money essay upsc

Money Laundering

• Recently the Indian government has expanded the scope of the PMLA Act 2002 to include additional reporting entities and enhanced the recording of financial transactions. These amendments aim to strengthen the anti-money laundering framework in India and empower authorities to combat money laundering more effectively.

What is Money Laundering?

• Definition: Money laundering is the process of hiding the source of money obtained from illegal sources and converting it to a clean source, for the purpose of avoiding prosecution, conviction, and confiscation of the criminal funds.
• As per FATF : The goal of a large number of criminal acts is to generate a profit for the individual or group that carries out the act. Money laundering is the processing of these criminal proceeds to disguise their illegal origin. This process is of critical importance, as it enables the criminal to enjoy these profits without jeopardizing their source.

• Shell Companies : Setting up fictitious entities to create the appearance of legitimate business activity and facilitate the movement of funds.
• Smurfing/Structuring : Breaking down large sums of money into smaller transactions to avoid reporting thresholds and conceal the source of funds.
• Offshore Accounts: Using offshore banks or jurisdictions with strict bank secrecy laws to hide the true ownership and control of funds.
• Trade-Based Laundering : Manipulating invoices, over- or under-invoicing goods or services in international trade transactions to disguise the movement of funds.
• Money Mules : Recruiting individuals to transfer funds on behalf of criminals, making it difficult to trace the money back to its original source.
• Cryptocurrencies: Utilizing digital currencies like Bitcoin to obfuscate transactions and launder money across various blockchain platforms.
• Shell Banks: Establishing banks without physical presence or legitimate banking operations to facilitate money transfers without proper oversight.
• Casino Laundering: Converting illicit funds into chips, gambling them, and then cashing out with "clean" money from the casino.
• Real Estate Investments : Purchasing properties with illicit funds to legitimize the money and generate rental income or capital gains.
• Layered Transactions : Conducting multiple complex financial transactions to obscure the audit trail and confuse investigators.

Impact of Money Laundering

• Distortion of Economic Sectors : Money laundering disrupts fair competition and market integrity by injecting illicit funds into legitimate businesses.
• Undermining Financial Stability : Money laundering weakens the financial system, increasing the risk of crises and compromising the credibility of banks.
• Reduced Tax Revenues: Money laundering enables tax evasion, leading to lower government revenues and reduced public spending.
• Inequality and Poverty: Money laundering worsens wealth inequality, hindering equitable economic development and perpetuating poverty.
• Distorted Investment Patterns : Money laundering misallocates resources by diverting funds into sectors that may not contribute to genuine economic growth.
• Increased Costs for Businesses and Consumers: Anti-money laundering measures impose costs on businesses, which are passed on to consumers through higher prices.

• Undermining Rule of Law : Money laundering undermines the rule of law by allowing criminals to benefit from their illegal activities, eroding trust in legal systems.
• Impeding Development : Money laundering diverts funds from legitimate economic activities and social programs, hindering development efforts in areas such as education, healthcare, and infrastructure.
• Facilitating Organized Crime : Money laundering provides financial support to organized crime groups, allowing them to expand operations and engage in further criminal activities.
• Reinforcing Corruption : Money laundering perpetuates corruption by infiltrating and corrupting public and private institutions, undermining transparency, and accountability.
• Supporting Illegal Markets : Money laundering sustains illegal markets, such as drug trafficking and human trafficking, by legitimizing and profiting from illicit proceeds.
• Exacerbating Inequality : Money laundering contributes to wealth inequality as illicit funds concentrate in the hands of a few, widening social disparities.

• Corruption and Capture of Institutions : Money laundering infiltrates and corrupts institutions, compromising their integrity and effectiveness.
• Undermining Democracy : Money laundering distorts political processes by allowing illicit funds to influence elections and policy decisions, undermining fairness, and transparency.
• Weakening Governance and Rule of Law : Money laundering weakens governance structures, eroding the rule of law and diminishing public trust in institutions.
• State Fragility and Security Risks : Money laundering contributes to state fragility, undermining national security and exacerbating conflicts.
• Illicit Influence and Covert Operations : Money laundering facilitates covert operations and illicit influence, manipulating public opinion and political outcomes.
• Global Political Instability : Money laundering funds terrorism, supports rogue regimes, and destabilizes economies, contributing to global instability.

• Financing Terrorism: Money laundering provides funds for terrorist activities, including recruitment and violence.
• Transnational Organized Crime : Money laundering strengthens organized crime groups involved in drug trafficking, human trafficking, and arms smuggling, posing security threats.
• State Destabilization: Money laundering contributes to state fragility, political unrest, and conflicts by supporting corruption and criminal networks.
• Cybersecurity Risks: Money laundering involving digital transactions and virtual currencies exposes vulnerabilities for cybercriminals to launder funds and finance illegal activities.
• Illicit Arms Trade: Money laundering legitimizes and funds the purchase of weapons, exacerbating regional conflicts and security threats.
• Border Security Challenges: Money laundering facilitates the cross-border movement of illicit funds, creating challenges for border security in detecting and preventing illegal financial flows.

Steps for tackling Menace of Money Laundering

Legal Framework

• The Income Tax Act, 1961 : Mandates reporting of certain transactions, investigates tax evasion cases, and enables tax information exchange to detect and investigate money laundering activities.
• The Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 : Targets smuggling activities and confiscates assets acquired through smuggling, which can be associated with money laundering.
• The Benami Transactions (Prohibition) Act, 1988 : Prohibits benami transactions, where property is held in someone else's name, aiding in the identification and prevention of money laundering schemes.
• The Foreign Exchange Management Act, 2000 (FEMA): Regulates foreign exchange transactions, monitors cross-border movements of funds, and prevents money laundering associated with illegal foreign exchange activities.
• NIA Act, 2008 : Provides investigative and legal powers to the National Investigation Agency (NIA) in cases related to terrorism, which can have links to money laundering.
• Fugitive Economic Offender Act, 2018 : Targets economic offenders who flee the country to avoid prosecution, facilitates confiscation of their assets, and helps combat money laundering by such individuals.
• Prevention of Money Laundering Act, 2002: Provides a comprehensive framework for the prevention, detection, and prosecution of money laundering offenses, including the establishment of the Financial Intelligence Unit (FIU) and the enforcement of anti-money laundering measures.

Institutional Measure

• Enforcement Directorate (ED): The ED is a law enforcement agency responsible for enforcing economic laws and combating financial crimes, including money laundering, through investigations, seizures, and prosecutions.
• National Investigation Agency (NIA): The NIA is a specialized counter-terrorism law enforcement agency that investigates and prosecutes terrorism-related offenses, including those linked to financing of terrorism and money laundering.
• Combating Financing of Terrorism (CFT) Cell: The CFT Cell is a specialized unit within law enforcement agencies that focuses on identifying, tracking, and disrupting the financing of terrorism activities, including money laundering.
• Financial Intelligence Unit (FIU): The FIU is an independent government agency responsible for receiving, analysing, and disseminating information related to suspicious financial transactions to aid in the detection and prevention of money laundering and terrorist financing.

International Cooperation

• Vienna Convention, 1988 : The United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances provides a framework for international cooperation in combating drug-related crimes, including money laundering.
• The 1990 Council of Europe Convention : The Council of Europe Convention on Laundering, Search, Seizure, and Confiscation of the Proceeds from Crime promotes international cooperation to combat money laundering and recover proceeds from criminal activities.
• Financial Action Task Force (FATF) : The FATF is an intergovernmental organization that sets global standards and promotes the implementation of effective measures to combat money laundering, terrorist financing, and proliferation financing.
• Egmont Group : The Egmont Group is a network of financial intelligence units (FIUs) that facilitates the exchange of financial intelligence and enhances cooperation among FIUs worldwide to combat money laundering and terrorist financing.
• SDG Target Number 16.4 : Sustainable Development Goal Target 16.4, adopted by the United Nations, aims to reduce illicit financial flows, combat organized crime, and strengthen the recovery of stolen assets as part of broader efforts to promote peaceful and inclusive societies.

Challenges to tackle Money laundering

• Weak Global Cooperation: Example-Different laws in different countries.
• Complex Transactions: Example-funds may be moved through multiple shell companies, layered through various financial institutions, or converted into different assets like real estate or art to hide their illegal source.
• Evolving Technology: Example-use of cryptocurrencies like Bitcoin.
• Regulatory Compliance:  Example-Vague provision and complex language in money laundering act.
• Informal Economies:  Example-funds from illegal activities (Drug trafficking, tax evasion) may be integrated into legitimate businesses operating in cash-based sectors
• Corruption : Example-when law enforcement officials or regulators are bribed or coerced into turning a blind eye to money laundering activities,
• Tax haven countries: Example-Cayman Islands, British Virgin Island, Mauritius etc.
• Data Analysis : Lack of use of advanced technology and expertise for analysing vast amounts of financial data to identify suspicious transactions.
• Public Awareness:  Lack of awareness among individuals and organizations about money laundering.

Prevention of Money laundering act 2002

Recent Context -

• The government has recently made changes to the Prevention of Money Laundering Act (PMLA) to increase disclosures for non-governmental organizations and address loopholes.
• These changes are in preparation for India's assessment by the Financial Action Task Force (FATF), a global watchdog for money laundering and terrorist financing.

Recent Amendments to the PMLA:

• Inclusion of new entities: Chartered accountants, company secretaries, and cost and works accountants are now covered under the amended law when conducting financial transactions for clients.
• Expanded coverage of financial transactions
• Aadhaar verification for designated financial entities
• Definition clarification for PEPs: The amendment provides clarity on politically exposed persons (PEPs) who hold prominent public functions in foreign countries, such as heads of states or governments and military officers.

Concerns Related to recent amendment

• Misuse of powers: Risk of targeting political rivals or dissenters.
• Issues with ECIR (Enforcement Case Information Report)
• Accused not provided with details of allegations.
• Contrast to general criminal law: Burden of proof shifted to accused.
• Accused-bound to be a witness: Violation of right against self-incrimination.
• Inefficiency of ED: Low conviction rates despite numerous cases

Way Forward

• Internal Checks: Ensure consensus on constitutionality between adjudicating authority and ED.
• Process Not Punishment: Use ED's powers to expedite trials, preventing prolonged investigation as punishment.
• Operational Vigilance: Scrutinize ED's operations, assess conviction rate, address deficiencies.

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Money Laundering- Explained, pointwise

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• 1 What is Money Laundering
• 2 What are the negative impacts and effects on money laundering?
• 3 What are the Challenges in combating money laundering in India?
• 4 What measures have been taken to combat money laundering in India?
• 5 What should be the way forward to combat money laundering in India?

According to recent report of Pandora paper investigation two offshore shell companies registered in British Virgin Islands (BVI) that have invested in Adani Group stocks are linked to Adani Group Chairperson’s Brother.

