REPO RATE
- The repo rate, short for repurchase rate, is the rate at which the central bank of a country (such as the Reserve Bank of India in India) lends money to commercial banks for a short-term period, typically overnight. It is one of the key tools used by central banks to control monetary policy and regulate the economy.
- When the central bank wants to stimulate economic growth, it may lower the repo rate. This makes it cheaper for commercial banks to borrow money, which in turn encourages them to lend more to businesses and consumers, stimulating spending and investment. Conversely, when the central bank wants to control inflation or cool down an overheated economy, it may raise the repo rate. This makes borrowing more expensive, which can help reduce spending and inflationary pressures.
- The repo rate also influences other interest rates in the economy, such as lending rates for consumers and businesses, as well as rates on savings and deposits. Therefore, changes in the repo rate have wide-ranging implications for the overall economy.
- The repo rate in India is 6.50%. This rate has been unchanged since February 8, 2023, after a series of hikes throughout 2022 to combat inflation.
3. What is the Cash Reserve Ratio (CRR) Rate?
- The Cash Reserve Ratio (CRR) is the portion of a bank's deposits that it is required to maintain as reserves with the central bank, such as the Reserve Bank of India (RBI) in India. It is expressed as a percentage of a bank's total deposits.
- The CRR rate is set by the central bank as part of its monetary policy tools to regulate the money supply in the economy. By adjusting the CRR rate, the central bank can influence the amount of money available for lending by commercial banks.
- When the CRR rate is increased, banks are required to hold a higher proportion of their deposits as reserves with the central bank, which reduces the amount of money available for lending. Conversely, when the CRR rate is decreased, banks have more funds available for lending, which can stimulate borrowing and economic activity.
- The primary objective of adjusting the CRR rate is to control inflation, manage liquidity in the banking system, and ensure the stability of the financial system.
4. How this move will impact the overall Economy?
Changes in repo rate and CRR affect various aspects of the economy, including:
- When the central bank increases the CRR rate, banks are required to hold a larger portion of their deposits as reserves, reducing the amount of money available for lending. This can lead to a decrease in liquidity in the banking system, making it more difficult for businesses and individuals to access credit. Conversely, a decrease in the CRR rate can increase liquidity in the banking system, making credit more readily available.
- Changes in the CRR rate can also influence interest rates in the economy. When the CRR rate is increased, banks may raise their lending rates to compensate for the higher cost of holding reserves. This can lead to higher borrowing costs for businesses and consumers, potentially dampening investment and spending. Conversely, a decrease in the CRR rate can lead to lower lending rates, stimulating borrowing and economic activity.
- The CRR rate is one of the tools used by the central bank to control inflation. By adjusting the amount of money available for lending, changes in the CRR rate can impact aggregate demand in the economy. A decrease in the CRR rate can stimulate borrowing and spending, potentially leading to increased demand and inflationary pressures. Conversely, an increase in the CRR rate can reduce borrowing and spending, helping to control inflation.
- Changes in the CRR rate can have implications for overall economic growth. Higher CRR rates can reduce the availability of credit, which may slow down investment and consumption spending, leading to lower economic growth. Conversely, lower CRR rates can stimulate borrowing and spending, potentially boosting economic activity.
5. About the Monetary Policy Framework
A monetary policy framework is the overall structure and set of guidelines that a central bank like the Reserve Bank of India (RBI) uses to achieve its economic objectives. It defines the tools, targets, and communication strategies employed to manage the money supply and influence interest rates, ultimately affecting inflation and economic growth.
Objectives
- Maintaining low and stable inflation is typically the primary objective.
- Balancing price stability with promoting economic growth is crucial.
- Ensuring a stable and efficient financial system is also important.
Instruments
- Repo rate influences the cost of borrowing for banks and indirectly impacts interest rates in the economy.
- CRR affects the amount of money banks have available for lending, influencing the money supply.
- Open market operations The central bank can buy or sell government securities to inject or drain money from the economy.
Targets
- This framework sets a specific inflation target and uses monetary policy tools to achieve it. India currently follows a flexible inflation-targeting framework.
- This framework aims to maintain a stable exchange rate, but India does not currently follow this approach.
Communication
- The central bank clearly communicates its policy decisions and rationale to the public and market participants to ensure transparency and manage expectations.
Benefits of a clear framework
- It helps the public understand how the central bank makes monetary policy decisions.
- It holds the central bank accountable for achieving its objectives.
- It allows businesses and individuals to make informed economic decisions based on expected monetary policy actions.
India's Monetary Policy Framework
- India currently follows a flexible inflation targeting framework, with a target of 4% inflation ± 2%.
- The RBI uses a variety of instruments, including the repo rate and CRR, to achieve this target.
- The RBI regularly communicates its policy decisions and rationale through press releases, speeches, and its website.
6. The Way Forward
The RBI's decision to maintain the repo rate highlights its cautious approach to balancing inflation control with economic growth. Analyzing the potential implications within the context of broader monetary policy objectives can help us understand the impact on various economic actors and sectors.
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For Prelims: Repo rate, RBI, Inflation, Monetary Policy Committee, Cash Reserve Ratio For Mains: 1. Examine the impact of the RBI's repo rate decision on various sectors of the Indian economy, such as agriculture, manufacturing, and small and medium enterprises. How can the government mitigate the negative consequences on vulnerable sections of the population? (250 Words)
2. In a globalized world where economic policies are interconnected, how can India collaborate with other countries to address macroeconomic challenges such as inflation and exchange rate volatility? (250 Words)
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Previous Year Questions 1. Consider the following statements: (UPSC 2021)
1. The Governor of the Reserve Bank of India (RBI) is appointed by the Central Government.
2. Certain provisions in the Constitution of India give the Central Government the right to issue directions to the RBI in the public interest.
