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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

  • Workers protesting for higher wages spent over 50 days in jail on average until courts intervened

    Why in the News

    An investigation into 222 bail orders arising from the April 2026 wage protests by factory workers in Noida found that relief was granted in 188 of them, or 84 per cent, after courts repeatedly held that mere presence in a protesting crowd is not evidence of criminal intent. The average protester nonetheless spent 53 days in custody before that relief arrived. Two protests over comparable grievances in the same month produced opposite outcomes, one ending in a ministerial resignation and an assurance of no prosecution, the other in mass arrests and preventive detention.

    What is the National Security Act, 1980?

    1. What it is: A central preventive detention law that allows the State to detain a person to prevent an apprehended act, without trial and without a criminal charge being proved.
    2. The period it permits: It allows detention for up to one year without trial.
    3. Who orders it: A district magistrate, a commissioner of police or the State government may pass the detention order, and the State government must confirm it.
    4. Its use in this case: Two of those arrested in the Noida protests were booked under the Act, a former journalist and a university graduate, and their pleas are pending before the Supreme Court and the Allahabad High Court respectively.

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

    1. A derived right, not an enumerated one: The right to protest is not written into the Constitution as a separate right, it is derived from the freedom of speech under Article 19(1)(a) and the freedom to assemble peaceably and without arms under Article 19(1)(b).
    2. The qualification on it: Both freedoms are subject to reasonable restrictions in the interests of public order and the sovereignty and integrity of India.
    3. The peaceful assembly limit: Protection extends only to assembly that is peaceable and unarmed, so the State may act against an assembly once it turns violent.
    4. The bail standard courts applied here: Judges in these cases held that mere presence at a protest is not evidence to deny bail, that the absence of specific evidence outweighs the gravity of the charges, and that ordinary workers cannot be equated with those found organising or instigating violence.
    5. Preventive detention sits alongside it: A person may be detained without trial under a preventive detention law even where no offence has been proved, which is the route taken against two of the accused here.

    Constitutional Provisions Related to Protest, Liberty and Preventive Detention

    1. Article 19(1)(a): Guarantees freedom of speech and expression, from which the right to protest is derived.
    2. Article 19(1)(b): Guarantees the right to assemble peaceably and without arms.
    3. Article 19(1)(c): Guarantees the right to form associations or unions, the basis of the right to organise labour.
    4. Article 19(2) and 19(3): Permit reasonable restrictions on speech and on assembly in the interests of public order.
    5. Article 21: Guarantees that no person shall be deprived of life or personal liberty except according to procedure established by law, read to require a just, fair and reasonable procedure.
    6. Article 22(1) and 22(2): Guarantee an arrested person the right to be informed of the grounds of arrest, to consult a legal practitioner, and to be produced before a magistrate within twenty four hours.
    7. Article 22(3): Expressly withdraws those protections from a person detained under a preventive detention law.
    8. Article 22(4) and 22(5): Cap preventive detention at three months unless an Advisory Board of persons qualified to be High Court judges reports sufficient cause, and require the grounds of detention to be communicated to the detainee.
    9. Entry 9, Union List and Entry 3, Concurrent List: Place preventive detention connected with defence and foreign affairs with the Union, and preventive detention for reasons connected with State security and the maintenance of public order on the Concurrent List.
    10. Article 23: Prohibits forced labour, the constitutional anchor of minimum wage jurisprudence.
    11. Article 43: Directs the State to secure a living wage and conditions of work ensuring a decent standard of life, as a Directive Principle.

    What triggered the Noida wage protests?

    1. Rising fuel costs: Rising liquefied petroleum gas cylinder prices amid the West Asia crisis, with workers additionally citing black market prices for cylinders.
    2. A rumour about the Labour Codes: WhatsApp rumours in late March that the new Labour Codes would raise minimum wages.
    3. A neighbouring wage settlement: Wage hike protests in Haryana's Manesar, which produced a settlement that workers in Noida then demanded for themselves.
    4. The underlying grievances: Workers cited unrealistic work targets, the absence of social security benefits such as provident fund, and hiring on a temporary basis through contractors.
    5. Working hours in practice: Workers said they were officially on eight hour shifts but routinely worked ten to twelve hours with few breaks, with safety, especially for women, a further concern.

    What did the wage revisions actually deliver?

    1. The Haryana settlement: After the Manesar protests, the State government announced a 35 per cent hike in minimum monthly wages on 9 April, backdated to 1 April.
    2. The Haryana figures: Rs 15,220.71 for unskilled workers and Rs 19,425.85 for highly skilled workers.
    3. The effect on Noida: The Haryana announcement intensified the Noida protests, which turned violent as workers and activists took to the streets.
    4. The Uttar Pradesh interim hike: Calm returned after the State announced its own interim revision on 14 April, raising unskilled wages from Rs 11,313 to Rs 13,690 and skilled wages from Rs 13,940 to Rs 16,868 in Gautam Buddh Nagar and Ghaziabad.
    5. The parallel warning: Authorities in Noida warned contractors that complaints against them would be dealt with harshly.

    What did the bail orders across the seven FIRs establish?

    1. First Information Report 149 of 2026, Noida Phase III: 31 granted bail and 6 denied, on an allegation that 300 to 400 accused entered an electronics firm's premises in Sector 67 on 13 April carrying lathis, sticks, bricks, stones and deadly weapons and extended threats to kill. The sessions court held that the mere fact that an accused was part of the crowd cannot by itself lead to the conclusion that he possessed the same grave criminal intent, and found that the prosecution had described the crowd's acts in a collective manner without specifying individual roles. Fourteen further grants came from the High Court.
    2. First Information Report 151 of 2026, Noida Phase III: 37 granted bail, on an allegation of stone pelting with intent to cause death and vandalism of security gates, closed circuit television cameras, glass structures and office property. The prosecution relied on an informant's statement, an inspection of the site and closed circuit television footage, and the court found that no such footage or electronic record had been placed on record depicting the accused in any violent activity.
    3. First Information Report 163 of 2026, Noida Phase II: 3 granted bail and 10 denied, arising from protests by workers of three garment and apparel firms between 10 and 11 April. Bail went to three who had remained in judicial custody for a long period once the chargesheet was filed, and was refused to ten on prima facie allegations of an active conspiratorial role, including the creation of WhatsApp groups in the names of companies and the recovery of banners, posters and pamphlets from their residences.
    4. First Information Report 165 of 2026, Noida Phase II: 29 granted bail and 6 denied, on an allegation that 450 to 500 workers assembled in Sector 84 and elsewhere on 13 April over wages, overtime and bonuses, and that the protest turned violent between 8.30 am and 9.30 pm. The prosecution cited independent witnesses including a water vendor, a chowmein cart owner and a rickshaw puller, and the court found it was not clear how they were previously acquainted with or able to identify the accused, adding that the presence of an accused at a labourers' protest is not unnatural. Six further grants came from the High Court.
    5. First Information Report 169 of 2026, Noida Phase II: 26 granted bail and 1 denied, on an allegation that garment exporter employees blocked gates, restrained workers from entering and threatened vandalism and arson from 10 April. The court noted the First Information Report was lodged nearly ten days after the incident with several accused not named in it and no explanation for the delay, and that the complaint reflected no actual incident of arson or injuries. The single refusal rested on closed circuit television footage establishing a specific role.
    6. First Information Report 172 of 2026, Noida Phase I: 21 granted bail and 7 denied, on an allegation that workers of an auto components manufacturer blocked a public road, damaged government and company property and injured police personnel. The court held that the only allegation was presence in the protesting crowd, that the role of every person in a crowd cannot be treated the same, and that mere presence does not by itself make every accused equally liable where no specific act is attributed.
    7. First Information Report 164 of 2026, Noida Phase II: 41 granted bail and 4 denied, with 39 of the 41 grants coming from the Allahabad High Court, which applied a broad standard resting on the facts and circumstances of the case, the evidence on record and grounds of parity.

