THE RESERVE BANK OF INDIA'S REPO RATE CUT - ECONOMY

NEWS: The Reserve Bank of India (RBI) has made a significant move in its monetary policy
by reducing the repo rate by 25 basis points (bps), bringing it down to 6.25%.
WHAT’S IN THE NEWS?
This marks the first repo rate cut in nearly five years and is aimed at stimulating economic
growth by making borrowing more affordable. Lower borrowing costs are expected to
encourage increased consumer spending and business investments, ultimately boosting
economic activity.
What is the Repo Rate and Why Was it Reduced?
Definition of Repo Rate
 The repo rate, short for “Repurchase Option”, is the interest rate at which the
Reserve Bank of India (RBI) lends money to commercial banks in exchange for
government securities.
 This lending is usually short-term, helping commercial banks meet their temporary
liquidity needs.
 Under this arrangement, banks agree to repurchase the securities from the RBI at a
later date, typically at a slightly higher price, which accounts for the interest charged
by the RBI.
Impact of Changes in the Repo Rate
 Increase in the Repo Rate:
 If the RBI increases the repo rate, borrowing from the central bank becomes
more expensive for commercial banks.
 This discourages banks from borrowing funds, reducing the overall liquidity
in the economy and making loans more expensive for businesses and
consumers.
 As a result, demand for goods and services may decline, helping to control
inflation.
 This type of policy is known as contractionary monetary policy because it
restricts money supply and economic expansion.
 Decrease in the Repo Rate:
 A decrease in the repo rate makes it cheaper for banks to borrow money
from the RBI.
 Banks, in turn, lower their lending rates for consumers and businesses,
making loans more affordable.
  This increases liquidity in the market, boosting economic activity by
encouraging more borrowing and spending.
 This is known as expansionary monetary policy, as it promotes economic
growth by injecting liquidity into the system.
Reason for the Repo Rate Cut
 The RBI has reduced the repo rate to stimulate economic activity by making credit
cheaper and more accessible.
 Lower borrowing costs encourage individuals to spend more on consumer goods,
real estate, and automobiles, while businesses can invest more in expansion and
production.
 The ultimate goal is to boost economic growth while maintaining inflation within a
manageable range.

Inflation and Growth Outlook

 Inflation Management:
 Inflation in India is currently within the RBI’s target range of 4%.
 With inflation under control, the RBI has room to reduce interest rates
without the immediate risk of excessive price increases.
 GDP Growth Projections:
 The GDP growth rate for FY 2025-26 is expected to be 7%, reflecting a
positive economic outlook.
 Retail inflation is forecast to be around 4.2%, suggesting a stable price
environment that allows for policy adjustments like the repo rate cut.

How Will This Impact the Economy?

Impact on Borrowing Costs
 A lower repo rate reduces the cost of borrowing for commercial banks, enabling
them to offer loans at lower interest rates to businesses and consumers.
 EMIs (Equated Monthly Installments) on home loans, auto loans, and personal
loans are expected to decline, making debt repayment easier for individuals.
 Banks will also reduce lending rates linked to external benchmarks, such as the
Marginal Cost of Funds-Based Lending Rate (MCLR) and repo-linked loans,
further benefiting borrowers.
Increased Accessibility to Credit
  With borrowing costs lower, businesses will find it easier to take loans for
expansion, hiring, and capital investment.
 Consumers will find it more affordable to finance purchases, leading to increased
spending on goods and services.
 This rise in borrowing and spending should accelerate economic activity, promoting
job creation and industrial growth.
Alignment with Global Economic Trends
 Many central banks around the world have adopted accommodative monetary
policies, cutting interest rates to support economic recovery.
 The RBI’s decision to lower the repo rate aligns India’s monetary policy with global
trends, ensuring that the country remains competitive in attracting investments.

