DAILY CURRENT AFFAIRS IAS | UPSC Prelims and Mains Exam – 10th July – 2025

Category: SCIENCE AND TECHNOLOGY

Context:  Jaguar trainer aircraft of the Indian Air Force (IAF) crashed near Bhanuda village in Rajasthan’s Churu district during a routine training mission

This marks the third Jaguar jet crash in 2025, following previous incidents in March and April. The IAF has launched a court of inquiry to investigate the cause of the crash, while emergency teams have cordoned off the area for recovery operations. The IAF has expressed its condolences to the families of the deceased.

Concerns have been raised about the aging Jaguar fleet, which has been in service since 1979. Despite upgrades, the fleet’s safety has been questioned due to technical issues and outdated systems. There are growing calls for the fleet to be modernized to avoid further tragedies.

Learning Corner:

The Jaguar is a twin-seat, multi-role combat aircraft used by the Indian Air Force (IAF) primarily for ground attack and close air support missions. Developed by the British Aircraft Corporation in collaboration with France’s Dassault Aviation, the Jaguar was inducted into the IAF in 1979. It was designed to operate in all weather conditions and from shorter, less-developed airstrips.

Key Features:

• Role: Ground attack, close air support, reconnaissance.
• Engine: Powered by Rolls-Royce Adour engines, providing a top speed of around 1,200 km/h.
• Armament: Capable of carrying a variety of bombs, rockets, and air-to-ground missiles.
• Range: Approximately 1,000 km with external fuel tanks.
• Upgrades: Over the years, the Jaguar has undergone several upgrades, including better avionics, radar, and weapons systems.

Service and Challenges:

• The Jaguar has been a workhorse for the IAF, but its aging infrastructure and the delay in acquiring newer aircraft like the Rafale have raised concerns about its operational safety.
• Despite upgrades, issues like engine failures and outdated safety systems have led to repeated accidents, including a series of crashes in 2025.
• The IAF has been working towards phasing out older models while modernizing its fleet.

Source: THE HINDU

Category: ECONOMICS

Catastrophe bonds (cat bonds) are financial instruments used to transfer the risk of natural disasters from insurers or governments to capital market investors. They function as follows:

• Risk Transfer: Governments, insurers, or reinsurers issue cat bonds to raise capital. If a specified natural disaster occurs (e.g., hurricane, earthquake, or flood) and meets predefined criteria, the bond’s principal is used for claims or recovery. If no disaster occurs, investors receive their principal back with interest.
• Trigger Mechanisms: Various triggers determine when payouts occur:
  • Indemnity triggers: Based on actual losses.
  • Parametric triggers: Based on measurable factors like earthquake magnitude or wind speed.
  • Modeled or industry loss triggers: Based on modeled estimates or industry-wide losses.
• Pre-Disaster Planning: Issuing cat bonds before a disaster ensures:
  • Immediate access to funds for relief and reconstruction.
  • Reduced reliance on public budgets or emergency loans.
  • Enhanced resilience by guaranteeing available recovery resources.
• Diversification and Stability: Cat bonds help distribute disaster risk globally, maintaining stable insurance premiums despite rising climate risks.
• Supplementing Disaster Funds: While not replacing traditional disaster funds, cat bonds provide additional financial protection, especially for large-scale, low-frequency events that may overwhelm other resources.

Learning Corner:

Types of Bonds:

Bonds are debt securities issued by entities like governments, municipalities, or corporations to raise capital. Investors who purchase bonds are lending money to the issuer in exchange for periodic interest payments (coupons) and the return of the principal amount at maturity. There are several types of bonds, each with unique features:

Government Bonds

• Treasury Bonds (T-Bonds): Long-term bonds issued by the central government. They offer fixed interest payments and are considered low-risk since they are backed by the government.
• Municipal Bonds (Muni Bonds): Issued by local governments or municipalities to fund projects such as schools, hospitals, or infrastructure. Interest earned is often tax-exempt at the federal level.
• Sovereign Bonds: Issued by a country’s government in foreign currencies or domestic currency. These bonds can carry higher risks if the issuing country faces economic instability.

Corporate Bonds

• Issued by companies to raise capital for various purposes, such as expansion or debt refinancing. Corporate bonds typically offer higher yields than government bonds but come with increased credit risk.
• Investment-Grade Bonds: Issued by financially stable companies, these bonds have lower yields due to lower risk.
• High-Yield (Junk) Bonds: Issued by companies with lower credit ratings. These bonds offer higher interest rates due to the greater risk of default.

