Current Affairs 11 February, 2025

Daily Current Affairs Quiz
11 February, 2025

International Affairs

1. Trump’s Gaza Proposal and Its Geopolitical Implications

Context:

Donald Trump, who is known for his bold negotiation tactics, proposed on February 4, 2025, that Gaza’s 2.3 million residents be relocated to Egypt and Jordan while the U.S. would redevelop the strip into a global tourist hub. This highly controversial proposal has sparked widespread reactions, with Saudi Crown Prince Mohammed bin Salman (MbS) stating that Saudi Arabia would not establish ties with Israel without a Palestinian state.

Key Highlights:

Key Trump Proposal & Reactions

• Trump proposed depopulating Gaza and making it a “riviera for the world’s people”. Netanyahu sided with Trump on this.
• MbS took exception, reminding everyone that ties between Saudi and Israel need to have a two state solution. The proposal appears to be maximalist bargaining. The stakeholders have no choice but to present their counter offers.

West Asia Geopolitical Reconfigurations

• This is an area that has undergone massive turmoil since October 7, 2023, making all previous assumptions crumble.
• Israel’s military supremacy has been threatened.
• Iran’s strategic control in the area from the Red Sea to the Mediterranean has declined.
• The Axis of Resistance (Iran, Hezbollah, Hamas) is temporarily neutralized but could revive.
• The war has redefined political alliances, with Saudi Arabia playing an increasingly central role.

Trump’s Foreign Policy Approach

• He remains impulsive and transactional, prioritizing economic deals but still deeply entangled in global conflicts.
• His expansion of the Abraham Accords is now complicated by Palestinian statehood demands.
• Ultra religious Jewish groups in Israel and hardline factions in Syria add further unpredictability.

Economic Consequences

• Conflict Driven Economic Destruction Gaza reconstruction: $50 billion for 170,000 destroyed homes.
• Lebanon damages: $8.5 billion due to conflict.
• Syria war costs: Some $500 billion over 13 years. .
• Western sanctions exacerbate the challenge of recovery.

Structural Economic Challenges

• West Asian economies remain dependent on oil, but global demand is expected to decline by the decade’s end.
• Trump’s climate and energy policies, such as withdrawing from the Paris Agreement and pushing for more oil drilling, may disrupt energy markets.
• A powerful U.S. dollar is rendering West Asian economies less competitive.

Saudi Arabia’s Critical Position

• With a $1.07 trillion GDP, Saudi Arabia has dodged severe war related damage and continues to be the region’s economic powerhouse. MbS has consolidated power, managing relationships with Iran, Qatar, China, and the U.S.
• The Saudi Public Investment Fund ($930 billion) and Aramco’s $1.79 trillion market cap place the Kingdom in a position of great financial leverage.
• Trump and MbS’s relationship is the key, as MbS is said to have offered $600 billion in U.S. investments, which Trump countered by asking him to round it up to $1 trillion.

Challenges & Outlook

• Normalization now hinges on the Palestinian state, which Israel’s Parliament has already officially rejected.
• However, tensions notwithstanding, Saudi U.S. re engagement is key to provide funding for the reconstruction of this region and urge diplomatic solutions
• The potential of Trump’s ability to squeeze concessions from Israel while keeping its Arab allies’ support will frame the future for West Asia

Abraham Accord

The Abraham Accords are bilateral agreements signed between Israel and the UAE and Bahrain on September 15, 2020. These deals, mediated by the US, concern Israel and the UAE before Israel and Bahrain. The signing was hosted by US President Donald Trump on the Truman Balcony, where he hoped to evoke historic peace treaties that were otherwise relevant only in previous administrations.

2. India U.S. Trade Talks

Context:

Prime Minister Narendra Modi’s bilateral meetings with U.S. President Donald Trump this week are expected to focus on tariff negotiations, with India considering further import duty reductions on U.S. goods like pecan nuts to ease trade tensions.

Key Highlights:

India’s Tariff Concessions on U.S. Agricultural Imports

• India has already cut import duty on U.S. almonds and is weighing further reductions on pecan nuts.
• The import duty on pecan nuts was reduced from 100% to 30% in early 2023 and is likely to go down further.
• This is aimed at countering the concerns over India’s trade policies by the U.S. and softening Trump’s stance on tariffs.

India’s Case for Low Tariffs on U.S. Industrial Products

• Indian officials will present a fact sheet that import duties on major U.S. industrial exports to India are already low or zero.
• The government hopes this will counter Trump’s claims that India is a tariff abuser.

Possible U.S. Concessions for India

• India is also seeking to have its GSP benefits restored, which Trump had canceled in 2019.
• Officials claim that a meeting between Modi and Trump would eventually ease or suspend the U.S. trade measures felt to be detrimental against India.

U.S. Strategy: Tariffs as Negotiation Tool

• Trump has used tariffs as a bargaining chip before in trade agreements with Canada and Mexico.
• US India Strategic Partnership Forum (USISPF) President Mukesh Aghi believes this ‘art of the deal‘ approach by Trump can end with a win win trade agreement for the two nations also.

