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Current Affairs 7 February, 2025

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Daily Current Affairs Quiz
7 February, 2025


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Table of Contents

International Affairs

1. Trump’s Freeze on Foreign Aid and its Global Impact.

Context:

The Administration of Donald Trump has halted foreign aid. The former president’s act is seen to be another strategy of disengagement in international agreements and obligations by his administration, following resignation from the WHO and the Paris Climate Accord“.

Justifications and Rationalizations

  • Trump claims the inefficiencies and ideological opposition that plague US-AID’s operations.
  • Elon Musk now Secretary of Government Efficiency, called US-AID a “viper’s nest of radical left Marxists.
  • The government believes US-AID misplaces funds and makes bad policy decisions.

US-AID Functions and Budget

  • Founded in 1961, US-AID deals with international humanitarian and development support.
  • In 2024, US-AID was funded at $44.2 billion, which is 0.4% of the U.S. federal budget, but 42% of all humanitarian aid tracked by the UN.
  • Major Program Areas
    • Health and nutrition assistance (including to Gaza). Worldwide, HIV/TB prevention and child health.
  • Contributions to India
    • Contributions to India from US-AID were over $150 million in the last fiscal year and education and immunization.

Effects of the Aid Freeze

  • Interrupts critical international assistance programs, putting millions at risk.
  • Starves food, medical aid, and resources from conflict areas.
  • It weakens U.S. leadership in international development, perpetuating isolationism. It jeopardizes global stability as aid dependent nations flail.

2. Chabahar Port

Context:

A day after U.S. President Donald Trump signed an order that could impose sanctions on India for its investment in Iran’s Chabahar port, the Union government remained silent regarding the order and its implications.

image 41

Why Chabahar Port is Important for India?

  • Located in Iran’s Sistan and Baluchistan Province, Chabahar Port is India’s closest oceanic port in Iran.
  • It has been developing as part of a long term agreement by India for building greater trade and connectivity there. The port is an alternate route that bypasses Pakistan, strengthens the strategic presence of India, and advances its economic and humanitarian outreach.
  • Challenges such as U.S. sanctions, regional instability, and competition with China have prevented its full realization.

Important Takeaways

Introduction of Chabahar Port & Indian Engagement

  • Chabahar is the Iranian nation’s sole oceanic port, situated in the Gulf of Oman.
  • This port comprises two key terminals, which are known as Shahid Kalantari and Shahid Beheshti.
  • India signed an MoU in 2015 to develop it, and a trilateral agreement was inked between Iran and Afghanistan in 2016 to create the Chabahar International Transport and Transit Corridor.
  • A new 10 year contract is agreed, which automatically renews, following resolution of disputes concerning arbitration terms.

Strategic & Economic Significance

  • Increases India’s trade with Afghanistan and other countries in Central Asia without being dependent on Pakistan.
  • Enhances greater accessibility of the International North South Transport Corridor, which will link India, Iran, Russia, Central Asia, and Europe.
  • Economic Advantages
    • Diversifies India’s trade routes, resulting in an enhancement of bonds with Central Asian countries.
    • 30% cargo movement cost reduction and 40% in time through INSTC. The landlocked Central Asian nations are eyeing Chabahar as a passage to the Indian Ocean for Kazakhstan and Uzbekistan.
  • Humanitarian & Diplomatic Significance
    • Important Corridor for Afghanistan aid, such as example for wheat 2.5 million tonnes and pulses 2,000 tonnes.
    • India shipped pesticides to Iran through Chabahar in the 2021 locust invasion.

Geopolitical & Security Benefits

  • Checks China’s Gwadar Port in Pakistan and constrains Beijing’s access to the Indian Ocean.
  • Facilitates Indian surveillance of sea piracy and enhances regional maritime security.

Challenges Obstructing Chabahar’s Potential

  • US Sanctions & Iran Relations: The U.S. has warned India that there is a “possible risk of sanctions” that will be imposed if India continues its engagement with Iran.
  • In 2018, India was granted a waiver, but the consequences of future waivers are uncertain.

