Content
- Algorithmic Sovereignty
- Development Means Expansion of Choices in Amartya Sen’s ‘Capability Approach’
- 31.2% of AI Learners in India Are Women: Study
- Exercise Lamitiye – 2026
- Bird Flu Emerges as Significant Threat to Migratory Wildlife
- Essential Commodities Act: When and Why Did the Centre Invoke It Last?
- Open Market Operations (OMO)
Algorithmic sovereignty
Source : The Hindu
Why in News?
- The sinking of the Iranian frigate IRIS Dena inside Sri Lanka’s Exclusive Economic Zone (EEZ) and an AI system’s biased legal interpretation have sparked debate about AI bias, international law interpretation, and digital sovereignty.
Relevance
GS Paper II – International Relations
- Interpretation of international maritime law (UNCLOS) and differing Global South–Western legal perspectives.
- Technology and geopolitics: AI shaping international narratives and policy discourse.
GS Paper III – Science & Technology
- Artificial Intelligence governance and algorithmic bias.
- Need for indigenous AI ecosystems, datasets, and compute infrastructure.
- Concept of digital sovereignty and technological self-reliance.
Practice Question
- Artificial Intelligence systems can influence legal interpretations and geopolitical narratives. Discuss why digital sovereignty and indigenous AI ecosystems are important for India. (250 words)
The IRIS Dena Incident and International Law
The Incident
- A U.S. submarine reportedly sank the Iranian frigate IRIS Dena inside Sri Lanka’s EEZ, triggering debates about the legality of military operations in exclusive economic zones.
- The incident highlights tensions between different interpretations of international maritime law, particularly under the UNCLOS framework.
Legal Debate: Military Activities in the EEZ
Western Interpretation of UNCLOS
- The United States and its allies interpret Article 58 of UNCLOS broadly, allowing military activities such as surveillance, exercises, and combat operations in another state’s EEZ.
- Under this view, as long as actions occur beyond territorial waters, military operations are considered lawful uses of the sea related to navigation freedoms.
Global South Interpretation
- India and several Global South countries interpret UNCLOS more restrictively, arguing that military activities in an EEZ require consent from the coastal state.
- This interpretation emphasises Article 58(3), which requires foreign states to show “due regard” for the rights and jurisdiction of coastal states.
Humanitarian Law Concerns
Obligation to Rescue Shipwrecked Personnel
- Under Article 18 of the Second Geneva Convention (1949), parties to a naval conflict must take all possible measures to rescue shipwrecked personnel without delay.
- Reports indicate that the attacking submarine left the scene quickly, raising questions about whether adequate rescue obligations were fulfilled.
AI Bias in Legal Interpretation
Structural Bias in AI Training Data
- Most AI models are trained predominantly on Western academic literature, legal scholarship, and institutional sources, creating structural biases in outputs.
- As a result, Western interpretations of international law often appear as default authoritative answers, while alternative perspectives are treated as marginal.
Algorithmic Influence on Global Narratives
- Policymakers, analysts, and institutions increasingly rely on AI systems for legal research, geopolitical analysis, and policy advice.
- If AI systems systematically favour certain interpretations, algorithmic outputs may shape international discourse and influence policy decisions.
AI and Geopolitics
Emerging AI Bipolarity
- The global AI ecosystem is increasingly dominated by two major technological blocs: the United States and China, each shaping AI systems according to their data ecosystems and political values.
- This emerging bipolarity could create technological dependencies and ideological influence through digital platforms.
Digital Colonialism
- Dependence on foreign AI infrastructure may lead to digital colonialism, where algorithms developed abroad shape knowledge production, policy analysis, and innovation pathways.
- Control over compute infrastructure, datasets, and foundational models translates into strategic influence over global digital ecosystems.
India’s Strategic Choices in AI Development
Adoption of Foreign AI Systems
- Some analysts argue that India should adopt advanced foreign AI models and focus on building applications across sectors such as healthcare, agriculture, and education.
- This approach prioritizes rapid deployment and economic gains rather than developing foundational AI technologies domestically.
Case for a Sovereign AI Stack
- Others argue that relying entirely on foreign models carries strategic risks related to data sovereignty, algorithmic bias, and technological dependency.
- Developing an indigenous AI stack would ensure control over datasets, computational infrastructure, and knowledge systems.
