Daily Current Affairs (DCA) 2 April, 2025

Daily Current Affairs Quiz
2 April, 2025

International Affairs

1. U.S. Push for Greenland

Context:

The Prime Minister of Greenland pushed back against assertions by U.S. President Donald Trump that America will take control of the island territory. Greenland, a huge, resource-rich island in the Atlantic, is a self-governing territory of Denmark, a NATO ally of the United States. Mr. Trump wants to annex the territory, claiming it’s needed for national security purposes.

A History of U.S. Interest in Greenland

• 1867: First U.S. attempt to buy Greenland after acquiring Alaska.
• WWII: U.S. built military bases when Denmark fell to Nazi Germany.
• 1946: Washington offered $100 million, Denmark refused.
• 2019 (Trump’s First Term): Another failed purchase attempt.
• 2025 (Trump’s Second Term): More aggressive push, despite past rejections.

Greenland’s Political Landscape Today

• Status: Autonomous, but defense and foreign affairs under Danish control.
• Nationalist Wave:
  • 80% of Greenlanders support full independence.
  • 85% reject U.S. control over their territory.

Strategic Importance of Greenland

• Arctic Access: Climate change is melting ice, opening new routes.
• Resource Rush: Potential untapped reserves of oil, gas, and minerals.
• Geopolitical Chessboard:
  • Russia has a strong military presence in the Arctic.
  • U.S. aims to counter Moscow and expand Arctic claims.
  • Other Arctic players: Canada, Norway, Denmark (via Greenland).

Expansionism vs. Sovereignty

• Historical Echoes: Attempting to seize land for strategic/economic gain mirrors past empires.
• Legal & Ethical Concerns: Violates principles of national sovereignty.
• International Fallout:
  • Risk of diplomatic conflict with Denmark.
  • Could destabilize the Arctic region and increase militarization.
  • Undermines U.S. credibility on respecting democratic self-determination.

What’s Next?

• Will Denmark and Greenland strengthen ties to resist U.S. pressure?
• Could Greenland’s independence movement accelerate as a countermeasure?
• How will Russia and other Arctic nations respond to U.S. ambitions?

2. India-China Relations

Context:

The 75th anniversary of India-China diplomatic relations was commemorated with messages from leaders of both nations, underlining the need for cooperation, stability, and strategic engagement.

Key Messages from Leaders

Chinese President Xi Jinping

• Advocated for a “cooperative pas de deux of the dragon and the elephant” to advance mutual interests.
• Urged both countries to adopt a strategic and long-term perspective in handling bilateral relations.
• Highlighted India and China as ancient civilizations, major developing nations, and key players in the Global South.
• Expressed readiness to work with President Droupadi Murmu to deepen mutual trust, coordinate on international affairs, and maintain border peace.

Indian President Droupadi Murmu

• Stressed the importance of “stable, predictable, and amicable” ties for the benefit of both nations and the world.

Rebuilding India-China Relations

Strategic and Diplomatic Cooperation

• Both nations acknowledge the importance of engagement at a high level.
• The commitment to deepen trust and coordination on global issues signals an attempt to stabilize ties despite past tensions.

Border Peace and Stability

• President Xi’s mention of safeguarding peace and tranquillity in border regions reflects the ongoing priority of both sides to prevent escalations along the Line of Actual Control (LAC).

Economic and Developmental Parallels

• Xi’s reference to both countries being at a critical stage of modernization hints at potential areas of collaboration, such as technology, trade, and sustainable development.

Challenges

• Lingering border tensions and unresolved diplomatic frictions remain a barrier.
• Economic and trade disparities, along with concerns over market access and security issues, need careful negotiation.

Opportunities

• Strengthening bilateral trade and investment.
• Expanding people-to-people exchanges to foster better understanding.
• Collaborating on global challenges such as climate change, health security, and multilateral diplomacy.

As India and China mark 75 years of diplomatic relations, their future ties hinge on trust-building, conflict resolution, and economic collaboration. While challenges persist, the commitment to dialogue and strategic engagement offers a path toward a more constructive and stable relationship.

TH

3. India-Chile Relations

Context:

As India and Chile agreed to start negotiations for a comprehensive economic partnership agreement after a bilateral meeting with the visiting President of Chile Gabriel Boric Font, Prime Minister Narendra Modi described Chile as the “gateway to Antarctica”.

Key Developments

• India & Chile to negotiate a Comprehensive Economic Partnership Agreement (CEPA).
• Enhanced cooperation in defence, security, critical minerals, and agriculture.
• Four bilateral agreements signed, including Antarctic cooperation.
• Chile reaffirms support for India’s bid for a permanent UN Security Council seat.
• Joint commitment to combating terrorism through FATF & NMFT.

Economic & Trade Cooperation

• Expansion of trade & investment opportunities between India and Chile.
• Strengthening critical mineral partnerships to build resilient supply chains.
• Enhanced collaboration in agriculture to boost food security.

Defence & Security Collaboration

• Joint efforts to develop defence industrial manufacturing & supply chains.
• Stronger cooperation on organized crime, drug trafficking, and terrorism.
• Commitment to UNSC reforms for global peace & stability.

