Daily Current Affairs : 9th February 2023

Daily Current Affairs for UPSC CSE

Topics Covered

  1. RBI Monetary Policy
  2. QR Code based coin vending Machine
  3. India – Fiji Relationship
  4. Disinvestment
  5. Facts for Prelims

1 . RBI Monetary Policy

Context: The Monetary Policy Committee (MPC) of the Reserve Bank of India raised the benchmark lending rate

Key Decisions and Observations of MPC

  • RBI raised the benchmark lending rate by 25 basis points (bps) to 6.5% as the RBI targets persistently high core or underlying inflation that it sees as a risk to the improving outlook for the economy.
  • The MPC was of the view that further calibrated monetary policy action is warranted to keep inflation expectations anchored, break the persistence of core inflation and thereby strengthen the medium-term growth prospects”.
  • Was the decision to hike rates unanimous?
  • It was a 4:2 majority decision by the RBI’s policy panel to hike the Repo rate, the sixth since May 2022. In a majority 4:2 decision, the MPC also retained the stance on withdrawal of accommodation to ensure that inflation remains within the target going forward, while supporting growth.
  • The central bank has lowered the inflation target for FY23 from 6.7 per cent to 6.5 per cent – which is still above the RBI’s comfort level of four per cent. Inflation is expected to be 5.3 per cent in FY24. Inflation for Q4 of FY23 at 5.7 per cent as against 5.9 per cent.
  • The RBI has projected GDP growth for the next fiscal (FY2024) at 6.4 per cent. The MPC had slashed the GDP forecast for fiscal 2023 to 6.8 per cent in the December policy review from an estimate of 7 per cent earlier as risks continue to emanate from protracted geopolitical tensions, global slowdown and tightening of global financial conditions.
  • The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) also unveiled its latest review of the monetary policy. In it, the RBI cut India’s GDP (gross domestic product) growth forecast for the current financial year, maintained the inflation forecast, and raised the repo rate by 35 basis points.

What will be the impact?

  • Lending rates of banks are expected to go up as the cost of funds is expected to rise further. EMIs on vehicles, home and personal loans will also rise. The external benchmark linked lending rate (EBLR) of banks will rise by 25 bps — one basis point is one-hundredth of a percentage point— as such loans are linked to the Repo rate. As much as 43.6 per cent of the total loans are now linked to the Repo rate.
  • Marginal cost of funds-based lending rates (MCLR), which accounts for 49.2 per cent of the loans portfolio of banks, are also expected to move up. The hike will help in moderating inflation in the country.
  • Deposit rates are also expected to witness some realignment

What is Monetary Policy Review?

  • Monetary policy reviews are among the most effective tools of the central bank of any country to achieve financial stability and economic growth.
  • Monetary policies basically control the overall supply of money available to commercial banks and, indirectly, to individual users and companies

What is the need of monetary Policy review?

  • In India, the RBI is entrusted with the responsibility of devising monetary policy “with the primary objective of maintaining price stability while keeping in mind the objective of growth”.
  • The central bank is supposed to target a 4% retail inflation level, although the RBI has the leeway of inflation going up to 6% or falling to 2% in any particular month.
  • Retail inflation is the inflation (or rise in the general price level) that everyday consumers face. Typically, when an economy experiences fast economic growth — that is, there is a lot of demand in the economy — prices rise. Some degree of inflation is desirable as it promotes economic activity.
  • When inflation runs high, RBI raises the repo rate — the interest rate it charges banks when it lends them money. Doing this incentivises savings and disincentives expenditure, thus curtailing overall demand and GDP. That, in turn, reduces the inflation rate.
  • In times of weak economic activity, RBI cuts the repo rate and by the reverse logic, boosts demand and economic output. All these critical decisions about the repo rate are taken by the MPC, which meets once every two months to assess inflation and growth outlook.

Monetary Policy Committee 

  • RBI Act, 1934 provides for an empowered six-member monetary policy committee (MPC) to be constituted by the Central Government. 
  • The first such MPC was constituted in 2016.  
  • Memebers:
    • Governor of the RBI; 
    • Deputy Governor of the RBI in charge of Monetary Policy; 
    • one officer of the RBI to be nominated by the Central Board;  
    • Three people to be appointed by the Central Government 
  • Governor of the Reserve Bank of India is the ex-officio Chairperson of the committee 
  • Members hold office for a period of four years or until further orders, whichever is earlier) 
  • It determines the policy repo rate required to achieve the inflation target. 
  • The MPC is required to meet at least four times in a year.
    • The quorum for the meeting of the MPC: four members. 
  • Each member of the MPC has one vote, and in the event of an equality of votes, the Governor has a second or casting vote. 