3. The Governor of the RBI draws his natural power from the RBI Act.
Which of the above statements is/are correct?
A. 1 and 2 only B. 2 and 3 only C. 1 and 3 only D. 1, 2 and 3
2. Concerning the Indian economy, consider the following: (UPSC 2015)
Which of the above is/are component(s) of Monetary Policy? (a) 1 only (b) 2, 3 and 4 (c) 1 and 2 (d) 1, 3 and 4
3. An increase in Bank Rate generally indicates: (UPSC 2013) (a) Market rate of interest is likely to fall.
(b) Central bank is no longer making loans to commercial banks.
(c) Central bank is following an easy money policy.
(d) Central bank is following a tight money policy.
4. Which of the following statements is/are correct regarding the Monetary Policy Committee (MPC)? (UPSC 2017) 1. It decides the RBI's benchmark interest rates.
2. It is a 12-member body including the Governor of RBI and is reconstituted every year.
3. It functions under the chairmanship of the Union Finance Minister.
Select the correct answer using the code given below: A. 1 only B. 1 and 2 only C. 3 only D. 2 and 3 only
5. If the RBI decides to adopt an expansionist monetary policy, which of the following would it not do? (UPSC 2020) (1) Cut and optimize the Statutory Liquidity Ratio
(2) Increase the Marginal Standing Facility Rate
(3) Cut the Bank Rate and Repo Rate
Select the correct answer using the code given below: A. 1 and 2 only B. 2 only C. 1 and 3 only D. 1, 2 and 3
6. With reference to inflation in India, which of the following statements is correct? (UPSC 2015)
A. Controlling the inflation in India is the responsibility of the Government of India only
B. The Reserve Bank of India has no role in controlling the inflation
C. Decreased money circulation helps in controlling the inflation
D. Increased money circulation helps in controlling the inflation
7. Consider the following statements: (UPSC 2020)
1. The weightage of food in Consumer Price Index (CPI) is higher than that in Wholesale Price Index (WPI).
2. The WPI does not capture changes in the prices of services, which CPI does.
3. Reserve Bank of India has now adopted WPI as its key measure of inflation and to decide on changing the key policy rates.
Which of the statements given above is/are correct?
A. 1 and 2 only B. 2 only C. 3 only D. 1, 2 and 3
Answers: 1-C, -C, 3-D, 4-A, 5-B, 6-C, 7-A
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BRICS
1. Context
2. BRICS
- The BRICS alliance, composed of Brazil, Russia, India, China, and South Africa, has evolved from an economic consortium to a multifaceted geopolitical force.
- Emerging economies with considerable potential, these countries together form a collective that challenges traditional power dynamics and fosters cooperation in an increasingly interconnected world.
3. Formation and Evolution
- BRICS was officially established in 2006, with the objective of fostering economic growth, development, and cooperation among member nations.
- Over time, it has transformed into a platform for addressing a broader spectrum of global challenges, encompassing political, security, and social concerns alongside economic issues.
4. Geopolitical Relevance
- Counterbalance to Western Influence: BRICS serves as a counterweight to the dominance of Western powers. The coalition's diverse representation from different regions empowers non-Western countries to assert their interests on the global stage.
- Global South Unity: BRICS resonates with many countries in the Global South that seek a voice in international affairs. It presents an alternative to the traditional Western-dominated institutions, offering a platform for collaboration and advocacy.
5. Economic Cooperation and Growth
- Economic Powerhouses: Collectively, BRICS nations account for a substantial portion of the world's population and GDP. Their economic potential has led to discussions on reforming global financial institutions to better reflect contemporary realities.
- Intra-BRICS Trade: Trade among BRICS members has grown significantly. Initiatives like the New Development Bank (NDB) and the Contingent Reserve Arrangement (CRA) bolster financial cooperation and stability within the group.
6. Geopolitical Challenges and Opportunities
- Diverse Interests: As BRICS expands and diversifies, differing geopolitical interests may arise, potentially leading to internal divisions. However, this diversity also presents opportunities for creative solutions to global challenges.
- Diplomatic Outreach: BRICS engages with other regional and international organizations, strengthening its influence. The expansion of the group's membership underscores its growing geopolitical relevance.
7. India's Role and Beyond
- India's Diplomacy: India has played an active role within BRICS, emphasizing issues such as counter-terrorism, cybersecurity, and climate change. Its strategic partnerships contribute to the coalition's expansion and its influence in shaping its direction.
- Global Impact: BRICS expansion into a broader coalition incorporating West Asian countries like Egypt, Iran, Saudi Arabia, and the UAE signifies a deliberate shift towards greater global political relevance. This expansion highlights BRICS' adaptability to changing geopolitical dynamics.
8. BRICS New Members Dynamics
- Unanimous Decisions: BRICS decisions require unanimous agreement, reflecting collective decision-making.
- Geopolitical Partnerships: While Russia and China confront West-related challenges, Brazil, South Africa, and India maintain significant partnerships with the US and Europe.
- China's Expansion Drive: China spearheads BRICS expansion, prioritizing membership growth.
- Inclusion of Iran: China and Russia's influence is seen in Iran's inclusion, showcasing their collaboration.
- Mediation Efforts: China's role reconciles rivals Saudi Arabia and Iran within the alliance.
- Saudi Arabia's Shift: Saudi Arabia's entry signifies a move towards an independent foreign policy, diverging from the US alliance.
- Global Significance for Russia and Iran: BRICS membership elevates Russia and Iran's global partnerships, challenging Western dominance.
9. Implications for India
- Strategic Role: India played a lead role in drafting BRICS membership criteria, demonstrating its strategic influence within the alliance.