Global & Strategic Impact

• India positions Chile as its gateway to Antarctica, expanding scientific research & cooperation.
• Strengthened ties bolster India’s presence in Latin America.
• Mutual support in multilateral platforms like FATF to combat global terrorism.

The agreement marks a new era of economic and strategic partnership, reinforcing India’s global outreach and Chile’s role as a key Latin American ally.

The Indian Express

National Affairs

1. India’s Education System

Breaking Free from a Stagnant Past

• Before 2014: India’s education system remained unchanged since 1986 (with minor amendments in 1992).
• Challenges:
  • Rampant corruption and governance deficit.
  • Funding cuts to public universities.
  • Unregulated private institutions turning into degree mills.
  • Political interference in university leadership.
  • Skewed historical narratives in textbooks.

The NEP 2020

• Most extensive democratic consultation in policy-making history.
• Built on five pillars: Access, Equity, Quality, Affordability, and Accountability.
• Aim: Break free from centralised, rigid, and elitist structures.

Key Achievements

Women’s Leadership in Education

• PhD enrolment among women: +135%.
• Women in STEMM fields: 43% (shattering gender barriers).
• Female teachers: 44.23% (up from 38.6% in 2014).

Increased Investment in Education

• Per-child government expenditure: +130% (₹10,780 in 2013-14 → ₹25,043 in 2021-22).
• Government schools upgraded with modern infrastructure & pedagogy.
• Drop-out rates reduced, learning outcomes improved.

Innovation & Future-Ready Education

• Coding introduced from middle school.
• Multidisciplinary learning & problem-solving approach.
• 10,000+ Atal Tinkering Labs (ATL) in rural areas → fostering grassroots innovation.
• Plans for 50,000 ATLs with broadband connectivity in the next 5 years.

Higher Education & Research Boom

• India now has 11 universities in QS World Rankings top 500.
• Research publications: +88% since 2015.
• India’s ranking in Global Innovation Index: Improved from 76 (2014) to 39 (2023).
• Anusandhan-National Research Foundation: Boosting research-industry collaboration.

Indian Languages & Knowledge Systems Revitalized

• End of ‘English-first’ dominance in education.
• 8,000+ institutions adopting Indian Knowledge Systems (IKS) curricula.
• 15,000 textbooks in 22 Indian languages under Bharatiya Bhasha Pustak Yojana.

Social Justice Reforms in Education

• Central Educational Institutions (Reservation in Teachers’ Cadre) Act, 2019 ensures proper representation.
• End of discriminatory hiring practices that blocked SC/ST/OBC candidates in universities.

Intellectual Decolonization & A Viksit Bharat

• A complete break from colonial-era education models.
• Integration of India’s civilizational ethos with modern innovations.
• Vision: Position India as a global knowledge superpower.

This is not just education reform; it is India’s intellectual renaissance, paving the way for a developed and self-reliant nation.

TH

2. WEF’s Global Risks Report 2025

Context:

The World Economic Forum’s (WEF) Global Risks Report 2025 underscores misinformation and disinformation as the highest ranked short-term global threat. The WEF defines “global risk” as an event that can adversely affect a sizeable portion of the population, the global GDP, and natural resources. 

The Rising Challenge of Misinformation

• WEF’s Global Risks Report 2025 ranks misinformation and disinformation as the top short-term global threat.
• Key drivers of the crisis:
  • AI-generated content & deepfakes.
  • Algorithmic biases & polarisation.
  • Declining trust in mainstream media.
  • Exploitation of social media platforms by political and non-state actors.

India’s Growing Vulnerability

• India, with nearly 900 million Internet users, is highly susceptible to disinformation.
• Political & economic impact:
  • Manipulated narratives affecting elections & democracy.
  • Disinformation leading to economic conflicts & consumer boycotts.
  • Foreign interference, including Chinese disinformation campaigns since 2017.
• Key findings:
  • 46% of disinformation in India is political, followed by 33.6% on general issues & 16.8% on religion.
  • China-based platforms like Weibo continue to push distorted narratives.
  • Meta’s potential rollback of fact-checking could worsen misinformation spread.

Global & National Policy Responses

• EU’s Digital Services Act (DSA): Sets a benchmark in tackling disinformation & foreign interference.
• India’s efforts so far:
  • Ban on 300+ Chinese apps (including TikTok) to curb foreign influence.
  • Initiatives like Shakti – India Election Fact-Checking Collective & Deepfake Analysis Unit during elections.

Recommended Strategies for India

Regulatory & Policy Measures

• Adopt an India-specific Digital Services Act, enforcing:
  • Regular risk assessments for major social media platforms.
  • Transparency in online ads (disclosing funding sources & target audience).
  • Stronger legal safeguards for journalists & fact-checkers.
  • Non-discrimination rules in content moderation policies.

Technological & Institutional Interventions

• Upskilling AI developers to improve algorithmic transparency & bias detection.
• AI supervisory boards & councils to oversee Generative AI practices.
• Increased investment in cybersecurity research to counteract misinformation threats.

Public Awareness & Fact-Checking

• Expand media literacy programs similar to RBI’s Financial Literacy Campaign with Amitabh Bachchan.
• Collaboration between civil society groups, regulators, and fact-checkers.
• Encourage independent research on disinformation and Foreign Information Manipulation & Interference (FIMI).

