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GS Paper: GS3

  • Odisha start-up flight-tests an autonomous in-space pharmaceutical manufacturing payload

    Why in the News

    A Bhubaneswar-based start-up, Serendipity Space, has flight-tested a prototype satellite carrying Alchemy, an autonomous pharmaceutical manufacturing payload, using a high-altitude balloon at the TIFR facility in Hyderabad. The technology aims to manufacture pharmaceutical products in microgravity without human supervision.

    How does it work?

    1. Microgravity: Near-weightlessness reduces sedimentation, buoyancy and convection.
    2. Crystal growth: Crystals can form differently and potentially with greater uniformity than on Earth.
    3. Autonomous processing: The satellite carries reagents and hardware and executes the manufacturing sequence independently.
    4. Recovery: Processed material is returned to Earth using a re-entry system and heatshield.

    What is LEO?

    • Low Earth Orbit (LEO) extends roughly up to 2,000 km above Earth.
    • The proposed system is intended for an altitude of about 400 to 500 km.

    What did the balloon test demonstrate?

    • Tested the satellite prototype under near-space conditions.
    • Validated avionics, heatshield and Alchemy payload.
    • Demonstrated autonomous operation.
    • Tested controlled return to Earth.
    • Serves as a relatively low-cost step before orbital deployment.

    How is it different from earlier space-based drug research?

    • Earlier experiments on platforms such as the ISS generally required crew involvement. The distinguishing feature here is a dedicated free-flying satellite designed for autonomous pharmaceutical manufacturing.
    • International examples include Varda Space Industries, Redwire and experiments aboard China’s Tiangong station.

    Why is it important for India?

    • Promotes private-sector space innovation.
    • Expands India’s space ecosystem beyond Bengaluru to cities such as Bhubaneswar, Pune and Ahmedabad.
    • Creates opportunities in pharma, biotechnology, space engineering and advanced manufacturing.
    • Demonstrates potential convergence of space technology + biotechnology + pharmaceuticals.

    Laws, Treaties and Rules Governing Space Activities

    1. Outer Space Treaty, 1967: Bars national appropriation of outer space and makes States internationally responsible for national activities, including those of private entities.
    2. Liability Convention, 1972: Makes the launching State absolutely liable for damage caused on the surface of the Earth or to aircraft in flight.
    3. Registration Convention, 1975: Requires launching States to maintain a registry of objects launched into outer space and to furnish details to the United Nations.
    4. Rescue Agreement, 1968: Obliges States to assist astronauts in distress and to return space objects to the launching State.
    5. Indian Space Policy, 2023: Defines the roles of ISRO, IN-SPACe and NSIL and permits private entities across the full value chain from launch to satellite operations.
    6. Space Activities Bill, 2017: Proposed a licensing and liability framework for private Indian space activity but lapsed without enactment.
    7. Norms, Guidelines and Procedures issued by IN-SPACe: Prescribe the authorisation route, safety requirements and liability sharing for non governmental entities operating from India.
    8. Telecommunications Act, 2023 and allied spectrum rules: Govern satellite spectrum assignment and the licensing of satellite based communication services.

    Indian National Space Promotion and Authorisation Centre

    1. What it is: IN-SPACe is the single window autonomous agency that authorises, promotes and supervises space activities by non governmental entities in India.
    2. Year established: Announced in 2020 as part of the space sector reforms and made operational in 2022.
    3. Parent department: It functions as an autonomous body under the Department of Space.
    4. Headquarters: Ahmedabad, Gujarat.
    5. Jurisdiction: It authorises private launches, satellite establishment and operation, ground station creation and the dissemination of space based data.
    6. Enabling role: It permits private entities to use ISRO facilities and to access ISRO technologies through transfer agreements.
    7. Distinction from NSIL: IN-SPACe regulates and promotes, while NewSpace India Limited is the commercial arm that contracts launches and technology transfers.

    “[2026] Consider the following statements about involvement of private entities in India’s space programme:
    1. IN-SPACe is an autonomous agency formed to facilitate participation of private entities.
    2. Agnikul Cosmos launched the world’s first flight using 3D-printed rocket engine.
    3. Skyroot Aerospace has developed liquid fuel for GSLV.
    (a) 1 only
    (b) 2 and 3 only
    (c) 1 and 2 only
    (d) 1, 2 and 3

  • Punjab’s groundwater collapse demands the diversification its farm politics keeps deferring

    Why in the News

    The acreage under water intensive paddy in Punjab touched a record high this year, even as the water table continues to fall and experts warn of impending desertification. The State that built its agrarian success on assured irrigation is now consuming the resource that made it possible, while governments across party lines keep supplying free water and power rather than executing the diversification plans already drafted.

    What is crop diversification?

    1. About: Crop diversification is the shift of cropped area away from one or two dominant crops toward a wider mix of crops within the same season or rotation.
    2. How it works: A cultivator replaces part of the area under a water intensive or soil depleting crop with pulses, oilseeds, maize, cotton or horticulture.
    3. Rationale: It reduces the drawdown on a single natural resource and spreads market and weather risk across several crops.
    4. The precondition: It requires an assured market or procurement for the replacement crop, since the displaced crop already has one.

    Who was Ajit Singh?

    1. About: Ajit Singh was a peasant leader of colonial Punjab and the uncle of Bhagat Singh, and one of the main architects of the Pagdi Sambhal Jatta agitation against British agricultural laws.
    2. Exile and return: Hounded by the British, he spent nearly four decades abroad, engaging with revolutionaries including Lala Har Dayal and Subhas Chandra Bose, and was imprisoned in Germany after the Second World War before Jawaharlal Nehru secured his release in early 1947.
    3. Death: He died at Dalhousie at about 3.30 am on 15 August 1947, aged 66, his last words recorded as “Jai Hind”.

    What were the canal colonies of western Punjab?

    1. About: The canal colonies, known locally as the Baar, were settlements created in western Punjab after the British built an extensive canal network in the late nineteenth and early twentieth centuries.
    2. Why they were created: Large parts of western Punjab had remained uncultivated for centuries for want of irrigation, and the canals made cultivation possible for the first time.

    What is a murabba?

    1. About: A murabba is a square land allotment of 25 acres, the standard unit granted to settlers in the canal colonies.
    2. Who received them: Cultivators from what is now Indian Punjab, including retired soldiers, were moved into the colonies and allotted murabbas.

    What is abiana?

    1. About: Abiana is the water charge levied on cultivators for the use of canal irrigation.
    2. Why it mattered: A hike in abiana was one of the three grievances that triggered the 1907 Pagdi Sambhal Jatta agitation.

    What was the Pagdi Sambhal Jatta movement?

    1. About: Pagdi Sambhal Jatta was a peasant agitation of 1907 in colonial Punjab against three British laws that threatened farmers’ rights over their land and raised the water charge.
    2. How it got its name: Lala Banke Dayal’s poem of that title was recited at a rally in Lyallpur in March 1907, giving the movement its name and its anthem.

    What is desertification?

    1. About: Desertification is the degradation of land in dry, semi dry and dry sub humid areas, driven by climatic variation and human activity, until it loses its biological productivity.
    2. How it applies to Punjab: Sustained groundwater extraction beyond the recharge rate turns irrigated land progressively unproductive, which is the process experts have warned of in Punjab.

    What is Vibhajan Vibhishika Smriti Diwas?

    1. About: Vibhajan Vibhishika Smriti Diwas, or Partition Horrors Remembrance Day, is observed on 14 August each year since 2021.
    2. Purpose: It commemorates the displacement and loss suffered during the Partition of 1947.

    How did canal irrigation create Punjab’s agrarian identity?

    1. Arid land before irrigation: Large parts of western Punjab stayed uncultivated for centuries for want of irrigation.
    2. The canal network was the first input: The British built an extensive canal system across the region in the late nineteenth and early twentieth centuries.
    3. Settlers were the second input: Water alone was not enough, so cultivators from what is now Indian Punjab, including retired soldiers, were moved into the new tracts.
    4. Land allotted as murabbas: Each settler household received a murabba of 25 acres in the colonies.
    5. Settlements numbered, not named: New colonies were given administrative numbers such as Chak 8, Chak 20 and Chak 503, often carrying the name of the migrants’ original village, as in Chak 503 Narangwal.
    6. Reclamation took years: The land was arid and took years of sustained work before it turned fertile, which is why its loss at Partition was felt as the loss of built capital.

    What does Punjab’s tradition of agrarian resistance consist of?

    1. The 1907 movement: Ajit Singh led the Pagdi Sambhal Jatta agitation alongside Lala Lajpat Rai against three British laws that threatened farmers’ rights and hiked the water charge or abiana.
    2. Scale of mobilisation: Ajit Singh addressed 19 of the 33 meetings recorded by British intelligence.
    3. The anthem: Lala Banke Dayal’s poem was recited at a rally in Lyallpur in March 1907 and gave the movement its name.
    4. The outcome: The British withdrew the farm laws, and both leaders were imprisoned in Mandalay, Burma.
    5. Recognition: Bal Gangadhar Tilak hailed Ajit Singh as the “king of Punjab peasantry” on his return.
    6. The tradition carried forward: The same slogan was raised during the 2020-21 farmers’ agitation against the since repealed central farm laws.

    Why has the adversary shifted from colonial law to resource depletion?

    1. The threat is now internal: The challenge today is not colonial rule but the depletion of the resource that made Punjab’s agrarian success possible.
    2. Warnings are long standing: Experts have warned of impending desertification in Punjab for years.
    3. The trend is worsening, not stabilising: Acreage under water intensive paddy cultivation touched a record high this year.
    4. The water table keeps falling: The aquifer continues to drop even as extraction expands with every additional paddy season.
    5. The cost is deferred, not avoided: Groundwater does not recharge at the rate at which it is being pumped, so each season transfers the shortfall to a later one.

    Why has a known diagnosis not produced action?

    1. The solutions are already documented: Economist S S Johl outlined diversification measures during the tenure of the previous Congress government in the State.
    2. Later plans exist as well: The current State government has also prepared plans on the water issue.
    3. Implementation is the gap: Execution of both sets of plans remains negligible.
    4. The problem is not knowledge: Punjab knows precisely what has to be done and consistently fails to do it, which makes this an execution failure rather than a policy vacuum.

    Why do free water and assured paddy procurement keep expanding the crop that is emptying the aquifer?

    1. The case for the free provision: Free water and free power for tubewells lower the cash cost of cultivation for a farm sector carrying heavy debt.
    2. The political arithmetic: State governments cutting across party lines have continued the free provision for political reasons, since withdrawing it carries an immediate electoral cost.
    3. Assured procurement completes the lock in: Paddy and wheat carry guaranteed purchase at a minimum support price, and no alternative crop offers comparable certainty.
    4. The other side of the ledger: Free power removes the price signal on extraction, so pumping continues well past the rate at which the aquifer can recharge.
    5. Two legitimate claims in conflict: Farm income security and aquifer survival both carry a genuine claim, and current policy settles the question entirely in favour of the first.
    6. The cost appears nowhere: The support shows up as a power subsidy line in the State budget, while the depletion appears in no account until wells begin to fail.

    Why have farmer unions’ priorities not tracked the water crisis?

