UPSC Key: Pope Francis, Snow Persistence and Liquidity Coverage Ratio

Pontiff who opened the Catholic church

Syllabus:

Preliminary Examination: Current events of national and international importance.

Main Examination: General Studies I: History of the world will include events from 18th century such as industrial revolution, world wars, redrawal of national boundaries, colonization, decolonization, political philosophies like communism, capitalism, socialism etc.— their forms and effect on the society.

What’s the ongoing story: Pope Francis passed away after prolonged illness in Rome on Monday, the Vatican confirmed in a video statement. He was 88.

Key Points to Ponder:

• Person in News—Pope Francis

• What is difference between Catholic and Roman Catholic?

• What is the difference between a Protestant and Roman Catholic?

• What are the Papal States?

• How is the pope viewed doctrinally in the Roman Catholic Church?

• What is the relevance of the pope?

• Map Work—Vatican City

• Vatican City and Pope—Connect the dots

• Discuss the significance of Pope Francis’s papacy in the context of modernizing the Catholic Church.

• What is the role of Pope Francis in promoting interfaith dialogue and its implications for global peace?

• What impact did Pope Francis have in India?

Key Takeaways:

• “At 7:35 this morning, the Bishop of Rome, Francis, returned to the home of the Father. His entire life was dedicated to the service of the Lord and of his Church,” announced Cardinal Kevin Ferrell, the Vatican camerlengo.

• “He taught us to live the values of the Gospel with faithfulness, courage, and universal love, especially for the poorest and most marginalized. With immense gratitude for his example as a true disciple of the Lord Jesus, we commend the soul of Pope Francis to the infinite merciful love of God, One and Triune,’’ added Cardinal Ferrell.

• Francis was the first Latin American to lead the Roman Catholic Church, and was elected as the supreme pontiff on March 13, 2013, ending an often turbulent reign marked by division and tension as he sought to overhaul the hidebound institution.

• His passing away comes just a day after his surprise public appearance on Easter Sunday, greeting a crowd of more than 35,000 in St. Peter’s Square. This marked his most significant outing since recovering from a severe case of double pneumonia.

• In his 12 years of papacy, he had suffered various ailments, and underwent respiratory therapy during his recent illness.

• Born Jorge Mario Bergoglio in Buenos Aires on December 17, 1936, he was one of the five children of Italian immigrants — Mario, who worked as an accountant for the railways, and Regina Sivori. After graduating as a chemical technician, he decided to pursue the priesthood and entered the Diocesan Seminary of Villa Devoto. On March 11, 1958, he joined the novitiate of the Society of Jesus.

• The death of a sitting pope initiates a profound period of mourning and transition within the Roman Catholic Church, marked by time-honoured rituals and a meticulously structured process to elect a new pontiff.

• The Roman Catholic Church has an elaborate procedure for choosing a new pope after the old one dies. When a pope dies or resigns, the Church enters a period known as “sede vacante” (“empty seat” or “vacant see”), as per Reuters. This is when the throne of St Peter is unoccupied.

Do You Know:

• The Pope is the visible head of the Catholic Church, which regards Jesus Christ as its invisible head. He is also the Bishop of Rome.

• The Holy See is the central governing body of the Church and Vatican City, which enjoys formal diplomatic relations with other nations.

• The Vatican City is the world’s smallest country, and the city-state that serves as the seat of the Catholic Church. The Holy See is, quite simply, its government, and effectively the government of the Catholic Church.

• This dichotomy was established by the Lateran Treaty of 1929, which established the Vatican City as an independent state under the sovereignty of the Holy See. According to an article in the International Center for Law and Religion Studies, the Holy See has existed since early Christian times, while papal representatives are accredited to the Holy See, not representing the Vatican.

• In international law, the Holy See occupies the status of a sovereign juridical entity. While the Holy See does not meet the established criteria for statehood (namely a permanent population, a defined territory, a stable government and capacity to enter into relations with other states), it still possesses a full legal personality in international law by virtue of the diplomatic relations it enjoys with 180 states and its membership in several international organisations.

