Content

1. Death Sentences in India: Fewer Confirmations, Higher Acquittals
2. Ambiguities in the U.S.–India Trade Deal
3. Bio-based Chemicals and Enzymes: India’s Bioeconomy Push
4. India Adds 50,000+ MW Power Capacity: Renewable Surge
5. AI Impact Summit 2026: India & Global AI Governance
6. LHS 1903 Planetary System Discovery
7. RBI Plan to Compensate Victims of Digital Fraud

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Death Sentences in India: Fewer Confirmations, Higher Acquittals

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Source : The Hindu

A. Issue in Brief

• As of 31 Dec 2025, 574 prisoners (550 men, 24 women) on death row — 43.5% rise since 2016, indicating growing imposition at trial stage despite low final confirmation.
• ~45% death row prisoners for murder; ~37% for murder with sexual offences, showing concentration in aggravated violent crimes.
• NALSAR Death Penalty Report (2025) notes rising removal from death row since 2020 due to appellate courts’ reluctance to confirm capital punishment.
• Only 8.31% death sentences upheld by High Courts; Supreme Court confirmed none in last 3 years, showing systemic dilution at higher judiciary.
• Signals concerns on evidence quality, procedural fairness, and rights protection at trial level.

Relevance

• GS-II (Polity & Governance)
  • Judiciary, criminal justice system, due process
  • Role of higher judiciary in protecting fundamental rights
  • Legal aid and access to justice

B. Static Background

Constitutional & Legal Basis

• Article 21 permits deprivation of life by “procedure established by law” → constitutional basis for death penalty.
• Bachan Singh vs State of Punjab (1980): Introduced “rarest of rare” doctrine, making death penalty an exception.
• Machhi Singh vs State of Punjab (1983): Elaborated aggravating vs mitigating factors framework.
• Death penalty provided under IPC/BNSS for offences like terrorism, waging war, rape-murder, etc.

C. Key Dimensions

Judicial Trends

• 1,310 death sentences (last decade) by Sessions Courts → high trial-level imposition.
• Out of 842 cases reviewed, only 70 confirmed by HCs → strong appellate correction.
• 34.65% HC decisions led to acquittals, indicating serious trial-stage errors.
• Highest acquittal rates:
  • Patna HC – 78.31%
  • Karnataka HC – 50.46%
  • Jharkhand HC – 46.97%

Criminal Justice System Insight

• Pattern suggests over-reliance on capital punishment at trial stage, followed by appellate reversals.
• Reflects investigation gaps, weak legal aid, coerced confessions, and forensic limitations.

D. Critical Analysis

Structural Concerns

• High acquittal rates imply possible wrongful convictions, undermining fairness in irreversible punishment.
• Trial courts may award death penalty under public pressure in heinous crimes, later corrected by higher courts.
• Long death row incarceration creates “death row phenomenon” — psychological torture recognised in jurisprudence.

Rights Perspective

• Global human rights discourse increasingly views death penalty as violative of right to life and dignity.
• Law Commission 262nd Report (2015) recommended abolition except for terrorism-related offences.

Deterrence Debate

• Empirical studies globally show no conclusive proof that death penalty deters crime more than life imprisonment.
• NCRB data show crime trends not directly correlated with capital punishment frequency.

E. Way Forward

• Strengthen forensic infrastructure and investigation quality to reduce wrongful convictions.
• Mandatory mitigation investigation reports before awarding death penalty (as SC suggested in recent rulings).
• Improve legal aid quality at trial stage; many death row prisoners are socio-economically vulnerable.
• Consider legislative re-evaluation of death penalty scope in line with Law Commission suggestions.
• Promote victim-centric justice models focusing on restitution and speedy trials rather than symbolic severity.

F. Exam Orientation

Prelims Pointers

• Death penalty constitutional under Article 21.
• “Rarest of rare” doctrine – Bachan Singh (1980).
• Law Commission 262nd Report recommended partial abolition.
• Supreme Court confirmation required for execution.

Mains Practice Question (15M)

• “The declining confirmation of death sentences by higher courts indicates deeper structural issues in India’s criminal justice system.”Critically examine in light of recent death penalty statistics.

