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GS Paper: GS3

  • Why India needs a third aircraft carrier

    Why in the news?

    Recent reports from the media suggest that the Indian Navy’s persistent request for a third aircraft carrier is edging closer to reality, as Cochin Shipyard Limited (CSL) prepares to commence construction on an additional Vikrant-class platform weighing approximately 40,000 tonnes.

    About Indigenous Aircraft Carrier-2 (IAC-2)   

    • The Indigenous Aircraft Carrier-2 (IAC-2) is a proposed second Indigenous aircraft carrier for the Indian Navy.
    • It is planned to be similar to the first indigenous aircraft carrier, INS Vikrant, but with some modifications.
    • The IAC-2 is expected to have a displacement of around 45,000 tonnes and will be equipped with STOBAR (short take-off but arrested recovery or short take-off, barrier-arrested recovery) technology.

    Future Scope 

    • Operational Versatility: IAC-2 will enhance the Indian Navy’s operational flexibility, enabling it to conduct a wide range of missions including power projection, maritime security, and humanitarian assistance. The carrier’s advanced capabilities and modern technologies will ensure its effectiveness in addressing evolving maritime challenges.
    • Strategic Deterrence: IAC-2 will serve as a key deterrent against potential adversaries, bolstering India’s maritime deterrence posture and signalling its commitment to safeguarding its maritime interests. Its presence will reinforce India’s position as a major maritime power in the Indo-Pacific region, contributing to regional stability and security.
    • Technological Advancement: The construction and operation of IAC-2 will drive technological innovation and advancement in India’s indigenous defence industry. It will stimulate research and development efforts, fostering self-reliance and technological sovereignty in naval defence capabilities.

    Concerns associated   

    • Budgetary issues: The estimated cost of constructing and operating IAC-2 is high, raising concerns about budgetary constraints and the allocation of resources amidst competing defence priorities.
    • Operational Vulnerabilities: IAC-2 may face challenges from evolving anti-access/area denial (A2/AD) strategies employed by potential adversaries such as China and Pakistan. The carrier’s large size and visibility make it susceptible to modern maritime warfare tactics, including advanced missile systems and submarine threats, potentially compromising its operational effectiveness.
    • Strategic Alignment: Questions may arise about the carrier’s role and relevance in addressing contemporary security threats and whether alternative defence investments would provide better national security and strategic deterrence returns.

    Upgrading Capabilities as a Solution

    • Enhanced Airborne Capabilities: The Indian Air Force (IAF) can project maritime power using aircraft like the SEPECAT Jaguar IM/IS and Sukhoi Su-30MKI fighters, which can carry advanced maritime strike weapons. The Su-30MKI squadron, equipped with BrahMos-A supersonic cruise missiles, enhances maritime strike capabilities.
    • Strengthening Island Defenses: Upgrading the military capabilities of the Andaman and Nicobar archipelago could create an A2/AD maritime ‘exclusive zone’, deterring Chinese naval activities.
    • Balanced Force Development: Diversifying investments to upgrade existing surface combatants, submarines, and air assets can provide a balanced approach to enhancing naval capabilities. Ensuring adequate funding for other critical areas like mine counter-measures, maritime patrol aircraft, and naval utility helicopters is essential for comprehensive maritime security.

    Conclusion: While the IAC-2 represents a significant advancement in India’s naval capabilities, addressing financial constraints, strategic vulnerabilities, and diversifying investments in maritime and airborne assets are crucial for achieving a robust and balanced defence strategy.

    Mains PYQ:

    Q What are the maritime security challenges in India? Discuss the organisational, technical and procedural initiatives taken to improve maritime security. (UPSC IAS/2022)

  • What are Coronal Mass Ejections (CMEs)?

    Why in the News?

    • India’s solar mission Aditya-L1 recently captured images of the Sun and it’s Coronal Mass Ejections (CMEs) during a solar storm in May.
      • The Active region AR13664 on the Sun erupted several X-class and M-class flares, which were associated with Coronal Mass Ejections (CMEs).

