1) RBI Cuts Repo Rate: Implications for Growth, Inflation, and Borrowing Costs

GS 3: Economy: RBI’s MPC meet

Why is it in the news?

• After maintaining the repo rate at 6.50% for two years, the Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) reduced the key policy rate by 25 basis points (bps) to 25% on February 7.
• This marks the first repo rate cut in nearly five years, expected to lower interest rates and equated monthly instalments (EMIs) on home and personal loans. The unanimous decision aims to stimulate economic activity by making borrowing cheaper, encouraging spending and investment.
• The RBI projects GDP growth at 6.7% and retail inflation at 4.2% for FY 2025-26.

Rationale Behind the Repo Rate Cut

• The primary reason for the rate cut is to boost economic growth by making credit more accessible. Lower borrowing costs for individuals and businesses can enhance spending and investment, leading to job creation.
• Since inflation remains within the RBI’s target range, the central bank has room to ease rates without compromising price stability. The rate cut aligns India with global monetary trends, as many central banks have adopted accommodative policies.
• RBI Governor Sanjay Malhotra highlighted the decline in inflation as a key factor behind the decision.

Impact on Interest Rates, Investment, and Consumption

• The cut in repo rate will lead to a 25 bps reduction in external benchmark lending rates (EBLR), providing relief to borrowers as their EMIs decrease. Lenders may also lower interest rates on loans linked to the marginal cost of funds-based lending rate (MCLR), where the full transmission of previous hikes has not been realized.
• Since May 2022, banks have increased their repo-linked EBLRs by 250 bps, while the one-year median MCLR has risen by 175 bps. Lower EMIs on home and vehicle loans will improve affordability and boost consumer demand.
• Increased access to cheaper credit can drive business investments, strengthening economic growth. However, lower interest rates could also reduce savings returns and contribute to inflation due to higher money supply and spending.

GDP Growth and Inflation Outlook

• The RBI has adopted a flexible inflation-targeting approach for macroeconomic decisions. In December 2024, it revised the GDP growth estimate for FY 2025 to 6.6% from the earlier projection of 7.2%, later adjusting it to 6.7% for 2025-26.
• India’s GDP growth for FY 2024-25 is estimated at 6.4%, slightly below the Economic Survey’s projection of 6.5-7%. Headline inflation moderated to 5.2% in December 2024 and is expected to decline further to 4.5% over the coming months. However, concerns remain over sustainability, especially with the rupee depreciating to 87 per US dollar.
• Retail inflation is projected at 4.2% for FY 2025-26, supported by declining vegetable prices and softened global edible oil prices, which should aid in controlling domestic inflation.

2) Governor’s Role in Assenting Bills: Constitutional Provisions and Challenges

GS 2: Polity and Governance: Debate over Governor’s discretionary powers

Why is it in the news?

• The Supreme Court recently questioned the Tamil Nadu Governor for delaying assent to several bills for over three years, reigniting debates on the Governor’s discretionary powers in the legislative process.
• As the constitutional head of a state, the Governor plays a pivotal role in approving bills passed by the state legislature. However, the discretion exercised in granting, withholding, or delaying assent has often been a matter of legal and political debate.

Constitutional Provisions

Article 200: Governor’s Authority Over State Bills

• When a bill is passed by the State Legislature and sent to the Governor, they have four options:

1) Grant Assent – The bill becomes law.

2) Withhold Assent – The bill is rejected and does not become law.

3) Return for Reconsideration – The bill is sent back to the legislature with suggestions. If the legislature re-passes it without changes, the Governor must give assent.

4) Reserve for Presidential Assent – If the bill contradicts constitutional provisions, affects High Court powers, or conflicts with central laws, the Governor can forward it to the President.

Article 201: President’s Role in Reserved Bills

• If the Governor reserves a bill for the President’s consideration, the President has two choices:

1) Approve the Bill – The bill becomes law.

2) Withhold or Return for Reconsideration – If returned and re-passed by the state legislature, the President is not obligated to give assent.

