DAILY PRELIMS NOTES 31 January

Daily Prelims Notes

31^st Dec,2025

1.RBI Tightens Penalty Norms Under the Payment Systems Law

Sub: Eco

Sec: Monetary Policy

Why in News?

The Reserve Bank of India (RBI) has strengthened norms for imposing monetary penalties and compounding offenses under the Payment and Settlement Systems Act (PSS Act), 2007.

This move aims to enhance compliance, rationalize penalties, and improve enforcement in the digital payments’ ecosystem.

 Key Updates & Context

 Penalty Raised:

•   Increased from ₹5 lakh to ₹10 lakh (or twice the amount involved, if quantifiable).
•   For continuing violations, an additional penalty of ₹25,000 per day will be imposed.
•   These changes follow the Jan Vishwas (Amendment of Provisions) Act, 2023, effective January 22, 2024.

 Major Violations Under the PSS Act

•   Operating a payment system without RBI authorization.
•   Unauthorized disclosure of prohibited information.
•   Failure to pay penalties within the stipulated period.

Compounding of Offenses

 Certain contraventions (excluding those punishable with imprisonment-only or imprisonment & fine) can be compounded by authorized RBI officers.

Payment and Settlement Systems Act, 2007 (PSS Act)

The PSS Act, 2007 regulates and supervises payment systems in India, with the Reserve Bank of India (RBI) as the regulatory authority.

 Scope of the Act:

•   Covers: Payment systems (cards, money transfers), settlement systems (clearing of funds/securities), and Financial Market Infrastructures (FMIs).
•   Exemptions: Does not apply to stock exchanges or clearing corporations under stock exchanges (Section 34).

Objectives:

•   Establishes a legal framework for payment system regulation.
•       Ensures financial stability, efficiency, and consumer protection.
•   Provides for netting and settlement finality.

 Features:

•   Authorization Requirement: No entity can operate a payment system without RBI approval.
•   Regulatory Powers: RBI can impose penalties, inspect systems, and take enforcement actions.
•   Board for Regulation and Supervision (BPSS): An RBI committee overseeing payment systems.

 RBI’s Powers:

•   Grant/Deny Authorization to payment system operators.
•   Impose Penalties
•   Compound Offences (settle non-imprisonable violations).
•   Inspect & Supervise payment systems for compliance.

2.Six Firms on Track to Develop Indian AI Models in 8-10 Months

Sub: Sci

Sec: Awareness in IT and Computer

Why in News?

Union Minister for Electronics & IT, Ashwini Vaishnaw, announced that six Indian firms are developing foundational AI models under the IndiaAI Mission.

These models will compete with top global AI models from the U.S. and China (e.g., DeepSeek R1, OpenAI’s O1).

Key Highlights

India’s AI Push

•   AI Models Timeline: Expected within 8 to 10 months.
•   Objective: To develop India-specific AI models incorporating Indian languages, culture, and unbiased datasets.
•   Competition: Indian AI models aim to rival DeepSeek (China) and OpenAI (U.S.) in advanced reasoning and response quality.

IndiaAI Mission

The IndiaAI Mission is a government initiative aimed at developing a robust AI ecosystem in India by building high-end computing infrastructure, fostering innovation, and promoting ethical AI practices.

Objectives:

•       Establish a powerful AI computing infrastructure with over 10,000 GPUs to support AI research and startups.
•       Develop indigenous AI technologies, including Large Multimodal Models (LMMs) for priority sectors like healthcare, agriculture, and governance.
•       Enhance data quality and accessibility through a unified IndiaAI Datasets Platform for startups and researchers.
•       Promote AI skilling at all levels, from undergraduate to Ph.D., and set up Data & AI Labs in smaller cities.
•       Ensure safe and trusted AI development with regulatory guidelines and assessment tools.

Key Components:

•   IndiaAI Compute Capacity – A high-end AI infrastructure with GPUs to power AI startups and research.
•   IndiaAI Innovation Centre – Focus on developing foundational AI models for various sectors.
•   IndiaAI Datasets Platform – A central repository for high-quality, non-personal datasets.
•   IndiaAI Application Development – AI-driven solutions for governance and socio-economic growth.
•   IndiaAI FutureSkills – AI education expansion, including undergraduate and Ph.D. programs.
•   IndiaAI Startup Financing – ₹2,000 crore allocated for funding deep-tech AI startups.

3.IRDAI Caps Health Insurance Premium Hike for Senior Citizens

Sub: Eco

Sec: Msc

Why in News?

IRDAI (Insurance Regulatory and Development Authority of India) has capped annual premium hikes for senior citizens at 10% per year.

Insurers cannot withdraw existing health insurance policies for seniors without IRDAI’s approval.

Key Highlights

Premium Hike Restrictions

•   Cap on Premium Increase: Maximum 10% annual increase for senior citizens (aged 60+ years).
•   Regulatory Concern: Observed steep premium increases for seniors, impacting financially vulnerable groups.
•   Objective: Prevent uncontrolled price hikes while maintaining affordable healthcare coverage.

•   No Policy Withdrawal Without IRDAI Approval: Insurers cannot discontinue senior citizen policies without prior consultation with IRDAI.

Factors Behind Rising Premiums

High Medical Inflation: Increasing hospitalization costs & non-standardized treatment charges lead to higher claims outgo.

Insurer Justification: Rising healthcare expenses force frequent price adjustments.

IRDAI (Insurance Regulatory and Development Authority of India)

The IRDAI is a statutory body established under the IRDA Act, 1999 to regulate and develop the insurance sector in India. It operates under the Insurance Act, 1938 and frames regulations to ensure market stability and policyholder protection.

Key Functions:

• Regulates & supervises insurers, intermediaries, and insurance products.
• Ensures policyholder protection and grievance redressal.
• Grants licenses to insurance companies, brokers, and agents.
• Monitors solvency margins to maintain financial stability.
• Regulates Foreign Direct Investment (FDI) in insurance (currently 74%).

Significance:

• Promotes competition, transparency, and innovation in the sector.
• Protects consumer interests while ensuring market growth.
• Ensures financial stability of the insurance industry.

4.India Heading Towards Middle-Income Trap, Says Congress

 Sub: Eco

Sec: National Income

Why in News?

Congress released a “Real State of the Economy” report ahead of the Union Budget 2024.

Claims that India is facing an economic slowdown and heading into a middle-income trap.

Key concerns:

Stagnant wages, high inflation, job crisis, and economic inequality.

Key Highlights & Context

Economic Slowdown & Middle-Income Trap

Slow GDP Growth:

•   India’s GDP projected at 6.4% for 2024-25, but needs 8%+ growth to utilize demographic dividend.
•   Economy reportedly slowed down by 2% compared to previous years.

Middle-Income Trap:

•   Risk of low productivity & competitiveness leading to economic stagnation.

Rising Inequality & Stagnant Wages

•   50% of Indians live on ₹100-₹150 per day.
•   No new jobs being created, while wages remain stagnant.
•   Essential expenses (food, healthcare, education) see double-digit inflation.

Criticism of policies undertaken –

•   Demonetization & GST blamed for economic downturn.
•   Corporate tax cuts (2019) benefited big businesses, not common people.
•   High taxes on fuel & an extractive GST regime burden small business.

Middle-Income Trap

The Middle-Income Trap refers to a situation where a country, after achieving middle-income status, struggles to transition into a high-income economy due to structural challenges.

Causes:

•   Stagnant Productivity Growth – Lack of innovation and industrial upgrades.
•   Declining Cost Competitiveness – Rising wages make low-skilled exports uncompetitive.
•   Weak Institutions – Poor governance, corruption, and regulatory inefficiencies.
•   Inequality & Skills Gap – A mismatch between workforce skills and industry demands.
•   Dependence on Low-Tech Industries – Failure to shift from labor-intensive to knowledge-driven sectors.

5.SC relaxes condition for appointment of ad hoc judges to HCs

Sub :Polity

Sec: Judiciary

Context: A Special Bench of the Supreme Court headed by Chief Justice of India Sanjiv Khanna on Thursday (January 30, 2025) relaxed a condition that ad hoc judges can be appointed to State High Courts only if their judicial vacancies crossed 20% of the sanctioned strength.

Latest Judgement: –

• The Bench said an ad hoc judge could accompany a sitting High Court judge on a Division Bench to hear criminal appeals.
• The number of ad hoc judges must not exceed 10% of the sanctioned judicial strength of a High Court. That would mean at least two to five ad hoc judges could be appointed to a High Court.

Constitutional Provision

• Article 224A empowers the Chief Justice of a High Court, with the previous consent of the President, to request a retired High Court judge to “sit and act” as a judge of that High Court.
• This provision aims to bolster judicial capacity in situations of increased workload or significant case pendency.

Appointment Conditions:

As per the 2021 Lok Prahari judgment, ad-hoc judges may be appointed under the following conditions:

• Vacancy Threshold: When vacancies exceed 20% of the sanctioned judicial strength in a High Court.
• Case Pendency Duration: If cases in a particular category have been pending for over five years.
• Overall Pendency: When more than 10% of pending cases are over five years old.
• Disposal Rate: If the rate of case disposal is lower than the rate of new case filings in specific subject matters or across the court.

Appointment Procedure

The process for appointing ad-hoc judges involves several steps:

• Chief Justice’s Recommendation: The Chief Justice of the High Court identifies the need and selects a retired judge for appointment.
• Communication with State Government: The Chief Justice informs the Chief Minister of the State about the recommendation and the proposed tenure.
• State Government’s Role: The Chief Minister, after consulting with the Governor, forwards the recommendation to the Union Minister of Law and Justice.
• Consultation with Chief Justice of India (CJI): The Union Law Minister seeks the advice of the CJI on the recommendation.
• Presidential Approval: Based on the CJI’s advice, the Prime Minister advises the President regarding the appointment.
• Official Notification: Upon the President’s approval, the appointment is officially notified in the Gazette of India.

Ad-hoc judges in Supreme Court:-

• Article 127 of the constitution :-Ad-hoc judges are retired judges appointed temporarily to High Courts to address specific needs, such as reducing case backlogs.
• Article 128 of the constitution :- Chief Justice of India, with the previous consent of the President, request a retired Judge of the Supreme Court High Court, who is duly qualified for appointment as a Judge of the Supreme Court, to sit and act as a Judge of the Supreme Court.

6.Three inter-State committees to draft social security plan for workers

Sub :Schemes

Sec: Vulnerable section

Context:-Two-day Chintan Shivir of the Labour Ministers and Secretaries of Union and State governments discusses the implementation of various clauses under the new four Labour Codes.

Formation of Committees for Social Security

• Three committees comprising five States each were formed.
• The objective is to develop a sustainable model for comprehensive social security coverage for workers.
• These committees will submit their reports in March 2025.

Key Discussions:-

• Labour Inspector-cum-Facilitator Model
  • A key reform discussed was the transition from a labour inspector to a labour inspector-cum-facilitator model.
  • The goal is to reduce the compliance burden and promote ease of doing business.
  • Ensures decent working conditions, equal opportunities, and improved employee-employer relationships.
  • This change is part of the Code on Industries.
• Welfare of Construction Workers
  • Concerns raised over ₹70,744.16 crore collected as labour cess not being utilised by various State welfare boards.
  • States presented progress in using these funds for social security, education, and skill development.
  • Innovative ways to provide welfare initiatives, including pensions, were discussed.
• Social Security for Gig and Platform Workers
  • The Ministry is designing a dedicated Social Security and Welfare Scheme for gig and platform workers.
  • Modalities of funding, data collection, and administration of the scheme were discussed.
  • States were urged to share data of unorganised workers and register them on eShram on a mission mode.

About four Labour Codes:

The Government of India has consolidated 29 existing labour laws into four Labour Codes to simplify and modernize labour regulations.

