PRESIDENTIAL REFERENCE
The Supreme Court's advisory role, as outlined in Article 143, traces its origins to the Government of India Act of 1935. This act granted the Governor-General the authority to seek the opinion of the federal court on significant legal matters.
A comparable feature exists in the Canadian Constitution, where the Supreme Court of Canada is empowered to give advisory opinions on legal issues referred by either the federal or provincial governments. In contrast, the U.S. Supreme Court has consistently refused to issue advisory opinions to the executive branch, adhering strictly to the principle of separation of powers embedded in the American Constitution
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Under Article 143 of the Constitution, the President has the authority to seek the Supreme Court’s opinion on any legal or factual issue deemed to be of public significance. This referral is made based on the advice of the Union Council of Ministers. According to Article 145, such matters must be examined by a bench comprising at least five judges of the Supreme Court. Following the hearing, the Court may deliver its opinion as it deems appropriate. While the opinion is not legally binding on the President and does not set a judicial precedent, it holds considerable persuasive value. Consequently, it is generally respected and adhered to by both the executive and the judiciary |
3. Past instances
- Since 1950, approximately fifteen presidential references have been made to the Supreme Court, excluding the most recent one. Below are brief summaries of some notable opinions delivered by the Court in response to these references.
- The first such reference came in the Delhi Laws Act case (1951), where the Court outlined the concept of delegated legislation, allowing the legislature to delegate certain law-making powers to the executive for efficient law implementation.
- In the Kerala Education Bill case (1958), the Court established the principle of harmonious interpretation between Fundamental Rights and the Directive Principles of State Policy, while also clarifying the constitutional safeguards for minority-run educational institutions under Article 30.
- In the Berubari Union case (1960), the Court held that any transfer or acquisition of Indian territory requires a constitutional amendment as per Article 368. The Keshav Singh case (1965) addressed the scope of legislative powers and privileges.
- In the Presidential Election case (1974), the Court ruled that elections for the President must proceed even if there are vacancies in the electoral college due to the dissolution of state assemblies.
- The Special Courts Bill reference (1978) was particularly important, as the Court clarified that it can choose not to respond to a reference, that the questions posed must be clear and precise, and that the judiciary must not intrude into Parliament's domain when giving its opinion.
- The Third Judges case (1998) resulted in a comprehensive set of guidelines shaping the collegium system for appointing judges to the higher judiciary.
- Although the Supreme Court is not bound to respond to every reference, it has declined to provide an opinion on only one occasion — in 1993, concerning the Ram Janmabhoomi dispute
4. Current reference
- The current presidential reference stems from a recent Supreme Court ruling that established specific timelines for the President and State Governors to act on Bills passed by State legislatures.
- In that judgment, the Court also asserted that the decisions made by the President and Governors regarding such Bills are open to judicial scrutiny. This reference has posed 14 key questions, mainly focusing on the interpretation of Articles 200 and 201 of the Constitution.
- The central government has raised concerns about whether courts can impose timelines when the Constitution itself does not prescribe any. It also questions whether the actions of the President and Governors, taken before a Bill becomes law, can be subjected to judicial review. Additionally, the reference seeks clarity on the scope of the Supreme Court’s powers under Article 142.
- This legal dispute has largely been driven by political tensions between the Union government and Opposition-led State governments. In its judgment, the Supreme Court had referred to the timelines mentioned in a Ministry of Home Affairs Office Memorandum concerning the President's assent to Bills.
- Notably, in the Cauvery dispute reference (1992), the Court had stated that, in an advisory capacity, it does not have the authority to review its previous rulings.
- Nevertheless, a definitive opinion in the present case is expected to bring clarity to important constitutional questions, thereby aiding in the effective functioning of federalism and democratic governance
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For Prelims: Article 143, Supreme Court's advisory jurisdiction
For Mains: General Studies II - Indian Polity & Governance
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Previous Year Questions
Prelims
1. Consider the following statements: (UPSC 2017) 1. The Election Commission of India is a five-member body.
2. Union Ministry of Home Affairs decides the election schedule for the conduct of both general elections and bye-elections.
3. Election Commission resolves the disputes relating to splits/mergers of recognised political parties.
Which of the statements given above is/are correct? A. 1 and 2 only B. 2 only C. 2 and 3 only D. 3 only Answer: D 2. With reference to the Constitution of India, prohibitions or limitations or provisions contained in ordinary laws cannot act as prohibitions or limitations on the constitutional powers under Article 142. It could mean which one of the following? (UPSC CSE 2019) Answer: B 3. Consider the following statements : (UPSC 2021) 1. In India, there is no law restricting the candidates from contesting in one Lok Sabha election from three constituencies.
2. In the 1991 Lok Sabha Election, Shri Devi Lal contested from three Lok Sabha constituencies.
3. As per the- existing rules, if a candidate contests in one Lok Sabha election from many constituencies, his/her party should bear the cost of bye-elections to the constituencies vacated by him/her in the event of him/her winning in all the constituencies.
Which of the statements given above is/are correct?
A. 1 only B. 2 only C. 1 and 3 D. 2 and 3
4. Consider the following statements about Electoral Bond Scheme 2018: (RPSC RAS Prelims 2018)
(A) The aim of this scheme is to bring about transparency in the funding process of political parties.
(B) Only the political parties recognized by the Election Commission which secured not less than one per cent of the votes polled in the last general election to the House of People or the Legislative Assembly of the State shall be eligible to receive the Electoral Bonds.
(C) Electoral Bonds shall be valid for fifteen calendar days from the date of issue.
(D) The Electoral Bond deposited by an eligible political party in its account shall be credited on the same day.
Which of the above statements are correct?
1. Only (A) and (B)
2. (A), (B), (C) and (D)
3. Only (B), (C) and (D)
4. Only (A), (C) and (D)
Answer: 2
5. With reference to the PM CARES Fund, consider the following statements: (AFCAT 27 2022)
I. The amount collected by it directly goes to the Consolidated Fund of India.
II. It can avail donations from the foreign contribution and donations to fund can also avail 100% tax exemption.
Which of the above statements is/are correct?
