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  • 30 Dec 2024
  • 54 min read
Indian Economy

Trends and Progress of Banking in India 2023-24

For Prelims: Reserve Bank of India, Non-performing assets, Capital Adequacy Ratios, Urban Co-operative Banks, Dark patterns, Central Consumer Protection Authority 

For Mains: Impact of Unsecured Loans on the Indian Economy, Financial Stability and Inflation Management, Economic Consequences of Loan Defaults and NPAs 

Source: TH 

Why in News?  

The Reserve Bank of India (RBI) has raised alarms over the increasing reliance on unsecured lending and private credit, calling for enhanced vigilance in its annual Trends and Progress of Banking in India 2023-24 report.  

  • Despite the steady decline in gross non-performing assets (GNPA) and sustained profitability of banks, the central bank emphasized the need to address emerging risks in the financial ecosystem. 

What are the Key Highlights of RBI's Trends and Progress of Banking Report?  

  • Decline in NPAs: GNPAs reached a 13-year low of 2.7% in March 2024, further dropping to 2.5% by September 2024.  
    • The Retail Loan Segment had the lowest GNPA ratio at 1.2% in September 2024, while agriculture loans had the highest GNPA ratio at 6.2%.  
    • The GNPA ratios for education loans improved significantly, declining from 5.8% in March 2023 to 2.7% by September 2024, though they remain the highest among retail segments. 
  • Profitability: Banks' profitability continued to rise with return on assets (RoA) at 1.4% (first half of 2024-25) and return on equity (RoE) at 14.6% in FY24, marking six consecutive years of profit growth. 
    • The NBFC sector exhibited double-digit credit growth, with improved asset quality and strong Capital Adequacy Ratios (CRAR). 
    • The consolidated balance sheet of Scheduled Commercial Banks (SCBs) showed strong growth in credit and deposits, and Urban Co-operative Banks (UCBs) saw improvements in asset quality, capital buffers, and profitability. 
  • Rising Share of Unsecured Loans: The share of unsecured loans in SCBs' total credit rose to 25.5% in March 2023 before slightly declining to 25.3% in March 2024. 
    • In response, the RBI introduced stricter norms in November 2024, raising risk weights and setting exposure limits (maximum lending to a borrower or group).  
    • The RBI also expressed concerns over top-up loans, often approved with minimal due diligence and lax adherence to guidelines, with reports of misuse, including redirection to the stock market. 
      • In 2023, the RBI mandated top-up loans against depreciating movable assets to be treated as unsecured loans. 
  • Rise of Dark Patterns: The report highlights concerns over dark patterns, the Central Consumer Protection Authority (CCPA) issued guidelines to regulate such practices, and RBI is evaluating the prevalence of dark patterns among regulated entities (REs). 
  • High Employee Attrition: Employee attrition ( employees leaving organizations) rates have surged to 25% in the past three years, raising concerns about operational risks such as service disruption, loss of institutional knowledge, and higher recruitment costs. 
  • Slippage Ratio: The slippage ratio improved in 2023-24. For the third consecutive year, private sector banks (PVBs) had a higher slippage ratio than public sector banks (PSBs) due to larger fresh accretions to NPAs in PVBs. 
  • RBI’s Recommendations:  
    • RBI recommended banks to adopt strategies such as improved onboarding, training, mentorship, competitive benefits, and fostering a supportive workplace culture to curb attrition. 
    • RBI urged banks to ensure better compliance with credit appraisal processes and prudential guidelines, particularly in light of rising risks regarding unsecured loans 

Key Terms 

  • Return on Assets (RoA): Measures a business's profitability relative to its total assets. 
  • Return on Equity (RoE): Measures a company's annual return (net income) relative to its total shareholders' equity. 
  • Capital Adequacy Ratios (CRAR): Measures a bank's ability to absorb losses and ensure stability, protecting depositors and promoting financial system efficiency. 
  • Slippage Ratio: Measures new accretions to NPAs as a share of standard advances at the beginning of the year. 
  • Dark Patterns: Dark Patterns are unethical user interface (UI)/user experience (UX) tactics designed to deceive users into actions they don't intend, benefiting the company.  
    • These practices limit user control and transparency, such as hidden costs, difficult cancellation options, misleading ads, or auto-charging after free trials. 
    • Examples: Fake countdowns, disguised ads, and forced account creation for transactions. 

What is the Impact of Rising Unsecured Loans on India's Economy? 

  • Higher Default Rates and Financial Stress: As more unsecured loans are issued, the risk of defaults rises, leading to increased non-performing assets (NPAs) and financial strain on banks and NBFCs. 
  • Inflationary Pressure: Rising defaults and higher interest rates reduce disposable income, curbing discretionary spending, increasing inflation, and slowing economic growth. 
  • Effect on Consumers: For consumers, the availability of unsecured loans can provide easier access to credit.  
    • However, it also means higher interest rates and potential debt traps if not managed responsibly 
  • Rural and Urban Impact: Both rural and urban consumers face financial instability due to the rise in high-cost loans, contributing to lower consumer confidence. 

