The article discusses the critical role of the Finance Commission (FC) in determining fiscal transfers from the Union to States, highlighting the complexities of ensuring both vertical and horizontal equity. It notes that while vertical transfers have increased, horizontal equity remains a challenge due to varying fiscal capacities and needs among states. The 16th FC faces the task of balancing these aspects, especially with the cessation of GST compensation and the need for a new framework for revenue sharing. The piece emphasizes the importance of a holistic approach to ensure states can meet their developmental goals without excessive reliance on discretionary grants.
The Finance Commission plays a crucial role in ensuring fiscal federalism by determining the distribution of Union tax revenues between the Centre and States.
Horizontal equity, which aims to reduce disparities among states, remains a significant challenge despite increased vertical transfers.
The 16th Finance Commission is tasked with addressing the cessation of GST compensation and developing a new framework for fiscal transfers.
Exam Points
The 16th Finance Commission is currently deliberating on fiscal transfers.
GST compensation to states ceased in June 2022.
The article mentions the 'Thirteenth Finance Commission' and 'Fourteenth Finance Commission' in the context of increasing transfers.
The article highlights the progress and challenges in the India-Australia Comprehensive Economic Cooperation and Trade Agreement (CECTA/ECTA). It notes that while India has achieved 90% tariff-free trade, significant non-tariff barriers and issues in specific sectors like agriculture, education, and critical minerals persist. The article emphasizes the need for deeper engagement, addressing regulatory hurdles, and fostering trust to unlock the full potential of the bilateral relationship. It suggests that both countries need to move beyond traditional trade to collaborate on strategic areas like clean energy, education, and critical minerals, ensuring a more robust and mutually beneficial partnership.
The India-Australia CECTA has significantly boosted trade, with India achieving nearly 90% tariff-free trade.
Despite progress, non-tariff barriers and regulatory hurdles continue to impede deeper economic integration.
Key sectors for cooperation include clean energy, education, critical minerals, and agriculture.
Exam Points
India and Australia signed the Comprehensive Economic Cooperation and Trade Agreement (CECTA/ECTA).
Australia's 2025 Economic Engagement Roadmap identified four bilateral superhighways: clean energy, education, tourism, and agribusiness.
India's share in Australia's total exports is around 3%, while Australia accounts for 2.5% of India's exports.
India is undergoing a significant demographic transition, moving from a 'population explosion' to an ageing population, as evidenced by the latest SRS bulletin (2024). The Total Fertility Rate (TFR) has dropped to 1.9, below the replacement level of 2.1, and the birth rate has fallen from 21 in 2014 to 18.3 in 2024. While India currently enjoys a demographic dividend with a median age of 29.2 years, this will eventually disappear. The article highlights the need for policy reassessment to address the needs of a greying nation, including better healthcare access, education, and addressing regional disparities in child survival and infant mortality rates.
India's Total Fertility Rate (TFR) has fallen to 1.9, below the replacement level of 2.1, indicating a significant demographic shift.
The country is transitioning from a young, expanding population to an ageing one, which will eventually lead to the disappearance of the demographic dividend.
Factors like urbanisation, better education, and access to contraception contribute to the decline in fertility rates.
Exam Points
India's Total Fertility Rate (TFR) is 1.9 (as per SRS bulletin, 2024).
The replacement level TFR is 2.1.
India's median age is 29.2 years, compared to China's 40.2 years.
Andhra Pradesh has proposed new incentives for families to have three or more children, a departure from traditional family planning policies. The state's TFR has dropped to 1.5, well below the national average. The incentives include cash payments, free education, and extended maternity leave. However, the article argues that such incentives are unlikely to significantly increase fertility and could inadvertently keep poorer women out of the workforce, especially without robust social infrastructure like universal childcare. It raises concerns about the potential for economically vulnerable families to increase in size without adequate long-term support, exacerbating existing ecological and social challenges.
Andhra Pradesh is offering incentives for families to have more children, including cash payments and educational support.
The state's Total Fertility Rate (TFR) has fallen significantly to 1.5, below the national average.
