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  • NATO enters a new strategic era as burden shifts to Europe and openings emerge for India

    Why in the News

    The 36th North Atlantic Treaty Organization (NATO) Summit held in Ankara (July 2026) highlighted a shift in transatlantic security, with the United States (US) urging European allies to take greater responsibility for conventional defence, allowing Washington to focus more on the Indo-Pacific.

    What is NATO?

    • North Atlantic Treaty Organization (NATO) is a military alliance established in 1949 under the Washington Treaty.
    • Based on collective defence under Article 5, where an attack on one member is considered an attack on all.
    • Members: 32 countries (including Finland and Sweden).

    Key Developments

    • US expects European allies to assume primary responsibility for conventional defence.
    • Greater emphasis on burden-sharing through higher defence spending.
    • US continues as NATO’s: Nuclear guarantor. Strategic enabler. Political leader.

    Evolution of NATO

    • NATO 1.0 (1949-1991): Cold War; deterrence against the Soviet Union.
    • NATO 2.0 (1991-2022): Eastward expansion and operations in the Balkans and Afghanistan.
    • NATO 3.0 (2022 onwards): Europe strengthens conventional defence while the US focuses increasingly on the Indo-Pacific.

    Significance for India

    • Greater US strategic focus on the Indo-Pacific.
    • Enhanced opportunities for India-Europe cooperation in: Defence manufacturing. Artificial Intelligence (AI). Cybersecurity. Semiconductors. Space technology.
    • Supports India’s strategic autonomy through diversified partnerships.

    Challenges

    • Burden-sharing disagreements among NATO members.
    • Europe’s dependence on US military capabilities.
    • Industrial capacity constraints.
    • Continuing Russia-Ukraine conflict.
    • Simultaneous security commitments in Europe and the Indo-Pacific.

    Value Addition

    Article 5: The cornerstone of NATO, providing collective defence. It has been invoked only once, after the 11 September 2001 (9/11) terrorist attacks on the United States.

    Article 10: Allows European states to join NATO by unanimous agreement of existing members.

    • NATO and India
      • India is not a NATO member.
      • India engages with several NATO members through bilateral defence cooperation while maintaining strategic autonomy.

    “[2024] Consider the following pairs:
    Country : Reason for being in the news
    1. Argentina : Worst economic crisis
    2. Sudan : War between the country’s regular army and paramilitary forces
    3. Turkey : Rescinded its membership of NATO
    How many of the pairs given above are correctly matched?
    (a) Only one pair
    (b) Only two pairs
    (c) All three pairs
    (d) None of the pairs

  • Census 2027 finalises Phase 2 questions with caste enumeration

    Why in the News

    Around 28 questions have been finalised for the Population Enumeration phase of Census 2027, which will record caste for all residents for the first time in decades. The enumeration begins on 17 August in Ladakh and snow bound areas ahead of the rest of the country.

    What is the Census in India?

    1. Constitutional and legal basis: The Census is conducted under the Census Act, 1948 by the Registrar General and Census Commissioner of India, and Census is a Union subject in the Seventh Schedule.
    2. Decadal count: It is a decennial enumeration of the entire population covering demographic, social and economic characteristics.

    What are the two phases of Census 2027?

    1. Houselisting phase: The first phase records houses, household amenities and assets.
    2. Population Enumeration: The second phase counts every individual and records personal and household particulars, and is where caste will be captured.

    What is new in Census 2027?

    1. Caste for all: For the first time in decades, the caste of every resident is to be recorded, not only Scheduled Castes and Scheduled Tribes.
    2. Questionnaire: The final questionnaire is likely to carry 28 questions for the Population Enumeration phase.
    3. Phased timing: Snow bound areas of Ladakh, Jammu and Kashmir, Himachal Pradesh and Uttarakhand are counted from 17 August, and the rest of the country in February 2027.

    Why does caste enumeration matter?