A. I only B. II only C. Both I and II D. Neither I nor II
Answer: B
6. The Prime Minister's National Relief Fund is operated by which one of the following bodies? (CDS 2019)
A. The Prime Minister's Office (PMO)
B. The National Disaster Management Authority
C. The Ministry of Finance
D. The National Development Council (NDC)
Answer: A
Mains 1. In the light of recent controversy regarding the use of Electronic Voting Machines (EVM), what are the challenges before the Election Commission of India to ensure the trustworthiness of elections in India? (UPSC 2018) 2. Discuss the role of the Election Commission of India in the light of the evolution of the Model Code of Conduct. ( UPSC 2022) |
FOSSIL FUELS
2. About Fossil Fuels
Fossil fuels are hydrocarbon-based energy sources derived from the remains of ancient plants and animals buried and subjected to geological processes over millions of years. The three primary types of fossil fuels are coal, oil (petroleum), and natural gas. These fuels have been pivotal in powering the industrialization and development of modern societies, serving as the mainstay for electricity generation, transportation, and numerous industrial processes.
Challenges regarding Fossil Fuels
Despite their widespread use, fossil fuels pose significant challenges:
- The combustion of fossil fuels releases carbon dioxide (CO2) and other greenhouse gases, contributing to global warming and climate change.
- Burning fossil fuels releases pollutants that degrade air quality, leading to respiratory issues and environmental damage.
- Fossil fuels are finite resources, and their extraction raises concerns about depletion and environmental degradation, such as oil spills and coal mining impacts.
- Dependence on fossil fuels, often concentrated in specific regions, raises concerns about geopolitical stability and energy security.
- The concept of achieving net-zero emissions by 2050 involves balancing the amount of greenhouse gases emitted with an equivalent amount removed from the atmosphere.
- This ambitious target aims to mitigate the impacts of climate change and limit global warming to 1.5 degrees Celsius above pre-industrial levels.
- Achieving net-zero emissions requires a transition to renewable energy, energy efficiency, and carbon capture technologies.
3. Dubai Consensus
The Dubai Consensus, adopted at COP28 in December 2023, represents a significant step forward in the global fight against climate change.
Dubai Consensus and Fossil Fuels
- The Dubai Consensus, a recent agreement, marks a significant departure by formally acknowledging that emissions from fossil fuels play a central role in driving global warming. Contrary to previous agreements that broadly addressed "greenhouse gas emissions," this marks the first explicit acknowledgement since 1995 that fossil fuels, including coal, oil, and gas, are the primary contributors to climate change.
- Despite the acknowledgement of the role of fossil fuels, particularly coal, in global warming, the Dubai Consensus does not signal an imminent end to the era of fossil fuels. Notably, it's crucial to recognize that the agreement falls short of providing specific timelines or commitments to phase out these fuels entirely.
- The Glasgow Climate Conference in 2021 marked a notable shift when countries, for the first time, agreed to address the impact of coal, the fossil fuel with the most substantial global warming footprint. However, the commitment made was to "phase down" coal rather than "phase out," and it lacked a specific termination year.
- The Dubai Consensus, by encompassing all fossil fuels, acknowledges the necessity of eliminating these energy sources to prevent a 1.5-degree Celsius rise in global average temperatures. However, the absence of concrete timelines reflects the challenges posed by varying energy needs and sources among nations.
- Large developing countries like India and China have raised objections to singling out coal, emphasizing its crucial role in lifting populations out of poverty and ensuring energy security. Both countries have substantial coal reserves, with India being a net importer. The consensus brings parity among fossil fuels, recognizing that all need eventual elimination.
4. Challenges in the Immediate Replacement of Fossil Fuels
The immediate replacement of fossil fuels poses substantial challenges, primarily due to the deeply entrenched and efficient infrastructure supporting the extraction, processing, and distribution of coal, oil, and gas. Over nearly two centuries of industrialization, a sophisticated system has evolved to convert these fossil fuels into electricity, petrol, diesel, and various other combustible products.
- Fossil fuel infrastructure is well-established, encompassing extraction, processing, and distribution networks for coal, oil, and gas.
- Power plants and refineries are optimized for the combustion of fossil fuels, contributing to the reliability and stability of energy supply.
- Fossil fuels offer on-demand availability, providing a consistent and controllable source of energy.
- Natural sources such as solar and wind, while cleaner, face challenges due to intermittency (nighttime for solar, variable wind patterns) and lack of effective energy storage infrastructure.
- Energy storage infrastructure for renewable sources is inadequate to handle the intermittency of solar and wind power, hindering their widespread adoption.
- Developing efficient and scalable energy storage solutions is crucial for transitioning away from fossil fuels.
- National plans, such as India's National Electricity Plan 2022-27, continue to include substantial additions to coal-fired capacity, highlighting the persistent reliance on fossil fuels.
- The infrastructure and investment in new coal-fired power plants reflect the ongoing challenges in immediately replacing fossil fuels.
- The Dubai Consensus acknowledges the necessity of transitioning away from fossil fuels but suggests the potential role of "transition fuels" to facilitate the process while ensuring energy security.
- While the consensus does not define these fuels, natural gas is considered a contender due to its lower emissions compared to coal. However, concerns exist regarding methane emissions associated with natural gas production.
- The COP deliberations face challenges due to the substantial presence of oil and gas manufacturers. Hosting a climate summit in a petro-state adds complexity to addressing the transition from fossil fuels.
- Natural gas, often considered a transition fuel, has advantages in reducing emissions when producing electricity and providing heat. However, criticisms argue that framing natural gas in this context may disproportionately benefit countries with existing production and distribution capabilities.
5. Dubai Consensus on Methane Emissions
- The Dubai Consensus underscores the critical importance of addressing methane emissions, recognizing methane as a potent greenhouse gas with significantly higher heat-trapping capabilities than carbon dioxide. The consensus acknowledges that substantial and accelerated reductions in non-carbon-dioxide emissions, particularly methane emissions, are essential to limit global warming and prevent average temperatures from exceeding a 1.5-degree Celsius increase by the end of the century.
