2 Economy

Money, Banking, Finance & Insurance

Imported Inflation
About Imported Inflation:
y It occurs when there is an increase in the prices of goods and services imported into a country.
y Reasons: Increased taxes on imports, depreciation of domestic currency, or inflation in the
exporting country.
y Impact:
⚪ It can affect a country’s economy by leading to higher consumer prices and potentially
reducing purchasing power.
⚪ It can also put pressure on the central bank to adjust monetary policy to control inflation
levels.

Why in news?
y The Asian Development Bank recently warned that India could face imported inflation as the
rupee could depreciate amid the rise in interest rates in the West.

New Version of SCORES by SEBI

Why in news?
Securities and Exchange Board of India (SEBI) recently launched the new version of the SEBI
Complaint Redressal System (SCORES 2.0).

About SCORES:
y 2011: Launch Year.
y A web based platform that enables investors to file their grievances online with SEBI, against
any entity involved in the market.
y Objective: to improve investor protection and trust while offering a prompt and efficient
resolution of concerns.

Features of SCORES 2.0:

y uniform period of time for handling complaints, which is 21 calendar days from the date of
receipt of the complaint.
y automated complaint forwarding to relevant authorities.
y To facilitate investor registration , SCORES 2.0 will be connected with the KYC Registration
Agency database.

SCORES platform discontinued:

y The previous Scores platform will no longer be available for investors to file new complaints
through.
y Through past SCORES, they can still check the status of any complaints that have already been
filed.

Economy 25
UPI for Cash Deposit
Key Points:
y Cash deposits are currently available only through debit cards at Cash Deposit Machines (CDMs)
y The RBI has proposed enabling UPI for cash deposit
y The RBI proposes allowing Prepaid Payment Instruments (PPIs) to be linked through third-party
UPI applications.

Why in the News?

y The Reserve Bank of India (RBI) has proposed enabling UPI for cash deposit facilities, enhancing
the convenience and popularity of UPI.

90 Years of the Reserve Bank of India (RBI)

Overview of the RBI Journey:
y The Reserve Bank of India was set up on the basis of
the recommendations of the Hilton Young Commission
(1926).
y 1935: The Reserve Bank of India Act, of 1934 provides
the statutory basis for the functioning of the RBI, which
commenced operations on April 1, 1935 from Calcutta.
y 1937: The RBI was permanently moved from Calcutta
to Mumbai, where its current Headquarters is located.
y 1949: The Reserve Bank of India (RBI) was initially a
privately owned entity but was nationalized.
y The first Indian Governor was Sir C D Deshmukh who
was also governor after its nationalization..

Key Functions of RBI:

y Implements and monitors monetary policy for price
stability and growth, including flexible inflation
targeting.
y Manages India’s foreign exchange reserves, facilitates
external trade and payments, and maintains the
external value of the rupee.
y Issues, exchanges, and destroys currency and coins.
Aims to provide the public with adequate and quality currency notes and coins, ensuring smooth
circulation.
y Regulates and supervises banks, non-banking financial
companies, payment systems, and other financial entities
to maintain stability, protect depositors’ interests, and
foster healthy financial intermediation.

Why in News?
y The RBI has recently completed 90 years of its formation.
The Finance Ministry unveiled a special Rs 90 denomination
coin marking the 90th anniversary of the RBI.

Economy 26
RBI’s Review on Liquidity Coverage Ratio ( LCR)
What is LCR?
y The LCR aims to ensure that financial institutions have enough high-quality liquid assets to
withstand a 30-day financial stress scenario.
y It was implemented as a part of the Basel III regulatory reforms post-2008 financial crisis.
Basel Norms are international banking regulations issued by the Basel Committee on Banking
Supervision.

Why in the News?

y The Reserve Bank of India (RBI) is considering a review of the Liquidity Coverage Ratio (LCR)
framework to enhance banks’ liquidity risk management.

Health Insurance for All Ages: IDRAI Directives

Why in News?
y IRDAI (Insurance Regulatory and Development Authority of India) has abolished the age limit
of 65 years for purchasing health insurance, aiming to broaden coverage and provide relief to
senior citizens.

