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  • 1.85 lakh names out of Manipur, Sikkim poll rolls after SIR

    Why in the News

    The Election Commission of India has published the final photo electoral rolls of Manipur and Sikkim following the Special Intensive Revision. The revision removed 1,32,456 names in Manipur and 52,614 in Sikkim, 1.85 lakh in all, amounting to 6.3 per cent of the Manipur roll and 11.2 per cent of the Sikkim roll. The bulk of the removals were not adjudicated findings of ineligibility. They followed from enumeration forms that were never received in Manipur and from electors who could not be matched to an earlier roll in Sikkim. Kuki-Zo groups have said that community members displaced by the ethnic conflict that erupted on 3 May 2023 stand to be struck off, and the government has sought to dispel that apprehension.

    What is the Special Intensive Revision?

    1. The roll is rebuilt rather than carried forward: An intensive revision generates an enumeration form for every existing elector and requires it back, in place of the summary practice of amending the previous roll.
    2. A form not returned means a name not carried: An elector whose form is not received is excluded from the draft roll at the outset, before any question of eligibility is examined.
    3. Claims and objections follow the draft: The draft roll is published, claims and objections are filed and processed within a fixed window, and the final photo electoral roll issues after that.

    What do the Manipur numbers show?

    1. The roll shrank by 1,32,456: Manipur held 20,93,076 electors before the revision and holds 19,60,620 after it.
    2. The draft did the deleting: The draft roll published on 5 July carried 19,34,399 electors, against 1,58,677 whose enumeration forms were not received and who were excluded at that stage.
    3. The exclusion heads: Of those excluded, 72,473 were identified as shifted, 43,000 as deceased, 34,740 as absent, 7,394 as duplicate entries and 1,070 under other categories.
    4. The claims stage added more than it removed: 96,985 claims and objections were processed, 56,871 electors were included and 30,650 were deleted from the draft roll.

    What do the Sikkim numbers show?

    1. The roll shrank by 52,614: Sikkim held 4,71,081 electors before the revision and holds 4,18,467 after it.
    2. Mapping decided who was questioned: Of the 4,33,294 electors in the July draft, 3,61,159 or 83.35 per cent were mapped to their own or their parents’ details in a previous qualifying roll or the last revision. The remaining 72,135, or 16.65 per cent, could not be mapped.
    3. A digital flag added a second category: Among the mapped electors the Election Commission’s system identified 52,384 as carrying “logical discrepancies”.
    4. Notices ran far ahead of findings: 1,24,519 electors from the unmapped and discrepancy categories were issued notices for hearings, and 16,485 were found ineligible after verification.
    5. A separate deletion route: Another 324 electors were deleted through Form 7 on grounds including death or shifting, taking deletions during claims and objections to 16,809.

    Why do the Kuki-Zo objections matter to these figures?

    1. Displacement and shifting look identical on the roll: The largest single exclusion head in Manipur is 72,473 electors recorded as shifted, and internal displacement is precisely what produces an elector who is not found at a registered address.
    2. The instrument has no displaced category: A person living in a relief camp is neither a resident at the registered address nor an elector anywhere else, and the enumeration exercise offers no third classification.
    3. The apprehension preceded the exercise: Kuki-Zo groups raised the fear both before and during the revision, and the assurance offered was administrative rather than a change in the classification rules.

    What does the composition of the final rolls show?

    1. Manipur’s roll is majority women: 10,06,962 women electors against 9,53,350 men, a ratio of 1,056 women for every 1,000 men, alongside 308 third gender electors.
    2. Sikkim’s roll runs the other way: 2,12,534 men against 2,05,931 women, with two third gender electors.

    Challenges to the Special Intensive Revision

    1. The burden of proof moves onto the elector: A person already on the roll must re-establish entitlement rather than have it presumed. Eg. In the Bihar revision of 2025, Aadhaar did not figure among the documents initially listed for establishing eligibility.
      The Fix: Fix the admissible document list before the enumeration begins and bar additions or subtractions to it mid-exercise.
    2. Migrant and displaced electors are structurally disadvantaged: Enumeration works from a fixed address, and a seasonal migrant or a person in a relief camp has none for the reference period. Eg. An elector sheltering after the 2023 Manipur conflict cannot register at the camp and cannot be enumerated at home.
      The Fix: Recognise a relief camp or worksite address as ordinary residence for the duration of the revision.
    3. Deletion takes effect before an appeal is decided: A name goes off the roll on the officer’s finding, and the appeal runs afterwards. Eg. Appeals against inclusion or exclusion lie to the District Magistrate and then the Chief Electoral Officer under Section 24 of the Representation of the People Act, 1950.
      The Fix: Suspend the deletion until the statutory appeal window closes, so the roll reflects a final decision.
    4. A deleted elector has no automatic route back: Restoration is a fresh application rather than a correction of the same file. Eg. An elector deleted as absent must apply again under Form 6 to be re-enrolled.
      The Fix: Restore a name automatically on production of proof within the same revision cycle, without a fresh application.

    Conclusion

    The revision has produced a smaller and internally consistent roll, and it has not produced a finding that 1.85 lakh people were ineligible to vote. Two different tests are being reported as one: a documentary test of whether a form came back or a record could be matched, and a substantive test of citizenship, age and residence. The exercise is now closed in both States and the appeal machinery is the only route left for a person struck off. Whether that machinery can absorb objections at this scale, in a State where a section of the electorate has been displaced for three years, is the open question.

    Back2Basics: Revision of electoral rolls under the Representation of the People Act, 1950

    1. Statutory basis: Section 21 empowers the Election Commission to prepare and revise electoral rolls, either as a matter of course before an election or by special direction.
    2. Two modes of revision: An intensive revision prepares the roll afresh through house-to-house enumeration. A summary revision carries the existing roll forward and invites claims and objections against it.
    3. The forms: Form 6 seeks inclusion of a name, Form 7 objects to an inclusion or seeks a deletion, and Form 8 covers correction of particulars and transposition within a constituency.
    4. Qualifying dates: Eligibility is tested with reference to 1 January, with 1 April, 1 July and 1 October added as further qualifying dates from 2022.

    [2026, GS2, 10 marks] Is the right to vote a fundamental right? Discuss the position of the Election Commission of India while undertaking the revision of electoral rolls. Can it also examine the question of citizenship of voters?”

  • Why does India’s food safety system need a Clint Eastwood?

    Why does India’s food safety system need a Clint Eastwood?

    Why in the News

    India’s food safety regulation fails at disclosure and enforcement rather than at data collection. Between May and July a Maharashtra Food and Drug Administration drive led by a 2005 batch Indian Administrative Service officer inspected 3,137 restaurants, issued 764 improvement notices and shut 165 eateries.

    What is FoSCoS?

    1. The regulator’s integrated digital platform: The Food Safety Compliance System (FoSCoS) is the Food Safety and Standards Authority of India’s single platform for licensing, inspections, laboratory results and penalties, with the compliance chain digitised and connected.
    2. The designed sequence: A violation is found, a laboratory test is ordered, results are analysed, an audit is conducted, adjudication follows, a penalty issues and the establishment is closed.
    3. The record is held, never published: The platform accumulates violation data that never reaches the person choosing where to eat.

    Why does the enforcement chain stall?

    1. The design is a series of checkpoints: A violation sits in audit, then in adjudication, then in enforcement.
    2. No step carries a closing clock: Each checkpoint can hold a file indefinitely, so a violation is never formally disposed of.
    3. The system has more blockers than doers: The count of officers who can stop a file exceeds the count who can conclude one, so enforcement resumes only when a senior officer personally drives it.

    What did the Maharashtra drive actually demonstrate?

    1. A crackdown is not a system: The drive produced closures at a scale the routine machinery had not, using powers the routine machinery already held.
    2. A folk hero is evidence of failure: Celebrating an enforcement officer amounts to conceding that the enforcement design does not work without one.
    3. The output is not durable: An enforcement wave attached to one officer’s posting ends with that posting, and the platform returns to recording violations nobody acts on.

    What do the disclosure regimes elsewhere show?

