Mains Ready By December. Smash Mains & Smash PYQ Admissions Open
Talk to Mentor

Civilsdaily

Search results for: “”

  • In trade deal with US, India needs to secure terms harder to reverse

    Why in the News

    The India-US interim trade deal has stalled for a third time, 20 months after negotiations began, as the legal basis of US tariffs keeps shifting. India’s narrow tariff edge can vanish under the shifting US system, so the stake is durable terms rather than a wider tariff gap.

    What was the interim deal meant to deliver?

    1. What it is: An interim trade deal covers some tariffs and purchases ahead of a full agreement, like a down payment on a larger bargain.
    2. February framework: The joint statement aimed to cut the US tariff on Indian goods from 50% to 18%.
    3. India’s side of the bargain: India agreed to cut duties on American industrial goods and to buy more from the US.
    4. What went wrong: The rate’s legal basis vanished within two weeks, so India’s promised advantage shrank.
    5. The takeaway: A concession tied to a shifting US legal regime has little lasting value.

    How has the legal ground under US tariffs shifted?

    1. Court ruling: The US Supreme Court struck down the reciprocal tariffs, the country-by-country duties imposed since April 2025 under an emergency law. India’s 18% rate rested on that law.
    2. Temporary global tariff: A temporary tariff on most imports followed, and it expired in July.
    3. Forced-labour tariffs: From July, rates depend on how well a country blocks forced labour goods. India’s proposed 12.5% was cut to 10% after it banned such imports.
    4. Narrow lead: Rival Vietnam pays only slightly more, and several countries pay the same as India.
    5. Repeated stalls: A negotiating round was called off in August 2025, and a February visit was postponed.
    6. Mixed US signals: The State Department called the deal “90 per cent-plus there”. The US Trade Representative saw nothing imminent.

    Why is a tariff advantage a weak thing to rely on?

    1. Relative edge: Washington decides who gets which rate. A US deal with Vietnam, reportedly near completion, could erase India’s margin overnight.
    2. Shifting baseline: The baseline itself can change, through a wider probe or through sector tariffs:
      • a US probe into “structural excess capacity”, meaning output far beyond home demand, covers 16 economies, including India, and its findings, due by a statutory deadline of March 2027, could reset rates regardless of any deal;
      • generic medicines, the backbone of India’s pharma exports to the US, are exempt from new pharma duties only until a review by April 2027, and steep duties on generics are planned from 2028.
    3. Unequal permanence: India’s tariff cuts, farm openings and purchase commitments are long-term and politically hard to reverse. India’s rate is an administrative decision Washington can revise alone.

    Should India chase a wider tariff gap or durable terms?

    1. New Delhi’s logic: Cutting tariffs and buying more gains India little unless its exporters benefit, so it wants a clear advantage over rivals before signing.
    2. Case for durable terms: A rival’s deal, the capacity probe or sector duties can each erase a tariff gap, so bargaining power is better spent on terms harder to reverse.
    3. Predictability as the prize: Uncertainty costs exporters more than any single rate, because it pushes firms to hedge. Washington has based tariffs on three laws in eight months.

    Challenges

    1. Executive discretion: US tariffs can change by presidential action, without legislation.
    2. Farm sensitivities: Openings on farm products face strong domestic political resistance in India.
    3. Unilateral withdrawal history: Washington has withdrawn trade preferences before. Eg. Revocation of India’s Generalized System of Preferences (GSP) benefits in 2019.

    Way Forward

    1. Tariff ceiling: Washington commits not to raise duties on Indian goods above the agreed level for the deal’s life.
    2. Non-discrimination and notice: Bar less favourable treatment of India than of competitors, and require prior notice and consultation before any new tariff.
    3. Written sector carve-outs: Start with pharmaceuticals, where some Indian speciality medicines already pay zero duty under the new pharma tariffs.
    4. Phased, conditional concessions: Phase in India’s tariff cuts and purchase commitments, tied to US compliance.

    Conclusion

    The negotiation now turns on how long agreed terms last, not on how low the US tariff is. Trading India’s concessions for binding ceilings, not a passing rate gap, will decide the deal’s real value.

    About India-US trade relations

    1. Trade volume: Bilateral trade stood at $149.84 billion in 2025-26.
    2. Trade surplus: India’s surplus with the US narrowed to $34.4 billion in 2025-26.
    3. Investment: The US is India’s third-largest investor, with cumulative foreign direct investment (FDI) inflows of $70.65 billion (2000-2025).
    4. Indian investment in the US: About 163 Indian companies have invested over $40 billion there (Confederation of Indian Industry).

    Matching Previous Year Question

    “[2026] The Chancellor of Germany visited India in January 2026. Which of the following is/are NOT correct in terms of outcomes? 1. MoU between All India Institute of Ayurveda and University of Hamburg 2. MoU on Youth Hockey Development between Hockey India and German Hockey Federation 3. Establishment of a bilateral dialogue mechanism on the Indo-Pacific 4. Opening of an Honorary Consul of Germany in Lucknow (a) 2 and 3 (b) 1 and 4 (c) 3 and 4 (d) 1 only Answer: B”

  • Colby’s mid-term report card, what it means for India

    Why in the News

    The US Under Secretary of War for Policy, Elbridge A. Colby, has updated the 2026 National Defense Strategy a month before the US mid-term elections. The strategy asks partners to carry more of the cost of regional security, which changes what the US expects from India.

    What does the 2026 National Defense Strategy aim at?

    1. What it is: The National Defense Strategy is the US defence master plan, like a business plan that ranks threats and assigns resources.
    2. Four goals: Defending the US homeland, deterring China, gaining more support from allies and partners, and rebuilding the US defence industry.
    3. China focus: The strategy aims to stop China dominating the Indo-Pacific through deterrence, especially along the First Island Chain (the island arc from Japan through Taiwan to the Philippines).
    4. Twin track with Beijing: The administration is also negotiating with Beijing on trade, so military competition and economic talks run together.
    5. The takeaway: Washington wants stronger partners that pay more, so a partner’s value now depends on what it contributes.

    What is the new bargain with allies and partners?