    1. Attention directed at trade: Farmer unions have mobilised strongly against free trade agreements.
    2. The nearer threat is unaddressed: The same unions have overlooked aquifer depletion as a looming calamity of comparable scale.
    3. Individual adaptation is happening: Some individual farmers have adopted alternatives to paddy on their own initiative.
    4. Collective adaptation is not: Most cultivators remain caught within an unsustainable farming model that no organised body is challenging.

    What does the stated way forward require?

    1. Reduce paddy dependence: Cut the area under water intensive paddy cultivation.
    2. Guarantee markets for the substitutes: Ensure assured markets for diversified crops so that the switch is not a loss of income.
    3. Invest in micro irrigation: Move field irrigation from flood delivery to drip and sprinkler systems.
    4. Build food processing capacity: Create processing demand that gives non paddy crops a committed buyer.
    5. Align policy with ecology: Set agricultural policy against ecological limits rather than electoral compulsions.

    Challenges to crop diversification in Punjab

    1. Absence of assured procurement for alternative crops: Only paddy and wheat carry guaranteed purchase, so any switch transfers price risk to the farmer. e.g. maize in Punjab routinely selling below its minimum support price for want of a procurement agency.
    2. Free power removes the cost of extraction: Zero marginal cost pumping eliminates any incentive to economise on water. e.g. blocks in Sangrur, Barnala and Moga classified as over exploited by the Central Ground Water Board while tubewell use continues unchecked.
    3. Sunk investment in the paddy and wheat rotation: Farm assets are built around a single cycle and cannot be repurposed. e.g. combine harvesters, paddy transplanters and laser levelled fields configured for that rotation alone.
    4. Labour and machinery calendar locked to paddy: The seasonal labour supply arrives for a specific operation window. e.g. migrant labour arriving in June for transplanting, a cycle no substitute crop matches.
    5. Groundwater regulation limited to sowing dates: Existing law delays transplanting without reducing total irrigated area. e.g. the Punjab Preservation of Subsoil Water Act, 2009, which shifted the transplanting date later but left acreage untouched.
    6. Weak processing and cold chain for horticulture: Perishable substitutes fail without storage and processing capacity nearby. e.g. kinnow growers in Abohar and Fazilka facing distress sales in glut years.
    7. Residue burning tied to the compressed paddy to wheat window: The delayed transplanting date leaves too little time between harvest and the next sowing. e.g. the October and November stubble fires across Sangrur, Bathinda and Patiala every year.

    Conclusion

    Punjab’s crisis is not the absence of a diversification plan but the presence of a policy structure that pays cultivators to keep growing paddy. Free water and power remove the cost of extraction while assured procurement removes the risk of continuing, so a record paddy acreage now coexists with a falling water table and warnings of desertification. Diversification will begin only when an alternative crop carries the same market certainty that paddy already has. Until then the tradition of agrarian resistance will keep facing outward while the aquifer empties.

    Groundwater Irrigation in India

    1. About: Groundwater irrigation is the extraction of water from aquifers through wells and tubewells for crop cultivation, as distinct from surface canal irrigation.
    2. India’s standing: India is the largest user of groundwater in the world, extracting more than the United States and China combined.
    3. Share of irrigation: Groundwater accounts for roughly 60 per cent of irrigated area and about 85 per cent of rural drinking water supply.
    4. The assessment system: The Central Ground Water Board and State agencies jointly assess blocks annually and classify them as safe, semi critical, critical or over exploited.
    5. Regional concentration of stress: Punjab, Haryana, Rajasthan, western Uttar Pradesh and parts of Tamil Nadu carry the highest proportion of over exploited units.
    6. The energy link: Subsidised or free electricity for agricultural pumping is the single largest driver of extraction, since it removes the marginal cost of drawing water.

    Constitutional Framework Governing Water in India

    1. Entry 17, State List, Seventh Schedule: Places water supply, irrigation, canals, drainage, embankments and water storage under State legislative competence.
    2. Entry 56, Union List, Seventh Schedule: Empowers Parliament to regulate inter State rivers and river valleys where it declares such regulation expedient in the public interest.
    3. Article 262: Allows Parliament to provide for adjudication of inter State river water disputes and to bar the jurisdiction of courts in such disputes.
    4. Article 21: Interpreted by the Supreme Court to include the right to clean and adequate water as part of the right to life.
    5. Article 48A: Directs the State to protect and improve the environment, which courts have read as covering groundwater conservation.
    6. Article 243G and the Eleventh Schedule: Assign minor irrigation, water management and watershed development to panchayats.

    Laws and Rules Governing Groundwater Use

    1. Indian Easements Act, 1882: Treats groundwater as attached to land ownership, which is the legal root of unrestricted extraction by landowners.
    2. Environment (Protection) Act, 1986: Provides the authority under which the Central Ground Water Authority was constituted to regulate and control groundwater development.
    3. Water (Prevention and Control of Pollution) Act, 1974: Governs the quality dimension of water resources through the pollution control boards.
    4. Punjab Preservation of Subsoil Water Act, 2009: Bars paddy nursery sowing and transplanting before notified dates, in order to shift the crop’s peak water demand closer to the monsoon.
    5. Model Bill for Conservation, Protection and Regulation of Groundwater, 2016: Circulated to States to establish groundwater as a public trust and to create local level groundwater security plans.
    6. Electricity Act, 2003: Governs agricultural power tariffs and the State subsidy mechanism that determines the cost of pumping.
    7. Guidelines for groundwater extraction, 2020: Prescribe the no objection certificate regime for industrial, infrastructure and mining users of groundwater.

    Back2Basics: Central Ground Water Board

    1. What it is: The Central Ground Water Board (CGWB) is the national apex agency for groundwater assessment, exploration, monitoring and management.
    2. Year established: Constituted in 1970, on the reorganisation of the Exploratory Tubewells Organisation.
    3. Parent ministry: It functions under the Department of Water Resources, River Development and Ganga Rejuvenation, Ministry of Jal Shakti.
    4. Headquarters: Faridabad, Haryana, with regional offices across the country.
    5. Mandate: It develops and disseminates technologies and monitors and implements national policies for the scientific and sustainable development of groundwater.
    6. Key outputs: It publishes the annual Dynamic Ground Water Resource Assessment and the groundwater year book, and it categorises assessment units by stage of extraction.
    7. Regulatory arm: The Central Ground Water Authority, constituted under Section 3(3) of the Environment (Protection) Act, 1986, exercises the regulatory powers over extraction.

    Government Initiatives for Groundwater and Crop Diversification

    1. Atal Bhujal Yojana: A community led groundwater management scheme in water stressed blocks across seven States, with incentives linked to measured improvement in the water table.
    2. Pradhan Mantri Krishi Sinchayee Yojana, Per Drop More Crop: Funds drip and sprinkler micro irrigation to raise water use efficiency at the farm level.
    3. Crop Diversification Programme: Operates in the original Green Revolution States of Punjab, Haryana and western Uttar Pradesh to shift area from paddy to alternative crops.
    4. Pani Bachao Paisa Kamao: A Punjab scheme paying farmers for electricity saved against a benchmark, converting free power into a metered incentive to pump less.
    5. Direct Seeded Rice incentive: A per acre payment in Punjab for sowing paddy directly rather than transplanting into puddled fields, cutting water use substantially.
    6. Jal Shakti Abhiyan, Catch the Rain: A national campaign for rainwater harvesting and recharge structure creation in water stressed districts.
    7. National Food Security Mission and the National Mission on Edible Oils: Support pulses and oilseeds as area substitutes for paddy through seed, input and market interventions.

    Key Facts about Groundwater and Punjab Agriculture

    1. Extraction stage: Punjab has the highest stage of groundwater extraction among Indian States, exceeding the annual recharge by a wide margin.
    2. Over exploited units: A large majority of Punjab’s assessment blocks are classified as over exploited by the Central Ground Water Board.
    3. Tubewell density: Punjab operates well over a million agricultural tubewells, nearly all running on subsidised or free power.
    4. Paddy water requirement: Transplanted paddy consumes several thousand litres of water per kilogram of grain, the highest among Punjab’s field crops.
    5. Procurement share: Punjab and Haryana together account for a dominant share of central wheat procurement and a large share of rice procurement.
    6. Green Revolution origin: Punjab was the first State where high yielding wheat varieties were introduced in the mid 1960s, establishing the wheat and paddy rotation.
    7. The 2009 legal shift: The Punjab Preservation of Subsoil Water Act, 2009 pushed paddy transplanting to mid June to align it with the monsoon onset.

    Challenges in Groundwater Management in India

    1. Legal treatment of groundwater as private property: Ownership attached to land under the Indian Easements Act, 1882 makes extraction limits hard to enforce. e.g. the absence of any cap on the number of tubewells a landowner may sink in most States.
    2. Free or heavily subsidised farm power: Zero marginal cost pumping removes the economic brake on extraction. e.g. Punjab, Haryana and Tamil Nadu supplying agricultural power free or at a nominal flat rate.
    3. Minimum support price incentives skewed to water intensive crops: Assured procurement concentrates in paddy and wheat and pulls area toward them. e.g. paddy area in Punjab reaching a record high in 2026 despite falling water tables.
    4. Weak metering and monitoring of extraction: Without volumetric measurement, regulation cannot be calibrated. e.g. the very small share of agricultural connections in the northern States that carry functioning energy meters.
    5. Aquifer contamination alongside depletion: Falling water tables concentrate geogenic contaminants and draw in poor quality water. e.g. arsenic in the Gangetic plains and fluoride in parts of Rajasthan and Telangana.
    6. Fragmented institutional responsibility: Water is a State subject while the regulatory authority is central, producing overlapping mandates. e.g. Central Ground Water Authority notifications applying to industry while agricultural extraction stays outside their reach.
    7. Poor uptake of micro irrigation: Capital cost and small holding size limit the spread of drip and sprinkler systems. e.g. micro irrigation covering only a small fraction of Punjab’s net sown area despite years of subsidy.

    Way Forward

    1. Extend assured procurement to substitute crops: Guarantee purchase of maize, pulses and oilseeds in Punjab at announced prices so the switch out of paddy carries no income penalty.
    2. Convert free power into a measured entitlement: Scale the Pani Bachao Paisa Kamao model, paying farmers for unused power rather than withdrawing the subsidy outright.
    3. Meter agricultural extraction: Install energy or volumetric meters on tubewells to make regulation and incentive design possible.
    4. Fund micro irrigation at scale: Raise the subsidy and credit support for drip and sprinkler systems to cover small holdings.
    5. Build processing and cold chain capacity: Locate processing units for maize, kinnow, potato and dairy in Punjab to create local demand for diversified output.
    6. Enact a groundwater law based on public trust: Adopt the Model Bill for Conservation, Protection and Regulation of Groundwater so extraction rights derive from a shared resource rather than land title.
    7. Link central assistance to measured water table outcomes: Extend the Atal Bhujal Yojana incentive design, so State transfers respond to verified improvement in the aquifer.

    “[2021, GS3, 15 marks] What are the present challenges before crop diversification? How do emerging technologies provide an opportunity for crop diversification?”

  • India contracts 17 lakh tonnes of urea at $390 a tonne, a fraction of the April tender price

    Why in the News?

