August 16th Current Affairs
Table of Contents
Operation Sindoor
July 21st Current Affairs Home / Operation Sindoor Why in News? Parliament’s Monsoon Session, starting July 21, 2025, is expected to feature
Alaska Earthquakes
July 21st Current Affairs Home / Alaska Earthquakes Why in News? On July 21, 2025, Alaska Peninsula was struck by
August 2, 2027 Solar Eclipse
July 21st Current Affairs Home / August 2, 2027 Solar Eclipse Why in News? A total solar eclipse is set
India’s milestone in clean energy transition
July 21st Current Affairs Home / India’s milestone in clean energy transition Why in News? India achieved a milestone by
‘Baby Grok’, child-friendly AI app
July 21st Current Affairs Home / ‘Baby Grok’, Child-friendly AI app Why in News? Elon Musk’s AI company xAI has announced
Impeachment proceedings against Justice Yashwant Verma
July 22nd Current Affairs Home / Impeachment proceedings against Justice Yashwant Verma Context On July 22, 2025, impeachment proceedings against
Jane Street case in India.
Context
The Securities and Exchange Board of India (SEBI), the country’s market regulator, has banned the US-based quantitative trading giant Jane Street, accusing it of a “sinister scheme” to manipulate the Indian stock market.
Background
The action comes amidst a surge in retail investor participation in India’s highly volatile derivatives market. This case highlights the growing challenges regulators face in monitoring complex, high-speed algorithmic trading strategies used by sophisticated global firms.
Government Schemes
Investor Protection and Education Fund (IPEF): This SEBI-administered fund aims to educate investors and promote awareness about the securities market. The Jane Street episode underscores the critical need for such initiatives, especially concerning the risks of derivatives trading.
Rules and Laws
- SEBI Act, 1992: This is the parent legislation that establishes SEBI and gives it the power to protect the interests of investors and regulate the securities market. SEBI’s action against Jane Street is derived from powers vested under this Act.
- SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003: This is the specific regulation under which Jane Street’s alleged activities fall. It explicitly prohibits any act or practice that creates a false or misleading appearance of trading, including practices like “marking the close.”
Economist
Expert Deepak Shenoy argues that Jane Street’s actions were not legitimate “index arbitrage” but a clear case of manipulation. He points out the asymmetry in the positions taken (e.g., buying ‘X’ in one market to profit from ‘7X’ in another) as evidence of a manipulative scheme, not risk-neutral arbitrage.
Significance
- Regulatory Test: This case is a crucial test of SEBI’s ability to police and penalize large, technologically advanced global firms.
- Investor Trust: It directly impacts the trust of millions of small investors in the fairness and integrity of the Indian market.
- Global Precedent: The outcome could set a precedent for how emerging market regulators handle complex cross-market manipulation by high-frequency trading (HFT) firms.
Definition of Technical Terms
- Quantitative Trading: A trading strategy that uses mathematical models, statistical analysis, and automated algorithms to make high-speed trading decisions.
- Derivatives: Financial contracts whose value is derived from an underlying asset, such as a stock or index. Futures and Options are common types.
- Index Arbitrage: A legitimate strategy that exploits the price difference between stocks in a cash market and the corresponding futures contract in the derivatives market. The goal is to lock in a small, risk-free profit.
- Marking the Close: An illegal manipulative practice where a trader attempts to influence the closing price of a security by buying or selling large volumes of it at or near the market’s close.
Share Market
- Cash vs. Derivatives Interplay: The alleged scheme hinges on the relationship between the cash market (where actual bank shares are traded) and the derivatives market (where contracts on the Bank Nifty index are traded). Influencing the price of the underlying shares in the cash market directly impacts the value of the index and, therefore, the derivative contracts based on it.
- Expiry Day Dynamics: The manipulation was allegedly timed for the expiry day of the derivatives contracts. On this day, the settlement price of the contracts is determined by the closing price of the underlying index, making last-minute price movements highly profitable for those positioned correctly.
Impacts on Finances
- Retail Investors: The primary victims are retail investors who, lured by the artificially inflated prices during the day, bought options or shares at unfavorable levels, leading to significant losses. An average loss of ₹110,069 ($1,283) per retail derivatives trader last year.
