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Type: Prelims Only

  • Centre approves 1 billion Rs 10, Rs 20 polymer banknotes

    Why in News?

    Government approved 1 billion polymer notes each of ₹10 and ₹20 for field trials, following an RBI proposal under Section 25 of the RBI Act, 1934.

    What are Polymer Banknotes?

    • Made from a thin plastic film instead of cotton-paper.
    • More durable, moisture-resistant and hygienic.
    • Offer enhanced anti-counterfeiting features.
    • Have a longer circulation life, reducing replacement needs.

    Government Approval

    • Denominations: ₹10 and ₹20.
    • Quantity: 1 billion each.
    • Will circulate alongside paper notes.
    • Regular issuance will depend on successful field trials.
    • Procurement is at an initial stage, so cost and timeline are not yet fixed.

    Why Polymer Notes?

    • Longer life → lower replacement costs.
    • Higher security → difficult to counterfeit.
    • Better durability → resistant to dirt, water and wear.
    • Global precedent → used by several countries.

    Currency Management: Key Facts

    • RBI: Sole issuer of banknotes, except ₹1 note.
    • Government of India: Issues coins and ₹1 note.
    • Section 22, RBI Act: RBI’s sole right to issue banknotes.
    • Section 24: Specifies permissible denominations.
    • Section 25: Design, form and material require Central Government approval on RBI recommendation.
    • Coinage Act, 2011: Governs coins and ₹1 note.

    Back2Basics: RBI

    • Established under RBI Act, 1934; began operations in 1935.
    • Nationalised in 1949.
    • Functions as India’s central bank and monetary authority.
    • Manages currency, monetary policy, banking and payment systems.

    [2025] Which of the following are the sources of income for the Reserve Bank of India?
    I. Buying and selling Government bonds
    II. Buying and selling foreign currency
    III. Pension fund management
    IV. Lending to private companies
    V. Printing and distributing currency notes
    Select the correct answer using the code given below.

    [A] I and II only

    [B] II, III and IV

    [C] I, III, IV and V

    [D] I, II and V

  • Govt extends PM E-DRIVE scheme timeline, sop halved

    Why in the news?

    The Centre has extended the PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-DRIVE) Scheme for electric two wheelers till 31 March 2028 and halved the per unit incentive to Rs 2,500 per kilowatt hour from Rs 5,000 earlier. The move signals a planned tapering of demand support as electric two wheeler costs fall and the market matures.

    What is the PM E-DRIVE Scheme?

    1. What it is: PM E-DRIVE is the central scheme providing demand incentives and support infrastructure for electric mobility, administered by the Ministry of Heavy Industries. It succeeds the earlier FAME programme as the main demand side push for electric vehicles.
    2. Outlay and duration: It carries an outlay of Rs 11,900 crore and is implemented from 1 April 2024 till 31 March 2028.
    3. Two wheeler support: For electric two wheelers, the scheme sets a total fund support of Rs 2,767 crore from the Ministry of Heavy Industries.

    What has changed?

    1. Timeline extended: The electric two wheeler segment has been extended till 31 March 2028.
    2. Incentive halved: The per unit incentive is cut to Rs 2,500 per kilowatt hour from Rs 5,000 per kilowatt hour earlier.
    3. Per vehicle cap lowered: The incentive is capped at Rs 5,000 per vehicle, down from Rs 10,000 per vehicle in FY 2024-25.
    4. Eligibility window: Registered electric two wheelers can avail the Rs 2,500 per kilowatt hour incentive for the period between 1 April 2025 and 31 March 2028.
    5. Price ceiling: The maximum ex factory price for an electric two wheeler to qualify is Rs 1.5 lakh.
    6. Lower of two limits: The incentive is limited to the specified cap or 15 per cent of the ex factory price of the electric two or three wheeler, whichever is lower, and is subject to periodic review as vehicle costs fall.

    Back2Basics: PM E-DRIVE Scheme

    1. Ministry: Ministry of Heavy Industries.
    2. Launch year: 2024, implemented from 1 April 2024 to 31 March 2028.
    3. Outlay: Rs 11,900 crore.
    4. Aim: Accelerate adoption of electric vehicles and build charging and testing infrastructure.
    5. Beneficiaries: Buyers of electric two, three, and heavier vehicles, state transport undertakings, and charging infrastructure providers.

