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INTEGRATED MAINS AND PRELIMS MENTORSHIP (IMPM) 2025 Daily KEY

Exclusive for Subscribers Daily: Rupee Exchange rate and Ramsar Wetlands for the UPSC Exam? Why are topics like Panama Canal and Earth observation Satellites important for both preliminary and main exams? Discover more insights in the UPSC Exam Notes for August 17, 2024

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Critical Topics and Their Significance for the UPSC CSE Examination on August 17, 2024

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India-Russia in talks to work out exchange rate to ease trade

For Preliminary Examination: Current events of national and international importance

For Mains Examination: GS II & III - International relations, Economy

Context:

Aimed at increasing exports to Russia amid widening trade deficit with the country, the Reserve Bank of India is in talks with the Central Bank of the Russian Federation to work out a currency exchange rate

Read about:

What is Rupee exchange rate?

India - Russia relation

Key takeaways:

Exchange rate

The exchange rate is the value at which one currency can be exchanged for another. It indicates how much of one currency you need to spend to obtain a certain amount of another currency. Exchange rates can be classified into two main types:

Fixed Exchange Rate: The value of a currency is pegged or fixed to another major currency (like the US Dollar) or a basket of currencies. The government or central bank maintains this rate.
Floating Exchange Rate: The value of the currency is determined by market forces, such as supply and demand in the foreign exchange market

More Information

To facilitate trade between two countries without relying on the dollar, an exchange rate is crucial. Challenges with currency often arise from trade imbalances between nations. For example, Russia-China bilateral trade exceeded a record $240 billion in 2023.
Currently, there is no direct exchange mechanism between the ruble and the rupee; instead, a cross-currency reference is used, which introduces an additional premium.
The goal is to eliminate this premium by enabling free trade between the two currencies at the same exchange rate without referencing another currency.
A dynamic exchange rate could potentially boost trade from $4.5 billion to $45 billion. For rupee vostro accounts to function effectively, a direct exchange rate is necessary.
Typically, exchange mechanisms, apart from those involving the euro or dollar, rely on referencing these major currencies

Nominal Effective Exchange Rate (NEER)

The Nominal Effective Exchange Rate (NEER) is an index that measures the value of a country's currency relative to a basket of other major currencies. It is a weighted average of bilateral exchange rates, where the weights are typically based on the trade shares with the respective countries.

Key Points about NEER:

Nominal: NEER is expressed in nominal terms, meaning it does not account for inflation differences between the countries involved.
Effective: The "effective" part of NEER means that it considers the exchange rate against a group of foreign currencies, rather than just one.
Trade-Weighted: The currencies included in the basket are weighted according to their importance in the country’s trade. For example, if a country does more trade with the Eurozone, the euro will have a higher weight in the NEER calculation.
Comparison Tool: NEER is used as a tool to compare the relative strength or weakness of a currency over time, which can help in assessing the impact on trade competitiveness.
Policy Indicator: Central banks and policymakers often monitor the NEER to understand the overall performance of their currency against a broad set of currencies, which can influence decisions related to exchange rate policies

Real Effective Exchange Rate (REER)

The Real Effective Exchange Rate (REER) is an index that adjusts the Nominal Effective Exchange Rate (NEER) by taking into account the relative price levels or inflation rates between the home country and its trading partners. REER provides a more accurate measure of a country's currency value and its impact on international trade competitiveness.

Key Points about REER:

Real: Unlike the NEER, which is nominal, the REER adjusts for inflation differences between countries. This means it reflects the purchasing power of a currency in terms of the goods and services it can buy relative to other currencies.
Effective: Similar to NEER, the "effective" part refers to the comparison against a basket of currencies, weighted by trade importance.
Trade-Weighted: The REER uses trade-weighted averages of bilateral exchange rates, adjusted by relative price levels or inflation rates. The weights reflect the significance of each trading partner in the country's overall trade.
Competitiveness Indicator: REER is a critical indicator of a country's trade competitiveness. A higher REER suggests that the country's goods and services have become more expensive relative to its trading partners, potentially leading to a decrease in exports. Conversely, a lower REER indicates increased competitiveness.
Economic Analysis: Policymakers and economists use REER to assess the impact of exchange rate movements on a country's trade balance, inflation, and overall economic performance. It helps in understanding how changes in the exchange rate affect a country’s international competitiveness

Follow Up Question

1.With reference to the Indian economy, consider the following statements: (UPSC CSE 2022)

1. An increase in the Nominal Effective Exchange Rate (NEER) indicates the appreciation of rupee.

2. An increase in the Real Effective Exchange Rate (REER) indicates an improvement in trade competitiveness.

3. An increasing trend in domestic inflation relative to inflation in other countries is likely to cause an increasing divergence between NEER and REER.

