1) Miyawaki Method at Mahakumbh 2025: Urban Afforestation for Sustainable Cities

GS 3: Environment and Biodiversity: Miyawaki afforestation technique

Why is it in the news?

• The 45-day Maha Kumbh festival in Prayagraj concluded on February 26, drawing a record footfall of over 66 crore people, as per government data. To enhance the city’s beautification and promote environmental sustainability, the Uttar Pradesh government implemented the Miyawaki afforestation technique.
• Originating in Japan, this method is aimed at creating “oxygen banks” and restoring green cover in urban areas. In Prayagraj, the administration applied this approach to transform 56,000 square meters of land into dense green spaces.
• Previously, the Miyawaki technique has been successfully used in cities like Mumbai and Chennai and is gaining global recognition, though it has also faced some criticism.

Understanding the Miyawaki Technique

• Developed by Japanese botanist Akira Miyawaki in the 1970s, the Miyawaki technique was aimed at reviving native forests in Japan, which had deteriorated due to urban expansion.
• Miyawaki drew inspiration from Japan’s sacred shrine forests, known as “Chinju no Mori,” which traditionally surrounded Shinto shrines. He observed that these forests consisted of multiple indigenous tree species growing in layered formations.
• Based on this observation, he formulated a method to recreate natural ecosystems by planting dense clusters of native vegetation in degraded or urban areas.

How the Miyawaki Technique Works

• The Miyawaki method involves densely planting native tree species in a compact area to mimic natural forest ecosystems. The soil is prepared to match the natural habitat of these species, ensuring a suitable environment for growth. Typically, saplings or seeds are planted at a density of 3-5 plants per square meter.
• Unlike conventional plantation techniques, Miyawaki forests are not arranged in rows; instead, multiple plant species are sown randomly to simulate natural forest growth.
• Due to the competition for sunlight, the trees grow rapidly, reaching maturity within three years—far faster than conventional forests, which take much longer to develop.

Benefits of Miyawaki Forests

• One of the primary advantages of the Miyawaki technique is its suitability for urban areas, where space is limited. It enables the rapid creation of dense green cover, which can help absorb carbon emissions and improve air quality.
• Additionally, Miyawaki forests require minimal maintenance after the initial growth phase, as they become self-sustaining and do not need frequent watering or fertilization.
• These forests also help regulate local temperatures through transpiration and provide natural shade.
• In urban environments, increasing construction and concretization contribute to the “heat island” effect, where cities become significantly warmer than surrounding rural areas. Miyawaki forests can mitigate this by offering cooling benefits.
• In Prayagraj, species such as mango, mahua, neem, peepal, tamarind, arjuna, teak, tulsi, amla, and ber have been planted, contributing to biodiversity and ecological balance.

Limitations and Challenges

• Despite its benefits, the Miyawaki method has some limitations. It requires significant initial investment and manpower to ensure the survival of densely packed plants.
• Furthermore, conservationists argue that while Miyawaki forests are beneficial, they cannot be seen as a comprehensive solution to large-scale environmental challenges like deforestation and resource depletion.
• Simply planting “mini-forests” in cities without addressing broader issues such as urban planning, resource management, and waste disposal will yield only limited results.

Conclusion

• Although the method is gaining traction worldwide due to growing concerns over climate change, it is essential to complement Miyawaki forests with broader conservation strategies.
• While they offer a practical solution for urban afforestation, long-term sustainability requires holistic environmental policies that address both urban expansion and natural ecosystem restoration.

2) Supreme Court Limits Arrest Powers Under Customs and CGST Acts

GS 2: Polity and Governance: Arrest powers under Customs and CGST acts

Why is it in the news?

• The Supreme Court recently restricted the arbitrary use of arrest powers by officials under the Customs Act, 1962, and the Central Goods and Services Tax (CGST) Act, 2017.
• In Radhika Agarwal v. Union of India, the court ruled that officials exercising arrest, search, and seizure powers under these acts must follow the same procedural restrictions as police officers under the Code of Criminal Procedure, 1973 (CrPC).
• This decision aligns with the Supreme Court’s broader efforts to regulate the prosecuting agencies’ extensive powers under stringent laws like the Prevention of Money Laundering Act, 2002 (PMLA).
• In Arvind Kejriwal v. Directorate of Enforcement (2025), the court had established requirements for legal arrests under the PMLA, which it extended to officials operating under the Customs Act and the CGST Act.