    Coronal Mass Ejections (CMEs)

    • CMEs were discovered in 1971 and established their importance in solar-terrestrial relations later in the 1980s.
    • It consists of massive clouds of solar plasma and magnetic field lines.
    • It typically accompanies solar flares and filament eruptions.
    • The frequency of CMEs varies with the 11-year solar cycle, with about one a week observed during solar minimum and an average of two to three CMEs per day observed near solar maximum
    • They travel at thousands of km per hour.
    • They can lead to geomagnetic storms, aurorae, and in extreme cases, damage to electrical power grids.
    • Not all CMEs interact with Earth, but those that do can cause disruptions to satellite communications and power grids.
    • Halo CMEs are Earth-directed CMEs visible as rings in white-light coronagraph observations.

    About Aditya-L1:

    • Aditya-L1 mission is India’s first space mission to observe the Sun.
    • It is ISRO’s 2nd space-based astronomy mission after AstroSat, which was launched in 2015.
    • It was launched on September 2nd 2023 to observe the Sun and the solar corona.
    • The L1 point is a location in space where the gravitational forces of two massive objects, such as the Earth and the Sun, balance each other out, allowing a spacecraft to “hover” in a stable orbit.

    Launch Details: 

    • Polar Satellite Launch Vehicle (PSLV) with 7 payloads (instruments) on board.

    The 7 payloads include: 

      1. Visible Emission Line Coronagraph (VELC): Images of the solar corona in visible light to study its structure and dynamics.
      2. Solar Ultraviolet Imaging Telescope (SUIT): Images the solar chromosphere and transition region in ultraviolet light to understand heating and dynamics.
      3. Solar Low Energy X-ray Spectrometer (SoLEXS): Measures solar X-ray spectrum to study solar flares and coronal mass ejections.
      4. High Energy L1 Orbiting X-ray Spectrometer (HEL1OS): Measures high-energy solar X-rays to understand particle acceleration.
      5. Plasma Analyser Package for Aditya (PAPA): Measures solar wind plasma properties to study its interaction with Earth’s magnetosphere.
      6. Aditya Solar Wind Particle Experiment (ASPEX): Measures energetic particle properties in the solar wind to study their effects on Earth’s atmosphere.
    • Solar Irradiance Monitor (SIM): Measures solar irradiance variations and their impact on Earth’s climate.

    Objectives:

    • Aditya L1 will study the coronal heating, solar wind acceleration, coronal magnetometry, origin and monitoring of near-UV solar radiation and continuously observe the photosphere, chromosphere and corona, solar energetic particles and the magnetic field of the Sun.

    Location:

    • Aditya is placed in L1 Halo orbit which is about 1.5 million km from the Earth. The orbit allows the mission to look at the Sun continuously.
    • L1 refers to Lagrangian/Lagrange Point 1, one of 5 points in the orbital plane of the Earth-Sun system.
    • Lagrange Points are positions in space where the gravitational forces of a two-body system like the Sun and Earth produce enhanced regions of attraction and repulsion.

    PYQ:

    [2017] The terms ‘Event Horizon’, ‘Singularity’, ‘String Theory’ and ‘Standard Model’ are sometimes seen in the news in the context of-

    (a) Observation and understanding of the Universe

    (b) Study of the solar and lunar eclipses

    (c) Placing satellites in the orbit of the Earth

    (d) Origin and evolution of living organisms on the Earth

     

    https://www.thehindu.com/sci-tech/science/isro-releases-images-of-sun-captured-by-aditya-l1-during-may-solar-storm/article68273124.ece

  • PM-KISAN Scheme: Boosting Farmer Welfare

    Why in the News?

    Prime Minister has approved the 17th instalment of the PM Kisan scheme. This move will benefit 9.3 crore farmers, amounting to a distribution of approximately Rs 20,000 crore.