Balancing Regulation with Democratic Safeguards

• Avoid overreach & surveillance risks, ensuring free speech is not compromised.
• Promote global cooperation, as disinformation is a transnational challenge.
• Build India’s digital resilience while setting an example for the world’s largest democracy.

Beyond Combating Falsehoods

Disinformation isn’t just a technological issue; it is a test of democratic values, social cohesion, and national security. India must lead the way in building a fact-driven, resilient digital society, where unity in diversity remains unshaken amidst a polarized global information landscape.

TH

3. Aircraft Objects Bill, 2025

Context:

The Rajya Sabha has approved the Protection of Interests in Aircraft Objects Bill, 2025, aligning India’s legal framework with the Cape Town Convention and Protocol. This legislation aims to streamline aircraft leasing regulations, protect the rights of lessors, and reduce disputes arising from unpaid dues by airlines.

Key Provisions of the Bill

• Legal Clarity for Lessors: Establishes clear guidelines for aircraft repossession and dispute resolution in case of payment defaults.
• DGCA’s Authority: Recognizes the Directorate General of Civil Aviation (DGCA) as the key regulator for implementing the treaty’s provisions.
• Enhanced Creditor Rights: Ensures standardized enforcement mechanisms for creditors under the Cape Town Convention.

Expected Benefits

For the Aviation Industry

• Lower Leasing Costs: Expected to reduce leasing expenses by 8-10%, benefiting airlines financially.
• Stronger Leasing Industry: Encourages investment in India’s aviation sector, making it more attractive for international lessors.

For Airlines

• Improved Access to Leased Aircraft: Easier lease agreements boost fleet expansion without large capital investments.
• Increased Liquidity: Airlines can allocate resources efficiently rather than making outright purchases.

For Passengers

• Potential Reduction in Airfares: Cost savings from lower leasing expenses may translate into cheaper ticket prices.

Background and Need for the Bill

• Past Leasing Disputes: Issues with SpiceJet and Go First highlighted legal uncertainties in aircraft repossession.
• 86% of Indian Airlines’ Fleets Are Leased: India’s aviation sector heavily relies on leased aircraft, making regulatory clarity essential.
• Global Compliance: Aligning with international leasing norms enhances India’s credibility in global aviation finance.

The Protection of Interests in Aircraft Objects Bill, 2025 is a critical step in strengthening India’s aviation sector. By ensuring legal certainty for lessors, reducing leasing costs, and encouraging investment, the bill is expected to make aircraft leasing more viable while potentially lowering airfares for consumers.

4. Employment-Linked Schemes to Prevent Fund Misuse

Context:

The government is revising its proposed employment-linked incentive schemes to prevent misuse and fund diversion, ensuring that only genuine employees and employers benefit, sources said.

Key Developments

• The Cabinet has returned the Labour Ministry’s proposal, seeking refinements in the scheme design.
• The Ministry of Labour and Employment is restructuring the scheme to ensure real employment generation.
• Concerns arise from past misuse under the Atmanirbhar Bharat Rojgar Yojana (ABRY), where fake firms were created to access incentives.

Proposed Safeguards

• Aadhaar Linking: While Aadhaar-based verification is included, the government is unsure if this alone can prevent fraud.
• Mandatory Audits: Exploring periodic audits for all beneficiary companies to enhance transparency.
• EPFO Strengthening: Plans are underway to boost EPFO’s capacity to manage additional payrolls under the schemes.

Details of the Employment-Linked Incentive Schemes

• Budget Allocation: ₹1.07 lakh crore earmarked for the schemes over five years.
• Job Creation Target: 29 million jobs expected under the schemes.
• Scheme A:
  • Government to reimburse one month’s wage (up to ₹15,000) in three instalments as a subsidy for new workforce entrants.
• Scheme B (Manufacturing Sector Focus):
  • Wage reimbursement structure:
    • 24% in Year 1
    • 24% in Year 2
    • 16% in Year 3
    • 8% in Year 4
  • Employers must hire 50% or 25% of their baseline employee strength under EPFO and retain them for at least 12 months to qualify.

Future Outlook

• The government aims to finalize the revised structure soon to ensure effective implementation.
• Additional monitoring mechanisms may be introduced to prevent fraud and enhance accountability.

The revised framework seeks to strike a balance between employment promotion and financial prudence, ensuring that incentives reach genuine beneficiaries without fund leakages.

TET

Science & Tech

1. Breakthrough in Butterfly Migration Research

Context:

A recent study published in PNAS Nexus has revealed surprising insights into the migration of painted lady butterflies (Vanessa cardui). Unlike birds, whose migratory patterns are often influenced by genetics, these butterflies appear to migrate based on environmental conditions rather than genetic differences.

Key Findings

• No Genetic Differences in Migration: Short- and long-distance migratory butterflies belong to a single, interbreeding genetic population.
• Multi-Generational Migration: Painted ladies complete their 15,000 km journey over 8-10 generations, unlike birds that return to the same breeding grounds.
• Isotope Analysis of Wings: Researchers used stable isotopes of hydrogen and strontium in butterfly wings to track their places of origin.
• Wing Size & Shape Irrelevant: Migration distance is not influenced by wing morphology, challenging prior assumptions.
• Unexpected Wing-Wear Observations: Some butterflies that traveled 4,000 km showed minimal wing-wear, contradicting beliefs that worn wings indicate long flights.

