FOREIGN DIRECT INVESTMENT (FDI)
1. Context
Net foreign direct investment (FDI) remained negative for the fourth consecutive month in December 2025, coming in at -$1.6 billion, due to repatriation by foreign companies in India and outward investments by Indian companies exceeding the amount of direct investment entering the country, an analysis of the latest data from the Reserve Bank of India (RBI) show.
2. FDI in India
- 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
3. Foreign Direct Investment (FDI)
Foreign Direct Investment (FDI) refers to the investment made by individuals, businesses, or governments from one country (the home country) into another country (the host country) with the objective of establishing a lasting interest or significant degree of influence in the foreign business or enterprise
Key Aspects:
- 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.
4.FDI Routes in India
India has several routes through which Foreign Direct Investment (FDI) can enter the country. These routes are regulated by the Reserve Bank of India (RBI) and the Department for Promotion of Industry and Internal Trade (DPIIT), and they define the conditions, limits, and sectors in which FDI is allowed
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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.
4.1. Examples
- 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
4.2.Sectors where FDI Prohibited
- 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
5. Foreign Portfolio Investors (FPIs)
Foreign Portfolio Investors (FPIs) refer to foreign individuals, institutions, or funds that invest in financial assets in a country, such as stocks, bonds, mutual funds, and other securities. FPIs are distinct from Foreign Direct Investors (FDIs), who typically make long-term investments in companies and assets to establish a lasting interest
Key Aspects:
- 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.
6.Foreign Portfolio vs. Foreign Direct Investment
| 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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Source: indianexpress
SPEAKER OF LOK SABHA
1. Context
February 2026 saw a proposal for a No-Confidence Motion against the Speaker (under Article 94), triggered by allegations of procedural bias concerning the Leader of the Opposition’s right to quote from sensitive memoirs..
2. Speaker of Lok Sabha
The Speaker of the Lok Sabha is the presiding officer and the highest authority in the Lower House of the Parliament of India. This position is pivotal in the functioning of the Lok Sabha and plays a crucial role in maintaining order and conducting its proceedings impartially. The Speaker is elected by members of the Lok Sabha from among themselves
The Speaker plays a crucial role in ensuring the effective functioning of parliamentary democracy in India. Their impartiality and adherence to parliamentary norms are essential in upholding the integrity and dignity of the Lok Sabha
3. What are the constitutional provisions related to the Speaker?
The constitutional provisions related to the Speaker of the Lok Sabha in India are primarily outlined in the Constitution of India, particularly in Articles 93 to 97.
Here are the key constitutional provisions related to the Speaker:
- Article 93(1) states that the Lok Sabha (House of the People) shall choose two of its members to be the Speaker and the Deputy Speaker.
- Article 94(1) provides that the Speaker or the Deputy Speaker may resign by writing addressed to the Deputy Speaker or, if the office of Deputy Speaker is vacant, to the President of India.
- Article 94(2) states that before the House of the People first meets after each general election and before the office of Speaker and Deputy Speaker becomes vacant, the President shall appoint from among the members of the House a Speaker pro tem.
- Article 95 provides for the election of a Deputy Speaker of the Lok Sabha by its members.
- Article 96 outlines the procedure for the removal of the Speaker and the Deputy Speaker. It states that they may be removed from office by a resolution of the Lok Sabha passed by a majority of all the then members of the House, after giving not less than 14 days’ notice of the intention to move the resolution.
- Article 97 provides for the vacation of the office of Speaker or Deputy Speaker, stating that their office shall become vacant if they cease to be a member of the Lok Sabha.
4. How are a Speaker and Deputy Speaker elected?
In India, both the Speaker and the Deputy Speaker of the Lok Sabha are elected by the members of the Lok Sabha (House of the People), as per the provisions laid out in the Constitution of India and the Rules of Procedure and Conduct of Business in Lok Sabha.
Election of the Speaker:
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Nomination: Any member of the Lok Sabha who is eligible to be elected as Speaker may propose another member as a candidate for the office of Speaker. This proposal must be supported by at least 50 members.
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Voting: Once nominations are completed, voting takes place by a simple majority of members present and voting. The voting is conducted by means of a voice vote or a division (where members physically stand up to indicate their choice).
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Oath: After the election, the newly elected Speaker has to make and subscribe to an oath or affirmation before the President or some person appointed in that behalf by the President.
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Assumption of Office: The Speaker assumes office immediately after taking the oath or affirmation.
Election of the Deputy Speaker:
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Nomination: Similar to the Speaker, any member of the Lok Sabha may propose another member as a candidate for the office of Deputy Speaker. The proposal needs support from at least 50 members.
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Voting: Voting for the Deputy Speaker also takes place by a simple majority of members present and voting. The procedure for voting is the same as for the Speaker.
