💥Mains Ready By December. Smash Mains & Smash PYQ Admissions Open

Talk to Mentor

Search results for: “”

What is the Uniform Civil Code debate?
Why in the News
The Union Home Minister has indicated that the Uniform Civil Code (UCC) would be implemented in all 21 States ruled by the National Democratic Alliance (NDA) by 2029. The statement builds on enactment that has already begun. Uttarakhand has had a UCC in force since January 2025, and UCC bills passed by the legislatures of Assam, Gujarat and Madhya Pradesh are awaiting Presidential assent. The tension the debate turns on is between two constitutional claims. Article 44 directs the State to endeavour to secure a UCC, while Article 25 guarantees the right to practise a religion of one’s choice and Article 29 protects the right of any section of citizens to conserve its distinct culture.
What is a Uniform Civil Code?
1. What it does: A UCC would apply the same set of secular personal laws to all people, irrespective of religion, caste or tribe.
2. Its constitutional basis: Article 44 provides that the State shall endeavour to secure a UCC for citizens throughout India.
3. What is already uniform: India already has uniform criminal laws, and common civil laws covering matters such as taxation, contracts and negotiable instruments.
4. What is not: Marriage, divorce and inheritance of property remain governed by personal laws based on religious doctrines.
How are personal matters governed today?
1. Hindus: Governed by laws such as the Hindu Marriage Act (1955) and the Hindu Succession Act (1956).
2. Tribals within the Hindu religion: Many may follow customary family laws under constitutional exceptions rather than the codified Hindu statutes.
3. Jains, Buddhists and Sikhs: Covered by Hindu laws, with Sikh marriages also registrable under the Anand Marriage Act (2012).
4. Christians and Parsis: Each community has its own personal laws.
5. Muslims: Governed by the Muslim Personal Law (Shariat) Application Act (1937).
Why did the Constituent Assembly place the UCC in Part IV?
1. The Assembly was divided: The framers did not reach agreement on whether a UCC belonged in the Constitution at all.
2. The case for a Fundamental Right: Some members wanted it made a Fundamental Right, to ensure uniformity in civil laws and secure equal rights for women.
3. The objection raised: Many members of the Muslim community opposed its inclusion, on the ground that a uniform civil code would violate the fundamental right to religion guaranteed in Part III.
4. The settlement reached: The provision was placed in the non justiciable Part IV, the Directive Principles of State Policy, so it directs the State without being enforceable in a court.
What are the arguments in favour of a UCC?
1. Secularism in substance: Subjecting all citizens to the same personal laws would make India secular in the true sense, rather than leaving the State to administer a different law for each community.
2. Gender justice: A UCC would ensure equal rights for women across religions in the matters governed by personal laws, which is described as the most vital argument for it.
What are the arguments against a UCC?
1. Conflict with the right to religion: Article 25 guarantees every person a fundamental right to practise a religion of one’s choice, and a UCC’s provisions on personal matters may run contrary to the scriptures of a religion.
2. Conflict with cultural rights: Article 29 gives any section of citizens a fundamental right to conserve its distinct culture, which the codification of family matters may cut across.
3. The tribal exemption: All four States that have enacted a UCC have exempted the tribal population from its ambit, on the grounds of constitutional safeguards protecting tribal culture and the belief that many tribal customs already provide adequate rights to women.
4. Why that exemption is contested: Exempting one section of society while making the code compulsory for all other groups, including religious minorities, is discriminatory on its face.
How have the courts and the Law Commission framed the way forward?
1. Article 25 is not unqualified: The right to religion is subject to constitutional morality and to other fundamental rights, including equality.
2. The Supreme Court on cultural protection: In the Section 6A of the Citizenship Act, 1955 (2024) case, the Court held that practices such as casteism and gender discrimination, which run against the spirit of the Constitution, would not receive protection under Article 29.
3. Ambedkar’s voluntary route: In the Constituent Assembly, B.R. Ambedkar advocated a UCC but suggested it could remain voluntary, with Parliament providing for it to apply to citizens who declare they are willing to be bound by it.
4. The Law Commission’s position: Its Consultation Paper on Reform of Family Law (2018) held that a UCC was neither necessary nor desirable at this stage, and argued instead for reforming discriminatory provisions across personal laws.
5. The standard it proposed: The emphasis should be on achieving “equality within communities” between men and women, rather than “equality between communities”, through legislative reform of marriage, divorce, custody, adoption, maintenance, succession and inheritance.
Challenges to a Uniform Civil Code
1. No published draft to debate: The argument runs on positions rather than on text, because no model code has been placed in the public domain for the country as a whole. Eg. The 22nd Law Commission sought public views on the UCC in 2023 without circulating a draft code alongside the notice.
  The Fix: Publish a model draft code for consultation before further State enactments, so objections attach to clauses rather than to the idea.
2. State by State enactment fragments uniformity: Personal law sits in the Concurrent List, so separate State codes can produce different rules on the same subject and defeat the uniformity the code is named for. Eg. Entry 5 of the Concurrent List covers marriage, divorce, infants and minors, adoption, wills and succession.
  The Fix: Anchor the State codes to a central framework law so the substantive rules converge even where each State enacts its own.
3. Scope creep beyond family law: A code enacted to equalise rights in marriage and succession can extend into regulating private arrangements that no personal law governed. Eg. Uttarakhand’s code makes registration of a live in relationship compulsory, with a penalty for failure to register.
  The Fix: Confine the code to marriage, divorce, maintenance, adoption and succession, and drop registration duties that create fresh offences.
4. Adjudication capacity: Codification moves disputes into family courts that already carry long pendency, so a new right delivers slowly in practice. Eg. Family courts constituted under the Family Courts Act, 1984 carry pendency running into lakhs of cases.
  The Fix: Expand family court benches and statutory mediation capacity before any commencement date is notified.
Conclusion
The debate is no longer only about Article 44 in the abstract, since four States have already legislated and the stated target is all 21 NDA ruled States by 2029. The unresolved question is whether equality in personal law is better reached by replacing the personal laws or by reforming the discriminatory provisions inside each of them, which is the choice between the State codes and the Law Commission’s 2018 position. The immediate marker is Presidential assent for the codes passed by the legislatures of Assam, Gujarat and Madhya Pradesh.
Back2Basics: Directive Principles of State Policy (DPSP)
1. Where they sit: Part IV of the Constitution, Articles 36 to 51, setting out goals the State is to pursue in making law and policy.
