CURRENT AFFAIRS - 04/10/2023

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CURRENT AFFAIRS – 04/10/2023

CURRENT AFFAIRS – 04/10/2023

Using AI for audit techniques

(General Studies- Paper III and IV)

Source : The Hindu

Girish Chandra Murmu, the Comptroller and Auditor General of India (CAG) and chair for the Supreme Audit Institutions (SAIs) of the G20, has cautioned against excessive reliance on Artificial Intelligence (AI) for auditing, highlighting the potential for inaccurate findings.

Ethics is emphasized as a crucial element of responsible AI in auditing, considering challenges related to transparency, objectivity, fairness, and bias.

Key Highlights

Foundations of Responsible AI in Auditing
- Responsible AI in auditing must be ethical and inclusive to enhance credibility, trust, and scalability.
- Data sets used in AI auditing should be complete, timely, accurate, available, and relevant; integrity in data fields is crucial to avoid inaccurate findings.
- Risks of inherent AI data bias arise, especially when data is sourced from unauthorized platforms like social media, where data manipulation is common.
AI Regulation in India
- The European Parliament’s approval of the EU AI Act in June 2023 sets a precedent for AI regulation.
  - The Act imposes restrictions and scrutiny on generative AI tools.
- The challenge of ensuring the accuracy of vast internet data mines and addressing legal implications regarding content ownership and copyright infringement is highlighted.
- Elon Musk’s concept of ‘Truth GPT’ as a truth-seeking AI reflects a fusion of technological progress and ethical considerations.
Challenges for CAG in Auditing AI Systems
- AI regulation and data standardization are identified as critical challenges for CAG in auditing AI systems.
- Data integration and cross-referencing difficulties arise due to data being sourced from different platforms across government entities.
- Synchronizing data platforms through government IT policies is necessary for streamlined audits.
- Capacity building of auditors in AI technology and the adoption of appropriate AI design and architecture are emphasized.
- Ethical considerations, authentic data sources, addressing legal concerns, and deficiencies in IT controls and governance are focal points.
- Collaboration with data scientists, engineers, architects, programmers, and AI specialists may be required.
- AI outsourcing and cloud computing introduce risks that need to be documented in risk and control matrices.
Compliance Issues in AI Auditing
- Global organizations have developed various AI auditing frameworks, including COBIT, US Government Accountability Office framework, COSO ERM Framework, and the UK’s Information Commissioner’s Office framework.
- Data Protection Impact Assessments are legally required when using AI systems processing personal data.
- AI auditors must ensure that personal data is processed securely and with appropriate levels of security.
- In the absence of comprehensive AI auditing frameworks, auditors focus on assessing risks, controls, and governance structures to determine their effectiveness.

Note: The Supreme Audit Institutions (SAIs) of the G20 refer to the national audit offices or agencies of the member countries of the G20.

What is CAG?

The Comptroller and Auditor General (CAG) of India is a constitutional office created under Article 148 to 151 of the Indian Constitution.
Constitutional Provision:
- The CAG’s role and functions are primarily outlined in Article 148 to 151 of the Indian Constitution.
- Article 148 deals with the appointment and conditions of service of the CAG, while Article 149 outlines the duties and powers of the CAG in relation to the audit and accounts of the Union and the States.
Appointment:
- The CAG is appointed by the President of India and can only be removed from office in a manner and on grounds similar to those of a Supreme Court Judge, as per Article 148(2).
  - This ensures the independence of the office.
- Tenure:
  - The CAG’s term of office is six years or until they attain the age of 65, whichever is earlier, as specified in Article 148(1).
- Role and Functions:
  - The primary role of the CAG is to audit the accounts related to the receipts and expenditures of the Government of India and the State Governments.
  - The CAG conducts financial audits, compliance audits, and performance audits to ensure transparency and accountability in public finances.
- Audit Reports:
  - The CAG submits audit reports to the President or Governor (depending on whether it’s the Union or a State audit) and to the legislatures (Parliament or State Legislature).
- Audit of Autonomous Bodies:
  - In addition to auditing the accounts of the Union and the States, the CAG also audits the accounts of autonomous bodies and corporations that are substantially funded by the government.
- Role in Public Accounts:
  - The CAG is also the custodian of the Consolidated Fund of India and the Consolidated Fund of each State.
  - All government expenditures are made from these funds, and the CAG’s role is to ensure that these expenditures are within the limits approved by the legislature.