Potential Risks of the Repo Rate Cut

While the repo rate cut has several positive effects, it also carries certain risks:
1. Higher Inflation:
 Lower interest rates increase the money supply, which can raise demand for
goods and services.
 If supply does not keep pace with demand, inflation may rise, making
essential goods and services more expensive.
 Although inflation is currently within target, sustained demand growth could
put upward pressure on prices.
2. Lower Returns on Savings and Fixed Deposits:
 A decrease in interest rates on loans often leads to a reduction in interest
rates on savings accounts and fixed deposits.
 This makes saving less attractive, potentially discouraging individuals from
setting aside money in banks.
 Retired individuals and others dependent on fixed-income investments may
see their earnings decline, impacting their purchasing power.

Projections for GDP Growth and Inflation

 GDP Growth Expectations:
 The Indian economy is projected to grow at 4% in FY 2024-25, reflecting a
slight slowdown from the 8.2% growth rate recorded in the previous year.
  However, for FY 2025-26, growth is expected to rise to 6.7%, supported by
increased investment and economic activity.
 Inflation Forecast:
 Retail inflation is projected to be 2% in FY 2025-26, with factors such as
falling vegetable prices and declining global edible oil prices contributing
to lower overall inflation.
 Despite this, there are concerns about inflation sustainability, especially if
demand surges due to easy credit availability.
 Rupee Depreciation Concerns:
 The Indian rupee has weakened, reaching 87 against the US dollar.
 A weaker currency makes imports more expensive, which could increase
inflationary pressures, particularly for fuel and essential commodities.

Conclusion
 The RBI’s decision to cut the repo rate by 25 bps to 6.25% is a strategic move
aimed at stimulating economic growth by making credit cheaper.
 While this will encourage borrowing, investment, and consumer spending, it also
presents risks such as inflationary pressures and reduced savings returns.
 With inflation currently within the RBI’s comfort zone, the central bank sees an
opportunity to support growth without significantly raising inflation risks.
 Going forward, careful monetary policy management will be essential to balance
economic expansion with price stability, ensuring long-term sustainable growth.

Key Interest Rates in India’s Monetary Policy

The RBI uses several key interest rates and reserve requirements to regulate liquidity and
control the flow of money in the economy.
1. Repo Rate
 The repo rate is the interest rate at which the RBI lends short-term funds to
commercial banks, with an agreement that the banks will repurchase the securities at
a later date.
 A higher repo rate discourages borrowing, reducing money supply and controlling
inflation.
 A lower repo rate encourages borrowing, increasing liquidity and promoting
economic growth.
2. Reverse Repo Rate
 The reverse repo rate is the interest rate the RBI pays to commercial banks when
they deposit their excess funds with the central bank.
 A higher reverse repo rate incentivizes banks to park more money with the RBI,
reducing liquidity in the market.
 A lower reverse repo rate encourages banks to lend more money to businesses and
consumers, boosting economic activity.
3. Bank Rate
 The bank rate is the interest rate charged by the RBI when it lends long-term
funds to commercial banks.
 It influences lending rates in the economy. A higher bank rate increases borrowing
costs, while a lower bank rate makes borrowing cheaper.
4. Statutory Liquidity Ratio (SLR)
 The Statutory Liquidity Ratio (SLR) refers to the percentage of a commercial
bank’s net demand and time liabilities (NDTL) that must be held in the form of
liquid assets such as cash, gold, or government-approved securities.
 The RBI mandates this reserve to ensure banks remain financially stable and
have sufficient liquidity to meet obligations.
 Increasing the SLR reduces the funds available for lending, tightening liquidity and
controlling inflation. Lowering the SLR frees up funds, boosting lending and
economic activity.
5. Cash Reserve Ratio (CRR)
 The Cash Reserve Ratio (CRR) is the percentage of a commercial bank’s total
deposits that must be kept as reserves with the RBI in the form of liquid cash.
 CRR is used by the RBI to regulate liquidity in the banking system.
 A higher CRR means banks have less money to lend, reducing liquidity in the
economy.
 A lower CRR allows banks to lend more, increasing money supply and stimulating
growth.
6. Marginal Standing Facility (MSF) Rate
 The Marginal Standing Facility (MSF) rate is the interest rate at which banks
can borrow money overnight from the RBI in emergency situations when they
have exhausted their borrowing options under the repo rate facility.
 MSF provides a last-resort liquidity support to banks facing short-term shortages.
  A higher MSF rate discourages emergency borrowing, while a lower MSF rate
provides easier access to funds.
The RBI’s monetary policy plays a critical role in regulating inflation, stabilizing the
financial system, and promoting economic growth. By adjusting interest rates and reserve
requirements, the RBI ensures that liquidity in the economy remains balanced.
 Expansionary monetary policy boosts growth by making borrowing cheaper,
increasing spending and investment.
 Contractionary monetary policy controls inflation by making borrowing
expensive, reducing excess money supply.
Key interest rates such as repo rate, reverse repo rate, and bank rate, along with reserve
requirements like SLR and CRR, serve as important tools for maintaining financial
stability. The RBI continuously monitors economic conditions and adjusts its policies
accordingly to ensure sustainable growth while keeping inflation under control.
Source: https://www.thehindu.com/business/Economy/rbi-monetary-policy-committee-
meeting-friday/article69190903.ece