- Jane Street: The firm reportedly made $4.3 billion from India in two years. It now faces a potential fine of up to three times its illicit gains and has already placed over $560 million in an escrow account.
- Market Integrity: Such incidents can erode overall market confidence, potentially deterring both domestic and foreign investment.
Challenges
- Technological Gap: Regulators often struggle to keep pace with the speed and complexity of the algorithms used by quant firms, making real-time detection of manipulation difficult.
- Proving Intent: A key legal challenge is to prove that the trading pattern was intentionally manipulative, rather than just an aggressive but legitimate trading strategy.
- Cross-Border Regulation: Enforcing regulations on a global entity operating through different subsidiaries can present jurisdictional complexities.
Way Forward
- Enhanced Surveillance: SEBI must invest in advanced surveillance systems using AI and Machine Learning to detect anomalous trading patterns in real-time.
- Stricter HFT Norms: Introducing stricter regulations for HFT and algorithmic trading, such as minimum order resting times or order-to-trade ratios, could curb manipulative strategies.
- Investor Education: There is a pressing need for comprehensive education campaigns to inform retail investors about the extreme risks associated with derivatives trading.
- Deterrent Penalties: Imposing swift and substantial penalties is crucial to deter other potential wrongdoers and reinforce the integrity of the market.
Prelims MCQ
Q. Consider the following statements regarding trading practices in the securities market: 1. "Marking the close" is a legally recognized form of index arbitrage used to profit from price differentials between cash and derivatives markets. 2. The regulatory actions against Jane Street by SEBI are based solely on its activities within the cash market, independent of its positions in the derivatives market. Which of the statements given above is/are correct?
Mains Question
Q. How does the Jane Street case highlight the evolving challenges for regulators in policing sophisticated cross-market manipulation by algorithmic trading firms? (150 words)
The government's focus on demographic challenges.
Context
The Indian Prime Minister has announced a “High-Power Demography Mission” to address demographic change, reviving a similar, unfulfilled proposal from the 2024 Interim Budget.
Background
This move comes amid a significant data vacuum, as the last national Census was conducted in 2011. Security agencies have persistently raised alarms about demographic shifts in border districts as a national security issue.
Government Schemes and Policies
- National Population Policy, 2000: Aims to achieve a stable population by 2045, with a focus on voluntary and informed choice in contraception and reproductive healthcare, linking it to broader socio-economic development.
- Mission Parivar Vikas: Specifically targets 146 high-fertility districts in seven states to accelerate access to family planning services.
- Border Area Development Programme (BADP): Focuses on the comprehensive development of border regions. The security agencies’ suggestions to engage the border population align with the community-centric goals of this programme.
Constitutional Provisions and Acts
- Concurrent List (Seventh Schedule): Entry 20A, “Population control and family planning,” allows both the Union and State governments to legislate on this matter.
- Article 29: Protects the interests of minorities, including their distinct culture and language. Policies arising from demographic concerns could be scrutinized under this article if they are seen as targeting specific communities.
- Citizenship Act, 1955: This law and its subsequent amendments (especially in 2019) are central to any discussion of demography involving migration, particularly in border states like Assam.
- Supreme Court Verdicts: Sarbananda Sonowal vs. Union of India (which struck down the Illegal Migrants (Determination by Tribunals) Act, 1983) it deeply engaged with issues of migration and its impact on the demography and rights of residents in Assam.
Anthropologist
- Demographic shifts are complex phenomena driven by multiple factors, including economic opportunities (pull factors), environmental distress, political persecution (push factors), and historical social networks.
- Need ethnographic, evidence-based studies to understand migration patterns rather than relying solely on security-centric reports, which may overlook nuanced local realities.
- We have to study the process of acculturation and identity formation in border areas, highlighting how communities adapt and change over time, a process that cannot be reduced to mere statistics on religious composition.
Significance
- Securitization of Demography: The framing of population change as a national security threat marks a significant shift from a development-and-health-based approach to a security-oriented one.
- Policy Implications: The Mission could lead to policies focused on surveillance and control in border areas..
Definition of Technical Terms
- Total Fertility Rate (TFR): The average number of children a woman would have in her lifetime if she were to experience the current age-specific fertility rates through her childbearing years.