This news brings in focus the menace of money laundering which is prevalent from corporate sector to terrorist Groups. Money Laundering is a heinous crime that not only affects the economic and social fabric of a country but also promotes other serious offenses like terrorism and drug trafficking .

India has been plagued with the problem of money laundering. Some famous Money laundering cases that have dominated headlines and political narrative in India are- Sharada Group Financial scandal , Satyam Scandal , PNB Fraud case of Nirav Modi and Kingfisher Airlines case of Vijay Mallaya.

What is Money Laundering

Definition- According to the UN Office on Drugs and Crime (UNODC), money laundering is the processing of money obtained from criminal activities to disguise their illegal origin. These criminal activities include financial fraud, drug trafficking and terrorist activities.

Process of Money Laundering- Money Laundering involves 3 steps:

Common Methods of Money Laundering- Some common methods of money laundering are:

What are the negative impacts and effects on money laundering?

Economic effects

Destabilisation of economy- According to studies conducted by the International Monetary Fund (IMF) it was estimated that the quantum of money laundered is approximately 2 to 5 percent of GDP of the world. Unpredictability of the economy increasing due to pumping of illegal money can lead to destabilisation economy of the country causing financial crisis.

Loss of revenue exchequer to Govt- Money laundering decreases the tax funds available for collection in the economy and decreases government’s revenues . Social sectors like health, education suffer due to lesser allocation of budgetary resources.

Impact on financial sector- Money Laundering discourages foreign investors from long term investments in the financial markets. FPIs pull out money in the way money laundering scams from the Indian markets resulting in exchange rates and interest rates volatility in the financial market. It also encourages tax evasion culture .

Transfers of economic power from the right people to the wrong – Committing crime of money laundering transfers of economic power from the right people to the wrong. The good citizens and the government are dispossessed from their right making the criminals take the benefit to flourish in their criminality.

Social Effects

Decline of Social and Political morality of the society- Money Laundering leads to decline in the moral and social position of the society by exposing it to activities such as drug trafficking, smuggling, corruption and other criminal activities.

‘Demographic Dividend’ turns into ‘Demographic Disaster’- Money Laundering i ncreases unemployment in the country as legitimate business companies fail to compete with operators operating through illegal money. It also increases criminal activities and more youth get attracted due to higher returns.

Political Effects

Policy Paralysis- Money laundering leads to policy paralysis due to measurement error and misallocation of resources. Legislative bodies are unable to quantify the negative economic effects of money laundering on economic development and its linkages with other crimes – trafficking, terrorism.

What are the Challenges in combating money laundering in India?

Increased use of digital currency like Bitcoins and cryptocurrency: The rise of cryptocurrency allows money launderers to conceal their illicit funds. According to IMF, more than $2.5 billion have been laundered since 2019 in cryptocurrencies.

Presence of tax haven countries- Strict financial secrecy laws by tax heaven countries like Bahamas, Bahrain, the Cayman Islands, Hong Kong, Panama and Singapore i ncentivize the creation of anonymous accounts in these countries by launderers.

Laxity on part of banks: Increasing competition in the financial market is forcing banks to lower their guards which allows money launderers to use the black money illicitly in furtherance of their crime.

Collusion by employees of financial institutions in money laundering: Some employees of financial institutions like Banks,NBFCs collude with the money launderers which further accentuates the menace of money laundering. PNB Fraud, Videocon-ICICI Bank cases are prime examples of this.

Lack of Convergence among the different enforcement agencies – Separate wings of law enforcement agencies dealing with money laundering, cyber-crimes, terrorist crimes, economic offences lack convergence among themselves. Lack of convergence between INTERPOL and CBI in the arrest of Indian fugitive Nirav Modi.

Lack of awareness about the seriousness of crimes of money laundering: People shop from several black markets which sell smuggled goods in India like the Chor Bazars . This further aggravates the problem of money laundering . Preference of Hawala system by the poor and illiterate population. This system is a major source of money laundering.

What measures have been taken to combat money laundering in India?

Statutory Measures

Passage of PMLA Act in 2002 to combat money laundering- Prevention on Money Laundering Act was passed in 2002 with the sole objective of combating money laundering in India. It provides greater power to the govt agencies in attachment and confiscation of properties and provides for stricter bail conditions . It is gradually becoming a dread law in the country.

Institutional Measures

Enforcement Directorate: Investigation and prosecution of cases under the PMLA have been entrusted to Enforcement Directorate. Prosecutions of Individuals under PMLA act have increased in recent times.

Financial Intelligence Unit India (FIU-IND)- Established in 2004 to serve as the primary national organization in charge of gathering, analyzing, and disseminating data about improbable financial transactions.

International Cooperation Measures

The Financial Action Task Force (FATF)- India as a member of FATF has effectively used the grouping to push for sanctions against countries like Pakistan which indulge in money laundering to breed terrorism.

India is a signatory to various conventions of UN to combat money laundering- India is also signatory to the International Convention for Suppression of Financing of Terrorism (1999) ; the United Nation Convention against Transnational Organised Crime (2000) and United Nation Convention against Corruption (2003).

What should be the way forward to combat money laundering in India?

Money laundering has the potential to completely destroy the economic and socio-political fabric of the country. Hence, we need to take further measures to protect our country from this menace.

Addition of stricter provisions – More strict provisions must be added to PMLA because money laundering tends to corrupt even the most professional players in the market.

Criminalization of money laundering in tax haven countries- Money laundering should be criminalized in accordance with the Vienna Convention and the Palermo Convention which must ensure that financial institution secrecy laws of tax haven countries do not impede the implementation of the FATF Recommendations.

Sensitization- Public must be sensitised that money laundering is more dangerous than terrorism. Hence they must refrain from buying from black markets or using hawala transactions. There is a need to sensitize the Private Sector about their role in anti-money laundering activities

There is a need to build a balance between financial confidentiality and this confidentiality turning to a money-laundering have n. India must use its diplomatic heft to nudge the tax haven countries to end their financial secrecy laws.

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Money and Money Supply

Money and Money Supply are the lifeline of an economy and central to our daily transactions. Understanding the mechanics of money and money supply is essential for grasping the broader economic forces at play, enabling informed decisions in both personal finance and policy-making arenas. This article of NEXT IAS aims to explain in detail the concept of Money and its types, along with the mechanism involved in the supply of money, Money Supply Measures, and other related concepts.

What is Money?

Money is defined as something that is generally accepted by society as a medium of exchange and which can act as a unit of account, a store of value, and be used for repayment of debt.

Money developed as a better alternative to the barter system of trade that had existed across the world since ancient times.

Barter System and Evolution of Money

The Barter System refers to the act of trading goods and services between two or more parties directly, without the use of an intermediary monetary medium, such as money or credit card. In other words, the barter system involves an exchange of one kind of goods and services for another kind of goods and services.

The barter system has been in use since the beginning of recorded history. However, as the economy grew in terms of its size and number of economic players, this system of trade started facing several difficulties as explained below:

• For example, a person, who wants clothes and has rice with him to offer in return, can exchange rice for cloth with only that another person who has cloth and who also wants rice. In practical life, finding such a person might be difficult.
• Issue of Large and Long Storage : In a barter system, a person must store a large volume of his own goods in order to exchange for his/her desired goods with others on a day-to-day basis. However, the good loses its original quality and value if it is stored for a long period.

These problems of the Barter System meant that as human civilization progressed, people felt the need for some common medium of exchange that could be easily carried, stored, and used to express the value of a good. It is this need that brought the money into being.

Major Functions of Money

The main functions of money in a modern economy can be seen as follows:

• Medium of Exchange : The primary and unique function of money is to serve as a medium of exchange. It resolves the issue of double coincidence of wants and facilitates economic exchanges with ease.
• Unit of Account : Money is the common standard for measuring the relative worth of goods and services. This makes it easier to compare values and setting prices.
• Store of Value : Money also serves as a store of value. People can hold their wealth in the form of money. Money provides a liquid store of value because it is easy to spend and store.
• Standard of Deferred Payments : Money facilitates transactions that are not settled immediately but require a future payment.
• Means of Payment : Money is used to settle debts and pay for obligations, including taxes, fees, and fines.

Types of Money

Economies across the world make use of various forms of money as can be seen below:

Commodity Money

Commodity money is that type of money that possesses intrinsic value of its own, independent of any governing body. This means the money itself contains a worth. Numerous commodities such as gold, silver, copper, chocolate beans, etc, have been used as Commodity Money.

Metallic Money

Metallic Money refers to money that is made up of pure and superior metals like gold and silver. Convenience, storability, high-value density, and easy portability led metallic money to take the place of commodity money.

Paper Money

Paper money consists of currency notes issued by the government or the central bank of a country.

• This type of money does not have any intrinsic value as such. Rather, they derive their value from the guarantee provided by the issuing authority.
• In India, every currency note and coin bears on its face, a promise from the Governor of RBI that if someone produces them to RBI or any other commercial bank, RBI will be responsible for giving the person purchasing power equal to the value printed on them.
• Cheques drawn on savings or current accounts and Demand Deposits (DD) are not legal tenders as they can be refused by anyone as a mode of payment.

Bank Money or Credit Money

• Bank Money or Credit Money refers to money held in the form of demand deposits with commercial banks.
• Therefore, credit money is regarded as ‘near money’.

Plastic Money

Plastic money is a term that is used predominantly in reference to the hard plastic cards in place of actual bank notes. They can come in many different forms such as cash cards, credit cards, debit cards, etc.

Helicopter Money or Helicopter Drop

• Helicopter Money or Helicopter Drop refers to increasing the supply of money in an economy through measures such as more spending, tax cuts, etc.
• It is, basically, an expansionary fiscal or monetary policy that involves printing large sums of money and distributing it to the public in order to stimulate the economy.
• The term ‘Helicopter Drop’ was coined by the American economist Milton Friedman in 1969.

Digital Money or Electronic Money

• Digital Money or Electronic Money refers to any means of payment that exists in a purely electronic form.
• Unlike other forms of money, Digital Money is not physically tangible.
• At present, this form of money is increasingly becoming prevalent with the rise of online banking and digital wallets.

Money Supply

• The total stock of money in circulation among the public at a particular point in time is called money supply or supply of money.
• the government
• the RBI (in the form of CRR), and
• the commercial banks (in the form of SLR).
• Currency Notes and Coins (CU)
• Demand Deposits such as Saving Bank Deposits (DD) – These are those deposits that can be withdrawn on demand from banks.
• Other Deposits such as Time Deposits/Term Deposits/Fixed Deposits – These are those deposits that can be withdrawn only after a specific time.
• Money held in Post Office Saving Accounts.
• Deposits of Banks in other Banks/RBI (except CRR).

