💥UPSC 2026, 2027, 2028 UAP Mentorship (March Batch) + Access XFactor Notes & Microthemes PDF

Type: Prelims Only

  • Make in India: Challenges & Prospects

    What is Project Vishnu? 

    Why in the News?

    India is set to test the Extended Trajectory-Long Duration Hypersonic Cruise Missile (ET-LDHCM), an advanced hypersonic missile developed by DRDO under the secretive Project Vishnu.

    What is Project Vishnu?

    • Overview: Project Vishnu is a top-secret initiative by India’s Defence Research and Development Organisation (DRDO) to develop hypersonic missile technologies.
    • Strategic Purpose: The project aims to enhance India’s strategic deterrence by delivering high-speed missiles capable of both conventional and nuclear roles.
    • Focus: It is specifically designed to counter threats from China and Pakistan, reinforcing regional strike capability.
    • Platform Flexibility: A core feature is multi-platform deployment, allowing the missile to be launched from land, air, and naval systems.
    • Integrated Technologies: It brings together scramjet propulsion, materials science, and precision guidance into a single hypersonic weapons system.
    • Doctrinal Alignment: It reflects India’s shift toward technology-driven warfare and supports its credible minimum deterrence doctrine.

    About the ET-LDHC Hypersonic Missile:

    • Overview: It is the flagship missile system under Project Vishnu.
    • Speed and Range: It reaches Mach 8 (~11,000 km/h) and has a strike range of 1,500 km, making it nearly impossible to intercept with current defence systems.
    • Payload Versatility: It can carry 1,000–2,000 kg of conventional or nuclear warheads, allowing mission-specific configurations.
    • Propulsion: Powered by an indigenously developed scramjet engine, it uses atmospheric oxygen for combustion, improving fuel efficiency and endurance.
    • Strike Capabilities: With evasive manoeuvrability and a flat trajectory, the missile is ideal for deep-penetration and precision attacks.
    • Next-Gen Materials: It is built from materials that withstand 2,000°C+ temperatures, ensuring oxidation resistance and structural integrity.
    • Launch Platforms: The missile is compatible with land systems, fighter jets, and naval vessels, offering operational flexibility.
    [UPSC 2024] Consider the following statements:

    1. Ballistic missiles are jet-propelled at subsonic speeds throughout their flights, while cruise missiles are rocket-powered only in the initial phase of flight.

    2. Agni-V is a medium-range supersonic cruise missile, while BrahMos is a solid-fuelled intercontinental ballistic missile.

    Which of the statements given above is/are correct?

    Options: (a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2 *

     

  • Wildlife Conservation Efforts

    First Assembly of the International Big Cat Alliance (IBCA)

    Why in the News?

    The first Assembly of the International Big Cat Alliance (IBCA) was held on June 16, 2025, in New Delhi, with the Union Environment Minister presiding over the session.

    About the International Big Cat Alliance (IBCA)

    • Overview: It is a multi-country, multi-agency alliance of 95 countries, both range and non-range, dedicated to the conservation of big cats and their habitats.
    • Launch: Proposed by PM Modi in 2019, the alliance was officially launched in April 2023 to mark Project Tiger’s 50th anniversary.
    • Conservation Focus: IBCA seeks to protect and restore populations of 7 big cats: tiger, lion, leopard, snow leopard, cheetah, jaguar, and puma.
    • Core Functions: The alliance works through advocacy, knowledge exchange, promotion of eco-tourism, and resource mobilisation.
    • Conflict Resolution: It aims to reduce human-wildlife conflict and restore degraded habitats critical to big cat survival.
    • Global Participation: IBCA brings together 95 range countries from:
      • Asia: India, China, Nepal, Pakistan, Iran
      • Africa: Kenya, Congo, Ghana
      • Americas: Brazil, Ecuador, United States
      • Europe/Central Asia: Russia, Kazakhstan
    • Members: Bhutan, Eswatini, Cambodia, Guinea, India, Liberia, Nicaragua, Somalia and Suriname have deposited an instrument of ratification.
    • Institutional Structure: It is governed by a General Assembly, an elected Council, and a secretariat led by a Secretary-General.
    • Permanent Base: The ratification of the headquarters agreement has enabled IBCA to set up its permanent headquarters in India.