Houthi Red Sea Crisis & Regional Instability

  • The Houthi rebels pose a threat to the maritime trade routes, which indirectly taints the profitability of Chabahar.
  • Instability in Afghanistan since the return of the Taliban.
  • Rivalry between Iran and Israel.

Infrastructure Building & Competition

  • It entails a huge amount of investment in roads, ports, and rail connectivities. It will face the new competition of India Middle East Europe Economic Corridor (IMEC).
  • Investment by Chinese in Iranian Ports may dampen the prospects of India at Chabahar.

India Iran Economic Ties

  • Two way Trade (FY 2022-23)
    • Total trade: $2.33 billion (21.76% growth YoY).
    • Exports from India: $1.66 billion (agricultural products, milk, onions, and canned vegetables).
    • Imports into India: $672 million (methanol, bitumen, apples, propane, dates, and almonds).
    • Trade has declined: 23.32% year on year drop from last year.
    • FDI inflow from Iran: Only $1 million (April 2000 Dec 2023).
    • India has suspended importing Iranian oil due to US sanctions.

UPSC Civil Services Examination, Previous Year Question (PYQ)

Prelims

Q. What is the importance of developing Chabahar Port by India? (2017)

(a) India’s trade with African countries will enormously increase.

(b) India’s relations with oil-producing Arab countries will be strengthened.

(c) India will not depend on Pakistan for access to Afghanistan and Central Asia.

(d) Pakistan will facilitate and protect the installation of a gas pipeline between Iraq and India.

Ans: (c)

Mains

Q. In what ways would the ongoing U.S-Iran Nuclear Pact Controversy affect the national interest of India? How should India respond to this situation? (2018)

Q. The question of India’s Energy Security constitutes the most important part of India’s economic progress. Analyse India’s energy policy cooperation with West Asian countries. (2017)


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National Affairs

1. Pinaka Multiple Rocket Launch Systems (MRLS)

Context:

The Defence Ministry on Thursday signed contracts worth ₹10,147 crore for a variety of ammunition for the Army’s Pinaka Multiple Rocket Launch Systems (MRLS). The ammunition also enhances the range of the Pinaka systems.

Pinaka Multi-Barrel Rocket Launcher

Pinaka is a multi-barrelled rocket launcher designed and developed by the Defence Research and Development Organisation (DRDO) for the Indian Army. The rocket has a maximum range of 45 km, and one launcher can fire 12 HE rockets in 44 seconds. Pinaka is mounted on a Tatra truck and was quite effective during the Kargil War in neutralizing Pakistani positions. It has been inducted in large numbers in the Indian Army since then.

2. Ad-Hoc Judges Appointed

Context:

Supreme Court permitted appointment of retired judges on ad hoc basis to the high courts. On the other hand, the ad hoc judges will hear only criminal appeals as part of a Bench lead by a sitting judge. This relaxes a 2021 rule that limited such appointments to High Courts with over 20% judicial vacancies.

How Are Ad-Hoc Judges Appointed?

  • Article 224 (A) (introduced in 1963)
    • Permits temporary appointment of retired judges to High Courts.
    • Requires consent from both the retired judge and the President of India.
    • They draw allowances determined by the President and enjoy the same powers and privileges as sitting judges. Such appointments are made in terms of procedure indicated in the 1998 Memorandum of Procedure (MoP).

When Are Ad-Hoc Judges Appointed?

The 2021 Lok Prahari case indicated some “trigger points” for ad hoc judges:

  • Vacancies in courts amounting to more than 20% of sanctioned strength.
  • Cases pending for more than five years in a particular category.
  • More than 10% of cases in a High Court pending for more than five years.
  • Case clearance rate is below the rate of new filing. The Supreme Court had warned that Article 224-A should not be used as a substitute for regular judicial appointments.

What Does the Current Order Say?

  • Total cases pending are 62 lakhs before the High Courts as of Jan 25, 2025. Those are:
  • 18.2 lakhs are under criminal matters
  • 44 lakhs under civil matters.
  • Ad hoc vacancy limit of 20% withdrawn, so theoretically ad hoc judges can hear a lot of matters. And the ad hoc judges are allowed to hear only the criminal appeals.
  • The sanctioned judicial strength in a High Court can have at most 10% ad hoc judges.

