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GS Paper: GS3

  • India’s rising dependence on U.S. LPG

    Why in the news?

    The Union Minister of Petroleum and Natural Gas stated that 67 per cent of India’s liquefied petroleum gas (LPG) now comes from the United States, a drastic shift from an earlier decision to source about 10 per cent of cooking gas there. The pivot, driven by the crisis in the Strait of Hormuz, exposes that LPG security cannot be anchored to a single geography while dependence on the United States carries risks of its own.

    What is Liquefied Petroleum Gas (LPG) and how is India’s supply structured?

    1. What it is: LPG is a mix of propane and butane used mainly as cooking gas in India. It is a politically volatile fuel because shortages carry direct social and political consequences.
    2. Import dependence: India, the world’s second largest importer of LPG, imports about 60 per cent of the LPG it consumes, with nearly 90 per cent of that passing through the Strait of Hormuz.
    3. Sourcing shift: State run refiners signed a long term deal for 2.2 million tonnes of United States LPG in 2026, raising the United States share to two thirds of imports.

    Why did India pivot to United States LPG?

    1. Hormuz disruption: Disruptions in the narrow Strait of Hormuz threatened the Gulf supply route through which most Indian LPG passes.
    2. Collapse in West Asian flows: India’s LPG imports from West Asia fell almost 85 per cent between February and June 2026.
    3. Partial offset: India replaced the lost flows by lifting imports from other sources, including the United States, from where June imports reached 0.77 million metric tonnes.
    4. Availability over price: Because cooking gas is politically sensitive, the priority is making it available rather than optimising cost, so costlier United States cargoes became attractive during the crisis.

    Why is overdependence on the United States risky?

    1. Energy as leverage: Relying more on a partner that views ties through the lens of national interest risks energy being used as a bargaining tool in bilateral trade talks.
    2. History of coercive tools: The United States has historically used financial sanctions, export controls, and technology denial as foreign policy tools, seen in Iran, Iraq, Cuba, North Korea, Syria, Russia, Venezuela, Myanmar, Libya, Sudan, and Afghanistan.
    3. Third country reach: The Lindsey O. Graham Sanctioning Russia and Iran Act of 2026, proposing tariffs of up to 100 per cent on the top five buyers of Russian oil and natural gas, is a non tariff trade barrier that can influence third country transactions.
    4. Monetary spillover: Import dependence complicates monetary policy, as elevated United States inflation could keep the Federal Reserve’s rates higher for longer, strengthening the dollar and raising the rupee cost of each cargo.

    Why does proximity pricing matter?

    1. Definition: Proximity pricing is a market benefit where goods cost less when bought from a nearby place. Shorter travel distance means lower shipping costs and faster delivery.
    2. Loss of distance advantage: United States shipments take 25 to 35 days against 5 to 10 days from the Gulf, so India loses the advantage of proximity pricing.
    3. Two price benchmarks: United States LPG is Mont Belvieu propane based, while West Asian supply follows the Saudi Aramco Contract Price, and the Gulf fuel is usually cheaper at the disembarking point due to the shorter distance.
    4. Temporary reversal: Geopolitical risk has temporarily inflated West Asian supply costs, with the Saudi Contract Price rising from about 543 dollars per tonne in February to around 790 dollars in June, making United States cargoes competitive despite the longer voyage.

    How does India balance availability with cost optimisation?

    1. The core trade off: For a politically volatile fuel, ensuring supply outweighs cost optimisation, so India accepted higher priced United States cargoes to cut supply risk.
    2. Residual exposure: India may have cut Hormuz risk, but remains exposed to commodity price, dollar, and freight risks.
    3. Under recovery pressure: If domestic prices are held down while global prices rise amid rupee depreciation, oil companies’ under recoveries expand, worsening fiscal and external sector stress.

    What are the challenges to India’s LPG security?

    1. Single supplier concentration: Two thirds reliance on one country recreates the concentration risk the pivot was meant to solve.
    2. Stagnant domestic output: LPG production has stayed nearly flat while consumption grows, widening the import gap.
    3. Chokepoint vulnerability: Heavy dependence on the Strait of Hormuz leaves Gulf sourced volumes exposed to any regional conflict.
    4. Fiscal drain: Accumulated under recoveries of state oil marketing companies exceeded Rs 59,000 crore as of 31 July 2026.
    5. Currency and freight risk: Dollar denominated pricing and long shipping routes expose landed costs to exchange rate and freight swings.
    6. Thin strategic reserves: India lacks large dedicated LPG strategic reserves to buffer sudden supply shocks.

    Conclusion

    Energy security is not about replacing one supplier with another but ensuring no single player holds all the cards. India must strengthen local production, bolster multiple supply chains, and build more strategic reserves. Australia offers a shorter Indo Pacific route outside Hormuz, though its export volumes remain small.

    Back2Basics

    Energy Security and LPG in India (Foundational Context)

    1. About: Energy security means assured availability of energy at affordable prices with resilience against supply shocks. LPG security is a subset covering cooking gas access for households.
    2. Scale: Public sector oil marketing companies serve 33.14 crore active domestic LPG customers, growing at a compound annual growth rate of 7.6 per cent between 2015 and 2026.
    3. Consumption gap: LPG production was 4.3 million metric tonnes against consumption of 6.5 million metric tonnes in the first quarter of FY27, with the 2026-27 consumption estimate at 34,692 thousand metric tonnes.

    Key Facts about India’s LPG Sector

    1. Oil marketing companies: Indian Oil, Bharat Petroleum, and Hindustan Petroleum are the three public sector oil marketing companies distributing LPG.
    2. PPAC: The Petroleum Planning and Analysis Cell tracks LPG consumption, customer base, and pricing data.
    3. Crisis production ramp up: At the peak of the crisis, oil marketing companies raised cumulative daily LPG production from 34,000 metric tonnes to 55,000 metric tonnes.
    4. Output jump: First quarter FY27 LPG production rose 35.73 per cent year on year to 4.26 million metric tonnes after refineries diverted propane and butane streams into the LPG pool.

