Mains Ready By December. Smash Mains & Smash PYQ Admissions Open
Talk to Mentor

Civilsdaily

Type: Prelims Only

  • India seals deal to purchase Javelin anti-tank missile system from US

    India seals deal to purchase Javelin anti-tank missile system from US

    Why in the News

    India has finalised a deal to buy the Javelin anti-tank guided missile system from the United States, with the Indian Army signing a Letter of Offer and Acceptance through the US Foreign Military Sales process. The US Embassy called the signing a “milestone” that strengthens the US-India Major Defence Partnership and opens discussions on co-production, extending a series of recent India-US defence deals that followed Operation Sindoor.

    What is the Javelin system, and how was the deal concluded?

    1. A man-portable, fire-and-forget missile: The Javelin is a single, man-portable, fire-and-forget, medium-range anti-tank guided missile designed for use against armoured vehicles and fortified positions. “Fire-and-forget” means soldiers do not need to remain exposed after launch, and “man-portable” means it can be carried by soldiers, a combination that makes it particularly effective.
    2. Produced by a joint venture, used by Ukraine: The Javelin is manufactured by the Javelin Joint Venture, a partnership between RTX and Lockheed Martin, and is used by the US Army and Marine Corps as well as several international customers, including Ukraine in its war with Russia.
    3. A prior clearance preceded the final signing: In November last year, the US had approved a possible foreign military sale of 100 FGM-148 Javelin rounds, one Javelin missile and 25 Javelin Lightweight Command Launch Units and related equipment, estimated at $45.7 million, ahead of Friday’s signed agreement.

    What does the deal signal for US-India defence ties?

    1. Co-production is now under discussion: US Defence Secretary Pete Hegseth said in May that Washington had committed to pursuing co-production of Javelin munitions with India, calling it a real, tangible step to improve the collective readiness of both forces.
    2. Part of a broader run of recent procurements: The Javelin purchase follows India’s acquisition of 216 M982A1 Excalibur tactical projectiles, a planned purchase of six additional Boeing P-8I maritime patrol and anti-submarine warfare aircraft, US approval of support services and equipment for Apache helicopters worth $198.2 million, a five-year, Rs 7,995 crore support agreement for the MH-60R helicopter fleet, and an October 2024 deal for 31 MQ-9B High Altitude Long Endurance drones.
    3. Built on the 2024 defence partnership framework: India and the US signed the framework for the US-India Major Defence Partnership last October, a framework the current wave of procurements, including the Javelin deal, sits within.

    What is the Foreign Military Sales process?

    A government-to-government US arms transfer route: Foreign Military Sales is the US government’s mechanism for selling defence equipment and services to foreign governments, under which the US government, rather than the manufacturer directly, administers the sale.

  • PSU banks more efficient than private peers: EAC-PM

    PSU banks more efficient than private peers: EAC-PM

    Why in the News

    A paper by two economists for the Economic Advisory Council to the Prime Minister (EAC-PM), a body that advises the Prime Minister on economic policy questions, found that public sector banks (PSBs) are more efficient than private and foreign banks.

    Titled “Reforms, Efficiency, and Productivity of Indian Banking Sector in the Last Decade: DEA Approach”, the paper used Data Envelopment Analysis (DEA), a method that measures how far a unit could shrink its inputs while producing the same output, to compare 47 banks.

    What does the study find?

    1. PSBs improved significantly: During 2014-15 to 2025-26, PSBs recorded average efficiency of 88.53%, compared with 85.62% for private banks. Foreign banks led over the full period: Foreign banks had the highest 12-year average of 88.98%, but their efficiency declined from 95.86% in 2014-15. Most efficient banks:
    2. HSBC and JPMorgan Chase: 100% efficiency in all 12 years.
    3. HDFC Bank: 97.54% average efficiency among private banks.
    4. State Bank of India (SBI): 97.49%, highest among PSBs.
    5. DBS Bank India: Lowest single-year efficiency of 40.12% in 2021-22, linked to its merger with Lakshmi Vilas Bank.
    6. Impact of PSB mergers: PSBs were relatively less efficient than private banks during FY2019 to FY2022, partly due to the merger and rationalisation of branches, employees and business operations.

    Data Envelopment Analysis (DEA)

    1. DEA is a method for measuring the relative efficiency of units, here banks, that produce the same kind of output from different combinations of inputs.
    2. An efficiency score below 100% means the unit could reduce its inputs by that shortfall and still produce the same output. Eg. A score of 85% means the unit could cut inputs by 15% without any loss of output.

    “[2024] Consider the following statements:
    Statement-I: Syndicated lending spreads the risk of borrower default across multiple lenders.
    Statement-II: The syndicated loan can be a fixed amount/lump sum of funds, but cannot be a credit line.
    Which one of the following is correct in respect of the above statements?
    (a) Both Statement-I and Statement-II are correct and Statement-II explains Statement-I
    (b) Both Statement-I and Statement-II are correct, but Statement-II does not explain Statement-I
    (c) Statement-I is correct, but Statement-II is incorrect
    (d) Statement-I is incorrect, but Statement-II is correct

  • Nuclear power operator plans new design unit to support pvt players

    Nuclear power operator plans new design unit to support pvt players

    Why in the News

    The Nuclear Power Corporation of India Limited (NPCIL) is setting up a new design vertical to support private companies deploying Pressurised Heavy Water Reactor (PHWR) technology. This follows recent legal reform enabling private participation in civil nuclear power. The move marks a shift from NPCIL’s traditional role as sole builder and operator of India’s nuclear fleet toward a design-support role for private entrants, addressing India’s stated need to scale nuclear capacity to meet rising electricity demand while keeping deployment within a technology NPCIL already operates at scale.

    Why does India favour PHWR technology for private entry?

    1. Established domestic supply chain: PHWR technology has been indigenised in India since the 1980s, giving it a mature domestic manufacturing and fuel-cycle base that a newly entering private player can draw on.
    2. Natural uranium fuel cycle: PHWRs use natural, unenriched uranium, avoiding dependence on enrichment technology that remains tightly controlled internationally.

    What does NPCIL’s new design unit change?

    1. From sole operator to technology enabler: NPCIL will now provide design support to private players rather than being the only entity that builds and runs reactors, opening a role private companies previously could not access.
    2. Institutional capacity test: Whether NPCIL’s new vertical can support multiple private projects simultaneously, without diverting engineering capacity from its own ongoing reactor construction, remains to be demonstrated.

    Pressurised Heavy Water Reactor (PHWR)

    • PHWR = Pressurised Heavy Water Reactor uses heavy water (deuterium oxide, D₂O) as moderator and Coolant
    • It uses natural, unenriched uranium as fuel.

    Key Features of PHWR

    Heavy Water

    • Heavy water contains deuterium, an isotope of hydrogen.
    • It acts as both the moderator and coolant in PHWRs.

    Natural Uranium

    • PHWRs can operate using natural uranium, avoiding the need for uranium enrichment for the reactor fuel.

    Online Refuelling

    • PHWRs permit online refuelling.
    • Fuel bundles can be replaced while the reactor continues operating.
    • Therefore, the reactor does not need to be shut down for routine fuel replacement.

    “[2017, GS3, 15 marks] Give an account of the growth and development of nuclear science and technology in India. What is the advantage of fast breeder reactor programme in India?”

    [2023] Consider the following statements:
    Statement-IIndia, despite having Uranium deposits, depends on coal for most of its electricity production.
    Statement-II:Uranium, enriched to the extent of at least 60%, is required for the production of electricity.
    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 incorrect but Statement-II is correct.

  • ‘Killer robots’ are closer than ever, warn UN, ICRC

    ‘Killer robots’ are closer than ever, warn UN, ICRC

    Why in the News

    The United Nations and the International Committee of the Red Cross (ICRC) have jointly warned that the world is dangerously close to the autonomous targeting of humans by machines, renewing an urgent appeal for international regulation of lethal autonomous weapon systems. The statement renews a 2023 call by the UN Secretary General and the ICRC president for specific bans and restrictions on the technology by this year.

    Note: Lethal autonomous weapon systems are weapon systems that select targets and apply force without human intervention.

    What is the concern, and how has it changed since 2023?

    1. The warning has hardened, not softened: The two bodies stated their fundamental concerns remain unchanged from 2023 but that the underlying risks have intensified since then.
    2. The alarm includes the technology’s own developers: The statement highlights that scientists and engineers involved in developing these weapon systems have themselves raised concerns about the direction the technology is taking.
    3. No confirmed use yet, but the trajectory is the concern: Experts state there has been no confirmed use of fully autonomous weapons to directly target humans so far, and the warning is precautionary rather than a report of an actual deployment.

    International Regulation

    1. United Nations: The UN has repeatedly called for international rules governing autonomous weapons.
    2. Convention on Certain Conventional Weapons (CCW): Discussions on LAWS have taken place under the CCW framework.
    3. UN Secretary General and ICRC: Both have advocated prohibiting weapons that operate without meaningful human control and imposing strict restrictions on other autonomous weapons.
    4. International Humanitarian Law (IHL): Existing principles such as distinction, proportionality and precaution remain central to assessing autonomous weapons.

    India’s Position

    1. India has participated in international discussions on Lethal Autonomous Weapon Systems under the CCW.
    2. India has generally emphasised the importance of human control, international law and responsible development of emerging military technologies.
    3. For India, the issue is particularly relevant as AI, drones, robotics and autonomous systems become increasingly important in modern warfare.

