Preliminary Examination: Current events of national and international importance.
Mains Examination: General Studies-II: Government policies and interventions for development in various sectors and issues arising out of their design and implementation.
What’s the ongoing story: A HIGH-level government meeting was held earlier this month to examine and debate possible protocols for the recitation of the national song Vande Mataram, similar to those in place for the national anthem Jana Gana Mana, The Indian Express has learned.
Key Points to Ponder:
— Know the history of adoption of national song Vande Mataram
— What is the recent controversy around it?
— What is the Prevention of Insults to National Honour Act, 1971?
— What are fundamental duties?
— What are the safeguards to protect the honour of the national anthem in India?
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— Know about the history and adoption of the national anthem
Key Takeaways:
— Written by Bankim Chandra Chattopadhyay, Vande Mataram emerged as a rallying cry during the Swadeshi movement (1905–08), becoming closely associated with the freedom struggle.
— While the Constituent Assembly accorded the song equal honour and respect alongside the national anthem, there is currently no compulsory etiquette, posture, or legal requirement associated with singing or reciting the national song.
— The ongoing deliberations within the highest levels of the government form part of what the ruling BJP has described as an effort to elevate the song’s standing, something it has accused the Congress of having diminished through appeasement politics and the removal of what it calls important stanzas during the Congress session in 1937.
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— In recent years, several petitions have been filed in courts seeking a framework for the rendition of the national song and clarity on whether penalties can be prescribed under the Prevention of Insults to National Honour Act, 1971, which was enacted to prevent disrespect to national symbols.
— In 2022, the Centre told the Supreme Court that while the 1971 law makes it an offence to prevent the singing of the national anthem or cause disturbance to an assembly engaged in such singing, similar penal provisions have not been made for the national song.
— The government also stated that no instructions have so far been issued laying down the circumstances in which Vande Mataram may be sung or played.
— The national anthem enjoys explicit constitutional and statutory protection, unlike the national song. Article 51A(a) of the Constitution places a fundamental duty on citizens to respect the national anthem, with its recitation and use governed by detailed executive orders issued by the MHA.
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— Under these orders, the government has laid down specific instructions on the playing, singing, and display of the national anthem to ensure it is treated with due respect, including mandatory standing for its full version at official functions and a ban on dramatised or altered versions that may show disrespect.
— Further, under the Prevention of Insults to National Honour Act, whoever Intentionally prevents the singing of the Indian National Anthem or causes disturbance to any assembly engaged in such singing can be punished with imprisonment of up to three years.
Do You Know:
— The law around alleged disrespect to the National Anthem was laid down by the Supreme Court in its 1986 judgment in Bijoe Emmanuel & Ors vs State Of Kerala & Ors.
— The court granted protection to three children belonging to the millenarian Christian sect Jehovah’s Witnesses, who did not join in the singing of the National Anthem at their school. The court held that forcing them to sing the Anthem violated their fundamental right to religion under Article 25 of the Constitution.
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— In its August 11, 1986 judgment, the Supreme Court said that “Article 25 (“Freedom of conscience and free profession, practice and propagation of religion”)…[was] incorporated in recognition of the principle that the real test of a true democracy is the ability of even an insignificant minority to find its identity under the country’s Constitution.”
— The court held that the children’s expulsion as a result of their “conscientiously held religious faith…was a violation of their Fundamental Right to freedom of conscience” and to freely profess, practise and propagate their religion.
— The Supreme Court revisited the matter in Shyam Narayan Chouksey vs Union of India (2018). While hearing the case, the court had, on November 30, 2016, passed an interim order that “All the cinema halls in India shall play the National Anthem before the feature film starts and all present in the hall are obliged to stand up to show respect to the National Anthem.”
— However, in its final judgment in the case passed on January 9, 2018, the court modified its 2016 interim order. “The order passed on 30th November, 2016, is modified to the extent that playing of the National Anthem prior to the screening of feature films in cinema halls is not mandatory, but optional or directory,” the court said.