    1. Singapore publishes the result where the customer stands: Inspections and rules resemble India’s. A failed inspection produces a rating displayed on the storefront and online.
    2. The pressure that works is commercial: The owner fears customers who see a failed grade and walk away, not the inspector or the fine. Revenue falls the same week and the problem is fixed at once.
    3. Denmark and Australia publish within days: Violations become public within days and the media carries them.
    4. Publication also disciplines the regulator: A lenient district looks bad against a neighbouring district’s published record, so an official cannot let files sit unseen.

    Why would publication work where inspection has not?

    1. The system is built for the wrong user: The compliance chain is designed for the convenience of the regulator, and the customer, who bears the risk, sees none of its output.
    2. Automatic publication is the specific proposal: Violation data should go public online within 48 hours, in food delivery apps and in restaurant windows, so a customer knows before ordering.
    3. A working regulator is invisible: Countries with published hygiene ratings generate no news coverage of their food safety enforcers, because enforcement there is routine rather than exceptional.

    Where else would published regulatory data change behaviour?

    1. Real estate: Buyers cannot tell whether a building was flagged for structural problems. Municipal violation history displayed in property listings would move demand away from flagged buildings and force developers to remedy them.
    2. Television channels: Official data exists on complaints against news channels for fake news, hate speech and bias, and never appears at the point where a viewer chooses a channel.
    3. Schools: Education departments inspect schools and record violations that parents never see while comparing institutions.
    4. Hospitals: Data on doctor complaints, disciplinary action and malpractice cases is held and withheld, so a patient chooses on reputation alone.

    Challenges to the food safety regulator’s enforcement design

    1. Testing capacity and procedure are the weak link: An enforcement order stands only if the sampling and laboratory chain behind it survives challenge. Eg. The 2015 national recall order on Maggi noodles was set aside by the Bombay High Court in August 2015, partly over how the samples had been tested.
      The Fix: Accredit a referral laboratory for every zone and publish its sample turnaround time against a fixed standard.
    2. Penalties are capped in absolute rupees: A ceiling fixed in the statute does not scale with the turnover of the business penalised. Eg. Section 52 of the Food Safety and Standards Act, 2006 caps the penalty for sub-standard food at Rs 5 lakh.
      The Fix: Link the penalty for a repeat violation to declared annual turnover rather than to a flat statutory ceiling.
    3. Most food businesses are registered rather than licensed: Small operators below a turnover threshold need only registration, which carries a lighter inspection and record obligation. Eg. Street food vendors and small eateries fall almost entirely into the registration category.
      The Fix: Extend a simplified published hygiene grade to registered outlets, so the lighter compliance route still produces a visible signal.
    4. The regulator sets standards and does not enforce them: Designated officers and food safety officers are appointed and paid by State commissioners, so the national platform records violations that no national authority can act on. Eg. An enforcement drive in one State changes nothing about a chain’s outlets in the next State.
      The Fix: Publish State-wise enforcement counts and pendency on the platform, so a State’s inaction is visible against its neighbours.

    Conclusion

    The instrument that would change behaviour is already built and already loaded, and it is pointed at the regulator instead of at the customer. Disclosure converts a compliance record into a commercial consequence, which is the one pressure a restaurant answers within the week. What is worth watching is whether any State food safety commissioner makes publication automatic and time-bound rather than discretionary, since the platform holding the data is national and the decision to open it is not.

    Laws and Rules Governing Food Safety Regulation

    1. Food Safety and Standards Act, 2006: Consolidated the earlier food laws into a single statute and created the Food Safety and Standards Authority of India as the standard-setting regulator.
    2. It repealed the Prevention of Food Adulteration Act, 1954, which had governed food adulteration for five decades.
    3. Food Safety and Standards (Licensing and Registration of Food Businesses) Regulations, 2011: Split food businesses into registration and licensing categories by turnover and scale of operation.
    4. Food Safety and Standards (Labelling and Display) Regulations, 2020: Fixed the mandatory declarations and the display obligations for food service establishments.
    5. Consumer Protection Act, 2019: Created the Central Consumer Protection Authority, which acts against misleading advertisements and unsafe goods independently of the food regulator.

    Government Initiatives for Food Safety

    1. Eat Right India: The regulator’s national movement combining regulatory measures, industry self-compliance and consumer awareness on safe and healthy food.
    2. Food Safety Training and Certification (FoSTaC): Mandatory training and certification of food safety supervisors for licensed food businesses.
    3. Clean Street Food Hub and Eat Right Station certification: Audited hygiene certification for street food clusters and railway stations.
    4. BHOG, Blissful Hygienic Offering to God: Hygiene certification programme for places of worship that prepare and distribute prasad.

    [2018] Consider the following statements:

    1. The Food Safety and Standards Act, 2006 replaced the Prevention of Food Adulteration Act, 1954.

    2. The Food Safety and Standard Authority of India (FSSAI) is under the charge of Director General of Health Services in the Union Ministry of Health and Family Welfare.

    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

  • The political cost of UCT schemes

    Why in the News

    Unconditional cash transfer schemes aimed at women have become a standard electoral instrument in India since 2020, and the argument now is that they carry a political cost their designers cannot remove.

    What is an unconditional cash transfer scheme?

    1. Cash paid without a behavioural condition: The transfer reaches an identified beneficiary on eligibility alone, with no requirement to enrol a child, attend a clinic or perform work.
    2. The named State schemes: Kalaignar Magalir Urimai Thittam in Tamil Nadu, Lakshmir Bhandar in West Bengal and Gruha Lakshmi Yojana in Karnataka are the principal instances.
    3. The stated welfare purpose: The schemes provide financial support to women, and partially advance Sustainable Development Goal 5.4 (recognition and valuation of women’s unpaid domestic and care work).

    Why can beneficiary targeting not be made accurate?

    1. Incomes are not observable: Governments cannot directly observe the incomes of most workers in the informal sector.
    2. Proxies stand in for income: Eligibility is inferred from land ownership, electricity consumption or household assets.
    3. Both errors follow from the proxy: Inclusion errors send benefits to ineligible households. Exclusion errors leave eligible households out.

    What does the Kalaignar Magalir Urimai Thittam experience show?

    1. The promise was universal: Rs 1,000 a month was promised to all women-headed households before the 2021 election.
    2. The launch was restricted: Fiscal constraints produced eligibility limits on income, land ownership and other criteria at launch in September 2023, covering about 1.13 crore women.
    3. Expansion followed complaints, not review: Another 16.94 lakh beneficiaries were added in December 2025 after widespread complaints from women who believed they met the criteria. The scheme cost Rs 13,807 crore in 2025-26.
    4. The expansion did not settle the grievance: Women who considered themselves unfairly excluded became more aggrieved when beneficiaries received an advance of three months’ entitlement along with a special summer relief payment.

    Why does a perceived error cost as much as a real one?

    1. Belief drives grievance, not eligibility: An individual who fails the official criteria may still believe the treatment was unfair, and votes on that belief.
    2. Qualifying households attract resentment: A household that legally qualifies may be regarded as undeserving where it appears relatively affluent.
    3. The two logics pull in opposite directions: Economics favours targeting so that scarce public resources reach those most in need. Politics rewards broader inclusion, because voters weigh benefits they believe were unfairly denied to them.
    4. Small shifts decide outcomes: The precise electoral impact cannot be measured, and modest shifts in voter preference decide closely contested constituencies.

    What is the fiscal case against unconditional transfers?

    1. The national bill: States are expected to spend about $18 billion on unconditional cash transfers in 2025-26, according to the latest Economic Survey.
    2. The money is switched rather than raised: Financing requires expenditure switching or a larger fiscal deficit.
    3. Productive spending is displaced: Resources available for employment generation and self-employment programmes fall.
    4. Withdrawal is not an option once dependence sets in: Parties escalate the amount instead of ending the transfer, which produces competitive welfarism.

    Does a conditional design perform better?

    1. The benefit is tied to an outcome: Conditional and incentive-linked transfers link payment to a socially desirable behaviour, so the money buys a developmental gain alongside relief.
    2. Self-selection replaces verification: Participation in Tamil Nadu’s Midday Meal Scheme depends on school enrolment, so beneficiaries select themselves and grievances fall.
    3. The political cost falls with the targeting burden: A programme tied to education or another desirable behaviour needs no proxy means test, so it generates no perceived exclusion error.