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Ambiguities in the U.S.–India Trade Deal

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Source : The Hindu

A. Issue in Brief

• India and U.S. moved toward an interim trade deal (2025–26) after prolonged tariff tensions; comes when bilateral trade already crossed ~$190–200 billion (FY24, USTR/GoI data), making U.S. India’s largest trading partner.
• U.S. imposed 25% tariff hikes on select imports and an additional 25% tariff threat linked to Russian oil purchases, blending trade policy with geopolitical leverage.
• U.S. cuts tariffs to 18% on Indian goods; India reportedly indicated ~$500 billion purchase intentions over 5 years in energy, defence, and tech, aimed at narrowing the U.S. trade deficit and stabilising ties.
• Domestic debate intensified due to possible concessions on agriculture, GM foods, and NTBs, raising farmer-income and food-security concerns.

Relevance

• GS-II (International Relations)
  • India–U.S. bilateral relations
  • Trade diplomacy and strategic autonomy
  • Geoeconomics and foreign policy

B. Static Background

Trajectory of India–U.S. Trade

• Bilateral goods & services trade:
  • ~$120 bn (2016) → ~$191 bn (2023–24)
  • Target often discussed: $500 bn by 2030 (joint ambition statements).
• U.S. accounts for ~18% of India’s exports (largest single-country destination), especially in IT services, pharma, gems & jewellery, engineering goods.
• India runs a goods trade surplus (~$30–35 bn) with the U.S., a recurring U.S. concern.

Disputes

• GSP withdrawal (2019) affected ~$6 bn of Indian exports.
• Section 232 (steel/aluminium) and 301 tariffs created friction.
• Multiple disputes filed at WTO (e.g., ICT products, steel tariffs).

C. Key Dimensions

1) Tariffs & Market Access

• U.S. average applied tariffs:
  • ~3–4% overall, but higher on specific sectors (textiles, footwear, agri).
• India’s average tariffs:
  • ~17–18% (WTO data); higher in agriculture (30–40%+ in some lines).
• Interim deal discussions focus on:
  • Lower Indian duties on nuts, apples, medical devices, select agri.
  • Better U.S. access for Indian textiles, leather, and engineering goods.

Example: Earlier tariff cuts on U.S. almonds and apples were used as confidence-building measures.

2) Agriculture Sensitivity

• Agriculture supports ~45% of India’s workforce but contributes ~15–16% of GDP → high livelihood sensitivity.
• U.S. provides large farm support:
  • $20–30 bn annually in farm subsidies (OECD estimates vary by year).
  • Creates price competitiveness against Indian smallholders.
• India’s red lines:
  • Dairy, cereals, pulses, edible oils, and GM foods.

Example: India kept dairy largely out of RCEP, showing consistent defensive stance.

3) Energy & Strategic Trade

• U.S. already among India’s top LNG suppliers:
  • U.S. share in India’s LNG imports rose from ~5% (2017) to ~15%+ in some recent years.
• Russian oil:
  • Share in India’s crude imports jumped from <2% (pre-2022) to ~35–40% in 2023–24 due to discounts.
• Linking tariffs to Russian oil purchases introduces geoeconomics into trade, potentially constraining India’s diversification strategy.

4) Non-Tariff Barriers (NTBs) & GM Foods

• U.S. repeatedly flags India’s SPS measures and lengthy approvals as NTBs.
• India restricts GM food imports citing:
  • Biosafety
  • Environmental risks
  • Farmer dependency on patented seeds

Example: GM mustard debate in India shows domestic sensitivity to biotech crops.

D. Critical Analysis

Opportunities

• Improved access to U.S. market benefits:
  • Textiles & apparel (~$10 bn+ exports to U.S.)
  • Pharmaceuticals (U.S. takes ~30–35% of India’s pharma exports)
• Energy deals diversify supply and support India’s role as a major energy consumer economy.
• Trade cooperation complements strategic ties in QUAD, iCET, semiconductor and defence tech cooperation.