Migration Patterns

• Spring Migration: Butterflies move north from the Sahara Desert across the Mediterranean into southern Europe, where they breed.
• Autumn Migration: Offspring return south, crossing Spain and Italy back to North Africa.
• Strong Fliers: Painted ladies have high-speed flight capabilities and powerful thoracic muscles adapted for long distances.

Research Methods

• Data Collection: The study involved tracking butterflies across Benin, Senegal, Morocco, Spain, Portugal, and Malta over several years.
• Genetic & Isotopic Analysis: Researchers compared genetic data and isotopic markers to trace migration origins and distances.
• Use of Isoscapes: European and North African isotope distribution maps helped estimate butterfly travel distances.

Implications & Future Research

• Climate Change Impact: Understanding how environmental factors drive migration can help predict changes in insect behavior.
• Comparing Insect & Bird Migration: Future research will explore how insect migration differs genetically from birds.
• Global Migration Patterns: Researchers plan to study butterflies from distant regions like the U.K. and Japan to see if they show genetic distinctions.

This study reshapes our understanding of insect migration, highlighting environmental influences over genetics in the migration of painted lady butterflies. As research expands, scientists aim to uncover how climate change could alter these migration patterns and what this means for the broader ecosystem.

TH

Economy

1. USTR Report

Context:

Indian equity markets saw their steepest single-day drop in a month on April 1, as investors reacted to foreign institutional outflows and US-India trade concerns ahead of President Donald Trump’s “Liberation Day” reciprocal tariff announcement.

Foreign Portfolio Investors (FPIs) sold ₹5,902 crore worth of equities, the highest single-day outflow since February 28.

US-India Trade Disputes & Tariff Concerns

Ahead of reciprocal tariffs on April 2, the US raised concerns over India’s:

• High import duties on key goods like automobiles, agricultural products, medicines, and alcohol
• Unpredictable tariff changes and regulatory hurdles that restrict US exports
• Import monitoring system for laptops and dairy products, impacting US market access
• Data privacy regulations that could increase compliance burdens for US companies
• Insurance sector concerns, despite FDI cap being raised to 100%

Key Stats from the USTR Report

• India’s average import tariff (2023): 17% (highest among major world economies)
• Non-agricultural goods: 13.5% average import tariff
• Agricultural goods: 39% average import tariff
• Specific high tariffs:
  • Vegetable oils: 45%
  • Apples, corn, motorcycles: 50%
  • Automobiles, flowers: 60%
  • Natural rubber: 70%
  • Coffee, raisins, walnuts: 100%
  • Alcoholic beverages: 150%

Despite India’s recent tariff reductions (average now 10.66%, per CBIC), the US continues to flag concerns.

Impact on Foreign Investment & Business Confidence

• Investor Caution: Rising uncertainty over US-India trade ties has made investors risk-averse, leading to heavy foreign outflows.
• Education Loan Policy Review: Indian banks are reevaluating study loans for US-bound students due to the Trump administration’s tightened migration policies and uncertainty over educational support.
• Corporate Strategy Adjustments: Companies in auto, tech, and pharmaceuticals are closely watching policy shifts to reassess investment strategies.

Outlook & Future Concerns

• Stock Market Volatility: Further fluctuations likely as global investors react to tariff announcements and trade negotiations.
• Trade Negotiations: India may consider reducing tariffs in key sectors to avoid a full-blown trade war.
• Foreign Investment Impact: Prolonged uncertainty could affect FDI inflows and business expansion plans in India.
• Rupee & Inflation Risks: Potential currency depreciation and higher import costs could emerge if tensions escalate.

The US-India trade tensions have rattled investor sentiment, leading to a sharp market correction and concerns over economic policy shifts. As the world watches Trump’s reciprocal tariff rollout, Indian policymakers may face pressure to adjust trade policies to maintain global investor confidence.

BS

2. US Trade Representative (USTR) Report

Context:

The Office of the US Trade Representative (USTR) has highlighted several concerns regarding India’s financial regulations, FDI policies in insurance, and restrictions in banking and digital payments.

Insurance Sector Reforms

• FDI Cap Raised to 100%: India announced an increase in foreign direct investment (FDI) in insurance from 74% to 100% in the FY25 Budget.
• Uncertainty Over Domestic Safeguards:
  • Board Composition Requirement: Majority of board members must be resident Indians.
  • Higher Solvency for Foreign Insurers: Stricter capital requirements for foreign insurance firms.
• Uneven Playing Field:
  • State-owned insurers (e.g., LIC) enjoy government-backed guarantees, leading to an unfair competitive advantage over private insurers.

Reinsurance Market

• Mandatory First Right of Refusal:
  • Indian reinsurers have a priority claim over reinsurance business, limiting opportunities for foreign firms.
  • The only domestic reinsurer, GIC Re, enjoys preferential treatment.
• Risk Consolidation Concern: The lack of global risk diversification goes against international best practices.

Banking Sector Restrictions

• Foreign Bank Expansion Limited:
  • Foreign banks must submit annual branch expansion plans, and approvals are non-transparent.
• State-Run Banks Dominate:
  • 60% market share held by government-run banks.
  • Foreign banks constitute less than 0.6% of total bank branches.

