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DAILY CURRENT AFFAIRS, 17 MARCH 2026

STRAIT OF HORMUZ

 
 
1. Context
 
The EU is in discussion with the UN on a Black Sea Grain initiative type arrangement to open up the Strait of Hormuz, according to its top diplomat Kaja Kallas. The strait, a waterway for a fifth of the world’s oil supply, has been virtually closed by Iran following a conflict in the region which began after Israel and the U.S. struck Iran on February 28, sending oil prices soaring to above $100 per barrel.
 
2. What is the Strait of Hormuz?
 

  • The Strait of Hormuz is a strategically significant and narrow maritime passage situated between Iran and Oman, serving as a link between the Persian Gulf, the Gulf of Oman, and the Arabian Sea. The U.S. Energy Information Administration (EIA) has labeled it as the world’s most vital oil transit chokepoint, through which nearly 20% of global liquid petroleum fuels and a substantial portion of LNG trade pass. In May, more than 45% of India’s crude oil imports were estimated to have transited through this strait. Given that India is the third-largest consumer of crude oil globally and imports over 85% of its oil needs, the strait plays a crucial role in its energy security.

  • Data from the commodity analytics firm Kpler indicates that, as of June, India has been importing over 2.2 million barrels per day (bpd) of crude oil from Russia, which constitutes more than 41% of its total oil imports.

  • While oil imports from the U.S. have shown a steady rise, supplies from West Asian nations such as Iraq, Saudi Arabia, the UAE, and Kuwait have remained relatively consistent. Many of these shipments were likely planned prior to the recent escalation in tensions between Israel and Iran, and therefore, may not reflect the impact of the current geopolitical developments.

  • Over the past two to three years, India has notably adjusted its oil import strategy. Russia has emerged as India’s top crude supplier, overtaking traditional exporters from West Asia. Importantly, Russian oil bypasses the Strait of Hormuz, as it is mainly transported via alternative sea routes like the Suez Canal and Red Sea, and sometimes through the Cape of Good Hope or Pacific Ocean routes.

 
3. Why is the Strait of Hormuz strategically important for India?
 

  • India’s current oil procurement approach already demonstrates a diversified and risk-mitigated strategy, especially in light of uncertainties in West Asian oil routes, with Russian crude now making up the largest share of India’s import basket.

  • After recent U.S. air strikes targeting Iranian nuclear sites, Iran’s parliament passed a resolution on Sunday advocating the closure of the Strait of Hormuz, a vital corridor for global oil transportation. The final decision on this move now lies with Iran’s Supreme National Security Council.

  • Although Iran has repeatedly issued threats in the past to shut the strait, it has never acted on them. Even in the present context, industry analysts consider the likelihood of an actual blockade to be low. Nevertheless, the increased risk perception surrounding the potential closure is expected to trigger global alarm, including in India, by raising concerns over the security of oil and gas supplies and potentially driving up global energy prices.

 
4.How does the Israel-Iran conflict pose a threat to global oil and gas flows?
 
 
  • The Israel-Iran conflict poses a significant threat to global oil and gas flows due to the geopolitical sensitivity and strategic location of the region. At the heart of this issue lies the Strait of Hormuz—a narrow but crucial maritime passage through which nearly 20% of the world’s petroleum and a substantial share of liquefied natural gas (LNG) are transported.
  • Iran borders this strait and has, over the years, repeatedly threatened to block it during periods of heightened tension, including in response to military actions or sanctions.
  • When hostilities between Israel and Iran escalate—such as through air strikes, proxy conflicts, or cyber warfare—it increases the likelihood of retaliation from Iran that could involve disrupting maritime traffic in the Strait of Hormuz.
  • Even if Iran does not fully close the strait, the mere threat or perception of such an action is enough to cause volatility in global energy markets. Tanker insurance rates rise, shipping routes are reconsidered, and countries heavily dependent on oil imports, like India, become increasingly vulnerable to supply disruptions and price shocks.
  • Furthermore, any military conflict in this region risks damaging key infrastructure such as refineries, pipelines, or export terminals in the broader West Asian region.
  • This would constrain oil production and distribution, affecting both the availability and price of crude oil and gas worldwide. Global markets respond quickly to these risks, often resulting in immediate spikes in prices due to concerns over supply security.
  • In summary, the Israel-Iran conflict amplifies the risk to global oil and gas flows by potentially destabilizing a region that is central to global energy supply chains. It heightens fears of supply disruptions, increases market speculation, and threatens the economic stability of energy-importing countries, making it a matter of both geopolitical and economic concern
 
For Prelims: Strait of Hormuz,  Persian Gulf, Energy Information Administration (EIA), liquefied natural gas (LNG)
 
For Mains: General Studies II: Effect of policies and politics of developed and developing countries on India’s interests.
 
Previous Year Questions
 

1.Which one of the following straits is nearest to the International Date Line? (UPSC CSE 2008)

(a) Malacca Strait

(b) Bering Strait

(c) Strait of Florida

(d) Strait of Gibraltar

Answer (b)

The International Date Line (IDL) roughly follows the 180° longitude, which lies in the Pacific Ocean, deviating slightly to accommodate international boundaries.

The Bering Strait lies between Russia and Alaska, and it is very close to the 180° meridian, making it the closest strait to the International Date Line.

Here's why the other options are incorrect:

  • Malacca Strait – Lies between Malaysia and Indonesia, far west of the IDL.

  • Strait of Florida – Lies between the U.S. (Florida) and Cuba, in the Atlantic Ocean.

  • Strait of Gibraltar – Connects the Atlantic Ocean to the Mediterranean Sea, between Spain and Morocco, far from the IDL.
Source: Indianexpress
 

REMOVAL OF CHIEF ELECTION COMMISSIONER

 
 
 
1. Context
 
Citing charges including “partisan and discriminatory conduct” and “obstruction of investigation into electoral fraud and SIR” (Special Intensive Revision of electoral rolls), the Opposition on Friday submitted notices in both Houses of Parliament for an impeachment motion against Chief Election Commissioner (CEC) Gyanesh Kumar.
 
