Current Affairs 10 January 2025

Daily Current Affairs Quiz
10 January, 2025

International Affairs

1. Forest Fires

Context:

Fast-growing wildfires near Los Angeles have caused more than two deaths; hundreds are destroyed and scalded by hilly countryside.

Forest Fire

• A forest fire is an unchecked and non- prescription burning or combustion of plant life in the wild.
• It needs three main ingredients for the fire to keep burning:
  • Fuel, Oxygen, and a source of Heat.

Government Initiatives

• National Action Plan for Forest Fires (NAPFF):
  • Initiated in 2018, aims to reduce forest fires by informing, enabling, and empowering forest fringe communities and incentivizing them to collaborate with state forest departments.
• The Forest Fire Prevention and Management Scheme:
  • It is the only government-sponsored programme that helps states deal with forest fires.
• Ideal Season
  • The Indian forest fire season runs from November to June.
• Most Vulnerable Areas
  • The Northeast India, Odisha, Maharashtra, Jharkhand, Chhattisgarh, and Uttarakhand forests are the most prone to fires in this season.
• Largest Cases Registered
  • The largest number of forest fires have been recorded in Mizoram, Manipur, Assam, Meghalaya, and Maharashtra.
• Reasons for Forest Fires
  • Human Carelessness:
    • Most forest fires are due to human negligence like cigarette butts, campfires, and burning of waste.
  • Weather:
    • The extreme temperatures and dry weather in southern India are ideal conditions for the expansion of forest fires.
  • Aridity:
    • In southern India, above-normal temperature conditions, clear sky conditions, and lack of rainfall have augmented aridity conditions.
  • Earlier Dry Biomass Availability:
    • Early availability of dry biomass in the forests is another consequence of the above-normal temperature conditions that characterized the lead-up to the summer season.
  • Public Awareness and Education:
    • This can be brought about by raising public awareness regarding the causes and consequences of forest fires and promoting responsible behavior in forests, which could reduce the cases of human-ignited fires.
  • Enforcing Laws and Regulations:
    • Strictly enforcing laws and regulations regarding prevention of forest fire can reduce accidental fires.
  • Firebreaks and Fuel Management:
    • The creation of firebreaks and controlled burns will help minimize the spread of fires by forming barriers and fuel load reduction.
  • Early Detection Systems:
    • Implementing early detection systems will enable detection of fires at an early stage.

2. North Atlantic Treaty Organization (NATO)

Context:

The United States will “always be a reliable partner” in NATO, U.S. defence chief Lloyd Austin said, after remarks by President-elect Donald Trump sparked concerns among members of the military alliance.

North Atlantic Treaty Organization (NATO)

• Creation and History:
  • Founded in 1949 by 12 original member states from Europe and North America.
  • Used as a Cold War deterrent against Soviet expansionism.
    • The Soviet Union, or Union of Soviet Socialist Republics (USSR), was a socialist state that existed from 1922 to 1991. It was the world’s first communist state and a major player in 20th century world history.
  • Post-Cold War added crisis management, conflict prevention, and cooperative security to the agenda.

• Members:
  • Original 12 founding members included Belgium, Canada, Denmark, France, Iceland, Italy, Luxembourg, the Netherlands, Norway, Portugal, the United Kingdom, and the United States.
  • Expanded from its establishment and currently encompasses 32 member states.

• Mission and Objectives:
  • Its prime mission is collective defense according to Article 5 of the North Atlantic Treaty.
  • Other than collective defense, NATO carries out crisis management in terms of prevention of conflicts, peacekeeping, and stabilizing efforts.

• Structure:
  • Political Leadership
    • North Atlantic Council, the ultimate decision-making organ on political issues at NATO.
  • Military Command Structure
    • NATO’s military command structure consists of Strategic Commands, Regional Commands, and Force Headquarters.
  • Integrated Military Forces
    • NATO maintains integrated military forces for collective defence efforts.

• Issues Regarding NATO’s Operations:
  • Unbridled Offensive
    • NATO has launched or been involved in more than 200 military conflicts around the world, including 20 major ones.
    • Miscalculations in Eastern European, Middle East, and Asian Nations: The bombing of Yugoslavia, the invasion of Iraq, the failed statehood of Libya, the illegal military intervention in Syria, and the suspicious fruits of anti-terrorism operations in Afghanistan.
  • Inciting the Russia-Ukraine War
    • Five rounds of expansion of the alliance since 1991 have turned out to be the biggest provocation of all times.
  • Maintaining Western Hegemony
    • NATO’s military potential stands as an effective tool for maintaining the West’s hegemony over nations not viewed as a military menace.
  • Unwarranted Expansion
    • NATO’s capabilities are being built up in outer- and cyberspace.
  • Capitalising the Threat Posed in The Indo-Pacific
    • NATO’s attempts to extend its responsibility over the entire eastern hemisphere under the slogan of indivisibility of security in the Euro-Atlantic and Indo-Pacific regions.

