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Type: Explained

These Newscards correspond to the explained section of various newspapers. They become immensely important for both prelims and mains and special attention needs to be paid to them

  • To build AI for all, bring in more women

    Why in the News

    India ranks among the world’s leading artificial intelligence ready nations, powered by Digital Public Infrastructure and a large innovation ecosystem, while women fall from 43 percent of STEM graduates to 10 percent of senior AI leadership. Every artificial intelligence system begins with data and every dataset begins with people, so a pipeline that loses women at each stage produces systems that reproduce the inequality of the society they learn from.

    What is the AI pipeline?

    1. Definition: The AI pipeline is the full sequence from data collection through model training and deployment to the decisions the model produces.
    2. Not only technical: It is not merely a technological conduit of code, silicon and compute power. It is fundamentally a human pipeline.
    3. It starts early: The pipeline begins before the first line of code is written, at the point where data about people is collected or not collected.
    4. Where the consequences land: Its outputs shape decisions affecting millions, from loan sanction to clinical recommendation.
    5. The failure mode: When people are absent from that data, artificial intelligence inherits those gaps.

    What is Digital Public Infrastructure?

    1. Definition: Digital Public Infrastructure (DPI) is a set of shared, interoperable digital systems, such as digital identity, payments and data exchange layers, built as public utilities on which both government and private services run.
    2. Why it matters here: India’s artificial intelligence readiness is powered by DPI, which also determines whose transactions and records enter the datasets models are trained on.

    What is the India AI Mission?

    1. Definition: The India AI Mission is the national programme providing compute capacity, datasets, application development support, skilling and startup financing for artificial intelligence in India.
    2. Relevance here: It is the vehicle through which artificial intelligence in India can be steered onto the same inclusive path that DPI followed for public welfare.

    Where does the pipeline leak women?

    1. STEM foundation: Women account for 43 percent of India’s STEM graduates, one of the world’s largest pools of women STEM graduates.
    2. Tech workforce: Representation falls to 26 percent in the technology workforce.
    3. Advanced AI roles: Only 12 percent of professionals in advanced artificial intelligence roles are women.
    4. Senior AI leadership: Women hold just 10 percent of senior artificial intelligence leadership positions.
    5. What the sequence shows: At every stage the pipeline leaks talent, lived experience and innovation, so the loss compounds rather than occurring at one bottleneck.

    What causes the leakage?

    1. Access to the network itself: Only 57 percent of women have independent internet access, compared with 72 percent of men.
    2. Nutrition and education: Unequal nutrition and unequal education set the disparity before any career choice is made.
    3. Caregiving responsibilities: Unpaid care work removes women from the workforce at the point where advanced technical careers compound.
    4. Workplace discrimination: Discrimination at work blocks progression from entry level technical roles into advanced ones.
    5. Language barriers: Artificial intelligence education is dominated by English, which excludes those schooled in other languages.
    6. School infrastructure: A student cannot pursue robotics where her school lacks the necessary infrastructure, so the exclusion begins well before higher education.
    7. Influence, not only presence: A woman who becomes an artificial intelligence engineer often remains the only woman in the room, with limited influence in product design.

    What happens to systems built without women in the data?

    1. Credit assessment: A self help group member in rural Bihar applying for a micro-loan is scored by models relying mainly on historical male financial patterns, which may underestimate her creditworthiness.
    2. Maternal health tools: A community health worker in Gujarat depends on artificial intelligence enabled maternal health tools, and training data that fails to reflect local nutrition and health conditions produces inaccurate recommendations affecting maternal care.
    3. The general mechanism: Artificial intelligence automates existing inequalities when trained on incomplete or biased data.
    4. The learning relationship: Artificial intelligence learns from society, so an unequal society produces an artificial intelligence that reflects that inequality.
    5. Why datasets alone are insufficient: Correcting the output requires more than diverse datasets, because the decisions about what to collect and what to optimise are made by the people in the room.

    Does India’s AI readiness conceal an exclusion problem?

    1. The readiness claim: India ranks among the world’s leading artificial intelligence ready nations, powered by Digital Public Infrastructure and a thriving innovation ecosystem.
    2. The contradiction beneath it: India produces one of the world’s largest pools of women STEM graduates, and women steadily disappear as the artificial intelligence pipeline advances.
    3. Formal equality achieved early: When India adopted its Constitution in 1950, it granted women and men universal adult franchise simultaneously, ahead of the sequence followed in several western democracies.
    4. Substantive access lagging: That simultaneous political inclusion sits alongside a 15 percentage point gap in independent internet access between men and women today.
    5. What the measure of leadership should be: True artificial intelligence leadership cannot be measured only by models, investments or patents. It must be measured by whether artificial intelligence reflects India’s diversity of languages, cultures, socio-economic realities and lived experiences.

    What does the corrective path look like?

    1. The precedent of scale: India has already shown how technology can advance public welfare at scale, and the India AI Mission offers the opportunity to ensure artificial intelligence follows the same inclusive path.
    2. Existing women’s institutions: Across rural India, women’s self-help groups have built strong financial ecosystems through collective savings and entrepreneurship, which is usable financial data and an existing delivery network.
    3. Influence changes output: When women occupy positions of influence, the technology itself shifts.
    4. Four roles, not one: Women and marginalised communities must participate as researchers, engineers, entrepreneurs and policymakers, not only as subjects in the training data.
    5. The constitutional foundation: The commitment to simultaneous inclusion continues through Digital Public Infrastructure, which provides the base for building inclusive artificial intelligence.

    Challenges to building inclusive AI

    1. Unpaid care work truncates technical careers: Time available for advanced training and long project cycles is unequal, e.g. the Time Use Survey 2019 recorded women spending 299 minutes a day on unpaid domestic work against 97 minutes for men.
    2. Device and connectivity gap precedes the skills gap: Independent access, not shared household access, determines who generates data, e.g. the National Family Health Survey 2019 to 2021 found 33.3 percent of women had ever used the internet against 57.1 percent of men.
    3. Language exclusion in model and curriculum: English dominant material and models exclude most first generation learners, e.g. Bhashini and BharatGen were set up precisely because Indian language coverage in large models was thin.
    4. Data annotation labour has no design voice: The workers who label training data are outside the decisions the data shapes, e.g. annotation work is outsourced at low wages with no representation in product design.
    5. No bias audit obligation: Automated decision systems face no statutory fairness testing requirement, e.g. the Digital Personal Data Protection Act, 2023 governs consent and processing of personal data but imposes no algorithmic audit duty.
    6. Online safety drives women off the platforms that generate data: Harassment reduces sustained participation, e.g. National Crime Records Bureau data has recorded a rising count of cyber crimes against women.
    7. Absence of sex disaggregated public datasets: Models cannot be checked for differential performance where the data does not record the split, e.g. many administrative datasets used for training carry no reliable gender field.

    Conclusion

    The central point is that the artificial intelligence pipeline is a human pipeline, and the numbers show it losing women at every stage from 43 percent of STEM graduates to 10 percent of senior AI leadership. Diverse datasets alone will not correct outputs shaped by rooms in which women are absent, so participation must extend to research, engineering, entrepreneurship and policymaking. What remains unresolved is the access gap that precedes all of it, with only 57 percent of women holding independent internet access against 72 percent of men.

  • Gene Editing’s Bold Move: Permanently Shut Down PCSK9

    Why in the News

    VERVE-102, an experimental in vivo base editing therapy delivered as a single intravenous infusion, permanently switches off the PCSK9 gene inside liver cells and cut LDL cholesterol by about 62 percent in a phase 1 trial. Cholesterol control has until now been a lifelong compliance problem, and a one time genetic change replaces that problem with a permanent, irreversible one.

    How does VERVE-102 work?

    1. What it is: VERVE-102 is not a traditional drug. It is a form of in vivo gene editing, meaning the editing is done inside the patient’s body rather than on cells removed and returned.
    2. Step 1, delivery: Genetic instructions are delivered through a single intravenous infusion.
    3. Step 2, the edit: Those instructions make a one time targeted change to the DNA inside liver cells, altering a single base in the PCSK9 gene.
    4. Step 3, the effect: The edited liver cells permanently lose the ability to produce PCSK9.
    5. Step 4, the outcome: With PCSK9 production switched off, the liver clears more LDL cholesterol from the blood, and the effect persists without repeat dosing.
    6. The stated goal: A single infusion that permanently reduces the liver’s ability to produce PCSK9, so that a one and done cholesterol treatment could eventually replace conventional medicines.

    What is LDL cholesterol?

    1. Definition: LDL (low-density lipoprotein) is called bad cholesterol because high levels make it stick to artery walls and form hard fatty deposits called plaque.
    2. Why it matters: These deposits narrow the arteries and block blood flow, which raises the risk of heart attacks and strokes.

    What is PCSK9 and why is it the target?

    1. What it is: PCSK9 is a protein involved in regulating LDL cholesterol in the blood.
    2. The natural experiment: People who naturally carry certain loss-of-function changes in the PCSK9 gene have lower LDL cholesterol throughout their lives and a lower risk of coronary heart disease.
    3. The inference: Reducing PCSK9 activity is therefore a safe and effective route to lowering cardiovascular risk.
    4. Confirmed by drugs: PCSK9 monoclonal antibodies substantially reduce LDL cholesterol and cardiovascular events, confirming the target.
    5. The limitation VERVE-102 addresses: Traditional medicines temporarily block PCSK9 or reduce its production, so their effects require continued treatment.

    What did the phase 1 trial find?

    1. LDL reduction: LDL cholesterol fell by about 62 percent in the highest dose group after four weeks.
    2. PCSK9 reduction: PCSK9 levels in that group fell by about 88 percent.
    3. Absolute fall: LDL cholesterol decreased by approximately 78 mg/dL on average.
    4. Follow up length: Some participants were followed for at least one year, and the longest follow up reached 18 months.
    5. Durability so far: The reductions in PCSK9 and LDL cholesterol were relatively stable across that period.

    How much cardiovascular risk does that reduction translate into?

    1. The established ratio: For every 1 mmol/L reduction in LDL cholesterol, cardiovascular risk falls by 20 to 22 percent.
    2. Worked case: An LDL cholesterol of 4.0 mmol/L, approximately 155 mg/dL, falling to 1.6 mmol/L is a 60 percent reduction.
    3. Effect of that case: That fall halves the patient’s cardiovascular risk.
    4. What remains unproven: VERVE-102 has not yet been shown to prevent heart attacks or strokes directly.
    5. The supporting evidence: All cholesterol lowering trials so far have shown that lower cholesterol means fewer cardiovascular events, and drugs blocking the PCSK9 protein have been shown to reduce heart attacks.

    How does it compare with the treatments already in use?

    1. Statins: Usually the foundation of treatment. They are relatively inexpensive, widely available, and supported by extensive evidence showing reductions in cardiovascular events.
    2. Ezetimibe: A cholesterol absorption inhibitor, taken orally, that works by blocking cholesterol from being absorbed in the small intestine.
    3. PCSK9 antibody medicines: They produce powerful LDL reductions and have demonstrated cardiovascular benefits, but require repeated injections.
    4. Inclisiran: It reduces PCSK9 production and can lower LDL cholesterol by roughly 50 percent, with less frequent dosing that makes long term treatment easier. It does not permanently modify DNA.
    5. The distinguishing feature of VERVE-102: Every existing option acts temporarily and must be continued. VERVE-102 makes a permanent change to DNA.

    Does permanence justify the loss of reversibility?

    1. The compliance case: Repeat prescriptions and remembering daily doses are a standing burden, and a safe one time treatment would remove that burden entirely.
    2. The unknown: This is a permanent change and the long term consequences are not yet known, so treated patients will need close observation.
    3. The reassurance from biology: Naturally occurring loss-of-function mutations of the gene exist, and people carrying them have less heart disease and live longer, which is the basis for the trial.
    4. The evidence horizon problem: An 18 month period is very different from proving that an effect will last for decades, and that requires further research.
    5. The current standing of the therapy: It is a potential future option for selected high risk patients, not a replacement for statins, ezetimibe, PCSK9 inhibitors or inclisiran.
    6. Trial breadth: More diverse trials are needed to establish whether the effect holds across populations over decades.

    Who would be considered for it first?

    1. Familial hypercholesterolemia: An inherited condition producing very high LDL cholesterol from birth, whose patients have the most to gain from a permanent reduction.
    2. Very high cardiovascular risk patients: Those whose risk is not controlled by existing therapy would be the second group.
    3. The staging logic: Beginning with these groups allows observation for problems before any wider use.
    4. What it is not yet: It is not a population level cholesterol intervention and is not positioned as one.

