Current Affairs 07 June 2025

Content :

1. RBI cuts rate by 50 bps, interest burden to ease
2. 800-year-old Shiva temple unearthed in Madurai
3. A sunken ship and a sea of worries
4. Elon Musk’s Starlink gets licence to start services in India
5. Shah launches BBA initiative to free governance from ‘foreign language influence’
6. Chenab bridge designed to survive loss of a pier
7. RBI reduces qualifying asset threshold for NBFC-MFIs

RBI cuts rate by 50 bps, interest burden to ease

Key Policy Decisions:

• Repo Rate Cut:
  • Repo rate reduced by 50 basis points to 5.5%.
  • Aimed at stimulating growth amid subdued inflation.
  • Third cut since February 2025.

• CRR (Cash Reserve Ratio) Cut:
  • CRR to be reduced by 100 basis points in a staggered manner:
    • 25 bps cuts effective on: Sept 6, Oct 4, Nov 1, Nov 29.
  • Final CRR to be 3% of NDTL.

Relevance : GS 3(Indian Economy)

Implications of Repo Rate Cut:

• Positive for Borrowers:
  • Lower loan EMIs and borrowing costs (home, car, business loans).
  • Likely to revive credit demand and consumption.

• Negative for Savers:
  • Lower deposit interest rates may impact household savings.

• Boost to Investment:
  • Cheaper credit expected to incentivize capital expenditure by firms.

Implications of CRR Cut:

• Liquidity Infusion:
  • ~₹2.5 lakh crore of primary liquidity to be released to banks by Dec 2025.
  • More funds available for credit expansion.

• Reduced Cost of Funds:
  • Banks’ cost of holding reserves declines, improving profitability.

• Better Transmission:
  • Enhances monetary policy transmission to end-users (borrowers).

Inflation and Growth Context:

• Inflation Under Control:
  • CPI inflation remains near the target of 4% ± 2% band.

• GDP Forecast Maintained:
  • 6.5% real GDP growth projected for FY 2025-26.
  • Indicates confidence in economic fundamentals despite global uncertainty.

Strategic Significance:

• Balanced Approach:
  • Policy aims to support growth without compromising inflation control.
  • RBI appears more pro-growth as inflation risks recede.

• Supports Fiscal Measures:
  • Complements government capital expenditure and public investment efforts.

• Signal to Market:
  • Strong message of liquidity support and credit revival, may boost investor sentiment.

Key Definitions from the Article:

• Repo Rate:
  • The rate at which the RBI lends money to commercial banks.
  • Cut by 50 basis points to 5.50% to stimulate economic growth.

• Basis Point (bps):
  • A unit to measure interest rates; 1 bps = 0.01%.
  • So, 50 bps = 0.50% cut in repo rate; 100 bps = 1% CRR cut.

• Cash Reserve Ratio (CRR):
  • The portion of bank deposits that must be kept with the RBI.
  • Reduced by 100 bps in four phases → more money for banks to lend.

• PrimaryLiquidity:
  • The cash freed up for banks after CRR cuts.
  • ₹2.5 lakh crore expected to be released into the banking system.

• Net Demand and Time Liabilities (NDTL):
  • Total deposits banks hold, including savings, current, and fixed deposits.
  • CRR is calculated as a % of NDTL.

• Monetary Policy Committee (MPC):
  • A six-member body of RBI that decides policy interest rates.
  • Voted 5:1 for the 50 bps repo rate cut.

800-year-old Shiva temple unearthed in Madurai

Historical & Cultural Significance

• Temple dedicated to Lord Shiva, dated to 1217–1218 CE during the later Pandya period.
• Unearthed in Udampatti village, Melur taluk, Madurai, indicating the area’s rich temple heritage.
• Referred to as Thennavanisvaram, tying it to the Pandya royal title “Thennavan”, reinforcing dynastic patronage.

Relevance : GS 1(Culture ,Heritage)

Archaeological Insights

• Only the foundation with stone bases on the northern and southern sides remain.
• Silpa Sastram references helped identify the temple layout and style.
• Unearthing aligns with 1974–75 TN State Archaeology reports suggesting ancient temples in the belt, most of which are in ruins or missing.

Epigraphical Evidence

• Two Tamil inscriptions deciphered by archaeologist C. Santhalingam.
• Inscriptions include:
  • Sale deed of a waterbody (Nagankudi) and surrounding lands.
  • Seller: Alagaperumal, chieftain of Kalavalinadu.
  • Buyer: Nambi Perambala Kuthan alias Kangeyan.
  • Sale price: 64 kasu (coins).
  • Land’s tax to be offered to the temple, suggesting self-sustaining temple economy.

Socio-Economic Insights

• Attur was the earlier name of Udampatti, as revealed by inscriptions.
• The temple functioned as a fiscally autonomous institution, receiving revenue from land/waterbody transactions.
• Reflects the importance of temples as socio-economic hubs in the Pandya era.