The shutdown of the Afghan embassy

(General Studies- Paper II)

Source : The Hindu

On September 30, the Embassy of Afghanistan in Delhi officially announced its closure.

The closure had been anticipated for some time, following reports of a letter from the embassy to the Indian Ministry of External Affairs indicating the impending closure.

Key Highlights

The embassy cited several reasons for its closure, including a lack of cooperation from the Government of India and insufficient resources to continue operations.
The embassy urged the Indian government to raise the flag of the Islamic Republic of Afghanistan over its premises.
It also requested that New Delhi hand over the mission to a “legitimate government” of Afghanistan at some point in the future.
Impact on Afghanistan-India Relations
- The embassy had represented the Islamic Republic of Afghanistan, which was overthrown by the Taliban in August 2021.
- After the Taliban took control, the embassy functioned as a “stateless mission,” performing a symbolic role rather than representing an active government.
- It helped Afghan citizens and travellers in India deal with challenges arising from the absence of diplomatic relations between the two countries.
- The ambassador of the previous Afghan regime, FaridMamundzay, left India and has not been seen for over three months.
Impact on Travel and Trade
- Afghanistan traditionally maintained an embassy in Delhi and consulates in Hyderabad and Mumbai.
- While the embassy in Delhi has closed, the consulates in Hyderabad and Mumbai remain operational.
- ZakiaWardak, the Consul General of Afghanistan (Islamic Republic), affirmed that the consulate in Mumbai will continue to function, especially to support Afghan students, refugees, and traders.
- The embassy’s closure may lead to confusion among Afghans in India, but the consulates are expected to assist them.
Continued Engagement Despite Closure
- Despite the closure of the Afghan Embassy in Delhi and the absence of formal diplomatic ties, India and Afghanistan maintain an informal relationship.
- India has a “technical team” in Kabul that issues visas to Afghan traders and travelers heading to India.
- Two weekly flights connect Afghanistan to India, facilitating the movement of Afghan citizens and goods.
  - India also uses these flights for sending humanitarian aid to Afghanistan.
- Some Indian goods enter Afghanistan indirectly through countries like Iran and the UAE, highlighting the informal nature of trade relations.
Formal Diplomatic Ties Unestablished
- India has not formally recognized the Taliban government in Afghanistan, primarily due to concerns about human rights abuses under their regime.
- Indian diplomats have engaged with the Taliban since the fall of Kabul in August 2021.
  - These engagements have taken place in various locations, including multilateral initiatives such as the Moscow format dialogue.
- While India has maintained its position, there is increasing international recognition of the Taliban by countries like China, Iran, Pakistan, the UAE, Russia, Qatar, and China.
  - This puts pressure on India to reconsider its stance.
- The Taliban has sought India’s support for its economic revitalization, including projects related to electricity generation and road construction.
  - India has not yet indicated a change in its position.
- Historical Stance:
  - India has a history of not allowing the Taliban to operate from the Afghan Embassy in Delhi, even during the Taliban’s previous rule in Afghanistan from 1996 to 2001.

Afghanistan since Its Independence and Emergence of the Taliban:

Independence:
- Afghanistan gained full independence from British influence in 1919 and maintained its status as a sovereign nation.
1950s-1970s – Modernization Efforts:
- Afghanistan pursued a policy of modernization during the 1950s and 1960s, with initiatives such as education for women and infrastructure development.
1978 – Saur Revolution:
- The Saur Revolution in 1978 led to a communist government coming to power in Afghanistan.
- This event triggered political turmoil and resistance from various groups.
1979-1989 – Soviet-Afghan War:
- The Soviet-Afghan War began in 1979 when the Soviet Union invaded Afghanistan to support the communist government.
- Afghanistan became a battleground for Cold War rivalries.
1989 – Soviet Withdrawal:
- The Soviet Union withdrew its troops from Afghanistan in 1989, leading to a power vacuum and continued conflict.
1996-2001 – Taliban Rule:
- The Taliban, an Islamist militant group, emerged in the mid-1990s and eventually took control of Afghanistan in 1996.
- They imposed a strict form of Islamic law and faced international isolation.
2001 – U.S.-Led Invasion:
- Following the 9/11 attacks, the U.S. led an international coalition to oust the Taliban regime in Afghanistan in 2001.
2004 – New Afghan Government:
- A new Afghan government was established in 2004, following the Bonn Agreement. Hamid Karzai became Afghanistan’s first post-Taliban president.
Post-2001 – Ongoing Conflict:
- Afghanistan has experienced ongoing conflict and instability since the U.S. invasion.
- The Taliban and other insurgent groups have continued to fight against Afghan government forces and foreign troops.
2021 – U.S. Withdrawal:
- The U.S. announced its withdrawal from Afghanistan in 2021, which was completed by August.
- This withdrawal led to the rapid advance of the Taliban, culminating in their takeover of Kabul in August 2021.
Taliban:
- The Taliban is an Islamist militant group that originated in Afghanistan in the early 1990s.
- Their name translates to “students” in Pashto, and many of their early members were educated in religious schools in Pakistan.

2023 Nobel Prize in Physics

(General Studies- Paper III)

Source : The Hindu

The 2023 Nobel Prize in Physics was awarded to Pierre Agostini, FerencKrausz, and Anne L’Huillier for their groundbreaking work in experimental methods that generate attosecond pulses.

These attosecond pulses have allowed scientists to directly study the ultra-fast dynamics of electrons in matter, opening up new possibilities in understanding fundamental processes.

Key Highlights

Understanding Electron Dynamics:
- Electrons are negatively charged particles within atoms, and their rapid movements have been challenging to directly observe.
- The analogy is drawn to capturing a fast-moving race car in a photograph, where shorter exposure times lead to sharper images.
- Electrons move so quickly that conventional exposure times are inadequate to capture their dynamics.
Electron Speed:
- Atomic movements can be studied with femtosecond (a millionth of a billionth of a second) laser pulses, but electrons, being much lighter, operate on even shorter timescales in the attosecond realm (a billionth of a billionth of a second).
Limitation of Femtosecond Pulses:
- By the 1980s, physicists could produce femtosecond light pulses, but they believed this to be the lower limit due to technological constraints.
- Yet, to study electrons, even shorter pulses were required.
Breakthrough in Attosecond Pulses:
- In 1987, Anne L’Huillier and her team passed an infrared laser beam through a noble gas, generating overtones, which are waves of ultraviolet light.
- These overtones interacted with each other, leading to constructive interference that produced intense attosecond pulses.
Creating Attosecond Pulses:
- Scientists found that by manipulating the generation of overtones and using constructive and destructive interference, they could create attosecond pulses.
- In 2001, Pierre Agostini’s group in France successfully produced a series of 250-attosecond light pulses.
- FerencKrausz’s team in Austria separated individual 650-attosecond pulses from pulse trains, enabling precise measurements.
Applications of Attosecond Physics:
- Attosecond pulses have diverse applications in science and technology.
- They allow the observation of ultra-short atomic and molecular processes relevant to materials science, electronics, and catalysis.
- In medical diagnostics, attosecond pulses can detect specific molecules based on their fleeting signatures.
- These pulses have the potential to advance electronic devices, telecommunications, imaging, and spectroscopy.

Toilet use declining since 2018-19: World Bank paper

(General Studies- Paper II)

Source : The Hindu

A World Bank departmental working paper analyzes the progress of the Swachh Bharat Mission – Gramin (SBM-G), which aims to provide toilet access to rural India.

The report highlights a significant increase in toilet access since the program’s inception in 2014-15.
However, there is a concerning trend of declining regular toilet use in rural India, especially among Scheduled Caste (SC) and Scheduled Tribe (ST) socio-economic groups.