- The agreement emphasizes the need for urgent action, setting a target for humanity to significantly reduce methane emissions by the year 2030. It aligns with the Global Methane Pledge, signed by nearly 150 countries at the COP-27 summit held in Egypt the previous year. The pledge commits countries to cut methane emissions by 30% of 2020 levels by the end of this decade.
- China and the United States, two major global players, have taken specific steps to address industrial methane emissions resulting from natural gas production. This collaborative effort signifies a shared commitment to tackling a significant source of methane release and contributing to the global reduction target.
- India, while resisting external pressure to cut methane emissions, has outlined plans to enhance the efficiency of its energy production processes. The nation contends that a substantial portion of its methane emissions originates from the agricultural sector. Despite resistance, India's commitment to making energy production more efficient aligns with the broader goal of reducing greenhouse gas emissions.
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For Prelims: Fossil Fuels, Cop 28, Net zero emission, air pollution, Dubai Consensus, Global Methane Pladge, India's National Energy Plan, climate change
For Mains:
1. Discuss the challenges and opportunities associated with transitioning away from fossil fuels to achieve net-zero emissions by 2050. (250 Words)
2. Discuss the potential economic benefits of transitioning to a green economy. How can this transition create new jobs and opportunities? (250 Words)
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Previous Year Questions
1. The UN Framework Convention on Climate Change (UNFCCC) has announced which country to host the 28th Conference of the Parties (COP28) in 2023? (SSC CGL 2023) A. UAE B. US C. UK D. Russia
2. The United Nations Framework Convention on Climate Change (UNFCCC) is an international treaty drawn at (UPSC 2010) A. United Nations Conference on the Human Environment, Stockholm, 1972 B. UN Conference on Environment and Development, Rio de Janeiro, 1992 C. World Summit on Sustainable Development, Johannesburg, 2002 D. UN Climate Change Conference Copenhagen, 2009
3. UNFCCC (United Nations Framework Convention on Climate Change) entered into from - (Sr. Teacher Gr II NON-TSP G.K. 2018) A. 21 March 1994 B. 5 June 1992 C. 12 May 1991 D. 5 June 1993
4. The 'Paris Agreement' adopted in Conference of the Parties (COP 21) in December 2015 will be effective provided the document is signed by: (UPSC CAPF 2016) A. 51 UNFCCC parties accounting for at least 51% of global greenhouse gas emission
B. 51 UNFCCC parties accounting for at least 55% of global greenhouse gas emission
C. 55 UNFCCC parties accounting for at least 55% of global greenhouse gas emission
D. 75 UNFCCC parties accounting for at least 51% of global greeenhouse gas emission
5. The term ‘Intended Nationally Determined Contributions’ is sometimes seen in the news in the context of (UPSC 2016) (a) pledges made by the European countries to rehabilitate refugees from the war-affected Middle East
6. With reference to the Agreement at the UNFCCC Meeting in Paris in 2015, which of the following statements is/are correct? (UPSC 2016)
Select the correct answer using the code given below. (a) 1 and 3 only (b) 2 only (c) 2 and 3 only (d) 1, 2 and 3
7. Consider the following statements with reference to Organisation for Economic Co-operation and Development (OECD): (RBI Grade B 2022) 1. OECD is an official Permanent observer to the United Nations and is referred to as a think-tank or as a monitoring group.
2. India is not a member of OECD.
3. OECD is funded by its member countries.
Which of the statement given above is/ are correct? A.1 only B.1 and 2 only C.2 and 3 only D.1, 2 and 3 E.2 only Answer: D 8. Which one of the following is associated with the issue of control and phasing out of the use of ozone-depleting substance? (UPSC CSE 2015) A.Bretton woods conference
B. Montreal Protocol
C. Kyoto Protocol
D. Nagoya Protocol
Answer: B
9. Headquarters of the World Meteorological Organization is located in (NDA 2017)
A. Washington
B. Geneva
C. Moscow
D. London
Answer: B
10. With reference to the Agreement at the UNFCCC Meeting in Paris in 2015, which of the following statements is/are correct? (UPSC 2016)
1. The Agreement was signed by all the member countries of the UN and it will go into effect in 2017
2. The Agreement aims to limit greenhouse gas emissions so that the rise in average global temperature by the end of this century does not exceed 2°C or even 1.5°C above pre-industrial levels.
3. Developed countries acknowledged their historical responsibility in global warming and committed to donate $ 1000 billion a year from 2020 to help developing countries to cope with climate change.
Select the correct answer using the code given below:
A. 1 and 3 only B. 2 only C. 2 and 3 only D. 1, 2 and 3
Answer: B
11. A new type of El Nino called El Nino Modoki appeared in the news. In this context, consider the following statements: (UPSC 2010)
1. Normal El Nino forms in the Central Pacific ocean whereas El Nino Modoki forms in the Eastern Pacific ocean.
2. Normal El Nino results in diminished hurricanes in the Atlantic ocean but El Nino Modoki results in a greater number of hurricanes with greater frequency.
Which of the statements given above is/are correct?
A. 1 only B. 2 only C. Both 1 and 2 D. Neither 1 nor 2
Answer: B
12. La Nina is suspected to have caused recent floods in Australia. How is La Nina different from El Nino? (UPSC 2011)
1. La Nina is characterized by unusually cold ocean temperature in the equatorial Indian Ocean whereas El Nino is characterized by unusually warm ocean temperature in the equatorial Pacific Ocean.
2. El Nino has an adverse effect on the south-west monsoon of India, but La Nina has no effect on the monsoon climate.
Which of the statements given above is/are correct?
A. 1 only B. 2 only C. Both 1 and 2 D. Neither 1 nor 2
Answer: D
13. Consider the following statements: (MPSC 2017)
a. La Nina is a little girl.
b. During the time of La Nina cold water in the ocean rises to the surface.
c. La Nina strengthens the Indian monsoon.
d. During the time of El Nino, trade winds weaken, and warm water moves east in the ocean. Which of the above statements is/are correct?