    Government Initiatives for Electric Mobility

    1. FAME India (Phase I and II): Earlier demand incentive scheme for electric and hybrid vehicles.
    2. PLI Auto Scheme: Production Linked Incentive for advanced automotive technology products.
    3. PLI ACC Battery Scheme: Incentive for domestic advanced chemistry cell battery manufacturing.
    4. Vehicle Scrappage Policy: Phasing out unfit vehicles to spur cleaner replacements.
    5. e-AMRIT portal: A one stop information platform on electric vehicles.

    Key Facts about PM E-DRIVE

    1. Successor scheme: PM E-DRIVE succeeds FAME II as the flagship electric mobility scheme.
    2. Incentive metric: Support is calculated per kilowatt hour of battery capacity.
    3. Segment coverage: Covers electric two wheelers, three wheelers, buses, trucks, and ambulances, plus charging infrastructure.

    Challenges to Electric Vehicle Adoption

    1. Charging infrastructure gap: Public charging networks remain thin outside major cities.
    2. Battery import dependence: Reliance on imported cells and critical minerals raises cost and supply risk.
    3. High upfront cost: Purchase prices stay above comparable petrol vehicles despite incentives.
    4. Range and grid strain: Range anxiety and grid readiness limit uptake in some segments.
    5. Recycling burden: End of life battery disposal needs robust recycling systems.
    6. Incentive dependence: Demand remains sensitive to the level and continuity of subsidies.

    “[2023, GS3, 15 marks] The adoption of electric vehicles is rapidly growing worldwide. How do electric vehicles contribute to reducing carbon emissions and what are the key benefits they offer compared to traditional combustion engine vehicles?”

    [2025] With reference to India, consider the following pairs: Organization Union Ministry
    1. The National Automotive BoardMinistry of Commerce and Industry
    2. The Coir BoardMinistry of Heavy Industries
    3. The National Centre for Trade
    InformationMinistry of Micro, Small and Medium Enterprises
    How many of the above pairs are correctly matched?

    [A] Only one

    [B] Only two

    [C] All the three

    [D] None

  • As AI threat loomed, UPI players flagged rising security costs

    Why in News?

    UPI platforms have flagged rising cybersecurity costs, especially from AI-enabled fraud, renewing demands to allow Merchant Discount Rate (MDR) on UPI.

    What is MDR?

    • MDR: Fee paid by merchants to banks/payment providers for processing digital payments.
    • UPI: MDR is currently zero, so merchants pay no transaction fee.
    • Costs are borne by banks, payment apps and government reimbursements.

    Why are Security Costs Rising?

    • AI-enabled fraud can make sophisticated cyberattacks cheaper and easier.
    • Security accounts for 20%+ of UPI platform costs.
    • Security infrastructure costs around 10 to 20 paise per transaction.
    • Dependence on imported AI/cloud tools adds dollar and currency risks.
    • Rising transaction volumes keep security expenditure high.

    Why Allow MDR?

    • UPI infrastructure is not costless and someone must bear its cost.
    • Reduces dependence on uncertain government subsidies.
    • Provides dedicated funding for cybersecurity and system resilience.

    Concerns

    • Fees on small-value transactions could push users back to cash.
    • Higher costs may disproportionately affect price-sensitive consumers.
    • Poorly designed MDR could weaken UPI’s role as a public digital infrastructure.
    • Foreign AI security tools create strategic and currency dependence.

    UPI: Back2Basics

    • UPI: Real-time interbank payment system developed by NPCI.
    • Enables instant P2P and P2M payments.
    • NPCI: Umbrella organisation for India’s retail payment systems, established in 2008.
    • Key systems: UPI, RuPay, IMPS, BBPS and FASTag.
    • Regulated by RBI under the Payment and Settlement Systems Act, 2007.

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

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

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

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

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

  • India’s first privately-built FFSC rocket engine signals a new dawn in space flight

    Why in the News

    Bengaluru-based Astrobase Space Technologies unveiled EVEREST, India’s first privately built 800 kN Full-Flow Staged Combustion (FFSC) LOX-Methane engine on 7 August 2026. India is now the fourth country after Russia, the US and China with FFSC technology.

    What is an FFSC Engine?

    1. About: An advanced liquid rocket engine architecture offering high thrust and efficiency.
    2. Full-flow: Fuel and oxidiser pass through separate pre-burners, driving turbopumps before entering the main chamber.
    3. Advantage: Almost all propellant contributes to thrust, improving efficiency and reusability.

