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GS Paper: GS3

  • [pib] National Green Hydrogen Mission

    Why in the news?

    • The Ministry of New & Renewable Energy has unveiled Guidelines for the implementation of an R&D Scheme under the National Green Hydrogen Mission.
    • The scheme aims to catalyze advancements in the production, storage, transportation, and utilization of green hydrogen, with a focus on affordability, efficiency, safety, and reliability.

    Hydrogen Energy: A Backgrounder

    • Hydrogen is an important source of energy since it has zero carbon content and is a non-polluting source of energy in contrast to hydrocarbons that have net carbon content in the range of 75–85 per cent.
    • Hydrogen energy is expected to reduce carbon emissions that are set to jump by 1.5 billion tons in 2021.
    • It has the highest energy content by weight and lowest energy content by volume.
    • As per International Renewable Energy Agency (IRENA), Hydrogen shall make up 6 per cent of total energy consumption by 2050.
    • Hydrogen energy is currently at a nascent stage of development, but has considerable potential for aiding the process of energy transition from hydrocarbons to renewable.

    About National Green Hydrogen Mission (NGHM)

    • The National Green Hydrogen Mission was launched in January 2023 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 implementation of these missions.

    Key features of the NGHM

    • Power capacity: The mission seeks to promote the development of 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), two distinct financial incentive mechanisms targeting domestic manufacturing of electrolysers and production of green hydrogen will be provided under the mission.
    • Green Hydrogen Hubs: Regions capable of supporting large-scale production and/or utilisation of hydrogen will be identified and developed as Green Hydrogen Hubs.

    Types of Hydrogen

    Hydrogen extraction methods are classified into three types based on their processes: Grey, Blue, and Green.

    1. Green Hydrogen: Green hydrogen is produced through water electrolysis, utilizing electricity generated from renewable energy sources.
    2. Grey Hydrogen: This type of hydrogen is obtained through coal or lignite gasification (black or brown), or by steam methane reformation (SMR) of natural gas or methane (grey). These processes are typically carbon-intensive.
    3. Blue Hydrogen: Blue hydrogen is derived from natural gas or coal gasification, coupled with carbon capture storage (CCS) or carbon capture use (CCU) technologies to mitigate carbon emissions.

     

    PYQ:

    [2010]Hydrogen fuel cell vehicles produce one of the following as “exhaust”:

    (a) NH3

    (b) CH4

    (c) H2O

    (d) H2O2

     

    [2023]With reference to green hydrogen, consider the following statements:

    1. It can be used directly as a fuel for internal combustion.

    2. It can be blended with natural gas and used as fuel for heat or power generation.

    3. It can be used in the hydrogen fuel cell to run vehicles.

    How many of the above statements are correct?

    (a) Only one

    (b) Only two

    (c) All three

    (d) None

     

  • India’s Soil Erosion Trends: Insights from a New Study

    Why in the news?

    • Titled “Geospatial modelling and mapping of soil erosion in India,” the report marks the first attempt to classify soil erosion on a pan-India basis.
    • The study categorizes soil erosion into six classifications, ranging from “minor” to “catastrophic,” based on the amount of soil eroded per hectare over a year.

    Soil Erosion in India

    • Soil erosion is the process by which soil is removed or displaced from its original location, often due to the action of wind, water, or human activities.
    • It is a natural geological process accelerated by various factors such as deforestation, overgrazing, improper agricultural practices, urbanization, and climate change.

    Key trends in India

    • Nearly 30% of the country’s landmass is experiencing “minor” soil erosion.
    • Critical 3% (approx. 1500 sq km) faces “catastrophic” topsoil loss.
    • The Brahmaputra Valley in Assam emerged as the most significant hotspot for soil erosion, with close to 300 square kilometers or 31% of its surface soil lost to “catastrophic” erosion.
    • The lower Himalayan region, extending from Kashmir to Uttarakhand and beyond, and Odisha also face severe erosion challenges, posing threats to biodiversity and environmental stability.

    Causes of Soil Erosion

    1. Anthropogenic Causes: Soil erosion in India is primarily caused by human activities including deforestation, overgrazing, improper land use practices, and construction activities.
    2. Natural Causes: The monsoon season, characterized by heavy rainfall, exacerbates soil erosion, especially in regions with steep slopes and poor vegetation cover.

    Impact of Soil Erosion

    • Topsoil, essential for agriculture due to its nutrient-rich composition, is crucial for sustaining crop growth.
    • Erosion diminishes soil fertility, leading to reduced crop yields and agricultural productivity.

    Revised Universal Soil Loss Equation (RUSLE) Methodology 

    • The Revised Universal Soil Loss Equation (RUSLE) is a widely used empirical model for estimating soil erosion rates.
    • It is used to predict the average annual soil loss caused by sheet and rill erosion from specific field areas.
    • The RUSLE methodology considers various factors that contribute to soil erosion, including rainfall, soil erodibility, slope length and steepness, vegetation cover, and conservation practices.
    • The equation for RUSLE is:

    A = R * K * LS * C * P

    Where:

    A is the estimated average annual soil loss (in tons per acre per year).

    R is the rainfall factor, representing the erosive power of rainfall.

    K is the soil erodibility factor, representing the susceptibility of soil to erosion.

    LS is the slope length and steepness factor, accounting for the effect of slope on erosion.

    C is the cover management factor, indicating the impact of vegetation cover and land use practices on erosion.

    P is the conservation practice factor, reflecting the effectiveness of erosion control practices implemented.

     

    PYQ:

    [2014] In India, the problem of soil erosion is associated with which of the following?

    1.    Terrace cultivation

    2.    Deforestation

    3.    Tropical climate’

    Select the correct answer using the code given below:

    (a) 1 and 2 only

    (b) 2 only

    (c) 1 and 3 only

    (d) 1, 2 and 3

  • [9 April 2024] The Hindu Op-ed: Indian aviation, a case of air safety at a discount

    PYQ Relevance:

    Mains: 

    Q) Examine the development of Airports in India through joint ventures under Public – Private Partnership (PPP) model. What are the challenges faced by the authorities in this regard? (UPSC CSE 2017) 

    Q) International civil aviation laws provide all countries complete and exclusive sovereignty over the airspace above their territory. What do you understand by ‘airspace’ What are the implications of these laws on the space above this airspace? Discuss the challenges that this poses and suggest ways to contain the threat. (UPSC CSE 2014) 

    Note4Students: 

    Prelims: International Civil Aviation Organisation (ICAO);

    Mains: Economy and Infrastructure; Civil Aviation in India; 

    Mentor comments: To put in place long-term efforts for our safe and secure future, we must break down the barriers between ‘Development’ and ‘Humanitarian Response’. Air Transport plays a pivotal role in promoting Economy and Tourism in India. India has an extensive civilian air transportation network and is amongst the fastest-growing aviation markets in the world according to the International Air Transport Association (IATA). Presently, the Aviation Sector in India is facing serious safety concerns as Airline Management prioritizes commercial interests over passenger safety. 

    Let’s learn. 

    —

    Why in the News?

    The Civil Aviation Ministry and the DGCA need a more human-centric approach in airline management, addressing pilot shortages, and prioritizing safety over commercial interests is crucial for the Indian aviation sector to thrive.

    Challenges faced by Airline Services in India:

    • Technical and Safety Concerns: The safety of passengers is being gravely compromised due to the non-provision of the Runway End Safety Area. For example,  at Kozhikode’s Karipur Airport (Kerala).
      • Despite reassurances from the Civil Aviation Ministry and the DGCA, safety issues persist, such as the deferred regulations on pilot fatigue.
    • Resource Availability: The land resources needed by AAI [Airports Authority of India] for better landing and avoiding accidents are generally ignored or delayed by state governments.
    • Nexus between private players and government: Lack of Coordination between Airline owners and the Government for the implementation of safety policies needs to be resolved. For example, the present Flight Duty Time Limitations Regulations where the deadline for their implementation was June 1, 2024, were not taken seriously by private players.
    • Pilot Stress: Financial stress on pilots is also highlighted as a risk factor, with examples of past incidents linked to pilot suicide due to personal financial pressures.
      • Recognizing pilots as human beings who require time with their families, the importance of providing two days off per week for pilots is essential to ensure their well-being and maintain aviation safety.
    Global Scenario and System Overseas:

    The International Civil Aviation Organisation (ICAO) introduced the Fatigue Risk Management System (FRMS) as a mandatory requirement due to the significant impact of fatigue on aviation safety. 

    Studies have shown that sleep deprivation and impaired reaction times due to fatigue are major contributors to accidents and incidents. 

    Countries like Japan, Singapore, and the United Kingdom emphasize fatigue management and rest periods for flight crew to mitigate these risks. 

    Pilots in these countries typically have two days off every week to reset their body clock, especially after long-haul flights. 