    1. Burden shifting: The US once supplied most of its alliances’ military strength. Partners must now take more responsibility for their own regions.
    2. Regional roles: Europe is urged to lead its own defence, South Korea to do more on the Korean Peninsula, and Japan and Australia to play bigger Indo-Pacific roles.
    3. Division of labour: The US keeps advanced capabilities, strategic coordination and extended deterrence (its promise to defend allies, including with nuclear forces). Partners provide troops, infrastructure, funding and industrial support.
    4. Russia calculus: Washington wants to cut its costs in the Ukraine war and push Europe to do more. It still wants to limit Russian military power and influence.

    Where will Indian and US interests overlap, and where not?

    1. India’s value: India’s location, military potential, Indian Ocean position, technology goals and Indo-Pacific role matter to Washington. These interests have stayed largely constant across US administrations.
    2. New expectations: Washington now expects India to help keep the regional balance, work closely on defence, join technology and supply-chain projects, and build military strength.
    3. Shifting China equation: India’s value to Washington is tied to the China challenge. US-China ties swing between competition and cooperation, so their interests will overlap but not always align.
    4. Russia factor: US policy on Russia touches India’s defence ties with Russia, its energy needs and its desire for strategic autonomy.
    5. Diversified partnerships: Ties with France, Europe, Japan, Australia, the Gulf and Russia widen India’s strategic choices.

    Why does leverage matter more than partnership labels?

    1. Importance is not leverage: A country’s importance to Washington does not set the terms on which Washington negotiates with it. Leverage does.
    2. Sources of leverage: Economic scale, military capability, technology, market access and the ability to offer or withhold key capabilities all build bargaining power.
    3. China example: Beijing’s economic and technological strength gives it tools to influence US decisions. India can gain similar influence as its economy grows.
    4. Strategic task: New Delhi must build capability and keep the freedom to use it.

    Challenges

    1. US-China thaw: A trade deal between Washington and Beijing could lower India’s strategic value.
    2. Russia ties under scrutiny: India’s defence and energy links with Russia may clash with US goals.
    3. Capability gap: Building economic and military leverage takes years, but US expectations are immediate.

    Way Forward

    1. Defence industrial base: Expand domestic defence production so India contributes capability, not only demand.
    2. Supply-chain projects: Join US technology and supply-chain initiatives on terms that build Indian manufacturing.
    3. Clear red lines: Define in advance where strategic autonomy will not be traded, including Russia and energy.

    Conclusion

    The next phase of India-US relations turns on the terms of cooperation between two capable powers, not on partnership labels. India’s ability to add capability faster than US expectations rise is the test to watch.

    About the India-US defence partnership

    1. Foundational agreements: Four pacts enable military interoperability:
      • General Security of Military Information Agreement (GSOMIA);
      • Logistics Exchange Memorandum of Agreement (LEMOA);
      • Communications Compatibility and Security Agreement (COMCASA);
      • Basic Exchange and Cooperation Agreement (BECA).
    2. Joint exercises and dialogue: Exercises include MALABAR, YUDH ABHYAS and RED FLAG, supported by 2+2 Ministerial Dialogues between foreign and defence ministers.
    3. Technology access: India received Strategic Trade Authorization Tier 1 (STA-1) status in 2018, easing access to US military technology.
    4. Co-development: The Initiative on Critical and Emerging Technologies (iCET) and India-US Defense Acceleration Ecosystem (INDUS-X) support co-development of jet engines, armoured vehicles and space technology.

    Matching Previous Year Question

    “[2025, GS2, 10 marks] With the waning of globalization, post-Cold War world is becoming a site of sovereign nationalism. Elucidate.”

  • Team depth to individual gaps: India’s Asian Games report card for LA 2028

    Why in the News

    India’s flagship elite sports fund is meant to back future champions, yet only about 2% of its spending since the 2022 Hangzhou Asian Games went to athletes who won gold at Nagoya. India finished fourth at the Aichi-Nagoya Asian Games, and the Ministry of Youth Affairs and Sports has announced a performance review focused on the Los Angeles 2028 Olympics.

    What is TOPS, and how is elite sport funded?

    1. What it is: The Target Olympic Podium Scheme (TOPS) is the Sports Ministry’s flagship fund for Olympic hopefuls. Like a scholarship, it pays for chosen athletes’ customised training, foreign exposure, coaches and equipment.
    2. Who gets in: A TOPS team monitors athletes and inducts them into a Development Group or a Core Group, based on performance, potential and medal prospects.
    3. Wider funding: The Annual Calendar for Training and Competitions (ACTC) funds camps, tournaments, coaches’ salaries and other competition expenses across federations.
    4. What went wrong: Most of this money missed the athletes who finally won gold, so the system spots winners late.
    5. The takeaway: Funding that arrives after an athlete has broken through cannot build the next generation of champions.

    What did Nagoya reveal about where the money went?

    1. TOPS spending: Of ₹97.84 crore spent under TOPS since Hangzhou, only ₹2.05 crore went to athletes who won gold at Nagoya.
    2. ACTC spending: Only one-eighth of ACTC spending since 2023 was linked to Nagoya golds.
    3. Kumkum Mohod: She became India’s first individual Asian Games champion in women’s recurve archery without being part of TOPS.
    4. Shooting golds: Mixed team champion Suruchi Singh joined TOPS only recently, and partner Kamaljeet Singh is not on it. Trap champion Neeru Dhanda remains in the developmental group.
    5. Three golds, little support: The archery and two shooting golds above together drew only ₹3.5 lakh of TOPS funding.

    What do team and individual results show?

    1. Team depth: 13 of 21 golds came in team events, some of which are not Olympic events. Eg. Cricket, kabaddi, hockey, archery, athletics relays and shooting.
    2. Individual gap: 19 of 27 silvers came in individual events, from athletes who reached finals but could not convert silver into gold.
    3. Strongholds slipping: Badminton won no individual medal for the first time in 12 years. Weightlifter Mirabai Chanu’s silver was India’s first weightlifting medal at the Games since 1998, with no obvious successor.
    4. Bright spots: The women’s recurve archery team ended South Korea’s 28-year run as champion. Women’s hockey, after specialised penalty-corner and goalkeeping clinics, beat China for gold and qualified for Los Angeles.
    5. Combat sports: Aman Sehrawat and Sujeet Kalkal won wrestling gold, and boxing returned to the top of the podium.