Risks

• Import surges can depress prices for MSP-backed crops:
  • Example: edible oil import liberalisation earlier hurt domestic oilseed farmers.
• Policy space erosion:
  • FTAs may constrain future use of tariffs for infant industry protection.
• Strategic autonomy:
  • Trade conditionalities on energy sourcing blur line between commerce and geopolitics.
• Asymmetric bargaining:
  • U.S. GDP ~$27 trillion vs India ~$4 trillion → power imbalance in negotiations.

E. Way Forward

• Use tariff-rate quotas (TRQs) for sensitive agri products.
• Strengthen domestic competitiveness via logistics, storage, and value chains rather than only tariffs.
• Institutionalise stakeholder consultations with states & farmer bodies before commitments.
• Diversify export destinations to avoid overdependence on a single market.
• Separate trade diplomacy from geopolitical pressure points to preserve autonomy.

F. Exam Orientation

Prelims Pointers

• U.S. = India’s largest trading partner.
• GSP withdrawal – 2019.
• WTO terms: AoA, SPS, TBT often tested.
• Section 232/301 = U.S. unilateral trade tools.

Mains Practice Question (15M)

• “India’s trade negotiations increasingly reflect a balance between export ambition, farmer protection, and strategic autonomy.”Examine in the context of recent India–U.S. trade developments.

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Bio-based Chemicals and Enzymes: India’s Bioeconomy Push

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Source : The Hindu

A. Issue in Brief

• Bio-based chemicals are produced from renewable biomass (sugarcane, corn, agri-residue) using fermentation or enzymatic processes, offering lower carbon footprint vs petrochemicals.
• India has prioritised the sector under Department of Biotechnology’s BioE3 Policy (2024) — Biotechnology for Economy, Environment, Employment.
• India still imports key intermediates; e.g., ~$480 million acetic acid imports in 2023, showing petrochemical dependence and opportunity for bio-alternatives.
• Global push for net-zero and circular bioeconomy is driving demand for green chemicals, sustainable fuels, and industrial enzymes.

Relevance

• GS-III (Science & Technology)
  • Biotechnology, industrial bioprocessing
  • Innovation-led growth sectors
• GS-III (Environment)
  • Circular economy
  • Low-carbon industrial transition
  • Waste-to-wealth

B. Static Background

What are Bio-based Chemicals?

• Industrial chemicals derived from biomass instead of fossil fuels, including:
  • Organic acids (lactic, acetic)
  • Bio-alcohols (ethanol, butanol)
  • Bioplastics & solvents
• Used in plastics, cosmetics, pharma, textiles, packaging.

What are Enzymes?

• Biological catalysts enabling reactions at lower temperature & pressure, reducing energy use by 10–30% in some industrial processes (IEA estimates for bioprocessing).
• Key sectors:
  • Detergents
  • Food processing
  • Pharmaceuticals
  • Biofuels

Policy Framework

• BioE3 Policy (2024):
  • Focus on bio-manufacturing and green growth.
  • Links with Atmanirbhar Bharat and Net Zero 2070 goals.
• Related initiatives:
  • National Biofuel Policy
  • PLI schemes in chemicals & specialty materials
  • SATAT for bio-CNG

C. Key Dimensions

1) Economic Potential

• Global bio-based chemicals market:
  • Estimated $110–120 billion, projected to grow at ~10–12% CAGR (industry estimates).
• Enzyme market:
  • Global size $12–15 billion, dominated by Novozymes (Denmark) and DSM (Netherlands).
• India’s enzyme market:
  • Consolidated; top players hold >75% share.

2) Resource Advantage

• India produces 500+ million tonnes of agri-residue annually, much underutilised or burned.
• Strong sugar industry:
  • India among top 2 global sugar producers, enabling ethanol and biochemicals.

3) Industrial Base

• Major Indian players:
  • Praj Industries – biofuels & biochemicals.
  • Godavari Biorefineries – bio-based chemicals & ethanol.
  • Advanced Enzyme Technologies, Rossari Biotech – industrial enzymes.

4) Environmental Gains

• Bio-based chemicals can reduce lifecycle emissions by 30–80% vs petrochemicals (EU bioeconomy studies).
• Support circular economy and waste-to-wealth models.