    “[2025, GS2, 15 marks] “The reform process in the United Nations remains unresolved, because of the delicate imbalance of East and West and entanglement of the USA vs. Russo-Chinese alliance.” Examine and critically evaluate the East-West policy confrontations in this regard.”

    [2025] Consider the following statements regarding Al Action Summit held in Grand Palais, Paris in February 2025:
    I. Co-chaired with India, the event builds on the advances made at the Bletchley Park Summit held in 2023 and the Seoul Summit held in 2024.
    II. Along with other countries, US and UK also signed the declaration on inclusive and sustainable AI.
    Which of the statements given above is/are correct?

    [A] I only

    [B] II only

    [C] Both I and II

    [D] Neither I nor II

  • Congress urges PM to scrap caste census questionnaire

    Congress urges PM to scrap caste census questionnaire

    Why in the News

    The Leader of the Opposition in the Rajya Sabha and the Leader of the Opposition in the Lok Sabha have written to the Prime Minister demanding that the questionnaire prepared for the caste census be scrapped. They have asked that a new questionnaire be prepared to ensure accurate enumeration of castes.

    What is being contested about the questionnaire’s design?

    1. The objection targets an open-ended format: The two leaders object to an open-ended format proposed for recording caste details, arguing it could allow the same caste to be recorded under different names, sub-castes, and linguistic variants, undermining accurate counts.
    2. They demand consultation before the survey form is finalised: The letter asks the government to formulate a new survey form only after consulting political parties, experts, and the public, rather than proceeding with the existing draft.
    3. The stated purpose is enumeration accuracy, not the census itself: The objection is to the questionnaire’s design, not to the decision to conduct a caste census, and the leaders frame the current format as an obstacle to the caste enumeration’s own stated purpose of social justice.

    Constitutional & Legal Angle

    • Article 15: Prohibits discrimination on grounds including caste and enables special provisions for socially and educationally backward classes.
    • Article 16(4): Enables reservation in public employment for backward classes that are not adequately represented.
    • Article 46: Directs the State to promote the educational and economic interests of weaker sections, particularly SCs and STs.
    • Article 340: Provides for a Commission to investigate the conditions of socially and educationally backward classes.
    • Article 17: Abolishes untouchability, making caste-related discrimination a key constitutional concern.
    • Privacy dimension: Caste is sensitive personal information, so enumeration also requires safeguards against misuse and unauthorised disclosure. UPSC has repeatedly tested the Right to Privacy under Article 21.

    Why Accurate Caste Data Matters

    • Reliable data → identify deprivation → better targeting of welfare → evidence-based reservation policy → social justice
    • Poor classification can lead to:
      • Under-counting of communities
      • Over-counting due to duplicate names
      • Difficulty comparing data across regions and time
      • Distorted assessment of representation and deprivation

    “[2009] Which one among the following South Asian countries has the highest population density ?

    (a) India

    (b) Nepal

    (c) Pakistan

    (d) Sri Lanka

  • Excavation at Vaishya Tekri, Ujjain, sheds light on Ashoka’s Mauryan-era rule

    Excavation at Vaishya Tekri, Ujjain, sheds light on Ashoka’s Mauryan-era rule

    Why in the News

    An ongoing excavation at the Vaishya Tekri mound in Ujjain has uncovered a Buddhist stupa dated to the Mauryan period, adding physical evidence to the tradition that Ashoka served as Mauryan viceroy over Ujjain and the surrounding Avanti province before he became emperor. Ujjain’s connection to Ashoka has so far rested mainly on textual and traditional accounts, including his association with the city of Vidisha and with Devi, traditionally described as his consort during his time there. A dated stupa at Vaishya Tekri gives that tradition an archaeological anchor it did not previously have at this specific site.

    What has the excavation at Vaishya Tekri found?

    1. A Buddhist stupa dated to the Mauryan period: Excavators have uncovered the remains of a stupa, a dome-shaped Buddhist commemorative structure typically built to enshrine relics, at the Vaishya Tekri mound, with the structure’s dating placed within the Mauryan period.
    2. Located at a mound with a known but under-explored history: Vaishya Tekri has long been recognised as an archaeologically significant mound in Ujjain, but the current excavation is what has produced the specific Mauryan-period stupa evidence.
    3. Physical evidence for a previously text-based tradition: The tradition that Ashoka governed Avanti province from Ujjain as a Mauryan prince before becoming emperor has rested on textual and inscriptional sources; a dated Mauryan-period Buddhist structure at Ujjain itself gives that tradition a corresponding physical find.

    How does this connect to Ashoka’s association with Ujjain, Vidisha, and Devi?

    1. Ujjain as Ashoka’s provincial capital under his father: Textual tradition holds that Ashoka was appointed viceroy of Avanti province, governing from Ujjain, during the reign of his father, Bindusara, before Ashoka’s own accession as emperor.
    2. Vidisha’s connection through Devi: Tradition associates Ashoka with Devi, described as his consort during his time in the region, whom he is said to have met at or near Vidisha, a city close to Ujjain within the same Avanti province.
    3. Stupa construction consistent with early Buddhist patronage in the region: A Mauryan-period Buddhist stupa at Ujjain is consistent with the broader pattern of early Buddhist architectural patronage across the Avanti region during and after Ashoka’s association with it, including the well-documented stupas at nearby Sanchi.

    Back2Basics: Vaishya Tekri, Ujjain

    1. An archaeological mound in Ujjain, Madhya Pradesh, long identified as a site of historical significance within the ancient city associated with the Avanti Mahajanapada, one of the sixteen great kingdoms of ancient India.
    2. Ujjain’s ancient layers have previously yielded evidence of settlement dating from well before the Mauryan period, making it one of the longer continuously significant urban sites in central India.
    3. Its Mauryan-period association rests on textual tradition identifying it as the seat of Ashoka’s viceroyalty over Avanti province prior to his accession as emperor.
    4. Sits within the same historical region as Vidisha and Sanchi, both major centres of early Buddhist architectural activity.

    “[2022] Consider the following pairs :
    Site of Ashoka’s major rock edicts Location in the State of
    1. Dhauli — Odisha
    2. Erragudi — Andhra Pradesh
    3. Jaugada — Madhya Pradesh
    4. Kalsi — Karnataka
    How many pairs given above are correctly matched ?
    (a) Only one pair
    (b) Only two pairs
    (c) Only: three pairs
    (d) All four pairs

  • FDI policy rejig for border nations spur Rs 5k cr investment: DPIIT

    Why in the News

    A relaxation in India’s rules on investment from land bordering countries has drawn 29 foreign direct investment (FDI) proposals worth ₹4,895.65 crore up to 20 August 2026. The relaxation was notified in March 2026. It permits a foreign entity carrying non controlling beneficial ownership of up to 10 per cent from a land bordering country to invest through the automatic route. Press Note 3 of 2020 had required prior government approval for any such investment, however small that land border shareholding was. What is now tested is whether a shareholding threshold can separate incidental Chinese exposure inside a global fund from Chinese strategic control of an Indian asset.

    What is Press Note 3 of 2020?

    1. The restriction: Imposed in April 2020, it made government approval mandatory for investment from any country sharing a land border with India.
    2. Stated purpose: It was aimed at preventing opportunistic takeovers of Indian firms during the Covid-19 pandemic, and stayed in force amid heightened national security concerns after the Galwan clash later that year.
    3. Country neutral drafting: The framework named no country, and China is the largest source of investment among India’s land neighbours.
    4. Uneven bite: Entities of Bangladesh and Pakistan can invest only through the government route. Flows from Nepal, Myanmar, Bhutan and Afghanistan are very small as a share of India’s total foreign investment.

    What conditions does the relaxed route carry?

    1. Indian control retained: The majority shareholding and control of the investee entity must rest at all times with resident Indian citizens, or with resident Indian entities that are themselves owned and controlled by resident Indian citizens.
    2. Threshold is a ceiling, not a waiver: A land border holding above 10 per cent still routes the investment through government approval, so the automatic route covers only diluted exposure.
    3. Time bound clearance for named goods: A 60 day deadline was approved for clearing proposals from land bordering countries, including China, in capital goods, electronic capital goods, electronic components, polysilicon, and ingot wafer for solar cells.

    Where has the relaxed route drawn money from?

    1. Sectors: The proposals span information technology, artificial intelligence, information and communication, manufacturing, pharmaceuticals, data centres and transport services.
    2. Jurisdictions: They were reported by investors and entities based in Mauritius, the United States, the Republic of Korea, Japan, Singapore, Luxembourg and the Cayman Islands, among others.
    3. Stated gain: The government’s own assessment is that the reform gives investors greater certainty, cuts transaction time and strengthens ease of doing business in India.

    Where has the Centre gone further than the ownership threshold?

    1. A strategic sector joint venture: In July 2026 the Centre cleared a joint venture between Dixon Technologies (India) Limited and Vivo Mobile India Limited for manufacturing electronic devices and smartphones, one of the first major approvals to Chinese investment in a strategic sector.
    2. Entry into power tenders: The Finance Ministry in July allowed four Chinese power equipment manufacturers with factories in India to bid for government tenders on critical power projects.
    3. A procurement exemption: TBEA Energy, Nanjing Electric India, New Northeast Electric India and Taikai Electric (India) were exempted from the public procurement rule requiring entities from land bordering countries to register with the relevant Indian authority before bidding.
    4. What is at stake in that equipment: The four firms make transformers, wires, high voltage switchgear and gas insulated switchgear used in transmission lines. New Northeast Electric India lists at least 11 transmission line projects across India.