Instances of Ad Hoc Judicial Appointment in the Past

  • Justice Suraj Bhan appointed in 1972 to the Madhya Pradesh High Court to handle election petitions.
  • Justice P. Venugopal appointed to the Madras High Court in 1982.
  • Justice O.P. Srivastava appointed in 2007 to the Allahabad High Court for Ayodhya title suits.

Appointment Of Judges

UPSC Civil Services Examination, Previous Year Question (PYQ) 

Prelims

Q. With reference to the Indian judiciary, consider the following statements: 

  1. Any retired judge of the Supreme Court of India can be called back to sit and act as a Supreme Court judge by the Chief Justice of India with the prior permission of the President of India.
  2. A High Court in India has the power to review its own judgement as the Supreme Court does.

Which of the statements given above is/are correct? 

(a) 1 only  

(b) 2 only 

(c) Both 1 and 2  

(d) Neither I nor 2 

Ans: (c)

Mains

Q. Critically examine the Supreme Court’s judgement on ‘National Judicial Appointments Commission Act, 2014’ with reference to the appointment of judges of higher judiciary in India. (2017)

3. Green Bonds

Context:

The government may move away from green bonds to fall back on conventional government securities and other debt instruments for green financing in the coming years, as these so-called “climate” and “sustainable” bonds have delivered only modest returns, two people aware of the matter told.

Green Bonds

  • Green bonds are bonds issued by governments, companies, or multilateral organizations.
  • They are issued to fund projects that produce positive impacts on the environment and on climate change.
  • Green bonds offer fixed-income payments to the investors.
  • Greenium or Green Premium is the savings that accrue on coupon payments.
  • Public debts for projects that are intended to accelerate a low-carbon economy in India.
  • The framework includes investments in solar and wind energy; biomass; hydro energy; urban mass transportation; green buildings; and pollution prevention and control programs.

Green Bonds and Standard Bonds

  • Introduction
    • Green bonds, introduced in 2007, are debt instruments which aims to finance projects positively impacting the climate and environment.
  • Issuers
    • The issuers can be countries, companies, and multilateral organizations as well.
    • Issuers must provide information about the project and its expected climate and environmental impacts.
  • Benefit
    • Sovereign green bonds can benefit the Indian economy by promoting environment-friendly public sector projects and achieving government targets like 175 gigawatt of renewable energy capacity by 2022 and net zero carbon emissions by 2070.
  • Examples
    • Examples of green projects include renewable energy, clean transportation, and green buildings.


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Agriculture

1. India’s Ethanol Blending

Context:

After having crossed the 20% ethanol blending (E20) milestone recently, the National government is now looking to extend its attempts at further increasing ethanol in petrol. A multi-ministry committee is set to assess its feasibility and submit its report by March 2025.

What is Ethanol blending?

  • It is the process of mixing ethanol with gasoline to reduce the use of fossil fuels.

What is Ethanol?

  • Ethanol is a renewable biofuel that’s a byproduct of processing sugarcane, rice husk, or maize. It’s also known as ethyl alcohol.

What is Ethanol?

India’s Ethanol Program

Current Status of Ethanol Blending

  • Blending capacity (Jan 2024): 17.4%
  • Blending average (Feb 2024): 16%
  • Expected by Oct 2025 (end of Ethanol Supply Year 2024 25): 18%
  • Target for next ESY (2025 26): 20%

Next Five Year Target: 25% Blending?

  • The committee has not agreed upon targets so far, though 25% ethanol blending or E25 would probably be from 2026-27.
  • The technical cooperation is being worked on with Brazil.
  • E100 will not feature as there are infrastructural issues as well as the efficiency to get it up.

Impact & Benefits

  • Foreign Exchange Savings: ₹1.13 lakh crore saved till date by Dec 2023.
  • Crude Oil Replacement: 19.3 million tonnes of crude oil replaced by ethanol. .
  • Production Increase: Ethanol blending by OMCs, from 380 million liters in the year 2013-14 to 7,070 million liters in the year 2023-24.
  • Distillation capacity to be increased up to 17,130 million liters per year in ethanol.