    What is LOX-Methane?

    • LOX: Liquid Oxygen as oxidiser.
    • Methane: Fuel that burns relatively cleanly, reducing engine deposits and aiding faster refurbishment and turnaround.

    What is IN-SPACe?

    • Indian National Space Promotion and Authorisation Centre, an autonomous agency under the Department of Space.
    • Acts as a single-window agency to promote and authorise private space activities.
    • Astrobase received support through its Technology Adoption Fund.

    Why is EVEREST Significant?

    1. Technology: Makes India the 4th FFSC-capable nation.
    2. Reusability: Suitable for reusable launch vehicles with precise throttle control.
    3. Capacity: Could enable reusable systems carrying up to 30 tonnes to LEO.
    4. Manufacturing: Uses advanced manufacturing, including large-scale 3D printing.
    5. Timeline: Development began in 2024; integrated hot-fire tests are planned at Anantapur, with first flight targeted for December 2028.

    Global Comparison

    • Russia: Pioneer in FFSC technology.
    • USA: SpaceX’s Raptor is the only operational FFSC engine.
    • China: LandSpace has developed a commercial high-thrust FFSC engine.
    • India: EVEREST marks its entry into FFSC technology.

    Private Space Sector in India

    • 2020 reforms: Opened space activities to private players through IN-SPACe.
    • Indian Space Policy 2023: Enables greater private participation across the space value chain.
    • NSIL: Commercial arm of the Department of Space.
    • Firms such as Skyroot Aerospace and Agnikul Cosmos are developing indigenous launch technologies.

    “[2026] Consider the following statements about involvement of private entities in India’s space programme:

    1. IN-SPACe is an autonomous agency formed to facilitate participation of private entities.

    2. Agnikul Cosmos launched the world’s first flight using 3D-printed rocket engine.

    3. Skyroot Aerospace has developed liquid fuel for GSLV.

    (a) 1 only

    (b) 2 and 3 only

    (c) 1 and 2 only

    (d) 1, 2 and 3

  • For energy security, the way forward is not public or private, but both

    Why in the News

    India’s ethanol blending has reached 20%, ahead of the 2030 target. It has displaced 310 lakh tonnes of imported crude, saved over ₹1.90 lakh crore in foreign exchange and transferred over ₹1.6 lakh crore to farmers.

    What is the Ethanol Blended Petrol (EBP) Programme?

    • EBP: Ethanol Blended Petrol Programme blends ethanol, mainly produced from sugarcane and grains, with petrol.
    • E20: 20% ethanol blending has been achieved ahead of schedule.
    • Benefits: Reduces crude imports, supports farmers and lowers emissions.

    What are Strategic Petroleum Reserves (SPR)?

    • SPR: Strategic Petroleum Reserves are underground crude oil storage facilities used as an insurance against supply disruptions.
    • They provide a temporary buffer and must eventually be replenished.

    What has Ethanol Blending Achieved?

    • 20% blending achieved.
    • 310 lakh tonnes of crude imports displaced.
    • ₹1.90 lakh crore+ foreign exchange saved.
    • ₹1.6 lakh crore+ transferred to farmers.
    • 930 lakh tonnes+ CO₂ emissions avoided.

    Why Both Public and Private Players?

    • ONGC: Oil and Natural Gas Corporation, a major state-owned upstream producer.
    • OIL: Oil India Limited, another major state-owned upstream producer.
    • Public sector: Provides strategic control and supports national energy security.
    • Private sector: Brings capital, technology and efficiency into exploration, production and storage.
    • Balanced approach: India needs both strategic public capacity and competitive private participation.

    How Do Reserves and Domestic Production Complement Each Other?

    • SPR: Protects against sudden supply shocks.
    • Domestic production: Reduces imports over the life of an oil field.
    • Overseas stocks: Long-term suppliers could maintain crude stocks earmarked for India.
    • Exploration: Opening more offshore areas can expand domestic resources.

    Energy Security in India

    • Energy security means reliable and affordable energy supply with resilience against disruptions.
    • Four pillars:
      • Domestic production
      • Strategic reserves
      • Import diversification
      • Alternative fuels

      India’s high crude import dependence exposes it to global price shocks and disruptions in chokepoints such as the Strait of Hormuz and Bab el-Mandeb.