    Is the problem talent spotting or medal counting?

    1. Talent identification: The same pattern appeared at the Paris Olympics. The question is whether the system spots future winners early enough for money to reach them before they win.
    2. Ministry’s position: The Ministry calls the performance encouraging and says TOPS follows “a dynamic and continuous evaluation process”. Its review will identify gaps where results fell short.
    3. Medals as the wrong yardstick: The Athletics Federation of India (AFI) argued that improvement in performance, not the medal count alone, should guide Olympic preparation.

    Challenges

    1. Late selection: Funding follows proven results, so emerging athletes go unsupported during their breakthrough years.
    2. Non-Olympic medals: Team golds in non-Olympic events flatter the tally ahead of Los Angeles.
    3. Silver-to-gold gap: Individual athletes reach finals but lack the edge to win them.

    Way Forward

    1. Wider Development Group: The Sports Ministry should induct junior and national-level medallists into TOPS earlier, using performance trends, not only podium finishes.
    2. Spending audit: Track TOPS and ACTC spending against results by athlete and discipline.
    3. Final-stage coaching: Fund specialised mental and technical coaching for athletes who repeatedly finish second.
    4. Replicate clinics: Extend the women’s hockey model of foreign expert clinics and injury rehabilitation to other sports.

    Conclusion

    India’s Asian Games result shows a funding system that rewards athletes after they rise, not before. The Ministry’s review will show whether TOPS selection shifts toward spotting talent earlier.

    Key numbers

    1. Medal tally: 21 gold, 27 silver, 37 bronze (85 in all).
    2. Against targets: Short of the 100-medal target, and 21 medals below the record Hangzhou 2022 haul.
    3. ACTC spending since 2023: ₹702.86 crore, of which 12.5% was linked to Nagoya golds.
    4. Athletics and shooting: 39 medals (athletics 24, shooting 15), down from 51 at Hangzhou.

    Matching Previous Year Question

    “[2024] Consider the following statements regarding ‘Nari Shakti Vandan Adhiniyam’: 1. Provisions will come into effect from the 18th Lok Sabha. 2. This will be in force for 15 years after becoming an Act. 3. There are provisions for the reservation of seats for Scheduled Castes Women within the quota reserved for the Scheduled Castes. Which of the statements given above are correct? (a) 1, 2 and 3 (b) 1 and 2 only (c) 2 and 3 only* (d) 1 and 3 only Answer: C”

  • How regulation stifles HEIs

    Why in the News

    The Viksit Bharat Shiksha Adhishthan (VBSA) Bill, 2025, now under legislative review, seeks to overhaul how Higher Educational Institutions (HEIs) are regulated in India. The live question is whether a new overarching regulator will harm the quality it claims to protect, since India’s best institutions already work outside the regulators.

    What is the VBSA Bill, and why is it being questioned?

    1. What it is: The VBSA Bill, 2025 proposes a single, overarching regulatory apparatus for higher education, replacing today’s set of separate regulators. It works like one licensing office for all colleges and universities.
    2. Why it was proposed: The Bill’s stated aims are to ensure quality and accountability, enforce minimum standards, and prevent malpractice.
    3. What the critique says: The problem is regulation’s “governmentality”, the habit of governing through external supervision. When supervision replaces an institution’s own internal integrity, HEIs ask only what minimum must be shown on paper.
    4. The takeaway: A stronger regulator can produce better files without producing better teaching, which is the risk the Bill must avoid.

    How does the regulatory culture hurt teaching?

    1. Fear of the regulator: HEIs optimise academic work for the inspector, not for teaching. Teachers document evidence for annual self-assessment reports instead of asking what makes a class worthwhile.
    2. Rankings over learning: University authorities track ranking and accreditation scores, not how a teacher builds students’ intellectual engagement.
    3. ‘Paper blizzard’: Institutions now produce an evidence blizzard, a flood of digital documents made for inspection. A college can meet every norm and keep perfect files, yet its students stay disengaged.
    4. Contradictory rules: The University Grants Commission (UGC) Regulation (2018) sets norms that do not match each other:
      • it expects a 40-hour working week;
      • it requires teachers on campus for only five hours a day;
      • clarifications issued to fix such mismatches create fresh irregularities.
    5. Trust deficit and risk aversion: Constant surveillance and an assembly line model of work, which treats teaching like factory output, erode trust. Institutions then avoid risk, so innovation stalls and conventional mediocrity becomes the safest option.

    What do India’s autonomous institutions show?

    1. Outside the architecture: India’s top institutions are not bound by the regulators’ uniform formulas:
      • the Indian Institute of Science (IISc);
      • the Indian Institutes of Technology (IITs) and Indian Institutes of Management (IIMs);
      • the National Institutes of Technology (NITs) and Indian Institutes of Science Education and Research (IISERs).
    2. Own rules: They set curricula at their own pace, recruit through their own process and direct resources by their own strategy.
    3. Counter-evidence: If intensive regulation were the engine of quality, the most tightly regulated universities would outperform these institutions. They do not, so the regulatory logic misreads what quality higher education requires.
    4. Risk of a new casualty: Bringing these institutions under the VBSA framework would extend the same constraints to the sector’s best performers.

    Can quality be secured without the inspection model?

    1. Case for autonomy: Regulation built on force and fear ignores the moral base of society, as economist Alan Greenspan observed. Quality rises from internal integrity, not from compliance alone.
    2. The real test: The Bill succeeds only if it makes HEIs bolder hubs of teaching and inquiry, not portals that are updated for inspection.

    Challenges

    1. Compliance burden: Documentation demands take teachers’ time away from teaching and research.
    2. Metric capture: Accreditation and ranking scores reward visible outputs over classroom quality. Eg. Publication counts chased for rankings.
    3. Autonomy at risk: Folding autonomous institutions into one framework could dilute the model that works best.

    Way Forward

    1. Graded autonomy: Give more self-governance to institutions with a proven record, under a “light but tight” approach.
    2. Outcome-based inspection: Replace document checks with assessment of teaching quality and student learning.
    3. Consistent regulations: Audit UGC rules for contradictions before carrying them forward.

    Conclusion

    India’s higher education problem is less a shortage of rules than a shortage of trust in institutions to govern themselves. Whether the Bill widens autonomy or deepens inspection is the decision to watch.

