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Distribution: yearly

  • Veer Savarkar and His Contributions

    Why in the News?

    Prime Minister paid tribute to Veer Savarkar on his death anniversary (26th February), acknowledging his contributions to India’s freedom movement.

    About Veer Savarkar: Life, Contributions, and Legacy

    Details
    Who was Veer Savarkar? • Born on May 28, 1883, in Bhagur, Maharashtra.
    • Founded Abhinav Bharat Society (1904) for armed resistance.
    • Led India House in London (1906) and the Free India Society.
    • Arrested in 1910, sentenced to life imprisonment in Cellular Jail (Kala Pani, Andaman & Nicobar Islands).
    • Became President of the Hindu Mahasabha (1937-1943).
    • Died on February 26, 1966, after fasting till death.
    His Contributions • Advocated armed revolution against British rule.
    • Coined Hindutva (1923), defining Indian identity beyond religion.
    • Opposed Partition, emphasizing Hindu political unity.
    • Championed military nationalism over passive resistance.
    • Writings and ideology influenced Indian nationalist movements.
    Literary Works • The First War of Indian Independence (1909):  Reinterpreted the 1857 Revolt as a nationalist struggle.
    • Hindutva: Who is a Hindu? (1923): Laid the ideological foundation of Hindutva.
    • My Transportation for Life (1950): Memoirs of his imprisonment in Cellular Jail.
    • Six Glorious Epochs of Indian History: Advocated Hindu resistance against foreign invaders.
    Controversies • Gandhi Assassination Case (1948): Arrested but acquitted due to lack of evidence.
    • Mercy Petitions (1911-1924): Wrote clemency petitions for early release from prison, debated as tactical or compromising.
    • Opposition to Quit India Movement (1942): Rejected Gandhi’s call, favored military strength over civil disobedience.
    • Hindutva Ideology: Critics claim it fostered religious divisions, while supporters see it as reviving Hindu identity.

     

  • Should a third language be compulsory?

    Why in the News?

    The Central government and the Tamil Nadu government are disagreeing over the three-language rule in schools under the New Education Policy (NEP), 2020.

    Why is the Union government withholding funds under the Samagra Shiksha Abhiyan from Tamil Nadu?

    • Non-compliance with the three-language formula: The Union government has linked the release of funds under the Samagra Shiksha Abhiyan to the implementation of the three-language formula outlined in the National Education Policy (NEP) 2020. Tamil Nadu’s refusal to adopt this formula has led to a standoff.
    • Policy disagreement: The Tamil Nadu government views the three-language policy as a tool for Hindi imposition and insists on continuing with its two-language policy (Tamil and English).
    • Financial leverage: The Centre is using financial incentives to push for uniform adoption of the NEP guidelines across States, causing friction with Tamil Nadu.

    When was the three-language policy first introduced, and what were its key mandates?

    • The three-language policy was first introduced in the National Policy on Education (NPE), 1968 to promote multilingualism and foster national unity.

    Key Mandates of the Three-Language Policy:

    • First Language – Mother Tongue/Regional Language: Students must learn their mother tongue or the regional language of the state. Example: Kannada is the first language in Karnataka, while Tamil is the first language in Tamil Nadu.
    • Second Language – Hindi or English: In Hindi-speaking states, students must learn English or another modern Indian language. In non-Hindi-speaking states, Hindi is taught as the second language. Example: Hindi is the second language in Kerala, while English is the second language in Uttar Pradesh.
    • Third Language – Another Indian Language or English: In Hindi-speaking states, students must learn a non-Hindi Indian language or Sanskrit. In non-Hindi-speaking states, English is usually taught as the third language. Example: Sanskrit as a third language in Madhya Pradesh, while English is the third language in Tamil Nadu.

    What difficulties do government schools face in implementing additional language courses?

    • Shortage of Qualified Language Teachers: Many government schools lack trained teachers for third-language instruction. Example: In rural Odisha, schools often struggle to find Hindi teachers, affecting the implementation of the three-language formula.
    • Limited Resources and Infrastructure: Schools lack textbooks, teaching aids, and language labs, making it difficult to provide quality language education. Example: Government schools in Bihar face a shortage of English textbooks, leading to poor learning outcomes.
    • Burden on Students and Poor Learning Outcomes: Many students struggle to grasp multiple languages simultaneously, especially those from economically weaker backgrounds. Example: In Tamil Nadu, students from rural areas find it difficult to learn Hindi as a third language due to limited exposure and practice opportunities.

