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GS Paper: GS3

  • Imposition of Anti-Dumping Duty on Sodium Cyanide

    Why in the news?

    The Directorate General of Trade Remedies (DGTR) has recently recommended the imposition of an anti-dumping duty on sodium cyanide (NaCN) imported from China, the European Union, Japan, and Korea.

    Sodium Cyanide and Its Applications

    • Sodium cyanide is a deadly toxic, white, crystalline compound with the chemical formula NaCN.
    • It is a water-soluble solid, mainly used in gold mining, electroplating, and in the synthesis of organic chemicals.
    • It is hygroscopice. it quickly absorbs water from the air.
    • In gold mining, sodium cyanide is used to dissolve and separate gold from its ores.
    • It plays a pivotal role in various industrial processes, electroplating, metal heat treatment, and the production of insecticides, dyes, pigments, and pharmaceuticals.

    What is Anti-Dumping Duty?

    • An anti-dumping duty is a protectionist tariff that a domestic government imposes on foreign imports that it believes are priced below the price at which it is sold in the exporters’ domestic market.
    • This is imposed with the rationale that these products have the potential to undercut local businesses and the local economy.
    • The World Trade Organization (WTO) operates a set of international trade rules for the regulation of anti-dumping measures.
    • In general, the WTO agreement permits governments to act against dumping “if it causes or threatens material injury to an established industry in the territory of a contracting party.

    Anti-Dumping Mechanism in India:

    • The Anti-Dumping mechanism in India is administered by the Directorate General of Anti-Dumping and Allied Dutites (DGAD) under the Ministry of Finance.
    • The anti-dumping law in India is covered under the Customs Tariff Act, 1975, and the Customs Tariff Rules, 1995.
    • The DGAD conducts anti-dumping investigations to determine if the domestic industry has been hurt by a surge in below-cost imports.

    How is Anti-Dumping Duty calculated?

    • The anti-dumping duty is calculated as the difference between the normal value and the export value of the product.
    • The normal value is the market value of the product in the domestic market, while the export value is the price at which the product is exported to India.
    • The anti-dumping duty is imposed to offset the price difference and prevent the domestic industry from being harmed by cheap imports.

     

    PYQ:

    [2015] In India, the steel production industry requires the import of-

    (a) Saltpetre

    (b) Rock phosphate

    (c) Coking coal

    (d) All of the above

  • In news: Gape Limitation

    This newscard is an excerpt from the original article published in TH.

    What is Gape Limitation?

    • In ecology, the concept of ‘gape limitation’ sheds light on a simple yet crucial idea: predators can only eat prey that fit into their mouths.
    • It dictates the range of prey accessible to predators, influencing the dynamics of ecological communities.

    Imagine a predator fish species with a relatively small mouth or gape size. This fish species primarily feeds on small aquatic invertebrates like zooplankton and small crustaceans. Due to its limited gape size, it cannot consume larger prey items such as larger fish or large insects.Now, let’s introduce a different predator fish species with a larger mouth or gape size. This predator has a broader diet and can consume a wider range of prey items, including smaller fish and larger invertebrates.In this scenario, the predator with the larger gape size has a competitive advantage over the predator with the smaller gape size. It can exploit a greater variety of prey resources, potentially leading to differences in foraging success, growth rates, and overall fitness between the two predator species.This example demonstrates how gape limitation can influence the feeding ecology and interactions between predator and prey species in an ecosystem.

     

  • What is the technology behind manufacturing a semiconductor chip?

    Why in the News? 

    The Union Cabinet has sanctioned the setup of three semiconductor facilities as part of the initiative to develop semiconductor and display manufacturing ecosystems in the country. One is in Assam and the other two are in Gujarat.

    Need for Semiconductor hub in India:

    • Right now, only a few countries in the world make computer chips. Due to the issues like COVID-19 pandemic and geopolitical tensions between countries, it’s become clear that we need more countries to manufacture these chips instead of Depending on the single country (Taiwan issue).
    • For example, the TATA Group, working with a company from Taiwan called Powerchip Semiconductor Manufacturing Corporation (PSMC), is building a factory in Gujarat to make chips.