Other Important Articles Covering the same topic:

📍Catholics in the world

📍Francis tried laying ground for liberal successor through choice of cardinals

📍Pope Francis, first Latin American pontiff, dies at 88

FRONT PAGE

Significant progress in trade deal talks, say India and US after PM, Vance meet

Syllabus:

Preliminary Examination: Current events of national and international importance.

Main Examination: General Studies II: Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.

What’s the ongoing story: In the first high-level visit from the White House since the inauguration of President Donald Trump in January, US Vice-President J D Vance met Prime Minister Narendra Modi on Monday and both sides “welcomed the significant progress” in negotiations towards a India-US bilateral trade pact, framing it as a “new and modern trade agreement.”

Key Points to Ponder:

• Person in News—United States Vice President J D Vance

• “United States Vice President J D Vance, is much more than just a vice president”—Comment

• What sectors were highlighted for enhanced cooperation during recent US Vice-President J D Vance visit to India?

• What is ‘Terms of reference’?

• What can be the potential economic implications for India if the temporary suspension of US tariffs is not extended beyond the 90-day period?

• What is the role of cultural diplomacy, as evidenced by JD Vance’s activities during his India visit?

Key Takeaways:

• Vance, on a four-day visit, met Modi amid the backdrop of the sweeping tariff regime announced by Trump — which has been paused for 90 days — against most countries, including India.

• “(Both sides) welcomed the significant progress in the negotiations for a mutually beneficial India-US Bilateral Trade Agreement focused on the welfare of the people of the two countries,” the Prime Minister’s Office said in a statement.

• Echoing this was the White House readout that “welcomed significant progress in the negotiations for a U.S.-India Bilateral Trade Agreement (BTA) and formally announced the finalization of the Terms of Reference for the negotiations, laying down a roadmap for further discussions about our shared economic priorities.”

• The White House statement said that the BTA is an opportunity to negotiate a “new and modern trade agreement focused on promoting job creation and citizen well-being in both countries, with the goal of enhancing bilateral trade and supply-chain integration in a balanced and mutually beneficial manner.”

• This push at the highest level comes days before Indian negotiators, led by Rajesh Agrawal (Additional Secretary in the Commerce Ministry), are preparing for a three-day visit beginning April 23 to the US to draw up a “realistic 90-day roadmap” to clinch an interim agreement covering a range of issues, including tariffs, non-tariff barriers, and services.

• “The Terms of Reference (ToR) have been finalised and will be further developed with the aim of moving closer to a trade deal within the 90-day pause window. Nineteen chapters are under negotiation, covering areas such as tariffs, non-tariff barriers, rules of origin, and customs facilitation,” a senior government official had said Saturday.

• Besides the trade agreement, the Indian statement also noted “continued efforts towards enhancing cooperation in energy, defence, strategic technologies and other areas.”

• According to the PMO statement, the PM “fondly recalled his visit to Washington…and his fruitful discussions with President Trump, which laid down the roadmap for close cooperation between India and the U.S., leveraging the strengths of Make America Great Again (MAGA) and Viksit Bharat 2047”.

Do You Know:

• United States Vice President J D Vance, who began his India visit on Monday (April 21), is much more than just a vice president. At 40, he’s the authentic voice of the new American right, emerging as the leader of the ‘Make America Great Again’ movement that has propelled Donald Trump back to power and is driving social and political changes in the West unseen in a century.
That’s why, even though vice presidents rarely make a long-term impact on American politics, Vance could be the bold outlier.

• The US is India’s largest trading partner, with total goods trade between the two countries estimated at $129.2 billion in 2024. The US imported goods worth $87.4 billion in 2024 from India, up 4.5 per cent ($3.7 billion) from 2023.

• If, after the 90-day pause, Trump were to restore the 26% tariff, Indian imported goods will become more expensive in the US, potentially leading to customers looking elsewhere. That could significantly harm Indian businesses and jobs. For example, Andhra Pradesh Chief Minister N Chandrababu Naidu, an NDA ally, had earlier this month written to the Centre to get shrimps exempt from the US tariffs — his state is a big exporter of shrimps and other marine products.
To escape the tariff damage, countries, just like India, have been holding talks with the US for one-on-one trade deals. China, the biggest Trump target, is understandably unhappy about this.