Digital Payment Regulations

• UPI Market Share Cap:
  • India imposed a 30% market share cap on Unified Payments Interface (UPI) players, limiting dominance by foreign digital payment firms.
  • Compliance Deadline Extended to 2026 for foreign firms, but enforcement remains uncertain.
• National Common Mobility Card (NCMC) Issue:
  • India’s push for a proprietary QR code standard favors domestic payment systems, disadvantaging foreign digital payment firms.

Key Takeaways & Outlook

• India’s Insurance & Banking Sectors Still Favor Domestic Firms:
  • Despite the 100% FDI cap in insurance, regulatory hurdles may limit foreign investments.
• Foreign Reinsurers & Banks Face Systemic Barriers:
  • Restricted branch expansion for foreign banks and first right of refusal in reinsurance create an uneven business environment.
• Digital Payments Restrictions Could Deter Global Players:
  • The 30% cap on UPI market share and proprietary QR code policies could reduce participation from international firms.

The USTR report highlights significant structural and regulatory challenges that could slow down foreign investments in India’s financial sector. While India is making progress, global firms continue to face major entry barriers, which could impact the country’s long-term trade and investment relations.

Banking//Finance

1. RBI Injects ₹80,000 Crore Liquidity Via OMO

Context:

The Reserve Bank of India (RBI) has announced an open market operation (OMO) purchase of ₹80,000 crore to inject liquidity into the banking system, ensuring effective transmission of policy rate cuts ahead of the April 7-9 Monetary Policy Committee (MPC) meeting.

Liquidity Boost

• OMO Purchase Plan:
  • RBI will purchase government securities in four tranches of ₹20,000 crore each on April 3, 8, 22, and 29.
• Liquidity Status:
  • Banking system liquidity turned surplus over the weekend for the first time in four months.
  • Net liquidity surplus reached ₹89,398 crore on Sunday.
  • Core liquidity surplus stood at ₹1.1 trillion as of March 21.

Rationale Behind RBI’s Liquidity Infusion

• Facilitating Rate Cut Transmission:
  • Surplus liquidity improves monetary policy transmission, ensuring that rate cuts effectively lower borrowing costs.
  • RBI aims to maintain a liquidity surplus of ₹1-2 trillion, which is necessary for smooth rate transmission.
• Government Spending Impact:
  • Increased government expenditure at the end of March contributed to the liquidity surplus.
  • Historically, spending spikes towards the financial year-end, adding liquidity into the banking system.
• Earlier Liquidity Measures:
  • Since January 2024, RBI has injected over ₹5 trillion through OMO auctions, dollar-rupee swap transactions, and repo auctions.
  • Another ₹1.8 trillion was infused through repos maturing in early April.

Impact on Policy & Lending Rates

• Possible Rate Cut in April MPC Meeting:
  • RBI expected to cut the repo rate by 25 basis points (bps) for the second consecutive time.
  • The last repo rate cut of 25 bps was in February 2024, following 11 consecutive meetings of unchanged rates.
• Limited Impact on Lending Rates So Far:
  • External benchmark-linked loans (EBLR) (tied to repo rate) have declined, reflecting past rate cuts.
  • However, marginal cost of funds-based lending rates (MCLR)—which impact corporate loans—have not fallen significantly.
  • Banks have not reduced deposit rates due to previous liquidity tightness.

RBI’s Policy Strategy

• Liquidity Injection Signals Continued Easing:
  • Economists suggest that RBI remains committed to maintaining a liquidity surplus, indicating support for further monetary easing.
• Market Expectations:
  • While an immediate change in RBI’s stance is unlikely, the central bank’s continued focus on liquidity infusion and rate cuts suggests a dovish policy stance in the coming months.

The RBI’s ₹80,000 crore liquidity infusion via OMOs signals proactive measures to support rate transmission and economic growth. While repo rate cuts have started affecting external benchmark loans, MCLR-based lending rates remain sticky. The April MPC meeting will be crucial in determining further monetary policy direction.

BS

2. Microfinance Sector Faces Continued Stress in Q3FY25

Context:

India’s microfinance sector witnessed a significant downturn in Q3FY25, with loan originations falling 35% in value and 42% in volume year-on-year, according to CRIF data.

Key Highlights of Q3FY25

Metric	Q3FY25	YoY Change	QoQ Change
Gross Loan Portfolio (₹ trillion)	3.91	-4%	-5.4%
Active Loans (million)	146	-7.3%	-4.8%
Disbursed Amount (₹ crore)	63,440	-34.9%	-9.3%
PAR (1-30 days past due) (%)	1.8%	NA	NA
PAR (31-180 days past due) (%)	6.4%	NA	NA

Reasons for the Decline

• Rising Delinquencies: Increasing borrower defaults are impacting overall portfolio quality.
• Overleverage Across Lenders: Borrowers taking loans from multiple lenders have heightened repayment risks.
• Collection Inefficiencies: Difficulty in recovering dues has led to liquidity constraints.
• Cautious Lending Approach: Lenders are prioritizing high-ticket loans (above ₹50,000) over smaller ones.
• Regulatory Changes & Risk Realignment: Adjustments in underwriting and collections have slowed disbursals.