Importance of Digital Sovereignty
Control Over Data and Algorithms
- Digital sovereignty involves maintaining national control over critical digital infrastructure, data resources, and algorithmic systems.
- Without domestic AI capabilities, countries risk outsourcing cognitive processes and knowledge production to external technological powers.
Strategic Autonomy in the Digital Age
- Just as India developed independent capabilities in space technology, nuclear energy, and digital public infrastructure, AI sovereignty is becoming essential for national power.
- Control over AI technologies will influence economic competitiveness, national security, and global governance influence.
Implications for India
Geopolitical Influence
- AI systems increasingly shape legal interpretations, geopolitical narratives, and international policy debates, making technological autonomy strategically important.
Linguistic and Cultural Representation
- Indigenous AI models can better represent India’s linguistic diversity, cultural realities, and governance challenges, which are often underrepresented in global AI datasets.
Innovation and Economic Growth
- Developing domestic AI ecosystems can support innovation, startup growth, and technology leadership in emerging sectors.
Challenges in Building Sovereign AI
High Infrastructure Costs
- AI development requires massive investments in high-performance computing infrastructure, data storage systems, and research ecosystems.
Talent and Research Capacity
- India must strengthen AI research institutions, talent pipelines, and advanced training programmes to compete with global AI leaders.
Global Technology Competition
- Competition between the U.S. and China in AI technologies may create pressures for countries to align with one technological ecosystem.
Way Forward
Invest in Domestic AI Infrastructure
- India should expand investments in national computing infrastructure, semiconductor capabilities, and data centres to support large-scale AI development.
Develop Indigenous Datasets
- Creating high-quality multilingual datasets reflecting Indian languages, governance systems, and social realities is essential for building relevant AI models.
Encourage Public–Private Collaboration
- Collaboration between government, academia, startups, and industry can accelerate AI innovation and research capacity.
Promote Global AI Governance
- India should play an active role in shaping international norms on AI ethics, transparency, and equitable technological development.
Conclusion
- Artificial Intelligence is emerging as a strategic domain influencing geopolitics, international law, and knowledge production, making digital sovereignty a key component of national power.
- For India, developing a sovereign AI ecosystem with indigenous models, infrastructure, and datasets is essential to safeguard strategic autonomy and ensure equitable global digital governance.
Development means expansion of choices in Amartya Sen’s ‘capabilities approach
Source : The Hindu
Why in News?
- The discussion on Amartya Sen’s Capability Approach has gained renewed attention amid debates on education quality, democratic freedoms, and the instrumentalisation of development policies focused narrowly on economic growth and employability.
Relevance
GS Paper II – Governance
- Human development approach in public policy.
- Link between democratic freedoms, institutional credibility, and development outcomes.
- Relevance to constitutional values: justice, liberty, equality, dignity.
GS Paper III – Economy
- Debate between GDP-centric growth vs human development approach.
- Importance of education, health, and social infrastructure for inclusive development.
Practice Question
- Amartya Sen’s Capability Approach redefines development as the expansion of human freedoms rather than mere economic growth. Examine its relevance for contemporary development policy in India. (250 words)
What is the Capability Approach?
Conceptual Foundations
- The Capability Approach, developed by Amartya Sen, defines development as the expansion of individuals’ real freedoms to achieve the lives they value.
- Capabilities represent substantive opportunities available to individuals, including education, health, participation in society, and economic security.
Development as Freedom
- Sen argued that economic growth alone cannot capture the complexity of human development, since income does not automatically translate into well-being.
- True development requires the expansion of social opportunities, political freedoms, economic facilities, and protective security.
Intellectual Influence
- Sen’s work, in collaboration with Mahbub ul Haq, influenced the creation of the Human Development Index (HDI) by the United Nations Development Programme (UNDP).
- The HDI measures development through health, education, and income indicators, reflecting the capability-based understanding of human well-being.
Key Principles of the Capability Approach
Freedom as the Core of Development
- Development must enhance people’s freedom to choose and pursue life paths they value, rather than merely increasing economic output.
Human Agency
- Individuals should be seen as active agents capable of shaping social and economic change, rather than passive recipients of welfare policies.