    BACK2BASICS:

    What is a Semiconductor chip? How is it manufactured?

    It is a tiny electronic device made of semiconductor material (usually silicon or germanium) that serves as the basic building block of most electronic circuits. These chips can perform various functions, such as processing data, storing information, or controlling electronic devices.

    What is a transistor?

    A transistor is a semiconductor device used to amplify or switch electronic signals and electrical power. It is a fundamental building block of modern electronic devices and circuits. Transistors can be thought of as electronic switches that can be turned on or off, or can be used to amplify electrical signals.

    What is fabrication technology?

    Fabrication technology, often referred to as semiconductor fabrication technology or semiconductor manufacturing, is the process of creating electronic devices and integrated circuits (ICs) on semiconductor materials such as silicon. It involves a series of complex steps to build electronic components, including transistors, diodes, and resistors, as well as connecting them to create functional electronic circuits.

    What is known as a wafer?

    A wafer refers to a thin, flat slice of semiconductor material, typically made of silicon. Silicon wafers are the primary substrate used in the fabrication of integrated circuits (ICs) and other semiconductor devices.

     

    Efforts made by the Indian Government to build Semiconductor Ecosystem:

    • India Semiconductor Mission (ISM): The Indian government is actively promoting semiconductor industry growth through initiatives and incentives, including the establishment of the India Semiconductor Mission (ISM) and a significant financial package to boost semiconductor and display manufacturing.
    • Effort to boost Domestic manufacturing: India is also working to attract international investments to bolster domestic manufacturing. An example of this is Micron Technology’s planned Assembly, Test, Mark, and Pack (ATMP) facility in Gujarat, with a total investment of $2.75 billion, set to produce the first “Made in India” chip by the end of 2024
    • International Partnership: The US Semiconductor Industry Association (SIA) and the India Electronics and Semiconductor Association (IESA) have decided to establish a partnership, with the US presently having a ‘Chip 4’ alliance with the world’s top semiconductor makers – Taiwan, Japan

    Conclusion: India’s semiconductor ecosystem is proliferating, backed by government initiatives like the India Semiconductor Mission and partnerships with global players. Efforts to boost domestic manufacturing and international collaborations signify India’s emergence as a key player in the semiconductor industry.

  • Why RBI has been wary of declaring an early victory over inflation?

    Why in the news? 

    Recently, the Monetary Policy Committee (MPC), which met here from April 3 to 5, decided to keep the repo rate unchanged at 6.5% and maintain the policy stance of ‘withdrawal of accommodation’ in the monetary policy.

    • Withdrawal of accommodation means reducing the money supply in the system which will rein in inflation further. (Temporary Provision)

    Why the RBI has been wary of declaring an early victory over inflation?

    • Persistent Food Inflation: Despite expectations of moderation in inflation, food inflation has remained a concern, especially due to the high prices of food grains and vegetables. In February, food inflation was at 8.7%, with foodgrain inflation still high at 9.8%.
    • Inflation Gap between Bottom and Top of Urban Population: Food inflation disproportionately affects lower-income deciles more than higher ones. In February, the bottom 20% of the urban population faced 5.5% inflation compared to 4.7% for the top 20%. This pattern is similar in rural areas as well.
    • Management Issues: The RBI faces challenges in managing inflation while maintaining growth, especially when inflation persists due to Geopolitical conditions. While central bank policy moves cannot directly bring down supply shock-driven inflation, they can prevent high prices from spilling over.

     Why RBI has kept policy rates unchanged?