Other Important Articles Covering the same topic:
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📍Standing up for National Anthem: What the Supreme Court has ruled
Previous year UPSC Prelims Question Covering similar theme:
(1) With reference to Madanapalle of Andhra Pradesh, which one of the following statements is correct? (UPSC CSE 2021)
(a) Pingali Venkayya designed the tricolour Indian National Flag here.
(b) Pattabhi Sitaramaiah led the Quit India Movement of Andhra region from here.
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(c) Rabindranath Tagore translated the National Anthem from Bengali to English here.
(d) Madame Blavatsky and Colonel Olcott set up headquarters of Theosophical Society first here.
EU leaders’ R-Day visit aims to conclude talks, signing later: EU official
Syllabus:
Preliminary Examination: Current events of national and international importance.
Main Examination: General Studies-II, III: Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests, Effects of liberalisation on the economy.
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What’s the ongoing story: AMID trade negotiations between India and the European Union, with four chapters yet to be closed, an EU official said Friday said that the EU leaders’ visit to India next week is aimed at concluding the negotiations. The formal signing of the trade deal could follow after internal procedures are completed.
Key Points to Ponder:
— What is the significance of the India-EU trade deal?
— How significant is India for the EU to diversify its supply chain?
— What are the other areas of cooperation that can be explored other than trade between India and the EU?
— What are the major trade deals signed by India in recent times?
— How significant are these trade deals considering the current geopolitical situation?
— What is the India-Middle East-Europe Economic Corridor (IMEC)?
Key Takeaways:
— President of the European Commission, Ursula von der Leyen, and President of the European Council Antonio Luís Santos da Costa will be the chief guests at the Republic Day celebrations next week and will also co-chair the 16th India-EU Summit the next day.
— The EU official said that the trade agreement will help India and the EU diversify supply chains and reduce unwanted dependencies.
— Dependence on active pharmaceutical ingredients (API) and other high-tech products from China is a key source of strategic worry for India as well as the West. India is the largest exporter of generic drugs, but the majority of the ingredients come from China. India’s imports from China have crossed $112 billion during the last financial year.
— The EU official said that, alongside the free trade agreement, the EU is also looking at traditional measures to boost investment and business cooperation in specific supply chains that both sides aim to reinforce, including hydrogen, machinery and advanced manufacturing.
Prime Minister Narendra Modi and President of the European Commission Ursula von der Leyen (File Photo)
— India and the EU are also expected to launch a new corporation framework on mobility that would cover students, researchers, seasoned workers, and highly skilled professionals in line with the labour market needs in the European Union, EU officials said, adding that the decision on movement rests with the EU members.
— The official said that the India-EU summit is also expected to “inject some momentum” into the preparatory work for India-Middle East-Europe Economic Corridor (IMEC).
From the Editorial page: The familiar world order will not return. What India and EU can build
— Jawed Ashraf writes: This could be a moment of enormous global consequence. US President Donald Trump has untethered the long-adrift transatlantic relationship from its anchors of security, economics, and values. His posturing on Greenland has injected hostility.
— This, together with the Russia-Ukraine war, economic pressure from China, crumbling multilateralism and fragmenting global economic and energy systems, has put unprecedented strategic pressure on the EU.
— Yet, Europe has shown cohesion and resolve on multiple issues, including the Ukraine war. From the crises, it is now seeking to build a new sovereign future, independent of the US.
— India, too, is at a moment of reckoning. Many of the trends and forces that are affecting Europe have forced reappraisal of India’s strategic bets, exerted stress on the framework of its global engagement and raised risks and barriers for national economic transformation.
— Adjustments often follow a J-curve. Short- term costs can yield to long-term gains with the right strategy. India’s response to the shifts has many dimensions: Rapidly adding to domestic capacities, affirming strategic autonomy, reframing traditional relationships, expanding plurilateral engagement and diversifying partnerships to mitigate risks and build influence.
— A partnership with Europe touches each dimension of India’s strategy. The value of a relationship is not just in the strength of a partner, but in the need it fulfils and the benefits it brings.