    What are the basic issues in Schools? 

    • Poor Learning Outcomes: ASER 2022 found 60% of Class V students unable to read a Class II-level text. Similarly, ASER 2023 revealed 25% of youth (14-18 years) cannot fluently read basic texts in their regional language, highlighting foundational literacy gaps.
    • Inadequate Public Investment in Education: Despite the NEP 2020 target of 6% of GDP, actual spending on education remains at 4-4.5% of GDP. This underfunding restricts access to quality resources, affecting learning outcomes, especially in rural areas.
    • Disparity in Funding Allocation: 85% of elementary education costs are borne by States, while the Centre contributes only 15%. This fiscal imbalance creates unequal resource distribution, impacting teacher availability and infrastructure quality in less-developed regions.

    What are the constitutional provisions regarding the official languages of the Union and the States in India?

    • Official Language of the Union (Article 343): Hindi in Devanagari script is the official language of the Union.
      • English was to be used for official purposes for 15 years after the Constitution came into effect (until 1965), but the Official Languages Act, 1963 extended its use indefinitely alongside Hindi.
    • Language of the States (Article 345): State legislatures can adopt one or more languages in use in the State or Hindi as the official language for State administration. Example: Tamil Nadu uses Tamil, Punjab uses Punjabi, and Maharashtra uses Marathi as their official languages.
    • Promotion of Hindi (Article 351): It is the Union’s duty to promote the spread of Hindi to serve as a medium for all elements of India’s composite culture while drawing from Sanskrit and other Indian languages.
    • Safeguard for Linguistic Minorities (Article 350A & 350B)
      • 350A: The State must provide primary education in the mother tongue of linguistic minority groups.
      • 350B: Establishment of a Special Officer for Linguistic Minorities to investigate and report on their safeguards.

    What steps can be taken to resolve the conflict between the Centre and the Tamil Nadu government? (Way forward)

    • Promote Cooperative Federalism through Dialogue: Establish a joint consultative body to discuss language policies and ensure that both regional concerns and national goals are addressed. Example: Regular Centre-State meetings under the Inter-State Council could facilitate consensus on the language policy without coercion.
    • Grant Flexibility in Implementing Language Policies: Allow States to adapt the three-language policy based on their linguistic diversity and educational capacity while ensuring basic proficiency in major languages. Example: Tamil Nadu could continue its two-language policy while introducing optional third-language courses without affecting funding under Samagra Shiksha Abhiyan.

    Mains PYQ:

    Q National Education Policy 2020 isin conformity with the Sustainable Development Goal-4 (2030). It intends to restructure and reorient education system in India. Critically examine the statement. (UPSC IAS/2020)

  • ‘Cali Fund’ launched at CBD COP16

    Why in the News?

    A new international biodiversity fund, the ‘Cali Fund’, was launched at the 16th Conference of Parties (COP16) to the United Nations Convention on Biological Diversity (CBD) in Rome.

    What is the Cali Fund?

    • The Cali Fund is an international biodiversity financing mechanism launched on February 25, 2025, at COP16 of the UN Convention on Biological Diversity (CBD) in Rome.
    • It collects funds from private companies that utilize Digital Sequence Information (DSI) from nature in their businesses.
    • The fund supports biodiversity conservation, scientific research, and indigenous communities.

    Key Features of the Cali Fund:

    • Funding Source: Businesses using genetic data (DSI) from plants, animals, and microorganisms will contribute financially.
    • Utilization of Funds:
      • 50% allocated to indigenous and local biodiversity projects.
      • Supports scientific research and developing nations’ biodiversity action plans.
    • Global Management: Managed by UNDP and UNEP, with MPTFO handling finances.
    • Alignment with Global Goals: Supports Kunming-Montreal Global Biodiversity Framework (KMGBF) to reverse biodiversity loss by 2030.
    • First-of-Its-Kind: Direct private sector contributions to a global UN biodiversity fund.

    What is Digital Sequence Information (DSI)?

    • DSI refers to genetic data extracted from plants, animals, and microorganisms.
    • Used extensively in industries such as:
      • Pharmaceuticals (medicine development).
      • Cosmetics (natural ingredient research).
      • Agriculture (crop improvement, pest resistance).
      • Biotechnology (genetic engineering, bioinformatics).

