Why in news?

P K Mishra, Principal Secretary to the Prime Minister, said that tariffs, export controls and other trade restrictions are increasingly used not just for commercial objectives but for strategic purposes — and that these "instruments of economic policy are sometimes even weaponised.

He was speaking at a session titled 'A World Priced for Risk' at the 5th Kautilya Economic Conclave.

He framed India's goal in a memorable formulation: the future will belong to those who can be steady without being closed, careful without being fearful, and ambitious without being naïve.

What’s in Today’s Article?

• Risk vs Uncertainty: The New Global Condition
• Energy: From "What's the Price?" to "Will It Arrive?"
• Rethinking Globalisation's Core Logic
• Critical Minerals: A New Concentration Risk
• The Policy Question Going Forward
• India's Response to Supply Chain Shocks
• Diversifying Trade Relationships

Risk vs Uncertainty: The New Global Condition

• The Secretary drew a key distinction: the world today faces not merely risk, but uncertainty — and this decade has sharpened that distinction.
• Examples he cited:
  • A pandemic disrupting production and mobility worldwide.
  • Wars disrupting energy and food markets.
  • Shipping routes and geographical chokepoints becoming sources of economic vulnerability.
  • Export restrictions, sanctions and tariffs turning into instruments of economic policy — sometimes weaponised outright.
  • Critical minerals, technologies, and financial infrastructure acquiring new strategic significance.

Energy: From "What's the Price?" to "Will It Arrive?"

• He highlighted a fundamental shift in how energy-importing economies must think.
  • For decades, the principal question for energy importers was simply the price of energy.
  • Today, a second question has emerged: will the energy be available, or can it even reach us?
• He noted that a disruption in a major shipping route can affect crude oil prices thousands of kilometres away — meaning geography has become an economic variable in itself.

Rethinking Globalisation's Core Logic

• The speaker reflected on how the traditional logic of globalisation is being supplemented, not replaced.
  • The old logic: produce where costs are lowest, move goods efficiently across borders.
  • This logic "remains relevant and even powerful," he stressed.
  • But recent experience — the pandemic, geopolitical conflict, and other disruptions — has added a new consideration: the cost of interruption.
  • A supply chain efficient in normal times can become fragile if a single-node supplier or geography becomes unavailable.

Critical Minerals: A New Concentration Risk

• Mishra pointed to a parallel pattern in critical minerals essential to the clean energy transition.
  • Lithium, cobalt, rare earths and other minerals are essential for batteries, electronics, renewable energy, and advanced manufacturing.
  • Their extraction, processing, and refining are highly geographically concentrated.
  • For nearly all of them, a single country does most of the refining.
• His key warning: "the clean energy future, which was meant to free us from oil dependence, risks creating new ones."
• In other words, moving away from oil dependency may simply replace it with mineral-refining dependency on a different single country.

The Policy Question Going Forward

• Mishra framed the central challenge for policymakers precisely:
  • The question before policymakers is therefore not whether globalisation has ended. It has not.
  • The question is how we preserve the gains from openness, while making economies less vulnerable to concentrated and unpredicted shocks.
• This reframes the debate — not openness versus protectionism, but openness with resilience against concentration risk.

India's Response to Supply Chain Shocks

• Discussing disruptions around the Strait of Hormuz, Mishra noted India is a major energy importer, vulnerable to prolonged disruption of important maritime routes.
• India's response has combined several layers of protection:
  • Maintaining substantial stocks.
  • Increasing domestic production.
  • Ensuring alternative supply routes and suppliers are available.
• Concrete Evidence of Diversification: The number of countries from which India imports crude oil has increased from 27 to 43 — a significant expansion.

Diversifying Trade Relationships

• Mishra emphasised that an open economy will always depend on other economies — but the goal is avoiding excessive concentration, not eliminating dependence altogether.
• India's expanding trade agreement network now includes: UAE; Australia; AIFTA (ASEAN–India Free Trade Area); United Kingdom; Oman; New Zealand; European Union.
• He also flagged a less visible form of resilience: macroeconomic resilience — strength in the broader fundamentals of the economy, beyond trade diversification alone.