Other Important Articles Covering the same topic:

📍V-P Vance more than V-P: Voice of the new idea of America, shaping change

📍J D VANCE IN INDIA, A FALLING DOLLAR, AND A CAUTIOUS IMF

📍As India-US talks gather pace, China warns nations: No deals at our expense

Govt imposes 12 per cent safeguard duty on import of some steel products

Syllabus:

Preliminary Examination: Current events of national and international importance.

Main Examination: General Studies II: Effect of policies and politics of developed and developing countries on India’s interests.

What’s the ongoing story: Amid fears of dumping into India following steep US duties on Chinese goods, the government has imposed a 12 per cent safeguard duty on non-alloy and alloy steel flat products, a notification from the Ministry of Finance released on Monday showed.

Key Points to Ponder:

• What is dumping according to the WTO?

• What is safeguard duty in India?

• Why government has imposed a 12 per cent safeguard duty on non-alloy and alloy steel flat products?

• What is the director general of trade remedy (DGTR)?

• The director general of trade remedy (DGTR) comes under which ministry and what is its role?

• Why large steel producers are pressing the government to significantly raise tariffs on steel?

Key Takeaways:

• This follows an investigation by the Directorate General of Trade Remedies (DGTR), under the Ministry of Commerce and Industry, which in its findings last month said that there was a “sudden and sharp” surge in imports that could “cause serious injury to the domestic industry”.

• “The safeguard duty imposed under this notification shall be effective for a period of two hundred days (unless revoked, superseded or amended earlier) from the date of publication of this notification in the Official Gazette and shall be payable in Indian currency,” the notification stated.

• Notably, several specialised steel items have been excluded from the scope of the measure, including Cold Rolled Grain Oriented Electrical Steel (CRGO), tinplate, stainless steel, rubber-coated steel, brass-coated steel, and aluminium-coated steel, among others.

• The notification added that the safeguard duty will not apply to product categories priced above the import price on a Cost, Insurance and Freight (CIF) basis—set at $675 per metric tonne (MT) for hot rolled coils, sheets and plates, and $964 per MT for colour-coated coils and sheets, whether or not profiled.

• In its submission to the Ministry of Commerce and Industry, the Indian Steel Association (ISA) had said that since the United States imposed a 25 per cent duty under Section 232 of its Trade Expansion Act, 1962, several countries have introduced multiple trade remedy measures against steel imports. “The evidence indicates that 129 trade remedy measures were imposed by various countries against steel products between 2019 and 2023,” ISA had said.

Do You Know:

• According to Investopedia, dumping is when a country or company exports a product at a lower price than its domestic sale price. In the context of international trade, dumping is often considered an unfair pricing strategy. Because dumping typically involves substantial export volumes of a product, it often endangers the financial viability of the product’s manufacturer or producer in the importing nation.
— An anti-dumping duty is a protectionist tariff that a domestic government imposes on foreign imports that it believes are priced below fair market value.

• The Directorate General of Trade Remedies (earlier known as Directorate General of Anti-dumping and Allied Duties) was named in May 2018 as an integrated single window agency for providing comprehensive and swift trade defence mechanism in India.
—Earlier, the Directorate General of Anti-dumping and Allied Duties (DGAD) dealt with anti-dumping and CVD cases, Directorate General of Safeguards (DGS) dealt with safeguard measures and DGFT dealt with quantitative restriction (QR) safeguards.
—The DGTR brings DGAD, DGS and Safeguards (QR) functions of DGFT into its fold by merging them into one single national entity.
—DGTR now deals with Anti-dumping, CVD and Safeguard measures. It also provides trade defence support to our domestic industry and exporters in dealing with increasing instances of trade remedy investigations instituted against them by other countries.
—DGTR functions as an attached office of Department of Commerce, Ministry of Commerce and Industry. It is a professionally integrated organisation with multi-spectrum skill sets emanating from officers drawn from different services and specialisations.