    Higher education regulation in India

    1. Scale: India runs the world’s second-largest higher education system, with about 4.65 crore students enrolled in 2026 (All India Survey on Higher Education (AISHE) and NITI Aayog).
    2. Apex regulators: The UGC funds universities and sets standards. The All India Council for Technical Education (AICTE) regulates technical education, and the National Council for Teacher Education (NCTE) regulates teacher training.
    3. Accreditation bodies: The National Assessment and Accreditation Council (NAAC) grades HEIs. The National Board of Accreditation (NBA) assesses technical and professional programmes.
    4. Fragmentation: Overlapping bodies issue conflicting guidelines, delaying institutional autonomy.

    Matching Previous Year Question

    “[2015, GS2, 12 marks] For achieving the desired objectives, it is necessary to ensure that the regulatory institutions remain independent and autonomous. Discuss in the light of the experiences in recent past.”

  • EC releases video for EROs on SIR notice disposal; no written instructions so far

    Why in the News

    Notice cases in the Special Intensive Revision (SIR), which earlier needed documents or a hearing order to settle, can now be cleared by Electoral Registration Officers (EROs) without a hearing or documents. The Election Commission (EC) has added these options to its ERONET portal but is explaining them only through a demonstration video, with no written instructions.

    What has changed in disposing of SIR notices?

    1. What a notice case is: Electors flagged for “no mapping” or “logical discrepancies” (doubtful entries) in the draft roll are served notices. They must produce one of 12 documents prescribed by the EC.
    2. Who decides: The ERO has final authority over a constituency’s electoral roll. ERONET is the portal through which EROs record each decision.
    3. Three new options:
      • where the Booth Level Officer (BLO) has uploaded documents, the ERO can mark an elector “found OK” without a hearing order;
      • where no documents were collected, the ERO can mark the elector eligible after uploading a hearing order;
      • where notices are yet to be generated, the ERO can choose “without hearing” or “with hearing”.
    4. Earlier rule: A hearing order was needed only to mark an elector “found not eligible”, with the reason recorded.
    5. The takeaway: EROs can now clear cases faster, but the legal basis rests on a video rather than a written order.

    Why does the absence of written instructions matter?

    1. Video only: The EC’s Information Technology Department made an eight-minute video, recorded on October 1, and showed it to Delhi EROs at a meeting.
    2. Shifting instructions: One ERO said instructions had come “some written and some oral”, and many were withdrawn. Eg. Delhi EROs were told to identify “suspected foreigners”, then told not to.
    3. Statutory authority: The same ERO said he will wait for written orders, because the Representation of the People (RP) Act, 1950 vests decisions in him.
    4. Centralisation charge: Critics allege bringing ERONET under ECINET, the EC’s integrated digital platform, curtailed field officers’ powers. EROs had sought these options since the notice phase began.

    Where do the options apply, and how much can they change?

    1. Coverage: The options apply in the 10 States and Union Territories (UTs) where the third phase of the SIR is still under way.
    2. Too late for some: Final rolls were already published elsewhere. In West Bengal, 27 lakh of the 60 lakh electors served notices were left out of the final roll.
    3. Scale: Over nine crore notices have been served in the second and third phases.
    4. Limited use where hearings are fixed: The options matter little where every notice already carries a hearing venue and time. Eg. All of Delhi’s notices do.
    5. No reversal: EROs cannot reverse a case once an elector is marked ineligible. Over 350 Delhi electors were marked so, and the Delhi Chief Electoral Officer cautioned EROs against unverified use of the options.

    Challenges

    1. Natural justice: An ineligible marking cannot be reversed, so marking without a fresh hearing can wrongly exclude voters.
    2. Unequal treatment: Electors in States already finalised never got the faster route.
    3. Legal uncertainty: Decisions made on a video, not a written order, are open to later legal challenge.
    4. Field capacity: BLOs collecting documents door to door face heavy workloads.

    Way Forward

    1. Written order: The EC should issue a written order stating when each option may be used.
    2. Review window: Allow an ERO to review an ineligible marking on fresh documents.
    3. Finalised States: Let excluded electors apply afresh through a simple inclusion form.
    4. Public data: Publish constituency-wise counts of cases cleared under each option.

    Conclusion

    The new options speed up disposal of notices but leave EROs exercising statutory powers on unwritten guidance. Whether the EC issues a written order before the remaining final rolls are published, starting this month, will decide if these decisions hold.

    Key numbers

    1. Delhi notices: 33.1 lakh, all with hearing venue and time; notice phase runs till 30 November.
    2. Final roll dates: Delhi on 4 December; Haryana, Maharashtra and Telangana in November; Tripura in February 2027.

    Back2Basics: Electoral Registration Officer (ERO)

    1. Legal basis: Section 13B of the Representation of the People Act, 1950 provides an ERO for every Assembly constituency.
    2. Appointment: The EC designates an officer of the government or a local authority, in consultation with the State government.
    3. Role: The ERO prepares and revises the constituency’s electoral roll and decides claims and objections.
    4. Hierarchy: EROs work under the District Election Officer and the State’s Chief Electoral Officer.

    Matching Previous Year Question

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

  • Subhash Chandra’s IBC deal: ED probe focuses on big haircuts, proxy bidders

    Why in the News

    The insolvency law was meant to take failed companies away from their promoters, but investigators allege promoters are using the process itself to buy back their companies at deep discounts. The Enforcement Directorate (ED) has made such frauds its first operational priority, after Zee founder Subhash Chandra settled bank claims of over ₹22,000 crore for ₹6.5 crore.

    How is the insolvency process meant to work?

    1. What it is: The Insolvency and Bankruptcy Code (IBC), 2016 gives creditors a time-bound process to rescue or sell a defaulting company. It works like a court-supervised auction of a failed business.
    2. Who decides: In the Corporate Insolvency Resolution Process (CIRP), a resolution professional (RP) replaces management. A Committee of Creditors (CoC) approves a resolution plan by a 66% vote.
    3. Haircut: A haircut is the share of admitted claims creditors give up under a plan. A 94% haircut returns ₹6 per ₹100 owed.
    4. The takeaway: A process designed to end promoter control can become a cheap route back to it.

    What has the ED flagged?

