Mains Examination: General Studies-II: Effect of policies and politics of developed and developing countries on India’s interests, Indian diaspora.
What’s the ongoing story: As Prime Minister Narendra Modi and Kuwait’s Amir Sheikh Meshal Al-Ahmad Al-Jaber Al-Sabah held their first bilateral meeting on Sunday, the two countries elevated their relationship to a “strategic partnership” and signalled that trade and defence cooperation would form the key pillars of their ties.
Key Points to Ponder:
— What is strategic partnership?
— What is the status of economic cooperation between India and Kuwait?
— What is the Free Trade Agreement?
— What is the Gulf Cooperation Council (GCC)? What is its significance?
— Why does India want to sign a Free Trade Agreement with GCC?
— What are the areas of cooperation between India and GCC?
Key Takeaways:
— This came on the day that Kuwait conferred its highest honour — ‘The Order of Mubarak Al-Kabeer’ — on Modi for his role in strengthening the relations between the two countries.
— Modi arrived in Kuwait on Saturday for a two-day visit — the first by an Indian PM in 43 years. The last Indian PM to visit Kuwait was Indira Gandhi in 1981.
— Besides the Amir, Modi also met Crown Prince Sheikh Sabah Al-Khaled Al-Hamad Al-Mubarak Al-Sabah, who hosted a banquet in his honour, and held delegation-level talks with Kuwaiti Prime Minister Sheikh Ahmad Abdullah Al-Ahmad Al-Sabah.
— The two sides institutionalised defence cooperation through an overarching agreement that includes training, exchange of personnel and experts, joint exercises, supply of defence equipment, and collaboration in research and development, among others.
— Besides defence, three other MoUs (Memoranda of Understanding) were inked to facilitate cooperation in the areas of sports, culture and solar energy.
— With a “strategic partnership”, India and Kuwait have given new momentum to bilateral ties. Kuwait is among India’s top trading partners, with bilateral trade valued at US$ 10.47 billion in 2023-24. The Indian community forms the largest expatriate group in Kuwait.
— While a strategic partnership entails greater cooperation in the areas already identified — pharmaceuticals, IT, fintech, infrastructure and security in this case — several new areas of cooperation will also be sought. In this regard, regular bilateral consultations, exchanges and visits pertaining to issues of mutual concern will be held.
— Modi invited a delegation comprising the Kuwaiti Investment Authority and other stakeholders to visit India to look at new opportunities, including in the fields of energy, defence, medical devices, pharma, food parks, the Ministry of External Affairs (MEA) said.
— In the meetings, the Indian side also showed keen interest in intensifying its cooperation with the Gulf Cooperation Council (GCC) through Kuwait’s presidency of the influential grouping which includes the United Arab Emirates, Bahrain, Saudi Arabia, Oman and Qatar.
— The total volume of India’s trade with GCC countries stood at US$ 184.46 billion in the financial year 2022-23. Both sides also stressed the importance of early conclusion of the India-GCC Free Trade Agreement.
Do You Know:
— The Cooperation Council for the Arab Gulf States, often called the Gulf Cooperation Council (GCC), is one of the most important regional organisations in the Gulf and the wider Middle East region.
— The six member states of the GCC, namely Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE, came together in 1981 to form the regional grouping in the light of the tumultuous politics at the time to develop collective mechanisms to deal with political, security and economic challenges facing the member states.
— Over the years, the core focus area of the GCC has evolved, and at times, they have developed serious differences among themselves, as was evident during the Qatar crisis in 2017-21.
— The first India-GCC Joint Ministerial Meeting for Strategic Dialogue was held in Riyadh on September 9 where the two sides emphasised on the significance of bolstering cooperation across various sectors, including trade, investments, energy, infrastructure, and healthcare.
— The first India-GCC meeting holds significance as India and GCC have gradually been working towards enhancing their economic partnership to expand trade, investments, energy cooperation, infrastructure development, connectivity, food security and healthcare.
