Context:

• At the Southern Zonal Council meeting, held recently in Mamallapuram, Union Home Minister Amit Shah stressed the need for early resolution of water disputes in the southern region.
• He also spoke of linking major rivers from the Brahmaputra to the Godavari and the Cauvery, claiming this could ensure India faces no water shortage for 100 years.
• In this context, this article argues that while the intent appears well-meaning, resolving water issues is far harder than it sounds, and river-linking is not the solution.

The Pennaiyar Dispute: A Case of Delay

• The Centre's handling of Tamil Nadu's demand for a tribunal on the Pennaiyar river dispute shows how slow the process can be:
  • Tamil Nadu alleged that Karnataka violated the 1892 inter-State agreement.
  • In November 2019, it requested the Centre to constitute a tribunal and also moved the Supreme Court.
  • Since then, two negotiation committees have been formed and 11 meetings held, without result.
  • In February this year, the Supreme Court directed the Centre to form the tribunal within a month. The deadline was later extended by six months.
  • The tribunal is still not in place.
• Instead of constituting a new tribunal, the Centre asked the court whether the Pennaiyar dispute could be referred to the Mahadayi Water Dispute Tribunal.
• Critics call this illogical, as the two disputes have nothing in common. The Interstate River Water Disputes Act, 1956 also does not permit such a transfer.
• Similarly, the Centre has not yet replied to Tamil Nadu's March 2026 demand for a tribunal on the Mekedatu dam project proposed by Karnataka.

Why River-Linking Is Problematic?

• If routine disputes take years to resolve, the complications of inter-linking rivers would be far greater.
• Proponents, including Tamil Nadu, argue that river-linking would not disturb natural flows but only divert surplus water. Many experts are not convinced, for several reasons:
  • Once linking is allowed, beneficiary regions may demand water even during distress periods, eventually depriving original beneficiaries of their share.
  • There are serious concerns about adverse ecological consequences.
  • Kerala has strongly opposed the Pamba-Achankovil-Vaippar link, warning that it would harm the Vembanad wetland system, into which the Pamba and Achankovil rivers drain.
• The National Water Development Agency counters that it has accounted for improving river flows during lean periods.

India's Limited Experience with Inter-Basin Transfers

• In the last 130-odd years, India has seen only a handful of inter-basin transfer projects, mostly in south India.
• The successful examples include:
  • Mullaperiyar dam
  • Parambikulam-Aliyar project
  • Krishna Water Supply Project
  • Indira Gandhi Canal Project
• After 2014, the Union government formed a Special Committee for Interlinking of Rivers, which has held over two dozen meetings. Yet there has been little progress.
• In 2024, PM Modi laid the foundation stone for the Rs 44,000 crore Ken-Betwa Link Project. This has already led to agitations by tribal populations in Chhatarpur.

The Case for Demand-Side Management

• Many experts argue that governments at the Centre and in the States, along with civil society, should shift focus from supply-side interventions to demand-side management.
• The reasons are practical:
  • Land is increasingly scarce.
  • Public resistance to land acquisition is growing.
  • The era of mega irrigation projects is almost over.
• The priority must be conserving available water and using it judiciously. Specific measures suggested include:
  • A massive programme to sensitise and incentivise farmers on optimal water use.
  • Immediate curbs on indiscriminate groundwater extraction, which is encouraged by free electricity schemes for agriculture in many States and is leading to ecological disaster.
• Unless water conservation becomes a shared commitment of all stakeholders, disputes will remain the norm.

Conclusion

• River-linking promises a supply-side fix but ignores ecological risks, federal tensions and the Centre's own poor record in resolving existing disputes.
• With land scarce and mega projects facing resistance, India must prioritise conservation, efficient irrigation and groundwater regulation.
• Demand-side management, not grand engineering, offers the sustainable path to water security.

Why in the News?

• Indian banks mobilised over $127 billion through FCNR(B) deposits under a special RBI swap facility, but with the window now closed, attention has turned to who bears the foreign exchange risk on the principal and interest.