Money Supply Measures

Money Supply Measures refer to the tools used to measure the supply of money in an economy. In India, the RBI has been using the following tools as money supply measures:

• M0 (or Reserve Money)
• M1 (or Narrow Money)
• M3 (or Broad Money)

The following points are to be noted w.r.t. these Money Supply Measures:

• These measures of the supply of money vary in terms of the liquidity they possess.
• This decline in liquidity indicates the shifting of its nature from a ‘medium of exchange’ to a ‘store of value’.
• In India, mostly M0, M1, and M3 are used, while M2 and M4 are rarely used.

M0 (Reserve Money)

M0 is the sum of

• Currency in Circulation
• Bankers’ Deposits with RBI, and
• ‘Other’ Deposits with RBI

Here, ‘Other’ Deposits with RBI comprise mainly:

• Deposits of quasi-government and other financial institutions including primary dealers,
• Balances in the accounts of foreign Central banks and Governments,
• Accounts of international agencies such as the International Monetary Fund, etc.

M1 (Narrow Money)

M1 is the sum of

• Currency with the Public, and
• Net Demand Deposits held by Commercial Banks

M2 is the sum of

• Savings Deposits with Post Office Savings Banks

M3 (Broad Money)

M3 is the sum of

• Net Time Deposits with the Banking System

M4 is the sum of

• Total Deposits with Post Office Savings Organizations (excluding National Savings Certificate)

New Monetary Aggregates

The Working Group on Money Supply: Analytics and Methodology of Compilation (Chairman: Dr. Y.V. Reddy), in 1998, recommended the compilation of 4 monetary aggregates on the basis of the balance sheet of the banking sector in conformity with the norms of progressive liquidity. The RBI has started publishing these new monetary aggregates as a measure of supply of money:

• NM0 (Monetary Base)

NM1 (Narrow Money)

Nm3 (broad money), nm0 (monetary base or reserve money).

NM0 is the sum of

Here, ‘Other’ deposits with RBI comprise mainly:

NM1 is the sum of:

• Currency with the Public
• Current Deposits with the Banking System
• Demand Liabilities Portion of Savings Deposits with the Banking System, and

Thus, NM1 includes currency with the public and non-interest-bearing deposits with the banking sector including that of RBI.

NM2 is the sum of:

• Short-term Time Deposits of Residents (including and up to the contractual maturity of 1 year)

NM3 is the sum of:

• Long-term Time Deposits of Residents, and
• Call/Term Funding from Financial Institutions.

Thus, NM3 captures the complete balance sheet of the banking sector.

Liquidity Aggregates

In addition to the New Monetary Aggregates, the Working Group had also recommended the compilation of three Liquidity Aggregates – L1, L2, and L3.

L1 is the sum of:

• All Deposits with the Post Office Savings Banks (excluding National Savings Certificates).

L2 is the sum of:

• Term Deposits with Term-Lending Institutions and Refinancing Institutions (FIs),
• Term Borrowing by FIs, and
• Certificates of deposit issued by FIs.

L3 is the sum of:

• Public Deposits of Non-Banking Financial Companies (NBFCs)

Velocity of Money

The velocity of money is a measurement of the rate at which money is exchanged in an economy. In simple terms, it refers to:

• the number of times that money moves from one entity to another, OR
• the number of times a unit of currency is used in a given period of time, OR
• the rate at which consumers and businesses in an economy collectively spend money.

The velocity of money is usually measured as a ratio of GDP to a country’s Total Money Supply. Thus,

Velocity of Money = GDP/Total Money Supply

Significance of Velocity of Money

• Indicator of Robustness of Economy : Velocity is important for measuring the rate at which money in circulation is used for purchasing goods and services. This helps investors gauge how robust the economy is.
• Indicator of Inflation : It is also a key input in the determination of an economy’s inflation calculation. Economies that exhibit a higher velocity of money have a higher rate of inflation , and vice versa.
• Velocity of Money = GDP/Total Money Supply Hence, GDP = Money Supply × Velocity of Money

Thus, GDP cannot be controlled through the supply of money alone.

• If there is an increase in money supply, but the velocity of money decreases, the GDP may stay the same or even decline.
• If the supply of money is decreased, but the velocity of money increases, GDP could increase.

Therefore, an increase in the supply of money does not necessarily lead to an increase in GDP or inflation without taking the velocity of money into consideration.

The concepts of Money and Money Supply are foundational to understanding economic dynamics. As economies continue to evolve, with digital currencies and new forms of transactions emerging, the definitions and implications of Money and Money Supply will likely adapt.

FAQs on Money and Money Supply

What constitutes money.

Anything that can serve as a medium of exchange, a unit of account, a store of value, and be used for repayment of debt can be called Money. There are various types of money such as Commodity Money, Metallic Money, Paper Money, etc.

What is meant by ‘Currency in Circulation’?

“Currency in Circulation” refers to banknotes and coins that are not held by the Central Bank or banking institutions, but are instead in the cash reserves of banks or in the hands of the public and are actively being used in an economy for transactions.

How does the Central Bank control the Money Supply?

The Central Bank makes use of various monetary policy instruments to control the supply of money in an economy.

What role does the Supply of M oney play in Inflation?

Inflation is more or less directly related to the money supply in an economy. The higher the supply of money, the higher the inflation, and vice versa.

How does the Money Supply impact interest rates?

The supply of money and interest rates have an inverse relationship. This means that generally, as the supply of money in an economy increases, interest rates tend to decrease, and vice versa.

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Economics Notes

Money: Definition, Function, and Forms

Money is a medium of exchange that is widely accepted in transactions involving the transfer of goods and services from one party to another. It serves several key functions in an economy, which include:

1. Medium of Exchange

Money facilitates transactions by eliminating the inefficiencies of a barter system. In a barter system, there must be a double coincidence of wants for a transaction to occur, which is often difficult to achieve. Money eliminates this problem by acting as a commonly accepted intermediary.

2. Unit of Account

Money provides a standard measure of value, which makes it easier to compare the value of goods and services. This function simplifies both the pricing of goods and services and the recording of financial transactions.

3. Store of Value

Money can be saved and retrieved in the future, thus preserving value over time. This is contingent on the stability of the money’s value; high inflation can erode the purchasing power of money, making it a less effective store of value.

4. Standard of Deferred Payment

Money is widely accepted as a way to settle debts payable in the future. This function is crucial for the credit market, allowing for loans and credit transactions.

Money can take various forms, including:

• Commodity Money : This is money whose value comes from the commodity out of which it is made, such as gold or silver coins. The value of commodity money is derived from the material itself and its uses outside of being a medium of exchange.
• Fiat Money : This is money that has no intrinsic value but is established as money by government regulation or law. Its value comes from the trust and faith that people have in the issuing government. Most modern currencies, like the Indian Rupee or the US Dollar, are examples of fiat money.
• Bank Money : This form of money is created through the banking system and includes various deposit accounts that can be used to make transactions. While not physical money, bank money can be converted into physical form, such as cash, and is widely used for electronic transactions.

The evolution of money from physical commodities to digital forms (like digital currencies and cryptocurrencies) reflects ongoing changes in technology, preferences, and economic systems. Regardless of its form, the fundamental functions of money remain critical to the functioning of modern economies.

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What is Money Supply? Definition and Concept Explained

Last updated on February 26, 2024 by Alex Andrews George

The money supply is the total value of money available in an economy at a point of time.

Money Supply is also known as Money Stock.

Table of Contents

What constitutes money?

There is no uniform definition of money.

Common public usually associate currency with money. As you know, bank deposits are also money.

For different calculations, different components are included as ‘money’.

Definition of Money Supply

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Money Supply can be defined as the money circulating in an economy .

As money supply is connected with ‘circulating money’, only the highly-liquid forms of money like currency and bank deposits are usually considered.

Money Supply is measured and expressed using different monetary aggregates like M1, M2, M3, M4 etc.

Terms like Narrow Money and Broad Mone y are also used to denote money supply.

Money Supply – In layman’s terms

The money supply is the total stock of money circulating in an economy. In the most simple language, Money Supply is Currency in Circulation plus Deposits in Commercial Banks.

Money supply consists of:

• total currency circulating in the public plus
• the non-bank deposits with a commercial bank.

Money supply includes deposits generated in the banking system resulting from a multiplier effect of movement of currency in the banking system as well as other forms of liquid assets.

What is meant by ‘currency in circulation’?

It is the total value of the currency (coins and paper currency) that has ever been issued by the Reserve Bank of India minus the amount that has been withdrawn by it.

Currency in circulation (currency with the public) comprises of:

• currency notes and coins with the public
• cash in hand with banks.

It is a major liability componen t of a central bank’s balance sheet.

Money Aggregates: Standard Measures of Money Supply

In short, there are two types of money.

• Central bank money (M0 ) – obligations of a central bank, including currency and central bank depository accounts.
• Commercial bank money (M1 and M3)  – obligations of commercial banks, including current accounts and savings accounts.

In the money supply statistics, central bank money is M0 while the commercial bank money is divided up into the M1 and M3 components. M2 and M4 components also include Post-Office deposits as well.

Generally, the types of commercial bank money that tend to be valued at lower amounts are classified in the narrow category of M1 while the types of commercial bank money that tend to exist in larger amounts are categorized in M2 and M3. M3 is the largest of all money aggregates (M1-M3).

Note: In this article, we cover the Monetary Aggregates as per the old convention (M1, M2, M3, and M4). In the new convention, aggregates are represented as NM1, NM2, and NM3. This is covered in detail in the ClearIAS article on the new monetary aggregates .

Reserve Money (M0):

Reserve money is also called central bank money, monetary base, base money, or high-powered money. It is the base level for the money supply or the high-powered component of the money supply.

In the most simple language, Reserve Money is Currency in Circulation plus Deposits of Commercial Banks with RBI. 

• = Currency in circulation + Bankers’ deposits with the RBI + ‘Other’ deposits with the RBI
• = Net RBI credit to the Government + RBI credit to the commercial sector + RBI’s claims on banks + RBI’s net foreign assets + Government’s currency liabilities to the public – RBI’s net non-monetary liabilities.

M1 (Narrow Money)

• =Currency with the public + Deposit money of the public (Demand deposits with the banking system + ‘Other’ deposits with the RBI).
• =M1 + Savings deposits with Post office savings banks.

M3: (Broad Money)

• = M1+ Time deposits with the banking system
• = Net bank credit to the Government + Bank credit to the commercial sector + Net foreign exchange assets of the banking sector + Government’s currency liabilities to the public – Net non-monetary liabilities of the banking sector (Other than Time Deposits).
• =M3 + All deposits with post office savings banks (excluding National Savings Certificates).

Money Multiplier (m)

A money multiplier is an approach used to demonstrate the maximum amount of broad money that could be created by commercial banks for a given fixed amount of base money and reserve ratio.