      Key Government Initiatives

      • EBP: Ethanol Blended Petrol Programme.
      • NBP: National Policy on Biofuels, 2018.
      • PM JI-VAN: Pradhan Mantri JI-VAN Yojana, promoting 2G (second-generation) ethanol from agricultural residues.
      • SATAT: Sustainable Alternative Towards Affordable Transportation, promoting compressed biogas.
      • SPR Programme: Strategic Petroleum Reserves Programme for crude oil security.

      [2025] Consider the following statements:

      Statement I: Of the two major ethanol producers in the world, i.e., Brazil and the United States of America, the former produces more ethanol than the latter.

      Statement II: Unlike in the United States of America, where corn is the principal feedstock for ethanol production, sugarcane is the principal feedstock for ethanol production in Brazil.

      Which one of the following is correct in respect of the above statements?

      (a) Both Statement I and Statement II are correct and Statement II is the correct explanation for Statement I

      (b) Both Statement I and Statement II are correct and Statement II is not the correct explanation for Statement I

      (c) Statement I is correct but Statement II is incorrect

      (d) Statement I is incorrect but Statement II is correct

    1. Agasthyamalai eviction orders still silence the Forest Rights Act

      Why in the News

      The Forest Department has issued eviction notices to thousands of households in the Agasthyamalai Biosphere Reserve (ABR) following a Supreme Court order for time-bound removal of forest encroachments. The issue highlights the tension between forest conservation and rights under the Forest Rights Act, 2006.

      What is the Forest Rights Act, 2006?

      • Full name: Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act, 2006.
      • Recognises forest rights of Scheduled Tribes (STs) and other traditional forest dwellers.
      • Cut-off: Eligible occupation must pre-date 13 December 2005.
      • Claims are initiated and verified by Gram Sabhas and examined by higher-level committees.
      • Key safeguard: Eviction cannot take place until recognition and verification are completed.

      What is the Agasthyamalai Biosphere Reserve?

      • ABR: Agasthyamalai Biosphere Reserve.
      • Covers about 3,500 sq km across Tamil Nadu and Kerala.
      • Includes Kalakkad-Mundanthurai, Srivilliputhur-Megamalai and Periyar Tiger Reserves, along with wildlife sanctuaries.

      What is the Central Empowered Committee?

      • CEC: Central Empowered Committee.
      • Constituted under Supreme Court directions to monitor forest and environmental compliance.
      • It surveyed the Agasthyamalai landscape and reported violations involving non-forestry activities.

      Who are Other Traditional Forest Dwellers?

      • OTFDs: Other Traditional Forest Dwellers.
      • Non-tribal communities primarily dependent on forests for livelihood.
      • They must demonstrate three generations or 75 years of dependence before 13 December 2005.

      What did the Supreme Court order?

      1. Time-bound eviction plan, with rehabilitation where applicable.
      2. Legal action against wilful violators, including 118 government servants found to be encroachers.
      3. Ecological restoration after eviction.
      4. No new forest diversion or non-forest activity in ABR until encroachments are removed.
      5. Possible deployment of paramilitary forces for enforcement.

      Key Issue: Conservation vs Forest Rights

      • Conservation: Evictions aim to restore critical tiger habitat and remove non-forest activities.
      • Rights concern: Eviction before completion of FRA recognition and verification can violate statutory safeguards.
      • Data problem: Lack of reliable data on occupation outside FRA’s scope makes it difficult to distinguish genuine rights-holders from actual encroachers.

      Statutory Framework

      • FRA, 2006: Forest rights recognition.
      • FCA, 1980: Forest (Conservation) Act, 1980, regulates diversion of forest land.
      • WLPA, 1972: Wild Life (Protection) Act, 1972, governs protected areas.
      • PESA, 1996: Panchayats (Extension to Scheduled Areas) Act, 1996, strengthens Gram Sabha powers in Scheduled Areas.
      • SC/ST PoA Act, 1989: Scheduled Castes and Scheduled Tribes (Prevention of Atrocities) Act, 1989.

      Back2Basics: Forest Rights Act

      • Nodal Ministry: Ministry of Tribal Affairs.
      • Beneficiaries: Forest-dwelling STs and eligible OTFDs.
      • Three rights: Individual forest rights, community rights and Community Forest Resource (CFR) rights.
      • Gram Sabha: Starting point for claims.
      • Key safeguard: No eviction before completion of recognition and verification.

      “[2021] At the national level, which ministry is the nodal agency to ensure effective implementation of the Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act, 2006?

