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  • Finance Commission – Issues related to devolution of resources

    [2nd March 2026] The Hindu OpED: Sixteenth Finance Commission-misses and concerns

    op-ed snap | Polity | Mains Paper 2: Constitutional Bodies,Federalism

    PYQ Relevance

    [UPSC 2021] How have the recommendations of the 14th Finance Commission of India enabled the states to improve their fiscal position?

    Linkage: The question links directly to the Sixteenth Finance Commission debate, as both examine how devolution design affects States’ fiscal autonomy and capacity. While the Fourteenth Commission expanded untied transfers to 42%, the Sixteenth’s structural changes raise questions on continuity of fiscal empowerment and equalisation.

    Mentor’s Comment

    The Sixteenth Finance Commission (SFC) has retained the States’ share in the divisible pool at 41% but introduced significant changes in methodology, particularly in horizontal devolution and treatment of cesses, surcharges, and grants. The article evaluates whether the Commission has strengthened fiscal federalism or diluted equalisation principles. The issue is critical as Finance Commission transfers constitute the largest source of untied fiscal transfers to States and directly affect Centre-State fiscal balance.

    Why in the News?

    The SFC is in the news for redesigning the transfer framework without increasing support to States. It discontinues revenue deficit grants and adds a GSDP-based parameter while removing the tax effort criterion. Several States see reduced shares compared to the Fifteenth Finance Commission. The changes affect the largest channel of formula-based fiscal transfers and have revived debate on Centre-State financial balance.

    Has vertical devolution been strengthened or diluted?

    1. Retention of 41% Share: Maintains States’ share at 41% of the divisible pool, continuing the post-Fourteenth Finance Commission structure.
    2. Decline from 42%: Reduces from the 42% recommended earlier after accounting for the reorganisation of Jammu & Kashmir.
    3. Rise of Cesses and Surcharges: Expands non-shareable revenue instruments, reducing the effective divisible pool.
    4. Absence of Reform Recommendation: Does not mandate merger of cesses and surcharges into the divisible pool.
    5. Grand Bargain Proposal: Suggests States accept smaller share if cesses are merged into regular taxes; lacks constitutional enforcement mechanism.

    Does the redesign of horizontal devolution alter equalisation principles?

    1. GSDP Contribution Criterion: Introduces efficiency-linked parameter through share in aggregate GSDP.
    2. Income Distance Formula Modification: Uses square root of GSDP to moderate excessive impact.
    3. Removal of Tax Effort/Fiscal Discipline Criterion: Eliminates performance-based fiscal efficiency parameter.
    4. Judgmental Weight Changes: Adjusts weights of criteria without transparent normative reasoning.
    5. Distributional Impact: Madhya Pradesh, Uttar Pradesh, West Bengal, Bihar, Odisha, Chhattisgarh, and Rajasthan lose share; small North-Eastern States also record losses.

    What is the impact of discontinuing revenue deficit and sector-specific grants?

    1. Revenue Deficit Grants Dropped: Discontinues gap-filling support despite inter-State fiscal disparities.
    2. Sector-Specific Grants Eliminated: Removes targeted interventions in priority areas.
    3. Shift from Normative to Formula-Based Transfers: Reduces flexibility to address cost disabilities.
    4. Article 275 Mechanism Underused: Limits equalisation through need-based grants despite constitutional provision.
    5. Ad Hoc Grants Risk: Encourages discretionary transfers outside formula-based system.

    Are projections and fiscal assumptions realistic?

    1. High Nominal GDP Assumption: Assumes 11% nominal GDP growth from 2026-27 onwards.
    2. Budget Estimate Contrast: Exceeds Budget’s 10% projection.
    3. Overestimation Risk: Inflates projected transfer envelope.
    4. GST Reform Impact Ignored: Does not factor revenue effects of September 2025 GST reforms.
    5. Stability Concerns: Potential fiscal stress if growth assumptions underperform.

    Does the Commission address structural federal concerns?

    1. Central Fiscal Space Concern: Notes Centre’s shrinking fiscal space.
    2. Cesses and Surcharges Expansion: Recognises distortion but avoids structural correction.
    3. Uneven State Capacity: Does not fully compensate for cost disabilities and migration-driven GSDP concentration.
    4. Market-Driven Capital Concentration: Ignores structural advantage of developed States in attracting capital and labour.
    5. Equalisation Objective Weakened: Reduces redistributive thrust compared to earlier Commissions.

    Conclusion

    The Sixteenth Finance Commission preserves the formal 41% vertical devolution but recalibrates the structure of transfers. The removal of revenue deficit grants and introduction of a GSDP-based contribution parameter shift the framework from strong equalisation toward efficiency-linked allocation. The expansion of cesses and surcharges continues to constrain the divisible pool. The long-term impact on fiscal federalism will depend on whether future reforms strengthen constitutional equity under Articles 270 and 280 or deepen inter-State disparities.

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  • Government Budgets

    Why key to coconut cultivation today is sustainability, not productivity

    Explained | Agriculture | Mains Paper 3: Agriculture and related issues

    Why in the News?