- Replacement Level Fertility: The TFR at which a population exactly replaces itself from one generation to the next, without migration. This rate is roughly 2.1 children per woman.
- Demographic Change: Refers to the long-term shifts in the structure of a population, such as changes in age distribution, birth and death rates, migration patterns, and ethnic or religious composition.
Societal implications
- Moral Panic: This demographic change can create a moral panic as an existential threat.
- Socio-economic Determinants: fertility rates are more strongly correlated with factors like female literacy, economic development, and access to healthcare.
Challenges
- Data Deficit: The most significant challenge is the absence of credible, nationwide Census data since 2011, making any claim about demographic trends speculative and hard to verify.
- Distinguishing Migration Types: It may be difficult to differentiate between internal migration (citizens moving within the country), natural population growth, and undocumented cross-border migration.
- Balancing Security and Rights: The state faces the challenge of managing national security concerns without infringing upon the fundamental rights of its citizens.
Way Forward
- Conduct the Census Immediately: The highest priority must be to conduct the decennial Census to provide an accurate, empirical foundation for all policy discussions.
- Evidence-Based Policymaking: The proposed Mission’s work should be transparent, data-driven, and based on inputs from sociologists, economists, and demographers.
- Focus on Development: Address the root causes of population pressure and migration by investing in education, healthcare, and economic opportunities in border areas and high-fertility regions.
Prelims MCQ
Consider the following statements: 1. According to recent official data, India's national Total Fertility Rate (TFR) is significantly above the replacement level, indicating a nationwide trend of rapid population growth. 2. The primary focus of security agencies' reports on demographic changes has been on the challenges posed by rapid urbanization and internal migration to megacities. Which of the statements given above is/are correct?
Mains Question
Q. Is demographic change a national security issue? discuss (150 words)
Mission Sudarshan Chakra
Introduction
Prime Minister’s announcement of Mission Sudarshan Chakra marks a pivotal moment in India’s quest for strategic autonomy. This ambitious 10-year plan aims to create a homegrown, multi-layered air defence system by 2035. The mission isn’t just about defence; it’s a declaration of India’s intent to become a self-reliant technological powerhouse capable of protecting its skies and hitting back when necessary.
Context
PM Modi has announced Mission Sudarshan Chakra, an ambitious 10-year national mission to develop a comprehensive indigenous air defence system by 2035, aiming to protect both strategic and civilian infrastructure across the country.
Background
The announcement comes as India currently relies heavily on foreign systems like the Russian S-400 Triumf. This mission is a direct extension of the ‘Aatmanirbhar Bharat’ (Self-Reliant India) policy into the critical domain of high-tech defence.
Government Schemes and Policies
This mission is the flagship embodiment of the Aatmanirbhar Bharat and ‘Make in India’ initiatives within the defence sector. It will be guided by the Defence Acquisition Procedure (DAP) 2020, which prioritizes indigenous design, development, and manufacturing. The Defence Research and Development Organisation (DRDO) will be the nodal agency.
Constitutional Provisions
The mandate to protect the nation is derived from the Union List (Entry 1: Defence of India) of the Seventh Schedule. Article 53(2) vests the supreme command of the Defence Forces in the President. The mission also aligns with the fundamental duty under Article 51A to defend the country.
UN Resolutions
The mission is an exercise of the right to self-defence, a principle enshrined in Article 51 of the UN Charter. It also has to operate within the constraints of international arms control regimes like the Missile Technology Control Regime (MTCR), which governs the proliferation of high-end missile technology.
Defense Experts welcomed the move as a critical step toward strategic autonomy, reducing dependence on foreign suppliers who can be influenced by geopolitical pressures. However, they would likely express caution regarding the ambitious 10-year timeline, pointing to the immense technological complexity and the historical record of delays in major DRDO projects. They’d stress the need for a robust public-private partnership.
Significance
- Strategic Autonomy: The single biggest significance is breaking free from reliance on other nations for critical defence needs, ensuring India isn’t vulnerable to sanctions or supply chain disruptions during a conflict.
- Economic Boost: It will galvanize the domestic defence ecosystem, creating high-skilled jobs and fostering innovation with potential civilian spin-offs.