    Government Initiatives for LPG and Energy Security

    1. Pradhan Mantri Ujjwala Yojana: Provides free LPG connections to women from below poverty line households to promote clean cooking.
    2. PAHAL (DBTL): Directly transfers LPG subsidy to beneficiary bank accounts to curb diversion.
    3. Strategic Petroleum Reserves: Underground crude storage to cushion supply disruptions.
    4. Ethanol Blending Programme: Reduces import dependence in the broader energy basket.
    5. Long term supply agreements: State refiner contracts diversifying LPG sourcing across geographies.

    Way Forward

    1. Boost domestic output: Maximise refinery LPG yield and invest in production capacity to narrow the import gap.
    2. Diversify suppliers: Spread sourcing across the Gulf, the United States, Australia, and others to avoid single supplier dependence.
    3. Expand strategic reserves: Build dedicated LPG storage to buffer sudden shocks.
    4. Hedge price and currency risk: Use financial instruments to manage commodity, dollar, and freight exposure.
    5. Secure alternate routes: Develop supply chains outside the Strait of Hormuz to reduce chokepoint vulnerability.

    PYQ Relevance

    [UPSC 2025] “Energy security constitutes the dominant kingpin of India’s foreign policy, and is linked with India’s overarching influence in Middle Eastern countries.” How would you integrate energy security with India’s foreign policy trajectories in the coming years?

    Linkage: The PYQ directly relates to energy security as a key driver of India’s foreign policy, especially in West Asia. India’s shift to US LPG highlights the need for supplier diversification, alternate routes and strategic autonomy in energy diplomacy.

  • As AI threat loomed, UPI players flagged rising security costs

    Why in News?

    UPI platforms have flagged rising cybersecurity costs, especially from AI-enabled fraud, renewing demands to allow Merchant Discount Rate (MDR) on UPI.

    What is MDR?

    • MDR: Fee paid by merchants to banks/payment providers for processing digital payments.
    • UPI: MDR is currently zero, so merchants pay no transaction fee.
    • Costs are borne by banks, payment apps and government reimbursements.

    Why are Security Costs Rising?

    • AI-enabled fraud can make sophisticated cyberattacks cheaper and easier.
    • Security accounts for 20%+ of UPI platform costs.
    • Security infrastructure costs around 10 to 20 paise per transaction.
    • Dependence on imported AI/cloud tools adds dollar and currency risks.
    • Rising transaction volumes keep security expenditure high.

    Why Allow MDR?

    • UPI infrastructure is not costless and someone must bear its cost.
    • Reduces dependence on uncertain government subsidies.
    • Provides dedicated funding for cybersecurity and system resilience.

    Concerns

    • Fees on small-value transactions could push users back to cash.
    • Higher costs may disproportionately affect price-sensitive consumers.
    • Poorly designed MDR could weaken UPI’s role as a public digital infrastructure.
    • Foreign AI security tools create strategic and currency dependence.

    UPI: Back2Basics

    • UPI: Real-time interbank payment system developed by NPCI.
    • Enables instant P2P and P2M payments.
    • NPCI: Umbrella organisation for India’s retail payment systems, established in 2008.
    • Key systems: UPI, RuPay, IMPS, BBPS and FASTag.
    • Regulated by RBI under the Payment and Settlement Systems Act, 2007.

    “[2026] Which one of the following statements about Unified Payments Interface (UPI) and Central Bank Digital Currency (Digital Rupee) is NOT correct?

    (a) UPI is a real-time payment system but Digital Rupee is akin to sovereign paper currency

    (b) In case of UPI, settlement for end users happens instantly; in case of Digital Rupee, wallet balance gets transferred to another wallet (no traditional settlement)

    (c) UPI transactions are recorded by banks and reflected in bank statements; in case of Digital Rupee, no data is captured in bank statements

    (d) In both the cases (UPI and Digital Rupee), the liability lies with the users and their respective banks

  • India’s first privately-built FFSC rocket engine signals a new dawn in space flight

    Why in the News

    Bengaluru-based Astrobase Space Technologies unveiled EVEREST, India’s first privately built 800 kN Full-Flow Staged Combustion (FFSC) LOX-Methane engine on 7 August 2026. India is now the fourth country after Russia, the US and China with FFSC technology.

    What is an FFSC Engine?

    1. About: An advanced liquid rocket engine architecture offering high thrust and efficiency.
    2. Full-flow: Fuel and oxidiser pass through separate pre-burners, driving turbopumps before entering the main chamber.
    3. Advantage: Almost all propellant contributes to thrust, improving efficiency and reusability.

    What is LOX-Methane?

    • LOX: Liquid Oxygen as oxidiser.
    • Methane: Fuel that burns relatively cleanly, reducing engine deposits and aiding faster refurbishment and turnaround.

    What is IN-SPACe?

    • Indian National Space Promotion and Authorisation Centre, an autonomous agency under the Department of Space.
    • Acts as a single-window agency to promote and authorise private space activities.
    • Astrobase received support through its Technology Adoption Fund.

    Why is EVEREST Significant?

    1. Technology: Makes India the 4th FFSC-capable nation.
    2. Reusability: Suitable for reusable launch vehicles with precise throttle control.
    3. Capacity: Could enable reusable systems carrying up to 30 tonnes to LEO.
    4. Manufacturing: Uses advanced manufacturing, including large-scale 3D printing.
    5. Timeline: Development began in 2024; integrated hot-fire tests are planned at Anantapur, with first flight targeted for December 2028.

    Global Comparison

    • Russia: Pioneer in FFSC technology.
    • USA: SpaceX’s Raptor is the only operational FFSC engine.
    • China: LandSpace has developed a commercial high-thrust FFSC engine.
    • India: EVEREST marks its entry into FFSC technology.