    Way Forward:

    • Change the Priority: The Indian aviation sector faces critical safety issues due to a lack of prioritization of safety over commercial interests by airline management. The need for a more human-centric approach, addressing pilot shortages, and emphasizing safety is essential for the sector’s success.
    • Need for Humanitarian Code: India should adopt the ICAO Annex 1 Standard which allows experienced Indian pilots abroad to return to India and utilize the present retired pilots for training and checks. 
    • Need for Updating policy implementations: Overcoming corruption, revising outdated rules, and focusing on transparency and brand loyalty are crucial for the sector’s improvement and the success of airline mergers.

  • Heat affects India’s aim to move from coal to renewables

    Why in the News? 

    The India Meteorological Department (IMD) recently said that India will have more than the ‘usual’ number of days with heat waves in this summer.

    Increasing Temperature in India and its impact as per IMD:

    • Temperature Predictions: The Indian Meteorological Department (IMD) predicts “above-normal” temperatures for April-June 2024, with a probability of 55%-65% in one half of the country and over 65% in the other half. Few parts are expected to have normal or below-normal temperatures.
    • Effect of Heat on Agriculture: Higher heat negatively impacts crop yield, agricultural workers’ productivity, and water availability, varying in degree depending on the crop.
    • Consequences of Heat in Urban Area: Increased heat leads to higher power demand in urban and industrial centers, poses deadly risks for outdoor workers (such as at construction sites), overwhelms health service providers (especially affecting the very young and old), and highlights the importance of access to clean, cool water, indoor ventilation, and bathrooms.
    • Power Demand: The availability of power is crucial for addressing the effects of heat. A chart shows that in March 2024, the average evening peak-hour demand reached a new high of 190 GW.

    Major challenges around the Energy Demand and Government Targets:

    • Government Targets: The government aims to achieve 500 GW of power generation capacity from renewable energy sources by 2030. Additionally, it has committed to producing 50% of its power from non-fossil fuel energy sources by the same year.
    • Heat increases power demand: Heat boosts power demand in cities and industries, heightens risks for outdoor labor, strains healthcare services for vulnerable groups, and underscores the necessity of clean water, ventilation, and bathrooms. Power availability is fundamental for addressing these challenges.
    • Focus on Solar Power: A substantial portion of the renewable energy addition will come from solar power. However, due to the intermittent nature of solar output and the ongoing establishment of power storage capacity, coal is still relied upon to meet peak demand.
    • Coal’s Dominance: Chart 3 (above) illustrates the gross electricity generated using coal in India and coal’s share in total electricity generation. The coal’s share has remained between 70-74% since at least FY16.
    • Commercially Viable Energy Storage: In India, the most commercially viable energy storage forms currently are battery-based and Pumped Hydro Storage (PHS).
    • Renewable Energy Generation: Chart 4 depicts the gross electricity generated using renewable sources in India and the share of renewable sources in total electricity generation. The share of renewables, including solar, hydro, wind, etc., has remained between 20-25% since at least FY16

    Major Dilemma For India: Cannot ignore Coal immediately:

    • Coal is projected to continue as the backbone of the Indian energy system until the next two decades and its phase-down will require active policies on critical minerals, according to a report by the Indian Institute of Management (IIM)- Ahmedabad.
    • The report, titled ‘Synchronising energy transitions towards a possible Net Zero for India: Affordable and Clean Energy for All,’ asserted that net zero is not possible without substantial nuclear power and renewable energy generation by 2070.
    • To achieve net-zero energy systems by 2070, the report mentioned that the electricity sector will need to decarbonize well before that.

     

    Way Forward: 

    • NDC Goals: The remaining gaps in emissions will be offset through sequestration in forestry and tree cover as envisaged in our Nationally Determined Contributions (NDCs).
    • Need for Technological intervention: There is no silver bullet to achieve net zero. The transition needs multiple pathways to be adopted with the co-existence of myriad technologies in our energy basket.

     

    Mains PYQ

    Q Discuss the implications of heightened heat waves in India, as highlighted by recent statements from the India Meteorological Department (IMD).

  • Marching ahead with technology absorption

    Why in the news? 

    The Indian Army is observing the year 2024 as the ‘Year of Technology Absorption’.

    • The Indian military is moving in the right direction, but the challenge lies in sustaining technology absorption with a nuanced understanding of the requirements

    What is Technology absorption in terms of disruptive technology (DT)?