• The money multiplier, m , is the inverse of the reserve requirement, R :

• For example, with the reserve ratio of 20 per cent, this reserve ratio, R , can also be expressed as a fraction:

• So then the money multiplier, m , will be calculated as:

This number is multiplied by the amount of reserves to estimate the maximum potential amount of the money supply. For example, from Rs.100 can be multiplied by 5 to generate Rs.500 money supply if Reserve Ratio is 1/5 (20%) or when Money Multiplier is 5. When Reserve Ratio is 1/4 (25%) or when Money Multiplier is 4, that would generate only Rs. 400 as money supply.

Money Supply (M3) vs Monetary Base (Mo)

Reserve Money (Mo) is also called the monetary base. As mentioned earlier, it denotes the money of RBI. Mo includes Currency in Circulation and Bank’s Reserves.

Even though the money supply can be denoted either as M1 or M3, usually when we speak of money supply, we intend M3. M3 includes Currency in Circulation and Checkable Bank’s Deposits.

Demonetisation and its effect on Money Supply (M3) and Reserve Money (Mo)

When a currency note of a particular denomination ceases to be legal tender, the central bank’s liabilities are reduced to that extent and also the amount of currency in circulation declines.

On November 8, 2016 Government of India made Rs. 500 and Rs. 1000 notes invalid . This meant that Rs. 15.41 lakh crore worth of high-value legal tender was withdrawn from circulation.

So, the entire liability of Rs. 15.41 lakh crore due to Rs.500 and Rs.1000 notes in circulation was nullified.

But the demonetisation impact is neutralised when the demonetised currency is replaced with new accepted currency notes. You may note that, even if an individual chooses to park the cash as deposits with banks, it forms a part of the overall money supply.

The RBI report after demonetisation had mentioned that 99.3% of all demonetised currency returned to the banking system . The figure was 15.31 lakh crore.

As 15.31 lakh crore again became part of the RBI, now the net-liability of RBI = Rs.15.41 lakh crore – Rs.15.31 lakh crore = Rs.0.10 lakh crore.

This figure (Rs. 10000 crore) was only a nominal reduction in liability, offset by printing and transportation cost of the new currency, which led many experts to point out that the demonetisation experiment was a failure to curb black money. Many criticised the government that it over-estimated the black money in the country.

What if the demonetisation was a success?

If there was a lot of black money in the country, and people choose not to declare and surrender their high-denomination currency notes, then RBI would have gained to the extent that its currency liabilities are lowered.

The gains it makes in the process could have been transferred to its reserves and then appropriated in its profit and loss account. This would have given it leeway to transfer higher amounts as dividends to the government .

However, this scenario didn’t happen.

Why is the currency in circulation a liability to RBI or government?

Let us examine what is the status of the currency we hold in our hands.

Section 26 of the Reserve bank of India Act 1934 (“RBI Act”) states as follows: (1) Subject to the provisions of sub-section (2), every banknote shall be legal tender at any place in India in payment or on account for the amount expressed therein and shall be guaranteed by the Central Government.

This means that the money the public hold in hand or in the bank is a debt guaranteed by the government (to us). The currency thus represents a ‘public debt’ owed by the government to the holders of the banknotes – the public.

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About Alex Andrews George

Alex Andrews George is a mentor, author, and social entrepreneur. Alex is the founder of ClearIAS and one of the expert Civil Service Exam Trainers in India.

He is the author of many best-seller books like 'Important Judgments that transformed India' and 'Important Acts that transformed India'.

A trusted mentor and pioneer in online training , Alex's guidance, strategies, study-materials, and mock-exams have helped many aspirants to become IAS, IPS, and IFS officers.

Reader Interactions

November 18, 2016 at 12:00 pm

Nice to read on this current affair.

November 19, 2016 at 12:43 pm

What a website for Upsc preparation….i love the contents and article of this website…mind blowing…really the best website…

October 23, 2017 at 8:43 pm

what exactly is cash in hand with bank, under CIC section. does that mean that CIC also consists of demand deposits ?

January 28, 2019 at 11:12 pm

Cic means cash/currency notes and coins with public and banks (printed notes).. where as demand deposits much more than the cic due to the multiple effect of money.. If all the depositers ask for their money at a time banks won’t able to pay them all… cic is the currency ie physically available.. I hope u got it

December 18, 2021 at 11:37 am

Yes cic includes demand deposit.

April 5, 2018 at 1:01 am

With respect m0 two different equation are given… How are they related? M0 is sum of banks deposit.. But in other equation its RBIs credit give?

Please clarify

October 9, 2018 at 7:40 pm

one rupee notes issued by the govt of india is known as? a-reserve money b-narrow money c-broad money d-fiat money

can anyone answer for this question

April 16, 2021 at 12:57 pm

Option d… One rupee note has finance secretary sign… That means bearer of 1rupee note creates a liability of the signed one. It should not refused by every citizen of India hence it is a fiat money

December 13, 2018 at 6:36 pm

As per my understanding, Bank reserves do not form a part of Monetary base (aka) Reserve Money (M0), because Bank reserves are Net non-monetary liabilities of RBI, which is deducted when calculating M0. The same is also indicated in the M0 2nd formula, which is, M0 – Net RBI credit to the government + RBI credit to Commercial sector + Net foreign currency assets of RBI + RBI claim on Banks + GOvernment’s currency liabilities to the public ‘-‘ NET NON MONETARY LIABILITIES OF RBI Please review.

April 16, 2021 at 3:51 pm

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Money and Banking: Functions, Evolution, and Modern Dynamics

Money and Banking Dynamics:

Money is the commonly accepted medium of exchange. In economies with multiple individuals, money facilitates market transactions . Money facilitates exchanges by allowing individuals to sell their produce for money, which is then used to purchase necessary commodities. It serves various functions in a modern economy, including the facilitation of exchanges, market transactions, and facilitating the exchange of goods and services.

Money and Banking form an interdependent relationship. Once the money is in circulation, it is mainly the banking sector that gets involved in the transaction process.

How has the role of Money and Banking transformed from a Medium of Exchange to facilitating Cashless Transactions?

• This requires both parties to agree to sell and buy each other’s commodities. 
• This happens in a barter system where goods are directly exchanged without the use of money, but transactions in terms of money make it all easier.
• An Intermediate Step: Money serves as an intermediate step in an economy, Thus eliminating the need for a double coincidence of wants.  
• Convenient Unit of Account: Money acts as a convenient unit of account.
• Example: A certain wristwatch is worth Rs 500, It  means that the wristwatch is exchangeable for 500 units of money, with the rupee serving as the unit of currency in this instance. 
• Example: If the price of a pencil is Rs. 2, and the price of a pen is Rs 10, then a pen is worth 10÷2 = 5 pencils. 
• Example: A rupee is equivalent to 1÷ 2 = 0.5 pencils or 1÷10 = 0.1 pens in the example above.
• Money, on the other hand, is not perishable and has lower storage costs and universal acceptability. 
• Other assets like gold, landed property, houses, or bonds can also act as stores of value but may not be easily convertible or universally acceptable. 
• Dynamic in Nature: When commodity prices increase in terms of money, the purchasing power of money decreases, allowing a unit of money to purchase less of any commodity.
• Example: the Indian government has been investing in reforms like Jan Dhan accounts, Aadhar-enabled payment systems, e-wallets, and National Financial Switch to promote financial inclusion.

Ever wondered why transactions are made in money?

The reason is simple. A person holding money can easily exchange it for any commodity or service that he or she might want.

Money and Banking: Understanding modern forms of money

Money has served as a medium of exchange, with Indians using grains and cattle since ancient times. Metallic coins like gold, silver, and copper were introduced in the last century.

What roles do Modern Money and Banking play in today’s financial landscape?

• Modern forms of Money: It includes currency — paper notes and coins .
• It is not made of precious metals like gold, silver, or copper, nor is it everyday use like grain or cattle, but has its own unique use.
• The Reserve Bank of India issues currency notes on behalf of the central government in India, no other individual or organisation is allowed to issue currency. 
• Hence, the rupee is widely accepted as a medium of exchange in India. 
• This deep integration of money and banking is a cornerstone of the modern financial system, shaping economic transactions and financial stability.

Relationship between money and banking: Why do people hold money in deposits with banks?

• Money Holding Behavior: People hold money in deposits with banks, as they need only some currency for their daily needs at a certain point in time.
• Withdrawal of Money: People also have the provision to withdraw the money as and when they require it.
• Demand Deposits: Since the deposits in the bank accounts can be withdrawn on demand, these deposits are called demand deposits. 
• For payment through cheque, the payer who has an account with the bank, makes out a cheque for a specific amount.
• Hence they share essential features of money. 
• The Symbiotic Relationship: The modern forms of money (currency and deposits) are closely linked to the working of the modern banking system.

How do Income and Interest Rates influence the demand and supply of money in the Context of Money and Banking?

Factors influencing Money Demand: 

• Determinants of Money Demand: The demand for money is determined by the value of transactions and the quantity of money demanded. 
• Income Impact on Money Demand: As the quantum of transactions depends on income, an increase in income leads to a higher demand for money.
• The amount of money people keep in banks depends on the rate of interest. 
• The higher rate of interest decreases interest-earning deposits and subsequently decreases the demand for money.

How do money and banking work together in the modern economy?

Money in a modern economy includes cash and bank deposits . These are created by the central bank and commercial banking system.  

Let’s have a look at them in detail. 

• Central Bank: Functions and currency control
• The Reserve Bank of India , established in 1935, is a crucial institution in the Indian economy. 
• Like issuing currency.
• Controlling the money supply through methods like bank rates and reserve ratios. 
• It acts as a banker to the government .
• It is  custodian of foreign exchange reserves. 
• The central bank’s currency, known as high-powered money or reserve money, serves as a basis for credit creation.
• Role of Commercial Banks in money creation:
• Money-creating System : Commercial banks are essential for the economy’s money-creating system . 
• Normally, interest rates for depositors are lower than for borrowers. 
• This difference between these two interest rates is called the ‘spread’ .
• They offer interest on deposits and make transactions more convenient and safer. 
• Security and Utility of Demand Deposits: In the modern context, demand deposits make transactions more secure , even without earning interest. 
• To ensure that sufficient funds are available to repay any depositor on demand, banks must balance their lending activities.
• This ensures that banks can continue to serve their customers and maintain a healthy financial system.

UPDATED :     

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Evolution of Money

• 4 minute read

Points to Ponder in This Article –  Just understand the definitions of money system that were used over the time from ancient to modern one. Understand the differences between barter system, bank money and crypto currencies.

Money, as we know it today, is the result of a long process. At the beginning, there was no money. People engaged in barter, the exchange of merchandise for merchandise, without value equivalence.

Barter System

Function of Money

• In barter system, it was difficult to determine how much each of the labour should earn from the total production.
• But money’s primary function viz. measure of value makes it possible to determine the share of individual worker in the total production and pay him accordingly.
• Helps in Distribution of National income.

