Economy

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RBI Board reviews Economic Capital Framework

Context: The central board of directors of the Reserve Bank of India (RBI) reviewed the Economic Capital Framework (ECF). ECF is a financial governance tool that guides RBI to determine risk provisioning and surplus transfers to the government.

Relevance of the Topic: Prelims: Key facts about Contingency Risk Buffer; Economic Capital Framework.

How does the RBI transfer surplus to the Central government?

Based on the Economic Capital Framework (ECF), RBI transfers dividends to the government every year.

After setting aside the Contingency Risk Buffer and other operational expenditures (salaries etc.) from the earnings of RBI, the surplus is transferred to the central government in the form of dividends. Surplus transfer from RBI is an important component of non-tax revenues to the central government.
Bimal Jalan Expert Committee (2019):
- The expert committee led by the former RBI Governor recommended that the ECF framework be periodically reviewed every five years.
- It suggested that the Contingency Risk Buffer should be 5.5-6.5% of the RBI's balance sheet to ensure adequate risk provisioning.
The surplus RBI transfers to the government depends on how much risk buffer it wants to maintain. A higher risk buffer would mean a lower amount of transferable surplus and vice versa.

Note:

RBI will transfer ₹2,68,590 crore surplus to the Union government as dividend for the accounting year 2024-25. This is 27% more than the dividend paid in the previous year.
Based on revised Economic Capital Framework (ECF) and taking into consideration the macroeconomic assessment, the RBI board has decided to further increase the Contingent Risk Buffer (CRB) to 7.50%.
It is estimated that the RBI may transfer Rs 2.5 lakh crore to Rs 3 lakh crore as surplus to the government for the accounting year 2024-25. In 2023-24, the RBI had transferred the highest-ever surplus transfer of Rs 2.11 lakh crore.
In FY25, the RBI’s earnings were robust, driven by sale of dollars to curb volatility in the rupee; sharp rise in gold prices; appreciation in prices of government securities held by the RBI.

Key Concepts

Source of Earnings for RBI:

Interest on Government securities held
Interests on loans and advances made
Interest earned on Liquid Adjustment Facility operations
Interest income from foreign currency assets held
Earnings from forex swaps
Seigniorage (difference between cost of printing currency note and its face value)
Valuation gains from Gold

Contingency Risk Buffer:

CRB is the reserved fund within the Economic Capital Framework (ECF) that is maintained by RBI to address potential financial disruptions or crises.
It is the country’s savings for a ‘rainy day’ (financial stability crisis) which the central bank consciously maintains in view of its role as Lender of Last Resort.

Significance:

Higher dividend payout by the RBI will help the government in managing the fiscal deficit.
Higher surplus transfer is likely to improve liquidity conditions in the system.

India's Net Foreign Direct Investment drops by 96.5%

Context: According to the data released by the Reserve Bank of India (RBI), India witnessed a sharp 96.5% drop in net foreign direct investment (FDI) in FY25.

Relevance of the Topic: Prelims: Key concepts- Foreign direct investment; net foreign direct investment (FDI).

Drop in net foreign direct investment (FDI)

India witnessed a sharp 96.5% drop in net foreign direct investment (FDI) in FY25. The net FDI fell to $353 million, the lowest on record, from $10 billion in FY24.

What is net foreign direct investment (FDI)?

Net FDI is the difference between FDI inflows by other countries into India and FDI outflow due to direct investments made by Indians abroad.

Net FDI = (Gross investment - Repatriation) - FDI Outflow

Components of Net FDI:

FDI Inflow (Gross FDI) is gross investment minus repatriation/disinvestment.
- Gross Investment includes- Fresh equity inflows (shares allocated to foreign investors), Reinvestment of profits by foreign companies in India, other capital inflow (loans from parent company to subsidiary)
- Repatriation/ disinvestment- Foreign companies removing capital out of India.
FDI Outflow is the investment by Indian companies abroad.

The net FDI drop is due to:

surge in repatriation/disinvestment of existing investments through profitable initial public offerings (IPOs).
Indian firms increased their investments overseas.

While the net FDI dropped, gross FDI remained concentrated in core sectors like manufacturing, financial services, energy, and communications, which accounted for more than 60% of total inflows.

First monthly Periodic Labour Force Survey

Context: MoSPI has released India’s first-ever monthly labour market data under the revamped Periodic Labour Force Survey (PLFS) for the month of April 2025.

Relevance of the Topic: Prelims: Key trends and statistics from India’s first-ever monthly labour market data under PLFS (April 2025).