    Challenges to the revised land border investment framework

    1. Beneficial ownership is hard to trace through layers: A 10 per cent test presumes the ultimate holder is visible, which layered holding structures defeat. Eg. Several of the reported proposals came through Mauritius and the Cayman Islands. The ultimate holder is not on the local register in either jurisdiction. Fix. Require a declaration of the ultimate beneficial owner at every layer, verified against the significant beneficial ownership register maintained under the Companies Act, 2013.
    2. A shareholding cap does not bound influence: Control travels through contracts as much as through equity. Eg. A minority holder with board nomination rights or a sole technology licence can direct a joint venture without owning a majority. Fix. Test control by board composition and contractual veto rights, not by shareholding percentage alone.
    3. Screening capacity is spread thin: No single body owns the security review of an inbound proposal. Eg. Screening runs across the Department for Promotion of Industry and Internal Trade, the Ministry of Home Affairs and the administrative ministry, each with its own timeline. Fix. Constitute a standing inbound investment security review committee with a statutory disposal deadline.
    4. Technology dependence persists in the sectors being opened: Approval eases entry without changing who owns the process knowledge. Eg. India imports most of its polysilicon and ingot wafer requirement for solar cells. Fix. Tie approval in those goods to a phased technology transfer and a rising domestic sourcing commitment.
    5. The government route stays slow for everyone else: Only the notified goods got a deadline, so other proposals still face open ended review. Eg. Land border proposals outside the notified list have historically taken well over a year to clear. Fix. Extend the 60 day discipline to every proposal on the government route, with reasons recorded for any extension.

    Conclusion

    The relaxed framework has been operative since March 2026 and has produced 29 reported proposals in five months. Press Note 3 itself stays on the books for any land border holding above the threshold, so the restriction has been narrowed rather than withdrawn. The next milestone is disposal of proposals under the 60 day window for the notified goods, and whether the Dixon and Vivo clearance becomes a template for a wider, sector by sector opening.

    Foreign Direct Investment in India

    1. About: Foreign direct investment is cross border investment that establishes a lasting interest in an enterprise abroad, in the definition used by the Organisation for Economic Cooperation and Development.
    2. Routes: Most sectors permit 100 per cent foreign investment through the automatic route, and the remainder require prior government approval.
    3. Cumulative scale: India’s cumulative inflows crossed about $1.14 trillion between April 2000 and December 2025, with nearly 70 per cent of that arriving in the last decade.
    4. Recent flows: Gross inflows reached a three year high of $81 billion in 2024-25, led by services and manufacturing.

    Laws and Rules Governing Foreign Investment

    1. Foreign Exchange Management Act, 1999: The parent statute governing cross border transactions and capital account flows into and out of India.
    2. Foreign Exchange Management (Non-debt Instruments) Rules, 2019: Notified by the Finance Ministry, these fix sectoral caps, entry routes and pricing guidelines for equity investment.
    3. Consolidated FDI Policy Circular: A single compiled statement of sectoral policy, which Press Notes amend between editions.
    4. Competition Act, 2002: Acquisitions above notified thresholds need Competition Commission of India clearance.

    Challenges in Attracting Foreign Direct Investment

    1. Policy unpredictability: Rules that change mid cycle force investors to restructure entities already built. Eg. Repeated shifts in e-commerce foreign investment norms forced marketplace operators to redraw their seller structures. Fix. Publish a standstill period between the notification of a sectoral rule change and its taking effect.
    2. Land acquisition: Site control is the binding constraint on greenfield manufacturing. Eg. POSCO abandoned its Odisha steel project after a decade of unresolved land disputes. Fix. Build titled, pre cleared land banks held by state industrial corporations and offered on long lease.
    3. Geographic concentration: Inflows cluster in services and a few urban states. Eg. A handful of states absorb the bulk of equity inflows reported each year. Fix. Offer differential incentives for greenfield investment in aspirational districts.
    4. Intellectual property enforcement: Weak enforcement raises the risk premium on technology intensive investment. Eg. India remains on the United States Priority Watch List on intellectual property enforcement. Fix. Create dedicated commercial intellectual property benches with fixed disposal timelines.
    5. Clearance friction across governments: A central approval does not deliver the state permissions a project actually needs. Eg. The National Single Window System still does not carry every state level clearance. Fix. Make full state onboarding to the single window a condition for central infrastructure co-funding.

    Back2Basics: Department for Promotion of Industry and Internal Trade

    1. Parent ministry: It sits under the Ministry of Commerce and Industry. It was the Department of Industrial Policy and Promotion until internal trade was added in 2019.
    2. Policy mandate: It frames and administers the Consolidated FDI Policy and issues the Press Notes that amend it.
    3. Programmes run: It runs Startup India and Make in India, and maintains the National Single Window System.

    “[2020] With reference to Foreign Direct Investment in India, which one of the following is considered its major characteristic?

    (a) It is the investment through capital instruments essentially in a listed company.

    (b) It is a largely non-debt creating capital flow.

    (c) It is the investment which involves debt-servicing.

    (d) It is the investment made by foreign institutional investors in the Government securities.

  • Shah hails southern states: ‘Biggest contributor to nation’s development’

    Why in the News

    The 31st meeting of the Southern Zonal Council was held at Mahabalipuram in Tamil Nadu on 20 August 2026, chaired by the Union Home Minister, who described South India as the biggest contributor to the country’s development. Every demand the southern States tabled at the same meeting asked that this contribution not cost them seats, funds or control over shared resources. The praise and the agenda therefore pointed in opposite directions.

    What are the Zonal Councils?

    1. What they are: Zonal Councils are advisory bodies that bring the States and Union Territories of a region together with the Centre to discuss matters of common interest. There are five Zonal Councils, covering the Northern, Central, Eastern, Western and Southern zones.
    2. Their legal basis: They were created by Sections 15 to 22 of the States Reorganisation Act, 1956, so they are statutory bodies and not constitutional ones.
    3. Who sits on them: The Union Home Minister is the chairman of each Zonal Council. The Chief Ministers of the member States are members, with the office of vice chairman rotating annually among them, and each State also nominates two other ministers.
    4. What they can do: They discuss and make recommendations on inter State disputes, economic and social planning, border and linguistic minority issues, and matters arising from State reorganisation. Their conclusions are recommendatory and carry no binding force.

    What did the Union Home Minister set out as the South’s contribution?

    1. The three pillars named: The development journey of South India was attributed to three pillars, namely a high literacy rate, trained manpower, and technical expertise in the utilisation of deep seas.
    2. The sectors credited: The region was said to have contributed across literature, research and development, space, information technology, artificial intelligence, industrial development and agriculture, with the automobile, pharmaceutical and infrastructure sectors also named.
    3. The instruction drawn from it: The rest of the country was asked to learn from South India on innovation and revenue generation.
    4. The timeframe set: The Independence Day message that what has not been achieved in the last seven decades must be accomplished in the next five to seven years was underlined, with every State asked to contribute.
    5. Water framed as the region’s constraint: Water was described as the soul of the region across four areas, namely agriculture, industry, healthy citizens and the environment.
    6. The proposal on rivers: Linking major rivers from the Brahmaputra to the Kaveri and the Godavari was put forward as a way to ensure the country faces no water shortage for the next 100 years.
    7. The nutrition point: Malnutrition and stunted growth were described as snowballing into a national problem, with the fight against malnutrition credited to Tamil Nadu and Andhra Pradesh before it was accepted across India.

    What did each southern State place before the Council?

    1. Kerala: The State sought State specific premiums for the Ayushman Bharat Pradhan Mantri Jan Arogya Yojana in place of a uniform national premium, eligibility aligned with the National Food Security Act, 2013 database, and a revised central share reflecting actual expenditure incurred on centrally sponsored families. It also sought a more equitable and flexible funding approach for centrally sponsored schemes and asked that auctioning of mineral blocks along the Kerala coast be put on hold.
    2. Kerala on Mullaperiyar: The State reaffirmed its willingness to supply water to Tamil Nadu from a new dam it has proposed at Mullaperiyar in Idukki district in place of the existing structure, offering to bear the construction expense while leaving construction and location to Tamil Nadu.
    3. Karnataka: The State argued that success in population control must not be allowed to diminish southern political representation, urged the Centre to reconsider the recently passed Mines and Minerals (Development and Regulation) Amendment Bill, 2026, and pressed for fairness in funds, voice and respect.
    4. Karnataka on delimitation: The State urged the Council to adopt a resolution calling on the Centre to honour the 1971 Census as the basis for delimitation.
    5. Tamil Nadu: The State conveyed its concerns on delimitation and pressed that the existing freeze on the number of Lok Sabha seats should continue. It asserted its position on increasing the storage height of the Mullaperiyar Dam.
    6. Tamil Nadu on the terms of the relationship: The State stated that southern States seek not preferential treatment but fair and equitable treatment that respects fiscal autonomy and rewards performance alongside equity.
    7. Andhra Pradesh: The State projected that the southern economy could reach $10 trillion by 2047, sought greater cooperation among States in the region and urged the Centre to expedite resolution of bifurcation related issues.
    8. Telangana: The State stated that established adjudicatory mechanisms on Krishna waters must be respected and reiterated that it retains lower riparian rights over surplus waters. It stated that it sought no special privilege but only its fair entitlement through the legal mechanisms already established.
    9. Telangana on the method: The State stated that cooperative federalism should provide a framework for resolving inter State issues in a fair, time bound and legally sustainable manner.
    10. The demand two States made jointly: Tamil Nadu and Karnataka both urged that the existing number of Lok Sabha seats be frozen and that women’s reservation be accommodated within the current number of seats.
    11. What the Council recorded as agreed: On the division of assets and liabilities between Andhra Pradesh and Telangana, both States agreed to resolve the matters in consultation with the Ministry of Home Affairs. On pending water issues, the southern States agreed to early resolution through meetings involving the ministries concerned, the Inter-State Council and the respective States.