    Challenges to VERVE-102

    1. Irreversibility of a permanent edit: A therapy that cannot be stopped removes the physician’s ability to withdraw treatment, e.g. a statin prescription can be discontinued the day an adverse effect appears, while an edited liver cell population cannot be restored.
    2. Evidence horizon is short: Durability is established only to 18 months, e.g. statin cardiovascular outcome evidence rests on trials such as the Heart Protection Study that ran over five years in more than 20,000 participants.
    3. Delivery vector and off target risk: Gene therapy delivery carries historical safety precedent, e.g. the 1999 death of a participant in an adenoviral vector gene therapy trial in the United States halted the field for years.
    4. Cost and access: One time genetic therapies have been priced far beyond public health budgets, e.g. Casgevy, the first approved CRISPR based therapy, is priced at over two million dollars per patient in the United States.
    5. Population applicability: Early phase cohorts do not establish effect across differing lipid profiles, e.g. coronary artery disease in South Asians presents roughly a decade earlier and at lower body mass index than in western populations.
    6. Regulatory pathway for permanent somatic edits: Approval frameworks for irreversible somatic edits are still forming, e.g. India’s National Guidelines for Gene Therapy Product Development and Clinical Trials, 2019 permit somatic editing under review but bar germline editing outright.
    7. The competing benchmark is already cheap: A one time therapy must justify a large upfront price against an existing generic, e.g. statins cost a few rupees a day in India and are on the National List of Essential Medicines.

    Conclusion

    The central finding is that a permanent genetic switch off of PCSK9 through a single infusion produces LDL reductions larger than any daily medicine achieves, and that the reduction has held for 18 months. What remains unresolved is whether a permanent change is safe across a lifetime, and whether the LDL reduction converts into fewer heart attacks and strokes, neither of which the phase 1 data can answer. Until large outcome trials report, the therapy stands as an option for familial hypercholesterolemia and very high risk patients rather than a replacement for statins, ezetimibe, PCSK9 inhibitors or inclisiran.

    PYQ Relevance:

    Question (2021, GS3): “What are the research and developmental achievements in applied biotechnology? How will these achievements help to uplift the poorer sections of society?
    Linkage: Applied biotechnology is the primary field where gene editing techniques (like CRISPR) are developed to address challenges in health and agriculture, which can specifically benefit the underprivileged

  • The US Research That Helped Power China’s Robot Revolution

    Why in the News

    China’s Unitree Robotics based the designs of its most successful quadruped robots on breakthroughs financed by the United States Army Research Laboratory, according to a former United States defence technology official and three researchers involved in the programme. The findings were published openly to advance the field, and the country that funded them has no mass producer of such robots, while the company that scaled them is now on the Pentagon’s list of Chinese military companies.

    What is the Robotics Collaborative Technology Alliance?

    1. What it was: The Robotics Collaborative Technology Alliance (RCTA) was a United States Army funded research consortium that ran from 2010 to 2020.
    2. Funding body: It was financed by the DEVCOM Army Research Laboratory (ARL) alongside other military programmes.
    3. Participants: It gathered government, academic and industry researchers from the University of Pennsylvania, the Massachusetts Institute of Technology (MIT), Boston Dynamics and NASA’s Jet Propulsion Laboratory, among other research institutions.
    4. Lead commercial partner: General Dynamics Land Systems, the Michigan based defence manufacturer that builds Abrams M1 tanks.
    5. Publication practice: The programme’s findings were published openly to stimulate progress in the field, which is common practice in publicly funded research.

    What is an actuator?

    1. Definition: An actuator is the component that converts electrical power into the movement of a robot’s joint, combining a motor, a gearbox and control electronics.
    2. Why it decides the design: Actuator torque, weight and cost set what a legged robot can do and what it costs, which is why an actuator design published in detail is effectively a manufacturing blueprint.

    What is DARPA?

    1. Definition: The Defense Advanced Research Projects Agency (DARPA) is the United States Department of Defense agency that funds high risk, early stage technology research with potential military application.
    2. Role here: DARPA financed the MIT laboratory work on which the later Army funded University of Pennsylvania advances were built.

    How did Army funded research travel from the laboratory to a Chinese manufacturer?

    1. 2016, motors moved into the legs: University of Pennsylvania researchers eliminated heavy central gearboxes and placed motors in the robots’ legs, which improved the machine’s ability to sense and respond to terrain.
    2. Built on DARPA funded work: That advance built on the MIT laboratory’s earlier work financed by DARPA.
    3. 2019, the Mini Cheetah: The MIT laboratory presented the Mini Cheetah, adding strength and the ability to perform backflips to the University of Pennsylvania features.
    4. The thesis that carried the design: Months earlier, an MIT researcher published a master’s thesis detailing the Mini Cheetah’s actuators.
    5. Copies within six months: Chinese firms were manufacturing actuator copies purchasable on the online retailer AliExpress within six months of that publication.
    6. Dimensional match: The dimensions of Unitree’s popular Go series were almost identical to the millimetre to the Mini Cheetah, per the MIT researcher involved in developing it.
    7. The scale product: The Army funded project became the first Unitree robot that had any kind of scale, per a former University of Pennsylvania researcher on the programme.
    8. 2023, the price point: Unitree’s $1,600 Go2 model, launched in 2023, let the company rapidly dominate the global quadruped robot market. Unitree was founded in 2016, three years before the Mini Cheetah was presented.

    What does the scale gap look like in numbers?

    1. Unitree’s volumes: The company sold more than 5,500 humanoids and 18,000 quadrupeds last year, per company filings.
    2. Valuation: Unitree is valued at about $9 billion ahead of its stock market debut, and its Shanghai initial public offering drew frenzied demand.
    3. United States output: No United States company has mass produced such robots, including Tesla, which has displayed prototypes of its Optimus humanoid for years.
    4. A different technology base: Boston Dynamics’ 2019 canine robot Spot used different technology from the Army funded line.
    5. The domestic commercialiser: Ghost Robotics commercialised the United States breakthroughs and supplies United States special forces with ruggedised robots, but its production is small and costly compared with Unitree’s.

    Why did the United States not capture the market it created?

    1. Capital preference: United States venture capital prefers high return software startups, which a robotics analyst described as a dropped ball on commercialising domestic research.
    2. Missing industrial inputs: The United States excels in innovation and software development but needs the capital, industrial base, highly skilled workforce and parts supply chains to scale up breakthroughs, per the dean of Penn Engineering.
    3. No production support after the research ended: The Army funded project kick-started the United States quadruped industry, but without support for large scale production Unitree consumed that space, per the former Army Research Laboratory director who oversaw it.
    4. Price competition threatens incumbents: Boston Dynamics argued in a Congressional hearing that China’s low pricing would drive United States firms out of the market.
    5. Asymmetry of actors: The contest is between private United States companies and a coordinated Chinese national strategy, per the founder of Ghost Robotics.

    What structural advantages does China’s manufacturing model carry?

    1. A stated ten year industrial plan: In 2015, China’s leadership set out a ten year plan to lead industries including green energy, electric vehicles and robotics.
    2. Tolerance for losses: Capital has since been channelled into risky bets on low margin advanced manufacturing.
    3. Critical minerals dominance: Rapid reverse engineering draws on China’s dominance in refining the critical minerals needed for magnets in robotics applications.
    4. Supplier density: Motors, gears and the artificial muscles known as actuators are supplied by a dense cluster of firms near Unitree’s base in Hangzhou.
    5. The pattern is not new: Backed by subsidies and component factory clusters, Chinese firms have already seized market share in solar panels, drones, electric vehicles and quantum communications, many of them first developed in the United States with government or military backing.

    How have United States authorities responded?

    1. June, Pentagon listing: The Pentagon added Unitree to its list of Chinese military companies, calling it a contributor to the Chinese defence industrial base.
    2. Effect of the listing: The designation falls short of a sanction but limits the United States military’s future use of Unitree technology.
    3. July, import ban: The Federal Communications Commission (FCC) banned imports of future models of foreign made humanoid and quadruped robots, including those from Unitree.
    4. Chinese response: China has threatened to retaliate against the FCC ban, and its Washington embassy accused the United States of abusing administrative power and of market distortion and unilateral bullying.
    5. Company position: Unitree has said its robots are for civilian use, and one Unitree robot has been shown on Chinese state television armed and accompanying People’s Liberation Army troops on an exercise.

    Should publicly funded research be published openly when a rival scales it faster?

    1. Nothing was taken improperly: Unitree did nothing underhanded in using the Army research, since the programme’s findings were published openly by design.
    2. The funder’s own defence: The Army Research Laboratory stated the research strengthened the broader United States robotics ecosystem and informed subsequent work across government and the private sector.
    3. Researchers reject secrecy: None of the United States robotics researchers involved advocated keeping such government financed research secret, arguing publication is important to scientific and technological advancement.
    4. Their alternative prescription: Policymakers should focus on enabling companies to commercialise such advances quickly enough to compete.
    5. Trade barriers are insufficient: Most experts supported the import ban but said the policy alone cannot build an industry capable of catching up, since it would take more than trade barriers to boost robotics manufacturing.

    Challenges to commercialising publicly funded robotics research

    1. Open publication transfers advantage immediately: A detailed design published for scientific benefit is also a manufacturing specification, e.g. actuator copies drawn from the Mini Cheetah thesis were on sale within six months.
    2. Hardware startups cannot match software returns: Venture funding avoids capital heavy, low margin manufacturing, e.g. Ghost Robotics supplies United States special forces but produces at small volume and high cost.
    3. No domestic component cluster: Motors, gears and actuators must be sourced abroad when no local supplier base exists, e.g. the supplier density around Hangzhou has no United States equivalent.
    4. Critical mineral chokepoint: Magnet grade rare earths are refined almost entirely in one country, e.g. China’s April 2025 export controls on rare earth magnets disrupted automotive and electronics production worldwide.
    5. Trade restrictions do not create capacity: A ban removes a supplier without creating a substitute, e.g. the FCC July ban covers future imported models while no United States firm mass produces quadrupeds.
    6. Dual use ambiguity complicates policy: A civilian product can appear in a military role without the manufacturer changing its position, e.g. an armed Unitree robot appeared with People’s Liberation Army troops on state television while the company maintains its robots are civilian.
    7. Price competition ends domestic production: Cheaper imports remove the volume a domestic manufacturer needs to survive, e.g. Boston Dynamics warned a Congressional hearing that China’s pricing would drive United States firms out.

    Conclusion

    Publicly funded, openly published United States military robotics research became the design basis for the world’s largest quadruped robot manufacturer, based in China. The failure was not in the research or in its disclosure but in the absence of capital, supplier depth and skilled manufacturing capacity to commercialise it domestically. Export bans and military company listings restrict a competitor’s access without supplying any of those three, so the structural gap remains open.

    Question (2024, GS2): “The West is fostering India as an alternative to reduce dependence on China’s supply chain and as a strategic ally to counter China’s political and economic dominance. Explain this statement with examples.

    Linkage: This touches upon the global strategic response to China’s “revolution” in manufacturing and technology, highlighting the shift to move away from Chinese-dominated supply chains.

  • Draft rules under the SHANTI Act could favour Russia’s Rosatom in India’s nuclear opening

    Why in the News

    Draft rules issued by the Department of Atomic Energy under the Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India (SHANTI) Act require any foreign nuclear technology brought into India to be design certified by the regulator in its country of origin and already operational there or in another foreign country. Only two Small Modular Reactors are operational anywhere in the world, so a clause written as a safety filter narrows India’s field of eligible suppliers to the one country that already has an operating unit.

    Mentor’s Comment

    A proven technology test is the most defensible condition a regulator can write. It is also the condition that most reliably locks out every new entrant, because nothing can be operational before someone allows it to operate somewhere first.

    What is the SHANTI Act?

    1. Full name: The Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India Act, referred to as the SHANTI Act.
    2. Function: It is the statute under which India’s expansion of nuclear power generation is being governed, including the terms on which foreign nuclear technology may be sourced for an Indian plant or reactor.
    3. Rule making authority: The Department of Atomic Energy (DAE) frames the subordinate rules under the Act, and has now issued them in draft.
    4. Operative clause in the draft rules: Foreign nuclear technology sourced for a nuclear power plant or reactor in India must mandatorily carry design certification or approval from the regulatory body in its country of origin, and must already be operational there or in another foreign country.

    What is a Small Modular Reactor?