Further Trade & Defence Talks

• The President wishes to hammer in a Free Trade Agreement with India.
• The U.S. will also ask for greater purchases of Indian equipment and American exports of energy products.

3. UK-India Defence Partnership India (DPI)

Context:

The United Kingdom (UK) has launched the Defence Partnership India (DPI), a dedicated cell within the UK Ministry of Defence to strengthen bilateral defence cooperation with India. The announcement was made during Aero India, where multiple defence agreements were signed between the two nations.

Key Highlights:

Establishment of DPI

• DPI is the “one stop shop” in the UK Ministry of Defence to deepen UK India defence cooperation.
• Aimed by UK Defence Minister Lord Vernon Coaker at UK India Defence Partnership pavilion at Aero India. 
• Intends to enhance interoperability, boost joint defence production, and strengthen security cooperation.

Defence Agreements signed at Aero India

• Man Portable Air Defence Systems (MANPADS) & Lightweight Multirole Missiles (LMM)
  • Thales UK and Bharat Dynamics Limited (BDL) concluded a contract for Laser Beam Riding MANPADs (LBRMs).
• STAR Streak
  • First delivery of the STAR Streak high velocity missiles and launchers is due this year.
• Thales and BDL
  • Collaboration between Thales and BDL for production of LMMs in India. The Indian industry would become a part of the Thales’ global supply chain
• ASRAAM Assembly & Test Facility
  • MBDA UK and BDL to establish an ASRAAM production facility at Hyderabad. These will arm the Jaguar and Light Combat Aircraft (LCA) Mk1A.
• Integrated Full Electric Propulsion (IFEP) System for Indian Navy Ships
  • There was a Statement of Intent (SoI) on the design and development of an IFEP system for offering more naval capabilities.

The UK India Defence Partnership India (DPI) is one step forward towards joint defence production, increased security cooperation, and supply chain integration. The agreements signed at Aero India will not only boost indigenous defence manufacturing but also foster strategic interoperability between the two countries.

4. Modi arrives in France for AI summit

National Affairs

1. Aero India 2025

Context:

Defence Minister Rajnath Singh described Aero India as “the Kumbh of research”, as the biennial air show got under way at the Air Force Station in Yelahanka, Bengaluru,

Introduction

• Aero India 2025, the 15th edition of Asia’s premier aerospace and defense exhibition, is currently underway at the Yelahanka Air Force Station in Bengaluru, Karnataka, from February 10 to 14, 2025.
• Inaugurated by Defense Minister Rajnath Singh, the event has been dubbed the ‘Maha Kumbh’ of India’s display of might.

History of Aero India

• Aero India was first held in 1996 at Yelahanka Air Force Station, Bengaluru.
• Since then, it has grown into a global platform for defense cooperation, technology collaboration, and industrial partnerships.
• Over the years, it has played a vital role in shaping India’s defense and aviation landscape.

Key Highlights of Aero India

• Static and aerial displays of military and commercial aircraft
• Exhibitions showcasing cutting-edge defense technology
• Business and investor meets for global aerospace firms
• Seminars & conferences featuring top industry experts
• Startup and innovation pavilions promoting indigenous R&D

Event Highlights

• Dates and Venue:
  • The exhibition spans five days, with the first three days (February 10-12) dedicated to business visitors and the last two days (February 13-14) open to the general public.
• Theme:
  • Continuing with the theme “The Runway to a Billion Opportunities,” Aero India 2025 emphasizes India’s aspirations in the aerospace and defense sectors.
• Participation:
  • The event has attracted over 800 exhibitors from more than 100 countries, showcasing the latest advancements in aerospace and defense technology.

Read more>>

2. India’s Global South Strategy

Context:

India has made itself increasingly an anchor in the Global South, with Prime Minister Narendra Modi focusing the attention of Indian foreign policy toward the amplification of the voice of developing countries. A reflection of that aspiration is a series of endeavors, such as the Voice of Global South Summit 2024, geared toward pushing India to become more proactive in reformation toward the more equitable global governance order.

India’s Strategic Turn Around to China

• The Non Aligned Movement (NAM) is an anti western movement, but India is not. Instead, India seeks to balance its relationships with the Global South and the developed nations.
• India is multi aligned in foreign policy, as seen through its closeness to the U.S. (visit of Jake Sullivan in January 2025) and Europe (Modi visit to Poland in August 2024).

India and China: Competition or Different Strategy?

• FDI in India in Africa
  • India is trying to match China by aiming at countries in which China has already gained immense influence.
• Western powers want India to rise against China
  • For example, the Quad, India, U.S., Japan, and Australia.
• But, of course, India is not just competing with others but carving out its identity as a bridge between the North and South of the world.

Key Strategies for India to Succeed

• Redefining Development Cooperation
  • India seeks equal partnerships but operates on an India first principle in reality.
• The Global Development
  • Compact champions Indian strategies, but India must also learn from other Global South nations.
• India should not become a “big brother” and should instead focus on mutual learning rather than trying to impose solutions.

