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  • Heat, weak monsoon continue to push up power demand

    Why in the News

    India’s peak electricity demand touched 269 gigawatt (GW) on September 10, the highest ever recorded for that month and close to the year’s peak of 270 GW set during the summer in May. Demand normally eases by September as the summer heat recedes, and September has recorded the year’s highest peak only twice in recent years, in 2023 to 24 and 2020 to 21. This year persistent heat, a deficient monsoon and higher irrigation load have held consumption at summer levels. The contested point is that the surge is arriving at the hour the grid is weakest, since solar generation falls away in the evening and night when the peak now occurs.

    What is peak power demand?

    1. What it measures: Peak demand is the highest instantaneous load the grid has to meet at any moment in a period, measured in gigawatt, and it sets the capacity the system must keep available.
    2. How it differs from consumption: Total electricity consumption is measured in units of energy over a period, in billion units, and a system can have flat consumption with a sharply higher peak.
    3. Why the distinction matters: Capacity planning, reserve margins and spot market prices are driven by the peak rather than by the total, so a rising peak stresses the system even where annual consumption growth is modest.

    What does the September demand data show?

    1. The record for the month: Peak power demand touched 269 GW on September 10, the highest ever peak recorded for September.
    2. Proximity to the summer peak: The year’s highest peak so far is 270 GW, recorded during the peak summer in May, so September is running within a gigawatt of it.
    3. The normal pattern: Demand usually peaks in April, May, June and July, driven by air conditioners and other cooling appliances in households and commercial establishments, and eases into a post summer pattern by September.
    4. Consumption growth: The Indian Energy Exchange (IEX), the country’s largest power trading platform, puts electricity consumption at 49.84 billion units between September 1 and 9, up 20.7 per cent from the same period a year earlier.

    Why has demand stayed at summer levels?

    1. Heat and cooling load: The Energy and Resources Institute (TERI) attributes the increase to persistent heat and continuing cooling demand, with El Nino related weather conditions adding to it.
    2. Irrigation load: Deficient rainfall raises irrigation demand, so agricultural pumping load rises at the same time as air conditioning load.
    3. The temperature and rainfall forecast: The India Meteorological Department (IMD) had forecast monthly average maximum temperatures in September above normal over most of the country, and rainfall below normal at less than 91 per cent of the long period average.
    4. The rainfall shortfall recorded: Between June 1 and September 9 India received 648 millimetres of rainfall against a normal of 760.6 millimetres, a seasonal deficit of 15 per cent.
    5. A recurring condition: The All India DISCOM Association states that this type of uncertainty will prevail given global warming and the consequential changes in weather and climate.

    Where does the system actually run short?

    1. The daytime surplus: Expansion of solar capacity has left the system comfortable during daylight hours, and grid operators have had to curtail solar generation as the system struggles to absorb the surplus.
    2. The evening and night deficit: Supply conditions tighten in the evening and at night as solar generation falls away, which is when the tightest balance now occurs.
    3. The measured shortfall: Grid India data show a night time shortfall of about 7.7 GW on September 9, when peak demand touched 267 GW, and 6.1 GW on September 10 at the 269 GW peak.

    What is filling the evening gap?

    1. Gas based generation: Electricity generation from gas based plants rose 80.32 per cent during September 1 to 9 over the same period last year, and gas is relatively expensive to run.
    2. Coal at near maximum: Coal based generation over the same nine days rose 25.30 per cent, from 26,135.72 million units in 2025 to 32,748.95 million units in 2026, with plants operating at near maximum levels.
    3. The cumulative coal shift: Since April, coal based generation has risen 10.64 per cent, from 553,730.78 million units to 612,663.37 million units, reflecting heavy reliance on coal through non solar hours.
    4. Hydropower squeezed: Deficient rainfall has cut hydropower generation, which deepens dependence on thermal generation and has pushed up prices in the spot electricity market.

    Challenges to meeting a weather driven evening peak

    1. No storage at the scale of the shortfall: Solar capacity cannot serve an evening peak without storage, and battery capacity on the Indian grid remains small against a shortfall measured in gigawatt. Eg. Grid operators curtailed solar output during the day in the same week the night time shortfall ran above 6 GW.
      The Fix: Tie every new solar tender to a contracted block of storage delivering into the evening peak rather than procuring energy alone.
    2. Expensive peaking generation: The evening gap is bridged with gas, which is the costliest generation in the stack, and the cost lands on distribution companies already carrying losses. Eg. Gas based generation rose sharply in the first nine days of September while spot market prices climbed.
      The Fix: Run a separate capacity market that pays for availability at the peak hour, so peaking plants are financed without distorting the energy price.
    3. Agricultural load is uncontrolled: Irrigation pumping rises with a rainfall deficit and is largely unmetered, so the system cannot shift it away from the peak. Eg. A 15 per cent seasonal rainfall deficit raised irrigation demand at the same time as cooling demand.
      The Fix: Expand segregated agricultural feeders that supply daytime solar power to pumps, moving that load into the surplus hours.
    4. Hydropower is no longer a reliable balancer: Hydropower is the traditional flexible source for an evening peak, and a deficient monsoon removes it in the same season that demand rises. Eg. Reduced reservoir inflows this monsoon have squeezed hydro generation exactly when the peak moved into September.
      The Fix: Contract pumped storage capacity on long term agreements so evening flexibility does not depend on the year’s rainfall.

    Conclusion

    The demand peak has moved out of the summer months and into a season the power system was not planned around, and it has moved into the hours when the fastest growing source of supply produces nothing. The response so far has been to run coal harder and gas more often, which raises both emissions and the spot price. The thing to watch is whether storage procurement is attached to new solar capacity at the scale the evening shortfall now requires, since every further year of weather driven September peaks will be met from the thermal fleet until it is.

    Back2Basics: Grid India

    1. What it is: Grid Controller of India Limited, known as Grid India, is the system operator responsible for integrated operation of the national electricity grid.
    2. What it was before: It was formerly the Power System Operation Corporation Limited, and it functions under the Ministry of Power.
    3. What it runs: It operates the National Load Despatch Centre and the Regional Load Despatch Centres, which balance generation against demand in real time.
    4. Why its data matters here: Scheduling and despatch data from these centres is the source for measured demand met, peak demand and the shortfall at any hour.

    Matching Previous Year Question

    “[2026, GS3, 15 marks] Explain the key challenges for India’s energy security. What measures do you suggest for ensuring energy security along with economic growth and sustainability?”