Key Highlights

Toilet Access Gains:
- The SBM-G program substantially increased access to improved toilets in rural India, rising from 38% in 2012 to 90% in 2019-20.
- The sharpest increase was observed in the program’s last two years.
- While the SBM information system tracked toilet access, it lacked a method to measure toilet usage.
- Data from surveys indicated a parallel rise in toilet usage alongside improved access.
Decline in Regular Toilet Use:Analysis revealed two distinct phases in the program’s impact:
- Phase 1 (2015-2019): Marked by significant improvements.
- Phase 2 (2018-2021): Stagnation and decline, particularly concerning.
- States experiencing sustained declines in regular toilet use since 2018 include Uttar Pradesh, Gujarat, Chhattisgarh, Telangana, Karnataka, and Himachal Pradesh.
- Seven other states saw uneven declines, while seven remained steady performers.
National-Level Findings:
- Regular use of any toilet (improved or unimproved) increased from 46% to 75% on average in rural areas between 2015-16 and 2019-21.
- Improvements were observed across all population and socio-economic sub-groups, with pronounced gains among the poor and socially disadvantaged.
Impact on SCs and STs:
- Regular use of toilets surged for SCs and STs, with a 51 and 58 percentage point increase between 2015-16 and 2018-19, nearly matching General Category levels.
- However, these gains reversed afterward, leading to a significant decline.
- The decline in regular use was most substantial for SCs and STs compared to Other Backward Caste and General Categories.
Spatial Variation in Toilet Use:
- Toilet use showed wide spatial variations within and across states.
- Low-income states performed well in terms of increasing regular toilet use, while richer states displayed mixed results.
- States like Chhattisgarh, Jharkhand, Madhya Pradesh, and Uttar Pradesh, initially low performers, reported substantial increases in regular toilet use.
- In contrast, states like Odisha, Bihar, and Rajasthan saw smaller gains despite improved access.

About Swachh Bharat Mission – Gramin (SBM-G)

SBM-G is a sanitation program launched by the Ministry of Jal Shakti.
It aims to accelerate efforts to achieve universal sanitation coverage and focus on sanitation in rural areas.
Swachh Bharat Mission (G) Phase-I:
- Launched on October 2, 2014.
- At the launch, rural sanitation coverage was only 38.7%.
- The primary goal was to eliminate open defecation in rural areas.
- Achieved remarkable progress with the construction of over 10 crore individual toilets.
- By October 2, 2019, all rural areas in every state declared themselves Open Defecation Free (ODF).
SBM(G) Phase-II:
- This phase focuses on sustaining the achievements of Phase-I and expanding sanitation efforts.
- Implementation period: 2020-21 to 2024-25.
- Total budget allocation: Rs. 1,40,881 crores.
- In addition to ODF, Phase-II emphasizes the importance of Solid/Liquid & Plastic Waste Management (SLWM) in rural India.
- It aims to provide adequate facilities for SLWM.
Key Components of SBM-G Phase-II (ODF Plus):
- The ODF Plus component of Phase-II includes monitoring for four key areas:
- Plastic waste management.
- Biodegradable solid waste management, including animal waste management.
- Greywater (Household Wastewater) management.
- Fecal sludge management

In Image: Status of ODF plus status in Indian Villages.

In Image: ODF Plus status of States.

Indian outbound tourism market to cross billion in 2023

(General Studies- Paper III)

Source : The Hindu

The outbound tourism market in India has been steadily growing since the COVID-19 pandemic.

This growth momentum is expected to continue until about 2032, according to industry executives.
India’s outbound tourism market is projected to reach $15.2 billion in 2023.

Key Highlights

The growth is driven by Indian travelers, particularly millennials, who are eager to explore international destinations.
Outlook for Outbound MICE Market:
- India’s outbound MICE market is one of the world’s fastest-growing.
- Industry experts expect the outbound MICE market to reach pre-COVID levels by 2024.
Russian Promotion of Tourism:
- Russian cities are actively promoting their destinations to capture a share of the growing outbound tourism segment from India.
- Despite the Russia and Ukraine war, Indian travelers are visiting Russian cities like Moscow and St. Petersburg.
Tourism Flow to Moscow:
- Before the pandemic, the tourist flow from India to Moscow used to grow by 12-15% annually.
- Although it dropped during the pandemic, there is now a recovery in progress.
- Indian business tourists have been among the top visitors to Moscow in 2022.
Moscow’s Initiatives:
- Moscow has launched the Moscow MICE Ambassador program in India to promote the city as a preferred destination for business tourism.
Sri Lanka is also increasing its efforts to attract more Indian tourists.
India’s Emergence as a MICE Tourism Destination:
- India is also rapidly emerging as a Meetings, Incentives, Conferences, and Exhibitions (MICE) tourism destination.
- Government support and infrastructure development for global events have contributed to the growth of the MICE sector.
- Indian tourism sites are aligning with the growth of MICE tourism.

