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  • What are asteroids? How real is the threat of them causing extinction of life? What strategies have been developed to prevent such a catastrophe?

    Asteroids are rocky, airless remnants from the early solar system, primarily orbiting between Mars and Jupiter in the Asteroid Belt. There are around 1.3 million known asteroids, and in recent years, tracking efforts have intensified due to the potential threats they pose to Earth.

    Threat of Asteroids Causing Extinction

    1. In NASA’s fifth biennial Planetary Defense Interagency Tabletop Exercise, it has found that a potentially hazardous asteroid has a 72% chance of hitting Earth, highlighting potential gaps in Earth’s preparedness to prevent such an event.
    2. Historical Evidence: asteroid impact caused the extinction of dinosaurs 66 million years ago, as seen in Chicxulub crater in Mexico.
    3. Near-Earth Objects (NEOs): According to NASA (2023), over 30,000 NEOs have been discovered with about 2,300 classified as “potentially hazardous.”
    4. Impact Consequences: Even small asteroids (e.g., 20 meters wide) can cause significant damage. Eg- If Bennu impacted Earth, it would release the energy equivalent to the detonation of 1.4 billion tons of TNT.
    5. Extinction-Level Threat: Asteroids over 1 km in size can cause global climatic effects. However, NASA estimates such impacts occur every 500,000 years, making the risk relatively low but not negligible.
    6. Disasters: The kinetic energy from an asteroid impact can cause earthquakes, tsunamis, and hurricanes, which can be global in impact. 

    Counter Argument

    1. Atmospheric Protection: Earth’s atmosphere provides a natural shield, burning up most smaller asteroids before they reach the surface. 
    2. Astronomical and Statistical Odds: The chances of a civilization-ending asteroid (larger than 10 km) hitting Earth are one in several million per year.

    Strategies developed to prevent such a catastrophe:

    1. Early Detection Systems:
    1. NASA’s Near-Earth Object Observations (NEOO) program and ESA’s Space Situational Awareness Program continuously monitor potential threats.
    2. ISRO has launched the Network for Space Object Tracking and Analysis (NETRA), which tracks space debris and NEOs. 
    3. Deflection Techniques:
    1. DART Mission (2022): NASA’s Double Asteroid Redirection Test successfully altered the orbit of an asteroid, demonstrating the feasibility of deflection.
    2. Gravity Tractor where a spacecraft can use gravitational attraction over time to gradually change an asteroid’s trajectory.
    3. Planetary Defense Coordination: International collaboration under the United Nations fosters information-sharing and readiness through bodies like the International Asteroid Warning Network (IAWN).

    The findings from the OSIRIS-REx mission will provide valuable insights not only into the nature of asteroids but also into the broader context of planetary defense and the importance of continued vigilance in monitoring the skies.

  • The world is facing an acute shortage of clean and safe freshwater. What are the alternative technologies which can solve this crisis? Briefly discuss any three such technologies citing their key merits and demerits

    The world population is projected to reach approximately 9.7 billion by 2050, significantly increasing demand for freshwater resources. UNESCO notes that, 30% of the world’s aquifers are being over-exploited, particularly in regions like the Middle East, North Africa, and South Asia.

    Reasons for Shortage of Clean and Safe Fresh Water:

    1. Climate Change Impacts:
    1. Droughts: The United Nations reported that the number of severe droughts globally has increased by over 29% since the 1970s.
    2. Glacial Retreat: glaciers in the Himalayas have lost more than 40% of their mass over the past 40 year
    3. Groundwater Depletion
    1. Over-extraction: In Ogallala Aquifer(US) water levels dropped by as much as 30 meters.
    2. Agricultural Use: Agriculture accounts for 80% of global freshwater withdrawals, with some regions, like South Asia, relying heavily on groundwater for irrigation.
    1. Inadequate Water Supply: in India according to NITI Aayog, 40% of urban households lack access to piped water.
    2. Water Quality Issues:
    1. Contaminated Water Sources: CPCB reported in 2021 that 70% of India’s surface water is contaminated due to industrial discharge, agricultural runoff, and untreated sewage.
    2. Health Risks: According to WHO, waterborne diseases like diarrhea, cholera, and dysentery affect 2.3 billion people annually.