    About the PM-KISAN Scheme

    • The Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) is a Central Sector Scheme with 100% funding from the Government of India.
    • It is being implemented by the Ministry of Agriculture and Farmer’s Welfare.
    • Launched: In February 2019.
    • Aim: To help procure various inputs to ensure proper crop health and appropriate yields, commensurate with the anticipated farm income at the end of each crop cycle.
    • Objective: To provide eligible farmers with an annual financial assistance of ₹6,000.
      • This assistance is distributed in three equal instalments of ₹2,000 each every 4 months, via Direct Benefit Transfer (DBT) into the bank accounts of beneficiaries.
    • Beneficiaries:
      • Farmer families that hold cultivable land can apply for the benefits of this plan.
      • Small and Marginal Farmers (SMFs) (a farmer who owns cultivable land up to 2 hectares as per land records of the concerned State/UT.).
      • The entire responsibility of identification of beneficiary farmer families rests with the State / UT Governments.

    Significance for Farmers

    • Beneficiaries outreach: Over 11 crore farmers (with more than 3 crore women farmers) across the country have availed of the PM-Kisan scheme, indicating its widespread reach and impact.
    • Financial Support: This financial aid helps farmers meet their agricultural expenses, purchase seeds, fertilizers, and other inputs, and support their families’ livelihoods.
    • Improved Agricultural Practices: This contributes to food security and boosts the agricultural sector’s growth.
    • Poverty Alleviation: The scheme plays a crucial role in alleviating poverty among small and marginal farmers by providing them with a steady source of income just like Universal Basic Income (UBI).
    • Enhanced Livelihoods: PM-Kisan supports farmers’ livelihoods, by providing a safety net during times of agricultural distress or economic uncertainties, ensuring a better quality of life for rural communities.

    PYQ:

    [2020] Under the Kisan Credit Card scheme, short-term credit support is given to farmers for which of the following purposes?

    1. Working capital for maintenance of farm assets.
    2. Purchase of combine harvesters, tractors and mini trucks.
    3. Consumption requirements of farm households.
    4. Post-harvest expenses.
    5. Construction of family house and setting up of village cold storage facility.

    Select the correct answer using the code given below:

    (a) 1, 2 and 5 only

    (b) 1, 3 and 4 only

    (c) 2, 3, 4 and 5 only

    (d) 1, 2, 4 and 5

  • Bonn Climate Conference 2024: 3rd Glasgow dialogue flags need for loss & damage cooperation

    Why in the News?

    This week, the Third Glasgow Dialogue on Loss and Damage occurred during the 60th Session of the Subsidiary Bodies (SB60) to the United Nations Framework Convention on Climate Change (UNFCCC) in Bonn, Germany.

    Key highlights of the Conference:

    • Dialogue on Loss and Damage (L&D): The conference focused on discussions around the mechanisms under the UNFCCC, including the Santiago Network on Loss and Damage (SNLD), the Warsaw International Mechanism (WIM), and the recently operationalized Loss and Damage Fund (LDF).
    The SNLD was established at COP25 in 2019 to catalyze technical assistance for developing countries in implementing approaches for averting, minimizing, and addressing loss and damage

    The WIM was established at COP19 in 2013 to promote approaches for averting, minimizing, and addressing loss and damage associated with climate change impacts

    The LDF was operationalized at COP27 in 2022 to provide financial support to developing countries for averting, minimizing, and addressing loss and damage
    • Progress in Mechanisms: The co-chairs of each mechanism highlighted the progress made in addressing L&D in the UNFCCC negotiations. This includes positive steps taken in forming the Board of the LDF and formalizing its institutional arrangements and additional rules.
    • Global South Concerns: Countries from the Global South, including the African Group of Negotiators (AGN), the Alliance of Small Island States (AOSIS), and the Arab Group, emphasized the growing cases of L&D in developing nations. There were calls for better cooperation and coordination between countries and mechanisms to address L&D more effectively.
    African Group of Negotiators (AGN): It is a coalition of African countries that work together to coordinate their positions and negotiate on various international issues, such as climate change, sustainable development, and human rights.

