💥Join UPSC 2027,2028 Mentorship (August Batch) + XFactor Notes & Microthemes PDF
Talk to Mentor

Civilsdaily

Login

Type: Amended/Enacted

  • Bihar decides to drop ‘fail’ from Class 10, 12 marksheets

    Why in the News

    Bihar’s Education Department has decided that Class 10 and 12 marksheets issued by the Bihar School Examination Board will no longer carry the word “fail,” replacing it with “Kaushal ke liye patra” (eligible for skills). The state’s Education Minister announced the change at a review meeting, saying the Board would amend its rules and issue instructions, and that a student’s inability to secure expected marks should not be treated as a reflection of talent. The change follows other recent moves in Bihar’s school system aimed at reducing conventional classroom pressure, including a shorter “no bag day” on Saturdays, and comes as the department also plans special preparatory classes for students appearing for supplementary examinations.

    What is changing on Bihar’s Class 10 and 12 marksheets, and why now?

    1. A terminology change, not a grading change: The word “fail” will be replaced with “Kaushal ke liye patra (eligible for skills)” on marksheets, while the underlying pass criteria and examination structure are unchanged.
    2. Mental health is the stated rationale: The Education Minister said the change is meant to protect student morale, framing a failing mark as a gap in results rather than a judgment on a student’s ability.
    3. Supplementary examination support is being added alongside: The department will run special preparatory classes for a month for students appearing in the Matric supplementary examination, aimed at improving their chances of clearing it.
    4. The change follows a wider set of reforms: Bihar has also introduced a shorter “no bag day” on Saturdays, from 9:30 am to 1 pm instead of 9:30 am to 4 pm, to expose students to theatre, music and other creative activities.

    What does Bihar’s own recent school reform pattern reveal?

    1. Reduced classroom time is a recurring theme: The Saturday “no bag day” order, issued under the Chief Minister’s announcement, cuts formal instruction time in favour of non-academic activity, mirroring the marksheet change’s emphasis on reducing pressure over reducing rigour.
    2. Teacher workload is being reallocated, not reduced: Teachers are now required to spend an additional hour after classroom duties on lesson planning, laboratory management and remedial classes, shifting effort toward preparation and remediation.
    3. The announcement doubled as a Teachers’ Day preview: The same review meeting discussed the September 5 Teachers’ Day function, where one teacher per district will receive a state award, tying the marksheet change to a broader push to recognise and support the teaching workforce.

    Challenges to a terminology-only fix for exam-related student distress

    1. Renaming does not remove the underlying selection pressure: A student who does not clear the exam still cannot progress to the next stage or apply for further study, so the anxiety around the outcome persists even if the label softens. Eg. Kerala and several other states have separately debated “no detention” policies without resolving the same underlying pressure around board exam outcomes. Fix. Pair the marksheet change with post-result counselling support and multiple re-attempt windows so students have a genuine path forward, not only a softer label.
    2. Selective terminology change can obscure rather than address failure rates: Removing the word “fail” without addressing why students underperform risks treating the symptom, language, rather than the cause, such as teaching quality or foundational learning gaps. Eg. Bihar has run remedial classes only for the supplementary examination cohort, not as a standing intervention through the academic year. Fix. Extend structured remedial teaching to the full academic year rather than limiting it to a pre-supplementary exam crash course.

    Conclusion

    Bihar’s decision replaces the word “fail” with a skills-oriented label on its board marksheets, framed as a mental health measure, while leaving the underlying pass-fail structure and supplementary examination process intact. Whether the change eases student distress or merely renames it will depend on whether the state follows through with sustained academic support rather than a one-time terminology.

  • Govt. eases norms for defence exports, licences

    Why in the News

    The Defence Ministry has simplified its Defence Export Standard Operating Procedure (SOP) and overhauled the Open General Export Licence (OGEL) framework to help Indian defence manufacturers access global markets faster. Stakeholder consultation with concerned ministries and government agencies has been dispensed with for exports of non-lethal defence items to most destinations, though safeguards continue for sensitive countries, and the same consultation requirement has been removed altogether for exports linked to international tenders and exhibitions.

    What has changed under the revised Export SOP?

    1. Reduced consultation for non-lethal exports: Stakeholder consultation with concerned ministries and agencies is no longer required for exporting non-lethal defence items to most destinations, though safeguards remain in force for sensitive countries.
    2. No consultation for tenders and exhibitions: The same consultation requirement has been dropped for exports of all items meant for international tenders and exhibitions, letting Indian companies pursue overseas opportunities faster.

    How has the OGEL framework been restructured?

    1. Consolidated procedures: Three separate OGEL SOPs, covering major platforms and equipment, parts and components, and intra-company technology transfer, have been merged into a single framework.
    2. Longer validity and wider country coverage: OGEL validity has been extended from two years to three, and its country coverage expanded from 41 countries to all countries except those designated negative or sensitive.
    3. A new licence category for long-term contracts: Indian companies with long-term contracts or agreements with foreign original equipment manufacturers can now obtain an OGEL for eligible items tied to that specific manufacturer, with validity aligned to the underlying contract.
    4. Expanded item coverage: OGEL eligibility now extends to civil-end-use exports of specified small-calibre arms components and protective equipment.

    Challenges to the liberalised export and licensing regime

    1. Diversion risk from wider country coverage: Extending OGEL coverage to all countries except a negative list raises the risk that dual-use or sensitive items reach unintended end users through re-export or transhipment. Eg. Widened general licensing regimes elsewhere have previously required retrofitted end-use verification systems after initial liberalisation exposed gaps, as seen in tightened United States Commerce Control List enforcement following early Export Administration Regulations liberalisation. Fix. Pair the wider OGEL coverage with mandatory post-export end-use certification audits for a sample of shipments to non-treaty destinations.
    2. Consultation removal versus oversight continuity: Dispensing with stakeholder consultation for non-lethal exports speeds approvals but removes a cross-ministry check that previously caught destination-specific concerns before shipment. Eg. Non-lethal classification itself can be contested, since components with civil and military dual use, such as certain protective equipment, may be misclassified at the exporter’s discretion. Fix. Retain a post-facto sampling audit by the Department of Defence Production even where pre-export consultation is waived.

    Conclusion

    The Defence Ministry’s overhaul of the Export SOP and the OGEL framework liberalises licensing timelines, validity and country coverage for Indian defence exporters while explicitly retaining safeguards for sensitive countries and technologies. The stated intent is to let Indian manufacturers respond faster to international tenders and deepen co-production ties with foreign original equipment manufacturers.

    Back2Basics: What is an Open General Export Licence (OGEL)?

    1. An OGEL is a standing, one-time authorisation that lets an eligible exporter self-generate export authorisations for multiple consignments of specified defence items without seeking a separate approval for every individual shipment.
    2. It is administered by the Defence Ministry’s Department of Defence Production and covers major platforms and equipment, parts and components, and intra-company technology transfers.
    3. Its use remains subject to end-destination safeguards, so items bound for negative or sensitive countries continue to require case-by-case authorisation outside the OGEL route.

    Matching Previous Year Question

    No direct PYQ traced in the provided files.

  • How can States use disaster funds for heatwaves?

    How can States use disaster funds for heatwaves?

    Why in the News

    The Ministry of Home Affairs told the Lok Sabha on 4 August 2026 that heatwaves and lightning have been added to India’s list of notified natural calamities, taking the list to 14 items. The change follows a recommendation of the Sixteenth Finance Commission (FC-XVI), the constitutional body under Article 280 that recommends the distribution of resources including disaster funds between the Centre and the states, and operational guidelines issued on 30 June 2026. Heatwaves are now eligible for the full State Disaster Risk Management Fund pool rather than the capped local-disaster route states previously had to use.

    What changes for states?

    1. Removal of the funding ceiling: A state could previously notify a heatwave only as a “local disaster” and draw on the State Disaster Response Fund (SDRF) up to a 10% annual cap, after setting its own compensation norms. Other notified disasters such as floods and cyclones faced no such ceiling. The new notification removes this asymmetry.
    2. Two distinct funding routes now available: Under the SDRF, states can fund relief and compensation for heat-related losses. Under the State Disaster Mitigation Fund (SDMF), a fund meant for longer-term risk reduction rather than immediate response, states can finance cooling shelters and early-warning systems.
    3. Scale of the fund pool: FC-XVI recommended Rs 2.04 lakh crore for state disaster funds over 2026-27 to 2030-31, about 28% more than the previous Commission’s allocation, split Rs 1.6 lakh crore to the SDRF and the rest to the SDMF. It separately recommended Rs 79,406 crore for national disaster funds that states can draw on when a disaster exceeds their own resources.

    What challenges are in the way of using the funds effectively?

    1. Uneven heat action planning: Twelve states have notified heatwaves locally, but only around 300 cities and districts across 23 heatwave-prone states have Heat Action Plans (HAPs), leaving roughly 4,800 urban local bodies and 800 districts without one. Fix. Heat-specific SDMF guidelines, still awaited, will need to be paired with the risk and vulnerability assessments already required before any project proposal.
    2. Limited technical capacity to convert plans into proposals: A 2023 review found 79% of existing HAPs asked city departments to self-fund interventions rather than costing a proposal against the new fund. Fix. States need model mitigation proposals suited to local climate and geography, since many local bodies lack the capacity to prepare fundable projects on their own.
    3. Weak loss-and-damage data: Relief payouts under the new notification will depend on accurate heat mortality and morbidity data. The Health Ministry’s surveillance system, covering over 51,000 reporting units, recorded 4,853 heatstroke cases and 20 confirmed heatstroke deaths between 1 March and 26 July, but it does not capture the wider toll from heart, lung and kidney conditions worsened by heat.

