Daily Current Affairs (DCA) 3 May, 2025

Daily Current Affairs Quiz
3 May, 2025

International Affairs

1. India-UK FTA Talks Resume

Context:

Union Commerce Minister Piyush Goyal met UK Trade Secretary Jonathan Reynolds in an unscheduled resumption of Free Trade Agreement (FTA) talks in London. Goyal’s return follows an earlier two-day visit this week that ended without a final deal. Negotiations began in January 2022, post-Brexit, but faced delays due to frequent changes in British leadership. The new Labour government has accelerated the process.

Status of Negotiations

• Few Issues Remain: Businesses close to the matter say only a few sticking points are left.
• Finalized Areas: Tariff reductions on whisky and automobiles have reportedly been agreed upon.
• Constructive Dialogue: Both governments described the latest discussions as “constructive”, indicating substantial progress.

Parallel Negotiations

• Bilateral Pacts: India and the UK are also negotiating separate treaties on investment protection and social security alongside the FTA.
• Investment Treaty Clause: Expected to include investor-state dispute settlement (ISDS) provisions, enabling companies to sue governments over policy changes impacting investments.
• US Tariff Concerns: Both India and the UK are seeking separate trade negotiations with the US to resolve tariff-related issues.

Implications

• A successful FTA would boost bilateral trade, provide duty benefits, and offer legal protection for investors.
• The deal may serve as a model for future post-Brexit UK trade pacts with emerging economies.

BS

National Affairs

1. Vizhinjam Port

Context:

PM Narendra Modi inaugurated the ₹8,800-crore Vizhinjam International Deepwater Multipurpose Seaport in Thiruvananthapuram, Kerala. This is India’s first dedicated container transshipment port, strategically located near major global shipping routes. The port is developed by Adani Ports and SEZ Ltd under a public-private partnership (PPP) with the Kerala government.

Prime Minister’s Remarks

• Economic Vision: Modi emphasized that port cities and coastal States will be pivotal to India’s growth and transformation into a developed economy.
• Policy Blueprint: The Centre’s focus is on infrastructure development and ease of doing business, which has shaped the port and waterways strategy over the past decade.
• Private Sector Role: Highlighted massive PPP investments as critical in upgrading ports to global standards and making India’s maritime sector future-ready.

Port Features & Benefits

• Natural Depth: Nearly 20-metre deep draft makes it ideal for handling large container ships.
• Reduced Dependence: The port will minimize India’s reliance on foreign ports for transshipment, boosting efficiency and lowering logistics costs.
• Global Trade Integration: Enhances India’s presence in international maritime trade, aligning with long-term export and logistics goals.

TH

2. PM Modi Launches ₹58,000-Crore Projects in Andhra Pradesh

Context:

PM Narendra Modi laid the foundation stone and inaugurated infrastructure works worth ₹58,000 crore in Andhra Pradesh. Ceremony held near the Secretariat in Guntur district, with virtual participation for select projects.

Amaravati Capital Development

• Amaravati Revived: Modi restarted the stalled capital city works at Amaravati, originally launched by him in 2015 under the TDP regime.
• Past Delays: Development halted due to the three-capital policy of the YSR Congress Party government.
• Renewed Commitment: Modi assured full Central support and declared that all obstacles are now cleared for Amaravati’s development.
• Future Vision: Projected Amaravati as a hub for IT, AI, green energy, education, healthcare, and clean industries.
• Cultural Sentiment: Quoting in Telugu, Modi said, “Amaravati oka nagaram kaadu, oka Shakti” (Amaravati is not a city, it’s a force).

Infrastructure Projects Highlights

• National Highways & Railways: Over ₹9,000 crore allocated to railway projects, with broad emphasis on inter-state connectivity.
• Defence Sector: Foundation laid for a Missile Testing Range at Nagayalanka (Krishna district) to bolster the national defence ecosystem.
• River Linking Support: Backing extended for Polavaram project, aimed at harnessing Godavari and Krishna rivers for irrigation and water supply.

Socio-Economic Initiatives

• Inclusive Development Focus: Emphasis on empowering farmers, youth, women, and the poor, with targeted welfare schemes.
• Central-State Collaboration: PM reaffirmed that joint efforts with CM Chandrababu Naidu and Deputy CM Pawan Kalyan would fulfill the dream of “Viksit Andhra” envisioned by N.T. Rama Rao.