Human Centric Development

• Mission LiFE (Lifestyle for Environment) focuses on sustainability but should be repackaged as human resource development.
• Skill India & women entrepreneurship programs can be exported to the Global South as countries strive to build indigenous industries.
• In the long term, the capacity building strategy of India (such as ITEC) needs more institutional support than mere short-term training.
• Key points of emphasis digital infrastructure, climate and energy solutions, water and food security.

Strengthening Global Governance & Institutional Capacity

• India is promoting Africa Union incorporation into the G20 in 2023 as a step towards inclusive governance. Indian influence must not only come with the aim of influencing current systems but also from developing its strong global cooperation mechanism.
• Utilizing existing partnerships, such as with the UN, Germany, or France, may enable India to gain experience in leading their own initiatives at the institutional level.

3. The 3rd Voice of Global South Summit (VOGSS)

Context:

India is emerging as one of the global voices for a more representative, inclusive system of global governance. The 3rd Voice of Global South Summit (VOGSS), that took place on 17th August 2024 was thematically tagged under “An Empowered Global South for a Sustainable Future,” while 123 countries participated with only China and Pakistan missing.

What is Voice of Global South Summit (VOGSS)?

• An India led initiative offering a platform for Global South countries to share their views and solutions.
• VOGSS resonates with the Indian philosophy of Vasudhaiva Kutumbakam (“One Earth, One Family, One Future”) and Sabka Saath, Sabka Vikas (Inclusive Growth for All).
• Need for VOGSS
  • Global Challenges (COVID 19, Ukrainian Conflict, food and energy insecurity, debt crisis).
  • Limited South’s representation concerns at international platforms. Inadequate finance to deal with the challenge to development

Key Outcome 3rd VOGSS 2024

• Global Development Compact (GDC)
  • Trade as a tool for development
  • Building capacity for sustainable growth
  • Technology sharing
• Concessional finance & grants Funding & Support Programmes
  • $2.5 million fund for trade promotion.
  • $1 million fund for building capacity in the field of trade policy and negotiation.

Healthcare & Agriculture

• Cheap Generic Medicines to Global South
• Training to drug regulators
• Sharing Technology & Experience IN Natural Farming

What is the Global South?

• Term coined by Carl Oglesby (1969) to describe countries that had been dominated by the Global North.
• Comprises Latin America, Africa, Asia, and Oceania.
• Normally low income and politically disenfranchised.
• India & China are the leading countries of the Global South.
• The Brandt Line segments the wealthy North and the poor South, based on division by GDP per capita.

India’s Expectations as a Voice of Global South

• Geopolitical Rivalry with China
  • China’s BRI only strengthens its presence in the Global South.
  • India must build strategic alliances to counter Chinese influence.
• Food Security Conundrum
  • India’s rice export bans (July 2023) speaks contradiction in a place like it, which claims to work for global food security.
  • Opproprocrium for trying to serve national interest rather than the greater good in the South.
• Pharmaceutical Repute Issues
  • India’s image as the “pharmacy of the world” is under threat due to the supply of spurious medicines.
  • WHO alerts or warnings point to a need for strict quality control.
• In house Development Challenges
  • Poverty, unemployment and poor infrastructure are questions on India’s ability to lead the rest.
  • Health and education in the rural areas require improvement before India can guide the rest of the developing world.

The Way Ahead for India

• Consolidate Strategic Alliances
  • Upgrade cooperation in the areas of technology, health care and education. Form strategic alliances to contain Chinese influence particularly in BRI regions.
• Development of a Balanced Growth Model
  • Position India as the ethically alternative debt driven model from China. Focus on sustainability & inclusiveness in developmental cooperation.
• Reviewing Export Strategies
  • Ensure a better balance between internal food security and international obligations.
  • Invest more in agricultural technology to increase production to meet international obligations.
• Domestic Issues First
  • Infrastructure, health, and education must be strengthened by being role models.
  • A robust domestic foundation will further strengthen the credibility of India as a Global South leader.

Conclusion

India can forge a new and effective governance landscape in the global world, advancing Global South interests, but leadership has to be supported by strategic policies, credibility in global commitments, and strong domestic development. That way, it determines success to lead the Global South effectively, where domestic priorities meet international responsibilities.

4. India Justice Report 2025-26

Context:

The India Justice Report 2025-26 shows a resolute downward trend since 2019 in budgetary allocations to justice related schemes. Moreover, a significant aspect that the report has brought forward is that the actual expenditure incurred in a lot of sub components, especially in police modernisation and forensic capacity building, has been much lower than both the Budget Estimates (BE) and the Revised Estimates (RE).

