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Type: Bills/Act/Laws

  • Keep UPI free. Fund it from the savings it generates

    Why in the News

    Parliament has passed the Taxation and Other Laws (Amendment) Bill, 2026, rewriting Section 10A of the Payment and Settlement Systems Act, 2007. That section barred any charge on Unified Payments Interface (UPI) and RuPay transactions. The amendment replaces the bar with an enabling provision, letting the government notify in future which payment modes may carry a charge. No charge is imposed today. The tension is that the cost of running UPI is real and the state’s compensating outlay is shrinking. The only fee instrument available for recovering that cost would be levied on the smallest transactions in the economy.

    What is the Merchant Discount Rate?

    1. Definition: The Merchant Discount Rate (MDR) is the percentage of a transaction value that a merchant pays for accepting a digital payment, deducted before the money reaches the merchant’s account.
    2. Card world origin: It is an inheritance from card payments, with the card issuer, the acquiring bank and the network each taking a slice. A physical card, a terminal and credit default risk give the fee something real to recover.

    What has the amendment to Section 10A actually changed?

    1. From prohibition to permission: A statutory bar on charging has been converted into a discretionary power to allow charging on notified modes.
    2. The trigger moves to the executive: Imposing a charge no longer needs Parliament, only a notification.
    3. The status quo is unchanged today: No charge has been imposed on any mode as of the amendment.
    4. Why it still matters: A right protected by statute and a right held at executive discretion are different guarantees for a merchant deciding whether to accept digital payment.

    What has UPI become?

    1. Volume and value: In 2025-26 UPI carried over 24,000 crore transactions, roughly 66 crore a day, worth about ₹314 lakh crore.
    2. Share: It accounts for some 85 per cent of India’s digital retail payments and nearly half of the world’s real time payments.
    3. Ticket size: The average transaction is about ₹1,300, and 86 per cent of merchant payments are below ₹500.
    4. Who transacts: Payments at that size are made to the vegetable seller, the auto driver and the kirana shop, so a charge is a levy on the smallest transactions of the poorest rather than on commerce in the abstract.
    5. What was achieved: No other country has made real time digital payment free, instant and universal, and the transition pulled hundreds of millions of Indians into the formal economy.

    Why is UPI treated as public infrastructure rather than a company’s product?

    1. Most used digital public good: After Aadhaar gave every Indian a digital identity, UPI is the most visible piece of digital public infrastructure, and the citizen reaches for it many times a day rather than once.
    2. A protocol, not a platform: It is an open, protocol based public good, a shared language for money instead of any single firm’s product.
    3. What the protocol did to banking: Before UPI each bank ran its own closed application. UPI asked banks only to open their programming interfaces to a shared protocol, so any application can move money between any two accounts at any two banks.
    4. External validation: The model is being studied and adopted by other countries.

    Why is the Merchant Discount Rate the wrong instrument for UPI?

    1. The recoverable costs do not exist: The point of sale machine is the customer’s own phone, running on data he has already paid for. There is no card, no terminal, no credit risk, and settlement is instant.
    2. The work done test: Telecom interconnection regulation pays a network only for the work it actually performs, and the same test applies to a payment rail.
    3. The work actually performed: When A pays B, A’s bank makes a debit entry, the National Payments Corporation of India (NPCI) issues a settlement instruction, and B’s bank makes a credit entry. No cash moves at any point.
    4. What that work costs: NPCI runs the entire switch for about ₹500 crore a year, which is some two paise a transaction.

    The funding gap is real even where the fee is wrong

    1. Providers earn nothing directly: Banks and payment providers bear real costs, and under zero MDR they receive nothing from a UPI transaction itself.
    2. The bridge is being withdrawn: The government has covered the gap with an incentive, and the outlay is projected to fall to about ₹437 crore from about ₹3,631 crore two years ago.
    3. Traffic is moving the other way: The volume the incentive supports is multiplying and the incentive itself is shrinking. The shortfall widens each year without any policy decision being taken.

    Who actually captures the savings digitisation creates?

    1. Currency printing: The Reserve Bank spends some ₹5,000 crore to ₹6,400 crore a year merely printing currency notes, which is more than the government spends keeping UPI free, before storage and movement of cash is counted.
    2. Channel cost at the bank: A counter transaction costs a bank ₹40 to ₹50 and an automated teller machine (ATM) withdrawal costs ₹19 in interchange alone. A UPI transaction costs a small fraction of either.
    3. The float: By making an account as usable as cash, UPI keeps money in accounts rather than idle in pockets, and that low cost float is what banks earn a spread on and lend against.
    4. The mismatch: The beneficiary of digitisation is the state and the bank, and the party a merchant fee would tax is the merchant, so the instrument does not follow the benefit.

    What would a Merchant Discount Rate cost the transition?

    1. Price sensitivity: India is intensely price sensitive, and a digital payment costing even a rupee more than cash sends many users back to cash.
    2. Pass through at the counter: A merchant charged MDR passes it on as a stated surcharge for digital, or refuses digital payment altogether.
    3. Scale of the extraction: Even 0.3 per cent on merchant payments would take some ₹27,000 crore a year out of a thin margin retail economy.
    4. Reversal risk: Telling a hundred crore users that what was always free now costs money is the surest way to slow, and even reverse, a transition still forming, collecting a little and losing a great deal.
    5. A large merchant carve out will not hold: Confining the charge to large merchants offers no lasting protection, because thresholds slip and definitions widen.

    What funding model could cover the cost without charging the user?

    1. Return a share of the savings: The state, as steward of the public good and no longer obliged to print and move the cash UPI displaces, should return a small, defined share of its savings to those who run the rails.
    2. Formula, not discretion: The support should be transparent and formula based, funded specifically from savings in currency management.
    3. Not a subsidy: It is payment for value delivered, on the same principle by which the state pays a transmission company to carry electricity.
    4. The price stays off the citizen: The design keeps the charge out of sight of the user, so no price tag ever appears in front of the person paying.

    Challenges to keeping UPI free

    1. The support is a Budget line, not an entitlement: An annual allocation can be cut without any change in law, so the guarantee is only as durable as one fiscal year. Eg. The incentive allocation has been cut sharply across two consecutive Budgets. Fix. Convert the support into a formula linked to measured currency management savings, so the amount tracks the service rather than the fiscal cycle.
    2. Two applications carry most of the volume: Concentration lets a handful of private applications set the terms of access for banks and merchants. Eg. Two private applications account for roughly 80 per cent of UPI volume, and the market share cap on them has been deferred repeatedly. Fix. Fund interoperable merchant acquisition through smaller banks and the Bharat Interface for Money application to widen the base.
    3. Charged rails already run beside the free ones: Credit products routed over the same interface carry a fee, so the free character of the system is already partial. Eg. From June 2026 a merchant discount rate applies to large value RuPay credit on UPI transactions. Fix. Publish a single schedule stating exactly which flows carry a charge, so a merchant sees the boundary before accepting a payment.
    4. Fraud losses sit outside the pricing debate: The system’s real cost includes reimbursing victims, which no fee structure currently funds. Eg. Digital payment fraud losses have crossed ₹22,000 crore. Fix. Build a lagged credit window for high risk first time transfers, so a fraudulent transfer can be reversed before withdrawal.
    5. Downtime carries no consequence: Bank side outages take users off the network at peak hours with no compensation obligation. Eg. Server downtime at major banks has repeatedly disrupted time sensitive payments. Fix. Set a published per bank uptime standard with penalties credited directly to affected users.

    Conclusion

    The statutory prohibition on charging for UPI is gone and the power to permit a charge now sits with the executive, even though no charge exists today. The cost of running the rails is genuine and the compensating outlay is falling, so the funding question cannot be deferred much longer. The unresolved choice is between recovering that cost from the merchant, which taxes the smallest transactions and risks reversing adoption, and recovering it from the currency management savings the state already books because UPI exists.

    “[2018] Which one of the following best describes the term “Merchant Discount Rate” sometimes seen in news?

    (a) The incentive given by a bank to a merchant for accepting payments through debit cards pertaining to that bank.

    (b) The amount paid back by banks to their customers when they use debit cards for financial transactions for purchasing goods or services.

    (c) The charge to a merchant by a bank for accepting payments from his customers through the bank’s debit cards.

    (d) The incentive given by the Government to merchants for promoting digital payments by their customers through Point of Sale (PoS) machines and debit cards.

  • Vande Mataram: Religious imagery, political debate

    Why in the News

    The Congress Working Committee has decided that only the first two stanzas of Vande Mataram will be sung at party programmes, citing a resolution passed by the same body in 1937. Parliament has since made it an offence to intentionally prevent the singing of the National Song, so a compromise negotiated inside the freedom movement now sits against a statutory protection and an executive protocol.

    What is Vande Mataram?

    1. Composition: Vande Mataram, meaning mother, I bow to thee, was composed in Sanskritised Bengali by Bankim Chandra Chattopadhyay in 1875.
    2. Placement in a novel: Six years later it was included in his novel Anandamath, which tells the story of the late eighteenth century Sanyasi Rebellion.
    3. Status: It is the National Song of India, a designation distinct from that of the National Anthem, Jana Gana Mana.
    4. Length: The full composition runs to six stanzas, of which the first two are the portion conventionally sung in public.

    What was the Sanyasi Rebellion?

    1. Sanyasi Rebellion: The Sanyasi Rebellion was a series of armed uprisings in Bengal in the late eighteenth century directed against East India Company rule and against the regional Muslim administrators. Anandamath is set in that revolt, which is the narrative frame in which Vande Mataram first appeared.

    Why do the later stanzas carry religious imagery?

    1. The first two stanzas: The first two stanzas describe the beauty of the motherland, its fertility, its waters and its greenery.
    2. The turn in the later stanzas: The later stanzas liken the motherland to the divine mother and speak of installing the mother’s statues in temples.
    3. The fifth stanza: The fifth stanza compares the motherland to the ten armed Durga, and to the goddesses who dwell on lotuses and bestow knowledge and expression, which are references to Lakshmi and Saraswati.
    4. The text itself: The Sanskritised Bangla lines run “Tvam hi Durga dasa-praharana-dharini, Kamala kamala-dala-viharini, Vani vidya-dayini, Namami tvam namami kamalam”.
    5. The translation: These translate roughly as “You are Durga, bearing ten weapons; You are Lakshmi, who dwells upon the lotus; You are Saraswati, the giver of knowledge; I bow to you, I bow to you”.
    6. The objection recorded: The Muslim League was against some of these references and held that bowing to the mother amounts to idolatry.

    How did Vande Mataram become associated with the freedom struggle?