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Oath: Once elected, the Deputy Speaker has to make and subscribe to an oath or affirmation before the Speaker or some person appointed in that behalf by the Speaker.
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Assumption of Office: The Deputy Speaker assumes office immediately after taking the oath or affirmation.
5. What are the duties of the pro-tem Speaker?
The pro-tem Speaker is appointed temporarily to preside over the first meeting of the Lok Sabha after a general election until a regular Speaker is elected. The duties and responsibilities of the pro-tem Speaker primarily involve ensuring the smooth conduct of the proceedings during this initial phase.
Here are the key duties of the pro-tem Speaker:
- The pro-tem Speaker convenes the first meeting of the newly elected Lok Sabha. This includes overseeing the swearing-in ceremony of newly elected members.
- The pro-tem Speaker administers the oath or affirmation to all members-elect of the Lok Sabha.
- During the first meeting, the pro-tem Speaker presides over the House. They ensure that the proceedings are conducted in accordance with parliamentary rules and procedures.
- The primary duty of the pro-tem Speaker is to facilitate the election of the regular Speaker of the Lok Sabha. They oversee the process of nominations and the voting procedure until a Speaker is elected
- Similar to the regular Speaker, the pro-tem Speaker maintains order and decorum in the House. They have the authority to call members to order and ensure that debates and discussions are conducted respectfully
- The pro-tem Speaker decides on points of order raised during the proceedings and interprets parliamentary rules as necessary
- Until the regular Speaker assumes office, the pro-tem Speaker represents the Lok Sabha in ceremonial functions or interactions with the President or other dignitaries.
- Once the regular Speaker is elected by the members of the Lok Sabha, the pro-tem Speaker facilitates the smooth transition of responsibilities and hands over charge to the elected Speaker
6. What is the process for the removal of the Speaker?
The process for the removal of the Speaker of the Lok Sabha in India is outlined in Article 94 of the Constitution of India.
Here’s a detailed explanation of the process:
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A resolution for the removal of the Speaker can be moved in the Lok Sabha. This resolution must be supported by at least 50 members of the House
- A minimum notice period of 14 days is required before the resolution can be taken up for consideration in the House. This notice period allows for adequate preparation and notification to all members
- The resolution for removal is debated and discussed in the Lok Sabha. Members are given an opportunity to present arguments for or against the removal of the Speaker.
- After the debate, the resolution is put to vote. The resolution for removal of the Speaker requires a majority of all the then members of the Lok Sabha (i.e., a simple majority of members present and voting is not sufficient)
- If the resolution for removal is passed by a majority of all the then members of the Lok Sabha, the Speaker ceases to hold office from the date of the passing of the resolution
- Upon the removal of the Speaker, the office of the Speaker becomes vacant. The Deputy Speaker or, in their absence, any other member of the Lok Sabha presides over the House until a new Speaker is elected
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For Prelims: Indian Polity
For Mains: GS-II: Governance, Constitution and Polity
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Previous Year Questions
1.With reference to the Speaker of Lok Sabha, consider the following statements: (UPSC CSE 2024)
While any resolution for the removal of the Speaker of the Lok Sabha is under consideration 1. He/She shall not preside. 2. He/She shall not have the right to speak. 3. He/She shall not be entitled to vote on the resolution in the first instance. 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 (a)
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Source: Indianexpress
ARBITRATION COUNCIL OF INDIA(ACI)
1. Context
Nearly six years after the 2019 amendments to the Arbitration and Conciliation Act, 1996 (1996 Act), the Union government is yet to constitute the Arbitration Council of India (ACI), envisaged as the central regulatory and promotional body for institutional arbitration.
2. What is the Arbitration Council of India (ACI)?
- The Arbitration Council of India (ACI) is a statutory body created to strengthen and professionalize the system of arbitration in India, making the country a more reliable and attractive destination for resolving commercial and legal disputes outside traditional courts.
- It was established under the Arbitration and Conciliation (Amendment) Act, 2019, which amended the original Arbitration and Conciliation Act, 1996.
- In simple terms, the main purpose of the ACI is to improve the quality, credibility, and efficiency of arbitration in India.
- Arbitration is a method where disputes—especially in business and contractual matters—are settled by neutral experts called arbitrators instead of through lengthy court trials.
- By creating a national-level authority, the government aimed to bring uniform standards and oversight to how arbitration is practiced across the country.
- One of the key roles of the ACI is to grade and accredit arbitration institutions. This means it evaluates arbitral institutions based on criteria such as infrastructure, quality of arbitrators, case management practices, and transparency.
- Institutions that meet the required standards are officially recognized, which helps parties choose reliable forums for resolving their disputes. Over time, this process is meant to raise overall confidence in India’s arbitration ecosystem.
- The ACI also plays a role in maintaining a database of qualified arbitrators. This helps ensure that parties have access to trained and experienced professionals, reducing concerns about bias, lack of expertise, or procedural irregularities.
- By promoting training and setting professional benchmarks, the Council contributes to building a pool of high-quality arbitration practitioners in the country
3. Proposed Mandate
- The 2019 legislative changes put forward the creation of the Arbitration Council of India as a central regulatory authority responsible for encouraging, modernising, and strengthening arbitration practices across the country.
- This framework was shaped by the suggestions of the High-Level Committee on Arbitration, led by Justice B.N. Srikrishna, which presented its findings in July 2017.
- Under these amendments, the Council was given broad responsibilities, such as evaluating and ranking arbitral institutions, recognising professional organisations that certify arbitrators, and maintaining a national record of arbitration awards issued in India.
- The proposal also stated that the ACI would be led by a Chairperson appointed by the Central Government in consultation with the Chief Justice of India.
- This position could be held by a former Supreme Court judge, a former Chief Justice or judge of a High Court, or a distinguished expert in arbitration, along with ex officio members from the executive branch forming part of the Council
4. Institutional Independence
- One of the principal criticisms directed at the Council is its perceived lack of institutional independence.
- A majority of its members are either selected or appointed by the Union government, which has led to worries about the autonomy of the arbitration system in India—especially since the government itself is the largest party to legal disputes.
- Legal experts have pointed out that placing regulatory authority in a body dominated by government nominees, with powers to rate arbitration centres, certify arbitrators, and shape policy, raises serious concerns about neutrality and has little parallel in countries known for arbitration-friendly frameworks.
- Additional issues have been raised regarding the ACI’s responsibility for approving and assessing arbitral institutions.
- Although this approach is said to be influenced by models in Singapore and Hong Kong, there is an important difference. In those jurisdictions, arbitration is largely managed by a single, central institution rather than a regulator supervising numerous bodies.
- The 2019 amendments allow the ACI to recognise an unlimited number of arbitration institutions, which could weaken quality control, create heavy administrative burdens for the Council, and increase costs for public resources
5. Judicial Intervention restriction
- Under the Arbitration and Conciliation Act, 1996, Indian courts have the authority to issue interim protections to safeguard the interests of parties involved in arbitration.
- Currently, such relief can be sought before the arbitration begins, while proceedings are ongoing, or even after an arbitral award is issued but prior to its enforcement in India.
- The draft Bill aims to redefine this role by restricting the courts’ power to grant interim measures only to two stages: before the start of arbitration or after the award has been delivered.
- It proposes a change to Section 9(2), which at present mandates that arbitration must be initiated within 90 days from the date a court grants pre-arbitration interim relief.
- Under the new proposal, this 90-day countdown would instead start from the date the application for interim relief is submitted, rather than when the court passes the order. The purpose behind this shift is to reduce delays caused by extended court involvement before arbitration formally begins.
- Another key recommendation is the addition of a new Section 9-A, which would permit parties to approach an emergency arbitrator for interim protection after arbitration has started but before the arbitral tribunal is formally constituted
6. 2024 draft bill mandate
- On October 18, 2024, the Union government issued the draft Arbitration and Conciliation (Amendment) Bill, 2024 and opened it up for public feedback. The proposed legislation aims to revitalise institutional arbitration by introducing a range of structural changes.
- It offers a new definition of an “arbitral institution,” describing it as any body or organisation that administers arbitration proceedings under its own procedural framework or as agreed upon by the parties.
- This represents a shift away from the 2019 framework, which required such institutions to be formally notified or designated by the Supreme Court or a High Court.
- The draft also seeks to broaden the responsibilities of arbitral institutions by granting them certain powers that are currently exercised solely by the courts.
- These include the ability to extend the deadline for issuing arbitral awards, lower arbitrators’ fees in cases where delays are caused by the tribunal, and replace arbitrators when necessary.
- If implemented, these steps are expected to limit the extent of judicial involvement in arbitration proceedings.
- However, in March 2025, while responding to a query in Parliament, Union Law Minister Arjun Ram Meghwal stated that the Bill was still being examined
7. Way Forward
The report led by Justice B.N. Srikrishna observed that the ongoing prevalence of ad hoc arbitration in India largely stems from parties’ strong inclination toward controlling their own procedures. This tendency is further strengthened by long-standing doubts about the neutrality and administrative capacity of domestic arbitration institutions. The report emphasised that closing this gap in confidence is essential if Indian arbitral bodies are to compete effectively with well-established international institutions
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For Prelims: Arbitration, Alternate Dispute Resolution, International Arbitration Centre, Foreign Direct Investment, Startup India For Mains: Alternate Dispute Resolution, Impact of Arbitration on Efficiency of Function of Judiciary, Promoting Dispute Resolution in India. |
Source: The Hindu
FOREST RIGHTS ACT
1. Context
Over the last six months, the Odisha government has been shutting down Forest Rights Act (FRA) Cells that were set up under State and Central schemes to accelerate the implementation of the Forest Rights Act, 2006
2. Key Takeaways
- The ST Commission is caught in a row with the Union Environment Ministry over the latest Forest Conservation Rules (FCR), 2022.
- The row is over the potential violation of provisions enshrined in the Scheduled Tribes and Other Forest Dwellers (Recognition of Forest Rights) Act, 2006 was dubbed the Forest Rights Act (FRA).
3. The involvement of NCST in the Act
- The Ministry of Environment, Forests and Climate Change in June 2022 notified the forest (Conservation Rules, 2022, which prescribed the mechanism for the diversion of Forest land for non-forest purposes.
- These amended rules have omitted a clause (Present in 2014 and 2017 Rules) that explicitly required any proposal to mandatorily have the consent of local tribespeople and Other Traditional Forest Dwellers (OTFDs) of the area, before proceeding for Stage 1 clearance.
- The FCR, 2022 has allowed applying entities to go for the consent of locals, represented by the Gram Sabha after Stage 1 or even after Stage 2 clearance.
- According to the FRA, 2006, in case of a dispute over forest land, precedence has to be given to the rights of STs and OTFDs, who live in and off the forest and its resources, over any other party.
4. NCST demands
- In September 2022, NCST Chairperson Harsh Chouhan shot off a letter to Environment Minister Bhupendra Yadav, highlighting the potential consequences of FCR, 2022, recommending that they be put on hold and the previous Rules, which provided for the consent clause, be strengthened.
- The ST panel argued that the previous versions of the Rules provided a legal space for ensuring the completion of the processes for recognition and vesting of rights under the FRA in areas where forests are being diverted.
- The ST Commission noted that it made little sense to take the consent of tribals and forest dwellers after an applicant had got Stage 1 clearance.
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By then, the applicant would be invested in the project and would then have the incentive to "pursue the State It said governments or Union Territories" to divert the land at the earliest.
The NCST added that the FCR, 2022 provided for compensatory Afforestation, but nowhere did it prescribe safeguards or a mechanism for compliance with FRA.
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- Further, the NCST's Working Group found that FRA compliance was in trouble even under the old rules.
It said currently, nearly 25, 000-30, 000 hectares of forest land were being diverted every year. - It cited a study by the Centre for Environment and Development, ATREE to note: " Out of 128 applications for forest diversion for mining, over 100 had been processed between 2009 and 2018".
- It added that 74 proposals had Stage 2 approval, 46 had Stage 1 approval (in principle), with just five rejected and four closed for other reasons.
- None of the rejections was for non-compliance with FRA.
- The study also found that 14 of these cases (all post-2014) had been cleared with an FRA compliance report, despite, this being far from the "ground reality".
5. About NCST
- The National Commission for Scheduled Tribes is a constitutional body that was established by the Constitution (89th Amendment) Act, 2003.
- The Commission is an authority working for the economic development of Scheduled Tribes in India.
This amendment replaced the National Commission for Scheduled Castes and Scheduled Tribes with two distinct commissions which are:
- National Commission for Scheduled Castes (NCSC)
- National Commission for scheduled Tribes (NCST)
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Article 366 (25) of the Constitution, Scheduled Tribes are those communities that are scheduled in by article 342 of the Constitution.
Also, Article 342 of the Constitution says that: The Scheduled Tribes are the tribes or tribal communities or part of or groups within these tribes and tribal communities which have been declared as such by the President through a public notification.
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5.1. Composition of NCST
- The NCST consists of one chairperson, one vice-chairperson and three full-time members.
- Out of the three members, there should compulsorily be one lady member.
- Tenure of the members is 3 years.
5.2. Functions of NCST
- It investigates and monitors issues related to safeguarding the provisions for Scheduled Tribes under the Constitution and evaluating the working of those safeguards.
- NCST will inquire into specific complaints concerned with the deprivation of rights and safeguards of the STs.
- The commission participates and advises on the planning process for the socio-economic development of the STs and also evaluates the progress of the various developmental activities.
- The President will be presented with an annual report on the working of those safeguards.
- Apart from annual reports, other reports also will be submitted to the President as and when necessary.
- The Commission will also give reports on what measures are to be taken by both the central and various state governments for the effective execution of the measures and safeguards for the protection, development and welfare of the STs.
- Other functions of NCST are related to the welfare, protection, development and advancement of the STs.
6. Forest Rights Act
- The Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act, commonly known as the Forest Rights Act of India, is often referred to as the Tribal Rights Act or the Tribal Land Act.
- It was enacted in 2006 and recognises the rights of tribal communities that live in the forest as well as other traditional forest dwellers to the forest resources that were essential to their ability to provide for a variety of needs, including subsistence, habitation and other sociocultural requirements.
- The forest management policies, including the Acts, Rules and Forest Policies of Participatory Forest Management policies in both colonial and post-colonial India, did not, till the enactment of this Act., recognize the symbiotic relationship of the STs with the forests, reflected in their dependence on the forests as well as in their traditional wisdom regarding conservation of the forests.
| The Act encompasses Rights of Self-cultivation and Habitation which are usually regarded as Individual rights; and Community Rights such as Grazing, Fishing and access to Water bodies in the forest, Habitat Rights for PVTGs, Traditional Seasonal Resources access to Nomadic and Pastoral Communities, access to biodiversity, community right to intellectual property and traditional knowledge, recognition of traditional customary rights and right to protect, regenerate or conserve or manage any community forest resource for sustainable use. |
- It also provides rights to the allocation of forest land for developmental purposes to fulfil the basic infrastructural needs of the community.
- In conjunction with the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Settlement Act, 2013 FRA protects the tribal population from eviction without rehabilitation and settlement.
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The Act further enjoins upon the Gram Sabha and rights holders the responsibility of conservation and protection of bio-diversity, wildlife, forests, adjoining catchment areas, water sources and other ecologically sensitive areas as well as to stop any destructive practices affecting these resources or cultural and natural heritage of the tribals.The Gram Sabha is also a highly empowered body under the Act, enabling the tribal population to have a decisive say in the determination of local policies and schemes to impact them.
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Thus the Act empowers the forest dwellers to access and use the forest resources in the manner that they were traditionally accustomed, to protect, conserve and manage forests, protect forest dwellers from unlawful evictions and also provides for basic development facilities for the community of forest dwellers to access facilities of education, health, nutrition, infrastructure etc.
6.1. Objective
- To undo the historical injustice that occurred to the forest-dwelling communities
- To ensure land tenure, livelihood and food security of the forest-dwelling Scheduled Tribes and other traditional forest dwellers
- To Strengthen the conservation regime of the forests by including the responsibilities and authority of Forest Rights holders for sustainable use, conservation of biodiversity and maintenance of ecological balance.
For Prelims & Mains
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For Prelims: Forest Rights Act, NCST, NCSC, Forest Conservation Rules 2022, Traditional Forest Dwellers,
For Mains:
1.Discuss the powers and functions of the National Commission for Scheduled Tribes in protecting the rights of the Forest-dwellers in India. (250 Words)
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Source: The Hindu and Ministry of Tribal Affairs
GREAT NICOBAR ISLAND PROJECT
1. Context
A Bench of the National Green Tribunal (NGT) on Monday cleared the way for the ₹92,000-crore Great Nicobar Island mega-infrastructure project, noting that “considering the strategic importance” of it and “other relevant considerations”, “we do not find any good ground to interfere”
2.What is the Great Nicobar Island Project?
- The Great Nicobar Island Project is a significant infrastructure development initiative undertaken by the Indian government on Great Nicobar Island, part of the Andaman and Nicobar Islands in the Indian Ocean. The project aims to transform the island into a strategic and economic hub.
- A deep-draft international container transshipment terminal is planned to be developed at Galathea Bay. This port is expected to serve as a key shipping hub in the region, facilitating trade and reducing dependency on transshipment ports in other countries
- An international airport is proposed to improve connectivity to the island, both for tourism and strategic purposes. This airport will be capable of handling wide-bodied aircraft and will enhance the island's accessibility
- To support the infrastructure and population growth, a gas- and solar-based power plant will be developed. This plant aims to provide a reliable and sustainable energy source for the island's needs
- A modern township with residential, commercial, and recreational facilities is planned to accommodate the increased population and workforce that the project will attract. This township is expected to have state-of-the-art amenities and infrastructure
Strategic and Economic Importance
- Great Nicobar Island is situated near the Malacca Strait, one of the world's busiest shipping lanes. Developing this island will enhance India's strategic presence in the Indian Ocean Region, particularly in terms of maritime security and trade control
- The project aims to boost the local economy by creating job opportunities and attracting investments. Improved infrastructure and connectivity are expected to stimulate tourism and other economic activities on the island
- Enhancing connectivity through the transhipment port and international airport will integrate Great Nicobar Island more closely with the global and regional trade networks, potentially making it a key logistical and commercial hub
Environmental and Social Considerations
- The project has raised concerns about its potential impact on the island's rich biodiversity and ecosystems. Great Nicobar Island is home to unique flora and fauna, including endangered species. Ensuring sustainable development practices and environmental protection measures will be crucial
- There are concerns about the impact on local communities, particularly indigenous tribes such as the Nicobarese and Shompen. Ensuring that their rights and livelihoods are protected is a key consideration for the project
- The project's emphasis on using renewable energy sources like solar power and promoting eco-friendly practices is an effort to mitigate environmental concerns. However, balancing development with conservation will be an ongoing challenge
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Great Nicobar
Great Nicobar is the largest of the Nicobar Islands, part of the Union Territory of Andaman and Nicobar Islands in India. It is located in the Indian Ocean, near the western entrance of the Malacca Strait, which is a key maritime route for international trade.
Here are some key aspects of Great Nicobar:
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3. Strategic Importance
- The Bay of Bengal and Indian Ocean region are critically important for India's strategic and security interests, especially as the Chinese People’s Liberation Army Navy aims to increase its presence in these waters.
- India is concerned about the buildup of Chinese naval forces at key Indo-Pacific chokepoints, particularly Malacca, Sunda, and Lombok. China's efforts to extend its influence in the area include constructing a military facility on the Coco Islands in Myanmar, located just 55 km north of the Andaman & Nicobar Islands.
- Earlier this year, The Indian Express reported significant upgrades to the military infrastructure on the Andaman & Nicobar Islands.
- This includes modernizing airfields and jetties, creating new logistics and storage facilities, establishing a base for military personnel, and enhancing surveillance capabilities.
- The goal of these upgrades is to support the deployment of more military forces, larger warships, aircraft, missile batteries, and troops.
- Maintaining close surveillance over the area surrounding the archipelago and establishing a strong military presence on Great Nicobar is crucial for India's national security
4. Environmental Concerns
- The proposed infrastructure upgrade has faced opposition due to its potential ecological threat to the islands. Wildlife conservation researchers, anthropologists, scholars, civil society members, and the Congress party have raised concerns about the devastating impact on the Shompen, a particularly vulnerable tribal group (PVTG) of hunter-gatherers, who have an estimated population of a few hundred individuals residing in a tribal reserve on the island.
- Critics claim the project infringes on the rights of the tribal population and will harm the island’s ecology, including the felling of nearly a million trees. There are fears that the port project will damage coral reefs, affecting the local marine ecosystem, and pose a threat to terrestrial species like the Nicobar Megapode bird and leatherback turtles, which nest in the Galathea Bay area.
- A statement by senior Congress leader and former Environment Minister Jairam Ramesh highlighted that the proposed port is in a seismically active zone, which experienced permanent subsidence of about 15 feet during the 2004 tsunami.
- The statement also accused the local administration of insufficiently consulting the Tribal Council of Great and Little Nicobar Islands as required by law.
- In November 2022, the tribal council withdrew a no-objection certificate it had issued for the diversion of about 160 sq km of forest land, citing inadequate information provided to them.
- In April 2023, the Kolkata Bench of the National Green Tribunal (NGT) chose not to interfere with the environmental and forest clearances granted to the project. However, the Tribunal ordered the formation of a high-power committee to review the clearances. There is still no clarity on whether the committee, mainly composed of government representatives, has submitted its report
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For Prelims: National Green Tribunal (NGT), Great Nicobar Island, Coastal Regulation Zones, Turtles, Dolphins, Particularly Vulnerable Tribal Groups (PVTGs), Mangroves, Great Nicobar Biosphere Reserve
For Mains: Significance and Issues Related to Great Nicobar Island Project
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Previous Year Questions
1. Which one of the following pairs of islands is separated from each other by the ‘Ten Degree Channel’? (2014) (a) Andaman and Nicobar Answer (a) 2. Which of the following have coral reefs? (2014)
Select the correct answer using the code given below: (a) 1, 2 and 3 only Answer (a) 3. In which one of the following places is the Shompen tribe found? (2009) (a) Nilgiri Hills Answer (b) |
Source: indianexpress
CONSUMER PRICE INDEX (CPI)
1. Context
The new series of the Consumer Price Index (CPI), released on Thursday, has addressed the many shortcomings of the previous series. The new series has a base year of 2024, and is pegged to consumption patterns from the Household Consumption Expenditure Survey 2023-24
2. Consumer Price Index
- The Consumer Price Index (CPI) is a measure of the change in prices of a basket of goods and services that are commonly purchased by consumers. It is the most commonly used measure of inflation.
- The CPI is calculated by comparing the prices of the goods and services in the basket in a particular period to those of the same in a base period.
- The base period is usually the previous year's corresponding period. The difference in prices is expressed as a percentage, and this is the CPI inflation rate.
- The CPI is calculated for eight different categories of goods and services Food and beverages, Housing, Clothing and footwear, Transport, Health, Education, Communication, Recreation and Miscellaneous goods and services.
- The weights of each category in the CPI are determined by the expenditure patterns of urban households. For example, food and beverages have the highest weight in the CPI, followed by housing and transport.
- The CPI inflation rate is an important indicator of the cost of living.
- It is used by the government to set monetary policy and by businesses to make pricing decisions.
