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  • SC order on mining around Ramsar wetland sites

    Why in the News

    The Supreme Court has clarified that its earlier direction restricting mining within a 10 km radius of the Asan Wetland Conservation Reserve now applies to all Wetland Conservation Reserves across India. Mining in such areas will require prior approval from the competent authority.

    What did the Supreme Court clarify?

    • Nationwide Application: The 10 km mining safeguard around the Asan Wetland Conservation Reserve will now apply to all Wetland Conservation Reserves.
    • Uniform Principle: The Court held that the protection should apply uniformly across the country.
    • Case Background: The clarification came while hearing an application filed by the Himachal Pradesh Government.
    • State’s Argument: Himachal Pradesh contended that Wetland Conservation Reserves do not have a statutory buffer zone unlike national parks.
    • Further Direction: The Court asked the National Board for Wildlife (NBWL) or the Ministry of Environment, Forest and Climate Change (MoEFCC) to examine whether the Asan Wetland extends into Himachal Pradesh.

    What is the Asan Wetland Conservation Reserve?

    • Location: Situated at the confluence of the Asan and Yamuna rivers in Uttarakhand.
    • Ramsar Status: Declared a Ramsar Site in 2020.
    • Ecological Importance: Supports migratory waterbirds and rich aquatic biodiversity.
    • Judicial Protection: Mining within a 10 km radius requires prior clearance from the NBWL or MoEFCC.

    What are Ramsar Sites?

    • Definition: Wetlands designated under the Ramsar Convention on Wetlands (1971) for their international ecological importance.
    • India’s Membership: India became a party to the Convention in 1982.
    • Current Status: India has 101 Ramsar Sites, the highest in Asia.
    • Significance: Ramsar designation commits countries to maintain the ecological character of wetlands but does not itself create a separate statutory protection regime.

    What is the legal position on mining near wetlands?

    • No Statutory Buffer: The Ramsar Convention and the Wetlands (Conservation and Management) Rules, 2017 do not prescribe a fixed buffer zone around wetlands.
    • 2010 Rules: Earlier rules listed prohibited activities and required prior approval for activities within the wetland’s zone of influence.
    • 2017 Rules: Replaced the earlier framework with a decentralised system led by State Wetland Authorities.
    • Judicial Safeguard: The Supreme Court’s ruling fills this regulatory gap by requiring prior clearance for mining near Wetland Conservation Reserves.

    [2022] Consider the following pairs: Wetland/Lake — Location
    1. Hokera Wetland — Punjab
    2. Renuka Wetland — Himachal Pradesh
    3. Rudrasagar Lake — Tripura
    4. Sasthamkotta Lake — Tamil Nadu
    How many pairs given above are correctly matched?
    (a) Only one pair

    (b) Only two pairs

    (c) Only three pairs

    (d) All four pairs

  • [7th August 2026] The Hindu OpED: Stop the scam: Digital arrest menace

    Why in the News

    The Supreme Court passed an order on 4 August 2026 on the digital arrest scam. It directed banks, states and regulators toward faster action on mule accounts and cyber fraud. The scams persist because they are run largely from overseas hubs.

    What is the digital arrest scam?

    1. Definition: Fraudsters impersonate authorities and coerce victims into transferring money under threat of fake arrest. There is no legal basis or process called digital arrest.
    2. Targets: Older victims fall prey through deference to authority and fear of legal trouble.
    3. New targets: Scammers now also target youth and professionals, and senior citizens whom advisories have not reached.

    Why are digital arrests keep happening?

    1. Human Psychology & Social Engineering: Cybercriminals use social engineering tactics to manipulate people into revealing sensitive information. Fraudsters also exploit emotions like fear (threatening legal action), excitement (fake lottery wins), or urgency (fake emergency fund requests). Cybercriminals often impersonate trusted sources such as banks, government agencies, or even close friends.
    2. Weak Cybersecurity Practices: Common weaknesses include weak password and credentials use, unpatched software and system and poor security hygiene.
    3. Rapidly Evolving Cybercrime Techniques: Cybercriminals constantly evolve their methods to stay ahead of security measures.
    4. Digital Payments & Financial Fraud Risks: With the rise of digital transactions, cybercriminals have developed sophisticated methods to exploit online payment systems like fake UPI requests & QR codes, card skimming & SIM swaps and crypto & investment scams.
    5. Dark Web & Cybercrime Networks: The dark web serves as a marketplace for stolen data, malware tools, and illegal activities. Cybercrime has become an organized industry where criminals buy and sell stolen data and identity theft, organised cyber-crime syndicates and also offer Ransomware-as-a-Service (RaaS) as well.
    6. Lack of Strong Cyber Laws & Enforcement: Despite increasing cyber threats, many scams go unpunished due to slow law enforcements response, cross border crime challenges and lack of cyber crime awareness and policies.

