1. NBFCs: A Vital Pillar of India’s Financial System

Context: The Reserve Bank of India (RBI) has been actively urging Non-Banking Financial Companies (NBFCs) to adopt sustainable growth strategies while ensuring their long-term stability. NBFCs are instrumental in strengthening the financial ecosystem, especially in rural and semi-urban areas, where traditional banking networks remain limited.

What are Non-Banking Financial Companies (NBFCs)?

NBFCs are entities registered under the Companies Act, 1956, engaging in a range of financial activities, such as:

• Providing loans and advances.
• Acquiring shares, stocks, bonds, and other marketable securities.
• Operating varied deposit schemes.

However, NBFCs do not include institutions primarily involved in:

• Agricultural or industrial activities.
• Trade of goods or real estate transactions.

The Ministry of Corporate Affairs and the Reserve Bank of India oversee NBFC operations.

Banks vs. NBFCs: Key Differences

While NBFCs perform functions similar to banks, there are notable differences:

1. Demand Deposits: NBFCs cannot accept demand deposits like banks.
2. Payment Systems:NBFCs are not part of the payment and settlement system and cannot issue cheques.
3. Deposit Insurance: Unlike banks, NBFCs lack Deposit Insurance and Credit Guarantee Corporation (DICGC) protection for their depositors.

The Significance of NBFCs:

NBFCs play a crucial role in advancing financial inclusion and economic growth, particularly in underserved regions. Their contributions include:

• Expanding Financial Access: Extending credit to remote areas.
• Efficient Services: Simplified processes and doorstep delivery.
• Priority Sector Lending (PSL): Addressing credit demands in sectors like agriculture and microfinance.
• Boosting Growth: Financing housing, infrastructure, and small businesses.

Challenges Faced by NBFCs:

Despite their significance, NBFCs encounter numerous challenges:

1. Higher Risk Weights:
   • RBI’s increased risk weights for loans to NBFCs have raised borrowing costs.
   • Bank funding to NBFCs has dropped from 22% to 15% as of April 2024.
2. Funding Constraints: Smaller NBFCs with low credit ratings face high borrowing costs and limited financing options.
3. Underdeveloped Debt Market: India’s bond market lacks depth, restricting access to diversified funding sources.
4. Regulatory Barriers: Caps by SEBI on International Securities Identification Numbers (ISINs) and a lack of market makers hinder market efficiency.
5. Rising Costs:Credit costs are projected to rise from 2.6% in 2024 to 4% in 2025, affecting profitability.
6. Challenges in Overseas Borrowing: Although overseas funding offers lower hedging costs, many NBFCs are still exploring its full potential.

The Road Ahead for NBFCs:

1. Developing the Bond Market: Creating a liquid and vibrant bond market will help NBFCs access long-term capital with reduced dependence on banks.
2. Co-Lending Models: Strengthening partnerships between NBFCs and banks can lower costs and ensure broader credit availability.
3. Enhancing Compliance: Adhering to RBI’s regulations will improve risk management and public trust.
4. Diversifying Funding Sources: NBFCs should explore securitization, commercial papers, and equity markets while balancing domestic and international funding.

Conclusion:

NBFCs are the backbone of India’s financial ecosystem, driving financial inclusion and supporting economic growth. However, addressing funding limitations, regulatory challenges, and market inefficiencies is crucial to ensuring their resilience and long-term sustainability.

2. PAN 2.0 Project: A Modern Tax Revolution

Context: The PAN 2.0 Project, approved by the Cabinet Committee on Economic Affairs, is set to transform the Income Tax Department’s e-governance landscape. With a budget of 1,435 crore, this initiative promises a free upgrade to PAN cards, introducing QR Codes as a unified identifier across various government agencies.

What is the PAN 2.0 Project?

The PAN 2.0 Project is a cutting-edge e-governance initiative aimed at modernizing PAN and TAN services with technology-driven upgrades. It focuses on making tax-related processes simpler, faster, and more user-friendly.

Key Features and Benefits:

1. Easy PAN Applications The project simplifies the process, enabling individuals to apply for a PAN card effortlessly.
2. Enhanced Tax Filing Filing taxes will become less cumbersome, faster, and highly accurate, incorporating advanced digital features.
3. Sustainability Boost With the digitalization of services, the project will significantly reduce paper waste, contributing to environmental sustainability.
4. Cybersecurity Enhancements Robust cybercrime protections and enhanced security features will safeguard user data.

Responsibilities of Service Providers:

The companies implementing the PAN 2.0 system will undertake three crucial duties:

1. Infrastructure DevelopmentEstablishing the required hardware, software, and network systems for the upgraded system.
2. Data Migration Ensuring a seamless transfer of existing tax records to the new system with zero errors.
3. System Integration Aligning the new system with government regulations and ensuring smooth compatibility with existing frameworks.

Why PAN 2.0 Matters?