- National Pride: The mythological naming and grand vision are designed to foster a sense of national pride and rally public support for a long-term, expensive project.
Definition of Technical Terms
- Air Defence System: A network of radars, command-and-control centres, and interceptor missiles designed to detect, track, and destroy incoming aerial threats like aircraft, drones, cruise missiles, and ballistic missiles.
- S-400 Triumf: A highly advanced, long-range Russian surface-to-air missile system capable of engaging multiple aerial targets simultaneously.
- Integrated Air Command and Control System (IACCS): An automated system of the Indian Air Force that integrates various ground and airborne sensors to create a composite picture of the airspace for effective command and control.
Strategic
- Deterrence Posture: This isn’t just a shield; the PM’s mention of “hitting back strongly” suggests the system will have offensive or counter-attack capabilities, significantly strengthening India’s deterrence against adversaries.
- No First Use Policy: A robust and impenetrable shield strengthens India’s ‘No First Use’ nuclear policy by increasing the credibility of its second-strike capability.
- Two-Front Threat: The system is being developed to handle a potential two-front conflict scenario, providing a security umbrella against both China and Pakistan.
Impacts on Society
The primary impact will be an enhanced sense of security for the civilian population, as the shield is explicitly meant to cover non-military areas like hospitals and faith centres. It will also channel significant government funds into domestic R&D and manufacturing.
Challenges
- Technological Complexity: Developing advanced sensor technology (like long-range radars), powerful interceptors, and a foolproof command network is extraordinarily difficult and expensive.
- System Integration: Making different components—radars, launchers, missiles—developed by various labs and companies work together seamlessly is a massive engineering challenge.
- Project Management: Avoiding the time and cost overruns that have plagued past large-scale Indian defence projects will be crucial for meeting the 2035 deadline.
Way Forward
- Public-Private Partnership: Success hinges on moving beyond a purely government-led model and deeply integrating the innovation and agility of India’s private sector.
- Clear Roadmap: The government needs to establish a clear, well-defined roadmap with specific milestones, accountability, and ring-fenced funding.
- Targeted Collaboration: While the goal is indigenous development, collaborating with friendly nations for specific niche technologies could help bridge critical gaps and accelerate the project.
Prelims MCQ
Q. Consider the following statements regarding Mission Sudarshan Chakra:
1. The mission aims to develop an indigenous air defence system by 2030, with its protection limited exclusively to strategic military installations.
2. The stated objective of the mission is purely defensive, focusing only on neutralizing incoming threats without any counter-offensive capabilities.
3. India's current advanced air defence capabilities are heavily reliant on foreign systems, such as the Russian-made S-400 Triumf.
Which of the statements given above is/are correct?
Mains Question
Q. Discuss the strategic imperatives and key technological challenges faced by India in developing an indigenous, multi-layered air defense system, such as Mission Sudarshan Chakra. (250 words)
Failure to sign the global plastics treaty
Context
The UN Plastics Treaty talks in Geneva failed, with 183 nations deadlocked over core issues like production limits and financing. This outcome, after a 12-day session and previous failed talks, highlights deep global divisions.
Background
The negotiations are part of a three-year diplomatic effort to create a legally binding instrument to combat plastic pollution. Past attempts, including a summit in Busan, South Korea, have also ended without significant progress, largely due to a unanimous agreement rule.
Government Schemes and Policies
Many nations have their policies to address plastic pollution, such as bans on single-use plastics (e.g., India’s Plastic Waste Management Amendment Rules, 2021) and Extended Producer Responsibility (EPR) schemes. However, these are largely national or regional and lack the legally binding international framework needed to tackle the global nature of the plastics crisis. The failure of the UN talks underscores the inadequacy of fragmented national efforts.
Constitutional Provisions & SC Verdicts
India’s Article 21 (Right to Life) has been interpreted by the Supreme Court to include the right to a clean and healthy environment, with verdicts like the M.C. Mehta v. Union of India case expanding on this principle.
Internationally, the Rio Declaration on Environment and Development (1992) and the Stockholm Declaration (1972) affirm the right to a healthy environment and the principle of state responsibility for environmental harm.