Zero-Coupon Bonds

• These bonds do not pay periodic interest. Instead, they are issued at a discount to their face value, and the full value is paid back at maturity. The difference between the purchase price and face value represents the bond’s yield.

Convertible Bonds

• Bonds that can be converted into a specified number of shares of the issuing company’s stock, usually at the bondholder’s discretion. These bonds offer potential for capital appreciation along with regular interest payments.

Callable Bonds

• These bonds give the issuer the option to redeem them before their maturity date, typically at a premium. Issuers may call bonds when interest rates fall to take advantage of cheaper borrowing costs.

Puttable Bonds

• These bonds give bondholders the right to sell the bond back to the issuer at a predetermined price before maturity, providing protection against rising interest rates.

Inflation-Linked Bonds

• These bonds, like Treasury Inflation-Protected Securities (TIPS), adjust the principal value of the bond according to inflation, protecting investors from inflation risk. The interest payments are also adjusted for inflation.

Catastrophe Bonds (Cat Bonds)

• Issued by insurers or governments, cat bonds are used to transfer the financial risk of natural disasters to investors. If a specified disaster occurs, the bond’s principal is used for recovery. If no disaster occurs, investors receive their principal plus interest.

Foreign Bonds

• Issued in one country by a foreign entity and denominated in the currency of the country where they are issued. For example, a bond issued by a Japanese company in the U.S. in U.S. dollars would be considered a foreign bond.

Foreign-Currency Bonds

• Bonds issued in a currency other than the issuer’s domestic currency. These bonds are subject to foreign exchange risk, where the bond’s value may fluctuate due to changes in exchange rates.

Each type of bond carries varying degrees of risk, yield, and maturity characteristics, allowing investors to choose bonds that align with their risk tolerance and investment objectives.

Source: THE HINDU

Category: HISTORY

Context : The Ministry of Culture has launched a two-year nationwide commemoration (July 6, 2025 – July 6, 2027) to honor Dr. Syama Prasad Mookerjee, a visionary leader integral to India’s political, educational, and industrial development.

Inaugural Events and Highlights

• Official Launch: The commemoration started in New Delhi with an event attended by Union Minister of Culture and Tourism, Shri Gajendra Singh Shekhawat, emphasizing Dr. Mookerjee’s contributions to national unity and self-reliance.
• Commemorative Stamp and Coin: A special postage stamp and ₹125 commemorative coin were released, accompanied by cultural performances, exhibitions, and a documentary on Dr. Mookerjee’s life.
• Cultural Programs: The National School of Drama presented a play and a short documentary to highlight his role as a Bengali thinker and nationalist.

Nationwide Activities

• Exhibitions and Outreach: Multiple exhibitions and outreach programs are being held across India to showcase Dr. Mookerjee’s life and philosophy.
• State and District Events: Tributes, workshops, and screenings are being organized in states like Sikkim and Assam, reflecting his contributions to education and national unity.
• Workshops and Educational Initiatives: Workshops are being conducted to engage students and the public, ensuring Dr. Mookerjee’s ideals are passed to future generations.

Key Themes of the Commemoration

• National Unity: Emphasis on his campaign for “one nation, one flag, one Constitution” and his role in the integration of Jammu and Kashmir.
• Educational and Industrial Reform: Focus on his achievements as Vice-Chancellor of Calcutta University and India’s first Minister for Industry and Supply.
• Legacy and Inspiration: The commemoration aims to inspire citizens by reflecting on Dr. Mookerjee’s vision for a self-reliant and united India.

Learning Corner:

Dr. Syama Prasad Mookerjee (1901–1953) was a prominent Indian politician, educationist, and nationalist leader. He played a crucial role in shaping India’s political landscape post-independence and was a key figure in the Bharatiya Jana Sangh, which later evolved into the Bharatiya Janata Party (BJP). Mookerjee is widely remembered for his advocacy of national unity, self-reliance, and Hindu nationalism.