Challenges & Concerns

  • Dependence on Subsidized Rice
    • FCI supplies 2.4 million tonnes of subsidized rice for ethanol.
    • A higher blending percentage to 25% may increase dependence on further government subsidies which is fiscally alarming.

Supply Chain Reforms

  • Infrastructure for FFVs & multi feed distilleries has to expand.
  • Ethanol deficient states need to have dedicated ethanol plants to maintain the balance in supply.

2. Harit Samriddhi Project

Context:

Roots Foundation has collaborated with Coal India Ltd (CIL) for the initiation of the Harit Samriddhi project, so the income of farmers is increased, and also every walk of inclusive rural growth is fostered in Chatra district, Jharkhand. The project, one which comes under CSR initiative of CIL, aims at the modernization of agricultural practices and sustainable income generating activities.

Implementation & Reach

  • It is implemented under Tandwa and Simaria blocks currently.
  • It will train 2,000 farmers, where more than 1,000 have been certified by the Agricultural Skill Council of India.
  • It is being given on modern farming techniques, advanced tools, and crop diversification.

Hands on Training & Knowledge Hubs

  • 60 demonstration farms will be established across 60 villages as knowledge hubs. They will provide training in the farm, input support in terms of seeds and fertilizers, and guidance on the crop cycle.
  • Emphasis on Sustainable Income Chatra is a aspirational district with high reliance on agriculture.

The initiative will increase income for farmers by:

  • Introduction of modern farming practices
  • Good quality inputs provision
  • Diversification into crops

Long Term Plans

  • Harit Samriddhi will equip the farmers with skills, tools, and resources for equipping the farmers for adapting to new agricultural challenges.
  • The program will help in improving and nourishing rural economies and ensuring food security through sustainable efficient farming practices.

3. Rural Agricultural Land

Context:

Tax treatment on sale of agricultural land in India varies between whether it is considered to be a rural or urban agricultural land. In India, the sale of rural agricultural land is tax exempt under capital gains, and sale of urban agricultural land is subject to capital gains tax. It is divided on specific criteria related to population and distance.

What is Rural Agricultural Land?

Land is rural agricultural land if it falls outside municipal or cantonment board limits based on the population criteria of the latest census (2011).

  • The distance from the municipal or cantonment board limits must be:
    • 2 km if the population is between 10,000 and 100,000.
    • 6 km if the population is between 100,000 and 1 million.
    • 8 km if the population exceeds 1 million.
    • Straight line distance is taken for qualification and not the road distance.

Tax Consequences: Agricultural Land Rural vs. Urban

  • Rural agricultural land is exempted from capital gains tax.
  • Urban agricultural land is liable for tax:
    • STC Gains: If sold within 2 years, gains are taxed at the seller’s income tax slab rate.
    • LTCG: Sold after 2 years, then gains would be taxed at 12.5%.
    • Deductible expenses: Brokerage and legal fees can reduce taxable gains.

State Laws & Restrictions on Sale

  • Some states, like Maharashtra and Gujarat, restrict agricultural land sales to non agriculturists without prior approval from local authorities.
  • Ceiling limits exist on how much agricultural land an individual can own.
  • State specific definitions of agricultural land may include cultivation, horticulture, grazing, and dwelling sites for farmers.

Court Criteria for Agricultural Land Classification

  • The determination of whether the land is agricultural or non-agricultural becomes more complex in cases of dispute and cannot depend solely on revenue records of the land.
  • Official classification of land, land revenue assessment status, actual use by the owner for cultivation, intention of ownership to cultivate or for development, and character of other lands in the neighborhood, that is, agricultural, residential, commercial, and industrial.
  • Rural agricultural land is exempt from taxation if sold.
  • Population and distance requirements are highly regulated.
  • For urban land sales, the state imposes capital gains tax, so accurate classification is a priority. Lastly, it’s also based on state law and judicial decisions.