    Challenges to unconditional cash transfers

    1. There is no current income record to target on: Welfare lists rest on a deprivation ranking that ages faster than household circumstances change. Eg. The Socio-Economic and Caste Census of 2011 remains the base for several central and State beneficiary lists.
      The Fix: Re-run the deprivation survey on a fixed cycle and publish the ranking rules, so exclusion can be contested against a stated test.
    2. Exclusion falls hardest on those without documents: Authentication failure removes a household that is eligible on every substantive criterion. Eg. Aadhaar authentication failures in ration distribution in Jharkhand’s Simdega district were linked to a starvation death in 2017.
      The Fix: Mandate an offline exception route at every disbursement point, with the exception count published monthly.
    3. The transfer amount is fixed in nominal terms and erodes: Inflation cuts the real value of a flat monthly figure that no rule revises. Eg. The maternity benefit under the Pradhan Mantri Matru Vandana Yojana has stayed at Rs 5,000 since 2017.
      The Fix: Index the transfer to the consumer price index with an automatic annual revision.
    4. Cash cannot substitute for a service that does not exist: A transfer lets a household buy a service only where a provider is present. Eg. A cash benefit cannot purchase schooling or primary care in a block that has neither a functioning school nor a health centre.
      The Fix: Pair every new transfer with a published service-availability audit for the districts it covers.

    Conclusion

    Targeting error is not an implementation defect in an unconditional cash transfer. It is a property of paying cash on an inferred income in an economy where income cannot be observed. The design therefore buys relief at a political price the government cannot negotiate down, and raising the amount does not buy it down either. The alternative on offer is not universality but conditionality: tie the payment to a behaviour the household chooses, and the household sorts itself.

    Cash Transfer Based Welfare in India

    1. About: Benefit is paid in cash directly into a beneficiary’s bank account in place of a subsidised good, a price support or an in-kind entitlement.
    2. The delivery rails: The Jan Dhan-Aadhaar-Mobile combination supplies the account, the identity and the confirmation, and the Public Financial Management System routes the payment.
    3. Where it began at scale: Cooking gas subsidy transfer under the PAHAL scheme in 2014-15 was the first large national rollout.
    4. Present spread: Direct Benefit Transfer now runs across more than 300 central schemes in addition to State transfers.

    Government Initiatives for Cash Transfer Based Welfare

    1. Pradhan Mantri Kisan Samman Nidhi: Rs 6,000 a year in three instalments to landholding farmer families, run by the Ministry of Agriculture and Farmers’ Welfare.
    2. National Social Assistance Programme: Old age, widow and disability pensions to below poverty line households, run by the Ministry of Rural Development.
    3. Direct Benefit Transfer Mission: Housed in the Cabinet Secretariat, it coordinates transfer implementation across ministries and maintains the scheme-wise public dashboard.

    [2022, GS2, 10 marks] Reforming the government delivery system through the Direct Benefit Transfer Scheme is a progressive step, but it has its limitations too. Comment.

  • State consent not taken, put HC Chief Justice appointment on hold: Punjab Govt

    Why in the News

    The Punjab Cabinet has passed a resolution demanding that the appointment of Justice Ashwani Kumar Mishra as Chief Justice of the Punjab and Haryana High Court be put on hold. The resolution states that the Centre notified the appointment without obtaining the State government’s views, as the Memorandum of Procedure for the appointment of High Court judges requires. The Supreme Court Collegium had recommended four High Court Chief Justices on 6 August. The Centre sought the views of the Chief Ministers and Governors of the four States on 12 August, and notified the appointments on 5 September. The contest is over a document that gives a State a consultative role, sets no period within which the State must use it, and creates no right the State can enforce.

    What is the Memorandum of Procedure?

    1. A working document, not a statute: The Memorandum of Procedure sets out the steps by which judges of the Supreme Court and the High Courts are recommended, consulted on and appointed. It carries no statutory force and confers no enforceable right on any party.
    2. It came out of the Judges cases: The Supreme Court’s Second Judges case (1993) and Third Judges case (1998) placed primacy in a Collegium of senior judges. The Memorandum was drawn up afterwards to record how the Collegium and the executive would process an appointment.
    3. The State enters as a consultee: For a High Court appointment the Centre seeks the views of the Chief Minister and the Governor of the State before the recommendation is processed for notification.

    What has Punjab demanded, and on what ground?

    1. A hold on the appointment and the oath: The Cabinet resolved at an emergency meeting that the appointment and the administration of oath be put on hold until Punjab’s views are obtained and duly considered.
    2. The stated ground is procedural bypass: The Cabinet described the appointment as “yet another instance” of the Centre bypassing Punjab’s constitutional rights and established procedure.
    3. The objection was escalated to the constitutional heads: The Chief Minister wrote to the President, the Prime Minister and the Governor, enclosing the resolution. The Chief Minister is not expected to attend the oath ceremony.
    4. The Bar has framed it as executive overreach: The Punjab and Haryana High Court Bar Association has read the notification as the executive acting past a procedural safeguard rather than as a routine posting.

    Why did the appointment proceed without Punjab’s response?

    1. The document fixes no time period: Nothing in the Memorandum states how long a State may take to send its views.
    2. Convention supplies the missing clock: Consent for a Chief Justice is conventionally dealt with immediately, and inputs from a Chief Minister on a High Court judge take four to six weeks.
    3. Silence is read as assent: After a certain period the Law Ministry deems that the State government had no objection to the recommendation.
    4. Three other States had already replied: Bihar, West Bengal and Maharashtra sent their inputs immediately. The delay by Punjab held up those three appointments as well.

    Where does this leave the wider appointments cycle?

    1. Every High Court now has a regular Chief Justice: Eight appointments were notified on Collegium recommendations of 6 August and 31 August, filling all 25 High Courts. The Chhattisgarh appointment followed separately after its sitting Chief Justice retired on 4 September.
    2. The Collegium’s attention shifts to the top court: Four vacancies remain in the Supreme Court, which trace to the Supreme Court (Number of Judges) Amendment Ordinance, 2026 raising the sanctioned strength in May. The Court currently sits at 34 judges.
    3. The window is narrow: A fifth seat falls vacant on 29 November on a retirement, and the Chief Justice of India retires on 9 February 2027. These are the last recommendations the present Collegium can make.

    Challenges to the Memorandum of Procedure

    1. The revised document has stayed unsettled for a decade: After the Supreme Court struck down the National Judicial Appointments Commission in Supreme Court Advocates-on-Record Association v. Union of India (2015), a five judge Constitution Bench directed the government to finalise a revised Memorandum. Eg. Successive drafts have moved between the Collegium and the Law Ministry without agreement on a national security exception or on a permanent secretariat.
      The Fix: Settle the revised document against a dated deadline set by the Court, so that the operative rulebook is a published text rather than a decade of correspondence.
    2. No clause binds the executive to notify within a period: A recommendation the Collegium reiterates is binding in substance, and nothing fixes when the notification must issue. Eg. Justice K M Joseph’s elevation was recommended in January 2018, returned by the government, reiterated in July 2018 and notified only in August 2018.
      The Fix: Write a fixed outer limit for notification into the revised Memorandum, with the recommendation taking effect on its expiry.
    3. The criteria for selecting a Chief Justice are unpublished: Seniority combined with suitability operates as a convention rather than as a stated test, so a comparative assessment cannot be examined. Eg. Collegium resolutions record the name recommended without the assessment that produced it.
      The Fix: Publish the criteria and an anonymised comparative note with each Chief Justice recommendation.
    4. A State’s view has no remedy attached to it: The Memorandum creates no right, so a State that believes it was not consulted has no forum that can stay the appointment. Eg. Punjab’s objection could travel to the President and the Prime Minister and to no authority able to halt the oath.
      The Fix: Record the State’s response, or its absence, on the file as a dated entry that the notification must recite.

    Conclusion

    The dispute is not about the individual appointed. It sets a State’s claim to be consulted against a document that binds nobody and can be satisfied by the passage of time. A State that responds late has its silence converted into consent, and a State that objects afterwards has nowhere to take the objection. Until the Memorandum of Procedure is itself settled, a State’s dissent on a judicial appointment will keep arriving as a political resolution rather than as a step in the appointment process.