Key Contributions:

• Educational Reforms: Dr. Mookerjee was the youngest Vice-Chancellor of Calcutta University, where he made significant contributions to improving the educational system. His emphasis on quality higher education and innovation helped shape India’s academic foundation.
• Political Leadership: As the founder of the Bharatiya Jana Sangh in 1951, Dr. Mookerjee promoted the idea of “One Nation, One Flag, One Constitution” and staunchly opposed Article 370, which granted special status to Jammu and Kashmir.
• Jammu and Kashmir: He is particularly remembered for his strong stance against the special privileges accorded to Jammu and Kashmir, advocating for its complete integration into India. He was arrested during a protest in Kashmir in 1953 and died under mysterious circumstances in prison, making him a martyr for his cause.
• Industrial and Economic Vision: As India’s first Minister for Industry and Supply, Mookerjee contributed significantly to the establishment of the Indian industrial sector, emphasizing self-reliance and indigenous development.

Legacy:

Dr. Mookerjee’s legacy remains influential in Indian politics, especially with regard to national unity, educational reforms, and his role in the formation of a more self-sufficient India. His contributions to education, governance, and national integration continue to inspire political leaders and citizens alike.

Source :  PIB

Category: SCIENCE AND TECHNOLOGY

Context: The first indigenous Diving Support Vessel (DSV) ‘Nistar’ was formally delivered to the Indian Navy on July 8, 2025, by Hindustan Shipyard Limited (HSL) at Visakhapatnam

Key Features and Capabilities:

• Indigenous Design and Construction: ‘Nistar’ is the first DSV fully designed and built in India, with approximately 75% indigenous content.
• Dimensions and Displacement: The vessel measures 118 meters in length and displaces around 10,000 tons.
• Deep-Sea Operations: Capable of saturation diving up to 300 meters and side diving up to 75 meters, enabling complex underwater missions.
• Submarine Rescue: Acts as the “Mother Ship” for Deep Submergence Rescue Vehicles (DSRVs), enabling rapid response for submarine emergencies and personnel evacuation.
• Remotely Operated Vehicles (ROVs): Equipped for diver monitoring and salvage operations at depths up to 1,000 meters.
• Strategic Importance: India is now among a select group of nations possessing such specialized rescue and diving capabilities.

Significance:

The delivery of ‘Nistar’ enhances the Indian Navy’s ability to perform submarine rescue, deep-sea diving, salvage, and underwater logistics operations. It also highlights India’s commitment to indigenous shipbuilding and defense technology development.

Importance:

The delivery of ‘Nistar’ enhances India’s ability to conduct critical submarine rescue, deep-sea diving, and salvage operations. It underscores India’s growing self-reliance in defense technology and the Aatmanirbhar Bharat initiative, further strengthening India’s naval and maritime capabilities.

Source: PIB

Category:SCIENCE AND TECHNOLOGY

Context: Starlink, owned by Elon Musk, has received the final regulatory clearance to offer satellite communication services in India. The company was granted an operator license by the Department of Telecommunications (DoT) and IN-SPACe (Indian National Space Promotion and Authorization Center)

Starlink operates the world’s largest satellite constellation with around 7,000 satellites in orbit, aimed at offering internet services to rural and remote areas that lack reliable terrestrial broadband infrastructure. The service will utilize Low Earth Orbit (LEO) satellites to provide faster internet speeds and more resilient network connections compared to traditional methods.

The company plans to roll out its services in India soon, collaborating with Airtel and Jio to offer its services in the country. The clearance paves the way for Starlink to expand its global internet coverage and support India’s connectivity needs, especially in underserved regions.

Learning Corner:

IN-SPACe (Indian National Space Promotion and Authorization Center) is an autonomous agency under the Department of Space, Government of India. It was established in 2020 with the primary aim of promoting private sector participation in the Indian space industry and enabling them to use India’s space resources and infrastructure for various commercial purposes.

Key Functions of IN-SPACe:

1. Promotion of Private Sector Participation: IN-SPACe facilitates and promotes private sector entities in the space industry, encouraging innovation, collaboration, and technological advancement.
2. Authorization and Regulation: It is responsible for authorizing and regulating all space activities undertaken by private players. This includes licensing and ensuring that the activities align with national security and legal frameworks.
3. Space Infrastructure Access: IN-SPACe enables private companies to access India’s space infrastructure, such as launch vehicles, satellites, and ground stations, to facilitate satellite launches and space research.
4. Encouraging Startups: The agency works to create an environment conducive to the growth of space startups in India, helping them with resources, expertise, and technology to build their own space capabilities.
5. International Collaboration: IN-SPACe also looks to foster collaboration with international space agencies and companies, positioning India as a key player in the global space market.