    The Union Budget 2026-27 announced a Coconut Promotion Scheme focused on raising productivity through high-yielding varieties. This comes despite projections of a 1.6-2.1°C temperature rise by 2050 (up to 3.2°C by 2070), which may render large parts of peninsular India less suitable for coconut cultivation. The issue signals a shift from yield expansion to climate-resilient sustainability in plantation policy.

    What is the Status of Coconut Cultivation in India?

    1. Global Position: India is the world’s largest producer and consumer of coconuts.
    2. Productivity Levels: Per-palm productivity in India exceeds that of Sri Lanka, the Philippines, and Indonesia.
    3. Geographical Spread: Major cultivation concentrated in Kerala, coastal Karnataka, and Tamil Nadu, with expansion into Gujarat, Assam, and other non-traditional regions.
    4. Western Coast Belt: Kerala, coastal Karnataka, and western Tamil Nadu remain core high-temperature resilience zones.
    5. Emerging Vulnerabilities: Interior Karnataka, Andhra Pradesh, Tamil Nadu, and parts of the east coast face projected climatic unsuitability.
    6. Price Trend: Domestic coconut prices have remained higher than international prices since 2024, affecting competitiveness.

    What Are the Major Coconut Policies and Schemes in India?

    1. Coconut Development Board (CDB) Schemes
      1. Replanting and Rejuvenation: Replaces senile and diseased palms.
      2. Area Expansion: Promotes cultivation in non-traditional states.
      3. Productivity Support: Distributes improved and hybrid seedlings.
      4. Market Linkages: Facilitates branding and export promotion.
    2. Coconut Promotion Scheme (2026-27)
      1. Garden Revitalisation: Targets old and unproductive plantations.
      2. High-Yield Varieties: Enhances productivity through improved planting material.
      3. Coastal Expansion: Supports new plantations in coastal regions.
    3. Technology Mission on Coconut
      1. Integrated Approach: Covers production, processing, and marketing.
      2. Value Addition: Supports coconut oil, desiccated coconut, and coir units.
    4. Cluster Development Programme (NHB)
      1. Cluster-Based Development: Strengthens aggregation, processing, and market access.
    5. Support under National Missions
      1. MIDH/NMSA Linkages: Provides irrigation, sustainability, and infrastructure support.

    Why is Productivity-Centric Policy Inadequate for Coconut Cultivation?

    1. Yield Plateau: India already records higher per-palm productivity than Sri Lanka, the Philippines, and Indonesia. Further yield push offers limited marginal gains.
    2. Price Distortion: Domestic coconut prices remain above international prices since 2024, limiting export competitiveness.
    3. Climate Risk Escalation: Temperature rise of 1.6-2.1°C by 2050 and up to 3.2°C by 2070 increases vapour pressure deficit and drought stress.
    4. Disease Vulnerability: Root wilt disease has devastated districts like Alappuzha and Pollachi.
    5. Regional Unsuitability: Interior peninsular regions may become climatically unsuitable in coming decades.

    How Does Climate Change Threaten Coconut Geography in India?

    1. Temperature Sensitivity: Coconut is sensitive to heat stress during flowering and nut development stages.
    2. Western Ghats Buffer: Current cultivation belt in Kerala, coastal Karnataka, and western Tamil Nadu benefits from moderated temperatures.
    3. Interior Risk Zones: Karnataka, Andhra Pradesh, and parts of Tamil Nadu show vulnerability under climate projections.
    4. East Coast Stress: Cyclones and salinity intrusion increase risk in eastern coastal regions.
    5. Vapour Pressure Deficit Rise: Intensifies moisture stress even when rainfall levels appear stable.

    Why Must the Scheme Prioritise Climate-Resilient Varieties?

    1. Heat-Tolerant Genotypes: Ensures long-term viability under rising temperature regimes.
    2. Drought-Resistant Varieties: Supports survival under irregular rainfall and groundwater depletion
    3. Disease-Resistant Strains: Reduces root wilt and pathogen vulnerability.
    4. Regional Customisation: East coast requires climate-resilient varieties; west coast requires wilt-tolerant strains.
    5. Research Integration: State universities and ICAR institutions possess breeding capacity for resilient genotypes.

    What Structural and Institutional Failures Limit Current Schemes?

    1. Input Subsidy Bias: Focus remains on free biological inputs rather than structural farm transformation.
    2. Low-Quality Inputs: Distribution-based schemes often reduce soil microbial viability.
    3. Farmer Producer Organisation (FPO) Exclusion: High compliance norms prevent meaningful farmer producer organisation participation.
    4. Capital Subsidy Fragmentation: Coconut Development Board (CDB) offers 25% capital subsidy for value addition, but variation across schemes causes confusion.
    5. Implementation Gaps: Cluster Development Programme of NHB remains under-implemented due to investment barriers.

    Why Are Cooperative and Cluster Models Critical?

    Cooperative and Cluster Models are institutional mechanisms that aggregate farmers geographically or organisationally to enable collective production, processing, value addition, and marketing, thereby ensuring scale efficiency, bargaining power, and income stability.