— The high-quality FTA will address the compelling need to diversify trade and investment, deepen India’s integration into global value chains, stimulate the development of resilient supply chains, and foster greater industrial and technological collaboration.
— India and Europe can collaborate to gain self-sufficiency in the building blocks of the digital age, such as artificial intelligence (AI) and semiconductors. That can help prevent a global duopoly. India and Europe also converge on the public character and purpose of digital technology.
— EU-India relations are built on India’s deep ties with key member states. France has been a strong and reliable strategic partner for decades, from consistent support in the UN to long-standing defence, nuclear, and space collaboration.
— Germany, a major economic partner, is developing stronger defence and strategic cooperation with India. Spain and Italy, too, are prioritising India. The Nordic countries are the new frontiers of India’s engagement. Attention is now turning to the strategically important and dynamic east.
— India and Europe can together play a bigger role in addressing the challenges of our times: Recourse to power over norms, the perilous course of our planet, the arrested future of the Global South, growing global fragmentation, emasculated multilateralism, fragile security in the Indo-Pacific, and seemingly intractable Eurasian security challenges.
— There are challenges. That includes carving out influence in a world buffeted by the major powers. The EU must remain cohesive and united, with sovereign capabilities and an independent foreign and security policy. India’s relationship with Russia and Europe’s relations with China cast a shadow of concern.
— There is a need for continuous engagement and greater mutual sensitivity and respect, collaboration over censure, and dialogue over prescription.
Do You Know:
— The IMEC is a landmark project announced during the G20 Leaders’ event in New Delhi in 2023. It was aimed at stimulating economic development through enhanced connectivity and economic integration between Asia, the Middle East, and Europe.
— It will have two separate corridors, the east corridor connecting India to the Arabian Gulf and the northern corridor connecting the Arabian Gulf to Europe, along with a railway route for supplementing trade exchanges between India, the UAE, Saudi Arabia, Jordan, Israel, and Europe.
Other Important Articles Covering the same topic:
📍India-Middle East-Europe Economic Corridor: Significance and Prospects for India
📍India-EU trade deal would be largest of its kind
Previous year UPSC Prelims Question Covering similar theme:
(2) Consider the following statements: (UPSC CSE 2023)
The ‘Stability and Growth Pact’ of the European Union is a treaty that:
1. limits the levels of the budgetary deficit of the countries of the European Union
2. makes the countries of the European Union to share their infrastructure facilities
3. enables the countries of the European Union to share their technologies
How many of the above statements are correct
(a) Only one
(b) Only two
(c) All three
(d) None
Previous year UPSC Mains Question Covering similar theme:
The expansion and strengthening of NATO and a stronger US-Europe strategic partnership works well for India. What is your opinion about this statement? Give reasons and examples to support your answer. ( UPSC CSE 2023)
EXPLAINED
‘The antibiotic pipeline is running dangerously dry’
Syllabus:
Preliminary Examination: Current events of national and international importance
Mains Examination: General Studies-II: Issues relating to development and management of Social Sector/Services relating to Health, Education, Human Resources
What’s the ongoing story: Prime Minister Narendra Modi, Home Minister Amit Shah and Health Minister JP Nadda have recently raised awareness about Anti-Microbial Resistance (AMR) stemming from antibiotic overuse, highlighting how India is facing a silent public health crisis.
Dr Kamini Walia, senior scientist at ICMR (Indian Council of Medical Research), who coordinates its Antimicrobial Resistance and Diagnostics initiatives, explains questions related to AMR.
Key Points to Ponder:
— What is AMR?
— What is the status of AMR in India?
— What is antibiotic stewardship?
— What are the reasons for increased AMR?
— What is the impact of increasing AMR?
— What initiatives have been taken by the government to tackle the challenge of increasing AMR?
— What behavioral changes need to be adopted to tackle AMR?
Key Takeaways:
— According to the Institute of Health Metrics and Evaluation, Washington University, an estimated 2,67,000 deaths were attributable to AMR in 2021. Key statistics include high resistance rates (e.g., 83% of Indians carrying resistant bacteria in one study), massive treatment gaps and heavy misuse of antibiotics, making common infections untreatable and jeopardising the efficacy of modern medicine itself.