    Private Space Sector in India

    • 2020 reforms: Opened space activities to private players through IN-SPACe.
    • Indian Space Policy 2023: Enables greater private participation across the space value chain.
    • NSIL: Commercial arm of the Department of Space.
    • Firms such as Skyroot Aerospace and Agnikul Cosmos are developing indigenous launch technologies.

    “[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

  • For energy security, the way forward is not public or private, but both

    Why in the News

    India’s ethanol blending has reached 20%, ahead of the 2030 target. It has displaced 310 lakh tonnes of imported crude, saved over ₹1.90 lakh crore in foreign exchange and transferred over ₹1.6 lakh crore to farmers.

    What is the Ethanol Blended Petrol (EBP) Programme?

    • EBP: Ethanol Blended Petrol Programme blends ethanol, mainly produced from sugarcane and grains, with petrol.
    • E20: 20% ethanol blending has been achieved ahead of schedule.
    • Benefits: Reduces crude imports, supports farmers and lowers emissions.

    What are Strategic Petroleum Reserves (SPR)?

    • SPR: Strategic Petroleum Reserves are underground crude oil storage facilities used as an insurance against supply disruptions.
    • They provide a temporary buffer and must eventually be replenished.

    What has Ethanol Blending Achieved?

    • 20% blending achieved.
    • 310 lakh tonnes of crude imports displaced.
    • ₹1.90 lakh crore+ foreign exchange saved.
    • ₹1.6 lakh crore+ transferred to farmers.
    • 930 lakh tonnes+ CO₂ emissions avoided.

    Why Both Public and Private Players?

    • ONGC: Oil and Natural Gas Corporation, a major state-owned upstream producer.
    • OIL: Oil India Limited, another major state-owned upstream producer.
    • Public sector: Provides strategic control and supports national energy security.
    • Private sector: Brings capital, technology and efficiency into exploration, production and storage.
    • Balanced approach: India needs both strategic public capacity and competitive private participation.

    How Do Reserves and Domestic Production Complement Each Other?

    • SPR: Protects against sudden supply shocks.
    • Domestic production: Reduces imports over the life of an oil field.
    • Overseas stocks: Long-term suppliers could maintain crude stocks earmarked for India.
    • Exploration: Opening more offshore areas can expand domestic resources.

    Energy Security in India

    • Energy security means reliable and affordable energy supply with resilience against disruptions.
    • Four pillars:
      • Domestic production
      • Strategic reserves
      • Import diversification
      • Alternative fuels

      India’s high crude import dependence exposes it to global price shocks and disruptions in chokepoints such as the Strait of Hormuz and Bab el-Mandeb.

      Key Government Initiatives

      • EBP: Ethanol Blended Petrol Programme.
      • NBP: National Policy on Biofuels, 2018.
      • PM JI-VAN: Pradhan Mantri JI-VAN Yojana, promoting 2G (second-generation) ethanol from agricultural residues.
      • SATAT: Sustainable Alternative Towards Affordable Transportation, promoting compressed biogas.
      • SPR Programme: Strategic Petroleum Reserves Programme for crude oil security.

      [2025] Consider the following statements:

      Statement I: Of the two major ethanol producers in the world, i.e., Brazil and the United States of America, the former produces more ethanol than the latter.

      Statement II: Unlike in the United States of America, where corn is the principal feedstock for ethanol production, sugarcane is the principal feedstock for ethanol production in Brazil.

      Which one of the following is correct in respect of the above statements?

      (a) Both Statement I and Statement II are correct and Statement II is the correct explanation for Statement I

      (b) Both Statement I and Statement II are correct and Statement II is not the correct explanation for Statement I

      (c) Statement I is correct but Statement II is incorrect

      (d) Statement I is incorrect but Statement II is correct

    1. Agasthyamalai eviction orders still silence the Forest Rights Act

      Why in the News

      The Forest Department has issued eviction notices to thousands of households in the Agasthyamalai Biosphere Reserve (ABR) following a Supreme Court order for time-bound removal of forest encroachments. The issue highlights the tension between forest conservation and rights under the Forest Rights Act, 2006.

      What is the Forest Rights Act, 2006?

      • Full name: Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act, 2006.
      • Recognises forest rights of Scheduled Tribes (STs) and other traditional forest dwellers.
      • Cut-off: Eligible occupation must pre-date 13 December 2005.
      • Claims are initiated and verified by Gram Sabhas and examined by higher-level committees.
      • Key safeguard: Eviction cannot take place until recognition and verification are completed.

      What is the Agasthyamalai Biosphere Reserve?

      • ABR: Agasthyamalai Biosphere Reserve.
      • Covers about 3,500 sq km across Tamil Nadu and Kerala.
      • Includes Kalakkad-Mundanthurai, Srivilliputhur-Megamalai and Periyar Tiger Reserves, along with wildlife sanctuaries.

      What is the Central Empowered Committee?

      • CEC: Central Empowered Committee.
      • Constituted under Supreme Court directions to monitor forest and environmental compliance.
      • It surveyed the Agasthyamalai landscape and reported violations involving non-forestry activities.

      Who are Other Traditional Forest Dwellers?

      • OTFDs: Other Traditional Forest Dwellers.
      • Non-tribal communities primarily dependent on forests for livelihood.
      • They must demonstrate three generations or 75 years of dependence before 13 December 2005.

      What did the Supreme Court order?

      1. Time-bound eviction plan, with rehabilitation where applicable.
      2. Legal action against wilful violators, including 118 government servants found to be encroachers.
      3. Ecological restoration after eviction.
      4. No new forest diversion or non-forest activity in ABR until encroachments are removed.
      5. Possible deployment of paramilitary forces for enforcement.

      Key Issue: Conservation vs Forest Rights

      • Conservation: Evictions aim to restore critical tiger habitat and remove non-forest activities.
      • Rights concern: Eviction before completion of FRA recognition and verification can violate statutory safeguards.
      • Data problem: Lack of reliable data on occupation outside FRA’s scope makes it difficult to distinguish genuine rights-holders from actual encroachers.