    About the Convention on Biological Diversity (CBD):

    • The CBD, with 196 contracting parties, stands as the most comprehensive international agreement focused on nature conservation and the sustainable use of natural resources.
    • It was opened for signing at the 1992 UN Conference on Environment and Development in Rio de Janeiro.
    • The CBD has 3 main objectives:
    1. Conservation of biological diversity (including genetic, species, and habitat diversity).
    2. Sustainable use of biological diversity.
    3. Fair and equitable sharing of benefits arising from the use of genetic resources.
    • It addresses biodiversity at all levels: ecosystems, species, and genetic resources.
    • The Conference of the Parties (COP) is the CBD’s governing body, and it meets biennially to assess progress, set priorities, and develop action plans.
    • The Secretariat of the CBD is located in Montreal, Canada.
    • To further its goals, the CBD includes two binding protocols:
    1. The Cartagena Protocol (2000), which regulates the transboundary movement of living modified organisms (LMOs) and came into force in 2003.
    2. The Nagoya Protocol (2010), which provides a legal framework for the access to genetic resources and the fair sharing of benefits from their use.

    PYQ:

    [2014] With reference to ‘Global Environment Facility’, which of the following statements is/are correct?

    (a) It serves as financial mechanism for ‘Convention on Biological Diversity’ and ‘United Nations Framework Convention on Climate Change’

    (b) It undertakes scientific research on environmental issues at global level

    (c) It is an agency under OECD to facilitate the transfer of technology and funds to underdeveloped countries with specific aim to protect their environment.

    (d) Both A and B

     

  • What is Black Plastic?

    Why in the News?

    A recent study suggested that black plastic contains harmful flame retardants, which may leach into food at hazardous levels.

    What is Black Plastic?

    • Black plastic is often made from recycled electronic waste like old computers, TVs, and appliances.
    • These electronics contain flame retardants (such as bromine-based compounds), heavy metals (lead, cadmium, mercury), and other hazardous chemicals.
    • Flame retardants are added to prevent fire hazards, but they can persist in recycled plastics.
    • Many of these chemicals are now banned in several countries due to their toxicity.
    • However, legacy plastics containing these substances continue to enter the recycling stream, leading to contamination of household products.

    Threats Posed by Black Plastic:

    • Contains Toxic Chemicals: Made from recycled e-waste, it may have flame retardants, heavy metals, and antimony.
    • Food Contamination: Heat and acidic foods can leach harmful chemicals into meals.
    • Environmental Impact: Difficult to recycle, it pollutes landfills and groundwater.
    • Health Risks: Linked to hormonal issues, neurological damage, and cancer.

    PYQ:

    [2019] Why is there a great concern about the ‘microbeads’ that are released into environment?

    (a) They are considered harmful to marine ecosystems.

    (b) They are considered to cause skin cancer in children.

    (c) They are small enough to be absorbed by crop plants in irrigated fields.

    (d) They are often found to be used as food adulterants.

     

  • New Experiment to Test Quantum Gravity

    Why in the News?

    A new proposal published on October 29, 2024, suggests an experiment that could provide direct evidence for quantum gravity, unifying general relativity and quantum mechanics. A new experiment proposes testing weak gravitational fields at the quantum level, a historic breakthrough in physics if successful.

    What is Quantum Gravity?

    • Quantum Gravity is a theoretical framework that aims to unify general relativity (which explains gravity at large scales) and quantum mechanics (which governs subatomic particles).
    • Since gravity behaves differently from the other fundamental forces in quantum mechanics, physicists have been searching for a theory that integrates gravity into the quantum world.
    • General relativity treats gravity as the curvature of spacetime, while quantum mechanics describes forces through particle interactions.
    • Gravity has never been directly observed in quantum form, unlike the other fundamental forces.
    • Theories like String Theory and Loop Quantum Gravity attempt to explain quantum gravity but lack experimental validation.

    Significance of the Experiment

    • First Realistic Test for Quantum Gravity: Most quantum gravity theories rely on extreme conditions (e.g., black holes), making them impossible to test. This experiment provides a lab-based alternative.
    • Testing Gravity at the Quantum Level: If a small mass in quantum superposition is influenced by gravity, it could prove gravity itself is quantum in nature.
    • Weak Gravity Instead of Strong Gravity: Unlike previous studies focused on black holes, this experiment explores weak gravitational interactions, making it more feasible.
    • Towards a Unified Theory of Physics: Proving quantum gravity could merge general relativity and quantum mechanics, solving a major gap in modern physics.
    • Challenging Existing Theories: If results differ from both classical and quantum predictions, it could suggest a new force or a modified gravity theory.