These incentives are unlikely to lead to sustained increases in fertility, based on evidence from India and globally.
Exam Points
Andhra Pradesh's Total Fertility Rate (TFR) is 1.5.
Proposed incentives include ₹30,000 for a third child and ₹40,000 for a fourth.
The 'Thalliki Vandanam' scheme pays ₹15,000 per child for school attendance.
India's peri-urban areas, the transitional zones between rural and urban, face significant water and sanitation challenges due to rapid growth and institutional limbo. These areas often lack reliable water supply, suffer from inadequate sanitation infrastructure, and experience environmental contamination from waste. The article highlights the need to address this 'missing middle' with a comprehensive plan. It proposes five key actions: resolving governance vacuum by constituting Nagar Panchayats, securing drinking water sources, implementing a Swachh Bharat Mission 3.0 focused on peri-urban sanitation, scaling up decentralised wastewater treatment, and financing peri-urban water as strategic infrastructure.
Peri-urban areas in India, experiencing rapid growth, suffer from a 'missing middle' in governance, leading to severe water and sanitation issues.
Challenges include unreliable water supply, inadequate wastewater treatment, illegal dumping, and groundwater contamination.
A key action is to resolve the governance vacuum by constituting Nagar Panchayats as envisioned by the 74th Constitutional Amendment.
Exam Points
The number of Census towns jumped from 1,362 to 3,784 (178% increase) in two decades.
The 74th Constitutional Amendment envisions Nagar Panchayats for Census towns.
The Jal Jeevan Mission has expanded tap connections to nearly 8 out of 10 rural households.
The Assam government has tabled 'The Uniform Civil Code, Assam, 2026 Bill' in the State Assembly, aiming to establish a common law for all residents on matters of marriage, divorce, succession, and live-in relationships. Key provisions include a ban on bigamy and polygamy with imprisonment, standardised legal ages for marriage (21 for grooms, 18 for brides), mandatory registration of all marriages and divorces, uniform grounds for divorce, and gender-equal inheritance. The Bill also mandates registration of live-in relationships within a month, with penalties for non-compliance, and explicitly excludes Scheduled Tribes from its purview. Opposition parties have criticized the lack of consultation.
The Assam UCC Bill aims to establish a common law for marriage, divorce, succession, and live-in relationships for all residents, excluding Scheduled Tribes.
It proposes a ban on bigamy and polygamy, punishable by imprisonment, and standardizes legal ages for marriage.
Mandatory registration of all marriages, divorces, and live-in relationships is a key provision, with penalties for non-registration.
Exam Points
The Bill is titled 'The Uniform Civil Code, Assam, 2026 Bill'.
It proposes imprisonment up to seven years under Section 82 of the Bharatiya Nyaya Sanhita, 2023, for bigamy and polygamy.
Standardized legal age: 21 for grooms, 18 for brides.
President Droupadi Murmu presented the Padma Vibhushan, Padma Bhushan, and Padma Shri awards for 2026 at the Civil Investiture Ceremony-I. Among the prominent awardees, legendary Bollywood actor Dharmendra received the Padma Vibhushan posthumously, accepted by his wife Hema Malini, and violin virtuoso N. Rajam was also conferred the Padma Vibhushan for her exceptional contribution to classical music. Other notable recipients included Uday Suresh Kumar Kotak (Padma Bhushan) and Harmanpreet Kaur Bhullar (Padma Shri). The awards recognize individuals for their distinguished service in various fields, celebrating their contributions to the nation.
President Droupadi Murmu conferred the Padma Vibhushan, Padma Bhushan, and Padma Shri awards for 2026.
Dharmendra (posthumously) and N. Rajam were awarded the Padma Vibhushan.
The awards recognize individuals for their exceptional contributions in diverse fields.
Exam Points
Padma Vibhushan awarded to Dharmendra (posthumously) and N. Rajam.
The Supreme Court has directed an expert committee, to be constituted for defining the Aravalli hills and ranges, to ensure larger public participation through consultations with domain experts and stakeholders. A Bench led by Chief Justice Surya Kant emphasized that the committee's mandate would extend beyond mere definition to drawing a roadmap for permissible activities, including the crucial aspect of regulated mining in this ecologically sensitive mountain system. The court's decision underscores the importance of inclusive decision-making and sustainable management for one of the world's oldest mountain ranges.
