INSTA PT 2024 Exclusive Economy

INSTA PT 2024
EXCLUSIVE
ECONOMY
MAY 2023 – JANUARY 2024
INSTA PT 2024 EXCLUSIVE (ECONOMY)
NOTES
Table of Contents
Schemes / Government Initiatives ................................................................................ 4
1. DIGITAL INDIA LAND RECORDS MODERNIZATION PROGRAMME (DILRMP) .............................. 4
2. REMISSION OF DUTIES AND TAXES ON EXPORTED PRODUCTS (RODTEP) SCHEME ................... 5
3. LEAP AHEAD INITIATIVE .......................................................................................................... 5
4. TECHNOLOGY DEVELOPMENT BOARD (TDB) ........................................................................... 6
5. EXPORTER STATUS CERTIFICATES............................................................................................ 7
6. BIMA VAHAK .......................................................................................................................... 7
7. SAHAKAR 22 ........................................................................................................................... 7
8. ADVISORY BOARD ON BANK FRAUDS ...................................................................................... 8
9. RAIL-SEA-RAIL (RSR) INITIATIVE ............................................................................................... 8
10. STANDARD OPERATING PROCEDURE (SOP) BY CBIC ............................................................ 9
11. ADVANCE AUTHORISATION SCHEME................................................................................... 9
12. SPECIAL ASSISTANCE TO STATES FOR CAPITAL INVESTMENT 2023-24 SCHEME .................. 10
13. SAMARTH CAMPAIGN....................................................................................................... 11
14. LIBERALIZED REMITTANCE SCHEME (LRS).......................................................................... 11
15. CENTRE FOR PROCESSING ACCELERATED CORPORATE EXIT (C-PACE) ................................ 12
16. STARTUP INDIA SEED FUND SCHEME ................................................................................ 13
Indian Economy and Issues relating to planning, mobilization of resources, growth,

development and employment ................................................................................... 14
1. INCOME INEQUALITY ............................................................................................................ 14
2. INSOLVENCY AND BANKRUPTCY CODE (IBC).......................................................................... 14
3. IBBI TO FORM 'COMMON PANEL' OF INSOLVENCY PROFESSIONAL ........................................ 15
4. CROSS-BORDER INSOLVENCY ................................................................................................ 15
5. EMPLOYMENT IN INDIA ........................................................................................................ 16
6. WORKER’S PRODUCTIVITY .................................................................................................... 16
7. IREDA GETS UPGRADED ........................................................................................................ 16
8. PURPLE ECONOMY ............................................................................................................... 17
9. MICRO, SMALL AND MEDIUM ENTERPRISES [MSMES]........................................................... 18
10. GROSS DOMESTIC PRODUCT (GDP) ................................................................................... 19
11. GROSS FIXED CAPITAL FORMATION (GFCF) ....................................................................... 19
12. DEFLATION ....................................................................................................................... 20
13. INDIA’S CREATIVE ECONOMY ............................................................................................ 20
14. GIG ECONOMY ................................................................................................................. 21
15. GREEDFLATION................................................................................................................. 21
16. SNOWBALL EFFECT ........................................................................................................... 22
Banking Sector / Financial Sector ................................................................................ 23

1. VIRTUAL DIGITAL ASSET SERVICE PROVIDERS (VDA SPS) ........................................................ 23
2. GREEN FUNDS/DEPOSIT ....................................................................................................... 23
3. AADHAAR ENABLED PAYMENT SYSTEM (AEPS)...................................................................... 24
4. INDIAN STOCK MARKET ........................................................................................................ 25
5. FOREIGN PORTFOLIO INVESTORS (FPIS) ................................................................................ 25
6. DIRECT TAX TO GDP RATIO ................................................................................................... 26
7. PRIMARY AGRICULTURAL CREDIT SOCIETIES (PACS) IN INDIA ................................................ 26
8. CLOUD FACILITY FOR THE FINANCIAL SECTOR IN INDIA ......................................................... 28
9. EVERGREENING OF LOAN BY AIF ........................................................................................... 28
10. TOKENISATION ................................................................................................................. 29
11. 'UPI TAP AND PAY' ............................................................................................................ 30
12. ‘LIGHTWEIGHT’ PAYMENTS SYSTEM.................................................................................. 31
13. T+0, INSTANT SETTLEMENT CYCLE .................................................................................... 31
www.insightsonindia.com 1 InsightsIAS
NOTES
14. SEBI'S SCORES PLATFORM ................................................................................................ 32
15. CLEARING CORPORATIONS ............................................................................................... 32
16. FRONT-RUNNING ............................................................................................................. 33
17. DOMESTIC SYSTEMICALLY IMPORTANT BANKS .................................................................. 33
18. BUSINESS CORRESPONDENTS (BCS) .................................................................................. 34
19. INSURANCE SURETY BOND ............................................................................................... 34
20. SOVEREIGN GREEN BOND ................................................................................................. 35
21. ANGEL TAX ....................................................................................................................... 35
22. DIGITAL PUBLIC INFRASTRUCTURE (DPI) ........................................................................... 36
23. UPI QR CODE-CENTRAL BANK DIGITAL CURRENCY INTEROPERABILITY ............................... 37
24. INCREMENTAL CASH RESERVE RATIO ................................................................................ 37
25. SELF-REGULATORY ORGANISATION (SRO) FOR FINTECH ENTITIES...................................... 38
26. CRYPTOCURRENCY ........................................................................................................... 39
27. GRESHAM'S LAW .............................................................................................................. 39
28. WILFUL DEFAULTERS ........................................................................................................ 40
29. SOCIAL BONDS ................................................................................................................. 40
30. LISTING ON STOCK EXCHANGE .......................................................................................... 40
31. WORLDCOIN..................................................................................................................... 41
32. TIME-OF-DAY (TOD) TARIFF .............................................................................................. 41
33. INFRASTRUCTURE DEBT FUND-NBFCS (IDF-NBFCS) ........................................................... 42
34. GOODS AND SERVICES TAX (GST) ...................................................................................... 42
35. GST NETWORK (GSTN) ...................................................................................................... 43
36. TRADE RECEIVABLES DISCOUNTING SYSTEM (TREDS) PLATFORMS .................................... 43
37. VARIABLE RATE REVERSE REPO AUCTIONS (VRRRS) ........................................................... 44
38. TWIN-BALANCE SHEET PROBLEM...................................................................................... 45
39. NATIONAL ASSET RECONSTRUCTION COMPANY (NARCL) .................................................. 45
40. RBI’S SOPS TO BANKS FOR RUPEE TRADE .......................................................................... 45
41. PAYMENT SYSTEM OPERATORS (PSOS) ............................................................................. 46
42. URBAN CO-OPERATIVE BANKS .......................................................................................... 46
43. DEFAULT LOSS GUARANTEE (DLG)/ FIRST LOSS DEFAULT GUARANTEE (FLDG) ................... 47
44. RBI’S GOLD RESERVES ....................................................................................................... 48
45. ECL-BASED LOAN LOSS PROVISIONING NORMS ................................................................. 49
46. E-RUPI VOUCHERS ............................................................................................................ 49
47. RBI PAYOUT TO GOVERNMENT ......................................................................................... 50
48. LIBOR ............................................................................................................................... 51
External Sector ........................................................................................................... 52

1. REVERSE FLIP........................................................................................................................ 52
2. INDIA CLUB .......................................................................................................................... 52
3. TAX INSPECTORS WITHOUT BORDERS (TIWB) PROGRAM ...................................................... 52
4. SOVEREIGN CREDIT RATING .................................................................................................. 53
5. MOST FAVOURED NATION (MFN) ......................................................................................... 53
6. ANTI-TRUST LAW .................................................................................................................. 54
7. BASEL-III CAPITAL FRAMEWORK ........................................................................................... 54
8. INDIA’S PROTECTIONIST INDUSTRIAL POLICY ........................................................................ 55
9. RESTRICTIONS ON THE IMPORT OF ELECTRONIC DEVICES ..................................................... 56
10. IMF QUOTA REVIEW ......................................................................................................... 56
11. INTERNATIONALISATION OF RUPEE .................................................................................. 57
12. TAX CHALLENGES ARISING FROM THE DIGITALISATION OF THE ECONOMY ........................ 57
13. LOCAL CURRENCY SETTLEMENT SYSTEM (LCSS) ................................................................ 58
14. INDIA’S PREFERENTIAL SCHEME FOR LDCS ........................................................................ 59
15. US DEBT CEILING DEAL ..................................................................................................... 59
16. TAX HAVEN....................................................................................................................... 60
NOTES
Infrastructure: Energy, Ports, Roads, Airports, Railways etc. ........................................ 62
1. BHARAT TEX 2024 ................................................................................................................ 62
2. MODAL SHARE OF FREIGHT (CARGO) IN INDIA ...................................................................... 62
3. INDIA’S PORT SECTOR........................................................................................................... 64
4. CRUDE OIL BENCHMARK....................................................................................................... 64
5. MARKET COUPLING .............................................................................................................. 64
6. OIL RESERVES IN SALT CAVERNS ........................................................................................... 65
7. STEEL PRODUCTION IN INDIA ............................................................................................... 66
8. SCRAP STEEL ........................................................................................................................ 67
9. BUILD-OPERATE-TRANSFER (TOLL) MODEL ........................................................................... 67
Reports / Ranking / Committees / Awards / Events ..................................................... 69

1. MULTIDIMENSIONAL POVERTY INDEX (MPI) ......................................................................... 69
2. RECENT REPORTS IN NEWS ................................................................................................... 69
3. INDIA INFRASTRUCTURE REPORT 2023 ................................................................................. 70
4. INTERNATIONAL DEBT REPORT (IDR) .................................................................................... 70
5. GLOBAL BOND INDEX (GBI) ................................................................................................... 71
6. PERIODIC LABOUR FORCE SURVEY (PLFS) .............................................................................. 71
7. RBI’S STATE OF THE ECONOMY REPORT ................................................................................ 72
8. WORLD INVESTMENT REPORT .............................................................................................. 72
9. RBI'S DIGITAL PAYMENTS INDEX (RBI-DPI) ............................................................................. 73
10. NATIONAL TIME RELEASE STUDY (NTRS) 2023 REPORT ...................................................... 73
Miscellaneous............................................................................................................. 74
1. 2023 NOBEL PRIZE IN ECONOMICS ....................................................................................... 74
2. THE LEWIS MODEL IN ECONOMIC DEVELOPMENT ................................................................ 74
3. HALLMARKING ..................................................................................................................... 75
4. LAST NATURAL PERSON ABOVE EVERY PERSON CLAUSE ........................................................ 76
5. ROBERT LUCAS’ RATIONAL EXPECTATION THEORY ................................................................ 76
NOTES
Schemes / Government Initiatives
1. Digital India Land Records Modernization Programme (DILRMP)
Digitization of land records involves the conversion of physical land ownership documents and
records into digital formats.
Digital India Land Records Modernization Programme (DILRMP) was launched by the
Government of India in August 2008, initially named NLRMP.
Benefits of DILRMP:
Benefits Details
1. Promote Eliminates discrepancies, errors, and fraud associated with manual
Transparency record-keeping.
Provides accurate and up-to-date information on ownership, transactions,
boundaries, and encumbrances.
Enhances transparency and accountability in land administration.
2. Reduce Automates processes, reducing human intervention.
Corruption Creates an audit trail and tamper-proof records, discouraging document
forgery or manipulation.
3. Promote Facilitates access to credit for rural landowners.
Rural Allows financial institutions to assess land ownership and value efficiently
Development for transparent loan processes.
Enables better land-use planning by providing accurate data for informed
decision-making.
Supports government initiatives in rural development, ensuring efficient
execution of programs.
4. Other Expedites dispute resolution by providing swift access to pertinent
Benefits information.
Helps relieve court burdens and conserve time and resources in resolving
land disputes.
Preserves land records in digital formats, reducing susceptibility to
physical damage or loss.
Mitigates the risk of losing critical land information in natural disasters or
accidents.
Components of DILRMP:
• Unique Land Parcel Identification Number (ULPIN): An Aadhar-like identification for a land
parcel or plot. Each land parcel or plot is assigned a unique identification number.
• National Generic Document Registry System (NGDRS) — One Nation One Registration
Software System: It is a software application platform that facilitates online registration of
immovable properties and documents as compared to the manual registration process used
earlier.
• Transliterating the land records in any language under Schedule VIII of the Constitution to
break the linguistic barriers in land records.
Other Schemes for land modernization:

• SVAMITVA scheme: The scheme seeks to confer land titles in unmapped and inhabited parts
of rural India and to distribute property cards in villages.
• PM Gati Shakti National Master Plan: Coordinate infrastructure development using digital
land records.
• Bhoomi Project (Karnataka): Digitize land records for efficient management and accessibility.
• Bhulekh (Uttar Pradesh): Digitization and computerization of land records.
NOTES
• Dharani (Telangana): Online management of agricultural and non-agricultural land records.
• e-Dharti (Haryana): Online access to land records, reduction of manual processes.
• Bhu-Adhikar (Maharashtra): Digitize land records and streamline land administration.
About NLRMP
It was initiated by the Government of India in 2008, and aimed to modernize the land records
system and implement conclusive land-titling with a title guarantee. In 2016, it was revamped
and renamed as DILRMP under Digital India, now a central sector scheme with 100% funding by
the Centre.
About ULPIN:
The Unique Land Parcel Identification Number (“ULPIN”) is a 14-digit identification number for
every parcel of land in India. Being described as “Aadhar for Land”, it is a number that would
uniquely identify every surveyed parcel of land. It is part of DILRMP.
ULPIN is regarded as a digital revolution in land ownership for the following reasons:
• The identification is based on the longitude and latitude coordinates of the land parcel.
• The identification is based on detailed surveys.
• This is to help develop land banks and lead towards an Integrated Land Information
Management System (ILIMS).
2. Remission of Duties and Taxes on Exported Products (RoDTEP) scheme

The Indian government is exploring options to reinstate tax remission benefits for sugar exports,
which were excluded from the Remission of Duties and Taxes on Export Products (RoDTEP)
scheme in June 2022.
• Sugar was moved to the 'restricted' category as a precautionary measure to enhance
domestic availability and prevent a surge in prices.
• The sugar industry has appealed to reclassify sugar into the 'free' category with certain
conditions, such as obtaining permissions from the Directorate of Sugar for exports.
About RoDTEP:
The Remission of Duties and Taxes on Exported Products (RoDTEP) scheme has been introduced
with the aim of neutralizing the taxes and duties incurred on exported goods that are not
credited, remitted, or refunded in any manner, and thus, remain embedded in the export goods.
The scheme provides a rebate for all hidden central, state, and local duties, taxes, and levies on
exported goods that have not been refunded under any other existing scheme.
The RoDTEP scheme replaced the Merchandise Exports from India Scheme (MEIS).
The scheme is designed to be compliant with World Trade Organization (WTO) principles.
3. LEAP AHEAD initiative

The Ministry of Electronics & Information Technology (MeitY) launched the LEAP AHEAD
initiative, a collaborative effort between the Software Technology Parks of India (STPI) and The
Indus Entrepreneurs (TiE) Delhi-NCR, aimed at supporting and accelerating the success of tech
startups in India.
About the LEAP AHEAD initiative:

Launchpad for Tech Entrepreneurs towards Accelerated Growth and Pioneering AHEAD (LEAP
AHEAD) aims to support tech startups by offering them access to funding (up to ₹1 Crore),
mentorship and global connections.
NOTES
What are Start-Ups?
Start-ups are companies in their early stages of operation, founded by entrepreneurs aiming to
meet demand with innovative products or services. India has become the 3rd largest start-up
ecosystem in the world after the US and China. India is home to as many as 75,000 Startups.
About STPI:
Software Technology Parks of India (STPI) (est. 1991; HQ: New Delhi) is an Autonomous Society
under the Ministry of Electronics and Information Technology (MeitY). It is engaged in
promoting software export and nurturing the tech startup ecosystem
4. Technology Development Board (TDB)

The Technology Development Board (TDB) and the Small Industries Development Bank of India
(SIDBI) have formed an alliance to support the Micro, Small, and Medium Enterprise (MSME)
sector.
About Technology Development Board (TDB)

It is a statutory body established (in 1996; under the Department of Science and Technology) to
promote the development and commercialization of indigenous and imported technology. It
provides equity capital or loans to industrial concerns and financial assistance to research and
development institutions.
The TDB has supported the establishment of the Global Innovation & Technology Alliance (GITA)
(a not–for–profit Public Private Partnership (PPP) company to encourage industrial investments in
innovative technology solutions)
About SIDBI
NOTES
5. Exporter status certificates
The Ministry of Commerce & Industry in India has launched a digital system for issuing
automatic 'Status Holder' certificates under the Foreign Trade Policy (FTP) 2023.
• This system eliminates the need for exporters to apply to the Directorate General of Foreign
Trade (DGFT) for a Status Certificate.
• Instead, the IT system will determine export recognition based on the Directorate General
of Commercial Intelligence and Statistics (DGCIS) merchandise export electronic data and
other risk parameters.
The new system simplifies the process, reduces compliance burdens, and promotes ease of
doing business.
The Status Holder certification program enhances the credibility of Indian exporters in
international markets and offers privileges like simplified procedures, priority custom
clearances, and exemptions from certain requirements.
6. Bima Vahak
The Insurance Regulatory and Development Authority of India (IRDAI) has announced that the
guidelines for the women-centric insurance distribution channel called "Bima Vahak" will
become effective upon the launch of "Bima Vistaar," an all-in-one standard insurance product
currently under development.
• The primary objective of Bima Vahak is to establish a dedicated distribution channel focused
on enhancing insurance inclusion and awareness in every village/gram panchayat, thereby
increasing the accessibility and availability of insurance throughout the country.
The Bima Vahaks – individual as well as corporate – are to be provided with handheld electronic
communication devices integrated to the electronic platform of the insurers and sell and service
Bima Vistaar and other products specified by the regulator. They will not be allowed to collect any
fees or charges from policyholder or prospective policyholder, other than the insurance premium.
The scope of work of Bima Vahaks, besides creating awareness of insurance in villages, is likely
to range from filling proposal forms, facilitating KYC process for customers, issuance of
insurance policies, coordination and support in policy and claims related servicing as well as
extending support in claims settlements.
IRDAI stands for the Insurance Regulatory and Development Authority of India. It was
established on April 19, 2000 to regulate the insurance industry in India.
It is a statutory body under the IRDA Act 1999 and is under the jurisdiction of the Ministry of
Finance.
IRDAI's responsibilities include:

• Regulating and licensing the insurance and re-insurance industries in India
• Protecting the interests of policyholders
• Promoting the orderly growth of the insurance industry in India
7. Sahakar 22
During the fiscal year 2017-18, the National Cooperative Development Corporation (NCDC)
initiated Sahakar-22, a program aimed at achieving rural and agricultural prosperity through
cooperative efforts by the year 2022.
This initiative encompassed several components, including:

• FOCUS 222: NCDC's dedicated support for cooperatives in 222 districts, which also includes
117 Aspirational Districts.
NOTES
• PACS HUB: The transformation of Primary Agricultural Cooperative Societies (PACS) and other
cooperatives into Apna Kisan Resource Centers.
• AENEC: Facilitating cooperatives in the Act East and North East regions of the country.
• CEMtC: Establishing Centres of Excellence to enhance market access through cooperative
networks.
• SAHAKAR PRAGYA: Enhancing capacity development through the Laxmanrao Inamdar
National Academy for Cooperative Research and Development (LINAC).
NCDC (founded 1963; HQ: New Delhi) operates as a statutory body under the administrative
jurisdiction of the Ministry of Cooperation. It is implementing Agency under the Central Sector
Scheme titled "Formation and Promotion of 10,000 Farmer Producer Organizations (FPOs)”.
• NCDC is also supporting and handholding the FPOs, for registration and legal compliance
processes, through Cluster Based Business Organizations (CBBOs)
8. Advisory board on bank frauds

The Central Vigilance Commission (CVC) has reconstituted the advisory board on Banking and
Financial Frauds (ABBFF), responsible for conducting initial examinations of bank frauds before
recommending further investigation by agencies like the Central Bureau of Investigation (CBI).
• The ABBFF's authority encompasses examining the roles of officials and whole-time
directors in public sector banks, insurance companies, and financial institutions when
frauds amounting to ₹3 crores and above occur.
The CVC now requires all these entities to refer matters involving such fraud amounts to the
ABBFF for advice before initiating criminal investigations.
The ABBFF is also authorized to conduct periodic fraud analysis within the financial system,
providing inputs for fraud-related policy formulation to the RBI and CVC.
The ABBFF, headquartered in New Delhi, is mandated to provide advice within a month of
receiving initial references from the Ministry, Department, CVC, or investigative agencies.
Notably, the suggestion from the Indian Banks Association (IBA) for introducing a "sunset clause"
to limit actions against bankers for credit decisions after a specific period hasn't been accepted
by the CVC.
9. Rail-Sea-Rail (RSR) Initiative

The Ministry of Coal is driving a transformative initiative known as Rail-Sea-Rail (RSR) to
revolutionize coal transportation in India.
• This strategy integrates rail and sea transportation to create an efficient movement of
domestic coal, connecting mining sites, ports, and end-users.
• The goal is to enhance logistical efficiency, reduce transportation costs, and reshape the
coal transportation landscape.
Stats regarding Coal:

• Major coal-producing states like Odisha, Chhattisgarh, Jharkhand, and parts of Madhya
Pradesh contributed around 75% of domestic raw coal dispatch in FY’23.
• The Ministry envisions doubling India's coal production by FY’30, with a projected
Compound Annual Growth Rate (CAGR) of approximately 7.7%.
• Currently, railways handle about 55% of coal evacuation, with a target of increasing it to
75% by FY’30.
Benefits of RSR Initiative:
NOTES
• The Rail-Sea-Rail initiative aims to transform logistics through an eco-friendly coastal
shipping mode.
• Opting for RSR could result in substantial cost savings for end-users in Southern India,
potentially cutting logistics costs.
• Over the past four years, Rail-Sea-Rail coal transportation has seen impressive growth of
around 125%.
10. Standard Operating Procedure (SoP) by CBIC

The Central Board of Indirect Taxes and Customs (CBIC) has issued a standard operating
procedure (SoP) to prevent the use of freebies, illicit liquor, and other prohibited items to lure
voters during upcoming elections in India.
What is SoP?
It is a set of guidelines and instructions that define how a particular task or process should be
carried out. SoPs are created to ensure consistency, efficiency, and compliance with established
protocols.
About SoP by CBIC:

• Monitoring: In line with the directions of the Election Commission, CBIC has instructed its
field officials to monitor both monetary and non-monetary inducements used during the
election process.
• Surveillance: The officials will establish surveillance teams, conduct checks on vehicles and
warehouses, and apprehend smuggled goods. Setting up flying squads and static surveillance
teams for vehicles check and verification of warehouses.
• Confiscation: Movement of items like saris, party flags etc. associated with candidates or
political parties without an e-way bill may be confiscated.
• Reporting: The tax officers will report their activities to the Election Commission on a daily
basis.
About CBIC:
It is a government body under the Ministry of Finance in India. It is responsible for formulating
policies related to customs, excise duties, GST, and narcotics.
CBIC oversees the administration and collection of these taxes and is the administrative authority
for its subordinate organizations. These include Custom Houses, Central Excise and GST
Commissionerate, and the Central Revenues Control Laboratory.
11. Advance Authorisation Scheme

The Directorate General of Foreign Trade (DGFT) has implemented the Advance Authorisation
Scheme under the Foreign Trade Policy, which allows duty-free import of inputs for export
purposes. The eligibility of inputs is determined by Sector-specific Norms Committees based on
input-output norms.
NOTES
• To streamline the norms fixation process, the DGFT has created a user-friendly and
searchable database of Ad-hoc Norms fixed in previous years. These norms can be used by
any exporter without requiring a Norms Committee review, as outlined in the Foreign Trade
Policy 2023.
• This trade facilitation measure simplifies the advance authorisation and norms fixation
process, leading to shorter turnaround times for exporters, improved ease of doing
business, and reduced compliance burden.
About Advance Authorization Scheme:

• It allows the duty-free import of inputs, which are physically incorporated into an export
product.
• In addition to any inputs, packaging material, fuel, oil, and catalyst which is
consumed/utilized in the process of production of export product, is also allowed.
• DGFT provides a sector-wise list of Standard Input-Output Norms (SION) under which the
exporters may choose to apply.
• Advance Authorization is valid for 12 months from the date of issue of such Authorization.
12. Special Assistance to States for Capital Investment 2023-24 Scheme

The Department of Expenditure, Ministry of Finance, has approved capital investment proposals
in 16 States in the financial year 2023-24.
What is capital expenditure (capex)?

● It includes money spent by the government on the development/upgrading/repairing of
physical assets (like health and education facilities), acquiring fixed and intangible assets,
repayment of loans, etc.
● Capex of the government has been the prime driver in the economy (in recent years) because
the private sector has not been in a position to invest due to poor demand and high inflation.
● In FY23, the Centre’s capital expenditure exceeded the government’s revised estimate of Rs
7.28 lakh crore by Rs 8,551 crore.
Significance of capex:
● Long-term in nature, leads to the creation of assets and allows the economy to generate
revenue for many years.
● Add or improve production facilities, increases labour participation, boost operational
efficiency and raise the capacity of the economy to produce more in future.
● Repayment of loan reduces liability.
Capex vs revenue expenditure: Revenue expenditure (salaries of employees, interest payment on

past debt, subsidies, pension, etc) is recurring in nature and neither creates assets nor reduces
any liability of the government.
Concerns: Conflict between capex and public spending. For example, when capex was 14.2% of
Budget Estimates in the FY 2019-20, the government had to cut public spending sharply in order
to meet its deficit target.
The Special Assistance to States for Capital Investment 2023-24 Scheme
About The scheme was announced in the Union Budget 2023-24 to give special
assistance to the State Governments in the form of a 50-year interest-free
loan up to an overall sum of Rs. 1.3 lakh crore during the FY 2023-24.
NOTES
Need It was launched in view of a higher multiplier effect of capital expenditure
and in order to provide a boost to capital spending by States.
Background The scheme was first instituted in 2020-21 in the wake of the COVID-19
Pandemic.
Components Part-I is the largest component with an allocation of Rs. 1 lakh crore. It has
been allocated amongst States in proportion to their share of central taxes
and duties as per the 15th Finance Commission.
For Part–II, Rs. 3,000 crore has been set aside for providing incentives to
States for scrapping State Government vehicles and ambulances, etc.
Part–III & IV aims at providing incentives to States for reforms in Urban

Planning and Urban Finance.
Part V aims at increasing the housing stock for police personnel and their
families within the police stations in urban areas.
Part VI promotes national integration, Make in India and One District, One
Product (ODOP) through the construction of Unity Mall in each State.
Part VII provides financial assistance to States for setting up libraries with
digital infrastructure at Panchayat and Ward levels.
13. SAMARTH campaign

The SAMARTH campaign is an initiative launched by the Ministry of Rural Development,
Government of India, to promote digital transactions at the Gram Panchayat level in rural areas.
Aim:
• To increase the adoption of digital payment methods, particularly among women, in 50,000
Gram Panchayats across the country.
• It seeks to empower rural communities by enabling them to participate in the digital
economy and access the benefits of digital transactions.
It is part of the larger AmritMahotsav celebrations and is being implemented under the
AzadiKaAmritMahotsav, which commemorates 75 years of India's independence.
Don’t get confused with a similar named initiative: Samarth Scheme (under Ministry of Textiles)
14. Liberalized Remittance Scheme (LRS)

Finance Ministry announced that it will waive the 20% tax on overseas credit card spending for
individuals up to ₹7 lakh per financial year, following criticism and concerns raised by taxpayers
and businesses.
About the LRS Scheme:

Description
Definition of In the context of the Liberalized Remittance Scheme (LRS), remittance
Remittance refers to the transfer of foreign exchange (forex) by resident individuals
in India for various purposes.
NOTES
About the scheme The LRS sets the limit on the amount of money that can be remitted by
individuals without requiring specific approvals from regulatory
authorities.
Under LRS (introduced in 2004), Indian individuals can send money

outside up to a maximum of $250,000 in a year.
Aim Simplify the process of remitting money outside India and encourage
foreign investments by Indian individuals
Permissible Education, travel, medical treatment, gifting, investment in shares or
Transactions property, etc.
Non-Permissible Trading in foreign exchange or buying lottery tickets
Transactions
Ineligible Entities Corporations, partnership firms, Hindu Undivided Family (HUF), Trusts,
etc.
Benefits Diversify investments and assets, finance foreign education or travel
Issues Outward remittances may pressure Forex reserves
Repatriation In August 2022, RBI had directed that any money remitted overseas by
Directive Indian residents that remains unutilised for more than 180 days needs
to be repatriated back into India.
15. Centre for Processing Accelerated Corporate Exit (C-PACE)

The Ministry of Corporate Affairs (MCA) has established the Centre for Processing Accelerated
Corporate Exit (C-PACE) to centralize the process of striking off companies from the MCA
Register.
What is striking off?

Striking off companies from the Ministry of Corporate Affairs (MCA) Register means removing
defunct, non-operational, or dissolved companies from the official database.
C-PACE (founded: March 2023; HQ: at the office of Indian Institute of Corporate Affairs (IICA) in
Gurgaon) aims to ensure a clean registry, provides hassle-free filing and timely, process-bound
striking off of company names from the Register.
• C-PACE operates through the Registrar of Companies (RoC) and is part of MCA's efforts to
improve the Ease of Doing Business and facilitate company exits.
NOTES
16. Startup India Seed Fund Scheme
Aspect Details
SISFS was created by Department for Promotion of Industry and Internal Trade (DPIIT),
Ministry of Commerce and Industry in 2021. It aims to provide financial assistance to start-
ups for proof of concept, prototype development, product trials, market-entry, and
commercialization.
Eligibility Startups recognized by DPIIT incorporated not more than 2 years ago at
the time of application, have not received more than Rs. 10 lakhs of
monetary support under any other Central or State Government scheme.
Preference Startups create innovative solutions in sectors such as social impact,
waste management, water management, etc.
Grants and Grants of up to Rs. 5 crores are provided to eligible incubators, which in
Support turn provide grants of up to Rs. 20 lakhs to startups for validation of
proof of concept, prototype development, or product trials.
Estimated 3,600 entrepreneurs through 300 incubators in the next 4 years
Beneficiaries
What is Seed Seed Funding is an early stage of investment in a start-up or a new
funding? business idea to help the company reach a point where it can secure
additional rounds of funding or generate revenue to become self-
sustaining.
Invest India (est. 2009), is a non-profit venture under the Department for Promotion of Industry
and Internal Trade, Ministry of Commerce and Industry, Government of India.
It serves as the national investment promotion and facilitation agency, targeting specific sectors
and fostering partnerships for sustainable investments in India.
NOTES
Indian Economy and Issues relating to planning, mobilization of
resources, growth, development and employment
1. Income Inequality
According to a recent SBI Research report, income inequality in India has decreased, indicating a
positive trend of upward mobility and the growth of the middle class.
Gini Coefficient:
The Gini coefficient is a statistical measure of the
economic inequality across the population in a
country or between countries. It measures the
dispersion of income or wealth distribution
among the members of a population.
The Gini coefficient ranges from 0 (perfect

equality) to 1 (perfect inequality). Theoretically,
values over 1 are possible due to negative income
or wealth. A Gini coefficient larger than 0.40 is
considered high inequality.
K-Shaped Recovery:
Post-COVID, India is witnessing a 'K-shaped' recovery, signifying disparate economic rebounds for
different segments. Experts note that the affluent are thriving, while the less privileged encounter
challenges, exemplifying a divided recovery pattern.
2. Insolvency and Bankruptcy Code (IBC)

• The Insolvency and Bankruptcy Code (IBC), enacted in 2016, is a comprehensive legal
framework in India that replaced existing laws related to insolvency and bankruptcy.
• It provides a uniform procedure for resolving financial distress, addressing Non-performing
Assets (NPAs), and managing debt defaults.
• The primary goal of the IBC is to streamline and expedite the resolution of insolvency and
bankruptcy disputes in a time-bound manner.
The Code creates various institutions to facilitate resolution of insolvency. These are as follows:
NOTES
• Insolvency Professionals: A specialised cadre of licensed professionals will administer the
resolution process, manage the assets of the debtor, and provide information for creditors to
assist them in decision making.
• Insolvency Professional Agencies: The insolvency professionals will be registered with
insolvency professional agencies. The agencies conduct examinations to certify the insolvency
professionals and enforce a code of conduct for their performance.
• Information Utilities: Creditors will report financial information of the debt owed to them by
the debtor. Such information will include records of debt, liabilities and defaults.
• Adjudicating authorities: The proceedings of the resolution process will be adjudicated by the
National Companies Law Tribunal (NCLT), for companies; and the Debt Recovery Tribunal
(DRT), for individuals. The duties of the authorities will include approval to initiate the
resolution process, appoint the insolvency professional, and approve the final decision of
creditors.
• Insolvency and Bankruptcy Board: The Board will regulate insolvency professionals,
insolvency professional agencies and information utilities set up under the Code. The Board
will consist of representatives of Reserve Bank of India, and the Ministries of Finance,
Corporate Affairs and Law.
What is insolvency and bankruptcy?

• Insolvency is a situation where individuals or companies are unable to repay their outstanding
debt.
• Bankruptcy, on the other hand, is a situation whereby a court of competent jurisdiction has
declared a person or other entity insolvent, having passed appropriate orders to resolve it and
protect the rights of the creditors. It is a legal declaration of one’s inability to pay off debts.
3. IBBI to form 'common panel' of insolvency professional

The Insolvency and Bankruptcy Board of India (IBBI) will create a "common panel" consisting of
registered insolvency professionals (IPs).
• This list will be shared in advance with the adjudicating authority.
• For appointment as IRP (interim resolution professional), Liquidator, RP (resolution
professional) and BT (bankruptcy trustee).
The purpose of this panel is to allow the authority to choose IPs from the list to oversee various
cases of resolution or liquidation.
Previously, the IBBI could only recommend an IP's name after receiving a reference from the
National Company Law Tribunal (NCLT) in a corporate insolvency resolution process (CIRP). This
new measure aims to streamline the selection process and improve efficiency in handling
insolvency cases.
4. Cross-Border Insolvency
Cross-border insolvency typically occurs when a debtor has operations or creditors in multiple
countries, and there is a need for coordination and cooperation among different courts and
stakeholders to achieve an efficient and fair resolution.
• United Nations Commission on International Trade Law (UNCITRAL) Model Law on Cross-
Border Insolvency, 1997, is a widely accepted legal framework to deal with cross-border
insolvency issues.
Why has India halted its plan?

