The Hindu Daily Current Affairs – 28 October 2026
Wednesday, 28 October 2026
The Hindu – Important News Articles & Editorial
Today’s edition covers a Nobel laureate’s defence of crop biotechnology and India’s GM debate, a new study showing that lake-ending glaciers drive most global ice loss, Operation Trident and the hunt for drug kingpins, the future of Keralam’s KIIFB and off-budget borrowing, and ICRA’s warning on fresh bad loans, along with an editorial analysis on how India’s next investment cycle will shape its carbon future.
Nobel Winner Backs GM Crop Innovation in India
Nobel laureate Richard J. Roberts (Physiology or Medicine, 1993) told the second Emerging Science, Technology and Innovation Conclave (ESTIC) in New Delhi that fears of Indian dependence on foreign seed companies are “nonsense”. Crop biotechnology, including CRISPR gene editing, can be done and owned in Indian laboratories, he argued. His remarks revive India’s contested debate on GM crops, safety, seed sovereignty and regulation.
Key Facts
- Roberts called the term “genetically modified” very misleading and preferred “biotechnologically modified”, since every life form has been genetically modified by evolution.
- On Monsanto/Bayer-type control of seeds, he said improved agriculture can be done and owned in India, and that CRISPR-based plant work needs only a lab and a few weeks of training.
- CRISPR-Cas9 uses a guide RNA to steer the Cas9 enzyme to a chosen DNA site, where it cuts the DNA, allowing genes to be altered or inserted. The foundational CRISPR patents remain in an intellectual property dispute.
- He declined to comment on Golden Rice’s possible effect on Indian agriculture, saying he is not an agriculture expert.
- India’s GM crop record:
- 2010: then Environment Minister Jairam Ramesh imposed an indefinite moratorium on Bt brinjal.
- July 2024: the Supreme Court gave a split verdict on the environmental release of GM mustard, but unanimously asked the Centre to frame a national policy on GM crops.
- A 2017 PLOS One study found that backcrossing a Golden Rice event into an Indian rice variety produced stunted, low-yielding plants.
- India permits only Bt cotton commercially; no GM food crop is approved for cultivation.
- Critic Kavitha Kuruganti (Coalition for a GM-Free India) says GM mustard’s yield claims are not supported by the developers’ own data.
Transgenic (GM) vs Genome-Edited Crops
| Feature | Transgenic (GM) crops | Genome-edited crops (SDN-1, SDN-2) |
|---|---|---|
| Technique | Insertion of a foreign gene (transgene) from another species | Targeted change to the plant’s own DNA, e.g. with CRISPR-Cas9 |
| Foreign DNA in final plant | Yes | No |
| Regulation in India | Full biosafety review; GEAC approval needed for environmental release | Exempted from GM rules since March 2022, subject to institutional biosafety checks |
| Indian examples | Bt cotton (approved, 2002); Bt brinjal (moratorium); GM mustard DMH-11 (contested) | Two genome-edited rice varieties released by ICAR in 2025 |
Who Regulates GM Crops in India
| Body / law | Role |
|---|---|
| Environment (Protection) Act, 1986 and Rules, 1989 | Legal basis for regulating GM organisms |
| Genetic Engineering Appraisal Committee (GEAC), MoEFCC | Approves large-scale trials and environmental release |
| Review Committee on Genetic Manipulation (RCGM), DBT | Oversees research and confined trials |
| FSSAI (Food Safety and Standards Act, 2006) | Safety of GM food |
| Cartagena Protocol on Biosafety (under the CBD) | International rules on transboundary movement of living modified organisms |
Static Dimensions
- GM vs gene-edited crops: GM involves transgenes (foreign DNA), while genome editing makes targeted changes, often without foreign DNA. In March 2022 India exempted SDN-1 and SDN-2 genome-edited plants without foreign DNA from GM rules; in 2025 it released the world’s first genome-edited rice varieties.
- Regulation: Environment (Protection) Act, 1986 and the 1989 Rules on hazardous micro-organisms and GM organisms; GEAC (MoEFCC); RCGM (DBT); and FSSAI for GM food.
- Legal frameworks: Cartagena Protocol on Biosafety, Protection of Plant Varieties and Farmers’ Rights Act, 2001, Patents Act, 1970 (Section 3(j) excludes plants and seeds from patentability), and the Biological Diversity Act, 2002.
- Bt cotton: introduced in 2002 (Mahyco-Monsanto); disputes over trait fees and the Monsanto patent case (Supreme Court, 2019).
- Concepts: transgene, biosafety, precautionary principle, seed sovereignty, and biofortification (Golden Rice for vitamin A).
- Related institutions: ICAR and the Department of Biotechnology.
Analysis
- Terminology and framing: “biotechnologically modified” is a persuasive reframing, but it does not address safety, ecological or socio-economic concerns.
- Dependence argument: CRISPR’s low technical barrier supports domestic innovation, but control can still lie with patent holders, seed markets and trait licensing – so sovereignty depends on IP policy and public-sector research, not lab skills alone.
