INTEGRATED MAINS AND PRELIMS MENTORSHIP (IMPM) 2025 Daily KEY
| Exclusive for Subscribers Daily:
Power Purchasing Parity (PPP) for the UPSC Exam? Why are topics like Drug Resistant TB and PM-KUSUM, Financial Action Task Force (FATF) important for both preliminary and main exams? Discover more insights in the UPSC Exam Notes for January 17, 2025 |
🚨 UPSC EXAM NOTES presents the January edition of our comprehensive monthly guide. Access it to enhance your preparation. We value your input - share your thoughts and recommendations in the comments section or via email at Support@upscexamnotes.com 🚨
Critical Topics and Their Significance for the UPSC CSE Examination on January 17, 2025
Daily Insights and Initiatives for UPSC Exam Notes: Comprehensive explanations and high-quality material provided regularly for students
The impacts of rupee weakening
For Preliminary Examination: Current events of national and international importance
For Mains Examination: GS III - Indian Economy
Context:
The sharp devaluation of the Indian rupee is driven by capital outflows, higher import costs, and a policy shift by the RBI; structural issues such as rising domestic prices and real exchange rate appreciation further complicate the recovery of net exports
Read about:
Power Purchasing Parity (PPP)
Foreign Exchange Management Act (FEMA)
Key takeaways:
The Indian rupee has recently experienced a significant devaluation against the US dollar, following a period of relative stability for over two years. What are the underlying reasons for this shift, and what implications does it hold? This discussion explores India’s exchange rate policy and highlights key structural challenges within the Indian economy in recent years.
Exchange Rate Frameworks
The nominal exchange rate represents the cost of acquiring one unit of foreign currency in terms of the domestic currency. Changes in the nominal exchange rate are influenced by the interplay between supply and demand in the foreign exchange market and the central bank’s exchange rate policy.
The real exchange rate reflects the relative cost of foreign goods in terms of domestic goods, taking into account price levels. It indicates the comparative affordability of domestic goods against foreign ones.
The demand and supply in the foreign exchange market are shaped by the flows in the current and capital accounts. A decline in the combined net flows of these accounts increases the demand for foreign currency, while an increase in net flows boosts its supply. Net current account flows are largely determined by net exports, whereas capital account flows depend on foreign investment inflows and outflows. Reduced net exports and greater capital outflows increase the demand for foreign currency and vice versa.
Central bank responses to market conditions define three primary exchange rate regimes: fixed, floating, and managed-floating.
- Fixed Exchange Rate: The central bank offsets higher foreign currency demand by selling foreign exchange reserves to maintain a fixed nominal exchange rate.
- Floating Exchange Rate: The central bank allows the currency to devalue to meet increased foreign currency demand, keeping reserves unaffected.
- Managed-Floating Exchange Rate: The central bank combines selling reserves and allowing devaluation to address higher demand.
India has predominantly followed a managed-floating exchange rate system over the last three decades. In the 2010s, the Reserve Bank of India (RBI) adopted a nuanced approach under this regime.
During periods of excess demand, it devalued the rupee and reduced foreign exchange reserves. Conversely, during excess supply, the RBI resisted nominal exchange rate appreciation by accumulating reserves to safeguard export competitiveness. This asymmetric policy resulted in a gradual rupee devaluation throughout the decade.
Post-COVID, particularly between late 2022 and November 2024, the RBI temporarily adopted a policy resembling a fixed exchange rate regime, maintaining a stable nominal exchange rate despite current account deficits and capital outflows by selling foreign reserves. However, the recent sharp rupee devaluation suggests a return to the managed-floating regime, driven by capital outflows, increased imports, and rising crude oil prices. This strategy aims to reduce pressure on foreign reserves by permitting rupee depreciation.
Consequences of Devaluation
A nominal exchange rate depreciation can have dual macroeconomic effects—favorable and adverse. The positive impact stems from the real exchange rate mechanism, while the negative effect arises from domestic price dynamics.