2. Their legal force: Article 37 makes them non justiciable, so no court can enforce them, while declaring them fundamental in the governance of the country.
3. Their source: The idea was drawn from the Irish Constitution, which in turn borrowed it from the Spanish Constitution.
4. Their relationship with rights: They are read alongside the Fundamental Rights in Part III, and courts use them to interpret the scope of those rights rather than to override them.
Matching Previous Year Question
“[2015, GS2, 12] Discuss the possible factors that inhibit India from enacting for its citizens a uniform civil code as provided for in the Directive Principles of State Policy.”
September 18, 2026
After US Fed and others, will RBI also raise interest rates in Oct?
Why in the News
The Federal Open Market Committee (FOMC), the rate setting panel of the US central bank, has raised the federal funds rate target range by 25 basis points to 3.75% to 4%, its first increase in three years. The decision reversed the expectation that a new Chair at the helm of the Federal Reserve would push forward the US President’s agenda of lower interest rates, and all 12 FOMC members, including the new Chair, voted for the increase. The move is one of several, with the European Central Bank, the UAE and Bahrain all raising rates within days. The tension now sits with India. The Reserve Bank of India (RBI) is mandated to hold consumer price inflation at 4%, retail inflation has run above target for three straight months, and its Monetary Policy Committee (MPC) meets from 5 to 7 October.
What is the Monetary Policy Committee (MPC)?
1. What it is: The statutory committee of the Reserve Bank of India that decides the repo rate, the rate at which the central bank lends to commercial banks against government securities.
2. Its mandate: It is required to target consumer price inflation of 4%, within a tolerance band of 2% to 6%.
3. How the rate works: A higher repo rate raises the cost of funds for banks, which passes into lending rates and is intended to compress demand and with it price pressure.
Why did the US Federal Reserve raise rates?
1. The stated inflation reason: The FOMC said “inflation remains elevated” and that the decision to increase rates will support a “timelier return” to the 2% inflation target, closing with the line that the Committee “will deliver price stability”.
2. The growth reading behind it: The FOMC described US economic activity as expanding at a “solid” pace, with domestic spending resilient, productivity growth strong and capital investment robust.
3. The labour market reading: Job gains have kept pace with the workforce and the unemployment rate has changed little, which removes the usual argument against tightening.
4. The political objection: The White House called the decision “rather unfortunate” and said it was not backed by a “particularly compelling economic case”, which the unanimous vote nonetheless overrode.
What does the wider round of rate decisions show?
1. The Gulf economies: The central banks of the UAE and Bahrain both raised their main interest rates by 25 basis points, to 3.9% and 4.5% respectively, mirroring the US decision.
2. Japan at a three decade high: The Bank of Japan is widely expected to raise interest rates to 1.25%, the highest in 31 years, on the reading that risks to Japanese inflation are skewed to the topside.
3. The drivers named for Japan: A weak yen raising import prices, no resolution in sight to the West Asia conflict or to traffic through the Strait of Hormuz, and strong artificial intelligence demand adding to goods and services prices.
4. The euro area: The European Central Bank raised interest rates by 25 basis points, noting that upward price pressures caused by the West Asia conflict are set to keep inflation “well above target for an extended period”.
5. The exception: The Bank of England left its policy rate unchanged at 3.75%, so the tightening round is broad rather than universal.
What is happening to prices in India?
1. Across every measure: In August, inflation for households, wholesalers and producers all increased, so the pressure is not confined to the retail basket.
2. The headline number: The Consumer Price Index (CPI) rose 4.82% in August, the third straight month above the 4% target, though still inside the tolerance band.
3. The near term projection: Some economists see CPI inflation jumping to 5.7% in September.
4. The central bank’s own path: The RBI expects CPI inflation to average 4.7% in July to September, 5.9% in October to December, 5.5% in January to March 2027 and 5.3% in April to June 2027, so its own forecast breaches the upper tolerance band in the current quarter.
Has price pressure become generalised, and does the MPC accept that?
1. The MPC’s August reading: The Committee said in August that there were “little signs of” a generalisation of price pressures, which is the reading that supported holding the rate.
2. The contrary assessment: The Group Chief Economic Adviser of the State Bank of India holds that the process of generalisation of price pressures has already started.
3. The projected peak on that view: CPI inflation may cross the 6.5% mark before dropping to less than 6% in early 2027, which places it outside the tolerance band rather than merely above target.
4. The prescription that follows: A 25 basis point increase at each of the October and December MPC meetings, followed by a pause to take stock against incoming data.
Challenges to a rate hike by the RBI
1. Supply driven price pressure: The increase is coming through imported energy and the West Asia conflict, and a policy rate acts on domestic demand rather than on an external supply shock. Eg. Retail inflation in India spiked in 2022 after crude and edible oil prices rose, and the repo rate was raised by 250 basis points over the following year without the shock itself abating.
  The Fix: Pair the rate action with supply measures on the affected commodities, such as duty adjustments and buffer releases, so the instrument matches the source of the pressure.
2. Transmission lag: Policy rate changes reach lending and deposit rates over several quarters, so an October increase acts on prices well after the projected peak has passed. Eg. Banks repriced external benchmark linked loans within a quarter during the 2022 tightening while deposit rates moved far more slowly.
  The Fix: Expand the share of loans linked to an external benchmark so the increase reaches borrowers in the quarter it is announced.
3. Cost to growth and to borrowers: A higher repo rate raises the cost of housing and working capital loans at a time when the price shock is already compressing household budgets. Eg. Home loan instalments rose across banks through the 2022 to 2023 tightening cycle.
  The Fix: Sequence the increase in two smaller steps with a stated pause, so borrowers and firms can price the path rather than the level alone.
4. Limited currency benefit: Raising rates while major central banks are raising theirs leaves the interest differential roughly unchanged, so the rupee gains little support from the move. Eg. The rupee weakened through 2022 despite repeated repo rate increases, because the Federal Reserve was tightening faster.
  The Fix: Rely on reserve management and rupee settlement arrangements for exchange rate support, rather than loading that job onto the policy rate.
Conclusion