    What did the Supreme Court order?

    1. Debit holds: It directed the Reserve Bank of India (RBI) to circulate a standard operating procedure for temporary debit holds on mule accounts.
    2. State action: States must notify cybercrime coordination centres and operationalise electronic Zero FIRs.
    3. Compensation: An inter departmental committee must examine a victim compensation framework.
    4. Data cited: Complaints on the National Cyber Crime Reporting Portal fell from 1,23,672 in 2024 to 16,377 in the first half of 2026.
    5. Recovery: Money was restored in 36,290 cases involving Rs 18.05 crore.

    What are the key terms in the response?

    1. Indian Cybercrime Coordination Centre (I4C): the nodal body coordinating action against cyber fraud and running the reporting portal.
    2. Mule account: a bank account used to receive and move fraud proceeds across states.
    3. Zero FIR: a First Information Report that can be filed at any police station regardless of jurisdiction.
    4. MuleHunter.AI: a detection system used in over 20 banks to flag mule accounts.

    Why do these scams persist despite falling complaints?

    1. Nimble methods: Fraudsters route calls through SIM boxes to mask origin and appear as Indian numbers.
    2. Deepfakes: They deploy deepfakes on video calls to dupe victims and stay untraceable.
    3. Few convictions: Convictions are rare as many schemes are run from overseas scam compounds.
    4. Overseas hubs: Compounds operate in Myanmar, the wider Golden Triangle and Cambodia, some with official patronage.
    5. Trafficking link: Indians are trafficked and coerced to run digital crimes against fellow citizens.

    Conclusion

    Detection systems and swift account freezes limit the damage even when perpetrators escape conviction. The core problem lies in overseas scam compounds beyond domestic law enforcement reach. New Delhi must use diplomatic pressure with China, the United States and ASEAN to compel host countries to act.

    Back2Basics

    Electronic-Zero FIR (e-zero FIR)

    An e-Zero FIR is an automated digital system in India that converts high-value cyber financial fraud complaints (above ₹10 lakh) filed via the National Cyber Crime Reporting Portal or the 1930 helpline directly into a Zero FIR. It eliminates jurisdictional delays during the critical “golden hour” for fund recovery

    Key Features and Workflow

    1. Automatic Registration: Eligible financial fraud reports trigger an instant e-Zero FIR without requiring an initial physical station visit.
    2. System Integration: Combines the I4C portal, state e-FIR mechanisms, and the NCRB’s Crime and Criminal Tracking Network & Systems (CCTNS).
    3. Auto-Routing: The system instantly routes the electronic document to the correct territorial cybercrime station based on the victim’s location.
    4. Mandatory Follow-Up: Complainants must visit the designated local police station within three days to sign and convert the e-Zero FIR into a regular FIR under the Bharatiya Nagarik Suraksha Sanhita (BNSS).

    PYQ Relevance

    [UPSC 2022] What are the different elements of cyber security? Keeping in view the challenges in cyber security, examine the extent to which India has successfully developed a comprehensive National Cyber Security Strategy.

    Linkage: The PYQ tests India’s cyber security framework and response to cybercrime. The article highlights recent measures to strengthen India’s response to digital arrest scams and cyber fraud.

  • India-Bangladesh ties should be Hasina-proof

    Why in the News

    The former Bangladesh Prime Minister held her first question taking media interaction from exile in India. She announced a political comeback and said she would return in December. The event risks turning India’s grant of refuge into a diplomatic irritant with Dhaka’s elected government.

    What is the diplomatic dilemma India faces?

    1. Refuge granted: India gave the former Prime Minister refuge after she fled Bangladesh on 5 August 2024 amid protests.
    2. Legitimacy concern: the grant was defended given the unfairness of the legal proceedings against her, including a death sentence by the International Crimes Tribunal.
    3. Platform risk: using the refuge as a political platform complicates ties with the elected government.
    4. Elected counterpart: the Bangladesh Nationalist Party (BNP) led administration under the new Prime Minister took office about six months earlier.

