Content
- Pink Bollworm, Cotton Crisis And Implications For India
- Gold Price Fall During Crisis – Changing Safe Haven Dynamics
- India Exploring Local Currency Trade For Oil Imports
- Living Will And End-of-Life Care In India
- UDAN Scheme Revamp – Regional Connectivity And Viability Concerns
- Punjab–Rajasthan Water Dispute – ₹1.44 Lakh Crore Claim
- WTO Dispute Settlement Crisis And India’s Position
Pink Bollworm, Cotton Crisis And Implications For India
Introduction
- The resurgence of pink bollworm (Pectinophora gossypiella) has triggered a cotton productivity crisis in India, especially in north-western states like Haryana, Punjab, and Rajasthan.
- Once controlled by Bt cotton (early 2000s), the pest has developed resistance since ~2010s, leading to sharp yield decline and farmer losses.
Relevance
GS I (Geography / Society)
- Cropping patterns and regional shifts (cotton → paddy in NW India)
- Agrarian distress and rural livelihood patterns
- Impact on women labour and migration
GS III (Agriculture / Economy / Environment)
- Agricultural productivity decline and pest resistance
- GM crops (Bt cotton) and technological limitations
- Climate-unsuitable cropping and groundwater depletion
- Agri-value chains and textile industry linkages
Practice Question
- “The pink bollworm crisis highlights structural weaknesses in India’s cotton economy.” Analyse.(250 Words)
Cotton In India – Key Facts
- India is among the largest cotton producers globally, but productivity remains low compared to countries like USA, China, Brazil.
- Cotton contributes to:
- Textile industry (~45 million jobs)
- Export earnings (~$12–15 billion annually)
- Livelihoods of ~6 million farmers
- Production declined from 36.07 million bales (2019–20) to 29.72 million bales (2024–25) (~14.84% fall).
Pink Bollworm – Nature Of Crisis
- Pink bollworm is a major cotton pest that damages bolls internally, reducing yield and fibre quality.
- Bt cotton initially effective due to Bacillus thuringiensis toxin, but pest developed genetic resistance, reducing effectiveness.
- Yield impact:
- Earlier: 10–12 quintals/acre
- Current: ~3–4 quintals/acre in affected regions
- Continuous monocropping of Bt cotton and lack of refuge crops accelerated resistance development.
Impact On Farmers
- Cost of cultivation: ~₹40,000 per acre vs returns ~₹25,000, resulting in losses ~₹15,000 per acre.
- Market price often ₹1,000–₹1,600 below MSP, due to quality issues and weak procurement.
- Farmers face triple burden:
- Pest infestation
- Rising input costs
- Price realisation failure
Regional Evidence (Haryana Case)
- Cotton area declined from 0.72 million ha (2019–20) to 0.40 million ha (2024–25).
- District-level losses up to ₹17,500 per acre reported (CCSHAU study).
- Yield volatility: 714 kg/ha (2019) → 264 kg/ha (2022) → ~534 kg/ha (2024).
Cropping Pattern Shift
- Farmers shifting from cotton to paddy, despite ecological unsuitability.
- Example: Sirsa district saw 55.18% increase in paddy area (2020–2024).
- This shift worsens groundwater depletion in already water-stressed regions of north-west India.
Policy And Institutional Issues
- MSP exists but procurement is weak, forcing farmers into distress sales.
- Crop insurance (PMFBY) suffers from delayed or denied payouts, reducing effectiveness.
- Incentives like:
- ₹3,000/acre (desi cotton)
- ₹8,000/acre (Mera Pani-Meri Virasat)
have low uptake due to market and seed constraints.
Labour And Social Impact
- Cotton is labour-intensive, especially for manual picking, supporting rural employment.
- Decline in cotton reduces employment for women labourers, with seasonal income loss of ₹10,000–₹15,000.
- Shift to paddy increases reliance on migrant labour, displacing local workers and increasing distress migration.
Structural Issues In Cotton Economy
- Overdependence on single technology (Bt cotton) without continuous innovation.
- Weak R&D ecosystem for developing next-generation pest-resistant varieties.
- Lack of value chain integration (ginning, textiles, exports) reduces farmer share in final price.
- Limited availability of desi cotton seeds despite better resilience.