Exercising Police Powers

• The court acknowledged that while Customs and CGST officials are not police officers, they have similar investigative powers, including arrest and seizure. It ruled that these officials cannot exercise powers beyond those of a police officer in charge of a station. Sections 4 and 5 of the CrPC apply unless explicitly excluded by the special laws.
• Thus, Customs and CGST officers must follow procedural safeguards, including presenting an arrested person before a magistrate within 24 hours, informing a family member or friend about the arrest, and allowing the arrestee to have legal representation present during interrogation.

Power of Arrest Under Customs and CGST Acts

• Under Section 104(4) of the Customs Act, some offences—such as those related to prohibited goods or customs duty evasion exceeding ₹50 lakh—are classified as cognizable. This allows a Customs officer to arrest a suspect without a warrant.
• However, under Section 104(5), all other offences require a magistrate’s warrant. Similarly, Section 132 of the CGST Act distinguishes between cognizable and non-cognizable offences and prescribes punishments based on severity.
• The Supreme Court’s ruling in Kejriwal emphasized that arresting someone without a warrant is an extreme power requiring strict safeguards.
• It held that officials must have substantial material evidence, a written “reason to believe” in the person’s guilt, and must inform the arrestee of the grounds of arrest. These principles now apply to Customs and CGST officers.

Key Conditions for a Valid Arrest

Material in Possession

• The court in Kejriwal held that an arrest can only be made if an officer possesses concrete material indicating guilt, recorded with written reasons. Officers cannot make arrests based on mere suspicion or assumptions.
• Applying this to Radhika Agarwal, the SC ruled that Customs officials must also rely on material evidence and cannot arbitrarily conclude that an offence has been committed.

Reasons to Believe

• The SC clarified that an officer must document their reasons for believing an arrestee is guilty, based on available case material. While courts cannot assess the merits of these reasons, they must ensure that they are logically connected to the evidence.
• The court emphasized that arrests cannot be arbitrary or made on a whim. Even though the Customs and CGST Acts do not explicitly require written reasoning, the SC ruled that officials must still provide justification due to the acts’ classification of cognizable offences.

Providing Grounds of Arrest

• The SC ruled that the arrestee must be informed of the reasons for their arrest, allowing them to challenge it or apply for bail. Without this information, the arrested individual is at a disadvantage in court.
• The Radhika Agarwal ruling reaffirmed that providing reasons for arrest is a necessary procedural safeguard.

Addressing the Misuse of Arrest Powers

• The court refused to strike down the power of arrest under the CGST and Customs Acts but acknowledged concerns over its misuse. It reviewed data on GST-related cases, recoveries, and arrests since 2017 and found merit in the argument that tax officials were coercing individuals into paying outstanding taxes under the threat of arrest.
• The SC ruled that compelling taxpayers to pay dues under the threat of arrest is illegal. It granted affected individuals the right to seek refunds and directed the government to take action against officers found guilty of such coercion.
• Additionally, the Central Board of Indirect Taxes and Customs (CBIC) has been instructed to issue guidelines preventing officials from misusing their arrest powers against taxpayers.

3) Delimitation Debate: Balancing Representation and Federalism

GS 2: Polity and Governance: Delimitation exercise

Why is it in the news?

• The issue of delimitation has sparked renewed debate, particularly after the Tamil Nadu CM raised concerns. As per constitutional provisions, delimitation refers to the process of fixing the number of seats and boundaries of territorial constituencies for the Lok Sabha and State Legislative Assemblies.
• The ‘Delimitation Commission,’ constituted through a parliamentary act, carries out this exercise. Previous exercises were conducted based on the 1951, 1961, and 1971 Censuses.
• The number of Lok Sabha seats, fixed at 543 since the 1971 Census, has remained unchanged to encourage population control. This figure is set to be readjusted based on the first Census after 2026, though the postponed 2021 Census has further delayed discussions on delimitation.

Challenges in the Delimitation Process

• India’s population has grown unevenly over the past five decades, with states like Uttar Pradesh, Bihar, Madhya Pradesh, and Rajasthan witnessing higher growth compared to states such as Kerala, Tamil Nadu, Karnataka, and Andhra Pradesh.
• Two possible scenarios have emerged regarding the delimitation exercise. The first involves redistributing the existing 543 seats among states, while the second suggests increasing the number of seats to 848, proportionally allocated among states.
• Union Home Minister recently assured that no state would lose seats, and an increase would occur on a ‘pro-rata’ basis. However, it remains unclear whether this will be based on the existing percentage of seats or projected population.