-
Boosting Net Exports: Depreciation makes domestic goods cheaper relative to foreign goods, potentially enhancing net exports and economic output. For this to occur, two conditions must be met: net exports should respond positively to changes in the real exchange rate, and nominal depreciation must lead to real exchange rate depreciation. A rise in domestic prices at a constant nominal rate negates the benefit by making domestic goods costlier, while nominal depreciation at stable domestic prices enhances competitiveness.
-
Rising Domestic Prices: Depreciation can inflate domestic prices by increasing firms' variable costs, particularly for imported raw materials. In markets with limited competition, businesses often adjust prices by marking up their variable costs, which rise with higher import costs. Consequently, this cost escalation is passed on to consumers, driving up domestic prices
Recent Challenges
- Since the mid-2010s, particularly from 2019 onward, a significant divergence has emerged between India’s nominal and real exchange rates. These rates represent the weighted average exchange rate of India with its various trading partners.
- According to their definitions, an increase (or positive change) in these indices indicates an appreciation, while a decrease (or negative change) signifies depreciation.
- While these indices moved in tandem until the mid-2010s, they began diverging thereafter, with the real exchange rate appreciating even as the nominal exchange rate depreciated. This trend sets India apart from most other countries.
- In this context, the horizontal and vertical axes represent the changes in the Nominal Effective Exchange Rate (NEER) and Real Effective Exchange Rate (REER), respectively, between January 2019 and November 2024.
- The vertical zero line denotes no change in the NEER, while the horizontal zero line indicates no change in the REER
1.Which one of the following groups of items is included in India’s foreign-exchange reserves? (UPSC CSE 2013)
(a) Foreign-currency assets, Special Drawing Rights (SDRs) and loans from foreign countries
(b) Foreign-currency assets, gold holdings of the RBI and SDRs
(c) Foreign-currency assets, loans from the World Bank and SDRs
(d) Foreign-currency assets, gold holdings of the RBI and loans from the World Bank
|
Answer (b)
India's foreign-exchange reserves consist of the following components:
|
- Multidrug-resistant tuberculosis (MDR-TB) refers to a form of TB in which the bacteria responsible are resistant to rifampicin and isoniazid, two of the most effective medications used for TB treatment.
- Contracting MDR-TB carries a high risk of mortality, estimated at 30-40%, making it a severe and life-threatening condition. India faces a significant burden of TB, with MDR-TB cases on the rise. In 2023, 27% of the 1,75,923 cases reported to the World Health Organization originated from India.
- For years, the emergence of resistant strains was mainly attributed to poor adherence to treatment protocols and the misuse of TB medications, including incorrect drug regimens. These factors promote the development of resistant bacterial strains.
- In India, challenges such as the lengthy treatment duration (six months) and the initial need for multiple drugs (typically four) make adherence to drug-sensitive (DS) TB treatment difficult.
- Ironically, treating drug-resistant TB (DR-TB) historically required even more drugs—at least five—administered over an extended period (18 months or more), with significantly worse toxicity. It is unsurprising that TB-affected communities have long called for shorter, less harmful treatments, though their pleas often went unheard.
- Healthcare systems and research largely sidelined these demands, perhaps due to the concentration of TB cases in the Global South. Physicians often minimized or dismissed the side effects of treatments, sometimes blaming patients for their complaints.
- Daily intramuscular injections caused painful swellings, making sitting or engaging in daily activities unbearable.
- Hearing loss, a side effect of injectable drugs, was rationalized with statements like “better deaf than dead.” Similarly, skin discoloration caused by clofazimine, which added to the stigma surrounding TB, was downplayed as a “minor” issue.
- Other side effects, such as disrupted menstrual cycles, loss of appetite, depression, and suicidal thoughts, were labeled as secondary to treatment and endured over long treatment durations.
The Need for Shorter Regimens
- Shorter treatment regimens have long been necessary. Their advantages include reduced treatment duration, better adherence rates, and lower economic burdens on patients. These regimens aim to be entirely oral and minimize the number of pills required.