India halted the adoption of cross-border insolvency, based on the fact that only around 50
countries have adopted the UN model of cross-border insolvency, and many of them have
stringent restrictions in place.
NOTES
5. Employment in India
Types Description
Wage Regular Wage Jobs: Formal, structured positions with fixed salaries, found in
Employment government organizations, private companies, and multinational
corporations.
Casual or Daily Wage Labor: Involves daily wage labour, prevalent in sectors
like construction, agriculture, and unorganized labour markets.
Self- Entrepreneurship: Individuals engaged in entrepreneurial activities, running
Employment small businesses or enterprises such as shops, local services, or
manufacturing units.
Farmers: Agriculture serves as a significant source of self-employment, with
individuals owning and operating farms independently or as part of a family-
run enterprise.
Freelancing and Informal Work: Reflects the gig economy trend, with
individuals working as freelancers, consultants, or in part-time roles.
Various Approaches to growth and employment:

Aspect Details
Keynesian Emphasizes aggregate demand as the key factor influencing employment.
Theory Fiscal policy is seen as a tool to boost labour demand by stimulating output.
Mahalanobis Identifies availability of capital goods as the primary constraint on output
Strategy and employment. Advocates for policies promoting heavy industrialization.
6. Worker’s Productivity
What is Productivity?
It is the efficiency of using resources like labour and capital to produce goods and services. It
impacts a nation's living standards and economic growth.
Type of Productivity:
Type Description
Labour Measures output per hour of work, directly influencing wages, living
Productivity standards, and purchasing power.
Capital Evaluates output from physical assets like machinery and buildings, impacting
Productivity profitability and competitiveness.
Total Factor Accounts for output growth beyond labour and capital, are often associated
Productivity with innovation, efficiency, and technological progress.
7. IREDA gets upgraded

The Indian Renewable Energy Development Agency Ltd. (IREDA), a prominent green financing
Non-Banking Finance Company focused on renewable energy, has achieved an upgrade from
'Schedule B' to 'Schedule A' status as a Central Public Sector Enterprise.
• This elevation to 'Schedule A' status sets the stage for IREDA to potentially attain
"Navratna" status, granting it greater financial autonomy.
• This upgraded status enables IREDA to make strategic decisions that further promote the
adoption of renewable energy solutions in India.
Two Central Public Sector Enterprises (CPSEs) under the Ministry of Railways, Ircon International
Limited (IRCON), and RITES Ltd, have been granted 'Navratna' status.
• RITES Ltd, in its 50th year of operation, is a prominent transport infrastructure consultancy
and engineering firm in India, offering services in various sectors such as transportation,
railways, highways, airports, and more.
NOTES
• IRCON, with 47 years of experience, specializes in railways, highways, and high-tension
substation engineering and construction. The company has executed various projects in
railway construction, electrification, tunnelling, and more, both in India and abroad.
The Government of India has elevated Oil India Limited to the 'Maharatna' category, granting
the company enhanced decision-making powers in financial matters.
Oil India has become the 13th Maharatna Central Public Sector Enterprise (CPSE) in India. Having
achieved Navaratna status in 2010, Oil India's recent acquisition of Numaligarh Refinery Ltd.
further solidified its position as an integrated energy company.
Also, the government elevated ONGC Videsh Ltd (OVL) to Navratna CPSE. OVL will be the 14th
Navratna amongst the CPSEs.
The Government of India categorizes Central Public Sector Enterprises (CPSEs) into four
schedules: Schedule A, B, C, and D. The categorization of a CPSE affects the organizational
structure and salary of the board level incumbents.
8. Purple economy
What is the Care Economy?
• It refers to the economic activities related to providing care and support services, often in
healthcare, childcare, elderly care, and other areas aimed at improving people's well-being.
• It encompasses both paid and unpaid care work and is a critical aspect of social and economic
development.
What is Purple Economy?
NOTES
The purple economy is an economic order that
focuses on the sustainability of caring
labour. It's an alternative vision that
complements the green economy. The purple
economy aims to:
1. Organize the system around the
sustainability of caring labour
2. Address the inequalities created by the
disproportionate reli ance on women's
unpaid and underpaid labour
3. Contribute to sustainable development by
promoting the cultural potential of goods
and services
4. Contribute to a richer and more diverse cultural environment
Examples of the purple economy include Digital, Tourism, Luxury goods, and Housing.
9. Micro, Small and Medium Enterprises [MSMEs]

The report titled "Annual Survey of Micro, Small, and Medium Enterprises (MSMEs) In India:
Leveraging E-commerce for the Growth of MSMEs" conducted a comprehensive survey of
MSMEs in India to explore the potential of e-commerce in enhancing their growth.
What are MSMEs?

Micro, Small and Medium Enterprises [“MSMEs”] are small to medium-sized businesses that
typically have a limited number of employees and generate moderate levels of revenue.
MSMEs are defined or classified in accordance with the MSME Development Act of 2006.
Micro Small Medium
Manufacturing and Investment: < 1 crore Investment: < 10 Investment: < 50

Services Turnover: < 5 crore crore crore
Turnover: < 50 crore Turnover: < 250 crore
Status of MSMEs in
India:
• Around 19
million MSMEs
which employ
over 131 million
(over 13 crore)
individuals are
registered on
the Udyam
portal of which
about 96 % are
classified as
micro, about 3
% as small, and
0.4% as medium
enterprises.
NOTES
• 27% of the MSMEs are engaged in manufacturing and 73% are in services
10. Gross domestic product (GDP)

Accurate GDP measurement is crucial for India's economic goals. Currently, India's GDP base year
is outdated (2011-12), which may not capture recent economic activities and investments.
What is GDP?
Gross domestic product (GDP) is the total
monetary or market value of all the finished
goods and services produced within a
country’s borders in a specific time period.
• India's GDP is calculated by the Central
Statistics Office (CSO), which is part of
the Ministry of Statistics and Program
Implementation (MoSPI).
How is it Calculated?
India's GDP is calculated with two different
methods, one based on economic activity (at
factor cost), and the second on expenditure
(at market prices). The factor cost method
assesses the performance of eight different industries. The expenditure-based method indicates
how different areas of the economy are performing, such as trade, investments, and personal
consumption.
There are still limitations to the GDP method of calculating growth:

GDP Limitations Issues with GDP
Not a Welfare Measure GDP doesn't measure overall well-being or happiness.
Simon Kuznets, who developed the concept of GDP, warned it was
not a suitable measure of a country’s economic development
Weak Relationship State of Working India (SWI 2023) report indicates that the
Between Growth and connection between GDP growth and employment in India is
Employment weak. Growth in GDP doesn’t assure proportional job creation.
The same report says that the employment benefits of growth
aren’t equally shared among genders, castes, or religions.
No Adjustment for Ignores differences in work hours and leisure time.
Leisure Time
Misses Home Production Doesn't account for informal or home-based economic activity.
Income Distribution Doesn't reflect income distribution within a country.
Ignores Pollution Costs Fails to factor in environmental or social costs.
Fails to Measure Human Doesn't encompass aspects like happiness or community.
Well-Being
Unequal Progress Doesn't address wealth inequality and social disparities.
Ignores Non-Monetized Doesn't value activities like volunteering or housework.
Activity
Neglects Sustainability Doesn't account for the environmental impact of growth.
11. Gross Fixed Capital Formation (GFCF)

The Gross Fixed Capital Formation (GFCF) in the Indian economy has increased from over Rs 32
lakh crore (constant 2011-12 prices) in 2014-15 to about Rs 54 lakh crore in 2022-23 (Provisional
Estimates)
NOTES
What is GFCF?
Gross Fixed Capital Formation (GFCF) refers to the total amount of investment made in the
production of physical assets, such as buildings, machinery, equipment, and infrastructure, within
a country during a specific period. It indicates the increase in the nation's capital stock and
productive capacity.
Generally, the higher the capital formation of an economy, the faster an economy can grow its
aggregate income.
Importance of GFCF:
• Economic Growth: Increasing investments lead to the expansion of productive capacity,
which can result in higher output and overall economic development.
• Employment Generation: For instance, constructing a new factory or infrastructure project
employs workers in various stages of development.
• Technological Advancement: This helps improve productivity and competitiveness by
enabling businesses to adopt more efficient methods and processes.
• Infrastructure Development: Investment in infrastructure like roads, ports, and utilities
enhances a country's connectivity and supports economic activities.
12. Deflation
China has entered a state of deflation due to challenges in its post-pandemic recovery efforts, as
evidenced by recent data.
What is Deflation?
Deflation is an economic phenomenon characterized by a sustained decrease in the general price
level of goods and services within an economy. It is the opposite of inflation, where prices tend to
rise over time. Deflation occurs when the supply of goods and services exceeds demand, leading
to a decrease in consumer spending.
Effects of Deflation: While lower prices might seem advantageous, they can hinder economic
growth by causing businesses to cut jobs, freeze hiring, and offer discounts to maintain sales.
Reasons for deflation in China:

• Government intervention in IT, Real state industries
• Crackdown on polluting industries
• Rising wages in China
• Geopolitical tensions leading to the trade war with the USA
• Challenges to Recovery: China's post-COVID-recovery momentum has faltered as domestic
demand weakens.
• Consumer Price Index (CPI) Dropped in China
• Product Price Index (PPI) Decline: The product price index, a measure of wholesale prices,
continued its downward trajectory
13. India’s creative economy

The creative economy refers to the intersection of culture, creativity, and commerce. It
encompasses economic activities that are based on creative and cultural products and services,
such as arts, design, media, entertainment, and technology.
● The creative industries include advertising, architecture, arts and crafts, design, fashion,
film, video, photography, music, performing arts, publishing, etc.
● They are also considered an important source of commercial and cultural value.
● Digital platforms and technology have enabled Indian artists and artisans to reach wider
audiences.
NOTES
MONDIACULT 2022:
● Recognising the economic importance of culture, the UNESCO World Conference on Cultural
Policies and Sustainable Development (MONDIACULT 2022) was held.
● The goal was to share a vision for the future of cultural policies and to reaffirm the
international community’s commitment to leveraging culture’s transformative power for
sustainable development.
14. Gig economy

● It is a labour market that relies heavily on temporary and part-time positions filled by
independent contractors and freelancers rather than full-time permanent employees.
● Gig workers gain flexibility and independence but little or no job security.
Gig workers
Gig workers refer to workers outside of the traditional employer-employee relationship. There
are two groups of gig workers.
Platform workers Non-platform workers
When gig workers use online algorithmic Those who work outside of these platforms
matching platforms or apps to connect with are non-platform workers, including
customers, they are called platform workers. construction workers and non-technology-
based temporary workers.
15. Greedflation
It refers to a situation where corporate greed fuels inflation. Instead of the traditional wage-
price spiral, it is the profit-price spiral that drives inflation. In developed countries like Europe
and the US, there is a growing consensus that greedflation is a significant factor contributing to
inflation.
Types of Greedflation:
Scenario Description Greedflation
Energy During a crisis or sudden surge Energy companies exploit the situation
Companies and in energy demand, such as a by imposing excessive price hikes,
Fuel Prices natural disaster or geopolitical leading to higher inflationary pressures
event, energy companies may for consumers.
raise fuel prices
disproportionately.
Essential In times of scarcity or crisis, Sellers of essential commodities increase
Commodities certain essential commodities prices excessively, exploiting consumers
during a Crisis like food, water, or medical and contributing to higher inflation
supplies may experience a during crises.
surge in demand
Price Mark-ups Companies may increase profit For example, if raw material costs
and Profit margins by keeping market decline, companies may maintain
Margins prices high even when input product prices without passing on
costs decrease. savings to consumers. This allows
companies to generate higher profits
and contributes to inflationary
pressures.
NOTES
India’s Case: In the context of India, the profitability of Indian companies has nearly tripled
compared to the period before the pandemic. A significant growth in net profit, primarily driven
by an increase in profit margins, indicates a possibility of corporate greed contributing to
inflation in India.
Impact of Greedflation: It leads to higher inflationary pressures, financial strain on individuals,

and reduced purchasing power. It undermines trust in businesses, distorts market dynamics, and
hampers economic stability and growth.
16. Snowball effect

According to the World Economic
Forum president India witnessing a
‘snowball effect’; set to see
exponential growth in coming years.
About the Snowball effect:

When the snowball starts to roll, it
gets bigger and bigger, and that is
what is happening with the Indian
economy - the growth will lead to
more investments, and more jobs
leading to exponential growth in the coming years.
NOTES
Banking Sector / Financial Sector
1. Virtual Digital Asset Service Providers (VDA SPs)
The Financial Intelligence Unit India (FIU IND) issued show-cause notices to 9 offshore virtual
digital asset service providers (VDA SPs), including Binance and Huobi, for operating illegally
without complying with anti-money laundering regulations (under the Prevention of Money
Laundering Act (PMLA), 2002)
What are VDA SPs?

VDA SPs (Virtual Digital Asset Service Providers) are entities (operating within or outside India)
that offer digital asset services, such as cryptocurrency exchanges.
Regulations in place for VDA SPs:

In March 2023, India mandated VDA SPs to adhere to the Prevention of Money Laundering Act
under the Anti Anti-Money Laundering/Counter Financing of Terrorism (AML-CFT) framework.
They also have to verify client identities and record financial transactions. Non-compliance led to
notices and a request to block URLs. They are required to be registered with FIU IND as Reporting
Entity. Currently, 31 VDA SPs have registered with FIU IND
Global Regulations:
• Global regulations vary, with Dubai's VARA having a licensing framework, the EU's MiCA
focusing on market rules, and the U.S. lacking a comprehensive framework.
• The Bureau for International Settlements (BIS) suggests considering an outright ban,
containment, or regulation, emphasizing the need to balance benefits and costs, especially for
emerging market economies.
About Financial Intelligence Unit – India
It is an organisation (HQ: New Delhi; formed: 2004) under the Department of Revenue,
Government of India which collects financial intelligence about offences under the Prevention of
Money Laundering Act, 2002. It is an independent body reporting directly to the Economic
Intelligence Council (EIC) headed by Finance Minister.
2. Green Funds/Deposit
The Reserve Bank of India (RBI) said, it is not mandatory for banks and NBFCs to raise green funds,
but in case they intend to do so they must follow the prescribed framework.
What are Green Funds/Deposits?

Green funds refer to financial resources (interest-bearing deposit) specifically earmarked for
environmentally sustainable projects and activities. These funds are designed to support
initiatives that contribute to ecological well-being, such as renewable energy, green transport,
and eco-friendly construction.
What is REs?
Regulated Entities (REs) are financial institutions and organizations operating in the financial
sector that fall under the regulatory purview of a central authority, such as the Reserve Bank of
India (RBI).
REs under the Framework for acceptance of Green Deposits include:

1. Scheduled Commercial Banks including Small Finance Banks (excluding Regional Rural
Banks, Local Area Banks, and Payments Banks)
2. All Deposit-taking NBFCs registered with the RBI
NOTES
3. Housing Finance Companies (HFCs)
Other aspects of Green Deposits are:

• Green deposits in India must be in Indian rupees. The framework aims to encourage
green financing and address concerns, supporting the flow of credit to eco-friendly
projects.
• Sectors included are Renewable Energy, Energy Efficiency, Clean Transportation, Climate
Change Adaptation, Sustainable Water and Waste Management, Green Buildings, etc.
• Exclusions (don’t come under Green Deposit framework): Projects involving new or
existing extraction, production and distribution of fossil fuels; Nuclear power generation;
Direct waste incineration; Landfill projects; Hydropower plants larger than 25 MW, etc.
Monitoring: Green deposit funds are subject to independent third-party verification on an
annual basis.
3. Aadhaar Enabled Payment System (AePS)

In 2023, Aadhaar Enabled Payment System (AePS) frauds accounted for 11% of cyber financial
scams originating in India, according to an analysis by the Indian Cyber Crime Coordination
Centre (I4C).
What is AePS?
It is a payment service that allows users to access their Aadhaar-enabled bank accounts for
transactions.
Details
What is AePS? The AePS is a bank-led model facilitating online interoperable financial
transactions through Aadhaar authentication.
It is managed by the National Payments Corporation of India (NPCI), a joint
initiative of the RBI and IBA.
Aimed at providing secure access to banking services, especially for rural
and marginalized communities.
Working Eliminates the need for OTPs, bank details, and other financial information.
Transactions require only the bank name, Aadhaar number, and captured
fingerprint during Aadhaar enrollment.
Benefits: Facilitates cash transfers for government schemes directly into
beneficiaries' accounts; Allows access to bank accounts through any Banking
Correspondent or micro-ATM of any bank
How is AePS Leaked Biometric Details: Cybercriminals use stolen biometric information
Exploited? for unauthorized transactions.
Silicone Thumbs: Scammers use silicone thumbs to deceive biometric
devices and perform fraudulent transactions.
Lack of Transaction Notifications: Victims may not receive immediate alerts
for unauthorized transactions.
Systemic Issues: Biometric mismatches, poor connectivity, and weaker
systems affect performance and reliability.
About I4C Indian Cyber Crime Coordination Centre (I4C) deals with all types of
cybercrimes in India. It will be set up under the newly created Cyber and
Information Security (CIS) division of the MHA.
The I4C aims to centralize cyber security investigations, develop response
tools, and foster collaboration among private companies to combat
cybercrime.
NOTES
4. Indian Stock market
The stock market is a collection of exchanges where investors can buy and sell company shares
and other securities. It also includes over-the-counter (OTC) marketplaces where investors can
trade securities directly with each other.
Types of Purpose
Markets
Primary Issuance of new securities by companies to raise capital. This includes
Market processes like IPOs (Initial Public Offerings) and Rights Issues.
Secondary Trading of existing securities among investors without the involvement of the
Market issuing company through exchanges such as NSE, BSE etc. Provides liquidity to
investors and allows for price discovery based on market demand and supply.
5. Foreign Portfolio Investors (FPIs)

The Securities and Exchange Board of India (SEBI) has extended the deadline for Foreign Portfolio
Investors (FPIs) to disclose granular details of entities holding ownership, economic interest, or
control in the FPI.
FPI vs FDI (Foreign direct investment):
FPI FDI
Distinguishing Does not give investors direct Direct control/ownership in a

features ownership of a company's assets. business.
Definition of FPI FPI results in an investor FDI results in an investor

and FDI as per controlling less than 10% of the controlling more than/equal to
Arvind Mayaram shares of the company. 10% of the shares of the company.
Committee (2014)
Why does SEBI want FPIs to disclose their details? The Securities Exchange Board of India
• SEBI’s move aims to prevent possible round- (SEBI) has issued a set of amendments to
tripping and misuse of the FPI route. strengthen anti-money laundering(AML)
• SEBI is seeking additional information from FPIs standards and combat finance terrorism
holding more than 50% of their Indian equity (CFT).
assets under management (AUM) in a single • These guidelines are based on rules
corporate group or with over Rs 25,000 crore in established under the Prevention of
Indian equity markets. Money Laundering Act of 2002.
NOTES
• The requirement is part of efforts to address concerns that certain FPIs may be used to
circumvent regulatory requirements.
• Sovereign wealth funds, listed companies on certain global exchanges, public retail funds, and
other regulated pooled investment vehicles are exempted from enhanced disclosures.
What is round-tripping?
• Round tripping refers to a process where funds are sent
out of a country and then brought back into the same
country through a circuitous route.
• This can involve complex financial transactions and may be
done for various reasons, such as disguising the origin of
funds, taking advantage of tax loopholes, or circumventing
regulatory restrictions.
6. Direct Tax to GDP Ratio

During the fiscal year 2022-23, the share of direct taxes in India's gross domestic product (GDP)
reached a 15-year high of 6.11%.
What is the Direct Tax to GDP ratio?