Which of the above statements are correct?

(a) 1 and 2 only

(b) 2 and 3 only

(d) 1, 2 and 3

Answer (c)

An increase in the Nominal Effective Exchange Rate (NEER) indicates the appreciation of the rupee.
- True. NEER is a measure of the value of the rupee against a basket of other currencies. An increase in NEER indicates that the rupee has strengthened or appreciated relative to those currencies.
An increase in the Real Effective Exchange Rate (REER) indicates an improvement in trade competitiveness.
- False. An increase in REER generally indicates that the rupee has appreciated after adjusting for inflation, making Indian goods more expensive relative to foreign goods, which typically reduces trade competitiveness, not improves it.
An increasing trend in domestic inflation relative to inflation in other countries is likely to cause an increasing divergence between NEER and REER.
- True. If domestic inflation is higher than in other countries, the NEER may not change much, but the REER will rise because it adjusts for inflation differences. This creates a divergence between NEER (nominal) and REER (real).

Correct Answer: (c) 1 and 3 only

Why climate change poses an existential threat to Panama Canal

For Preliminary Examination: Current events of national and international importance

For Mains Examination: GS II & III - International relations, Environment & Ecology

Context:

The Panama Canal, connecting the Atlantic and Pacific Oceans through the Isthmus of Panama, was opened to ships 110 years ago. Today, it faces an existential threat

Read about:

What is Historical Significance of Panama Canal?

Global trade in Panama and Red sea route

Key Takeaways:

The Panama Canal is more than just a waterway connecting two larger bodies of water; it's a complex, meticulously engineered system that utilizes locks and elevators to transport ships from one end to the other.
This intricate system is necessary because the two oceans connected by the canal are at different elevations, with the Pacific being slightly higher than the Atlantic. To navigate this elevation difference, ships traveling from the Atlantic to the Pacific must ascend during their journey.
This is accomplished through a system of locks that raise and lower vessels to the appropriate sea levels at each end of the canal.
Locks function as water elevators by either filling with water to raise ships or draining to lower them. The canal's lock system includes three sets of locks, totaling 12 locks, supported by artificial lakes and channels.
Here's how a lock set operates: a ship enters the first, lowest lock chamber, which is at sea level; the gate at the entrance opens to admit the ship and then closes; water is then transferred from the first chamber to the second, higher chamber; once the water levels are equalized, the gate between the chambers opens, allowing the ship to move into the next chamber. This process continues to achieve the necessary elevation.
The reverse process occurs when descending. Ships entering from the Atlantic first gain 26 meters of elevation at Lake Gaitan before descending as they approach the Pacific side

Climate Change threats

The Panama Canal requires a substantial amount of fresh water to operate its lock system. Most of this water is sourced from Lake Gatun, relying on gravity to move it, which means no pumps are needed.
Each day, the canal consumes about 2.5 times the amount of water used by New York City's 8 million residents. Recently, lower water levels in Lake Gatun restricted the number of ships that could transit the canal daily, and those that did often had to reduce their cargo.
While ocean water could be used to operate the locks, it would increase the salinity of Lake Gatun, which also provides drinking water for over half of Panama's 4.4 million people.
Though improved rainfall this year has eased some issues, experts warn that this is likely a temporary relief. Carlos Urriola, president of SSA International, notes that improved conditions can create a false sense of security.
The broader issue is linked to climate change, which has led to more frequent extreme rainfall deficits.
While significant rainfall shortages historically occurred about once every 20 years due to major El Niño events, there have been three such deficits in the past 26 years, suggesting a shift in rainfall patterns, according to Steven Paton from the Smithsonian Tropical Research Institute. The conditions in 2023 were unprecedented in the last century.
To address this ongoing challenge, Panama Canal authorities have proposed creating a new water source by damming the Rio Indio.
Although such proposals have been made before, an old law previously prohibited this. However, Panama’s Supreme Court recently overturned that restriction, paving the way for a $1.6 billion dam project that officials believe will resolve the issue for at least the next 50 years

Follow Up Question

1.Which of the following statements about the Panama Canal is/are correct?