MARINE HEAT WAVES - ENVIRONMENT

NEWS: In January 2025, marine heatwaves (MHWs) in Western Australia led to the death of
over 30,000 fish.
WHAT’S IN THE NEWS?
1. Extremely High Ocean Temperatures:
 Marine Heatwaves (MHWs) are periods of abnormally high ocean
temperatures that exceed the typical seasonal range.
 These temperature spikes can significantly alter marine ecosystems and
disrupt climate patterns.
2. Temperature Threshold and Duration:
 An event is classified as an MHW when sea surface temperatures (SSTs)
rise by 3-4°C above the average for at least five consecutive days.
 While some MHWs last only a few weeks, others can persist for several
months or even multiple years.
3. Role of Climate Change in MHWs:
 Climate change is the primary driver of increasing MHWs, as over 90% of
the excess heat trapped by greenhouse gases is absorbed by the ocean.
 Rising global temperatures have led to more frequent, intense, and
prolonged MHWs over the past few decades.
Global Presence of Marine Heatwaves
1. Widespread Occurrence Across Oceans:
 Marine Heatwaves have been observed in various oceanic regions, including:
 North Pacific Ocean
 North Atlantic Ocean
 Mediterranean Sea
 Caribbean Sea
 Parts of the Indian Ocean
2. Impact on Global Weather Patterns:
 MHWs can intensify extreme weather events such as tropical storms,
hurricanes, and cyclones.
 They also disrupt the global water cycle, leading to increased occurrences of
floods, droughts, and wildfires.

Recent Trends in the Indian Ocean

1. Rising Frequency in the Indian Ocean:
  In the past, MHWs were considered rare events in the tropical Indian
Ocean.
 However, in recent decades, they have become an annual phenomenon due to
sustained ocean warming.
2. Increased Occurrence in the Western Indian Ocean and Bay of Bengal:
 Between 1982 and 2018, the frequency of MHWs in the:
 Western Indian Ocean rose to 1.5 events per decade.
 Bay of Bengal recorded 0.5 events per decade.
 This trend suggests that MHWs are becoming more intense and
widespread, affecting climate systems across South Asia.

