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DAILY CURRENT AFFAIRS, 06 JUNE 2026

GROSS DOMESTIC PRODUCT (GDP)

 
 
1. Context
 
The growth in India’s gross domestic product (GDP) has been estimated at 7.7% in 2025-26, according to data released by the government on Friday, compared with 7.1% in the previous financial year of 2024-25. GDP growth in the fourth quarter of 2025-26 stood at 7.8%.
 
2. Gross Domestic Product (GDP)
 
Gross domestic product (GDP) is the total monetary or market value of all the finished goods and services produced within a country's borders in a specific time period. It is often used as a measure of a country's economic health
GDP provides insight into the overall economic health of a nation and is often used for comparing the economic output of different countries.

There are three primary ways to calculate GDP:

  1. Production Approach (GDP by Production): This approach calculates GDP by adding up the value-added at each stage of production. It involves summing up the value of all final goods and services produced in an economy.

  2. Income Approach (GDP by Income): This approach calculates GDP by summing up all the incomes earned in an economy, including wages, rents, interests, and profits. The idea is that all the income generated in an economy must ultimately be spent on purchasing goods and services.

  3. Expenditure Approach (GDP by Expenditure): This approach calculates GDP by summing up all the expenditures made on final goods and services. It includes consumption by households, investments by businesses, government spending, and net exports (exports minus imports).

3. Measuring GDP

GDP can be measured in three different ways:

  1. Nominal GDP: This is the raw GDP figure without adjusting for inflation. It reflects the total value of goods and services produced at current prices.

  2. Real GDP: Real GDP adjusts the nominal GDP for inflation, allowing for a more accurate comparison of economic performance over time. It represents the value of goods and services produced using constant prices from a specific base year.

  3. GDP per capita: This is the GDP divided by the population of a country. It provides a per-person measure of economic output and can be useful for comparing the relative economic well-being of different countries.

The GDP growth rate is the percentage change in the GDP from one year to the next. A positive GDP growth rate indicates that the economy is growing, while a negative GDP growth rate indicates that the economy is shrinking

The GDP is a useful measure of economic health, but it has some limitations. For example, it does not take into account the distribution of income in an economy. It also does not take into account the quality of goods and services produced.

Despite its limitations, the GDP is a widely used measure of economic health. It is used by economists, policymakers, and businesses to track the performance of an economy and to make decisions about economic policy

4. Gross Value Added (GVA)

 

Gross Value Added (GVA) is a closely related concept to Gross Domestic Product (GDP) and is used to measure the economic value generated by various economic activities within a country. GVA represents the value of goods and services produced in an economy minus the value of inputs (such as raw materials and intermediate goods) used in production. It's a way to measure the contribution of each individual sector or industry to the overall economy.

GVA can be calculated using the production approach, similar to one of the methods used to calculate GDP. The formula for calculating GVA is as follows:

GVA = Output Value - Intermediate Consumption

Where:

  • Output Value: The total value of goods and services produced by an industry or sector.
  • Intermediate Consumption: The value of inputs used in the production process, including raw materials, energy, and other intermediate goods.
5. GDP vs GNP

Gross Domestic Product (GDP) and Gross National Product (GNP) are both important economic indicators used to measure the size and health of an economy, but they focus on slightly different aspects of economic activity and include different factors. Here are the key differences between GDP and GNP:

  1. Definition and Scope:

    • GDP: GDP measures the total value of all goods and services produced within a country's borders, regardless of whether the production is done by domestic or foreign entities. It only considers economic activities that take place within the country.
    • GNP: GNP measures the total value of all goods and services produced by a country's residents, whether they are located within the country's borders or abroad. It takes into account the production of residents, both domestically and internationally.
  2. Foreign Income and Payments:

    • GDP: GDP does not consider the income earned by residents of a country from their economic activities abroad, nor does it account for payments made to foreigners working within the country.
    • GNP: GNP includes the income earned by a country's residents from their investments and activities abroad, minus the income earned by foreign residents from their investments within the country.
  3. Net Factor Income from Abroad:

    • GDP: GDP does not account for net factor income from abroad, which is the difference between income earned by domestic residents abroad and income earned by foreign residents domestically.
    • GNP: GNP includes net factor income from abroad as part of its calculation.
  4. Foreign Direct Investment:

    • GDP: GDP does not directly consider foreign direct investment (FDI) flowing into or out of a country.
    • GNP: GNP considers the impact of FDI on the income of a country's residents, both from investments made within the country and from investments made by residents abroad.
  5. Measurement Approach:

    • GDP: GDP can be calculated using three different approaches: production, income, and expenditure approaches.
    • GNP: GNP is primarily calculated using the income approach, as it focuses on the income earned by residents from their economic activities.
 
 
 
 
For Prelims: GDP, GVA, FDI, GNP
For Mains: 1.Discuss the recent trends and challenges in India's GDP growth
2.Examine the role of the service sector in India's GDP growth
3.Compare and contrast the growth trajectories of India's GDP and GNP
 
 
Previous Year Questions
1.With reference to Indian economy, consider the following statements: (UPSC CSE, 2015)
1. The rate of growth of Real Gross Domestic Product has steadily increased in the last decade.
2. The Gross Domestic Product at market prices (in rupees) has steadily increased in the last decade.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer (b)
2.A decrease in tax to GDP ratio of a country indicates which of the following? (UPSC CSE, 2015)
1. Slowing economic growth rate
2. Less equitable distribution of national income
Select the correct answer using the code given below:
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer (a)
Previous year UPSC Mains Question Covering similar theme:
Define potential GDP and explain its determinants. What are the factors that have been inhibiting India from realizing its potential GDP? (UPSC CSE GS3, 2020)
Explain the difference between computing methodology of India’s Gross Domestic Product (GDP) before the year 2015 and after the year 2015. (UPSC CSE GS3, 2021)
 
Source: indianexpress
 
 

MONETARY POLICY COMMITTEE (MPC)

 
 
1. Context
 
The Reserve Bank of India’s Monetary Policy Committee began its three-day meeting on Wednesday. And while the committee is widely expected to retain the policy repo rate at 5.25%, a small but vocal segment is predicting an interest rate hike on Friday due to the tremendous pressure the rupee has been under and to ‘pre-emptively’ stamp out upside risks to inflation.
 