    Alliance of Small Island States (AOSIS): It is a coalition of small island developing states that work together to address common challenges and promote their interests in international forums.

    Arab Group: It is a coalition of Arab states that work together to promote their collective interests and coordinate their positions on various international issues.
    • Need for Clarity and Coordination: There were calls for a clear relationship between the SNLD, WIM, and LDF, as they each continue to have separate discussions despite having the same goal of addressing L&D. Coordination between these mechanisms would address gaps and improve resource mobilization for developing nations.

    About Article 6 and its structural mandate:

    • Article 6 of the UNFCCC deals with cooperative approaches for the implementation of climate action. It provides a framework for international cooperation in areas such as emissions trading, sustainable development, and the transfer of mitigation outcomes. 
    • The structural mandate of Article 6 aims to facilitate cooperation between countries to enhance climate action and achieve the goals of the Paris Agreement.
    • Article 6.2: Authorisation is the formal approval process where emission reductions (Internationally Transferred Mitigation Outcomes or ITMOs) are sanctioned by the host country for transfer to another country.
    • Article 6.4 of the Paris Agreement focuses on operationalising market mechanisms for emission reduction units (6.4ERs), addressing issues like authorisation, carbon removal activities, and the role of the supervisory body in developing market procedures.

    Key Goals and Objectives:

    • Raised Ambition: International cooperation under Article 6 aims to raise ambition by enabling countries to achieve more ambitious emission reduction targets.
    • Supporting Sustainable Development: The cooperation mechanisms must support sustainable development, addressing not only climate change but also other sustainability issues.
    • Ensuring Environmental Integrity: The mechanisms must ensure environmental integrity by preventing emission reductions from being counted more than once and ensuring that countries do not circumvent their climate action efforts

    Way Forward:

    • Clarity and Coordination: There is a need for clarity on the framework of L&D as a whole, with a defined relationship between its key mechanisms. This would ensure better coordination and cooperation in addressing L&D effectively.
    • Enhanced Technical Interventions: Countries emphasized the importance of technical interventions such as Early Warning Systems and timely provision of finance to improve responses to L&D. Implementing these interventions could minimize the impacts of extreme weather events and facilitate faster recovery.
    • Tailored Responses: Responses to L&D must be tailored to the unique contexts of each country, with individual vulnerability and needs assessments being a priority. This would ensure that assistance and support are provided where they are most needed.
    • Trigger-based Funding Mechanisms: Suggestions were made for trigger-based funding mechanisms or timeline-based provision of funds for countries facing devastating impacts and remaining most vulnerable. Such mechanisms would ensure timely and adequate support for those in need.

    Mains PYQ:

    Q Explain the purpose of the Green Grid Initiative launched at the World Leaders Summit of the COP26 UN Climate Change Conference in Glasgow in November 2021. When was this idea first floated in the International Solar Alliance (ISA)? (UPSC IAS/2021)

  • Hydrogen Line: A Unique Signal

    Why in the News?

    The hydrogen line stands as a pivotal tool in contemporary astronomy, serving various purposes from studying distant stars to questing for extraterrestrial intelligence, should it exist.

    What is a Hydrogen Line?

    • The hydrogen line is a special type of light that hydrogen atoms emit.
    • It happens when an electron, a tiny particle that orbits the nucleus of the hydrogen atom, jumps from a higher energy level to a lower one.
    • This jump releases energy in the form of light, specifically with a wavelength of about 21 centimetres. This wavelength is what scientists call the hydrogen line.

    Why is it Important?