First monthly Periodic Labour Force Survey (April 2025):

India’s first-ever monthly unemployment data under the Periodic Labour Force Survey (PLFS) was released for April 2025.
Released by: The Ministry of Statistics and Programme Implementation (MoSPI).
This marks a shift from earlier annual or quarterly datasets to more frequent, granular reporting of labour market conditions.
The size of sample households has also increased, which can help provide better information about the labour market and its seasonality factor.
The revamped model assesses employment and unemployment data from rural areas too.

Periodic Labour Force Survey:

PLFS is India’s primary official source for measuring employment and unemployment indicators.
Launched by: National Statistical Office under the MoSPI in 2017, replacing the earlier Employment-Unemployment Surveys (EUS) conducted by the NSSO.
PLFS provides estimates based on two reference periods:
- Usual Status (US): capturing long-term employment over the previous 365 days.
- Current Weekly Status (CWS): capturing short-term employment over the last 7 days.

Current Weekly Status (CWS) Methodology:

The PLFS uses the CWS approach to estimate labour indicators. Under CWS, a person is considered:

Employed if they worked at least one hour on any day during the 7 days preceding the date of the survey.
Unemployed if they did not work at all but were available for or seeking work for at least one hour on any day during that week.

The estimates of unemployment in CWS give an average picture of unemployment in a short period of 7 days during the survey period. This helps capture dynamic labour market trends more frequently and is the basis for calculating the monthly UR, LFPR, and WPR.

Key Highlights of the First PLFS monthly bulletin:

1. Unemployment Rate (UR):

The unemployment rate (UR) in April was 5.1%. As this is the first monthly data, no comparisons are available.
- The report for 2024 had recorded an unemployment rate at 4.9%.
Male vs Female UR: UR among males was higher at 5.2% compared with female UR of 5%.
Rural vs Urban UR: Urban UR for all persons was higher at 6.5%, as compared to rural UR at 4.5%.

2. Labour Force Participation Data:

Labour Force Participation Rate: LFPR is defined as the percentage of persons in the labour force (i.e. working or seeking or available for work) in the population.

LFPR in CWS among persons of age 15 years and above was 55.6% during the period.
Rural vs Urban: LFPR in rural areas was 58% and in urban areas it was 50.7% in April for persons of the same age group.
Rural men vs women: LFPR among rural men of age 15 years and above was 79% and it was 38.2% for women.
Urban men vs women: LFPR among women of age 15 years and above was 25.7% compared with 75.3% observed for men of the same age-group.

3. Worker Population Ratio:

Worker Population Ratio: WPR is defined as the percentage of employed persons in the population. WPR = (Total number of workers / Total population) × 100

Overall WPR: WPR at the country level was observed as 52.8% during April.
WPR in rural areas among persons of age 15 years and above was 55.4%.
WPR in urban areas among persons of the same age group was 47.4%

The revamped PLFS marks a significant step towards real-time labour market monitoring in India, enabling more responsive and evidence-based employment policies.

India’s WPI Inflation falls to 13-month Low

Context: As per the data released by the Ministry of Commerce and Industry, India’s wholesale inflation fell to a 13-month low of 0.85% in April 2025. It is down from 2.05% in March and 2.38% in February.

The decline in inflation was largely due to a decline in prices in the fuel & power and primary articles segments, although the manufacturing sector continued to show resilience.

Relevance of the Topic: Prelims: Key facts about Wholesale Price Index (WPI).

Wholesale Price Index:

WPI is an economic indicator that measures inflation at the wholesale level i.e., the average change in price of goods and commodities before they reach the retail or consumer market.
It reflects price movements of basket of goods, including primary articles (food, oilseeds, minerals), fuel and power, and manufactured products.
Compiled by: Office of Economic Advisor, Ministry of Commerce and Industry.
Base year: 2011-12
Unlike CPI, WPI does not include services. WPI is used to monitor supply-side inflation and is a critical input for industry pricing, taxation and policy making.

WPI Food Index

Sub-index of WPI. It is a combination of the food articles from the Primary Articles basket, and the food products from the Manufactured Products basket.