UN Resolutions
The UN Environment Assembly (UNEA) resolution 5/14, “End Plastic Pollution: Towards an internationally legally binding instrument,” initiated the treaty process in March 2022. The resolution aims to develop a treaty addressing the full life cycle of plastics, from production to disposal. The current failure represents a significant setback to the goals outlined in this resolution.
Climate Scientists
They emphasize that plastic production is intrinsically linked to the climate crisis. Since 99% of plastics are made from fossil fuels, their production, use, and disposal release vast amounts of greenhouse gases. The plastics industry is a significant emitter of CO2, and its projected growth threatens to consume a substantial portion of the remaining global carbon budget, making the Paris Agreement’s 1.5°C target unattainable without addressing plastic production.
Significance
The failure of the talks is a significant blow to multilateralism and global environmental governance. It highlights the power of a small bloc of oil-producing nations to obstruct progress on a major global issue. The stalemate leaves the world without a coordinated, legally binding strategy to combat a crisis with severe environmental, health, and economic impacts.
Definition of Technical Terms
- Multilateralism: The practice of coordinating relations between three or more states, typically through international organizations or treaties.
- High Ambition Coalition: A group of nations, including Denmark and around 100 others, pushing for a strong, legally binding treaty with measures to curb plastic production.
- Petrochemical Producing Bloc: A group of “like-minded countries” led by Saudi Arabia and including the US, Russia, and India, which prioritize protecting their fossil fuel and petrochemical industries and advocate for a treaty focused solely on waste management.
Environmental aspects
The plastics crisis is not just a waste management issue. It involves the entire life cycle of plastics. Production relies on fossil fuels, contributing to climate change. The chemicals used in plastics, many of which are unregulated, pose a threat to human and animal health. The prevalence of microplastics in ecosystems, including oceans and air, has far-reaching and irreversible impacts on biodiversity.
Impacts on Biodiversity
Plastic pollution severely impacts biodiversity at all levels. Marine life, from plankton to whales, ingests plastic, leading to starvation, entanglement, and death. Microplastics enter the food chain, affecting human health and ecosystem functions. The chemicals leached from plastics can alter species’ reproductive and hormonal systems. This unchecked pollution threatens fragile ecosystems like coral reefs and coastal habitats.
Challenges
The primary challenge is the fundamental disagreement between nations. The petrochemical-producing bloc, driven by economic interests, opposes any legally binding measures on production limits, emissions, or chemicals. The consensus rule, which allows a few nations to block progress, is a major procedural hurdle. The influence of a powerful lobby, with 234 fossil fuel and petrochemical lobbyists attending the talks, further complicates the process.
Way Forward
To break the deadlock, a fundamental change in strategy is needed. The consensus rule must be reconsidered. High-ambition nations may need to explore alternative approaches, such as forming a coalition of the willing to move forward with a treaty and invite others to join later. Public and civil society pressure, which has been instrumental in raising awareness, must continue to hold nations accountable. The global community must acknowledge that a plastics treaty that does not address production and toxic chemicals will not be effective.
Prelims MCQ
Q.Consider the following statements regarding the UN Plastics Treaty negotiations:
1. The "High Ambition Coalition" advocates for a treaty focused on improving global recycling rates and waste management.
2. The "petrochemical producing bloc," which includes the US and Russia, supports legally binding measures to curb plastic production.
Which of the statements is/are correct?
Mains Question
Q. Analyze the factors contributing to the repeated failure of the UN Plastics Treaty talks and propose a strategic way forward. (150 words)
GST reforms
Context
The Indian government has proposed a major GST reform to simplify the tax structure by eliminating the 12% and 28% slabs, retaining only the 5% and 18% rates. This move, announced by Prime Minister Narendra Modi, aims to reduce the tax burden on consumers and streamline the indirect tax system.
Background
The Goods and Services Tax (GST) was introduced in 2017 to create a “one nation, one tax” system. Originally, it had multiple slabs: 5%, 12%, 18%, and 28%. Over the years, there have been demands to simplify the structure and rationalize rates to reduce complexity and classification disputes.
Government Schemes and Policies
The proposed GST changes are not a specific government scheme but a significant policy reform under the existing GST framework. The government’s broader economic agenda, including Make in India and boosting domestic consumption, is expected to benefit from these reforms. The reduction in tax rates on white goods and daily-use items aims to stimulate demand and support manufacturing. The focus on a digital, automated GST system with pre-filled returns aligns with the government’s push for Digital India and ease of doing business.