    India has contracted 17 lakh tonnes (1.7 mt) of imported urea at landed prices of $390.25 to $393.65 per tonne, marking a ~58% drop from the peak rates of $935 to $959 per tonne seen in the April 2026 tender. This sharp collapse highlights how heavily India’s fertiliser subsidy bill depends on external factors, ranging from West Asian energy disruptions to Chinese inventory accumulation.

    Global Urea Import Tender Mechanism

    • Nominated State Agencies: Import tenders are invited by designated state-owned canalising agencies like Rashtriya Chemicals and Fertilizers (RCF) and Indian Potash Limited (IPL).
    • Landed Price (CFR): Offers are quoted on a landed basis—covering both material cost and ocean freight to destination ports. This shifts shipping risk to the supplier.
    • Geographical Distribution: Tenders split required tonnages between the East Coast and West Coast to optimize port discharge and domestic logistics.
    • Market Signals: Bids from multiple global traders (e.g., Ameropa Group) establish the benchmark. High oversubscription indicates a loose global supply market.

    Price Trajectory & Global Supply Dynamics

    1. April Peak ($935–$959/tonne): Driven by peak war risk premiums, high global fuel prices, and Strait of Hormuz shipping anxieties.
    2. May Moderation ($444.9–$449.3/tonne): Easing immediate supply shocks.
    3. July/August Drop ($390.25–$393.65/tonne): Triggered by:
      • China’s Surplus Inventory: Domestic in-plant inventories in China surged 76% year-on-year, turning it into a major swing supplier.
      • Re-routed Supplies: Iranian material reaching markets through China.
      • Alternative Sourcing: Diversification of LNG feedstock by agencies like GAIL and IOC away from Hormuz transit routes toward the US, Oman, Norway, Angola, Congo, Indonesia, and Trinidad.

    Current Supply & Demand Position

    • Adequate Reserves: Imports reached 25.08 lakh tonnes in Q1 (April–June 2026) compared to 8.38 lakh tonnes in the previous year.
    • Domestic Production: Expanded to 71.53 lakh tonnes in Q1 2026.
    • Cropping Seasons Covered: Sufficient availability reported across both the ongoing Kharif (monsoon) season and upcoming Rabi (winter/spring) sowing.

    Challenges in India’s Fertiliser Policy

    • Subsidy Exposure: Urea sells at a statutorily controlled Maximum Retail Price (MRP), meaning any surge in landed cost directly increases the exchequer’s subsidy burden.
    • Nutrient Imbalance: Controlled urea pricing versus decontrolled phosphatic and potassic nutrients encourages over-application of nitrogen (N), skewing the ideal 4:2:1 (N:P:K) ratio.
    • Phosphate Vulnerability: While urea and LNG supply sources have been widened, Di-ammonium Phosphate (DAP) and raw intermediates (phosphoric acid, ammonia, sulphur) remain vulnerable to concentrated import sources and price spikes.
    • Feedstock Dependence: Domestic plants remain tied to imported LNG, linking production costs directly to international gas trends.

    Statutory & Regulatory Framework

    • Essential Commodities Act, 1955: Empowers the Union Government to regulate production, stock limits, supply, and pricing of fertilisers.
    • Fertiliser (Control) Order, 1985 & Movement Control Order, 1973: Governs quality standards, dealer registrations, and inter-state distribution.
    • New Urea Policy, 2015: Promotes energy efficiency in production units and mandates 100% Neem Coating of domestic urea to prevent industrial diversion.
    • Nutrient Based Subsidy (NBS) Scheme, 2010: Provides a fixed annual per-kg subsidy on N, P, K, and S for decontrolled fertilisers (DAP, MOP, Complex).
    • Direct Benefit Transfer (DBT): Releases subsidies to manufacturers only after Aadhaar-authenticated point-of-sale (PoS) transactions at retail outlets.

    Key Government Initiatives

    • PM PRANAM: Encourages States to reduce chemical fertiliser usage by sharing the resulting subsidy savings.
    • One Nation One Fertiliser: Standardises all subsidised crop nutrients under the single Bharat brand.
    • Nano Urea: Liquid alternative developed by IFFCO to lower overall bulk tonnage requirements.
    • Plant Revivals: Reactivation of closed units (Ramagundam, Gorakhpur, Sindri, Barauni, Talcher) to boost domestic capacity.
    • Coal Gasification: Talcher plant designed to produce urea using coal gasification rather than natural gas, cutting gas import reliance.

    Key Concepts

    • Urea: Solid nitrogenous fertiliser (carbamide) carrying 46% Nitrogen—the highest among solid fertilisers.
    • Di-ammonium Phosphate (DAP): Phosphatic fertiliser containing 18% Nitrogen and 46% Phosphorus.
    • Fertiliser Association of India (FAI): Industry body (est. 1955) providing production, import, and consumption stats for supply planning.
    • Muriate of Potash (MOP): Fully import-dependent nutrient; India has no commercial potash reserves.

    [2020] With reference to chemical fertilizers in India, consider the following statements:
    1. At present, the retail price of chemical fertilizers is market-driven and not administered by the Government.
    2. Ammonia, which is an input of urea, is produced from natural gas.
    3. Sulphur, which is a raw material for Phosphoric acid fertilizer, is a by-product of oil refineries.
    Which of the statements given above is/are correct?
    (a) 1 only
    (b) 2 and 3 only
    (c) 2 only
    (d) 1, 2 and 3
    Answer: (b)”

  • Kondapalli in Bastar shows what state presence looks like after the Maoist withdrawal

    Why in the News

    Kondapalli, a village of 600 people in Chhattisgarh’s Bijapur district that served as the base of the most dreaded Maoist battalion, now has a road, a bus, grid electricity, a cellphone tower and a new school. The change moves the test of the insurgency’s end from the absence of armed cadre to the delivery of ordinary services, since a surrendered commander now demands from the State the borewell, pond, land rights and visiting doctor he once took up arms against it over.

    How does the forward base model work in the Red Corridor?

    1. Step one, the camp: A central armed police force announces a forward operating base inside a village previously controlled by the Maoists.
    2. Step two, clearing operations: A series of encounters follows, which pushes the armed cadre out of the area.
    3. Step three, the road: An engineering agency opens a motorable road to the camp, which ends the physical isolation the insurgency depended on.
    4. Step four, civil administration: Grid electricity, telecom towers, schools, anganwadis, ration shops, Aadhaar enrolment and bank accounts follow the road.
    5. Step five, the political process: Elections resume and elected panchayat bodies begin to function.
    6. Application in Kondapalli: The Central Reserve Police Force (CRPF) announced its forward base in the village in November 2024, and this sequence has run there since.

    What is the People’s Liberation Guerrilla Army (PLGA)?

    1. About: The PLGA is the armed wing of the Communist Party of India (Maoist), organised into platoons, companies and battalions.
    2. Its role here: Kondapalli served as the base of Battalion No. 1, the most dreaded unit of the PLGA.

    What was Battalion No. 1?

    1. About: Battalion No. 1 was the main armed formation of the Maoists in south Bastar, camped in the jungle outside Kondapalli.
    2. Present position: The battalion is gone from the area and security forces now camp in the same space.

    What is a Revolutionary People’s Committee?

    1. About: It is a grassroots governing body of the Maoists that ran village level administration, land distribution and dispute settlement in areas under their control.
    2. Its role here: A former commander of one such committee surrendered in Kondapalli in March 2025.

    What is the Bal Sangam?

    1. About: The Bal Sangam is the children’s wing of the Maoists, used to recruit and indoctrinate minors in areas under their control.

    What is the Chetna Natya Manch?

    1. About: The Chetna Natya Manch is the Maoists’ cultural troupe, which used song and theatre on themes such as jal, jungle and zameen to mobilise villagers.

    What was the Salwa Judum?

    1. About: The Salwa Judum was a civilian counter insurgency force set up in Chhattisgarh in 2005, which armed villagers against the Maoists.
    2. Legal status: The Supreme Court declared it illegal in 2011 and ordered the disarming of the appointed special police officers.

    What is the Red Corridor?

    1. About: The Red Corridor is the belt of forested, mineral rich and largely tribal districts across central and eastern India where Maoist influence was concentrated.
    2. Scale in Chhattisgarh: Kondapalli was one of nearly 400 villages in the State’s Red Corridor where the state had little say or presence.

    What is the Border Roads Organisation (BRO)?

    1. About: The BRO is a road construction agency under the Ministry of Defence that builds and maintains roads in border and strategically sensitive areas.
    2. Its role here: It began work on the Tarrem to Kondapalli road soon after security forces pushed the Maoists back in November 2024.

    What is a Bailey bridge?

    1. About: A Bailey bridge is a portable, prefabricated steel truss bridge assembled on site without heavy equipment, used where permanent bridges cannot be built quickly.
    2. Its use here: The BRO installed nine Bailey bridges over river streams on the stretch past Kondapalli.

    What is the Mahtari Vandan Yojana?

    1. About: It is a Chhattisgarh government scheme that transfers Rs 1,000 a month to eligible married women through direct benefit transfer.
    2. Its role here: One villager’s mother opened a bank account last year and now receives this transfer.

    How did the Maoists govern Kondapalli?

    1. Territorial claim: Kondapalli lay in the Maoists’ South Bastar division, part of what they called the Liberated Zone.
    2. Strength of the formation: The division was one of the strongest Maoist formations and among the last to fall, and could gather the support of 400 to 500 people at short notice.
    3. Economic function of the village: Kondapalli mattered to the Maoists because their supplies came from its local market.
    4. Commemorative gatherings: Hundreds of villagers were assembled every year at a 64 foot tall memorial in Komatpalli, part of the Kondapalli gram panchayat, for Martyrs’ Week.
    5. Land and housing: The Maoists redistributed land and helped villagers build their houses, which is how they gained trust.
    6. Local public works: They built small roads and a pond, and asked villagers to donate money for the treatment of anyone who fell sick.
    7. Forest rule: Cutting trees was punishable under their order.
    8. What was withheld: Residents describe the arrangement as delivering a sense of security and of being seen, with little development alongside it.

    How was that order enforced?

    1. Conscription pressure: At least one person from every village had to join, which put pressure on families to give up their sons or daughters.
    2. Recruitment through front organisations: A boy recruited as a teenager passed through the Bal Sangam and then the Chetna Natya Manch, singing about saving jal, jungle and zameen.
    3. Fear of dispossession: Recruits were told the government would steal their land and that they would eventually have to leave the village.
    4. Control of movement: Villagers leaving the Kondapalli gram panchayat were questioned on their return.
    5. Public punishment: Wrongdoers were beaten publicly under a tree.
    6. Killing of suspected informers: Those suspected of informing to the police were killed, and others left the village.
    7. Destruction of state assets: The Maoists burnt down the only school and the adjoining hostel in the 2000s to stop security forces sheltering there, and destroyed the electric poles the administration brought.
    8. Withdrawal of officials: Forest officials and the patwari, the village records keeper, stopped coming to Kondapalli.
    9. Control of communication: Phones were seized and villagers were told not to use them.
    10. Cost on the other side: Villagers were caught in the middle, and one resident’s uncle was killed by security forces on the suspicion that he was a Maoist.

    What ended the Maoist hold on Kondapalli?