Measurement of Inflation in India:

Criteria	Wholesale Price Index (WPI)	Consumer Price Index (CPI)
Level	Measures Inflation at Wholesale level	Measures Inflation at Retail Level
Who Calculates?	Office of Economic Advisor, Ministry of Commerce and Industry	National Statistical Office, Ministry of Statistics and programme Implementation
Base year	2011-12	2012
Categories	Primary Articles, Manufactured products, Fuel and Power	Food and beverages, Tobacco and Intoxicants, Clothing and Footwear,Housing,Fuel,Miscellaneous- Education, Healthcare, Transportation etc.
Highest Weightage	Manufactured products > Primary Articles > Fuel and Power	Food and Beverages
Impact of increase in Food items	Less impact on WPI as compared to CPI, since WPI provides higher weightage to manufactured products and lower weightage to Food items.	Larger impact on CPI as compared to WPI since it gives more weightage to food products.
Services included	No	Yes
Indirect Taxes Included?	No	Yes
Targeted by RBI?	No	Yes. The RBI is required to maintain CPI rate of inflation of 4% with a deviation of 2%.

Cabinet approves India's Sixth Semiconductor Unit

Context: The Union Cabinet has approved India's sixth semiconductor unit- a ₹3,706 crore project to be set up in Jewar, Uttar Pradesh.

Relevance of the Topic: Prelims: Key facts related to India’s efforts towards semiconductor self-reliance.

India's Sixth Semiconductor Unit

The chip manufacturing unit will be a joint venture by Indian firm HCL and Foxconn (Taiwanese electronics manufacturing giant). This is the first semiconductor plant in Uttar Pradesh.
The plant is designed for 20,000 wafers per month. The design output capacity is 36 million units per month.
The facility will manufacture display driver chips for a wide range of devices, including mobile phones, laptops, personal computers (PCs), automobiles and other display-enabled technologies.
The unit will attract investments worth ₹3,700 crore. It will fulfill about 40% of India’s chip needs and boost chances of bringing display panel manufacturing to India.
This semiconductor unit is the sixth to be supported under the ₹76,000 crore first phase of the India Semiconductor Mission (ISM).

India Semiconductor Mission

Strategic initiative aimed at establishing a robust semiconductor and display ecosystem in the country. It seeks to position India as a global hub for electronics manufacturing and chip design.
Launched: 2021
Implemented by: Ministry of Electronics and Information Technology (MeitY) through a special purpose vehicle (SPV) called the India Semiconductor Mission.
Budget outlay: The total outlay for ISM under the Semicon India Programme is ₹76,000 crore.
Incentives: Financial incentives up to 50% of the project cost are provided to companies involved in Semiconductor Fabs, Display Fabs, Assembly, Testing, Marking, and Packaging (ATMP/OSAT) units, Semiconductor Design.

Project approved under India Semiconductor Mission:

As of 2025, six major projects have been approved under the India Semiconductor Mission. Already five semiconductor units are in advanced stages of construction.

Company / Joint Venture	Location
Micron	Sanand, Gujarat
Tata Electronics + PSMC (Taiwan)	Dholera, Gujarat
Tata Semiconductor Assembly & Test (TSAT)	Morigaon, Assam
CG Power + Renesas (Japan) + Stars Microelectronics (Thailand)	Sanand, Gujarat
Suchi Semicon	Surat, Gujarat
HCL + Foxconn (Taiwan)	Jewar, Uttar Pradesh

Also Read: India’s push for Semiconductor Chip Production amid Rising Imports

India notifies WTO of plan to impose retaliatory tariffs on US imports

Context: India has notified the World Trade Organisation (WTO) that it plans to impose $7.6 billion in retaliatory tariffs on import of the selected US goods. This is in retaliation for the US increasing duties on steel and aluminium imports to 25%.

The US stance at the WTO is that the tariffs on Indian goods were imposed on national security grounds and should not be regarded as safeguard measures.

Relevance of the Topic : Prelims: Key facts related to GATT, WTO Agreement on Safeguards (AoS).

India’s Response

India maintains that the measures taken by the US are not consistent with the General Agreement on Tariffs and Trade 1994, and the Agreement on Safeguards (AoS). The US failed to notify the WTO and did not conduct the mandatory consultations under Article 12.3 of the WTO Agreement on Safeguards. Hence, India has the right to retaliate.
India has the right to impose reciprocal measures under WTO rules due to adverse trade effects, after the expiration of thirty days from the date of this notification.
The US tariffs have affected $7.6 billion worth of Indian exports, leading to an estimated $1.91 billion in additional duties. India aims to recover this equivalent amount by suspending concessions or increasing tariffs on the US goods.