Monetary policy refers to the actions and strategies undertaken by a country's central bank to control and regulate the supply of money, credit availability, and interest rates in an economy. Its primary goal is to achieve specific economic objectives, such as price stability, full employment, and sustainable economic growth.

Central banks use various tools to implement monetary policy, including:

Interest Rates: Adjusting the interest rates at which banks lend to each other (known as the federal funds rate in the United States) influences borrowing and spending in the economy.

Open Market Operations: Buying or selling government securities in the open market to regulate the money supply. When a central bank buys securities, it injects money into the system, and when it sells them, it reduces the money supply.

Reserve Requirements: Mandating the amount of reserves banks must hold, affecting their ability to lend money.

By influencing the availability and cost of money, central banks aim to stabilize prices, control inflation, encourage or discourage borrowing and spending, and promote economic growth. However, the effectiveness of monetary policy can be influenced by various factors such as global economic conditions, fiscal policies, and market expectations.

3.What is the primary objective of the monetary policy?

The primary objective of monetary policy typically revolves around maintaining price stability or controlling inflation within an economy. Central banks often set an inflation target, aiming to keep it at a moderate and steady level. Stable prices help in fostering confidence in the economy, encouraging investment, and ensuring that the value of money remains relatively constant over time.

However, while controlling inflation is often the primary goal, central banks might also consider other objectives, such as:

Full Employment: Some central banks have a secondary objective of supporting maximum employment or reducing unemployment rates.

Economic Growth: Encouraging sustainable economic growth by managing interest rates and credit availability to stimulate or cool down economic activity.

Exchange Rate Stability: In some cases, maintaining stable exchange rates might be an important consideration, especially for countries with open economies heavily reliant on international trade.

These additional objectives can vary depending on the economic conditions, priorities of the government, and the central bank's mandate. Nonetheless, ensuring price stability is typically the fundamental goal of most monetary policies, as it forms the basis for a healthy and growing economy.

4. Monetary Policy Committee (MPC)

  • In line with the amended RBI Act, 1934, Section 45ZB grants authority to the central government to establish a six-member Monetary Policy Committee (MPC) responsible for determining the policy interest rate aimed at achieving the inflation target.
  • The inaugural MPC was formed on September 29, 2016. Section 45ZB stipulates that "the Monetary Policy Committee will ascertain the Policy Rate necessary to meet the inflation target" and that "the decisions made by the Monetary Policy Committee will be obligatory for the Bank."
  • According to Section 45ZB, the MPC comprises the RBI Governor as the ex officio chairperson, the Deputy Governor overseeing monetary policy, a Bank official nominated by the Central Board, and three individuals appointed by the central government.
  • The individuals chosen by the central government must possess "capabilities, ethical standing, expertise, and experience in economics, banking, finance, or monetary policy" (Section 45ZC)
5.Monetary Policy Committe and Inflation
  • The Monetary Policy Committee (MPC) plays a crucial role in managing inflation through its decisions on the policy interest rate.
  • When inflation is too high, the MPC might decide to increase the policy interest rate. This action aims to make borrowing more expensive, which can reduce spending and investment in the economy.
  • As a result, it could help decrease demand for goods and services, potentially curbing inflation.
  • Conversely, when inflation is too low or the economy needs a boost, the MPC might decrease the policy interest rate.
  • This move makes borrowing cheaper, encouraging businesses and individuals to spend and invest more, thus stimulating economic activity and potentially raising inflation closer to the target level.
  • The MPC's goal is to use the policy interest rate as a tool to steer inflation toward a target set by the government or central bank.
  • By monitoring economic indicators and assessing the current and expected inflation levels, the MPC makes informed decisions to maintain price stability within the economy
6. Way forward
With more than half of the current financial year witnessing positive developments in the economy, the full financial year should conclude as projected with a strong growth performance and macroeconomic stability. Yet risks on the downside persist. Inflation is one of them that has kept both the government and the RBI on high alert. Financial flows in the external sector also need constant monitoring as they impact the value of rupee and the balance of payments. A fuller transmission of the monetary policy may also temper domestic demand
 
 
 
 
For Prelims: Economic and Social Development
For Mains: General Studies III: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.
 
 
Previous Year Questions
 
1. Consider the following statements:  (UPSC 2021)
1. The Governor of the Reserve Bank of India (RBI) is appointed by the Central Government.
2. Certain provisions in the Constitution of India give the Central Government the right to issue directions to the RBI in the public interest.
3. The Governor of the RBI draws his natural power from the RBI Act.
Which of the above statements is/are correct? 
A. 1 and 2 only    B.  2 and 3 only     C. 1 and 3 only     D. 1, 2 and 3
 
Answer: C
 
2. Concerning the Indian economy, consider the following: (UPSC 2015)
  1. Bank rate
  2. Open Market Operations
  3. Public debt
  4. Public revenue

Which of the above is/are component(s) of Monetary Policy?