Direct and Indirect instruments used for implementing monetary Policy 

  • Repo Rate: The (fixed) interest rate at which the Reserve Bank provides overnight liquidity to banks against the collateral of government and other approved securities under the Liquidity Adjustment Facility (LAF). 
  • Reverse Repo Rate: The (fixed) interest rate at which the Reserve Bank absorbs liquidity, on an overnight basis, from banks against the collateral of eligible government securities under the LAF 
  • Liquidity Adjustment Facility (LAF): The LAF consists of overnight as well as term repo auctions. Progressively, the Reserve Bank has increased the proportion of liquidity injected under variable rate repo auctions across the range of tenors. The aim of term-repo is to help develop the inter-bank term-money market, which in turn can set market-based benchmarks for pricing of loans and deposits, and hence improve transmission of monetary policy. The RBI also conducts variable interest-rate reverse-repo auctions, as necessitated under market conditions. 
  • Marginal Standing Facility (MSF): A facility under which scheduled commercial banks can borrow additional amount of overnight money from the Reserve Bank by dipping into their Statutory Liquidity Ratio (SLR) portfolio up to a limit at a penal rate of interest. This provides a safety valve against unanticipated liquidity shocks to the banking system 
  • Corridor: The MSF rate and reverse repo rate determine the corridor for the daily movement in the weighted average call money rate.  
  • Bank Rate: It is the rate at which the Reserve Bank is ready to buy or re discount bills of exchange or other commercial papers. The Bank Rate is published under Section 49 of the Reserve Bank of India Act, 1934. This rate has been aligned to the MSF rate and, therefore, changes automatically as and when the MSF rate changes alongside policy repo rate changes. 
  • Cash Reserve Ratio (CRR): The average daily balance that a bank is required to maintain with the Reserve Bank as a share of such per cent of its Net demand and time liabilities (NDTL) that the Reserve Bank may notify from time to time in the Gazette of India. 
  • Statutory Liquidity Ratio (SLR): The share of NDTL that a bank is required to maintain in safe and liquid assets, such as unencumbered government securities, cash and gold. Changes in SLR often influence the availability of resources in the banking system for lending to the private sector. 
  • Open Market Operations (OMOs): These include both outright purchase and sale of government securities, for injection and absorption of durable liquidity, respectively. 
  • Market Stabilization Scheme (MSS): This instrument for monetary management was introduced in 2004. Surplus liquidity of a more enduring nature arising from large capital inflows is absorbed through sale of short-dated government securities and treasury bills. The cash so mobilized is held in a separate government account with the Reserve Bank.

Policy Stances of RBI 

  • Accommodative Stance
    • Accommodative stance means the central bank is telling the market to expect a rate cut anytime 
    • Usually, this policy is adopted when there is slowdown in the economy. 
  • Neutral stance
    • Neutral stance doesn’t have any particular meaning. This means anything can happen anytime means the RBI would have the flexibility to either increase or decrease the policy rates 
  • Tight and Calibrated Tightening stance
    • Tight – It indicates an impending rate hike 
    • Calibrated Tightening – RBI would either keep the rates constant or increase the rates. 

2 . QR Code based Coin Vending Machine

Context: To improve the distribution of coins among members of the public, the Reserve Bank of India (RBI) is preparing a pilot project on QR code-based Coin Vending Machine (QCVM) in collaboration with a few leading banks.  

What is QR code based Vending Machine?

  • The QCVM is a cashless coin dispensation machine which would dispense coins against a debit to the customer’s bank account using Unified Payments Interface (UPI)
  • Unlike standard cash-based Coin Vending Machines, the QCVM would not require actual tendering of banknotes or their validation.
  • Customers will also be able to withdraw coins in the required number and denominations from QCVMs

Where will these be QCVM launched?

  • The trial project will begin with 19 locations in 12 cities across the country.
  • These vending machines are designed to be deployed in public spaces such as railway stations, shopping malls, and marketplaces to improve convenience and accessibility.
  • Based on the results of the pilot tests, banks will be given guidance to promote improved coin distribution using QCVMs.

What are benefits of QCVM?

  • The new QR-code based pilot will offer ease and ready access to coins for customers via UPI facility.
  • With the initial launch across 12 cities in India, this move by the RBI is a strategic decision which will benefit the Indian payments landscape.

3 . India – Fiji Relationship

Context: The Government of Fiji will seek closer relations with democracies including India, said Deputy Prime Minister Dr. Biman Prasad who is on a five-day visit to India. where he attended events related to India Energy Week, he expressed hope that Fiji and India will cooperate in meeting climate change goals and in ensuring “common democratic values” in the Indo-Pacific region.