The Panama Canal uses a system of locks and elevators to manage the elevation difference between the Pacific and Atlantic Oceans.
The water used by the Panama Canal's lock system is entirely sourced from the Pacific Ocean to avoid affecting local freshwater supplies.
Recent lower water levels in Lake Gatun have led to restrictions on the number of ships that can pass through the canal, with some ships needing to reduce their cargo.
The Panama Canal authorities have proposed damming the Rio Indio as a solution to address water supply issues for the canal.

Select the correct answer:

(a) 1 and 2 only

(b) 1, 3, and 4 only

(d) 1 and 3 only

Answer (b)

Statement 1: Correct. The Panama Canal uses a sophisticated system of locks and elevators to manage the elevation difference between the Pacific and Atlantic Oceans.
Statement 2: Incorrect. The canal’s lock system primarily uses fresh water from Lake Gatun, not the Pacific Ocean, to avoid increasing salinity and affecting local water supplies.
Statement 3: Correct. Lower water levels in Lake Gatun have restricted ship traffic and cargo loads due to reduced water availability.
Statement 4: Correct. To address water supply issues, the Panama Canal authorities have proposed building a dam on the Rio Indio

ISRO launches Earth Observation Satellite EOS-08

For Preliminary Examination: Current events of national and international importance

For Mains Examination: GS III - Science & Technology

Context:

ISRO’s latest Earth Observation Satellite ‘EOS-08’ launched by the Small Satellite Launch Vehicle (SSLV)-D3 today at 9:17 hrs from Satish Dhawan Space Centre, Shriharikota

Read about:

What is an Earth Observation Satellite?

What is a Small Satellite Launch Vehicle (SSLV)?

Key takeaways:

ISRO's new Earth Observation Satellite, EOS-08, was launched today at 9:17 AM from the Satish Dhawan Space Centre, Shriharikota, aboard the Small Satellite Launch Vehicle (SSLV)-D3.
The EOS-08 mission aims to design and develop a microsatellite, integrate payload instruments compatible with this microsatellite platform, and test new technologies for future satellites.
Built on the Microsat/IMS-1 bus, EOS-08 carries three key payloads: the Electro Optical Infrared Payload (EOIR), the Global Navigation Satellite System-Reflectometry payload (GNSS-R), and the SiC UV Dosimeter.
The EOIR payload captures images in the Mid-Wave IR (MIR) and Long-Wave IR (LWIR) bands, both day and night, for applications including satellite surveillance, disaster monitoring, environmental assessment, fire detection, volcanic activity tracking, and industrial disaster monitoring.
The GNSS-R payload showcases the use of GNSS-R-based remote sensing for analyzing ocean surface winds, assessing soil moisture, studying cryosphere conditions in the Himalayan region, detecting floods, and identifying inland water bodies. The SiC UV Dosimeter monitors UV irradiance in the Gaganyaan Mission’s Crew Module viewport and functions as a gamma radiation high-dose alarm sensor.
The satellite operates in a Circular Low Earth Orbit (LEO) at an altitude of 475 km with a 37.4° inclination and has a mission life of one year. It weighs approximately 175.5 kg and generates around 420 W of power, interfacing with the SSLV-D3 launch vehicle.
EOS-08 features advanced satellite systems, including an Integrated Avionics system known as the Communication, Baseband, Storage, and Positioning (CBSP) Package, which consolidates multiple functions into one unit.
This system includes cold redundant components using commercial off-the-shelf (COTS) materials, with up to 400 Gb of data storage.
The satellite also has a structural panel with embedded PCB, an embedded battery, a Micro-DGA (Dual Gimbal Antenna), an M-PAA (Phased Array Antenna), and a flexible solar panel, all contributing to its onboard technology demonstration.
The satellite's miniaturized Antenna Pointing Mechanisms achieve a rotational speed of 6 degrees per second with a pointing accuracy of ±1 degree.
The miniaturized phased array antenna enhances communication capabilities, while the flexible solar panel features a foldable substrate, GFRP tube, and CFRP honeycomb end panel for better power generation and structural strength.
A pyrolytic graphite sheet diffuser plate, with a high thermal conductivity of 350 W/mK, reduces mass and supports various satellite functions.
The EOS-08 mission also introduces a hinge-based fixture for integrating housekeeping panels, significantly shortening the Assembly, Integration, and Testing (AIT) phase.
Additional innovations include X-band data transmission using pulse shaping and Frequency Compensated Modulation (FCM), and a battery management system with SSTCR-based charging and bus regulation operating at a frequency of 6 Hz.
The mission’s indigenization includes solar cell fabrication and a Nano-Star Sensor for microsat applications, reaction wheel isolators for vibration attenuation, and a single antenna interface for TTC and SPS applications.
Thermal management employs materials like AFE BGA, Kintex FPGA, Germanium Black Kapton, and STAMET (Si-Al Alloy) Black Kapton. The mission also features an auto-launch pad initialization function, highlighting its commitment to innovative mission management