- Expanded Influence: The inclusion of new members who are strategic partners of India enhances its influence within BRICS.
- Geopolitical Balancing: BRICS expansion allows India to navigate between its ties with the West and its position within this non-Western coalition.
- Global Advocacy: With more representation and diverse members, India can push for UN reforms and increased Global South representation.
- Diplomatic Challenges: India might need to exert more effort to assert its influence in an alliance with a wider range of members and potential competing interests.
- Economic Opportunities: Collaboration with economically strong members like China can lead to enhanced trade and investment prospects for India.
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For Prelims: BRICS, Global South Unity, Western Influence, New Development Bank (NDB), and Contingent Reserve Arrangement (CRA).
For Mains: 1. Discuss the Implications of BRICS' Expansion for India's Geopolitical Positioning and Influence within the Alliance.
2. Analyze India's Role in Shaping BRICS' Membership Criteria and Its Strategic Significance in the Expanded Coalition.
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Previous year Questions1. With reference to a grouping of countries known as BRICS, consider the following statements: (UPSC 2014)
1. The First Summit of BRICS was held in Rio de Janeiro in 2009.
2. South Africa was the last to join the BRICS grouping.
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: B
2. With reference to BRIC countries, consider the following statements: (UPSC 2010)
1. At present, China's GDP is more than the combined GDP of all three other countries.
2. China's population is more than the combined population of any two other countries.
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: A
3. The 'Fortaleza Declaration', recently in the news, is related to the affairs of (UPSC 2015)
A. ASEAN
B. BRICS
C. OECD
D. WTO
Answer: B
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MAJOR DEFENCE AGREEMENTS
India–Russia Relations:
- India’s air defence capabilities were put to the test during Pakistani aerial strikes on multiple military installations and cities, during which the Integrated Counter-UAS Grid and key surface-to-air missile systems like the S-400 Triumf (procured from Russia), Barak 8 MRSAM, and Akash were deployed.
- These systems form the backbone of India’s defence shield. In addition to these, India and Russia have established a strong defence partnership through agreements involving the acquisition of MiG-29 jets, Kamov helicopters, and licensed production of military platforms such as T-90 tanks, Su-30MKI fighter aircraft, AK-203 rifles, and the BrahMos supersonic cruise missile. Notably, the Indian Navy's aircraft carrier, INS Vikramaditya, was formerly Russia's Admiral Gorshkov.
India–UK Relations:
- India and the United Kingdom recently concluded a Free Trade Agreement (FTA), marking a milestone in their bilateral ties. In early 2025, the two nations formalised their defence collaboration under Defence Partnership-I (DP-I) at the Aero India event.
- Notable developments include a contract between Thales UK and Bharat Dynamics Limited (BDL) for the delivery of Laser Beam Riding MANPADS (LBRM), particularly the STARStreak missile systems, and a joint effort with MBDA UK to establish a facility in Hyderabad for advanced air-to-air missile assembly and testing. These initiatives aim to bolster India’s air combat capabilities and expand defence exports.
India–France Relations:
In a recent intergovernmental deal, India agreed to acquire 26 Rafale-M aircraft — 22 single-seaters and 4 dual-seaters — for its navy, along with related simulators, equipment, weaponry, and logistics support.- France, like Russia, has remained a dependable defence partner, notably refraining from imposing sanctions after India's 1998 nuclear tests. Over the years, India and France have collaborated extensively in international platforms.
- Following the Ukraine conflict, France emerged as one of the top three destinations for Indian defence exports in 2023–24. Both countries have committed to a Defence Industrial Roadmap that includes joint projects such as the Scorpene submarines, additional Rafale and helicopter procurement, and efforts toward domestic manufacturing.
India–Thailand Relations:
- During the 6th BIMSTEC summit held in Thailand, India and Thailand elevated their bilateral ties to a strategic partnership, emphasizing defence cooperation.
- The two sides agreed to create formal mechanisms for high-level consultations, including a strategic dialogue between their National Security Councils. Defence collaboration is to be strengthened through technology transfer, joint training programs, and industrial partnerships.
India–United States Relations:
India and the United States launched the US–India COMPACT initiative to promote deep strategic cooperation in defence, technology, and commerce. During Defence Minister Rajnath Singh’s visit to the US, both nations signed a Security of Supply Arrangement (SOSA) and a Memorandum of Agreement on Liaison Officers.- SOSA will ensure mutual priority support for defence-related goods and services. India’s inventory now includes several US-origin defence platforms such as the C-130J Super Hercules, C-17 Globemaster III, P-8I Poseidon, Chinook and Seahawk helicopters, Apache attack helicopters, Harpoon missiles, M777 howitzers, and MQ-9B drones. Talks continue on acquiring F-35 Lightning-II fighter jets.
India–New Zealand Relations:
In March 2025, India signed a Memorandum of Understanding (MoU) on defence cooperation with New Zealand, a member of the Five Eyes intelligence alliance. The agreement aims to facilitate regular military engagement and deeper bilateral defence cooperation, signed during the New Zealand Prime Minister's visit to India.
India–Indonesia Relations:
Reflecting deep-rooted cultural and strategic ties, Indonesia’s President Prabowo Subianto was the Chief Guest at India’s Republic Day celebrations. Both nations reiterated their commitment to enhancing cooperation in maritime security, cybersecurity, counter-terrorism, and de-radicalisation.- They celebrated the ratification of the Defence Cooperation Agreement (DCA) signed in 2018 and emphasized ongoing joint initiatives such as the India–Indonesia Coordinated Patrol and regular military exercises involving the army and navy
India actively participates in a wide range of joint military exercises across the three branches of its armed forces—Army, Navy, and Air Force—to strengthen defence cooperation, enhance interoperability, and share strategic and tactical knowledge with partner countries.