Impacts of Marine Heatwaves

1. Influence on Monsoon Patterns
 MHWs in the western Indian Ocean and Bay of Bengal significantly impact the
South Asian monsoon system.
 Altered atmospheric circulation due to heatwaves has led to:
 Reduced rainfall in central India, causing dry spells and droughts.
 Increased rainfall in southern India, leading to extreme precipitation events
and flooding.
How does the Bay of Bengal Impact Monsoon?
 Moisture Source:
 The warm and humid air mass over the Bay of Bengal provides the necessary
moisture that is carried by the monsoon winds towards the Indian
subcontinent.
 Heat Exchange:
 The Bay of Bengal has warm sea surface temperatures, especially in its
northern part. During the monsoon season, the landmass of the Indian
subcontinent gets heated up, creating a low-pressure area. The warm air
rises, and cooler air from the Bay of Bengal rushes in to replace it, causing a
pressure gradient. This pressure gradient helps draw in moisture-laden
winds from the Bay of Bengal, contributing to the monsoon rainfall.
 U-Turn of Monsoon Currents:
 The monsoon winds blowing from the southwest over the Arabian
Sea cross over into the Bay of Bengal. When they reach the Bay of Bengal,
 they make a U-turn and start moving towards the northeast, eventually
bringing rainfall to different parts of India.
 The warm temperatures in the Bay of Bengal facilitate this U-turn and the
transport of moisture to the Indian subcontinent.
 Low-Level Jet Stream:
 The Bay of Bengal also influences the formation and intensity of the low-level
jet stream, known as the Somali Jet.
 This jet stream plays a crucial role in the transport of moisture from the
equatorial Indian Ocean to the Indian subcontinent.
 The warm sea surface temperatures in the Bay of Bengal contribute to
the strengthening of this low-level jet, enhancing the moisture supply
during the monsoon season.

2. Socio-Economic Disruptions
 MHWs negatively affect the livelihoods of coastal communities, particularly those
dependent on:
 Aquaculture and fisheries, as warming waters alter fish migration patterns
and disrupt breeding cycles.
 Tourism, especially in destinations reliant on marine biodiversity and coral
reefs.
 Specific marine species suffer declines in productivity, including:
 Lobsters, snow crabs, and scallops, which are commercially important
seafood species.
 The collapse of these fisheries threatens food security and local economies.
3. Biodiversity Loss and Ecosystem Destruction
 Mass Mortality of Marine Species:
 MHWs cause widespread death of marine organisms, forcing many species
to relocate or change their natural behavior.
 Impact on Coral Reefs and Kelp Forests:
 Coral reefs are highly sensitive to prolonged heat stress, leading to coral
bleaching.
 Coral bleaching weakens reproductive ability and increases coral
susceptibility to diseases.
  Kelp forests, another vital marine habitat, experience die-offs, leading to
habitat loss for many marine organisms.
 Compounding Threats:
 The damage from MHWs is worsened by other environmental threats like
ocean acidification, overfishing, and coastal pollution.
How does Marine Heatwave Impact Rainfall in Northwest India?
 The marine heatwave in the Bay of Bengal increased sea surface temperatures,
causing higher evaporation rates and a greater moisture supply in the atmosphere.
This surplus of moisture contributed to above-average rainfall in northwest India.
 The marine heatwave likely influenced the formation and behavior of
depressions in the Bay of Bengal, which may have contributed to an increase in the
frequency and intensity of depressions, particularly on faster timescales (3-10
days).
 Depressions, which are low-pressure systems, play a significant role in the
monsoon and rainfall patterns.
 The marine heatwave, along with changing timescales of depressions, affected the
path and trajectory of these weather systems. Depressions tended to move more
towards northwest India rather than north-central India, causing a higher
concentration of rainfall in the northwest region, leading to above-average
rainfall in that area.

