Daily Prelims Notes 8 February 2025

Daily Prelims Notes

8 February 2025

Table Of Contents

1. DR Congo conflict advances as U.N. warns of regional escalation
2. ICC condemns sanctions by Donald Trump, pledges to continue its work
3. Centre holds consultation with States on setting up biomanufacturing facilities
4. 9 submarines, 65 ships taking part in TROPEX exercise
5. RBI Slashes Repo Rate by 0.25% to Revive Growth
6. Budget’s Focus on Agriculture is a positive for Inflation: RBI

1. DR Congo conflict advances as U.N. warns of regional escalation

Sub: IR

Sec: Places

Context:

• The M23 armed group, reportedly backed by Rwanda, is threatening the town of Kavumu in South Kivu province of eastern Democratic Republic of Congo (DRC), having seized Goma last week. Kavumu, located near Bukavu, is a key strategic point for DRC forces.
• The DRC government has issued an international arrest warrant for M23 leader Corneille Nangaa, further escalating tensions.

M23’s Political Ambitions:

• The M23 has established its own political structures in areas under its control, such as appointing its mayor in Goma.
• The group’s leader Corneille Nangaa, has made public declarations calling for the liberation of all of Congo, fuelling fears of an expanded conflict that could destabilize the region.
• Thousands of supporters gathered for a public rally of the River Congo Alliance, a political-military coalition that includes the M23, chanting slogans advocating for the capture of the DRC’s capital, Kinshasa.

River Congo Alliance:

• The Congo River Alliance (French: Alliance Fleuve Congo) is a political and military coalition of rebel groups and political parties led by former Independent National Electoral Commission President Corneille Nangaa that seeks to overthrow the government of DRC.
• The alliance was formed by Corneille Nangaa in 2023 and it includes the M23 group.

Regional Diplomatic Efforts:

• Rwandan President Paul Kagame and Congolese President Felix Tshisekedi are scheduled to attend a summit in Tanzania, with leaders from the East African Community (EAC) and Southern African Development Community (SADC) also participating.
• The summit aims to address the crisis and find a diplomatic resolution, as previous peace talks brokered by Angola and Kenya have failed to produce lasting solutions.
• The situation in eastern DRC poses a serious risk of regional war, with several African nations, including South Africa, Burundi, and Malawi, already involved in supporting Congolese military

Southern African Development Community (SADC):

• SADC is a regional intergovernmental organization aimed at fostering economic cooperation and integration, peace, and security in Southern Africa.
• It was established in 1980, originally as the Southern African Development Coordination Conference (SADCC), with the goal of reducing economic dependency on apartheid-era South Africa. In 1992, it was transformed into SADC to include broader objectives of regional integration and development.
• Members: Angola, Botswana, Comoros, Democratic Republic of Congo, Eswatini, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Seychelles, South Africa, Tanzania, Zambia and Zimbabwe.

East African Community:

• The East African Community is an intergovernmental organisation in East Africa.
• The EAC’s membership consists of eight states: Democratic Republic of the Congo, Somalia, Burundi, Kenya, Rwanda, South Sudan, Uganda, and Tanzania. 
• The organization aims to enhance economic, political, social, and cultural cooperation among its member states to foster regional integration. 
• The EAC was established in 1967, and after a break in the 1970s, it was revived in 1999.

2. ICC condemns sanctions by Donald Trump, pledges to continue its work

Sub: IR

Sec: Int org

Context:

• The International Criminal Court (ICC) condemned the U.S. sanctions imposed by President Donald Trump, calling them an attempt to harm the court’s ability to administer justice and protect innocent lives.
• The sanctions followed an ICC arrest warrant for Israeli Prime Minister Benjamin Netanyahu over alleged war crimes in Gaza.

Background of US Sanctions:

• U.S. President Donald Trump imposed sanctions on the ICC following its investigation into alleged war crimes by U.S. service members and Israeli troops. The sanctions included asset freezes and travel bans on ICC officials and their families.
• The U.S. and Israel are not members of the ICC and do not recognize its authority.
• The European Union, traditionally an ally of the U.S., voiced strong support for the ICC, condemning the sanctions as a threat to the court’s independence and international justice.

About ICC:

• The International Criminal Court (ICC), located in the Hague, Netherlands is the court of last resort for prosecution of genocide, war crimes, and crimes against humanity.
• It is the first permanent, treaty based, international criminal court established to help end impunity for the perpetrators of the most serious crimes of concern to the international community.
• Its founding treaty, the Rome Statute, entered into force on July 1, 2002.
• Funding: Although the Court’s expenses are funded primarily by States Parties, it also receives voluntary contributions from governments, international organisations, individuals, corporations and other entities.

Composition and voting power:

• The Court’s management oversight and legislative body, the Assembly of States Parties, consists of one representative from each state party.
• Each state party has one vote and “every effort” has to be made to reach decisions by consensus. If consensus cannot be reached, decisions are made by vote.
• The Assembly is presided over by a president and two vice-presidents, who are elected by the members to three-year terms.

Membership:

• 123 countries are currently members of the ICC, with African countries making up the largest bloc.
• Notably, India, China, Iraq, North Korea and Turkey never signed the Rome Statute.
• Others including the US, Russia, Israel and Syria signed, but never ratified.

3. Centre holds consultation with States on setting up biomanufacturing facilities

Sub: Schemes

Sec: Sci

Context:

• Following the approval of the Biotechnology for Economy, Environment, and Employment (BioE3) policy last August, the Department of Biotechnology held a consultation with States to discuss setting up biomanufacturing facilities.
• The BioE3 Policy aligns with India’s vision of achieving a Net Zero’ carbon economy and promoting a ‘Lifestyle for Environment.

About BioE3 Policy:

• The Biotechnology for Economy, Environment, and Employment (BioE3) Policy is India’s first comprehensive biotechnology policy, approved by the Union Cabinet in August 2024.
• It aims to position India as a global leader in sustainable biomanufacturing by focusing on high-value bio-based products and green growth.

Biomanufacturing and its Scope

• Biomanufacturing refers to the industrial production of bio-based products, including:
  • High-value bio-based chemicals
  • Biopolymers and enzymes
  • Smart proteins and functional foods
  • Precision biotherapeutics
  • Climate-resilient agriculture
  • Carbon Capture & Utilization
• This sector is seen as having vast potential for innovation and economic growth, particularly in high-value industries related to biotechnology.

Roadmap for Implementation:

• Establishment of State-centric BioE3 Cells: These will focus on state-level biotechnology initiatives.
• Formulation of State-centric BioE3 Action Plans: Tailored plans for each state to promote biotechnology.
• Formation of State-level Steering Committees: These committees will oversee the implementation of biotechnology policies and initiatives.
• Working Groups and Nodal Officers: To facilitate coordination between states and the central government.
• Bio-AI Hubs, Foundries, and Manufacturing Hubs: These will serve as centres for biotechnology research, innovation, and production.

4. 9 submarines, 65 ships taking part in TROPEX exercise

Sub: Sci

Sec: Defence

Overview of the Exercise:

• The Indian Navy’s Theatre Level Operational Exercise (TROPEX) is currently underway in the Indian Ocean Region, from January to March.
• TROPEX-25 focuses on validating the Navy’s warfighting capabilities and ensuring an integrated response to national maritime security threats, including conventional, asymmetric, and hybrid challenges.
• This is conducted biennially with participation by all operational units of the Navy along with substantial participation of Army, Air Force, and Coast Guard assets.
• The exercise includes various phases, both in harbour and at sea, covering combat operations, cyber and electronic warfare, live weapon firings, and amphibious exercises.

5. RBI Slashes Repo Rate by 0.25% to Revive Growth

Sub: Eco

Sec: Monetary Policy

Key Takeaways from the RBI decision

• The Reserve Bank of India (RBI) cut the repo rate by 25 basis points (bps) to 6.25%, marking the first rate cut since May 2020.
• The decision aims to stimulate economic growth and follows the Union Budget’s ₹1 lakh crore income tax breaks to boost urban demand.
• Inflation is projected to decline, making room for monetary easing.
• GDP growth for 2025-26 is projected at 6.7% (up from 6.4% this year).
• The RBI maintains a neutral monetary policy stance, balancing inflation control with growth support.