Low Earth Orbit (LEO) refers to the region of space located between approximately 160 kilometers (100 miles) and 2,000 kilometers (1,200 miles) above the Earth’s surface. It is the closest orbit to Earth, where most Earth observation satellites, communication satellites, and crew missions take place.

Key Characteristics of LEO:

1. Proximity to Earth: LEO is closest to Earth compared to other orbits like Medium Earth Orbit (MEO) or Geostationary Orbit (GEO). This allows satellites in LEO to have lower latency and faster communication with the ground.
2. Orbital Period: Satellites in LEO typically complete an orbit around Earth in 90 to 120 minutes, meaning they can pass over different regions of the Earth multiple times a day.
3. Lower Latency: The proximity of LEO satellites to Earth results in lower latency compared to higher orbits, making them ideal for real-time communication services like broadband internet, video conferencing, and satellite phone services.
4. Use in Earth Observation: LEO is widely used for Earth observation satellites that monitor weather, environmental changes, and natural disasters due to its ability to capture high-resolution images with minimal distortion.
5. Cost-Effective Launches: Launching satellites into LEO is generally more cost-effective due to the lower energy requirements for reaching these orbits compared to higher altitudes like GEO.
6. Applications:
   • Communication Satellites: Companies like Starlink use LEO to offer internet services, particularly in underserved and remote areas.
   • Space Stations: The International Space Station (ISS) orbits in LEO, where it supports scientific research and human habitation.
   • Military and Intelligence: LEO is also used for reconnaissance and surveillance satellites.

Source: THE INDIAN EXPRESS

Introduction (Context)

Recently, a government release claimed that India is “one of the most equal societies today”, citing the World Bank’s latest Poverty and Equity Brief which showed India’s Gini Index at 25.5, making it the fourth most equal country after Slovak Republic, Slovenia, and Belarus.

The government’s claim has been contested both by academics who study inequality, as well as observers who see India as a country with high and rising inequality.

What is the Gini Coefficient?

The Gini Coefficient is a number between 0 and 1 (or 0% to 100%) that measures inequality of income or wealth in a country.

• 0 = perfect equality (everyone has the same income)
• 1 = perfect inequality (one person has all the income, others have none)

Example:
If India’s Gini is 0.25 (25%), it suggests less inequality compared to a country with Gini 0.60 (60%), where few people hold most of the income.

Recent data

• India’s consumption-based Gini index improved from 28.8 in 2011-12 to 25.5 in 2022-23, 
• The World Inequality Database shows income inequality rising from a Gini of 52 in 2004 to 62 in 2023. 
• Wage disparity remains high, with the median earnings of the top 10 percent being 13 times higher than the bottom 10 percent in 2023-24.

Issues

The government’s claim has been contested both by academics who study inequality, as well as observers who see India as a country with high and rising inequality. The issues are:

1. India uses Consumption-based Gini

• India’s Gini is calculated on consumption, not income.
• Income varies more than consumption.
• Rich people save most of their extra income.

Hence a Gini Index of inequality using consumption data underestimates the level of inequality in a society.

• Limititation in survey

• It is widely acknowledged that the gap between the bottom 10% and top 10% of the population is widening, even if it is assumed that everyone in the country is becoming better off.
• However, the calculation of inequality is unlikely to capture the widening gap because: 

• Rich people often refuse to participate (differential non-response).
• Survey sampling rarely picks up top 1% earners, leading to underestimation of inequality.

• Similar underestimation occurs in US, UK, Europe.
• World Inequality Lab uses income tax data, showing rising inequality in India.

A way to correct for this lapse in sampling is to use the survey data in conjunction with income tax data, which is uniquely accurate in capturing the incomes of the top earners in a country. 

Problems with Gini Index

• The Gini Index too is not ‘sensitive’ to changes at the extremes of a population, but is overly sensitive to changes in the middle.
• Experts recommend measures like Palma Ratio, comparing income shares of top 10% vs bottom 50%, for a clearer picture.

Way forward

• Combine survey data with income tax data to measure true inequality.
• Adopt multiple measures to design targeted policies.
• Focus on inclusive growth to ensure equitable distribution of economic gains.

Conclusion

The point of studying inequality is to allow governments to tailor appropriate policies to alleviate excessive inequality. However, an inaccurate reading of inequality can lead to policies that actually exacerbate existing inequalities.  Relying solely on the Gini Index, that too with severe data limitations, can obscure the reality. Hence use multiple measures to design the schemes.