    1. Evidence for policy: Caste data informs reservation, welfare targeting and assessment of backwardness beyond SC and ST groups.
    2. Filling a data gap: The last full caste count outside SC and ST dates to 1931, leaving current policy reliant on dated estimates.

    Challenges to caste enumeration in the Census

    1. Classification complexity: Caste names run into thousands with regional and spelling variations, complicating standardised recording.
    2. Self identification: Responses depend on self reporting, which can be inconsistent or strategically stated.
    3. Enumerator training: Accurate capture of caste needs trained enumerators and a controlled code list.
    4. Political sensitivity: Publication of caste numbers can intensify demands for revised reservation shares.
    5. Data privacy: Handling granular caste data raises confidentiality and misuse concerns.

    Census Act, 1948

    1. Central legislation empowering the government to conduct the decennial Census.
    2. Administered by the Registrar General and Census Commissioner of India under the Ministry of Home Affairs.
    3. Makes public cooperation compulsory and guarantees confidentiality of individual records.
    4. Census information is not admissible as evidence in court, protecting respondent data.

    [2009] Consider the following statements:
    1. Between Census 1951 and Census 2001, the density of the population of India has increased more than three times.
    2. Between Census 1951 and Census 2001, the annual growth rate (exponential) of the population of India has doubled.
    (a) 1 only
    (b) 2 only
    (c) Both 1 and 2
    (d) Neither 1 nor 2

  • Supreme Court extends Section 498A cruelty protection to live in relationships

    Why in the News

    The Supreme Court held that protection against cruelty under Section 498A of the Indian Penal Code (IPC), 1860 extends to women in live-in relationships, provided the partners share a genuine intent to marry. The ruling is based on Article 14 (Right to Equality).

    What is Section 498A?

    • Penalized cruelty by a husband or his relatives against a woman.
    • Now corresponds to Section 85 of the Bharatiya Nyaya Sanhita (BNS), 2023.
    • Traditionally applied only to legally valid marriages.

    Supreme Court Ruling

    • Adopted a purposive interpretation to address changing social realities.
    • Extended protection to women in live-in relationships where there is: A relationship in the nature of marriage, and A genuine intent to marry.
    • Held that denying such protection violates Article 14.

    Why is the Domestic Violence Act Not Enough?

    • The Protection of Women from Domestic Violence (PWDV) Act, 2005 covers women in relationships in the nature of marriage.
    • However, it provides civil remedies such as: Protection orders, Residence orders, and Maintenance
    • Section 85, BNS provides criminal punishment, offering stronger deterrence.

    Challenges

    • Difficulty in proving intent to marry.
    • Limited documentary evidence in live-in relationships.
    • Possibility of misuse.
    • Overlap between civil remedies under the PWDV Act and criminal proceedings.

    Important Constitutional Provisions

    • Article 14: Equality before law.
    • Article 21: Right to life and personal liberty, including dignity and autonomy.

    Landmark Judgments

    • D. Velusamy v. D. Patchaiammal (2010): Defined “relationship in the nature of marriage.”
    • Indra Sarma v. V.K.V. Sarma (2013): Laid down factors for determining live-in relationships under the PWDV Act.

    [2019] Which Article of the Constitution of India safeguards one’s right to marry the person of one’s choice?

    (a) Article 19

    (b) Article 21

    (c) Article 25

    (d) Article 29

  • Parliamentary panel flags that only 30% of urban households under AMRUT have sewerage

    Why in the News

    The Parliamentary Standing Committee on Housing and Urban Affairs reported that only about 30% of urban households under the Atal Mission for Rejuvenation and Urban Transformation (AMRUT) have a sewerage connection. It flagged slow progress and inter state gaps in sanitation infrastructure.

    What is AMRUT?

    1. Flagship civic scheme: AMRUT is the Union government’s flagship urban civic infrastructure mission, providing water supply, sewerage, septage, stormwater drains and green spaces.
    2. Two phases: AMRUT (2015 to 2021) covered 500 cities, and AMRUT 2.0 (from 2021) covers all statutory towns with a focus on universal water and sewerage coverage.

