Daily Current Affairs (DCA) 25 April, 2025

Daily Current Affairs Quiz
25 April, 2025

International Affairs

1. Pakistan Shuts Airspace and Trade With India After Pahalgam Terror Attack

Context:

Following the deadly terror attack in Pahalgam, Jammu and Kashmir, where 26 Indian men were killed by terrorists allegedly linked to Pakistan-based Lashkar-e-Taiba, tensions have escalated sharply between India and Pakistan.

Key Developments:

• Airspace Closure:
  • Pakistan has closed its airspace to Indian airliners, disrupting regional flight routes and signaling a strong retaliatory stance.
• Trade Suspension:
  • All bilateral trade between India and Pakistan has been suspended, further deepening the diplomatic fallout.
• Diplomatic Retaliation:
  • Closure of the Wagah border check post
  • Declaring Indian defence, naval, and air advisors persona non grata
  • Downsizing the Indian High Commission in Islamabad from 55 to 30 personnel
• Water War Warning:
  • Pakistan has warned that any Indian move to stop or divert the flow of Indus river waters would be interpreted as an “act of war.”

Implications:

• Rising risk of military confrontation in South Asia
• Potential for international diplomatic interventions to de-escalate the situation
• Strained regional connectivity and trade dynamics

TH

2. WTO in the Age of Reciprocal Tariffs

Decline of the WTO: Structural and Functional Breakdown

• Three Core Functions Undermined:
  • Negotiation Deadlock: The Doha Round (since 2001) has failed to deliver substantial results.
  • Dispute Settlement Dysfunction: U.S. blocked Appellate Body appointments, making the mechanism toothless.
  • Trade Monitoring Gaps: Countries, particularly China, withhold transparency on trade measures.
• WTO’s Diminished Role:
  • Both Mohan Kumar and Mark Linscott agree: the WTO is sidelined and lacks enforcement power.
  • The WTO cannot prevent economic crises or manage trade shocks like the reciprocal tariff wave under Trump.

WTO and the United States: Retreat from Multilateralism

• Unilateralism Over Consensus:
  • U.S. policies (Sections 232 & 301) show growing disdain for WTO’s Most-Favoured-Nation (MFN) principle.
  • Tariff frustration: U.S. liberalized tariffs expecting global reciprocity — which didn’t materialize.
• FTA Proliferation:
  • With WTO’s negotiation stagnation, nations turned to bilateral Free Trade Agreements, stepping away from MFN principles.
  • Trump’s tariffs are seen as a withdrawal from WTO norms, introducing unpredictability and strain on the global order.

WTO’s Internal Gridlock and Reforms

• Consensus Rule Obstruction:
  • Reform attempts stalled due to opposition from nations like India and the U.S. over switching from consensus to voting.
  • EU’s arbitration proposals for DSM reform lack universal support.
• Monitoring Failures:
  • WTO lacks the mechanism to compel disclosure of protectionist or trade-distorting policies.

India’s Role and Trade Positioning

• Agriculture Sensitivities:
  • India opposes disciplines on subsidies and public stockholding due to political compulsions and domestic food security.
  • WTO rules cap subsidies at 10% for India, while developed nations historically offered far more.
• Double Standards in Engagement:
  • India avoids discussing labour and environmental standards at WTO but is willing to address these issues bilaterally with the EU, U.K., and U.S.
• India as a First Mover:
  • Despite WTO chaos, India may gain from early trade negotiations and strategic bilateralism.

China and the WTO: An Unanticipated Disruption

• Challenge to Global Trade Norms:
  • WTO frameworks were inadequate to check China’s rise as a low-cost export powerhouse.
  • Market flooding: China’s steel and cement overcapacity has distorted global trade without technically breaching WTO rules.
• Rule Deficiencies:
  • WTO lacked foresight in regulating excess capacity and non-tariff distortions, leaving gaps exploited by China.

The WTO at a Crossroads

• The WTO’s loss of negotiating power, enforcement capability, and monitoring efficiency has rendered it largely ineffective.
• While unilateralism, FTAs, and regionalism rise, nations like India must recalibrate their strategies by:
  • Advocating targeted WTO reforms
  • Leveraging bilateral trade diplomacy
  • Protecting sensitive sectors without blocking necessary global engagement

TH

National Affairs

1. India to Increase GPU Procurement by 15,000 Units

Context:

India is set to procure 15,000 additional GPUs in the second round of bidding, which will increase the total number of high-performance graphics processing units (GPUs) to 33,000. The deadline for the second round of bidding is April 30.

Procurement and Supply Process

• The GPUs will be procured as part of the ₹10,372 crore IndiaAI Mission, approved by the Union Cabinet in March last year.
• In January 2025, the government procured 18,693 GPUs in the first round, surpassing the initial target of 10,000 GPUs.
• The procurement and supply process is managed by the Ministry of Electronics and Information Technology (MeitY), with an ongoing quarterly empanelment process for companies wishing to place bids.

Strategic Goals and US Regulations

• India is fast approaching the 50,000 GPU limit imposed by the United States on several countries. However, high-level discussions are underway to potentially remove this barrier, as part of broader bilateral trade talks between India and the US.
• The additional GPUs will be used by startups, academic institutions, researchers, and other stakeholders in the country.