Way Forward 

  • Tighten Lending Practices: Strengthen credit appraisal processes using technology and Artificial Intelligence (AI) to assess borrower risk and reduce defaults. 
  • Enhance Consumer Protection: Focus on financial literacy, transparency in loan products, and strict regulation of dark patterns in lending. 
  • Manage Inflationary Pressures: Balance interest rates with economic growth to control inflation and protect disposable income. 
  • Strengthen Asset Quality: Proactively monitor loan portfolios, build stronger capital buffers, and conduct stress testing to mitigate risk. 
  • Improve Regulatory Oversight: Ensure rigorous enforcement of prudent lending practices and regular audits to maintain financial stability. 

Drishti Mains Question: 

Discuss the impact of rising unsecured loans on the Indian banking sector and the broader economy. How can the Reserve Bank of India address these emerging risks?

 UPSC Civil Services Examination, Previous Year Questions (PYQs) 

Prelims 

Q. Which of the following statements is/are correct regarding the Monetary Policy Committee (MPC)? (2017)

  1. It decides the RBI’s benchmark interest rates. 
  2. It is a 12-member body including the Governor of RBI and is reconstituted every year. 
  3. It functions under the chairmanship of the Union Finance Minister. 

Select the correct answer using the code given below: 

(a) 1 only 
(b) 1 and 2 only 
(c) 3 only 
(d) 2 and 3 only 

Ans: A 

If the RBI decides to adopt an expansionist monetary policy, which of the following would it not do? (2020)

  1. Cut and optimize the Statutory Liquidity Ratio 
  2. Increase the Marginal Standing Facility Rate 
  3. Cut the Bank Rate and Repo Rate 

Select the correct answer using the code given below: 

(a) 1 and 2 only 
(b) 2 only 
(c) 1 and 3 only 
(d) 1, 2 and 3 

Ans: B 

Mains 

Q. The product diversification of financial institutions and insurance companies, resulting in overlapping of products and services strengthens the case for the merger of the two regulatory agencies, namely SEBI and IRDA. Justify. (2013)

Biodiversity & Environment

India’s E-Waste Management

For Prelims: E-Waste (Management) Rules, 2022, Groundwater contamination, Air pollution, Soil degradation, Extended Producer Responsibility (EPR), Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and Their Disposal, Stockholm Convention on Persistent Organic Pollutants, Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016, Landfilling. 

For Mains: Policy Initiatives and Programs related to E-Waste Management, Current Scenario of E-Waste in India, Challenges in E-Waste Management and Socio-Economic Implications. 

Source: DTE 

Why in News? 

  • Recently, the Minister of State for the Union Ministry of Housing and Urban Affairs provided data that reflects growing use of electronic and electrical devices across the country.  

E-waste 

  • Electronic waste (e-waste) refers to discarded electrical and electronic equipment, including household appliances and office devices, that are old or at the end of their life. 
  • E-waste contains numerous toxic chemicals including metals such as lead, cadmium, mercury, and nickel. 

 What is the State of E-Waste in India? 

  • Volume Growth: India has witnessed a 72.54% rise in e-waste generation over five years, increasing from 1.01 million metric tonnes (MT) in 2019-20 to 1.751 million MT in 2023-24. 
    • Approximately 57 % of e-waste (equivalent to 990,000 MT) of e-waste remains untreated annually. 
    • The 65 cities in India generate more than 60% of the total generated e-waste, whereas 10 states generate 70% of the total e-waste. 
  • Recycling Gaps: Only 43% of e-waste was recycled in 2023-24, up from 22% in 2019-20. 
    • Informal sectors dominate e-waste handling, lacking environmental safeguards. 
  • Global Context: India is the third-largest e-waste generator globally, after China and the US. 
    • Approximately 53.6 MT of e-waste was generated worldwide in 2019, as per UN estimates. 

 E-Waste_Generation

E-Waste (Management) Rules 

  • E-Waste (Management) Rules 2022: 
    • Extended Producer Responsibility (EPR): Producers are mandated to achieve annual recycling targets via registered recyclers. 
      • EPR certificates ensure accountability for recycled products. 
    • Expanded Product Coverage: Inclusion of 106 Electrical and Electronic Equipment (EEE) items from FY 2023-24 (up from 21 items). 
    • Integration of Bulk Consumers: Public institutions and offices must dispose of e-waste via registered recyclers/refurbishers. 
      • Registered recyclers and refurbishers are tasked with managing e-waste collection and processing. 
  • E-Waste (Management) Second Amendment Rules, 2023: Under Rule 5 of E-Waste (Management) Rules, 2022, clause 4 was added to  ensure safe, accountable, and sustainable refrigerant management in refrigeration and air-conditioning manufacturing. 
  • E-Waste (Management) Amendment Rules, 2024: 
    • The Central Government may establish platforms for trading Extended Producer Responsibility certificates as per guidelines issued by the Central Pollution Control Board with its approval. 
    • The Central Pollution Control Board will set the price range for Extended Producer Responsibility certificates at 100% (maximum) and 30% (minimum) of the environmental compensation for non-compliance. 