    1. New priority: At an internal conference in Bengaluru, ED officers named “unearthing frauds under IBC and PMLA” the agency’s first operational thrust area. PMLA is the Prevention of Money-laundering Act, 2002.
    2. Specific target: The ED will examine “collusive resolution cases involving disproportionately large haircuts through which promoters re-acquire assets”.
    3. Earlier probes: Over two years, the ED has probed about a dozen cases alleging five forms of manipulation:
      • promoter-linked entities dominating creditor committees;
      • proxy bidders used to regain companies;
      • compromised resolution professionals;
      • assets moved out before or during the CIRP;
      • bids allegedly suppressed.

    How do promoters allegedly regain control?

    1. Alchemist: A group firm allegedly held 97% of CoC votes and the RP was a former group employee. The ED alleged the aim was immunity from past offences under Section 32A.
    2. Tribunal finding: The National Company Law Tribunal (NCLT) held the Alchemist CIRP vitiated by “fraud and collusion”. The Calcutta High Court later ordered a Central Bureau of Investigation probe.
    3. Sunstar Overseas: The company allegedly financed its own takeover through Umaiza Infracon LLP, a shell with no funds of its own, at an almost 85% haircut.
    4. Richa Industries: Saariga Constructions, allegedly set up by promoters through a former employee acting as a benamidar (front holder), bought CoC votes. Banks took a haircut of about 94%.

    How are assets allegedly stripped before or during insolvency?

    1. Amtek Auto: Fifteen group companies with claims over ₹34,000 crore were resolved at an average haircut of about 81%.
    2. Shell network: In Amtek, the ED identified about 500 shell companies allegedly holding properties bought with siphoned funds.
    3. Undervalued sales: In Angle Infrastructure, two acres were allegedly sold for ₹31 crore against a valuation of ₹160 crore. The RP denied it.
    4. Assets moved out: In Bhasin Infotech, 384 commercial units were allegedly shifted beyond the CIRP through “sham” and “backdated” agreements.

    Challenges

    1. Proxy loophole: Section 29A bars defaulting promoters from bidding, but benami fronts and shells evade it.
    2. Immunity risk: Section 32A’s protection for approved plans can shield a collusive buyer if fraud surfaces late.
    3. RP independence: Resolution professionals with links to promoters face weak checks before appointment.

    Way Forward

    1. Beneficial ownership checks: The Insolvency and Bankruptcy Board of India (IBBI) should require resolution applicants to disclose ultimate owners.
    2. Haircut trigger: Mandate an independent forensic audit when a haircut crosses a set threshold.
    3. RP vetting: The IBBI should screen RPs for prior links with the debtor group.
    4. Agency coordination: Set an information-sharing protocol between the ED, the IBBI and the NCLT.

    Conclusion

    Deep haircuts now draw scrutiny as possible fraud, not only as the cost of failure. Whether the IBBI tightens checks on bidder ownership and RP independence will decide if promoters can still buy back what they lost.

    Key numbers

    1. Richa Industries recovery: ₹40.29 crore against admitted claims of ₹696 crore (October 2025).
    2. Sunstar Overseas sale: ₹196 crore against admitted claims of ₹1,274.14 crore.

    Back2Basics: Section 32A of the IBC

    1. What it does: It ends a company’s liability for offences committed before the CIRP once the NCLT approves a resolution plan.
    2. Asset protection: The company’s property cannot then be attached for those earlier offences.
    3. Condition: The protection applies only where control passes to a new owner who is not a promoter, related party or abettor of the offence.
    4. Origin: Inserted in 2020, it gives genuine buyers a clean start; offenders stay personally liable.

    Matching Previous Year Question

    “[2024] Consider the following statements: Statement-I: Syndicated lending spreads the risk of borrower default across multiple lenders. Statement-II: The syndicated loan can be a fixed amount/lump sum of funds, but cannot be a credit line. Which one of the following is correct in respect of the above statements? (a) Both Statement-I and Statement-II are correct and Statement-II explains Statement-I (b) Both Statement-I and Statement-II are correct, but Statement-II does not explain Statement-I (c) Statement-I is correct, but Statement-II is incorrect* (d) Statement-I is incorrect, but Statement-II is correct ANSWER:”

  • Global capital is no longer cheap, that’s the challenge

    Why in the News

    Ten-year government bond yields in the United States (US) and France have hit 5.34% and 4.99%, their highest since 2002, and Japan’s has crossed 3.1% for the first time since 1996. Investors now demand higher returns even from rich-country governments, so India must plan for a world where global capital is no longer cheap.

    What is a bond yield, and why does its rise matter?

    1. What it is: A bond yield is the return investors demand for lending to a government through tradable debt. It works like the interest rate a lender charges a borrower.
    2. Why it was seen as safe: Government bonds are treated as default risk-free, because a sovereign can tax and print currency to repay.
    3. What changed: Borrowing costs for rich-country governments rose 1.2 to 1.4 percentage points in a year, roughly twice India’s rise.
    4. No safe-haven discount: Investors now treat advanced and emerging economies as almost equally risky, and advanced-economy bond yields have surged to multi-decade peaks.
    5. The takeaway: When even the safest borrowers pay more, every other borrower, India included, pays more for global money.

    Why are rich-country borrowing costs rising?

    1. Persistent deficits: Developed-country governments keep running deficits because of ageing populations, expanded welfare alongside military build-up, and voter resistance to higher taxes or entitlement cuts:
      • US public debt has crossed $40 trillion;
      • the US defence budget reached a record $1 trillion for 2026;
      • advanced economies paid over $3.3 trillion in interest last year, according to the Institute of International Finance (IIF);
      • China, wary of US fiscal risk, cut its holdings of US Treasuries (US government bonds) to an 18-year low of $618 billion in July 2026.
    2. Commodity inflation: War and weather-driven supply shocks raise commodity prices, so central banks raise interest rates and signal more increases.
    3. Artificial intelligence (AI) infrastructure race: The four hyperscalers (firms running giant cloud data centres), Meta, Microsoft, Amazon and Google, are funding much of their capital spending with debt. As technology firms borrow in bond markets, governments must compete harder for investors, which drives up yields even on “safe haven” long-term US Treasuries.

    What does this mean for India?