Key Players in GPU Supply

• Several key players, including Jio Platforms, Tata Communications, and Yotta Data Services (owned by the Hiranandani Group), were empanelled in the first round of bidding.
• Other firms, such as CMS Computers India, Ctrls Datacentres, E2E Networks, and Locuz Enterprise Solutions, have also been shortlisted to supply GPUs.

Cost Efficiency

• The average rate for AI compute units based on the first round of bidding was discovered to be ₹115.85 per GPU hour for low-end units and ₹150 per GPU hour for high-end units.
• These rates are significantly lower than the global benchmark of $2.5 to $3 per GPU hour.

With this second round of procurement, India’s total number of high-performance GPUs will reach 33,000, boosting the nation’s AI research capabilities and supporting the IndiaAI Mission’s goals.

BS

2. Algorithmic Management in India: ILO report

Context:

Algorithmic management (AM) in India has led to a decline in job quality, with “clear” evidence of increased monitoring, surveillance and work intensity, noted International Labour Organisation (ILO) in its latest report.

Key Findings from ILO Report

• Decline in Job Quality:
  • The International Labour Organization (ILO) reports that algorithmic management (AM) in India has led to a decline in job quality, citing increased monitoring, surveillance, and work intensity.
• Study Insights:
  • According to a 2024 joint study by ILO and the European Commission, while AM technologies had a positive impact in France and Italy by improving work organisation, they had negative consequences in countries like South Africa and India.
• Institutional and Regulatory Influence:
  • The study emphasizes that the implementation of AM, rather than the technology itself, is critical in shaping its impact on job quality. The regulatory and institutional frameworks of each country play a key role.

What is Algorithmic Management?

• Definition: AM refers to the process of managing work tasks, monitoring performance, and evaluating workers through data collection, surveillance, real-time decision-making, and metrics-driven evaluations.
• Technologies Used: AM incorporates digital technologies such as big data analytics, machine learning, geolocation, and wearable devices, which automate or support tasks typically handled by human managers.

Sectoral Impact

• Digital Labour Platforms: While AM is widely used in digital labour platforms, its reach has extended to traditional sectors such as warehouses, factories, call centres, transportation, healthcare, and construction.

Challenges in Remote Work and Occupational Safety

• Health Concerns: The report highlights challenges faced by remote/online workers, particularly in ensuring a safe and healthy work environment without direct oversight.
  • Ergonomics Issues: Only 16% of remote workers in India have a dedicated workspace, leading to risks such as musculoskeletal disorders and eye strain from poor workstation setups.
  • Physical Health Risks: The sedentary nature of desk-based work increases risks of obesity, diabetes, and cardiovascular diseases due to extended hours of work without adequate movement breaks.

Global Efforts to Regulate Algorithmic Management

• China and Netherlands: Both countries have introduced regulations focusing on fairness and transparency in workplace algorithms.
• Spain: Amended its Workers’ Statute Act, requiring employers to disclose algorithmic parameters affecting working conditions.
• United States: The Algorithmic Accountability Act mandates the assessment of high-risk AI and machine learning systems that make automated decisions or handle personal data.

India’s National Policy on Safety

• National Policy: India’s national policy on safety, health, and environment addresses new risks associated with the adoption of modern technologies. It advocates for the use of safe technologies and computer-aided risk assessment tools to better manage risks.

The report, titled “Revolutionizing Health and Safety: The Role of AI and Digitalization at Work,” underscores the need for strong regulatory frameworks to mitigate the adverse effects of algorithmic management on job quality and worker health. It also highlights the increasing importance of AI and digitalization in reshaping occupational safety and health globally.

BS

3. Panchayat Advancement Index (PAI)

Context:

Prime Minister Narendra Modi’s address on National Panchayati Raj Day emphasized the pivotal role of rural local bodies in India’s pursuit of Sustainable Development Goals (SDGs). The Ministry of Panchayati Raj recently launched the Panchayat Advancement Index (PAI), a tool designed to assess the progress of over 216,000 panchayats across key areas such as poverty alleviation, health, water sufficiency, livelihood enhancement, and governance.

Key Features of the Panchayat Advancement Index (PAI)

• Coverage and Ranking:
  • The PAI ranks panchayats based on their performance across SDG-related themes. This tool is part of a broader effort to localize the SDGs, ensuring that their implementation is grounded in local realities.
• Current Progress:
  • While the index shows promise, the results indicate that no panchayat has yet reached the “achievers” category, with only 699 panchayats classified as “frontrunners”.
• Geographical Disparities:
  • A significant concentration of frontrunners is seen in Gujarat (346 panchayats), Telangana (270), and Tripura (42), while many other states are lagging in their progress.

Challenges Faced by Panchayats in Achieving SDGs

1. Inadequate Financing:
   • Most panchayats heavily rely on upper tiers of government for funding, with limited ability to generate their own revenue.
   • The average revenue per panchayat in 2022-23 was just ₹21.23 lakh, with a meager 1.1% generated from local taxes and fees.
   • The lack of financial autonomy restricts the ability of panchayats to invest in long-term development initiatives.
2. Limited Technological Infrastructure:
   • The absence of advanced technological tools and digital literacy impedes the monitoring, evaluation, and reporting of progress at the grassroots level, further delaying the achievement of SDG targets.
3. Fragmented Efforts:
   • Multiple government departments often work independently within villages, leading to duplication of efforts and resource wastage.
   • The lack of coordination between different departments and schemes results in the failure to achieve holistic development as envisioned under the SDGs.

