04 October 2025

• Union Finance Minister Nirmala Sitharaman at the Kautilya Economic Conclave highlighted the inevitability of engaging with stablecoins, irrespective of whether nations welcome them or not.
• RBI and Finance Ministry have maintained reservations about private cryptocurrencies, yet India taxes such transactions.
• RBI continues to push for a ban on private cryptocurrencies while piloting its own Central Bank Digital Currency (CBDC).
• Debate reflects larger questions of financial sovereignty, regulation of digital assets, and systemic risks in global finance.

Key Points

• Stablecoins: Pegged to underlying assets (fiat basket, commodities, etc.) to reduce volatility.
• India’s stance: No legalization of private cryptocurrencies; transactions taxed (30% on gains, 1% TDS).
• RBI position: Advocates complete ban; stresses risks to monetary policy, financial stability, and capital controls.
• CBDC pilot projects: RBI’s Digital Rupee backed by sovereign guarantee; positioned as safer alternative.
• Global context: IMF, G20 have urged coordinated regulation of crypto-assets. FATF calls for strict KYC/AML compliance.
• Minister’s caution: India must remain vigilant —“eternal performance is the price of strategic independence.”

Static Linkages

• Legal Tender: Defined under RBI Act, 1934; only currency issued by RBI/government is legal tender.
• Monetary Policy & Financial Stability: Managed by RBI under RBI Act, 1934 and Banking Regulation Act, 1949.
• Fiscal Federalism: Taxation of virtual digital assets via Income Tax Act (2022 amendments).
• Digital India & JAM Trinity: Government’s push for digitization of finance, UPI, and Aadhaar-based services.
• Cybersecurity & Financial Crimes: Concerns under IT Act, 2000 and Prevention of Money Laundering Act, 2002.

Critical Analysis Pros of Stablecoin Adoption

• Promotes cross-border trade and faster remittances (India is the largest remittance recipient).
• Reduces volatility compared to Bitcoin/Ethereum.
• Encourages FinTech innovation and global integration.

Cons / Challenges

• Threat to sovereign currency control and RBI’s monetary authority.
• Risk of capital flight and destabilization of foreign exchange reserves.
• Cybersecurity vulnerabilities and money laundering risk.
• Unequal adoption → exclusion of digitally poor sections.

Stakeholder Perspectives

• Government: cautious engagement, taxation without recognition.
• RBI: strong opposition, promotes CBDC as safe alternative.
• Industry/Investors: seek regulatory clarity.
• International Agencies: push for coordinated regulatory standards.

Way Forward

• Establish comprehensive regulatory framework with global coordination.
• Promote CBDC adoption while testing cross- border settlement systems.
• Ensure consumer protection & data privacy under Digital Personal Data Protection Act, 2023.
• Strengthen AML/CFT compliance (align with FATF guidelines).
• Encourage fintech innovation sandboxes under RBI while safeguarding systemic stability.

INDIA SLAMS PAK,BANGLADESH OVER ABUSES

KEY HIGHLIGHTS

• India criticized Pakistan for human rights violations in Pakistan-occupied Kashmir (PoK), where police firing during protests led to deaths and injuries.
• Protests in PoK, led by the Awami Action Committee, demand subsidised food, affordable electricity, political reforms, education, and healthcare.
• Bangladesh accused India of supporting unrest in the Chittagong Hill Tracts (CHT), which India denied. India highlighted Dhaka’s failure in protecting minority communities.
• The unrest in CHT escalated after killings of indigenous Marma and Mog communities by the Bangladesh Army.
• India called for accountability and rejected “false and baseless” accusations, urging Bangladesh to address local extremist violence.

Key Points

• PoK Protests: Triggered by rising inflation, high electricity bills, unemployment, and lack of basic facilities.
• Casualties: At least 10 people reported dead due to police firing (Dawn newspaper).
• Indian Stand: Pakistan accused of “systemic plundering of resources” and “illegal occupation” of PoK.
• CHT Background: A 1997 Peace Accord signed between the Sheikh Hasina government and tribal groups for autonomy and development remains fragile.
• Recent Violence: 3 indigenous persons killed by Army, sparking international concerns.
• Bangladesh’s Allegations: Interim government claimed India and “fascist groups” were behind unrest; India rejected this.