    1. Domestic yield: India’s 10-year government security (G-sec) yield rose 0.7 percentage points in a year and closed the week at 7.21%.
    2. Costlier foreign capital: Policymakers and corporates must accept that cheap global capital is no longer available for borrowing or investment plans.
    3. Fiscal discipline: Heavy government borrowing at home pushes up interest rates and leaves less credit for private firms. This is crowding out, so restraint matters for India too.

    Challenges

    1. Portfolio outflows: Higher US yields pull foreign investors out of Indian bonds. Eg. Net foreign portfolio outflows pressured the rupee in 2025.
    2. Large borrowing programme: The Centre still plans heavy market borrowing, competing with firms for domestic savings.
    3. Imported inflation: Commodity shocks raise India’s import bill, so interest rate cuts get delayed.
    4. Corporate foreign debt: Firms with unhedged foreign currency loans, meaning loans not protected against currency swings, face higher refinancing costs.

    Way Forward

    1. Debt anchor: The Centre should hold to its path of cutting debt to about 50% of GDP by March 2031.
    2. Quality of spending: Shift borrowing toward capital expenditure rather than revenue spending.
    3. Deeper bond market: The Reserve Bank of India should widen the domestic investor base for long-term G-secs.
    4. Currency hedging: Regulators should push corporates to hedge external commercial borrowings (loans raised abroad).

    Conclusion

    A world of costlier capital punishes fiscal slippage faster than before, and emerging economies have less room than rich ones to absorb it. Whether India keeps its borrowing in check as advanced-economy deficits and AI-driven debt keep rising is what will set its cost of capital.

    Key numbers

    1. Chinese holdings of US Treasuries, peak: $1.32 trillion, November 2013.
    2. Proposed US defence budget: $1.5 trillion for the coming fiscal year.
    3. Hyperscaler capital spending: $410 billion (2025), $725 billion projected (2026), over $1.1 trillion (2027).

    Back2Basics: Government security (G-sec)

    1. What it is: A G-sec is a tradable debt instrument issued by the Central or a State government, acknowledging its debt.
    2. Types: Short-term Treasury Bills mature in under one year; dated securities run for one year or more.
    3. Who manages it: The Reserve Bank of India issues and manages G-secs on the government’s behalf.
    4. Why its yield matters: The 10-year G-sec yield is the benchmark against which other long-term loans in the economy are priced.

    Matching Previous Year Question

    “[2026] Which one of the following best describes the ‘Crowding Out Effect’ in the context of fiscal policy? (a) A situation where private investment increases due to increased Government spending (b) A situation where Government borrowing leads to higher interest rates, which reduces private investment (c) A situation where an increase in taxes leads to increased private sector investment (d) A situation where Government spending has no impact on aggregate demand Answer: B”

  • Next-Gen GST and India’s next phase of growth

    Why in the News

    The Union Finance Minister has said that Next-Gen GST, the rate rationalisation in force since September 2025, has widened reported economic activity without weakening tax revenue. A second round of process reforms on registration, returns, refunds, disputes and input tax credit goes before the GST Council on October 7.

    What is Next-Gen GST, and why was it introduced?

    1. What GST is: The Goods and Services Tax (GST), introduced in 2017, is one national indirect tax. It works like a single checkout counter in place of separate central and State taxes.
    2. What Next-Gen GST is: Next-Gen GST is the next stage of GST reform, built on nine years of taxpayer and State experience.
    3. Two connected purposes: It set out to reduce and rationalise rates and to make compliance easier. The rate changes took effect on 22 September 2025.
    4. The takeaway: The reform is now judged on whether lower rates can expand activity enough to keep revenue growing.

    What has happened to economic activity since the rate cut?

    1. Taxable supplies: The value of reported taxable supplies grew 25.8% in the ten months after the rate cut, compared with a year earlier.
    2. Breadth of growth: Supplies grew across all 11 sector groups and all major States.
    3. Consumer sales: Reported business-to-consumer (B2C) sales, meaning sales to households, rose 26.7%. Lower prices lift household buying, which flows back to retailers, suppliers and producers.

    Has revenue held up alongside the relief?

    1. Gross collections: Gross GST collections reached ₹12.46 lakh crore in the first half of 2026-27, up 11.6% on a year earlier.
    2. Monthly momentum: Collections grew at double digits each month from June to September, nearly 15% combined.
    3. Net collections: Collections net of refunds grew 10.4% over the half year, so lower rates did not shrink the revenue base.
    4. States’ position: Aggregate State GST (SGST) receipts, including their share of Integrated GST (IGST), the tax on supplies between States, grew about 16%, funding infrastructure and public services.

    What do the coming process reforms aim to fix for small firms?

    1. Wider participation: About 1.71 crore businesses were registered under GST by end August, so more firms sell into a national market.
    2. Timely filing: GSTR-3B returns (the monthly summary return through which tax is paid) filed on time rose 12.6% for April to July.
    3. Input tax credit: Input tax credit lets a firm deduct tax already paid on inputs. A larger share of liability is now paid through credits, and idle accumulated credit has declined, which frees working capital.
    4. Refund predictability: Predictable refunds let firms plan purchases and production. Refund speed also shows how well tax administration performs.
    5. Smaller towns: The reforms aim to cut compliance time for firms in Tier-2 and Tier-3 towns.

    Challenges

    1. Self-reported data: The gains rest on reported supplies, so part of the rise may be formalisation, meaning firms newly declaring existing sales, not new activity.
    2. Refund delays: Exporters and firms with an inverted duty structure (higher tax on inputs than outputs) still depend on slow refunds.
    3. Dispute backlog: Appeals pile up because the GST Appellate Tribunal has only recently begun hearing cases.
    4. Excluded items: Petroleum and electricity stay outside GST, so firms cannot claim credit for tax paid on them.

    Way Forward

    1. Refund deadlines: Fix time-bound, risk-based refund processing for small exporters.
    2. Tribunal capacity: The Centre and States should staff all GST Appellate Tribunal benches to clear pending appeals.
    3. Price pass-through data: Publish sector-wise data showing whether rate cuts reached consumer prices.
    4. Energy inclusion roadmap: Set a timeline to bring petroleum products into GST.