The Direct Tax to GDP ratio is a financial metric that represents
the percentage of a country's gross domestic product (GDP)
contributed by direct taxes.
A higher ratio implies a larger share of tax revenue relative to
the overall economic activity.
It gives an estimate of a country’s ability to mobilise resources
to fuel its development. Direct taxes contributed over 54% to
the overall tax collection during FY23.
Other facts:
The Tax Buoyancy decreased from 2.52 to 1.18 compared to
the previous year.
Tax buoyancy measures the efficiency of tax collection in response to GDP growth.
It signifies buoyancy when tax revenues increase more than proportionately with GDP growth,
even if tax rates remain constant.
In India, central-level direct taxes include personal and corporate income taxes under the
Income Tax Act of 1961. However, India's tax-to-GDP ratio is notably low, ranking much below
countries like OECD members with an average tax-to-GDP ratio exceeding 30%. This is attributed
to factors such as the dominance of the informal sector, tax evasion, and various exemptions and
incentives.
7. Primary Agricultural Credit Societies (PACS) in India

The Ministry of Cooperation has introduced Model Bye-Laws to revitalize Primary Agricultural
Credit Societies (PACS).
What are Model Bye-Laws?

The Model Bye-Laws empower PACS to diversify by engaging in over 25 business activities,
including dairy, fishery, godowns, credit services, and more. Provisions ensure inclusive
membership with adequate representation for women and Scheduled Castes/Scheduled Tribes.
These guidelines aim to govern the grassroots functioning of PACS, outlining their structure and
operations. The purpose is to enhance economic viability and expand their role in rural areas.
Status of PACS in India:
NOTES
• With approximately 13 crore farmers as members, PACS are integral to the country's
three-tier Short-term cooperative credit system.
About PACS:
• Established in 1904, PACS contribute significantly to financial inclusion with minimal
paperwork, facilitating timely access to capital for farmers.
Role of Primary Agricultural Credit Societies (PACS) for Rural and Agricultural Development in
India:
Role Description
Financial It is a village-level institution that works directly with rural residents. It
Inclusion encourages agriculturists to save, accepts deposits from them, makes
loans to deserving borrowers, and collects repayments.
Extending Credit PACS have the capacity to extend credit with minimal paperwork within
a short time.
Kisan Credit Card The KCC scheme, launched by the government, is facilitated through
(KCC) Scheme PACS. It provides farmers with a simplified credit card to access short-
term credit for crop cultivation and allied activities. (e.g., they account
for 41% of all KCC loans.)
Providing It supplies agricultural inputs like fertilizers, seeds, insecticides, and
Agricultural implements to farmers.
Inputs
Supporting Small Among these KCC loans provided by PACS, a remarkable 95%
and Marginal (approximately 3 crore farmers) are availed by Small and Marginal
Farmers farmers through PACS.
Marketing of PACS assist farmers in the marketing of their agricultural produce and
Agricultural provides support in finding better markets, thereby improving farmers'
Produce income and reducing dependency on middlemen. (e.g., in Kerala, PACS
play an active role in marketing cash crops like rubber and spices.)
NOTES
Training and PACS conduct various training programs and workshops to enhance the
Capacity Building financial literacy and awareness of farmers, empowering them to make
informed financial decisions. (e.g., in Maharashtra, training programs on
modern agricultural practices, organic farming, etc.)
Initiatives taken to strengthen the functioning and effectiveness of PACS in India:

• Computerisation: The budget 2023 has announced Rs 2,516 crore for Computerisation of
63,000 Primary Agricultural Credit Societies (PACS) over the next five years, with the aim of
bringing greater transparency and accountability in their operations and enabling them to
diversify their business and undertaking more activities.
• Credit Linkage with NABARD: PACS are linked to the National Bank for Agriculture and Rural
Development (NABARD), enabling them to access financial resources and expertise for better
functioning.
• Making PACS multidimensional: The model bylaws, prepared by the Ministry of Cooperation
after consultation with all stakeholders, will enable PACS to diversify its business by
undertaking more than 25 different economic activities, including, dairy, fisheries, godowns,
custom hiring centres, fair price shops, LPG/diesel/petrol distributorship, etc.
• Multistate Cooperative Societies have been formed for seeds, marketing of organic farming
and export of farmers’ produce.
• Common Service Centres (CSCs): Delivery of CSC services through PACS.
8. Cloud Facility for the Financial Sector in India

The Reserve Bank of India (RBI) is in the process of setting up a cloud facility for the financial
sector in India, aiming to bolster the security, integrity, and privacy of financial sector data.
• The facility will be similar to an Aadhaar or NPCI-like setup for domestic financial data and
reporting
• Initially operated by the RBI's subsidiary, Indian Financial Technology & Allied Services
(IFTAS), the cloud facility will later transition to a separate entity owned by financial sector
participants.
Other measures taken by RBI:

Measures Details
Enhancing UPI Proposed increase in UPI limit for payments to hospitals and
Transaction Limit educational institutions from ₹1 lakh to ₹5 lakh per transaction.
The current UPI limit is capped at ₹1 lakh, except for specific categories
like Capital Markets, Collections, Insurance, etc., where the limit is ₹2
lakh.
Regulatory WALP aims to increase transparency in the operations of loan
Framework for Web- aggregators. It involves aggregating loan offers from multiple lenders
Aggregation of Loan on an electronic platform, allowing borrowers to compare and choose
Products (WALP) the best available option for obtaining a loan from one of the lenders.
9. Evergreening of Loan by AIF

The Reserve Bank of India (RBI) has strengthened regulations for Regulated Entities (RE),
including banks and financial institutions, to curb the evergreening of loans through investments
in Alternative Investment Funds (AIFs).
What is the evergreening of loans?

It refers to the practice where a lender extends new credit to borrowers who are struggling to
meet their debt obligations. Instead of addressing the underlying financial issues, the lender
provides additional funds, essentially giving the appearance that the borrower's financial
situation is stable.
NOTES
This can create a temporary illusion of creditworthiness but may lead to a cycle of increasing
debt and delayed resolution of financial difficulties. Regulatory authorities often aim to prevent
evergreening to ensure a transparent and healthy financial system.
What is AIF:
While REs commonly invest in AIF units as part of their regular operations, certain transactions
involving AIFs have raised regulatory concerns. To address these concerns, the RBI prohibits REs
from investing in AIF schemes with downstream investments in debtor companies of the RE. If
an AIF scheme, in which an RE is an investor, makes a downstream investment in a debtor
company, the RE must liquidate its investment within 30 days. Failure to do so requires a 100%
provision on the investments.
10. Tokenisation
The Reserve Bank of India (RBI) has expanded the scope of card-on-file tokenisation (CoFT) to
include card issuing banks and institutions directly, moving beyond services provided through
merchants.
• CoFT is a security measure for users opting for digital payments, replacing the practice of
merchants storing card details with specially created tokens.
NOTES
• RBI's recent notification outlines the requirements for enabling CoFT through card issuers,
allowing customers to generate tokens through mobile and internet banking channels with
explicit consent and additional validation.
Tokenization is the process of replacing sensitive data with a non-sensitive equivalent, called a
token. Tokens are random strings of characters that have no meaningful value if breached. They
serve as a reference to the original data, but cannot be used to guess those values.
11. 'UPI Tap and Pay'

The National Payments Corporation of India (NPCI) has initiated the deployment of 'UPI Tap and
Pay' across digital payment providers.
• The UPI Tap and Pay feature is currently live on the BHIM app and Paytm for limited users.
Features of UPI tap and pay: • The credit line on UPI allows users to make
• It utilizes near-field communication purchases by scanning a QR code with their
(NFC) technology to capture a payee's UPI-linked app, choosing their bank,
UPI ID or Virtual Payment Address entering the transaction amount, and opting
(VPA), eliminating the need for a for the credit line as the payment option.
camera. • 'Hello UPI' is a conversational payment
• The feature can only be accessed on mode that can understand spoken language
phones or devices with NFC capability. and silence, convert text to numerical values,
• Users need to locate the 'Tap & Pay' and offer text-to-speech capabilities.
button on their UPI app, and the • UPI Lite X enables peer-to-peer transactions
transaction is completed by tapping the without an internet connection, using near-
device on the UPI Smart Tag/Smart QR. field communication (NFC) functionality on
• Transactions up to ₹500 are processed compatible phones.
through UPI LITE, while those exceeding
₹500 require a UPI PIN.
A unified payment system (UPI) powers multiple bank accounts into a single mobile application
(of any participating bank), merging several banking features like Instant transfer of funds, bill-
sharing facility, etc. It has been developed by: National Payments Corporation of India.
NOTES
About Near-field communication (NFC) is a short-range wireless technology that allows two
devices to communicate when they are within 4 centimetres of each other. NFC uses magnetic
field induction to enable communication.
12. ‘Lightweight’ payments system

The Reserve Bank of India (RBI) has conceptualised a lightweight payment and settlements
system, which can be operated from anywhere by a bare minimum staff in exigencies such as
natural calamities or war.
• The infrastructure for this system will be independent of the technologies that underlie the
existing systems of payments such as UPI, NEFT, and RTGS.
Difference between UPI and lightweight system:

• The key difference lies in the resilience and availability of the two systems.
• UPI and other conventional systems prioritize handling large transaction volumes and
require a stable and robust infrastructure.
• On the other hand, the lightweight system is designed to operate even in volatile and
extreme conditions when regular payment systems may not be accessible.
Benefits:
• Such a system could ensure near-zero downtime of the payment and settlement system in
the country and keep the liquidity pipeline of the economy alive and intact by facilitating the
uninterrupted functioning of essential payments.
• By implementing a lightweight system as a backup, the RBI aims to ensure that individuals and
institutions can continue to make payments during emergencies or disruptions to the
conventional payment infrastructure.
• It serves as a precautionary measure to be prepared for extreme situations and maintain
the continuity of financial transactions.
13. T+0, instant settlement cycle

The Securities and Exchange Board of India (SEBI) has proposed a new settlement cycle called
T+0, allowing for the clearing and settlement of funds and securities on the same day of the
trade, in addition to the existing T+1 settlement cycle.
• The proposal is part of SEBI's efforts to keep pace with market changes, enhance investor
protection, and make the securities markets more efficient.
• Surveillance measures applicable in the T+1 settlement cycle will apply to the T+0 settlement
cycle.
Currently, the settlement process takes one day (T+1) after the trade date, but with T+0
settlement, funds and securities will be transferred instantly on the same day as the trade. This
shift will bring operational efficiency, faster fund remittances, and immediate availability of
money and shares for investors.
What is the T+1 settlement cycle?

In simple terms, T+1 settlement means that securities transactions will reflect in the demat
account after a day instead of two days now under the T+2 cycle. If an investor buys a stock on
Thursday, it would be shown in the demat account on Friday. Now with T+0 settlement, investors
can find the purchased on the same day (i.e., Thursday)
T+2: Was introduced in 2017

T+1: Was recently allowed in the Indian stock market (January 2023)
NOTES
14. Sebi's SCORES platform

• SEBI’s Complaints Redress System (SCORES) portal encourages investors to lodge their
complaints on SCORES instead of sending physical letters.
• SCORES does not deal with complaints against companies including Unlisted/delisted
companies, sick companies, or a company where a moratorium order is passed, or where the
company is struck off by the Registrar of Companies (RoC).
15. Clearing corporations

The European Securities and Markets Authority (ESMA), the European Union's financial markets
regulator and supervisor, has derecognised six Indian central counterparties (CCPs) from April 30,
2023.
What are Clearing corporations (CC)?

CC is an organization associated with an exchange to handle the confirmation, settlement, and
delivery of transactions in a prompt and efficient manner.
NOTES
Examples of CCs:
The CCPs are The Clearing Corporation of India (CCIL), Indian Clearing Corporation Ltd (ICCL), NSE
Clearing Ltd (NSCCL), Multi Commodity Exchange Clearing (MCXCCL), India International Clearing
Corporation (IFSC) Ltd (IICC), and NSE IFSC Clearing Corporation Ltd (NICCL).
Why has ESMA derecognized Indian CCs?

The decision to derecognise Indian CCPs came due to ‘no cooperation arrangements’ between
ESMA and Indian regulators – the Reserve Bank of India (RBI), the Securities and Exchange Board
of India (SEBI) and the International Financial Services Centres Authority (IFSCA).
Impact:
As per the European Market Infrastructure Regulations (EMIR), a CCP in a third country can
provide clearing services to European banks only if it is recognised by ESMA. With the withdrawal
of recognition, these CCPs will no longer be able to provide services to clearing members and
trading venues established in the EU.
Government’s stand – ESMA’s threat is unreasonable since all clearing corporations are well-
regulated in India.
16. Front-Running
17. Domestic systemically important banks

The Reserve Bank of India (RBI) has released its list of domestic systemically important banks (D-
SIBs) for 2023, including the State Bank of India (SBI), HDFC Bank, and ICICI Bank.
NOTES
• While ICICI Bank maintains its previous categorization, SBI and HDFC Bank have moved to
higher buckets.
• The D-SIB framework aims to enhance the resilience of the financial system by assigning
additional common equity requirements based on the systemic importance of banks.
• The indicators which are used for assessment are: size, interconnectedness, substitutability
and complexity.
• Based on their systemic importance scores in ascending order, banks are plotted into four
different buckets and are required to have additional Common Equity Tier 1 Capital
(CET1) requirements ranging from 0.20% to 0.80% of risk weighted assets (RWA).
o CET1 is the highest quality of regulatory capital, as it absorbs losses immediately
when they occur. It is a capital measure introduced in 2014 globally as a
precautionary means to protect the economy from a financial crisis.
o RWA, are used to link the minimum amount of capital that banks must have, with
the risk profile of the bank’s lending activities (and other assets).
18. Business Correspondents (BCs)

Business Correspondents (BCs) are intermediaries appointed by banks and financial institutions
to provide banking and financial services in areas where establishing traditional branches may be
challenging or expensive.
BCs act as a link between banks and customers, offering services such as opening accounts,
disbursing loans, collecting payments, and facilitating other financial transactions.
• RBI launched the Banking Correspondent’s (BCs) model in 2006 to expand Financial
Inclusion. E.g., ‘Bank Sakhi’ (or female banker friend) model.
Current status of BCs (as per the report):

1. BCs operate over 95% of banking outlets in rural regions.
2. Presently Women agents comprise less than 10% of the BC workforce
19. Insurance Surety Bond

The National Highways Authority of India (NHAI) has embraced an innovative approach,
accepting an Insurance Surety Bond in place of a Bank Guarantee for the Toll Operate Transfer
(TOT), marking the first such use in the road infrastructure sector.
• This move aims to boost liquidity, encourage private participation in highway development,
and promote the 'Ease of Doing Business'.
• The Insurance Surety Bonds, facilitated by NHAI in partnership with insurance companies,
serve as a financial guarantee, underlining their significance in evolving the road
infrastructure landscape.
• This approach has received substantial traction, with over 40 such bonds issued for various
NHAI contracts, signalling the potential for wider adoption.
• The Ministry of Finance, Government of India has recognized e-BGs and Insurance Surety
Bonds at par with Bank Guarantees, consolidating their role in government procurements.
About Surety Bonds:
A surety bond is a legally binding contract that is a unique type of insurance. It is a three-party
agreement that guarantees compliance, payment, or performance of an act.
A surety bond is a promise to be liable for the debt, default, or failure of another. The principal is
the debtor, and the surety is the third person who becomes responsible for the payment of the
obligation if the principal is unable to pay or perform. The principal remains primarily liable,
whereas the surety is secondarily liable.
NOTES
Surety bonds are used as an assurance that the issuer will pay any debts if the other party fails
to do so. For example, surety bonds can be used as a substitute for bank guarantees in
government procurement
20. Sovereign green bond

In the first issuance of sovereign green bonds (SGrB) for the Financial Year 2024, the auction of
five-year maturity bonds was successful, attracting decent investor interest.
About Sovereign Green Bond:
A sovereign green bond is a financial instrument that is issued by a sovereign entity, inter-
governmental group, alliance, or corporation. The proceeds from the sale of these bonds are
earmarked exclusively for projects classified as environmentally sustainable.
In India, sovereign green bonds showcase the country's commitment to building a low-carbon
economy. They lower the capital cost for green projects by attracting new investors, and
mobilizing private capital for sustainable development.
India's first deal in the sovereign green bond market financed expenditures in grid-scale solar
and wind, decentralised solar such as solar water pumps for agriculture.
The Pension Fund Regulatory and Development Authority (PFRDA) will allow pension funds to
invest in sovereign green bonds.
Pension Fund Regulatory and Development Authority (Statutory organization; founded 2003; HQ:
New Delhi) is the regulatory body for the overall supervision and regulation of pensions in India. It
operates under the jurisdiction of the Ministry of Finance.
21. Angel tax

The Central Board of Direct Taxes (CBDT) has issued a directive to its officers, instructing them
not to carry out scrutiny of angel tax provisions for start-ups recognized by the Department for
Promotion of Industry and Internal Trade (DPIIT).
• The directive comes in response to concerns raised by start-ups regarding scrutiny notices
for angel tax.
Angel tax is income tax levied at a rate of 30.6% on unlisted companies that issue shares to
investors at a price higher than their fair market value.
NOTES
The Finance Act 2023 amended Section 56(2)(viib) of the Income-tax Act, colloquially known as
the 'angel tax,' to include foreign investors. DPIIT-recognized start-ups are exempt from the
angel tax levy.
22. Digital Public Infrastructure (DPI)

India's use of Digital Public Infrastructure (DPI) has achieved an 80% financial inclusion rate in just
six years, according to a World Bank report.
NOTES
23. UPI QR Code-Central Bank Digital Currency interoperability

Several Indian banks, have initiated interoperability between the Unified Payments Interface's
(UPI) Quick Response (QR) codes and their central bank digital currency (CBDC) or e₹
applications.
• This integration allows users of the retail digital rupee to perform transactions by scanning
any UPI QR code at a merchant outlet, simplifying payments for customers and merchants.
The digital rupee, issued by the RBI, is a tokenized digital version of the rupee, stored in a digital
wallet linked to a customer's savings bank account.
This move aims to increase the adoption of the digital rupee by leveraging the widespread use
of UPI.
About Interoperability:
As defined by the Reserve Bank of India (RBI), it enables a payment system to work seamlessly
with other payment systems. In this context, it means that all UPI QR codes are compatible with
CBDC apps, eliminating the need for separate QR codes for transactions.
24. Incremental cash reserve ratio

The Reserve Bank of India (RBI) has announced the discontinuation of the incremental cash
reserve ratio (I-CRR) in a phased manner.
• The I-CRR was aimed at absorbing surplus liquidity in the banking system, primarily due to
various factors like the return of Rs 2,000 banknotes, government spending, and capital
inflows.
NOTES
About I-CRR:
Banks are typically required to maintain 4.5 per cent of their Net Demand and Time Liabilities as
CRR with the RBI.
However, in periods of excess liquidity, the RBI can impose incremental CRR, which means that
banks will have to park even more liquid cash with the RBI. This measure helps the central bank
manage liquidity and acts as a buffer during times of stress in the banking system.
25. Self-Regulatory Organisation (SRO) for fintech entities

The Reserve Bank of India (RBI) has proposed the establishment of a Self-Regulatory
Organisation (SRO) for fintech entities.
What are fintech entities?