    • High Economic Growth: The RBI is focused on maintaining price and financial stability to sustain high growth. The central bank expects the Indian economy to grow at 7% in fiscal year 2024-25
    • Benign Core Inflation: Benign core inflation, which has declined steadily over the past months, indicates that strong growth has not been inflationary. The RBI finds comfort in the declining core inflation levels
    • Monetary Policy Stance associated with food inflation: The RBI is likely to maintain policy rates until October 2024 to assess evolving risks associated with food inflation. The central bank is cautious and prefers to adopt a risk-minimization mode to align inflation towards the target while supporting growth
    • Global Economic Conditions: The RBI is monitoring global economic trends and external factors that could impact domestic inflation and growth. The central bank is aware of the risks posed by geopolitical tensions, volatility in international financial markets, and geo-economic fragmentation

     

    BACK2BASICS

    The Monetary Policy Committee (MPC)

    • It is a key body responsible for formulating the country’s monetary policy. It  is a statutory body constituted as per Section 45ZB under the RBI Act of 1934 by the Central Government
    •  It is a six-member committee established under the amended Reserve Bank of India Act, of 1934. The MPC’s primary objective is to determine the policy rate required to achieve the inflation target set by the government. The committee consists of the following members:
      • RBI Governor (ex officio chairperson)
      • Deputy Governor in charge of monetary policy
      • An officer of the Bank nominated by the Central Board
      • Three members appointed by the central government
    • The MPC meets at least four times a year, and decisions taken by the committee are binding on the Reserve Bank of India.
    • The committee’s composition ensures a mix of expertise in economics, banking, finance, and monetary policy to effectively manage the country’s Monetary Policy Framework.

     

    Conclusion: The RBI has been cautious due to persistent food inflation impacting lower income groups, challenges in managing it, and the need to assess evolving risks. MPC’s unchanged policy rates reflect this caution amidst high growth and benign core inflation.

    Mains pyq 

    Q Do you agree with the view that steady GDP growth and low inflation have left the Indian economy in good shape? Give reasons in support of your arguments. (UPSC IAS/2019)

    Source https://indianexpress.com/article/opinion/columns/why-rbi-wary-of-declaring-early-victory-over-inflation-9253330/

  • Next government must urgently fix ‘unnecessarily complex’, counter-productive GST: 13th Finance Commission chair

    Why in the news? 

    Recently Vijay Kelkar (chaired 13th Finance Commission) attributes frauds in Indirect Tax regimes to high GST rates; Moots switched to a single 12% rate like most other countries.

    Reason behind the need for a Single GST rate:

    • Simplification of the structure: A single GST rate would simplify the structure, making it easier for businesses to comply with the tax system and reducing the complexity of classification issues
    • Promotion of manufacturing and exports: A single GST rate could help promote manufacturing and exports by reducing the burden of multiple rates and making the tax system more predictable
    • Single GST rate in many countries: In many developed and emerging market economies, a single GST or VAT rate has been successful in optimizing tax revenue and minimizing tax disputes for example Singapore, New Zealand, the United Arab Emirates, and Japan, have opted for a single GST or VAT rate
    • Addressing GST frauds: High GST rates can make it lucrative for fraudsters to evade taxes. A single, lower GST rate could potentially reduce the incentive for tax evasion and make the system more transparent
    • Reducing litigation: A single GST rate could help reduce litigation related to classification issues and subjective interpretation of tax rates

    How does the Indian GST model compare with GST in other countries?

    Particulars India  Canada UK Singapore
    Name of GST in the Country Goods and Service tax Federal Goods and Service Tax & Harmonized Sales Tax Value Added Tax Goods and Service Tax
    Standard Rate 0% (for food staples), 5%, 12%, 18% and 28% (+cess on luxury items) GST 5% and HST varies from 0% to 15% 20 %Reduced rates- 5 %, exempt, zero rated 7% Reduced rates- Zero rated, exempt
    Threeshold Exemption Limit Rs.40 lakh or Rs.20 lakh, depending on the state and supply Canadian $ 30,000 ÂŁ 85,000 Singapore $ 1 million
    Liability arises on Accrual basis: Issue of invoice ORReceipt of payment-earlier Accrual basis: The date of issue of invoice OR the date of receiptof payment- earlier. Accrual Basis: Invoice OR PaymentOR Supply-earliestCash basis (T/O up to 1.35mn): Payment Accrual Basis: Issue of invoice OR Receipt of payment OR Supply – earliestCash basis: (T/O up to SGD$1mn): Payment
    Reverse Charge Mechanism Applies on goods as well as services Reverse charge applies to the importation of services andintangible properties Applicable Reverse charge applies to the supply of services
    Exempt Supplies Sale of land and completed buildings, certain healthcare and educational services, essential food items, etc. Real estate, financial services, rent (Residence), charities, health, education Medical, education, finance, insurance, postal services Real estate, Financial services, Residential rental