Conclusion

P K Mishra's remarks capture a broader shift: trade tools once reserved for commerce are now instruments of geopolitical leverage, and geography itself has re-entered economic calculus.

India's answer isn't retreat from globalisation but deliberate diversification — more oil suppliers, more trade agreements, deeper domestic buffers. Whether this strategy holds will depend on how well India converts diversification into genuine resilience, not just a longer list of partners.

Why in news?

India recorded 3,832 new leprosy cases among children in 2025–26, including 37 cases with Grade-2 Disability (G2D) at diagnosis — a marker of delayed detection. This child caseload is 91.6% higher than the National Leprosy Eradication Programme's (NLEP) target of 2,000 cases for the year.

These figures, drawn from the latest NLEP annual report, emerge even as India pursues its National Strategic Plan for Leprosy 2023–27, which aims to interrupt transmission at the district level by 2027.

What’s in Today’s Article?

• Understanding the Target Framework
• Why Child Cases and Disability Matter: The Epidemiological Logic
• A Troubling Trend Over Time
• The National Picture
• Where the Burden Is Concentrated?
• The Programme's Response Strategy
• About the Disease

Understanding the Target Framework

• Under the national roadmap:
  • A district is considered to have "interrupted transmission" after reporting zero new indigenous child cases for five consecutive years.
  • NLEP's programme objectives include:
    • Zero disability among new child cases.
    • A national G2D rate of less than one case per million population.
  • The roadmap had projected just 1,000 child cases and a G2D rate of 0.5 per million for 2026–27 — targets the current data suggest are now far out of reach.

Why Child Cases and Disability Matter: The Epidemiological Logic

• The World Health Organisation (WHO) treats two specific indicators as critical markers of disease control progress:
  • New cases among children below 15 years indicate recent transmission — since children typically wouldn't have been infected long ago, their diagnosis signals the disease is still actively spreading.
  • G2D among newly detected patients indicates delayed diagnosis — visible disability only develops after the infection has progressed significantly, meaning the patient wasn't caught early.
• Together, WHO notes, disabilities among newly detected child cases signal both delayed detection and ongoing transmission simultaneously — making this one of the most sensitive indicators for tracking whether a leprosy programme is truly working.

A Troubling Trend Over Time

• India's G2D figures among children, year by year:
• 
• While the latest figure (37) is lower than several earlier years, the persistent detection of children with disability — year after year — directly contradicts NLEP's stated objective of "zero disability among new child cases."
• This raises a fundamental question: if India is working to interrupt transmission by 2027, why are children still developing leprosy, and why are some only being diagnosed after visible disability has appeared?

The National Picture

• According to the Union Health Ministry, India detected 91,783 new leprosy cases overall in 2025–26.
  • Prevalence rate: 0.56 per 10,000 population.
  • 1,945 patients had Grade-2 Disability at diagnosis — 2.12% of all newly detected cases.
  • National G2D rate: 1.34 per million — above the NLEP's target of less than one case per million.
• India's Position Globally
  • According to the WHO's latest global update, India reported the world's largest number of newly detected leprosy cases in 2025:
    • India - 91,783
    • Brazil - 22,901
    • Indonesia - 16,292
  • Together, these three countries accounted for 78.3% of all new cases reported globally.
  • India also reported the world's largest number of new child leprosy cases globally — the same 3,832 cases, with 37 children having G2D, as recorded in WHO's table.

Where the Burden Is Concentrated?

• The Health Ministry has identified specific high-priority states and districts where leprosy prevalence remains concentrated — defined as districts with a prevalence rate above one case per 10,000 population:
  • Chhattisgarh: 23 districts
  • Jharkhand: 21 districts
  • Maharashtra: 18 districts
  • Odisha: 18 districts
  • Madhya Pradesh: 10 districts
• These high-endemic and hard-to-reach areas are being prioritised for intensified case detection.

The Programme's Response Strategy

• NLEP's current approach emphasises:
  • Active case detection
  • Household contact surveys
  • Focused campaigns in high-burden areas
  • Special plans for hard-to-reach areas
• The programme also explicitly identifies stigma and discrimination as continuing concerns that likely contribute to delayed self-reporting and diagnosis.