Key Highlights:

Shrinking State Police Modernisation Budget

• The State Police Forces Modernisation Fund is to modernise police infrastructure and criminal tracking systems.
• Budget trend:
  • FY19: ₹900 crore (BE)
  • FY21: ₹780 crore (BE), reduced to ₹106 crore (RE)
  • FY26: Reduced to ₹587.97 crore (BE)
• Low actual expenditure:
  • FY23: An amount of ₹600 crore was allocated but ₹34.7 crore (6%) only spent.
  • Repeated underutilisation in FY21, FY23, and FY24 where the amount spent stands at just 20 25% of the total amount allocated.

Shifting Funds for Forensic Modernization

• The Modernisation of Forensic Capacities was established to enhance forensic infrastructure and deal with shortages in staff.
• Funding has seen sharp increases and decreases, reflecting inconsistent policy focus.

The Modernisation of Prisons Fund

• The Modernisation of Prisons Fund, introduced over two decades ago, supports prison renovations, new cell construction, and improved prisoner living conditions.
• Budget trends:
  • FY23: Peak allocation of ₹400 crore
  • FY24 & FY25: Reduced to ₹300 crore
• Utilisation trends:
  • Full utilisation till FY23.
  • Post FY23, only 44% of the budgeted fund was used.

Judiciary Related Schemes: Optimal Fund Utilisation

• National Legal Services Authority (NALSA)
  • Budget range: ₹150 crore to ₹200 crore (except FY24, which reached ₹400 crore).
  • 100% budget utilisation from FY19 to FY24.
• Judicial Infrastructure Development Fund
  • BE for FY25: ₹1,123.40 crore
  • BE for FY26: Reduced to ₹998 crore
• Almost full utilisation in the past five years.

5. India’s Renewable Energy

Context:

India will likely fail to meet the February 10 deadline for submitting its third round of climate action plans under the Paris Agreement on account of hurdles in the adoption of renewable energy (RE). A major setback is that 40 GW of RE projects tendered by government agencies remain unsold.

Key Challenges in Renewable Energy Adoption

Lack of Power Sale Agreements (PSAs)

• 40 GW of RE projects handed out by SECI, NTPC, NHPC, and SJVN are still in the unsigned books.
• Neither do the state governments want to buy this power, forcing a bottleneck in the adoption of RE.

Dropping Renewable Energy Prices Threating SEBs

• The cost of solar power per unit is ₹2.50, and this makes it the cheapest source of electricity. This also gives rise to another challenge as SEBs are hesitant to sign long term agreements due to prices which keep falling with every auction.
• A study by TERI and the Climate Policy Initiative predicts that solar power prices could fall to ₹1.9 per unit by 2030, making future contracts cheaper than current ones.

Stalled Investments and Regulatory Setbacks

• SECI’s failure to sign power purchase agreements (PPAs) has led the Central Electricity Regulatory Commission (CERC) to reject tariff approvals for the first ever grid scale battery energy storage systems (BESS) tender.
• BESS technology is essential for storing RE and ensuring a stable power supply, but its development has been hampered.

Coal Continues to Dominate Power Generation

• RE still stands at 46.3% of India’s installed capacity, while coal remains the primary source.
• Without an efficient storage system, the stochastic nature of RE makes coal indispensable for reliability in power supply.

Consequences for India’s Climate Targets

• India plans to raise non fossil fuel based power generation capacity to 500 GW by 2030, which is not feasible due to structural reasons.
• Lack of PSA/PPAs, Stalled investment and dependence on coal would retard India’s trend towards Newly introduced low carbon energy sources.

6. Union Budget 2025-26: Health Sector Allocations and Issues

Context:

Union Budget 2025-26 charts out four major growth drivers agriculture, MSMEs, investment, and exports through reforming taxation, power, urban development, mining, finance, and regulation. The social sector spend, in general, public health, remains grossly disappointing and has dropped to 3.9% of the budget 2025 26 from 5.3% of the budget 2019-20.

Key Highlights:

Budget and Growth Trends

• The budget for the year 2025-26 to the Union, health budget in the ministries like AYUSH, Health and Family Welfare along with Finance reaches ₹1.19 trillion.
• A sectoral spend of 2.4 % of the whole Union Budget while 0.33% against the GDP scale, down in comparison to its 3.59% value in 2021 22 and 0.56%.
• After three consecutive years of decline, health expenditure rises 18% from 2024-25 levels, but largely because of releases of pending 15th Finance Commission grants.
• MoUs:
  • Health expenditure rises 154% compared to the previous year through MoF (Final tranche of Finance Commission Grants).
  • 10% for the Ministry of Health and Family Welfare.  
  • 8% for the Ministry of AYUSH.

Public Health Spending Still Below Targets

• The 11th Five-Year Plan (2012) had set an aspiration to take public health spending up at least to 2% of GDP, and the National Health Policy (2017) had set an aspiration which brought spending up to 2.5% by 2025.
• 2025-26: total government health spending (Centre + States) will be at 0.79% of GDP, way below the goals.

Ayushman Bharat and Universal Health Coverage (UHC)

• PMJAY: the largest health assurance program in the world, with 29% increase in budget, now covers
• ASHA and Anganwadi workers, senior citizens above 70, and gig workers.
• 7% of the overall Union health budget. However, the per capita health budget is ₹844 that is 8% lower in the pandemic and fear of not achieving Universal Health Coverage (UHC) by 2030 hangs in the air.