(a) 1 only   (b) 2, 3 and 4    (c) 1 and 2     (d) 1, 3 and 4

Answer: C

3. An increase in Bank Rate generally indicates: (UPSC 2013)

(a) Market rate of interest is likely to fall.

(b) Central bank is no longer making loans to commercial banks.

(c) Central bank is following an easy money policy.

(d) Central bank is following a tight money policy.

Answer: (d) 

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

Answer: A

 
Source: Indianexpress
 
 
 

SOUTHWEST MONSOON

 
 
1. Context
 
The India Meteorological Department (IMD) Thursday announced the onset of southwest monsoon over Kerala, marking the beginning of the four-month long season.
 
2. What is the southwest monsoon?
 
  • The southwest monsoon is a seasonal weather pattern that brings significant rainfall to large parts of South Asia, particularly India, between June and September
  • The southwest monsoon typically begins in early June and lasts until late September. It starts with the arrival of the monsoon winds in the southern part of India, usually marked by the onset over the state of Kerala
  • The southwest monsoon brings about 70-90% of India’s annual rainfall. The distribution of rainfall varies, with some regions receiving heavy rains, while others may experience scanty showers.
  • The Western Ghats, the northeastern states, and the Himalayan foothills typically receive very heavy rainfall.
  • The monsoon is critical for the Kharif crop season in India, which includes crops like rice, maize, pulses, and cotton. Adequate and timely monsoon rains are essential for a good harvest
  • The monsoon starts retreating from northwestern India in early September and completely withdraws from the Indian subcontinent by mid-October. This phase is also known as the retreating or northeast monsoon

Mechanism:

  • High-Pressure Area: During the summer, intense heating of the landmass in the Indian subcontinent creates a low-pressure area over northern India and the Tibetan Plateau.
  • Low-Pressure Area: The Indian Ocean remains relatively cooler, creating a high-pressure area.
  • Wind Movement: Air moves from the high-pressure area over the ocean to the low-pressure area over the land, carrying moisture from the ocean and resulting in rainfall.
The monsoon trough is an elongated area of low pressure extending from the heat low over Pakistan and northwestern India to the Bay of Bengal. It influences the distribution and intensity of the monsoon rains.
 
3. What are easterly and westerly winds?
 
Easterly Winds
 
  • Easterly and westerly winds refer to the direction from which the winds originate
  • Easterly winds are winds that blow from the east towards the west
  • Easterly winds can affect weather patterns, including the development of tropical storms and cyclones. For instance, easterly waves in the tropics can lead to the formation of tropical cyclones in the Atlantic and Pacific Oceans

Characteristics:

  • Trade Winds: One of the most well-known examples of easterly winds are the trade winds. These winds blow from the east towards the west in the tropics, from the subtropical high-pressure areas toward the equatorial low-pressure areas.
  • Tropical Regions: In the tropical regions, particularly between 30 degrees north and south of the equator, easterly winds are prevalent. These are crucial for the weather patterns and climatic conditions in these regions.
  • Monsoon Winds: During certain seasons, such as the northeast monsoon in India, easterly winds play a significant role. These winds bring dry air from the land towards the ocean during the winter months.
Westerly Winds
 
  • Westerly winds are winds that blow from the west towards the east
  • Westerly winds play a significant role in the weather of temperate regions, influencing the climate and the movement of storm systems.
  • They are also responsible for carrying warm and moist air from the oceans inland, affecting precipitation patterns in coastal and inland regions.
  • The westerlies can affect transoceanic travel and weather prediction due to their influence on the movement of high and low-pressure systems

Characteristics:

  • Prevailing Westerlies: These winds are predominant in the mid-latitudes (between 30 and 60 degrees north and south of the equator). They blow from the subtropical high-pressure belts towards the poles.
  • Jet Streams: High-altitude westerly winds known as jet streams are important in influencing weather patterns and the movement of weather systems across the globe. They are fast flowing and occur in the upper levels of the atmosphere.
  • Polar Front: In the mid-latitudes, the westerlies interact with polar easterlies near the polar front, leading to the development of extratropical cyclones and storms
 
 
4.How does monsoon occur in India?

Monsoons in India occur due to seasonal changes in wind patterns and temperature differences between land and sea.

Here's a concise explanation of the process:

  • Differential heating: During summer, the Indian landmass heats up more quickly than the surrounding Indian Ocean.
  • Low pressure system: The heated land creates a low-pressure area over the Indian subcontinent.
  • Wind direction shift: This low pressure draws in moisture-laden winds from the cooler Indian Ocean towards the land.
  • Orographic lift: As these winds encounter geographical features like the Western Ghats or the Himalayas, they are forced to rise.
  • Condensation and precipitation: The rising air cools, causing water vapor to condense and form clouds, leading to heavy rainfall.
  • Duration: This pattern typically lasts from June to September, bringing the majority of India's annual rainfall.
 
5.What are the conditions that determine the onset of monsoon?
 
  • The primary driver is the temperature difference between the land and the surrounding sea. During summer, the land heats up faster than the ocean, creating a low-pressure area over the land and a high-pressure area over the ocean. This pressure difference leads to the movement of moist air from the ocean to the land
  • Warm sea surface temperatures are crucial as they increase the evaporation rate, contributing to the formation of moist air masses that drive the monsoon rains.
  • The monsoon winds, which are part of the larger atmospheric circulation, shift according to the seasonal temperature differences. The southwest monsoon, for instance, is driven by the southwest winds that carry moisture from the Indian Ocean to the Indian subcontinent.
  • The geographical features, such as mountain ranges, play a significant role. For example, the Western Ghats in India force moist air to rise, cool, and condense, leading to heavy rainfall on the windward side
  • The movement and strength of the high-pressure systems over the oceans and low-pressure systems over the land influence the intensity and timing of the monsoon.
  • Phenomena such as El Niño and La Niña can affect the strength and timing of the monsoon. For example, El Niño can lead to weaker monsoons due to altered wind patterns and sea surface temperatures
6.What is the impact of La-Nina and El Nino on monsoon?
 