    1. Definition: A Small Modular Reactor (SMR) is an advanced nuclear reactor with about one third the generating capacity of a conventional large power reactor, built from factory made modules rather than site fabricated components.
    2. Intended use: SMRs are aimed at supplying clean electricity to remote regions with limited grid infrastructure and to individual industrial enterprises.
    3. India’s interest: India is examining SMRs for localised applications such as energy hungry data centres, and for scaling up baseload capacity quickly.

    What do the draft rules actually require of a foreign supplier?

    1. Home regulator certification: The design must be certified or approved by the regulatory body of the technology’s country of origin.
    2. Prior operating record: The technology must already be operational in that country or in another foreign country.
    3. Cumulative condition: Both tests must be met together, so a design certified but not yet built fails the rule, and a demonstration unit without home regulator certification also fails it.
    4. Practical filter: The clause screens out first of a kind designs, which is the entire category most SMR developers currently sit in.

    What does the global SMR field look like?

    1. Russia, Akademik Lomonosov: A floating power unit with two modules of 35 MWe that began commercial operation in May 2020. It is a non self propelled power barge docked at Pevek harbour, supplying heat to the Arctic port town and electricity to the regional grid, and is the world’s northernmost nuclear power plant.
    2. China, HTR-PM: A demonstration project grid connected in December 2021 that started commercial operations in December 2023, the second of the two SMRs operational globally.
    3. United States, Holtec International: The New Jersey based developer’s SMR is still in the design certification phase and is yet to be cleared by its domestic regulator.
    4. United Kingdom, Rolls-Royce SMR: Also in the design certification phase, with no operating unit anywhere.
    5. United States, GE-Hitachi BWRX-300: A boiling water reactor derived SMR, likewise awaiting domestic regulatory clearance.
    6. What the set demonstrates: Only Russia and China clear the operational test today, and Russia is the only country in the world with expertise in floating nuclear power solutions.

    What is Russia already positioned to supply in India?

    1. Existing build: Russia is already constructing conventional nuclear projects in India and holds a lead in the nascent SMR field.
    2. Kudankulam: The Kudankulam Nuclear Power Project (KKNPP) in Tamil Nadu is India’s largest nuclear power station and the flagship project of Russian and Indian energy cooperation. Units 1 and 2 use Russia’s earlier VVER-1000 light water reactors, where water cools the reactor, and are connected to the national grid supplying south India.
    3. Serial construction pitch: A key negotiating point from the Russian side is serial construction of high capacity units of Russian design in India based on the new generation VVER-1200 reactor models, with technical specifications being proposed by Russia.
    4. SMR pitch: Rosatom State Corporation has made a strong pitch for deploying its SMRs for targeted applications in India, and construction of SMRs of Russian design in India is under discussion.
    5. Floating solutions: In April 2024, Rosatom presented its Indian partners with information on its floating nuclear power solutions.
    6. Bilateral track: Progress on Kudankulam and the SMR proposal was reviewed at a working meeting in Mumbai on 10 November between the Chairman of the Department of Atomic Energy and the Director General of Rosatom.

    Why does cost also point the same way?

    1. Indigenous benchmark: India’s indigenous pressurised heavy water reactors (PHWRs) cost about Rs 18 crore per MW-electric.
    2. Russian comparison: Russian reactors are estimated at about Rs 34 crore per MW-electric, which industry insiders describe as only marginally more expensive.
    3. Western comparison: Light water reactors offered by French and United States companies are significantly more expensive than India’s indigenous PHWRs.
    4. Where the cost sits: Fuel accounts for a relatively small share of the overall cost of nuclear generation, so the capital number dominates.
    5. Financing and time: High upfront capital cost remains the key challenge for new projects, and financing costs and the length of the construction period are critical determinants of the final cost of nuclear power.

    What are the other major changes in India’s nuclear framework?

    1. Change to an existing monopoly: The reform track opens nuclear power generation beyond the exclusive preserve of state owned entities, which the Atomic Energy Act, 1962 had reserved for the government.
    2. Change to an existing liability regime: The Civil Liability for Nuclear Damage Act, 2010, whose Section 17(b) gives the operator a right of recourse against the supplier, is part of the same reform track because that provision is the standing deterrent for foreign vendors.
    3. New institutional target: A Nuclear Energy Mission for Viksit Bharat carries an outlay of Rs 20,000 crore for research and development on Small Modular Reactors, with at least five indigenously designed SMRs targeted to be operational by 2033.
    4. New capacity goal: A national target of 100 GW of nuclear capacity by 2047 anchors the entire framework, against present installed capacity of under 9 GW.
    5. New subordinate rules: The draft rules now released are the first set of subordinate legislation under the SHANTI Act governing sourcing of foreign nuclear technology.

    Does a proven technology test buy safety at the cost of competition?

    1. The case for the clause: A design already certified and operating abroad carries demonstrated safety performance, which is the strongest assurance a regulator can demand before a first Indian deployment.
    2. The cost of the clause: Almost every SMR developer is in the design certification phase, so a rule keyed to operating status excludes the field rather than ranking it.
    3. Competition effect: With Holtec, Rolls-Royce SMR and the GE-Hitachi BWRX-300 all outside the gate, price discovery for Indian projects narrows to one supplier’s quotation.
    4. Reciprocity problem: India’s own first of a kind designs have no operating record either, so a mirror clause applied abroad would keep Indian reactors out of foreign markets.
    5. Strategic dependence: Serial construction of VVER-1200 units plus SMR supply from the same country deepens a single supplier relationship in a sector with sixty year asset lives.

    Challenges to the design certification and prior operation clause

    1. The eligible field collapses to two countries: Only Russia and China have an operating SMR, e.g. Akademik Lomonosov since May 2020 and HTR-PM since December 2023, so every other developer is excluded until its home regulator acts.
    2. First of a kind Indian designs get no reciprocal entry: An indigenous SMR has no operating unit anywhere, e.g. the Bharat Small Modular Reactor of about 200 MWe exists only on paper, so a comparable foreign rule would bar it abroad.
    3. Supplier liability still deters western vendors independently of this clause: Section 17(b) of the Civil Liability for Nuclear Damage Act, 2010 has kept projects frozen, e.g. the Jaitapur project with French supply has been under negotiation since 2010 without a single unit built.
    4. Construction period risk dominates project cost: Long build times inflate financing cost, e.g. Kudankulam Unit 1 was sanctioned in 1988 and reached criticality only in 2013.
    5. Fuel supply remains external for safeguarded reactors: Imported uranium underpins the light water fleet, e.g. India sources uranium from Kazakhstan, Uzbekistan, Russia and Canada under Nuclear Suppliers Group waiver arrangements.
    6. Local acceptance and land acquisition delay siting: Public opposition has stalled commissioning, e.g. protests at Kudankulam through 2011 and 2012 delayed the first unit by over a year.
    7. SMR economics depend on serial factory production: A handful of units cannot amortise a module factory, e.g. Pevek’s barge served a single Arctic town, which is not a template for grid scale Indian demand.

    Conclusion

    The rules under the SHANTI Act are at the stage of a draft released by the Department of Atomic Energy for public comment, and the operative clause requires foreign nuclear technology to be design certified in its country of origin and already operational there or abroad. The next milestone is the close of the comment window on 4 September 2026, after which the rules are to be finalised and notified. As drafted, the clause leaves Rosatom as effectively the only qualifying SMR supplier, with Holtec International, Rolls-Royce SMR and the GE-Hitachi BWRX-300 all still in design certification.

  • First talks begin on retailing E10 petrol alongside E20 amid the blending row

    Why in the News

    Early exploratory discussions have begun within the government and the fuel industry on whether E10 petrol can be retailed alongside E20, which is currently the only standard petrol variant sold across the country. The trigger is a policy success that has produced a consumer problem: India reached 20 percent ethanol blending five years ahead of the original deadline, which pushed the entire retail network onto a fuel that most vehicles on the road were never certified for. The question now is whether a national fuel supply chain built for a single base grade can be reopened to two.

    What is the Ethanol Blended Petrol (EBP) Programme?

    1. About: The Ethanol Blended Petrol Programme requires oil marketing companies to blend ethanol into petrol at a mandated percentage before sale, so that a share of transport fuel demand is met from domestically produced ethanol.
    2. Administering ministry: Run by the Ministry of Petroleum and Natural Gas, with the Ministry of Road Transport and Highways on vehicle compatibility and the Department of Food and Public Distribution on feedstock supply.
    3. Policy basis: Formalised under the National Policy on Biofuels, 2018, which sets the indicative blending target and defines permitted feedstocks.
    4. Objectives: Reduce crude oil import dependence, cut foreign exchange outgo, provide an assured market for surplus sugarcane and foodgrain, and lower tailpipe carbon monoxide and hydrocarbon emissions.
    5. Beneficiaries: Sugarcane and maize farmers, sugar mills and distilleries, and vehicle owners through the retail fuel price.
    6. Achievement: India reached 20 percent ethanol blending in petrol in 2025, five years ahead of the original target, and the milestone has been credited with displacing about 310 lakh tonnes of crude and saving roughly Rs 1.9 lakh crore in foreign exchange.

    What is E20 petrol?

    1. Composition: E20 is a blend of 80 percent petrol and 20 percent ethanol by volume.
    2. Current status: It is the only standard petrol variant sold across the country, and a notification of 17 February 2026 requires all States and Union Territories to sell E20 at a minimum Research Octane Number of 95 from 1 April 2026.

    What is E10 petrol?

    1. Composition: E10 is a blend of 90 percent petrol and 10 percent ethanol by volume.
    2. Why it is at issue: Older vehicles, particularly two wheelers, were certified for E10 petrol, and E10 was the base retail grade until the network shifted entirely to E20.

    What are Bharat Stage 6 phase two norms?

    1. Definition: Bharat Stage 6 phase two is the second stage of India’s sixth generation vehicle emission standard, which tightened real driving emission and on board diagnostic requirements for vehicles manufactured from April 2023.
    2. Relevance here: Full E20 material compatibility was mandated under these norms, which is why April 2023 is the dividing line between compliant and non compliant vehicles.

    Components of the Ethanol Blended Petrol Programme, by lifecycle stage

    Component and official instrument (lifecycle stage)Intervention and official numbersPrimary stakeholder
    Permitted feedstock list under the National Policy on Biofuels, 2018 (feedstock and input)Allows ethanol from sugarcane juice, sugar and sugar syrup, B heavy molasses, C heavy molasses, damaged foodgrain, maize and surplus rice; no per unit figure attaches to this componentSugarcane and maize farmers, sugar mills
    Ethanol Interest Subvention Scheme (financing)Interest subvention on loans for setting up new distilleries and expanding existing molasses based and grain based capacity; the release states the subvention period, not a fixed outlay per plantDistilleries and sugar mills
    Pradhan Mantri JI-VAN Yojana (plant or asset build, advanced biofuels)Viability gap funding for second generation ethanol projects using lignocellulosic feedstock such as agricultural residueTechnology developers and oil marketing companies
    Administered ethanol procurement price (production and pricing)Differential ex mill prices fixed by the Cabinet Committee on Economic Affairs for each feedstock route, highest for the sugarcane juice route and lowest for the C heavy molasses routeSugar mills and distilleries
    Long term offtake agreements by oil marketing companies (distribution and evacuation)Assured purchase of tendered ethanol volumes for each ethanol supply year, which runs from November to OctoberOil marketing companies and distilleries
    E20 as the base retail grade (offtake and demand)20 percent blending achieved in 2025, five years ahead of the 2030 target; minimum Research Octane Number of 95 required for E20 sold from 1 April 2026Vehicle owners

    What has triggered the rethink on a lower blend?

    1. The consumer complaint: Opposition to E20 has come from several quarters, with claims of notable reduction in mileage and engine component wear in older vehicles whose engines were not designed for higher ethanol blends.
    2. The government’s position on mileage: The drop in mileage in older vehicles would be 3 to 5 percent at most, and would be outweighed by E20’s benefits as a superior fuel.
    3. The government’s position on engine damage: Claims that E20 could damage engine components have been consistently rejected.
    4. The parliamentary figure: A reduction in fuel economy of 2 to 6 percent depending on vehicle category and vintage has been stated in Parliament.
    5. The absence of choice: Questions have been raised on why motorists are not offered a choice between pure petrol, E10 and E20, and some Opposition leaders have taken up the same point.
    6. The first official break: A co authored opinion article published on 17 August 2026 by the Chief Economic Adviser called for a lower ethanol petrol blend such as E10 to be made available alongside E20. The views were personal, and it is the first instance of a high ranking government official publicly calling for more petrol options.
    7. The stated rationale for restoring E10: Restoring a lower blend at the pumps alongside the option to buy E20 would calm public concern, lower total ethanol use instead of raising it, and protect the existing fleet while the retrofit programme catches up.