• Fintech entities are financial
technology companies that
leverage technology to
provide innovative financial
services and solutions.
• They often operate in areas
such as digital payments,
lending, investing,
insurance, and wealth
management.
• Examples of fintech entities
include Paytm, PhonePe,
PolicyBazaar, Zerodha, CRED
etc.
What is an SRO?
An SRO is a non-governmental
organization that sets and
enforces industry rules to
protect customers, and promote
ethics, equality, and
professionalism. They ensure
compliance through impartial mechanisms, maintaining discipline and enforcing penalties.
• SRO regulations complement existing laws and regulations.
Functions of SROs:
• Communication: Serve as a link between members and regulatory bodies like the RBI.
• Standards: Set industry benchmarks and encourage professional conduct.
• Training: Provide member training and awareness programs.
• Dispute Resolution: Establish a uniform grievance resolution framework.
Advantages of SROs:
• Expertise: SROs offer industry expertise and insights to members.
• Ethical Standards: They enforce ethical standards, enhancing industry trust.
• Oversight: Act as watchdogs, preventing unprofessional practices.
NOTES
26. Cryptocurrency
Cryptocurrency is a digital or virtual form of currency that uses cryptography for security. It
operates on decentralized technology called blockchain, which records all transactions
transparently.
Unlike central bank currencies (fiat currencies), cryptocurrencies are not issued or regulated by a
central authority like a government or central bank. They are decentralized, borderless, and
typically have limited supply, making them immune to government manipulation and often
subject to price volatility.
The current regulatory framework for cryptocurrencies in India:

• In 2018, the Reserve Bank of India (RBI) banned Indian banks from engaging in
cryptocurrency transactions.
• In 2020, the Supreme Court of India overturned the RBI's ban on cryptocurrency
transactions.
• In the 2022-23 Union budget, India proposed a 30% tax on income generated from digital
asset transfers and a 1% Tax Deducted at Source (TDS) on cryptocurrency transactions.
About FSB:
The Financial Stability Board (founded in 2009; HQ: Basel, Switzerland) is an international body
that monitors and makes recommendations about the global financial system. It was established
after the G20 London summit (2009) as a successor to the Financial Stability Forum.
27. Gresham's Law

Gresham's Law, named after Thomas Gresham, states that "bad money drives out good" when
the government fixes the exchange rate between two currencies at a level different from the
market rate.
Impact:
• This leads to the undervalued currency going out of circulation, while the overvalued
currency remains but lacks buyers.
• The law can result in a currency shortage when demand exceeds supply due to the fixed
price.
Gresham's law applies not only to paper currencies but also to commodities. It can cause goods
to disappear from the formal market when their prices are forcibly undervalued by governments.
Explanation using example:

Imagine a country where both gold coins and copper coins are used as currency. The
government sets an exchange rate, saying that 10 copper coins are equal in value to 1 gold coin,
even though the market values them differently.
In this scenario, people will start hoarding and using gold coins because they are more valuable.
They will spend copper coins, which are considered "bad money," in everyday transactions,
keeping the "good money" (gold coins) for themselves.
Eventually, the circulation of copper coins increases, while gold coins become scarce in daily
transactions. This demonstrates Gresham's Law in action, where the undervalued (copper)
currency pushes out the more valuable (gold) currency from everyday use.
NOTES
The alternative:
Thiers' law, on the other hand, states that "good money drives out bad" when people have the
freedom to choose between currencies, and they prefer higher-quality currencies.
28. Wilful defaulters

The Reserve Bank of India (RBI) has announced stricter measures against wilful defaulters,
aiming to prevent them from accessing additional credit facilities or credit restructuring.
• The RBI has also barred any lender from extending credit to entities associated with
wilful defaulters.
Measures taken by RBI:

• Timeline for Identification: The RBI has set a timeline of six months, starting from the
classification of an account as a non-performing asset (NPA), within which a lender must
identify borrowers who should be categorized as wilful defaulters.
• Dissemination of Credit Information: The RBI's proposed changes include the establishment
of a system for sharing credit information about wilful defaulters.
• Identification Process: In cases of wilful default, an "Identification Committee" will examine
the situation.
• Criminal Action: Based on the specific circumstances of each case, lenders have the discretion
to assess whether criminal action against wilful defaulters is warranted.
Definition of Wilful Default:

The RBI defines a wilful default as a situation where a borrower fails to meet repayment
obligations despite having the capacity to do so, diverting the loan for purposes other than its
intended use, siphoning off funds that are no longer available in other forms, or disposing of
assets securing a term loan without informing the lender.
29. Social bonds

The National Bank for Agriculture and Rural Development (NABARD) has successfully raised Rs
1,040.50 crore through a five-year social bond.
• The social bonds issued by NABARD have received 'AAA' ratings from CRISIL and ICRA, and
they will be listed on the BSE (Bombay Stock Exchange).
• NABARD recently introduced a Sustainability Bond Framework, aimed at financing and
refinancing green and social projects.
Social bonds are a type of financial instrument or investment vehicle issued by governments,
companies, or organizations to raise capital for projects or initiatives with a specific social or
environmental purpose.
These bonds are typically designed to fund projects that have a positive impact on society or
address social and environmental challenges.
30. Listing on Stock Exchange

Indian companies are allowed to directly list their securities on overseas exchanges in specified
jurisdictions.
What is Listing on Stock Exchange?

Listing on a stock exchange is the process by which a company's shares or securities are made
available for public trading on the exchange. It allows investors to buy and sell the company's
stock, providing the company with access to capital and visibility in the financial markets.
How will Indian Companies get listed on foreign exchanges?
NOTES
The process will involve an initial listing on the International Financial Services Centre (IFSC) in
Gandhinagar.
Significance:
It will help expand capital-access opportunities for businesses in India and attract more overseas
investors, ultimately leading to better valuations for Indian companies.
• This policy initiative, to enable listing of Indian companies in GIFT-IFSC, will reshape the Indian
capital market landscape and offers Indian companies, especially start-ups and companies in
the sunrise and technology sectors, an alternative avenue to access global capital beyond the
domestic exchanges.
• This is expected to lead to better valuation of Indian companies in line with global standards
of scale and performance, boost foreign investment flows, unlock growth opportunities and
broaden the investor base.
• The public Indian companies will have the flexibility to access both markets i.e. domestic
market for raising capital in INR and the international market at IFSC for raising capital in
foreign currency from the global investors.
• It is also expected to provide a boost to the capital market ecosystem at GIFT IFSC by
provision of new investment opportunities for investors, diversification of financial products
and by enhancing liquidity.
ABOUT GIFT-IFSC
• GIFT-IFSC is the maiden international financial services centre of India that connects India
with global opportunities and also enables the Indian economy to connect with the global
financial system and allows seamless and easy flow of global capital into India.
• To cater to the dynamic development needs of GIFT IFSC, the unified statutory regulatory
authority, International Financial Services Centres Authority (IFSCA) has taken significant steps
in accelerating global sustainable capital flows by providing an agile and world class regulatory
and business environment in GIFT IFSC.
31. Worldcoin
Worldcoin is an initiative to create a digital network where individuals can claim a stake and join
the digital economy. The project involves scanning individuals' irises through a device called
"Orb" to collect biometric data and issue them a World ID.
• In exchange, participants receive a cryptocurrency called Worldcoin [WLD]. The goal is to
build the "world's largest identity and financial public network" accessible globally.
• To be a part of the Worldcoin network, individuals can become "Orb operators" and scan the
irises of others, or they can get their own irises scanned to receive a World ID and WLD
cryptocurrency.
Features:
• Worldcoin uses biometric data to ensure unique participation and avoid duplications. The
company claims to use zero-knowledge proofs (ZKPs) to maintain users' privacy and comply
with Europe's General Data Protection Regulation (GDPR).
• WLD's price fluctuates, and it was criticized, especially by NSA whistle-blower Edward
Snowden, for using biometrics for verification.
• Worldcoin has been introduced in India, with Orb operators scanning people's eyes at
various locations in cities like Delhi, Noida, and Bangalore.
32. Time-of-Day (ToD) tariff

Time-of-Day (ToD) tariff is an electricity pricing system that adjusts prices based on demand,
with higher rates during peak hours and lower rates during off-peak hours. The goal is to
NOTES
encourage consumers to use electricity when demand is lower, helping to manage energy
consumption and grid load.
Status: This system is being introduced in India in 2024 for commercial and industrial users and in
2025 for other users. ToD tariffs are already used in many countries, including the US, UK, and
Japan. For this system to work, smart meters are needed to track electricity use every 15
minutes.
33. Infrastructure Debt Fund-NBFCs (IDF-NBFCs)

The Reserve Bank of India (RBI) has issued revised guidelines for Infrastructure Debt Fund-NBFCs
(IDF-NBFCs) with the aim of enhancing their role in financing the infrastructure sector.
About the New norm:

• According to the new norms, IDF-NBFCs must have a minimum net owned fund (NOF) of Rs
300 crore and a capital-to-risk weighted assets ratio (CRAR) of at least 15%, with a minimum
Tier 1 capital of 10%.
• They will be allowed to raise funds through rupee or dollar-denominated bonds with at least
a five-year maturity
• The requirement for a sponsor for IDF-NBFCs has been removed, and shareholders will now
undergo scrutiny similar to other NBFCs.
What are IDF-NBFCs?

Infrastructure Debt Fund-Non-Banking Financial Companies (IDF-NBFCs) are specialized financial
entities registered as NBFCs with the purpose of facilitating the flow of long-term debt into
infrastructure projects.
• They raise funds by issuing bonds, typically with a minimum maturity of five years, to
support infrastructure development.
• These entities play a crucial role in financing large-scale infrastructure projects in sectors like
transportation, energy, and telecommunications.
NBFC permitted to:

• Refinance infrastructure projects that have completed at least one year of commercial
operations
• Finance Toll-Operate-Transfer (TOT) projects as a direct lender.
34. Goods and Services Tax (GST)

● It is an indirect tax (not directly paid by customers to the government) that came into effect on
July 1, 2017, as a result of the 101st Amendment to the Indian Constitution.
● It is imposed on both manufacturers and sellers of goods, as well as suppliers of services.
● The rates for GST range from 5%, 12%, 16% and 28%, and it applies to most goods and services,
excluding alcoholic liquor for human consumption and five petroleum products (petroleum
crude, motor spirit (petrol), high-speed diesel, natural gas and aviation turbine fuel).
NOTES
About GST Council:

● It is an apex committee to modify, reconciles or make recommendations to the Union and the
States on GST, like the goods and services that may be subjected or exempted from GST, model
GST laws, etc.
● Article 279A of the Indian Constitution empowers the President of India to constitute a joint
forum of the Centre and States called the GST Council.
Direct Tax GST

Direct tax refers to the taxes imposed on GST (Goods and Services Tax) is an indirect
individuals and entities (levied directly on tax levied on the supply of goods and
the taxpayer) based on their income, profits, services. GST is a consumption-based tax
or assets. It includes taxes like income tax, that is charged at each stage of the supply
corporate tax, and wealth tax. chain, from production to the final sale.
35. GST Network (GSTN)

The GST Network (GSTN) has introduced geocoding functionality in all states and union territories
of India.
Geocoding converts location descriptions into geographic coordinates to ensure accurate
address details in GSTN records and simplify verification process.
GSTN under PMLA- Government has included the GSTN under the Prevention of Money
Laundering Act (PMLA). It allows for the sharing of information between the GSTN, Enforcement
Directorate, and other investigative agencies. The amendment to the 2006 notification enhances
provisions under Section 66 of the PMLA, enabling disclosure of information.
Significance: This step aims to address rising cases of GST fraud and fake registrations. By
bringing GSTN under the purview of money laundering laws, tax authorities gain more power to
trace the original beneficiaries in cases of fraud.
About GSTN:
GSTN, the non-profit organization, provides IT infrastructure and services to Central and State
Governments, taxpayers and other stakeholders for the implementation of GST
36. Trade Receivables Discounting System (TReDS) platforms

The Indian government and the Reserve Bank of India (RBI) are exploring the integration of the
Goods and Services Tax Network (GSTN) with the Trade Receivables Discounting System (TReDS)
platforms using an account aggregator.
What are Trade Receivables Discounting System (TReDS) platforms?

Trade Receivables Discounting System (TReDS) platforms are digital platforms that provide a
mechanism for small and medium-sized enterprises (SMEs) to raise funds by selling their trade
NOTES
receivables or invoices to financiers at a discounted rate. These platforms facilitate the early
realization of funds, helping SMEs improve their cash flow and working capital.
What is an account aggregator?

An account aggregator is a financial intermediary that collects and consolidates a user's financial
data from various sources such as banks, mutual funds, insurance companies, and other financial
institutions.
Account Aggregator Network (AAN) is an RBI-regulated entity (with an NBFC-AA license)
Currently, around 23 banks from both public and private are under the AAN. AA framework was
created in 2021 through an inter-regulatory decision by RBI and other regulators including SEBI,
IRDA, and PFRDA through an initiative of the Financial Stability and Development Council (FSDC)
How does the integration of GSTN with TReDS help?

• It facilitates direct sanctions of invoices raised by Micro, Small, and Medium Enterprises
(MSMEs) on the GSTN platform.
• By integrating the two systems, e-invoices generated on the GSTN can be seamlessly
transmitted to the TReDS portal, eliminating the need for additional activities or
documentation.
• This will lead to faster loan underwriting and sanctions as financiers will have greater
confidence in the authenticity of the invoices sourced directly from the GST platform.
• Development of an alternative credit database, particularly benefiting MSMEs with limited
credit history.
37. Variable Rate Reverse Repo Auctions (VRRRs)

The Reserve Bank of India (RBI) has continued to conduct variable rate reverse repo auctions
(VRRRs) to withdraw excess liquidity from the banking system since June 30.
What is Repo and Reverse Repo?

Repo rate is the rate at which the central bank lends money, while the reverse repo rate is the
rate at which the central bank borrows money from commercial banks. These rates are used to
influence liquidity, credit availability, and inflation in the economy.
What is VRRR?
Variable rate reverse repo (VRRR) auctions are a tool used by the Reserve Bank of India (RBI) to
manage the amount of money in the banking system. The RBI conducts these auctions to absorb
excess money from banks when there is too much liquidity. The VRRRs aim to maintain the
overnight call money rate close to the target rate of 6.50%.
What is Liquidity?
It is a measure of how quickly an asset can be converted into cash. High liquidity means that an
asset can be easily traded, while low liquidity indicates that it may be difficult to buy or sell the
asset without affecting its price. Liquidity is essential for efficient functioning of financial
markets and allows investors to enter or exit positions with minimal transaction costs.
Working:
1. Excess liquidity: If there is too much money in the banking system, the RBI wants to reduce it
to maintain stability.
2. Auction process: The RBI offers to borrow money from banks through VRRR auctions. Banks
participate by submitting bids, stating the interest rate at which they are willing to lend
money to the RBI. This interest rate is called the reverse repo rate.
3. Bid acceptance: The RBI reviews the bids and accepts those with the lowest interest rates
first. For example, if Bank A offers a reverse repo rate of 6.5% and it is the lowest bid, the RBI
accepts it.
NOTES
4. Lending money: Bank A then lends a specific amount of money to the RBI for a short period,
usually overnight. In return, Bank A earns interest at the reverse repo rate of 6.5%.
5. The RBI takes this borrowed money out of circulation, reducing the overall liquidity in the
banking system.
38. Twin-Balance Sheet problem

The twin-balance sheet problem refers to a situation in which both banks and corporates face
financial distress simultaneously. It occurs when banks have a high amount of non-performing
assets (bad loans) (NPA of public sector banks reached almost 12% in 2016-17) on their balance
sheets, and corporates have accumulated excessive debt, leading to a negative impact on the
overall economy.
Some of the initiatives taken by the government are:

• 4R strategy (recognizing, recapitalizing, resolving, and reforming);
• Central Repository of Information on Large Credits (CRILC) to enable banks to share
information on large loans;
• Insolvency and Bankruptcy Code, 2016
• National Asset Reconstruction Company (NARCL) to handle bad debt
39. National Asset Reconstruction Company (NARCL)

The government has finally renewed its federal guarantee to the National Asset Reconstruction
Company (NARCL), making it easier for the entity to acquire bad loans from lenders.
About NARCL:
NARCL has been set up by banks as a strategic initiative to clean up the legacy stressed assets
with an exposure of Rs 500 crore and above in the Indian Banking system.
• Public Sector Banks maintain 51% ownership in NARCL.
Purpose: The main purpose behind the formation of the NARCL is to acquire bad loans from
banks and sell them to buyers who are looking for Non-Performing Assets (NPAs). The
organisation itself will also decide the price of these NPAs.
Structure: It has been incorporated under the Companies Act and registered with RBI as an Asset
Reconstruction Company under the Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002.
40. RBI’s SOPs to Banks for Rupee Trade

The Reserve Bank of India (RBI) is set to issue a standard operating procedure (SOP) to banks in
order to expedite the issuance of proofs of inward remittances for exporters.
Aim: This move aims to address the challenges faced by exporters in the rupee-based trading
mechanism for foreign trade.
Issues with FIRC (Foreign Inward Remittance Certificate)?

The issue with Foreign Inward Remittance Certificates (FIRC) arises when the certificate from one
bank is not being sent to another, which hampers the generation of electronic bank realisation
certificates (e-BRCs). This creates a problem for exporters as e-BRCs serve as proof of payment
for their exports and make them eligible for benefits under the Foreign Trade Policy.
For example, if an exporter in India receives a payment for their exports from a foreign buyer
through a bank, they require a FIRC from that bank as evidence of the inward remittance.
However, if the FIRC is not transmitted to the exporter's bank, the exporter cannot obtain the
NOTES
necessary e-BRC, which may prevent them from accessing benefits or incentives provided by the
government for export transactions.
What is FIRC (Foreign Inward Remittance Certificate)?

FIRC is a document that acts as a testimonial for all the inward remittances entering India.
What is an Electronic Bank Realization Certificate(e-BRC)?