    India’s Role:

    • Species Richness: India is home to 5 of the 7 big cats—the tiger, lion, leopard, snow leopard, and cheetah—and holds 70% of the world’s tiger population.
    • Funding Commitment: The Indian government has committed ₹150 crore (2023–2028) and is attracting additional global contributions to support the alliance’s goals.
    • Conservation Leadership: India plays a leading global role in big cat protection, setting benchmarks in wildlife conservation and ecological stewardship.
    [UPSC 2024] Consider the following statements:

    1. Lions do not have a particular breeding season.

    2. Unlike most other big cats, cheetahs do not roar.

    3. Unlike male lions, male leopards do not proclaim their territory by scent marking.

    Which of the statements given above are correct?

    (a) 1 and 2 only * (b) 2 and 3 only (c) 1 and 3 only (d) 1, 2 and 2

     

  • Urban Transformation – Smart Cities, AMRUT, etc.

    Key Highlights of the Global Liveability Index, 2025

    Why in the News?

    The Economist Intelligence Unit (EIU) has released its Global Liveability Index 2025, evaluating 173 cities worldwide on their quality of life.

    About the Global Liveability Index:

    • Publisher: It is released annually by the Economist Intelligence Unit (EIU).
    • Purpose: It measures the quality of life in 173 cities worldwide, assessing how challenging or comfortable it is to live in each location.
    • Usage: The index informs decisions by corporations, governments, and development agencies, particularly for policy planning and expatriate relocation.
    • Five Assessment Categories:
      1. Stability (25%): Considers levels of crime, civil unrest, and terrorism threats.
      2. Healthcare (20%): Evaluates the quality, accessibility, and availability of medical services.
      3. Culture & Environment (25%): Includes climate, cultural offerings, and environmental conditions.
      4. Education (10%): Measures access to public and private education and overall quality.
      5. Infrastructure (20%): Covers transport, roads, housing, and utility services.
    • Scoring: Cities are rated from 1 (intolerable) to 100 (ideal) using 30+ qualitative and quantitative indicators.

    Key Global Rankings (2025):

    • Top Cities:
      • Copenhagen (Denmark) ranked 1st, scoring 98/100 with perfect marks in stability, education, and infrastructure.
      • Vienna and Zurich tied for 2nd, followed by Melbourne (4th) and Geneva (5th).
    • Regional Trends: Western European cities dominated the top 10, thanks to strong healthcare, education, and public transport systems.
    • Asia-Pacific Performers: Melbourne, Sydney, Osaka, Auckland, and Adelaide made the top 10, showing continued high liveability.
    • Improvements: Al Khobar (Saudi Arabia) jumped 13 spots due to gains in education and healthcare.
    • Lowest Ranked: Damascus (Syria) remains the least liveable, followed by Tripoli (Libya) and Dhaka (Bangladesh).
    • India’s Position: Both Delhi and Mumbai ranked 141st out of 173 cities, reflecting persistent issues in healthcare, infrastructure, air quality, and public safety.
    [UPSC 2017] With reference to the role of UN-Habitat in the United Nations programme working towards a better urban future, consider the following statements:

    1. UN-Habitat has been mandated by the United Nations General Assembly to promote socially and environmentally sustainable towns and cities to provide adequate shelter for all.

    2. Its partners are either governments or local urban authorities only.

    3. UN-Habitat contributes to the overall objective of the United Nations system to reduce poverty and to promote access to safe drinking water and basic sanitation.

    Which of the statements given above is/are correct?

    Options: (a) 1, 2 and 3 (b) 1 and 3 only* (c) 2 and 3 only (d) Neither 1 nor 2

     

  • Modern Indian History-Events and Personalities

    In news: Servants of India Society

    Why in the News?