Static Linkages

• UNCIP (1948): UN resolution called for plebiscite in J&K after Pakistan’s withdrawal – never implemented.
• Article 370 & 35A: Abrogation (2019) altered India’s constitutional position on J&K.
• Indus Waters Treaty (1960): Despite tensions, water-sharing continues between India & Pakistan.
• Sixth Schedule: Provides for autonomous councils in India’s tribal areas – comparable to demands in CHT.
• Minority Rights: Enshrined in Articles 25–30 of Indian Constitution.
• Panchsheel & NAM: India’s foreign policy tradition emphasizes non-interference, yet balances with regional security concerns.

Critical Analysis Pros / India’s Position

• Strengthens India’s diplomatic narrative of Pakistan’s illegal occupation.
• Highlights Bangladesh’s failure to protect minorities, exposing governance gaps.
• Builds India’s moral high ground in global forums like UNHRC.

Cons / Challenges

• Risks straining ties with Bangladesh, a key neighbour in connectivity & Act East policy.
• Pakistan may escalate propaganda against India at OIC & UN platforms.
• Human rights accusations may invite international scrutiny on India’s own record in J&K.

Stakeholders

• Local communities in PoK and CHT.
• Governments of India, Pakistan, and Bangladesh.
• International community (UN, human rights NGOs).

Way Forward

• Diplomatic Engagement: Use SAARC/BIMSTEC to raise minority protection issues.
• Human Rights Diplomacy: Strengthen India’s voice at UNHRC & global fora.
• Confidence-Building Measures: With Bangladesh, enhance border management and tribal cooperation.
• Strategic Communications: Counter propaganda through consistent official narratives.
• Regional Stability: Push for adherence to peace accords (like 1997 CHT pact) and humanitarian norms.

TRUMP SETS DEADLINE FOR HAMAN PEACE DEAL

• U.S. President Donald Trump has given Hamas until 2200 GMT (3:30 a.m. IST, Sunday) to accept his 20-point plan for peace in Gaza.
• The plan proposes:
  • A ceasefire.
  • Release of hostages within 72 hours.
  • Hamas’s disarmament.
  • Gradual Israeli withdrawal from Gaza.
  • Formation of a post-war transitional authority headed by Trump himself.
• Hamas has expressed reservations, seeking amendments on disarmament and international guarantees for withdrawal and security.
• The UN, UNICEF, and Amnesty International have raised concerns over humanitarian catastrophe, stating “no safe place in Gaza.”
• Over 66,288 Palestinians (UN figures, Hamas- run health ministry) and 1,219 Israelis (official figures) have died since the October 7, 2023 attack that triggered the war.

Key Points

• Deadline: Trump’s ultimatum ends on Sunday 2200 GMT.
• Hamas divided: Leadership split between officials in Gaza and those abroad, particularly in Qatar.
• Humanitarian toll: UN reports mass displacement, overcrowded southern enclaves lacking food, water, and healthcare.
• Global protests: Activists’ flotilla intercepted by Israel; deportation of foreign participants.
• Israeli support: PM Netanyahu backs the U.S. plan.
• Rights groups: Amnesty condemns “catastrophic displacement.”
• Geopolitical weight: U.S. attempts to assert itself as primary mediator in West Asia.

Static Linkages

• Ceasefire agreements: Part of international humanitarian law under the Geneva Conventions.
• U.S. mediation in West Asia: From Camp David Accords (1978) to Oslo Accords (1993), U.S. has historically played peacemaker.
• Disarmament: Linked to UN Charter Ch. VII, allowing Security Council to enforce peace and disarm belligerents.
• Mass displacement: Related to UNHCR mandate under 1951 Refugee Convention.
• International humanitarian law: Principle of proportionality and civilian protection under the 1977 Additional Protocols to Geneva Conventions.

Critical Analysis Pros

• Offers a structured roadmap to end two years of devastating war.
• U.S. positioning as mediator could accelerate ceasefire implementation.
• Hostage release provision can build trust.

Cons

• Proposal seen as unilateral, with Trump seeking to head a transitional authority.
• Hamas’s demand for international guarantees suggests lack of trust in Israel and U.S.
• Civilian suffering remains unresolved, with displacement continuing.
• Legitimacy concerns: Transitional governance led by a U.S. President lacks multilateral acceptance.

Stakeholder Perspectives

• Israel: Sees disarmament and withdrawal guarantees as favorable.
• Hamas: Split internally; fears losing military leverage.
• U.S.: Aspires to reassert global leadership in conflict resolution.
• International community: Concerned about humanitarian disaster and legality of transitional authority.

