Why in news?

India will host the AI Impact Summit 2026 from February 16 to 20, marking the first time this global AI governance forum is being held in the Global South.

The summit aims to generate actionable, long-term policy recommendations rather than impose immediate binding regulations. It seeks to align AI governance with inclusive growth, sustainability, and social impact.

What’s in Today’s Article?

• Background: Evolution of Global AI Summits
• India’s Distinct Approach
• India AI Impact Summit 2026: What to Expect
• Opening Up to China at the AI Impact Summit
• Hardware and Energy: India’s Key AI Constraints

Background: Evolution of Global AI Summits

• The summit builds on a series of international meetings on AI governance.
• The Bletchley Park AI Safety Summit (2023) focused on identifying catastrophic AI risks.
• The Seoul Summit (2024) widened the agenda to include innovation and inclusivity.
• The Paris AI Action Summit (2025) shifted attention to implementation and economic opportunities.
• Each iteration has gradually expanded the scope beyond safety towards practical and developmental concerns.

India’s Distinct Approach

• Unlike earlier summits centred on regulation and risk containment, India is steering the discussion towards “People, Planet, and Progress.”
• The focus is on developing AI solutions that address real-world challenges, especially in developing countries.
• This reflects India’s dual role as an emerging AI power and a representative voice of the Global South.
• Through this summit, India is positioning itself to secure a larger role in shaping global AI governance and capturing greater economic and developmental benefits from the technology.

India AI Impact Summit 2026: What to Expect

• Scale and Significance - The AI Impact Summit 2026 has been described by Union IT Minister Ashwini Vaishnaw as the largest such global gathering so far, with strong international interest and participation.
• High-Level Global Participation - The summit is expected to host representatives from over 100 countries, including 15–20 heads of government, more than 50 ministers, and over 40 CEOs of leading global and Indian companies.
  • Prime Minister Narendra Modi will inaugurate the event, host a dinner, and address a CEO roundtable.
• Diverse Stakeholders - Participants will include governments, industry leaders, researchers, civil society organisations, and international institutions, highlighting the summit’s multi-stakeholder approach to AI governance and development.
• Key Themes and Deliberations - The summit will feature working groups and discussions on major issues such as AI’s impact on jobs, trust and safety frameworks for AI systems, and the application of AI across key industries.
• India’s AI Push and Model Launches - As part of the Rs 10,370 crore IndiaAI Mission, the government will launch several indigenous AI language models during the summit, including foundational and small language models.
• Startup and Innovation Showcase - The event will showcase over 500 AI startups and host around 500 sessions alongside the main programme, making it one of the most comprehensive global forums focused on artificial intelligence.

Opening Up to China at the AI Impact Summit

• Chinese Participation at the Summit - China is expected to send a delegation to the AI Impact Summit, following a formal invitation extended by India last year as both countries seek to strengthen domestic AI capabilities.
• Summit Format and Invitations - The AI Summit is not a formal multilateral grouping. Participation is determined by the host country, giving India the discretion to invite China despite geopolitical sensitivities.
• Precedents from Earlier Summits - When the UK hosted the first AI Safety Summit, it faced opposition from allies and domestic lawmakers over inviting China, but proceeded nonetheless. China also participated in the subsequent summits in Seoul and Paris.
• Signal of Easing India–China Ties - India’s invitation to China reflects a gradual thaw in bilateral relations. Earlier this year, direct flights between the two countries resumed after a gap of more than five years.
• Trade and Supply Chain Developments - China has also begun clearing applications from firms supplying rare earth components to Indian automobile manufacturers, easing earlier restrictions imposed amid global trade tensions.

Hardware and Energy: India’s Key AI Constraints

• Dependence on Imported Computing Hardware - A major disadvantage for India in the AI race is the lack of domestically produced advanced hardware. Access to high-end GPUs, which power AI systems, depends largely on imports, limiting self-reliance.
• Hopes from India–US Tech Trade - The proposed interim India–US trade deal offers some relief. It is expected to significantly expand trade in technology products, including GPUs and data centre equipment, and deepen joint technology cooperation.
• Policy Push for Data Centres - India has announced a tax holiday until 2047 for foreign companies setting up data centres. This aims to attract global players and build domestic AI infrastructure, even as reliance on imported hardware continues.
• Budget Signals and AI Mission - In the Union Budget 2026–27, the allocation for subsidising compute under the IndiaAI Mission was halved. This came alongside strong growth in electronics manufacturing and iPhone exports, indicating shifting priorities.
• Energy Needs and Nuclear Power - Powering AI data centres is emerging as a critical challenge. The government is exploring nuclear energy as a long-term solution.

Why in news?

Recently, Anthropic released 11 open-source plugins for Claude Cowork, its AI workplace tool. Unlike regular chatbots, Cowork works like a digital colleague. It can read files, write documents, review contracts, and complete tasks across legal, finance, sales, and marketing with little human input.

A few days later, Anthropic launched Claude Opus 4.6. This new model can manage and coordinate multiple AI agents to carry out complex work such as financial research and due diligence.

This marked a major leap in autonomous AI capabilities, enabling AI agents to independently handle complex workplace tasks across sectors.

Markets reacted sharply. Global software stocks saw heavy losses, with major US SaaS firms and Indian IT companies witnessing steep declines.

The sell-off reflected fears that autonomous AI could replace large teams, threatening traditional, headcount-driven business models—especially in India’s IT outsourcing industry.

What’s in Today’s Article?

• About SaaS
• ‘SaaSpocalypse’: Why AI Is Being Seen as an Existential Threat to SaaS
• Real-World AI Disruption Across Professional Services
• India Inc’s AI Pivot: Incremental Moves in a Fast-Moving Disruption
• Jobs at Risk, Roles Rewritten: How AI Is Reshaping Indian IT Employment

About SaaS

• Software as a Service (SaaS) is a cloud-based software delivery model where applications are hosted by a vendor and accessed by users over the internet, typically via a web browser.
• Instead of installing and maintaining software locally, users subscribe to the service, allowing for easier access, automatic updates, and flexible, pay-as-you-go pricing.

‘SaaSpocalypse’: Why AI Is Being Seen as an Existential Threat to SaaS

• The term “SaaSpocalypse” reflects market fears that advanced AI is not just improving software but replacing it altogether.
• As AI agents perform tasks autonomously, the traditional per-user SaaS pricing model looks vulnerable.
• This has triggered a sharp selloff in software stocks, with investors questioning whether businesses will still pay for large software licences when AI can deliver the same outcomes with fewer people and tools.
• While analysts warn that markets may be overreacting, the episode highlights a real structural shift in how software value is created and priced.

Real-World AI Disruption Across Professional Services

• The direction of AI-driven disruption has been visible for years. In March 2023, Bloomberg launched BloombergGPT, a domain-specific financial model trained on an unprecedented volume of proprietary data.
• It outperformed general AI models on core financial tasks, proving that specialised AI could decisively augment — and eventually automate — expert work.
• From tools to autonomous agents
  • BloombergGPT assisted professionals within a closed system.
  • The newer shift, seen with Claude Cowork, takes this further by deploying AI as autonomous agents that operate across enterprises, executing workflows with minimal human input.
  • This transition from “AI-assisted” to “AI-operated” systems has unsettled markets.
• Legal services: automation shock
  • Claude’s legal plugins automate contract review, NDA screening, and compliance tracking — tasks that form the backbone of legal services.
  • The impact was immediate: Thomson Reuters saw its steepest ever single-day stock fall, while LegalZoom, RELX, and Wolters Kluwer suffered sharp declines.
• Financial services: AI runs the back office
  • Goldman Sachs’ partnership with Anthropic marks a turning point.
  • Unlike earlier AI tools that supported analysts, Claude-based agents are being used to automate trade accounting, compliance, and client onboarding.
  • This move triggered selloffs in firms like FactSet, S&P Global, and Moody’s.
• Healthcare: agentic AI at scale
  • Cognizant’s collaboration with Palantir embeds AI agents into the TriZetto healthcare platform, which processes over half of US medical claims.
  • These systems now handle routing, claims adjudication, and supply chains, with humans intervening only in exceptions.
• Workforce implications
  • Industry leaders are openly acknowledging disruption. Anthropic’s CEO has warned that AI could displace half of entry-level white-collar jobs within five years.
  • Salesforce’s CEO has said the company will not hire more engineers or lawyers due to AI efficiency gains.
• Coding as a leading indicator
  • AI’s impact is already visible in software development. Experts report most of the coding are now done by AI agents, with humans editing the output.
  • Research suggests AI may author 20% of public GitHub commits by year-end, signalling a broader shift in knowledge work.

India Inc’s AI Pivot: Incremental Moves in a Fast-Moving Disruption

• Indian IT companies have begun responding to AI-driven disruption, but largely through cautious, incremental investments.
• The core challenge is speed. Autonomous AI agents are rapidly automating the very high-volume, repetitive tasks that underpin India’s outsourcing model.
  • As global clients embed AI directly into operations — from banks deploying agentic workflows to defence agencies consolidating software under single platforms — the traditional argument of slow enterprise adoption is losing credibility.
• To stay relevant, Indian IT firms must shift from labour-based delivery to AI deployment partnerships.
• Their competitive advantage lies in deep domain expertise across sectors like banking, insurance and healthcare.
• Combining this knowledge with leading AI platforms offer a viable path forward in an era where AI is reshaping services at unprecedented speed.

Jobs at Risk, Roles Rewritten: How AI Is Reshaping Indian IT Employment

• The near-term impact on Indian IT jobs is unsettling.
• Firms are cutting headcount, freezing fresher hiring, and automating entry-level roles in testing, maintenance and compliance — the traditional backbone of the outsourcing model. These trends signal genuine disruption, not just cyclical slowdown.
• At the same time, a new layer of opportunity is emerging.
• Autonomous AI systems operating in regulated sectors still require Human-in-the-Loop (HITL) oversight — people to validate decisions, manage exceptions, ensure compliance, and uphold ethical and governance standards.
• These roles rely on domain expertise and judgment rather than routine coding.
• The shift points to three growth avenues: AI deployment partnerships within enterprises, HITL operations centres for regulated industries, and large-scale reskilling to prepare engineers to design, supervise and govern AI systems.
• The employment challenge is real — but so is the chance to redefine the nature of tech work in India.

Why in the News?

• India and Malaysia signed multiple agreements during Prime Minister Narendra Modi’s visit to Kuala Lumpur in February 2026, marking a strategic deepening of bilateral ties.

What’s in Today’s Article?

• India-Malaysia Relationship (Historical Links, Political & Diplomatic Engagement, Trade Ties, Defence & Security Cooperation, etc.)
• News Summary

India-Malaysia Bilateral Relationship

• Historical and Civilisational Links
  • India and Malaysia share deep civilisational connections dating back over two millennia, shaped by trade, religion, language, and cultural exchanges across the Indian Ocean.
  • Elements of Indian culture, including Sanskrit influences, Hindu-Buddhist traditions, and later Islamic connections, are visible in Malaysia’s historical evolution.
  • Modern diplomatic relations were established soon after India’s independence, with consistent political engagement since then.
• Political and Diplomatic Engagement
  • India and Malaysia elevated their relationship to a Comprehensive Strategic Partnership in 2024, reflecting growing political trust.
  • High-level visits, regular foreign office consultations, and cooperation at multilateral forums such as the United Nations and ASEAN-led platforms form the backbone of diplomatic engagement.
  • Malaysia has supported India’s demand for permanent membership of a reformed UN Security Council, reinforcing political convergence.
• Trade and Economic Cooperation
  • Malaysia is India’s 3^rd largest trading partner within ASEAN. Between April 2000 and March 2025, Malaysia invested about US$ 1.27 billion in India.
  • Bilateral trade between the two countries stood at US$ 19.86 billion in 2024-25, comprising Indian exports worth US$ 7.32 billion and imports valued at US$ 12.54 billion.
  • Owing to its strategic location along the Strait of Malacca and the South China Sea, Malaysia is a key pillar of India’s Act East Policy and an important partner in India’s maritime connectivity strategy.
  • India’s major exports include petroleum products, engineering goods, meat and dairy products, and organic chemicals, while India’s major imports from Malaysia consist of vegetable oils, machinery, electrical equipment, and minerals.
• Defence and Security Cooperation
  • Defence ties have expanded steadily through joint exercises, maritime cooperation, and capacity building.
  • As maritime neighbours in the Indian Ocean and Indo-Pacific region, both countries share concerns over freedom of navigation, maritime security, and non-traditional threats such as piracy and terrorism.
  • Intelligence sharing and counter-terrorism cooperation have gained prominence in recent years.
• Diaspora and People-to-People Ties
  • The Indian diaspora in Malaysia, numbering over 2 million, plays a crucial role in strengthening bilateral ties.
  • Persons of Indian Origin are active in Malaysia’s politics, business, education, and culture.
  • Educational exchanges, tourism, and cultural diplomacy further enhance people-to-people relations.
• Shared Regional and Global Platforms
  • Both countries actively engage through ASEAN, the East Asia Summit, and the Indian Ocean Rim Association (IORA).
  • India recognises ASEAN centrality in the Indo-Pacific, while Malaysia supports India’s Act East Policy, creating strategic alignment at the regional level. 

News Summary

• During Prime Minister Narendra Modi’s visit to Kuala Lumpur, India and Malaysia agreed to significantly broaden cooperation across multiple high-priority sectors.
• The two sides signed 11 agreements and MoUs, covering areas such as defence cooperation, semiconductors, digital technologies, health, and energy
• A major highlight was the framework agreement on semiconductor collaboration, reflecting both countries’ intent to integrate into global supply chains for advanced manufacturing.
• India invited Malaysian investment in electronics, AI, renewable energy, and healthcare, while showcasing domestic reforms aimed at improving ease of doing business.
• Both leaders strongly reaffirmed a zero-tolerance approach to terrorism, explicitly condemning cross-border terrorism and calling for global cooperation against terror financing, radicalisation, and misuse of emerging technologies.
• Prime Minister Modi stressed that there would be “no double standards, no compromise” on terrorism.
• Defence cooperation is set to expand further, particularly in maritime security, intelligence sharing, and joint capacity-building initiatives.
• The two sides also agreed to enhance cooperation in multilateral fora, including the UN and the Financial Action Task Force (FATF).
• Another notable development was the decision to promote trade settlement in local currencies, the Indian Rupee and Malaysian Ringgit, to reduce transaction costs and dependence on third-country currencies.
• Malaysia reiterated its support for India’s permanent membership in a reformed UNSC.
• India also announced the establishment of a new Indian Consulate General in Malaysia, aimed at improving consular services and strengthening diaspora engagement.
• The visit underscored the strategic convergence between the two countries on Indo-Pacific stability, ASEAN centrality, and reform of global governance institutions.

Context:

• The Union Budget 2026–27 positioned the textile sector as a strategic driver of economic growth, employment generation, export expansion, and rural livelihood support.
• The Budget marks a shift from fragmented, scheme-based support to an integrated value-chain approach, covering fibre to fashion.
• However, the core question remains - Will India merely expand textile production, or will it capture the higher value embedded in design, branding, and global fashion markets?

Key Budget Announcements for the Textile Sector:

• Integrated value-chain approach:
  • The Budget outlines five major programmes -
    • National Fibre Scheme: Ensuring sustainable raw material supply, and strengthening upstream fibre production.
    • Textile Expansion and Employment Scheme: Focusing on scaling manufacturing capacity, and employment-intensive growth model.
    • National Handloom and Handicraft Programme (Consolidated): Rationalising multiple schemes, and strengthening artisan ecosystems.
    • Text-ECON Initiative: Enhancing global competitiveness, and supporting modernisation and exports.
    • Samarth 2.0 (Skill Development Upgrade): Focus on workforce modernisation, industry-oriented skilling.
  • Significance: These schemes together signal a shift towards a holistic blueprint, linking fibre production, manufacturing, artisan livelihoods, skills, and exports.
• Mahatma Gandhi Gram Swaraj Initiative:
  • It is designed to strengthen khadi, handloom, and handicraft sectors through improved market access, branding, and training.
  • This reflects a welcome recognition that India’s textile strength lies not only in mechanised mills, but also in its vast cultural and craft ecosystems — systems that sustain millions of rural livelihoods.
  • This will strengthen rural non-farm employment, aligning with Atmanirbhar Bharat and inclusive growth.
• Mega Textile Parks in “Challenge Mode”:
  • Expansion of infrastructure: Similar to PM MITRA Parks, consolidating manufacturing, logistics, value addition, with special focus on technical textiles.
  • Significance: It will reduce logistics costs, encourage economies of scale, attract private investment (reflected in positive equity market response).