Follow Up Question

1.Which of the following statements about Earth Observation Satellites (EOS) is/are correct?

Earth Observation Satellites are designed to collect data through both passive and active imaging techniques.
Passive Earth Observation Satellites can operate effectively through cloud cover by using radar and other sensors.
The data collected by Earth Observation Satellites is often used for applications such as environmental monitoring, agriculture, and disaster management.
Earth Observation Satellites can provide real-time data with no delay between image capture and data availability.

Select the correct answer:

(a) 1 and 3 only

(b) 1, 2, and 3 only

(d) 2 and 4 only

Answer (a)

Statement 1: Correct. Earth Observation Satellites use both passive and active imaging techniques. Passive satellites detect natural radiation reflected from the Earth’s surface, while active satellites emit energy and measure the reflected signal.
Statement 2: Incorrect. Passive Earth Observation Satellites generally cannot operate through cloud cover because they rely on detecting natural radiation reflected from the Earth’s surface. Active satellites, on the other hand, can see through clouds by emitting their own signals.
Statement 3: Correct. The data from Earth Observation Satellites is widely used for environmental monitoring, agriculture, disaster management, and other applications.
Statement 4: Incorrect. There is often a delay between when an image is captured by an Earth Observation Satellite and when it is available for download. This delay can range from a month to a few minutes, depending on the satellite and technology

Green Credit Programme lack clarity

For Preliminary Examination: Current events of national and international importance

For Mains Examination: GS III - Environment & ecology

Context:

Planned afforestation projects under Green Credit Programme lack clarity on the risks posed to India’s diverse, unprotected forest ecosystems

Read about:

What is Green Credit Program?

Significance of Green Credit Program

Key takeaways:

The Green Credits Programme (GCP), launched by the Union government in October 2023, aims to award credits for environmentally beneficial activities. This program, described as a pioneering "innovative market-based mechanism," supports initiatives such as tree planting, water conservation, sustainable agriculture, waste management, air pollution reduction, mangrove conservation, and sustainable infrastructure projects, as well as the identification of eco-friendly products under the Ecomark scheme.
To date, the Union Ministry of Environment, Forest and Climate Change (MOEFCC) has provided detailed guidelines solely for tree planting under the GCP. While these guidelines appear to promote afforestation, experts have raised concerns about their clarity, suggesting that they may potentially cause more issues than benefits.
According to the guidelines issued earlier this year, the Indian Council of Forestry Research and Education (ICFRE), Dehradun, will oversee the GCP.
Entities wishing to invest, including companies, organizations, or individuals, must apply to the ICFRE Director-General and, upon approval, make payments to state forest departments responsible for establishing the plantations. These departments are tasked with selecting "degraded" land of at least 5 hectares for the plantations.
Investors receive one green credit per tree two years after the successful establishment of the plantation.
These credits can be used to meet corporate social responsibility (CSR) or environmental, social, and governance (ESG) requirements, or they can be traded to fulfill compensatory afforestation requirements under the Forest (Conservation) Act, 1980, which mandates new plantations in exchange for forestland diversion.
However, the guidelines have raised several issues. There is no clear information on how project payments will be determined or how calculations will be made. Additionally, the guidelines do not specify the status of green credits if a plantation fails, such as whether they will be revoked or retained.

