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October 2019

RBI Notifications

[oped of the day] Regulator needs to address risks to financial stability


From UPSC perspective, the following things are important :

Prelims level : Nothing much

Mains level : Monetary Policy Transmission

Op-ed of the day is the most important editorial of the day. This will cover a key issue that came in the news and for which students must pay attention. This will also take care of certain key issues students have to cover in respective GS papers.


RBI’s accelerated monetary policy response since February has provided the first line of defence to India’s acute growth slowdown. Yet the pace of policy rate transmission and investment revival is very slow.

Impact of Monetary policy easing is low

  • Monetary policy easing has impacted government bonds more favourably than corporate bonds. Corporate yields did not fall because of high credit risk perception
  • Transmission through the banking channel was very slow. Leading banks lowered the 1-year MCLR by 25-40 basis points against the policy rate reduction of 110 bps. 
  • Low investment confidence was also visible in the 67% year-on-year plunge in non-convertible debentures (NCDs)
  • The investment momentum was weak because of several factors such as downgrades, unsustainable borrowings by some large companies, a continued funding crunch for NBFCs/ HFCs and low capital adequacy of public sector banks
  • Global headwinds and domestic policy flip flops further weakened the investment sentiment.
  • There is scope for further reduction in the repo rate by 35-40 bps. H

Despite falling rates, the material impact on improving investment spending remains a challenge because of the obstacles to monetary transmission. 


  • The weight of structural factors has increased in the slowdown. Cyclical stimulus measures may not be enough to restore investment confidence.
  • Monetary policy is too blunt a tool to take care of sector-specific issues, as it simultaneously affects all sectors of the economy. 

Way ahead

  • India needs targeted interventions and sector-specific corrective measures for its ailing sectors such as infrastructure, real estate, MSMEs, export industries, and financial intermediaries such as PSBs, NBFCs/HFCs and mutual funds.
  • Fiscal stimulus worth ₹1.45 trillion through corporate tax reduction is a step in the right direction.
  • The focus of the monetary policy should shift to financial stability issues such as restoring confidence in financial intermediaries and getting credit flowing again at a reasonable price. 
  • Other corrective measures should be aimed at removing structural constraints for various productive sectors.

RBI policy

  • RBI’s policy emphasis should be on strengthening the NBFC sector – which is a dominant lender to retail, rural, housing and MSMEs, which contributes more than 20% of the total credit.
  • Two policy priorities for RBI
    • Set up a “lender of last resort” facility for NBFCs. This should undertake repo of securities, backed by NBFCs’ loan portfolio. It can be restricted to NBFCs that are more bank-like in nature, adequately capitalised and have top ratings
    • Facilitate long-term funding for NBFCs
      • At present, PSBs cannot lend to NBFCs because of capital shortage. 
      • RBI may advise the government to extend special dispensations/bank guarantees to PSBs for taking additional exposure to well-governed NBFCs. 
    • Long-term tax saving bonds may be reintroduced for infrastructure financiers. 
    • Listed NBFCs, may be kept out of the group exposure limit to improve their access to bank funds. 
    • Innovative instruments, such as covered bonds, may be promoted to make available enhanced funding from insurance/pension funds to NBFCs. 
    • RBI may also allow systemically important, well-governed, top-rated NBFCs to raise public deposits


Unless the regulator addresses growing risks to financial stability, monetary policy will not be effective beyond a certain limit.

Climate Change Impact on India and World – International Reports, Key Observations, etc.

[op-ed snap] At hot sea


From UPSC perspective, the following things are important :

Prelims level : Nothing much

Mains level : Climate change and warming oceans


As per a recent IPCC report, by 2100, oceans all over the world will absorb five to seven times more heat than they have done in the past 50 years if we do not reduce our emissions trajectory. 

Importance of oceans

    • Oceans cover more than 70% of the earth’s surface.
    • They provide critical ecosystem services such as soaking up the heat and distributing it evenly.