- One such regimen, BPaL, combines three oral drugs—bedaquiline, pretomanid, and linezolid—for six months of treatment. A variant, BPaL/M, includes moxifloxacin as a fourth drug.
- The Nix-TB trial demonstrated the efficacy of this regimen in 109 South African patients, while the ZeNix trial, conducted across four countries, showed that a lower dose of linezolid (600 mg daily) improved tolerability without compromising effectiveness.
- While these advancements are promising, they come with caveats. Close monitoring is essential to prevent bedaquiline resistance, which has already been observed in some treatment failures.
- Digital tools and counseling to support adherence must be integrated into treatment programs, particularly in high-burden countries where they are currently lacking.
- Additionally, widespread access to drug-susceptibility testing is critical to ensure the suitability of these regimens for individual patients. These treatments should not be seen as universal solutions but prescribed only when their efficacy is confirmed for the specific case.
- Adverse effects remain a concern, even with shorter regimens. For instance, linezolid can cause severe sensory neuropathy in some patients, necessitating alternative treatments. Adverse events and their impact on patients' quality of life during and after treatment must be carefully evaluated.
Strengthening Health Systems and Preparedness
- Health systems must be adequately prepared for these new regimens. Training physicians to manage side effects and complications should be an integral part of the implementation process. Universal molecular diagnostics to detect drug-resistant TB early are vital to curbing its spread.
- Given that many TB patients initially seek private healthcare, strong public-private partnerships are necessary to ensure the availability of these regimens while preventing misuse.
- Although shorter regimens are likely to be more expensive, persisting with cheaper but highly toxic treatments would be shortsighted, leading to patient suffering and reduced treatment adherence.
- While the government's decision to introduce these regimens is commendable, albeit delayed, the focus must also include community education, side-effect management, and counseling.
- In addition to adopting new regimens, it is crucial to address the social determinants of health, such as reducing stigma, providing economic and nutritional support, and improving living conditions for TB-affected populations
1.Read the following passages and answer the question, your answers to these items should be based on the passages only.
A majority of the TB infected in India are poor and lack sufficient nutrition, suitable housing and have little understanding of prevention. TB then devastates families, makes the poor poorer, particularly affects women and children, and leads to ostracisation and loss of employment. The truth is that even if TB does not kill them, hunger and poverty will. Another truth is that deep-seated stigma, lack of counselling, expensive treatment and lack of adequate support from providers and family, coupled with torturous side-effects demotivate patients to continue treatment - with disastrous health consequences.
Which one of the following is the most logical, rational and crucial message conveyed by the above passage? (UPSC 2019)
- TB is not a curable disease in Indian circumstances.
- Curing TB requires more than diagnosis and medical treatment.
- Government's surveillance mechanism is deficient, and poor people have no access of treatment.
- India will be free from diseases like TB only when its poverty alleviation programmes are effectively and successfully implemented.
|
Answer (2)
The most logical, rational, and crucial message conveyed by the passage is: Curing TB requires more than diagnosis and medical treatment. The passage highlights the multifaceted challenges faced by TB patients in India, including poverty, malnutrition, stigma, lack of counselling, inadequate support systems, and severe treatment side effects. It emphasizes that these factors, beyond the medical diagnosis and treatment, significantly affect a patient's ability to recover. While poverty alleviation is important, the passage focuses more on the immediate challenges of providing holistic care to TB patients rather than solely addressing poverty as the ultimate solution |
What is 'Blood Money'?
- 'Blood money,' or diya, is rooted in Islamic Sharia law and is practiced in countries where these laws are integrated into legal systems. According to diya, the perpetrator of a crime must compensate the victim or the victim's family (in case of the victim's death) with a defined monetary or valuable amount.
- This practice is typically applied in cases of unintentional murder or culpable homicide and sometimes in murder cases where the victim's family opts against retribution (qisas).
- The purpose of diya is not to commodify human life but to ease the suffering and financial burden of the affected family. However, even if diya is agreed upon, the state and community reserve the right to impose additional penalties to deter crime.