    1. Swadeshi movement: The song gained popularity during the Swadeshi movement of 1905 to 1908 and became closely linked with the freedom struggle.
    2. Political rather than devotional use: It functioned as an anti imperialist cry rather than as a devotional composition, which is how Mahatma Gandhi later described its purpose.
    3. Individual endorsement: Subhas Chandra Bose supported the song wholeheartedly and argued for its use.
    4. Fault line opened by that popularity: Its adoption as a national rallying song placed the Muslim League’s objection to its later stanzas at the centre of a dispute inside the Congress.

    Why did the Congress limit public rendition to two stanzas in 1937?

    1. Opinion sought from Tagore: Several leaders, including Subhas Chandra Bose and Jawaharlal Nehru, wrote to Rabindranath Tagore to seek his opinion on the question.
    2. Tagore on the first portion: Tagore wrote that the spirit of tenderness and devotion in its first portion, and the emphasis it gave to the beautiful and beneficent aspects of the motherland, made a special appeal, so much so that he found no difficulty in dissociating it from the rest of the poem.
    3. Tagore’s concession: He conceded that the whole poem read with its context is liable to be interpreted in ways that might wound Moslem susceptibilities, and held that a national song consisting only of the first two stanzas need not remind us of the whole every time.
    4. The October 1937 resolution: The Congress Working Committee decided that when Vande Mataram is sung at national gatherings, only the first two stanzas should be sung.
    5. The reason recorded: The resolution stated that the other stanzas are little known and hardly ever sung, and that they contain certain allusions and a religious ideology which may not be in keeping with the ideology of other religious groups in India.
    6. Gandhi in July 1939: Writing in Harijan on 1 July 1939, Mahatma Gandhi called it an anti imperialist cry, said it had never occurred to him that it was a Hindu song or meant only for Hindus, and said he would not risk a single quarrel over singing it at a mixed gathering.
    7. Gandhi’s second statement: Later in the same month he wrote that if at any mixed gathering any person objected to the singing of Vande Mataram, even with the Congress expurgations, the singing should be dropped.

    How was the song’s status settled in the Constituent Assembly?

    1. Demand for anthem status: After Independence there was a demand that Vande Mataram be adopted as the national anthem, and the issue produced friction in the Constituent Assembly.
    2. 14 August 1947: At the Assumption of Power ceremony, Sucheta Kripalani sang the first verse of Vande Mataram as the opening item.
    3. 26 August 1947: H V Kamath rose in the Assembly to say that a number of members had entered the Assembly Chamber only after the song had been sung, and asked the Chair to look into the matter.
    4. Nehru’s objection: Jawaharlal Nehru preferred Jana Gana Mana, and among the reasons he cited was that Vande Mataram would be difficult to set to an orchestra.
    5. 5 November 1948: Seth Govind Das argued that Vande Mataram could be the National Anthem, since the history of the independence struggle is associated with it, and that any difficulty of orchestration could be overcome by experts in orchestral music.
    6. 24 January 1950: The President of the Constituent Assembly declared that Jana Gana Mana is the National Anthem, subject to such alterations in the words as the Government may authorise, and that Vande Mataram, 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.
    7. What the declaration left open: The declaration conferred equal status without prescribing how much of the composition constitutes the National Song, and that gap is what the present dispute occupies.

    What has changed in the legal position now?

    1. Executive protocol: The Ministry of Home Affairs on 28 January notified the first set of protocols for singing Vande Mataram, directing that all six stanzas shall be sung during official functions.
    2. Statutory protection extended: Parliament has passed the Prevention of Insults to National Honour (Amendment) Act, 2026, which amends Section 3 of the Prevention of Insults to National Honour Act, 1971.
    3. What the amendment does: It extends to Vande Mataram the same legal protection that the National Anthem, Jana Gana Mana, already enjoys.
    4. The offence created: It makes it an offence to intentionally prevent the singing of the National Song, or to cause a disturbance to an assembly engaged in its singing.
    5. Passage through the House: The Lok Sabha cleared the Bill in about 15 minutes on 30 July amid protests, with one Opposition party participating in the discussion.
    6. Push behind the change: The ruling party has made a sustained push for rendition of all six stanzas and has long accused the Congress of appeasement politics over the song’s truncation.

    Why is the truncation politically contested?

    1. The party decision: The Congress Working Committee has restricted rendition at its own programmes to the first two stanzas, citing the 1937 resolution and the backing Mahatma Gandhi and Rabindranath Tagore gave that position.
    2. The appeasement charge: The decision has been attacked as vote bank appeasement and as a violation of the law enacted by Parliament on rendition of the full song.
    3. The parliamentary approval argument: The Congress position is that Parliament held only a discussion in December 2025 and never adopted a resolution declaring the full song the National Song, so the change rests on a notification without parliamentary approval.
    4. The 1950 baseline invoked: The Congress reads the declaration of 24 January 1950 as covering the first two stanzas, and treats that as the settled position the notification departs from.
    5. The public and private distinction: Its legal position is that the amended law addresses national and official functions and is silent on functions held by a party or in a private setting.
    6. Trigger events: The row followed the rendition of the song at the party’s Independence Day programme and later at an event in Goa.

    Does a statutory mandate settle or reopen the question of the National Song?

    1. Convention survived because it was uncodified: The two stanza practice held for nine decades precisely because it was never written into law, so neither side had to concede the point of principle.
    2. Codification forces a choice: A protocol prescribing all six stanzas converts a question of custom into a question of compliance, which removes the ambiguity the compromise depended on.
    3. The objection is revived, not removed: Mandating the later stanzas restores the exact content the 1937 compromise was built to set aside.
    4. Two different instruments: A protocol notified by a ministry and an offence created by an amendment are separate instruments, and neither is a parliamentary vote on the song’s extent.
    5. The offence is framed as obstruction: The amendment penalises preventing or disturbing the singing rather than prescribing a number of stanzas, so the protocol and the penal provision do not cover the same ground.
    6. Equal status without equal prescription: The National Anthem carries a settled text and a prescribed playing time of about 52 seconds for the full version and about 20 seconds for the short version. The National Song carries neither a fixed extent nor a prescribed duration, which is why the extent question could remain open for so long.

    Challenges to enforcing a full-stanza protocol on the National Song

    1. Reach limited to official functions: A protocol for official functions cannot govern the internal programme of a political party or a private gathering. Eg. The Congress decision applies to its own party events, which fall outside the scope of the notified official function protocol.
    2. Proving intention: The offence turns on intentional prevention, and distinguishing a scheduling decision from deliberate obstruction is left to the investigating officer at the first instance. Eg. Not scheduling the later stanzas at an event and actively stopping their rendition would attract the same complaint.
    3. Federal divergence on the same day: State governments run their own official functions and have taken opposite positions. Eg. One State government skipped the rendition of Vande Mataram at its official Independence Day function, and three others sang the full composition on the same day.
    4. No prescribed duration: A six stanza rendition materially lengthens every official function without any notified time standard to plan around. Eg. The Home Ministry protocol of 28 January directs all six stanzas at official functions without notifying any corresponding duration for the rendition.
    5. Absence of a parliamentary vote: A change of this kind executed by notification invites a challenge to its authority rather than to its content. Eg. Parliament held a discussion in December 2025 without adopting a resolution on the extent of the National Song.
    6. Compliance without belief: A mandate can secure attendance and silence but not participation, which leaves the enforcing authority judging demeanour. Eg. The row began over what was described as a gesture during a rendition rather than over any refusal to hold one.

    Conclusion

    Vande Mataram’s status has rested since 24 January 1950 on a declaration of equal honour that never fixed how much of the composition constitutes the National Song. A Home Ministry protocol of 28 January directing all six stanzas at official functions, and the Prevention of Insults to National Honour (Amendment) Act, 2026, have now answered that question administratively and penally. The Congress Working Committee has restated the 1937 two stanza position for its own programmes, and the contested point is whether the extent of the National Song can be fixed by notification rather than by a resolution of Parliament.

    National Symbols of India

    1. National Flag: A horizontal tricolour of deep saffron, white and dark green in equal proportion, with a navy blue Ashoka Chakra of 24 spokes at the centre, in the ratio of 3 to 2, adopted on 22 July 1947.
    2. National Anthem: Jana Gana Mana, written and set to music in Bengali by Rabindranath Tagore, with the Hindi rendering adopted by the Constituent Assembly.
    3. National Song: Vande Mataram, drawn from Bankim Chandra Chattopadhyay’s novel Anandamath.
    4. State Emblem: Adapted from the Lion Capital of Ashoka at Sarnath and adopted on 26 January 1950, with the motto Satyameva Jayate drawn from the Mundaka Upanishad.
    5. National Calendar: The Saka calendar was adopted on 22 March 1957, with Chaitra as its first month, corresponding to 22 March in a normal year.
    6. Other designations: The tiger is the national animal, the peacock the national bird, the lotus the national flower, the banyan the national tree, the mango the national fruit, the Ganga the national river, the Gangetic dolphin the national aquatic animal and the elephant the national heritage animal.

    Constitutional and Statutory Framework Governing National Symbols

    1. Article 51A(a): Makes it a fundamental duty of every citizen to abide by the Constitution and respect its ideals and institutions, the National Flag and the National Anthem.
    2. Article 19(1)(a) read with Article 19(2): Places any compulsion to sing, and any restriction on refusing to sing, within the test of reasonable restriction on free expression.
    3. Prevention of Insults to National Honour Act, 1971: Penalises insult to the National Flag, the Constitution of India and the National Anthem.
    4. Section 2 covers burning, mutilating, defacing, defiling or otherwise showing disrespect to the National Flag or to the Constitution.
    5. Section 3 covers intentionally preventing the singing of the National Anthem or causing disturbance to an assembly engaged in singing it.
    6. Section 3A, inserted in 2003, provides enhanced punishment on a second or subsequent conviction.
    7. Emblems and Names (Prevention of Improper Use) Act, 1950: Bars improper commercial and professional use of specified names and emblems.
    8. State Emblem of India (Prohibition of Improper Use) Act, 2005: Regulates the use of the State Emblem by persons and authorities.
    9. Flag Code of India, 2002: Consolidates the instructions on display and hoisting of the National Flag, amended subsequently to allow machine made and polyester flags and display at night.

    Key Facts about the National Anthem and the National Song

    1. First rendition of Vande Mataram: Sung at the 1896 Calcutta session of the Indian National Congress, set to a tune composed by Rabindranath Tagore.
    2. First rendition of Jana Gana Mana: Sung on 27 December 1911 at the Calcutta session of the Indian National Congress.
    3. Common adoption date: Both were placed on record together by the Constituent Assembly on 24 January 1950.
    4. Single author for both: Rabindranath Tagore wrote the National Anthem and also composed the tune to which the National Song was first publicly sung.
    5. Anniversary year: The year 2025 marked 150 years since the composition of Vande Mataram in 1875.
    6. Source novel: Anandamath, in which the song appears, was published in 1882 and is set in the Sanyasi Rebellion of the late eighteenth century.