    Conclusion

    The notification closes a genuine funding gap between heat and other disasters, but the benefit depends on state capacity to plan, cost and document heat interventions. Parametric insurance, which pays out automatically once a set temperature threshold is crossed, similar to Nagaland’s existing rainfall insurance, is one fast-disbursing tool states can pair with the new fund access.

    Back2Basics: State Disaster Risk Management Fund

    1. It is the combined pool of the State Disaster Response Fund (SDRF), for immediate relief and reconstruction after a disaster, and the State Disaster Mitigation Fund (SDMF), for interventions that reduce the risk of a hazard becoming a disaster.
    2. The Finance Commission fixes the inter-state distribution using a disaster risk index built from hazard frequency and intensity, exposure, vulnerability, and a state’s expenditure record in the previous Commission’s period.

    “[2024, GS3, 15 marks] What is disaster resilience? How is it determined? Describe various elements of a resilience framework. Also mention the global targets of the Sendai Framework for Disaster Risk Reduction (2015-2030).”

  • Centre lifts ban on wheat exports amid depressed local prices

    Why in the News

    The central government has lifted the ban on wheat exports that it had imposed in 2022, citing depressed domestic wheat prices. The 2022 ban was put in place after a heatwave-hit domestic harvest and global supply disruption from the Russia-Ukraine conflict pushed both international and domestic wheat prices sharply higher, and the government moved to restrict exports to protect domestic supply and price stability. Domestic prices now running below the level that supports farmer incomes has produced the opposite problem the 2022 ban was designed for, prompting the reversal.

    Why was the wheat export ban imposed in 2022, and why lift it now?

    1. 2022 ban responded to a domestic and global price spike: The government banned wheat exports in May 2022 after a heatwave curtailed India’s wheat harvest just as global wheat prices were rising sharply due to the Russia-Ukraine conflict’s disruption of Black Sea grain exports.
    2. Ban was meant to protect domestic food security and price stability: Restricting exports kept domestic wheat supply from being drawn down by exporters chasing the higher international price, a measure meant to shield Indian consumers and the government’s own procurement operations from a global price shock.
    3. Current problem is the reverse, depressed domestic prices: Domestic wheat prices have since fallen to a level the government now assesses as too low to adequately support farmer incomes, the opposite condition from the one that justified the 2022 ban.
    4. Lifting the ban allows exports to absorb surplus domestic supply: Reopening exports gives farmers and traders an additional market outlet beyond domestic demand, which is expected to support prices by allowing surplus stock to move into export channels rather than depressing the domestic market further.

    What does this reversal say about India’s wheat trade policy stance?

    1. India is the world’s second-largest wheat producer: India’s scale of wheat production means its export policy decisions, in either direction, have a visible effect on global wheat supply and price, well beyond India’s own domestic market.
    2. Export policy is being used actively as a price-stabilisation lever: Moving from a ban to a lifted ban within a few years shows the government treating wheat export policy as an active tool to manage domestic price swings in both directions, rather than as a fixed, long-term trade stance.
    3. Signals confidence in current domestic stock levels: Lifting the ban implies the government assesses domestic wheat stocks, including those held for the public distribution system, as adequate to permit exports without risking a repeat of the price and supply concerns that triggered the original ban.

    Conclusion

    The reversal of the 2022 wheat export ban reflects a shift from a supply-protection concern to a price-support concern, as depressed domestic prices have replaced the earlier worry about a domestic and global supply shock. How much export volume actually moves, and how far domestic prices recover, will determine whether the reversal achieves its intended effect for farmers.

    Back2Basics: Minimum Support Price and wheat procurement

    1. The Minimum Support Price (MSP) is the price at which the government commits to procure specified crops, including wheat, from farmers, intended to guarantee a floor price regardless of market fluctuations.
    2. Wheat procurement for the MSP system, along with the Public Distribution System’s buffer stock requirements, is carried out mainly by the Food Corporation of India.
    3. A gap between the market price farmers actually receive and the announced MSP is one of the triggers that can prompt a trade-policy response such as an export ban or its reversal.
    4. India’s wheat export policy has swung between restriction and liberalisation multiple times in recent years, tracking domestic price and stock conditions.

    Matching Previous Year Question

    “[2024, GS3, 15 marks] Elucidate the importance of buffer stocks for stabilizing agricultural prices in India. What are the challenges associated with the storage of buffer stock? Discuss.”

  • After Minister, Secy’s kin availed of agri subsidy scheme, new rules bar them

    After Minister, Secy’s kin availed of agri subsidy scheme, new rules bar them

    Why in the News

    The National Horticulture Board (NHB) amended the Scheme Guidelines of the Commercial Horticulture and Cold Storage Schemes on 21 August 2026, with immediate effect. The amendment bars holders of constitutional posts, serving ministers, members of legislatures, mayors, district panchayat chiefs and government employees from financial assistance under NHB schemes, and redefines ‘family’ to cover the applicant’s spouse, father, mother, sons and daughters. It follows a 27 June 2026 investigation reporting that a Union Minister of State and the kin of a serving Central government Secretary had availed subsidy for their cucumber farms. The tension is that a scheme designed to promote large scale commercial horticulture had eligibility rules loose enough to route public subsidy to the families of the officials administering the sector.

    What is the Development of Commercial Horticulture scheme?

    1. Purpose: The scheme, formally the Development of Commercial Horticulture through Production and Post-Harvest Management of Horticulture Crops, promotes commercial farming of horticultural crops on a large scale, meaning cultivation for profit rather than subsistence.
    2. Crops covered: It covers three vegetables, capsicum, cucumber and tomato, and eight varieties of flowers including rose, lilium and chrysanthemum.
    3. The assistance it offered: The scheme offered a maximum subsidy of 50 per cent of the project cost, capped per family.
    4. Who runs it: It is administered by the National Horticulture Board, an autonomous body under the Ministry of Agriculture and Farmers’ Welfare.

    Who is now barred from the subsidy?

    1. Constitutional post holders: Present holders of constitutional posts are ineligible for financial assistance under NHB schemes.
    2. Elected representatives and office bearers: Present ministers and ministers of state, members of the Lok Sabha and the Rajya Sabha, members of State Legislative Assemblies and Councils, mayors of municipal corporations and chairpersons of district panchayats are ineligible.
    3. Serving government employees: Serving employees of Central and State government ministries and departments, public sector undertakings, autonomous bodies and local bodies are ineligible, except Multi-Tasking Staff, Class-IV and Group D employees.
    4. Pensioners above a threshold: Superannuated and retired pensioners receiving a monthly pension of Rs 10,000 or more are ineligible, excluding the same Multi-Tasking Staff, Class-IV and Group D categories.
    5. Groups of farmers: A group of farmers is the fifth barred category, closing the route by which several individuals could apply jointly.
    6. A single concession: Family members of persons in the barred categories may avail one-time assistance, subject to the revised definition of family.

    How has the definition of ‘family’ changed?

    1. The new definition: For determining eligibility under NHB schemes, ‘family’ now comprises the applicant’s spouse, father, mother, sons and daughters.
    2. The definition it replaces: The old guidelines defined family as the husband, wife and dependent minor children, which left adult children and parents free to apply separately.
    3. One member per family: Only one member of a family is eligible to avail financial assistance under NHB schemes, whether individually or through a Hindu Undivided Family, a partnership or proprietorship firm, or as a director of a company.
    4. Assistance is attributed to the family: Financial assistance availed by any member of a family is treated as assistance availed by that family, and no further assistance is admissible to any other member under any NHB scheme or component.
    5. The unutilised balance is forfeited: The bar applies irrespective of any unutilised portion of the maximum admissible ceiling, and constitutes the final entitlement of the family across all NHB schemes and components.

    What else did the amendment change?

    1. The subsidy rate was cut: The subsidy component was reduced from 50 per cent to 35 per cent for beneficiaries in general category states.
    2. A higher rate for hill and North Eastern states: The rate is 45 per cent in North Eastern and Himalayan states, retaining a differential for higher cost regions.
    3. Cold storage assistance was capped: The maximum subsidy for cold storage capacity was capped at Rs 2 crore.
    4. A voluntary exit route was created: A beneficiary may, during the prescribed lock-in period, voluntarily opt out by refunding the entire subsidy amount with applicable interest, and is then discharged from the obligations and restrictions arising from the assistance.
    5. Misrepresentation now carries recovery: Suppression, misrepresentation or furnishing of incorrect information to obtain assistance renders the applicant liable for recovery of the assistance released, along with applicable interest.
    6. The stated objective: The NHB circular states the amendments are meant to rationalise financial assistance, ensure equitable distribution of benefits, prevent duplication of subsidy, and make implementation more transparent and effective.

    What prompted the amendment?