TOI

3. Global Media Dialogue 2025

Overview

• Event: Global Media Dialogue 2025
• Platform: Government-to-government initiative, held during the World Audio Visual Entertainment Summit (WAVES)
• Hosted by: India; attended by delegates from 60+ countries

Key Objectives

• Foster technology-driven pluralism and a democratised international system
• Promote cultural diversity, local storytelling, and cross-border media collaboration
• Reimagine global discourse beyond colonial-era structures and great power dominance

WAVES Declaration Highlights

• Adopted by all member states
• Core Commitments:
  • Promote cultural diversity and responsible AI use
  • Enhance global cooperation in the media and entertainment sector
  • Reduce digital and cultural divides
  • Ensure fair and ethical media practices
  • Combat misinformation and disinformation through responsible journalism

Strategic Outcomes:

• Global consensus on:
  • Enabling creative innovation and cultural preservation
  • Strengthening media integrity and fact-based reporting
  • Supporting inclusive, ethically governed digital media ecosystems

Significance:

• Positions India as a thought leader in shaping a more inclusive, multipolar media order
• Lays groundwork for a collaborative global media framework, anchored in shared cultural values and equitable digital access

PIB

Banking/Finance

1. RBI Working Group Recommends Longer Call Money Market Hours to Enhance Liquidity Flexibility

Key Recommendations by RBI Working Group (Chaired by Radha Shyam Ratho):

• Extended Trading Hours for Call Money Market:
  • Proposed trading window to be extended till 7:00 PM (from the current 5:00 PM).
  • Aims to offer greater flexibility for banks in overnight fund management and balance sheet optimization.
• Changes to Market Repo & Tri-Party Repo (TREP):
  • Synchronize and extend trading hours for both market repo and TREP to 4:00 PM.
  • Unify TREP trading hours for participants settling via Designated Settlement Banks and RBI.
• Revised LAF Auction Timings:
  • Prepone the Liquidity Adjustment Facility (LAF) auction to 9:30–10:00 AM, from the current 10:00–10:30 AM.
  • This change is aimed at improving liquidity planning during the trading day.
• Government Securities Market:
  • No change to current onshore trading hours.
  • However, offshore trading with non-residents may be allowed between 5:00 PM and 11:30 PM, subject to:
    • T+1 trade reporting on NDS-OM before onshore hours.
    • T+2 settlement cycle.
• No Changes Proposed For:
  • Interest Rate Derivatives
  • Foreign Exchange Markets

Rationale Behind the Recommendations

• Post-5 PM, many banks face settlement uncertainties, impacting overnight fund usage.
• Greater alignment with global best practices and rising market volumes demand flexible frameworks.
• Feedback from market participants revealed a strong preference for operational flexibility.

Market Trends and Data Highlights (2014–2025)

• Overnight Money Market Annual Turnover:
  • Grew from ₹281.37 trillion (2014–15) to ₹1,324.05 trillion (2024–25).
• Daily Average Turnover:
  • Increased from ₹1.17 trillion to ₹5.52 trillion in the same period.
• TREP Segment Dominance:
  • Accounts for 69% of daily average volume, followed by market repo (29%).
  • Call Money share fell from 13% to 2%.

The RBI’s working group has proposed a pragmatic set of market reforms to reflect the evolving structure of India’s financial ecosystem. These changes aim to improve liquidity management, ensure operational continuity, and enhance market efficiency.

BS

2. RBI Seeks Government Nod to Remove Cap on Vostro Account Investment in Short-Term Sovereign Debt

Context:

In 2022, the Reserve Bank of India (RBI) introduced Special Rupee Vostro Accounts (SRVAs) to facilitate rupee-based trade settlements, aiming to promote the internationalisation of the rupee. These SRVAs allow foreign banks to hold rupee balances in India through domestic banks for trade settlement without registering as Foreign Portfolio Investors (FPIs).

Current Restriction

• As per existing norms, only 30% of SRVA balances can be invested in short-term sovereign debt instruments (residual maturity less than one year), including treasury bills.
• This restriction was designed to:
  • Encourage long-term capital inflows.
  • Support financial stability by avoiding excess short-term speculative flows.