    Back2Basics: Swadeshi Movement (1905 to 1908)

    1. Trigger: The Viceroy announced the Partition of Bengal on 19 July 1905, and it took effect on 16 October 1905.
    2. Stated and actual grounds: Administrative convenience was the stated reason, and the effect was to divide Bengal along religious lines and split the base of its nationalist politics.
    3. Formal launch: The boycott of foreign goods was formally proclaimed at a meeting in the Calcutta Town Hall on 7 August 1905.
    4. Methods used: Boycott of British goods and institutions, promotion of indigenous industry, national education, volunteer corps known as samitis, public meetings and processions.
    5. Congress positions: The Calcutta session of 1906, presided over by Dadabhai Naoroji, adopted swaraj as the goal, and the movement’s disputes led to the Surat split of 1907.
    6. Leaders associated: Bal Gangadhar Tilak, Bipin Chandra Pal, Lala Lajpat Rai, Aurobindo Ghosh and Surendranath Banerjea led it in different regions.
    7. Institutions created: The Bengal National College and the National Council of Education were founded in 1906, alongside indigenous enterprises such as the Bengal Chemical and Pharmaceutical Works.
    8. Cultural expression: Vande Mataram became the rallying song of the movement, which is how it entered the national political vocabulary.
    9. Decline and reversal: The movement declined by 1908 under repression and prosecutions, and the Partition was annulled in 1911, when the capital was also moved from Calcutta to Delhi.

    Challenges in Regulating National Symbols in India

    1. Compulsion against conscience: Requiring participation collides with religious belief and with the right to remain silent. Eg. In Bijoe Emmanuel v State of Kerala (1986), the Supreme Court held that children who stood respectfully but did not sing the National Anthem on religious grounds could not be expelled from school.
    2. Judicial position has shifted: Directions on compulsory rendition have been imposed and then withdrawn, leaving no stable standard. Eg. The Supreme Court’s 2016 direction making the National Anthem compulsory in cinema halls was made optional again in January 2018.
    3. Private complaint driven prosecution: Offences of this kind are triggered by individual complaints, which allows the law to be used to harass rather than to protect. Eg. Complaints under the Prevention of Insults to National Honour Act, 1971 have been filed against persons for remaining seated, with the question of intention decided only at trial.
    4. Vagueness of disrespect: The statutory language of showing disrespect has no fixed content, so identical conduct produces different outcomes. Eg. Section 2 of the 1971 Act lists burning and mutilation alongside the open ended phrase otherwise showing disrespect.
    5. Commercial misuse of the flag: Relaxations meant to increase public use have widened the space for improper commercial handling. Eg. The Flag Code amendments allowing machine made polyester flags and night display increased circulation of flags that are then discarded improperly.
    6. Federal divergence in observance: States conduct their own official functions and set their own protocols, so a Union notification does not produce uniform practice. Eg. Union protocols on the National Flag apply uniformly, and observance of the National Song at State official functions has varied between State governments on the same date.
    7. Symbols as electoral instruments: Enforcement decisions are read as political positioning rather than as neutral administration. Eg. The present dispute over stanzas has been argued in terms of appeasement and vote banks rather than in terms of the statute’s text.

    Way Forward

    1. Settle the extent by resolution: Place the question of how much of the composition constitutes the National Song before Parliament, since a notification cannot resolve a claim about parliamentary authority.
    2. Publish a full protocol: Notify the text, order and playing time of the National Song in the same form as exists for the National Anthem, so compliance is measurable rather than inferred.
    3. Confine the offence to obstruction: Limit prosecution to acts that prevent or disturb an ongoing rendition, and exclude non participation, in line with the Bijoe Emmanuel position.
    4. Require prior sanction for prosecution: Make registration of a case under the amended provision conditional on sanction by a designated authority, to prevent complaint driven harassment.
    5. Separate official from private observance: State expressly that the protocol governs national and official functions, which removes the ambiguity that the present dispute turns on.
    6. Teach the full text with its history: Include the composition, the 1937 resolution and the 1950 declaration in school curricula, so the song is understood as a negotiated national settlement rather than as a loyalty test.

  • Centre imposes sugar stockholding limit to rein in price increase

    Why in the News

    The Centre on 20 August 2026 imposed a stockholding limit on bulk consumers of sugar and simultaneously allowed duty free import of 10 lakh metric tonne of raw sugar till the end of October. Retail sugar prices had risen about 15 per cent in a month ahead of the festive demand peak, which has pulled a commodity the government had been steadily deregulating back under the controls of the Essential Commodities Act, 1955.

    What is a stockholding limit under the Essential Commodities Act, 1955?

    1. What it does: A stockholding limit is an order fixing the maximum quantity of a notified commodity that a specified class of trader, processor or bulk consumer may hold at one time, or the maximum period for which it may be held.
    2. The legal source: It is issued by the administering ministry under Section 3 of the Essential Commodities Act, 1955, which empowers the Centre to regulate production, supply, distribution, trade and commerce in an essential commodity.
    3. The economic purpose: By capping how long stock can sit with a buyer, the order forces held inventory back into circulation and removes the incentive to accumulate ahead of an expected price rise.
    4. Its temporary character: Such orders carry a stated duration or a stated coverage period, because a permanent cap would function as a structural restriction on trade rather than a price intervention.

    What is a Tariff Rate Quota?

    1. Definition: A Tariff Rate Quota permits a fixed quantity of a good to be imported at a reduced or zero duty within a stated period, with imports beyond that quantity attracting the normal tariff.
    2. Why it is used: It supplies a targeted volume to correct a domestic shortage without dismantling the tariff protection that the domestic industry otherwise enjoys.

    What is an Advance Authorisation?

    1. Definition: It is a scheme permitting duty free import of inputs that are physically incorporated into a product meant for export, subject to an export obligation.

    What are the Standard Input Output Norms?

    1. Definition: The Standard Input Output Norms (SION) are the notified input to output ratios that fix how much of an input may be imported duty free for a given quantity of export product.
    2. The norm for sugar: SION E-52 is the norm applicable to sugar.

    Who does the sugar stockholding order cover and what does it require?

    1. Confectioners: Confectionery manufacturers using sugar as a production input fall within the class of bulk consumers covered by the order.
    2. Soft drink manufacturers: Beverage manufacturers are the second named category of bulk consumer brought under the limit.
    3. Food processing industry: Food processing units using sugar as raw material are the third named category.
    4. Sweetmeat sellers: Sweetmeat sellers form the fourth named category in the order.
    5. Any other institutional buyer above the threshold: The order extends to any other institutional buyer consuming not less than ten metric tonne of sugar as average monthly consumption over the past one year, excluding the current month.
    6. The fifteen day rule: No bulk consumer using more than ten metric tonne of sugar per month as raw material for production, consumption or use may keep sugar in stock for any period exceeding 15 days for such consumption or use.
    7. The exemption: Government institutions are kept outside the purview of the order.

    How will compliance with the stock limit be verified?

    1. Mill level sales data: The monthly quantity of sugar sold by each sugar mill to a bulk consumer is to be verified, whether that sale was made directly or routed through dealers.
    2. Consumption determined from tax returns: The consumption of each bulk consumer is to be determined with reference to the Goods and Services Tax returns filed by the sellers or the buyers, or both.
    3. The Harmonised System of Nomenclature code: The determination uses the relevant Harmonised System of Nomenclature code applicable to sugar, which is the standardised commodity classification used in tax and customs filings.
    4. Why this mechanism matters: Verification runs off filings the buyer already makes for tax purposes rather than off a separate physical inspection regime, which removes the need for a new inspectorate to enforce the cap.

    What do the price figures show about the trigger for the order?

    1. The current level: Sugar retail prices touched Rs 5,152.44 per quintal on Thursday, 20 August 2026, on the price portal maintained by the Department of Consumer Affairs.
    2. The one month rise: That level is a 15.12 per cent rise over Rs 4,475.84 per quintal a month earlier.
    3. The one year rise: It is a 19.68 per cent rise over Rs 4,305.05 per quintal a year earlier.
    4. The rate of acceleration: Close to four fifths of the annual increase occurred within the final month of the series, which points to a short run supply and holding response rather than a slow structural rise.
    5. The seasonal context: The spike lands with the festive season approaching, when sweetmeat, confectionery and beverage demand for sugar is at its annual peak.

    Why has the Centre paired stock limits with duty free imports?

    1. A two pronged approach: The government has described the intervention as a two pronged approach, acting on domestic holding and on import supply at the same time.
    2. Stock limits address holding: The 15 day cap targets sugar already inside the country that is being held by bulk consumers rather than converted into output.
    3. Imports address volume: The Ministry of Commerce and Industry amended the import policy for raw sugar to allow 10 lakh metric tonne of duty free imports under Tariff Rate Quota till 31 October 2026, which adds physical supply that stock limits alone cannot create.
    4. The conversion option: A one time option allows conversion of Advance Authorisations already issued under SION E-52 to the Tariff Rate Quota scheme, for the quantity of raw sugar actually imported under them up to the date of the notification, subject to specified conditions.
    5. Why one instrument alone would fail: A stock limit without added supply merely redistributes a shortage across the chain, while imports without a holding cap can be absorbed into inventory instead of reaching the retail price.

    Challenges to using stock limits to control sugar prices

    1. Signalling effect on the trade: An Essential Commodities Act order signals that the Centre will intervene again, which discourages legitimate seasonal inventory building by processors. Eg. Stock limits imposed on pulses in 2015 were followed by traders shifting holdings to unregulated intermediaries rather than releasing them to the market.
    2. Enforcement rests with State machinery: The order is issued by the Centre but is enforced through State civil supplies departments whose inspection capacity varies widely. Eg. Enforcement of edible oil stock limits notified in 2021 differed sharply across States, with several reporting negligible verification.
    3. Displacement rather than release: A cap on bulk consumers does not bind mills, dealers or unregistered buyers, so stock can move down the chain instead of into consumption. Eg. The present order exempts government institutions and does not fix a limit on the mills themselves.
    4. The ethanol diversion trade off: Sugar diverted to ethanol under the blending programme reduces the quantity available for the sweetener market, and the diversion decision is taken separately from price management. Eg. Sugar diversion to ethanol has crossed 35 lakh tonne in recent seasons, which directly reduces the sugar balance sheet.
    5. Import lead time: Duty free import permission does not translate into arrivals within the price window it is meant to address, because contracting, shipping and refining take weeks. Eg. The present window closes on 31 October 2026, which leaves a narrow period for contracting and delivery ahead of the festive peak.
    6. Producer price consequences: Import liberalisation and stock caps depress mill realisations, which feeds into delayed cane payments to farmers. Eg. Cane arrears in Uttar Pradesh have historically risen in seasons when mill realisations were compressed by policy interventions.