• Successes and Failures of NATO Grouping:
  • Successes
    • It restrained the Soviet Union, discouraged militant nationalism and communism across Europe, and brought more political unity across Europe.
  • Current-day Security
    • It ensured collective security to its members and has established a worldwide network of over 40 countries and other partners.
  • Providing Humanitarian Support to Ukraine
    • NATO has vocally condemned the Russian invasion of Ukraine and provided major support to Ukraine.
  • Failures
    • Funding Issues: Most NATO nations fail to uphold the promise that 2% of their country’s GDP would be allocated to defense expenditure.
• Role of NATO in Afghanistan and Neo-Nationalism
  • NATO played the most vital role for the Afghan government post 9/11.
  • In 2020, when NATO, and US troops withdraw from Afghanistan, the Afghan government collapsed.
  • European right-wing nationalism increases discontent with the international institutions like NATO and the EU.
  • Challenges for NATO to counter the criticisms and bring a divided Europe under one roof.

• Russian Aggression in NATO
  • NATO has welcomed some former Warsaw Pact members since the Soviet Union collapsed.
  • Russia is increasingly intimidated with NATO membership on its borders and further enlargement promises.
  • The perceived possibility of Ukraine joining NATO is one of the most important motivations for Russian acts in the Russia-Ukraine Conflict.
    • The Russia-Ukraine war, which began on February 24, 2022, has profound geopolitical, economic, and humanitarian implications globally.

National Affairs

1. Persons of Indian Origin (PIO)

Context:

Prime Minister Narendra Modi praises the journey undertaken by Persons of Indian Origin across the world and their efforts for a better society.

Persons of Indian Origin (PIO)

A person of Indian origin is referred to as any foreign citizen, who was either an Indian citizen or whose ancestors had been Indian citizens. PIO cards are issued and can be obtained by PIOs, which makes them eligible for visa-free stay in India up to 15 years.

• Qualifications
  • Either he was Indian citizen at some point in the past
  • OR any of either of his ancestor or ancestors i.e. Grandfather or Father was borned in India who was a settled resident
  • Marriage with person who is India citizen or was PIO
• Benefit
  • PIO card holders can stay in India without visa for 15 years after the date of the card
  • A PIO card holder can spend up to 180 days in India without registering with FRRO/FRO
    • FRRO and FRO stand for Foreigners Regional Registration Office and Foreigners Registration Office, respectively. These offices are part of the Ministry of Home Affairs and are responsible for registering foreigners in India. 
  • If a PIO card holder is staying more than 180 days, he has to register with the concerned FRRO/FRO within 30 days
• Countries that are not eligible for PIO cards
  • Pakistan, Afghanistan, Bangladesh, China, Iran, Bhutan, Sri Lanka and Nepal.

Constitutional Provisions

• Articles 5, 8, and 9 of the Indian Constitution deal with citizenship for those of Indian origin.
• Article 5
  • Confer citizenship to those who were born in India, or to those whose parents were born in India, or to those who were residents of India for a period of not less than five years before the coming into force of this Constitution
• Article 8
  • The gives citizenship to persons of Indian origin residing abroad who are enrolled as citizens with the Indian diplomatic or consular representative
• Article 9
  • Deems the Indians, who take citizenship voluntarily by any country outside India.

2. Sixth-Generation Aero-Engine

Context:

India’s Defence Research and Development Organisation (DRDO) Chairman Samir V. Kamat suggested co-development with foreign manufacturers for the sixth-generation aero-engine development.

Sixth-Generation Aero-Engine

Sixth-generation engines are advanced engines which are to be integrated in jet fighter aircraft designs, of which several countries are pursuing national programs and collaborative multinational projects. The first of these fighters are expected to enter service in the 2030s, spread across development and procurement costs.

• Features
  • Expected to have a variable cycle for optimal efficiency at any speed or altitude.
  • Engine configuration to act like a turbojet at supersonic speeds and a high-bypass turbofan for efficient cruising at slower speeds.
  • Technology developed by the Air Force under the Adaptive Engine Transition Program (AETP) and the Navy under its Variable Cycle Advanced Technology (VCAT) program.
  • Adaptive Engine Transition Program (AETP)
    • The ADVENT program, led by the US Air Force, aimed to create an efficient adaptive cycle engine for next-generation military aircraft, with initial demonstrators expected to be in the 20,000 (89 kN) lbf thrust class.
  • The Variable Cycle Advanced Technology (VCAT)
    • The Variable Cycle Advanced Technology (VCAT) program is a Navy initiative to develop engines for next-generation fighter aircraft. The VCAT program has defined engine cycles, integrated the airframe and engines as a single unit, and explored engine variability by changing the bypass ratio.
    • A variable cycle engine (VCE) is a jet engine that can operate efficiently in subsonic, transonic, and supersonic flight conditions, also known as adaptive cycle engines (ACE).

3. Z-Morh Tunnel

Context:

Prime Minister Narendra Modi will inaugurate the strategic Z-Morh tunnel connecting Kashmir and Ladakh on January 13.

Key Highlights:

• Location
  • The tunnel is located in Ganderbal district and is crucial for maintaining Sonamarg, a popular winter tourist destination.
• Strategical Significance
  • The road to Sonamarg, part of the Zojila tunnel project, is impassable due to snow avalanches, making it crucial for all-weather connectivity to Ladakh, allowing quick access for military personnel.
  • Tunnel built under Thajiwas Glacier avoids landslide-and avalanche-prone pockets of road.
• Status
  • The Z-Morh will lead towards Asia’s longest tunnel, the Zojila tunnel, which will cut through the Himalayan range at Zojila Pass to reach the Kargil district in Ladakh.