What’s in Today’s Article?

• About FCNR Deposits (Meaning, Special Swap Facility, Risk Management, RBI’s Cost-Benefit Position, Exposure Among Banks, Broader Assessment)

About FCNR(B) Deposits

• Foreign Currency Non-Resident (Bank) deposits, or FCNR(B) deposits, are term deposits that non-resident Indians can maintain with Indian banks in foreign currency rather than in rupees.
• The key feature is that both the principal and interest are denominated in foreign currency, typically US dollars.
• This protects the depositor from rupee depreciation, a significant attraction for NRIs who would otherwise see the value of their savings erode if the rupee weakened.
• These deposits are usually held for maturities of one to five years and are a long-standing instrument for attracting foreign currency into India's banking system.

The Special Swap Facility

• The RBI introduced a special swap facility in June 2026 to encourage NRIs to place money in FCNR(B) deposits.
• The context was pressure on the rupee from high oil prices and India's need to strengthen its foreign exchange reserves amid the West Asia conflict.
• Response - the scheme attracted far more than anticipated:
  • Initial target: around $50 billion
  • Actual mobilisation: more than $127 billion
• Given the scale of inflows, the RBI closed the window for fresh FCNR(B) deposits on August 31, 2026.
• For banks, the scheme provided a relatively cheap source of foreign currency funding. For the country, it added substantially to foreign exchange reserves at a time of external pressure.

How the Risk Is Split?

• Because these deposits typically carry three-to-five-year maturities, the question of who bears currency risk when principal and interest fall due becomes important.
• The answer is that the risk has been divided between the central bank and commercial banks.
• The RBI Covers the Principal
  • Under the swap arrangement, the RBI shields banks from foreign exchange risk on the principal amount. The central bank bears the cost of hedging this exposure.
  • Estimates place this hedging cost at up to 3% annually.
  • In simple terms, the RBI is protecting the dollar value of the principal against movements in the rupee-dollar exchange rate, absorbing the cost of that protection itself.
• Banks Handle the Interest
  • The swap facility does not cover the interest that banks must pay depositors in dollars.
  • This means banks have to arrange the dollars themselves for interest payments and manage that foreign exchange exposure independently.

The RBI's Cost-Benefit Position

• The RBI's position is not purely a cost. The foreign currency received through these deposits adds to India's reserves, which can then be invested.
• Recouping Reserves
  • By August 7, 2026, the RBI had recouped $31.2 billion of its foreign currency assets, equivalent to 55% of the amount mobilised at that point.
  • Part of this may be invested in US securities, which offer higher yields.
• Potential Returns
  • Estimates suggest the RBI could earn around 4.5% to 5% on the foreign exchange reserves generated through these deposits.
  • This could more than offset a hedging cost of up to 3%, assuming the foreign currency holdings are hedged for five years.
• The Scale of the Cost
  • Research assuming FCNR(B) mobilisation of $65-70 billion and a 3% annual hedging cost calculated:
    • Annual notional cost: about $2.1 billion
    • Cumulative cost over five years: about $10.5 billion
  • Against current reserves of around $700 billion, this works out to roughly 1.45% of the reserve stock over five years, a modest figure in relative terms.

Unhedged Exposure Among Banks

• Where the risk becomes more concerning is on the interest side.
• Who Is Hedging - pattern varies by type of bank:
  • Foreign banks are largely hedging this exposure.
  • Most state-run banks and several private-sector Indian lenders have left it unhedged.
• Why Banks Are Not Hedging?
  • The main reason cited is cost. Hedging the foreign exchange risk on interest payments for three-to-five-year deposits costs banks about 3% a year.
  • Since interest on these deposits is paid at maturity rather than periodically, some banks have chosen to avoid that cost upfront. Their plan is to buy dollars in the spot market when the payment actually falls due, rather than locking in protection in advance.
  • One banker at a mid-sized state-run lender indicated the bank expected to handle payments through spot purchases when required.

What Happens If the Rupee Weakens?