    What did the parliamentary panel find?

    1. Low sewerage coverage: Of 11.32 crore urban households, only 3.44 crore had sewerage connections and 2.84 crore relied on septage systems, per the City Water Balance Plans (2025).
    2. Inter state variation: Madhya Pradesh, Tamil Nadu, West Bengal, Odisha, Jharkhand and Bihar depend more on septage than on sewer networks.
    3. Network gap: Of 59,261 km of approved sewer network, only 27,418 km has been laid so far.

    Why does the sewerage gap persist?

    1. Small share of projects: Of 8,743 projects approved under AMRUT 2.0, only 594 (about 6.79%) relate to sewerage and septage management.
    2. Slow completion: Only 104 of those 594 sewerage projects (17.51%) are complete, while 398 (67%) remain under implementation.
    3. Funds pending: Only Rs 22,762 crore of the Rs 66,059 crore committed as central assistance has been released.

    What did the committee recommend?

    1. Database and audit: The Ministry should build a database of existing sewer networks, functional status and household connectivity gaps and carry out periodic assessments.
    2. End manual cleaning: Manual cleaning of sewers and septic tanks should be eliminated.

    Challenges to urban sanitation delivery

    1. Weak urban local bodies: Municipal bodies often lack the finances and technical staff to build and operate sewage treatment plants.
    2. Trunk versus last mile: Laying trunk sewer lines without household connections leaves treatment capacity underused.
    3. Cost recovery: User charges for sewerage are politically difficult, so operation and maintenance is chronically underfunded.
    4. Land and legacy: Retrofitting sewer networks into dense, unplanned settlements is slow and expensive.
    5. Faecal sludge gap: Cities dependent on septic tanks lack faecal sludge treatment plants, so untreated waste re enters water bodies.

    AMRUT

    1. Launched in 2015 by the Ministry of Housing and Urban Affairs.
    2. Aims at universal household water supply and sewerage or septage coverage in urban areas.
    3. AMRUT 2.0, launched in 2021, targets all statutory towns and water body rejuvenation.
    4. Beneficiaries are urban households, with a stated focus on the urban poor.

    [2022] Consider the following statements
    1. The India Sanitation Coalition is a platform to promote sustainable sanitation and is funded by the Government of India and the World Health Organization.
    2. The National Institute of Urban Affairs is an apex body of the Ministry of Housing and Urban Affairs in Government of India and provides innovative solutions to address the challenges of Urban India.
    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

  • Supreme Court extends mandatory third party motor insurance and floats a no-insurance, no fuel pilot

    Why in the News

    The Supreme Court extended mandatory Third-Party Motor Insurance to 4 years for new cars and 6 years for new two-wheelers. It also proposed a “No Insurance, No Fuel” pilot to improve compliance.

    What is Third-Party Motor Insurance?

    • Mandatory under Section 146 of the Motor Vehicles Act, 1988.
    • Covers compensation for injury, death, or property damage caused to a third party.
    • Does not cover damage to the insured vehicle or owner.

    Supreme Court Directions

    • Mandatory third-party cover:
      • 4 years for new cars.
      • 6 years for new two-wheelers.
    • Link Automatic Number Plate Recognition (ANPR) cameras with:
      • Insurance Information Bureau of India (IIB)
      • VAHAN portal.
    • Enable police to verify insurance in real time through mobile applications.
    • Explore a “No Insurance, No Fuel” pilot.

    Why is Enforcement Needed?

    • Around 56% of vehicles reportedly operate without valid third-party insurance.
    • Victims face delays in compensation.
    • Insurance often lapses after the initial mandatory period.

    Challenges

    • Lack of integration among IIB, VAHAN, and police databases.
    • Low renewal rates, especially for two-wheelers.
    • Concerns over denying fuel as an essential service.
    • Weak penalties and limited rural enforcement.