    Back2Basics: The Collegium system

    1. What it is: A body of the senior most judges of the Supreme Court that recommends appointments and transfers of judges to the Supreme Court and the High Courts.
    2. Composition: The Chief Justice of India and the four senior most judges of the Supreme Court for Supreme Court appointments. A smaller collegium of the Chief Justice of India and two senior most judges handles High Court recommendations.
    3. Source of authority: It is a judicial creation, not a constitutional provision. Articles 124 and 217 speak only of consultation with the judiciary.
    4. The executive’s residual role: The government may return a recommendation once with its objections. A reiterated recommendation is binding on it.

    Matching Previous Year Question

    “[2025, GS2, 15 marks] Discuss the evolution of collegium system in India. Critically examine the advantages and disadvantages of the system on appointment of the Judges of the Supreme Court of India and that of the USA.”

  • Judicial integrity – a case the Court cannot ignore

    Why in the News

    A sitting judge of the Supreme Court of India, Justice Sandeep Mehta, wrote three letters to the Chief Justice of India (CJI) on 2, 10 and 17 August seeking the immediate transfer of the Acting Chief Justice of the Rajasthan High Court, Justice Sanjeev Prakash Sharma. The letters allege victimisation of judges, maladministration, improper shifting of cases to his own Bench, and nepotism in appointments to the Permanent Lok Adalat. The last of the three records concern at the CJI’s inaction, with Justice Sharma due to retire on 26 September. The stated response is that allegations cannot be treated as findings and must be dealt with strictly through the established institutional mechanism. The tension is that the established mechanism is precisely what has not worked, since the appointment system carries no published criteria and the removal machinery has never removed a judge.

    What is the “master of the roster” power?

    1. What the power is: The Chief Justice of a court holds the exclusive administrative authority to constitute Benches and to assign cases among them.
    2. Where it comes from: It rests on convention and on the Supreme Court’s own rulings treating the Chief Justice as first among equals for administrative purposes, not on any statutory provision.
    3. Its reach in this case: The power covers roster allocation for the whole court, and it is exercised by the Acting Chief Justice wherever the office of Chief Justice is vacant.

    What do the letters allege?

    1. Interference with the roster: Cases were allegedly shifted improperly to the Acting Chief Justice’s own Bench, in misuse of the master of the roster power.
    2. Pressure on colleagues: Judges were allegedly intimidated with the threat of retributive measures including transfers, on the basis of claimed proximity to the CJI.
    3. Favouritism at the Bar: The letters refer to specific instances of alleged favouritism towards a chosen few among the lawyers.
    4. Appointments outside the court: Nepotism is alleged in appointments to the Permanent Lok Adalat, the statutory body that decides disputes relating to public utility services and whose award is final and binding.
    5. The state of the record: There has been no official denial of the reports concerning the contents of the letters, and Justice Sharma has publicly denied the accusations as baseless.

    What is the record behind the appointment itself?

    1. A long acting tenure: The High Court functioned under an Acting Chief Justice for about 11 months, which is not a sound institutional arrangement for a court of that size.
    2. An earlier transfer out: Justice Sharma was transferred to the Patna High Court in 2022.
    3. A rejected repatriation: His request to return to the Rajasthan High Court was rejected by the Collegium in 2023, which instead proposed his transfer to the Punjab and Haryana High Court.
    4. A reversal without a stated reason: He was nonetheless retransferred to the Rajasthan High Court in 2025 and then allowed to function as Acting Chief Justice with wide administrative and judicial powers.

    How did the institution respond?

    1. The Bar acted first: Lawyers staged a sit-in protest on the High Court premises, following which Justice Sharma opted out from hearing cases.
    2. The Collegium moved on the vacancy: On 31 August the Supreme Court Collegium recommended the appointment of Justice Sanjay Agrawal as the new Chief Justice of the Rajasthan High Court, and that appointment has since been made.
    3. The complaint itself drew no step: For several weeks no cogent step was initiated on the letters, with the retirement date approaching.
    4. The trust cost is measurable: Transparency International’s 2002 report, based on a household survey, identified the judiciary as the second-most corrupt institution in certain South Asian countries including India.

    Why does the appointment system produce this?

    1. There are no criteria at all: The selection of judges proceeds without published standards against which a candidate can be assessed or a rejection explained.
    2. The Collegium and the Executive must collaborate: The unavoidable joint working of the Collegium and the Union Executive under the present system makes appointments partisan, opaque and often arbitrary.
    3. The filter cannot do the job asked of it: A process built this way is incapable of identifying the cleanest and most meritorious candidates.
    4. The link to corruption is direct: Corruption in the judiciary is inseparable from the method of selecting candidates for judicial office, so the accountability problem starts at entry rather than at removal.

    Why does the removal machinery not work?

    1. The inquiry statute is dormant: The Judges (Inquiry) Act, 1968 is inadequate to tackle judicial corruption and has for all practical purposes become defunct.
    2. A criminal investigation cannot begin: In K. Veeraswami vs Union of India (1991) the Supreme Court held that the permission of the CJI is a necessary precondition for registering a First Information Report against a judge of the higher judiciary. The requirement is circular in practice, because the police will not seek permission without clinching evidence and cannot obtain that evidence without investigating.
    3. Impeachment has failed as a route: Removal on the ground of proved misbehaviour or incapacity, as provided by Articles 124(4) and 217(1)(b) of the Constitution, has not worked in practice.
    4. The internal route has no teeth: The in-house mechanism adopted by the Supreme Court in 1999 has not proved fault-free or effective.
    5. The legislative fix lapsed: The Judicial Standards and Accountability Bill passed the Lok Sabha in 2012 and lapsed with the dissolution of the 15th Lok Sabha in 2014, and the later effort to revive it with changes remained a non-starter.

    What do other systems do differently?

    1. Canada invites applications: Candidates apply for judicial office rather than being identified privately, so the pool and the criteria are both visible before a selection is made.
    2. The United Kingdom uses an independent body: Judicial selection is conducted by a body separate from both the judiciary and the executive, which breaks the circularity of judges choosing judges.
    3. Neither is currently available in India: Both arrangements remain unthinkable in the Indian setting, which is why the accountability argument keeps returning to the removal stage rather than the entry stage.

    How have earlier Chief Justices responded to comparable situations?

    1. The 1990 precedent, advice to step back: When an inquiry was underway against Justice V. Ramaswami for alleged misconduct, the then CJI advised him to take leave and keep away from judicial work.
    2. The 1993 precedent, work withheld after a failed motion: The impeachment motion against him failed in Parliament following the Congress party’s strategic abstention. He attempted to resume judicial work with about nine months of tenure remaining, and the then CJI refused to allocate any cases to him for hearing.
    3. The recent precedent, immediate transfer: After partly burnt currency notes were reportedly found at the Delhi residence of Justice Yashwant Varma, the then CJI quickly transferred him to the Allahabad High Court, where he was practically not allocated judicial work.
    4. The Court’s own statement of the duty: In XXX vs Union of India (2025) the Supreme Court emphasised the responsibility of the CJI in matters relating to judicial integrity and allegations of corrupt practices.

    Challenges to judicial accountability in India

    1. Asset declaration rests on resolution rather than statute: Judges of the higher judiciary declare their assets under an internal resolution, so a failure to declare carries no legal consequence. Eg. Publication of the declarations on the Supreme Court’s website began only in 2025.
      The Fix: Place the declaration requirement in statute, with an annual filing deadline and a public register maintained by an authority outside the court.
    2. The selection record stays outside disclosure: The reasons recorded for an elevation, a rejection or a transfer are not published, so a questionable appointment cannot be traced to a reasoning. Eg. The 2023 rejection of a repatriation and the 2025 reversal of that position were never explained on the record.
      The Fix: Publish the Collegium’s recorded reasons for every recommendation and every transfer at the time the decision is communicated.
    3. The in-house procedure runs to no timeline: An internal inquiry proceeds at the discretion of the CJI, with no fixed stage limits and no published outcome. Eg. The procedure can end in advice to resign, leaving no finding on the record at all.
      The Fix: Fix statutory timelines for each stage of the inquiry and require publication of the finding, with reasons, on completion.
    4. Removal depends on parliamentary arithmetic: The final step turns on the numbers in both Houses rather than on the inquiry’s finding, so a party decision can defeat a proved case. Eg. No judge of the higher judiciary has ever been removed under the constitutional procedure.
      The Fix: Make an adverse inquiry finding trigger the automatic withdrawal of judicial work, so the consequence does not wait on a vote.