    • Hydrogen is everywhere in the universe. It’s the simplest and most abundant element, making up about 75% of the universe’s elemental mass.
      • So, studying the hydrogen line allows us to understand a lot about the composition and distribution of matter in the universe.
    • By observing the hydrogen line’s emission from different regions of space, astronomers can create maps showing where hydrogen gas is located.
    • Secrets about the early Universe: The hydrogen line also holds secrets about the early universe. Shortly after the Big Bang, the universe was filled with hydrogen gas.
      • By studying the hydrogen line from distant parts of the universe, astronomers can learn about its conditions and evolution billions of years ago.

    How Do We Interpret Hydrogen Line?

    • Radio telescope data enables mapping of hydrogen distribution, revealing locations of hydrogen clouds crucial for understanding galaxy and galaxy cluster formation and evolution.
    • Observing hydrogen line emission from different galaxy parts enables studying internal structures and dynamics, like rotation curves, offering insights into mass distribution within galaxies.
    • Observing hydrogen lines from distant galaxies unveils early universe conditions, aiding in understanding cosmic evolution’s initial stages.

    What’s Next?

    • New Discoveries: Scientists are continually developing new technologies and techniques to improve the sensitivity and resolution of radio telescopes.
      • This enables them to detect fainter signals and uncover new insights into the universe’s hydrogen content.
    • Exploring Dark Matter: The hydrogen line observations could also contribute to understanding dark matter, an invisible substance that makes up about 27% of the universe’s total mass-energy content.
      • By studying the hydrogen distribution in relation to the gravitational effects observed in galaxies, scientists hope to shed light on the nature of dark matter.

    PYQ:

    [2012] A team of scientists at Brookhaven National Laboratory including those from India created the heaviest anti-matter (anti-helium nucleus). What is/are the implication/implications of the creation of anti-matter?

    1. It will make mineral prospecting and oil exploration easier and cheaper.
    2. It will help prove the possibility of the existence of stars and galaxies made of anti-matter.
    3. It will help us understand the evolution of the universe.

    Select the correct answer using the codes given below:

    (a) 1 only

    (b) 2 and 3 only

    (c) 3 only

    (d) 1, 2 and 3

  • [pib] Green Ammonia Production under SIGHT Program

    Why in the News?

    • Solar Energy Corporation of India (SECI) has initiated the bidding process for a total capacity of 5.39 lakh Metric Tonnes (MT) per annum of Green Ammonia production.
      • The initiative falls under Mode 2A of the Strategic Interventions for Green Hydrogen Transition (SIGHT) Programme, part of the National Green Hydrogen Mission led by the Ministry of New & Renewable Energy (MNRE).

    What is Green Ammonia?

    • Green ammonia, also known as renewable ammonia, is a form of ammonia produced using renewable energy sources, which is proposed as a sustainable, emission-free alternative with a multitude of applications in industry and other sectors.
    • It is produced by combining nitrogen with hydrogen, which is generated through water electrolysis using renewable energy, and then reacting the hydrogen and nitrogen at high temperatures and pressures to form ammonia.

    About the National Green Hydrogen Mission

    • The National Green Hydrogen Mission was launched in January 2023.
      • Objective: To make India a ‘global hub’ for using, producing and exporting green hydrogen.
    • Earlier, the National Hydrogen Mission was launched on August 15, 2021, with a view to cutting down carbon emissions and increasing the use of renewable sources of energy.
    • The Ministry of New and Renewable Energy (MNRE) formulates the scheme guidelines for the implementation of these missions.

    Key features of the NGHM

    • Power capacity: The mission seeks to promote the development of a green hydrogen production capacity of at least 5 MMT per annum with an associated renewable energy capacity addition of about 125 GW in the country by 2030.
    • Job creation: It envisages an investment of over ₹8 lakh crore and creation of over 6 lakh jobs by 2030.
    • Reducing energy import bill: It will also result in a cumulative reduction in fossil fuel imports of over ₹1 lakh crore and abatement of nearly 50 MMT of annual greenhouse gas emissions by 2030.
    • Export promotion: The mission will facilitate demand creation, production, utilisation and export of green hydrogen.
    • Incentivization: Under the Strategic Interventions for Green Hydrogen Transition Programme (SIGHT), distinct financial incentive mechanisms are provided.
    • Green Hydrogen Hubs: Regions capable of supporting large-scale production and/or utilisation of hydrogen will be identified and developed as Green Hydrogen Hubs.