      (a) Ministry of Environment, Forest and Climate Change

      (b) Ministry of Panchayati Raj

      (c) Ministry of Rural Development

      (d) Ministry of Tribal Affairs

    2. Ten years later, looking back and ahead at GeM

      Why in the News

      The Government e-Marketplace (GeM) completed 10 years, connecting around 1.37 lakh government buyers with 25 lakh sellers/service providers and achieving nearly ₹20 lakh crore cumulative Gross Merchandise Value (GMV).

      What is GeM?

      • GeM: Government e-Marketplace.
      • Launched on 9 August 2016.
      • A digital platform for government procurement of goods and services.
      • Replaced the Directorate General of Supplies and Disposals (DGS&D).
      • Integrates product discovery, bidding, contract award and payment.

      How does GeM Improve Procurement?

      1. End-to-end digitisation: Covers the complete procurement cycle.
      2. Transparency: Creates an auditable digital trail.
      3. Reduced discretion: Limits face-to-face interaction and scope for favouritism.
      4. Single window: Simplifies registration and standardises procurement.
      5. Inclusion: Gives Micro and Small Enterprises (MSEs), start-ups and women-led firms direct access to government buyers.

      What Does the Data Show?

      • Cumulative GMV: About ₹20 lakh crore.
      • Buyers: 1.37 lakh.
      • Sellers/service providers: 25 lakh.
      • Categories: 10,644 product and 350 service categories.
      • MSEs: Around 60% of orders by volume and over 45% of GMV.
      • Measured benefit: IIT Delhi study estimated ₹86,571.69 crore in benefits over the last three financial years through price and process efficiencies.

      What Problems Does GeM Address?

      • Reduces corruption and procurement discretion.
      • Improves Ease of Doing Business (EoDB) for suppliers.
      • Expands opportunities for MSMEs and start-ups.
      • Enables faster procurement.
      • Promotes competitive prices and better use of public funds.
      • Supports domestic manufacturing and Atmanirbhar Bharat.

      What is Public Procurement?

      • Public procurement is the process through which government bodies purchase goods, works and services using public funds.
      • Core principles: Transparency, Fair competition, Non-discrimination, Value for money, and Accountability

      Challenges

      1. Quality assurance: Risk of substandard products in a large digital catalogue.
      2. MSME payment delays: Delayed payments affect working capital.
      3. Bid rigging: Cartelisation can undermine competition.
      4. Digital divide: Smaller sellers may lack connectivity or digital skills.
      5. Grievance redress: Delays in resolving quality, delivery and payment disputes.
      6. Cybersecurity: Concentration of procurement data increases cyber risks.

      Back2Basics: GeM

      • Full form: Government e-Marketplace.
      • Launch: 9 August 2016.
      • Nodal Ministry: Ministry of Commerce and Industry.
      • Predecessor: DGS&D, Directorate General of Supplies and Disposals.
      • Purpose: Transparent and efficient government procurement.
      • Users: Government buyers, sellers and service providers.
      • Focus: Particularly beneficial for MSMEs, start-ups and women entrepreneurs.

      Government Initiatives

      • Public Procurement (Preference to Make in India) Order, 2017: Preference for domestically manufactured goods.
      • Public Procurement Policy for MSEs, 2012: Procurement preference for Micro and Small Enterprises.
      • Vivad se Vishwas for MSMEs: Relief mechanism for eligible MSME contractual disputes.
      • TReDS: Trade Receivables Discounting System, helping MSMEs obtain liquidity against receivables.

      [2025, GS2, 10 marks] E-governance projects have a built-in bias towards technology and back-end integration than user-centric designs. Examine.”

    3. Apr-Jun unemployment at 5.4%, highest in 4 quarters

      Why in the News

      The unemployment rate for persons aged 15 years and above rose to 5.4% in April-June 2026, a four-quarter high, according to the Periodic Labour Force Survey (PLFS). Youth and urban women experienced the sharpest increase.

      What is PLFS?

      • PLFS: Periodic Labour Force Survey.
      • Conducted by the National Statistical Office (NSO) under the Ministry of Statistics and Programme Implementation (MoSPI).
      • Launched in 2017.
      • Replaced the earlier quinquennial Employment-Unemployment Surveys.
      • Provides regular employment and unemployment estimates.

      What did April-June 2026 PLFS Show?

