Current Affairs 14 February, 2025

Daily Current Affairs Quiz
14 February, 2025

International Affairs

1. The Yarlung Zangbo Dam in China

Context:

Construction of a hydroelectric dam on the Yarlung Zangbo River in Tibet by China has once again put India and the rest of the world on guard. This river, which flows as the Brahmaputra in India before finally emptying into Bangladesh, is a lifeline for millions. Different views are in play, with the Chinese considering the establishment of this dam as another step towards carbon neutrality by 2060, versus other countries’ considerations such as water security, regional stability, and environmental ones.

What are Hydroelectric Dams?

A hydroelectric dam is a structure that uses water to generate electricity. The turbines in the dam convert the kinetic energy of water into mechanical energy, which is then converted into electricity by generators. 

About the Dam

The Yarlung Zangbo Dam is a planned hydroelectric dam on the Yarlung Zangbo River in Tibet. It’s intended to be the world’s largest hydropower project, capable of producing three times as much electricity as the Three Gorges Dam. 

Location

• In a huge gorge in the Himalayan reaches where the Brahmaputra makes a huge U-turn.
• Near the Indian border.

India’s Strategic Implications

• Water Security Threats
  • The riparian, lower state, India, in fact, derives about a third of its freshwater from rivers falling from Tibet. Any impairment of the rivers’ flows can easily gather misgivings about agriculture, drinking water, or hydropower generation.
• Lack of Legal Obstacles
  • India and China do not have ratified accession for any of the provisions under the 1997 UN Watercourses Convention in a way that establishes the existence of any binding international codes in respect to water sharing.
• Expired MoUs
  • The data sharing agreements on Brahmaputra and the Sutlej expired between China and India. Such events though create an element of obscurity on future action plans as envisaged by Beijing.

Environmental and Seismic Costs

• Seismic Risk
  • The landscape of one of the most earthquake prone zones in the world raises red flags for the dam. The Tibet earthquake, January 2025, which killed over 120 people, is a most vivid reminder of the risks that are involved in this venture.
• Ecosystem modification
  • Giant dams change and obstruct the sediment transport, disturb aquatic life, increase riverbank erosion, and directly or indirectly affect agriculture and biodiversity in northeast India and Bangladesh.

Big Challenges on Regional Diplomacy

• Fragmented South Asia
  • Although, for instance, countries such as Nepal, Bhutan, and Pakistan also depend on rivers originating from Tibet, they have no coherent regional positioning on these matters that would allow them to stand up to China.
• China’s Diplomacy
  • The passive attitude of Bangladesh prior to construction illustrates all the contrast with India’s aggressive opposition, marking a change of course with regard to Dhaka’s foreign policy since the sheikh Hasina government fell from power in August 2024.

Way Forward

• Strengthening Diplomacy
  • The revival of the Expert Level Mechanism (ELM) should not be limited to convening meetings but also extend to the negotiation for new MoUs on water sharing, thus creating confidence.
• Regional Water Alliance
  • A unified South Asian front would definitely be tough, but it would yield leverage for transparency from Beijing.
• Water Infrastructure Resilience
  • India should build on conservation and storage options so that it can withstand disruption from any upstream activity.

China To Build World’s Largest Dam on the Brahmaputra

2. Trump-Putin Talks

Context:

Former U.S. President Donald Trump has broached further discussions with Russian President Vladimir Putin about ending what they would term the Ukraine war in peace making it yet again the source of hope for peace as well as concern regarding further Russian manipulation.

Key Highlights:

Is Trump talking to Putin?

• Trump ended his 90 minutes of talk with Putin, the two leaders are well aware of the fact that under this sad situation, millions of deaths will have to be stopped.
• Russia has reported that Putin would also be prepared to liaison with U.S. officials for discussions about Ukraine.
• Trump Putin meeting in Saudi Arabia would be an important part of announcing a major shift from the previous U.S. course.

On the opposite of Biden policy

• Trump’s negotiations mark the very first step towards a deviation from the policy adopted by the Biden administration, which basically wanted to isolate Russia diplomatically.
• Otherwise, Biden was just calling Putin a “murderous dictator” and refusing any direct talks with him.
• Trump had earlier promised during his 2024 campaign to end the war within 24 hours of taking office.

Chances and Concerns over Ukraine

• Should that happen, bring Putin to the negotiating table very improbable.
• However, early signals indicate that Ukraine will need to compensate huge amounts:
  • No U.S. troops sent into Ukraine in a future security agreement.
  • No NATO membership for Ukraine.
  • No restoration of pre 2014 borders, SMPR effectively legitimizing Russia’s annexation of Crimea.
  • This might be seen by Ukraine’s President Volodymyr Zelenskyy as a betrayal of commitments made by the U.S. and NATO.