  • Subhash Chandra case: IBBI to tighten guarantor resolution

    Why in the News

    The Insolvency and Bankruptcy Board of India (IBBI) has proposed four amendments to the insolvency resolution process for personal guarantors to corporate debtors, extending to banks and creditors safeguards already available under the corporate insolvency resolution process (CIRP) of a company. The proposals follow a special bench of the National Company Law Tribunal (NCLT) staying a single bench order that had approved a repayment plan offering creditors Rs 6.25 crore against admitted claims of Rs 22,006.57 crore. That case led experts to question the efficacy of the Insolvency and Bankruptcy Code, 2016, which was introduced to revive companies under heavy debt and secure repayment to banks. The contested point is that the guarantor track of the Code was built with weaker creditor protections than the corporate track, and a related party of the guarantor can currently vote on the plan that decides what creditors recover.

    What is the personal guarantor resolution process?

    1. Who a personal guarantor is: An individual, usually a promoter, who personally guarantees a company’s borrowing, so the lender can proceed against that individual’s own estate when the company defaults.
    2. How the process runs: A resolution professional is appointed, a repayment plan is prepared for the guarantor, and the plan is put to a vote of the creditors before it goes to the adjudicating authority for approval.
    3. How it differs from the corporate track: Under CIRP the plan is decided by a committee of creditors from which a related party of the debtor company is excluded from voting. In a personal guarantor resolution only an associate is barred, and the definition of associate is far narrower.

    What triggered the review?

    1. The order under stay: On August 25 the NCLT single bench approved a repayment plan involving personal guarantor and Essel Group founder Subhash Chandra, and a special bench has since stayed that order.
    2. The recovery on offer: Creditors were offered Rs 6.25 crore against admitted claims of Rs 22,006.57 crore.
    3. What the banks alleged: The banks alleged that the non bank entities voting on the plan were associates or related parties of the guarantor and had acted under his influence to push through a plan carrying a very large haircut.
    4. The gap the case exposed: The narrower associate test let entities that would fail a related party test vote on the plan. The IBBI’s own illustration is a company that habitually acts on the guarantor’s advice or instructions, without the guarantor holding any shares in it or controlling its board.

    What are the four proposed amendments?

    1. Voting rights of related parties: Any creditor who is a related party of the guarantor would get no voting right in approving the resolution plan, replacing the narrower associate test.
    2. Scrutiny of avoidance transactions: Resolution professionals would have to examine whether the guarantor was party to any avoidance transactions, meaning undervalued transactions, transactions giving preference and extortionate credit transactions, present those findings to creditors before the vote, and initiate legal proceedings with creditor approval.
    3. Independent asset valuation: A registered valuer would have to determine the fair value and the realisable value of the guarantor’s assets, and the valuation report would go to creditors along with the repayment plan.
    4. Reasoned minutes of creditor meetings: Resolution professionals would have to record creditors’ deliberations and the reasons for their decision in the minutes of creditors’ meetings.

    How do these proposals close the gap with the corporate process?

    1. Parity on the voting bar: The related party exclusion is the CIRP standard, and applying it to guarantor resolutions removes the mismatch the Chandra case turned on.
    2. A duty that does not currently exist: When a guarantor’s repayment plan is put to a vote, the resolution professional is today under no obligation to examine whether an avoidance transaction took place or whether the guarantor made full disclosure of affairs.
    3. Informed commercial judgement: The IBBI’s stated purpose for the valuation report is to let creditors assess the adequacy of the proposed security, the viability of the repayment plan and the potential recovery available from the guarantor’s assets.
    4. An auditable record: Recording only raw voting tallies leaves no record of commercial reasoning, and reasoned minutes give an appellate forum something to review beyond the arithmetic of the vote.

    Challenges to the personal guarantor resolution framework

    1. Asset shielding before the filing: A guarantor can move assets into family or trust structures well before insolvency begins, leaving little to value. Eg. Promoter assets held through family trusts have repeatedly fallen outside the estate available to lenders in large default cases.
      The Fix: Extend the look back period for avoidance transactions involving a guarantor’s relatives and require a sworn asset disclosure covering it.
    2. Proving a related party connection: The related party test is broader than the associate test and is also harder to establish, since control through habitual instruction leaves no shareholding trail. Eg. The IBBI’s own example is a company acting on the guarantor’s instructions without any shareholding or board control.
      The Fix: Place the burden on the creditor claiming unrelated status to establish it, rather than on the objecting bank to disprove it.
    3. Delay in adjudication: The guarantor track sits in the same tribunals already carrying a heavy corporate caseload, so an order and its stay can consume months while asset value erodes. Eg. The stay in this case leaves the approved plan in suspension with no fixed date for a decision.
      The Fix: Fix a statutory outer limit for disposal of a personal guarantor repayment plan and report breaches bench wise.
    4. Valuation of illiquid personal assets: Fair value and realisable value diverge sharply for unlisted shareholdings, disputed land and pledged promoter stock. Eg. Pledged promoter shareholdings lose value the moment a lender begins to sell them into the market.
      The Fix: Require two independent registered valuers where the guarantor’s estate is dominated by unlisted or pledged securities.

    Conclusion

    The guarantor track of the Code was written as a lighter version of the corporate one, and the difference has turned out to matter most in exactly the cases where recovery is largest. The four proposals move that track towards the corporate standard on voting, scrutiny, valuation and record keeping, and each of them constrains the resolution professional rather than the tribunal. The proposals sit in a discussion paper open for public comment, and the special bench’s stay holds until it decides the matter.

    Back2Basics: Insolvency and Bankruptcy Board of India

    1. What it is: The IBBI is the regulator for insolvency and bankruptcy proceedings in India, established in 2016 under the Insolvency and Bankruptcy Code, 2016.
    2. Who it regulates: Insolvency professionals, insolvency professional agencies, registered valuers and information utilities.
    3. What makes it unusual: It holds regulatory, executive and quasi judicial functions over the same set of entities, which is rare among Indian regulators.
    4. Its rule making role: It frames the regulations that govern both the corporate insolvency resolution process and the resolution of personal guarantors, which is what the present discussion paper proposes to amend.