- Regulatory distinction: genome-edited crops without foreign DNA face lighter rules than transgenic GM crops, which may be the practical route to acceptance.
- Evidence and trust: the Golden Rice backcross study and the GM mustard yield dispute show that field performance, independent testing and transparent data matter.
- Limits of expert authority: Roberts is a Nobel laureate in molecular biology, not an agronomist, as he himself noted.
- Policy vacuum: the Supreme Court’s call for a national GM policy remains central to resolving the stalemate.
Challenges
- Public distrust and politically contested approvals.
- Ecological and gene-flow risks, and limited biosafety testing capacity.
- IP disputes and corporate concentration in seeds.
- Farmers’ livelihood and market risks (exports, labelling).
- No settled national GM policy.
Way Forward
- Frame a transparent national policy on GM and genome-edited crops, as directed by the Supreme Court.
- Strengthen independent, public-sector R&D (ICAR, agricultural universities) to keep ownership domestic.
- Ensure rigorous, open, case-by-case biosafety and efficacy assessment.
- Protect farmers’ rights, regulate trait fees and promote seed diversity.
- Run public consultation and science communication to build trust.
India Implications
- Food and nutrition security: edited crops for drought, heat or disease tolerance could protect yields under climate stress, if proven in Indian fields.
- Seed sovereignty: public-sector CRISPR research and careful patent policy can prevent a repeat of the Bt cotton trait-fee disputes.
- Trade: export markets that demand GM-free produce make labelling and segregation an economic issue.
Himachal Pradesh is promoting chemical-free natural farming under the Prakritik Kheti Khushhal Kisan Yojana (2018), and its apples, off-season vegetables and traditional crops such as red rice and rajmah sell partly on a clean, hill-grown image. Public institutions such as CSK HPKV Palampur and Dr Y.S. Parmar University at Nauni could use gene editing to breed disease-resistant or climate-tolerant hill varieties – but the State will have to weigh labelling and its natural-farming brand before adopting them.
ConclusionDomestic capability in CRISPR can reduce dependence on foreign firms, but acceptance of GM or gene-edited crops in India will turn on strong regulation, transparent evidence and farmer-centred policy – not on terminology or authority alone.
Prelims Practice
Q. With reference to CRISPR-Cas9 technology, consider the following statements:
- CRISPR-Cas9 can be used for targeted genome editing.
- Guide RNA helps direct the Cas9 enzyme to a specific DNA sequence.
- Cas9 is an enzyme that can cut DNA at a targeted location.
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
Click to reveal answer
Answer: (d)
The guide RNA matches the target DNA sequence and leads Cas9 there; Cas9 then cuts both DNA strands, and the cell’s repair process alters the gene. Its developers, Emmanuelle Charpentier and Jennifer Doudna, received the 2020 Nobel Prize in Chemistry.
Q. What is CRISPR-Cas9 technology? Explain its mechanism and discuss its potential applications in agricultural research and crop improvement.
(10 Marks, 150 Words)
Glaciers Ending in Lakes Drive More Than Half of Global Ice Loss
A study in Nature Communications, led by the Universities of Birmingham and Leeds, finds that glaciers ending in lakes, oceans or ice shelves make up just over 3% of the world’s glaciers but account for more than half of global glacier ice loss – about 134 billion tonnes of ice a year between 2000 and 2019. The finding matters for sea-level rise, glacial lake hazards in the Himalaya and the accuracy of climate projections.
Key Facts
- Water-terminating glaciers (ending in a lake, ocean or ice shelf) are just over 3% of glaciers by number but lost 134 billion tonnes of ice a year in 2000–2019 – over half of all glacier ice loss.
- They are generally much larger than land-ending glaciers and together cover over half of the world’s glacier area.
- Speed: lake-ending glaciers flow about 10% faster, and ocean-ending glaciers about 44% faster, than land-ending glaciers.
- Relative to size, lake-ending glaciers lose about 57% more ice than land-ending ones.
- Likely mechanisms: calving (icebergs breaking off the glacier front) and melting of ice below the waterline by lake water. It is not yet clear whether the lake, the glacier’s size and shape, or both cause the faster loss.
- Glacial lakes are becoming more common as the climate warms.
- Current projection models do not fully account for lake-ending glaciers.
How Glacier Type Affects Ice Loss
| Glacier type | Flow speed vs land-ending | Ice loss |
|---|---|---|
| Land-ending | Baseline | Most glaciers by number, but under half of total ice loss |
| Lake-ending | About 10% faster | About 57% more ice lost relative to size |
| Ocean-ending | About 44% faster | Together with lake- and ice shelf-ending glaciers: just over 3% of glaciers, over half of ice loss (134 billion tonnes a year, 2000–2019) |
Glacier-Related Disasters in India
| Event | Year | Cause |
|---|---|---|
| Kedarnath, Uttarakhand | 2013 | Extreme rainfall combined with the outburst of Chorabari Tal, a glacial lake |
| Chamoli (Rishiganga–Dhauliganga), Uttarakhand | 2021 | Massive rock-and-ice avalanche that turned into a debris flow (not a lake outburst) |
| South Lhonak Lake, Sikkim | October 2023 | Glacial Lake Outburst Flood (GLOF) that breached the Teesta-III dam at Chungthang |
Static Dimensions
- Glacier terms: calving; ablation (loss) versus accumulation; mass balance; and proglacial lakes (formed at a glacier’s front, often dammed by moraine).