The Supreme Court has called for greater public participation in the expert committee tasked with defining the Aravalli hills and ranges.
The committee's role will include developing a roadmap for permissible activities, such as regulated mining, in the Aravalli region.
The Aravalli range is recognized as one of the oldest and ecologically sensitive mountain systems globally.
Exam Points
A Bench headed by Chief Justice Surya Kant issued the directive.
Additional Solicitor-General Aishwarya Bhati and amicus curiae K. Parameshwar were involved in submissions.
The Central Empowered Committee was mentioned in the context of panel nominations.
India's Union Health Minister J. P. Nadda reviewed the country's preparedness and surveillance measures against the Ebola virus outbreak in Africa, expressing concern about its potential global spread. The Health Ministry confirmed that India has not reported any cases of Bundibugyo Ebola disease and is actively monitoring the situation, collaborating with the National Centre for Disease Control and other agencies. The Directorate General of Civil Aviation (DGCA) has issued directives for airlines, mandating passengers from affected regions to fill out health forms, and implementing segregated seating and personal protective equipment for suspected cases, alongside mask distribution for nearby passengers.
India's Health Ministry is closely monitoring the Ebola virus situation in Africa and has strengthened national surveillance and preparedness.
No cases of Bundibugyo Ebola disease have been reported in India to date.
The DGCA has issued specific directives for airlines regarding passengers traveling from or transiting through Uganda or the Democratic Republic of Congo.
Exam Points
Union Health Minister J. P. Nadda reviewed preparedness.
India has not reported any case of the Bundibugyo Ebola disease.
The National Centre for Disease Control (NCDC) is involved in monitoring.
The Indian mobile market, particularly the sub ₹10,000-₹15,000 phone segment, is severely impacted by a global semiconductor shortage, termed 'memflation'. This inflation is driven by skyrocketing prices of memory chips (DRAM and NAND) as manufacturing capacities are increasingly diverted to produce high-bandwidth memory (HBM) for AI infrastructure, which offers higher margins. India is highly vulnerable due to its heavy reliance on electronic component imports and price-sensitive consumer base. Industry experts predict that the market will remain tight through 2026-2027, with premium phone production being prioritized over entry-level devices, making affordable smartphones increasingly difficult to sustain profitably.
The Indian mobile market is experiencing 'memflation' due to a severe global shortage and rising prices of memory chips.
Manufacturing capacities are being diverted from conventional DRAM and NAND to high-bandwidth memory (HBM) for AI infrastructure due to higher demand and margins.
India is particularly vulnerable due to its heavy reliance on electronic component imports and a price-sensitive consumer base.
Exam Points
The term 'memflation' refers to inflation caused by memory chip shortage.
The Indian rupee has been sharply depreciating against the U.S. dollar, crossing 96 in May this year. This decline is primarily attributed to India's persistent merchandise trade deficit, significant Foreign Portfolio Investment (FPI) outflows driven by global geopolitical tensions and higher U.S. interest rates. A falling rupee increases import costs, particularly for oil, and impacts the overall economy. The Reserve Bank of India (RBI) intervenes by selling dollars from its forex reserves to stabilize the rupee, but ongoing global uncertainties pose severe challenges. The article emphasizes the need to regulate speculative capital outflows and reduce dependence on oil imports to strengthen the rupee.
The Indian rupee has significantly depreciated against the U.S. dollar, primarily due to persistent merchandise trade deficits and FPI outflows.
FPI outflows are driven by global geopolitical tensions and higher interest rates in the U.S., leading to a reduced demand for the rupee.
A falling rupee increases the cost of imports, especially oil, negatively impacting the Indian economy.
Exam Points
The rupee-to-dollar exchange rate crossed 96 in May this year.
India's current account has consistently been in deficit.
Forex reserves stood at around USD 691.11 billion at the end of March 2026, covering 10.8 months' worth of imports.
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