Broader Implications
- Threat to textile industry supply chain, increasing reliance on cotton imports.
- Undermines crop diversification and sustainability goals, especially in water-stressed regions.
- Reflects larger agrarian issue of price-cost imbalance and technological stagnation.
- Indicates limits of genetically modified crops without integrated pest management.
Way Forward
- Develop next-generation pest-resistant cotton varieties and strengthen public sector seed research.
- Promote Integrated Pest Management (IPM) and enforce refuge policy to delay resistance development.
- Strengthen MSP procurement mechanisms and ensure better price realisation.
- Improve insurance delivery (PMFBY) with timely payouts and transparency.
- Promote diversified cropping systems with assured markets to reduce monoculture risks.
- Expand cotton value chain (processing, textiles) to enhance farmer income share.
Prelims Pointers
- Pink bollworm: major cotton pest; affects bolls internally
- Bt cotton: introduced early 2000s using Bacillus thuringiensis
- Cotton production: 36.07 → 29.72 million bales
- Haryana cotton area: 0.72 → 0.40 million ha
- Scheme: Mera Pani-Meri Virasat (₹8,000/acre)
Gold Price Fall During Crisis – Changing Safe Haven Dynamics
Introduction
- Contrary to historical trends, gold prices fell sharply during the West Asian conflict (Feb 2026), declining from ~₹1.9 lakh to ~₹1.3 lakh per 10 grams in India.
- Traditionally a safe haven asset, gold usually rises during crises (e.g., 2008 crisis, COVID-19, Ukraine war 2022), but current behaviour reflects changing macro-financial dynamics.
Relevance
GS II (IR)
- Impact of global conflicts (West Asia) on financial markets
- Role of US dollar dominance in global economy
GS Paper III (Economy)
- Monetary policy: interest rates, inflation, bond markets
- Safe haven assets (gold, dollar, US Treasuries)
- External sector dynamics and capital flows
- Commodity price behaviour under crisis
Practice Question
- Why did gold fail to act as a safe haven during recent global crises? Analyse.(250 Words)
How Gold Typically Behaves In Crises ?
- Gold acts as a store of value when uncertainty rises, especially when financial markets, currencies, or institutions are unstable.
- It becomes attractive when interest rates fall, as gold does not yield returns, reducing its opportunity cost relative to bonds.
- A weak US dollar boosts gold demand globally, as gold becomes cheaper for non-dollar buyers, increasing prices.
What Changed In Current Crisis ?
- The West Asian conflict triggered a sharp rise in crude oil prices (> $120/barrel), creating inflationary pressures globally.
- Markets now expect interest rates to remain higher for longer, reversing earlier expectations of rate cuts by central banks.
- Higher expected interest rates increase returns on US Treasury bonds, making gold (a non-yielding asset) less attractive.
Role Of Dollar And Interest Rates
- Rising interest rate expectations led to capital inflows into US bonds, strengthening the US dollar.
- A stronger dollar makes gold more expensive globally, reducing demand and putting downward pressure on prices.
- Thus, key drivers of gold rallies (low rates + weak dollar) moved in the opposite direction simultaneously.
Liquidity And Market Dynamics
- Gold had already reached record highs (~₹1.8–1.9 lakh per 10 grams; >$5,000/ounce globally) before the conflict, creating scope for correction.
- Falling prices triggered automatic sell orders (stop-loss), causing a chain reaction of selling and accelerating price decline.
- Investors facing losses in equities sold gold to book profits and meet liquidity needs, reinforcing downward pressure.
Shift In Safe Haven Preference
- In the short run, the US dollar has re-emerged as the primary safe haven, especially during inflation-driven crises.
- Oil price rise increases global demand for dollars (since oil is dollar-denominated), further strengthening the currency.
- Despite diversification trends (dollar share in reserves: ~71% → <60%), the dollar remains dominant in global trade and reserves.
Why Gold Still Retains Importance ?
- Central banks continue to accumulate gold reserves, reflecting long-term confidence as a sanction-proof asset.
- After Russia asset freeze (2022), countries increased gold holdings as it is immune to financial sanctions.
- Gold ETF inflows in India remained positive for 10 consecutive months, indicating sustained investment demand.
Indian Context
- Gold imports fell 38% month-on-month (Feb 2026) but remained ~80% higher year-on-year, indicating underlying demand strength.