    Why does delimitation dominate the southern agenda?

    1. The freeze is the source of the current seat distribution: The number of Lok Sabha seats allotted to each State has been held at the 1971 Census population, so States that reduced fertility fastest have not lost seats for doing so.
    2. The freeze has an expiry: The freeze runs until the first Census taken after 2026, after which readjustment on current population becomes constitutionally due.
    3. Performance and representation move in opposite directions: States that completed the demographic transition earliest have the slowest population growth, so a population based readjustment reduces their share of the House.
    4. The demand is for the freeze to be extended, not for a new formula: Tamil Nadu and Karnataka both asked that the existing number of seats continue rather than proposing an alternative allocation rule.
    5. Women’s reservation raises the stakes: Accommodating the reserved seats within the current total, as both States asked, keeps the reservation from becoming a reason to expand the House on a population basis.

    Why do water disputes keep returning to the Council table?

    1. The rivers are inter State and the users are not: The Krishna, the Kaveri and the Godavari cross State boundaries, so every allocation decision transfers water from one electorate to another.
    2. Adjudication and negotiation run in parallel: Telangana pressed that established adjudicatory mechanisms be respected on Krishna waters, which places a tribunal award and a Council discussion on the same question at the same time.
    3. A structure can outlive its settlement: The Mullaperiyar dispute turns on the storage height of an ageing structure, with Kerala proposing a replacement dam and Tamil Nadu asserting a claim over storage in the existing one.
    4. Ownership and operation are split: Kerala offered to bear the cost of a new dam while leaving construction and location to Tamil Nadu, which separates who pays from who controls.
    5. Interlinking is offered as the way past allocation: The proposal to link the Brahmaputra to the Kaveri and the Godavari reframes a distribution dispute as a supply problem, which shifts it out of the tribunal system and into a capital project.

    Can a body without binding power settle demands of this kind?

    1. The Council can only recommend: Nothing decided at a Zonal Council binds the Centre or any State, so agreement at the table is a statement of intent rather than a settlement.
    2. The demands are not within its gift: Delimitation is fixed by the Constitution and by Parliament, mineral taxation by a central Act, and river water allocation by tribunals under a separate statute.
    3. What it did settle was procedural: The two outcomes recorded, on Andhra Pradesh and Telangana assets and on pending water issues, were agreements to hold further consultations rather than agreements on substance.
    4. The forum multiplies rather than converges: Water issues were referred onward to the ministries concerned, the Inter-State Council and the States, which adds forums to a dispute rather than closing it.
    5. The tension the meeting exposed: The southern States were praised for performance and simultaneously asked the Centre to ensure that performance does not reduce their seats, their scheme funding or their control over coastal minerals.

    Challenges to the Zonal Council as a forum for resolving these demands

    1. Meetings are irregular and agenda driven: A Council that meets once in a year or longer cannot track an issue between sittings, so items are carried forward rather than closed. Eg. The Southern Zonal Council reached only its 31st meeting in 2026, seven decades after the Councils were created in 1956.
    2. Recommendations carry no enforcement: There is no mechanism to compel a member State or the Centre to act on a resolution the Council adopts. Eg. Karnataka’s request that the Council resolve to honour the 1971 Census for delimitation would bind neither Parliament nor the Centre even if adopted.
    3. The Council has no dispute settlement power over water: Inter State river water disputes are reserved to tribunals by statute, so the Council can discuss but not decide them. Eg. The Krishna waters question was placed before the Council even as Telangana insisted that established adjudicatory mechanisms be respected.
    4. Fiscal questions sit outside its mandate: Scheme design and the central share are decided by the Union ministries and the Finance Commission, not by a regional council. Eg. Kerala’s request for State specific Ayushman Bharat premiums has to be settled by the health ministry, not by the Council.
    5. Asymmetry of the chair: The Union Home Minister chairs the Council, so the Centre presides over a forum where the principal counterparty in most disputes is the Centre itself. Eg. Karnataka used the meeting to ask the Centre to reconsider a central Act on mineral taxation.
    6. Overlapping bodies dilute accountability: The Inter-State Council, the NITI Aayog Governing Council, the Goods and Services Tax Council and the Zonal Councils all handle Centre State coordination without a clear division of subjects. Eg. The pending water issues were referred simultaneously to the concerned ministries, the Inter-State Council and the States.

    Conclusion

    The Council closed with agreement on two procedural points, namely further consultation on the division of Andhra Pradesh and Telangana assets and further meetings on pending water issues, and the next step lies with the Ministry of Home Affairs. The substantive demands raised, on delimitation, on the freeze on Lok Sabha seats, on centrally sponsored scheme funding and on coastal mineral auctions, remain with Parliament and the Union ministries. The meeting confirmed that the southern States are asking to be held harmless for the very performance they were praised for. That question cannot be answered by a body whose conclusions are recommendatory.

    What is Cooperative Federalism?

    1. About: Cooperative federalism is a working arrangement in which the Union and the States act as collaborating levels of the same government rather than as rival sovereigns, coordinating through joint institutions on subjects that neither can handle alone.
    2. Rationale: It exists because the Indian Constitution distributes powers between two levels while leaving many problems, such as river water, internal migration, public health and taxation of a single national market, indivisible across those levels.
    3. The institutional forms it takes:
    4. Constitutional coordination bodies: The Inter-State Council and the Finance Commission are created by the Constitution itself rather than by statute.
    5. Statutory coordination bodies: The Zonal Councils under the States Reorganisation Act, 1956 and the North Eastern Council under its own 1971 statute are created by Parliament.
    6. Executive coordination bodies: The NITI Aayog Governing Council and its Regional Councils operate through executive resolution rather than statute.
    7. Constitutionally mandated joint decision bodies: The Goods and Services Tax Council under Article 279A takes decisions binding in practice on both levels through a weighted vote.
    8. The doctrinal companion: Competitive federalism describes States competing on outcome indicators for investment and rank, and operates alongside cooperative federalism rather than replacing it.

    Key Concerns Regarding Cooperative Federalism

    1. The Governor’s office as a point of friction: Reservation of Bills for the President’s consideration and indefinite withholding of assent place an appointee of the Centre inside the State legislative process.
    2. Central agencies operating in State subjects: Police and public order are State List subjects, while central investigative agencies operate within States, and several States have withdrawn general consent for such operations.
    3. Unilateral legislation on Concurrent List subjects: Parliament can legislate on Concurrent List entries without State agreement, and central law prevails over State law under Article 254 in the event of repugnancy.
    4. Central control over the higher civil service: All India Service officers serve in the States but are governed by central cadre rules, so deputation and disciplinary control sit with the Centre.
    5. Coordination bodies meet at the Centre’s discretion: The Inter-State Council and the Zonal Councils have no fixed calendar in the Constitution or the statute, so their frequency depends on the Union executive.
    6. Reorganisation obligations remain open for years: Division of assets and liabilities after State bifurcation is left to be settled by consultation, which leaves successor States negotiating long after reorganisation.

    Constitutional Framework Governing Centre State Coordination

    1. Article 246 with the Seventh Schedule: Distributes legislative power across the Union List, the State List and the Concurrent List.
    2. Article 254: Provides that central law prevails over a repugnant State law on a Concurrent List subject, subject to Presidential assent for the State law.
    3. Article 262: Empowers Parliament to provide for adjudication of disputes over the waters of inter State rivers and to bar the jurisdiction of courts, including the Supreme Court, over such disputes.
    4. Article 263: Empowers the President to establish an Inter-State Council to inquire into and advise upon inter State disputes and to investigate and discuss subjects of common interest.
    5. Article 279A: Establishes the Goods and Services Tax Council as a joint forum of the Centre and the States with a weighted voting formula.
    6. Article 280: Establishes the Finance Commission to recommend the distribution of net tax proceeds between the Union and the States and the principles governing grants in aid.
    7. Article 281 and Article 282: Require Finance Commission recommendations to be laid before Parliament, and allow the Union and the States to make grants for any public purpose, which is the constitutional basis for centrally sponsored schemes.
    8. Article 81 and Article 82: Fix the composition of the Lok Sabha and require readjustment of seat allocation among States after each Census, on the terms Parliament determines.
    9. Article 293: Places conditions on State borrowing where a State is indebted to the Union.
    10. Article 131: Confers original jurisdiction on the Supreme Court in disputes between the Government of India and one or more States.