Before After

Age limit for health insurance was 65 years. No age limit for buying health insurance.
Compulsory pre-insurance health check-ups No compulsory pre-insurance health check-
for those over 65. ups based on age.
No cover for pre-existing ailments for those Coverage available irrespective of existing
over 65. medical conditions.

Inheritance Tax
Inheritance Tax in India:
y An inheritance tax is a tax that is levied against a particular asset during the time of its
inheritance.
y Previously, inheritance tax was levied on specific assets inherited by an individual.
y Inheritance can occur through a Will or under personal law.
y It falls under direct taxation.
An Oxfam report says that 70% of countries don’t have any form of inheritance tax on wealth.

Current Status in India:

y The inheritance tax concept no longer exists in India.
y The Inheritance or Estate Tax was abolished in 1985.
y Properties passing to legal heirs upon death are considered transfers without consideration.
y Such transfers are excluded from gift tax under the Income Tax Act, 1961.
Some of the major countries levying tax on inherited properties are France, Germany, United
Kingdom and Spain.

Why in News?

Economy 27
y The debate on Inheritance tax has been sparked between major political parties in their political
speeches.

Balance of Payment & International Trade

Special Rupee Vostro Account (SRVA)

About SRVA:
y It is maintained by domestic banks in rupees for foreign banks.
y It enables domestic banks to offer global banking services to clients without physical presence
overseas.
y This arrangement allows domestic banks to cater to clients with international banking
requirements by facilitating transactions in their local currency, the rupee.
Nostro Accounts:
y It is a bank account that a commercial bank creates in some other foreign country with the
currency of a foreign country only.
Loro Account:
y It is a current account that is maintained by one domestic bank for another domestic bank in
the form of a third-party account, unlike nostro and vostro which is bilateral correspondence.

Why in news?
y India has implemented the Rupee/Kyat direct payment system through the Special Rupee
Vostro Account (SRVA) via Punjab National Bank, simplifying the payment process for traders
importing pulses from Myanmar.

Investment Facilitation for Development (IFD) Agreement by WTO

Why in the News?
y The 13th WTO Ministerial Conference in Abu Dhabi saw the non-adoption of the Investment
Facilitation for Development (IFD) Agreement.

Economy 28
The IFD Agreement
y Negotiations: Launched in 2017 by 70 countries through the Joint Statement Initiative; finalized
in November 2023.
y Support: Backed by around 120 of 166 WTO member countries (~70%).
y Purpose: To create legally binding provisions to facilitate investment flows.
y Key Provisions: Enhances regulatory transparency, and streamlines administrative procedures.
y Exclusions: No market access, investment protection, or investor-state dispute settlement
(ISDS) provisions.

Reasons for India’s Opposition

y Questioning whether investment should be part of the WTO.
y Concerns about the process followed to integrate the IFD Agreement into the WTO rulebook.

Peace Clause - WTO

Why in news?
y India has invoked the peace clause at the World Trade Organization (WTO) for the fifth
consecutive time for the marketing year 2022-23 (October-September).
y This is because India has breached the WTO prescribed subsidy limit for rice offered to its
farmers.

About Peace Clause:

y 2013 Bali Ministerial meeting: Establishment year.
y It is a temporary clause.
y According to this, developing countries can provide subsidies beyond the prescribed limits for
certain agricultural products, such as rice and wheat.
y It allows developing countries to support their domestic agricultural sectors while negotiations
continue on more permanent subsidy rules.
About WTO:
y 1995: Establishment year.
y As per the 1994 Marrakesh Agreement, it replaced the 1948 General Agreement on Tariffs and
Trade (GATT).
y HQ: Geneva, Switzerland.
y It regulates and facilitates international trade in goods, services, and intellectual property.
y It seeks to reduce tariffs, barriers, and other quotes to trade.

Economy 29
India revises the Double Taxation Avoidance Agreement (DTAA) with Mauritius

Why in News?
y India has revised its Double Taxation Avoidance Agreement (DTAA) with Mauritius to counter
treaty misuse aimed at tax evasion or avoidance.
Benefits of DTAA:
y Deduction: Allows deductions for taxes paid to foreign governments in the taxpayer’s home
country.
y Exemption: Provides tax relief in one of the two countries involved.
y Tax Credit: Offers a credit in the taxpayer’s country of residence for taxes paid abroad

About:
y Double Taxation: It refers to the imposition of taxes on the same source of income by two
different jurisdictions.
y Role of DTAA: It prevents international double taxation, thereby fostering economic exchanges
such as investment and trade between the two signing nations.