Concerns and Recent Issues

Delays in Granting Assent

• While the Constitution requires the Governor to act “as soon as possible,” it does not specify a strict timeframe. Prolonged delays can create a constitutional deadlock, hindering governance.
• Some Governors have been accused of misusing discretionary powers by indefinitely postponing decisions or employing a ‘pocket veto’—withholding assent without returning the bill for reconsideration.

Political Controversies

• State governments in West Bengal, Maharashtra, and Punjab have alleged that Governors act under central government influence, disrupting state governance. This raise concerns over federalism and the impartiality of the Governor’s office.

Supreme Court’s Interpretations

• Shamsher Singh v. State of Punjab (1974) – The Governor must act on the advice of the Council of Ministers, except in cases explicitly provided by the Constitution.
• Nabam Rebia v. Deputy Speaker (2016) – The Governor cannot override the elected government’s authority arbitrarily.
• Rameshwar Prasad Case (2006) – The Governor’s discretion must be exercised within constitutional limits and should not be politically motivated.

Governor’s Discretionary Powers

• The Governor’s ability to withhold assent or return a bill is not absolute. The Sarkaria Commission (1987) emphasized that sending bills for Presidential assent should be an exception, not a regular practice.
• It recommended that the President should decide on such bills within six months and provide reasons for withholding assent.

Reforms and the Way Forward

• Time-Bound Decision-Making – The Supreme Court has indicated that Governors should not indefinitely delay assent. Clear timelines should be set for decision-making.
• Greater Transparency – The Governor should communicate reasons for rejecting or reserving a bill to ensure accountability.
• Clarification on Discretionary Powers – A well-defined constitutional or judicial framework should establish limits on the Governor’s role in assenting bills.
• Judicial Oversight – Courts should have the authority to review cases where the Governor’s actions appear politically motivated, ensuring adherence to constitutional principles.

Conclusion

• The Governor’s role in the legislative process must balance constitutional responsibilities with democratic principles.
• Establishing clear guidelines and ensuring accountability will help prevent misuse of powers, strengthening India’s federal structure and governance.

3) States’ Demand for Increased Share in Central Taxes

GS 3: Economy: Tax Devolution

Why is it in the news?

• Odisha has joined other states in demanding that the Finance Commission increase their share in the divisible tax pool from the current 41% to 50%.
• This demand reflects the growing need for greater fiscal autonomy and financial resources to meet developmental and governance challenges.

Understanding Tax Devolution

• Tax devolution refers to the sharing of tax revenues collected by the central government with state governments. The Finance Commission recommends the distribution formula based on various factors, ensuring fair allocation.
• The objective is to strengthen fiscal federalism, provide states with financial autonomy, and enable them to meet their development needs. The formula considers demographic performance, tax mobilization efforts, geographic area, forest cover, and per capita income.
• Additionally, the Centre provides grants for schemes jointly funded by both levels of government.

Constitutional Provisions on Centre-State Financial Relations

• Several constitutional provisions govern financial relations between the Union and the States.
• Articles 202 to 206 deal with states’ financial administration, covering budgeting, expenditure, borrowing, and taxation powers. Articles 268 to 272 outline revenue distribution between the Union and the states.
• Article 280 mandates the formation of a Finance Commission every five years (or as determined by the President), while Article 282 allows the Union government to provide financial assistance to states for public purposes.

Current Tax Devolution to States

• The 14th Finance Commission increased states’ tax devolution from 32% to 42%, introducing revenue deficit grants for states with resource gaps.
• The 15th Finance Commission, chaired by N.K. Singh, revised the share to 41%, which will remain in effect until 2026. Despite the removal of the special status category, northeastern and hill states continue to receive funding in a 90:10 ratio, while other states receive central funding in a 60:40 ratio.

Concerns of the States

• States argue they need a higher share than what the Finance Commission has recommended due to their increased responsibilities, including education, healthcare, and law enforcement.
• Additionally, developed states like Karnataka and Tamil Nadu feel they contribute more in taxes than they receive from the Centre. There is concern that well-governed, financially strong states are being penalized to support states with weaker governance.
• Another major issue is the Centre’s increasing reliance on cesses and surcharges, which are not shared with states and currently constitute up to 28% of central tax revenues, reducing funds available for states.