    Laws and Rules Governing Inter State Coordination

    1. States Reorganisation Act, 1956: Reorganised the States on a linguistic basis and created the five Zonal Councils.
    2. Sections 15 to 22 establish the Councils, fix their composition and define their advisory functions on inter State and Centre State matters.
    3. North Eastern Council Act, 1971: Created a sixth regional council for the north eastern States, later amended in 2002 to add Sikkim and to make the Council a regional planning body.
    4. Inter-State River Water Disputes Act, 1956: Provides for the constitution of a tribunal where a State complains that its interests in an inter State river are affected.
    5. The 2002 amendment fixed a one year deadline for constituting a tribunal and a three year deadline for its award, with a further two year extension permitted.
    6. Andhra Pradesh Reorganisation Act, 2014: Governs the bifurcation of Andhra Pradesh and Telangana, including the division of assets, liabilities and institutions still under negotiation.
    7. Inter-State Council Order, 1990: The Presidential order that constituted the Inter-State Council on a recommendation of the Sarkaria Commission on Centre State relations, and defined its duties.
    8. It makes the Prime Minister the chairman, with the Chief Ministers of all States, the Chief Ministers of Union Territories with legislatures, administrators of other Union Territories and six Union Cabinet Ministers nominated by the Prime Minister as members.
    9. A Standing Committee chaired by the Union Home Minister handles continuous consultation, and the Council Secretariat functions under the Ministry of Home Affairs.
    10. Its recommendations are not binding on the Centre or on any State.

    Challenges in Centre State Fiscal and Resource Relations

    1. The divisible pool is smaller than the tax collected: Cesses and surcharges are not shared with the States, so revenue can rise without the States’ share rising with it. Eg. Kerala pressed at the Council for a revised central share reflecting actual expenditure incurred on centrally sponsored families.
    2. Centrally sponsored schemes carry uniform design across unequal States: A single national parameter ignores differences in cost, disease burden and delivery capacity across States. Eg. Kerala asked for State specific premiums under the Ayushman Bharat Pradhan Mantri Jan Arogya Yojana in place of a uniform national premium.
    3. Resource decisions on State territory are taken centrally: Auction and regulation of major minerals sit with the Centre while the resource and its social costs sit in the State. Eg. Kerala asked that auctioning of mineral blocks along its coast be put on hold, and Karnataka asked the Centre to reconsider the 2026 mineral law amendment.
    4. River water adjudication is slow enough to become a political dispute: Tribunal timelines stretch across electoral cycles, so States negotiate politically while adjudication is pending. Eg. The Krishna waters allocation between Andhra Pradesh and Telangana remained live at the Council table.
    5. Bifurcation settlements remain unfinished for years: Division of assets, liabilities and institutions is left to consultation without a deadline. Eg. Andhra Pradesh and Telangana agreed at this meeting to resolve asset and liability division in consultation with the Ministry of Home Affairs, twelve years after reorganisation.
    6. Fiscal performance is not rewarded in the transfer formula: Devolution weights population and income distance heavily, so States with better demographic and fiscal outcomes receive a smaller share. Eg. Tamil Nadu stated at the meeting that it seeks treatment that rewards performance alongside equity.
    7. Borrowing headroom is set by the Centre: State borrowing limits are fixed centrally under Article 293 and under the fiscal responsibility framework, which caps State led capital spending. Eg. Andhra Pradesh projected a $10 trillion southern economy by 2047, a target that depends on capital expenditure the States do not independently control.

    Way Forward

    1. Fix a statutory meeting calendar for the Councils: Require the Zonal Councils and the Inter-State Council to meet at a defined minimum frequency, with published agendas and action taken reports on earlier resolutions.
    2. Create an action taken mechanism: Record each Council recommendation against a named ministry with a response deadline, so a recommendation produces a documented decision rather than a carry forward.
    3. Settle the delimitation question before the freeze lapses: Resolve the basis for readjustment through a parliamentary process now, rather than allowing the constitutional deadline to force it.
    4. Cap cesses and surcharges as a share of gross tax revenue: Limit the proportion of central tax revenue kept outside the divisible pool so that devolution tracks actual collections.
    5. Allow State specific parameters within national schemes: Permit variation in premium, unit cost and beneficiary definition within centrally sponsored schemes where a State demonstrates a different cost structure.
    6. Enforce the statutory timelines for water tribunals: Apply the one year constitution and three year award deadlines strictly, and use a single permanent tribunal with benches to prevent each dispute restarting from the beginning.
    7. Close reorganisation settlements with a deadline: Fix an outer date for completing the division of assets, liabilities and institutions under reorganisation statutes, with an arbitral mechanism where consultation fails.

    “[2025] With reference to India, consider the following:

    I. The Inter-State Council

    II. The National Security Council

    III. Zonal Councils

    How many of the above were established as per the provisions of the Constitution of India?

    (a) Only one

    (b) Only two

    (c) All the three

    (d) None

  • Iran war pushes India’s oil & gas import bill up 43%

    Why in the News

    India’s net oil and gas imports rose 43.4 percent in value in April to July of the current financial year, to $57.8 billion from $40.3 billion a year earlier. Import volumes barely moved, so the increase is almost entirely a price effect created by supply tightness and stifled energy flows through the Strait of Hormuz. With 88.3 percent of crude requirement met by imports, India has prioritised supply security over price, and the cost of that choice lands on the trade balance.

    What are net oil and gas imports?

    1. How the figure is built: Net oil and gas imports are arrived at by deducting petroleum product exports from oil, natural gas and petroleum product imports.
    2. Why the deduction matters: India is a net exporter of petroleum products because of its refining capacity, so gross import figures overstate the true external drain.
    3. What it still includes: India also imports some petroleum products, notably liquefied petroleum gas, so the netting does not remove product imports entirely.
    4. Why it is the tracked number: It measures the actual foreign exchange outgo on energy, which is what feeds into the trade balance and the current account.

    What is the Petroleum Planning and Analysis Cell?

    1. What it is: The Petroleum Planning and Analysis Cell (PPAC) is the data and analysis body under the Ministry of Petroleum and Natural Gas. It compiles India’s official import, consumption, production and pricing statistics for petroleum and natural gas.

    What is liquefied natural gas?

    1. What it is: Liquefied natural gas (LNG) is natural gas, primarily methane, cooled to minus 162 degrees C so that it becomes liquid and can be shipped in cryogenic carriers. It must be regasified at a terminal in the importing country before use.
    2. How it is priced: Spot LNG in Asia is priced against the Japan Korea Marker, with Henry Hub and the Title Transfer Facility serving the American and European markets.

    What is liquefied petroleum gas?

    1. What it is: Liquefied petroleum gas (LPG) is propane and butane, produced as a byproduct of oil refining or natural gas processing, and used for domestic cooking, industrial heating and autogas.
    2. How it is priced: It is priced against the Saudi Aramco Contract Price, which is loosely linked to Brent crude.

    Why did the import bill rise 43 percent when volumes barely moved?

    1. Volumes were nearly flat: Oil and LNG imports were only marginally higher in volume terms across April to July.
    2. Crude price did the work: The average landed price of imported crude was about $106 per barrel in April to July, sharply higher than about $68 per barrel in the corresponding period of last year.
    3. Value rose without volume: The crude oil import bill surged by over 56 percent year on year to $63.4 billion even as volumes rose only slightly, to 81.9 million tonnes or about 600 million barrels, from 81.5 million tonnes.
    4. The stated priority: India has been prioritising supply security over price considerations, so it imported at extremely high rates rather than curtail volumes.
    5. Product trade moved the same way: Petroleum product export volumes fell while export value rose, and product import volumes fell faster than product import value, both reflecting high international prices.

    How did each component of the energy trade basket move?

    1. Crude oil imports, volume: 81.9 million tonnes against 81.5 million tonnes a year earlier, a rise of 0.5 percent.
    2. Crude oil imports, value: $63.4 billion against $40.5 billion, a rise of 56.5 percent.
    3. Petroleum product imports, volume: 9.0 million tonnes against 16.4 million tonnes, a fall of 45.1 percent.
    4. Petroleum product imports, value: $5.6 billion against $7.6 billion, a fall of 26.3 percent.
    5. LNG imports, volume: 11,867 million standard cubic metres against 11,269 million standard cubic metres, a rise of 5.3 percent.
    6. LNG imports, value: $5.6 billion against $4.5 billion, a rise of 24.4 percent.
    7. Petroleum product exports, volume: 16.5 million tonnes against 20.1 million tonnes, a fall of 17.9 percent.
    8. Petroleum product exports, value: $16.7 billion against $12.4 billion, a rise of 34.7 percent.
    9. Net oil and gas imports: $57.8 billion against $40.3 billion, a rise of 43.4 percent.

    How exposed is India’s energy basket to the Strait of Hormuz?

    1. Crude dependence: India depends on imports to meet over 88 percent of its crude oil requirement, and its dependence on imported oil for the four months ended July was 88.3 percent, almost flat year on year.
    2. Gas dependence: About half of India’s natural gas consumption is met by imports, brought in as LNG.
    3. Share routed through the strait: Around 40 percent of India’s crude oil imports, 60 percent of its LNG imports and 90 percent of its LPG imports came from West Asia through the strait.
    4. Where the disruption showed: Petroleum product imports declined 45.1 percent in volume to 9.0 million tonnes because supply of major products India imports, such as LPG, was hit by the West Asia conflict.
    5. Why exports fell: India’s petroleum product export volumes fell almost 18 percent year on year to 16.5 million tonnes as domestic fuel supplies were prioritised amid the global supply crunch.

    Why does an oil price shock transmit into the wider economy?

    1. The volume multiplier: India annually imports 1.8 to 2 billion barrels of oil, so every $1 per barrel increase raises the oil import bill by up to $2 billion on an annualised basis.
    2. Share of total imports: Energy imports are a major component of India’s overall imports, so any meaningful increase moves the aggregate import number.
    3. Trade balance and current account: A higher energy bill widens the merchandise trade deficit and feeds directly into the current account deficit.
    4. Inflation channel: Higher landed crude costs pass into transport and freight costs and into the prices of petroleum linked goods.
    5. Exchange rate channel: A larger dollar outgo on energy adds to demand for foreign exchange and weighs on the rupee’s exchange rate.