    Significance of sharing GST with local bodies:

    • Promoting Co-operative Fiscal-federalism: Sharing GST revenues with local bodies could promote fiscal federalism by ensuring a fair distribution of tax revenues among all tiers of government.
    • Strengthening of their Fiscal base: Equitable sharing of GST with the third tier of government, i.e., local bodies, would strengthen their fiscal base and enable them to undertake investments for vital infrastructure and high-quality public goods
    • Building Fairness and appropriateness: GST is a consumption tax, and taxpayers should see direct benefits accruing from their payment of taxes. An arrangement for sharing GST revenues with local bodies would be fair and appropriate
    • Improves Local governance: Sharing GST revenues with local bodies would bolster the quality of governance provided by local governments, as citizens’ demand for quality public goods will grow louder.

    BACK2BASICS:

    About Goods and Services Tax:

    • GST was introduced through the 101st Constitution Amendment Act, 2016. It is one of the biggest indirect tax reforms in the country.
    • It was introduced with the slogan of ‘One Nation One Tax’.The GST has subsumed indirect taxes like excise duty, Value Added Tax (VAT), service tax, luxury tax etc.
    • It is essentially a consumption tax and is levied at the final consumption point.
    • Tax Structure:
    • Central GST to cover Excise duty, Service tax etc, State GST to cover VAT, luxury tax etc. and Integrated GST (IGST) to cover inter-state trade.
    • IGST per se is not a tax but a system to coordinate state and union taxes.
    • It has a 4-tier tax structure for all goods and services under the slabs- 5%, 12%, 18% and 28%.

    Conclusion: Implementing a single GST rate streamlines compliance, promotes economic growth, and curbs fraud. Sharing GST revenue with local bodies strengthens fiscal bases, fosters fairness, enhances governance, and supports fiscal federalism for equitable distribution.

  • AgniKul ‘Agnibaan SOrTeD’ Mission

    Why in the news?

    • For the second time, the launch of AgniKul ‘Agnibaan SOrTeD’ has been postponed.
    • The IIT Madras-based Agnikul Cosmos was to test-fire an Agnibaan rocket with 3D-printed engine, aiming for suborbital flight trajectory control.

    What is Agnibaan SOrTeD (Suborbital Tech Demonstrator)?

    • Agnibaan SOrTeD is a single-stage launch vehicle powered by Agnikul’s patented Agnilet semi-cryogenic engine.
    • In contrast to traditional sounding rockets, Agnibaan SOrTeD’s vertical take-off and precise trajectory enable orchestrated maneuvers during flight.

    Distinct Features of Agnibaan:

    • Customizability: The rocket offers custom launch configurations, either single or two-stage launches.
    • Dimensions: Standing at 18 meters and weighing 14,000 kg, Agnibaan SOrTeD is a powerful presence.
    • Payload Capacity: With a capacity for payloads of up to 100 kg, it can reach altitudes of 700 km in five different Lower Earth Orbits (LEOs).
    • Engine Configuration: The first stage can house up to seven Agnilet engines, powered by Liquid Oxygen and Kerosene, dependent on the mission’s requirements.
    • Launch Pedestal ‘Dhanush’: AgniKul’s built ‘Dhanush’ supports the rocket’s mobility across configurations, ensuring compatibility with multiple launch ports.
    • Agnilet Engine: Agnilet engine, a 3D-printed, single-piece, 6 kN semi-cryogenic marvel, drives Agnibaan’s propulsion. The engine employs a novel blend of liquid kerosene and supercold liquid oxygen as propellants.