    Which vehicles are actually affected?

    1. The compliance line: Petrol vehicles manufactured and sold after April 2023 are considered fully E20 compliant, since this was mandated under Bharat Stage 6 phase two emission norms.
    2. What that leaves out: All vehicles currently being sold are E20 compliant, but most vehicles sold prior to 2023 are not.
    3. The scale of the gap: Of about 310 million petrol vehicles in use, only about 70 million built after April 2023 carry factory certified E20 compatibility.
    4. How long the legacy fleet stays on the road: The permissible life of a petrol vehicle in the National Capital Region is 15 years, which means cars manufactured in 2022 can be in use until 2037 under current norms.
    5. The most exposed category: The discussions were initiated specifically with older vehicles, particularly two wheelers, that were certified for E10 petrol, in mind.

    Why is retailing E10 alongside E20 a logistical problem?

    1. A parallel supply chain: Retailing E10 and E20 simultaneously requires a complex, parallel supply chain stretching from refineries to pumps.
    2. The volume distinction: Two or three premium petrol variants already coexist with the base fuel, and their consumption is minuscule compared with base petrol, so offering small volumes alongside E20 is manageable. Retailing E10 in large volumes is a different problem, since the existing chain has shifted entirely to E20.
    3. Underground storage is the binding constraint: Most retail outlets use single or dual underground tanks, so adding E10 alongside E20 would require replacing them with a dual tank system for petrol at thousands of pumps.
    4. Dispensing equipment: Outlets would additionally need separate dispensers for the base fuel.
    5. The government’s July position: Offering multiple grades of base fuel across the country would create an “enormous logistical challenge”, raise costs and reduce operational efficiencies in India’s complex fuel retail network.
    6. The sunk investment argument: The shift to E20 required massive investments already made, and reverting to a lower blend would not be prudent.
    7. Where the talks stand: The discussions are described as “preliminary” and as “keeping the older vehicles in mind”, are being held on technical and non technical aspects of the fuel retail supply chain, and no concrete conclusions have been arrived at.

    Where does the blending success pull against the consumer?

    1. A target met is not a fleet protected: Reaching 20 percent blending five years early moved the entire retail network onto a fuel that roughly four fifths of the petrol fleet was never certified for.
    2. The choice question has no cheap answer: Restoring choice requires physical infrastructure at thousands of outlets, so the demand for choice and the cost of supplying it move in opposite directions.
    3. Lower blend means lower ethanol demand: Restoring E10 would lower total ethanol use, which cuts against the assured offtake that distilleries and sugar mills invested against.
    4. Retrofit is the alternative to reversal: Protecting the existing fleet through a retrofit programme leaves E20 intact but transfers the cost from the fuel network to the vehicle owner.
    5. The time horizon is fixed by vehicle life: With 2022 vehicles running until 2037, the mismatch persists for over a decade regardless of which route is chosen.

    Challenges to the Ethanol Blended Petrol Programme

    1. Legacy fleet incompatibility: The bulk of vehicles on the road predate the E20 mandate. e.g. of about 310 million petrol vehicles in use, only about 70 million built after April 2023 carry factory certified E20 compatibility.
    2. Fuel economy loss: Ethanol has lower energy density than petrol, so the same volume delivers fewer kilometres. e.g. the government puts the drop at 3 to 5 percent in older vehicles, and a range of 2 to 6 percent by category and vintage has been stated in Parliament.
    3. Water footprint of feedstock: Sugarcane based ethanol carries a heavy irrigation demand in water stressed regions. e.g. sugarcane in Maharashtra’s Marathwada draws heavily on groundwater while occupying a small share of the cropped area.
    4. Food versus fuel diversion: Grain routed to distilleries competes with food and feed use. e.g. surplus rice from the Food Corporation of India and maize have been diverted to ethanol, tightening maize supply for the poultry feed industry.
    5. Fuel quality disputes: Contamination claims undermine public confidence in the blend. e.g. chloride and moisture contamination claims were raised against E20 in 2026 and rejected by state oil marketing companies after pan India testing.
    6. Supply chain rigidity: The retail network has been optimised for a single base grade. e.g. restoring E10 would require dual underground tanks and separate dispensers at thousands of outlets.
    7. Geographic concentration of distillery capacity: Ethanol production clusters in a few States, requiring long haul movement. e.g. Uttar Pradesh, Maharashtra and Karnataka account for the bulk of capacity, so deficit States in the east and north east draw on long distance tanker movement.
    8. Material compatibility in older engines: Ethanol acts on certain elastomers and metals used in pre 2023 fuel systems. e.g. rubber fuel lines and aluminium components in older two wheelers were specified against E10, not E20.

    What do other countries’ dual grade fuel markets show?

    1. Brazil: Mandates a high anhydrous ethanol blend in gasoline, raised to 30 percent in 2025, and sells hydrous ethanol as a separate grade at the same forecourt for its flex fuel fleet. The design feature is that the vehicle fleet was converted to flex fuel first, and the fuel grade followed.
    2. United States: E10 is the de facto base gasoline, with E15 and E85 offered at selected stations rather than universally. The design feature is that higher blends are optional and geographically limited, so no station is forced to carry every grade.
    3. Thailand: Retails gasohol E10, E20 and E85 simultaneously through its state fuel retailer network. The design feature is a differential excise structure that prices higher blends below lower ones, so demand shifts by price rather than by mandate.
    4. Germany: Sells Super E10 alongside a Super E5 protection grade, retained specifically for vehicles not certified for the higher blend. The design feature is the legal obligation on larger stations to keep the lower blend available, which is the arrangement now being examined in India.
    5. France: Retails SP95-E10 alongside SP98, with the lower ethanol grade preserved for older vehicles, and publishes a vehicle compatibility list so owners can check before filling. The design feature is that consumer information was issued as a public compatibility register, not left to manufacturers.

    Conclusion

    India met its 20 percent blending target five years early, and the cost of that speed is a national retail network carrying a single fuel grade that most of the vehicle fleet was never certified for. Discussions on retailing E10 alongside E20 are at a preliminary stage with no conclusions reached, and the binding constraint is physical, being underground tank and dispenser capacity at thousands of outlets rather than ethanol availability. The next development to watch is whether the government converts the current exploratory talks into a formal feasibility study, since the mismatch persists until the pre 2023 fleet ages out around 2037.

  • PM CARES corpus hits all-time high as utilisation collapses to Rs 87.85 lakh

    Why in the News

    Audited statements of the PM CARES Fund for 2023-24 and 2024-25, both published only on 17 August 2026 after a two year delay, show the closing balance at an all time high of Rs 8,452.06 crore while spending fell to a five year low of Rs 87.85 lakh. A fund created to disburse relief in emergencies is now accumulating faster through interest than it is spending, which raises the question of what a relief fund is for when it does not disburse.

    What is the PM CARES Fund?

    1. Full name: The Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund, created on 27 March 2020, days after the national lockdown was imposed.
    2. Legal form: A public charitable trust registered under the Registration Act, 1908, rather than a statutory or constitutional fund.
    3. Composition of the trust: The Prime Minister is the ex officio chairman, and the Defence Minister, Home Minister and Finance Minister are ex officio trustees.
    4. Sources of money: Voluntary domestic donations, foreign contributions, interest earned on bank balances and fixed deposits, and refunds returned by implementing agencies.
    5. Position on transparency: The Fund is not treated as a public authority under the Right to Information Act, 2005, and does not accept audit by the Comptroller and Auditor General of India, being audited instead by an independent chartered accountant.

    What is a public charitable trust?

    1. What it is: A public charitable trust is a private legal arrangement in which trustees hold property for a charitable purpose benefiting an indeterminate section of the public, created by a trust deed and registered under the Registration Act, 1908.
    2. Consequence of the form: It is not created by statute and does not draw on the Consolidated Fund, so parliamentary appropriation control and constitutional audit do not attach to it automatically.

    What is a refund from an implementing agency?

    1. What it is: A refund from an implementing agency is money previously released to an executing body for a sanctioned purpose and returned unspent or unutilised to the fund.
    2. Why it matters here: A refund inflates receipts without any relief being delivered, so a year with high refunds and low disbursement records activity that produced no outcome.

    What do the 2024-25 audited statements show?

    1. Total contributions: Contributions fell to Rs 479.96 crore, comprising Rs 479.04 crore domestic and about Rs 92 lakh foreign, down about 30 percent over the previous year.
    2. Interest income: The Fund received Rs 475.14 crore as interest, of which Rs 469.37 crore came from fixed deposits and Rs 5.76 crore from regular accounts.
    3. Other receipts: About Rs 13.49 lakh was received as refund of tax deducted at source on fixed deposit interest, and Rs 324.65 crore came back as refund from implementing agencies.
    4. Total income: Total income grew to Rs 1,279.9 crore, up 41 percent over the previous year.
    5. Total spending: Total spending fell to Rs 87.85 lakh, comprising Rs 87.84 lakh on the PM CARES for Children Scheme and Rs 451 in bank and short message service charges.
    6. Utilisation ratio: The Fund spent 0.01 percent of its closing balance, and between March 2020 and 31 March 2025 it spent less than one fifth, or 18.1 percent, of its total income.
    7. Closing balance: The closing balance touched an all time high of Rs 8,452.06 crore, 17.83 percent above the previous year’s Rs 7,173.03 crore.
    8. Two year corpus growth: The corpus grew 25.8 percent between 2022-23 and 2024-25, from about Rs 6,722 crore to about Rs 8,453 crore.

    Why has the corpus grown while spending collapsed?

    1. Interest now rivals donations: In 2024-25 interest income of Rs 475 crore was almost the same as donations of Rs 480 crore, so the Fund grows without any fresh public contribution.
    2. The instrument shift: The corpus was moved from savings bank accounts to fixed deposits in 2023-24, which is the immediate reason for the jump in interest earnings.
    3. Refunds outweigh disbursement: In 2024-25, Rs 324.65 crore came back from implementing agencies while only Rs 0.87 crore went out, so money returning exceeded money spent by a factor of over three hundred.
    4. Inflow consistently exceeds outflow: Since 2022-23 the money flowing in through donations and interest has far exceeded the money disbursed in every single year.
    5. Spending narrowed to one scheme: Almost the entire 2024-25 outgo went to the PM CARES for Children Scheme, so the Fund has effectively ceased to operate as a general emergency relief instrument.

    Why does a record corpus in a relief fund raise a governance question rather than settle one?

    1. Both readings are defensible: A large unspent corpus can be read as prudent reserve building for a future emergency, or as money raised on an emergency appeal and then withheld from that emergency.
    2. The appeal was purpose specific: Donations were solicited during a public health emergency, so accumulation departs from the stated purpose on which consent to donate was given.
    3. Scale of the mismatch: Utilisation of 0.01 percent of an available Rs 8,452 crore cannot be explained by a shortage of relief needs during a period of recurring floods, cyclones and heat emergencies.
    4. Refunds without explanation: Neither the identity of the implementing agencies, nor the nature of the payments, nor the reasons for the Rs 324 crore of refunds has been disclosed, so it is not known whether refunds followed faulty procurement.
    5. The oversight gap widens with the corpus: The larger the accumulation, the weaker the case for keeping the Fund outside both the Right to Information Act and constitutional audit.
    6. No competing claim is resolved: A public charitable trust is legally entitled to build a corpus, and the objection is not to legality but to the absence of any published disbursement policy that would justify the accumulation.

    What transparency questions remain unanswered?

    1. Sources of funds: No information is available on who the donors are, including donors of the foreign contributions the Fund has received.
    2. Identity of implementing agencies: The agencies that received and refunded money have not been named.
    3. Purpose of refunded allocations: The purpose for which the refunded money was originally allotted has not been disclosed, leaving open whether refunds followed faulty equipment supply.
    4. Missing audit annexures: The explanatory notes accompanying the audit report were not uploaded alongside the statements.
    5. Delay in publication: Statements for 2023-24 and 2024-25 were both released only on 17 August 2026, after a failure to upload annual disclosures since 2022-23, a lapse publicly flagged on 8 August 2026.
    6. Pattern of delay: The publication dates run 19 August 2020 for 2019-20, 8 February 2022 for 2020-21, 1 November 2022 for 2021-22, 28 December 2024 for 2022-23, and 17 August 2026 for the last two years together, computed from the Internet Archive and the Fund portal’s own metadata.
    7. Auditor change: The prolonged delay in releasing statements coincided with the Centre changing the Fund’s auditors.
    8. Statutory position: The Fund continues to refuse to submit itself to the Right to Information Act, 2005.