    Matching Previous Year Question

    “[2019] What was the purpose of Inter-Creditor Agreement signed by Indian banks and financial institutions recently? (a) To lessen the Government of India’s perennial burden of fiscal deficit nd current account deficit (b) To support the infrastructure projects of Central and State Governments (c) To act as independent regulator in case of applications for loans of Rs. 50 crore or more (d) To aim at faster resolution of stressed assets of Rs. 50 crore or more which are under consortium lending Answer: (d)”

  • Govt: No bank charge on UPI payment up to Rs 2,000

    Why in the News

    The Ministry of Finance has notified that no bank or system provider may impose any charge, directly or indirectly, on a payment made through RuPay debit cards or through the Unified Payments Interface (UPI), the National Payments Corporation of India’s real time system for transferring money between bank accounts using a virtual address, up to Rs 2,000. The notification does not specify any charge for transactions above that amount, which opens the way for a fee on higher value person to merchant payments. It follows the Taxation and Other Laws (Amendment) Bill, 2026, passed by Parliament last month, which removed the statutory bar on charging for these payment modes. The contested point is that a threshold covering 96 per cent of person to merchant transactions by number leaves roughly two thirds of their value open to a charge.

    What is the Merchant Discount Rate?

    1. What it is: The Merchant Discount Rate (MDR) is the fee a bank that processes a card or digital payment levies on the merchant receiving it.
    2. What it pays for: It covers transaction processing, settlement and payment infrastructure costs across the chain of banks and providers that carry the payment.
    3. The usual range: An MDR normally runs between 1 and 3 per cent of transaction value on debit and credit card payments.
    4. The exemption since 2020: No MDR has been levied on RuPay debit cards and UPI transactions since January 2020, a decision taken to promote adoption of digital payments.

    What has the notification done, and who decides a fee above the threshold?

    1. The prohibition: The notification bars any charge, direct or indirect, on RuPay debit card payments and on UPI transactions of up to Rs 2,000, whether imposed on the person making or the person receiving the payment.
    2. The silence above the threshold: The ministry did not specify charges for transactions above Rs 2,000, which is what creates the opening for an MDR on higher value person to merchant payments.
    3. The deciding body: Whether an MDR is imposed above the threshold will be decided by the UPI and Services Steering Committee, headed by the National Payments Corporation of India (NPCI), with 22 members including banks, third party application providers such as PhonePe and Google Pay, the Payments Council of India and the Indian Banks’ Association.
    4. The rate under discussion: Payments industry officials have suggested an MDR of around 0.4 to 0.5 per cent for UPI payments to large merchants, which would help meet the industry’s annual cost of about Rs 20,700 crore.

    What legal change made this possible?

    1. The provision amended: The Bill amended Section 10A of the Payment and Settlement Systems Act, 2007, which had barred any bank or system provider from imposing a charge on payments made through the electronic modes prescribed under Section 269SU.
    2. The modes covered: Those prescribed modes were RuPay debit cards, BHIM UPI and the UPI QR code.
    3. Who the underlying obligation binds: Section 269SU of the Income Tax Act, 1961 applies to businesses with a turnover of over Rs 50 crore, requiring them to offer the prescribed electronic payment modes.
    4. What the amendment enables: Removing the exemption paves the way for an MDR on UPI and RuPay debit card payments to large merchants such as e commerce platforms.
    5. The stated rationale: The amendment is presented as an enabling provision for UPI’s long term sustainability, technological advancement and resilience against emerging risks.

    Why does the Rs 2,000 threshold matter for UPI’s economics?

    1. Small share by number: Only 4 per cent of person to merchant UPI payments in 2025 to 26 were for more than Rs 2,000.
    2. Large share by value: Those same transactions accounted for about two thirds of total person to merchant UPI payment value.
    3. The base: More than 24,000 crore UPI transactions worth Rs 314 lakh crore were made during the year.
    4. What the design achieves: The threshold protects the small ticket everyday payment from any charge while leaving the value where a percentage fee actually earns revenue open to one.

    How has the state paid for zero MDR so far?

    1. The incentive scheme: The government subsidises payments of up to Rs 2,000 made to small merchants through its incentive scheme for promotion of RuPay debit cards and low value BHIM UPI person to merchant transactions.
    2. The cap and the exclusion: The incentive is capped at 0.15 per cent of transaction value, and large merchants are not covered by the scheme at all.
    3. What it costs: The Budget for 2026 to 27 estimated the payout at Rs 2,000 crore. Rs 2,196.21 crore was paid in 2025 to 26, up from Rs 1,922.77 crore in 2024 to 25.
    4. The sustainability finding: A March report of the Standing Committee on Finance recorded that the absence of MDR makes the UPI ecosystem financially unsustainable.

    Challenges to reintroducing a Merchant Discount Rate on UPI

    1. Merchant pass through to the customer: A merchant charged a percentage fee recovers it by quoting a higher price or by preferring cash for large tickets. Eg. Many small retailers added a surcharge on card payments before the Reserve Bank of India barred the practice on debit cards.
      The Fix: Bar surcharging by contract with the acquiring bank and make the ban a condition of merchant onboarding.
    2. Threshold gaming by splitting payments: A fixed value threshold invites a single large payment being broken into several below the cut off. Eg. A Rs 5,000 purchase settled as three separate UPI transfers falls entirely inside the exempt band.
      The Fix: Apply the threshold to the aggregate value settled to one merchant from one payer in a day rather than to a single transaction.
    3. Definition risk on the large merchant: The charge is designed to fall on large merchants, and the line between a large and a small merchant sits on self declared turnover. Eg. Section 269SU already uses a Rs 50 crore turnover test that a merchant can restructure across entities.
      The Fix: Anchor the classification to verified Goods and Services Tax turnover rather than to a declaration made at onboarding.
    4. Fiscal and commercial funding running in parallel: An incentive subsidy and an MDR answer the same infrastructure cost, and running both leaves the split unstated. Eg. The subsidy payout has risen each year while the industry’s stated annual cost has stayed far above it.
      The Fix: Publish a stated glide path withdrawing the incentive as MDR revenue begins, so the two do not fund the same cost twice.

    Conclusion

    The zero fee regime on UPI was paid for by the exchequer, and the bill grew every year while the payments industry’s own cost stayed several times larger. The notification shifts the funding of the large value end of the system from the Budget to the merchant, and leaves the small everyday payment where it was. What to watch is whether the UPI and Services Steering Committee sets a rate above the threshold at all, and whether merchants at that end of the market stay on UPI once it does.

    Back2Basics: National Payments Corporation of India

    1. What it is: NPCI is the umbrella organisation for retail payments and settlement systems in India.
    2. How it was set up: It was incorporated in 2008 as a not for profit company, promoted jointly by the Reserve Bank of India and the Indian Banks’ Association.
    3. Its statutory anchor: It operates under the Payment and Settlement Systems Act, 2007, which is the law governing payment systems in India.
    4. What it runs: Its systems include UPI, RuPay, the Immediate Payment Service, the National Automated Clearing House and FASTag.

    Matching Previous Year Question

    “[2023, GS3, 10 marks] What is the status of digitalization in the Indian economy? Examine the problems faced in this regard and suggest improvements.”