- Himalayan context: the Hindu Kush Himalaya holds the “Third Pole” ice store that feeds the Indus, Ganga and Brahmaputra. Growing glacial lakes raise the risk of Glacial Lake Outburst Floods (GLOFs).
- Institutions and policy: NDMA guidelines on GLOFs; the National Mission for Sustaining the Himalayan Ecosystem (NMSHE, under the NAPCC); the Wadia Institute of Himalayan Geology; and glacial lake monitoring by ISRO and the Central Water Commission.
- Global frameworks: IPCC assessments (AR6 and the Special Report on the Ocean and Cryosphere), the Paris Agreement, and 2025 as the UN International Year of Glaciers’ Preservation.
- Concepts: cryosphere, sea-level rise, tipping points and early warning systems.
Analysis
- Disproportionate impact: a small group of glaciers drives most of the loss, so monitoring should focus on them.
- Model gap: projections that omit lake effects may understate future ice loss and sea-level rise.
- Feedback risk: as glaciers retreat, new lakes form, which can accelerate melt further.
- Hazard link: growing lakes in the Himalaya raise GLOF risk for downstream communities, hydropower and infrastructure.
- Uncertainty: the study does not yet separate the effect of lakes from that of glacier size and shape.
Challenges
- Limited field data on glacier–lake interactions.
- Difficult, high-altitude terrain for monitoring.
- Incomplete models and uncertain projections.
- Vulnerable downstream communities and infrastructure.
- Transboundary rivers and limited data-sharing.
Way Forward
- Include lake-terminating dynamics in glacier and sea-level models.
- Expand satellite and on-site monitoring of glacial lakes, with early warning systems.
- Zone and regulate construction in GLOF-prone valleys, and reduce risk at high-hazard lakes (for example, by lowering lake levels).
- Strengthen regional cooperation and data-sharing across the Hindu Kush Himalaya.
- Cut emissions to slow warming.
India Implications
- Water security: faster glacier loss alters the long-term flow of the Indus, Ganga and Brahmaputra, affecting irrigation and drinking water for hundreds of millions.
- Disaster risk: expanding glacial lakes threaten hydropower projects, roads and border infrastructure built in Himalayan valleys.
- Climate diplomacy: transboundary lakes in Tibet and Nepal require data-sharing with China and Nepal for early warning.
Himachal’s Chenab, Beas, Ravi and Sutlej basins hold hundreds of glacial lakes, and inventories by the State Centre on Climate Change show their number and area rising. Geepang Gath lake in Lahaul is among the fastest-growing, and the 2005 outburst of the Parechu lake in Tibet flooded the Sutlej through Kinnaur. With large hydropower projects such as Nathpa Jhakri and Karcham Wangtoo on the Sutlej, lake monitoring, early warning sirens and strict zoning in river valleys are vital for the State.
ConclusionThe study shows that a small share of glaciers contributes most of the world’s glacier ice loss. Better models, monitoring and hazard planning are needed – especially for India’s Himalayan glacial lakes.
Prelims Practice
Q. Which of the following best describes “calving” in glaciology?
- (a)The accumulation of snow that gradually turns into glacial ice
- (b)The breaking away of ice from a glacier’s edge to form icebergs or ice fragments
- (c)The movement of groundwater through glacial sediments
- (d)The deposition of wind-blown dust on a glacier’s surface
Click to reveal answer
Answer: (b)
Calving happens where a glacier ends in water – a lake, the sea or an ice shelf – which is one reason water-terminating glaciers lose ice faster. Option (a) describes accumulation.
Q. What is the cryosphere? Explain the role of glaciers in regulating freshwater availability, river systems and global sea levels.
(10 Marks, 150 Words)
Small Fish: While Carriers of Narcotics Are Caught, Big Sharks Operate Freely
The editorial examines Operation Trident, a multi-agency crackdown on an international drug syndicate operating across the India–Myanmar–Bangladesh corridor. The government has stepped up its anti-drug campaign, but carriers and small operators are caught while the “big sharks” – often based abroad – operate freely. It calls for following the money trail and convicting the ultimate beneficiaries.
Key Facts
- Operation Trident: raids on 23 October led to 18 arrests, based on NCB investigations that followed the arrest of an alleged Myanmar-based kingpin in Delhi in May.
- Dismantling the network requires identifying and prosecuting all its suppliers in Myanmar.
- Home Minister Amit Shah has set 31 December 2029 as the deadline to eradicate drug networks.
- Vision Document on Drug Control (2026–2029): launched on 26 June 2026 at the Narco-Coordination Centre meeting; involves States and UTs, over 40 Ministries, central agencies and the pharma sector, and aims to dismantle 100 major cartels and improve prosecution outcomes.