The question is no longer whether India is an exception to a global tightening round, since every major central bank except one has moved in the same direction within a week. It is whether the MPC accepts that price pressure has generalised, which is the reading it rejected in August and which its own forecast for October to December now strains. The decision window is 5 to 7 October, and a 25 basis point increase would be the first in three and a half years and would take the repo rate to 5.5%.
Back2Basics: Federal Open Market Committee (FOMC)
1. What it is: The monetary policy body of the US Federal Reserve System, which sets the target range for the federal funds rate.
2. Composition: Twelve voting members, comprising the seven members of the Board of Governors, the President of the Federal Reserve Bank of New York, and four other regional Reserve Bank presidents serving on rotation.
3. Frequency: It holds eight scheduled meetings a year and issues a statement with each decision.
4. What the federal funds rate is: The rate at which US banks lend reserve balances to each other overnight, which anchors short term borrowing costs across the dollar system.
Matching Previous Year Question
“[2017] Which of the following statements is/are correct regarding the Monetary Policy Committee (MPC)? 1. It decides the RBI’s benchmark interest rates. 2. It is a 12-member body including the Governor of RBI and is reconstituted every year. 3. It functions under the chairmanship of the Union Finance Minister. Select the correct answer using the code given below: (a) 1 only (b) 1 and 2 only (c) 3 only (d) 2 and 3 only Answer: (a)”
September 18, 2026
India softens EU steel import curbs hit, secures 80% exports
Why in the News
India has safeguarded more than 80% of its steel supplies to the European Union (EU) by negotiating that the steel concessions contained in the free trade agreement between India and the EU be front loaded, so they apply before the agreement comes into force. The step answers a curb the EU has already imposed. Since July 2026 the EU has run an amended quota based system for certain steel imports that sharply cut country wise quotas in order to reduce overall steel imports. The tension is that the quota relief does not remove the cost barrier. Indian steelmakers will still have to pay the EU’s separate Carbon Border Adjustment Mechanism (CBAM) charge even where their exports fall within the quota.
What is the EU’s steel quota system?
1. The mechanism: It caps the volume of specified steel products that may enter the EU from each country at a preferential duty, with shipments beyond the cap facing a higher duty.
2. Country wise quotas: Each supplying country receives a named tonnage for the product categories inside the quota mechanism.
3. Residual quotas: Beyond the country specific allocation, a residual pool is available, and India’s access to that pool comes from the free trade agreement.
How much did India’s quota actually move?
1. The negotiated text: The trade deal text set India’s quota at 16.5 lakh tonnes for the items within the quota mechanism.
2. The implemented figure: When the system was finally implemented in July, India’s quota was expanded to 19 lakh tonnes.
3. With residual access: Counting the residual quotas India receives under the free trade agreement, the total potential quota for Indian steel exports now stands at 28 lakh tonnes.
4. Measured against past trade: India exported an average of 30 lakh tonnes of steel products falling under the quota regime over 2022 to 2024, so full use of the residual quotas secures more than 80% of quota based steel exports.
Why does front loading matter before the agreement is in force?
1. The timing problem: The EU’s amended quota system took effect in July 2026, while the free trade agreement had not yet come into effect, which would have left India inside the tightened country quota with no concession to draw on.
2. The concession obtained: The EU agreed to make the steel concessions applicable from July 2026, ahead of the agreement’s own entry into force.
3. Where the agreement stands: The text is currently with the European Commission to sign, which the government expects to take place in December.
Why does CBAM still bite despite the quota gain?
1. A separate instrument: CBAM is a carbon charge on imports and operates independently of the quota, so quota compliant steel is not exempt from it.
2. Verification as the practical cost: Exporters must have their embedded carbon figures verified, and Indian exporters currently have to look abroad for that service.
3. The response under way: India is working with the EU to build domestic capacity for CBAM verification, including recognition of Indian verification agencies, with the government trying to get at least 10 agencies verified.
Challenges to India’s steel exports to the EU
1. Carbon intensity of the production route: Indian steel is made largely through the coal based blast furnace route, so its declared embedded carbon sits above that of EU producers and the levy scales with that gap. Eg. Coal based production accounts for the bulk of India’s crude steel output.
  The Fix: Route export grade capacity through electric arc furnaces and direct reduced iron so the verified carbon content falls at source.
2. Residual quota exhaustion: Residual pools are allotted on a first come first served basis within each period, so an exporter shipping late in the period can find the pool used up. Eg. Steel entering the EU outside the safeguard quota faces a duty of 25%.
  The Fix: Publish a shipment calendar allocating the residual pool across Indian exporters within each quarter, rather than leaving it to who files first.
3. Concentration on a single destination: Securing 80% of quota based exports to one bloc leaves that volume exposed to a single regulator’s next revision. Eg. The EU cut country wise quotas in July 2026 without a corresponding change in Indian production plans.
  The Fix: Build parallel quota and tariff access in other markets so a single revision does not move the whole export book.
4. Compliance capacity in smaller mills: Carbon accounting at installation level requires measurement systems that secondary and smaller producers do not maintain. Eg. Much of India’s steel capacity sits with secondary producers operating induction furnaces.
  The Fix: Fund a shared carbon measurement and reporting facility for secondary producers at the cluster level.
Conclusion
The quota outcome is real but partial. India has converted a tightening safeguard into slightly more room than the trade deal text promised, and has done it before the deal is signed. The cost barrier has simply moved from the quota to the carbon charge, which no volume concession addresses. The next marker is the European Commission’s signature, expected in December, and the number of Indian verification agencies the EU actually recognises.
Back2Basics: Carbon Border Adjustment Mechanism (CBAM)
1. What it is: An EU measure that charges imports of specified goods for the greenhouse gas emissions embedded in their production, so imported goods bear a carbon cost comparable to EU produced goods.
2. Sectors covered: Iron and steel, aluminium, cement, fertilisers, electricity and hydrogen.
3. How it operates: Importers must report the embedded emissions of each consignment and surrender certificates priced against the EU’s own carbon market.
4. Timeline: A transitional reporting only phase began in October 2023, with the financial obligation on importers beginning from 2026.
Matching Previous Year Question
“[2017] ‘Broad-based Trade and Investment Agreement (BTIA)’ is sometimes seen in the news in the context of negotiations held between India and (a) European Union (b) Gulf Cooperation Council (c) Organization for Economic Cooperation and Development (d) Shanghai Cooperation Organization Answer: (a)”