Strategic Shift in Textile Policy:

• Earlier approach: Isolated schemes targeting individual bottlenecks, and fragmented policy architecture.
• Budget 2026 approach:
  • Integrated, value-chain-based policy
  • Treating textiles as a strategic industrial ecosystem
  • Connecting economic, social, and cultural dimensions
  • Reflecting a maturing policy imagination

Key Challenges and Gaps Identified:

• The value creation deficit:
  • Though India exports fabric, garments, and embellishments, it remains a low-margin, cost-competitive supplier, weak in brand ownership and creative authorship.
  • Missing elements: Design education, trend intelligence systems, sustainability certification, and brand-oriented export strategy.
  • Without these, India risks being a volume producer, not a value-setter in global fashion.
• Narrow framing of skills:
  • While Samarth 2.0 modernises workforce skills, it focuses mainly on operational training.
  • Missing elements: Creative capabilities, design leadership, managerial competence, systems-level thinking, and digital and sustainability integration.
  • In a global market driven by fast fashion cycles, digital tools, ESG compliance, and consumer consciousness, skill depth matters as much as scale.
• Artisan vulnerability and pricing power:
  • Even with Gram Swaraj support, structural issues (fragmented supply chains, inconsistent quality standards, weak bargaining power, income insecurity) persist.
  • Therefore, assured procurement mechanisms, transparent pricing systems, quality certification frameworks, and direct market access platforms (digital marketplaces) are needed.
  • Otherwise, artisans remain vulnerable despite increased output.
• External trade pressures:
  • Opportunities: Emerging trade agreements (e.g., with the European Union), and expanded global market access.
  • Risks: Competition from Bangladesh, Vietnam; fluctuating tariffs; stringent compliance norms; and sustainability standards.
  • India must combine infrastructure, scale, brand building, and standards compliance.

Way Forward - From “Make More” to “Value Better”:

• Move towards brand ownership: Promote Indian global fashion brands. Incentivise design-led exports. Create fashion innovation hubs.
• Strengthen creative ecosystem: Invest in top-tier design institutes. Encourage industry-academia collaboration. Support IP protection in fashion.
• Secure artisan livelihoods structurally: Introduce minimum support mechanisms. Digital platforms for direct selling. GI tagging and certification expansion. Transparent value-chain integration.
• Focus on sustainability and compliance: Green textiles, circular economy practices, and ESG-based export readiness.
• Build technical textile leadership: R&D support; high-tech manufacturing clusters; and defence, medical, and industrial textile integration.

Conclusion:

• Union Budget 2026–27 marks a turning point in India’s textile policy. It transitions from fragmented to an integrated approach, recognising textiles as central to India’s economic and social fabric.
• Yet scale alone is not destiny. So, India’s textile ambition must ultimately be measured not just in export volumes, but in value captured, livelihoods secured, and cultural capital elevated.

Context

• Five years after the February 2021 coup, Myanmar’s military organised elections between December 2025 and January 2026 to project political normalcy.
• The military-backed USDP emerged victorious in a tightly managed political environment marked by restricted participation, suppression of opposition, and ongoing armed conflict.
• Rather than restoring civilian rule, the process sought to institutionalise military authority.
• The elections hold wider regional importance, particularly for India, which shares borders, security concerns, and economic ambitions tied to Myanmar.

Manufactured Legitimacy and Controlled Participation

• The electoral exercise functioned primarily as a mechanism to produce legitimacy. Voting occurred in only 265 of 330 townships, excluding large populations.
• Polling remained concentrated in urban wards, while rural areas under resistance influence were effectively absent from the process.
• Political competition was systematically eliminated. The Election Commission dissolved major parties including the NLD, the Arakan National Party, and the Shan Nationalities League for Democracy, while senior leaders were imprisoned.
• At the same time, numerous serving and retired military officers contested under the USDP banner.
• Turnout figures reinforced the credibility crisis. The regime reported roughly 55% participation, a sharp fall from earlier elections.
• Under conditions of fear and surveillance, reduced participation signified silent political rejection rather than apathy.
• The elections thus represented controlled participation rather than democratic choice.

Elections Amid Civil War

• The polls took place amid widespread conflict. Since 2021, thousands of civilians, activists, and journalists have been killed, tens of thousands arrested, and more than 113,000 structures destroyed, especially in Sagaing and Magway.
• Repression strengthened armed opposition. The People’s Defence Forces, working alongside long-standing ethnic armed organisations, now control significant territory, including dozens of towns.
• The state therefore lacks full sovereignty over its territory.
• Under such conditions, elections cannot stabilise governance. Instead, they deepen political division: participation would validate military rule, while opposition groups view armed struggle as the only viable option.
• The electoral process therefore risks intensifying violence rather than resolving it.

India’s Diplomatic Balancing Act

• For India, Myanmar is a strategic neighbour and a gateway central to the Act East Policy.
• Official statements support democracy and call for free and inclusive elections while avoiding direct recognition of the junta’s authority.
• High-level engagement continues. Diplomatic contacts, including leadership meetings, demonstrate ongoing engagement while carefully avoiding endorsement.
• India simultaneously maintains distance by clarifying non-official involvement during the election period.
• Humanitarian outreach strengthens this calibrated approach. Relief operations and medical assistance following the 2025 earthquake allowed India to maintain a constructive role without conferring political approval.
• The strategy effectively amounts to engagement without full diplomatic validation.

Security and Economic Implications for India

• Refugee Flows
  • Violence has driven significant refugees into India, particularly into Mizoram and Manipur.
  • The absence of a national refugee policy places heavy administrative burdens on state governments and exposes governance gaps.
  • Continued instability is likely to sustain these movements.
• Infrastructure and Connectivity
  • Major connectivity initiatives, the Kaladan Multi-Modal Transit Transport Project and the Trilateral Highway, have experienced repeated delays due to insecurity.
  • Claims of post-election normalisation are unlikely to improve ground conditions, forcing reassessment of timelines and investment risks.
• Non-Traditional Security Threats
  • State fragility has accelerated trafficking, narcotics trade, and organised crime.
  • A major concern is the growth of cyber-scam centres and cyber slavery networks operating in conflict zones.
  • Thousands of Indians have already been rescued, yet many remain trapped. These emerging threats demand coordinated domestic and regional responses.

The Limits of International Pressure

• Western governments and ASEAN have declined to recognise the election results. However, external pressure alone cannot resolve Myanmar’s political crisis.
• The military remains entrenched, while opposition forces remain fragmented.
• India therefore pursues a dual policy: maintaining communication with the authorities while also sustaining contact with local stakeholders.
• This approach acknowledges uncertainty regarding Myanmar’s future political order and prioritises stability along the frontier.

Conclusion

• Myanmar’s 2025–26 elections did not signal democratic restoration but an effort to formalise military rule under institutional cover.
• Conducted under repression and territorial fragmentation, the process failed to address the underlying political crisis and may prolong instability.
• For India, the situation presents a lasting dilemma; disengagement risks border instability and economic disruption, while recognition would compromise democratic commitments.
• New Delhi therefore follows a careful middle path, balancing ideals with national interest.

Context

• The suicide of three sisters in Ghaziabad provoked national grief and immediate calls for strict action against digital platforms.
• Public anger often seeks a clear cause and a decisive response, and social media became the primary target.
• Yet complex social problems rarely yield to simple remedies. While online environments can intensify psychological distress among adolescents, a blanket prohibition risks replacing thoughtful policy with reaction.
• The challenge lies in protecting children without undermining their rights, autonomy, and participation in modern life.
• Effective solutions must therefore balance safety with access, focusing on responsible governance rather than elimination.

Social Media and Adolescent Mental Health

• Research consistently associates heavy social media use with anxiety, depression, self-harm, and body image dissatisfaction, particularly among teenage girls.
• Online comparison, cyberbullying, and constant performance pressure can aggravate emotional vulnerability.
• These findings warrant concern but require careful interpretation. Digital exposure rarely operates as a single cause; instead, it interacts with loneliness, academic stress, or family conflict.
• Overstating its influence risks ignoring broader psychological and social contexts. The issue is therefore not whether harm exists, but how society should address it without restricting opportunity.

Global Responses and the Rise of Moral Panic

• International Policy Trends
  • Governments across the world have pursued strict regulation.
  • Australia has barred users under sixteen from major platforms through mandatory age verification, while Spain has proposed similar measures and legal liability for harmful algorithms.
  • These policies promise swift protection and visible accountability.
• The Concept of Moral Panic
  • Such reactions reflect a moral panic, where a complex problem is attributed to a single identifiable threat.
  • A technological villain offers emotional clarity and political reassurance. However, symbolic crackdowns seldom resolve underlying causes.
  • Emotional satisfaction can overshadow careful analysis, resulting in policies that appear decisive yet produce limited real-world benefit.

Why a Social Media Ban Would Fail in India?

• Technical Ineffectiveness
  • Restrictions are easily bypassed. Adolescents often possess higher digital literacy than regulators and can access platforms through VPNs or alternative applications.
  • Prohibitions may push users into unregulated or encrypted spaces, increasing exposure to grooming, extremism, and exploitation.
  • Mandatory surveillance through identity verification also raises privacy risks.
• Ignoring the Social Value of Digital Platforms
  • For many teenagers, especially those in marginalised settings, online spaces offer community, belonging, and support.
  • Rural youth, socially isolated adolescents, and LGBTQ individuals rely on digital networks to express identity and seek advice.
  • Removing access may deepen isolation rather than improve well-being.
• Democratic Deficit in Policymaking
  • Policies affecting young people often exclude their voices. Adolescents are treated as passive subjects instead of participants.
  • A meaningful democracy requires consultation, listening, and recognition of lived experiences.
  • Regulation designed without youth engagement risks misunderstanding both problems and solutions.
• Reinforcing Gender Inequality
  • A prohibition would likely intensify gender disparities. Internet access in India already favours boys over girls.
  • Within conservative households, restrictions would lead families to confiscate devices primarily from daughters, limiting education, skills, and mobility.
  • A protective measure could therefore entrench inequality rather than reduce harm.

A Better Policy Approach

• Regulating Technology Companies
  • Attention must shift from controlling children to governing corporations. Platform algorithms are designed to maximise engagement and profit.
  • Governments should impose enforceable duty of care obligations, establish competition law, and require accountability for harmful design practices.
  • An independent regulator with technical expertise would be better suited than general administrative authorities.
• Promoting Research and Youth Participation
  • Comprehensive research is needed to understand how online behaviour varies across class, caste, and region.
  • Long-term studies should inform policy rather than speculation. Young people must participate directly in consultation processes, shaping interventions that affect their daily lives.

The Way Forward

• Expanding the Debate: Artificial Intelligence and Child Safety
  • Concerns about harm extend beyond social media. Increasing reliance on AI chatbots for advice and emotional support introduces new risks.
  • Excessive dependence may create cognitive weakness in critical thinking and expose minors to inappropriate interactions.
  • Consistent standards are required across all digital technologies, not selective regulation.
• Toward a Healthy Media Ecology
  • Technology is neither inherently beneficial nor inherently harmful. Its effects depend on structure, incentives, and guidance.
  • A balanced media ecology requires education, supervision, and responsible design.
  • Rather than absolute acceptance or rejection, society must cultivate informed use and ethical innovation.

Conclusion

• Public grief after the Ghaziabad tragedy generated urgent demands for bans, but prohibition offers only the illusion of control.
• It would be technically ineffective, socially damaging, democratically weak, and potentially discriminatory.
• Meaningful protection lies in regulating corporations, strengthening research, and involving young citizens in governance.
• By prioritising thoughtful regulation over reaction, society can protect mental health while preserving opportunity, ensuring both safety and dignity for the next generation.

Why in news?

Under their interim trade agreement, India and the United States have agreed to significantly expand trade in technology products, particularly Graphics Processing Units (GPUs) and other equipment critical for data centres, alongside deeper joint technology cooperation.

The move aligns with India’s broader push to strengthen its digital and AI ecosystem. New Delhi has announced a tax holiday for foreign firms setting up data centres, reduced budgetary support under its flagship AI mission—shifting focus from subsidies to market-driven investment. It is witnessing a surge in iPhone exports, signalling growing integration with global technology supply chains.

As India lacks domestic GPU manufacturing capacity, it will rely heavily on imports, primarily from US-based firms such as Nvidia, to meet the rapidly rising compute demand of AI startups developing models and applications.

The agreement is expected to improve access to high-end computing hardware while positioning India as an attractive destination for data centre investments.

What’s in Today’s Article?

• On GPUs: A Positive Shift for India’s AI Ambitions
• India Meets Key US Demand on Data Centres
• A $100 Billion Opportunity for India’s Electronics Sector

On GPUs: A Positive Shift for India’s AI Ambitions

• The IndiaAI Mission saw its allocation reduced to ₹1,000 crore for 2026–27, down from ₹2,000 crore in the current fiscal, raising concerns about India’s AI momentum.
• The ₹10,370 crore mission aims to subsidise GPU access for startups and researchers developing AI models.
• So far, around 40,000 GPUs have been installed under the mission—widely seen as inadequate, especially when compared to the massive compute capacity available to leading American AI companies.
• India–US Trade Deal Offers an Alternative Route
  • The India–US interim trade agreement to increase trade in GPUs offers a market-driven alternative to public subsidies.
  • Since India lacks domestic GPU manufacturing, improved access to imports—primarily from US firms—can help bridge the compute gap for Indian startups.
• Contrast with Biden-Era Export Controls
  • This marks a clear departure from the approach under former US President Joe Biden.
  • Before leaving office, the Biden administration introduced stringent export controls on GPUs, placing limits on the number of GPUs India could import, citing national security concerns.
    • These restrictions were part of a broader global framework.
  • After President Donald Trump took office, the framework was set aside, easing access for partners like India.
• Escaping China-Style Technology Restrictions
  • From a strategic standpoint, India has secured favourable terms:
    • It has avoided China-style export controls, under which Beijing is barred from importing the most advanced GPUs
    • Although US restrictions on China have seen some recent dilution, they remain far stricter than those applied to India
  • This positions India as a trusted technology partner, rather than a restricted market.

India Meets Key US Demand on Data Centres

• Data centres have emerged as a major pillar of India–US technology cooperation. In a significant policy move, India announced a tax holiday until 2047 for foreign companies setting up data centres in the country, addressing a long-standing US demand.
• This incentive was announced in the Union Budget and signals India’s intent to position itself as a global hub for digital and AI infrastructure.
• US Demands in Trade Negotiations
  • During bilateral trade talks, the United States sought:
    • Greater market access for US data centre companies
    • Tax incentives
    • Affordable access to land, electricity, and water
    • Duty exemptions on select imports
  • By offering a long-term tax holiday, India has acted on one of the core US asks, strengthening the investment climate for foreign tech firms.
• Major US Investments Announced
  • Several US technology giants have announced large-scale investments in India’s data centre ecosystem:
    • Google: Announced a $15 billion investment (October) to build a 1 GW data centre in partnership with Adani Group.
    • Microsoft: Committed $17.5 billion (December), primarily focused on AI data centres.
    • Amazon: Plans to invest $35 billion over five years in India, with a significant portion expected to support data centre expansion.
  • These investments are driven by the surging compute demand of artificial intelligence.
• India’s Data Centre Market Outlook
  • Current market size: ~$10 billion
  • Revenue in FY24: ~$1.2 billion
  • Capacity addition: 795 MW of new capacity expected by 2027; Total capacity projected to reach 1.8 GW.