    PYQ:

    [2011] Satellites used for telecommunication relay are kept in a geostationary orbit. A satellite is said to be in such an orbit when:

    1.    The orbit is geosynchronous.

    2.    The orbit is circular.

    3.    The orbit lies in the plane of the Earth’s equator.

    4.    The orbit is at an altitude of 22,236 km

    Select the correct answer using the codes given below:

    (a) 1, 2 and 3 only

    (b) 1, 3 and 4 only

    (c) 2 and 4 Only

    (d) 1, 2, 3 and 4

  • What is Project Akashteer?

    Why in the news?

    • The Indian Army’s Corps of Army Air Defense has initiated the induction of control and reporting systems under ‘Project Akashteer’ to bolster its air defense capabilities.

    About Project Akashteer

    • The Akashteer Project is an initiative designed to automate air defence control and reporting processes by digitising the entire process.
    • It is developed by Bharat Electronics Limited (BEL) as part of the ‘Atmanirbhar Bharat’ initiative.
    • It seeks to induct Akashteer Command and Control Systems
    • By integrating radar and communication systems at all levels into a unified network, ‘Akashteer’ aims to deliver an unprecedented level of situational awareness and control.
    • This will enable swift engagement of hostile targets, significantly reduce the risk of fratricide, and ensure the safety of friendly aircraft in contested airspace.

    How it will help India’s air defence system?

    The ‘Akashteer Command and Control Systems’ will significantly enhance India’s air defense capabilities in several ways:

    1. Efficiency and Integration: Digitizing Air Defence Control and Reporting processes with ‘Akashteer’ will improve efficiency and integration. This enables the Indian Army to respond swiftly to hostile threats while reducing the risk of friendly fire incidents.
    2. Situational Awareness: ‘Akashteer’ integrates radar and communication systems into a unified network, providing the Indian Army with better situational awareness. This enables them to detect and engage hostile targets more effectively, ensuring the safety of friendly aircraft in contested airspace.
    3. Mobility and Resilience: The system’s vehicle-based and mobile Control Centers are designed for operational capabilities even in challenging communication environments. This ensures that the Indian Army can operate effectively in diverse terrain and adverse conditions.
    4. Automation: Deployment of ‘Akashteer’ represents a move towards complete automation of air defense operations. This enhances the Indian Army’s ability to defend its airspace, ensuring a safer and more secure future for the country.

    PYQ:

    [2018] What is “Terminal High Altitude Area Defense (THAAD)”, sometimes seen in the news?

    (a) An Israeli radar system

    (b) India’s indigenous anti-missile programme

    (c) An American anti-missile system

    (d) A defence collaboration between Japan and South Korea

  • Fighting forest fires with a plan and community cooperation

    Why in the news? 

    The forest staff across the Kerala State are on alert with the onslaught of summer, with temperatures reaching as high as 40-41 degrees Centigrade, unusual for this time.

    Forest Fires in Kerala 

    • Kerala records relatively fewer forest fires compared to several other states in India, including Chhattisgarh, Odisha, Madhya Pradesh, Assam, and Maharashtra.
    • Kerala’s forest cover, occupying 29.65% of the land, is dominated by deciduous and semi-deciduous woods that are drying up, especially on the forest periphery because of it Forest staff in Kerala are on alert
    •  Kerala reported 163 wildfire incidents since January, resulting in the burning of 230 hectares of forest, which is less compared to previous years.
    • Global Forest Watch data indicates 97 VIIRS(Visible Infrared Imaging Radiometer Suit) fire alerts in Kerala between March 15 and 22, with only 5.2% of them classified as high-confidence alerts.Fires were responsible for 0.33% forest cover loss in Kerala between 2001 and 2022 according to Global Forest Watch.

    What is the frequency of forest fires in India?

    •  Escalation Of forest Fire : Forest fire season in India typically spans from November to June, during which hundreds of thousands of small and large fires occur annually. The frequency of fires tends to escalate from February onwards as summer approaches.
    • forest Fires as per (ISFR) : In its 2021 report, the biennial India State of Forest Report (ISFR) released by the Forest Survey of India (FSI) indicates that 35.47% of the forest cover is classified as fire-prone areas.