    On what grounds was bail refused?

    1. The common accusation: Those denied relief face an alleged role in the conspiracy rather than an alleged act at the protest.
    2. Administering WhatsApp groups: Courts cited data showing certain accused were administrators of a WhatsApp group alleged to have been created to facilitate the commission of violence.
    3. Mobilisation from outside: Bail was refused to accused said to have called others to Noida for the protests or to have run groups to mobilise and instigate workers.
    4. Absence of an employment link: One court held that persons with no direct employment relationship with the companies concerned stand on a different footing from the companies' own workers.
    5. Statements of co accused: In one case bail was refused on the statements of co accused despite the defence pointing to the absence of prior criminal antecedents.
    6. Preventive detention instead of bail: On 13 May, nearly a month after the protests turned violent, the State invoked the National Security Act, 1980 against a 60 year old former journalist from Lucknow and a 25 year old Delhi University graduate, taking both outside the bail process altogether.
    7. The material cited in the detention orders: The grounds included membership of a political organisation, writing described as inciting a new generation to join a rebel organisation, joining a library run by a co accused, the recovery of a book on Indian revolutionaries described as a controversial work of literature, and participation in earlier protests over citizenship registration and over Gaza. One police report used the term andolanjeevi.

    What did the arrests cost the workers and their families?

    1. Time in custody: Across the 106 arrests carrying substantive allegations, ranging from rioting and arson to attempt to murder, the average period a protester spent in custody was 53 days.
    2. Arrest away from any protest: A 34 year old daily wage worker was picked up from Labour Chowk on 14 April while looking for work, and was released on bail 40 days later.
    3. Cost of the process itself: That worker's family, migrants from Bihar, spent nearly Rs 50,000 on jail and court visits alone, and his mother lost her factory job over the frequency of those visits.
    4. The scale of borrowing: The families of two young men aged 20 and 18 from Sitamarhi spent almost Rs 3 lakh between them on bail, and sought relatives' help for surety bonds.
    5. Length of detention for the young: One of those two completed three months and a day in jail, and was released two days after the other because of a documentation problem.
    6. The lasting effect: A 19 year old picked up on 14 April after stepping out of his workplace for a meal was released on 18 May, and reports that his parents now call six times a day fearing he will be picked up again.

    Why did two protests over comparable grievances end so differently?

    1. The first outcome: The Jantar Mantar protest demanding a leak proof examination system ended with the Union Education Minister's resignation and an assurance by the Centre and the States that the police would pursue no case against the protesters.
    2. The second outcome: The week long protest beginning 10 April by factory workers in Noida demanding higher wages drew a police crackdown, with up to 200 people taken into custody.
    3. The distinction was not the demand: Both protests raised a grievance against a State failure, one over examination integrity and the other over the statutory minimum wage.
    4. The distinction was the protester: The workers were largely contract hires, migrants and daily wagers with no institutional voice, which is what left them dependent on the courts for relief the other protesters received by executive assurance.
    5. The State conceded the demand anyway: Uttar Pradesh raised wages on 14 April, so the substance of the workers' claim was accepted while the workers themselves remained in custody.
    6. The relief was judicial, not political: Courts granted relief in 84 per cent of the bail pleas, which means the correction came from the judiciary rather than from the executive that had made the arrests.

    Major debates surrounding preventive detention and the right to protest

    1. Preventive detention inside a rights guaranteeing Constitution: India is among the few democracies to carry preventive detention in the Constitution itself, and Article 22(3) removes the very safeguards Article 22(1) and 22(2) create for an arrested person.
    2. Public order against ordinary law and order: Preventive detention is available only for a threat to public order, and the line between a law and order breach and a public order breach determines whether the ordinary criminal process or detention without trial applies.
    3. Collective liability against individual act: The prosecution treats the crowd as the accused while the courts require a specific act attributed to a named individual, and the bail record here shows the two standards producing opposite results.
    4. Bail as the rule and jail as the exception: The settled principle collides with a practice in which the average protester spent 53 days in custody before a court applied it.
    5. Speech and association as evidence: Books read, library membership, publishing and participation in earlier protests were cited in the detention grounds, which raises whether protected expression can supply the material for a preventive order.
    6. Advisory Board review against judicial review: Preventive detention is reviewed by an Advisory Board rather than by a trial, so the detenu's remedy is a writ petition, which is slower than a bail application.
    7. The right to strike: Indian law recognises no fundamental right to strike, so a wage agitation has no protected status independent of the general freedom of assembly.

    Challenges to protecting the right to protest

    1. Procedure as punishment: Even where charges fail, the time spent in custody before bail is itself the penalty. e.g. the 53 day average custody in these Noida cases against an 84 per cent eventual bail rate.
    2. Collective First Information Reports: Naming 300 to 500 unidentified persons in a single complaint makes individual defence impossible and shifts the burden onto the accused. e.g. First Information Report 149 of 2026, where the sessions court found the prosecution had described the crowd's acts in a collective manner without specifying individual roles.
    3. Preventive detention bypasses bail entirely: Once a detention order is passed, the bail jurisprudence stops applying and the detenu must approach a constitutional court. e.g. the two National Security Act, 1980 detentions of 13 May 2026, whose pleas remain pending before the Supreme Court and the Allahabad High Court.
    4. Cost of accessing justice: Surety bonds, travel, lawyers and jail visits impoverish families whose original grievance was a wage below subsistence. e.g. one family spending nearly Rs 50,000 on visits and another almost Rs 3 lakh on two sons.
    5. Contract hiring removes institutional protection: Workers hired through contractors have no recognised union and no employer of record to negotiate on their behalf. e.g. courts here treated persons with no direct employer employee relationship with the companies as standing on a different footing when refusing bail.
    6. Delay in registering complaints: Complaints filed days after the event allow names to be added without contemporaneous evidence. e.g. First Information Report 169 of 2026, lodged nearly ten days after the incident with several accused not named in it.
    7. Unequal executive response: The executive can extend an assurance of no prosecution to one set of protesters and none to another, with no standard governing the choice. e.g. the Jantar Mantar assurance against the Noida crackdown in the same month.
    8. Absence of accountability for wrongful arrest: No consequence attaches to an investigating agency whose case collapses at the bail stage. e.g. senior police officers linked to this investigation declined comment on the findings.

    Conclusion

    The Noida record shows a criminal process in which the crowd, rather than a named individual with a proved act, was treated as the accused, and in which the correction came from the courts rather than from the agency that made the arrests. The State conceded the wage demand on 14 April while the workers who raised it remained in custody for weeks longer, so the substance of the grievance was accepted without any consequence for the arrests. The pending challenges to the two National Security Act, 1980 detentions, before the Supreme Court and the Allahabad High Court respectively, are the next milestone in the matter.

    What is Preventive Detention?

