What’s in Today’s Article?

• Financial Stability Report Latest News
• Increasing Household Debt: A Cause for Concern
• The Shift in Borrowing Trends
• Consumption Loans: A Red Flag for Financial Stability
• The Multiplier Effect of Rising Debt
• RBI’s Response: Curbing Unchecked Credit Growth
• Conclusion
• Rising Consumer Credit in India FAQs

Financial Stability Report Latest News

• Financial Stability Report (FSR) 2024 released by the Reserve Bank of India (RBI) has called attention to the question of household finances and consumption loans.

Increasing Household Debt: A Cause for Concern

• The Reserve Bank of India’s Financial Stability Report (FSR) 2024 has highlighted an alarming rise in household debt, which has increased from 36.6% of GDP in June 2021 to 42.9% in June 2024. 
• While India’s household debt remains lower than most emerging economies, the rising debt-to-GDP ratio signals potential macroeconomic weaknesses.
• Debt is typically taken to acquire assets such as homes and vehicles. However, recent data indicates that Indian households are borrowing more for consumption rather than for asset creation. 
• This shift raises concerns about the financial health of lower-income groups and the long-term impact on economic stability.

The Shift in Borrowing Trends

• The RBI report presents a mixed picture regarding consumer credit.
• A significant proportion of new loans is being taken by healthy, prime borrowers, reducing the share of subprime borrowing.
• Rising per capita debt is mainly observed among super-prime borrowers, who are using loans for asset creation rather than discretionary spending.
• Borrowing for consumption purposes, however, has increased, particularly among lower-income groups.
• While these trends indicate a maturing credit market, the growing reliance on loans for consumption raises concerns about the sustainability of household finances.

Consumption Loans: A Red Flag for Financial Stability

• A worrying trend in the report is the increasing share of loans taken for consumption rather than investment in assets like housing or education. The data reveals that:
  • 64% of loans taken by super-prime borrowers are directed towards asset creation.
  • Nearly half of the loans taken by subprime borrowers are being used for consumption.
  • Lower-income households (earning below ₹5 lakh annually) rely heavily on unsecured credit such as credit card debt and personal loans for daily expenses.
• This trend suggests that many households may be borrowing to meet essential expenses rather than for wealth accumulation. In addition, rising delinquency rates in personal loans and credit card debt indicate increasing financial stress among lower-income groups.

The Multiplier Effect of Rising Debt

• The impact of household debt on economic growth depends on how it affects consumption patterns. 
• Households with lower incomes generally have a higher income multiplier, meaning they spend a larger portion of their income on goods and services. 
• However, if they are burdened with debt repayments, their disposable income shrinks, reducing overall consumption and slowing down economic growth.
• Several key questions arise:
  • Are households borrowing more due to income insecurity post-pandemic?
  • Are financial innovations, such as BNPL (Buy Now, Pay Later) schemes, encouraging excessive borrowing?
  • Will this rising debt reduce the effectiveness of future macroeconomic policy measures, such as tax cuts or interest rate adjustments?

RBI’s Response: Curbing Unchecked Credit Growth

• In response to the rise in unsecured loans, the RBI has introduced measures to slow down consumer credit growth since September 2023. These steps include:
  • Tighter lending norms for personal loans and credit card borrowing.
  • Encouraging banks to focus on prime borrowers, reducing the risk of default.
  • Monitoring financial institutions to prevent reckless lending practices.
• While these measures have led to a slowdown in credit growth, the structural risks associated with rising consumption debt still remain.

Conclusion

• The increasing reliance on loans for everyday consumption rather than asset creation is a growing concern for India's financial stability. 
• While the rise in borrowing among prime borrowers is a positive sign, the financial stress among lower-income groups could pose challenges for economic growth. 
• Policymakers must carefully balance credit growth with financial prudence to ensure that India’s expanding consumer credit market remains sustainable.

Rising Consumer Credit in India FAQs

Q1. Why is rising consumer credit a concern in India?

Ans. The increase in borrowing for consumption rather than asset creation indicates financial stress among lower-income households and potential macroeconomic weaknesses.

Q2. How has household debt changed in India in recent years?

Ans. Household debt has risen from 36.6% of GDP in June 2021 to 42.9% in June 2024, according to the RBI’s Financial Stability Report 2024.

Q3. What types of loans are increasing in India?

Ans. There has been a significant increase in credit card debt and personal loans, particularly among lower-income households.

Q4. What steps has the RBI taken to address the rise in consumer credit?

Ans. The RBI has tightened lending norms for unsecured loans and credit cards to curb excessive consumer borrowing.

Q5. How does rising household debt impact economic growth?

Ans. Increased debt repayments reduce disposable income for lower-income households, slowing down consumption and potentially hindering economic growth.

Source: TH

What’s in Today’s Article?

• Balochistan Liberation Army (BLA) Latest News
• Balochistan Liberation Army (BLA)
• Background of the Baloch Insurgency
• Strategic and Economic Importance of Balochistan
• Balochistan Liberation Army (BLA) FAQs

Balochistan Liberation Army (BLA) Latest News

• Balochistan Liberation Army (BLA) insurgents attacked and hijacked the Jaffar Express traveling from Quetta to Peshawar on March 11 in Balochistan’s Bolan district. 
• The BLA claimed responsibility, stating that 182 people were taken hostage, 20 Pakistani military officers were killed, and a drone was shot down. 
• This marks one of the largest recent attacks by Baloch insurgents amid ongoing unrest in the region.

Balochistan Liberation Army (BLA)

• The BLA emerged in the early 2000s with the goal of achieving Baloch independence.
• Pakistan banned the organization in 2006, and the US designated it as a global terrorist group in 2019.

BLA’s Activities and Structure

• The US State Department describes the BLA as an armed group targeting security forces and civilians in Baloch areas of Pakistan.
• The Majeed Brigade, its suicide squad active since 2011, led the Jaffar Express hijacking. It has been involved in previous attacks, including the March 2024 Gwadar port strike.
• Other BLA units involved in the hijacking include the Special Tactical Operations Squad (STOS), Fatah Squad, and Zirab Units.

Historical Context

• The roots of the Baloch insurgency predate the BLA and are part of a broader, long-standing separatist movement in Balochistan.

Goals of the BLA

• The BLA seeks independence for Balochistan, which borders Afghanistan and Iran.
• It is the largest among several ethnic insurgent groups fighting Pakistan’s federal government for decades.
• The insurgents claim Balochistan’s rich gas and mineral resources are unfairly exploited and should belong to the local people.

Increasing Lethality of the BLA

• In 2022, the BLA shocked Pakistan’s security forces by attacking army and navy bases.
• It has deployed women suicide bombers, including in attacks on Chinese nationals in Karachi and southwest Balochistan.
• Recently, an umbrella group of Baloch ethnic factions announced efforts to unite under a single military structure, potentially escalating the insurgency further.

Background of the Baloch Insurgency

• Balochistan is Pakistan’s largest but least populated province, rich in natural resources but economically underdeveloped.
  • Pakistan has four provinces – Balochistan, Sindh, Punjab and Khyber Pakhtunkhwa.
• Ethnic Baloch communities have long accused the central government of economic neglect and Punjab’s dominance over resources, military, and bureaucracy.

Historical Context

• After independence, Balochistan remained independent under a treaty with Pakistan until March 1948.
• The Khan of Kalat, who controlled Kalat, Makran, Las Bela, and Kharan, initially sought independence but later signed the instrument of accession under political pressure.
• British concerns over Russian influence and internal demands from other Baloch regions contributed to its integration into Pakistan.

Continued Unrest and Foreign Involvement

• Pakistan has accused India of supporting Baloch insurgent groups, an allegation India denies.
• China’s China–Pakistan Economic Corridor (CPEC) has become a target of Baloch militants, who see it as exploitative and lacking local benefits.
• In October 2024, the BLA claimed responsibility for a suicide bombing that killed two Chinese nationals, highlighting their resistance to foreign involvement and Pakistan’s reliance on China.

Strategic and Economic Importance of Balochistan

• Key to China's CPEC: Balochistan is crucial to China’s $65 billion China-Pakistan Economic Corridor (CPEC) under Xi Jinping’s Belt and Road Initiative.
• Rich in Resources: It hosts major mining projects, including Reko Diq, one of the world’s largest gold and copper mines, operated by Barrick Gold and China.
• Security Concerns: The long-running Baloch insurgency has destabilized the province, threatening Pakistan’s plans to tap into its vast resources.
• Geopolitical Significance: Balochistan, Pakistan’s largest province by area but smallest by population, has a long Arabian Sea coastline near the Strait of Hormuz, a vital oil shipping route.

Balochistan Liberation Army (BLA) FAQs

Q1. What is the Balochistan Liberation Army (BLA)?

Ans. The BLA is an armed separatist group seeking Balochistan’s independence, banned by Pakistan in 2006 and the US in 2019.

Q2. Why did the BLA hijack the Jaffar Express?

Ans. The BLA claimed the hijacking was part of their struggle for Baloch independence, targeting Pakistan’s military and security forces.

Q3. What are the roots of the Baloch insurgency?

Ans. The Baloch insurgency stems from historical grievances over resource exploitation and economic neglect by Pakistan’s central government.

Q4. Why is Balochistan strategically important?

Ans. Balochistan is rich in resources and key to China’s CPEC, with a coastline near the vital Strait of Hormuz.

