13 January 2026

• India’s retail inflation (CPI) rose to a three- month high of 1.33% in December 2025, according to MoSPI data.
• Inflation remains well below RBI’s lower tolerance level of 2%, under the flexible inflation targeting framework.
• The decline in inflation is broad-based, with major contribution from food price deflation due to a high base effect.
• Despite headline moderation, core inflation rose to a 28-month high, driven mainly by precious metals prices.

Key Points

• CPI Inflation (Dec 2025): 1.33% (Nov 2025: lower)
• RBI Inflation Target: 4% ± 2% (2%–6%)  Food & Beverages Inflation:
  • Contracted by –1.85% (Nov: –2.8%)
  • Base effect: 7.7% inflation in Dec 2024  
• Items with High Inflation (>5%):
  • Meat products  
  • Edible oils
  • Fruits
• Fuel & Light Inflation: 1.97% (down from 2.3%)  Housing Inflation: 2.86% (marginal easing)
• Clothing & Footwear: 1.44% (Dec 2024: 2.7%)  Pan, Tobacco & Intoxicants: unchanged at 2.96%
• Core CPI Inflation:
  •  4.8% (28-month high)
  • Excluding gold & silver: 2.4% (unchanged)

Static Linkages

• CPI is compiled by National Statistical Office (NSO) under MoSPI
• RBI follows Flexible Inflation Targeting (FIT) framework (recommended by Urjit Patel Committee, 2014)
• Inflation mandate inserted through RBI Act, 1934 (Amendment, 2016)
• CPI components and weights derived from Consumer Expenditure Survey
• Core inflation excludes volatile components such as food and fuel
• Monetary policy decisions taken by Monetary Policy Committee (MPC)

Critical Analysis

• Positive Aspects
  • Sustained low inflation improves real household purchasing power
  • Provides policy space for accommodative monetary stance
  • Food price stability supports consumption-led growth
• Concerns
  • Core inflation spike indicates latent demand- side pressures
  • Rising prices of proteins and edible oils affect nutrition security
  • Precious metals-led inflation may reflect global uncertainty and capital flight
  • Very low inflation risks demand compression if prolonged
• Stakeholder Perspective
  • RBI: Cautious due to rising core inflation
  • Consumers: Benefit from low food inflation  
  • Producers/Farmers: Risk of lower price realization
  • Government: Fiscal-monetary coordination challenge

Way Forward

• Maintain data-dependent monetary policy approach
• Monitor core inflation excluding precious metals closely
• Strengthen agricultural supply chains to avoid future food inflation
• Use buffer stocks and import policy for edible oils and pulses
• Improve price transmission mechanisms at retail level

PSLV-C62 LAUNCH FAIL

KEY HIGHLIGHTS

• Indian Space Research Organisation (ISRO)’s PSLV-C62 mission failed due to an anomaly during the third stage (PS3).
• Launch occurred from Satish Dhawan Space Centre.
• Loss of EOS-N1 Earth Observation satellite and 15 co-passenger satellites.
• Second consecutive PSLV failure after PSLV- C61 (May 2025).
• Mission was commercially executed by NewSpace India Limited (NSIL).
• EOS-N1 developed for strategic purposes by Defence Research and Development Organisation (DRDO).

Key Points

• PSLV: Four-stage launch vehicle (PS1 & PS3 – solid; PS2 & PS4 – liquid).
• Anomaly: disturbance in vehicle roll rates near end of PS3 → trajectory deviation.
• Intended orbit: Sun Synchronous Orbit (SSO).
• Planned PS4 restart and KID capsule re-entry could not be achieved.
• Financial aspects:
  • Strategic satellites: loss borne by Government of India (generally uninsured).
  • Private satellites: covered via launch insurance (if purchased).
• Waiver of liability standard in space launch contracts; launcher not liable unless gross negligence proven.

Static Linkages

• Sun Synchronous Orbit: Near-polar orbit; constant local solar time → ideal for remote sensing.
• Outer Space Treaty, 1967: State responsibility and liability for national space activities.
• Space sector reforms (2020):
  • NSIL for commercialisation.
  • IN-SPACe for private sector facilitation.
• Importance of launch vehicle reliability for India’s share in global small-satellite launch market.

Critical Analysis

• Issues
  • Back-to-back PSLV failures affect commercial credibility.
  • Financial burden on state for strategic payload losses.
  • Highlights need for stronger quality assurance and mission assurance systems.
• Significance
  • Failure analysis essential for long-term reliability.
  • Tests robustness of India’s commercial space reforms.

Way Forward

• Strengthen third-stage testing and redundancy checks.
• Independent mission assurance audits for commercial launches.
• Reduce over-dependence on PSLV by operationalising SSLV and LVM3.
• Continuous lessons-learnt integration across ISRO missions.

INDIA- GERMANY DEFENCE PACT

• India and Germany signed an agreement on bilateral defence industrial cooperation
• Focus on co-production and co-development in defence sector.
• Visit of Friedrich Merz to India.
• India–Germany mark 25 years of Strategic Partnership and 75 years of diplomatic relations.
• Announcement of a new consultation mechanism on Indo-Pacific cooperation.
• Joint support reiterated for early conclusion of India–EU Free Trade Agreement (FTA).