What are the National and International Conventions Related to E-waste Management? 

What are the Common E-Waste Disposal Methods in India?  

  • Landfilling: It involves burying e-waste in excavated pits, sealed with layers of earth. 
    • A major concern is the risk of hazardous substances leaching into soil and groundwater, causing environmental harm. 
  • Incineration: Controlled burning of e-waste at high temperatures (900–10,000°C), reduces waste volume and neutralizes some hazardous substances. 
  • Recycling: Dismantling e-waste to recover valuable materials (e.g., metals, plastics) and safely dispose of toxic components. It reduces hazardous substances like mercury, cadmium, and lead, minimizing environmental and health risks. 
    • Examples: Recycling printed circuit boards, CRTs, mobile phones, and wires. 

What are the Issues and Challenges in E-Waste Management? 

  • Informal E-Waste Recycling: Informal e-waste recycling, using hazardous methods like burning and acid leaching, releases toxic fumes and contaminates soil and water, posing serious environmental and health risks. 
    • Informal recycling markets in China, India, Pakistan, Vietnam, and Philippines handle anywhere from 50 % to 80 % of the world's E-Waste. 
  • Lack of Infrastructure: The lack of infrastructure for e-waste management, including insufficient collection points and recycling facilities, leads to improper disposal.  
    • This results in e-waste ending up in landfills, causing soil and water contamination from harmful chemicals. 
  • Lack of Awareness: Lack of awareness among consumers, businesses, and policymakers about proper disposal and recycling. 
    • For instance, individuals might dispose of their e-waste in regular trash bins or donate it to charities that lack the proper resources to manage e-waste responsibly. 
  • Environmental Effects of E-waste: E-waste harms the environment as toxic materials (like lead, cadmium, and mercury) contaminate water, soil, and air, affecting wildlife.  

What Strategies Can Strengthen E-Waste Management in India? 

  • Integration of Informal Sector: Integrate informal waste handlers into formal systems to boost collection rates. Provide training programs for informal recyclers on safe handling techniques. 
    • For example, China formalizes the informal sector with training and financial support through Regulation on the Management of the Recovery and Disposal of Waste Electrical and Electronic Products (WEEE). 
  • Technological Advancements: Promote research in advanced recycling technologies to enhance efficiency and develop AI and IoT-based solutions for improved e-waste tracking and collection systems. 
    • EUs “right to repair” rules clarify the obligations for manufacturers to repair goods and encourage consumers to extend a product’s lifecycle through repair.  
  • Learning from Global Practices: 
    • EU: Set stringent recycling targets and enhance eco-design incentives for producers. 
      • For example, the Waste Electrical and Electronic Equipment (WEEE) Directive by the European Union (EU). 
    • Japan: Introduce a nationwide e-waste recycling fee to fund and support recycling initiatives effectively. 
  • Refurbishing and Reuse Programs: Create incentives for companies to refurbish used electronics for resale, extending their lifecycle. 
    • Example: In Germany, consumers can return old devices for repair or refurbishment at designated centers. 
    • Strengthen organized second-hand markets to make affordable electronics accessible while reducing e-waste. 
  • Public Awareness and Education: Campaigns targeting urban and rural populations on e-waste hazards and proper disposal methods. 
    • Collaboration with NGOs and think tanks for outreach programs. 
  • Collaboration with International Bodies: Partner with organizations like the International Telecommunication Union (ITU) for capacity building in recycling technologies. 

Drishti Mains Question 

Discuss the challenges related to e-waste management in India and suggest ways for its effective management. 

 

  UPSC Civil Services Examination, Previous Year Questions 

 Prelims: 

Q. Due to improper/indiscriminate disposal of old and used computers or their parts, which of the following are released into the environment as e-waste? (2013)

  1.  Beryllium 
  2. Cadmium 
  3. Chromium 
  4. Heptachlor 
  5. Mercury 
  6. Lead 
  7. Plutonium 

Select the correct answer using the codes given below: 

 (a) 1, 3, 4, 6 and 7 only 

(b) 1, 2, 3, 5 and 6 only 

(c) 2, 4, 5 and 7 only 

(d) 1, 2, 3, 4, 5, 6 and 7 

 Ans: (b) 

 Mains: 

Q. What are the impediments in disposing of the huge quantities of discarded solid waste which are continuously being generated? How do we safely remove the toxic wastes that have been accumulating in our habitable environment? (2018) 

International Relations

African Union Support and Stabilisation Mission in Somalia

For Prelims: UN Security Council (UNSC), African Union (AU), African Union Support and Stabilisation Mission in Somalia (AUSSOM), African Union Transition Mission in Somalia (ATMIS), Somaliland, Puntland, Horn of Africa, Blue Berets, Tutsis. 

