INTEGRATED MAINS AND PRELIMS MENTORSHIP (IMPM) 2025 Daily KEY
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Foreign Direct Investment (FDI) and Coronal Mass Ejection (CME) its significance for the UPSC Exam? Why are topics like National Pension System (NPS), Artificial Intelligence (AI) important for both preliminary and main exams? Discover more insights in the UPSC Exam Notes for October 22, 2025 |
Net FDI inflow fell by 159% in August: RBI’s data reveals
For preliminary Examination: Current events of national and international Significance like Foreign Direct Investment
For Mains Examination: GS III - Economy
Context:
Net Foreign Direct Investment (FDI) into India fell 159% in August, with more money leaving the country than entering it, according to official data. This is the second time this financial year that outflows have exceeded inflows
Read about:
Foreign Direct Investment (FDI)
Key takeaways:
- Foreign Direct Investment (FDI) refers to an investment made by an individual, company, or government from one country into business interests located in another country.
- Unlike portfolio investment, which involves buying financial assets such as stocks or bonds, FDI involves a lasting interest and significant control in a foreign enterprise.
- This usually means acquiring at least 10% ownership in a company abroad, or establishing new business operations such as factories, offices, or infrastructure projects.
- FDI is considered a key driver of globalization because it allows the movement of capital, technology, and management expertise across borders.
- For instance, when a multinational corporation like Toyota sets up a car manufacturing plant in India, it brings not only investment funds but also advanced technology, production methods, and employment opportunities. This helps boost industrial development in the host country.
- There are generally two main forms of FDI. The first is Greenfield investment, where a company builds new facilities from scratch in the host country. This type often generates new jobs and infrastructure.
- The second is Brownfield investment or mergers and acquisitions (M&A), where an existing company in the host country is purchased or merged with the foreign investor’s enterprise. This allows quicker market entry and access to existing customer bases.
- FDI can take place in different sectors—manufacturing, services, infrastructure, and technology are among the most common. Governments of developing countries, including India, actively encourage FDI by offering incentives such as tax breaks, relaxed regulations, and the creation of special economic zones (SEZs), as FDI contributes to economic growth, employment, and technological advancement.
- However, FDI also comes with challenges. Excessive dependence on foreign capital can make an economy vulnerable to external shocks. Some critics argue that foreign investors may repatriate profits rather than reinvest them locally, and that large multinational corporations could influence domestic policies to favor their interests.
- In India, FDI is regulated under the Foreign Exchange Management Act (FEMA), 1999, and is overseen by the Department for Promotion of Industry and Internal Trade (DPIIT).
- The country follows two routes: the automatic route, where investment does not require prior government approval, and the government route, where approval is necessary in sensitive sectors such as defense or media.
- Over the years, liberalization policies have made India one of the most attractive destinations for FDI, with inflows directed toward sectors like information technology, telecommunications, and renewable energy
Additional Information
- According to official data, India witnessed a sharp 159% decline in net Foreign Direct Investment (FDI) in August 2025, as capital outflows surpassed inflows. This marked the second instance in the current financial year when more money exited the country than entered it.
- Nonetheless, the broader trend over the first five months of the financial year presents a contrasting picture. Between April and August 2025, net FDI was over 121% higher than in the corresponding period of the previous year.
- In August 2025, gross FDI inflows amounted to $6,049 million — a fall of 30.6% from August 2024 and 45.5% from July 2025 — representing the weakest monthly inflows so far in this financial year.
- Meanwhile, repatriation and disinvestment by foreign investors operating in India reached $4,928 million in August 2025. This was 5.4% lower than a year earlier but almost 30% higher than the previous month. On the other hand, outward investments made by Indian companies dropped by 29.7% to $1,736 million, their lowest level in the current fiscal year.
- As a result, net FDI — the difference between total inflows and outflows — stood at a negative $616 million in August 2025, indicating that more funds were withdrawn than invested during the month. A similar situation had occurred earlier in May 2025, though on a smaller scale, when net FDI was recorded at -$5 million.