    Conclusion

    The Centre has notified a 15 day stockholding cap on bulk sugar consumers under Section 3 of the Essential Commodities Act, 1955, and separately amended the raw sugar import policy to allow 10 lakh metric tonne of duty free import. The order stands issued and in force, with compliance to be determined from Goods and Services Tax filings using the sugar Harmonised System of Nomenclature code. The next stated milestone is 31 October 2026, when the duty free Tariff Rate Quota import window closes.

    Sugar Sector in India

    1. Scale: India is among the world's largest producers of sugar and is the largest consumer, with sugarcane occupying a large share of the country's irrigated cropped area.
    2. Producing States: Uttar Pradesh, Maharashtra and Karnataka together account for the bulk of national sugar output, with Tamil Nadu, Gujarat and Andhra Pradesh forming the second tier.
    3. Livelihood base: Around five crore sugarcane farmers and their dependants, along with workers employed in mills and ancillary units, depend on the sector.
    4. A multi point regulated commodity: The sector is regulated at the cane price, at the mill's monthly sale quantity, at the mill's minimum selling price and at the export and import margin, which makes it one of the most administered agricultural value chains in India.
    5. Cane price mechanism: The Centre fixes a Fair and Remunerative Price on the recommendation of the Commission for Agricultural Costs and Prices, and several States additionally announce a higher State Advised Price.
    6. The ethanol link: Sugar and cane juice are diverted to ethanol production under the Ethanol Blended Petrol Programme, which makes the sugar balance sheet directly sensitive to fuel blending policy.

    Laws and Rules Governing Sugar and Essential Commodities

    1. Essential Commodities Act, 1955: Empowers the Centre to control the production, supply, distribution, trade and commerce of commodities notified as essential.
    2. Section 3 is the operative provision under which stock limits, licensing and price control orders are issued.
    3. The Essential Commodities (Amendment) Act, 2020 removed cereals, pulses, oilseeds, edible oils, onion and potato from regulation except in extraordinary circumstances, and was repealed by the Farm Laws Repeal Act, 2021.
    4. Sugarcane (Control) Order, 1966: Provides for the fixation of the minimum price of sugarcane payable by producers and for cane area reservation and bonding with mills.
    5. Sugar (Control) Order, 1966: Empowers the Centre to regulate the production, sale, storage and movement of sugar by mills, including the monthly release quota.
    6. Prevention of Black-marketing and Maintenance of Supplies of Essential Commodities Act, 1980: Provides for preventive detention of persons acting in a manner prejudicial to the supply of essential commodities.
    7. Foreign Trade (Development and Regulation) Act, 1992: Provides the authority under which the Directorate General of Foreign Trade amends the import policy and administers Tariff Rate Quotas.
    8. Customs Tariff Act, 1975: Fixes the tariff rates against which a duty free quota concession operates.
    9. Food Safety and Standards Act, 2006: Governs quality and labelling standards for sugar as a food product.

    Government Initiatives for the Sugar Sector

    1. Ethanol Blended Petrol Programme: Channels surplus sugar and cane juice into fuel ethanol, giving mills an alternative revenue stream and reducing the sugar surplus that depresses domestic prices.
    2. Minimum Selling Price for mills: A floor price below which mills may not sell sugar in the domestic market, introduced to prevent distress sales from eroding the mills' capacity to pay cane dues.
    3. Fair and Remunerative Price: The statutory minimum price payable to cane growers, announced each season on the recommendation of the Commission for Agricultural Costs and Prices.
    4. Soft loan and interest subvention schemes for mills: Extended to sugar mills to clear cane price arrears and to fund ethanol distillation capacity.
    5. PM JI-VAN Yojana: Supports commercial second generation ethanol projects using agricultural residue, widening the ethanol feedstock base beyond cane.
    6. Price Monitoring Division: Maintains daily retail and wholesale price data for essential commodities on the Department of Consumer Affairs portal, which is the basis on which interventions are triggered.

    Key Facts about Sugar in India

    1. The sugar season: The Indian sugar season runs from October to September, not the financial year, which is why import and stock windows are set against October.
    2. Global position: India is the world's largest consumer of sugar and alternates with Brazil at the top of the global production table.
    3. Minimum Selling Price level: The Minimum Selling Price for mills has stood at Rs 31 per kilogram since it was last revised in February 2019.
    4. Cooperative dominance: A large share of the sugar mills in Maharashtra operate in the cooperative sector, which links the industry to State level politics.
    5. Ethanol blending milestone: India reached the 20 per cent ethanol blending level in petrol in 2025, ahead of the original 2030 target.
    6. Byproducts: Bagasse is used for cogeneration of power and press mud for biofertiliser, so a mill's revenue does not depend on sugar alone.

    Challenges in Agricultural Price Stabilisation in India

    1. Leakage and diversion in the public distribution chain: Grain and sugar released at subsidised rates are diverted into the open market before reaching the entitled household. Eg. Sugar released for the public distribution system in several States has been recovered from open market traders during civil supplies raids.
    2. Exclusion errors in beneficiary identification: Households entitled to subsidised supply are left out because the beneficiary list is anchored to an outdated population base. Eg. National Food Security Act, 2013 coverage continues to be calculated on the 2011 Census population, which excludes households added since.
    3. Storage and warehousing deficiency: Inadequate scientific storage causes physical loss between procurement and distribution, tightening supply independent of production. Eg. Foodgrain stored in cover and plinth facilities during the monsoon has repeatedly been reported as damaged in Comptroller and Auditor General audits.
    4. Regional disparity in procurement: Procurement infrastructure is concentrated in a few States, so price support reaches producers unevenly. Eg. Wheat and paddy procurement remains concentrated in Punjab, Haryana and Madhya Pradesh, leaving eastern State growers dependent on traders.
    5. Fiscal burden of the intervention: Price support, buffer carrying cost and subsidised distribution together consume a large and rising share of the food subsidy bill. Eg. The food subsidy has remained among the largest single line items in the Union Budget's revenue expenditure.
    6. The commodity price cycle: High prices in one season induce acreage expansion and a glut in the next, so annual interventions treat a cycle that policy itself reinforces. Eg. The sugar cycle in India has historically alternated between surplus years requiring export subsidy and deficit years requiring import concession.
    7. Weak monitoring data: Price intervention depends on retail price reporting from a limited set of centres, which lags the actual market. Eg. The Department of Consumer Affairs price portal draws daily quotations from a fixed set of reporting centres, which may not capture local scarcity.

    Back2Basics: Essential Commodities Act, 1955

    1. Purpose: It provides for the control of production, supply and distribution of, and trade and commerce in, commodities declared essential in the interest of the general public.
    2. Administering ministry: It is administered by the Department of Consumer Affairs and the Department of Food and Public Distribution under the Ministry of Consumer Affairs, Food and Public Distribution.
    3. The essential commodities list: The Schedule lists the commodities covered, including drugs, fertilisers, foodstuffs, hank yarn, petroleum and products, raw jute and jute textiles, and seeds of food crops.
    4. Power to amend the list: The Centre may add or remove a commodity from the Schedule in consultation with the State Governments, which allows the coverage to change without amending the Act.
    5. Section 3: Empowers the Centre to issue orders regulating or prohibiting production, supply, distribution, storage, transport and disposal of an essential commodity.
    6. Section 7: Prescribes penalties for contravention of an order made under Section 3, including imprisonment and forfeiture of the stock involved.
    7. Delegation to States: The Centre delegates enforcement powers to State Governments, which issue their own control orders and conduct inspections.

    Way Forward

    1. Attach an explicit sunset to the stock order: State the closing date of the stockholding limit in the order itself, so that a price stabilisation measure does not harden into a standing restriction on processors.
    2. Publish stock disclosure in real time: Extend the online stock declaration portal used for pulses and edible oils to sugar, so that holdings across mills, dealers and bulk consumers are visible before an intervention is needed.
    3. Coordinate ethanol diversion with the sugar balance sheet: Fix the season's ethanol diversion cap after the opening stock and expected production are known, rather than treating fuel policy and food policy as separate decisions.
    4. Move cane pricing to a revenue sharing formula: Adopt the revenue sharing approach recommended by the Rangarajan Committee so that the cane price moves with sugar and byproduct realisations instead of being fixed independently of them.
    5. Widen the price reporting base: Expand the Price Monitoring Division's reporting centres and integrate mandi level data, so intervention is triggered on a fuller picture of local scarcity.
    6. Use warehouse receipt financing: Encourage negotiable warehouse receipts so that mills can raise working capital against stored sugar without distress selling, which reduces the volatility that stock limits are later called on to correct.
    7. Time the import window to the demand peak: Align duty free import windows with the contracting and shipping lead time for raw sugar, so that permitted volume actually lands before the festive demand period.

    Matching Previous Year Question

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

  • 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

  • Panel to review nuclear liability caps every 5 years

    Why in the News

    Draft rules released by the Department of Atomic Energy on 14 August 2026 require an expert group to review the graded caps on nuclear operators’ civil liability once every five years. The review reaches only the operator’s cap, and leaves untouched the removal of the supplier’s statutory liability that is now the subject of a challenge in the Supreme Court.

    What is the Sustainable Harnessing and Advancing Nuclear Energy for Transitioning India (SHANTI) Act, 2025?

    1. About: The SHANTI Act, 2025 replaces both the Atomic Energy Act, 1962 and the Civil Liability for Nuclear Damage Act, 2010 (CLNDA) in a single unified statute, and is the first comprehensive overhaul of India’s nuclear power regime since independence.
    2. What it opens: The Act allows private entities to own and operate nuclear power plants for the first time, covering construction, transport, storage, import, export and handling of nuclear material, with mandatory authorisation from the Atomic Energy Regulatory Board for every activity.
    3. What it retains for the State: The government keeps an exclusive monopoly over enrichment, isotope separation, spent fuel reprocessing and radioactive waste management, so the fuel cycle remains entirely in the public sector.
    4. What it changed on liability: The Act’s Second Schedule introduced graded liability caps based on the size of a nuclear installation, replacing the earlier flat cap of Rs 1,500 crore under the CLNDA.

    What is an operator’s right of recourse?

    1. About: A right of recourse is the operator’s ability, after paying compensation for nuclear damage, to recover that amount from another party responsible for the incident.
    2. Why it is contested: The scope of this right decides whether the financial consequence of a defective component rests with the plant operator or travels back to the equipment supplier.

    What does Rule 78 of the draft rules provide?

    1. A standing review, not an occasional one: Rule 78 requires the Central government to constitute a group of experts to review the maximum limits of the operator’s civil liability for nuclear damage once every five years.
    2. Composition of the expert group: The group draws from nuclear science and engineering, actuarial science, insurance and law, together with public-interest representatives.
    3. What it can recommend: The group may propose amendments to the Second Schedule of the Act, which is where the graded caps sit.
    4. How this differs from the earlier law: Section 6 of the now-repealed CLNDA also allowed the Centre to periodically review the operator’s liability and notify a higher amount. The draft rules add a defined time period within which that review must happen.