    1. Vertical Integration: Links production, value addition, and marketing.
    2. Cooperative Precedent: Models like AMUL demonstrate scale-based efficiency and farmer ownership.
    3. Processing Stability: Encourages long-duration procurement and price stabilisation.
    4. Market Diversification: Expands into coconut oil, tender coconut, desiccated coconut, coir products.
    5. Risk Sharing Mechanism: Reduces individual farmer exposure to climate and price shocks.

    How Should Policy Shift from Expansion to Sustainability?

    1. Direct Benefit Transfers: Empowers farmer-led decision-making on irrigation, soil amendments, labour.
    2. Small Pilot Projects: Generates ground-level feedback before scaling.
    3. Climate Mapping: Aligns plantation zones with projected climate suitability.
    4. Integrated Funding: Aligns Coconut Promotion Scheme with Cluster Development Programme.
    5. Institutional Voice Inclusion: Incorporates farmer consultation to reflect ground realities.

    Conclusion

    Productivity enhancement alone cannot secure the future of coconut cultivation under rising climate stress. Policy design must shift from input subsidies and area expansion to climate-resilient varieties, water-use efficiency, institutional integration, and cooperative value-chain development. A sustainability-centred framework is essential to ensure long-term farmer income stability and agro-ecological viability.

    PYQ Relevance

    [UPSC 2017] How do subsidies affect the cropping pattern, crop diversity and economy of farmers? What is the significance of the crop insurance, minimum support price and food processing for small and marginal farmers?

    Linkage: This question is relevant to GS 3 (Agriculture) as it examines how subsidies shape cropping patterns and farmer incomes, and the role of insurance, MSP, and food processing in income security. It links to the coconut policy debate by highlighting the need to shift from input subsidies to climate resilience and value-chain development.

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  • ISRO Missions and Discoveries

    How do astronauts return from space and survive re-entry

    Explained | Science Tech | Mains Paper 3: Awareness in various sc and tech fields

    Why in the News?

    India is advancing its human spaceflight ambitions under ISRO’s Gaganyaan programme, with successful Crew Escape System tests and re-entry validation experiments demonstrating safe atmospheric descent capability. Since re-entry involves extreme heat (over 1,500°C) and velocities exceeding 25,000 km/h, mastering this phase is a critical milestone that places India closer to joining the limited group of nations capable of independently returning astronauts safely from space.

    What is spacecraft re-entry?

    Spacecraft re-entry is the critical process of a vehicle returning from space, passing through a planet’s atmosphere to land on the surface. It is a controlled deceleration process in which a spacecraft transitions from orbital velocity to safe landing conditions.It involves using atmospheric drag and heat shielding to dissipate immense kinetic energy (approx. mph) while managing temperatures up to caused by compressed air.

    Key aspects of re-entry include:

    1. Deceleration and Heating: As the spacecraft hits the dense atmosphere, it experiences extreme deceleration and intense heat, often creating a “wall of fire” around the craft.
    2. Thermal Protection: Vehicles use specialized heat shields, such as ablative materials, to protect against temperatures exceeding 1650 degree celsius.
    3. Methods: Re-entry can be controlled (using engines for precise, safe, or targeted landing) or uncontrolled (naturally falling back).
    4. Phases: It typically involves deorbiting, atmospheric entry, and landing (often using parachutes).
    5. Challenges: The “entry corridor” must be precisely navigated; entering too steeply causes excessive heat, while too shallow causes the craft to skip back into space

    Why is Re-entry Considered the Most Critical Phase of Spaceflight?

    1. Orbital Velocity: Spacecraft travel at ~7.8 km/s in Low Earth Orbit, generating extreme kinetic energy during descent.
    2. Thermal Load: Atmospheric compression produces temperatures above 1,500°C, sufficient to melt structural metals.
    3. Deceleration Stress: Astronauts experience high G-forces due to rapid velocity reduction.
    4. Historical Precedent: Early scientific belief held that re-entry survival was impossible due to predicted structural failure from heat loads.

    How Does a Spacecraft Dissipate Immense Heat During Re-entry?

    1. Blunt Body Design: Rounded capsule structure disperses heat around the vehicle rather than allowing penetration.
    2. Aerodynamic Braking (Aerobraking): Uses atmospheric drag to systematically reduce speed without propulsion fuel.
    3. Thermal Protection System (TPS): Shields internal structure from heat exposure.
    4. Ablation Mechanism: Outer material chars and erodes, carrying heat away from the capsule.
    5. Heat Shield Materials: Designed to prevent thermal transfer to primary structure and crew module.

    What is the “Re-entry Corridor” and Why is It Crucial?

    1. Optimal Angle Window: Ensures safe atmospheric penetration between overshoot and undershoot limits.
    2. Overshoot Risk: Too shallow angle causes the capsule to skip back into space.
    3. Undershoot Risk: Too steep angle results in excessive heating and structural stress.
    4. Precision Navigation: Onboard guidance systems adjust trajectory within strict tolerances.

    Why Does Communication Blackout Occur During Re-entry?

    1. Plasma Formation: Extreme heat ionizes surrounding air, forming an electrically charged plasma layer.
    2. Signal Obstruction: Plasma sheath blocks radio communication between crew and ground stations.
    3. Blackout Duration: Persists until velocity reduces sufficiently for plasma dissipation.
    4. Mitigation Strategy: Use of relay satellites and high-frequency transmission pathways through thinner plasma regions.