- In modern contexts, blood money is implemented in several Islamic countries, often influenced by factors like the victim's gender, religion, or nationality. Islamic scholar Mohammad Hashim Kamali discusses examples in his book Crime and Punishment in Islamic Law: A Fresh Interpretation.
- For instance, Saudi Arabia mandates diya payments to victims' families in road accident cases, alongside potential prison sentences for the offender. The Sharia court determines the diya amount after police identify the guilty party.
- In workplace accidents, a special committee fixes compensation rates. Talks emerged in 2022 about Saudi Arabia revising its diya laws to ensure equal payments irrespective of gender, religion, or nationality, but these changes are yet to be enacted.
- In Iran, blood money is stringently practiced, with compensation varying by gender and religion; for example, a woman’s compensation is half that of a man. Although a 2019 Supreme Court ruling aimed to equalize diya, full implementation remains pending.
- Pakistan also incorporates diya and qisas through the Criminal Laws (Amendment) Ordinance of 1991. In Yemen, compensation agreements are negotiable between the parties, subject to judicial oversight for fairness.
India's Position on Diya
- India's legal system does not formally include blood money. However, it permits plea bargaining, which, while not directly equivalent to diya, allows accused individuals to negotiate concessions by pleading guilty. Introduced through the Criminal Law (Amendment) Act, 2005, plea bargaining is outlined in Chapter XXI A of the Code of Criminal Procedure, 1973.
- Unlike diya, plea bargaining has stricter limitations. It applies only to offences punishable by less than seven years of imprisonment and is not available for serious crimes like murder, rape, or crimes against women and children under 14.
- Moreover, the accused must voluntarily agree to plead guilty without coercion. Under Section 265E, the victim may receive compensation as part of the agreement, similar to diya. Discussions to refine plea bargaining continue, aiming for greater inclusivity and fairness.
- Despite its limited use in India, judicial delays and prolonged trials often pressure the accused—sometimes even the innocent—to accept plea bargaining to avoid lengthy court battles.
Historical Practices Similar to Blood Money
- Parallels to diya exist in various historical legal systems. In ancient Ireland, the Brehon law (7th century AD) featured Éraic (body price) and Log nEnech (honor price), which replaced capital punishment with compensation based on the crime's severity or the victim's social status. In early Welsh law, galanas determined compensation according to the victim's status, mandating a "blood fine" in most murder cases unless justified by circumstances.
- The early medieval German concept of wergeld also resembled blood money. Legal historian Roscoe Pound notes in The Ideal Element in Law that many medieval states established standards for compensation to victims' families in cases of homicide or serious crimes.
Instances of Indians Pardoned Through Blood Money
Several Indians have been pardoned under blood money laws. In 2019, the death sentence of Arjunan Athimuthu in Kuwait was commuted to life imprisonment after his family paid ₹30 lakh in blood money. Abdul Rahim, sentenced to death in Saudi Arabia for killing a boy in 2006, was pardoned after ₹34 crore was paid, though he remains imprisoned. In the UAE, ten Indians were pardoned in 2017 after a blood money payment of 200,000 dirhams, and 17 Indians on death row for a 2009 murder were pardoned after paying nearly ₹4 crore in dirhams. In this case, the Indian consulate even hired legal assistance to argue for clemency
Irked by the Enforcement Directorate’s submission that the rigours of getting bail in cases under the Prevention of Money Laundering Act (PMLA) would apply equally to women accused, the Supreme Court on Wednesday cautioned that it “will not tolerate” submissions contrary to the law.
Read about:
Prevention of Money Laundering Act (PMLA)
Money Laundering
Key takeaways:
The Prevention of Money-Laundering Act, 2002 (PMLA) was enacted by the Government of India to combat the menace of money laundering and ensure that the proceeds of crimes are not funneled into the formal economy. This legislation aligns with India’s international commitment to combat money laundering and financing of terrorism under recommendations from the Financial Action Task Force (FATF).
The PMLA provides a comprehensive framework to prevent and control money laundering activities. It defines money laundering as any process or activity in which the proceeds of crime are projected or claimed to be legitimate money. The Act specifies that anyone directly or indirectly involved in such activities, including concealment, possession, acquisition, or use of proceeds of crime, can be prosecuted under its provisions.