- 2025 data: arrests up over 50% and cases under the NDPS Act up about 53% compared with 2024.
- Gaps:
- Foreign-based operatives often remain at large – in the 2021 Mundra port case (about 3,000 kg of heroin), the Afghanistan-based suppliers are yet to be brought to book.
- Seizure quantities alone do not show whether drug availability or consumption has fallen.
- Punjab still faces a public health crisis, with alleged killings of anti-drug activists in Mansa and Gurdaspur, and the death of a father in Sangrur after he raised concerns about synthetic drugs.
- Protecting those who speak out against traffickers remains a concern.
Golden Crescent vs Golden Triangle
| Feature | Golden Crescent | Golden Triangle |
|---|---|---|
| Countries | Afghanistan, Pakistan, Iran | Myanmar, Laos, Thailand |
| Location relative to India | West – entry through Punjab, Rajasthan, Gujarat ports | East – entry through Manipur, Mizoram and other north-eastern States |
| Main drugs | Opium and heroin; increasingly methamphetamine | Opium and heroin; methamphetamine (yaba) and synthetic drugs |
| Security link | Narco-terror financing in Punjab and Jammu & Kashmir | Funding of insurgent groups in the Northeast |
India’s Drug-Control Framework
| Instrument | Key provisions |
|---|---|
| NDPS Act, 1985 | Bans production, possession, sale and transport of narcotics; strict bail (Section 37); punishment for financing (Section 27A); forfeiture of illegally acquired property (Chapter V-A) |
| PIT-NDPS Act, 1988 | Preventive detention of traffickers |
| PMLA, 2002 | Attachment of drug money and laundered assets |
| Narcotics Control Bureau (1986) | Nodal enforcement and coordination agency under the Ministry of Home Affairs |
| NCORD | Four-tier Narco-Coordination Centre mechanism linking Centre, States and districts |
| Nasha Mukt Bharat Abhiyaan (2020) | Demand reduction, awareness and de-addiction |
Static Dimensions
- NDPS Act, 1985: prohibits production, possession, sale and transport of narcotic drugs and psychotropic substances; stringent bail under Section 37; Section 27A on financing illicit traffic; PIT-NDPS Act, 1988 for preventive detention; forfeiture of property under Chapter V-A.
- Agencies: Narcotics Control Bureau (NCB, under the MHA, set up in 1986), DRI, Customs, Coast Guard, State police and Anti-Narcotics Task Forces (ANTFs); NCORD is the coordination mechanism.
- Golden Crescent and Golden Triangle: the Afghanistan–Pakistan–Iran and Myanmar–Laos–Thailand opium and synthetic drug zones; India lies between both.
- International conventions: UN Single Convention on Narcotic Drugs (1961), Convention on Psychotropic Substances (1971) and the UN Convention against Illicit Traffic (1988).
- Related: Nasha Mukt Bharat Abhiyaan (2020), the MANAS national narcotics helpline (1933), and Article 47 (State’s duty to prohibit intoxicating drugs injurious to health).
- Concepts: narco-terror nexus, hawala and money laundering (PMLA, 2002), and supply versus demand reduction.
Analysis
- Carriers versus kingpins: arrests of low-level couriers raise statistics but leave command and finance structures intact.
- Outcome indicators: higher arrests and cases may reflect more enforcement, not less drug use; prosecution and conviction rates and consumption data are better measures.
- Transnational barrier: kingpins sit in Myanmar and Afghanistan, which calls for extradition, mutual legal assistance and diplomatic cooperation.
- Public health dimension: Punjab shows the demand side – the need for treatment and rehabilitation.
- Witness protection: killings of activists show the need to protect whistle-blowers and complainants.
- Strategy signal: a time-bound vision document and cartel-targeting show focus, but delivery depends on coordination.
Challenges
- Foreign-based leaders beyond Indian jurisdiction.
- Low conviction rates and slow trials.
- Porous borders and ports, and growing synthetic-drug and online/dark-web trade.
- Money laundering through hawala and cryptocurrency.
- Overstretched treatment and rehabilitation systems.
- Weak protection for activists and informants.
Way Forward
- Follow the money: use the PMLA, NDPS asset forfeiture and financial intelligence to hit the beneficiaries.
- Strengthen international cooperation with Myanmar, Bangladesh, Afghanistan and others, including extradition and joint operations.
- Improve investigation quality and fast-track NDPS trials to raise convictions.
- Expand treatment, rehabilitation and school-level awareness through a public-health approach.
- Protect witnesses and activists.
- Use technology for border, port and online surveillance, and publish outcome data.
India Implications
- National security: drug money funds insurgency in the Northeast and terror networks in the north-west, making narcotics a core internal-security issue.
- Demographic dividend: addiction among youth erodes health, productivity and social stability.
- Federal coordination: policing is a State subject, so NCORD-style coordination and shared intelligence are essential.