    How Do Parachutes Enable Safe Landing?

    1. Terminal Velocity Reduction: Atmospheric drag alone remains insufficient for safe splashdown.
    2. Multi-stage Deployment: Drogue parachutes stabilize descent; main parachutes reduce final speed.
    3. Controlled Splashdown: Ensures low-impact landing in designated sea recovery zones.
    4. Landing Example: Bay of Bengal identified as primary splashdown zone for Indian missions.

    How Will India’s Gaganyaan Crew Module Execute Re-entry?

    1. Crew Module (CM): Maintains trajectory within re-entry corridor and survives thermal stress.
    2. Service Module (SM): Provides propulsion during orbital phase; separates before re-entry.
    3. Controlled Manoeuvres: Adjusts lift-to-drag ratio for precise landing.
    4. Thermal Validation: Crew Module Atmospheric Re-entry Experiment validated full-scale heat shield.
    5. Operational Significance: Positions India among nations capable of independent human re-entry systems.

    Conclusion

    Safe atmospheric re-entry represents the ultimate test of a nation’s human spaceflight capability, demanding mastery over thermal protection, trajectory precision, communication resilience, and controlled descent systems. As India advances toward operationalizing Gaganyaan, successful re-entry validation will not only ensure astronaut safety but also strengthen technological sovereignty, strategic autonomy, and India’s position among leading spacefaring nations.

    PYQ Relevance

    [UPSC 2017] India has achieved remarkable successes in unmanned space missions including the Chandrayaan and Mars Orbiter Mission, but has not ventured into manned space mission. What are the main obstacles to launching a manned space mission, both in terms of technology and logistics? Examine critically.

    Linkage: This GS-3 question examines the technological and logistical challenges in shifting from unmanned missions to human spaceflight. It directly links to Gaganyaan, especially re-entry systems, crew safety, and human-rated launch capability.

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  • Economic Indicators and Various Reports On It- GDP, FD, EODB, WIR etc

    New GDP Series: Why Fiscal Targets and $4 Trillion Goal Get Harder

    Prelims Only | Economics | Mains Paper 3: Indian Economy

    Why in the News

    The Ministry of Statistics and Programme Implementation released the new GDP series with 2022-23 as base year, lowering nominal GDP by about 3 to 4 percent. This affects fiscal deficit ratios, debt calculations and India’s timeline to become a 4 trillion dollar economy.

    What Changed in the New GDP Series

    • 2023-24 growth revised down from 9.2% to 7.2%.
    • Nominal GDP for 2025-26 reduced by about 3.3%.
    • Real GDP now calculated using double deflation method.
    • Better data sources such as GST, ASUSE, PLFS integrated.
    • Lower nominal GDP means the economy is slightly smaller in rupee terms than previously estimated.

    Impact on Fiscal Deficit

    Fiscal deficit is calculated as a percentage of GDP.

    1. Current Year Impact

    • 2025-26 fiscal deficit moves from 4.4% to 4.5%.
    • Past years’ ratios also rise slightly due to smaller GDP base.

    2. FY27 Target Problem

    • Target: 4.3% of GDP
      Absolute deficit: Rs 16.96 lakh crore
    • To achieve this ratio:
      • Nominal GDP must grow 13 to 14% next year.
      • Budget assumption was only 10% nominal growth.
    • This implies either: Higher growth, or Lower borrowing, or Expenditure compression.

    Impact on Debt to GDP Ratio

    • Debt ratio projected to rise to about 58% in 2025-26.
    • Target is 55.6%.
    • Lower GDP denominator pushes ratio upward.
    • New GDP series makes fiscal consolidation slightly tougher mathematically.

    Impact on $4 Trillion Economy Goal

    • At exchange rate of about Rs 90.98 per dollar: 2025-26 GDP is around 3.8 trillion dollars.
    • If nominal growth is 10% and rupee remains stable: India can cross 4 trillion dollars in 2026-27.
    • However:
      • Rupee depreciation can delay milestone.
      • Dollar GDP depends on both growth and exchange rate.
    • Nigeria example shows how currency depreciation can shrink dollar GDP even if domestic output rises.

    Broader Implications

    • Ratios worsen even without policy slippage.
    • Government may need borrowing recalibration.
    • Fiscal arithmetic becomes tighter.
    • Market expectations on growth become crucial.

    Prelims Pointers

    • GDP can be measured by production, income and expenditure methods.
    • Nominal GDP uses current prices.
    • Real GDP adjusts for inflation.
    • Fiscal deficit equals total expenditure minus total receipts excluding borrowings.
    • Debt to GDP ratio indicates sustainability of public debt.
    [2015] With reference to Indian economy, consider the following statements: 

    1. The rate of growth of Real Gross Domestic product has steadily increased in the last decade. 
    2. The Gross Domestic product at market prices (in rupees) has steadily increased in the last decade. 