Impact on Portfolio Quality

• Loan portfolio fell to ₹3.91 trillion, reflecting a 4% YoY decline and 5.4% sequential dip since Q2FY25.
• Active loans dropped from 157 million (Q3FY24) to 146 million (Q3FY25), showing a clear reduction in lending activity.
• Early-stage delinquencies (1-30 days) improved slightly, with the Portfolio at Risk (PAR) reducing by 3 bps to 1.8%.
• Longer-term stress worsened:
  • PAR (31-180 days) increased by 210 bps to 6.4%.
  • PAR (180+ days) rose by 120 bps to 3.7%.

Industry Outlook & Recovery Efforts

• Preventive Measures: The sector is focusing on strengthening collections and portfolio quality stabilization.
• Risk-Based Lending: Shift towards high-ticket loans and reduced exposure to riskier borrowers.
• Gradual Recovery Expected: Improved collection rates in early delinquency buckets indicate some stabilization ahead.

The microfinance sector remains under pressure, but stabilization efforts are yielding early signs of improvement. However, longer-term delinquencies and overleveraging remain key challenges that require continued policy adjustments and risk management strategies.

BS

3. RBI’s Vision

Context:

The next decade will be crucial for shaping India’s financial architecture, and the Reserve Bank of India (RBI) will take all necessary steps to enhance access, efficiency, and resilience, said Governor Sanjay Malhotra.

Key Focus Areas for RBI

• Financial Inclusion Expansion: Over 551 million bank accounts have been opened under financial inclusion programs. The Financial Inclusion Index rose to 64.2 in March 2024 from 60.1 in March 2023 and 43.4 in 2017.
• Customer Protection & Service Improvement: Strengthening consumer rights and improving banking services will be a top priority.
• Balancing Stability & Innovation: The RBI aims to optimize regulatory frameworks while ensuring financial stability and fostering efficiency.
• Technology & Modernization: Adoption of new technologies and modern regulations will be driven by transparency, integrity, and public service commitment.
• Collaboration with Stakeholders: RBI will work closely with governments, financial regulators, and industry stakeholders to drive economic transformation.

Governor’s Perspective on Future Challenges & Opportunities

Governor Malhotra highlighted that the RBI stands at the intersection of tradition and transformation, balancing price stability, financial security, and economic growth amid global uncertainties, climate challenges, and technological advancements.

He emphasized that continuous adaptation, innovation, and agility are essential to navigate the evolving financial landscape, ensuring that India’s financial system remains resilient and future-ready.

RBI’s vision for the coming decade is centered on deepening financial inclusion, embracing innovation, and maintaining financial stability. With a strong regulatory approach, modernized frameworks, and collaborative efforts, the central bank aims to steer India’s financial sector toward sustainable and inclusive growth.

BS

4. RBI Issues Master Direction on Interest Rates for Deposits

Context:

The Reserve Bank of India (RBI) has released a comprehensive Master Direction (MD) on interest rates for deposits, effective immediately.

Key Directives Under the New Master Direction

• Uniform Interest Rates:
  • All commercial banks must maintain uniform interest rates across all branches and customer categories.
  • No discrimination between deposits of the same amount and tenure accepted on the same date.
• Non-Negotiable Rates:
  • Interest rates on deposits cannot be negotiated between banks and individual depositors.
  • The rates must be reasonable, transparent, and consistent for all customers.
• Supervisory Oversight:
  • Interest rate policies must be approved by the board of directors or an authorized committee.
  • Banks must ensure that policies are available for regulatory scrutiny when required.
• Daily Interest Calculation for Savings Deposits:
  • Interest on domestic rupee savings deposits will now be calculated on a daily product basis, ensuring a fairer interest accrual for depositors.

Implications

• Greater Transparency: The move eliminates unfair rate discrepancies between depositors.
• Better Consumer Protection: Depositors receive equal treatment irrespective of their banking relationships.
• Regulatory Compliance: Banks must maintain detailed policies and documentation for RBI review.

The RBI’s new directive aims to standardize deposit interest rates while promoting fair banking practices and financial stability.

BS

5. Treasury Heads Urge RBI to Cut CRR

Key Demands from Treasury Heads & Asset Managers

• Lower the Cash Reserve Ratio (CRR) to 4% to infuse at least ₹1.30 lakh crore into the banking system.
• Ensure durable surplus liquidity to support effective monetary transmission of policy rate cuts.
• Address tight banking liquidity, which has prevented banks from lowering deposit rates despite the repo rate cut in February.

Current Liquidity & Rate Challenges

• Daily Average Banking Deficit: ₹1.32 lakh crore in March, creating pressure on banks.
• CRR Reduction History: Cut by 50 bps (to 4.5%) in December 2024.
• Repo Rate Cut in February: Lowered by 25 bps to 6.25% (first reduction in nearly 5 years).
• Banks’ Dilemma:
  • Repo rate cut forced them to reduce lending rates (home loans, MSME credit).
  • But tight liquidity prevented deposit rate cuts, squeezing margins.

Upcoming RBI Policy Review & Expectations

• The next Monetary Policy Committee (MPC) review is scheduled between April 7-9.
• Economists anticipate another rate cut, but treasury heads insist it must be accompanied by liquidity support.