September 18, 2026
PM pitches India as trusted base for chip manufacturing
Why in the News
The Prime Minister has said the world needs “new and trusted locations” for semiconductor manufacturing and that India is readying itself to meet that requirement, while inaugurating SEMICON India 2026 in New Delhi. He said India has entered the second phase of its semiconductor journey, moving beyond policy announcements and plant construction toward commercial production of chips. The pitch answers a specific market condition, that chip companies are looking to diversify their global supply chains away from a narrow set of manufacturing locations. The tension is between the pitch and the base it rests on. India’s semiconductor demand is projected at $110 billion by FY30, while domestic manufacturing remains at a nascent stage and imports have grown at a compound annual rate of 23%.
What is the India Semiconductor Mission?
1. What it does: It is the central programme that provides fiscal support to semiconductor projects in India, covering fabrication, packaging and other parts of the chip value chain.
2. Phase one scale: Twelve semiconductor projects were approved under the first phase, spanning fabrication, packaging and other value chain segments.
3. Phase two scope: The programme has moved to Semicon 2.0, a Rs 1.27 lakh crore programme that widens the focus beyond large chip factories.
Why is India pitching itself as a trusted location now?
1. Supply chain diversification: Chip companies are looking to spread manufacturing across more countries, which creates an opening for a location that is not already in the established set.
2. The trust framing: The pitch was made as a claim about reliability rather than cost, on the stated ground that the world’s trust in India is increasing alongside its economic growth.
3. The supporting economic markers: The claim was anchored on 7.8% quarterly GDP growth, a recent sovereign rating upgrade by a Japanese credit rating agency, and the New Delhi Declaration adopted at the BRICS Summit India hosted this month.
4. The stated pace: India has achieved in about four years what generally takes countries around a decade to build, though semiconductor manufacturing was described as a journey with no end point.
What has the first phase actually delivered?
1. Projects in production: Five of the twelve approved projects have already started commercial production, which is the marker separating phase one from phase two.
2. Memory output from Gujarat: Micron Technology has begun shipping DRAM (Dynamic Random Access Memory) and NAND memory products to customers globally from its Sanand facility in Gujarat.
3. The scale up path there: The plant is expected to assemble and test tens of millions of chips this year, scaling to hundreds of millions next year.
4. Design and engineering presence: Infineon Technologies, a German chipmaker, now has over 2,800 employees in India, and has said India has potential to strengthen its position across the global semiconductor value chain as its domestic market and technology capabilities expand.
What does Semicon 2.0 change about the approach?
1. Beyond the fab: The programme extends support to semiconductor equipment, materials, design, research and development, supply chains and skilled manpower, rather than to large chip factories alone.
2. The ecosystem logic: A fabrication plant depends on a surrounding base of tool makers, chemical and gas suppliers and trained engineers, which the first phase did not fund directly.
3. Project count: The next phase is expected to see the number of approved projects increase further.
How large is the demand gap the mission is chasing?
1. Projected demand: India’s semiconductor demand is projected to reach $110 billion by FY30 and to exceed $200 billion by FY35.
2. The import bill so far: The country spent almost $150 billion on semiconductor product imports between FY17 and FY25.
3. The trajectory if nothing changes: Imports grew at a compound annual growth rate of 23% over that period, and on the same trend annual imports could reach $240 billion by 2035.
4. The policy conclusion drawn: Building a comprehensive semiconductor ecosystem has been identified as an urgent national priority on the strength of that gap.
Challenges to the India Semiconductor Mission
1. Utility reliability at fab sites: A fabrication plant needs continuous ultrapure water and uninterrupted power, and an interruption of either scraps the wafers in process. Eg. Taiwan’s chip plants cut water use and trucked in supplies during the 2021 drought when the island’s reservoirs fell to record lows.
  The Fix: Ring fence dedicated water recycling plants and captive power capacity for each approved site as a condition of disbursal.
2. Fabrication workforce depth: India’s semiconductor engineers sit in design centres rather than in fabrication and process engineering, which is a different skill base. Eg. Design centres of global chipmakers have operated in Bengaluru and Hyderabad for over two decades without a commercial fabrication plant alongside them.
  The Fix: Tie a share of the incentive to process engineer placements trained through partnerships with operating fabs abroad.
3. Equipment and materials import dependence: The tools and high purity inputs a fab consumes come from a handful of global suppliers, so domestic assembly does not by itself reduce external exposure. Eg. Extreme ultraviolet lithography machines are produced by a single company, ASML of the Netherlands.
  The Fix: Anchor equipment and materials suppliers in India through long term purchase commitments from the approved plants rather than through subsidy alone.
4. Competition at mature nodes: India’s approved capacity targets older process nodes, where large capacity additions elsewhere can push prices below the level a new entrant needs. Eg. Sustained capacity expansion in China at 28 nanometre and older nodes has driven down prices for legacy chips.
  The Fix: Condition support on secured long term offtake contracts rather than on installed capacity alone.
Conclusion
The pitch is that trust and diversification, rather than cost, are what bring chip manufacturing to India. The measurable claim behind it is narrower, five plants in commercial production against a demand curve heading for $200 billion. Semicon 2.0’s widening into equipment, materials and skills is the part that decides whether the fabs have a supply base around them, and the count of projects approved under it is the next thing to watch.
Matching Previous Year Question
“[2025, GS3, 15] India aims to become a semiconductor manufacturing hub. What are the challenges faced by the semiconductor industry in India? Mention the salient features of the India Semiconductor Mission.”
September 18, 2026
Who has to pay MDR on UPI and who stands to gain the most?
Why in the News
The National Payments Corporation of India (NPCI) has released a circular allowing a Merchant Discount Rate (MDR) to be levied on certain Unified Payments Interface (UPI) payments from 15 October. The charge falls on person to merchant (P2M) payments above Rs 2,000 and is paid by merchants to payment processors and banks rather than by consumers. The circular follows a long public argument over whether UPI would be charged at all, which the Ministry of Finance answered with a press release saying banks have been advised to ensure merchants do not pass the charge on to customers, and that UPI application providers are expressly prohibited from imposing platform fees or hidden charges on users. The tension is over incidence. The Opposition argues the charge will raise prices for consumers, while the government argues it will not, and that even the impact on merchants will be minimal.