4. Tax Terrorism

Introduction

Tax terrorism is the fear and perception of tax authorities resorting to aggressive practices to achieve revenue collection targets. The key features of tax terrorism include retrospective taxation, high taxation, aggressive tax collection targets, excessive notices and summons, prosecution for minor infractions, and use of enforcement agencies. The term gained prominence in 2014 when India’s Finance Minister referred to retrospective tax amendments.

• Causes of Tax Terrorism
  • Legislative Practices:
    • Frequent amendment of tax laws in order to set high tax rates.
  • Administrative Actions:
    • Stringent revenue collection targets for tax officials.
  • Impact on Taxpayers:
    • Mass issuance of notices and strict penalties.

• Impact of Tax Terrorism
  • It creates a hostile environment, discourages investments, and legal uncertainties.
  • It scares taxpayers, thereby losing confidence in the tax system.
  • It also causes stagnation of business growth as there is fear of hassle of compliance and potential migration of capital and talent to more tax-friendly countries.

Challenges in Indian Tax System

• Social Perception about Taxes:
  • Tax evasion is considered to be a normal practice, resulting in non-payment of taxes.
  • India has a high rate of taxes as far as a developing country is concerned.
• Aggressive Enforcement Practices
  • Scrutiny assessments and surveys are criticized for being too intrusive.
  • Public responses to tax actions tend to characterize assessments as unfair.
• Remedial Measures
  • Aggressiveness in prosecuting admitted tax evasion cases
  • The law to become less technical for taxpayers.
  • Utilize technology to increase faceless assessments.
  • Reward compliance through incentives for continuous compliance.

Goods and Services Tax (GST) and Council Formation

5. Genomes

Context:
India Assembles Human Genomes for Disease and Drug Therapy: India released a year’s compilation of 10,000 human genomes of 83 population groups, roughly 2% of the country’s 4,600 population groups.

Genome India database

• Genome India database was hosted at Indian Biological Data Centre, Faridabad, Haryana.
• Significance
  • It will help the researchers to understand diseases so that there will be targeted clinical interventions and precision medicine.

Genome

A genome is the complete set of DNA, or genetic material, in an organism. It contains all the information an organism needs to develop and function.

• How is a genome organized?
  • A genome is made up of DNA, which is a set of instructions organized into genes and chromosomes.
  • Genes are segments of DNA that carry instructions for making proteins.
  • Chromosomes are protein structures that carry genetic information from one cell to the next.
• What is a genome?
  • The information that an organism needs to develop and function is found in the genome.
  • Genes in the genome guide the production of proteins that build and repair tissues and organs.
• What is genomics?
  • The study of genomes identifies how genes are expressed and interact with the environment.
• What is the human genome?
  • The human genome consists of around 3 billion DNA base pairs, 23 pairs of chromosomes, and 20,000 to 25,000 genes.

DNA, RNA, and Chromosomes are all parts of the genetic code that store and transmit hereditary information.

DNA

• Structure:
  • DNA is a double-stranded helix made of long chains of chemical bases
• Function:
  • DNA contains the instructions for making and maintaining living things
• Stability:
  • DNA is a relatively stable molecule

RNA

• Structure:
  • RNA is a single-stranded molecule made of long chains of chemical bases connected by a sugar backbone
• Function:
  • RNA contains instructions for the function of a cell
• Reactivity:
  • RNA is more reactive than DNA

Chromosomes

• Structure:
  • Chromosomes consist of DNA in the form of coiled bundles
• Function:
  • Chromosomes are the reservoir and means of hereditary information
• Components:
  • Chromosomes consist of genes, which refer to a DNA segment coding for proteins or RNA molecules

DNA and RNA in chromosomes

• DNA provides the blueprint that RNA translates to proteins
• Chromosomes consist of DNA and genes refer to DNA segments aligned on chromosomes.

6. Tuberculosis (TB)

Context:

The Union Ministry of Home Affairs (MHA) has written to all the States and the Union Territories (UTs) to organise a 100-day intensified campaign on tuberculosis (TB) elimination in prisons and correctional institutions as part of the Union government’s commitment to eliminating the disease from India.

India TB Report 2024

Recently, the Ministry of Health and Family Welfare released the India TB Report 2024, which highlights that the mortality rate due to Tuberculosis (TB) had declined from 28 per lakh population in 2015 to 23 per lakh population in 2022.

Key Highlights:

• Most Cases Registered
  • Government health centres are reporting most TB cases, private sector notification has been rising.
  • The private sector reported 8.4 lakh from 25.5 lakh in 2023 as against 1.9 lakh in 2015.
• Mortality Rate
  • Estimated TB incidence slightly increased to 27.8 lakh in 2023, but infection-related mortality remained at 3.2 lakh.
• Target
  • India met the target for the year 2023 to have treatment initiated for 95% of the identified cases.