La Niña and El Niño, both phases of the El Niño-Southern Oscillation (ENSO) phenomenon, have significant impacts on the monsoon patterns around the world.
 
Here’s how each affects the monsoon:
El Niño
  • El Niño is generally associated with a weaker Indian monsoon. The warming of the central and eastern Pacific Ocean during El Niño tends to disrupt the normal atmospheric circulation patterns, leading to reduced rainfall over the Indian subcontinent.
  • The onset of the monsoon can be delayed, and the overall intensity of the rainfall during the monsoon season might be lower than usual
  •  El Niño often brings drier conditions to Southeast Asia and northern Australia, leading to droughts and reduced rainfall
  • Eastern and southern Africa may experience drier conditions as well
La Niña
  • La Niña, characterized by cooler-than-average sea surface temperatures in the central and eastern Pacific Ocean, is typically associated with a stronger Indian monsoon. It often leads to increased rainfall over the Indian subcontinent
  • The enhanced monsoon can lead to heavier rains and potentially more frequent and intense flooding
  • La Niña tends to bring wetter conditions to Southeast Asia and northern Australia, potentially causing heavy rains and flooding
  • La Niña can lead to wetter conditions in parts of northern South America
 
7.Way Forward
 
The intermittent development of a wind shear zone — where winds move with different velocities and directions — along latitudes 20 ° N between central and peninsular India
 
 
 
For Prelims: Indian and World Geography
For Mains: GS-I, GS-III: Important Geophysical phenomena and environment
 
 
Previous Year Questions
 
1.Consider the following statements: (UPSC CSE 2012)
 
1. The duration of the monsoon decreases from southern India to northern India.
2. The amount of annual rainfall in the northern plains of India decreases from east to west.
 
Which of the statements given above is/are correct?
A. 1 Only
B. 2 Only
C. Both 1 and 2
D. Neither 1 nor
Answer (C)
  • The duration of the monsoon indeed decreases from southern India to northern India. The southern part of India experiences the monsoon earlier and for a longer duration compared to the northern part.
  • The amount of annual rainfall in the northern plains of India decreases from east to west. The eastern part of the northern plains receives more rainfall compared to the western part, largely due to the influence of the Bay of Bengal branch of the Southwest Monsoon.
 
 
Source: The Hindu
 
 

INSOLVENCY AND BANKRUPTCY CODE (IBC)

 
 

1. Context

When a person undergoes IBC proceedings, a moratorium on legal action with respect to any debt kicks in. But there is little clarity on whether this moratorium covers cheque bounce. The matter has now been referred to a larger Supreme Court bench

2. About Insolvency and Bankruptcy Code (IBC)

 

  • The Insolvency and Bankruptcy Code (IBC), 2016 is one of the most significant economic reforms introduced in India to deal with the problem of unpaid debts and financially distressed businesses.
  • Before the IBC came into existence, India had multiple laws and institutions dealing with bankruptcy and debt recovery.
  • This often resulted in lengthy legal battles, delays in recovering money, and a significant loss in the value of businesses. As a result, banks accumulated large amounts of bad loans, also known as Non-Performing Assets (NPAs).
  • To address these issues, the Government of India enacted the IBC in 2016. The Code provides a single, comprehensive, and time-bound framework for resolving insolvency and bankruptcy cases involving companies, partnership firms, and individuals.
  • In simple terms, insolvency occurs when a person or a company is unable to repay its debts on time. Under the IBC, when a company defaults on its loan obligations, either the creditor or the company itself can approach the National Company Law Tribunal (NCLT).
  • Once the tribunal admits the case, the management of the company is temporarily taken away from the existing promoters and handed over to an Insolvency Resolution Professional. This professional takes control of the company's affairs and works towards finding a solution to revive the business.
  • A Committee of Creditors, mainly consisting of financial creditors such as banks, is then formed. This committee evaluates various resolution plans submitted by investors or interested parties who are willing to take over or restructure the company.
  • If the creditors approve a suitable plan, the company is revived and continues its operations under new management or a revised financial structure.
  • However, if no viable resolution plan is approved within the prescribed period, the company proceeds to liquidation. In liquidation, the company's assets are sold, and the proceeds are distributed among creditors according to a legally defined order of priority.
  • One of the most important features of the IBC is its emphasis on a time-bound process. The law aims to complete the insolvency resolution process within a specified period, thereby preventing unnecessary delays and preserving the value of the company's assets.
  • The IBC is regulated by the Insolvency and Bankruptcy Board of India (IBBI), while appeals against NCLT decisions can be made before the National Company Law Appellate Tribunal (NCLAT).
  • The significance of the IBC lies in the fact that it has shifted India's insolvency framework from a "debtor-in-possession" model to a "creditor-in-control" model.
  • This has strengthened credit discipline, improved the recovery prospects of banks, reduced the burden of bad loans, and enhanced investor confidence in the Indian economy.