Anyone who provides any of the four factors of production viz. land, labour, capital, entrepreneurship; will earn money as rent, wage, interest or profit. Less chances of exploitation (compared to the Barter system, feudal system, Zamindari system) Thus, money helps in distribution of income among various factors of production.

Commodity Money

• Intrinsic value of commodity was used to make exchanges viz.

USA → Tobacco, Corn, Iron nails were used to make exchanges. Aztec → Cocoa beans were used to make exchanges. India → Cowries were used to make exchanges. Fiji → Whale teeth were used to make exchanges.

• Problems of commodity money

Face Value was not same throughout region. Face value was not same for outsiders. Generally, commodity used were perishable in nature → could cause inflation. Generally bulky to carry. No fungibility or divisibility → No division of labour.

Metallic Money

• Started by Kings & Traders with uniformity & precision
• Forged in Gold (Muhr)                            → High value
• Forged in Silver (Rupaiya)                      → Moderate value
• Forged in Copper/ Bronze (Dam, Paisa) → For day to day purchases

Positives of Metallic Money

• Intrinsic value + Non-perishable
• Divisible, Fungible
• Foreign trade possible (without exchange rate)
• Production was low → Prices stable → No Hyperinflation

Negatives of Metallic Money

• Mansabdari payment system → 50% in Gold +25% in Silver + 25% in Copper
• Copper Dam Debasement → 20 gm copper in Akbar time in a coin | 13 gm copper in Aurangzeb time  

People became vary of coin values → Again started barter system Tax collection & revenue system started declining People started using East India company coins

• Bulky to carry
• Smuggling for intrinsic value to other Kingdoms (Main reason for debasement)

Paper Money (Fiat Money)

• Fiat Money → Used by the command of the government
• Examples include → US dollar, Indian Rupee, Euro, Yen, Yuan
• Legally recognized to settle all debts & payments within territorial jurisdiction
• Initially Fiat Money was pegged to Gold viz.

1 US $ →   22 grains Gold 1 British Pound → 113 grain gold 1 Pound → 113/22 → 8 US $ But during world war 2 this system collapsed

• After WW2 Fiat Money was formatted as Paper standard viz.

Central Bank free to print currency without gold backing Exchange Rates → Fixed Exchange rate + Floating Exchange rate + Managed Exchange rate

What is not Fiat Money?

• Money without government legal backing
• Superstores plastic coins, cards & coupons
• Shares, Bonds, Debentures, G-Sec, T-bill
• DD, Cheques, Credit Card, ATM card
• Bitcoin & other Digital currency

Problems of Fiat Money

• Debasement → Over printing → Hyper inflation
• Still Bulky to carry + Theft + Counterfeit
• Change problem → Rounding off problem

Imagine a petrol pump not returning 60 paise per customer due to change problem For Every 1 lakh customers pump is earning 60,000 rupees

• Backed by Central bank of the country viz.

Cheque, Bank Draft, NEFT, RTGS Credit card, Debit cards, Visa Card, Master card, Rupay card

• Benefits of Bank money

Spot payment + Deferred payment + Time saving Easy to transfer over long distance Exact amount can be transferred (No change problem) Hard to counterfeit Can be freezed if card is stolen via. KYC norms Legally recognized for high value payment

Crypto Currency / Virtual Currency → Bitcoin

• Major reasons for birth of crypto currency

Subprime crisis → US QE → Increased dollar supply → Dollar’s purchasing power decreased Banks charge fees on online transfer, credit card, ATM Anarchist groups (a person who believes that government and laws are not necessary)

• Birth of Bitcoin

Started in 2009 by Satoshi Nakomoto 1 BTC → 10(^8) Satoshi – Virtual money Reward distribution for solving algorithm + Exchange by Fiat money + Selling goods & services

RBI Stand on Decentralised Digital Currency / Virtual Currency (Bitcoin)

• No central bank has authorized Bitcoins
• Not Traded through BSE, NSE or Commodity exchange (SEBI, FMC)
• No Forex dealers under FEMA can convert Fiat currency into Bitcoin or vice versa
• Bitcoin Exchange website → Legal status unclear
• Danger → Hacking, Phishing, Malware, Password lost
• Consumer courts cannot help
• High speculation & volatility
• Mere digital code, no intrinsic value, not backed by Gold, silver or crude oil
• Media reports on illegal drug, money laundering, terror-financing.
• Unintentionally breaching anti-money laundering / Anti-terror laws
• Same for all Digital currencies / virtual currencies

very good effort

Excellent Post

Grt…..

easy to understand…thanks iasmania

This is called notes otherwise all websites so far i have visited were just copy paste material but here to the point answer.Absolutely as mentioned by above written statement it is -Easy To Digest Material.

And quick to study during exam time,when we have shortage of time.Thanks Iasmania for this.

very simplified …easy to digest..thank you

awesome notes for IAS preparation

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UPSC Essay Topic wise Question Papers of last 31 years (1993-2023) for Civil Services IAS/IPS Exam Free Download

In the UPSC mains examination, essay paper is worth 250 marks and three hours. Here is the topic wise questions from the earlier years for the benefit of civil service IAS IPS aspirants.

1.1 India Since Independence

1.2 federalism, decentralization, 1.3 administration, 1.4 judiciary, 1.5 poverty, social justice, 1.6 indian society, culture and values, 1.7 media, tv & cinema, literature, 2.1 growth vs development, 2.2 environment vs development, 2.4 sectors of economy, 3.1 values in education, 3.2 scheme implementation, 3.3 higher education, 4.1 character, honesty, ethics, 4.2 knowledge, 4.3 compassion, 4.4 truth and reality, 4.5 youth, discipline, 4.6 towards excellence, 5.1 @national politics, 5.2 @world / quote type, 5.3 empowerment overall, 5.4 compared to men, 6.1 globalization, 6.2 international org./ bilateral, 6.3 security, 6.4 history, 7.1 science and religion, 7.2 science and education, 7.3 computer and internet, 7.4 sci-tech: others, appendix: linear paper of upsc essay 2023, appendix: linear paper of upsc essay 2022, appendix: model answer pe free lecture & powerpoint, appendix: syllabus of essay paper in upsc, 1 india: democracy, administration, society, culture.

• Is the Colonial mentality hindering India’s Success? -2013
• In the context of Gandhiji’s views on the matter, explore, on an evolutionary scale, the terms ‘Swadhinata’, ‘Swaraj’ and ‘Dharmarajya’. Critically comment on their contemporary relevance to Indian democracy -2012
• Dreams which should not let India sleep. -2015
• Why should we be proud of being Indians? -2000
• Whither Indian democracy? -1995
• How far has democracy in India delivered the goods? -2003
• What we have not learnt during fifty years of independence. -1997
• What have we gained from our democratic set-up? -2001
• My vision of India in 2001 a.d. -1993
• Impact of the new economic measures on fiscal ties between the union and states in India. -2017
• Water disputes between States in federal India. -2016
• Cooperative federalism : Myth or reality. -2016
• Creation of smaller states and the consequent administrative, economic and developmental implication -2011
• Evaluation of panchayati raj system in India from the point of view of eradication of power to people. -2007
• Water resources should be under the control of the central government. -2004
• The language problem in India: its past, present and prospects. -1998
• There are better practices to “best practices”. -2021
• How should a civil servant conduct himself? -2003
• Politics without ethics is a disaster. -1995
• The VIP cult is a bane of Indian democracy -1996
• Need for transparency in public administration -1996
• The country’s need for a better disaster management system. -2000
• Politics, bureaucracy and business – fatal triangle. -1994
• We may brave human laws but cannot resist natural laws. -2017
• Justice must reach the poor -2005
• Judicial activism and Indian democracy. -2004
• Judicial activism. -1997
• A society that has more justice is a society that needs less charity. (- जिस समाज में अधिक न्याय होता है उस समाज को दान की कम आवश्यकता होती है।) – 2023
• There can be no social justice without economic prosperity but economic prosperity without social justice is meaningless (बिना आर्थिक समृद्धि के सामाजिक न्याय नहीं हो सकता, किन्तु बिना सामाजिक न्याय के आर्थिक समृद्धि निरर्थक है ) -2020
• Neglect of primary health care and education in India are reasons for its backwardness. -2019
• The focus of health care is increasingly getting skewed towards the ‘haves’ of our society. -2009
• Food security for sustainable national development -2005
• Reservation, politics and empowerment. -1999
• Culture is what we are, civilization is what we have (जो हम है, वह संस्कार; जो हमारे पास है, वह सभ्यता ) -2020
• Indian culture today: a myth or a reality? -2000
• Modernism and our traditional socio-ethical values. -2000
• The composite culture of India. -1998
• The Indian society at the crossroads. -1994
• From traditional Indian philanthropy to the gates-buffet model-a natural progression or a paradigm shift? -2010
• New cults and godmen: a threat to traditional religion -1996
• Biased media is a real threat to Indian democracy. -2019
• Responsibility of media in a democracy. -2002
• Role of media in good governance -2008
• Does Indian cinema shape our popular culture or merely reflect it? -2011
• How has satellite television brought about cultural change in Indian mindsets? -2007
• Is sting operation an invasion on privacy? -2014
• Mass media and cultural invasion. -1999
• The misinterpretation and misuse of freedom in India. -1998
• Poets are the unacknowledged legislators of the world (कवि संसार के अनधिकृत रूप से विधायक होते हैं) – 2022

2 Economy, Development

• Poverty anywhere is a threat to prosperity everywhere. -2018
• Digital economy: A leveller or a source of economic inequality. -2016
• Innovation is the key determinant of economic growth and social welfare. -2016
• Near jobless growth in India: An anomaly or an outcome of economic reforms. -2016
• Crisis faced in India – moral or economic. -2015
• Was it the policy paralysis or the paralysis of implementation which slowed the growth of our country? -2014
• GDP (Gross Domestic Product) along with GDH (Gross Domestic Happiness) would be the right indices for judging the wellbeing of a country-2013
• Can capitalism bring inclusive growth? -2015
• Resource management in the Indian context. -1999
• Economic growth without distributive justice is bound to breed violence. -1993
• Forests are the best case studies for economic excellence (आर्थिक समृद्धि हासिल करने के मामले में वन सर्वोत्तम प्रतिमान होते हैं।) – 2022
• Alternative technologies for a climate change resilient India. -2018
• Should a moratorium be imposed on all fresh mining in tribal areas of the country? -2010
• Urbanisation and its hazards -2008
• Protection of ecology and environment is essential for sustained economic development. -2006
• Urbanization is a blessing in disguise. -1997
• Ecological considerations need not hamper development. -1993
• Globalization would finish small-scale industries in India. -2006
• Multinational corporations – saviours or saboteurs -1994
• Special economic zone: boon or bane -2008
• Is the criticism that the ‘Public-Private-Partnership’ (PPP) model for development is more of a bane than a boon in the Indian context, justified ?-2012
• Farming has lost the ability to be a source of subsistence for majority of farmers in India. -2017
• BPO boom in India. -2007
• Tourism: Can this be the next big thing for India? -2014
• Are our traditional handicrafts doomed to a slow death? -2009

