💥Join UPSC 2027,2028 Mentorship (August Batch) + XFactor Notes & Microthemes PDF
Talk to Mentor

Civilsdaily

Login

GS Paper: GS3

  • Rupee’s Real Effective Exchange Rate turns undervalued, more so than the yuan

    Why in the News

    India’s Real Effective Exchange Rate (REER) has moved from overvalued, above 100 until mid-2025, to undervalued at around 91 in June 2026. The rupee is now more undervalued than China’s yuan, a shift driven by oil price volatility and the West Asia war.

    What is the Real Effective Exchange Rate (REER)?

    1. Definition: REER measures a currency’s value against a trade weighted basket of other currencies, adjusted for inflation differentials, with 100 as the base year benchmark.
    2. Above 100: A REER above 100 signals overvaluation, meaning the currency is more expensive than its trade weighted fair value, hurting export competitiveness.
    3. Below 100: A REER below 100 signals undervaluation, meaning exports become cheaper and more competitive in foreign markets.
    4. Current reading: The rupee’s REER at around 91 in June 2026 places it firmly in undervalued territory, a reversal from above 100 as recently as mid-2025.

    Why does rupee undervaluation matter now?

    1. Export competitiveness: An undervalued rupee makes Indian exports cheaper relative to competitors, a potential offset to the tariff pressure Indian exporters face from the United States.
    2. Oil price link: Volatility from the West Asia war affects oil import costs, which in turn move the rupee’s value against the dollar and the wider currency basket.
    3. Comparative position: The rupee being more undervalued than the yuan reverses a longstanding pattern where China’s currency was seen as the more actively managed, undervalued one.
    4. Policy dilemma: Sustained undervaluation aids exporters but raises import costs, including for oil, creating a trade off the Reserve Bank of India must weigh in its currency management.

    Conclusion

    The rupee’s shift from overvalued to undervalued reflects oil price and West Asia conflict volatility more than a deliberate policy choice. Whether this undervaluation becomes a durable export advantage or reverses with oil price stabilisation remains the open question.

  • Madhya Pradesh farmers march to Bhopal demanding 100% moong procurement at MSP

    Why in News?

    Around 2,000 Madhya Pradesh farmers under the Samyukt Kisan Morcha marched to Bhopal demanding 100% moong procurement at Minimum Support Price (MSP), against the current 25% cap under the central Price Support Scheme, along with fixes to fertiliser distribution.

    Key Highlights

    1. Scale: Around 2,000 farmers marched to Bhopal.
    2. Organiser: March organised under the Samyukt Kisan Morcha banner.
    3. Demand: 100% moong procurement at MSP, against the current 25% cap.
    4. Scheme cited: Current cap operates under the central Price Support Scheme.
    5. Additional demand: Fixes to fertiliser distribution.

    What is the Price Support Scheme (PSS)?

    1. A component of the PM-AASHA (Pradhan Mantri Annadata Aay Sanrakshan Abhiyan).
    2. Implemented by the Department of Agriculture & Farmers Welfare.
    3. Provides physical procurement of notified pulses, oilseeds and copra at the Minimum Support Price (MSP) when market prices fall below MSP.
    4. Procurement is undertaken by Central Nodal Agencies in coordination with State governments.

    What is Minimum Support Price (MSP)?

    1. MSP is the minimum price at which the government purchases crops from farmers to protect them from sharp price declines.
    2. Recommended by the Commission for Agricultural Costs and Prices (CACP) and announced by the Central Government.
    3. MSP is currently announced for 23 crops.

    “[2018, GS3, 10 marks] What do you mean by Minimum Support Price (MSP)? How will MSP rescue the farmers from the low-income trap?”

    [2020] Consider the following statements:

    1.In the case of all cereals, pulses and oil-seeds, the procurement at Minimum Support Price (MSP) is unlimited in any State/UT of India.
    2.In the case of cereals and pulses, the MSP is fixed in any State/UT at a level to which the market price will never rise.

    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

  • ICMR-NICPR validates oral therapy SHetA2 to block HPV’s cancer causing proteins

    Why in News?

