Current Affairs 28 June 2025

Content :

1. India rejects ‘supplemental award’ on Kishenganga, Ratle hydropower projects
2. Tax, securities norm changes make buybacks less attractive
3. Modern tech to keep an eye on NH traffic
4. ALL ABOUT THE PROPOSED GLOBAL POTATO RESEARCH CENTRE IN AGRA
5. How India ‘added’ more than 3,500 km to its coastline, 7 new islands
6. Current account in $13.5-bn surplus

India rejects ‘supplemental award’ on Kishenganga, Ratle hydropower projects

India’s Position

• Total Rejection: India “categorically rejected” the Court of Arbitration’s supplemental award.
• Legal Standpoint: Maintains that it never recognized the Court’s legal standing—calls it “illegal” and “per se void”.
• Violation of Treaty: Considers the constitution of the arbitral body itself a “serious breach” of the Indus Waters Treaty (IWT), 1960.
• Treaty in Abeyance: Post-April 22 Pahalgam terror attack, India has placed the Indus Waters Treaty in abeyance, citing Pakistan’s continued support for cross-border terrorism.

Relevance : GS 2(International Relations ) , GS 3(Infrastructure)

Project Dispute Background

• Projects in Question: Kishenganga and Ratle hydropower projects located in Jammu & Kashmir.
• Pakistan’s Objections: Raised concerns over design features—initiated arbitration in 2016 after failed bilateral talks.
• Unilateral Move: India views Pakistan’s approach to the World Bank for arbitration as a unilateral violation of dispute resolution procedures under the IWT.

On the Court of Arbitration

• “So-Called” Tribunal: India deems the Court of Arbitration as non-existent in law and lacking jurisdiction.
• Supplemental Award: Recent award dismissed by India as a “charade” orchestrated at Pakistan’s behest.

Strategic Implications

• Sovereign Action: India asserts its sovereign right to suspend treaty obligations in light of terrorism.
• No Binding Obligation: States that while the treaty is suspended, it is not bound to fulfill its terms, nor can any arbitral forum assess its actions.

Broader Context

• Geopolitical Signal: Strong assertion of sovereignty linking hydro-diplomacy with national security.
• Evolving India-Pakistan Water Dynamics: Marks a shift in India’s traditionally restrained approach to the IWT amid escalating terror concerns.

Value addition :

1. Rare Invocation of Treaty Suspension: India placing the Indus Waters Treaty “in abeyance” is a rare case of linking transboundary water cooperation with cross-border terrorism.
2. Violation of Article IX of IWT: India argues that Pakistan unilaterally approached the Court of Arbitration, bypassing prescribed stages (Neutral Expert first), thus breaching the treaty.
3. Sovereign Right Cited Under VCLT: India’s action can be seen under Article 60 of the Vienna Convention on the Law of Treaties, which allows suspension in case of material breach.
4. Strategic Shift from Restraint: India’s move marks a shift from “treaty obligation compliance” to “conditionality-based engagement”, elevating water sharing to national security domain.
5. Energy Security in J&K: Kishenganga (330 MW) and Ratle (850 MW) are vital for regional power supply, reducing dependence and boosting infrastructure in a sensitive border region.
6. World Bank’s Dual Decision Controversy: The World Bank controversially allowed both Neutral Expert and Court of Arbitration in parallel, weakening its neutral facilitator role.
7. Lawfare by Pakistan: Pakistan’s move reflects a strategy of lawfare—using international legal institutions to constrain India’s sovereign development rights.
8. No Jurisdiction Without Consent: India asserts that no arbitral tribunal has jurisdiction without mutual consent, a key principle in international arbitration law.
9. Transboundary Water Precedent: Acceptance of the Court’s award could undermine India’s rights over western rivers and create restrictive precedents for future hydro projects.
10. China–Pakistan–Water Axis: Emerging alignment over water and infrastructure (e.g., CPEC, Chinese dams on Indus tributaries) adds a geostrategic layer to the water dispute.

Tax, securities norm changes make buybacks less attractive

Trend Overview

• Steep Decline: Only 4 share buybacks worth ₹186 crore occurred till June 26, 2025—a drastic drop from 38 buybacks worth ₹8,000+ crore in 2024.
• Pre-emptive Action: Many companies may have accelerated buybacks before September 2024, anticipating upcoming tax changes.

Relevance : GS 3(Indian Economy)

Taxation Changes

• New Tax Regime (Oct 1, 2024): Tax burden shifted from companies (20% buyback tax earlier) to shareholders, aligning it with dividend income taxation.
• Impact on Shareholders: Shareholders now pay capital gains tax on buyback proceeds, reducing the post-tax attractiveness of buybacks.
• Buybacks vs. Dividends: The new rule removes the tax advantage of buybacks over dividends, changing corporate payout strategies.