•  Code on Wages, 2019
  • Merges four laws: Payment of Wages Act, Minimum Wages Act, Payment of Bonus Act, and Equal Remuneration Act.
  • Ensures uniformity in wage-related provisions across industries and States.
  • Introduces a universal minimum wage covering all workers, including those in the unorganised sector.
  • Mandates equal pay for equal work, regardless of gender.
•  Code on Social Security, 2020
  • Merges Nine laws related to social security, including EPF, ESI, maternity benefits, and gratuity.
  • Extends social security benefits to gig workers, platform workers, and unorganised sector workers.
  • Provides for a National Social Security Board to frame schemes for unorganised workers.
  • Allows fixed-term employees to be eligible for gratuity.
• Industrial Relations Code, 2020
  • Merges three laws: Industrial Disputes Act, Trade Unions Act, and Industrial Employment (Standing Orders) Act.
  • Aims to streamline dispute resolution and employment conditions.
  • Introduces a labour inspector-cum-facilitator model to reduce compliance burden.
  • Allows firms with up to 300 workers to lay off employees without government approval (earlier limit was 100).
• Code on Occupational Safety, Health, and Working Conditions (OSH), 2020
  • Merges 13 laws related to occupational safety, health, and working conditions.
  • Covers all establishments with 10 or more workers and all mines and docks.
  • Provides for free health check-ups and ensures clean drinking water, ventilation, and first aid at workplaces.
  • Regulates working hours, leaves, and night shifts for different categories of workers.

These Labour Codes aim to simplify regulations, ensure worker welfare, and promote ease of doing business in India.

7.Philippines to remove U.S. missile system if China stops ‘sea aggression

Sub : IR

Sec: Places in news

Context:

• Philippine President Ferdinand Marcos Jr. proposed that the Philippines would remove the U.S. Typhon missile system from the country, provided China halts its “aggressive and coercive behaviour” in the disputed South China Sea.

About Typhon missile system:

• The Typhon missile system is a land-based, mobile, mid-range missile defence system developed by US firm Lockheed Martin for the US Army, has a range of 300 miles (480 kilometres).
• It is designed to offer enhanced aerial defence capabilities against threats such as aircraft, missiles, and other aerial targets.
• The missile system consists of a launcher along with Standard Missile-6 and Tomahawk Land Attack Missiles.
• The system was positioned in the northern Philippines in April 2024 to enhance U.S.-Philippine military cooperation and joint combat readiness.

Relocation of the Missile System:

• The U.S. Typhon missile system was recently repositioned from northern Philippines to a more strategic area near the capital, Manila.
• This relocation brings the system closer to the South China Sea, where tensions between the Chinese and Philippine coast guards and naval forces have been escalating.
• The Tomahawk missiles, part of the Typhon system, have a range of over 1,600 km, which could potentially target parts of mainland China.

Chinese Criticism:

• China has strongly opposed the installation of the Typhon missile system, arguing that it could escalate geopolitical tensions and spark an arms race in the region, and has called for the Philippines to remove the system.

Escalating tensions in the South China Sea:

• The South China Sea remains a heavily disputed region, with territorial claims from China, the Philippines, and other nations.
• Chinese actions, such as harassing Filipino boats, using water cannons, and firing lasers at Philippine vessels, have contributed to rising tensions.
• The presence of the Typhon missile system in the Philippines is viewed as part of the broader S.-Philippine defence collaboration aimed at countering China’s growing influence in the region.

8.Targeted Containment Strategy to Eliminate Leprosy Transmission in India

Sub : Sci

Sec: Health

Why in News

The Union Health Ministry has introduced a more targeted approach to eliminate leprosy transmission in India at the subnational level by 2027.

Leprosy in India:

• India eliminated leprosy as a public health problem in 2005, but cases continue to emerge in specific regions.
• Five states—Bihar, Chhattisgarh, Jharkhand, Maharashtra, and Odisha—report the highest prevalence.
• The number of new leprosy cases detected has decreased from 125,785 in 2014-15 to 75,394 in 2021-22, constituting 53.6% of global cases.

About Leprosy:

• Leprosy is a chronic infectious disease caused by Mycobacterium leprae.
• It primarily affects the skin, peripheral nerves, mucosa of the upper respiratory tract, and eyes.
• Transmission occurs through prolonged close contact with untreated individuals.
• Top Affected Countries (2023 Data):
  • More than 10,000 new cases: India, Brazil, Indonesia.
  • 1,000–10,000 new cases: Bangladesh, DR Congo, Ethiopia, Madagascar, Mozambique, Myanmar, Nepal, Nigeria, Philippines, Somalia, Sri Lanka, Tanzania.

Types of Leprosy:

• Paucibacillary (PB) Leprosy: Mild form with 1-5 skin lesions. Minimal nerve damage. Treated with multi-drug therapy (MDT) for 6 months (previously 2 drugs, now 3 drugs).
• Multibacillary (MB) Leprosy: Severe form with more than 5 skin lesions. Extensive nerve involvement, leading to deformities. Requires MDT for 12 months.

Neglected Tropical Diseases (NTDs):

• A diverse group of parasitic, bacterial, and viral diseases affecting impoverished communities.
• Examples: Leprosy, Dengue, Lymphatic Filariasis, Kala-azar, Rabies.
• WHO’s Goal: Reduce NTD burden globally through prevention, mass drug administration, and vector control.

National Strategic Plan (NSP) and Roadmap for Leprosy (2023-27):

• Objective: Achieve zero transmission of leprosy by 2027, three years ahead of the Sustainable Development Goal (SDG) target.
• Implementation strategies and year-wise targets.
• Public health interventions focusing on early detection and prevention.
• Nikusth 2.0: A web-based information portal for real-time case reporting.

• A three-drug regimen for Pauci-Bacillary (PB) cases replaced the earlier two-drug regimen for six months.
• Emphasis on prophylactic treatment (post-exposure prophylaxis) to curb disease transmission.

National Leprosy Eradication Programme (NLEP):

• Initiatives to prevent Grade 2 Disabilities among patients.
• Ensuring cost-free medication and healthcare access for affected individuals.
• Campaigns to eliminate stigma and discrimination associated with leprosy.

9.Extreme Climate Events Impacting Southwest Coast

Sub : Geo 

Sec: Climatology

Why in News

A recent study analysed monsoon data (1990–2023) to assess how vertically integrated moisture flux influences rainfall patterns along India’s southwest coast. Published in the International Journal of Climatology, the study highlights a rising trend in extreme rainfall events, driven by sea surface temperature (SST) changes in the southeast Arabian Sea.

Key Findings:

• Increase in Extreme Rainfall Events: Southwest coast experiencing a 23 mm per season rise in extreme rainfall. Directly linked to thermodynamic moisture flux, which is influenced by warming SSTs.
• Role of Sea Surface Temperature (SST): Since 2014, SSTs in the southeast Arabian Sea have exceeded 28°C, intensifying moisture transport and rainfall. The Arabian Sea is warming faster than the Bay of Bengal, strengthening moisture transport over the southwest coast.
• Changing Moisture Flux Patterns: Before 2006, the correlation between moisture flux and SST was negative. From 2007–2023, this correlation strengthened to 71, indicating a strong link between warming SSTs and increased rainfall.
• Regional Differences:
  • Southwest coast (Kerala) is highly vulnerable, with more frequent extreme rainfall events.

1. • Northwest coast has seen an increase in average monsoon rainfall, linked to the dynamic component of moisture flux.

Vertically Integrated Moisture Flux (VIMF):

• VIMF represents the total horizontal transport of moisture through the atmosphere, integrated across all vertical levels.
• It provides a comprehensive measure of how water vapor moves from one region to another, influencing weather systems and precipitation.
• To compute VIMF, meteorologists integrate the product of specific humidity and horizontal wind components over the atmospheric column, typically from the surface up to a specified pressure level (e.g., 300 hPa).
• This integration accounts for the varying distribution of moisture and wind speed at different altitudes.

• VIMF helps in identifying areas of moisture convergence and divergence, which are critical for forecasting precipitation events.

Thermodynamic Moisture Flux:

• Thermodynamic moisture flux refers to the component of moisture transport driven by changes in atmospheric temperature and humidity.
• It emphasizes the role of thermal processes in moving moisture within the atmosphere.

• Temperature Influence: Warmer air can hold more moisture, enhancing the potential for moisture transport.
• Humidity Levels: Regions with higher humidity contribute more significantly to moisture flux due to the greater availability of water vapor.

• Thermodynamic factors can intensify moisture transport, leading to extreme rainfall events, especially in warming climates.
• Understanding thermodynamic moisture flux is essential for assessing how global warming may alter precipitation patterns and the frequency of extreme weather.