    Region more prone to forest Fire

    • Fires of severe magnitude occur frequently in dry deciduous forests, whereas evergreen, semi-evergreen, and montane temperate forests are relatively less susceptible to fires.
    • During the November to June period, the forests in Northeast India, Odisha, Maharashtra, Jharkhand, Chhattisgarh, and Uttarakhand face the highest risk of fires.For example in 2021, a string of forest fires occurred in Uttarakhand, Himachal Pradesh, the Nagaland-Manipur border, Odisha, Madhya Pradesh, and Gujarat, including within wildlife sanctuaries.
    • In 2024 forest Fires: According to data from the Forest Survey of India (FSI), Mizoram reported the highest number of forest fires (3,738), followed by Manipur (1,702), Assam (1,652), Meghalaya (1,252), and Maharashtra (1,215).

    Reason behind the forest fires in India 

    The majority of forest fires in India are ignited by human activities, including:

    • Agricultural Burning: Farmers often use fire to clear land for cultivation or to manage crop residues, leading to accidental fires spreading into nearby forests.For example Jhum (slash and burn cultivation)
    • Intentional Arson: Deliberate setting of fires for various reasons, such as land grabbing, hunting, or retaliatory actions.
    • Carelessness: Unattended campfires, discarded cigarettes, or burning of waste materials can spark fires.
    • Climate Conditions: Dry and hot weather conditions during the summer months create favorable conditions for the rapid spread of fires. .For example forest fires has worsen due to climate change as per UNEP

    Plan for Fighting forest Fires 

    • Early Detection: Implement systems for early detection of forest fires, such as fire watchtowers, aerial surveillance, and remote sensing technologies like drones and satellites.
    • Rapid Response: Develop well-trained and equipped firefighting teams capable of swift response to contain fires in their early stages before they escalate.
    • Controlled Burns: Conduct controlled burns during cooler and wetter months to remove excess vegetation and reduce the risk of large-scale wildfires during dry seasons.
    • Firebreaks: Create and maintain firebreaks by clearing vegetation along strategic points to halt the spread of fires.
    • Community Involvement: Educate local communities about fire prevention and train them in firefighting techniques. Encourage community participation in fire management efforts.
    • Equipment and Infrastructure: Ensure availability and proper maintenance of firefighting equipment such as hoses, pumps, bulldozers, and firefighting aircraft.

    Conclusion 

    Forest fires in India, exacerbated by climate conditions, pose significant threats. Kerala’s proactive measures and community involvement highlight effective strategies for prevention and control, crucial in mitigating the increasing frequency of fires nationwide.

     

     https://www.downtoearth.org.in/news/natural-disasters/wildfires-will-be-more-frequent-larger-and-intense-due-to-climate-change-unep-81615

  • Why green hydrogen presents both major opportunities, significant challenges

    why in the news? 

    Recently, the Ministry of New and Renewable Energy (MNRE) has announced a Rs-496-crore (until 2025-26) scheme to support pilot projects that either test the viability of green hydrogen as a vehicle fuel or develop secure supporting infrastructure such as refuelling stations.

    Objecive of MNRE scheme 

    (i) validation of technical feasibility and performance of green hydrogen as a transportation fuel

    (ii) evaluation of the economic viability of green hydrogen-powered vehicles

    (iii) demonstration of safe operation of hydrogen-powered vehicles and refuelling stations.

    About Green , Blue and grey hydrogen

    The significance of hydrogen fuel vehicles, particularly hydrogen internal combustion engine (ICE) vehicles and hydrogen fuel cell electric vehicles (FCEVs)

    • Zero Carbon Emissions: Both hydrogen ICE vehicles and FCEVs produce zero carbon emissions during operation.
    • Energy Efficiency: While research suggests that burning hydrogen in an ICE vehicle may be less energy-efficient than using it in a fuel cell, FCEVs still offer high energy efficiency compared to traditional internal combustion engine vehicles, particularly those powered by fossil fuels like diesel and petrol.
    • Clean Energy Production: Hydrogen can be produced through various renewable energy sources, such as wind, solar, and hydroelectric power.
    • Lightweight and Increased Payload Capacity: Hydrogen FCEVs typically weigh less than battery electric vehicles (BEVs) due to the lighter weight of hydrogen and the fuel cell stack compared to EV batteries.
    • Long-haul Freight Applications: Research indicates that long-haul FCEVs can carry freight amounts similar to diesel trucks, while BEVs may suffer from a weight penalty due to heavier batteries.  .
    • Diversification of Energy Sources: Hydrogen fuel vehicles offer a viable alternative to battery electric vehicles, providing diversification in energy sources for transportation.

