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DAILY NEWS ANALYSIS | 10 APRIL, 2024

Expansion of UPI Services: Now Enabling Cash Deposits        

UPSC CSE Mains Question     


 Why in the News?  

  • The Reserve Bank of India (RBI) has announced plans to introduce the Unified Payment Interface (UPI) for cash deposits, expanding the versatility and convenience of UPI. This move is part of a series of developmental and regulatory updates aimed at enhancing financial services and investor participation in India.

Background  

  • UPI has revolutionized digital payments in India, providing a seamless, real-time payment system that enables inter-bank peer-to-peer and person-to-merchant transactions. Recognizing its popularity and the convenience it offers, the RBI has decided to extend its utility to include cash deposit services.

Key Points of the News

  1. Extension of UPI Services:
    • The decision to enable UPI for cash deposit facilities marks a significant enhancement in the UPI ecosystem, making it even more integral to India’s digital finance landscape.
  2. Operational Instructions:
    • The RBI’s forthcoming operational instructions for implementing UPI-based cash deposit facilities are anticipated to detail the procedural aspects and ensure a smooth rollout.
  3. Investment in Green Bonds:
    • By allowing foreign investors in IFSC to invest in Sovereign Green Bonds, the RBI is encouraging global participation in India’s sustainable development efforts.
  4. Retail Direct Scheme Mobile App:
    • The introduction of a mobile app for the RBI’s Retail Direct scheme aims to further democratize investment in government securities, making it more accessible to individual investors.

Important Terms Meaning

  1. UPI (Unified Payment Interface):
    • A real-time payment system developed by the National Payments Corporation of India that facilitates inter-bank transactions.
  2. CDMs (Cash Deposit Machines):
    • Automated machines that allow customers to deposit cash directly into their bank accountswithout going through bank tellers.
  3. Sovereign Green Bonds (SGrBs):
    • Bonds issued by the government to finance environmental and climate-related projects.
  4. IFSC (International Financial Services Centre):
    • Special zones in India that are intended to provide financial services to non-residents and residents, to the extent permissible under current regulations, in foreign currencies.
  5. FPIs (Foreign Portfolio Investors):
    • Investors who invest in financial assets in a country outside of their own.

Way Forward

  • The implementation of these initiatives requires robust infrastructure, clear guidelines, and awareness campaigns to ensure widespread adoption and utilization. Continuous monitoring and feedback mechanisms will be crucial to address any challenges that arise during the implementation phase.


UPSC CSE Prelims Question

1. What is the primary purpose of introducing UPI for cash deposits according to the RBI?
a. To replace traditional banking methods
b. To facilitate card-less cash withdrawals at ATMs
c. To enhance customer convenience and reduce the cash-handling load on banks
d. To eliminate the use of cash in the economy
Answer: c. To enhance customer convenience and reduce the cash-handling load on banks

2. Which of the following statements is true regarding the RBI's recent initiatives?
a. UPI will be replaced by a new digital payment system
b. Only domestic investors can invest in Sovereign Green Bonds
c. RBI plans to introduce a mobile app for its Retail Direct scheme
d. Foreign Portfolio Investors are not allowed to invest in government securities
Answer: c. RBI plans to introduce a mobile app for its Retail Direct scheme

IMF to Revise World Economic Outlook, Separate from India’s 8% Growth Projection                

UPSC CSE Mains Question    

Why in the News?    

  • The International Monetary Fund (IMF) has clarified that the optimistic growth projection of 8% for India till 2047, made by Krishnamurthy Subramanian, does not reflect the official stance of the IMF. The statement was made by Subramanian in his capacity as India’s representative to the IMF, not as an expression of the IMF’s views.      

Background

  • Krishnamurthy Subramanian, Executive Director at the IMF and representing India, recently projected an 8% growth rate for India continuing until 2047. This projection was based on the assumption that India would intensify its reform efforts and continue the good policies implemented over the last decade. However, the IMF has distanced itself from these remarks, emphasizing the distinction between the views of its staff and those of representatives from member countries.

Key Points of the News

  1. Clarification from the IMF:
    • The IMF has clarified that the views expressed by Krishnamurthy Subramanian were his own and not those of the IMF, highlighting the institutional distinction between country representatives and IMF staff.
  2. Projection Basis:
    • Subramanian’s optimistic projection for India’s growth is predicated on the continuation and intensification of reforms and policies that have been implemented in the past decade.
  3. IMF’s Official Stance:
    • The IMF’s official growth projections are a collective decision made by its Executive Board and staff, and any upcoming revisions to these projections will be included in the next World Economic Outlook report.