Strategies to Combat Marine Heatwaves

1. Reducing Ocean Warming Through Climate Action
 Countries must reduce fossil fuel emissions to slow ocean temperature rise,
aligning with the targets of the Paris Agreement.
 A transition towards renewable energy and sustainable industrial practices
is essential in mitigating further damage.
2. Investing in Nature-Based Solutions (NbS)
 Governments and environmental organizations should:
 Restore marine ecosystems like mangroves, seagrass beds, and coral
reefs to enhance natural resilience against MHWs.
 Follow guidelines from the IUCN Global Standard for Nature-based
Solutions to implement effective conservation strategies.
3. Enhancing Scientific Research and Monitoring
 It is crucial to expand research capacity to:
  Improve real-time monitoring and prediction of MHWs.
 Analyze long-term ecological impacts on marine biodiversity.
 International cooperation should be strengthened through global research
networks like the Marine Heatwave International Group.
Way Forward
1. Implementing Protective Marine Policies
 Governments must establish marine protected areas (MPAs) to safeguard
vulnerable species and habitats from MHW-related destruction.
 Policies should regulate human activities like deep-sea fishing, coastal
development, and tourism to minimize further environmental damage.
2. Strengthening Fisheries Management
 Enforcing strict fishing regulations and catch limits can help sustain marine
populations affected by MHWs.
 Sustainable fisheries management will reduce economic losses for coastal
communities.
3. Raising Awareness Among Stakeholders
 Policymakers, environmental groups, and the private sector must be actively
engaged in climate adaptation measures.
 Educating fishermen, tourism operators, and local communities about the
risks and mitigation strategies can improve resilience against MHWs.

