• RBI’s MPC cut the repo rate by 25 bps to 5.25%. • Driven by strong GDP growth (8.2% in Q2) and sharp fall in inflation (1.7%). • Indicates shift towards easing borrowing costs.
Reasons for Rate Cut
1. Inflation well below target • Inflation down to 1.7%, below RBI’s 4% target. • Allowed policy easing without risking stability.
2. Robust economic growth • GDP at 8.2%, showing momentum. • Rate cut to sustain growth and make loans cheaper.
• RBI to conduct OMO purchases of ₹1 lakh crore + USD/INR buy–sell swap of $5 billion. • Aim: inject liquidity, support monetary transmission, stabilise financial system. • RBI clarified it is not intended to support rupee levels.
What are OMOs?
• Buying/selling of G-Secs by RBI. • RBI buying G-Secs → liquidity increases.
Dollar–Rupee Swap
• RBI buys dollars now, sells later at maturity. • Injects rupee liquidity without permanently raising money supply.
• Partnership diversifies into labour mobility, energy, nuclear, Arctic, cultural, and financial sectors — strengthening a multidimensional relationship.
Why India–Russia Ties Matter
• Historical trust + steady partnership (“Pole Star” analogy). • Russia supports India in defence, nuclear, and energy sectors. • Labour mobility → new cooperation dimension. • Rupee–ruble trade → strategic autonomy. • Arctic cooperation → future geo-economic relevance. • Helps India maintain space between US and Russia rivalries.
Challenges
• Payment issues due to sanctions • Over-dependence on Russian defence systems • Balancing US partnership with Russia ties • Ukraine war complicates diplomacy
TDF
“In light of the recent India–Russia summit, critically examine how the bilateral partnership is expanding beyond a traditional defence focus into broader strategic, economic, and people-centric domains.”
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About the UPSC Civil Services Examination (UPSC CSE)
The UPSC Civil Services Examination (CSE) is one of the most competitive and esteemed examinations in India, conducted by the Union Public Service Commission to recruit officers for services such as the Indian Administrative Service (IAS), Indian Police Service (IPS), Indian Foreign Service (IFS), and others. The exam comprises three stages — Prelims, Mains, and the Personality Test (Interview) — designed to test a candidate’s knowledge, aptitude, decision-making, and leadership skills.
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