    1. The Minister’s own case: A 27 June 2026 report found that Bhagirath Choudhary, Minister of State in the Union Ministry of Agriculture and Farmers’ Welfare, availed a Rs 99 lakh subsidy for his farm in 2025 under the same scheme administered by his own ministry.
    2. The subsidy was returned: He returned the subsidy amount to the government a month later.
    3. The Secretary’s kin: The same investigation showed that the wife, son and mother of senior Indian Administrative Service officer Naresh Pal Gangwar, then serving as Secretary of the Department of Animal Husbandry and Dairying, were among the beneficiaries of the scheme.
    4. A posting was withdrawn: The government appointed that officer as Higher Education Secretary on 23 July 2026, and cancelled the appointment on 10 August 2026 before he joined.
    5. The design gap the cases exposed: Neither case required a false declaration, because the old ‘family’ definition covered only husband, wife and dependent minor children, and no category of applicant was excluded by office.

    Challenges to the National Horticulture Board subsidy scheme

    1. Verification of family relationships is self declared: The Board has no independent database linking an applicant to parents, adult children or spouse, so the widened definition depends on the applicant disclosing it. Eg. The barred cases surfaced through a newspaper investigation rather than through scheme level scrutiny. Fix. Seed applications with Aadhaar based family linkage from the ration card or land record database, so a second application from the same family is flagged automatically.
    2. Corporate structures can defeat the one-member rule: The bar covers a Hindu Undivided Family, a firm and a directorship, but not shareholding through nominees or layered entities. Eg. The revised rule lists specific vehicles rather than applying a beneficial ownership test. Fix. Apply a beneficial ownership disclosure requirement above a defined shareholding threshold, on the model used for company law filings.
    3. A lower subsidy rate deters the small grower: The reduced rate raises the own contribution needed for a poly-house or a cold store, which is harder for a one hectare holder than for a large operator. Eg. Protected cultivation and cold storage carry high fixed setup costs regardless of holding size. Fix. Retain the higher rate for small and marginal holders and Farmer Producer Organisations while applying the reduced rate to larger project sizes.
    4. Cold storage assistance concentrates geographically: Capital subsidy flows to states that already have storage clusters and applicants able to raise the balance capital. Eg. Cold storage capacity in India remains concentrated in a few states, leaving wide gaps elsewhere. Fix. Ring-fence a share of the cold storage corpus for districts with no existing capacity, appraised against a mapped storage deficit.
    5. Lock-in monitoring is weak: The new voluntary exit and recovery provisions assume the Board can track asset use through the lock-in period, which requires physical inspection capacity it does not have. Eg. The guidelines rely on the beneficiary approaching the Board rather than on periodic verification. Fix. Mandate geo-tagged and time-stamped asset verification at fixed intervals during the lock-in, released through the scheme portal.
    6. No public beneficiary register exists: Without a searchable list of who received what, the same defect can recur undetected until it is reported externally. Eg. Both the Minister’s case and the Secretary’s family’s case came to light through an outside investigation. Fix. Publish a district-wise beneficiary register with name, project and sanctioned amount, on the model of the public disclosure already used for fertiliser and food subsidy transfers.

    Conclusion

    The scheme guidelines have been amended by an NHB circular dated 21 August 2026 and apply with immediate effect, so the barred categories and the widened family definition already govern fresh applications. The amendment also cuts the subsidy rate for general category states, caps cold storage assistance at Rs 2 crore, and creates a voluntary refund route out of the scheme. The circular sets no further date or review milestone, and the operative test will be whether the widened family definition is verified at application stage rather than after the fact.

    “[2018, GS3, 15 marks] Assess the role of National Horticulture Mission (NHM) in boosting the production, productivity and income of horticulture farms. How far has it succeeded in increasing the income of farmers?”

  • Vande Mataram and the right to dissent

    Why in the News

    Parliament has given Vande Mataram the same criminal-law protection long enjoyed by the national anthem, through the Prevention of Insults to National Honour (Amendment) Bill, 2026. The amendment follows the government’s push, since late 2025 and around the song’s 150th anniversary, to popularise and even mandate all six stanzas at official functions. The amended text does neither of those things: it does not compel any citizen to sing, and it does not prescribe which stanzas of the song attract its protection. The contest is between that narrow statutory text and the political framing around it, with Bijoe Emmanuel & Ors. v. State of Kerala (1986) standing as the controlling precedent on whether a citizen can be compelled to join a patriotic recitation against conscience.

    What is the Prevention of Insults to National Honour (Amendment) Bill, 2026?

    1. What it amends: It substitutes Section 3 of the Prevention of Insults to National Honour Act, 1971, the statute that already protected the national anthem from disrespect.
    2. What it punishes: It punishes two things and only two things, in relation to both the national anthem and the national song: intentionally preventing their singing, and causing disturbance to an assembly engaged in singing them.
    3. The punishment: Up to three years’ imprisonment, a fine, or both. A mandatory minimum of one year applies to repeat offenders.
    4. What it equalises: That punishment is now common to both compositions, so the national song carries the same criminal protection as the anthem.

    Why was Vande Mataram never made the national anthem?

    1. The question was left open almost to the end: India’s national anthem was left unsettled for nearly the entire life of the Constituent Assembly.
    2. It was settled by a statement, not a vote: The matter was resolved by a presidential statement on 24 January 1950, at the Assembly’s last sitting, declaring Jana Gana Mana the National Anthem of India.
    3. Vande Mataram was given equal status, not anthem status: The same statement said the song, “which has played a historic part in the struggle for Indian freedom, shall be honoured equally with Jana Gana Mana and shall have equal status with it.” It did not make it the anthem or a co-anthem.
    4. The Constitution is silent on a national song: The Constitution, which came into force two days later, contains no reference whatsoever to a “national song”, so the song’s status rests entirely on the 1950 statement and on subsequent convention.
    5. The restraint came from a 1937 decision: Objections from the Muslim League and others led the Congress Working Committee, in October 1937, to resolve that only the first two stanzas, pastoral, secular in imagery and free of any reference to a deity, would be sung at official gatherings.
    6. The objection was to the song’s source text: The later stanzas invoke the motherland in explicitly devotional, goddess-centred terms, and in the context of the 1882 novel Anandamath, from which the song is drawn, some verses were read as casting Muslims as adversaries.

    How was the Amendment passed?

    1. Introduction and passage: The Bill was introduced in the Rajya Sabha on 24 July 2026 and cleared both Houses within a week.
    2. The House dates: The Rajya Sabha cleared it on 29 July and the Lok Sabha on 30 July, each after only a brief discussion.
    3. The Opposition’s objection: The Dravida Munnetra Kazhagam (DMK) and the Congress raised strong objections that the Bill was being used to advance a particular cultural agenda, and objected to its timing amid unrelated protests in the House.
    4. Assent: It received Presidential assent shortly after passage in both Houses.
    5. The scrutiny it received: It was one of 12 Bills passed in a Monsoon Session in which, by Parliament’s own record, most legislation went through with barely any discussion. For a law touching religious sentiment, free expression and criminal liability at once, that is remarkably little parliamentary scrutiny.

    What does the Amendment not do?

    1. It prescribes no version: Nowhere does the amended Act say which stanzas of Vande Mataram must be sung, or that all six stanzas must be sung, for the law’s protection to apply.
    2. It does not compel singing: The statute does not compel singing in the first place, by anyone, of any stanza.
    3. The obligation is conditional and negative: All the amended Section 3 requires is that if the national song is being sung, at whatever length and in whatever form, that rendition must not be intentionally prevented or disturbed.
    4. It is narrower than the framing around it: That is a materially narrower obligation than the political framing around the Bill, including the push since late 2025 to mandate all six stanzas at official functions, would lead the public to believe.
    5. What it actually penalises: The law penalises disrespect and disruption of a performance. On its text it does not mandate participation in one, and it does not fix which version of the song is entitled to protection.

    Why do the later stanzas raise a constitutional difficulty?

    1. The opening stanzas are pastoral: The commonly sung opening stanzas describe the motherland in pastoral terms: her waters, her fruit, her cooling breezes, her fields.
    2. The later stanzas change register entirely: In substance, and in every available English rendering, they describe the motherland as embodied in the Hindu goddesses Durga, Lakshmi and Saraswati, goddesses of power, wealth and learning.
    3. They read as prayer, not patriotic verse: They speak of her as an object of worship enshrined in temples, with “crores” of arms raised in her defence. On a plain reading this is a devotional address to a deity, structured in the grammar of prayer.
    4. Two fundamental rights are engaged: Article 25 guarantees freedom of conscience and the free profession, practice and propagation of religion. Article 26 guarantees a denomination the right to manage its own religious affairs without State interference.
    5. Coercive pressure is enough to raise the difficulty: For adherents of monotheistic faiths, being required to stand through an extended recitation addressed to Hindu goddesses, whether by direct compulsion or by a criminal statute looming over the assembly, raises a serious constitutional difficulty. That discomfort is exactly the conscientious objection Articles 25 and 26 exist to protect.
    6. An ordinary law cannot override a fundamental right: No ordinary legislation, however patriotically framed or however large its parliamentary majority, can override a fundamental right, so a law pressuring citizens into a devotional performance contrary to their faith would not survive Part III scrutiny.