WTO Agreement on Safeguards

WTO AoS allows the countries to temporarily restrict imports (E.g., through higher tariffs or quotas) to protect a domestic industry from serious injury caused by a sudden surge in imports.
Safeguard measures must be applied to imports from all countries equally. No selective targeting of countries is allowed, unlike anti-dumping measures.
Countries must notify the WTO about the proposed safeguard measures and must provide evidence of injury and details of the proposed action.
As per Article 12.3, Countries imposing safeguards must hold consultations with affected countries before applying the measure. Failure to do so allows the affected countries to take retaliatory measures.
Safeguard measures are temporary. Maximum initial duration is 4 years, extendable up to 8 years under strict conditions. Measures must be progressively liberalised (i.e., reduced in severity) over time.
Countries affected by the measure can seek compensation. If not provided, they can take countermeasures (retaliatory tariffs), as India is planning.

If India does go ahead with its retaliatory measures, it would not be the first time. In June 2019, India imposed higher tariffs on 28 products from the US, after the U.S. removed India from its Generalised System of Preferences (GSP) and refused to discontinue its 2018 steel and aluminium tariffs. The duties, covering $240 million in trade value, were withdrawn in 2023.

Gaps in India’s Irrigation System

Context: The recent suicide of a Young Farmer Award recipient from Maharashtra highlights the contentious issue of irrigation in India. It points towards the inequity in water distribution, social inequalities and issues in water governance.

Relevance of the Topic: Mains: Agriculture: Irrigation Challenges in India.

State of Irrigation in India

Agriculture accounts for almost 80% of the water withdrawal in India. Annually, 688 billion cubic metres of water is consumed by the farm sector.
Irrigation is an inevitable input for increasing agricultural production, however, access to water for irrigation remains a contentious issue.

Irrigation Challenges in India:

Poor Irrigation coverage: 52% of net sown area is still completely dependent on rainfall. Over-reliance on traditional sources like wells, tube wells, canals for flood irrigation.
Uneven rainfall: Irrigation is impacted by substantial spatial and temporal rainfall variation, exacerbated by climate change.
Outdated off-farm and on-farm infrastructure and poor maintenance reduce irrigation efficiency. E.g., Unlined canals and channels.
Lack of adoption of smart irrigation solutions like micro-irrigation, drip agriculture. E.g., Total area covered under micro-irrigation is 10.3 mha against potential of 69.5 mha.
Aggressive groundwater extraction for irrigation- Due to over extraction, almost 17% of India’s groundwater assessment units are deemed ‘over-exploited’ while 3.9% are in a ‘critical’ state. Intensive pumping has resulted in massive energy consumption resulting in excessive carbon emissions.
- Misaligned cropping patterns: Rampant cultivation of water-intensive crops (sugarcane, paddy, cotton) across water-stressed regions exhausts groundwater, thus requiring irrigation solutions. E.g., Sugarcane cultivation in water-stressed Maharashtra.
- Loose regulation: The Easement Act, 1882, provides every landowner with the right to collect and dispose of all water under the land/over surface, i.e., the owner can dig wells and extract water based on his discretion. Additionally, landowners are not legally liable for any damage caused to water resources because of over-extraction.
- Gap between potential created and utilised: Despite heavy public expenditure on canals, governments have not been able to reduce groundwater depletion. E.g., Irrigation Potential Utilised (IPU) is 80 million hectares against Irrigation Potential Created (IPC) of 109 mha presently.
Inordinate delay in completion of irrigation projects due to delayed tendering, contract management, land acquisition etc. The operating efficiency and water use efficiency has also remained sub-optimal in Indian agriculture. While irrigation systems in India report an operating efficiency of 38%, in developed countries it is 55%.

Marginalised groups, especially women, are disproportionately affected by increasing deprivation and decline of water tables with climate change intensifying disparities.

Way Forward

Enhancing water efficiency:
- In irrigated areas by reducing the difference between IPC and IPU through proper maintenance of canals and rationalisation of water tariffs/power subsidies.
- In rain-fed areas by rainwater harvesting, creating check dams, convergence between MGNREGA and water conservation, desilting ponds and water bodies.
Adoption of Model Bill to control and regulate extraction of groundwater, setting up of Groundwater Regulating Authority, compulsory registration of borewell-owners etc.
Policy-led shift in cropping patterns towards crops suiting regional agro-climatic conditions, less water-intensive crops and crop-diversification.
Participatory irrigation management involving farmers in planning, design, development, and management of water resources schemes and capacity building.
Promotion of micro-irrigation techniques like drip and sprinkler irrigation.
Alternative water management technologies such as alternate wetting and drying, which can result in significant water saving and reduced emissions, may be popularised.

