Current Affairs 16 April 2025

Content :

1. Retail inflation eases to 3.34%, lowest since 2019
2. IMD forecasts ‘above normal’ monsoon
3. The approach to regulating AI in India
4. Are births, deaths being properly registered?
5. Bonds surge to more than 3-year high on RBI’s liquidity infusion plan

Retail inflation eases to 3.34%, lowest since 2019

Context :

• Retail inflation (CPI) fell to 3.34% in March 2025, the lowest since late 2019.
• The drop was driven by falling food prices, particularly vegetables, pulses, and eggs.
• Rural inflation fell to 3.25%, while urban inflation rose slightly to 3.43%.
• Consumer Food Price Inflation declined sharply to 2.7%, from 3.75% in February.
• Fuel and light inflation rose marginally to 1.48%, marking the first price rise since Sep 2023.
• State-wise variation:
  • Highest inflation: Kerala (6.6%)
  • Lowest inflation: Delhi (1.5%), Telangana (1.1%)

Relevance : GS 3(Indian Economy)

Policy and Monetary Context

• The decline follows two recent RBI repo rate cuts (each by 25 bps).
• Indicates monetary policy easing is yielding results, without triggering inflation.
• Analysts expect inflation to stay below 4%, creating space for a further 50 bps repo rate cut.

Implications

• Boosts household purchasing power, especially in rural areas.
• Signals macroeconomic stability and room for growth-focused policy.
• Could stimulate consumption and investment, given lower interest rates.
• Positive sentiment for bond and equity markets due to lower inflation expectations.

Implication:

Inflation Management

• Reflects effectiveness of inflation-targeting framework (RBI’s 4±2% band).
• Emphasizes food price volatility’s role in retail inflation—a persistent issue in India.

Monetary Policy & Growth Trade-off

• Shows a pro-growth bias of RBI amid global disinflationary trends.
• Highlights the delicate balance between stimulating demand and maintaining price stability.

Sectoral Impact

• Agriculture: Lower food inflation might hurt farmer incomes despite consumer benefit.
• Manufacturing & MSMEs: May benefit from rate cuts, improving credit access.
• State-level divergence: Calls for granular inflation management, considering regional disparities.

Broader Macroeconomic Linkage

• May aid in current account control if rate cuts improve competitiveness.
• Needs alignment with fiscal policy and supply-side measures for sustainable inflation control.

IMD forecasts ‘above normal’ monsoon

Context :

• IMD forecast: India likely to receive “above normal” monsoon in 2025 — i.e., 5% more than the long-period average (LPA) of 87 cm.
• This would be the second consecutive year of surplus rainfall (2024 had 8% above normal).
• The margin of error in the forecast is ±4%.

Relevance : GS 1(Geography) ,GS 3(Climate Change)

Positive Implications

• Agriculture:
  • Likely to benefit kharif crops (e.g., paddy, pulses, oilseeds) due to adequate soil moisture.
  • May enhance agricultural output, supporting rural income and food security.

• Water Resources:
  • Better reservoir storage improves irrigation, drinking water supply, and hydropower generation.

• Inflation Control:
  • Good monsoon → stable food prices → supports low retail inflation (relevant from previous news).

• Rural Economy:
  • Employment under MGNREGA, agro-based sectors, and rural consumption could get a boost.

Risks and Concerns

• Flood Risk:
  • Above-normal rainfall may bring episodes of intense rainfall → urban flooding, crop loss, and infrastructure damage.

• Climate Extremes:
  • Recent years show a trend of spatial and temporal rainfall variability, even during surplus monsoons.

• Forecast Limitations:
  • Models have only moderate predictability (~33%); high uncertainty due to complex monsoon dynamics.

Scientific Basis

• No El Niño: Typically leads to better monsoons; this year’s forecast benefits from its absence.
• Eurasian Snow Cover:
  • Below-normal snow in Jan–Mar 2025 → historically associated with better Indian monsoons (inverse correlation).
• Dynamical Model Forecasting:
  • IMD uses coupled ocean-atmosphere models, fed into supercomputers with parameters like:
    • Sea surface temperatures
    • Snow cover
    • Oceanic heat content
    • Wind patterns

The approach to regulating AI in India

Context :

• India lacks a formal AI regulatory law or national strategy, unlike several other countries.
• Current efforts are centered around IndiaAI Mission and an advisory group, but lack enforceability, accountability, and public engagement.
• The article stresses the need for a comprehensive AI policy and public discourse to ensure ethical and inclusive AI development.

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

Global Context of AI Regulation

• Countries with enacted laws: China, EU, Canada, Korea, Peru, USA (Trump revoked Biden’s AI EO).
• Countries with draft AI bills: UK, Japan, Brazil, Costa Rica, Colombia, Pakistan.
• 85+ countries (including the African Union) have national AI strategies, outlining:
  • Vision and priorities
  • Budgetary support
  • Roadmaps for ethical and inclusive growth

India’s Approach to AI Governance

• No official National AI Strategy or AI-specific legislation.
• Relies on:
  • NITI Aayog’s 2018 Strategy Document – yet to be formally adopted.
  • IndiaAI Mission with seven pillars – still evolving.
  • Expert advisory group – work-in-progress; recommendations not officially binding.