- Physical jewellery demand softened due to high prices, but investment demand via ETFs remained resilient.
- Gold continues to play a key role in household savings, inflation hedge, and cultural asset in India.
Key Economic Insight
- Current episode highlights that gold behaves differently depending on type of crisis:
- Financial crisis → gold rises
- Inflation + high interest rates → gold may fall
- Indicates shift from “uncertainty-driven demand” to “interest rate-driven valuation” in global financial markets.
What Lies Ahead ?
- If oil prices stabilise, inflation concerns may ease, leading to rate cuts → favourable for gold.
- If conflict intensifies and inflation persists, stagflation scenario may emerge, which historically supports gold prices.
- Long-term outlook remains bullish, with corrections seen as part of cyclical market adjustments.
Prelims Pointers
- Gold priced in US dollars globally
- Relationship:
- Interest rates ↑ → Gold ↓
- Dollar ↑ → Gold ↓
- Safe haven assets: Gold, US dollar, US Treasury bonds
- Stagflation: High inflation + low growth
India Exploring Local Currency Trade For Oil Imports
Introduction
- India is exploring local currency trade with GCC countries to reduce dependence on the US dollar for oil imports, which constitute nearly 80% of total crude imports.
- The move is driven by surging oil prices ($69 → $123/barrel) and rupee depreciation (₹91.3 → ₹94.1/$), increasing India’s import burden.
Relevance
GS II (IR)
- India–GCC relations and energy diplomacy
- De-dollarisation and global financial geopolitics
- Strategic balancing between US and emerging blocs
GS Paper III (Economy)
- Current Account Deficit (CAD) and exchange rate
- External sector vulnerability and forex management
- Rupee internationalisation
- Trade settlement mechanisms and currency risks
Practice Question
- Analyse the implications of local currency trade for India’s energy security and external stability.(250 Words)
Key Context And Data
- GCC countries account for ~49% of India’s oil imports, while Russia contributes ~30.4% (Apr 2025–Jan 2026).
- India’s crude basket price rose to $123.15/barrel, significantly increasing import bills and widening current account deficit pressures.
- Each currency conversion costs ~1–2% per transaction, leading to cumulative costs of ~5–6% in multi-stage conversions.
Why India Is Moving Towards Local Currency Trade ?
- Rupee depreciation increases cost of dollar-denominated imports, making oil more expensive and worsening inflation and fiscal pressures.
- High oil prices amplify import costs, creating a double shock: price effect + exchange rate effect.
- Local currency trade reduces transaction costs, exchange rate risks, and dependency on dollar liquidity.
Economic Implications
- Potential savings of 5–6% on high-value oil transactions can significantly reduce India’s import bill and fiscal stress.
- Helps stabilise current account deficit (CAD) by lowering outflow of foreign exchange reserves.
- Reduces exposure to currency volatility, improving predictability in trade payments.
Strategic And Geopolitical Implications
- Indicates gradual move towards de-dollarisation in trade, aligning with global trends of currency diversification.
- Strengthens economic ties with GCC countries, which are India’s key energy partners.
- However, may attract US pressure, as the US has historically opposed alternatives to the dollar in global trade.
Existing Precedents
- India already uses local currencies and dirham-based payments for Russian oil imports.
- Similar arrangements have been explored with countries like UAE (rupee-dirham trade mechanism).
Benefits Of Local Currency Mechanism
- Reduces currency conversion costs (1–2% per stage), especially in multi-currency transactions.
- Enhances trade settlement efficiency and speed, avoiding multiple intermediary conversions.
- Promotes internationalisation of the rupee and strengthens India’s financial sovereignty.
Challenges And Risks
- Limited acceptance of rupee internationally, especially among oil-exporting nations with dollar-linked economies.
- Risk of geopolitical backlash, particularly from the US, including potential tariff or trade pressures.
- Currency volatility and lack of deep financial markets for rupee settlement may limit scalability.
- GCC economies are heavily dollar-pegged, making transition to alternative currencies complex.
Way Forward
- Develop bilateral currency swap agreements and settlement mechanisms with GCC countries.
- Strengthen rupee internationalisation through trade invoicing, financial markets, and reserve currency usage.