    Challenges to managing India’s oil and gas import bill

    1. Demand is price inelastic in the short run: Refiners cannot cut crude intake without cutting fuel supply, so a price shock passes straight into the bill. Eg. Crude import volumes rose 0.5 percent even as the crude bill rose 56.5 percent in April to July.
    2. Concentration of LPG sourcing: A single region supplies almost the entire LPG import basket, leaving no substitute route in a disruption. Eg. The West Asian share of India’s LPG imports moves entirely through the Strait of Hormuz, with no second corridor available if the strait closes.
    3. Fixed rupee excise blocks pass through of relief: Central excise duty is levied as a fixed amount per litre rather than as a percentage, so falling crude prices accrue to revenue rather than to consumers. Eg. When Brent fell from $80 to $60 per barrel in early 2025, Delhi petrol fell by only about Rs 2 to 3 per litre.
    4. Strategic reserve cover below international norms: The buffer available to ride out a supply interruption is short of the accepted benchmark. Eg. India’s total crude cover of 74 days sits below the International Energy Agency norm of 90 days of net import cover.
    5. No strategic reserve for gas at all: The gas basket has an operational buffer but no strategic cushion. Eg. India’s LNG storage tanks at regasification terminals give roughly 10 days of operational buffer, with no strategic LNG reserve in existence.
    6. Spot LNG volatility deters utilisation: When spot prices spike, importers switch to coal or fuel oil, stranding regasification capacity. Eg. India’s roughly 42.5 million tonnes per annum of LNG regasification capacity runs at 60 to 65 percent utilisation because switching becomes rational above $15 per MMBtu.
    7. Refinery configuration ties India to sour crude sources: Indian refineries have invested in desulphurisation capacity built around Middle Eastern grades, which limits how fast the basket can be re-sourced. Eg. Most Middle Eastern crude India buys is priced against Dubai and Oman, and Saudi, Iraqi and UAE grades track that benchmark.

    Conclusion

    India’s net oil and gas import bill rose to $57.8 billion in April to July from $40.3 billion a year earlier, a 43.4 percent increase driven almost wholly by price rather than volume. At 88.3 percent crude import dependence and with the West Asian shares of crude, LNG and LPG all routed through the Strait of Hormuz, a chokepoint disruption converts directly into a macroeconomic shock. The figures are provisional data from the Petroleum Planning and Analysis Cell, and the next reading will show whether the price effect persists once Hormuz flows normalise.

    About India’s Crude Oil Procurement and Pricing

    1. Who buys: State owned refiners account for 73 percent of India’s procurement through Indian Oil Corporation Limited, Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Limited, with private refiners Reliance Industries and Nayara Energy accounting for 27 percent.
    2. How buying works: Each refiner independently forecasts demand two to three months ahead and negotiates bilaterally with suppliers such as Rosneft, Saudi Aramco and Iraq’s State Organisation for Marketing of Oil.
    3. How it is priced: All contracts are priced as Brent plus or minus a negotiated discount, and Middle Eastern grades track the Dubai and Oman benchmark.
    4. Where crude lands: Crude is received by tanker at Paradip, Mumbai, Kochi and Vadinar.
    5. Quality determines price: Sulphur content and American Petroleum Institute (API) gravity, the measure of a crude’s density, together determine refining cost and product yield, with sweet crude defined as sulphur content below 0.5 percent and sour crude requiring additional processing.

    Regulatory Framework Governing India’s Petroleum and Natural Gas Sector

    1. Ministry of Petroleum and Natural Gas: The apex policy body, which sets the framework for exploration, refining, marketing, pricing and strategic reserves, awards production sharing contracts, and exercises ownership over the public sector oil companies.
    2. Petroleum and Natural Gas Regulatory Board: Regulates refining, processing, storage, transportation, distribution, marketing and sale of petroleum products and natural gas, authorises City Gas Distribution networks, and determines pipeline tariffs on a common carrier basis.
    3. Directorate General of Hydrocarbons: The technical regulator for upstream exploration and production, which manages block allocations, monitors production sharing contracts, verifies reserves, approves field development plans and maintains the National Data Repository.
    4. Oil Industry Development Board: Funded by a statutory cess on domestic crude production, it finances oil industry development and wholly owns Indian Strategic Petroleum Reserves Limited, which operates the underground reserve caverns.
    5. Deregulated retail pricing: Petrol was deregulated in 2010 and diesel in 2014, so the Ministry does not directly set retail pump prices.

    Government Initiatives in the Petroleum and Gas Sector

    1. Strategic Petroleum Reserve: Phase I comprises 5.33 million tonnes of crude across three underground rock caverns at Visakhapatnam, Mangaluru and Padur, with a Phase II commercial cum strategic expansion under public private partnership models.
    2. Hydrocarbon Exploration and Licensing Policy, 2016: Replaced the earlier New Exploration Licensing Policy with a uniform licence covering all hydrocarbons, open acreage licensing and revenue sharing in place of production sharing.
    3. Administered Price Mechanism for domestic gas: The Ministry sets the administered price for domestic natural gas indexed monthly at 10 percent of the Indian Crude Basket price, following the Kirit Parikh Committee recommendations, subject to a floor and ceiling for legacy fields.
    4. Direct Benefit Transfer for LPG: LPG is subsidised through direct transfer, with Rs 300 per cylinder for Ujjwala beneficiaries.
    5. City Gas Distribution expansion: India’s city gas distribution network now covers 98 cities, supplying compressed natural gas for vehicles and piped natural gas for households from a mix of domestic gas and regasified LNG.

    Key Facts about Global Oil Benchmarks and India’s Reserves

    1. Brent crude: North Sea origin, 38 API and 0.37 percent sulphur, traded on the Intercontinental Exchange in London, accounting for 75 to 80 percent of global oil trade and serving as the reference against which all other grades are a premium or discount.
    2. West Texas Intermediate: Cushing, Oklahoma origin, 39.6 API and 0.24 percent sulphur, traded on the New York Mercantile Exchange, accounting for 15 to 20 percent of global trade and typically Brent minus $0 to $5 per barrel.
    3. Dubai and Oman: Persian Gulf origin, 31 to 33 API and 1.0 to 2.0 percent sulphur, traded on the Dubai Mercantile Exchange, accounting for 5 to 10 percent of global trade and typically Brent minus $5 to $15 per barrel.
    4. Why OPEC does not set the price: OPEC controls 40 percent of production but Brent sets 75 to 80 percent of global prices, since markets price oil hundreds of thousands of times a day while OPEC announces targets once and has no enforcement mechanism against quota cheating.
    5. Reserve position: India’s total crude cover is 74 days, made up of 9.5 days from the Strategic Petroleum Reserve and 64.5 days of oil marketing company commercial stocks, against the International Energy Agency norm of 90 days.
    6. LPG and LNG cover: LPG cavern capacity of about 140,000 tonnes gives roughly 22 days of cover against consumption of about 3 million tonnes a month, while LNG has about 10 days of operational buffer and no strategic reserve.
    7. Volatility of spot gas: The Japan Korea Marker swung from $3 per MMBtu in mid 2020 to $70 per MMBtu in August 2022.
    8. Committee recommendation on storage: The Parliamentary Standing Committee on Petroleum in December 2023 recommended equipping refineries with two to three days of smaller strategic storage at five to six additional locations, which could add 15 to 20 days of capacity.

    Back2Basics: Strait of Hormuz

    1. Location: A narrow sea passage connecting the Persian Gulf to the Gulf of Oman and onward to the Arabian Sea.
    2. Control: Iran controls the northern shore and seven of the eight islands in the strait, Oman controls the southern entrance, and the United States Fifth Fleet acts as the external guarantor of transit.
    3. Oil traffic: About 20 million barrels a day pass through it, amounting to 20 percent of global oil movement.
    4. Gas traffic: It carries 20 percent of global LNG trade, which makes closure hit gas hardest given Qatar’s dominance in LNG supply.
    5. Strategic character: It carries the highest concentration of energy flow of any maritime chokepoint in the world.

    Challenges in India’s Energy Security

    1. Stagnant domestic crude production: Falling domestic output pushes import dependence upward regardless of demand. Eg. Cess collections of the Oil Industry Development Board have declined in real terms because domestic crude production has stagnated.
    2. Regulatory conflict of interest: The same ministry sets the pricing environment and owns the companies whose losses that environment creates. Eg. The Ministry of Petroleum and Natural Gas simultaneously regulates the sector and holds ownership rights over Indian Oil Corporation Limited, Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Limited.
    3. Gaps in the regulatory perimeter: No single regulator covers the full chain from wellhead to pump. Eg. The Petroleum and Natural Gas Regulatory Board has no jurisdiction over upstream exploration, wellhead gas pricing or LPG retail pricing.
    4. Upstream reservoir disputes slow output: Technical disputes between operators delay field development and carry royalty implications. Eg. The gas migration dispute between ONGC and Reliance Industries in the Krishna Godavari basin required adjudication by the Directorate General of Hydrocarbons.
    5. Chokepoint concentration across all three fuels: Crude, LPG and LNG share the same maritime chokepoint, so diversification of supplier does not diversify route. Eg. LPG moves with crude tankers or on dedicated carriers through the same Strait of Hormuz.
    6. Tax structure blunts price signals: Taxes form roughly 60 percent of the retail pump price, weakening the link between global prices and consumer behaviour. Eg. Delhi petrol at Rs 96 to 97 per litre carried Rs 13 of central excise and Rs 15 to 18 of State value added tax before the crisis.
    7. Storage build out lags the exposure: Reserve expansion depends on capital and cavern geology, both of which take years. Eg. Phase II of the Strategic Petroleum Reserve is being pursued through public private partnership because budgetary funding alone has not delivered the capacity.