Other Important Articles Covering the same topic:
📍‘Contributing to talent, tech and tradition’: PM Modi hails Indian diaspora in Kuwait
📍India-GCC relations: From historical bonds to strategic dialogue
Previous year UPSC Prelims Question Covering similar theme:
(1) Which of the following is not a member of ‘Gulf Cooperation Council’? (UPSC CSE 2016)
(a) Iran
(c) Oman
(b) Saudi Arabia
(d) Kuwait
As key cases fall in courts, ED to staff: No PMLA on basis of conspiracy alone
Syllabus:
Preliminary Examination: Indian Polity and Governance – Constitution, Political System, Panchayati Raj, Public Policy, Rights Issues
Mains Examination: General Studies-II: Constitution of India —historical underpinnings, evolution, features, amendments, significant provisions and basic structure.
What’s the ongoing story: With some of its high-profile money laundering proceedings falling in court, the Enforcement Directorate (ED) has decided not to rely solely on “criminal conspiracy” as the “predicate offence” based on which it registers such cases — it should also include the offence under the Prevention of Money Laundering Act (PMLA) related to that conspiracy, The Indian Express has learnt.
Key Points to Ponder:
— What is money laundering?
— What are the roles and functions of the ED?
— What is the Prevention of Money Laundering Act (PMLA)?
— What are the various amendments to the PMLA?
— What is the IPSC Section 120B?
— What are the criticisms of the PMLA?
— What are the powers of ED related to PMLA?
Key Takeaways:
— According to sources, instructions regarding this decision have been “passed on” by ED Director Rahul Navin to the agency’s officers. The PMLA schedule covers close to 150 primary offences, ranging from corruption to tax evasion and even violations of the Wild Life Act.
— A “predicate offence” here refers to the criminal activity mentioned in a primary FIR registered by another agency on which the ED case is based. Under PMLA, the ED can register a case only on the basis of an FIR filed by an investigative agency, such the CBI, state police or, in some cases, even the IT department.
— But the courts, including the Supreme Court, have subsequently ruled that section 120B cannot be listed as the sole “predicate offence”, which should also have an offence related to the “criminal conspiracy” which falls under the PMLA’s ambit.
— It was in November 2023 that the Supreme Court ruled against the invocation of PMLA solely on the basis of section 120B. The ruling came on an ED case against Pavana Dibbur, who was the acting head of a private university in Karnataka, over a land deal from 2020.
Do You Know:
— India’s Enforcement Directorate (ED) has been facing repeated setbacks in some of its high-profile money laundering cases. The reason? The Supreme Court had ruled last year that the watchdog cannot rely solely on “criminal conspiracy” as the “predicate offence” based on which it registers a case. The offence should also fall within the ambit of the Prevention of Money Laundering Act (PMLA) schedule.
— A “predicate offence” refers to the nature of a crime mentioned in the primary First Information Report (FIR) registered by another agency, based on which the ED builds its case.
— With the advent of global terrorism in the 1990s, there was a focus internationally on choking terror financing and the movement of illicit money across borders. The Financial Action Task Force (FATF) was created in 1989 to coordinate anti-money laundering efforts across the world — and as a member, it was incumbent upon India to do its bit.
— The PMLA was also enacted in response to the political declaration adopted by the special session of the United Nations General Assembly held on June 8 and 10, 1998, calling on member states to put in place national anti-money laundering legislation.
— The Prevention of Money-Laundering Bill, 1998 was introduced in Lok Sabha on August 4, 1998, by the Atal Bihari Vajpayee government. The proposed law was focused on preventing money laundering and connected activities, confiscation of the proceeds of crime, setting up of agencies and mechanisms to coordinate measures to combat money laundering, etc.
Other Important Articles Covering the same topic:
📍How anti-money laundering law came to have a vast scope, granting police powers to ED
📍Supreme Court overrules Delhi court verdict to grant bail to Kavitha
Previous year UPSC Mains Question Covering similar theme:
Discuss how emerging technologies and globalisation contribute to money laundering. Elaborate measures to tackle the problem of money laundering both at national and international levels. (UPSC CSE 2021)
EXPRESS NETWORK
Fourth branch institutions shouldn’t be retirement homes for civil servants, judges: Justice Narasimha
Syllabus:
Preliminary Examination: Indian Polity and Governance – Constitution, Political System, Panchayati Raj, Public Policy, Rights Issues
Mains Examination: General Studies-II: Constitution of India —historical underpinnings, evolution, features, amendments, significant provisions and basic structure; Statutory, regulatory and various quasi-judicial bodies.