Opportunities and Recommendations

To fully unlock the potential of panchayats and enable them to drive SDG implementation, several strategies must be pursued:

1. Enhancing Institutional Capacity:
   • Training and capacity building for panchayat officials are essential for improving governance and decision-making processes.
   • Fostering digital inclusion will help panchayats harness technology for better monitoring, data management, and service delivery.
2. Strengthening Financial Independence:
   • Enabling panchayats to generate their own revenue through local taxes, such as property and market taxes, could reduce their dependence on external funding and increase financial autonomy.
   • The devolution of funds should be timely and sufficient to meet local development needs.
3. Improved Coordination and Integration:
   • Establishing better coordination between departments would reduce duplication and ensure that development schemes are effectively integrated and aligned with SDG targets.
   • Encouraging community participation in decision-making will ensure that development plans are tailored to local needs, improving their effectiveness.

The launch of the Panchayat Advancement Index (PAI) is a significant step in India’s journey to achieve the SDGs. However, the challenges identified, such as financial constraints, lack of technological infrastructure, and fragmented efforts, must be addressed to unlock the full potential of panchayats. Through enhanced capacity building, financial independence, and improved coordination, panchayats can become the key drivers of sustainable development in India’s rural areas.

BS

Science & Tech

1. World Malaria Day 2025

Context:

April 25 is observed globally as World Malaria Day, initiated by the World Health Organization (WHO) in 2006. The day highlights the need for continued investment and innovation in fighting malaria, a disease that still infects 263 million people annually, killing over 600,000, with Africa bearing 95% of the global malaria mortality.

From Miasma Theory to Scientific Discovery

• Malaria, originally thought to be caused by “bad air” (Italian: mala aria), was scientifically traced to the Plasmodium parasite in 1880 by Alphonse Laveran.
• Key milestones:
  • 1885–1892: Italian scientists Golgi, Celli, and Marchiafava identified parasite cycles and species.
  • 1894–1898: British doctor Ronald Ross and Italian researcher Giovanni Grassi confirmed transmission by Anopheles mosquitoes, completing the transmission cycle.

Impact on Colonialism and Global Politics

• Prior to this discovery, malaria severely limited European colonisation in Africa, with mortality rates reaching up to 60% among inland troops.
• Following the scientific breakthroughs:
  • Colonisers adopted vector control strategies like swamp drainage and European-only settlements.
  • These allowed safer inland expansion during the Scramble for Africa post the 1884 Berlin Conference.
  • By 1914, European powers controlled nearly 90% of Africa.

Racial Hierarchies and Economic Exploitation

• Africans with genetic resistance to malaria were favoured in the trans-Atlantic slave trade, reinforcing a racialised labour economy.
• Malaria indirectly supported pseudo-scientific racism, shaping enduring social hierarchies and discriminatory systems still present in modern societies.

Scientific Advances in Treatment and Prevention

• Key tools in malaria control:
  • Quinine, chloroquine, and now artemisinin-based therapies.
  • Insecticide-treated bed nets, indoor residual spraying, and the new RTS,S malaria vaccine.
• Malaria is now a major factor in environmental and climate planning, as factors like deforestation and stagnant water influence mosquito breeding.

Current Status and Challenges

• Despite progress, malaria remains a public health emergency, especially in Africa.
• WHO’s 2024 World Malaria Report confirms a significant reduction in death rates, but the burden remains disproportionately high in low-income regions.

TH

Banking/Finance

1. DigiLocker Initiative Launched for Athletes

Context:

Sports Minister Mansukh Mandaviya has launched the DigiLocker facility for athletes, aiming to digitally store and manage essential sports documents. The initiative was unveiled at a formal event attended by representatives from 40 National Sports Federations (NSFs) and notable athletes including Mirabai Chanu and Jarmanpreet Singh.

Objectives of the Initiative

• Ensure hassle-free record-keeping of key documents like certificates, IDs, and performance records.
• Promote transparency, reduce paperwork, and improve administrative efficiency in sports governance.

Mandatory Digitisation Timeline

• All NSFs have been directed to digitise athletes’ documents within the next one year.
• The move is aimed at creating a centralised, accessible database for athletes’ credentials.

Benefits for Athletes

• Simplifies verification during selections and competitions.
• Offers secure and permanent storage of documents.
• Allows quick access across institutions and international events, especially useful during travel or trials.

Broader Vision

• The initiative aligns with the government’s push for Digital India and modernisation of sports administration infrastructure.
• Expected to benefit emerging athletes from rural and remote areas, ensuring equal access to opportunities.

TOI

2. New CBDT Notification

Context:

The Central Board of Direct Taxes (CBDT) has issued a notification stating that companies can no longer claim tax deductions on expenditures incurred to settle cases related to violations of specific financial and competition laws. The change, effective April 23, prohibits companies from deducting fines, penalties, or settlement amounts associated with four key laws while calculating taxable income.