      Statutory Framework

      • FRA, 2006: Forest rights recognition.
      • FCA, 1980: Forest (Conservation) Act, 1980, regulates diversion of forest land.
      • WLPA, 1972: Wild Life (Protection) Act, 1972, governs protected areas.
      • PESA, 1996: Panchayats (Extension to Scheduled Areas) Act, 1996, strengthens Gram Sabha powers in Scheduled Areas.
      • SC/ST PoA Act, 1989: Scheduled Castes and Scheduled Tribes (Prevention of Atrocities) Act, 1989.

      Back2Basics: Forest Rights Act

      • Nodal Ministry: Ministry of Tribal Affairs.
      • Beneficiaries: Forest-dwelling STs and eligible OTFDs.
      • Three rights: Individual forest rights, community rights and Community Forest Resource (CFR) rights.
      • Gram Sabha: Starting point for claims.
      • Key safeguard: No eviction before completion of recognition and verification.

      “[2021] At the national level, which ministry is the nodal agency to ensure effective implementation of the Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act, 2006?

      (a) Ministry of Environment, Forest and Climate Change

      (b) Ministry of Panchayati Raj

      (c) Ministry of Rural Development

      (d) Ministry of Tribal Affairs

    2. Asiatic lion population rises from 523 (2015) to 891 (2025) under Project Lion

      Why in the News

      India’s Asiatic lion population increased from 523 in 2015 to 891 in 2025, the highest recorded count. Project Lion, launched in 2020, aims to strengthen conservation of the species and its Gir landscape.

      What is Project Lion?

      • Launched: 2020 for long-term conservation of the Asiatic lion.
      • Focus: Habitat improvement, disease surveillance, scientific monitoring and community participation.
      • Tools: Radio-collaring, camera traps and genetic/gene-pool conservation.
      • Need: The entire wild population is concentrated in one landscape, creating a major single-population risk.

      Latest Population Status

      • 2015: 523 lions
      • 2025: 891 lions
      • Key concern: Many lions now occur outside protected areas, increasing human-wildlife conflict.
      • Habitat: Gir is approaching its carrying capacity, strengthening the case for a second home.

      Back2Basics: Asiatic Lion

      • Scientific name: Panthera leo persica
      • IUCN: Endangered
      • CITES: Appendix I
      • Wild Life (Protection) Act, 1972: Schedule I
      • Only wild population: India
      • Natural range: Gir landscape, Gujarat
      • Proposed second home: Barda Wildlife Sanctuary, Porbandar.

      Why is a Second Home Needed?

      1. Single-site risk: Disease or disaster in Gir could threaten the entire species.
      2. Habitat saturation: Increasing population is pushing lions beyond protected areas.
      3. Human-wildlife conflict: Greater interaction with people and livestock.
      4. Disease risk: Outbreaks such as Canine Distemper Virus (CDV) can threaten large carnivores.
      5. Habitat fragmentation: Mining, roads and railways can disrupt dispersal corridors.

      Statutory Framework

      • WLPA, 1972: Wild Life (Protection) Act, 1972, provides legal protection to wildlife.
      • FCA, 1980: Forest (Conservation) Act, 1980, regulates forest diversion.
      • BDA, 2002: Biological Diversity Act, 2002, promotes conservation and sustainable use.
      • EPA, 1986: Environment (Protection) Act, 1986, provides the broader environmental framework.

      Government Initiatives

      • Project Lion (2020): Asiatic lion conservation.
      • Project Tiger (1973): Tiger conservation.
      • Project Elephant (1992): Elephant and corridor conservation.
      • Project Snow Leopard (2009): Snow leopard and Himalayan ecosystem conservation.
      • Integrated Development of Wildlife Habitats: Supports protected areas and endangered species recovery.

      [2019] Consider the following statements:

      1. Asiatic lion is naturally found in India only.

      2. Double-humped camel is naturally found in India only.

      3. One-horned rhinoceros is naturally found in India only.

      Which of the statements given above is / are correct?

      (a) 1 only

      (b) 2 only

      (c) 1 and 3 only

      (d) 1, 2 and 3

    3. For first time in 50 years, DGP sets foot on former Maoist bastion in Telangana

      Why in the News

      For the first time in 50 years, a Director General of Police set foot on the Telangana side of Karregutta, a hill once used to house Central Committee members of the banned Communist Party of India (Maoist). The visit marks the decline of Left Wing Extremism under Operation Kagar, with around 700 surrenders in Telangana and the top leadership largely killed, arrested, or surrendered.

      What is Operation Kagar?

      1. Definition: Operation Kagar is a coordinated anti-Maoist offensive launched by security forces in pursuit of the central government’s deadline for a Naxal-free India.
      2. Scope: It combines intensified security operations with surrender-and-rehabilitation measures across the Maoist-affected belt.

      Who are the CPI (Maoist)?

      1. Definition: The Communist Party of India (Maoist), or CPI (Maoist), is a banned Left Wing Extremist organisation that seeks to overthrow the state through armed struggle.
      2. Leadership: Its former General Secretary Muppala Lakshmana Rao, alias Ganapati, was the longest-serving general secretary of the outfit.

      What happened at Karregutta?

      1. The DGP’s visit: The Telangana Director General of Police entered the Telangana side of Karregutta accompanied by a large contingent of police and revenue personnel.
      2. The message: The delegation’s size was meant to signal that it is now safe to visit the area, where earlier only specialised forces such as Greyhounds and COBRA units operated briefly during operations.
      3. Tricolour hoisted: The contingent hoisted the national flag at the spot.
      4. Tourism plan: The DGP announced the kaccha road into the forest would be tarred and the area developed into a tourist spot.
      5. Surrender support: Surrendered Maoists are given a lump-sum grant, including the bounty announced on their heads, to start a new life.

      What is the current status of the Maoist decline?