    1. About: Preventive detention is the confinement of a person to prevent an apprehended future act, rather than to punish a proved past offence, and it therefore involves no charge, trial or conviction.
    2. Rationale: It exists to allow the State to act on an anticipated threat to public order or State security in advance of the harm, on the reasoning that a completed offence would be too late to prevent.
    3. Punitive detention distinguished: Punitive detention follows conviction after a trial, preventive detention precedes any trial and rests on the subjective satisfaction of the detaining authority.
    4. The constitutional cap: Detention beyond three months requires an Advisory Board of persons qualified to be High Court judges to report sufficient cause, under Article 22(4).
    5. The grounds requirement: The authority must communicate the grounds of detention to the detainee and afford the earliest opportunity to make a representation, under Article 22(5).
    6. The judicial standard: Because the satisfaction is subjective, courts review the procedure and the relevance of the material rather than the sufficiency of the grounds themselves.

    Key Concerns Regarding Preventive Detention

    1. Constitutional safeguards expressly withdrawn: Article 22(3) removes the right to be informed of grounds of arrest, to counsel and to production before a magistrate for a preventively detained person.
    2. No requirement to prove an offence: Detention rests on apprehension rather than evidence of a committed act, so the ordinary standard of proof never applies.
    3. Executive rather than judicial review: An Advisory Board, not a trial court, examines the detention, and the detenu's only judicial route is a writ petition.
    4. Vague standards for public order: The distinction between a law and order breach and a public order breach is not statutorily defined, so classification is a matter of executive judgment.
    5. Successive detention orders: A fresh order can follow the revocation of an earlier one, extending confinement beyond the period any single order permits.
    6. Use against speech and association: Writing, publishing, reading and participating in earlier protests have been cited as material in detention grounds, converting protected expression into evidence of apprehended threat.

    Laws and Rules Governing Preventive Detention and Public Order in India

    1. Preventive Detention Act, 1950: The first post independence preventive detention statute, tested in A.K. Gopalan versus State of Madras in 1950, and allowed to lapse in 1969.
    2. Maintenance of Internal Security Act, 1971: Provided for preventive detention on internal security grounds and was repealed in 1978.
    3. Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974: Permits preventive detention in smuggling and foreign exchange matters, and remains in force.
    4. National Security Act, 1980: Permits detention for up to one year to prevent a person from acting prejudicially to the defence of India, the security of the State, relations with foreign powers, the maintenance of public order, or the maintenance of supplies and services essential to the community.
    5. Detention orders may be passed by a district magistrate, a commissioner of police or the State government, and must be confirmed by the State government.
    6. Prevention of Illicit Traffic in Narcotic Drugs and Psychotropic Substances Act, 1988: Provides preventive detention in narcotics cases.
    7. Unlawful Activities (Prevention) Act, 1967: Governs terrorist and unlawful association offences, with restrictive bail conditions in place of ordinary bail jurisprudence.
    8. Bharatiya Nagarik Suraksha Sanhita, 2023: Replaced the Code of Criminal Procedure, 1973 and carries the preventive powers of the police and the magistracy, including the dispersal of unlawful assemblies.
    9. Bharatiya Nyaya Sanhita, 2023: Carries the substantive offences of rioting, unlawful assembly, mischief and criminal conspiracy on which protest prosecutions are built.
    10. State security legislation: Several States operate their own public safety or goonda acts providing for preventive detention on locally defined grounds.

    Back2Basics: The Four Labour Codes

    1. What they are: Four consolidated central statutes that subsume 29 earlier central labour laws into a single framework covering wages, industrial relations, social security and workplace safety.
    2. Code on Wages, 2019: Merges four laws including the Minimum Wages Act, 1948 and the Payment of Wages Act, 1936, and provides for a statutory floor wage set by the Centre below which no State may fix its minimum wage.
    3. Industrial Relations Code, 2020: Merges three laws on trade unions, standing orders and industrial disputes, and raises the threshold for prior government permission for retrenchment and closure to establishments with 300 or more workers.
    4. Code on Social Security, 2020: Merges nine laws on provident fund, gratuity, maternity benefit and employees' state insurance, and for the first time brings gig and platform workers within the definition of beneficiaries.
    5. Occupational Safety, Health and Working Conditions Code, 2020: Merges 13 laws on factories, contract labour, migrant workmen and specific hazardous sectors.
    6. Coverage of minimum wages: The Code on Wages, 2019 extends minimum wage entitlement to all employees in both organised and unorganised sectors, whereas the earlier law applied only to scheduled employments.
    7. Why they figure here: A rumour in late March 2026 that the Codes would raise minimum wages was one of the three stated triggers of the Noida protests.

    Way Forward

    1. Require individualised allegations in a First Information Report: A complaint naming an unascertained crowd should be treated as insufficient to sustain custody absent a specific act attributed to a named person.
    2. Apply a statutory bail timeline in protest cases: A fixed outer limit for the first bail hearing would prevent the process itself becoming the punishment, as the 53 day average shows it did.
    3. Restrict preventive detention to defined public order threats: A statutory definition distinguishing a law and order breach from a public order breach would narrow the discretion the National Security Act, 1980 currently leaves to the detaining authority.
    4. Bar expression and association as sole detention grounds: Books read, publications authored and participation in earlier lawful protests should not by themselves constitute material for a preventive order.
    5. Enforce the Code on Wages, 2019 floor wage: Timely notification and revision of minimum wages removes the grievance that produced the agitation, since Uttar Pradesh conceded the revision within four days of the protests.
    6. Regulate contract hiring: Registration of contractors and a statutory grievance route for contract workers gives them a channel short of street protest, addressing the absence of any union or employer of record.
    7. Institutionalise a protest response protocol: A published standard for how the police respond to a peaceful assembly, applied uniformly, would end the disparity between the assurance given at Jantar Mantar and the crackdown at Noida.

    Matching Previous Year Question

    “[2023] Consider the following statements: 1. According to the Constitution of India, the Central Government has a duty to protect States from internal disturbances. 2. The Constitution of India exempts the States from providing legal counsel to person being held for preventive detention 3. According to the Prevention of Terrorism Act, 2002, confession of the accused before the police cannot be used as evidence. How many of the above statements are correct? (a) Only one (b) Only two (c) All three (d) None Answer: (a)”

  • Early Closure of the FCNR(B) Swap Window and the Cost of Absorbing Dollars

    Why in the News

    The Reserve Bank of India (RBI) advanced the closure of the Foreign Currency Non-Resident (Bank), or FCNR(B), swap window by a month, and the RBI Governor defended the move on 19 August 2026 as a calibrated and data driven response rather than a reversal. The decision exposes a shift in the objective of India's forex defence, from maximising dollar inflows to managing the rising domestic cost of absorbing them.

    What is the FCNR(B) deposit and what was the swap window?

    1. The deposit: FCNR(B) deposits allow non residents to hold money in an Indian bank in the foreign currency itself, so the depositor faces no rupee exchange risk on the principal.
    2. Permanent availability: These deposits are available at all times and are a standing category of non resident deposit, not a temporary scheme.
    3. The temporary swap facility: In June 2026 the RBI opened a temporary window allowing banks to swap these foreign currency deposits with the central bank, with the RBI bearing the full currency risk on them.
    4. What the window did: By taking the currency risk off bank balance sheets, the facility made it commercially attractive for banks to mobilise fresh foreign currency deposits and convert them into rupee resources.

    What are External Commercial Borrowings?