Laws Affected

• The affected laws are:
  • Securities and Exchange Board of India (SEBI) Act, 1992
  • Securities Contracts (Regulation) Act, 1956
  • Depositories Act, 1996
  • Competition Act, 2002

Impact on Businesses

• Under the notification, any expenditure related to settling proceedings or paying penalties under these laws will not be considered a business expense.
• This decision is made under Section 37 of the Income Tax Act, 1961, which governs the treatment of business-related expenses.

Government’s Stance

• The government has reinforced the message that violating laws will result in dual financial consequences: fines and higher taxes.
• Abhishek Rastogi, founder of Rastogi Chambers, commented that this policy signals the government’s firm stance on noncompliance, stressing that companies will face more significant financial consequences beyond fines.

BS

3. Equity Mutual Funds Performance Based on Information Ratios (IR)

Context:

The Information Ratio (IR) has become an important metric to evaluate the performance of equity mutual fund schemes on a risk-adjusted basis. This ratio helps investors understand how well a fund has performed relative to its benchmark, considering the risks involved. In the five-year period from 2020 to 2025, one in three equity mutual fund schemes managed to beat their benchmark based on IR.

Key Insights on Fund Performance

• IR Metric: The IR is calculated by subtracting the benchmark return from the portfolio return and dividing by the standard deviation of the excess returns. A higher IR indicates better consistency in delivering returns relative to the benchmark, while a lower IR suggests underperformance.
• Positive IRs: Out of the 208 active equity schemes (excluding sectoral and thematic funds), only 62 schemes reported a positive IR over the past five years.

Category-Wise Performance

1. Smallcap Funds: These funds showed the worst performance, with only 3 out of 21 schemes outperforming their benchmarks.
2. Largecap and Midcap Funds: Both these categories had less than 20% of schemes reporting a positive IR over five years, indicating poor performance in the long run.
3. Flexicap and Multicap Funds: These categories had better results, especially in the 1-year and 3-year periods.

Performance over Different Time Periods

• 1-Year Performance: Most schemes in all categories, except for large-cap funds, outperformed their benchmarks.
• 3-Year Performance: A majority of large-cap and multicap schemes delivered higher returns than their respective benchmarks.
• 5-Year Performance: Less than 20% of large-cap and mid-cap schemes reported positive IRs, showing a struggle in the long term.

Top and Bottom Performing Funds

• Best Performing Funds:
  • Largecap: Nippon India Largecap Fund (IR: 0.51)
  • Midcap: Motilal Oswal Midcap Fund (IR: 0.19)
  • Smallcap: Quant Smallcap Fund (IR: 0.83)
• Worst Performing Funds:
  • Largecap: Axis Bluechip Fund (IR: -1.12)
  • Midcap: DSP Midcap Fund (IR: -1.37)
  • Smallcap: ABSL Smallcap Fund (IR: -0.68)

Factors Driving Performance

• Fund Manager’s Abilities: A higher IR reflects a fund manager’s stock selection skills and timely sectoral shifts. Consistency in upside capture and downside protection is crucial.
• Risk-Adjusted Returns: Advisors recommend looking beyond IR and considering other metrics such as Sharpe ratio, alpha, and beta to evaluate funds’ ability to perform across different market cycles.

BS

4. Revised Eligibility Criteria for SMEs to Migrate to Mainboard on NSE

Context:

The National Stock Exchange (NSE) has revised its eligibility criteria for small and medium enterprises (SMEs) wishing to migrate to the mainboard, effective May 1 2025. These updated guidelines come in response to growing concerns about the governance and financial practices of SMEs, following recent scrutiny by the Securities and Exchange Board of India (SEBI).

New Eligibility Requirements:

• Revenue Threshold: SMEs must have a minimum revenue of ₹100 crore in the previous financial year.
• Profitability: Firms must demonstrate positive operating profit for at least two out of the last three financial years.
• Market Capitalisation: The company’s average market capitalisation should not be less than ₹100 crore at the time of migration.
• Promoter Holding: The promoters and promoter group must hold at least 50% of the shares they held at the time of listing when applying for migration.
• Public Shareholding: The company must have 500 public shareholders.

Additional Requirements:

• Financial Standing: SMEs must have no defaults in payment of interest or principal on debentures, bonds, or fixed deposits.
• Regulatory Standing: The company must not have faced any material regulatory actions in the last three years, such as suspension of trading or legal actions against the promoters.

Recent Context:

• The SEBI crackdown on irregularities such as fund diversion, manipulation in financials, and fictitious transactions led to a tightening of regulations for SMEs.
• The migration process allows SMEs to move from the NSE Emerge platform to the mainboard after meeting these criteria.

Migration Data:

• 142 companies have migrated from the NSE Emerge portal to the mainboard so far.
• As of February 2025, ₹16,587 crore has been raised by 605 SMEs listed on the platform since 2012.
• A significant portion of capital raised, 40%, came from retail individual investors (RIIs) in February 2025.