A $100 Billion Opportunity for India’s Electronics Sector

• The reduction of US tariffs on Indian goods from 50% to 18% has opened the door to a major expansion of India’s electronics manufacturing sector.
• Industry estimates suggest India–US electronics trade could reach $100 billion, driven by improved market access and smoother technology flows.
• Electronics Exports Gain Momentum
  • Electronics have emerged as a key growth engine for India:
    • Exports in 2024–25: ₹3.27 lakh crore (≈ $38 billion)
    • Largest export market: United States
  • The new trade framework is expected to accelerate export growth and deepen integration with global value chains.
• Employment and Industrial Footprint
  • India’s electronics manufacturing sector:
    • Employs over 2 million workers directly
    • Is concentrated in Tamil Nadu, Karnataka, Uttar Pradesh, and Maharashtra
    • Supports a broad ecosystem of component suppliers, assemblers, and technology service providers

Why in news?

The Economic Survey recently flagged a worrying rise in digital addiction and screen-related mental health issues, especially among children and adolescents. Responding to these concerns, the February 1 Union Budget announced steps to strengthen India’s mental health infrastructure.

Key measures include the proposal to set up a second National Institute of Mental Health and Neuro Sciences (NIMHANS) in north India, alongside plans to upgrade premier mental health institutions in Ranchi and Tezpur.

These steps aim to improve regional access, reduce pressure on existing facilities, and expand specialised mental healthcare services across the country.

What’s in Today’s Article?

• India’s Mental Health Burden: Scale and Severity
• Mental Health Infrastructure in India: Expanding Access Beyond Hospitals
• Where Does India Fall Short on Mental Health Funding
• The Way Ahead: Shifting to Preventive and Community-Based Mental Healthcare

India’s Mental Health Burden: Scale and Severity

• Experts warn that India is facing a serious mental health crisis.
• The country accounts for nearly one-third of global cases of suicide, depression, and addiction, making mental health a major public health challenge.
• High Suicide Burden Among Youth
  • Data from the National Crime Records Bureau and the Sample Registration System under the Ministry of Home Affairs show that:
    • Suicide is among the leading causes of death for Indians aged 15–29 years.
    • Young people are particularly vulnerable due to academic pressure, unemployment, social stress, and digital addiction
• Economic Cost of Mental Illness
  • According to the World Health Organization (WHO):
    • India is expected to lose $1.03 trillion between 2012 and 2030 due to mental health conditions.
    • Losses stem from reduced productivity, healthcare costs, and premature mortality.
• Large Treatment Gap
• A major concern is the treatment gap: 70%–92% of people with mental disorders do not receive proper care.
• Key reasons include: Lack of awareness; Social stigma; Severe shortage of trained mental health professionals.
• Shortage of Mental Health Professionals
  • As per the Indian Journal of Psychiatry:
    • India has 0.75 psychiatrists per 1,00,000 people
    • The WHO recommends at least 3 psychiatrists per 1,00,000
  • This gap severely limits access to diagnosis, counselling, and treatment.
• Low Budgetary Priority
  • Although overall health spending has increased since FY2014–15, mental health has received: Only about 1% of the total health budget.
  • Limited funding has constrained infrastructure, manpower, and outreach services

Mental Health Infrastructure in India: Expanding Access Beyond Hospitals

• To meet the rising demand for mental health services, the government has integrated mental healthcare into primary healthcare under Ayushman Bharat.
• Mental health services are now part of the Comprehensive Primary Health Care package delivered through Ayushman Arogya Mandirs (Health and Wellness Centres).
• Over 1.73 lakh sub-health centres and primary health centres have been upgraded into Ayushman Arogya Mandirs
• These centres provide basic mental health screening, counselling, and referrals, reducing dependence on specialised hospitals
• Strengthening Specialist Capacity
  • To address the shortage of trained professionals, the government has expanded education and training infrastructure:
    • Over 20 Centres of Excellence sanctioned for postgraduate training in mental health
    • 47 postgraduate departments in mental health established nationwide
  • These initiatives aim to increase the availability of psychiatrists, psychologists, and mental health specialists, especially in underserved regions.
• Tele-Mental Health Support: Tele MANAS
  • India has complemented physical infrastructure with digital outreach through Tele MANAS (Tele Mental Health Assistance and Networking Across States):
    • 24×7 free mental health support via helplines 14416 or 1-800-891-4416
    • Launched on October 10, 2022
    • 53 operational cells across 36 States and Union Territories
    • Backed by 23 specialised mentoring institutes
  • Tele MANAS bridges access gaps, especially for people in remote areas or those hesitant to seek in-person care.

Where Does India Fall Short on Mental Health Funding?

• India’s mental health budget has increased from ₹683 crore in 2020–21 to about ₹1,898 crore in 2024–25.
• However, experts argue that this rise masks a deeper problem of chronic underinvestment.
• The allocation remains below 2% of the total health budget, which itself is only around 2% of India’s GDP—far short of what the scale of the mental health burden demands.
• Mismatch Between Spending and Need
  • The underinvestment becomes stark when weighed against:
    • India’s high suicide and depression burden
    • Massive treatment gaps
    • Economic losses due to untreated mental illness
  • Despite these realities, mental health continues to receive low fiscal priority.
• Overemphasis on Tertiary Institutions
  • A major concern is where the money goes. A significant portion of allocations continues to be directed toward tertiary institutions such as NIMHANS and newly established centres of excellence.
  • While important, experts argue that:
    • Tertiary institutions alone cannot mainstream mental healthcare in a country of India’s size
    • They serve a limited population and are often concentrated in urban areas
  • They stress the need for targeted funding for grassroots mental health programmes, including:
    • Community-based services
    • Early intervention models
    • Preventive and promotive mental healthcare
  • Such approaches are more effective in reaching underserved populations and reducing long-term disease burden.
• Utilisation Gap Compounds the Problem
  • Beyond low allocations, there is also a utilisation issue:
    • Funds earmarked for mental health are not fully utilised at the national level
    • Administrative bottlenecks and lack of local capacity hinder effective spending
    • Health experts argue that better utilisation requires decentralised planning and community-led models, not just increased funding.

The Way Ahead: Shifting to Preventive and Community-Based Mental Healthcare

• India urgently needs affordable access, continuity of care, and timely treatment to prevent avoidable deaths and disability from mental illness.
• Experts highlight an over-reliance on specialist-led, tertiary care, severe shortages of trained professionals, and a 95% access gap.
• The government is pivoting to a whole-of-community approach, integrating mental well-being into schools and strengthening workplace policies to address stress and burnout—signalling a shift from curative to preventive, community-based care.

Why in News?

• The United States and India have agreed upon a Framework for an Interim Trade Agreement (ITA) aimed at delivering early trade gains while negotiations continue for a comprehensive US–India Bilateral Trade Agreement (BTA).
• The US-India BTA was launched in February 2025 by President Donald Trump and Prime Minister Narendra Modi.
• The framework reflects evolving geopolitical realities, particularly China’s rise, supply chain diversification, energy security concerns, and technology competition, which have injected new urgency into bilateral trade negotiations.

What’s in Today’s Article?

• Nature and Scope of the Interim Agreement
• Trade, Technology and Supply Chain Cooperation
• Strategic Significance
• Key Challenges
• Way Forward
• Conclusion

Nature and Scope of the Interim Agreement:

• A transitional but strategic arrangement:
  • Designed as a reciprocal and mutually beneficial trade arrangement, it is -
    • Intended to generate early trade benefits
    • Serves as a stepping stone toward a comprehensive BTA
  • The agreement signals renewed momentum in a relationship that has struggled for years over issues such as agriculture, digital trade, and market access.
• India’s commitments:
  • Tariff liberalisation and rationalisation: India will eliminate or reduce tariffs on all US industrial goods, reduce tariffs on US agricultural and food products, including dried distillers’ grains, red sorghum, tree nuts, fresh and processed fruits, soybean oil, wine and spirits.
  • Addressing non-tariff barriers (NTBs):
    • India agreed to tackle import licensing delays; standards-related restrictions; and barriers affecting medical devices, ICT goods, food and agricultural products.
    • Talks to align with US or international standards to conclude within six months.
    • Significance: Non-tariff barriers have long been contentious in WTO discussions. Their removal signals regulatory convergence.
• US commitments:
  • Tariff reductions for Indian exports:
    • The US will remove tariffs on generic pharmaceuticals; gems and diamonds; selected aircraft and aircraft parts.
    • India will receive ally-equivalent tariff treatment in certain aviation sectors, and get a preferential quota for auto parts at lower tariff rates.
    • However, the US will apply an 18% reciprocal tariff on several Indian exports including textiles, clothing, leather, footwear, plastics, chemicals, and certain machinery.
  • Relief under national security tariffs:
    • The US will lift certain tariffs imposed under national security provisions, especially in aviation sectors.
    • This is significant because national security tariffs are often invoked under domestic trade laws, and their removal indicates strategic trust.

Trade, Technology and Supply Chain Cooperation:

• Strategic economic integration:
  • India plans to purchase $500 billion worth of US goods over five years, including energy products, aircraft, precious metals, technology products, and coking coal.
  • Both sides agreed to expand trade in high-tech goods such as GPUs, and deepen cooperation in innovation, supply chains, economic security, and addressing non-market practices of third countries (implicit reference to China).
• Digital trade commitments:
  • Both countries agreed to address barriers to digital trade, committed to establishing clear and mutually beneficial digital trade rules.
  • Digital trade has been a key friction point, especially concerning data localisation, cross-border data flows, and e-commerce regulations.

Strategic Significance:

• Geopolitical drivers: China–US rivalry, supply chain realignment (“China +1” strategy), energy security, and Indo-Pacific strategic convergence.
• Economic implications: Enhanced market access for both sides, strengthening India’s position in global value chains, potential boost to manufacturing and exports, reinforcing India’s role in trusted technology supply chains.

Key Challenges:

• Agricultural sensitivities: US agricultural access may affect Indian farmers.
• Reciprocal tariffs: The US will apply a reciprocal tariff rate of 18% on many Indian goods, which may hurt labour-intensive sectors like textiles and leather.
• Pharmaceutical uncertainty: Subject to US tariff investigations.
• Digital trade disputes: Data sovereignty vs open digital markets.
• Rules of origin enforcement: Ensuring benefits accrue primarily to US and Indian producers.

Way Forward:

• Fast-track: Conclusion of the Interim Trade Agreement (ITA).
• Build: Trust through early harvest implementation.
• Protect: Sensitive sectors via calibrated tariff reduction.
• Align: Digital governance frameworks with global best practices.
• Strengthen: Institutional mechanisms for dispute resolution.
• Integrate: Trade negotiations with broader strategic cooperation (Quad, Indo-Pacific frameworks).

Conclusion:

• The India–US Interim Trade Framework represents more than a tariff adjustment exercise—it reflects a strategic recalibration of bilateral economic ties amid shifting global power dynamics.
• If implemented effectively, this framework could redefine India–US economic relations, reinforce supply chain resilience, and strengthen India’s position in the evolving global trade architecture.

Why in the News?

• The Union Budget 2026-27 significantly increased allocations for the AYUSH sector and announced major institutional and regulatory initiatives to expand its domestic and global footprint.

What’s in Today’s Article?

• AYUSH (Background, Budgetary Expansion, Strengthening Infrastructure, Impact of FTA with EU, Concerns, etc.)

Understanding the AYUSH System in India

• AYUSH refers to Ayurveda, Yoga & Naturopathy, Unani, Siddha, and Homoeopathy, India’s traditional systems of medicine that coexist with modern allopathic healthcare.
• Over the last decade, the government has sought to integrate AYUSH into the public health system while also positioning it as a source of economic growth and soft power.
• Institutionally, AYUSH functions under the Ministry of AYUSH, established in 2014.
• The sector operates through a nationwide network of AYUSH hospitals, dispensaries, teaching institutions, research councils, and regulatory bodies.
• The National AYUSH Mission (NAM) is the primary vehicle for integrating AYUSH services into primary healthcare by co-locating AYUSH facilities in existing health centres.
• India also hosts Institutes of National Importance such as the All India Institute of Ayurveda, New Delhi, and the National Institute of Homoeopathy, Kolkata, along with research bodies like the Central Council for Research in Ayurvedic Sciences.
• Regulatory oversight is provided by the National Commission for Indian System of Medicine and the National Commission for Homoeopathy, while drug standards are set by the Pharmacopoeia Commission for Indian Medicine and Homoeopathy.

Budgetary Expansion of the AYUSH Sector

• The Union Budget 2026-27 marked a sharp increase in government spending on AYUSH.
• The total allocation rose to Rs. 4,408 crore, up from Rs. 3,992 crore in 2025-26 and Rs. 2,122 crore in 2020-21.
• This reflects a long-term policy shift to mainstream traditional medicine within India’s healthcare framework.
• A major announcement was the establishment of three new All-India Institutes of Ayurveda, envisioned as centres of excellence on the lines of AIIMS.
• These institutions will combine patient care, advanced research, and high-quality medical education, aiming to standardise Ayurvedic practice nationally.
• The Budget also proposed enhanced funding for upgrading the WHO Global Traditional Medicine Centre in Jamnagar, signalling India’s ambition to lead global standard-setting for traditional medicine practices.

Strengthening Infrastructure, Research, and Supply Chains

• The National AYUSH Mission received a 66% hike to Rs. 1,300 crore, focusing on modernising AYUSH hospitals and dispensaries, expanding preventive healthcare, and upgrading existing facilities.
• Additional funds were earmarked for improving AYUSH pharmacies and drug-testing laboratories to address long-standing quality and safety concerns.
• A notable innovation announced was Bharat-VISTAAR, a multilingual AI-based digital assistant designed to support farmers cultivating medicinal plants.
• It will provide real-time guidance on crop quality, market prices, and export certification, strengthening the medicinal plant supply chain.

India-EU Free Trade Agreement and Global Outreach

• A key driver behind the Budget push is the India-European Union Free Trade Agreement (FTA), which has opened new opportunities for AYUSH in European markets.
• In EU countries that do not specifically regulate traditional medicine, Indian AYUSH practitioners can now offer services based on qualifications obtained in India.
• The FTA also allows Indian companies to establish wellness centres and Ayurvedic clinics across the EU with legal certainty.
• Importantly, it enables mutual recognition of certain laboratory test results and safety certifications, easing the export of AYUSH products.
• The agreement also recognises India’s Traditional Knowledge Digital Library, helping prevent biopiracy and wrongful patent claims on Indian formulations.

Concerns Around Evidence, Safety, and Regulation

• Despite the expansion, the AYUSH sector faces persistent criticism.
• Medical bodies such as the Indian Medical Association argue that many AYUSH therapies lack rigorous empirical validation through randomised controlled trials.
• Safety concerns remain, particularly regarding the presence of heavy metals like lead and mercury in some Ayurvedic formulations, which have triggered international health advisories.
• Another contentious issue is “mixopathy”, the overlap between AYUSH and allopathic practices.
• Policy decisions allowing Ayurveda practitioners to perform certain surgical procedures and prescribe allopathic drugs have led to legal disputes and professional opposition, highlighting the need for clearer regulatory boundaries.

Why in news?

US President Donald Trump announced a sharp reduction in tariffs on Indian goods from 50% to 18%, claiming that India has agreed to stop buying Russian crude oil and instead increase purchases from the US and Venezuela.

While India welcomed the trade deal, it has not confirmed any commitment to halt Russian oil imports.

What’s in Today’s Article?

• India’s Official Position: Energy Security First
• Why a Complete Halt Is Unlikely?
• Russian Oil to Remain a Major Part of India’s Import Basket in the Near Term
• Replacing Russian crude with US, Venezuelan oil is difficult
• India’s Strategic and Trade Autonomy in Oil Imports

India’s Official Position: Energy Security First

• India has not publicly endorsed Trump’s claim on Russian oil.
• The MEA reiterated that energy security for 1.4 billion people remains India’s overriding priority. According to the government, India’s strategy is based on:
  • Diversification of energy sources
  • Market conditions
  • Evolving international dynamics
• No formal directive has yet been issued to Indian refiners to stop importing Russian crude.

