RBI CUTS REPO RATE TO 5.5%, ALSO REDUCES CRR
TOPIC: (GS3) ECONOMY: THE HINDU
The RBI cut the repo as inflation eased. It also announced a reduction in the cash reserve ratio (CRR) to enhance liquidity.
RBI Decisions
- The Monetary Policy Committee (MPC) voted 5:1 to cut the repo rate by 50 bps to 5% — the third rate cut since February 2025.
- Aimed at reducing borrowing costs and spurring growth.
- Benefits borrowers but may lower deposit interest rates.
- The CRR will be cut by 100 basis points (1%) in a staggered manner to 3% of net demand and time liabilities (NDTL).
- Reductions scheduled from September to November 2025 (25 bps each month).
- Expected to release ₹2.5 lakh crore liquidity to banks by December 2025.
What is Repo Rate?
- Repo Rate is the interest rate at which the RBI lends money to commercial banks, usually for short-term needs.
- When banks borrow from the RBI at this rate, it helps them meet temporary cash shortages.
- A lower repo rate makes borrowing cheaper for banks, and ideally encourages them to lend more to businesses and consumers.
What is CRR?
- CRR (Cash Reserve Ratio) is the percentage of a bank’s total deposits that must be kept as cash reserve with the RBI.
- It’s a tool used by the RBI to control liquidity (money supply) in the banking system.
- Banks cannot use this money for lending or investment — it’s kept idle with the RBI.
How Does Decreasing CRR Impact Liquidity?
- When the RBI reduces the CRR, banks can keep less money as reserves with the RBI.
- This frees up more money in banks’ hands to lend to businesses, farmers, and consumers.
- Liquidity in the market increases because banks have more funds to circulate in the economy.
- This can boost credit growth, investments, and economic activity, especially when demand for funds is high.
Impact on Liquidity and Growth
- Additional liquidity will lower banks’ funding costs, encouraging lending.
- RBI aims for better monetary policy transmission to credit markets.
- Supports investment and consumer demand amid stable inflation.
Policy Stance Shift
MPC shifted its stance from accommodative to neutral.
- Allows RBI flexibility to adjust rates if inflation rises.
- Indicates limited space for further cuts due to recent reductions.
Monitoring and Future Outlook
RBI emphasized continuous monitoring of global and domestic factors.
- Retail loan stress has eased; microfinance stress persists.
- Banks and NBFCs are strengthening credit practices to manage risks.
Monetary Policy Committee (MPC)
A 6-member body of the Reserve Bank of India (RBI) that decides India’s monetary policy, including key rates like the repo rate.
- Members: 3 from RBI (Governor, Deputy Governor, and one RBI official) and 3 external experts appointed by the government.
- Voting: Decisions are made by majority vote (4 out of 6 needed). Each member has one vote, and in case of a tie, the RBI Governor has a casting vote.
Main Aim:
- To maintain price stability while supporting economic growth.
- In simple terms, it focuses on controlling inflation and ensuring a stable financial environment for sustainable growth.
Targets:
- Keep Consumer Price Index (CPI) inflation at 4% (with a tolerance band of ±2%, i.e. between 2% and 6%).
Adjust key policy rates (like the repo rate) to manage inflation and growth.
Conclusion
RBI’s repo rate and CRR cuts aim to boost liquidity and support economic growth. Focus remains on balancing growth and inflation, with a shift to a neutral stance reflecting caution amid global uncertainties.
Prelims Practice Question:
- What does a tight monetary policy by the MPC mean?
- Lowering interest rates
- Raising interest rates to control inflation
- Cutting government spending
- Increasing money supply
Answer: B
Explanation:
- A tight policy means raising interest rates to curb inflation.
- A neutral policy means keeping rates steady, with no push for growth or slowdown.
WATER MANAGEMENT IN INDIA NEEDS A NEW COURSE
TOPIC: (GS3) ENVIRONMENT: THE HINDU
The 2025 World Water Day focused on ‘Glacier Preservation’, highlighting the need for sustainable water management, especially with rapid glacier loss.
Importance of Water and Glacier Linkage
- The UN World Water Development Report 2025 spotlighted the role of mountain glaciers as “water towers” that sustain communities and ecosystems downstream.
- The cryosphere (frozen parts of Earth) is crucial for freshwater flow, which affects both land and ocean systems.
- Water connects land and ocean ecosystems through rivers, groundwater, and coastal areas.
Challenges with India’s Current Water Management
- India’s water management is fragmented and sectoral, leading to inefficiency.
- Multiple administrative boundaries and overlapping jurisdictions complicate water governance.
problems include:
- Water scarcity: NITI Aayog’s 2018 report warned 600 million people could be affected, risking 6% of GDP.
- Pollution: 311 polluted river stretches in 30 States identified by CPCB in 2022.