What’s the ongoing story: Underlining the role of public institutions that are enshrined in the Constitution, Supreme Court judge Justice P S Narasimha on Sunday said that “fourth branch institutions (such as the EC, CAG, Union and State Public Service Commissions, and National Commissions for SCs, STs, and OBCs) should not be retirement homes for civil servants and judges”.
Key Points to Ponder:
— What do you understand about judicial restraint?
— What are the constitutional provisions for judges post-retirement?
— Why did the constitution prohibit the Supreme Court Judges from practising before any court or authority in India?
— What are the arguments in favour and against the post-retirement practises in the fourth branch institutions of the government?
— Know about the function and purpose of the Election Commission, CAG, Union and State Public Service Commissions, and National Commissions for SCs, STs, and OBCs.
Key Takeaways:
— Justice Narasimha was delivering the second edition of the Justice ES Venkataramiah Centennial Memorial Lecture organised by National Law School of India University in Bengaluru.
— Speaking on the significance of the Election Commission, Justice Narasimha said the framers of the Constitution deliberately ensured that elections were conducted by a body that was completely “outside the Executive”.
Do You Know:
— Abhinav Chandrachud writes: The time has come for us to ask a difficult question: Should judges stop accepting post-retirement jobs offered by the government, at least for a few years after retiring, because accepting such posts could undermine the independence of the judiciary?
— Unlike federal judges in the US, judges in India do not hold office for life. They remain in office until they reach the retirement age — 65 for Supreme Court judges and 62 for high court judges.
— These judges do not hold their offices at the “pleasure” of the President. In other words, they cannot be arbitrarily removed by the government once they are appointed, and can only be impeached by a supermajority of both houses of Parliament “on the ground of proved misbehaviour or incapacity”.
— However, the retirement of judges threatens to undermine judicial independence. This is because some judges — not all — are offered post-retirement employment by the government. It is often feared that a judge who is nearing retirement could decide cases in a manner that pleases the government in order to get a favourable post-retirement position.
— In the words of India’s first Attorney General, M C Setalvad, all this raises “a question of constitutional propriety” relating to the independence of the judiciary. After all, could the government not use such tactics to reward judges who decide cases in its favour? Further, if a judge decides highly controversial and contested cases in favour of the government and then accepts a post-retirement job, even if there is no actual quid pro quo, would this not lead to the public perception that the independence of the judiciary is compromised?
Other Important Articles Covering the same topic:
📍Time has come to ask: Should judges stop accepting post-retirement jobs offered by govt
📍Judges have to have a deep sense of restraint: Justice Nagarathna
Previous year UPSC Prelims Question Covering similar theme:
(2) With reference to the Indian judiciary, consider the following statements: (UPSC CSE 2021)
1. Any retired judge of the Supreme Court of India can be called back to sit and act as a Supreme Court judge by the Chief Justice of India with the prior permission of the President of India.
2. A High Court in India has the power to review its own judgement as the Supreme Court does.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither I nor 2
EXPLAINED
India’s rupee continue to fall against US dollar: what determines exchange rate?
Syllabus:
Preliminary Examination: Economic and Social Development – Sustainable Development, Poverty, Inclusion, Demographics, Social Sector Initiatives, etc.
Mains Examination: General Studies-III: Indian Economy and issues relating to planning, mobilisation, of resources, growth, development and employment
What’s the ongoing story: The Indian rupee’s exchange rate against the US dollar has breached the 85 mark. In other words, one would have to pay Rs 85 to buy $1. In April, this “exchange rate” was around 83 and a decade ago, when Prime Minister Narendra Modi took charge, it was around 61. As such, the rupee has been weakening in value relative to the dollar.
Key Points to Ponder:
— What is the Exchange Rate?
— What are the different types of the Exchange rate system?
— What are the factors responsible for determining the Exchange rate?
— How do the demand and supply of the currency affect the Exchange rate?
— What is the significance of the Exchange rate in the trade of goods and services?
— What is dollarisation and de-dollarisation?
— What is the strengthening and weakening of a currency?
Key Takeaways:
— The rate at which one can swap between currencies is the exchange rate. In other words, how many rupees would buy you a dollar or a euro.