Way Forward

• The 16th Finance Commission should reassess states’ demand for a higher tax share based on their fiscal needs and expenditure responsibilities. Strengthening disaster resilience funding by establishing a dedicated central disaster relief fund can ease the financial burden of disaster-prone states.
• Additionally, enhancing states’ financial management capacity will help ensure efficient utilization of devolved funds for development.

4) Power and Limitations of the Delhi Chief Minister

GS 2: Polity and Governance: Powers of Delhi CM

Why is it in the news?

• Over the past decade, Delhi’s government has been locked in a power struggle with the Centre, with disputes over law and order, pollution control, and revenue distribution.

Early Debates on Delhi’s Governance (1947)

• The Constituent Assembly debated the status of centrally administered provinces like Delhi, Ajmer, and Coorg. A committee led by Pattabhi Sitaramayya recommended a self-governing Delhi with a 50-member Legislative Assembly, a three-member Council of Ministers, and a Lieutenant Governor (L-G).
• However, Prime Minister Jawaharlal Nehru, Sardar Patel, and Rajendra Prasad argued that the Centre must retain control over Delhi. After prolonged debate, Delhi was made a ‘Part C’ state in 1951, with limited legislative powers.
• The Assembly could legislate on all State List subjects except public order, police, and land. Congress leader Brahm Prakash became Delhi’s first Chief Minister in 1952.

Delhi’s Status as a Union Territory (1956-1991)

• In 1956, Delhi became a Union Territory (UT) under direct administration from the Centre, leading to the dissolution of its Assembly. However, growing demands for self-governance led to the Delhi Administration Act of 1966, which established a 61-member Metropolitan Council.
• The L-G was empowered to summon and prorogue the council, while a three-member Executive Council advised him on legislative matters. Though the council lacked full legislative powers, it played a consultative role.
• The Congress dominated Delhi’s governance except for 1977-80 when the Janata Party briefly held power.

Introduction of Delhi’s Legislative Assembly (1991)

• In 1991, Delhi was renamed the National Capital Territory (NCT) through a constitutional amendment introducing Articles 239AA and 239AB. These articles provided for a Legislative Assembly with power over subjects in the State and Concurrent Lists, except police, public order, and land.
• The executive structure included a Chief Minister and a Council of Ministers, who advised the L-G. The L-G, as the President’s representative, retained discretionary powers on certain matters.
• The 1991 amendment also allowed the President to suspend the Assembly in case of a constitutional breakdown. The Government of NCT of Delhi Act, 1991, further defined the L-G’s role, stating that he could act independently only on matters beyond the Assembly’s control.

Political Shifts in Delhi (1993-2013)

• Between 1993 and 2024, Delhi saw governance shifts between the BJP, Congress, and AAP.
• The BJP ruled from 1993 to 1998, but after the Congress gained power at the Centre in 1998, Sheila Dikshit led Delhi for three consecutive terms. During this period, Delhi’s governance remained stable.
• However, with the emergence of AAP in 2013, the power tussle between the state and Centre intensified.

AAP vs. Centre: Escalating Power Struggles (2014-Present)

• The 2014 election of Arvind Kejriwal as CM and Narendra Modi as PM marked a new phase of conflict. AAP won a massive mandate in 2015 and 2020 but faced obstacles due to Centre’s control over crucial subjects.
• In 2016, the Delhi High Court ruled that the L-G was the executive head of Delhi, prompting AAP to challenge the verdict.
• In 2018, the Supreme Court ruled in favour of AAP, stating that the L-G must consult, not control, the government. However, in 2021, the Centre amended the Government of NCT Act, curtailing the Delhi government’s powers by requiring the L-G’s approval on all executive decisions. AAP challenged the amendment in the Supreme Court.
• In 2023, the Supreme Court reaffirmed the Delhi government’s control over administrative services, but within a week, the Centre issued an ordinance overriding this decision.
• The ordinance gave the L-G control over bureaucratic appointments and established the National Capital Civil Service Authority (NCCSA), where the CM had only one vote against two Centre-appointed officials. This severely restricted the CM’s power over governance.