About the News

·       Prasad, Fiji’s minister for finance, strategic planning, national development and statistics, who is paying a visit to India from February 5 to 10, held talks with Jaishankar during which the two ministers reiterated the close connection that exists between the peoples of the two countries.

  • This is the first high-level visit from Fiji following the formation of the new government under Prime Minister Sitiveni Rabuka in December 2022.


  • Fiji, country and archipelago is located in the South Pacific Ocean. It surrounds the Koro Sea north of Auckland, New Zealand. The archipelago consists of some 300 islands and 540 islets scattered over about 1,000,000 square miles. Fiji is in the continent of Australia, which is also sometimes called Oceania
  • Due to its location in south pacific it is strategically important to the Major powers

Why Fiji is Strategically important to India?

  •  The Pacific Islands region in the Southwest Pacific has emerged as an area of keen interest to major powers, largely due to the People’s Republic of China’s (PRC’s) expanding engagement in the region.
  • China has aggressively sought to engage the smaller Island states and has challenged Australia and New Zealand, the traditional regional powers
  • In this context, India is demonstrating incremental interest to mark its presence in the region.
  • About 37% of Fijian population is of Indian origin and the Indian diaspora has been a key factor shaping Indo-Fiji ties. The country had hosted the first summit between India and the Pacific Island States in 2014.
  • Fiji has also been one of the founding members of the US-led Indo-Pacific Economic Framework (IPEF). The IPEF is an attempt by the US to re-enter the region and play a prominent role in the economic future of the Indo-Pacific
  • As a part of expanding its relations the 12th World Hindi Conference will be held in Fiji in February 2023.

India- Fiji Relationship

  • India-Fiji relations are based on mutual respect, cooperation, and strong cultural and people-to-people ties.
  • Historical Perspective- India’s links with Fiji commenced in 1879 when Indian laborers were brought here under indenture system to work on sugarcane plantations. Between 1879 and 1916 around 60,000 Indians were brought to Fiji. Currently, of the 849,000 population (2009 estimates), 37% are people of Indian origin.
  • Diplomatic relation– Following the 1987 coups in Fiji, the High Commission of India and Indian Cultural Centre were closed on May 24, 1990. The High Commission of India was subsequently reopened in March 1999 and the Indian Cultural Centre in February 2005.  Fiji established its High Commission in New Delhi in January 2004. India-Fiji bilateral relations have grown steadily during the past few years due to several ongoing initiatives and bilateral visits to and from Fiji
  • Commercial and Economic Relations– Major items of import from India are textiles, precious / semiprecious stones, chemicals, plastics & rubber, machinery and food products. Major items of export to India are pearls and iron & steel (scrap).  An MoU on Supervisory Cooperation and Exchange of Supervisory Information between the Reserve Bank of India and the Reserve Bank of Fiji was signed in March 2013. 
  • Agriculture and Allied Sector– A Memorandum of Understanding (MoU) for cooperation in the field of Agriculture and allied sectors was signed between India and Fiji
  • Defence Cooperation– An MoU on defence cooperation was signed between the two countries to envisage several areas of cooperation including in defence industry, military training and humanitarian assistance & disaster management.
  • Cultural Contact– The 12th World Hindi Conference is being organized by the Ministry of External Affairs in collaboration with the Government of Fiji from 15 to 17 February 2023 in Fiji.  

4 . Disinvestment

Context: In the Union Budget for 2023-24, the government has set a disinvestment target of ₹51,000 crore, down nearly 21% from the budget estimate for the current year and just ₹1,000 crore more than the revised estimate. It is also the lowest target in seven years. Moreover, the Centre has not met the disinvestment target for 2022-23 so far, having realised ₹31,106 crore to date, of which, ₹20,516 crore or close to a third of the budgeted estimate came from the IPO of 3.5% of its shares in the Life Insurance Corporation (LIC).

What is disinvestment?

  • Disinvestment or divestment is when the government sells its assets or a subsidiary, such as a Central or State public sector enterprise.

Types of Disinvestments

  • Minority disinvestment, majority disinvestment, and complete privatisation are the three main approaches to disinvestment.  
    • Minority disinvestment- In this type of investment, the government retains a majority in the company, typically greater than 51%, thus ensuring management control.Majority divestment- the government hands over control to the acquiring entity but retains some stake
    • Complete privatisation- 100% control of the company is passed on to the buyer.  

What is the reason for disinvestment?