A. Only a and b B. a, b and c C. Only b and c D. All of the above
Answer: D
14. Which of the following statements regarding 'Green Climate Fund' is/are correct? (UPSC 2015)
1. It is intended to assist the developing countries in adaptation and mitigation practices to counter climate change.
2. It is founded under the aegis of UNEP, OECS, Asian Development Bank and World Bank. Select the correct answer using the code given below.
A. 1 only B. 2 only C. Both 1 and 2 D. Neither 1 nor 2
Answer: A
15. In the context of any country, which one of the following would be considered as part of its social capital? (UPSC 2019)
A. The proportion of literature in the population
B. The stock of its buildings, other infrastructure and machines
C. The size of population in the working age group
D. The level of mutual trust and harmony in the society
Answer: D
16. The International Development Association, a lending agency, is administered by the (UPSC 2010)
A. International Bank for Reconstruction and Development
B. International Fund for Development
C. United Nations Development Programme.
D. United Nations Industrial Development Organization
Answer: A
Answers: 1-A, 2-B, 3-A, 4-C, 5-B, 6-B, 7-D, 8-B, 9-B, 10-B, 11-B, 12-D, 13-D, 14-A, 15-D, 16-A
Mains
1. Describe the major outcomes of the 26th session of the Conference of the Parties (COP) to the United Nations Framework Convention on Climate Change (UNFCCC). What are the commitments made by India in this conference? (UPSC 2021)
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FOREIGN DIRECT INVESTMENT (FDI)
- India's net foreign direct investment (FDI) inflows experienced a decline, decreasing by nearly 31% to $25.5 billion during the first 10 months of the 2023-24 fiscal year. The Finance Ministry attributed this decline to a broader trend of slowing investments in developing countries, while expressing optimism for a potential increase in investments in the current calendar year.
- Although global FDI flows overall saw a 3% rise to approximately $1.4 trillion in 2023, economic uncertainty and elevated interest rates impacted global investment, resulting in a 9% decrease in FDI flows to developing nations, as outlined in the Ministry's February assessment of economic performance.
- Reflecting the global trend of reduced FDI flows to developing countries, gross FDI inflows to India also experienced a slight decline, from $61.7 billion to $59.5 billion during the period from April 2023 to January 2024. In terms of net inflows, the corresponding figures were $25.5 billion versus $36.8 billion. The decrease in net inflows was primarily attributed to an increase in repatriation, while the decline in gross inflows was minimal.
- While a modest uptick in global FDI flows is anticipated for the current calendar year, attributed to a decrease in inflation and borrowing costs in major markets that could stabilize financing conditions for international investment, significant risks persist, according to the Ministry. These risks include geopolitical tensions, elevated debt levels in numerous countries, and concerns regarding further fragmentation of the global economy
- FDI involves the transfer of funds and resources from one country to another. This capital inflow can help stimulate economic growth in the host country by providing funds for investment in infrastructure, technology, and other areas.
- FDI often leads to the creation of jobs in the host country. When foreign companies establish subsidiaries or invest in existing businesses, they typically hire local employees, which can help reduce unemployment and improve living standards
- Foreign investors often bring advanced technologies, processes, and management practices to the host country. This technology transfer can enhance the host country's productivity, competitiveness, and industrial capabilities
- FDI can provide access to new markets for both the host country and the investing company. Foreign investors can tap into the host country's consumer base, while the host country gains access to the investing company's global distribution networks.
- FDI can contribute to overall economic development in the host country by promoting industrialization, improving infrastructure, and fostering innovation and entrepreneurship.
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Automatic Route: Under the automatic route, FDI is allowed without the need for prior approval from the RBI or the government. Investors only need to notify the RBI within a specified time frame after the investment is made. This route is available for most sectors, except those that are prohibited or require government approval.
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Government Route: In sectors or activities that are not covered under the automatic route, FDI requires government approval. Investors must apply for approval through the Foreign Investment Facilitation Portal (FIFP) or the Foreign Investment Promotion Board (FIPB), depending on the sector.
- Under the automatic route, FDI of up to 100% is allowed for manufacturing of automobiles and components.
- For the manufacturing of electric vehicles (EVs), 100% FDI is allowed under the automatic route.
- In single-brand retail trading, 100% FDI is allowed, with up to 49% allowed under the automatic route. Beyond 49%, government approval is required.
- Multi-brand retail trading (supermarkets and department stores) with FDI is permitted in some states, subject to certain conditions and restrictions. The FDI limit is typically capped at 51%.
- FDI in the insurance sector is allowed up to 74%, with up to 49% under the automatic route. Beyond 49%, government approval is needed
- In the telecom sector, 100% FDI is allowed, with up to 49% under the automatic route. Beyond 49%, government approval is required
- In the defense sector, FDI up to 74% is allowed under the automatic route, with government approval required for investments beyond 49%
- In most segments of the media and broadcasting sector, including print and digital media, 100% FDI is allowed, with up to 49% under the automatic route
- FDI is prohibited in the atomic energy sector, which includes activities related to the production of atomic energy and nuclear power generation.
- FDI is generally prohibited in the gambling and betting industry, which includes casinos and online betting platforms
- FDI is not allowed in the lottery business, except for state-run lotteries
- FDI is prohibited in chit funds, which are traditional Indian savings and credit schemes.
- Nidhi companies are non-banking finance companies (NBFCs) that facilitate mutual benefit funds. FDI is typically not permitted in these entities
- While FDI is allowed in single-brand retail trading, it is generally prohibited in multi-brand retail trading of agricultural products. Some states have allowed it under specific conditions, but this remains a highly regulated area.
- FDI is not allowed in the trading of transferable development rights (TDRs) pertaining to the construction of real estate
- FPIs invest in a country's financial markets, primarily by buying and selling securities traded on stock exchanges and fixed-income instruments like bonds and government securities
- FPIs often seek to diversify their investment portfolios by spreading their investments across different asset classes, sectors, and countries. This diversification helps manage risk and enhance returns
- FPIs have the flexibility to buy and sell securities in the secondary market, providing liquidity to the market and contributing to price discovery
- FPIs typically have a shorter investment horizon compared to Foreign Direct Investors (FDIs). They may engage in short-term trading or hold securities for a few months to a few years.