    Challenges to the PM CARES Fund

    1. Contested public authority status: The Fund’s exclusion from the Right to Information Act, 2005 rests on it being a trust rather than a body owned or controlled by government, a characterisation litigated repeatedly, e.g. the Delhi High Court has heard a series of petitions since 2020 seeking a declaration that the Fund is a public authority.
    2. Absence of constitutional audit: Money raised in the name of the highest offices of the State is audited by a private chartered accountant rather than the Comptroller and Auditor General, e.g. the National Disaster Response Fund, its statutory counterpart, is audited by the CAG under the Disaster Management Act, 2005.
    3. Donor disclosure gap: Neither domestic nor foreign donors are identified, so contributions from entities regulated by the same government cannot be scrutinised for conflict of interest, e.g. central public sector undertakings routed corporate social responsibility funds to the trust in 2020-21.
    4. Corporate social responsibility diversion: Recognition of contributions as qualifying corporate social responsibility spending channels statutory corporate obligations into an unaudited pool, e.g. the Ministry of Corporate Affairs clarified in March 2020 that PM CARES contributions count under Schedule VII of the Companies Act, 2013.
    5. Duplication with existing funds: The Fund overlaps the pre existing Prime Minister’s National Relief Fund and the statutory National Disaster Response Fund without a stated division of purpose, e.g. both the older relief fund and PM CARES made COVID-19 disbursements in the same period.
    6. Idle corpus with no disbursement policy: No published criteria govern when and to whom money is released, so a record balance can coexist with unmet relief demand, e.g. Rs 8,452 crore stood unspent while only Rs 87.85 lakh was disbursed in 2024-25.
    7. Refund opacity as an accountability risk: Large refunds from unnamed agencies can conceal procurement failure rather than reflect prudent recovery, e.g. Rs 324.65 crore was refunded in 2024-25 with no explanation of the original allotment.
    8. Delayed disclosure defeats scrutiny: Financial statements published two years late are of limited use to Parliament or the public, e.g. 2023-24 and 2024-25 accounts were both released on the same day in August 2026.

    Conclusion

    The PM CARES Fund now grows chiefly on interest from fixed deposits and on money returned by unnamed implementing agencies, while its actual relief spending has fallen to Rs 87.85 lakh against a corpus of Rs 8,452.06 crore. The accumulation is legally permissible for a public charitable trust and remains unexplained as public policy, because no disbursement criteria and no donor or agency disclosure accompany it. The gap will only close when the Fund is placed within either the Right to Information Act or constitutional audit, and until then each annual statement will restate the same unanswered questions.

  • Carbon Tax War? BRICS Challenges the EU

    Why in the News

    Environment and climate Ministers of the BRICS grouping adopted a joint statement opposing “unilateral, punitive, discriminatory and protectionist” climate measures, naming the European Union’s Carbon Border Adjustment Mechanism (CBAM) among them. The statement lands in the first year in which CBAM actually charges money at the border, which converts an internal European climate instrument into a live trade cost for developing country exporters. The same document demands that developed countries deliver the adaptation finance they have already promised, linking the objection on trade to a claim on money.

    What is the Carbon Border Adjustment Mechanism (CBAM)?

    1. Definition: CBAM is an import levy on carbon intensive goods entering the European Union, priced against the emissions embedded in their production. It makes an importer pay for the carbon released abroad at the same price a European producer pays at home.
    2. Mechanism: Importers must purchase and surrender CBAM certificates matching the emissions embedded in each consignment. The certificate price is tied to the European carbon allowance price.
    3. Covered sectors: The mechanism applies to importers of iron and steel, aluminium, cement, fertilizers, hydrogen and electricity, the six sectors treated as most exposed to carbon costs.
    4. Timeline: CBAM was rolled out on 1 October 2023 with a reporting only phase, during which importers declared embedded emissions without paying. It entered its definitive phase from 1 January 2026, when the obligation to buy and surrender certificates began.
    5. Stated purpose: The European Union presents the measure as a means of preventing carbon leakage and of ensuring that its own climate ambition does not simply displace production abroad.

    What is carbon leakage?

    1. Definition: Carbon leakage is the shifting of carbon intensive production outside a jurisdiction because that jurisdiction’s climate policy raises production costs there and not elsewhere. Global emissions do not fall, they relocate.
    2. Why it drives border measures: A domestic carbon price without a border charge leaves domestic producers competing against untaxed imports. The border charge is the instrument used to close that gap.

    What is common but differentiated responsibilities and respective capabilities (CBDR-RC)?

    1. Definition: CBDR-RC is the founding principle of the international climate regime under which all countries share responsibility for the climate problem, but not equally. Obligations are calibrated to a country’s historical contribution to emissions and to its present capacity to act.
    2. How it was invoked here: The joint declaration used CBDR-RC to argue that all cooperation commitments, from forest fire protocols to circular economy standards, remain voluntary and calibrated to each country’s national circumstances.

    What is the New Collective Quantified Goal (NCQG)?

    1. Definition: The New Collective Quantified Goal is the post 2025 climate finance target agreed under the climate convention, replacing the earlier annual finance commitment made to developing countries. It fixes how much money developed countries must mobilise, and for what.
    2. The specific commitment at issue: The Ministers urged wealthy nations to deliver on the NCQG reached at the 30th Conference of the Parties (COP30) held at Belem, Brazil, including the commitment to triple adaptation finance to developing countries by 2035.

    What did the 12th BRICS Environment Ministers’ Meeting actually decide?

    1. Venue and chair: The 12th BRICS Environment Ministers’ Meeting was held in New Delhi under India’s chairship, and adopted its positions through a joint statement.
    2. Participation: Environment and climate Ministers and senior officials from eleven countries took part: Brazil, Russia, India, China, South Africa, the United Arab Emirates, Indonesia, Iran, Saudi Arabia, Egypt and Ethiopia.
    3. Position on border measures: Ministers recorded concern that carbon border measures such as CBAM “undermine developing countries’ efforts to address climate change and build resilience”, placing that language in the adaptation and climate resilience section of the statement.
    4. Quality of finance demanded: Support from developed countries must be “new, additional, predictable, adequate and accessible”, delivered through grants and concessional finance and without adding to the financial vulnerabilities of developing countries.
    5. Technical basis: The statement marked the culmination of a year of technical work by the BRICS Environment Working Group and its Contact Group on Climate Change and Sustainable Development.
    6. Handover: India formally handed hosting duties for the 13th edition to China, which will lead the meeting in 2027.

    Why does the definitive phase matter so much for India’s exports?

    1. Concentrated exposure: Iron and steel account for about 90 percent of India’s exports to the European Union that fall within the CBAM framework, so a sectoral measure operates as a single sector measure for India.
    2. Evidence of behavioural change already: A June 2026 analysis in Nature Climate Change, built on shipment level trade data and facility level emissions estimates, found that high emission Indian steel firms cut their export quantities and revenues to the European Union during the reporting phase, while lower emission firms held their export levels.
    3. Cost now real, not notional: During the reporting phase the obligation was informational. From 1 January 2026 the exporter’s emissions intensity translates directly into a certificate purchase by the buyer.
    4. Collision with the trade opening: The BRICS position arrives as India and the European Union move to implement a free trade agreement negotiated earlier this year, so tariff concessions on one track sit beside a new carbon related compliance cost on the other.
    5. Adaptation finance is the counterweight: Adaptation finance is used to help countries and communities cope with climate impacts, including measures to strengthen water security, agriculture and infrastructure, which is the ground on which the bloc pressed its finance claim.

    What do other jurisdictions’ carbon border and pricing measures show?

    1. United Kingdom: A UK CBAM is legislated to begin on 1 January 2027, covering aluminium, cement, fertilisers, hydrogen and iron and steel. It uses a fixed sectoral levy rate linked to the UK carbon price rather than tradable certificates, and it excludes electricity.
    2. European Union: The border charge is paired with the phase out of free allowances under the EU Emissions Trading System between 2026 and 2034. The design feature that matters is the pairing: the border cost rises as European industry loses its free permits.
    3. China: The national Emissions Trading Scheme was expanded in 2025 from power generation to steel, cement and aluminium. A domestic carbon price gives exporters a payment that can be set off against a border charge, converting revenue that would otherwise leave the country.
    4. Turkey: Legislation in 2025 created a national Emissions Trading System explicitly to retain carbon revenue domestically instead of surrendering it to the European border charge.
    5. United States: There is no federal carbon price. Proposals such as the Foreign Pollution Fee Act would levy an import charge based on emissions intensity relative to United States producers, a border measure with no domestic carbon price behind it.

    Where does the BRICS position pull against its members’ own choices?

    1. Objection and integration run together: The bloc calls the measure protectionist while India simultaneously implements a free trade agreement with the same partner, so the objection is lodged inside a deepening trade relationship rather than outside it.
    2. A domestic carbon price weakens the objection: Members building their own carbon markets, including India and China, gain a set off against CBAM only by adopting the very instrument they describe as an imposition.
    3. The measure is producing decarbonisation, unevenly: Lower emission Indian steel firms held their European market share while high emission firms retreated, which is the outcome CBAM claims to seek and the outcome that concentrates the cost on the least prepared producers.
    4. Voluntary cooperation limits the bloc’s own leverage: Insisting that every cooperation commitment stays voluntary and nationally calibrated protects policy space, and it also denies the bloc a collective standard it could offer as an alternative to CBAM.
    5. Finance and trade are separate tracks: Tripling adaptation finance by 2035 does not compensate an exporter for a certificate cost paid in 2026, so the two demands in the statement address different constituencies.

    Challenges to the Carbon Border Adjustment Mechanism

    1. Extraterritorial reach without representation: The charge is designed by a regulator that exposed exporters have no vote over. e.g. iron and steel form about 90 percent of India’s CBAM covered exports to the European Union, so a single foreign rulebook governs the bulk of that trade.
    2. Measurement and verification burden: Embedded emissions must be computed at installation level and verified, which small suppliers cannot do unaided. e.g. small Indian foundries and rolling mills supplying European buyers must commission third party verification that costs more than their margin on the consignment.
    3. Carbon price divergence: A domestic carbon payment offsets the certificate cost only to the extent of its price. e.g. prices under India’s Carbon Credit Trading Scheme are expected well below the European allowance price, leaving a large residual charge.
    4. Resource shuffling: A producer can reallocate output rather than cut emissions. e.g. a steelmaker can route its cleanest electric arc furnace line to the European Union and its blast furnace output to West Asia, lowering the reported figure without lowering total emissions.
    5. Downstream coverage gap: The mechanism covers raw materials but not most finished goods made from them. e.g. imported cars and machinery containing steel escape the charge while imported steel does not, creating an incentive to relocate downstream manufacturing outside the bloc.
    6. Trade law exposure: Developing countries argue the measure conflicts with the differentiation principle of the climate convention and with core trade disciplines. e.g. CBAM has been repeatedly contested in the World Trade Organization’s Committee on Trade and Environment by India, China, Brazil and South Africa.
    7. Revenue destination: The proceeds accrue to the imposing jurisdiction, not to the exposed exporter’s transition. e.g. CBAM revenue flows to the European Union budget while the BRICS statement asks for grant based adaptation finance, so the money moves in the opposite direction to the demand.

    Conclusion

    The definitive phase has converted a European domestic carbon price into a border cost carried largely by developing country exporters, and the BRICS statement is the first collective effort to frame that as a breach of differentiated responsibility rather than a technical trade irritant. The demand for tripled adaptation finance by 2035 sits alongside the objection because the bloc treats the two as one bargain. What remains unresolved is that neither the objection nor the finance demand reduces the certificate cost an Indian steel exporter pays in 2026, and only a credible domestic carbon price and lower emissions intensity will do that.

    Question (2025, GS3): “What are the challenges before the Indian economy when the world is moving away from free trade and multilateralism to protectionism and bilateralism? How can these challenges be met?”
    Linkage: The BRICS statement explicitly labels CBAM as a “protectionist” measure that converts a climate instrument into a trade cost, directly illustrating the challenge of rising protectionism.

  • Telangana’s 94 Lakh Electors Face SIR Scrutiny

    Why in the News

    The Telangana Chief Electoral Officer’s office records that only 78.3 percent of enumeration forms in the ongoing Special Intensive Revision (SIR) of electoral rolls have been digitised, with the remaining 21.7 percent classified as uncollectable. Together with nearly 20 lakh technically inconsistent or unmapped entries, close to 94 lakh electors now face scrutiny, exposing a conflict between the Election Commission’s duty to purify the roll and the elector’s burden of proving continued existence at a particular address.

