MPC has kept interest rate unchanged

GS Paper - 3 (Economy)

Interest rates in the Indian financial system will remain unchanged following the decision of the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) to keep the main policy instrument – the Repo rate – unchanged at 6.50 per cent on 10 August 2023. Equated monthly instalments (EMIs) of home, vehicle and other loans are expected to remain steady for the time being.

Why is the RBI in pause mode?

• The pause in the Repo rate – the rate at which RBI lends money to banks to meet their short-term funding needs – on 10 August 2023 is for the third time since the RBI started hiking the Repo rate in May 2022 to check inflation.
• In April policy, the MPC members, in a surprise move, had unanimously decided to pause the rate hike cycle.
• Monetary policy transmission is still underway after the RBI slashed the Repo rate by 250 basis points since May 2022 and headline inflation is expected to remain above the five per cent level and even touch even 6.2 per cent in the second quarter of this year.
• While the vegetable price shock may reverse quickly, possible El Nino weather conditions along with global food prices need to be watched closely against the backdrop of a skewed southwest monsoon so far.

Why RBI has hiked inflation projection and its impact

• On 10 August 2023, the RBI revised its FY2024 inflation projection to 5.4 per cent from 5.1 per cent announced in June.
• It said CPI inflation is expected to be at 6.2 per cent in the second quarter, 5.7 per cent in the third quarter and 5.2 per cent in the fourth quarter of FY2023-24.
• This means the high policy rates will remain high for long and, therefore, a rate cut can be expected only in Q1 FY25.
• The spike in tomato prices and the rise in cereal and pulses contributed to inflation. However, vegetable prices may see a significant correction.
• Retail inflation (measured using the consumer prices index or CPI) had declined to an 18-month low of 4.3 per cent in May from 5.7 per cent in March, remaining under the RBI’s comfort zone of 2-6 per cent for two consecutive months.
• However, inflation has picked up since then and it’s likely to rise in the range of 6-6.8 per cent in July from 4.81 per cent in June. The RBI is mandated to keep CPI at 4 per cent with a band of +/- 2 per cent.

Why has RBI retained the stance of withdrawal of accommodation?

• The RBI has focused on its stance of ‘withdrawal of accommodation’ until all risks to inflation dissipate. An accommodative stance means the central bank is prepared to expand the money supply to boost economic growth.
• Withdrawal of accommodation will mean reducing the money supply in the system which will rein in inflation further.

Manipur Police have filed an FIR against AR

GS Paper - 2 (Polity)

Police in Manipur have registered an FIR accusing the Assam Rifles (AR) of preventing police from doing their duty, including blocking their way with armoured vehicles, which allegedly allowed Kuki militants suspected of killing Meiteis to escape.

Who are the Assam Rifles, and what is their role?

• The AR is one of the six central armed police forces (CAPFs) under the administrative control of the Ministry of Home Affairs (MHA).
• The other five forces are the Central Reserve Police Force (CRPF), Border Security Force (BSF), Indo-Tibetan Border Police (ITBP), Central Industrial Security Force (CISF) and Sashastra Seema Bal (SSB).
• The AR is tasked with maintaining law and order in the Northeast along with the Indian Army. It also guards the Indo-Myanmar border.
• The AR have a sanctioned strength of more than 63,000 personnel, organised in 46 battalions, apart from administrative and training staff.

The AR is unique

• It is the only paramilitary force with a dual control structure. While the administrative control of the force is with the MHA, its operational control is with the Indian Army, which is under the Ministry of Defence (MoD).
• This means that salaries and infrastructure for the force is provided by the MHA, but the deployment, posting, transfers, and deputation of AR personnel is decided by the Army.
• All its senior ranks, from DG to IG and sector headquarters are manned by officers from the Army. The force is commanded by a Lieutenant General of the Indian Army.
• The AR is in effect a central paramilitary force (CPMF) — its operational duties and regimentation are on the lines of the Indian Army.
• However, being a CAPF under the MHA, the recruitment, perks, and promotion of AR personnel, and their retirement policies are governed according to rules framed for CAPFs by the MHA.
• There are demands within the AR that only one Ministry should have full control over the force.
• A large section within the AR wants to be under the administrative control of the MoD, as that would mean perks and retirement benefits that are far better than those enjoyed by the CAPFs under MHA.
• However, Army personnel retire early — at age 35 — while the retirement age of CAPFs is 60 years.
• Also, CAPF officers have recently been granted non-functional financial upgradation (NFFU) to at least financially address the issue of stagnation in their careers due to lack of avenues for promotions.
• But Army personnel also get‘one rank, one pension’ (OROP) which is not available to CAPFs.

Aspirational districts programme

GS Paper - 2 (Infrastructure)

Haryana's Nuh district has achieved the second position in Niti Aayog's 'Delta ranking' under the aspirational districts programme on 10 August 2023. The programme aims at uplifting and developing the most socio-economically challenged districts in India, and this progress in Nuh is certainly a step in the right direction.

More about the News

• The continuous efforts are on to improve the ranking of the district on several parameters.
• Nuh tops in parameters of agriculture and water resources while in health and nutrition parameters, it comes in second place.
• Due to continuous improvement in the ranking of other departments, the district has bagged an overall second position.
• The Delta rankings for the aspirational districts measure the incremental progress made by them across the developmental areas of health and nutrition, education, agriculture and water resources, financial inclusion and basic infrastructure.
• The Aspirational Districts Programme is a part of the government’s endeavour to raise the standard of living of its citizens and ensure inclusive development for all under the vision of ‘Sabka Saath Sabka Vikas’.
• The programme focuses on improving the capacity of people to participate fully in a growing economy, ensuring optimum utilisation of their potential.
• Health and nutrition, education, agriculture and water resources, financial inclusion and skill development and basic infrastructure are the thrust areas of the programme.