    What did Bijoe Emmanuel hold?

    1. The facts: Three siblings, practising Jehovah’s Witnesses, stood respectfully and silently while their schoolmates sang Jana Gana Mana during morning assembly, since their faith forbade joining in what they understood as an act of worship of anyone or anything other than god. They were expelled for this.
    2. The High Court position: The Kerala High Court upheld the expulsion, holding that the Article 51A fundamental duty to respect the national anthem overrode any claim under Articles 25 and 26.
    3. The reversal: A Division Bench of the Supreme Court reversed the High Court in emphatic terms in 1986.
    4. The two rights engaged: The Bench held that compelling a person to join in singing despite a genuine, conscientiously held religious objection contravenes Article 19(1)(a), freedom of expression, which the Court held extends to the freedom to remain silent, and Article 25(1), the guarantee of freedom of conscience.
    5. Duties cannot cut down rights: The Court held that the fundamental duties enumerated under Article 51A cannot be used to cut down or override the fundamental rights guaranteed under Part III. A duty to respect national symbols cannot in law be turned into a licence to punish sincere religious dissent.
    6. The 1971 Act was read narrowly: The Court read the 1971 Act itself as requiring nothing more than respectful conduct, not active participation from anyone present. It closed by observing that the country’s tradition, philosophy and Constitution alike “practise tolerance”.

    What is the settled legal position now?

    1. The precedent stands: The 1986 ruling has never been overturned, and its logic transfers with full force to the national song.
    2. It applies with greater force here: The song’s later verses are, unlike the anthem, addressed to specific deities, so a citizen objecting to reciting them stands on stronger ground than the objector in the 1986 case did.
    3. Official recognition was always confined: The Constituent Assembly and the founding leadership deliberately confined official recognition to the first two, secular stanzas, which is precisely why the fuller devotional version was never made compulsory.
    4. No textual obligation to sing exists: The 2026 Amendment imposes no textual obligation on any citizen to sing any particular version of the song, let alone all six stanzas.
    5. Silent respect is not an offence: Standing respectfully, in silence, without disrupting others, is not an offence under the amended Act, was not an offence under the original 1971 Act, and cannot be made one merely by extending the statute to a new composition.

    Challenges to the Prevention of Insults to National Honour (Amendment) Bill, 2026

    1. “Disturbance” is left undefined: The offence turns on causing disturbance to an assembly, a term the statute does not define, which leaves its scope to the complainant and the investigating officer. Eg. A citizen who remains seated or silent during a recitation may be read as disturbing it, which is precisely what the 1986 ruling forbids. Fix. Insert a statutory explanation excluding silent non-participation and peaceful abstention from the meaning of disturbance.
    2. The political framing exceeds the text: Official messaging around the law suggests a duty to sing all six stanzas, so citizens act on the framing rather than on the statute. Eg. The Ministry of Home Affairs’ Orders relating to the National Anthem of India are executive instructions carrying no penal force, yet schools and public institutions routinely enforce them as though they were binding law. Fix. Issue an advisory to State governments and school authorities recording that the Act creates no obligation to participate in a rendition.
    3. It was passed without scrutiny: A law touching religious sentiment, free expression and criminal liability at once cleared both Houses within a week on brief discussion. Eg. It was one of 12 Bills passed in a Monsoon Session where most legislation passed with barely any debate. Fix. Refer any Bill creating or extending a criminal offence to a Standing Committee as a default rule of procedure.
    4. Cognisance risks vexatious complaint: A criminal provision available to any complainant against a person present at a public assembly invites use as a tool of local pressure. Eg. Cinema hall anthem prosecutions after 2016 produced repeated complaints against individuals who stayed seated for medical or conscientious reasons. Fix. Require prior sanction from a district level authority before a court takes cognisance of an offence under Section 3.
    5. A mandatory minimum removes judicial discretion: The one year minimum for repeat offenders forecloses proportionality in cases where the conduct is trivial or conscientious. Eg. A repeat conscientious abstainer wrongly booked twice would face the same floor as a deliberate disruptor. Fix. Replace the mandatory minimum with a graded sentencing guideline keyed to intent and to actual disruption caused.
    6. Enforcement asymmetry across compositions: Extending equal protection to a composition whose later verses are devotional creates unequal burdens on citizens of different faiths at the same public event. Eg. A monotheistic believer at a school function faces a choice the same statute does not impose on others present. Fix. Confine the protected rendition at State functions to the first two stanzas, as the 1937 Congress resolution and the 1950 statement already did.

    Conclusion

    The Amendment extends the anthem’s criminal protection to the national song without compelling anyone to sing it and without fixing which stanzas count. The three strands, the founding decision to recognise only the first two secular stanzas, the narrow text of the new Section 3, and the 1986 precedent on freedom of conscience, converge on a single conclusion: a citizen who declines to join in on grounds of conscience is under no legal obligation to participate, and needs no court to say so. The measure has received Presidential assent and is now in force, and the source records no further legislative milestone attached to it. What remains unresolved is application rather than text, since the danger lies in how a statute framed narrowly is enforced against those who exercise the silence the Constitution protects.

    “[2025] Consider the following pairs: Provision in the Constitution of India: Stated under

    I. Separation of Judiciary from the Executive in the public services of the State The Directive Principles of the State Policy

    II. Valuing and preserving of the rich heritage of our composite culture The Fundamental Duties

    III. Prohibition of employment of children below the age of 14 years in factories The Fundamental Rights

    How many of the above pairs are correctly matched?

    (a) Only one

    (b) Only two

    (c) All the three

    (d) None

  • NGT seeks Centre’s response on change in floodplain rules

    NGT seeks Centre’s response on change in floodplain rules

    Why in the News

    The National Green Tribunal (NGT) has issued notice to the Centre on a petition challenging an amendment to the rules governing the Ganga’s floodplains. The Jal Shakti Ministry issued the amendment earlier this month. It removed the “construction-free zone” tag on the Ganga’s floodplains. It also redefined what counts as a floodplain, replacing a single protected belt with three graded bands. The contest is over whether narrowing the protected area corrects a legal defect in the original rules or opens land that a hundred years of flood records show the river still claims.

    What is the River Ganga (Rejuvenation, Protection and Management) Authorities Order, 2016?

    1. A governance structure, not a pollution standard: The Order was notified under the Environment (Protection) Act, 1986 to create a single chain of command for the Ganga. It replaced a scatter of separate authorities with one tiered structure.
    2. Five tiers from the Centre to the district: It set up the National Ganga Council, an Empowered Task Force, the National Mission for Clean Ganga (NMCG), State Ganga Committees and District Ganga Committees. The Council is chaired by the Prime Minister and the Task Force by the Union Jal Shakti Minister.
    3. NMCG holds the enforcement powers: The Order gave NMCG the standing of an authority able to issue binding directions to any person or body on the Ganga and its tributaries. Its directions carry the force of directions under the 1986 Act.
    4. It closed the floodplain to construction: The Order tagged the Ganga’s floodplains a construction-free zone. It fixed the extent of that floodplain largely by the once-in-100-year flood line.

    What is a floodplain and how is one delineated?

    1. A floodplain is the river’s own land: It is the flat ground beside a river channel that the river inundates when discharge exceeds the channel’s capacity, and it absorbs flood volume and recharges groundwater.
    2. Delineation uses a flood return period: A one-in-100-year flood is a discharge with a one per cent chance of being equalled or exceeded in any single year, and the line it reaches marks the outer edge of the mapped floodplain.

    What exactly does the amendment change?

    1. The active floodplain shrinks to a five-year line: The “active floodplain” is now the area inundated by a flood with a one-in-five-year return period. The 2016 line ran to the once-in-100-year flood.
    2. A regulatory zone replaces the ban on the middle belt: Land flooded once in five to 25 years falls into a “regulatory zone” where activity is permitted subject to conditions rather than prohibited.
    3. A warning zone covers the outer belt: Land flooded once in 25 to 100 years falls into a “warning zone”, the weakest of the three categories.
    4. NMCG notified the change: The amendment was notified by the Ministry’s National Mission for Clean Ganga and was reported on 11 August. The construction-free zone tag was dropped in the same instrument.

    Why does the petitioner say the change is unlawful?

    1. An environmentalist filed the challenge: The petition was filed by environmentalist Amit Kumar, who is not a State or a statutory body.
    2. The no-construction zone was altered without a fresh basis: The petition argues that the amendment alters the no-construction zone set out in the 2016 order. It says the “active floodplain” has been wrongly pegged to a one-in-five-year flood.
    3. The change contradicts settled orders: The petition contends that the amendment runs counter to earlier rulings of the Tribunal and of the High Courts. Those rulings had treated the floodplain as protected land.
    4. The route was an executive notification: The 2016 Order was made under the Environment (Protection) Act, 1986 and has been amended by executive notification, without any legislative examination of the narrowed definition.

    Is a graded floodplain regime a legal correction or a dilution of protection?