Geopolitical Effects

• For Ukraine
  • Negotiated settlement would be a huge loss to Ukraine, forcing it to accept Russian territorial gains.
• For Europe
  • This is because the burden of addressing Russian aggression would primarily be borne by the EU without full U.S. support.
• For the U.S.
  • The Trump administration has prioritized migration and trade deficits over confrontation with Russia, so the geopolitical realignment is profound.

3. Indian B1/B2 Visa

Context:

Indian applicants renewing their U.S. B1/B2 (business/tourism) visas now face increased wait times after the U.S. government reinstated its pre-COVID renewal policy.

Key Changes & Implications

• Renewal Eligibility Rule Reinstated
  • Previously, visas could be renewed without an interview if they had expired within the last 48 months (temporary COVID-era policy introduced in Nov 2022).
  • Now, this eligibility period has reverted to 12 months, limiting the number of applicants qualifying for interview waivers.
• Impact on Visa Processing Times
  • Though wait times have reduced from the peak of 999+ days, they remain lengthy:
    • New Delhi & Mumbai – Over 440 days
    • Chennai – 436 days
    • Hyderabad – 429 days
    • Kolkata – 415 days

H1B Visa Rules

National Affairs

1. President’s Rule in India

Context:

Four days after Manipur Chief Minister N. Biren Singh resigned, President’s Rule was imposed in the northeastern State that has been affected by ethnic violence for the past two years.

President’s Rule

This article states that President’s Rule can be invoked in any state in India when the constitutional machinery in that state fails. Like the section 93 of Government of India Act 1935, it refers to state emergency or constitutional emergency.

Mechanism of Article 356

• Grounds for Imposition
  • If the President, based on the Governor’s report or otherwise, becomes convinced that state bound by the constitution cannot function.
• Article 365
  • When a State has not complied with a direction of the Union government. If parliament approves within two months, then:
  • Parliament’s Approval
    • Must pass in both Houses of Parliament within a time span of two months.
    • Requires only a simple majority.
  • Duration and Extension
    • Indefinitely for the six months.
    • Beyond this up to three years, but every six months will need revival approval.
  • The 44th Amendment (1978) restricts extension beyond one year unless
    • A national emergency is in force.
    • The Election Commission certifies

Effects of Presidents Rule

• Governor
  • Administers State on behalf of President.
  • Works with the Chief Secretary and other appointed advisors.
• State Legislature
  • Such powers will get transferred to Parliament.
  • State Assembly can be suspended or dissolved.
• Ordinance Power
  • The President can promulgate ordinances for the state when Parliament is not in session.

Reasons for Declaring Presidents Rule

• Political Crisis
  • No elected Chief Minister within the time limit specified.
  • Coalition government breaks down or fails to prove its majority.
  • A government falls due to no confidence motion.
• Other Reasons
  • Delay of elections due to natural disasters or wars, or an epidemic.
  • Non compliance with Union directives (Article 365).

Revocation of President Rule

• May be revoked at any time by a later proclamation made by the President.
• No requirement of parliamentary approval.
• Would follow when a political leader proves majority support and then forms a government.

Political Misuse

• Dismiss such state governments which come under opposition. In Punjab, it was first used during 1951. It was misused to an alarming degree during the reign of Indira Gandhi (39 times from 1966 1977). The guidelines are in the S.R. Bommai case (1994).
• Subject to judicial review, must be justified by the Centre. Courts will restore the government, which is dissolved if it is unconstitutional imposition.
• State Assemblies cannot be dissolved before parliamentary approval.
• Grounds include corruption or financial instability do not apply.
• Intrapolitical differences and resignations of the state ministry do not justify.
• This heavily constricted provision is to be invoked only under acute situations.

Recommendations for Reform

• Sarkaria Commission (1983)
  • Giving a warning to the state government of such proclamation beforehand.
  • Comprehensible reasons should accompany the proclamation.
  • The President will dissolve the state legislature only with parliamentary approval.
• Punchhi Commission
  • A “Localized Emergency” was recommended to be set up to address issues in certain areas without dissolving the entire government.
  • Bommai case guidelines should also be included in the amendments.

Article 356 is a strong provision and quite controversial. It is requisite for constitutional order, but misuse thereof has given rise to judicial and commission reforms against arbitrary usage.