    The Indian Council of Medical Research-National Institute of Cancer Prevention and Research (ICMR-NICPR) has validated an oral small molecule therapy, SHetA2, that blocks Human Papillomavirus (HPV)’s cancer causing proteins, potentially treating pre-cancerous and cancerous cervical lesions. The molecule has been transferred to Emcure for larger human trials.

      Key Highlights

      1. Therapy: SHetA2, an oral small molecule drug.
      2. Mechanism: Blocks HPV oncoproteins (E6 and E7), which drive cervical cancer development.
      3. Target: Designed to treat pre-cancerous (CIN) and cancerous cervical lesions.
      4. Validating body: ICMR-National Institute of Cancer Prevention and Research (ICMR-NICPR).
      5. Next stage: Technology transferred to Emcure for advanced human clinical trials.
      6. Significance: Represents a potential non-surgical, oral treatment for HPV-related cervical disease.

      What is Human Papillomavirus (HPV)?

      1. HPV is a common DNA virus that infects the skin and mucous membranes.
      2. It is transmitted mainly through sexual contact.
      3. Persistent infection with high-risk HPV types, especially HPV-16 and HPV-18, is the leading cause of cervical cancer.
      4. HPV is also associated with cancers of the anus, vulva, vagina, penis and oropharynx.

      How Does SHetA2 Work?

      1. Inhibits the activity of HPV’s E6 and E7 oncoproteins.
      2. Restores the function of tumour suppressor proteins (p53 and Rb), allowing abnormal cells to undergo programmed cell death (apoptosis).
      3. May help prevent progression from pre-cancerous lesions to invasive cervical cancer.

      Significance

      1. Offers a non-invasive oral treatment option for HPV-related cervical lesions.
      2. May reduce the need for surgical procedures in early-stage disease.
      3. Supports India’s efforts to reduce the burden of cervical cancer, one of the most common cancers among women.
      4. Demonstrates the growing role of indigenous biomedical research and public-private collaboration.

      Government Initiatives

      1. National Programme for Prevention and Control of Non-Communicable Diseases (NP-NCD) includes cervical cancer screening.
      2. Introduction of Cervavac, India’s indigenous HPV vaccine, to expand cervical cancer prevention.
      3. Promotion of HPV vaccination, screening and early diagnosis under national health programmes.

      [2021] Consider the following statements:
      1. Adenoviruses have single-stranded DNA genomes whereas retroviruses have double-stranded DNA genomes.
      2. Common cold is sometime caused by an adenovirus whereas AIDS is caused by a retrovirus.
      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

    1. All four dengue virus serotypes found co-circulating nationally, ICMR-VRDL study finds

      Why in News?

      A two year Indian Council of Medical Research-Virus Research and Diagnostic Laboratory (ICMR-VRDL) surveillance study finds all four dengue virus serotypes co-circulating nationally, raising hyperendemicity concerns and complicating future vaccine rollout.

        Key Highlights

        1. Study duration: Conducted over two years through nationwide surveillance.
        2. Conducting body: ICMR-Virus Research and Diagnostic Laboratory (VRDL) Network.
        3. Key concern: Simultaneous circulation of all serotypes indicates hyperendemicity, increasing the risk of severe dengue and complicating vaccine strategies.
          • Note: A serotype is a distinct subgroup or variation of a microorganism (such as a bacterium or virus) classified by the specific antigens found on its surface

        What is Dengue?

        1. Dengue is a viral disease caused by the dengue virus (DENV).
        2. It is transmitted by the female Aedes aegypti mosquito (also Aedes albopictus).
        3. The virus has four distinct serotypes: DENV-1, DENV-2, DENV-3 and DENV-4.
        4. Infection with one serotype provides lifelong immunity only against that serotype and temporary protection against the others.

        What is Hyperendemicity?

        1. Hyperendemicity refers to the simultaneous circulation of multiple serotypes of the same pathogen in a region.
        2. It increases the likelihood of secondary infections, which can lead to severe dengue due to Antibody-Dependent Enhancement (ADE).

        About the ICMR-VRDL Network

        • Established by the Indian Council of Medical Research (ICMR).
        • Functions as a nationwide network for diagnosis, surveillance and research on viral diseases.
        • Supports early detection and monitoring of emerging and re-emerging viral infections.