- For the April–August 2025 period, net FDI amounted to $10,128 million, marking a 121% increase compared with the same timeframe last year. This improvement was supported by an 18.2% rise in gross inflows (reaching $43,760 million) and a 6.1% decline in repatriation and disinvestment (totaling $21,205 million).
- Additionally, foreign investments made by Indian companies abroad rose to $12,427 million during this period — nearly 26% higher than in the corresponding months of the previous financial year
Follow Up Question
Mains
1.Despite a temporary dip in net Foreign Direct Investment (FDI) inflows in certain months, India continues to witness strong long-term foreign investment trends. Discuss the factors influencing short-term fluctuations in FDI and evaluate their implications for India’s economic stability and growth
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Note: This is a reference answer structure and a model answer
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Prelims
1.Both Foreign Direct Investments (FDI) and Foreign Institutional Investor (FII) are related to investment in a country. (UPSC CSE 2011)
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Answer (B)
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- A solar storm, also known as a Coronal Mass Ejection (CME), refers to the release of highly magnetized plasma and charged particles from the Sun’s outer layers. These energetic particles can travel at speeds of several million kilometers per hour and typically take anywhere from 13 hours to five days to reach Earth.
- Although Earth’s atmosphere shields humans from the direct impact of these particles, they can still interact with the planet’s magnetic field, producing strong electric currents on the surface that may disrupt satellite operations, power grids, and communication systems.
- The first documented solar storm occurred in 1859, reaching Earth in about 17 hours. Known as the Carrington Event, it severely disrupted telegraph systems and even caused electric shocks to operators.
- Recently, the Solar Ultraviolet Imaging Telescope (SUIT) aboard India’s Aditya-L1 mission successfully captured a solar flare “kernel” from the lower layers of the Sun’s atmosphere — the photosphere and chromosphere — offering valuable insights into solar activity.
- On the Moon, the exosphere — a very thin outer layer — consists of molecules released through solar radiation, solar wind, and meteorite impacts. During a CME, when the Sun ejects a burst of plasma, more molecules are knocked off the lunar surface, increasing the density of its exosphere. Because the Moon lacks a protective magnetic field, it is far more vulnerable to such solar activity.
- This phenomenon was recorded by Chandrayaan-2’s CHACE-2 instrument during a series of intense CMEs in May 2024, which caused a noticeable rise in total pressure within the Moon’s sunlit exosphere.
- The discovery is crucial for advancing knowledge of the Moon’s exosphere and space weather, supporting India’s long-term goal of sending humans to the Moon by 2040, and aiding in the design of lunar habitats capable of withstanding extreme solar conditions that can damage satellites and other space assets
Chandrayaan-1 (2008) – India’s First Lunar Mission
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Launch date: October 22, 2008
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Objective: To conduct a detailed chemical, mineralogical, and photo-geologic mapping of the Moon.
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Key Achievements:
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Discovered water molecules on the lunar surface — one of the most significant findings in modern lunar science.
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Helped create a 3D atlas of the Moon’s surface.
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Demonstrated India’s ability to place a spacecraft in lunar orbit.
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Outcome: The mission was officially declared over in August 2009, after losing communication with the orbiter, but it had already achieved 95% of its objectives.
Chandrayaan-2 (2019) – India’s Second Lunar Mission
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Launch date: July 22, 2019
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Components:
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Orbiter – continues to operate successfully around the Moon.
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Vikram Lander – attempted a soft landing near the Moon’s south pole but lost communication during descent.
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Pragyan Rover – housed within the lander.
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Objectives:
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To explore the south polar region, search for water ice, and study lunar topography, exosphere, and elemental composition.
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Key Achievements:
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The orbiter remains active, sending valuable data on the Moon’s exosphere, minerals, and solar interactions.