    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

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  • The Crisis In The Middle East

    War in West Asia: Why Insurers Are Cancelling War Risk Covers as Ships Avoid Hormuz

    Prelims Only | International Relations | Mains Paper 2: Bilateral, Regional and Global Groupings and agreements involving India

    Why in the News

    Escalating conflict involving Iran, Israel and the United States has led global shipping lines to suspend or divert vessels from the Strait of Hormuz, while insurers rush to cancel war risk covers.

    What Is Happening?

    • Major container carriers have halted Hormuz transits.
    • Some vessels reversed course mid voyage.
    • Insurers issued war risk cancellation notices even before markets reopened.
    • Tanker hit near Oman, worsening risk perception.
    • Around 170 container ships are reportedly inside the strait, facing departure restrictions.

    Why Strait of Hormuz Matters

    • One of the world’s most critical oil chokepoints.
    • Connects Persian Gulf to Arabian Sea.
    • Large share of global crude oil and LNG trade passes through it.
    • Disruption affects energy prices, freight rates and global supply chains.

    Why Insurers Are Cancelling War Risk Covers

    • Sharp Rise in Risk

        • War risk premiums in the Gulf were around 0.25% of vessel value.
          Now expected to jump up to 50%.
        • Example: For a 100 million dollar ship. Premium may rise from 250,000 dollars to 375,000 dollars per voyage.

    • Anticipation of Escalation

        • Missile strikes and drone attacks increase probability of vessel damage.
        • Ports in Israel also facing higher risk premiums.
        • Insurers prefer to cancel existing covers and reprice contracts at higher rates.

    • Legal and Financial Safeguard

      • War risk insurance is separate from standard marine insurance. Insurers can issue short notice cancellation during extraordinary events.

    Impact on Global Trade

    • Shipping delays and rerouting from Suez Canal.
    • Higher freight and insurance costs.
    • Potential spike in crude oil prices.
    • Inflationary pressure globally.

    Implications for India

    • India imports a large share of crude oil from the Gulf.
    • Shipping cost increase can widen trade deficit.
    • Energy inflation risk.
    • Strategic petroleum reserves become important.

    Prelims Pointers

    • Strait of Hormuz lies between Iran and Oman.
    • It is a narrow maritime chokepoint.
    • TEU stands for Twenty foot Equivalent Unit.
    • War risk insurance covers losses from war, piracy and armed conflict.
    [2024] Consider the following statements: Statement-I: Sumed pipeline is a strategic route for Persian Gulf oil and natural gas shipments to Europe. 

    Statement-II: Sumed pipeline connects the Red Sea with the Mediterranean Sea. 

    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 explains Statement-I 

    (b) Both Statement-I and Statement-II are correct, but Statement-II does not explain Statement-I 

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

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

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  • Goods and Services Tax (GST)

    GST Collections Rise 8.1% to ₹1.83 Lakh Crore in February

    Prelims Only | Economics | Mains Paper 3: Indian Economy

    Why in the News

    Gross Goods and Services Tax collections rose 8.1% year on year to over ₹1.83 lakh crore in February 2026, indicating steady consumption and import activity.

    Key Figures

    • Gross GST: ₹1.83 lakh crore
    • Net GST: ₹1.61 lakh crore up 7.9%
    • Gross domestic revenue: ₹1.36 lakh crore up 5.3%
    • Import revenue: ₹47,837 crore up 17.2%
    • Refunds: ₹22,595 crore up 10.2%
    • Cumulative GST collection so far this fiscal: ₹20.27 lakh crore up 8.3%.

    Policy Context

    • GST slabs merged into two major rates: 5% and 18%
    • 40% slab retained for ultra luxury goods and tobacco
    • Around 375 items saw rate cuts from September 2025
    • Initial dip in November after tax cuts followed by recovery in December, January and February.

    State Level Trends

    Negative growth observed in:

    • Tamil Nadu
    • Madhya Pradesh
    • Rajasthan

    Below national average growth in:

    • West Bengal
    • Haryana
    • Uttar Pradesh
    • Maharashtra

    Significance

    • Reflects resilience of consumption demand
    • Strong import growth suggests trade momentum
    • Stable revenue trend despite rate rationalisation
    • Indicates structural maturity of GST ecosystem
    [2017] What is/are the most likely advantages of implementing ‘Goods and Services Tax (GST)’? 

    1. It will replace multiple taxes collected by multiple authorities and will thus create a single market in India. 
    2. It will drastically reduce the ‘Current Account Deficit’ of India and will enable it to increase its foreign exchange reserves. 
    3. It will enormously increase the growth and size of economy of India and will enable it to overtake China in the near future. 

    Select the correct answer using the code given below: 

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

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  • Capital Markets: Challenges and Developments

    SEBI to Leverage AI and Tech to Crack Down on Market Manipulators

    Prelims Only | Economics | Mains Paper 3: Indian Economy

    Why in the News

    SEBI Chairman Tuhin Kanta Pandey said the regulator will strengthen surveillance using Artificial Intelligence and technology to curb market manipulation and cyber fraud.

    Key Announcements

    • Tech Driven Surveillance

      • Use of AI to detect market manipulation and suspicious trading patterns.
      • Stronger enforcement against fraudulent brokers and cyber criminals.