    Alternative Technologies which can solve this issue:

    1. Solar Desalination – uses solar energy to evaporate and condense seawater, producing freshwater. This process mimics the natural water cycle, where the sun’s energy evaporates water, which is then condensed into clean water.
    1. Merits: Environmentally friendly, using renewable energy and Suitable for remote, off-grid locations.
    2. Demerits: Limited water output compared to conventional desalination plants and  Initial investment costs for solar infrastructure are high.
    1. Atmospheric Water Generation (AWG) – extracts water from the moisture in the air through condensation. Devices can be designed to capture water by cooling the air or by using desiccants that absorb moisture.  
    1. Merits: Produces clean drinking water from the atmosphere, reducing dependence on surface or groundwater and Can be used in off-grid locations with solar-powered AWG units.
    2. Demerits: Limited output in areas with low humidity and High energy demand for cooling and dehumidification processes.
    3. Fog Harvesting – capturing water droplets from fog using large mesh nets. The droplets condense on the mesh and are collected in containers for use.
    1. Merits: Provides water in arid, foggy regions where other sources are limited and Low-tech and low-energy solution, relatively inexpensive to set up.
    2. Demerits: Only viable in regions with frequent fog and Limited water output, making it impractical for large-scale use.

    A combination of these solutions, along with improved water management and policy frameworks, is essential for ensuring water security and achieving SDG 6.

  • Elucidate the importance of buffer stocks for stabilizing agricultural prices in India. What are the challenges associated with the storage of buffer stock? Discuss

    Buffer stocks are reserves of essential commodities, aimed at stabilizing agricultural prices and ensuring food security. India currently maintains over 80 million tonnes of buffer stock, well above the norm set by the Buffer Stocking Policy (around 30-40 million tonnes), managed primarily by the Food Corporation of India (FCI). 


    Importance of buffer stocks for stabilizing agricultural prices:

    1. Mitigating Price Volatility: According to the RBI Report, despite adverse climatic conditions and international disruptions, buffer stocks helped contain food inflation at average of 5.9%.
    2. Mitigating Global Supply Disruption (2022-23): Even during the Russia-Ukraine war, buffer stocks helped stabilize the market by releasing 18 lakh tonnes of wheat in early 2023.
    3. Stabilizing Farmers’ Incomes: In 2021-22, FCI procured 43 million tonnes of wheat and 58 million tonnes of rice, stabilizing farmer incomes during surplus production.
    4. Public Distribution System (PDS): Buffer stocks support the National Food Security Act (NFSA), ensuring food supply to 67% of India’s population at subsidized rates, and controlling inflation for essential goods.
    5. Export Management: In times of surplus, the government can release surplus grains for export. Conversely, during shortages, restricting exports ensures price stabilization.
    6. Meeting Emergency Needs – Buffer stocks help meet food requirements during natural calamities or crises. Eg- Garib Kalyan Yojana during COVID

    Challenges Associated with Storage of Buffer Stocks:

    1. Wastage and Quality Degradation: As per Ministry of Consumer Affairs, more than 25000 Metric Tonnes (MT) of food grains were wasted in the last five years in FCI godowns.
    2. Excess Procurement:  In 2020-2021, India held about 90 million metric tons of food grains particularly due to the open procurement policy, far exceeding the buffer norms.
    3. Management and Leakages:  Shanta Kumar Committee highlighted that 46% of PDS grains do not reach the intended beneficiaries due to inefficiencies and corruption.
    4. Mismatch Between Procurement and Regional Needs:  Procurement is concentrated in states like Punjab, Haryana, and UP, whereas Bihar and West Bengal often face shortages.
    5. Inadequate Storage Infrastructure and obsolete technology: Using temporary facilities like Covered and Plinth (CAP), lacking modern technology for temperature control, pest management, and moisture regulation.    
    6. Financial burden on the government due to high costs of procurement, storage, and management, especially during years of large-scale purchases, straining the budget.

    Recommendations to revamp storage of buffer stocks:

    1. Ashok Gulati Committee (2011): revision of buffer stock norms based on actual requirements for the PDS and emergency situations.
    2. Comptroller and Auditor General (CAG) Report on FCI (2013): use of Technology to digitize inventory management systems, allowing real-time tracking of food stocks at FCI warehouses.
    3. Shanta Kumar Committee (2015): It suggested decentralizing the procurement process by encouraging states to take up procurement based on their regional capabilities. 