  • Key inflation numbers rise in August, all eyes on RBI’s interest rate decision next month

    Why in the News

    Retail inflation measured by the Consumer Price Index (CPI) rose to 4.82 per cent in August from 4.45 per cent in July, the highest reading in at least eight months. This is the third month in a row that headline retail inflation has stayed above the 4 per cent target the Reserve Bank of India (RBI) is legally mandated to hold it at. The Monetary Policy Committee (MPC), the six member body that sets the policy repo rate, left that rate unchanged at 5.25 per cent last month and has not raised it since February 2023. The contested point is whether a price rise now visible across food, fuel and manufactured goods obliges the MPC to begin tightening even as output is growing faster than expected.

    What is India’s inflation targeting framework?

    1. The statutory target: The RBI is legally mandated to keep CPI inflation at 4 per cent, within a tolerance band of 2 to 6 per cent.
    2. The instrument: The MPC sets the policy repo rate, the rate at which the RBI lends overnight to commercial banks against government securities, and changes in it are expected to pass through to deposit and lending rates.
    3. Why the band matters: Inflation inside the band does not by itself require action. A reading persistently above the central target, rather than a breach of the 6 per cent ceiling, is what builds the case for a rate increase.

    What do the August retail price numbers actually show?

    1. Food inflation: Food inflation measured by the CPI rose from 5.52 per cent in July to 5.95 per cent in August.
    2. Sugar: The CPI for sugar surged 19 per cent over July and 24 per cent over August 2025, on lower than expected production and inventory falling to multi year lows.
    3. Policy response on sugar: The government last month allowed duty free imports of up to 10 lakh tonnes of raw sugar until October 31, with sugar a key input through the festival season.
    4. Onion: Onion prices were up 22 per cent in August over July, with late rains delaying planting.

    Why is the price rise being read as broad based rather than a food shock?

    1. Breadth of the increase: 314 of the 358 items in the CPI recorded higher prices in August than in July. The figure was 310 in July and 236 in February, before the war in West Asia began.
    2. Items above target: The number of items with inflation above the target rate rose from 101 in July to 110 in August.
    3. Spillover risk: Price pressure spreading from food and fuel into other categories is what distinguishes a broad based rise from a seasonal vegetable spike, and it is the pattern the data now shows.

    What do the wholesale and producer numbers add?

    1. Wholesale Price Index: Wholesale inflation rose to 9.92 per cent in August from 9.78 per cent in July, driven by food and fuel.
    2. Wholesale food: Wholesale food inflation hit a 20 month high of 7.05 per cent in August, which ICRA attributes largely to higher prices of fruits, vegetables, milk, spices and sugar.
    3. Producer prices: Inflation based on the output Producer Price Index (PPI) edged up to 9.81 per cent from 9.57 per cent in July.
    4. Structural signal in manufacturing: India Ratings and Research reads the rise as becoming structural, since seven manufacturing sub categories, tobacco products, textile products, chemical products, rubber and plastic products, base metals, electrical equipment and other manufacturing, all carry wholesale inflation above 10 per cent. Those seven make up more than a quarter of the manufacturing group, which is itself almost two thirds of the entire Wholesale Price Index.

    Where does this leave the Monetary Policy Committee?

    1. Direction from the last meeting: Minutes of last month’s meeting showed the RBI Governor and a Deputy Governor both hinting towards an increase in interest rates.
    2. The RBI’s own projections: The central bank expects CPI inflation to average 4.7 per cent in July to September, 5.9 per cent in October to December, 5.5 per cent in January to March 2027 and 5.3 per cent in April to June 2027.
    3. Growth is not a constraint: GDP growth was 7.8 per cent in the first quarter of 2026 to 27, which removes the usual argument against tightening.
    4. The meeting date: The MPC meets on October 5 to 7, three weeks after this price data, and could deliver the first interest rate increase in three and a half years.

    What is the external monetary backdrop?

    1. US Federal Reserve: The Fed announces its own interest rate decision this week, with markets expecting a 25 basis point increase in the federal funds rate target range to 3.75 to 4 per cent.
    2. The US price trigger: American consumer prices rose 0.4 per cent month on month in August against a 0.1 per cent increase in July, with the year on year headline rate steady at 3.4 per cent.
    3. The tightening cycle: ANZ economists expect a compressed 75 basis point tightening cycle, with the increase this week followed by further increases in October and December to take the key rate to 4.25 to 4.50 per cent.
    4. Why it matters for India: Major central banks have already begun raising rates, which narrows the room for the MPC to hold while inflation runs above target.

    Challenges to inflation targeting in India

    1. Food weight in the index: Food carries a large share of the CPI basket, so a supply shock in one commodity moves the headline number that policy is judged against. Eg. A sugar output shortfall and delayed onion planting moved the August print on their own.
      The Fix: Publish the policy response against core inflation alongside the headline, so a supply driven spike is not read as a demand signal.
    2. Interest rates do not reach a supply shock: The repo rate works on credit demand and cannot add a tonne of sugar or an onion crop to the market. Eg. The government answered the sugar price surge with an import window rather than with monetary policy.
      The Fix: Pair the rate decision with a stated buffer stock and import calendar for the commodities driving the print.
    3. Transmission lag to borrowers: A change in the repo rate reaches lending and deposit rates only over several quarters, so a decision taken after inflation is established arrives late. Eg. The policy rate has been unchanged for four consecutive meetings while the headline number has risen for three months.
      The Fix: Widen the share of loans benchmarked to an external rate, so a policy change reaches borrowers in the same quarter.
    4. Imported price pressure: A large share of fuel and edible oil demand is met by imports, so the exchange rate and global prices set domestic costs irrespective of the domestic rate stance. Eg. Landed prices of imported crude palm, soyabean and sunflower oil in Mumbai are all above their September 2025 levels.
      The Fix: Use a calibrated import duty schedule on edible oils that moves against global prices rather than staying fixed through a cycle.

    Conclusion

    Inflation has moved from a food story to a broader one, and the numbers that usually lag the headline, wholesale and producer prices, are now leading it. The central bank holds a rate that has not changed in three and a half years against a growth rate that gives it no reason to wait. The thing to watch is the next Monetary Policy Committee decision and whether it treats the current run as a supply spike that will pass or as the start of a demand driven episode requiring a rate increase.