    Pune’s Gokhale Institute of Politics and Economics (GIPE) has recently called for a neutral takeover of its parent body, the Servants of India Society (SIS), following allegations of financial irregularities.

    In news: Servants of India Society

    About Servants of India Society:

    • Founding: It was founded on June 12, 1905, in Pune by Gopal Krishna Gokhale, along with N.A. Dravid, G.K. Devadhar, and A.V. Patwardhan.
    • Mission: The Society aimed to train Indians for selfless national service, promote education, and work for social and political reform through constitutional means.
    • Core Values: Members took vows of simple living, secularism, and equality across caste and religion.
    • Non-political Nature: Though non-political and non-sectarian, many SIS members contributed significantly to the freedom movement.
    • Prominent Members: Influential members included V.S. Srinivasa Sastri, Hriday Nath Kunzru, and A.V. Thakkar.
    • Major Activities: SIS established schools, ran night classes, supported healthcare, and published The Hitavada since 1911.
    • Welfare Work: It actively engaged in disaster relief, women’s and child welfare, and rural development.
    • Secular Legacy: It was India’s first secular social reform organisation, focusing on nation-building through service.
    • Current Status: Headquartered in Pune, it continues to operate today, though with limited membership, preserving its foundational values.

    Gopal Krishna Gokhale (1866-1915):

    • Early Life: He was a liberal nationalist, senior Indian National Congress leader, and social reformer.
    • Political Journey: He joined the Indian National Congress in 1889 under Justice M.G. Ranade and became Congress President in 1905.
    • Institution Building: In 1905, Gokhale founded the Servants of India Society to train dedicated public servants.
    • Legislative Work: He served in the Bombay Legislative Council (1899) and the Imperial Legislative Council as a non-official member.
    • Reform Advocacy: Gokhale played a major role in securing the Morley-Minto Reforms (1909) and presented India’s economic conditions to the Welby Commission.
    • Mentor to Gandhi: Gokhale was a political mentor to Mahatma Gandhi and supported his early work, including funding the Sabarmati Ashram.
    • Education and Journalism: He established the Ranade Institute of Economics and launched The Hitavada newspaper (published from Nagpur).
    • Philosophy: Gokhale believed in constitutional reform, education, and social justice as the path to Indian self-rule, bridging social reform and political activism.

     

    [UPSC 2009] Who among the following rejected the title of knighthood and refused to accept a position in the Council of the Secretary of State for India?

    Options: (a) Motilal Nehru (b) M.G. Ranade* (c) G.K. Gokhale (d) B.G. Tilak

     

  • AYUSH – Indian Medicine System

    Sowa-Rigpa Traditional Medicine

    Why in the News?

    A one-day Samyoga event was organised today at the National Institute of Sowa-Rigpa (NISR), Leh, with the participation of experts from 10 states of India.

    About Sowa-Rigpa:

    • Overview: Sowa-Rigpa, also known as Traditional Tibetan Medicine or the Amchi system, is among the oldest continuously practised medical systems in the world.
    • Origin: The term comes from the Bhoti language, meaning “knowledge of healing”, and dates back over 2,000 years.
    • Historical Development: It was codified in the 8th century CE during King Trisong Detsen’s reign and further developed in the 12th century.
    • Foundational Text: The Gyud-Zi (4 Tantras) integrates ideas from Ayurveda, Chinese medicine, Greek traditions, and Bon and Buddhist philosophy.
    • Global Presence: Sowa-Rigpa is practiced in Tibet, Mongolia, Bhutan, Nepal, and parts of Russia and China.
    • Indian Regions: In India, it is common in Ladakh, Sikkim, Arunachal Pradesh, Himachal Pradesh (Lahaul & Spiti), Jammu & Kashmir, and Darjeeling.
    • Core Beliefs: The system promotes disease prevention, longevity, and holistic mind-body well-being, viewing the body as a microcosm of nature in harmony with the environment.