 
2. Process of appointment
 
  • The Chief Election Commissioner (CEC) and other Election Commissioners are appointed by the President of India based on the recommendations of a three-member selection panel, which includes the Prime Minister, the Leader of the Opposition (LoP), and a Union Cabinet Minister.
  • As per the 2023 Act, the appointees must be former secretary-level officers in the Government and should be individuals of proven integrity, with adequate knowledge and experience in managing and conducting elections.
  • Their tenure is fixed at six years or until they attain the age of 65, whichever is earlier. The CEC is entitled to the same privileges, service conditions, and salary as a judge of the Supreme Court

 

3. Process of removal

  • Article 324(5) of the Constitution provides that the Chief Election Commissioner (CEC) can only be removed in the same manner and on the same grounds as a Supreme Court judge.
  • This safeguard is reiterated in Section 11(2) of the 2023 Act. The provision also specifies that an Election Commissioner or Regional Commissioner may be removed only if the CEC recommends it.
  • This high threshold was intentionally designed to insulate the Election Commission of India (ECI) from political influence.
  • Under Article 124(4) of the Constitution, which outlines the removal procedure for Supreme Court judges, removal is permitted solely on grounds of “proved misbehaviour or incapacity.”
  • Misbehaviour generally refers to corrupt acts, abuse of power, or conduct inconsistent with the role of the CEC, while incapacity denotes the inability to carry out official duties.
  • The process begins with a notice of motion in either House of Parliament, explicitly alleging misbehaviour or incapacity.
  • Once admitted, a committee of enquiry investigates the charges. For the motion to succeed, it must be passed by a two-thirds majority of members present and voting in both Houses of Parliament.
  • If the motion passes, the President formally removes the CEC. In this matter, the President has no discretionary power, acting strictly in accordance with Parliament’s decision

 

4.Constitution and Election Commission of India
 

The Constitution includes a series of articles (Articles 324–329) that grant powers to the Election Commission and outline its possible roles and responsibilities.

  • Article 324: Grants the authority for overseeing, directing, and controlling the preparation of electoral rolls and the conduct of all elections to Parliament, state legislatures, and the offices of the President and Vice-President.

  • Article 325: Prohibits exclusion from electoral rolls based on religion, race, caste, sex, or any of these factors.

  • Article 326: Establishes adult suffrage as the foundation for elections to the House of the People and State Legislative Assemblies.

  • Article 327: Allows Parliament to pass laws, in accordance with the Constitution, regarding all matters related to elections to Parliament and State Legislative Assemblies.

  • Article 328: Empowers state legislatures to enact laws concerning all matters related to elections to the state's legislative bodies.

  • Article 329: Prevents courts from interfering in electoral matters

5. ECI Responsibilities and Functions
 

The responsibilities and functions of the Election Commission of India (ECI) can be categorized into advisory, quasi-judicial, and administrative roles.

  • Advisory: The Constitution grants the ECI the authority to advise on the post-election disqualification of sitting members of Parliament and State Legislatures. The ECI is also consulted in cases where individuals are found guilty of corrupt practices during elections, as brought before the Supreme Court and High Courts, to decide if they should be disqualified from contesting future elections and for how long. In such matters, the President or, where applicable, the Governor, is required to follow the ECI's advice.
  • Quasi-Judicial: The ECI has the power to disqualify a candidate who fails to submit their election expense accounts within the legally required timeframe and format. It also has the authority to remove or reduce other legal disqualifications. Additionally, the ECI resolves disputes related to the recognition of political parties and the allocation of election symbols. The commission sets a model code of conduct and ensures compliance by all candidates and political parties during elections.
  • Administrative: The ECI's administrative duties include delimiting electoral constituencies and managing the registration of eligible voters, as well as regularly updating electoral rolls. The commission is responsible for announcing election schedules and dates, reviewing nomination documents, recognizing political parties, and assigning them election symbols. The ECI can also nullify voting in cases of violence, booth capturing, tampering, or other irregularities. It oversees the financial expenditure of political parties on candidates' campaigns impartially.

The ECI also designates specific roles to register political parties for elections and grants them the status of national or state parties based on their performance in the polls. These roles include the person in charge of elections, the District Election Officer, and the Election Registration and Returning Officer

 

6.Composition of Election Commission of India
  • Since its inception in 1950, the Chief Electoral Commissioner (CEC) was the sole member of the Election Commission of India (ECI). However, after the voting age was lowered from 21 to 18 in 1989, a large influx of new voters was added. To manage this increased workload, two additional commissioners were appointed, expanding the ECI to include three commissioners.
  • In January 1990, some changes were made to the structure of the ECI, but it was soon reverted to its original form. Following discussions and debates in the political sphere, the President ultimately reconstituted the commission in 1993, adding two more commissioners, establishing the current structure of the ECI.
  • The Chief Election Commissioner and the other election commissioners are appointed by the President, who also determines their terms of office and service conditions. All commissioners, including the CEC, receive the same salary, benefits, and powers as judges of the Supreme Court.
  • If there is a disagreement among the three members, decisions are made by a majority vote. Commissioners serve a term of up to six years or until they reach the age of 65, whichever comes first. They hold a status equivalent to that of Supreme Court justices in India.
  • The Chief Election Commissioner can only be removed from office through the same process used to remove a Supreme Court judge. This involves the President dismissing the CEC based on a resolution supported by a special majority in both Houses of Parliament, on grounds of proven misconduct or incapacity.
  • In conclusion, as outlined by the Constitution, the ECI is responsible for supervising, directing, and conducting elections for the offices of President, Vice President, state legislatures, and Parliament.
  • For elections to state-level urban bodies like municipalities and panchayats, a separate State Election Commission exists. The ECI plays a crucial role in upholding the democratic process by ensuring free and fair elections for key political positions in the country
 
For Prelims: Election Commission of India, Chief Election Commissioner, Election Commission (Conditions of Service of Election Commissioners and Transaction of Business) Act, 1991, State Election Commission, Article 324, Electronic Voting Machines (EVMs) and Voter Verified Paper Audit Trails (VVPATs).
For Mains: 1. Discuss the powers and functions of the Election Commission of India. How does the Election Commission ensure the conduct of free and fair elections in the Country? (250 words).
 

Previous year Question

1. Consider the following statements: (UPSC 2017)
1. The Election Commission of India is a five-member body.
2. Union Ministry of Home Affairs decides the election schedule for the conduct of both general elections and bye-elections.
3. Election Commission resolves the disputes relating to splits/mergers of recognized political parties.
Which of the statements given above is/are correct?
A. 1 and 2 only
B. 2 only
C. 2 and 3 only
D. 3 only
Answer: D
 
2. Consider the following statements : (UPSC 2021)
1. In India, there is no law restricting the candidates from contesting in one Lok Sabha election from three constituencies.
2. In the 1991 Lok Sabha Election, Shri Devi Lal contested from three Lok Sabha constituencies.
3. As per the- existing rules, if a candidate contests in one Lok Sabha election from many constituencies, his/her party should bear the cost of bye-elections to the constituencies vacated by him/her in the event of him/her winning in all the constituencies.
Which of the statements given above is/are correct?
A. 1 only
B. 2 only
C. 1 and 3
D. 2 and 3
Answer: B
Source: Indianexpress
 
 

MENSTRUAL LEAVE POLICY

1. Context

The Supreme Court on Friday reiterated its concern that making menstrual leave for women employees mandatory could disadvantage women, as it could make employers wary of recruiting them.
 