    1. The forward base: The CRPF announced in November 2024 that it was establishing a forward base in Kondapalli.
    2. Encounters: A series of encounters followed, after which the Maoists were pushed into Telangana.
    3. Surrender of the formation: The cadre pushed into Telangana laid down arms in March 2026.
    4. Village level surrender: A former commander of the Revolutionary People’s Committee surrendered in March 2025 along with 12 other villagers.
    5. Rehabilitation in practice: He opened a kirana store with the money received under the State’s rehabilitation policy.
    6. Losses in the campaign: A villager’s 18 year old daughter, who left home in December 2022 to join the Maoists, was among about 30 Maoists killed in a security operation in Telangana’s Karregutta hills last year.
    7. Scale of the insurgency: The decades long insurgency claimed at least 4,741 lives in the Bastar region alone since 2000.
    8. National declaration: The Union Home Minister has declared the country Maoist free, 80 years after Independence.

    Which markers of state presence have appeared in the village?

    1. Grid electricity: Kondapalli received electricity from the grid last July, after years of solar lamps and then of darkness once those failed.
    2. Telecom: A cellphone tower was erected on the edge of the village in December last year, rising above the mud houses and small shops.
    3. School building: A new government school building came up in the summer of 2025, painted bright blue and standing by the main road.
    4. School capacity: The school runs classes 1 to 8 with 158 students and seven teaching staff, all male, and has blackboards and benches.
    5. What preceded it: After the school was burnt down children studied in a shanty in the same compound, and an asbestos shade was put up there in 2020.
    6. Anganwadi and residential school: An anganwadi and a residential school are under construction in the village.
    7. Panchayat and ration infrastructure: Panchayat bhawans have been built and the new ration shop is painted in the colours of the Tricolour.
    8. Identity and banking: Villagers were called to the police camp where they were enrolled under Aadhaar and given birth certificates and bank accounts.
    9. Cash transfer: A household bank account opened last year now receives Rs 1,000 from the State under the Mahtari Vandan Yojana for women.
    10. Return of the vote: The village voted for the first time last year, in the local body polls, having been told under the Maoists to make no demands of the government.
    11. Political visit: The Chhattisgarh Chief Minister visited Kondapalli on 2 June, a first for the village.
    12. Announced pipeline: The Bijapur District Collector stated that over the next two years the village will get a cricket ground, a health centre, a cement road and government scheme benefits.
    13. Security presence: Security forces now camp in the jungle outside the village where Battalion No. 1 used to camp.
    14. Private consumption: A villager bought a Redmi phone for Rs 10,000 after the Maoists left, and uses it to watch films, news and skill tutorials.

    How has connectivity changed?

    1. Bus service: A blue bus from Cherla in Telangana has run since March 2025 under the State’s rural bus scheme, making two trips a day.
    2. What it connects: The bus carries villagers to Bijapur, 79 km to the north, and to Cherla in Telangana, where many young men work as daily wage labourers.
    3. The road agency: The Border Roads Organisation began work on the Tarrem to Kondapalli road soon after November 2024.
    4. Engineering on the road: On the stretch running past Kondapalli into Telangana, the BRO installed nine Bailey bridges over river streams and 43 precast culverts to keep the road usable during the rains.
    5. Present condition: The road is still a work in progress, carrying the occasional motorcycle or truck with construction material.
    6. Travel before the road: A circuitous journey of 209 km taking five hours through Cherla was the only way to travel from Bijapur to Kondapalli.
    7. Travel now: A 90 minute car ride from Bijapur reaches the village without crossing into Telangana, passing the junctions of Awapalli and Basaguda and reaching Tarrem on the Sukma and Bijapur border.
    8. Map lag: For the 18 km beyond Tarrem, Google Maps still recommends the older and longer route through Telangana.
    9. What the road replaced: Villagers earlier walked two days to Telangana carrying 30 kg of rice, stayed 45 days and worked plucking chillies on farms.
    10. A generation without a bus: The bus stopped after the Maoists came from Telangana in 1985, and an entire generation grew up without ever seeing one.
    11. Border geography: Kondapalli sits on the Telangana border and is closer to Cherla at 46 km than to its own district headquarters at Bijapur, 79 km away.

    What distances still separate the village from basic services?

    1. Health care: The nearest doctor requires a journey of over 30 km to Basaguda.
    2. Schooling beyond class 8: Students travel 33 km to Basaguda or 23 km to Pamed to continue past class 8.
    3. Higher education: The village’s first graduate could finish his education only by leaving during the Salwa Judum years for a hostel in Basaguda and then a college in Dantewada.
    4. A second case of leaving to study: A CRPF recruit from the village completed school while staying in a hostel in Usoor in Bijapur.
    5. Schooling in the earlier generation: The village head travelled 27 km by bus to school in Awapalli in the 1980s.
    6. Food supply: Villagers earlier travelled to Awapalli even to buy rice, which took a full day.
    7. Maternal health: Women died in labour or on the way to hospital because there was no medical facility nearby and no road, and were carried on cots.

    Why does the arrival of the state not settle the question of legitimacy?

    1. The camp changed hands rather than disappeared: Security forces occupy the same jungle space the Maoist battalion used, so the village still lives beside an armed presence.
    2. The demands are the same goods: A surrendered commander now asks the State for a borewell for irrigation, a pond, land rights, small roads and a visiting doctor, which are the goods the Maoists claimed to supply.
    3. Memory of redistribution: Residents attribute the Maoists’ trust to land redistribution and help in building houses, which the State’s works now have to match.
    4. Memory of being caught in between: Families were punished by both sides, with suspected informers killed by the Maoists and a relative killed by security forces on suspicion.
    5. The Salwa Judum legacy: A villager still recalls her father being beaten for hours in 2006 during the Salwa Judum years, and the Supreme Court declared that force illegal in 2011.
    6. Delivery remains promised: The health centre, cement road and cricket ground sit on a two year timetable, and the anganwadi and residential school are still under construction.
    7. What residents ask for next: Villagers name a health facility, a school for higher studies and a self help group for poultry, farming and other livelihoods as the unmet needs.

    Challenges to consolidating state presence in Bastar

    1. Reversibility of security gains: Cadre pushed across a State border can regroup and return if camps thin out. e.g. the cadre pushed out of Kondapalli in November 2024 moved into Telangana and laid down arms only in March 2026.
    2. Roads reach before services do: Physical connectivity arrives years ahead of health and higher education facilities, so the mortality and dropout risks persist. e.g. Kondapalli residents still travel more than 30 km to Basaguda to see a doctor.
    3. Education discontinuity beyond the primary stage: Village schools stop at class 8, so children must migrate to hostels to continue studying. e.g. Kondapalli students travel 33 km to Basaguda or 23 km to Pamed after class 8.
    4. Unsettled forest and land rights: Slow recognition of individual and community forest rights leaves the state contested on the very issue the Maoists mobilised on. e.g. community forest rights claims under the Forest Rights Act, 2006 have seen high rejection rates in Chhattisgarh’s Bastar districts.
    5. Distrust from past counter insurgency: Civilian militias and killings on suspicion leave a memory that slows cooperation with the administration. e.g. the Supreme Court struck down the Salwa Judum in Nandini Sundar versus State of Chhattisgarh (2011).
    6. Livelihood dependence on distant labour markets: Without local employment, better connectivity mainly makes it easier to migrate out. e.g. young men from Kondapalli take the daily bus to Cherla in Telangana for daily wage work.
    7. Administrative vacancy in interior blocks: Staffing in remote blocks remains thin even after the security situation improves. e.g. forest officials and the patwari stopped visiting Kondapalli entirely during the Maoist years, and the new school runs with seven teachers for classes 1 to 8.
    8. Displacement risk from mining and infrastructure: Newly accessible mineral belts raise the prospect of acquisition in Scheduled Areas without full consent. e.g. protests over iron ore mining in the Bailadila range in Dantewada in 2019.

    Conclusion

    Kondapalli shows that the end of an insurgency is measured by the return of ordinary state functions, not by the absence of armed cadre. Within two years of the CRPF forward base, the village has a road with nine Bailey bridges, a daily bus, grid electricity, a tower, a school with 158 students, Aadhaar numbers and bank accounts, and it has voted for the first time. The health centre, the cement road and the school for higher studies remain on a two year promise, and the villagers’ claims on the State now decide whether the change holds.

    Left Wing Extremism in India

    1. About: Left Wing Extremism is an armed movement that seeks to capture state power through a protracted people’s war, drawing on grievances over land, forest rights, displacement and the absence of the administration in tribal districts.
    2. Origin: It began with the peasant uprising at Naxalbari in West Bengal in 1967, which gave the movement its popular name.
    3. Principal organisation: The Communist Party of India (Maoist) was formed in 2004 by the merger of the People’s War Group and the Maoist Communist Centre of India, and is banned as a terrorist organisation.
    4. Armed wing: The People’s Liberation Guerrilla Army is its military formation, organised into platoons, companies and battalions.
    5. Geography: Influence was concentrated in the Dandakaranya belt across Chhattisgarh, Jharkhand, Odisha, Maharashtra, Telangana and Andhra Pradesh.
    6. Parallel governance: Janatana Sarkars, also called Revolutionary People’s Committees, ran village administration, land distribution and dispute settlement in areas under Maoist control.
    7. Scale of decline: The number of districts affected by Left Wing Extremism fell from 126 in 2018 to 38 in April 2024, with the worst affected districts concentrated in the Bastar division.
    8. Policy frame: The National Policy and Action Plan of 2015 combines security measures, development, entitlements for tribal groups and perception management.
    9. Constitutional position: Police and public order are State subjects, so the Centre acts through central armed police forces, funding and intelligence sharing.

    Constitutional Framework Governing Scheduled Areas and Internal Security

    1. Article 244 and the Fifth Schedule: Provide for the administration of Scheduled Areas and Scheduled Tribes, including the Governor’s power to modify the application of laws and the Tribes Advisory Council.
    2. Article 275(1): Provides grants in aid to States for tribal welfare and for raising the administration of Scheduled Areas to the level of the rest of the State.
    3. Article 338A: Establishes the National Commission for Scheduled Tribes to investigate and monitor safeguards for Scheduled Tribes.
    4. Article 355: Places on the Union the duty to protect every State against external aggression and internal disturbance.
    5. Article 356: Allows a proclamation where the government of a State cannot be carried on in accordance with the Constitution.
    6. Entry 1 of the State List: Places public order within the legislative competence of the States.
    7. Entry 2 of the State List: Places police within the legislative competence of the States.
    8. Entry 2A of the Union List: Covers the deployment of any armed force of the Union in a State in aid of the civil power.

    Laws and Rules Governing the Response to Left Wing Extremism

    1. Unlawful Activities (Prevention) Act, 1967: Provides for banning unlawful associations and terrorist organisations and for offences of membership and support.
    2. Unlawful Activities (Prevention) Amendment Act, 2019: Allows the Centre to designate individuals, and not only organisations, as terrorists.
    3. Chhattisgarh Special Public Security Act, 2005: Criminalises membership of and support to organisations declared unlawful within the State.
    4. National Investigation Agency Act, 2008: Creates a central agency to investigate scheduled offences including terrorism, with jurisdiction across States.
    5. Panchayats (Extension to the Scheduled Areas) Act, 1996: Extends panchayat provisions to Fifth Schedule areas and vests the gram sabha with control over minor forest produce and consultation before land acquisition.
    6. Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act, 2006: Recognises individual and community forest rights of forest dwelling tribal groups.
    7. Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013: Requires consent, social impact assessment and rehabilitation, with additional safeguards in Scheduled Areas.
    8. Bharatiya Nyaya Sanhita, 2023: Section 152 penalises acts endangering the sovereignty, unity and integrity of India.