For Mains: Role of peacekeeping missions in resolving conflicts, regional peace initiatives. 

Source: HT 

Why in News?  

Recently, the UN Security Council (UNSC) endorsed the African Union (AU) Peace and Security Council’s initiative named African Union Support and Stabilisation Mission in Somalia (AUSSOM). 

  • The resolution titled Resolution 2767 (2024) aims to address Somalia's security challenges posed by Somalia’s civil war and terrorist groups such as Al-Shabaab and Islamic State of Iraq and the Levant.  
  • It is similar to UN peacekeeping missions.  

 Note: Peace and Security Council (PSC) is the standing decision-making organ of the AU for the prevention, management and resolution of conflicts.  

  • It is also the key pillar of the African Peace and Security Architecture (APSA), which is the framework for promoting peace, security and stability in Africa. 
  • The Levant is the eastern shoreland of the Mediterranean sea comprising Syria, Lebanon, Israel, Jordan, and Palestine. 

What is ATMIS and AUSSOM? 

  • About ATMIS: African Union Transition Mission in Somalia (ATMIS) is a multidimensional mission (military, police and civilian), authorised by the African Union and mandated by the United Nations Security Council. 
    • Mandate: It replaces the African Union Mission in Somalia (AMISOM) with a clear mandate to fully implement the Somali Transition Plan (STP). 
      • STP is a comprehensive guide by Somalia and partners for transferring security responsibility from the African Union to the Federal Government of Somalia. 
  • About AUSSOM: It provides for the replacement of the African Union Transition Mission in Somalia (ATMIS), whose mandate ends on 31st December 2024. 
    • Transitioning Responsibility: Since 2022, 7,000 ATMIS troops have been reduced, and AUSSOM continues supporting Somali forces in stabilising the nation. 
    • Mandate and Operations: AU members can deploy up to 12,626 personnel, including 1,040 police officers, until June 2025 to combat terrorism and maintain security. 
    • Financing: A hybrid approach, combining UN assessed contributions (75%) and African Union/partner contributions (25%), has been proposed to fund the mission to ensure sustainable and predictable funding for African peace operations. 
    • Challenges: Burundi and Ethiopian troops will not be taking part in AUSSOM. 
      • Egypt may take part in the AUSSOM with which Ethiopia has its own disputes over a dam it has constructed along the Nile. 
      • Ethiopia has good relations with authorities governing Somaliland (a breakaway region of Somalia). 
        • The US expressed concerns that the UN disproportionately funded the mission and abstained from voting in the UNSC. 

What is Somalia’s Civil War? 

  • About: It began in 1988, during President Siad Barre's authoritarian rule. His regime collapsed in January 1991, creating a power vacuum and chaos. 
  • Fragmentation of Somalia: After Barre's fall, Somalia split into regions controlled by militias and groups, including Somaliland, which declared independence in 1991, and Puntland, which declared partial autonomy in 1998. 
    • Somalia and Ethiopia have been in a year-long dispute over a sea access deal Ethiopia made with the separatist Somaliland region. 

 Somalia_and_Breakway _Regions

  • Rise of Clannism: The clannism system fueled tensions in Somalia, hindering government unity and peace efforts, while clan rivalries strained relations between the Federal Government and regional states. 
    • Clannism is the dominance of clan-based politics, where loyalty to clan and sub-clan interests often overrides national unity.  
    • The four main clans in Somalia are Dorad, Hawiye, Dir and Rahanweym. 
  • Peace Efforts:  
    • Arta Declaration (2000): Regional organizations such as the Intergovernmental Authority on Development (IGAD) attempted to establish a more representative government. 
    • Transitional Government: Transitional National Government (TNG) and Transitional Federal Government (TFG) were established but were plagued by inefficiency, infighting, and corruption.  
  • Rise of Al-Shabaab: By 2007, the rise of Al-Shabaab, an Islamist militant group, escalated the conflict. It is al-Qaeda’s strongest affiliate. 
    • Al-Shabaab's primary goal is to overthrow the Federal Government of Somalia (FGS), expel foreign military presence, and establish a strict interpretation of Islamic law (Sharia).  
    • The group advocates for a “Greater Somalia,” seeking to unite ethnic Somalis across East Africa into a single Islamic state. 
      • Greater Somalia would include Somalia, Somaliland, part of Djibouti and Kenya (Northern areas) and the Ethiopian Ogaden. 