The NSE has raised the bar for SMEs looking to migrate to the mainboard, with stricter financial and governance standards. These measures are aimed at improving transparency and ensuring that only well-managed firms make the transition to the mainboard. The revised guidelines will ensure greater scrutiny and enhance investor confidence in the SME sector.

BS

5. Sebi Imposes ₹10 Lakh Fine on Future Retail

Context:

The Securities and Exchange Board of India (SEBI) has imposed a penalty of ₹10 lakh on Future Retail for disclosure lapses related to material events, particularly regarding arbitration proceedings initiated by Amazon.

Key Highlights:

• Background: In October 2020, Amazon initiated arbitration proceedings against Future Group in the Singapore International Arbitration Centre (SIAC) over concerns related to a scheme of arrangement between Future Group and the Mukesh Ambani Group.
• Sebi’s Findings: SEBI found that Future Retail did not immediately disclose the arbitration proceedings or the interim order passed by SIAC, which would have been crucial information for investors.
• Stock Exchange Intervention: After intervention by the stock exchanges, Future Retail eventually disclosed the interim order and its implications, though SEBI found the initial delay in disclosure to be a violation.

Sebi’s Move to Ease Business for Small and Medium REITs

In a bid to improve the regulatory framework and ease the process for Small and Medium Real Estate Investment Trusts (SM REITs), SEBI has announced new measures to simplify public issue processes and standardise disclosures.

• Standardisation of Disclosures: SEBI has split the draft scheme offer document into two parts:
  • Key Information of the Trust (KIT): Includes details about the trust, its investment manager, trustee, and overall structure.
  • Key Information of the Scheme (KIS): Contains scheme-specific details, such as assets and investment strategy.
• Objective: These changes aim to make it easier for SM REITs to comply with disclosure norms while ensuring transparency and investor protection.

BS

6. FIU-IND Directs Crypto Exchanges to Redo KYC by June 30

Context:

The Financial Intelligence Unit-India (FIU-IND) has issued a directive mandating all registered cryptocurrency exchanges to enhance their Know Your Customer (KYC) processes by June 30, 2025, in compliance with the Prevention of Money Laundering Act (PMLA).

Key Highlights

KYC Overhaul Required

• Exchanges must update all user information, especially where KYC details are older than 18 months.
• Fresh KYC must be initiated for such users, with stricter data collection for accounts deemed “risky”.

TDS and Tax Compliance

• Crypto exchanges are required to deduct 1% TDS on transactions exceeding ₹10,000.
• Users must submit tax returns to claim exemption from TDS.
• FIU flagged non-collection of tax returns as non-compliance with PMLA.
• Several transactions without TDS are already under investigation by the Income Tax Department.

FIU’s Warning

• The FIU is closely monitoring exchanges for any breaches.
• Non-compliance with KYC or TDS requirements may result in penalties or operational restrictions.
• Globally, KYC violations are being taken seriously to combat money laundering and terror financing.

Compliance by Major Exchanges

• Binance: Previously fined ₹18 crore by FIU; now initiating KYC re-verification, including PAN card collection, for Indian users.
• Bybit: Settled a fine of ₹9.27 lakh for non-compliance; also asking users for fresh KYC.
• Coinbase Global: Recently registered with FIU-IND; preparing to launch retail services with full KYC compliance.

Regulatory Context

• Since March 2023, crypto exchanges are mandated to register with FIU-IND.
• Operating without registration can lead to penalties or shutdowns.
• As per the 2022 Union Budget, gains from Virtual Digital Assets (VDAs) are taxed at 30%.

TET

7. RBI Buys 57.5 Tonnes of Gold in FY25

Context:

The Reserve Bank of India (RBI) added 57.5 tonnes of gold to its reserves in FY25, marking the second-highest annual purchase since it began accumulating gold actively in December 2017. This surge in gold accumulation comes amid heightened global geopolitical risks, US dollar volatility, and reduced appeal of US Treasury securities.

Key Highlights

Record Gold Holdings

• RBI’s total gold holdings reached 879.6 tonnes as of March 2025, up from 822.1 tonnes a year earlier.
• FY25’s purchase is only second to the 66 tonnes bought in FY22.
• Gold now accounts for 11.8% of India’s foreign exchange reserves (up from 8.7% last year).

Global Context Driving Gold Demand

• Volatile dollar, especially after Donald Trump’s re-election in November 2024, is making gold more attractive.
• Global central banks, facing uncertain returns on US Treasuries, are shifting towards gold for safety and inflation hedging.
• According to the World Gold Council, central banks remained pivotal to global gold demand in 2024.

Strategic Importance in Reserve Management

• RBI rarely sells gold, unlike many central banks, due to political sensitivities and strategic reserve policies.
• The central bank emphasized that safety and liquidity are its key reserve management goals, with return optimization being secondary.

Pattern Suggests Measured Strategy

• RBI’s buying pace slowed in December and February, dipping below the average of 6.6 tonnes per month seen between January–November 2024.
• This may signal a more calibrated approach, though it highlights gold’s growing strategic role in India’s reserves.

Valuation Gains

• RBI also benefited from a 30% surge in global gold prices, which boosted the valuation of its existing holdings.