    1. The government calls it a technical repair: A government official explained the change as “correcting a legal inconsistency” in the original order. A blanket construction-free tag over a 100-year flood line was internally inconsistent with the graded controls used elsewhere in river regulation.
    2. Graded zoning is the standard engineering practice: Flood plain zoning worldwide separates a prohibited core from regulated and warning belts, because a single prohibition over the full 100-year belt is unenforceable in a densely settled basin.
    3. The graded regime converts prohibition into permission: Most of the land between the five-year and the 100-year line moves from a ban to a conditional clearance. Discretion at the clearance stage replaces a rule that needed no discretion.
    4. Flood risk does not follow the average: A five-year line describes the routine flood, not the damaging one, and structures built between the five-year and 100-year line are exposed precisely in the years that matter.

    What does the Tribunal’s refusal to stay the amendment mean on the ground?

    1. The amendment remains in force during the challenge: The Tribunal did not stay the amendment, so the narrowed definition governs every clearance decision taken until the case is decided.
    2. The hearing produced notice, not relief: A Bench of the Chairperson and an Expert Member heard the matter on 19 August. It directed the Union government and other respondents to file their replies.
    3. The next date is two months away: The case has been listed for 27 October. Construction permitted in the interval will be complete or under way by then.
    4. Approvals granted meanwhile are hard to unwind: A structure raised on the strength of a valid clearance acquires equities that a later order rarely disturbs. Demolition after the fact is the remedy the Tribunal has historically been most reluctant to grant.

    Challenges to floodplain regulation in India

    1. India has no floodplain zoning law: A Model Flood Plain Zoning Bill was circulated to the States in 1975 and only a handful enacted it, so the country regulates floodplains through orders and court directions rather than statute. Eg. Manipur, Rajasthan and Uttarakhand enacted versions of the model bill. The large basin States did not. Fix. Enact a central framework law under Entry 56 of the Union List for inter-State rivers, leaving intra-State reaches to State legislation.
    2. Land is a State subject and floodplains are valuable: State governments resist zoning because the floodplain is often the last unbuilt land inside a growing city. Eg. Delhi’s Yamuna floodplain hosts a bus depot, a metro depot and event grounds built after clearances that were later questioned. Fix. Compensate States for foregone land value through a dedicated flood risk reduction transfer, so protection stops being a pure fiscal loss.
    3. Flood hazard maps are outdated or missing: Zoning cannot be enforced without a current, surveyed inundation line, and most basins are mapped on decades-old records. Eg. The Central Water Commission’s flood atlas work covers only part of the flood-prone area of 40 million hectares. Fix. Mandate a satellite-based inundation remapping cycle every five years, with the maps published as the legal basis for zoning.
    4. Definitions conflict across agencies: Revenue records, irrigation departments and pollution boards each use a different boundary for the same riverbank, so an approval from one is defended against an objection from another. Eg. Riverbed land recorded as revenue land in State records is routinely leased for farming and then built upon. Fix. Fix one notified inundation line per reach as binding on every department, with revenue entries corrected to match it.
    5. Enforcement rests on understaffed boards: State pollution control boards carry the monitoring duty without field staff to patrol hundreds of kilometres of riverbank. Eg. The Tribunal has repeatedly pulled up State boards for filing identical status reports without site inspection. Fix. Transfer routine floodplain patrolling to district administrations with a published monthly encroachment return.
    6. Rules change faster than the river: A protected belt created by executive order can be narrowed by another executive order, so investment and enforcement both discount the rule’s durability. Eg. The construction-free zone survived nine years before this amendment removed it. Fix. Require that any dilution of a notified ecological limit be preceded by a published scientific justification and a public objection window.

    Conclusion

    The Ganga’s floodplain has been redefined from a single protected belt fixed at the 100-year flood line to three graded bands whose innermost core is set at a five-year flood. The amendment stands notified and unstayed, so it governs clearances now. The Union government and other respondents must file replies before the National Green Tribunal. The Tribunal has listed the matter for 27 October. Whether the change is a legal repair or a dilution will be settled at that hearing, and until then the narrowed line is the operative law.

    “[2016] Which of the following are the key features of ‘National Ganga River Basin Authority (NGRBA)’?

    1. River basin is the unit of planning and management.

    2. It spearheads the river conservation efforts at the national level.

    3. One of the Chief Ministers of the States through which the Ganga flows becomes the Chairman of NGRBA on rotation basis.

    Select the correct answer using the code given below.

    (a) 1 and 2 only

    (b) 2 and 3 only

    (c) 1 and 3 only

    (d) 1, 2 and 3

  • Export payments in rupees get trade policy benefits

    Why in the News

    Two paragraphs of the Foreign Trade Policy 2023 were amended on 20 August 2026 so that exporters invoicing overseas sales in Indian rupees receive the same trade policy benefits as those realising payment in foreign currency. Rupee invoicing has been permitted for years without carrying equal benefit, and removing that mismatch shifts the constraint from India's own rulebook to whether foreign buyers will hold and pay in rupees.

    What is the Foreign Trade Policy 2023?

    1. About: The Foreign Trade Policy is the framework issued by the Directorate General of Foreign Trade setting out the rules, entitlements and obligations governing India's exports and imports.
    2. What its benefits are: Policy benefits include duty remission and duty exemption entitlements that lower the cost of inputs used in exported goods, claimed against realised export proceeds.
    3. Export obligation: Several of these entitlements are conditional on the exporter fulfilling a stated export obligation, measured against the value of realised proceeds.
    4. The 2023 version: The current policy has no end date and is amended continuously by notification rather than being replaced every five years.

    What is the Asian Clearing Union?

    1. About: The Asian Clearing Union is a regional payment arrangement established in 1974 to facilitate trade settlements and reduce repeated transfers of foreign exchange by periodically settling the net obligations of its members.
    2. Membership: It has nine members, Bangladesh, Bhutan, India, Iran, Maldives, Myanmar, Nepal, Pakistan and Sri Lanka, represented by their central banks or monetary authorities.

    What is a Special Rupee Vostro Account?

    1. About: A Special Rupee Vostro Account is a rupee account opened in an Indian bank by a correspondent bank of a partner country, through which international trade is invoiced, paid for and settled in rupees.
    2. Its purpose: The framework was implemented in view of the evolving dynamics of India's international trade, and it lets a foreign buyer pay in rupees without either side converting through a third currency.

    What exactly has changed in the Foreign Trade Policy?

    1. The stated purpose of the amendment: Two paragraphs of the Foreign Trade Policy 2023 were amended to align the provisions on denomination of export contracts and eligibility for policy benefits in respect of export realisation in Indian rupees with the Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2023.
    2. Denomination freed outside the Asian Clearing Union: For countries outside the Asian Clearing Union, export contracts and invoices may now be denominated in any foreign currency or in Indian rupees.
    3. Coverage: The amendments cover exports to all countries, with the applicable rules varying by destination.
    4. Two countries excepted: Eligible rupee payments for exports to any country other than Nepal and Bhutan will now qualify for trade policy benefits and count towards fulfilment of export obligations.
    5. Parity with foreign currency realisation: Rupee earnings received through approved banking channels are to be treated on par with export payments received in foreign currency.
    6. Lines of credit included: Exports financed through the Export-Import Bank of India or through Government of India lines of credit may also be invoiced in Indian rupees.

    Why were rupee realisations treated differently until now?

    1. Two rulebooks had drifted apart: The exchange control regulations permitted receipt in rupees while the trade policy did not extend the same benefit eligibility to those receipts, so the exporter chose the currency and lost the entitlement.
    2. The export obligation problem: An exporter claiming a duty exemption against an export obligation needed the realisation to count, and a rupee realisation that did not count left the obligation unfulfilled on paper.
    3. The Asian Clearing Union carve-out: Settlement among the nine members runs through the Union's own netting mechanism, which is why denomination rules for those destinations differ from the rest.
    4. The effect on behaviour: Faced with the risk of losing entitlements, exporters defaulted to dollar invoicing even where the counterparty was willing to pay in rupees.

    What does rupee invoicing do for India's external position?

    1. Reduces demand for foreign exchange in settlement: Every transaction invoiced in rupees is one that does not require the exporter or the buyer to source dollars, easing pressure on reserves.
    2. Removes a layer of conversion cost: Trade settled directly between two currencies avoids the spread paid twice when a third currency intermediates.
    3. Insulates counterparties under sanctions pressure: Rupee settlement lets trade continue with partners whose access to dollar clearing is restricted, which is why several Asian Clearing Union members matter here.
    4. Supports lines of credit as an export instrument: Invoicing Export-Import Bank of India and Government of India credit lines in rupees keeps both the financing and the payment inside one currency.
    5. Builds a rupee balance abroad: Settlement in rupees creates rupee holdings with foreign banks, which is the first condition for the currency being used beyond bilateral trade.

    Why does a rulebook change not by itself internationalise the rupee?

    1. Willingness sits with the counterparty: India can permit rupee invoicing and cannot make a foreign buyer accept payment in a currency it has no independent use for.
    2. A trade deficit limits the mechanism: Rupee settlement works most easily where flows are balanced, and India's persistent goods trade deficit means partners accumulate rupees faster than they can spend them.
    3. Idle balances need an investment outlet: A rupee balance held abroad is only attractive if it can be deployed in Indian government securities or corporate paper at a return the holder accepts.
    4. Currency weakness discourages holding: A depreciating currency is a poor store of value between invoice and use. Eg. The rupee was quoted at 95.71 to the dollar on the day the notification was issued.
    5. Convertibility remains partial: The rupee is convertible on the current account and only partially on the capital account, which limits what a foreign holder can do with a rupee balance.