About the Disease

• Leprosy, also known as Hansen's disease, is a chronic bacterial infection caused mainly by Mycobacterium leprae.
• It primarily affects the skin and peripheral nerves. Transmission occurs mainly through prolonged, close contact with an untreated person.
• Importantly, the disease is curable with multidrug therapy (MDT).

Conclusion

The numbers tell two stories at once — overall case detection may be improving, but children are still being infected and some are still reaching diagnosis only after visible disability sets in.

That combination points squarely at gaps in early detection and persistent transmission, not a disease in retreat. With 2027 just a year away, closing this gap in high-burden districts like Chhattisgarh and Jharkhand will determine whether India's elimination goal is met or merely postponed.

Why in News?

• More than nine years after the rollout of the Goods and Services Tax (GST) in July 2017, the GST regime, now dubbed as GST 2.0, is considering a significant change - removal of arrest powers under GST laws.
• The proposal is expected to be discussed at the 57th GST Council meeting on October 7, 2026. The move follows consultations between the Centre and States over the past eight-nine months.
• Businesses have raised concerns that arrest provisions have sometimes resulted in overreach, harassment and uncertainty, affecting the ease of doing business.
• If approved, the proposal would require legislative amendments to the GST laws, potentially during the Winter Session of Parliament.

What’s in Today’s Article?

• Need to Decriminalise GST Offences
• Existing GST Arrest Framework
• Scale of Enforcement
• Throwback to the VAT Regime
• Towards Wider Tax Decriminalisation
• Conclusion

Need to Decriminalise GST Offences

• Industry representatives have raised concerns that arrest powers can be used as a bargaining tool, particularly in sectors such as banking and insurance, compelling businesses to settle tax disputes or penalties to avoid prolonged litigation.
• The proposed reform seeks to -
  • Improve taxpayer confidence and investor sentiment.
  • Reduce perceptions of fear and harassment by tax authorities.
  • Strengthen the ease of doing business (EoDB).
  • Separate genuine tax administration from criminal enforcement.
• However, intentional fraud and deceit would continue to attract prosecution. In such cases, arrests could be undertaken under the Bharatiya Nyaya Sanhita (BNS) rather than through GST-specific arrest provisions.

Existing GST Arrest Framework:

• Under the Central Goods and Services Tax (CGST) Act, tax violations can attract -
  • Penalty under Section 122;
  • Interest under Section 50;
  • Recovery of tax dues; and
  • In serious cases involving deliberate tax evasion, arrest and prosecution.
• Section 69 of the CGST Act empowers the Commissioner to authorise an arrest where there are “reasons to believe” that a person has committed specified offences.
• These include cases involving -
  • Fake invoices;
  • Fraudulent availment of Input Tax Credit (ITC);
  • Invoices without actual supply;
  • Collection of GST without depositing it with the government; and
  • Availing ITC without receiving goods or services.
• The law requires the reasons for arrest to be supported by credible evidence, recorded in writing, and authorised by the Commissioner.

Scale of Enforcement:

• Between 2021-22 and 2024-25, Central GST formations made 887 arrests in 72,393 GST-offence cases. Arrests undertaken by State authorities are additional.
• Common fraud mechanisms include -
  • Creation of fake identities and mule accounts;
  • Generation of fake invoices without actual supply;
  • Fraudulent claims of input tax credit;
  • Undervaluation of goods; and
  • Supplying taxable goods or services without paying GST.
• These practices can undermine tax compliance and cause significant revenue leakage.

Throwback to the VAT Regime:

• The proposed removal of arrest powers would bring GST enforcement closer to the pre-GST Value Added Tax (VAT) framework, which generally did not provide tax authorities with direct arrest powers.
• Interestingly, concerns over GST arrest provisions existed even before GST was launched.
• During the fifth GST Council meeting in December 2016, representatives of Maharashtra and West Bengal questioned whether granting arrest powers to tax authorities was consistent with EoDB and existing VAT practice.
• At the same time, the Central Board of Indirect Taxes and Customs (CBIC) had defended arrest provisions as necessary to deter unscrupulous tax evaders and maintain discipline in tax administration.
• It highlighted safeguards such as Commissioner-level authorisation and specified/severe offences and monetary thresholds (combined evasion of duty was Rs 2 crore or more).