Structural Challenges in Fund Utilization

• Finance Commission health grants for local bodies need proper coordination to be spent correctly.
• Use of finances for 2021-22 to 2023-24 is at an abysmal 50% levels of allocations, which perhaps seems to reflect a low level of local governance capacity.

Shrinking Fiscal Space for Social Sectors

• Health and social sector expenditure remains on a contractionary trajectory as a share of the budget.
• This would reduce India’s capacity to learn from the pandemic and slow the progress on poverty reduction, inequality and access to basic health care.

7. Household Consumption Expenditure 2023-24

Context:

The new HCES for 2023-24 unveiled that “households in the country spend most on conveyance among nonfood items,” making it a rise in movements with high prices in petrol and deficient public modes of transport.

Key Highlights:

Percentage of the Monthly Per Capita Consumption Expenditure Spent on Transport

• Rural Areas:
  • 7.6% of MPCE on commuting, which is the highest non food expense.
  • This is followed by durables (6.48%), fuel & light (6.11%), and clothing & bedding (5.67%).
• Urban Areas:
  • 8.5% of MPCE on commuting.
  • This is followed by durables (6.8%) and rent (6.6%).

Average Monthly Per Capita Expenditure (MPCE)

• Rural Households:
  • ₹4,122, with 52.96% (₹2,183) of it spent on non food items.
• Urban Households:
  • ₹6,996, with 60.32% (₹4,219) spent on non food items.

State wise Trends in Conveyance Expenditure

• Rural Areas (Highest MPCE on Conveyance):
  • Kerala (11.38%), Goa (11.14%), Tamil Nadu (10.57%), Punjab (9.5%), Maharashtra (9.3%).
• Urban Areas (Highest MPCE on Conveyance):
  • Manipur (10.96%), Tamil Nadu (9.91%), Goa (9.91%), Rajasthan (9.59%), Gujarat (9.43%).

8. Criminalization of Politics

Context:

A report presented to the Supreme Court reveals the surge in criminal cases against Indian parliamentarians. The data, compiled from various high courts, was presented by amicus curiae and senior advocate Vijay Hansaria to a bench of Justices Dipankar Datta and Manmohan.

Key Highlights:

• Total Lok Sabha MPs: 543
• MPs with criminal cases: 251 (46%)
• MPs facing serious charges (punishable by 5+ years imprisonment): 170

State Wise Breakdown of MPs Facing Criminal Charges

• Kerala: 19 out of 20 MPs (95%) (11 face serious charges)
• Telangana: 14 out of 17 MPs (82%)
• Odisha: 16 out of 21 MPs (76%)
• Jharkhand: 10 of 14 MPs (71%)
• Tamil Nadu: 26 of 39 MPs (67%)
• Other major states: Uttar Pradesh, Maharashtra, West Bengal, Bihar, Karnataka and Andhra Pradesh: ~ 50% MPs have pending criminal cases.

States with Relatively Lower Criminal Cases Against MPs

• Haryana & Chhattisgarh: Only 1 MP each
• Punjab: 2 out of 13 MPs
• Assam: 3 of the 14 MP’s
• Delhi: 3 out of the 7 MPs 
• Rajasthan: 4 out of 25 MPs  
• Gujurat: 5 out of the 25 MPs  
• MP: 9 out of the 29 MPs

Pending Criminal Cases against Legislators as on date Total cases pendency in terms of trials to be taken up against the Sitting/ Former lawmakers 4,732. No. of top pendency among states:

• Uttar Pradesh: 1,171 cases
• Odisha: 457 cases
• Bihar: 448 cases
• Maharashtra: 442 cases
• Madhya Pradesh: 326 cases
• Kerala: 315 cases
• Telangana: 313 cases
• Karnataka: 255 cases
• Tamil Nadu: 220 cases
• Jharkhand: 133 cases
• Delhi: 124 cases

Cases Under Section 144 (Prohibitory Orders) Violation

• Total cases: 863
• States with the most such cases:
  • Himachal Pradesh: 307 cases
  • Bihar: 175 cases
  • Telangana: 112 cases
  • Maharashtra: 96 cases
  • Delhi: 4 cases

Challenges & Supreme Court’s Response

• Backlog in trials
  • More than two decades old cases are pending as there is no provision for courts exclusively to handle such matters.
• SC order of 2023
  • It ordered High Courts to constitute monitoring benches for expediting the process. Yet, many states are yet to comply.
• Challenges in trial proceeding
  • Repeated adjournments Absence of the accused Overburdening of courts with judicial work Supreme Court decision: Justice Datta and Manmohan sent the case to the Chief Justice of India (CJI) for a three judge bench to consider it.

The report brings to the fore the profound entrenchment of criminalization in Indian politics, where nearly half the sitting MPs have cases registered against them. Although the Supreme Court has directed for speeding up trials, judicial inefficiencies and a lack of compliance by states ensure that the matter is still in the hands of the CJI for further action as the implications of criminal elements in governance are coming to the fore.