RBI’s Proposal to Finance Ministry

• The RBI has written to the Finance Ministry, seeking removal of the 30% cap on short-term investments by SRVA holders.
• The central bank argues this limit is discouraging usage of SRVAs and restricting short-term liquidity management for foreign banks.
• Feedback from SRVA participants indicated the cap was a major barrier to operational efficiency.

Objective Behind the Move

• Boost rupee-denominated investments and trade settlement through SRVAs.
• Enhance global acceptance of the rupee for international trade.
• Provide greater flexibility to overseas banks using SRVAs for managing trade-linked liquidity.

Significance

• If approved, the measure could:
  • Increase foreign interest in rupee assets.
  • Enhance demand for short-term Indian sovereign debt.
  • Further India’s goal of establishing the rupee as a global trade currency.

BS

3. Poonam Gupta Appointed Deputy Governor of RBI

Context:

Economist Poonam Gupta took charge as a Deputy Governor of the Reserve Bank of India (RBI) on Friday, becoming the fourth woman to hold this position. She succeeds Michael Patra, whose term ended in January 2025.

Departments Under Her Oversight:

Poonam Gupta will oversee several critical RBI departments, including:

• Monetary Policy Department
• Financial Markets Operations Department
• Department of Economic and Policy Research
• Financial Stability Department
• International Department
• Department of Statistics and Information Management
• Corporate Strategy and Budget Department
• Department of Communication

Role in Monetary Policy:

• Gupta will be part of the six-member Monetary Policy Committee (MPC), responsible for setting interest rates.
• The MPC has cut the policy repo rate by 25 basis points each in its last two meetings (April and February).
• The next MPC meeting is scheduled for June 2025.

BS

4. SEBI Alleges Insider Trading Violation by Pranav Adani

Context:

Pranav Adani, a key director in Adani Group companies and nephew of founder Gautam Adani, is facing insider trading allegations from the Securities and Exchange Board of India (SEBI). According to a SEBI notice reviewed by Reuters, Pranav Adani allegedly shared unpublished price-sensitive information (UPSI) regarding Adani Green Energy’s 2021 acquisition of SB Energy Holdings, backed by SoftBank.

What Is Illegal Insider Trading?

Definition

Illegal insider trading involves buying or selling securities while in possession of material, nonpublic information in violation of a fiduciary duty or a relationship of trust and confidence. It also includes tipping such information to others who then trade based on it.

Key Violations Include

• Trading by corporate insiders (officers, directors, employees) who have access to confidential information
• Trading by tippees (friends, family, or associates) who receive insider information from company insiders
• Employees of law firms, banks, brokerages, or printing firms who misuse corporate information
• Government employees who trade on confidential information acquired through their official roles
• Political intelligence consultants who tip or trade on nonpublic government information
• Others who misappropriate confidential information from any trusted source (e.g., employers, friends)

Examples of Insider Trading Cases Brought by the SEC

• Company executives trading on confidential merger or earnings information
• Friends or family trading stocks after receiving a tip from an insider
• Legal or financial professionals using client information to trade securities
• Government insiders or consultants leveraging political intelligence for financial gain

Why It Matters

Illegal insider trading erodes public trust in the financial markets by giving unfair advantages to a select few. To maintain market integrity, the U.S. Securities and Exchange Commission (SEC) prioritizes detecting, investigating, and prosecuting such violations.

Nature of Allegation

• The regulator claims Adani shared deal-related information with his brother-in-law before the acquisition was publicly disclosed.
• The incident potentially violates India’s Prohibition of Insider Trading Regulations, which aim to curb unfair advantages in securities trading.

Background:

• The Adani Green–SB Energy deal was a major transaction valued at $3.5 billion, marking one of the largest M&A deals in India’s renewable energy sector in 2021.
• This is the first time such allegations have surfaced publicly against Pranav Adani, a long-time executive and public face of the group.

Implications:

• The case could test SEBI’s enforcement powers in high-profile insider trading matters.
• A settlement without admission may help Adani avoid protracted litigation but still leaves reputational questions open.