- Build robust payment infrastructure (like UPI cross-border, digital currency frameworks) for seamless transactions.
- Maintain a balanced approach, ensuring diversification without disrupting strategic ties with the US.
Prelims Pointers
- India imports ~85% of crude oil needs
- GCC share: ~49%; Russia: ~30.4%
- Oil priced in US dollars globally
- Indian crude basket: $123.15/barrel (2026)
- Currency conversion cost: ~1–2% per stage
Living Will And End-of-Life Care In India
Introduction
- A living will (advance directive) is a legal document specifying an individual’s preferences regarding life-sustaining treatment in terminal or irreversible conditions, ensuring dignity in end-of-life care.
- Recognised by the Supreme Court in Common Cause vs Union of India (2018), it upholds patient autonomy and right to die with dignity under Article 21.
Relevance
GS Paper I (Society)
- Changing attitudes towards death, dignity, and autonomy
- Family structures and decision-making
GS Paper II (Polity / Governance)
- Article 21: Right to life with dignity
- Supreme Court judgments (Common Cause case)
- Healthcare governance and palliative care policy
GS Paper III (Social Sector)
- Healthcare infrastructure and palliative care systems
- Cost of healthcare and end-of-life expenditure
Practice Question
- Discuss the ethical and legal dimensions of living wills in India.(250 Words)
What Is A Living Will ?
- It allows individuals to decide in advance whether to accept or refuse life-support interventions such as ventilators, CPR, artificial feeding, or ICU care in irreversible conditions.
- Applies only when a person is terminally ill or in irreversible states (e.g., persistent vegetative state, metastatic cancer), not for routine or curable illnesses.
- Requires signature of the individual, two witnesses, and attestation by a notary/gazetted officer, with recent simplification removing magistrate requirement.
Why It Is Important ?
- Prevents unnecessary prolongation of suffering, especially in cases with no hope of recovery.
- Reduces emotional burden on families, who otherwise face difficult decisions amid conflict, guilt, and uncertainty.
- Ensures doctors respect patient preferences, rather than defaulting to aggressive life-prolonging treatments.
- Studies show it does not affect survival, but reduces unnecessary interventions and healthcare costs.
Current Reality In India
- Most end-of-life decisions are family-driven or doctor-driven, often leading to continued ICU care even in terminal cases.
- Lack of awareness leads to patients spending final days on life support, disconnected from family, with poor quality of life.
- Palliative care access remains limited, despite guidelines by Indian Association of Palliative Care (IAPC) and Indian Society of Critical Care Medicine (ISCCM).
Ethical And Social Issues
- Reflects tension between sanctity of life vs quality of life in medical ethics.
- Challenges patriarchal and family-centric decision-making, shifting focus to individual autonomy.
- Cultural reluctance to discuss death leads to lack of preparedness and planning.
- Risk of misuse or misunderstanding if clear guidelines and safeguards are not followed.
Key Judicial Developments
- Common Cause (2018): Legalised passive euthanasia and recognised living wills.
- Recent SC rulings (e.g., Harish Rana case 2026) clarified that withdrawal of artificial feeding/medical support can be allowed under medical supervision.
- Simplified procedure: removed requirement of judicial magistrate approval, making implementation easier.
Practical Aspects
- Living will can specify preferences such as:
- No ventilator support
- No artificial feeding
- No CPR
- Preference for palliative/comfort care
- It is flexible and revisable, allowing individuals to update preferences over time.
- Requires prior discussion with family members and treating doctors to avoid future disputes.
Challenges
- Low awareness and social taboo around death planning.
- Limited integration into hospital protocols and medical practice.
- Absence of strong palliative care infrastructure, especially in rural India.
- Fear among doctors of legal liability and ethical dilemmas.
Way Forward
- Increase public awareness campaigns on living wills and end-of-life planning.
- Integrate advance directives into digital health records (Ayushman Bharat Digital Mission).
- Strengthen palliative care services and include them in primary healthcare.
- Provide legal clarity and standardised templates for easy adoption.
- Train healthcare professionals in end-of-life communication and ethical decision-making.