Towards Wider Tax Decriminalisation:

• The proposed GST reform is part of a broader movement towards decriminalisation of tax-related defaults.
• On the direct-tax side, the Central Board of Direct Taxes (CBDT) removed arrest and detention provisions from tax-recovery rules through the Income-Tax (Fourth Amendment) Rules, 2026, with retrospective effect from April 1, 2026.

Conclusion:

• The issue highlights the need to balance revenue mobilisation and tax compliance with taxpayer rights, due process, EoDB and administrative accountability.
• It also raises important questions about cooperative federalism, as GST administration requires coordination between the Centre and States through the GST Council.
• Thus, GST 2.0 should aim to create a tax system that is both enforcement-oriented and taxpayer-friendly.

Why in the News?

• The RBI Governor Sanjay Malhotra has called for continued vigilance to protect financial stability, warning that prolonged stability can encourage risk-taking and let vulnerabilities accumulate.

What’s in Today’s Article?

• Financial Stability (Meaning, RBI Governor’s Speech, Five Priorities, Emerging Global Risks, AI Investment Cycles, Capital Flow, etc.)

Financial Stability

• Financial stability refers to the ability of the financial system, including banks, non-banking financial institutions (NBFIs), financial markets, payment systems and supporting infrastructure, to continue functioning effectively despite economic or financial shocks.
• Recently, RBI Governor Sanjay Malhotra said that India’s financial system currently shows no imminent signs of stress, but cautioned against complacency.
• His central concern is that financial vulnerabilities can accumulate during periods of prolonged stability. As memories of earlier crises fade, financial institutions, businesses and investors may increase risk-taking and leverage.
• India's experience with the legacy of excessive lending and non-performing assets (NPAs) from the early 2000s illustrates that financial stress can take years to resolve once vulnerabilities become systemic.

Five Priorities for Financial Stability

• Strengthening Systemic Resilience
  • The first priority is to build a financial system capable of absorbing and containing shocks.
  • Shocks may be endogenous, originating within the financial system, or exogenous, arising from external events.
  • Regulators therefore need to ensure that financial institutions can continue providing essential services even during severe disruptions.
  • This requires resilient institutions, credible safety nets, effective resolution mechanisms and proportionate but forward-looking regulation and supervision.
• Identifying New Systemic Risks
  • The nature of financial risks is changing. A future financial crisis may not necessarily originate from conventional banking weaknesses. Potential triggers include:
    • Geopolitical conflicts
    • Cyberattacks
    • Technological failures
    • Supply-chain disruptions
    • Financial-market shocks
    • Climate-related disruptions
  • These risks can interact through multiple channels. Understanding dependencies and contagion channels is therefore essential, with scenario analysis becoming an important component of risk management.
• Better and More Granular Data
  • Financial systems are becoming increasingly interconnected and complex, making effective risk monitoring dependent on high-quality data.
  • The RBI Governor highlighted gaps in data relating to NBFIs, interconnected exposures, technology dependencies and cross-border financial positions.
  • Better and more granular data can help regulators identify vulnerabilities earlier, conduct stress testing and understand how shocks can transmit across institutions and markets.
• System-Wide Resilience
  • A strong banking system alone is insufficient to guarantee financial stability.
  • Resilience needs to extend across:
    • NBFIs
    • Financial markets
    • Payment systems
    • Technology infrastructure
    • Critical third-party service providers
    • Cross-border financial networks
  • This reflects the growing importance of financial interconnectedness. A disruption in one part of the financial system can potentially spread to other institutions through lending relationships, payment systems, technology providers or common exposures.
• Innovation Without Eroding Trust
  • Financial innovation can improve efficiency and expand access to financial services. Technologies such as Artificial Intelligence (AI), tokenisation and new forms of financial intermediation can transform financial markets.
  • However, innovation must preserve the foundations of trust in the financial system, including Sound institutions, Settlement finality, Singleness of money & Financial integrity.
  • The objective is therefore not to prevent innovation but to ensure that technological development does not create new vulnerabilities faster than regulatory and institutional safeguards can adapt.