    Diagnosis and Treatment:

    • Diagnostic Methods: Practitioners use pulse analysis, urine analysis, and detailed observation including case history.
    • Therapies Used: Treatments include diet and lifestyle adjustments, herbal medicines, Kunyé massage, moxibustion, acupuncture, and spiritual healing.
    • Ayurvedic Influence: About 75% of its theoretical base is derived from Ayurveda, especially the Ashtanga Hridaya.
    • Common Herbs: Shared medicinal herbs include Ashwagandha, Triphala, and Guggulu.

    Education and Recognition:

    • Traditional Training: Knowledge was historically passed through oral traditions, via guru-shishya parampara or family lineages.
    • Modern Institutions: The Central Council for Tibetan Medicine oversees education and practice standards.
    • National Institute: The National Institute of Sowa-Rigpa (NISR) in Leh leads in education, research, and policy implementation.
    • Government Recognition: Sowa-Rigpa has been officially recognised under AYUSH systems in India since 2010 and is promoted in multiple Himalayan states.
    [UPSC 2019] Recently, there was a growing awareness in our country about the importance of Himalayan nettle (Girardinia diversifolia) because it is found to be a sustainable source of:

    Options: (a) anti-malarial drug* (b) biodiesel (c) pulp for paper industry (d) textile fibre

     

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

    Ocean Darkening: A New Ecological Crisis

    Why in the News?

    A new study from the University of Plymouth has revealed that over 21% of the global ocean has significantly darkened in the last two decades.

    What is Ocean Darkening?

    • Ocean darkening refers to the reduction in sunlight penetration into the ocean’s upper layers, known as the photic zone (up to 200 meters deep), where sunlight drives photosynthesis and supports marine biodiversity.
    • This process is measured using the diffuse attenuation coefficient (Kd 490), which tracks how quickly light diminishes as it passes through seawater.
    • The photic zone is essential for phytoplankton productivity, oxygen generation, marine food chains, and the regulation of global climate.

    Recent Report Citing Ocean Darkening:

    • A new study by researchers from the University of Plymouth, published in 2024, titled “Darkening of the Global Ocean”, revealed that 21% of the global ocean has significantly darkened from 2003 to 2022.
    • Key findings:
      • 9% of the ocean saw a drop of more than 50 meters in light penetration—equal to the area of Africa.
      • 2.6% experienced a loss exceeding 100 meters in photic depth.
    • Affected Region: The study found the Arctic, Antarctic, Gulf Stream, and North Sea among the worst affected regions.
    • Causes:
      • Algal blooms from nutrient runoff in coastal areas.
      • Warming seas, altered plankton dynamics, and changing ocean currents in open ocean zones.

    Implications of Ocean Darkening:

    • Ecosystem Disruption: Light-dependent species, such as Calanus copepods, are being pushed into shallower zones, increasing predation and competition.
    • Loss of Habitat: The shrinkage of the photic zone could be one of the largest marine habitat losses ever, affecting fish stocks and biodiversity.
    • Climate Feedback Loop: Reduced photosynthesis in oceans could weaken the ocean’s role in carbon sequestration and oxygen production, worsening climate change.
    • Threat to Global Fisheries: The contraction of productive zones affects fish populations, jeopardising fisheries and food security.
    • Scientific Concern: Researchers warn that this hidden crisis could fundamentally alter marine ecosystems if not urgently addressed.
    [UPSC 2025] With reference to the planet Earth, consider the following statements:

    I. Rain forests produce more oxygen than that produced by oceans. II. Marine phytoplankton and photosynthetic bacteria produce about 50% of the world’s oxygen. III. Well-oxygenated surface water contains several folds higher oxygen than that in atmospheric air.

    Which of the statements given above is/are correct?

    Options: (a) I and II (b) II only * (c) I and III (d) None of the above statements is correct

     

  • Make in India: Challenges & Prospects

    Rudrastra UAV passes key army trial. 

    Why in the News?