• A WTO member may take a “safeguard” action (i.e., restrict imports of a product temporarily) under the WTO Agreement on Safeguards to protect a specific domestic industry from an increase in imports of any product which is causing, or which is threatening to cause, serious injury to the industry.

• According to Investopedia, Protectionism refers to government policies that restrict international trade to help domestic industries. Protectionist policies are usually implemented with the goal of improving economic activity within a domestic economy but can also be implemented for safety or quality concerns.
—Protectionist policies are typically focused on imports but may also involve other aspects of international trade, such as product standards and government subsidies.
—Import tariffs are one of the top tools that a government uses when seeking to enact protectionist policies.

Other Important Articles Covering the same topic:

📍Dumping: Price Discrimination in Trade, Attitudes and Examples

Previous year UPSC Prelims Question Covering similar theme:
1. With reference to the international trade of India at present, which of the following statements is/are correct? (2020)
(1) India’s merchandise exports are less than its merchandise imports.
(2) India’s imports of iron and steel, chemicals, fertilisers and machinery have decreased in recent years.
(3) India’s exports of services are more than its imports of services.
(4) India suffers from an overall trade/current account deficit.
Select the correct answer using the code given below:
(a) 1 and 2 only
(b) 2 and 4 only
(c) 3 only
(d) 1, 3 and 4 only

EXPRESS NETWORK

Ganga, Brahmaputra and Indus basins stare at low water flow due to reduced snow persistence: Report

Syllabus:

Preliminary Examination: General issues on Environmental ecology, Bio-diversity and Climate Change – that do not require subject specialization.

Main Examination: 

• General Studies I: Important Geophysical phenomena such as earthquakes, Tsunami, Volcanic activity, cyclone etc., geographical features and their location-changes in critical geographical features (including water-bodies and ice-caps) and in flora and fauna and the effects of such changes.

• General Studies III: Conservation, environmental pollution and degradation, environmental impact assessment.

What’s the ongoing story: The Ganga, Indus, and Brahmaputra river basins that support the livelihoods and water security of millions are staring at reduced flows in early summer as snow persistence, which signifies how long snow remains on the ground after snowfall, has declined alarmingly, according to a new report by Kathmandu-based International Centre for Integrated Mountain Development (ICIMOD).

Key Points to Ponder:

• What new report by Kathmandu-based International Centre for Integrated Mountain Development (ICIMOD) says?

• Map Work—Hindu Kush Himalayas stretch, the Ganga, Indus, and Brahmaputra river basins.

• What you understand by the term ‘snow persistence’?

• What explains the lower snow persistence?

• Snow persisting on the ground is important for the Ganga, Brahmaputra and Indus basins—Why?

• How reduced snow persistence in the Hindu Kush Himalaya region can impact the water security of South Asian countries?

Key Takeaways:

• The report mapped snow persistence across the Hindu Kush Himalayas (HKH), and found that it was at a two-decade low of 23.6 per cent. “This is worrying news for the water security of nearly two billion people across 12 major river basins that originate high in the HKH,” the report said. This is the third consecutive year of below-par seasonal snow across the region, ICIMOD added.

• A 23-year time series of basin-scale snow persistence during the November to March snow season was monitored from 2003 to 2025, and it showed recurrent seasonal deficits coupled with annual fluctuations, especially in the last five years. The report said that snow persistence in the Ganga basin – 24.1 per cent below normal – was the lowest in 23 years. The highest snow persistence of 30.2 per cent above normal was recorded in 2015.

• The snow persistence in the Indus basin declined to 24.5 per cent below normal, from a high of 19.5 per cent above normal in 2020. Ganga, Indus, Brahmaputra all depend on the Hindu Kush Himalayas.

• About a fourth of the total river runoff in the HKH region is from snowmelt, and its share in the river basins increases from east to west. “Seasonal snowmelt is crucial for regional and local water availability, especially in the early melt season. It nourishes rivers for agriculture, hydropower, and several ecosystem services,” the report said.