• May 2025: India–Pakistan standoff culminated in aerial domain engagements.
• Post-crisis, focus has shifted to the maritime theatre, marked by naval movements, missile tests, live-fire drills, and statements from political & military leadership.
• India:
  • Defence Minister warned of a “resounding response” in Sir Creek if Pakistan attempted misadventure.
  • Navy Chief stressed that the Navy would be the first responder in any future conflict.
  • INS Nistar commissioned; joint patrols with the Philippines reflect Indo-Pacific outreach.
• Pakistan:
  • Dispersed fleet from Karachi to Gwadar to reduce vulnerability.
  • Inducted Hangor-class submarine (Chinese origin) & tested P282 ship-launched ballistic missile.
  • Conducted parallel exercises near Indian deployments.

Key Points

• Strategic Uncertainty: Air domain crisis left behind unresolved deterrence questions at sea.
• Balance of Power: India retains numerical/geographic advantage but faces modernization challenges. Pakistan’s capability expansion (Chinese submarines, Turkish corvettes) is narrowing the gap.
• Escalation Control: Naval engagements carry higher risks than aerial skirmishes; even limited actions can trigger existential fears in Pakistan.
• External Involvement:
  • China’s PLAN presence in Karachi & Gwadar.
  • Türkiye supplying corvettes & training.
• Deterrence Doctrines: Pakistan shifting towards deterrence-by- denial (A2/AD). India focusing on deterrence-by-punishment with visible forward deployments.

Static Linkages

• Sir Creek Dispute: 96 km estuary; India–Pakistan maritime boundary not demarcated. Impacts EEZ (Exclusive Economic Zone) claims.
• 1971 Indo-Pak War: Indian Navy’s Operation Trident & Operation Python crippled Pakistan Navy at Karachi.
• UNCLOS 1982: Maritime boundary principles – equidistance vs. thalweg doctrines (relevant to Sir Creek).
• Deterrence Theories:
  • Deterrence-by-denial (blocking access).
  • Deterrence-by-punishment (threat of overwhelming retaliation).
• China–Pakistan Economic Corridor (CPEC): Gwadar’s dual role – economic & strategic base.

Critical Analysis Positives:

• India’s proactive signalling ensures deterrence credibility.
• Joint patrols strengthen Indo-Pacific partnerships.
• Capability upgrades (INS Nistar, stealth frigates) improve operational readiness.

Concerns:

• Escalation risk: Naval engagements less controllable, may spiral quickly.
• Modernisation gap: India’s aging fleet vs. Pakistan’s new inductions.
• External dimension: PLAN presence complicates Indian strategy.
• Strategic Drift: Reliance on past playbooks may ignore new tech (drones, hypersonics).

Stakeholder Perspectives:

• India: Seeks dominance, deterrence, protection of EEZ & sea lanes.
• Pakistan: Aims to prevent 1971-type vulnerability, strengthen denial capabilities.
• China: Expanding PLAN influence via Gwadar/Karachi.
• Regional partners: ASEAN, Quad, littoral states watch Indian Navy’s role.

Way Forward

• Accelerate naval modernisation: Replace aging platforms; strengthen indigenous shipbuilding.
• Enhance maritime domain awareness (MDA): Expand radar chains, satellite surveillance, QUAD cooperation.
• Codify naval crisis protocols: Establish India– Pakistan naval hotlines to manage escalation.
• Expand Indo-Pacific outreach: More joint patrols with ASEAN, Indian Ocean littorals.
• Balance deterrence & restraint: Use maritime domain as both signalling space & escalation reserve.

CLEAN ENERGY RISE NEEDS MORE CLIMATE FUND

Context

•  In 2024, India added 24.5 GW of solar capacity, becoming the third-largest global contributor after China and the U.S.
• UN Secretary-General’s 2025 Climate Report recognised India, Brazil, and China as leading developing nations in scaling solar and wind.
• Renewable energy contributed 5% of India’s GDP growth in 2023, employing over 1 million people.
• Despite momentum, climate finance gap remains critical — estimated at $1.5–2.5 trillion by 2030.
• India’s green bond market is expanding, but access for MSMEs and smaller innovators remains limited.