      1. Surrenders: Around 700 Maoists surrendered in Telangana alone during the operation.
      2. Leadership losses: By March 31, several Central Committee members of the CPI (Maoist) were killed, arrested, or had surrendered.
      3. Top commander killed: Former General Secretary Nambala Keshava Rao, alias Basavaraju, was killed in a police encounter in May 2025.
      4. Factional split: After Basavaraju’s death the party split into two factions, one led by Mallojula Venugopal Rao, alias Sonu, and another by Thippiri Tirupathi, alias Devuji, who later surrendered.
      5. Few absconding: Only two to three top Maoists remain absconding, chief among them Ganapati.

      Conclusion

      A DGP entering Karregutta after five decades, followed by the hoisting of the Tricolour, signals the sharp decline of the Maoist movement in Telangana under Operation Kagar. With around 700 surrenders, the top leadership neutralised, and only a handful absconding, the insurgency’s organisational base has collapsed. The next milestone is the government’s deadline for a Naxal-free India and the rehabilitation of surrendered cadres into mainstream society.

      Back2Basics:

      Left Wing Extremism in India (Foundational Context)

      1. About: Left Wing Extremism (LWE), also called Naxalism, is an armed insurgency by Maoist groups aiming to capture state power through violence.
      2. Geography: It has historically concentrated in a forested tribal belt across Chhattisgarh, Jharkhand, Odisha, Telangana, and neighbouring States.
      3. Nodal ministry: The Ministry of Home Affairs coordinates the national response through security and development measures.

      Communist Party of India (Maoist)

      1. Formation: Formed in 2004 through the merger of the People’s War Group and the Maoist Communist Centre of India.
      2. Status: Designated a terrorist organisation under the Unlawful Activities (Prevention) Act, 1967.
      3. Objective: Seeks to overthrow the Indian state through protracted armed struggle.
      4. Armed wing: Operates the People’s Liberation Guerrilla Army.

      Government Initiatives against LWE

      1. SAMADHAN doctrine: An overarching strategy covering smart leadership, aggressive strategy, motivation, actionable intelligence, and technology.
      2. Security Related Expenditure Scheme: Reimburses States for security operations, training, and rehabilitation of surrendered cadres.
      3. Aspirational Districts Programme: Targets development in the most backward districts, many of them LWE-affected.
      4. Road connectivity projects: The Road Requirement Plan and RCPLWE scheme build roads to open up affected areas.
      5. Surrender and Rehabilitation Policy: Provides grants, vocational training, and support to those who lay down arms.

      Key Facts about LWE

      1. Shrinking footprint: The number of LWE-affected districts has fallen sharply over the past decade.
      2. Declining violence: Incidents and casualties have dropped substantially with intensified operations.
      3. Elite forces: Greyhounds of Telangana and Andhra Pradesh and the CoBRA units of the CRPF are specialised anti-Maoist forces.

      Challenges in Countering LWE

      1. Development deficit: Persistent gaps in roads, health, and education sustain grievances in affected areas.
      2. Difficult terrain: Dense forests and hilly terrain aid guerrilla movement and hamper operations.
      3. Tribal alienation: Displacement and land alienation feed recruitment among tribal populations.
      4. Rehabilitation gaps: Surrendered cadres struggle to find a foothold in mainstream society.
      5. Cross-border and inter-State movement: Cadres exploit State boundaries to evade coordinated action.

      Way Forward

      1. Sustained development: Extend roads, connectivity, and public services into cleared areas.
      2. Robust rehabilitation: Ensure surrendered cadres receive grants, skills, and livelihoods.
      3. Protect tribal rights: Implement the Forest Rights Act and Fifth Schedule protections effectively.
      4. Consolidate security gains: Hold cleared areas and prevent the movement’s revival across State borders.

      UPSC Relevance

      [UPSC 2018] Left Wing Extremism (LWE) is showing a downward trend, but still affects many parts of the country. Briefly explain the Government of India’s approach to counter the challenges posed by LWE.

      Linkage: The PYQ examines the Government’s approach to tackling Left Wing Extremism. Operation Kagar demonstrates the security and surrender components of this approach. The article also highlights the need for rehabilitation and development after security gains.

    4. Can banks lock phone for loan default? What RBI’s new rules say

      Why in the News

      The Reserve Bank of India (RBI) has issued a comprehensive set of rules governing how commercial banks recover unpaid loans, coming into force on January 1, 2027. The framework introduces India’s first detailed regulation of technology-based restrictions on mobile phones financed through bank loans, balancing lenders’ recovery rights against borrower protection.

      What is the RBI’s new loan-recovery framework?

      1. Comprehensive recovery rules: The framework governs the conduct of banks and outsourced recovery agents in recovering unpaid loans, and applies to all commercial banks.
      2. Board-governed process: It makes recovery a board-governed process rather than a purely operational function, requiring a documented recovery policy.
      3. Effective date: It comes into force on January 1, 2027.

      Can banks now lock a financed phone?

      1. Only for device loans: Technology-based restrictions can be used only where the loan specifically financed that smartphone, tablet or laptop.
      2. Disclosure required: The loan agreement must clearly disclose these restrictions in advance.
      3. 30-day threshold: No restriction can be activated until the account is 30 days past due, despite notices to the borrower.
      4. Gradual escalation: Restrictions must be introduced gradually.
      5. 60-day limit for full lock: Complete restrictions can be imposed only after 60 days of non-payment, and outgoing calls cannot be blocked before that.

      What safeguards protect borrowers?

      1. Essential functions protected: Banks cannot disable incoming calls, SMS services or emergency functions.
      2. Work not disrupted: Restrictions must not interfere with activities necessary for the borrower’s work or employment.
      3. Visibility: Borrowers must be able to view the status of restrictions on their device at any time.
      4. Fast restoration: Once overdue amounts are paid, functionality must be restored within one hour.
      5. Compensation: Where restoration is delayed by the bank, compensation of Rs 250 per hour is payable until access is restored, subject to a ceiling equal to the loan amount.
      6. Data protection: Banks and third-party technology providers are barred from accessing personal data stored on borrowers’ devices.

      How are recovery agents regulated?