D. Critical Analysis

Opportunities

• Reduces import dependence on petrochemicals.
• Creates new markets for farmers via biomass value chains.
• Aligns with global ESG investment flows toward green manufacturing.

Risks / Constraints

• Cost disadvantage vs fossil-based chemicals when crude prices are low.
• Limited bioprocessing infrastructure:
  • Few bio-foundries, pilot plants, scale-up facilities.
• Technology gaps:
  • Advanced enzymes and fermentation tech often imported.
• Market adoption:
  • Downstream industries reluctant without price parity.

E. Way Forward

• Scale shared bio-manufacturing infrastructure (bio-foundries, pilot plants).
• Offer green procurement incentives for bio-based products.
• Support R&D-industry linkages via DBT and BIRAC.
• Develop standards & certification for bio-based products.
• Integrate with carbon markets and green finance.

F. Exam Orientation

Prelims Pointers

• BioE3 Policy – DBT initiative.
• Enzymes reduce energy need in industry.
• Bio-based chemicals derive from biomass, not fossil fuels.
• India major agri-residue producer.

Mains Practice Question (15M)

“Bio-based chemicals and enzymes can transform India’s industrial ecosystem from fossil-dependent to bio-economy driven.”Discuss opportunities and challenges.

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India Adds 50,000+ MW Power Capacity: Renewable Surge

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Source : The Hindu

A. Issue in Brief

• India added 52,537 MW generation capacity in FY 2025–26 (till Jan 31) — highest-ever annual addition, surpassing previous record 34,054 MW (FY 2024–25).
• Addition equals ~11% increase over last year’s base capacity, indicating accelerated infrastructure build-out.
• 39,657 MW (≈75%) of new capacity from renewables, led by 34,955 MW solar and 4,613 MW wind.
• India’s total installed capacity now at 5,20,510.95 MW (≈520.5 GW), reflecting rapid energy-sector expansion.

Relevance

• GS-III (Infrastructure & Energy)
  • Power sector, renewable transition
  • Grid stability and storage
• GS-III (Environment)
  • Climate commitments (Panchamrit)
  • Decarbonisation pathway

B. Static Background

India’s Power Mix – Structural Context

• Current installed capacity share:
  • Renewables (incl. large hydro): ~50.5% (2,63,189 MW)
  • Fossil fuels: ~48% (2,48,541 MW)
  • Nuclear: ~1.6% (8,780 MW)
• India is the 3rd-largest electricity producer and consumer globally (IEA).
• Electricity demand growing ~6–7% annually due to urbanisation, EVs, cooling demand, and industrial growth.

Policy Framework Driving Growth

• National Electricity Plan (CEA) projects ~900 GW capacity by 2032 to meet demand and climate goals.
• Panchamrit commitments (COP26):
  • 500 GW non-fossil capacity by 2030
  • 50% energy from renewables
  • Net Zero by 2070
• Key schemes:
  • PLI for solar modules
  • Green Energy Corridor
  • PM Surya Ghar Rooftop Solar
  • ISTS charge waivers for renewables

C. Key Dimensions

1) Solar Dominance

• 34,955 MW solar added in one year:
  • Nearly equals total solar capacity addition of many countries annually.
  • India already among top 5 global solar markets.
• Falling solar tariffs:
  • Utility-scale tariffs reached ₹2–2.5/unit range in recent bids, improving competitiveness.

2) Wind Sector

• 4,613 MW wind addition shows revival after slow years.
• Offshore wind policy and hybrid projects (solar-wind-storage) gaining traction.

3) Energy Transition Signal

• Renewables now largest share in installed capacity, a structural shift from coal dominance a decade ago.
• In 2014:
  • Renewables share was ~30% or less (including hydro).
  • Coal dominated >60%.

4) Grid & Storage Implications

• Higher RE penetration requires:
  • Battery Energy Storage Systems (BESS)
  • Pumped hydro
  • Smart grids
• CEA estimates India may need ~27 GW storage by 2030.

D. Critical Analysis

Opportunities

• Reduces fossil import bill:
  • India imports ~85% of crude oil and significant coal.
• Supports climate diplomacy credibility.
• Creates green jobs:
  • Solar & wind sectors labour-intensive in installation phase.