    India advanced its indigenous defence tech with SDAL’s successful trial of the Hybrid VTOL UAV Rudrastra at Pokhran.

    Rudrastra UAV passes key army trial. 

    About Rudrastra:

    • Rudrastra is an indigenously developed Hybrid Vertical Take-Off and Landing (VTOL) UAV built by Solar Defence and Aerospace Limited (SDAL).
    • The UAV is engineered for deep-strike capabilities, capable of carrying out precision missions without endangering human soldiers.
    • It is tailored for anti-personnel roles, with airburst munitions designed to strike targets across hostile borders.
    • Rudrastra blends rotor-based vertical lift with fixed-wing cruise capability, enhancing deployment across diverse terrains.
    • It is considered a “stand-off” weapon, enabling missions deep into enemy territory with autonomous return capability.

    Key Features:

    • Hybrid VTOL Design: Can vertically take off and land like a helicopter and cruise like a fixed-wing aircraft, enhancing flexibility.
    • Extended Range: Demonstrated a total mission range of over 170 km, including loiter time over the target.
    • Real-Time Surveillance: Maintained a stable video link while covering a 50+ km mission radius.
    • Precision Strike Capability: Successfully deployed airburst munitions, effective for area damage and anti-personnel use.
    • Endurance: Achieved a flight endurance of 1.5 hours, ideal for extended ISR or strike operations.
    • Autonomous Navigation: Returned independently to the launch site after completing the mission.
    • Made in India: Fully developed by an Indian defence company, supporting indigenous innovation in combat drones.
    [UPSC 2025] With reference to Unmanned Aerial Vehicles (UAVs), consider the following statements:

    I. All types of UAVs can do vertical landing. II. All types of UAVs can do automated hovering. III. All types of UAVs can use battery only as a source of power supply.

    Which of the statements given above are correct?

    Options: (a) Only one (b) Only two (c) All the three (d) None*

     

  • Global Geological And Climatic Events

    Green Arabia Hypothesis in Human Evolution Research

    Why in the News?

    A recent study confirms that Arabia wasn’t always a desert wall but occasionally a green bridge between continents.

    About the Green Arabia Hypothesis:

    • Core Idea: It suggests that the Arabian Peninsula, now one of the driest places on Earth, experienced multiple humid phases over the past 8 million years, turning it into a green corridor for early migrations.
    • Challenge to Old Views: This theory challenges traditional models that excluded Arabia from early human dispersal routes in the ‘Out of Africa’ narrative.
    • Fossil Evidence: The discovery of fossils of crocodiles, hippos, and horses, dating up to 74,000 years ago, supports the claim that Arabia was once lush and habitable.

    Key Discoveries and Methods:

    • Archaeological Sites: Over 10,000 ancient lakebeds and sites over 500,000 years old were found, confirming Arabia’s role as a migration bridge between Africa and Eurasia.
    • Speleothem Analysis: 22 speleothem samples (mineral deposits formed within caves) from seven Saudi caves indicated humid phases between 7.44 million and 60,000 years ago.
    • Dating Techniques: Scientists used uranium-thorium dating to accurately time wet periods, revealing patterns linked to monsoon shifts and glacial cycles.
    • Environmental Impact: These wet intervals, though brief, supported vegetation, biodiversity, and water bodies, enabling human and animal settlements.

    Significance of the Study:

    • Biogeographic Role: Arabia is now viewed as a climate-sensitive migratory bridge, not a barrier, in human evolution and dispersal.
    • Climate Dependency: Human movement was influenced not just by geography, but by shifts in rainfall patterns and monsoonal activity.
    • Key Locations: Sites like Jubbah Oasis provided stone tools and lakebed evidence, validating early human habitation in the region.
    • Conclusion: Arabia’s periodic greening played a decisive role in early human migration, revising our understanding of ancient dispersal pathways out of Africa.
    [UPSC 2014] Which of the following phenomena might have influenced the evolution of organisms?