— Antimicrobial resistance is a silent pandemic. Often dismissed as a hospital-acquired infection or complication, its impact was felt in the Covid phase, when patients were impacted by drug-resistant infections.
— In hospitals, which see a high usage of antibiotics, that pressure forces the bacteria to develop ways to survive them primarily through genetic mutations. Then they pass on resistance genes to other bacteria, accelerated by the overuse and misuse of antibiotics in humans.
— antibiotic stewardship is more effective than an overnight ban on over-the counter (OTC) sales.
— Take the case of Kerala, the first state to launch the antimicrobial stewardship programme in 2015, which focusses on rationalising antibiotic prescription and awareness at all levels. They banned OTC sales only last year with a reasonable amount of success. It took 10 years.
— In India, the challenge is the simultaneity of infections during certain seasons. So come July-August, you have diarrhoea, typhoid, dengue, malaria and chikungunya. Getting all of them on one panel to be able to detect everything is going to be a challenge.
— Alternative therapy to beat AMR: One is phage therapy, which involves bacteria-eating viruses. It is effective in treating UTIs.
— But it requires a kind of precision to identify which phages will work for your infection. Resistance develops even to phages.T hen you have to use a cocktail of viruses. This is an evolving field and needs customisation for patients depending upon the nature of infection. Then there are monoclonal antibodies, but they are in a nascent stage.
Do You Know:
— Many Indians have a tendency to pop an antibiotic for a fever, without even checking if the fever is caused by a bacterium. An antibiotic is of no use for viral infections such as influenza, but consuming it can drive up resistance in the population.
— Doctors must be educated to not use broad-spectrum antibiotics. These are antibiotics that work against a wide range of infections, but these are also the ones that are more likely to lead to resistance. Overuse of antibiotics has rendered some of them useless or of limited use.
— The WHO’s guidelines on antibiotic pollution from manufacturing provides guidance on wastewater and solid waste management for antibiotic manufacturing facilities. Despite the high levels of antibiotic pollution that have been widely documented, the issue is largely unregulated, the WHO said.
Other Important Articles Covering the same topic:
📍UPSC Issue at a Glance | Antimicrobial Resistance and India
Previous year UPSC Prelims Question Covering similar theme:
(3) Which of the following are the reasons for the occurrence of multi-drug resistance in microbial pathogens in India? (UPSC CSE 2019)
1. Genetic predisposition of some people
2. Taking incorrect doses of antibiotics to cure diseases
3. Using antibiotics in livestock farming
4. Multiple chronic diseases in some people
Select the correct answer using the code given below.
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1, 3 and 4 only
(d) 2, 3 and 4 only
Previous year UPSC Mains Question Covering similar theme:
Can overuse and free availability of antibiotics without Doctor’s prescription, be contributors to the emergence of drug-resistant diseasesin India? What are the available mechanisms for monitoring and control? Critically discuss the various issues involved. (UPSC CSE 2014)
Coming this year: Foundational Census phase seeking data on internet use & more
Syllabus:
Preliminary Examination: Indian Polity and Governance – Constitution, Political System, Panchayati Raj, Public Policy, Rights Issues
Mains Examination: General Studies-II: Government policies and interventions for development in various sectors and issues arising out of their design and implementation
What’s the ongoing story: As preparations gather pace for the 16th Census of India, set to be held after a six-year delay, the government has formally notified the questions that will be asked during the houselisting and housing Census — the first and foundational phase of the Census exercise.
Key Points to Ponder:
— What is the census and its significance?
— What is the history of census in India?
— What is the difference between Census, caste census and SECC?
— How is the census conducted in India?
— What are the various phases of Census 2027?
— What is the role and function of the Registrar General of India (RGI)?
— How will the Census 2027 different from past censuses?
Key Takeaways:
— Slated to be carried out between between April 1 and September 30, 2026, across all States and Union Territories, this phase will map every structure and household in the country and generate the frame on which the entire Census rests.