BS

5. NSE Launches Nifty Waves Index for Media, Entertainment, and Gaming Sectors

Key Highlights:

The National Stock Exchange (NSE) launched a new thematic index — the Nifty NSE Waves Index at the World Audio Visual & Entertainment Summit (WAVES) in Mumbai. The index is designed to track the performance of companies in the media, entertainment, and gaming sectors, reflecting growing investor interest in these industries.

Index Composition

• The Nifty Waves Index includes 43 listed companies, such as:
  • Nazara Technologies
  • PVR Inox
  • Zee Entertainment
  • Saregama India
  • Network18 Media & Investments
• Weight cap: Each stock’s weight in the index is capped at 5%, ensuring diversified exposure.

Objective and Relevance

• The index aims to provide a benchmark for tracking performance in India’s rapidly evolving digital entertainment economy.
• It also aligns with the broader market shift toward thematic investing in niche and high-growth sectors like gaming, OTT, music, and media.

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6. SEBI Proposes Framework Relaxations for InvITs and REITs to Ease Business Environment

Context:

The Securities and Exchange Board of India (SEBI) released a discussion paper on Friday outlining proposed relaxations in the regulatory framework for Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs). The move is part of SEBI’s broader agenda to promote ease of doing business and enhance the attractiveness of these instruments for both issuers and investors.

Major Proposals Include

• Redefinition of ‘Public’ Unitholders:
  • SEBI proposes changes to the definition of ‘public’ for the purpose of calculating minimum public unitholding requirements.
  • This could help trusts meet public holding norms more flexibly, especially during fundraising or restructuring events.
• Additional Relaxations (Under Consideration):
  • Easing of listing obligations and disclosure norms.
  • Simplification of capital raising procedures for InvITs and REITs.
  • Enhanced flexibility in leverage limits and investment conditions.

Objective and Impact

• These proposals are aimed at streamlining regulatory compliance, reducing friction in capital markets, and encouraging greater participation in long-term infrastructure and real estate investments.
• If adopted, the new rules could spur growth in REIT and InvIT listings, attract global capital, and boost retail and institutional investor confidence.

BS

7. SEBI Proposes Simplified Disclosure Norms for QIP Placement Documents

Context:

The Securities and Exchange Board of India (SEBI) on Friday proposed amendments to the ‘placement document’ required for Qualified Institutions Placement (QIP). The changes aim to streamline disclosure requirements by focusing only on information relevant to the issuer, eliminating redundant details.

Key Highlights:

• QIP’s Importance: In FY24, QIPs accounted for 35% of total equity-based fund mobilization, making them a crucial fundraising tool for listed companies.
• Rationale for the Proposal:
  • SEBI noted that listed entities already adhere to continuous disclosure obligations.
  • The current QIP format mandates extensive disclosures that are duplicative and time-consuming.

Proposed Changes

• Amend the QIP placement document format to focus exclusively on:
  • Material information specific to the issuer
  • Recent developments impacting the company
  • Risk factors and key financials already disclosed via regulatory filings

Expected Impact

• Reduced compliance burden and faster fundraising process for companies.
• Enhanced efficiency and transparency in capital raising via QIPs.
• Likely to encourage more frequent usage of the QIP route by listed firms.

TET

8. RBI Panel Proposes Extension of Call Money Market Hours till 7 PM

Context:

A Reserve Bank of India (RBI) working group has recommended extending the call money market trading hours by two hours, from 5:00 PM to 7:00 PM, to align with the 24×7 availability of payment systems and support better liquidity management among banks.

Key Recommendations

• Call Money Market: Extend trading hours till 7:00 PM to enhance reliance on this regulated interbank platform.
• Market Repo & TREPS: Unify and extend trading hours for both segments to 4:00 PM from the current 3:00 PM.
• Government Securities (Post-Market): Permit post-onshore trading with non-residents from 5:00 PM to 11:30 PM, with reporting on T+1 and settlement on T+2 via NDS-OM.
• No change proposed for trading hours in the bond and foreign exchange markets.