Banking/Finance

1. RBI Instructions on Gold Auctions

Context:

The RBI has framed explicit directives to support transparency, non-discrimination and implementing instructions in an auction of pledged gold held by scheduled commercial banks/Non Banking Financial Companies/ Primary Cooperative Banks. The process of determining the reserve price becomes the most important affair when gold is used as collateral.

Key Highlights:

Reserving Price Establishment

• The minimum reserve price for the pledged gold must be at least 85% of the average closing price of 22 carat gold for the last 30 working days.
• In case the pledged gold is of a lower carat value, its price is proportionately adjusted before auction. This ensures that the price of the pledged gold is neither undervalued nor over-valued.
• Auction Process & Borrower Participation Perceptibility
  • The auction must be carried out by a board-approved auctioneer to ensure transparency and prevent malpractices. Only bidders who comply with Know Your Customer (KYC) regulations are permitted to take part in the auction.
• Borrower’s Right to Participate
  • The first borrower who had promised the gold can attend the auction, thereby giving them a chance to recover their property. Now that is a positive pointer.
• Additional Requirements for Lenders Third Party Participation
  • Lenders need to have standardized third-party agencies in activities such as sourcing, appraisal, and valuation of the pledged gold to minimize fraud or misvaluation.
• Monitoring of Loan to Value Ratio
  • The loan to value ratio must be constantly monitored to avoid excessive lending against gold collateral.   
•  Risk Management
  • The risk weight measures of the borrower should be properly applied to avoid financial instability.   
• Internal Controls & Compliance
  • Such internal controls should be developed, where the lender outsources handling of gold and auction procedures.
• Regulatory Reporting
  • Any corrective action taken by lenders regarding gold auctions must be reported to the RBI’s Senior Supervisory Manager within three months.
• Handling of Auction Proceeds
  • If the auction proceeds exceed the outstanding loan amount, the excess amount must be returned to the borrower.
  • This will ensure that borrowers would not unnecessarily incur financial losses due to undervaluation and unfair auction practices.

2. Non Deliverable Forwards (NDFs)

Context:

“The NDF(non-deliverable forward) was showing opening at 88. Since Ifelt that RBIwill surely intervene, Iasked exporters to cover it at whatever level they got above 87.90. The intervention was very strong as the rupee rose to 87.41 before the fall to 87.60. RBImay have sold $1-2 billion to protect the rupee,” said Anil Kumar, head of treasury at Finrex Treasury Advisors.

Non Deliverable Forwards (NDFs)

Non Deliverable Forwards (NDFs) are financial contracts used for speculating or hedging against currency fluctuations in markets where currencies are not freely traded. They are widely used by companies and investors to manage currency risk in restricted or controlled foreign exchange markets.

How NDFs Work?

• Short term contracts
  • The two parties agree on an exchange rate at some point in the future.
• Cash settlement
  • No physical exchange of currencies. Settled in cash.
• Settlement process
  • The difference between the agreed rate (contract rate) and the actual market rate at maturity is computed.
  • A party that is at a disadvantage pays the difference to the counterparty. .
• Pricing in USD
  • Most NDFs are priced and settled in U.S. dollars. .
• Traded offshore
  • NDFs are commonly traded in offshore financial markets, outside of the jurisdiction of the currency’s home country. .

Why NDFs Are Used?

• Used for hedging against currency risk by businesses that operate in countries with capital controls or restricted foreign exchange markets.
• Used by investors to bet on currency movements without needing access to the actual currencies. 
• Access to restricted markets
• Investors cannot trade in a country’s currency directly because of regulatory restrictions can seek NDFs instead. 

NDF Market & Applications

• Forex
  • Against the volatility in the emerging economies, it has been used in hedging
• Commodities
  • Some of the NDFs are commoditized and link the payments basis on price variation
• Most common currencies on NDF platforms:
  • Chinese Yuan (CNY)
  • Indian Rupee (INR)
  • South Korean Won (KRW)
  • Brazilian Real (BRL)

Economy

1. India-EFTA Trade Deal

Context:

India and EFTA have progressed a step to enhance investments following the launch of a dedicated desk to facilitate European businesses who may want to upscale their India operations. The news comes ahead of the expected commitment of $100 billion in foreign direct investment each side is going to make forth from the signed trade deal.

Essential Facts of the Trade Deal

• Investment Commitment
  • $50 billion to be invested in India over the next 10 years from the day the agreement kicks in
  • Then, another $50 billion over the next five years.
• Job Generation
  • May provide 1 million direct employment opportunities to Indians within the next 15 years.
  • May have a multiplier effect, creating indirect employment for 5 6 million people.

EFTA Members Participating:

• Iceland, Liechtenstein, Norway, Switzerland
• Dedicated Desk
  • Game Changer for European Businesses
• Acts as a central support system for EFTA companies that would like to invest, expand, or establish their business operations in India. Helps smooth out the business development process. Makes it hassle free for the flow of capital and addresses problems of regulations
• Strengthen trade and investment ties between India and EFTA.