Multidimensional Well-being
- Human development depends on multiple factors including education, health, social participation, and access to resources, which collectively expand human capabilities.
Sen vs Martha Nussbaum: Debate on Capabilities
Nussbaum’s Approach
- Philosopher Martha Nussbaum proposed a universal list of core capabilities that governments must guarantee, including life, bodily integrity, education, and political participation.
Sen’s Perspective
- Sen opposed prescribing a fixed list of capabilities, arguing that societies should democratically determine which capabilities matter most in their context.
- His approach emphasises public reasoning and democratic deliberation in defining development priorities.
Capabilities and Education
Education Beyond Employability
- Sen emphasised that education should develop reasoning, critical thinking, and civic engagement, rather than merely preparing individuals for employment.
Current Policy Trends
- Contemporary education policy often treats education as primarily a tool for skill development and job creation, neglecting broader intellectual and democratic functions.
Capability Approach and Democratic Society
Role of Critical Thinking
- Democracies depend on citizens capable of reasoned debate, critical thinking, and informed participation in public life.
- Weak educational standards and declining intellectual engagement undermine the capabilities required for democratic governance.
Impact of Post-Truth Politics
- The rise of misinformation and post-truth narratives weakens public reasoning and evidence-based discourse, which are essential for expanding human capabilities.
Sen’s Framework of Justice
Niti vs Nyaya
- Sen distinguishes between niti (formal institutions and rules) and nyaya (realised justice experienced in everyday life).
- Justice must be evaluated not only through institutional design but through actual outcomes affecting people’s lives.
Equality of Autonomy
- Sen emphasises the concept of equality of autonomy, meaning individuals should have equal freedom to make choices and pursue meaningful lives.
Contemporary Challenges to the Capability Approach
Economic Reductionism
- Development discourse often equates progress with GDP growth, income levels, and employment generation, overlooking broader human freedoms.
Declining Institutional Credibility
- Weak governance standards and erosion of public trust in institutions undermine the social conditions necessary for expanding capabilities.
Plutocratic Populism
- Increasing convergence of state power and economic elites can weaken civil society and restrict the democratic space necessary for capability expansion.
Relevance of the Capability Approach for India
Inclusive Development
- India’s diverse social structure requires development policies that address inequalities in health, education, gender, and regional opportunities.
Social Justice
- The capability framework aligns with constitutional goals such as justice, equality, and dignity, ensuring development benefits all sections of society.
Human Development Indicators
- India’s progress in education quality, healthcare access, and gender equality remains essential for expanding capabilities across the population.
Way Forward
Strengthen Education Systems
- Educational reforms should emphasise critical thinking, creativity, and civic awareness alongside vocational skills.
Promote Democratic Participation
- Expanding platforms for public debate, civic engagement, and participatory governance strengthens the agency of citizens.
Improve Social Infrastructure
- Investments in healthcare, education, and social protection systems expand the capabilities necessary for human well-being.
Shift Development Metrics
- Policymakers should incorporate human development indicators alongside economic metrics to assess progress more comprehensively.
Conclusion
- Amartya Sen’s capability approach provides a normative framework that places human freedom, agency, and dignity at the centre of development policy.
- In an era of economic reductionism and shrinking democratic spaces, restoring the emphasis on human capabilities and social opportunities is essential for meaningful development.
31.2% of AI learners in India are women: study
Source : The Hindu
Why in News?
- A Coursera report on online learning trends revealed that women constituted 31.2% of AI course enrolments in India in 2024, highlighting the persistence of gender gaps in emerging technology sectors.
Relevance
GS Paper I – Indian Society
- Gender inequality in education and workforce participation.
- Gender digital divide in access to technology and digital skills.
GS Paper II – Governance
- Government initiatives for women empowerment, digital inclusion, and STEM education.
- Role of policy in promoting inclusive digital transformation.
Practice Question
- The gender gap in emerging technology sectors reflects deeper structural inequalities in digital access and education. Discuss the challenges and measures needed to enhance women’s participation in India’s AI ecosystem. (250 words)
Women’s Participation in AI Education
Current Trends
- Women accounted for 31.2% of AI course enrolments in India in 2024, which is significantly below the global average of about 36% participation.
- The participation gap reflects the continuing gender divide in digital skills and access to emerging technologies such as Artificial Intelligence.