    Comprehensive vs Third-Party Insurance

    • Third-Party Insurance: Mandatory; covers third-party losses only.
    • Comprehensive Insurance: Optional; covers both third-party liability and damage to the insured vehicle.

    Key Platforms

    • VAHAN: National vehicle registration database managed by Ministry of Road Transport and Highways (MoRTH).
    • ANPR: Automatic Number Plate Recognition technology for vehicle identification.
    • IIB: Insurance Information Bureau of India, maintains insurance-related databases.

    Insurance Regulatory and Development Authority of India (IRDAI)

    • Established under: Insurance Regulatory and Development Authority Act, 1999.
    • Headquarters: Hyderabad.
    • Functions: Regulates insurance companies and intermediaries. Protects policyholders’ interests. Prescribes solvency, pricing, and disclosure norms.

  • RBI monetary policy explainer ahead of the MPC decision

    Why in the News

    The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) is set to announce its bi-monthly monetary policy. Most analysts expect it to keep the repo rate unchanged amid global economic uncertainty.

    What is the Monetary Policy Committee (MPC)?

    • The MPC decides the policy repo rate to maintain price stability while supporting economic growth.
    • Constituted under: Reserve Bank of India Act, 1934 (amended in 2016).
    • It meets every two months to review inflation and growth.

    Repo Rate & Inflation Target

    • Repo Rate: The interest rate at which the RBI lends short-term funds to commercial banks.
    • Inflation Target: 4%, with a tolerance band of 2%-6% under the Flexible Inflation Targeting (FIT) framework.

    Factors Considered by MPC

    • Rising crude oil prices.
    • US-Iran geopolitical tensions.
    • Weak monsoon and El Niño increasing food inflation.
    • Mixed domestic growth indicators.
    • Policy stance of major central banks (US Fed, ECB, BoJ, BoE).

    Challenges

    • Time lag in monetary policy transmission.
    • Supply-side inflation (food and fuel) beyond RBI’s control.
    • Balancing inflation with economic growth.
    • External risks affecting capital flows and the rupee.
    • Uncertain global and domestic economic conditions.

    Value Addition

    • Flexible Inflation Targeting (FIT): Adopted in 2016 to maintain inflation at 4% ± 2%.
    • Monetary Policy Tools: Repo Rate, Standing Deposit Facility (SDF), Cash Reserve Ratio (CRR), Statutory Liquidity Ratio (SLR), and Open Market Operations (OMOs).

    “[2017] Which of the following statements is/are correct regarding the Monetary Policy Committee (MPC)?
    1. It decides the RBI’s benchmark interest rates.
    2. It is a 12-member body including the Governor of RBI and is reconstituted every year.
    3. It functions under the chairmanship of the Union Finance Minister.
    (a) 1 only
    (b) 1 and 2 only
    (c) 3 only
    (d) 2 and 3 only

  • FCNR (B) inflows of nearly $49 billion fail to lift the rupee

    Why in the News

    India received nearly USD 49 billion during June-July 2026 through the Foreign Currency Non Resident (Bank) [FCNR(B)] swap window, foreign loans, and bond investments. However, the Indian Rupee (INR) remained stable at around ₹95.38/USD, unlike the sharp appreciation seen under a similar scheme in 2013.

    What are FCNR(B) Deposits and the Swap Window?

    FCNR(B) Deposits

    • Foreign currency term deposits maintained by Non-Resident Indians (NRIs) with Indian banks.
    • Protect depositors from exchange rate risk.
    • Tenure: 1-5 years.

    Swap Window

    • A facility by the Reserve Bank of India (RBI) where banks swap FCNR(B) dollar deposits for rupees.
    • Since dollars go directly to the RBI, they do not increase dollar supply in the forex market.

    Why Didn’t the Rupee Strengthen?

    • Dollar inflows bypassed the open forex market.
    • RBI sold dollars to stabilize the rupee amid global uncertainty.
    • Banks hedged future foreign currency liabilities.
    • Higher crude oil prices and a stronger US dollar offset the impact of inflows.