 Note: Horn of Africa comprises the countries of Djibouti, Eritrea, Ethiopia, and Somalia. 

Horn_of_Africa 

What is the UN Peacekeeping Mission? 

  • About: It is a set of operations led by the UN to help maintain peace and security in conflict zones through deployment of military personnel, police, and civilian experts. 
    • It was established in May 1948 when the UNSC authorised the deployment of UN military observers to monitor the Armistice Agreement between Israel and its Arab neighbors. 
    • UN peacekeepers are often referred to as Blue Berets or Blue Helmets because of their light blue berets or helmets. 
  • Global Presence: Over the past 70 years, more than 1 million men and women have served under the UN flag in more than 70 UN peacekeeping operations.  
    • More than 1,00,000 military, police and civilian personnel from 125 countries currently serve in 14 peacekeeping operations. 

 Peacekeeping_Operations

  • Effectiveness:  
    • Success Stories:  
      • Sierra Leone (1999-2005): The peacekeepers disarmed over 75,000 ex-fighters, including child soldiers, and destroyed 42,000 weapons, greatly aiding the country's stabilization. 
      • Burundi (2004-2006): UN peacekeepers helped the country recover from ethnic conflict, aiding the transition from civil war to stability, and extended their mission to protect these gains. 
      • Liberia ( 2003-2018): United Nations Mission in Liberia (UNMIL) brokered peace agreements, oversaw disarmament, and supported democratic elections in Liberia. 
      • Sierra Leone (1999 to 2005): Peacekeepers ended the country’s civil war and facilitated the implementation of the Lome Peace Agreement.  
        • The mission’s success was driven by the commitment of both warring parties to the peace process, its clear mandate, and the support from the international community. 
    • Failures:  
      • Somalia (1992-1995): The Battle of Mogadishu (1993) saw US soldiers killed and their bodies paraded, leading to the swift withdrawal of American and UN forces.  
        • By 1995, the UN withdrew completely, marking the mission a failure. 
      • Rwanda (1994): In 1994, over 800,000 people, mostly Tutsis ethnic group, were killed in a genocide.  
        • Despite early warnings, the UN failed to intervene or provide enough resources to prevent it. 
      • Srebrenica (1995): In 1995, UN peacekeepers in Srebrenica, Bosnia, failed to prevent the execution of 8,000 Muslim men and boys by Bosnian Serb forces, despite declaring it a "safe area." 

 India's Contribution in UN Peacekeeping Missions 

  • India’s Role: India has played a significant role in UN Peacekeeping Missions contributing more troops than any other country, with over 253,000 personnel serving in 49 of the 72 UN missions since 1948.  
    • As of January 2024, around 5,900 Indian troops are deployed across 12 UN peacekeeping missions.  
  • Past Missions:  
    • Haiti (2017-19): India contributed two Formed Police Units (FPU) with around 280 personnel from BSF, CISF, and Assam Rifles from November 2017 to July 2019, achieving great success. 
    • Liberia (2007-16): A 125-member all-women police unit in Liberia inspired a fourfold increase in women applying to join the police. 
    • Sierra Leone (1999-2001): India contributed two Infantry Battalion groups, two engineer companies, Attack helicopter unit, and medical unit among others. 
    • Sudan (2005): India has contributed two Infantry Battalion groups, Engineer Company, Signal Company, among others. 
    • Rwanda (1994-96): An Infantry Battalion, Signal Company, Engineer Company, Staff Officers, and Military Observers were provided. 
    • Somalia (1993-94): Indian Army deployed a Brigade Group comprising 5,000 all ranks and the Navy deployed four battleships. 

Conclusion 

The recent endorsement of AUSSOM by the UN Security Council underscores the continued struggle to stabilize Somalia amidst its prolonged civil war. While African-led missions like ATMIS and AUSSOM are crucial, historical failures of UN peacekeeping, such as in Somalia and Rwanda, emphasize the need for clear mandates, resources, and international cooperation. 

Drishti Mains Question: 

Analyze the successes and failures of UN peacekeeping missions.

 

 Mains 

Q. Discuss the impediments India is facing in its pursuit of a permanent seat in UN Security Council. (2015)

Important Facts For Prelims

Underutilization of Operation Greens Scheme

Source: DTE 

Why in News? 

Recently, a Parliamentary Standing Committee (PSC) on Agriculture, Animal Husbandry and Food Processing tabled a report highlighting the underperformance Operation Greens (OG) scheme. 

  • The scheme’s limited success raises concerns about the government's ability to address the challenges of volatile agricultural markets and post-harvest losses. 

What are the Key Findings of the PSC Report? 