- Groundwater stress: Overuse in states like Haryana, Punjab, and Rajasthan, with 25% of units at risk.
- Solid waste: Around 47% of daily waste remains untreated, polluting water bodies.
The Source-to-Sea (S2S) Approach
- Recognizes land, freshwater, and marine ecosystems as interconnected.
- Proposed in the Manila Declaration 2012, endorsed by 65 countries.
- Promotes integrated water management, linking upstream and downstream issues.
- Calls for cooperation between governments, experts, and communities to tackle problems holistically.
Way Forward for India
- Shift towards S2S approach in water policies to connect freshwater and ocean management.
- Integrate social-ecological frameworks to ensure community participation and science-based solutions.
- Focus on Sustainable Development Goals (SDGs) 6 and 14, linking water management (SDG 6.5) and reducing land-based pollution to oceans (SDG 14.1).
- Improve coordination between different governance levels—local, state, and national.
- Promote case studies and pilot projects like Delhi’s nutrient management and the Indo-Gangetic basin S2S program to test the approach.
Conclusion
India must move beyond fragmented water policies and embrace the Source-to-Sea approach for integrated and sustainable water management. This shift is essential to secure water resources, support ecosystems, and tackle climate change impacts effectively.
INDIA’S PATH TO A $5 TRILLION ECONOMY
TOPIC: (GS3) ECONOMY: THE HINDU
India is close to becoming the world’s fourth-largest economy, crossing a $5 trillion milestone soon. To sustain and accelerate this growth, it needs to adopt advanced technologies and focus on innovation.
India’s Economic Journey
- At independence in 1947, India had a small economy worth about $33 billion, weakened by colonial exploitation.
- For decades, the economy grew slowly at 3-4%, known as the “Hindu rate of growth,” due to centralized planning and focus on heavy industries.
- By 1991, the economy was only around $266 billion.
Economic Liberalisation and Growth
- In 1991, India opened its economy through liberalisation, unleashing entrepreneurial energy.
- The digital revolution, especially internet adoption, was seized by Indian tech entrepreneurs.
- Services sector grew rapidly, making up 60% of GDP, helping India cross $2 trillion by 2014.
Recent Growth and Government Initiatives
- Over the last decade, government programs like Start-Up India, Make in India, and Stand-Up India boosted growth.
- As per IMF data (May 2025), India is set to surpass Japan’s economy, reaching about $4.19 trillion.
- Japan’s economy shrank from $5.8 trillion to $4.18 trillion due to slow growth.
Understanding Per Capita Income
- Per capita income can be misleading since India has the world’s largest population.
- Even the US (largest economy) ranks 7th in per capita income, China 69th.
- The key focus should be on improving living standards and quality of life for citizens.
Signs of Economic Progress
- Monthly per capita expenditure in India increased 2.5 times in the past decade, especially on health, education, and travel.
- Domestic tourism reached 2.5 billion visits last year, and international travel by Indians rose 30% in 2024.
- Poverty has been significantly reduced, and the middle class has grown with higher disposable income.
The Road Ahead: Embracing Technology
- Growth depends not only on consumption but also on trade and technology.
- India missed the first two industrial revolutions due to colonial rule but benefited from the digital revolution.
- Now, the Fourth Industrial Revolution — involving AI, quantum tech, robotics, space, biotech, and crypto — will shape future growth.
- India must focus on deep-tech research, innovation, and create an investment-friendly environment.
- This strategic shift is essential for achieving the $10 trillion economy target by 2035.
Conclusion
India’s journey from a small, struggling economy to the world’s fourth-largest is remarkable. To sustain this momentum and reach its ambitious $10 trillion goal, India must focus on innovation and adopt cutting-edge technologies.
TRUMP-MUSK RIFT AND ITS IMPACT ON NASA
TOPIC: (GS2) INTERNATIONAL RELATIONS: THE HINDU
The recent public clash between US President Donald Trump and SpaceX owner Elon Musk has raised concerns about NASA’s heavy reliance on private companies for key space missions. Musk’s threat to decommission the Dragon spacecraft highlights NASA’s vulnerability due to its dependence on SpaceX.
Implications of the situation:
- NASA, the US space agency, now heavily depends on private companies like SpaceX for astronaut transport and other missions.
- A feud between Trump and Musk could disrupt this partnership, delaying key projects.
NASA’s Dependence on SpaceX
- ISS Missions: SpaceX’s Crew Dragon is currently NASA’s only reliable vehicle for ferrying astronauts to the International Space Station (ISS).
- After the end of NASA’s shuttle program in 2011, the US relied on Russia’s Soyuz until 2020, then shifted to SpaceX.
- Artemis Programme: NASA’s plan to send humans back to the Moon relies on SpaceX’s Starship spacecraft for crewed missions starting from 2027.