Why a Complete Halt Is Unlikely?

• Completely stopping Russian oil imports is not feasible in the current context due to:
  • Technical challenges in quickly switching crude grades
  • Commercial constraints, including pricing and long-term contracts
  • Logistical limitations in ramping up supplies from the US and Venezuela
  • Strategic autonomy concerns in energy trade decisions
• Experts note that increasing imports from alternative suppliers is easier said than done, and cannot happen overnight.
• Strategic Autonomy and Market Realities
  • India’s energy policy has consistently aimed to balance:
    • Geopolitical pressures
    • Cost competitiveness
    • Supply reliability
  • A sudden halt to Russian oil would undermine India’s strategic autonomy and expose it to price volatility and supply risks.
  • Industry analysts expect:
    • A gradual reduction in Russian oil imports.
    • A measured increase in crude purchases from the US and other suppliers.
    • Continued emphasis on flexibility and diversification, rather than rigid alignment.
• Economic Logic: Discounts and Refining Compatibility
  • Analysts note that Russian crude remains economically critical:
    • Volumes are locked in for the next 8–10 weeks because the orders are already placed.
    • Deep discounts on Urals (Russia’s flagship crude grade)) crude relative to ICE Brent (benchmark) support margins.
    • India’s complex refining system is well-suited to Russian grades.

Russian Oil to Remain a Major Part of India’s Import Basket in the Near Term

• Indian refiners have already booked Russian crude cargoes through March and parts of April, making any abrupt cancellation impractical.
• Even if the government advises a reduction, refiners will need several months to gradually scale down purchases, given existing contracts and supply-chain constraints.
• A complete halt is especially unfeasible due to Nayara Energy, which processes about 400,000 barrels per day (bpd) and is almost entirely dependent on Russian oil.
  • Rosneft, Russia’s national oil company, is a major shareholder in Nayara Energy.
  • Nayara has been sanctioned by the European Union, while Rosneft faces US and EU sanctions.
  • These sanctions have severely limited access to alternative crude sources.
• Likely Scale of Reduction: Gradual, Not Zero
  • Energy experts broadly agree that:
    • India is unlikely to reduce Russian oil imports to zero
    • Imports could fall from an average of ~1.6 million bpd in 2025 to around 500,000 bpd in the medium term
  • Even at 500,000 bpd, Russian crude would still account for ~10% of India’s total oil imports.
• Recent Trends: Decline Already Underway
  • India’s Russian oil imports have steadily declined to a three-year low, following US sanctions on major Russian producers, including Rosneft and Lukoil.
  • According to a data:
    • Imports peaked at 2.09 million bpd in June 2025
    • Fell to 1.16 million bpd in January 2026
  • Despite the decline:
    • Russian oil accounted for 22% of India’s total imports in January 2026
    • This is lower than the 35–40%+ share seen earlier, but still significant
  • This dominance is expected to continue for several months.

Replacing Russian crude with US, Venezuelan oil is difficult

• Replacing Russian crude is theoretically possible, since before the Ukraine war, Russia accounted for less than 2% of India’s oil imports.
• However, the real challenge lies in how much and how fast supplies from the United States and Venezuela can substitute Russian volumes.
• US Oil: Cost and Compatibility Constraints
  • India has been increasing oil imports from the US, and this trend can continue if prices remain competitive. However, two key constraints exist:
    • Higher transportation costs: Shipping crude from the US to India costs more than double compared to supplies from West Asia.
    • Crude quality mismatch: Indian refineries are optimised for medium-sour crude from Russia and West Asia. US crude is lighter and sweeter, making it less suitable for some refinery configurations.
    • While Indian refineries can technically process most crude types, efficiency and output vary by grade
• Venezuelan Oil: Opportunity with Limits
  • Venezuelan crude is closer in quality to Russian oil and could be a partial substitute.
  • However, limitations remain:
    • Low production: Venezuela currently produces only about 1 million bpd
    • High competition: Much of this crude is also in demand in the US
    • Long-term constraints: Meaningfully increasing output would require years and billions of dollars in investment
  • As a result, Venezuelan oil can only partially and intermittently replace Russian volumes.

India’s Strategic and Trade Autonomy in Oil Imports

• India maintained a strong stance on strategic autonomy through most of last year, despite sustained pressure from the United States under President Donald Trump to curb Russian oil purchases.
• New Delhi was unwilling to be directed on trade partners, particularly Russia—an old and key strategic partner.
• Notably, reductions in recent months occurred only after US sanctions on Rosneft and Lukoil, not due to bilateral pressure.
• A recent statement by the MEA suggests India is unlikely to change its stance on trade autonomy. Maintaining some Russian oil volumes aligns with this position and preserves flexibility in energy sourcing.

Why in news?

The Reserve Bank of India’s Monetary Policy Committee (MPC) decided to keep the repo rate unchanged at 5.25%, maintaining the status quo on interest rates. As a result, bank lending and deposit rates — and EMIs on home and personal loans — are expected to remain stable.

The MPC revised India’s GDP growth projection upward to 7.4% for FY 2026 (from 7.3%) and retail inflation to 2.1% (from 2%), reflecting confidence in growth momentum alongside benign price pressures.

The committee also retained a neutral policy stance, signalling flexibility to respond to evolving domestic and global conditions. This comes shortly after India announced trade agreements with the US and the European Union, and follows the Union Budget, which shaped the broader macroeconomic context.

The pause follows a 25 basis point rate cut in December, which reduced the repo rate to its current level. With cumulative rate cuts of 125 basis points in 2025, the decision marks a breather after a phase of sustained monetary easing, as the RBI balances growth support with future policy optionality.

What’s in Today’s Article?

• Why the RBI Chose to Hold Interest Rates Steady?
• Impact of RBI’s Rate Pause on Lending and Deposit Rates
• The Road Ahead: RBI’s Cautious Pause Amid Global Uncertainty

Why the RBI Chose to Hold Interest Rates Steady?

• The decision by the Reserve Bank of India to pause on rates reflects a benign inflation outlook alongside strong growth momentum.
• Domestic economic conditions remain broadly resilient, giving the MPC space to wait and watch rather than act immediately.
• Budget Measures Supporting Growth
  • RBI Governor Sanjay Malhotra noted that several measures announced in the FY26 Union Budget are expected to boost economic activity.
  • These include:
    • Income tax cuts, improving household disposable income
    • GST rate rationalisation, easing cost pressures
    • Benefits of earlier RBI rate cuts, supporting credit and consumption
  • Together, these factors have strengthened the near-term growth outlook.
• External Sector: Cushion from Trade Agreements
  • Since the December policy review, India has signed four trade agreements with:
    • The United States
    • The European Union
    • Oman
    • New Zealand
  • These agreements are expected to:
    • Boost exports and investments
    • Reduce vulnerability to global uncertainties
    • Support medium- to long-term growth
  • However, the RBI flagged that global geopolitical developments and external headwinds continue to warrant close monitoring, even as the US trade deal augurs well for the economy.
• Consumption as the Main Growth Driver
  • Economic growth is being underpinned by robust consumption, projected to grow at around 7% in FY26.
  • The consumption outlook has been reinforced by:
    • Subdued inflation
    • Fiscal support measures
    • Monetary easing already delivered
  • Additionally, statistical factors, such as a low GDP deflator due to low inflation, contributed to stronger growth in the first half of the fiscal year.
• Inflation Outlook: Benign but Watched Closely
  • Headline inflation in November and December remained below the tolerance band.
  • CPI inflation projections for:
    • Q1 FY27: 4.0%
    • Q2 FY27: 4.2% (slightly revised upwards)
  • The RBI clarified that the upward revision is mainly due to higher prices of precious metals, contributing 60–70 basis points, while underlying inflation pressures remain low.

Impact of RBI’s Rate Pause on Lending and Deposit Rates

• With the repo rate unchanged, lending rates linked to external benchmarks, particularly the repo rate, are expected to remain stable in the near term.
• As a result:
  • No immediate change in EMIs for home and personal loans linked to the repo rate
  • Borrowers gain certainty over repayment obligations
• Possible Movement in MCLR-Linked Loans
  • Loans linked to the Marginal Cost of Funds-Based Lending Rate (MCLR) may still see adjustments.
  • This is because banks can revise MCLR-based rates based on:
    • Changes in funding costs
    • Liquidity conditions
    • Deposit mobilisation trends
  • Thus, MCLR-linked borrowers may experience rate changes even without a repo rate move.
• Deposit Rates to Remain Broadly Steady
  • On the deposit side:
    • Interest rates are expected to stay stable in the near term.
    • Any change would depend on sustained liquidity pressures or shifts in banks’ funding requirements.

The Road Ahead: RBI’s Cautious Pause Amid Global Uncertainty

• The Reserve Bank of India appears comfortable with a cautious, wait-and-watch stance.
• With economic growth holding firm, inflation under control, and fiscal spending providing support, there is no immediate need to alter policy rates.
• The February decision thus represents a deliberate pause rather than a shift in policy direction.
• Growth Boost from Trade Agreements
  • RBI Governor highlighted that recent and forthcoming trade agreements with the European Union and the United States are likely to sustain growth momentum over the medium term.
  • He also noted that global growth could be marginally stronger than earlier projections, supported by:
    • Rising technology investments
    • Accommodative financial conditions
    • Large-scale fiscal stimulus across major economies
• Persistent External Risks
  • Despite the positive outlook, risks remain significant:
    • Geopolitical tensions and rising trade frictions
    • Volatile crude oil prices
    • Diverging global monetary policies, as inflation remains above target in many advanced economies and central banks approach the end of easing cycles
• Fiscal–Monetary Alignment
  • With the government committed to fiscal consolidation, monetary policy is unlikely to face additional pressure.

Why in the News?

• In February 2026, the Reserve Bank of India announced a draft framework to compensate customers up to Rs. 25,000 for losses arising from small-value digital frauds, even in certain cases of user error.

What’s in Today’s Article?

• Digital Payments & Fraud Risks (Background, Existing Framework, Key Features of Proposed Framework, Significance, Challenges, etc.)

Background: Growth of Digital Payments and Fraud Risks in India

• India has witnessed an unprecedented expansion in digital payments over the past decade, driven by initiatives such as UPI, Aadhaar-based authentication, and financial inclusion programmes.
• While this shift has enhanced convenience and transparency, it has also led to a rise in digital fraud cases, including phishing, OTP-based scams, unauthorised electronic transactions, and social engineering attacks.
• According to regulatory assessments, fraudsters increasingly exploit gaps in user awareness, delayed reporting, and weak authentication mechanisms.
• Senior citizens and first-time digital users are particularly vulnerable.
• This evolving risk landscape has necessitated stronger regulatory safeguards to protect customers while maintaining trust in digital payment systems.

Existing RBI Framework on Customer Liability

• The RBI first issued detailed instructions in 2017 to limit customer liability in unauthorised electronic banking transactions. These guidelines classified liability based on factors such as:

• Delay in reporting unauthorised transactions
• Negligence on the part of banks or customers
• Nature of the fraud (system failure vs. customer compromise)

• Under this regime, customers could enjoy zero or limited liability if they reported fraud promptly. However, the framework did not mandate direct compensation for small-value losses, especially in cases involving partial customer fault, such as OTP sharing under deception.
• With rapid technological changes and growing fraud sophistication, RBI reviewed the adequacy of these rules, leading to the proposed revisions.

Key Features of the Proposed RBI Compensation Framework

• The newly proposed framework seeks to introduce a structured compensation mechanism for victims of small-value digital fraud. Its major features include:

• Compensation Cap: Customers may be compensated for losses up to Rs. 25,000 per fraudulent transaction.
• Scope: The framework applies primarily to small-value digital frauds, where recovery through existing mechanisms is difficult.
• User Error Consideration: Compensation may be available even in cases where customers shared OTPs or credentials under coercion or deception, subject to conditions.
• Public Consultation: Draft instructions will be placed in the public domain to invite stakeholder feedback before finalisation.

• This approach marks a shift from a purely liability-based framework to a consumer-protection-oriented compensation model.

Additional Safety Measures for Digital Payments

• Alongside compensation, the RBI has proposed several preventive measures to reduce fraud incidence:

• Lagged Credits: Introducing time delays before crediting funds in high-risk transactions.
• Enhanced Authentication: Additional verification layers for vulnerable groups, such as senior citizens.
• Targeted Risk Profiling: Differentiated safeguards based on user behaviour and transaction patterns.

• These measures aim to balance user convenience with systemic security, especially in high-volume digital ecosystems.

Related Consumer Protection Reforms by RBI

• The compensation proposal is part of a broader regulatory push to strengthen consumer rights in financial services. The RBI has announced draft guidelines in three key areas:

• Mis-selling of Financial Products: Ensuring the suitability of third-party products sold by banks.
• Loan Recovery Practices: Harmonising rules governing recovery agents and borrower treatment.
• Customer Liability Norms: Updating rules on unauthorised electronic transactions to reflect current risks.

• Together, these reforms indicate a shift towards outcome-based consumer protection rather than procedural compliance.

Significance for India’s Digital Economy

• The proposed compensation framework is significant for several reasons:

• Trust Building: Reassures users that financial losses from fraud will not always be borne individually.
• Financial Inclusion: Encourages continued digital adoption among vulnerable populations.
• Regulatory Accountability: Places greater responsibility on banks and payment service providers to strengthen security systems.
• Global Alignment: Reflects international best practices in consumer protection for digital finance.

• For India, which aims to become a global leader in digital public infrastructure, safeguarding user confidence is critical.

Challenges and Implementation Concerns

• Despite its benefits, the framework raises certain challenges:

• Moral Hazard: Risk of reduced user caution if compensation is perceived as guaranteed.
• Operational Burden: Banks must establish clear, fast, and fair grievance redressal mechanisms.
• Fraud Classification: Differentiating genuine victims from negligent behaviour will require robust assessment protocols.

• Effective implementation will depend on clear guidelines, technological support, and coordination between banks, regulators, and law enforcement agencies.

Why in News?

• A deadly explosion in an illegally operating rat-hole coal mine in East Jaintia Hills district, Meghalaya, has resulted in the death of 25 miners.
• The incident has once again highlighted the persistence of illegal mining in the state despite a ban by the National Green Tribunal (NGT) and the Supreme Court.
• It raises serious concerns about regulatory enforcement, governance failure, labour safety, and disaster management preparedness.

What’s in Today’s Article?

• Nature of the Incident
• Rat-Hole Mining - Structural and Environmental Concerns
• Legal and Administrative Dimensions
• Scale of the Illegal Mining Problem
• Challenges Highlighted
• Way Forward
• Conclusion

Nature of the Incident:

• A dynamite explosion occurred in a rat-hole mine in the Thangkso area, a remote region with poor connectivity.
• Rescue teams comprising the NDRF, SDRF, and Special Rescue Teams retrieved multiple bodies from narrow underground tunnels.
• The mine structure included -
  • Five vertical shafts (almost 100 feet deep)
  • Each shaft branching into 2–3 narrow horizontal tunnels
  • Tunnels measuring only 2 feet high and 3 feet wide, requiring miners to crawl
• Three bodies were found 350 feet horizontally inside a rat-hole tunnel.
• Rescue operations were hampered by -
  • Water accumulation
  • Mudslides due to dripping water
  • Rockfall hazards
  • Extremely confined working spaces

Rat-Hole Mining - Structural and Environmental Concerns:

• What is rat-hole mining?
  • A primitive and hazardous coal extraction method, which involves digging narrow pits and horizontal tunnels to manually extract coal.
  • It is widely prevalent in Meghalaya due to unique land ownership patterns (community/private ownership).
• Why is it problematic?
  • Because it violates the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act).
  • It was banned by the NGT (2014) and the ban was upheld by the Supreme Court.
  • These violations leads to -
    • Severe environmental degradation
    • Acid mine drainage
    • Water contamination
    • Land instability
    • Loss of biodiversity
  • There is a complete absence of worker safety mechanisms.

Legal and Administrative Dimensions:

• Criminal action: Following the incident, a case FIR registered under charges that include culpable homicide, violation of the MMDR Act and the Explosive Substances Act. Two mine owners were arrested.
• Judicial oversight:
  • Justice (Retd) BP Katakey committee: Appointed by the Meghalaya High Court to monitor illegal coal-mining in the state since 2022 following a suo-motu PIL taken up by the court on the issue.
  • Findings: Flagged Widespread illegal mining in Meghalaya, particularly the East Jaintia Hills.
  • Meghalaya HC: “No one in the state, except the high court, is taking the issue very seriously”.

Scale of the Illegal Mining Problem:

• As per Justice Katakey Committee findings, over 22,000 illegal mine openings in East Jaintia Hills alone, and over 25,000 across Meghalaya.
• East Jaintia Hills was identified as the worst-affected district.
• Past tragedies: 2018 Ksan incident – 15 miners killed in flooding, Umpleng incident – 5 miners died.
• This indicates a pattern of systemic regulatory collapse rather than isolated accidents.

Challenges Highlighted:

• Governance deficit: Weak enforcement of NGT and Supreme Court orders. Lack of political and administrative will. Local complicity and informal protection networks.
• Terrain and accessibility: Remote location (25 km takes around 3 hours by road). Difficult terrain requiring 4WD vehicles. Slows both regulation and rescue.
• Informal labour exploitation: Migrant and economically vulnerable workers. Absence of safety nets or formal contracts. Occupational hazards without social security.
• Disaster management constraints: Hazardous confined spaces. Waterlogging and collapse risk. Inadequate early detection and monitoring systems.
• Constitutional and federal complexity: Meghalaya’s Sixth Schedule Community land ownership under Autonomous District Councils. Regulatory ambiguity exploited for illegal mining.
• Broader issues:
  • Sustainable Development vs livelihood concerns
  • Environmental governance and rule of law
  • Judicial activism vs executive inaction
  • Cooperative federalism in resource regulation
  • Disaster risk reduction in informal sectors
  • Internal security linkages (illegal mining networks and criminal economy)

Way Forward:

• Strict enforcement and monitoring: Real-time satellite surveillance of illegal mining. Independent regulatory authority for mining oversight. Strengthened coordination between State Government, Autonomous Councils, and Centre.
• Institutional accountability: Fix responsibility of district officials. Time-bound compliance reporting to High Court. Strengthen implementation of MMDR Act provisions.
• Formalisation of the mining sector: Introduce regulated, scientific, and environmentally compliant mining models. Alternative livelihood programs for affected communities. Skill development and employment diversification.
• Environmental restoration: Mine closure plans. Rehabilitation of degraded land and water bodies. Polluter Pays Principle implementation.
• Worker safety framework: Strict compliance with labour laws. Insurance and compensation mechanisms. Community awareness regarding occupational risks.

Conclusion:

• The Meghalaya rat-hole mining tragedy is not merely a mining accident—it is a stark reminder of the consequences of institutional apathy, regulatory failure, and socio-economic vulnerability.
• Despite judicial bans and repeated warnings, illegal mining continues unabated, turning preventable disasters into recurring tragedies.
• Ensuring environmental sustainability, worker safety, and accountable administration is not just a policy necessity but a constitutional obligation under Articles 21 and 48A of the Indian Constitution.
• Unless systemic reforms replace episodic reactions, such “incidents waiting to happen” will continue to claim lives.

Context

• The contemporary global order is marked by geopolitical rivalry, economic nationalism, and institutional uncertainty.
• Within this context, the recent breakthrough in trade negotiations between India and the European Union (EU) represents more than a commercial arrangement.
• The agreement reflects a deeper strategic convergence between two influential actors seeking stability and autonomy in a rapidly changing world.
• Rather than a narrow settlement of tariffs, the development signals the emergence of a partnership with the capacity to influence a multipolar international system and contribute to global stability.

Historical Background and Significance

• Negotiations between India and the EU extended over nearly twenty-five years, repeatedly encountering deadlock and delay.
• The prolonged process demonstrated the difficulty of aligning two complex economic systems with different regulatory traditions and development priorities.
• The eventual breakthrough indicates a shift in policy orientation on both sides.
• Economic incentives alone cannot explain the progress; broader political and geopolitical considerations now shape cooperation. The agreement therefore stands as a turning point in bilateral relations.

Role of Political Leadership and Trust

• Sustained diplomatic engagement created the conditions necessary for compromise.
• Frequent summits and high-level dialogue fostered trust and mutual understanding, allowing leaders to address domestic resistance.
• In India, policymakers moderated protectionism by presenting Europe as a reliable and diversified economic partner.
• In Europe, political guidance encouraged the bureaucracy to move beyond rigid negotiation frameworks.
• The willingness of leadership to invest political capital transformed a stalled negotiation into a workable agreement and deepened cooperation.

Geopolitical Drivers of the Agreement

• The global environment strongly influenced this development. Intensifying competition among major powers, economic pressures, and security challenges increased the need for diversified partnerships.
• Concerns about economic dependence and coercion encouraged both sides to pursue resilience through collaboration.
• The agreement therefore represents a pragmatic response to a changing international system and a collective attempt to safeguard security and long-term interests.

Key Features of India-EU Free Trade Agreement

• Expanding Beyond Trade: Defence and Security Cooperation
  • Durability requires moving beyond economic exchange. Defence and security collaboration offers a crucial foundation.
  • Shared interests in maritime routes and regional maritime order highlight the importance of the Indo-Pacific.
  • Joint exercises, information-sharing, and institutional arrangements can strengthen regional capacity-building and support a broader partnership.
  • Such measures elevate the relationship from economic cooperation to strategic alignment.
• Energy Partnership and Climate Cooperation
  • Energy policy creates another strong link. Europe’s commitment to decarbonisation intersects with India’s need for affordable development.
  • Collaboration in renewable technologies, green hydrogen, and modern infrastructure can produce mutual benefits while addressing climate challenges.
  • Shared projects encourage long-term economic interdependence and reinforce environmental responsibility.
• Technology and Innovation
  • Technological development represents the most transformative dimension of cooperation.
  • Global power increasingly depends on standards in technology, semiconductors, artificial intelligence, and data governance.
  • Joint initiatives in innovation and digital public infrastructure can reduce vulnerability and enhance sovereignty in emerging sectors.
  • By shaping common rules, both partners can encourage progress while safeguarding democratic principles.
• Mobility and Societal Connections
  • The movement of people strengthens institutional ties.
  • Greater mobility for students, researchers, and skilled professionals expands educational exchange and supports shared mobility and knowledge networks.
  • Addressing visa barriers and professional recognition would deepen societal links and sustain interdependence beyond government-level engagement.
• Contribution to a Multipolar World Order
  • Cooperation contributes to a broader realignment in international politics. Flexible partnerships among influential actors increasingly replace rigid alliance systems.
  • By coordinating policies and supporting development initiatives, India and the EU can promote balanced growth and reinforce democratic values across regions.
  • Their collaboration may help moderate global rivalries and support a cooperative order.

Conclusion

• The trade agreement marks the beginning of a long-term transformation rather than the end of negotiations.
• Political engagement and changing global conditions enabled the breakthrough, but lasting success depends on sustained commitment in security, energy, technology, and societal exchange.
• With continued implementation, the partnership can strengthen economic growth and international cooperation.
• The agreement therefore forms a foundation for a durable strategic relationship capable of contributing to a stable and cooperative global system.

Context

• Over three decades of international negotiations have produced agreements, conferences, and declarations promising collective action against global warming.
• Yet global emissions continue to rise and the 1.5°C target grows increasingly unattainable. The paradox of global climate governance lies not in ignorance but in insufficiency.
• The international architecture, centred on the Kyoto Protocol and the Paris Agreement, provides a framework for dialogue without ensuring decisive action.
• The failure emerges from structural politics, economic priorities, and social realities that privilege short-term interests over long-term planetary stability.

Institutional Structure and the Illusion of Progress

• The United Nations process operates through recurring Conferences of the Parties under the UNFCCC.
• Participation resembles voluntary engagement rather than obligation. Countries commit rhetorically while avoiding costly measures in practice. Because decisions require consensus, every nation effectively possesses a veto.
• This design promotes agreement on language but discourages enforceable action.
• Declarations frequently contain ambitious goals, yet operational provisions remain weak.
• The system therefore produces diplomatic success without environmental change.
• Instead of collapse, governance experiences drift, institutions function, negotiations continue, but effective action remains limited.
• Agreements display aspiration without accountability, creating a cycle of negotiation rather than implementation.

The Dominant Role of Politics

• National interest consistently outweighs global urgency. Political leaders operate within short electoral cycles, whereas mitigation requires long-term commitment.
• Governments therefore attempt to minimise immediate economic costs while maintaining international legitimacy.
• Climate policy becomes an exercise in managing expectations, postponing decisions, and distributing responsibility.
• Every conference is celebrated as progress even when emission trajectories remain unchanged. Such behaviour is politically rational but environmentally insufficient.
• The logic of governance prioritises stability of power over planetary stability. Consequently, ambition appears in principles while hesitation governs outcomes, reinforcing systemic inaction.

Economic Incentives and Market Behaviour

• Economic systems reinforce political hesitation. Markets reward immediate profit, whereas climate protection requires sustained investment and restraint.
• Corporations and financiers respond to present incentives rather than future consequences.
• Future generations are not economic participants and therefore lack representation within market decision-making.
• The pursuit of economic growth intensifies the conflict. Governments depend on expansion for employment and legitimacy, making restrictions on fossil-fuel use politically risky.
• As a result, economic priorities override ecological considerations. Long-term sustainability competes with short-term returns, and market behaviour consistently favours the latter.
• The system functions according to design, but the outcome undermines planetary security.

Society and Public Engagement

• Public behaviour contributes to the problem. Citizens prioritise immediate needs, employment, food, housing, and health.
• Climate change remains an abstraction until it manifests as disaster. Without sustained public pressure, policymakers face little incentive to adopt costly reforms.
• Individuals become victims of climatic impacts rather than participants in prevention. The absence of societal urgency weakens political will and reinforces delayed response.

Science and the Politics of Uncertainty

• Scientific research has already established climatic mechanisms, projected warming pathways, and identified risk.
• The barrier is not knowledge but interpretation. Remaining scientific uncertainty is used to justify postponement, diffuse responsibility, and delay decisive policy.
• The issue has shifted from scientific inquiry to strategic calculation. Evidence exists; implementation remains limited.
• The gap between scientific clarity and political behaviour illustrates the transformation of science into an instrument within political debate.

COP30 and the Gap Between Words and Action

• Recent negotiations illustrate structural limitations. Cooperation was emphasised, yet binding emission reductions were absent.
• Finance commitments lacked timelines, and required adaptation resources remained insufficient.
• Developing countries require trillions annually, while actual flows remain far lower. The loss-and-damage mechanism was operationalised but modest in scale, and technology transfer initiatives remained largely conceptual.
• Capacity-building processes expanded without corresponding funding.
• Across policy areas, the pattern persisted: new frameworks and platforms multiplied, but measurable implementation remained limited.
• Meanwhile, global emissions reached record levels, and projected warming is expected to exceed the 1.5°C threshold in the early 2030s.
• The disparity between negotiated ambition and real-world outcomes widened further.

The Paradox of Necessity

• Despite structural weaknesses, the UNFCCC process remains indispensable. No alternative institution possesses comparable legitimacy, inclusivity, or legal framework.
• Smaller coalitions cannot substitute for a universal negotiating platform.
• Abandonment would reduce coordination rather than accelerate progress. The system is flawed yet necessary, slow yet irreplaceable.

Conclusion

• Global climate governance reflects a fundamental contradiction. Nations recognise the need for mitigation, cooperation, and justice, yet resist bearing immediate cost.
• Political systems seek power, markets seek profit, and societies seek livelihood, each operating according to its own logic.
• The result is persistent inadequacy rather than outright failure. Negotiations continue, commitments expand, and promises multiply, yet decisive implementation remains selective.
• Humanity may withdraw from agreements, but it cannot withdraw from planetary consequences.
• The planet imposes outcomes regardless of negotiation, reminding all actors that participation in the climate system is not optional.

Why in the News?

• India’s electricity distribution companies (DISCOMs) have recorded a notable financial and operational turnaround, though concerns remain over their long-term sustainability.

What’s in Today’s Article?

• DISCOMs in India (Background, Financial Stress, Policy Reforms, State Support, Structural Challenges, Way Forward)

Understanding DISCOMs in India

• Power Distribution Companies, commonly known as DISCOMs, are responsible for the final stage of electricity delivery, distributing power to households, industries, and agricultural consumers.
• India currently has 72 DISCOMs, comprising State-owned utilities, private-sector entities, and power departments.
• Historically, DISCOMs have been the weakest link in India’s power sector, plagued by inefficiencies, mounting losses, and rising debt.
• Two indicators define their financial health:

• Aggregate Technical and Commercial (AT&C) losses, which capture losses from theft, technical inefficiencies, and billing gaps.
• ACS-ARR gap, the difference between the Average Cost of Supply (ACS) and Average Revenue Realised (ARR).

• For decades, high AT&C losses and non-cost-reflective tariffs resulted in persistent deficits, forcing State governments to periodically bail out DISCOMs.

Legacy of Financial Stress

• The roots of DISCOM losses lie in the functioning of earlier State Electricity Boards under the Electricity (Supply) Act, 1948.
• Although the law required utilities to earn modest profits, political interference, subsidised tariffs, and delayed subsidy payments weakened financial discipline.
• Between 2020-21 and 2024-25, accumulated losses rose from Rs. 5.5 lakh crore to Rs. 6.47 lakh crore, while outstanding debt touched Rs. 7.26 lakh crore.
• Non-payment of dues by consumers, delayed State subsidies, and rising power procurement costs worsened the situation.

Signs of a Turnaround

• Recent years have shown measurable improvement. According to official data, DISCOMs collectively recorded a Profit After Tax of Rs. 2,701 crore in 2024-25, a sharp contrast to losses exceeding Rs. 67,000 crore in 2013-14.
• AT&C losses declined from 22.62% to 15.04%, while the ACS-ARR gap narrowed drastically to 0.06 paise per unit, indicating near cost recovery.
• This turnaround reflects better billing efficiency, improved collections, and stronger enforcement of financial discipline.

Role of Policy Reforms

• The improvement has been driven by a series of reforms:

• Revamped Distribution Sector Scheme (RDSS): Links financial assistance to measurable performance outcomes such as feeder metering, loss reduction, and system modernisation.
• Electricity Rules and Late Payment Surcharge Rules: Enabled DISCOMs to clear legacy dues in instalments, preventing snowballing of unpaid liabilities.
• Debt Discipline Measures: Since 2022, legacy dues of nearly Rs. 1.4 lakh crore have been substantially reduced through structured repayments.

• These reforms restored confidence among power generators and fuel suppliers, stabilising the electricity supply chain.

Dependence on State Support

• Despite improvements, financial sustainability remains fragile. Many DISCOMs have posted profits only after receiving tariff subsidies and loss takeovers from State governments.
• For instance, utilities in States like Tamil Nadu and Rajasthan reported profits largely due to direct fiscal support rather than operational surplus.
• This dependence raises concerns about the durability of the turnaround, especially when future liabilities such as employee pay revisions arise.

Structural Challenges Ahead

• Unmetered Agricultural Supply: Lack of accurate data on farm power consumption distorts cost recovery.
• Free or Highly Subsidised Power: Universal free electricity benefits wealthier consumers disproportionately and weakens utility finances.
• Operational Inefficiencies: Not all States have adopted feeder segregation or smart metering at scale.

• Without addressing these structural issues, improvements may prove temporary.

Way Forward

• Long-term sustainability requires deeper reforms.
• Expanding feeder segregation, promoting solar pumps in agriculture, improving metering, and ensuring cost-reflective tariffs are essential.
• Political commitment and professional management must align to transform DISCOMs into consumer-friendly and financially viable utilities.

Context:

• The Union Budget 2026-27 (Budget 2026) received an unusually high approval rating — over 95% positive commentary — described as “businesslike, calm, short, boring and good.”
• However, after the initial euphoria settled, a controversial provision emerged - the imposition of a retrospective long-term capital gains (LTCG) tax of 12.5% on Sovereign Gold Bonds (SGBs) effective April 2026.
• The episode reopens an old debate in Indian fiscal policy — retrospective taxation, investor confidence, and policy credibility.

The “Googly” - Retrospective Tax on Sovereign Gold Bonds (SGBs):

• Background of SGB scheme:
  • It was introduced in 2015–16 when global gold prices were stable or low.
  • Objective:
    • Reduce physical gold imports
    • Improve Current Account Deficit (CAD)
    • Provide investors paper gold with 2.5% annual interest
  • Original understanding: Capital gains tax exemption if held till maturity, and the investor bears gain or loss.
  • The scheme was discontinued in 2024, prior to the global gold price surge.
• What has changed? From April 2026, retrospective LTCG tax (12.5%) will be imposed on capital gains from SGBs. It applies even to bonds purchased under earlier tax-exempt terms.

Why the Move is Problematic?

• Retrospective taxation (A policy red flag):
  • Retrospective taxation violates the principle of tax certainty, undermines predictability in fiscal policy, and damages rule of law and investor trust.
  • India has past scars. For example, the 2012 retrospective tax amendment, which was widely criticized internationally, hurting India’s investment climate.
  • The current move revives those concerns.
• Marginal revenue gain, disproportionate cost:
  • For example, this new tax will net about Rs 200 crore a year — about .005% of India’s tax receipts in 2025-26.
  • In contrast, SGBs reportedly saved substantial forex by reducing gold imports, improved CAD and supported rupee stability.
  • The government made an estimated fiscal gain of Rs 50,000 crore from borrowing from the investor (at an annual rate of 2.5%) rather than 7% from the market.
  • This trade-off appears economically inefficient.
• Impact on investor confidence:
  • Investor confidence depends on stability, contract sanctity, and policy continuity.
  • The move signals the government may alter terms ex post facto when gains accrue to investors.
  • This is particularly damaging at a time when -
    • Private investment share in GDP has fallen from about 30% peak to 20%,
    • Net FDI is barely positive,
    • Recent quarterly net FDI flows are negative, and
    • The FDI as a percentage of GDP is at its lowest since the 1990 crisis.
  • The retrospective tax may further worsen India’s investment climate.

Broader Structural Issues Highlighted:

• Decline in private investment:
  • Persistent stagnation in domestic private capital formation, capital flight tendencies (Indians investing abroad), and foreign investors are cautious.
  • Reasons cited:
    • 2012 retrospective tax amendment.
    • Model Bilateral Investment Treaty (BIT), 2015: Provides for a 5-year cooling period (meaning a divorce agreement between a foreign and a domestic firm could only be achieved after 5-years), and restrictive dispute resolution (mandatory domestic adjudication).
    • Revised BIT (3-year cooling, possible international arbitration) shows partial correction.
  • The deeper problem is policy overconfidence and bureaucratic rigidity.
• Budget-making process - The secrecy question:
  • The economists criticizes: Colonial-era legacy of secretive Budget preparation. Lack of collaborative and consultative policymaking.
  • Suggested reform: Open, participatory budget process; pre-budget consultations with stakeholders, and greater transparency in tax changes.
  • Major reforms today (GST, trade deals, deregulation) are increasingly happening outside the Budget — a structural shift in governance style.

Positive Features of Budget 2026 Excluding Retrospective Tax:

• Policy continuity: Income tax reforms announced earlier, ongoing GST rationalization, deregulation backed by NITI Aayog.
• Trade openness: New trade agreements, increased economic openness, movement away from aggressive “self-reliance” rhetoric toward pragmatic integration.
• Structural reforms outside budget: Trade and regulatory reforms de-linked from Budget speech, more continuous reform process (unlike 1991’s one-shot Budget reform).

Key Challenges for India:

• Restoring private investment momentum
• Reversing FDI decline
• Ensuring tax certainty and contract sanctity
• Reforming BIT framework
• Improving regulatory predictability
• Strengthening institutional decision-making processes

Way Forward:

• Make retrospective taxation legally impermissible: Amend tax law to prohibit ex post facto taxation, institutionalize tax stability principles.
• Improve budget governance: Transparent, consultative budget drafting; white papers before major tax changes; strengthen Parliamentary scrutiny.
• Reform investment framework: Further liberalize BIT provisions, fast-track dispute resolution, strengthen commercial courts and arbitration mechanisms.
• Focus on investment revival: Improve ease of doing business, reduce compliance burdens, encourage domestic capital formation, strengthen financial sector depth.
• Signal policy credibility: Reverse or grandfather retrospective SGB tax, restore investor trust proactively.

Conclusion:

• Budget 2026 stands as a paradox. On the surface, it reflects administrative maturity, fiscal stability, and reform continuity. Yet, the retrospective taxation of Sovereign Gold Bonds (SGBs) introduces a serious credibility risk.
• In an economy grappling with declining private investment and weak FDI flows, policy certainty is more valuable than marginal tax revenue. Economic growth depends not merely on macro numbers but on trust between state and investor.
• India aspires to become Viksit Bharat. That journey demands not just bold reforms — but predictable, principled policymaking. And in taxation, certainty is not a luxury. It is the foundation.

Why in news?

Union Cooperation Minister Amit Shah has launched Bharat Taxi, India’s first cooperative-based ride-hailing platform, positioning it as an alternative to private cab aggregators. The initiative is aimed at strengthening the cooperative movement while improving access to affordable and people-centric urban transport.

According to the Ministry of Cooperation, Bharat Taxi places drivers—called Sarathis—at the centre of the platform. Unlike aggregator-led models, drivers will have ownership, operational control, and greater say over earnings, reducing dependence on commission-heavy digital platforms.

The model seeks to enhance driver autonomy and ensure fairer income distribution through a cooperative structure.

What’s in Today’s Article?

• What is Bharat Taxi
• Bharat Taxi’s Cooperative Business Model
• Pilot Cities and Expansion
• The Road Ahead

What is Bharat Taxi?

• A cooperative-based ride-hailing platform - Bharat Taxi is a ride-hailing app built on a cooperative model, aimed at offering an alternative to privately owned cab aggregators.
• Drivers at the core - According to the Ministry of Cooperation, the platform places drivers at the centre of ownership, operations, and value creation, allowing them greater control over earnings and day-to-day functioning.
• Reducing dependence on private aggregators - The model is intended to help drivers move away from exploitative practices often associated with aggregator-led platforms that limit income and autonomy.
• Not a direct government initiative - While government-backed, Bharat Taxi is not run by the Government of India. It is operated by Sahakar Taxi Cooperative Limited, an independent cooperative entity.
• Cooperative expertise behind the project - The initiative is supported by individuals who have previously worked with Amul, drawing on experience from one of the world’s most successful cooperative movements.

Bharat Taxi’s Cooperative Business Model

• Driver-owned structure - Under Bharat Taxi, every driver—called a Sarathi—is a member of the cooperative and holds five shares, giving them a stake in ownership and decision-making.
• Zero-commission pricing - Unlike private aggregators, Bharat Taxi does not deduct commission per ride. Drivers instead pay a fixed daily fee of ₹30 (₹18/day for auto-rickshaws) to use the platform, addressing long-standing concerns over high commissions and limited autonomy.
• Lower fares for passengers - With no per-ride commission, cost savings are passed on to riders. Officials estimate fares to be up to 30% cheaper than those charged by platforms like Uber and Ola.
• Large driver base - Bharat Taxi has stated that it already has over four lakh registered drivers, indicating significant early adoption of the cooperative model.
• Safety and verification measures - The platform includes in-built safety features, a dedicated helpline, and driver verification. In partnership with Delhi Police, 35 special booths have been set up to quickly address passenger complaints and concerns.
• Pricing Philosophy - Bharat Taxi aims to offer fair, transparent pricing, avoiding opaque surge pricing. The goal is not to be the cheapest, but the most reasonable and predictable.

Pilot Cities and Expansion

• Bharat Taxi pilots began in Delhi-NCR and Rajkot in late 2025.
• The service has since expanded to cities like Ahmedabad, where adoption has been rapid.
• As per government data:
  • Around 4 lakh drivers are registered.
  • Over 10,000 rides daily are being completed.
• The aim is nationwide operations by 2029, making it the largest ride-hailing platform in India.
• Early Adopters: Hope Mixed with Caution
  • The early adopters have welcomed the zero-commission model but report initially lower earnings due to fewer bookings.
  • Despite this, both drivers remain hopeful that demand will rise as awareness grows.
  • Many drivers say they prefer a driver-owned, cooperative platform over private aggregators that take high commissions.
  • Some passengers report teething troubles, such as:
    • Staff unfamiliar with software at booths.
    • Longer queues.
  • Higher fares at certain locations compared to earlier prepaid services.
  • Officials acknowledge early challenges and say pricing algorithms and operations will improve as more data is gathered.

The Road Ahead

• Bharat Taxi’s early phase reflects strong government backing, rapid driver onboarding, and high expectations, but also the realities of building scale in a competitive market.
• Its success will depend on increasing ride volumes, refining pricing, and delivering consistent user experience, while staying true to its cooperative promise.

Why in news?

The expiry of the New START Treaty marks the end of five decades of binding nuclear limits between the US and Russia, raising global concerns about strategic stability and the risk of a renewed nuclear arms race.

What’s in Today’s Article?

• Cold War Arms Control Efforts
• Post–Cold War Nuclear Arms Reduction
• A New Phase in US–Russia Arms Control
• After New START: What Lies Ahead

Cold War Arms Control Efforts

• In the late 1960s, at the peak of the Cold War, the Soviet Union began expanding its intercontinental ballistic missile (ICBM) arsenal to match the United States.
• In January 1967, US President Lyndon B. Johnson warned that Moscow was developing an anti-ballistic missile (ABM) system around its capital, raising fears of a destabilising first-strike capability.
• SALT Talks and Early Treaties
  • To curb the escalating arms race, Washington and Moscow launched the Strategic Arms Limitation Talks (SALT) in November 1969.
  • These negotiations produced two key agreements:
    • The Anti-Ballistic Missile (ABM) Treaty, which capped missile defence systems at 200 (later reduced to 100) per side.
    • An interim SALT accord under which both sides agreed not to expand their ICBM capabilities.
• SALT II and Its Collapse
• Negotiations for a follow-up pact, SALT II, began in 1972 and culminated in a 1979 agreement limiting nuclear delivery vehicles—such as ICBMs, submarine-launched missiles, and strategic bombers—to 2,250 each.
• However, after the Soviet invasion of Afghanistan in December 1979, US President Jimmy Carter withdrew the treaty from Senate consideration, and it was never ratified.
• Unravelling of Controls
  • Years later, the US unilaterally exited the ABM Treaty in 2002, arguing it constrained defences against terrorist and rogue-state missile threats.
  • This marked an early step in the gradual erosion of Cold War-era arms control frameworks.

Post–Cold War Nuclear Arms Reduction

• After the Cold War, the US and Russia signed the Strategic Arms Reduction Treaty (START I) in 1991.
• It required both sides to cap deployed strategic delivery systems at 1,600 and reduce nuclear warheads to 6,000.
• Crucially, START I mandated the destruction of excess missiles and bombers, backed by an intrusive verification regime that included on-site inspections, data exchanges, and satellite monitoring.
• Because of the Soviet Union’s collapse and efforts to denuclearise former Soviet states, implementation took longer than expected.
• The reductions were completed only in December 2001, and the treaty expired in 2009.
• START II: An Unfulfilled Follow-on
  • A second agreement, START II, was signed in January 1993. It aimed to cut strategic warheads further, to 3,000–3,500 by 2003.
  • However, the treaty never entered into force due to delays in ratification in both countries.
  • After the US withdrew from the Anti-Ballistic Missile Treaty in 2002, Russia formally withdrew from START II, and plans for a START III agreement collapsed.
• SORT: A Temporary Bridge
  • In May 2002, the two countries adopted the Strategic Offensive Reductions Treaty (SORT), committing to reduce operationally deployed warheads to 1,700–2,200.
  • SORT came into force in 2003 after legislative approval in both countries.
  • It was conceived as an interim arrangement and was later superseded by the New START treaty in 2011.

A New Phase in US–Russia Arms Control

• In 2010, US President Barack Obama and Russian President Dmitry Medvedev signed the New Strategic Arms Reduction Treaty (New START).
• The agreement came into force on February 5, 2011, marking a renewed commitment to nuclear arms control after earlier treaties expired.
• Key Limits and Reductions
  • Under New START, both countries agreed to cap their strategic nuclear warheads at 1,550 and limit strategic delivery vehicles to 800, including both deployed and non-deployed systems.
  • These cuts were substantial, requiring about a 30% reduction in warheads and a 50% reduction in delivery vehicles compared to the earlier SORT agreement.
• Verification and Inspections
  • To ensure compliance, the treaty established a strong verification mechanism.
  • Each side was permitted to conduct up to 18 on-site inspections per year of the other’s strategic nuclear facilities, along with regular data exchanges.
• Extension and Expiry
  • The treaty allowed for a one-time extension. In 2021, after President Joe Biden took office, the US and Russia mutually agreed to extend New START by five years, setting its expiry date at February 5, 2026.

After New START: What Lies Ahead

• End of Legal Limits on Nuclear Arsenals - With the treaty’s expiry, binding caps on US and Russian nuclear warheads cease to exist. As of 2025, the US holds about 5,277 warheads and Russia around 5,449, raising concerns over unchecked expansion.
• Rising Risks and Loss of Transparency - Experts warn that the absence of arms control increases the danger of accidental or unintended escalation, especially amid regional conflicts involving Russia or China. Ending limits also reduces transparency over nuclear forces.
• Erosion of Nuclear Deterrence - Analysts argue that traditional nuclear deterrence is weakening as a stabilising force. The breakdown of arms control norms signals a shift toward open-ended strategic competition among major powers.
• Global Implications and Non-Proliferation Concerns - The lapse could undermine restraint worldwide, just ahead of the 2026 Nuclear Non-Proliferation Treaty review. While rethinking arms control is possible, experts caution that even limited mutual restraint is safer than unconstrained nuclear rivalry.

Context

• India’s latest defence budget represents a notable shift after years of stagnation, marking the first sustained double-digit increase in allocation and reaching 2% of GDP.
• In an unstable global environment, this increase signals strategic intent and a renewed emphasis on preparedness.
• However, higher spending alone does not guarantee improved outcomes.
• The real test lies in whether the allocation can translate into faster acquisition, stronger domestic capacity, and long-term capability through systemic reform rather than incremental adjustment.

Key Feature of the Budget Regarding the Defence

• A key feature of the budget is the renewed focus on modernisation, particularly through a significant rise in capital expenditure.
• This shift corrects years of imbalance in which revenue expenses dominated at the cost of future readiness.
• The Indian Air Force and Army benefit from substantial increases aimed at platforms, heavy vehicles, and weapons, strengthening operational credibility across multiple theatres.
• At the same time, the weakened currency reduces the purchasing power of these allocations, especially for imported systems, partially offsetting the headline gains.

The Good and the Bad

• The emphasis on domestic manufacturing is reinforced by reserving a large share of acquisition spending for local firms, further advancing indigenisation.
• Defence exports have expanded rapidly over the past decade, reflecting growing industrial competence and policy continuity.
• This progress shows that domestic production is no longer aspirational but achievable.
• However, not all services benefit equally. Despite its expanding role in the Indian Ocean, the Navy receives a comparatively modest increase, largely because of its ability to absorb funds efficiently.
• This exposes a paradox in allocation logic, where institutional efficiency may unintentionally constrain future growth.
• Another structural issue is the continued burden of pensions, which consume a substantial share of overall spending.
• Historically treated separately, their inclusion today limits flexibility and distorts comparisons with earlier periods when defence allocations were significantly higher as a share of GDP. 