    1. Continental drift

    2. Glacial cycles Select the correct answer using the code given below.

    Options: (a) 1 only (b) 2 only (c) Both 1 and 2* (d) Neither 1 nor 2

     

  • Port Infrastructure and Shipping Industry – Sagarmala Project, SDC, CEZ, etc.

    Fire on waters India’s maritime firefighting capabilities are standing up to the test

    Why in the News?

    The fire on MV Wan Hai 503 near Kannur exposed India’s weak maritime safety. With over 140 hazardous containers onboard, it posed a major risk during the monsoon, threatening the environment and lives.

    What are the major types of peacetime maritime accidents faced by the Indian coast?

    • Sinking of merchant ships – leads to cargo loss, traffic disruption, and environmental damage.
    • Fire onboard vessels – threatens coastal life, property, and marine ecology.
    • Oil spills – have long-lasting environmental impacts and are difficult to contain.

    Why was the MV Wan Hai 503 incident a significant maritime safety challenge?

    • Presence of Hazardous Cargo: Over 140 of the 1,754 containers onboard contained hazardous materials, posing a high risk of toxic release and chemical explosions. Eg: Multiple colors of smoke (brown, white, grey, black) indicated different substances burning simultaneously.
    • Proximity to Coastline During Fire: The ship began drifting dangerously toward the Indian coast near Azhikkal, Kerala, during monsoon rough seas, increasing the threat of coastal disaster. Eg: The tow rope initially snapped under pressure, risking further drift and collision with the shore.
    • Complexity of Fire-Fighting and Towing: Fire-fighting was complicated by weather conditions and ship instability, requiring precise coordination. Eg: An Indian Navy helicopter had to airdrop a salvage team to pass a steel wire rope for safe towing to deeper waters.
    • Multi-Agency Emergency Response Needed: The incident required rapid coordination between the Indian Navy, Coast Guard, and the ship owner’s team using tugs. Eg: The ship was finally stabilized 45 nautical miles offshore, where the water depth was nearly one kilometre, minimizing risk to coastal areas.

    How did Indian agencies respond to the fire on MV Wan Hai 503?

    • Rapid firefighting efforts amid adverse conditions: The Indian Coast Guard initiated firefighting operations despite rough seas caused by the monsoon. Eg: Firefighting continued while the ship drifted dangerously toward the Kerala coast, with thick smoke from burning hazardous cargo.
    • Coordinated aerial and naval action: The Indian Navy deployed a helicopter to airdrop a salvage team onto the ship and deliver a steel wire rope to secure it. Eg: The steel rope enabled safe towing after the initial tow rope snapped due to tension and sea conditions.
    • Strategic towing and risk mitigation: Indian agencies, in coordination with the ship owner’s agents and tugboats, towed the vessel 45 nautical milesaway from the coast to prevent environmental and coastal damage. Eg: The vessel was moved to deeper waters (1 km depth) to minimize the impact of any further explosion or sinking.

    Why are gas-carrying and oil-laden ships considered severe fire and explosion hazards?

    • High flammability of cargo: Gas and crude oil are highly combustible, making these ships extremely prone to fires and explosions if containment fails. Eg: Even a minor spark can ignite vapours from gas or oil, causing catastrophic fires onboard.
    • Large volume of hazardous material: These vessels carry enormous quantities of flammable substances, which amplify the scale of damage during accidents. Eg: The New Diamond VLCC was carrying 2,70,000 tonnes of crude oil when it caught fire off Colombo in 2020.
    • Critical maritime chokepoint risks: Accidents involving such vessels at strategic locations like the Suez Canal or Strait of Malacca can disrupt global trade and cause widespread damage. Eg: A gas carrier explosion at a maritime chokepoint could halt international shipping routes, impacting global supply chains.