Challenges due to warming oceans

    • This will lead to global sea- levels rising by at least a meter. This will submerge several coastal cities, including Mumbai, Kolkata, Chennai, and Surat. 
    • Marine heatwaves are projected to be more intense. They would last longer and occur 50 times more often. 
    • Sea-level rise could also lead to an increase in the frequency of extreme weather events, which occur, for example, during high tides and intense storms.
    • As the planet warms, it’s oceans get most of the extra energy
    • Hotter oceans also mean stronger cyclones and storms. This could lead to unprecedented volatility in several coastal regions. For instance, in 2014, Cyclone Nilofar was the first extremely severe cyclone to be recorded in the Arabian Sea in the post-monsoon season. 
    • Earlier, cyclones impacting the country generally originated in the Bay of Bengal and made their landfall on India’s eastern coast. Cyclone Nilofar did not make landfall but it led to heavy rains in the country’s west coast
    • In October last year, a higher than normal surge in sea-level due to the dual impact of Cyclone Luban and high tide swamped several beaches in Goa. Some of them went completely underwater for a few hours. 
    • Warming seas have changed cyclone behaviour in other ways as well. In 2017, Cyclone Ockhi, which originated in the Bay of Bengal, traveled more than 2,000 km to wreak havoc on India’s western coast — the first cyclone to do so in 30 years.
    • The IPCC report warns of more “frequent El Nino and La Nina events”. These events in the Pacific Ocean are critically linked to the southwest monsoons in India. An El Nino caused a severe drought in the country in 2015. 

Way ahead

    • Countries will have to upscale efforts to check GHG emissions.
    • Ramp up investments in infrastructure and knowledge systems to build up peoples’ resilience against extreme weather events. 
    • The latest IPCC report should serve as a wake-up call.

Housing for all – PMAY, etc.

[op-ed snap] Housing crisis, untouched


From UPSC perspective, the following things are important :

Prelims level : Nothing much

Mains level : Model Tenancy Act - analysis


A draft of the Model Tenancy Act, 2019 was released by the Ministry of Housing and Urban Affairs. Finance Minister stated in the Budget 2019 speech that the rental laws in India are archaic and do not address “the relationship between the Lessor and the Lessee realistically and fairly”. 

Features of the act

    • It aims to promote rental housing and balance the interests of landowners and tenants. 
    • It covers residential and non-residential properties.
    • It is largely aimed at the urban residential sector.

Positive Impact

    • Constitution of Rent Courts and Tribunals – Thousands of rent cases clog the lower judiciary and the process is lengthy and time-consuming. 
    • Time-bound procedures – The Act provides for a time-bound process with dedicated courts for tenants and landlords. 

Limitations of the act

    • Limited scope – The Model Tenancy Act has a limited understanding of the tenant-owner relationship. It fails to take into account that a majority of tenancies in India are informal. These agreements are based on trust, word of mouth, and social kinship networks
    • Challenge in implementation – 
      • Either a majority of the rental agreements will continue to be unregistered
      • The Act might formalise existing arrangements -> an increase in rents. It will be the opposite of what it sought to achieve.
    • Jurisdiction 
      • The jurisdiction of these courts to hear cases is limited to the tenancy agreement submitted to the Rent Authority
      • All future tenancies that have been submitted to the Rent Authority shall be eligible to approach these courts.
      • Older tenancies and informal tenancies will still not fall under its jurisdiction. These problems will continue.

Way ahead

    • The Act needs to respond in a realistic manner to actual housing market practices in our cities. 
    • Focus on the upper end of the housing market
      • The vacancy is higher in the upper segments of the housing market. Across urban India, vacancy rates in urban areas is 10.1% while in slums it is 7.3%. 
      • Implementation of the Act in the upper segments of the housing market will allow some of these vacant houses to enter the rental market.
      • This will relieve the pressure and demand on the lower segments.
    • Commercial – Residential – 
      • Commercial tenancies attract a lot more institutional investment.
      • Residential tenancies are largely held between individuals and households
      • The two markets are very different from each other. 
      • The outcomes required of the two sectors are entirely different — while commercial real estate underpins economic development, residential arrangements in urban areas offer the security of tenure and access to livelihoods, health, and education.
    • More investments
      • Increase the supply of formal affordable rental housing.
      • This requires investment on the part of the Central and State governments. 
      • Publicly provided rental housing will need structured efforts in management, planning, and design to achieve its inclusive agenda. 
      • Central and State governments to develop schemes for the supply of formal affordable rental housing. 
      • This could be in the form of housing built to rent for migrants, low-wage informal and formal workers, and students; rent-to-own housing for unsteady low-wage households; and even rental housing allowances/vouchers for the most marginalised in the housing market. 
    • Wider ambit – The Act needs a wider ambit along with renewed efforts and investments.