Economic Gains Available

• $100 billion FDI will unleash total investments of $400 $500 billion in the Indian ecosystem
• India has promised to provide dedicated industrial enclaves to the EFTA nations in: 20 industrial smart cities under the National Industrial Corridor Development Corporation (NICDC)
• 100 industrial hubs are proposed in the Budget

What’s Next?

• The Trade and Economic Partnership Agreement (TEPA) was signed in March last year
• It will go into effect after 4-6 months of completing four EFTA nations’ Parliamentary approvals.
• The decision is under consideration as to dedicate industrial parks for the companies only from some specific EFTA countries.

2. Disinvestment

Context:

The Union Budget 2025-26 has introduced a subtle yet significant change in the way capital receipts are presented. Instead of specifying disinvestment targets, the budget now bundles them under “miscellaneous capital receipts”, which include privatisation, asset monetisation, and stake sales.

Key Highlights of the Disinvestment Shift

Reduced Transparency in Disinvestment Targets

• 2025-26 budget sets the target for miscellaneous capital receipts at ₹47,000 crore.
• This is in line with last year’s target, despite the government’s inability to achieve its disinvestment targets in the last few years.
• The government has been shy of setting any specific disinvestment targets as it has disappointed every year so far.

Disinvestment Goals Missed for Consecutive Years

• In the FY 2024 25, stake sales such as GIC of India raised less than ₹10,000 crore in proceeds. Therefore, by all means the full year target cannot be met.
• The last major privatisations were undertaken for Air India and Neelachal Ispat in the year 2022. The previous year had a tall disinvestment targets of
• ₹1.05 trillion during 2019 20; ₹2.1 trillion 2020-21.
• ₹1.75 trillion in 2021 22
• However, the targets were never achieved, which is surprising since the public sector valuations have increased over the last few years.

Backtracking on the 2021 Privatization Policy

• In 2021, the government had pledged to restrict state owned enterprises to four strategic sectors.
• Close down or privatise all Public Sector Units (PSUs), not strategic in the government’s opinion.
• Privatization has come to a standstill without any public debate or justification.
• Example: Disinvestment of IDBI Bank is in limbo despite repeated interest from investors.

Moving Head in Contrary Direction: Investment in Sick PSUs rather than Privatising

• Instead of selling Visakhapatnam Steel Plant for instance, the govt has splurged its precious taxpayer’s money into beleaguered PSUs.  Here’s how:
•  It approved the Rs 11,500 cr revival package of RINL Rashtriya Ispat Nigam Ltd operator of Visakhapatnam steel plant who’s liabilities tally over Rs 35,000 crore.

Fiscal Constraints Make Disinvestment More Critical:

• The government is faced with a challenging fiscal scenario in which it is looking to fund capital spending without raising taxes.
• The FY 2025-26 budget managed to lower personal income tax revenues by ₹1 trillion while permitting capital expenditure to rise at a decelerating pace.

Disinvestment

Disinvestment is the selling or liquidation of assets, subsidiaries, and business units by an organization or government. It can also be termed as reducing capital expenditures.

Why is disinvestment done?

• Strategic focus: Companies can concentrate on their core business and improve efficiency
• Free up capital: Companies can raise funds to invest in more profitable ventures or reduce debt
• Environmental reasons: Disinvestment for environmental reasons
• Political reasons: Disinvestment can be done for political reasons

Types of disinvestment

• Minority disinvestment: The government retains a majority stake in the company, usually more than 51%.
• Majority disinvestment: The government sells a majority stake in the company to private investors.
• Complete privatization: The government sells the entire enterprise to private investors.

How is disinvestment done?

• Institutional placement: The government sells its stake to financial institutions
• Exchange traded funds: The government sells its equity participation in several companies through ETFs
• Cross-holding: Listed public sector undertakings (PSUs) acquire the stake owned by the government in other PSUs

Agriculture

1. Fertilizer Subsidy

Context:

The government will for the first time use some of the money in its Oil Industry Development Fund (OIDF) for conducting partial financing of its fertilizer subsidy program for FY 2025-26, official sources said. This is a novel way of using reserve funds that can provide critical sectoral support.

Key Highlights:

Use of Reserve Funds for Fiscal Management

• The Finance Ministry has provided ₹23,000 crore in the FY26 Budget as net additional resources from reserve funds, which include: OIDF (Oil Industry Development Fund) Agriculture Infrastructure and Development Fund Universal Service Obligation Fund.
• This approach aims to maintain fiscal transparency while marginally reducing the fiscal deficit by leveraging available reserves.

Legality & Strategic Utilization of OIDF

• The Oil Industry Development Act allows OIDF funds to be used for fertilizer subsidies, but this has not been previously exercised for such purposes.
• The fund is still fungible, according to an official, but is now being strategically targeted for fertilizer subsidy support.