    Conclusion

    Two failures are operating at once and neither can substitute for the other. Entry into the higher judiciary is decided without published criteria, and exit from it is governed by a statute that has never produced a removal, which leaves everything in between resting on how quickly one officeholder chooses to act. That is not accountability but discretion, and discretion is what the present controversy has tested. The measure of what follows is whether a complaint carrying verifiable material now generates a recorded step with a date attached to it, rather than a retirement that closes the file.

    Back2Basics: The Collegium system

    1. What it is: The mechanism through which the higher judiciary selects its own judges, evolved through the Supreme Court’s judgments rather than from the text of the Constitution.
    2. Its origin: The Second Judges Case (1993) and the Third Judges Case (1998) read the word “consultation” in Articles 124 and 217 as requiring the concurrence of the CJI, and fixed the collegium’s composition.
    3. Its composition: The CJI and the four senior most judges of the Supreme Court decide Supreme Court appointments; the CJI and the two senior most judges decide High Court appointments and transfers.
    4. The failed replacement: The National Judicial Appointments Commission, created by the 99th Constitutional Amendment, was struck down by the Supreme Court in 2015 as violating judicial independence, leaving the collegium in place.

    Matching Previous Year Question

    “[2019] Consider the following statements: 1. The- motion to impeach a Judge of the Supreme Court of India cannot be rejected by the Speaker of the Lok Sabha as per the Judges (Inquiry) Act, 1968. 2. The Constitution of India defines and gives details of what Constitutes ‘incapacity and proved misbehaviour’ of the Judges of the Supreme Court of India. 3. The details of the process of impeachment of the Judges of the Supreme Court of India are given in the Judges (Inquiry) Act, 1968. 4. If the motion for the impeachment of a Judge is taken up for voting, the law requires the motion to be backed by each House of the Parliament and supported by a majority of total membership of that House and by not less than two-thirds of total members of that House present and voting. Which of the statements given above is/are correct? (a) 1 and 2 (b) 3 only (c) 3 and 4 only (d) 1, 3 and 4 (c)”

  • RBI faces liquidity deluge as surplus climbs to 4-yr high of Rs 10.3 lakh crore

    Why in the News

    Banking system liquidity has climbed to a four-year high of about Rs 10.3 lakh crore on 3 September, its highest level since May 2022. The surplus is the direct product of the Reserve Bank of India’s (RBI) special US dollar-rupee forex swap facility, which drew foreign exchange inflows of $136.377 billion through 31 August. The RBI has closed that window ahead of schedule, leaving the swap usable only until 11 September. The tension is that an instrument run to defend the currency has produced a rupee overhang large enough to push overnight rates down at a moment when the Monetary Policy Committee expects headline inflation to peak. The central bank must now drain the surplus without triggering a sharp rise in interest rates or unsettling the government securities market.

    How does the special dollar-rupee swap window work?

    1. The transaction: Banks sell dollars to the RBI against rupees today, with an agreed reverse leg at a fixed future date, so the RBI takes the foreign exchange and releases rupees into the system.
    2. Where the dollars came from: Banks raised them by mobilising Foreign Currency Non-Resident (Bank), or FCNR(B), deposits, which accounted for $127.226 billion of the total mobilisation.
    3. The concession that made it attractive: The deposits were exempted from the Cash Reserve Ratio (the share of deposits a bank must park with the RBI) and the Statutory Liquidity Ratio (the share it must hold in specified securities), so the rupees released landed unencumbered.
    4. The window’s closure: The deposit scheme ended on 31 August, and banks may use the dollar swap facility only until 11 September.

    How large is the surplus, and how fast did it build?

    1. The record: The liquidity surplus in the banking system hit a fresh record on 3 September, surpassing the previous high of Rs 9.7 lakh crore set a day earlier.
    2. The pace of the build-up: The daily average surplus stood at Rs 3.67 lakh crore in August, more than three times July’s Rs 1.07 lakh crore.
    3. The second source: Liquidity released through the RBI’s own foreign exchange operations added to the swap inflows, leaving a large pool of rupee funds chasing limited avenues for deployment.

    Who raised the money?

    1. Private banks took the largest share: Private sector lenders netted $61 billion, or 46.9 per cent of the $130 billion counted to 3 September.
    2. Public sector banks came second: State-owned lenders raised $37 billion, a 28.5 per cent share.
    3. Foreign banks took the remainder: Foreign lenders picked up $32 billion, or 24.6 per cent.
    4. The tally is provisional: The final figure is likely to run higher once the data is fully captured.

    Why is a surplus a problem for the central bank?

    1. It drags the operating rate down: A large surplus puts downward pressure on the overnight money-market rate, including the repo rate, unless the RBI actively absorbs it.
    2. It works against the inflation stance: Cheap overnight money can push inflation levels up, at a time when members of the Monetary Policy Committee have indicated that headline inflation is projected to peak as high as 5.9 per cent in Q3 2026-27 and that a case for a rate hike may emerge.
    3. It runs against the global direction: Global central banks are keeping rates high or tightening cautiously, because inflation from energy and geopolitical shocks remains above target even as growth weakens.
    4. The absorption itself carries risk: Draining the excess cannot be done in a way that triggers a sharp rise in interest rates or unsettles the government securities market.

    What is the RBI doing about it?

    1. It shut the window early: The swap scheme was stopped ahead of schedule. An official position two weeks earlier had stated there was no intention to do so.
    2. It is absorbing through auctions: A 30-day variable rate reverse repo of Rs 7 lakh crore was announced on 4 September, an auction in which the RBI borrows surplus funds from banks for a fixed term at a market-determined rate.
    3. A reserve requirement change is under discussion: Near-term options include a temporary Cash Reserve Ratio hike or the Incremental Cash Reserve Ratio first used in 2023.
    4. One tool may not suffice: The assessment on record is that mopping up the surplus is a challenge and that the RBI may have to employ a range of liquidity absorption tools rather than one.

    What could deepen or offset the surplus?

    1. The projected peak: CareEdge Ratings expects core liquidity to rise from Rs 8.1 lakh crore as of mid-August to closer to Rs 13-14 lakh crore by December-end in the absence of liquidity management operations.
    2. Festive currency demand pulls the other way: Currency in circulation could rise by around Rs 1.1 lakh crore from June levels by December during the festive season.
    3. The forward book drains more: Maturing RBI short positions in the forwards market create an additional drag of around Rs 3 lakh crore, against a short-forward book maturing of $22 billion in three months.
    4. Reserve accretion adds a smaller drain: Cash Reserve Ratio accretion on deposit growth should reduce core liquidity by a further Rs 70,000 crore.

    What does the surplus do to bank funding?

    1. Money market rates are already falling: Interest rates on certificates of deposit are declining as banks holding the new deposits stay away from bulk borrowings.
    2. Large banks have saved on funding: The bigger banks are estimated to have saved about 25 to 60 basis points in incremental cost of deposits in August as they shed bulk funds.
    3. The benefit spreads unevenly: Smaller banks and non-banking financial companies gain through cheaper money market funding, and the surplus itself is not evenly distributed among lenders.