    Why is the timing fraught?

    1. Reset underway: New Delhi is rebuilding ties after strained relations with the earlier Muhammad Yunus led interim government.
    2. Domestic backlash: a mob hurled petrol bombs at a party member’s residence after he joined the exiled leader online.
    3. Media bar: the statements were barred from broadcast in Bangladesh under laws the former government itself once used.
    4. Awami League banned: the leader’s party is barred from contesting, so the comeback call targets the incumbent government.

    What unresolved issues shadow the relationship?

    1. Ganga treaty: the 1996 Ganga Water Treaty is due for renewal this year.
    2. Teesta treaty: the Teesta water sharing treaty is still to be signed.
    3. Migration: New Delhi views illegal immigration from Bangladesh as a major irritant.
    4. Trade curbs: some trade restrictions remain even after Bangladesh removed visa curbs.
    5. China factor: India is wary of Dhaka drifting into China’s orbit, and the new Prime Minister has visited China but not India.

    Why must ties be insulated from any single individual?

    1. Shared border: a 4,000 kilometre border makes cooperation indispensable against trafficking and cross border extremism.
    2. Economic stakes: Indian investment and infrastructure financing support Bangladesh’s growth, with stakes in power and connectivity.
    3. Strategic caution: both governments need to insulate bilateral ties from short term compulsions.

    Conclusion

    India was right to shelter the former Prime Minister, but her political aspirations cannot bruise ties with the elected government. The bilateral relationship, anchored in geography and security, is too important to be held hostage by one individual. New Delhi’s task is to keep the reset with Dhaka insulated from her comeback bid.

    Back2Basics

    The 1996 Ganga Water Treaty is a 30-year bilateral agreement between India and Bangladesh signed on December 12, 1996. It governs the sharing of dry-season (January 1 to May 31) water flows from the Ganges River at the Farakka Barrage.

    Key Provisions and Formula

    1. Lean Season Focus: Applies specifically to lean-season flows from January 1 through May 31.
    2. 50:50 Sharing Rule: If the water flow at Farakka is 70,000 cusecs or less, India and Bangladesh each receive 50% of the water.
    3. Fixed Allocation Windows:
      • Flows of 70,000-75,000 cusecs: Bangladesh receives a fixed 35,000 cusecs, and India receives the rest.
      • Flows above 75,000 cusecs: India receives 75,000 cusecs, and Bangladesh receives the balance.
    4. Emergency Clause: If water flow drops below 50,000 cusecs in any 10-day period, both nations must hold immediate consultations for emergency adjustments.

    Administration and Oversight

    1. Joint Committee: An equal-representation monitoring committee measures daily flows at the Farakka feeder canal and Bangladesh’s Hardinge Bridge.
    2. Review Schedule: Subject to five-year reviews or earlier adjustments if requested.

    PYQ Relevance

    [UPSC 2013] Critically examine the compulsions which prompted India to play a decisive role in the emergence of Bangladesh.

    Linkage: It examines the strategic and political foundations of India–Bangladesh relations. The article highlights how India must balance humanitarian refuge with long-term bilateral and strategic interests.

  • JD(U) tells Centre not to renew 1996 Farakka water treaty without safeguarding Bihar

    Why in the News

    The 1996 Farakka Water Treaty between India and Bangladesh is set to expire on 12 December 2026. The JD(U) has urged the Centre not to renew the treaty unless Bihar’s long term water security and developmental needs are adequately addressed.

    What is the 1996 Farakka Water Treaty?

    • Definition: A bilateral agreement between India and Bangladesh for sharing the Ganga’s dry season flow at the Farakka Barrage.
    • Objective: To allocate Ganga waters during the lean season between the two countries.
    • Duration: Signed in 1996 for 30 years, expiring on 12 December 2026.

    What is the Farakka Barrage?

    • Location: Built across the Ganga River in West Bengal.
    • Purpose: Diverts water into the Hooghly River.
    • Objective: Flushes silt to maintain the navigability of Kolkata Port.

    Why has Bihar opposed the treaty’s renewal?