An Electronic Bank Realization Certificate(e-BRC) is a vital digital certificate for export
businesses. A bank issues the e-BRC to confirm that the buyer made payment to the exporter
against the export of services or goods. The BRC is the proof of realization of payment against
exports.
What is the Clean Note Policy?

● The policy was introduced in 1999 by the then RBI Governor: Bimal Jalan.
● It seeks to give the public good-quality currency notes and coins with better security
features, while soiled notes are withdrawn out of circulation.
● Under the policy, the RBI had earlier decided to withdraw from circulation all banknotes
issued prior to 2005 as they have fewer security features.
41. Payment System Operators (PSOs)

Payment System Operators (PSOs) are entities that facilitate the movement of funds between
payers and payees in electronic payment systems. They provide the necessary infrastructure and
technology to enable various payment transactions, such as online payments, card payments,
mobile payments, and electronic fund transfers.
Examples: Popular PSOs like PayPal, RuPay, Visa, Mastercard, and Paytm act as intermediaries in
processing and settling payments between buyers and sellers in online transactions.
42. Urban Co-Operative Banks

The government has taken steps to strengthen 1,514 urban co-operative banks (UCBs) by
implementing four key measures, as notified by the Reserve Bank of India (RBI).
Measures notified by the RBI are:

Measure Description
New Branches UCBs can open new branches up to 10% (maximum 5 branches) of the
previous year's branch count. UCBs have to get the policy approved by
their board and comply with the Financially Sound and Well Managed
(FSWM) Norms
One-Time UCBs can also do One-Time Settlements at par with commercial banks.
Settlement UCBs can have board-approved policies for technical write-offs and
settlements with borrowers
Priority Sector Extension of timeline by two years (until March 31, 2026) to achieve PSL
Lending (PSL) targets. Deadline extension from March 31, 2023, to March 31, 2024, to
achieve the PSL target of 60%
Designating Appointment of a Nodal Officer in RBI for closer coordination and focused
Nodal Officer in interaction
RBI
NOTES
43. Default loss guarantee (DLG)/ First Loss Default Guarantee (FLDG)
The RBI has allowed a Default loss guarantee (DLG) (also called first Loss Default Guarantee
(FLDG), a safety-net arrangement among banks, non-banking finance companies (NBFCs) and
lending service providers
(LSPs).
LSPs: These are new-age

technology platforms/ agents
(of a bank or NBFC) in the
lending space who carry out
one or more of a lender’s
functions on behalf of
regulated entities (REs).
What is an FLDG
arrangement?
● It is an arrangement
whereby a third party such
as a financial technology (fintech) player (LSP) compensates lenders if the borrower defaults.
● For all practical purposes, credit risk is borne by the LSP without having to maintain any
regulatory capital.
Previous arrangement:
NOTES
● RBI had expressed reservations about the FLDG arrangement because it felt that the model
could pose a systemic risk.
● The RBI guidelines (2022) on digital lending did not provide clarity on the FLDG structure.
New guidelines:
● The RBI permitted FLDG arrangements between banks and fintech or between two REs.
● The LSP-providing DLG must be incorporated as a company under the Companies Act, 2013.
● Banks and NBFCs should ensure that the total amount of DLG cover on any outstanding
portfolio does not exceed 5% of the amount of that loan portfolio.
Significance: This will facilitate the entry of small and medium fintech into the digital lending
space in partnerships with banks or NBFCs.
44. RBI’s gold reserves

The RBI’s gold reserves touched 794.64 metric tonnes in fiscal 2023, an increase of nearly 5%
over fiscal 2022.
Gold reserves
● Meaning: It is the gold held by a national central bank.
● Purpose:
○ A guarantee to redeem promises to pay depositors, note holders/paper
money/trading peers, during the era of the gold standard - a monetary system (until
1971) in which the standard economic unit of account is based on a fixed quantity of
gold.
○ Currently, a store of value/ to support the value of the national currency.
Why is gold used as a reserve in Central banks?

Unlike fiat currencies, which can be subject to inflation or devaluation due to various economic
factors, the value of gold tends to be relatively stable over time, which makes it an attractive
asset for central banks to hold as a reserve. Additionally, gold is highly liquid, which means it can
easily be converted into cash or used to settle international transactions.
Composition of India’s gold reserves:

● The 794.64 tonnes of gold reserves included gold deposits of 56.32 tonnes.
● 437.22 tonnes of gold is held overseas in safe custody with the Bank of England and the Bank
of International Settlements (BIS).
● 301.10 tonnes of gold is held domestically.
Comparison with total foreign exchange

reserves:
● As on March 31 2023, India’s total
foreign exchange (forex) reserves
stood at $578.449 billion, and gold
reserves were pegged at $45.2 billion.
● Thus, the share of gold in the total
forex increased from about 7% (March
2022) to about 7.81%.
Why are these reserves increasing?

● RBI has been adding gold to its
reserves to diversify its overall
reserves.
NOTES
○ This change in strategy has been driven by negative interest rates in the past, the
weakening of the dollar, global uncertainty and rising inflation.
● As gold is considered a more safe, secure and liquid asset, it can safeguard RBI’s returns.
What are other central banks doing?

● Many other central banks, including the Monetary Authority of Singapore (MAS), the People’s
Bank of China (PBoC), etc., have been buying gold.
● The two key drivers behind the decision to hold gold - its performance during crisis times and
its role as a long-term store of value.
45. ECL-based loan loss provisioning norms

Lenders have sought extension from the Reserve Bank of India (RBI) for implementation of the
Expected Credit Loss (ECL)-based loan loss provisioning framework.
What is loan loss provisioning?

Loan loss provisioning refers to the practice of setting aside funds by banks to cover potential
losses arising from loans that may default or become unrecoverable.
Current Banks are required to make loan loss provisions based on an "incurred loss"
System approach. Also, the Loan loss provisioning happens much later, leading to an
increase in credit risk for banks.
“Incurred This model assumes that all loans will be repaid until evidence to the contrary
Loss” model is identified. Only at that point is the defaulted loan written down to a lower
value. This leads to a delay in the recognition of defaults.
The New RBI has proposed an expected loss (EL)-based approach for provisioning by
Proposal banks in case of loan defaults. Banks are required to estimate expected credit
losses based on forward-looking estimations. Banks have to categorize ECL
norms for assessing the quality of assets and the expected loss.
ECL Norms Banks classify financial assets (primarily loans, including irrevocable loan
commitments, and investments classified as held-to-maturity or available-for-
sale) into three categories: Stage 1, Stage 2, and Stage 3.
Stage 1: Financial assets that have not had a significant increase in credit risk or
with low credit risk at the reporting date.
Stage 2: Financial instruments that have had a significant increase in credit risk
but don't have objective evidence of impairment.
Stage 3: Financial assets that have objective evidence of impairment at the
reporting date
46. e-RUPI vouchers

The RBI has permitted non-bank Prepaid Payment Instrument (PPI) issuers to issue e-RUPI
vouchers and enable the issuance of e-RUPI vouchers on behalf of individuals.
What is e-RUPI?
● e-RUPI is a contactless cashless voucher which a user gets on his or her phone in the form of
an SMS or QR code.
● S/he can go and redeem it at any centre that accepts it.
● The cap on the amount for e-RUPI vouchers issued by the government has been set at Rs
1,00,000 per voucher.
● The central bank has also allowed the use of the e-RUPI voucher multiple times (until the
amount of the voucher is completely redeemed).
NOTES
How will it work?
● For instance, if
the central
government
wants to cover a
particular
treatment of an
employee in a
specified
hospital, it can
issue an e-RUPI
voucher for the
determined
amount through
a partner bank.
● The employee
will receive an SMS or a QR Code on his/her feature phone/smartphone.
● S/he can go to the specified hospital, avail of the services and pay through the e-RUPI voucher
received on his phone.
How will e-RUPI benefit?

● It ensures an easy, contactless process that is operable on basic phones also.
● It will deepen the penetration of digital payments in the country and a major stride towards
promoting financial inclusivity.
47. RBI payout to Government
NOTES
48. LIBOR
NOTES
External Sector
1. Reverse flip
Several well-funded startups, including Pine Labs and Udaan, are considering relocating their
holding companies to India, a trend known as "reverse flipping" ahead of potential IPOs.
• This shift is attributed to a tightening regulatory environment, potential IPO plans, and
the desire to operate from the home market.
Reverse Flipping is a term used to describe the trend of overseas start-ups shifting their domicile
to India and listing on Indian stock exchanges. Reverse flipping can be done through share swaps
and inbound mergers
Some reasons for reverse flipping include:

• Access to venture capital
• Favourable tax regimes
• Better intellectual property protection
• Favourable government policies
2. India Club
India plans to establish its own Protection and Indemnity (P&I) entity, named the India Club, to
provide insurance for ships operating along its coasts and waterways.
What are P&I clubs?

They are mutual insurance associations that offer risk pooling and coverage for third-party risks
like cargo damage, war, and environmental hazards.
Aim:
The initiative aims to reduce vulnerability to international pressures, particularly in conflicts like
the Russia-Ukraine situation. The India Club will initially focus on insuring ships involved in
domestic movements, led by the Ministry of Ports, Shipping, and Waterways.
Global P&I Club: International Group of P&I Clubs: Headquartered in London, this group
comprises 13 clubs covering about 90% of the world’s ocean-going vessels.
3. Tax Inspectors Without Borders (TIWB) program

Tax Inspectors Without Borders (TIWB) program, a collaborative effort between the United
Nations Development Programme (UNDP) and the Organisation for Economic Cooperation and
Development (OECD), was recently launched in Saint Lucia.
India has been selected as the Partner Administration and will contribute Tax Experts to the 12-
18-month initiative. This marks the seventh TIWB program supported by India through the
provision of Tax Experts.
Aim: The program's focus is on the effective use of automatic exchange of information under the
Common Reporting Standard (CRS) framework. TIWA will facilitate the transfer of tax audit
knowledge and skills to developing country tax administrations using a practical, "learning by
doing" approach.
Saint Lucia is an Eastern Caribbean island nation with a pair of dramatically tapered mountains,
the Pitons, on its west coast. Saint Lucia is one of two sovereign states in the world named after a
woman and is the only one named after a human woman (Ireland is named after a goddess).
NOTES
4. Sovereign Credit Rating
Topic Details
What is Credit Credit rating is an assessment of the creditworthiness of a borrower,
Rating? including individuals, companies, or countries.
What is A sovereign credit rating is an independent assessment of a country's
Sovereign creditworthiness. It evaluates the country's ability to repay debt without
Credit Rating? default, impacting the risk associated with investing in its debt instruments.
Key agencies include Standard & Poor's, Moody's, and Fitch Ratings,
considering economic indicators, fiscal policies, political stability, and trade
position.
Importance of Obtaining a good credit rating is crucial for accessing funding in the
Credit Rating international bond market and attracting foreign investments. It also
influences borrowing costs in global financial markets, allowing countries
with higher ratings to borrow at lower interest rates.
Key Concerns Concerns include the disadvantageous rating methods for developing
Raised by CEA countries, lack of transparency in expert selection, unclear weights assigned
to parameters, and subjective assessments favouring advanced economies.
Between 2006 and 2022, India's GDP has risen, and foreign exchange
reserves have increased, yet its credit rating remains lower than expected.
CRAs heavily rely on the World Bank's governance indicators, explaining only
68% of India's rating.
5. Most Favoured Nation (MFN)

It is a principle in international trade and diplomacy that promotes equal treatment among
trading partners. When a country grants MFN status to another, it agrees to extend the same
trade privileges and favourable terms to that partner as it does to its most favoured trading
partner.
Explanation:
For example, if Country A gives Country B MFN status, it must offer the same trade benefits to
Country B as it does to its best trading partner, Country C. This ensures fairness and non-
discrimination in international trade.
Legal Status of MFN:

Article 1 of GATT 1994 mandates WTO member countries to grant Most Favoured Nation (MFN)
status to each other, ensuring equal trade treatment. There can be exceptions, like bilateral trade
agreements and special access for developing nations.
For instance, India initially granted MFN status to all WTO members, including Pakistan.
However, India suspended Pakistan's MFN status in 2019 due to security concerns, and Pakistan
never reciprocated MFN status for India.
Benefits of Most Favored Nation (MFN) Status:

Benefit Explanation
Equal Trade MFN status ensures all trading partners receive the same trade
Treatment privileges.
Non-Discrimination Prevents preferential treatment for specific countries, promoting fair
trade relations.
Promotes Fair Encourages competition on a level playing field, fostering innovation
Competition and economic growth.
Expanding Market MFN status allows access to a broader market with potentially more
Access favourable trade terms.
NOTES
Reduced Tariffs Lower trade barriers and tariffs can result from MFN status, reducing
and Barriers costs for businesses.
Enhances Encourages countries to work together for mutual economic benefits.
Economic
Cooperation
Fosters Diplomatic Trade ties built on MFN status can promote diplomatic and political
Relations relationships.
About Double Taxation Avoidance Agreement or DTAA:

It is a tax treaty signed between India and another country (or any two/multiple countries) so
that taxpayers can avoid paying double taxes on their income earned from the source country as
well as the residence country
What is Permanent Normal Trade Relations (PNTR)?

The status of Permanent Normal Trade Relations (PNTR) is a legal designation in the United States
for free trade with a foreign nation. It is the same as MFN, only that in the US it is called PNTR.
The Supreme Court of India has ruled that a Double Taxation Avoidance Agreement (DTAA)
cannot be enforced unless it is notified under Section 90 of the Income Tax Act.
• This decision may have significant implications for multinational corporations (MNCs) from
Switzerland, the Netherlands, France, and other countries.
Implications:
• The decision may lead to additional tax revenue for the Indian government but could
potentially strain relations with tax treaty partners.
• The ruling revolves around the interpretation of the Most Favoured Nation (MFN) clause
contained in various Indian treaties with countries that are members of the Organisation for
Economic Cooperation and Development (OECD).
• This clause allows for concessions in tax rates on dividends, interest, royalties, or fees for
technical services, similar to concessions given to other OECD countries.
6. Anti-trust Law
Google is facing allegations in a U.S. court that it used illegal tactics to maintain a monopoly in
online search.
"Anti-trust" issues, refer to concerns related to antitrust laws and regulations, which are
designed to promote fair competition and prevent anti-competitive practices in the
marketplace.
These issues typically involve situations where companies or organizations engage in activities
that hinder competition, limit consumer choice, or create monopolies or dominant market
positions.
7. Basel-III capital framework

The Reserve Bank of India (RBI) has introduced new norms based on the Basel III capital
framework for All India Financial Institutions (AIFIs), which will take effect from April 2024.
• India has five AIFIs under RBI regulation: Export-Import Bank of India (EXIM Bank), National
Bank for Agriculture and Rural Development (Nabard), National Bank for Financing
Infrastructure and Development (NaBFID), National Housing Bank (NHB), and Small Industries
Development Bank of India (SIDBI).
The key provisions of the new norms are as follows:
NOTES
• Capital Adequacy: AIFIs will be required to maintain a minimum total capital of 9 per cent by
April 2024. This includes a minimum tier-I capital of 7 percent and common equity tier-I
(CET-1) capital of 5.5 percent.
• Consolidation of Financial Subsidiaries: All financial subsidiaries, except those involved in
insurance and non-financial activities (both regulated and unregulated), must be fully
consolidated for the purpose of capital adequacy.
• Investment Caps: The RBI has imposed limits on AIFIs' investments in capital instruments of
banking, financial, and insurance entities, capping them at 10 percent of their capital funds.
• Equity Investment Limits: AIFIs' equity investment in a single entity cannot exceed 49 percent
of the equity of the investee.
• Capital Planning and Risk Management: AIFIs are advised to focus on effective and efficient
capital planning and long-term capital maintenance.
About BASEL-III Norms:

Basel-III norms were adopted by financial regulators to improve the banking sector’s ability to
absorb shocks arising from financial and economic stress.
It was developed by the Basel Committee on Banking Supervision in the aftermath of the
financial crisis of 2007-08. It mandates banks to maintain a CAR or Capital to Risk-weighted
Assets (CRAR) of at least 8%.
CRAR is a ratio that compares the value of a bank’s capital (or net worth) against the value of its
various assets weighted according to risk.
8. India’s protectionist Industrial Policy

What meaning of Protectionist measures?
It refers to economic policies and actions taken by a country to protect its domestic industries,
businesses, and workers from foreign competition.
• These measures can include tariffs, quotas, subsidies, and other barriers that make imported
goods more expensive or difficult to access, thereby promoting domestic production and
consumption.
• The goal is to shield domestic industries from foreign competition and support local
economic growth.
How other countries are applying protectionist measures?

• US: The US has introduced the CHIPS and Science Act to boost domestic research and
manufacturing in semiconductors and electric vehicles. This initiative aims to reduce reliance
on countries like China and Russia and enhance "strategic autonomy." The US-Mexico-
Canada Agreement (USMCA) also promotes regional economic integration.
• EU: The EU's Green Deal Industrial Plan aims for carbon neutrality by 2050. The Carbon
Border Adjustment Mechanism (CBAM) taxes imports from high carbon-output sectors,
affecting major exporters like China and Russia. The EU's approach focuses on environmental
sustainability.
The Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce &
Industry, is working on a new industrial policy. This will be the third industrial policy (after 1956
and 1991), which is likely to replace the 1991 policy, which was prepared against the backdrop of
the balance of payment crisis.
NOTES
9. Restrictions on the import of electronic devices
The Indian government has introduced immediate restrictions on the imports of personal
computers, laptops, and other electronic devices to promote domestic manufacturing.
Why restriction?
India is obligated to its commitment to zero-duty imports under WTO’s Information Technology
Agreement (ITA 1). Due to this, the government was unable to check the import of electronic
goods, thus impacting its domestic manufacturing. Hence it imposed import restriction
What do the new rules say?