To strengthen its effectiveness, the Act establishes three key measures:
-
Identification of Offenses and Attachment of Property: Authorities can identify and confiscate properties derived from money laundering. Provisions in the Act allow for the attachment of assets, freezing of bank accounts, and confiscation of properties acquired through illicit means to prevent their misuse or transfer.
-
Obligations of Reporting Entities: Banks, financial institutions, intermediaries, and other businesses are obligated to maintain records of transactions, verify customer identities, and report suspicious activities to the Financial Intelligence Unit-India (FIU-IND). These obligations ensure that financial systems are not exploited for laundering money.
-
Adjudication and Prosecution: The PMLA establishes special courts to handle money laundering cases and prescribes strict penalties, including imprisonment and fines, for offenders. It empowers authorities such as the Enforcement Directorate (ED) to investigate offenses and gather evidence.
The Act has undergone amendments to strengthen its scope and address evolving challenges in financial crimes. For instance, offenses under the Act are cognizable, and bail provisions have been made stringent to ensure offenders face strict legal scrutiny. Furthermore, the inclusion of various predicate offenses under the Act has broadened its reach, encompassing crimes ranging from terrorism financing to tax evasion.
In essence, the PMLA aims to deter illegal financial activities by implementing stringent measures and promoting transparency within financial systems. It reflects India’s commitment to safeguarding the integrity of its economy and combating the global threat of money laundering
|
Answer (D)
The Directorate of Enforcement (ED) is a specialized financial investigation agency functioning under the Department of Revenue, Ministry of Finance. Its primary functions include the enforcement of:
The Prohibition of Benami Property Transactions Act, 1988, however, is enforced by a different authority, the Income Tax Department, not the Directorate of Enforcement. Hence, option D is incorrect |
- The ₹34,000-crore PM-KUSUM programme, designed to enhance solar energy infrastructure in agriculture, has faced delays, prompting States to explore alternative methods to increase adoption.
- The Pradhan Mantri-Kisan Urja Suraksha evam Utthaan Mahabhiyan (PM-KUSUM) aims to establish 100 GW of solar power on farmer-owned land, install 14 lakh solar pumps, and solarize 35 lakh grid-connected agricultural pumps.
- As of June, only 256 MW of power plants, 3.97 lakh solar pumps, and 13,500 solarized pumps have been installed, leading the government to extend the scheme's deadline to 2026.
- Major challenges include the lack of suitable land; while solar power in India has expanded with utility-scale projects in Gujarat and Rajasthan, finding adequate agricultural land for solar installations remains difficult.
- Saurabh Kumar, Vice President of Global Energy Alliance for People and Planet (GEAPP), notes that pooling agricultural land for power projects is a significant hurdle.
- GEAPP, a collaboration between the IKEA Foundation, the Rockefeller Foundation, and the Bezos Earth Fund, is working with the Rajasthan government to develop a digital platform utilizing drone technology for land mapping.
- This digital platform allows real-time tracking of the scheme's progress and facilitates prompt corrective actions, providing essential oversight for large-scale solar projects.
- The platform has already resulted in 12.3 MW of solar power installation in Rajasthan, with plans to reach 100 MW by 2024 and expand to Maharashtra and Madhya Pradesh.
- Farmers who agree to host solar modules on their land receive rent from power project developers, with GEAPP ensuring fair compensation based on market rates and inflation.
- GEAPP’s solutions and support have helped Rajasthan significantly advance its renewable energy targets, with nearly 200 MW of the national 256 MW solar capacity installed in the state, according to the Ministry for New and Renewable Energy (MNRE)
- To facilitate the generation of solar power on rooftops of buildings, thus supporting the national goal of increasing renewable energy capacity and reducing greenhouse gas emissions.
- The scheme is applicable to residential, commercial, industrial, and institutional buildings. Both owners of these properties and tenants (in some cases) can participate.