TET

8. RBI Inspection Triggers Spandana Sphoorty Leadership Change Amid Fraud Concerns

Context:

The Reserve Bank of India (RBI) may have uncovered serious operational lapses at Spandana Sphoorty Financial, prompting the sudden resignation of its Managing Director, Shalabh Saxena, and a shake-up in top leadership. Sources allege that RBI found unreported frauds and cash balance mismatches during a detailed inspection conducted in October–November 2024.

Key Developments

RBI Inspection and Alleged Lapses

• RBI’s inspection reportedly lasted 19 days, significantly longer than the usual 3–4 days for routine audits.
• Unreported frauds and discrepancies in branch-level cash balances were allegedly found.
• The regulator is said to be reviewing top management’s accountability in these lapses.

Leadership Exit

• Shalabh Saxena resigned this week, citing personal reasons and plans to explore new opportunities.
• He has denied any wrongdoing, stating that all cash is accounted for.
• Ashish Kumar Damani, CFO, has been appointed interim CEO, with Saxena assisting in a 3-month transition.

RBI’s Silent Watch

• While RBI has not issued a public statement, it reportedly held meetings with independent directors, although Saxena denied this occurred.

Financial Stress Indicators

• Spandana reported consecutive quarterly losses:
  • ₹440 crore loss in Q3 FY25
  • ₹216 crore loss in Q2 FY25
• Gross NPA ratio surged to 5.2% in December 2024, from 1.7% in March 2024.
• The firm disclosed covenant breaches:
  • ₹373 crore in non-convertible debentures
  • ₹268 crore in term loans

TET

9. SEBI Fines Future Retail ₹10 Lakh Over Delay in SIAC Arbitration Disclosure

Context:

The Securities and Exchange Board of India (SEBI) has imposed a penalty of ₹10 lakh on Future Retail Ltd for the delayed disclosure of arbitration proceedings initiated by Amazon before the Singapore International Arbitration Centre (SIAC).

Background and Case Summary

1. Arbitration Initiated by Amazon

• On October 5, 2020, Amazon initiated arbitration proceedings against Future Group at SIAC, objecting to a scheme of arrangement between Future Group and the Mukesh Ambani-led Reliance Group.

2. Disclosure Violation Allegations

• SEBI alleged that Future Retail failed to disclose this arbitration as a material event under Listing Obligations and Disclosure Requirements (LODR) norms.
• Future Retail received the notice on October 5, 2020, and filed objections with SIAC on October 6, 2020.
• Under LODR norms, disclosure was required within 24 hours, i.e., by October 6, 2020, but the company only disclosed the arbitration on November 1, 2020, after stock exchange intervention.

3. SEBI’s Rationale

• The arbitration was deemed a material event given its potential impact on Future Retail’s ongoing corporate decisions.
• “The same was required to be disclosed as soon as reasonably possible and not later than 24 hours,” SEBI emphasized in its order.

Penalty and Regulatory Implications

• A ₹10 lakh fine has been imposed for violating timely disclosure norms.
• SEBI issued a show cause notice on April 7, 2021, before concluding its investigation.
• The case underscores SEBI’s heightened scrutiny of disclosure practices amid complex M&A and legal proceedings.

The Singapore International Arbitration Centre (SIAC)

The Singapore International Arbitration Centre (SIAC) is an independent, neutral, and not-for-profit institution that provides case management services for international arbitration. It administers arbitrations under its own rules and the UNCITRAL Arbitration Rules. SIAC is a globally recognized arbitral institution that helps resolve disputes between international businesses. 

Key aspects of SIAC:

• Independent and Neutral:SIAC does not represent any party in arbitration proceedings and does not provide legal advice. 
• Not-for-profit:SIAC is a non-profit organization, ensuring its focus remains on resolving disputes efficiently and fairly. 
• Global Reach:SIAC serves parties from all over the world, handling a wide range of disputes, according to the Singapore International Arbitration Centre website. 
• Case Management:SIAC provides comprehensive case management services, including appointing arbitrators, managing the arbitral process, and ensuring the finality of awards. 
• Rules-Based Arbitration:SIAC arbitrations are conducted according to its own rules or the UNCITRAL Arbitration Rules, providing a clear and structured process for resolving disputes. 
• Confidentiality:Arbitration proceedings are generally confidential, providing a private and less formal alternative to court litigation. 
• Enforceability:SIAC’s scrutiny process enhances the enforceability of awards. 

Benefits of using SIAC:

• Neutral and Impartial Forum:SIAC provides a neutral and impartial forum for resolving disputes, ensuring a fair and equitable outcome. 
• Efficient and Cost-Effective:SIAC offers cost-competitive and efficient case management services, helping to streamline the arbitration process. 

TET

10. RBI Caps FEMA Violation Penalty at ₹2 Lakh in Regulatory Easing

Context:

The Reserve Bank of India (RBI) has introduced a significant relief for individuals and businesses by capping the penalty for violations of Foreign Exchange Management Act (FEMA) regulations at ₹2 lakh per contravention, a shift from the earlier percentage-based fines.

Key Highlights of the Revised FEMA Guidelines

1. New Penalty Structure

• Earlier Penalty: 0.30% to 0.75% of the transaction amount in violation.
• Revised Cap: ₹2 lakh maximum for each contravention, irrespective of the transaction size.