Follow Up Question

1.Regarding “carbon credits”, which one of the following statements is not correct? (UPSC CSE 2011)

(a) The carbon credit system was ratified in conjunction with the Kyoto Protocol

(b) Carbon credits are awarded to countries or groups that have reduced greenhouse gases below their emission quota

(d) Carbon credits are traded at a price fixed from time to time by the United Nations Environment Programme.

Answer (d)

Carbon credits are indeed part of a system ratified by the Kyoto Protocol and are awarded to entities that reduce greenhouse gas emissions below their allocated quota. The goal of the carbon credit system is to limit the increase of carbon dioxide emissions. However, the prices of carbon credits are not fixed by the United Nations Environment Programme (UNEP). Instead, carbon credits are traded on various carbon markets, and their prices are determined by market forces of supply and demand

Conserving wetlands: Madhya Pradesh, Tamil Nadu get new Ramsar sites

For Preliminary Examination: Current events of national and international importance

For Mains Examination: GS III - Environment & ecology

Context:

The Centre declared three new wetlands as Ramsar sites on August 14, 2024. These include the Nanjarayan Bird Sanctuary and Kazhuveli Bird Sanctuary in Tamil Nadu and Tawa Reservoir in Madhya Pradesh, announced Bhupender Yadav, Union Minister for Environment, Forest and Climate Change

Read about:

What is a Wetland?

What is a Ramsar Convention?

Key takeaways:

On August 14, 2024, the Indian government announced the designation of three new Ramsar sites: the Nanjarayan Bird Sanctuary and Kazhuveli Bird Sanctuary in Tamil Nadu, and the Tawa Reservoir in Madhya Pradesh. This announcement was made by Bhupender Yadav, the Union Minister for Environment, Forest and Climate Change.
With these additions, India now has 85 Ramsar sites, covering a total area of 1,358,068 hectares. These sites were recognized under the Ramsar Convention, an international treaty signed in 1971 in Ramsar, Iran, which India joined in 1981.
The Ramsar Convention aims to highlight wetlands that support biological diversity and provide essential socio-ecological services, ensuring their strict protection and sustainable use.
According to the treaty, wetlands include various environments such as lakes, rivers, aquifers, swamps, marshes, wet grasslands, peatlands, oases, estuaries, deltas, tidal flats, mangroves, coral reefs, and human-made sites like fish ponds, rice paddies, and reservoirs. However, in India, river channels, paddy fields, and artificial waterbodies created for drinking water and commercial purposes are not considered for Ramsar listing.
The inclusion of these three new sites adds 25,327.465 hectares of protected wetlands to the country’s inventory. From 1982 to 2013, India added 26 Ramsar sites, while from 2014 to 2024, 59 new sites have been added, with the highest number (19) in 2022 alone.
The Nanjarayan Bird Sanctuary, located in the northeastern part of Uthukuli Taluk, Tiruppur District, Tamil Nadu, encompasses a shallow lake of 125.865 hectares near Sarkar Periyapalayam village, approximately 10 kilometers north of Tiruppur city.
This lake is vital for both resident and migratory birds, providing essential feeding and nesting grounds, agricultural water, and aiding groundwater recharge.
It has been recognized as Tamil Nadu’s 17th bird sanctuary, with local communities and the forest department working together to manage and protect it sustainably.
The Kazhuveli Bird Sanctuary, designated as Tamil Nadu’s 16th bird sanctuary in 2021, covers 5,151.6 hectares. Situated on the Coromandel Coast in Villupuram district, north of Puducherry, it connects to the Bay of Bengal through the Uppukalli Creek and Edayanthittu Estuary.
Kazhuveli is one of the largest brackish wetlands in peninsular India, serving as a critical stopover for migratory birds, a breeding ground for resident bird species and fish, and a key source for aquifer recharge

Subject	Topic	Description
History	Modern Indian History	National Movements between 1919 to 1939
History	Modern Indian History	Governor generals of India
History	Modern Indian History	Doctrine of Lapse
History	Modern Indian History	Religious reform Movements

UPSC KEY

INTEGRATED MAINS AND PRELIMS MENTORSHIP (IMPM) 2025 Daily KEY

Key Points about NEER:

Key Points about REER: