Current Affair

Back
DAILY CURRENT AFFAIRS, 09 OCTOBER 2025

MINIMUM SUPPORT PRICE

 

1. Context

The government on Wednesday announced a 6.59% increase in the minimum support price (MSP) for wheat to ₹2,585 per quintal for 2026-27 marketing year. The decision was taken in the Union Cabinet meeting chaired by Prime Minister Narendra Modi.

2. What is the Minimum Support Price (MSP)?

  • MSP is the minimum price a farmer must pay for their food grains as guaranteed by the government. They are recommended by the Commission for Agricultural Costs and Prices (CACP) and approved by the Cabinet Committee on Economic Affairs.
  • The CACP submits its recommendations to the government in the form of Price Policy Reports every year.
  • After considering the report and views of the state governments and also keeping in view the overall demand and supply situation in the country, the central government takes the final decision.
  • The Food Corporation of India (FCI) is the nodal agency for procurement along with State agencies, at the beginning of the sowing season.
The minimum support price (MSP) is set for 23 crops every year. They include:
  • 7 cereals (paddy, wheat, maize, bajra, jowar, ragi, and barley)
  • 5 pulses (chana, tur/arhar, moong, urad, and Masur)
  • 7 oilseeds (rapeseed-mustard, groundnut, soya bean, sunflower, sesamum, safflower, and Enigerseed) and
  • 4 commercial crops (sugarcane, cotton, copra, and raw jute).

3. How MSP is Calculated?

  • MSP, presently, is based on a formula of 1.5 times the production costs.
  • The CACP projects three kinds of production costs for every crop, both at state and all-India average levels.
  • A2 covers all paid-out costs directly incurred by the farmer — in cash and kind — on seeds, fertilizers, pesticides, hired labour, leased-in land, fuel, irrigation, etc.
  • A2+FL includes A2 plus an imputed value of unpaid family labour.
  • C2: Estimated land rent and the cost of interest on the money taken for farming are added to A2 and FL.
  • Farm unions are demanding that a comprehensive cost calculation (C2) must also include capital assets and the rentals and interest forgone on owned land, as recommended by the National Commission for Farmers.

4. The issue with the calculation of MSP

  • To calculate MSP, the government uses A2+FL cost. The criticism of A2+FL is that it doesn’t cover all costs and that a more representative measure, C2, needs to be used.
  • For example, in the 2017-18 rabi season, CACP data shows that C2 for wheat was 54% higher than A2+FL.
  • The Swaminathan Commission also stated that the MSP should be based on the comprehensive cost of production, which is the C2 method.

5. Key Points about the Farmer's Demand

  • After the recent decision to repeal three contentious farm laws, protesting farmer unions are now pressing for their demand of the legalization of the Minimum Support Price (MSP).
  • They want a legal guarantee for the MSP, which at present is just an indicative or a desired price.
  • Legalising MSPs would put the government under a legal obligation to buy every grain of the crops for which MSPs have been announced.
  • At present, the PM has announced the formation of a committee to make MSP more transparent, as well as to change crop patterns and to promote zero-budget agriculture which would reduce the cost of production.
  • The entire issue of enforcing MSP legally is a tricky, complicated, and multidimensional one, involving lots of factors.
  • Core demand: MSP based on a C2+50% formula should be made a legal entitlement for all agricultural produce. This would mean a 34% increase in the latest MSP for paddy and a 13% increase for wheat. MSP should also be extended to fruit and vegetable farmers who have been excluded from benefits so far.

6. The rationale behind the demand for legislation of MSP

  • Farmers receive less than MSP: In most crops grown across much of India, the prices received by farmers, especially during harvest time, are well below the officially declared MSPs. And since MSPs have no statutory backing, they cannot demand these as a matter of right.
  • Limited procurement by the Govt: Also, the actual procurement at MSP by the Govt. is confined to only about a third of wheat and rice crops (of which half is bought in Punjab and Haryana alone), and 10%-20% of select pulses and oilseeds. According to the Shanta Kumar Committee’s 2015 report, only 6% of the farm households sell wheat and rice to the government at the MSP rates.

7. Challenges associated with MSP

  • Protest by Farmers: Farm unions have been protesting for more than six months on Delhi's outskirts, demanding legislation to guarantee MSP for all farmers for all crops and a repeal of three contentious farm reform laws.
  • MSP and Inflation: When announcing the MSP, inflation should be taken into account. But often the price is not increased up to the mark. For example, this time MSP for Maize has not even considered inflation then how it will benefit farmers! Also, frequent increases in the MSPs can lead to inflation too.
  • High Input Costs: The input costs have been rising faster than sale prices, squeezing the meagre income of the small farmers and driving them into debt.
  • Lack of Mechanism: No mechanism guarantees that every farmer can get at least the MSP as the floor price in the market. So proper mechanisms need to be fixed for all times to come.
  • Restriction in Europe: Even after producing surplus grains, every year a huge portion of these grains gets rotten. This is due to the restrictions under WTO norms, that grain stocks with the FCI (being heavily subsidized due to MSP) cannot be exported.
 
For Prelims: Minimum Support Price, Rabi Crops, WTO, Commission for Agricultural Costs and Prices (CACP), Cabinet Committee on Economic Affairs, Food Corporation of India
For Mains:
1. Explain the concept of Minimum Support Price (MSP) in India. How is MSP determined, and what is its role in ensuring fair prices for agricultural produce? (250 Words)
 
 
Previous Year Questions
 
1. Consider the following statements: (UPSC CSE 2020)
1. In the case of all cereals, pulses, and oil seeds, the procurement at Minimum Support Price (MSP) is unlimited in any State/UT of India.
2. In the case of cereals and pulses, the MSP is fixed in any State/UT at a level to which the market price will never rise.
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
 
2. Which of the following factors/policies were affecting the price of rice in India in the recent past? (UPSC CSE, 2020)
(1) Minimum Support Price
(2) Government’s trading
(3) Government’s stockpiling
(4) Consumer subsidies
Select the correct answer using the code given below:
(a) 1, 2 and 4 only
(b) 1, 3 and 4 only
(c) 2 and 3 only
(d) 1, 2, 3 and 4
 
Answer: D
 
3. In India, which of the following can be considered as public investment in agriculture? (UPSC GS1, 2020)
(1) Fixing Minimum Support Price for agricultural produce of all crops
(2) Computerization of Primary Agricultural Credit Societies
(3) Social Capital development
(4) Free electricity supply to farmers
(5) Waiver of agricultural loans by the banking system
(6) Setting up of cold storage facilities by the governments.
In India, which of the following can be considered as public investment in agriculture?
Select the correct answer using the code given below:
(a) 1, 2 and 5 only
(b) 1, 3, 4 and 5 only
(c) 2, 3 and 6 only
(d) 1, 2, 3, 4, 5 and 6
 
Answer: C
 
4. The Fair and Remunerative Price (FRP) of sugarcane is approved by the (UPSC CSE, 2015)
(a) Cabinet Committee on Economic Affairs
(b) Commission for Agricultural Costs and Prices
(c) Directorate of Marketing and Inspection, Ministry of Agriculture
(d) Agricultural Produce Market Committee
 
Answer: A
 
 
 

GREEN HYDROGEN 

 
 
 
 
1. Context
 
 
In the clean energy market, the limelight has recently shifted from solar and wind towards green hydrogen. Hydrogen is widely used in industries for oil refining and ammonia and methanol production, but most of it is currently produced using fossil fuels, which add to carbon emissions. Green hydrogen technologies used in production, storage, transportation and application are rapidly advancing, with electrolysers at the core of this transformation
 
 
2. What is Green Hydrogen?
 
Green hydrogen refers to hydrogen gas that is produced through a process called electrolysis, which involves splitting water molecules into hydrogen and oxygen using electricity generated from renewable energy sources such as solar, wind, or hydropower. Unlike conventional methods of hydrogen production, which rely on fossil fuels and emit greenhouse gases, green hydrogen production is considered environmentally friendly because it does not generate carbon emissions. Green hydrogen is thus a clean and sustainable energy carrier that can be used in various sectors, including transportation, industry, and power generation, to help reduce reliance on fossil fuels and mitigate climate change.
 
Difference between Green and Grey Hydrogen
 
Characteristic Green Hydrogen Grey Hydrogen
Production Method Electrolysis of water using renewable energy sources (solar, wind) Steam methane reforming from natural gas
Environmental Impact Virtually emissions-free, utilizing renewable energy and water as feedstock High carbon emissions contribute to environmental degradation
Carbon Emissions No carbon emissions during production or consumption High carbon emissions during production
Sustainability Represents an end-to-end green pathway for hydrogen production Contributes significantly to carbon emissions and environmental degradation
Purpose Offers a sustainable alternative to traditional hydrogen production Predominantly used in industrial applications
 
 
3. India's Push for Hydrogen-Powered Transportation
 
  • Major Indian commercial vehicle manufacturers like Tata Motors, Volvo Eicher, and Ashok Leyland are intensifying their efforts in developing hydrogen-powered trucks and buses. They are investing heavily in research and development while expanding manufacturing capacities.
  • Simultaneously, Indian energy companies are striving to scale up green hydrogen production and drive down costs to enhance their competitiveness against other fuels.
  • Hydrogen is poised to become a cornerstone in the transportation sector shortly. With India being a substantial and growing market for both vehicles and energy, the widespread adoption of green hydrogen as a vehicular fuel holds immense potential for the country.
  • The utilization of green hydrogen offers substantial emissions reductions, crucial for combating global warming and climate change. India sees various benefits, including pollution mitigation, achieving climate targets, reducing dependency on costly fossil fuel imports, and seizing the opportunity to establish itself as a global hub for green hydrogen production and export.
 

4. MNRE Scheme for the Transportation Sector

 

The Ministry of New and Renewable Energy (MNRE) launched a pilot project scheme in February to assess the viability of green hydrogen as a transportation fuel.

The scheme focuses on three key objectives

  1. Technical Feasibility and Performance: Validate the technical capabilities and performance of green hydrogen when used as a fuel for vehicles.
  2. Economic Viability: Evaluate the economic feasibility of green hydrogen-powered vehicles, including factors like costs and potential returns.
  3. Safe Operation Demonstration: Showcase the safe operation of both hydrogen-powered vehicles and the associated refuelling stations.

The Ministry of Road Transport & Highways will appoint a dedicated agency to manage the scheme. This agency will then invite proposals for pilot projects. Following a selection process, the chosen company or consortium will become the executing agency responsible for carrying out the project.

Funding for these pilot projects will come in the form of viability gap funding (VGF) approved by the MNRE based on the recommendations of a Project Appraisal Committee. The VGF amount will be determined on a project-by-project basis, considering factors like specific needs, merits, and overall feasibility. The executing agency will have two years to complete the pilot project.

 

 
5. Hydrogen Fuel Cell Vehicles
 

A hydrogen internal combustion engine (ICE) vehicle operates similarly to traditional cars powered by diesel or petrol, but with a key difference: there are no carbon emissions produced during combustion.

Hydrogen Fuel Cell Electric Vehicles (FCEVs)

Hydrogen fuel cell electric vehicles (FCEVs) utilize hydrogen electrochemically by converting it into electricity through a fuel cell. This process involves storing hydrogen in a high-pressure tank and generating electricity, with water being the only byproduct. While hydrogen ICE vehicles don't emit carbon, research suggests that burning hydrogen is less energy-efficient compared to converting it into electricity in a fuel cell.

Advantages of Hydrogen FCEVs Over Battery Electric Vehicles (BEVs)

Compared to battery electric vehicles (BEVs), where the battery constitutes the heaviest part of the vehicle, hydrogen FCEVs are typically lighter. This is because hydrogen is a lighter element, and a fuel cell stack weighs less than an electric vehicle (EV) battery. This feature makes hydrogen fuel cell technology a promising alternative to EV battery technology, particularly for heavy-duty trucks that can benefit from increased payload capacity without emitting smoke from burning diesel.

The Promise of Hydrogen Fuel Cell Technology

Research indicates that long-haul FCEVs can carry freight amounts comparable to diesel trucks, whereas long-haul BEVs face a weight penalty of up to 25% due to heavier batteries. Given the imperative to reduce carbon emissions in the transportation sector while maintaining revenue-generating payload capacity, green hydrogen emerges as a promising solution.

 

6. Challenges Facing the Adoption of Green Hydrogen in Transportation

 

The widespread adoption of green hydrogen in the transportation sector encounters several significant challenges

  • The primary obstacle is the high cost of green hydrogen production. Additionally, challenges related to storage and transportation at scale further compound the issue. However, ongoing technological innovation and increased production scaling are expected to drive costs down in the coming years.
  • Despite advancements, green hydrogen-powered vehicles are not yet perceived as a viable alternative to four-wheel electric vehicles (EVs). Challenges such as fuel costs and the establishment of supporting infrastructure hinder their widespread acceptance. Recent closures of hydrogen refuelling stations in California, despite remaining operational for heavy-duty vehicles, underscore the challenges in this regard.
  • For hydrogen fuel cell electric vehicles (FCEVs) to compete effectively with battery electric vehicles (BEVs), the cost of green hydrogen needs to range between $3 and $6.5 per kilogram by 2030. However, current retail prices in California are substantially higher, and the cost of building hydrogen refuelling stations for trucks is significantly greater than that of BEV stations.
  • Specialized cylinders capable of storing green hydrogen pose another challenge. Existing cylinders designed for compressed natural gas (CNG) are unsuitable due to the higher pressure requirements of hydrogen. Developing high-pressure hydrogen cylinders with sufficient strength, typically using carbon fibre, incurs high costs, hampering hydrogen's adoption as a transport fuel.
  • Hydrogen's flammability necessitates stringent safety measures compared to conventional fuels like diesel, petrol, or even CNG. Robust handling and safety standards are imperative before large-scale adoption can be pursued.
  • Advancements in battery technologies, resulting in lighter EV batteries, may pose a long-term challenge to the viability of green hydrogen-powered heavy-duty commercial vehicles. As battery weight decreases, the attractiveness of hydrogen-powered vehicles may diminish.
 
7. The Way Forward
 
The advantages of green hydrogen, including its versatility, zero-emission profile, and potential for large-scale production, position it as a key player in the global transition towards sustainable transportation solutions. With continued innovation, investment, and collaboration, green hydrogen has the potential to revolutionize the way we power vehicles, mitigate climate change, and create a more sustainable future for generations to come.
 
 

For Prelims: Green Hydrogen, compressed natural gas, Electric Vehicles, Hydrogen Fuel Cell vehicles, Grey Hydrogen, The Ministry of New and Renewable Energy
For Mains: 
1. Green hydrogen production utilizes electrolysis, a process powered by renewable energy sources. However, large-scale production of renewable energy also has environmental implications. Discuss the ethical considerations involved in promoting green hydrogen as a sustainable solution. (250 words)
2. India aspires to become a global hub for green hydrogen production and export. What are the strategic advantages India possesses to achieve this goal? Discuss the policy measures and technological advancements needed to make India a leader in this emerging field. (250 words)
 
 
Previous Year Questions
 
1. With reference to 'fuel cells' in which hydrogen-rich fuel and oxygen are used to generate electricity, consider the following statements: (UPSC 2015)
1. If pure hydrogen is used as a fuel, the fuel cell emits heat and water as by-products.
2. Fuel cells can be used for powering buildings and not for small devices like laptop computers.
3. Fuel cells produce electricity in the form of Alternating Current (AC)
Which of the statements given above is/are correct?
A. 1 only        B. 2 and 3 only         C. 1 and 3 only        D. 1, 2 and 3
 
 
2. With reference to green hydrogen, consider the following statements: (UPSC 2023)
1. It can be used directly as a fuel for internal combustion.
2. It can be blended with natural gas and used as fuel for heat or power generation.
3. It can be used in the hydrogen fuel cell to run vehicles.
How many of the above statements are correct?
A. Only one      B. Only two        C. All three      D. None
 
Answers: 1-A, 2-C
 
Source: The Indian Express
 
 

PANCHAYAT RAJ INSTITUTIONS

 
 
1. Context
 
The Mohan Majhi-led Bharatiya Janata Party (BJP) government in Odisha announced the new Odisha Panchayat Samiti Accounting Procedure (Amendment) Rules, 2025, after state cabinet approval last month. However, the Biju Janata Dal (BJD) and the Congress have strongly criticised the amended rules, stating that it undermines people’s representatives of the Panchayati Raj Institutions (PRIs).
 
2. Evolution of Panchayat raj institutions
 
  • Panchayati Raj Institutions (PRIs) play a pivotal role in promoting grassroots democracy and decentralised governance across rural India. These bodies, which represent the foundation of local self-governance, were formally recognised and empowered through the 73rd and 74th Constitutional Amendments in 1992, granting constitutional status to panchayats in rural areas and municipalities in urban regions.
  • However, the concept of local governance in India is not new—it has deep roots in the country's ancient traditions, with references found in the Vedas, Kautilya’s Arthashastra, the Mauryan period, and other historical texts.
  • Throughout India’s history, especially before and after gaining independence, the Panchayati Raj system has seen various transformations. During British rule, decentralisation efforts began with Lord Mayo’s 1870 resolution, which supported devolving financial and administrative powers to local levels for village and town development.
  • This was further advanced by Lord Ripon in 1882, whose reforms laid the groundwork for local self-government by suggesting that smaller administrative units be managed by local boards.
  • The Royal Commission on Decentralisation in 1909, led by Sir Henry William, evaluated the operations of these boards and highlighted major shortcomings like limited representation and insufficient authority.
  • The commission’s recommendations eventually influenced the Government of India Act of 1919. Post-independence, there was a renewed focus on decentralised governance to strengthen local self-rule.
  • On November 25, 1948, K. Santhanam, a Gandhian and a member of the Constituent Assembly, urged the Drafting Committee’s Chairman to incorporate provisions that supported this vision.
  • Consequently, the Indian Constitution included Article 40 under the Directive Principles of State Policy in Part IV. This article directs the state to facilitate the establishment of village panchayats and to empower them appropriately so that they may function as effective units of self-governance
 
3. Community development programme
 
 
  • The Community Development Programme, launched during India's First Five-Year Plan (1951–55), served as an early foundation for the later establishment of Panchayati Raj Institutions.
  • In the years following independence, the country confronted multiple socio-economic issues such as food shortages, widespread poverty, and high unemployment. This programme was introduced as a strategy to promote rural development by encouraging active participation from all sections of rural society.
  • Even before this initiative, India had experimented with several rural development efforts. Noteworthy examples include the Sriniketan Institute of Rural Reconstruction started by Rabindranath Tagore in 1922, Dr. Spencer Hatch’s Marthandam Project conducted through the YMCA in Kanyakumari, Tamil Nadu, and the Firka Development Scheme introduced by T. Prakasam in 1946 in the Madras Presidency.
  • The Community Development Programme aimed to improve agriculture (through land reforms and distribution of fertilisers and pesticides), expand irrigation (like well construction), build infrastructure such as roads, and control the spread of diseases. However, the programme fell short of expectations. Key obstacles included limited community involvement, excessive bureaucratic procedures, and widespread corruption.
  • A Planning Commission review revealed that the initiative failed to benefit small artisans and disproportionately favored regions with established irrigation and large landholders
 
4. Three-tier System
 
 
  • In response to the shortcomings of earlier rural development efforts, the government established a committee in 1957 led by Balwant Rai Mehta to propose reforms. The committee recommended devolving administrative authority across multiple levels—from villages up to districts.
  • It introduced a three-tier framework comprising Village Panchayats at the base, Panchayat Samitis at the intermediate (block or taluk) level, and Zilla Parishads at the district level. Rajasthan was the first state to adopt this model on October 2, 1959, followed by Andhra Pradesh in November of the same year.
  • Despite these steps, issues persisted in the implementation and effectiveness of the system. To address these, another committee was set up in 1977 under the leadership of Ashok Mehta during the Janata Party’s rule—the first non-Congress government. This committee suggested replacing the three-tier model with a two-tier arrangement consisting of Mandal Panchayats at the grassroots and Zilla Parishads at the district level.
  • The Ashok Mehta Committee also emphasized the need to reserve seats for Scheduled Castes and Scheduled Tribes in proportion to their population to ensure their fair representation.
  • A key recommendation was allowing political parties to participate in Panchayati Raj governance. However, these proposals saw limited execution, mainly due to challenges like financial constraints and the complexity of ensuring uniformity in a diverse nation.
  • In the years that followed, various other committees were set up to periodically review the state of Panchayati Raj Institutions. These included the Hanumantha Rao Committee (1983), G.V.K. Rao Committee (1985), L.M. Singhvi Committee (1986), P.K. Thungan Committee (1989), and Harlal Singh Kharra Committee (1990)
 
5. Evolution of Local Governance
 
 
  • Starting in the late 1980s, the government made multiple efforts to constitutionally empower the Panchayati Raj Institutions. Although constitutional amendment bills were introduced in 1989, 1990, and 1991, it was only during Prime Minister P.V. Narasimha Rao’s administration that success was achieved. In December 1992, both Houses of Parliament passed the constitutional amendment, which was subsequently ratified by 17 state legislatures.
  • This historic development led to the inclusion of two new sections in the Indian Constitution: Part IX, dedicated to 'The Panchayats,' and Part IX-A, addressing 'The Municipalities.' As per the Ministry of Panchayati Raj's Annual Report for 2024–25, the country currently has 2,55,397 gram panchayats, 6,742 block-level panchayats, and 665 zilla (district) panchayats.
  • To measure how effectively Panchayati Raj Institutions are functioning across states, the government developed the Panchayat Devolution Index. This index evaluates local governance performance based on criteria like financial management, transparency, institutional capacity, and more.
  • Initially based on a concept by V.N. Alok and Laveesh Bhandari in 2004, the index focused on three key aspects: Functions, Finances, and Functionaries (the 3Fs). It was later expanded to include Capacity Building, Accountability, and Institutional Framework.
  • In the most recent edition of the Panchayat Devolution Index, Karnataka emerged as the leading state, with Kerala, Tamil Nadu, and others following closely.
  • The Ministry of Panchayati Raj released these rankings based on research conducted by the Indian Institute of Public Administration (IIPA). The findings also highlighted persistent issues such as limited financial independence, funding shortages, lack of transparency, human resource gaps, challenges in conducting elections, and updating electoral rolls.
  • To improve the operational efficiency of Panchayats, the Ministry also launched the e-Gram Swaraj platform. However, low levels of digital literacy among stakeholders have limited the platform’s effectiveness.
  • Such barriers continue to impede the full potential of Panchayati Raj Institutions in executing government-led socio-economic development initiatives at the grassroots level
 
 
For Prelims: Panchayat Raj institutions, Local Governance
 
For Mains: GS II - Indian Polity & Governance
 

 

Previous year Question

 
1. Consider the following statements: (UPSC 2016)
1. The minimum age prescribed for any person to be a member of Panchayat is 25 years.
2. A Panchayat reconstituted after premature dissolution continues only for the remainder period.
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
 
2. In areas covered under the Panchayat (Extension to the Scheduled Areas) Act, 1996, what is the role/power of Gram Sabha? (UPSC 2012)
1. Gram Sabha has the power to prevent the alienation of land in the Scheduled Areas.
2. Gram Sabha has the ownership of minor forest produce.
3. Recommendation of Gram Sabha is required for granting a prospecting license or mining lease, for any minerals in the Scheduled Areas.
Which of the statements given above is/are correct?
A. 1 only
B. 1 and 2 only
C. 2 and 3 only
D. 1, 2 and 3
Answer: B
 
3.The Government enacted the Panchayat Extension to Scheduled Areas (PESA) Act in 1996. Which one of the following is not identified as its objective? (UPSC 2013)
A. To provide self-governance
B. To recognize traditional rights
C. To create autonomous regions in tribal areas
D. To free tribal people from exploitation
Answer: C
 
 
Source: The Hindu
 

CYBERCRIME

 
 
1. Context
 
 
India’s digital transformation — powered by affordable Internet, digital banking, and e-commerce — while enhancing convenience and inclusion has also created a fertile ground for cybercrime. Fraudsters exploit system loopholes and human psychology, using tactics such as phishing, OTP/UPI frauds, identity theft, loan scams, and increasingly, digital arrests. These frauds rely less on hacking skills and more on manipulation of fear and trust. 
 

2. About cybercrime

 

Cybercrime is essentially any illegal activity that involves computers, networks, or digital devices. Criminals can use these tools to steal data, commit fraud, disrupt computer systems, or cause other harm. Some common types of cybercrime include:

  • Stealing someone's personal information like their name, Social Security number, or credit card details to impersonate them and commit fraud.
  • Tricking people into giving up their personal information or clicking on malicious links by disguising emails or websites as legitimate ones.
  • Malicious software that can be installed on a computer to steal data, damage files, or disrupt operations.
  • Gaining unauthorized access to a computer system or network to steal data, install malware, or cause damage.
 

3. What is NCRP?

 

The National Cybercrime Reporting Portal is an online platform established by the government of India to facilitate the reporting of cybercrimes by citizens. The portal allows individuals to report incidents of cybercrime in a streamlined and accessible manner.

Key features and functions of the National Cybercrime Reporting Portal include

  • Individuals can report various types of cybercrimes such as online harassment, financial fraud, ransomware attacks, and identity theft. The portal provides specific categories for different types of cyber incidents to ensure proper documentation and handling.
  • The portal places a special emphasis on crimes related to women and children, providing a dedicated section to report cases of online harassment, child pornography, and other related offences.
  • The portal allows users to report crimes anonymously if they choose, ensuring the confidentiality and privacy of the complainant.
  • Once a complaint is filed, the portal provides a tracking number which can be used to follow up on the status of the complaint.
  • The portal offers resources and guidelines on how to protect oneself from cybercrime, as well as information on legal recourse and support available for victims.
 
4. What is the Indian Cyber Crime Coordination Centre (I4C)?
 

The Indian Cyber Crime Coordination Centre (I4C), established by the Ministry of Home Affairs (MHA), is essentially India's central command centre for combating cybercrime.

Functions

  • The I4C serves as a focal point for coordinating efforts between various Law Enforcement Agencies (LEAs) across the country to tackle cybercrime effectively.
  • It facilitates the exchange of information on cybercrime investigations, cyber threat intelligence, and best practices among LEAs. This allows for a more unified approach to combating cyber threats.
  • The I4C is citizen-centric. It played a role in launching the National Cybercrime Reporting Portal (NCRP) which allows people to report cybercrime complaints online. There's also a National Cybercrime Helpline (1930) to report incidents and get assistance.
  • The I4C identifies the need for adapting cyber laws to keep pace with evolving technology. They recommend amendments to existing laws and suggest the creation of new ones if necessary.
  • The I4C works with academia and research institutes to develop new technologies and forensic tools to aid in cybercrime investigations.
  • They promote collaboration between the government, industry, and academia to raise awareness about cybercrime and develop standard operating procedures (SOPs) for containing and responding to cyberattacks.

5. What is the Budapest Convention?

 

The Budapest Convention, also known as the Council of Europe Convention on Cybercrime, is the world's first international treaty specifically designed to address cybercrime. It came into effect in 2004 with three main objectives:

  1. The convention aims to improve how countries investigate cybercrime by setting standards for collecting electronic evidence and fostering cooperation between law enforcement agencies.
  2. It facilitates cooperation among member states in tackling cybercrime. This includes sharing information, assisting with investigations, and extraditing cybercriminals.
  3. The convention encourages member countries to harmonize their national laws related to cybercrime. This creates a more unified approach to defining and prosecuting cyber offences.

India's Stand: India is not currently a party to the Budapest Convention. There are concerns that some provisions, like data sharing with foreign law enforcement agencies, might infringe on India's national sovereignty. India has also argued that it wasn't involved in drafting the initial convention.

 

6. What is the Global Cybersecurity Index?

 

The Global Cybersecurity Index (GCI) is an initiative by the International Telecommunication Union (ITU) to measure and rank the cybersecurity capabilities of countries around the world. The index provides insights into the commitment of countries to cybersecurity at a global level, assessing their strengths and identifying areas for improvement. The key aspects of the Global Cybersecurity Index

Purpose

  • To promote cybersecurity awareness and foster a global culture of cybersecurity.
  • To encourage countries to enhance their cybersecurity infrastructure and strategies.
  • To facilitate knowledge sharing and cooperation among nations.

Assessment Criteria

 The GCI evaluates countries based on five main pillars:

  1. Examines the existence of cybersecurity legislation and regulatory frameworks.
  2. Assesses the implementation of cybersecurity technologies and technical institutions.
  3.  Looks at national cybersecurity strategies, policies, and dedicated agencies.
  4. Evaluate the availability of cybersecurity education, training, and awareness programs.
  5. Measures the extent of international and national cooperation in cybersecurity efforts.
Methodology
 
The assessment is conducted through a comprehensive survey sent to ITU member states, followed by analysis and validation of the responses. The countries are then scored and ranked based on their overall cybersecurity posture.

Impact

 The GCI serves several important functions:

  • Provides a benchmarking tool for countries to assess their cybersecurity maturity.
  • Helps policymakers identify gaps and prioritize areas for improvement.
  • Encourages international cooperation and collaboration to tackle global cyber threats.
The GCI reports typically highlight the growing importance of cybersecurity due to increasing digital transformation and the rising number of cyber threats. They showcase best practices and successful initiatives from top-ranking countries, serving as models for others.
 

7. The challenges related to cyber security in India

 

India faces numerous challenges related to cybersecurity, reflecting its rapidly growing digital economy and increasing reliance on technology. 

Increasing Cyber Threats:

  • India has seen a significant rise in cybercrimes, including hacking, phishing, ransomware attacks, and identity theft. Sophisticated, state-sponsored attacks targeting critical infrastructure and sensitive data are becoming more common.
  • Many public and private sector systems rely on outdated technology, making them vulnerable to attacks. Inadequate implementation of robust cybersecurity measures and protocols leaves systems exposed.
  • There is a significant gap in the number of trained cybersecurity experts needed to protect against and respond to cyber threats. Ongoing education and training programs are insufficient to keep pace with evolving cyber threats.
  • The absence of a unified regulatory framework complicates cybersecurity management. While laws like the IT Act 2000 exist, enforcement and implementation remain inconsistent and weak.
  • Many individuals and small businesses lack awareness of basic cybersecurity practices. Practices like using weak passwords, not updating software, and falling for phishing scams are common.
  • The absence of robust data protection legislation makes it difficult to safeguard personal and sensitive data. Ensuring privacy and protection of personal information remains a significant challenge.
  • Effective cybersecurity often requires international cooperation, which is currently limited and inconsistent. Cross-border cyber threats and geopolitical tensions complicate collaboration and response efforts.
  • The rapid adoption of IoT devices, often with minimal security features, increases vulnerabilities. While AI can enhance security, it also introduces new risks and attack vectors.
  • Sectors like banking, healthcare, and energy are increasingly targeted, requiring enhanced protection measures. Ensuring coordinated efforts among various governmental and private entities involved in critical infrastructure protection is challenging.
  • Limited financial resources allocated for cybersecurity initiatives hinder the development and implementation of comprehensive security measures.
  • Staying abreast of the latest cybersecurity technologies and tools is difficult due to financial and logistical constraints.
 
8. Way Forward
 
Addressing these challenges requires a multifaceted approach involving improved regulatory frameworks, enhanced public awareness, investment in cybersecurity infrastructure, international cooperation, and the development of a skilled workforce. By strengthening these areas, India can better safeguard its digital ecosystem against the growing threat of cybercrime.
 
 
For Prelims: Cyber Crime, Artificial Intelligence, Internet of Things, Indian Cyber Crime Coordination Centre,  National Cybercrime Reporting Portal, Budapest Convention, Global Cybersecurity Index, International Telecommunication union
For Mains: 
1. India witnesses a high number of cybercrimes originating from Southeast Asia. Analyze the challenges this poses for Indian Law Enforcement Agencies and suggest measures to improve cross-border cooperation in tackling cybercrime. (250 words)
2. What are the key functions of the Indian Cyber Crime Coordination Centre (I4C)? Critically evaluate its effectiveness in combating cybercrime in India. (250 words)
3. The rise of Internet of Things (IoT) devices introduces new vulnerabilities in cyberspace. Analyze the cybersecurity challenges posed by IoT and suggest measures to mitigate these risks. (250 words)
 
Previous Year Questions
 
1. In India, under cyber insurance for individuals, which of the following benefits are generally covered, in addition to payment for the loss of funds and other benefits? (UPSC 2020)
1. Cost of restoration of the computer system in case of malware disrupting access to one's computer
2. Cost of a new computer if some miscreant wilfully damages it, if proved so
3. Cost of hiring a specialized consultant to minimize the loss in case of cyber extortion
4. Cost of defence in the Court of Law if any third party files a suit
Select the correct answer using the code given below:
A.1, 2 and 4 only  B.1, 3 and 4 only  C.2 and 3 only   D.1, 2, 3 and 4
 
2. Global Cyber Security Index (GCI) 2020 is released by which of the following organizations? (RRB Clerk Mains 2021)
A. World Bank
B. United Nations Development Programme
C. International Telecommunication Union
D. World Economic Forum
E. None of these
Answers: 1-D, 2-C
 
Source: The Indian Express
 
 

PRODUCTION LINKED INCENTIVE (PLI) SCHEME

 
 
 
1. Context
 
The textile industry is expecting an announcement soon on a revised Production Linked Incentive (PLI) scheme for the sector, with focus on manmade fibre (MMF) textiles.
 
 
2. About Production-Linked Incentive (PLI) Scheme

 

The Production-Linked Incentive (PLI) scheme is an initiative by the Indian government to boost domestic manufacturing in specific sectors. It incentivizes companies, both domestic and foreign, to set up or expand production facilities in India by offering financial rewards based on incremental sales achieved over a set period.

  • The government announces a PLI scheme for a particular sector with specific targets for production and sales.
  • Companies apply for the scheme and submit their production plans.
  • If selected, companies receive a percentage of their incremental sales (over a base year) as an incentive.
  • The incentive amount varies depending on the sector and the level of incremental sales achieved.
  • The scheme typically runs for several years, providing companies with long-term financial support.

 

3. Sectors with Current PLI Schemes

 

  • Mobile phone manufacturing and specified electronic components have been successful in attracting major players like Apple and Samsung to set up production in India.
  • Large-scale electronics manufacturing to boost domestic production of TVs, laptops, and other electronics products.
  • High-efficiency solar PV modules to make India a global leader in solar energy production.
  • Automobiles and auto components incentivize the production of electric vehicles, hydrogen fuel cell vehicles, and advanced auto components.
  • Man-made fibre (MMF) apparel and textiles to boost domestic production of high-quality MMF textiles.
  • White goods (air conditioners, refrigerators, etc.) to make India a global hub for white goods manufacturing.

 

4. Sectors Likely to See PLI Schemes in the Future

 

  • The pharmaceuticals and medical devices sector is crucial for national health security and has the potential for significant growth.
  • Green hydrogen and ammonia fuels are essential for achieving climate goals and could benefit from PLI support.
  • Advanced manufacturing technologies include robotics, 3D printing, and artificial intelligence, which are crucial for future industries.
  • The food processing sector has vast potential for value creation and job creation, and PLI could help address inefficiencies.

 

5. Benefits of the PLI Scheme

 

  • PLI attracts investment and encourages companies to manufacture in India, reducing dependence on imports.
  • New manufacturing units and increased production lead to job creation in various sectors.
  • PLI attracts global companies with advanced technology, leading to knowledge transfer and skill development in India.
  • Increased domestic production can lead to higher exports and strengthen the Indian economy.
 

6. Challenges in the PLI Scheme

 

  • Companies need significant upfront investment to set up new production facilities, which can be a deterrent for some.
  • The application and approval process for PLI schemes can be lengthy and complex, discouraging some companies.
  • The government needs to ensure the long-term sustainability of PLI schemes to avoid dependence on subsidies.

 

7. The Way Forward

 

The PLI scheme is a promising initiative with the potential to transform India's manufacturing landscape. By addressing the challenges and continuously improving its design, the government can further incentivize domestic production and boost India's economic growth.

 
For Prelims: Production Linked Incentive scheme,  industrial policy
For Mains: 
1. Discuss the role of the government in promoting domestic manufacturing. Should the focus be on incentives like the Production Linked Incentive scheme or on creating a conducive business environment? (250 Words)
 
 
 
Previous Year Questions
 

1. Consider, the following statements : (UPSC 2023)

Statement-I : India accounts for 3.2% of global export of goods.

Statement-II : Many local companies and some foreign companies operating in India have taken advantage of India's ‘Production-linked Incentive’ scheme.

Which one of the following is correct in respect of the above statements?

(a) Both Statement-I and Statement-II are correct and Statement-II is the correct explanation for Statement-I

(b) Both Statement-I and Statement-II are correct and Statement-II is not the correct explanation for Statement-I

(c) Statement-I is correct but Statement-II is incorrect

(d) Statement-I is incorrect but Statement-II is correct

Answer: D

 

Source: The Indian Express

 

MONETARY POLICY COMMITTEE (MPC)

 
 
1. Context
 
 AT A TIME when India is grappling with rising trade frictions with the US and President Donald Trump’s sharp rhetoric against a BRICS currency, the Reserve Bank of India (RBI) on Wednesday unveiled a series of measures to deepen the financial markets, allow banks a greater role in corporate consolidation, and crucially, take steps towards internationalising the rupee.
 

Monetary policy refers to the actions and strategies undertaken by a country's central bank to control and regulate the supply of money, credit availability, and interest rates in an economy. Its primary goal is to achieve specific economic objectives, such as price stability, full employment, and sustainable economic growth.

Central banks use various tools to implement monetary policy, including:

Interest Rates: Adjusting the interest rates at which banks lend to each other (known as the federal funds rate in the United States) influences borrowing and spending in the economy.

Open Market Operations: Buying or selling government securities in the open market to regulate the money supply. When a central bank buys securities, it injects money into the system, and when it sells them, it reduces the money supply.

Reserve Requirements: Mandating the amount of reserves banks must hold, affecting their ability to lend money.

By influencing the availability and cost of money, central banks aim to stabilize prices, control inflation, encourage or discourage borrowing and spending, and promote economic growth. However, the effectiveness of monetary policy can be influenced by various factors such as global economic conditions, fiscal policies, and market expectations.

3.What is the primary objective of the monetary policy?

The primary objective of monetary policy typically revolves around maintaining price stability or controlling inflation within an economy. Central banks often set an inflation target, aiming to keep it at a moderate and steady level. Stable prices help in fostering confidence in the economy, encouraging investment, and ensuring that the value of money remains relatively constant over time.

However, while controlling inflation is often the primary goal, central banks might also consider other objectives, such as:

Full Employment: Some central banks have a secondary objective of supporting maximum employment or reducing unemployment rates.

Economic Growth: Encouraging sustainable economic growth by managing interest rates and credit availability to stimulate or cool down economic activity.

Exchange Rate Stability: In some cases, maintaining stable exchange rates might be an important consideration, especially for countries with open economies heavily reliant on international trade.

These additional objectives can vary depending on the economic conditions, priorities of the government, and the central bank's mandate. Nonetheless, ensuring price stability is typically the fundamental goal of most monetary policies, as it forms the basis for a healthy and growing economy.

4. Monetary Policy Committee (MPC)

  • In line with the amended RBI Act, 1934, Section 45ZB grants authority to the central government to establish a six-member Monetary Policy Committee (MPC) responsible for determining the policy interest rate aimed at achieving the inflation target.
  • The inaugural MPC was formed on September 29, 2016. Section 45ZB stipulates that "the Monetary Policy Committee will ascertain the Policy Rate necessary to meet the inflation target" and that "the decisions made by the Monetary Policy Committee will be obligatory for the Bank."
  • According to Section 45ZB, the MPC comprises the RBI Governor as the ex officio chairperson, the Deputy Governor overseeing monetary policy, a Bank official nominated by the Central Board, and three individuals appointed by the central government.
  • The individuals chosen by the central government must possess "capabilities, ethical standing, expertise, and experience in economics, banking, finance, or monetary policy" (Section 45ZC)
5.Monetary Policy Committe and Inflation
  • The Monetary Policy Committee (MPC) plays a crucial role in managing inflation through its decisions on the policy interest rate.
  • When inflation is too high, the MPC might decide to increase the policy interest rate. This action aims to make borrowing more expensive, which can reduce spending and investment in the economy.
  • As a result, it could help decrease demand for goods and services, potentially curbing inflation.
  • Conversely, when inflation is too low or the economy needs a boost, the MPC might decrease the policy interest rate.
  • This move makes borrowing cheaper, encouraging businesses and individuals to spend and invest more, thus stimulating economic activity and potentially raising inflation closer to the target level.
  • The MPC's goal is to use the policy interest rate as a tool to steer inflation toward a target set by the government or central bank.
  • By monitoring economic indicators and assessing the current and expected inflation levels, the MPC makes informed decisions to maintain price stability within the economy
6. Way forward
With more than half of the current financial year witnessing positive developments in the economy, the full financial year should conclude as projected with a strong growth performance and macroeconomic stability. Yet risks on the downside persist. Inflation is one of them that has kept both the government and the RBI on high alert. Financial flows in the external sector also need constant monitoring as they impact the value of rupee and the balance of payments. A fuller transmission of the monetary policy may also temper domestic demand
 
 
 
 
For Prelims: Economic and Social Development
For Mains: General Studies III: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.
 
 
Previous Year Questions
 
1. Consider the following statements:  (UPSC 2021)
1. The Governor of the Reserve Bank of India (RBI) is appointed by the Central Government.
2. Certain provisions in the Constitution of India give the Central Government the right to issue directions to the RBI in the public interest.
3. The Governor of the RBI draws his natural power from the RBI Act.
Which of the above statements is/are correct? 
A. 1 and 2 only    B.  2 and 3 only     C. 1 and 3 only     D. 1, 2 and 3
 
Answer: C
 
2. Concerning the Indian economy, consider the following: (UPSC 2015)
  1. Bank rate
  2. Open Market Operations
  3. Public debt
  4. Public revenue

Which of the above is/are component(s) of Monetary Policy?