Challenges

• Installed capacity ≠ actual generation:
  • Coal still provides ~70% of actual electricity generation due to higher PLFs.
• Land acquisition and transmission bottlenecks slow RE deployment.
• DISCOM financial stress affects payment security to RE developers.

E. Way Forward

• Accelerate storage deployment for grid stability.
• Reform DISCOMs under RDSS scheme for financial viability.
• Promote domestic manufacturing of modules, cells, and batteries.
• Integrate green hydrogen with renewable growth.
• Strengthen interstate transmission for RE-rich states.

F. Exam Orientation

Prelims Pointers

• India = 3rd largest power producer globally.
• 500 GW non-fossil target by 2030.
• Renewables now >50% of installed capacity.
• Nuclear share ~1–2%.

Mains Practice Question (15M)

• “India’s rapid renewable capacity addition is transforming its energy landscape, but structural challenges remain.”Examine.

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AI Impact Summit 2026: India & Global AI Governance

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Source : The Hindu

A. Issue in Brief

• AI Impact Summit 2026 hosted by India at Bharat Mandapam (Feb 16–20) — first time the global AI summit is hosted in a Global South country, signalling India’s growing AI diplomacy role.
• Participation from ~100 countries, 20+ heads of state/government, and global tech CEOs like Sundar Pichai, Sam Altman, Demis Hassabis, showing high geopolitical-tech convergence.
• Event includes India AI Impact Expo with 300+ exhibitions, 3,000+ speakers, and expected 2.5 lakh visitors, making it one of the largest AI gatherings globally.
• India positions summit around “human-centric AI” and equitable access rather than heavy regulation-first models.

Relevance

• GS-II (International Relations)
  • Tech diplomacy
  • Global governance of emerging tech
  • India as Global South voice
• GS-III (Science & Tech)
  • AI ecosystem, compute infrastructure
  • DPI model and AI applications

B. Static Background

Global AI Governance Context

• Previous AI summits hosted by:
  • UK (Bletchley Park, 2023)
  • South Korea
  • France
• Global debate split between:
  • EU-style regulation-first approach (AI Act)
  • U.S.-style innovation-led governance
  • China’s state-driven AI model
• India advocates inclusive AI governance for Global South, aligned with its Digital Public Infrastructure (DPI) diplomacy.

India’s AI Ecosystem

• India among top 5 AI talent pools globally (Stanford AI Index, recent editions).
• MeitY-backed IndiaAI Mission (~₹10,000+ crore outlay approved in 2024) focuses on:
  • Compute infrastructure
  • Datasets
  • Startups
  • Skilling
• India has 100,000+ AI professionals and one of the world’s largest startup ecosystems.

C. Key Dimensions

1) Geopolitical Significance

• AI seen as strategic technology shaping economic and military power.
• Hosting summit boosts India’s soft power similar to:
  • G20 Presidency 2023
  • Voice of Global South Summits
• Engagement from Brazil, France, UAE, African and Latin American states indicates South–South tech diplomacy.

2) Economic & Innovation Impact

• Global AI market projected to reach:
  • $1–1.5 trillion by 2030 (PwC/McKinsey estimates).
• AI could add ~$500 billion to India’s GDP by 2025–30 period (industry estimates).
• AI-driven productivity gains expected in:
  • Health
  • Agriculture
  • Education
  • Governance

3) Human-Centric AI Approach

• Focus on People, Planet, Progress:
  • AI for climate modelling
  • Smart agriculture
  • Public service delivery
• Aligns with India’s DPI model:
  • Aadhaar
  • UPI
  • CoWIN

4) Tech Diplomacy & Standards

• Early participation in AI standards can prevent rule-setting dominance by developed nations.
• Opportunity to shape global norms on ethics, data governance, and access to compute.

D. Critical Analysis

Opportunities

• Positions India as bridge between tech powers and developing world.
• Boosts domestic AI startup visibility and investment.
• Enhances India’s claim as trusted tech partner.