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With the United Kingdom:
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Exercise Ajeya Warrior involves the Indian Army and the British Army, focusing on counter-insurgency and counter-terrorism operations in semi-urban environments.
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Exercise Konkan is a bilateral naval exercise between the Indian Navy and the Royal Navy, designed to boost maritime collaboration and operational synergy.
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Exercise Indradhanush-IV is an Air Force-level drill, where the Indian Air Force and the Royal Air Force engage in joint air combat maneuvers, including aerial refueling and close-combat simulations.
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With Thailand:
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Exercise Maitree is a joint Army exercise conducted between the Indian Army and the Royal Thai Army, focusing on counter-terrorism and jungle warfare.
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The India–Thailand Coordinated Patrol (Indo-Thai CORPAT) is a naval exercise aimed at enhancing maritime security through coordinated patrols in the Andaman Sea.
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With the United States:
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Exercise Yudh Abhyas is a bilateral Army exercise focusing on joint military operations in counter-insurgency and humanitarian assistance scenarios.
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Exercise Vajra Prahar is a special forces training program between the Indian and U.S. Armies to enhance joint tactical cooperation.
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Exercise Malabar is a high-end naval exercise involving India, the U.S., and other Indo-Pacific allies, focusing on naval interoperability, anti-submarine warfare, and maritime security.
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Red Flag 16-1 is a prestigious multinational air combat exercise hosted by the United States Air Force, in which the Indian Air Force has participated to enhance aerial combat readiness and coordination with allied forces.
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With Indonesia:
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Exercise Garuda Shakti is an Army-level joint drill with the Indonesian Army, aimed at improving tactical-level operations in counter-insurgency environments.
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Exercise Samudra Shakti is a naval exercise with the Indonesian Navy, designed to improve interoperability in maritime security operations and joint navigation tactics
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Five Eyes intelligence alliance
“Five Eyes” refers to an intelligence-sharing alliance of the United States, United Kingdom, Australia, Canada and New Zealand. It was formed during World War II. The history of the ‘Five Eyes’ alliance dates back to an intelligence-sharing agreement signed between Washington and London
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India has not officially disclosed the specific weapons used during Operation Sindoor, conducted in the early hours of May 7. The Indian Armed Forces, however, confirmed that precision strikes were executed against terrorist infrastructure located deep within Pakistan and Pakistan-occupied Kashmir (PoK). While the details of the armaments remain classified, India possesses several advanced long-range precision-guided weapons and drones that are likely candidates for such operations. These include:
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HAMMER (Highly Agile and Manoeuvrable Munition Extended Range): Designed for the Rafale jets, HAMMER is an air-to-ground precision weapon capable of striking targets up to 70 km away. It is adaptable and can be integrated with different bomb configurations and guided munitions.
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SCALP (Système de Croisière Autonome à Longue Portée – Emploi Général): Known as Storm Shadow in the UK, SCALP is a stealthy, air-launched cruise missile optimized for deep-penetration strikes. It functions effectively under all weather conditions and at night, making it a formidable tool for long-range precision targeting.
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BRAHMOS: This supersonic cruise missile is jointly developed by India’s DRDO and Russia’s NPO Mashinostroyeniya under the BrahMos Aerospace partnership. Capable of being launched from land, sea, and air platforms, BrahMos follows the "fire-and-forget" model and can maneuver along various flight trajectories to accurately strike its target.
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METEOR: The Meteor is an advanced Beyond Visual Range Air-to-Air Missile (BVRAAM) equipped to handle high-threat environments, including those with dense electronic warfare activity. It enhances an aircraft’s capability to neutralize aerial threats from a significant distance
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For Prelims:Brahmos missile, Five Eyes intelligence alliance
For Mains: GS III - Defence Acquisition
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Previous Year Questions
1.Consider the following statements: (UPSC CSE Prelims 2023)
Which of the statements given above is/are correct?
Answer: (d) |
JAL JEEVAN MISSION
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The Jal Jeevan Mission, launched by Prime Minister Narendra Modi on August 15, 2019, was envisioned to ensure tap water access to approximately 16 crore rural households, with the goal of achieving universal coverage by 2024.
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However, in just over five years, only 75% of the target has been met. To cover the remaining 4 crore households, the government now plans to extend the mission’s deadline to December 31, 2028.
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The Ministry of Jal Shakti had sought Rs 2.79 lakh crore from the Centre to finish the project. But according to sources, the Expenditure Finance Committee (EFC)—headed by the Expenditure Secretary—reviewed the proposal on March 13 and recommended a revised funding of only Rs 1.51 lakh crore. The committee also slashed the total project cost by Rs 41,000 crore, approving an outlay of Rs 8.69 lakh crore instead of the Rs 9.10 lakh crore originally proposed.
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Since the Jal Jeevan Mission is co-financed equally by the Centre and the states, this cut in Central funding could shift a greater financial burden onto state governments
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Government Schemes related to Water
Among the various initiatives under the Ministry of Jal Shakti, the Namami Gange Programme and river interlinking projects hold significant importance. Hence, it is essential for aspirants to not only be familiar with these schemes but also grasp the concept of river interlinking itself. In fact, a previous Prelims question was based on the Godavari-Krishna river interlinking, highlighting the relevance of such topics. As a result, gaining a clear understanding of the Ken-Betwa river linking project is also crucial for exam preparation
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The Namami Gange Programme is a comprehensive river conservation initiative launched as a flagship mission by the Union Government in June 2014. It aims to achieve two primary goals: the reduction of pollution and the revival and preservation of the Ganga River, recognized as India’s national river.