3 Education

• Education is what remains after one has forgotten what one has learned in – school. (- शिक्षा वह है जो विद्यालय में विधालय में सीखी गई बातों को भूल जाने के बाद भी शेष रह जाती है।)
• Destiny of a nation is shaped in its classrooms. -2017
• Education without values, as useful as it is, seems rather to make a man more clever devil-2015
• Independent thinking should be encouraged right form the childhood. -2007
• Are the standardized tests good measure of academic ability or progress? -2014
• Irrelevance of the classroom. -2001
• Is the growing level of competition good for the youth? -2014
• Literacy is growing very fast, but there is no corresponding growth in education. -1996
• Is an egalitarian society possible by educating the masses ? -2008
• What is real education? -2005
• “Education for all” campaign in India: myth or reality. -2006
• Restructuring of Indian education system. -1995
• Privatization of higher education in India. -2002
• Credit – based higher education system – status, opportunities and challenges -2011

4 Quote based, Philosophy, Ethics

• A smile is the chosen vehicle for all ambiguities (हर असमंजस के लिए मुस्कराहट ही चुनिन्दा साधन है) – 2022
• Philosophy of wantlessness is a Utopian, while materialism is a chimera. -2021
• Your perception of me is a reflection of you; my reaction to you is an awareness of me. -2021
• Simplicity is the ultimate sophistication (सरलता चरम परिष्करण है ) -2020
• Ships don’t sink because of water around them ships sink because of water that gets into them (जहाज अपने चारों तरफ के पानी के वजह से नहीं डूबा करते, जहाज पानी के अंदर समां जाने की वजह से डूबता हैं ) -2020
• Life is a long journey between being human and being humane.  (मनुष्य होने और मानव बनने के बीच का लम्बा सफर ही जीवन है)-2020
• Values are not what humanity is, but what humanity ought to be -2019
• Best for an individual is not necessarily best for the society -2019
• Courage to accept and dedication to improve are two keys to success -2019
• Wisdom finds truth -2019
• A people that values its privileges above its principles loses both. -2018
• Customary morality cannot be a guide to modem file. -2018
• Need brings greed, if greed increases it spoils breed. -2016
• Character of an institution is reflected in its leader. -2015
• With greater power comes greater responsibility. -2014
• Words are sharper than the two-edged sword. -2014
• Attitude makes, habit makes character and character makes a man. -2007
• He would reigns within himself and folds his passions and desires and fears is more than a king. -1993
• Thinking is like a game, it does not begin unless there is an opposite team. (- सोच एक खेल की तरह है, यह तब तक शुरू नहीं होता है जब तक कि एक विपरीत टीम/पक्ष न हो।) – 2023
• Mathematics is the music of reason. (- गणित ज्ञान का संगीत है।) – 2023
• The real is rational and the rational is real. -2021
• Mindful manifesto is the catalyst to a tranquil self (विचारपरक संकल्प स्वयं के शांतचित्त रहने का उत्प्रेरक है )-2020
• ‘The past’ is a permanent dimension of human consciousness and values. -2018
• A good life is one inspired by love and guided by knowledge. -2018
• There is nothing either good or bad but thinking makes it so. -2003
• Disinterested intellectual curiosity is the lifeblood of civilisation. -1995
• Joy is the simplest form of gratitude. -2017
• Compassion is the basic of all morality of the world -1993
• Lending hands to someone is better than giving a dole. -2015
• Be the change you want to see in others (Gandhi)-2013
• Just because you have a choice, it does not mean that any of them has to be right (केवल इसलिए कि आपके पास विकल्प हैं, इसका यह अर्थ कदापि नहीं है कि उनमें से किसी को भी ठीक होना ही होगा) – 2022
• Reality does not conform to the ideal, but confirms it. -2018
• Truth is lived, not taught -1996
• When money speaks, the truth is silent. -1995
• Search for truth can only be a spiritual problem. -2002
• The time to repair the roof is when the sun is shining (छप्पर मरम्मत करने का समय तभी होता है, जब धूप खिली हुई हो) – 2022
• You cannot step twice in the same river (आप उसी नदी में दोबारा नहीं उतर सकते) – 2022
• Discipline means success, anarchy means ruin -2008
• Youth is a blunder, manhood a struggle, old age a regret -1994
• If youth knew, if age could. -2002
• Youth culture today. -1999
• Fifty Golds in Olympics: Can this be a reality for India? -2014
• Visionary decision-making happens at the intersection of intuition and logic. (- दूरदर्शी निर्णय तभी लिए जाते है अंतर्ज्ञान और तर्क का परस्पर मेल होता है।) – 2023
• Not all who wander are lost. (- भटकने वाले सभी गुम नहीं हो जाते।) – 2023
• Inspiration for creativity springs from the effort to look for the magical in the mundane (- रचनात्मकता की प्रेरणा अलौकिक ता में चमत्कार ढूंढने के प्रयास से उपजति है) – 2023
• A ship in harbour is safe, but that is not what ship is for (जहाज बन्दरगाह के भीतर सुरक्षित होता है, परन्तु इसके लिए तो वह होता नहीं है) – 2022
• Quick but steady wins the race. -2015
• Useless life is an early death. -1994
• Our deeds determine us, as much as we determine our deeds. -1995
• The paths of glory lead but to the grave. -2002
• The pursuit of excellence. -2001

5 Women empowerment

• Greater political power alone will not improve women’s plight. -1997
• Women’s reservation bill would usher in empowerment for women in India. -2006
• The new emerging women power: the ground realities. -1995
• Hand that rocks the cradle rules the world. -2021
• If women ruled the world -2005
• The hand that rocks the cradle -2005
• Patriarchy is the least noticed yet the most significant structure of social inequality (पितृ-सत्ता की व्यवस्था नजर मैं बहुत काम आने के बावजूद सामाजिक विषमता की सबसे प्रभावी संरचना है) -2020
• Fulfilment of ‘new woman’ in India is a myth. -2017
• If development is not engendered, it is endangered. -2016
• Whither women’s emancipation? -2004
• Empowerment alone cannot help our women. -2001
• Women empowerment: challenges and prospects. -1999
• Woman is god’s best creation. -1998
• Men have failed: let women take over. -1993
• Managing work and home – is the Indian working woman getting a fair deal ?-2012

6 International issues, Internal Security, History

• South Asian societies are woven not around the state, but around their plural cultures and plural identities. -2019
• Modernisation and westernisation are not identical concepts. -1994
• ‘globalization’ vs. ‘nationalism’ -2009
• National identity and patriotism -2008
• Globalizations and its impact on Indian culture. -2004
• The masks of new imperialism. -2003
• As civilization advances culture declines. -2003
• The implications of globalization for India. -2000
• My vision of an ideal world order. -2001
• India’s contribution to world wisdom. -1998
• The world of the twenty-first century. -1998
• Preparedness of our society for India’s global leadership role. -2010
• Technology as the silent factor in international relations (अंतर्राष्ट्रीय संबंधों मैं मौन करक के रूप मैं प्रौद्योगिकी) -2020
• Has the Non-Alignment Movement (NAM) lost its relevance in a multipolar world ? -2017
• Restructuring of UNO reflect present realities -1996
• The global order: political and economic -1993
• India’s role in promoting ASEAN co-operation. -2004
• Importance of Indo-US nuclear agreement -2006
• Management of Indian border dispute is a complex task. -2018
• In the Indian context , both human intelligence and technical intelligence are crucial in combating terrorism -2011
• Are we a ‘soft’ state ? -2009
• Good fences make good neighbours -2009
• Is autonomy the best answer to combat balkanization? -2007
• Terrorism and world peace -2005
• True religion cannot be misused. -1997
• History repeats itself, first as tragedy, second as farce. -2021
• Geography may remain the same ; history need not. -2010

7 Science-Technology

• Spirituality and scientific temper. -2003
• Science and Mysticism : Are they compatible ?-2012
• What is research, but a blind date with knowledge! -2021
• Modern technological education and human values. -2002
• Value-based science and education. -1999
• The march of science and the erosion of human values. -2001
• The process of self-discovery has now been technologically outsourced. -2021
• Rise of Artificial Intelligence: the threat of jobless future or better job opportunities through reskilling and upskilling. -2019
• ‘Social media’ is inherently a selfish medium. -2017
• Cyberspace and Internet : Blessing or curse to the human civilization in the long run -2016
• Increasing computerization would lead to the creation of a dehumanized society. -2006
• The cyberworld: its charms and challenges. -2000
• Computer: the harbinger of silent revolution. -1993
• Technology cannot replace manpower. -2015
• Science and technology is the panacea for the growth and security of the nation-2013
• The modern doctor and his patients. -1997
• The lure of space. -2004

Section-A (write any one)

• Thinking is like a game, it does not begin unless there is an opposite team. (- सोच एक खेल की तरह है, यह तब तक शुरू नहीं होता है जब तक कि एक विपरीत टीम/पक्ष न हो।)
• Visionary decision-making happens at the intersection of intuition and logic. (- दूरदर्शी निर्णय तभी लिए जाते है अंतर्ज्ञान और तर्क का परस्पर मेल होता है।)
• Not all who wander are lost. (- भटकने वाले सभी गुम नहीं हो जाते।)
• Inspiration for creativity springs from the effort to look for the magical in the mundane (- रचनात्मकता की प्रेरणा अलौकिक ता में चमत्कार ढूंढने के प्रयास से उपजति है)

Section-B (write any one)

• Girls are weighed down by restrictions, boys with demands – two equally harmful disciplines. (-लड़कियां बंदिशों के तथा लड़के अपेक्षा के बोझ तले दबे हुए होते हैं दोनों ही समान रूप से हानिकारक व्यवस्थाएं हैं।)
• Mathematics is the music of reason. (- गणित ज्ञान का संगीत है।)
• A society that has more justice is a society that needs less charity. (- जिस समाज में अधिक न्याय होता है उस समाज को दान की कम आवश्यकता होती है।)

Answer one-one essay from each section in 1000-1200 words

• History is a series of victories won by the scientific man over the romantic man (इतिहास वैज्ञानिक मनुष्य के रूमानी मनुष्य पर विजय हासिल करने का एक सिलसिला है।) – 2022
• A ship in harbour is safe, but that is not what ship is for (जहाज बन्दरगाह के भीतर सुरक्षित होता है, परन्तु इसके लिए तो वह होता नहीं है) & 2022
• Just because you have a choice, it does not mean that any of them has to be right (केवल इसलिए कि आपके पास विकल्प हैं, इसका यह अर्थ कदापि नहीं है कि उनमें से किसी को भी ठीक होना ही होगा) – 2022

Essay: Candidates may be required to write essays on multiple topics. They will be expected to keep closely to the subject of the essay to arrange their ideas in orderly fashion, and to write concisely. Credit will be given for effective and exact expression.