    India’s “World’s Largest Grain Storage Plan” aims to create 70 million tons of modern storage through cooperatives, enhancing rural capacity, improving grain handling, and reducing post-harvest losses by building silos and warehouses in underserved areas.

  • A re-balancing of India’s great power relations

    Why in the News?

    India’s participation in the sixth Quad Leaders’ Summit in Wilmington, Delaware, U.S., on September 21, 2024, has heightened expectations for strengthening security cooperation among the “four key maritime democracies in the Indo-Pacific.”

    How can India navigate its relationships with major powers?

    • Strategic Autonomy: India maintains a policy of non-alignment, balancing relations with both the U.S. and Russia. It is careful not to be drawn into formal alliances but seeks to leverage its partnerships for national interests.
    • Quad vs. Russia: India’s engagement with the U.S.-led Quad strengthens its Indo-Pacific strategy, while its ties with Russia (a Quad opponent) focus on maintaining historical military and strategic benefits.
    • Russia-China Dynamics: As Russia moves closer to China, India seeks to rebalance, ensuring its interests are not sidelined, particularly in the context of China’s growing influence in Asia and unresolved border disputes.
    • U.S. Partnership: While deepening ties with the U.S., India is cautious about fully aligning with Washington’s agenda (for exports), especially regarding tensions with Russia.

    What role does India play in Global Conflict Resolution?

    • As a Peace facilitator: India is increasingly positioning itself as a peace facilitator, evidenced by the NSA (Ajit Dowal) of India’s outreach to Russia and France regarding the Ukraine conflict and peace plan.
    • As a ‘Vishwa Bandhu’: India’s engagement with both Ukraine and Russia shows its willingness to serve as an interlocutor, navigating complex diplomatic terrains while pushing for dialogue in global conflicts.
      • India’s attempts to mediate in conflicts like Ukraine emphasize its independent foreign policy, aiming to project itself as a “Vishwa Bandhu” (friend to the world).

    What implications do Domestic Issues have on India’s Foreign Policy?

    • Economic Dependencies: India’s reliance on Russian military equipment and discounted oil affects its stance on the Ukraine war, pushing for a more nuanced approach in balancing U.S. and Russian relations.
    • Border Tensions with China: Domestic security concerns, such as the standoff at the LAC, influence India’s foreign policy decisions, especially in its cautious relationship with China despite economic interdependence.
    • Public Opinion and Strategic Decisions: India’s foreign policy must account for domestic perceptions of global powers, balancing national security with economic growth and political stability in a complex international environment.

    Way forward: 

    • Strengthen Strategic Autonomy: India should continue balancing its relationships with major powers by deepening economic and security ties with both the U.S. and Russia, while maintaining flexibility to protect its national interests, particularly in the Indo-Pacific and vis-à-vis China.
    • Expand Peace Diplomacy: India can further leverage its role as a mediator in global conflicts, enhancing its international standing by promoting dialogue and peace initiatives.
  • What are the major challenges faced by Indian irrigation system in recent times? State the measures taken by the government for efficient irrigation management

    Irrigation is critical to Indian agriculture, which accounts for 80% of the country’s freshwater consumption. According to the Ministry of Agriculture, about 52% of India’s net sown area is irrigated, but inefficiencies in the system have hampered agricultural productivity. 

    Major challenges faced by Indian irrigation system in recent times:

    • Groundwater exploitation: According to CGWA, India extracts nearly 25% of global groundwater annually. Punjab and Haryana groundwater tables deplete by 33% in the last two decades.
    • Inefficient Water Use: Due to electricity subsidies and Traditional methods like flood irrigation, still used in 85% of irrigated areas.
    • Poor Infrastructure: Canal systems, which cover around 40% of irrigated land, suffer from leakages and evaporation losses, leading to about 30-40% wastage (Central Water Commission).
    • Unequal Distribution: Punjab, with 98% irrigation coverage, contrasts with underdeveloped infrastructure in eastern and southern states. (NITI Aayog).
    • Low Adoption of Modern Techniques: As per ICAR, only 6% of India’s irrigated land uses drip or sprinkler systems, mainly due to high initial costs and lack of awareness.