  • [25th February 2025] The Hindu Op-ed: Surveillance capitalism: the power to control personal data

    PYQ Relevance:

    Q) Data security has assumed significant importance in the digitized world due to rising cyber-crimes. The Justice B. N. Srikrishna Committee Report addresses issues related to data security. What, in your view, are the strengths and weaknesses of the Report relating to protection of personal data in cyber space? (UPSC CSE 2018)

     

    Mentor’s Comment: UPSC mains have always focused on “ Data security”  (2018), and the Impact of digital technology (2021).

    Surveillance capitalism is an economic system where tech companies collect, analyze, and sell personal data to predict and influence behaviour. This system, described by Shoshana Zuboff in The Age of Surveillance Capitalism (2018), treats human experiences as a resource for profit, similar to how colonialism and industrial capitalism exploited natural and human resources.

    Today’s editorial highlights current issues related to surveillance capitalism and its impact. This topic is relevant for GS Paper 2 and 3 in the UPSC Mains.

    _

    Let’s learn!

    Why in the News?

    Recently, surveillance capitalism has depended on turning personal data into a product. It affects people’s privacy and freedom while being closely linked to government surveillance.

    What is Surveillance Capitalism? 

    • Surveillance capitalism is an economic system where technology companies collect, analyze, and monetize personal data to predict and influence human behaviour.
    • This data is often gathered through digital platforms like social media, search engines, and smart devices, often without users’ full awareness.

    How does surveillance capitalism rely on the commodification of personal data?

    • Collection of Personal Data as Raw Material: Google Search tracks every query a user makes, including location and device information. This data is processed to understand user preferences and behaviour patterns.
    • Behavioural Prediction for Targeted Advertising: Companies monetize behavioural data by selling it to advertisers who target users with precision, maximizing ad effectiveness.
      • Meta (Facebook) monitors user activity across its platforms to deliver highly personalized ads. Users discussing fitness products may soon see ads for gym memberships.
    • Continuous Data Harvesting Across Devices: Data is continuously extracted from smart devices, even during routine interactions, deepening the pool of user insights.
      • Amazon’s Alexa collects voice commands and ambient sounds to refine product recommendations and improve its machine-learning models.
    • Algorithmic Manipulation to Influence Behaviour: Algorithms shape user behaviour by curating content that fosters prolonged engagement, increasing ad revenue.
      • YouTube’s recommendation algorithm analyses watch history to suggest videos that keep users engaged, often promoting content that aligns with their interests or biases.

    What are the strong connections between data commodification and state surveillance?

    • Mass Data Collection Programs: Governments collaborate with private tech companies to access vast amounts of personal data for surveillance purposes. Example: The PRISM program by the U.S. National Security Agency (NSA) collected user data from major tech companies like Google, Facebook, and Microsoft to monitor global communications.
    • Legal Mandates for Data Sharing: Many countries enforce laws requiring digital platforms to share user data with state agencies for national security and law enforcement. Example: India’s Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 require platforms to trace the origin of messages, facilitating state surveillance.
    • Surveillance Technologies Integration: States use advanced technologies like facial recognition and AI-driven monitoring to track citizens’ movements and online activities. Example: China’s Social Credit System uses surveillance cameras and digital monitoring to track citizens’ behavior, affecting access to services based on their social scores.

    What are the negative impacts of commodifying personal data?

    • Privacy Erosion: When personal data is commodified, individuals lose control over their private information, leading to widespread privacy violations. Example: Social media platforms like Facebook have been criticized for selling user data to third parties, such as Cambridge Analytica which used it for targeted political advertising without users’ explicit consent.
    • Exploitation and Manipulation: Personal data is often used to influence behaviour through targeted advertising or algorithmic content curation, exploiting vulnerabilities. Example: Companies like Google and Amazon use personal data to create highly targeted ads.
    • Increased Risk of Data Breaches: The collection and trade of personal data raise the likelihood of data breaches, leading to identity theft, financial loss, and other harms. Example: The Equifax data breach in 2017 exposed the personal information of 147 million people.
    • Inequality and Discrimination: Commodified data can reinforce social and economic inequalities by enabling discriminatory practices, such as price discrimination or exclusion from services. Example: Insurance companies may use personal data to charge higher premiums to individuals based on their health or lifestyle, disproportionately affecting vulnerable groups.
    • Loss of Autonomy and Trust: The exploitation of personal data weakens public trust in institutions and reduces individuals’ sense of control over their own information. Example: The revelation that apps like TikTok collect and share user data with governments or third parties.