Note: The Outbound MICE Market refers to a segment of the travel and tourism industry that focuses on facilitating business-related travel activities for individuals or groups from one country to another. MICE stands for Meetings, Incentives, Conferences, and Exhibitions/Events.

Nanoparticles from vehicle fumes can cause acute illness’: Study

(General Studies- Paper II and III)

Source : The Indian Express

A study conducted in Delhi has found that nanoparticles present in the city’s air, largely originating from vehicular emissions, can pose significant health risks by potentially being transported from the respiratory system to other parts of the human body, leading to chronic and acute illnesses.

Key Highlights

The study analyzed nanoparticles in Delhi during two periods in 2021 (April to June and October to November).
These very small particles can arise from both natural sources and human activities, with vehicular emissions being a major contributor in urban environments.
In urban areas, nanoparticles are primarily generated through the combustion processes in automobiles.
The concentration of these particles in urban roadside environments varies with human activity, particularly vehicular emissions.
Deep Respiratory Penetration:
- The study highlighted that nanoparticles in the road environment have the potential to penetrate deeper into the respiratory system compared to other pollutants.
- Ultrafine particles in the size range of 1 to 100 nanometers can contribute significantly, up to 90%, to the total particle number concentration in urban environments.
Impact of Covid-19 Restrictions:
- During the April to June 2021 period, which coincided with Covid-19-related restrictions and reduced vehicular activity, the concentration of particles was around 31% lower than normal.
- Vehicle fleet size was also found to be 49% less during this time.
Diwali and Particle Concentration:
- In the second period, which included the Diwali festival, particle concentration increased by 35% compared to normal conditions due to a sudden rise in firework emissions.
Variation in Particle Size:
- Particle size varied depending on emission sources.
- During the Diwali period, when emissions were more complex, particles ranged in size from 20 nm to 200 nm.
- In the first period, with limited emissions due to Covid restrictions, particle sizes were between 15 nm and 80 nm.
Factors Affecting Particle Concentration:
- Meteorological factors and time of day also played a role.
- Higher relative humidity led to increased particle concentration due to coagulation.
- Peak concentrations were observed during morning and evening hours, coinciding with high vehicular emissions.
- Higher wind speeds contributed to particle dispersion.
Health Implications and Policy Recommendations:
- The study’s findings have implications for human health, emphasizing the need for policies, standards, and mitigation measures to address pollution events and their potential health impacts.
- The study aims to support efforts toward sustainability and climate change mitigation.