Important Terms Meaning

  1. IMF (International Monetary Fund):
    • An international organization that aims to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.
  2. Executive Board:
    • The body responsible for conducting the day-to-day business of the IMF, consisting of 24 Directors who represent member countries or groups of countries.   

Way Forward  

  • Given the dynamic nature of global economics, the IMF’s upcoming World Economic Outlook will be keenly anticipated for insights into official growth projections for India and how they compare with Subramanian’s optimistic outlook.  


UPSC CSE Prelims Question

1. Who at the IMF recently made a personal projection of an 8% growth rate for India till 2047?
a. Julie Kozack
b. Kristalina Georgieva
c. Krishnamurthy Subramanian
d. Gita Gopinath
Answer: c. Krishnamurthy Subramanian

2. Which of the following statements best describes the IMF's reaction to the 8% growth projection for India?
a. They confirmed it as their official projection.
b. They clarified that the projection was a personal view, not the IMF's.
c. They revised their growth projection for India to 8%.
d. They dismissed the projection as unrealistic.
Answer: b. They clarified that the projection was a personal view, not the IMF's.

ITC Infotech Platform Aims to Boost Income of 10 Million Farmers          

UPSC CSE Mains Question   

Why in the News?

  • ITC Infotech, a subsidiary of the ITC Group, has announced its ambitious goal to significantly enhance the incomes of 10 million farmers across India by 2030 through its innovative platform, ITC Metamarket for Advanced Agriculture and Rural Services (ITCMAARS).   

Background  

  • The initiative seeks to leverage the power of artificial intelligence (AI) and machine learning (ML) to deliver a comprehensive range of services aimed at empowering farmers. With a focus on farmer-producing organisations (FPOs), ITCMAARS aims to revolutionize traditional farming practices through digital transformation.  

Key Points of the News

  1. Scope of Impact:
    • ITCMAARS has already onboarded 1.5 million farmers and 1,500 FPOs across 10 states, demonstrating significant potential for scaling and impact.
  2. Income Enhancement:
    • Farmers associated with the platform have reported a 30-50% increase in income, underscoring the effectiveness of the interventions.
  3. Comprehensive Services:
    • The platform offers predictive weather and crop advisories, access to modern farming techniques, market linkages, precision farming technologies, and affordable formal credit, among other services.
  4. Phygital Ecosystem:
    • ITCMAARS represents a holistic phygital ecosystem that merges world-class digital and agricultural technologies to empower Indian farmers.

Important Terms Meaning

  1. ITCMAARS (ITC Metamarket for Advanced Agriculture and Rural Services):
    • An AI and ML-driven platform developed by ITC Infotech to offer various services for the empowerment of farmers.
  2. FPO (Farmer-Producing Organisation):
    • A collective of farmers, typically small-scale, that aims to improve access to markets and inputs, thereby enhancing their bargaining power and incomes.
  3. Phygital:
    • A blend of physical and digital experiences, aiming to take advantage of the best aspects of both to improve user engagement and outcomes.

Way Forward  

  • To achieve its ambitious targets, ITCMAARS will need to continue expanding its reach, enhancing its technology offerings, and strengthening partnerships with FPOs and other stakeholders in the agricultural ecosystem.   


UPSC CSE Prelims Question

1. What is the primary objective of the ITCMAARS platform developed by ITC Infotech?
a. To provide a digital marketplace for agricultural products
b. To enhance the income of 10 million farmers across India by 2030
c. To replace traditional farming methods with AI-driven techniques
d. To offer online education for farmers
Answer: b. To enhance the income of 10 million farmers across India by 2030

2. Which of the following best describes the term 'phygital' as used in the context of ITCMAARS?
a. A new type of digital currency for farmers
b. A blend of physical and digital experiences to improve agricultural outcomes
c. A digital phylogenetics tool for crop improvement
d. A physical toolkit with digital sensors for soil analysis

RBI’s Strategy on Inflation: Repo Rate Maintained at 6.50%           

UPSC CSE Mains Question     

 Why in the News?     

  • The Reserve Bank of India (RBI) has decided to maintain the policy repo rate at 6.50% amid concerns over high food prices, despite overall inflation showing signs of moderation. This decision marks the seventh consecutive time the rates have remained unchanged.  