(a) 1 only   (b) 2, 3 and 4    (c) 1 and 2     (d) 1, 3 and 4

Answer: C

3. An increase in Bank Rate generally indicates: (UPSC 2013)

(a) Market rate of interest is likely to fall.

(b) Central bank is no longer making loans to commercial banks.

(c) Central bank is following an easy money policy.

(d) Central bank is following a tight money policy.

Answer: (d) 

4. Which of the following statements is/are correct regarding the Monetary Policy Committee (MPC)? (UPSC 2017) 

1. It decides the RBI's benchmark interest rates.

2. It is a 12-member body including the Governor of RBI and is reconstituted every year.

3. It functions under the chairmanship of the Union Finance Minister.

Select the correct answer using the code given below:

A. 1 only      B.  1 and 2 only      C. 3 only      D. 2 and 3 only

Answer: A
 
Source: Indianexpress
 
 

ARCHAEOLOGICAL SURVEY OF INDIA (ASI)

 
 
 
1. Context
 
For the first time, the government plans to open up conservation of protected monuments — so far the mandate of only the Archaeological Survey of India (ASI) — to private players.
 
 

2. What is a national monument?

A national monument is a protected area or site that has been designated by a government or other authority as having national significance. These monuments can be natural, cultural, or historical landmarks and are usually protected from development or other activities that could damage or destroy them. National monuments are often open to the public and may have visitor centers, trails, and other facilities to help people learn about and appreciate them. They are typically managed by government agencies or non-profit organizations that work to preserve and protect them for future generations.

 

3. About Archaeological Survey of India (ASI)

  • The ASI was founded in 1861 by Alexander Cunningham, when he realised the need for a permanent body to oversee archaeological excavations and conservation.
  • But while the body remained largely dysfunctional in the 19th century owing to fund crunch, in the decades preceding Independence, it became very active.
  • A bulk of the protected monuments were taken under the ASI’s wings during the 1920s and30s, up till the 50s.
  • But in the decades after independence, the focus of successive governments was on health, education and infrastructure, rather than protecting heritage.
  • Even within the scope of heritage, the aim was to uncover more monuments and sites, instead of conservation.

Powers

  • The ASI operates under the Ancient Monuments and Archaeological Sites and Remains Act, 1958, which empowers it to protect and manage monuments and archaeological sites of national importance.
  •  The ASI formulates and enforces regulations related to archaeological activities, including excavations, conservation, and publication of findings.
  • The ASI issues licenses for excavations, export of antiquities, and trade in archaeological objects.

Functions

  • The ASI undertakes conservation and restoration of protected monuments and sites. This includes structural repairs, chemical preservation, and environmental management.
  • The ASI conducts archaeological excavations to uncover historical remains, understand past civilizations, and enrich our knowledge of history.
  • The ASI conducts research on various aspects of archaeology and publishes findings in reports, journals, and books.
  • The ASI studies ancient inscriptions and coins to understand language, history, and economic systems.
  • The ASI manages site museums at various monuments and archaeological sites to showcase artifacts and educate the public.
  • The ASI conducts educational programs and outreach activities to raise public awareness about India's cultural heritage.

Role

  • The ASI plays a vital role in preserving India's rich cultural heritage for future generations. It safeguards monuments and sites that represent diverse periods and cultures, fostering national identity and pride.
  • By protecting and promoting historical sites, the ASI contributes significantly to India's tourism industry. Well-maintained monuments attract visitors, generating revenue and local economic benefits.
  • The ASI's research activities contribute to our understanding of India's history, culture, and society. This knowledge enriches academic fields and informs public discourse.

Mandate

  • To protect and preserve monuments and archaeological sites of national importance.
  • To conduct research and excavations to understand India's past.
  • To educate the public about India's cultural heritage.
  • To promote tourism by developing and maintaining historical sites.

 

Significance

  • The ASI is responsible for protecting and preserving India's archaeological sites, monuments, and artifacts. This includes conducting conservation and restoration work to ensure that these cultural treasures are maintained for future generations.
  • India is home to numerous world-renowned archaeological sites and monuments, such as the Taj Mahal, Qutub Minar, and Ajanta and Ellora Caves. The ASI's efforts to preserve and promote these sites contribute to the country's tourism industry, attracting millions of visitors from around the world each year.
  • India's rich cultural heritage is an integral part of its identity. The ASI's work helps to preserve and promote this heritage, fostering a sense of pride and connection among the country's citizens.
  • The ASI conducts research and documentation on India's archaeological heritage, contributing to the understanding of the country's history and culture. It also plays a role in educating the public about India's archaeological sites and artifacts through exhibitions, publications, and educational programs.
  • The ASI enforces laws and regulations related to the protection and preservation of India's cultural heritage. This includes the Ancient Monuments and Archaeological Sites and Remains Act, 1958, which provides legal protection to ancient monuments and archaeological sites in India.

 

4. The Way Forward

The Archaeological Survey of India plays an indispensable role in safeguarding and interpreting India's rich cultural heritage. Their efforts not only preserve the past but also contribute to academic knowledge, national identity, and economic development. As India navigates the future, the ASI's work remains vital in ensuring that its cultural legacy continues to inspire and educate generations to come.

 

For Prelims: Ancient Monuments and Archaeological Sites and Remains Act, 1958, ASI, 

For Mains: 
1. Critically evaluate the role of ASI in fostering national identity and pride in India. How does their work contribute to social cohesion and understanding of diverse historical periods and cultures? (250 Words)
2. Evaluate the potential conflicts between preservation of cultural heritage and development projects. Suggest strategies for achieving a sustainable balance between economic progress and protection of historical sites. (250 Words)

 

Previous year UPSC Mains Question Covering similar theme:

1.The rock-cut architecture represents one of the most important sources of our knowledge of early Indian art and history. Discuss. (GS 1, 2020)
2. Safeguarding the Indian Art Heritage is the need of the moment. Discuss. (GS 1, 2019)

 Source: The Indian Express

 

GOODS AND SERVICE TAX (GST)

 
 
1. Context
 
The recent rate rationalisation exercise under the Goods and Services Tax (GST) regime is likely to have a “sobering impact” on inflation while giving a push to consumption and growth, Reserve Bank of India Governor Sanjay Malhotra said while outlining the monetary policy review on Wednesday (October 1).
 
2. What is the Goods and Services Tax (GST)?
  • The Goods and Services Tax (GST) is a value-added tax levied on the supply of goods and services at each stage of the production and distribution chain. It is a comprehensive indirect tax that aims to replace multiple indirect taxes imposed by the central and state governments in India.
  • GST is designed to simplify the tax structure, eliminate the cascading effect of taxes, and create a unified national market. Under the GST system, both goods and services are taxed at multiple rates based on the nature of the product or service. The tax is collected at each stage of the supply chain, and businesses are allowed to claim a credit for the taxes paid on their inputs.
  • The GST system in India came into effect on July 1, 2017, replacing a complex tax structure that included central excise duty, service tax, and state-level taxes like VAT (Value Added Tax), among others. The GST Council, consisting of representatives from the central and state governments, is responsible for making decisions on various aspects of GST, including tax rates and rules.
  • GST is intended to create a more transparent and efficient tax system, reduce tax evasion, and promote economic growth by fostering a seamless flow of goods and services across the country. It has a significant impact on businesses, as they need to comply with the new tax regulations and maintain detailed records of their transactions for GST filing

3.Goods and Services Tax (GST) and 101st Amendment Act, 2016

The Goods and Services Tax (GST) in India was introduced through the 101st Amendment Act of 2016. This constitutional amendment was a crucial step in the implementation of GST, which aimed to create a unified and comprehensive indirect tax system across the country.