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Banking/Finance

1. RBI’s Monetary Policy Committee Meeting

Context:

The Reserve Bank of India (RBI) has cut the repo rate by 25 basis points to 6.25%. This is for the first time in five years that the repo rate has been cut. The move has been considered to be in the kind of indications this reduction in the personal income tax that the government recently brought out and its implications on consumerism.

Key Highlights:

Repo Rate Cut & Its Implications

  • Rate Cut Details
    • Repo rate cut to 6.25%. (From 6.5%). It was the first reduction since May 2020.
  • Benefits
    • Reducing borrowing costs will help in increasing spending and investing. This encourages credit growth, which in turn can increase the level of economic activity. For the borrower, this means cheaper loans & lower EMIs.
    • It might cut lending rates, which means home and business loans will receive a boost.
  • Monetary Policy Stance
    • The RBI adopted a neutral tone, giving some elbow room in case of change in the current economic trend for the future period.

GDP Growth Forecasts

  • Forecast by RBI
    • FY26- GDP growth – 6.7%
  • Estimate by government’s Economic Survey
    • 6.3 %-6.8%
  • Scenario
    • Growth is decelerating and FY25 was the weakest in four years, at 6.4%.
    • External shocks include global trade tensions and uncertainty over interest rates, which may challenge growth.

Inflation Outlook & Monetary Policy Reaction

  • Retail Inflation (CPI) Estimate
    • 2025-26: 4.2%, against 4.8% in FY25.
  • Quarter on Quarter
    • Q1: 4.5%
    • Q2: 4.0%
    • Q3: 3.8%
    • Q4: 4.2%
  • Inflation Status Till Date
    • On the Dec CPI, 5.22%, which was a four month low.
    • Lower inflation was largely due to food, which decreased in the face of particularly vegetable items.
  • Outlook for MPC
    • Inflation moderating but risks remain from external uncertainties and weather conditions.

Global Economic Uncertainty & RBI’s Forex Intervention

  • Global Risks
  • RBI’s Forex Strategy
    • No fixed exchange rate target, but intervention aims at stability & avoiding excessive volatility.
    • Indian rupee facing depreciation pressure, with the RBI actively managing fluctuations.

Cyber Fraud Measures & Digital Banking Reforms

Greater digitalization has exposed organizations to a great number of risks related to cyber threats.

  • New RBI Measures
    • Online Cross Border Payment online with stronger authentications which also would decrease their reliance on such merchants that happen to be outshores.
    • Introduction of exclusive “.bank.in” and “.fin.in” domains for Indian financial institutions to enhance security.

Regulatory Approach & Economic Stability

  • RBI has pledged
    • Consultative policymaking with feedback from the stakeholders before the regulatory decisions.
    • Gradual Implementation of New Rules to reduce the impact of shock effects.
  • RBI Identified Key Economic Risks
    • Global Market Volatility.
    • Uncertainty in Trade Policies.
    • Climate Related Economic Risks due to climate change factors affecting inflation. 

Conclusion

The repo rate cut is a timely measure to stimulate economic growth, complementing the recent tax relief measures. While inflation is expected to moderate, global uncertainties remain a concern. The RBI’s forex interventions, cyber security enhancements, and consultative regulatory approach aim to strengthen economic stability amidst evolving risks.

2. Indian Banking Sector

Context:

The Indian banking sector, apart from small finance banks, remained muted in terms of profitability in Q3FY25 due to lower core income, declining margins, and increasing slippages.

What Are Core Earnings?

Core earnings are the profits derived from a company’s main or principal business, which does not take into consideration some of the expenses related to the main activities, as well as nonrecurring income or expense items that lie outside of the normal business.

Key Highlights:

  • Growth in Net Profit
    • YoY: 21.2% year over year.
    • Growth for 32 scheduled commercial banks (SCBs).
    • QoQ: A 2.4% quarterly decline sequentially.
    • Without SBI: 12% YoY growth.
  • SBI’s Impact
    • SBI reported a whopping 84.3% YoY increase in net profit to ₹16,891 crore.
    • Without SBI, state owned banks reported 47% YoY net profit growth.
    • Private banks grew by 3.8% YoY.