Himachal Pradesh faces a growing problem of chitta (adulterated heroin) among its youth, much of it trafficked in from neighbouring Punjab, alongside illicit cannabis and opium cultivation in Kullu, Mandi and Chamba. The editorial’s lesson applies directly: arresting peddlers is not enough – the State needs financial investigation and property forfeiture against suppliers, preventive detention under PIT-NDPS, inter-State coordination with Punjab and more de-addiction and rehabilitation centres.
ConclusionDisrupting drug networks requires reaching the financiers and foreign suppliers, not just the couriers. A strategy combining financial tracing, international cooperation, prosecutions and public-health support can turn Operation Trident into lasting change.
Prelims Practice
Q. Consider the following pairs:
- Golden Crescent : Afghanistan, Iran and Pakistan
- Golden Triangle : Myanmar, Laos and Thailand
- Narcotics Control Bureau : Ministry of Finance
Which of the pairs given above are correctly matched?
- (a)1 and 2 only
- (b)2 and 3 only
- (c)1 and 3 only
- (d)1, 2 and 3
Click to reveal answer
Answer: (a)
Pair 3 is incorrect: the Narcotics Control Bureau, set up in 1986 under the NDPS Act, functions under the Ministry of Home Affairs. The Directorate of Revenue Intelligence is the agency under the Ministry of Finance.
Q. What are the Golden Crescent and the Golden Triangle? Examine their implications for India’s internal security and drug-control efforts.
(10 Marks, 150 Words)
On the Question of KIIFB’s Future
An expert panel set up by Keralam’s UDF government has recommended winding up the Kerala Infrastructure Investment Fund Board (KIIFB) and absorbing its functions into the State government. Once KIIFB’s borrowing was clubbed with the State budget, the panel reasons, the special purpose vehicle lost its main purpose. The article uses the episode to examine off-budget borrowings (OBBs) by States and Keralam’s need to raise public investment.
Key Facts
- The panel was set up in July 2026 under a former civil servant; its report has been tabled in the State Assembly.
- KIIFB was created under the KIIF Act, 1999 and restructured in 2016 by the LDF government to raise extra-budgetary resources for infrastructure. In 2019 it raised ₹2,150 crore through masala bonds listed on the London Stock Exchange – the first Indian State entity to do so.
- CAG strictures on KIIFB’s finances became a point of contention between the Centre, the Opposition and the State. Its borrowings are serviced from State revenue, as KIIFB earns no profits from lending – the heart of the dispute.
- Keralam reportedly spends only about 1.5% of GSDP on infrastructure, despite one of the highest own-tax-revenue-to-GSDP ratios among major States (RBI data), and lags in modern infrastructure such as high-speed rail and highways.
- Historical background:
- Under planning, the Centre used a “gap-filling” approach, and richer, more influential States got more.
- The FRBM Act, 2003 imposed a hard budget constraint (fiscal deficit up to 3% of GSDP), and the RBI monitors State debt.
- States devised OBBs to get around these limits; the CAG says actual OBBs are higher than it can count. Keralam is not among the worst offenders.
- The author’s view: OBBs are not undesirable if used productively and in line with sound expenditure principles, following the Domar condition (growth exceeding the interest rate). External borrowing for social or green purposes at lower rates carries exchange-rate risk but may be justified for fiscally fragile Keralam. Dissolving KIIFB is the easy part; raising public investment under Central monitoring is harder and largely political.
On-Budget vs Off-Budget Borrowing
| Feature | On-budget borrowing | Off-budget borrowing |
|---|---|---|
| Who borrows | The government directly | SPVs, corporations, boards or funds owned by the government |
| Who repays | Government budget | Government budget (directly or through guarantees and grants) |
| In fiscal deficit? | Yes | No – hence it can understate true debt |
| Scrutiny | Legislature, CAG and FRBM limits | Weaker legislative and audit scrutiny |
| Current treatment | Within borrowing limit | Since 2021-22, the Centre counts such borrowings serviced from the State budget within the State’s borrowing limit |
Static Dimensions
- Off-budget borrowing: borrowing by SPVs, corporations or funds that is serviced from the State budget but not counted in the fiscal deficit.
- Constitutional basis: Article 293 (State borrowing; Centre’s consent needed while a Central loan is outstanding); Articles 266 and 267 (Consolidated and Contingency Funds); Article 151 (CAG audit reports laid before the legislature).
- Fiscal rules: FRBM Act, 2003 and State FRBM Acts; Finance Commission-set borrowing limits (3% of GSDP, with extra room tied to power-sector reforms); the Centre’s decision to count OBBs and guarantees within State borrowing limits.
- Domar condition: public debt is sustainable if the economy’s growth rate exceeds the interest rate on debt.
- Masala bonds: rupee-denominated bonds issued overseas, which shift exchange-rate risk to investors.
- Related concepts: public goods, SPVs, contingent liabilities, fiscal federalism, and gap-filling versus rule-based transfers.
Analysis
- Rationale of SPVs: they let States fund infrastructure beyond the deficit cap, which matters when capital spending is low.