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The programme is built on several core components, which include:
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Development of sewage treatment infrastructure
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Revitalization of riverfront areas
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Cleaning of the river surface to remove floating waste
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Promotion and protection of biodiversity
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Expansion of afforestation along the river basin
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Enhancing public engagement and awareness
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Monitoring of industrial waste discharge
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Transformation of villages along the Ganga into model Ganga Grams
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River interlinking refers to a large-scale water resource management approach where water is deliberately redirected from regions with excess availability to those facing water scarcity.
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This method typically involves connecting river basins using infrastructure such as canals, reservoirs, and pipelines. These inter-basin water transfer (IBWT) projects are designed to improve irrigation capacity, support flood management, and boost water availability in areas prone to drought.
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On December 25, 2024, Prime Minister Narendra Modi inaugurated the Ken-Betwa Link Project (KBLP) in Khajuraho, Madhya Pradesh, marking the 100th birth anniversary of former PM Atal Bihari Vajpayee.
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The project’s primary goal is to irrigate the drought-prone Bundelkhand region by channeling excess water from the Ken River in Madhya Pradesh to the Betwa River in Uttar Pradesh. Both rivers eventually feed into the Yamuna River, and are classified as its right-bank tributaries.
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The Union Cabinet approved a budget of Rs 44,605 crore for the KBLP. It will be implemented in two phases:
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Phase I includes the construction of the Daudhan Dam, a 221-km-long Ken-Betwa Link Canal, and associated infrastructure.
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Phase II will involve the development of the Lower Orr Dam, the Bina Complex Project, and the Kotha Barrage.
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A section of the proposed infrastructure will pass through the Panna Tiger Reserve, raising environmental concerns due to the potential submergence of a part of this ecologically sensitive tiger habitat.
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Significantly, the KBLP is the first river interlinking project to be implemented under the National Perspective Plan, which was introduced in 1980. This larger plan includes 16 river links in the Peninsular region, and another 14 links proposed under the Himalayan component
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Yamuna river
Yamuna is a tributary of River Ganga. It has four main tributaries in the Himalayan region: Rishi Ganga, Hanuman Ganga, Tons, and Giri. In the plains, the main tributaries are Hindon, Chambal, Sind, Betwa and Ken. Tons is the largest tributary of Yamuna. Other small tributaries of the Yamuna River include the Uttangan, Sengar and the Rind.
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Right to Water as a Fundamental Right in India
The right to access clean and safe drinking water in India is considered part of the fundamental rights framework, particularly under Article 21 of the Constitution, which guarantees the Right to Life. This interpretation is derived from connected rights such as the right to food, right to health, and the right to a clean environment.
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In the landmark Narmada Bachao Andolan v. Union of India (2000) case, the Supreme Court emphasized that access to water is a basic human necessity, integral to the right to life. It also stated that the right to a healthy environment and sustainable development are essential components of human rights under Article 21.
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Similarly, in the State of Karnataka v. State of Andhra Pradesh (2000) case, the Court reiterated that the right to water is part and parcel of the right to life, thus making it a fundamental right
Directive Principles Related to Water and Environment
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Article 39(b) under the Directive Principles of State Policy directs the State to ensure that material resources, including water, are equitably distributed to promote the common good.
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Article 48A calls upon the State to actively work towards the protection and enhancement of the environment, including forests and wildlife, which indirectly contributes to water conservation
Environmental Duties of Citizens
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Article 51A(g), which falls under Fundamental Duties, obligates every citizen to safeguard and improve the natural environment, specifically mentioning rivers, lakes, forests, and wildlife. It also encourages compassion for living beings
Legal Provisions for Water Dispute Resolution
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Article 262 empowers Parliament to enact laws for resolving inter-State river water disputes. According to:
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Clause (1): Parliament can legislate for the adjudication of conflicts over the use, distribution, or control of inter-State river waters.
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Clause (2): Parliament may restrict judicial intervention, including that of the Supreme Court, in such matters.
This article served as the constitutional basis for the enactment of the Inter-State River Water Disputes Act, 1956, aimed at resolving such disputes
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Constitutional Powers over Water – State and Union Roles
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Entry 17 of the State List (List II), Seventh Schedule grants states the authority to legislate on water-related issues like irrigation, canals, drainage, and water supply, subject to the Union’s jurisdiction under Entry 56 of List I.
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Entry 56 of the Union List (List I), Seventh Schedule allows the central government to regulate and develop inter-State rivers and river valleys when declared to be in the public interest by Parliament
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For Prelims: Jal jeevan Mission, Directive Principles of State Policy
For Mains: GS II - Government Schemes on Water
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AYUSHMAN BHARAT
1. Context
2. About Ayushman Bharat Scheme
The Ayushman Bharat scheme, officially known as the Pradhan Mantri Jan Arogya Yojana (PM-JAY), is a flagship healthcare initiative launched by the Government of India in September 2018. It is aimed at providing financial protection and access to quality healthcare services to a significant portion of India's population, especially those who are economically disadvantaged and vulnerable.
The scheme has two main components:
- Health and Wellness Centers (HWCs): This component aims to transform the existing sub-centers and primary health centers into Health and Wellness Centers. These centers serve as the first point of contact for individuals seeking healthcare services. They offer a range of preventive, promotive, and basic healthcare services, including maternal and child health services, communicable disease management, and health education.
- Pradhan Mantri Jan Arogya Yojana (PM-JAY): PM-JAY is the larger component of the Ayushman Bharat scheme, focused on providing health insurance coverage to economically vulnerable families. It offers financial protection against catastrophic health expenses by covering the cost of hospitalization and certain medical procedures. PM-JAY provides coverage up to ₹5 lahks (per family per year) for secondary and tertiary care hospitalization. This includes coverage for a wide range of medical treatments, surgeries, and therapies.
