CURRENT AFFAIRS - 7 Dec 2024

Key Economic Concepts from RBI's December 2024 Policy

Monetary Policy Instruments
• Repo Rate: The interest rate at which RBI lends money to commercial
banks, currently maintained at 6.5% India-Bangladesh Relations Amid Tensions
• Cash Reserve Ratio (CRR): The mandatory percentage of deposits banks Context
must keep with RBI, reduced from 4.5% to 4% • Vikram Misri, Foreign Secretary of India, to visit Dhaka on December 9,
• Standing Deposit Facility (SDF): Remains at 6.25% marking India’s first high-level diplomatic outreach to Bangladesh after
• Marginal Standing Facility (MSF): Maintained at 6.75% the fall of the Sheikh Hasina-led regime.
Recent Developments in Bilateral Ties
• War of Words: Escalation of tensions due to attacks on the Hindu
minority in Bangladesh.
• Diplomatic Actions:
○ Bangladesh summoned India’s Assistant High Commissioner in
Agartala after vandalism at their mission in Tripura.
○ Bangladesh Deputy High Commissioner in Kolkata, Ashrafur
Rahman, called back for consultations amid protests outside the
Kolkata mission.
• Suspension of Services: Bangladesh suspended visa and consular services
at Agartala citing security concerns.
Trigger Events
• Arrest of Vaishnav monk Chinmoy Das on November 25 in Chittagong
amid communal clashes.
Economic Indicators • India expressed “deep concern” over denial of bail and demanded
• Inflation transparent legal processes.
○ Current retail inflation at 6.21% (14-month high) Key Issues
○ RBI's mandated inflation target: 4% with ±2% flexibility • Communal tensions affecting the minority Hindu community in
○ Food inflation remains a major concern for Q3 FY2024-25 Bangladesh.
• Growth Metrics • Impact of domestic political changes in Bangladesh on India-Bangladesh
○ GDP growth slowed to 5.4% in Q2 FY25 relations.
○ FY25 growth forecast revised down to 6.6% from 7.2% • Increasing protests and security challenges for diplomatic missions.
○ Growth slowdown attributed to weak manufacturing and mining Diplomatic Expectations
sectors • Structured dialogue during Vikram Misri’s visit to address tensions.
Policy Actions and Their Impact • Fair and transparent legal proceedings in Bangladesh.
• Liquidity Management • Resolution of visa service suspension and security issues.
○ CRR reduction will release ₹1.16 lakh crore into banking system Strategic Significance
○ Aims to counter liquidity tightening due to: • India-Bangladesh relations are critical for regional stability and addressing
§ Advance tax payments cross-border issues.
§ GST outflows • Importance of maintaining strong bilateral ties amid changing political
§ Quarter-end credit demand landscapes in Bangladesh.
• Banking Sector Effects
○ Banks expected to have more lendable resources
○ MCLR increased by 170 basis points (May 2022 to October 2024)
○ Banks might pass CRR cut benefits to borrowers
Economic Challenges
• Persistent high inflation affecting consumer spending power
• Adverse weather events impacting food prices
• Geopolitical uncertainties affecting supply chains
• Balance between inflation control and growth support

Cyclone Relief in Tamil Nadu MGNREGS Deletions Impacting Rural Workers

Context Context
• ₹944.80 crore released from State Disaster Response Fund (SDRF) to aid • Reports of workers being deleted from Mahatma Gandhi National Rural
Cyclone Fengal-affected districts in Tamil Nadu. Employment Guarantee Scheme (MGNREGS) due to Aadhaar-related
Key Details issues.
• Funds and Assessment: Issues
○ Interim assistance requested: ₹2,000 crore. • Aadhaar Linking and Deletions:
○ ₹6,675 crore sought for relief and restoration. ○ Workers’ names deleted as Aadhaar-based payment systems (ABPS)
• Affected Areas: Survey teams to visit Villupuram, Cuddalore, and other became mandatory.
districts. ○ Matching Aadhaar details with job cards and bank accounts has led
• Government Actions: to widespread exclusions.
○ Presentation made to inter-ministerial team. • Delayed Wages and Connectivity Problems:
○ Relief measures prioritized for affected families. ○ App-based attendance systems fail in areas with poor connectivity,
Significance resulting in no payments.
• Importance of disaster preparedness and quick fund allocation. • Impact on Livelihood:
• Role of SDRF and NDRF in relief and restoration. ○ Workers struggle for alternative jobs; many dependent on
MGNREGS wages.
• Protests:
○ NREGA Sangharsh Morcha demands rollback of Aadhaar mandates,
improved fund allocation, and solutions for job card deletions.
Way Forward
Karnataka Government Relaxes Norms for Minority Tags • Address system inefficiencies.
Context • Ensure inclusive digitization.
• Karnataka government scraps the minimum student criterion for granting • Revise Aadhaar-seeding requirements.
minority status to institutions.
Key Decisions
• Norms Relaxed:
○ Earlier: 50% students needed to belong to the minority community
for the institution to retain its status.
○ Now: Norm removed, enabling flexibility for institutions. Plea to Reduce Water Level of Mullaperiyar Dam
• Cabinet Rationale: Context
○ Christian, Jain, Sikh, and Parsi institutions faced challenges meeting • Supreme Court to hear a plea in January 2024 to reduce Mullaperiyar
the previous criteria. Dam’s water level from 142 ft to 120 ft, citing safety concerns.
○ Change aligns with Article 30 and National Minority Commission Key Issues
recommendations. • Wayanad Landslides: Recent landslides claimed over 220 lives, raising
• Higher Education Boost: concerns about the dam’s safety.
○ ₹1,750 crore loan approved from the World Bank to improve higher • Dam Breach Fears:
education infrastructure in Karnataka. ○ Potential risk to 5 million people in Kerala.
Implications ○ Likely impact on districts of Idukki, Ernakulam, Alappuzha, and
• Increased accessibility to non-minority students. Kottayam.
• Strengthened education system with improved funding and infrastructure. • Petitioner’s Argument:
○ The dam, built in 1895, has exceeded its lifespan of 50 years.
○ Two earlier judgments (2006, 2014) declared the dam “eternally
safe.”
Significance
• Highlights the importance of balancing infrastructure safety with disaster
preparedness.