      1. Fixed contact hours: Agents can contact borrowers only between 8 am and 7 pm, unless the borrower requests otherwise.
      2. Identification: They must identify themselves through identity cards and authorisation letters and carry copies of notices issued by the bank.
      3. Certification: Only certified individuals can undertake recovery work.
      4. Background checks: Banks must conduct background verification before appointing agents and periodically thereafter.

      How are banks held accountable?

      1. Call recording: Banks must record recovery-related calls, keep records for at least six months and inform borrowers that conversations are recorded.
      2. No aggressive incentives: Recovery targets and incentive structures should not encourage aggressive behaviour.
      3. Grievance redressal: Every bank must set up a dedicated grievance redressal mechanism for recovery complaints, detailed in loan documents and communications.
      4. Direct responsibility: Banks are made directly responsible for the conduct of outsourced recovery personnel.

      Why were fresh directions issued?

      1. Retail lending boom: India’s retail lending market has expanded rapidly, driven by digital loans, unsecured personal credit and Buy Now Pay Later products.
      2. Device financing: Growth in financing for smartphones and consumer electronics raised the practice of remotely disabling devices.
      3. Rising complaints: Complaints about harassment by recovery agents and aggressive collection practices have grown.

      Conclusion

      The RBI has converted loan recovery from an operational function into a board-governed, rights-based process, and for the first time regulated the remote disabling of financed devices. The framework takes effect on January 1, 2027, and its impact will depend on how banks build recovery policies, certify agents and enforce the device-restriction safeguards. The next milestone is compliance readiness across all commercial banks before the effective date.

      Back2Basics: Reserve Bank of India (RBI)

      1. Type: Central bank and monetary authority of India.
      2. Established: 1935, nationalised in 1949.
      3. Governing Acts: RBI Act, 1934 and Banking Regulation Act, 1949.
      4. Headquarters: Mumbai.
      5. Core functions: Monetary policy, currency issue, banker to the government, banking regulation and supervision, and management of foreign exchange.

      What are the RBI’s Functions?

      1. About: The RBI is India’s central bank, established in 1935, responsible for monetary policy, currency issuance and financial system regulation.
      2. Rationale: It exists to maintain price stability, ensure adequate credit flow and safeguard the stability of the banking and payments system.
      3. Regulatory scope: It regulates commercial banks on liquidity of assets, branch expansion, mergers, winding-up and, increasingly, conduct towards customers.

      Statutory Framework Governing Bank Regulation

      1. Reserve Bank of India Act, 1934: Establishes the RBI and its monetary and regulatory powers.
      2. Banking Regulation Act, 1949: Empowers the RBI to license, supervise and regulate banks, including branch expansion, mergers and winding-up.
      3. Payment and Settlement Systems Act, 2007: Provides for RBI regulation of payment systems, including digital lending rails.
      4. Consumer Protection Act, 2019: Reinforces borrower rights against unfair practices.

      Government and RBI Initiatives for Borrower Protection

      1. Fair Practices Code for Lenders: Sets standards for transparency and conduct in lending.
      2. RBI Integrated Ombudsman Scheme: Provides a single redressal window for customer complaints against banks and lenders.
      3. Digital Lending Guidelines, 2022: Regulate loan disbursal, data use and recovery by digital lenders.
      4. RBI Retail Direct and Financial Literacy programmes: Improve borrower awareness and protection.

      Key Facts about RBI Regulation of Banks

      1. Effective date of new recovery rules: January 1, 2027.
      2. Compensation cap: Rs 250 per hour for delayed restoration, ceiling equal to the loan amount.
      3. Recovery contact window: 8 am to 7 pm.
      4. Record retention: At least six months for recovery calls.

      Challenges in Loan Recovery and Retail Lending

      1. Agent harassment: Aggressive and coercive collection practices remain widespread.
      2. Digital coercion: Remote disabling of financed devices can cut borrowers off from work and emergencies.
      3. Data misuse: Access to personal data on devices raises privacy risks.
      4. Over-leverage: Rapid unsecured and Buy Now Pay Later lending raises default risk.
      5. Enforcement gaps: Outsourced agents are hard to monitor and hold accountable.
      6. Grievance delays: Weak redressal leaves borrowers without timely remedy.

      Way Forward

      1. Enforce certification: Ensure only verified, certified agents undertake recovery.
      2. Audit device restrictions: Independently audit compliance with the 30-day and 60-day safeguards.
      3. Strengthen redressal: Make grievance mechanisms accessible and time-bound.
      4. Protect data: Enforce the bar on accessing personal data with strict penalties.
      5. Promote responsible lending: Tighten underwriting for unsecured and device-linked credit.

      PYQ Relevance

      [2013] The Reserve Bank of India regulates the commercial banks in matters of

      (1) liquidity of assets

      (2) branch expansion

      (3) merger of banks

      (4) winding-up of banks.

      Select the correct answer using the codes given below:

      (a) 1 and 4 only

      (b) 2, 3 and 4 only

      (c) 1, 2 and 3 only

      (d) 1, 2, 3 and 4

    5. The MSME opportunity lies in clustering them

      Why in the News

      Youth unemployment protests and the passage of the Micro, Small and Medium Enterprises Development (Amendment) Bill, 2026, have refocused attention on the Micro, Small and Medium Enterprises (MSME) sector as a job engine. The central argument is that industrial strength comes not from supporting isolated firms but from building clusters, dense ecosystems where suppliers, labour, research institutions and capital reinforce one another.

      What is a cluster-based development model?

      1. Definition: A cluster is a geographic concentration of firms in a related activity, together with their suppliers, workers, research institutions and finance, located close enough to reinforce one another.
      2. Core idea: Proximity generates shared benefits that an isolated firm cannot capture on its own.

      What is the “Little Giant” programme?

      1. Chinese niche-firm scheme: The Little Giant programme is a Chinese policy that supports technically strong small firms operating in narrow specialised niches.
      2. Support offered: It provides these firms with financing, tax support and research and development assistance.

      How significant is the MSME sector in India?