3. Key features of PM-JAY include:
- Universal Coverage: PM-JAY covers over 10 crore (100 million) vulnerable and economically disadvantaged families, which is approximately 50 crore individuals, making it one of the largest government-funded healthcare insurance programs in the world.
- Cashless Transactions: Beneficiaries can avail of cashless and paperless healthcare services at any empanelled public or private hospital across the country.
- Portability: The scheme is portable, meaning beneficiaries can access services in any part of the country, irrespective of where they are registered under the scheme.
- No Cap on Family Size: The benefits under the scheme are not limited by family size or age, providing comprehensive coverage to all eligible family members.
- Priority for Women and Senior Citizens: The scheme gives priority to women, senior citizens, and individuals from marginalized communities.
- Empanelled Hospitals: The scheme has a network of public and private hospitals that have been empanelled to provide services under PM-JAY.
4. What is National Health Authority (NHA)?
- The National Health Authority (NHA) is the apex body responsible for the implementation and management of the Pradhan Mantri Jan Arogya Yojana (PM-JAY), also known as Ayushman Bharat, in India.
- It was established as an autonomous body by the Government of India in January 2019.
- The NHA plays a crucial role in the effective execution of the world's largest government-funded health insurance scheme.
Key functions and responsibilities of the National Health Authority include:
- Policy Formulation: The NHA is responsible for formulating policies and guidelines for the implementation of PM-JAY. It works to ensure that the scheme aligns with the broader objectives of universal health coverage and affordable healthcare for all.
- Enrollment and Beneficiary Identification: The NHA oversees the process of identifying and enrolling eligible beneficiaries for PM-JAY. This involves creating and maintaining a comprehensive database of eligible families to ensure accurate and efficient access to healthcare services.
- Empanelment of Hospitals: The NHA empanels both public and private hospitals to participate in the scheme. These hospitals are evaluated based on their infrastructure, facilities, and willingness to provide services under PM-JAY. Empanelled hospitals provide cashless and quality healthcare services to beneficiaries.
- Claims Management: The NHA is responsible for managing the claims process, which includes processing and reimbursing hospitals for the healthcare services provided to beneficiaries. This process ensures that beneficiaries can access medical treatment without facing financial barriers.
- Monitoring and Quality Assurance: The NHA monitors the implementation of PM-JAY to ensure that the services provided by empanelled hospitals meet quality standards. It conducts regular audits and assessments to maintain the quality of healthcare services.
- Technology and Data Management: The NHA employs technology extensively to manage beneficiary data, hospital empanelment, claims processing, and monitoring. This helps in creating an efficient and transparent system for the implementation of the scheme.
- Capacity Building: The NHA works on capacity-building initiatives for stakeholders involved in the implementation of PM-JAY. This includes training for healthcare providers, government officials, and other relevant personnel.
- Research and Innovation: The NHA focuses on research and innovation to improve the implementation of PM-JAY. It explores ways to enhance the scheme's reach, effectiveness, and impact.
5. Is National Health Authority a Statutory Body?
- The National Health Authority (NHA) is a statutory body. It was established by an Act of Parliament known as the " National Health Authority Act, 2019.
- The Act was passed to provide a legal framework for the creation and functioning of the NHA, which is responsible for the implementation of the Pradhan Mantri Jan Arogya Yojana (PM-JAY), also known as Ayushman Bharat.
- The National Health Authority Act, 2019, outlines the composition, Powers, functions, and responsibilities of the NHA.
- It grants the NHA the authority to manage and oversee the implementation of PM-JAY, which is one of the largest government-funded health insurance schemes in the world.
- The Act also provides the NHA with the necessary legal framework to carry out its role effectively, including policy formulation, enrollment of beneficiaries, empowerment of hospitals, claims processing, and quality assurance.
- As a statutory body, the National Health Authority operates within the legal framework provided by the Act and has the authority to make decisions, issue guidelines, and implement policies related to the functioning of PM-JAY.
- This legal status ensures that the NHA has the necessary autonomy and powers to carry out its responsibilities in the implementation of the healthcare scheme.
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For Prelims: Ayushman Bharat, Pradhan Mantri Jan Aarogya Yojana (PMJAY), the Comptroller and Auditor General of India (CAG), Health and Wellness Centers (HWCs), National Health Authority (NHA).
For Mains: 1. Discuss the significance, achievements, and challenges of the Ayushman Bharat scheme in the context of achieving universal health coverage in India. (250 Words).
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Previous year Question
1. With reference to Ayushman Bharat Digital Mission, consider the following statements: (UPSC 2022)
1. Private and public hospitals must adopt it.
2. As it aims to achieve universal health coverage, every citizen of India should be part of it ultimately.
3. It has seamless portability across the country.
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
Answer: B
2. With reference to 'Ayushman Bharat Yojana' which of the following statement(s) is/are correct? (UPPSC 2020)
1. This Yojana provides free health insurance of Rs. 5 lahks per person.
2. The expenses incurred in this Scheme (Yojana) is shared between the Centre and State in a 60:40 ratio.
Select the correct answer from the codes given below.
A. 1 only
B. 2 only
C. Both 1 and 2
D. Neither 1 nor 2
Answer: B
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MONETARY POLICY COMMITTEE (MPC)
Monetary policy refers to the actions and strategies undertaken by a country's central bank to control and regulate the supply of money, credit availability, and interest rates in an economy. Its primary goal is to achieve specific economic objectives, such as price stability, full employment, and sustainable economic growth.
Central banks use various tools to implement monetary policy, including:
Interest Rates: Adjusting the interest rates at which banks lend to each other (known as the federal funds rate in the United States) influences borrowing and spending in the economy.