Mains Practice Question

Q “Consumption-based measures of inequality underestimate the true extent of economic disparity in India.” Critically examine this statement in light of recent debates around the Gini Index and its limitations. (250 words, 15 marks)

Introduction (Context)

The frequency and intensity of disasters have increased due to climate change. Further, a low penetration of disaster risk insurance for individual property and livelihoods leaves much of the population exposed to irretrievable damage and loss. Hence there is a growing discussion on innovative disaster financing instruments like catastrophe bonds (cat bonds).  Experts suggest India could sponsor regional cat bonds to strengthen South Asia’s disaster resilience.

What is a cat bond?

• Cat bonds are a hybrid financial instrument combining features of insurance and debt securities. 
• They convert disaster insurance cover into tradable securities in global financial markets.
• This means that instead of relying solely on traditional re-insurers, at-risk governments can securitise disaster risks and transfer them to a wider pool of investors with large financial capacity. 
• The main benefit is the ability to unlock a much larger quantum of funds for immediate post-disaster relief and reconstruction.

How do Cat Bonds work?

• Sovereign governments pay premiums (like insurance premiums) and define risk parameters.
• Institutions like the World Bank, Asian Development Bank, or reinsurance companies issue bonds on behalf of the sponsor to reduce counter-party risks.
• Pension funds, hedge funds invest in cat bonds for portfolio diversification.
• Risk & Returns:
  • Investors earn higher coupon rates than regular bonds due to the inherent risk of principal loss if a disaster strikes.
  • For example, earthquake-related cat bonds have lower premiums (1-2%) than those for cyclones or hurricanes.

Advantages of Cat Bonds

• Immediate liquidity for post-disaster reconstruction.
• Transfers disaster risk to global financial markets, reducing burden on government finances.
• Encourages proactive disaster risk reduction measures to reduce coupon rates.

Disadvantages of Cat Bonds

• If a cat bond is poorly designed, it might not trigger payouts despite significant disasters. 
• For instance, a bond designed to cover earthquakes above 6.6 magnitude might not pay out for a 6.5 magnitude quake that still causes widespread destruction. 
• This underlines the importance of setting realistic and context-appropriate payout parameters.
• If no disaster occurs, expenses towards premiums may be questioned despite being preventive financial planning.

Does India Need Cat Bonds?

• The unpredictability and increase in frequency of extreme weather events like cyclones, floods, forest fires and devastating earthquakes in South Asia have increased India’s exposure to disaster-risk
• Advantages for India:

• Sponsoring cat bonds would enable India to protect its public finances by ensuring immediate funds for post-disaster reconstruction without sudden fiscal shocks. 
• India has a strong financial reputation in the world, which means global investors trust its ability to pay. Also, because India faces many natural disasters, issuing cat bonds through trusted organisations like the World Bank can be a cost-effective way to manage these risks.

India can create regional bond

• India, due to its size and financial stability, could lead the creation of a South Asian cat bond. 
• Such a bond would cover multiple countries exposed to diverse disaster risks, such as earthquakes in Bhutan, Nepal, and India or supra-cyclones and tsunamis impacting India, Bangladesh, Maldives, Myanmar, and Sri Lanka. 
• A regional cat bond would spread risks, reduce premium costs for each country, and improve financial resilience for the entire region.

Terminologies

• Hybrid insurance-cum-debt financial products: These are financial instruments that combine features of insurance (risk coverage) and debt (raising money from investors), like cat bonds which provide disaster insurance while functioning as tradable bonds.
• Insurance premium: It is the amount of money paid regularly by an individual or organisation to an insurance company to keep their insurance policy active.
• Debt securities: These are financial instruments, such as bonds, through which investors lend money to issuers (governments or companies) and receive fixed returns over time.
• Reinsurance companies: These are firms that provide insurance to insurance companies themselves, helping them spread and manage large risks.
• Hedge funds: These are investment funds that use various strategies, including high-risk ones, to earn returns for their wealthy investors or institutions.

Way forward

• Evaluate historical disaster costs vs. premium payments for cat bonds through transparent government procedures.
• Design robust payout structures to avoid technical disqualification of claims.
• Explore regional collaboration for cost-sharing and greater resilience.

Mains Practice Question

Q Discuss how catastrophe bonds (cat bonds) can be leveraged by India to strengthen its disaster risk financing framework. Critically analyse. (250 words, 15 marks)