3. Wholesale Price Index
- The Wholesale Price Index (WPI) is a measure of the change in prices of goods and services at the wholesale level.
- It is calculated by comparing the prices of a basket of goods and services in a particular period to those of the same in a base period.
- The base period is usually the previous year's corresponding period. The difference in prices is expressed as a percentage, and this is the WPI inflation rate.
- The WPI is calculated for 67 groups of commodities, which are further divided into 225 subgroups.
- The weights of each group and subgroup in the WPI are determined by the value of the goods and services produced in each group and subgroup.
- The WPI inflation rate is an important indicator of inflation at the wholesale level.
- It is used by businesses to make pricing decisions and by the government to set monetary policy.
4. Findings of the Report
4.1. Food inflation
- Food inflation in India remained high in August, at 9.94%. This was driven by rising prices of essential food items, such as cereals, pulses, vegetables, and oils.
- Eleven of the 12 items on the heavyweight food and beverages group of the CPI logged price increases, with oils and fats, the sole item logging a year-on-year decline in prices, posting its first sequential increase in nine months.
- Vegetables provided some relief, with tomatoes leading an appreciable month-on-month deflation of 5.88% in the 19-member basket.
- However, the cooking staples of potatoes and onions were among the seven items that continued to log sequential inflation (2.3% and 12.3%, respectively).
4.2. Monsoon deficit and rising crude oil prices
- The near-term inflation outlook is also made more uncertain by other factors, including a distinct deficit in monsoon rainfall.
- Besides the overall 10% shortfall, sharp regional and temporal anomalies in rain distribution have impacted either the sowing or the quality of produce of several farm items.
- Kharif's sowing of pulses had, as of September 8, recorded an 8.6% shortfall compared with the year-earlier period.
- Another inflation driver, crude oil, has also seen a steady rise in prices as the output cuts by major oil producers of the OPEC+ grouping start to bite.
- The price of India's crude basket had, as of September 12, climbed 7.2% from the average in August to $92.65/barrel, according to official data.
4.3. RBI measures to control inflation
- For the RBI, the latest inflation data further roils its interest rate calculus.
- Unless CPI inflation decelerates by an incredible 250 basis points in September to a 4.33% pace, price gains are certain to substantially overshoot the monetary authority's 6.2% forecast for the July-September quarter, leaving it with few real options to achieve its medium-term price stability goal of 4% inflation.
- As the RBI has been at pains to stress, failure to anchor inflation expectations risks hurting growth.
5. About the sticky Consumer Price Index (CPI)
- The sticky Consumer Price Index (CPI) is a subset of the CPI that includes goods and services that change prices relatively infrequently.
- These goods and services are thought to incorporate expectations about future inflation to a greater degree than prices that change more frequently.
- Some of the items included in the sticky CPI are Rent, Housing costs, Utilities, Education, Healthcare, Transportation, Household furnishings and appliances, Personal insurance, Recreation, and Miscellaneous goods and services.
- The sticky CPI is often used by economists to measure inflation expectations.
- This is because prices of sticky goods and services are less likely to be affected by short-term changes in supply and demand, and are therefore more likely to reflect changes in inflation expectations.
- The sticky CPI is also used by central banks to set monetary policy.
- This is because the central bank wants to make sure that inflation expectations are anchored at a low level.
- If inflation expectations start to rise, the central bank may raise interest rates to bring them back down.
6. How India’s retail inflation is measured?
- India's retail inflation is measured by the Consumer Price Index (CPI), a basket of goods and services commonly purchased by urban households.
- The CPI is calculated by the National Statistical Office (NSO) every month.
- The CPI is calculated by comparing the prices of the goods and services in the basket in a particular month to those of the same in a base month.
- The base month is usually the previous year's corresponding month. The difference in prices is expressed as a percentage, and this is the CPI inflation rate.
- The CPI is calculated for eight different categories of goods and services, Food and beverages, Housing, Clothing and footwear, Transport, Health, Education, Communication, Recreation and Miscellaneous goods and services.
- The weights of each category in the CPI are determined by the expenditure patterns of urban households. For example, food and beverages have the highest weight in the CPI, followed by housing and transport.
- The CPI inflation rate is an important indicator of the cost of living in India.
- It is used by the government to set monetary policy and by businesses to make pricing decisions.
7. Calculation of Inflation
- Inflation is the rate at which the prices of goods and services increase over time.
- It is calculated by comparing the prices of a basket of goods and services in a particular period to the prices of the same basket of goods and services in a base period.
- The base period is usually the previous year's corresponding period. The difference in prices is expressed as a percentage, and this is the inflation rate.
There are two main ways to calculate inflation
1. Consumer Price Index (CPI): The CPI is a measure of the change in prices of a basket of goods and services that are commonly purchased by consumers. It is the most commonly used measure of inflation.