    Back2Basics: Producer Price Index

    1. What it measures: The Producer Price Index tracks the average change in prices received by domestic producers for their output, measured from the seller’s side of a transaction.
    2. How it differs from the Wholesale Price Index: The Wholesale Price Index measures the price a buyer pays at the wholesale stage, so it includes trade margins and indirect taxes. The PPI strips those out and measures the producer’s own realisation.
    3. Why it is tracked: It signals cost pressure building upstream before that pressure reaches retail prices, so it works as a leading indicator for consumer inflation.

    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.”

  • From Bengal to Boston, politicians love a ‘revdi’

    Why in the News

    The US President has promised a dividend of $5,000 to every adult citizen of the United States if the Republican Party retains control of Congress at the November midterm elections, describing it as a return on the country’s economic strength. The promise imports into a rich economy an instrument Indian parties have used for two decades. In India, Direct Benefit Transfers (DBT), the routing of welfare money straight into a beneficiary’s bank account, were built on the Jan Dhan, Aadhaar and Mobile (JAM) trinity under the second United Progressive Alliance government, and every party now carries cash handouts in its manifesto. The Prime Minister warned against a “revdi culture” in July 2022, and his own party’s state units went on to make cash transfers central to their poll strategy. The contested point is whether an instrument with this universal electoral pull is welfare policy or a substitute for a state that has not delivered health, education and skilling.

    What is a Direct Benefit Transfer based cash transfer?

    1. Direct Benefit Transfer: Welfare money is credited directly to an identified beneficiary’s bank account instead of reaching them as a subsidised good or a service.
    2. The JAM rails: A Jan Dhan bank account, an Aadhaar number for identification and a mobile number for authentication together make the credit instantaneous and traceable.
    3. Unconditional transfer: The recipient has to satisfy an eligibility filter such as being an adult woman, and nothing more. No school attendance, health check or work requirement attaches to the payment.

    Why does a cash dividend appeal to voters in the world’s richest economy?

    1. Per capita income gap: US annual per capita income is $94,430, almost 34 times India’s $2,813, so a flat payment reads very differently at each end of that range.
    2. Bottom quintile: Mean household income of the poorest 20 per cent of Americans is $17,132 a year, per the 2024 American Community Survey of the US Census Bureau. A $5,000 payment is more than 100 days of that household’s annual income.
    3. Second quintile: The next 20 per cent has a household income of $48,852 a year, so the same payment is a little over a month’s income.
    4. Concentration at the top: Annual household income of the top 5 per cent is $5,25,113, more than 30 times the mean of the bottom 20 per cent. A flat transfer is therefore a large sum for the bottom of a rich country and a rounding error at its top.

    How large is the fiscal commitment behind these promises?

    1. Cost of the US dividend: About 245 million citizens are over 18, per US Census Bureau 2024 data, putting the cost of the promise at at least $1 trillion.
    2. Scale against India: That sum is close to a fourth of India’s entire GDP of $3.92 trillion in 2025 to 26.
    3. State transfers in India: The Sixteenth Finance Commission estimates large group unconditional cash transfers by states at Rs 1.96 lakh crore in 2025 to 26, roughly $20 billion, the bulk of it going to women in Maharashtra, Karnataka and West Bengal.
    4. Approval risk: The US dividend is a promise and not an appropriation. It requires the United States Congress to approve the spending.

    How did cash transfers become the common instrument of Indian electoral politics?

    1. Origin in delivery reform: DBT began as a leakage reduction measure under the second United Progressive Alliance government, built on the JAM trinity rather than on an electoral calculation.
    2. The electoral discovery: An advisor to that government framed the appeal in terms of funds reaching a voter’s account at the click of a mouse ahead of an election.
    3. Cross party adoption: Regional parties, the Congress and the Bharatiya Janata Party all now carry cash handouts to sections of their voter base in their manifestos.
    4. Reversal of a stated position: The Prime Minister’s July 2022 warning against the practice was followed by his own party’s state units adopting it, producing a competitive escalation between state units, regional parties and the Congress.

    What does the spread of cash transfers reveal about the state?

    1. A political economy fallout: Cash transfers expanded because the state failed on health, education and skilling, leaving parties to offer money in place of services.
    2. Substitute forms of security: The same failure produces minimum income through job guarantees, cash in the hands of women and allowances for the literate but jobless, each of them a payment standing in for a missing service.
    3. Universality of the instrument: A rich economy with 34 times India’s per capita income reaches for the same device, which shows the appeal is electoral rather than developmental.

    Challenges to unconditional cash transfers

    1. Recurring outlay against capital spending: A monthly transfer becomes a permanent charge on a state budget and competes with capital spending on hospitals, schools and water supply. Eg. Maharashtra’s Ladki Bahin scheme and Karnataka’s Gruha Lakshmi are annual recurring commitments rather than one time payments.
      The Fix: Report unconditional transfer outlay as a disclosed share of a state’s own revenue receipts in every annual budget document.
    2. Absence of human capital conditionality: An unconditional payment asks nothing of the household, so it does not move school attendance or immunisation. Eg. Mexico’s Progresa linked benefits to school attendance and health check ups, and Brazil’s Bolsa Familia used conditional transfers to lift 36 million people out of poverty.
      The Fix: Attach verifiable attendance and immunisation conditions where the delivery system can already confirm them.
    3. Exclusion through the identification layer: Eligibility rests on databases, and a household with unseeded or mismatched records drops out of the list without knowing why. Eg. Aadhaar seeding failures have removed ration card holders from beneficiary lists in Jharkhand.
      The Fix: Provide an offline grievance and reinstatement route at the block level with a fixed disposal deadline.
    4. Pressure off the public provider: Cash allows a household to buy the private service the state failed to supply, which removes the political pressure to repair the public one. Eg. Out of pocket spending on private hospitals remains a leading route into household impoverishment in India.
      The Fix: Publish a service availability audit of the relevant public facilities alongside each transfer scheme.

    Conclusion

    A cash transfer buys immediate relief and buys it visibly, which is why it has crossed from a lower middle income democracy to the richest one. It does not build a health centre, staff a school or train a worker, and the states expanding it fastest are the ones whose service delivery gaps created the demand for it. The tension is unresolved: the instrument is popular precisely because the public system it compensates for has not been fixed, and every rupee committed to the transfer makes fixing that system harder to finance.

    What is Inclusive Growth?

    1. About: Inclusive growth is economic growth distributed fairly across society that creates opportunity for all, as defined by the Organisation for Economic Co operation and Development (OECD).
    2. Rationale: It entered India’s stated policy goals with the Eleventh Five Year Plan (2007 to 2012), titled “Rapid and More Inclusive Growth”, and continued in the Twelfth Plan as “Faster, Sustainable, and More Inclusive Growth”.
    3. The OECD typology: Three dimensions govern it. Participation, meaning all groups can contribute to growth; benefit sharing, meaning all groups gain in proportion to their contribution; and equity, meaning historical disadvantage is actively redressed.
    4. How it is measured: The National Multidimensional Poverty Index across health, education and living standards, the Gini coefficient for consumption or income inequality, the Human Development Index, and the Periodic Labour Force Survey for participation and unemployment.