• Explaining the importance of the findings, Sher Muhammad, ICIMOD’s remote sensing specialist and lead expert for the snow report 2025, said, “We are observing such deficit situations occurring in continuous succession. This is an alarming trend. While our findings give a broad picture across the region, each must act based on the specific conditions of their river basins, particularly where seasonal snow melt is the major water source.

• The report recorded a bigger decline across the Mekong (51.9 per cent), Salween (48.3 per cent), and Tibetan Plateau (29.1 per cent) river basins in South East Asia.

Do You Know:

• According to the ICIMOD website, the HKH region extends 3,500 km over all or part of eight countries from Afghanistan in the west to Myanmar in the east. It is the source of ten large Asian river systems – the Amu Darya, Indus, Ganges, Brahmaputra (Yarlungtsanpo), Irrawaddy, Salween (Nu), Mekong (Lancang), Yangtse (Jinsha), Yellow River (Huanghe), and Tarim (Dayan) – and provides water, ecosystem services, and the basis for livelihoods to a population of around 240 million people in the region. The basins of these rivers provide water to 1.9 billion people, a fourth of the world’s population.

• The ICIMOD website says that, considerable volume of water resources is stored as snow and glacier ice in the HKH. Cryosphere components including permafrost and glacial lakes provide various ecosystem services for mountain and downstream communities. The snow cover area during winter varies between 951,000 sq km and 1,390,000 sq km. During summer, it ranges between 388,000 and 481,000 sq km The total glacier area can extend up to 87,340 sq km.

• Snow persistence measures the fraction of time snow remains on the ground after snowfall. This marks the third consecutive year of below-normal seasonal snow across the region, a report by the International Centre for Integrated Mountain Development (ICIMOD) said in the 2025 Hindu Kush Himalaya Snow Update.

Other Important Articles Covering the same topic:

📍Multilateral treaties required for Indus, Ganga, Brahmaputra management, says report

Previous year UPSC Prelims Question Covering similar theme:
2. When you travel in Himalayas, you will see the following: (2012)
1. Deep gorges
2. U-turn river courses
3. Parallel mountain ranges
4. Steep gradients causing land sliding
Which of the above can be said to be the evidence for Himalayas being young fold mountains?
(a) 1 and 2 only
(b) 1, 2 and 4 only
(c) 3 and 4 only
(d) 1, 2, 3 and 4
Previous year UPSC Prelims Question Covering similar theme:
📍How will the melting of Himalayan glaciers have a far-reaching impact on the water resources of India? (2020)

THE IDEAS PAGE

A bridge to the Gulf

Syllabus:

Preliminary Examination: Current events of national and international importance.

Main Examination: 

• General Studies II: Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.

• General Studies II: Indian diaspora.

What’s the ongoing story: C. Raja Mohan Writes: As PM Modi visits Riyadh, a look Saudi Arabia’s transformation and foreign policy pragmatism

Key Points to Ponder:

• India and Saudi Arabia—Know historical ties and present bilateral relations.

• Prime Minister Narendra Modi’s 2025 visit to Saudi Arabia—Why significant?

• India’s look west policy —What you know about the same?

• How the transformation happened from “Look west” policy to ” Link and ACT West”?

• What are the challenges and opportunities in diversifying India-Saudi Arabia trade beyond energy sectors?

• Know the role of the Indian diaspora in Saudi Arabia in fostering cultural and economic ties between the two nations.

• What is the Strategic Partnership Council Agreement between India and Saudi Arabia?

• Gulf Cooperation Council and Organisation of Islamic Cooperation (OIC)-compare and contrast

• Gulf Cooperation Council, Organisation of Islamic Cooperation (OIC) and India-Connect the dot

Key Takeaways:
C. Raja Mohan Writes:

• As Prime Minister Narendra Modi heads to Saudi Arabia this week, there is much to celebrate in the remarkable transformation of bilateral ties. Yet, in our media’s intense focus on prime ministerial visits, we often overlook the profound shifts underway in the countries hosting these visits. Nowhere is this truer than in Saudi Arabia.