The CPI is calculated by the following formula:
CPI = (Cost of a basket of goods and services in current period / Cost of a basket of goods and services in base period) * 100
2. Producer Price Index (PPI): The PPI is a measure of the change in prices of goods and services that are produced by businesses. It is used to track inflation at the wholesale level.
The PPI is calculated by the following formula:
PPI = (Cost of a basket of goods and services at the wholesale level in the current period / Cost of a basket of goods and services at the wholesale level in the base period) * 100
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For Prelims: Consumer Price Index, Wholesale Price Index, Inflation, retail inflation, Producer Pirce Index, National Statistical Office, OPEC+, Crude oil, Kharif season, Monsoon,
For Mains:
1. Analyse the factors contributing to high food inflation in India in recent months. Discuss the impact of high food inflation on the Indian economy and suggest measures to mitigate it. (250 words)
2. Explain the concept of sticky inflation. What are the various factors that contribute to sticky inflation? Discuss the implications of sticky inflation for the Indian economy. (250 words)
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Previous Year Questions
1. With reference to inflation in India, which of the following statements is correct? (UPSC 2015)
A. Controlling the inflation in India is the responsibility of the Government of India only
B. The Reserve Bank of India has no role in controlling the inflation
C. Decreased money circulation helps in controlling the inflation
D. Increased money circulation helps in controlling the inflation
Answer: C
2. With reference to India, consider the following statements: (UPSC 2010)
1. The Wholesale Price Index (WPI) in India is available on a monthly basis only.
2. As compared to Consumer Price Index for Industrial Workers (CPI(IW)), the WPI gives less weight to food articles.
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
3. Consider the following statements: (UPSC 2020)
1. The weightage of food in Consumer Price Index (CPI) is higher than that in Wholesale Price Index (WPI).
2. The WPI does not capture changes in the prices of services, which CPI does.
3. Reserve Bank of India has now adopted WPI as its key measure of inflation and to decide on changing the key policy rates.
Which of the statements given above is/are correct?
A. 1 and 2 only B. 2 only C. 3 only D. 1, 2 and 3
4. India has experienced persistent and high food inflation in the recent past. What could be the reasons? (UPSC 2011)
1. Due to a gradual switchover to the cultivation of commercial crops, the area under the cultivation of food grains has steadily decreased in the last five years by about 30.
2. As a consequence of increasing incomes, the consumption patterns of the people have undergone a significant change.
3. The food supply chain has structural constraints.
Which of the statements given above are correct?
A. 1 and 2 only B. 2 and 3 only C. 1 and 3 only D. 1, 2 and 3
Answer: B
5. The Public Distribution System, which evolved as a system of management of food and distribution of food grains, was relaunched as _______ Public Distribution System in 1997. (SSC JE EE 2021)
A. Evolved B. Transformed C. Tested D. Targeted
Answer: D
6. Under the Antyodaya Anna Yojana, up to what quantity of rice and wheat can be purchased at a subsidised cost? (FCI AG III 2023)
A. 35 kg B. 40 kg C. 30 kg D. 25 kg E. 50 kg
Answer: A
7. As per the the National Statistical Office (NSO) report released on 7 January 2022, India's Gross domestic product (GDP) is expected to grow at ___________ per cent (in first advance estimates) in the fiscal year 2021-22? (ESIC UDC 2022)
A. 17.6 per cent B. 9.5 per cent C. 11 per cent D. 9.2 per cent E. None of the above
Answer: D
8. The main emphasis of OPEC (Organisation of the Petroleum Exporting Countries) is on which of the following? (UKPSC 2016)
A. The production of petroleum
B. Control over prices of petroleum
C. Both (a) and (b)
D. None of the above
Answer: C
9. In the context of global oil prices, "Brent crude oil" is frequently referred to in the news. What does this term imply? (UPSC 2011)
1. It is a major classification of crude oil.
2. It is sourced from the North Sea.
3. It does not contain sulfur.
Which of the statements given above is/are correct?
A. 2 only B. 1 and 2 only C. 1 and 3 only D. 1, 2 and 3
Answer: B
10. The term 'West Texas Intermediate', sometimes found in news, refers to a grade of (UPSC 2020)
A. Crude oil B. Bullion C. Rare earth elements D. Uranium
Answer: C
11. With reference to the cultivation of Kharif crops in India in the last five years, consider the following statements: (UPSC 2019)
1. Area under rice cultivation is the highest.
2. Area under the cultivation of jowar is more than that of oilseeds.
3. Area of cotton cultivation is more than that of sugarcane.
4. Area under sugarcane cultivation has steadily decreased.
Which of the statements given above are correct?
A. 1 and 3 only B. 2, 3 and 4 only C. 2 and 4 only D. 1, 2, 3 and 4
Answer: A
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Source: The Hindu