      1. Number of firms: India has 63 million MSMEs.
      2. Employment: They employ more than 320 million people.
      3. Output share: They contribute about 31% of Gross Domestic Product (GDP) and 35% of manufacturing output.
      4. Exports: They account for 49% of exports.
      5. Structural weakness: The sector remains largely informal, fragmented and concentrated in low-value activities.

      What does the MSME Development (Amendment) Bill, 2026, address?

      1. Delayed payments: It seeks to tackle the problem of delayed payments to smaller firms.
      2. Dispute resolution: It aims to ease dispute resolution for MSMEs.
      3. Compliance burden: It reduces some compliance burdens on the sector.
      4. Limits: It does not by itself resolve the deeper problems of credit access and the burden of Goods and Services Tax (GST), labour, environmental and tax compliance.

      Why do clusters work?

      1. Knowledge spillovers: Technical know-how spreads quickly through worker mobility, informal interaction and shared service providers.
      2. Talent pooling: A cluster creates a real labour market that attracts and retains specialised workers, which an isolated firm struggles to hire.
      3. Lower fixed costs: Firms share infrastructure such as testing labs, effluent-treatment plants, cold storage and logistics hubs.

      What do global cluster models demonstrate?

      1. United States, Research Triangle: In North Carolina, universities such as Duke, the University of North Carolina at Chapel Hill and North Carolina State anchored biotechnology and pharmaceutical ecosystems by connecting research with industry.
      2. China, Guangdong: Industrial zones with land, tax incentives and infrastructure created thick supplier networks, letting firms design, fabricate and prototype quickly.
      3. China, Little Giant programme: Dedicated support to technically strong small firms in narrow niches through financing, tax support and research assistance.

      Why have India’s existing cluster schemes underperformed?

      1. Infrastructure grants, not ecosystems: India already runs the MSME Cluster Development Programme and PM MITRA textile parks, but many function more like infrastructure grants than true ecosystem builders.
      2. Firm-level lending: Banks still assess firms individually despite a large MSME credit gap, ignoring cluster-level ties.
      3. Disconnected universities: Top Indian universities often remain disconnected from nearby industry, unlike US and Chinese models.

      What policies can make clusters engines of jobs?

      1. Specialised hubs: Move from generic industrial estates to sector-specific clusters, such as auto components in Pune and electronics in Sriperumbudur.
      2. An Indian Little Giant scheme: Identify hidden champions in fields like precision castings and defence components, and give them dedicated credit lines, faster patent processing, research support and priority procurement.
      3. Cluster-level financing: Assess shared collateral, buyer-supplier ties and collective performance, expanding the Tiruppur textile model through the Small Industries Development Bank of India (SIDBI) and cluster-focused non-banking financial companies.
      4. University-industry links: Place universities at the centre of the ecosystem as suppliers of talent, lab infrastructure and innovation.

      Conclusion:

      MSMEs can become engines of jobs, productivity and exports only if policy shifts from isolated firm support to ecosystem building. The Amendment Bill helps with payments, disputes and compliance, but the binding constraints of fragmented finance and weak knowledge networks are addressed only at the cluster level. Strong specialised clusters, cluster-based finance and closer university-industry ties are the missing preconditions.

      Back2Basics:

      About MSMEs in India

      1. Definition: MSMEs are enterprises classified by investment in plant and machinery or equipment and by annual turnover.
      2. Classification: Micro (investment up to Rs 1 crore, turnover up to Rs 5 crore), Small (up to Rs 10 crore and Rs 50 crore), Medium (up to Rs 50 crore and Rs 250 crore).
      3. Economic role: MSMEs are the second-largest employer after agriculture and a backbone of manufacturing and exports.
      4. Registration: Firms register on the Udyam portal for formal recognition and scheme access.

      Statutory Framework Governing MSMEs

      1. Micro, Small and Medium Enterprises Development Act, 2006: Provides the legal definition and framework for MSMEs and for tackling delayed payments.
      2. MSME Development (Amendment) Bill, 2026: Strengthens provisions on delayed payments, dispute resolution and compliance.
      3. Factoring Regulation Act, 2011: Enables receivables financing that helps MSMEs address delayed payments.

      MSME Classification and Support

      1. Governing Act: Micro, Small and Medium Enterprises Development Act, 2006.
      2. Ministry: Ministry of Micro, Small and Medium Enterprises.
      3. Development bank: SIDBI is the principal financial institution for the sector.
      4. Registration portal: Udyam Registration.
      5. Composite criteria: Classification uses both investment and turnover.

      Government Initiatives for MSMEs

      1. MSME Cluster Development Programme: Supports common facilities and infrastructure for firm clusters.
      2. PM MITRA Parks: Integrated textile parks to build scale and supplier networks.
      3. Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE): Provides collateral-free credit guarantees.
      4. PM Vishwakarma: Supports traditional artisans and craftspeople.
      5. Prime Minister’s Employment Generation Programme (PMEGP): Credit-linked subsidy for micro-enterprise creation.

      Key Facts about the MSME Sector

      1. Firm count: 63 million MSMEs.
      2. Employment: More than 320 million people.
      3. GDP share: About 31%.
      4. Export share: 49%.
      5. Manufacturing output share: 35%.

      Challenges in the MSME Sector

      1. Credit gap: Limited access to affordable formal credit, worsened by firm-level rather than cluster-level assessment.
      2. Compliance burden: GST, labour, environmental and tax compliance weigh heavily on small firms.
      3. Informality: Most MSMEs remain outside the formal system, limiting scale and finance.
      4. Low value addition: Concentration in low-value activities caps productivity and wages.
      5. Delayed payments: Late payments from buyers strain working capital.
      6. Weak technology and skills: Limited access to research, testing and specialised labour.

      Way Forward

      1. Build specialised clusters: Concentrate resources in sector-specific hubs rather than generic estates.
      2. Cluster-based lending: Reform credit appraisal to use collective performance and supplier ties.
      3. Identify hidden champions: Support niche high-performers with dedicated finance and procurement.
      4. Integrate universities: Anchor clusters with research institutions for talent and innovation.
      5. Ease compliance: Simplify and consolidate regulatory requirements for small firms.