    What steps has the Indian government taken?

    • Data Protection Legislation: The Indian government enacted the Digital Personal Data Protection Act (DPDPA), 2023, which regulates the collection, processing, and storage of personal data. It mandates user consent, imposes penalties for data breaches, and establishes a Data Protection Board to address grievances.
    • Strengthening Cybersecurity: Initiatives like the National Cyber Security Policy (2013) and the establishment of CERT-In (Indian Computer Emergency Response Team) aim to protect critical information infrastructure, prevent cyberattacks, and enhance data security.
    • Regulating Big Tech: The government has introduced guidelines like the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, which require platforms to ensure transparency, allow user grievance redressal, and hold intermediaries accountable for data misuse.

    What steps have been taken at the global level?

    • General Data Protection Regulation (GDPR), European Union (2018): The GDPR sets a global benchmark for data privacy by enforcing strict guidelines on data collection, processing, and storage. It grants individuals the right to access, correct, and delete their personal data and imposes hefty penalties for non-compliance.
    • Global Data Protection Frameworks: Initiatives like the OECD Privacy Guidelines and the UN’s Internet Governance Forum promote international cooperation on data privacy, emphasizing transparency, user consent, and cross-border data flow regulations.
    • The USA’s Sectoral Approach: The California Consumer Privacy Act (CCPA) and similar state-level laws provide data protection rights to consumers, including the ability to opt out of data sales. The USA also advocates for a federal privacy law to harmonize regulations across industries.

    Way forward: 

    • Stronger Regulatory Frameworks: Implement comprehensive and adaptive data protection laws with clear accountability for data handlers, regular audits, and stringent penalties to safeguard user privacy and prevent misuse.
    • User Empowerment and Transparency: Promote data literacy programs and ensure platforms provide clear, accessible consent mechanisms, allowing users greater control over their personal information and how it is shared.

  • The RTI is now the ‘Right to Deny Information’

    Why in the News?

    The RTI Act allowed people to question the government, but the government soon tried to weaken it.

    Why is the RTI now being viewed as the ‘right to deny information’?

    • Judicial Interpretations Diluting the Scope of RTI: Key court judgments, like Girish Ramchandra Deshpande vs. CIC (2012), have expanded the definition of “personal information” under Section 8(1)(j) of the RTI Act. This allows authorities to deny information about public servants’ misconduct, assets, and disciplinary records.
    • Delayed Appointments and Case Backlogs: Government delays in appointing Information Commissioners have led to massive backlogs, reducing the effectiveness of the RTI. Information is often provided after significant delays, turning it into a “right to history.”
    • Narrow Interpretation of Public Interest: The Supreme Court’s ruling in CBSE vs. Aditya Bandopadhyay (2011) warned against the “misuse” of RTI for seeking all types of information, limiting disclosures that could allegedly disrupt administrative efficiency.
      • Example: Information requests related to public policy decisions are frequently denied on vague grounds of protecting “national integration” or preventing “administrative burden.”

    What have been the key achievements of the RTI since its inception?

    • Increased Transparency and Accountability: The RTI Act has empowered citizens to hold public authorities accountable by providing access to government records and decisions. Example: In 2007, RTI applications exposed corruption in the National Rural Employment Guarantee Scheme (NREGA), leading to better monitoring and payment transparency.
    • Exposing Corruption and Misuse of Power: RTI has played a crucial role in uncovering major scams and irregularities, prompting legal and policy reforms. Example: The 2G spectrum scam (2008) involving massive financial irregularities in telecom licensing was brought to light through RTI inquiries, leading to the cancellation of 122 telecom licenses by the Supreme Court.
    • Empowering Marginalized Communities: Rural and marginalized groups have used RTI to access entitlements like ration cards, pensions, and housing schemes, ensuring their socio-economic rights. Example: In Rajasthan, villagers used RTI to reveal discrepancies in public distribution system (PDS) records, ensuring access to their rightful food supplies.