Disadvantaged States and Federal Concerns

• If representation is based on projected population, southern states, smaller northern states like Punjab, Himachal Pradesh, and Uttarakhand, and the northeastern states would be disadvantaged compared to larger northern states.
• Such a scenario may challenge the ‘basic structure’ of federalism, creating a sense of political marginalization in states that have successfully controlled their population.
• Southern states, which currently hold a 24% share of Lok Sabha seats, would see a 5% decline in representation, impacting their political significance.

Potential Solutions for Fair Representation

• Democracy is built on the principle of ‘one citizen-one vote-one value.’ However, this principle was diluted in 1976 when the delimitation exercise was postponed to promote population control.
• In the U.S., the House of Representatives has remained capped at 435 seats since 1913, despite the population increasing nearly fourfold from 9.4 crore in 1911 to an estimated 34 crore in 2024.
• Given that Lok Sabha MPs primarily legislate on Union List matters and oversee the Union government, while state governments implement most central schemes, India has managed with 543 MPs for five decades, even as the population grew from 55 crore to 145 crore.
• With India’s population expected to peak at 165-170 crore in the next three decades before declining, capping Lok Sabha seats at 543 would maintain regional balance and uphold federal principles.
• Leaders from southern states, smaller northern states, and the northeast should advocate for this cap in Parliament to protect their regions’ political interests. Meanwhile, the number of MLAs in state assemblies can be increased in proportion to population growth to meet democratic representation needs.

4) U.S.-Taiwan Relations Amid Rising Chinese Aggression

GS 2: International Relations: U.S.- Taiwan Relations

Why is it in the news?

• The recent update of the U.S. State Department factsheet on Taiwan has reignited discussions on U.S.-Taiwan relations. The new version omits the previous statement that the U.S. does not support Taiwan independence and affirms support for Taiwan’s participation in international organizations where applicable.
• While Washington termed this as a routine update, it was welcomed by Taiwan but strongly opposed by Beijing. China’s Foreign Ministry criticized the revision, stating that it sends a “seriously erroneous message” to pro-independence forces in Taiwan.
• The foundation of U.S. policy on Taiwan is the Taiwan Relations Act (TRA), 1979, which mandates preserving and promoting close ties between the U.S. and Taiwan. The TRA also ensures Taiwan receives U.S. arms of a defensive nature, a policy that has led to continuous arms sales and heightened tensions with Beijing.

Donald Trump’s Position on Taiwan

• The U.S. President Donald Trump has introduced unpredictability into U.S.-Taiwan relations. While he has supported Taiwan through major arms sales in the past, his recent statements suggest a shift in approach. Trump has claimed that Taiwan “stole” the chip industry from the U.S. and insisted that Taiwan should pay for American protection by increasing its defense budget.
• Currently, Taiwan is negotiating a $7-10 billion arms deal with the U.S. and has already raised its defense spending to 2.5% of its GDP.
• Taiwanese President has expressed interest in strengthening ties with Trump and increasing Taiwanese investments in the U.S. Taiwan Semiconductor Manufacturing Company (TSMC) has committed $100 billion for U.S. manufacturing expansion, increasing its total investment to $165 billion.
• Despite Trump’s recent rhetoric suggesting that Taiwan is too distant for U.S. military intervention, his previous administration approved $10 billion in arms deals and delivered $18 billion worth of weapons to Taiwan.
• He also enacted key pro-Taiwan laws, including the Taipei Act, Taiwan Travel Act, and Taiwan Assurance Act, solidifying diplomatic and defense ties.

Taiwan’s Growing Vulnerability

• Chinese aggression toward Taiwan has been increasing through military exercises in the Taiwan Strait, cyber-attacks, and intelligence operations such as spy balloons.
• Chinese President has been working to diplomatically isolate Taiwan, reducing its official allies from 22 in 2016 to just 12 today. The Democratic Progressive Party (DPP), which has held power since 2016, faces continued hostility from Beijing due to its pro-independence stance.
• During Taiwan’s 2024 elections, China intensified its military exercises near the Taiwan Strait, reinforcing the possibility of a future military confrontation. Beijing’s sustained pressure on Taiwan underscores the island’s precarious position as geopolitical tensions between the U.S. and China escalate.

Taiwan’s Strategic Importance

• For China, Taiwan’s reunification is a critical aspect of national rejuvenation, while for Washington, Taiwan remains crucial due to its semiconductor industry and as a major buyer of U.S. arms.
• Taiwan’s fate will depend on the evolving U.S.-China relationship, which continues to shape the island’s geopolitical and economic future.