2. Climate Risk Index (CRI)

Context:

India has improved its Climate Risk Index (CRI) ranking significantly, moving from 7th worst affected in 2019 to 49th in 2022. However, in the long-term assessment (1993-2022), it remains 6th most affected globally.

Key Findings from CRI 2025 Report

• Published By
  • the environmental think tank Germanwatch
• India’s Climate Impact
  • 80,000 lives lost and $180 billion in economic damages from 400 extreme weather events between 1993-2022.
  • Devastating floods (1993, 1998, 2013, 2019) and severe heat waves (2002, 2003, 2015) contributed to high fatalities.
  • Major cyclones: 1998 Gujarat, 1999 Odisha, Hudhud (2014), Amphan (2020).
  • Repeated heat waves with temperatures around 50°C caused significant casualties.
• Global Climate Risk Trends
  • 7,65,000 deaths from 9,400 extreme weather events (1993-2022) worldwide.
  • Economic damages: $4.2 trillion (inflation-adjusted).
  • Top causes of fatalities:
    • Storms – 35%
    • Heat waves – 30%
    • Floods – 27%
• Shifts in Global Vulnerability
  • High-income countries were disproportionately affected in 2022, with 7 of the 10 most affected nations belonging to this group.
  • Italy, Spain, and Greece among the worst-hit EU nations in the past three decades.
  • Most affected countries (1993-2022):
    • Dominica
    • China
    • Honduras
    • Myanmar
    • Italy

Banking/Finance

1. RBI-NBFC Meeting

Context:

The heads of select NBFCs have put forward several recommendations to the RBI Governor, and senior officials, to enhance their access to funding due to the decline of bank funding to the sector. Discussions included external commercial borrowings (ECBs), liquidity support, debt market deepening, and regulatory changes.

Key Highlights:

Enhancement of External Commercial Borrowing (ECB) Limits

• Proposal
  • Increase annual ECB limit under the automatic route to $750 million.
• Rationale
  • Enables the NBFCs to mobilize further external funds when domestic sources are limited.

An External Commercial Borrowing (ECB) is a foreign currency loan availed by an Indian company from a non-resident lender. It may be a bank loan, bond, or supplier or buyer credit.

• How does it work?
  • Eligible Indian firms can raise ECBs in rupees or in foreign currency.
  • The company has to adhere to the norms of the Reserve Bank of India (RBI) and the Department of Economic Affairs (DEA).
  • ECBs may be raised by the automatic route or the approval route.
  • Under the automatic route, companies are allowed to raise funds without any advance approval if they are conforming to the government’s standards.
  • Under the approval route, companies have to obtain government approval for certain industries.

National Liquidity Facility for the NBFCs Multipurpose

• Create an entity, just like an NHB, for smaller NBFCs to provide such a facility.
• Why?
  • Because smaller NBFCs carry relatively higher borrowing costs and face challenges of fund availability compared to AAA rated NBFCs.

Reclassification of Gold Loan NBFCs

• Reques
  • Should be reclassified to include gold loan NBFCs for regulatory benefits similar to housing finance and microfinance companies.
• Effect
  • May reduce regulatory risk weights, thereby enhancing funding availability.

Deepening the Domestic Debt Capital Market

• Doubt
  • Lower rated NBFCs cannot raise funds domestically anymore but rely increasingly on overseas bonds for long term funds.
• Proposal
  • Boost domestic bond markets to mitigate over dependence on bank loans and external markets.

Deepening the Domestic Debt Capital Market

• The industry needed a specific refinancing institution. The financial charge is dedicated to the microfinance institutions (MFIs) that are in distress conditions. This definitely would help improve the credit flow towards MFIs ensuring healthy stability in microfinance lending.

Background and Regulatory Context

Dwindling Bank Funding for NBFCs

• In November 2023, the RBI increased risk weights on bank loans to non banking financial companies from 100% to 125%. This rendered the costlier for borrowing now.
• Effects
  • Bank to NBFC exposure reduced from 43.1% as of March 2023 to 42.7% as of March 2024.
  • This moderation in bank lending was viewed as positive for financial stability and has reduced NBFC liquidity.

Unified Lending Interface (ULI) Initiatives by the RBI

• According to Governor Malhotra, NBFCs should join ULI, which is a digital lending framework for financial inclusion.
• The initiative is expected to bolster loan accessibility and transparency in the credit system.

ULI was designed by RBIH and co-designed with the Reserve Bank of India (RBI). ULI is a technological platform designed for easy access to verified data across sources, using standardised APIs to which any lender can attach seamlessly using a ‘plug and play’ strategy.