— The houselisting phase precedes the population count and is designed to create a comprehensive inventory of buildings, Census houses and households across India. Unlike population enumeration, which focuses on individuals, houselisting captures information about where and how people live.
— Every structure — residential, commercial or mixed-use — is visited by enumerators. Each household is assigned a unique Census house number and household number, which later becomes the basis for enumerating individuals.
— This phase allows the Registrar General of India (RGI) to assess housing conditions, access to basic amenities and household assets, and to finalise the enumeration blocks for the main Census.
— For Census 2027, houselisting will be conducted primarily through a digital-first approach. Enumerators will use a mobile application on smartphones or handheld devices to collect and upload data. The app will support offline data entry, with automatic syncing once connectivity is available.
— For the first time, the Census architecture also allows for self-enumeration. Households that choose to fill in details online will be able to submit information through a government portal, after which enumerators will only verify and authenticate the entries during their visit.
— Each Census house will be geo-tagged, enabling precise mapping and reducing the risk of omission or duplication. Supervisors will monitor progress in near real time through dashboards under the Census Management and Monitoring System (CMMS).
— The houselisting exercise in 2011 was largely paper-based, dependent on handwritten schedules and physical maps. Data entry and validation often took years.
— In contrast, the 2026 houselisting will: Use GPS tagging of houses and enumeration blocks, rely on standardised drop-down menus instead of descriptive handwritten answers, enable instant validation checks for inconsistencies, and allow faster aggregation and processing of data.
— Another important change is the expanded scope of questions, reflecting shifts in living standards, digital access and consumption patterns over the past decade.
— There are seven new or revised questions added this time as compared to 2010 houselisting phase questionnaire.
— These include: Availability of internet connection in the house, Ownership of mobile phone and smartphone, Access to drinking water source inside the dwelling, Gas connection type—distinguishing between piped natural gas and LPG, Vehicle ownership—with distinctions between two-wheelers, four-wheelers, and commercial vehicles, and the type of Cereal Consumed in the household is to be recorded
— In another first, households will be requested to share a mobile number for Census-related communications only, which officials say will be used for follow-ups and dissemination of information.
— Houselisting data feeds directly into policymaking. Information on housing quality informs schemes such as PM Awas Yojana, data on water, sanitation and cooking fuel shapes interventions under Jal Jeevan Mission, Swachh Bharat Mission and Ujjwala.
Do You Know:
— The first non-synchronous, nationwide census was in 1872. This census involved counting individuals across most parts of the country; however, it did not include all territories under British control. It was non-synchronous census.
— The first synchronous census of India was conducted in 1881.It was conducted by W.C. Plowden.
— Census of 1881 marked a significant advancement towards a modern and synchronized census. This census emphasized not only complete coverage but also the classification of demographic, economic, and social characteristics.
— The Indian Census is the largest administrative and statistical exercise in the world. The responsibility for conducting the decadal census lies with the Office of the Registrar General and Census Commissioner of India (ORG&CCI), which is part of the Ministry of Home Affairs, Government of India.
— According to the Census India website, the Census Organisation was set up on an ad-hoc basis for each Census till the 1951 Census. In 1948, the Census Act was enacted to provide for the scheme of conducting population census with duties and responsibilities of census officers.
Other Important Articles Covering the same topic:
📍Exclusive: For Census 2027
📍Census 2027 and Registrar General of India: A must-know for UPSC Exam
Previous year UPSC Prelims Question Covering similar theme:
(4) Consider the following statements with reference to the census in India: (UPSC-CDS(II) – 2024)
1. The first All India Census was attempted in 1872.
2. From 1881, decennial censuses became a regular feature.
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
Echoes of Gujarat as Rajasthan looks to bring ‘disturbed areas’ law
Syllabus:
Preliminary Examination: Current events of national and international importance.
What’s the ongoing story: The Rajasthan government has decided to introduce a Bill designating certain zones as “disturbed areas” to curb what it terms “demographic imbalance” and “improper clustering”.