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Instruments like CHACE-2 have provided insights into lunar atmosphere changes during solar events such as CMEs (Coronal Mass Ejections)
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Chandrayaan-3 (2023) – India’s Successful Soft Landing
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Launch date: July 14, 2023
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Landing date: August 23, 2023
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Objective: To demonstrate India’s ability to achieve a soft landing and deploy a rover on the lunar surface.
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Components:
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Vikram Lander (Chandrayaan-3 version)
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Pragyan Rover
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Key Achievements:
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India became the first country to land near the Moon’s south pole.
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The lander and rover conducted experiments on soil composition, thermal properties, and seismic activity.
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The mission established India as the fourth nation (after the USA, USSR, and China) to achieve a successful lunar landing
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1.“The Chandrayaan missions mark India’s progressive journey from lunar observation to surface exploration and scientific innovation. Discuss the scientific and strategic significance of India’s Chandrayaan programme in the context of future space exploration goals.”
(Answer in 250 words)
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Note: This is a reference answer structure and a model answer
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Prelims
1.If a major solar storm (solar flare) reaches the Earth, which of the following are the possible effects on the Earth?( UPSC CSE 2022)
1. GPS and navigation systems could fail.
2. Tsunamis could occur at equatorial regions.
3. Power grids could be damaged.
4. Intense auroras could occur over much of the Earth.
5. Forest fires could take place over much of the planet.
6. Orbits of the satellites could be disturbed.
7. Shortwave radio communication of the aircraft flying over polar regions could be interrupted.
Select the correct answer using the code given below:
(a) 1, 2, 4 and 5 only
(b) 2, 3, 5, 6 and 7 only
(c) 1, 3, 4, 6 and 7 only
(d) 1, 2, 3, 4, 5, 6 and 7
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Answer (c)
A major solar storm (solar flare or coronal mass ejection) releases huge amounts of charged particles and magnetic energy from the Sun. When these reach Earth, they can interact with the magnetosphere and ionosphere, causing several technological and atmospheric effects. Let’s examine each statement carefully:
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Key Highlights of the Unified Pension Scheme (UPS):
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Guaranteed Pension:
The scheme ensures a fixed pension amounting to 50% of the average basic salary drawn during the last 12 months of service before retirement or superannuation. This is applicable for employees with at least 25 years of qualifying service. Those who serve between 10 and 25 years will receive a proportionately reduced pension. -
Minimum Pension Assurance:
Every eligible employee completing a minimum of 10 years of service is entitled to a minimum monthly pension of ₹10,000 after superannuation. -
Family Pension Benefit:
In case of the pensioner’s death, the immediate family will receive 60% of the last drawn pension as a family pension. -
Inflation Protection:
The pension will be indexed to inflation, with dearness relief linked to the All-India Consumer Price Index for Industrial Workers (AICPI-IW)—the same index used for serving employees. -
Lump-sum Benefit at Retirement:
At the time of retirement, in addition to gratuity, employees will receive a lump-sum amount equivalent to one-tenth of their monthly emoluments (basic pay + DA) for every completed six months of service. This payment will not affect the assured pension entitlement. -
Coverage for Compulsory Retirement:
Employees retired compulsorily under Rule 56(j) (not as a punishment) will also be eligible for UPS benefits. However, those dismissed, removed, or who resign will not qualify for the assured pension under this scheme
Implementation and Employee Response:
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The Union Cabinet cleared the Unified Pension Scheme in August 2024, and it became operational from April 1, 2025.
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Initially, employees under the National Pension System (NPS) had until June 30 to opt for the UPS. This deadline was later extended twice—first to September 30, and then to November 30, due to low uptake.
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As of September 30, only 4.5% (around 1.11 lakh) of the 23.93 lakh NPS subscribers had chosen to switch to UPS.
Background and Employee Demands:
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Under the Old Pension Scheme (OPS), government employees were entitled to 50% of their last drawn basic pay as pension.
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Since January 1, 2004, new recruits were placed under the NPS, which ties pension returns to market-linked investments.