    Back2Basics: Bastar Region

    1. Designation: Bastar is an administrative division of southern Chhattisgarh and the core of the Dandakaranya region.
    2. Districts: The division covers Bastar, Kondagaon, Narayanpur, Dantewada, Sukma, Bijapur and Kanker.
    3. Rivers: The Indravati and the Sabari are the principal rivers of the region.
    4. Protected areas: Kanger Valley National Park and the Indravati National Park and Tiger Reserve lie in the division.
    5. Landform features: The Chitrakote falls on the Indravati are the widest waterfall in India, and the Abujhmarh hills remain largely unsurveyed.
    6. Tribal groups: The Gond, Muria, Madia, Dorla, Halba and Bhatra communities live in the region.
    7. Cultural institutions: Bastar Dussehra runs for about 75 days and is among the longest festivals in the country, and the Ghotul is the traditional youth dormitory of the Muria.
    8. Mineral base: The Bailadila range in Dantewada holds some of India’s richest iron ore deposits.

    Government Initiatives for Left Wing Extremism Affected Areas

    1. SAMADHAN doctrine: The Centre’s operational framework combining smart leadership, aggressive strategy, motivation and training, actionable intelligence, dashboards, harnessing technology, action plans for each theatre and denial of financing.
    2. Security Related Expenditure Scheme: Reimburses States for the costs of security operations, training, community policing and rehabilitation of surrendered cadre.
    3. Special Infrastructure Scheme: Funds fortified police stations, secure camps and district police infrastructure in affected districts.
    4. Special Central Assistance: Provides funds for public infrastructure and services in the most affected districts.
    5. Road Connectivity Project for Left Wing Extremism Affected Areas: Builds all weather roads and bridges in affected districts, alongside the earlier Road Requirement Plan.
    6. LWE Mobile Tower Project: Installs mobile towers in affected districts to close the telecom gap.
    7. Civic Action Programme: Funds central armed police forces to run health camps, sports events and welfare activity to build local trust.
    8. ROSHNI and Eklavya Model Residential Schools: Provide skill training for youth and residential schooling for tribal children in affected districts.
    9. Aspirational Districts Programme: Targets health, nutrition, education and infrastructure indicators in the districts with the weakest outcomes, many of them in the Red Corridor.
    10. Niyad Nellanar scheme: A Chhattisgarh programme that saturates villages within a radius of new security camps with central and State scheme benefits.

    Key Facts about Left Wing Extremism

    1. Naxalbari: The movement takes its name from the 1967 uprising at Naxalbari in Darjeeling district of West Bengal.
    2. Formation of the CPI (Maoist): The party was formed on 21 September 2004 and is listed as a terrorist organisation under the Unlawful Activities (Prevention) Act, 1967.
    3. Decline in affected districts: Affected districts fell from 126 in 2018 to 38 in April 2024.
    4. Salwa Judum: Formed in 2005 and declared illegal by the Supreme Court in 2011 in Nandini Sundar versus State of Chhattisgarh.
    5. Specialised forces: The Greyhounds in Andhra Pradesh and Telangana, and the District Reserve Guard and Bastar Fighters in Chhattisgarh, are the principal anti Maoist units.
    6. Stated deadline: The Union government set a target of ending Left Wing Extremism by 31 March 2026.
    7. Bastar toll: The insurgency claimed at least 4,741 lives in the Bastar region alone since 2000.
    8. Karregutta hills: The hills on the Chhattisgarh and Telangana border were the site of a major operation against Maoist formations.

    Challenges in Left Wing Extremism Affected Areas

    1. Development deficit that created the grievance: Absence of roads, schools, health centres and electricity is the condition the movement recruited on. e.g. Kondapalli got grid electricity only last July and a cellphone tower only in December.
    2. Weak implementation of tribal rights law: PESA and the Forest Rights Act remain unevenly implemented, so consent and forest produce rights stay contested. e.g. community forest rights claims across the Bastar districts have been rejected in large numbers.
    3. Displacement from mining and infrastructure: Acquisition in mineral rich Scheduled Areas turns development projects into recruitment arguments. e.g. protests over iron ore mining at Bailadila in Dantewada in 2019.
    4. Human rights costs of the security response: Killings on suspicion and civilian militias damage the state’s legitimacy for a generation. e.g. the Supreme Court’s 2011 order disbanding the Salwa Judum and disarming special police officers.
    5. Financing of the insurgency: Extortion from contractors, tendu leaf traders and transporters sustains cadre even after territorial losses. e.g. levy collection on road contractors has repeatedly been cited in National Investigation Agency chargesheets.
    6. Coordination across State borders: Cadre exploit inter State boundaries where police jurisdiction ends. e.g. the Kondapalli cadre moved into Telangana after the November 2024 encounters.
    7. Rehabilitation follow through: Surrender packages fail where no livelihood follows the cash grant. e.g. surrendered cadre in Bijapur depend on small kirana shops set up with one time rehabilitation money.
    8. Sustaining services after the camp: Teachers, doctors and revenue officials remain reluctant to serve in interior blocks. e.g. the new Kondapalli school has seven teachers for classes 1 to 8 and no facility beyond that.

    Way Forward

    1. Saturate cleared villages with entitlements: Extend the saturation model so every village within reach of a new camp receives Aadhaar, bank accounts, ration cards, pensions and scheme benefits within a fixed timeframe.
    2. Complete the road and telecom grid: Finish the Tarrem to Kondapalli type links and the mobile tower programme so connectivity does not stop at the camp.
    3. Settle forest and land rights first: Clear pending individual and community claims under the Forest Rights Act, 2006 and enforce gram sabha consent under PESA before any acquisition.
    4. Extend schooling beyond class 8 locally: Upgrade village schools and expand residential schools so children are not forced to migrate 20 to 35 km to continue.
    5. Place health infrastructure with the road: Staff sub centres and mobile medical units at the same time as road completion, rather than years later.
    6. Build local livelihoods: Fund self help groups, minor forest produce processing and poultry and farming enterprises so connectivity does not only enable outmigration.
    7. Make rehabilitation a multi year programme: Follow the surrender grant with skill training, credit and market linkage, and monitor outcomes for surrendered cadre.
    8. Institutionalise inter State coordination: Sustain joint operations, shared intelligence and unified surrender policies across Chhattisgarh, Telangana, Odisha, Maharashtra and Jharkhand.

    Matching Previous Year Question

    “[2025, GS3, 10 marks] The Government of India recently stated that Left Wing Extremism (LWE) will be eliminated by 2026. What do you understand by LWE and how are the people affected by it? What measures have been taken by the government to eliminate LWE?”

  • Draft rules under the SHANTI Act open nuclear power to captive industrial use and a composite licence

    Why in the News

    The Department of Atomic Energy released draft rules under the Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India (SHANTI) Act on 14 August 2026, opening nuclear power generation to private and captive users. Comments are invited until 4 September 2026.

    What is the SHANTI Act?

    • Replaces the earlier state monopoly framework with a licensing regime for non-government operators.
    • Covers private participation, captive generation, foreign reactor technology, safety and nuclear liability.
    • Provides a single composite licence for building, owning, operating and decommissioning a reactor.

    Key Provisions

    1. Captive nuclear power: Industries can generate nuclear electricity mainly for their own consumption.
    2. In-principle approval: Allows land acquisition and vendor negotiations before final licensing.
    3. Foreign technology: Imported designs must be certified by the regulator in the country of origin and already operational.
    4. Nuclear liability: Operators must maintain insurance or financial security; a Nuclear Liability Fund is proposed.
    5. Eligible users: Aluminium, cement, data centres, semiconductor fabs and Artificial Intelligence (AI) facilities.

    Key Concern

    • The country-of-origin certification may speed up safety approval but restrict technology sourcing to a few countries. Requiring continued support and retaining Intellectual Property Rights (IPR) with foreign developers could also limit technology transfer and indigenous reactor design.

    India’s Nuclear Programme

    • Stage 1: Pressurised Heavy Water Reactors (PHWRs) using natural uranium.
    • Stage 2: Fast Breeder Reactors (FBRs) using plutonium.
    • Stage 3: Thorium-based reactors using Uranium-233 (U-233).
    • Target: 100 GW nuclear capacity by 2047.

    Challenges

    • Supplier liability concerns
    • Limited regulatory independence
    • Land and public acceptance
    • Uranium and fuel constraints
    • Nuclear waste management
    • High project costs and long construction timelines

    Prelims Pointers

    • DAE: Department of Atomic Energy
    • AERB: Atomic Energy Regulatory Board
    • NPCIL: Nuclear Power Corporation of India Limited
    • BHAVINI: Bharatiya Nabhikiya Vidyut Nigam Limited
    • NPT: Nuclear Non-Proliferation Treaty
    • NSG: Nuclear Suppliers Group
    • India is not a signatory to NPT and received an NSG waiver in 2008.

    [2018, GS3, 15 marks] With growing energy needs should India keep on expanding its nuclear energy programme? Discuss the facts and fears associated with nuclear energy.”

    [2020]  In India, why are some nuclear reactors kept under “IAEA safeguards” while others are not ?

    a) Some use uranium and others use thorium
    b) Some use imported uranium and others use domestic supplies
    c) Some are operated by foreign enterprises and others are operated by domestic enterprises
    d) Some are State-owned and others are privately-owned

  • Socialism as the shackle: revisiting the four decades before the 1991 reforms

    Why in the News

    India holds foreign exchange reserves of $700 billion, including 880 tonnes of gold, on its 80th Independence Day. In early 1991 the same reserves had fallen below $1 billion, and the escape required a Prime Minister formed in socialist politics to pledge the country’s gold to foreign banks.

    What was the licence permit quota system?

    1. About: The administrative regime under which a private firm needed a government licence to set up capacity, expand output, change product mix or import inputs.
    2. Legal basis: The Industries (Development and Regulation) Act, 1951 reserved industrial licensing to the Centre and listed the industries requiring approval.
    3. Delivery vehicle: Investment was allocated through five year plans, which placed the public sector first in the commanding heights of the economy.
    4. Effect on entry: Capacity was fixed by the licence rather than by demand, so a firm could not expand even when the market grew.
    5. Effect on competition: New entrants competed for approvals rather than for customers, which made the licence itself the scarce asset.

    What is a balance of payments crisis?

    1. Definition: A country cannot meet payments for imports and external obligations because its foreign exchange earnings and reserves fall short of what it owes.
    2. The operative measure: Severity is read in import cover, that is the number of weeks of imports the reserves can finance, not in the absolute size of the reserves.

    What was the socialist pattern of society resolution?

    1. Adoption: The Congress session at Avadi in Tamil Nadu in 1955 passed a resolution declaring a socialist pattern of society to be the goal of government policy.
    2. Content: It committed the government to state ownership and state direction of the principal means of production.