    What are the graded liability caps under the Second Schedule?

    1. Above 3,600 Megawatt-electric (MWe): Operators of reactors above 3,600 MWe face a maximum liability of Rs 3,000 crore. MWe measures the electrical output of a reactor as distinct from its thermal output.
    2. 1,500 MWe to 3,600 MWe: Operators in this band face a cap of Rs 1,500 crore.
    3. 750 MWe to 1,500 MWe: The cap falls to Rs 750 crore.
    4. 150 MWe to 750 MWe: The cap falls to Rs 300 crore.
    5. Up to 150 MWe and other facilities: For reactors up to 150 MWe, for fuel-cycle facilities other than spent-fuel reprocessing plants, and for the transportation of nuclear material, liability is capped at Rs 100 crore.

    How has the operator’s right of recourse against suppliers changed?

    1. The three grounds under the old law: Section 17 of the CLNDA gave the operator a right of recourse where the right was expressly provided for in a written contract, where the incident resulted from an act of the supplier or the supplier’s employee including supply of equipment or material with patent or latent defects or sub-standard services, and where the incident resulted from an act or omission of an individual done with intent to cause nuclear damage.
    2. What survives: The new law retains the contractual ground and the intentional damage ground.
    3. What has been dropped: The supplier defect ground has been omitted, and it was the provision that exposed nuclear equipment vendors to long-term and uncertain liability risk in the event of an accident.
    4. What replaces it: Operators may now seek recourse from suppliers only through what they negotiate into a contract, which moves the question from statute to bargaining power.
    5. What it unblocks: Removing the statutory supplier exposure directly addresses the objection that kept foreign vendors out of Indian projects for over a decade.

    Why is the liability framework being challenged in the Supreme Court?

    1. The grounds pleaded: A petition challenges the Act for allowing private sector and foreign companies to operate nuclear power plants in India, for capping the liability of these operators at what it calls an absurdly low level, and for exempting the supplier from any liability, in violation of the Constitution.
    2. The accountability objection: Opening the sector to private operators while capping their exposure shifts residual risk from the operator to the exchequer and ultimately to victims.
    3. The five-yearly review does not answer it: Rule 78 allows the operator’s cap to be revised upward over time. It creates no mechanism to restore a supplier’s statutory liability, which the Act has removed from the framework entirely.
    4. The competing objective: Liability certainty is the precondition foreign vendors set for entering Indian projects, so the same provision that draws the petition is the one that makes the capacity expansion arithmetic feasible.

    What challenges does India’s civil nuclear liability framework face?

    1. A cap fixed in nominal terms erodes with inflation: A rupee figure written into a Schedule loses real value between revisions, so the five-year cycle sets the pace at which protection decays. Eg. The flat cap under the Civil Liability for Nuclear Damage Act, 2010 stood unrevised from 2010 until the SHANTI Act, 2025 replaced it with graded caps.
    2. Caps far below the actual cost of a severe accident: Graded caps measured in thousands of crores do not approach the cost of a major release. Eg. Cleanup and compensation costs after the 2011 Fukushima accident in Japan ran to tens of trillions of yen, orders of magnitude above any cap in the Second Schedule.
    3. Thin domestic insurance capacity for nuclear risk: Operators must place cover for the capped amount in a market with few underwriters willing to carry nuclear exposure. Eg. The India Nuclear Insurance Pool was created in 2015 precisely because individual insurers would not write the risk alone.
    4. Contractual recourse depends on bargaining power: With the statutory supplier ground removed, a smaller operator negotiating with a global vendor has little leverage to secure recourse in the contract. Eg. Jaitapur negotiations with the French vendor stalled for years over tariff and liability terms even while the statutory provision was in force.
    5. Regulatory independence still being built out: The Atomic Energy Regulatory Board has only now received statutory authority, having previously reported to the Department of Atomic Energy it was meant to regulate. Eg. The SHANTI Act, 2025 grants the Board statutory status for the first time and places its expenditure under the Comptroller and Auditor General.
    6. Claims machinery untested at scale: A dedicated claims commission exists on paper without a demonstrated record of settling mass claims quickly. Eg. The Act establishes a Nuclear Damage Claims Commission with appeals to the Electricity Appellate Tribunal, neither of which has adjudicated a nuclear damage claim.
    7. Public acceptance and siting resistance: Liability caps read as a transfer of risk to communities near installations, which hardens local opposition to siting. Eg. Sustained local protest at Kudankulam in Tamil Nadu delayed commissioning of the first units for years.

    Conclusion

    The five-yearly expert review converts a static Schedule of liability caps into a periodically revisable one, which is a real improvement on a flat figure left unrevised for fifteen years. It does not address the change that drew the litigation, since the supplier’s statutory exposure has been removed rather than capped, and no review clause can restore it. The measure currently stands at the draft rules stage, and the source states no date for the close of the comment window or for notification of the final rules, with the constitutional challenge to the Act pending before the Supreme Court.

    “[2018, GS3, 15] With growing energy needs should India keep on expanding its nuclear energy programme? Discuss the facts and fears associated with nuclear energy.”

  • 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 |

  • Collectors empowered to grant citizenship under CAA

    Why in the News

    The Union Ministry of Home Affairs (MHA) has transferred the processing of pending citizenship applications under the Citizenship Amendment Act, 2019 from centrally staffed Empowered Committees to District Collectors in eight States and Union Territories. The transfer reverses a centralising arrangement built two years earlier specifically to keep State machinery out of the process. It arrives after the political composition of the State that had resisted the law most strongly changed.

    What is the Citizenship Amendment Act, 2019?

    1. What it does: It amends the Citizenship Act, 1955 to create a route to Indian citizenship for members of six communities from three neighbouring countries who entered India before a fixed cut off date.
    2. Who it covers: It applies to Hindu, Sikh, Buddhist, Jain, Parsi and Christian migrants from Pakistan, Afghanistan and Bangladesh who entered India on or before 31 December 2014 without documents or illegally.
    3. How it operates: It inserts Section 6B into the Citizenship Act, 1955, under which such persons may be granted citizenship by registration or naturalisation, and it exempts them from being treated as illegal migrants.
    4. When it became operational: The Act was passed in December 2019, and the Citizenship (Amendment) Rules that made it operational came into effect on 11 March 2024, days before the 2024 General Election.

    What is Section 6B of the Citizenship Act, 1955?

    1. The provision: Section 6B is the enabling clause inserted by the 2019 amendment, under which the Central Government or an authority specified by it may grant a certificate of registration or naturalisation to a person covered by the Act.
    2. What it removes: It provides that proceedings pending against such a person in respect of illegal migration or citizenship stand abated on grant of citizenship, and that the person is deemed a citizen from the date of entry into India.

    What were the Empowered Committees?

    1. Composition: Each Empowered Committee was made up of Central Government officials, drawn from bodies including the Census organisation, the Intelligence Bureau (IB) and the postal department.
    2. Purpose: They were created to receive and clear citizenship applications without routing them through State government machinery, with at least four constituted, two of them at the district level.

    What does the 19 August order change in the processing chain?

    1. The transfer of pending cases: All applications pending before the Empowered Committees and the District Level Committees in the eight jurisdictions stand transferred to the concerned Collector.
    2. The jurisdictions covered: Gujarat, Rajasthan, Punjab, West Bengal, Assam except tribal areas, Tripura except tribal areas, Jammu and Kashmir, and Ladakh.
    3. The instrument used: The Citizenship (Third Amendment) Rules, 2026, notified on 19 August 2026, empower Collectors in these jurisdictions to receive, scrutinise and dispose of applications for registration or naturalisation under Section 6B.
    4. What the Collector must now do: The Collector is required to verify the documents submitted by an applicant and determine whether the applicant meets the eligibility requirements.
    5. The earlier notification is displaced: The order makes the MHA notification of 11 March 2024 implementing the Citizenship Amendment Rules inapplicable to these jurisdictions.
    6. The committee route is spent: The order renders the earlier multi agency committee arrangement redundant in the eight jurisdictions.

    Why was the power centralised in the first place?

    1. State opposition to the law: The Citizenship Amendment Act was strongly opposed by the then Trinamool Congress government in West Bengal.
    2. The design was built to bypass the State: Empowered Committees headed by Central Government officials were constituted specifically to keep the State government out of the processing of applications.
    3. The timing tracked the electoral calendar: The committees were created days before the Assembly polls in West Bengal in April 2026, and the amendment now decentralising the process was notified after the Bharatiya Janata Party came to power in that State.
    4. The first grants preceded the committees: The Home Ministry handed the first set of citizenship certificates to 14 applicants in May 2024.

    Why does a Union List subject still need the States?

    1. The subject is central: Citizenship, naturalisation and aliens fall under the Union List of the Seventh Schedule, so legislative and executive competence rests with the Centre.
    2. The delivery is district level: Receiving applications, verifying documents and issuing certificates are field functions that need offices, staff and records located in the district.
    3. Police verification sits with the State: Police is a State List subject, so verification of an applicant’s antecedents runs through the State police machinery whatever the processing authority.
    4. The State’s role was reduced to logistics: Under the centralised arrangement the State’s contribution was limited to providing office space and police verification of applicants.
    5. The Collector belongs to both systems: A District Collector is an officer of the State administration and simultaneously the Centre’s principal field functionary in the district, which is why the transfer restores State machinery without transferring the subject.

    What are the other major changes the Citizenship Amendment Act, 2019 made?

    1. Shortened naturalisation period: For the covered communities the residence requirement in the qualifying period for naturalisation was reduced from eleven years to five years, a change made to the Third Schedule of the Citizenship Act, 1955.
    2. Exemption from illegal migrant status: Covered persons were exempted from the operation of the Passport (Entry into India) Act, 1920 and the Foreigners Act, 1946, so their entry without documents no longer bars citizenship.
    3. Abatement of pending proceedings: Proceedings pending against a covered person in respect of illegal migration or citizenship abate on grant of citizenship.
    4. Geographic carve outs: The Act does not apply to the tribal areas of Assam, Meghalaya, Mizoram and Tripura covered by the Sixth Schedule, nor to areas under the Inner Line Permit regime in Arunachal Pradesh, Nagaland, Mizoram and Manipur.
    5. Effect on Overseas Citizen of India registration: The Act added a ground for cancellation of Overseas Citizen of India registration where the holder violates any law notified by the Central Government, with an opportunity of being heard.