Regulatory Changes by SEBI

• Phasing Out of Open Market Buybacks: SEBI has eliminated the open market buyback route, forcing companies to use only the tender offer method.
• Reduced Flexibility: Open market buybacks allowed greater flexibility and discretion, now removed under SEBI’s stricter framework.
• Merchant Banker Impact: Investment banks may be less active or adapting due to reduced business from buyback facilitation.

Market Conditions

• Bear Market Unusual Behavior: Typically, buybacks increase in bearish markets as companies support stock prices—not seen this time, due to tax and regulatory deterrents.

Implications

• Shift in Capital Allocation: Firms may now prefer dividends, acquisitions, or capex over buybacks.
• Policy Trade-off: The government’s attempt to curb tax arbitrage may have inadvertently reduced capital return options for investors.
• Corporate Governance Angle: Reduced buybacks could dampen investor confidence and affect perceived shareholder-friendliness of firms.

Additional Info:

What is a Share Buyback?

A buyback is when a company repurchases its own shares from the market, reducing the number of shares in circulation. This often boosts earnings per share (EPS) and signals that the company believes its stock is undervalued.

Why Do Companies Do Buybacks?

Buybacks are used to return surplus cash to shareholders, improve valuation metrics, support share prices during market downturns, and sometimes deter hostile takeovers.

What is a Bear Market?

A bear market refers to a market condition where prices of securities fall by 20% or more from recent highs. It is often marked by pessimism, low investor confidence, and reduced buying interest.

Buybacks vs. Dividends

Both are ways of returning money to shareholders. While dividends are regular cash payouts, buybacks reduce share count, potentially increasing share value. Buybacks were often preferred due to lower tax incidence—a benefit now removed.

Tender Offer vs. Open Market Buyback

• Open Market Buyback: Company buys shares from the stock exchange gradually and anonymously.
• Tender Offer: Company invites shareholders to sell a specific number of shares at a fixed price.
  SEBI now allows only tender offers, reducing flexibility for companies.

Modern tech to keep an eye on NH traffic

Core Analysis of the ATMS Rollout

• Nationwide Implementation: NHAI will implement Advanced Traffic Management Systems (ATMS) across 30,000 km of 4-lane+ national highways over the next 2–3 years.
• Real-time Enforcement: The new ATMS will allow for real-time tracking of traffic violations and instant e-challan generation, improving accountability and deterrence.
• Pilot Project: The Dwarka Expressway (56.46 km) is the first highway to be equipped under the revised ATMS policy (Oct 2023), serving as a model corridor.
• Relevance : GS 3(Infrastructure ,Transport)

Enhanced Enforcement Features

• 14 Violation Categories: Includes common violations like helmetless riding, triple riding, seatbelt non-use, wrong-way driving, and animal or pedestrian presence.
• Police Integration: Unlike earlier systems where NHAI was the end user, now traffic enforcement agencies are directly integrated to act on violations.

Additional Information & Value Additions

• What is ATMS?
  An Advanced Traffic Management System uses sensors, Automatic Number Plate Recognition(ANPR) cameras, AI, and command centres to monitor traffic flow, detect violations, and manage incidents in real time.

• Why Is This Needed?
  India has the highest number of road deaths globally. Automated enforcement helps reduce human discretion, bribery, and enforcement gaps on highways.

• Policy Shift Since 2023:
  The revised October 2023 ATMS policy shifts focus from passive surveillance to proactive enforcement, with integrated software and hardware architecture.

• Global Parallels:
  Countries like the UK, UAE, and Singapore already use AI-driven highway enforcement systems. India’s move aligns with global best practices for smart road infrastructure.

• Traffic Safety Goals:
  Contributes to India’s target to reduce road fatalities by 50% by 2030, aligning with the UN Decade of Action for Road Safety.

• Tech-Infra Integration:
  Project reflects increasing use of AI, IoT, and edge computing in governance, part of the larger Digital India and Smart Mobility vision.

Key Data for ATMS & Road Safety

1. Road Fatalities: India recorded 1.68 lakh road deaths in 2022—highest globally (MoRTH).
2. Highway Share: National highways form 2% of total roads but carry 40% of traffic.
3. Blackspots: Hundreds of high-fatality zones identified on highways lack enforcement.
4. Pilot Impact: ATMS pilot projects showed a 15–25% drop in traffic violations (NHAI data).
5. Digital Expansion Goal: NHAI targets 30,000 km of highways under ATMS by 2027.

ALL ABOUT THE PROPOSED GLOBAL POTATO RESEARCH CENTRE IN AGRA

About the Proposal

• The Union Cabinet approved the CIP–South Asia Regional Centre (CSARC) at Singna, Agra—a regional arm of the Peru-based International Potato Center (CIP).
• Total cost: ₹171 crore (India: ₹115 crore; CIP: remainder).
• Land: 10 hectares provided by Uttar Pradesh government.