Tuberculosis

• Tuberculosis is a bacterial infection caused by Mycobacterium tuberculosis, affecting any organ of the body.
• Airborne Infection
  • It is an airborne infection that spreads through close contact with the infected, especially in densely populated spaces with poor ventilation.
• Symptoms
  • Symptoms include cough with sputum and blood at times, chest pains, weakness, weight loss, fever, and night sweats.
• Infection Prevalence
  • TB is the world’s top infectious killer, leading to 1.5 million deaths annually.
  • The majority of those infected with TB reside in low- and middle-income countries, but the disease is everywhere.
• Treatment
  • The standard 6-month treatment consists of 4 antimicrobial drugs, resistance to at least 1 of the medicines has been reported from all surveyed countries.
  • Multidrug-resistant Tuberculosis (MDR-TB) is a form of TB caused by bacteria that are not responsive to isoniazid and rifampicin, the two most powerful, first-line anti-TB drugs.
    • Multidrug resistance (MDR) is when a microorganism is resistant to multiple antimicrobial drugs.
• Drugs
  • Any of the mentioned drugs include isoniazid (INH), rifampicin (RIF), and delamanid.

Programs to Control TB

• The WHO established the “Find. Treat. All. #EndTB” program and the Global Plan to End TB, 2023-2030.
• The efforts of India are Pradhan Mantri TB Mukt Bharat Abhiyan, National Strategic Plan for Tuberculosis Elimination (2017-2025), TB Harega Desh Jeetega Campaign, Nikshay Poshan Yojna, and RePORT India.

7. Earthquake in Tibet!

Context:

An earthquake in Tibet, magnitude 7.1, originating at a depth of 10 km, has claimed at least 100 lives and damaged buildings and houses.

Earthquake

8. Bharatiya Nyaya Sanhita (BNS)

Context:

The Rajasthan High Court, in Tejender Pal Singh v. State of Rajasthan (2024), cautioned against using Section 152 of the Bharatiya Nyaya Sanhita (BNS) as a tool to stifle legitimate dissent.

Section 152 (BNS)

Section 152 (BNS) criminalizes acts which endanger the sovereignty, unity, and integrity of India, such as inciting rebellion or promoting separatism. Though it does not use the term “sedition,” it does similar work but with broader words.

• Penalties
  • Section 152 increases the potential penalty to life imprisonment or up to seven years, along with a mandatory fine, making it potentially more stringent.
• Section 152 lowers this threshold by allowing prosecution if a person “knowingly” shares information that could incite rebellion or separatism, regardless of malicious intent.

Bharatiya Nyaya Sanhita (BNS)

9. Dual Citizenship in India!

Context:

At an event, External Affairs Minister S. Jaishankar said there are a lot of challenges in providing dual citizenship to Indians settled abroad. He pointed out that the Overseas Citizenship of India drive is a step towards meeting the demand.

• Dual or Multiple Citizenship:
  • It gives the person legal status as a citizen of two or more countries simultaneously.
• Countries allowing dual citizenship:
  • United States, Finland, Albania, Israel, and Pakistan, etc.
• India
  • Indian Constitution does not allow dual citizenship for nationals
• Alternative to dual citizens in India
  • India offers the Overseas Citizenship of India (OCI) program to Persons of Indian Origin (PIO), except to those who moved to Pakistan and Bangladesh.

The Overseas Citizenship of India (OCI)

The Overseas Citizenship of India (OCI) scheme allows people of Indian origin to live and work in India indefinitely. OCI cardholders receive a lifetime visa to India, and are treated similarly to Non-Resident Indians (NRIs) in many ways. 

• Facilities for the OCI cardholder
  • Multi-purpose, multi-entry, lifetime visa for visiting India.
  • Exemption from registering with local police authority for any length of stay in India
  • Parity with NRIs with regard to the economic, financial, and educational fields except for matters relating to the acquisition of agricultural/plantation properties
• Foreign national eligible to apply for OCI
  • Who was eligible to become a citizen of India on 26.01.1950
  • Was citizen of India either on or at any time after 26.01.1950.
  • Who is a child or a grandchild or a great-grandchild of such a citizen given above.

Non-Resident Indian (NRI)

A Non-Resident Indian (NRI) is a citizen of India living outside the country. In fact, the term NRI is also sometimes used to describe a person of Indian origin living outside India.

• Who is an NRI?
  • An Indian citizen who is out of India
  • A person of Indian origin who lives outside of India
  • A foreign person staying in India for less than 182 days in a fiscal year.
  • A person who stays abroad for employment, business, or other reasons that indicate an intention to stay abroad for an unspecified period.

10. University Grants Commission (UGC) Regulations, 2025.

Context:

Chief Minister M.K. Stalin’s resolution calls the Union government to withdraw the draft University Grants Commission (UGC) Regulations, 2025.

11. India-Mongolia Trade Relations

Context:

India is set to finalize a Memorandum of Understanding (MoU) with Mongolia to enhance collaboration in geology and exploration, aimed at securing key resources essential for industrial growth.

Mongolia is rich in natural resources, including coal, copper, gold, iron, and uranium. These resources are a key part of the country’s economy, accounting for over 90% of its exports.

Key Highlights

• Resources to Be Acquired:
  • Copper: Critical for electrical and industrial applications.
  • Coking Coal: Vital for India’s steel production.
• Government Approval:
  • The Indian Cabinet has approved the MoU, paving the way for imminent formalization of the agreement.
• Private Sector Interest:
  • Major Indian firms such as Adani, Hindalco, and Vedanta are keen on sourcing high-quality copper from Mongolia.
• Strategic Import Route:
  • India prefers the Vladivostok route in Russia for logistical and strategic reasons.
• Industrial Impact:
  • Enhanced supply security of resources like copper and coking coal.
  • Boost to India’s steel sector, with high-grade coking coal providing a competitive edge.

