Topic – India’s retail inflation trends

Q1. What lessons can be drawn from India’s recent retail inflation trends for the Reserve Bank of India’s monetary policy framework? Discuss how persistently low inflation affects growth dynamics, and evaluate the need for recalibrating the RBI’s forecasting and policy approach. (15 marks, 250 words)

IntroductionIndia’s retail inflation touched a 99-month low of 1.54% in September 2025, marking a rare phase of sustained disinflation. The average inflation rate for the first half of FY 2025–26 stood at 2.2%, well below the Reserve Bank of India’s (RBI) medium-term target of 4% and just within the lower tolerance limit of 2–6%. While falling prices may seem beneficial for consumers, the trend carries important macroeconomic and policy implications, particularly concerning monetary stimulus, demand recovery, and forecasting accuracy.
Body
  • Understanding Inflation and the Current Context
  • Implications of Persistently Low Inflation
  • Monetary Policy Challenges for the RBI
  • Forecasting Inaccuracy and Its Consequences
  • The Growth-Inflation Trade-off and Policy Coordination
  • Way Forward: Recalibrating the RBI’s Approach
ConclusionIndia’s current low inflation phase reveals that price stability without demand growth is not sustainable for a developing economy. The Reserve Bank must refine its forecasting tools and adopt a more growth-supportive monetary stance, complementing government efforts to raise real incomes and investments. The key lesson is that monetary policy must remain flexible, evidence-driven, and attuned to both inflationary and disinflationary risks, ensuring balanced and inclusive economic progress.
UPSC SyllabusIndia’s Retail inflation and its implications
Why was this question asked?Q. Do you agree with the view that steady GDP growth and low inflation have left the Indian economy in good shape? Give reasons in support of your arguments. (2019)
IntroductionIndia’s retail inflation touched a 99-month low of 1.54% in September 2025, marking a rare phase of sustained disinflation. The average inflation rate for the first half of FY 2025–26 stood at 2.2%, well below the Reserve Bank of India’s (RBI) medium-term target of 4% and just within the lower tolerance limit of 2–6%. While falling prices may seem beneficial for consumers, the trend carries important macroeconomic and policy implications, particularly concerning monetary stimulus, demand recovery, and forecasting accuracy.
BodyUnderstanding Inflation and the Current Context

 

  • Inflation refers to the sustained rise in the general price level of goods and services in an economy over a period of time, leading to a fall in the purchasing power of money.
  • Moderate inflation indicates healthy demand and economic activity, while persistently low inflation signals weak consumer demand and excess supply.
  • In 2025, India’s inflation declined steadily — except for a brief August rise — driven by falling prices in clothing, footwear (2.3%), and essential goods.
  • The cause is not merely policy success but demand compression, where households prefer saving and debt repayment over consumption.
  • This mirrors the deflationary pressures seen in China, where domestic oversupply threatens growth — a warning India must heed.

Implications of Persistently Low Inflation

  • Demand Deficiency: Consumers postpone purchases, anticipating stable or lower prices.
  • Investment Disincentive: Firms hesitate to expand capacity due to low pricing power.
  • Rising Real Interest Rates: Low inflation increases real borrowing costs, discouraging private investment.
  • Employment and Wage Effects: Low inflation without real wage growth constrains job creation, reducing disposable income and consumption further.
  • Thus, prolonged low inflation may appear stable but can undermine economic dynamism.

Monetary Policy Challenges for the RBI

  • Under the Flexible Inflation Targeting (FIT) framework, the RBI must balance price stability with growth.
  • The central bank’s earlier emphasis on containing inflation near 4% must now shift toward stimulating aggregate demand.
  • With inflation below target, there is space for interest rate cuts to reduce borrowing costs and boost private investment.
  • As noted, a significant repo rate reduction in the upcoming Monetary Policy Committee (MPC) meeting could help invigorate demand-led growth.

Forecasting Inaccuracy and Its Consequences

  • The RBI’s April 2025 forecast of 4% inflation was revised to 2.6% by September 2025, a major correction within six months.
  • Frequent revisions signal weaknesses in its modelling and estimation process.
  • Causes include:
  • Overestimation of post-pandemic recovery.
  • Neglect of global disinflationary trends.
  • Structural flaws in price data collection and sectoral weighting.
  • To restore credibility, RBI must adopt AI-driven models, improve real-time data analytics, and integrate global commodity indicators into its forecasting framework.