Cyber Security – CERTs, Policy, etc

Explained: Right to be forgotten


From UPSC perspective, the following things are important :

Prelims level : Right to be forgotten

Mains level : Read the attached story

  • The European Court of Justice (ECJ) ruled in favour of the search engine giant Google, which was contesting a French regulatory authority’s order to have web addresses removed from its global database.
  • The court ruled that an online privacy rule known as the ‘right to be forgotten’ under European law would not apply beyond the borders of EU member states.
  • The ruling comes as an important victory for Google, and lays down that the online privacy law cannot be used to regulate the internet in countries such as India, which are outside the EU.

The ‘Right to be forgotten’

  • The right to be forgotten empowers individuals to ask organisations to delete their personal data.
  • It is provided by the EU’s General Data Protection Regulation (GDPR), a law passed in 2018.
  • It states: “The data subject shall have the right to obtain from the controller the erasure of personal data concerning him or her without undue delay and the controller shall have the obligation to erase personal data without undue delay”
  • Under Article 2 of the GDPR, “personal data” means “any information relating to an identified or identifiable natural person (“data subject”)”.
  • “Controller” means “the natural or legal person, public authority, agency or any other body which… determines the purposes and means of the processing of personal data”.


  • In 2015, the internet regulating agency in France, required that Google go beyond its practice of region-specific delinking, and ordered the search engine company to delete links from its global database.
  • Google refused to abide by the order, arguing that following the same would impede the free flow of information across the world.
  • This led to the slapping a fine of EUR 100,000 (around INR 77 lakh) on Google in 2016 so it challenged the order at the ECJ.

Conclusion: No privacy law beyond EU

  • Google contended that implementing the online privacy law beyond the EU would hamper access to information in countries around the world, especially those ruled by authoritarian governments.
  • Arriving at a landmark ruling, the ECJ has now restricted applying the privacy law beyond the EU.
  • It has also observed that the EU cannot enforce the ‘right to be forgotten’ on countries which do not recognise such a right.

International Space Agencies – Missions and Discoveries

Starship spacecraft


From UPSC perspective, the following things are important :

Prelims level : Starship

Mains level : About the interplanetory mission

  • SpaceX unveiled a prototype design of its next-generation Starship spacecraft that will take people or cargo to the moon, Mars or other destinations in space or around Earth.


  • SpaceX’s Starship spacecraft will be capable of carrying up to 100 people on long-duration interplanetary flights and deliver as much as around 100 tons of payload for building bases on Moon and Mars cities.
  • It has been designed for full and rapid reusability.
  • Starship was first unveiled in 2016 as a fully reusable spacecraft and back then, it was called Interplanetary Transport System (ITS).
  • In 2017, it was renamed the Big Falcon Rocket (BFR) and the design was updated as well.
  • The spacecraft was finally named Starship in 2018 with more design improvements.


  • It is 164 feet (50 meters) tall and has a diameter of nine meters.
  • It will be launched into space with the help of its Super Heavy booster, which can include up to 37 Raptor engines, though only 24 would be required for each mission.
  • Super Heavy measures 223 feet in length, while its diameter is also nine meters.

Why Starship?

  • According to the SpaceX CEO, the Earth will face a near-extinction event at some point in time, which is why a “backup” plan for all humankind is needed.
  • The ultimate goal is to colonize Mars over the next 100 years and SpaceX has been quite vocal of his idea in the past.

Water Management – Institutional Reforms, Conservation Efforts, etc.

Scientists find ‘ancient river’ in UP


From UPSC perspective, the following things are important :

Prelims level : About the river

Mains level : Paleochannels and their significance in groundwater recharge

  • The Union Water Ministry has excavated an old, dried-up river in Allahabad that linked the Ganga and Yamuna rivers.

About the river

  • The “ancient buried river” is around 4 km wide, 45 km long and consisted of a 15-metre-thick layer buried under soil.
  • The newly discovered river was a “buried paleochannel that joins the Yamuna river at Durgapur village, about 26 km south of the current Ganga-Yamuna confluence at Allahabad.
  • The paleochannels reveal the course of rivers that have ceased to exist.

Significance of this river

  • Knowledge on subsurface connectivity between Ganga and Yamuna rivers will play a very crucial role in planning of Ganga cleaning and protecting safe groundwater resources.
  • The aim is to develop it as a potential groundwater recharge source.
  • The evidence from paleochannels also suggests that the mythological Saraswati river did indeed exist.