5) AI Basics: Understanding Artificial Intelligence and Machine Learning

GS 3: Science and Technology: AI and ML

Context

• The AI industry is evolving rapidly, with new models being introduced frequently. OpenAI recently launched GPT-4.5, described as a “bigger and more compute-intensive” model. This came shortly after Elon Musk’s xAI unveiled Grok 3, touted as the “world’s smartest AI.”
• Anthropic also released a hybrid reasoning model for its Claude chatbot, while in January, the Chinese startup DeepSeek introduced R1, a cost-effective AI model considered a major breakthrough.
• However, these developments represent only a fraction of the AI landscape. The field is filled with technical jargon like LLMs, neural networks, and algorithms, making it challenging to follow. To simplify AI concepts, this explainer breaks down two fundamental terms: artificial intelligence and machine learning.

What is Artificial Intelligence?

• Artificial Intelligence (AI) is a branch of computer science focused on creating systems that can think, learn, and act like humans to solve complex problems.
• The field was formally established in 1956 at a workshop at Dartmouth College, organized by mathematician John McCarthy. He collaborated with Marvin Minsky (Harvard University), Nathaniel Rochester (IBM), and Claude Shannon (Bell Telephone Laboratories), all of whom are considered AI pioneers.
• McCarthy coined the term “artificial intelligence” despite acknowledging that the name was not universally liked. As quoted in Melanie Mitchell’s book Artificial Intelligence: A Guide for Thinking Humans, McCarthy admitted, “I had to call it something, so I called it ‘Artificial Intelligence.’”
• Today, AI is widely recognized as a transformative technology. Companies like Google integrate AI into their products to enhance functionality, while AI models such as OpenAI’s ChatGPT power various tools and applications.

What is Machine Learning?

• Machine Learning (ML) is a subset of AI that enables computer systems to learn from data and perform tasks autonomously without explicit programming. ML models are trained on large datasets to identify patterns and make predictions about new information.
• According to tech platform Built In, machine learning systems use arithmetic, statistics, and trial-and-error to detect relationships within datasets, allowing them to draw conclusions from new data. As these systems process more data, their ability to learn and improve increases.
• A practical example of ML in action is recommendation systems used by platforms like Spotify and Netflix. These companies analyze user behaviour, such as listening and viewing history, to predict and suggest content that aligns with individual preferences.

Conclusion

• By understanding AI and ML, one can better grasp how these technologies are shaping industries and driving innovation across the world.

6) Trump’s Joint Address to Congress: Why It’s Not a State of the Union Speech

GS 2: International Relations: Addressing joint session of congress

Why is it in the news?

• S. President Donald Trump is set to address a joint session of Congress for the first time since assuming office for his second term. While annual presidential addresses are typically called the “State of the Union” (SOTU) speech, this one is officially termed a “Joint Address to Congress.”

What Is the State of the Union?

• The State of the Union (SOTU) address is an annual speech by the U.S. President that fulfils his constitutional duty to inform Congress about the country’s condition and legislative agenda. Article II, Section 3, Clause 1 of the U.S. Constitution mandates the President to provide Congress with updates on the “State of the Union” and recommend necessary measures.
• A 2018 report by the Congressional Research Service highlighted that the SOTU address serves multiple purposes. It informs Congress and the nation about current national conditions, outlines the President’s legislative priorities, and serves as a platform to rally public support for upcoming policies.
• The speech, broadcast to a national and international audience, is a key moment for the President to convey his vision for the country.
• Though no specific date is mentioned in the Constitution, the SOTU is usually delivered in the first few months of the year. Since the presidential inauguration is fixed for January 20, a newly elected President delivers their first SOTU shortly after assuming office.

History of the State of the Union

• The tradition of this speech dates back to 1790, when President George Washington delivered what was then called the “Annual Message.” From 1790 to 1946, the address retained this title.
• Between 1942 and 1946, it was informally referred to as the “State of the Union.” In 1947, President Harry S. Truman officially named it the “State of the Union Address.”

Why Is Trump’s Speech Not Called a State of the Union?