• Directorate General of Foreign Trade (DGFT) (Ministry of Commerce) issued a notification
saying that any import of laptops, tablets, etc., under Harmonized System of Nomenclature
(HSN) 8471 shall be ‘restricted’ and would be allowed against a valid license from DGFT from
‘trusted’ sources.
• Exemption for imports under Baggage Rules, R&D, testing, benchmarking, repair, etc.
Aim: It will likely aim at boosting local production and reducing dependence on imports from
China, which accounted for over 75% of India's laptop and personal computer imports in the
previous fiscal year.
About ITA 1 and HSN:

The Technology Agreement, known as ITA 1, was established in 1996 with 29 members, including
India in 1997. This agreement mandates the removal of customs duties on specific IT products.
These products, like laptops and computers, are identified by codes called HSN codes, which are
part of a global classification system for taxation. HSN stands for Harmonized System of
Nomenclature, and it's managed by the World Customs Organization (WCO).
10. IMF Quota Review

Reserve Bank Governor Shaktikanta Das has called for the timely completion of the 16th general
review of quotas at the International Monetary Fund (IMF), highlighting its potential to enable
the IMF to better support distressed nations.
IMF Quota System and SDRs:

Quota Subscription Each member contributes a sum known as a quota subscription upon
joining the IMF. The quota is determined using a formula.
Quota Formula The calculation involves a weighted average of GDP (50%), openness
(30%), economic variability (15%), and international reserves (5%).
GDP Measurement GDP is measured using market exchange rates (60%) and purchasing
power parity (PPP) exchange rates (40%).
Special Drawing SDRs are IMF's unit of account, not a currency. Its value is determined
Rights (SDRs) by a basket of major currencies: U.S. dollar, Euro, Japanese yen, pound
sterling, and Chinese renminbi.
Currency Valuation SDR value is calculated daily based on market exchange rates. The
valuation basket is reviewed and adjusted every five years.
Quotas in SDRs Quotas expressed in SDRs, representing member countries'
contributions to the IMF.
Claim to Currency SDRs represent claims to currency held by IMF members, exchangeable
among member countries.
Voting Power Voting power is linked to quotas; larger quotas mean greater influence
in decision-making.
NOTES
11. Internationalisation of rupee
● Internationalisation is a process that involves increasing the use of the rupee in cross-
border transactions - between residents in India and non-residents.
● It involves promoting the rupee for import and export trade and then other current
account transactions, followed by its use in capital account transactions.
● Currently, the US dollar, the Euro, the Japanese Yen, and the pound sterling are the
leading reserve currencies in the world.
● China’s efforts to make its currency renminbi has met with only limited success so far.
Prerequisites: The internationalisation of the currency, which is closely interlinked with the -
● Nation’s economic progress.
● Further opening up of the currency settlement and a strong swap and forex market.
● Full convertibility of the currency on the capital account (allowing free movement of
local financial investment assets into foreign assets and vice-versa) and
● Cross-border transfer of funds without any restrictions.
Current scenario:
● India has allowed only full convertibility on the current account as of now.
● The US dollar is said to enjoy an ‘Exorbitant Privilege’, supported by a range of factors,
including the size of the US economy, a history of macroeconomic stability and currency
convertibility, lack of viable alternatives, etc.
● Chinese Renminbi is the obvious challenger to the US dollar dominance. However, its
ability to rival the US dollar will depend on the -
○ Chinese economy and its financial system to demonstrate the same long-term
resilience,
○ Integrity, transparency, openness and stability, which are characteristics of the
US economy.
12. Tax Challenges Arising from the Digitalisation of the Economy

138 members of the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) -
representing over 90% of global GDP - agreed to an Outcome Statement.
BEPS:
● It refers to corporate tax planning strategies used by multinationals to shift profits from
higher-tax jurisdictions to lower or no-tax jurisdictions.
● The OECD defines BEPS strategies as exploiting gaps and mismatches in tax rules. It erodes
the tax base (costing countries USD 100-240 billion in lost revenue annually) of the higher-tax
jurisdictions.
● As developing countries have a higher reliance on corporate income tax, they suffer from
BEPS disproportionately.
● Working together within the OECD/G20 Inclusive Framework on BEPS, over 135 countries
and jurisdictions are collaborating on -
○ The implementation of measures to tackle tax avoidance,
○ Improving the coherence of international tax rules and
○ Ensuring a more transparent tax environment.
The objective of the Outcome Statement: It delivered a package to further implement the Two-
Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy.
Two-Pillar Solution/ Global Anti-Base Erosion (GloBE) rules: These rules were agreed upon in
2021 by 137 countries and jurisdictions under the OECD/G20 Inclusive Framework on BEPS.
NOTES
About OECD:
• It is an intergovernmental organisation with 38 Member countries, founded in 1961 (under

the Rome Treaties of 1957) to stimulate economic progress and world trade.
• It is a forum whose member countries describe themselves as committed to democracy and
the market economy.
13. Local Currency Settlement System (LCSS)

India and the United Arab Emirates (UAE) signed a Memorandum of Understanding (MoU) to
establish Local Currency Settlement System (LCSS) for using local currencies, the Indian rupee
(INR), and the UAE Dirham (AED), for cross-border transactions.
• LCSS will promote the use of INR and AED for current accounts and permitted capital
account transactions between the two countries.
What is a Local Currency Settlement System (LCSS)?

The Local Currency Settlement System (LCSS) is a mechanism that enables cross-border
transactions between two countries to be conducted in their respective domestic currencies.
• It allows exporters and importers to invoice and make payments in their local currencies,
reducing the reliance on a third-party currency such as the US dollar.
For example,
NOTES
Let us consider a scenario where a company in India exports goods to a company in the United
Arab Emirates (UAE). With the LCSS in place, the Indian exporter can issue an invoice in Indian
rupees (INR), and the UAE importer can make the payment in UAE dirhams (AED).
Advantages:
Advantages Examples
Reduction in foreign An Indian exporter can invoice in INR, and a UAE importer can
exchange costs pay in AED, eliminating the need for currency conversion to a
third-party currency like USD.
Mitigation of exchange Companies can hedge exchange rate risks by transacting in local
rate risks currencies, limiting losses caused by fluctuations in exchange
rates.
Improved transaction Transaction processes can be streamlined as parties can invoice
efficiency and settle payments in their domestic currencies, reducing
complexities and time delays.
Enhanced trade and The use of LCSS promotes bilateral trade and investment
investment between India and UAE by facilitating easier and more efficient
opportunities cross-border transactions.
Optimized remittances Indian residents in the UAE can send remittances in INR,
benefiting from lower transaction costs and faster settlement
times.
14. India’s preferential scheme for LDCs

According to a report by the LDC Group at the World Trade Organization (WTO), approximately
85% of the 11,000 products offered at zero tariffs by India to least developed countries (LDCs)
under the duty-free quota-free (DFQF) scheme remain unutilized.
About the duty-free quota-free (DFQF) scheme :

Aspect Information
About the The Scheme requires all developed and developing country members to
scheme provide preferential market access for all products originating from all LDCs.
Origin The decision to provide duty-free quota-free (DFQF) access for LDCs was
first taken at the WTO Hong Kong Ministerial Meeting in 2005.
India India became the first developing country to extend this facility to LDCs in
2008, providing market access to 85% of India’s total tariff lines to better
integrate LDCs into the global trading system and improve their trading
opportunities.
Expansion The scheme was expanded in 2014, providing preferential market access on
over 98% of India’s tariff lines to LDCs. India offers 11,506 preferential tariff
lines to LDCs, of which 10,991 are duty-free.
Reasons for Lack of awareness among exporters about the scheme and its benefits.
low utilization Incomplete or inaccurate data regarding utilization rates.
Significant amounts of LDC exports entering India under non-preferential
(most favoured nation) tariff route, despite being covered by DFQF.
15. US debt ceiling deal

The US government is facing a crucial issue regarding the debt ceiling.
About Debt Ceiling:

Topic Debt Ceiling
Definition The maximum amount of money that the US government is legally allowed
to borrow to fund its operations and meet its financial obligations. It sets a
cap or limit on the total amount of government debt.
NOTES
Origin Established by the US Congress in 1917 during World War I to promote
fiscal responsibility in the federal government.
Issue Disagreement between President Joe Biden (executive) and the
Republican-controlled US Congress (Legislature) on raising the debt ceiling.
The decision to increase the borrowing cap lies with the US Congress,
which needs to vote on it.
Impact Possible government default if the debt ceiling is not raised, leading to
economic consequences such as a weaker dollar, stock market problems,
and job losses.
The downgrade of the US credit rating made future borrowing more
expensive for the government.
Hinders discussions on long-term fiscal challenges and has become a
political tool instead of a responsible fiscal mechanism.
Impact on India Increased volatility in financial markets affects currency exchange rates,
capital flows, and investor confidence.
Impact on India's exports, foreign direct investment, and overall economic
stability.
Previous In 2011, the US faced a near default on public debt due to a delay in raising
instance the debt ceiling. This led to the first downgrade in the US credit rating, a
sharp drop in the stock market, and higher borrowing costs.
India's Debt India does not have a formal debt ceiling mechanism like the one in the
Ceiling United States.
Mechanism The Indian government manages borrowing and debt obligations through
fiscal discipline, budgetary controls, and oversight by the Reserve Bank of
India (RBI). The Fiscal Responsibility and Budget Management (FRBM) Act
governs India's borrowing activities, setting targets for fiscal deficits and
debt-to-GDP ratios.
16. Tax haven

An investigative report
(called Cyprus
Confidential) by The
Indian Express and ICIJ,
exposes Cyprus as a
favoured location for
global wealthy
individuals engaging in
tax evasion and money
laundering.
A tax haven is a
jurisdiction with very
low tax rates. Tax
evasion is a criminal act
involving individuals,
corporations, and other
entities using illegal
means to evade taxes by
misrepresenting or
concealing their true
financial state.
NOTES
According to the State of Tax Justice Report 2023, countries across the world will lose $ 4.8
trillion to tax havens over the next 10 years.
Cyprus is an island country located in the

eastern Mediterranean Sea, south of the
Anatolian Peninsula and east of the
Levant. It is geographically in Western
Asia, but its cultural ties and geopolitics
are overwhelmingly South-eastern
European.
NOTES
Infrastructure: Energy, Ports, Roads, Airports, Railways etc.
1. Bharat Tex 2024
It is a global textile mega-event organized by 11 Textile Export Promotion Councils in
collaboration with the Ministry of Textiles. It showcases India's entire textile value chain,
emphasizing fashion, traditional crafts, and sustainability.
Aligned with India's 5F vision, it covers the journey from Farm to Fibre to Factory to Fashion to
Foreign, representing the textile production process from raw resources to global markets.
2. Modal share of freight (cargo) in India

The railway is one of the
cheaper modes of
transportation for moving
bulk cargo. However, it only
has about 32% share
Government initiative for

increasing bulk cargo in
Railways:
Dedicated Freight Corridor:
The North-South Dedicated
Freight Corridor (North-South
DFC) is a proposed freight
railway connecting New Delhi
to Chennai, spanning ap
proximately 2,343 km with 43 planned stations.
The Ministry of Railways has tasked the Dedicated Freight Corridor Corporation of India (DFCCIL)
with conducting Preliminary Engineering & Traffic Surveys (PETS) for four additional corridors,
including the
• East-West Corridor (Kolkata-Mumbai, 2,330 km)
• East Coast Corridor (Kharagpur-Vijayawada, 1,100 km)
• Southern Corridor (Chennai-Goa, 899 km)
Relaxation of Rake Movement Rules: This allows for loading from/to multiple locations, permits
mini rakes, and introduces private freight terminals (PFTs).
Gati Shakti Terminal (GCT) Policy: This policy aims to convert all PFTs and private sidings into
GCTs. A private siding is a railway line owned by a company and connected to a railway.
Partnership with Private Freight Operators: Indian Railways has encouraged private freight
operators to invest in wagons, facilitating the induction of privately owned wagons for specialized
cargo such as automobiles and fly ash.
Other initiatives for Indian Railways:
NOTES
Role of National Rail Plan (NRP) for 2030: Indian Railways have recently prepared a National Rail
Plan (NRP) for India – 2030 to create a ‘future ready’ Railway system by 2030. The objective of the
Plan is to create capacity ahead of demand, which in turn would also cater to future growth in
demand right up to 2050.
Features of the plan:

Feature Description
Focus on freight Increase the modal share of Railways in freight to 45% by 2030.
Substantially reduce transit time: Achieve this by increasing the
average speed of freight trains to 50 kmph.
National Rail Plan, Accelerate the implementation of critical projects by 2024.
Vision 2024 100% electrification and multi-tracking: Focus on congested
routes for electrification and multi-tracking.
Aim to upgrade speed to 160 kmph on Delhi-Howrah and Delhi-
Mumbai routes.
Target speed upgrades to 130 kmph on all other Golden
Quadrilateral-Golden Diagonal (GQ/GD) routes.
The goal is to eliminate all Level Crossings on GQ/GD routes.
Identify new Dedicated To arrest the trend of falling market share of railways in the
Freight Corridors country and also shift the advantage in favour of rail transport
Identify new High-Speed Rail Corridors

Assess rolling stock requirements for passenger traffic as well as wagon requirements for
freight.
NOTES
Sustained involvement of the Private Sector in areas like operations and ownership of rolling
stock, development of freight and passenger terminals, development/operations of track
infrastructure etc.
3. India’s port sector

• India's strategic location on global shipping routes with a 7,517 km coastline
• Maritime transport handles 70% of India's trade
• India owns 30% of the global ship-breaking market
• Sagar Mala Program focuses on port-led development with $123 Bn investment
• 100% FDI allowed via government and automatic routes.
• India has 13 major ports (12 Government-owned and one private) and 200 non-
major/intermediate ports.
• The major ports include: Deendayal (Kandla), Mumbai, Mormugao, New Mangalore, Cochin,
Chennai, Ennore (Kamarajar), Tuticorin (V O Chidambaranar), Visakhapatnam, Paradip and
Kolkata (including Haldia) and Jawaharlal Nehru Port. Port Blair which was notified as major
port in 2010 was removed of its status recently.
• Jawaharlal Nehru Port Trust is the largest major port, and Mudra is the largest private port.
• Jawaharlal Nehru Port is the first 100% Landlord Major Port
4. Crude Oil benchmark

A benchmark crude or marker crude is a crude oil that serves as a reference price for buyers and
sellers of crude oil.
Benchmark Region/Source Characteristics
Brent Crude Europe, Africa, Middle East Light oil; International benchmark;
(North Sea) Used by OPEC
West Texas Intermediate United States (US oil Light and sweeter than Brent;
crude (WTI) fields) Benchmark for the US market
Dubai/Oman The third major benchmark crude;
5. Market Coupling
The Central Electricity Regulatory Commission (CERC) has released a staff paper on implementing
market coupling in India's power sector.
What is Market coupling?

Market coupling is a process in the energy sector where bids from various power exchanges are
matched to determine a uniform market clearing price for electricity trading.
o It aims to optimize transmission infrastructure use, maximize economic surplus, and create
simultaneous benefits for both buyers and sellers.
o This process helps in efficient price discovery and integration of different electricity markets
or geographies, promoting transparency and competition in the energy trading sector.
The CERC (Central Electricity Regulatory Commission) has introduced provisions for market
coupling among power exchanges in the country under its CERC Power Market Regulations (PRC)
2021. However, these provisions are yet to be officially implemented.
The benefits of market coupling include:

o Optimal utilization of transmission infrastructure.
o Maximization of economic surplus by considering all bid types leads to the creation of
simultaneous benefits for both buyers and sellers.
India has three power exchanges:

o Indian Energy Exchange (IEX): 90% market share
NOTES
o Power Exchange of India (PXIL)
o Hindustan Power Exchange (HPX)
6. Oil reserves in salt caverns

Government-owned Engineers India (EIL) is studying the prospects and feasibility of developing
salt cavern-based strategic oil reserves in Rajasthan, in line with the government’s objective of
increasing the country’s strategic oil storage capacity.
The country’s existing strategic oil storage facilities are made up of excavated rock caverns.
About Strategic Oil Reserves:

• A strategic oil reserve refers to a stockpile of crude oil or petroleum products that a country
maintains as a strategic measure to ensure energy security and stability in times of
emergencies or disruptions in oil supply.
• The International Energy Agency (IEA) recommends that all countries maintain emergency oil
stockpiles equivalent to 90 days of import protection.
Statistics about Oil Reserves in India:

• India, the world’s third-largest consumer of crude, depends on imports for more than 85%
of its requirement.
• India currently has an SPR capacity of 5.33 million tonnes or around 39 million barrels of
crude. India's strategic petroleum reserves (SPR) currently provide around 9.5 days of oil
requirement coverage.
• Additionally, oil marketing companies in India have their storage facilities, providing an
additional 64.5 days of storage, totalling approximately 74 days of petroleum demand
coverage.
• India’s strategic crude oil storages are currently located at Visakhapatnam (Andhra Pradesh),
Mangaluru (Karnataka), Padur (Karnataka) and Chandikhol in Odisha.
• The construction of the Strategic Crude Oil Storage facilities in India is being managed
by Indian Strategic Petroleum Reserves Limited (ISPRL) (a wholly owned subsidiary of Oil
Industry Development Board (OIDB) under the Ministry of Petroleum & Natural Gas).
Underground storage
It is, by far the most economical method of storing petroleum products because the
underground facility rules out the requirement of large swathes of land, ensures less evaporation
and, since the caverns are built much below the sea level, it is easy to discharge crude into them
from ships.
Two types of underground reserves:

Salt Cavern-Based Reserves Rock Cavern-Based Reserves
Development Developed through solution mining, Developed through excavation
Process involving the dissolution of salt deposits
Cost and Simpler, faster, and less cost-intensive More complex, time-consuming,
Time and expensive
Sealing and Naturally well-sealed and engineered May require additional sealing
Accessibility for rapid injection and extraction measures and access points
Oil Extremely low oil absorbency, creating a Absorbency varies depending on
Absorbency natural impermeable barrier the rock type
Operation Can be created and operated almost Requires excavation and
entirely from the surface underground operations
Examples US Strategic Petroleum Reserve (SPR) Mangaluru and Padur in
consists of salt cavern-based storage Karnataka, and Visakhapatnam
facilities in Andhra Pradesh
NOTES
Usage Primarily used for oil storage, but also Primarily used for oil storage
suitable for liquid fuels, natural gas,
compressed air, and hydrogen
7. Steel Production in India

India has emerged as the second-largest producer of crude steel globally, surpassing Japan and
2nd largest consumer of finished steel.
Government initiatives for the steel sector:

Initiative Description
Steel Scrap Recycling Policy Promotes scientific processing and recycling of ferrous scrap.
2019 Six Vehicle Scrapping Centres established, with three more
planned to commence operations soon.
National Steel Policy 2017 Aims to achieve a total crude steel capacity of 300 MTPA and
a total crude steel demand/production of 255 MTPA by 2030-
31.
Preference to Domestically This resulted in the import substitution of steel products in
Manufactured Iron and Steel India
Products (DMI & SP Policy)
Productivity Linked Incentive Attracted investment of around ₹30,000 crores and has the
Scheme (PLI) potential to generate employment for 55,000 individuals.
Branding steel produced in Aims to differentiate Indian steel in the market by
India as "Made in India" emphasizing its origin.
Green Steel 13 task forces were constituted to promote decarbonization
in the steel sector.
Industrial Deep India joined the UK to co-lead this initiative under the banner
Decarbonisation Initiative of the Clean Energy Ministerial.
Purvodaya initiative Facilitates the establishment of greenfield steel clusters in
the Eastern states of Chhattisgarh, Jharkhand, West Bengal,
Odisha, and Andhra Pradesh.
NOTES
8. Scrap Steel
The Indian government aims to raise the share of scrap in steel production to 50% by 2047.
What is Scrap Steel?