Fiscal Impact & Policy Justification

• The FY26 Budget stresses reserve utilization as yet another wise fiscal management procedure to create more fiscal transparency at accounting levels, while ensuring an optimal use of funds.
• Oil cess revenues are sent to the OIDF, thus becoming one of the potential sources of funding strategic national initiatives.

2. Market Intervention Scheme (MIS)

Context:

The Market Intervention Scheme (MIS) is one of the flagship components of the PM AASHA scheme. It would assist farmers in the stabilization of market prices of perishable agricultural and horticultural produce such as tomatoes, onions, and potatoes (TOP crops) when the market prices fall by at least 10% from the normal season preceding it.

• Integration with PM AASHA
  • MIS has now become part of the larger PM AASHA scheme, therefore intensifying its reach and impact.
• Price Reduction Threshold
  • The schemes would be implemented only when market prices reduce by at least 10% from the earlier normal year.

• High Procurement Threshold
  • The procurement/coverage limit has increased from 20% to 25% of the total production quantity.
• Option for Direct Benefit Transfer (DBT)
  • In the new format, states now have the liberty to pay to farmers the MIP minus selling price directly to their bank account rather than going in for procurement of the product.
• Reimbursement of Transportation and Storage Expenses
  • In case of differential price between producing and consuming states, the CNA, NAFED and NCCF will pay for the operational costs of transportation and storage.
  • Example: Sanction for 1,000 MT of Kharif tomato transportation from Madhya Pradesh to Delhi under this scheme.
• Enhanced Participation of Procurement Agencies
  • In addition to NAFED and NCCF, other agencies such as Farmer Producer Organizations (FPOs), Farmer Producer Companies (FPCs), and State nominated agencies will participate in procurement, storage, and transportation of TOP crops.

Importance & Effect

• Averts Distress Sales
  • Prevents farmers from selling their perishable produce at distress prices.
• State Incentives
  • New policies facilitate states in adopting and implementing MIS.
• Supply Chain Efficiency
  • Helps reduce post harvest losses and ensure efficient delivery of produce to consumer markets.
• Farmer Income
  • Helps the farmer during low market prices when they cannot be sold at a sustainable level.

The Market Intervention Scheme has been reformed for strengthening mechanisms to protect farmers through price stability, proper procurement policies, and financial support; this will strengthen government intervention in times of crisis, ensuring there is no distress sale and effective compensation for the farmers concerned.

Facts To Remember

1 LCA-Mk2 prototype likely to be rolled out by 2025-end, AMCA by early 2027: officials

The first prototype of the country’s fifth-generation fighter jet, the Advanced Medium Combat Aircraft or AMCA, is expected to be rolled out by the end of 2026 or early 2027, while the first prototype of the Light Combat Aircraft-Mk2, which is a bigger and more capable version of the LCA, is expected by the end of this year, officials of the Aeronautical Development Agency (ADA) said.

2. HAL renames upgraded trainer aircraft ‘Yashas’

The Hindustan Aeronautics Limited’s Hindustan Jet Trainer (HJT)-36 was renamed Yashas on the inaugural day of Aero India. The aircraft was earlier called Sitara. 

3. Stealth aircraft from Russia and U.S. showcase their aerial capabilities

Visitors witnessed a scintillating aerial display by two of the most advanced fifth-generation fighter aircraft in the world on the inaugural day of Aero India.

4. Alcaraz beats de Minaur, claims his first indoor title

Carlos Alcaraz secured his first indoor title by beating Alex de Minaur in the final of the Rotterdam Open in Rotterdam.

5. 90% of FDI Comes Through Automatic Route, Says Minister Jatin Prasada

The country has received 90 percent of foreign direct investment under the automatic route as of now. This was stated by Minister of State for Commerce and Industry Jatin Prasada in a written reply in the Lok Sabha today.

6. Govt Distributes Over 2.35 Crore Property Cards Under SVAMITVA Scheme

The government has said that over two crores thirty-five lakh property cards have been distributed across one lakh fifty-nine thousand villages under the Survey of Villages and Mapping with Improvised Technology in Village Areas (SVAMITVA) scheme so far.

7. Snooker: Pankaj Advani Wins 36th National Title, Secures Spot in Asian & World Championships

India’s most accomplished cueist, Pankaj Advani, has once again demonstrated his acumen by securing his 36th overall national title at the Indian Snooker Championship and 10th men’s snooker crown at the Yashwant Club in Madhya Pradesh. He commanded a 5-1 victory over Brijesh Damani in the final.

8. India launches its first indigenous Automated Bio Medical Waste Treatment Plant

Union Minister Dr. Jitendra Singh launched India’s first indigenous Automated Biomedical Waste Treatment Rig, named Sṛjanam, at AIIMS New Delhi, yesterday.

9. India Energy Week 2025 to begin today in New Delhi

India Energy Week 2025 (IEW’25) is scheduled to commence today at Yashobhoomi in New Delhi. IEW’25 is set to be a landmark event in the global energy calendar, continuing its rapid growth from previous editions.