    What is the Bank for International Settlements (BIS)?

    1. Definition: A Basel based institution owned by central banks that functions as a bank to central banks, with operations that made it one of the two lenders against India’s gold in 1991.
    2. Function: It accepts deposits and gold from member central banks and extends short term credit against that collateral.

    What was the 42nd Constitutional Amendment Act, 1976?

    1. Preamble change: It inserted the words socialist, secular and integrity into the Preamble of the Constitution.
    2. Wider effect: It also expanded the protection given to laws implementing Directive Principles and curtailed the scope of judicial review, and much of it was reversed by the 44th Amendment.

    Why did the 1991 crisis force India to pledge its gold?

    1. Reserve collapse: Foreign exchange reserves fell below $1 billion in early 1991, producing a full balance of payments crisis.
    2. Import cover: The remaining reserves covered only about two weeks of imports.
    3. The only option left: The Reserve Bank Governor advised that India’s gold be mortgaged to the Bank of England and the Bank for International Settlements in Switzerland, and dollars borrowed against it.
    4. Quantum pledged: About 67 tonnes of gold moved out in two consignments during 1991.
    5. Closed markets: A downgrade below investment grade had shut India out of ordinary commercial borrowing, which left collateralised lending as the only route.

    How did socialism become the organising idea of Indian economic policy?

    1. 1927: A visit to Moscow for the decennial celebration of the October Revolution converted Jawaharlal Nehru to socialism.
    2. 1929: As president of the Indian National Congress he declared that India will have to go the socialist way.
    3. 1936: A revolt in the Congress Working Committee followed, in which seven senior leaders including Sardar Patel, Rajendra Prasad, C Rajagopalachari, J B Kripalani and Jamnalal Bajaj resigned.
    4. Gandhi’s condition: Mahatma Gandhi extracted a commitment that socialism would not become the Congress’s official policy, and it was honoured as long as Gandhi and Patel were alive.
    5. After 1950: The theme returned, and the 1955 Avadi resolution made a socialist pattern of society the declared goal of government.
    6. Instrumentation: The goal was executed through five year plans and the licence permit quota system, which emphasised state led growth and discouraged individual entrepreneurship.

    What did four decades of state led growth actually deliver?

    1. Poverty rose: Decadal data published in 1965 showed the poverty rate had risen from 52.66 per cent to 58.60 per cent.
    2. Food rationing persisted: India was the only country still running food rationing two decades after the Second World War.
    3. Agriculture stagnated: Agricultural productivity remained among the lowest in the world.
    4. The income floor: In Parliament in 1963 it was asserted that 270 million Indians lived on three annas, that is 19 paise, a day while the Prime Minister’s pet dog cost nearly three rupees a day.
    5. Enterprise discouraged: Licensing made official approval rather than consumer demand the binding constraint on production.

    Where did ideological commitment collide with fiscal solvency?

    1. The formation: The Prime Minister of 1990 to 1991 had begun his political life under the socialist leaders Acharya Narendra Dev and Ram Manohar Lohia.
    2. The dilemma: Pledging national gold to foreign banks contradicted the economic doctrine he had held throughout that political life.
    3. The counter argument: The Reserve Bank Governor’s case was that the country ranked above the doctrine, and it prevailed.
    4. Who acted: A lame duck government running on a thin majority took the decision that kept India solvent until a reform government could be formed.
    5. Who is credited: The turnaround is attributed to the Prime Minister and Finance Minister who followed, not to the government that pledged the gold.

    How much of the 1991 collapse can be attributed to socialism alone?

    1. Oil shock: The Gulf conflict of 1990 raised crude prices and cut worker remittances from West Asia at the same time.
    2. Deposit flight: Non resident deposits were withdrawn rapidly as confidence in repayment fell.
    3. Fiscal position: The fiscal deficit had reached about 8.4 per cent of gross domestic product in 1990 to 1991, financed by borrowing.
    4. Political instability: Three governments in two years delayed every corrective decision.
    5. Model exhaustion: The licensing system had already produced four decades of low growth, so an external shock met an economy with no buffer.

    What did other countries do when the same model failed?

    1. China: The Four Modernisations introduced by Deng Xiaoping in 1978 opened agriculture, industry, defence and science and technology to market incentives, with special economic zones as the entry point for foreign capital.
    2. Soviet Union: The planned economy did not reform in time and collapsed along with the state itself in the early 1990s.
    3. Vietnam: The Doi Moi programme from 1986 replaced collective farming with household production and legalised private enterprise.
    4. Poland: The stabilisation programme of 1990 freed prices and made the currency convertible in a single step rather than in stages.

    Challenges to the post 1991 reform model

    1. Manufacturing share stagnation: Industry has not absorbed labour at the expected scale, e.g. manufacturing has remained near 17 per cent of gross value added against the 25 per cent target set under Make in India.
    2. Factor market reform stalled: Land and agricultural marketing reform remain politically blocked, e.g. the three farm laws enacted in 2020 were repealed in 2021 after a year of protest.
    3. Labour codes unimplemented: Consolidation of labour law has not translated into uniform practice, e.g. the four labour codes passed by 2020 waited years for States to notify matching rules.
    4. Disinvestment slippage: Public sector exits are announced faster than they are completed, e.g. the sale of Air India concluded in 2022 after two decades of failed attempts.
    5. Credit cycle damage: Directed and concentrated lending has repeatedly produced stress, e.g. the asset quality review of 2015 exposed non performing assets built up in infrastructure and power lending.
    6. Policy predictability: Retrospective changes deter long term capital, e.g. the retrospective tax amendment of 2012 triggered the Vodafone and Cairn arbitrations and was withdrawn only in 2021.

    Conclusion

    The crisis of 1991 was the terminal cost of a model in which official approval, not consumer demand, set the limit on production. The decisive moment came when a Prime Minister formed in socialist politics accepted that solvency outranked doctrine. Liberalisation removed the licence, but factor markets, manufacturing scale and policy predictability remain unresolved three decades later.

    What is Economic Liberalisation?

    1. About: Economic liberalisation is the removal of state controls on entry, capacity, prices and trade so that market signals rather than administrative permission allocate resources.
    2. Rationale: It addresses the shortages, rent seeking and low productivity that follow when output is capped by licence rather than by demand.
    3. Liberalisation: The first element removes industrial licensing, price controls and import restrictions on domestic producers.
    4. Privatisation: The second element transfers ownership or management of state enterprises to private hands and opens reserved sectors to private entry.
    5. Globalisation: The third element integrates the domestic economy with world markets through trade, investment and currency convertibility.

    Key Concerns Regarding Economic Liberalisation

    1. Jobless growth: Output growth has not produced proportionate formal employment, leaving a large workforce in low productivity informal work.
    2. Regional divergence: Investment concentrates in States with existing infrastructure, widening the gap with lagging States.
    3. Concentration of market power: Deregulation without strong competition enforcement allows dominant firms to entrench themselves.
    4. External vulnerability: Open capital accounts transmit global shocks quickly through portfolio flows and the exchange rate.
    5. Weak social protection: Removal of administered prices raises the burden on households where targeted transfers are incomplete.

    Constitutional Framework Governing Economic Policy in India

    1. Preamble: The word socialist, inserted by the 42nd Amendment in 1976, declares a normative economic orientation without prescribing a specific model.
    2. Article 19(1)(g): Guarantees the freedom to practise any profession or carry on any occupation, trade or business.
    3. Article 19(6): Permits reasonable restrictions on that freedom, including the creation of a complete or partial state monopoly in any trade.
    4. Article 39(b): Directs that ownership and control of material resources be distributed to best subserve the common good.
    5. Article 39(c): Directs that the operation of the economic system not result in concentration of wealth to the common detriment.
    6. Article 31C: Protects laws made to give effect to Articles 39(b) and 39(c) from challenge on specified fundamental rights grounds.
    7. Article 246 with Union List Entry 52: Places industries whose control by the Union is declared expedient in the public interest within Parliament’s exclusive competence, which is the basis of central industrial licensing.
    8. Article 301: Guarantees freedom of trade, commerce and intercourse throughout the territory of India.

    Laws and Rules Governing Industrial Policy in India

    1. Industries (Development and Regulation) Act, 1951: Created the licensing system for industrial capacity; it remains in force but licensing now applies to only four industries.
    2. Industrial Policy Resolution, 1956: Classified industries into three schedules and reserved the commanding heights for the public sector.
    3. Monopolies and Restrictive Trade Practices Act, 1969: Restricted expansion by large firms above an asset threshold, and was repealed and replaced by the Competition Act, 2002.
    4. Foreign Exchange Regulation Act, 1973: Capped foreign equity and criminalised exchange violations, and was replaced by the Foreign Exchange Management Act, 1999, which shifted violations from crime to civil penalty.
    5. New Industrial Policy, 1991: Abolished industrial licensing except for a short list, opened reserved sectors and raised the automatic route for foreign investment.
    6. Competition Act, 2002: Shifted regulation from restricting size to prohibiting anti competitive agreements and abuse of dominance.
    7. Insolvency and Bankruptcy Code, 2016: Created a time bound resolution process, which supplied the exit mechanism the licence era economy never had.

    Back2Basics: The 1991 New Economic Policy

    1. Trigger: Foreign exchange reserves below $1 billion and import cover of about two weeks.
    2. Gold pledge: About 67 tonnes of gold were pledged to the Bank of England and to a Swiss bank across two consignments in 1991.
    3. Devaluation: The rupee was devalued in two steps on 1 and 3 July 1991, by roughly 9 per cent and 11 per cent.
    4. External support: India drew on an International Monetary Fund standby arrangement, conditioned on fiscal correction and structural reform.
    5. Industrial delicensing: Licensing was abolished for all but 18 industries, a list since reduced to four.
    6. Trade and investment: Import tariffs were cut sharply and foreign direct investment up to 51 per cent was permitted through an automatic route in listed industries.

    Government Initiatives for Industrial Growth

    1. Make in India: Launched to raise manufacturing’s share of output and employment through sector specific facilitation.
    2. Production Linked Incentive schemes: Pay incentives on incremental sales in named sectors such as electronics, pharmaceuticals and solar modules.
    3. National Single Window System: Consolidates central and State approvals for a new industrial project into one application portal.
    4. PM GatiShakti National Master Plan: Coordinates infrastructure planning across ministries to reduce logistics cost for industry.
    5. Jan Vishwas (Amendment of Provisions) Act, 2023: Decriminalised a large number of minor business offences to reduce compliance risk.
    6. Startup India: Provides tax benefits, a fund of funds and simplified compliance for recognised new enterprises.

    Key Facts about the 1991 Reforms

    1. The Budget of 1991: The reform Budget was presented in July 1991 and paired fiscal correction with trade liberalisation.
    2. Licensing today: Only four industries still require an industrial licence, including alcoholic drinks, tobacco products, defence and aerospace equipment, and industrial explosives.
    3. Reserve position now: Foreign exchange reserves stand at about $700 billion, with gold holdings of 880 tonnes.
    4. Rate of change: Reserves more than doubled over the last twelve years.
    5. Preamble litigation: The presence of the word socialist in the Preamble has been repeatedly challenged, and the Supreme Court has declined to read it as mandating a specific economic model.