• It is common for Presidents to use a different title for their first-year speeches. President Ronald Reagan, in 1981, delivered an “Address Before a Joint Session of the Congress on the Program for Economic Recovery.”
• Similarly, Presidents George H.W. Bush (1989) and Bill Clinton (1993) called their first-year speeches “Administration Goals,” while George W. Bush’s 2001 address was termed his “Budget Message.”
• During his first term in 2017, Trump’s initial speech to Congress was titled the “Address Before a Joint Session of the Congress.” Following this tradition, his upcoming speech is also labelled as a “Joint Address to Congress” rather than a formal State of the Union address. Despite the different name, these first-year speeches carry the same weight as subsequent SOTU addresses.

Response from the Opposition

• As with the SOTU, the opposition party will deliver a televised response to Trump’s speech. This year, Democratic Senator Elissa Slotkin of Michigan will present the rebuttal, offering an alternative perspective to the President’s remarks.

7) India’s First Comprehensive River Dolphin Survey

GS 3: Environment and Biodiversity: Estimating River Dolphin

Why is it in the news?

• Prime Minister Narendra Modi on March 3 released the findings of India’s first-ever comprehensive survey on riverine dolphins, covering both Gangetic and Indus dolphins.
• Conducted between 2021 and 2023 across the Ganga and Brahmaputra River basins, the survey estimated an average of 6,324 Gangetic dolphins, with a range of 5,977 to 6,688. However, only three Indus dolphins were found in the Beas River, Punjab.
• The study highlights the urgent need for conservation efforts as these endangered species face threats from pollution, riverbed mining, habitat loss, declining prey, and climate change.

Key Findings of the Survey

• The Wildlife Institute of India, under the Union Environment Ministry, conducted the survey across 28 rivers by boat and 30 rivers by road, covering major river channels and tributaries.
• The surveyed stretches included:

1) Ganga basin: 7,109 km in Uttar Pradesh, Bihar, Jharkhand, West Bengal, Madhya Pradesh, and Rajasthan.

2) Brahmaputra basin: 1,297 km, including the Subansiri, Kulsi, Beki, Kopili, and Barak tributaries.

3) Beas river: 101 km surveyed, detecting the only three Indus River dolphins in India.

• The population breakdown estimated 3,275 dolphins in the Ganga’s main stem, 2,414 in its tributaries, 584 in the Brahmaputra’s main stem, and 51 in its tributaries.
• Uttar Pradesh recorded the highest number of 2,397 dolphins, followed by Bihar (2,220), West Bengal (815), Jharkhand (162), Rajasthan and Madhya Pradesh (95), and Punjab (3).

Survey Methodology and Challenges

• River dolphins live in turbid waters, surfacing only briefly, making population estimation complex. According to the report, dolphins stay on the surface for just 1.26 seconds and dive for 107 seconds, leading to potential observer and availability errors.
• To improve accuracy, the survey combined visual and acoustic methods:

1) Acoustic surveys: Used hydrophones to detect ‘dolphin clicks’ since dolphins rely on echolocation to navigate. Multiple hydrophones helped reduce observer errors and track individual dolphins.

2) Visual surveys: Different methods were employed based on river depth and width:

1. a) Double observer method for deep, wide channels.
2. b) Tandem method for channels less than 600m wide and 3m deep.
3. c) Single boat method for narrow channels under 300m wide and 2m deep.

Dolphin ‘Hotspots’ and ‘Coldspots’

• Certain river stretches showed high dolphin concentrations (hotspots), while others had low or no dolphins (coldspots).

Coldspots:

• Ganga River: A 366-km stretch from Narora to Kanpur had an extremely low encounter rate of 0.1 dolphins/km.
• Farukkhabad-Kannauj (between Narora and Kanpur barrages) was also a coldspot.
• Other coldspots include Yamuna River (Kaushambi-Chitrakoot); Sharda River (Pilibhit); Rapti River (Balrampur-Siddharth Nagar); and Barak River (Assam).

Hotspots:

• Bihar had the highest encounter rate of 1.62 dolphins/km, compared to 0.62 dolphins/km in Uttar Pradesh. The Chausa-Manihar stretch (590 km) recorded 2.20 dolphins/km, while the Manihari-Rajmahal stretch (Bihar-Jharkhand) had 2.75 dolphins/km.
• In Assam, despite good water depth in the Brahmaputra’s main stem, tributaries had low depth, causing declining populations in Subansiri and Kulsi rivers.

Conclusion

• The survey provides crucial insights into river dolphin populations in India, highlighting regional disparities in their distribution.
• It underscores the importance of conservation efforts, improved habitat protection, and stricter pollution control measures to safeguard these endangered aquatic mammals.