Conclusion
 Marine Heatwaves (MHWs) are a growing global concern, with devastating
effects on ocean ecosystems, climate stability, and economic activities.
 The Indian Ocean is experiencing a significant rise in MHWs, impacting
monsoons, fisheries, and coastal livelihoods.
 Urgent climate action and targeted conservation strategies are required to mitigate
the effects of MHWs and protect marine biodiversity.
 Collaboration between governments, scientists, and industries is key to ensuring
the long-term sustainability of marine ecosystems.
Source: https://indianexpress.com/article/explained/explained-climate/climate-crisis-marine-
heatwaves-9821129/
INTERNATIONAL BIG CAT ALLIANCE
NEWS: Recently, the IBCA, a treaty-based intergovernmental organization launched by
India to conserve the seven big cats, came into force.
WHAT’S IN THE NEWS?
On January 23, 2025, the International Big Cat Alliance (IBCA), an initiative launched by
Prime Minister Narendra Modi in April 2023, officially became a treaty-based
intergovernmental organization.
 The IBCA framework agreement has now come into force, enabling it to begin its
formal operations, programs, and governance activities.
 Under the agreement, India has been designated as the depository, meaning that it
will be responsible for holding the instruments of ratification, approval, or
accession from countries that decide to become parties to the agreement.
Formation and Membership Details
Establishment of IBCA
 IBCA was officially launched on April 9, 2023, in Mysuru, Karnataka, to mark the
50th anniversary of Project Tiger.
 The primary goal of IBCA is to strengthen global cooperation for the conservation
of seven big cats:
 Lion (Panthera leo)
 Tiger (Panthera tigris)
 Leopard (Panthera pardus)
 Cheetah (Acinonyx jubatus)
 Snow Leopard (Panthera uncia)
 Jaguar (Panthera onca)
 Puma (Puma concolor)
Membership and Ratification
 A total of 27 countries, including India, have consented to join IBCA.
 For the agreement to come into force, at least five signatory countries had to ratify
the framework agreement and formally deposit their instruments of ratification.
 The five countries that ratified the agreement, enabling it to take effect, are:
1. India
2. Liberia
3. Nicaragua
 4. Eswatini
5. Somalia
Categories of Countries Involved in IBCA
IBCA membership includes a diverse set of nations and organizations:
1. Range Countries – These are nations where at least one of the seven big cats is
naturally found.
2. Non-Range Countries – These are countries that do not have big cats in their native
wildlife but are interested in contributing to their conservation.
3. Conservation Partners & Scientific Organizations – Various international and
national organizations, research institutions, and conservation groups dedicated to big
cat protection.
India’s Role and Financial Commitment
India’s Formal Participation in IBCA
 India formally joined IBCA in September 2024, following the necessary legal
approvals.
 Before this, in February 2024, the Union Cabinet approved the establishment of
the IBCA headquarters and endorsed a financial commitment.
Financial Support by India
 The Indian government has allocated a one-time budgetary support of ₹150 crore
to IBCA for its operations during the 2023-24 to 2027-28 period.
Details of the Seven Big Cats Covered Under IBCA
Lion (Panthera leo)
 Geographical Distribution: Found primarily in Africa and Asia.
 Asiatic Lion Habitat: India is home to the only surviving population of Asiatic
lions, found in Gujarat’s Gir Forest.
 Conservation Initiatives:
 Project Lion (2020): Launched by the Indian government to protect and
expand the population of Asiatic lions.
 World Lion Day: Celebrated on August 10 each year to raise awareness
about lion conservation.
Leopard (Panthera pardus)
 Global Presence: Leopards are found in both Asia and Africa and are highly
adaptable to diverse environments.
  Notable Features: Leopards are smaller than other big cats, are primarily
nocturnal, and are known for their stealth and agility.
 Population in India:
 2018: 12,852 leopards recorded.
 2022: 13,784 leopards recorded, indicating a growth in population (as per the
"Status of Leopards in India, 2022" report).
Snow Leopard (Panthera uncia)
 Habitat Range: Found in the high-altitude regions of 12 Asian countries, including
India (Ladakh, Jammu & Kashmir, Himachal Pradesh, Uttarakhand, Sikkim,
Arunachal Pradesh).
 Population in India: Estimated at 718 individuals (SPAI, 2024 Report).
Tiger (Panthera tigris)
 India’s Role: India is home to over 70% of the world’s wild tiger population.
 Tiger Population in India (2022 estimate): 3,167 individuals.
 Conservation Efforts:
 Project Tiger (1973): Launched as a centrally sponsored scheme to protect
tigers in their natural habitat.
 Initially covered nine tiger reserves across states like Assam, Bihar,
Karnataka, Madhya Pradesh, Maharashtra, Odisha, Rajasthan, Uttar
Pradesh, and West Bengal.
Cheetah (Acinonyx jubatus)
 Historical Context: India was home to the Asiatic cheetah, which is now nearly
extinct in the country.
 Current Conservation Efforts:
 Project Cheetah (2022): Launched for the reintroduction of African
cheetahs from Namibia and South Africa to Kuno National Park in
Madhya Pradesh.
 IUCN Status:
 Asiatic Cheetah: Critically Endangered (found only in Iran).
 African Cheetah: Vulnerable.
Jaguar (Panthera onca)
 Geographical Presence: Native to South America, not found in India.
  Cultural Significance: The jaguar was a sacred symbol in Mayan and Aztec
civilizations.
 Melanistic Jaguars: Also known as black panthers due to their dark pigmentation.
Puma (Puma concolor)
 Common Names: Also known as Cougar, Mountain Lion, or Panther.
 Geographical Range: Found across North and South America, from Canada to
the Southern Andes.
 India: Not a native species.
Important National Parks & Wildlife Sanctuaries in India
Jim Corbett National Park, Uttarakhand
 Established in 1936, making it India’s first national park.
 Project Tiger was launched here in 1973.
Sunderban National Park, West Bengal
 A UNESCO World Heritage Site, home to the largest mangrove ecosystem in the
world.
 Famous for:
 Royal Bengal Tiger
 Other wildlife: Fishing cats, macaques, pangolins, wild boars, and leopard
cats.
Ratapani Wildlife Sanctuary, Madhya Pradesh
 Declared as India’s 57th Tiger Reserve in December 2024.
 Total Area: 1,271.4 sq km (Core: 763.8 sq km, Buffer: 507.6 sq km).
 Madhya Pradesh now has eight tiger reserves.
Bandhavgarh National Park, Madhya Pradesh
 Notable for having the highest density of Bengal tigers in India.
 A major hotspot for tiger tourism and conservation research.
Significance of IBCA for Global Conservation
1. Encourages international cooperation for big cat conservation.
2. Promotes knowledge exchange and scientific research on big cats.
3. Prevents poaching, illegal trade, and habitat destruction through coordinated
efforts.
 4. Ensures financial and logistical support for conservation initiatives worldwide.
The establishment of IBCA represents a major step in international wildlife conservation,
with India playing a leadership role in protecting big cats on a global scale.
Source: https://indianexpress.com/article/upsc-current-affairs/upsc-essentials/knowledge-
nugget-upsc-international-big-cat-alliance-9821088/