Open Market Operations: Buying or selling government securities in the open market to regulate the money supply. When a central bank buys securities, it injects money into the system, and when it sells them, it reduces the money supply.
Reserve Requirements: Mandating the amount of reserves banks must hold, affecting their ability to lend money.
By influencing the availability and cost of money, central banks aim to stabilize prices, control inflation, encourage or discourage borrowing and spending, and promote economic growth. However, the effectiveness of monetary policy can be influenced by various factors such as global economic conditions, fiscal policies, and market expectations.
3.What is the primary objective of the monetary policy?
The primary objective of monetary policy typically revolves around maintaining price stability or controlling inflation within an economy. Central banks often set an inflation target, aiming to keep it at a moderate and steady level. Stable prices help in fostering confidence in the economy, encouraging investment, and ensuring that the value of money remains relatively constant over time.
However, while controlling inflation is often the primary goal, central banks might also consider other objectives, such as:
Full Employment: Some central banks have a secondary objective of supporting maximum employment or reducing unemployment rates.
Economic Growth: Encouraging sustainable economic growth by managing interest rates and credit availability to stimulate or cool down economic activity.
Exchange Rate Stability: In some cases, maintaining stable exchange rates might be an important consideration, especially for countries with open economies heavily reliant on international trade.
These additional objectives can vary depending on the economic conditions, priorities of the government, and the central bank's mandate. Nonetheless, ensuring price stability is typically the fundamental goal of most monetary policies, as it forms the basis for a healthy and growing economy.
4. Monetary Policy Committee (MPC)
- In line with the amended RBI Act, 1934, Section 45ZB grants authority to the central government to establish a six-member Monetary Policy Committee (MPC) responsible for determining the policy interest rate aimed at achieving the inflation target.
- The inaugural MPC was formed on September 29, 2016. Section 45ZB stipulates that "the Monetary Policy Committee will ascertain the Policy Rate necessary to meet the inflation target" and that "the decisions made by the Monetary Policy Committee will be obligatory for the Bank."
- According to Section 45ZB, the MPC comprises the RBI Governor as the ex officio chairperson, the Deputy Governor overseeing monetary policy, a Bank official nominated by the Central Board, and three individuals appointed by the central government.
- The individuals chosen by the central government must possess "capabilities, ethical standing, expertise, and experience in economics, banking, finance, or monetary policy" (Section 45ZC)
- The Monetary Policy Committee (MPC) plays a crucial role in managing inflation through its decisions on the policy interest rate.
- When inflation is too high, the MPC might decide to increase the policy interest rate. This action aims to make borrowing more expensive, which can reduce spending and investment in the economy.
- As a result, it could help decrease demand for goods and services, potentially curbing inflation.
- Conversely, when inflation is too low or the economy needs a boost, the MPC might decrease the policy interest rate.
- This move makes borrowing cheaper, encouraging businesses and individuals to spend and invest more, thus stimulating economic activity and potentially raising inflation closer to the target level.
- The MPC's goal is to use the policy interest rate as a tool to steer inflation toward a target set by the government or central bank.
- By monitoring economic indicators and assessing the current and expected inflation levels, the MPC makes informed decisions to maintain price stability within the economy
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For Prelims: Economic and Social Development
For Mains: General Studies III: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.
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Previous Year Questions
1. Consider the following statements: (UPSC 2021)
1. The Governor of the Reserve Bank of India (RBI) is appointed by the Central Government.
2. Certain provisions in the Constitution of India give the Central Government the right to issue directions to the RBI in the public interest.
3. The Governor of the RBI draws his natural power from the RBI Act.
Which of the above statements is/are correct?
A. 1 and 2 only B. 2 and 3 only C. 1 and 3 only D. 1, 2 and 3
Answer: C
2. Concerning the Indian economy, consider the following: (UPSC 2015)
Which of the above is/are component(s) of Monetary Policy? (a) 1 only (b) 2, 3 and 4 (c) 1 and 2 (d) 1, 3 and 4 Answer: C 3. An increase in Bank Rate generally indicates: (UPSC 2013) (a) Market rate of interest is likely to fall. (b) Central bank is no longer making loans to commercial banks. (c) Central bank is following an easy money policy. (d) Central bank is following a tight money policy. Answer: (d) 4. Which of the following statements is/are correct regarding the Monetary Policy Committee (MPC)? (UPSC 2017) 1. It decides the RBI's benchmark interest rates. 2. It is a 12-member body including the Governor of RBI and is reconstituted every year. 3. It functions under the chairmanship of the Union Finance Minister. Select the correct answer using the code given below: A. 1 only B. 1 and 2 only C. 3 only D. 2 and 3 only Answer: A |
MINIMUM SUPPORT PRICE
1. Context
The Union Cabinet has approved a ₹69 per quintal increase in the minimum support price (MSP) for paddy for the upcoming Kharif 2025–26 marketing season, taking the MSP for paddy (common variety) to ₹2,369 per quintal
2. What is the Minimum Support Price (MSP)?
- MSP is the minimum price a farmer must pay for their food grains as guaranteed by the government. They are recommended by the Commission for Agricultural Costs and Prices (CACP) and approved by the Cabinet Committee on Economic Affairs.
- The CACP submits its recommendations to the government in the form of Price Policy Reports every year.
- After considering the report and views of the state governments and also keeping in view the overall demand and supply situation in the country, the central government takes the final decision.
- The Food Corporation of India (FCI) is the nodal agency for procurement along with State agencies, at the beginning of the sowing season.
- 7 cereals (paddy, wheat, maize, bajra, jowar, ragi, and barley)
- 5 pulses (chana, tur/arhar, moong, urad, and Masur)
- 7 oilseeds (rapeseed-mustard, groundnut, soya bean, sunflower, sesamum, safflower, and Enigerseed) and
- 4 commercial crops (sugarcane, cotton, copra, and raw jute).