Mother and Child Health – Immunization Program, BPBB, PMJSY, PMMSY, etc.

Rheumatic fever


From UPSC perspective, the following things are important :

Prelims level : Penicillin, Rheumatic fever

Mains level : Child healthcare in India

  • The government is planning to procure penicillin centrally for three years and give it to all children between 5-15 years who are diagnosed with rheumatic fever.
  • The drug will be dispensed through primary health centres or administered by ASHAs.

Rheumatic fever

  • A rare but potentially life-threatening disease, rheumatic fever is a complication of untreated strep throat caused by bacteria called group A streptococcus.
  • The main symptoms — fever, muscle aches, swollen and painful joints, and in some cases, a red rash — typically begin two to four weeks.
  • The knees, ankles, elbows, and wrists are the joints most likely to become swollen from rheumatic fever.
  • The pain often migrates from one joint to another.
  • However, the greatest danger from the disease is the damage it can do to the heart.

Why a concern?

  • India has a high burden of rheumatic fever and rheumatic heart disease — the latter often goes undiagnosed and leads to many maternal deaths at the time of childbirth.
  • Studies indicate the prevalence of rheumatic heart disease in India to be about 2/1000 population.
  • However surveys conducted in school children in the age group of 5-16 years by ICMR gives overall prevalence of 6/1000.
  • Rheumatic fever is endemic in India and remains one of the major causes of cardiovascular disease, accounting for nearly 25-45% of acquired heart disease.

Reviving Penicillin

  • Penicillin, discovered in 1928, is still the first line antibiotic in many western countries, but it gradually went out of the Indian market even though some of its more expensive derivatives continue to be prescribed.
  • Penicillin appears to reduce the attack rate in rheumatic fever by as much as 80%.
  • Penicillin went out of production in India because of unrealistic price control.

Rural Distress, Farmer Suicides, Drought Measures

High rate of farmer suicides in Punjab’s Malwa


From UPSC perspective, the following things are important :

Prelims level : Malwa region (in MP and Punjab)

Mains level : Farmers suicides prone regions


  • Over the past few years, ‘farm debt’ has been one of the main reasons behind farmers and farm labourers committing suicide in Punjab.
  • Data has indicated that 97% of farmer suicides are taking place in the Malwa region only.

More suicides in Malwa region

  • According to report farmer suicides due to debt drastically increased in the late 1990s.
  • The maximum such suicides are taking place in the Malwa region (97.45 per cent), which falls south of the Sutlej, and has 14 of the state’s 22 districts.
  • Malwa has a majority of ‘small and marginal’ farmers’, who have 1-5 acres land.

Reasons for suicide

  • Of around 97 per cent suicides that has taken place in the Malwa region — 94 per cent were due to ‘farm debt’.
  • Majority of them are small and marginal farmers having 1-5 acres of land.

Total number of such suicides

  • The Punjab government’s data states that 3,330 farmers have taken their lives due to farm debt since 2000 till date, of which 698 committed suicide in the past four years, most of them in the Malwa region.
  • It also states that 97 farm labourers committed suicide since 2016, before which no records were maintained of the same.

Why Malwa region?

  • Exorbitant lease land rentals is one of the factors behind the high rate of farmer suicide in Malwa.
  • Farmers cannot get alternative employment opportunities in Malwa, hence small and marginal farmers fall in the trap of debt.
  • If the crop turns out bad, it only adds to their mounting debt.
  • In the Malwa region, a large number of farmers have to spend a chunk of their earnings on health issues including cancer, which is quite common here.
  • There is even a train that carries mostly cancer patients from here to a hospital in Rajasthan.
  • Several reasons have been attributed to high number of cancer patients here, including highly contaminated groundwater.

Why are lease land rentals high?

  • In Malwa, the number of ‘landless’ and ‘marginal farmers’ is very high against the availability of farmland.
  • Cultivation of land is the only way available to them to earn their living.
  • For taking land on rent, they are dependent on big land lords and ‘sahukaars’ who have also become owners of agricultural lands of most small and marginal farmers, who could not pay their debts.
  • Poor farmers think that even if their entire earnings go in paying rent, they will at least get grain for a whole year for their families.
  • On the other hand, in Doaba, which is the NRI belt, and Majha, a large number of farming households either have one member abroad or in government jobs or armed forces from where they get an assured regular income.
  • Even small farmers are running subsidiary occupations like dairy. Also, they prefer to plant three crops in a year including wheat, paddy and vegetables.
  • In the Doaba, large farm lands of NRIs are available to fellow farmers for cultivation due to which lease rentals are 20-30 per cent down here.