- Other Missions: SpaceX also supports planetary exploration missions and satellite deployment.
The Feud and Its Consequences
- Political Tensions:
- Musk criticized a tax bill, leading to Trump threatening to cancel government contracts and subsidies.
- Musk initially threatened to stop the Dragon spacecraft but later withdrew the threat.
- NASA’s Vulnerability:
- If contracts are cut, NASA’s ISS missions and Artemis program could be delayed.
- NASA might need to revive its in-house capabilities or find new private partners.
Conclusion
The conflict highlights the risks of over-reliance on a single private company and the need for diversified partnerships in space missions.
CHENAB BRIDGE
TOPIC: (GS3) ECONOMY: THE HINDU
The Chenab Bridge, the world’s highest railway arch bridge in Jammu & Kashmir, is designed by Prof. Madhavi Lata of IISc, ensures the bridge’s strength in challenging conditions like earthquakes and strong winds.
Chenab Bridge
- The Chenab Bridge is a major engineering achievement and part of the Udhampur-Srinagar-Baramulla Rail Link project.
- It stands 359 metres above the river Chenab, equivalent to stacking four Qutb Minars.
Unique Features
- Resilient Design: Designed to remain standing and safe even if one supporting pier is lost. Trains can still move on the bridge, though at a reduced speed.
- Foundation Challenges: Located in the Himalayas, the bridge faces cracks and fissures in mountain slopes. Cement grouting and rock anchors (steel rods) were used to stabilize the foundations.
- Arch Structure: The bridge’s parabolic arch design helps it withstand high wind speeds up to 220 kmph and strong earthquakes.
Significance
- First-of-its-kind: The only arch-shaped railway bridge in India, with few similar bridges worldwide.
- Length and Span: Measures 1,315 metres with an arch span of 467 metres.
CHENAB RIVER
The Chenab River originates from the Satsar Lakes in the Lahaul and Spiti district of Himachal Pradesh.
- Course: It flows through Jammu and Kashmir and Punjab before entering Pakistan.
- Tributaries: The Chenab is formed by the confluence of two rivers, Chandra and Bhaga, which meet at Tandi in Himachal Pradesh.
- Length: The river has an approximate length of about 960 km.
- Drainage Basin: The Chenab is part of the Indus River system.
- Significant Infrastructure: The Chenab Bridge (near Reasi, Jammu & Kashmir) is the world’s highest railway bridge, built over the Chenab River.
- Hydropower Projects: Important hydropower projects on the Chenab include the Baglihar and Salal dams.
- International Boundary: The Chenab flows into Pakistan-administered Kashmir, making it a transboundary river between India and Pakistan.
Treaty: It is one of the rivers governed by the Indus Waters Treaty (1960) between India and Pakistan.
Conclusion
The Chenab Bridge exemplifies India’s engineering capabilities in challenging terrains, enhancing connectivity and national pride.
Prelims Practice Question:
- Consider the following rivers:
- Chenab
- Ravi
- Jhelum
- Sutlej
Which of the above are tributaries of the Indus River?
- 1, 2, and 3 only
- 1, 2, and 4 only
- 2, 3, and 4 only
- 1, 2, 3, and 4
Answer: D
Explanation
- The Indus River has five main tributaries: Jhelum, Chenab, Ravi, Beas, and Sutlej.
- These rivers originate mainly in India and flow into Pakistan, joining the Indus River.
- Together, they form the Indus River System, which is important for agriculture, hydroelectric power, and water sharing between India and Pakistan.
- The Indus Waters Treaty between India and Pakistan governs the use of these rivers.
INDIA-US RELATIONS AND THE INDIA-PAKISTAN CEASEFIRE
TOPIC: (GS2) INTERNATIONAL RELATIONS: THE HINDU
Recent developments in India-US relations and the ceasefire between India and Pakistan, mediated by the US, have raised concerns about the nature of diplomatic ties and strategic challenges faced by India.
Strained India-US ‘Dosti’ (Friendship):
- Despite close ties, the US deported Indian immigrants with harsh treatment, imposed high tariffs on Indian goods, and voted to support IMF loans to Pakistan.
- Indian students face visa issues and suspension of visa interviews, with no strong protest from the Indian government.
- The trust and warmth once seen in India-US relations have weakened considerably.
The Trump-Modi Dynamics:
- In 2024-25, both leaders exchanged friendly words, even coining slogans like “MIGA” (Make India Great Again) and “MEGA” (Mega partnership).
- However, since May 2025, Modi and Trump have reportedly not spoken, indicating a diplomatic chill.
- The ceasefire between India and Pakistan announced by the US was unexpected and publicly attributed to Trump’s mediation.