    Challenges in India’s Industrial Economy

    1. Scale deficit in manufacturing: Firms stay small to retain benefits tied to size, e.g. the majority of registered manufacturing units remain micro enterprises with fewer than ten workers.
    2. Import dependence in key inputs: Assembly has grown faster than component making, e.g. India still imports the bulk of active pharmaceutical ingredients and advanced electronic components from China.
    3. Logistics cost: Freight moves disproportionately by road, e.g. rail’s share of freight traffic has fallen steadily since the 1950s, raising delivered cost for bulk industry.
    4. Land acquisition friction: Project land remains slow and contested to assemble, e.g. the Nandigram and Singur episodes in West Bengal ended two large industrial projects outright.
    5. Skills mismatch: Formal training does not match employer requirements, e.g. employability surveys repeatedly report that a minority of engineering graduates are job ready without retraining.
    6. Power reliability and cost: Industrial tariffs cross subsidise other consumers, e.g. energy intensive units in several States run captive diesel or solar capacity to avoid grid interruption.

    Way Forward

    1. Complete factor market reform: Move on land assembly, tenancy and labour rule notification instead of amending statute without implementation.
    2. Tie incentives to competitiveness: Structure production incentives to expire on a fixed schedule so that supported sectors face world prices.
    3. Deepen component ecosystems: Extend support beyond final assembly to component, material and capital goods manufacturing.
    4. Cut logistics cost: Shift bulk freight to rail and coastal shipping through dedicated corridors and multimodal terminals.
    5. Stabilise tax and regulatory expectations: Rule out retrospective taxation by statute and publish advance rulings to reduce litigation.
    6. Align skilling with employers: Fund apprenticeships tied to firm level hiring rather than to enrolment targets.

    “[2017, GS3, 15 marks] “Industrial growth rate has lagged behind in the overall growth of Gross-Domestic-Product (GDP) in the post-reform period” Give reasons. How far the recent changes is Industrial Policy are capable of increasing the industrial growth rate?”

  • Twelve years of Pradhan Mantri Jan Dhan Yojana and the JAM architecture

    Why in the News

    The Pradhan Mantri Jan Dhan Yojana (PMJDY) completed twelve years on Independence Day 2026, having crossed 58 crore accounts with deposits of about ₹3 lakh crore. The milestone exposes the distance between owning a bank account and actually using savings, credit and insurance through it.

    What is the Pradhan Mantri Jan Dhan Yojana (PMJDY)?

    1. About: National financial inclusion mission announced from the ramparts of the Red Fort on 15 August 2014 and formally launched at Vigyan Bhawan on 28 August 2014.
    2. Core entitlement: Every household in India was to have a bank account, a RuPay debit card and insurance cover.
    3. Zero balance design: The account can be opened and held without any minimum balance requirement.
    4. Credit attachment: An overdraft facility of up to ₹10,000 is attached to the account so that it functions as more than a deposit box.
    5. Administering authority: The Department of Financial Services, Ministry of Finance, runs the scheme through public and private sector banks.

    What is Antyodaya?

    1. Definition: The principle that the most deprived person is the most deserving claimant on the fruits of development.
    2. Origin: The concept was propounded by both Mahatma Gandhi and Deendayal Upadhyaya.

    What is the JAM trinity?

    1. Definition: The linking of Jan Dhan bank accounts, Aadhaar digital identity and Mobile connectivity into one delivery rail.
    2. Function: It allows a government payment to reach a verified individual account without passing through any intermediate handling point.

    What is Direct Benefit Transfer (DBT)?

    1. Definition: The transfer of a subsidy or entitlement directly into the beneficiary’s bank account instead of through a physical distribution chain.
    2. Purpose: It removes the intermediate custody points at which cash and commodity leakage historically occurred.

    What is Digital Public Infrastructure (DPI)?

    1. Definition: Publicly governed digital rails for identity, payments and data sharing on which both government and private services are built.
    2. The Indian stack: Aadhaar supplies identity, the Unified Payments Interface (UPI) supplies payments, and Jan Dhan accounts supply the account layer.

    Why did political independence not deliver financial access to millions of Indians?

    1. A distant formal system: Decades after 1947, a bank account, formal credit, insurance and a reliable channel to receive government support could not be taken for granted.
    2. Leakage in delivery: A former Prime Minister acknowledged that when a rupee was sent from Delhi, only 15 paise reached the intended recipient.
    3. No delivery address: Without an account, a citizen had no address to which government money could be sent directly.
    4. Exclusion by balance: Minimum balance requirements made the formal banking system unusable for people whose incomes were small and irregular.
    5. Incomplete freedom: Political freedom remains incomplete where a citizen cannot save securely, receive money directly or reach the institutions through which economic opportunity flows.

    Why is access to formal finance treated as a responsibility of the state?

    1. The Chanakya formulation: The launch invoked Sukhasya moolam dharmah, Dharmasya moolam artha, Arthasya moolam rajyam, that the root of happiness is dharma, the root of dharma is artha, and the root of artha is the state.
    2. The claim it carries: Economic means are fundamental to human well being, so creating access to those means is a state obligation and not a discretionary favour.
    3. The Antyodaya test: The architecture was built on the rule that the last person in the queue should not remain outside the system.
    4. Entry point, not benefit: The account was designed as an entry point into the formal economy, not as one more transfer to be received.
    5. A second independence: Sixty seven years after 1947, financial and digital literacy was placed at the centre of the Independence Day address as unfinished national business.

    How was the Jan Dhan account designed so that the poorest could keep it?

    1. No entry cost: The zero balance account meant that having little money was no longer a reason to stay outside the banking system.
    2. A usable instrument: The RuPay debit card converted the account from a passbook into a transacting instrument.
    3. Small credit line: The overdraft facility gave the holder a formal alternative to the moneylender for a consumption shortfall.
    4. Embedded insurance: A ₹2 lakh accident insurance cover was attached to the RuPay card without a separate premium payment.
    5. Household unit: Coverage was defined at the household level, so the target was universality rather than a beneficiary list.

    What do twelve years of numbers show about the scale of the first step?

    1. Account base: The scheme had crossed 58 crore accounts by July 2026.
    2. Deposits held: Balances in these accounts run into about ₹3 lakh crore.
    3. Women’s share: More than half of all Jan Dhan accounts are held by women.
    4. Geographic spread: Roughly three fourths of the accounts are in rural and semi urban areas.
    5. Average balance: The two figures together imply an average balance of about ₹5,200 per account.

    How did a bank account become the first layer of a national digital infrastructure?

    1. First layer of JAM: Jan Dhan supplied the account layer on which Aadhaar identity and mobile connectivity were stacked.
    2. A direct channel: Once accounts were linked to identity and mobile, the government gained a direct route through which benefits could reach a named individual.
    3. Transformed transfers: This changed what Direct Benefit Transfer could actually do, from a pilot idea to the default mode of payment.
    4. Continuity with UPI: The same infrastructure carried the Unified Payments Interface into everyday retail payments.
    5. Cross border reach: A merchant accepting a UPI payment in France in 2026 and a first time account holder of 2014 sit on the same financial infrastructure.

    Does opening accounts amount to financial inclusion?

    1. The ownership side: With 58 crore accounts and near universal household coverage, the question of formal access has been settled.
    2. The usage side: Financial inclusion means participation in savings, payments, credit, insurance and economic opportunity, which an account count does not measure.
    3. What the balances say: An average balance of about ₹5,200 indicates that the account works mainly as a receiving channel rather than as a savings instrument.
    4. The credit gap: The overdraft remains the least used component of the design, so formal credit has not displaced the informal lender for most holders.
    5. Dormancy: Close to a fifth of Jan Dhan accounts have been reported inoperative, which means the rail exists but is not always carrying traffic.

    Why does a bank account function as a marker of identity?

    1. Recognition with respect: The account gave people from marginalised sections a formal record of existence that the system had rarely offered them.
    2. Visibility: It made those on the periphery visible and counted within the financial system.
    3. The scheme’s own framing: The tagline Mera khaata, bhagya vidhata, my account the destiny maker, states the claim that the account itself changes standing.
    4. Forward link: Financial inclusion is now positioned as an input into the Viksit Bharat 2047 goal.

    Challenges to the Pradhan Mantri Jan Dhan Yojana

    1. Inoperative accounts: A large share of accounts records no customer induced transaction for long periods, e.g. the Finance Ministry ran a nationwide fresh KYC drive in 2024 covering roughly 11 crore inoperative Jan Dhan accounts.
    2. Overdraft under use: Banks sanction the overdraft to a small fraction of eligible holders because these borrowers carry no credit score, e.g. lenders treat a zero balance account with irregular inflows as an unscorable credit risk.
    3. Last mile agent viability: Business correspondents earn thin commissions on low value transactions, e.g. Bank Mitras in remote blocks handle deposits too small to cover travel and cash carrying costs.
    4. Duplicate accounts: The 2014 enrolment drive produced multiple accounts per household, e.g. families opened a second account to capture the accident cover, inflating the headline count.
    5. Unclaimed insurance: The accident cover lapses through ignorance of its conditions, e.g. holders do not know the RuPay card must have been used within a qualifying period before the accident for the claim to stand.
    6. Misuse of dormant accounts: Idle zero balance accounts are rented out as conduits for fraud proceeds, e.g. mule account networks flagged by the Indian Cyber Crime Coordination Centre have used dormant no frills accounts.

    Conclusion

    Twelve years of Jan Dhan have settled the question of access and left the question of use open. The visible achievement is 58 crore accounts; the durable one is the rail that now carries Direct Benefit Transfer and UPI. The unfinished work is converting a receiving account into a working relationship with savings, credit and insurance.

    What is Financial Inclusion?

    1. About: Financial inclusion is the delivery of banking, payment, credit, insurance and pension services to every section of society at an affordable cost.
    2. Rationale: Exclusion from formal finance forces households into informal credit at punitive rates and denies the state a clean channel to transfer entitlements.
    3. Access: The first dimension is the availability of a formal account and a service point within reach of the household.
    4. Usage: The second dimension is the actual frequency and depth of transactions, savings and borrowing through that account.
    5. Quality: The third dimension covers consumer protection, grievance redress and financial literacy, and it is the dimension the Reserve Bank of India Financial Inclusion Index weights lowest.

    Key Concerns Regarding Financial Inclusion

    1. Access without depth: Account ownership figures rise faster than transaction, credit and insurance uptake.
    2. Credit exclusion persists: Formal small ticket credit remains scarce, so the informal lender survives even where the account exists.
    3. Digital divide: Feature phone users, elderly holders and low literacy users cannot operate app based interfaces without assistance.
    4. Agent network fragility: The business correspondent model depends on commissions too thin to sustain service in low density areas.
    5. Fraud exposure: New entrants to the formal system are the most vulnerable to phishing, mule account recruitment and unauthorised debits.