Advantages of India’s Flexible Approach

• Adaptability to evolving tech, global trends, and domestic needs.
• Can respond dynamically to citizen sentiment and market shifts.
• Avoids premature rigid regulation that may stifle innovation.

Major Concerns

• No binding vision or enforcement tools.
• Reactive governance – lacks clear milestones, accountability, or long-term planning.
• Overdependence on leadership – initiatives can change with political priorities.
• Low algorithmic transparency – no standards for public disclosure or audit.
• Social risks – exclusion, discrimination, deepfakes, violence from AI-generated content (e.g., social media unrest).

Lessons from Global Models

EU GDPR Model (Comprehensive & Centralised)

• India’s DPDP Act, 2023 aligns more closely with this model.
• Could be extended into AI governance.

US Model (Sector-Specific & Decentralised)

• Focuses on industry-specific regulations.
• May not suit India’s federal structure or need for unified standards.

China’s Use-Case Specific Laws

• Targeted laws for Generative AI, Deepfakes, etc.
• Offers clarity for high-risk sectors.

Way Forward for India

Short-Term Goal:

• Develop a National AI Policy Document addressing:
  • Vision & guiding principles
  • Priority sectors (e.g., health, agriculture, judiciary, education)
  • Institutional roles & responsibilities
  • Ethical standards
  • Infrastructure & capacity building
  • Transparency and accountability mechanisms

Medium-Term Goal:

• Pilot test enforcement tools, public consultations, and ethical frameworks.

Long-Term Goal:

• Enact formal AI legislation integrating learnings from pilots and international norms.

Are births, deaths being properly registered?

Context : The Registration of Birth and Death (RBD) Act, 1969 mandates the timely registration of births and deaths, with penalties for negligence. The government is pushing for digital registration through the Civil Registration System (CRS) to ensure accuracy and update vital national databases.

Relevance : GS 2(Governance ,Social Issues)

Legal Framework: Registration of Births and Deaths (RBD) Act, 1969 (Amended 2023)

• Mandate: Registration of all births and deaths within 21 days is compulsory.
• Penalty: Registrar’s negligence in registering births/deaths is punishable with a fine (increased to ₹1,000 from ₹50).
• Digital Mandate (since Oct 1, 2023): Digital birth/death certificates are now mandatory and are the sole legal proof for various public services.

March 17, 2024 Circular by Registrar General of India (RGI)

• Reason: Noted violations by hospitals in reporting birth/death data.
• Findings:
  • ~90% registration level, but 10% still unregistered.
  • 2011 levels: 82.4% (births), 66.4% (deaths).
• Reminder: Hospitals (govt. & private) must report events promptly.

Roles and Responsibilities under the Civil Registration System (CRS)

• Government hospitals: Act as registrars.
• Private hospitals: Must report events to the registrar — they cannot issue certificates directly.
• Variability: Departments responsible differ across States (Health Dept., Panchayats, or Economics & Statistics).
• Centralised Database: RGI now maintains a national database (post-2023 amendment), integrated with NPR.

Purpose of Centralised Digital Registration

• The digital birth certificate is now used for:
  • Admission to schools, govt. jobs, marriage registration, etc.
  • Updating NPR, ration cards, property, and electoral rolls.
• NPR (2010, updated 2015) — contains data of 119 crore residents; next update on hold due to census delay.

Ground-Level Challenges

• Hospitals often delay registration till relatives initiate it.
• Some private hospitals ask families to report events themselves.
• Registrars sometimes lack citizen-friendly registration mechanisms.
• Certificates should ideally be issued within 7 days.

Vital Statistics Report Status

• Purpose: Tracks infant mortality, stillbirths, death data — key for socio-economic planning & public health.
• Current status:
  • Last national-level report: 2020.
  • Some States like Mizoram (2023), Kerala (2021), Karnataka, Delhi, HP (2022) have updated data.
• 2020 Trends:
  • Birth registrations fell from 2.48 cr (2019) to 2.42 cr (2020).
  • Death registrations rose from 76.4 lakh (2019) to 81.2 lakh (2020).

Beware of child traffickers, top court cautions parents

Context : Supreme Court Warning to Parents:

• Parents must remain “extremely vigilant” against child trafficking.
• The Court highlighted various forms of child trafficking, including sexual exploitation, forced labor, begging, and child marriage.
• Trafficking rings may disguise child sales as inter-country adoptions, making it harder to detect.

Relevance : GS 2 (Governance, Constitution, Polity, Social Justice)

Technology’s Role in Child Trafficking:

• Criminal gangs use technology to share victim information, photos, and locations, making their operations more efficient.
• The Court emphasized the ease with which traffickers operate due to these technological advancements.