    What is the Special Intensive Revision (SIR) of electoral rolls?

    1. Nature of the exercise: SIR is a house to house re-verification of the entire electoral roll ordered by the Election Commission of India, distinct from the routine annual summary revision that only adds and deletes at the margin.
    2. Core method: Every existing elector is served an enumeration form and must return it with supporting particulars, so continued enrolment depends on a fresh positive response rather than on the presumption of an existing entry.
    3. Statutory anchor: The revision is conducted under the Representation of the People Act, 1950, read with the Registration of Electors Rules, 1960, which govern preparation and revision of rolls.
    4. Output of the exercise: The Commission publishes a draft roll, invites claims and objections, disposes of them, and then publishes the final roll that governs the next election.
    5. Stated purpose: The exercise removes deceased, shifted, duplicate and ineligible entries and is intended to produce a roll free of multiple enrolment across constituencies.

    What is a Booth Level Officer (BLO)?

    1. Who they are: A Booth Level Officer is a local government functionary, usually a schoolteacher, anganwadi worker or panchayat employee, appointed by the Electoral Registration Officer for one polling station area.
    2. Core duty: The BLO conducts door to door verification, distributes and collects enumeration forms and reports additions, deletions and corrections for that booth.

    What is a Booth Level Agent (BLA)?

    1. Who they are: A Booth Level Agent is a party appointed representative attached to a polling station, authorised to submit claims and objections in bulk on behalf of a recognised political party.
    2. Function in a revision: The BLA is the party’s only institutional means of tracking who is being added to or removed from the roll while the revision is still under way.

    What is the claims and objections phase?

    1. What it is: After the draft roll is published, any person may file a claim for inclusion or correction, and any elector may file an objection to another person’s entry, within a notified window.
    2. Why it matters here: An elector whose form is missing, uncollected or found to contain discrepancies must use this window to restore the entry, which shifts the burden of proof onto the individual.

    What is the current status of the right to vote in India?

    1. Who holds the right: Every citizen of India not less than 18 years of age on the qualifying date, ordinarily resident in a constituency and not otherwise disqualified, is entitled to be registered as an elector.
    2. Nature of the right: The right to vote is a statutory right conferred by the Representation of the People Act, 1950 and 1951, not a fundamental right, though the Supreme Court has treated the act of voting as an expression of choice touching Article 19(1)(a).
    3. Age threshold: The voting age was lowered from 21 to 18 years by the Sixty first Constitutional Amendment Act, 1988.
    4. Bar on discrimination: No person may be excluded from a roll on grounds only of religion, race, caste or sex, and separate electorates stand abolished.
    5. Grounds of disqualification: Non citizenship, unsoundness of mind declared by a competent court, and corrupt practices or electoral offences under the Representation of the People Act, 1951 disqualify a person from registration.
    6. Practical precondition: Enrolment requires ordinary residence in the constituency, which is the exact test that a migration heavy electorate such as Telangana’s strains.

    Which constitutional provisions govern electoral rolls and the franchise?

    1. Article 324: Vests superintendence, direction and control of the preparation of the electoral rolls and the conduct of all elections to Parliament, State legislatures, the office of President and the office of Vice President in the Election Commission of India.
    2. Article 325: Provides for a single general electoral roll for every territorial constituency and bars exclusion on grounds only of religion, race, caste or sex.
    3. Article 326: Establishes adult suffrage as the basis of elections to the Lok Sabha and State Legislative Assemblies, with non residence, unsoundness of mind, crime, corrupt practice or illegal practice as the only permitted disqualifications.
    4. Article 327: Empowers Parliament to make law on all matters relating to elections, including the preparation of electoral rolls.
    5. Article 328: Empowers a State legislature to legislate on election matters for that State where Parliament has not occupied the field.
    6. Article 329: Bars courts from questioning the delimitation of constituencies and confines challenges to an election to an election petition filed under law.

    What does the Telangana revision’s own arithmetic show?

    1. Total electorate: The Chief Electoral Officer’s office records a total electorate of 3,38,26,448 in Telangana.
    2. Forms digitised: 2,64,86,214 enumeration forms have been digitised, a completion rate of 78.3 percent.
    3. Forms uncollectable: The remaining 21.7 percent stand classified as uncollectable, the category at the centre of the dispute.
    4. Additional problem entries: Nearly 20 lakh entries have been identified as technically inconsistent or unmapped, which is separate from the uncollectable set.
    5. Aggregate exposure: The two categories together account for nearly 94 lakh electors who may face scrutiny during the revision.
    6. Political reading of the figure: The State’s Chief Minister has warned party colleagues that a potential reduction of 21 percent in voter numbers would carry serious consequences.

    What exactly does the uncollectable category contain?

    1. Deceased: 9,22,230 electors are recorded as deceased.
    2. Absent or untraceable: 11,25,546 electors are marked absent or untraceable.
    3. Permanently shifted: 45,18,961 electors are listed as permanently shifted, the single largest component of the set.
    4. Enrolled elsewhere: 6,70,203 electors are shown as enrolled elsewhere.
    5. Other categories: 1,02,294 electors fall under residual other categories.

    Why has the uncollectable count risen so far?

    1. Verification substituted, not performed: Overburdened Booth Level Officers allegedly skipped mandatory door to door verification in several areas and worked instead from centralised collection points.
    2. Consequence of that substitution: Persons who could not travel to those collection centres were marked unavailable, so an administrative shortcut is recorded as an elector’s absence.
    3. Geographic concentration: The problem is concentrated in districts around Hyderabad, specifically the erstwhile districts of Ranga Reddy, Medak, Mahabubnagar and Nalgonda, which have seen substantial migration to the capital region.
    4. The dual voter imbalance: People who moved to Hyderabad retained their votes in their native places, producing low local enrolment across the 28 Assembly segments falling under the Hyderabad, Secunderabad, Chevella and Malkajgiri Lok Sabha constituencies.
    5. Interstate migration: Migrant workers from Bihar, Chhattisgarh and other States also vote in their home States rather than registering locally, which leaves them unavailable at the Telangana address on record.
    6. Absence of party level checks: The ruling party did not deploy adequate Booth Level Agents during field verification, so lapses in the revision went unchallenged while opposition parties monitored enrolment patterns closely.

    Why does a roll cleaning exercise carry a disenfranchisement risk?

    1. Both claims are legitimate: A roll carrying deceased and duplicate entries is a genuine integrity problem, and a revision that deletes a living elector is a genuine rights problem, and the same exercise produces both outcomes.
    2. The burden inverts: Once an entry is classed uncollectable, the elector must affirmatively reclaim it during claims and objections, so the cost of an official’s failure falls on the individual.
    3. Incidence is not neutral: Deletions concentrate among minorities, low income households and socio economically weaker groups, precisely the electors least able to navigate a documentary appeal.
    4. Loss extends beyond the vote: Losing an entry can also affect access to welfare linked identity systems and government benefits, since the roll functions as a residence proof in practice.
    5. Scale defeats remedy: A claims window designed for marginal correction cannot realistically process nearly 94 lakh contested entries within a normal revision calendar.
    6. Comparative anxiety: The concern is framed against roll controversies in other States where large scale deletions are alleged to have altered electoral outcomes.

    What are the major debates surrounding electoral roll revision?

    1. Purity versus inclusion: One position treats a bloated roll as the primary threat to a fair election, the other treats wrongful deletion as the graver harm, and the Commission has no settled test for choosing between them.
    2. Ordinary residence versus migration: The ordinary residence requirement of the Representation of the People Act, 1950 assumes a settled population, which sits badly with an economy built on circular and long distance internal migration.
    3. Burden of proof: Whether the State must prove ineligibility before deletion, or the elector must prove eligibility to retain an entry, remains the central unresolved question of every intensive revision.
    4. Documentary thresholds: Any documentary requirement beyond the existing roll risks excluding electors who lack birth records, which raises a question of proportionality under Article 14.
    5. Aadhaar linkage: The voluntary linking of Aadhaar with the elector photo identity card, permitted after 2021, is contested on the ground that a residence and identity database is being used to test citizenship linked entitlement.
    6. Data and audit gap: No independent audit of deletion accuracy is published, so the actual error rate of any revision is unknown to both parties in the dispute.
    7. Migrant voting rights: The absence of a working remote voting mechanism means an internal migrant must choose between a vote at origin and residence at destination.

    Challenges to the Special Intensive Revision

    1. Field capacity deficit: A single Booth Level Officer handling more than a thousand electors alongside a regular government job cannot complete genuine door to door verification within a compressed calendar, e.g. Telangana’s revision saw officers operating from centralised collection points instead of visiting households.
    2. Migration blindness of the roll: The roll’s design assumes a fixed address, so circular migrants appear as absent rather than as electors resident elsewhere, e.g. 45,18,961 Telangana entries classed as permanently shifted with no corresponding transfer of registration.
    3. Asymmetric political capacity: Parties with dense booth level networks can protect their electors during verification while weaker parties cannot, e.g. Telangana’s ruling party admitted it failed to deploy adequate Booth Level Agents during field verification.
    4. Documentary exclusion of the poorest: Reclaiming a deleted entry requires paperwork that landless, informal and displaced households frequently lack, e.g. the 46 lakh distinct caste strings thrown up by the 2011 Socio Economic and Caste Census illustrate how weakly self reported records map onto official categories.
    5. Compressed appeal window: The claims and objections period is calibrated for marginal correction, not for mass restoration, e.g. nearly 94 lakh Telangana entries now require individual disposal inside a single revision cycle.
    6. Absence of a deletion audit: No independent verification of deletion accuracy is published before the final roll, e.g. neither the 11,25,546 absent or untraceable entries nor the nearly 20 lakh unmapped entries in Telangana have been sample audited.
    7. Federal friction over process: State governments read a centrally ordered intensive revision as an intrusion into a politically sensitive process, e.g. the Telangana Cabinet was alerted that a 21 percent reduction in voter numbers would carry serious consequences.

    Conclusion

    The Telangana revision has converted an administrative failure of verification into a question of individual entitlement, because an elector missed at the doorstep is recorded as an elector who does not exist. Nearly 94 lakh entries now stand exposed at the claims and objections phase, and the burden of correcting an officer’s shortcut has passed to the elector. The revision will only be defensible if field verification is genuinely completed and deletions are audited before the final roll is published.

  • Why corporate investment has not revived despite tax cuts and cheap credit

    Source: The Hindu, Page 10, Text & Context
    Published: 19 August 2026

    Why in the News

    Corporate investment as a share of Gross Domestic Product (GDP) has fallen to about 9 percent from a peak of 17.3 percent, and has not returned even to the low levels recorded during the Global Financial Crisis. A corporate tax cut from 30 percent to 22 percent and a sustained low interest rate regime failed to reverse the decline, which points to a constraint that cost side policy does not touch.

    What does corporate investment as a share of GDP measure?

    1. Definition: It measures the value of new fixed assets created by companies, such as plant, machinery and buildings, expressed as a proportion of the economy’s total output.
    2. Why the ratio is used: Expressing investment as a share of output strips out inflation and growth in the size of the economy, so a fall in the ratio means investment is growing slower than output.
    3. What it signals: Corporate investment builds the future productive capacity of the economy, so a sustained decline in the ratio caps the growth rate the economy can sustain later.
    4. Data source used here: The trend is drawn from the Database on Indian Economy maintained by the Reserve Bank of India (RBI).

    What are animal spirits?

    1. Definition: Animal spirits, a term used by John Maynard Keynes, refers to the level of confidence with which firms hold their expectations about future profits.
    2. How it acts: High confidence pushes the expected profitability schedule outward and raises investment at every level of cost, and pessimism about the future pulls it inward.

    What is the principle of increasing risk?

    1. Definition: The principle of increasing risk, proposed by Michal Kalecki, holds that the cost of borrowing rises as a firm takes on more loans in proportion to its own funds committed to a project.
    2. Its consequence: The system is rigged against small capitalists even where small and large firms hold the same blueprint of a technology, because access to capital begets more capital.

    What is the Prowess database?

    1. Definition: Prowess is a firm level database of Indian companies compiled from their audited annual accounts, used for panel studies of corporate performance.
    2. Use in this analysis: The study draws a balanced panel of listed manufacturing firms from Prowess to compare profitability and interest costs across firm sizes.

    What is autonomous expenditure?

    1. Definition: Autonomous expenditure is spending that does not depend on the current level of income or profit in the economy, so it can rise when private demand is falling.
    2. Why it matters here: Government expenditure is the principal autonomous component, which is why it can create demand actively rather than merely responding to demand that already exists.

    How has corporate investment moved since 2000?