    Challenges to the special swap window

    1. The inflow is debt and it matures: The deposits are repayable, so this year’s balance of payments gain converts into an outflow when they come due. Eg. Repayments begin in 2029, against a short forward book of $200 billion already lined up.
      The Fix: Build the repayment schedule into the reserve adequacy target and stagger maturities through a partial rollover window opened well before 2029.
    2. Reversing the reserve exemption carries a credibility cost: Imposing a cash reserve requirement on deposits raised on an explicit exemption unwinds the term on which banks accepted the scheme. Eg. A temporary or incremental reserve ratio hike is among the absorption tools under discussion.
      The Fix: Exhaust longer tenor auction absorption before touching the exemption, and announce any change with a fixed sunset date.
    3. The mobilisation is concentrated in a few balance sheets: Nearly half the money sits with private lenders, so both the funding advantage and the eventual repayment risk are clustered. Eg. Smaller lenders gain only indirectly, through cheaper money market rates.
      The Fix: Require bank-wise disclosure of the swap position and its maturity profile in the regulatory returns.
    4. The scheme substitutes for structural inflows: A one-off deposit window fills the external account in a year when nothing has changed to attract durable foreign investment. Eg. A flight to safety in global markets would leave India unable to raise incremental inflows at any price.
      The Fix: Keep a standing, smaller swap facility open through the cycle, so mobilisation is not bunched into a single crisis window.

    Conclusion

    The RBI has ended one problem by creating its mirror image, and the currency defence now sits on the wrong side of the inflation mandate. The immediate marker is the outcome of the term absorption auctions and whether the reserve ratio is touched before the festive season drains currency out of the system on its own. The larger question opens at the far end of the deposit tenor, when the money raised in this window has to be sent back out. Every absorption tool used until then buys time rather than closing the external gap the window was opened to cover.

    Back2Basics: Foreign Currency Non-Resident (Bank) deposit

    1. What it is: A term deposit held with an Indian bank by a non-resident Indian or a person of Indian origin, denominated in a permitted foreign currency rather than in rupees.
    2. Who carries the exchange risk: Principal and interest are repayable in the same foreign currency, so the depositor bears no rupee depreciation risk and the bank or the central bank carries it.
    3. Tenor: Deposits are accepted for terms of one year to five years.
    4. Regulation: The RBI sets ceilings on the interest rate banks may offer, fixed against a reference benchmark rate for the currency concerned.

    Matching Previous Year Question

    “[2010] When the Reserve Bank of India announces an increase of the Cash Reserve Ratio, what does it mean? (a) The commercial banks will have less money to lend (b) The Reserve Bank of India will have less money to lend (c) The Union government will have less money to lend (d) The commercial banks will have more money to lend (a)”

  • Does inflation targeting work in India?

    Why in the News

    India has completed a decade of inflation targeting as the formal policy framework of the Reserve Bank of India (RBI). An empirical evaluation of that decade finds India’s New Keynesian Phillips Curve effectively flat on data from April 2012 to March 2026, meaning output and inflation do not move together as the framework assumes. The same evaluation finds household inflation expectations running consistently above the RBI’s own projections, on average by four percentage points. Both findings attack the framework at the same place, since inflation targeting works through exactly these two channels. The consequence claimed is that rate action compresses output and employment without a commensurate reduction in inflation.

    How is inflation targeting supposed to work?

    1. The mandate: The RBI is required to contain inflation at 4 per cent within a band of plus or minus 2 percentage points.
    2. The demand channel: The RBI raises its policy rate of interest, the repo rate, when inflation rises. That pushes commercial banks’ lending rates up, households become wary of taking home and consumer loans, and businesses postpone building factories.
    3. The expectations channel: Expectations of higher inflation tomorrow raise inflation today, because firms build them into pricing decisions and workers into wage decisions. Anchoring expectations to the RBI’s projected path is meant to break that loop.
    4. The relationship both channels run through: The New Keynesian Phillips Curve links the level of output in an economy to inflation, and it is the mechanism through which either channel is supposed to deliver disinflation.

    What does the curve assume about wages?

    1. Prices are a markup over costs: Where wages are the main cost, a rise in wages passes into prices directly.
    2. Output is assumed to strengthen workers: A rise in output and employment is assumed to let workers demand more in real terms for the same hours, so the wage demand curve slopes upward with output and the price curve follows it.
    3. Expectations set the curve’s position: A worker negotiating a money wage today for goods bought later must price in expected inflation, so a higher expected price level shifts the whole wage demand curve and the price curve upward.
    4. Bargaining power sets its slope: The position of the curve is determined by expectations and its slope by the bargaining power of workers and firms, so the framework’s two levers map onto those two properties.

    What do the data show?

    1. The test: Monthly data on industrial output, measured by the Index of Industrial Production (IIP), the volume index of factory, mining and electricity output, was plotted against CPI-C inflation, the combined rural and urban consumer price index on base 2012, for April 2012 to March 2026.
    2. The construction: The output gap is measured as de-seasonalised IIP minus trend IIP, and the inflation variable as the first difference of CPI-C inflation, so the common time trend that produces spurious correlations is removed before any relationship is read.
    3. The result: The best-fit trend line shows India’s curve is at best flat, meaning changes in the output gap are not associated with changes in inflation.
    4. The finding is not an artefact of one method: The underlying academic work published in the Economic and Political Weekly finds the curve flat under multiple configurations and methodologies.

    Why is India’s curve flat?

    1. Most workers do not set wages: Around 92 per cent of workers have no bargaining power and are simply price takers.
    2. The assumed link therefore breaks: Wages do not rise with output and employment, so the rising wage demand curve on which the whole relationship rests does not exist in this economy.
    3. The consequence for policy: Compressing demand slides the economy along a flat line, which costs output without buying disinflation.

    Do household expectations track the RBI’s projections?

    1. What is surveyed: The RBI asks households for their inflation expectations a quarter ahead and one year ahead through its Inflation Expectations Survey.
    2. The gap against projections: Household expectations run consistently higher than the RBI’s own projections, on average by a margin of four percentage points.
    3. The gap against outturns: The same gap holds when expectations are plotted against actual inflation rather than against projections, so it is not an artefact of projection error.

    What follows if both assumptions fail?

    1. Route one is closed: Sliding the economy down the curve delivers falling output with no matching fall in inflation, because the line is flat.
    2. Route two is closed: Shifting the curve downward requires household expectations to move with the central bank’s projections, and they do not.
    3. The combination that results: Output falls, inflation stays where it is, and the outcome resembles stagflation rather than disinflation.
    4. Who carries the cost: The burden of a demand compression that produces no disinflation falls on employment, in a workforce that has no wage bargaining power to recover it.

    Challenges to flexible inflation targeting in India

    1. The targeted index is driven by supplies the rate cannot reach: Food and fuel carry a heavy weight in the headline consumer price index, and a policy rate has no effect on a monsoon or a crude price. Eg. A rate increase cannot move vegetable prices during a supply shock.
      The Fix: Set the operational stance against a core measure and treat food spikes through buffer stock releases and import duty action.
    2. Transmission reaches only part of the credit market: A repo change passes quickly to loans linked to an external benchmark and slowly to deposit rates and older loans. Eg. External benchmark linking covers floating rate retail and small business loans, not the whole loan book.
      The Fix: Extend external benchmark linking further and publish transmission data by loan category with each policy review.
    3. The framework has no instrument for the employment cost: The statutory objective names price stability first and growth second, so a flat curve leaves the entire adjustment burden on output. Eg. A rate cycle records its inflation outturn but not the jobs foregone during it.
      The Fix: Publish an estimate of the output and employment cost alongside every rate decision, so the trade-off is on the record.
    4. Expectations are formed outside the central bank’s reach: Households form price expectations from grocery bills rather than from a policy statement, so communication does not anchor them. Eg. The survey’s respondents run persistently above the projected path.
      The Fix: Broaden the expectations survey to report by income group and publish the survey design, so the anchoring claim becomes testable.

    Conclusion

    The dispute is no longer about the level of the target but about whether the mechanism connecting the policy rate to prices exists in this economy. The unresolved tension is between a framework designed for a market where wages respond to output and a labour force where almost all workers are price takers. Ten years of data are now available to settle it, and the statutory review of the framework is where that evidence has to be confronted. Whether the central bank revises its model or continues to force-fit it is the thing to watch.

    Matching Previous Year Question

    “[2024, GS3, 10 marks] What are the causes of persistent high food inflation in India? Comment on the effectiveness of the monetary policy of the RBI to control this type of inflation.”

