05 June, 2021 - Daily Current Affairs Analysis & MCQs - The Daily News Simplified from The Hindu

  • RBI's Monetary Policy (Indian Economy)
  • Two Cheers- Gini Coefficient and Palma Ratio (Indian Economy)
  • Saving biodiversity, securing earth’s future (Environment & Biodiversity)
  • The time to limit global warming is melting away (Environment & Biodiversity)
  • Question for the Day

Prelims Quiz


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    UPSC Current Affairs: RBI’s Monetary Policy| Page 1

    UPSC Syllabus: Prelims: Economy | GS Paper III – Indian Economy

    Sub Theme:  Regulatory Forbearance   | LAF | NACH | UPSC  

    Context: The RBI's Monetary Policy Committee (MPC) has decided to keep the policy rates unchanged and continue with the accommodative policy stance to kick start the Indian economy. Apart from that, the MPC has taken a number of policy decisions to enhance liquidity in the economy and deepen the Financial sector.       

    Policy rates of RBI

    Policy Repo Rate

    : 4.00%

    Reverse Repo Rate

    : 3.35%

    Marginal Standing Facility Rate

    : 4.25%

    Bank Rate

    : 4.25%



    What is the importance of the term "Interest Coverage Ratio" of a firm in India? ( Prelims 2020)

    1. It helps in understanding the present risk of a firm that a bank is going to give loan to.
    2. It helps in evaluating the emerging risk of a firm that a bank is going to give loan to.
    3. The higher a borrowing firm's level of Interest Coverage Ratio, the worse is its ability to service its debt.

    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

    What is the importance of “Regulatory Forbearance” for a bank to deal with the Economic crisis?

    1. It enables the Bank to undertake restructuring of NPAs.
    2. It enables the Bank to treat the restructured assets as Standard Assets rather than NPAs.

    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

    Resolution Framework 2.0 for COVID Related Stressed Assets of Individuals, Small Businesses and MSMEs

    Background: In August 2020, the RBI had come out with the Resolution framework 1.0 deal with problem of possible increase in NPAs. The framework enabled the Banks to carry out debt-restructuring of the loans given to Corporates  as well as Individuals. As part of one-time debt restructuring, the Banks can extend the tenure of loans, sanction additional loans, convert debt into Equity etc. This facility to undertake debt restructuring was available only until the end of December 31, 2020.

    Now, the RBI has come out with Resolution Framework 2.0 for the entities who did not avail restructuring during the first lockdown.

    Rationale behind Debt Restructuring: A large number of corporate and Individual borrowers may have a good track record in repayment of loans, however, due to COVID-19, they are not in a position to repay loans. Hence, lack of provision of Debt Restructuring would be unfair to them. At the same time, lack of debt restructuring would lead to increase in NPAs, affect balance sheets of Banks leading to decrease in Credit Creation and consequently prolong the economic revival.

    Conditions for carrying out Debt Restructuring:

    • Facility would be extended to only those loans which were classified as Standard Loans as on March 31, 2021.
    • Facility to undertake Debt Restructuring would be available to the Banks only until September 30, 2020
    • The Loans which have undergone Debt Restructuring would continue to categorised as Standard Assets by Banks

    New Announcement: On May 5, 2021, the RBI had declared that only those loans whose value is less than Rs 25 crores are eligible for debt restructuring. Now, the RBI has decided to increase the maximum threshold to Rs 50 crores.

    Economic Survey's Recommendations

    Regulatory forbearance- Emergency medicine, not a staple diet.

    Facilitating Flexibility in Liquidity Management by issuers of Certificates of Deposit

    The Regional Rural Banks (RRBs) were permitted to access the liquidity windows of the Reserve Bank as well as the call/notice money market in order to facilitate more efficient liquidity management by the RRBs at competitive rates. To provide greater flexibility in raising short term funds by RRBs, it has now been decided to permit RRBs to issue Certificates of Deposit (CDs) to eligible investors.

     Availability of National Automated Clearing House (NACH) on all days of the week

    NACH, a bulk payment system operated by NPCI, facilitates one-to-many credit transfers, such as payment of dividend, interest, salary, pension, as also collection of payments pertaining to electricity, gas, telephone, water, periodic instalments towards loans, investments in mutual funds, insurance premium, etc. NACH has emerged as a popular and prominent digital mode of direct benefit transfer (DBT) to large number of beneficiaries. This has helped transfer of government subsidies during the present COVID-19 in a timely and transparent manner. NACH is currently available only on the days when banks are functional. In the interest of customer convenience, and to take advantage of the availability of RTGS on all days of the year, it is proposed to make available NACH on all days of the week throughout the year, effective August 1, 2021.

    On-tap Liquidity Window for Contact-intensive sectors

    On May 5, 2021, it was decided to open an on-tap liquidity window of ₹50,000 crore with tenors of up to three years at the repo rate till March 31, 2022 to boost provision of immediate liquidity for ramping up COVID-related healthcare infrastructure and services in the country. It has now been decided to open a separate liquidity window of ₹15,000 crore with tenors of up to three years at the repo rate till March 31, 2022 for certain contact-intensive sectors i.e., hotels and restaurants; tourism – travel agents, tour operators and adventure/heritage facilities; aviation ancillary services – ground handling and supply chain; and other services that include private bus operators, car repair services, rent-a-car service providers, event/conference organisers, spa clinics, and beauty parlours/saloons.

    Liquidity Facility for contact intensive sectors

    Total loans to be extended by the RBI: Rs 15,000 crores for a period up to 3 years: rate of interest would be equal to Repo rate.

    Entities eligible to avail loans:  Hotels and restaurants, tourism, private bus operators, car repair services, rent-a-car service providers, event/conference organisers, spa clinics, and beauty parlours/saloons.


    UPSC Current Affairs: Two Cheers- Gini Coefficient and Palma Ratio | Page – 6

    UPSC Syllabus: Prelims: Economy | Mains – GS Paper III – Indian Economy

    Sub Theme:  Lorenz Curve | Gini Co-efficient | Inequality | UPSC        

    • The Lorenz Curve is a graphical representation of Income inequality in a country. As inequality increases, the Lorenz curve deviates from the line of equality and shows that income gets concentrated in few sections of the society.
    • The Gini coefficient is defined as A/(A+B), where A is the area between Line of Perfect Equality and Lorenz Curve and B is area between Lorenz Curve and X-Axis (As shown in the figure)
    • If A=0 (i.e., Lorenz Curve lies along the line of Perfect Equality), then Gini-Coefficient (A/A+B) = 0, which denotes Perfect Equality.
    • If B=0 (i.e., Lorenz Curve lies along X), then Gini-Coefficient (A/A+B) = 1, which denotes Perfect Inequality. Thus, as Gini-Coefficient increases, the inequality in the country increases.


    UPSC Current Affairs: Saving biodiversity, securing earth’s future | Page 6

    UPSC Syllabus: Prelims: Environment | Mains – GS Paper III – Environment & Biodiversity

    Sub Theme:  TII | National Mission on Biodiversity & Human Well Being | Biodiversity & Economy |UPSC     

    Bio diversity:

    Bio diversity is the variability among living organisms from different sources including terrestrial and aquatic ecosystems and the ecological complexes of which they are part. This includes diversity within the species, between species and of ecosystems

    Significance of Biodiversity

    Bio diversity provides key ecosystem services

    • Support services like soil formation, nutrient cycling, primary production
    • Provisioning services like providing Food, fibre, fuel, medicines and water by maintaining the hydrological cycles
    • Regulating services like climate regulation, disease regulation, water regulation, water purification, pollination
    • Cultural services like spiritual and religious, recreation and ecotourism, educational, cultural heritage

    Bio diversity and Economy

    • From an economic standpoint, the natural services associated with biodiversity provided by India’s forests alone, are valued at a whopping ₹128 trillion/year
    • According to a report on economic evaluation of tiger reserves released by the National Tiger Conservation Authority, Bandipore Tiger Reserve alone provides ₹6,405.7 crore worth of Ecosystem services annually

    The Government has launched The Economics of Ecosystems and Biodiversity (TEEB)-India Initiative (TII) to highlight the economic consequences of the loss of biological diversity and the associated decline in ecosystem services. The Initiative focusses on three ecosystems- forests, inland wetlands and coastal & marine ecosystems

    Bio diversity is key to the Human wellbeing. This is reflected in the concept of ‘One health’- Environmental health, Animal health and Human health are integrally connected to each other.

    Bio diversity and Human health:

    • Bio diversity through its ecosystem services not only provides Nutritional security but also mitigates the extreme events like drought and floods.
    • Biodiversity is also an important source of genetic resources for the development of many treatments, vaccines and a range of biotechnology products

    Ex: Artemisinin as a treatment for malaria

    • Biodiversity loss and environmental degradation may affect the emergence of infectious diseases

    Type of environmental Change

    Example Disease

    Pathway of risk change

    Agricultural intensification


    Crop insecticides and increased vector resistance

    Global temperature rise

    Malaria, Dengue fever, Chikungunya, Yellow fever, Zika

    Increased number and range of vector mosquitos

    Deforestation and habitat encroachment

    Ebola virus disease



    Avian influenza H5N1



    H1N1 virus disease, Nipah virus disease




    Increased contact and pathogen transmission with infected animals


    Increased contact and pathogen transmission among captive birds, wild birds and people


    Increased contact among captive pigs and people

    Wildlife trade or breeding

    HIV, monkeypox, SARS

    Increased contact among captive animals and people

    Bio diversity is key to the Human wellbeing. This is reflected in the concept of ‘One health’- Environmental health, Animal health and Human health are integrally linked to each other

     Prime Minister’s Science, Technology and Innovation Advisory Council (PMSTIAC) in consultation with the Ministry of Environment, Forest, and Climate Change and other Ministries approved an ambitious

    National Mission on Biodiversity and Human Well-Being (NMBHWB)

    • The Mission proposes a national effort that aims to transform biodiversity science by linking it to the peoples’ economic prosperity and health
    • It further aims to help India realize the United Nation’s Sustainable Development Goals by using India’s rich biodiversity to create solutions for challenges in agriculture, health, and climate change.


    UPSC Current Affairs: The time to limit global warming is melting away | Page 6

    UPSC Syllabus: Prelims: Environment| Mains – GS Paper III – Environment | GS Paper II - IR

    Sub Theme:  Relevance of CoP on Climate Change | Major Roadblocks – Climate Talk | UPSC     

    Context: Current steps and multilateral talks are not enough to keep the temperature rise below 1.5 degree Celsius in this century. We need a more robust structure to keep the efforts in more fruitful manner and outcomes to be achievable early. For all this we must cut down the emission at the earliest.

    Author has highlighted the relevance of Conference of Parties (CoP) to the United Nation Framework Convention on Climate Change to put forward following goals in the upcoming CoP26 in United Kingdom. He has also highlighted, what India as a developing country can do to fight climate change.

    Note: Due to global pandemic outcry, there was no CoP in 2020. Last, CoP was organised in 2019 as CoP25 (Madrid, Spain).

    Goals as per the author:

    Goal1: Setting short-term ambitious targets backed by net zero target.

    Goal2: Protect vulnerable groups to the climate change. India can utilise its CDRI (Coalition of Disaster Resilient Infrastructure to protect vulnerable groups.

    Goal3: Developed nations should meet their commitment on funding and technology transfer.

    Goal4: Building consensus among governments for an ambitious, balanced and inclusive outcome.

    However, apart from the article itself, we will look into what are the major roadblock in climate talks.

    Issues in last climate change talks at Madrid.

    1. Unambitious Actions:

    The Madrid talks were expected to nudge all countries to scale up their commitments (Nationally Determined Contributions or NDCs) under the Paris deal.

    According to the United Nations Environment Programme's (UNEP) Emissions Gap Report 2019 even if all countries do what they had agreed in the NDCs, the global temperature will increase by 3.2°C by 2100.

    1. Unfulfilled Financial Commitments:

    The talks were expected to push for the formulation of new finance mechanism for climate change. As instead of the promised $100 billion (by developed countries) in climate financing by 2020, multilateral climate funds (for developing countries) approved was only $10.4 billion for mitigation during 2013-18 and adaptation funding was at $4.4 billion.

    1. Unsold carbon credits:

    There are 4 billion unsold certified emissions reductions (CERs) under the Clean Development Mechanism (CDM). Not paying for them had undermined confidence in carbon markets. Therefore, developing countries have pushed for carryover of millions of unsold carbon credits from clean development mechanism (CDM) under the Kyoto Protocol to the new carbon markets to be developed after 2020.

    1. Other issue: In the last few years, several countries walked out of the Kyoto Protocol, and the remaining members did not feel compelled to fulfil their targets.

    Way forward:

    1. Common but differentiated responsibility should be part of higher target setting and funding mechanism.
    2. Developed countries should pay the one-time payment for unpaid CERs (certificate Emission Reduction). Such a settlement would preserve the integrity of a post-2020 emissions trading market.
    3. New carbon trading mechanism should be framed to incentivise countries to do more at home and then to buy whatever remains through global trading systems.

    Yasir 1 year ago

    Really great explaination