- FPIs are subject to regulatory frameworks and restrictions in the countries where they invest. These regulations are designed to ensure that foreign investments do not pose undue risks to the local financial markets and economy.
| FPI (Foreign Portfolio Investment) | FDI (Foreign Direct Investment) |
| FPI involves the purchase of financial assets such as stocks, bonds, mutual funds, and other securities in a foreign country. These investments are typically made with the intention of earning returns on capital and do not result in significant control or ownership of the underlying businesses | FDI entails making an investment in a foreign country with the primary objective of establishing a lasting interest and significant control or influence over a business enterprise or physical assets. FDI often involves the acquisition of a substantial ownership stake (typically at least 10%) in a company or the establishment of new business operations. |
| FPI is generally characterized by a shorter investment horizon. Investors in FPI may engage in trading and portfolio rebalancing activities, and their investments are often more liquid. The focus is on earning capital gains and income from investments. | FDI is characterized by a longer-term commitment. Investors in FDI intend to engage in the day-to-day management or decision-making of the business, contribute to its growth and development, and generate profits over an extended period. |
| FPI investors typically have little to no influence or control over the companies in which they invest. They are passive investors who participate in the financial markets and rely on market dynamics to drive returns. | FDI investors actively participate in the management and decision-making of the businesses they invest in. They often seek to exercise control over company operations and strategy, which may include appointing board members or key executives. |
| FPI investments are often made through financial instruments like stocks, bonds, and securities. Investors may use instruments like mutual funds or exchange-traded funds (ETFs) to gain exposure to foreign markets | FDI investments involve a direct equity stake in a company, either through share acquisition or the establishment of a subsidiary or branch in the host country. FDI can also involve the purchase of real assets such as land, factories, or infrastructure |
| FPI can provide short-term capital inflows, but it may be more susceptible to market volatility and sudden capital outflows. It may not have as direct an impact on job creation and economic development as FDI. | FDI often contributes to long-term economic development by creating jobs, stimulating infrastructure development, transferring technology and expertise, and enhancing the competitiveness of local industries |
| FPI investments are subject to regulations that vary by country and may include foreign ownership limits, reporting requirements, and tax considerations. | FDI is subject to regulations that can be more stringent and may involve government approval, sector-specific conditions, and investment protection measures |
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For Prelims: Economic and Social Development-Sustainable Development, Poverty, Inclusion, Demographics, Social Sector Initiatives, etc
For Mains: General Studies III: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment
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Previous Year Questions
1. Both Foreign Direct Investments (FDI) and Foreign Institutional Investor (FII) are related to investment in a country. (UPSC CSE 2011)
Which one of the following statements best represents an important difference between the two?
A.FII helps bring better management skills and technology, while FDI only brings in capital
B.FII helps in increasing capital availability in general, while FDI only targets specific sectors C.FDI flows only into the secondary markets, while FII targets primary market
D.FII is considered to the more stable than FDI
Answer (B)
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FUEL GAS DESULPHURISATION (FDG)
- Flue gas is produced as a result of burning fossil fuels and contains several harmful pollutants such as carbon dioxide (COâ‚‚), sulphur dioxide (SOâ‚‚), nitrogen oxides, and particulate matter.
- Among these, flue gas desulphurisation (FGD) systems are specifically designed to remove SOâ‚‚ emissions. Since SOâ‚‚ is acidic in nature, it is neutralised using a basic substance within the FGD process.
- There are three main types of FGD technologies used globally: dry sorbent injection, wet limestone scrubbing, and seawater-based removal. In the dry sorbent method, a fine powdered material such as limestone is introduced into the flue gas stream, where it chemically reacts with SOâ‚‚. The resulting compounds are then extracted using equipment like electrostatic precipitators or fabric filters.
- The wet limestone technique, which is widely adopted due to its high efficiency, uses a slurry of limestone instead of dry powder. When SOâ‚‚ comes into contact with this slurry, it forms gypsum—a stable byproduct that has commercial use, particularly in the construction sector.
- For power plants located near coastlines, the seawater method is often employed. In this process, seawater captures the SOâ‚‚ from the flue gas. The used water is then treated adequately before being released back into the ocean, ensuring minimal environmental impact
- In 2015, the Union Ministry of Environment introduced regulations requiring all 537 coal-based thermal power plants (TPPs) across India to install flue gas desulphurisation (FGD) systems in order to curb sulphur dioxide (SOâ‚‚) emissions. The initial deadline for compliance was set for 2018.
- However, only a small number of power plants managed to meet this target. By April 2025, the timeline had been extended, with revised deadlines staggered between 2027 and 2029, based on the classification of each TPP. Notably, the installation of an FGD unit typically requires about two years.
- As per a government update released on August 1, 2024, only 39 out of the 537 coal-fired TPPs had completed FGD installation. Subsequently, on December 30, 2024, the Ministry of Environment, Forest and Climate Change (MoEFCC) issued another notification, postponing the compliance deadline by an additional three years, but without providing any justification for the delay.
- In April 2025, a report commissioned by the Principal Scientific Adviser’s (PSA) office recommended that the Ministry consider withdrawing the 2015 directive that mandated FGD units across all coal-fired power plants in India
- SOâ‚‚ emissions are dangerous due to their role in acid rain formation, air pollution, and public health hazards. That is why technologies like Flue Gas Desulphurisation (FGD) are crucial in reducing SOâ‚‚ from industrial sources like power plants
- Sulphur dioxide (SOâ‚‚) is a significant pollutant that contributes to global warming and poses serious respiratory health risks. In the atmosphere, SOâ‚‚ can transform into other sulphur compounds, which may then interact with various chemicals to generate particulate matter.
- Research based on atmospheric modelling indicates that approximately 15% of India’s ambient PM2.5 levels are linked to coal combustion. Of that, around 80% results from secondary particulate matter created by SOâ‚‚ emissions from burning coal.