• The consequences of leaving this exposure unhedged can be illustrated simply.
• Consider a bank that must pay $1 million in interest:
  • If the dollar costs Rs. 95, the payment requires Rs. 9.5 crore.
  • If the rupee weakens and the dollar rises to Rs. 100 at maturity, the same payment requires Rs. 10 crore.
• A bank that has hedged would be protected against this movement. A lender that has left the exposure unhedged absorbs the higher rupee cost directly.

The Broader Assessment

• The FCNR(B) scheme achieved its immediate objective. It brought in substantially more foreign currency than targeted at a time when the rupee was under pressure and reserves needed strengthening.
• The RBI has taken on the exposure associated with the principal through its swap, and appears likely to cover that cost through returns on invested reserves.
• Banks continue to face currency risk on the interest payments, and a substantial share of that exposure remains unhedged by choice.
• This means a portion of the currency risk has been deferred rather than removed, surfacing only when the deposits mature.

Why in News?

• For the first time, the Ministry of Statistics and Programme Implementation (MoSPI) has released district-level estimates on the informal economy, drawing on the Annual Survey of Unincorporated Sector Enterprises (ASUSE), 2025.
• The data covers the unincorporated non-agricultural sector—broadly, establishments engaged in manufacturing, trade and other services.
• The district-level estimates provide a more granular picture of women’s participation, wages, enterprise ownership and the geographical concentration of informal economic activity, which can help improve evidence-based policymaking.

What’s in Today’s Article?

• Women’s Share in Informal Work
• The Pay Divide
• Women’s Enterprise Ownership
• Economic Activity Is Highly Concentrated
• Significance for Policy
• Conclusion

Women’s Share in Informal Work:

• The data reveals a striking geographical divide in women’s participation among informal workers.
  • Highest women’s participation: Nirmal, Telangana (78% of all its informal workers are women); Imphal East, Manipur (70%); Nizamabad, Telangana (70%); Jagtial, Telangana (69%); and Bishnupur, Manipur (66%).
  • Lowest women’s participation: Srinagar, J&K (11%); Hathras, Uttar Pradesh (11%); Banaskantha, Gujarat (11%); Marigaon, Assam (9%); and Rudraprayag, Uttarakhand (7%).
• All the top 10 districts for women’s share are located in eastern or northeastern 22 of the 25 districts with the highest female participation are from the region, with the remaining three in Jharkhand and Odisha.
• At the other end, Rudraprayag records just 7%. The all-India average is around 29%, while women constitute at least one-third of the informal workforce in 237 districts.
• Telangana’s presence among the leading districts also highlights the importance of state- and district-specific socio-economic factors.

The Pay Divide:

• High female participation does not necessarily translate into uniformly higher earnings.
• Among districts where women constitute at least half of the informal workforce, South West Khasi Hills, Meghalaya, is identified as the best-paying district.
• Here, annual emoluments per hired worker is around ₹1.71 lakh, compared with an all-India average of about ₹1.3 lakh.
• This underlines the need to examine both participation and the quality of employment, including remuneration, productivity and access to better economic opportunities.

Women’s Enterprise Ownership:

• The district-level data also reveals a strong relationship between women’s participation in the workforce and women’s ownership of enterprises.
• Districts with high female participation tend to have a high proportion of female-owned proprietary establishments.
• Nirmal, which tops the female workforce participation ranking, also has nearly 80% of proprietary establishments owned by women.
• This suggests that women’s economic participation in some regions is not confined to being workers; it also extends to entrepreneurship and ownership of informal enterprises.

Economic Activity Is Highly Concentrated:

• The distribution of informal economic activity is very different when measured by the absolute number of workers and establishments rather than women’s participation.
• North 24 Parganas, West Bengal has the largest number of informal workers—about 21.3 lakh—and around 16.6 lakh establishments.
• The top 10 districts by number of establishments account for around 11% of the total Gross Value Added (GVA) generated by the sector. The top 50 districts account for almost one-third of the sector’s GVA.
• Thus, while women’s participation is particularly high in several northeastern districts, the scale of informal economic activity is concentrated in a relatively smaller set of districts across India.