2. Scope of Applicable Violations

• Misuse of Liberalised Remittance Scheme (LRS): Proceeds not reinvested within 180 days.
• Advance Export Receipts: If exports are not completed within one year of receiving advance payment.
• High-Value Gifting of Shares: Without prior approval from RBI.

3. RBI’s Justification

• The move aims to simplify compounding procedures, encourage voluntary compliance, and reduce litigation.
• The cap applies based on the nature and specifics of the case and in the larger public interest.
• Applicable to each rule/regulation cited in a compounding application.

TET

Economy

1. Private Investment Concerns and Growth Outlook for India

Private Investment Issues

• Muted Private Investment: Krishna Srinivasan, Director of the IMF’s Asia and Pacific department, expressed concerns over the lack of private investment in India, particularly in sectors that can significantly boost the economy’s productivity, such as products and machinery.
• Need for Momentum: For India to achieve its goal of becoming a developed economy by 2047, private investment must gain greater momentum, according to Srinivasan.

Growth Forecast Adjustment

• IMF Growth Forecast: The IMF revised India’s FY26 growth forecast downward by 30 basis points to 6.2%, citing escalating trade tensions and global uncertainty as key factors.
• Impact of Trade Tariffs: The downgrade was largely due to increased tariffs despite India’s lower exposure to trade shocks compared to other economies.
• World Bank Adjustment: Similarly, the World Bank reduced its FY26 growth forecast for India to 6.3%, a 0.4 percentage point decrease from its previous estimate, citing the increasingly challenging global environment.

Recommendations for Growth

• Structural Reforms: The IMF emphasized that India could benefit from trade liberalization, structural reforms, and a focus on education and public infrastructure to enhance trade opportunities and global integration.
• Public Spending Efficiency: India is improving public spending efficiency and implementing tax reforms to increase revenue and fuel growth.

Growth Drivers and Risks

• Export and Consumption Growth: In 2024, India’s growth was driven by a pickup in exports and consumption.
• Slow Start to Public Investment: The IMF noted that public investment was slower to pick up after the elections, contributing to a slightly weaker than expected overall economic performance in 2024.

Outlook

• While the global environment remains challenging, India has significant opportunities for growth through strategic reforms, trade integration, and improvements in public infrastructure. However, boosting private investment remains crucial for sustaining long-term growth.

BS

2. External Commercial Borrowing (ECB) Inflows in India

Overview of Inflows

• Significant Increase in Inflows: Net inflows through ECB more than doubled to $20.3 billion from April 2023 to February 2024, compared to $8.8 billion during the same period the previous year. This marks the highest level of inflows in at least five years.
• Monthly Inflows: In February 2024, net inflows were $1.9 billion, up from $1.3 billion in February 2023.

Factors Driving Growth

• Lower Overseas Borrowing Costs: The rise in ECB inflows was partly attributed to a decline in the cost of overseas funds, with the overall lending rate down by 40-50 basis points (bps) compared to the previous year.
• Rate Expectations: Expectations of further rate cuts in the US also played a role, as much of the ECB is linked to the six-month to one-year benchmark rates.
• Global Benchmark Rates: The cost of registered ECBs declined by 35 bps due to reductions in global benchmark rates like the secured overnight financing rate (SOFR) and the weighted average interest margin (WAIM).

Cumulative Data (April 2024 – February 2025)

• ECB Registrations: $50.1 billion in registrations, up by $8.6 billion from the previous year.
• ECB Disbursements: $46.1 billion in disbursements, a rise of $13.4 billion compared to the previous year.

Impact of US Tariff and Rate Expectations

• US Rate Expectations: Expectations of rate cuts in the US have diminished due to tariffs and policy changes under the Trump administration. This contrasts with growing expectations for rate cuts in India, which may impact ECB borrowing costs for Indian companies.
• Currency and Tariff Uncertainty: The ongoing tariff war and currency uncertainties could reduce further ECB borrowing, with moderate borrowing expected in the financial year 2025.

ECB Flow Trends (FY21 – FY25)

• Historical Flow Trends:
  • FY21: $0.2 billion
  • FY22: $7.7 billion
  • FY23: < $0.5 billion
  • FY24: $9.5 billion
  • FY25 (up to February 2025): $20.3 billion

Outlook

• Moderate ECB Borrowing: Despite a strong inflow in FY25, moderate ECB borrowing is expected in the coming financial year, influenced by uncertainties in global markets, currency fluctuations, and the domestic interest rate outlook.

BS

3. Impact of Emerging Tariff Scenario on India

Context:

The imposition of additional tariffs by the United States (US) on Indian exports, even at modest rates, could lead to a decline in India’s export growth. This, combined with a potential moderation in global demand, presents a challenge for India’s export-driven sectors. A positive offset to this impact could be lower crude oil prices, which may help reduce India’s import bill and thus mitigate the negative effects on the trade balance.

Fiscal Impact and Budget Forecasts

• Nominal GDP Growth: The government has forecast a nominal GDP growth rate of 10.1% in the Union Budget. With real growth at over 6% and inflation around 4%, government receipts are likely to align with these projections.
• Expenditure and Social Security: Given the expectation of a good monsoon and the modest impact of external uncertainties on the real economy, there seems to be no immediate need for additional social security measures. The government can therefore focus on economic policy to boost long-term growth.