Concerns / Risks

• Compute gap:
  • Advanced AI requires high-end GPUs; global supply concentrated in few firms.
• Data governance:
  • Balancing innovation with privacy under DPDP Act 2023.
• Skill gap:
  • Large talent pool but uneven advanced research capacity.
• Ethical debates and reputational risks around controversial attendees can politicise events.

E. Way Forward

• Invest in national AI compute infrastructure and semiconductor ecosystem.
• Promote open datasets for public-good AI.
• Strengthen AI skilling under Skill India Digital.
• Develop balanced AI regulation ensuring safety without stifling startups.
• Lead Global South AI coalition for equitable access.

F. Exam Orientation

Prelims Pointers

• IndiaAI Mission – MeitY initiative.
• EU AI Act = regulation-first model.
• AI summits earlier in UK, Korea, France.
• DPI model = Aadhaar, UPI, CoWIN.

Mains Practice Question (15M)

• “AI governance is emerging as a key arena of global power politics.” Discuss India’s role in shaping inclusive and human-centric AI governance.

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LHS 1903 Planetary System Discovery

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Source : The Hindu

A. Issue in Brief

• Astronomers identified a four-planet system around red dwarf star LHS 1903 (117 light-years away) that challenges existing planet formation theories.
• System contains 2 rocky super-Earths + 2 gaseous mini-Neptunes, but unusually the outermost planet is rocky instead of gaseous, contradicting classical models.
• Observed using ESA’s CHEOPS (Characterising Exoplanet Satellite) space telescope dedicated to exoplanet studies.
• One rocky planet has estimated surface temperature ~60°C, placing it near the inner edge of habitable conditions.

Relevance

• GS-III (Science & Technology — Space)
  • Exoplanets, astronomy
  • Space missions and telescopes

B. Static Background

What are Exoplanets?

• Planets outside our solar system; over 5,500 exoplanets confirmed (NASA Exoplanet Archive, recent data).
• Detection methods:
  • Transit method (most common)
  • Radial velocity
  • Direct imaging

Planet Formation Theory

• Standard model:
  • Planets form in a protoplanetary disk of gas and dust.
  • Inner planets = rocky (gas evaporates due to heat).
  • Outer planets = gaseous (retain hydrogen-helium).
• LHS 1903 system deviates from this expected pattern.

Red Dwarf Stars

• Make up ~70–75% of stars in Milky Way.
• Smaller, cooler, longer-lived than Sun:
  • LHS 1903 is ~50% Sun’s mass
  • Only ~5% Sun’s luminosity
• Habitable zones closer to the star due to low luminosity.

C. Key Dimensions

1) Scientific Significance

• Rocky outer planet suggests:
  • Sequential formation rather than simultaneous.
  • Gas depletion before last planet formed.
• Alternative hypothesis:
  • Planet lost atmosphere due to stellar radiation or collision.

2) Habitability Angle

• Surface temperature ~60°C:
  • High but potentially within extremophile tolerance.
  • Habitability also depends on:
    • Atmosphere
    • Water presence
    • Magnetic field
• Many potentially habitable exoplanets found around red dwarfs.

3) Technology & Space Science

• CHEOPS mission (launched 2019):
  • ESA mission focused on characterising known exoplanets.
  • Measures planet size, density, and orbit.
• Complements missions like:
  • NASA’s TESS
  • James Webb Space Telescope

D. Critical Analysis

Opportunities for Science

• Forces refinement of planetary formation models.
• Improves understanding of atmospheric evolution and planetary migration.
• Expands search criteria for habitable worlds.

Limitations

• Habitability inference based on temperature alone is incomplete.
• Red dwarfs emit strong stellar flares:
  • Can strip atmospheres and harm life prospects.
• Distance (117 light-years) makes direct study difficult.

E. Way Forward

• Use JWST spectroscopy to detect atmospheric gases.
• Study more red dwarf systems to see if pattern repeats.
• Integrate findings into next-gen planet formation simulations.

F. Exam Orientation

Prelims Pointers

• Exoplanets = planets outside solar system.
• Red dwarfs most common stars.
• CHEOPS = ESA exoplanet mission.
• Super-Earth vs mini-Neptune distinction.

Mains Practice Question (10–15M)

• “Recent exoplanet discoveries are reshaping our understanding of planetary formation and habitability.”Discuss with examples.