    What is the SIGHT Program?

    • In the initial stage, two distinct financial incentive mechanisms proposed with an outlay of ₹ 17,490 crore up to 2029-30:
    1. Incentive for manufacturing of electrolysers
    2. Incentive for production of green hydrogen.
    • Depending upon the markets and technology development, specific incentive schemes and programmes will continue to evolve as the Mission progresses.

    PYQ:

    [2019] Consider the following statements:

    1. Agricultural soils release nitrogen oxides into the environment.
    2. Cattle release ammonia into the environment.
    3. Poultry industry releases reactive nitrogen compounds into environment.

    Which of the statements given above is/are correct?

    (a) 1 and 3 only

    (b) 2 and 3 only

    (c) 2 only

    (d) 1, 2 and 3

  • Remoulding the Global Plastics Treaty

    Why in the news?

    As discussions for an international legally binding treaty on plastic pollution continue, it is essential to consider how it can support a fair transition for informal waste collectors and recyclers.

    Observations by the OECD Global Plastic Outlook

    • In 2019, global plastic waste production was 353 million tonnes, more than double the amount in 2000. This number is expected to triple by 2060. Only 9% of plastic waste was recycled in 2019.
    • 50% of plastic waste was sent to landfills, 19% incinerated, and 22% disposed of in uncontrolled sites or dumps.

    Challenges due to Plastic Pollution:

    • Soil Pollution: Plastic waste can contaminate soil, reducing its fertility and affecting plant growth.
    • Marine Pollution: Plastic waste in oceans can harm marine life, alter habitats, and disrupt natural processes, making ecosystems less resilient to climate change.
    • Water Pollution: Plastic waste can contaminate groundwater and waterways, affecting human consumption and aquatic life.
    • Health Risks: 
      • Microplastics: Plastic waste can break down into microplastics, which can be ingested by humans and animals, potentially causing health problems.
      • Toxic Chemicals: Plastic products can leach toxic chemicals, such as phthalates and BPA, into food and water, posing health risks

    Significance of Recognizing the Issue

    • Crucial role of recycling workers: Informal recycling workers recycled 85% of the 9% recycled plastic, playing a crucial role in global waste management.
    • Economic and Environmental Contribution: These workers alleviate municipal budgets, promote circular waste management solutions, and help mitigate greenhouse gas emissions. Their efforts significantly reduce plastic in landfills and prevent plastic leakage into the environment.
      • Despite their contributions, informal recycling workers are often overlooked and remain vulnerable. They face risks such as privatization of waste management, waste-to-energy projects, and exclusion from public policy interventions in plastic waste management.

    Global Plastic Treaty Needs Just Transition

    • Need for Intergovernmental Negotiating Committee (INC): Established in 2021, the INC aims to create a legally binding agreement to reduce plastic pollution. The INC has held several meetings, with the final one scheduled in South Korea.
    • Promoting Informal Workers Participation: The International Alliance of Waste Pickers (IAWP) emphasizes the need to support and integrate informal waste pickers into the treaty discussions. Their historical contributions should be acknowledged, their rights protected, and their perspectives included in policy implementation.
    • Building Clarity: There is no universally agreed-upon terminology for a just transition or a formal definition of the informal waste sector. Clarifying these definitions is essential.

    India’s Voice is Important

    • India promotes repair, reuse, refill, and recycling without eliminating the use of plastics. This approach emphasizes country-specific circumstances and capacities.
    • India’s informal waste pickers are indispensable and remain central to the discussion on plastic waste management.
    • Rethinking EPR norms is crucial to integrating the informal worker cohort into the new legal framework.
    • As a key representative from the Global South, India’s perspectives and approaches are vital in shaping the Global Plastics Treaty.