It is imperative for India to redesign its irrigation policy to ensure irrigation efficiency and rationalise the use of its limited water resources. This is pertinent to ensure food security to the growing population amidst climate change.

Also Read: Irrigation

IMO’s Net Zero Framework for Global Shipping Industry

Context: Recently, at its 83rd session, the Marine Environment Protection Committee (MERC) of the International Maritime Organisation (IMO) has approved a draft legal text for a Market-Based Measure (MBM) framework aimed at decarbonising the international shipping industry and promoting green shipping.

Relevance of the topic:

Prelims: MEPC-83, MARPOL Convention, Green fuels, CBDR-RC principle.

Mains: Need for green shipping, steps taken and implementation challenges.

Why does Green Shipping Matter?

Shipping plays an outsized role in global emissions:

The sector emits approximately one billion metric tonnes of GHG each year, representing about 2.8% of total global emissions.
If ranked as a country, international shipping would be the sixth-largest emitter in the world, between Germany and Japan. Without intervention, shipping emissions could increase by 50–250% by 2050 due to growing global trade.

Given its international nature, shipping is uniquely positioned for global regulation, making the IMO's action a significant precedent.

International Maritime Organisation:

IMO is the United Nations specialised agency responsible for regulating maritime transport, ensuring the safety and security of shipping, and preventing marine pollution.
Its main role is to create a regulatory framework for the shipping industry that is fair and effective, universally adopted and universally implemented.
IMO measures cover all aspects of international shipping- including ship design, construction, equipment, manning, operation and disposal.
Established in1948 (under the UN Convention), came into force in 1958.
Headquarters: London, United Kingdom
Members: 175 Member States including India.

For over ten years, IMO has been working to decarbonise the maritime industry. It undertook various strategies such as:

Initial GHG Strategy (2018) and its Updated GHG Strategy (2023).
Technical and operational measures under Annex VI of the MARPOL Convention, including: Energy Efficiency Design Index (EEDI), Ship Energy Efficiency Management Plan (SEEMP), Mandatory fuel oil consumption reporting.

However, without a binding economic mechanism, these efforts had limited impact. This led to a shift in focus toward Market-Based Measures (MBMs) to internalise the environmental cost of emissions.

Key Highlights of MEPC-83

At the 83rd session, IMO adopted Singapore’s Hybrid Model as the IMO Net Zero Framework- making shipping the first global industry with a binding emissions levy. It aims to help the shipping industry reduce its greenhouse gas emissions to net zero by or around 2050.

Features of Singapore’s Hybrid Model (IMO Net Zero Framework):

GHG Fuel Standard: Sets a greenhouse gas (GHG) intensity benchmark for marine fuels. Encourages the use of Zero or Near-Zero emission fuels- such as green hydrogen, ammonia, or methanol. Ships are required to meet a specified carbon intensity target per megajoule (MJ) of fuel.
Tiered Credit and Penalty System: Ships exceeding performance targets (i.e., using cleaner fuels than the standard) receive surplus emission credits. Ships underperforming (i.e., emitting more than the threshold) must purchase remedial credits or units to offset their excess emissions.
Progressive Benchmarks: The GHG intensity thresholds become stricter over time, driving innovation and investment in greener technologies. E.g., IMO rewards fuels under 19.0 g CO₂e/MJ until 2034, and under 14.0 g CO₂e/MJ thereafter.
Global but Differentiated Incentives: While the framework is universally applicable, it is designed to provide economic flexibility for developing countries.

Challenges to the IMO Net Zero Framework

1. Legal and Procedural Hurdles:

The draft Net Zero Framework was approved with 63 votes in favour, 16 against, and 24 abstentions. To implement the Net Zero Framework, IMO needs to amend Annex VI of the MARPOL convention, which governs air pollution from ships.

The amendment will undergo a six-month circulation period among all contracting parties to MARPOL. For final adoption, it requires a two-thirds majority of votes from members present and voting.
Even if the amendment is adopted, it can still be blocked if one-third of the parties, representing at least 50% of the global shipping tonnage, submit formal written objections.

2. Geopolitical Resistance:

The US boycotted the IMO deliberations and warned of reciprocal measures, if a global levy (especially one aligned with the EU proposal) was adopted.
Major fossil fuel exporters (like Saudi Arabia) and large shipping nations (like China) are resistant to aggressive emission controls.
Shipowners, especially from traditional maritime powers like Greece, are sceptical about the economic feasibility and compliance costs.
Small Island Developing States (SIDS) and Least Developed Countries (LDCs) demanded high levies to fund climate adaptation.
Norway and Scandinavian nations pushed for reward mechanisms to acknowledge early investments in green tech.
Brazil advocated for methanol as a transitional marine fuel.