• The PM’s visit to Jeddah is not only about expanding bilateral relations; it also reflects Saudi Arabia’s emergence as a significant geopolitical actor under its Crown Prince and Prime Minister, Mohammed bin Salman (MbS).

• Modi’s visit marks only the sixth time an Indian Prime Minister has been to Saudi Arabia since 1947, which underscores the under-performance in earlier decades.

• Jawaharlal Nehru visited in 1955, followed by Indira Gandhi more than a quarter-century later in 1982 and Manmohan Singh in 2010 after a gap of 28 years. In contrast, Modi’s upcoming trip will be his third — after visits in 2016 and 2019 — reflecting a higher priority for Saudi Arabia in India’s foreign policy strategy.

• Despite historical, civilisational, and religious links between Arabia and the Indian subcontinent, India’s policy toward the region was long shaped by ideological posturing, apprehensions about Pakistan, and hesitancy to invest political capital. Even as India’s stakes in the Gulf grew — from the oil price shocks of the 1970s and 1980s to the surge in expatriate labour (now about 10 million people) — political engagement, especially with Saudi Arabia, lagged.

Do You Know:
C. Raja Mohan Writes:

• External Affairs Minister Jaswant Singh’s visit to Riyadh in 2000 and King Abdullah’s historic 2006 visit to India — the first by a Saudi monarch in 50 years — were key turning points. That visit broadened the bilateral agenda beyond oil to include strategic and economic cooperation, with a particular focus on counterterrorism.

• Crucially, it also began the process of de-hyphenating Saudi Arabia’s ties with India and Pakistan. India, in turn, ended the unfortunate tradition of viewing Saudi Arabia through the prism of Pakistan.

• Manmohan Singh’s 2010 visit laid the groundwork for a more robust, wide-ranging partnership. Under Modi, this trajectory has accelerated. Delhi’s engagement with the Arab Gulf, particularly Saudi Arabia, has become one of the most significant strategic advances in Indian foreign policy over the past decade.

• While India’s evolving relationship with Saudi Arabia is now widely recognised, the sweeping changes within the Kingdom under MbS receive less attention in India. Saudi Arabia’s metamorphosis — from a conservative and sclerotic state governed by ageing leadership to a dynamic, globally engaged actor — represents one of the most consequential geopolitical shifts of the 21st century.

• When King Salman ascended the throne in 2015, he appointed MbS Defence Minister. In 2017, he named him Crown Prince, and in 2022, Prime Minister. As MbS consolidated power, he initiated ambitious reforms that have redefined both domestic governance and foreign policy. A key element of this transformation has been the shift from consensus-based decision-making within the large royal family to centralised authority under MbS. While this has streamlined governance and enhanced state efficiency, it has also drawn criticism for the new authoritarian style.

• MbS seeks to position Saudi Arabia as a diplomatic hub for the region — mediating conflicts, both inter-state and intra-state, in the Middle East and North Africa and hosting dialogue between global powers like the US and Russia on Ukraine. His interest-driven, rather than ideologically rigid, approach marks a fundamental shift in the evolution of the Saudi kingdom — one that echoes the pragmatism of India’s own Middle East policy under Modi.

Other Important Articles Covering the same topic:

📍As India looks west

📍Why the Gulf matters for India

Previous year UPSC Prelims Question Covering similar theme:
3. Which of the following is not a member of ‘Gulf Cooperation Council’? (2016)
(a) Iran
(b) Saudi Arabia
(c) Oman
(d) Kuwait

Previous year UPSC Prelims Question Covering similar theme:
📍The question of India’s Energy Security constitutes the most important part of India’s economic progress. Analyse India’s energy policy cooperation with West Asian countries. (2017)

EXPLAINED

How world’s first market for trading in particulate emissions in Gujarat works

Syllabus:

Preliminary Examination: General issues on Environmental ecology, Bio-diversity and Climate Change – that do not require subject specialization.

Main Examination: General Studies III: Conservation, environmental pollution and degradation, environmental impact assessment and Inclusive growth and issues arising from it.