    Way Forward

    1. Complete Phase II of the Strategic Petroleum Reserve: Bring the commercial cum strategic caverns on stream to move total cover towards the 90 day International Energy Agency norm.
    2. Adopt the refinery level storage recommendation: Implement the Parliamentary Standing Committee’s December 2023 proposal on refinery level storage, which remains a recommendation rather than sanctioned capacity.
    3. Create a strategic gas reserve: Extend the reserve architecture to LNG, which today has only an operational buffer at regasification terminals.
    4. Shift excise from a fixed levy to an ad valorem levy: This would let consumers receive part of the benefit when crude prices fall, restoring the price signal.
    5. Diversify sourcing away from a single chokepoint: Expand term contracts with Atlantic basin, West African and North American suppliers so that a Hormuz disruption does not strike crude, LNG and LPG supply simultaneously.
    6. Raise domestic production through open acreage: Accelerate block awards under the Hydrocarbon Exploration and Licensing Policy to arrest the decline in domestic output.
    7. Separate ownership from regulation: Move ownership of the public sector oil companies out of the administering ministry so that pricing policy is not set by their shareholder.

    “[2025, GS2, 15] “Energy security constitutes the dominant kingpin of India’s foreign policy, and is linked with India’s overarching influence in Middle Eastern countries.” How would you integrate energy security with India’s foreign policy trajectories in the coming years?”

  • RWAs a barrier, Govt may let high-income households compile own spending data

    Why in the News

    The Ministry of Statistics and Programme Implementation (MoSPI) is considering a separate diary based method of recording expenditure for high income households living in gated societies. The proposal answers a refusal rate that has climbed fastest at the top of the income distribution. It also splits a single national survey across two different collection methods.

    What is the Household Consumption Expenditure Survey?

    1. What it measures: The Household Consumption Expenditure Survey (HCES) records how much a household spends on goods and services over a reference period. It covers rural and urban households across the country.
    2. Who runs it: The National Statistics Office under MoSPI conducts it as a sample survey using tablets to record responses.
    3. What the output is used for: The spending shares it produces fix the weights of the Consumer Price Index (CPI) basket, which forms the basis of headline retail inflation. The Reserve Bank of India (RBI) looks at that inflation measure while deciding on interest rates, against a CPI target of 4% within a band of 2% to 6%.
    4. How often it runs: It was earlier conducted every five years. Two back to back rounds ran in 2022-23 and 2023-24 after an overhaul of methods, and the ministry now intends a round every three years or so.

    What is diary based data collection?

    1. The method: The household itself notes down the information as and when the relevant activity occurs, instead of answering a field official at the door. For the HCES this means jotting down monthly spending on different goods and services, ranging from food items to haircuts.
    2. The form it may take: The record need not be a physical diary. The ministry may allow such households to enter consumption expenditure details on an online portal.

    What is recall error in survey data?

    1. The defect: Recall error is the gap between what a household actually spent and what a respondent remembers spending when asked later. It rises with the length of the reference period and the number of items being recalled.
    2. Why the diary reduces it: A household writing an entry at the moment of purchase is not relying on memory at all. The error the interview method introduces is therefore absent from the diary record.

    How far has participation in official surveys fallen?

    1. Urban non response: The overall urban non response rate during the 2022-23 HCES rose to 9.8%, from 2.8% in the 75th round of the National Sample Survey conducted from July 2017 to June 2018.
    2. Rural non response: The rural rate rose to 4.1% over the same period, from 1.5%.
    3. The most affluent respondents: For the most affluent urban and rural respondents, the non response rate stood at 11% and 3.9% respectively.
    4. The earlier baseline: In the 2011-12 survey the corresponding figures for those groups were 3.3% and 1.3%.
    5. The scale of the last round: The most recent HCES, conducted from August 2023 to July 2024, surveyed 2.6 lakh households across the country, barring a few inaccessible villages in the Andaman and Nicobar Islands. It sought responses for a total of 405 goods and services.
    6. The next round: The next edition is expected to begin in mid-2027 and continue for about a year, with the diary method proposed only for richer households in gated societies on a pilot basis.

    Why do affluent households refuse to be surveyed?

    1. Physical exclusion by the association: Resident Welfare Associations (RWAs) have cited security as the reason for not permitting survey staff inside gated societies. Field officers already inform the district collector, local bodies and the police station to obtain permission and support before entry.
    2. Objection to the questions themselves: RWAs have objected to the sensitive and private nature of some questions asked in government surveys.
    3. Fear of onward sharing: RWAs have voiced the apprehension that the details may be shared with other government departments. MoSPI has stated that data privacy is paramount and that the data is anonymised.
    4. Inability to remember: Households have cited the difficulty of recalling expenditure details accurately during a door to door interview.
    5. Discomfort within the family: Residents have cited unease at answering certain questions in front of family members, such as expenditure on alcohol and cigarette consumption.
    6. No perceived reason to participate: MoSPI has recorded a lack of awareness of why these surveys matter for policy, which often leads to outright refusal. Eg. Residents of an affluent society in Gurugram refused to take part in the Time Use Survey.

    Why does refusal concentrated at the top distort national estimates?

    1. The sample shrinks: A rise in non response rates curtails the achieved sample size of a survey.
    2. The sample changes shape: Non responses drawn from one segment leave the final composition of the sample different from what was intended, which produces incorrect estimates from the exercise.
    3. Substitution moves the problem, it does not solve it: Where access failed, the ministry substituted the original residential society with a similar one, so the households actually surveyed are not the households the design selected.
    4. The refusal is not confined to one survey: Similar incidents have been reported from high rises in Bengaluru, Kolkata, Udaipur, Mumbai and Bhopal for the HCES, the Periodic Labour Force Survey, the Annual Survey of Unincorporated Sector Enterprises and the Urban Frame Survey.
    5. Policy is built on these numbers: Government policy is increasingly data and evidence driven, so a biased estimate leads to inappropriate conclusions and decisions that do not produce the desired result.

    What does international practice show about diary based expenditure surveys?

    1. United Kingdom: The Office for National Statistics runs the Living Costs and Food Survey, in which each adult in a selected household keeps a two week spending diary. The results feed the weights of the United Kingdom consumer price indices.
    2. United States: The Bureau of Labor Statistics runs the Consumer Expenditure Surveys in two parts, a quarterly interview component and a separate diary component in which households record purchases for two consecutive one week periods.
    3. Japan: The Statistics Bureau runs the Family Income and Expenditure Survey using a household account book kept by the household over a fixed period rather than a single recall interview.
    4. Australia: The Australian Bureau of Statistics collects a two week personal expenditure diary from household members in its Household Expenditure Survey, alongside a face to face interview.
    5. The limit of the evidence here: The proposal is defended on the ground that the diary method is used in other countries, without naming a country or a comparability finding from any of them.

    Can one survey run on two collection methods without breaking its own comparability?

    1. Two data sets, one estimate: The practical problem is how data compiled through two different methods will be stitched together into a single national estimate.
    2. The error is asymmetric by design: Data collected door to door from poorer households would carry higher recall error than diary based data supplied by richer households. The difference in the numbers would then reflect the method as much as the spending.
    3. The asymmetry runs the wrong way: India's survey samples are dominated by the low income group, so the method with the larger error would apply to most of the sample.
    4. Literacy sets the boundary: Lower literacy rates in the low income group mean only higher income households can be expected to follow the diary method correctly.
    5. The department's own position: MoSPI has stated that the integration of diary compiled data with the main survey is still being worked out and that the proposal is at a planning stage.

    Challenges to the diary based collection proposal

    1. No legal compulsion behind participation: Voluntary compliance is what has broken down, and a change of instrument does not create an obligation to respond. Eg. Residents of gated societies have simply stated that they do not want to participate in a survey, with no consequence following.
    2. Self reporting understates socially sensitive spending: Items respondents are reluctant to declare in front of family are also the items most likely to go unrecorded in a self kept diary. Eg. Expenditure on alcohol and cigarette consumption was named by RWAs as a category respondents avoid.
    3. A portal shifts the burden to the respondent: An online entry system asks an unpaid household to do the work a trained investigator was paid to do, which raises the risk of partial and abandoned records. Eg. The ministry already uses tablets for field recording, so the enumerator side of the process is not the bottleneck.
    4. A pilot on one income class cannot be validated: Without running both methods on the same households, there is no way to separate a method effect from a real difference in spending. Eg. The 2017-18 consumption expenditure survey was junked in November 2019 after its results were questioned on data quality grounds, showing how a contested method destroys the entire round.
    5. Privacy assurance rests on administrative practice: Anonymisation has been promised as a departmental assurance rather than as an enforceable statutory guarantee against onward sharing. Eg. RWAs specifically raised the fear that details would travel to other government departments.
    6. Class segregated methods invite challenge to the inflation number itself: A CPI weight derived from two collection systems can be contested on the ground that the two halves are not measuring the same thing. Eg. The food group weight in the CPI was cut sharply on the basis of the 2023-24 HCES, a revision that depends entirely on the survey being internally consistent.