Key Points of Revision of DTAA:

y The amended agreement introduces the Principal Purpose Test which says benefits of a treaty
may be denied if the principal purpose of a business is just to benefit from the treaty.

Sectors of the Economy, GDP, Inflation

Krishi ICCC: To Leverage Technology for the Advancement of Agricultural Practices

Why in news?
y The Union Minister of Agriculture & Farmers’ Welfare inaugurated the Integrated Command and
Control Center (ICCC) at Krishi Bhawan, Delhi.

Economy 30
About Krishi ICCC:

Ministry Ministry of Agriculture & Farmers’ Welfare.

Empower farmers by providing them with digital technology-based

Objective
information, services, and facilities.
y Krishi Decision Support System (K-DSS), a platform under
development, will act as an agriculture data repository.
y Studying crop diversification maps and field variability for paddy
Application helps decision-makers find areas suitable for different crops,
Examples: allowing better advice for farmers.
y The ICCC can establish an ecosystem to generate personalized
farmer advisories through apps like Kisan e-mitra, a chatbot
designed for PM-Kisan beneficiaries.

Revised Wages of MGNREGA

About: MGNREGS is a demand-driven scheme that seeks to provide guaranteed 100 days of wage
employment per year to every rural household whose adult members volunteer to do unskilled
manual work.
Features: Legal right to work, a time-bound guarantee of work and unemployment allowance
(within 15 days), Decentralized planning– i.e. Gram Sabha recommends work, demand-driven
scheme.

How are MNREGA Wages Decided?

y The MGNREGA wage rates are fixed according to changes in the CPI-AL (Consumer Price Index-
Agriculture Labour), which reflects the increase in inflation in rural areas.

Key Points of Recent Hike:

Uttar Pradesh Increase from ₹230 in 2023 to ₹237 in 2024

Telangana, Andhra Pradesh,

Chhattisgarh, Gujarat, Madhya
Wage hikes ranging from 8% to 10.5%.
Pradesh, Maharashtra, Tamil
Nadu, and Goa

Haryana offering the highest daily wages at ₹374,

y Despite the government’s promise of 100 days of guaranteed work, the national average days of
employment provided per household in the financial year 2023-24 stood at only 51 days.

Why in News?
y The Union government recently notified the revised wages under the Mahatma Gandhi National
Rural Employment Guarantee Scheme (MGNREGS).

Economy 31
Food Waste Index Report 2024- by UNEP

About: It presents the most extensive compilation of food waste data to date, including thorough
analysis and modeling.
Published by: UNEP and Waste and Resources Action Programme (WRAP), an international charity
org.

Key Findings of the report:

Food Waste Generation in

y 1.05 billion tonnes of food waste are generated globally.
2022

y Food loss and waste contribute to 8%-10% of global

Impact on Climate Change
greenhouse gas emissions annually.
y Rural areas tend to waste less food compared to urban
areas.
Rural vs. Urban Food Waste
y This is due to better utilization of food scraps for pets,
livestock, and home composting.

Why in news?
y According to the Food Waste Index Report 2024 by the United Nations Environment Program,
Households across the globe wasted over one billion meals a day in 2022.

Iron Ore in India

Iron Ore:
y About: Iron ores are rocks and minerals containing metallic iron, extracted through various
processes.
y Abundance in India: India boasts substantial reserves of iron ore, predominantly found in
volcano-sedimentary Banded Iron Formations (BIF) dating back to the Precambrian era.
⚪ Major Iron Ore Belts in India: Orissa-Jharkhand belt, Durg-Bastar-Chandarpur belt, Bellary-
Chitradurga-Chimaglur-Tumkur belt, and Maharashtra-Goa belt. Iron metal is the commonest
of all minerals.
y Distribution in world: China, Brazil, Australia, India, Russia, Ukraine, the United States, South
Africa, Canada, Sweden.