    • SEBI Check Tool

      • Integrated within UPI interface.
      • Helps investors verify registered intermediaries before making payments.
      • Aimed at curbing fake brokers promising unrealistic returns.
      • SEBI has partnered with Bengaluru based AI firm SARVAM for multilingual awareness campaigns.

    • Investor Awareness Push

      • AI based outreach pilot contacted 3.85 lakh people.
      • Campaigns to caution against financial influencers promising “astronomical” returns.
      • Emphasis on disciplined and long term investing.

    • Derivatives & Market Stability

      • Measures introduced to cool speculation in equity derivatives.
      • Focus on short duration options segment.
      • SEBI says no signs of systemic instability.

    • Enforcement Record

      • Action against unregistered advisors and alleged market manipulators.
      • High success rate in tribunal and Supreme Court cases.
      • Regulator defends combined legislative, executive and quasi judicial role.

    • Future Focus Areas

      • Revitalising agricultural commodity markets.
      • Deepening corporate bond market.
      • More scientific policy making with impact assessment.

    Significance

    • Strengthens investor protection.
    • Improves trust and transparency in capital markets.
    • Reflects shift toward data driven regulation.
    • Aligns with digital public infrastructure ecosystem including UPI.
    [2025] Consider the following statements: 

    I. India accounts for a very large portion of all equity option contracts traded globally, thus exhibiting a great boom. 

    II. India’s stock market has grown rapidly in the recent past, even overtaking Hong Kong’s at some point in time. 

    III. There is no regulatory body either to warn small investors about the risks of options trading or to act on unregistered financial advisors in this regard. 

    Which of the statements given above are correct? 

    (a) I and II only (b) II and III only (c) I and III only (d) I, II and III

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  • The Crisis In The Middle East

    Iran–Israel Escalation After Killing of Khamenei

    Prelims Only | International Relations | Mains Paper 2: Bilateral, Regional and Global Groupings and agreements involving India

    Why in the News

    Iran launched missile and drone strikes across Israel and parts of the Gulf after the reported killing of Supreme Leader Ayatollah Ali Khamenei in U.S. and Israeli bombardment, triggering a widening regional conflict.

    What Happened

    • U.S. and Israeli strikes hit targets in Tehran.
    • Iran retaliated with missiles targeting Israel and Gulf states hosting U.S. forces.
    • Israel vowed “non-stop” strikes on Iranian leadership and military sites.
    • Casualties reported in Israel, Iran, and among U.S. personnel.

    Leadership Transition in Iran

    • President Masoud Pezeshkian announced an interim leadership council.
    • Foreign Minister Abbas Araghchi said a new Supreme Leader would be chosen soon.
    • Ayatollah Alireza Arafi named to interim council.
    • Permanent leader to be elected by the Assembly of Experts.

    Wider Regional Impact

    • Explosions heard in Tel Aviv; strike reported in Beit Shemesh.
    • Shrapnel and debris incidents reported in Abu Dhabi.
    • Attacks extended to Oman.
    • U.S. President Donald Trump warned of severe retaliation if Iran escalates further.

    Strategic Significance

    • Raises risk of full-scale regional war in West Asia.
    • Direct involvement of U.S. forces increases geopolitical stakes.
    • Implications for global oil supply and maritime security in the Gulf.
    • Potential impact on India’s energy security and diaspora in the region.
    [2023] Consider the following statements: 

    Statement-I: Israel has established diplomatic relations with some Arab States. 

    Statement-II: The ‘Arab Peace Initiative’ mediated by Saudi Arabia was signed by Israel and Arab League. 

    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

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  • Foreign Policy Watch: United Nations

    [28th February 2026] The Hindu OpED: International law is not dead, its rules stay resilient

    op-ed snap | International Relations | Mains Paper 2: Bilateral, Regional and Global Groupings and agreements involving India

    PYQ Relevance

    [UPSC 2025] The reform process in the United Nations remains unaccomplished because of the delicate imbalance of East and West and entanglement of the USA vs. Russo-Chinese alliance.” Examine and critically evaluate the East-West policy confrontations in this regard.

    Linkage: This question directly examines power politics within the UN system, linking to debates on institutional reform, legitimacy, and the resilience of international law. It connects themes of multilateralism, UNSC reform, and geopolitical contestation shaping global governance.

    Mentor’s Comment

    Debates over the resilience of international law reflect deeper tensions within the contemporary global order. While powerful states increasingly test legal limits, the institutional architecture of treaties, courts, and multilateral frameworks continues to regulate global conduct. The issue is not the disappearance of international law, but the contestation of its authority in an era of geopolitical realignment.

    Why in the News?

    Recent conflicts, including Russia-Ukraine war (2022), Israel’s military actions in Gaza, tensions in West Asia, and renewed U.S.-Iran hostility, have intensified debates over the effectiveness of international law. Repeated breaches of the UN Charter’s prohibition on the use of force have raised concerns about the credibility of the post-1945 rules-based global order.

    What is Article 2(4) of the UN Charter?

    It prohibits UN Member States from threatening or using force against the territorial integrity or political independence of any state, or in any manner inconsistent with UN purposes. This cornerstone of international law aims to prevent war, uphold sovereign equality, and promote peaceful dispute resolution. 