What is the Merchant Discount Rate (MDR)?
1. Definition: MDR is a fee for using UPI that is paid by the merchant to the payment processors and the banks that carry the transaction. Consumers do not pay it directly.
2. Who it is collected from: It is deducted from the merchant’s receipts, so the merchant receives less than the amount the customer sent.
3. Coverage on UPI: It applies only to person to merchant payments above a value threshold, not to transfers between two individuals.
What does a merchant actually pay, and on which transactions?
1. The standard rate: Mid to large sized merchants receiving UPI payments in excess of Rs 2,000 per transaction pay 0.4% of the transaction value.
2. The absolute cap: For transactions of Rs 75,000 and above, the MDR is capped at Rs 300 per transaction, so the charge stops rising with the ticket size.
3. Essential and thin margin sectors: Transactions of Rs 2,000 or more in railways, telecommunications, insurance, fuel and agricultural inputs attract a flat Rs 5 per transaction. The stated purpose is cost certainty for critical public services and for businesses operating on narrow margins.
4. Capital market payments: Payments to mutual funds, stockbrokers, dealers and for equities attract 0.02%, capped at Rs 300 per transaction, a lower rate justified as support for retail participation in formal financial markets.
How much of UPI escapes the charge altogether?
1. Person to person transfers: All P2P transactions remain free regardless of amount, under the specification that no transaction fee, platform fee or other charge may be imposed on individuals for sending or receiving money through UPI. P2P is about 37% of total UPI transaction volume.
2. Small ticket merchant payments: Payments to merchants of up to Rs 2,000 remain free of MDR, and these are another 60.5% of all UPI transactions by volume.
3. The combined exemption: Taken together, 97.5% of all UPI transactions remain free, since P2M payments above Rs 2,000 are just 2.5% of volume.
4. Small merchants and street vendors: Merchants receiving up to Rs 1 lakh per month through UPI QR codes under the Person to Person Merchant (P2PM) category are exempt, which pushes the charged share below 2.5%.
How large is the revenue pool, and how is it divided?
1. Value concentration: P2M transactions above Rs 2,000 are only 2.5% of volume but 20% of all UPI transactions by value.
2. The monthly ceiling: Of the Rs 29.8 lakh crore transacted over UPI in August 2026, P2M payments above Rs 2,000 were Rs 5.99 lakh crore, so the absolute maximum collectible is about Rs 2,400 crore a month. The caveats, exemptions, flat rates and caps mean the actual receipts will be lower.
3. The split: The payer’s bank takes about 40%, because it holds the customer’s account and bears the core authorisation, security and settlement costs. The merchant’s bank takes 30% for managing the merchant relationship, QR code deployment and merchant settlements.
4. The technology layers: The UPI app or Third Party Application Provider (TPAP) receives 20%, and the Payment Service Provider that links the technology partner bank to the central network switches receives the final 10%.
5. The promotion fund: A dedicated fund to promote UPI adoption among small merchants will receive an amount equal to 5% of total MDR collections. The circular does not specify which payment system player contributes that 5%.
Which institutions stand to gain the most?
1. Yes Bank on both legs: It is the payer bank in more than 50% of all UPI transactions and the payee bank in about 55%, so it collects the largest share of both the 40% and the 30% pools.
2. The next largest banks: ICICI Bank is the second largest payer bank at 18.3%, and Axis Bank is the second largest payee bank at about 19%.
3. The two dominant apps: PhonePe accounts for about 46% of UPI transactions by volume and Google Pay another 32%, so the TPAP pool flows overwhelmingly to two applications.
Challenges to the MDR on UPI
1. Pass through to consumers: The instruction that merchants must not recover the fee from customers is an advisory rather than an enforceable term, so the cost can surface as a higher listed price. Eg. Surcharging on card payments continued at fuel outlets and small retailers for years after similar advisories were issued.
  The Fix: Write the no pass through condition into the merchant onboarding agreement of the acquiring bank, with a customer complaint route attached to it.
2. Structuring below the threshold: A hard cut off at Rs 2,000 rewards splitting a single large payment into several smaller ones, which costs the payment system volume without collecting revenue. Eg. Cash dealings were routinely broken up below the Rs 2 lakh limit introduced under Section 269ST of the Income Tax Act, 1961 in 2017.
  The Fix: Charge on the merchant’s monthly aggregate receipts above a threshold rather than on each transaction, so splitting yields no saving.
3. The cliff at the small merchant limit: The P2PM exemption ends abruptly once monthly receipts cross Rs 1 lakh, so a marginal increase in turnover removes the exemption from the whole of a merchant’s qualifying receipts. Eg. A vendor receiving Rs 1.05 lakh a month loses the exemption entirely rather than on the excess alone.
  The Fix: Taper the charge above the limit so only receipts beyond Rs 1 lakh attract MDR.
4. Reinforcement of app concentration: A revenue stream keyed to transaction share rewards the applications that already hold most of the market. Eg. NPCI’s cap limiting any third party application to 30% of UPI volume has been deferred repeatedly since it was first framed in 2020.
  The Fix: Weight the small merchant promotion fund toward applications below a defined market share, so the subsidy runs against concentration rather than with it.
Conclusion
The charge is deliberately narrow in reach and wide in value. Almost all of UPI stays free, yet the fifth of transaction value that is charged sits with a small set of banks and two applications, which is where the revenue will settle. Whether the advisory against pass through holds is the thing to watch once the framework takes effect on 15 October.
Back2Basics: National Payments Corporation of India (NPCI)
1. What it is: An umbrella organisation for retail payments and settlement systems in India, incorporated in 2008.
2. Legal and institutional basis: It was set up as a not for profit company under the guidance of the Reserve Bank of India and the Indian Banks’ Association, and operates under the Payment and Settlement Systems Act, 2007.
3. Systems it runs: UPI, RuPay, the Immediate Payment Service, the National Automated Clearing House, FASTag and the Aadhaar Enabled Payment System.
4. Rule making role: It sets the operating circulars, pricing rules and participation norms that member banks and third party applications must follow on these systems.
Matching Previous Year Question
“[2018] Which one of the following best describes the term “Merchant Discount Rate” sometimes seen in news? (a) The incentive given by a bank to a merchant for accepting payments through debit cards pertaining to that bank. (b) The amount paid back by banks to their customers when they use debit cards for ﬁnancial transactions for purchasing goods or services. (c) The charge to a merchant by a bank for accepting payments from his customers through the bank’s debit cards. (d) The incentive given by the Government to merchants for promoting digital payments by their customers through Point of Sale (PoS) machines and debit cards. Answer: (c)”
September 18, 2026
Global Gender Gap Index 2026
Why in the News?