Strategic Importance

• Diversification of Resource Base:
  • Reduces dependency on traditional suppliers, ensuring more robust supply chains.
• Strengthened India-Mongolia Relations:
  • This partnership could open avenues for broader economic cooperation.

12. Graphics Processing Unit (GPU)

Context:

Indian Ministry of Electronics and Information and Technology (Meity) receives 20,000 GPUs from companies under the ₹ 10,370 crore IndiaAI Mission, nearly double the amount requested.

Graphics Processing Unit (GPU)

A graphics processing unit (GPU) is an electronic circuit that accelerates the rendering of computer graphics and image processing. GPUs are designed to quickly perform mathematical calculations, which may help reduce the time it takes for a computer to run several programs.

• Applications of GPUs include:
  • Gaming
    • The capabilities of GPUs in gaming are probably best known.
  • Creative production
    • GPUs are gaining popularity for use in creative production.
  • Artificial intelligence (AI)
    • GPUs are necessary for emerging technologies like AI.
  • Machine learning (ML)
    • GPUs accelerate machine learning applications like image recognition and facial detection.
  • Crypto mining
    • GPUs can carry out the high-speed mathematical calculations required for mining a cryptocurrency like bitcoin or Ethereum.
  • Many devices include: video cards, system boards, mobile phones, personal computers (PCs), workstations, and game consoles.

IndiaAI Mission

Banking/Finance

1. SBI’s Report on Poverty

Context:

The release of the 2023-24 Household Consumer Expenditure Survey (HCES) fact sheet has reignited the poverty debate in India. While recent estimates suggest a sharp decline in poverty levels, the methodological challenges and historical context continue to complicate the discourse.

Key Developments in the Poverty Estimates

• 2023-24 Poverty Estimates:
  • Rural Poverty: Declined from 7.2% (2022-23) to 4.9%.
  • Urban Poverty: Declined from 4.6% (2022-23) to 4.1%.
  • National-level poverty dropped significantly from 21.5% in 2011-12 to below 5% in 2023-24 (SBI report).
• Historical Trends:
  • The poverty line traditionally reflected the minimum expenditure required to meet basic calorie needs.
  • Evolving methodologies (Tendulkar and Rangarajan Committees) and shifts in survey techniques have introduced inconsistencies over time.

Evolution of Poverty Measurement in India

Early Methodology

• Anchored to a calorie-based poverty line proposed by Dandekar and Rath (1960s).
• Adopted by the Planning Commission with periodic revisions using price inflators.

Shift from Calorie Norms (Tendulkar Committee)

• Recommended moving away from calorie-based thresholds to a broader consumption basket.
• Used urban poverty benchmarks for rural areas and introduced the Mixed Reference Period (MRP).

Rangarajan Committee’s Redefined Basket

• Defined the poverty line with specific calorie, fat, and protein requirements.
• Added normative expenses for non-food essentials (clothing, housing, mobility, and education).
• The report was not officially adopted but highlighted higher poverty estimates compared to Tendulkar’s method.

Recent Methodological Innovations

• Modified Mixed Reference Period (MMRP):
  • Records consumption across three timeframes: weekly (food), monthly (regular goods), and yearly (large expenditures).
• Inclusion of Imputed Values:
  • Expenditures now account for free provisions like laptops, bicycles, school uniforms, and food.
• Improved Data Collection:
  • Adoption of three-monthly household visits for better accuracy.

Challenges in Comparing Poverty Estimates

• Data Inconsistencies:
  • New methodologies (2022-23 and 2023-24 surveys) are not strictly comparable with the 2011-12 data, leading to underestimated poverty figures.
• Urban-Rural Gap:
  • Decline in rural-urban poverty disparity attributed to unchanged urban boundaries since 2011. Inclusion of potential “census towns” could increase rural poverty estimates.
• Impact of Methodological Changes:
  • Enhanced expenditure recording through imputed values and multiple visits inflates consumption figures, complicating longitudinal comparisons.

Human Development Report(HDR) 2023-24

2. RBI Take on NBFCs

Context:

On October 17, 2024, the Reserve Bank of India (RBI) issued a “cease and desist” order against four NBFCs.

• The NBFCs banned were Navi Finserv, Arohan Financial, Asirvad Microfinance, and DMI Finance.
• By December 2024, Navi Finserv was the first to have its ban revoked.

• Some Notable Bans
  • Kotak Mahindra Bank:
    • Ban on new credit card issuance from December 2, 2020, to August 17, 2021.
  • Bajaj Finance:
    • Loan sanction and disbursal ban through e-commerce and Insta EMI Card from November 15, 2023 to May 2, 2024.
  • Mahindra Finance:
    • Ban on customer acquisition through online/ mobile banking and fresh credit card issuance from April 24, 2024 to Till date.
  • Edelweiss ARC:
    • Recovery/repossession ban through outsourcing arrangement from September 22, 2022 to January 4, 2023.
  • ECL Finance:
    • Prohibition on wholesale exposure structured transactions from May 29, 2024, to December 17, 2024.

