4 February 2025

• Rupee: Hit a record low against the US dollar. US announced 25 per cent tariffs on China, Mexico and Canada. Dollar index rose to 109.8.
• Ethanol policy: Expanded blending road map linked to new Budget allocations.
• Science: Fentanyl crisis data in focus. AI-driven genetic testing breakthroughs reported.
• Schemes: Gender Budget 2025-26 details analysed. Presumptive taxation for semiconductor non-residents announced.

GS area: Economy (international trade, exchange rates)

The Indian rupee touched a record low against the US dollar. The immediate trigger was the US announcement of 25 per cent tariffs on imports from China, Mexico and Canada. The dollar index rose to 109.8 as investors moved into the dollar.

Key links for prelims:

• India's crude dependence: Over 80 per cent of crude oil is imported and priced in dollars. A weaker rupee raises the import bill directly.
• Current account: India typically runs a deficit. A weak rupee widens it by making imports costlier and exports nominally cheaper.
• Beggar-thy-neighbour policies: A phrase from Adam Smith (1776) describing policies that benefit one nation at others' expense. Tariffs, quotas and currency devaluation are classic tools. US tariffs in this round fit the description. These contributed to the Great Depression of the 1930s when practised simultaneously by multiple countries.

The dollar index measures the dollar against a basket of six major currencies: euro, yen, pound, Canadian dollar, Swedish krona and Swiss franc.

Static linkage: Indian economy (balance of payments, exchange rates).

GS area: Economy, Governance

The Budget introduced Section 44BBD to the Income Tax Act. Key terms:

• Effective date: April 1, 2026.
• Target: Non-resident entities in electronics and semiconductor manufacturing.
• Rate structure: 25 per cent of gross receipts is deemed taxable income, taxed at 35 per cent. Effective tax burden is below 10 per cent.
• Purpose: Attract foreign semiconductor technicians and companies. Supports Make in India for critical electronics.

Presumptive taxation eliminates the need for a non-resident to maintain full Indian accounts. It is a well-established instrument in the Income Tax Act (Section 44AD for domestic businesses, Section 44ADA for professionals).

Static linkage: Indian economy (taxation, manufacturing).

GS area: Science and Technology, Society

Fentanyl is a synthetic opioid 100 times more potent than morphine. It is used medically for severe pain management but has driven a catastrophic addiction crisis in the United States. Numbers that prelims occasionally tests:

• US opioid overdose deaths in 2021: Approximately 107,000. Opioids were involved in 75 per cent of these deaths.
• Non-opioid alternative: The US FDA recently approved Suzetrigine (brand name Journavx) as a non-addictive painkiller. Initial dose is 100 milligrams followed by 50 milligrams every 12 hours. It blocks pain signals before they reach the brain rather than binding to opioid receptors.

India has its own narcotic regulation under the NDPS Act 1985, which covers fentanyl as a psychotropic substance. The Narcotics Control Bureau operates under the Ministry of Home Affairs.

Static linkage: Health and society (science and technology, GS Paper 2).

GS area: Science and Technology

Key data points from reported research:

• Johns Hopkins finding (2024): 1,200 junk DNA elements linked to tumour formation identified.
• AI prediction accuracy: Gene Box AI claims 98 per cent accuracy in predicting genetic predispositions to disease.
• Alzheimer's research: 80 genes associated with Alzheimer's identified through AI analysis.
• Cost reduction: AI has lowered genome sequencing costs by approximately 50 per cent.
• Privacy risk: 23andMe, a consumer genetics company, suffered a breach in 2023 exposing 6.9 million genetic profiles.
• Data bias: 90 per cent of genomic studies are Euro-centric, creating gaps in population-specific risk models.

Genetic data is classified as sensitive personal data under the Digital Personal Data Protection Act 2023.

Static linkage: Science and technology, bioethics.

GS area: Economy (fiscal policy)

The Budget introduced a new fiscal anchor: the government has set a debt-to-GDP target of 50 per cent with a tolerance band of plus or minus 1 percentage point to be achieved by 2031. This is effective from FY 2026-27.

The Fiscal Responsibility and Budget Management (FRBM) Act 2003 set the original framework for fiscal consolidation. The debt-to-GDP ratio measures the government's total outstanding debt as a percentage of GDP. A declining ratio signals improving fiscal health and reduces the debt service burden on future revenues.

Static linkage: Indian economy (fiscal policy).

• International Big Cat Alliance: Covered on February 4 again as the Budget re-affirmed the 150 crore rupee allocation. The five countries that have ratified membership: India, Nicaragua, Eswatini, Somalia and Liberia. India hosts five of the seven covered big cat species.
• Jevons Paradox: Proposed by William Stanley Jevons in 1865. When resource efficiency improves, total consumption tends to rise because efficiency makes the resource more economically attractive. Originally observed with coal. Now relevant to AI energy consumption: more efficient AI chips lead to more AI use and higher total power demand.
• Plastic-degrading bacteria: Ideonella sakaiensis and the strain X-32 break down PET plastic. Vibrio natriegens processes organic material at unusually high speeds and is being studied for industrial applications.