- Therefore, implementing Flue Gas Desulphurisation (FGD) systems is crucial to reducing this major source of PM2.5 pollution
- Installing flue gas desulphurisation (FGD) systems involves substantial financial investment. According to estimates by the Central Electricity Authority, the installation cost is around ₹1.2 crore per megawatt (MW). As of April 2025, India’s coal-based power generation capacity was 2,19,338 MW—accounting for over 46% of the nation’s total installed power capacity—and this figure is projected to grow.
- At a press briefing on June 10, Union Power Minister Manohar Lal Khattar noted that an additional 97,000 MW of capacity is planned, and incorporating FGD systems for this expansion would require an estimated ₹97,000 crore. He emphasized the need to weigh this carefully, ensuring public health isn't compromised, while also avoiding a sharp rise in electricity tariffs or increased emissions.
The issue of installing Flue Gas Desulphurisation (FGD) units in India’s thermal power plants lies at the intersection of environmental responsibility, public health, and economic feasibility. While FGDs are essential to control sulphur dioxide (SOâ‚‚) emissions—major contributors to air pollution and PM2.5 formation—implementation has been sluggish due to high installation costs, regulatory delays, and lack of political urgency. With India’s coal power capacity set to expand, the environmental costs of inaction could be significant, undermining the country’s clean air targets and affecting millions of lives.
At the same time, the power sector faces pressure to keep tariffs affordable and ensure energy security. Although installing FGDs will raise electricity costs modestly, experts argue that these represent necessary and predictable investments in public health and environmental sustainability. The way forward requires a balanced approach: one that internalizes the cost of pollution, streamlines implementation timelines, and ensures the power sector does not externalize its environmental burden onto the public
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For Prelims: Flue Gas Desulphurisation, Pollutants removed by FGD (especially SOâ‚‚)
For Mains: GS III - India’s coal-based installed power capacity
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Previous Year Questions
1.With reference to the “New York Declaration on Forests”, which of the following statements are correct? (UPSC CSE 2020)
Select the correct answer from the above given
A.1, 2 and 4
B.1, 3 and 5
C.3 and 4
D.2 and 5
Answer (A)
2.Consider the following: (UPSC CSE 2019)
Which of the above are released into atmosphere due to the burning of crop/biomass residue?
A.1 and 2 only
B.2, 3 and 4 only
C.1 and 4 only
D.1, 2, 3 and 4
Answer (D)
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FREE TRADE AGREEMENT
1. Context
2. About the Free Trade Agreement
- A Free Trade Agreement (FTA) is an agreement between two or more countries to reduce or eliminate barriers to trade, such as tariffs, quotas, and subsidies.
- FTAs can also include provisions on other issues, such as investment, intellectual property, and labour standards.
- The goal of an FTA is to promote trade and economic growth between the signatory countries.
- By reducing or eliminating trade barriers, FTAs can make it easier for businesses to export their goods and services to other countries, which can lead to increased production, employment, and innovation.
3. Types of Free Trade Agreement
- Bilateral Free Trade Agreement (BFTA) involves two countries, aiming to promote trade and eliminate tariffs on goods and services between them. It establishes a direct trade relationship, allowing for a more focused and tailored agreement between the two nations.
- Multilateral Free Trade Agreement (MFTA) Involving three or more countries, an MFTA seeks to create a comprehensive trade bloc, promoting economic integration on a larger scale. It requires coordination among multiple parties, addressing diverse economic interests and fostering a broader regional economic landscape.
- Regional Free Trade Agreement (RFTA) involves countries within a specific geographic region, aiming to enhance economic cooperation and integration within that particular area. It focuses on addressing regional economic challenges and fostering collaboration among neighbouring nations.
- Preferential Trade Agreement (PTA) involves a reciprocal reduction of tariffs and trade barriers between participating countries, granting preferential treatment to each other's goods and services. It allows countries to enjoy trading advantages with specific partners while maintaining autonomy in their trade policies with non-participating nations.
- Comprehensive Economic Partnership Agreement (CEPA) is a broad and advanced form of FTA that goes beyond traditional trade barriers, encompassing various economic aspects such as investment, intellectual property, and services. It aims for a more comprehensive economic partnership, encouraging deeper integration and collaboration between participating countries.
- Customs Union While not strictly an FTA, a Customs Union involves the elimination of tariffs among member countries and the establishment of a common external tariff against non-member nations. It goes beyond standard FTAs by harmonizing external trade policies, creating a unified approach to trade with the rest of the world.
- Free Trade Area (FTA) with Trade in Goods (TIG) and Trade in Services (TIS): Some FTAs specifically emphasize either trade in goods or trade in services, tailoring the agreement to the specific economic strengths and priorities of the participating countries. This approach allows nations to focus on areas where they have a comparative advantage, fostering specialization and efficiency.
4. India's Free Trade Agreements
India is a member of several free trade agreements (FTAs) and is currently negotiating others. India's FTAs have helped to reduce trade barriers and promote trade and economic growth. They have also helped to attract foreign investment and create jobs.
- The South Asian Free Trade Agreement (SAFTA) was signed in 1995 by the seven countries of the South Asian Association for Regional Cooperation (SAARC). SAFTA aims to reduce or eliminate tariffs on trade between the member countries.
- The India-Bangladesh FTA was signed in 2010 and came into force in 2011. It is a comprehensive FTA that covers goods, services, and investments.
- The India-Sri Lanka FTA was signed in 1999 and came into force in 2000. It is a comprehensive FTA that covers goods, services, and investments.
- The India-ASEAN Free Trade Agreement was signed in 2002 and came into force in 2010. It is a comprehensive FTA that covers goods, services, and investments.
- The India-Korea Comprehensive Economic Partnership Agreement (CEPA) was signed in 2010 and came into force in 2011. It is a comprehensive FTA that covers goods, services, and investments.
- The India-Japan Comprehensive Economic Partnership Agreement(CEPA) was signed in 2022 and came into effect in 2023. It is a comprehensive FTA that covers goods, services, and investments.
- The India-UAE Comprehensive Partnership Agreement (CEPA) was signed in 2022 and came into effect in 2022. It is a comprehensive FTA that covers goods, services, and investments.
