What’s in today’s article?

• Why in News?
• What is Monetary Policy Committee (MPC)?
• Key outcomes of MPC 2024
• Other announcements made during MPC 2024

Why in News?

In its first meeting after the Union Budget, the Reserve Bank of India’s Monetary Policy Committee (MPC) decided to keep the policy repo rate unchanged at 6.50% for the ninth consecutive time.

Of the six members of the MPC, four voted in favour of the decision, which is aimed at taming inflation.

What is Monetary Policy Committee (MPC)?

• The Committee
  • Under Section 45ZB of the amended RBI Act, 1934, the central government is empowered to constitute a six-member Monetary Policy Committee (MPC).
  • MPC will determine the policy interest rate required to achieve the inflation target. The first such MPC was constituted in September 2016.
• Members of MPC
  • As per the amended RBI act, the MPC shall consist of
    • the RBI Governor as its ex officio chairperson,
    • the Deputy Governor in charge of monetary policy,
    • an officer of the Bank to be nominated by the Central Board, and
    • three persons to be appointed by the central government.
• Functions of MPC
  • Setting Policy Interest Rates: The primary function of the MPC is to determine the policy interest rates, specifically the repo rate.
  • Inflation Targeting: The current inflation target set by the government is a Consumer Price Index (CPI) inflation target of 4% with a tolerance band of +/- 2%.
  • Economic Analysis and Forecasting: The MPC conducts thorough analysis and forecasting of various economic indicators, including inflation, GDP growth, employment, fiscal conditions, and global economic developments.
  • Decision-Making: The MPC meets at least four times a year to review the monetary policy stance.

Key outcomes of MPC 2024

• Policy rates remained unchanged

• MPC decided to keep the policy repo rate unchanged at 6.50%.
• Repo rate is the rate at which the Reserve Bank of India lends money to commercial banks in the event of any shortfall of funds.
• The standing deposit facility (SDF) rate remains at 6.25%, while the marginal standing facility (MSF) rate and the bank rate stand at 6.75%.
• The SDF is a liquidity window through which the RBI will give banks an option to park excess liquidity with it.
• It is different from the reverse repo facility in that it does not require banks to provide collateral while parking funds.
• MSF is a window for banks to borrow from the central bank in an emergency situation when inter-bank liquidity dries up completely.
  • The MPC also decided to remain focused on withdrawal of accommodation to ensure that inflation progressively aligns to the target, while supporting growth.
• An accommodative stance means the central bank is prepared to expand the money supply to boost economic growth.
• Withdrawal of accommodation means reducing the money supply in the system which will rein in inflation further.
• Food prices drive inflation
  • The headline inflation, after remaining steady at 4.8% during April and May, had increased to 5.1% in June.
  • The headline inflation, primarily driven by food inflation, remains stubborn.
• Core inflation (CPI excluding food and fuel) moderated, while the fuel group remained in deflation.
  • Inflation is moderating but the pace of disinflation is uneven and slow. Still there is distance to cover to align inflation with target.
• GDP forecast
  • Real GDP growth for 2024-25 has been projected at 7.2%, with the first quarter (Q1) projection at 7.1%; Q2 at 7.2%; Q3 at 7.3%; and Q4 at 7.2%.
  • Real GDP growth for the first quarter of 2025-26 is projected at 7.2%.

Other announcements made during MPC 2024

• Transaction limit for tax payments via UPI hiked from Rs 1 lakh to Rs 5 lakh
  • RBI announced to increase the transaction limit for tax payment through Unified Payments Interface (UPI) from Rs 1 lakh to Rs 5 lakh per transaction.
  • The move will further ease tax payments by consumers through UPI, which has become the most preferred mode of digital payments.
• The enhancement of the UPI limit for tax payments will strengthen the tax-collection system, reduce the cost of tax collection, and make tax payments more convenient for taxpayers.
• Creation of repository of digital lending apps
  • In a bid to protect customers from fraudulent players in the financial services sector, the Reserve Bank of India is creating a public repository of digital lending applications which will be available on its website.
  • This measure will put some check on the digitalized loan shark business.
  • Aim of RBI is to sensitise the public about unauthorized digital lending App’s and to prevent them from falling prey to digital fraud.
• Focus more on deposit mobilisation via innovative product
  • RBI Governor Shaktikanta Das has expressed concern over the shift of household savings from banks to alternative investment avenues, leading to slower deposit growth compared to credit growth.
  • While deposits grew by 11.7%, credit growth increased by 15.5% as of July 12.
  • RBI Governor urged banks to attract deposits by offering innovative products and leveraging their branch networks to avoid potential liquidity issues.
• Can’t ignore food inflation pressures
  • The Economic Survey for 2023-24 suggested excluding food prices from headline inflation.
  • It argued that food prices were keeping the CPI-based inflation high and delaying interest rate cuts by the RBI.
  • However, RBI Governor disagreed, emphasizing that food inflation, which constitutes about 46% of the CPI basket, cannot be ignored due to its significant impact on the public and overall inflation.
• He acknowledged that while the MPC might overlook temporary food inflation spikes, it must remain vigilant against persistent food inflation to prevent spillovers into other areas of the economy.
• The governor mentioned that the National Statistical Office (NSO) is conducting a survey to reassess the CPI basket, which may influence future decisions on the weight of food, fuel, and core components in headline inflation.

Q.1. What is National Statistical Office (NSO)?

The National Statistical Office (NSO) is the central statistical agency of India, responsible for the collection, compilation, and dissemination of statistical data. It operates under the Ministry of Statistics and Programme Implementation (MoSPI), providing key economic indicators, conducting surveys, and ensuring the accuracy of national statistics.

Q.2. What is Repo Rate?

The repo rate is the interest rate at which a country's central bank, such as the Reserve Bank of India (RBI), lends money to commercial banks for short-term needs. It is a key monetary policy tool used to control inflation, manage liquidity, and influence overall economic activity.

Source: RBI Monetary Policy Meeting: RBI keeps repo rate unchanged at 6.5% | Hindu Business Line | Indian Express  | Indian Express | Economic Times

What’s in today’s article?

• Why in News?
• Objective and Intent Behind the Draft Broadcasting Services (Regulation) Bill 2024
• Key Provisions of the Draft Bill that Undermine Creative Independence in India
• Issues with the Provisions of the Draft Broadcasting Services (Regulation) Bill 2024
• Way Ahead for Internet Regulation in India

Why in News?

• The Ministry of Information and Broadcasting (MIB) recently circulated the draft version of the Broadcasting Services (Regulation) Bill 2024 among a handful of stakeholders from the industry.
• The MIB is learnt to have proposed expanded regulations for independent creators of news content on platforms such as YouTube, Instagram and X, which has raised concerns over the freedom of speech and expression.

Objective and Intent Behind the Draft Broadcasting Services (Regulation) Bill 2024:

• Significance of the digital media:
  • As seen in the recent elections, digital media can serve as a vital alternative forum for creators and commentators to scrutinise government policies and demand accountability.
  • It can enable dissenting voices that are ignored by mainstream media and aid in the formation of counter-narratives on key issues.
• Objectives of the bill:
  • This Bill aims to extend the regulations currently applied to traditional television and radio to the internet, and is designed to consolidate existing guidelines and increase accountability among broadcasters.
  • It covers all large influencers, content creators and political commentators, and tries to regulate speech.
• Intent of the bill: Hence, the Bill could significantly undermine creative independence and stymie online freedom of expression in India, both of which are vital for a well-functioning and vibrant democracy.

Key Provisions of the Draft Bill that Undermine Creative Independence in India:

• Reimagines the term “broadcaster”:
  • To include digital news broadcasters, defining them as anyone who “systematically” broadcasts news and current affairs online, including on social media platforms via text, video or audio.
  • This means that commentators on YouTube, Twitter, blogging portals or podcasts discussing current affairs and socio-political issues will all get covered under the Bill.
• Provisions for the digital news broadcasters:
  • These broadcasters with a certain threshold of subscribers/viewers must notify the government, conform to a Programme Code, set up a grievance redressal mechanism, and adhere to a three-tier regulatory structure.
  • For content other than current affairs (for example, a programme providing a historical overview), broadcasters are also required to get pre-certification by a Content Evaluation Committee.
• Penalties for the digital news broadcasters: The Bill empowers the users to raise complaints against Programme Code violations, and gives the central government the power to -
  • Impose penalties,
  • Direct broadcasters to go off-air, and
  • Even prohibit transmission in the interest of sovereignty, security, public order, decency, morality, or foreign relations.
• Extra-territorial application: The current draft potentially brings global content creators, news publishers, and commentators of current affairs within the scope of the Bill.
• Threatening safe harbour: The Bill imposes new obligations on social media intermediaries, including compliance with government demands for information about broadcasters on their platforms.

Issues with the Provisions of the Draft Broadcasting Services (Regulation) Bill 2024:

• Ignores fundamental differences between TV and the internet:
  • Unlike TV where linear programming is disseminated one to many, content on the internet is demand-based and one-to-one.
  • Applying the same regulations as TV, may significantly increase costs (while reducing speed to market) for smaller-scale content creators and independent journalists.
  • This may lead to serious censorship and can create a chilling effect on free speech.
• Implementation challenges: The extra-territorial application of the provisions is difficult to implement given the global, decentralised nature of the web.
• Add to the regulatory difficulties by introducing parallel legislation: This is because the IT Act 2000 and the accompanying IT Rules already require social media intermediaries to
  • Establish grievance redressal mechanisms,
  • Comply with government orders, and
  • Operate a notice-and-takedown regime for flagged content.

Way Ahead for Internet Regulation in India:

• The constitutional challenges to the IT Rules 2021, which attempted to create government oversight over media, have led to these Rules being stayed by the Courts.
• Therefore, other measures (such as the IT Act 2000) need to be leveraged if the government is worried about fake news or harmful/misleading content.
• The draft Bill requires thorough deliberation and discussion with a broad and diverse range of stakeholders before it is made into law.

Q.1 What are the reasonable restrictions under the Indian Constitution?

Reasonable restrictions as outlined in Article 19 (2) of Constitution allows for restrictions on rights (mentioned under Article 19) in the interests of the security and sovereignty of India, friendly relations with foreign states, public order, decency or morality, etc.

Q.2. How is television broadcasting regulated in India?

Program and Advertisement Codes for regulating content broadcast on the television, are issued under the Cable Television Networks (Regulation) Act, 1995. The District magistrate can seize the equipment of the cable operator in case he broadcasts programs that violate these Codes.

Source: Why has the draft Broadcast Services Bill 2024 raised concerns of freedom of speech? | IE

What’s in today’s article?

• Background
• Challenges in Himalayan Towns
• Uncontrolled Urban Expansion
• Underlying Causes
• Strategic Recommendations

Background

• The Indian Himalayan Region is spread across 13 Indian States/Union Territories (namely Jammu and Kashmir, Ladakh, Uttarakhand, Himachal Pradesh, Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Assam and West Bengal), stretching across 2500 km.
• Nearly 50 million people reside in this region, which is characterized by a diverse demographic, and versatile economic, environmental, social and political systems.
• Towns have expanded, and more urban settlements are developing.
• However, Himalayan towns require a different definition of urbanisation.

Challenges in Himalayan Towns

• Himalayan towns, including key state capitals, face significant civic management challenges.
• For instance, cities such as Srinagar, Guwahati, Shillong, and Shimla, along with smaller towns, are grappling with issues related to sanitation, solid and liquid waste management, and water supply.
• The root cause lies in the reliance on planning models designed for plains, which are ill-suited for the unique geographical and environmental conditions of the Himalayas.
• Additionally, city governments are severely understaffed, operating at just 25% of their required human resource capacity.
• For example, in the Kashmir Valley, excluding the Srinagar Municipal Corporation, there are only 15 executive officers managing over 40 urban local bodies.

Uncontrolled Urban Expansion

• Urban expansion into peripheral areas is a growing concern. Cities like Srinagar and Guwahati are encroaching on village commons, leading to the depletion of open spaces, forest lands, and watersheds.
• In Srinagar, from 2000 to 2020, there was a 75.58% increase in built-up real estate, while water bodies shrank by nearly 25%.
• Moreover, almost 90% of liquid waste in these areas is discharged into water bodies without any treatment, exacerbating environmental degradation.

Underlying Causes

• The Indian Himalayan Region (IHR) is under immense pressure from rapid urbanisation and development, compounded by high-intensity tourism, unsustainable infrastructure practices, and irresponsible resource use, particularly land and water.
• These issues are further aggravated by climate change impacts such as changing precipitation patterns and rising temperatures, leading to water scarcity, deforestation, land degradation, biodiversity loss, and increased pollution, including plastic waste.
• These pressures threaten to disrupt the socio-ecological fabric of the Himalayas, with potentially devastating consequences for local communities and ecosystems.
• Tourism in the IHR has expanded significantly, with an average annual growth rate of 7.9% from 2013 to 2023.
• However, this growth has often resulted in the replacement of eco-friendly infrastructure with inappropriate and unsafe constructions, poorly designed roads, and inadequate waste management systems.
• This has led to the depletion of natural resources, damaging biodiversity and essential ecosystem services.
• For long-term sustainability, a shift towards ecotourism, which prioritises environmentally friendly practices, is urgently needed.

Strategic Recommendations

• Mapping and Vulnerability Assessment:
  • Planning institutions in IHR cities must shift from traditional land-use principles to more comprehensive approaches that incorporate geological and hydrological vulnerabilities.
  • Every town should be mapped to identify these risks, and planning processes should involve local communities in a bottom-up approach.
• Climate-Resilient Urban Design:
  • Consultant-driven urban planning, which often fails to address the unique challenges of Himalayan towns, should be replaced with urban designs focused on climate resilience.
• Urban Financing for IHR:
  • None of the cities in the IHR have the financial capacity to support their infrastructure needs.
  • The Finance Commission should include a separate chapter on urban financing for the IHR, recognising the high costs of urban services and the absence of industrial corridors.
  • Current intergovernmental transfers from the central government to urban local bodies account for only 0.5% of GDP; this should be increased to at least 1%.
• Focus on Sustainability:
  • Himalayan towns must engage in broader discussions about sustainability, with a focus on creating urban futures through robust, eco-centric planning processes that actively involve public participation.

Q1. Is Uttarakhand a seismic zone?

Tracing to history the Himalayan foothills witness many earthquakes and are seismic sensitive area thats why whole of the state of Uttarakhand comes under seismic zone IV and V as per Indian seismic zonation map.

Q2. Are Shivalik Ranges covered with Forests?

Thick coniferous woods dominate the Shiwalik range, which stretches from Nepal to North-East India. Nearly no trees cover the southern slopes of the Shiwalik mountain in Punjab and Himachal Pradesh.

Source: Why Himalayan towns need a different kind of development | Explained