  • Underutilisation of Budget: Only 34% (Rs 59.44 crore) of the Rs 173.40 crore allocated for the 2024-25 financial year has been spent by October 2024. 
    • 65.73% of the allocated budget remains unspent, which raises concerns about meeting expenditure guidelines for the remaining fiscal year. 
  • Limited Impact on Price Stabilization: Despite the scheme's objective to stabilize crop prices, onion farmers in Maharashtra are facing a price crash, with onion prices falling by nearly 50%. 
    • Potato shortages are being experienced in states like Odisha and Jharkhand, exacerbated by production dips in West Bengal due to weather conditions. 
  • Policy Inconsistencies: The government’s inconsistent policies, like the export ban and its extension, and the imposition of export duties, have frustrated onion farmers, affecting their ability to secure fair prices. 
  • Challenges in Achieving Scheme's Mandate: The scheme has struggled to meet its dual objectives: ensuring farmers receive fair prices while maintaining affordable prices for consumers. 
    • The underfunding and lack of progress highlight the challenges in stabilizing agricultural markets and addressing infrastructure gaps in post-harvest management. 

What is the Operation Greens Scheme? 

Read more: Food Inflation: Trends, Factors and Control Measures 

Important Facts For Prelims

ISRO’s SpaDeX

Source: BS 

Why in News?  

Indian Space Research Organisation (ISRO) is set to achieve a significant milestone with the launch of the Space Docking Experiment (SpaDeX) mission on 30th December 2024. 

  • The mission aims to demonstrate satellite docking capabilities, a crucial technology for future space missions. 

What is SpaDeX? 

  • About: SpaDeX (Space Docking Experiment) is a technology demonstrator mission developed by the ISRO to showcase in-space docking technology. 
    • This mission aims to demonstrate the ability to rendezvous, dock, and undock two small spacecraft, marking a significant advancement in India’s space capabilities. 
  • Objective: The primary goal of SpaDeX is to develop docking technologies for two small spacecraft, SDX01 (Chaser) and SDX02 (Target), in low Earth orbit.  
    • They will dock autonomously using advanced sensors and propulsion systems.  
    • Secondary objectives include testing electric power transfer and demonstrating spacecraft control. 
  • Mission Duration: Two years 
  • Mission Design:  SpaDeX will deploy two satellites, SDX01 and SDX02, into a 470 km orbit using the Polar Satellite Launch Vehicle (PSLV) rocket, where they drift apart and gradually approach each other, eventually docking at distances from 20 km to 3 meters. 
    • The two satellites are equipped with the Bharatiya Docking System (BDS). 
      • BDS features identical, low-impact (approach velocity is in the order of 10 mm/s), androgynous (docking systems are identical for both spacecraft, Chaser & Target) docking mechanisms, enhancing mission flexibility and precision for future operations like satellite servicing, crew transfers, and India’s space station development. 
    • SpaDeX will use PSLV's fourth stage, POEM (PSLV Orbital Experimental Module)-4, to carry 24 payloads from academic institutions and startups. These experiments will leverage the microgravity environment in orbit. 
  • Docking Challenge: The two satellites (Chaser and Target) will orbit at speeds of 28,800 km/h. They will need to carefully reduce their relative velocity to just 0.036 km/h before docking. 

SpaDeX 

Space Docking 

  • Space docking is the intricate process of maneuvering two fast-moving spacecraft into the same orbit, bringing them closer, and joining them to form a single unit. 
    • This capability is pivotal for assembling large structures or transferring equipment, crew, or supplies in space. 
  • For instance, the International Space Station (ISS) was built using this technique, with various modules launched separately and docked in space.  
    • Continuous docking missions keep the ISS operational by delivering supplies, new crew members, and modules while facilitating the return of the older crew to Earth. 

Why is Space Docking Technology Crucial for India? 

  • Modular Space Infrastructure: Docking is a prerequisite for constructing multi-modular space stations. It allows the assembly of structures in space, reducing the size and weight constraints of single-launch missions. 
  • Interplanetary and Lunar Missions: Docking supports orbital refueling, and payload exchange, enhancing mission flexibility for lunar bases and Mars exploration.  
  • Human Spaceflight Program: Space Docking is critical for crew transfers and emergency evacuations during long-duration missions like Gaganyaan and beyond. 
  • Global Collaboration and Market Potential: SpaDeX could position India as the fourth nation, after Russia, the US, and China, to master space docking, strengthening its presence in satellite servicing and enabling advanced international collaborations. 
  • Satellite Servicing: Docking allows for repairing, refueling, and upgrading satellites, enhancing their operational life and performance. 

 

UPSC Civil Services Examination, Previous Year Question (PYQ) 

Prelims 

Q. Consider the following statements: (2016)

The Mangalyaan launched by ISRO 

  1. is also called the Mars Orbiter Mission 
  2. made India the second country to have a spacecraft orbit the Mars after USA 
  3. made India the only country to be successful in making its spacecraft orbit the Mars in its very first attempt 

Which of the statements given above is/are correct? 