— In such a market — also referred to as the currency market — each currency is like a commodity itself. The value of each currency relative to another currency is called the exchange rate. These values can stay the same over time but more often than not they keep changing.
— Like any other trade in life, the relative value of one currency against another depends on which is demanded more. If Indians demand more US dollar than Americans demand the Indian rupee, the exchange rate will tilt in favour of the US dollar; that is, the US dollar will become relatively more precious, more valuable, and more costly.
— One big component of demand comes from trade of goods. For the sake of simplicity, imagine a world where there are only two countries — India and the US. If India imports more goods from the US than what it exports to the US, then the demand for US dollar will outstrip the demand for Indian rupee. This, in turn, will make the US dollar gain strength against the rupee and its exchange rate versus the rupee will appreciate.
— The other big component is trade in services. If Indians buy more US services — say tourism — than Americans buy Indian services, then again, demand for dollar will outstrip the demand for rupee, and rupee will weaken.
— The third component is investments. If Americans invest in India more than Indians invest in the US, then the demand for rupee will outstrip the dollar and rupee will appreciate against the dollar.
— Of course, there are several factors that can affect these three demands. Suppose the US decides that it will not allow Indian imports. In such a scenario, the demand for Indian rupees will plummet.
— End result: rupee will weaken. Something similar is expected to happen if, as President-elect Donald Trump has promised, the US slaps high tariffs against Indian goods, making them so costly that no one in America will buy them.
— Last week, the rupee breached the psychological 85-to-the-dollar mark, sliding to a low of 85.11 and closing at 85.02. In itself, that shouldn’t be cause for worry. The current fall is more about a strengthening US dollar than a weakening Indian rupee.
— The dollar’s strengthening is basically a global problem, arising from the US President-elect Donald Trump’s threats to effect across-the-board import tariffs — even more on goods from China — and mass deportations of illegal immigrants.
— What should the government and RBI do? First, they must not look at just the dollar. India’s trade competitiveness depends on the rupee’s effective exchange rate with not only the dollar, but also with other global currencies. If they are weakening more against the dollar, there’s no point shoring up the rupee’s value relative to the greenback alone.
— Second, don’t use interest rates as a tool to defend the rupee. The RBI’s repo rate should be lowered or left unchanged based on the trajectory of consumer price index inflation, not the rupee’s exchange rate.
— Third, in times such as these, ensuring macroeconomic stability matters.
Do You Know:
— Inflation refers to the rate at which the general price level for goods and services increases over a period of time, causing a decrease in purchasing power of money or real income. In other words, as inflation rises, each unit of currency can buy fewer goods and services than before.
— Rising inflation affects the financial well-being of households, especially those with lower incomes or fixed incomes. As the cost of goods and services increases, it reduces the quantity of goods and services that can be purchased with the same nominal income, thereby affecting households’ cost of living.
— But what is nominal and real income? Nominal income is the total amount of money that an individual, household or entity earns over a specific period. For instance, if someone earns Rs. 50,000 per month, this amount is their nominal income. However, if the cost of goods and services increases (inflation), the real value of Rs. 50,000 decreases.
— Real income, on the other hand, stands for the actual value of income in terms of what it can buy after adjusting for inflation.
Real Income = Nominal Income ÷ Price of Goods
Other Important Articles Covering the same topic:
📍How inflation affects cost of living
📍Rising inflation: A growing concern for policymakers
Previous year UPSC Prelims Question Covering similar theme:
(3) With reference to the Indian economy, consider the following statements: (UPSC CSE 2022)
1. An increase in Nominal Effective Exchange Rate (NEER) indicates the appreciation of rupee.
2. An increase in the Real Effective Exchange Rate (REER) indicates an improvement in trade competitiveness.
3. An increasing trend in domestic inflation relative to inflation in other countries is likely to cause an increasing divergence between NEER and REER.
Which of the above statements are correct?
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
EDITORIAL
Reversing the slowdown
Syllabus:
Preliminary Examination: Economic and Social Development – Sustainable Development, Poverty, Inclusion, Demographics, Social Sector Initiatives, etc.