    What are the key areas India needs to strengthen in maritime fire-fighting and salvage operations? (Way forward)

    • Rapid Salvage Capability: India must improve its ability for quick salvage of sinking or damaged vessels to prevent cargo loss, environmental damage, and navigation disruption. Eg: During the MV Wan Hai 503 incident, timely towing by the Indian Navy helped avert a coastal disaster, but highlighted the need for faster salvage deployment.
    • Multi-agency Coordination: Effective response to maritime emergencies requires seamless coordination among the Coast Guard, Navy, port authorities, and private salvage firms. Eg: The successful control of the New Diamond VLCC fire involved joint efforts from Indian and Sri Lankan naval forces.
    • Advanced Fire-fighting Infrastructure: India needs to upgrade fire-fighting equipment on patrol vessels and at key ports, especially for handling hazardous cargo and oil/gas fires. Eg: The Coast Guard’s patrol vessels are now fitted with basic fire-fighting systems, but large-scale fires require specialised ships and foam-based suppression systems.

    Mains PYQ:

    [UPSC 2023] What are the ways in which oil pollution affects the marine ecosystem? In what way is oil pollution particularly harmful for a country like India?

    Linkage: Maritime Accident Response” explicitly talks about the “oil spills” as one of the three major peacetime maritime accidents that the Indian coast needs protection against. It also states that oil is a “more severe fire hazard” than hazardous cargo, especially in the context of gas-carrying merchant ships. This question directly addresses the environmental and national impact of oil pollution, which is a significant aspect of maritime accidents and firefighting efforts.

  • Capital Markets: Challenges and Developments

    What are Passively Managed Funds?

    Why in the News?

    Passively Managed Funds—those that track a market index without active stock selection—have become increasingly popular among investors seeking low-cost, predictable returns.

    About Passively Managed Funds:

    • Passively managed funds, commonly known as passive funds, are investment vehicles designed to replicate the performance of a specific market index, such as the Nifty Fifty or the Sensex.
    • Unlike actively managed funds, the fund manager in a passive fund does not select stocks or make frequent buy-and-sell decisions.
    • Instead, the fund holds the same stocks in the same proportion as the underlying index.
    • How Passive Funds Work?
      • These funds track a benchmark index by investing in all or a representative sample of the securities in that index.
      • The objective is to mirror the index’s returns, not to outperform it.
      • As a result, they incur lower management costs and have minimal portfolio turnover.

    Types of Passive Funds:

    1. Index Funds:
      • These are mutual funds that can be purchased or redeemed directly from the fund house.
      • Transactions are processed only once a day, based on the day’s closing Net Asset Value.
      • They offer ease of use and are suitable for systematic investment plans and long-term investors.
    1. Exchange Traded Funds:
      • These are funds listed on stock exchanges, like the National Stock Exchange or the Bombay Stock Exchange.
      • Investors buy or sell units during trading hours through brokers, just like stocks.
      • They require a dematerialised account and are suitable for investors seeking intraday trading flexibility.

    Advantages of Passive Funds:

    • Low Expense Ratios: Because no active research or trading is involved.
    • Transparency: Holdings closely follow a well-known index.
    • Diversification: Spreads investment risk across multiple securities.
    • No Human Bias: Avoids mistakes due to the fund manager’s poor decisions.

    Limitations:

    • No Outperformance: Returns will always be close to the index and cannot exceed it.
    • Tracking Error: Slight variation between the fund’s performance and the index due to operational reasons.
    • Limited Flexibility: Cannot adapt to sudden market downturns.
    [UPSC 2025] Consider the following statements:

    Statement I: As regards returns from an investment in a company, generally, bondholders are considered to be relatively at lower risk than stockholders.

    Statement II: Bondholders are lenders to a company, whereas stockholders are its owners.

    Statement III: For repayment purposes, bondholders are prioritised over stockholders by a company.

    Which one of the following is correct in respect of the above statements?

    (a) Both Statement II and Statement III are correct, and both of them explain Statement I *

    (b) Both Statement I and Statement II are correct, and Statement I explains Statement II

    (c) Only one of the Statements II and III is correct and that explains Statement I

    (d) Neither Statement II nor Statement III is correct