Why Did the RBI Cut the Repo Rate?

 Slowing Growth & Need for Stimulus

• Growth is losing momentum, and the government is using both fiscal (tax cuts) and monetary (rate cuts) tools to revive demand.
• Lower interest rates reduce borrowing costs, making home, car, and business loans cheaper, potentially boosting consumption.

Inflation Expected to Stay Under Control

• Inflation projections: Q1 2025-26 → 4.5%
• With inflation moderating and remaining within the RBI’s target range (4% ± 2%), a rate cut was feasible.

Economic Risks & Challenges 

Global Uncertainties & Trade Risks

• Geopolitical tensions, protectionist trade policies, and volatile commodity prices pose risks to growth.
• The RBI is cautious but expects gradual economic recovery.

Mixed Domestic Demand Trends

• Rural demand is improving, but urban consumption remains subdued.
• Employment gains, tax relief, and stable inflation are expected to support household consumption.

 India’s External Sector:

• Rupee depreciation factored into policy decisions; RBI aims to maintain stability without direct intervention in forex markets.
• Current Account Deficit (CAD) remains within sustainable limits.
• Foreign exchange reserves at $630.6 billion (covering 10+ months of imports), signalling resilience.

 Monetary Policy Stances

• Dovish: The central bank reduces interest rates or maintains a low-rate environment to stimulate economic growth and encourage borrowing and investment.
• Hawkish: The central bank raises interest rates to curb inflation and prevent an overheating economy, even at the cost of slowing down growth.
• Accommodative: The central bank keeps interest rates low and injects liquidity into the economy to support growth and employment.
• Neutral: The central bank maintains a balanced approach, where interest rate changes are data-driven, without a strong bias toward economic expansion or contraction.

6. Budget’s Focus on Agriculture is a positive for Inflation: RBI

Sub: Eco

Sec: Monetary Policy

Why in News?

• RBI Governor Sanjay Malhotra emphasized that the Budget’s focus on vegetables, fruits, and pulses will help control inflation.
• Inflation is declining, allowing RBI to support growth while maintaining a neutral stance.

 Context:

 RBI is to support growth and manage inflation. In this regard, following are the key highlights: –

 Growth vs. Inflation

• RBI’s dual mandate: Ensure price stability while supporting economic growth.
• Inflation is expected to decline further, allowing a more growth-friendly monetary policy.

 Rupee Depreciation & Global Uncertainty

• Rupee depreciation impacts inflation, but global uncertainties (trade wars, financial volatility) are a bigger concern.
• RBI does not target a fixed exchange rate, but intervenes to prevent excessive volatility.

Budget’s Role in Inflation Control

• Food accounts for 46% of CPI basket, making agricultural measures crucial for inflation control. For Pulses – Mission launched to boost production, address the inflation spikes.

Can India Achieve 7%+ growth?

• RBI believes 7%+ GDP growth is achievable.
• RBI’s repo rate cut + Budget measures create a favourable environment for economic expansion.

Key Regulatory Initiatives undertaken by RBI

• Cross-border card deals to carry Additional Factor of Authentication facility
• Working group to review trading and settlements timings of RBI- regulated financial markets
• Home loans linked to EBLR (external benchmak lending rate) to be cheaper now, those linked to MCLR (Marginal cost of funds-based lending rate) to see effect in 6 months
• Launch of forward contracts in Govt. securities mulled.
• External Benchmark Lending Rate (EBLR): Introduced by the RBI in October 2019, banks link lending rates to an external benchmark like the RBI Repo Rate, 3-month T-Bill yield, etc.
• Ensures faster transmission of rate cuts to borrowers.
• Marginal Cost of Funds-based Lending Rate (MCLR): Introduced in April 2016, MCLR is based on a bank’s marginal cost of funds, operating costs, and a tenure premium. It replaced the Base Rate system but had slower rate transmission than EBLR.
• Base Rate: The minimum interest rate set by banks before April 2016, below which they could not lend. It was determined by factors like cost of funds, profitability, and regulatory requirements.
• Benchmark Prime Lending Rate (BPLR): Used before the Base Rate (pre-2010), where banks set their own prime lending rates. It was not transparent, leading to its gradual phase-out.