RBI’s Liquidity Measures: ₹80,000 Crore OMO Announced

• Open Market Operations (OMO) Purchase Plan:
  • Total amount: ₹80,000 crore
  • Four tranches:
    • ₹20,000 crore each on April 3, 8, 22, and 29
• Aims to address liquidity constraints in the banking system.

TET

6. India’s GST Collections Surge

Key Highlights

• GST collections rose by 9.9% YoY to ₹1,96,141 crore in March 2025 – the second-highest monthly collection ever.
• Imports saw a sharp increase, with GST from imports rising 13% YoY to nearly ₹47,000 crore.
• Domestic GST collections grew by 8.8% to just under ₹1.5 lakh crore.

Annual Trends & Insights

• FY 2024-25 average monthly GST collections: ₹1.84 lakh crore, up from ₹1.68 lakh crore in FY 2023-24.
• Total GST collections for the year: ₹22 lakh crore, marking a 9.5% YoY growth—the slowest since post-pandemic recovery.
• 41% rise in refunds, with a massive 202% increase in import-related refunds and 25.7% rise in export refunds, indicating manufacturing sector strength.

State-Wise Growth

• Top GST growth performers:
  • Haryana: +16%
  • Delhi: +15.9%
  • Maharashtra: +12.4%
  • Bihar: +12.1%
• Declining collections:
  • Arunachal Pradesh: -8%
  • Nagaland: -4%

Impact & Future Outlook

• Stronger GST audits & scrutiny expected to prevent revenue leakages.
• Consumption slowdown concerns persist, prompting increased government monitoring.
• Higher import GST points to rising import dependency, raising questions about domestic production.
• Surging export refunds reflect manufacturing growth, aligning with Make in India initiatives.

The sustained growth in GST revenue highlights India’s resilient economy, but slowing consumption and rising imports may prompt policy adjustments and tax enforcement measures in the coming months.

TOI

7. Axis Bank & JP Morgan Enable 24/7 Blockchain-Based USD Clearing

Key Highlights

• Axis Bank, in partnership with JP Morgan and Kinexys Digital Payments (KDP), has launched near real-time, 24/7 programmable USD clearing for business customers in India.
• The partnership leverages blockchain-based financial infrastructure to facilitate instant cross-border payments.

Strategic Benefits

• Seamless Cross-Border Transactions: Businesses can access always-on USD clearing without traditional banking delays.
• Enhanced Liquidity: Faster settlements unlock working capital efficiency.
• Blockchain-Powered Security: Ensures transparency and reduces settlement risks.
• Future-Ready Financial Infrastructure: Supports interoperability between central bank digital currencies (CBDCs), stablecoins, and other digital assets.

Industry Impact

• First-of-its-kind in India: Axis Bank is pioneering blockchain adoption for institutional and commercial banking clients.
• Growing Blockchain Adoption: Since 2019, KDP has processed over $1.5 trillion, with $2 billion in daily transaction volume.
• Potential Expansion: This initiative could pave the way for multi-currency, instant global payments, enhancing India’s fintech ecosystem.

Axis Bank’s integration with JP Morgan’s Kinexys platform is a game-changer for cross-border finance, offering real-time USD clearing, enhanced liquidity, and blockchain security. This move positions India’s banking sector at the forefront of digital financial innovation.

8. RBI Increases Liquidity Access for Standalone Primary Dealers

Context:

The Reserve Bank of India (RBI) has raised the Standing Liquidity Facility (SLF) limit for Standalone Primary Dealers (SPDs) from ₹10,000 crore to ₹15,000 crore, effective April 2, 2025.

• SPDs can now access higher funding at the prevailing repo rate.
• RBI has also expanded SPD participation in repo operations, allowing them to take part in all tenors of repo transactions.

The Standing Liquidity Facility (SLF)

The Standing Liquidity Facility (SLF) is a collateralized liquidity facility provided by the Reserve Bank of India (RBI) to standalone primary dealers (SPDs), offering them access to funds at the prevailing repo rate to meet their liquidity needs. 

• Purpose:The SLF aims to ensure that SPDs, who act as market-makers in the government securities market, have sufficient liquidity to perform their duties effectively. 
• Mechanism:The RBI makes funds available to SPDs under the SLF, allowing them to borrow at the prevailing repo rate

Market Impact

• Improved Liquidity for SPDs: SPDs will have more funding sources, enhancing their role in the financial markets.
• Minimal Impact on G-Secs: Analysts expect limited influence on government securities (gilts) markets.
• Strengthened Role of SPDs: With increased access to liquidity and participation in repo operations, SPDs can play a more active role in market-making.

This move is part of RBI’s broader liquidity management strategy, ensuring efficient market operations while supporting SPDs in fulfilling their role as key intermediaries in the government securities market.

BS

9. RBI Eases Pension Payment Rules for Government Pensioners

Key Announcements:

• Joint Accounts Can Continue: Spouses of deceased central government pensioners can continue receiving family pensions in the same joint account without opening a new one.
• Mandatory Acknowledgement of Life Certificates: Banks must issue signed acknowledgements upon receiving life certificates to prevent delays in pension payments.
• Core Banking System (CBS) Integration:
  • Banks should record life certificate submissions in CBS for real-time updates.
  • Digital acknowledgements should be issued for Digital Life Certificates.