        [2017] Consider the following statements:
        1. In tropical regions, Zika virus disease is transmitted by the same mosquito that transmits dengue.
        2. Sexual transmission of Zika virus disease is possible.
        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

      1. India’s Record Exports in FY 2025-26

        Why in News?

        India recorded its highest-ever exports of US$ 863.1 billion in FY 2025-26, driven by strong merchandise and services exports and growing benefits from recent Free Trade Agreements (FTAs), particularly with the UAE, UK, Australia, Oman and EFTA.

        Key Highlights

        • Record exports: India’s total exports reached US$ 863.1 billion in FY 2025-26.
          • Merchandise exports: US$ 441.8 billion
          • Services exports: US$ 421.3 billion
        • Top FTA export destinations:
          • ASEAN: US$ 38.4 billion
          • UAE (CEPA): US$ 37.4 billion
          • SAFTA: US$ 25.8 billion
          • UK (CETA): US$ 13.4 billion
          • Singapore (CECA): US$ 11.9 billion
        • Recent FTAs boosted exports:
          • UAE CEPA: 4.45 lakh Certificates of Origin issued; export tariff lines increased from 7,546 to 8,053.
          • Australia ECTA: Certificates of Origin rose from 1,482 (FY21) to an average 45,500+ annually after implementation.
          • Mauritius CECPA: Export tariff lines increased by 20.9%.
          • Oman CEPA: June 2026 exports grew 54.7% month-on-month and 189.6% year-on-year.
          • India-EFTA TEPA: Over 7,885 Certificates of Origin issued since October 2025.
        • Labour-intensive sectors benefited most: Textiles & apparel, Leather & footwear, Gems & jewellery, Marine products, Carpets, Handicrafts, Agricultural products
        • Trade facilitation initiatives:
          • Trade e-Connect: Provides market intelligence, tariff information, Rules of Origin guidance and FTA advisory.
          • Trade Intelligence & Analytics (TIA) Portal: Offers commodity-wise trade analytics and real-time export monitoring.

        Significance

        • Diversifies export markets and products.
        • Enhances global value chain integration.
        • Boosts manufacturing and employment in labour-intensive industries.
        • Improves India’s competitiveness through preferential tariff access.

        [2023] Consider the following statements:
        Statement-I: India accounts for 3.2% of global export of goods.
        Statement-II: Many local companies and some foreign companies operating in India have taken advantage of India’s Production-linked Incentive’ scheme.
        Which one of the following is correct in respect of the above statements?

        [A] Both Statement-I and Statement-II are correct and Statement-ll is the correct explanation for Statement-I.

        [B] Both Statement-I and Statement-II are correct and Statement-l is not the correct explanation for Statement-I.

        [C] Statement-l is correct but Statement-II is incorrect.

        [D] Statement-I is incorrect but Statement-II is correct.

      2. Fiscal Health Index (FHI) 2026

        Why in News?

        NITI Aayog has released the second edition of the Fiscal Health Index (FHI) 2026, providing a comprehensive assessment of the fiscal performance of Indian States during FY 2023–24. The report expands its coverage to include 10 North-Eastern and Himalayan States, in addition to the 18 major States assessed in the inaugural edition.

        Key Highlights

        • Expanded coverage: Evaluates 28 States (18 major States + 10 North-Eastern and Himalayan States).
        • Purpose: Measures the fiscal health of States using a transparent and data-driven framework.
        • Fiscal significance: States account for nearly two-thirds of public expenditure and about one-third of the general government debt.
        • Key finding: Most States recorded moderate fiscal performance, with significant variations across regions.
        • Recommendations: Improve own tax revenue, rationalise committed expenditure, strengthen capital expenditure, enhance public financial management, and ensure debt sustainability.

        What is the Fiscal Health Index (FHI)?

        • The Fiscal Health Index (FHI) is an annual report released by NITI Aayog to evaluate the fiscal performance of States using objective indicators. It promotes fiscal discipline, financial sustainability, and evidence-based policymaking while encouraging States to improve public financial management.