    What challenges does rupee-denominated trade settlement face?

    1. Accumulated balances with no deployment route: Partners that sell more to India than they buy build rupee balances they cannot spend. Eg. Rupee balances held under vostro arrangements with Russia accumulated well beyond what Russian buyers could absorb in Indian goods.
    2. Exchange rate risk shifts to the foreign counterparty: A buyer paying in rupees carries the depreciation risk that the exporter previously bore. Eg. The rupee has weakened steadily against the dollar, having breached the 91 mark during 2025-26 and traded near 95.7 in August 2026.
    3. Thin rupee hedging markets offshore: A foreign counterparty cannot cheaply hedge a rupee exposure in the way it hedges a dollar one. Eg. Offshore non-deliverable forward markets in the rupee developed precisely because onshore hedging access is restricted for non-residents.
    4. Correspondent banking and compliance frictions: Opening and operating vostro accounts requires approvals and sanctions screening that smaller banks avoid. Eg. Trade with Asian Clearing Union member Iran has repeatedly stalled on the willingness of banks to handle the settlement leg.
    5. Interest rate and return disadvantage: Rupee balances earn less than the holder can obtain in reserve currency instruments unless a specific investment window is opened. Eg. Permission to invest surplus vostro balances in Indian government securities was extended precisely to address this gap.
    6. Documentation mismatch across regulations: Exporters must satisfy both exchange control and trade policy requirements, and any divergence between them creates a compliance risk. Eg. The present amendment exists only because eligibility rules under the Foreign Trade Policy had drifted from the Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2023.
    7. Uneven customer experience at the bank counter: Documentation demands and delays at authorised dealer banks slow cross-border remittances regardless of the currency chosen. Eg. A supervisory review found multiple documentation requirements and cases of delay in executing cross-border remittances, and banks were advised to publish a clear policy on documentation, charges, timelines and grievance redress.

    Conclusion

    The amendment removes an internal inconsistency rather than creating a new entitlement, since it makes a rupee realisation earn the same trade policy benefit and count towards the same export obligation as a dollar realisation. That closes the reason exporters had for avoiding rupee invoicing even where the buyer was willing. The notification has been issued by the Directorate General of Foreign Trade and is in effect, and the measure that follows is whether the Special Rupee Vostro Account framework generates enough deployable rupee balances abroad for foreign buyers to choose rupee settlement on their own account.

    India's External Sector

    1. What it covers: The external sector comprises merchandise and services trade, investment flows in both directions, external borrowing, remittances, foreign exchange reserves and the exchange rate that links them.
    2. Two accounts: The current account records trade in goods and services, primary income and transfers. The capital and financial account records investment and borrowing flows.
    3. Direct investment position: India held fifth position globally in foreign direct investment inflows with $28 billion in 2024, fourth position in announced greenfield projects, and fifth position in international project finance deals.
    4. Recent direction of flows: Net foreign direct investment turned negative for three consecutive months during 2025, with gross inflows staying strong while outward investment and repatriation rose.
    5. Currency pressure: The rupee breached the 91 mark against the dollar during 2025-26 and emerged as Asia's worst performing currency amid trade uncertainty.
    6. Energy in the import bill: India depends on imports for over 88% of its crude oil requirement and about half of its natural gas consumption, so the trade balance moves with global energy prices.
    7. Global backdrop: Global foreign direct investment fell 11% in 2024, and the share of foreign direct investment in global Gross Domestic Product fell from 5% in 2007 to under 1% in 2023-24.

    Laws and Rules Governing Foreign Trade and Payments in India

    1. Foreign Trade (Development and Regulation) Act, 1992: Provides for the development and regulation of foreign trade and is the statute under which the Foreign Trade Policy and the office of the Director General of Foreign Trade exist.
    2. Empowers the Central government to formulate and announce the export and import policy and to amend it by notification.
    3. Foreign Exchange Management Act, 1999: Governs all foreign exchange transactions, replacing a control-based regime with a management-based one and treating contraventions as civil rather than criminal.
    4. Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2023 prescribe the currencies and channels through which export proceeds may be received, the regulations the present amendment aligns the trade policy to.
    5. Customs Act, 1962: Governs the levy of customs duty, valuation, clearance of goods and the operation of duty exemption and remission schemes at the border.
    6. Customs Tariff Act, 1975: Prescribes the rates of import and export duty and provides for anti-dumping and countervailing measures.
    7. Special Economic Zones Act, 2005: Governs the establishment and operation of zones treated as outside the customs territory for duty purposes.
    8. Reserve Bank of India Master Directions on Export of Goods and Services: Prescribe realisation and repatriation periods, documentation and the role of authorised dealer banks in export transactions.

    Government Initiatives for Export Promotion

    1. Remission of Duties and Taxes on Exported Products: Refunds embedded central, state and local duties and taxes that are not otherwise rebated, at notified rates by tariff line.
    2. Rebate of State and Central Taxes and Levies: Provides rebate of embedded taxes specifically for exports of garments and made-ups.
    3. Advance Authorisation and Duty Free Import Authorisation: Allow duty free import of inputs physically incorporated in an export product, against a stated export obligation.
    4. Export Promotion Capital Goods scheme: Permits import of capital goods at zero duty against an export obligation linked to the duty saved.
    5. Interest Equalisation Scheme: Provided interest subvention on pre-shipment and post-shipment rupee export credit, particularly for micro, small and medium enterprises and for identified sectors.
    6. Districts as Export Hubs: Identifies products with export potential in each district and builds district-level export action plans and institutional support.
    7. Market Access Initiative: Funds participation in international trade fairs, buyer-seller meets and market studies to open new destinations.
    8. Trade Connect e-Platform: Brings exporters, Indian missions abroad, export promotion councils and banks onto a single digital interface for market and regulatory information.

    Back2Basics: Directorate General of Foreign Trade (DGFT)

    1. What it is: The agency responsible for formulating, implementing and amending India's Foreign Trade Policy.
    2. Parent ministry: It functions under the Department of Commerce in the Ministry of Commerce and Industry.
    3. Statutory basis: It operates under the Foreign Trade (Development and Regulation) Act, 1992.
    4. Core function: It issues the Importer Exporter Code, without which no person may import or export except as exempted.
    5. Entitlement administration: It grants authorisations and scrips under the duty exemption and duty remission schemes and monitors fulfilment of export obligations.
    6. Instrument of change: It amends the Foreign Trade Policy and the Handbook of Procedures through notifications, public notices and circulars.
    7. Trade facilitation role: It runs the online platform through which authorisations are applied for and issued, and it handles quality complaints and trade disputes involving Indian exporters and importers.

    Challenges in India's External Sector

    1. Structural merchandise trade deficit: Import demand for energy, electronics and gold consistently exceeds export earnings, which keeps the current account in deficit. Eg. Net oil and gas imports rose 43.4% in value to $57.8 billion in April to July of 2026-27 from $40.3 billion a year earlier.
    2. Concentration of imports in a few commodities: A price shock in one commodity transmits directly to the trade balance. Eg. Every one dollar per barrel increase in oil prices raises India's annual oil import bill by up to $2 billion, on annual imports of 1.8 to 2 billion barrels.
    3. Protectionism and tariff shocks in destination markets: Export access can be withdrawn by unilateral action outside any trade agreement. Eg. Tariffs on key goods surged to 50% in August 2025, disrupting exporter planning.
    4. Competition from alternative manufacturing destinations: Rivals offer faster approvals and wider free trade agreement networks to firms relocating supply chains. Eg. Vietnam, Indonesia and Mexico compete directly for near-shoring investment that India seeks.
    5. Volatility of portfolio capital: Portfolio flows reverse quickly and transmit directly to the exchange rate. Eg. Foreign portfolio investors recorded an outflow of Rs 1.66 lakh crore, equivalent to $18.9 billion, in 2025, the largest since such investment began.
    6. Rising outward investment and repatriation: Indian firms investing abroad and foreign firms repatriating profits both reduce net inflows even when gross inflows hold up. Eg. Foreign companies operating in India repatriated about $5 billion in October 2025, of which $3.3 billion followed a single initial public offering.
    7. Round-tripping and financialisation of investment flows: A large share of inflows originates from a few jurisdictions and increasingly arrives through funds rather than as direct industrial equity. Eg. Inflows routed through Mauritius and Singapore reflect tax arbitrage rather than fresh industrial capital.
    8. Exchange rate depreciation raising the external debt burden: A weaker rupee raises the rupee cost of servicing external liabilities without any new borrowing. Eg. The rupee emerged as Asia's worst performing currency during 2025-26 amid trade uncertainty.