Here are some key points related to the 101st Amendment Act and GST:

 

  • The 101st Amendment Act was enacted to amend the Constitution of India to pave the way for the introduction of the Goods and Services Tax.
  • It added a new article, Article 246A, which confers concurrent powers to both the central and state governments to levy and collect GST
  • The amendment led to the creation of the GST Council, a constitutional body consisting of representatives from the central and state governments. The council is responsible for making recommendations on GST rates, exemptions, and other related issues
  • The amendment introduced a dual GST structure, where both the central government and the state governments have the power to levy and collect GST on the supply of goods and services
  • For inter-state transactions, the 101st Amendment Act provides that the central government would levy and collect the Integrated Goods and Services Tax (IGST), which would be a sum total of the central and state GST
  • The amendment also included a provision for compensating states for any revenue loss they might incur due to the implementation of GST for a period of five years
The 101st Amendment Act was a critical legislative step that provided the constitutional framework for the implementation of GST in India. It addressed the need for a unified tax system, simplifying the tax structure and promoting a common market across the country. The subsequent establishment of the GST Council has played a pivotal role in the ongoing management and evolution of the GST system in India
 
4. What are the different types of Goods and Services Tax (GST)?

In India, the Goods and Services Tax (GST) is structured into different tax rates based on the nature of the goods and services. As of my last knowledge update in January 2022, the GST rates are divided into multiple slabs. It's important to note that tax rates may be subject to changes, and new amendments could have been introduced since then. As of my last update, the GST rates are as follows:

  • Nil Rate:

    • Some goods and services are categorized under the nil rate, meaning they attract a 0% GST. This implies that no tax is levied on the supply of these goods or services.

  • 5% Rate:

    • This is a lower rate, applicable to essential goods such as certain food items, medical supplies, and other basic necessities.

  • 12% Rate:

    • Goods and services falling in this category attract a 12% GST rate. Items such as mobile phones, processed foods, and certain services fall under this slab.

  • 18% Rate:

    • A higher rate of 18% is applicable to goods and services such as electronic items, capital goods, and various services.

  • 28% Rate:

    • The highest GST rate of 28% is applied to luxury items, automobiles, and certain goods and services that are considered non-essential or fall into the luxury category.

  • Compensation Cess:

    • In addition to the above rates, some specific goods attract a compensation cess, which is levied to compensate the states for any revenue loss during the transition to GST. This is often applied to items like tobacco and luxury cars.

  • Zero Rate:

    • Certain categories of goods and services may be specified as "zero-rated," which means they are effectively taxed at 0%. This is different from the nil rate, as it allows businesses to claim input tax credit on inputs, capital goods, and input services.

  • Exempt Supplies:

    • Some goods and services may be exempt from GST altogether. This means that they are not subject to any GST, and businesses cannot claim input tax credit on related inputs
 
5.Central GST (CGST), State GST (SGST), Union territory GST (UTGST) and Integrated GST (IGST)
 
 
Subject Central GST (CGST) State GST (SGST) Union Territory GST (UTGST) Integrated GST (IGST)
Levied by Central Government Respective State Governments Union Territory Administrations Central Government (on inter-state transactions)
Applicability On intra-state supplies (within the same state) On intra-state supplies (within the same state) On intra-union territory supplies (within the same union territory) On inter-state supplies (across states or union territories)
Rate Determination Determined by the Central Government Determined by the Respective State Government Determined by the Union Territory Administration IGST rate is a sum of CGST and SGST rates
Revenue Collection Collected by the Central Government Collected by the Respective State Government Collected by the Union Territory Administration Collected by the Central Government (on inter-state transactions)
Utilization of Revenue Shared between Central and State Governments Retained by the Respective State Government Retained by the Union Territory Administration Shared between Central and State Governments
Purpose Part of the dual GST structure, meant to cover central taxes Part of the dual GST structure, meant to cover state taxes Applicable in union territories for intra-territory supplies Applied to regulate and tax inter-state supplies
Input Tax Credit (ITC) ITC available for CGST paid on inputs and services ITC available for SGST paid on inputs and services ITC available for UTGST paid on inputs and services ITC available for both CGST and SGST paid on inputs
Tax Jurisdiction Applies within a particular state Applies within a particular state Applies within a particular union territory Applies to transactions across states and union territories
GSTN Portal for Filing Returns Central GSTN portal State-specific GSTN portals UTGSTN portal Integrated GSTN portal
 
 
6.What are the benefits of Goods and Services Tax (GST) in India?
 
The Goods and Services Tax (GST) in India was implemented with the aim of bringing about significant reforms in the indirect tax structure. Several benefits have been associated with the introduction of GST.
 
Here are some key advantages:
 
  • GST replaced multiple indirect taxes levied by the central and state governments, simplifying the tax structure. This streamlined system reduces the complexity of compliance for businesses
  • GST eliminates the cascading effect of taxes, where taxes are levied on top of other taxes. With a seamless credit mechanism, businesses can claim input tax credit on the taxes paid on their purchases, leading to a more transparent and efficient system
  • GST has facilitated the creation of a common national market by harmonizing tax rates and regulations across states. This has reduced trade barriers and promoted the free flow of goods and services throughout the country
  • The GST system has incorporated technology-driven processes, including electronic filing and real-time reporting, making it harder for businesses to evade taxes. This has contributed to increased tax compliance
  • The input tax credit mechanism under GST benefits manufacturers, as they can claim credits for taxes paid on raw materials and input services. This has a positive impact on the cost of production and enhances the competitiveness of Indian goods in the international market
  • GST brings transparency to the taxation system. The online filing of returns and the availability of transaction-level data make it easier for tax authorities to monitor and track transactions, reducing the scope for corruption
  • GST has replaced a complex system of filing multiple tax returns with a more straightforward mechanism. Businesses now need to file fewer returns, reducing the compliance burden
  • The implementation of GST has contributed to an improvement in the ease of doing business in India. The unified tax system has made it simpler for businesses to operate across states and has reduced the paperwork and bureaucratic hurdles associated with tax compliance
  • GST has led to the harmonization of tax rates across states and union territories, minimizing the tax rate disparities that existed earlier. This creates a more predictable tax environment for businesses
7.Goods and Services Tax (GST)-Issues and Challenge
 
  • Despite the intention to simplify the tax structure, the multi-tiered rate system (0%, 5%, 12%, 18%, and 28%) and the inclusion of cess on certain goods have introduced complexity. The classification of goods and services under different tax slabs can be challenging, leading to disputes and confusion
  • The successful implementation of GST relies heavily on technology. Issues such as technical glitches on the GSTN (Goods and Services Tax Network) portal, especially during the initial phases, have caused difficulties for businesses in filing returns and complying with regulations
  • The compliance requirements for businesses under GST, including multiple returns filing, have been perceived as burdensome. Smaller businesses, in particular, may find it challenging to adapt to the new system and comply with the various provisions
  • The transition from the previous tax regime to GST posed challenges, especially for businesses in terms of understanding the new tax structure, reconfiguring accounting systems, and ensuring a smooth transition of credits from the old tax system to the GST system
  • The classification of certain goods and services into specific tax slabs has been a source of contention. Ambiguities in classification have led to disputes and litigations, with businesses seeking clarity on the applicable tax rates
  • The implementation of GST has increased compliance costs for businesses due to the need for sophisticated IT infrastructure, the hiring of tax professionals, and efforts to ensure accurate reporting and filing
  • Challenges related to availing and matching input tax credits have been reported. Timely matching of credits and resolving discrepancies can be cumbersome, leading to concerns about the seamless flow of credit across the supply chain
  • The anti-profiteering provisions were introduced to ensure that businesses pass on the benefits of reduced tax rates to consumers. However, the implementation of anti-profiteering measures has been criticized for its complexity and potential for disputes
  • The periodic changes in the GST return filing system have created challenges for businesses in adapting their processes. Delays and complexities in return filing can affect working capital management
8.Goods and Services Tax Council (GST Council)
 
The Goods and Services Tax Council (GST Council) is a constitutional body in India that makes recommendations on the Goods and Services Tax (GST). It was established under the Constitution (122nd Amendment) Act, 2016, which introduced the GST in India

The GST Council consists of the following members:

  • The Union Finance Minister, who is the Chairperson of the Council.
  • The Union Minister of State in charge of revenue or any other Minister of State nominated by the Union Government.
  • One Minister from each state, nominated by the Governor of that state.
  • The Chief Secretary of each state, ex-officio.
  • If the President, on the recommendation of the Council, so directs, one representative of each Union territory which has a legislature, to be nominated by the Lieutenant Governor of that Union territory.
  • Three to seven members (other than Ministers) to be nominated by the Union Government, of whom at least one member shall be from the field of economics and another from the field of chartered accountancy, legal affairs or public finance
9. Way forward
 
It's important to note that the composition and structure of the GST Council may evolve over time, and there might have been changes since my last update in January 2022. To obtain the latest and most accurate information about the GST Council and its members, it is recommended to refer to official government sources or recent announcements by the relevant authorities

 

For Prelims: Economic and Social Development and Indian Polity and Governance
For Mains: General Studies II: Functions and responsibilities of the Union and the States, issues and challenges pertaining to the federal structure, devolution of powers and finances up to local levels and challenges therein

General Studies III: Inclusive growth and issues arising from it
 
 
Previous Year Questions
 
1.Which of the following are true of the Goods and Services Tax (GST) introduced in India in recent times? (UGC Paper II 2020)
A. It is a destination tax
B. It benefits producing states more
C. It benefits consuming states more
D. It is a progressive taxation
E. It is an umbrella tax to improve ease of doing business
Choose the most appropriate answer from the options given below:
A.B, D and E only
B.A, C and D only
C.A, D and E only
D.A, C and E only
Answer (D)
2.What is/are the most likely advantages of implementing ‘Goods and Services Tax (GST)’? (UPSC CSE 2017)

1. It will replace multiple taxes collected by multiple authorities and will thus create a single market in India.

2. It will drastically reduce the ‘Current Account Deficit’ of India and will enable it to increase its foreign exchange reserves.