    1. Foreign currency loans to Indian entities: External Commercial Borrowings (ECBs) are commercial loans raised by eligible Indian resident entities from recognised non resident lenders, governed by RBI limits on amount, maturity, end use and all in cost.

    What are Overseas Foreign Currency Borrowings?

    1. Bank borrowing abroad: Overseas Foreign Currency Borrowings (OFCBs) are foreign currency funds raised abroad by Indian banks themselves, typically through their overseas branches, and brought back to support domestic foreign currency lending and liquidity.

    What is sterilisation?

    1. Neutralising the rupee side of a dollar purchase: Sterilisation is the operation by which a central bank absorbs the rupee liquidity it releases when it buys foreign currency, using instruments such as open market sales of government securities or cash reserve ratio changes, so that the forex purchase does not add to domestic money supply.
    2. Why it has a cost: The central bank earns a low return on the dollars it holds and pays a higher domestic rate on the instruments used to absorb the rupees, and that spread is the sterilisation cost, which rises the longer the position is held.

    Why did the RBI advance the closure of the window?

    1. Inflows exceeded expectations: Inflows had been stronger than the RBI and most market participants had expected, so the quantity objective of the facility was met ahead of schedule.
    2. Diminishing marginal utility of each dollar: The Governor stated that there is a diminishing marginal utility of every dollar that is swapped, because each additional dollar adds less to an already adequate reserve and inflow position.
    3. Rising marginal cost: At the same time there is an increasing marginal cost, because the rupee liquidity created has to be sterilised for a longer period, and that cost accumulates with the size and duration of the position.
    4. A decision from strength: The closure was taken from a position of strength rather than under stress, and forms part of the RBI's wider external sector management.
    5. Not a reversal: The Governor stated that it would not be correct to call it a U turn, that it is rather a calibration, and that the move demonstrated the central bank's ability to remain flexible and data dependent amid rapidly changing conditions.

    Does an early closure amount to a policy reversal or a calibration?

    1. The criticism: Remarks made after the Monetary Policy Committee meeting of 5 August 2026 were read by the market as ruling out an early closure, so bringing the date forward within two weeks was read as a reversal of stated guidance.
    2. The defence on wording: The Governor pointed to the use of the words as of now in the statement that there was no proposal to advance the last date, which conditioned the guidance on the information available at that moment.
    3. The defence on process: The RBI had also said it would keep stakeholders informed of any decision, which on the central bank's reading indicated that an early closure had not been ruled out.
    4. The underlying trade off: Data dependence requires a central bank to change course when the data changes, while forward guidance requires it to keep its word, and the two objectives pull against each other whenever conditions move faster than the guidance horizon.
    5. Why the distinction matters commercially: Banks and depositors price fixed tenure instruments against the announced window, so an advanced closure imposes a real cost on those who planned against the earlier date, regardless of how the change is described.

    What do the three schemes mean for India's balance of payments?

    1. The combined expectation: The RBI expects the three schemes together, FCNR(B), ECBs and OFCBs, to attract at least $80 billion.
    2. What the number signals: The Governor stated that this reflects the country's strong macroeconomic fundamentals and would further strengthen the balance of payments.
    3. The channel: All three are capital account inflows, so they finance the current account deficit and add to reserves without requiring an improvement in the trade balance itself.
    4. The currency backdrop: The rupee stood at 95.76 to the United States dollar and the Indian basket crude oil price at $92.11 a barrel as of 18 August 2026, which is the pressure the inflows are being mobilised against.
    5. The market backdrop: The Sensex closed at 76,909.68, down 325.78 points or 0.42%, and the Nifty at 24,078.30, down 76.60 points or 0.32%, on the day the remarks were made.

    What did the Governor prescribe for Indian banks to reach global scale?

    1. The stated ambition: The Prime Minister has set out the objective of having an Indian bank among the world's top five, and the Governor stated that Indian banks have the scale and ability to achieve a larger global footprint and are on the right path.
    2. Governance and institutional strength: Banks must continue improving governance and institutional strength and build a sound risk management culture.
    3. Customer trust: They must sustain good customer service and retain customer trust, which the Governor listed as a distinct requirement rather than a consequence of the others.
    4. Technology and cost: They need to invest continuously in technology, reduce costs, improve efficiency and expand their reach.
    5. People: They must continuously train and equip their staff to adapt nimbly to a growing economy and a fast evolving financial system.
    6. On mergers: Asked whether bank mergers would hasten the process, the Governor said what is needed is a good, strong banking system with healthy competition, that the government merged a few banks earlier, and that whether there is a case for further mergers is a call the government can take.

    Challenges to the RBI's Forex Inflow Schemes and External Sector Management

    1. Sterilisation cost accumulates on the central bank's own balance sheet: Every dollar absorbed requires rupee liquidity to be withdrawn at a domestic rate higher than the return earned on reserves, and the spread is a direct cost. e.g. sustained open market sales of government securities to absorb liquidity push up domestic yields at the same time as the government is running a large borrowing programme.
    2. The inflows are debt creating, not equity: ECBs, OFCBs and FCNR(B) deposits all create a repayment obligation in foreign currency, unlike foreign direct investment, so they improve the balance of payments today at the cost of a redemption cliff later. e.g. the $34 billion FCNR(B) mobilisation of 2013 produced a concentrated redemption in late 2016 that the RBI had to manage through a pre announced forward book.
    3. Currency risk transfers to the central bank, not away from the system: Under the swap facility the RBI bears the full currency risk, so a sharp rupee depreciation converts a banking sector exposure into a public balance sheet loss. e.g. with the rupee at 95.76 to the dollar, every further rupee of depreciation raises the rupee cost of returning the same dollar principal.
    4. Guidance reversals raise the risk premium on future schemes: Advancing a closure date after indicating no such proposal makes participants discount the next announced window. e.g. banks that had built deposit mobilisation campaigns around the original closure date carry stranded acquisition costs.
    5. Inflows can reverse faster than they arrived: Non resident deposits and portfolio linked borrowings respond to interest rate differentials and can exit within a quarter. e.g. foreign portfolio investors withdrew a record of about Rs 1.66 lakh crore from Indian markets in 2025.
    6. Oil dominates the current account the schemes are financing: India imports the bulk of its crude requirement, so a rise in the crude price widens the deficit faster than capital inflows can be mobilised. e.g. the Indian basket price at $92.11 a barrel on 18 August 2026 sits well above the levels around which recent import bills were budgeted.
    7. Tariff shocks can undercut the export side simultaneously: Trade restrictions imposed by a major partner reduce export earnings at the same time as capital inflows are being courted. e.g. the imposition of tariffs of up to 50% on Indian goods by the United States in August 2025 hit textiles and auto components, which are labour intensive export earners.
    8. Concentration of banking scale can weaken competition: Pursuing a top five global bank through further mergers reduces the number of competing lenders, which the Governor himself flagged by insisting on healthy competition. e.g. the amalgamation of ten public sector banks into four with effect from 1 April 2020 cut the number of public sector banks from 27 in 2017 to 12.

    Conclusion

    The early closure of the FCNR(B) swap window is best read not as a change of view on the rupee but as the point at which the RBI judged the marginal cost of absorbing another dollar to exceed its marginal benefit. With the three schemes expected to deliver at least $80 billion, the quantity objective is largely met, and the residual task is managing the sterilisation cost of the liquidity already created. The open question is whether the communication cost of advancing an announced date will raise the price of the next facility the RBI needs to open.