      • Overall: 5.4% from 5.0% in the previous quarter.
      • Rural: 4.8% from 4.3%.
      • Urban: 6.7% from 6.6%.
      • Female: 5.7% from 5.3%.
      • Male: 5.3% from 4.8%.
      • Employed population: About 566 million, including 402 million males and 164 million females.

      Where is Joblessness Concentrated?

      • Youth (15-29 years): 15.9%, the highest in the current PLFS series.
      • Female youth: 19.6%, a series high.
      • Urban females: 8.7% compared with 6.1% for urban males.
      • Rural females: 4.7%, close to rural males at 4.8%.
        • Key takeaway: The headline unemployment rate masks much higher youth and urban female unemployment, pointing to problems of job quality, skills and labour-market absorption.

      About Unemployment

      • Unemployment refers to people in the labour force who are willing and able to work but do not have work.
      • Key Labour Indicators
        • Labour Force Participation Rate (LFPR): Labour force as a percentage of the working-age population.
        • Worker Population Ratio (WPR): Employed persons as a percentage of the population.
        • Unemployment Rate (UR): Unemployed persons as a percentage of the labour force.

      Types of Unemployment

      1. Structural: Skill or location mismatch with available jobs.
      2. Frictional: Temporary unemployment while changing jobs.
      3. Cyclical: Caused by economic downturns.
      4. Disguised: More workers employed than required, common in agriculture.
      5. Seasonal: Employment varies with seasons, especially agriculture.

      Back2Basics: PLFS

      • Full form: Periodic Labour Force Survey.
      • Conducted by: National Statistical Office (NSO).
      • Ministry: Ministry of Statistics and Programme Implementation (MoSPI).
      • Launched: 2017.
      • Coverage: Rural and urban India.
      • Key measures: Usual Status and Current Weekly Status (CWS).
      • Youth: Persons aged 15-29 years.

      Government Initiatives

      • MGNREGA: Mahatma Gandhi National Rural Employment Guarantee Act, providing up to 100 days of rural wage employment.
      • PMKVY: Pradhan Mantri Kaushal Vikas Yojana, promoting skill development.
      • Skill India Mission: Develops a skilled workforce.
      • Startup India & Stand-Up India: Promote entrepreneurship.
      • ELI: Employment Linked Incentive Scheme, encouraging formal employment creation.

      “[2023, GS3, 15 marks] Most of the unemployment in India is structural in nature. Examine the methodology adopted to compute unemployment in the country and suggest improvements.”

      [2018] With reference to Pradhan Mantri Kaushal Vikas Yojana, consider the following statements :

      1. It is the flagship scheme of the Ministry of Labour and Employment.
      2. It, among other things, will also impart training in soft skills, entrepreneurship, financial and digital literacy.
      3. It aims to align the competencies of the unregulated workforce of the country to the National Skill Qualification Framework.
      Which of the statements given above is/are correct?

      (a) 1 and 3 only

      (b) 2 only

      (c) 2 and 3 only

      (d) 1, 2 and 3

    4. Seamless digital payments have a price / UPI and the cost of policy reversal

      Why in the News

      Parliament has passed the Taxation and Other Laws (Amendment) Bill, 2026, allowing a legal framework for possible charges on Unified Payments Interface (UPI) and RuPay debit card transactions. The debate centres on whether digital payments should remain free to promote inclusion or adopt a sustainable funding model.

      What is UPI?

      • UPI: Unified Payments Interface.
      • Enables instant bank-to-bank payments through mobile applications.
      • Operated by the National Payments Corporation of India (NPCI).
      • Processed 23.6 billion transactions in July.

      What is Merchant Discount Rate (MDR)?

      • MDR: Merchant Discount Rate.
      • A fee charged for processing digital payments, generally paid by merchants.
      • Credit-card MDR: around 1-3%.
      • Debit-card MDR: up to 0.9%.
      • UPI has followed a zero-MDR regime since 2020.

      What Does the 2026 Bill Do?

      • Amends Section 10A of the Payment and Settlement Systems Act, 2007.
      • Creates legal space for the government to notify charges on specified electronic payment modes.
      • A proposed MDR of 0.25-0.5% has been discussed for UPI transactions above ₹2,000.
      • This could cover about 5% of transactions by volume but around 65% by value.
      • The government has stated that consumers and small merchants will not bear MDR and the final framework is yet to be decided.

      Why is Zero-MDR Considered Unsustainable?