Completion Rates
- Women learners were found to be more likely to complete AI and Generative AI courses after enrolling, indicating stronger persistence and motivation in acquiring digital skills.
- Higher completion rates suggest that structural barriers exist mainly at the entry stage rather than in capability or performance.
Gender Digital Divide in India
Access to Digital Infrastructure
- Women in India are significantly less likely than men to own smartphones or access the internet, limiting opportunities to participate in digital learning platforms.
Educational and Social Barriers
- Gender stereotypes, lower STEM participation, and limited encouragement for girls in technology fields continue to restrict women’s engagement with emerging technologies.
Workforce Representation
- Although women constitute a significant share of STEM graduates in India, their participation in technology industries and leadership roles remains comparatively lower.
Implications for India’s AI Ecosystem
Talent Pool Constraints
- Low participation of women in AI education reduces the potential talent pool available for India’s rapidly expanding technology and AI sectors.
Innovation and Diversity
- Diverse workforces contribute to more inclusive innovation and better AI systems, reducing risks of algorithmic bias and improving technological outcomes.
Inclusive Economic Growth
- Increasing women’s participation in digital skills training can contribute to higher workforce participation rates and inclusive economic development.
Government Initiatives Promoting Women in Technology
Digital Literacy and Skill Development
- Initiatives such as Digital India, Skill India, and AI-focused training programmes aim to expand access to technology education across gender groups.
Women-Focused Technology Programs
- Programmes such as Women in STEM initiatives, coding bootcamps, and entrepreneurship schemes encourage women’s participation in technology sectors.
Challenges
Social Norms and Cultural Constraints
- Persistent gender norms in many regions limit women’s access to education, technology training, and professional opportunities in emerging sectors.
Limited Role Models and Mentorship
- The lack of women leaders and mentors in technology industries discourages young women from pursuing careers in AI and advanced technologies.
Structural Barriers in Employment
- Workplace biases, wage gaps, and limited career advancement opportunities continue to restrict women’s participation in high-growth technology sectors.
Way Forward
Expand Digital Access for Women
- Expanding affordable internet access and digital devices can reduce barriers to participation in online learning platforms and technology education.
Promote STEM Education for Girls
- Encouraging girls’ participation in science, technology, engineering, and mathematics from early education stages can strengthen the pipeline of women in AI fields.
Strengthen Mentorship and Leadership Programs
- Creating mentorship networks and leadership opportunities for women in technology can improve retention and career progression.
Encourage Industry Participation
- Technology companies should promote gender-inclusive hiring policies and training initiatives to increase women’s representation in AI-driven industries.
Conclusion
- The gender gap in AI education highlights the broader digital divide that continues to shape access to emerging technologies.
- Bridging this gap is essential not only for gender equality but also for ensuring that India’s digital transformation is inclusive, innovative, and socially equitable.
EXERCISE LAMITIYE – 2026
Source : PIB
Why in News?
- An Indian Armed Forces contingent has reached Seychelles to participate in the 11th edition of the joint military exercise “LAMITIYE-2026”, aimed at strengthening bilateral defence cooperation and interoperability.
Relevance
GS Paper III – Internal Security
- Maritime security, counter-piracy, and protection of sea lanes of communication (SLOCs).
- Importance of joint military exercises for interoperability and defence preparedness.
GS Paper III – Defence & Security
- Tri-service military cooperation and joint operations capability.
- Strategic significance of Indian naval presence in the Indian Ocean amid growing Chinese influence.
Practice Question
- Joint military exercises play an important role in strengthening defence diplomacy and maritime security. Discuss the strategic significance of India–Seychelles Exercise Lamitiye in the Indian Ocean Region. (250 words)
What is Exercise Lamitiye?
About
- Exercise Lamitiye is a joint India–Seychelles military exercise conducted biennially since 2001, designed to strengthen defence cooperation and operational coordination between the armed forces of both nations.
- The term “Lamitiye” means “Friendship” in the Creole language, symbolising the long-standing defence partnership between India and Seychelles.
Key Features of Exercise Lamitiye 2026
Tri-Service Participation
- The 2026 edition includes participation from Indian Army, Indian Navy, and Indian Air Force, demonstrating integrated military cooperation and joint operational capabilities.
Indian Military Assets
- The Indian contingent includes personnel from the Assam Regiment, naval participation through INS Trikand, and air support from a C-130 aircraft, showcasing multi-domain military capability.
Training Focus
- The exercise focuses on sub-conventional warfare in semi-urban environments, which is relevant for counter-terrorism, insurgency control, and peacekeeping operations.
Operational Activities
- Activities include field training exercises, tactical drills, combat discussions, lectures, and demonstrations, culminating in a validation exercise to test joint operational preparedness.
Strategic Importance for India
Strengthening Indian Ocean Partnerships
- Seychelles occupies a strategically important location in the western Indian Ocean, making it a key partner in India’s maritime security framework.
Enhancing Maritime Security
- Defence cooperation with island nations helps India monitor sea lanes, counter piracy, and enhance maritime domain awareness in the Indian Ocean Region.
Countering External Influence
- Engagement with Seychelles helps India maintain strategic balance in the Indian Ocean amid growing presence of external powers, particularly China.
Promoting Security and Growth for All in the Region (SAGAR)
- The exercise aligns with India’s SAGAR doctrine, which emphasises cooperative security and development in the Indian Ocean.
Operational Significance
Interoperability
- Joint exercises enable armed forces to develop interoperability, allowing seamless coordination during joint missions or multinational peacekeeping operations.
Knowledge and Technology Exchange
- The exercise facilitates exchange of operational experiences, tactical knowledge, and exposure to new-generation military equipment and technologies.
Capacity Building
- Training with the Indian Armed Forces strengthens capacity and professional capabilities of the Seychelles Defence Forces.
Importance for Regional Security
Indian Ocean Geostrategic Importance
- The Indian Ocean hosts major global sea lanes through which a large portion of global trade and energy supplies pass, making regional security critical.
Maritime Threats
- Cooperation between India and Seychelles helps address threats such as piracy, illegal fishing, maritime terrorism, and trafficking.
Challenges
Increasing Strategic Competition
- Growing presence of China and other external powers in the Indian Ocean creates strategic competition affecting regional security dynamics.
Capacity Constraints of Island States
- Small island nations often face limited military resources and surveillance capabilities, requiring sustained support from partners like India.
Way Forward
Deepen Defence Cooperation
- Expanding joint exercises, training programmes, and defence equipment support will further strengthen bilateral security cooperation.
Enhance Maritime Domain Awareness
- Developing integrated surveillance systems and information-sharing mechanisms can improve monitoring of maritime activities in the Indian Ocean.
Strengthen Regional Security Architecture
- India can promote multilateral maritime security cooperation with island states through regional frameworks such as the Indian Ocean Rim Association (IORA).
Conclusion
- Exercise Lamitiye reflects India’s growing commitment to strengthening defence partnerships with Indian Ocean island states and ensuring stability in the region.
- Continued cooperation with Seychelles will enhance maritime security, regional stability, and India’s strategic presence in the Indian Ocean Region.
Bird flu emerges as significant threat to migratory wildlife, as species see decline of 5% in just 2 years: Report
Source : Down to Earth
Why in News?
- A new interim update of the UN “State of the World’s Migratory Species” report warns that 49% of migratory species populations are declining, with bird flu (H5N1) emerging as a major threat.
Relevance
GS Paper III – Environment & Biodiversity
- Decline of migratory species and global biodiversity loss.
- Role of international environmental agreements like the Convention on Migratory Species (CMS).
- Impact of climate change, habitat loss, and wildlife diseases (H5N1 avian influenza) on ecosystems.
GS Paper III – Ecology / Conservation
- Importance of migratory flyways such as the Central Asian Flyway passing through India.
- Significance of wetland conservation, habitat protection, and international cooperation.
Practice Question
- The decline of migratory species reflects broader global biodiversity challenges. Discuss the major threats to migratory species and the importance of international cooperation for their conservation. (250 words)
Convention on Migratory Species (CMS)
About
- The Convention on the Conservation of Migratory Species of Wild Animals (CMS) is a United Nations environmental treaty aimed at conserving migratory animals across international boundaries.
- The convention facilitates international cooperation among countries located along migratory routes of wildlife species.
Objectives
- Protect migratory species and their habitats across national borders.
- Promote coordinated conservation actions among range states.