    India's External Sector: Capital Flows and the Rupee

    Source: Backgrounder, External Sector_ FDI,FPI, Weakening Rupee against Dollar.docx

    1. Foreign Direct Investment: Foreign Direct Investment (FDI) is investment made to acquire a lasting interest and significant control over an enterprise, defined as 10% or more of the post issue paid up equity capital of a listed company, or any stake in an unlisted company.
    2. Foreign Portfolio Investment: Foreign Portfolio Investment (FPI) is investment in financial assets for short term financial gain without control, defined as less than 10% of the paid up equity capital of a listed company.
    3. Divergent stability: FDI is long term, strategic and often tied to physical assets such as factories, while FPI is highly liquid, passive and prone to sudden reversals during global stress.
    4. Split regulation: FDI is regulated primarily by the RBI under the Foreign Exchange Management Act and by the Department for Promotion of Industry and Internal Trade through the Consolidated FDI Policy, while FPI is regulated by the Securities and Exchange Board of India under the SEBI (Foreign Portfolio Investors) Regulations, 2019.
    5. FDI entry routes: Investment enters either through the automatic route, requiring no prior approval and only reporting to the RBI, or the government approval route requiring prior clearance, for example food retail and defence above 74%.
    6. Prohibited sectors: FDI is barred in atomic energy, gambling and lotteries, chit funds and Nidhi companies, real estate other than townships and special economic zones, and tobacco.
    7. Recent flow stress: Net FDI turned negative for three consecutive months even as gross inflows remained strong, driven by higher outward direct investment by Indian companies and high repatriation by foreign companies operating in India.
    8. The harvest phase: Many investments made in the early 2000s have reached a stage where funds prioritise profit booking over expansion, so repatriation rises without any deterioration in the investment climate.
    9. Portfolio outflow scale: FPIs recorded a record outflow of about Rs 1.66 lakh crore, roughly $18.9 billion, in 2025, the largest since FPI investment began in India.
    10. Financialisation of FDI: A growing share of FDI is routed through Alternative Investment Funds rather than direct industrial equity, so headline FDI increasingly behaves like volatile portfolio money and delivers less technology transfer.
    11. Round tripping: A large share of inflows still originates from Mauritius and Singapore, which points to tax arbitrage rather than fresh industrial capital and inflates the headline number relative to its productive impact.

    Statutory and Regulatory Framework Governing India's External Sector

    1. Foreign Exchange Management Act, 1999: Replaced the earlier control based regime and governs all current and capital account transactions, with the RBI as the administering authority.
    2. Section 6 of the Foreign Exchange Management Act, 1999: Empowers the RBI, in consultation with the Union Government, to specify the permissible classes of capital account transactions and the limits on them, which is the source of the FCNR(B), ECB and OFCB frameworks.
    3. Reserve Bank of India Act, 1934: Vests the RBI with the management of the country's foreign exchange reserves and with the issue and regulation of currency.
    4. Foreign Exchange Management (Deposit) Regulations, 2016: Govern non resident deposit accounts, including the FCNR(B), Non-Resident External and Non-Resident Ordinary categories.
    5. External Commercial Borrowings Master Direction of the RBI: Fixes eligible borrowers, recognised lenders, minimum average maturity, all in cost ceilings and permitted end uses for ECBs.
    6. Prevention of Money Laundering Act, 2002: Applies reporting and beneficial ownership requirements to cross border financial flows through banks and market intermediaries.
    7. SEBI (Foreign Portfolio Investors) Regulations, 2019: Govern registration, categorisation and investment limits for foreign portfolio investors in Indian securities.
    8. Consolidated FDI Policy of the Department for Promotion of Industry and Internal Trade: Codifies sectoral caps, entry routes and conditionalities for foreign direct investment.

    Government and Central Bank Initiatives to Manage External Sector Stress

    Source: Backgrounder, External Sector_ FDI,FPI, Weakening Rupee against Dollar.docx

    1. Open market operation purchases of government securities: A programme of about Rs 2 trillion in open market purchases, conducted in tranches, was used to offset the domestic cash crunch caused by portfolio investors pulling out of Indian equities.
    2. Dollar rupee swap and forex sales: A $10 billion dollar rupee swap auction, alongside direct sale of dollars, was used to prevent the rupee from crashing through a threshold level during a period of dollar shortage.
    3. Trade diversification through free trade agreements: The India European Union Free Trade Agreement and the India United Kingdom Comprehensive Economic and Trade Agreement are being used to reduce dependence on a single dominant export market.
    4. National Single Window System: Integrates 32 central departments and more than 25 States into a unified clearance portal to reduce approval delays that deter foreign investors.
    5. Jan Vishwas amendments: Decriminalisation of a large set of minor industry offences and removal of imprisonment for technical violations, aimed at reducing the perception of regulatory risk.
    6. New labour codes: Nationwide implementation of the four labour codes to simplify compliance on wages and social security for foreign investors.
    7. Beneficial ownership screening: Stricter beneficial ownership checks and portal upgrades to ensure incoming FDI brings permanent technology rather than tax arbitrage capital.

    Key Facts about India's Foreign Exchange Framework

    1. The rupee stood at 95.76 to the United States dollar and the Indian basket crude oil price at $92.11 a barrel as of 18 August 2026.
    2. The three schemes of FCNR(B), ECBs and OFCBs are together expected to attract at least $80 billion.
    3. India follows a managed float exchange rate regime, in which the rupee's external value is market determined and the RBI intervenes only to curb excessive volatility, not to defend a level.
    4. India's exchange rate arrangement is classified by the International Monetary Fund on the basis of observed intervention behaviour, not on any officially announced peg.
    5. The Foreign Exchange Management Act, 1999 replaced the Foreign Exchange Regulation Act, 1973, converting foreign exchange violations from criminal offences into civil contraventions.
    6. Non resident Indians hold rupee denominated deposits through Non-Resident External and Non-Resident Ordinary accounts, and foreign currency denominated deposits through FCNR(B) accounts.
    7. Portfolio investors withdrew a record of about Rs 1.66 lakh crore, roughly $18.9 billion, from Indian markets in 2025.
    8. Foreign direct investment is defined at a threshold of 10% or more of the post issue paid up equity capital of a listed company, the internationally standard cut off separating direct from portfolio investment.

    Back2Basics: India's Foreign Exchange Reserves

    1. What they are: Foreign exchange reserves are external assets held and controlled by the RBI that are readily available to finance a balance of payments gap and to intervene in the currency market.
    2. Four components: Reserves comprise foreign currency assets, gold, Special Drawing Rights held with the International Monetary Fund, and the Reserve Tranche Position with the Fund.
    3. Foreign currency assets: The largest component, held mainly in sovereign bonds, treasury bills and deposits with other central banks and the Bank for International Settlements, denominated chiefly in United States dollars, euros, pounds sterling and yen.
    4. Gold: Held partly domestically and partly in custody abroad, and revalued periodically, so movements in the gold price alone change the headline reserve number without any transaction.
    5. Special Drawing Rights: An international reserve asset created by the International Monetary Fund, allocated to members in proportion to their quota, whose value is set from a basket of five currencies comprising the United States dollar, euro, Chinese renminbi, Japanese yen and pound sterling.
    6. Reserve Tranche Position: The portion of a member's quota subscription paid in reserve assets, which the member may draw on from the Fund without conditions.
    7. Adequacy measures: Reserve adequacy is judged by the number of months of imports covered, by the ratio of reserves to short term external debt on residual maturity, and by the ratio of reserves to broad money.
    8. The forward book: The RBI's net forward position in the currency market is disclosed separately, because outstanding forward sales are a claim on future reserves that the headline number does not capture.
    9. Custody and disclosure: Reserve data are published weekly in the RBI's Weekly Statistical Supplement, with the currency composition disclosed with a lag in the half yearly report on foreign exchange reserves.