2. About Menstrual leave

  • Menstrual leave refers to all policies allowing employees or students to take time off when experiencing menstrual pain or discomfort.
  • In the workplace context, it refers to policies that allow for paid or unpaid leave or time for rest.
  • More than half of those who menstruate experience pain for a couple of days a month; for some, it is debilitating enough to hamper daily activities and productivity.
A 2017 survey of 32, 748 women in the Netherlands published in the British Medical Journal found that 14 per cent of them had taken time off from work or school during their periods.
The researchers estimated that employees lost around 8.9 per day's worth of productivity every year due to menstrual cycle-related issues.

3. Arguments against it

  • Not everyone, even those who menstruate, is in favour of menstrual leave.
  • Some believe that it is not required and that it will backfire and lead to employer discrimination against women.
  • For example, in response to the plea filed in the Supreme Court, a caveat was filed for highlighting a potential issue with menstrual leave.
  • If you compel employers to grant menstrual pain leave, it may operate as a de facto disincentive for employers to engage women in their establishments in a policy dimension.

4. The global menstrual leave policies

  • Spain became the first European country to grant paid menstrual leave to workers.
  • Workers now have the right to three days of menstrual leave expandable to five days a month.
  • In Asia, Japan introduced menstrual leave as part of its labour laws in 1947, after the idea became popular with labour unions in the 1920s.
  • At present, under Article 68, employers cannot ask women who experience difficult periods to work during that time.
  • Indonesia too introduced a policy in 1948, amended in 2003, which states that workers experiencing menstrual pain are not obliged to work on the first two days of their cycle.
  • In the Philippines, workers are permitted two days of menstrual leave a month.
  • Among African nations, Zambia introduced one day of leave a month without needing a reason or a medical certificate, calling it Mother's day.

5. Attempts being made in India

  • Section 14 of the Maternity Benefit Act, of 1961 deals with the appoint of inspectors.
  • It says that appropriate governments may appoint such officers and may define the local limits of jurisdiction within which they shall exercise their functions under this law.
  • Among State governments, Bihar and Kerala are the only ones to introduce menstrual leave to women.
  • The Bihar government, then headed by Lalu Prasad Yadav, introduced its menstrual leave policy in 1992, allowing employees two days of paid menstrual leave every month.
  • Recently, Kerala Chief Minister Pinarayi Vijayan announced that the State's Higher Education department will now grant menstrual and maternity leave for students in universities that function under the department.
  • Additionally, Congress MP from Kerala Hibi Eden announced that he will be moving a private member's Bill seeking the right to paid leave during menstruation for working women, menstrual leave for female students and free access to menstrual health products, in the ongoing Budget session of the Parliament.

For Prelims & Mains

For Prelims: Menstrual leave policy, Maternity Benefit Act, of 1961, Private member bill, Supreme Court, British Medical Journal, Bihar, Kerala, PIL, Spain, Japan, Indonesia, Philippines, Zimba,
For Mains:
1. What is Menstrual leave and discuss the various menstrual leave policies across the world. (250 Words)
2. Critically analyse the need for National Menstrual leave policy. (250 Words)
Source: The Hindu
 
 

OBC CREAMY LAYER

 
 
1. Context
The Supreme Court on Wednesday (March 11) ruled that income cannot be the sole criterion to decide the creamy layer among Other Backward Classes (OBCs), and settled the long-pending question of equivalence between PSUs and private sector employees and those in the government sector. Those included in the ‘creamy layer’ are not entitled to OBC reservation benefits
 
2.History of reservation
 
  • Articles 15 and 16 ensure that all citizens are treated equally under government policies and in public employment.
  • To promote social justice, these articles also allow for special provisions aimed at uplifting socially and educationally disadvantaged groups such as Other Backward Classes (OBC), Scheduled Castes (SC), and Scheduled Tribes (ST).
  • Specifically, SCs and STs are allocated reservations of 15% and 7.5% respectively in central government jobs, educational institutions, and public sector enterprises.
  • In 1990, during V. P. Singh's tenure as Prime Minister, a 27% reservation for OBCs was introduced in central government jobs based on the Mandal Commission's recommendations from 1980.
  • Later, in 2005, reservations for OBCs, SCs, and STs were extended to educational institutions, including private ones. Additionally, in 2019, a 10% reservation was introduced for Economically Weaker Sections (EWS) within the general category
 
3. What is Creamy Layer?
 
  • In the Indra Sawhney case (1992), the Supreme Court affirmed the 27% reservation for OBCs, acknowledging that caste serves as a class determinant in the Indian context.
  • However, to maintain the fundamental principle of equality, the Court imposed a 50% cap on total reservations, allowing exceptions only under special circumstances. The Court also mandated the exclusion of the 'creamy layer' within the OBC category.
  • The criteria for identifying individuals as part of the creamy layer are based on the recommendations of the Justice Ram Nandan Prasad Committee (1993).
  • This determination relies solely on the income or position of an applicant’s parents. To be considered part of the creamy layer, an applicant's parental income, excluding salary and agricultural earnings, must exceed ₹8 lakh annually for each of the last three financial years.
  • Additionally, the creamy layer includes individuals whose parents: (a) entered government service as Group A/Class I officers or both entered as Group B/Class II officers, or if the father was promoted from a Group B/Class II post to Group A/Class I before the age of 40; (b) are employed in managerial roles in public sector undertakings (PSUs); or (c) hold constitutional positions
 