2. The Income Tax Bill, 2025 introduced in the Lok Sabha

Context:

The Income Tax Bill, 2025 was introduced in the Lok Sabha by Union Finance Minister Nirmala Sitharaman, who sought the passage to the Speaker to constitute a Select Committee to assess the legislation. The bill seeks to simplify tax laws, regarding reduction of sections, removal of redundancy, and consolidation of key provisions. While opposing members raised doubts about the requirement of a new law, the government stood its ground on its necessity.

Key Features:

• Select Committee for Review
  • Speaker Om Birla to constitute a committee to examine the bill.
  • The committee’s report is expected to be submitted by the first day of the next session.
• Simplification of Tax Laws
  • 1,200 provisos and 900 explanations removed that could lead to simplification.
  • Sections and chapters consolidated for overall easier comprehension of the tax code.
  • Salary related provisions were placed together so that taxpayers can file return of income without hassle.
• Introduction of ‘Tax Year’
  • Better clarity for taxpayers and therefore, with this, ‘previous year’ and ‘assessment year’ will be done away with
  • At the same time, it will have India’s tax terminology in sync with global tax practices.
• Digital & Administrative Reforms
  • New rules and forms will be notified after Parliament approval.
  • Simultaneous development of software for administrative and compliance purposes.

Section Wise Mapping of Old and New Laws

• The Income Tax Department will place detailed and microscopic comparisons of provisions in the public domain.
• This is aimed at facilitating a smooth transition for taxpayers to come to terms with the new rubric

Reference to Past Direct Tax Codes

• In drafting the new bill, the Direct Tax Codes from 2009 and 2019 were consulted.
• Some recommendations from the earlier tax reform attempt have been taken on board.

3. RBI Expected to Expand OMO Purchases

Context:

The bond market anticipates an expansion in the Reserve Bank of India’s (RBI) Open Market Operation (OMO) purchases due to persistent liquidity shortages. The liquidity deficit has remained around ₹2 trillion for the past eight weeks, prompting expectations of increased intervention by the central bank.

Key Highlights:

• Liquidity Deficit Situation
  • The financial system has faced a liquidity shortfall since December 16, 2024.
  • On February 7, core liquidity was in deficit by ₹40,000 crore.
  • As of Wednesday, the overall banking system deficit stood at ₹2.07 trillion.
• Expected OMO Expansion
  • The RBI may increase the upcoming OMO auction amount from ₹20,000 crore to ₹40,000 crore.
  • Market participants anticipate further OMO announcements beyond the next auction.
  • The central bank has already conducted three OMO auctions to date.
• Use of OMO Funds and Forex Intervention
  • The RBI has been utilizing liquidity infusion for forex market interventions.
  • It is estimated that the central bank sold $12-14 billion this week to stabilize the rupee.
  • Despite these efforts, the rupee remained mostly stable, closing at 86.92 against the dollar on Thursday, slightly lower than 86.89 on Wednesday.
• Recent OMO Auction Insights
  • The RBI conducted an OMO auction on Thursday, purchasing ₹40,000 crore worth of securities.
  • The auction received bids totaling ₹1.8 trillion (4.5 times the notified amount).
  • State-owned banks were reportedly the largest participants in the auction.

4. SEBI Seeks Greater Powers to Curb Unauthorised Financial Advice on Social Media

Context:

India’s market regulator, SEBI (Securities and Exchange Board of India), has again sought broader powers from the government to remove unauthorised financial advice from platforms like WhatsApp and Telegram and to access call records for investigating market violations. The request, pending since 2022, comes amid increasing concerns over unregulated financial tips and market manipulation circulating on social media.

Key Highlights:

• SEBI’s Request for Expanded Authority
  • SEBI seeks power to take down misleading messages, links, and groups on social media that violate securities regulations.
  • Wants access to calls and message data records of digital platforms, similar to agencies like the Tax Department, DRI, and Enforcement Directorate.
  • The latest formal request was sent on February 3, 2025.
• Challenges in Enforcement
  • WhatsApp (Meta) and Telegram have refused SEBI’s access to group chats, citing IT laws that do not classify SEBI as an “authorised agency.”
  • Social media companies have not fully complied with previous government requests for data access.
• Concerns Over Market Violations
  • Ongoing investigations into cases of front running, insider trading, and market manipulation require SEBI to monitor social media interactions.
  • WhatsApp and Telegram groups have become hotspots for financial influencers offering paid trading tips on specific stocks and securities, raising concerns over unregulated investment advice.