    Conclusion

    Next-Gen GST has so far combined tax relief with rising revenue, which strengthens the case for the Council as a forum of cooperative federalism. Whether the Council adopts the process reforms at its coming meeting will decide if the rate gains last.

    Key numbers

    1. Refunds paid: about ₹1.80 lakh crore, April to September 2026.
    2. Growth in registrations: nearly 15% year on year, end August 2026.

    Back2Basics: GST Council

    1. Constitutional basis: The GST Council is a constitutional body under Article 279A, inserted by the Constitution (One Hundred and First Amendment) Act, 2016.
    2. Composition: The Union Finance Minister chairs it, with the Union Minister of State for Finance and the Finance Ministers of all States and Union Territories with legislatures as members.
    3. Voting: Decisions need a three-fourths weighted majority, with the Centre holding one-third of the vote and the States together two-thirds.
    4. Role: It recommends GST rates, exemptions and procedures to keep the tax uniform across States.

    Matching Previous Year Question

    “[2025] Consider the following statements: Statement I: In India, income from allied agricultural activities like poultry farming and wool rearing in rural areas is exempted from any tax. Statement II: In India, rural agricultural land is not considered a capital asset under the provisions of the Income-tax Act, 1961. Which one of the following is correct in respect of the above statements? (a) Both Statement I and Statement II are correct and Statement II explains Statement I (b) Both Statement I and Statement II are correct but Statement II does not explain Statement I (c) Statement I is correct but Statement II is not correct (d) Statement I is not correct but Statement II is correct Answer: B”

  • [3rd October 2026] The Hindu OpED: India’s Model BIT: a decade later, amid changes

    [3rd October 2026] The Hindu OpED: India’s Model BIT: a decade later, amid changes

    Question (2020, GS3 – 15 Marks): Explain the meaning of investment in an economy in terms of capital formation. Discuss the factors to be considered while designing a concession agreement between a public entity and a private entity.
    Linkage: A Bilateral Investment Treaty is effectively a macro-level concession/protection agreement between a host state and foreign private investors. Designing a BIT requires balancing public interest safeguards against the private entity’s need for capital security and predictability.
    [2022] Which one of the following situations best reflects “Indirect Transfers” often talked about in media recently with reference to India ?
    (a) An Indian company investing in a foreign enterprise and paying taxes to the foreign country on the profits arising out of its investment
    (b) A foreign company investing in India and paying taxes to the country of its base on the profits arising out of its investment
    (c) An Indian company purchases tangible assets in a foreign country and sells such assets after their value increases and transfers the proceeds to India
    (d) A foreign company transfers shares and such shares derive their substantial value from assets located in India

    Mentor’s Comment

    India’s treaty practice has already moved ahead of its model. The UAE, Uzbekistan and Israel agreements shortened the remedies period and allowed counterclaims while the 2015 text stayed unchanged. The revision matters only if it writes this practice into the model. If it does not, the model remains a reference that negotiators bypass.

    Why in the News

    The Union Budget 2025-26 announced that India’s Model Bilateral Investment Treaty (BIT) would be revamped and made more investor-friendly, and the revised model is reportedly finalised and awaiting Cabinet approval. The real question is not whether investors get more or less protection, but what India has learnt from a decade of treaty practice.

    What is a Model BIT, and why was the 2015 version cautious?

    1. What it is: A BIT protects one country’s investors in the other. A Model BIT is India’s opening template, like a standard contract form, showing the protections it offers and obligations it expects.
    2. Why it turned cautious: The White Industries Australia Limited vs Republic of India award (2011) and worries about investor-state dispute settlement (ISDS), where investors sue states before international tribunals, made India defensive.
    3. Design of the 2015 Model: It narrowed what counts as an investment and kept regulatory exceptions for state action. Investors had to exhaust local remedies for five years, using Indian courts first, before arbitration.
    4. The takeaway: After nearly a decade, the revision decides whether India keeps this defensive design or trades some of it for investor confidence.

    How has India’s own treaty practice moved since 2015?

    1. New-generation agreements: Since 2015, India has concluded newer investment agreements with the United Arab Emirates (UAE), Uzbekistan and Israel.
    2. Shorter local remedies: The India-UAE BIT and the India-Israel Bilateral Investment Agreement, in force since July 2026, cut the local remedies period to three years.
    3. Greater flexibility: These treaties show India has already departed from its own model in practice.

    How has the global investment regime changed?

    1. UNCTAD’s shift: UN Trade and Development (UNCTAD) records treaties moving toward investment facilitation, making investing procedurally easier, with narrower protections. They rely less on ISDS.
    2. UNCITRAL reform agenda: The UN Commission on International Trade Law (UNCITRAL) is examining a permanent tribunal with an appellate mechanism to correct errors. It is also studying rules on damages and dispute prevention.
    3. Rule-shaper, not rule-taker: Scholar Makane Moïse Mbengue argues a developing state can shape investment law through its treaties, so India’s model must answer this new regime, not merely edit the old text.

    How should the new model handle the MFN clause?

    1. What MFN does: A Most Favoured Nation (MFN) clause lets one partner’s investor claim any better treatment India gives under another treaty. Most Indian treaties omit it, and a new clause needs precise scope.
    2. Maffezini vs Spain: An investor used MFN to bypass an 18-month local-court requirement by borrowing friendlier dispute rules from another treaty.
    3. Plama vs Bulgaria: The tribunal refused to import such dispute provisions where the treaty did not clearly allow it.
    4. Carve-out practice: Recent treaties expressly exclude dispute settlement from MFN, so a waiting period cannot be bypassed.

    What else must the new model get right?

    1. Counterclaims: The India-Uzbekistan BIT lets a state file a counterclaim, suing the investor back in the same case. The new model can list investor obligations and when counterclaims apply.
    2. Dispute prevention: The model can add consultation and dispute-prevention steps before arbitration, now discussed at UNCITRAL Working Group III (WG III).
    3. Precise protections: Expropriation (the state taking an investment) and fair and equitable treatment (FET) (a broad promise of fair handling) need clear wording. Precise terms protect the state’s right to regulate.
    4. Binding, balanced text: Responsible investment must be written as a legal duty, not a declaration. The model should be clearer for both sides and leave room to adjust each treaty.