     Challenges 

    • Storage and Transportation Challenges: Developing specialized cylinders capable of safely storing high-pressure green hydrogen is essential. Existing cylinders designed for compressed natural gas (CNG) are not suitable for hydrogen storage
    • Fuel Costs and Infrastructure: Green hydrogen-powered vehicles face challenges in competing with battery electric vehicles (BEVs) due to higher fuel costs and the need for infrastructure development, including hydrogen refueling stations. The cost of establishing and maintaining hydrogen refueling infrastructure is significant, hindering the widespread adoption of hydrogen FCEVs.
    • Safety Concerns: Hydrogen is highly flammable, necessitating robust safety standards and protocols for handling and storing the fuel at refueling stations.

    Conclusion 

    Green hydrogen offers zero emissions, energy efficiency, and diversification in energy sources for transportation. However, challenges like storage, infrastructure costs, and safety concerns hinder widespread adoption, despite MNRE’s support scheme.

    Mains PYQ

    Q How is efficient and affordable urban mass transport key to the rapid economic development in India? (UPSC IAS/2019)

    Q Discuss in detail the photochemical smog emphasizing its formation, effects and mitigation. Explain the 1999 Gothenburg protocol.(UPSC IAS/2022)

  • RBI to launch Mobile App for Retail Direct scheme

    Why in the news?

    The RBI has decided to introduce a Mobile App of its RBI Retail Direct scheme aimed at facilitating seamless investment in government securities by retail investors.

    What is Retail Direct Scheme?

    • Retail Direct Scheme was rolled out in November 2021, giving access to individual investors to maintain gilt accounts with RBI and invest in government securities.
    • Using this app, investors can buy central and state government bonds as well as Treasury bills.
    • It enables investors to buy securities in primary auctions as well as buy/sell securities through the Negotiated Dealing System-Order Matching system (NDS-OM) platform.
    • A Gilt Account can be compared with a bank account, except that the account is debited or credited with treasury bills or government securities instead of money.

    Treasury Bills:

    • They are promissory notes issued by the RBI on behalf of the government as a short term liability and sold to banks and to the public.
    • The maturity period ranges from 14 to 364 days.
    • They are the negotiable instruments, i.e. they are freely transferable.
    • No interest is paid on such bills but they are issued at a discount on their face value.

     How does it work?

    • Under the scheme, small investors can buy or sell government securities (G-Secs), or bonds, directly without an intermediary like a mutual fund.
    • However, the same tax rules apply to income from G-Secs.
    • The minimum amount for a bid is â‚č10,000 and in multiples of â‚č10,000 thereafter.
    • Payments may be made through Net banking or the UPI

    Benefits of RDS

    • With the government being the borrower, there is a sovereign guarantee for the funds and hence zero risk of default.
    • Also, government securities may offer better interest rates than bank fixed deposits, depending on prevailing interest rate trends.

    How can individuals access G-Sec offerings?

    • Investors wishing to open a Retail Direct Gilt account directly with the RBI can do so through an online portal set up for the purpose of the scheme.
    • Once the account is activated with the aid of a password sent to the user’s mobile phone, investors will be permitted to buy securities either in the primary market or in the secondary market.

    PYQ:

    [2018] Consider the following statements:

    1. The Reserve Bank of India manages and services Government of India Securities but not any State Government Securities.

    2. Treasury bills are issued by the Government of India and there are no treasury bills issued by the State Governments.

    3. Treasury bills offer are issued at a discount from the par value.

    Which of the statements given above is/are correct?

    (a) 1 and 2 only

    (b) 3 only

    (c) 2 and 3 only

    (d) 1, 2 and 3