Significance for Policy:

• The findings highlight three interconnected policy concerns -
  • Women’s labour-force participation: High female representation in informal work needs to be converted into productive and remunerative employment.
  • Women-led entrepreneurship: High female ownership of proprietary enterprises can be leveraged through credit, skilling, digitalisation and market access.
  • Regional targeting: Large inter-district variations demonstrate the need for granular, locally tailored policies rather than one-size-fits-all interventions.
• Importance and challenges of the informal sector: It contributes significantly to employment, livelihoods and economic activity, while often operating outside the institutional protections available to formal workers.
• Why district-level data matters?
• The report covers 757 districts, although geographical coverage can vary because of administrative changes, including the creation of new districts and changes in district boundaries.
• District-level data can help identify districts requiring focused measures for women’s employment, skilling, entrepreneurship, credit access and social protection.

Conclusion:

• The first district-level estimates of the informal economy provide an important statistical foundation for understanding India’s gendered and geographically uneven informal economy.
• Better granular statistics can strengthen cooperative and competitive federalism, outcome-based governance and evidence-based policymaking, particularly for achieving women-led development and inclusive growth.

Context

• The global war on terror, launched by the United States after September 11, 2001, sought to eliminate terrorism and contain threats to American interests.
• However, its interventions in Afghanistan and Iraq produced unintended consequences that strengthened Iran.
• By removing hostile regimes, creating political vacuums, and intensifying sectarian conflicts, U.S. actions enabled Tehran to emerge as a powerful regional actor.
• Iran’s rise demonstrates how military intervention can generate outcomes contrary to its original objectives.

The Removal of Iran’s Strategic Rivals

• Before 2001, Iran faced strategic pressure from two hostile neighbours: the Taliban in Afghanistan and Saddam Hussein’s Iraq.
• The U.S. invasions of Afghanistan in 2001 and Iraq in 2003 removed these governments, eliminating Iran’s most dangerous regional adversaries.
• In Iraq, the overthrow of Saddam’s Sunni-dominated regime enabled the emergence of a Shia-led political order with strong connections to Tehran.
• Iran subsequently developed substantial influence over Iraqi political institutions, security organisations, and armed militias.
• Iraq gradually shifted from a hostile neighbour to a strategic partner, significantly improving Iran’s regional position.

Sectarianism and the Expansion of Proxy Warfare

• The Shia-Sunni Divide
  • The invasions of Afghanistan and Iraq destabilised existing political structures and intensified Shia-Sunni sectarian tensions.
  • The weakening of central authority encouraged religious identity-based mobilisation and armed conflict.
  • In Iraq, Sunni insurgent groups and Shia militias competed for influence, while regional powers supported opposing factions.
  • Iran strengthened Shia militias, whereas Saudi Arabia and other regional actors supported Sunni political and militant forces.
  • This proxy warfare increased Tehran’s influence and undermined the objective of isolating Iran.
• Iran’s Role in Counter-Terrorism
  • The emergence of ISIS paradoxically strengthened Iran’s regional position.
  • Tehran became a crucial military supporter of the Iraqi government, deploying advisers and coordinating Shia militias through the Quds Force of the Islamic Revolutionary Guard Corps.
  • Iran’s participation in the anti-ISIS campaign provided strategic legitimacy for its military presence in Iraq and Syria.
  • Although the United States and Iran briefly shared an interest in defeating ISIS, meaningful cooperation failed to emerge.
  • The U.S. designation of Iran as part of the Axis of Evil in 2002 reflected continuing hostility and prevented sustained dialogue.

The Axis of Resistance and Forward Defence

• Iran’s regional strategy developed around the Axis of Resistance, a network of political, military, and social organisations extending across Iran, Iraq, Syria, Lebanon, and Palestine.
• Its major members include Hezbollah, Hamas, the Houthis, and Shia militias in Iraq.
• These groups provide Iran with strategic depth and enable it to exert influence beyond its national borders.