The World Economic Forum (WEF) released the Global Gender Gap Index 2026, ranking 145 economies across four dimensions. India retained its 131st position. Iceland remained at the top.

Key Findings
- India’s overall gender parity: 64.5%
- Global average: 69.2%
- India has closed 4.3 percentage points of its gender gap since 2006.
- Globally, 69.2% of the gender gap has been closed.
- Iceland: 1st, with 93% of its gender gap closed.
- Top three:
  - Iceland
  - Finland
  - Norway
- Chad: lowest-ranked country.
- Iran and Pakistan were also among the bottom three.
Four Dimensions of the Index

1. Economic Participation and Opportunity

India’s parity score: 41.2%
- Improved by 0.5 percentage points from the previous edition.
- Still 3.5 percentage points below India’s best score in 2013.
- Professional and technical workers: parity increased from 26.6% in 2006 to 49.9% in 2026.
- Legislators, senior officials and managers: 13.1% parity.
- Labour-force participation parity: 44.1%.
2. Educational Attainment
- India recorded 96.6% parity.
- Declined by 0.5 percentage points from the previous year.
- Educational gains have been a major contributor to India’s improvement since 2006.
3. Health and Survival
- India’s parity score: 95.6%.
- Sex ratio at birth remained nearly one percentage point lower than in 2006.
4. Political Empowerment
- India’s highest-performing subindex.
- 24.5% of the gender gap closed.
- Global rank: 67th.
- Parliament: 16.1% of the gender gap closed in 2026.
- Ministerial level: 5.9%, compared with 3.5% in 2006.
- India’s ministerial parity had reached 30% in 2019, before declining.
Important Global Observations
- Southern Asia was the lowest-scoring region in Economic Participation and Opportunity.
- Globally, political empowerment recorded the largest gains since 2006, but has experienced a reversal since 2016.
- Women account for 19.1% of CEO roles globally.
- Women remain underrepresented in Artificial Intelligence (AI), accounting for fewer than one in five AI engineers.
- Australia entered the global top 10 for the first time.
- Iceland was the only country to cross 90% parity, at 93%.
Important Full Forms
- WEF: World Economic Forum
- AI: Artificial Intelligence
- CEO: Chief Executive Officer
Prelims Quick Revision
- Global Gender Gap Index: World Economic Forum
- 2026 edition: 145 economies
- India: 131st
- Top: Iceland
- India overall parity: 64.5%
- Global parity: 69.2%
- Four dimensions:
  1. Economic Participation and Opportunity
  2. Educational Attainment
  3. Health and Survival
  4. Political Empowerment
- India’s highest subindex: Political Empowerment
- India’s Economic Participation parity: 41.2%
- India’s Educational Attainment parity: 96.6%
- India’s Health and Survival parity: 95.6%
- Political Empowerment: 24.5% gap closed
September 17, 2026
Mining amendment is unfair to States
Why in the News

Section 9D of the Mines and Minerals (Development and Regulation) Amendment Act, 2026 restricts State governments from imposing taxes, cesses or other levies on mineral rights or mineral-bearing land, except in accordance with conditions prescribed by the Centre. The provision follows Mineral Area Development Authority vs. Steel Authority of India (2024), in which a nine-judge Bench of the Supreme Court held that royalty payable on minerals is not a tax. The same Bench recognised the States’ legislative power to tax mineral rights and held that mineral-bearing land falls within the States’ taxation power over land. The tension is that Entry 50 of the State List lets Parliament limit State taxation of mineral rights, while the new section extends its restriction to levies on mineral-bearing land, a separate power under Entry 49 of the State List. What is contested is not the revenue States receive today but the levies they may be barred from raising tomorrow.