    1. The take off: Corporate investment took off in 2004, jumping almost four percentage points from 6.5 percent to 10.3 percent of GDP.
    2. The peak: It rose further during the growth years to a peak of 17.3 percent.
    3. The crisis fall: It fell during the Global Financial Crisis, then began a steady revival.
    4. The break point: The revival ran until demonetisation hit the economy in 2016, after which the decline has been continuous.
    5. Where it stands: The share is now about 9 percent, and has not returned even to the low levels recorded during the Global Financial Crisis.

    Why is demonetisation treated differently from the other shocks?

    1. Nature of the shock: The global economic crisis was an external shock beyond India’s control, and demonetisation was a self inflicted shock.
    2. Depth of the fall: The post 2016 decline has taken the share below the crisis era floor, which the external shock itself never did.
    3. Covid is not the explanation: Covid arrived in 2020-21 as another external shock, and the decline in investment had started a few years earlier.
    4. Two channels of damage: Demonetisation pushed the expected profitability schedule inward both because immediate profitability declined and because the credibility of future policy steps became suspect.
    5. The casualty at the margin: The fall was severe enough to push small firms below the cost of credit curve altogether, forcing many out of business, which is what happened to many micro, small and medium enterprises (MSMEs) in this period.

    What three factors determine a firm’s investment decision?

    1. Expected profitability: The profit a firm expects from selling the goods the new factory will produce, assessed over the whole life of the asset.
    2. Confidence in that expectation: The certainty with which the firm can predict those profit rates over the factory’s lifetime, which sets the position of the profitability schedule.
    3. Cost of credit: The price of borrowing, which matters once the planned investment exceeds the firm’s own available funds.
    4. How profitability varies with size: Most industries have economies of scale, so larger equipment, factories and workspaces carry higher profit rates than smaller ones, and expected profitability rises with the size of the investment.
    5. Where that stops: Each firm has an upper limit to how much it can sell, set by its share in the total market, and investment beyond that point leaves part of the factory idle.
    6. Two channels for the interest rate: A firm that does not build can park its funds in an interest bearing asset, so expected profitability must exceed the market interest rate, and a firm that borrows faces a cost of credit that is flat up to its own capital and rises steadily thereafter.

    Why does firm size change what constrains investment?

    1. Small firms: With very low levels of own capital the cost of credit curve starts rising far sooner, and it cuts the upper portion of the profitability curve.
    2. Their binding constraint: Investment by such firms is constrained by the availability of credit, and their interest costs are correspondingly high.
    3. Large firms: Their own capital is high enough that the cost curve cuts the profitability curve on its vertical portion.
    4. Their binding constraint: Such firms are limited by the market rather than by finance, and interest costs are not consequential for them.
    5. The structural implication: The same technology blueprint yields different investment outcomes purely because of the firm’s existing access to capital.

    What does the firm level data show?

    1. The sample: A balanced panel of 1,224 listed manufacturing firms between 2000 and 2024, drawn from the Prowess dataset and grouped into three sizes.
    2. Size definition: Median capital stock is Rs 14.5 crore for small firms, Rs 156.8 crore for medium firms and Rs 1,745.9 crore for large firms, all measured in 2011-12 prices.
    3. The profitability gradient: Smaller firms have lower profitability than larger firms, with the median rate of profit rising across the three size classes.
    4. The interest cost gradient: Smaller firms carry higher interest costs than larger firms, with median interest costs falling as size rises.
    5. What it confirms: The asymmetry predicted by the theory, that small firms are credit constrained and large firms are demand constrained, holds by and large for the Indian manufacturing sector.

    Why did a tax cut and cheap credit fail to revive investment?

    1. The tax cut: The corporate tax rate was cut from 30 percent to 22 percent, alongside a low interest rate regime followed by the Reserve Bank of India.
    2. No effect on small firms: A fall in the interest rate does not revive investment among smaller firms once their expected profitability has collapsed below the cost of credit.
    3. No effect on large firms: A large firm is not constrained by credit in the first place, so cheaper credit has no impact on its investment decision.
    4. The general result: Cost side policy interventions, including tax cuts, do not have much expansionary impact on investment, because neither group’s binding constraint is the cost of funds.
    5. What the failure reveals: Both groups are ultimately held back by expected demand, and cheapening the supply of capital does nothing to create that demand.

    What would shift expected profitability outward?

    1. The required direction: What is needed is to push the profitability curve outward, which raises investment by both small and large firms simultaneously.
    2. The only instrument that does it: This can be achieved only if government expenditure acts as an autonomous stimulus.
    3. The mechanism: Such expenditure creates demand actively, and rising demand pushes the profitability curves outward for firms of every size.
    4. The fiscal implication: It requires giving up on being a fiscal hawk, since the stimulus has to be sustained rather than symbolic.
    5. The political signal being read: The same conclusion is drawn from the youth protesting on the streets asking for gainful employment.

    Challenges to reviving corporate investment in India

    1. Weak capacity utilisation: Firms do not add capacity while existing plants run below their rated output. e.g. manufacturing capacity utilisation tracked by the Reserve Bank of India has hovered around the mid seventies in percentage terms for extended periods.
    2. Credit constraint on small firms: Formal lenders price small borrowers out or lend against collateral they lack. e.g. the credit gap for micro, small and medium enterprises runs into lakhs of crores against their assessed requirement.
    3. Policy uncertainty: Abrupt changes damage the confidence component of investment decisions independently of the direct cost. e.g. the retrospective amendment to tax cross border share transfers after the Vodafone ruling deterred investors until it was withdrawn in 2021.
    4. Weak household demand: Consumption growth caps the sales any firm can plan for. e.g. the collapse in employment generation under the rural employment guarantee programme in April to July 2026 cut rural purchasing power directly.
    5. Land and clearance delays: Project timelines stretch well beyond the investment appraisal horizon. e.g. large steel and refinery projects in Odisha and Maharashtra have taken over a decade from announcement to commissioning.
    6. Legacy stressed assets: Bank and corporate balance sheets recovering from earlier defaults limit fresh risk appetite. e.g. the twin balance sheet problem of the mid 2010s suppressed both credit supply and corporate borrowing for years.
    7. Import competition in inputs: Cheaper imported inputs and finished goods reduce the return on domestic capacity creation. e.g. domestic solar module manufacturers competed against imported cells until duties and incentives were introduced.

    Conclusion

    Corporate investment has fallen to about 9 percent of GDP from a peak of 17.3 percent and remains below its Global Financial Crisis floor, with the decline dating from 2016 rather than from Covid. A corporate tax cut from 30 percent to 22 percent and a low interest rate regime failed because neither addresses the binding constraint, since small firms are held back by credit access and large firms by the size of the market. Pushing expected profitability outward requires government expenditure acting as an autonomous stimulus, which means abandoning fiscal hawkishness rather than repeating cost side concessions.

    Foundational Context: What is Capital Formation?

    1. About: Capital formation is the addition to the stock of physical assets in an economy in a given period, measured in the national accounts as Gross Fixed Capital Formation (GFCF).
    2. Rationale: It exists as a distinct measure because current output can either be consumed or used to create productive capacity, and only the second raises future output.
    3. Named typology, by the investing sector:
    4. Public sector capital formation: Investment by the Central and State governments and by public sector enterprises, largely in infrastructure.
    5. Private corporate sector capital formation: Investment by registered companies in plant, machinery and structures, which is the measure this item tracks.
    6. Household sector capital formation: Investment by households and unincorporated enterprises, dominated by residential construction.
    7. Related measure: The investment rate is Gross Fixed Capital Formation expressed as a share of Gross Domestic Product, and the incremental capital output ratio measures how much investment is needed to produce one additional unit of output.

    Key Concerns Regarding Capital Formation in India

    1. Private investment has not replaced public investment: Central capital expenditure has risen sharply while private corporate investment has stagnated, so the recovery rests on one leg.
    2. Household investment is concentrated in real estate: A large share of household capital formation is residential construction, which adds less to productive capacity than plant and equipment.
    3. Financing depth for small firms: The corporate bond market is accessible only to highly rated large issuers, leaving small firms dependent on bank credit at high spreads.
    4. Crowding out concern: Sustained government borrowing to fund the stimulus can raise interest rates and reduce private investment, which is the standard counter argument to an expenditure led revival.
    5. Measurement lag: Private corporate investment is estimated with a significant lag and revised substantially, which delays the recognition of a turning point in the cycle.

    Statutory Framework Governing Fiscal Policy and Public Investment

    1. Article 112: Requires the Annual Financial Statement of estimated receipts and expenditure to be laid before Parliament for every financial year.
    2. Article 266: Establishes the Consolidated Fund of India and the Public Account, from which expenditure may be made only under authority of law.
    3. Article 292: Empowers the Union to borrow upon the security of the Consolidated Fund of India within limits fixed by Parliament.
    4. Article 293: Governs State borrowing and requires the consent of the Union where a State is indebted to it.
    5. Article 280: Provides for the Finance Commission, whose recommendations determine the vertical and horizontal sharing of Union taxes.
    6. Fiscal Responsibility and Budget Management Act, 2003: Sets statutory fiscal targets and requires the government to lay fiscal policy statements before Parliament.
    7. Section 4: Prescribes the fiscal deficit and debt targets and the grounds on which they may be deviated from.
    8. Section 7: Requires the Finance Minister to review and report on the trends in receipts and expenditure to Parliament.

    Laws and Rules Governing Corporate Finance and Small Firm Credit

    1. Companies Act, 2013: Governs incorporation, capital raising, disclosure and audit obligations of companies, which is the source of the accounts used in firm level databases.
    2. Micro, Small and Medium Enterprises Development Act, 2006: Defines the three enterprise categories and provides for delayed payment remedies for small suppliers.
    3. Section 15 and Section 16: Require payment to a micro or small enterprise within a specified period and provide for compound interest on delay.
    4. Insolvency and Bankruptcy Code, 2016: Provides a time bound resolution process for corporate debtors, which determines how quickly stressed capital is redeployed.
    5. Factoring Regulation Act, 2011, amended in 2021: Widened the set of lenders permitted to undertake factoring, easing receivables financing for small firms.
    6. Reserve Bank of India Act, 1934: Provides the statutory basis for monetary policy, including the inflation targeting framework that governs the interest rate regime.
    7. Fiscal Responsibility and Budget Management Rules, 2004: Prescribe the formats and the quarterly review obligations under the parent Act.

    Back2Basics: Demonetisation of 2016

    1. What it was: The withdrawal of legal tender status from the existing Rs 500 and Rs 1,000 currency notes, announced on 8 November 2016.
    2. Legal basis: Effected through a notification under Section 26(2) of the Reserve Bank of India Act, 1934, on the recommendation of the Central Board of the Reserve Bank of India.
    3. Stated objectives: Curbing unaccounted money, countering counterfeit currency and terror financing, and accelerating the shift to digital payments.
    4. Replacement currency: New Rs 500 and Rs 2,000 notes were introduced, and the Rs 2,000 note was later withdrawn from circulation in 2023.
    5. Return of notes: The Reserve Bank of India subsequently reported that the overwhelming majority of the demonetised currency was returned to the banking system.
    6. Judicial position: A Constitution Bench of the Supreme Court upheld the decision by a 4 to 1 majority in January 2023, holding that the process followed did not suffer from a legal infirmity.
    7. Economic effect recorded here: It marks the point after which corporate investment as a share of Gross Domestic Product began a continuous decline, and it pushed many micro, small and medium enterprises out of business.

    Government Initiatives

    1. Production Linked Incentive schemes: Pay incentives on incremental sales of goods manufactured in India across sectors including electronics, pharmaceuticals and automobiles, aimed at drawing private capital into manufacturing capacity.
    2. National Infrastructure Pipeline and the National Monetisation Pipeline: Set out a project pipeline for public infrastructure investment and a route to recycle operating public assets into fresh capital expenditure.
    3. PM Gati Shakti National Master Plan: Coordinates infrastructure planning across ministries to reduce logistics cost and project delay, both of which enter the investment appraisal of private firms.
    4. Emergency Credit Line Guarantee Scheme: Provided fully guaranteed collateral free credit to micro, small and medium enterprises to keep credit constrained firms solvent.
    5. Credit Guarantee Fund Trust for Micro and Small Enterprises: Guarantees collateral free bank lending to small firms, addressing the security requirement that keeps them off formal credit.
    6. Trade Receivables Discounting System (TReDS): An electronic platform allowing small suppliers to discount invoices owed by large buyers, easing the working capital squeeze.
    7. Corporate tax rate reduction: The concessional rate regime introduced for domestic companies, and a lower concessional rate for new manufacturing companies, intended to raise post tax returns on new capacity.