Constitutional Provisions
The GST system is governed by the 101st Constitutional Amendment Act, 2016, which led to the creation of the GST Council. The Council, a federal body, is empowered to make recommendations on GST rates, rules, and laws. While the Constitution provides the framework, the specific rates and structures are determined by the Council’s decisions.
Opinion
Economists generally support the simplification of the GST structure. A multi-slab system often leads to classification disputes and loopholes, which can be exploited for tax evasion. By reducing the number of slabs, the proposed reform could lead to a wider tax base and higher compliance. The government’s expectation of increased consumption and reduced evasion is a key economic rationale. However, some economists may caution about the potential short-term revenue loss and the need for careful implementation to avoid disruption. The shift from a higher tax bracket to a lower one for most items is seen as a pro-consumption and pro-growth measure.
Significance
This reform is a significant step towards achieving the original goal of a simplified GST. It will simplify compliance for businesses, reduce classification-related litigation, and lower the tax burden on consumers, particularly for aspirational and daily-use items. The elimination of the cess, except for specific “sin goods,” is a major relief for both consumers and businesses.
Definition of Technical Terms
- GST (Goods and Services Tax): An indirect tax system in India that replaced multiple cascading taxes levied by the central and state governments.
- GST Slabs: The different tax rates at which goods and services are taxed under the GST regime (e.g., 5%, 12%, 18%, 28%).
- Inverted Duty Structure: A situation where the tax rate on finished goods is lower than the tax rate on the inputs used to manufacture them, leading to a refund claim from the government.
- Cess: An additional tax levied by the government for a specific purpose, over and above the regular GST rate.
- Sin Goods: Items considered socially harmful or non-essential, such as tobacco, alcohol, and luxury cars, which are typically taxed at a higher rate.
Fiscal Federalism
The GST Council, with its representation from both the Union and State governments, is a prime example of cooperative fiscal federalism. The current proposal, initiated by the Centre and now subject to the GoM (Group of Ministers), which only comprises state representatives, highlights the complex dynamics of this federal structure. The Centre’s move to present a formal proposal underscores its recognition that GST reforms require the consensus of the states, as they have a significant say in the Council’s decisions. The potential revenue impact on states is a key consideration, and the Centre’s reassurance that the fiscal deficit will not be materially affected is crucial for building consensus.
Impacts on the Economy
- Positive Impacts: Lower tax rates on a wide range of goods and services will likely boost consumption and demand. The simplification will reduce compliance costs for businesses, particularly SMEs, and could lead to increased formalization of the economy. Resolving the inverted duty structure will improve working capital for businesses, encouraging investment.
- Challenges: The immediate challenge is the potential revenue hit for the government, although officials are confident that this will be offset by increased consumption and tax compliance in the long run. The implementation will require careful coordination between the Centre and States to ensure a smooth transition. Businesses will need to adjust their pricing and systems.
Challenges
The biggest challenge is securing consensus from the states, which have a significant say in the GST Council. While the Centre’s proposal seems beneficial, states may be wary of the potential revenue implications. The transition period could also present administrative and logistical challenges for businesses and tax authorities. The classification of items into the new slabs will need to be meticulously done to avoid new disputes.
Way Forward
The Centre must engage in extensive dialogue with the states to build consensus on the proposed reforms. The GoM’s recommendations will be critical, and the final decision will rest with the GST Council. The government needs to clearly articulate the long-term benefits of the changes, including a wider tax base and increased consumption, to assuage any concerns about short-term revenue loss. The focus should be on a phased and transparent implementation to ensure a smooth transition and realize the full benefits of the “next-generation GST reforms.”
Prelims MCQ
Q. Consider the following statements regarding the proposed GST reforms in India:
1. The 28% tax slab will be retained only for a few "sin goods," and a new cess will be introduced on these item.
2. The reform aims to simplify the tax structure by moving 99% of items from the 12% slab to the 5% slab.
Which of the statements given above is/are correct?
Mains Question
Q. Critically examine the proposed GST rate rationalization and its potential impact on the Indian economy and fiscal federalism. (250 words)