What does Section 9D do?
1. Scope of the restriction: It bars States from imposing taxes, cesses or other levies on mineral rights or on mineral-bearing land except as the Centre prescribes.
2. Where the discretion sits: The conditions under which a State may levy are set by the Central government, so future State levies depend on a framework the Centre controls.
3. What it does not touch: Royalty, the auction premium and the other mineral revenues States currently receive are not altered by the section.
What is the Centre’s case for a uniform levy framework?
1. Predictability for investors: The stated objective is to create a predictable tax environment, prevent excessive levies and encourage long-term investment in mining.
2. Project horizons: Mining projects involve enormous investment and operate over decades, so investors need assurance that financial rules will not change unpredictably from one year to the next.
3. Revenue assurance offered: The Centre’s position is that 90% of mining sector revenue accrues to the States and that this will continue.
Why do mineral-rich States object?
1. Uneven distribution of the resource: India’s mineral wealth is concentrated rather than spread evenly. Odisha, Jharkhand, Chhattisgarh and Karnataka hold enormous reserves of coal, iron ore and other minerals that feed industries across the country.
2. Costs land on the host State: The host State handles resettlement of displaced groups, environmental damage, pressure on public infrastructure and the long-term consequences of extracting minerals that can never be replaced.
3. Budgets tied to mining receipts: NITI Aayog’s Fiscal Health Index has recognised the role mining receipts play in the strong revenue mobilisation performance of Odisha and Chhattisgarh. Mining accounts for a large proportion of Odisha’s non-tax revenue.
4. Higher spending needs in mineral districts: Mineral producing districts require greater public expenditure precisely because they bear the costs of mining.
5. Loss of a natural advantage: A mineral-rich State ordinarily expects some ability to convert that advantage into resources for its own development, and the section substantially reduces that freedom.
What is the constitutional objection to Section 9D?
1. Entry 50 and its built-in limit: The Constitution gives States the power to tax mineral rights under Entry 50 of the State List, subject to limitations Parliament may impose through laws relating to mineral development.
2. Entry 49 is a separate power: The power to tax lands and buildings under Entry 49 of the State List is a distinct constitutional head and carries no equivalent parliamentary limitation clause.
3. Where the section goes further: By extending the restriction to taxes or levies on mineral-bearing land, the section reaches a power Entry 50 does not authorise Parliament to limit.
4. Risk to the 2024 ruling: The amendment risks rendering the impact of the nine-judge ruling nugatory, since a power the Court affirmed can be neutralised by prescription rather than by overruling.
5. The question it raises: How far can a Central law dealing with mineral development restrict a State’s exclusive power to tax land is now a live constitutional question rather than a mining policy dispute.
Challenges to Section 9D
1. Responsibility without fiscal capacity: A federal system cannot function where States carry obligations they have no independent means to fund. Eg. Mineral districts must fund resettlement and infrastructure repair from receipts the Centre may now condition.
  The Fix: Confine the prescribed conditions to levies on mineral rights under Entry 50 and leave the Entry 49 land taxation power untouched.
2. Predictability purchased by narrowing State choice: Uniformity makes taxation more predictable for investors and reduces the fiscal options available to States. Eg. A State cannot design a mineral-linked levy to fund a district-specific rehabilitation programme without Central prescription.
  The Fix: Set a ceiling on State mineral levies in the statute itself rather than routing each levy through Central approval, so investors get the certainty without the States losing the power.
3. Litigation risk over a settled question: A provision that neutralises a nine-judge ruling by executive prescription invites a fresh round of constitutional challenge. Eg. Mineral Area Development Authority vs. Steel Authority of India itself ran for decades before it was settled in 2024.
  The Fix: Refer the scope of Section 9D to the Inter-State Council under Article 263 before conditions are prescribed, so the levy framework is negotiated rather than litigated.
4. Concentration of the burden on a few States: The section’s cost is borne almost entirely by a handful of mineral-bearing States rather than spread across the Union. Eg. Odisha, Jharkhand, Chhattisgarh and Karnataka carry the bulk of the country’s coal and iron ore output.
  The Fix: Weight mineral-bearing districts explicitly in the next Finance Commission’s horizontal devolution formula, so extraction costs are recognised in transfers.
Conclusion

The minerals beneath a State’s soil serve the entire country, and the costs of extracting them are felt most directly by the people who live above them. A State that bears the infrastructural and social consequences of extraction must retain a meaningful stake in the economic value its natural resources generate. The unresolved point is whether a Central law on mineral development may condition a State’s power to tax land, a power the Constitution places under a separate entry and does not subject to parliamentary limitation. That question now sits between a statute in force and a nine-judge ruling that has not been overruled.

What is Fiscal Federalism?
1. About: It is the division of taxation powers, expenditure responsibilities and transfer arrangements between the levels of government in a federation.
2. Rationale: It exists because the level of government best placed to raise a tax is often not the level that must spend on the service, so the design has to close that gap without destroying accountability.
3. Vertical imbalance: The Union raises a larger share of revenue than it spends directly, while States carry the larger share of expenditure obligations, and transfers bridge the difference.
4. Horizontal imbalance: Revenue capacity differs sharply across States of similar need, which is why devolution formulas weight income distance, area and population rather than collections alone.
Back2Basics: NITI Aayog’s Fiscal Health Index
1. What it is: A composite index published by NITI Aayog that ranks States on the quality of their public finances.
2. What it measures: It scores States on sub-indices covering quality of expenditure, revenue mobilisation, fiscal prudence, debt index and debt sustainability.
3. First edition: The maiden report was released in January 2025 and covered 18 major States.
4. Why it matters here: It is the benchmark that records mining receipts as a driver of revenue mobilisation performance in mineral-bearing States.
Matching Previous Year Question

[2025] Examine the evolving pattern of Centre-State financial relations in the context of planned development in India. How far have the recent reforms impacted the fiscal federalism in India?
September 17, 2026
PMAY-U: Housing, Inclusion and Empowerment
Why in the News?

The Ministry highlighted the achievements of Pradhan Mantri Awas Yojana-Urban (PMAY-U) and the progress of PMAY-U 2.0, aimed at achieving Housing for All in urban areas. PMAY-U was launched in June 2015, while PMAY-U 2.0 was launched in September 2024.

Key Highlights

PMAY-U
- Provides all-weather pucca houses with basic civic amenities to eligible urban households.
- Focuses on:
  - Economically Weaker Sections (EWS)
  - Low Income Groups (LIG)
  - Middle Income Groups (MIG)
  - Slum dwellers
- Original mission period was up to March 2022, extended up to 30 September 2026 for completion of sanctioned projects.
PMAY-U 2.0
- Launched in September 2024.
- Implementation period: 2024-2029.
- Target: 1 crore additional urban poor and middle-class families.
- Financial assistance: up to ₹2.50 lakh per unit.
- Also includes affordable rental housing.
Income Categories
- EWS: Annual income up to ₹3 lakh
- LIG: ₹3 lakh to ₹6 lakh
- MIG: ₹6 lakh to ₹9 lakh
Four Verticals of PMAY-U 2.0

1. Beneficiary-Led Construction (BLC)
- Financial assistance up to ₹2.5 lakh.
- For eligible EWS families.
- Construction on own available land.
- Maximum carpet area: 45 sq m.
2. Affordable Housing in Partnership (AHP)
- Public/private agencies construct affordable houses.
- Houses generally have 30-45 sq m carpet area.
- Financial assistance up to ₹2.5 lakh per unit.
3. Affordable Rental Housing (ARH)
- Provides affordable rental accommodation.
- Covers EWS and LIG beneficiaries, including:
  - Migrants
  - Homeless persons
  - Industrial workers
  - Working women
  - Construction workers
  - Street vendors
  - Rickshaw pullers
  - Contractual workers
4. Interest Subsidy Scheme (ISS)
- Provides interest subsidy on eligible home loans.
- Applicable to loans sanctioned and disbursed on or after 1 September 2024.
- Covers EWS, LIG and MIG beneficiaries.
Major Achievements