    Key Aspects of the Prohibition

    1. Scope: It prohibits the threat or use of armed force in international relations.
    2. Protected Interests: Actions against a state’s territorial integrity (invasion, occupation) or political independence are strictly forbidden.
    3. Forms of Force: Prohibited actions include direct military action, invasion, blockade, and indirect use of force through armed groups.
    4. Cyber Operations: Cyber attacks that cause physical damage, injury, or death are considered violations of this article.
    5. Exceptions: The prohibition is not absolute; lawful exceptions include authorization by the UN Security Council (Chapter VII) and inherent self-defense against an armed attack (Article 51).

    Has the Prohibition on Use of Force Under Article 2(4) Lost Its Normative Authority?

    1. Article 2(4) of UN Charter: Prohibits threat or use of force in international relations; remains binding on all UN member states.
    2. Cold War Context: Despite proxy wars, the U.S. and USSR rarely abandoned legal justification frameworks.
    3. Post-1990 Expansion of Self-Defence: U.S. expanded interpretation of anticipatory self-defence (1990s-2000s) in Afghanistan (2001) and Iraq (2003).
    4. Contemporary Violations: Russia-Ukraine conflict (2022) and West Asian conflicts challenge Charter principles.
    5. Continuity of Norms: Even powerful states frame actions within legal narratives, indicating normative pull of law.

    Does Legalisation of International Relations Constrain Powerful States?

    1. Legalisation Process: Institutional frameworks compel states to justify conduct within international law.
    2. Domestic Anchoring: International norms resonate through domestic constitutional systems.
    3. Agency of Weaker States: Legal frameworks enable smaller states to question powerful states in multilateral forums.
    4. Judicialisation: Growth of international courts institutionalises dispute resolution.
    5. Example: International Criminal Court prosecutions; African Court on Human and Peoples’ Rights regional accountability mechanisms.

    Is Contemporary Populist-Authoritarianism a Structural Threat to International Law?

    1. Normative Rejection: Populist regimes openly question liberal constitutional order.
    2. U.S. Withdrawal Trends: Exit from international agreements during the Trump presidency (e.g., Paris Agreement, WHO).
    3. Geopolitical Assertion: Russia and others reject Western-led normative frameworks.
    4. Shift from Justification to Defiance: Reduction in effort to legally justify actions.
    5. Risk: Weakening compliance culture in multilateral institutions.

    Beyond the UN Charter, How Extensive is International Law’s Regulatory Reach?

    1. Trade Governance: Free Trade Agreements; India-EU negotiations ongoing.
    2. Maritime Governance: High Seas Treaty (2023) strengthens marine biodiversity protection.
    3. Global Health: Pandemic Agreement negotiations aim to enhance preparedness.
    4. Climate Governance: Paris Agreement institutionalises nationally determined contributions (NDCs).
    5. Arms Control: Chemical and Biological Weapons Conventions regulate prohibited weapons.
    6. Outer Space Law: Governs peaceful use and liability norms.

    Do International Courts Demonstrate Institutional Resilience?

    1. International Criminal Court (ICC): Prosecutes genocide, war crimes, crimes against humanity.
    2. Regional Courts: African Court on Human and Peoples’ Rights strengthens regional human rights enforcement.
    3. Dispute Settlement: WTO dispute mechanism institutionalises trade compliance (though Appellate Body crisis persists).
    4. Peaceful Resolution: Courts reduce reliance on armed conflict.
    5. Continuity: Judicial processes operate independent of media attention.

    Does International Law Operate Quietly Despite Political Breaches?

    1. Silent Functioning: Enables cross-border trade, aviation, communication networks.
    2. Everyday Governance: Facilitates migration, shipping, investment flows.
    3. Systemic Integration: Supports global supply chains.
    4. Structural Embeddedness: Law operates beyond headline conflicts.
    5. Institutional Persistence: Law-making processes continue despite geopolitical tensions.

    Conclusion

    International law faces visible strains due to geopolitical rivalries and selective compliance. However, its treaties, courts, and institutional frameworks continue to regulate trade, climate action, maritime governance, and human rights. The current phase reflects contestation and power politics, not the collapse of the rules-based international order.

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  • Foreign Policy Watch: India-Afghanistan

    Taliban & terror: How Pakistan came to declare ‘open war’ on Afghanistan

    Explained | International Relations | Mains Paper 2: Bilateral, Regional and Global Groupings and agreements involving India

    Why in the News?

    Pakistan launched cross-border airstrikes in Afghanistan’s Khost and Paktika provinces after a surge in Tehreek-e-Taliban Pakistan (TTP) attacks that killed nearly 274 people in recent months. The Afghan Taliban retaliated, marking one of the most direct military confrontations between the two since 2021 and signaling a breakdown of post-Taliban counter-terror coordination.

    What explains the recent escalation between Pakistan and the Afghan Taliban?

    1. TTP Resurgence: Tehreek-e-Taliban Pakistan intensified attacks inside Pakistan; 274 fatalities reported in recent months.
    2. Safe Haven Allegations: Pakistan alleges TTP operates from Afghan soil under Taliban protection.
    3. Retaliatory Airstrikes: Pakistan conducted strikes in Khost and Paktika targeting alleged militant camps.
    4. Taliban Response: Afghan forces retaliated with mortar shelling across the border.
    5. Civilian Casualties: Reports indicate non-combatant deaths, escalating humanitarian concerns.