      1. Infrastructure costs: Huge transaction volumes require continuous investment.
      2. Fraud prevention: Cybersecurity and fraud-control systems require funding.
      3. Government support: ₹8,730 crore was provided through incentives during 2021-22 to 2024-25.
      4. Funding gap: This covered only a limited share of industry costs.
      5. Market concentration: PhonePe and Google Pay together account for around 80% of UPI transactions.

      What is a Two-Sided Market?

      • A platform connecting two groups whose participation reinforces each other.
      • UPI: Consumers ↔ Payment platforms ↔ Merchants
      • More users attract more merchants, while more merchants attract more users. Therefore, imposing a charge on one side may reduce the network effect.

      Why Could MDR Affect UPI?

      Arguments for charges

      • Provides sustainable revenue for infrastructure.
      • Supports innovation and fraud prevention.
      • May attract more competitors into the UPI ecosystem.

      Arguments against charges

      • Could discourage merchants and consumers from using digital payments.
      • Intermediaries may absorb the cost rather than pass it on.
      • Could weaken India’s financial inclusion and formalisation gains.
      • May encourage a shift back towards cash.

      About India’s Digital Payments Ecosystem

      • RBI: Reserve Bank of India, the regulator.
      • NPCI: National Payments Corporation of India, operator of major retail payment rails.
      • Banks and fintechs: Participate as payment service providers.
      • UPI: Real-time account-to-account payment system.
      • RuPay: India’s domestic card payment network.

      Statutory Framework

      • Payment and Settlement Systems Act, 2007: Regulates payment systems under RBI supervision.
      • Section 10A: Provides the framework for charges on specified electronic payment modes.
      • RBI Act, 1934: Establishes the Reserve Bank of India.
      • Information Technology Act, 2000: Provides legal recognition to electronic records and authentication.

      Back2Basics: NPCI

      • Full form: National Payments Corporation of India.
      • Established: 2008.
      • Nature: Not-for-profit company.
      • Promoted by: Banks under the guidance of RBI and Indian Banks’ Association (IBA).
      • Key systems: UPI, RuPay, Immediate Payment Service (IMPS), FASTag and Bharat Bill Payment System (BBPS).

      Government Initiatives

      • UPI Incentive Scheme: Supports the cost of low-value UPI transactions.
      • Digital India Programme: Expands digital infrastructure and inclusion.
      • BHIM: Bharat Interface for Money, NPCI’s UPI application.
      • RuPay: Domestic card network.
      • JAM: Jan Dhan-Aadhaar-Mobile trinity supporting digital transfers and financial inclusion.

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

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

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

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

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

    5. Evidence of non-Mendelian inheritance in mice

      Why in the News

      Researchers have reported evidence of non-Mendelian inheritance in mice, involving DNA methylation, genomic imprinting and paramutation. Nanopore sequencing helped detect these epigenetic marks.

      What is Epigenetic Inheritance?

      1. Definition: Transmission of heritable changes in gene activity without altering the underlying DNA sequence.
      2. Major mechanism: Chemical modifications such as DNA methylation can influence whether genes are switched on or off.
      3. Non-Mendelian: Unlike classical Mendelian inheritance, the inherited information is not limited to changes in the DNA sequence.
      4. Genomic imprinting: Expression of certain genes depends on whether they are inherited from the mother or father.
      5. Paramutation: One allele can induce a heritable change in the expression of another allele without changing its DNA sequence.
      6. Nanopore sequencing: Can detect certain DNA modifications, including methylation, while sequencing DNA.

      Why does it matter?

      • Expands inheritance theory: Heritable information can involve regulatory/epigenetic states in addition to DNA sequence.
      • Environment and inheritance: Some environmental factors can influence epigenetic states, though not every acquired epigenetic change is necessarily inherited.
      • Disease relevance: Abnormal epigenetic regulation is associated with cancers and other diseases.
      • Biotechnology: Advanced sequencing can help identify epigenetic modifications alongside DNA sequences.

      “[2021, GS3, 15 marks] What are the research and developmental achievements in applied biotechnology? How will these achievements help to uplift the poorer sections of society?

      [2021] In the context of hereditary diseases, consider the following statements:
      1. Passing on mitochondrial diseases from parent to child can be prevented by mitochondrial replacement therapy either before or after in vitro fertilization of egg.
      2. A child inherits mitochondrial diseases entirely from mother and not from father.
      Which of the statements given above is/are correct?

      [A] 1 only

      [B] 2 only

      [C] Both 1 and 2

      [D] Neither 1 nor 2