As of 9 August 2026:
- 1.25 crore houses sanctioned under PMAY-U and PMAY-U 2.0.
- More than 1 crore houses completed and delivered.
- Under PMAY-U 2.0:
  - 18.38 lakh houses sanctioned
  - 14.40 lakh under BLC
  - 2.48 lakh under AHP
  - 1.36 lakh under ISS
  - 13,046 dwelling units under ARH
- Around 1 crore houses among the 1.25 crore sanctioned were allotted to women, either in the name of the female head of household or through joint ownership.
Inclusion and Empowerment

PMAY-U promotes:
- Women ownership/co-ownership of houses.
- Housing access for:
  - Scheduled Castes (SCs)
  - Scheduled Tribes (STs)
  - Other Backward Classes (OBCs)
  - Minorities
  - Senior citizens
  - Persons with disabilities
  - Transgender persons
Technology-enabled Implementation
- Unified Web Portal: application, processing, tracking and fund disbursement.
- PMAY-U Dashboard: real-time monitoring of key indicators.
- Geo-tagging: tracks houses through five stages:
  1. Grounding
  2. Foundation
  3. Superstructure
  4. Finishing and external development
  5. Completion
- Technology Sub-Mission (TSM): promotes modern and disaster-resilient construction technologies.
- Technology and Innovation Sub-Mission (TISM): promotes innovative, green and climate-responsive housing.
- Technology Innovation Grant (TIG): supports innovative technologies in AHP projects.
Prelims Quick Revision
- PMAY-U: launched in June 2015.
- PMAY-U 2.0: launched in September 2024.
- PMAY-U 2.0 period: 2024-2029.
- Target: 1 crore additional families.
- Four verticals: BLC, AHP, ARH, ISS.
- PMAY-U 2.0 covers EWS, LIG and MIG.
- ARH focuses on rental housing, including migrants and working women.
- ISS relates to home-loan interest subsidy.
- Technology tools include geo-tagging, dashboards and unified digital platforms.
September 17, 2026
Care That Goes Beyond the Prescription
Why in the News?

The Pradhan Mantri Bhartiya Janaushadhi Pariyojana (PMBJP) is expanding affordable healthcare beyond medicines through a wider basket of surgical, medical consumable and supportive-care products.

Key Highlights
- 20,000+ Janaushadhi Kendras across India.
- Product basket as of August 2026:
  - 2,110 medicines
  - 315 surgicals, medical consumables and devices
- Covers major therapeutic categories such as:
  - Cardiovascular
  - Anti-cancer
  - Anti-diabetic
  - Anti-infectives
  - Gastro-intestinal
  - Anti-allergic
Affordability Impact
- Sales during 2021-22 to 2025-26: ₹7,873.85 crore.
- Estimated savings to citizens: ₹37,200 crore.
Healthcare Beyond Medicines

Janaushadhi Bachpan
- Baby diapers and wipes
- Baby feeding bottles
- Manual breast pumps
- Infant feeding tubes
Monitoring and Recovery
- Electrical nebulizers
- Nebulizer masks
- Glucometer test strips
- Pulse oximeters
Elderly and Dependent Care
- Jan Aushadhi Swabhiman: adult diapers.
- Focus on hygiene, comfort, mobility and caregiving.
Products in Pipeline
- Knee brace
- Walker with sit-to-stand support
- Medical steam vaporizer
- Foot elevator pillow
- Pregnancy back support belt
- Cervical collar
Important Full Forms
- PMBJP: Pradhan Mantri Bhartiya Janaushadhi Pariyojana
- JAK: Jan Aushadhi Kendra
Prelims Quick Revision
- PMBJP provides quality-assured generic medicines at affordable prices.
- Distribution takes place through Janaushadhi Kendras.
- The basket now includes medicines + surgicals + medical devices + consumables.
- Janaushadhi Bachpan: infant-care products.
- Jan Aushadhi Swabhiman: adult diapers.
September 17, 2026
NITI Aayog: Trade Watch Quarterly
Why in the News?

NITI Aayog released the 9th edition of Trade Watch Quarterly for Q1 FY27 (April-June 2026), analysing global and Indian trade trends with a special focus on metals and ores.

Key Highlights
- Global goods trade: $13.7 trillion in H1 2026, up 12.5% YoY.
- Global services trade: grew 10.5%.
- India’s total trade: $506.9 billion in Q1 FY27, up 15.5% YoY.
- India saw strong merchandise exports in:
  - Mineral fuels
  - Electrical machinery
  - Nuclear reactors
  - Iron and steel
  - Vehicles
Metals and Ores
- Metals exports: $34.8 billion (2025).
- Iron and steel, articles of iron and steel, and aluminium contributed around 78% of metals exports.
- Metals and ores imports rose from $32.2 billion (2015) to $60.5 billion (2025).
- Key import-dependent minerals include:
  - Copper
  - Lithium
  - Cobalt
  - Nickel
Digitally Delivered Services
- Exports increased from $277 billion (2024) to $317 billion (2025).
- India became the 4th-largest DDS exporter, after the US, UK and Ireland.
Trade Diversification
- Tanzania and South Africa emerged among India’s top 10 export markets.
- Imports from Latin America and West Africa increased.
- Northeast Asia, West Asia-GCC and ASEAN together account for around half of India’s imports.
- Exports to FTA partners increased 36.3%, while imports rose 10%.
Policy Significance
- MMDR Amendment Act, 2026 can support exploration and investment in critical minerals.
- EU CBAM increases the need for competitive, low-carbon steel and aluminium exports.
- Priorities include:
  - Domestic mineral exploration
  - Recycling of critical minerals
  - Value addition
  - Renewable energy access
  - Lower logistics and financing costs
  - Export-market diversification
Important Full Forms
- NITI: National Institution for Transforming India
- DDS: Digitally Delivered Services
- FTA: Free Trade Agreement
- MMDR: Mines and Minerals (Development and Regulation)
- CBAM: Carbon Border Adjustment Mechanism
- GCC: Gulf Cooperation Council
Prelims Quick Revision
- Trade Watch Quarterly: NITI Aayog publication.
- Latest edition: 9th edition, Q1 FY27.
- India’s total trade: $506.9 billion.
- Metals and ores imports: $60.5 billion in 2025.
- India: 4th-largest digitally delivered services exporter.
September 17, 2026

More posts