Impact on Pensioners:

• Simplifies Family Pension Processing: Reduces administrative hurdles for pensioner families.
• Ensures Timely Payments: Prevents pension delays due to misplacement of life certificates.
• Encourages Digital Adoption: Supports smooth pension processing through CBS and digital tracking.

RBI’s new guidelines enhance efficiency, transparency, and convenience in pension disbursements, reducing financial stress for government pensioners and their families.

BS

10. Maharashtra Government Scraps ₹1 Crop Insurance Scheme Amid Fiscal Strain

Key Developments

• Discontinuation of ₹1 Crop Insurance Scheme:
  • The state government is winding up the ambitious scheme launched in 2023.
  • A revised version will be introduced with the kharif season in May 2025.
• Reasons for Scrapping the Scheme:
  • The scheme was plagued by irregularities, including 4.5 lakh fake claims.
  • Financial burden: The scheme cost ₹10,500 crore, compared to ₹3,500 crore under the previous PM Crop Insurance Scheme.
  • Low payout despite high premium costs.
  • Fiscal deficit concerns: Maharashtra’s fiscal deficit stands at ₹1.33 lakh crore in FY2024-25.
• Fraudulent Applications & Measures Taken:
  • Claims were filed for non-existent crops on government, temple, and dam lands.
  • 96 Common Service Centres (CSCs) suspended for submitting false applications to earn processing fees.
  • ₹80 crore saved by identifying fraudulent applications.
• Wider Economic Implications:
  • The government has also scrapped the farmer loan waiver due to budget constraints.
  • Major welfare schemes like power subsidies, Ladki Bahin payout, and state employee salaries have led to financial strain.
  • Maharashtra’s debt is projected to reach ₹9.32 lakh crore by FY2025-26.
• Future Strategy:
  • New policies will focus on long-term agricultural infrastructure like drip irrigation, farm ponds, and mechanized sowing.
  • The government aims to cut unproductive expenses while maintaining essential farmer support programs.

Maharashtra’s decision to scrap the ₹1 crop insurance scheme reflects deepening fiscal challenges. The government is now shifting towards sustainable agricultural investments while cutting populist spending to balance its finances.

Agriculture

1. Government Deploys AI and IoT for Agricultural Advancement

Key Initiatives

• Kisan e-Mitra (AI-powered Chatbot):
  • Assists farmers with PM Kisan Samman Nidhi scheme queries.
  • Supports 11 regional languages.
  • Handles 20,000+ queries daily (92 lakh+ queries answered).
  • Future expansion to include other government schemes.
• National Pest Surveillance System:
  • Uses AI & ML to detect pest infestations early.
  • Enables timely intervention to reduce crop losses.
  • Farmers upload pest images for analysis.
  • Covers 61 crops & 400+ pests.
  • Used by 10,000+ extension workers.
• AI-Based Crop Monitoring:
  • Utilizes satellite imagery and field photographs.
  • Helps in crop-weather monitoring & mapping.

Impact on Agriculture

• Boosts Productivity: Early pest detection and crop monitoring enhance yield.
• Supports Farmers: AI-powered chatbot simplifies access to government schemes.
• Strengthens Sustainability: Data-driven insights improve farming resilience.

By integrating AI and IoT, the government is modernizing agriculture, ensuring higher efficiency, sustainability, and farmer welfare across India.

PIB

Facts To Remember

1. RBI says 98.21% of ₹ 2,000 notes returned to banks

The Reserve Bank of India (RBI) announced that 98.21 per cent of ₹ 2000 banknotes have been returned to the banking system, leaving only ₹ 6,366 crore worth of such notes still with the public.

2. Gennova Bio Joins CEPI to Develop Vax Against Nipah Virus

Gennova Biopharmaceuticals, a subsidiary of Emcure Pharmaceuticals, on Tuesday announced a partnership with the Coalition for Epidemic Preparedness Innovations (CEPI) for advancing the development of self-amplifying mRNA (saRNA) vaccine against the Nipah virus.

3. EPFO enhances payment options by adding 15 more banks to Direct Payment System

Employees’ Provident Fund Organisation (EPFO) has expanded its Multi-Banking Centralised Collection System by empanelling 15 more banks, bringing the total number of banks in the panel to 32. 

4. India achieve record high of renewable energy capacity addition of 25 gigawatts in the last financial year

India’s renewable energy sector has achieved the highest-ever capacity addition in the last financial year by installing 25 gigawatts.

5. 98.21% of ₹2000 notes returned to banking system, legal tender status remains: RBI

The Reserve Bank of India, RBI, has said 98.21 per cent of the 2000 rupee bank notes have been returned to the banking system. On May 19, 2023, the RBI announced the withdrawal of bank notes of the 2000 Rupee denomination from circulation. 

6. Over 1 million manpower resources hired through govt e-Marketplace in Financial year 2045-25

Over 1 million manpower resources were hired through the digital procurement platform Government e-Marketplace (GeM) in the Financial Year 2024-25. Speaking on this achievement, the EO of GeM, Ajay Bhadoo, stated that the platform has harnessed digital capabilities and has emerged as a one-stop shop for all possible services required by government buyers at various levels of administration.