    Conclusion: By incorporating the perspectives of informal waste workers and ensuring their livelihoods are protected, the Global Plastics Treaty can embody social justice and equity principles, contributing to a sustainable future while leaving no one behind.

    Mains PYQ:

    Q What are the impediments in disposing of the huge quantities of discarded solid wastes which are continuously being generated? How do we remove safely the toxic wastes that have been accumulating in our habitable environment?  (UPSC IAS/2018)

  • Why has RBI policy panel kept repo rate unchanged, hiked GDP growth projection?

    Why in the news?

    The RBI’s Monetary Policy Committee kept the repo rate at 6.5% for the eighth consecutive time, due to persistent high retail inflation from sticky food prices.

    Monetary Policy Committee (MPC) 

    • The Monetary Policy Committee (MPC) of India is responsible for setting the benchmark interest rate in the country.
    • The committee consists of six members: the Governor of the Reserve Bank of India (RBI), the Deputy Governor in charge of monetary policy, an Executive Director of the RBI, and three external members nominated by the government.
    • The MPC meets at least four times a year and publishes its decisions after each meeting. The committee’s primary objective is to maintain price stability while considering the goal of economic growth.

    Why did the RBI keep the Rates Unchanged?

    • Inflation Concerns: The Monetary Policy Committee (MPC) kept the repo rate unchanged at 6.5% due to persistent high inflation, with April 2024 retail inflation at 4.83%.
    • Caution on Food Inflation: The policy stance remains cautious due to the risk of rising food inflation from heatwave conditions, which may impact the final journey of disinflation.
    • Flexible Inflation Targeting: Under the regime, the RBI aims to keep inflation within the 2-6% range and achieve a 4% target on a durable basis.
    • Supply Side Disruptions: Persistent supply shocks in cereals, pulses, spices, and vegetables contributed to elevated food inflation, impacting overall inflation management.

    What happens to Lending Rates if the Repo Rate is left steady?

    Lending Rate:

    The lending rate, also known as the bank rate, is the rate at which commercial banks borrow money from the central bank without securities. It is typically higher than the repo rate and is used for longer-term lending. The lending rate is used to assess the long-term monetary goals of a bank and is often used to manage liquidity in the system

    Repo Rate 

    The repo rate, on the other hand, is the rate at which the central bank lends money to commercial banks against government securities as collateral. It is used for short-term lending and is typically lower than the lending rate
    • Relief for Borrowers: With the repo rate steady at 6.5%, external benchmark lending rates (EBLR) linked to the repo rate will not increase, keeping equated monthly installments (EMIs) on home and personal loans unchanged.
    • Potential MCLR Increase: Lenders might raise interest rates on loans linked to the marginal cost of fund-based lending rate (MCLR), as the full transmission of the 250 basis points hike in the repo rate from May 2022 to February 2023 has not yet occurred.

    Why Has MPC Hiked GDP Growth?

    • Improving Demand: The MPC raised the GDP growth forecast for FY25 to 7.2% from 7% due to strengthening rural and urban demand conditions buoyed by favourable monsoon forecasts.
    • Robust Economic Activity: Indicators such as healthy growth in the eight core industries, strong Purchasing Managers Index (PMI) in manufacturing and services, and overall resilient domestic economic activity support the upgraded growth projection.
    • Sectoral Strength: The manufacturing and services sectors continued to exhibit robust performance, with the PMI for services standing at 60.2 in May 2024, indicating strong expansion.

    Conclusion: The RBI’s cautious approach to keeping rates steady while boosting GDP growth projections aims to balance economic growth and inflation control, with a focus on addressing persistent food 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)

  • In news: Volkhov River

    Why in the News?

    Four medical students from India studying in a university in Russia drowned in Volkhov River near St. Petersburg.