Key Points to Ponder:
— What is the purpose of designating certain zones as “disturbed areas”?
— Provide arguments in favor and against it.
— What are the concerns related to the act?
— What is Article 19(1)(e) of the Constitution?
— What is the role and function of the Collector under this law?
— What is Article 226 of the Constitution?
Key Takeaways:
— While the Bill is not yet in the public domain, it is already drawing comparisons with the Gujarat Prohibition of Transfer of Immovable Property and Provision for Protection of Tenants from Eviction from Premises in Disturbed Areas Act, 1991, which has been in force in Gujarat for over three decades.
— The Rajasthan Law Minister has framed the proposed Rajasthan Prohibition of Transfer of Immovable Property and Provisions for Protection of Tenants from Eviction from the Premises in Disturbed Areas Bill, 2026, as a measure to maintain communal harmony.
— Enacted in 1991 following a series of communal riots, the Gujarat Disturbed Areas Act was originally conceived to prevent “distress sales”, which occur when an individual is forced to sell their property at a value lower than the market rate due to fear of violence or intimidation – usually during communal unrest.
— Under the Act, the state government can declare a specific area as “disturbed” due to a history of communal violence or mob unrest. Once an area is notified, the transfer of immovable property – houses, shops or land – in that zone requires the prior sanction of the district collector.
— Without their approval, any sale or transfer is considered void. The collector must hold a formal inquiry to ensure the sale is consensual and not driven by coercion.
— While the stated objective of the Act is to protect vulnerable owners from being forced out, legal scholars have raised concerns that the Act effectively allows the state to police the demographic composition of neighbourhoods.
— By regulating who can buy property where, the state can prevent the organic mixing of communities, raising questions regarding Article 19(1)(e) of the Constitution, which guarantees every citizen the right to reside and settle in any part of the territory of India and Article 15 of the Constitution, which prohibits discrimination on grounds of religion, race, caste, sex or place of birth.
— The Disturbed Areas Act states that the decision of the collector – and the state government in appeal – shall be final and conclusive and “shall not be questioned in any Court.”
— However, since High Courts are empowered under Article 226 of the Constitution to review administrative actions that violate fundamental rights or principles of natural justice, the Gujarat High Court has repeatedly been petitioned to scrutinise orders passed by collectors that went beyond the scope of the law.
— Through a series of judgments, the High Court has established a clear doctrine: the collector’s power is limited strictly to verifying free consent and fair market value to validate a sale. They cannot block a transaction based on “law and order” fears or neighbours’ objections if the sale is genuine.
— The court reiterated the core purpose of the act most recently in an order in September 2025, stating: “The object to get into such sale consideration is not to see whether it would create a law and order problem but to decide whether the sale is a distress sale so as to migrate from such an area by any manner getting away and selling his property for whatever consideration under fear.”
Other Important Articles Covering the same topic:
📍Explained: What has changed in Gujarat’s Disturbed Areas Act
ECONOMY
RBI calls on states to frame ‘clear glide path’ to reduce debt
Syllabus:
Preliminary Examination: Current events of national and international importance
Mains Examination: General Studies-III: Indian Economy and issues relating to planning, mobilisation, of resources, growth, development and employment; Government Budgeting
What’s the ongoing story: The Reserve Bank of India (RBI) has called on state governments to target a reduction in their debt levels just as the Central government has done as “high level of debt comes in the way of investment and growth”.
Key Points to Ponder:
— What is the debt-GSDP (Gross State Domestic Product) ratio?
— How is the fiscal deficit calculated?
— What are government bonds?
— What are the reasons for the high debt-GSDP ratio of states?
— What is the Fiscal Responsibility and Budget Management Act?
— High general government debt has been cited by global ratings agencies as a key weakness of India’s public finances. Why? What steps need to be taken to address this?
— What are the recommendations of the Fiscal Responsibility and Budget Management (FRBM) Review Committee Report on debt to GDP ratio
Key Takeaways:
— In its study of states’ budgets for 2025-26, the Indian central bank warned on Friday that while the debt of all states put together had declined to 28.1% of GDP by March 2024 from a peak of 31% as of March 2021, the figure is expected to rise to 29.2% by the end of the current fiscal.