• Unified Identification: The QR code upgrade enhances PAN’s usability as a universal identifier for multiple services.
• User-Friendly Approach: This upgrade focuses on improving taxpayer convenience while reducing procedural complexities.
• Digital India Goal: Supports the government’s vision of a tech-driven, efficient tax ecosystem.

The PAN 2.0 Project is more than just a system upgrade; it’s a leap towards a futuristic, streamlined, and citizen-friendly tax infrastructure, setting new benchmarks in digital governance.

3. India’s 6GHz Spectrum Debate: Balancing Progress and Priorities

Context: India faces a critical decision on the allocation and use of the 6GHz spectrum, a move that could shape its future in technology, economic growth, and global competitiveness. The dilemma highlights the need to balance the interests of various stakeholders while keeping pace with international standards.

Understanding Spectrum Management:Spectrum is a finite and vital resource enabling wireless communication. Effective spectrum management ensures efficient and equitable utilization of this resource. In India, the Telecom Regulatory Authority of India (TRAI) and the Department of Telecommunications (DoT) oversee spectrum allocation and regulation.

What is Spectrum?

• Spectrum refers to the range of invisible radio frequencies that carry wireless signals, forming a part of the electromagnetic spectrum.
• It spans from 3 Hz to 300 EHz, with frequencies used for communication ranging between 20 KHz and 300 GHz.
• These frequencies are grouped into bands based on their wavelength, with different bands serving various technological purposes.

Key Spectrum Bands:

1. 2.4GHz and 5GHz Bands:
   • Widely used for WiFi and wireless communications.
   • 2.4GHz offers wider coverage but slower speeds.
   • 5GHz delivers faster speeds but covers shorter distances.
2. 6GHz Band (WiFi 6E):
   • Operates between 5,925MHz and 7,125MHz.
   • Allows maximum theoretical speeds of up to 9.6Gbps.
   • Globally, countries like the U.S., U.K., Japan, South Korea, and others have de-licensed the 6GHz spectrum for WiFi, enabling faster internet speeds.
   • India and China, however, are yet to approve this band for WiFi use, creating a regulatory bottleneck.

India’s Current Status:

• The 6GHz spectrum in India is primarily allocated to the Indian Space Research Organisation (ISRO) for satellite communications.
• This allocation limits its availability for telecom operators and technology firms, who view it as crucial for expanding 5G and enabling advanced WiFi services.
• The Cellular Operators’ Association of India (COAI) emphasizes that unlocking this spectrum is key to achieving the goals of the National Broadband Mission and ensuring cost-effective 5G deployment.
• The World Radiocommunications Conference has extended the deadline for global decisions on the 6GHz band until 2027.

The 6GHz Spectrum Debate:

Telecom Operators vs. Tech Companies

• Telecom Operators: Argue that the 6GHz band is essential for scaling 5G networks and meeting rising data demands.
• Tech Firms: Advocate for its unlicensed use in WiFi to support connected devices and the growing need for high-speed internet.
• Using the 6GHz spectrum for unlicensed purposes could reduce costs for 5G rollout.
• Retaining it solely for satellite communication might hinder innovation and economic growth..

Global Standards and Competitiveness:

• Many countries have already de-licensed the 6GHz spectrum for unlicensed use.
• India’s delay risks affecting its global competitiveness and reducing its appeal to technology investors.

Potential Solutions:

1. Partial De-licensing:
   • Allocate a portion of the spectrum for unlicensed use while reserving some for satellite needs.
2. Phased Implementation:
   • Gradually transition the spectrum for WiFi use, giving stakeholders time to adapt.
3. International Collaboration:
   • Work with global regulatory bodies to align India’s policies with international best practices.

Conclusion:

India’s decision on the 6GHz spectrum will shape its technological future. Striking the right balance between the needs of telecom operators, technology firms, and satellite communication is critical for fostering innovation, supporting economic development, and maintaining global competitiveness.

4. Constitution Day of India 2024: Celebrating the Spirit of Democracy

5. SC Upholds Inclusion of ‘Secular’ and ‘Socialist’ in the Constitution’s Preamble

Context: The Supreme Court of India has dismissed petitions challenging the constitutional validity of the 42nd Amendment Act, 1976, which introduced the words ‘secular’ and ‘socialist’ into the Preamble of the Constitution.

In its verdict on Dr. Balram Singh & Others vs. Union of India, the court emphasized the acceptance and importance of these terms in reflecting the ethos of the Indian Constitution.

Understanding the Preamble to the Indian Constitution:

The Preamble serves as the introduction to the Constitution, outlining its philosophy, principles, and objectives. It reflects the ideals envisioned by the Objective Resolution, adopted in 1947, and was finalized on November 26, 1949.

Key Highlights of the Preamble:

• Source of Authority: The Constitution derives its power from the “people of India”.
• Non-Justiciable: While it is an integral part of the Constitution, violations of its principles cannot directly lead to legal action. However, it serves as a guiding framework for judicial interpretation.