Rationale & Industry Viewpoint

• 24×7 RTGS has made it challenging to manage end-of-day fund flows, leading to increased reliance on RBI’s Standing Deposit Facility (SDF) or Marginal Standing Facility (MSF).
• Banks lose potential earnings when surplus funds are parked in SDF rather than the interbank market.
• Call money’s share in the overnight money market has declined from 13% (2014-15) to ~2%, but it remains critical as the call rate serves as the RBI’s operational target under its current monetary policy framework.
• TREPS holds 69% market share, followed by market repo at 29%.

Next Steps

• The RBI is accepting public comments until May 30, after which it will take a final decision on the recommendations.

TET

9. RBI Imposes Penalties on ICICI Bank, Axis Bank, and 3 Others for Regulatory Non-Compliance

Context:

On Friday, the Reserve Bank of India (RBI) imposed monetary penalties on five major banks ICICI Bank, Axis Bank, Bank of Maharashtra, Bank of Baroda, and IDBI Bank for violations across multiple regulatory frameworks, including KYC norms, cyber security, and customer service standards.

Bank-wise Penalties and Reasons

1. ICICI Bank
   • Penalty: ₹97.8 lakh
   • Violations:
     • Delayed reporting of a cybersecurity incident
     • Weak alert systems for account monitoring
     • Failure to send credit card statements, while levying late payment fees
2. Axis Bank
   • Penalty: ₹29.6 lakh
   • Violation:
     • Unauthorized use of internal/office accounts
3. Bank of Maharashtra
   • Penalty: ₹31.8 lakh
   • Violation:
     • Non-compliance with Know Your Customer (KYC) regulations
4. Bank of Baroda
   • Penalty: ₹61.4 lakh
   • Violations:
     • Lapses in financial services compliance
     • Deficiencies in customer service and deposit interest rate disclosures
5. IDBI Bank
   • Penalty: ₹31.8 lakh
   • Violation:
     • Non-compliance with the interest subvention scheme related to Kisan Credit Card (KCC) loans for agriculture

Regulatory Context

These penalties are administrative actions under RBI’s supervisory powers and are not meant to question the validity of any transaction or agreement with customers.

Implications

This development underscores RBI’s emphasis on cybersecurity preparedness, customer service integrity, and accurate implementation of government subsidy schemes, particularly in agriculture finance.

TET

10. SEBI Rules Out Aptitude Test for Retail F&O Traders, Emphasizes Investor Autonomy

Context:

Securities and Exchange Board of India (SEBI) Chairperson Tuhin Kanta Pandey has dismissed the idea of introducing an aptitude test for retail traders in the Futures and Options (F&O) segment, citing concerns over feasibility and regulatory overreach.

Key Highlights:

1. No Aptitude Test for F&O Participation

• SEBI will not introduce a mandatory screening or aptitude test for retail investors to trade in derivatives.
• The move is aimed at maintaining a balance between investor protection and personal financial autonomy.

2. Regulatory Perspective on Derivative Trading

• In November 2023, SEBI introduced curbs on excessive speculation in derivatives to reduce financial risk.
• A SEBI internal study revealed that 90% of retail investors incur losses in F&O trading.

3. Focus on Certification for Key Market Participants

• SEBI currently mandates NISM certifications for certain roles such as investment advisors and registered intermediaries, but not for individual retail traders.

4. Emphasis on Individual Autonomy

• SEBI asserts that individuals should have the freedom to manage their investments.
• The regulator encourages informed decision-making rather than imposing restrictions on access to markets.

5. Leverage and Risk Controls

• SEBI discourages the use of leverage for trading due to the high risk involved.
• Leverage-based trading is not permitted in Alternative Investment Funds (AIFs).

6. Systemic Checks and Market Surveillance

• SEBI believes the current market infrastructure has adequate checks and balances.
• Stock exchanges act as frontline regulators, ensuring transparency through disclosures and audits.

7. Strong Enforcement Against Insider Trading

• SEBI maintains a zero-tolerance policy on insider trading.
• Enforcement actions focus on building legally robust cases to withstand judicial scrutiny.

Implications

This policy stance reflects SEBI’s broader vision of empowering retail investors without creating entry barriers, while strengthening systemic safeguards against misuse and financial fraud.