- Address threats such as habitat destruction, overexploitation, pollution, and climate change.
Structure of CMS Listings
- Appendix I: Species threatened with extinction requiring strict protection.
- Appendix II: Species needing international cooperation for conservation.
Current Status of Migratory Species
Population Decline
- Approximately 592 CMS-listed species (49%) now show decreasing population trends, reflecting a deterioration from earlier assessments.
- Only 38% of migratory species populations are stable or increasing, indicating worsening global conservation outcomes.
Rising Extinction Risk
- Around 24% of CMS-listed species are now classified as globally threatened, representing a gradual increase in extinction risk.
- Several species previously considered stable have recently been reclassified into more threatened categories on the IUCN Red List.
Bird Flu as an Emerging Threat
Highly Pathogenic Avian Influenza (H5N1)
- H5N1 has caused mass mortality events in migratory bird populations across continents, particularly affecting seabirds and waterbirds.
Species Affected
Examples include:
- African Penguin (Critically Endangered)
- Humboldt Penguin (Vulnerable)
- Peruvian Pelican (Near Threatened)
- Dalmatian Pelican (Near Threatened)
- Red-crowned Crane and Hooded Crane (Vulnerable)
Impact on Marine Mammals
- Disease outbreaks have also affected marine mammals such as South American sea lions and fur seals, indicating cross-species transmission risks.
Key Drivers of Migratory Species Decline
Habitat Loss and Fragmentation
- Urbanisation, agriculture expansion, and infrastructure projects reduce critical habitats used for breeding, feeding, and stopovers during migration.
Expansion of Linear Infrastructure
- Roads, railways, pipelines, and fencing disrupt migratory pathways and reduce landscape connectivity essential for long-distance movement.
Climate Change
- Changes in temperature and precipitation patterns alter migration timing, breeding habitats, and food availability.
Overexploitation
- Hunting, trapping, and illegal wildlife trade remain major threats to several migratory species, particularly birds and marine species.
Pollution and Bycatch
- Marine pollution, fishing bycatch, and coastal habitat degradation significantly affect migratory marine species such as sharks and rays.
Regional Conservation Concerns
Shorebird Decline
- Significant declines have been recorded in shorebirds along the East Asian–Australasian Flyway and East Atlantic Flyway, including key habitats in India.
Raptors in Africa and Eurasia
- Raptors face threats from poisoning, illegal hunting, electrocution, and collisions with energy infrastructure.
Examples of Species Recovery
Scimitar-horned Oryx
- Reintroduced populations in Chad have allowed the species to move from Extinct in the Wild to Endangered, demonstrating successful conservation interventions.
Saiga Antelope
- Populations in Kazakhstan have rebounded after disease outbreaks, improving conservation status from Endangered to Near Threatened.
Mediterranean Monk Seal
- Conservation efforts have increased populations to nearly 1,000 individuals, improving its status from Endangered to Vulnerable.
Ecological Importance of Migratory Species
Ecosystem Services
- Migratory animals contribute to pollination, seed dispersal, pest control, nutrient transport, and carbon cycling.
Cultural and Economic Value
- Migratory species support ecotourism, traditional livelihoods, and cultural practices in many communities worldwide.
Relevance for India
Migratory Flyways
- India lies along the Central Asian Flyway, which supports over 600 migratory bird species.
Conservation Challenges
- Habitat degradation, wetland loss, and coastal development threaten migratory bird habitats across India.
Wetland Conservation
- Protection of wetlands under initiatives such as Ramsar Convention and National Wetland Conservation Programme is essential for migratory species.
Way Forward
Strengthen Habitat Protection
- Protect and restore wetlands, coastal ecosystems, and grasslands that serve as critical migratory stopover and breeding habitats.
Improve Disease Monitoring
- Establish global surveillance systems to monitor wildlife diseases such as avian influenza affecting migratory species.
International Cooperation
- Strengthen collaboration under CMS and other global biodiversity agreements to protect migratory routes.
Sustainable Infrastructure Planning
- Infrastructure projects should incorporate wildlife corridors and ecological impact assessments to reduce migration barriers.
Conclusion
- Migratory species are increasingly threatened by disease outbreaks, habitat loss, and climate change, highlighting the urgency for coordinated global conservation action.