    It comprises Artificial intelligence, Autonomous Weapon Systems such as drones, sensors, robotics, space technology, and hypersonic weapon systems (also called Legacy Systems)

    Challenges in Technology absorption:

    • Compatibility issues: Incorporating new technologies into existing structures or systems, known as legacy systems, can be challenging due to compatibility issues and the need for adaptation.
    • More time in Training and Skills Development: Ensuring that personnel are adequately trained to operate and maintain new technologies is crucial. The acquisition of technical skills and knowledge may require significant investment and time.
    • Lack of Resource: Limited resources, both financial and human, may constrain the absorption of technologies because need to require more funds to maintain preexisting military hardware. Due to this military has left very less amount of money to the absorption of technologies
    • Cybersecurity Concerns: With the integration of advanced technologies comes the risk of cyber threats and vulnerabilities. Safeguarding systems and networks against cyber-attacks becomes paramount.
    • Supply Chain Management: Dependence on external suppliers for critical components or technologies can introduce risks related to reliability, availability, and security of supply chains like fighter jet engine import from the USA

    Technological Absorption needs to be governed organically:

    • Acknowledge the Sensitivity: Recognize existing vulnerabilities and sensitivities within the military structure and operations. Identify gaps between current capabilities and future needs.
    • Need to Understand Latest Technologies:  Understanding the latest advancements in technology and their potential applications in military operations. Understand the context in which these technologies can be effectively utilized.
    • Integrating at Unit-Level: Ensure that technology absorption is not limited to higher levels of command but is visibly manifested at the unit level. Democratize the use of technology to empower frontline personnel.
    • Macro-Level Aspects: Address macro-level aspects such as organizational restructuring, human resource management, cultivation of specialists at various levels, civil-military fusion, data integrity management, and procurement policies tailored for Defense Technologies (DTs).
    • Learn from Recent Wars: Analyze lessons learned from recent and ongoing conflicts to inform future planning and decision-making like the Russia Conflict

    Mains question for practice 

    Q Discuss the Challenges in Technology absorption in terms of disruptive technology (DT).And give suggestive measures to resolve the challenges

  • What is Consumer Confidence Survey?

    Why in the news?

    • The latest Consumer Confidence Survey conducted by the Reserve Bank of India in March 2024 reveals a significant boost in consumer confidence, particularly regarding future expectations.
    • It says consumer confidence has hit highest level in nearly 5 years.

    What is Consumer Confidence Survey (CCS)?

    • The RBI conducts a bi-monthly Consumer Confidence Survey to measure consumers’ perceptions of the prevailing economic situation.
    • It was started in 2015 with surveys in 13 major cities.
    • The survey is conducted across various cities and measures consumer confidence on parameters such as the economy, employment, price, income, and spending.
    • The survey consists of questions regarding consumers’ sentiments over various factors in the current situation and future.

    Here are a few parameters that help aggregate overall confidence:

    1. Spending: The consumer is asked about the willingness to spend on major consumer durables, purchasing vehicles, or real estate. This measures the overall spending scenario on necessities as well as luxuries for the next quarter.
    2. Employment: The consumer is asked about current and future ideas on employment situations, joblessness, job security, which reflects the sentiments of the current or expected employment in the country.
    3. Inflation: The consumer is asked about interest rates and levels of prices of all goods, tracking the price expected by consumers and their spending on basic necessities.

    Components of CCS:

    1. Current Situation Index (CSI): It measures overall consumer sentiment regarding the present economic situation.
    2. Future Expectations Index (FEI): It analyses consumer sentiment for the next 12 months.

    CSI and FEI are calculated based on people’s views about the economy, their income, spending, job opportunities, and prices compared to the previous year and expectations for the year ahead.

    Key Highlights of the recent report

    • Future Expectations Index (FEI) has climbed by 2.1 points to reach 125.2, marking its highest level since mid-2019, indicating heightened optimism among consumers for the year ahead.
    • Current Situation Index (CSI) has surged by 3.4 points to reach 98.5, marking its highest level since mid-2019.

    PYQ:

    [2018] As per the NSSO 70th Round “Situation Assessment Survey of Agricultural Households”, consider the following statements-

    1. Rajasthan has the highest percentage share of agricultural households among its rural households.

    2. Out of the total agricultural households in the country, a little over 60 percent belong to OBCs.

    3. In Kerala, a little over 60 percent of agricultural households reported to have received maximum income from sources other than agricultural activities.

    Which of the statements given above is/are correct?

    (a) 2 and 3 only

    (b) 2 only

    (c) 1 and 3 only

    (d) 1, 2 and 3

  • 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/