 
4. Challenges
  • Recent controversies have highlighted flaws in the reservation process. There are claims that some individuals secure Non-Creamy Layer (NCL) or Economically Weaker Sections (EWS) certificates through questionable methods.
  • Similar concerns are raised about disability certificates, which are used to claim the 4% reservation for people with disabilities in central government positions.
  • There are also allegations of individuals and their families circumventing the creamy layer exclusion by employing tactics such as transferring assets or opting for early retirement, since the income of the applicant’s spouse is not factored into the creamy layer criteria.
  • Another contentious point is the uneven distribution of reservation benefits. The Rohini Commission, tasked with recommending sub-categorization among OBC castes, reported that approximately 97% of reserved positions and seats in educational institutions are occupied by only 25% of OBC castes/sub-castes at the central level.
  • About 1,000 of the 2,600 OBC communities have no representation in jobs or educational institutions. A similar issue of uneven distribution exists within the SC and ST categories, which do not have a creamy layer exclusion.
  • Currently, the reservation percentage stands at 60%, including the EWS quota. Given the current societal dynamics, this higher percentage is deemed necessary. Government responses in Parliament reveal that 40-50% of seats reserved for OBC, SC, and ST categories in central government roles often remain unfilled
 
5. Way Forward
 
The primary focus should be on addressing the gaps in the issuance of Non-Creamy Layer (NCL), Economically Weaker Sections (EWS), and disability certificates. It is crucial to implement rigorous checks to ensure that only qualified individuals receive these benefits.
Efforts should be made to fill vacancies for reserved categories without any backlog. Additionally, sub-categorization within reservations might be necessary to correct the underrepresentation or lack of representation of various communities. Consideration could also be given to applying creamy layer exclusion within the SC and ST categories, at least for the children of Group I/Class A government officials. While these are complex and sensitive issues with arguments both for and against such proposals, initiating discussions with all relevant stakeholders is important. This approach would help ensure that reservation benefits more effectively reach the most marginalized groups across generations
 
 
For Prelims: Rohini Commission, OBC, National Commission for Backward Classes, Hukum Singh Committee, B.P. Mandal Commission,  Kaka Kalelkar Commission, 
For Mains: 
1. "Discuss the significance of caste enumeration and subcategorization of Other Backward Classes (OBCs) in the context of India's reservation policies. How does it impact social equity and representation?" (250 Words)
2.  Critically assess the role of the Mandal Commission and subsequent commissions in addressing the issue of OBC reservation and subcategorization. Discuss the challenges and opportunities in implementing subcategorization policies.  (250 Words)
 
 
Previous Year Questions

1. Consider the following organizations/bodies in India: (UPSC 2023)

  1. The National Commission for Backward Classes
  2. The National Human Rights Commission
  3. The National Law Commission
  4. The National Consumer Disputes Redressal Commission

How many of the above constitutional bodies?

(a) Only one
(b) Only two
(c) Only three
(d) All four

Answer: A

2. The First Backward Classes Commission was chaired by: (Dehli Police Constable 2020) (TNPSC Group 1)

A. V.P. Singh     B. PG Shah        C. Kaka Kalelkar       D. Anup Singh

Answer: C
 
 
Source: The Hindu
 
 

SUSTAINABLE HARNESSING AND ADVANCEMENT OF NUCLEAR ENERGY FOR TRANSFORMING INDIA (SHANTI) ACT

 
 
1. Context
 
The SHANTI Act 2025 represents a watershed moment for India’s atomic energy programme. It opens the doors of nuclear energy to the public and private sectors, academia and industry alike, fostering an ecosystem that responds to India’s needs and opportunities in this field.
 
 
2. Why is SHANTI significant?
 
 
  • The SHANTI framework seeks to open India’s nuclear energy sector to private participation and may also facilitate the inflow of foreign investment.
  • At present, the construction and operation of nuclear power plants are restricted exclusively to public sector entities.
  • India aims to scale up its nuclear capacity from the existing 8.8 GW—roughly 1.5% of total installed power capacity—to 100 GW by 2047, thereby raising nuclear energy’s share in electricity generation from around 3%.
  • Public sector nuclear utilities estimate that they will contribute nearly 54 GW of this expansion, with the remaining capacity expected to come from private players
 
3. What are the major differences in SHANTI?
 
 
  • Because of nuclear energy’s association with atomic weapons, the movement and use of nuclear fuel such as uranium are subjected to rigorous oversight to prevent its diversion for the production of weapons-grade plutonium.
  • Past disasters—including the 1979 Three Mile Island accident, the 1986 Chernobyl catastrophe, and the Fukushima core meltdown triggered by the 2011 tsunami—have reinforced a global culture of caution, leading to stringent controls over every stage of nuclear plant functioning.
  • Internationally, there is now broad agreement that in the event of a nuclear accident, the operator of the facility bears the primary responsibility for compensating affected individuals in proportion to the harm caused.
  • Such compensation must be provided promptly, without waiting for investigations into causation or fault.
  • Subsequently, however, the operator may seek reimbursement if it can demonstrate that the accident resulted not from managerial failure but from defective equipment supplied by another party
  • Under the earlier Civil Nuclear Liability framework, operators were permitted to pursue recourse against equipment providers in three situations: first, where an explicit contractual provision existed; second, where the incident was attributable to defects in the supplier’s equipment; and third, where the damage was caused by a deliberate act intended to inflict nuclear harm.
  • The SHANTI legislation removes the second ground for recourse. Even after the 2008 Indo-US civil nuclear agreement, which reopened India’s access to uranium supplies and advanced nuclear technology following restrictions imposed after the 1974 and 1998 nuclear tests, reactor manufacturers from the United States and France remained reluctant to enter the Indian market due to the potential exposure to massive liability claims.
  • By eliminating this clause—and even removing explicit references to “suppliers”—the proposed framework effectively addresses these concerns
 
4. Will SHANTI spur India’s nuclear vision?
 
  • Homi Bhabha, regarded as the architect of India’s nuclear energy programme, envisaged nuclear power as a cornerstone of the country’s energy security while also overcoming India’s limited uranium reserves through the eventual use of thorium.
  • His three-stage plan begins with the construction of pressurised heavy water reactors that utilise natural uranium (U-238) to generate electricity and produce plutonium as a by-product.
  • The second stage involves fast breeder reactors, which are designed to generate additional plutonium and uranium-233 while producing power. In the third and final stage, uranium-233 is combined with India’s abundant thorium resources to generate electricity, creating a largely self-reliant thorium-based nuclear system.
  • India has yet to transition fully into the second stage, having only a prototype fast breeder reactor so far. This project, delayed by nearly two decades, was earlier scheduled to become operational in 2025 but has now been postponed further, with commissioning expected in September 2026.
  • To meet its near-term nuclear energy targets, India is increasingly exploring Small Modular Reactors (SMRs).
  • These are scaled-down versions of conventional reactors currently deployed in countries such as the United States and France, and they require enriched uranium-235—a resource that India does not possess in sufficient quantities. Like India’s first-stage reactors, SMRs generate various radioactive by-products, including plutonium and strontium.
  • SMRs are expected to be manufactured in modular components across multiple locations and assembled at a central site, much like the global production processes used for aircraft or smartphones.
  • However, due to their smaller size, they produce less electricity per unit compared to large reactors. They also do not offer a fundamentally superior solution to nuclear waste management, although some designs incorporate enhanced safety features that allow automatic shutdown during emergencies.
  • While SMRs may contribute to electricity generation, they do little to advance India’s long-term objective of transitioning to thorium-based nuclear power
 