Bureaucracy and Delays

• Beyond allocations, entrenched bureaucracy remains a central obstacle. Procurement procedures, particularly cost-focused procurement norms, favour established firms and disadvantage smaller players critical for innovation in a technology-driven sector.
• Without assured demand, predictable timelines, and long-term planning, private participation remains constrained.
• Chronic delays in major acquisition programmes further weaken outcomes.
• Projects approved decades ago continue to face shifting timelines, eroding deterrence and forcing repeated extensions of legacy platforms.
• These delays also result in underutilisation of allocated funds, with large sums returning unspent at the end of the fiscal year.
• The absence of a non-lapsable modernisation fund compounds this problem, allowing short-term fiscal convenience to override sustained capability development.

Challenges and the Way Ahead: R&D Lies Scattered

• Investment in R&D has increased, but research remains fragmented and poorly integrated with production and deployment.
• Despite the dual-use nature of many technologies, translation into operational advantage is limited.
• Overall spending on research remains low compared to global peers, and private-sector participation is minimal.
• Without unified direction and stronger collaboration with industry, incremental funding increases are unlikely to yield transformative results.
• The broader conceptual challenge lies in how defence spending is perceived.
• Framed narrowly as a trade-off against welfare, its wider contribution to infrastructure, employment, and growth is often overlooked.
• Programmes such as border connectivity and indigenous shipbuilding demonstrate strong multiplier effects across the economy, supporting long-term development alongside security. 

Conclusion

• The current budget reflects ambition and improved prioritisation, but outcomes will depend on execution.
• Aligning spending with industrial capacity, accelerating decision-making, integrating research, and revisiting outdated financial structures are essential.
• If pursued seriously, these changes can convert higher allocations into durable strength, reinforcing national autonomy in an increasingly contested world.

Context

• From the Aravalli ranges to coastal mangroves, India stands at a profound moral and constitutional crossroads.
• Amitav Ghosh’s The Hungry Tide offers a powerful metaphor for the present moment: nature remembers what law and power attempt to erase.
• Environmental safeguards are increasingly diluted in the name of development, raising concerns that the Constitution may become a silent witness to ecological loss.
• Such damage is neither abstract nor distant; its consequences, like the tide, return with relentless force.

Policy Shifts and Judicial Retreat in Environmental Protection

• Recent regulatory changes reflect a weakening of environmental safeguards.
• On December 18, 2025, non-coal mining projects were permitted to undertake Environmental Impact Assessments (EIA) without specifying land location or area, reversing the principle of prior scrutiny.
• This was compounded by the Supreme Court’s recall of Vanashakti vs Union of India (2025), which had prohibited retrospective environmental clearances.
• Although a suo motu stay by Chief Justice Surya Kant temporarily restored institutional credibility, the broader trend reveals increasing judicial leniency, treating environmental law as a procedural formality rather than a substantive safeguard.

The Aravalli Controversy: Redefining Ecology Through Reductionism

• The Aravalli ranges illustrate this shift most starkly. As the ecological backbone of north-western India, they prevent desertification, recharge groundwater, stabilise soil, and sustain biodiversity.
• Earlier rulings, notably M.C. Mehta vs Union of India (2004) and subsequent orders up to 2010, recognised irreversible damage caused by unregulated mining and rejected narrow, height-based definitions.
• However, issue relating to Definition of Aravalli Hills and Ranges (2025) accepted a 100-metre elevation criterion, ignoring hydrology, ecological continuity, and geomorphology.
• This reductionist approach departs from the precautionary principle articulated in Vellore Citizens’ Welfare Forum vs Union of India (1996) and effectively removes protection from vast ecologically significant areas.

Constitutional Implications: Articles 21, 48A, 14, and Environmental Rights

• These developments have serious constitutional
• The right to a clean and healthy environment has been read into Article 21, while Article 48A obligates the state to protect and improve the environment, and Article 51A(g) places a corresponding duty on citizens.
• Judicial interpretations that enable ecological exclusion hollow out these provisions.
• Moreover, selective protection based solely on altitude creates an arbitrary classification with no rational nexus to ecological goals, violating the equality principle under Article 14.
• Such arbitrariness undermines both environmental justice and constitutional coherence.

Judicial Leniency and the Erosion of Environmental Deterrence

• The dilution of protection extends beyond the Aravallis. Courts and regulatory bodies increasingly approve projects based on assurances of mitigation rather than strict enforcement.
• Despite Common Cause vs Union of India (2017) clearly rejecting the legalisation of environmental violations after the fact, post-facto and conditional clearances have become routine.
• This erosion weakens the deterrent function of environmental law and signals that compliance is negotiable.

Mangroves, Coastal Ecology, and the Illusion of Compensation

• The consequences are especially visible in coastal ecosystems. Mangroves function as flood buffers, carbon sinks, and biodiversity reservoirs.
• Judicial approvals allowing the felling or transplantation of tens of thousands of mangrove trees for infrastructure represent a serious ecological setback.
• Reliance on compensatory afforestation ignores ecological science: mature mangrove ecosystems take decades to develop and cannot be recreated elsewhere.

Infrastructure in Fragile Ecosystems: The Char Dham Project

• A similar pattern emerges in the Himalayan region through the Char Dham highway project.
• A 2025 study identified 811 landslide-prone zones along the route, underscoring the fragility of the Himalayan ecosystem.
• Although ecological importance was acknowledged in Citizens for Green Doon vs Union of India (2021), wider roads were permitted on strategic grounds.
• Subsequent floods and disturbances raise serious questions about this balancing exercise, especially regarding intergenerational responsibility.

Procedural Inequality and Corporate Advantage

• Environmental governance increasingly favours economically powerful actors.
• Large corporations navigate clearance processes with ease, while public objections are marginalised and hearings curtailed.
• Environmental compliance becomes a checklist, undermining procedural fairness and public trust. This imbalance violates equality guarantees and entrenches perceptions of regulatory capture.

The Judiciary’s Changing Role and the Need for Institutional Reform

• Indian courts have historically been custodians of environmental rights.
• In M.C. Mehta vs Kamal Nath (1996), the Supreme Court affirmed the public trust doctrine, recognising natural resources as held by the state for the people.
• Departures from this jurisprudence necessitate reform, including regular sittings of the Supreme Court’s Green Bench and similar benches in High Courts.

Conclusion

• Ease of doing business must not become ease of environmental destruction.
• When law forgets what nature remembers, the Constitution risks standing mute before irreversible loss. Environmental harm is cyclical, cumulative, and unforgiving.
• Restoring environmental justice requires reaffirming constitutional duties, ecological science, and fairness, recognising development as a process constrained by environmental limits rather than a justification for their erosion.

Why in the News?

• Denotified, nomadic and semi-nomadic tribes have demanded constitutional recognition and a separate column in the 2027 Census to address long-standing political and administrative marginalisation.

What’s in Today’s Article?

• Denotified Tribes (Background, Socio-Economic Status, Classification, Govt Initiatives)
• News Summary (Demand for Constitutional Recognition)

Denotified Tribes in India: Background and Evolution

• Denotified Tribes (DNTs) are communities that were historically labelled as “criminal tribes” under colonial rule.
• The Criminal Tribes Act, 1871, empowered the British administration to notify entire communities as criminal by birth, subjecting them to surveillance, restrictions on movement, and social stigma.
• This law was later amended in 1924, further institutionalising discrimination.
• Following Independence, the Criminal Tribes Act was repealed in 1952, and the affected communities were officially “denotified”.
• Since then, these groups have been known as Denotified, Nomadic and Semi-Nomadic Tribes (DNTs).
• However, repeal of the law did not automatically translate into social acceptance or legal empowerment.
• The stigma of criminality continued through policing practices and social exclusion.

Socio-Economic Status of Denotified Tribes

• Denotified Tribes remain among the most marginalised communities in India, facing severe deficits in education, health, housing, and livelihood security.
• Many DNT communities follow nomadic or semi-nomadic lifestyles, limiting access to land ownership, ration cards, caste certificates, and welfare schemes.
• Studies and official committees have repeatedly highlighted that literacy levels among several DNT groups are extremely low, with some communities reporting negligible school completion rates.
• Economic survival often depends on informal labour, traditional occupations, or seasonal migration, making them vulnerable to exploitation.

Administrative Classification and Policy Gaps

• Unlike Scheduled Castes (SCs) and Scheduled Tribes (STs), Denotified Tribes do not have a dedicated constitutional Schedule.
• Over time, many DNT communities were subsumed under SC, ST or OBC categories, while others were left completely unclassified.
• The Idate Commission (2017) identified around 1,200 denotified, nomadic and semi-nomadic communities, of which about 267 communities were not included in any constitutional category.
• Even those included within SC, ST or OBC lists often fail to access benefits due to intense competition with relatively better-off groups.
• This administrative misclassification has resulted in policy invisibility, as there is no reliable population data on DNTs at the national level.

Government Initiatives for Denotified Tribes

• The Union government has introduced welfare measures, including the Scheme for Economic Empowerment of DNTs (SEED), covering education, health insurance, housing and livelihood support.
• However, utilisation remains low due to the absence of proper DNT certificates issued by States and Union Territories.
• Between 2020 and 2025, actual spending under SEED remained significantly below allocated amounts, reflecting implementation challenges rather than a lack of need. 

News Summary

• In the run-up to the 2027 caste-based Census, Denotified, Nomadic and Semi-Nomadic Tribes across northern India have renewed demands for a separate Census column and code.
• They argue that without explicit enumeration, they will once again be statistically erased.
• The Ministry of Social Justice and Empowerment has recommended their inclusion to the Office of the Registrar General of India, which has agreed in principle to include them in the caste enumeration exercise.
• However, community leaders stress that mere inclusion is insufficient without a distinct category.
• Additionally, there is a growing demand for constitutional recognition through a separate Schedule, similar to SCs and STs.
• Leaders also seek sub-classification within DNTs to recognise “graded backwardness” between settled and nomadic groups, drawing support from recent Supreme Court judgments allowing sub-classification within reserved categories.

Significance of the Demand

• A separate Census entry would provide credible population data, strengthening the basis for targeted welfare schemes, budgetary allocation, and political representation.
• Constitutional recognition would acknowledge historical injustice and provide legal backing for affirmative action.
• Without these reforms, DNTs risk remaining trapped between categories, unable to compete within SC, ST or OBC lists, yet lacking an identity of their own.

Why in News?

• A series of major disasters struck India in 2025, exposing serious gaps in the identification and management of disaster victims.
• In response to this, the National Disaster Management Authority (NDMA) has released India’s first comprehensive Standard Operating Procedure (SOP) for handling Mass Fatality Incidents (MFIs).
• The guidelines, titled “National Disaster Management Guidelines on Comprehensive Disaster Victim Identification and Management”, were released on Republic Day by the Ministry of Home Affairs, marking 25 years since the 2001 Gujarat earthquake.

What’s in Today’s Article?

• Need for these Guidelines
• Key Objectives of the Guidelines
• Salient Features of the SOP
• Institutional and Operational Framework
• Challenges Highlighted in the Document
• Way Forward Suggested by NDMA
• Conclusion

Need for these Guidelines:

• India witnessed at least five major mass fatality events in 2025, including -
  • Air India crash, Ahmedabad (June)
  • Chemical factory explosion, Sangareddy, Telangana (June)
  • Gambhira bridge collapse, Vadodara (July)
  • Flash floods, Dharali, Uttarakhand (August)
  • Delhi car bomb blast (November)
• Several victims in such incidents remained unidentified or were identified after significant delays, causing prolonged distress to families and administrative challenges.

Key Objectives of the Guidelines:

• Ensure: Scientific, coordinated and humane identification of disaster victims.
• Enable: Dignified handling and handover of human remains.
• Address: Institutional, logistical and forensic gaps.
• Standardise: Roles of multiple stakeholders across local, State and Central levels.

Salient Features of the SOP:

• Four-stage victim identification process: The guidelines lay down a globally accepted, structured approach -
  • Systematic recovery of human remains
  • Collection of post-mortem data (physical, dental, forensic details)
  • Collection of ante-mortem data from families (medical records, dental records, personal identifiers)
  • Reconciliation and identification, followed by release of remains to families
• National Dental Data Registry:
  • One of the most notable and innovative recommendations.
  • As teeth and jaws often survive fire, explosions and decomposition, dental records can serve as reliable identifiers.
  • Aligns with Interpol Disaster Victim Identification (DVI) standards.
• Use of advanced forensic disciplines:
  • For example,
    • Forensic odontology: Dental identification.
    • Forensic archaeology: Identification of remains months or years after disasters, especially in landslides or buried sites.
  • Brings together multiple forensic branches under one coordinated framework.
• Humanitarian forensics approach: Recognises that mass autopsies may not always be feasible, emphasising -
  • Sensitivity to community customs and religious practices
  • Emotional support and counselling for families
  • Focus on dignity, not merely procedural compliance

Institutional and Operational Framework:

• The expansive document details the role of all stakeholders in the aftermath of a disaster.
• For example,
  • Composition of identification teams.
  • Coordination among police, medical, forensic, administrative and disaster response agencies.
• It acknowledges the reality of multi-agency presence and overlapping jurisdictions at disaster sites.

Challenges Highlighted in the Document:

• Operational challenges:
  • Fragmentation and commingling of remains.
  • Rapid decomposition in hot and humid climates.
  • Charring in fires and displacement during floods.
• Logistical gaps:
  • Inadequate mortuary capacity.
  • Lack of cold chain transport and storage.
  • Absence of reliable manifests or records in many disaster scenarios.
• Institutional lacunae:
  • Shortage of trained forensic manpower.
  • Weak inter-agency coordination.
  • Leadership and command challenges during large-scale disasters.

Way Forward Suggested by NDMA:

• Creating: Organisational structures for Disaster Victim Identification (DVI) across India.
• Training: Experts from all relevant forensic fields.
• Forming: Specialised DVI teams, ideally in each State.
• Fast-tracking: Implementation on a “war footing”.
• Adaptation: Interpol best practices, contextualised for Indian conditions.
• Others:
  • Strengthen Disaster Risk Reduction (DRR) and post-disaster governance.
  • Integrate science, technology and humanitarian values.
  • Reinforce India’s compliance with international forensic standards.

Conclusion:

• The NDMA’s first-ever SOP on Disaster Victim Identification (DVI) marks a critical shift from ad hoc responses to an institutionalised, humane and scientific framework for managing mass fatalities.
• By combining global best practices with indigenous realities, and by placing dignity of victims and emotional well-being of families at the centre, the guidelines represent a mature evolution of India’s disaster management architecture.
• Effective implementation and sustained capacity-building will determine whether this landmark initiative translates into real relief on the ground during future disasters.

Why in news?

The Union Budget’s allocation of ₹20,000 crore over five years for carbon capture, utilisation and storage (CCUS) signals a major push towards cutting emissions from hard-to-abate sectors.

By backing CCUS technologies, the government aims to lower industrial carbon footprints and support India’s long-term goal of achieving net-zero emissions.

What’s in Today’s Article?