About Vehicle Emissions and Their Impact

Types of Vehicle Emissions:
- Tailpipe Emissions:
  - These emissions come directly from a vehicle’s exhaust system and include various pollutants such as carbon monoxide (CO), nitrogen oxides (NOx), volatile organic compounds (VOCs), and particulate matter (PM).
- Evaporative Emissions:
  - These emissions occur when fuel evaporates from a vehicle’s fuel system and contribute to the release of VOCs into the atmosphere.
- Brake and Tire Wear:
  - When vehicles brake or tires wear down, they release fine particulate matter (PM2.5) and contribute to road dust.
- Roadway Reentrained Dust:
  - Dust and particles from the road surface can become airborne due to vehicle movements, especially in dry and windy conditions.
- Environmental Impact:
  - Air Pollution:
    - Vehicle emissions are a major source of air pollution, leading to the formation of ground-level ozone, smog, and poor air quality.
    - This can have detrimental effects on ecosystems, vegetation, and wildlife.
  - Climate Change:
    - The release of greenhouse gases (GHGs) such as carbon dioxide (CO2) from vehicle exhaust contributes to global warming and climate change.
  - Acid Rain:
    - Nitrogen oxides (NOx) emitted from vehicles can lead to the formation of acid rain, which harms aquatic ecosystems, forests, and buildings.
  - Ozone Depletion:
    - Some vehicle air conditioning systems release chlorofluorocarbons (CFCs), which can deplete the ozone layer, resulting in harmful UV radiation reaching the Earth’s surface.
  - Health Impact:
    - Respiratory Problems:
      - Inhalation of vehicle emissions, especially fine particulate matter (PM2.5), can lead to respiratory issues such as asthma, bronchitis, and reduced lung function.
    - Cardiovascular Effects:
      - Exposure to air pollutants from vehicles is associated with an increased risk of cardiovascular diseases, including heart attacks and strokes.
    - Cancer:
      - Long-term exposure to certain vehicle emissions, such as benzene and formaldehyde, may increase the risk of cancer.
    - Neurological Effects:
      - Emerging research suggests that air pollution from vehicles may have adverse effects on cognitive function and neurological health.

Election of China-friendly Mohamed Muizzu could test Indo-Maldives ties

(General Studies- Paper II)

Source : The Indian Express

Mohamed Muizzu’s victory in the Maldives presidential election, following a second-round run-off, is seen as surprising and is believed to be advantageous for China.

India’s ties with the Maldives, especially in defense and infrastructure investments, were key issues during the campaign.
Muizzu accused the incumbent president of acting in India’s interests and continued the “India Out” campaign, previously led by former president Abdulla Yameen, who was close to China during his tenure.

Key Highlights

Past China-Maldives Relations:
- During his previous term, Muizzu’s Progressive Party of Maldives (PPM) was perceived to be aligned with China, and there were crackdowns on protests and dissent.
- Muizzu, who was then the housing minister, was involved in infrastructure projects linked to China’s Belt and Road Initiative (BRI).
India-Maldives Relations:
- India and the Maldives have shared geographical proximity, convergent security interests, and cultural affinities, resulting in a deep and close relationship.
- India has invested significantly in the Maldives, particularly during President Ibrahim Mohamed Solih’s tenure.
- Cooperation between the two countries has grown under India’s Neighbourhood First policy and Security and Growth for All in the Region (SAGAR).
- The Colombo Security Conclave, involving Sri Lanka, India, and the Maldives, was established, and India provided financial assistance for infrastructure projects like the Greater Male Connectivity project.
Muizzu’s Affiliation with China:
- Mohamed Muizzu is perceived to be close to Beijing and is seen by many as a proxy for former president Abdulla Yameen, who could not run in the election due to a corruption conviction.
- Muizzu’s victory resulted from defections within the ruling Maldivian Democratic Party, including former president Mohamed Nasheed.
- Nasheed, despite switching sides, is not seen as anti-India.
Challenges and Stakes for India:
- India continues to have significant stakes in the Maldives, and the peaceful transition of power is a positive development.
- The challenge for India’s foreign policy establishment is to maintain a stable and mature bilateral relationship with the new government in the Maldives.
- A sign of a strong bilateral relationship is its ability to transcend changes in government.

About Security and Growth for All in the Region (SAGAR)

“Security and Growth for All in the Region” (SAGAR) is an Indian strategic and economic initiative introduced by Prime Minister Narendra Modi in 2015.
SAGAR is often regarded as India’s maritime strategy for the Indian Ocean region (IOR).
Key Objectives:
- SAGAR aims to promote security and economic cooperation among Indian Ocean littoral states.
- It seeks to enhance maritime security, foster economic growth, and ensure the well-being of the people living in the region.
Components and Focus Areas:
- Maritime Security: SAGAR emphasizes the importance of maritime security, including countering threats such as piracy and terrorism in the Indian Ocean.
- Economic Growth: It promotes economic and trade cooperation among Indian Ocean countries, focusing on the development of blue economy sectors like fisheries, tourism, and shipping.
- Regional Integration: SAGAR seeks to strengthen regional integration and connectivity, including port development and infrastructure projects.
- Humanitarian Assistance and Disaster Relief (HADR): The initiative also emphasizes cooperation in humanitarian assistance and disaster relief efforts in the region.
- Environmental Protection: SAGAR recognizes the need for environmental protection and sustainable management of marine resources.
Significance:
- SAGAR is significant for India’s foreign policy as it reflects India’s growing role and influence in the Indian Ocean region.
- It aligns with India’s “Neighbourhood First” policy and aims to strengthen ties with neighboring countries and Indian Ocean littoral states.
- SAGAR is seen as a response to China’s increasing presence and initiatives like the Belt and Road Initiative (BRI) in the Indian Ocean.