    Major debates surrounding the Citizenship Amendment Act

    1. Religion as a statutory classification: The Act identifies its beneficiaries by naming six religious communities, which is contested as a classification that fails the reasonable classification test under Article 14.
    2. The defence of the classification: The stated basis is that the three named countries have a State religion and that the six communities are religious minorities there facing persecution, which is offered as an intelligible differentia with a rational nexus.
    3. The excluded groups: Persecuted groups outside the classification, including Ahmadis and Shias in Pakistan, Rohingya from Myanmar and Tamils from Sri Lanka, fall outside the Act’s coverage.
    4. The cut off date and the Assam Accord: The 31 December 2014 cut off for the covered communities sits against the 24 March 1971 cut off fixed for Assam by Section 6A of the Citizenship Act, 1955, inserted after the Assam Accord of 1985 to regularise migrants in that State. The gap between the two dates is the source of the objection in Assam.
    5. Section 6A itself has been upheld: A Constitution Bench of the Supreme Court upheld the validity of Section 6A in 2024, confirming the 1971 cut off for Assam as constitutionally valid.
    6. The link with a national register: The objection that the Act operates as a filter alongside a nationwide citizens register turns on whether the two exercises are read together, since the Act creates a route to citizenship but no obligation to prove it.
    7. The federal objection: Several State legislatures passed resolutions seeking repeal of the Act, and Kerala filed an original suit in the Supreme Court under Article 131, raising the question whether a State can sue over a Union List subject.

    Challenges to implementing the CAA framework

    1. Documentary proof of origin is the binding constraint: An applicant who entered without documents has to establish nationality of the country of origin and the date of entry, which is precisely what the flight left behind. Eg. The Home Ministry issued its first set of certificates to only 14 applicants in May 2024, years after the Act was passed.
    2. Eligibility determination sits with a generalist officer: The Collector must now assess questions of foreign nationality, religious identity and date of entry alongside a full district administration workload. Eg. The function was earlier assigned to committees staffed by Census, Intelligence Bureau and postal officials specifically for that expertise.
    3. Verification depends on a machinery the Centre does not control: Police verification of applicants runs through the State police, a State List subject, so the pace of processing depends on State cooperation. Eg. The centralised committee design was itself adopted because the West Bengal government opposed the law.
    4. Applicants risk exposure by applying: Filing an application is an admission of having entered India without valid documents, which deters applicants where the outcome is uncertain. Eg. The Act exempts covered persons from the Foreigners Act, 1946 only on grant of citizenship, not on filing.
    5. Uniformity across eight jurisdictions is hard to hold: Decentralising to district officers across eight States and Union Territories creates as many decision practices as there are districts. Eg. The 19 August order applies to Gujarat, Rajasthan, Punjab, West Bengal, Assam, Tripura, Jammu and Kashmir and Ladakh, each with a different administrative history on migration.
    6. The carve outs cut through the areas of highest migrant density: Excluding Sixth Schedule areas and Inner Line Permit States removes from coverage several districts where the affected population actually lives. Eg. Tribal areas of Assam and Tripura are expressly excluded from the 19 August transfer as well.
    7. The constitutional challenge remains live: A framework operating while its parent Act is under challenge risks decisions being unsettled later. Eg. More than 200 petitions challenging the Act were filed before the Supreme Court after its enactment.

    Conclusion

    The Citizenship (Third Amendment) Rules, 2026 stand notified with effect from 19 August 2026, and pending applications in the eight named jurisdictions have been transferred to District Collectors, who will now verify documents and determine eligibility. The 11 March 2024 notification no longer applies in those jurisdictions and the Empowered Committee route is spent there. The source names no further date or milestone for the disposal of the transferred applications. The change is administrative in form, and it records that the reason for centralising the process, namely State government opposition, is no longer present in the State it was designed for.

    “[2021] With reference to India, consider the following statements:

    1. There is only one citizenship and one domicile.

    2. A citizen by birth only can become the Head of State.

    3. A foreigner, once granted citizenship, cannot be deprived of it under any circumstances.

    Which of the statements given above is/are correct?

    (a) 1 only

    (b) 2 only

    (c) 1 and 3

    (d) 2 and 3

  • In a 5-4 ruling, Supreme Court for tweaking the definition of industry, exempts pending matters

    Why in the News

    A nine-judge Bench of the Supreme Court held on 20 August 2026, by a 5:4 margin, that the expansive 1978 interpretation of the term industry will not govern the Industrial Relations Code, 2020. The ruling preserves that interpretation for disputes already pending under the Industrial Disputes Act, 1947 and withdraws it from every case that follows.

    What is the ‘triple test’ laid down in Bangalore Water Supply (1978)?

    1. Origin: A seven-judge Constitution Bench in Bangalore Water Supply and Sewerage Board v. A. Rajappa (1978), authored by Justice V.R. Krishna Iyer, read Section 2(j) of the Industrial Disputes Act, 1947 expansively.
    2. The three conditions: An undertaking qualifies as an industry where there is systematic activity, organised by cooperation between employer and employee, for the production or distribution of goods or services calculated to satisfy human wants and wishes.
    3. What the test ignores: Profit motive is irrelevant to the classification. Purely spiritual or religious activity stays outside the definition.
    4. Reach: The test brought hospitals, educational institutions and municipalities within the fold of industry, exempting only core sovereign activities such as the judiciary, law and order and defence, in order to protect the state’s functional autonomy.

    What is the Industrial Relations Code, 2020?

    1. About: The Industrial Relations Code, 2020 consolidates the law on trade unions, standing orders and the settlement of industrial disputes into a single statute, and came into force in November 2025.
    2. The operative provision: Section 2(p) of the Code carries its own definition of industry, taking over the function that Section 2(j) of the 1947 Act performed for 48 years.

    What did the Supreme Court actually hold on the reach of the 1978 definition?

    1. A clean slate for the new Code: The majority held that industry under Section 2(p) of the Industrial Relations Code, 2020 would not be burdened by the 1978 interpretation of Section 2(j) of the 1947 Act.
    2. No sheet anchor: The Chief Justice of India stated that the 1978 judgment and its conclusion would not act as the sheet anchor or the foundation for any future interpretation of Section 2(p).
    3. A refinement, not a reversal: The majority found that the essential framework of the 1978 interpretation had withstood the test of time, and that some of its constituent elements could have been articulated differently to better reflect the scope and contours of Section 2(j).
    4. Prospective operation: The refined triple test evolved in the opinion of the Chief Justice of India will operate prospectively, and the modified definition will not apply to pending cases.
    5. Pending disputes protected: All matters presently pending before courts, tribunals and labour authorities under the Industrial Disputes Act, 1947 are to be adjudicated in accordance with the triple test as laid down in Bangalore Water Supply.
    6. Maintainability settled: The majority held that the reference questioning the correctness of the 1978 ruling was maintainable.
    7. Text still awaited: The fine print of the ruling prescribing the new formulation of the definition has not yet been released.

    Why was the 1978 definition sent to a nine-judge Bench at all?

    1. Docket explosion: Later Benches found that the 1978 definition produced what they called a docket explosion, bringing far more cases to the labour courts.
    2. A failed legislative narrowing: Parliament attempted to narrow the definition through the Industrial Disputes (Amendment) Act, 1982, excluding several organisations from its scope.
    3. The 2005 admission: The Centre told the Court in 2005 that no alternative dispute resolution mechanism existed for employees who would fall outside the amended definition, so the 1978 position continued to hold.
    4. Divergent readings: Subsequent rulings interpreted the 1978 judgment differently, and the case was referred to a nine-judge Bench for reconsideration.

    What three questions did the reference place before the Bench?

    1. Correctness of the test: Whether the test laid down in Bangalore Water Supply remains the correct interpretation of industry, and whether later legislative developments have any bearing on it.
    2. Welfare schemes: Whether welfare schemes run by the government count as an industrial activity.
    3. Sovereign function: What constitutes a sovereign function of the state, and whether such functions fall outside the ambit of labour law altogether.
    4. When framed: The Court identified these three broad questions for consideration in February 2026.

    Why does preserving the 1978 test only for pending cases divide the workforce in two?

    1. Two regimes running side by side: A dispute already filed under the 1947 Act is decided on the wide 1978 definition. An identical dispute arising under the Code is decided on a definition that has not yet been written out.
    2. The Court’s own reason: The majority stated that it did not intend to displace the governing legal position on pending proceedings, since doing so would create artificial discrimination.
    3. What the wide net secured: The 1978 definition enabled workers across a wide range of jobs to obtain legal recourse on wages, working hours, strikes, collective bargaining and protection against arbitrary dismissal.
    4. What the clean slate removes: Workers whose disputes arise after the Code’s commencement lose the settled presumption that their workplace is an industry, and must establish it afresh under Section 2(p).

    What does the dissent argue about the State as an employer?

    1. Reference itself questioned: Justice B.V. Nagarathna found the reference against the 1978 verdict unwarranted and not maintainable, and held that the ruling required no interference or modification.
    2. Identity of the employer is irrelevant: The dissent held that merely because a function is performed by the State, it cannot be exempted from the definition of industry, so the test of who carries out the activity is not relevant.
    3. Nature of the activity governs: Social welfare activities and schemes undertaken by government departments or their instrumentalities can be construed as industrial activities for the purpose of Section 2(j), depending on the nature of the activity and all other relevant factors.
    4. Why it matters now: The dissent held that it was important, now more than ever, to retain the inclusive definition of industry to safeguard workers’ rights.
    5. Split within the majority side: Justice Joymalya Bagchi recorded disagreement with the majority on the reformulation of the triple test, and Justices Dipankar Dutta and Ujjal Bhuyan wrote dissenting opinions.

    What challenges follow from redefining ‘industry’ under the new Code?

    1. Coverage uncertainty until the operative text arrives: The modified formulation was pronounced without the wording that prescribes it being available, so adjudicating authorities have no text to apply. Eg. The hour-long pronouncement on 20 August 2026 ended with the fine print of the new formulation still awaited.
    2. Identical workplaces treated differently by filing date: The cut-off is the date of the proceeding, not the nature of the work, so two workers in the same undertaking can face different definitions. Eg. A dispute in a municipal water supply undertaking filed under the 1947 Act is decided on the triple test, and one arising afterwards is not.
    3. No fallback forum for excluded categories: Narrowing the definition removes workers from the industrial adjudication machinery without putting anything in its place. Eg. The Centre itself told the Court in 2005 that no alternative dispute resolution mechanism existed for employees who would fall outside a narrowed definition.
    4. Threshold effects that discourage firms from growing: The Code applies its stricter obligations only above stated headcounts, which gives firms a reason to stop hiring below the line. Eg. Standing orders now apply at 300 employees and prior approval for layoff, retrenchment and closure applies at 300 workers, both raised from far lower thresholds.
    5. The sovereign function boundary left to case-by-case litigation: The Court has framed the question of what a sovereign function is without settling a workable test for it. Eg. Whether a government-run welfare scheme is an industrial activity was one of the three questions placed before the Bench in February 2026.
    6. A definition built for a standard employment relation: The triple test turns on cooperation between employer and employee, which platform-mediated work does not fit. Eg. Gig and platform workers are addressed through the Code on Social Security, 2020 rather than through the industrial dispute machinery.