3. Erosion of the CBDR-RC principle:

CBDR-RC is a core principle enshrined in climate agreements like UNFCCC, Kyoto Protocol and the Paris Agreement which acknowledges that all nations must address climate change but recognise historical responsibility and unequal capacities. Developed nations, with their longer industrial histories, are expected to bear greater burdens.
However, recent IMO proceedings reflect an effort by wealthier nations to shift responsibility onto developing economies, despite stark differences in income and consumption.

Impacts on India

While some short-term cost burdens are expected, India stands to benefit significantly in the long run:

Minimal Near-Term Impact: India’s logistics costs are projected to increase by 4.98-7.29% (imports) and 5.92-8.09% (exports) by 2030.
Limited Exposure: India currently operates nearly 236 ships over 5,000 gross tonnage, with only 135 involved in international voyages. Since MBMs apply only to international shipping, India’s coastal fleet remains unaffected.
Green Hydrogen Export Potential: Under the National Hydrogen Mission, India is developing a competitive green hydrogen sector. Indian green hydrogen, with a GHG intensity of about 16.7 gCO₂e/MJ, is well below the IMO’s threshold of 19.0 gCO₂e/MJ (till 2034) and 14.0 gCO₂e/MJ (thereafter), making it a viable export for green fuel bunkering globally.
Port Infrastructure: At least three Indian ports are gearing up to offer green hydrogen bunkering, positioning India as a future clean fuel hub.

Despite persistent disagreements, the adoption of a MBM by the IMO represents a milestone in the journey toward decarbonisation. If successful, this framework could make shipping the first truly global sector to operate under binding climate goals, setting a powerful precedent for others to follow.

Digitalising India’s Seed Value Chain: SATHI Portal

Context: The Government of India is rapidly expanding the implementation of the SATHI portal to enhance transparency, traceability, and quality assurance in India’s agricultural input systems.

As of mid-2025, 24 States have integrated with the portal, with complete national coverage expected before the Kharif 2026 season.

Relevance of the Topic: Prelims: Key facts related to SATHI Portal.

What is SATHI Portal?

SATHI stands for Seed Traceability, Authentication and Holistic Inventory.
Developed by: Ministry of Agriculture and Farmers’ Welfare in partnership with the National Informatics Centre (NIC).
Aim: To digitalise the entire Seed Retail Chain- from Seed Producing Agency, distributors, dealers, retailers to farmers to prevent the circulation of spurious or substandard seeds.

Key Features:

Centralised online portal for seed traceability, authentication and inventory.
Seven Integrated verticals of seed chain: Research Organisations, Seed Certification, Seed Licensing, Seed Catalogue, Dealer to Farmer Sales, Farmer Registration and Seed DBT.
QR coded seed packets: Each certified seed packet will carry a QR code. Farmers can scan the code to view the entire history of the seed- origin, grower, certifying agency, etc. The seeds would be certified under the supervision of State Seed Certification Agencies (SSCAs).
Seed DBT integration: Centrally registered farmers could buy seeds from valid licensed dealers at market prices, and receive the subsidy directly into their bank accounts.

Implementation Challenges:

There is an inherent 3-year lag in the seed certification cycle. So, even if a new seed variety is approved by the government today, it will only reach the farmers after 3 years. That means the data currently visible on the portal will mainly reflect older seed varieties, and the newly approved varieties will appear gradually over time.
Currently, uploading data to SATHI is optional for stakeholders. The government is considering amending the Seeds Act, 1966 to make data entry mandatory.

SAATHI aims to make the seed supply chain more efficient, accessible, save time and improve traceability, while guaranteeing the quality and purity of unadulterated seeds. Genuine seeds would ultimately contribute to increased agricultural production and enhanced income for the farmers.

India keeps Data Exclusivity out of UK FTA

Context: India safeguards its $25B generic drug industry by excluding data exclusivity from the India-UK FTA to ensure affordable drug access and faster generic launches. India’s stance upholds the TRIPS norms, protecting pharma exports and local manufacturers' interests.

Relevance of the Topic: Prelims: Concept of Data Exclusivity.