8) Delimitation of Constituencies

GS 2: Polity and Governance: Delimitation exercise

Why is it in the news?

• Union Home Minister recently assured southern states that they would not lose any parliamentary seats following the upcoming delimitation of constituencies.
• This statement aimed to ease concerns in Tamil Nadu and Kerala, where fears persist that a delimitation exercise based solely on population figures could reduce their representation in Parliament.
• The 2021 Census, delayed due to the Covid-19 pandemic, is expected to take place this year, followed by the delimitation process. The Constitution (Eighty-Fourth Amendment) Act, 2002, had frozen constituency boundaries until the first Census conducted after 2026.

Constitutional Mandate

• Delimitation ensures equitable representation in legislative bodies, upholding the constitutional principle of ‘one citizen, one vote, one value’ under Article 81.
• Article 82 mandates readjustment of Lok Sabha seats and state Assembly constituencies after each Census as determined by Parliament. Similarly, Article 170(3) provides for the reallocation of Assembly seats and their territorial division after every Census, ensuring fair representation across regions.

History of Delimitation in India

• India’s first Delimitation Commission was established under the Delimitation Commission Act, 1952, following the 1951 Census. Subsequent commissions were set up under the Delimitation Commission Acts of 1962, 1972, and 2002.
• The last delimitation exercise in 2002 revised constituency boundaries based on the 2001 Census but did not change the number of Lok Sabha and state Assembly seats, which have remained frozen since 1972.
• The number of Lok Sabha seats, set at 543 based on the 1971 Census, has remained unchanged, maintaining a ratio of approximately one MP per million citizens. The Constitution (Forty-second Amendment) Act, 1976, initially froze Lok Sabha seats until after 2000, and this freeze was further extended in 2002 until at least 2026.

The Delimitation Process

• The President appoints a Delimitation Commission, chaired by a retired Supreme Court judge, with the Chief Election Commissioner or their representative and the State Election Commissioners as members. Associate members, including sitting MPs and MLAs from affected states, provide inputs but do not have decision-making powers.
• The Commission functions independently, and its decisions are final, immune from judicial challenges. After reviewing population distribution, geographic factors, and socio-economic conditions, the Commission releases draft proposals, inviting public and political feedback before finalising the delimitation plan.
• Once published in the official Gazette, the changes take effect in the next election.

Census and Political Implications

• Census data play a crucial role in the delimitation process, shaping electoral boundaries based on population size, density, and distribution. This has raised concerns in the southern states, where population growth has been effectively controlled, unlike in several northern states.
• If representation is adjusted purely on population figures, the northern states could gain additional seats at the cost of the South, potentially impacting the political balance in Parliament. Given the BJP’s strong presence in northern states and limited influence in the South, except in Karnataka, such a shift could alter national politics.
• Census data also ensure fair representation of Scheduled Caste (SC) and Scheduled Tribe (ST) populations. Seats are reserved in proportion to SC/ST demographics, considering both population concentration and regional distribution.
• After delimitation proposals are drafted, public and stakeholder feedback is sought before finalisation. The Commission’s orders, once published, come into effect in the subsequent election cycle.

9) Navratna Status for IRCTC and IRFC

GS 3: Economy: Navratna Status

Why is it in the news?

• The Centre recently approved the upgradation of Indian Railway Catering and Tourism Corporation (IRCTC) and Indian Railway Finance Corporation (IRFC) as the country’s 25th and 26th Navratna companies.
• With this, all seven listed Central Public Sector Enterprises (CPSEs) under Indian Railways now hold Navratna status. Indian Railways operates a total of 12 CPSEs.

Criteria for Navratna Status

• Navratna companies are the second tier of government-owned ‘Ratna’ companies, positioned between Maharatnas and Miniratnas.
• The Department of Public Enterprises (DPE) under the Ministry of Finance grants this status based on financial performance indicators. These include:

1) Ratio of net profit to net worth

2) Ratio of manpower cost to total production or service cost

3) Ratio of profit before depreciation, interest, and tax (PBDIT) to capital employed

4) Ratio of profit before interest and taxes (PBIT) to turnover

5) Earnings per share

6) Inter-sectoral performance

• Each indicator carries a specific weight, with a company requiring a composite score of 60 or more to qualify. Additionally, the CPSE must have an Excellent or Very Good MOU rating for three of the last five years.