    Key Facts about Investment in the Indian Economy

    1. Peak investment rate: India’s overall gross fixed capital formation rate peaked in the years before the Global Financial Crisis, in step with the corporate investment peak of 17.3 percent recorded here.
    2. Corporate tax rates: The headline domestic corporate tax rate was reduced from 30 percent to 22 percent, with a lower concessional rate offered to new manufacturing companies.
    3. Monetary framework: India adopted flexible inflation targeting in 2016, with the target set at 4 percent and a tolerance band of plus or minus 2 percentage points.
    4. Micro, small and medium enterprises: The sector accounts for roughly 30 percent of Gross Domestic Product and about 45 percent of exports.
    5. Crowding out effect: The proposition that government borrowing raises interest rates and thereby reduces private investment, which is the standard objection to an expenditure led revival.
    6. Data sources: The Database on Indian Economy of the Reserve Bank of India for macro aggregates, and firm level databases such as Prowess for company accounts.

    Challenges in Reviving the Investment Cycle

    1. Demand uncertainty: Firms will not commit to long lived assets without visibility on sales. e.g. consumer durables makers deferred capacity additions through successive years of weak rural demand.
    2. Fiscal space for the stimulus: A sustained expenditure push runs against the statutory deficit path. e.g. the Fiscal Responsibility and Budget Management Act, 2003 targets constrain the size of a discretionary stimulus.
    3. Transmission of rate cuts: Policy rate reductions reach small borrowers slowly and incompletely. e.g. lending rates for small firms have historically moved far less than the repo rate in the same period.
    4. Skill and labour mismatch: New capacity requires skilled workers who are not available at scale. e.g. semiconductor and electronics assembly investments have flagged shortages of trained technicians.
    5. Land acquisition cost and delay: Assembling contiguous land for large plants remains the slowest step. e.g. industrial projects across several States have stalled for years at the land acquisition stage.
    6. Global trade uncertainty: Export oriented capacity decisions are hostage to tariff shifts abroad. e.g. punitive tariffs of 50 percent on Indian goods disrupted the export calculus for entire product lines.
    7. Concentration of profitability: Profits accrue disproportionately to large firms, which are the very firms not constrained by finance. e.g. the firm level panel shows median profitability rising and interest costs falling as firm size increases.

    Way Forward

    1. Use expenditure as the lead instrument: Direct sustained public expenditure at demand creating heads so that expected profitability rises for firms of every size rather than only for the largest.
    2. Target employment intensive spending: Prioritise programmes that put income directly in the hands of households, since that is what converts stimulus into the sales firms plan around.
    3. Fix credit access rather than credit price: Expand guarantee backed and receivables based lending to small firms, whose constraint is availability rather than the interest rate.
    4. Restore policy predictability: Avoid abrupt, economy wide interventions, since the confidence component of the investment decision recovers far slower than the immediate profitability component.
    5. Complete the public capital expenditure pipeline: Convert announced infrastructure projects into commissioned assets on schedule, so that the demand impulse is actually delivered.
    6. Report investment data faster: Shorten the lag and revision cycle in private corporate investment estimates so that a turning point is identified in time to act on it.

    Matching Previous Year Question

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

  • Government explores routing gold monetisation through jewellers after bank scheme’s weak record

    Why in the News

    The government is in talks with jewellers on a gold monetisation route in which jewellers accept household gold and the deposit is held in a demat account, with interest paid on the value deposited. The bank based Gold Monetisation Scheme of 2015 mobilised only 38 tonnes by March 2025 against household holdings placed well upwards of 20,000 tonnes, so the redesign turns on who households trust with their gold rather than on the return offered.

    How would the proposed jeweller led gold monetisation route work?

    1. Point of deposit: A depositor would take physical gold to the nearest jeweller rather than to a bank branch.
    2. Record of holding: The scheme would be implemented through demat accounts, in the same way as shares, and the gold deposit would be reflected in the depositor’s demat account.
    3. Return to the depositor: The depositor would earn interest on the value of the gold deposited.
    4. Role of the jeweller: Jewellers would assume a key role in mobilising gold, becoming the contact point that banks occupy in the existing scheme.
    5. Stage of the proposal: Discussions with large industry players have been constructive and a scheme could be announced soon.

    What is a demat account?

    1. Definition: A dematerialised, or demat, account holds securities in electronic form with a depository, removing the need for a physical certificate.
    2. Application here: Holding a gold deposit in a demat account makes the claim transferable and tradable in electronic form, which physical gold in a bank vault is not.

    Why is the government revisiting gold monetisation now?

    1. Currency pressure: The exchange rate is under pressure from several factors at once.
    2. Fuel prices: Elevated fuel prices following the West Asia crisis have widened the import bill.
    3. Equity market sentiment: Investor concerns about the domestic stock market have weighed on capital inflows.
    4. Gold imports: Elevated gold imports are the third source of pressure, with imports reaching $71.98 billion in 2025-26 against about $35.02 billion in 2022-23, per Ministry of Commerce and Industry data.
    5. Industry signal: The chairman of the All India Gems and Jewellery Domestic Council stated that the government has communicated that it is serious about the proposal and has assured implementation as swiftly as it can be done.

    What did the bank based scheme of 2015 achieve?

    1. Mobilisation record: The scheme launched in 2015 mobilised just 38 tonnes of gold by March 2025, according to government data.
    2. Scale of the untapped stock: There is no official estimate of gold held by Indian households, and experts place the figure significantly upwards of 20,000 tonnes.
    3. The identified failure point: Families are more comfortable dealing with their family jewellers on matters concerning gold and silver, and that comfort is missing when banks play that role.
    4. The stated design change: The big shift in the current proposal is moving the collection point beyond banks, per the President of the India Bullion and Jewellers Association.

    Components of the Gold Monetisation Scheme, 2015, along the deposit lifecycle

    Component (lifecycle stage)Intervention and official termsPrimary stakeholder served
    Collection and Purity Testing Centre (input and assaying)Depositor’s raw gold is tested for purity at a Bureau of Indian Standards certified centre and converted into a standard equivalent before the deposit is acceptedHousehold depositor
    Short Term Bank Deposit (financing, short tenure)Tenure of 1 to 3 years, accepted by the bank on its own account, with the interest rate decided by the bank itselfDepositor and the accepting bank
    Medium Term Government Deposit (financing, medium tenure)Tenure of 5 to 7 years, accepted by banks on behalf of the Central government, at an interest rate of 2.25 percent per annumCentral government and the depositor
    Long Term Government Deposit (financing, long tenure)Tenure of 12 to 15 years, accepted on behalf of the Central government, at an interest rate of 2.50 percent per annumCentral government and the depositor
    Refinery and deployment (use of mobilised gold)Mobilised gold is refined and lent to jewellers as metal loans or used to reduce fresh import demandJewellery manufacturers and the external account
    Tax treatment (redemption)Deposits are exempt from capital gains tax, wealth tax and income tax on the interest and the appreciationHousehold depositor
    Current status of the componentsThe medium and long term government deposit components were discontinued from 26 March 2025, leaving only the short term bank deposit at the discretion of banksCentral government

    What would monetisation at scale do for the economy?

    1. Value of a partial mobilisation: Monetising just 10 percent of the gold held would be worth around $400 billion, according to a part time member of the Economic Advisory Council to the Prime Minister (EAC-PM).
    2. Comparison with foreign capital: India’s gross foreign direct investment is about $80 billion, so that gold would be equivalent to five years of foreign direct investment inflows.
    3. External account effect: Locked up gold, once monetised, can make India a trade account surplus nation.
    4. Consumption and investment effect: The change would increase domestic consumption and force companies to invest more.
    5. Savings channel: Investment depends on either domestic or global savings, and adding frozen domestic savings to liquid savings alongside continuing foreign capital would make a much larger pool available for investment.

    Why does routing gold through jewellers solve one problem and create another?

    1. The trust problem is real: Households deal with a family jeweller across generations, and the bank counter never acquired that standing, which is the single clearest explanation for 38 tonnes in ten years.
    2. The proposal is described as a win-win only in theory: The depositor earns interest and the system unlocks idle metal, and both outcomes depend on the intermediary honouring the deposit.
    3. Supervision moves to a lightly regulated node: A bank accepting a deposit is a regulated entity under banking law, and a jeweller accepting gold is not supervised in the same way.
    4. Purity assessment shifts: In the bank route, purity is established at a certified Collection and Purity Testing Centre, and a jeweller led route puts assaying and the customer relationship in the same hands.
    5. The demat layer is the safeguard being relied on: Holding the claim electronically creates a record of the deposit, and it does not by itself secure the physical metal held by the collecting jeweller.

    Challenges to gold monetisation in India

    1. Sentimental and social value of gold: Household gold is largely ornamental and passed down, so melting it for a deposit is resisted regardless of the interest offered. e.g. wedding jewellery in most Indian households is treated as inalienable rather than as a financial asset.
    2. Competing use as loan collateral: Households increasingly pledge gold rather than deposit it, since a loan preserves ownership of the ornament. e.g. gold backed loans reached about Rs 5.4 lakh crore by June 2026.
    3. Low return relative to price appreciation: Interest of a little over two percent is negligible against expected gold price gains. e.g. the Medium Term Government Deposit paid 2.25 percent while gold prices rose several fold over the scheme’s life.
    4. Fear of tax scrutiny: Depositing undeclared gold exposes the holder to questions on the source of the holding. e.g. income tax rules on unexplained investments deter deposits of inherited and undocumented holdings.
    5. Thin collection infrastructure: The number of certified collection and purity testing centres and refiners is small relative to the geography. e.g. large parts of rural India have no Bureau of Indian Standards certified assaying centre within reach.
    6. Loss of the ornament itself: The deposit requires the ornament to be melted into standard gold, which is irreversible. e.g. antique and regionally distinctive designs cannot be recovered once assayed and melted.
    7. Bank incentive problem: Banks earn little from accepting and deploying gold deposits, so branch level effort has been minimal. e.g. the medium and long term components were discontinued from 26 March 2025 after weak uptake.

    Conclusion

    The government is in talks with jewellers on a monetisation route in which household gold is deposited with a jeweller, held in a demat account and paid interest, after the bank based scheme of 2015 mobilised only 38 tonnes by March 2025 against holdings placed above 20,000 tonnes. The redesign correctly identifies trust in the family jeweller, rather than the return on the deposit, as the binding constraint, and it moves the collection point to an intermediary that is not supervised like a bank. Discussions are described as constructive and a scheme could be announced soon; the source states no announcement date.

    Foundational Context: Gold in India’s Economy

    1. Consumption scale: India is among the world’s two largest consumers of gold, alongside China, and imports almost all the gold it consumes.
    2. Household stock: Indian households are estimated to hold upwards of 20,000 tonnes of gold, which is larger than the official reserves of most central banks.
    3. External account weight: Gold is consistently among the top items in India’s import bill after crude oil, and gold imports reached $71.98 billion in 2025-26.
    4. Duty sensitivity: Import duty changes on gold move the split between formal imports and smuggling, which is why duty rates are treated as a customs enforcement issue as much as a revenue one.
    5. Financialisation objective: Public policy on gold has one consistent aim, which is to shift household savings out of physical metal into financial instruments backed by gold.

    Laws and Rules Governing Gold in India

    1. Bureau of Indian Standards Act, 2016: Provides the statutory basis for standardisation and for mandatory hallmarking of precious metal articles.
    2. Hallmarking Regulations and the HUID: Require every hallmarked gold article to carry a six digit alphanumeric unique identification number, traceable to the certified hallmarking centre.
    3. Foreign Trade (Development and Regulation) Act, 1992: Empowers the Central government to set the import policy for gold, including the channels and agencies through which it may be imported.
    4. Customs Act, 1962 and the Customs Tariff Act, 1975: Provide for the levy of import duty on gold and for confiscation and penalty in cases of smuggling and misdeclaration.
    5. Foreign Exchange Management Act, 1999: Governs the permissible modes of gold import and the treatment of gold in cross border transactions.
    6. Securities and Exchange Board of India (Vault Managers) Regulations, 2021: Regulate the vault managers who store the underlying gold against Electronic Gold Receipts traded on stock exchanges.
    7. Gold (Control) Act, 1968: Restricted private holding of gold bullion and was repealed in 1990, which is what allowed the later deposit and monetisation schemes to be built.
    8. Income-tax Act, 1961: Governs the treatment of unexplained investments and the tax exemptions specifically extended to deposits under the Gold Monetisation Scheme.

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