Scrap steel refers to recycled steel derived from discarded or unused metal products, industrial
waste, or end-of-life vehicles. It is processed and reused in steel production, contributing to
sustainability by reducing the need for raw materials and minimizing environmental impact.
Currently, scrap contributes around 30-35% of India's overall steel production
Using scrap in steel production is considered less polluting, and it is expected to contribute to
environmental sustainability. India’s steel sector accounts for 12% of India’s CO2 emissions. India
currently ranks as the World's 2nd Largest Producer of Crude Steel
Other initiatives for Scrap Steel:

National Steel Policy, 2017 aims for 300MT steel capacity by 2030, with 35-40% from the EAF
route, utilizing mostly recycled scrap. EAF (Electric Arc Furnaces) and BFBOF (Blast Furnace-Basic
Oxygen Furnace) are steelmaking methods. Steel Scrap Recycling Policy, 2019 aims to enhance
domestic scrap availability to reduce coal consumption in steel production.
9. Build-Operate-Transfer (toll) model

The Minister of Road Transport and Highways in India, has suggested the revival of the Build
Operate Transfer (BOT) model for road construction projects.
• This proposal is in response to a lack of private investments in the sector, which has strained
the government's finances.
• In recent years, the government has primarily funded highway construction through the
hybrid annuity model (HAM) and engineering, procurement, and construction (EPC) model,
NOTES
resulting in a significant increase in budgetary support to the National Highways Authority of
India (NHAI).
NOTES
Reports / Ranking / Committees / Awards / Events
1. Multidimensional Poverty Index (MPI)
A recent discussion paper by NITI Aayog reveals that in the last nine years, over 24 crore Indians
have escaped multidimensional poverty, showcasing a steep decline in the Poverty Headcount
Ratio from over 29% in 2013-14 to about 11% in 2022-23.
What is MPI?
The National Multidimensional
Poverty Index (MPI) is a metric
assessing poverty in a country by
considering health, education, and
standard of living, represented by 12
indicators. It employs the Alkire
Foster methodology.
• The National Multidimensional

Poverty Index (MPI), a first-of-
its-kind, estimates multiple
deprivations at a household level
using NFHS data.
• Published by NITI Aayog, it
includes three dimensions and
12 indicators. Sub-indices
measure the Headcount Ratio
(how many are poor) and the
Intensity of Poverty (how poor
are the poor).
• The Global MPI, published by
OPHI in collaboration with UNDP, is a similar index addressing worldwide multidimensional
poverty.
2. Recent Reports in News

Report Details
Global Risk Released annually by the World Economic Forum.
Report 2024 Based on the Global Risks Perception Survey.
India's top five risks: Misinformation and Disinformation (MI), Infectious
diseases, Illicit economic activity, Inequality (wealth and income), and
Labour shortage.
Released by Henley & Partners.
Ranks passports based on allowing destinations without a prior visa.
NOTES
Henley Passport India ranks 80th with visa-free access to 62 nations.
Index 2024 France, Germany, Italy, Spain, Japan, and Singapore share the top spot.
(HPI)
Global Released by the World Bank Group.
Economic Global trade growth in 2024 is expected to be half the pre-pandemic
Prospects average.
Report 2024 Global growth is projected to slow from 2.6% in 2023 to 2.4% in 2024.
Developing countries need to increase investments, about $2.4 trillion per
year, to tackle climate change and achieve global development goals by
2030.
World Released by the International Labour Organisation (ILO)
Employment Despite a slowdown, global growth in 2023 was modestly higher than
and Social anticipated.
Outlook Trends The macroeconomic environment deteriorated significantly in 2023. Real
2024 wages declined in the majority of G20 countries due to inflation.
"Digital Trade Joint publication by IMF, World Bank, WTO, OECD, and UNCTAD.
for The value of digitally delivered services increased nearly four times since
Development" 2005, growing at an average annual rate of 8.1% from 2005 to 2022.
Report
Developing economies require increased international financial and
technical support for digital trade-related areas.
Initiatives like WTO-led Aid for Trade, UNCTAD-led eTrade for All, and
World Bank-led Digital Advisory and Trade Assistance (DATA) Fund can
help.
3. India Infrastructure Report 2023

The India Infrastructure Report 2023 on Urban Planning and Development was recently released
virtually.
• The report is a collaborative effort by the IDFC Foundation, Infrastructure Development
Corporation (Karnataka) Ltd. (iDeCK), and the National Institute of Urban Affairs (NIUA).
• The report, part of the India Infrastructure Report series, covers various complex issues
related to urban planning and development.
Key aspects of the report include Planning and Governance, Smart Initiatives, PPPs and
Financing, Housing and Migration, Public Service Delivery, Integrating Infrastructure, and Urban
Redevelopment.
4. International Debt Report (IDR)

The World Bank released the International Debt Report (IDR).
What are debts?

Debt refers to an obligation or financial liability that one party owes to another. It is typically in
the form of borrowed funds that need to be repaid over time, often with interest.
• India’s total debt is around 81%, but most of it is domestic debt. India’s external debt is
around 18.6% (around USD 624 billion at the end of March 2023), as per the RBI data.
About IDR:
Formerly known as International Debt Statistics (IDS), is an annual publication by the World Bank,
now in its fiftieth year. It focuses on external debt statistics and analysis for 122 low- and
middle-income countries participating in the World Bank Debt Reporting System.
NOTES
5. Global Bond Index (GBI)
6. Periodic Labour Force Survey (PLFS)

The Periodic Labour Force Survey (PLFS) Quarterly Bulletin for July–September 2023 highlights key
employment indicators in urban areas:
• Unemployment Rate: Decreased to 6.6% for individuals aged 15 years and above.
• Labour Force Participation Rate: Increased to 49.3%, indicating a growing percentage of
people in the labour force.
• Worker Population Ratio (WPR): Grew to 46%, reflecting a rise in the percentage of
employed persons in the population.
Aspect Description
About The Periodic Labour Force Survey (PLFS) (Launched in April 2017) is a
survey conducted by the National Sample Survey Office (NSO) under the
Ministry of Statistics and Programme Implementation (MoSPI) in India
NOTES
Objective Estimate key employment and unemployment indicators (Worker
Population Ratio, Labour Force Participation Rate, Unemployment Rate)
in a three-month interval for urban areas under 'Current Weekly Status'
(CWS). And estimate employment and unemployment indicators in both
'Usual Status' and CWS annually for both rural and urban areas.
Labour Force Percentage of the working-age population (aged 15 years and above)
Participation that is either employed or unemployed but willing and looking for
Rate (LFPR) employment.
Worker The worker-population ratio (WPR) is the ratio of a country's working
Population Ratio population to its population, multiplied by 100. It's calculated by dividing
(WPR) the total number of workers by the total population.
Unemployment The unemployment rate is the percentage of unemployed workers in the
Rate (UR) total labour force. The labour force includes all people who are employed
or unemployed. The unemployment rate is calculated by dividing the
number of unemployed people by the total labour force.
Activity Status The usual activity status is determined on the basis of the last 365 days,
while the current weekly status is determined based on the last 7 days.
Types of Activity Principal Activity Status (PS): The primary activity status on which a
Status person spent a relatively long time (major time criterion) during the last
365 days. Subsidiary Economic Activity Status (SS): The activity status in
which a person, in addition to the usual principal status, performs some
economic activity for 30 days or more in the last 365 days.
Current Weekly The activity status is determined based on the last 7 days preceding the
Status (CWS) date of the survey.
The Female Labor Force Participation Rate (LFPR) measures the percentage of women within the
working-age population (typically 15-59 years old) who are either employed or actively seeking
employment.
7. RBI’s State of the Economy report

• A State of the Economy report by the Reserve Bank of India (RBI) provides a snapshot of the
country's economic status.
• It covers topics such as inflation, economic growth, employment, and the bank's monetary
strategies.
• The report guides RBI's decisions on interest rates and economic policies while aiding
economists, investors, and the public in understanding the economy and making informed
decisions.
8. World Investment Report

Recently, UNCTAD released the World Investment Report 2023.
About World Investment Report:
• The World Investment Report focuses on trends in foreign direct investment (FDI)
worldwide, at the regional and country levels and emerging measures to improve its
contribution to development.
• It also provides an analysis of global value chains and the operations of multinational
enterprises, with special attention to their development implications.
Key Findings:
• India and the Association of Southeast Asian Nations (ASEAN) were the top recipients, with
a 10% and 5% increase respectively. Asia accounted for over 50% of global FDI.
NOTES
• The FDI growth in developing countries was concentrated in a few large emerging
economies, with India, China, Singapore, Hong Kong, and the United Arab Emirates
accounting for nearly 80% of FDI flows to the region.
• India saw a 10% increase in FDI, making it the third-largest host country for greenfield
project announcements and the second-largest for international project finance deals.
• Singapore was the largest recipient of FDI in the Southeast Asian region.
• The report highlights the widening investment deficit in developing countries as they strive
to achieve the Sustainable Development Goals (SDGs), particularly in energy, water, and
transport infrastructure.
9. RBI's Digital Payments Index (RBI-DPI)

According to RBI data, digital payments in India saw a year-on-year growth of over 13% at the
end of March 2023.
• The RBI's Digital Payments Index (RBI-DPI) reached about 395 compared to 377 in September
2022.
About DPI: The DPI (Digital Payments Index) assesses the level of digitalization in payments
nationwide and showcases the growth of different digital payment methods. It is released semi-
annually and consists of five main parameters with varying weights:
• Payment Enablers (weight 25%)
• Payment Infrastructure – Demand-side factors (10%)
• Payment Infrastructure – Supply-side factors (15%)
• Payment Performance (45%)
• Consumer Centricity (5%)
10. National Time Release Study (NTRS) 2023 report

Central Board of Indirect Taxes and Customs (CBIC) released the National Time Release Study
(NTRS) 2023 report.
About National Time Release Study:

• The Time Release Study (TRS) is a performance measurement tool that quantifies the time
taken for cargo release at customs stations. It measures the duration from cargo arrival to
its out-of-charge for domestic clearance in imports and from cargo arrival to carrier
departure in exports.
• The study covers seaports, air cargo complexes (ACCs), inland container depots (ICDs), and
integrated check posts (ICPs), which handle a significant proportion of entry and shipping bills
in the country.
NOTES
Miscellaneous
1. 2023 Nobel Prize in Economics
2. The Lewis Model in Economic Development

The Lewis Model, which envisioned the shift of surplus labour from agriculture to manufacturing,
hasn't played out in India as expected.
What is the Lewis Model?

The Lewis Model, developed by
economist William Arthur Lewis,
proposed that in underdeveloped
countries with a surplus of low-wage
labour in agriculture, industrialization
could lead to economic growth.
This model suggests that as long as

the wages in the industrial sector
are marginally higher than
NOTES
subsistence wages in agriculture, surplus labour can transition to the industrial sector, boosting
economic development.
Why does this model work in China but not in India?

• The Lewis Model worked in China but has faced challenges in India due to differences in
industrialization, technological advancement, and labour transitions.
• In China, the model was successful because of its ability to absorb a massive surplus rural
labour force, turning China into the "world's factory."
• In contrast, India faces hurdles in implementing the Lewis Model because manufacturing is
becoming more capital-intensive and reliant on labor-displacing technologies like robotics and
artificial intelligence. This shift limits the ability of labour-intensive industries to absorb
surplus agricultural labour.
• Additionally, India is experiencing disguised unemployment in the agricultural sector, which
complicates labour transitions.
• As a result, Niti Aayog is exploring new models for job creation in and around agriculture,
focusing on value addition and agribusiness as potential sources of employment. Bio-fuels,
bio-based products, and sustainable agriculture practices are seen as potential areas for
employment generation, offering alternatives to traditional farm-based jobs.
3. Hallmarking
Hallmarking is like a quality stamp for jewellery and precious metal items. It tells you how pure or
good the metal is.
The principal objectives of the Hallmarking Scheme are to protect the public against adulteration
and to obligate manufacturers to maintain legal standards of fineness.
Hallmarking in India:
• At present two precious metals namely gold and silver have been brought under the purview
of Hallmarking.
• Mandatory hallmarking order is applicable on 14, 18 and 22 carats of gold jewellery/artefacts
only.
• BIS assigns a unique HUID (Hallmarking Unique ID) number to all hallmarked items
• Consumers can verify the authenticity of hallmarked items using the 'verify HUID' feature in
the BIS Care app.
What is the Hallmarking scheme?

Under the Hallmarking scheme of the Bureau of Indian Standards(BIS), Jewellers are registered for
selling hallmarked jewellery and recognised testing and hallmarking centres.
Mandatory Hallmarking of Gold Jewellery: Mandatory Hallmarking of Gold Jewellery has come
into force from June 2021. In the first phase, mandatory hallmarking was implemented in 256
districts of the country with effect from 23 June 2021 and in the second phase additional 32
districts were covered.
Aim of the scheme:

• To protect consumers against victimization due to irregular gold or silver quality
• Develop India as a leading gold market centre in the World and develop export
competitiveness
NOTES
4. Last Natural Person Above Every Person Clause
The Securities and Exchange Board of India (SEBI) clarified in the Supreme Court that the
challenges it faced in the Hindenburg-Adani allegations case were from the lack of a requirement
to disclose the ‘last natural person above every person’ owning an economic interest in the FPIs.
What is ‘Last Natural Person Above Every Person’?

It refers to the requirement to identify and disclose the ultimate individual who has control or
ownership over a financial investment such as Foreign Portfolio Investor (FPI). It means revealing
the final person in the ownership chain who holds an economic interest in the FPI, ensuring
transparency and accountability in the investment structure.
However, most of the national and international laws don’t have such provisions,
FPI Vs FDI?
• FPI (Foreign Portfolio Investment) refers to investments made by foreign individuals or
entities in financial assets such as stocks, bonds, or mutual funds of a country.
• FDI (Foreign Direct Investment), on the other hand, refers to investments made by foreign
individuals or entities in tangible assets such as businesses, properties, or infrastructure
projects in a country. FDI typically involves a long-term commitment and a significant level of
control and ownership in the invested entity, while FPI involves relatively shorter-term
investments in financial instruments without obtaining control or ownership rights.
5. Robert Lucas’ rational expectation theory

Nobel Laureate Robert E Lucas (1937 – May 15, 2023) was an economist known for developing
the "rational expectations" approach to macroeconomics.
What is Macroeconomics?
It studies the behaviour and performance of an economy as a whole. It focuses on analyzing
aggregate economic variables such as GDP (gross domestic product), inflation, unemployment,
and overall economic growth.
What is the “rational expectations”

approach to macroeconomics?
The "rational expectations"
approach in macroeconomics
suggests that people form
expectations about the future based
on available information and their
understanding of the economy. For
example, if people anticipate higher
inflation due to a new government
policy, they may adjust their
behaviour accordingly.
Significance of his work:

Robert Lucas's work on rational expectations in macroeconomics challenged traditional
Keynesian economics and emphasized the importance of individuals forming expectations based
on available information. His research highlighted that predictable government policies may not
have the desired impact on the economy.

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Indian Economy and Issues relating to planning, mobilization of resources, growth,

Banking Sector / Financial Sector ................................................................................ 23

External Sector ........................................................................................................... 52

Reports / Ranking / Committees / Awards / Events ..................................................... 69

Other Schemes for land modernization:

2. Remission of Duties and Taxes on Exported Products (RoDTEP) scheme

3. LEAP AHEAD initiative

About the LEAP AHEAD initiative:

4. Technology Development Board (TDB)

About Technology Development Board (TDB)

IRDAI's responsibilities include:

This initiative encompassed several components, including:

8. Advisory board on bank frauds

9. Rail-Sea-Rail (RSR) Initiative

Stats regarding Coal:

Benefits of RSR Initiative:

10. Standard Operating Procedure (SoP) by CBIC

About SoP by CBIC:

11. Advance Authorisation Scheme

About Advance Authorization Scheme:

12. Special Assistance to States for Capital Investment 2023-24 Scheme

What is capital expenditure (capex)?

Capex vs revenue expenditure: Revenue expenditure (salaries of employees, interest payment on

The Special Assistance to States for Capital Investment 2023-24 Scheme

Part–III & IV aims at providing incentives to States for reforms in Urban

13. SAMARTH campaign

14. Liberalized Remittance Scheme (LRS)

About the LRS Scheme:

Under LRS (introduced in 2004), Indian individuals can send money

15. Centre for Processing Accelerated Corporate Exit (C-PACE)

What is striking off?

The Gini coefficient ranges from 0 (perfect

2. Insolvency and Bankruptcy Code (IBC)

What is insolvency and bankruptcy?

3. IBBI to form 'common panel' of insolvency professional

Why has India halted its plan?

Various Approaches to growth and employment:

7. IREDA gets upgraded

What is Purple Economy?

9. Micro, Small and Medium Enterprises [MSMEs]

What are MSMEs?

Micro Small Medium

Manufacturing and Investment: < 1 crore Investment: < 10 Investment: < 50

10. Gross domestic product (GDP)

There are still limitations to the GDP method of calculating growth:

11. Gross Fixed Capital Formation (GFCF)

Reasons for deflation in China:

13. India’s creative economy

14. Gig economy

Platform workers Non-platform workers

Impact of Greedflation: It leads to higher inflationary pressures, financial strain on individuals,

16. Snowball effect

About the Snowball effect:

What are VDA SPs?

Regulations in place for VDA SPs:

About Financial Intelligence Unit – India

What are Green Funds/Deposits?

REs under the Framework for acceptance of Green Deposits include:

Other aspects of Green Deposits are: