PMF IAS

PRELIMS
MAGNUM
2025
January 2024 to
December 2024
Current Affairs

INDIAN ECONOMY
Infographics Included
 PMF IAS Prelims Magnum 2025 — Indian Economy

Prelims Specific Indian Economy Current Affairs from January 2024 to December 2024

Table of Contents
1. Banking and Related Aspects .................................................................................................................... 1
1.1. {Banking} Banking Laws (Amendment) Bill, 2024 ............................................................................... 1
1.2. {Banking} Domestic Systemically Important Banks (D-SIBs) ................................................................ 1
1.3. {Banking} India Post Payments Bank (IPPB)........................................................................................ 1
1.4. {Banking} Investment Companies ....................................................................................................... 1
1.5. {Banking} Look Out Circulars & Loan Defaulters * .............................................................................. 2
1.6. {Banking} Mule Bank Account * ......................................................................................................... 2
1.7. {Banking} NUCFDC ............................................................................................................................. 3
1.8. {Banking} Payment Bank ................................................................................................................... 3
1.9. {Banking} Ponzi Scheme ..................................................................................................................... 3
1.10. {Banking} Project Nexus * .................................................................................................................. 3
1.11. {Banking} RBI Calls for Action on CDR and Banking Sector Risks ......................................................... 4
1.12. {Banking} RBI Introduces two new UPI Features ................................................................................. 4
1.13. {Banking} RBI's Monetary Policy Stances ............................................................................................ 5
1.14. {Banking} Reduced deposit mobilisation by Banks.............................................................................. 5
1.15. {Banking} Third-Party Application Provider (TPAP) ............................................................................. 6
1.16. {Banking} UPI & Rupay Cards ............................................................................................................. 6
1.17. {Banking} US Fed Rate cut implications on India................................................................................. 6
2. Digitalization ............................................................................................................................................ 7
2.1. {Digitalization} Bank Clinic ................................................................................................................. 7
2.2. {Digitalization} DigiReady Certification Portal .................................................................................... 7
2.3. {Digitization} Aadhaar Payments Bridge System (APBS) ..................................................................... 7
3. Employment .............................................................................................................................................. 8
3.1. {Employment} Declining Earnings of Salaried & Self-employed ........................................................... 8
3.2. {Employment} RBI Data Shows Significant Job Growth in FY2024 ....................................................... 9
3.3. {Employment} State of Rural Youth Employment Report 2024 ............................................................ 9
4. Energy .................................................................................................................................................... 10
4.1. {Energy} GAIL's first Small-scale LNG Unit ........................................................................................ 10
4.2. {Energy} Many States fail to meet Solar RPO Targets ....................................................................... 10
4.3. {Energy} Power markets in India and their working .......................................................................... 10
4.4. {Energy} Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) ......................................................... 11
4.5. {Energy} Viability Gap Funding Scheme for Offshore Wind Energy .................................................... 11
5. Exports and Imports ................................................................................................................................ 13
5.1. {Exports} Foreign Trade Policy, 2023................................................................................................. 13
5.2. {Exports} Made in India: QCOs & ZDZE ............................................................................................. 13
Prelims Magnum 2025 Table of Contents Economy CA 2025 – i
 5.3. {Exports} National Industrial Corridor Development Programme ......................................................13
5.4. {Exports} Nirvik Scheme ....................................................................................................................13
5.5. {Exports} Non-market Economies * ...................................................................................................14
5.6. {Exports} One District One Product (ODOP) Scheme ..........................................................................14
5.7. {Exports} PM GATI Shakti ..................................................................................................................14
5.8. {Exports} Production Linked Incentive (PLI) Scheme ...........................................................................14
5.9. {Exports} Shrimp Exports ..................................................................................................................14
5.10. {Exports} Startup India......................................................................................................................15
5.11. {Exports} Trade Connect e-Platform ..................................................................................................15
5.12. {Imports} India’s laptop import monitoring system ...........................................................................15
6. Inclusive Growth ......................................................................................................................................16
6.1. {Inclusive Growth} All India Rural Financial Inclusion Survey .............................................................16
6.2. {Inclusive Growth} CRI Index 2024 .....................................................................................................16
6.3. {Inclusive Growth} India's Financial Inclusion on the Rise ..................................................................16
6.4. {Inclusive Growth} World Wealth Report 2024 ..................................................................................16
6.5. {Inclusive Growth} Inequality in India ...............................................................................................17
7. Indicators.................................................................................................................................................18
7.1. {Indicators} Advance estimates on National Income..........................................................................18
7.2. {Indicators} B Ready (Business – Ready) Index ...................................................................................18
7.3. {Indicators} GDP estimates for the third quarter of 2023-24 ..............................................................18
7.4. {Indicators} Logistics Performance Index 2023...................................................................................19
7.5. {Indicators} Preston Curve * ..............................................................................................................19
8. Industry ...................................................................................................................................................20
8.1. {Industry} ‘Perquisite Value’ to e-2-wheelers .....................................................................................20
8.2. {Industry} Advancing CPI and IIP Data Release Timings .....................................................................20
8.3. {Industry} Annual Survey of Industries ..............................................................................................21
8.4. {Industry} BHASKAR Platform for Startups ........................................................................................21
8.5. {Industry} Dieselgate ........................................................................................................................21
8.6. {Industry} 'EV as a Service' Programme .............................................................................................22
8.7. {Industry} Factors affecting the Price of Petroleum ** .......................................................................22
8.8. {Industry} India’s First Semiconductor Fabrication Plant ....................................................................22
8.9. {Industry} INDIAsize initiative ...........................................................................................................22
8.10. {Industry} Industrial Parks.................................................................................................................22
8.11. {Industry} Inverted duty structure * ..................................................................................................23
8.12. {Industry} Made in India | ASTDS Tug ...............................................................................................23
8.13. {Industry} Maharatna, Navratna and Miniratna CPSEs .....................................................................23
8.14. {Industry} National Centre of Excellence for Animation and AVGC-XR ................................................25
8.15. {Industry} New I-T Clause Poses Problem for MSMEs ** ....................................................................25
8.16. {Industry} Parametric Insurance ........................................................................................................25
8.17. {Industry} Purchasing Managers' Index .............................................................................................26
8.18. {Industry} Reasons for Increase in Gold Prices ...................................................................................26
8.19. {Industry} Reverse Flipping of Startups * ...........................................................................................26
8.20. {Industry} Schemes For Payment Solutions For MSMEs......................................................................26

Economy CA 2025 – ii Table of Contents Prelims Magnum 2025

 8.21. {Industry} Schemes for Tourism Development................................................................................... 26
8.22. {Industry} Sourcing Critical minerals................................................................................................. 27
8.23. {Industry} Tamil Nadu's Decentralised Industrialisation .................................................................... 27
8.24. {Industry} Tamil Nadu's Surge in Electronic Goods Manufacturing .................................................... 28
8.25. {Industry} TINA Factor and Rise in Gold Demand in China................................................................. 28
8.26. {Industry} Travel & Tourism Development Index (TTDI) 2024 ............................................................ 28
8.27. {Industry} Underutilised mesopelagic resources * ............................................................................ 29
8.28. {Industry} World Investment Report 2024......................................................................................... 29
9. Inflation .................................................................................................................................................. 30
9.1. {Inflation} India’s inflation-targeting framework .............................................................................. 30
9.2. {Inflation} Key Economy Terms ......................................................................................................... 30
9.3. {Inflation} Cost Inflation Index (CII) * ................................................................................................ 33
9.4. {Inflation} Measuring Food Inflation in India .................................................................................... 33
9.5. {Inflation} Types of Inflation ............................................................................................................. 33
10. Infrastructure .......................................................................................................................................... 35
10.1. {Infra} Bihta dry port ........................................................................................................................ 35
10.2. {Infra} Enabling Infrastructure for Hydro Electric Projects................................................................. 35
10.3. {Infra} India’s Largest Solar-Battery Project ...................................................................................... 35
10.4. {Infra} Indus Water Treaty | Ratle Hydro Electric (HE) Project........................................................... 35
10.5. {Infra} Issue of Bird Strike................................................................................................................. 37
10.6. {Infra} Khavda Renewable Energy Park ............................................................................................ 37
10.7. {Infra} Kiru Hydel Power Project ....................................................................................................... 37
10.8. {Infra} Kosi-Mechi Interlink Project................................................................................................... 37
10.9. {Infra} Kuppa Pumped Hydro Project ................................................................................................ 37
10.10. {Infra} Modified PKC-ERCP Link Project............................................................................................. 37
10.11. {Infra} National Electricity Plan (Transmission) 2024 ........................................................................ 38
10.12. {Infra} National Maritime Heritage Complex (NMHC) ....................................................................... 39
10.13. {Infra} National Monetisation Pipeline ** ........................................................................................ 39
10.14. {Infra} Nohar Irrigation Project ........................................................................................................ 40
10.15. {Infra} Projects in Arunachal Pradesh ............................................................................................... 40
10.16. {Infra} Sela Tunnel ........................................................................................................................... 40
10.17. {Infra} Temple corridors in Bihar....................................................................................................... 41
10.18. {Infra} Trial Run on the World's Highest Railway Bridge ................................................................... 41
10.19. {Infra} Vadhavan Port ...................................................................................................................... 42
10.20. {Infra} Vizhinjam Port to Commence Trial Operations....................................................................... 42
10.21. {Infra} Protest against hydropower project on Siang river ................................................................ 42
11. Institutions .............................................................................................................................................. 43
11.1. {Institutions} Financial Stability and Development Council ............................................................... 43
11.2. {Institutions} India Infrastructure Finance Company Limited (IIFCL) .................................................. 43
11.3. {Institutions} IRDAI removes Age bar for Health Insurance ............................................................... 43
11.4. {Institutions} NAFED......................................................................................................................... 43
11.5. {Institutions} National Bank for Financing Infrastructure and Development ..................................... 44
11.6. {Institutions} PFC Infra Finance IFSC Limited ..................................................................................... 45

Prelims Magnum 2025 Table of Contents Economy CA 2025 – iii

 11.7. {Institutions} Pharmexcil ...................................................................................................................45
11.8. {Institutions} Role of Institutions in Economic progress .....................................................................47
11.9. {Institutions} World Economic Forum ................................................................................................47
11.10. {Institution} IFD Agreement at WTO..................................................................................................47
12. Investment...............................................................................................................................................48
12.1. {Investment} India’s FDI Trends: 2023-24 ..........................................................................................48
12.2. {Investment} Private Investment in the Indian Economy ....................................................................48
12.3. {Investment} Strategic Disinvestment ...............................................................................................49
13. RBI and Related issues .............................................................................................................................50
13.1. {RBI} Commemorative coins ..............................................................................................................50
13.2. {RBI} Effective Exchange Rate (EER)...................................................................................................50
13.3. {RBI} Internationalization of Rupee ...................................................................................................51
13.4. {RBI} Liberalised Remittance Scheme (LRS) ........................................................................................51
13.5. {RBI} Market Borrowing by States .....................................................................................................52
13.6. {RBI} Operational Risk Management Guidance .................................................................................52
13.7. {RBI} RBI@90 event ..........................................................................................................................54
13.8. {RBI} RBI’s Currency Regulations’ Consequences ...............................................................................55
13.9. {RBI} RBI’s recent initiatives ..............................................................................................................55
13.10. {RBI} RBI’s surplus transfer................................................................................................................56
13.11. {RBI} Real Effective Exchange Rate ....................................................................................................56
13.12. {RBI} Rupee Weakening Against the Dollar .......................................................................................57
13.13. {RBI} Unified Lending Interface .........................................................................................................57
14. Reports ....................................................................................................................................................59
14.1. {Reports} Asia Development Outlook Report .....................................................................................59
14.2. {Reports} Consumer Confidence Survey .............................................................................................59
14.3. {Reports} Global Economic Prospects Report .....................................................................................59
14.4. {Reports} New Methodology for the HCE Survey ...............................................................................59
14.5. {Reports} Declining Savings ..............................................................................................................60
15. Securities .................................................................................................................................................61
15.1. {Securities} Adani Ports to enter Sensex * .........................................................................................61
15.2. {Securities} Curbing fraudulent trades in Mutual Funds.....................................................................61
15.3. {Securities} Financialization ..............................................................................................................61
15.4. {Securities} Front-running .................................................................................................................62
15.5. {Securities} Gold Exchange-Traded Funds (ETFs) * .............................................................................62
15.6. {Securities} Government Bonds .........................................................................................................62
15.7. {Securities} India International Bullion Exchange (IIBX) .....................................................................62
15.8. {Securities} India's First Electric Vehicle Index ....................................................................................62
15.9. {Securities} Initial Public Offering ......................................................................................................63
15.10. {Securities} Market Correction ..........................................................................................................63
15.11. {Securities} Meme Coins ...................................................................................................................63
15.12. {Securities} Momentum Investing .....................................................................................................64
15.13. {Securities} New asset class by SEBI ..................................................................................................64
15.14. {Securities} New Framework for Reclassification of FPI to FDI ...........................................................64
Economy CA 2025 – iv Table of Contents Prelims Magnum 2025
 15.15. {Securities} Nifty Next 50 Index ........................................................................................................ 66
15.16. {Securities} P-Notes * ....................................................................................................................... 66
15.17. {Securities} Pump and Dump Scheme ............................................................................................... 66
15.18. {Securities} RBI allows FIIs to invest in Green Bonds ......................................................................... 66
15.19. {Securities} SEBI Chairperson............................................................................................................ 67
15.20. {Securities} SEBI Introduces 'Unaffected Price' Framework ............................................................... 67
15.21. {Securities} SEBI’s New Rules on F&O ............................................................................................... 67
15.22. {Securities} T+0 settlement cycle ...................................................................................................... 68
15.23. {Securities} Uniform Charge Structure for Stock Market Institutions ................................................. 68
16. Taxation .................................................................................................................................................. 69
16.1. {Taxation} Additional Tax Devolution to States ................................................................................. 69
16.2. {Taxation} Angel Tax ........................................................................................................................ 69
16.3. {Taxation} Capital Gains ................................................................................................................... 69
16.4. {Taxation} Inheritance Tax ................................................................................................................ 69
16.5. {Taxation} Input Service Distributor (ISD) Mechanism ....................................................................... 70
16.6. {Taxation} Removal of GST on Railway services ................................................................................ 70
16.7. {Taxation} Safe Harbour Rates ......................................................................................................... 71
16.8. {Taxation} Coconut Oil Tax ............................................................................................................... 71
16.9. {Taxation} Stamp duty ..................................................................................................................... 72
16.10. {Taxation} Taxation & Black Money .................................................................................................. 72
16.11. {Taxation} Taxation Data by CBDT .................................................................................................... 72
16.12. {Taxation} Windfall Gains Tax on Oil ................................................................................................ 73
17. Trade ...................................................................................................................................................... 74
17.1. {Trade} Anti-Dumping Duty on Aluminium Foil Imports .................................................................... 74
17.2. {Trade} Anti-dumping duty on Sodium Cyanide ................................................................................ 74
17.3. {Trade} Balance of Payments ........................................................................................................... 74
17.4. {Trade} India's Trade Deficit and Surplus Overview 2023-24 * .......................................................... 74
17.5. {Trade} Verification Mechanism for RoDTEP Scheme ........................................................................ 75
17.6. {Trade} WTO Goods Trade Barometer .............................................................................................. 75
18. Transportation ........................................................................................................................................ 76
18.1. {Transportation} GPS-based toll collection ....................................................................................... 76
18.2. {Transportation} Galathea Bay......................................................................................................... 76
18.3. {Transportation} India’s First Hydrogen Fuel Cell Ferry ..................................................................... 77
18.4. {Transportation} India's First Hyperloop Test Track ........................................................................... 77
18.5. {Transportation} Roadmap for E-mobility R&D ................................................................................. 77
18.6. {Transportation} Z-Morh Tunnel ....................................................................................................... 77
18.7. {Misc} Challenges Faced by Indian Cities .......................................................................................... 78
18.8. {Misc} Source of Funds for Panchayats ............................................................................................. 78

Note: Some infographics are placed outside the topic because of

their full-page size.

Prelims Magnum 2025 Table of Contents Economy CA 2025 – v

 1. Banking and Related Aspects

 India Post Payments Bank (IPPB) celebrates its 7th

1.1. {Banking} Banking Laws (Amend- Foundation Day. IPPB was established in 2018 under
ment) Bill, 2024 the Department of Posts, Ministry of Communica-
tion, with 100% equity owned by the Government of
Provisions of the Bill India. It was launched as a pilot project in 2017 in
Ranchi (Jharkhand) & Raipur (Chhattisgarh).
• Increased Nominees for Accounts: Allows up to four
• IPPB offers a seamless, paperless, cashless, and pres-
nominees for bank accounts; only successive nomi-
ence-less banking experience through digital plat-
nation for lockers.
forms, integrating core banking systems with
• Redefining 'Substantial Interest': Raises eligibility
smartphones and biometric devices.
limit for directors to ₹2 crore from ₹5 lakh.
• Banking services are available in 13 regional lan-
• Cooperative Bank Directors: Extends director tenure
guages.
from 8 years to 10 years; permits Central Coopera-
tive Bank directors to serve on State Cooperative Services Offered
Bank boards.
• Savings and Current Accounts: IPPB provides zero
• Statutory Auditor Remuneration: Grants banks au-
balance savings accounts and current accounts.
tonomy to decide statutory auditor remuneration.
• Money Transfer and Remittances: Safe and secure
• Reporting Dates for Compliance: Shifts reporting
domestic money transfer services.
dates to the 15th & last day of every month.
• Direct Benefit Transfers: Facilitates the direct trans-
1.2. {Banking} Domestic Systemically Im- fer of government benefits to beneficiaries' ac-
counts.
portant Banks (D-SIBs)
• Bill Payments: This feature enables the payment of
 RBI retained SBI, HDFC and ICICI as Domestic Sys- utility bills, such as electricity, water, and gas.
temically Important Banks (D-SIBs). • Enterprise and Merchant Payments: Solutions for
businesses to manage payments efficiently.
About D-SIBs • Aadhaar Enabled Payment System (AePS): This sys-
• D-SIBs are banks whose potential failure could se- tem allows customers to make payments and access
verely disrupt the financial system due to their size, banking services using Aadhaar authentication.
cross-jurisdictional activities, complexity, lack of sub- • Virtual Debit Cards: Provides secure, digital payment
stitutability, and interconnectedness. solutions.
• These banks are considered ‘Too Big to Fail (TBTF)’, • Insurance Services: Offers various insurance prod-
highlighting the critical impact their failure could ucts in collaboration with partner companies.
have on the overall economy. • Digital Life Certificate for Pensioners: Facilitates
• The framework for handling D-SIBs was established pensioners in submitting life certificates digitally.
by the RBI in 2014 and implemented in 2015. • Cash Management Services: Tailored solutions for
• RBI assesses these banks based on their Systemic Im- corporates and government bodies.
portance Scores (SISs) and assigns them to specific
Niveshak Didi
buckets. Based on that, a D-SIB must adhere to addi-
tional common equity requirements. • Implementing Agency: IPPB and Investor Educa-
• If a foreign bank with branches in India is designated tion and Protection Fund Authority (under the
as a Global Systemically Important Bank (G-SIB), it Ministry of Corporate Affairs).
must maintain an additional Common Equity Tier 1 • It was India’s First Floating Financial Literacy
(CET1) capital surcharge in India. This surcharge is Camp to promote Financial Literacy ‘by the
proportionate to India's bank’s Risk-Weighted Assets women, for the women’ in Srinagar, J&K.
(RWAs).
1.4. {Banking} Investment Companies
1.3. {Banking} India Post Payments Bank
(IPPB) Book Value

Prelims Magnum 2025 Banking and Related Aspects Economy CA 2025 – 1

 • Also known as net asset value, is the value of an loan defaulters. Quashed the centre's Office Memo-
asset based on its balance sheet. randa (OM) that empowered PSBs to issue LOCs.
• Calculated by taking the aggregate value of all its
Background
and assets deducting all the liabilities from it.
• Current and fixed assets, and both current liabili- • In 2018, a provision was introduced to issue LOCs if
ties and non-current liabilities are included. an individual's departure posed a threat to the "eco-
nomic interest" of the country.
Investment Companies (ICs) • Later, a new clause empowered the chairperson of
• With no day-to-day operations, they earn major rev- the State Bank of India (SBI) and CEOs of other Pub-
enue from interest and capital appreciation from in- lic Sector Banks (PSBs) to request immigration au-
vestments. They do not include rental income (clas- thorities to issue LOCs against default borrowers.
sified as commercial activity). Reasons for quashing the Office Memoranda
• Can be privately or publicly owned. Can be a corpo-
(OM)
ration, partnership, business trust or limited liabil-
ity company (LLC) that pools money from investors • The court described these LOCs as "strong-arm tac-
on a collective basis. tics" to bypass legal processes. Such tactics violate
• The money pooled is invested, and the investors fundamental rights guaranteed under Articles 14
share any profits and losses incurred. and 21 of the IC.
• The fundamental right to travel abroad cannot be
Is a Hedge Fund an Investment Company? restricted by executive action without a legal basis.
• Private investment funds that only accept money • Allowing banks to act as judges and executioners vi-
from investors with a substantial amount of assets olates Article 21 of the IC.
(i.e., accredited investors) are not considered invest- • The government failed to prove that debt had been
ments. recovered through the denial of travel permission.
• Exempted from the registration requirements under • The court deemed the inclusion of only PSBs (not
the Investment Company Act of 1940, but they are Private banks) in the LOC issuance to violate Article
still subject to other securities laws and regulations. 14 of the IC and be arbitrary.

About Look Out Circulars (LOCs)

• The Bureau of Immigration of the Ministry of Home
Affairs (MHA) issues lookout circulars (LOCs).
• These LOCs allowed authorities at any departure
port to prevent PSB debtors from leaving India.
 Default borrowers include not only the borrowers
but also the guarantors for repayment of loans
and the principal officers or directors of corporate
entities in debt.

Options for Banks After Court Ruling

• Banks are free to seek orders from courts or tribunals
Investment Holding Companies (IHCs) to restrain individuals from travelling abroad.
• Banks can also utilise powers under the Fugitive Eco-
• Either a public or private group holding entity that
nomic Offenders Act, 2018, where applicable.
acts as a financial investor.
• Its portfolio consists of majority or minority equity 1.6. {Banking} Mule Bank Account *
stakes in private/publicly traded companies.
• Generates profits from investing in other compa-  Reserve Bank Innovation Hub (RBIH), Bengaluru, a
nies. subsidiary of the RBI has developed an AI-powered
model named MuleHunter.AI to combat digital fraud
1.5. {Banking} Look Out Circulars & Loan involving mule bank accounts.
Defaulters * • The traditional rule-based systems often produce
high false positives; therefore, RBIH developed an
 Bombay HC ruled that public sector banks (PSBs) in-house AI/ML-based solution. The solution is more
cannot request Look Out Circulars (LOCs) against effective than static rule-based systems.
Economy CA 2025 – 2 Banking and Related Aspects Prelims Magnum 2025
What is a Mule Bank Account? • Registered as a public limited company under the
Companies Act of 2013 and licensed under Section
• A mule bank account is a bank account that criminals 22 of the Banking Regulation Act of 1949.
use for illicit activities, including laundering illegal
• Governed by the provisions of Banking Regulation
funds. These accounts often exploit innocent or co-
Act of 1949, RBI Act of 1934, Foreign Exchange Man-
erce account holder's knowledge.
agement Act of 1999, Payment and Settlement Sys-
• How it works: Criminals purchase these accounts tems Act of 2007.
from original users, often from lower-income groups
• Mandatory Cash Reserve Ratio (CRR) and Statutory
or those with low technical literacy.
Liquidity Ratio requirement of 75%.
• Maximum of 25% in current and time/fixed deposits
with other scheduled commercial banks.
• Minimum paid-up capital 100 crore. Promoters’
contribution 40% for the first 5 years

1.9. {Banking} Ponzi Scheme

• Fraudulent investment schemes promising high rates
Source: EconomicTimes of return without much risk. | Named after fraudster
• Money Mule: The term describes innocent victims Charles Ponzi in the US in 1882.
whose accounts are used for laundering stolen or il- • Pays existing investors with funds collected from new
legal money. These individuals often face police in- investors, like a multi-level pyramid scheme.
vestigations while actual criminals remain unde- • Multi-level marketing itself is not illegal in India if a
tected. product is being sold.

1.7. {Banking} NUCFDC Provisions related to Ponzi Schemes in India

 National Urban Co-operative Finance and Develop- • Non-clear jurisdiction of regulatory bodies, yet State
ment Corporation Limited (NUCFDC) is an Umbrella governments can form laws on it.
organisation for the Urban Cooperative Banks • Enforcement Directorate under the PMLA 2002 can
(UCBs) to modernise and strengthen the Urban Co- also investigates such cases.
operative Banking Sector in India.
• Received a Certificate of Registration from the RBI to
1.10. {Banking} Project Nexus *
be Non-Banking Finance Company (NBFC).  The RBI has joined Project Nexus, a multilateral in-
• Will operate as a Self-Regulatory Organization (SRO) ternational initiative to enable instant cross-border
for the sector. retail payments by interlinking domestic Fast Pay-
ments Systems (FPSs).
1.8. {Banking} Payment Bank
About Project Nexus
• Recommended by Dr Nachiket Mor to cater to the
lower income groups and small businesses. • Project Nexus is conceptualised by the Innovation
• Similar to other banks but operate on a smaller Hub of the Bank for International Settlements (BIS).
scale. • It will enhance cross-border payments by connecting
multiple domestic Instant Payment Sys-tems (IPS)
Activities not allowed globally. First BIS Innovation Hub project in the pay-
 No credit risk (can’t advance loans), No credit cards). ments area to move towards live implementation.
Cannot accept NRI deposits. • The project will interlink India’s Unified Payments In-
terface (UPI) and the Fast Payments System (FPS) of
Allowed activities Malaysia, Philippines, Singapore, and Thailand.
 Can accept demand deposits upto 2 lakh (revised • India would be the founding member and first
Apr 2021). Can offer remittance services. mover country of this platform.
 Mobile payments/transfers/purchases and other • Founding members: Bank Negara Malaysia (BNM),
banking services like ATM/debit cards. Bank of Thailand (BOT), Bangko Sentral ng Pilipinas
• Eligible promoters: NBFCs, individuals, corporations, (BSP), Monetary Authority of Singapore (MAS) and
mobile phone companies, supermarket chains, real Reserve Bank of India (RBI).
estate cooperatives, and public sector entities. • Indonesia will also join the platform in future.

Prelims Magnum 2025 Banking and Related Aspects Economy CA 2025 – 3

1.11. {Banking} RBI Calls for Action on CDR and Banking Sector Risks
• RBI expressed concern over higher credit growth than deposit mobilisation and mule accounts.
 Mule accounts are bank accounts used to transfer illegally acquired money on behalf of others.

Credit-Deposit Ratio Concerns

• The RBI's latest financial stability report warned that credit growth exceeding 18% could lead to higher impair-
ments, given the prolonged trend of credit growth outpacing deposit mobilisation.
• As of June 2024, sectoral credit growth stood at 15.6% year-on-year, while deposit growth lagged at 12.1%, which
led many banks to offload their government securities to fund credit growth.
Credit-Deposit Ratio
• The credit-deposit ratio is a measure that indicates how much a bank lends out of the deposits it has mobilised.
CDR = (Total Loans / Total Deposits) × 100.
• A lower ratio suggests the bank has more liquidity, while a higher ratio indicates less liquidity.
• A very high CDR indicates that the bank is taking on risk by lending out a larger portion of its deposits.

1.12. {Banking} RBI Introduces two new UPI Features

• RBI proposes allowing third-party UPI apps for UPI payments from PPI wallets, enhancing convenience and digital
payment adoption.
 Currently, UPI payments from Prepaid Payment Instruments (PPIs) are limited to the issuer's web or mobile
apps.
 Individuals can now use PPIs like digital wallets to make UPI payments via third-party apps.
• Secondly, the RBI has proposed to enable UPI for cash deposit facility.
 Customers can soon deposit cash at CDMs using the UPI app.

Prepaid Payment Instruments

• Facilitate the purchase of goods and services, the conduct of financial services, the enabling of remittance facilities,
etc., against the value stored therein.
• Banks and non-banks can issue PPIs after obtaining approval from RBI.
Types of PPIs

Economy CA 2025 – 4 Banking and Related Aspects Prelims Magnum 2025

1.13. {Banking} RBI's Monetary Policy Stances
 Newly reconstituted monetary policy committee changing the policy stance from “withdrawal of accommodation”
to “neutral”.

The Importance of the Shift from “Withdrawal” to “Neutral”

• Reduced Inflationary Pressures: The RBI may see inflation pressures slowing down, which reduces the need to
keep tightening financial conditions.
• Supporting Economic Growth: A neutral stance gives the RBI flexibility to support growth if needed, without the
limits of a "tightening" focus.
• Focus on Data: A neutral approach means that the RBI will base its future decisions on actual economic data rather
than following a fixed plan.
Monetary Policy Stances
Stance Objective Policy Action Indicators
Accommodative To support eco- Keeps interest rates low, making borrow- Typically used during periods
nomic growth. ing cheaper; encourages spending and of low inflation and sluggish
investment. growth.
Neutral To balance inflation Allows flexibility to raise or lower interest Adapts to changing economic
control and growth. rates based on economic conditions. scenarios without a strong
bias.
Hawkish To curb inflation. Raises interest rates, making borrowing It is used when inflation rises,
more expensive; helps cool down an with the risk of economic over-
overheated economy. heating.
Dovish To stimulate eco- May lower interest rates to reduce bor- Applied during low inflation
nomic activity. rowing costs and encourage spending. and economic downturns.

Importance of Stances
For Borrowers and Investors
• Loan Interest Rates may become more stable & predictable, helping borrowers plan better.
• Investment Choices: Investors can make better decisions, knowing what to expect from future monetary policy
changes.
For the Economy
• Controlling Inflation: Helps keep inflation within the target range, protecting currency's buying power.
• Supporting Growth: A neutral stance encourages steady economic growth by avoiding unnecessary restrictions on
spending and investment.
1.14. {Banking} Reduced deposit mobilisation by Banks
 RBI has raised concerns over slower deposit mobilisation compared to credit growth, stating that it may create
structural liquidity issues.

Reasons for slower deposit mobilisation

• Slower deposit growth relative to credit growth was observed during 2018-2019, 2011-2013, and 2004-2007. Cur-
rent and savings accounts, banks’ primary low-cost funding sources, account for 41% of total deposits, down from
43% in the previous year.
• Lower credit to GDP for the current per capita income level compared to other Asian peers such as Thailand, Ma-
laysia, and China.
• Outflow of household savings from banks to capital markets adversely impacts the money multiplier and the de-
posit creation process.
• Low government spending in the run-up to the election led to an increase in government cash balances with the
RBI.
Prelims Magnum 2025 Banking and Related Aspects Economy CA 2025 – 5
 • Peer-to-peer inter-bank transfers through a single
1.15. {Banking} Third-Party Application two-click factor authentication process.
Provider (TPAP) • Regulated by the Reserve Bank of India (RBI).
• Uses existing systems Immediate Payment Service
• TPAP approval is mandatory to provide UPI-based
(IMPS) Aadhaar Enabled Payment System.
payment transactions to customers.
Rupay cards
What is a TPAP?
• Indigenous card payment network in India launched
• Company that offers UPI-compliant apps to users,
by NPCI.
enabling UPI-based payment transactions.
• Debit, credit, and prepaid propositions.
• These apps include mobile wallets, merchant apps,
• Banks that issue RuPay cards don’t need to pay net-
or other platforms that use UPI for payments.
work registration fees, unlike a MasterCard or Visa,
• Leverages the UPI infrastructure provided by NPCI
because RuPay is a domestic framework.
and work with payment service providers (PSPs) and
banks to facilitate transactions. 1.17. {Banking} US Fed Rate cut implica-
• 22 NPCI-approved 3rd party Unified Payments Inter-
tions on India
face (UPI) apps as of now, such as Amazon Pay,
Google Pay, Groww, Jupiter Money, Phonepe, Sam-  The United States Federal Reserve decided to cut in-
sung Pay, TataNeu and Whatsapp. terest rates by 50 basis points (bps).
1.16. {Banking} UPI & Rupay Cards Implications of US Fed Rate Cut on India
 UPI services were launched in Sri Lanka and Mauri- • Impact on Rupee: A Fed rate cut weakens the U.S.
tius, and RuPay card services in Mauritius. Bhutan dollar as lower interest rates reduce demand for dol-
was the first country to enable UPI. lar-denominated assets. The rupee may strengthen
 UPI was introduced in Seven countries (France, UAE, against the dollar, reducing depreciation pressure.
Mauritius, Sri Lanka, Singapore, Bhutan, and Nepal). • Higher Foreign Investment Inflows: A lower U.S. in-
terest rate reduces the attractiveness of U.S. assets,
Unified Payments Interface (UPI) encouraging foreign capital inflows in India to seek
• Developed by National Payments Corporation of In- higher returns.
dia (NPCI). • Impact on trade: The US Fed rate cut is positive for
• Eliminates the need to enter bank details each time Indian imports (which will be cheaper now due to an
a customer initiates a transaction. appreciation bias in the Indian rupee) but is strongly
negative for Indian exports.

---------- End of Chapter ----------

Economy CA 2025 – 6 Banking and Related Aspects Prelims Magnum 2025

 8. Industry

8.1. {Industry} ‘Perquisite Value’ to e-2-wheelers

 Perquisites are additional benefits given to corporate employees besides their salary.
• The perquisite value of electric bicycles and two-wheelers can influence the adoption of EVs.
• While the Income-tax Act exempts vehicles provided for office commute from perquisite value, there's ambiguity
regarding electric vehicles.
• This ambiguity leads to companies' hesitation to offer sustainable commute options, resulting in increased reliance
on cars and cab services, which contributes to urban congestion and pollution.

8.2. {Industry} Advancing CPI and IIP Data Release Timings

Consumer Price Index (CPI)

• Purpose: Tracks retail price changes in goods & services, serving as a key indicator for inflation and cost of living
adjustments.
• Types of CPI:
 CPI for Industrial Workers (IW): Compiled by the Labor Bureau under Ministry of Labor and Employment
(MoLE), with a base year of 2016; targets price fluctuations affecting industrial workers.
 CPI for Agricultural and Rural Laborers (AL and RL): Also compiled by MoLE, with a base year of 1986-87,
tracking price changes in rural and agricultural sectors.
 CPI (Rural, Urban, and Combined): Published by the Central Statistics Office, under MoSPI, with a base year of
2012; CPI Combined (Rural + Urban) is the primary inflation measure for RBI.
 Weight Distribution in CPI Combined: Food & Beverages (45.86%), Miscellaneous (28.32%), Housing (10.07%),
Fuel & Light (6.84%), Clothing & Footwear (6.53%), Pan, Tobacco & Intoxicants (2.38%).
Key Differences Between CPI and Wholesale Price Index (WPI)
Basis of Distinc- WPI CPI
tion
Scope Covers wholesale prices and includes inter- Focuses on retail prices and final consumer goods
mediate goods
Objective Indicates overall inflation in the economy Reflects consumer purchasing power and cost of
living adjustments
Data Collection Data is often voluntarily reported Data is actively collected by market investigators
Weighting Based on national accounts and enterprise Derived from consumer expenditure data
data

Index of Industrial Production (IIP)

• Purpose: Measures industrial production across sectors on a monthly basis, providing a short-term indicator for
manufacturing and industrial trends.
• Usage: Used for economic planning and analysis, offering insights into sector-wise growth rates.
• Base Year: 2011-12, with a six-week lag for data release.
• Key Sectors & Weight Distribution: Manufacturing (77.63%), Mining (14.37%) and Electricity (7.9%).
• Eight Core Industries (representing 40.27% of IIP weight): Refinery Products, Electricity, Steel, Coal, Crude Oil, Nat-
ural Gas, Cement, and Fertilizers.
• Product Categories in IIP:
 Primary Goods: Includes raw materials like mining products, fuels, electricity, and fertilisers.
 Capital Goods: Machinery and other equipment used in production.
 Intermediate Goods: Inputs like yarn, chemicals, and semi-finished products like steel.

Economy CA 2025 – 20 Industry Prelims Magnum 2025

  Infrastructure Goods: Materials used in con-  Annual Survey of Unincorporated Enterprises: It
struction, including cement, cables, and rail ma- is conducted by the National Sample Survey Of-
terials. fice (NSSO). Unincorporated enterprises are enter-
 Consumer Durables: Long-lasting consumer prises in the unorganised or informal sector, com-
items like vehicles, appliances, and electronics. prising MSMEs, household units with hired work-
 Consumer Non-Durables: Fast-moving goods, ers, and own-account enterprises.
including food products, medicines, and toilet-
State Performance
ries.
• Data Compilation and Release: IIP data is compiled • GVA: Maharashtra ranked first, followed by Gujarat,
and published monthly by the CSO under MoSPI and Tamil Nadu, Karnataka, and Uttar Pradesh. These top
is accessible on the Press Information Bureau (PIB) five states contributed over 54% of the total manu-
website. facturing GVA in 2022-23.
• Employment: Tamil Nadu, Maharashtra, Gujarat,
Evolution of Data Release Timings Uttar Pradesh, and Karnataka were the top five
• Pre-2013 Routine: Previously, CPI and IIP data were states, contributing about 55% of total manufactur-
released at 11–11:30 am on 12th of each month. ing employment in 2022-23.
• 2013 Adjustment: Following data leaks, the timing Coverage
was shifted to 5:30 pm to reduce trading volatility by
coinciding with forex and bond market closures.  All factories under Factories Act (1948), Bidi and Ci-
gar Workers Act (1966).
• New Timing Protocol: CPI and IIP data will now re-
 All electricity undertakings not registered with the
lease at 4 pm on the 12th of each month. If the 12th
Central Electricity Authority (CEA).
is a holiday, CPI data releases the next working day
 Factories employing 10 or more workers using
and IIP data the previous working day.
power and 20 or more workers without power.
8.3. {Industry} Annual Survey of Indus-  Modified for Maharashtra and Rajasthan as 20
or more workers with power and 40 or more
tries workers without power.
• By Ministry of Statistics and Programme Implemen-
8.4. {Industry} BHASKAR Platform for
tation based on the annual survey conducted by the
National Sample Survey Office (NSSO) for each year. Startups

Highlights of the Annual Survey of Industries  The Department for Promotion of Industry and In-
ternal Trade (DPIIT) is set to launch a groundbreaking
(ASI) for 2022-23
digital platform called the Bharat Startup Knowledge
Main Drivers of Manufacturing Growth Access Registry (BHASKAR).
• The primary growth drivers were key industries such About BHASKAR
as basic metals, coke and refined petroleum prod-
• It is part of the Startup India program and aims to
ucts, food products, chemicals, and motor vehicles.
centralise, streamline, and enhance collaboration
• Collectively, these industries contributed about 58%
among key stakeholders in India's entrepreneurial
of the sector’s total output, with an output growth of
ecosystem through a one-stop digital platform.
24.5% and a gross value added (GVA) growth of 2.6%
• Powerful search features and unique BHASKAR IDs
compared to 2021-22.
for each stakeholder will facilitate easier interac-
 Gross Value Added measures value of goods & tions, enhance searchability, and enable efficient dis-
services produced in an economy, sector, or re- covery of relevant opportunities and partnerships.
gion. It is calculated by subtracting the cost of in- • BHASKAR will serve as a vehicle for promoting India's
termediate inputs (like raw materials) from the to- global reputation as an innovation hub, making
tal output value. cross-border collaborations more accessible to
 Gross Fixed Capital Formation (GFCF) refers to the startups and investors.
total value of investments made in fixed assets
within an economy during a specific period. This 8.5. {Industry} Dieselgate
includes expenditures on physical assets like build-
ings, machinery, and infrastructure minus dispos- • Earlier in 2015, Dieselgate was the largest and most
als. expensive auto disgrace in history.

Prelims Magnum 2025 Industry Economy CA 2025 – 21

• Volkswagen (VW) was found to have violated the US • The US is the largest producer of oil and the larg-
Clean Air Act by intentionally programming diesel est exporter of liquefied natural gas (LNG).
engines to activate their emissions controls only dur-
ing laboratory testing. 8.8. {Industry} India’s First Semiconductor
• Faulty vehicles emitted up to 40 times more NOx Fabrication Plant
during normal driving.
• VW was then investigated in multiple other countries • Tata Electronics Private Limited (TEPL) is going to set
and received billion-dollar fines from governments up a semiconductor factory in partnership with
and compensation claims from owners, costing VW Powerchip Semiconductor Manufacturing Corp
over $30 billion in fines and compensation. (PSMC), Taiwan.
• Location: Dholera (GJ). Investment: Rs.91,000 Cr. Ca-
8.6. {Industry} 'EV as a Service' Pro- pacity: 50,000 wafer starts per month (WSPM).
gramme • A pure-play foundry that rolls out semiconductor
wafers for a number of industries.
 Union Minster launched 'EV as a Service' programme
 Fabs are highly specialised semiconductor manu-
of Convergence Energy Services Limited (CESL), a
facturing facilities that print the miniaturised in-
subsidiary of Energy Efficiency Services Limited
tegrated circuits from the chip design into the sil-
(EESL).
icon wafers.
• It aims to target the deployment of 5,000 electric
cars in government ministries and public sector To know more about the semiconductor industry, visit >
units over the next two years. It aligns with India's Semiconductor Manufacturing in India
goal of net zero by 2070 & PM E-DRIVE Scheme.
8.9. {Industry} INDIAsize initiative
8.7. {Industry} Factors affecting the Price
• The aim is to establish standardised measurements
of Petroleum ** tailored to Indian body types, addressing fitting is-
sues caused by reliance on Western sizing standards
Supply-side Factors used by brands in India.
• Geopolitics: • Ministry: Ministry of Textiles.
 Western sanctions on Venezuela, Iran and Rus- • The initiative gathers anthropometric data from over
sia. 25,000 individuals aged 15 to 65 across India, using
 Iran - Israel Conflict: Impacts Straits of Hormuz, human-safe 3D whole-body scanning technology to
significant for oil trade route. develop a comprehensive body size chart.
• Other factors: Drone attacks on petroleum reserves, • The standardised size chart will help retailers and
financial constraints and poor technology. manufacturers produce better-fitting garments for
Indian consumers, reducing return rates and enhanc-
Demand side Factors ing customer satisfaction in the apparel industry.
• Decarbonisation policies: Qatar, for instance, will
double its LNG capacity by 2030. 8.10. {Industry} Industrial Parks
 Natural gas emits about 40% less carbon dioxide
 The Cabinet Committee on Economic Affairs cleared
than coal and roughly 20% less CO2 than oil.
an outlay of ₹28,602 crore to set up 12 Industrial
• Technology: The AI industry needs a lot of electricity
Parks across 10 States and along six major Industrial
for data centres, cloud storage, and crypto mining.
Corridors.
Renewable energy might not be enough to meet this
• The Greenfield industrial “smart cities” can attract
demand.
potential investments, provide millions of direct and
• Political Decisions: Despite sanctions on Russia,
indirect jobs, and will offer investors a ‘plug and play’
China and India continue to procure oil from Russia,
alternative to set up shops.
as removing Russian oil from the market would
sharply raise prices, which can affect election pro- Greenfield Investment Brownfield Investments
spects. • A new venture begins • It occurs when an
by constructing new entity purchases or
Facts related to the Petroleum Industry facilities instead of leases an existing
• Venezuela has the largest reserves of oil in the buying an existing facility to begin new
world. one. production.

Economy CA 2025 – 22 Industry Prelims Magnum 2025

 •Advantage: It offers • Advantage: It re- • MoPSW initiated the 'Green Tug Transition Pro-
design flexibility duces start-up costs gramme' (GTTP) to convert all tugboats into 'Green
along with the effi- and time for the Hybrid Tugs' running on non-fossil fuels like Metha-
ciency to meet the construction of new nol, Ammonia, and Hydrogen.
project's needs. infrastructure. • India aims to become the global hub for building
Read more> National Industrial Corridor Development Green Ships by 2030.
Programme, Cabinet committees. • Initial green tugs are targeted to operate in major
ports by 2025.
8.11. {Industry} Inverted duty structure * • The goal is to convert at least 50% of all tugs into
green ones by 2030.
• An inverted duty structure refers to a situation in • Under GTTP, India's first Centre of Excellence in
which taxes on input items are higher than those on Green Port & Shipping (NCoEGPS) was established
the final product. through collaboration between the MoPSW, GoI and
• An inverted tax is also observed in cases where the the Energy and Resources Institute (TERI).
inputs are taxed, but the final output good is tax-ex- • Nodal entity: National Centre of Excellence for
empt (also known as zero/nil rated). Green Port & Shipping (NCoEGPS).
• Expensive inputs make products costly and cannot
compete in the export market. In the domestic mar- 8.13. {Industry} Maharatna, Navratna and
ket, such products are prone to cheaper imports. Miniratna CPSEs
• Implications: It discourages domestic production, as
importing finished products is cheaper.  Hindustan Aeronautics Ltd (HAL) has become 14th
Maharatna company in India.
8.12. {Industry} Made in India | ASTDS Tug
Updated List of Maharatna companies
 Ministry of Ports, Shipping & Waterways (MoPSW)
1. National Thermal Power Corporation (NTPC) Ltd
recently unveiled the 'Ocean Grace,' an ASTDS tug
2. Oil and Natural Gas Corporation (ONGC) Ltd
with a 60-ton bollard pull, and the Medical Mobile
3. Steel Authority of India Limited (SAIL)
Unit (MMU).
4. Bharat Heavy Electricals Limited (BHEL)
ASTDS Tug 5. Indian Oil Corporation Limited (IOCL)
6. Hindustan Petroleum Corporation Limited (HPCL)
• Tugs are specialised vessels designed to help other
7. Coal India Limited (CIL)
ships in and out of ports.
8. GAIL India Limited
• These boats primarily aid in moving larger ships by 9. Bharat Petroleum Corporation Limited (BPCL)
towing, pushing, and guiding them. 10. Power Grid Corporation of India Limited
• Can be equipped with fire suppression and other 11. Power Finance Corporation (PFC)
systems to assist larger ships in emergencies. 12. Rural Electrification Corporation (REC) Limited
• The Approved Standard Tug Design and Specifica- 13. Oil India Ltd (OIL)
tions (ASTDS) tug is powered by NIGATA main en- 14. Hindustan Aeronautics Ltd (HAL)
gines and a Power Z-Peller ZP Propulsion engine.
• This tug has been crafted to ensure peak efficiency IREDA gets Navratna Status
and reliability, guaranteeing smooth navigation and  The Indian Renewable Energy Development Agency
adept assistance to vessels, particularly large ones (IREDA) has been granted 'Navratna' status by the
like Very Large Crude Carriers (VLCCs) and Ultra- Department of Public Enterprises.
Large Crude Carriers (ULCCs).  To qualify for Navratna status, a company must first
Medical Mobile Unit (MMU) achieve the Miniratna Category-I designation and be
listed in Schedule A of Central Public Sector Enter-
• The MMU reflects the port's commitment to corpo- prises (CPSEs).
rate social responsibility (CSR).
• Staffed with skilled medical professionals, the MMU About IREDA
provides services like maternal and pediatric care, • IREDA is a non-banking financial institution under
disease management, and health awareness pro- the Ministry of New and Renewable Energy.
grams. • Established in 1987. Provides financial assistance to
sustainable electricity generation projects.
Green Tug Transition Program (GTTP)
• The government owns 75% of the company.

Prelims Magnum 2025 Industry Economy CA 2025 – 23

Economy CA 2025 – 24 Industry Prelims Magnum 2025
 • Intellectual Property Creation: It will focus on devel-
Updated List of Maharatna companies oping Indian intellectual property that leverages the
1. Bharat Electronics Limited country's rich historical and cultural heritage for do-
2. Container Corporation of India Limited mestic and global consumption.
3. Engineers India Limited • Job Creation: The NCoE is anticipated to become a
4. Mahanagar Telephone Nigam Limited source of employment for youth across India, with
5. National Aluminium Company Limited projections indicating that it could create over 2.3
6. National Buildings Construction Corporation Limited million jobs by 2032 in the AVGC sector.
7. Neyveli Lignite Corporation Limited
8. NMDC Limited 8.15. {Industry} New I-T Clause Poses Prob-
9. Rashtriya Ispat Nigam Limited lem for MSMEs **
10. Shipping Corporation of India Limited
11. Rail Vikas Nigam Limited • The Finance Act 2023 added a new clause (h) to sec-
12. ONGC Videsh Ltd tion 43B of the Income Tax Act. According to the
13. Rashtriya Chemicals & Fertilizers Limited clause, if a buyer doesn't pay an MSME within 45
14. IRCON days, they will be taxed on the unpaid amount.
15. RITES Impact on large companies & MSMEs
16. National Fertilizers Limited
17. Central Warehousing Corporation • Resulted in increased tax liability for bigger compa-
18. Housing & Urban Development Corporation Limited nies during audits.
19. Indian Renewable Energy Development Agency Lim-  Big companies started moving their business to un-
ited registered MSME. Unregistered MSMEs can con-
20. Mazagon Dock Shipbuilders Limited tinue with longer payment cycles of 90-120 days.
21. Railtel Corporation of India Limited
22. Solar Energy Corporation of India (SECI) Ltd.
Bill discounting
23. NHPC Limited • It allows businesses to receive immediate cash
24. SJVN Limited flow by selling their unpaid invoices to a third
Read More > Maharatna, Navratna and Miniratna CPSEs. party at a discounted rate rather than waiting for
the customers to make payments.
8.14. {Industry} National Centre of Excel- • A business offers goods or services to customers
lence for Animation and AVGC-XR and issues an invoice for payment at a later date.
• Instead of waiting for the customer to pay the full
 The Union Cabinet has approved the establishment invoice amount, the business can sell the invoice
of a National Centre of Excellence (NCoE) for Anima- to a financial institution at a discount.
tion, Visual Effects, Gaming, Comics, and Extended
Reality (AVGC-XR). 8.16. {Industry} Parametric Insurance
Key Features  Given South Asia’s status as the world’s most ‘cli-
• Establishment of IIIC: The centre will tentatively be mate-vulnerable zone,’ India could explore paramet-
named the Indian Institute for Immersive Creators ric insurance products.
(IIIC) and will function as a Section 8 Company under  Indemnity-based Insurance: pays out based on
the Companies Act 2013. the cost of the loss incurred.
• Industry Collaboration: The Federation of Indian  Parametric-based Insurance: pays out when a
Chambers of Commerce and Industry (FICCI) and predefined loss event occurs and the loss event ex-
the Confederation of Indian Industry (CII) will part- ceeds a specific amount previously agreed to in
ner with the government to establish this institute. the policy.
• Focus on AVGC-XR Sector: The NCoE will anchor the
Examples of adopting parametric insurance
AVGC-XR ecosystem, which plays a crucial role in var-
ious sectors, including filmmaking, OTT platforms, • In 2023, after a 6.8-magnitude earthquake struck
gaming, and education. Morocco, the country received $275 million in para-
• Skilling Initiatives: The centre aims to provide spe- metric insurance cover arranged with the help of the
cialised training programs to equip amateurs and World Bank.
professionals with the latest skills in cutting-edge
In India
AVGC-XR technologies.

Prelims Magnum 2025 Industry Economy CA 2025 – 25

 Pradhan Mantri Fasal Bima Yojana is based on loss Factors influencing Reverse Flipping
verification. In contrast, a new parametric product,
• Stock Market Valuations: India's attractive stock
the Restructured Weather-Based Crop Insurance
market valuations make it an appealing destination
Scheme, is based on threshold limits and does not
for launching IPOs compared to US primary market.
require field verification.
• Regulations in India, such as launching IPOs, data lo-
 Nagaland was the first State to buy a parametric
calisation requirements, and the easy securing of li-
cover for extreme precipitation in 2021.
censes, make it more favourable for startups to op-
8.17. {Industry} Purchasing Managers' In- erate from within the country.
• Indian startups capitalise on untapped local demand
dex
in tech and internet sectors, engaging with domestic
• Compiled by S&P Global (earlier by IHS Markit). The consumers and investors, etc.
PMI is an investor sentiment tracking index. • Indian-based startups benefit from accessing local
investors and securing intellectual property rights
 IHS Markit merged with S&P Global as its subsid-
by shifting operations back to India, which is crucial
iary. Post-merger, S&P Global now compiles vari-
for investor confidence and business sustainability.
ous PMIs globally, including India's Manufactur-
ing and Services PMI.  Unicorn is a startup company with a value of over
$1 billion.
• The PMI is an investor sentiment tracking index. In-
 Decacorns are startups that have a valuation of
dicates the economic health of both the manufac-
over $10 billion.
turing and service sectors.
• PMI >50 implies the economy is growing, and PMI 8.20. {Industry} Schemes For Payment So-
<50 means the economy is shrinking.
• Usually, PMI is released before other indexes, such
lutions For MSMEs
as GDP and industrial output.  Ministry of Micro, Small & Medium Enterprises has
introduced several schemes for MSMEs.
8.18. {Industry} Reasons for Increase in
Gold Prices TReDS
• To address delayed payments, RBI has issued guide-
 Direct relationship between global crude oil prices
lines for the TReDS platform, which facilitates the
and the price of gold (positive correlation).
electronic financing of MSME trade receivables from
 Inverse relationship between the external value of
corporates, government departments, and PSUs.
the U.S. dollar and the international price of gold
(negative correlation). MSME Trade Enablement and Marketing Ini-
Reason tiative (TEAM Scheme)
• Rise in oil prices signals potential global inflation. • Launched as a sub-scheme of the Central Scheme
 Gold is considered a real asset, so it retains its “Raising and Accelerating MSME Performance”.
value during times of inflation. • It assists five lakh MSMEs in using the ONDC plat-
• Additionally, since the global price of gold is denom- form through workshops, hand-holding, and subsi-
inated in U.S. dollars, a depreciation of the dollar dies for catalogue preparation, account manage-
leads to higher gold prices globally. ment, logistics, and packaging.
 Real assets are physical assets that have an intrin- Finance, Income and Trade Rank (FIT Rank)
sic worth due to their substance and properties.
Include precious metals, commodities, real estate, • Developed by CIBIL and Online PSB Loans Limited
equipment & natural resources. (OPL) to rank MSME loan applications using GST
data, bank statements, and income tax returns.
8.19. {Industry} Reverse Flipping of • It uses machine learning algorithms to arrive at the
probability of an MSME becoming a non-performing
Startups *
asset (NPA) in the next 12 months. The scale ranges
• Reverse-flipping refers to the process of shifting a from 1 to 10, where Rank 1 indicates the lowest risk
company's domicile back to its home country from and Rank 10 indicates the highest risk.
an overseas location to reposition itself for growth
8.21. {Industry} Schemes for Tourism De-
and success in its domestic market. E.g. PhonePe,
Groww and Pine Labs have reverse-flipped to India. velopment

Economy CA 2025 – 26 Industry Prelims Magnum 2025

 Govt. has approved interest-free loans for 50 years • Distribution: Arunachal Pradesh, Jammu & Kashmir,
to various States to enhance tourism infrastructure. and Jharkhand, with these three states collectively
• This initiative aims to identify and develop 40 new accounting for 74 per cent of India’s graphite re-
tourism projects across 23 States. It also aims to mit- sources.
igate overcrowding at popular destinations by en- • Concern: Only Tamil Nadu, Jharkhand, and Odisha
couraging the development of alternative locations. have economically viable graphite reserves.
• The Department of Expenditure has issued opera- • India’s production & Import in FY22
tional guidelines for Special Assistance to States for  Production: 57,264 tonnes of graphite.
Capital Investment (SASCI), which aims to develop  Imports: 54,052 tonnes (FY22) from countries
iconic tourist centres. like China, Madagascar, and Mozambique.
Objective and Scope of the Initiative Why Australia?
• Focus on Lesser-Known Destinations: Encourages • Australia produces almost half of the world’s lithium
the development of lesser-known tourist destina- and is the second-largest producer of cobalt.
tions such as Bateshwar (UP), Ponda (Goa), Gan- • Both lithium and cobalt are used in EVs and con-
dikota (Andhra Pradesh), and Porbandar (Gujarat). sumer electronics.
• Branding and Marketing: The initiative also focuses
• MoU signed between Khanij Bidesh India Limited
on branding and marketing these tourist centres
(KABIL) and Australia's Critical Minerals Office.
globally to attract international tourists.
• Proposals are shared through partner countries in
• State Government's Role: States are responsible for
the US-led Minerals Security Partnership (MSP).
providing land for the projects and ensuring their im-
plementation, operation, and management post-  KABIL, a joint venture company between NALCO,
completion. HCL and MECL, was formed in 2019 to source stra-
• Funding and Progress Monitoring: Funds will be re- tegic minerals like lithium and cobalt from over-
leased directly to the concerned States (66% in the seas locations.
first instalment). The Ministry of Tourism will moni- Minerals Security Partnership (MSP)
tor the progress of these projects.
• Completion Timeline: States have been given a two- •Group of 14 countries, led by the US, started in
year deadline to complete the projects. June 2022. Australia is also part of this partner-
ship.
8.22. {Industry} Sourcing Critical minerals • Also known as the Critical Minerals Alliance.
• The goal is to ensure the secure production, pro-
 Ministry of Mines meetings to discuss opportunities cessing, and recycling of critical minerals.
for the mining of critical minerals by Indian compa- • The alliance aims to reduce China's control over
nies in Sri Lanka and Australia. critical mineral supplies globally.
Why Sri Lanka? • Members include the US, Australia, Canada, Fin-
land, France, Germany, Japan, the Republic of Ko-
• Sri Lanka has valuable reserves of vein graphite, a rea, Sweden, UK, the European Commission, It-
pure form of natural graphite. aly, and India.
• It is only found in the island nations. • India is the only developing country in MSP.
• Graphite is a crucial mineral, mainly used as the an- • India became the 14th member of the MSP in June
ode material in lithium-ion batteries. 2023.
• In lithium-ion batteries, graphite is the heaviest com-
To know more, visit > Critical Minerals.
ponent by weight.
• An average electric vehicle (EV) uses up to 70 kilo- 8.23. {Industry} Tamil Nadu's Decentralised
grams of graphite.
• Graphite mining in Sri Lanka peaked during the two
Industrialisation
World Wars in the 20th century, hitting over 30,000  Tamil Nadu holds the top position among Indian
tonnes in annual exports. states for economic complexity.
• In 2023, however, the country only exported graphite
 Economic complexity is measured by the diversity
weighing around 2,500 tonnes.
of its GDP and employment profile.
India’s Graphite reserves • In Tamil Nadu, the farm sector's share in the gross
value added (GVA), which is GDP net of product taxes
• India graphite reserves: 8.56 million tonnes (as per
and subsidies, is below the national average.
the National Mineral Inventory).
Prelims Magnum 2025 Industry Economy CA 2025 – 27
• Similarly, farm sector's share in employed labour force in TN is also below the national average.
• This lower dependence on agriculture is balanced by higher shares of industry, services, and construction in Tamil
Nadu's economy compared to the national average.
Tamilnadu’s well-known clusters & their specialisation in particular industries
Cluster Specialisation
Tirupur Known for cotton knitwear, with high exports and domestic sales.
Coimbatore Spinning mills and engineering goods, auto components and wet grinders.
Sivakasi Specialises in safety matches, firecrackers, and printing.
Salem, Erode, Karur, and Known for power looms and home textiles.
Somanur
Vaniyambadi, Ambur, and Renowned for leather production.
Ranipet
Karur Power looms, bus body building, mosquito & fishing nets manufacturing.
Dindigul Hosts spinning mills and leather tanneries.
Namakkal Layer poultry farms, large lorry fleets, bulk cargo logistics operators, and tapioca-
based sago (sabudana) factories.
Erode Textile and "turmeric city."
Tiruchengode Known as India’s “borewell rigs capital.”

8.24. {Industry} Tamil Nadu's Surge in Electronic Goods Manufacturing

 Tamil Nadu emerged as India’s largest exporter of • Chinese consumers, investors, futures traders, and
electronic goods in FY23, contributing 30% of India’s even the central bank are turning to gold due to the
electronic goods exports in FY24. Dominated by UP "there is no alternative" (TINA) factor.
and Karnataka until FY22. • TINA has historically been a response to certain eco-
 Smartphones account for nearly 40% of India’s elec- nomic conditions where investments typically seen
tronics exports, with most of them being exported as safe have become less favourable.
from the Kancheepuram district in Tamil Nadu.  Limited investment options in China, along with
 China-Plus-One is a global business strategy in the property crisis, volatile stock markets, and a
which companies avoid investing only in China weakening yuan, are pushing people towards
and diversify their businesses to alternative desti- safer assets like gold.
nations.  In addition, Geopolitical tensions, conflicts in
the Middle East and Ukraine, and potential
India’s Electronic Goods Market lower US interest rates are boosting gold's ap-
• The U.S. and the UAE are the biggest markets for In- peal as an investment.
dia’s electronic goods exports. • E.g, after 2007-08 financial crisis, central banks
• Since FY21, the U.S. has been the primary destina- slashed interest rates to encourage economic activ-
tion for India’s electronics exports, and its share has ity.
increased significantly in recent years. U.S. is also the • This caused bond yields to decrease sharply, causing
largest importer of smartphones globally. investors to turn away from bonds. TINA then took
effect, and investors shifted to riskier investments to
8.25. {Industry} TINA Factor and Rise in achieve the desired results.
Gold Demand in China
8.26. {Industry} Travel & Tourism Develop-
 Chinese demand for gold hit record levels, while In- ment Index (TTDI) 2024
dia's demand decreased.
 Despite mining huge amount of gold China imports  The World Economic Forum, in collaboration with
significant amounts. the University of Surrey, released the TTDI 2024.
• It is the second edition of an index that evolved from
Reasons for the rise in Gold demand in China the Travel & Tourism Competitiveness Index.

Economy CA 2025 – 28 Industry Prelims Magnum 2025

• The biennial index analysed the travel and tourism • Light, oxygen, and temperature decrease with
sectors of 119 countries. depth while salinity and pressure increase. Due to
• Top 10 countries: US, Spain, Japan, France, Australia, these conditions, little resources for food are availa-
Germany, UK, China, Italy and Switzerland. ble in the mesopelagic zone.
• Worst Performers: Mali (119th ), Sierra Leone
(118th ), Cameroon, Angola, Malawi.
• Economies newly added to TTDI 2024: Alge-
ria, Barbados, Iran, Jamaica, Oman, Uzbeki-
stan, Zimbabwe.

India’s ranking
• India's rank has risen to 39th from 54th in
2021, though changes made to the index pa-
rameters limit its comparability to earlier
years.
• India is ranked highest in South Asia and
among the lower-middle-income econo-
mies.
• India is highly price-competitive (18th) and
boasts competitive Air Transport (26th) and
Ground & Port (25th) infrastructure. Credit: Thoughtco
• India's strong Natural (6th), Cultural (9th) and Non-
Leisure (9th) resources help drive travel, and the Resource Potential
country is only one of three to score in the top 10 for • Good source of protein, lipids, and minerals. High li-
all the resource pillars. pid content: Not used for direct human consump-
 According to World Economic Forum’s 2024 tion.
Global Risks Report, the travel and tourism sector • Potential uses: Fishmeal industry for poultry and an-
faces complex risks, including geopolitical uncer- imal feed, and crop fertilisers.
tainties, economic fluctuations, inflation & ex-  The Meenakumari committee report is related to
treme weather. deep-sea fishing policy and guidelines.

8.27. {Industry} Underutilised mesopelagic 8.28. {Industry} World Investment Report

resources * 2024
 Potential mesopelagic resources within the Indian  By the UN Conference on Trade and Development
Exclusive Economic Zone are underutilised. (UNCTAD).
Mesopelagic Zone Key findings
• Mesopelagic zone: 200 to 1,000 metres below sea • Global foreign direct investment (FDI) fell by 2% to
level. It is referred to as the twilight zone or the mid- $1.3 trillion in 2023 amid an economic slowdown and
water zone, as sunlight this deep is very faint. rising geopolitical tensions.
• Temperature changes the greatest in this zone as • FDI flows in Europe jumped from negative $106 bil-
this is the zone that contains the thermocline. lion in 2022 to positive $16 billion because of vola-
• Because of the lack of light, it is within this zone that tility in conduit economies. In contrast, in Africa, it
bioluminescence begins to appear in life. declined by 3%, in Asia by 8% and in Latin America
• Animals that live in the mesopelagic zone: Fish, and the Caribbean by 1%.
shrimp, squid, snipe eels, jellyfish, and zooplankton. • FDI in critical minerals nearly doubled. Infrastructure
 Home to many small fishes, including lantern & digital economy sectors witnessed lower FDI.
fishes. These fishes are the most abundant ver-
tebrates globally and are underutilised.

---------- End of Chapter ----------

Prelims Magnum 2025 Industry Economy CA 2025 – 29

 9. Inflation

9.1. {Inflation} India’s inflation-targeting framework

What is Inflation targeting?

• IT is a monetary policy framework where the central bank explicitly sets a publicly announced target for the infla-
tion rate and uses tools like interest rates to steer the economy towards that goal.
• It acts like a "compass for price stability," aiming to keep inflation within a specific range, ensuring predictable
prices and fostering economic confidence.
Pros and Cons of Inflation Targeting
Pros Cons
Improve credibility & anchor inflation expectations, mak- Monetary policy actions take time to impact inflation,
ing economy investor-friendly. risking mistimed responses.
Provide a clear path for the medium-term inflation out- It does not remove supply bottlenecks or shortages.
look, reducing the size of inflationary shocks.
It enables businesses & investors to plan their invest- It may overlook asset bubbles or systemic financial risks
ments and policies by considering inflation rate changes. while focusing solely on inflation.
It helps maintain a transparent monetary policy. It may limit policy flexibility or constrain policy measures
such as fiscal stimulus.
Informed IT have secured Indian banks from the spill-over Uniform inflation targets may not adequately consider
effect of the Silicon Valley bank collapse. regional disparities leading to potential imbalances and
uneven development.

History of Inflation Targeting in India

• In the first two decades following independence,
there was no formal framework for monetary policy. 9.2. {Inflation} Key Economy Terms
• From the 1960s to the mid-1980s, IT was described
as “credit planning” during which policy operated via Producer Price Index (PPI)
the statutory liquidity and cash reserve ratios.
• The Producer Price Index (PPI) is an economic indi-
• Mid-1980s to late 1990s: RBI employed a “monetary
cator that measures the average price changes that
targeting with feedback” framework, in which the
producers receive for their goods and services at var-
broad money supply was aligned with projected GDP
ious production stages.
growth. Price stability was the central objective of
monetary policy, with 5-7% as the target range for in- • It focuses on the producer's price perspective, not
flation. the consumer's. It captures producers' prices before
• The Urjit Patel Committee Report (2014) advocated additional costs like taxes, transportation, and retail
for Flexible Inflation Targeting (FIT) and proposed a markups are added.
target of 4% inflation with a tolerance band of ±2%. • The PPI excludes the taxes, transport, trade margins,
• IT was introduced in 2015 through the Monetary Pol- and other charges imposed when those products
icy Framework Agreement between the Union Gov- reach consumers or are used as inputs to other pro-
ernment and the RBI. ducers. In other words, it is the suppliers' price.
 In 2016, the RBI Act was amended, which gave Why is PPI Important?
statutory basis for Monetary Policy Framework
and the Monetary Policy Committee (MPC). This • Helps understand inflation from the beginning of the
made inflation targeting a legal mandate for the supply chain.
RBI. • Provides insights into cost pressures faced by pro-
• Target: In consultation with the RBI, the government ducers, which eventually is passed on to consumers.
set an inflation target of 4% (CPI-Combined inflation) • Economists and policymakers use PPI to analyse eco-
with a band of +/- 2% (i.e., between 2% and 6%). nomic conditions and make informed decisions.

Economy CA 2025 – 30 Inflation Prelims Magnum 2025

Prelims Magnum 2025 Inflation Economy CA 2025 – 31
Economy CA 2025 – 32 Inflation Prelims Magnum 2025
 • The Central Statistics Office (CSO), Ministry of
Wage Inflation
Statistics and Programme Implementation
• It refers to the rate at which workers' wages (com- (MOSPI) releases CFPI for three categories (rural,
pensation) increase over time. Unlike general infla- urban, and combined).
tion, which measures the rise in prices of goods and • Like the Consumer Price Index (CPI), the CFPI is
services, it specifically tracks the rise in wages. calculated monthly.
How is Wage Inflation Calculated? WPI food index
• Labour unions often base their wage increase nego- • Launched in 2017 as part of the revised WPI series
tiations on the expected rate of general inflation. For with the base year 2011-12.
e.g., suppose the expected inflation rate is 2%. In • Shows price changes in food items with price quo-
that case, unions might negotiate for a wage increase tations from producers. On the other hand, the
higher than 2% to ensure that workers' wages grow CPI Food Price Index uses price quotations from
in real terms. retailers.
• Wage inflation is important because it helps under- • Compiled by taking the aggregate of WPI for
stand the labour market dynamics. It shows how “Food Products” under “Manufacture Products”
wage levels change and whether workers' earnings and “Food Articles” under “Primary Article” using
keep up with or outpacing general inflation. weighted arithmetic mean.
• The WPI is historically the most used price index
9.3. {Inflation} Cost Inflation Index (CII) * for measuring inflation in India.
 Income Tax Department has announced the Cost In- Global Food Price Index
flation Index (CII) for FY 2023-24. • By Food and Agriculture Organization.
About Cost Inflation Index (CII) • Measure of the monthly change in international
prices of a basket of food commodities.
• Notified under the Income-tax Act, 1961 every year. • Consists of an average of five commodities prices
• Purpose: Helps taxpayers calculate long-term capital (Cereal, Vegetable Oil, Dairy, Meat Sugar).
gains from the sale of immovable property, securi-
ties, and jewellery after adjusting for inflation. Base Effect
 Normally, an asset must be retained for more • Occurs when price levels in the current year are
than 36 months (24 months for immovable prop- compared to those of the previous year. E.g.,
erty and unlisted shares, 12 months for listed se-  If inflation was high in the previous year, part of
curities) to qualify as long-term capital gains. the potential increase is already considered, re-
 Since prices increase over time, resulting in a fall sulting in relatively lower inflation rates for similar
in purchasing power, the CII is used to arrive at price increases in the current year.
the inflation-adjusted purchasing price of assets  Conversely, if inflation was low in the previous
so as to compute taxable long-term capital gains. year, even a small rise in the price index will lead
• Significance: Taxpayers are taxed on real apprecia- to a high current inflation rate.
tion of the assets and not the gains due to inflation.
• Current CII Value: The CII for FY 2023-24 is set at 348. 9.5. {Inflation} Types of Inflation
• Previous CIIs: FY 2022-23: CII was 331. FY 2021-22:
CII was 317.
Based on Causes
• Taxpayers usually prefer a higher CII as it allows
them to claim larger tax rebates. Demand-Pull Inflation

9.4. {Inflation} Measuring Food Inflation • It occurs when aggregate demand in an economy
exceeds the available supply of goods and services.
in India • Demand-pull inflation is often associated with
strong economic growth, increased consumer
Consumer Food Price Index (CFPI) spending, and excessive monetary expansion.
• Change in retail prices of food products consumed Cost-Push Inflation
by a defined population group in a given area, us-
• It is driven by increased production costs, such as
ing a base year as a reference. Current base year:
wages or raw material prices, which are then passed
2012.
on to consumers.
Prelims Magnum 2025 Inflation Economy CA 2025 – 33
• Cost-push inflation can lead to a decrease in real Based on the Rate of Inflation
wages and consumer purchasing power.
Creeping Inflation
Structural Inflation
• It occurs when prices increase at a slow and steady
• It arises from long-term imbalances in the econ- rate over time. This type of inflation is usually con-
omy’s structure, such as supply constraints, ineffi- sidered normal and manageable and does not sig-
ciencies, or structural rigidities. nificantly impact the purchasing power of consum-
• It is typically caused by factors like limited produc- ers.
tive capacity, inadequate infrastructure, or barriers • It is often seen as a sign of a healthy economy, as it
to competition. encourages spending and investment without creat-
Imported Inflation ing instability.
• It occurs when: Walking Inflation
 Prices of imported goods and services rise due • It is when prices rise at a moderate pace, higher
to changes in exchange rates, commodity than what is generally considered acceptable.
prices, or trade policies. • It begins to erode the purchasing power of money,
 A depreciation in the domestic currency raises making it more expensive for people to buy goods
the cost of imported goods. and services. Over time, it can discourage savings,
 Countries heavily reliant on imports may experi- as the value of money saved diminishes when re-
ence imported inflation when prices rise glob- turns on investments fail to match the inflation rate.
ally.
Galloping Inflation
Built-In Inflation
• It occurs when prices rise at a rate exceeding 10%
• Also known as wage-price spiral or internal inflation, but remain below hyperinflation levels. This type of
it refers to a self-perpetuating cycle of rising prices inflation creates significant economic instability, dis-
and wages. couraging investment and savings.
• It occurs when workers demand higher wages to
keep up with the increasing cost of living, and busi- Hyperinflation
nesses, in turn, increase prices to compensate for • Hyperinflation is extreme and rapid inflation where
higher labour costs. prices increase at an extremely high rate.
• This reciprocal process leads to a continuous up- • It typically occurs due to a severe loss of confidence
ward spiral of prices and wages. in the currency, often triggered by excessive money
Greedflation supply, political instability, or unsustainable fiscal
policies.
• It refers to a situation where excessive greed and • Hyperinflation erodes the currency’s value rapidly,
speculative behaviour contribute to rising inflation- leading to an economic breakdown.
ary pressures in an economy.
• It implies that inflation is driven not only by eco-
nomic fundamentals but also by excessive profit-
seeking motives and speculative activities.

---------- End of Chapter ----------

Economy CA 2025 – 34 Inflation Prelims Magnum 2025

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