        Key Parameters of the Fiscal Health Index

        • Quality of Expenditure
        • Revenue Mobilisation
        • Fiscal Prudence
        • Debt Management

        Significance of the Fiscal Health Index

        • Encourages competitive and cooperative federalism.
        • Helps identify strengths and weaknesses in State finances.
        • Supports informed policy decisions and fiscal reforms.
        • Promotes sustainable public finances and efficient resource allocation.
        • Enhances transparency and accountability in fiscal governance.

        Challenges Highlighted by the Report

        • Low own tax revenue in several States.
        • High committed expenditure on salaries, pensions, and interest payments.
        • Rising debt burden in some States.
        • Limited fiscal space for developmental expenditure.
        • Regional disparities in fiscal performance.

      3. Cabinet’s National Investment Policy for Urea (NIPU) 2026

        Why in the News?

        The Union Cabinet has approved the National Investment Policy for Urea (NIPU) 2026, restructuring the return framework for urea manufacturers to attract fresh investment in domestic capacity. This comes against an annual urea subsidy bill of Rs 1,42,175.74 crore for 2025-26.

          What are the Pillars of the National Investment Policy for Urea (NIPU) 2026?

          1. Aim: The policy aims to encourage the establishment of new gas-based urea manufacturing plants across the country to reduce dependence on imports and bridge the gap between domestic production and demand.
          2. The National Investment Policy for Urea-2026 (NIPU-2026) rests on three core pillars: cost separation, assured returns, and foreign exchange risk mitigation.
          3. Return band: The policy sets a Return on Equity (ROE) band of 12 to 16 percent for new urea manufacturing investment.
          4. Cost restructuring: It restructures how production costs are calculated and reimbursed to manufacturers.
          5. Subsidy delivery: Distribution continues through Direct Benefit Transfer (DBT), credited after retailers confirm sale to farmers.
          6. Self-reliance objective: The stated goal is to reduce India’s dependence on imported urea by making domestic capacity commercially viable.

          Why does urea self-reliance remain unresolved despite this policy?

          1. Subsidy scale: The current annual subsidy bill of Rs 1,42,175.74 crore reflects the price gap between controlled retail urea prices and actual production cost.
          2. Investment history: Previous urea policy revisions have not sufficiently attracted new private investment in domestic plants.
          3. Import dependence: India continues to import a share of its urea requirement despite decades of subsidy support to domestic units.
          4. Farmer price link: Retail urea prices remain fixed for farmers regardless of the ROE band offered to manufacturers.

          Conclusion

          The National Investment Policy for Urea 2026 targets manufacturer incentives rather than farm gate prices, betting that better returns on investment will draw the domestic capacity that decades of subsidy alone did not. Whether the 12 to 16 percent ROE band is sufficient to shift investment decisions remains to be tested against actual capacity additions.

          Value Addition:

          Urea Subsidy Scheme:

          Urea fertiliser subsidy in India is a central government scheme where the state fixes a low Maximum Retail Price (MRP) of ₹242 per 45-kg bag for farmers, while the government pays the remaining high production or import cost directly to manufacturers.

          Scheme Mechanics

          1. Fixed MRP: Farmers pay a low, controlled price of ₹242 per 45-kg bag (excluding taxes and neem-coating charges).
          2. Government Payout: The center pays the difference between the actual high cost of making or importing urea and the low selling price directly to the factory owners.
          3. Control: The Ministry of Chemicals and Fertilizers manages the policy and distribution across the country.

          PYQ Relevance

          [UPSC 2023] What are the direct and indirect subsidies provided to farm sector in India? Discuss the issues raised by the World Trade Organization (WTO) in relation to agricultural subsidies.

          Linkage: The PYQ examines India’s fertiliser subsidy regime and related WTO concerns. NIPU 2026 reforms urea subsidies to boost domestic production while retaining farmer subsidies, linking directly to agricultural subsidy debates.

          1. CBDT’s crypto-asset reporting guidance and India’s alignment with OECD’s CARF

            Why in the News?

            The Central Board of Direct Taxes (CBDT) has released a 198 page guidance note aligning India’s crypto-asset tax reporting with the OECD’s Crypto-Asset Reporting Framework (CARF). The mandate operates under Section 509 of the Income-tax Act, 2025.