Emotional Impact on Parents:

• The pain of losing a child to trafficking is different from the grief of death, as parents face long-term uncertainty and helplessness.
• The Supreme Court’s verdict calls for greater care and attention from parents, especially in poor, vulnerable sections of society.

Court’s Actions Against Hospitals:

• Hospitals will face license suspension and legal action if newborns go missing or are trafficked under their care.
• Hospitals are held responsible for the protection of infants during delivery, emphasizing strict accountability.

Inter-State Trafficking and Involvement of Healthcare Professionals:

• The case involved 13 members of a child trafficking ring, including a nurse working at a primary health center in Chhattisgarh, highlighting the role of trusted professionals in these crimes.
• This points to potential collusion within healthcare systems, complicating efforts to prevent trafficking.

Delays in Justice:

• The Court criticized the slow progress of the trial and the Uttar Pradesh government for lack of action, with no appeal against the bail granted by the Allahabad High Court.
• It ordered the completion of the trial within six months and a two-month deadline for the police to trace the absconding accused.

Call for Urgent Action by High Courts:

• The Supreme Court directed High Courts across India to expedite the trials of pending child trafficking cases and ensure completion within six months.
• The need for a stronger, more active response from the judiciary and law enforcement was emphasized.

Exploitation of Juvenile Justice Protections:

• Traffickers exploit the protections offered to minors under the juvenile justice system, which inadvertently becomes a haven for committing crimes.
• The Court expressed concern over how such protections are misused by criminal networks involved in child trafficking.

Socio-Political Issues Highlighted:

• The case points to systemic flaws in the handling of child trafficking, including insufficient governmental action and accountability at the state and institutional levels.
• The Court’s strong stance calls for a more proactive, coordinated response from both the government and judiciary to combat the issue.

Bonds surge to more than 3-year high on RBI’s liquidity infusion plan

Indian government bond prices surged to over three-year highs as the Reserve Bank of India (RBI) announced a significant liquidity infusion plan, including bond purchases and repo operations. This move is part of RBI’s accommodative stance to support economic growth and ensure effective monetary policy transmission.

Relevance : GS 3(Indian Economy, Banking)

Key Developments:

• Bond Price Surge: Indian government bond prices hit more than a three-year high, driven by short-end gains.
• RBI’s Liquidity Infusion Plan: The Reserve Bank of India (RBI) announced its plan to buy bonds worth ₹400 billion ($4.67 billion) and conduct a 43-day repo for ₹1.50 trillion on Thursday.
• Repo Rate Reduction: Last week, RBI reduced the repo rate for the second consecutive time and changed its monetary policy stance to “accommodative,” signaling a focus on growth.

Significance of the Move:

• Continued Liquidity Support: Market participants expect continued liquidity injections in the future, indicating a strong commitment from RBI to ensure sufficient liquidity in the banking system.
• Policy Transmission: Comfortable liquidity conditions are deemed essential for effective monetary policy transmission. A surplus in liquidity allows for faster and more efficient transmission of rate cuts, facilitating economic growth.
• Targeted Surplus Levels: RBI is aiming for a liquidity surplus of around 1% of deposits, which amounts to approximately ₹2.20 trillion to ₹2.50 trillion, with the daily average standing at₹1.70 trillion this month.

Market Reactions:

• Bond Yields Decline: Bond yields have fallen as a result of RBI’s actions. The 10-year benchmark bond yield decreased by 3 basis points to 6.41%. Meanwhile, the 3-year and 5-year bond yields fell by 5-6 basis points, reaching 6.12% and 6.17% respectively.

Underlying Objectives and Implications:

• Accommodative Stance: RBI’s accommodative stance aims to support economic growth by reducing borrowing costs through lower bond yields.
• Liquidity Injection’s Role: By buying bonds and injecting liquidity, RBI aims to ensure that the banking system remains well-supplied with funds, which is crucial for stimulating credit growth and supporting economic recovery.
• Economic Growth Focus: The primary goal is to stimulate growth amid a softening economy, with the expectation that comfortable liquidity will ease credit availability for businesses and consumers.

Challenges and Considerations:

• Sustaining Liquidity Surplus: Ensuring that the surplus liquidity remains durable in the long term is a critical challenge. Too much liquidity can lead to inflationary pressures, while too little could stifle growth.
• Impact on Inflation and Currency: While current policy measures are aimed at boosting growth, the long-term impact on inflation and the Indian Rupee’s strength against global currencies will need to be monitored.

Conclusion:

• The RBI’s decision to infuse liquidity through bond purchases and repo operations aligns with its growth-supporting monetary policy, aiming to enhance policy transmission and ease borrowing costs. The market’s positive response in the form of lower bond yields indicates confidence in RBI’s actions to support economic recovery. However, sustaining liquidity without sparking inflation remains a balancing act that will require careful monitoring.