Relevance : GS 3(Agriculture ,Infrastructure)

About CIP (International Potato Center)

• Founded: 1971; HQ: Lima, Peru.
• Focus: Research on potato, sweet potato, and Andean root crops.
• Historical Link: Potato is native to the Peruvian-Bolivian Andes and introduced to India in the 17th century.

Key Objectives of CSARC

• Boost food and nutrition security and farmers’ income.
• Develop climate-resilient, disease-free, processing-friendly potato & sweet potato varieties.
• Enhance post-harvest management and value addition.
• Support domestic seed production and reduce dependence on seed imports.

Significance for India

• India is the world’s 2nd largest potato producer (2020: ~51.3 million tonnes); China is 1st (~78.2 million tonnes).
• Average potato yield in India: 25 t/ha vs. potential 50+ t/ha.
• Sweet potato yield: 11.5 t/ha vs. potential 30 t/ha.
• Access to CIP’s germplasm bank will help develop better, high-yielding seeds.

Broader Impacts

• Will aid local food processing industries and job creation.
• Improves scope for exports of seed and processed products.
• Strengthens ICAR–CIP collaboration (ongoing since 1975).

How India ‘added’ more than 3,500 km to its coastline, 7 new islands

Key Findings from the New Measurement

• India’s coastline increased by ~48%: From 7,516 km (1970s data) to 11,098km (new measurement), due to higher-resolution data and modern GIS tools.
• No new territory added: The increase reflects more precise mapping, not geographic change or land acquisition.
• Resolution impact: Measurement scale improved from 1:5,000,000 to 1:250,000, enabling better capture of natural curves, bends, and offshore islands.
• Technology shift: Manual calculations replaced by modern Geographic Information Systems (GIS) for greater accuracy.

Relevance : GS 1(Geography ),GS 3(Internal Security)

Changes in Island Count

• Updated island count: Now 1,389 islands (1,298 offshore + 91 inshore) after reconciling data and resolving classification ambiguities.
• Earlier discrepancies: In 2016, estimates varied (e.g., Surveyor General: 1,382; other agencies: 1,334) due to tide-based ambiguities and varied definitions.

Understanding the ‘Coastline Paradox’

• Coastline paradox: The more detailed the measurement (finer the scale), the longer the coastline appears due to capturing more irregularities.
• A coastline has no fixed length—like rivers or mountain ranges, it changes depending on measurement resolution.

Implications of the Change

• Administrative: Could affect CRZ (Coastal Regulation Zone) boundaries, land use classification, and planning zones.
• Developmental: Better mapping aids coastal infrastructure, tourism planning, and port development.
• Security: Accurate data enhances maritime surveillance, naval operations, and disaster risk planning.
• Climate resilience: Helps track erosion, plan coastal defenses, and improve climate vulnerability assessments.

Global Context & Policy Measures

• Other nations also routinely re-measure coastlines to update maps and respond to natural or manmade changes (e.g., coastal erosion, land reclamation).
• India now mandates a coastline reassessment every 10 years for dynamic updating of data.

Current account in $13.5-bn surplus

Headline Trends

• Current Account Surplus (Q4 FY25):
  Surplus of $13.5 billion (1.3% of GDP), compared to a $4.6 billion surplus (0.5% of GDP) in Q4 FY24.

• Contrast with Previous Quarter:
  Q3 FY25 had a deficit of $11.3 billion, showing a strong quarterly reversal.

Relevance : GS 3(Indian Economy – Current Account )

Annual Trends (FY25 vs. FY24)

• Full-Year CAD FY25: $23.3 billion (0.6% of GDP), down from $26 billion (0.7% of GDP) in FY24.
• Reason for Improvement:
  Largely driven by higher net invisible receipts (services + remittances + investment income).

Trade & Services Performance

• Merchandise Trade Deficit (Q4 FY25):
  $59.5 billion, higher than Q4 FY24 ($52 bn) but lower than Q3 FY25 ($79.3 bn).

• Services Exports Surge:
  Net services receipts jumped to $53.3 billion from $42.7 billion in Q4 FY24, led by business and computer services.

Financial Account Movements

• FDI Inflows (Q4 FY25):
  $0.4 billion, down from $2.3 billion in Q4 FY24.

• Full-Year FDI (FY25):
  Only $1 billion, sharply lower than $10.2 billion in FY24, indicating investment headwinds.

Explanatory Additions

• What is Current Account?
  It tracks exports and imports of goods, services, income, and transfers. A surplus implies more inflows than outflows, while a deficit is the reverse.

• Why Does It Matter?
  A surplus indicates strong external performance, reduces reliance on foreign capital, and can support currency stability.

Insights & Implications

• Surplus Due to Invisibles, Not Goods Trade:
  Despite a large trade deficit, the services and remittances cushion was strong enough to generate a net surplus.

• Seasonal Spike, Not a Structural Surplus:
  Analysts term this surplus seasonal, aided by temporary factors like lower primary income outflows.

• FDI Weakness is a Concern:
  A sharp fall in FDI inflows could impact medium-term growth and rupee stability.