    Government Initiatives for Inclusive Growth

    1. Pradhan Mantri Garib Kalyan Anna Yojana: Free food grain to 81.35 crore beneficiaries, extended to 31 December 2028 at an outlay of about Rs 11.80 lakh crore.
    2. Viksit Bharat G RAM G Act, 2025: Replaces the Mahatma Gandhi National Rural Employment Guarantee Act with a 125 day wage guarantee plus skill and livelihood diversification components, effective 1 July 2026.
    3. Ayushman Bharat PM JAY: Health cover of Rs 5 lakh a year for 55 crore beneficiaries, now extended to all persons above 70 under Ayushman Vay Vandana.
    4. Pradhan Mantri Mudra Yojana and PM SVANidhi: Rs 27 lakh crore disbursed across 43 crore micro enterprise loans since 2015, and collateral free credit of Rs 10,000 to Rs 50,000 for street vendors.

    Matching Previous Year Question

    “[2024, GS3, 10 marks] Examine the pattern and trend of public expenditure on social services in the post-reforms period in India. To what extent this has been in consonance with achieving the objective of inclusive growth?”

  • Smash PYQ 2027 | Open Sessions Are Here!

    Smash PYQ 2027 | Open Sessions Are Here!

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  • Terror’s changing face, India’s counter-terror strategy

    Terror’s changing face, India’s counter-terror strategy

    Why in the News

    India has unveiled PRAHAAR, its first comprehensive National Counter Terrorism Policy and Strategy, which sets a national framework for preventing and responding to terrorist activity and radicalisation through coordinated “whole of government” and “whole of society” approaches. The policy follows Operation Sindoor, the strikes of 6 and 7 May on the Pakistan based terror network launched after the Pahalgam attack of 22 April 2025, and follows the three declarations India issued immediately after that operation. The first of those declarations ended the stated era of restraint, the second classified any future act of cross border terrorism emanating from Pakistan as an “act of war”, and the third removed Pakistani nuclear blackmail as a restraining factor. The tension is that the doctrine India has hardened is built for a state sponsor with a return address, while the threat itself has fragmented into lone wolf attackers, autonomous cells and drone, cyber and artificial intelligence enabled methods that a retaliatory strike does not reach.

    What is PRAHAAR?

    1. PRAHAAR as a national policy: PRAHAAR is India’s first comprehensive National Counter Terrorism Policy and Strategy, unveiled on 23 February 2026.
    2. Scope of the framework: It sets out a national counter terrorism framework for preventing and responding to terrorist activities and to radicalisation.
    3. Whole of government and whole of society approach: It works through coordinated “whole of government” and “whole of society” approaches, so prevention is not left to security agencies alone.

    How has the form of terrorism changed in 25 years?

    1. The organisational form has fragmented: Large terror groups run by single leaders, such as al-Qaeda under Osama bin Laden or the Islamic State under Abu Bakr al-Baghdadi with its call for an Islamic Caliphate, have given way to smaller and more autonomous entities.
    2. The attacker is now often solitary: Lone wolf attacks are becoming the norm, which removes the network that intelligence collection is designed to detect.
    3. Drones, cyber capability and artificial intelligence: Drones, cyber capabilities and artificial intelligence are now used to perpetrate terror.
    4. Counter terrorism use of the same technologies: Those technologies are used by the nations combating terrorism as well, so capability advantage is contested rather than assured.

    What is a lone wolf attack?

    1. The definition: A lone wolf attack is an attack planned and executed by a single individual, or by a pair acting alone, who belongs to no organisation and takes no operational direction from one.
    2. How the attacker is produced: Radicalisation runs through online propaganda rather than through recruitment by a handler, so the individual adopts a group’s cause without ever joining its structure. Eg. Self radicalised modules assembled around professionals, rather than around infiltrators, in recent hinterland cases.
    3. Why detection fails: Intelligence collection works by intercepting communication between conspirators and by penetrating networks, and an attacker who communicates with nobody generates neither signal.
    4. Why a retaliation doctrine does not reach it: A cross border response needs attribution to a sponsoring state, and an individual acting alone offers no camp, handler or command node to strike.

    Why did the early Indian response stay passive, and which attacks fell inside that period?

    1. Assassination of a former Prime Minister, 1991: The assassination of former Prime Minister Rajiv Gandhi by the Liberation Tigers of Tamil Eelam on 21 May 1991 at Sriperumbudur in Tamil Nadu came while cross border terror was only beginning in Kashmir.
    2. Internal detection failed repeatedly: The March 1993 Mumbai serial blasts killed over 250 people in 13 coordinated blasts, and the synchronised blasts across Coimbatore in February 1998 exposed the inadequacy of internal security mechanisms.
    3. Pakistan’s direct role was first exposed by a hijack: The hijack of Indian Airlines flight IC-814 on 24 December 1999 forced India to release the Pakistan based terrorists Ahmed Omar Sheikh and Masood Azhar in exchange for more than 160 civilian hostages.
    4. Operation Parakram and its outcome: The Jaish-e-Mohammed (JeM) attack on Parliament on 13 December 2001 triggered a large scale military mobilisation under Operation Parakram, and after almost two years of standoff the disengagement took place with no direct punishment on Pakistan.
    5. Nuclear parity was the restraint: With both countries holding nuclear weapons, the threat of escalation drew the international community in to cool tempers each time.
    6. The 26/11 Mumbai attacks and the absence of retaliation: The 26/11 Mumbai attacks of November 2008, which brought the world’s solidarity with India’s fight against cross border terrorism, produced no military action against Pakistan.
    7. The Red Fort attack of 2000: An Army garrison within the Red Fort was targeted on 22 December 2000 by Lashkar-e-Taiba (LeT) terrorists, killing three soldiers.
    8. Delhi market blasts of 2005: Over 60 people were killed in serial blasts across Delhi markets including Sarojini Nagar and Paharganj in October 2005.
    9. Delhi commercial district blasts of 2008: Multiple blasts hit Connaught Place, Greater Kailash and Karol Bagh in September 2008, months before the Mumbai attacks.
    10. The Delhi High Court blast of 2011: A briefcase bomb outside the Delhi High Court on 7 September 2011 killed 15 people, claimed by Harkat-ul-Jihad Islami (HUJI), an al-Qaeda affiliated group largely based in Pakistan.
    11. Akshardham, Varanasi and Pune attacks: The 2002 Akshardham Temple attack, the 2006 Varanasi serial blasts and the 2010 German Bakery blast in Pune are part of the same record.
    12. Proof did not produce a response: In each of these cases India chose not to respond directly and decisively, even after conclusive proof of Pakistan’s support.