India’s corporate credit rating in H1 FY24

(General Studies- Paper III)

Source : The Indian Express

Corporate credit profiles in India remain strong during the first half of the fiscal year 2023.

The number of credit rating upgrades exceeded downgrades during this period.

Key Highlights

Crisil Ratings:
- Credit ratio (upgrades to downgrades) moderated to 1.91 in H1 FY24 from 2.19 in the previous half.
- Crisil upgraded 443 corporates and downgraded 232 companies.
- The upgrade rate decreased slightly to 12.7% from 13.46% in the preceding half, but it remained above the decadal average of 10%.
- Upgrades were driven by expected cash flow expansion in sectors linked to domestic demand and government spending, such as infrastructure, services, and consumables.
- The overall downgrade rate increased to 6.65%.
- Export-oriented sectors saw some increase in the downgrade rate.
Icra Ratings:
- Both investment grade and non-investment grade categories showed an improvement in their credit profiles during H1 FY24.
- The upgrade rate for investment grade ratings moderated to 15%, below the 10-year average of 16%.
- The downgrade rate remained low at 6%.
- Six sectors, including hospitality, auto components, realty, power, roads, and financials, accounted for a significant number of upgrades.
India Ratings and Research:
- India Ratings upgraded ratings for 146 issuers in April-September, representing 17% of the reviewed portfolio.
- Rating downgrades were observed in only 55 issuers.
- The corporate downgrade-to-upgrade (D/U) ratio remained low at 0.38 for H1 FY24.
Challenges and Expectations:
- The private sector has not seen a significant pick-up in capital expenditure (capex) despite rising government spending.
- Conditions seem ripe for a private capex cycle to restart in domestic and infrastructure-linked sectors, but concerns about higher interest rates and inflation are limiting demand.
- A significant uptick in private sector capex may be a few quarters away.
Manufacturing PMI (September):
- India’s manufacturing activity in September eased to a five-month low.
- The S&P Global India Manufacturing Purchasing Managers’ Index (PMI) dropped to 57.5 from 58.6 in August.
- Although at a five-month low, the reading indicated a sharp rate of expansion, remaining above the no-change mark of 50.

What Is Corporate Credit Rating?

Corporate credit rating is an assessment of a company’s creditworthiness or its ability to meet its financial obligations and repay its debts.
Credit rating agencies assign credit ratings to corporations based on their evaluation of the company’s financial health, credit history, and various other factors.
These credit ratings provide investors, lenders, and other stakeholders with an objective measure of the company’s credit risk.

About Credit rating agencies in India

CRISIL (Credit Rating Information Services of India Limited):
- CRISIL is one of the oldest and most prominent credit rating agencies in India.
- It offers credit ratings, research, and risk and policy advisory services.
- CRISIL is a subsidiary of S&P Global Inc., a leading global provider of credit ratings and financial research.
ICRA (formerly Investment Information and Credit Rating Agency of India Limited):
- It is a subsidiary of Moody’s Investors Service, a global credit rating agency.
CARE Ratings (Credit Analysis & Research Limited):
- CARE Ratings is a credit rating agency known for its ratings in various sectors, including infrastructure, banking, and finance.
India Ratings and Research (a Fitch Group company):
- India Ratings is a credit rating agency and a wholly-owned subsidiary of Fitch Ratings Inc., a global credit rating agency.
SMERA (SME Rating Agency of India Limited):
- SMERA focuses on credit ratings for small and medium-sized enterprises (SMEs) in India.
- It offers ratings, research, and risk assessment services tailored to the needs of SMEs.