The report suggests following measures to relieve farmers in the region:

  • streamlining of ‘land lease rentals’,
  • waiving farm loans at least once,
  • providing compensation to the tune of Rs 10 lakh to each family that loses a farmer or farm labourer to suicide,
  • continuation of free power, crop diversification, insurance for crops and health of farmers and labourers, development of dairy sector etc.
  • profitable employment for one family member of farmers and labourers, rold-age pension to farmers and labourers,
  • streamlining of banking sector and curtailing unscrupulous activities of micro-finance agencies and moneylenders etc.

Urban Transformation – Smart Cities, AMRUT, etc.

World Urbanization Prospects Data


From UPSC perspective, the following things are important :

Prelims level : Developing Asia group

Mains level : Urbanization in India

  • The economic outlook update released by the Asian Development Bank (ADB) highlighted that the number of urban inhabitants in ‘Developing Asia’ has increased “almost five-fold since 1970”.

Developing Asia

  • It refers to a group of 45 countries that are members of the ADB.

World Urbanisation Prospects data

  • The report, tracking World Urbanisation Prospects data, states that the two-thirds of the nearly 1.5 billion additional city dwellers in the region belonged from India and China.
  • As such, between 1970 to 2017, the urban population in this bunch of countries grew from 375 million to 1.84 billion.
  • The region led the global increase in the urban population in this period and accounted for 53 per cent of it.

Low pace of urbanization

  • The ADB reports states that, notwithstanding the fast growth in urban population, “developing Asia’s urbanisation rate still lagged at 46% in 2017”.
  • Urbanisation rate means the percentage of the population living in urban areas.
  • The US achieved the 46 per cent urbanisation mark over a century ago while Japan reached there in the early 1950s. But the US and Japan are far cries at the moment.
  • Developing Asia’s urbanisation rate in 2017 was lower than the average in other developing economies (which stood at 58 per cent) and the average in the developed economies (which stood at 81 per cent).
  • India, specifically, has 34 per cent of its population living in urban areas.

Reason: Population rise

  • Developing Asia urbanized faster than the rest of the world not only in terms of absolute growth, but also in terms of growth rate.
  • Urban population in this region increased at an average of 3.4 per cent per annum between 1970-2017.
  • This is much faster than the 2.6 per cent in the rest of the developing world – mainly Africa and Latin America – and 1.0 per cent in the developed world.

Primary and Secondary Education – RTE, Education Policy, SEQI, RMSA, Committee Reports, etc.

[pib] School Education Quality Index (SEQI)


From UPSC perspective, the following things are important :

Prelims level : SEQI

Mains level : Promoting quality education in India

  • The first edition of SEQI was recently released by NITI Aayog, in the presence of NITI Aayog.

School Education Quality Index

  1. SEQI was developed by NITI Aayog to evaluate the performance of States and UTs in the school education sector.
  2. It is developed through a collaborative process, including key stakeholders such as Ministry of HRD, the World Bank and sector experts.
  3. The index aims to bring an ‘outcomes’ focus to education policy by providing States and UTs with a platform to identify their strengths and weaknesses and undertake requisite course corrections or policy interventions.
  4. In line with NITI Aayog’s mandate to foster the spirit of competitive and cooperative federalism, SEQI strives to facilitate the sharing of knowledge and best practices across States and UTs.

Key indicators

  • The index consists of 30 critical indicators that assess the delivery of quality education. These indicators are categorized as below:

Category 1: Outcomes

  • Domain 1: Learning outcomes
  • Domain 2: Access outcomes
  • Domain 3: Infrastructure and facilities for outcomes
  • Domain 4: Equity outcomes

Category 2: Governance processes aiding outcomes

States performance

  • States and UTs are ranked on their overall performance in the reference year 2016-17, as well as on their annual incremental performance between the reference year and base year (2015-16).
  • The rankings present incredible insights on the status of school education across States/UTs and their relative progress over time.