Benefits of Navratna Status

Navratna status provides companies with greater financial autonomy and market competitiveness. It allows them to:

• Invest up to ₹1,000 crore or 15% of their net worth in a single project without government approval.
• Form joint ventures, subsidiaries, and enter into mergers or acquisitions independently.
• Make strategic business and investment decisions without bureaucratic delays.
• Expand into international markets and attract more investors due to their financial stability.

Other Navratna CPSEs in Indian Railways

Before IRCTC and IRFC, five other Indian Railways companies had Navratna status:

• Container Corporation of India (CONCOR) – A multimodal logistics company for freight transport.
• Rail Vikas Nigam Ltd (RVNL) – Develops and expands rail infrastructure.
• RITES Ltd – A transport infrastructure consultancy firm.
• IRCON International Ltd – Specialises in railway and highway construction in India and abroad.
• RailTel Corporation of India Ltd – Provides connectivity services like video surveillance at stations and NIC ‘e-Office’ services.
• CONCOR was the first railway CPSE to receive Navratna status in July 2014, followed by RVNL, IRCON, and RITES in 2023, and RailTel in August 2024.

10) Poverty Estimation in India

GS 3: Economy: Estimating Poverty

Why is it in the news?

• A recent study by economists Surjit S Bhalla and Karan Bhasin highlights a significant decline in poverty and inequality in India over the past decade.

Key Findings

• Data Source: The study is based on household expenditure data from 2022-23 and 2023-24.
• Decline in Poverty: The poverty rate at the $3.65 PPP threshold has fallen from 52% in 2011-12 to 15.1% in 2023-24, while extreme poverty ($1.90 PPP) is now below 1%.
• Consumption Growth: The lowest three income groups witnessed the highest rise in consumption levels, marking a record improvement.
• Reduced Inequality: The Gini coefficient, a measure of income inequality, declined from 37.5 in 2011-12 to 29.1 in 2023-24.
• Global Comparison: India’s success in reducing inequality is notable among large economies, with only Bhutan and the Dominican Republic performing better—both with much smaller populations.
• Need for New Poverty Line: Current benchmarks are outdated, suggesting a need for a revised poverty threshold based on the 33rd percentile or relative poverty standards like those used in Europe.
• Pending NITI Aayog Revision: The official poverty estimates remain based on older committee reports, with no recent updates.

Evolution of Poverty Line in India

• Tendulkar Committee (2009): Defined poverty based on daily spending—₹33 in urban areas and ₹27 in rural regions. The national poverty line for 2011-12 was set at ₹816 per month per capita (rural) and ₹1,000 per month per capita (urban).
• Rangarajan Committee (2014): Recommended a higher threshold of ₹47 per day for urban areas and ₹30 for rural areas, but the government continued using the Tendulkar methodology.
• International Standard: The World Bank defines extreme poverty as living on less than $2.15 per day, adjusted for inflation and purchasing power parity.

Issues with Current Poverty Estimation

• Unrealistic Thresholds: The existing poverty line of ₹965 (urban) and ₹781 (rural) per month is considered inadequate for capturing actual living costs.
• Outdated Approach: The calorie-based measurement fails to account for evolving consumption needs.
• Exclusion of Essential Costs: Rising private expenses in healthcare, education, and housing are not fully reflected in poverty calculations.
• Uniform Poverty Line for All States: Cost-of-living differences across states are ignored, leading to distorted poverty assessments.
• Lack of Regular Updates: Inflation and economic changes are not factored into periodic poverty recalculations, making current estimates less relevant.

The Way Forward

• Regular Updates: Poverty lines should be periodically revised to align with economic trends and inflation.
• Comprehensive Approach: Incorporate non-food essentials like healthcare, education, and housing into poverty assessment.
• Regional Adjustments: Different states should have customized poverty benchmarks to reflect varying costs of living.
• Modern Metrics: Move away from outdated calorie-based methods and use broader well-being indicators, including nutrition and overall quality of life.

11) India’s New Tax Framework for Virtual Digital Assets

GS 3: Economy: Tax on Virtual Digital Assets

Why is it in the news?

• With the Income Tax Bill, 2025, India has officially classified Virtual Digital Assets (VDAs) as property and capital assets, allowing for their taxation, regulation, and even seizure when necessary.
• This move aligns India’s tax framework with global practices in countries like the U.K., U.S., Singapore, Australia, New Zealand, and the UAE, which categorize VDAs primarily as property or securities.