11. Bank of India Signs MoU with Sa-Dhan to Boost Financing for Women-Led and Micro Enterprises

Context:

Bank of India (BOI) has entered into a Memorandum of Understanding (MoU) with Sa-Dhan, a self-regulatory organisation appointed by the RBI, to expand financial access for small, micro, and women-led enterprises. The partnership aligns with India’s National Financial Inclusion Strategy and Sustainable Development Goals (SDGs).

Key Objectives of the MoU

• Expand credit access to Self-Help Groups (SHGs) and non-SHG entrepreneurs
• Promote climate-resilient technologies and green financing
• Support WASH financing (Water, Sanitation and Hygiene)
• Enable co-lending with Microfinance Institutions (MFIs)
• Drive digital transformation and technology adoption
• Enhance financial literacy and awareness of government schemes

Strategic Focus

• Promote affordable, flexible financing for underserved communities
• Prioritize women entrepreneurship, rural enterprises, and semi-urban development
• Facilitate loan disbursement and monitoring via digital platforms
• Build awareness around social security and financial inclusion programmes

Impact

This non-commercial MoU underscores a joint commitment to:

• Empowering rural entrepreneurs
• Strengthening women-led businesses
• Scaling sustainable finance solutions

Economy

1. Rupee Hits 7-Month High of 83.76/USD Before RBI Steps In

Key Highlights:

• Intraday Movement: The Indian rupee appreciated to 83.76 per dollar in early Friday trade — its strongest level since September 30, 2024 (when it touched 83.71).
• Psychological Level Breached: This marked the first time since October 17, 2024, that the rupee moved below the 84/USD mark, triggering stop-loss orders and foreign inflows.
• Closing Rate: The rupee ended the day at 84.55, slightly weaker than Thursday’s close of 84.49.

RBI Intervention:

• Estimated Size: The Reserve Bank of India intervened with an estimated \$3 billion purchase of US dollars.
• Purpose: Aimed at containing rupee volatility and preserving export competitiveness.
• Market Reaction: Dealers cited heavy dollar buying by RBI as the key reason for the rupee’s retracement from its peak.

Bond Market Update

• New 10-Year G-Sec: The coupon for the freshly issued 10-year government bond was set at 6.33%, aligning with market expectations.
• Liquidity: It has quickly become the second most liquid on-the-run government security.

Forex Reserves

• India’s foreign exchange reserves are also at a 7-month high, reflecting robust external stability and capital inflows.

BS

2. S&P Lowers India’s FY26 GDP Growth Forecast to 6.3%

Key Highlights:

Revised Growth Estimates:

• FY26 GDP forecast lowered to 6.3% from 6.5% by S&P Global Ratings.
• FY27 GDP forecast also cut by 30 basis points to 6.5%.

Reason for Downgrade:

• A “seismic and uncertain shift” in U.S. trade policy is causing market volatility and affecting global confidence.
• Increased U.S. tariffs, anticipated retaliatory actions by trade partners, and market turbulence are cited as major downside risks.

Impact on Indian Markets

• Foreign Portfolio Investors (FPIs) have offloaded record volumes of Indian government bonds, driven by:
  • Narrowing yield spread between Indian and U.S. bonds.
  • Increased global risk aversion amid uncertainty in trade and policy.

Implications

• Lower growth may impact fiscal and monetary policy assumptions for FY26–FY27.
• Bond market outflows suggest weaker investor sentiment, especially if yield differentials continue to shrink.
• The situation underscores India’s vulnerability to global macroeconomic shocks, despite domestic growth momentum.

BS

3. NITI Aayog Recommends Overhaul of CGTMSE Scheme to Boost MSME Competitiveness

Key Recommendations from NITI Aayog’s Report:
Title: “Enhancing Competitiveness of MSMEs in India”

• Reform of CGTMSE:
  • Greater transparency and oversight: The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) should be brought under a formal regulatory authority to improve governance and accountability.
  • Reduced premium rates: Lowering guarantee premiums to make the scheme more attractive and accessible for micro and small enterprises.
  • Enhanced coverage for women-led units: 100% credit guarantee coverage should be extended to women-led enterprises to encourage female entrepreneurship.
• Addressing Governance Gaps:
  • Currently, the Trust lacks regulatory oversight and clear governance structures.
  • Recommendations call for balancing fund availability with financial discipline, particularly for low-end entrepreneurial activities.
• Credit Utilization Focus:
  • Emphasis not just on access to credit, but on effective credit utilization.
  • Advocates better resource allocation at the enterprise, government, and institutional levels.
  • Calls for building a system that supports sound financial decision-making and risk mitigation beyond just formalised MSMEs.
• Technological & Fiscal Interventions:
  • Push for MSMEs to adopt emerging technologies such as Artificial Intelligence, supported through both financial and infrastructural assistance.
  • Cites findings from a NASSCOM–Meta study highlighting technology’s role in MSME competitiveness.