Incentives and Subsidies:
- Financial Assistance: The government provides subsidies to reduce the cost of solar rooftop installations. This financial assistance varies based on the capacity of the system and the type of user.
- Tax Benefits: Some schemes offer tax incentives or benefits for the installation of rooftop solar systems
|
Answer (A)
|
- India's startup ecosystem has seen phenomenal growth, evolving from its nascent stage to become the world's third-largest center for innovation and entrepreneurship. From around 400 recognized startups in 2015-16, the number has surged to over 1,30,000 today, reflecting a remarkable transformation.
- India is on the cusp of a technological revolution, offering vast potential in fields like artificial intelligence (AI), machine learning (ML), big data, energy transition, electric vehicles (EVs), quantum computing, genomics, 3D printing, robotics, drones, and space exploration.
- Government initiatives, such as the National Quantum Mission, India AI Mission, and Semiconductor Mission, along with a budget allocation of ₹1 lakh crore for research and development, have been instrumental in fostering this progress.
- Despite their growth, Indian startups, particularly those in deep-tech domains, face difficulties in securing patient capital. The Fund of Funds for Startups (FFS), launched in 2016, has played a transformative role by committing ₹11,688 crore across 151 Alternative Investment Funds (AIFs), leveraging a capital pool of ₹81,000 crore and creating a significant multiplier effect.
- To support deep-tech startups further, India requires a specialized fund of funds that can provide long-term investments. Increasing domestic capital availability is also crucial, as international sources account for nearly 75% of the $12 billion raised by Indian startups in 2024.
- Large domestic institutions like insurance companies and pension funds can contribute by allocating part of their surpluses, while family offices and businesses can play a greater role as angel investors.
- India’s premier educational institutions, such as IITs, IIMs, and IIITs, are key contributors to the startup ecosystem, producing skilled talent and driving innovation. Additionally, the country’s annual output of 24,000 PhD graduates helps advance science and engineering.
- However, in 2024, India paid $14.3 billion in intellectual property royalties while earning only $1.5 billion, highlighting the need for greater innovation and breakthroughs to bridge this disparity.
- The startup ecosystem is no longer restricted to metropolitan hubs like Bengaluru, Mumbai, and Delhi. Nearly half of India’s startups now emerge from Tier II and Tier III cities, including Indore, Jaipur, and Ahmedabad.
- With a significant portion of India’s urban population residing in smaller cities, these regions present immense opportunities for growth. Tech companies are increasingly expanding to cities like Chandigarh, Visakhapatnam, and Ahmedabad. Strengthening these regional hubs with better infrastructure, education, and inclusivity—particularly by increasing women’s representation in leadership roles—will unlock untapped talent and drive innovation.
- Launched on January 16, 2016, the Startup India Initiative aims to support entrepreneurs, create a robust startup ecosystem, and transform India into a nation of job creators. Managed by a dedicated team under the Department for Promotion of Industry and Internal Trade (DPIIT), this initiative has introduced several programs to nurture startups.
- National Startup Day, celebrated annually on January 16, recognizes and promotes India's dynamic startup ecosystem. This observance highlights entrepreneurship’s role in driving economic growth, innovation, and job creation, while reaffirming the government’s commitment to fostering startups' contributions to national progress.
|
Answer (D)
Thus, both statements are factually incorrect |
| Subject | Topic | Description |
| History | Modern Indian History | Important Personalities |
| History | Modern Indian History | Independence and Partition |
| History | Modern Indian History | Constitutional Development in India |
| History | Modern Indian History | Peasants, Tribal and other movements |
|
UPSC EXAM NOTES will be conducting both Prelims and Mains exams every Sunday as part of the Integrated Mains and Prelims (IMPM) Program. This program provides a comprehensive approach to UPSC exam preparation, ensuring that candidates are well-prepared for both stages of the exam. Program Highlights:
Duration: The IMPM plan is a one-year program, ensuring continuous and structured preparation over 12 months. With regular testing and consistent study guidance, this program is designed to maximize your chances of success in the UPSC exams |