Prelims Pointers
- Living will = Advance directive
- Recognised in 2018 SC judgment (Common Cause case)
- Applies only to terminal/irreversible conditions
- Requires 2 witnesses + notary/gazetted officer
- Linked to Article 21 (right to dignity)
UDAN Scheme Revamp – Regional Connectivity And Viability Concerns
Introduction
- The government has revamped the UDAN (Ude Desh ka Aam Nagrik) scheme with an outlay of ₹28,840 crore, marking a ~6-fold increase from the earlier ₹4,500 crore allocation (2017).
- The reform aims to address low route viability and high discontinuation rates, shifting focus from infrastructure creation to sustained operational support.
Relevance
GS II (Governance)
- Public policy design and subsidy frameworks
- Role of government in regional development
- Centre–state coordination in infrastructure
GS III (Economy / Infrastructure)
- Aviation sector development
- Viability Gap Funding (VGF)
- Infrastructure financing and regional growth
- Tourism and logistics connectivity
Practice Question
- Critically evaluate the performance of UDAN scheme and recent reforms.(250 Words)
Key Changes In UDAN Revamp
- Subsidy period extended from 3 years to 5 years for regional routes to improve long-term sustainability.
- Funding mechanism shifted from RCS levy (airfare-based) to direct budgetary support (exchequer-funded), reducing burden on passengers.
- ₹10,043 crore allocated specifically for Viability Gap Funding (VGF) to airlines over 10 years.
Performance Of Earlier UDAN Scheme
- Out of 663 routes launched (since 2017), 327 routes discontinued (~49%), indicating poor sustainability.
- Only 7–10% of routes remained viable after subsidy withdrawal (CAG findings).
- Of 95 revived airports, 15 became non-operational, highlighting underutilisation of infrastructure.
Infrastructure And Expansion Plans
- 100 airports to be redeveloped from unused airstrips with ₹12,159 crore outlay over 8 years.
- Support for operations and maintenance (O&M):
- ₹3.06 crore per airport
- ₹90 lakh per heliport/water aerodrome
- Total ₹2,577 crore for ~441 aerodromes
- Development of 200 helipads at ₹15 crore each (total ₹3,661 crore) to improve last-mile connectivity in remote areas.
Operational Mechanism
- Airlines bid for routes under UDAN; selected airlines receive VGF subsidy.
- In return, airlines must cap fares at ₹2,500 per hour of flight for 50% of seats, ensuring affordability.
Key Issues Highlighted
- Commercial unviability of Tier-2 and Tier-3 routes due to low passenger demand and high operational costs.
- Over-reliance on short-term subsidies (earlier 3 years) failed to create self-sustaining routes.
- Infrastructure created without adequate traffic demand assessment led to idle airports.
Economic Implications
- Higher subsidy burden shifts cost to government finances, increasing fiscal expenditure.
- However, improved connectivity can boost regional economies, tourism, trade, and employment generation.
- Reduces regional imbalance in aviation access, aligning with inclusive growth objectives.
Governance And Policy Shift
- Transition from infrastructure-centric approach → viability-centric approach.
- Recognition that regional aviation requires long-term state support, not short-term market correction.
- Direct exchequer funding improves transparency and predictability compared to indirect levy mechanism.
Strategic Importance
- Enhances connectivity to remote, hilly, and underserved regions, improving national integration.
- Supports multi-modal connectivity vision under PM Gati Shakti.
- Boosts defence and emergency access in border and strategic areas via helipads and small airports.
Challenges
- Risk of continued dependency on subsidies, without achieving long-term route viability.
- Potential inefficiencies in route selection and demand forecasting.
- Limited airline participation due to thin profit margins in regional aviation.
- High operational costs (fuel, maintenance) may still deter sustainability despite extended subsidies.
Way Forward
- Improve route selection using data-driven demand forecasting to ensure viability.
- Encourage smaller aircraft and regional carriers suited for low-demand routes.
- Integrate UDAN with tourism circuits, cargo logistics, and regional economic planning.
- Strengthen state government participation and incentives for last-mile connectivity.
- Gradually move towards hybrid funding models combining public support and private viability.
Prelims Pointers
- UDAN launched: 2017
- Fare cap: ₹2,500 per hour (50% seats)
- Revamp outlay: ₹28,840 crore
- Routes launched: 663; ~327 discontinued
- Subsidy: Viability Gap Funding (VGF)
Punjab–Rajasthan Water Dispute – ₹1.44 Lakh Crore Claim
Introduction
- Punjab CM has demanded ₹1.44 lakh crore from Rajasthan for use of ~18,000 cusecs water since 1960, reviving a long-standing dispute over Ravi-Beas river waters.