3. How MSP is Calculated?
- MSP, presently, is based on a formula of 1.5 times the production costs.
- The CACP projects three kinds of production costs for every crop, both at state and all-India average levels.
- A2 covers all paid-out costs directly incurred by the farmer — in cash and kind — on seeds, fertilizers, pesticides, hired labour, leased-in land, fuel, irrigation, etc.
- A2+FL includes A2 plus an imputed value of unpaid family labour.
- C2: Estimated land rent and the cost of interest on the money taken for farming are added to A2 and FL.
- Farm unions are demanding that a comprehensive cost calculation (C2) must also include capital assets and the rentals and interest forgone on owned land, as recommended by the National Commission for Farmers.
4. The issue with the calculation of MSP
- To calculate MSP, the government uses A2+FL cost. The criticism of A2+FL is that it doesn’t cover all costs and that a more representative measure, C2, needs to be used.
- For example, in the 2017-18 rabi season, CACP data shows that C2 for wheat was 54% higher than A2+FL.
- The Swaminathan Commission also stated that the MSP should be based on the comprehensive cost of production, which is the C2 method.
5. Key Points about the Farmer's Demand
- After the recent decision to repeal three contentious farm laws, protesting farmer unions are now pressing for their demand of the legalization of the Minimum Support Price (MSP).
- They want a legal guarantee for the MSP, which at present is just an indicative or a desired price.
- Legalising MSPs would put the government under a legal obligation to buy every grain of the crops for which MSPs have been announced.
- At present, the PM has announced the formation of a committee to make MSP more transparent, as well as to change crop patterns and to promote zero-budget agriculture which would reduce the cost of production.
- The entire issue of enforcing MSP legally is a tricky, complicated, and multidimensional one, involving lots of factors.
- Core demand: MSP based on a C2+50% formula should be made a legal entitlement for all agricultural produce. This would mean a 34% increase in the latest MSP for paddy and a 13% increase for wheat. MSP should also be extended to fruit and vegetable farmers who have been excluded from benefits so far.
6. The rationale behind the demand for legislation of MSP
- Farmers receive less than MSP: In most crops grown across much of India, the prices received by farmers, especially during harvest time, are well below the officially declared MSPs. And since MSPs have no statutory backing, they cannot demand these as a matter of right.
- Limited procurement by the Govt: Also, the actual procurement at MSP by the Govt. is confined to only about a third of wheat and rice crops (of which half is bought in Punjab and Haryana alone), and 10%-20% of select pulses and oilseeds. According to the Shanta Kumar Committee’s 2015 report, only 6% of the farm households sell wheat and rice to the government at the MSP rates.
7. Challenges associated with MSP
- Protest by Farmers: Farm unions have been protesting for more than six months on Delhi's outskirts, demanding legislation to guarantee MSP for all farmers for all crops and a repeal of three contentious farm reform laws.
- MSP and Inflation: When announcing the MSP, inflation should be taken into account. But often the price is not increased up to the mark. For example, this time MSP for Maize has not even considered inflation then how it will benefit farmers! Also, frequent increases in the MSPs can lead to inflation too.
- High Input Costs: The input costs have been rising faster than sale prices, squeezing the meagre income of the small farmers and driving them into debt.
- Lack of Mechanism: No mechanism guarantees that every farmer can get at least the MSP as the floor price in the market. So proper mechanisms need to be fixed for all times to come.
- Restriction in Europe: Even after producing surplus grains, every year a huge portion of these grains gets rotten. This is due to the restrictions under WTO norms, that grain stocks with the FCI (being heavily subsidized due to MSP) cannot be exported.
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For Prelims: Minimum Support Price, Rabi Crops, WTO, Commission for Agricultural Costs and Prices (CACP), Cabinet Committee on Economic Affairs, Food Corporation of India
For Mains:
1. Explain the concept of Minimum Support Price (MSP) in India. How is MSP determined, and what is its role in ensuring fair prices for agricultural produce? (250 Words)
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Previous Year Questions
1. Consider the following statements: (UPSC CSE 2020)
1. In the case of all cereals, pulses, and oil seeds, the procurement at Minimum Support Price (MSP) is unlimited in any State/UT of India.
2. In the case of cereals and pulses, the MSP is fixed in any State/UT at a level to which the market price will never rise.
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: D
2. Which of the following factors/policies were affecting the price of rice in India in the recent past? (UPSC CSE, 2020)
(1) Minimum Support Price (2) Government’s trading (3) Government’s stockpiling (4) Consumer subsidies Select the correct answer using the code given below: (a) 1, 2 and 4 only (b) 1, 3 and 4 only (c) 2 and 3 only (d) 1, 2, 3 and 4 Answer: D
3. In India, which of the following can be considered as public investment in agriculture? (UPSC GS1, 2020)
(1) Fixing Minimum Support Price for agricultural produce of all crops (2) Computerization of Primary Agricultural Credit Societies (3) Social Capital development (4) Free electricity supply to farmers (5) Waiver of agricultural loans by the banking system (6) Setting up of cold storage facilities by the governments. In India, which of the following can be considered as public investment in agriculture? Select the correct answer using the code given below: (a) 1, 2 and 5 only (b) 1, 3, 4 and 5 only (c) 2, 3 and 6 only (d) 1, 2, 3, 4, 5 and 6 Answer: C
4. The Fair and Remunerative Price (FRP) of sugarcane is approved by the (UPSC CSE, 2015)
(a) Cabinet Committee on Economic Affairs (b) Commission for Agricultural Costs and Prices (c) Directorate of Marketing and Inspection, Ministry of Agriculture (d) Agricultural Produce Market Committee Answer: A
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