3. What is insolvency under the Bankruptcy Code?

 
  • Under the Insolvency and Bankruptcy Code (IBC), 2016, insolvency refers to a financial situation in which a person, company, or business is unable to pay its debts when they become due.
  • To understand it simply, imagine a company has borrowed money from banks and other lenders. If the company's income and cash flow become insufficient to repay its loans, interest, or other liabilities on time, the company is said to be insolvent.
  • Insolvency does not necessarily mean that the company has stopped functioning or that it has no assets. It simply means that it is unable to meet its financial obligations as they fall due.
  • The IBC was enacted to address precisely this situation. Rather than immediately shutting down an insolvent company, the law first attempts to rescue and revive it.
  • Once a default occurs, creditors or the debtor itself can approach the tribunal to initiate the insolvency resolution process.
  • During this process, efforts are made to restructure the company's debts, find new investors, or transfer ownership so that the business can continue operating and creditors can recover as much of their money as possible.
 

It is important to distinguish insolvency from bankruptcy:

  • Insolvency is a financial condition—an inability to pay debts.
  • Bankruptcy is a legal status declared through a formal legal process when insolvency cannot be resolved.

4. What is the purpose of the Insolvency and Bankruptcy Code?

 
  • The primary purpose of the Insolvency and Bankruptcy Code (IBC), 2016 is to provide a time-bound and efficient mechanism for resolving insolvency of companies, partnership firms, and individuals while maximizing the value of their assets.
  • Before the IBC was enacted, India's insolvency framework was fragmented across several laws, and debt recovery often took many years.
  • During these delays, businesses lost value, creditors recovered only a small portion of their money, and the banking sector accumulated large amounts of bad loans (NPAs).
  • The IBC was introduced to address these problems by creating a single, comprehensive framework for insolvency resolution.
  • The Code seeks to ensure that when a debtor is unable to repay its debts, the focus is first placed on resolving the financial distress and keeping the business as a going concern, rather than immediately liquidating it.
  • This helps preserve jobs, maintain economic activity, and maximize the value that can be recovered by creditors.
  • Another important objective of the IBC is to promote credit discipline. Since borrowers know that default may lead to loss of control over their business, they are encouraged to manage their finances responsibly.
  • Similarly, lenders gain greater confidence in the legal system's ability to recover dues, which improves the overall availability of credit in the economy.
  • The Code also aims to balance the interests of all stakeholders, including creditors, employees, shareholders, suppliers, and the government. By establishing a clear and transparent process, it reduces uncertainty and enhances investor confidence.

In essence, the IBC serves four major purposes:

  1. Timely resolution of insolvency and financial distress.
  2. Maximization of the value of the debtor's assets.
  3. Improvement in recovery of debts for creditors and reduction of NPAs.
  4. Promotion of entrepreneurship, investment, and ease of doing business.

6. Insolvency and Bankruptcy Code (Amendment) Bill, 2025-what are key highlights of the bill?

 

The Insolvency and Bankruptcy Code (Amendment) Bill, 2025 was introduced to address delays in insolvency proceedings, improve recovery for creditors, and bring greater clarity to the insolvency resolution process. It also introduces new mechanisms for handling complex insolvency cases involving corporate groups and foreign assets.

Key Highlights of the Bill

1. Introduction of a Creditor-Initiated Insolvency Resolution Process (CIIRP)

One of the most significant reforms is the creation of an alternative insolvency resolution process that can be initiated by creditors outside the traditional tribunal-driven route. Financial creditors holding at least 51% of the outstanding debt can trigger the process, reducing dependence on the NCLT and speeding up resolutions.

2. Faster Admission of Insolvency Cases

The Bill seeks to reduce delays at the admission stage. The adjudicating authority is required to admit or reject applications within a prescribed timeline, and reasons must be recorded if there is a delay beyond 14 days. This is intended to make the commencement of insolvency proceedings more predictable.

3. Framework for Group Insolvency

Many business groups operate through multiple interconnected companies. The Bill introduces a framework to deal with insolvency of such corporate groups in a coordinated manner, helping maximize value and avoid fragmented proceedings.

4. Cross-Border Insolvency Mechanism

The Bill provides a legal framework for dealing with insolvency cases involving assets, creditors, or operations spread across different countries. This is particularly important for multinational corporations operating in India.

5. Strengthening the Role of Creditors

The powers of the Committee of Creditors (CoC) are enhanced. Creditors are given greater oversight during both resolution and liquidation processes, improving their ability to protect and recover their claims.

6. Stricter Rules for Withdrawal of Insolvency Applications

The Bill tightens the conditions under which an admitted insolvency application can be withdrawn. This is aimed at preventing misuse of the insolvency process and ensuring that withdrawals occur only with appropriate creditor approval.

7. Reforms in Liquidation Process

The liquidation framework is revised to improve asset realization and creditor recovery. The Bill also allows greater flexibility in the sale of assets and enhances creditor supervision during liquidation.

8. Greater Clarity on Rights of Different Creditors

The amendments clarify the treatment and priority of various categories of creditors, including government authorities. This reduces uncertainty and litigation over distribution of proceeds.

9. Improved Implementation of Resolution Plans

The Bill introduces provisions to ensure that approved resolution plans are implemented more effectively and within specified timelines, thereb

 

7. Way Forward

The Insolvency and Bankruptcy Code has reformed the Indian Insolvency Law to a great extent. The government needs to provide appropriate budgetary allocations to up skilling insolvency professionals and digitization of insolvency resolution process.

There has been a marked improvement in the recovery process which is already leading to billions of dollars being invested in the country due to the protection of creditor rights.

Prelims question:

1. According to the IBC, which of the following is not a financial service
A.Underwriting issuance of financial support
B.Accepting of deposits
C.Operating an investment scheme
D.Payment of wages to the Employees

Mains questions:

  1. What is Insolvency Bankruptcy Code and what are its challenges?
  2. Critically analyze the progress made in resolving stressed assets since the enactment of IBC?
  3. Do you think the insolvency and bankruptcy code has reformed the Indian insolvency law? Justify your answer.
 