Preservation & Public Involvement

• Temple remains were discovered accidentally by children, indicating lack of prior awareness.
• Prompt response from locals and Village Administrative Officer helped preserve and document the find.

Contemporary Relevance

• Highlights the need for proactive heritage mapping, especially in rural Tamil Nadu.
• Reinforces calls for conservation of undocumented historical structures.
• Useful for studies in medieval South Indian history, temple architecture, and epigraphy.

A sunken ship and a sea of worries

The Incident: MSC Elsa 3 Shipwreck

• The Liberian-flagged container ship MSC Elsa 3 sank on May 25, 2025, off the Thotapally coast, Kerala.
• It carried 644 containers, including hazardous materials like calcium carbide, 367 tonnes of fuel oil, and 64 tonnes of diesel.
• All 24 crew members were rescued before the ship sank.

Relevance : GS 3(Environment and Ecology)

Immediate Environmental Concerns

• Oil patches observed around the wreck but no major leaks yet.
• Plastic, cotton, and waste have washed ashore along a large stretch of Kerala’s coast.
• Concern about plastic nurdles (tiny plastic pellets) contaminating marine life.
• National Green Tribunal (NGT) warned of biodiversity risks in Kerala and Lakshadweep.

Fisherfolk’s Perspective

• Primary concerns go beyond the shipwreck:
  • Indiscriminate sand mining, untreated sewage, and chemical dumping.
  • Long-term decline in fish catch and increased sea incursion blamed on human activities, not just the accident.
• Fear of contaminated fish has hurt local demand and sales, despite no evidence of ‘fish kill’.

Economic Fallout on Fishers

• Fishing banned within a 20-nautical-mile radius of the wreck.
• Compensation of ₹1,000/month + 6 kg rice seen as inadequate.
• Fisher groups demand ₹10,000/month compensation.
• Retail fish prices fluctuated sharply due to fear-driven drop in demand:
  • Sardine (matthi): ₹15 → ₹300/kg
  • Pink perch (kilimeen): ₹30 → ₹190/kg
  • Mackerel (ayila): ₹220/kg

Response and Clean-up

• US-based T&T Salvage hired by MSC to manage clean-up operations.
• Equipment mobilized: oil-spill response tools, tugboats, underwater scanners.
• Kerala Pollution Control Board: no alarming presence of pollutants found yet in coastal samples.
• Ongoing daily sampling near the wreck site.

Policy and Governance Issues

• Media panic worsened economic fallout; calls for responsible reporting.
• Allegations that MSC and ship captain should be held accountable, as in global precedents (Philippines, France).
• Shipping lanes too close to the coast (sank <30 km from shore vs. 50 km standard channel).
• KMAV demands strict shipping routes and salvage of all fallen cargo.
• Three committees formed to assess:
  • Marine pollution
  • Damage to fisheries
  • Socio-economic impact

Community Resilience and Demand

• Fisher organizations launched fish festivals to revive local consumption.
• Demands include:
  • Precise mapping of sunken containers
  • Salvage operations for remaining cargo
  • Daily water quality checks
  • Plastic waste collection incentives
  • Long-term regulation of sand mining and pollution

Broader Environmental Message

• Experts like V.T. Sebastian warn of long-term ecological collapse if unchecked exploitation continues.
• Concerns raised about Kerala heading toward a “Somalia-like” maritime crisis if marine governance and pollution control are not strengthened.
• The shipwreck has become a flashpoint for long-standing environmental and livelihood issues along Kerala’s fragile coast.

Elon Musk’s Starlink gets licence to start services in India

Key Developments:

• Starlink gets licence from the Department of Telecommunications (DoT) to offer satellite-based internet services in India.
• Becomes the third firm after Eutelsat OneWeb and Jio Satellite Communications to receive such a licence.
• Amazon’s Project Kuiper is still awaiting approvals.

Relevance : GS 2(Governance) , GS 3(Technology)

What is Starlink?

• Developed by SpaceX, founded by Elon Musk.
• Offers high-speed broadband internet through low-earth orbit (LEO) satellites.
• Known as “broadband beamed from the skies”.

Next Steps for Starlink in India:

• Will be granted trial spectrum within 15–20 days of application.
• Must adhere to security protocols like lawful interception provisions.
• Needs to set up ground infrastructure and comply with regulatory norms before launch.

Relevance for India:

• Can significantly improve internet access in remote and rural areas.
• Strengthens digital infrastructure under Digital India mission.
• Supports disaster resilience by offering connectivity in areas without terrestrial networks.

Competitive Landscape:

• Starlink will compete with:
  • Eutelsat OneWeb – backed by Bharti Group.
  • Jio Satellite Communications – part of Reliance Jio’s broader digital push.
  • Amazon Kuiper – a potential fourth entrant.

Broader Implications:

• Potential to bridge India’s digital divide.
• Will boost telemedicine, remote education, e-governance, and IoT-based services.
• Raises data security and regulatory compliance concerns due to foreign ownership.