    Way Forward

    1. Open deployment routes for accumulated rupee balances: Allowing surplus vostro balances into Indian government securities, corporate bonds and project financing gives foreign holders a reason to accept rupees.
    2. Expand bilateral local currency settlement arrangements: Agreements with major trading partners, negotiated alongside the vostro framework, are what convert a permission into actual volumes.
    3. Deepen onshore rupee hedging access for non-residents: A foreign buyer that can hedge a rupee payable onshore no longer needs a dollar invoice to manage currency risk.
    4. Keep the trade policy and exchange control rulebooks synchronised: A standing reconciliation between the Foreign Trade Policy and the exchange management regulations would prevent the mismatch this amendment had to correct.
    5. Fix the customer experience at authorised dealer banks: Publishing documentation requirements, charges, timelines and escalation routes on bank websites and at branches removes a practical barrier that no notification reaches.
    6. Diversify the export basket and destinations: Reducing dependence on a small number of markets and product lines is the durable answer to unilateral tariff action.
    7. Reduce the energy component of the import bill: Faster domestic oil and gas output, refining efficiency and electrification of transport address the largest single driver of the trade deficit.

    Matching Previous Year Question

    “No direct PYQ traced in the provided files (closest microtheme: Foreign Exchange,Currency Devaluation)”

  • Transaction fees on UPI in 2 weeks

    Why in the News

    A merchant discount rate of 0.3% on Unified Payments Interface (UPI) transactions of Rs 2,000 and above is expected to be announced within two weeks. Six years of zero pricing built a network that now carries most of India’s digital payment volume without generating the revenue to maintain it, and restoring a fee moves that cost onto merchants while keeping the transaction free for consumers.

    What is the merchant discount rate?

    1. About: The merchant discount rate (MDR) is a fee paid by businesses to payment processors for accepting digital payments, deducted from the amount the merchant receives.
    2. Who it is shared among: The fee funds the banks, payment service providers and network operators that carry a transaction between the payer and the merchant.
    3. Its history on UPI: An MDR of up to 0.3% of the transaction value applied to UPI person-to-merchant transactions until December 2019.
    4. Zero MDR: Zero MDR was introduced in January 2020 to accelerate digital payment adoption and encourage a shift from cash to digital payments.

    What is the UPI and Services Steering Committee?

    1. About: It is the body headed by the National Payments Corporation of India that will determine the merchant discount rate on UPI, its scope and its structure.

    What is Section 10A of the Payment and Settlement Systems Act, 2007?

    1. About: Section 10A is the provision granting statutory protection from charges to specified electronic payment modes, which is what prevented a fee being levied on UPI.
    2. What changed: The Taxation and Other Laws (Amendment) Bill, 2026 amended Section 10A to pave the way for an MDR on UPI transactions above a certain threshold.

    How will the fee actually be brought into effect?

    1. Step one, the gazette notification: The Department of Financial Services will likely issue a gazette notification within a week specifying which electronic payment modes continue to receive statutory protection from charges.
    2. Step two, the rate decision: The UPI and Services Steering Committee will then determine the MDR, its scope and its structure.
    3. The consumer assurance: The government assured during the parliamentary debate on the amending Bill that UPI transactions will remain free for consumers.

    Why is a fee being restored after six years of zero pricing?

    1. Volume outgrew the funding model: UPI transactions jumped sharply after the Covid-19 pandemic, and banks and payment intermediaries ramped up investment in payment infrastructure to carry that load.
    2. Industry pressure for sustainability: The scale of that investment produced industry calls for the restoration of charges to make the system financially sustainable.
    3. The interim substitute was a subsidy: The government introduced an incentive scheme providing banks and other ecosystem participants an incentive equivalent to 0.15% MDR on UPI transactions up to Rs 2,000.
    4. The parliamentary committee’s warning: The Parliamentary Standing Committee on Finance called for early implementation of a tiered MDR framework, warning that delays could leave payment service providers dependent on inadequate government subsidies and weaken investment in payment infrastructure.

    How does 0.3% compare with the cost of other payment instruments?

    1. Credit cards: The prevailing MDR on credit card transactions is 1% to 3% of transaction value.
    2. Debit cards: The prevailing MDR on debit card transactions runs up to 0.9%.
    3. UPI at the proposed rate: A reintroduced MDR of 0.3% above a threshold would still be substantially lower than either.
    4. The subsidy benchmark: The proposed rate is double the implicit rate the exchequer already bears through the incentive scheme on small-value payments.
    5. The volume the rate applies to: UPI processed 241.62 billion transactions worth Rs 314.23 lakh crore in 2025-26, so even a fraction of a percent applied above a threshold is a large revenue pool.

    Why does a free-to-consumer network still have to be paid for by someone?

    1. The cost does not disappear when the price is zero: Switching, settlement, fraud monitoring and dispute resolution have running costs, and zero MDR moved them from merchants onto banks and the exchequer.
    2. Subsidy funding is discretionary and can lapse: An incentive scheme depends on an annual budgetary allocation, which is what the Parliamentary Standing Committee on Finance identified as inadequate and unreliable.
    3. Merchants now bear what consumers do not: Keeping the consumer free means the fee lands on the acceptance side, on the same small merchants whose adoption zero MDR was designed to secure.
    4. The threshold is doing the distributive work: Applying the fee only at Rs 2,000 and above protects the low-value transactions that dominate UPI by count, and captures the higher-value transactions that dominate by value.

    What challenges does reintroducing MDR on UPI face?

    1. Merchant resistance at the acceptance point: Small merchants may refuse UPI above the threshold or steer customers to cash to avoid the fee. Eg. Cash-on-delivery persists across Indian e-commerce despite a decade of digital payment incentives.
    2. Transaction splitting to stay below the threshold: A hard cut-off gives both sides a reason to break one payment into two. Eg. A payment of Rs 2,500 broken into two of Rs 1,250 falls below the threshold and carries no fee.
    3. Erosion of the adoption gains zero MDR bought: The zero-price regime was introduced specifically to shift users from cash, and reversing it risks reversing part of that shift. Eg. Zero MDR was introduced in January 2020 for the stated purpose of accelerating digital payment adoption.
    4. Concentration risk in the underlying network: A small number of third-party applications carry most UPI volume, so pricing decisions transmit through a narrow set of intermediaries. Eg. The National Payments Corporation of India has repeatedly deferred its own market share cap on third-party application providers.
    5. Outage and reliability exposure at national scale: A single network carrying most retail payments makes any downtime a systemic event rather than a service failure. Eg. UPI accounted for 85% of India’s digital payment transactions by volume in 2025-26.
    6. Fraud and mule account misuse growing with volume: Higher-value transactions attract more sophisticated fraud, and the cost of investigation falls on the same intermediaries the fee is meant to fund. Eg. The Reserve Bank of India has repeatedly directed banks to tighten controls on accounts used to route proceeds of digital payment fraud.
    7. Cross-subsidy questions across instruments: Pricing UPI below cards while both run on shared bank infrastructure distorts the choice of instrument at the counter. Eg. Credit card MDR at 1% to 3% funds reward programmes that UPI cannot match at 0.3%.

    Conclusion

    Zero MDR delivered adoption at a scale no other retail payment system has reached, and it did so by placing the cost of the network on banks and on the exchequer rather than on its users. Restoring a 0.3% fee above Rs 2,000 converts that subsidy into a price, keeps consumers unaffected and tests whether merchants will absorb the cost at the acceptance point. The measure currently stands at the stage where Section 10A of the Payment and Settlement Systems Act, 2007 has been amended, and the next milestones are a gazette notification from the Department of Financial Services within a week and the rate decision by the UPI and Services Steering Committee within two weeks.

    “[2026] Which one of the following statements about Unified Payments Interface (UPI) and Central Bank Digital Currency (Digital Rupee) is NOT correct?

    (a) UPI is a real-time payment system but Digital Rupee is akin to sovereign paper currency

    (b) In case of UPI, settlement for end users happens instantly; in case of Digital Rupee, wallet balance gets transferred to another wallet (no traditional settlement)

    (c) UPI transactions are recorded by banks and reflected in bank statements; in case of Digital Rupee, no data is captured in bank statements

    (d) In both the cases (UPI and Digital Rupee), the liability lies with the users and their respective banks

  • Congress-ruled states to move court against new mines law

    Why in the News

    State governments where the Congress is in power are preparing to challenge the Mines and Minerals (Development and Regulation) Amendment Act, 2026 in the Supreme Court, on the ground that it undermines the rights of the States. The Act, passed by the House on 13 August 2026, seeks to curb the power of States to levy taxes on mineral rights and mineral bearing lands. That power was confirmed as belonging to the States by a nine judge Bench two years ago, so the dispute is over whether Parliament can legislate away a taxing entry the Court has read as independent.

    What is the Mines and Minerals (Development and Regulation) Act, 1957?

    1. What it is: The Mines and Minerals (Development and Regulation) Act, 1957, referred to as the MMDR Act, is the parent law governing every mineral in India except petroleum and natural gas.
    2. The core split it creates: The State Government owns the mineral in its territory. The Central Government decides the rules, fixes the royalty rate for major minerals and, for some categories, conducts the auction.
    3. How a block reaches a miner: Someone auctions the block, the State signs the lease, and the company mines. The State signs the lease in every case, including where the Centre ran the auction.
    4. Where the money goes: Royalty, dead rent and the auction premium go to the State in every case, with offshore blocks the only exception.

    What is the current status of State taxing power over minerals in India?