Strategies to Leverage the Current Crisis

India can turn the current uncertainty into an opportunity by adopting a two-pronged strategy:

1. Restructuring Trade Partnerships
   • India is in discussions with key trade partners such as the US, UK, and EU. Given the ongoing global trade uncertainties, India should diversify its trade portfolio to build stronger partnerships and reduce dependence on any one region.
   • India could also consider engaging with China more actively, despite the ongoing tariff tensions, to broaden its trade networks.
2. Strategic Industrial Policy
   • Industrial Policy Focus: Developing a strategic industrial policy could help India optimize its position in global supply chains, especially as the global trade environment changes. This would focus on critical sectors that align with global demand shifts and emerging technological trends.

Policy Measures to Support Investment

To support investment in new sectors, the following measures could be considered:

1. Government Equity Support:
   • The government could provide minority equity support in strategic sectors, similar to how Finland supported Nokia and the US helped Apple with loans. This approach would allow the government to capitalize on successful ventures and use the returns to support other emerging sectors.
2. Skill Development Initiatives:
   • Skill India programs should be enhanced by building industry partnerships to identify emerging skills and market needs. The government could adopt a forward-looking approach, similar to Sweden’s model, to support the development of new skills and reskilling programs for the future workforce.
3. Affordable Housing for Workers:
   • With housing being a significant cost for workers, the government could focus on providing affordable housing near manufacturing hubs. Programs like the Pradhan Mantri Awas Yojana could be expanded to create low-rent housing for workers in high-demand industrial areas.

While the global tariff scenario poses challenges for India, it also presents an opportunity to restructure trade partnerships, develop a strategic industrial policy, and implement key support measures to attract investment. India’s growth forecast remains positive, and with the right policies, the country can turn these challenges into long-term economic advantages.

BS

4. CBDT has notified a 1% Tax Collected at Source (TCS)

Context:

The Central Board of Direct Taxes (CBDT) has notified a 1% Tax Collected at Source (TCS) on the sale of specified luxury goods priced above ₹10 lakh, effective from April 22, 2025. (Luxury Buys Over Rs 10 Lakh To Attract 1% TCS From 22 April)

Key Details:

• Applicability: Sellers are required to collect 1% TCS from buyers at the time of receiving payment for the specified luxury goods.
• Threshold: The TCS applies to individual items priced above ₹10 lakh.
• Specified Goods: While the exact list of goods has been notified, examples include high-end wristwatches, luxury handbags, and other premium items. (Tax to be Collected on Luxury Goods Above Rs. 10 Lakh Starting in 2025)
• Objective: This measure aims to enhance tax transparency and track high-value transactions. (New Tax Rules: Luxury Goods Over Rs 10 Lakh to Face 1% TCS – Read Here to Know)

Facts To Remember

1. China launches three astronauts to replace crew on its space station

China launched three astronauts aboard Shenzhou-20 spaceship to the Tiangong space station for a six-month mission, replacing the current crew. The mission supports China’s lunar and Mars ambitions, with astronauts conducting science experiments and maintenance tasks on the fully Chinese-built station.

2. Out Of The Blue, a book on BFC’s journey, released

Out Of The Blue, a book chronicling the rise of Bengaluru Football Club in the Indian Super League, has been released.

3. Indian Bank slashes home loan, interest rates

Following RBI´s reduction in policy repo rate earlier this month by 25 bps to 6 per cent, staterun lender Indian Bank has cut its home loan interest rates from the existing 8.15 percent to 7.90 percent and Vehicle loan interest rates from the existing 8.50 percent to 8.25 percent.

4. Axis Bank reports flat profit

Axis Bank on Thursday reporteda net profitt of ₹ 7,118 crore for the JanuaryMarch quarter (Q4) of 202425 (FY25), nearly flat numbers when compared to its net profit of ₹ 7,129 crore in the yearago period.

5. India emerges as global leader in medical tourism: MoS Ayush

Minister of State for Ayush, Prataprao Jadhav, today said that India has now emerged as one of the most sought-after destinations for treatment and medical tourism. 

6. Former ISRO Chairman Dr K Kasturirangan passes away at 84

Former ISRO Chairman and a key architect of India’s National Education Policy, Dr. K. Kasturirangan, passed away this morning at his residence in Bengaluru. 

7. Over 15.43 lakh new workers enrolled under ESI scheme in Feb

Union Labour Ministry has said that 15 lakh 43 thousand new workers have been enrolled under the ESI Scheme in February this year. The Ministry said, out of the total employees, 7.36 lakh employees belong to the age group of up to 25 years.

8. World Malaria Day 2025: WHO calls for renewed global action under theme ‘Malaria Ends With Us’

Today is World Malaria Day. It is a global initiative organised by the World Health Organisation (WHO) to raise awareness about malaria and promote actions to control, prevent, and ultimately eliminate the disease. The theme of this year’s Malaria Day is “Malaria ends with us: Reinvest, Reimagine, Reignite”, aiming to re-energise efforts at all levels, from global policy to community action, to accelerate progress towards malaria elimination.