    Challenges in India's External Sector

    Source: Backgrounder, External Sector_ FDI,FPI, Weakening Rupee against Dollar.docx

    1. Protectionism and policy shocks abroad: Tariff escalation and trade fragmentation divert capital toward friend shoring hubs or back to home markets. e.g. tariffs rising to 50% on key Indian goods in August 2025 directly hit export oriented manufacturing in textiles and automobiles.
    2. Competing destinations with faster approvals: Rival economies offer quicker clearances and wider free trade agreement networks for near shoring investors. e.g. Vietnam, Indonesia and Mexico have absorbed a large share of the China plus one relocation that India was positioned to attract.
    3. Policy unpredictability: Frequent regulatory pivots undermine investor trust in the stability of the rules. e.g. retrospective taxation disputes and changes in e-commerce marketplace rules in 2025 sustained a perception of high regulatory risk.
    4. Cumbersome approvals: Land and environmental clearances remain a bottleneck for greenfield investment. e.g. roughly 200 FDI proposals faced delays as of August 2025 because of screening requirements, and legacy cases such as the abandoned $12 billion POSCO project continue to define the land risk narrative.
    5. Skill mismatch in frontier sectors: Only about 5% of India's workforce is formally skilled, with acute shortages in wafer fabrication and artificial intelligence roles. e.g. semiconductor and electric vehicle investors face a talent gap that constrains how much high value FDI India can absorb.
    6. Weak contract enforcement: Long drawn arbitration and a backlog in commercial courts raise the perceived exit risk for investors. e.g. multi year tax arbitration such as the Cairn Energy dispute is repeatedly cited as evidence of an unpredictable legal exit.
    7. Round tripping and financialisation: A large share of inflows originates in low tax jurisdictions and an increasing share is routed through Alternative Investment Funds rather than industrial equity. e.g. persistent concentration of inflows from Mauritius and Singapore points to tax arbitrage rather than fresh productive capital.
    8. Weak external demand: Cooling global orders discourage export oriented investment in labour intensive sectors. e.g. purchasing managers' index readings in April 2025 recorded a sharp cooling in Indian export orders.

    Way Forward

    1. Publish a sterilisation cost disclosure: Report the carrying cost of intervention alongside the reserve number, so that decisions to open or close swap windows can be evaluated against a visible fiscal and balance sheet cost.
    2. Pre announce redemption management for debt creating inflows: Publish the maturity profile of FCNR(B), ECB and OFCB obligations and the forward cover arranged against them, so that a redemption cliff is priced in advance rather than discovered.
    3. Attach conditions and horizons to guidance: State the data conditions under which a stated window date could change at the time the guidance is issued, so that a data driven adjustment is not read as a reversal.
    4. Rebalance toward equity inflows: Reduce the reliance on debt creating flows by removing sectoral entry frictions and completing single window clearances, so that the same balance of payments support carries no repayment obligation.
    5. Diversify export markets through concluded agreements: Operationalise the European Union and United Kingdom trade agreements at the level of standards, rules of origin and customs procedure, so that the current account improves rather than being financed by capital.
    6. Deepen the onshore rupee derivatives market: Widen participation in exchange traded currency futures and the non deliverable forward segment, so that hedging demand is met onshore and the RBI is not the residual bearer of currency risk.
    7. Reduce the oil exposure structurally: Expand strategic petroleum reserve capacity, ethanol blending and electric mobility so that a $90 a barrel oil price does not automatically translate into an external financing requirement.
    8. Strengthen banks before consolidating them: Prioritise governance, risk management culture and technology investment, as the Governor set out, over amalgamation, so that scale is built on institutional strength rather than on balance sheet addition.

    Matching Previous Year Question

    “[2018, GS3, 15 marks] How would the recent phenomena of protectionism and currency manipulations in world trade affect macroeconomic stability of India?”

  • Punjab’s decade-long journey towards a formal sacrilege law

    Why in the News

    Punjab brought a stringent sacrilege law into force in April 2026 by amending an existing State statute on the ceremonial custody of the Guru Granth Sahib, avoiding the Presidential assent that had defeated three earlier attempts. The route exposes a conflict between a State's determination to legislate on religious sentiment and the constitutional limits set by secularism, equality, proportionality and the division of legislative competence. A challenge to the Act is pending before the Punjab and Haryana High Court.

    What does Punjab's 2026 sacrilege law do?

    1. What it penalises: It punishes sacrilege committed against the Guru Granth Sahib, and covers no other religious scripture.
    2. The sentence it carries: Its most serious provisions carry a mandatory minimum sentence extending to life imprisonment, leaving no room for a judge to calibrate punishment to the facts of a case.
    3. The statute it amends: It amends a pre existing State law concerned specifically with the ceremonial custody of the Guru Granth Sahib, rather than the central penal code.
    4. How it was brought into force: Because the State argued the amendment falls within its own legislative competence, it claimed no Presidential assent was needed, and the Governor's signature brought it into force in April 2026.

    What is the current status of sacrilege law in India?

    1. The central provision: Insulting religion or religious beliefs with deliberate and malicious intent is an offence under Section 299 of the Bharatiya Nyaya Sanhita, 2023, the successor to Section 295A of the Indian Penal Code, 1860.
    2. The settled constitutional position: Section 295A was upheld in Ramji Lal Modi, and the Supreme Court has not revisited that ruling in almost sixty years.
    3. The intent requirement on paper: Conviction requires proof of deliberate and malicious intent, a threshold the court reads into the provision.
    4. Where the practical harm falls: Indian criminal procedure allows a First Information Report to be lodged and an accused arrested well before any court examines whether that intent was present, so the chilling effect operates at the point of complaint, not at the point of conviction.
    5. No standalone national sacrilege statute: There is no separate central law on sacrilege beyond the religious offence provisions of the Bharatiya Nyaya Sanhita, 2023, which is why Punjab has repeatedly attempted a State law.

    Constitutional Provisions Related to Sacrilege, Speech and Secularism

    1. Article 14: Guarantees equality before the law, and permits classification only where an intelligible differentia bears a rational nexus to the law's stated purpose.
    2. Article 19(1)(a): Guarantees freedom of speech and expression to all citizens.
    3. Article 19(2): Permits reasonable restrictions on that freedom in the interests of public order, decency or morality, among other grounds.
    4. Article 21: Guarantees life and personal liberty, which the Supreme Court has read as requiring a just, fair and reasonable procedure.
    5. Article 25: Guarantees freedom of conscience and the free profession, practice and propagation of religion, subject to public order, morality and health, and permits the State to legislate for social welfare and reform even where this cuts against religious custom.
    6. Entry 1, Concurrent List, Seventh Schedule: Places criminal law within the legislative competence of both Parliament and the State legislatures.
    7. Article 254: Provides that a State law repugnant to a central enactment on the same Concurrent List subject is void to that extent.
    8. Article 254(2): Saves such a State law only where it has been reserved for and has received the assent of the President.