Data Exclusivity out of UK FTA:

Recently, India and the UK have announced the conclusion of the free trade agreement (FTA) that will substantially liberalise trade between the two countries.
The UK was pushing for inclusion of Data Exclusivity provisions in the FTA which would have prevented Indian generic drugs manufacturers from using the clinical trial data generated by the pharma patent holders.
India has protected the interest of its generic pharma industry by keeping out data exclusivity provisions from the FTA with the UK. Earlier, India had also rejected a similar demand from the four-nation European Free Trade Association (EFTA) in their FTA signed in 2024.

What is Data Exclusivity?

Data Exclusivity refers to the fixed period during which the non-clinical and clinical trial data submitted by the innovator pharmaceutical company to the regulatory body cannot be used by the generic manufacturers.
Purpose: Protects data generated in the course of clinical trials of a drug. By gaining exclusive rights over this data, innovator companies can prevent their competitors from obtaining marketing licence for low-cost generic versions during the tenure of this exclusivity.

Lack of Data Exclusivity law in India:

The Indian Drug and Cosmetic Act, 1940 and the Drug and Cosmetic Rules, 1945 do not provide for data exclusivity.
Lack of Data Exclusivity law risks unfair commercial use of test data submitted to the Indian government during application for market approval of pharma or agro-chemical products.
Indian laws allow the use of this data by companies to launch copies of the drugs that go off-patent. This reduces time and costs for generic manufacturers. If generic companies were to generate the same data independently, it would delay their generic launches.

India’s generic drug industry is estimated at about $25 billion and the country exports half of its output. Data exclusivity is beyond the provisions of the Trade Related Aspects of Intellectual Property Rights (TRIPS) agreement under the World Trade Organisation.

Asteroid YR4 may hit Moon in 2032

Context: National Aeronautics and Space Administration (NASA) has announced that there is a 3.8% chance that Asteroid YR4 could collide with the moon in December 2032.

Earlier, it was thought the asteroid might hit Earth, but the latest trajectory analysis concludes a very little chance of that happening. The asteroid is below the threshold size (140 metres), so it would not be a threat to Earth.

Relevance of the Topic:Prelims: Key facts about Asteroid 2024 YR4; Double Asteroid Redirection Test spacecraft (DART).

About Asteroid 2024 YR4

The 2024 YR4 was first discovered in December 2024 by a telescope in Chile.
It is a near-Earth asteroid measuring 40 to 100 metres across.
It came closest to Earth in December 2024— passing within roughly 800,000 kilometres of Earth, about twice the distance of the moon.
Scientists are using some of the most powerful telescopes to determine 2024 YR4’s path and size before it gets out of sight (becomes too faint to observe).
One AU (Astronomical Unit) is approximately equal to 93 million miles - the distance between the Sun and the Earth.
The closest asteroids which travel within 1.3 AU of the sun are called near-Earth objects (NEO).

If an NEO's orbit also intersects Earth's orbit, and the object is larger than about 140 metres in diameter, then it is classified as a potentially hazardous object (PHO).

The Challenge

Determination of the size of Asteroid:
- To determine the size of an asteroid, astronomers examine the brightness of the object — brighter objects are bigger.
- However, the brightness depends on how reflective the asteroid’s surface is (asteroids do not emit a light of their own, they only reflect sunlight).
- As a result, it is a challenge to distinguish between a large, dark-colored asteroid and a small, highly reflective one.
1% chance of crashing into Earth:
- The 2024 YR4 is expected to release 8 to 10 megatons of energy in case of a crash. Its impact could be 100 times more powerful than an atomic bomb.

What are Asteroids?

Asteroids are rocky remnants from the early formation of our solar system (about 4.6 billion years ago).
They are rocky, metallic, or icy bodies with no atmosphere.
Roughly one million asteroids are known. Majority of them are located between the orbits of Mars and Jupiter, in a region known as the main asteroid belt.
- The asteroid belt is a nearly flat ring that contains millions of asteroids, about 1000 kms or less in diameter.
- The largest asteroid in our solar system is Ceres (diameter ~940 kms), which is about one-quarter the size of Earth’s moon.
They are generally classified to be of three types: C-type, M-type, and S-type, i.e., carbonaceous, metallic, and siliceous compositions, respectively.
The first close-up observation of an asteroid was made by the NASA’s Galileo spacecraft (1991).

Asteroids as threats from Space

Thousands of Asteroids enter the Earth’s atmosphere every day. Most are very small and burn up in the atmosphere due to friction.
In some cases, unburnt fragments reach the Earth’s surface, although they are not large enough to cause much damage.
- In 2013, a 20-metre-wide asteroid entered the atmosphere and exploded about 30 km above a Russian town.
- Most of the energy released was absorbed by the atmosphere, however, shock waves travelled to the ground, damaged buildings, trees and injured people.
Space agencies are working on planetary defence mechanisms that can prevent celestial bodies from colliding with Earth with potentially catastrophic consequences.