- Transparency concern: borrowings serviced from the budget but kept off it weaken fiscal transparency and distort debt measures.
- Centre–State tension: CAG criticism and Central monitoring show the federal stake in State debt sustainability.
- Productive-use test: the Domar condition and public-good returns, not the legal form, should judge OBBs.
- Institutional versus political issue: abolishing KIIFB does not create fiscal space, so Keralam still needs a new way to finance investment.
Challenges
- Hidden liabilities and weak audit of SPVs.
- Low infrastructure spending and a squeeze on revenue.
- Exchange-rate risk on external borrowing.
- Central restrictions on State borrowing.
- Political contestation over KIIFB.
Way Forward
- Bring OBBs into transparent budget reporting while allowing productive capital borrowing.
- Subject SPVs to regular CAG and legislative scrutiny.
- Link borrowing to projects with measurable economic returns.
- Prefer long-tenor, low-cost sources, with hedging for external loans.
- Develop innovative, accountable financing – municipal bonds, PPPs and land value capture.
- Negotiate fiscal space for capital expenditure with the Centre through Finance Commission mechanisms.
India Implications
- Fiscal transparency: counting OBBs within limits improves the accuracy of State debt figures, but also squeezes capital spending.
- Cooperative federalism: States need predictable rules and room for productive borrowing to build infrastructure.
- Quality of spending: the debate shifts the focus from how much States borrow to what the borrowing builds.
Himachal Pradesh faces the same dilemma in sharper form: a high debt-to-GSDP ratio, large committed spending on salaries, pensions and interest, and borrowing by State entities such as power, transport and infrastructure corporations backed by government guarantees. Since such borrowings now count within the State’s limit, SPVs offer no escape route – raising investment in hydropower, roads and tourism infrastructure will depend on own revenues, Central assistance for special-category hill States and borrowing linked to projects with clear returns.
ConclusionKIIFB’s fate is one case in the wider debate on how States finance infrastructure under fiscal rules. The goal should be transparent, productively used borrowing that raises growth – not a choice between hidden debt and under-investment.
Prelims Practice
Q. With reference to Article 293 of the Constitution of India, consider the following statements:
- It deals with borrowing by States.
- A State may require the consent of the Government of India to raise a loan if a loan made by the Government of India remains outstanding.
- It prohibits States from borrowing from any source other than the Central Government.
Which of the statements given above are correct?
- (a)1 only
- (b)1 and 2 only
- (c)2 and 3 only
- (d)1, 2 and 3
Click to reveal answer
Answer: (b)
Statement 3 is incorrect: States may borrow within India on the security of their Consolidated Fund, within limits fixed by their legislature – but they cannot borrow directly from abroad.
Q. “Fiscal discipline should not come at the cost of essential public investment.” Critically examine this statement in the context of State borrowing limits and infrastructure financing in India.
(10 Marks, 150 Words)
‘New Bad Loans May Rise in FY27; Private Banks to Face Pressure’
Rating agency ICRA expects fresh non-performing assets (NPAs) in the banking sector to rise in FY27, with private banks under more pressure because of their exposure to unsecured retail and MSME loans. Credit costs, however, are still projected to stay favourable and well below historical levels.
Key Facts
- Fresh NPA generation rate in FY27: 0.8% for public sector banks and 2.5% for private banks.
- Absolute fresh NPAs: about ₹1 lakh crore for PSBs and ₹1.3 lakh crore for private banks.
- Higher slippages at private banks are likely to continue in the second half of FY27.
- Source of stress: unsecured retail loans and MSME lending.
- Credit costs are expected to remain well below historical levels.
ICRA’s FY27 Projection
| Indicator | Public sector banks | Private banks |
|---|---|---|
| Fresh NPA generation rate | 0.8% | 2.5% |
| Fresh NPAs (absolute) | About ₹1 lakh crore | About ₹1.3 lakh crore |
| Main source of stress | Relatively cushioned | Unsecured retail and MSME loans |
Classification of Bank Assets (RBI Norms)
| Category | Definition |
|---|---|
| Standard asset | Performing loan; interest and principal paid on time |
| Substandard asset | NPA for 12 months or less |
| Doubtful asset | Remained in the substandard category for more than 12 months |
| Loss asset | Loss identified by the bank, auditors or RBI, but not yet fully written off |
Static Dimensions
- NPA: a loan whose interest or principal is overdue for 90 days or more (RBI norms); classified as substandard, doubtful or loss.
- Slippage is the fresh accretion of NPAs; credit cost is provisioning for bad loans relative to total loans.
- Resolution tools: Insolvency and Bankruptcy Code, 2016; SARFAESI Act, 2002; Debt Recovery Tribunals; Asset Reconstruction Companies; and the 4R strategy (recognition, resolution, recapitalisation, reforms).
- Regulation: RBI norms on asset classification, higher risk weights on unsecured consumer loans (November 2023), and Basel III capital norms.
- Related: PSB mergers, multi-year lows in gross NPAs, and the RBI’s recent rate hike raising borrowing costs.