    How did Punjab arrive at this law across a decade?

    1. 2016, the first attempt: The then Akali Dal and Bharatiya Janata Party government passed a bill imposing life imprisonment for sacrilege committed specifically against the Guru Granth Sahib. The Centre returned it, objecting that a law protecting only one religion's scripture could not sit easily with India's secular Constitution.
    2. 2018, the second attempt: The succeeding Congress government extended the same life sentence to the Guru Granth Sahib, the Bhagavad Gita, the Quran and the Bible, through a new Section 295AA of the penal code. That Bill was also returned without Presidential assent.
    3. July 2025, the third attempt: The Aam Aadmi Party government introduced the Punjab Prevention of Offences Against Holy Scripture(s) Bill, again covering all four texts, with sentences ranging from ten years to life. It was sent to a select committee and has since been effectively shelved.
    4. April 2026, the successful route: The State abandoned the amendment of the central penal code and instead amended an existing State statute on the ceremonial custody of the Guru Granth Sahib, bringing the law into force on the Governor's signature alone.
    5. The pattern the sequence shows: A State legislature has persistently tried, by one route or another, to entrench a sacrilege code of ever increasing severity, undeterred by repeated constitutional rebuffs.

    Why does a religion specific penal law run into the equality guarantee?

    1. The classification test it must pass: A provision drawing a line between one community's sacred text and every other's needs an intelligible differentia bearing a rational nexus to its stated purpose, the test the Supreme Court set out in State of West Bengal versus Anwar Ali Sarkar.
    2. Why the classification fails on its own terms: The Act's stated purpose is communal harmony, framed in terms of all communities, and singling out one faith's scripture does not serve a purpose framed in terms of all of them.
    3. The objection is not new: By protecting only the Guru Granth Sahib, the 2026 Act revives precisely the objection that sank the 2016 attempt.
    4. The pending litigation: In May 2026, the Anglican Church of India, through its Amritsar bishop, petitioned the Punjab and Haryana High Court arguing that the Act creates a religion specific penal regime violating equality before law, and sought both the quashing of the Act and a stay on its implementation.
    5. The standing wrinkle: The Bench reportedly questioned how a church whose own scripture the Act does not touch could claim to be aggrieved by it, a question that demonstrates the very defect alleged, since a law can discriminate in structure while leaving those it excludes without the conventional standing to challenge it. The petition remains pending.

    Why does the mandatory life sentence raise a proportionality problem?

    1. What the Act does: Its most serious provisions carry a mandatory minimum sentence extending to life imprisonment, removing all sentencing discretion from the trial judge.
    2. The controlling precedent: In Mithu versus State of Punjab, the Supreme Court struck down a different mandatory sentencing provision precisely because it stripped courts of discretion.
    3. The standard applied: Mithu applied the requirement of a just, fair and reasonable procedure that Maneka Gandhi versus Union of India had read into Article 21.
    4. The parallel is close: The earlier case also arose out of Punjab, which makes the comparison with the 2026 Act direct rather than analogical.
    5. Why proportionality matters here: Sacrilege covers conduct ranging from a deliberate desecration to an inadvertent act, and a single fixed maximum sentence prevents a court from distinguishing between them.

    Does the State have the legislative competence to enact this law?

    1. Where the subject sits: Criminal law sits on the Concurrent List, so both Parliament and the State legislature may legislate on it.
    2. The repugnancy rule: Article 254 makes a State law repugnant to a central enactment on the same subject void to that extent, and the Bharatiya Nyaya Sanhita, 2023 carries its own provisions on sacrilege and on outraging religious feeling.
    3. The only saving route: Article 254(2) saves such a State law only where it has received Presidential assent, which is the requirement that defeated the 2016 and 2018 Bills.
    4. How Punjab avoided it: The State amended a pre existing, ostensibly ceremonial statute rather than the Bharatiya Nyaya Sanhita directly, and argued that no assent was therefore needed.
    5. The challenge to that route: A petition before the Punjab and Haryana High Court argues that a life sentence is a matter of criminal law and cannot dodge central scrutiny merely by changing which statute book it sits in.

    Why does the free speech objection survive despite Ramji Lal Modi?

    1. The vagueness of the operative terms: Section 295A and its successor in the Bharatiya Nyaya Sanhita, 2023 rest on terms such as outrage, insult and religious feelings, policed after the fact by whichever officer receives the complaint.
    2. The precedent that should apply: In Shreya Singhal versus Union of India in 2015, the court struck down Section 66A of the Information Technology Act, 2000 in its entirety, holding that criminalising online messages using undefined terms such as offensive and menacing left the provision impermissibly vague, invited arbitrary enforcement and chilled protected speech in violation of Article 19(1)(a).
    3. The terms are no more precise: The words on which the religious offence provisions rest are as undefined as the words the court found fatal in Shreya Singhal.
    4. What the court has not done: It has never brought the Shreya Singhal reasoning to bear on Section 295A, whose constitutionality it settled in Ramji Lal Modi almost sixty years earlier and has not revisited since.
    5. The reason for the gap: The inconsistency reads as reluctance rather than principle, since it is easier to strike down a recent statute governing an unfamiliar medium than to unsettle an eighty year old precedent with a long and emotionally fraught history behind it.
    6. What the vagueness enables: A cartoon, a novel, a documentary or a stray remark on social media can all be made to fit the language of insult without any accompanying threat of actual disorder.

    Major debates surrounding sacrilege law

    1. Secularism as an unamendable limit: Secularism was declared part of the Constitution's unamendable basic structure in S.R. Bommai versus Union of India, precisely so that the State could neither favour a religion nor punish disrespect towards one, and a sacrilege law does the second.
    2. Religious freedom against religious reform: Article 25 protects the practice of religion and at the same time preserves the space for social reformers, sceptics and atheists to challenge religious practice, since the right is subject to public order, morality and health and the State may legislate for reform.
    3. Public order as a threshold or a label: One position requires an actual threat of disorder before speech may be punished, the other treats the giving of offence as itself a disturbance of public order.
    4. Ramji Lal Modi against Shreya Singhal: Two lines of authority now sit in tension, one upholding a vague religious offence provision and the other striking down a vague online speech provision on the same reasoning.
    5. Federal competence against local sentiment: A State legislature responding to local religious sentiment collides with a national criminal code and the Article 254 assent requirement designed to keep criminal law uniform.
    6. Deterrence against chilling effect: Severe sentences are defended as deterrence against desecration, and are opposed on the ground that the harm is inflicted at the stage of arrest, long before any court weighs intent.

    Challenges to enforcing a sacrilege law

    1. Undefined operative terms: Insult and outrage are not statutorily defined, so the same conduct produces prosecution in one district and none in another. e.g. Section 66A of the Information Technology Act, 2000 was struck down in Shreya Singhal in 2015 for exactly this defect.
    2. Arrest precedes adjudication of intent: A First Information Report can be registered and an accused arrested before any court tests the deliberate and malicious intent the offence requires. e.g. the 2026 Punjab Act's life sentence attaches to a charge that a magistrate never has to evaluate before custody begins.
    3. Selective protection invites litigation: Protecting one scripture and not others invites an equality challenge that can stall the law for years. e.g. the Anglican Church of India's May 2026 petition before the Punjab and Haryana High Court, still pending.
    4. No sentencing discretion: A mandatory minimum forces the same punishment on a deliberate desecration and an inadvertent act. e.g. Mithu versus State of Punjab struck down a mandatory sentencing provision for removing exactly this discretion.
    5. Repugnancy risk to the whole statute: A State criminal law that overlaps a central enactment is void to the extent of repugnancy unless it carries Presidential assent, so the entire Act can fall on a procedural ground. e.g. the 2016 and 2018 Punjab Bills were both returned without assent.
    6. Incentive for mob complaint: A severe penalty attached to a subjective standard makes the police complaint itself a weapon against critics, writers and artists. e.g. the returned 2018 Bill would have extended a life sentence to insult of four separate scriptures, multiplying the categories of complainant.
    7. Standing gap for excluded groups: A community whose scripture the law does not cover may be told it is not aggrieved, so the discrimination cannot be tested. e.g. the Punjab and Haryana High Court's question to the Amritsar bishop in the pending petition.