VDAs as Property and Capital Assets

Legal Recognition and Classification:

• For the first time, the Income Tax Bill, 2025, explicitly classifies VDAs (including cryptocurrencies, NFTs, and other digital assets) as property under Section 92(5)(f) and capital assets under Section 76(1).
• This classification has broad implications for taxation, compliance, and legal oversight, aligning India with countries like the U.K., Australia, and New Zealand, where crypto assets are considered property and subject to capital gains tax.

Capital Gains Tax on VDAs

• Since VDAs are now classified as capital assets, any gains from their sale, transfer, or exchange are taxed under capital gains provisions, similar to real estate, stocks, and bonds.
• For example, if a person buys Bitcoin for ₹10 lakh and sells it for ₹20 lakh, the ₹10 lakh profit is subject to capital gains tax—either short-term or long-term, depending on the holding period. This approach ensures VDAs are taxed under standard asset taxation rules, preventing their misuse as unregulated financial instruments.

Taxation Framework for VDAs

Flat 30% Tax on VDA Transactions:

• Continuing from the precedent set in 2022, the Income Tax Bill, 2025, imposes a flat 30% tax on income from VDA transfers. Unlike traditional capital assets, no deductions are allowed (except for the cost of acquisition). This means expenses related to mining, transaction fees, commissions, or gas fees cannot be deducted when calculating taxable income.
• For example, if an investor buys Ethereum for ₹5 lakh and sells it for ₹7 lakh, the ₹2 lakh profit is taxed at 30%, with no relief for transaction costs. This tax treatment is stricter compared to the UAE, where the Virtual Assets Regulatory Authority (VARA) permits trading under regulated conditions with 0% personal income tax on gains in some cases.

1% TDS on VDA Transfers:

• Under Section 393, a 1% Tax Deducted at Source (TDS) applies to all VDA transfers, including peer-to-peer (P2P) transactions. This measure ensures the government tracks large crypto transactions and prevents tax evasion.
• TDS Exemption Thresholds: ₹50,000 for small traders and ₹10,000 for others.

Mandatory Reporting and Asset Seizure

• The Income Tax Bill, 2025, strengthens compliance by including VDAs in undisclosed income taxation laws.
• Under Section 301, failure to report VDA holdings in tax filings can result in classification as undisclosed income, leading to penalties and taxation.
• Under Section 524(1), tax authorities can seize VDAs during investigations or raids, just like cash, gold, or real estate in tax evasion cases.
• This aligns with global legal precedents. For instance, the U.K. High Court recognizes crypto assets as property, allowing courts to freeze or seize them in legal disputes. By applying similar measures, India ensures VDAs do not function as an unregulated shadow asset class.

Mandatory Reporting for Crypto Transactions

• Under Section 509, all entities dealing in crypto assets—including exchanges, wallet providers, and individual traders—must report transactions in a prescribed format. This prevents money laundering through digital assets and strengthens tax compliance.
• Additionally, VDAs must be included in the Annual Information Statement (AIS), ensuring all crypto transactions are automatically recorded in financial profiles.

India’s Approach to Global Standards

• India’s decision to classify VDAs as property and capital assets aligns with global legal standards.
• In the U.S., the SEC classifies many crypto assets as securities, subjecting them to financial market regulations.
• In New Zealand, the Inland Revenue Department treats crypto assets as property, making them subject to income tax on trades.
• The U.K.’s HMRC also recognizes crypto assets as property, making them liable for Capital Gains Tax (CGT).
• By defining VDAs as property, India gains the ability to tax, regulate, and seize these assets when necessary, preventing illicit financial activities.

Challenges and the Need for a Holistic Policy

Despite progress in VDA classification and taxation, several challenges remain:

• Lack of Investor Protection – No clear consumer safeguards exist for crypto investors.
• Market Regulation Gaps – No central financial authority currently regulates crypto transactions in India.
• Limited Enforcement Mechanisms – While seizure provisions exist, enforcement challenges remain in tracking cross-border transactions.

Way Forward

• While India’s taxation approach aligns with international standards, a more comprehensive regulatory framework is needed.
• The current policy mainly addresses taxation but lacks clarity on investor rights, market oversight, and technological safeguards. A balanced legal and financial ecosystem should integrate:

1) Stronger financial regulations to govern crypto exchanges and wallets.

2) Consumer protection laws ensuring safe digital asset investments.

3) Technological advancements to track and regulate cross-border VDA transactions.

• By implementing a cohesive policy, India can create a secure and regulated digital asset market, ensuring long-term sustainability and investor confidence.