    What are the limitations of RTI? 

    • Exemptions under Section 8: Certain categories of information are exempt from disclosure, such as matters related to national security, sovereignty, and personal privacy. Example: Information related to defense strategies or confidential Cabinet discussions cannot be accessed through RTI.
    • Delayed or Incomplete Responses: Bureaucratic delays and lack of accountability often lead to incomplete or delayed information, undermining the RTI’s effectiveness. Example: In 2021, RTI applications regarding COVID-19 vaccine procurement faced significant delays, limiting public scrutiny during a critical period.
    • Threats and Intimidation of RTI Activists: Whistleblowers and activists who use RTI to expose corruption face harassment, threats, and even violence. Example: Amit Jethwa, an RTI activist from Gujarat, was murdered in 2010 after exposing illegal mining near the Gir Forest.

    Does India have an alternative to the RTI?

    • Public Services Delivery Laws (Right to Public Services Act): Various states in India have enacted Public Services Delivery Laws to ensure the timely delivery of public services and redress grievances.
      • Example: Madhya Pradesh was the first state to implement the Right to Public Services Act (2010), which mandates timely delivery of services like issuing ration cards and driving licenses.
    • Whistleblower Protection Act (2014): This law protects individuals who expose corruption and wrongdoing in government institutions. It allows whistleblowers to report issues while keeping their identity confidential.
      • Example: An employee of a public sector bank can report irregularities without fear of retaliation under this Act. However, delays in operationalizing the law limit its effectiveness.
    • Lokpal and Lokayuktas Act (2013): This law establishes an independent body (Lokpal) at the central level and Lokayuktas at the state level to investigate corruption among public officials.
      • Example: In 2019, the Lokpal was appointed to investigate allegations of corruption against high-level public servants, including the Prime Minister (with conditions).

    Way forward:

    • Strengthen Institutional Framework: Ensure timely appointment of Information Commissioners, enforce penalties for delayed/incomplete responses, and streamline processes to reduce case backlogs.
    • Enhance Legal Safeguards: Amend the Whistleblower Protection Act for better security of RTI activists and clarify exemptions under Section 8 to prevent misuse while balancing public interest.

    Mains PYQ:

    Q “Recent amendment to the Right to Information Act will have a profound impact on the autonomy and independence of the Information Commission”. Discuss. (UPSC IAS/2020)  

  • Battle of Karnal (1739)

    Why in the News?

    On February 24, 1739, the Battle of Karnal marked a turning point in the history of Mughal empire.

    About Battle of Karnal 

    • The Battle of Karnal on February 24, 1739, saw Nadir Shah’s Persian army defeat Mughal Emperor Muhammad Shah ‘Rangila’ in under three hours.
    • Despite having 300,000 soldiers, the Mughal army was crushed by Nadir Shah’s 55,000 well-trained troops using modern tactics and superior firearms.
    • Following the victory, Delhi was sacked, 30,000 civilians massacred, and the Mughal treasury looted, including the Koh-i-Noor diamond and the Peacock Throne.

    Impact on Mughal Decline

    • Economic Collapse: The Mughal treasury was emptied, crippling military and administrative strength.
    • Weakening Central Power: Governors of Bengal, Awadh, and Hyderabad declared independence.
    • Military Decline: The Mughal army’s outdated tactics were exposed; future invasions (e.g., Ahmad Shah Abdali, 1748-1761) followed.
    • Rise of Regional Powers: The Marathas expanded, eventually capturing Delhi (1771); the Sikhs grew in Punjab.
    • British Expansion: The East India Company took advantage, leading to British rule after 1857.

    PYQ:

    [2019] With reference to Mughal India, what is/are the difference/differences between Jagirdars and Zamindar?

    1. Jagirdars were holders of land assignments in lieu of judicial and police duties, whereas Zamindars were holders of revenue rights without obligation to perform any duty other than revenue collection.

    2. Land assignments to Jagirdars were hereditary and revenue rights of Zamindars were not hereditary.

    Select the correct answer using the codes given below:

    (a) 1 only

    (b) 2 only

    (c) Both 1 and 2

    (d) Neither 1 nor 2

     

  • What is the ‘Quality of Public Expenditure’ Index?

    Why in the News?

    The Quality of Public Expenditure (QPE) Index, developed by the RBI, evaluates how efficiently government funds are used, focusing on expenditure composition and its long-term impact on economic growth.