Revenue & Profitability Trends

  • Net Interest Income (NII) Growth
    • Net Interest Income (NII) is the difference between the revenue generated from a bank’s interest-bearing assets and expenses incurred while paying its interest-bearing liabilities
    • YoY: Up 7.1% as banks paid more to acquire deposits.
    • Other income: Increased 12% YoY but decreased by more than 10% quarter on quarter.
  • Net Interest Margins Under Pressure
    • Net Interest Margins Under Pressure” means that banks are experiencing a decline in their profitability from lending activities, as the difference between the interest they earn on loans and the interest they pay on deposits is shrinking.
    • NIMs for Q3: Declined by 7 basis points YoY to 3.36%.
  • Factors influencing margins
    • Higher cost of funds (increased deposit rates).
    • High credit costs (higher risk weight on unsecured loans).
    • Slow credit growth.
    • Interest rate spread compression.

Effects of Suggested RBI Cut  

It is expected that NIM will compress even in Q4 and beyond, in case RBI lowers the repo rates to enhance economic growth.

  • Reason
    • Banks will have to reprice their external benchmark linked loans instantly.
    • Deposit rates response is slower, and hence short term squeeze is bound to happen.
    • Most vulnerable
      • Private banks, since they have a larger share of EBLR linked loans.
    • Affected sectors
      • Retail and MSME loans margin could get eroded.

Outlook & Challenges

  • NIMs Likely to Decline Further
    • Pressure will persist into FY26 if RBI implements rate cuts.
  • Growth Dependent on Rate Movements
    • Banks will struggle to maintain profitability unless credit growth picks up.
  • SBI’s Strong Performance May Not Reflect Broader Trends
    • Other banks face tougher challenges due to lower NII and higher credit costs.

3. Marginal Cost of Funds-based Lending Rate (MCLR)

Context:

In anticipation of the beginning of a softer rate cycle, several banks are looking to raise the share of their marginal cost-based lending rate (MCLR)-linked loans to prevent their net interest margin from falling sharply, according to industry executives.

Marginal Cost of Funds-based Lending Rate (MCLR)

The Marginal Cost of Funds-based Lending Rate (MCLR) is the minimum interest rate that a bank can charge for a loan. It’s based on the cost of borrowing funds, the bank’s operating costs, and other factors. The Reserve Bank of India (RBI) implemented MCLR on April 1, 2016. 

How MCLR works?

  • MCLR is a tenor-linked rate, meaning it varies based on the length of the loan. 
  • Banks use MCLR to determine the interest rate for loans. 
  • MCLR is the minimum interest rate that banks can charge, except in certain cases. 
  • MCLR is fixed for borrowers unless the RBI revises it. 

Factors that affect MCLR

  • Marginal cost of funds: The cost of borrowing funds, such as from savings deposits, term deposits, or other banks 
  • Operating costs: The cost of generating cash, including service charges 
  • Statutory liquidity ratio (SLR): The reserve that banks are required to keep 

Benefits of MCLR 

  • MCLR ensures that banks charge interest rates that are true to the consumers.
  • MCLR improves the openness of the structure used by banks to calculate interest rates.


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Economy

1. Union Budget 2025-26: Key Takeaways & Implications

Context:

The personal income tax relief is the most important feature of the Union Budget for 2025-26, which can boost private consumption while keeping a check on fiscal discipline. Another important feature is the shift in using the debt to GDP ratio as a fiscal anchor, that is, the long term stability measure.

Fiscal Deficit & Debt to GDP Ratio

  • Gross Fiscal Deficit (GFD) Target
    • It has been 4.4% for FY26, better than the target of 4.5% from 2021.
  • Fiscal Anchor Switched to Debt to GDP Ratio
    • The government wants to bring the debt to GDP ratio to 50% by March 2031.
    • This shift is positive for fiscal stability because liabilities are being better managed.
  • Risks
    • The balance of the current account is also more relevant in terms of interest payment fluctuations while excluding the entire fiscal balance.
    • Any large increase in the interest rate is likely to destroy the debt to GDP projections hence challenging the practice of fiscal discipline.