    Conclusion

    The Court has separated the past from the future of a single statutory term, keeping Justice Krishna Iyer’s wide definition alive for disputes already in the system and denying it any authority over the Code that now governs Indian industrial relations. The substantive contest has therefore moved from the judiciary to the text of Section 2(p) and to whoever interprets it first. The Industrial Relations Code, 2020 has been in force since November 2025, and the next milestone is the release of the full text of the judgment carrying the refined formulation of the triple test.

    “[2024, GS3, 15] Discuss the merits and demerits of the four ‘Labour Codes’ in the context of labour market reforms in India. What has been the progress so far in this regard?”

  • Supreme Court asks Centre to institutionalise National Testing Agency reforms, cites the Union Public Service Commission as the model

    Why in the News

    The Supreme Court has directed the Union government to file an affidavit within three weeks setting out what it has done to implement the recommendations of the expert committee headed by a former Chairperson of the Indian Space Research Organisation (ISRO) on the National Testing Agency (NTA). The Bench held that reforms must be institutionalised and carried forward by successive officers rather than restarted with each new committee after each failure.

    What is the National Testing Agency (NTA)?

    1. Status: The National Testing Agency (NTA) is an autonomous testing organisation set up in 2017 under the Ministry of Education and registered under the Societies Registration Act, 1860, to conduct entrance examinations for higher education institutions.
    2. Examinations conducted: It conducts the National Eligibility cum Entrance Test Undergraduate (NEET-UG), the Joint Entrance Examination Main, the University Grants Commission National Eligibility Test, and the Common University Entrance Test, among others.
    3. Why it is before the Court: The agency has been under the Supreme Court’s scanner since the NEET-UG 2026 paper leaks, with petitioners describing the failure as recurring and systemic rather than isolated.

    What is a sovereign database?

    1. Meaning: A sovereign database is one whose servers, storage and control remain within the jurisdiction and ownership of the sovereign authority, rather than on infrastructure owned or operated by a third party or located abroad. The Bench asked whether the NTA has one and where question papers are stored.

    Why did the National Testing Agency come under the Supreme Court’s scrutiny?

    1. The trigger event: The 2026 NEET-UG question paper leaks led to cancellation of the examination and left over 23 lakh medical college aspirants stranded.
    2. Criminal process: A Central Bureau of Investigation (CBI) probe was ordered into the leaks and arrests were made.
    3. Political consequence: The leaks led to nationwide protests and a police crackdown on students, and ultimately to the resignation of the then Union Education Minister.
    4. The petitioners’ framing: The Court was hearing petitions by the Federation of All India Medical Association and the United Doctors Front, which characterised the 2026 leak as part of a recurring, systemic and catastrophic failure of the NTA in conducting NEET-UG.

    Why does the Court treat committee hopping as the problem rather than the solution?

    1. The Bench’s central objection: The Court held that it should not be that a committee gives recommendations and a new committee is then formed which removes the old one lock, stock and barrel.
    2. The specific sequence at issue: A seven member committee formed in 2024 under a former ISRO Chairperson recommended structural reforms in the NEET system, and the Centre has since constituted a task force under an Infosys co founder for new technological reforms.
    3. The Court’s fix, not replacement but review: The new task force must review the earlier committee’s recommendations and improve on them where necessary, and the earlier committee’s chairperson could be made part of the new body.
    4. The pattern is older than these two: The Bench pointed out that there were two more committees before the 2024 committee, and that recommendations must not remain on paper but must translate into action.
    5. The Solicitor General’s position: The Union government agreed on the need for a permanent mechanism to introduce reforms and maintain their continuity, and stated that it had already accepted the 2024 committee’s recommendations.

    What does the Court mean by institutional memory in an examination body?

    1. The failure mode named: A set of reforms implemented for one examination is undone in the next when senior NTA officers are shifted out, so continuity depends on individuals rather than on the institution.
    2. The standard set: Reforms must be vibrant, institutionalised and carried on within the NTA by successive officers, and must flow down from one generation of officers to the next.
    3. The comparator used: The Court cited the Union Public Service Commission (UPSC), which has conducted examination after examination without a hitch because it holds institutional memory and institutional expertise.
    4. What the earlier committee already said: The 2024 committee had itself focused on ways to build institutional memory and had identified the problem as systemic rather than logistical.

    What specific institutional gaps did the Bench probe?

    1. Technology capability: The Bench asked how the agency was facing new technological challenges, and whether the necessary infrastructure and software systems were in place.
    2. Data security and storage: It asked about cybersecurity and storage, whether the NTA has a sovereign database, and where question papers are stored.
    3. Physical premises: It asked where the agency’s office is situated and pressed on the need to secure office premises and operational infrastructure.
    4. Manpower: It asked how many officers the body has, how much staff is available, whether the various director and joint director positions had been filled, and how many had taken charge.
    5. Candidate facing systems: It stressed training and preparing personnel for the long term, candidate friendly arrangements and a grievance mechanism, and the strengthening of physical and intellectual capacity.
    6. The government’s response on hiring: The Solicitor General said hiring for scaling up digital infrastructure was under way and that the chief technology officer and chief financial officer had already been selected.

    What has the Centre placed on record?

    1. Earlier affidavit: The Court referred to an affidavit of 4 August filed by the Union government listing several senior appointments to be made to the NTA.
    2. Fresh affidavit directed: The Secretary must file an affidavit within three weeks, containing all details and indicative timelines, on steps taken to implement the 2024 committee’s suggestions as reflected and nuanced by the new task force.
    3. Measures claimed: The Centre’s affidavit described the Public Examinations (Prevention of Unfair Means) Act, 2024 and the constitution of the new task force as landmark measures against future paper leaks.
    4. Mandate of the new task force: It has been constituted to recommend end to end reforms focused on leveraging advanced technology such as artificial intelligence and blockchain to strengthen examination security and integrity.
    5. Limits on redesigning NEET-UG: Any structural change in the design of NEET-UG would be undertaken only in consultation with and with the concurrence of the Union Health Ministry and the National Medical Commission.
    6. Assurance to candidates: The Union government committed to giving candidates adequate advance notice of any change in the mode or design of the examination.
    7. The residual admission: The Solicitor General submitted that the system in place is foolproof but that at some point there is human intervention.

    Challenges to institutionalising reform in the National Testing Agency

    1. Officer rotation defeats continuity: Reforms owned by a posting rather than a post are reversed on transfer, which is precisely the failure the Court described. e.g. reforms implemented for one examination cycle being undone in the next after senior NTA officers were shifted out.
    2. No statutory foundation: The NTA is a registered society rather than a body created by statute, so its powers, tenure protections and accountability are weaker than those of a constitutional or statutory examination body. e.g. the UPSC derives its independence from Article 315 of the Constitution, which the NTA has no equivalent of.
    3. Recommendations without an implementation tracker: Successive committees have produced reports with no published mechanism to show which recommendation was executed and when. e.g. the Court had to direct an affidavit with indicative timelines three weeks out simply to learn the status of the 2024 committee’s recommendations.
    4. The human link in an otherwise sealed chain: Security design can cover technology and logistics but not the conduct of every person with access. e.g. the Solicitor General’s own submission that the system is foolproof but that at some point there is human intervention.
    5. Vendor and outsourcing dependence: Question paper printing, transport and centre operations run through private contractors whose staff sit outside the agency’s disciplinary reach. e.g. arrests following the NEET-UG leak extended beyond the agency’s own personnel.
    6. State level examinations remain outside the frame: The Court’s directions bind the NTA, and state recruitment and board examinations run on separate legal and administrative regimes. e.g. the Jharkhand government’s cancellation of 22 recruitment examinations over alleged irregularities in the same week.

    Conclusion

    The Court has shifted the remedy from constituting committees to building an institution, holding that reforms must survive the officers who introduced them. The immediate stage is a directed affidavit from the Secretary within three weeks, setting out implementation of the 2024 committee’s recommendations as nuanced by the new task force, with indicative timelines. Whether the NTA acquires a sovereign database, filled senior posts, secured premises and a grievance mechanism is the test the Court has set. Committee count is not the measure of reform; institutional memory is.

    [2024, GS2, 15 marks] What are the aims and objects of the recently passed and enforced, The Public Examination (Prevention of Unfair Means) Act, 2024? Whether University/State Education Board examinations, too, are covered under the Act?”

  • Due diligence: curbs on surrogate advertising must avoid regulatory overreach

    Why in the News

    The Maharashtra Food and Drug Administration (FDA) Commissioner has begun summoning celebrity endorsers of a pan masala brand, treating the endorsement as a surrogate promotion of tobacco. The action moves enforcement from the manufacturer to the person who supplies the brand recall, and it tests whether the state can discharge the burden of proof that the courts have already placed on it.

    What is surrogate advertising?

    1. Definition: Surrogate advertising is the promotion of a banned product through a legally saleable substitute that carries the same brand name, packaging and visual identity.
    2. How it operates: A tobacco or liquor manufacturer registers an extension product such as elaichi, soda or music CDs, then advertises that extension so the parent brand stays visible where direct advertising is prohibited.
    3. The legal test: An advertisement becomes surrogate when the substitute product has no market identity independent of its association with the prohibited product.
    4. The case at hand: The FDA holds that the pan masala brand endorsed by three leading film actors has no identity independent of tobacco, so endorsing it amounts to endorsing tobacco.

    What is endorser liability?

    1. Meaning: Endorser liability is the statutory responsibility placed on a celebrity or influencer for a false or misleading claim made in an advertisement they lend their name to.
    2. Source of the duty: The Consumer Protection Act, 2019 created this liability along with monetary penalties, which removes ignorance of the manufacturer’s intent as a defence.

    Why has enforcement shifted from the manufacturer to the endorser?

    1. The asymmetry named: The person carrying the persuasive power bears almost none of the health or economic cost of the product being consumed.
    2. Where the cost lands: The consumer absorbs that cost, and an underfunded public health system absorbs the treatment burden that follows.
    3. Why the manufacturer route stalls: Brand extension is legal on its face, so acting only against the manufacturer leaves the advertisement itself untouched.
    4. Why the endorser route bites: Requiring endorsers to explain their decision making applies the endorser liability principle at the enforcement stage rather than only after a complaint.
    5. The wider field: The same asymmetry runs through advertisements making unsubstantiated health claims such as “boosts immunity”, and through educational and financial products.

    What must the state prove before it can call an advertisement surrogate?