Impact of Recent Amendments

• The 2023 ordinance and subsequent amendments have further diluted the Delhi CM’s authority. The Delhi government no longer has control over bureaucratic transfers, making it difficult to implement policies effectively.
• Legal experts argue that Parliament’s amendments may not withstand judicial scrutiny if they are deemed to violate the Constitution’s basic structure.

5) India Achieves Historic Milestone of 100 GW Solar Power Capacity

GS 3: Economy: India’s energy sector

Why is it in the news?

• India has surpassed 100 GW of installed solar power capacity, marking a major achievement in its renewable energy journey.
• This milestone strengthens India’s global leadership in green energy and aligns with its target of achieving 500 GW of non-fossil fuel-based energy capacity by 2030, as envisioned by PM Narendra Modi.

Government’s Commitment to Renewable Energy

• Union Minister of New and Renewable Energy highlighted that India’s energy sector has undergone a historic transformation. Initiatives such as solar parks, rooftop solar projects, and solar panel installations have played a crucial role in this progress.
• The Minister emphasized that India is not only becoming self-reliant in green energy but is also setting an example for the world. The PM SuryaGhar Muft Bijli Yojana is proving to be a game-changer by making rooftop solar energy accessible to households across the country.

Unprecedented Growth in the Solar Sector

• India’s solar capacity has witnessed a remarkable 3450% increase over the past decade, rising from just 2.82 GW in 2014 to 100 GW in 2025. As of January 31, 2025, the total installed solar capacity stands at 100.33 GW, with 84.10 GW under implementation and an additional 47.49 GW under tendering.
• The country is also advancing rapidly in hybrid and round-the-clock (RTC) renewable energy projects, with 64.67 GW under implementation and tendered, bringing the total solar and hybrid projects to 296.59 GW.

Solar Power Leading Renewable Energy Growth

• Solar energy remains the largest contributor to India’s renewable energy sector, accounting for 47% of the total installed renewable capacity. In 2024 alone, India added a record-breaking 24.5 GW of solar power, more than doubling the installations compared to 2023.
• Utility-scale solar capacity also saw a significant rise, with 18.5 GW installed in 2024—nearly 2.8 times the capacity added in 2023. Rajasthan, Gujarat, Tamil Nadu, Maharashtra, and Madhya Pradesh emerged as the top-performing states in utility-scale solar installations.

Rooftop Solar Expansion and Household Adoption

• The rooftop solar sector in India experienced impressive growth in 2024, with 4.59 GW of new capacity installed, reflecting a 53% increase compared to 2023.
• The PM SuryaGhar Muft Bijli Yojana, launched in 2024, has been a key driver in this expansion, nearing 9 lakh rooftop solar installations. This initiative has enabled households across the country to embrace clean energy, reducing dependence on traditional power sources.

India’s Rise as a Solar Manufacturing Hub

• India has also made significant progress in solar manufacturing. In 2014, the country had a limited solar module production capacity of just 2 GW.
• Over the past decade, this has surged to 60 GW in 2024, positioning India as a global leader in solar manufacturing. With continued policy support, India is expected to reach 100 GW of solar module production capacity by 2030.

Conclusion

• The achievement of 100 GW in solar energy underscores India’s position as a renewable energy powerhouse, ensuring clean, sustainable, and affordable energy access for millions while paving the way for energy self-reliance.

6) Initiatives for Climate-Resilient and Sustainable Agriculture

GS 3: Economy: Sustainable farming

Context

• Climate change poses significant challenges to Indian agriculture, with rising incidences of droughts, floods, heatwaves, and erratic rainfall patterns. To address these issues, the Government of India, through various initiatives, promotes sustainable and climate-resilient farming practices.

More about the news

• The Government of India, through the Indian Council of Agricultural Research (ICAR), is implementing the National Innovations in Climate Resilient Agriculture (NICRA) project to develop and promote climate-resilient agricultural technologies.
• Covering 151 climate-vulnerable districts, NICRA focuses on mitigating the impact of extreme weather conditions like droughts, floods, heatwaves, and frost.
• Technologies such as climate-resilient crop varieties, intercropping, conservation agriculture, agroforestry, zero-till sowing, green manuring, and integrated farming systems have been developed.
• These have been demonstrated to farmers through participatory approaches and documented for 23 states and 3 Union Territories for further upscaling.