(a) 1 only  
(b) 2 and 3 only  
(c) 1 and 3 only 
(d) 1, 2 and 3 

Ans: (c)  

Important Facts For Prelims

ADB Loans for India's Green Growth and Logistics Modernization

Source: PIB 

Why in News? 

Recently, the Government of India and the Asian Development Bank (ADB) signed two crucial loans aimed at strengthening India's infrastructure and supporting sustainable growth. 

  • What are the Key Facts Regarding the ADB Loans Taken by India? 
  • The USD 500 million loan aims to finance green and sustainable infrastructure projects aligned with India's climate commitments, particularly focusing on connectivity, energy transition, and under-resourced sectors like urban projects, education, and healthcare. 
    • Recipient: The loan, with a sovereign guarantee, will be provided to the India Infrastructure Finance Company Limited (IIFCL). 
    • Role of IIFCL: IIFCL will use the funds to provide long-term capital for infrastructure projects and leverage private sector resources.  
      • This aligns with India's need for private capital investment to meet its net-zero commitments. 
      • IIFCL is a leading public sector infrastructure finance institution, which has funded about 21% of the country’s national highway capacity, comprising nearly 30,000 km of roads. 
  • The USD 350 million loan falls under the SMILE program to bolster India’s manufacturing sector and enhance supply chain resilience. 
    • It aims to reduce logistics costs, improve efficiency, generate employment, and promote gender inclusion and supports India’s broader economic development by driving innovation and growth within the logistics sector. 

What is the Strengthening Multimodal and Integrated Logistics Ecosystem (SMILE) Program? 

  • About: 
    • The SMILE program is a key initiative by the Government of India, supported by the Asian Development Bank (ADB), to comprehensively reform and modernize the country's logistics sector. 
  • Objective: 
    • To enhance India's manufacturing competitiveness and strengthen supply chain resilience by improving logistics efficiency.   
  • Focus Areas:  
    • Institutional Strengthening: Improving coordination and planning among various government ministries and agencies involved in logistics at the national, state, and city levels.  
      • This aims to create a more unified and efficient governance structure for the sector.   
    • Standardisation and Infrastructure Development: Promoting standardisation of warehousing and other logistics assets to improve efficiency and attract greater private sector investment in infrastructure development.  
    • External Trade Logistics: Streamlining procedures and processes related to imports and exports to reduce delays and costs in international trade. 
    • Technology Adoption: Encouraging the use of smart technologies and automation in logistics operations to improve efficiency, reduce emissions, and enhance service delivery.  
      • This includes promoting digitalization and data sharing.   

Government Initiatives for Logistics Sector 

Asian Development Bank (ADB) 

  • About: ADB is a multilateral development bank established in 1966 with a mission to foster economic growth and cooperation in the Asia-Pacific Region. 
  • Headquarters: Located in Manila, Philippines. 
  • Membership: Comprises 68 members, including 49 from Asia and the Pacific, and 19 from other regions. 
  • India and ADB: India is a founding member and the 4th largest shareholder (after Japan, US and China) of ADB. 
  • ADB's Support to India: ADB aligns its support with India’s priorities for sustainable, climate-resilient, and inclusive growth, in line with its ADB’s Strategy 2030 and the country partnership strategy for 2023–2027. 
  • Recently ADB released the Asia Development Outlook Report 2024.  

 UPSC Civil Services Examination, Previous Year Questions (PYQs) 

Q. The term ‘Regional Comprehensive Economic Partnership’ often appears in the news in the context of the affairs of a group of countries known as (2016)

(a) G20 
(b) ASEAN  
(c) SCO  
(d) SAARC 

Ans: (b)  

Rapid Fire

Increased Regulatory Action on Nidhi Companies

Source: LM 

In 2024, the Ministry of Corporate Affairs (MCA) and Registrars of Companies (RoCs) significantly intensified action against Nidhi companies and firms defaulting on beneficial ownership disclosures.  

  • This was done to ensure financial transparency, curbs illicit activities in the non-banking sector, and strengthens corporate governance. 
  • RoCs issued 131 orders against Nidhis, a 72% rise from 2023, with penalties ranging from Rs 10,000 to Rs 30 lakh.  
  • Beneficial Ownership refers to the individuals who ultimately own or control a company, even if the shares are held in another person’s name.  
    • Under the Companies Act, 2013, companies must disclose the identity of individuals who have significant control or own 25% or more of the shares. 
  • Nidhi Companies are non-banking financial entities (NBFC) that operate under Section 406 of the Companies Act, 2013.  
    • These companies are formed to encourage savings and provide loans exclusively to their members.  
    • Nidhis are not required to obtain an RBI license but must adhere to strict disclosure and operational norms.  
    • They are registered as public limited companies and include "Nidhi Limited" in their name.  
    • They must maintain a minimum of 200 members within a year and Rs 20 lakh in net owned funds. 