Analysis
- Private-bank skew: rapid growth in unsecured retail and MSME credit explains the higher slippage at private banks, while PSBs are more cushioned.
- Low base: strong provisioning and historically low NPA levels mean the rise is a warning sign, not a crisis.
- Macro pressures: rate hikes, inflation and high oil prices can strain borrowers’ ability to repay.
Challenges
- Household leverage and risk in unsecured credit.
- MSME vulnerability to rising input costs.
- Weak recovery in some segments.
Way Forward
- Stronger underwriting and early-warning systems.
- Maintain adequate provisioning and capital buffers.
- Close RBI monitoring of unsecured lending.
- Faster resolution through the IBC and other recovery mechanisms.
India Implications
- Credit growth: rising slippages may make banks cautious, slowing credit to retail borrowers and small businesses.
- Financial stability: healthy capital buffers today are the result of the 4R clean-up and must be preserved.
- MSME finance: stress in MSME loans calls for targeted credit guarantees rather than blanket forbearance.
In Himachal Pradesh, MSMEs in the Baddi–Barotiwala–Nalagarh industrial belt, apple growers relying on crop and horticulture loans, and small tourism businesses are all sensitive to higher interest rates and input costs. Co-operative banks such as the HP State Co-operative Bank and the Kangra Central Co-operative Bank are major lenders in rural areas, so sound underwriting, early recognition of stress and RBI supervision matter for the State’s credit system as much as for private banks.
ConclusionAsset quality remains healthy overall, but rising slippages in unsecured and MSME loans call for vigilance to protect banking stability.
Prelims Practice
Q. With reference to the 4R strategy for addressing stressed assets in India, consider the following statements:
- Recognition involves identifying and transparently classifying stressed assets.
- Resolution involves addressing the underlying stress and recovering value wherever possible.
- Reforms aim to improve the institutional and regulatory framework governing banks.
- Recapitalisation can strengthen banks’ capacity to absorb losses.
Which of the statements given above are correct?
- (a)1 and 2 only
- (b)2 and 3 only
- (c)1, 3 and 4 only
- (d)1, 2, 3 and 4
Click to reveal answer
Answer: (d)
The 4R approach began with the RBI’s Asset Quality Review (2015), followed by resolution under the IBC (2016), recapitalisation of public sector banks and governance reforms such as PSB mergers.
Q. What are Non-Performing Assets (NPAs)? Explain the classification of NPAs and distinguish between slippages and credit costs in the banking sector.
(10 Marks, 150 Words)
India’s Next Investment Cycle Will Shape Its Carbon Future
UNEP has warned that the world could cross the 1.5°C warming threshold within a few years, renewing pressure for faster decarbonisation. The author argues that India’s choices are still open because much of the housing, industry, power networks and urban infrastructure it needs is yet to be built. What India builds now – and to what standards – will lock in its emissions for decades. The investment cycle is an opportunity to avoid stranded assets and costly retrofits.
Key Facts
- NITI Aayog: 86% of India’s 2070 building stock is yet to be built; floor space will rise from about 18 billion sq m (2020) to 42 billion sq m (2070).
- Steel and cement: crude steel capacity of about 200 million tonnes (2024-25), targeted at 300 million tonnes by 2030-31; cement output of about 427 million tonnes (2024), rising to about 660 million tonnes by 2030.
- Contrast with advanced economies: the IEA says about 80% of their 2050 buildings already exist. In the EU, 85% of buildings predate 2000, about three-quarters are energy-inefficient and only about 1% are renovated each year.
- Buildings:
- The Energy Conservation Building Code (ECBC) 2017 has been notified by 27 States but legally incorporated by only 21 (BEE State Energy Efficiency Index).
- BEE has issued the Energy Conservation and Sustainable Building Code (ECSBC) 2024 for commercial buildings and Eco-Niwas Samhita 2024 for homes.
- The gap is implementation: States should link the codes to building permits, occupancy certificates and grid connections.
- Power:
- Transmission bottlenecks have held back about 60 GW of renewable capacity (IEA).
- The Ministry of Power plans about 590 GW of generation additions in 2023–2032.
- Transmission and storage must be planned alongside, or ahead of, generation and demand.
- Steel and cement technology: hydrogen-based green steel is not yet viable in India (Ministry of Steel), and large-scale carbon capture in cement is further away (NITI Aayog). Mandating a technology could raise costs and lock in processes that later prove uneconomic.
- Public procurement as the better tool: India has a green-steel taxonomy, and the Ministry of Steel has proposed aggregated procurement through competitive bidding. Tenders should set emissions-intensity thresholds without prescribing the production route, tighten them over time and align them with Carbon Credit Trading Scheme (CCTS) targets.
- Finance: India’s cost of capital for grid-scale renewables is about 80% higher than in advanced economies (IEA). Remedies include payment-security mechanisms, partial credit guarantees and concessional debt – though cheap public finance for unproven technology shifts risk to the public balance sheet.