- Issue combines colonial-era agreements, post-Independence allocations, and present water scarcity, making it a complex inter-state dispute.
Relevance
GS I (Geography)
- River systems (Ravi–Beas) and water distribution
- Water scarcity and regional imbalances
GS II (Polity / Governance)
- Inter-state water disputes (Article 131)
- Federalism and river water sharing
- Role of tribunals and Supreme Court
Practice Question
- Analyse the legal and constitutional dimensions of inter-state water disputes in India.(250 Words)
Historical Background
- 1920s Agreement (Bikaner–Punjab):
- Maharaja Ganga Singh secured water from Sutlej (Gang Canal).
- Rajasthan (Bikaner) paid royalty/usage charges linked to irrigated land.
- Payments continued till ~1960, after which the system was discontinued.
Post-Independence Shift
- Indus Waters Treaty (1960):
- India got full control over Ravi, Beas, Sutlej (Eastern rivers).
- Water reallocation became an internal matter, not commercial.
- Development of Harike Barrage + Rajasthan Canal (Indira Gandhi Canal) enabled large-scale diversion to Rajasthan.
- Royalty-based payment system ended; water treated as inter-state allocation.
1981 Water Sharing Agreement
- Tripartite agreement (Punjab, Haryana, Rajasthan) fixed total availability at 17.17 MAF.
- Allocation:
- Rajasthan: 8.6 MAF (largest share)
- Punjab & Haryana shared remaining
- Rajasthan’s entitlement formalised despite being a non-riparian state.
Origin, Course And Features
- Beas River originates from Beas Kund near Rohtang Pass (Himachal Pradesh, ~4,000 m) and flows through Himachal Pradesh and Punjab, joining Sutlej at Harike Barrage.
- Ravi River originates in Chamba (Himachal Pradesh) near Rohtang region, flows through Punjab, and enters Pakistan to join Chenab.
- Both are part of the Indus River System and classified as Eastern Rivers under Indus Waters Treaty (1960), giving India full usage rights.
Legal Developments
- Punjab Termination of Agreements Act (2004) attempted to scrap water-sharing agreements.
- However, it protected “existing utilisation”, so Rajasthan’s supply continued.
- Supreme Court (2016) ruled that a state cannot unilaterally terminate inter-state agreements, restoring legal validity of earlier arrangements.
Punjab’s Current Argument
- Based on riparian principle:
- States through which rivers flow should have primary rights over water.
- Rajasthan is a non-riparian state (not in Ravi-Beas basin), yet has largest share.
- Punjab argues that historical diversion has imposed economic and ecological cost, now quantified as ₹1.44 lakh crore.
Changing Ground Realities
- Water availability assumptions (“surplus waters”) used in 1981 have weakened due to:
- Climate variability
- Increased demand
- Over-extraction
- Punjab groundwater extraction: 156.36% of annual recharge (highest in India) vs national average ~60.63%.
- Canal irrigation in Punjab increased from ~26.5% (2022) to ~78% (2025), indicating rising internal demand.
Rajasthan’s Position
- Relies on Indira Gandhi Canal system for irrigation in Thar desert region.
- Water supports agriculture, livelihoods, and desert development, making reallocation politically and economically sensitive.
Key Issues
- Conflict between riparian rights vs national redistribution for regional equity.
- Historical allocations remain fixed despite changing hydrological realities.
- Lack of updated basin-level water assessment and adaptive allocation mechanism.
- Political dimension: water disputes linked to federal tensions and regional identity.
Why Issue Has Resurfaced Now ?
- Severe groundwater depletion in Punjab and sustainability concerns.
- Increasing focus on water security and river basin management at national level.
- Quantifying claim (₹1.44 lakh crore) converts political grievance into negotiation leverage.
Possible Legal And Institutional Routes
- Punjab may approach Supreme Court (Article 131 – inter-state disputes).
- Issue can be revisited through Ravi-Beas Tribunal (pending for decades).
- Any resolution requires Centre-mediated negotiation among states.