US Role in India-Pakistan Ceasefire:
- The ceasefire was declared on May 10, 2025, after talks involving US Vice-President J.D. Vance and Secretary of State Marco Rubio urging India to stop the conflict.
- India’s Foreign Secretary confirmed the ceasefire, which surprised many Indians given India’s military gains during the four-day conflict.
The China Factor and Regional Security:
- Intelligence shared by the US reportedly warned India about potential nuclear threats or Chinese involvement.
- China reportedly supported Pakistan with advanced aircraft and missile technology, and Chinese military officers are believed to be embedded within Pakistan’s command structure.
- This has complicated India’s security situation and necessitates reevaluation of military strategies.
Trump’s Transactional Approach:
- Reports suggest Trump’s family business, involved in cryptocurrency deals with Pakistan, influenced his intervention in the war.
- This raises concerns about the mixing of personal business interests with US foreign policy.
- India faces a tougher diplomatic environment where commercial and political interests intersect.
Strategic Implications for India:
- India must reconsider its military and diplomatic strategies given the combined support Pakistan receives from China and tacit support from the US.
- The traditional India-US relationship is shifting, requiring India to rethink its foreign policy approach toward both countries.
Conclusion
India’s recent experience with the US highlights the complexities of international relations where strategic, political, and commercial interests intertwine. For India to safeguard its national interests, it must adapt its military and diplomatic policies to the changing global dynamics, especially concerning China and Pakistan.
UMEED PORTAL
TOPIC: (GS2) INDIAN POLITY: THE HINDU
The Union Minister for Minority Affairs, Kiren Rijiju, launched the UMEED (Unified Waqf Management, Empowerment, Efficiency and Development) Portal on June 6, 2025. This digital platform aims to ensure real-time monitoring, transparency, and public participation in managing Waqf properties across India.
Features of UMEED Portal
- Real-Time Monitoring: Enables real-time uploading, verification, and monitoring of Waqf properties.
- Digital Inventory: Includes geotagging of Waqf assets to create a digital record.
- Public Access: Provides verified records and reports for public viewing, promoting transparency.
- Grievance Redressal: Features an online system to address complaints efficiently.
- GIS Integration: Uses Geographic Information System (GIS) tools for better asset management.
Importance of the Portal
- Empowers Communities: Aims to protect the rights of minority communities, ensuring proper use of Waqf properties.
- Support for Women and Children: Designed to help disadvantaged groups within the Muslim community.
- Government Commitment: Reflects the government’s intention to safeguard community assets and promote inclusive development.
Conclusion
The UMEED Portal is a significant step towards modernising Waqf administration, ensuring assets are used for the welfare of poor Muslims as originally intended.
BENGALURU STAMPEDE
TOPIC: (GS2) INDIAN POLITY: THE HINDU
A deadly stampede occurred outside M A Chinnaswamy Stadium, Bengaluru, during a large public gathering celebrating the Royal Challengers Bangalore IPL win. The event caused multiple deaths and injuries, highlighting the need for better crowd management and personal safety awareness in such situations.
Bengaluru Stampede Incident
- Over 50,000 people gathered in a narrow area to see the IPL-winning team.
- The event faced poor planning and unclear permissions, leading to confusion and overcrowding.
- Mismanagement by organizers and unruly crowd behaviour contributed to the tragedy.
- 11 people died and more than 40 were injured in the stampede.
Tips to Stay Safe During a Stampede or Crowd Rush
Stay Alert and Watchful
- Always be aware of your surroundings in crowded places, especially during big events.
- Identify exits, bottlenecks, and possible escape routes beforehand.
- Look out for signs of sudden crowd movements or panic.
Leave Early When You Feel Unsafe
- If you feel uncomfortable or see crowd pressure building up, move away immediately.
- Early action reduces your risk and helps reduce crowd density, potentially preventing stampedes.
Keep Standing, Don’t Fall Down
- Staying on your feet is critical; falling can cause you and others to get trampled.
- Falling people can create a chain reaction that causes more people to fall.
Move with the Crowd Flow
- Avoid resisting the crowd’s movement as it can tire you and cause loss of balance.
- Going with the flow increases your chances of staying upright and safe.
Protect Your Chest and Keep Breathing
- Stampede deaths often occur from suffocation due to crowd pressure.
- Use your arms to shield your chest and create space to breathe.
- If you fall, lie on your stomach with hands under your chest to protect your airways.
Stay Calm and Help Others
- Panic and selfish behaviour worsen the situation.
- Cooperation and helping others can save lives, as seen in Bengaluru when people formed a human chain to assist fallen victims.
Conclusion
Stampedes often result from a mix of mismanagement and crowd panic. Awareness and quick, calm actions by individuals can save lives during such emergencies.
The post Daily Current Affairs 07-June-2025 first appeared on Ekam IAS Academy.