Economy

1. India’s Economic Strategy

Context:

The Economic Survey 2024-25 has been quite frank in recognizing the reality of global drift toward geo economic fragmentation (GEF) and how that overseas has actually brought the curtain down on the globalization boom. With a future of slowing international trade and increasing protectionism, India is moving into a domestic driven growth strategy rather than an export led measure for the development of its economy.

Key Highlights:

Globalization’s Decline and Protectionism’s Rise

• Policymaking across the globe has gone inward to prioritize domestic economies against free trade.
• The level of tariff and non tariff barriers (TBTs) has increased and now affects 67.1% of global trade.
• Some 26.4 % of international shipments are affected by climate related trade restrictions.
• Donald Trump in his possible second term may hyper accelerate trade restrictions.
• According to research, trade fragmentation could reduce GDP globally by up to 7%.

India Moving Towards Domestic Led Growth

• As exports cannot drive 8% GDP growth, India will rely more on its domestic market while boosting import export relations.
• The changing geopolitical alignments will also see reduced FDI inflows for emerging economies.
• Concerns on the current account deficit may see lower imports and enhanced self reliance.

Reducing Dependence on China

• Impending need to diversify supply chain risks and geopolitical tensions.
• Survey 2023 said: Open up Chinese FDI. The last edition survey dropped that.
• Instead, India wants strengthening domestic supply chains at even higher costs.

Industrial Policy & Protectionism Making a Comeback

• There is high tariff making economic strategy, and this is true in India as well as the world.
• Average tariff rate of India increased from 13.4% (2016) to 17% (2023).
• PLI (Production Linked Incentive) scheme (year 2020) promotes domestic manufacturing.
• Compliments of Domestic content requirements: this mandates local sourcing in various projects.
• Policy is not dead, it’s being revived with an eye on the East Asian growth models and history of us economically with Europeans.

Recasting Structural Reforms

• The traditional reforms of privatization, flexibility in labor law, and land acquisition are not much stated in the new Survey.
• Other deregulation is emphasized to cut the bureaucracy and generate investment efficiency.
• On the other hand, regulation itself would not be enough: low uncertainty and policy stability are vital to increase investment benefits.

Uncertain Global Scenario & The Small Need for Increased Public Investment

• Businesses stand “awaiting and watching” due to the uncertainties of the outside world.
• The government may have to exceed the intended 10.1 percent increase in capital expenditure for FY26 to stimulate economic vigor.

India is now fast moving toward becoming self sufficient and domestic led growth. As global trade now shrinks and protectionism rises, the government shall employ high tariffs as well as incentive schemes for domestic production and reduce dependency from China.

Facts To Remember

1. Modi-Trump talks: tariffs, trade set to take centre stage

Prime Minister Narendra Modi arrived in Washington for bilateral talks with U.S. President Donald Trump, presumably with the objective of managing the relationship with the newly re-elected President, whose style revolves around an ‘America First’ ethos and a trademark unpredictability.

2. Withdrawals of Adani Green Energy regarding Sri Lanka’s wind projects

Adani Green Energy has withdrawn its investment in two wind power projects in Sri Lanka due to the tariff renegotiations initiated by the new government. This has been accompanied by the shadow of corruption allegations and political controversies in these projects.

3. India’s Forex Reserves Surge by $7.65 Billion, Cross $638.26 Billion Mark

India’s foreign exchange reserves increased by over 7.65 billion dollars, reaching over 638.26 billion dollars in the week ending February 7, according to the latest data released by the Reserve Bank of India (RBI).

4. PLI Scheme Boosts Domestic Production of Medical Equipment in India

The government has said that several medical equipment are now being produced in India due to the Production Linked Incentive (PLI) scheme.

5. RBI Appoints Administrator for New India Cooperative Bank, Suspends Board for 12 Months

The Reserve Bank of India (RBI) has appointed Mr. Shreekant, former Chief General Manager of State Bank of India (SBI), as Administrator of New India Cooperative Bank Limited, Mumbai.

6. Ayushman Bharat Vay Vandana Scheme Launched in Puducherry for Senior Citizens

The Ayushman Bharat Vay Vandana Scheme was officially launched in Puducherry today. Puducherry Lieutenant Governor K. Kailashnathan formally inaugurated the scheme in the presence of Chief Minister N. Rangasamy and distributed insurance scheme cards to eligible senior citizens. 

7. RBI imposes several restrictions on New India Co-operative Bank

The RBI imposed several restrictions on New India Co-operative Bank yesterday, including on withdrawal of funds by depositors, amid supervisory concerns.