The Islamic Revolutionary Guard Corps and Asymmetric Power

• Iran’s military strategy has focused heavily on the Islamic Revolutionary Guard Corps (IRGC), particularly its Quds Force.
• The IRGC controls important strategic assets and coordinates Iran’s regional partnerships.
• Unlike conventional military forces, the IRGC specialises in asymmetric warfare, using military advisers, intelligence, missile capabilities, and allied armed groups to project Iranian power.
• This strategy allows Iran to challenge the United States and Israel without matching their conventional military superiority.
• Proxy networks have therefore become a central pillar of Iranian defence policy.

Power Vacuums after 2011

• The U.S. withdrawal from Iraq and the Arab Spring in 2011 created political and security vacuums.
• Iran was well positioned to exploit these developments because it already possessed established networks of allies and military influence.
• In Iraq, Iranian-backed forces became important actors in the fight against ISIS.
• In Syria, Tehran intervened to defend Bashar al-Assad’s government, protecting its major state ally and preserving access to Hezbollah in Lebanon.
• The prolonged Forever Wars consumed American resources and attention, allowing Iran to consolidate its influence.
• Its ability to operate through local partners reduced the costs of direct intervention while increasing strategic reach.

The Transformation of Iran into a Regional Power

• The removal of hostile regimes, collapse of political institutions, and rise of sectarian conflicts enabled Tehran to expand its influence across West Asia.
• Iran’s regional power rests on strategic depth, proxy warfare, political alliances, military networks, and nationalism.
• The IRGC coordinates regional operations, while allied governments and armed groups provide buffers against external threats.
• This transformation illustrates the limitations of strategies based exclusively on military containment.
• By attempting to reshape West Asia through intervention, the United States unintentionally created conditions for Iran’s rise.

Conclusion

• Although the United States sought to eliminate terrorism and contain Iran, its interventions removed Iran’s strategic rivals, destabilised neighbouring countries, and enabled Tehran to expand its influence.
• Iran capitalised on these developments through the Axis of Resistance, the IRGC, and an extensive network of regional alliances.
• Iran’s present capacity to resist pressure from the United States and Israel reflects the cumulative advantages it gained during the past two decades.
• Its rise demonstrates that military interventions can generate unintended strategic consequences, particularly when they disrupt regional balances without establishing durable political stability.

About Foot-and-Mouth Disease:

• It is a highly contagious viral infection that affects cloven-hoofed animals such as cattle, buffaloes, sheep and goats.
• Cause: It is caused by an Aphthovirus of the family Picornaviridae.
• It is a transboundary animal disease (TAD) that deeply affects the production of livestock and disrupts regional and international trade in animals and animal products.
• Intensively reared animals are more susceptible to the disease than traditional breeds.
• Transmission: It is transmitted through:
  • Infected animals newly introduced into a herd (carrying virus in their saliva, milk, semen, etc.); 
  • Contaminated pens/buildings or contaminated animal transport vehicles; 
  • Contaminated materials such as hay, feed, water, milk or biologics; 
  • Contaminated clothing, footwear, or equipment; 
  • Virus-infected meat or other contaminated animal products (if fed to animals when raw or improperly cooked); 
• Treatment: Vaccination is the only effective preventive measure against FMD.

About Perylene diimide:

• It is a derivative of perylene.
• It initially synthesized and explored as an organic dye, has since gained significant recognition for its outstanding optical and electronic properties.
• Properties:
  • PDIs exhibit exceptional optical characteristics.
  • It has strong absorption and high fluorescence quantum yield, along with remarkable electronic properties, such as high electron affinity and superior charge carrier mobility. 
  • It has a role as a fluorochrome. It is a dicarboximide and an organic heteropolycyclic compound.
  • The molecular architecture and electrical properties are closely related in semiconducting organic electronic materials
• Applications:
  • PDI derivatives are considered as potential candidates for photovoltaic applications and organic electronics.
  • They behave as n-type organic semiconductor materials and have been used in fabrication of solar cells, photovoltaic devices, dye lasers.