    • Reduced Water Availability: Bihar argues that diversion at Farakka reduces lean season water availability within the state.
    • Development Concerns: Seeks greater consideration of Bihar’s long term irrigation, drinking water and development needs.
    • Demand for Renegotiation: JD(U) has called for safeguards before any extension of the treaty.
    • Federal Dimension: Highlights the need to balance state interests with India’s international water sharing commitments.

    Why is the treaty sensitive for India and Bangladesh?

    • Shared Rivers: India and Bangladesh share numerous transboundary rivers, making water sharing politically significant.
    • Dry Season Scarcity: Limited lean season flows often lead to competing demands.
    • Related Issue: The Farakka dispute exists alongside the unresolved Teesta Water Sharing Agreement, another key bilateral concern.

    [2013, GS2, 10 marks] The protests in Shahbag Square in Dhaka in Bangladesh reveal a fundamental split in society between the nationalists and Islamic forces. What is its significance for India?

    [2017] With reference to river Teesta, consider the following statements:
    1. The source of river Teesta is the same as that of Brahmaputra but it flows through Sikkim.
    2. River Rangeet originates in Sikkim and it is a tributary of river Teesta.
    3. River Teesta flows into Bay of Bengal on the border of India and Bangladesh.
    Which of the statements given above is/are correct?

    [A] 1 and 3 only

    [B] 2 only

    [C] 2 and 3 only

    [D] 1, 2 and 3

  • Special Intensive Revision of electoral rolls faces fresh SC scrutiny

    Why in the News

    The Supreme Court agreed to consider a plea alleging misuse of Form 7 during Uttar Pradesh’s Special Intensive Revision of electoral rolls. In Karnataka, nearly half of Bengaluru’s voters are flagged for possible deletion ahead of the draft roll. The draft roll is due on 17 August 2026.

    What is the Special Intensive Revision of electoral rolls?

    1. Definition: the Special Intensive Revision (SIR) is a house to house exercise by the Election Commission to update and verify electoral rolls.
    2. Enumeration: electors are mapped and verified, and doubtful entries are flagged for review.
    3. Draft stage: a draft roll is published, followed by a claims and objections phase before finalisation.

    What is Form 7 and how is it alleged to be misused?

    1. Form 7: a statutory mechanism under the Registration of Electors Rules, 1960, for limited and bona fide objections to inclusion, or deletion on narrow grounds.
    2. Allegation: a Congress Member of Parliament cited documented evidence of bulk, fraudulent and targeted deletion attempts.
    3. Targeting: the plea says objections hit minority and marginalised electors, including those already verified during the revision.
    4. Mechanical filing: Booth Level Officers reportedly received pre filled Form 7 applications with identical grounds and no credible basis.
    5. Respondents: the Election Commission and the Chief Electoral Officer of Uttar Pradesh are named respondents.

    What is the ASDDO flag in Karnataka?

    1. Full form: Absent, Shifted, Dead, Duplicate or Other.
    2. Scale: of Bengaluru’s 1.03 crore voters, 49.42 lakh are flagged under this category.
    3. State total: across Karnataka, 1.11 crore voters, one fifth of the 5.54 crore mapped, are flagged.
    4. Hotspots: ten Bengaluru constituencies show flagged deletions above 50 percent, led by Bommanahalli at 57.08 percent.

    [2017] For election to the Lok Sabha, a nomination paper can be filed by
    (a) Anyone residing in India.
    (b) A resident of the constituency from which the election is to be contested.
    (c) Any citizen of India whose name appears in the electoral roll of a constituency.
    (d) Any citizen of India.

  • The challenge for school consolidation

    Why in the News

    A recent NITI Aayog Report flagged the closure of nearly 94,000 government schools across India over the past decade. Falling enrolment and a declining fertility rate underlie the closures and mergers. The debate weighs neighbourhood access against better resourced consolidated schools.

    What is school consolidation?

    1. Definition: the merging of under enrolled schools into better equipped composite schools with qualified teachers and improved infrastructure.
    2. Aim: to raise educational quality rather than merely cut costs.
    3. Constitutional placement: education sits on the Concurrent List, so states drive closure and merger policy.

    What is UDISE Plus?

    1. Full form: the Unified District Information System for Education Plus.
    2. Function: an education management information system that tracks schools, enrolment and teachers nationwide.
    3. It is the largest digital database of information related to school education in India.
    4. This portal, operated by the Union Ministry of Education, records the details of all recognized government and private schools in the country online.