European Space Agency's Support for Gaganyaan Mission

Context
• ISRO and ESA signed a Technical Implementing Plan (TIP) for ground
tracking of Gaganyaan missions.
Key Details
• Agreement Objectives: Ground station support for data flow and
communication continuity during orbital module operations.
• Gaganyaan Mission Overview:
Tribal Cultural Representation ○ Demonstrates human spaceflight capabilities.
Context ○ Aims to send a three-member crew for a three-day mission at 400
• Tribal women performed Dhimsa, a folk dance of Andhra Pradesh, at the km orbit.
All India Public Bus Transport Athletic Meet in Visakhapatnam. • Significance of Partnership:
Key Points ○ Builds on past ISRO-ESA collaborations.
• Cultural Heritage: Dhimsa is a vibrant tribal dance symbolizing community ○ Enhances technological reliability for India’s first crewed space
bonding and celebration. mission.
• Representation: Showcases India’s diverse cultural identity at national Relevance
events. • Strengthens international cooperation in space technology.
Relevance • Marks India’s strides in advancing human space exploration.
• Promotes tribal art and integration into mainstream platforms.

Nicobarese Ancestral Connection with Austroasiatic Populations

Context
Context • Genetic research reveals a significant connection between the Nicobarese
• Historical epidemics like the 1896 Bombay plague offer insights into public and Austroasiatic populations in South and Southeast Asia.
health policy. Findings:
Key Lessons • Settlement in the Nicobar region about 5,000 years ago.
• Colonial Response: • Affinity with the ‘Htin Mal’ population of Southeast Asia, who speak an
○ Focused on policing and surveillance over public health Austroasiatic language.
infrastructure. Research Scope:
○ Introduced measures like inspections and quarantine but lacked • Study included 1,559 individuals from South and Southeast Asia.
empathy. Significance:
• Modern Implications: • Highlights genetic and cultural diversity.
○ Importance of transparency and participatory health measures. • Provides insights into the ancient distribution of Austroasiatic heritage.
○ Avoiding coercion and prioritizing individual rights in public health.

Reviving the Manufacturing Sector

Context
• India’s manufacturing sector has rebounded, driven by the Production Silicosis in Mine Workers
Linked Incentive (PLI) scheme. Context
Key Details • Silicosis, a lung disease caused by prolonged exposure to silica dust,
• Achievements: affects millions of mine workers.
○ Manufacturing output growth: 21.5%. Key Issues
○ Sectors like electronics, textiles, and chemicals benefited from PLI. • Health Hazards: Risk is chronic and exacerbated by poor workplace safety
• Challenges: practices.
○ High input costs and global disruptions affect competitiveness. • Policy Concerns:
Way Forward: ○ National Green Tribunal (NGT) drafted guidelines for silica mining.
• Promote MSMEs and female participation. ○ Occupational Safety, Health, and Working Conditions Code 2020
• Focus on industrial diversification and infrastructure development. mandates employer accountability.
• Recommendations: Effective health monitoring and enforcement of
safety regulations.