5. Way Forward
 

Under the previous legal framework, victims of a nuclear incident could seek compensation from the plant operator up to a ceiling of ₹1,500 crore. Any damage beyond this limit was to be covered by the Union government through an insurance mechanism, capped at ₹4,000 crore. The SHANTI legislation introduces a tiered liability structure instead. Operators of facilities with a capacity exceeding 3,600 MW would face a maximum liability of ₹3,000 crore. For plants in the 1,500–3,600 MW range, the liability limit is set at ₹1,500 crore; for capacities between 750 MW and 1,500 MW, it is ₹750 crore; for 150–750 MW plants, the cap is ₹300 crore; and facilities below 150 MW carry a liability limit of ₹100 crore. At present, all nuclear power plants in India have capacities of 3,000 MW or less.

Science Minister Jitendra Singh, who introduced the Bill in Parliament, explained that this differentiated structure was designed to avoid deterring private sector investment. However, during parliamentary discussions, concerns were raised that the actual costs of compensation in major nuclear accidents have historically run into several billions of dollars, far exceeding the proposed liability ceilings

 

 

For Prelims: Nuclear Waste Management, Prototype Fast Breeder Reactor, uranium, plutonium
For mains: 
1. Discuss the challenges associated with nuclear waste management in the context of India's nuclear energy program. How can these challenges be addressed effectively? (250 Words)
2. Ethical considerations play a crucial role in nuclear waste management. Discuss the ethical concerns surrounding the potential for environmental injustice and the responsibility of nations in dealing with nuclear waste.(250 Words)

 

Previous Year Questions

1. To meet its rapidly growing energy demand, some opine that India should pursue research and development on thorium as the future fuel of nuclear energy. In this on text, what advantage, does thorium hold over uranium? (UPSC 2012)

  1. Thorium is far more abundant in nature than uranium.
  2. On the basis of per unit mass of mined mineral, thorium can generate more energy compared to natural uranium.
  3. Thorium produces less harmful waste compared to uranium.

Which of the statements given above is/are correct?

(a) 1 only         (b) 2 and 3 only            (c) 1 and 3 only              (d) 1, 2 and 3

2. Which among the following has the world’s largest reserves of Uranium? (UPSC 2009)

(a) Australia
(b) Canada
(c) Russian Federation
(d) USA

Answers: 1-D, 2-A

Source: The Hindu

 

LEGISLATIVE ASSEMBLY ELECTIONS

1. Context

 Setting the stage for intense electoral campaigns in the coming weeks, the Election Commission Sunday announced single-phase Assembly elections in Assam, Kerala, Puducherry (April 9) and Tamil Nadu (April 23), and two-phased polling in West Bengal on April 23 and April 29, down from the eight phases last time.
 

2. Reforms and changes are proposed by Election Commission of India in the upcoming elections

The Election Commission of India (ECI) has proposed several reforms and changes for the upcoming elections, including:

  • The ECI has proposed that VVPAT machines be made mandatory for all elections. VVPAT machines generate a paper slip that displays the voter's chosen candidate, which is then dropped into a sealed box. This allows voters to verify their vote and helps to prevent fraud.
  • The ECI is also considering the use of R-EVMs in the upcoming elections. R-EVMs are EVMs that can be operated from a remote location, such as a polling booth in a remote area. This would make it easier for voters in remote areas to cast their votes.
  • The ECI has also proposed to make online voter registration easier and more accessible. This would make it easier for eligible voters to register to vote, especially young voters and voters who live abroad.
  • The ECI has also proposed measures to increase transparency in political funding. This would include requiring political parties to disclose their sources of income and expenditure.
  • The ECI has also proposed to strictly enforce the Model Code of Conduct during elections. The Model Code of Conduct is a set of guidelines that political parties and candidates must follow during elections. It is intended to ensure that elections are conducted in a fair and free manner.
  • The ECI is proposing to increase the number of polling booths in areas with a large number of voters. This would make it easier for voters to cast their votes without having to travel long distances.
  • The ECI is proposing to introduce new rules for regulating the use of social media during elections. This includes requiring political parties to disclose their social media accounts and to be transparent about the content they are sharing.

3. The election process

The election process in India is as follows:

  • The ECI announces the schedule for the elections at least six weeks before the date of polling. The schedule includes the dates for filing nominations, campaigning, and polling.
  • Political parties and candidates file their nominations with the ECI on the specified dates. Each candidate must file a nomination form and pay a deposit. The nomination form must include the candidate's name, address, and other personal information.
  • The ECI scrutinizes the nominations to ensure that they meet all the requirements. The ECI may reject a nomination if the candidate is not eligible to contest the election or if the nomination form is not properly filled out.
  • The candidates campaign for the elections from the date of notification of candidates to the 48 hours before the polling day. During this period, the candidates hold rallies, give speeches, and distribute pamphlets.
  • Voting is held on the day of the election, which is a public holiday in India. Voters must cast their votes at the polling booth in the constituency where they are registered to vote. Voters must show their voter ID card to cast their vote.
  • The votes are counted after the polls close. The counting of votes is done in the presence of representatives of the candidates and political parties. The candidate who receives the most votes in a constituency is declared the winner.
  • The ECI declares the results of the elections after the counting of votes is complete. The winning candidates are awarded certificates of election.

4. The maximum and minimum strengths of a legislative assembly

  • The maximum and minimum strength of a legislative assembly is specified in the Constitution of India.
  • The Constitution also gives the states the autonomy to decide on the number of seats reserved for women Scheduled Castes and Scheduled Tribes.
  • The maximum strength of a legislative assembly in India is 500 members and the minimum strength is 60 members. However, there are some exceptions to this rule.
  • For example, the legislative assemblies of Arunachal Pradesh, Goa, and Sikkim have a minimum strength of 30 members, and the legislative assemblies of Mizoram and Nagaland have a minimum strength of 40 and 46 members respectively.
  • The strength of a legislative assembly is determined by the population of the state. The larger the population of the state, the larger the size of the legislative assembly.