- The India-Australia Economic Cooperation and Trade Agreement (ECTA) was signed in 2022 and came into effect in 2022. It is a comprehensive FTA that covers goods, services, and investments.
- The India-Malaysia Comprehensive Economic Cooperation Agreement (CECA) was signed in 2010 and aims to enhance economic ties by addressing trade in goods and services, as well as investment and other areas of economic cooperation.
- The India-Thailand Free Trade Agreement was signed in 2003 and focuses on reducing tariffs and promoting trade in goods and services between India and Thailand.
- The India-Singapore Comprehensive Economic Cooperation Agreement (CECA) has been operational since 2005, this agreement covers trade in goods and services, as well as investment and intellectual property.
- The India-Nepal Trade Treaty While not a comprehensive FTA, India and Nepal have a trade treaty that facilitates the exchange of goods between the two countries.
- The India-Chile Preferential Trade Agreement was signed in 2006 and aims to enhance economic cooperation and reduce tariffs on certain products traded between India and Chile.
5. India - UK Free Trade Agreement
5.1. Background
- Both countries have agreed to avoid sensitive issues in the negotiations.
- The interim (early harvest agreement) aims to achieve up to 65 per cent coverage for goods and up to 40 per cent coverage for services.
- By the time the final agreement is inked, the coverage for goods is expected to go up to "90 plus a percentage" of goods.
- India is also negotiating a similar early harvest agreement with Australia, which is supposed to set the stage for a long-pending Comprehensive Economic Cooperation Agreement that both countries have been pursuing for nearly a decade.
- While the commencement of negotiations does mark a step forward in the otherwise rigid stance adopted and when it comes to trade liberalisation, experts point to impediments and the potential for legal challenges going ahead.
5.2. GATT (General Agreement on Trade and Tariffs)
- The exception to the rule is full-scale FTAs, subject to some conditions.
- One rider, incorporated in Article XXIV.8 (b) of GATT, stipulates that a deal should aim to eliminate customs duties and other trade barriers on "Substantially all the trade" between the WTO member countries that are signatories to an FTA.
- For this Agreement, a free-trade area shall be understood to mean a group of two or more customs territories in which the duties and other restrictive regulations of commerce are eliminated on substantially all the trade between the constituent territories in products originating in such territories.
- It is often beneficial to negotiate the entire deal together, as an early harvest deal may reduce the incentive for one side to work towards a full FTA.
- These agreements are not just about goods and services but also issues like investment.
- If you are trying to weigh the costs and benefits, it is always better to have the larger picture in front of you.
- In the case of the early harvest agreement inked with Thailand, automobile industry associations had complained that relaxations extended to Bangkok in the early harvest had reduced the incentive for Thailand to work towards a full FTA.
- Early harvest agreements may serve the function of keeping trading partners interested as they promise some benefits without long delays, as India becomes known for long-drawn negotiations for FTAs.
- Government emphasis on interim agreements may be tactical so that a deal may be achieved with minimum commitments and would allow for contentious issues to be resolved later.
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For Prelims: Free Trade Agreement, India-U.K, Bilateral Free Trade Agreement, G-20 Summit, Agenda 2030, Covid-19 Pandemic, SAARC, General Agreement on Trade and Tariffs, Comprehensive Economic Partnership Agreement, Multilateral Free Trade Agreement, Regional Free Trade Agreement, Preferential Trade Agreement, Customs Union,
For Mains:
1. Evaluate the potential impact of the India-UK FTA on the Indian economy, considering both positive and negative aspects (250 Words)
2. Critically evaluate the significance of Free Trade Agreements (FTAs) in promoting trade and economic growth, considering their potential benefits and drawbacks. (250 Words)
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Previous Year Questions
1. Consider the following countries:
1. Australia
2. Canada
3. China
4. India
5. Japan
6. USA
Which of the above are among the free-trade partners' of ASEAN? (UPSC 2018)
A. 1, 2, 4 and 5 B. 3, 4, 5 and 6 C. 1, 3, 4 and 5 D. 2, 3, 4 and 6
Answer: C
2. Increase in absolute and per capita real GNP do not connote a higher level of economic development, if (UPSC 2018) (a) Industrial output fails to keep pace with agricultural output. Answer: C 3. The SEZ Act, 2005 which came into effect in February 2006 has certain objectives. In this context, consider the following: (2010)
Which of the above are the objectives of this Act? (a) 1 and 2 only (b) 3 only (c) 2 and 3 only (d) 1, 2 and 3 Answer: A 4. A “closed economy” is an economy in which (UPSC 2011) (a) the money supply is fully controlled Answer: D 5. With reference to the “G20 Common Framework”, consider the following statements: (UPSC 2022)
1. It is an initiative endorsed by the G20 together with the Paris Club. 2. It is an initiative to support Low Income Countries with unsustainable debt. Which of the statements given above is/are correct? (a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2 Answer: C
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BRAHMAPUTRA RIVER AND CHINA'S BRIDGE
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Source: The Hindu- Chinese Premier Li Qiang has formally inaugurated the construction of a massive hydropower dam in Nyingchi City, situated in the Tibet Autonomous Region along the lower course of the Brahmaputra River, which is locally called the Yarlung Zangbo.
- This significant move, reported by China’s state-run media, signals the beginning of a strategically and environmentally impactful project in a region of geopolitical sensitivity, particularly due to its proximity to India’s northeastern border.
- The project is being described as one of the largest hydropower developments globally, both in scale and investment. It involves the construction of five cascade hydropower stations, a system designed to maximize energy output by building multiple dams along the river’s flow.
- The total estimated investment for the project is about 1.2 trillion Yuan (approximately USD 167.8 billion), underscoring China’s long-term commitment to clean energy infrastructure and regional development in Tibet.
- At present, China’s Three Gorges Dam on the Yangtze River holds the record as the world's largest dam, boasting an installed capacity of 22.5 gigawatts. However, the newly announced project is likely to surpass it in terms of complexity and strategic relevance.