 
Previous Year Questions
 
1.Which of the following statements best describes the term ‘Scheme for Sustainable Structuring of Stressed Assets (S4A)’, recently seen in the news? (2017)

(a) It is a procedure for considering ecological costs of developmental schemes formulated by the Government.  

(b) It is a scheme of RBI for reworking the financial structure of big corporate entities facing genuine difficulties.  

(c) It is a disinvestment plan of the Government regarding Central Public Sector Undertakings.  

(d) It is an important provision in ‘The Insolvency and Bankruptcy Code’ recently implemented by the Government.

Answer (b)

Source: The Hindu

 
 

POLLUTION AND SUMMER

 
 
 
1. Context
 
 

In March, the Commission for Air Quality Management in the National Capital Region and Adjoining Areas (CAQM) revoked all curbs under the Graded Response Action Plan (GRAP), signalling the end of the winter air pollution in Delhi.A month later, as temperatures rose, it reimposed Stage 1 of the GRAP to combat summer air pollution. It was briefly revoked and reimposed again in May, while North India was reeling under heatwaves.

 

2. Why Are Urban Areas Experiencing Pollution Episodes During Summer?

 

  • Cities such as Delhi and those across the Indo-Gangetic Plain are typically associated with severe winter smog. During winter, low temperatures, weak winds, and the region’s basin-like geography prevent pollutants from dispersing, causing them to accumulate near the surface.
  • In contrast, summer conditions generally support better air quality. Stronger winds, intermittent thunderstorms that help remove pollutants, and higher temperatures promote vertical mixing of air, allowing pollutants to disperse more effectively.
  • Nevertheless, Delhi recorded significant pollution levels during the summer of 2026. Between April 1 and May 31, daily average PM10 concentrations exceeded the 24-hour National Ambient Air Quality Standard (NAAQS) of 100 µg/m³ on 54 days.
  • Furthermore, at least one Continuous Ambient Air Quality Monitoring Station (CAAQMS) reported hourly ozone concentrations above the prescribed limit of 180 µg/m³ on 40 days.
  • This trend is not confined to Delhi alone. Several major Indian cities—including Mumbai, Chennai, Hyderabad, Bengaluru, and Kolkata—also experienced episodes of elevated PM10 and ozone concentrations during the same period.
  • The intensity and frequency of these pollution events varied depending on local factors such as vehicular emissions, road dust, construction activities, industrial discharges, and dust storms.
  • Mumbai, for example, has witnessed persistently high PM10 and ozone levels in recent years, largely driven by rapid construction, traffic congestion, and dust generation.
  • Although Chennai experiences fewer PM10 exceedances, its dense traffic and high summer temperatures contribute to frequent ozone formation, making it particularly vulnerable to ozone pollution.
 
3. How Does Summer Air Pollution Differ from Winter Air Pollution?
 
 
  • The nature and causes of air pollution vary significantly between summer and winter.
  • During winter, pollution levels tend to rise because of unfavorable meteorological conditions.
  • Low temperatures, weak wind speeds, temperature inversions, and reduced atmospheric mixing trap pollutants close to the ground. As a result, particulate matter (PM2.5 and PM10) accumulates, leading to dense smog episodes, especially in cities across the Indo-Gangetic Plain.
  • In contrast, summer generally provides conditions that help disperse pollutants. Stronger winds, greater atmospheric mixing, and occasional rainfall facilitate the dilution and removal of particulate matter.
  • However, summer brings a different challenge—ground-level ozone pollution. Intense sunlight and high temperatures trigger chemical reactions between nitrogen oxides (NOx) and volatile organic compounds (VOCs), producing ozone.
  • Consequently, while particulate pollution may decline compared to winter, ozone concentrations often increase during hot and sunny periods.
  • Another key distinction lies in pollution sources. Winter pollution is often aggravated by biomass burning, domestic heating, and stagnant weather conditions.
  • Summer pollution, on the other hand, is more strongly influenced by vehicular emissions, industrial activities, road and construction dust, and photochemical reactions driven by solar radiation.
  • Therefore, winter air pollution is primarily characterized by the accumulation of particulate matter due to stagnant atmospheric conditions, whereas summer air pollution is marked by enhanced ozone formation and episodic increases in particulate matter from dust, traffic, and local emission sources
 
4. How Does Summer Pollution Differ from Winter Pollution?
 
  • Winter air pollution is largely characterized by high concentrations of fine particulate matter (PM2.5), whereas summer pollution is more strongly influenced by coarser PM10 particles and elevated ozone levels.
  • Several pollution sources—including vehicular emissions, industrial activities, waste burning, agricultural residue burning, construction operations, and deteriorating road surfaces—contribute to poor air quality throughout the year. Seasonal factors, however, alter the dominant pollutants.
  • During winter, additional emissions from biomass used for heating worsen particulate pollution. In summer, dust storms often raise PM10 concentrations, while intense heat and abundant sunlight promote the formation of ground-level ozone.
  • Unlike particulate matter, ozone is a secondary pollutant and is not released directly into the atmosphere. It is produced through chemical reactions involving nitrogen oxides (NOx), primarily emitted by vehicles, and volatile organic compounds (VOCs) originating from industrial processes, vehicle exhaust, paints, solvents, and other sources.
  • These reactions accelerate under strong sunlight and high temperatures, making hot summer days particularly conducive to ozone generation.
  • Elevated levels of both ozone and particulate matter can adversely affect respiratory health and increase the risk of various air-related illnesses
 
5. What Leads to Elevated PM10 Levels in India?

 