    What do the data reveal between 2014-15 and 2024-25?

    1. Schools: the total number of schools fell by about 45,000, driven entirely by a fall of 94,000 government schools while private unaided schools grew.
    2. Enrolment: overall enrolment fell by 2.26 crore to 24.69 crore.
    3. Sector shift: government enrolment fell while private enrolment rose from 8.42 crore to 9.59 crore.
    4. Teachers: teacher numbers rose from about 90 lakh to over one crore, improving teacher availability.
    5. Demography: the total fertility rate fell from more than 3 in the early 1990s to about 2.0, below the replacement level of 2.1.

    Why does school size matter?

    1. Thin schools: thousands of schools run with a single teacher or a handful of students.
    2. Weak instruction: low size makes grade wise, subject specific teaching, laboratories and peer learning difficult.
    3. Teacher load: teachers handle multiple classes alongside administrative tasks.
    4. Hidden disparity: national averages mask overcrowded urban schools alongside near empty rural ones.

    What are the challenges to school consolidation?

    1. Travel distance: longer distances disadvantage young children, girls and students in remote or tribal areas.
    2. Access risk: closures can strip neighbourhood access unless safe transport is guaranteed.
    3. Cost driven mergers: decisions taken on financial grounds alone can undercut quality goals.
    4. Equity gap: consolidation must balance quality, efficiency and equitable access, not just efficiency.
    5. Data need: decisions should be data driven rather than administrative, with uninterrupted access ensured wherever schools merge.

    Conclusion

    The school numbers reflect a transformation, not merely closures, driven by demographic change and shifting preferences. Consolidation can raise quality but only if it protects access for the most vulnerable children. Success should be measured by whether every child reaches a well resourced school, with safe transport where schools merge.

    Back2Basics

    International Examples & Case Studies

    India (Project SATH-E & State Initiatives):

    1. Under NITI Aayog’s Project SATH-E, states like Madhya Pradesh, Jharkhand, and Odisha consolidated over 26,000 schools.
    2. Rajasthan horizontally merged co-located schools and built vertically integrated “Adarsh” (model) schools spanning grades 1-12. This reduced multi-grade teaching and doubled the presence of designated headmasters.

    China (Rural School Consolidation Policy):

    1. Implemented to centralize resources in middle-income rural areas. While it successfully built larger, better-funded institutions, longitudinal studies indicate unintended consequences.
    2. For instance, longer commutes occasionally limited written minority language facility and worsened educational equity for marginalized groups.

    The Nordic Countries & Western Europe: Ecosystem Integration

    1. Low demographic density in isolated rural pockets across Denmark, the Netherlands, and Norway.
    2. Unlike abrupt closures, Denmark and other Nordic nations leveraged regional clustering. Rather than completely standardizing environments, they implemented extensive public support networks, dedicated student transport, and digital infrastructure to ease student adjustments.
    3. Short-term disruption to student test scores was documented, particularly for students transferring from the smallest schools. However, these adverse effects weakened over time as institutional integration stabilized

    PYQ Relevance

    [UPSC 2022] The Right of Children to Free and Compulsory Education Act, 2009 remains inadequate in promoting incentive-based system for children’s education without generating awareness about the importance of schooling. Analyse.

    Linkage: The PYQ examines whether school education reforms ensure universal and equitable access under the RTE Act. The article assesses whether school consolidation can improve quality without compromising access for vulnerable children.

  • FIRs cannot be withdrawn, three routes for relief under BNSS

    Why in the News

    The Supreme Court has clarified that State Governments cannot simply withdraw or cancel FIRs against student protesters through executive orders. Criminal proceedings can end only through procedures provided under the Bharatiya Nagarik Suraksha Sanhita (BNSS), 2023.

    What is a First Information Report (FIR) under the BNSS?

    • Definition: An FIR is the first written record of information relating to a cognizable offence received by the police.
    • Purpose: It sets the criminal investigation in motion under the Bharatiya Nagarik Suraksha Sanhita (BNSS), 2023.
    • No Executive Power: A government cannot cancel or erase an FIR through an executive order. Only the subsequent criminal proceedings can be terminated through legal procedures.