  • [7th September 2026] The Hindu OpED: India’s unemployment data dilemma

    [7th September 2026] The Hindu OpED: India’s unemployment data dilemma

    Question (2023, GS3): “Most of the unemployment in India is structural in nature. Examine the methodology adopted to compute unemployment in the country and suggest improvements.
    Linkage: This is the most direct match. The transition to high-frequency monthly indicators based on CWS directly challenges how India computes its unemployment. CWS captures employment status over a short seven-day reference period (which is why seasonal peaks like the kharif sowing season show a temporary drop to 5.1%), but it fails to address the underlying structural nature of informal underemployment.

    Mentor Comment

    India has converted its official unemployment estimate from a quarterly and yearly release into a monthly indicator, measured on the Current Weekly Status approach. The latest Periodic Labour Force Survey (PLFS) reports the unemployment rate for those aged 15 years and above at a four-month low of 5.1 per cent in July. The review period coincided with the peak of the kharif season, when demand for agricultural labour rises for land preparation and transplanting. The tension is that a higher frequency reading is being asked to measure a labour market where roughly 90 per cent of the workforce is informal and tens of millions of workers circulate seasonally. A rate can be published every month without becoming a measure of the quality of work behind it.

    What is the Periodic Labour Force Survey, and what changed?

    1. What it is: The Periodic Labour Force Survey is the household survey through which India produces its official employment and unemployment estimates.
    2. The reference period: Under the Current Weekly Status (CWS) approach, a person’s activity status is determined on the basis of the preceding seven days.
    3. What the change is: The survey has moved from quarterly and yearly unemployment data to a monthly indicator, raising the frequency of the headline rate without altering the sample’s household basis.

    What does the July reading actually show?

    1. The headline: The unemployment rate for those aged 15 and above marked a four-month low.
    2. The rural share of the move: The overall decline was owing to rural areas, where unemployment fell to 4.5 per cent from 5 per cent.
    3. A supply side signal: The month recorded an increase in the labour force participation rate, meaning a larger share of the working age population entered the labour market.

    Why is a seasonal reading not a structural improvement?

    1. The month is the agricultural peak: July hiring rises for land preparation, transplanting and allied activities, so the decline reflects the calendar rather than a turn in the market.
    2. The affected sectors are the seasonal ones: Construction, agriculture, small trade, logistics and local services all fluctuate seasonally, and the fall concentrates there rather than in formal sector jobs.
    3. A falling rate can mark distress: A decline in unemployment can indicate distress-driven entry into low-productivity jobs rather than genuine employment creation.
    4. The correct status of the number: A monthly unemployment figure functions at best as a leading indicator, not as a comprehensive measure of labour market health.

    Why does informality defeat a high-frequency headline rate?

    1. The scale of the informal market: Various reports place around 90 per cent of the population in informal work, where wage payments are negotiated informally rather than contracted.
    2. The workers the frame misses: Independent labour studies estimate 30 to 35 million seasonal labourers moving across India annually, forming the backbone of urban construction and infrastructure.
    3. Underemployment does not register: Disguised employment and underemployment are widespread, and neither shows up in a status that records whether a person worked.
    4. The granularity is missing: Data is sketchy on wage growth, hours worked, job quality, occupational shifts and sector-wise employment trends, so the rate carries no information about the nature of the job.

    What do mature labour markets do differently?

    1. The common benchmark: Most advanced nations count unemployment through a Labour Force Survey built on the definition of the International Labour Organization (ILO), which fixes what counts as employment, unemployment and labour force participation.
    2. The depth behind the number: The United States, Japan, the European Union and the United Kingdom hold decades of household survey data carrying full-time versus part-time status, hourly wages, job duration, labour mobility and unemployment spells.
    3. The administrative spine: Those markets run payroll surveys, unemployment insurance records, formal contracts and extensive administrative databases alongside the survey, so the headline rate is corroborated rather than standalone.

    Can administrative data close the gap?

    1. The sources already exist: Employees’ Provident Fund Organisation and Employees’ State Insurance Corporation payroll data, Goods and Services Tax based enterprise information, income tax records, corporate payroll data, gig economy employment data and rural wage indicators are all being built up.
    2. They do not yet speak to each other: These sources remain fragmented, so none can be used to cross-check the survey’s monthly movement.
    3. The gap they would close: A large informal employment market is difficult to track through a household survey alone, which is precisely the market these registers touch at the formal edge.

    Challenges to the revamped Periodic Labour Force Survey

    1. A short reference period counts any work as employment: A person engaged for as little as an hour on a single day in the reference week is recorded as employed, so a full-time job and a day of casual work carry the same weight. Eg. Unpaid work in a family enterprise is counted as employment.
      The Fix: Publish hours worked and earnings distributions alongside the headline rate, so the composition of employment is visible.
    2. The household frame loses the circulating worker: A survey records a person at their usual residence, so a worker moving between a home district and a distant worksite can be missed at both ends. Eg. Urban construction runs on labour that its home district still records as resident.
      The Fix: Link the survey frame to social security registration numbers, so a worker traced at the destination is not lost at the origin.
    3. Unemployment is the wrong headline where there is no income support: Without unemployment insurance a worker cannot afford to remain unemployed, so joblessness appears as low-paid self-employment rather than in the rate. Eg. A person selling goods on the street with no earnings floor is counted as employed.
      The Fix: Publish an underemployment and working poverty series with each monthly release.
    4. Monthly sampling limits disaggregation: A monthly sample supports a national and rural-urban split, not a State, district or occupational reading. Eg. The release carries no monthly breakdown by sector or by occupational shift.
      The Fix: Pool three consecutive monthly rounds into a rolling State level estimate published alongside the headline.

    Conclusion

    A statistical system has been made faster without being made deeper, and the two are not substitutes. The unresolved question is whether the survey will be judged on how often it reports or on whether it captures the working lives of a largely informal workforce. Frequency answers a demand from markets and commentary; job quality answers the policy question of whether participation is converting into stable, higher-productivity work. Until the administrative registers are integrated into a single frame, the monthly rate will keep being read as a verdict it cannot deliver.

    Back2Basics: International Labour Organization

    1. Formation: Established in 1919 under the Treaty of Versailles, and it became the first specialised agency of the United Nations in 1946.
    2. Headquarters: Geneva, Switzerland.
    3. Structure: It is the only tripartite United Nations agency, bringing together governments, employers and workers of member States with equal standing in its decision making.
    4. Why it matters here: Its conferences of labour statisticians set the international statistical definitions of employment, unemployment and the labour force that national surveys are benchmarked against.
  • Lost and found: An ‘A’ for India’s long game

    Lost and found: An ‘A’ for India’s long game

    Why in the News

    The Japan Credit Rating Agency has upgraded India’s long-term sovereign rating from BBB+ to A-, and raised the country ceiling to A. The upgrade is unsolicited, meaning the agency issued it without India commissioning or negotiating it. India last held an A-grade in January 1988, when Moody’s assigned it an A2 rating. That grade was lost when the borrowing fuelled growth of the 1980s ended in the balance of payments crisis of 1991. The contested question is whether a single external verdict marks a structural shift, since three of the largest agencies still hold India below the A band.

    What is a sovereign credit rating?

    1. What it measures: A sovereign credit rating is an independent assessment of a country’s creditworthiness, expressed as a letter grade standing for a probability of default.
    2. The scale: Grades run from AAA down to junk, with BB+ and below classified as non-investment grade.
    3. What agencies assess: The inputs are institutional strength and governance, economic structure and growth, external accounts and reserve adequacy, the fiscal position and debt path, and monetary flexibility.
    4. Why it moves money: Ratings are embedded in bank capital rules under Basel III (the global bank capital standard), so an upgrade lowers the risk weight banks must carry against government debt. Lower risk weights raise demand for sovereign bonds and cheapen funding.

    How did India lose the A-grade, and why did the return take 36 years?

    1. The 1980s growth was borrowed: The central government’s fiscal deficit reached 9.1 per cent of GDP and the current account deficit rose to 3.1 per cent of GDP in FY 1989-90.
    2. Political churn delayed the correction: Three prime ministers in as many years pushed reform out of reach, and no prospect of fiscal rectitude was in sight.
    3. The external shock arrived on top: The First Gulf War and rising oil prices produced the balance of payments crisis.
    4. The downgrade came in two steps: India was cut to Baa1 by October 1990. By mid-1991 reserves barely covered a few weeks of imports and the rating fell to non-investment grade.
    5. Recovery did not restore the grade: Credible progress across successive governments followed, and thirty-six years passed before an A-grade was accepted again.