• About Carbon Capture, Utilisation and Storage (CCUS) Solutions
• Budget Push for Carbon Capture in India
• Economic Benefits of CCUS

About Carbon Capture, Utilisation and Storage (CCUS) Solutions

• Capturing carbon emissions - CCUS refers to a set of technologies that capture carbon dioxide (CO₂) released during industrial activities before it enters the atmosphere. CO₂ is the main driver of global warming and climate change.
• Storage or reuse of captured CO₂ - Once captured, CO₂ can either be stored safely underground in geological formations for long periods or utilised by converting it into useful products such as chemicals, fuels, or construction materials.
• Not a single technology - CCUS is not one technology, but a range of methods and processes aimed at preventing CO₂ emissions. Different industries use different capture, transport, storage, or utilisation techniques.
• Limited deployment so far - Although CCUS technologies have existed for decades, their use has been limited due to high costs, safety concerns, and scaling challenges. Deployment has picked up only recently.
• Global status of CCUS - Most active CCUS projects are currently in the US, Europe, and China. Even so, only about 50 million tonnes of CO₂ are captured annually—less than 0.5% of global emissions.
• Crucial for net-zero goals - With global emissions remaining high, CCUS is increasingly seen as essential. There is no credible pathway to achieving net-zero emissions by 2050 or controlling global warming without large-scale adoption of CCUS technologies.

Budget Push for Carbon Capture in India

• With emissions expected to rise in the near and medium term due to rapid industrialisation and infrastructure expansion, CCUS is crucial for India to meet its long-term net-zero by 2070 commitment.
• India’s CCUS journey so far
  • Since announcing its net-zero goal at the 2021 Glasgow climate summit, India has accelerated efforts to develop indigenous CCUS technologies tailored to domestic conditions.
  • Pilot and demonstration CCUS projects are already running in steel, cement and chemical sectors.
  • Potential large-scale capture and storage sites have been mapped, and Centres of Excellence—such as at IIT Bombay and JNCASR Bengaluru—are driving research.
  • While CCUS science is well understood, major engineering, process and material innovations are needed across capture, transport, storage and utilisation to improve efficiency, safety and affordability.
  • 
• Policy and R&D roadmap
  • In December, the Department of Science and Technology released a CCUS R&D roadmap for 2030, identifying key technology, finance and policy bottlenecks slowing adoption.
• Role of the ₹20,000 crore budget outlay
  • The five-year budget allocation aims to bridge the critical funding gap for field testing and scale-up.
  • Many CCUS solutions have proven laboratory success but require real-world deployment to reach commercial readiness.
  • The funding seeks to raise technology readiness levels so systems can capture or store 100–500 tonnes of CO₂ per day.
  • Experts expect several CCUS technologies to reach commercial deployment in India within five years.

Economic Benefits of CCUS

• Hard-to-abate industries - CCUS is crucial for sectors like steel and cement, where carbon dioxide emissions arise not just from fuel use but are an inherent part of the production process. Switching to renewable power alone cannot eliminate these emissions.
• Only viable decarbonisation route - In cement and steel, most CO₂ emissions come from chemical processes rather than energy consumption. CCUS is therefore the only practical solution to significantly reduce their carbon footprint.
• Budget focus on major emitters - The ₹20,000 crore budget allocation is aimed at end-use CCUS applications in power, steel, cement, refineries and chemicals—industries that together account for the bulk of India’s CO₂ emissions.
• Boosting export competitiveness - Indian exporters in these sectors face carbon-related trade barriers such as the EU’s Carbon Border Adjustment Mechanism (CBAM). CCUS adoption can help lower embedded emissions, making Indian products more competitive in global markets.

Why in news?

In a significant hearing, the Supreme Court of India sharply questioned the data practices of Meta, the parent company of WhatsApp, suggesting that the extraction of user data may resemble “theft” rather than voluntary exchange.

A three-judge Bench observed that in markets dominated by a few digital platforms, user consent may be illusory, as individuals have little real choice but to accept data-sharing terms. The court indicated that market dominance can convert consent into coercion, raising concerns that go beyond privacy to challenge the very economic foundations of data-driven business models.

The observations signal a possible judicial rethink on how consent, competition, and data ownership are understood in India’s rapidly expanding digital ecosystem, with far-reaching implications for Big Tech regulation in the world’s largest internet market.

What’s in Today’s Article?

• Meta–WhatsApp Regulatory Friction
• Why Meta Took the Dispute to the Supreme Court
• What Happens Next?

Meta–WhatsApp Regulatory Friction

• The dispute began in 2021, when WhatsApp introduced a “take-it-or-leave-it” privacy policy update.
• The revised policy enabled greater data sharing between WhatsApp and its parent company, Meta.
• Although WhatsApp maintained that end-to-end encryption continued to protect message content, regulators flagged concerns over the use of metadata for advertising and business profiling.
• Competition Commission of India’s Intervention
  • The Competition Commission of India (CCI) viewed the update as an abuse of dominant market position.
  • Key observations included:
    • For most Indian users, opting out of WhatsApp is not a realistic choice
    • WhatsApp functions as India’s “digital town square”, making consent effectively coerced
  • Penalty imposed: ₹213.14 crore (≈ $25 million) on Meta
  • While financially modest for a trillion-dollar firm, it marked a strong regulatory signal.
  • Meta challenged the CCI order before the National Company Law Appellate Tribunal (NCLAT).
• NCLAT’s Nuanced Verdict
  • The NCLAT delivered a split decision:
    • Upheld the CCI’s finding that Meta had abused its dominant position
    • Retained the monetary penalty
    • Set aside a critical CCI directive that would have barred Meta from sharing WhatsApp user data with its other entities for five years for advertising purposes
  • The NCLAT’s reasoning rested on:
    • A traditional view of corporate integration, treating data-sharing between parent and subsidiary as a common digital-age practice
    • Concern that a five-year moratorium would be a disproportionate “structural remedy”, potentially disrupting Meta’s platform synergies
    • Preference to let privacy-specific legislation, rather than competition law, govern data flows
• With the Digital Personal Data Protection Act, 2023 on the horizon, the tribunal appeared inclined to defer finer questions of consent and data use to the emerging data protection regime.

Why Meta Took the Dispute to the Supreme Court?

• Dissatisfied with both the financial penalty and the reasoning adopted by the NCLAT, Meta appealed to the Supreme Court of India.
• Meta sought relief from what it viewed as excessive regulatory interference in its data-sharing practices and business model.
• Supreme Court’s Hard Line on Market Dominance
  • The apex court showed little inclination to dilute scrutiny.
  • Chief Justice remarked that opting out of WhatsApp in India is akin to “opting out of the country”, underlining the network effects that lock users into dominant digital platforms.
  • This observation reinforced the idea that user consent in monopolistic markets may be illusory.
• Shift from Privacy to Economic Value of Data
  • A more far-reaching argument came from Justice Joymalya Bagchi, who reframed the debate beyond privacy to the economic value of personal data.
  • India’s Digital Personal Data Protection Act, 2023 primarily safeguards informational privacy
  • However, the law is largely silent on “rent-sharing”—who benefits economically when platforms monetise user data
  • Justice Bagchi questioned: if behavioural data of Indian users fuels targeted advertising, who owns the profits generated from that data?
• Towards a ‘Data-as-Property’ Approach
  • The court’s reasoning hinted at a data-as-property framework, aligning India closer to the Digital Services Act of the European Union, rather than the more laissez-faire approach associated with the United States.
  • By impleading the Ministry of Electronics and Information Technology (MeitY), the court compelled the government to reflect on a deeper policy question:
    • Is privacy protection alone sufficient, or
    • Does the economic value of citizens’ digital footprints warrant a new form of sovereign and regulatory protection?

What Happens Next?

• Court’s Growing Discomfort with the ‘Free Internet’ Model - The remark that users are “not only consumers, but also products” captures the court’s unease with digital business models built on harvesting personal data. Targeted ads following private conversations are seen as intrusions, not innovation.
• Transparency vs Real Understanding - The court signalled that formal consent does not equal informed consent in a country with uneven digital literacy.
• Ultimatum to Meta - The court has issued a clear warning: Meta must give an undertaking to stop sharing personal data, or risk dismissal of its case and the imposition of “very strict conditions”.
• Message from the Judiciary - The judiciary’s stance is unmistakable—Indian users are no longer passive data sources. The long-tolerated model of invisible data extraction may be nearing its end.

Context

• India’s recent trade agreement with the United States represents a defining moment in the country’s evolving global trade strategy.
• Positioned within a broader architecture of strategic trade partnerships, the agreement reflects India’s shift toward predictable, rules-based, and large-scale trade engagement.
• More than a reduction in tariffs, the deal signals India’s growing confidence as a global economic actor and underscores the deepening strategic alignment between the world’s two largest democracies. 

The Road to Agreement on India-US Deal and India’s Expanding Network of Trade Partnerships

• The Road to Agreement: Negotiation, Diplomacy and Policy Certainty
  • The India-U.S. trade deal emerged from nearly a year of sustained dialogue, technical negotiations, and quiet diplomacy.
  • The complexity of the process highlights the sensitivity of bilateral trade relations and the significance of the outcome.
  • The agreement to reduce U.S. tariffs on Indian goods to 18% marks a critical departure from previously elevated tariff levels that had reached up to 50%.
  • This shift restores competitiveness for Indian exporters, enhances policy predictability, and reflects the effectiveness and resilience of India’s negotiating approach.
• India’s Expanding Network of Trade Partnerships
  • The agreement with the United States must be viewed as part of India’s broader strategy of forging comprehensive trade partnerships across regions.
  • Trade agreements with the European Union, the United Kingdom, and the European Free Trade Association provide India with preferential access to European markets, while agreements with Australia and New Zealand strengthen its engagement with the Pacific region.
  • Similarly, trade arrangements with the United Arab Emirates and Oman enhance access to West Asia.
  • Within this expanding network, the United States holds particular importance as the world’s largest import market and India’s single largest export destination, accounting for nearly one-fifth of India’s total exports.

Immediate Gains from US-India Trade Deal

• Sectoral Impact: Boosting Employment-Intensive Exports
  • The most immediate gains from the tariff reduction are expected in employment-intensive export sectors.
  • Apparel, a major contributor to industrial employment, stands to benefit significantly as Indian products now face lower tariffs than those of key competitors such as Vietnam and Bangladesh in the U.S. market.
  • Other sectors, including gems and jewellery, marine products, processed foods, footwear, and leather, also gain from improved price competitiveness.
  • Even modest tariff reductions in these industries translate into meaningful cost advantages, encouraging capacity expansion and deeper integration into global supply chains.
• Enhancing Global Competitiveness and Manufacturing Ambitions
  • By lowering U.S. tariffs on Indian goods, the agreement strengthens India’s competitive position relative to major exporting economies such as China, Bangladesh, Sri Lanka, Brazil, South Africa, Pakistan, and ASEAN countries.
  • This enhanced competitiveness directly supports India’s long-term objective of becoming a global manufacturing hub.
  • Improved market access, combined with greater policy certainty, creates conditions conducive to investment, scale, and productivity growth across export-oriented industries.
• Beyond Trade: Strategic and Institutional Implications
  • The agreement’s significance extends beyond immediate economic benefits.
  • Reduced trade frictions create momentum for advancing negotiations under the proposed India-U.S. Bilateral Trade Agreement, opening avenues for deeper cooperation in regulatory alignment, market access, and supply-chain resilience.
  • The deal also encourages joint ventures, technology partnerships, and investment in high-value sectors, creating innovation, skill development, and employment generation.
  • These outcomes reinforce mutual interests in strengthening trusted supply chains and advancing innovation-led growth.

Trade, Trust and Strategic Alignment

• From a strategic perspective, the trade deal contributes to a broader reset in India-U.S. relations grounded in trust and shared priorities.
• Stronger economic ties complement cooperation in strategic forums such as the Quad, where supply-chain resilience and reliable partnerships are key objectives.
• By aligning economic engagement with strategic cooperation, the agreement reinforces a stable and forward-looking bilateral relationship.

Conclusion

• The India-U.S. trade agreement is not merely a technical adjustment of tariff rates; it represents a strategic consolidation of economic and diplomatic ties.
• By enhancing export competitiveness, supporting employment-intensive sectors, and reinforcing India’s global trade integration, the deal lays the foundation for sustained bilateral growth.
• As policy momentum now shifts toward implementation, the focus turns to industry to leverage these opportunities through investment, innovation, and scale.
• Ultimately, the agreement marks a renewed, balanced, and strategic partnership poised to shape India-U.S. cooperation in the decades ahead.

Context

• The Union Budget 2026–27 is framed as a critical step in India’s journey towards Viksit Bharat by 2047.
• It prioritises advanced technology sectors such as artificial intelligence, biopharma, semiconductors and critical minerals, reflecting long-term development ambitions.
• While the strategic direction is appropriate, the success of these initiatives depends on effective implementation, adequate fiscal space and the pace at which outcomes can be delivered in a resource-constrained environment. 

Key Highlights of Union Budget 2026-27

• Restructuring of Expenditure and Changing Fiscal Priorities
  • A key feature of recent fiscal policy has been the restructuring of government expenditure to accommodate new priorities.
  • The share of revenue expenditure in total expenditure has declined from 88 per cent in 2014–15 to about 77 per cent in 2026–27 (BE).
  • This reduction has been driven largely by a decline in central subsidies, allowing a corresponding increase in capital spending.
  • This shift signals a move away from consumption-oriented spending towards asset creation and long-term growth.
• Capital Expenditure: Role in Growth and Emerging Concerns
  • Public capital investment has played a crucial role in supporting economic recovery in the post-pandemic period.
  • Capital expenditure as a share of GDP has remained elevated, supporting infrastructure creation and demand.
  • However, the momentum of this spending has weakened. Capital expenditure growth declined sharply from 28.3 per cent in 2023–24 to 4.2 per cent in 2025–26 (RE).
  • Although growth is budgeted at 11.5 per cent in 2026–27 (BE), it is only marginally higher than nominal GDP growth, leaving capital expenditure nearly stagnant at around 3.1 per cent of GDP.
  • Repeated shortfalls between budgeted and actual spending raise concerns about execution capacity.
• Revenue Prospects and Tax Buoyancy Challenges
  • On the revenue side, tax projections appear cautious and achievable. However, the low buoyancy of gross tax revenues remains a constraint.
  • Overall tax buoyancy is estimated at 0.8, below the benchmark of one. While direct taxes show relatively strong responsiveness, indirect taxes lag behind. In particular, GST collections are not expected to keep pace with GDP growth.
  • With rising developmental and welfare commitments, strengthening indirect tax responsiveness becomes essential for maintaining fiscal balance.

Finance Commission Transfers and Centre–State Fiscal Relations

• The recommendations of the Sixteenth Finance Commission retain the share of States in the divisible pool of central taxes at 41 per cent.
• However, the discontinuation of revenue deficit grants and the absence of sector- or State-specific grants have reduced overall transfers.
• Finance Commission grants are projected to decline from 0.43 per cent of GDP in 2025–26 to 0.33 per cent in 2026–27.
• This reduction may constrain subnational governments at a time when their role in delivering public services and development programmes is expanding. 

Challenges and the Way Forward

• Fiscal Consolidation and the Debt–Deficit Strategy
  • The pace of fiscal consolidation has slowed considerably in recent years.
  • While the fiscal deficit to GDP ratio continues to decline, the annual reduction has narrowed to just 0.1 percentage point in 2026–27 (BE).
  • The shift in focus from deficit targeting to debt-GDP targeting does not significantly improve transparency, as both indicators are closely linked to nominal GDP growth.
  • A clear medium-term glide path outlining targets and assumptions would strengthen fiscal credibility.
• Rising Debt and Interest Payment Pressures
  • High public debt levels have increased interest payment pressures.
  • The effective interest rate on central government debt is projected to rise to 7.12 per cent in 2026–27, with interest payments absorbing nearly 40 per cent of revenue receipts.
  • This limits fiscal space for essential primary expenditure. Persistent high public borrowing also risks crowding out private investment, which could weaken medium-term growth prospects.

Conclusion

• The Budget presents a coherent roadmap for long-term development, with emphasis on technology-led growth and public investment.
• However, achieving these objectives requires careful balancing of ambition with fiscal prudence.
• Strengthening tax buoyancy, ensuring credible capital expenditure outcomes, maintaining adequate transfers to States and restoring momentum in fiscal consolidation are essential.
• Sustained economic expansion ultimately depends on macroeconomic stability and sustainability, both of which require disciplined and transparent fiscal management.