Key Points

• Agreement titled: “Strengthening Bilateral Defence Industrial Cooperation”.
• Areas covered:
  • Defence manufacturing collaboration
  • Simplified defence trade procedures
  • Roadmap for defence industry partnership  
• Emphasis on:
  • Mutual trust
  • Long-term technology collaboration
  • Additional MoUs / Joint Declarations:
  • Skilled workforce mobility (Indian professionals to Germany)
  • Higher education and research
  • Sports cooperation
• Germany flagged rise in global protectionism affecting trade.
• Talks included regional/global issues:  Ukraine conflict
  • Gaza crisis
  • Terrorism (India reiterated condemnation)

Static Linkages

• Defence indigenisation under Atmanirbhar Bharat initiative.
• Defence manufacturing governed by Defence Acquisition Procedure (DAP).
• FDI in defence: up to 74% under automatic route.
• Indo-Pacific vision aligned with SAGAR framework.
• India–EU FTA aims to boost trade, investment, and supply chains.
• Strategic partnerships as part of India’s multi- alignment foreign policy.

Critical Analysis

• Positives
  • Supports domestic defence manufacturing.
  • Diversifies defence partnerships beyond traditional suppliers.
  • Enhances India’s role in Indo-Pacific security architecture.
  • Addresses skilled labour shortages in partner country.
• Challenges
  • Technology transfer subject to export controls.  
  • Long timelines in co-development projects.
  • Protectionist trends may affect trade benefits.  
  • India–EU FTA faces regulatory and standards-  related hurdles.

Way Forward

• Operationalise defence cooperation through time-bound roadmaps.
• Encourage private sector and MSME participation.
• Align defence collaboration with Make in India and iDEX.
• Fast-track India–EU FTA negotiations with balanced safeguards.
• Institutionalise Indo-Pacific consultations.

• Bamanwas Kankar in Kotputli-Behror became the first fully organic panchayat in Rajasthan.
• All agricultural and animal husbandry practices are chemical-free.
• Transition supported by Cofarmin Federation of Organic Societies and Producer Companies (COFED).
• Community pledge against chemical-based farming taken on January 2.

Key Points

• Reasons for transition: Soil degradation, falling groundwater, rising input costs, health issues from agro-chemicals.
• Practices adopted:
  • No chemical pesticides or synthetic fertilisers.
  • Organic livestock management ensuring animal health and safe dairy.
• Outcomes:
  • Improved soil fertility and biodiversity.
  • Reduced cost of cultivation.
  • Access to premium organic markets.
• Future plan: COFED targets 300 fully organic panchayats across Rajasthan districts.

Static Linkages

• Organic farming: FAO-defined holistic system improving agro-ecosystem health.
• Paramparagat Krishi Vikas Yojana (PKVY): Cluster-based organic farming with PGS certification.
• National Mission for Sustainable Agriculture (NMSA): Soil health, water efficiency, climate resilience.
• Soil Health Card Scheme: Long-term relevance through reduced chemical dependency.
• Sustainable Development Goals: SDG 2 (Zero Hunger), SDG 12 (Responsible Consumption).

Critical Analysis

• Positives
  • Environment-friendly and climate-resilient agriculture.
  • Improved public health and food safety.
  • Strengthens community participation and local governance.
• Challenges
  • Short-term yield uncertainty during transition.  
  • Certification and market linkage issues.
  • Need for continuous extension support.

Way Forward

• Promote PGS certification and Farmer Producer Organisations (FPOs).
• Provide transition incentives and crop insurance support.
• Strengthen KVKs for organic farming extension.
• Replicate model via Gram PanchayatDevelopment Plans (GPDPs).

EARLY INVESTMENT IN CHILDREN PAYS

Context of the News

• India aims to become a Viksit Bharat and a $30 trillion economy by 2047.
• Human capital formation is critical to sustain long-term economic growth.
• Despite focus on infrastructure, manufacturing and digital economy, systematic investment in Early Childhood Care and Development (ECCD) remains inadequate.
• World Health Organization and UNICEF recognise the first 1,000 days as a decisive window for child development.

Key Points

• First 3,000 days (conception to 8 years) determine physical growth, brain development, cognition, emotional and social skills.
• 80–85% of brain development occurs in early childhood.
• ECCD is a high-return economic investment, not merely a welfare measure.
• Well-nourished and stimulated children show better educational attainment, productivity and earnings in adulthood.
• ECCD reduces future public spending on healthcare, remedial education and social protection.
• Developmental risks exist across all income groups, not only among the poor.

Static Linkages

• Human Capital Theory: Early investment improves labour productivity and growth.
• Demographic Dividend: Quality of population is as important as quantity.
• Directive Principles of State Policy:
• Article 39(f): Protection of childhood and youth
• Article 47: Improvement of nutrition and public health
• Sustainable Development Goals: SDG-2 (Zero Hunger), SDG-3 (Health), SDG-4 (Education).

Critical Analysis

• Positives
  • Strong scientific and economic evidence supporting early intervention.
  • Long-term, intergenerational benefits for growth and equity.
• Concerns
  • Fragmented approach across ministries and schemes.
  • Excess focus on child survival, limited focus on holistic development.
  • Lack of structured pre-conception and parental education systems.
  • Inadequate attention to early stimulation and emotional well-being.

Way Forward

• Universal pre-conception and premarital counselling on nutrition and health.
• Structured parental education on early stimulation and caregiving.
• Early identification of developmental delays through growth monitoring.
• Strengthen quality of care for 2–5 years age group.
• Integrate health, nutrition and education into a life-cycle ECCD framework.
• Launch a national ECCD mission with inter- ministerial coordination.
• Promote citizen-led and community-based participation in child development.