TITBITS:
1. Denied permission to explore and extract oil and gas under Assam's Dibru Saikhowa
National Park, where mining is prohibited, Oil India Limited (OIL) has impressed upon the
Environment Ministry the need for carrying out an "R&D study"
2. Defence Minister and his American counter-part, Pete Hegseth, agreed Thursday to work
on a 10-year comprehensive framework to bolster the India-US defence partnership,
especially in the spheres of intelligence, logistics, operational and industrial engagement.
3. Demchok, which was among the two main points of the recent border row with China, has
now been opened for visitors as part of the Centre's new initiative of Battlefield Tourism.
4. The marine heatwaves (MHWs) linked to the death of more than 30,000 fish off the coastal
Western Australia in January were made up to 100 times more probable due to climate
change, a new analysis said.

MCQs:
1. The Reserve Bank of India (RBI) recently reduced the repo rate by 25 basis points (bps)
to 6.25%, marking the first rate cut in nearly five years. This decision was taken to stimulate
economic growth by making borrowing cheaper and encouraging spending and investment.
Which of the following statements about the repo rate are correct?
1. The repo rate is the interest rate at which the RBI lends short-term funds to
commercial banks in exchange for government securities.
2. An increase in the repo rate makes borrowing more expensive for banks, leading to
a reduction in liquidity in the economy.
3. A decrease in the repo rate leads to lower interest rates on loans, making
borrowing cheaper for consumers and businesses, thereby stimulating economic
growth.
4. The repo rate is a long-term lending tool used by the RBI to regulate commercial
bank reserves over extended periods.
How many of the above statements are correct?
A) Only one
B) Only two
C) Only three
D) All four
Correct Answer:
C) 3
Explanation:
 Statement 1 (Correct) – The repo rate is the interest rate at which the RBI lends
short-term funds to commercial banks against government securities as collateral.
 Statement 2 (Correct) – A higher repo rate makes borrowing more expensive for
banks, which in turn reduces liquidity and slows down inflation.
 Statement 3 (Correct) – A lower repo rate results in cheaper loans, boosting
spending and investment, which helps stimulate economic growth.
 Statement 4 (Incorrect) – The repo rate is a short-term lending tool, not a long-
term one. It is primarily used for liquidity adjustments, unlike tools such as the
bank rate, which is for long-term lending.

2. Consider the following statements regarding the International Big Cat Alliance (IBCA):
1. The IBCA was launched by Prime Minister Narendra Modi in 2023 to promote global
conservation efforts for seven big cat species.
2. The alliance includes only range countries where at least one of the seven big cat
species is found.
3. The IBCA framework agreement required a minimum of five countries, including
India, to ratify it before coming into force.
4. India has committed a one-time budgetary support of ₹150 crore for the IBCA for the
period 2023-24 to 2027-28.
How many of the above statements are correct?
A) Only one
B) Only two
C) Only three
D) All four
Correct Answer: C) Only three
Explanation:
 Statement 1 – Correct: The IBCA was indeed launched by PM Modi in 2023 for the
conservation of seven big cat species.
 Statement 2 – Incorrect: The alliance includes both range and non-range
countries, as well as conservation partners and scientific organizations.
 Statement 3 – Correct: A minimum of five countries had to ratify the agreement for
it to come into force.
 Statement 4 – Correct: India has allocated ₹150 crore for IBCA for the period
2023-24 to 2027-28.