    Challenges

    1. MFN imports: Tribunals have used MFN to import stricter standards. Eg. White Industries borrowed an “effective means” duty from the India-Kuwait BIT.
    2. Tax claims: Easier arbitration exposes sovereign tax measures to challenge. Eg. The Vodafone and Cairn Energy awards of 2020.
    3. Thin treaty network: India terminated most older BITs after 2016, so few partners hold treaties under any model.

    Way Forward

    1. MFN carve-out: The Department of Economic Affairs should exclude dispute settlement and procedural rights from any MFN clause.
    2. Closed FET list: Define FET as a closed list of breaches, such as denial of justice and manifest arbitrariness.
    3. Active WG III role: India should help design the permanent tribunal so its appellate review reflects developing country concerns.

    Conclusion

    India must write a model that reassures investors without surrendering the space to regulate in the public interest. Whether the Cabinet-approved text settles MFN scope and investor obligations, or leaves them to tribunals, will show if the decade’s lessons were learnt.

  • Dignity by Design: Innovation in India’s Public Toilets

    Dignity by Design: Innovation in India’s Public Toilets

    Why in the News?

    • Cities are adopting innovative designs and technologies to make Community and Public Toilets (CT/PTs) more accessible, safe, clean and inclusive.
    • The Toilets 2.0 initiative under Swachh Bharat Mission-Urban (SBM-U) was launched in 2022 to improve the quality and user experience of public toilets.

    Key Highlights

    • Swachh Bharat Mission: Launched on 2 October 2014.
    • Cities progressed from ODF towards ODF+ and ODF++.
    • SBM Toilet Locator: Available through the Swachhata App to help citizens locate nearby toilets.
    • Innovations highlighted include:
      • Scrap bus converted into women’s toilet
      • Recycled plastic used in toilet construction
      • Smart and sensor-based public toilets
      • Scientific sanitary-waste disposal
      • Inclusive toilets for women, transgender persons, children and persons with disabilities

    Sthree Toilet, Bengaluru

    • Located at Majestic bus terminal, Bengaluru, Karnataka.
    • Established using a scrap bus and exclusively serves women.
    • Facilities:
      • 3 Indian-style + 2 Western-style commodes
      • Sanitary napkin vending machine
      • Incinerator
      • Breastfeeding and diaper-changing space
      • Solar-powered sensor lights
    • Waste is connected to the nearest sewage chamber.

    Aspirational Toilets, Navi Mumbai

    • Developed by Navi Mumbai Municipal Corporation (NMMC) at Sector 14, Koparkhairane.
    • Used by approximately 8,000-9,000 visitors daily.
    • Construction incorporates:
      • 426 sq m recycled plastic sheeting
      • 5.3 tonnes single-use plastic
      • 11,700 plastic bottles
      • 35,200 bottle caps
      • 85 reused computer keyboards
      • 284 kg scrap metal
    • Follows the principle of 3Rs: Reduce, Reuse and Recycle.
    • Includes facilities for:
      • Women and men
      • Children
      • Persons with disabilities
      • Baby care
      • Sanitary-pad vending
    • Fountain uses treated sewage water.

    Freshrooms, Bhopal

    • Located at 10 Number Market, Bhopal.
    • Developed by Bhopal Municipal Corporation.
    • Operates under Design-Build-Operate-Transfer (DBOT) model through Public-Private Partnership (PPP).
    • Smart Lounge covers 800-1,000 sq ft.
    • Serves around 500-1,000 visitors daily.
    • Features:
      • Sensor-based toilets
      • Touch-free urinals
      • Hot and cold showers
      • Lockers
      • Wi-Fi
      • Café and vending machines
      • Baby-changing rooms
      • Digital information wall
    • Separate accessible facilities for men, women and persons with disabilities.

    Sanitary Waste Management, Karad

    • Karad, Satara district, Maharashtra, has achieved 100% segregation, collection and processing of sanitary and biomedical waste.
    • Collects around 300-350 kg sanitary waste daily.
    • Red bins are provided in public toilets for sanitary waste.
    • Schools use sanitary-pad vending machines and disposal systems.
    • Separate bins in garbage collection vehicles ensure sanitary waste is handled separately.
    • Karad Municipal Council (KMC) partnered with Karad Hospital Association.
    • Common Biomedical Waste Treatment Facility (CBWTF):
      • Capacity: 600 kg/day
      • Incinerator temperature: up to 1,200°C
      • Emissions monitored in real time
      • Linked with the State Pollution Control Board (SPCB) system.
    • PPP model reduces the financial burden on the municipal council.

    Inclusive Toilets, Tirupati

    • Tirupati Municipal Corporation has developed modern toilet complexes for pilgrims, tourists and residents.
    • Pink Toilet Complex:
      • Located near the bus station.
      • Serves 12,000-15,000 users daily.
      • Includes Indian and Western toilets, mother-care facilities, changing rooms, incinerators and sanitary-pad vending machines.
    • Common Public Toilet Complex near railway station:
      • Serves 20,000-25,000 devotees daily.
      • Facilities for men, women, transgender persons, Divyaang persons and children.
      • Includes ramps, handrails, child-friendly fixtures and bathing rooms.

    Prelims Quick Revision

    • SBM launched: 2 October 2014.
    • Toilets 2.0: Launched under SBM-U in 2022.
    • Sthree Toilet: Scrap bus converted into women’s toilet at Majestic, Bengaluru.
    • Navi Mumbai: Toilet constructed using recycled materials including 5.3 tonnes of single-use plastic.
    • Bhopal Freshrooms: Uses DBOT + PPP model.
    • Karad: 600 kg/day CBWTF, incinerator temperature up to 1,200°C.
    • Tirupati Pink Toilet: Serves 12,000-15,000 users daily.
    • Tirupati’s Common Public Toilet provides dedicated facilities for transgender persons and Divyaang persons.

    UPSC Prelims Trap

    • Toilets 2.0 is an initiative under SBM-U, not SBM-Grameen.
    • ODF, ODF+ and ODF++ represent different levels of sanitation outcomes and should not be treated as interchangeable.
    • DBOT is the operational model highlighted for Bhopal’s Freshrooms, while PPP describes the broader partnership framework.
    • Karad’s CBWTF is for treatment of sanitary and biomedical waste; it is not simply a conventional municipal solid-waste processing facility.

More posts