    Challenges

    • Strong US dollar and geopolitical risks.
    • Lower Foreign Direct Investment (FDI) inflows.
    • Rising crude oil prices widening the Current Account Deficit (CAD).
    • Risk of reversal of FCNR(B) deposits after the swap window ends.

    Value Addition

    • Spot Market: Immediate currency exchange.
    • Forward Market: Currency exchange at a future date and predetermined rate.
    • Foreign Exchange Reserves comprise:
      • Foreign Currency Assets (FCA) (largest component)
      • Gold
      • Special Drawing Rights (SDRs)
      • IMF Reserve Position

    Back2Basics:

    • FCNR(B): Foreign Currency Non Resident (Bank) Deposit.
    • Eligible: NRIs and Overseas Citizens of India (OCIs).
    • Tenure: 1-5 years.
    • Exchange Rate Risk: Borne by the bank/RBI, not the depositor.

    “[2017] Which of the following has/have occurred in India after its liberalization of economic policies in 1991?
    1. Share of agriculture in GDP increased enormously.
    2. Share of India’s exports in world trade increased.
    3. FDI inflows increased.
    4. India’s foreign exchange reserves increased enormously.
    (a) 1 and 4 only
    (b) 2, 3 and 4 only
    (c) 2 and 3 only
    (d) 1, 2, 3 and 4

  • SEBI Closing Auction Session goes live and moves index closing values

    Why in the News

    The Closing Auction Session (CAS) became operational from 3 August 2026 for stocks with Derivative Contracts. During its initial days, the National Stock Exchange (NSE) Nifty 50 and Bombay Stock Exchange (BSE) Sensex recorded unusually large differences in their closing values.

    What is the Closing Auction Session (CAS)?

    • The Closing Auction Session (CAS) is a dedicated 20-minute trading block (3:15 PM to 3:35 PM) introduced by SEBI on August 3, 2026.
    • It pools end-of-day buy and sell orders for eligible stocks to discover a single equilibrium closing price, replacing the final 30-minute VWAP method.

    What is Volume Weighted Average Price (VWAP)?

    • The Volume Weighted Average Price (VWAP) is the average price of a stock weighted by the trading volume, giving greater importance to prices with higher traded volumes.

    Why did Nifty and Sensex Diverge?

    • Separate CAS order books on the NSE and BSE.
    • Different index composition (Nifty 50: 50 stocks; Sensex: 30 stocks).
    • Different weightages of constituent stocks.
    • Initial adjustment to the new auction mechanism.

    Challenges

    • Temporary benchmark divergence.
    • Higher tracking error for Exchange Traded Funds (ETFs) and index funds.
    • Residual risk of price manipulation.
    • Liquidity concerns in less-traded stocks.
    • Operational adaptation by brokers and investors.

    Key Concept:

    • Equilibrium Price: The price at which the maximum quantity of buy and sell orders can be matched during the auction.
    • Derivative Contracts: Financial instruments whose value is derived from an underlying asset such as stocks or indices. Examples: Futures Contracts and Options Contracts
    • Collectively known as the Futures and Options (F&O) segment.

    Securities and Exchange Board of India (SEBI)

    • Established: 1988 (Statutory status in 1992).
    • Governing Act: Securities and Exchange Board of India Act, 1992.
    • Headquarters: Mumbai.
    • Functions: Protect investors. Regulate and develop the securities market. Regulate stock exchanges, mutual funds, and market intermediaries.

  • Taxation and Other Laws (Amendment) Bill, 2026 introduced in Lok Sabha

    Why in the News?

    The Finance Minister introduced the Taxation and Other Laws (Amendment) Bill, 2026 in the Lok Sabha to amend tax and payment laws, improve tax certainty, attract foreign investment, and support the Make in India initiative.