- The chosen location near the dramatic "Great Bend" of the Yarlung Tsangpo is particularly favorable for hydropower generation.
- Here, the river plunges about 2,000 meters within a short distance of 50 kilometers, offering immense potential for energy extraction through gravitational force.
- This development has broader implications beyond energy. It may influence water flow into the Brahmaputra basin, a lifeline for millions in India and Bangladesh, prompting concerns over transboundary river management and ecological impacts.
- While China insists the project is purely for energy purposes, its location in a seismically active and environmentally fragile zone continues to raise international attention and calls for cooperative water governance among the riparian nations
- The proposed Chinese dam is strategically located near the sharp U-turn of the Brahmaputra River—an area often referred to as the “Great Bend”—where the river dramatically curves before entering India’s Arunachal Pradesh and later flowing into Bangladesh, where it is known as the Jamuna.
- This particular stretch is not only geographically significant but also hydrologically sensitive. Alterations in the river’s natural flow at this point could disrupt the hydrological balance downstream, affecting water availability in both India and Bangladesh.
- Such disruptions may have serious consequences for the agricultural sector, which is heavily dependent on the seasonal flow of the Brahmaputra. Rice and jute cultivation, in particular, are highly water-sensitive, and changes in flow patterns could lead to reduced irrigation potential, crop failure, or delayed sowing seasons.
- Moreover, the river supports millions of livelihoods, especially in the Assam and Bangladesh floodplains, where fishing and farming are key economic activities.
- Environmental experts are also concerned about the dam's impact on the Eastern Himalayas, a globally recognized biodiversity hotspot. This region is home to countless endemic and endangered species, and changes in river ecology could disturb aquatic habitats, migratory routes, and forest ecosystems.
- Additionally, the area is prone to seismic activity, raising the risk of dam-related disasters such as landslides or reservoir-induced earthquakes.
- While China underscores the importance of this mega-project as a vital component of its renewable energy strategy—intended to reduce carbon emissions and promote sustainable development—it has not entered into any formal water-sharing treaty with India or Bangladesh.
- As a result, India and Bangladesh, being lower riparian states, are especially vulnerable to unilateral upstream activities. The absence of a transparent and cooperative water management framework raises geopolitical tensions, as such projects could be used to exert strategic leverage or cause ecological stress during droughts or conflicts.
- Given the transboundary nature of the Brahmaputra, many experts advocate for enhanced regional cooperation, joint river basin management, and early warning systems to ensure that hydropower development does not come at the cost of ecological and social stability across South Asia
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The Brahmaputra River is an international river system, with its basin covering an area of approximately 5,80,000 square kilometers. This vast catchment spans across four countries: China accounts for the largest share at 50.5%, followed by India with 33.3%, Bangladesh with 8.1%, and Bhutan contributing 7.8%.
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Within India, the Brahmaputra basin occupies about 1,94,413 square kilometers, making up roughly 5.9% of the nation’s total land area. The basin extends over several northeastern and eastern states including Arunachal Pradesh, Assam, Meghalaya, Nagaland, Sikkim, and West Bengal.
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The river has its source at the Chemayungdung Glacier, situated to the east of Mansarovar Lake in the Kailash mountain range in Tibet. In Tibet, it is known as the Yarlung Tsangpo, and it flows eastward for nearly 1,200 kilometers before curving southward.
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Near Namcha Barwa, the river takes a dramatic U-shaped turn—often referred to as the Great Bend—and enters India via Arunachal Pradesh, just west of Sadiya town. Here, the river is called the Siang or Dihang.
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As it flows southwest, the Siang is joined on the left bank by major tributaries such as the Dibang and Lohit, after which it takes the name Brahmaputra.
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On its right bank, the river receives important tributaries like the Subansiri (an antecedent river), Kameng, Manas, and Sankosh. The Brahmaputra continues its journey into the Bangladesh plains near Dhubri in Assam, eventually flowing southward.
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In Bangladesh, after the Teesta River merges from the right bank, the Brahmaputra is referred to as the Jamuna. It later converges with the Padma River, and the combined flow drains into the Bay of Bengal.
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All tributaries of the Brahmaputra within Indian territory are rain-fed, receiving intense rainfall during the southwest monsoon. This makes the region highly prone to seasonal flooding, riverbank erosion, and shifting of river channels, particularly in Assam.
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The river’s topography also makes it ideal for hydropower generation. In its Tibetan course of about 1,700 kilometers, the Brahmaputra descends nearly 4,800 meters, averaging a slope of 2.82 meters per kilometer. However, this gradient decreases drastically to 0.1 meter per kilometer once the river enters the Assam Valley, resulting in slower flow and increased sedimentation
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According to Ashok Kantha, former Indian Ambassador to China, India and China have established a broad-based Memorandum of Understanding (MoU) to facilitate cooperation on transboundary rivers, along with two separate agreements specifically addressing the Brahmaputra and Sutlej rivers.
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The MoU concerning the Sutlej was prompted by the Parechu incident, which had highlighted the need for consistent hydrological data sharing. However, China did not agree to provide year-round data, and the agreement has since expired and awaits renewal.
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The MoU on the Brahmaputra, which is designed to be renewed every five years, expired in 2023. According to the Jal Shakti Ministry, the renewal process is underway through official diplomatic exchanges.
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The broader umbrella agreement, signed in 2013, remains in force as it has no expiration clause. Despite this, the Ministry’s website notes that no active cooperation is currently taking place under this framework. Additionally, an Expert Level Mechanism established in 2006—intended to support annual bilateral meetings—has experienced periodic disruptions.
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In light of these limited cooperative structures, the 1997 United Nations Convention on the Law of the Non-Navigational Uses of International Watercourses is seen as a potential guiding framework for equitable and sustainable management of shared water resources between nations
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For Prelims: UN Convention on the Law of the Non-Navigational Uses of International Watercourses (1997), Transboundary River Agreements
For Mains: GS Paper II: International Relations
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Related Question
1.The Brahmaputra River is known as “Yarlung Tsangpo” in which of the following countries?
A) India B) China C) Bhutan D) Bangladesh Answer: B) China |