            How are crypto assets defined legally?

            1. Definition (Indian IT Legislation): India’s income tax legislation defines a “crypto-asset” as a digital representation of value that relies on a cryptographically secured distributed ledger or a similar technology to validate and secure transactions.
            2. Definition (OECD):The OECD Crypto-Asset Reporting Framework (CARF) defines crypto-assets similarly, but also includes “similar technology to validate and secure transactions, which includes cryptocurrencies, as well as cryptography- based tokens”.

            What is the Crypto-Asset Reporting Framework (CARF)?

            1. Definition: CARF is an international standard developed by the Organisation for Economic Co-operation and Development (OECD) requiring crypto-asset service providers to collect and report user transaction data to tax authorities.
            2. India’s mechanism: Section 509 of the Income-tax Act, 2025 gives CBDT the statutory basis to mandate this reporting domestically.
            3. Who reports: Exchanges and Reporting Crypto-Asset Service Providers (RCASPs) must collect and submit user transaction data.

            What are the Core Objectives Crypto-Asset Reporting Framework (CARF)?

            1. Automatic Information Exchange: Facilitates seamless cross-border sharing of taxpayer crypto transaction data between participating countries.
            2. Covered Entities: Mandates Reporting Crypto-Asset Service Providers (RCASPs), like exchanges and brokerages, to track and report user activity.
            3. Included Assets: Applies broadly to cryptocurrencies, stablecoins, certain non-fungible tokens (NFTs), and crypto derivatives.

            Why does this reporting mandate matter for crypto-asset holders?

            1. Visibility shift: Transactions previously visible only to the exchange become visible to the tax authority as well.
            2. Cross-border consistency: Aligning with CARF means data collected in India can be exchanged with other OECD-aligned tax jurisdictions.
            3. Compliance burden: Exchanges and RCASPs must build new data collection and reporting infrastructure to meet the mandate.
            4. Enforcement basis: The guidance gives CBDT a documentary basis to pursue undeclared crypto-asset income.

            What are the implications for taxpayers?

            1. No fresh reporting: The Guidance Note does not require taxpayers to make fresh disclosures directly to the Income-tax Department.
            2. Income reporting: Continue reporting crypto income under existing provisions of the Income-tax Act.
            3. Record keeping: Maintain records of purchases, sales, transfers, wallet movements, and exchange statements.
            4. Consistency: Ensure ITR disclosures match information reported by crypto exchanges (RCASPs).

            Conclusion

            The guidance closes a visibility gap that let crypto-asset transactions escape the reporting standard applied to conventional financial accounts. Its effectiveness now depends on how consistently exchanges and RCASPs implement the collection and reporting mechanics CBDT has mandated.

            PYQ Relevance

            [UPSC 2026] Which of the following statements regarding the features of blockchain technology are correct?

            1. Records stored in the database may be made visible to relevant stakeholders without risk of alteration.

            2. Copies of the entire database are stored on multiple computers on a network syncing within seconds.

            3. Consortium blockchain is a blend of public and private blockchains allowing selective data access.

            4. Mathematical algorithms make it impossible to change or delete any data once recorded and accepted.

            (a) 1 and 3 (b) 2 and 4 only (c) 1, 2 and 4 (d) 1 and 4 only

          2. AI data centres’ power load to nearly double government’s earlier estimate

            Why in News

            The Ministry of Power informed Parliament that AI-driven data centres are expected to add 26.3 GW of electricity demand by 2031-32, nearly double the earlier estimate of 13.56 GW. The additional demand is proposed to be met primarily through renewable energy.

            Key Highlights

            • Revised estimate: Additional power load projected at 26.3 GW by 2031-32, up from 13.56 GW estimated earlier.
            • Renewable-powered growth: The government plans to meet most of this demand through renewable energy.
            • Rapid expansion: India’s data centre capacity is projected to increase from 2.2 GW (2025) to 12 GW by 2030 (Wood Mackenzie).
            • Digital economy: India’s digital economy is valued at around ₹32 lakh crore, contributing nearly 12% of GDP.
            • AI demand: Growth is being driven by Generative AI, cloud computing, big data analytics, fintech, e-commerce and digital public infrastructure.