Advancements in Precision Agriculture

• To enhance precision agriculture, ICAR’s Network Program on Precision Agriculture (ICAR-NePPA) operates at 16 locations, leveraging ICT-based technologies for sustainable farming.
• The project has developed sensor-based soil and crop health monitoring systems, precision input management (water and fertilizer) using robotics, IoT, and data analytics.
• Additionally, pest and disease monitoring technologies, particularly for rice and cotton, have been developed to provide real-time advisory services for effective crop management.

Integrated and Organic Farming Initiatives

• ICAR runs the All India Coordinated Research Programme on Integrated Farming Systems (AICRP-IFS) across 25 States/UTs and the All India Network Programme on Organic Farming (AINP-OF) in 16 States to promote sustainable farming methods.
• These initiatives focus on alternative cropping systems, integrated farming, organic, and natural farming. So far, 76 integrated farming system models, including 8 integrated organic models across 26 States/UTs, have been developed.
• Additionally, organic farming packages for 80 cropping systems in 16 states have been formulated to support eco-friendly agriculture.

National Mission for Sustainable Agriculture (NMSA)

• To strengthen farmers’ resilience against climate change, the Government implements the National Mission for Sustainable Agriculture (NMSA) under the National Action Plan on Climate Change (NAPCC).
• NMSA focuses on three key components:

1. I) Rainfed Area Development (RAD) – Enhancing productivity in rainfed areas.
2. II) On-Farm Water Management (OFWM) – Promoting efficient water use.

III) Soil Health Management (SHM) – Improving soil fertility through balanced nutrient management.

• Financial assistance is provided to states under NMSA to mitigate the adverse impacts of climate change on agriculture.

Crop Insurance for Risk Mitigation

• To protect farmers from extreme weather events, the Pradhan Mantri Fasal Bima Yojana (PMFBY) and the Restructured Weather-Based Crop Insurance Scheme (RWBCIS) were introduced in Kharif 2016.
• These schemes provide yield-based and weather-linked insurance coverage, helping farmers recover from climate-induced crop losses.

Farmer Outreach and Capacity Building

• Under the Technology Demonstration component of NICRA, 6,93,629 farmers have benefitted through on-field demonstrations of climate-resilient technologies.
• Additionally, 6,47,735 farmers have received training through 23,613 capacity-building programs, equipping them with knowledge and skills to adapt to climate change challenges.

7) Theatre Level Operational Readiness Exercise (TROPEX-25)

GS 3: Defence: Navy’s exercises

Why is it in the news?

• The 2025 edition of the Indian Navy’s flagship Theatre Level Operational Exercise (TROPEX) is currently underway in the Indian Ocean Region.
• Conducted biennially, this exercise involves all operational units of the Indian Navy, along with significant participation from the Indian Army, Indian Air Force, and Indian Coast Guard.
• The primary goal of TROPEX 25 is to validate the Navy’s core warfighting skills and ensure a synchronized, integrated response to safeguard India’s maritime security in a contested environment, addressing both conventional, asymmetric, and hybrid threats.

More about the news

• TROPEX 25 is taking place over three months, from January to March 2025, and is being executed in multiple phases, both in Harbour and at Sea.
• The exercise integrates various facets of combat operations, including cyber and electronic warfare, live weapon firings during the Joint Work Up Phase, and an Amphibious Exercise (AMPHEX). During this period, the exercise will involve around 65 Indian Naval Ships, 9 Submarines, and more than 80 aircraft from different branches of the armed forces, all engaging in complex maritime operational scenarios.
• The exercise aims to refine the Navy’s Concept of Operations, including forward-deployed sustenance and interoperability with other services.
• Over the years, TROPEX has evolved in both scope and complexity, and TROPEX 25 marks a significant advancement in coordinated planning, precise targeting, and combat effectiveness.
• The exercise also emphasizes credible joint operations in a dynamic environment to safeguard India’s national maritime interests, ensuring readiness to protect these interests anytime, anywhere, anyhow.