Ashtalakshmi Mahotsav and Northeast Development

Context
• PM Narendra Modi inaugurated the Ashtalakshmi Mahotsav, celebrating
Context the cultural diversity of northeastern India.
• The Gyanvapi mosque committee has opposed petitions challenging the Key Points
constitutional validity of the Places of Worship (Special Provisions) Act, • Focus:
1991. ○ Promoting investment and showcasing the potential of
Key Points northeastern states.
• Provisions of the Act: ○ Highlighting traditional arts, crafts, and culture.
○ Preserves the character of all religious places of worship as they • Significance:
existed on Independence Day (August 15, 1947). ○ Boosting economic opportunities in the region.
• Arguments Against the Petitions: ○ Emphasizing India's shift towards integrating the northeast into the
○ Claims based on actions of historical rulers cannot form a growth story.
constitutional challenge.
○ Invalidating the Act could lead to further communal disputes.
• Relevance:
○ Act considered a legislative tool for maintaining communal harmony.

J&K Tourism and World Bank Collaboration

Context Context
• EPFO received the International Social Security Association’s Good • The Centre, in collaboration with the World Bank, plans to develop four
Practice Award for Asia and Pacific. new tourist destinations in Jammu and Kashmir.
Key Points Key Details
• Award Recognition: • Planned Destinations:
○ Efficient communication through Nidhi Aapke Nikat, multilingual ○ Kokernag (Anantnag)
call centers, and pension outreach. ○ Baradari (Reasi)
○ E-proceedings for resolving employer dues. ○ Bhaderwah (Doda)
• Significance: ○ Doodhpathri (Budgam)
○ Promotes transparency and efficiency in social security services. • Objectives:
○ Recognized as a model for innovation in employee welfare. ○ Promote eco-tourism and handicrafts.
○ Enhance tourist infrastructure with sustainable practices.
• Tourism Statistics:
○ J&K recorded 1.2 million tourist arrivals in the first half of 2024.

Context
• RBI Governor Shaktikanta Das clarified that India has no plans to de-
dollarize its economy or adopt a BRICS common currency.
Key Points
• BRICS Currency:
○ Proposed by a BRICS member; no concrete decision taken.
○ Challenging due to geographical and economic diversity within RBI’s MuleHunter for Digital Fraud Prevention
BRICS. Context
• Focus on Trade Risk Mitigation: Agreements for local currency- • RBI launched MuleHunter, an AI/ML tool, to tackle digital fraud involving
denominated trade aim to reduce dependency on the U.S. dollar. mule accounts.
• Concerns: Risks include retaliatory tariffs (e.g., Trump's 100% tariff threat) Key Details
and currency devaluation by other nations. • Technology:
○ Centralized infrastructure leveraging data from banks and payment
operators.
○ Trained AI for identifying fraudulent accounts.
• Purpose:
○ Enhance fraud detection efficiency.
RBI Podcast Initiative
○ Address the rising volume of digital frauds.
Context
• RBI introduces podcasts to make financial communication more
accessible, especially to younger audiences.
Key Highlights
• Objective: Widen outreach and improve public understanding of banking
and financial regulations.
• Significance: Modernizes RBI's communication strategy.
Balance Between Growth and Inflation: RBI
Context
• RBI focuses on managing inflation and restoring growth balance amidst
global economic uncertainties.
Key Observations
• Inflation Trends:
○ Inflation spikes due to factors like weather and supply chain issues.
○ Forecasts for FY25 growth revised to 6.7%-7.2%.
U.S.-Backed Syrian Kurds Seize Deir el-Zor • Liquidity Conditions: Monitoring excess liquidity to maintain stability in
Context financial markets.
• U.S.-backed Syrian Democratic Forces (SDF), led by Kurdish fighters, • Monetary Policy Focus: Balancing inflation control with economic growth.
captured the eastern Syrian city of Deir el-Zor.
Key Points
• Strategic Importance:
○ Third city to fall out of President Bashar al-Assad's control in a week.
• Geopolitical Implications:
○ Highlights the continued role of the U.S. in supporting anti-Assad
forces.
○ Raises tensions in the region amid ongoing civil war dynamics.
Iran’s Uranium Enrichment Expansion
Context
• Iran plans to significantly increase uranium enrichment at the Fordo plant,
according to the International Atomic Energy Agency (IAEA).
Key Details
• Uranium Enrichment: Increased to 60%, sparking concerns over nuclear
proliferation.
• Global Implications: May escalate tensions with Western nations amid
Context fragile nuclear deal negotiations.
• Islamist militants captured towns near Homs, Syria’s third-largest city.
Key Details
• Strategic Location: Homs lies at a crucial intersection between Damascus
and Syria’s coastal provinces.
• Humanitarian Impact: Thousands flee due to the looming insurgent
Context
assault on Homs.
• A synagogue in Melbourne was targeted by arsonists, raising concerns
• Significance: Losing Homs would be a major blow to Assad’s regime, as it
over anti-Semitic incidents.
connects critical regions.
Key Points
• Global Reaction: Israeli PM Benjamin Netanyahu linked the attack to anti-
Israel sentiment in Australia.
• Security Concerns: Reflects growing challenges in addressing hate crimes
and religious intolerance globally.