    Key Highlights

    • Amends the Payment and Settlement Systems Act, 2007, Income-tax Act, 2025, and Finance Act, 2026.
    • Replaces the Income-tax (Amendment) Ordinance, 2026 with a permanent law.
    • Simplifies tax exemptions for foreign companies using Indian data centres.
    • Allows leased data centres to avail tax benefits.
    • Facilitates relocation of foreign fund managers to India without creating a taxable business presence.
    • Restores dividend tax exemption for REITs and InvITs under the new tax regime.

    Other Legislative Business

    • Discussion on Demands for Excess Grants (FY 2022-23).
    • Introduction of the Appropriation (No. 3) Bill, 2026 to regularise excess government expenditure.
    • Statements on implementation of Parliamentary Standing Committee recommendations.
    • Consideration of the Bankers’ Books Evidence Bill, 2026 to modernise evidence laws for digital banking.

    Appropriation Bill

    • Authorises the government to withdraw money from the Consolidated Fund of India to meet approved expenditure.
    • Required under Article 114 of the Constitution.

    Demands for Excess Grants

    • Presented when actual government expenditure exceeds the amount approved by Parliament.
    • Examined by the Public Accounts Committee (PAC) before parliamentary approval.
    • Constitutional Basis: Article 115.

    Bankers’ Books Evidence Bill, 2026

    • Seeks to modernise legal provisions governing bank records by recognizing digital banking and electronic records.

  • Door opens for fee on UPI, RuPay debit card payment to big merchants

    Why in the News?

    The Ministry of Finance has proposed allowing banks and payment system providers to levy a Merchant Discount Rate (MDR) on Unified Payments Interface (UPI) and RuPay debit card transactions made to large merchants (annual turnover above ₹50 crore).

    What is Merchant Discount Rate (MDR)?

    • Merchant Discount Rate (MDR): A fee paid by a merchant to its bank for processing digital payments.
    • The fee is shared among: Acquiring bank, Issuing bank, and Card/payment network.
    • Currently, UPI and RuPay debit card transactions have zero MDR.

    Key Proposal

    • MDR permitted for merchants with annual turnover above ₹50 crore.
    • Small and medium merchants remain exempt.
    • Aims to ensure the long-term sustainability of the digital payments ecosystem.

    Why is MDR Being Considered?

    • Zero MDR has created a funding gap for payment infrastructure.
    • Maintaining and expanding UPI networks involves significant operational costs.
    • The Standing Committee on Finance recommended a sustainable revenue model.

    Challenges

    • Large merchants may pass the cost on to consumers.
    • Could discourage UPI acceptance among some businesses.
    • Turnover-based implementation may increase compliance complexity.
    • May affect confidence in India’s zero-cost digital payment model.

    Back2Basics

    • UPI: Unified Payments Interface, a real-time payment system developed by the National Payments Corporation of India (NPCI).
    • RuPay: India’s domestic card payment network operated by NPCI.
    • NPCI: National Payments Corporation of India, the umbrella organisation for retail payment systems.
    • Regulator: Reserve Bank of India (RBI) under the Payment and Settlement Systems Act, 2007.

    National Payments Corporation of India (NPCI)

    • National Payments Corporation of India (NPCI) is an umbrella organization for operating retail payment and settlement systems in India.
    • Established in 2008 under the provisions of the Payment and Settlement Systems Act, 2007.
    • Promoted by the Reserve Bank of India (RBI) and the Indian Banks’ Association (IBA).
    • Registered as a Not-for-Profit Company under Section 8 of the Companies Act, 2013 (earlier Section 25 of the Companies Act, 1956).

    [2018] Which one of the following best describes the term “Merchant Discount Rate” sometimes seen in news?

    (a) The incentive given by a bank to a merchant for accepting payments through debit cards pertaining to that bank.

    (b) The amount paid back by banks to their customers when they use debit cards for financial transactions for purchasing goods or services.

    (c) The charge to a merchant by a bank for accepting payments from his customers through the bank’s debit cards.

    (d) The incentive given by the Government to merchants for promoting digital payments by their customers through Point of Sale (PoS) machines and debit cards.