The Growth-Inflation Trade-off and Policy Coordination

  • With inflation undershooting the target, macroeconomic focus must shift to demand revival.
  • Fiscal tools — such as GST and income-tax rate cuts — have yielded only short-lived boosts to spending.
  • A durable solution lies in rising real wages, productive employment, and infrastructure investment.
  • Coordinated action between monetary easing by the RBI and fiscal expansion by the government can prevent a low-growth, low-inflation trap.

Way Forward: Recalibrating the RBI’s Approach

  • Revisit the Inflation Target: Permit temporary flexibility within the 2–6% band, aiming for inflation near 4–4.5% to sustain growth.
  • Strengthen Forecasting Units: Create a specialized Inflation Modelling and Research Division using adaptive and machine-learning models.
  • Enhance Transparency: Publish uncertainty bands around forecasts to improve policy credibility.
  • Prioritize Growth: When inflation is persistently below target, the RBI should err on the side of accommodation rather than restraint.
ConclusionIndia’s current low inflation phase reveals that price stability without demand growth is not sustainable for a developing economy. The Reserve Bank must refine its forecasting tools and adopt a more growth-supportive monetary stance, complementing government efforts to raise real incomes and investments. The key lesson is that monetary policy must remain flexible, evidence-driven, and attuned to both inflationary and disinflationary risks, ensuring balanced and inclusive economic progress.

 

Topic – Gaganyaan’s vital Crew Escape System (CES)

Q 2. How does Gaganyaan’s vital Crew Escape System (CES) work? Discuss its significance for crew safety, its types, and the steps taken by ISRO to validate the system. (15 marks, 250 words)

IntroductionIndia’s Gaganyaan Mission represents a milestone in its journey toward human spaceflight capability. The mission aims to send a three-member Indian crew into Low Earth Orbit (LEO) at about 400 km altitude and bring them back safely using the human-rated LVM3 (HLVM3) launch vehicle. In such missions, the lives of astronauts outweigh every other consideration. To ensure this, the Crew Escape System (CES) — an advanced, autonomous safety mechanism — has been integrated into the launch vehicle. It is designed to rescue the crew in case of a critical failure during the most dangerous phase of flight: launch and atmospheric ascent.
Body
  • Rationale and Necessity of the Crew Escape System
  • Design and Components of the CES
  • Operational Sequence During a Contingency
  • Types of Crew Escape Systems: Puller vs Pusher
  • ISRO’s Testing and Validation Efforts
  • Broader Significance for India’s Space Programme
ConclusionThe Crew Escape System stands as the guardian angel of India’s astronauts, embodying ISRO’s philosophy that “crew safety precedes mission success.”

 

By integrating real-time health monitoring, high-thrust propulsion, and rigorous testing, the CES ensures that any emergency during Gaganyaan’s ascent will trigger an immediate, autonomous rescue. Beyond its engineering brilliance, the CES reflects India’s arrival as a mature spacefaring nation — capable not only of reaching orbit but of bringing every astronaut home safely, laying the foundation for the next era of Indian human space exploration.

UPSC SyllabusIndia’s Space Programme
Why was this question asked?Q. India has achieved remarkable successes in unmanned space missions including the Chandrayaan and Mars Orbitter Mission, but has not ventured into manned space mission, both in terms of technology and logistics? Explain critically (2017)
IntroductionIndia’s Gaganyaan Mission represents a milestone in its journey toward human spaceflight capability. The mission aims to send a three-member Indian crew into Low Earth Orbit (LEO) at about 400 km altitude and bring them back safely using the human-rated LVM3 (HLVM3) launch vehicle.

 

In such missions, the lives of astronauts outweigh every other consideration. To ensure this, the Crew Escape System (CES) — an advanced, autonomous safety mechanism — has been integrated into the launch vehicle. It is designed to rescue the crew in case of a critical failure during the most dangerous phase of flight: launch and atmospheric ascent.