Mains Examination: General Studies-III: Indian Economy and issues relating to planning, mobilisation, of resources, growth, development and employment
What’s the ongoing story: Rajeswari Sengupta writes: With the new year around the corner, it is useful to think ahead and ask: What is going to be the big economic issue in India in 2025? There is little doubt that it is going to be the growth slowdown.
Key Points to Ponder:
— What are the reasons for the slowdown in the economy?
— What is the difference between recession and depression?
— What is the role of private investment in the growth of the economy?
— What is the significance of the Production Linked Incentives (PLI) subsidy scheme in driving the manufacturing sector?
Key Takeaways:
— For a rich country like the US with an annual per capita GDP of $86,000, slowing growth does not hurt a lot. But for a poor country like India, with a per capita GDP of only $2,700, slowdowns are painful and worrisome.
— The recently released GDP growth figures have triggered much discussion over whether the slowdown is merely a temporary blip or a warning of a more serious trend. Official statistics show that growth has declined in four out of the last five quarters.
— There are also no evident drivers that could reignite the engine of high growth. Consumption demand has been subdued, especially in urban India. Partly as a consequence, private investment has been weak, even though corporate balance sheets are healthy.
— While government investment has been growing rapidly over the past few years, propping up demand, it is soon going to run into fiscal constraints.
— So, is India doomed to slow growth? Fortunately, the answer is no. There is one major opportunity, waiting to be seized. Consider some basic data. India’s GDP is roughly $4 trillion while global GDP is a little more than $100 trillion. That means that India’s share of the global economy is around 4 per cent. But its share in global goods exports is much smaller, less than 2 per cent.
— Assume that India decides to bring its export share in sync with its share in the global economy. This would take some time, but it seems reasonable to target pushing up India’s export share by 1 percentage point over the next five years. If this could be achieved, it would do wonders for growth.
— The best part is that such an opportunity is, in fact, knocking on our door. Many multinational companies are wanting to move out of China. And the only other country with a large population base and strong growth prospects is India.
— In other words, there is now a historic opening to attract foreign direct investment (FDI) in manufacturing, which all across Asia has been the key to increasing countries’ global export market share. The government, to its credit, has been trying to seize this opportunity by rolling out the well-funded Production Linked Incentives (PLI) subsidy scheme.
— India is facing a historic opportunity to achieve rapid growth by increasing FDI and raising its share of global good exports. What is urgently needed for this growth strategy to work is predictability and certainty on the policy front, as well as a reorientation towards a free-trade mindset.
Do You Know:
— On several occasions in recent months, the government has flagged the challenges facing the economy. In its August and September monthly reviews, the finance ministry described the slowdown in urban demand and pointed to the signs of stress building up in certain sectors in the economy.
— Weak income growth, along with inadequate employment generation, and inflation have led to subdued household consumption.
— Despite relatively steady growth over the decades, the Indian economy has been unable to generate more productive, more remunerative employment opportunities for the millions entering the labour force each year — the labour force participation rate (ages 15 years and above) has risen from 49.8 per cent in 2017-18 to 60.1 per cent in 2023-24 as per the periodic labour force survey.
— The growing capital intensity of production has compounded the problem. A cut in interest rates is alone not going to address this. There are no quick fixes. This requires tackling the long-standing ails of the economy.
Other Important Articles Covering the same topic:
📍What sluggish salaries and slowdown in Indian economy might mean
📍Amid slowdown, RBI-Govt gulf widens, growth to holding rates
Previous year UPSC Prelims Question Covering similar theme:
(4) Which among the following steps is most likely to be taken at the time of an economic recession? (UPSC CSE 2021)
(a) Cut in tax rates accompanied by increase in interest rate
(b) Increase in expenditure on public projects
(c) Increase in tax rates accompanied by reduction of interest rate
(d) Reduction of expenditure on public projects
THE IDEAS PAGE
Farms as site of nurturing
Syllabus:
Preliminary Examination: Economic and Social Development – Sustainable Development, Poverty, Inclusion, Demographics, Social Sector Initiatives, etc
Mains Examination: General Studies-I: Distribution of key natural resources across the world (including South Asia and the Indian sub-continent); factors responsible for the location of primary, secondary, and tertiary sector industries in various parts of the world (including India)
General Studies-III: Indian Economy and issues relating to planning, mobilisation, of resources, growth, development and employment.