    What changed when the fight moved across the border?

    1. The Uri attack and the 2016 surgical strikes: The JeM attack on an Army camp at Uri in Kashmir on 18 September 2016 led to the first cross border surgical strikes on 28 and 29 September.
    2. Message conveyed by the surgical strikes: They sent a message and served as a statement of intent that terror would not go unpunished.
    3. The Balakot air strike of 2019: After the attack on a Central Reserve Police Force convoy at Pulwama on 14 February 2019, the Indian Air Force struck a JeM terror camp at Balakot, the first time it had crossed into Pakistani airspace to hit a terror target.
    4. Operation Sindoor, 2025: Operation Sindoor was launched on 6 and 7 May after the Pahalgam attack, and in 96 hours the leaders and headquarters of the LeT and JeM networks were destroyed and Pakistani military assets were hit.

    What is the four fold strategy proposed from here?

    1. Elimination of the residual network: Continue to hunt down and eliminate the remnants of the terror network inside the country, particularly in Kashmir.
    2. Pre emptive action across the Line of Control: Take pre emptive military action against any potential terror threat building across the Line of Control (LoC), including at terrorist launch pads, which years of experience and an embedded intelligence network make possible.
    3. The de radicalisation programme: Run an exhaustive de radicalisation programme that motivates young people towards the mainstream and makes joining or supporting a terror outfit unattractive and prohibitively costly.
    4. Terror financing: Take all necessary steps to cut off terror financing, in close coordination with friendly countries.

    What is India pressing for at the multilateral level?

    1. The charge of double standards: At the Shanghai Cooperation Organisation Summit in Bishkek on 1 September the Prime Minister said, “We must send a strong message to countries that use terrorism as an instrument of policy and provide safe haven and support to terrorists that terrorism can never be a strategic asset for anyone.”
    2. A named attack entered a group declaration: The 18th BRICS Summit in New Delhi included an exclusive paragraph on the Pahalgam attack in the Delhi Declaration.
    3. Effect of a grievance carried in multilateral text: A specific Indian grievance is now carried in the text of a multi country declaration rather than only in national statements.

    Challenges to India’s counter terrorism strategy

    1. A retaliation doctrine has no target in a lone wolf attack: An “act of war” classification presumes an attributable state sponsor, and a self radicalised individual acting alone gives no address to strike. Eg. Self radicalised modules assembled around professionals, rather than infiltrators, in recent hinterland cases.
      The Fix: Pair the declaratory doctrine with a published attribution standard, so the threshold of evidence that triggers a cross border response is fixed in advance rather than argued after each attack.
    2. Police and public order are State subjects: A national policy has to be executed through State police forces that the Union does not control, which is where coordination breaks down. Eg. The delay in National Security Guard deployment during the 26/11 Mumbai attacks.
      The Fix: Route PRAHAAR’s obligations through a standing Centre State counter terrorism council with State specific implementation timelines, rather than through advisories.
    3. Intelligence remains fragmented across agencies: Multiple collection agencies without seamless real time sharing means a warning held by one is not actionable by another. Eg. Intelligence fusion is attempted through the Multi Agency Centre and the National Intelligence Grid, which depend on voluntary feeds from database holding agencies.
      The Fix: Give a single fusion centre statutory authority to task and receive feeds, on the model of a national counter terrorism centre, so sharing is an obligation rather than a courtesy.
    4. De radicalisation has no measurable output: A programme aimed at intent rather than at incidents cannot be judged by attack counts, and India runs no published evaluation of one. Eg. Online influence of the kind that drove youth radicalisation in Kashmir operates outside any programme’s reach.
      The Fix: Fix published indicators for the programme, such as recruitment attempts intercepted and cases of disengagement sustained over a stated period, and report them annually.
    5. Terror financing has moved to channels outside the banking system: Hawala, counterfeit currency and cryptocurrency route funds without touching a reportable transaction. Eg. Informal channel financing was traced in the ISIS linked Padgha module.
      The Fix: Bring virtual digital asset service providers fully under reporting obligations to the Financial Intelligence Unit India, so the fastest growing channel is monitored on the same terms as banks.
    6. There is no agreed international definition of terrorism: The absence of one lets states label selectively and refuse cooperation on legal grounds. Eg. Repeated holds placed on listings under the United Nations Security Council 1267 sanctions committee.
      The Fix: Press the Comprehensive Convention on International Terrorism, which India first proposed in 1996, to a vote rather than leaving it in open ended negotiation.

    Conclusion

    The doctrine India adopted after Operation Sindoor answers one form of the threat well and leaves the other untouched. A declared willingness to retaliate raises the cost of sponsoring an attack from across the border; it does nothing about an attacker who was recruited online and never crossed anything. PRAHAAR is the first instrument that addresses the second half, which is why its prevention and radicalisation components, rather than its enforcement components, are the part worth watching. The marker is whether the policy produces named nodal responsibilities and reported outcomes, or remains a framework document that the next attack is measured against.

    Terrorism in India

    1. Definition of terrorism: Terrorism is the deliberate use of violence, or the threat of violence, to instil fear and achieve political, ideological or religious goals.
    2. The statutory definition: Under Section 15 of the Unlawful Activities (Prevention) Act, 1967, a terrorist act is any act intended to threaten India’s sovereignty, security or unity, or to create terror through violence, explosives or disruption of essential services.
    3. The four recognised strands in the Indian context: Cross border terrorism driven by Pakistan based groups in Jammu and Kashmir and by Khalistani networks, North East insurgencies run by ethno nationalist groups such as NSCN and ULFA, Left Wing Extremism across the Red Corridor, and hinterland terrorism by modules operating outside traditional conflict zones.
    4. The direction of change: The terror and organised crime nexus supplies funding, arms and logistics, and technology acts as a force multiplier through drones, encrypted platforms and 3D printing. Eg. The Houthi drone attack on Saudi Aramco in 2019.