BodyRationale and Necessity of the Crew Escape System

 

  • Space missions carry inherent risks such as engine malfunctions, structural stress, or explosions during take-off and early ascent.
  • In rockets like HLVM3, which use solid-fuel boosters (S200), engines cannot be shut down once ignited; hence, any anomaly can become catastrophic.
  • The CES ensures the rapid separation of the crew module from the main rocket if a contingency threatens astronaut safety.
  • Historical precedents such as the 1983 Soyuz T-10-1 escape prove that such systems can save lives even seconds before disaster.

Design and Components of the CES

  • The CES is mounted at the forward (top) end of the launch vehicle and is composed of several solid-fuel motors, reaction control systems, and separation mechanisms.
  • These high burn-rate solid propellants produce thrust faster than conventional rocket motors, allowing the system to out-accelerate the rocket itself.
  • The system can produce accelerations up to 10 times the force of gravity (10g) for a few seconds, which human bodies can endure if seated in the “child-in-cradle” orientation — with acceleration acting perpendicular to the chest.
  • Once activated, it pulls the crew module clear of danger within milliseconds.

Operational Sequence During a Contingency

  • Detection: The Integrated Vehicle Health Management System (IVHM) continuously monitors hundreds of parameters related to propulsion, structure, and crew vitals.
  • Triggering: When it detects an anomaly beyond safe limits, it sends a command to activate the CES instantly.
  • Separation: The CES motors fire, detaching the crew module and propelling it away to a safe distance and altitude.
  • Stabilisation: Secondary thrusters orient the module for controlled descent.
  • Recovery: A multi-stage parachute system sequentially deploys, slowing the module for a safe splashdown in the sea, where recovery teams retrieve the astronauts.
  • This automated response leaves no room for human delay, ensuring protection even if the crew is incapacitated.

Types of Crew Escape Systems: Puller vs Pusher

  • Puller Type (used in Gaganyaan): The escape tower mounted on top pulls the crew module away using powerful solid motors.
  • Proven globally in systems like NASA’s Apollo/Saturn VRussia’s Soyuz, and China’s Long March programs.
  • Advantages: Simplicity, quick response, high thrust-to-weight ratio.
  • Limitation: Once jettisoned, cannot be reused.
  • Pusher Type (used in SpaceX Falcon 9 Crew Dragon):

Uses liquid-fuel thrusters integrated into the capsule body to push it away.

  • Advantages: Reusability, lower aerodynamic drag.
  • Limitation: More complex plumbing, potential fire hazard from liquid propellants.
  • India’s choice of the puller-type CES ensures robustness and reliability, aligning with the mission’s first-time human safety requirements.

ISRO’s Testing and Validation Efforts

  • ISRO designed a cost-effective, single-stage Test Vehicle powered by the Vikas engine specifically to evaluate CES performance.
  • October 2023: The first Test Vehicle Abort Mission (TV-D1) successfully demonstrated module separation at transonic speeds (where airflow changes from subsonic to supersonic).
  • The system achieved clean separation, stable trajectory, and safe splashdown — confirming design accuracy.
  • Future tests (TV-D2, D3, D4) will replicate different ascent conditions, altitudes, and aerodynamic loads to fully validate CES under all possible contingencies.
  • These tests also verify the parachute deployment sequencetelemetry systems, and recovery procedures, building readiness for the first crewed mission.

Broader Significance for India’s Space Programme

  • Establishes India’s entry into the league of nations capable of human spaceflight — alongside the U.S., Russia, and China.
  • Reinforces self-reliant space safety technology, a prerequisite for future manned lunar or interplanetary missions.
  • Develops expertise in biomedical engineering, life-support systems, and human-rated design.
  • Enhances ISRO’s engineering culture of redundancy and reliability, benefiting all future launch vehicles.
  • Demonstrates India’s scientific capability and boosts national pride and technological diplomacy.
ConclusionThe Crew Escape System stands as the guardian angel of India’s astronauts, embodying ISRO’s philosophy that “crew safety precedes mission success.”

 

By integrating real-time health monitoring, high-thrust propulsion, and rigorous testing, the CES ensures that any emergency during Gaganyaan’s ascent will trigger an immediate, autonomous rescue. Beyond its engineering brilliance, the CES reflects India’s arrival as a mature spacefaring nation — capable not only of reaching orbit but of bringing every astronaut home safely, laying the foundation for the next era of Indian human space exploration.

UPSC CARE Mains Practice 17th october 2025
UPSC CARE Mains Practice 16th october 2025
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