    1. The settled position since 2024: A nine judge Bench of the Supreme Court in Mineral Area Development Authority v Steel Authority of India, decided eight to one in 2024, held that States hold an independent power under Entry 50 of the State List to levy taxes on mineral rights, and that the MMDR Act does not take that power away.
    2. The distinction the ruling rests on: Royalty is not a tax. It is consideration paid to the State as the owner of the mineral, which is why a State levy on mineral rights is a separate and additional exercise of power.
    3. What the ruling overturned: India Cement v State of Tamil Nadu (1990), which had held royalty to be a tax and State cesses on royalty to be beyond State competence, stands overruled.
    4. The recovery window: States may recover past dues from 1 April 2005, in instalments spread over twelve years beginning 1 April 2026, without interest or penalty on the earlier period.
    5. What the ruling did not give the States: It conferred a power to tax mineral rights, not a power to fix the royalty rate. Royalty rates for major minerals continue to be set centrally under the Second Schedule to the MMDR Act.
    6. What the 2026 amendment now does to that position: The Act passed on 13 August 2026 seeks to curb the power of States to levy taxes on mineral rights and mineral bearing lands, which is the power the 2024 ruling had recognised.

    Constitutional Provisions Related to Mineral Rights and Legislative Competence

    1. Entry 54, Union List: Regulation of mines and mineral development, to the extent that Parliament by law declares such Union control to be expedient in the public interest.
    2. Entry 23, State List: Regulation of mines and mineral development, expressly made subject to the provisions of Entry 54 of the Union List.
    3. Entry 50, State List: Taxes on mineral rights, subject to any limitations imposed by Parliament by law relating to mineral development.
    4. Entry 49, State List: Taxes on lands and buildings, the entry under which States tax mineral bearing land.
    5. Entry 55, Union List: Regulation of labour and safety in mines and oilfields.
    6. Article 297: Vests in the Union all lands, minerals and other things of value underlying the ocean within the territorial waters, the continental shelf and the exclusive economic zone.
    7. Article 246: Distributes legislative power between Parliament and the State legislatures across the three Lists.
    8. Article 265: Provides that no tax shall be levied or collected except by authority of law.
    9. Article 131: Confers original jurisdiction on the Supreme Court in a dispute between the Government of India and one or more States, the route through which a State sues over a central statute.

    What is royalty on minerals?

    1. What it is: Royalty is the payment a lessee makes to the owner of the mineral for the mineral removed or consumed, calculated mostly on an ad valorem basis on the average sale price published by the Indian Bureau of Mines.
    2. Who sets it and who receives it: The Centre fixes the rate for major minerals through the Second Schedule to the MMDR Act, and the State fixes it for minor minerals. The State Government receives it in both cases.

    What is a minor mineral?

    1. The statutory definition: Section 3(e) of the MMDR Act names building stones, gravel, ordinary clay and ordinary sand as minor minerals, and allows the Centre to notify any other mineral as minor. Everything not notified as minor is a major mineral, defined negatively with no positive list.
    2. Who controls them: Section 15 gives States exclusive power to frame minor mineral rules and to fix minor mineral royalty, so the Centre’s power over minor minerals is limited to deciding what enters the category.

    What does the Mines and Minerals (Development and Regulation) Amendment Act, 2026 change?

    1. The core change: The Act seeks to curb the power of States to levy taxes on mineral rights and on mineral bearing lands.
    2. The scope claimed for it: The Centre states that it is seeking to regulate only major minerals such as coal, limestone, iron ore, copper and manganese.
    3. What is stated to be left untouched: The States would continue to have powers over 49 minor minerals.
    4. The stated purpose: The Union Minister of Mines told the Rajya Sabha that the legislation does not seek to interfere with the autonomy or revenue rights of States, and that it aims only to ensure uniform mineral rates across the country.
    5. The stage it has reached: The Act was passed by the House on 13 August 2026.

    Which States are challenging the Act and on what ground?

    1. The States on board: Karnataka, Telangana and Himachal Pradesh are already committed to challenging the amendment Act in the Supreme Court.
    2. The State still being negotiated: The Congress is in talks with its ally the Jharkhand Mukti Morcha to get the Jharkhand government to join the challenge.
    3. The stated ground: The party alleges that the law undermines the rights of the States.
    4. The demand short of litigation: The Karnataka Deputy Chief Minister urged the Centre to withdraw the amendment Act, objecting to its restrictive provisions.
    5. The federal framing from Kerala: The Kerala Chief Minister stated that the amendments to the Act are against federal principles.

    How can a State challenge a central law?

    1. The original suit route: A State may institute an original suit against the Government of India in the Supreme Court under Article 131, which is the route available where the dispute involves a question on which a legal right of the State depends.
    2. The writ route is not open to a State in the same way: Article 32 is a remedy for enforcement of fundamental rights, and a State is not a person entitled to fundamental rights, so a State ordinarily proceeds under Article 131 rather than Article 32.
    3. Why the choice of route matters here: An Article 131 suit frames the matter as a Centre State dispute over legislative competence rather than as a grievance of an affected mining company.
    4. The competence question that will be argued: The dispute turns on whether the 2026 Act is a limitation of the kind Entry 50 permits Parliament to impose, or an extinguishing of the entry itself.
    5. The precedent that will be relied on: The 2024 nine judge ruling held that the MMDR Act as it then stood did not take away the Entry 50 power, which leaves open whether a later Act can impose limitations that empty it.

    Major debates surrounding State taxation of mineral rights

    1. Ownership against regulation: The State owns the mineral and receives the royalty, while the Centre fixes the rate and writes the rules, so the party bearing the social and environmental cost of mining does not set the price of it.
    2. Competing readings of one entry: Entry 50 is read either as a State power with a boundary Parliament may draw, or as a power Parliament may narrow until nothing is left of it.
    3. A tax entry against a regulatory entry: Entry 54 of the Union List is a regulatory entry over mineral development, and the question is whether a regulatory power carries with it the power to restrict a taxing entry in the State List.
    4. Two landmark rulings in tension: India Cement (1990) treated royalty as a tax and denied State competence, and Mineral Area Development Authority (2024) treated royalty as consideration and affirmed it, so the sector has operated under opposite rules within one generation.
    5. Uniform rates against fiscal autonomy: Uniform mineral rates across the country lower input cost volatility for steel, aluminium, cement and power, and remove a revenue instrument from the States where those minerals lie.
    6. The retrospective recovery question: Permitting recovery of dues from 1 April 2005 in instalments from 1 April 2026 exposes mineral users to a large accumulated liability, which is the practical trigger for legislative intervention.
    7. The empirical gap the dispute turns on: There is no agreed estimate of what the recovered dues and future State levies would add to the delivered cost of coal, iron ore and limestone, so both the revenue claim and the input cost claim rest on projections.

    Challenges to the new mineral taxation framework

    1. A single change alters two revenue streams at once: Curbing taxes on mineral rights and on mineral bearing lands touches Entry 50 and Entry 49 together, so States lose both an activity based and a property based levy. Eg. Several mineral States had begun framing levies immediately after the 2024 ruling recognised the Entry 50 power.
    2. Litigation freezes revenue planning on both sides: States cannot budget on a levy under challenge, and miners cannot provide for a liability that may be extinguished. Eg. Karnataka, Telangana and Himachal Pradesh have already committed to moving the Supreme Court against the Act.
    3. Uniform national rates ignore differences in deposit quality: A single rate across States taxes a high grade and a low grade deposit identically, which penalises the State with the harder ore body. Eg. Iron ore grades differ sharply between Odisha, Karnataka and Goa, with different beneficiation costs.
    4. The retrospective window collides with the amendment: Recovery of dues from 1 April 2005 was to start in instalments from 1 April 2026, the same period in which the curbing Act was passed. Eg. The twelve year instalment schedule the Court allowed begins precisely when the new restriction takes effect.
    5. The distinction between royalty and tax remains contestable in practice: A State levy structured on the royalty amount can be characterised as a tax on mineral rights or as a levy on land, which invites classification disputes at every notification. Eg. District Mineral Foundation contributions are already computed on the royalty amount rather than on sale value.
    6. Mining States bear the externalities regardless of the tax outcome: Land degradation, dust pollution, groundwater disruption and displacement fall on the district whether or not the State can levy. Eg. The mineral belt overlaps the Fifth Schedule tribal belt almost exactly.
    7. Investment decisions stall while competence is unsettled: Long gestation mining projects require certainty on the total payment stack over a fifty year lease. Eg. A mining lease under the MMDR Act runs for fifty years, far longer than the litigation cycle over the levy.

    Conclusion

    The Mines and Minerals (Development and Regulation) Amendment Act, 2026 has been passed by the House on 13 August 2026 and seeks to curb State powers to tax mineral rights and mineral bearing lands. The next step is a challenge in the Supreme Court, with Karnataka, Telangana and Himachal Pradesh committed and Jharkhand still under negotiation, and the source states no date for filing. The dispute is not about who owns the mineral, which is settled, but about whether a taxing entry in the State List can be narrowed by a central law made under a regulatory entry in the Union List. Until that is answered, the sector operates with two revenue claims on the same rupee.

    “[2025] Consider the following statements:

    Statement I: In India, State Governments have no power for making rules for grant of concessions in respect of extraction of minor minerals even though such minerals are located in their territories.

    Statement II: In India, the Central Government has the power to notify minor minerals under the relevant law.

    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 |