    About Volkhov River

    • The Volkhov River is a significant waterway in northwestern Russia.
    • It is located in the Leningrad Oblast and Novgorod Oblast of Russia, in the northwestern part of the country.
    • It stretches approximately 224 kilometers (139 miles) from Lake Ilmen to Lake Ladoga.
    • Origin: It flows out of Lake Ilmen north into Lake Ladoga, the largest lake in Europe.
    • Tributaries: The Msta River is the largest tributary of the Volkhov.
    • Major Cities: Several cities and settlements are situated along the banks of the Volkhov River, including Novgorod, Veliky Novgorod, and Volkhov.

    PYQ:

    [2020] Consider the following pairs:

    River – Flows into

    1. Mekong – Andaman sea
    2. Thames – Irish Sea
    3. Volga – Caspian Sea
    4. Zambezi – Indian Ocean

    Which of the pairs above is/are correctly matched?

    (a) Only 1

    (b) Only 2

    (c) 3 Only

    (d) None of the above/More than one of the above.

  • Regulator SEBI expands promoter definition for IPO-bound companies    

    Why in the news?

    • SEBI expands promoter definition for IPO-bound companies, including founders holding 10% or more, and their immediate relatives.
      • According to current SEBI regulations, a promoter is someone who controls the affairs of the company or can appoint the majority of directors or is named as such in an offer document.

    What is an IPO?

    • An IPO is an initial public offering, in which shares of a private company are made available to the public for the first time.
    • An IPO allows a company to raise equity capital from public investors.
    • The Dutch are credited with conducting the first modern IPO by offering shares of the Dutch East India Company to the general public.

    What Norms Say

    • Expanded Definition of Promoter: The definition of a promoter has been expanded for companies preparing for an IPO. A promoter is someone who controls the company’s affairs, can appoint the majority of directors, or is named as such in an offer document.
    • Previous Criteria: Founders holding 25% were previously deemed promoters due to their negative control and power to block special resolutions.
    • New Criteria: Founders holding 10% or more must classify themselves as promoters if they are key managerial personnel (KMP) or directors in the company. Immediate relatives on the company board or KMP will also be classified as promoters, even if they hold just 1%.

    About Declassification and 31A of LODR (Listing Obligations and Disclosure Requirements) Regulations

    • Declassification Difficulty: The current regulations do not provide an easy path for declassifying a promoter as a public shareholder.
    • Rule 31A of LODR Regulations: To be declassified, a person must not hold more than 10% in the listed company along with their relatives.
    • Restrictive Nature: This restrictive rule makes declassification almost impossible for immediate relatives who are classified as promoters by virtue of their relationship, especially problematic for married daughters with no active role in the company.

    Issue Over Subjective Definition

    • Subjective Nature of Promoter Definition: The definition of a promoter has been historically subjective, leading to varying interpretations and legal disputes.
    • Court Rulings: There have been several court rulings addressing the subjective nature of who qualifies as a promoter, highlighting inconsistencies and complexities.
    • Complex Criteria: Accounting standards and regulatory criteria for determining control and influence in a company are often complicated and can be interpreted in multiple ways.
    • Need for Objectivity: Experts argue for a more objective test to ascertain control and promoter status, which would provide clearer guidelines and reduce disputes.
    • Example: Vinod Kothari, Director at Vinod Kothari Consultants, points out that moving towards an objective test is a positive step, given the current complexities in determining control.

    Way forward: 

    • Standardised Guidelines: Develop clear and standardised guidelines for identifying promoters, reducing subjectivity and ensuring consistency.
    • Detailed Disclosures: Mandate detailed disclosures from companies about their promoters, including shareholding patterns, roles, and influence in decision-making.

    Mains PYQ:

    Q In the light of Satyam Scandal (2009), discuss the changes brought in corporate governance to ensure transparency and accountability. (UPSC IAS/2015)