    Measures taken by the government for efficient irrigation management:

    1. National Mission for Sustainable Agriculture (NMSA): to promote sustainable agriculture practices, enhance water use efficiency, and encourage adoption of new irrigation technologies.
    2. Pradhan Mantri Krishi Sinchai Yojana (PMKSY): aims to improve irrigation coverage, enhance water efficiency, and promote modern irrigation techniques such as drip and sprinkler systems.
    3. Command Area Development & Water Management (CADWM): Improves irrigation efficiency by repairing and upgrading canal systems  across 17 million hectares (CWC).
    4. Atal Bhujal Yojana: With a budget of ₹6,000 crores, this scheme focuses on sustainable groundwater management in stressed regions, aiming to reduce over-extraction in 78 districts.
    5. Jal Shakti Abhiyan: A water conservation campaign targeting 256 water-stressed districts, focusing on rainwater harvesting and recharging groundwater (NITI Aayog).

    State Led initiatives:

    1. Mission Kakatiya(Telangana)-for rejuvenation of tanks and micro-irrigation sources.
    2. Jalyukt Shivar Abhiyan(Maharashtra)-promotes water conservation and management by constructing farm ponds, percolation tanks, and check dams.
    3. Krishi Bhagya(Karnataka)-promotes the adoption of micro-irrigation systems, rainwater harvesting, etc.

    Therefore, as recommended by the Ashok Dalwai Panel, a substantial investment in modern irrigation infrastructure, including drip and sprinkler systems, and the need to revisit water pricing policies to increase water-use efficiency and agricultural productivity.

  • What is the need for expanding the regional air connectivity in India? In this context, discuss the government’s UDAN Scheme and its achievements

    India’s vast geography and diverse regions make efficient air connectivity a critical element in driving economic growth, enhancing national integration, and ensuring equitable development across the country. The UDAN Scheme was launched with the objective of connecting small and medium cities with big cities through air service.

    Need for expanding the regional air connectivity in India:

    1. Decongesting Overloaded Metros: Major urban airports like those in Delhi, Mumbai, and Bengaluru are experiencing severe congestion due to increased passenger traffic.
    2. Economic and Trade Development: Improved air connectivity can further boost initiatives like “Making Districts as export hubs” thereby facilitating local economies.
    3. Promoting Tourism: Unlocking Tourism Potential, especially in states like Northeast India, Himachal Pradesh, Uttarakhand, and Rajasthan.
    4. Enhancing National Security: Improved connectivity, particularly in border and strategic areas such as Ladakh, Arunachal Pradesh, and the Andaman & Nicobar Islands, is critical for national security.
    5. Disaster Management and Relief: Regions prone to natural disasters, such as floods, earthquakes, and landslides, benefit from rapid response and evacuation efforts when accessible by air.

    The Government’s UDAN Scheme

    Key features:

    1. Subsidized Airfare: airfares for a 500 km flight are capped at ₹2,500 for a one-hour journey.
    2. Viability Gap Funding (VGF): To incentivize non-commercially viable regional routes.
    3. Development of Airports: Particularly in unserved and underserved areas by improving infrastructure, including runways, terminals, and navigational aids.
    4. Public-Private Partnership (PPP): Encourages private sector participation in developing regional airport infrastructure.

    Achievements of UDAN Scheme:

    1. As per Ministry of Civil Aviation, UDAN scheme is operating over 2.8 lakh flights and serving 1.43 crore passengers as of August 31, 2024. 
    2. Increased Regional Connectivity: The scheme has launched operations on 583 routes, linking 86 airports, including 13 heliports and 2 water aerodromes. 
    3. Affordable Air Travel: India has emerged as the third-largest domestic aviation market, with the total number of air passengers handled at Indian airports reaching 37.6 crore in FY24—a year-on-year increase of 15%. 
    4. Growth in Regional Aviation: Airlines such as Star Air, Trujet, and Air India Regional have expanded their operations under the scheme. Eg- Akasa Air ordering 200 aircraft within 17 months
    5. Development of Infrastructure: Airports, such as those in Jharsuguda (Odisha), Kishangarh (Rajasthan), and Pakyong (Sikkim), have been operationalized.
    6. Boost to Regional Economies and Tourism: To promote tourism, 46 important tourist spots have been selected under UDAN Scheme.
    IssuesWay Forward
    Out of the 479 airport routes that were revived by the Union Government, 225 have ceased operations.Enhancing Financial Viability: Implementing revenue-sharing models to incentivize the operationalization of less profitable routes.
    As per CAG Report, there is excessive collection of Regional Air Connectivity Fund (RCF) and delay on the part of RACFT in raising RCF levy claims on the airline operators.Streamlining Regulatory Processes: Expediting the process of obtaining regulatory clearances from agencies like the DGCA , state governments, and airport authorities.
    AAI’s Viability Gap Fund’s claims approved through self-certification led to non-compliance to several scheme provisions. (CAG Report)Focus on Sustainable Practices and leveraging technology: Adopting fuel-efficient technologies to reduce carbon footprints and Data Analytics for Route Optimization