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Essay on Money for Students and Children

February 5, 2022 by Sandeep

Money was invented as early as 5000 BC in Europe. Previously, the barter system was used to exchange goods and services for products. Money helps us buy things and commodities and earns respect and dignity in social life. Money as a factor gives financial stability and creates great opportunities for humankind. Below we have provided an essay on money for class 4, 5, 6, 7, 8, 9 and 10. This composition is helpful for school students who are willing to participate in the essay writing competition.

Essay on Money

Money is an essential commodity for survival, used to buy goods and services. It is in the physical form of coins, notes, and cheques. A barter system was introduced to exchange goods and services during ancient times. For instance, a tool was exchanged for clothes or food items. It seemed pretty straightforward, but the trade was supposed to fulfil both the parties’ needs, or it would not occur.

Then in 600 B.C, the coins were minted and used as the official currencies of many countries. The pioneers who invented coins were from the kingdom of Lydia in Turkey. These coins were made of metals like gold, silver, bronze, etc. The kings and queens stamped pictures of themselves or their gods and goddesses, which acted as the denominations and identity to the kingdom.

Greeks made more significant coins and believed that coins had magical powers. Romans stamped their emperor’s picture to make him famous. The Tang Dynasty invented paper money in China during the 7th century. Paper money was lightweight, foldable, and portable because bigger pictures, denominations, and names were printed easily.

Impact of Money on Human Life

Everybody dreams of becoming rich in terms of financial status and improving their living standards. It affects our behaviour to a larger extent and alters our time and effort. Any work or task which guarantees money is always done faster and in a better way. Money cripples our values like empathy and compassion. We tend to become more and more materialistic.

Ego and attitude take over, and an individual starts displaying harsh and aggressive behaviour. This hurts others by making disparaging comments about an individual’s personality or financial stature. Researchers have found that children and adults who belong to affluent backgrounds fall prey to drug addiction due to heavy pressure and negligence from parents. They are vulnerable and weak because of the lack of guidance and support, and no one is present to correct them.

Love and care are absent, but money is available abundantly. So these children bully other kids into venting out their frustration and jealousy and end up being brats who lack moral ethics. Academically they perform poorly, and their grades drop eventually, thus paralysing their self-esteem and morale. Earning money and maintaining status becomes compulsive. This involves people addicted to gambling, eating, and shopping for luxurious and high-end brands.

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Need Brings Greed, If Greed Increases It Spoils Breed

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If Development is not Engendered, It is Endangered

• 09 Aug 2024

Social Media is Inherently a Selfish Medium

• 02 Aug 2024

We may Brave Human Laws But cannot Resist Natural Laws

• 26 Jul 2024

Fulfillment of ‘New Woman’ in India is a Myth

• 17 Jul 2024

Joy is the Simplest Form of Gratitude

• 10 Jul 2024

Has the Non-Alignment Movement (NAM) Lost Its Relevance in a M...

• 04 Jul 2024

Destiny of a Nation is Shaped in its Classrooms

• 27 Jun 2024

Impact of the New Economic Measures on Fiscal Ties Between the...

• 21 Jun 2024

The Character of An Institution is Reflected in Its Leader

• 13 Jun 2024

Farming has Lost the Ability to be a Source of Subsistence for...

• 06 Jun 2024

Reality does not Conform to the Ideal, but Confirms It

• 31 May 2024

A People that Values Its Privileges Above Its Principles Loses...

• 23 May 2024

The Past is a Permanent Dimension of Human Consciousness and V...

• 16 May 2024

Customary Morality cannot be a Guide to Modern Life

• 10 May 2024

Management of Indian Border Disputes - A Complex Task

• 02 May 2024

Poverty Anywhere is a Threat to Prosperity Everywhere

• 24 Apr 2024

A Good Life is One Inspired by Love and Guided by Knowledge

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• IAS Preparation
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Money Bill in India - Indian Polity Notes for UPSC

Money Bill is defined in Article 110 of the Indian Constitution. Money bills are concerned with financial matters like taxation, public expenditure, etc. The bill is significant for Indian Polity and governance as many important issues like the Aadhar Bill, Insolvency and Bankruptcy Bill are also related to it. Questions from this topic have time and again surfaced in the IAS Exam . The topic ‘Money Bill’ is important for all three stages of the examination – Prelims, Mains and Interview.

This article will mention the details of the Money Bill in India, the definition of money bill and how the money bill is different from the Financial Bill (Article 117 (1) & Article 117 (3)). The information provided will be helpful for IAS aspirants for UPSC Political Science which is an important subject for prelims, mains GS-II and Polity optional as money bill is an important topic for the exam.

Money Bill in India – Indian Polity Notes:- Download PDF Here

What is a Money Bill in India?

In the Indian Constitution , Article 110 deals with the Money Bill in India. There are few provisions for a bill to be deemed as a money bill. The provisions that make a bill a money bill in India are given below:

There have been questions from this topic in UPSC Prelims before, and are expected in UPSC 2024  too. IAS aspirants should focus on facts related to money bill which will be given in the latter part of the article.

Article 110 of the Indian Constitution also gives provisions following which a bill cannot be deemed as a money bill. Those provisions are given below:

Financial Bill – Article 117 of Indian Constitution

Financial Bills are dealt with under Articles 117 (1) and Article 117 (3.) Though Money Bill is a species of the financial bill however, not all financial bills are money bill. These bills are categorized as:

• Financial Bills (I)- Article 117 (1)
• Financial Bills (II)- Article 117 (3)

Facts about Financial Bills (I):

• It is defined as a bill that contains matters not only related to Article 110 (Money Bill) but also other matters of finances.
• It is introduced only in Lok Sabha similar to Money Bill
• It is introduced only on the recommendation of President
• It can be either rejected or amended by the Rajya Sabha which is not the case with money bill
• There is a provision of joint sitting summoned by President in case of deadlock
• President can give his assent, withhold the bill or can even return the bill for reconsideration

Facts about Financial Bills (II):

• It is defined as a bill that solely deals with provisions involving expenditure from the Consolidated Fund of India and does not include any matter of money bill (Article 110.)
• It is treated as an ordinary bill in all respects unlike Financial Bill (I)
• Special Feature : It cannot be passed by either house of the Parliament unless the President has recommended them for consideration of the bill
• It can be either rejected or amended by either House of Parliament

These bills are important to understand as they form an important stage to know how a bill is passed in Indian Parliament . After knowing what money bill and financial bill are, read below to know the difference between the two

Difference Between Money Bill & Financial Bill in India for UPSC

Till now we have understood that all money bills are financial bills but not all financial bills are money bills. To get more clarity, aspirants are advised to follow the table given below:

After President’s assent, these bills become the act and are published in the Indian Statute Book.

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UPSC NDA II 2024: Essential preparation tips and syllabus overview

Analysing the Syllabus and Exam Pattern

• Develop a clear understanding of both basic and advanced chapters. Identify your weak and strong areas and focus on them individually.
• Memorise theorems, formulas, and tricks in a fun and engaging way to ensure you can recall them easily during the examination.
• English: Scoring well in English is achievable with proper preparation. Make it a habit to read newspapers, books, and magazines that adhere to proper grammar rules to improve your reading comprehension and vocabulary.
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Upsc nda exam 2 syllabus, visual stories.

By Teddy Rosenbluth

There’s no way to put a price on the pain and suffering prevented by childhood vaccines. But as it turns out, you can pinpoint the savings to the country.

For nearly three decades, childhood vaccines — including those that target measles, tetanus and diphtheria — have saved the United States $540 billion in health care costs, according to a new report from the Centers for Disease Control and Prevention.

Routine childhood vaccinations have prevented approximately 508 million cases of illness, 32 million hospitalizations and 1,129,000 deaths, the agency estimated on Thursday.

“These vaccine programs, when you create the right infrastructure to implement them, they pay for themselves right away,” said William Padula, a health economist at the University of Southern California who was not involved in the new research.

The savings estimate includes money that would have been spent on treating the initial infection and managing later, related conditions. The figure dwarfs the cost of developing the shots.

But vaccine-preventable illnesses can also cause indirect economic effects if children become permanently disabled from an infection, or parents miss work while caring for their sick children.

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UPSC Civil Services Mains 2024: Exam Dates Announced – Check Your Timetable Here

The Union Public Service Commission (UPSC) has announced the schedule for the Civil Services Main Examination 2024. Candidates who have qualified for the Mains can now access the detailed timetable on the official UPSC website at upsc.gov.in.

The Mains examination is set to take place on five days: September 20, 21, 22, 28, and 29, 2024. The exam will be conducted in two sessions each day. The morning session will run from 9:00 am to 12:00 noon, while the afternoon session will take place from 2:30 pm to 5:30 pm.

The schedule is as follows:

• September 20, 2024: Essay Paper
• September 21, 2024: General Studies Papers I and II
• September 22, 2024: General Studies Papers III and IV
• September 28, 2024: Indian Language Paper and English Paper
• September 29, 2024: Optional Subject Papers 1 and 2

How To Check The UPSC Mains 2024 Schedule:

Candidates can view and download the schedule by following these steps:

• Visit the official UPSC website at upsc.gov.in .
• Locate and click on the link for the UPSC Civil Services Main Exam 2024 schedule on the homepage.
• A PDF file containing the schedule will open.
• Download and print the schedule for future reference.

Candidates who cleared the UPSC Preliminary Examination, the results of which were announced on July 1, are now eligible to appear for the Mains. The preliminary results, including the names and roll numbers of successful candidates, were published on July 20, 2024.

This year, the UPSC aims to fill approximately 1,056 vacancies across various central government services and departments through these exams. This includes prestigious positions in the Indian Administrative Service (IAS), Indian Police Service (IPS), and Indian Foreign Service (IFS).

For further details and updates, candidates are advised to regularly check the official UPSC website.

Sweden Reports First Case of More Infectious Mpox Strain from Congo

Kolkata Police Requests Public Help To Identify Suspects In Hospital Vandalism

Karnataka Halts Transactions With SBI, PNB Over Unresolved Fixed Deposit Issues

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UPSC CURRENT AFFAIRS – 13 August 2024

UPSC CURRENT AFFAIRS – 13 August 2024 covers important current affairs of the day, their backward linkages, their relevance for Prelims exam and MCQs on main articles

InstaLinks :  Insta Links help you think beyond the  current affairs issue and help you think multidimensionally to develop depth in your understanding of these issues. These linkages provided in this ‘hint’ format help you frame possible questions in your mind that might arise(or an examiner might imagine) from each current event. InstaLinks also connect every issue to their static or theoretical background.