      PYQ Relevance

      [UPSC 2023] Faster economic growth requires increased share of the manufacturing sector in GDP, particularly of MSMEs. Comment on the present policies of the Government in this regard.

      Linkage: Examines how MSMEs can drive manufacturing-led economic growth. The article highlights the shift from firm-level support to cluster-based MSME development. It shows how finance, infrastructure, skills and industry-university linkages can raise MSME productivity and jobs

    6. GEC third phase in final stages, up for Cabinet approval

      Why in the News?

      The government is in the final planning stages of the third phase of the intra-state Green Energy Corridor (GEC) and has sent the scheme to the Union Cabinet for approval. The phase carries an outlay of more than Rs 50,000 crore and targets the evacuation of about 135 gigawatts (GW) of renewable energy, marking a shift towards strengthening transmission from renewable-energy rich States.

      What is the Green Energy Corridor (GEC)?

      1. Renewable evacuation network: GEC is a scheme to build transmission infrastructure that carries electricity from renewable-energy rich areas to demand centres.
      2. Grid synchronisation: It links variable solar and wind generation with conventional power stations in the grid so that renewable power can be evacuated reliably from one location to another.

      What does GEC Phase III propose?

      1. Cabinet stage: The third phase has been sent to the Union Cabinet for final approval.
      2. Outlay: The scheme carries an outlay of more than Rs 50,000 crore.
      3. Evacuation target: The Ministry of New and Renewable Energy (MNRE) aims to evacuate about 135 GW of renewable energy in this phase.
      4. Focus area: The phase concentrates on augmenting intra-state transmission lines in renewable-energy rich States.

      Why have earlier phases faced delays?

      1. Right of way: Difficulty in securing right of way for transmission lines held up Phase I.
      2. Award delays: Delay in awarding project packages slowed progress.
      3. Forest clearances: Delays in forest clearances stalled work.
      4. Great Indian Bustard clearances: Clearances tied to the protection of the critically endangered Great Indian Bustard (GIB), whose habitat overlaps solar and wind zones in Rajasthan and Gujarat, delayed Phase I.
      5. State and regulatory issues: Non-participation of States during tendering, tender consultation and regulatory issues affected Phase II.

      Conclusion:

      GEC Phase III awaits Cabinet clearance and, if approved, will extend intra-state transmission capacity to evacuate about 135 GW of renewable power. With most Phase II packages already awarded and expected to complete within two years, the next milestone is Cabinet approval and the resolution of recurring right-of-way, forest and GIB clearance bottlenecks that have delayed earlier phases.

      Back2Basics: Green Energy Corridor (GEC) Scheme

      1. Ministry: Ministry of New and Renewable Energy.
      2. Objective: Build intra-state and inter-state transmission systems to evacuate renewable power.
      3. Structure: Implemented in phases, with intra-state components handled by State transmission utilities.
      4. Support: Funded through a mix of central grants, State contributions and multilateral loans.
      5. Beneficiaries: Renewable-energy rich States and the wider grid.

      About Renewable Energy Transmission in India

      1. Definition: Renewable energy transmission moves power generated from solar, wind and other renewable sources to consumption centres across States.
      2. Why it matters: Renewable generation is concentrated in a few resource-rich States, so evacuation infrastructure is essential to avoid stranded capacity.
      3. India’s standing: India is among the world’s largest renewable energy markets and has set large capacity addition targets for 2030.
      4. Structural feature: Variable renewable output requires grid balancing with conventional and storage capacity.

      Government Initiatives for Renewable Energy

      1. National Solar Mission: Promotes large-scale solar deployment under the National Action Plan on Climate Change.
      2. PM-KUSUM: Supports solar pumps and grid-connected solar for farmers.
      3. PM Surya Ghar: Muft Bijli Yojana: Promotes rooftop solar for households.
      4. Production Linked Incentive for solar modules: Builds domestic solar manufacturing capacity.
      5. Green Hydrogen Mission: Promotes production of green hydrogen using renewable power.

      Key Facts about India’s Renewable Energy Sector

      1. 2030 target: India aims for 500 GW of non-fossil fuel electricity capacity by 2030.
      2. Nodal ministry: Ministry of New and Renewable Energy.
      3. Grid operator: Grid Controller of India manages national load dispatch.
      4. Species overlap: The Great Indian Bustard is a critically endangered species whose habitat intersects renewable zones, driving clearance conditions.

      Challenges in Renewable Energy Transmission

      1. Land and right of way: Acquiring land and corridors for transmission lines is slow and contested.
      2. Clearance delays: Forest and wildlife clearances, including GIB-related conditions, hold up projects.
      3. State coordination: Uneven State participation in tendering and implementation delays intra-state work.
      4. Grid integration: Variable renewable output strains grid stability without adequate balancing.
      5. Financing and viability: Distribution company finances and cost recovery remain weak.
      6. Storage gap: Limited storage capacity constrains round-the-clock renewable supply.

      Way Forward

      1. Fast-track clearances: Streamline forest and wildlife clearances with mitigation for GIB habitat, including undergrounding of lines where feasible.
      2. Strengthen State participation: Improve incentives and coordination for State utilities in tendering.
      3. Expand storage: Scale up battery and pumped-hydro storage alongside transmission.
      4. Timely awards: Reduce delays in awarding and executing project packages.
      5. Grid modernisation: Invest in smart grids and forecasting to manage variable generation.

      PYQ Relevance

      [UPSC 2022] Do you think India will meet 50 percent of its energy needs from renewable energy by 2030? Justify your answer. How will the shift of subsidies from fossil fuels to renewables help achieve the above objective? Explain.

      Linkage: The PYQ examines India’s transition towards renewable energy and the challenges in achieving its 2030 targets. GEC Phase III strengthens renewable energy evacuation and grid infrastructure.
      This supports India’s 2030 renewable-energy targets.