    How does the Durand Line dispute complicate the conflict?

    1. Colonial Legacy: The 2,640-km Durand Line was drawn in 1893 between British India and Afghanistan.
    2. Non-Recognition: Successive Afghan regimes have questioned the legitimacy of the border.
    3. Border Clashes: Frequent skirmishes occur along contested stretches.
    4. Unregulated Movement: Porous terrain facilitates militant infiltration and smuggling networks.

    Durand Line

    Historical Background

    1. Establishment (1893): The line was drawn by Sir Mortimer Durand, a British diplomat, and Afghan Emir Abdur Rahman Khan
    2. Purpose: It was intended to fix the limits of their respective control and serve as a buffer zone against Russian expansionism toward British India
    3. Inheritance (1947): Following the partition of British India, Pakistan inherited the line as its western border. While Pakistan and most of the international community recognise it, Afghanistan has consistently refused to do so

    The Dispute & Conflict

    1. Ethnic Division: The line cuts through the Pashtun and Baloch tribal heartlands, dividing families and communities across two nations.
    2. Afghan Position: Successive Afghan governments, including the current Taliban administration, reject the border as a “colonial relic” imposed under duress. They claim territories extending as far as the Indus River.
    3. Pakistani Position: Pakistan maintains the line is a legally binding international boundary and has fenced approximately 98% of it since 2017 to curb militancy and smuggling

    Has Pakistan’s ‘Strategic Depth’ doctrine backfired?

    1. Strategic Depth Concept: Pakistan historically viewed Afghanistan as a buffer against India.
    2. Taliban Support: Islamabad extended diplomatic and logistical backing to Taliban factions.
    3. Blowback Effect: TTP, ideologically aligned with Afghan Taliban, now targets Pakistan.
    4. Policy Contradiction: Friendly regime in Kabul has not curbed anti-Pakistan militants.

    Pakistan’s “Strategic Depth” doctrine:

    1. It is a long-standing, largely failed, security policy designed to counter India by:
      1. controlling Afghanistan
      2. providing a fallback area during conflict
      3. preventing a two-front threat. 
    2. Developed in the 1980s by Gen. Mirza Aslam Beg, sought to use the Taliban as proxies to create a pro-Pakistan, anti-India regime in Kabul.

    Key aspects of this doctrine included:

    1. Military Fallback: Creating a rear area beyond the Durand Line to regroup if India invaded.
    2. Control over Kabul: Installing a friendly government in Afghanistan to prevent Indian influence and negate the “encirclement” of Pakistan.
    3. Proxy Warfare: Nurturing the Taliban and Haqqani network to manage the Pashtun border region and use Afghan soil to project power against India. 

    Failure and Consequences

    1. By 2026, the doctrine is seen as a strategic liability rather than a benefit. 
    2. The Taliban’s return to power in 2021 did not result in a subservient state, and Pakistan faces severe cross-border militant blowback from the Taliban. 
    3. The policy has led to increased domestic insecurity, with Afghanistan serving as a “strategic trap” for Pakistan instead of a “strategic depth.

    How does this episode reflect challenges in counter-terror strategy?

    1. Non-State Actor Challenge: TTP operates across borders, complicating traditional military responses.
    2. Intelligence Gaps: Weak coordination limits actionable counter-terror outcomes.
    3. Unilateral Force Doctrine: Cross-border strikes risk escalation without durable resolution.
    4. Humanitarian Risk: Civilian harm undermines legitimacy of counter-terror operations.

    What are the implications for India and the South Asian region?

    1. Militant Spillover: Escalation risks strengthening transnational jihadist networks.
    2. Regional Instability: Prolonged conflict weakens South Asian security architecture and undermines SAARC-level cooperation.
    3. Refugee Pressure: Conflict may trigger cross-border displacement.
    4. Terror Ecosystem Risk: Fragmented militant networks may redirect focus toward India or other neighboring states.
    5. Central Asian Connectivity Risk: Instability threatens regional trade corridors.
    6. Diplomatic Leverage: India may recalibrate engagement with regional partners amid shifting Afghanistan dynamics.

    Conclusion

    The Pakistan-Afghanistan escalation reflects the limits of proxy-based security doctrines and the persistence of cross-border militant ecosystems in South Asia. Tactical airstrikes may offer short-term signalling but fail to address structural drivers such as porous borders, ideological linkages, and weak counter-terror coordination. Durable stability requires institutionalized border management, credible action against non-state actors, and regional security dialogue to prevent further destabilization of the South Asian strategic landscape.

    PYQ Relevance

    [UPSC 2024] India has a long and troubled border with China and Pakistan fraught with contentious issues. Examine the conflicting issues and security challenges along the border. Also give out the development being undertaken in these areas under the Border Area Development Programme (BADP) and Border Infrastructure and Management (BIM) Scheme.

    Linkage: The Pakistan-Afghanistan conflict shows problems of cross-border terrorism and porous borders. This question helps compare India’s border security system with instability along the Durand Line.

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