    About the QPE Index

    • The QPE Index by the Reserve Bank of India (RBI) measures how effectively government funds are utilized.
    • It focuses on fiscal discipline, capital investment, and efficient allocation of public resources for long-term growth.
    • Key Indicators of the QPE Index:
    1. Capital Outlay to GDP Ratio: Measures government spending on infrastructure as a percentage of GDP. Higher ratio = better quality expenditure.
    2. Revenue Expenditure to Capital Outlay Ratio: Lower ratio preferred, as excessive spending on salaries & subsidies reduces funds for development.
    3. Development Expenditure to GDP Ratio: Tracks spending in education, healthcare, infrastructure, improving human capital & productivity.
    4. Development Expenditure as % of Total Expenditure:  Higher share indicates better resource allocation.
    5. Interest Payments to Total Expenditure Ratio:  Lower ratio = better debt management & fiscal sustainability.

    Key Findings from RBI’s QPE Index Analysis:

    • 1991-2003: Post-liberalization, focus on reducing fiscal deficit led to a decline in public investment.
    • 2003-2008:  FRBM Act (2003) improved fiscal discipline, increasing capital spending & state revenues.
    • 2008-2013: Global Financial Crisis (GFC) led to higher government spending, increasing fiscal deficits but supporting recovery.
    • 2013-2017: 14th Finance Commission (2015) increased states’ share in central taxes, boosting development expenditure.
    • 2017-2020:  GST implementation challenges affected the Centre’s revenues, but states benefited from higher tax shares.
    • 2020-Present:  Record capital expenditure boosted infrastructure & economic recovery, improving public expenditure quality.

    PYQ:

    [2014] With reference to Union Budget, which of the following, is/are covered under Non-Plan Expenditure?

    1. Defence-expenditure

    2. Interest payments

    3. Salaries and pensions

    4. Subsidies

    Select the correct answer using the code given below:

    (a) 1 only

    (b) 2 and 3 only

    (c) 1, 2, 3 and 4

    (d) None

     

  • Rupee-Dollar Swap Auction

    Why in the News?

    The Reserve Bank of India (RBI) will conduct a $10 billion dollar-rupee swap auction on February 28, 2025, aimed at injecting durable rupee liquidity into the banking system.

    This 3-year forex swap is expected to inject ₹86,000 crore into the banking system at a time when there is a liquidity deficit of ₹1.7 lakh crore in the financial sector.

    What is the RBI’s Forex Swap Auction?

    • Forex swap auctions are a tool used by the RBI to manage liquidity and stabilize financial markets.
    • In return, the RBI will inject rupee liquidity into the banking system.
      • Buy-Sell Swap: RBI buys dollars now and sells them back later (liquidity injection).
      • Sell-Buy Swap: RBI sells dollars now and buys them back later (liquidity absorption).
    • After 3 years, the transaction will be reversed, with the RBI selling dollars back to banks and absorbing rupee liquidity from the system.

    How does it work?

    • Auction Process:
      • Banks bid in the swap auction by quoting the swap rate (forward premium).
      • The lowest premium bids are accepted first (similar to G-sec auctions).
    • Liquidity Injection:
      • Banks sell US dollars to the RBI at the prevailing exchange rate.
      • The RBI provides rupees in exchange, boosting liquidity in the banking system.
    • Reverse Swap After Three Years:
      • On March 6, 2028, the swap will be reversed.
      • The RBI will return US dollars to the banks and absorb the equivalent amount of rupees.
    • This allows the RBI to control liquidity over a longer period without permanently altering its forex reserves.

    Significance of this move

    • Reduces Borrowing Costs: More liquidity in the system lowers short-term interest rates. Bond yields and corporate borrowing costs decline, benefiting businesses and NBFCs.
    • Stabilizes Foreign Exchange Markets: The rupee’s availability increases, reducing pressure on exchange rates. Lower hedging costs for companies with foreign liabilities.
    • Enhances RBI’s Monetary Policy Toolkit: This approach provides a temporary boost to liquidity, while ensuring a controlled reversal in the future.

    PYQ:

    [2015] Convertibility of rupee implies:

    (a) Being able to convert rupee notes into gold

    (b) Allowing the value of rupee to be fixed by market forces

    (c) Freely permitting the conversion of rupee to other currencies and vice versa

    (d) Developing an international market for currencies in India