    Institutional Architecture and Initiatives Against Terrorism

    1. Multi Agency Centre and Cyber Multi Agency Centre: Fuse intelligence inputs across central and State agencies.
    2. National Intelligence Grid: Networks databases held by different departments to give agencies real time access.
    3. Indian Cyber Crime Coordination Centre: Acts as the nodal point against cybercrime with a citizen reporting route. Eg. The 1930 helpline.
    4. Border management systems: Smart fencing under the Comprehensive Integrated Border Management System plugs infiltration gaps, backed by a layered coastal security grid.
    5. Surrender and rehabilitation policies: Pull cadres out of insurgency through reintegration rather than through prosecution alone.

    Matching Previous Year Question

    “[2025, GS3, 10 marks] Terrorism is a global scourge. How has it manifested in India? Elaborate with contemporary examples. What are the counter measures adopted by the State? Explain.”

  • CAZRI moth bean varieties show resilience in an El Niño year [MENTION]

    Why in News

    Moth bean varieties developed by the Central Arid Zone Research Institute (CAZRI) performed with resilience during an El Niño year. El Niño is the warm phase of the Pacific ocean and atmosphere cycle that often suppresses the Indian monsoon.

    Static Context

    CAZRI is an ICAR institute at Jodhpur, Rajasthan, focused on arid zone agriculture and desertification research. Moth bean is a hardy arid legume grown in the rainfed drylands of western Rajasthan and Gujarat. It tolerates drought and poor soils, which makes it valuable for climate resilient cropping. Release specific yield figures could not be verified, as the PIB detail page did not resolve this run. The exam value here is the institute and the crop, not the unverified numbers.

    Prelims angle

    Place CAZRI at Jodhpur under ICAR. Recognise moth bean as a drought tolerant arid pulse. Recall that El Niño tends to weaken the southwest monsoon.

    Mains angle

    GS3, dryland agriculture and climate resilience. A supporting example for answers on drought resistant crops and rainfed farming.

    Matching Previous Year Question

    “[2012] Consider the following crops of India: 1. Groundnut 2. Sesamum 3. Pearl millet Which of the above is / are predominantly rainfed crop/crops?
    (a) 1 and 2 only
    (b) 2 and 3 only
    (c) 3 only
    (d) 1, 2 and 3
    Answer: (d)”

    PIB Link

    https://www.pib.gov.in/PressReleasePage.aspx?PRID=2309690&reg=3&lang=1

  • Dryland Congress 2026 concludes with the Delhi Declaration on Drylands

    Why in News

    The Dryland Congress 2026 concluded in New Delhi with the adoption of the Delhi Declaration on Dryland, also styled the 3D. The Congress ran from 10 to 12 September 2026 at the National Agricultural Science Complex, New Delhi.

    Core facts

    The Congress was organised by the Indian Council of Agricultural Research (ICAR) and the International Crops Research Institute for the Semi Arid Tropics (ICRISAT). It gathered over 800 experts from Asia, Africa and the Americas. The event marked 50 years of the ICAR and ICRISAT partnership. It deliberated on six themes: breeding, climate resilience, nutrition and markets, farming systems, seed systems, and gender and youth inclusion. Drylands span about 45% of the world’s land surface and support over two billion people.

    Static Context

    ICRISAT is a research centre headquartered at Hyderabad, working on crops of the semi arid tropics such as sorghum, pearl millet, chickpea, pigeonpea and groundnut. ICAR is the apex body for coordinating agricultural research and education in India, under the Ministry of Agriculture & Farmers Welfare. Dryland and rainfed farming is supported through the Rainfed Area Development (RAD) programme under the National Mission for Sustainable Agriculture (NMSA), which promotes Integrated Farming Systems (IFS). Land degradation in drylands connects to the United Nations Convention to Combat Desertification (UNCCD).

    Prelims angle

    Distinguish ICAR (Indian apex research body) from ICRISAT (international centre at Hyderabad). Link RAD and IFS to the NMSA. Associate desertification with the UNCCD. Know the semi arid tropic crops.

    Mains angle

    GS3, agriculture and cropping systems. Frame dryland and rainfed agriculture as central to crop diversification, climate resilience and farmer incomes, and the value of cooperation among developing countries in seed and breeding research.

    Matching Previous Year Question

    “[2026] Which among the following is/are the objective(s) of the Rainfed Area Development (RAD) initiative under the National Mission for Sustainable Agriculture (NMSA)?
    1. Encouraging monoculture in rainfed areas
    2. Increasing rice cultivation in irrigated regions
    3. Enhancing productivity and minimising climatic risks through Integrated Farming Systems (IFS)
    (a) 1 only
    (b) 1 and 2
    (c) 2 and 3
    (d) 3 only
    Answer: (d)”

    “[2021, GS3, 15 marks] What are the present challenges before crop diversification? How do emerging technologies provide an opportunity for crop diversification?”

    PIB Link

    https://www.pib.gov.in/PressReleasePage.aspx?PRID=2309628&reg=3&lang=1

  • India to host the World Circular Economy Forum 2026 [MENTION]

    Why in News

    India will host the World Circular Economy Forum (WCEF) 2026 at Gandhinagar from 15 to 18 September 2026. The theme is “Circular Economy: Transition for People and Prosperity”.

    Static Context

    A circular economy keeps materials in use through reuse, repair, refurbishment and recycling, which cuts raw material inputs, waste and greenhouse gas emissions. The WCEF is convened by the Finnish Innovation Fund (Sitra) with partners. The Indian host is the Ministry of Environment, Forest and Climate Change (MoEFCC). India’s related domestic instruments include Extended Producer Responsibility (EPR) rules for plastic, electronic and battery waste, and the mission on resource efficiency. This item is a MENTION because the forum begins after this run. Its exam value is the circular economy concept and the fact that India hosts the WCEF.

    Prelims angle

    Link the circular economy to reduced raw material use, reduced waste and lower emissions. Associate EPR with waste categories. Note India as the WCEF 2026 host at Gandhinagar.

    Mains angle

    GS3, environment and resource efficiency. Frame the circular economy as a route to decoupling growth from material and emission intensity, and India’s positioning as a convening venue on sustainability.

    Matching Previous Year Question

    “[2025] Consider the following statements:
    Statement I: Circular economy reduces the emissions of greenhouse gases.
    Statement II: Circular economy reduces the use of raw materials as inputs.
    Statement III: Circular economy reduces wastage in the production process.
    Which one of the following is correct in respect of the above statements?
    (a) Both Statement II and Statement III are correct and both of them explain Statement I
    (b) Both Statement I and Statement II are correct and Statement I explains Statement II
    (c) Only one of the Statements II and III is correct and that explains Statement I
    (d) Neither Statement II nor Statement III is correct
    Answer: (a)”

    PIB Link

    https://www.pib.gov.in/PressReleasePage.aspx?PRID=2309702&reg=3&lang=1

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