Shah launches BBA initiative to free governance from ‘foreign language influence’

Key Development:

• Union Home Minister Amit Shah launched the Bharatiya Bhasha Anubhag (BBA) — Indian Languages Section.
• Aim: To reduce the influence of foreign languages (mainly English) in governance and promote Indian languages in administration.

Relevance : GS 1(Culture ,Heritage) , GS 2(Governance)

Objectives of BBA:

• Promote governance and official communication in Indian languages.
• Encourage thinking, decision-making, and analysis in mother tongues.
• Provide a translation platform to convert texts between Indian languages and Hindi (and vice-versa).

Budgetary Support:

• ₹56 crore allocated in Union Budget 2024–25 for the BBA initiative.
• Funds will support infrastructure, technology, and translation mechanisms.

Linguistic Inclusivity:

• Aims to integrate India’s linguistic diversity into administrative frameworks.
• Recognizes that States like Tamil Nadu, Kerala, Karnataka (Region C) prefer their own languages over others.

Language of Correspondence – Region-wise Rules:

• Official Languages Rules guide how the Centre communicates with States:
  • Region C States: Communication continues in English as per rules.
  • However, BBA will facilitate replies in the State’s language (e.g., Tamil reply to a Tamil letter).

Cultural & Administrative Philosophy:

• Emphasizes that “true national development” is possible when local languages are empowered in administration.
• Vision to reclaim India’s historical linguistic and cultural pride.

Broader Significance:

• Boosts federal linguistic inclusivity and cultural nationalism.
• Raises implementation challenges:
  • Standardisation of technical terms.
  • Recruitment and training of multilingual staff.
  • Accuracy and quality of translations.

Chenab bridge designed to survive loss of a pier

Engineering Feat: The Chenab Bridge

• Chenab Bridge in Jammu & Kashmir is the world’s highest arch-railway bridge.
• Stands 359 metres above the Chenab River — equivalent to four Qutb Minars stacked.
• Spans 1,315 metres, with an arch span of 467 metres.

Relevance : GS 3(Infrastructure)

Structural Innovation

• Designed to remain operational even if one of its eight piers fails.
• Trains can continue on the bridge at reduced speed even in such a scenario.
• This adds extra resilience against natural disasters or structural failure.

Geotechnical Challenges

• Built in rugged Himalayan terrain with cracked, fissured rock slopes.
• Stability ensured using:
  • Cement grouting to fill fissures in rock.
  • Rock anchors (steel rods) inserted into slopes.
• Design had to be constantly adapted due to unpredictable mountain geology.

Resilience to Natural Forces

• The parabolic arch supports:
  • Wind speeds of up to 220 km/h.
  • High seismic activity (earthquakes) typical of Himalayan region.
• Arch design is globally recognised for load-bearing strength.

Design Philosophy

• Emphasis on flexibility: design iterations were made on-site as terrain complexities emerged.
• Challenge was not just structural but involved real-time engineering adaptation.

National Importance

• First arch-shaped railway bridge in India.
• One of 927 bridges in the Udhampur-Srinagar-Baramulla Rail Link Project.
• Symbol of technological prowess and strategic infrastructure development in a border-sensitive region.

RBI reduces qualifying asset threshold for NBFC-MFIs

Policy Update by RBI

• The Reserve Bank of India (RBI) has reduced the qualifying asset threshold for NBFC-MFIs from 75% to 60%.
• This means only 60% of total net assets (excluding intangible assets) now need to be qualifying microfinance loans, down from 75%.
• The change is effective on an ongoing basis for compliance.

Relevance : GS 3(Banking)

Compliance Protocol

• If an NBFC-MFI fails to meet the 60% threshold for 4 consecutive quarters, it must:
  • Approach RBI with a remediation plan.
  • RBI will then take a decision on further action.

Industry Impact

• The move frees up 15% of asset space, allowing NBFC-MFIs to diversify their loan portfolio.
• Encourages entry into non-microfinance segments, improving risk management and financial sustainability.

Strategic Benefits

• Provides operational flexibility and balance sheet stability.
• Helps NBFC-MFIs to serve a wider borrower base with more adaptive loan structures.
• Could lead to better cross-cycle earnings, reducing dependency on a single segment.

Social & Developmental Significance

• The reform is expected to enhance service delivery to poor households.
• Enables MFIs to customize financial products for low-income and underserved segments.

Key Definitions

1. NBFC-MFI (Non-Banking Financial Company – Microfinance Institution):
A type of NBFC that primarily provides small loans and financial services to low-income individuals or groups who lack access to traditional banking.

2. Qualifying Assets:
Assets (typically loans) that meet specific criteria set by RBI for NBFC-MFIs, generally microfinance loans to low-income borrowers, which form the core business of MFIs.

3. Qualifying Asset Threshold:
The minimum percentage of total assets that an NBFC-MFI must hold as qualifying assets to be classified as a microfinance institution (previously 75%, now reduced to 60%).

4. Intangible Assets:
Non-physical assets like goodwill, patents, copyrights, trademarks, which are excluded while calculating net assets for qualifying asset ratio.