Planetary Defence Mechanisms:

1. Double Asteroid Redirection Test spacecraft (DART):

DART was the first planetary defence mission of NASA, launched in 2021, to test a method for defending Earth from potentially hazardous asteroids.
Target:
- It targeted the binary asteroid system which consists of a larger asteroid called Didymos and a smaller asteroid called Dimorphos.
- Dimorphos did not pose a threat to Earth, and was circling the Sun some 11 million kilometres away from the planet.
Objective: To intentionally crash the DART spacecraft into Dimorphos to slightly alter its orbit around Didymos.
Impact: In 2022, DART spacecraft crashed into Dimorphos, and successfully changed both its shape and its trajectory.
Significance: The data gathered from DART will help scientists develop more effective strategies for deflecting asteroids that pose a threat to Earth in the future.

2. OSIRIS-APophis EXplorer (OSIRIS-APEX):

NASA has redirected its Space-craft OSIRIS-REx (Origins, Spectral Interpretation, Resource Identification, and Security – Regolith Explorer) that previously studied the asteroid Bennu, to track Asteroid Apophis.
OSIRIS-APEX is a mission to study the physical changes to asteroid Apophis that will result from its rare close encounter with Earth in April 2029.
Our planet’s gravitational pull is expected to alter the asteroid’s orbit, change how fast it spins on its axis, and possibly cause quakes or landslides that will alter its surface. OSIRIS-APEX will allow scientists on Earth to observe these changes.
Additionally, the OSIRIS-APEX spacecraft will dip toward the surface of Apophis and fire its engines to kick up loose rocks and dust. This manoeuvre will give scientists a peek at the composition of material just below the asteroid’s surface.

RBI relaxes FPI investment limit in Corporate Debt Securities

Context: The Reserve Bank of India (RBI) has relaxed norms for foreign portfolio investors (FPIs) investing in corporate debt securities through the general route.

Relevance of the Topic: Prelims: Key facts related to FPI norms.

Major Highlights:

Foreign Portfolio Investors (FPIs) in corporate debt securities will no longer be required to adhere to the short-term investment and concentration limits. The decision, effective immediately, aims to provide greater ease of investment for FPIs.

Earlier Regulations

Short-term investment limit: FPIs were restricted from investing more than 30% of their total investment in corporate debt securities with residual maturity up to one year.
Concentration limit: For long-term FPIs, investment in a single corporate issuer could not exceed 15% of their corporate bond portfolio. For other FPIs, this limit was 10%.

Now both these limits have been withdrawn. FPIs can now invest more freely in corporate debt securities, without being constrained by maturity or issuer concentration limits. This relaxation comes in the backdrop of the financial markets facing volatility due to geopolitical tensions and tariff wars.

Corporate Debt Securities:

Financial instruments issued by companies to raise funds from investors. In return the companies offer the investors regular interest payments and the return of principal at maturity. E.g., Corporate bonds, debentures, Non-Convertible debentures, Commercial Papers etc.

Significance of the Reforms:

Liberalise India’s debt market: It is a major step toward liberalising India's debt market.
Retention of foreign capital: It gives more options to FPIs to park the proceeds from their sale in the equity markets in corporate debt securities at attractive interest rates without having to immediately repatriate the proceeds.
Diversification of Investor base: Attracts a wider range of global institutional investors, reducing dependence on domestic funding sources.
Improve Market liquidity: Eased investment norms are likely to increase demand for corporate debt instruments, thereby improving market liquidity, reducing cost of capital for firms, and promoting financial deepening.

Challenges

Despite these changes, foreign investors might still hesitate to invest more due to two key reasons:

1. Narrowing US-India 10-Year Yield Spread:

The 10-year yield spread is the difference between the interest rates (yields) on Indian government bonds and US government bonds.
A higher spread means Indian bonds offer better returns compared to US bonds, which attracts foreign investors.
Currently, this spread has narrowed to around 200 basis points (2%), meaning the extra return from Indian bonds is less attractive. This reduces the incentive for FPIs to take the additional risk of investing in India.

2. External Risk Factors:

External Risk Factors like geopolitical tensions, US Federal Reserve interest rate changes etc. These risks can make investors risk-averse, leading them to prefer safer assets in developed countries.

While the reforms create better long-term conditions for corporate bond market growth, meaningful FPI inflows may only materialise when yields are attractive.