Q5. How has the BLA intensified its attacks recently?

Ans. The BLA has attacked military bases, used women suicide bombers, and targeted Chinese nationals linked to CPEC projects.

Source: IE | DH

What’s in Today’s Article?

• World Air Quality Report 2024 Latest News
• Key Highlights of the World Air Quality Report 2024
• Challenges in Pollution Control Efforts and Way Forward
• World Air Quality Report 2024 FAQs

World Air Quality Report 2024 Latest News

• The World Air Quality Report 2024 by IQAir highlights severe pollution in India, with 13 of the world's 20 most polluted cities located in the country. 
• Byrnihat (Assam) is the most polluted city globally, while Delhi remains the most polluted capital. India ranked fifth in air pollution in 2024, improving from third place in 2023.

Key Highlights of the World Air Quality Report 2024

• The World Air Quality Report 2024 has been released by Swiss air quality technology company IQAir.
• The report looked at the data from over 40,000 air quality monitoring stations across 138 countries, territories, and regions, and was analysed by IQAir’s air quality scientists.

Pollution in India: Key Highlights

• Delhi: The World’s Most Polluted Capital for Six Consecutive Years
  • Delhi has once again been ranked as the world’s most polluted capital, surpassing other cities in the National Capital Region (NCR) in 2023. 
  • While some NCR cities previously recorded worse pollution levels, Delhi emerged as the most polluted regional city in South Asia.
  • In 2024, Delhi was the second most polluted city in the world and in Central and South Asia.
• Decline in Average PM2.5 Levels
  • India's average PM2.5 concentration in 2024 was 50.6 µg/m³, reflecting a 7% decrease from 2023 (54.4 µg/m³).
• Most Polluted Cities
  • Byrnihat recorded the highest pollution levels globally, with an annual PM2.5 concentration of 128.2 µg/m³.
  • Six Indian cities ranked among the world’s 10 most polluted.
• Severe Pollution Episodes in Northern India
  • January 2024 witnessed poor air quality in Delhi and Himachal Pradesh.
  • November 2024 saw extreme pollution in Delhi, Punjab, Chandigarh, Haryana, and Himachal Pradesh.
• Major Pollution Sources
  • Crop stubble burning accounted for 60% of PM2.5 pollution during peak periods.
  • Vehicular emissions, industrial discharges, and construction dust were other significant contributors.

Air Pollution: A Global Crisis

• Widespread Exposure to Dirty Air
  • In 2024, most of the global population was breathing polluted air.
  • Only 12 countries, regions, and territories met the WHO’s recommended PM2.5 limit of 5 µg/m³.
  • These regions were primarily in Latin America, the Caribbean, and Oceania.
• Most Polluted Countries
  • The five most polluted countries, based on annual average PM2.5 concentrations, were:
  • Chad – 91.8 µg/m³
  • Bangladesh – 78 µg/m³
  • Pakistan – 73.7 µg/m³
  • Congo – 58.2 µg/m³
  • India – 50.6 µg/m³
• Severe Air Quality Violations
  • Only 17% of the 8,954 cities worldwide met WHO’s PM2.5 guidelines.
  • The 20 most polluted cities, located in India, Kazakhstan, Chad, Pakistan, and China, exceeded WHO limits by over 10 times.

Challenges in Pollution Control Efforts and Way Forward

• The National Clean Air Programme (NCAP), introduced in 2019, aimed to reduce pollution. 
• However, the latest report highlighted persistent challenges due to inconsistent policy implementation and inadequate infrastructure.

Need for Stronger Action

• Environmental analysts argue that while Delhi has introduced policies like BS-VI fuel and advanced transportation technology, poor implementation has led to persistently high pollution levels.
• They emphasized that systematic actions remain largely on paper and stressed the need for stronger governance and a drastic overhaul of air pollution regulation. 
• Strengthening NCAP and ensuring sustained action will be crucial for long-term improvement.

World Air Quality Report 2024 FAQs

Q1. Which city is the most polluted in 2024?

Ans. Byrnihat (Assam) recorded the highest pollution globally, with an annual PM2.5 concentration of 128.2 µg/m³.

Q2. What is India’s air pollution ranking in 2024?

Ans. India ranked fifth in air pollution in 2024, improving from third place in 2023.

Q3. Why is Delhi’s air quality so poor?

Ans. Delhi’s pollution is driven by stubble burning, vehicular emissions, industrial discharges, and construction dust.

Q4. Which country had the worst air quality in 2024?

Ans. Chad had the highest PM2.5 levels, averaging 91.8 µg/m³.

Q5. What challenges does India face in controlling air pollution?

Ans. Weak policy implementation, inadequate infrastructure, and ineffective governance hinder India's pollution control efforts.

Source: IE | HT | ToI