3. It will enormously increase the growth and size of the economy of India and will enable it to overtake China in the near future.

Select the correct answer using the code given below:

(a) 1 only

(b) 2 and 3 only

(c) 1 and 3 only

(d) 1, 2 and 3

Answer (a)
 
Source: Indianexpress
 
 

MINIMUM SUPPORT PRICE

1. Context

The Centre on Wednesday announced minimum support prices (MSPs) for six rabi crops for the rabi marketing season 2026-27, with wheat seeing an increase of Rs 160 per quintal over the current MSP.

2. What is the Minimum Support Price (MSP)?

  • MSP is the minimum price a farmer must pay for their food grains as guaranteed by the government. They are recommended by the Commission for Agricultural Costs and Prices (CACP) and approved by the Cabinet Committee on Economic Affairs.
  • The CACP submits its recommendations to the government in the form of Price Policy Reports every year.
  • After considering the report and views of the state governments and also keeping in view the overall demand and supply situation in the country, the central government takes the final decision.
  • The Food Corporation of India (FCI) is the nodal agency for procurement along with State agencies, at the beginning of the sowing season.
The minimum support price (MSP) is set for 23 crops every year. They include:
  • 7 cereals (paddy, wheat, maize, bajra, jowar, ragi, and barley)
  • 5 pulses (chana, tur/arhar, moong, urad, and Masur)
  • 7 oilseeds (rapeseed-mustard, groundnut, soya bean, sunflower, sesamum, safflower, and Enigerseed) and
  • 4 commercial crops (sugarcane, cotton, copra, and raw jute).

3. How MSP is Calculated?

  • MSP, presently, is based on a formula of 1.5 times the production costs.
  • The CACP projects three kinds of production costs for every crop, both at state and all-India average levels.
  • A2 covers all paid-out costs directly incurred by the farmer — in cash and kind — on seeds, fertilizers, pesticides, hired labour, leased-in land, fuel, irrigation, etc.
  • A2+FL includes A2 plus an imputed value of unpaid family labour.
  • C2: Estimated land rent and the cost of interest on the money taken for farming are added to A2 and FL.
  • Farm unions are demanding that a comprehensive cost calculation (C2) must also include capital assets and the rentals and interest forgone on owned land, as recommended by the National Commission for Farmers.

4. The issue with the calculation of MSP

  • To calculate MSP, the government uses A2+FL cost. The criticism of A2+FL is that it doesn’t cover all costs and that a more representative measure, C2, needs to be used.
  • For example, in the 2017-18 rabi season, CACP data shows that C2 for wheat was 54% higher than A2+FL.
  • The Swaminathan Commission also stated that the MSP should be based on the comprehensive cost of production, which is the C2 method.

5. Key Points about the Farmer's Demand

  • After the recent decision to repeal three contentious farm laws, protesting farmer unions are now pressing for their demand of the legalization of the Minimum Support Price (MSP).
  • They want a legal guarantee for the MSP, which at present is just an indicative or a desired price.
  • Legalising MSPs would put the government under a legal obligation to buy every grain of the crops for which MSPs have been announced.
  • At present, the PM has announced the formation of a committee to make MSP more transparent, as well as to change crop patterns and to promote zero-budget agriculture which would reduce the cost of production.
  • The entire issue of enforcing MSP legally is a tricky, complicated, and multidimensional one, involving lots of factors.
  • Core demand: MSP based on a C2+50% formula should be made a legal entitlement for all agricultural produce. This would mean a 34% increase in the latest MSP for paddy and a 13% increase for wheat. MSP should also be extended to fruit and vegetable farmers who have been excluded from benefits so far.

6. The rationale behind the demand for legislation of MSP

  • Farmers receive less than MSP: In most crops grown across much of India, the prices received by farmers, especially during harvest time, are well below the officially declared MSPs. And since MSPs have no statutory backing, they cannot demand these as a matter of right.
  • Limited procurement by the Govt: Also, the actual procurement at MSP by the Govt. is confined to only about a third of wheat and rice crops (of which half is bought in Punjab and Haryana alone), and 10%-20% of select pulses and oilseeds. According to the Shanta Kumar Committee’s 2015 report, only 6% of the farm households sell wheat and rice to the government at the MSP rates.

7. Challenges associated with MSP

  • Protest by Farmers: Farm unions have been protesting for more than six months on Delhi's outskirts, demanding legislation to guarantee MSP for all farmers for all crops and a repeal of three contentious farm reform laws.
  • MSP and Inflation: When announcing the MSP, inflation should be taken into account. But often the price is not increased up to the mark. For example, this time MSP for Maize has not even considered inflation then how it will benefit farmers! Also, frequent increases in the MSPs can lead to inflation too.
  • High Input Costs: The input costs have been rising faster than sale prices, squeezing the meagre income of the small farmers and driving them into debt.
  • Lack of Mechanism: No mechanism guarantees that every farmer can get at least the MSP as the floor price in the market. So proper mechanisms need to be fixed for all times to come.
  • Restriction in Europe: Even after producing surplus grains, every year a huge portion of these grains gets rotten. This is due to the restrictions under WTO norms, that grain stocks with the FCI (being heavily subsidized due to MSP) cannot be exported.
 
For Prelims: Minimum Support Price, Rabi Crops, WTO, Commission for Agricultural Costs and Prices (CACP), Cabinet Committee on Economic Affairs, Food Corporation of India
For Mains:
1. Explain the concept of Minimum Support Price (MSP) in India. How is MSP determined, and what is its role in ensuring fair prices for agricultural produce? (250 Words)
 
 
Previous Year Questions
 
1. Consider the following statements: (UPSC CSE 2020)
1. In the case of all cereals, pulses, and oil seeds, the procurement at Minimum Support Price (MSP) is unlimited in any State/UT of India.
2. In the case of cereals and pulses, the MSP is fixed in any State/UT at a level to which the market price will never rise.
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
 
2. Which of the following factors/policies were affecting the price of rice in India in the recent past? (UPSC CSE, 2020)
(1) Minimum Support Price
(2) Government’s trading
(3) Government’s stockpiling
(4) Consumer subsidies
Select the correct answer using the code given below:
(a) 1, 2 and 4 only
(b) 1, 3 and 4 only
(c) 2 and 3 only
(d) 1, 2, 3 and 4
 
Answer: D
 
3. In India, which of the following can be considered as public investment in agriculture? (UPSC GS1, 2020)
(1) Fixing Minimum Support Price for agricultural produce of all crops
(2) Computerization of Primary Agricultural Credit Societies
(3) Social Capital development
(4) Free electricity supply to farmers
(5) Waiver of agricultural loans by the banking system
(6) Setting up of cold storage facilities by the governments.
In India, which of the following can be considered as public investment in agriculture?
Select the correct answer using the code given below:
(a) 1, 2 and 5 only
(b) 1, 3, 4 and 5 only
(c) 2, 3 and 6 only
(d) 1, 2, 3, 4, 5 and 6
 
Answer: C
 
4. The Fair and Remunerative Price (FRP) of sugarcane is approved by the (UPSC CSE, 2015)
(a) Cabinet Committee on Economic Affairs
(b) Commission for Agricultural Costs and Prices
(c) Directorate of Marketing and Inspection, Ministry of Agriculture
(d) Agricultural Produce Market Committee
 
Answer: A
 
 
Share to Social
View All Current affairs

More Current Affairs

DAILY CURRENT AFFAIRS, 16 JULY 2025...

16-Jul-2025
Read more

DAILY CURRENT AFFAIRS, 12 MAY 2025...

12-May-2025
Read more

DAILY CURRENT AFFAIRS, 06 JUNE 2025...

06-Jun-2025
Read more

DAILY CURRENT AFFAIRS, 24 MAY 2025...

24-May-2025
Read more