    Conclusion

    Punjab's 2026 Act carries three distinct constitutional infirmities at once: an equality defect under the Anwar Ali Sarkar test, a proportionality defect under Mithu, and a legislative competence defect under Article 254. Each of these is separate from the broader secularism objection that a State may neither favour a religion nor punish disrespect towards one. The petitions challenging the Act remain pending before the Punjab and Haryana High Court, and the next milestone is that court's decision on the quashing and stay applications.

    What is Secularism as a Constitutional Doctrine?

    1. About: Indian secularism requires the State to maintain equal distance from all religions, neither establishing nor favouring one, while retaining the power to regulate the secular aspects of religious practice.
    2. Rationale: It exists to secure equal citizenship in a society of multiple faiths, so that a citizen's legal standing does not vary with religious affiliation.
    3. Its constitutional status: It was declared part of the Constitution's unamendable basic structure in S.R. Bommai versus Union of India, and was written into the Preamble by the Forty second Amendment in 1976.
    4. Its distinguishing feature: Unlike a strict wall of separation, the Indian model allows positive State intervention in religion for social welfare and reform, which Article 25(2) expressly authorises.
    5. Where it is enforced: Articles 25 to 28 supply the operative provisions, and Article 15 and Article 16 bar religious discrimination by the State.

    Key Concerns Regarding Constitutional Secularism

    1. State regulation shading into State preference: The power to reform religious practice can be exercised unevenly across communities, converting regulation into favour.
    2. Religious offence provisions in a secular code: Criminal provisions protecting religious feelings require the State to adjudicate what counts as an insult to faith, a task secularism was meant to keep it out of.
    3. Uneven codification of personal law: Some communities' family law is codified and reviewable while others' is not, producing different legal protection for identically placed citizens.
    4. The essential religious practices test: Courts must decide what is essential to a religion before they may regulate it, drawing judges into theological determination.
    5. Local majoritarian legislation: State legislatures respond to locally dominant religious sentiment, so a nationally uniform standard fragments at the State level.
    6. Enforcement discretion at the police station: Where the offence turns on a subjective standard, the identity of the complainant rather than the conduct determines whether the law is invoked.

    Laws and Rules Governing Speech Restrictions in India

    Source: Backgrounder, Limits on Speech.docx

    1. Constitutional provision: Article 19(1)(a) guarantees free speech and Article 19(2) permits enumerated reasonable restrictions.
    2. Constitutional anchors for hate speech regulation: Article 14 on equality, Article 15 on non discrimination, Article 21 on dignity, Article 51A on the fundamental duty of harmony, and the Preambular value of fraternity.
    3. Bharatiya Nyaya Sanhita, 2023: Section 196 on promoting enmity between groups, Section 197 on imputations prejudicial to national integration, Section 299 on outraging religious feelings, and Section 356 on defamation.
    4. Section 152, effective from 1 July 2024, replaced Section 124A of the Indian Penal Code, 1860 and criminalises acts exciting secession, armed rebellion, subversive activities, separatist feelings or endangering sovereignty, unity and integrity, with punishment extending to life imprisonment.
    5. Representation of the People Act, 1951: Section 123(4) prohibits false statements about candidates during elections, and the Act carries the electoral speech restrictions.
    6. Information Technology Act, 2000 and the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021: Govern online content, intermediary due diligence and takedown obligations.
    7. Cable Television Networks (Regulation) Act, 1995: Prohibits misleading and prohibited broadcast content under its Programme Code.
    8. Cinematograph Act, 1952: Governs film certification and censorship.
    9. Indecent Representation of Women (Prohibition) Act, 1986: Restricts indecent depiction of women in publications and advertisements.
    10. Kedar Nath Singh versus State of Bihar (1962): Sedition requires both a tendency to create disorder and incitement to violence, and vigorous criticism of government measures is protected.
    11. Shreya Singhal versus Union of India (2015): Distinguishes discussion, advocacy and incitement, protects discussion and advocacy even where unpopular, and holds that vague terms such as annoyance or inconvenience cannot be the basis for restricting speech.
    12. Amish Devgan versus Union of India (2020): Applies a three part contextual test of content, intent of the speaker and harm caused or likely to be caused, with public figures held to a higher standard.
    13. Ashwini Kumar Upadhyay versus Union of India (29 April 2026): The Supreme Court dismissed a batch of petitions seeking new hate speech laws, holding that creating criminal offences belongs exclusively to the legislature and that the existing framework is adequate, the real problem being an enforcement deficit.

    Back2Basics: S.R. Bommai versus Union of India

    1. What it is: A Supreme Court ruling of 1994 delivered by a nine judge bench, arising out of the dismissal of State governments and the imposition of President's Rule under Article 356.
    2. Its holding on federalism: It made the exercise of Article 356 justiciable, requiring the proclamation to rest on relevant material and permitting courts to restore a dismissed government.
    3. Its holding on secularism: It declared secularism a part of the Constitution's basic structure, and therefore beyond the amending power under Article 368.
    4. The consequence for State action: A State government acting against secularism can itself be a ground for action under Article 356.
    5. Why it governs this item: It is the authority for the proposition that the State may neither favour a religion nor punish disrespect towards one, which is the core objection to a scripture specific penal law.
    6. Its broader effect: It sharply reduced the routine use of President's Rule, which had been invoked over a hundred times before the ruling.

    Way Forward

    1. Legislate through the correct route: A State that wishes to create a criminal offence on a Concurrent List subject should reserve the Bill for Presidential assent under Article 254(2) rather than route it through a ceremonial statute.
    2. Protect all scriptures equally or none: A provision framed around communal harmony must apply uniformly across faiths to satisfy the intelligible differentia and rational nexus test.
    3. Restore sentencing discretion: Replacing the mandatory minimum with a graded range lets courts distinguish deliberate desecration from an inadvertent act, meeting the Mithu standard.
    4. Define the operative terms: Statutory definitions of insult and religious feelings, and an express requirement of proximate incitement, would reduce the vagueness Shreya Singhal identified as fatal.
    5. Insert a pre registration safeguard: Requiring a preliminary inquiry or prior sanction before a First Information Report is registered addresses the chilling effect that operates at the point of complaint.
    6. Refer Ramji Lal Modi for reconsideration: A larger bench revisiting the 1957 ruling in the light of Shreya Singhal would settle the doctrinal inconsistency that now runs through religious offence law.

    Matching Previous Year Question

    “[2025, GS2, 15 marks] Examine the evolving pattern of Centre-State financial relations in the context of planned development in India. How far have the recent reforms impacted the fiscal federalism in India?”

  • 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.