            Why Do AI Data Centres Consume So Much Power?

            • AI model training requires high-performance GPUs and specialised chips.
            • Large-scale 24×7 computing and data processing significantly increase electricity demand.
            • Cooling systems account for a substantial share of total energy consumption.
            • Continuous operation requires high reliability and uninterrupted power supply.

            Significance

            • Strengthens India’s position as a global digital and AI hub.
            • Encourages investment in renewable energy, grid infrastructure and energy storage.
            • Supports growth of Digital India, semiconductor manufacturing and cloud services.
            • Creates employment in IT, engineering, power and infrastructure sectors.

            [2022, GS3, 15M] 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.”

            [2020] With the print state of development, Artificial Intelligence can effectively do which of the following?
            1. Bring down electricity consumption in industrial units
            2. Create meaningful short stories and songs
            3. Disease diagnosis
            4. Text -to -Speech Conversion
            5. Wireless transmission of electrical energy
            Select the correct answer using the code given below:

            [A] 1, 2, 3 and 5 only

            [B] 1, 3 and 4 only

            [C] 2, 4 and 5 only

            [D] 1, 2, 3, 4 and 5

          3. Western Ghats Eco-Sensitive Area notification remains deadlocked

            Why in News

            1. The Union Environment Ministry’s expert committee on Western Ghats Ecologically Sensitive Areas has had its tenure extended to July 2027.
            2. The 2024 draft notification covering 56,825 sq km remains unresolved across six states.

            Key Highlights

            1. Panel extension: Expert committee tenure extended to July 2027.
            2. Draft notification scope: 2024 draft notification covers 56,825 sq km across six states.
            3. Background dispute: The unresolved notification continues the divergence between the Gadgil Committee Report and the Kasturirangan Committee Report on how much of the Western Ghats should fall under Eco-Sensitive Area status.

            What is an Eco-Sensitive Area (ESA)?

            • Ecologically fragile areas notified under the Environment (Protection) Act, 1986.
            • Act as “shock absorbers” around protected ecosystems by regulating developmental activities.
            • Aim to balance environmental conservation with sustainable development.

            Gadgil Committee vs Kasturirangan Committee

            Gadgil Committee (Western Ghats Ecology Expert Panel, 2011)

            • Recommended about 64% of the Western Ghats as ESA.
            • Favoured strict conservation with a bottom-up, community-led approach.
            • Proposed a ban on mining, quarrying and highly polluting industries in sensitive zones.
            • Emphasised Gram Sabha participation in environmental governance.

            Kasturirangan Committee (High-Level Working Group, 2013)

            • Recommended about 37% of the Western Ghats (around 59,940 sq km) as ESA.
            • Used satellite imagery to identify ecologically sensitive landscapes.
            • Allowed greater flexibility for agriculture and human settlements.
            • Focused on balancing ecological protection with economic development.

            Significance of the Western Ghats

            • One of the world’s eight hottest biodiversity hotspots.
            • Recognised as a UNESCO World Heritage Site.
            • Origin of major peninsular rivers including Godavari, Krishna, Kaveri and Periyar.
            • Plays a crucial role in regulating the South-West Monsoon.
            • Supports rich biodiversity with a high proportion of endemic flora and fauna.
            • Provides vital ecosystem services, including water security and climate regulation.

            [2016] ‘Gadgil Committee Report’ and ‘Kasturirangan Committee Report’, sometimes seen in the news, are related to

            (a) constitutional reforms

            (b) Ganga Action Plan

            (c) linking of rivers

            (d) protection of Western Ghats

            “[2014] With reference to ‘Eco-Sensitive Zones’, which of the following statements is/are correct?

            1. Eco-Sensitive Zones are the areas that are declared under the Wildlife (Protection) Act, 1972.

            2. The purpose of the declaration of Eco-Sensitive Zones is to prohibit all kinds of human activities in those zones except agriculture.

            (a) 1 only

            (b) 2 only

            (c) Both 1 and 2

            (d) Neither 1 nor 2