Key Points

• Solar Leadership: India added 24.5 GW solar in 2024, cumulative capacity among the top 3 globally.
• Employment Impact: Renewable energy sector employed 1 million+ people; off-grid solar employed 80,000 (2021).
•   Climate Finance Needs:
  • $1.5 trillion (IRENA estimate) by 2030 for 1.5°C pathway.
  • $2.5 trillion (Ministry of Finance estimate) to meet India’s NDC targets.
• Green Bonds Growth:
  • Cumulative GSS+ issuance: $55.9 billion (2024).
  • Green bonds = 83% of issuance; private sector accounted for 84%.
  • Target: $100 billion by 2030.
• Policy Instruments: Sovereign green bonds, SEBI- regulated social bonds, blended finance, credit guarantees, and new Carbon Credit Trading Scheme.

Static Linkages

• National Action Plan on Climate Change (NAPCC, 2008) → National Solar Mission.
• Paris Agreement (2015) → India’s NDC commitments: 50% installed capacity from non-fossil fuel by 2030.
• Electricity Act, 2003 → Enabled open access and renewable purchase obligations.
• Fiscal Tools: Green bonds (SEBI 2017 framework), tax incentives for renewable energy projects.
• Institutional Role: International Solar Alliance (ISA, 2015, Gurugram HQ).

Critical Analysis  Pros:

• Strengthens energy security and reduces import dependence.
• Creates green jobs and boosts GDP.
• Enhances India’s global climate leadership (ISA, G20 commitments).

Challenges:

• Finance gap of $1.5–2.5 trillion.
• High private sector dependence, limited MSME access.
• Weak grid infrastructure and storage capacity.
• Carbon market effectiveness depends on transparency & regulation.

Stakeholders:

• Government: Policy support, de-risking, and fiscal tools.
• Private sector: Major investors in green bonds, renewables.
• Global community: Climate finance obligations under UNFCCC.
• Citizens & MSMEs: Need access to affordable green credit.

Way Forward

• Expand blended finance models → concessional finance + risk-sharing.
• Mobilise domestic institutional capital (EPFO, LIC, SWFs) for climate projects.
• Develop robust carbon markets under the Carbon Credit Trading Scheme.
• Strengthen grid infrastructure and battery storage.
• Policy innovation → blockchain for finance tracking, AI-based risk assessment.
• Enhance MSME and rural access via credit guarantees and social bonds.

DOMESTIC VITALITY

Context & Background

• In H1 of FY26, private sector investment announcements reached ₹9.9 lakh crore, a 15- month high.
• Domestic firms are increasingly dominant (94% share), while foreign firms’ announcements fell to ₹0.6 lakh crore, the lowest in 5 years.
• Government’s new project announcements also declined by 71%, highlighting fiscal restraint.
• This divergence signals rising optimism among Indian firms but persistent global caution.

Key Points

• Domestic firms’ share of private announcements: 77% (2018-19) → 94% (H1 FY26).
• Manufacturing sector: main focus of new announcements.
• Value of projects actually completed by Indian firms also near 15-month high.
• Foreign firms’ projects down for 3 consecutive years, despite global outflows increasing 11% (2024) and 3% (2023).
• Trade frictions with the U.S. aggravated concerns.
• Government project announcements: ₹1.5 lakh crore, sharply lower YoY.

Static Linkages

• Investment & GDP: Component of Aggregate Demand (Y = C + I + G + NX).
• Crowding-in effect: Public investment can stimulate private investment.
• Industrial Policy Resolution 1956: Public sector in commanding heights.
• Make in India, PLI Scheme, National Infrastructure Pipeline: policy measures to boost private investment.
• Balance of Payments: FDI vital for financing current account deficit and technology transfer.

Critical Analysis Pros

• Surge in domestic investment → confidence in Indian growth story.
• Manufacturing focus → aligns with Make in India & Atmanirbhar Bharat.
• Higher project completion → indicates execution, not just intent.

Cons

• Falling foreign investments → risk for BoP stability and technology inflows.
• Decline in government capex → weakens crowding-in effect.
• Over-reliance on domestic firms → risk if global headwinds worsen.

Stakeholder Perspectives

• Government: Seeks relief from private push but constrained fiscally.
• Domestic Firms: Optimistic yet vulnerable to costs and demand fluctuations.
• Foreign Firms: Wary of tariffs, regulatory unpredictability.
• Public: Benefits if jobs materialise; risk if slowdown sets in.

Way Forward

• Ease of Doing Business 2.0 – contract enforcement, faster clearances.
• Stable tax regime to reduce investor uncertainty.
• Strengthen manufacturing ecosystem through PLI, logistics, skill training.
• Trade diplomacy with U.S. & EU to address tariff risks.
• Balanced FDI strategy – openness with safeguards for strategic sectors.
• Revive public investment in infrastructure to sustain momentum.