Personal Income Tax Relief & Private Consumption

  • Significant relief in the personal income tax will boost private spending.
  • This is a very important move in a backdrop of global uncertainties and a stagnant private capex cycle.
  • The developments have been offset by no growth in government capital expenditure. It remains almost invariant vis à vis last year’s Budget Estimates (BE).

Corporate Tax Collections & Private Sector Investment

  • Corporate tax revenue declining
    • Share in total revenue receipts declined from 42.7% in FY19 to 31.6% in FY26 (BE).
    • The corporate tax cuts of 2019 have not yet improved revenue collection.
  • Private sector’s role in investment
    • Government has led public sector capex in recent years, but private corporate investment remains weak.
    • If private companies do not step up capex, it could lead to macroeconomic challenges.

Self Reliance in Pulses: Aatmanirbharta Mission

  • Six year mission for self reliance in pulses, focusing on tur, urad, and masoor.
  • Pulses are highly volatile in price, contributing to food inflation.
  • Since the greatest consumer of pulses lies in India and as such the imports are severely curbed, thus obtaining food self sufficiency will require that all sectors come closer towards a desired extent of accomplishment towards that direction and become all important.

Central vs State Fiscal Relations & Tied Transfers

  • Centrally Sponsored Schemes (CSSs)
    • Their allocation would rise by an unprecedented 30.5% in FY26 but at merely 7.6% BE to BE basis.
    • CSSs do not allow states to spend resources at their discretion.
  • Tied vs Untied Transfers
    • The ratio of tied transfers (Article 282) to untied transfers (Article 270/275) will rise to 34.8% in FY26, ending the downward trend witnessed over the past few years.
  • Issue
    • This undermines state level fiscal independence, as CSSs constrain state spending flexibility.


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Facts To Remember

1. Israel has no plans to exit other UN bodies after rights council boycott

Israel on Thursday said that it was not planning to withdraw from other United Nations bodies besides the Human Rights Council, which it is boycotting over perceived bias and “anti-Semitism”.

2. Trisha and Varun in the fray for ICC Monthly award

India spinner Varun Chakaravarthy was on Thursday nominated for the ICC Men’s Player of January following a stellar outing against England in the recent five-match T20I series.

3. Bank of England Cuts Rates, Sees Weaker Growth & Inflation Spike

The Bank of England cut interest rates by a quarter-point and some policymakers wanted a bigger move to offset a slowdown, but the BoE said it would be careful about further moves in the face of an expected inflation spike and global economic uncertainty.

4. India Achieves Historic Milestone of 100 GW Solar Power Capacity

India has achieved a historic milestone by surpassing 100 GW of installed solar power capacity, reinforcing its position as a global leader in renewable energy. The Ministry of New and Renewable Energy said in a statement that this achievement is a testament to the nation’s commitment to a cleaner, greener future.

5. Over 18 Lakh Calls Handled by Tele MANAS; 73 Crore ABHA IDs Created: Govt

The government today said more than 18 lakh calls have been handled by 53 Tele MANAS Cells set up across 36 states and union territories so far. In a written reply in the Lok Sabha today, Minister of State for Health and Family Welfare Prataprao Jadhav informed that Tele-MANAS services are available in 20 languages. 

6. India’s Maternal Mortality Ratio Drops 83% in 30 Years, Surpassing Global Decline: Govt

The government today said the Maternal Mortality Ratio in the country has declined by an impressive 83 percent, compared to the global reduction of 42 percent during the past 30 years. 

7. Over 4,300 FPOs registered on e-NAM: Agriculture Minister

Agriculture Minister Shivraj Singh Chouhan today said over 4300 Farm Producers’ Organisations have registered with the e-NAM portal till the end of last year and over 4 crore 80 lakh farmers of these FPOs have received payments to the tune of 249 crore rupees. 

8. India’s fertilizer producing capacity stands at 315 lakh metric tons: Union Minister J P Nadda

The government today said that at present the fertilizer-producing capacity of the country stands at 315 lakh metric tons. While replying to the supplimentaries during Question Hour in Lok sabha, Chemical and Fertilizer Minister, J P Nadda said that India produced 225 lakh metric tons of fertilizers in 2014, which has now increased significantly. 

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