    India can draw inspiration from the “Regional Connectivity Scheme” (RCS) in the United Kingdom whose emphasis on PPP and operational efficiency, can help realising the vision of ‘New India’.

  • How high-performance buildings are the next step towards a sustainable future?

    Why in the News?

    Due to rapid urbanization, India is facing the challenge of exceeding global energy efficiency and carbon benchmarks. High-performance buildings (HPBs) offer resilient, adaptive, and self-sufficient designs, promoting healthier indoor environments and better air quality.

    What are High-Performance Buildings (HPBs)?

    • These are structures designed to achieve peak levels of energy efficiency, sustainability, and occupant comfort.
    • They go beyond standard building practices by integrating advanced technologies and smart design strategies to minimize environmental impact, optimize resource use, and improve overall performance.
      • For example, Unnati (Greater Noida) and Indira Paryavaran Bhawan (New Delhi) showcase smart designs like sun-optimized facades and advanced HVAC systems, reducing energy use.

    Key features of HPBs include:

    • Energy Efficiency: HPBs use cutting-edge technologies like energy-efficient HVAC systems, smart lighting controls, and advanced insulation to reduce energy consumption.
    • Water Conservation: Techniques like greywater recycling and rainwater harvesting help HPBs minimize water usage.
    • Sustainable Materials: HPBs use eco-friendly, durable materials to reduce their carbon footprint and increase building longevity.
    • Site-Specific Design: HPBs leverage natural lighting, ventilation, and terrain-specific water management to enhance thermal efficiency and reduce energy demand.
    • Building Management Systems (BMS): HPBs employ BMS to monitor real-time performance metrics such as energy usage, water consumption, and indoor air quality, ensuring continuous optimization of resources.

    How can HPBs help Indian cities?

    • Resource Efficiency: HPBs help reduce energy consumption and promote water conservation, addressing India’s resource scarcity and fluctuating energy markets.
    • Urban Resilience: By being energy-efficient and self-sufficient, HPBs can help cities adapt to rising temperatures and urbanization pressures.
    • Healthier Environments: HPBs enhance indoor air quality, thermal comfort, and occupant well-being through intelligent systems like air filtration, natural lighting, and smart temperature control.
    • The strain on Infrastructure: HPBs can relieve pressure on public infrastructure by minimizing resource usage, making them crucial for fast-growing cities.
    • Sustainable Growth: HPBs are key to driving India’s transition to a low-carbon economy, supporting sustainable urbanization, and enhancing property value through long-term cost savings.

    Way Forward: 

    • Scaling Adoption of HPBs: Promote widespread implementation of HPBs through government incentives, regulations, and public-private partnerships, aligning with SDG Goal 11 (Sustainable Cities and Communities) to foster inclusive, safe, and resilient urban spaces.
    • Innovation and Capacity Building: Encourage innovation in building technologies and workforce training to develop HPBs, contributing to SDG Goal 7 (Affordable and Clean Energy) by ensuring energy efficiency and reducing carbon emissions in cities.
  • Discuss the merits and demerits of the four ‘Labour Codes’ in the context of labour market reforms in India. What has been the progress so far in this regard?

    As per recommendations of 2nd National Commission on Labour, 29 labor laws in India have been consolidated into Four comprehensive labor codes which aim at boosting the ease of doing business, while also extending social security to millions of workers, particularly in the informal and gig economy.

    1. Code on Wages: Standardized wage and bonus payments.
    2. Industrial Relations Code: Streamlines dispute resolution and labour relations.
    3. Occupational Safety, Health, and Working Conditions Code: Ensures safe and healthy working conditions.
    4. Code on Social Security: Expands social security benefits.