Table of Contents 

Gs paper 2: (upsc current affairs – 13 august  2024), un member states have adopted the convention against cybercrime, content for mains enrichment (cme):, nagaland’s drtps initiative, facts for prelims (ffp), overnight index swap (ois) market, nitrogen-use efficiency in indian rice varieties, perseid meteor shower, neelakurinji , megaquake advisory, gs paper 2:.

Syllabus: Internal Security: Cybercrime

Source: UN News

Context: The UN member states have adopted the Convention Against Cybercrime after nearly three years of negotiations .

What is Cybercrime?

Cybercrime refers to criminal activities conducted via the Internet or involving computer systems. It includes:

• Hacking : Unauthorized access to computer systems or networks.
• Phishing : Fraudulent attempts to obtain sensitive information by pretending to be a trustworthy entity.
• Online Fraud : Scams or deceitful schemes to steal money or personal information.
• Malware : Software designed to harm or exploit computers and networks.
• Cyberstalking : Harassment or stalking conducted online.

Cybercrimes fall under State subjects as per the  Seventh Schedule of the Constitution of India.

What is the Convention Against Cybercrime?  

It is a treaty adopted by the United Nations to create a global legal framework for combating cybercrime. It aims to address various cybercrimes, including online fraud, scams, harassment, child sexual abuse imagery, and money laundering, by establishing common standards for investigation and prosecution across member states.

Key Points:

• Objective : To provide a unified approach to prevent and combat cybercrime internationally, ensuring cooperation among countries in investigating and prosecuting such crimes.
• Adoption : The convention was adopted by all UN member states after extensive negotiations. It reflects a global consensus on the need for a robust response to cybercrime.
• Ratification : The treaty will enter into force once ratified by at least 40 UN member states.

Key Provisions:

• Domestic Legislation : Requires states to criminalize unauthorized access to information and communications systems.
• Child Protection: Mandates that states criminalize the production, distribution, and sale of online child sexual content.
• Human Rights: Ensures that treaty implementation aligns with international human rights obligations.
• Data Collection: Allows states to collect or record data for convictions and compel service providers to provide incriminating information.

Key issues with the UN Cybercrime Treaty:

• Human Rights Concerns : Criticized for potentially enabling authoritarian regimes to suppress dissent and violate freedoms.
• Surveillance Risks: Lacks oversight on data access and sharing, raising global surveillance concerns.
• Implementation Challenges : Poor drafting may endanger security researchers and journalists, and allow secretive IT interventions.
• Lack of Oversight : No measures for judicial oversight or proper handling of electronic evidence.

India’s Position on the Convention:

• India supports transferring personal data with prior written authorization and safeguards.
• Points of Contact : India supports designating 24/7 points of contact for cybercrime investigations and cooperation.

Budapest Convention:

The Budapest Convention , established by the Council of Europe in 2001 and effective in 2004, is the only binding international treaty on cybercrime. It facilitates cross-border cybercrime investigations and serves as a model for national cybercrime laws and international cooperation. It also includes a protocol on xenophobia and racism online. While it highlights the limitations of the Mutual Legal Assistance Treaty (MLAT) for digital issues, India has chosen not to join the convention despite ongoing calls for its participation.

Countermeasures taken by India against cyber threats.

• For Critical information infrastructure (CII )- Creation of the National Critical Information Infrastructure Protection Centre, the national nodal agency in respect of CII protection. It was envisaged to act as a 24×7 centre to battle cyber security threats in strategic areas such as air control, nuclear and space.
• Establishment of  Defence Information Assurance and Research Agency  for cyber security issues of the tri-services and Defence Ministry.
• For the Financial sector –  CERT-Fin will work closely with all financial-sector regulators and stakeholders on issues of cyber security.
• Establishment of cyber security infrastructure
• CERT-in  –  The main function of CERT-In is to provide early security warning and effective incident response. It is also a national agency to collects, analyzes and disseminates information on cyber incidents and takes emergency measures for handling cyber-attacks.
• IT Act 2000  –  This act provides a legal framework against cybercrimes related to “electronic commerce”.
• National Cyber Security Policy 2013  has been framed to create a secure cyber ecosystem, ensure compliance with global security systems and strengthen the regulatory framework.
• I4C (Indian Cyber Crime Coordination Center)  was set up in 2016 to look into every kind of cybercrime.
• The Indian Common Criteria Certification Scheme (IC3S)is  to evaluate and certify IT Security Products and Protection Profiles.
• Cyber Swachhta Kendra  was introduced for internet users to clean their computers and devices by wiping out viruses and malware.
• Cyber Surakshit Bharat Initiative  was launched to spread awareness about cybercrime and build capacity for safety measures for Chief Information Security Officers (CISOs) and frontline IT staff across all government departments.

Global Effort:  Bletchley Declaration :

The Bletchley Declaration, named after the historic code-breaking site, signifies a  global commitment to addressing AI’s ethical and security challenges,  particularly generative AI. Signed at the AI Safety Summit (in 2023), it highlights the increasing global recognition of AI risks and involves major world powers like China, the EU, India, and the US.

Insta Links:

• Cybersecurity Challenges in India

Mains Link:  

Keeping in view India’s internal security, analyse the impact of cross-border cyber-attacks. Also, discuss defensive measures against these sophisticated attacks. (UPSC 2021)

Prelims Link:

With the present state of development, Artificial Intelligence can effectively do which of the following? (UPSC 2020)

• Bring down electricity consumption in industrial units
• Create meaningful short stories and songs
• Disease diagnosis
• Text-to-Speech Conversion
• Wireless transmission of electrical energy

Select the correct answer using the code given below:

(a) 1, 2, 3 and 5 only (b) 1, 3 and 4 only (c) 2, 4 and 5 only (d) 1, 2, 3, 4 and 5

UPSC CURRENT AFFAIRS – 13 August 2024 Content for Mains Enrichment (CME):

Source: TOI

Context: Nagaland became the first state in India to adopt a Disaster Risk Transfer Parametric Insurance Solution (DRTPS) by signing an MoU with SBI General Insurance.

The insurance aims to protect critical infrastructure and reduce economic losses from extreme weather events over a three-year period (2024-2027).

Parametric insurance provides a predefined payout when specific events, like natural disasters , occur, ensuring quick financial support and enhancing the state’s resilience .

The significance of this initiative lies in its ability to enhance Nagaland’s financial resilience and safeguard livelihoods against the increasing frequency of extreme weather events. Providing quick payouts after disasters helps ensure rapid recovery and reduces economic losses, setting a precedent for disaster risk management in India.

Source: WFP

Context: The WFP and the Government of Odisha launched India’s first 24/7 ‘Grain ATM,’ called ‘Annapurti ,’ in Bhubaneswar.

This initiative allows Public Distribution System beneficiaries to access food grains anytime under the National Food Security Act . The machine, which can dispense up to 50 kilograms of grain in five minutes after biometric authentication, reduces waiting times by 70% and can be powered by solar panels. This partnership aims to enhance food security across Odisha, providing consistent access to essential grains for all beneficiaries.

UPSC CURRENT AFFAIRS – 13 August 2024 Facts for Prelims (FFP)

 Source: BS

Context: The Reserve Bank of India (RBI) is reviewing the investment limit for foreign investors in the Overnight Index Swap (OIS) market .

• The OIS market allows investors to hedge against interest rate fluctuations , and its activity has increased since Indian bonds were included in JPMorgan’s emerging market debt index .

This shift is expected to enhance liquidity, improve price discovery, and reduce transaction costs in this segment.

 Source: TH

Context: A study has identified significant variations in nitrogen-use efficiency (NUE) among popular Indian rice varieties.

• This finding could lead to the development of new rice varieties that require less nitrogen while maintaining high yields, potentially reducing costs associated with imported fertilizers and decreasing nitrogen-related pollution.
• Nitrogen-use efficiency refers to the crop yield relative to the amount of nitrogen (both natural and artificial) available to it.
• The study found that some rice varieties are five times more efficient in nitrogen use than others, although higher NUE doesn’t always correlate with the highest yields , which farmers typically prefer.

The researchers emphasize the need to shift focus from merely increasing crop yields , as done during the Green Revolution, to improving NUE to reduce fertilizer waste and environmental pollution.

Context: The Perseid meteor shower , which began in July and will continue until late August.

• The shower, visible to the naked eye in the northern hemisphere, occurs when the Earth passes through debris left by the comet Swift-Tuttle.
• The comet, which orbits the Sun every 133 years, poses no threat to Earth , as its debris mostly burns up in the atmosphere.

During the peak, over 60 meteors per hour may be visible , though local weather conditions could affect visibility.

The Perseids are a prolific meteor shower associated with the comet Swift–Tuttle that are usually visible from mid-July to late August.

 Source: TH  

Context: The overuse and misuse of antibiotics pose significant dangers, particularly to the microbiome, the complex community of microorganisms in the human body.

• While antibiotics are vital for treating infections, they also indiscriminately kill beneficial bacteria, leading to a disruption known as dysbiosis.
• Dysbiosis can have severe and long-lasting effects on health , contributing to conditions like inflammatory bowel disease, weakened immune function, and metabolic disorders such as obesity and diabetes.
• It also affects various “gut-organ axes,” impacting the brain, liver, skin, and respiratory systems .

Misuse of these “miracle” drugs can turn them into poisons , disrupting the delicate balance of the microbiome and leading to a range of health problems.

Neelakurinji

 Source: TH Context : Neelakurinji (Strobilanthes kunthiana), a flowering shrub native to the Western Ghats , has been officially listed as “Vulnerable” on the IUCN Red List of threatened species .

• Known for its once-in-12-years mass blooming that attracts significant tourist attention, the species was only recently assessed by the IUCN.
• The shrub is endemic to high-altitude grasslands in southwest India , with blooming cycles that create striking purple-blue landscapes.
• Habitat loss due to tea and softwood plantations, urbanization, invasive species, and climate change have contributed to its vulnerability.

The assessment highlights that approximately 40% of Neelakurinji’s habitat has been lost , with the remaining areas under threat from various factors.

 Source: IE

Context: Japan issued its first-ever “megaquake advisory” following a 7.1-magnitude earthquake recently.

• The advisory warns of a higher likelihood of strong shaking and large tsunamis along the Nankai Trough, a subduction zone where tectonic plates collide, potentially leading to a megaquake (magnitude 8+).
• While the advisory indicates an increased risk, it does not predict a specific earthquake.
• The Nankai Trough has historically produced large quakes every 100-150 years, and the next major quake has a 70% chance of occurring within 30 years.

UPSC CURRENT AFFAIRS – 13 August 2024 [PDF]

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