Read More: Nidhi Companies 

Rapid Fire

Kashmir's Papier Mache Revives the Dodo

Source: TH 

Papier mache artisans in Srinagar are crafting and exporting large quantities of dodo figurines, primarily to Mauritius (where the dodo was native and is a national symbol) and Europe around Christmas 2024. 

  • Dodo:  
    • The dodo (Raphus cucullatus) is an extinct (since 1681) flightless bird that was endemic to the island of Mauritius, which is east of Madagascar in the Indian Ocean. 
    • It belonged to the Columbidae family (doves and pigeons).  
    • It became extinct due to human activity and the introduction of invasive species like pigs, rats, and cats, which preyed on its eggs and chicks. 
  • Papier Mache Art:  
    • Papier mache, a 600-year-old handicraft in Kashmir, involves the use of paper pulp to create colorful, intricately decorated objects. 
    • This craft has its origins to the 15th century under King Zain-ul-Abidin, who invited Central Asian artisans. 
    • Traditionally influenced by Persian motifs, the craft recently incorporated dodos, introduced around two decades ago, possibly by Mauritian tourists. 
  • Other Crafts of Kashmir: 
    • Seven Kashmiri crafts, including carpets, pashmina, sozni, kani shawls, walnut wood carving, khatamband, and papier mache, have got Geographical Indication (GI) tags. 

DODO 

Read More: Cultural Exchange and Growth of Kashmir's Craft Industry, Human-induced Extinction of Dodo 

Rapid Fire

Conjugal Visits in Prisons

Source: TH 

The Delhi Government is reconsidering a proposal to allow conjugal visits for prisoners. 

  • Conjugal Visits: 
    • It is a private family visit where inmates spend time, including intimate moments, with their legal spouses within the prison. 
    • It promotes inmate rehabilitation and long-term recovery, enhancing psychological well-being and sustaining marital ties of prisoners. 
  • Judicial Landmarks: 
    • Punjab & Haryana High Court in 2014 has upheld the right to procreation (reproduction) for prisoners. 
    • Madras High Court in 2018 allowed parole for conjugal relations. 
    • In July 2023, Justice S.M. Subramaniam of the Madras High Court urged the Tamil Nadu government to consider allowing conjugal relations for prisoners within prison precincts. 
  • Other Countries: Conjugal visits are allowed in some US states but not federal prisons. 
    • In Europe, countries like Spain, France, Sweden, and Denmark permit such visits, with Spain offering monthly and Sweden up to 9 hour sessions. 

Read More: Open Prisons in India 

Rapid Fire

RBI Sets Up Committee for Ethical AI in Finance

Source: ET 

  • Recently, RBI has established an eight-member committee to develop a Framework for Responsible and Ethical AI (FREE-AI) adoption in the financial sector. 
  • The committee is chaired by Professor Pushpak Bhattacharyya from IIT Bombay and consists of specialists from academia, government, and industry. 
  • Objectives of the committee include: 
    • Assessing the current global and Indian adoption of AI in financial services. 
    • Reviewing regulatory and supervisory approaches to AI in the financial sector worldwide. 
    • Identifying potential risks of AI in finance, recommending evaluation, mitigation, and monitoring frameworks. 
  • The committee will recommend a governance framework for the ethical adoption of AI in financial institutions such as banks, Non-Banking Finance Companies (NBFCs), and FinTechs. 
  • The initiative aligns with the RBI's focus on incorporating AI responsibly within India's financial ecosystem. 
  • The FinTech Department at the Central Office of the Reserve Bank of India will offer secretarial assistance to the Committee. 

 Artificial_Intelligence

Read More: RBI’s Five Strategic Priorities for India's Financial Future 

Rapid Fire

PM Cares Funding Dropped in 2022-23

Source: IE 

A study of the Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM-CARES Fund)’s audited statements reveals that voluntary contributions dropped to Rs 912 crore in 2022-23, the lowest since its establishment in March 2020.  

  • Contributions peaked at Rs 7,184 crore in 2020-21, then fell to Rs 1,938 crore in 2021-22 as the Covid-19 threat diminished. 

 

PM CARES Fund 

  • About: 
    • It is a Public Charitable Trust registered on 27th March 2020  under the Registration Act, 1908. 
  • Objectives: 
    • It aims to provide relief or assistance including public health crises such as Covid-19, natural disasters, or man-made calamities, and facilitate the development of healthcare, pharmaceutical infrastructure, and other essential facilities. 
    • It offers financial assistance, grants, or other necessary support to affected populations. 
  • Members and Governance: 
    • Chairperson: Prime Minister (ex-officio). 
    • Trustees: Defence, Home, and Finance Ministers. 
    • Additional Trustees: Appointed by the Chairperson; serve on a non-profit basis. 
  • Tax Exemptions:  
  • Criticisms: 

Read More: PM - CARES Fund 

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