• Rapid Reversal Significance
  • Shortest Restriction Period:
    • The lifting of restrictions marks the shortest period of business restrictions since the imposition of the restrictions in 2020.
  • Possible Policy Shift:
    • The swift resolution under Governor Malhotra may indicate a shift towards faster corrective measures for NBFCs.
  • Regulation and Growth:
    • The fast lifting of the restrictions suggests that regulation is keen on maintaining financial discipline without inhibiting growth in the NBFC sector.

RBI’s Regulations on Asset Qualification Norms

3. Stress in Microfinance Loans and Challenges for Asset Reconstruction

Context:

The microfinance sector in India faces growing challenges due to uncontrolled credit growth and over-leveraging among borrowers. These factors have created a ripple effect, contributing to stress in loan portfolios and placing pressure on banks and non-banking financial companies (NBFCs) to offload their non-performing microfinance assets.

Key Issues in Microfinance Stress

• Unbridled Credit Growth:
  • Aggressive lending practices have led to excessive credit exposure for borrowers, making it difficult for them to meet repayment obligations.
• High Delinquency Rates:
  • Over-leveraging has increased default rates, especially among small borrowers, significantly impacting portfolio quality.
• Recovery Challenges:
  • Loan recovery remains resource-intensive and costly, compounded by the cash-driven nature of microfinance operations and limited infrastructure.
• NPA Disposal to ARCs:
  • Banks and NBFCs, including prominent players like IndusInd Bank, are selling non-performing microfinance loans to Asset Reconstruction Companies (ARCs).
  • Example: IndusInd Bank sold loans worth ₹1,573 crore at a recovery rate of 5.04%, underscoring the deep discounting required.

Challenges for Asset Reconstruction Companies (ARCs)

• Pricing Limitations:
  • ARCs find microfinance portfolios viable only when priced below 10% of the outstanding loan value, reflecting the high risk and cost of recovery.
• Preference for Secured Portfolios:
  • ARCs prioritize retail NPAs with secured backing over unsecured microfinance loans, which offer limited recovery potential.
• Cash-to-Security Receipts (SRs) Model:
  • ARCs prefer acquiring portfolios through a cash-to-SRs basis, which reduces upfront costs and balances risk-sharing between lenders and buyers.
• Competition with NARCL:
  • The National Asset Reconstruction Company Ltd (NARCL), a state-owned entity, has shifted focus to corporate NPAs, leaving private ARCs to explore retail segments. However, the microfinance segment remains less attractive due to its complexity and low margins.

Way Forward

• Better Pricing Mechanisms:
  • Banks and NBFCs need to adjust expectations on pricing non-performing microfinance loans, aligning them with market realities to attract ARC interest.
• Improved Risk Assessment:
  • Stronger credit assessment mechanisms can mitigate over-leveraging risks, reducing future stress.
• Policy Support:
  • Regulatory and infrastructure support, including streamlined recovery frameworks, can enhance the viability of the microfinance sector and asset recovery.
• Focus on Secured Lending:
  • Diversifying into secured microfinance products may help balance risks and offer better recovery outcomes for lenders.

Asset Reconstruction Companies (ARCs)

4. Unsecured Loans

Context:

Unsecured loans have gone up, and the resultant delinquency rates have also increased, due to which demand for collection profiles in the retail lending space, specifically unsecured loans like credit cards and personal loans, has increased in the past six months.

Unsecured Loans

An unsecured loan is a type of loan that does not require the borrower to provide collateral, such as property or other assets, to secure the loan. Instead, the lender approves the loan based on the borrower’s creditworthiness, financial stability, and ability to repay.

Key Features of Unsecured Loans

• No Collateral Required:
  • Borrowers do not need to pledge assets like property, vehicles, or savings.
• Higher Interest Rates:
  • Due to the absence of collateral, lenders charge higher interest rates to offset the risk.
• Eligibility Based on Creditworthiness:
  • Approval depends heavily on credit scores, income levels, and repayment history.
• Fixed or Variable Interest Rates:
  • Lenders may offer fixed or adjustable interest rates, impacting the cost of borrowing.
• Shorter Tenure:
  • Typically, unsecured loans have shorter repayment periods compared to secured loans.

Common Types of Unsecured Loans

• Personal Loans:
  • Used for various purposes such as medical emergencies, weddings, education, or travel.
• Credit Cards:
  • A revolving line of credit allowing borrowers to use funds as needed up to a limit.
• Student Loans (Some Types):
  • In certain regions, student loans may be unsecured, relying on the student’s credit or a cosigner’s backing.
• Small Business Loans:
  • Provided to startups or small businesses without requiring collateral.
• Debt Consolidation Loans:
  • Designed to merge multiple debts into a single loan with potentially lower interest rates.

Advantages of Unsecured Loans

• No Asset Risk:
  • Borrowers do not risk losing assets if they default.
• Faster Approval Process:
  • Without the need for asset evaluation, the approval process is quicker.
• Flexibility in Usage:
  • Funds can be used for a wide variety of purposes without restrictions.
• No Asset Valuation:
  • Borrowers with limited or no assets can still access credit.

Challenges and Risks

• Higher Interest Costs:
  • The lack of collateral results in higher interest rates and overall borrowing costs.
• Stricter Eligibility Criteria:
  • Only borrowers with strong credit profiles are likely to qualify.
• Lower Loan Amounts:
  • Lenders often impose limits on the amount due to increased risk.
• Impact on Credit Score:
  • Defaults or late payments can significantly harm the borrower’s credit score.

How to Qualify for an Unsecured Loan

• Build a Strong Credit Score:
  • Pay bills on time and maintain a low credit utilization ratio.
• Demonstrate Stable Income:
  • Proof of steady employment or a reliable income source reassures lenders.
• Reduce Existing Debt:
  • A lower debt-to-income ratio improves eligibility.
• Compare Lenders:
  • Research different lenders to find the best interest rates and terms.

When to Consider an Unsecured Loan

• When you need funds quickly and cannot offer collateral.
• For short-term financial needs like debt consolidation, medical emergencies, or personal expenses.
• If you have a strong credit profile and can secure favorable terms.

Economy

1. India’s Precious Metal and Electronics Import Data

Context:

The Central Government of India has revised the import data for precious metals and electronics for the April-November 2024-25 period due to errors and adjustments in the data collection process.

Key Highlights:

• Precious Metals (Gold and Silver):
  • The revised import values for gold and silver are $11.69 billion and $950 million, respectively.
  • The total import value of precious metals was significantly impacted by a fall in gold imports, bringing the overall figure down to $37.39 billion during this period.
• Electronics:
  • The import value for electronics was revised downwards by $2.7 billion, reducing the total to $61.2 billion.

Reasons for Revision

• Duplication in Gold Counts:
  • Errors in the shipment warehouse process led to the duplication of gold counts, necessitating adjustments.
• Transition to ICEGATE:
  • The need for data revision arose due to the migration of the data transfer mechanism from the National Securities Depository Limited (NSDL) system to the Indian Customs Electronic Gateway (ICEGATE).
    • ICEGATE (Indian Customs Electronic Data Interchange Gateway) is a centralized portal for electronic interactions between the Indian customs and the trading community. It was established in 2007 and is a part of the Central Board of Indirect Taxes and Customs (CBIC).

Implications of Data Revisions

• Policy Adjustments:
  • Accurate import data is crucial for crafting policies related to trade balance, taxation, and import regulations.
• Industry Insights:
  • The decline in gold imports reflects shifting consumer behavior or market trends, while the electronics sector’s downward adjustment highlights improved accuracy in reporting.
• Operational Improvements:
  • The migration to ICEGATE aims to streamline and enhance the accuracy of data reporting, reducing discrepancies in the future.

Gold Reserve in Central Bank

2. One-Time Amnesty Scheme

Context:

The Government of India has announced plans for a ‘One-Time Amnesty Scheme Under Customs’, modeled after the successful ‘Vivad Se Vishwas’ scheme for income tax. This initiative aims to address long-pending customs disputes and bring relief to businesses while enhancing government revenue.

Objectives of the Amnesty Scheme

• Reduction in Litigation:
  • Aimed at resolving disputes under the Customs Act related to duty values, the scheme seeks to decrease the volume of cases in courts and tribunals.
• Economic Relief for Businesses:
  • By providing immunity on base duty values, businesses can resolve disputes without prolonged legal battles.
• Enhanced Revenue for the Government:
  • The settlement of pending cases is expected to bolster government coffers through the recovery of disputed amounts.

Key Features of the Scheme

• Focus on Duty Values:
  • The scheme addresses disputes centered on the base customs duty values, offering resolution without penalties or interest in certain cases.
• Immunity from Further Action:
  • Provides businesses with protection from additional proceedings once disputes are settled under this framework.
• Alignment with Other Amnesty Efforts:
  • The customs amnesty initiative aligns with similar schemes for Income Tax, Excise Duty, Service Tax, and GST, creating a cohesive framework for resolving tax and duty disputes.
• Simplified Process:
  • The structure ensures that businesses can easily participate, reducing administrative complexity and time.

Implications for Stakeholders

• Businesses:
  • A chance to clear disputes efficiently, enabling them to focus on growth and operations.
• Legal System:
  • Reduced caseloads, leading to faster resolution of other cases and a more efficient judicial system.
• Government:
  • Increased collections from previously unresolved disputes and enhanced trust in its dispute resolution mechanisms.

The Vivad se Vishwas

The Vivad se Vishwas scheme is a voluntary settlement scheme in India that aims to resolve long-standing disputes. The scheme is available for both contractual and income tax disputes. 

• Ministry
  • Ministry of Finance

Vivad se Vishwas II scheme

• This scheme is for resolving contractual disputes between the government and other parties. 
• Launch
  • The scheme was announced in the Union Budget 2023-24. 
• Aims
  • The scheme aims to make it easier to do business with the government and encourage new investments. 

Direct Tax Vivad se Vishwas (DTVSV) scheme

• This scheme is for resolving pending income tax disputes. 
• Launch
  • The scheme was announced in the Union Budget 2024-25. 
  • The scheme came into effect on October 1, 2024. 
• Aims
  • The scheme aims to reduce pending income tax litigation and provide financial benefits to taxpayers. 

3. UN Report: Projections for the Indian Economy in 2025

• Economy Growth Projections:
  • Economically, India is projected to grow to 6.6% in 2025, increasing by another notch in 2026 to 6.7%.
  • The South Asian region is on course to record a growth of 5.7% in 2025 and a 6% growth figure in 2026.
  • This would see growth taper off a bit to 6.4% in 2024-25, slightly less than what the RBI has forecasted.