    Route 1: Closure Report

    • Provision: If the police find insufficient evidence during investigation, they may submit a closure report before the jurisdictional Magistrate under Section 193 of BNSS.
    • Judicial Scrutiny: The Magistrate is not bound to accept the report and may order further investigation or take cognizance.
    • Key Case: Abhinandan Jha v. Dinesh Mishra (1967) affirmed the Magistrate’s independent powers.

    Route 2: Withdrawal from Prosecution

    • Provision: Under Section 360 of BNSS, the Public Prosecutor, with the court’s consent, may withdraw from prosecution before judgment.
    • Independent Decision: The request must reflect the prosecutor’s own assessment and not merely government instructions.
    • Court’s Role: The court must ensure the withdrawal is in good faith and public interest.
    • Victim’s Rights: The victim must be given an opportunity to be heard.
    • Key Case: Sheonandan Paswan v. State of Bihar (1986).

    Route 3: Quashing by the High Court

    • Provision: Section 528 of BNSS preserves the High Court’s inherent powers to prevent abuse of process and secure the ends of justice.
    • Direct Remedy: An accused person may directly approach the High Court for quashing of criminal proceedings.
    • Limited Use: Courts have consistently held that this power should be exercised sparingly, particularly while investigation is ongoing.

    Important Judicial Precedent

    • Baroda Dynamite Case (1980): The Supreme Court upheld withdrawal of prosecutions arising from the Emergency period.
    • Principle: Withdrawal may be justified where it promotes public peace, reconciliation and good governance, provided legal safeguards are followed.

  • Extending creamy layer to SC, ST is Parliament’s call: Govt to top court

    Why in the News

    The Centre has told the Supreme Court that the creamy layer principle cannot be extended to Scheduled Castes (SCs) and Scheduled Tribes (STs) through judicial directions. It argued that any such change requires a decision by Parliament, as reservation for SCs and STs is based on historical and social discrimination rather than economic status.

    What is the Creamy Layer Principle?

    • Definition: Excludes the socially advanced and economically better off members of a reserved category from availing reservation benefits.
    • Origin: Introduced for Other Backward Classes (OBCs).
    • Current Position: The principle does not apply to SCs and STs, whose reservation is based on historical discrimination and social exclusion.

    What did the Centre argue before the Supreme Court?

    • Parliament’s Authority: Only Parliament can decide whether to extend the creamy layer principle to SCs and STs.
    • Constitutional Basis: Any exclusion must follow the procedure under Article 341(2) (and similarly Article 342 for STs).
    • Need for Evidence: Any income based classification should be preceded by a comprehensive empirical study.
    • Separation of Powers: Courts should not direct the executive to frame such a policy without legislative backing.
    • Reservation Basis: SC and ST identification depends on historical social disadvantage, not merely economic criteria.

    Key Judicial Precedents

    • State of Punjab v. Davinder Singh (2024): Held that sub classification within SCs and STs for equitable distribution of reservation benefits is constitutionally permissible.
    • E.V. Chinnaiah v. State of Andhra Pradesh (2005): Held that altering the SC list requires legislative action under Article 341.
    • Ashoka Kumar Thakur v. Union of India (2008): Clarified that the creamy layer principle does not apply to SCs and STs.

    What is the core issue?

    • Equitable Distribution: Petitioners seek greater benefits for the poorest sections within SCs and STs.
    • Social Justice vs Economic Criteria: The Centre maintains that SC/ST reservation addresses historical social stigma, not poverty alone.
    • Institutional Question: The case raises the issue of whether such reforms should come through judicial intervention or Parliamentary legislation.

  • Why households pledge gold instead of selling it

    Why in the News

    India’s gold market is witnessing a structural shift as investment demand and gold backed loans grow rapidly, while jewellery demand declines. The trend has also highlighted the limited success of the Gold Monetisation Scheme (GMS), 2015 in mobilising idle household gold.

    What is the Gold Monetisation Scheme (GMS), 2015?

    • Objective: Mobilise idle gold held by households and institutions into the formal financial system.
    • Mechanism: Individuals and institutions deposit physical gold with authorised banks and earn interest on the deposits.
    • Challenges: Limited participation due to taxation concerns, sentimental attachment to gold and procedural complexities.

    How is India’s gold demand changing?