Background

  • Amid fluctuating economic indicators, the RBI’s Monetary Policy Committee (MPC) has chosen to prioritize inflation alignment with its target, while still nurturing economic growth. This decision reflects the complex balance central banks must maintain between controlling inflation and fostering a conducive environment for economic expansion.

Key Points of the News

  1. Continued Focus on Inflation:
    • The MPC’s decision to keep the repo rate steady highlights its ongoing commitment to aligning inflation with its target over a durable period.
  2. Optimism Despite Challenges:
    • Despite high food prices, there is optimism regarding inflation control, supported by record rabi wheat production and the expectation of a normal monsoon, which are positive indicators for future price stability and agricultural output.
  3. Growth-Inflation Dynamics:
    • The RBI Governor noted that the dynamics between growth and inflation have been favorable since the last policy review, indicating a carefully managed approach to monetary policy.  

Important Terms Meaning

  1. Repo Rate:
    • The rate at which the central bank of a country (RBI, in the case of India) lends money to commercial banks in the event of any shortfall of funds. It is used by monetary authorities to control inflation.
  2. Liquidity Adjustment Facility (LAF):
    • A monetary policy tool used by the Reserve Bank of India to moderate short-term liquidity fluctuations and ensure that the banking system has sufficient liquidity.
  3. Monetary Policy Committee (MPC):
    • A committee of the RBI that meets regularly to decide on the policy interest rate in order to maintain price stability, while keeping in mind the objective of growth.
  4. Disinflation:
    • A decrease in the rate of inflation – a slowdown in the rate at which prices increase.
  5. Rabi and Kharif seasons:
    • In Indian agriculture, the rabi season corresponds to the winter crop season, and kharif corresponds to the monsoon crop season.

Way Forward  

  • The RBI’s future decisions will likely continue to be influenced by a range of economic indicators, including food prices, monsoon performance, and global economic conditions. Monitoring these factors will be crucial for aligning inflation with targets without stifling economic growth.


UPSC CSE Prelims Question

1. What is the primary reason for the RBI's decision to keep the repo rate unchanged at 6.50%?
a. To stimulate economic growth
b. Due to high food prices
c. To reduce the money supply in the economy
d. Because of a decrease in the inflation rate
Answer: b. Due to high food prices

2. What does the RBI hope to achieve by maintaining the current repo rate?
a. To immediately reduce inflation to the target level
b. To balance controlling inflation while supporting economic growth
c. To increase investment in the agricultural sector
d. To discourage borrowing by commercial banks
Answer: b. To balance controlling inflation while supporting economic growth

Editorial Analysis – 1 Parliaments Past, A Mirror to Changing Dynamics

  1. Context
    • This editorial provides an analytical overview of the functioning and priorities of the 17th Lok Sabha (2019-2024) of India, juxtaposing it with past Lok Sabhas to highlight evolving parliamentary dynamics. It discusses the trends in parliamentary questions directed at various ministries, shifts in ministerial focus, the impact of these changes on national priorities, and the use of parliamentary interventions like Zero Hour. The piece critically examines the opportunities and oversights in legislative engagement, accountability, and the facilitation of debate on crucial societal issues.
  2. Background
    • The 17th Lok Sabha, marking its end on an unusual Saturday session, prompts a reflection on the parliamentary performance and changing dynamics in India’s legislative system. The article brings to light the fluctuating nature of political engagement, particularly in the context of questioning within the Parliament. It delves into the distribution of parliamentary questions across different ministries, revealing shifts in focus towards health, agriculture, and education, while noting a decline in questions related to national security and finance.
  3. Important Terminology
    • Lok Sabha: The lower house of India’s bicameral Parliament, representing the people.
    • Rajya Sabha: The upper house of India’s Parliament, representing the states.
    • Zero Hour: A period during a parliamentary session where members can raise issues of importance without prior notice.
  4. In-Depth Analysis
    • Evolving Parliamentary Focus: The editorial underscores a significant shift in the focus areas of parliamentary questions, with health and agriculture gaining prominence over traditional areas like national security and finance. This shift reflects changing national priorities and challenges, including the impact of the COVID-19 pandemic.
    • Declining Parliamentary Engagement: There’s a noted decline in the engagement of MPs with the Prime Minister’s Office and in the number of questions directed at certain ministries, indicating a potential disinterest or a strategic shift in parliamentary scrutiny.
    • Interventions and Oversight: The editorial highlights the increasing reliance on Zero Hour for raising issues, contrasting it with the declining use of other interventions. This change suggests a preference for immediate, albeit limited, discussions over more comprehensive debates.
    • Missed Opportunities and Oversight: The piece criticizes the missed opportunities for debate on crucial issues like student suicides due to competitive exams, and the lack of accountability measures against misleading governmental remarks. These oversights are portrayed as missed chances for ensuring governmental accountability and addressing pressing societal concerns..
  5. Significance
    • The editorial serves as a mirror to the changing dynamics within India’s parliamentary system, highlighting how shifts in ministerial focus, parliamentary questioning, and intervention usage reflect broader societal and political changes. It raises important questions about parliamentary efficacy, accountability, and the role of legislative bodies in addressing the nation’s priorities and challenges.
  6. Concluding Thoughts
    • The article calls for a revitalized legislative engagement to ensure accountability, foster constructive debate, and enact policies that prioritize national welfare. It suggests that embracing a broader array of parliamentary interventions and focusing on missed opportunities could enhance the quality of legislative oversight and governmental accountability.
  7. Way Forward   
    • A call to action for lawmakers to leverage the full spectrum of parliamentary interventions available, ensuring a balanced and comprehensive approach to legislative debate and oversight. It advocates for a more proactive parliamentary stance on societal issues and governmental accountability, suggesting that such an approach is crucial for addressing the evolving needs and challenges of the nation.