    Merits of Labour Codes:

    1. Simplification and Rationalization of Laws: The consolidation of 29 laws into 4 codes reduces the complexity of compliance Uniform definitions E.g. simplifying payroll calculations.
    2. Promoting Formalization and Social Security: Code on Social Security brings gig and platform workers (e.g., delivery workers, app-based drivers) under the social security net 
    3. Minimum floor wage: to be determined by the Central government based on the minimum living standards and level of skills of workers based on which state governments shall identify a minimum wage rate, to be revised every 5 years or earlier. 
    4. Minimise exploitative practices – Provisions for overtime wages twice the normal wages on an hourly or part-of-hour basis as well as coverage of Employees’ State Insurance (ESI). 
    5. Flexibility in Hiring and Firing: The Industrial Relations Code allows firms with up to 300 workers (previously 100) to hire and fire employees without requiring government permission.
    6. Improved Worker Safety and Health Standards: The Occupational Safety, Health, and Working Conditions Code mandates stricter safety norms, such as proper ventilation, cleanliness, and adequate lighting at workplaces.
    7. Easier Resolution of Industrial Disputes: The Industrial Relations Code mandates the formation of Grievance Redressal Committees for companies with 20 or more workers and allows faster resolution through tribunals.
    8. Changes in EPF & gratuity: the Employee Provident Fund (EPF) and gratuity contributions are now applicable to both organised and unorganised sectors. Further, the codes permit a 1-year service for employees to collect gratuities from earlier 5 years.
    9. Gender Equality – The Code of Wages prohibits discrimination in remuneration and recruitment of employees for work of similar nature.
    10. Maternity benefits: the SS Code continues to ensure 26 weeks of paid maternity leave along with creche facilities funded by the employer.

    Demerits of Labour Codes:

    1. Lack of Uniformity Across States: Labour is a concurrent subject in India, this could lead to lack of uniformity in implementation across different regions.
    2. Delegated Legislation – Standing Committee on Labour has noted that the Acts delegates various aspects for rule-making by the government. Eg-  defining the entitlements 
    3. Concerns about Gig and Informal Workers’ Security: the Code on Social Security does not provide clear mechanisms for ensuring comprehensive coverage and enforcement.
    4. Impact on Trade Unions and Collective Bargaining: A requirement that 75% of workers in a company must vote for a strike before it is legally recognized can dilute the role of trade unions        
    5. Weakening of Workers’ Rights and Protections: The increased threshold for government permission for layoffs is criticized for potentially weakening job security.
    6. Power to government to modify or reject tribunal awards – it raises the question of conflict of interest, as government may modify an award made by the Tribunal in a disputes it is a party.  
    7. Provisions on fixed term employment – unequal bargaining powers between the worker and employer could affect the rights of workers as the power to renew contracts lies with employer.

    Progress so far in this regard:

    1. Publication of draft rules: over 20 states have published draft rules, but final notifications are still awaited in most cases.
    2. Implementation: Implementation has been delayed due to state-level preparations and ongoing consultations with stakeholders. 
    3. Centre has already enforced few provisions like Central Advisory Board and establishment of an employee’s and his family members’ identities through respective Aadhaar numbers.

    Reasons For Delay 

    1. Some states are yet to publish rules to set the codes in motion 
    2. Talks between the Union labour ministry and unions have stalled  
    3. Centre is inclined to take all stakeholders on board for which there needs agreement on key provisions.

    Way Forward

    1. Labour Market Information System (LMIS): to pinpoint skill shortages, training needs, and disseminate new job opportunities.
    2. Comprehensive Economic Reforms: upgrading infrastructure, skilling the workforce, and maintaining a consistent export-import policy to bolster investment and job creation.

    India can draw on Denmark’s “flexicurity” system which combines labor market flexibility with comprehensive social security, to ensure ensure ‘Ease of Doing Business’ and realise target of VIKSIT BHARAT 2047.

  • On the need for a different framework for passive Mutual Funds

    Why in the News?

    On September 30, the Securities and Exchange Board of India (SEBI) launched the liberalized Mutual Funds Lite (MF Lite) framework specifically for passively managed schemes.

    What is a Passive Mutual Fund? 