- Strengthening international cooperation and ecosystem protection will be crucial to prevent further biodiversity loss and ensure ecological balance.
Essential Commodities Act: When and why did Centre invoke it last?
Source : The Hindu
Why in News?
- The Government of India invoked the Essential Commodities Act, 1955 in March 2026 following disruptions in global energy markets caused by the U.S.–Israel–Iran conflict, directing refiners to maximise LPG production for domestic consumption.
Relevance
GS Paper II – Governance
- Role of Essential Commodities Act, 1955 in regulating production, supply, and distribution of essential goods.
- State intervention in markets during emergencies to ensure public welfare and prevent hoarding.
GS Paper III – Indian Economy
- Energy security and fuel supply management during global crises.
- Government tools for price stabilisation and inflation control.
Practice Question
- The Essential Commodities Act, 1955 enables government intervention to ensure availability of critical goods during crises. Examine its significance and limitations in managing supply disruptions and inflation in India. (250 words)
Essential Commodities Act, 1955
Objective
- The Essential Commodities Act (ECA), 1955 was enacted to ensure availability of essential goods at fair prices and prevent hoarding, black marketing, and artificial scarcity.
Key Powers under the Act
Section 3
- Empowers the Central Government to control production, supply, distribution, and pricing of essential commodities to protect consumer interests.
- The government can impose stock limits, price controls, and movement restrictions.
Section 5
- Allows the Centre to delegate powers to State Governments or authorised officers for effective enforcement and regulation at the local level.
Why the Act Was Invoked in 2026
Global Energy Crisis
- The West Asian conflict disrupted global energy markets, raising concerns about fuel availability and price volatility.
Ensuring Domestic LPG Supply
- LPG is used by over 30 crore households in India, making uninterrupted supply critical for household energy security.
Preventing Diversion of Inputs
- Refineries were diverting propane and butane to petrochemical production, which could reduce LPG availability for domestic consumption.
Previous Instances of ECA Invocation
Food Price Inflation
- The Act has historically been used to impose stock limits on commodities such as onions, pulses, edible oils, and cereals during periods of price spikes.
Pandemic Supply Management
- During the COVID-19 pandemic, the Act was invoked to regulate availability of essential medical supplies and food commodities.
Agricultural Commodities Regulation
- Governments have used the Act to control hoarding and speculation in agricultural markets, especially during supply shortages.
2020 Amendment to the Act
Liberalisation Measures
- The Essential Commodities (Amendment) Act, 2020 restricted government intervention in certain agricultural commodities.
Extraordinary Circumstances Clause
- Regulation of cereals, pulses, onions, potatoes, edible oils, and oilseeds is now allowed only under exceptional situations such as:
- War
- Famine
- Extraordinary price rise
- Natural calamity
Significance of the Act
Food and Energy Security
- The Act helps ensure availability of critical commodities such as food grains, fuel, and medicines during crises.
Inflation Control
- By regulating supply and preventing hoarding, the Act helps stabilise prices and protect consumers from market manipulation.
Market Stabilisation Tool
- The Act provides a policy instrument for governments to intervene in markets during emergencies or supply shocks.
Criticisms and Challenges
Market Distortions
- Frequent government interventions can distort market signals and discourage private investment in supply chains.
Impact on Agricultural Markets
- Stock limits and restrictions may reduce incentives for traders and farmers to store and invest in infrastructure.
Enforcement Issues
- Implementation often depends on effective coordination between central and state authorities, which may vary across regions.
Way Forward
Balanced Regulatory Approach
- Government interventions should balance consumer protection with market efficiency and farmer incentives.
Strengthening Supply Chains
- Investments in storage infrastructure, logistics, and food processing can reduce reliance on emergency regulatory measures.
Strategic Reserves
- Maintaining buffer stocks and strategic reserves of critical commodities can mitigate supply disruptions.
Conclusion
- The Essential Commodities Act remains an important policy instrument for ensuring availability of essential goods and controlling inflation during crises.
- However, its effectiveness depends on judicious use alongside structural reforms in supply chains and market systems.
Open Market Operations (OMO)
Source : The Hindu
Why in News?
- The Reserve Bank of India (RBI) announced Open Market Operation (OMO) purchases worth ₹1 lakh crore in two tranches to inject liquidity into the banking system amid global uncertainty triggered by the West Asia conflict.