Editorial Analysis – 2 There Will Be No Independent, Sovereign Palestine       

  1. Context         
    • In this editorial, Chinmaya R. Gharekhan offers a grim prognosis on the feasibility of establishing an independent, sovereign Palestinian state. Asserting a certain demise of the two-state solution, Gharekhan points to the recent surge in support for Hamas in the West Bank and the discreditation of the Palestinian Authority as key indicators that an independent Palestine, as envisioned, will not emerge. Furthermore, he speculates on the escalation of the Gaza war into a wider regional conflict, emphasizing the intricate interplay of domestic politics and international relations that exacerbates this situation.
  2. Background
    • Gharekhan’s analysis starts with the assertion that the notion of an independent Palestinian state coexisting peacefully with Israel is now beyond reach. This conclusion is based on the historical context of failed negotiations, the shifting political landscape post-October 7, 2023, and the growing popularity of Hamas over the Palestinian Authority. The author explains how the credibility and moderation of the Palestinian Authority have diminished, making Hamas the likely victor in any democratic elections, a scenario unacceptable to Israel.
  3. Important Terminology
    • Hamas: A Palestinian Islamic organization, with a military and a political wing, that governs the Gaza Strip and has been involved in various conflicts with Israel.
    • Palestinian Authority: A semi-autonomous body recognized internationally, governing parts of the West Bank and seen as a more moderate entity compared to Hamas.
  4. In-depth Analysis
    • Evolving Dynamics: The editorial highlights the complexities of Palestinian politics and the significant challenges facing the peace process, particularly due to Hamas’s strengthened position.
    • Israeli Security Concerns: The increased support for Hamas is viewed as a direct threat by Israel, influencing its willingness to engage in peace negotiations or entertain the idea of a Palestinian state.
    • Regional Implications: The potential for the conflict to escalate into a broader regional war involves various actors, including Hezbollah, Syria, Iran, and potentially Egypt, underlining the volatile nature of Middle Eastern geopolitics.
    • International Politics: Gharekhan points out how domestic political considerations in the United States influence its foreign policy decisions, specifically regarding the Israel-Palestine conflict, and how these considerations may lead to international involvement, including from Russia..
  5. Significance
    • This editorial underscores the critical junctures at which decisions made by Israel, Palestine, and international actors can pivot the region towards peace or further conflict. It serves as a stark reminder of the enduring complexities and geopolitical sensitivities that characterize the Israel-Palestine issue.
  6. Concluding Thoughts
    • Gharekhan’s analysis presents a somber view of the prospects for peace between Israel and Palestine, suggesting that the path to an independent Palestinian state is obstructed by insurmountable political and military challenges. The editorial calls attention to the broader implications of the conflict, urging a careful consideration of the potentially catastrophic consequences of its escalation.  
  7. Way Forward   
    • While Gharekhan does not offer a direct solution, the analysis implies a need for a revised approach to peace negotiations, one that realistically addresses the current political realities in both Israel and the Palestinian territories. It suggests the international community’s role in mediating a conflict that has far-reaching implications, advocating for a concerted effort to prevent the escalation into a wider regional war.
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