5. Determination of the legislative assembly’s strength

  • The strength of the legislative assembly is determined by the Delimitation Commission.
  • The Delimitation Commission is a quasi-judicial body that is appointed by the Government of India.
  • The Delimitation Commission is responsible for redrawing the boundaries of constituencies based on the latest census data.
  • The Delimitation Commission takes into account several factors when determining the strength of a legislative assembly, including:
  1. The population of the state
  2. The geographical features of the state
  3. The distribution of population within the state
  4. The number of Scheduled Castes and Scheduled Tribes in the state
  • The Delimitation Commission also ensures that each constituency has approximately the same number of voters.
  • This is important to ensure that all voters have equal representation in the legislative assembly.
  • Once the Delimitation Commission has determined the strength of the legislative assembly, it publishes a delimitation order.
  • The delimitation order specifies the number of constituencies in the state and the boundaries of each constituency.
  • The strength of a legislative assembly is an important factor in determining the level of representation that voters have.
  • A larger legislative assembly means that there are more representatives to represent the interests of the people.

6. Reasons for no uniformity in the organisation of state legislatures

  • There is no uniformity in the organization of state legislatures in India because the Constitution of India gives the states a lot of autonomy in this matter.
  • The Constitution only specifies the minimum and maximum strength of state legislatures.
  • The states are free to decide on the number of seats reserved for women, Scheduled Castes and Scheduled Tribes.
  • The Constitution also gives the states the option to have a unicameral or bicameral legislature. A unicameral legislature has only one house, while a bicameral legislature has two houses.

Currently, six states in India have a bicameral legislature:

  1. Andhra Pradesh
  2. Bihar
  3. Telangana
  4. Karnataka
  5. Maharashtra
  6. Uttar Pradesh

The other states and union territories in India have a unicameral legislature.

The following are some of the reasons why there is no uniformity in the organization of state legislatures:

  • Some states have a bicameral system because they have a long history of bicameralism. For example, the states of Uttar Pradesh and Bihar had bicameral legislatures before independence.
  • India is a linguistically and culturally diverse country. The states have different languages, cultures, and traditions. This diversity is reflected in the organization of state legislatures. For example, the state of Tamil Nadu has a unicameral legislature because it has a strong tradition of unitary government.
  • Political parties often play a role in determining the organization of state legislatures. For example, the state of Telangana has a bicameral legislature because the ruling party wanted to create a separate upper house to represent the interests of different groups in the state.
  • The states have different administrative requirements. This may necessitate different types of state legislatures.

The following are some of the advantages and disadvantages of having a bicameral legislature:

Advantages:

  • A bicameral legislature can provide better representation for different groups in the state.
  • A bicameral legislature can act as a check on the power of the lower house.
  • A bicameral legislature can provide a forum for more in-depth deliberation on legislation.

Disadvantages:

  • A bicameral legislature can be more expensive to run than a unicameral legislature.
  • A bicameral legislature can be more difficult to manage than a unicameral legislature.
  • A bicameral legislature can lead to a deadlock between the two houses.

7. Model Code of Conduct

After the Election Commission announces the schedule for the polls, various activities related to the election process, including nomination filing, campaigning, polling, and counting, are carried out as per the prescribed timeline. The Model Code of Conduct comes into effect, and the election machinery is put into motion to ensure a free and fair electoral process.

7.1. Duration of Model Code of Conduct

  • The Model Code of Conduct (MCC) is a set of guidelines that political parties and candidates must follow during elections in India.
  • It is intended to ensure that elections are conducted in a fair and free manner.
  • The MCC was first introduced in 1971 and has been updated several times since then.
  • The Model Code of Conduct (MCC) is enforced from the date of the announcement of the election schedule by the Election Commission and remains in operation until the completion of the election process, which includes the counting of votes and the announcement of results.

7.2. The Role of the Election Commission in the State Legislative Assembly Elections

  • The Election Commission of India (ECI) is a constitutional body responsible for conducting elections to the Parliament of India and the legislative assemblies of the states and union territories of India.
  • The ECI is also responsible for conducting elections to the office of the President of India and the Vice President of India.
  • The State Election Commissions (SECs) are statutory bodies responsible for conducting elections to the urban local bodies (ULBs) and rural local bodies (RLBs) in the states.
  • The SECs are set up under the provisions of the Constitution of India and the state election laws.

The ECI's role in state legislative elections includes

  • The ECI announces the schedule for state legislative elections at least six weeks before the date of polling. The schedule includes the dates for filing nominations, campaigning, and polling.
  • The ECI scrutinizes the nominations of political parties and candidates to ensure that they meet all the requirements.
  • The ECI is responsible for conducting polling on the day of the election. This includes setting up polling booths, providing ballot papers, and deploying security personnel.
  • The ECI is responsible for counting votes after the polls close. The counting of votes is done in the presence of representatives of the candidates and political parties.
  • The ECI declares the results of the elections after the counting of votes is complete. The winning candidates are awarded certificates of election.
  • The Model Code of Conduct is a set of guidelines that political parties and candidates must follow during elections. The Model Code of Conduct is intended to ensure that elections are conducted in a fair and free manner.
  • The ECI monitors the campaign period to ensure that all political parties and candidates adhere to the Model Code of Conduct.
  • The ECI conducts voter education programs to ensure that all eligible voters are aware of their rights and responsibilities.
  • The ECI resolves disputes that arise during the election process, such as disputes over the validity of nominations or the counting of votes.

7.3. The salient features of the Model Code of Conduct

 
The salient features of the Model Code of Conduct are as follows:
  • The Model Code of Conduct is intended to ensure that elections are conducted in a fair and free manner. This means that all political parties and candidates must have an equal opportunity to participate in the election process.
  • The Model Code of Conduct requires all political parties and candidates to be transparent about their activities and finances. This helps to promote accountability and deter corruption.
  • The Model Code of Conduct prohibits political parties and candidates from discriminating against any person based on caste, creed, religion, language, or sex. This helps to ensure that all citizens have an equal opportunity to participate in the election process.
  • The Model Code of Conduct respects the right to free speech. However, it prohibits political parties and candidates from making false or misleading statements. It also prohibits them from inciting violence or hatred.
  • The Model Code of Conduct requires political parties and candidates to maintain law and order during the election process. This means that they must avoid any actions that could lead to violence or disorder.
 