— “Disaggregated data of major States indicate that the debt-GSDP (Gross State Domestic Product) ratio ranges between 17.8% and 46.3% at end-March 2026 with several of them having debt levels above 30% of GSDP. The elevated debt levels necessitate a clear, transparent, and time bound glide path for debt consolidation by States,” the RBI report said.
— Starting 2026-27, the Central government will start targeting its debt-to-GDP ratio instead of the fiscal deficit, with the aim to bring it down to 50% by 2030-31 from 56.1% this year as per 2025-26 Budget estimates.
— Elevated debt levels at the Central and state levels – often referred together as general government debt – has repeatedly been cited by global ratings agencies as a key weakness of India’s public finances.
— While debt spiked during the peak pandemic year of 2020-21 when the economy contracted and public expenditure jumped, interest on the borrowed money must be paid. This, the RBI said, puts pressure on states’ finances as higher interest payments are often met by reducing productive expenditures, which affects medium term growth prospects.
— For 2025-26, the RBI said states’ budgets estimates point to a gross fiscal deficit of 3.3% of GDP, unchanged from 2024-25. Crucially, as many as 16 states have budgeted for a fiscal deficit of more than 3% of their GSDP for the current fiscal, with 13 of them projecting it to be higher than 3.5%.
— States need to keep their annual fiscal deficit within 3% of their GSDP, with a leeway of up to 3.5% given to those undertaking power sector reforms. The RBI noted that the increase in states’ fiscal deficit in 2024-25 was primarily due to the 50-year interest-free loans provided by the Centre for capital expenditure purposes. These loans are provided over and above the normal borrowing ceiling of states.
— On their borrowings – states have budgeted to borrow Rs 12.45 lakh crore from the markets in 2025-26 on a gross basis – the RBI again sounded a warning, saying they had risen significantly in the last two decades. In the first half of the current fiscal, states borrowed 21% more compared to the same period of 2024-25 and are slated to borrow Rs 5 lakh crore in just the current quarter than ends on March 31.
— Without using the word ‘freebies’, the central bank said several states had introduced measures such as free electricity and direct cash transfers to women in their budgets this year.
— On the whole, the central bank said that states’ fiscal outlook for the second half of 2025-26 “remains positive”. “The temporary revenue loss on account of GST rate rationalisation may be offset by higher private consumption in the coming months,” it added.
Do You Know:
— Aditi Nayar writes: Two questions we have heard repeatedly in recent months are: How did some states incur a fiscal deficit higher than 3 per cent of GSDP in recent years, and have welfare schemes curtailed the space for state-led capital spending?
— The answer to the first question is fairly straightforward. During FY2021-FY2025, states were permitted additional borrowings over and above their base borrowing limits, allowing them to incur a higher fiscal deficit.
— Their base borrowing limit was set between 3-4 per cent of the GSDP and an estimated additional borrowing of 0.5-1.1 per cent was allowed by the Union government and/or the 15th Finance Commission.
— This additional borrowing included loans by the Centre to the states (GST compensation loans and the 50-year interest-free capex loans) and reforms-linked additional borrowings.
— To the second question. Spending by state governments plays a vital role in the economic growth of the country. Their spending ability is influenced not only by their revenue position but the borrowing limit fixed by the Union government.
Other Important Articles Covering the same topic:
📍Going forward, much depends on states’ room for spending
📍From the Opinions Editor: Tax cuts have hemmed in Centre and state governments, shrunk their capacity to spend
Previous year UPSC Prelims Question Covering similar theme:
(5) Consider the following statements: (UPSC CSE 2018)
1. The Fiscal Responsibility and Budget Management (FRBM) Review Committee Report has recommended a debt to GDP ratio of 60% for the general (combined) government by 2023, comprising 40% for the Central Government and 20% for the State Governments.