Mineral Description Iron Content Applications

A reddish-black mineral found

y Major source of iron
in sedimentary, metamorphic, A p p rox i m at e ly
Hematite y Pigment in paints
and igneous rocks. Often used 70%
y Polishing compounds
as an iron ore.
A magnetic black or brownish-
black mineral found in various
y Iron production
Magnetite rock types. It is the most Up to 72%
y Coal washing
magnetic of all the naturally
occurring minerals on Earth.

Economy 32
 An amorphous mineral
consisting of hydrated iron y Minor ore of iron
Limonite oxide. It’s not a true mineral 35-50% y Historically used for iron
but a mixture of similar smelting
hydrated iron oxide minerals.

A mineral composed of iron y Source of iron, especially

Siderite carbonate, typically occurring Around 48% in historically iron-poor
in sedimentary deposits. regions

India’s Iron Ore Mining Market:

y Global Ranking: India ranks as the world’s second-largest producer of iron ore, trailing behind
Australia.
y Production Output: In 2023, India’s iron ore mine production reached a substantial 257.6 million
tonnes (Mt).

Why in News?
y A government-appointed panel has proposed setting up India’s first iron ore exchange to
determine the domestic sale price of the key steelmaking raw material.

Infrastructure

Cluster Development Programme (CDP)- SURAKSHA:

About CDP-SURAKSHA:
y SURAKSHA: System for Unified Resource Allocation, Knowledge, and Secure Horticulture
Assistance.
y Objective: To promote the growth of the horticulture sector by facilitating instant subsidy
disbursal to farmers’ bank accounts using e-RUPI vouchers.

Economy 33
y The previous system required farmers to buy planting material on their own and then apply for
the release of subsidies.
⚪ CDP-SURAKSHA offers subsidies at the moment of purchase.
y By mandating farmers to use geotagged images and videos to confirm the delivery of planting
material, the method assures accountability and transparency.
About e-RUPI vouchers:
y These vouchers are one-time payment mechanisms.
y They can be redeemed without requiring a card, digital payments app, or internet banking
access.
y Merchants accepting e-RUPI can receive these vouchers.
y NPCI states that e-RUPI can be shared with beneficiaries via SMS or QR code for specific
purposes or activities.

About CDP:
y A Central Sector Scheme.
y Objective: Growing and developing identified horticulture clusters to make them globally
competitive.
y Implemented by National Horticulture Board (NHB), Ministry of Agriculture.

Why in news?
y Under the Cluster Development Programme (CDP), the Indian government has launched a new
platform called CDP-SURAKSHA for providing horticultural farmers with subsidies.

NABARD Strategy 2030: For Green Financing

About NABARD Strategy 2030:
y Objective: To address India’s need for green financing.
y It is structured around four key pillars:
⚪ Accelerating green lending across sectors.
⚪ Playing a broader market-making role.
⚪ Internal green transformation.
⚪ Strategic resource mobilization.
y India requires approximately $170 billion annually to reach more than $2.5 trillion by 2030.
y As of 2019-20, India got about $ 49 billion in green financing.

Green Financing:
y Green financing is to increase the level of financial flows to sustainable development priorities.
y To facilitate the provision of climate finance, the UNFCCC has established a financial mechanism
to provide financial resources to developing countries.
⚪ Adaptation Fund under Kyoto Protocol.
⚪ Green Climate Fund.
⚪ Global Environment Fund (GEF).

Why in news?
y National Bank for Agriculture and Rural Development (NABARD) on the occasion of Earth Day
unveiled its Climate Strategy 2030 document aiming to address India’s need for green financing.

Economy 34
Nuclear Energy Summit
About:
y This summit is a collaborative initiative with the ‘‘Atoms4Netzero’ program of the International
Atomic Energy Agency.
y 2022: Launched during COP27
y ‘Atoms4NetZero’ supports Member States in utilizing nuclear energy for transitioning to net
zero emissions.
y The summit aimed to advocate for nuclear energy as a solution to climate change and energy
security concerns.

Why in News?
y Recently, Brussels hosted a significant Nuclear Energy Summit, marking a major international
gathering on nuclear energy.