  • During summer, intense heating over the Indian subcontinent creates a vast low-pressure zone that often stretches westward toward Iran. The interaction between this low-pressure system and nearby high-pressure regions generates strong, hot winds.
  • These winds can trigger large-scale dust storms and transport dust from the Thar Desert and parts of West Asia across northern and central India, sometimes reaching as far as the Bay of Bengal.
  • Such events can cause PM10 concentrations to remain elevated for several days, similar to the widespread dust storms that affected northern India in 2018.
  • Apart from these large regional events, India also experiences smaller and short-lived dust storms known as andhi. These storms are usually associated with thunderstorms.
  • When powerful downdrafts from thunderstorms strike the ground, they lift loose soil and dust into the atmosphere, creating fast-moving dust clouds that generally dissipate within a few hours.
  • While northern India frequently experiences dust transport associated with hot summer winds, cities such as Mumbai and Hyderabad are more likely to encounter dust episodes linked to localized thunderstorm activity.
  • Human-induced factors further intensify PM10 pollution. Construction and demolition activities often increase after seasonal restrictions under the Graded Response Action Plan (GRAP) are relaxed following winter.
  • Inadequate dust-control measures at construction sites allow significant amounts of particulate matter to enter the atmosphere.
  • Additionally, the movement of vehicles over damaged or unpaved roads resuspends accumulated dust, especially during the dry summer season, further contributing to higher PM10 concentrations
 
 
6. Managing Summer Air Pollution: The Way Forward

 

  • Although natural dust sources cannot be eliminated, their occurrence can be anticipated through effective forecasting systems. Following the severe dust storms of 2018 and recurring smog crises in earlier years, Delhi established the Air Quality Early Warning System (AQEWS), which now operates throughout the year.
  • The system has subsequently been expanded to cities such as Jaipur and Mumbai, enabling authorities to forecast various air pollutants several days in advance.
  • In addition to providing detailed meteorological updates for Delhi, AQEWS also issues three-day Air Quality Index (AQI) forecasts for nearly 140 cities across India.
  • Similarly, the India Meteorological Department (IMD) releases weather forecasts multiple times daily at the national level.
  • These forecasting tools should be leveraged by local administrations to disseminate timely warnings regarding dust storms, ozone episodes, and deteriorating air quality, allowing residents to take precautionary measures and limit their exposure.
  • While natural sources require preparedness, pollution from human activities can be addressed through stricter enforcement and management practices. Dust-control measures at construction and demolition sites should remain in force throughout the year rather than being limited to the winter season.
  • Research conducted by the Council on Energy, Environment and Water (CEEW) indicates that reducing the movement of heavy vehicles within construction zones can significantly decrease local particulate pollution.
  • In Mumbai, the Brihanmumbai Municipal Corporation (BMC), in collaboration with CEEW, has implemented the Air Quality Decision Support System (AQDSS) to monitor construction-related emissions. Since October 2025, the system has assisted authorities in taking corrective action at more than 1,000 construction sites across the city.
  • Addressing ozone pollution requires targeted reductions in emissions of nitrogen oxides (NOx) and volatile organic compounds (VOCs), which originate primarily from vehicles, industries, solvents, paints, and fuel combustion.
  • This can be achieved through cleaner transportation systems, stricter emission standards, and improved regulatory compliance.
  • Public participation can also make a difference. Initiatives such as Delhi’s “Red Light On, Gaadi Off” campaign, which encourages motorists to switch off their engines while waiting at traffic signals, help reduce unnecessary emissions that contribute to ozone formation.
  • However, isolated interventions are insufficient. Indian cities require comprehensive and long-term summer air-quality management strategies. Delhi has implemented a dedicated Summer Action Plan since 2022, demonstrating a proactive approach.
  • Similar frameworks should be adopted by other urban centres, integrating pollution forecasting, health advisories, construction and road-dust mitigation, and measures to curb ozone-forming emissions.
  • Although summer weather often facilitates the dispersion of some pollutants, elevated temperatures and intense sunlight create conditions that favour the formation of others, particularly ozone.
  • Therefore, urban air-quality management must address both winter and summer pollution challenges with equal urgency and sustained policy attention
 
 
For Prelims: Commission for Air Quality Management (CAQM), Graded Response Action Plan (GRAP), PM10
 
For Mains: GSIII - Environment and Ecology
 
 
Previous Year Questions
 

1.In the cities of our country, which among the following atmospheric gases are normally considered in calculating the value of the Air Quality Index? (2016)

  1. Carbon dioxide 
  2. Carbon monoxide 
  3. Nitrogen dioxide 
  4. Sulfur dioxide 
  5. Methane 

Select the correct answer using the code given below:

(a) 1, 2 and 3 only 

(b) 2, 3 and 4 only 

(c) 1, 4 and 5 only 

(d) 1, 2, 3, 4 and 5

Answer (b)

Source: The Hindu
 
 

HYPERSONIC MISSILE

 
 
 
1. Context
 
India on 9th May, achieved a major breakthrough in hypersonic missile technology. The Defence Research and Development Organisation (DRDO) accomplished a 1,200-second runtime of its actively cooled scramjet full-scale combustor. The test was conducted at the Scramjet Connect Pipe Test (SCPT) facility in Hyderabad, building on the successful 700-plus second test carried out in January.
 