What’s the ongoing story: Ashok Gulati and Ritika Juneja write: The pre-budget consultations are on. In the agri-space, what could be the possible suggestions for Union Budget 2025-26? We hold that whatever policies and budgetary allocations the government makes, it must make agriculture more productive, competitive, remunerative to farmers, and also benign to the planet’s natural resources.
Key Points to Ponder:
— What is the impact of climate change on agricultural production?
— What is the Natural Farming Mission?
— What is the ‘operation green’?
— What are the different types of soil found in India?
— What is the importance of micronutrients for the plants’ growth?
— What are the problems faced by the agricultural sector in India?
— What is the soil health? Why is it important?
Key Takeaways:
— We know that our production system is being challenged by climate change. In India, temperatures have risen by 0.7 degrees Celsius compared to 1951, and precipitation (July to September) has fallen by 6 per cent.
— This is increasing the risk to the agri-production basket. Developing climate-resilient agriculture will need more resources for agri-R&D. It is currently less than 0.5 per cent of agri-GDP, and needs to be doubled to at least 1 per cent.
— It will also need to change farming practices to ensure soils have enough organic carbon and retain more moisture. While the recently launched Natural Farming Mission aims to promote sustainable agriculture, it cannot feed the growing population of India, which is likely to touch 1.67 billion by 2050.
— Nourishing soils through appropriate fertilisation, be it through biofertilisers or chemical fertilisers, is critical. But fertilisers have to be applied in the right quantities, with the right balance of macronutrients…
— The current fertiliser subsidy policy does not promote the right usage of fertilisers. Urea is massively subsidised compared to other nutrients, leading to overuse of N and underuse of P, K, and other micronutrients.
— Technological innovations and products such as nano-urea and nano-DAP, or Single or Triple Superphosphates, etc, have limited penetration in the backdrop of the highly skewed subsidy policy in favour of granular urea.
— There is ample data on fertiliser sales, soil health cards, PM-KISAN, etc to pull all these together and do direct income transfer on a per-hectare basis. This would allow freeing prices of fertilisers from controls, will help restore the N, P and K balance, as also of the micronutrients.
— It will plug leakages of urea, improve nutrient use efficiency, and reduce environmental damage. It is a win-win situation, provided our political leaders are able to communicate this with our farmers and earn their trust. The time to do it is now.
— Building value chains of agri-commodities on the lines of milk, where farmers get 75 to 80 per cent of what the consumer pays, is the way to go. The starting point has to be fruits and vegetables, where typically the farmer gets only one-third of what the consumer pays.
— Such export controls and anti-market policies inflict a large “implicit tax” on farmers, despite significant budgetary support through fertiliser and other subsidies, including loan waivers.
— In this context, it is useful to look at the OECD’s producer support estimates (PSEs) that it generates for more than 50 major countries in the world. They adopt a common methodological framework to estimate the impact of various agricultural policies, mainly budgetary support and market price support.
— For the triennium ending 2023, OECD countries supported their agriculture to the tune of about 14 per cent of gross farm receipts (PSE 13.8 per cent). Interestingly, China also supports its agriculture to the tune of 14 per cent (PSE 14 per cent), while India’s PSE is negative (-) 15.5 per cent.
— That happens due to the negative market price support that results from export controls, dumping in the domestic market to push prices down, putting stocking limits on private trade, banning futures markets, and so on. Unless agriculture policies try to get the agri-markets right, Indian agriculture will keep limping and our farmers will keep agitating for higher and higher prices.
Do You Know:
— December 5, 2024, was the 10th World Soil Day. Topsoil — up to two to three cms in depth — which nature takes 1,000 years to create, is critical: Almost 95 per cent of food currently produced comes from it.
— So, ‘Caring for Soils – Measure, Monitor, and Manage’ — the theme of this year’s World Soil Day — was appropriate as our soils are becoming deficient in the essential nutrients needed for healthy soils.
— Less than 5 per cent of Indian soils have high or sufficient nitrogen, only 40 per cent have sufficient phosphate, 32 per cent have sufficient potash and just 20 per cent are sufficient in organic carbon.