2. The Central Government has domestic liabilities of 21% of GDP as compared to that of 49% of GDP of the State Governments.
3. As per the Constitution of India, it is mandatory for a State to take the Central Government’s consent for raising any loan if the former owes any outstanding liabilities to the latter.
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
Previous year UPSC Mains Question Covering similar theme:
What are the reasons for the introduction of Fiscal Responsibility and Budget Management (FRBM) Act, 2003? Discuss critically its salient features and their effectiveness. (UPSC CSE 2013)
ALSO IN NEWS
Manipur imperative: Peace & political process
For over 11 months now, Manipur has been under President’s Rule. At the outset, few would have disputed the move, given the evident inability of former chief minister N Biren Singh — widely seen as a partisan figure — to contain the ethnic conflict. But almost 33 months since the violence first erupted, Manipur remains carved up into buffer zones that rigidly segregate the Meitei and Kuki-Zo communities.
Manipur needs to be freed from the prolonged impasse. The longer the fragmentation and militarisation of society persist, the harder it will be to stitch the state back together again. The Centre, political parties, and civil society groups must stand firm in the face of provocations and build on the hard-won initial progress towards reconciliation.
Needed in Trump era: An India that can stand up for itself and can pay the price
Sanjaya Baru writes: In a different era, an Indian Prime Minister would have delivered this speech. Canadian Prime Minister Mark Carney’s address to the annual meeting of the Davos World Economic Forum is a manifesto for global solidarity against Big Power hegemonism. Carney very modestly calls it a guidance for “middle powers”. It is more than that. It is a call to arms against the reassertion of imperial interests.
In a different era, Trumpism and the re-assertion of American hegemonism would have been challenged by leaders of post-colonial nations, most certainly India. It is just as well that rather than a victim of Big Power hegemonism and western imperialism, it was left to a member of the western alliance to challenge Trumpism. Canada, after all, is not just a G7 nation but a member of the North Atlantic Treaty Organisation (NATO) and has, on occasion, partnered with the West in opposing, for example, India’s nuclear ambitionst.
Thanks to Donald Trump, sense has dawned on New Delhi. Prime Minister Narendra Modi has refused to kowtow to President Trump. But, while India is not kneeling, it often bends to please. New Delhi has not regained its confidence of the post-colonial era to be able to articulate the views that Prime Minister Carney did this week. We are satisfied with admonishing Poland for befriending Pakistan.
Prime Minister Carney has called for “principled pragmatism”. A call that must find an echo in New Delhi where often pragmatism over shadows principles. But, as Carney has warned, an assertion of national interest and strategic autonomy requires a nation to pay a price. There was once an India that was willing to pay that price. One often wonders whether the nationalism of today’s Indian elite and the “aspirational middle class” extends to a willingness to pay that price.
Corporate India’s sales data raises questions over GDP growth
UDit Mishra writes: According to the official forecast — technically called the First Advance Estimates — in the current financial year that will end in March, India’s economic output (measured by Gross Domestic Product or GDP) will grow by 8% in nominal terms and 7.4% in real terms.
The difference between real and nominal growth is the level of inflation in the economy. The nominal GDP is the actual observed value of the GDP, and by removing the effect of inflation, one derives the real GDP growth rate.
The curious thing about these numbers has been that, when compared by past standards, an 8% nominal GDP growth is fairly weak — more often than not, India’s nominal GDP has been closer to 12% — and a 7.4% real GDP growth is fairly strong.
Reinsurers pay $125 million to Air India for hull, engine loss in Ahmedabad air crash
Global reinsurers and Indian general insurance companies have paid around $125 million — around Rs 1,125 crore — to Air India as the insurance claim for the loss of hull and engines in the June 12 Dreamliner crash in Ahmedabad.
They have also completed the process of releasing $25 million (Rs 225 crore) as compensation for the relatives of passengers who died in the crash. The compensation process is incomplete and the amount is likely to rise significantly when the processing is fully done, insurance sources said.
PRELIMS ANSWER KEY
1. (c) 2. (a) 3. (b) 4. (c) 5. (c)
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