  • There are two main motivations behind disinvesting in PSUs.
    • One is to improve the overall efficiency of their functioning. As PSUs, they are managed by the government on a daily basis. But in doing so, there are chances of political considerations overshadowing economic and corporate interests. This is especially true when the PSU transacts with the government — for example when it sells its products and services to the government, the pricing may be influenced by factors other than market factors. By disinvesting (or reducing the government stake), an attempt is made to make such a PSU more efficient as it would not be accountable to people and entities other than the government. The underlying hope is that private or corporate ownership will result in more efficient management.
    • The second factor is the government’s need to plug its deficit. The government is unable to meet its expenditures just from its tax revenues. With the proceeds of these sales, the government can reduce its debt liabilities and raise money for investments in other parts of the economy — such as building infrastructure in the form of new roads and bridges or increased spending on providing welfare to the poor and needy in the country.


  • All PSUs work under different departments and ministries within the government. However, the Department of Investment and Public Asset Management (DIPAM) under the Ministry of Finance is tasked with managing the Centre’s investments in the PSUs. Sale of the Centre’s assets falls within the mandate of DIPAM.
  • Each year, the Finance Minister sets a “disinvestment target”. Accordingly, bids are invited, or as in the case like LIC, public offerings are made and the PSU is privatised partially or fully.

What are the advantages of disinvestment?

  • Disinvestment allows for the redirection of huge amounts of public funds from non-strategic public sector subdivisions to fields with a far higher societal priority, such as health, family, and philanthropy.
  • Disinvestments also contribute to the reduction of the large public sector debt burden in the international arena.  

What are the disadvantages of disinvestment?

  • From 1990 to 2004, the amount collected by disinvestment was 2056 crore per year, which is insufficient given the Indian government’s debt ratio.
  • Disinvestment process lacks transparency because the use of the money generated from disinvestment is never disclosed.
  • Only the government can ensure that the market system is sufficiently regulated and that private enterprises are not solely motivated by profit and are concerned about the interests of their customers.
  • Monopolies will never produce anything beneficial; only a fair and healthy competition can benefit customers. From this perspective, disinvestment may not be the most effective alternative.

National Investment Fund

  • Government had constituted the National Investment Fund (NIF) in November, 2005 into which the proceeds from disinvestment of Central Public Sector Enterprises were to be channelized.
  • The corpus of NIF was to be of a permanent nature and NIF was to be professionally managed to provide sustainable returns to the Government, without depleting the corpus.
  • Selected Public Sector Mutual Funds, namely UTI Asset Management Company Ltd., SBI Funds Management Private Ltd. and LIC Mutual Fund Asset Management Company Ltd. were entrusted with the management of the NIF corpus.

5 . Facts for Prelims

Humanitarian Assistance and Disaster Relief (HADR)

  •  Humanitarian Assistance and Disaster Relief operation is the humanitarian assistance and relief operations conducted by the military forces in the disaster hit areas. .
  • Indian defence forces, under the aegis of Headquarters Integrated Defence Staff (HQ IDS) have been carrying out HADR operations within the country as well as outside the country.
  • The defence forces can deliver during various HADR contingencies due to our well ingrained expertise in reconnaissance, damage assessment, evacuation, setting up of relief infrastructure, restoring communication & providing medical facilities, distributing ration supplies, clothing etc.
  • Due to its sub-continental size, geographical location and its vulnerability to disasters, India has kept its forces ready to render assistance at short notice.
  • Recently India dispatched four Indian Air Force (IAF) C-17 Globemaster transport aircraft with relief material, a 30-bed field hospital, and rescue and medical personnel to Turkey as part of its Humanitarian and Disaster Relief (HADR) efforts to assist earthquake-hit Turkey and Syria.


  • A quorum is the minimum number of members required to be present in the house before it can transact any business.
  • Article 100 of the Constitution of India stipulates that at least 10% of a total number of members of the House must be present to constitute the quorum to constitute a meeting of either House of Parliament.
  • For example- there must be 55 members present in the Lok Sabha and 25 members present in the Rajya Sabha, if any business is to be conducted.
  • If at any time during a meeting of a House there is no quorum, the Chairman or the speaker must either adjourn the House or suspend it until there is a quorum.


  • It is Shimla’s highest peak, 2.5 km (1.6 mi) east of the Ridge at a height of 2,455 m (8,054 ft) above sea level, present in the state capital of Himachal Pradesh
  • Jakhu Temple is an ancient temple in Shimla, dedicated to the Hindu deity Lord Hanuman situated in this hill

Unified Payment Interface

  • Unified Payments Interface is an instant real-time payment system developed by National Payments Corporation of India.
  •  It is a payment system that allows money transfer between any two bank accounts by using a smartphone.
  • UPI allows a customer to pay directly from a bank account to different merchants, both online and offline, without the hassle of typing credit card details, IFSC code, or net banking/wallet passwords
  • It is safe as the customers only share a virtual address and provide no other sensitive information.

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