‘Socialist’ and ‘Secular’ in the Preamble:

Historical Context

The terms ‘socialist’ and ‘secular’ were added through the 42nd Amendment, often referred to as the “mini-Constitution”, during the Emergency in 1976.

What Do These Terms Mean?

• Socialist:
  • Western Perspective: Advocates collective or government ownership of resources to achieve economic equality.
  • Indian Perspective: Supports democratic socialism, encouraging fair resource distribution while allowing a mixed economy of public and private sectors.
• Secular:
  • Western Perspective: Emphasizes strict separation between religion and state.
  • Indian Perspective: Advocates religious harmony, with the state treating all religions with equal respect rather than maintaining absolute separation.

Supreme Court Judgment: Key Highlights:

Legitimacy of the 42nd Amendment:

• The petitioners argued the amendment’s legitimacy, citing its passage during the Emergency.
• The SC noted that the Constitution Forty-Fourth Amendment Bill, 1978, retained the terms after parliamentary debate, affirming their importance.

Parliament’s Power to Amend the Preamble:

• The court ruled that Article 368 empowers Parliament to amend the Preamble.
• Arguments against retrospective amendments were dismissed, as the power to amend is clearly granted by the Constitution.

Constitution as a Living Document:

• The SC highlighted that while the Constituent Assembly initially excluded these terms, their inclusion reflects India’s evolving democratic framework.

Delay in Filing Petitions:

• The court criticized the 44-year delay in challenging the amendment, emphasizing the widespread acceptance of these terms in Indian society.

Interpretation of Key Terms:

• Secularism: The state remains neutral, neither endorsing nor opposing any religion. This principle is enshrined in Articles 14, 15, and 16.
• Socialism: Indicates the state’s commitment to being a welfare state without restricting economic policies.

Significance of Including ‘Secular’ and ‘Socialist’:

• Reinforces Democracy: Strengthens India’s commitment to inclusive governance and social justice.
• Guides Legislation: Ensures that laws align with constitutional rights and the basic structure doctrine.
• Dynamic Adaptation: Reflects the Constitution’s ability to evolve with India’s societal needs.

Understanding the 44th Amendment:

The 44th Amendment Act of 1978 was introduced to safeguard citizens’ Fundamental Rights against potential misuse by governments. It strengthened protections against arbitrary actions, ensuring the rights of the people remain

Conclusion:

The Supreme Court’s judgment upholding the 42nd Amendment underscores the dynamic and adaptive nature of the Indian Constitution. By reaffirming the inclusion of ‘secular’ and ‘socialist’, the verdict highlights Parliament’s authority to ensure the Constitution aligns with the nation’s evolving democratic and social ideals.

6. One Nation One Subscription Scheme, Benefits, Significance

Context: The One Nation One Subscription (ONOS) scheme, recently approved by the Indian Cabinet with a budget of 6,000 crore for 2025–27, aims to transform the research landscape in India. By granting seamless access to high-impact scholarly articles and journals, the initiative seeks to empower students, researchers, and faculty members across government-managed higher education institutions and R&D centers. It aligns with the vision of Viksit Bharat@2047, NEP 2020, and the Anusandhan National Research Foundation (ANRF) to foster a research-centric learning environment.

Key Objectives of One Nation One Subscription:

1. Comprehensive Access to Research Material: The scheme will offer subscriptions to over 13,000 international e-journals from around 30 leading publishers.
2. Boosting Interdisciplinary Research: It aims to encourage detailed and diverse research, especially benefitting institutions in Tier 2 and Tier 3 cities, which often lack access to premium resources.
3. Simplified Digital Access: A unified portal will streamline the process, ensuring faster and easier access for students, researchers, and faculty members.

Implementation and Oversight:

Implementation Authority

• The Department of Higher Education, along with associated ministries, will lead awareness campaigns to ensure maximum adoption by users.
• The campaigns will focus on educating stakeholders about the benefits and usage of the scheme.

Role of ANRF:

• The Anusandhan National Research Foundation (ANRF) will oversee periodic reviews of the scheme.
• It will monitor resource utilization and assess Indian authorship contributions in global research output.

Significance of the ONOS Scheme:

1. Alignment with NEP 2020: The scheme supports the National Education Policy’s vision of creating a robust ecosystem for research and innovation, driving academic synergy.
2. Strengthening India’s Research Position: By providing high-quality resources, the initiative positions India as a potential global research hub, promoting collaboration and innovation.
3. Bridging the Knowledge Divide: Access to premium journals will extend to rural and underserved regions, reducing the information gap and ensuring inclusive growth in the field of research.

Conclusion:

The One Nation One Subscription Scheme is a landmark step toward creating a research-oriented academic environment in India. It not only aligns with national policies like NEP 2020 but also works toward fostering inclusive education by bridging regional disparities in access to knowledge. With its focus on empowering researchers and promoting interdisciplinary studies, ONOS is poised to significantly contribute to India’s ambition of becoming a global leader in research and innovation.