Background

• CGTMSE, launched in 2000, is a key government initiative to provide collateral-free credit to India’s micro and small enterprises.
• It is jointly managed by the Ministry of MSME and SIDBI.

Implications

• A reformed CGTMSE can enhance formal credit outreach, particularly to underserved segments like women entrepreneurs.
• Technological integration and risk-aware lending practices can broaden the impact of government schemes across India’s vast MSME landscape.

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Agriculture

1. Centre Hikes Sugarcane FRP to ₹355/Quintal for 2025-26 Season

Context:

In a significant move to support India’s agrarian economy, the Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi, has approved an increase in the Fair and Remunerative Price (FRP) of sugarcane to ₹355 per quintal for the 2025-26 sugar season. This decision benefits around 5 crore farmers and 5 lakh sugar mill workers nationwide.

Key Highlights:

New FRP Rate Announced

• ₹355 per quintal for sugarcane with a basic recovery rate of 10.25%, up from ₹340 in 2024-25.
• 4.41% higher than the current season’s FRP.
• FRP is 105.2% higher than the cost of production, estimated at ₹173 per quintal.

Incentives Based on Sugar Recovery Rates

• Premium of ₹3.46/quintal for every 0.1% rise in recovery above 10.25%.
• Deduction of ₹3.46/quintal for each 0.1% fall below 10.25%.
• No deduction for recovery below 9.5%; such farmers will still receive ₹329.05/quintal.

Basis for Decision

• Recommendations from the Commission for Agricultural Costs and Prices (CACP).
• Consultations held with State Governments and stakeholders.

Payment Performance

• 2023-24 Season: ₹1,11,703 crore (99.92%) of the ₹1,11,782 crore dues paid.
• 2024-25 Season (ongoing): ₹85,094 crore (87%) of the ₹97,270 crore dues cleared by April 28, 2025.

Economic & Employment Impact

• Sugarcane farming and processing support millions of livelihoods across farming, factory work, transport, and rural labour sectors.

Implications

This FRP hike reinforces the Centre’s commitment to doubling farmer incomes, ensuring timely cane payments, and strengthening rural economic stability through targeted policy support.

What is Fair and Remunerative Price (FRP)?

Definition:

The Fair and Remunerative Price (FRP) is the minimum price set by the Government of India that sugar mills must legally pay to sugarcane farmers for their produce. It is designed to ensure that farmers receive a fair return on their crop.

Legal Framework

• Governed by the Sugarcane (Control) Order, 1966, under the Essential Commodities Act (ECA), 1955.
• FRP must be paid within 14 days of cane delivery.
• Delayed payments attract interest up to 15% per annum.
• Sugar commissioners can recover unpaid FRP dues through revenue recovery processes, including property attachment of defaulting mills.

Payment Terms

• Mills may enter agreements with farmers to pay FRP in installments.
• FRP is binding, irrespective of market prices for sugar.

Who Recommends and Approves FRP?

• Recommended by the Commission for Agricultural Costs and Prices (CACP), an advisory body under the Ministry of Agriculture and Farmers Welfare.
• Final FRP is approved by the Cabinet Committee on Economic Affairs (CCEA), which is chaired by the Prime Minister of India.
• The policy is based on suggestions from the Rangarajan Committee on sugarcane industry reform.

Key Factors Considered for FRP Determination

1. Cost of production of sugarcane
2. Returns from alternative crops and general price trends of agricultural commodities
3. Fair price for consumers of sugar
4. Selling price of sugar by producers
5. Sugar recovery rate from cane (efficiency)
6. Realization from by-products such as molasses, bagasse, and press mud
7. Reasonable margin for farmers covering risk and profit

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