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With widespread employee dissatisfaction over NPS volatility, the government introduced the UPS to ensure greater financial certainty after retirement.
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However, some employees still consider NPS preferable due to its market-based growth potential.
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The All-India NPS Employees Federation, led by Manjeet Singh Patel, announced a protest at Jantar Mantar demanding full restoration of OPS.
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In an October 7 representation, the federation also urged that UPS pension benefits be extended from the date of voluntary retirement, instead of from superannuation
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Note: This is a reference answer structure and a model answer
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1.Who among the following can join the National Pension System (NPS)? (UPSC CSE 2017)
(a) Resident Indian citizens only
(b) Persons of age from 21 to 55 only
(c) All State Government employees joining the services after the date of notification by the respective State Governments
(d) All Central Government employees including those of Armed Forces joining the services on or after 1st April, 2004
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Answer (c)
Hence, option (c) correctly identifies the eligible group as per the UPSC question’s context. |
- Artificial Intelligence (AI) is a branch of computer science that focuses on creating systems capable of thinking, reasoning, and learning in ways that resemble human intelligence. The goal is to enable machines to perform complex tasks independently.
- To help computers mimic human learning and operate without explicit commands, Machine Learning (ML) techniques are used. ML involves training systems with large sets of data so that they can recognize patterns, draw conclusions, and make predictions about new information.
- According to an analysis by Synergy Research Group, nearly 60% of the world’s 1,244 largest data centers were located outside the United States as of June. Moreover, over 575 new projects are under construction worldwide, led by major companies like Meta, Tencent, and Alibaba.
- However, the rapid expansion of data centers — which require massive amounts of electricity for computing and water for cooling — has caused or worsened environmental strains across multiple regions.
- In Ireland, data centers use over 20% of the nation’s electricity; in Chile, vital underground water reserves are depleting; and in South Africa, already plagued by blackouts, they are placing additional stress on the grid. Similar issues have been reported in countries like India, Malaysia, the Netherlands, and Spain.
- Transparency remains a major challenge. Many tech giants such as Google, Amazon, and Microsoft operate through subsidiaries, concealing details about their facilities’ energy and water consumption.
- Governments, eager to attract AI investment, are offering incentives such as tax benefits, cheap land, and relaxed regulations, often prioritizing growth over environmental oversight.
- While companies argue that data centers bring jobs, capital, and innovation, and claim to reduce their ecological impact through renewable energy and water recycling, experts note that these facilities, especially in resource-stressed regions, intensify existing power and water shortages.
- This has sparked a wave of activism and public opposition in several countries, where communities and environmental groups are demanding greater accountability, sustainability, and transparency in the global data center boom
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Note: This is a reference answer structure and a model answer
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1.With the present state of development, Artificial Intelligence can effectively do which of the following? (UPSC CSE 2020)
1. Bring down electricity consumption in industrial units
2. Create meaningful short stories and songs
3. Disease diagnosis
4. Text-to-Speech Conversion
5. Wireless transmission of electrical energy
Select the correct answer using the code given below:
(a) 1, 2, 3 and 5 only
(b) 1, 3 and 4 only
(c) 2, 4 and 5 only
(d) 1, 2, 3, 4 and 5
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Answer (b)
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Subject Wise Topics
| Topic | Description |
| 1. Fundamental Rights (Polity) | https://upscexamnotes.com/topic-wise-articles/article.php?subtopic=3 |
| 2. Doctrine of Lapse (Modern Indian History) | https://upscexamnotes.com/topic-wise-articles/article.php?subtopic=386 |
| 3. Monetary Policy (Economy) | https://upscexamnotes.com/topic-wise-articles/article.php?subtopic=182 |
| 4. Environment Pollution (Environmnet and Ecology) | https://upscexamnotes.com/topic-wise-articles/article.php?subtopic=158 |
| 5. Physical features of India | https://upscexamnotes.com/topic-wise-articles/article.php?subtopic=572 |