    1. The governing ruling: The Delhi High Court in DGHS vs Som Pan Product Pvt. Ltd. (2024) held that the state carries the responsibility of proving a case of surrogate advertising.
    2. Brand registration is not proof: The mere registration of an extension brand does not by itself establish that the advertisement is surrogate.
    3. Legality is not a shield either: The existence of a technically legal product does not automatically permit the particular advertisement built around it.
    4. What follows for the FDA: Suspicion must be converted into inquiries under the Cigarettes and Other Tobacco Products Act (COTPA), 2003 and its Rules and under the Food Safety and Standards Act, 2006 that survive judicial scrutiny.

    Why does the existing regulatory regime struggle with such advertisements?

    1. Fragmentation: Regulation is scattered across a series of Acts and Rules with no single authority owning the surrogate advertising question end to end.
    2. Forum shopping: Advertisers use the multiplicity of legal and administrative instruments to draw the judiciary into the dispute and stall enforcement.
    3. Definitional gap: No statute defines the threshold at which an extension product’s independent market identity becomes real rather than nominal.
    4. Health stakes: India carries the world’s largest burden of oral cancer, which is what makes treatment of these advertisements as unfair trade practices a consumer health question rather than a marketing dispute.

    Does tougher enforcement strengthen the rule or invite regulatory overreach?

    1. The case for acting: Penalties or prohibitions in this case would materially narrow the space that surrogate advertising currently exploits.
    2. The case for restraint: An action that fails the evidentiary standard set in 2024 becomes a precedent that advertisers cite in every later proceeding.
    3. The self defeating outcome: Enforcement seen as arbitrary strengthens the very practice it was meant to end, by converting a public health question into a dispute about administrative excess.
    4. The distinction that matters: Targeting the marketing chain is legitimate, targeting individuals without completing the statutory inquiry is not.

    Challenges to regulating surrogate advertising

    1. Proving the negative: The state must establish that a lawfully sold product has no independent market, which requires sales and distribution evidence that regulators rarely collect. e.g. brand extensions in elaichi and mouth freshener categories report genuine retail sales, which manufacturers cite as proof of independent identity.
    2. Split jurisdiction: Tobacco control sits with the health administration, food safety with the FDA and unfair trade practices with consumer authorities, so no single body carries the case through. e.g. the present action begins with a state FDA whose primary statute is the Food Safety and Standards Act, 2006, not COTPA.
    3. Digital advertising escapes the frame: Influencer posts and platform advertisements are transient and geo targeted, so they leave little evidence for a later inquiry. e.g. short video endorsements of betting and fantasy gaming platforms circulate widely without the disclosure labels print and television carry.
    4. Weak deterrence in practice: Penalties are small relative to advertising budgets and are contested for years. e.g. tobacco control prosecutions under COTPA are typically compounded at low fines rather than pursued to conviction.
    5. Sponsorship and event routes: Prohibited categories reach audiences through sports and cultural sponsorship where the brand appears without any product claim. e.g. surrogate liquor branding through music, soda and sporting event sponsorship has continued despite the advertising prohibition.
    6. Enforcement capacity: State drug and food administrations are staffed for sampling and licensing work, not for evidentiary media investigations. e.g. food safety officer vacancies in several States leave routine sampling targets unmet, before any advertising inquiry is added.

    Conclusion

    The action against celebrity endorsers is a defensible extension of endorser liability into the enforcement stage, and it addresses a real asymmetry between who persuades and who pays the health cost. Its survival depends entirely on whether the inquiry under COTPA, 2003 and the Food Safety and Standards Act, 2006 meets the evidentiary standard the Delhi High Court fixed in 2024. A well grounded order would narrow the space for surrogate advertising across tobacco, health claims, education and finance. An unsupported one would leave the practice stronger than it found it.

    Advertising Regulation in India

    1. What it covers: Advertising regulation governs the content, placement and truthfulness of commercial communication, and reaches the advertiser, the agency, the publisher and the endorser.
    2. Mixed model: India uses statutory control for specific product categories alongside self regulation by the Advertising Standards Council of India (ASCI), a voluntary industry body whose code is not itself law.
    3. Statutory anchor since 2019: The Central Consumer Protection Authority (CCPA), constituted under the Consumer Protection Act, 2019, can order the discontinuation of a misleading advertisement and impose penalties on the advertiser and the endorser.
    4. Prohibited categories: Direct advertising of tobacco products is banned, and liquor advertising is restricted, which is precisely what creates the incentive for brand extension.
    5. Scale: India is among the world’s largest advertising markets by volume of impressions, with digital and influencer marketing now the fastest growing segment and the least documented.

    Laws and Rules Governing Advertising and Surrogate Promotion

    1. Cigarettes and Other Tobacco Products Act (COTPA), 2003: Prohibits direct and indirect advertisement, promotion and sponsorship of tobacco products and regulates sale to and around minors.
    2. Section 5: Bars advertisement of cigarettes and other tobacco products, including indirect advertisement, which is the provision surrogate advertising is tested against.
    3. Consumer Protection Act, 2019: Defines misleading advertisement, creates the CCPA, and imposes liability and penalties on manufacturers and endorsers.
    4. Endorser penalty: Provides monetary penalty on an endorser for a false or misleading advertisement, with a prohibition on further endorsements for a stated period on repetition.
    5. Food Safety and Standards Act, 2006: Regulates food product claims and advertising, and prohibits misleading claims about the nature, quality or health effect of a food.
    6. Cable Television Networks (Regulation) Act, 1995: Bars advertisement of prohibited products on cable television through the Advertisement Code framed under it.
    7. Drugs and Magic Remedies (Objectionable Advertisements) Act, 1954: Prohibits advertisements claiming cure for listed diseases and conditions.
    8. Central Consumer Protection Authority (Prevention of Misleading Advertisements and Endorsements) Guidelines, 2022: Set conditions for a non misleading advertisement, regulate bait and surrogate advertisements, and fix due diligence duties for endorsers.
    9. Endorsement Know hows for digital advertising, 2023: Require celebrities, influencers and virtual influencers to disclose a material connection with the advertiser in a clear and prominent manner.

    Government Initiatives in Advertising and Consumer Protection

    1. National Tobacco Control Programme (NTCP): Implemented by the Ministry of Health and Family Welfare to enforce COTPA, run awareness campaigns and support cessation, targeted at tobacco users and youth.
    2. National Tobacco Quitline and mCessation: Provide telephone and mobile based cessation support to tobacco users seeking to quit.
    3. Jago Grahak Jago: Consumer awareness campaign of the Department of Consumer Affairs, aimed at informing consumers about misleading advertisements and grievance routes.
    4. National Consumer Helpline and the INGRAM portal: Give consumers a single point to lodge complaints against misleading advertisements and unfair trade practices.
    5. Eat Right India: Food Safety and Standards Authority of India (FSSAI) campaign to curb misleading food claims and promote safe and healthy food, aimed at consumers and food businesses.

    Key Facts about Tobacco Control and Advertising Regulation

    1. World No Tobacco Day is observed on 31 May each year.
    2. India has the world’s largest burden of oral cancer, which is the health basis for the strict treatment of tobacco surrogate advertising.
    3. India is a party to the World Health Organization Framework Convention on Tobacco Control (WHO FCTC), the first international public health treaty, which India ratified in 2004.
    4. Pictorial health warnings must cover 85 percent of the principal display area on both sides of a tobacco product package in India, among the largest such requirements globally.
    5. The Advertising Standards Council of India (ASCI) was set up in 1985 as a voluntary self regulatory body and its code has no statutory force of its own.

    Challenges in Advertising and Consumer Protection Regulation

    1. Self regulation without teeth: ASCI rulings bind only members and carry no penalty, so a non member advertiser faces no consequence. e.g. several offshore betting and crypto platforms advertising into India are outside ASCI’s membership entirely.
    2. Influencer economy outpaces disclosure rules: Paid endorsements are presented as personal opinion, and disclosure labels are omitted or hidden. e.g. financial influencers recommending securities without registration led the Securities and Exchange Board of India to restrict regulated entities from associating with unregistered advice givers.
    3. Dark patterns in digital interfaces: Design choices such as false urgency and forced action steer consumers without any express claim to test. e.g. the Department of Consumer Affairs notified guidelines in 2023 listing thirteen specified dark patterns on e commerce platforms.
    4. Regulatory capacity gap: The CCPA and State food and drug administrations have small investigation teams against a very large advertising volume. e.g. misleading claims in the coaching and edtech sector produced a separate CCPA advisory only after repeated complaints.
    5. Cross border advertising: Advertisements served from outside India for products banned within India are hard to reach through domestic statutes. e.g. offshore betting platforms advertise through surrogate news and sports content channels aimed at Indian audiences.
    6. Health claims without evidence: Immunity, weight loss and fortification claims sit between food law and drug law and are contested at the margin. e.g. claims on health supplements and nutraceuticals repeatedly draw FSSAI action for lacking substantiation.

    Back2Basics: Food Safety and Standards Authority of India (FSSAI)

    1. Governing Act: Established under the Food Safety and Standards Act, 2006.
    2. Year established: Constituted in 2008, with the Act’s substantive provisions brought into force from 2011.
    3. Parent ministry: Functions under the Ministry of Health and Family Welfare.
    4. Mandate: Lays down science based standards for articles of food and regulates their manufacture, storage, distribution, sale, import and advertising.
    5. Composition: Headed by a Chairperson of the rank of Secretary to the Government of India, with a Chief Executive Officer and members drawn from States, industry, consumer groups and food technology.
    6. Enforcement structure: Implemented on the ground by State Food Safety Commissioners, Designated Officers and Food Safety Officers, which is why a State FDA leads the present action.

    Way Forward

    1. Complete the statutory inquiry: Convert the summons into a documented proceeding under COTPA, 2003 and the Food Safety and Standards Act, 2006 that records evidence of the extension product’s dependent market identity.
    2. Define independent market identity: Notify an objective test combining sales volume, distribution reach and advertising spend of the extension product relative to the parent brand.
    3. Single window coordination: Create a joint mechanism between the CCPA, the health administration and State food and drug administrations so one authority carries a surrogate advertising case to conclusion.
    4. Raise the penalty to advertising spend: Link penalties to the advertising outlay of the campaign so the fine is not absorbed as a cost of business.
    5. Mandatory pre certification for prohibited categories: Require prior vetting of advertisements for brand names shared with tobacco and liquor products before release.
    6. Extend disclosure enforcement to digital: Audit influencer endorsements for the material connection disclosure and publish enforcement outcomes so the rule becomes visible.
    7. Consumer side remedy: Publicise the CCPA and National Consumer Helpline routes so complaints against misleading endorsements do not depend on regulator initiative alone.

    “[2014, GS2, 12.5 marks] The setting up of a Rail Tariff Authority to regulate fares will subject the cash strapped Indian Railways to demand subsidy for obligation to operate non-profitable routes and services. Taking into account the experience in the power sector, discuss if the proposed reform is expected to benefit the consumers, the Indian Railways or the private container operators.”