    • Overall Demand: Total gold demand increased 2% year on year to 282 tonnes in the first half of the year.
    • Jewellery Demand: Fell 17.1% to 141.2 tonnes, among the weakest first quarter levels since 2000.
    • ETF Investment: Gold Exchange Traded Funds (ETFs) recorded a net inflow of 20 tonnes in the first quarter.
    • Bars and Coins: Demand rose 21.3% in volume and 105.5% in value during the first half of FY27.
    • Price Rise: Domestic gold prices have increased more than fivefold over the past decade.

    Why are households pledging gold instead of selling it?

    • Collateral Preference: Households increasingly use gold as collateral for loans rather than selling it.
    • Gold Loan Growth: Outstanding gold loan portfolios reached about Rs 5.4 lakh crore by June 2026.
    • Retail Loans: Bank loans backed by pledged jewellery touched about Rs 4.3 lakh crore by February 2026.
    • Limited Recycling: Despite record high prices, households continue to retain gold, resulting in low recycled supply.
    • External Stability: Household gold holdings and central bank gold purchases have supported India’s external balance and moderated pressure on the rupee.

    What are the concerns?

    • Financial Stability: Rapid expansion of gold loans requires close regulatory monitoring.
    • RBI Measures: Borrowers must fully repay principal and interest before the same gold can be repledged.
    • Price Risk: A sharp decline in gold prices could affect lenders through lower collateral values.

    [2016] What is/are the purpose/purposes of Government’s ‘Sovereign Gold Bond Scheme’ and ‘Gold Monetization Scheme’?
    1. To bring the idle gold lying with Indian households into the economy.
    2. To promote FDI in the gold and jewellery sector.
    3. To reduce India’s dependence on gold imports.
    Select the correct answer using the code given below.
    (a) 1 only (b) 2 and 3 only (c) 1 and 3 only (d) 1, 2 and 3

  • Taxation and Other Laws (Amendment) Bill and the UPI levy

    Why in the News

    The Lok Sabha passed the Taxation and Other Laws (Amendment) Bill, 2026 on 6 August 2026. The Bill gives legal backing to modify the zero charge regime on some digital payments. Analysis links the move to United States trade pressure over digital payment barriers.

    What is the zero Merchant Discount Rate regime on UPI and RuPay?

    1. Merchant Discount Rate (MDR): the fee a merchant pays to banks and card networks for processing a digital payment.
    2. Zero MDR rule: since 2020 India has barred any charge on Unified Payments Interface (UPI) and RuPay debit card transactions.
    3. Effect on users: UPI stays free at the point of payment, which drove mass adoption.
    4. Bill change: the amendment removes the link between the Payment and Settlement Systems Act, 2007 and the Income Tax Act, and lets the government modify the zero charge regime.
    5. Scope: any charge would apply to merchants, not end users, and the steering committee headed by the National Payments Corporation of India (NPCI) is yet to decide.

    What else does the Bill do?

    1. Manufacturing: it aims to promote domestic electronics manufacturing.
    2. Foreign capital: it replaces a June ordinance that exempted interest income and capital gains earned by Foreign Portfolio Investors from government securities.

    Why is the change linked to United States trade demands?

    1. Section 301 lever: the United States Trade Representative (USTR) runs a Section 301 investigation, a tool to act against foreign trade barriers.
    2. Barrier tag: in March 2026 USTR classified India’s digital payment policies as favouring domestic players.
    3. Lost business: Visa and Mastercard cite lost potential business as Indian consumers shifted to free UPI.
    4. Market cap concern: USTR flagged that two United States owned providers processed over 80 percent of UPI transactions, alongside the 30 percent cap on third party apps.
    5. Precedent: India earlier scrapped the 6 percent equalisation levy on digital services under similar pressure.

    What are the concerns around the levy?

    1. Adoption risk: charges could slow UPI use if passed to merchants and then to prices.
    2. Policy autonomy: critics read the change as a concession under trade negotiation rather than domestic reform.
    3. Revenue pool: an interoperable zero cost platform limits card network fee income, which the change could restore.

    [2026] Which one of the following best describes the key objective of India’s ‘Open Network for Digital Commerce’ (ONDC) initiative?
    (a) To allow digital government control over all digital commerce transactions
    (b) To replace private e-commerce players
    (c) To break the dominance of large e-commerce platforms by enabling interoperability across networks
    (d) To mandate UPI-based payments for all online transactions

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