Relevance
GS Paper III – Indian Economy
- Monetary policy instruments used by the Reserve Bank of India.
- Role of Open Market Operations (OMO) in managing liquidity and money supply.
- Impact of global oil price shocks and geopolitical conflicts on India’s economy.
GS Paper III – Banking & Financial Sector
- Liquidity management in the banking system.
- Relationship between government bond yields, banking liquidity, and credit flow.
Practice Question
- Open Market Operations (OMO) are an important tool of monetary policy used by the Reserve Bank of India to manage liquidity in the banking system. Explain how OMOs influence financial stability and economic growth. (250 words)
What are Open Market Operations (OMO)?
- Open Market Operations are monetary policy tools used by the RBI to regulate money supply by buying or selling government securities (G-Secs) in the open market.
Mechanism
OMO Purchase
- When the RBI buys government securities, it injects liquidity into the banking system by increasing money supply.
OMO Sale
- When the RBI sells government securities, liquidity is absorbed from the banking system, reducing money supply.
Purpose of the Current OMO Purchases
Countering Advance Tax Outflows
- Mid-March advance tax payments usually cause large withdrawals of funds from banks, reducing system liquidity.
- RBI OMOs help offset this liquidity drain.
Supporting Bank Lending
- Additional liquidity enables banks to maintain credit flow to businesses and households, supporting economic growth.
Stabilising Financial Markets
- RBI bond purchases help reduce government bond yields, stabilising financial markets during periods of volatility.
Economic Context Behind RBI’s Move
Global Geopolitical Uncertainty
- The West Asia conflict has pushed global oil prices above $110 per barrel, increasing risks to India’s economy.
Pressure on the Indian Rupee
- Rising oil prices increase India’s import bill and current account deficit, weakening the rupee.
Inflation Concerns
- Higher crude prices can increase fuel inflation and input costs, potentially transmitting into broader inflation.
Previous RBI OMO Operations
- December 2025 – January 2026: RBI purchased ₹2 lakh crore in G-Secs in four tranches.
- May 2025: RBI conducted OMO purchases totaling ₹1.25 lakh crore to support economic growth.
Government Bond Management Measures
Switch Auctions
- The Government conducted switch auctions worth ₹6,309 crore, replacing bonds maturing soon with longer-term securities.
- This helps manage public debt and reduce refinancing risks.
Impact on Banking System
Liquidity Position
- Banking system liquidity currently shows an average surplus of around ₹2.63 lakh crore in March.
Liquidity Coverage Ratio (LCR) Concerns
- Banks may be reluctant to sell G-Secs to RBI because government securities count as High-Quality Liquid Assets (HQLA) required for maintaining LCR.
Credit-Deposit Ratio Pressure
- Strong credit growth and slower deposit growth have pushed credit-deposit ratio to around 83%, indicating pressure on bank liquidity buffers.
Significance of RBI’s Liquidity Management
Ensuring Financial Stability
- Liquidity injections prevent credit tightening and financial market stress during external shocks.
Supporting Economic Growth
- Adequate liquidity ensures continued lending to industry, MSMEs, and households.
Managing Exchange Rate Volatility
- Monetary policy interventions help reduce excessive currency volatility caused by global events.
Challenges
Imported Inflation Risk
- Rising oil prices increase inflationary pressures due to higher fuel and transportation costs.
External Sector Vulnerability
- India’s heavy dependence on crude imports makes the economy sensitive to geopolitical disruptions.
Banking Sector Liquidity Constraints
- Banks’ low liquidity buffers and high credit demand may limit their ability to sell government securities during OMOs.
Way Forward
Strengthening Liquidity Management
- RBI must continue flexible liquidity management through OMOs, repo operations, and standing facilities.
Reducing Oil Import Dependence
- Expanding renewable energy and domestic energy production can reduce exposure to global oil shocks.
Strengthening Banking Sector Stability
- Encouraging deposit mobilisation and improving financial sector resilience will enhance liquidity buffers.
Conclusion
- RBI’s OMO purchases demonstrate the importance of active monetary policy intervention in managing liquidity during periods of global economic uncertainty.
- Such measures help maintain financial stability, support economic growth, and manage external shocks affecting the Indian economy.