Human Resource Development, Health and Education

India Employment Report 2024- by ILO

Key Points:
y Around 83% of the unemployed workforce in India comprises
young people.
y The percentage of unemployed youth with secondary or
Recent trends higher education has nearly doubled from the year 2000.
y The Labour Force Participation Rate (LFPR), Worker
Population Ratio (WPR), and Unemployment Rate (UR)
showed a decline from 2000 to 2018.
y India’s large young workforce lack essential skills. For
Skill deficit in youth example, 75% of youth are unable to send emails with
attachments.

About ILO:
y 1919: Year of establishment.
y HQ: Geneva, Switzerland.
y Objective: To achieve social and economic justice by setting international labour standards.
y It is one of the first and oldest specialized agencies of the UN.

Why in news?
y Recently, India Employment Report 2024 was released by the International Labour Organisation
(ILO) and the Institute of Human Development (IHD).

Two difficulty levels for additional language in CBSE Class XII

About National Education Policy (NEP): aims to introduce several changes in the Indian education
system - from the school to college level.

Economy 35
School Education Reforms:
y Educational Structure: Replaces the 10+2 system with a new 5+3+3+4 curricular structure
corresponding to ages 3-8, 8-11, 11-14, and 14-18 years.
y Universalization Goal: Aim for 100% Gross Enrolment Ratio in school education by 2030 and to
bring back 2 crore out-of-school children.
y Board Exams: Class 10 and 12 board exams will be easier, focusing on core competencies, with
an option for students to take the exam twice.

Language Learning in Class 12:

y Language Study Expansion: Increases the number of languages studied from one to two in
Class 12, with at least one being a native Indian language.
y Difficulty Levels: Proposes two levels of difficulty for additional languages—basic and standard,
mirroring the options available for mathematics in Class 10.

Why in the News?

y The government is considering offering students two levels of difficulty for the additional
language — basic and standard.

India has 2nd highest hepatitis cases, 11% of global burden: WHO

Aspect Hepatitis A Hepatitis B Hepatitis C

Blood, semen, other body

Transmission Fecal-oral route Blood-to-blood contact
fluids
No specific
Antiviral medications, Antiviral medications,
Treatment treatment, often
sometimes interferon sometimes interferon
resolves on its own
Available and
Vaccination Available and effective No vaccine available
effective
Can lead to chronic Can lead to chronic
Chronic
Not chronic infection, cirrhosis, liver infection, cirrhosis, liver
Infection
cancer cancer
Often asymptomatic, but Often asymptomatic
Flu-like symptoms,
Symptoms can include jaundice, fatigue, initially, can lead to liver
jaundice
nausea damage
Safe sex, avoiding sharing Safe sex, avoiding
Hygiene practices,
Prevention needles or personal items, sharing needles or
vaccination
vaccination personal items

WHO Report Data:

y Over 50,000 new hepatitis B cases, 1.4 lakh hepatitis C cases, and 1.23 lakh deaths from these
infections were reported in 2022 in India.
y Viral hepatitis is a global health issue, with approximately 1.3 million deaths annually, on par
with tuberculosis.

Economy 36
Immunization on Hepatitis:
y The Hepatitis B vaccine is included in India’s Universal Immunization Programme.
y Treatment for hepatitis B and C is available, with a push towards treating all diagnosed cases
similarly to HIV management.

Why in News?
y WHO has highlighted that India faces a significant challenge with viral hepatitis.

India’s Fertility Rate Forecast by Lancet Study

Total fertility rate (TFR): It refers to the total number of children born or likely to be born to a
woman in her lifetime if she were subject to the prevailing rate of age-specific fertility.

Replacement level:
y Level of fertility at which a population exactly replaces itself from one generation to the next.
y In developed countries, replacement level fertility can be taken as requiring an average of 2.1
children per woman.

Key Points of the Study:

Change in Fertility Rate of India

1950 2021
6.18 1.91
y Causes of Decline on TFR: Economic development, changing intergenerational wealth flows,
increased female literacy, and women’s workforce participation
y Impact: By 2050, the elderly population in India is expected to exceed 20%.
y Suggestions: Supportive measures for families, gender equity initiatives, economic policies for
job creation, and reforms in social security and pensions.
y Global Outlook: By 2050, 76% of countries are projected to have TFRs below the replacement
level.