    • A Passive Mutual Fund is a type of investment fund that follows a market index, like Nifty50, trying to match its performance.
    • They can be easily tracked, whereas, Active Mutual Funds need expert fund managers to actively monitor them and make investments in securities of their choice accordingly.
    • Since there’s no need for constant research, analysis, or active trading the costs are lower.

    Key highlights of the liberalized Mutual Funds Lite (MF Lite) framework:

    • Separate Framework for Passive Funds: It is tailored for passively managed schemes, which are less risky and require minimal active management.
    • Relaxed Entry Requirements: Lowered net worth requirement (₹35 crore), simplified criteria for sponsor eligibility (profitability, track record).
    • Encouraging New Players: It provides easier entry for new AMCs (Asset management companies) and market players in the passive fund segment.
    • Governance Flexibility: It has reduced oversight for trustees; operational responsibilities shifted to AMC boards, focusing on fees, expenses, and tracking error.
    • Cost Efficiency Focus: It emphasizes on lowering Total Expense Ratio (TER) and minimizing tracking error for better returns.
    • Simplified Disclosures: The Scheme Information Documents (SID) are simplified to focus on key metrics like benchmark index, TER, and tracking error.
    • Risk Management: Audit committees of AMCs can handle risk management duties due to the lower risk profile of passive funds.

    Why a Separate Framework for MF Lite is Needed?

    • Lower Risk Profile: Passively managed funds are generally less risky because they track established benchmarks like BSE Sensex or Nifty50, reducing the need for active decision-making.
    • Minimal Asset Manager Discretion: Unlike actively managed funds, asset managers of passive funds have limited discretion in asset allocation and investment objectives. They simply mirror the performance of the benchmark index.
    • Inapplicability of Existing Regulations: The current framework is designed primarily for actively managed funds, which involve more risks and require more oversight. It is less suitable for passive funds, which operate with predefined, transparent rules.
    • Cost-Effective Market Entry: To encourage new players and make the passive fund industry more competitive, SEBI introduced relaxed regulations regarding eligibility, net worth, and profitability.

    What about risks and disclosures? 

    • Success depends on Total Expense Ratio (TER) and tracking error. Lower costs and minimal deviation from the benchmark are crucial for performance.
    • Scheme Information Documents (SID) focus on key metrics like the benchmark name, TER, and tracking error, leaving out complex strategies.
    • Risk management responsibilities are streamlined, allowing the audit committee of the AMC to handle oversight, reflecting the lower risks of passive funds.

    Way forward: 

    • Enhance Investor Education: Develop targeted educational initiatives to inform retail investors about the benefits, risks, and operational aspects of passive mutual funds, fostering informed investment decisions.
    • Ongoing Regulatory Evaluation: Establish a framework for periodic assessment and adaptation of the MF Lite regulations to ensure they remain effective and relevant, promoting competition while safeguarding investor interests.
  • Farmers to receive aid under Rythu Bharosa

    Why in the News?

    After the completion of the loan waiver, the Telangana government will provide Rythu Bharosa assistance to support farmers further.

    About the Rythu Bharosa Scheme:

    Details
    Scheme Name Rythu Bharosa Scheme (Farmer’s Investment Support Scheme – FISS)
    Launch Year 2018-19 Kharif season (Telangana Govt’s Navratna Scheme)
    Objective To support the initial investment needs of farmers by providing financial aid for agriculture and horticulture crops.
    Benefits ₹5,000 per acre per season as a grant for input purchases, with no cap on the number of acres owned by farmers.
    Eligibility
    • Farmers must be residents of Telangana.
    • Must own agricultural land.
    • Small and marginal farmers are eligible.
    • Farmers cultivating land with Record of Forest Rights (ROFR) document (mainly from Scheduled Tribe communities).
    Ineligible Farmers
    • Commercial farmers.
    • Farmers working on a rental contract or tenant farmers.

    Significance of the move

    • Financial Relief for Farmers: By waiving loans of up to ₹2 lakh per farmer, the scheme provides significant financial relief, helping farmers manage their debt and invest in future agricultural activities.
    • Boost to Agricultural Sector: The waiver will enable farmers to focus on improving productivity and crop yields without the burden of debt, potentially boosting the state’s agricultural output.
    • Reduction in Farmer Distress: This move will alleviate distress among farmers, especially those affected by unpredictable weather and fluctuating crop prices, reducing the risk of farm-related suicides and financial instability.

    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, 3, 4 and 5