The Key Growth Drivers

• Public Sector Investments in Major Infrastructure.
  • Infrastructure Development with Strong Multiplier Effects for Economic Growth.
  • Industrial Growth and Growth of Services in an Economy for Sectoral Leadership.
  • Service and product export in pharmaceuticals and electronics.
  • Better operations for crops during a monsoon in 2024.
• Disasters Risking Economic Growth
  • These include geopolitical tensions, external demand, debt problems, and domestic unrest.
  • Climate change risk is also included.

The United Nations (UN)

Agriculture

1. Nabard’s Four Pillar Approach in Agriculture

• Accelerating Green Lending
  • Incorporate climate-related activities into financial products.
  • Partnering with rural financial institutions to build innovative financing products that are congruent with climate policy.
• Market-Making Through Data Access
  • Climate Resilience by Data-Driven Solutions
  • Increase awareness of climate-related products and players.
  • Make sustainable agricultural practice adoption easier
• Internal Green Transformation
  • Zero Emissions within Nabard
  • Rural financial institutions, too, would be encouraged to reduce emissions with sustainable practices.
• Resource Mobilisation
  • Using blended finance, carbon funds, and green bonds to support climate-resilient projects.
  • Actively working with governments and multilateral agencies to establish a Carbon Fund for reducing emissions and sequestering carbon in agriculture.
• Major Initiatives and Partnerships
  • Comprehensive Data Warehouse
• Objective:
  • To legalize farmers, particularly tenant farmers, and enhance their access to credit and government schemes.
• Partnerships:
  • Prepared with the collaboration of agencies such as UNDP.
• Data Integration:
  • Crop data, farmers’ KYC, and land details would be integrated for informed decision-making and better financial services.
• Vision for Climate-Resilient Agriculture
  • This multi-faceted approach underscores Nabard’s commitment to building a sustainable agricultural economy through the integration of green finance, data analytics, and global partnerships as a way to address the challenges of climate change.

2. Fertilizer Subsidy Allocation FY-2026

• Projections on Allocation:
  • The fertilizer subsidy for FY26 is likely to remain more or less the same as FY25’s ₹1.7 trillion.
  • The original allocation will likely remain intact with this year’s trend and will undergo revision against any unpredicted increase of prices.

• Contextual Update and Trends:
  • Current fiscal update
    • For the original FY25 allocation of ₹1.64 trillion, an additional ₹6594 crore was added to the budget in December.
  • As of November 2024, ₹1.21 trillion had already been consumed for (74% of FY25 allocation)
  • Essential drivers for the subsidy
    • This results in India importing fertilizers muriate of potash and natural gas to grant it import subsidy also.
  • Retail Price Controls
    • Retail prices of urea are charged by government, rather subsidy levels are fixed to other nutrients under NBS.
  • Global Market Demand
    • India contributes around 20% of the entire international DAP.

• Analysts’ Views:
  • Subsidy Requirement Is under Control: The Centre has been containing the subsidies on its end for many years.
  • Prices of fertilizers like urea and muriate of potash had gone down at the end of November 2024. thereby, this tendency towards price stability would signal that subsidy trend would remain likely to be stable for FY26.

• Policy and Budget ramification:
  • Stable subsidy allocation ensures stability within the fiscal budget along with appropriate support to farmers.
  • Continued tracking of global price trends as well as geopolitical factors would lead to successful management of subsidy allocation.

Diammonium Phosphate (DAP) Fertilizer

Facts To Remember

1. Playback singer P. Jayachandran passes away

• Playback singer P. Jayachandran, known for his expressive singing and whose magical voice captivated music lovers for over six decades, passed away at a private hospital in Thrissur on Thursday. He was 81.

2. After two years of vacuum, Lebanon elects new leader

• Lebanon’s Parliament on Thursday elected Army commander Joseph Aoun as President, ending a two-year presidential vacuum. Mr. Aoun promised consolidating the state’s monopoly on weapons in his speech. 

3. Mo Farah as ambassador Tata Mumbai Marathon

• Mo Farah, the legendary distance runner, has been roped in as the International event ambassador for the 20th edition of the Tata Mumbai Marathon to be held on January 19 in south Mumbai.

4. Waikar named men’s team skipper for WC

• The 32-year-old from Pune to becoming the captain of the Indian men’s team for the inaugural Kho Kho World Cup.

5. The IndusInd Bank National women’s T20

• The IndusInd Bank National women’s T20 cricket tournament for the blind 2025 will be held at multiple venues in Ernakulam from January 13 to 18.

6. Tuhin Pandey takes charge as revenue secy

7. Thiruvallikeni – Divine Abode of Lord Parthasarathy

• The book, Thiruvallikeni – Divine Abode of Lord Parthasarathy, written by Nirmala Lakshman, Chairperson of The Hindu Group Publishing Private Limited, details the temple’s history and puranic accounts besides spectacular visuals.

8. Hindu Businessline Agri and Commodity Summit, 2025

• Hindu Businessline Agri and Commodity Summit, 2025: “Shaping Agriculture and Agri-Business in a Changing Climate”. NABARD in association with Yara co-powers the event; organized by Federation of Seed Industry of India (FSSI).