    Conclusion

    The proposal is at the planning stage, with a diary based pilot intended for high income households in gated societies before the 2027-28 consumption expenditure survey begins. The problem it addresses is real, since non response among the most affluent urban respondents has reached 11% against 3.3% in 2011-12. The unresolved question is the one the ministry itself has flagged, namely how a diary record and a door to door interview can be combined into one estimate when they carry different recall error. Until that is settled, the fix repairs coverage at the cost of comparability.

    About India's Consumption and Price Statistics System

    1. What the Consumer Price Index measures: It captures the price change experienced by the average urban and rural household across food, housing, transport, healthcare, education, clothing and services. It is the closest approximation to the cost of living for a typical household.
    2. How the basket is organised: The CPI is built on 12 divisions of the Classification of Individual Consumption According to Purpose, 2018 (COICOP-2018), covering food and non-alcoholic beverages, pan, tobacco and narcotics, clothing and footwear, housing, water, electricity, gas and other fuels, furnishings and routine household maintenance, health, transport, information and communication, recreation, sport and culture, education, restaurants and accommodation services, and personal care, social protection and miscellaneous items.
    3. The weight of food: Food and non-alcoholic beverages carry a weight of about 36.75% in the CPI, revised down from 45.86%.
    4. The food price index: The Consumer Food Price Index (CFPI) is derived from Division 1 of COICOP-2018 and is published separately for rural, urban and combined series. Its sub components include cereals, milk, meat and fish, oils and fats, vegetables, fruits, pulses, spices and sugar.
    5. Headline against core: Headline inflation includes every item in the basket and swings with monsoons, global crude and supply disruptions. Core inflation strips out food and fuel to give a cleaner read of demand driven, sticky inflation.
    6. The wholesale index: The Wholesale Price Index (WPI), on a 2011-12 base, measures what the economy produces and trades at wholesale. Manufacturing alone accounts for about 64% of the WPI, and food articles at the farm gate together with food manufacturing account for only about 24%.
    7. How the two indices enter national accounts: Goods producing sectors such as agriculture, mining and manufacturing are deflated using the WPI, since their transactions occur at the wholesale level. Services sectors are deflated using CPI components or dedicated services price indices.
    8. Where consumption data feeds employment and enterprise statistics: The Periodic Labour Force Survey (PLFS), launched in 2017-18, tracks employment, workforce participation and unemployment. The Annual Survey of Unincorporated Sector Enterprises (ASUSE) captures output, employment, wages and value added in the informal business economy.

    Laws and Rules Governing Official Statistics in India

    1. Collection of Statistics Act, 2008: Provides the legal framework for the collection of statistics on economic, demographic, social, scientific and environmental matters by the Centre, States and local bodies.
    2. It empowers a statistics officer to require information and penalises wilful refusal or supply of false information.
    3. The Collection of Statistics (Amendment) Act, 2017 extended the framework to the erstwhile State of Jammu and Kashmir and clarified the Centre's powers over subjects in the Union and Concurrent Lists.
    4. Collection of Statistics Rules, 2011: Lay down the procedure for notification of a statistical survey, appointment of statistics officers, service of notices and the handling of returns.
    5. Census Act, 1948: Governs the conduct of the decennial Census and the appointment of census officers.
    6. It makes information given to a census officer confidential and inadmissible as evidence, a confidentiality guarantee the Collection of Statistics framework does not replicate in the same terms.
    7. Registration of Births and Deaths Act, 1969: Provides the civil registration system that supplies vital statistics independent of survey estimates.
    8. Digital Personal Data Protection Act, 2023: Governs the processing of digital personal data and shapes how identifiable household records collected in surveys may be stored and shared.
    9. Right to Information Act, 2005: Provides the route through which unit level survey data and methodology notes are sought from statistical agencies.

    Government Initiatives

    1. National Statistical Commission: Constituted in 2005 on the recommendation of the Rangarajan Commission, it advises on statistical priorities, standards and the release calendar of official statistics.
    2. eSankhyiki portal: A MoSPI platform that brings macro indicators and survey outputs into a single searchable data lake for public and departmental use.
    3. National Data and Analytics Platform: A NITI Aayog initiative to standardise and publish government datasets in machine readable form for researchers and administrators.
    4. Data Governance Quality Index: Scores ministries and departments on the quality of their administrative data systems, aimed at raising the reliability of data generated outside sample surveys.
    5. Revamped Periodic Labour Force Survey: From January 2025 the survey shifted to the calendar year, expanded its sample and moved to monthly reporting of key labour market indicators.
    6. Sustainable Development Goals National Indicator Framework: Maintained by MoSPI, it fixes the national indicators against which progress on the Sustainable Development Goals is reported.

    Key Facts about India's Statistical System

    1. National Statistics Day: Observed on 29 June, the birth anniversary of Prasanta Chandra Mahalanobis, recognised as the architect of India's sample survey system.
    2. World Statistics Day: Observed on 20 October, designated by the United Nations Statistical Commission.
    3. Origins of the survey system: The National Sample Survey was set up in 1950 on Mahalanobis's initiative, making India one of the earliest large scale household survey systems in the developing world.
    4. Institutional merger: The Central Statistics Office and the National Sample Survey Office were merged into the National Statistical Office in May 2019.
    5. International standards: India was among the first countries to subscribe to the International Monetary Fund's Special Data Dissemination Standard, in 1996.

    Back2Basics: National Sample Survey

    1. What it is: A nationwide, large scale sample survey system that collects household and enterprise data through successive rounds, each round running for a fixed period.
    2. Who runs it: The National Statistical Office under MoSPI, through a field operations wing with offices across the country.
    3. How rounds work: Each round carries a principal subject, such as consumption expenditure, employment and unemployment, health, education or land and livestock holdings, with subjects rotating across rounds.
    4. Design: It uses a stratified multi stage sample design covering rural and urban areas, with villages and urban blocks as first stage units and households as ultimate units.
    5. Why the round number matters: Round numbers identify the survey period, so the 75th round refers to the survey conducted from July 2017 to June 2018.

    Challenges in India's Official Statistical System

    1. The sampling frame ages between Censuses: Village lists and urban blocks used to draw samples are anchored to the last Census, so the frame drifts from reality as migration and new construction accumulate. Eg. The decennial Census due in 2021 was deferred, leaving the 2011 Census as the frame for over a decade of surveys.
    2. Base years lag the structure of the economy: An index built on an old base assigns weights drawn from a consumption or production pattern that no longer exists. Eg. The Wholesale Price Index still uses 2011-12 as its base year.
    3. Comparability breaks at every methodological revision: A redesigned questionnaire produces a series that cannot be compared with its own predecessor, which destroys the ability to measure change. Eg. The 2011-12 and 2022-23 consumption rounds used different questionnaire designs, so poverty change between them cannot be read off directly.
    4. Contested releases erode trust in the system: A withheld or discarded round leaves policy without a number and invites the charge that inconvenient results are suppressed. Eg. Two members of the National Statistical Commission resigned in January 2019 over the withholding of employment survey results.
    5. No updated official poverty line: Welfare targeting continues on a threshold fixed against a consumption pattern from an earlier decade. Eg. No official poverty line has been revised since the estimates based on 2011-12 data.
    6. Administrative data sits outside the statistical system: Rich transaction records held by other departments are not routinely used to validate or supplement survey estimates. Eg. Goods and Services Tax returns, e-Shram registrations and direct benefit transfer records are maintained in separate systems from the household survey series.
    7. Privacy law raises the cost of collection: Stricter obligations on identifiable personal data increase the compliance burden on an agency that collects household level detail at scale. Eg. The Digital Personal Data Protection Act, 2023 applies to digital personal data held by government bodies with limited carve outs.

    Way Forward

    1. Run both methods on the same households first: Conduct a calibration study in which a subset of households is covered by interview and diary together, so the method effect can be measured and adjusted before the two data sets are combined.
    2. Give the survey a statutory response obligation with a privacy guarantee: Invoke the notification powers under the Collection of Statistics Act, 2008 for the HCES, paired with a published confidentiality and anonymisation protocol that binds onward sharing.
    3. Shorten reference periods rather than change the respondent's job: Use shorter recall windows and item specific reference periods to cut recall error for the interview sample instead of relying on the diary alone.
    4. Publish non response by income group with every release: Report achieved sample and non response rates decile wise alongside each estimate, so users can see where the sample is thin.
    5. Negotiate access through housing federations rather than society by society: Build standing memoranda with apex RWA federations and municipal bodies so that field access does not depend on a fresh permission at every gate.
    6. Refresh the sampling frame on the 2027 Census: Rebuild urban blocks and rural village lists on the new Census the moment enumeration closes, so the diary pilot is drawn from a current frame.
    7. Use administrative data as a cross check: Validate high income consumption estimates against Goods and Services Tax turnover, card and digital payment aggregates and vehicle and property registration data, without linking them to individual households.

    Matching Previous Year Question

    “[2020] Consider the following statements: 1. The weightage of food in Consumer Price Index (CPI) is higher than that Wholesale Price Index (WPI). 2. The WPI does not capture changes in the prices of services, which CPI does. 3. Reserve Bank of India has now adopted WPI as its key measure of inflation and to decide on changing the key policy rates. Which of the statements given above is/are correct? (a) 1 and 2 only (b) 2 only (c) 3 only (d) 1, 2 and 3 | Answer: (a)”