Archives (PRELIMS Focus) Inflation Category: ECONOMICS Context: India’s consumer price index (CPI) food inflation was just 2.1% in June 2025 — lower than the US (2.7%), UK (4.5%), and EU (3%). This is the lowest since January 2019. Key Points: Factors Controlling Inflation: Good monsoon for the second consecutive year boosted crop output. High central food stockpiles (see Table 1). Government policy: Allowed zero/low-duty imports of pulses and edible oils. Cooling global prices for oil and pulses. RBI Implication: This easing food inflation gives space for RBI to cut interest rates, which were kept high due to inflation worries. Monsoon and Crop Impact: Ample rainfall across the country boosted soil moisture and groundwater, benefiting Kharif crops like rice, arhar, and soybean. Area sown under Kharif crops has increased marginally in 2025 compared to 2024 (Table 2), especially for pulses, oilseeds, cotton, and maize. Imports and Price Support: Government imports of arhar and tur dal from Mozambique and Malawi. Edible oil imports (soybean, sunflower) were allowed at reduced duty to control inflation. Support prices for crops like tur increased to ensure farmers get remunerative returns. Learning Corner: Different Types of Inflation Inflation refers to the general rise in the price level of goods and services in an economy over a period. Different types of inflation are classified based on causes, speed, and scope: Based on Causes: Demand-Pull Inflation Caused by excess demand over supply in the economy. Occurs when consumer spending increases faster than production. Cost-Push Inflation Caused by a rise in production costs (e.g., wages, raw materials). Producers pass higher costs to consumers as higher prices. Built-in Inflation (Wage-Price Spiral) Occurs when workers demand higher wages to keep up with living costs, increasing production costs and causing further inflation. Based on Speed: Creeping Inflation Mild, slow rise in prices (≤ 3% per year). Considered manageable and sometimes desirable. Walking Inflation Moderate inflation (3–10% annually). Can affect the purchasing power and investment. Galloping Inflation Rapid inflation (double or triple digits). Destabilizes the economy. Hyperinflation Extremely high and typically uncontrollable inflation (e.g., >50% per month). Seen in crisis-hit countries (e.g., Zimbabwe, Venezuela). Based on Scope and Control: Headline Inflation Measures total inflation including volatile items like food and fuel. Tracked by indices like CPI (Consumer Price Index) in India. Core Inflation Excludes food and fuel to reflect the underlying trend in inflation. Useful for monetary policy decisions. Other Special Types: Stagflation Inflation + stagnant growth + high unemployment. Difficult to manage through traditional policies. Deflation Negative inflation; general fall in prices. Often indicates weak demand and economic slowdown. Reflation Deliberate policy-induced inflation to recover from deflation or recession. Achieved through fiscal/monetary stimulus. Skewflation Inflation only in specific sectors, like food or fuel, due to supply shocks. Source: THE INDIAN EXPRESS Kailash Manasarovar Yatra Category: INTERNATIONAL Context: The resumption of the Kailash Manasarovar Yatra in 2025, after a five-year gap, is seen as a key step in rebuilding India-China relations. The move has been hailed as a positive gesture in cultural diplomacy, promoting people-to-people exchanges and restoring mutual trust after years of pandemic-related suspension and border tensions. Chinese officials welcomed Indian pilgrims, describing them as “envoys of friendship,” while both governments emphasized the Yatra’s value as a confidence-building measure. Its revival aligns with the 75th anniversary of diplomatic ties, adding symbolic significance to the initiative. The decision follows high-level diplomatic engagements, with agreements to resume direct flights, improve cross-border cooperation on issues like water sharing and media, and discuss expanded routes and services for pilgrims. The Yatra is now being positioned not just as a spiritual journey, but as a strategic opportunity to stabilize and normalize bilateral ties. Learning Corner: Kailash Manasarovar Yatra The Kailash Manasarovar Yatra is a sacred pilgrimage undertaken by Hindu, Buddhist, Jain, and Bon devotees to Mount Kailash and Lake Manasarovar, located in the Tibet Autonomous Region of China. The sites are revered as the abode of Lord Shiva and hold immense spiritual and cultural significance. Key Features: Organized annually by the Government of India in collaboration with Chinese authorities. Traditionally conducted through two routes: Lipu Lekh Pass (Uttarakhand) Nathula Pass (Sikkim) Involves high-altitude trekking, requiring medical fitness and acclimatization. Recent Developments: Suspended since 2020 due to the COVID-19 pandemic and India-China border tensions. Resumed in 2025, symbolizing a thaw in bilateral relations and a step towards confidence building. Welcomed by both Indian and Chinese leaders as a move to enhance cultural diplomacy, people-to-people ties, and bilateral cooperation. Coincides with the 75th anniversary of diplomatic relations between India and China. Source: THE HINDU Cryptocurrency Category: ECONOMICS Context : CoinDCX Suffers ₹378-Crore Security Breach What Happened: CoinDCX, one of India’s largest cryptocurrency exchanges, suffered a major security breach on July 19, 2025. Hackers compromised an internal operational wallet used for liquidity management, stealing approximately ₹378 crore ($44.2 million). The breach did not affect any customer wallets or funds. Company Response: Founders reassured users that all customer assets remain safe and unaffected. The entire loss is being absorbed by CoinDCX’s own treasury, ensuring no financial impact on users. CERT-In was informed, and cybersecurity audits are underway. Details of the Hack: Hackers targeted stablecoins (USDT, USDC) and transferred funds across Solana and Ethereum chains, routing them through Tornado Cash to obscure tracking. The attack was flagged by blockchain investigators before CoinDCX made a public disclosure. Key Takeaways: User funds are fully secure. The breach only impacted a company-owned liquidity wallet. CoinDCX responded swiftly with transparency, containment, and external audits. The incident highlights the growing cybersecurity risks in crypto platforms despite proactive measures. Learning Corner: Different Types of Cryptocurrencies Cryptocurrencies are digital or virtual currencies that use cryptography for security and operate on decentralized blockchain networks. They serve different purposes, from being digital money to powering decentralized applications. Payment Currencies Purpose: Designed as a medium of exchange. Examples: Bitcoin (BTC): The first and most widely used cryptocurrency. Litecoin (LTC), Bitcoin Cash (BCH): Faster and lighter alternatives to Bitcoin. Use case: Peer-to-peer payments, remittances, store of value. Stablecoins Purpose: Pegged to a stable asset