 
2. Key takeaways
 
 
  • The missile is a hypersonic cruise weapon capable of travelling at speeds greater than Mach 5, or approximately 6,100 km per hour, for sustained durations.
  • This capability has been made possible through an advanced supersonic air-breathing propulsion system that employs indigenously developed liquid hydrocarbon endothermic fuel, high-temperature Thermal Barrier Coating (TBC), and sophisticated manufacturing technologies.
  • It is equipped with an advanced actively cooled scramjet combustor featuring a novel flame-stabilisation mechanism that enables a continuous combustion process even when air flows through the combustor at speeds exceeding 1.5 km per second.
  • The Thermal Barrier Coating (TBC) has been jointly developed by the Defence Research and Development Laboratory and facilities under the Department of Science and Technology.
  • This specialised coating is engineered to endure the extremely high temperatures generated during hypersonic flight. The newly developed ceramic-based TBC possesses superior thermal resistance and can function at temperatures exceeding the melting point of steel.
 
3. What are Hypersonic missiles?
 
 
 
  • Hypersonic missiles are advanced weapon systems capable of travelling at speeds greater than Mach 5, which means at least five times faster than the speed of sound.
  • Depending on atmospheric conditions, this translates to speeds exceeding nearly 6,000 km per hour.
  • Their combination of extremely high speed, manoeuvrability, and lower flight trajectory makes them difficult to detect, track, and intercept compared to conventional ballistic missiles.
  • These weapons are considered a major advancement in modern military technology because they can rapidly strike targets while reducing the reaction time available to defence systems.
  • Hypersonic Glide Vehicles are first launched into the atmosphere using a rocket booster. After reaching a certain altitude, the glide vehicle separates from the rocket and glides toward its target at hypersonic speeds
  • Hypersonic missiles represent one of the most transformative developments in modern warfare. Their unmatched speed, manoeuvrability, and ability to evade conventional missile defence systems make them strategically significant for major military powers.
  • However, they also raise concerns regarding global security, arms races, and the future of strategic deterrence.
 
 
4. Cruise vs Ballistic missiles
 
 
  • Ballistic missiles operate on the principle of projectile motion to deliver warheads to designated targets. They remain powered only during the initial phase of flight, after which they travel largely under the influence of gravity and aerodynamic forces.
  • These missiles are generally classified according to their operational range and may be equipped with either conventional or nuclear warheads.
  • A major feature that distinguishes hypersonic cruise missiles from ballistic missiles is their manoeuvrability.
  • Unlike ballistic missiles, which follow a predictable ballistic path, hypersonic missiles can alter their trajectory during flight and navigate dynamically toward their intended targets.
  • Cruise missiles typically travel at relatively low altitudes close to the Earth’s surface, whereas ballistic missiles move along a high-altitude parabolic trajectory.
  • Because ballistic missiles follow a more predictable flight path, they are comparatively easier to detect and track.
  • In contrast, the high manoeuvrability and low-altitude flight profile of cruise missiles make them more challenging for air defence systems to intercept
 
5. Scramjet vs Ramjet
 
 
  • Air-breathing propulsion technology has the potential to revolutionise launch vehicle design.
  • According to Indian Space Research Organisation, various global space agencies are actively developing three major categories of air-breathing engines: Ramjet, Scramjet, and Dual-Mode Ramjet (DMRJ).
  • In ramjet propulsion systems, the engine relies on the vehicle’s forward speed to compress incoming air for combustion, eliminating the need for a rotating compressor.
  • Fuel is injected into the combustion chamber, where it combines with the compressed hot air and ignites. Since ramjets cannot generate thrust at low speeds, they require external assistance, such as rocket boosters, to accelerate the vehicle to operational speed.
  • ISRO notes that ramjet engines perform most effectively at supersonic velocities of around Mach 3 and can function up to approximately Mach 6.
  • However, their efficiency declines once the vehicle enters the hypersonic speed regime.
  • A Supersonic Combustion Ramjet, commonly known as a Scramjet, is a more advanced form of ramjet engine designed for efficient operation at hypersonic speeds.
  • Unlike conventional ramjets, scramjets enable combustion while the airflow inside the engine remains supersonic.
  • In this system, air enters through the front intake, fuel combusts in the central chamber, and high-speed exhaust gases exit from the rear to generate thrust.
  • A Dual-Mode Ramjet (DMRJ) combines the operational features of both ramjet and scramjet technologies.
  • Within the Mach 4 to Mach 8 speed range, the engine transitions from ramjet mode to scramjet mode, allowing it to function efficiently under both subsonic and supersonic combustion conditions
 
6. Tactical Advanced Range Augmentation (TARA) system
 
 
  • On May 7, the Defence Research and Development Organisation in collaboration with the Indian Air Force successfully conducted the maiden flight test of the TARA system, a technology designed to convert unguided munitions into guided weapons.
  • The TARA glide weapon system mainly functions as a modular attachment that can be integrated with a standard unguided warhead. Once fitted, it enables the weapon to glide across extended distances and engage targets with greater accuracy.
  • The system is understood to employ a combination of inertial navigation technology and satellite-based guidance for directing the missile toward its designated target.
  • Instead of depending on a rocket propulsion mechanism, the TARA system operates through a glide-based approach. This design makes the weapon comparatively lightweight and economical while also enhancing its operational range.
  • Through this technology, conventional unguided or gravity bombs can be upgraded into precision-guided smart munitions with minimal modification. As a result, the need for developing completely new missile platforms can be significantly reduced
 
 
For Prelims: Tactical Advanced Range Augmentation (TARA) system, Ballistic missiles, Hypersonic missiles
 
For Mains: GS III - Science and technology
 
Previous Year Questions
 
1.Consider the following statements: (UPSC CSE, 2023)

1. Ballistic missiles are jet-propelled at subsonic speeds throughout their flights, while cruise missiles are rocket-powered only in the initial phase of flight.

2. Agni-V is a medium-range supersonic cruise missile, while BrahMos is a solid-fuelled intercontinental ballistic missile.

Which of the statements given above is/are correct?

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

 
 
Source: Indianexpress

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