    What did the Japan Credit Rating Agency actually cite?

    1. Growth and its composition: The agency cited a high growth rate of around 7 per cent, supported by robust private consumption and public investment.
    2. Tax action as a support: It named personal income-tax cuts and reductions of Goods and Services Tax rates, with the economy growing 7.7 per cent in real GDP terms.
    3. Bank balance sheets: It cited the banking sector’s gross non-performing loan ratio declining to 1.8 per cent, supported by the Insolvency and Bankruptcy Code and capital injections by the government.
    4. The character of the list: Almost every item cited is structural rather than cyclical, which is what separates a rating upgrade from a reaction to a good quarter.

    Does the new GDP series survive scrutiny?

    1. The quarter behind the upgrade: First quarter estimates for 2026-27 recorded real GDP growth of 7.8 per cent, nominal growth of 10.3 per cent, real Gross Value Added growth of 8.2 per cent, and gross fixed capital formation growing 11.9 per cent.
    2. Revision is routine, not novel: India has revised its national accounts series in 1948-49, 1960-61, 1970-71, 1980-81, 1993-94, 1999-2000, 2004-05, 2011-12 and 2022-23.
    3. What the revision fixed: The old series carried an outdated base year and relied on wholesale rather than producer prices, both flagged in International Monetary Fund assessments. The new series introduces an Output Producer Price Index, adopts double deflation across sectors including manufacturing, and aligns India closer to the System of National Accounts (SNA) 2008 (the international standard for compiling national accounts).
    4. The official position on the charge of inflation: The Ministry of Statistics and Programme Implementation has stated that the revisions do not represent a downward revision made to make the current year’s growth appear higher, and that the improved implicit deflator now carries more than 300 individual price deflators.

    Why is the upgrade significant beyond the letter grade?

    1. It is an external verdict: An unsolicited upgrade is delivered rather than negotiated, so it cannot be presented as the product of official persuasion.
    2. It validates pooled sovereignty: The rating rests on institutions built through Centre-State consensus, the GST Council foremost among them, whose pooling of taxation powers has no true parallel elsewhere.
    3. It should reprice risk in boardrooms: A lower risk premium enters the calculations where foreign direct investment decisions are actually taken, which augurs well for inward capital flows.

    Where the rating methodology itself is contested

    1. The framework carries judgement, not only data: The assessment model is opaque at the point where committee judgement enters, and the resulting grade cannot be replicated from published inputs.
    2. Fast growing emerging markets are penalised: The predilections built into the process have downgraded economies carrying low external debt and sound macroeconomic frameworks.
    3. The divide runs along territorial lines: A duality of standards based on where economic activity is located separates advanced economies from the Global South in the outcomes.
    4. Even AAA borrowers organise around the grade: The World Bank and several sovereign governments manage their balance sheets around retaining a rating, which shows how much the letter governs behaviour.

    Where do the other agencies stand?

    1. Three still hold India below the A band: S&P Global rates India BBB, Moody’s Baa3 and Fitch BBB-.
    2. The upgrade works as pressure: Agencies are wary of being conspicuous outliers, so one move raises the cost of holding a divergent view.
    3. Six firms set the price of capital: S&P Global, Moody’s, Fitch, the Japan Credit Rating Agency, R&I of Japan and Morningstar DBRS dominate sovereign assessment, in an industry dating to 1909 when John Moody began grading American railroad bonds.

    Challenges to the A- upgrade

    1. A single agency’s move does not reset the cost of borrowing: Investor mandates and bank capital rules key off the larger agencies, so funding costs shift only when the others follow. Eg. Indian issuers still price external debt against grades set one to three notches lower.
      The Fix: Publish a point by point rebuttal of each agency’s stated assessment, so a divergent grade has to be defended on the record.
    2. External shocks sit outside the rating’s control: A grade earned on structural reform can be tested by a price the economy does not set. Eg. Tariff frictions, tensions in West Asia and elevated oil prices ran alongside this upgrade.
      The Fix: Hold the reserve buffer and the fiscal glide path independently of the rating cycle, so the grade is not defended by procyclical tightening.
    3. Capital follows enforcement rather than a letter grade: A lower risk premium converts into investment only where contract enforcement and clearances are predictable. Eg. The agency itself credited a statutory change, the Insolvency and Bankruptcy Code, for the cleaner bank balance sheets it cited.
      The Fix: Extend the same statutory approach to contract enforcement, with time bound disposal in commercial courts.
    4. Assessment is concentrated in a handful of committees: A small set of firms prices capital for the entire Global South, and their method is not open to challenge. Eg. Even a multilateral lender orders its balance sheet around retaining its own top grade.
      The Fix: Build a credible rating agency headquartered in the Global South with a published and replicable methodology.

    Conclusion

    India holds one A-grade rating and three grades below it, and the gap is now the operative fact rather than the upgrade. The next test is whether the other large agencies move, since a rating changes funding costs only when the market’s benchmark grades change with it. The second test is whether the lower risk weight shows up as cheaper borrowing for Indian issuers rather than as a headline. The deeper question the upgrade leaves untouched is who gets to set the method by which a fast growing economy is judged.

    Back2Basics: Insolvency and Bankruptcy Code, 2016

    1. What it is: A single consolidated law for the time bound resolution of insolvency for companies, partnerships and individuals, replacing a scattered set of earlier debt recovery laws.
    2. How the process runs: A committee of creditors takes charge of the defaulting company through a licensed resolution professional and votes on a resolution plan, with liquidation as the outcome where no plan is approved.
    3. The forum: The National Company Law Tribunal adjudicates corporate insolvency, and the Debt Recovery Tribunal handles individuals and partnership firms.
    4. The regulator: The Insolvency and Bankruptcy Board of India regulates insolvency professionals, agencies and information utilities under the Code.

    [2019, GS3, 10 marks] Do you agree with the view that steady GDP growth and low inflation have left the Indian economy in good shape? Give reasons in support of your arguments.

  • Geothermal Energy

    Why in News

    A PIB Backgrounder on geothermal energy set out the resource, its potential in India, and its place in the clean energy transition.

    Core facts

    1. Definition: Geothermal energy is heat stored within the earth. It is drawn from hot rocks and hot water reservoirs below the surface and used for power generation and direct heating.
    2. Nature of the resource: Geothermal energy is a renewable and baseload source. It supplies power around the clock, unlike solar and wind, which vary with weather and time of day.

    Static Context

    1. India’s potential: The Geological Survey of India (GSI) has identified about 340 geothermal hot spring sites. The estimated geothermal power potential is placed around 10,600 megawatts (MW).
    2. Key geothermal provinces: Major sites include Puga and Chhumathang in Ladakh, Tattapani in Chhattisgarh, Manikaran in Himachal Pradesh, and the Godavari and Cambay basins.
    3. How it works: A geothermal plant taps steam or hot water from a well. The steam drives a turbine. The turbine drives a generator to produce electricity.
    4. Uses beyond power: Direct use includes space heating, greenhouse warming, aquaculture and cold storage. Ladakh has seen pilot efforts for geothermal power and heating.
    5. Nodal ministry: The Ministry of New and Renewable Energy (MNRE) is the nodal ministry for renewable energy sources, including geothermal.
    6. Global comparison: Countries with high geothermal output include the United States, Indonesia, the Philippines, Iceland and Kenya. India’s geothermal capacity remains at an early stage.

    Prelims angle

    1. The location of Puga, Tattapani, Manikaran and other geothermal sites, and the role of the Geological Survey of India in resource mapping.
    2. The classification of geothermal as a renewable and baseload source, and the nodal ministry. Site to state matching is a common format.

    Mains angle

    1. GS Paper 3, infrastructure and energy, and India’s renewable energy mix.
    2. A question can ask how baseload renewable sources such as geothermal complement variable solar and wind in the path to energy security.

    Matching Previous Year Question

    “[2022, GS3, 15] Do you think India will meet 50 percent of its energy needs from renewable energy by 2030 ? Justify your answer. How will the shift of subsidies from fossil fuels to renewables help achieve the above objective? Explain.”

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