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RBI Plan to Compensate Victims of Digital Fraud

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Source : The Indian Express

A. Issue in Brief

• RBI proposed a framework (Feb 2025) to compensate victims of digital payment frauds, especially UPI-related scams, addressing rising consumer vulnerability in India’s fast-growing digital economy.
• Proposal follows surge in complaints: National Cybercrime Reporting Portal recorded ~25 lakh cyber complaints in 2024, many linked to financial fraud.
• RBI aims to shift from purely customer-liability model to a shared-responsibility and faster-redress system.
• Reflects need to sustain trust in India’s Digital Public Infrastructure (UPI, AEPS, cards, wallets).

Relevance

• GS-II (Governance)
  • Consumer protection
  • Role of RBI as regulator
  • Ombudsman and grievance redressal
• GS-III (Economy & Internal Security)
  • Digital economy & fintech risks
  • Cyber fraud and financial security

B. Static Background

Digital Payments Growth Context

• India is world leader in real-time payments:
  • UPI processed 100+ billion transactions in 2023–24 (NPCI data).
  • Monthly UPI transactions often exceed ₹15–20 lakh crore.
• Rapid scale has also expanded fraud surface area.

Existing Liability Framework

• RBI’s 2017 circular on “Customer Protection – Limiting Liability”:
  • Zero liability if customer reports promptly and no negligence.
  • Limited liability if delay or customer fault.
• However, delays in dispute resolution often leave victims uncompensated.

C. Key Dimensions

1)     Rising UPI Fraud Trends

UPI fraud data (as per Parliamentary replies):

Year	Fraud Cases	Amount
2021–22	~4.07 lakh	~₹242 crore
2022–23	~7.25 lakh	~₹573 crore
2023–24	~13.42 lakh	~₹1,087 crore
2024–25	~12.64 lakh	~₹981 crore
2025–26*	~10.64 lakh	~₹805 crore

(*till Dec 2025)

Shows 3–4x rise in cases since 2021–22.

2) RBI Proposed Compensation Structure

• Compensation cap proposed: up to ₹25 thousand per victim (or 85% of actual loss, whichever lower).
• RBI to create a dedicated fund (~20% contribution from banks).
• Banks expected to contribute ~15%+ share, ensuring industry skin-in-the-game.
• Focus on cases involving:
  • OTP scams
  • Social engineering
  • App-based fraud

3) Consumer Protection & Trust

• Digital payments rely on network trust:
  • Any fear reduces adoption, especially among elderly and rural users.
• RBI signals shift toward proactive consumer protection, not just reactive grievance handling.

4) Institutional Mechanism

• Integration with:
  • NPCI dispute resolution
  • Ombudsman framework
  • Cybercrime portal coordination
• Faster turnaround expected compared to current bank-led investigations.

D. Critical Analysis

Opportunities

• Strengthens confidence in DPI ecosystem (UPI, Aadhaar, Jan Dhan).
• Encourages reporting rather than silent victimhood.
• Aligns with global best practices:
  • UK & EU frameworks ensure faster fraud refunds.

Concerns / Risks

• Moral hazard:
  • Users may lower vigilance expecting refunds.
• Fraud ecosystem increasingly sophisticated:
  • Deepfakes, spoofed calls, phishing-as-a-service.
• Burden on banks:
  • Rising fraud losses could affect profitability.
• Enforcement gap:
  • Low conviction rates in cyber fraud cases.

E. Way Forward

• Strengthen real-time fraud detection using AI/ML.
• Nationwide digital literacy campaigns under Digital India.
• Mandatory cooling period for high-risk transactions.
• Stronger KYC norms for mule accounts.
• Faster coordination between banks and law enforcement.

F. Exam Orientation

Prelims Pointers

• UPI = NPCI-run real-time payment system.
• RBI Ombudsman handles digital payment complaints.
• India leads world in real-time digital payments volume.
• Customer liability rules from RBI 2017 circular.

Mains Practice Question (15M)

• “Rapid digitisation of finance must be accompanied by robust consumer protection.”Discuss in context of rising digital payment frauds in India.