For Prelims: Election Commission of India, State Election Commissions, State legislative elections, Model Code of Conduct, Bicameralism, Delimitation Commission, VVPAT, R-EVM's, 
 
For Mains: 
1. Critically examine the reasons for the lack of uniformity in the organization of state legislatures in India. What are the advantages and disadvantages of a bicameral legislature?  (250 words)
2. Discuss the challenges faced by the Election Commission of India in conducting elections in a large and diverse country like India. Suggest measures to improve the electoral process. (250 words) 
3. What factors determine the strength of a legislative assembly in India? How does the Delimitation Commission play a crucial role in the determination of legislative assembly strength? (250 words) 
 
 
Previous Year Questions
 
Prelims

1. Consider the following statements: (UPSC 2017)

1. The Election Commission of India is a five-member body.
2. Union Ministry of Home Affairs decides the election schedule for the conduct of both general elections and bye-elections.
3. Election Commission resolves the disputes relating to splits/mergers of recognised political parties.

Which of the statements given above is/are correct?

A. 1 and 2 only          B. 2 only              C. 2 and 3 only                D. 3 only

Answer: D

2. With reference to the Constitution of India, prohibitions or limitations or provisions contained in ordinary laws cannot act as prohibitions or limitations on the constitutional powers under Article 142. It could mean which one of the following? (UPSC CSE 2019)
(a) The decisions taken by the Election Commission of India while discharging its duties cannot be challenged in any court of law.
(b) The Supreme Court of India is not constrained in the exercise of its powers by laws made by the Parliament.
(c) In the event of a grave financial crisis in the country, the President of India can declare a Financial Emergency without the counsel from the Cabinet.
(d) State Legislatures cannot make laws on certain matters without the concurrence of the Union Legislature.

Answer: B

3. Consider the following statements : (UPSC 2021)

1. In India, there is no law restricting the candidates from contesting in one Lok Sabha election from three constituencies.
2. In the 1991 Lok Sabha Election, Shri Devi Lal contested from three Lok Sabha constituencies.
3. As per the- existing rules, if a candidate contests in one Lok Sabha election from many constituencies, his/her party should bear the cost of bye-elections to the constituencies vacated by him/her in the event of him/her winning in all the constituencies.
Which of the statements given above is/are correct?
A. 1 only         B. 2 only           C. 1 and 3             D. 2 and 3
 
Answer: B
 
4. With reference to the Delimitation Commission, consider the following statements: (UPSC 2012)
1. The orders of the Delimitation Commission cannot be challenged in a Court of Law.
2. When the orders of the Delimitation Commission are laid before the Lok Sabha or State Legislative Assembly, they cannot effect any modifications in the orders.
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

Answer: C

5. The Voter Verifiable Paper Audit Trail (VVPAT) system was used for the first time by the Election Commission of India in (UPSC CAPF 2019) 

A. North Paravur Assembly Constituency, Kerala
B.  Noksen Assembly Constituency, Nagaland 
C. Mapusa Assembly Constituency, Goa 
D. Nambol Assembly Constituency, Manipur

Answer: B

6. VVPAT, used in Electronic Voting Machine, stands for (BPSC CDPO 2018)

A. Voter Verifiable Paper Audit Trail
B. Voter Varying Paper Account Trail
C. Voter Verified Paper Account Trail
D. Voting Verifiable Paper Audit Trail
E. None of the above/More than one of the above

Answer: A

7. In which of the following options, Electronic Voting Machines were used for the first time during general elections all over India? (Rajasthan Police Constable 2020)

A. 2014         B. 1999             C. 2004               D.  2009

Answer: C

Mains

1. In the light of recent controversy regarding the use of Electronic Voting Machines (EVM), what are the challenges before the Election Commission of India to ensure the trustworthiness of elections in India? (UPSC 2018)

2. Discuss the role of the Election Commission of India in the light of the evolution of the Model Code of Conduct. ( UPSC 2022)
 
 
 

FOREIGN DIRECT INVESTMENT (FDI)

 
 
1. Context
 
To boost investment in key manufacturing sectors such as mobile phone components and rare earth magnets, the Union government this week announced calibrated changes in the Foreign Direct Investment (FDI) policy for investments from Land Bordering Countries (LBCs), or those that share a land border with India.
 
2. FDI in India
  • India's net foreign direct investment (FDI) inflows experienced a decline, decreasing by nearly 31% to $25.5 billion during the first 10 months of the 2023-24 fiscal year. The Finance Ministry attributed this decline to a broader trend of slowing investments in developing countries, while expressing optimism for a potential increase in investments in the current calendar year.
  • Although global FDI flows overall saw a 3% rise to approximately $1.4 trillion in 2023, economic uncertainty and elevated interest rates impacted global investment, resulting in a 9% decrease in FDI flows to developing nations, as outlined in the Ministry's February assessment of economic performance.
  • Reflecting the global trend of reduced FDI flows to developing countries, gross FDI inflows to India also experienced a slight decline, from $61.7 billion to $59.5 billion during the period from April 2023 to January 2024. In terms of net inflows, the corresponding figures were $25.5 billion versus $36.8 billion. The decrease in net inflows was primarily attributed to an increase in repatriation, while the decline in gross inflows was minimal.
  • While a modest uptick in global FDI flows is anticipated for the current calendar year, attributed to a decrease in inflation and borrowing costs in major markets that could stabilize financing conditions for international investment, significant risks persist, according to the Ministry. These risks include geopolitical tensions, elevated debt levels in numerous countries, and concerns regarding further fragmentation of the global economy
 
3. Foreign Direct Investment (FDI)
Foreign Direct Investment (FDI) refers to the investment made by individuals, businesses, or governments from one country (the home country) into another country (the host country) with the objective of establishing a lasting interest or significant degree of influence in the foreign business or enterprise
Key Aspects:
  • FDI involves the transfer of funds and resources from one country to another. This capital inflow can help stimulate economic growth in the host country by providing funds for investment in infrastructure, technology, and other areas.
  • FDI often leads to the creation of jobs in the host country. When foreign companies establish subsidiaries or invest in existing businesses, they typically hire local employees, which can help reduce unemployment and improve living standards
  • Foreign investors often bring advanced technologies, processes, and management practices to the host country. This technology transfer can enhance the host country's productivity, competitiveness, and industrial capabilities
  • FDI can provide access to new markets for both the host country and the investing company. Foreign investors can tap into the host country's consumer base, while the host country gains access to the investing company's global distribution networks.
  • FDI can contribute to overall economic development in the host country by promoting industrialization, improving infrastructure, and fostering innovation and entrepreneurship.
4.FDI Routes in India
India has several routes through which Foreign Direct Investment (FDI) can enter the country. These routes are regulated by the Reserve Bank of India (RBI) and the Department for Promotion of Industry and Internal Trade (DPIIT), and they define the conditions, limits, and sectors in which FDI is allowed

  1. Automatic Route: Under the automatic route, FDI is allowed without the need for prior approval from the RBI or the government. Investors only need to notify the RBI within a specified time frame after the investment is made. This route is available for most sectors, except those that are prohibited or require government approval.