Building vs Retrofitting: India and Advanced Economies
| Aspect | India | Advanced economies |
|---|---|---|
| Future building stock | 86% of 2070 stock yet to be built (NITI Aayog) | About 80% of 2050 buildings already exist (IEA) |
| Main task | Build efficiently from the start | Retrofit inefficient old stock (EU renovates only about 1% a year) |
| Heavy industry | Steel capacity to rise from about 200 MT to 300 MT by 2030-31; cement to about 660 MT by 2030 | Mature, largely stable capacity |
| Main risk | Carbon lock-in through new high-emission assets | Costly early retirement of existing assets |
Sector Levers Suggested
| Sector | Problem | Suggested lever |
|---|---|---|
| Buildings | Codes notified but weakly enforced | Link ECSBC and Eco-Niwas Samhita to permits, occupancy certificates and utility connections |
| Power | About 60 GW of renewables held back by transmission gaps | Plan transmission and storage ahead of generation; fast-track Green Energy Corridors |
| Steel and cement | Green technologies not yet viable at scale | Green public procurement with tightening emissions-intensity thresholds, aligned with CCTS |
| Finance | Cost of capital about 80% higher than in advanced economies | Payment security, partial credit guarantees, concessional and blended finance |
Static Dimensions
- Climate commitments: net zero by 2070, 500 GW of non-fossil capacity by 2030 and a 45% cut in emissions intensity by 2030 (updated NDC); the Paris Agreement and its 1.5°C goal.
- Institutions: Bureau of Energy Efficiency (Energy Conservation Act, 2001, amended 2022), NITI Aayog, Ministry of Power, Central Electricity Authority and Grid-India.
- Policies: Carbon Credit Trading Scheme (CCTS), National Green Hydrogen Mission, Green Energy Corridors, PM Surya Ghar, the International Solar Alliance and the National Steel Policy.
- Concepts: stranded assets, carbon lock-in, embodied carbon, hard-to-abate sectors, green premium, green public procurement, cost of capital and blended finance.
- Related: the EU’s Carbon Border Adjustment Mechanism (CBAM), which raises the cost of carbon-intensive steel and cement exports.
Analysis
- Late-comer advantage: India can leapfrog by building efficiency in from the start, avoiding the retrofit burden mature economies face.
- Implementation gap, not technology gap: for buildings, codes and know-how exist, but State adoption and enforcement lag.
- Power-system sequencing: clean generation is wasted without transmission, storage and grid flexibility – especially as transport, cooling and industry electrify.
- Technology neutrality: outcome-based thresholds (emissions intensity) reward efficient routes without locking in unproven technology.
- State as market-maker: large public buyers (Railways, NHAI, governments) can create early demand for low-carbon steel and cement and reveal the green premium.
- Financing penalty: a high cost of capital makes front-loaded clean projects uneconomic, and risk-sharing instruments must be used with care.
- Balance: the article treats growth and decarbonisation as compatible, though costs, finance and sector readiness remain real constraints.
Challenges
- Weak enforcement of building codes at State and local levels.
- Transmission delays, right-of-way and land issues, and limited storage.
- Immature and costly green steel and cement technologies.
- High financing costs and off-taker (discom) risk.
- Rising demand for materials and electricity from urbanisation.
- Risk of backing the wrong technologies or creating contingent liabilities.
Way Forward
- Build ECSBC and Eco-Niwas Samhita into permits, occupancy certificates and utility connections, with penalties for non-compliance.
- Plan transmission and storage ahead of generation, and fast-track Green Energy Corridors.
- Use green public procurement with tightening emissions-intensity thresholds, aligned with CCTS.
- Avoid mandating specific technologies; support R&D and pilots in green hydrogen and carbon capture.
- Lower the cost of capital through payment-security mechanisms, partial credit guarantees, concessional debt and development finance.
- Strengthen building-sector capacity: a skilled workforce, testing, labelling and enforcement by urban local bodies.
India Implications
- Avoiding lock-in: decisions on buildings, steel, cement and grids in this decade will fix a large share of India’s emissions up to 2070.
- Competitiveness: low-carbon steel and cement will matter for exports as carbon border taxes spread.
- Fiscal prudence: using public procurement and risk-sharing wisely can speed the transition without overloading public finances.
Himachal Pradesh hosts major cement plants at Darlaghat and Baga in Solan and at Barmana in Bilaspur, so emissions-intensity standards and green procurement will shape its industrial future. The State’s hydropower surplus can reach other States only with stronger transmission through Green Energy Corridors. In fast-growing hill towns in seismic zones IV and V, energy-efficient and climate-appropriate building codes – built into permits from the start – are cheaper than retrofitting later.
ConclusionIndia cannot avoid the investment its growth requires, but it can decide what kind of capital stock it leaves behind. Building efficiency in where technology is mature, and keeping flexibility where it is still evolving, can spare the country costlier corrections later.
Q. Explain the significance of the 1.5°C warming threshold under the Paris Agreement. Discuss the implications of rising global temperatures for India’s climate policy.
(15 Marks, 250 Words)