    Laws and Rules Governing Financial Inclusion in India

    1. Reserve Bank of India Act, 1934: Establishes the central bank and its power to direct banking policy, including branch authorisation and priority sector norms.
    2. Banking Regulation Act, 1949: Governs the licensing and conduct of banks, and is the basis for the Basic Savings Bank Deposit Account norms that permit zero balance accounts.
    3. Aadhaar Act, 2016: Section 7 permits the use of Aadhaar authentication as a condition for receiving a subsidy or benefit funded from the Consolidated Fund of India.
    4. Payment and Settlement Systems Act, 2007: Gives the Reserve Bank authority to regulate payment systems, and is the legal basis for the National Payments Corporation of India operating UPI, RuPay and the Aadhaar Enabled Payment System.
    5. Prevention of Money Laundering Act, 2002 and Rules: Prescribe the customer identification and record keeping obligations that govern account opening and periodic verification.

    Back2Basics: Pradhan Mantri Jan Dhan Yojana

    1. Ministry or Department: Ministry of Finance, Department of Financial Services.
    2. Launch year: 2014, announced on 15 August and launched on 28 August.
    3. Aims and objectives: Financial inclusion through zero balance accounts, insurance, overdraft and micro pension, forming the first leg of the JAM trinity.
    4. Targeted beneficiaries: Unbanked adults, with a household level coverage target.
    5. Key features: Basic Savings Bank Deposit accounts, an overdraft of up to ₹10,000, an accident cover of ₹2 lakh, and RuPay and Aadhaar Enabled Payment System interoperability.
    6. Record: The scheme holds a Guinness World Record for the most bank accounts opened in a single week during its 2014 rollout.

    Government Initiatives for Financial Inclusion

    1. Pradhan Mantri Jeevan Jyoti Bima Yojana: Renewable one year life cover for account holders aged 18 to 50 at a low annual premium.
    2. Pradhan Mantri Suraksha Bima Yojana: Accident death and disability cover for account holders aged 18 to 70 at a nominal annual premium.
    3. Atal Pension Yojana: Guaranteed minimum pension for unorganised sector workers, delivered through the same bank accounts.
    4. Pradhan Mantri Mudra Yojana: Collateral free institutional credit to micro enterprises under the Shishu, Kishore and Tarun categories.
    5. Stand Up India: Bank loans for greenfield enterprises promoted by Scheduled Caste, Scheduled Tribe and women entrepreneurs.
    6. PM SVANidhi: Working capital loans to street vendors, extending formal credit to a category with no collateral.

    Key Facts about Financial Inclusion in India

    1. JAM as a term: The JAM trinity entered official vocabulary through the Economic Survey that followed the launch of Jan Dhan.
    2. Financial Inclusion Index: The Reserve Bank publishes an annual composite index built on Access, Usage and Quality, with Usage carrying the largest weight.
    3. Priority Sector Lending: Scheduled commercial banks must direct 40 per cent of adjusted net bank credit to priority sectors, including weaker sections.
    4. Payments banks: A separate bank category was licensed to accept small deposits and offer payments without lending, expanding the service point network.
    5. Aadhaar Enabled Payment System: It allows cash withdrawal at a business correspondent point using fingerprint authentication alone, without a card or a branch.

    Challenges in Financial Inclusion in India

    1. Thin rural service points: Banking outlets remain concentrated in towns, e.g. aspirational districts in central India depend on a single business correspondent covering several villages.
    2. Low insurance penetration: Micro insurance uptake stays low despite nominal premiums, e.g. renewal rates for the low cost life and accident schemes fall sharply after the first auto debit year.
    3. Weak grievance redress: New account holders rarely reach an effective complaint channel, e.g. unauthorised debit complaints from rural holders often stop at the branch level and never reach the Banking Ombudsman.
    4. Connectivity failures: Authentication depends on network availability, e.g. Aadhaar Enabled Payment System withdrawals fail in hilly and forest blocks where mobile data is intermittent.
    5. Financial literacy gap: Holders do not understand interest, penalty and claim conditions, e.g. overdraft users treat the limit as a grant rather than as a loan carrying interest.
    6. Gendered control of accounts: Women hold accounts that male household members operate, e.g. transfers under women centred schemes are frequently withdrawn by another family member at the agent point.

    Way Forward

    1. Shift the metric: Measure the scheme on transaction frequency, credit uptake and insurance claims settled rather than on accounts opened.
    2. Build alternative credit scoring: Use account transaction history and Account Aggregator consented data to underwrite the overdraft for holders with no formal credit record.
    3. Fix agent economics: Revise business correspondent commissions to reflect distance and transaction cost so that remote service points remain viable.
    4. Run a dormancy clearance cycle: Institutionalise periodic verification and reactivation drives instead of one off campaigns.
    5. Embed literacy in delivery: Attach a short standardised explanation of overdraft interest and insurance claim conditions to every account and card issued.
    6. Harden the rail against misuse: Apply transaction pattern monitoring to dormant zero balance accounts to detect mule account recruitment early.

    “[2016, GS3, 12.5 marks] Pradhan Mantri Jan-Dhan Yojana (PMJDY) is necessary for bringing unbanked to the institutional finance fold. Do you agree with this for financial inclusion of the poorer section of the Indian society? Give arguments to justify your option.”

  • WPI inflation eases to 9.78% in July, first month-on-month softening since October 2025

    Why in the News

    Wholesale Price Index (WPI) inflation eased to 9.78% in July 2026 from 9.87% in June, mainly due to lower fuel and power inflation.

    What is WPI?

    • Measures price changes of goods traded in bulk between businesses.
    • Covers only goods, not services.
    • Three groups: Primary Articles, Fuel & Power, Manufactured Products.
    • Base year: 2011-12.
    • Released by the Office of the Economic Adviser, Ministry of Commerce and Industry.
    • Weights: Manufactured Products 64.23%, Primary Articles 22.62%, Fuel & Power 13.15%.

    July 2026 Trends

    • Fuel & Power: 20.05%, down from 27.41%.
    • Manufactured Products: 8.29%, up from 7.48%.
    • Food Articles: 5.44%, marginally down from 5.49%.
    • PPI: Producer Price Index remained at 9.6%.

    WPI vs CPI

    • WPI: Wholesale prices of goods; excludes services.
    • CPI: Retail prices of goods and services; used as India’s inflation-targeting anchor.
    • CPI target: 4% with a tolerance band of ±2%.

    Why is inflation a concern?

    • Imported crude oil shocks
    • Food price volatility
    • Supply-chain constraints
    • Fertiliser import dependence
    • Input cost pressures

    “[2010] With reference to India, consider the following Statements:

    1. The Wholesale Price Index (WPI) in India is available on a monthly basis only

    2. As compared to Consumer Price Index for Industrial Workers (CPI (IW)), the WPI gives less weight to food articles.

    Which of the statements given above is/are correct?

    (a) 1 only

    (b) 2 only

    (c) Both 1 and 2

    (d) Neither 1 nor 2.

  • RBI shuts FCNR(B) dollar-rupee swap window early after $52.3 billion inflow

    Why in the News

    The Reserve Bank of India (RBI) will close its special US dollar-rupee swap window for fresh Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits on 31 August 2026, after attracting $52.3 billion.

    What is the FCNR(B) Swap Window?

    1. Banks mobilise fresh 3 to 5 year FCNR(B) deposits in foreign currency.
    2. Banks swap the dollars with the RBI for rupees at a concessional rate.
    3. The RBI returns the dollars when the swap matures.
    4. The concessional rate covers the bank’s hedging cost.

    Key Definitions

    • FCNR(B): Foreign Currency Non-Resident (Bank) term deposit held by NRIs or Persons of Indian Origin in foreign currency.
    • Hedging Cost: Cost incurred to protect against exchange-rate fluctuations.
    • ECB: External Commercial Borrowing, or loans raised by eligible Indian entities from non-resident lenders.
    • OFCB: Overseas Foreign Currency Borrowing, or foreign currency funds borrowed by Indian banks from overseas markets.
    • Balance of Payments (BoP): Record of all economic transactions between residents of a country and the rest of the world during a period.

    Why was the window closed early?

    • FCNR(B) route attracted $52.3 billion.
    • Total inflows through the three components reached $56.846 billion by 13 August.
    • High mobilisation indicated strong response.
    • Swaps against already mobilised deposits remain possible until 11 September.

    Impact on Forex Reserves

    • India’s foreign exchange reserves reached around $707 billion as of 7 August, with foreign currency assets driving much of the increase.
    • However, FCNR(B) inflows are debt creating and will eventually require repayment in foreign currency.

    “[2021] Consider the following:

    1. Foreign currency convertible bonds

    2. Foreign institutional investment with certain conditions

    3. Global depository receipts

    4. Non-resident external deposits.

    Which of the above can be included in Foreign Direct Investments?

    (a) 1, 2 and 3

    (b) 3 only

    (c) 2 and 4

    (d) 1 and 4.

  • States convert free-power subsidy into capital support for rooftop solar under PM Surya Ghar’s Utility-Led Aggregation model

    Why in the News

    States such as Uttar Pradesh, Andhra Pradesh and Bihar are shifting recurring free-power subsidies towards one-time capital support for rooftop solar under the Utility-Led Aggregation (ULA) model.

    What is PM Surya Ghar Yojana?

    • Ministry: Ministry of New and Renewable Energy (MNRE)
    • Launch: 13 February 2024
    • Target: 1 crore households with grid-connected rooftop solar by March 2027.
    • Outlay: ₹75,021 crore.
    • Benefit: Up to 300 units of free electricity per month.
    • Central subsidy: ₹30,000/kW up to 2 kW, plus ₹18,000 for the third kW, capped at ₹78,000.
    • Eligibility: Household must have a suitable roof and grid connection.

    What is ULA?

    • Utility-Led Aggregation (ULA) is a model where the distribution company (DISCOM) aggregates household demand and arranges rooftop solar installations at scale.
    • States convert recurring electricity subsidies into one-time capital support for installing solar systems.

    Why the Shift?

    • Reduces recurring State subsidy burden.
    • Creates a 25-year generating asset.
    • Reduces DISCOM’s cost of supplying subsidised daytime electricity.
    • Aggregated procurement can reduce installation costs.

    Current Progress

    • 52 lakh households had installed rooftop systems by 13 August.
    • About 2 lakh of 30 lakh ULA installations are complete.
    • Target: 1 crore households by March 2027.

    Key Definitions

    • Rooftop Solar: Solar photovoltaic system installed on a building roof and connected to the electricity distribution network.
    • Net Metering: Allows surplus rooftop electricity exported to the grid to be adjusted against electricity consumed.
    • DISCOM: Distribution Company responsible for electricity distribution.
    • ALMM: Approved List of Models and Manufacturers for eligible solar modules.

    Challenges

    • Financial stress of DISCOMs
    • High upfront installation costs
    • Limited rooftop access for tenants and apartment residents
    • No battery-storage subsidy
    • Grid and transformer capacity constraints
    • Dependence on imported solar cells and wafers

    “[2025] Consider the following statements about ‘PM Surya Ghar Muft Bijli Yojana’:

    I. It targets installation of one crore solar rooftop panels in the residential sector.

    II. The Ministry of New and Renewable Energy aims to impart training on installation, operation, maintenance and repairs of solar rooftop systems at grassroot levels.

    III. It aims to create more than three lakhs skilled manpower through fresh skilling and up-skilling, under scheme component of capacity building.

    Which of the statements given above are correct?

    (a) I and II only

    (b) I and III only

    (c) II and III only

    (d) I, II and III.