UPSC Key: Biostimulants, Snow leopards, and Capital markets

Preliminary Examination: Current events of national and international importance

Mains Examination: General Studies-III: Major crops-cropping patterns in various parts of the country, – different types of irrigation and irrigation systems storage, transport and marketing of agricultural produce and issues and related constraints; e-technology in the aid of farmer

What’s the ongoing story: Months after clearing them for crops, such as paddy, tomato, potato, cucumber and chilli, the Union Agriculture Ministry has withdrawn approval for the sale of 11 biostimulants derived from animal sources — from chicken feathers and pig tissue to bovine hide and cod scales — due to “religious and dietary restrictions”, The Indian Express has learnt.

Key Points to Ponder:

— What are biostimulants? How is it different from fertilizers and pesticides?

— What are the different types of biostimulants?

— What are the concerns related to biostimulants?

— What is the regulatory framework for biostimulants in India?

— What are the advantages and disadvantages of biostimulants?

Key Takeaways:

— A biostimulant is a substance or microorganism, or a combination of both, that stimulates plant processes to improve nutrient uptake, growth, yield, quality and stress tolerance. Unlike fertilisers, it does not supply nutrients directly, and unlike pesticides, it does not control pests.

— Biostimulants are separate from fertilisers and are used, mainly as a spray, to enhance crop yield, quality and growth. The ministry’s move is part of its efforts to bring the opaque sector, and its products, under a regulatory framework.

— According to Fortune Business Insights, the Indian biostimulants market was valued at US$ 355.53 million in 2024 and projected to grow to US$ 1,135.96 million by 2032. Biostimulants are usually sold across the counter in liquid form and sprayed on crops.

— The Centre’s decision is directed at one of the most common types of biostimulants: protein hydrolysate, which is a mixture of amino acids and peptides formed by breaking down proteins. These can be derived from plants, such as soy or maize, or from animal sources like feathers, hides or tissue.

— In a notification issued on September 30, the Ministry “omitted” the 11 biostimulants made from protein hydrolysates. They comprise different doses used for green gram, tomato, chilli, cotton, cucumber, hot pepper, soybean, grapes and paddy.

— These biostimulants were added to Schedule VI of the Fertiliser (Inorganic, Organic or Mixed) (Control) Order (FCO), 1985, through separate notifications earlier this year after the Indian Council of Agriculture Research (ICAR) cleared them.

— Before 2021, biostimulants were sold freely in India for more than a decade with no specific rules governing their sale, safety and efficacy. In 2021, the Government brought them under the FCO, which meant companies had to register products and prove safety and effectiveness. But they were still allowed to keep selling until June 16, 2025, provided they submitted applications for approval.

Do You Know:

— In 2017, NITI Aayog, the government’s premier think tank, and the Agriculture Ministry started working on a framework for biostimulants. Finally, in February 2021, the ministry amended the 1985 FCO and included biostimulants, paving the way for their regulated manufacturing, sale and import.

— On April 9, 2021, the agriculture ministry constituted the Central Biostimulant Committee for five years, with the Agriculture Commissioner as its Chairperson and seven other members.

— Under the FCO, it shall advise the Centre on: (i) inclusion of a new biostimulant; (ii) specifications of various biostimulants; (iii) methods of drawing of samples and its analysis; (iv) minimum requirements of laboratory; (v) method of testing of biostimulants; (vi) any other matter referred to it by the central government.

Other Important Articles Covering the same topic:

📍Explained: Biostimulants that aid plant growth, now under the Centre’s scrutiny

Previous year UPSC Prelims Question Covering similar theme:

(1) What is the use of biochar in farming? (UPSC CSE 2020)

1. Biochar can be used as a part of the growing medium in vertical farming.

2. When biochar is a part of the growing medium, it promotes the growth of nitrogen-fixing microorganisms.

3. When biochar is a part of the growing medium, it enables the growing medium to retain water for longer time.

Which of the statements given above is/are correct?

(a) 1 and 2 only

(b) 2 only

(c) 1 and 3 only

(d) 1, 2 and 3

SECOND PAGE

Natural forces like lightning, heat killed 6,444 in 2023: NCRB report

Syllabus:

Preliminary Examination: Current events of national and international importance

Mains Examination: General Studies-I: Important Geophysical phenomena such as earthquakes, Tsunami, Volcanic activity, cyclones. 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: Disaster and disaster management

What’s the ongoing story: Forces of nature such as lightning strikes, floods, cold, heat stroke, and landslides claimed 6,444 lives, as per the National Crime Records Bureau’s 2023 report on Accidental Deaths and Suicides in India. Lightning strikes alone accounted for 39.7 percent or 2,560 of these 6,444 deaths.

Key Points to Ponder:

— What are the causes of lightning strikes?

—  ‘Plains area of the Indo-Gangetic belt, as well as Madhya Pradesh are prone to thunderstorm and lightning activity.’ Elaborate.

— What are the causes of the increase in heatwaves?

— Are heatwaves and lightning strikes considered as natural disasters by the Indian central government under the Disaster Management Act, 2005?

Key Takeaways:

— Heat/sun stroke claimed 804 lives, exposure to cold claimed 733 lives while floods, landslide, and torrential rains were other key causes of deaths under the ‘forces of nature’ category, as per the report.

— Snake bites, animal attacks and insect bites were the other nature or environment related causes that claimed a substantial number of lives. As per the NCRB report, snake bites caused 10,144 deaths, a 0.6 percent increase over the 10,085 deaths recorded in 2022.

— Meanwhile, 1,739 people were killed by animals and 1,172 due to animal, reptiles (other than snakes) or insect bites, the report noted.

— While the overall number of deaths due to ‘forces of nature’ declined by 20 percent compared to 2022 figures, deaths caused by heat stroke and cold exposure have risen by 10 percent, and 1.8 percent, respectively.

— Odisha recorded 1,351 deaths, the highest due to ‘forces of nature’, followed by 852 in Uttar Pradesh, 789 in Madhya Pradesh, 679 in Bihar, 401 in Jharkhand and 312 in Maharashtra.

— According to the report, Madhya Pradesh (397), Bihar (345), Odisha (294), Uttar Pradesh (287), and Jharkhand (194), accounted for a high share of the lightning deaths.

— Studies have shown in the past that the plains area of the Indo-Gangetic belt, as well as Madhya Pradesh are prone to thunderstorm and lightning activity. Warm, dry air from north-west converges with moist air from the Bay of Bengal leading to formation of deep convective clouds.

— In 53 cities, 602 deaths were due to natural forces in 2023, the report noted, and heat and cold exposure accounted for 21.1 percent and 19.6% per cent of these deaths.

— India had seen a prolonged heat wave in 2023 in northern, eastern and north west India. In June 2023, Ballia and Deoria in Uttar Pradesh had seen over 150 deaths due to an intense heat wave.

Do You Know:

— Scientifically, lightning is a rapid and massive discharge of electricity in the atmosphere some of which is directed towards earth. The discharges are generated in giant moisture-bearing clouds that are 10-12 km tall.

— The base of these clouds typically lie within 1-2 km of the Earth’s surface, while the top is 12-13 km away. Temperatures in the top of these clouds are in the range of –35° to –45°C.

— As water vapour moves upward in the cloud, the falling temperature causes it to condense. As they move to temperatures below 0°C, the water droplets change into small ice crystals.

— They continue to move up, gathering mass until they are so heavy that they start to fall to Earth. This leads to a system in which, simultaneously, smaller ice crystals are moving up and bigger crystals are coming down.

— Collisions follow and trigger the release of electrons, a process that is very similar to the generation of sparks of electricity. As the moving free electrons cause more collisions and more electrons, a chain reaction ensues.

— This process results in a situation in which the top layer of the cloud gets positively charged, while the middle layer is negatively charged. The electrical potential difference between the two layers is huge, of the order of a billion to 10 billion volts. In very little time, a massive current, of the order of 100,000 to a million amperes, starts to flow between the layers.

— While the Earth is a good conductor of electricity, it is electrically neutral. However, in comparison to the middle layer of the cloud, it becomes positively charged. As a result, about 15%-20% of the current gets directed towards the Earth as well. It is this flow of current that results in damage to life and property on Earth.

Other Important Articles Covering the same topic:

📍Explained: How lightning kills, and how to be safe when it strikes

Previous year UPSC Prelims Question Covering similar theme:

(2) During a thunderstorm, the thunder in the skies is produced by the (UPSC CSE 2013)

1. meeting of cumulonimbus clouds in the sky

2. lightning that separates the nimbus clouds

3. violent upward movement of air and water particle

Select the correct answer using the codes given below:

(a) 1 only

(b) 2 and 3

(c) 1 and 3

(d) None of the above produces the thunder

 

EXPRESS NETWORK

83 snow leopards in Himachal, up from 51 in 2021: Survey

Syllabus:

Preliminary Examination: Current events of national and international importance

Mains Examination: General Studies-III: Conservation, environmental pollution and degradation, environmental impact assessment

What’s the ongoing story: The snow leopard count has jumped from 51 in 2021 to 83, excluding cubs, across Himachal Pradesh’s high-altitude habitats, the Wildlife Wing of the state’s Forest Department said on the first day of the Wildlife Week Thursday, after the conclusion of its second comprehensive population estimation.

Key Points to Ponder:

— What is the purpose of celebrating Wildlife Week?

— What is the IUCN status of snow leopard?

— Know about Pallas’s cat, woolly flying squirrel, blue sheep, Himalayan ibex, and musk deer

— Learn about the location of Kibber Wildlife Sanctuary, Great Himalayan National Park, Sechu Tuan Nala Wildlife Sanctuary, and Asrang Wildlife Sanctuary

— What is the role of the local community in conservation efforts?

— What are the efforts taken by the government for the conservation of snow leopards?

— What is the Global Snow Leopard & Ecosystem Protection Program?

Key Takeaways:

— In the first state-wide assessment, which started in 2018 and ended in 2021, the population was recorded at 51.

— The survey, which was completed in a year and conducted in partnership with the Nature Conservation Foundation (NCF), marks a significant advancement in wildlife monitoring, positioning Himachal as the first state in the country to undertake a population estimation of the elusive species.

Snow leopard caught on camera trap. (Photos provided by Himachal Pradesh Forest & Wildlife Wing)

— Notably, the survey documented the first official sighting of Pallas’s cat (Otocolobus manul) in Kinnaur and the rediscovery of the woolly flying squirrel (Eupetaurus cinereus) in Lahaul.

— The faster turnaround time of the survey demonstrated a scalable and cost-effective model for long-term monitoring. Officials noted that this was possible due to prior experience, refined techniques, and enhanced coordination among field teams.

— During the exercise, around 271 camera traps were set up across the 26,000 sq km habitats of snow leopards in Spiti Valley, Kinnaur, Pangi, Lahaul and Greater National Himalayan Park (GNHP), a wildlife officer said.

— This time, however, Bhandari said that many snow leopard detections were recorded outside protected areas such as Kibber Wildlife Sanctuary, Great Himalayan National Park, Sechu Tuan Nala Wildlife Sanctuary, and Asrang Wildlife Sanctuary.

— This underscores the importance of local community participation in conservation efforts and strengthens the case for community-based initiatives to safeguard snow leopard habitats in Himachal Pradesh, the official said.

— For the first time globally, an indigenous women’s team from Kibber also contributed to the data analysis, marking a milestone in inclusive conservation.

— Forest officials said the survey not only provides a robust baseline for long-term snow leopard monitoring in Himachal Pradesh but also sets a blueprint for other states across the Himalayan snow leopard range.

— By carrying out such large-scale, scientifically rigorous assessments in a cost-effective manner in a short time, Himachal Pradesh has offered a model for continuous monitoring and adaptive management of the species and its ecosystem.

Do You Know:

— On January 23, the International Big Cat Alliance (IBCA), launched by Prime Minister Narendra Modi in 2023 for the global conservation of seven big cats, formally became a full-fledged treaty-based intergovernmental organization.

—  The IBCA is an initiative launched by Prime Minister Narendra Modi in April 2023 in Mysuru commemorating the 50th anniversary of Project Tiger. The objective of the IBCA is to ensure cooperation for the conservation of seven big cats: lion, tiger, leopard, cheetah, snow leopard, jaguar, and puma, and enhance knowledge exchange and threats associated with them.

— Snow Leopard (Panthera uncia): The mountainous regions of twelve Asian countries—Afghanistan, Bhutan, China, India, Kazakhstan, Kyrgyz Republic, Mongolia, Nepal, Pakistan, Tajikistan, and Uzbekistan—make up the habitat range of the snow leopard. The Snow Leopard Population Assessment in India (SPAI), 2024 has estimated a population of 718 in Ladakh, Jammu and Kashmir, Himachal Pradesh, Uttarakhand, Sikkim and Arunachal Pradesh.

Other Important Articles Covering the same topic:

📍Knowledge Nugget: Importance of the International Big Cat Alliance for UPSC Exam

📍India’s snow leopard count: Why this Himalayan feat is only the first step to securing the cat

Previous year UPSC Prelims Question Covering similar theme:

(3) Read the following and choose the correct statement(s): (Punjab Civil Services 2020)

Statement I: The Himachal Pradesh State Government is to develop India’s first Snow Leopard Conservation Centre of India. The Centre is to be developed by the Himachal Pradesh Forest Department and the United Nations Development Programme (UNDP).

Statement II: Global Snow Leopard and Ecosystem Protection Programme (GSLEP) is an inter-governmental alliance of all 12 snow leopard range countries.

Choose the correct option:

(a) Both statements I and II are correct

(b) Statements I is correct

(c) Statement II is correct

(d) None of the above

EDITORIAL

A red line runs through it

Syllabus:

Preliminary Examination: Economic and Social Development – Sustainable Development, Poverty, Inclusion, Demographics, Social Sector Initiatives, etc.

Mains Examination: General Studies-II: Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests; Government policies and interventions for development in various sectors and issues arising out of their design and implementation

What’s the ongoing story: Sonalde Desai writes: Opening up Indian markets to American agricultural and dairy products has emerged as a key sticking point in the tariff negotiations.

Key Points to Ponder:

— What are the issues in the ongoing tariff negotiations between India and the USA?

— What are the farm subsidies provided by the Indian government? How is it different from the American government?

— Despite employing around 45 per cent of the population in agriculture, why is the contribution of agriculture sector in the GDP is only about 17 per cent?

— With 65 per cent of the population living in rural areas, farm distress is a genuine concern to both the populace and politicians. Elaborate.

— What are the various challenges faced by the agriculture sector in India?

— Know about the important schemes of the government for agriculture sector

Key Takeaways:

— Farm subsidies, mechanisation, and large farm sizes enable the US to produce affordable wheat, soybeans, and other crops. Indian farmers struggle in a low-productivity world where they barely manage to subsist. Whereas agricultural workers form less than two per cent of American workers, in India, they are 45 per cent.

— While agriculture is an increasingly smaller portion of Indian GDP — only about 17 per cent by World Bank estimates — the proportion of workers in agriculture has barely declined. Thus, anything that affects agricultural incomes affects a far greater proportion of the population in India than in the US.

— India needs to enhance its agricultural productivity and compete effectively in the global market. It needs to generate more jobs in the manufacturing and service industries to reduce crowding in agriculture.

— With 65 per cent of the population living in rural areas, farm distress is a genuine concern to both the populace and politicians. It is not surprising that protecting Indian agriculture is the red line around which all Indian political parties have united, whether they belong to the ruling party or the Opposition.

— When it comes to dairy, the challenge is even thornier. India produces about a fourth of the dairy products in the world. Almost all of it is consumed locally with little import or export. Unlike the corporatisation of dairy production in the US, India’s milk production primarily comes from households that own two or three milk-producing cows or water buffaloes.

— It is the salience of agriculture and dairy farming to the lives of hundreds of millions of Indians that makes it difficult to imagine a scenario in which global trade pressures and corporate profits trump the livelihoods of rural families.

— Indian discourse on agricultural protection is similar to the American discourse on immigration. Republicans and Democrats are, by and large, united that unchecked immigration is not sustainable.

— Hopefully, someday, manufacturing and services in India will boom, reducing the stress on agriculture. However, until that day arrives, it should not be surprising to Trump and his advisors to fathom why it would be as difficult for Modi to abandon agricultural tariffs as it would be for America to abandon farm subsidies — they began in 1933 and have ranged from $9 to $55 billion in recent years.

Do You Know:

— Even after 77 years of independence, agriculture continues to play a crucial role in the lives of the people. Both culturally or economically, it remains a mainstay of rural India which constitutes 68% of the total population.

— While there has been a major shift in agriculture’s contribution to the Gross Value Added in the economy from 61.7% in 1950 to 16.3% in 2020, the proportion of the workforce engaged in agriculture remains high at 46.5% as of 2020 compared to 69.2% in 1950-51.

— Post-independence, there have been continuous attempts to improve the condition of Indian agriculture. Major initiatives included the abolition of intermediaries, tenancy reforms, fixing and consolidation of land holdings, the introduction of community development programmes (1952), the establishment of Minimum Support Prices (MSP) through the Agricultural Prices Commission (1965), the Green Revolution (1966), the Evergreen Revolution, Operation Flood, and agricultural diversification.

— According to the Agricultural Census 2015-16, small( 1-2 hectares) and marginal (<1 hectare) land holdings make up over 86% of the total agricultural land holdings in India. However, the average land holding size is just 0.38 hectares for marginal farmers and 1.4 hectares for small farmers.

— Another major characteristic of agriculture is its dependence on the monsoon for Irrigation. As per NITI Aayog, 55% of the net cropped area in India is under irrigation, while the rest is dependent on the monsoon for irrigation. The monsoon is a seasonal reversal in wind patterns that leads to changes in precipitation levels.

Other Important Articles Covering the same topic:

📍How agriculture evolves and adapts to current challenges

Previous year UPSC Prelims Question Covering similar theme:

(4) Which of the following has/have occurred in India after its liberalization of economic policies in 1991? (UPSC CSE 2017)

1. Share of agriculture in GDP increased enormously.

2. Share of India’s exports in world trade increased.

3. FDI inflows increased.

4. India’s foreign exchange reserves increased enormously.

Select the correct answer using the codes given below:

(a) 1 and 4 only

(b) 2, 3 and 4 only

(c) 2 and 3 only

(d) 1, 2, 3 and 4

Previous year UPSC Mains Question Covering similar theme:

Explain various types of revolutions, took place in Agriculture after Independence in India. How these revolutions have helped in poverty alleviation and food security in India? (UPSC CSE 2017)

EXPLAINED

The curious case of GDP data

Syllabus:

Preliminary Examination: Current events of national and international importance.

Mains Examination: General Studies-III: Indian Economy and issues relating to planning, mobilisation, of resources, growth, development and employment

What’s the ongoing story: While official data show that India’s ‘real’ GDP growth has been on the upside more often than not, most of the big policy moves over the past couple of years have essentially been about giving some tax relief or the other in a bid to boost overall demand and raise India’s consumption levels

Key Points to Ponder:

— What is the relationship between demand and inflation?

— How is GDP calculated?

— What is the difference between Real GDP and nominal GDP?

— What are the issues with calculation of the Real GDP?

— What are private consumption demand and private investment expenditures?

— Why is the government pushing for increasing consumption demands?

Key Takeaways:

— If you are observing the Indian economy from a distance, something doesn’t add up. On the one hand, official data show that India’s “real” GDP growth — that is, after removing the effect of inflation — has been surprising on the upside more often than not.

— And yet, on the other hand, if one moves away from the days when GDP data are announced, most of the big policy moves over the past couple of years have essentially been about giving some tax relief or the other in a bid to boost overall demand and raise India’s consumption levels.

— First, in February 2023, in the year leading up to the General Election, the Union government raised the income tax exemption limit to Rs 7 lakhs per annum. Then, in February 2025, within a year of Prime Minister Narendra Modi coming back with a reduced mandate (the BJP lost 20% of its Lok Sabha seats in 2024), this exemption limit was raised to Rs 12 lakhs per annum.

— Most recently, the Union government has — along with the state governments, which are also part of the GST Council — decided to cut GST rates as well.

— Why are these two trends odd, you may wonder. Typically, when an economy grows at a fast pace, inflation is up because the overall supply of goods and services is unable to catch up with the high demand. Alternatively, when the demand in the economy is subdued, inflation cools down, and there is a need for policymakers to boost demand by means such as all kinds of tax cuts and interest rate cuts.

— On the face of it, in India, growth is running hot, and yet policymakers of all hues are trying to boost demand.

— What if one of the two trends is not really as robust as one might imagine? Of course, tax cuts are for real, and so are the government’s efforts to boost consumption and overall demand. So the obvious point of inquiry is the growth rate.

— Typically, and for good reason, one looks at the real GDP growth rate. But real GDP is a number that is derived or calculated after removing the effect of inflation from the nominal GDP growth, which, as it happens, is the data that is actually collected.

— The calculation of the real GDP growth rate has come under some cloud and questioning in the past few years.

— The broader point is that many outside the government have claimed that the real GDP growth rate is overstating India’s economic momentum, while the government has claimed that detractors are trying to use the nominal GDP data in a bid to show weakness in India’s growth.

— While looking at real GDP data is always the better thing to do when judging growth, it may be instructive to look at the trends of nominal GDP growth for at least four reasons.

— One, it is the actual observed variable and, to that extent, it is less susceptible to being questioned.

— Two, nominal GDP is the main benchmark for almost all the key economic variables in the country.

— Three, soon the process of the next Union Budget will start, and the nominal GDP and its growth rate will be the starting point for all calculations.

— Fourth, the nominal GDP does capture the demand story of the economy better than the real GDP, which maps the supply story better.

—  The deceleration in nominal growth rates, both for GDP as well as its two main components — private consumer demand and investment by businesses — is significant over the past two years. This may explain why, despite very strong real GDP growth rates, policymakers have been trying their best to boost consumption and investments.

— While nominal GDP is not the best tool to compare long-term growth, primarily because inflation rates are significantly different and, as such, distort the picture, a look at this table does show the sharp slide in nominal GDP growth rates.

— But if the nominal GDP growth rate starts to hover around 8% or 9%, it could quickly translate into a challenge for real GDP growth. That’s because — barring exceptional times or statistical anomalies — unlike developed countries, India’s economy will likely continue to have an inflation rate closer to 4%, at least for the retail consumer.

Do You Know:

— GDP is the sum of the market value of all the final goods and services produced within the geographical boundaries of a country each year. The value of GDP measured in current prices is called Nominal GDP but it might not be a good measure of production because the increase in value may result from an increase in prices and not output. Nominal GDP, adjusted for price changes, is called Real GDP.

Nominal GDP per capita = Nominal GDP/total population

Real GDP per capita = Real GDP/total population

— Furthermore, economists rely on three approaches to accurately measure GDP: Expenditure, Income, and Product. GDP calculated from all these approaches should give the same value.

— Personal consumption expenditure is the sum of expenditure on consumer durables, non-durable goods, and services.

— Gross private domestic investment is the total of business fixed investment (non-residential structure, equipment, and software), residential investment and inventory investment.

Other Important Articles Covering the same topic:

📍Three approaches to measuring GDP and why they matter

Previous year UPSC Prelims Question Covering similar theme:

(5) 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

Previous year UPSC Mains Question Covering similar theme:

Explain the difference between computing methodology of India’s Gross Domestic Product (GDP) before the year 2015 and after the year 2015. (UPSC CSE 2021)

ECONOMY

RBI’s funding boost could help unlock liquidity for struggling capital markets

Syllabus:

Preliminary Examination: Current events of national and international importance

Mains Examination: General Studies-III: Indian Economy and issues relating to planning, mobilisation, of resources, growth, development and employment.

What’s the ongoing story: Seeking to revitalise India’s financial markets, the Reserve Bank of India (RBI) on Wednesday rolled out a set of measures designed to make capital more accessible for investors and companies.

Key Points to Ponder:

— What is the capital market?

— What are the various types of capital market?

— What are the various capital market instruments?

— What is foreign portfolio investment(FPI)?

— What do you understand by this statement, “equity markets have been struggling to find momentum amid global and domestic headwinds.”

— What are NBFCs?

— What is External Commercial Borrowing(ECB)?

Key Takeaways:

— The central bank announced the withdrawal of the ceiling on lending against listed debt securities, giving banks greater flexibility to extend credit backed by these instruments.

— It also raised the individual loan limit against shares from Rs 20 lakh to Rs 1 crore, a fivefold increase, while enhancing the IPO financing limit for retail investors from Rs 10 lakh to Rs 25 lakh.

— The measures come at a time when India’s IPO market is buzzing, with several high-profile offerings in the pipeline. By easing restrictions, the RBI aims to widen participation from retail and institutional investors, improve liquidity flows into the primary market and deepen financial intermediation.

— Analysts believe the measures will boost investor confidence, particularly among retail participants who often face funding constraints. At the same time, banks will benefit from new lending opportunities backed by capital market securities.

— The timing of the Reserve Bank of India’s measures is significant, as equity markets have been struggling to find momentum amid global and domestic headwinds.

— Adding to the strain has been the sustained withdrawal by foreign portfolio investors (FPIs), who have pulled out $21 billion from Indian equities over the past year in search of safer or higher-yielding assets elsewhere.

— This exodus has pressured the rupee and dampened market sentiment, leaving domestic institutions and retail investors to shoulder the burden of keeping trading volumes alive.

— The RBI has proposed sweeping relaxations in norms governing loans against financial securities. The central bank has suggested removing the existing regulatory ceiling on lending against listed debt securities, a change that is expected to deepen market activity and enhance liquidity.

— The RBI has proposed scrapping the framework introduced in 2016 that discouraged banks from lending to very large borrowers — those with aggregate credit exposure of Rs 10,000 crore or more from the banking system.

— This change is expected to significantly ease the cost of financing for infrastructure developers, a sector widely recognised as the backbone of India’s long-term growth story.

— With large-scale investments required in roads, power, urban transport and renewable energy, the move could provide a timely boost to funding availability.

— The RBI’s step will not only improve liquidity in the sector but also encourage NBFCs to expand their exposure to stable, cash-generating projects, thereby supporting India’s infrastructure build-out while maintaining financial system stability.

— The RBI also unveiled plans to streamline and simplify regulations for External Commercial Borrowings (ECBs). The updated framework will expand the pool of eligible borrowers and recognised lenders, rationalise borrowing limits and maturity norms, eliminate restrictions on borrowing costs, relax end-use constraints, and simplify reporting requirements.

Do You Know:

— NBFC is a company registered under the Companies Act, 1956 or Companies Act, 2013, and engaged in the business of loans and advances, acquisition of shares/stocks/bonds/debentures /securities issued by Government or local authority or other marketable securities of a like nature, leasing, hire-purchase, etc., as their principal business, but does not include any institution whose principal business is that of agriculture activity, industrial activity, purchase or sale of any goods (other than securities) or providing any services and sale/purchase/ construction of immovable property.

— A non-banking institution which is a company and has principal business of receiving deposits under any scheme or arrangement in one lump sum or in installments by way of contributions or in any other manner, is also a non-banking financial company (Residuary non-banking company).

Other Important Articles Covering the same topic:

📍Knowledge Nugget | Small Finance Bank transition to Universal Bank: A must-know for the UPSC Exam

Previous year UPSC Prelims Question Covering similar theme:

(6) With reference to Convertible Bonds, consider the following statements: (UPSC CSE 2022)

1. As there is an option to exchange the bond for equity, Convertible Bonds pay a lower rate of interest.

2. The option to convert to equity affords the bondholder a degree of indexation to rising consumer prices.

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

ALSO IN NEWS
India, China to resume direct flights from October end after 5-year freeze	India and China will resume direct flight services later this month, the Ministry of External Affairs (MEA) said on Thursday. Flight services between the two countries were suspended in 2020 due to the COVID-19 pandemic and were not restored amid the eastern Ladakh border tensions. Lack of direct air connectivity between India and mainland China, along with stringent visa restrictions, led to airlines from both countries losing out on potential passenger loads, and airlines operating from other Southeast Asian countries cashing in on the opportunity. Passenger traffic between India and China—currently solely through connecting hubs in South and Southeast Asia—is less than half of what it was in 2019.
Feeling US tariff pain, exporters ask for relief; Centre in wait-and-watch mode	POST US tariffs, the Centre’s message to exporters has been to try and hold on to their market share in the US. Two key economic ministries — finance and commerce — met exporters across key affected sectors, and suggested relief measures similar to those put in place during Covid, to tide over the current crisis. But no succour has been forthcoming with weeks passing by since the reciprocal tariffs and secondary tariffs kicked in, and exporters are now beginning to feel the pain. Sources in the economic ministries said letters and enquiries from exporters have resulted in increased discomfiture.

 

PRELIMS ANSWER KEY

1. (d)       2. (d)       3. (c)      4. (b)      5. (a)      6. (c)

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