  2. Government Route: In sectors or activities that are not covered under the automatic route, FDI requires government approval. Investors must apply for approval through the Foreign Investment Facilitation Portal (FIFP) or the Foreign Investment Promotion Board (FIPB), depending on the sector.

4.1. Examples
  • Under the automatic route, FDI of up to 100% is allowed for manufacturing of automobiles and components.
  • For the manufacturing of electric vehicles (EVs), 100% FDI is allowed under the automatic route.
  • In single-brand retail trading, 100% FDI is allowed, with up to 49% allowed under the automatic route. Beyond 49%, government approval is required.
  • Multi-brand retail trading (supermarkets and department stores) with FDI is permitted in some states, subject to certain conditions and restrictions. The FDI limit is typically capped at 51%.
  • FDI in the insurance sector is allowed up to 74%, with up to 49% under the automatic route. Beyond 49%, government approval is needed
  • In the telecom sector, 100% FDI is allowed, with up to 49% under the automatic route. Beyond 49%, government approval is required
  • In the defense sector, FDI up to 74% is allowed under the automatic route, with government approval required for investments beyond 49%
  • In most segments of the media and broadcasting sector, including print and digital media, 100% FDI is allowed, with up to 49% under the automatic route
4.2.Sectors where FDI Prohibited
  • FDI is prohibited in the atomic energy sector, which includes activities related to the production of atomic energy and nuclear power generation.
  • FDI is generally prohibited in the gambling and betting industry, which includes casinos and online betting platforms
  • FDI is not allowed in the lottery business, except for state-run lotteries
  • FDI is prohibited in chit funds, which are traditional Indian savings and credit schemes.
  •  Nidhi companies are non-banking finance companies (NBFCs) that facilitate mutual benefit funds. FDI is typically not permitted in these entities
  • While FDI is allowed in single-brand retail trading, it is generally prohibited in multi-brand retail trading of agricultural products. Some states have allowed it under specific conditions, but this remains a highly regulated area.
  • FDI is not allowed in the trading of transferable development rights (TDRs) pertaining to the construction of real estate
5. Foreign Portfolio Investors (FPIs)
Foreign Portfolio Investors (FPIs) refer to foreign individuals, institutions, or funds that invest in financial assets in a country, such as stocks, bonds, mutual funds, and other securities. FPIs are distinct from Foreign Direct Investors (FDIs), who typically make long-term investments in companies and assets to establish a lasting interest
Key Aspects:
  • FPIs invest in a country's financial markets, primarily by buying and selling securities traded on stock exchanges and fixed-income instruments like bonds and government securities
  • FPIs often seek to diversify their investment portfolios by spreading their investments across different asset classes, sectors, and countries. This diversification helps manage risk and enhance returns
  • FPIs have the flexibility to buy and sell securities in the secondary market, providing liquidity to the market and contributing to price discovery
  • FPIs typically have a shorter investment horizon compared to Foreign Direct Investors (FDIs). They may engage in short-term trading or hold securities for a few months to a few years.
  • FPIs are subject to regulatory frameworks and restrictions in the countries where they invest. These regulations are designed to ensure that foreign investments do not pose undue risks to the local financial markets and economy.
6.Foreign Portfolio vs. Foreign Direct Investment
 
FPI (Foreign Portfolio Investment) FDI (Foreign Direct Investment)
FPI involves the purchase of financial assets such as stocks, bonds, mutual funds, and other securities in a foreign country. These investments are typically made with the intention of earning returns on capital and do not result in significant control or ownership of the underlying businesses FDI entails making an investment in a foreign country with the primary objective of establishing a lasting interest and significant control or influence over a business enterprise or physical assets. FDI often involves the acquisition of a substantial ownership stake (typically at least 10%) in a company or the establishment of new business operations.
FPI is generally characterized by a shorter investment horizon. Investors in FPI may engage in trading and portfolio rebalancing activities, and their investments are often more liquid. The focus is on earning capital gains and income from investments. FDI is characterized by a longer-term commitment. Investors in FDI intend to engage in the day-to-day management or decision-making of the business, contribute to its growth and development, and generate profits over an extended period.
FPI investors typically have little to no influence or control over the companies in which they invest. They are passive investors who participate in the financial markets and rely on market dynamics to drive returns. FDI investors actively participate in the management and decision-making of the businesses they invest in. They often seek to exercise control over company operations and strategy, which may include appointing board members or key executives.
FPI investments are often made through financial instruments like stocks, bonds, and securities. Investors may use instruments like mutual funds or exchange-traded funds (ETFs) to gain exposure to foreign markets FDI investments involve a direct equity stake in a company, either through share acquisition or the establishment of a subsidiary or branch in the host country. FDI can also involve the purchase of real assets such as land, factories, or infrastructure
FPI can provide short-term capital inflows, but it may be more susceptible to market volatility and sudden capital outflows. It may not have as direct an impact on job creation and economic development as FDI. FDI often contributes to long-term economic development by creating jobs, stimulating infrastructure development, transferring technology and expertise, and enhancing the competitiveness of local industries
FPI investments are subject to regulations that vary by country and may include foreign ownership limits, reporting requirements, and tax considerations. FDI is subject to regulations that can be more stringent and may involve government approval, sector-specific conditions, and investment protection measures
 
 
 
 
For Prelims: Economic and Social Development-Sustainable Development, Poverty, Inclusion, Demographics, Social Sector Initiatives, etc
For Mains: General Studies III: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment
 
 
Previous Year Questions
 
1. Both Foreign Direct Investments (FDI) and Foreign Institutional Investor (FII) are related to investment in a country. (UPSC CSE 2011)
 
Which one of the following statements best represents an important difference between the two?
A.FII helps bring better management skills and technology, while FDI only brings in capital
B.FII helps in increasing capital availability in general, while FDI only targets specific sectors C.FDI flows only into the secondary markets, while FII targets primary market
D.FII is considered to the more stable than FDI
 
Answer (B)
 
Source: indianexpress
 
 
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