— Our soils also suffer from a deficiency of micronutrients like sulphur, iron, zinc, boron, etc. These deficiencies range from moderate to severe.
Other Important Articles Covering the same topic:
📍To ensure a hunger-free nation, protect soil
Previous year UPSC Mains Question Covering similar theme:
(5) With reference to agricultural soils, consider the following statements : (UPSC CSE 2018)
1. A high content of organic matter in soil drastically reduces its water holding capacity.
2. Soil does not play any role in the sulphur cycle.
3. Irrigation over a period of time can contribute to the salinization of some agricultural lands.
Which of the statements given above is/are correct?
(a) 1 and 2 only
(b) 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
ECONOMY
CII seeks reforms in India’s priority sector lending framework
Syllabus:
Preliminary Examination: Current events of national and international importance
Mains Examination: General Studies-III: Indian Economy and issues relating to planning, mobilisation, of resources, growth, development and employment.
What’s the ongoing story: Industry body CII has proposed reforms in India’s Priority Sector Lending (PSL) framework, suggesting the inclusion of emerging sectors and high-impact sectors like digital infrastructure, green initiatives, healthcare, and innovative manufacturing.
Key Points to Ponder:
— What is the Priority Sector Lending (PSL)?
— Critically evaluate the success of the PSL scheme.
— What are the Development Finance Institutions (DFIs)?
— What are the emerging sectors?
— What are the various committees associated with PSL?
— What are the categories under the priority sector?
Key Takeaways:
— Arguing that current Development Finance Institutions (DFIs) like SIDBI and NaBFID (National Bank for Financing Infrastructure and Development) have their roles cut out as they have earmarked sectors to finance, the chamber also suggested the setting up of a high-level committee to look at the revision of PSL norms and explore the need for any new DFIs to cater to some of the new and emerging sectors.
— Priority Sector Lending is a policy tool aimed at ensuring that key sectors crucial to the nation’s development receive adequate financial support. Mandated by the Reserve Bank of India (RBI), PSL obligates banks to allocate a specified proportion of their loans to sectors such as agriculture, education, housing, and small industries.
— Despite its massive success, the PSL framework requires regular recalibration to remain relevant. This recalibration is essential to ensure that financial resources are optimally distributed, in harmony with our vision of Viksit Bharat 2047, CII stated.
— For instance, while agriculture contributes 14 percent of the GDP today, its PSL allocation remains at 18 percent, unchanged from when its GDP share exceeded 30 percent. Similarly, sectors like infrastructure and innovative manufacturing lack adequate PSL focus despite their potential to drive economic growth, the chamber pointed out.
Do You Know:
— As per RBI guidelines, it is mandatory for banks to extend 40 per cent of their adjusted net bank credit to the priority sector. At present, seven sectors agriculture, Micro, Small and Medium Enterprises (MSME), export credit, education, housing, social infrastructure, and renewable energy are considered for priority-sector lending.
Other Important Articles Covering the same topic:
📍Govt considering inclusion of EVs in priority sector, to help funding access
📍UPSC Essentials | Daily subject-wise quiz : Economy MCQs on priority sector lending
Previous year UPSC Mains Question Covering similar theme:
(6) Priority Sector Lending by banks in India constitutes the lending to (UPSC CSE 2013)
(a) agriculture
(b) micro and small enterprises
(c) weaker sections
(d) All of the above
| ALSO IN NEWS | |
| Change in poll rules part of conspiracy to destroy integrity of EC, says Congress | Earlier, Rule 93 (2) (a) of the 1961 Conduct of Election Rules stated that “all other papers relating to the election shall be open to public inspection”. The amended version of the rule now states: “all other papers as specified in these rules relating to the election shall be open to public inspection.”
This amendment, according to government sources, would effectively clarify that electronic footage of the polling process is not covered within the definition of election papers and, hence, not open to public scrutiny. |
| Express View on exam reform recommendations: Test, not stress | The recommendations of a seven-member panel, headed by former ISRO chairman K Radhakrishnan, to improve the transparency and efficiency of national entrance examinations come as a much-needed acknowledgement of the problems that plague the country’s higher education system. |
| PRELIMS ANSWER KEY |
| 1. (a) 2. (c) 3. (c) 4. (b) 5. (b) 6. (d) |
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