Challenges
- Revisiting allocations may trigger chain reaction of inter-state disputes across India.
- Balancing equity (desert irrigation) vs rights (riparian states) is politically sensitive.
- Lack of consensus on actual water availability (MAF estimates outdated).
Way Forward
- Conduct fresh basin-level hydrological assessment based on current data.
- Move towards dynamic allocation mechanisms, not fixed historical quotas.
- Strengthen river basin authorities for integrated water management.
- Promote water-use efficiency (micro-irrigation, crop diversification) in both states.
- Encourage cooperative federalism through negotiated settlements rather than litigation.
Prelims Pointers
- Indus Waters Treaty (1960): Eastern rivers to India
- Ravi-Beas allocation (1981): Total 17.17 MAF
- Rajasthan share: 8.6 MAF
- Punjab groundwater extraction: 156.36%
- Article 131: SC jurisdiction in inter-state disputes
WTO Dispute Settlement Crisis And India’s Position
Introduction
- India has called for restoring a fully functional WTO dispute settlement system, highlighting paralysis since 2019 due to US blocking Appellate Body appointments.
- The issue was raised at the 14th WTO Ministerial Conference (MC14), Cameroon (2026), reflecting a deep crisis in global trade governance.
Relevance
GS II (IR)
- WTO crisis and multilateralism
- India as voice of Global South
- Trade diplomacy and negotiations
GS III (Economy)
- Global trade governance
- Dispute settlement mechanism
- Digital trade and e-commerce issues
- Impact on developing economies
Practice Question
- Discuss the implications of WTO dispute settlement crisis on global trade governance.(250 Words)
Background Of The Crisis
- WTO’s dispute settlement system (DSS) was a two-tier mechanism:
- Panel stage
- Appellate Body (final authority)
- Since December 2019, the Appellate Body is non-functional due to insufficient judges (<3 required).
- Trigger: US opposition, citing concerns over judicial overreach and delays.
India’s Core Position
- Calls for automatic and binding dispute settlement restoration, ensuring predictability and rule-based trade order.
- Opposes “dysfunctional system” depriving members of effective redressal.
- Advocates reforms that preserve core WTO principles:
- Non-discrimination
- Consensus-based decision-making
- Equity and inclusiveness
Key Reform Concerns
- Developed countries pushing for plurilateral agreements (outside consensus), risking fragmentation of WTO.
- India supports multilateral, consensus-driven approach, resisting dilution of developing country interests.
- Debate over moratorium on customs duties on e-commerce:
- In place since 1998
- Renewed every 2 years
India’s Stand On E-Commerce Moratorium
- India (with South Africa, Indonesia) seeks reconsideration/ending of moratorium.
- Argument:
- Loss of tariff revenue
- Constraint on policy space for digital industrialisation
- UNCTAD estimate:
- Developing countries may lose ~$10 billion annually in tariff revenue.
- By 2025, digital services projected to form ~56% of global services exports, amplifying revenue loss concerns.
Economic Implications
- Weak dispute system reduces trust in global trade rules, increasing unilateralism.
- Benefits powerful economies, while developing countries lose enforcement capability.
- Digital trade rules without tariffs may deepen digital divide and limit domestic industry growth.
Strategic Dimensions
- Crisis reflects shift from multilateralism → power-based trade order.
- India positioning itself as voice of Global South, advocating fair rules.
- Aligns with broader push for reformed multilateral institutions (WTO, IMF, World Bank).
Challenges
- US resistance remains a major obstacle to restoring Appellate Body.
- Divergence between developed vs developing countries on digital trade, subsidies, and transparency.
- Rise of regional trade agreements (RTAs) reducing WTO centrality.
Way Forward
- Restore Appellate Body with reformed procedures addressing US concerns (timelines, mandate clarity).
- Strengthen consensus-based multilateralism, avoiding fragmentation via plurilaterals.
- Revisit e-commerce moratorium with balanced approach ensuring revenue + innovation.
- Enhance capacity of developing countries in dispute settlement and digital trade negotiations.
Prelims Pointers
- WTO Appellate Body non-functional since 2019
- MC14 held in Cameroon (2026)
- E-commerce moratorium: since 1998
- DSS requires minimum 3 judges
- India + South Africa oppose continuation of moratorium