Why in News?
y The leading medical journal Lancet has published a study that predicts that India’s fertility rate
will dip to 1.29 by 2050.

Decline of 16% of new TB cases in India

Key Points:
Decline in Tuberculosis (TB) Incidence and Mortality:
y India has seen an 18% reduction in mortality since 2015.

2015 2022

Incidence rate 237 per lakh population. 199 per lakh population.
Mortality rate 28 per lakh population. 23 per lakh population.

Economy 37
Target for Eliminating TB:
y India has set 2025 as the target for eliminating tuberculosis.

Why in news?
y India TB Report 2024 was recently released by the Union Health Ministry.

Kala Azar (visceral leishmaniasis)- Eliminated in India

About Kala Azar:

y Caused by a protozoan parasite Leishmania donovani and transmitted by the female sandfly,
Phlebotomus argentipes.
y Symptoms: Irregular fever, weight loss, enlargement of the spleen and liver, and anaemia.
y Prevention: Avoid getting bitten by a sand fly.
y Treatment: The main drugs available are antimony, amphotericin, paromomycin and now the
oral drug miltefosine.

Key Points:
y India had initially aimed to eliminate kala-azar by 2010, but the target was extended until 2023
due to persistent challenges.
y India reported only 520 cases of kala-azar in 2023 across India.
y Elimination criteria set by the World Health Organization (WHO): no block in the country
reporting more than one case per 10,000 people.

Why in news?
y India has achieved its target of eliminating Kala Azar, according to data from the National
Centre for Vector Borne Diseases Control (NCVBDC).

National Organ and Tissue Transplant Organisation (NOTTO)-ID

About National Organ and Tissue Transplant Organization (NOTTO):
y Set up under the Directorate General of Health Services, Ministry of Health and Family Welfare.
y Functions:
⚪ Procurement and distribution of organs and tissues.
⚪ Registry of organs, tissue donation, and transplantation in the country.
y It has two divisions:
⚪ National Human Organ and Tissue Removal and Storage Network.
⚪ National Biomaterial Centre (National Tissue Bank).

Why in news?
y According to the Health Ministry, all cases of organ transplants must be assigned a unique
NOTTO-ID for both the donor and the recipient.

More about news:

y Directive applicable in both cases whether organ transplantation is from living or deceased
donors.
y Objective: To eliminate commercial dealings in organs, especially those involving foreign
citizens.

Economy 38
Probable MCQs:
Q. What is CDP-SURAKSHA, recently in the news?
(a) It is a platform to disburse subsidies to horticulture farmers.
(b) It is a portal for credit support to disadvantaged sections of society.
(c) It is a platform to provide the necessary support to women facing physical abuse.
(d) It is an Accident Insurance Scheme offering accidental death and disability cover.
Answer: (a)

Q. The terms ‘Agreement on Agriculture’, and ‘Peace Clause’ appear in the news frequently in the
context of the affairs of the
(a) Food and Agriculture Organization
(b) United Nations Framework Conference on Climate Change
(c) World Trade Organisation
(d) United Nations Environment Programme
Answer: (c)

Q. Consider the following statements:

Statement-I: In India, Double Taxation Avoidance Agreement (DTAA) cannot be given effect
unless notified under the Income Tax Act.
Statement-II: DTAA ensures that no company or individual pays income tax twice while working
in a foreign country or for a foreign company.
Which one of the following is correct in respect of the above statements?
(a) Both Statement-I and Statement-II are correct and Statement-II is the correct explanation
for Statement-I
(b) Both Statement-I and Statement-II are correct and Statement-II is not the correct
explanation for Statement-I
(c) Statement-I is correct but Statement-II is incorrect
(d) Statement-I is incorrect but Statement-II is correct
Answer: (b)

Q. Consider the following statements in context of National Organ and Tissue Transplant
Organization (NOTTO):
1. It is set up under the Directorate General of Health Services, Ministry of Health and Family
Welfare.
2. It has created the National Human Organ and Tissue Removal and Storage Network.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer: (c)

Economy 39