Emerging Global Risks

• The RBI Governor also highlighted a combination of geopolitical and geoeconomic fragmentation, strategic realignment, trade restrictions, repeated supply shocks, technological disruption and climate change.
• These risks are particularly challenging because their interactions are difficult to predict and may not follow historical relationships.
• The West Asia conflict, for instance, created supply-side pressures, but India's financial system was able to absorb the shock relatively well. Nevertheless, such developments can simultaneously influence inflation, exchange rates, capital flows and financial-market stability.
• This demonstrates why price stability and financial stability cannot be examined in isolation.

AI Investment Cycle and Financial Markets

• Another emerging concern is the possibility of a slowdown in the global AI investment cycle.
• A correction in AI-related valuations could lead to sharp repricing of financial assets, particularly where high risk appetite and leverage have pushed valuations upward.
• If the earnings and cash flows of major AI companies weaken while leverage remains elevated, financial-market corrections could become more pronounced.
• At the same time, a correction in AI valuations in advanced economies could potentially benefit India by redirecting international capital towards Indian markets.

Capital Flows and External Vulnerabilities

• Foreign investors have continued to withdraw from Indian financial markets despite an improvement in recent net FDI flows.
• Net FDI during the first four months of 2026-27 stood at $13.43 billion, 38% higher than the corresponding period of the previous year. However, net FDI for 2024-25 and 2025-26 together had amounted to only $7.7 billion.
• Foreign investors sold Indian stocks and bonds worth $10.35 billion in 2026-27, in addition to $16.59 billion of sales during 2025–26.
• These movements illustrate the importance of maintaining resilience against volatile international capital flows.

About Hebbal Lake:

• It is a man-made lake situated in the northern part of Bengaluru in Karnataka.
• It is one of the oldest, largest, and most ecologically prominent urban waterbodies in Bengaluru.
• History:
  • The lake was created by Kempe Gowda, the founder of Bangalore, in 1537.
  • It is one of the three lakes that were created by him.
  • It was formed by damming natural valley systems through the construction of bunds, just as most other lakes and tanks were created within the Bangalore region.
  • Over the years, Hebbal Lake had lost its splendor owing to water pollution, poor maintenance, and lack of mass awareness.
  • It was restored at a great budget in the late 1900s, and two artificial islands were also created to develop a sustainable ecosystem.
• It is a seasonal lake that dries up in the summer and regains its glory along with the monsoon rains every year.
• It is home to several birds, including migratory birds, like, Baillon’s Crake, Crested Serpent Eagle, River Tern, Spot-billed pelican, Eurasian spoonbill, Shoveller, Pintail, Little grebe, Coot, Indian Spot-billed duck, etc.

About Dnipro River:

• The Dnipro (Dnieper) River is one of the major transboundary rivers of Europe.
• It is the fourth-longest river in Europe (after the Volga, the Danube, and the Ural).
• Located in Eastern Europe, the Dnipro River and its many tributaries drain much of Belarus and Ukraine.
• It is the longest river in Ukraine.
• Historically, the river was an important barrier dividing Ukraine into right and left banks.
• It passes through numerous urban centers such as the Russian cities of Smolensk and Dorogobuzh, as well as Mogilev in Belarus and Kiev, Cherkasy, Dnipro, and Zaporizhia in Ukraine.
• It is a typical river of the plains, sloping gently and flowing slowly. The water level varies considerably, and the riverbed is unstable.
• It is an important navigable waterway for the economy of Ukraine and is connected by the Dnieper–Bug Canal to other waterways in Europe.
• Tributaries: Sozh, Desna, Trubizh, Bilozerka, Drut, Berezina, and Prypiat.

About FP-7 Missile:

• The FP-7 Missile, nicknamed the Pelican, is a ground-launched tactical ballistic missile developed by Ukrainian defence company Fire Point.
• It is designed for shorter-range strikes against targets such as logistics hubs, air-defence sites, and drone bases, rather than deep strikes far behind the frontline.
• It is also being reworked to be used in air defense systems. It is a key part of Europe’s first common anti-ballistic system project, called Freyja. 
• Features:
  • It has a solid-fuel rocket motor.
  • It has a reported range of around 200 km
  • Its payload is 150 kg while its maximum flight duration is 250 seconds.
  • It has a circular error probability (CEP) of 14 meters.