What’s the ongoing story: A new study on the world’s first-ever market for trading particulate emissions, which are tiny particles that can impact human health, revealed that employing the market mechanism helped reduce pollution by 20-30 per cent in an industrial cluster in Surat.

Key Points to Ponder:

• What is market-based particulate matter emissions trading scheme (ETS)?

• What is the primary objective of the Emissions Trading Scheme (ETS) implemented in Surat?

• What mechanism does the Surat ETS employ to regulate emissions?

• Why was Surat chosen for the scheme?

• How will ETS help reduce emissions?

• Is there be a punitive action for non-compliance?

• Know the significance of the Surat Emissions Trading Scheme (ETS).

• What are the other innovative environmental governance schemes and policies in India?

Key Takeaways:

• Published in the May issue of the Quarterly Journal of Economics, the study saw researchers compare the emissions performance of participating plants with those complying with the business-as-usual pollution standards. It covered 162 plants, predominantly in the textile sector.

• Plants which were part of the market mechanism reduced emissions significantly more than those under conventional regulation and had permits to cover their emissions 99% of the time, the study found. On the other hand, plants outside the market failed to meet pollution norms for nearly a third of the study period of almost two years.

• The study builds on the idea of emissions trading, which has been in operation in Europe since 2005 and in China since 2021, and has at times been criticised.

• Emissions markets have operated in the United States, Europe and most recently, China. At times, they have been criticised for flaws in their design, which have undermined the intent of cutting emissions. One of the key criticisms has been over-allocation of permits.

• Another major criticism, especially in the United States, has been the lobbying influence of fossil fuel companies to delay the tightening of emission caps and to get free permits, essentially offering a way for industries to pay and pollute. In China, the national carbon market was criticised for using emissions intensity (emissions per unit of output) rather than an absolute emissions cap.

• The Surat-ETS was introduced in 2019 across 342 highly polluting industries to control fine particulate pollution emitted due to the use of solid fuel sources, such as coal and lignite, and liquid sources such as diesel.

• It is the world’s first ETS pilot to control particulate pollution and India’s first for any pollutant. The scheme was designed and developed by the Gujarat Pollution Control Board (GPCB) along with researchers from Abdul Latif Jameel Poverty Action Lab (J-PAL), Energy Policy Institute at the University of Chicago (EPIC) and Yale University.

Do You Know:

• An emissions trading scheme (ETS) or market is a regulatory tool to cut greenhouse gas emissions, while providing industries with financial incentives to comply with norms and to get them to invest in cleaner technology.

• Under ETS, regulators set a cap or a limit on the total emissions load that can be released into the air. Instead of enforcement through fines or show-cause notices, industries are given emissions permits or allowances, which can be traded among them to meet compliance. This lends the name ‘cap-and-trade’ to emission markets.

• Each permit allows industries to release a specific quantity of pollution into the air, such as a kilogram of particulate matter pollution or a ton of carbon dioxide. Plants with pollution-reducing technology save their permits and sell them to those who might need them to make up for their compliance gap. This way, plants with fewer resources get time to gradually shift to cleaner technology, while complying with a cap, and others earn through trading.

• Minimum floor price and maximum ceiling price are usually set by regulators to maintain stability and to keep the scheme attractive. Regulators can also tighten the cap based on pollution monitoring data. Industries that breach emission caps are penalised, usually on a per tonne cost basis. In some instances, they also have to surrender their permits.

• To ensure emissions reduction, regulators tighten emission caps and issue fewer permits as the ETS matures. This can ensure that industries find it more cost-effective to use cleaner technologies, rather than buying scarce and expensive permits.

Other Important Articles Covering the same topic:

📍Study: Surat particulate emissions market cut pollution in industries by up to 30%

Previous year UPSC Prelims Question Covering similar theme:
4. The ‘Common Carbon Metric’, supported by UNEP, had been developed for (2021)
(a) Assessing the carbon footprint of building operations around the world
(b) Enabling commercial farming entities around the world to enter carbon emission trading
(c) Enabling governments to assess the overall carbon footprint caused by their countries
(d) Assessing the overall carbon footprint caused by the use of fossil fuels by the world in a unit time

ECONOMY

RBI mandates 2.5% additional run-off factor on digital deposits

Syllabus:

Preliminary Examination: Economic and Social Development

Main Examination: General Studies III: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.

What’s the ongoing story: The Reserve Bank of India (RBI) eased the liquidity coverage ratio (LCR) norms under which the banks will now be required to assign an additional 2.5 per cent run-off factor for digital deposits.

Key Points to Ponder:

• What is the liquidity coverage ratio (LCR)?

• Why the Reserve Bank of India (RBI) eased the liquidity coverage ratio (LCR) norms?

• What is the difference between Statutory Liquidity Ratio (SLR) and liquidity coverage ratio (LCR)?

• What is the run-off factor in liquidity coverage ratio (LCR)?

• How lower run-off factor impacts banks?

Key Takeaways:

• “A bank shall assign an additional 2.5 per cent run-off factor for retail deposits which are enabled with internet and mobile banking facilities (IMB),” the RBI said final norms on LCR framework.

• The lower run-off factor will be a relief for banks as the draft norms had proposed an additional 5 per cent run-off factor for retail deposits which are enabled with (IMB).

• The regulator said that the stable retail deposits enabled with IMB will have 7.5 per cent run-off factor and less stable deposits enabled with IMB will have 12.5 per cent run-off factor (as against 5 and 10 per cent respectively, prescribed currently).

• RBI said that funding from non-financial entities such as trusts (educational/religious/charitable), Association of Persons (AoPs), partnerships, proprietorships, Limited Liability Partnerships (LLPs) and other incorporated entities will be categorised as funding from non-financial corporates and attract a run-off rate of 40 per cent as against 100 per cent currently.

• Unsecured wholesale funding provided by non-financial small business customers (SBCs) will be accorded the same treatment as retail deposits and so will attract an additional 2.5 per cent run-off factor.

• The final guidelines said that the level 1 high quality liquidity asset (HQLA) in the form of government securities will be valued at an amount not greater than their current market value, adjusted for applicable haircuts in line with the margin requirements under the Liquidity Adjustment Facility (LAF) and Marginal Standing Facility (MSF).

• According to Anil Gupta, Senior Vice President – Financial Sector Ratings, ICRA, As per RBI’s estimate, the reported LCR of the banking system will improve by 6 per cent as of December 31, 2024.

Do You Know:

• The run-off factor refers to the percentage of deposits that could be withdrawn by depositors in a stress scenario. Internet and Mobile Banking facilities (IMB) includes all facilities such as but not limited to internet banking, mobile banking and Unified Payments Interface (UPI) which enables a customer to digitally transfer funds from their accounts.

• The Investopedia website explains LCR as, “Just like you might keep aside money for three to six months of expenses in case of unexpected emergencies, banks must maintain a stockpile of easily accessible assets to weather financial storms. The liquidity coverage ratio (LCR), put in place after the 2008 financial crisis, was proposed by the Basel Committee on Banking Supervision, a group of central bankers and regulators from the world’s major financial centres”.

• The liquidity coverage ratio (LCR) acts as banks’ financial safety net, requiring them to maintain enough easily sellable assets to cover 30 days of withdrawals and obligations.

• SLR is a India-specific requirement focusing on government security investments, while Liquidity Coverage Ratio (LCR) is an international standard requiring banks to hold enough high-quality liquid assets to cover 30 days of net cash outflows.

Other Important Articles Covering the same topic:

📍What banking system liquidity going into ‘deficit mode’ means

Previous year UPSC Prelims Question Covering similar theme:
5. If the RBI decides to adopt an expansionist monetary policy, which of the following would it not do? (2020)
1. Cut and optimize the Statutory Liquidity Ratio
2. Increase the Marginal Standing Facility Rate
3. Cut the Bank Rate and Repo Rate
Select the correct answer using the code given below:
(a) 1 and 2 only
(b) 2 only
(c) 1 and 3 only
(d) 1, 2 and 3

 

PRELIMS ANSWER KEY

1. (d) 2.(d) 3.(a) 4.(a) 5.(b)

  

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