February 3, 2025

Current Affairs

How does UCC regulate Live-in Relationships in Uttarakhand?

Context: Uttarakhand’s Uniform Civil Code passed by the State Assembly in February 2024, it mandates the registration of live-in relationships both at their commencement and termination.

Relevance of the Topic:Prelims: Key facts about live-in relationships; Uniform Civil Code.

Uniform Civil Code & Live-in Relationship Registration

The Uttarakhand Uniform Civil Code (UCC) mandates compulsory registration of live-in relationships at both commencement and termination.
The law applies to both residents of Uttarakhand and individuals from other states residing in the state.
The rules came into effect on January 27, 2025, introducing stringent documentation and verification requirements.

Key provisions of the Law

Registration of live-in relationships:
- Mandatory registration is required at both the beginning and end of a live-in relationship.
- Couples can register online through a designated portal or offline by submitting a 16-page form with supporting documents.
- Only unmarried, heterosexual couples are allowed to enter into a live-in relationship, under this law. A person cannot get into a live-in relationship with someone who is already married or is in another live-in relationship.
The registrar is legally bound to notify the parents/guardians of such individuals about the relationship registration or its termination.

Relationship history & prohibited relationships:
- The law equates live-in relationships with marriage, imposing a similar degree of restrictions.
- Couples must provide:
  - Proof of any prior live-in relationships.
  - Current relationship status (single, married, divorced, annulled, separated, or widowed)
- If the couple falls within degrees of prohibited relationships (as per Schedule 1 of the Hindu Marriage Act, 1955), they must obtain approval from a religious/community leader certifying eligibility for marriage. Prohibited relationships refer to blood relations, unless allowed by custom.

Housing & landlord obligations:

Couples already living together must provide proof of shared accommodation (e.g., latest electricity or water bill).
Couples not yet living together must apply for a provisional certificate. After receiving this certificate, they must secure accommodation within 30 days (extendable by 15 days).
Final registration is granted after submitting proof of new residence.
Landlord Responsibilities:
- Must ensure the couple has a valid registration certificate before renting the property. Failure to comply may result in penalties.

Penalties & Legal Consequences

Failure to Register:	False Information or Concealment of Facts:	Summary Inquiry:	Non-Registration Complaint Mechanism:
If a couple does not register their live-in relationship within one month, they may face: Up to 3 months’ imprisonment₹10,000 fineOr both	If a couple provides false information, penalties increase to: Up to 3 months’ imprisonment₹25,000 fineOr both	The registrar has the power to verify submitted documents and check if the relationship was formed through: Coercion, Undue influence, Misrepresentation, Fraud	The registrar can Suo motu (on its own) or upon complaint issue a notice for compliance.False complaints may attract fines, with higher penalties for repeat offenders.

Benefits of registering a Live-in Relationship

Legal rights for women: A woman abandoned by her live-in partner can seek maintenance, as if they were married. The law applies the same provisions of maintenance as in marriage.
Legitimacy of children & inheritance rights: A child born out of a live-in relationship will be legally recognised as legitimate, ensuring such children have inheritance rights.
Protection against housing discrimination: Landlords cannot refuse tenancy solely because a couple is unmarried.
- If a couple has a registration certificate (provisional or final), they cannot be denied housing on that basis.

Concerns & Criticism

Violation of Right to Privacy: Experts argue that mandatory registration of live-in relationships violates Article 21 (Right to Privacy) of the Constitution.
The Justice K.S. Puttaswamy vs Union of India (2017) case established that:
- Informational privacy and decisional autonomy are fundamental rights.
- The state cannot intrude disproportionately into an individual’s private life.

Risk of Social Surveillance & Harassment:

The law enables third-party access to personal data without proper safeguards.
It could lead to large-scale surveillance of personal relationships.
No penalties for third-party data leaks, increasing risk of harassment.
Interfaith & inter-caste couples could face disproportionate targeting.

Conclusion

Uttarakhand’s live-in relationship registration law is the first of its kind in India, bringing marriage-like regulations to such unions.
While the law aims to prevent fraud and exploitation, it has sparked constitutional and privacy concerns.
Experts argue that compulsory state monitoring of live-in relationships could set a precedent for further encroachment on personal liberties.

Prime Minister Dhan-Dhaanya Krishi Yojana

Context: In the Union Budget 2025-26, the Finance Minister announced several new initiatives for the agriculture sector, including the Prime Minister Dhan-Dhaanya Krishi Yojana.

Relevance of the Topic: Prelims: Key facts about Prime Minister Dhan-Dhaanya Krishi Yojana.

About Prime Minister Dhan-Dhaanya Krishi Yojana

The scheme will be launched in partnership with states through the convergence of existing schemes and specialised measures.
No separate allocation has been made for the Prime Minister Dhan-Dhaanya Krishi Yojana, however, there are allocations for existing schemes which are to be converged:

Rs 1,000 crore has been allocated for the mission for pulses.
Rs 500 crore for the mission for vegetables and fruits.
Rs 100 crore support for the Makhana Board.
Rs 100 crore for the mission on hybrid seeds.
Rs 500 crore for the cotton technology mission.
In phase 1, It will be launched in 100 districts with low crop productivity, moderate crop intensity and below-average credit parameters.
- It is expected to benefit 1.7 crore farmers spread across the targeted districts.
- The scheme draws inspiration from the Aspirational Districts Program and would drive focused reforms to uplift farmers in underdeveloped agricultural regions.

Key focus of PM Dhan-Dhaanya Krishi Yojana

Enhance agricultural productivity
Adopt crop diversification and sustainable agriculture practices
Augment post-harvest storage at the panchayat and block level
Improve irrigation facilities
Facilitate availability of long-term and short-term credit.

Components:

Rural Prosperity and Resilience Program:

It aims at addressing under-employment in agriculture through skilling, investment, technology, and invigorating the rural economy.
The goal is to generate ample opportunities in rural areas so that migration is an option, but not a necessity.
The programme will focus on rural women, young farmers, rural youth, marginal and small farmers, and landless families.
Global and domestic best practices will be incorporated and appropriate technical and financial assistance will be sought from multilateral development banks.

Aatmanirbharta in Pulses:

The government will launch a 6-year mission with a special focus on Tur, Urad and Masoor.
The Mission will place emphasis on development and commercial availability of climate resilient seeds; enhancing protein content; increasing productivity; improving post-harvest storage and management and assuring remunerative prices to the farmers.
Central Agencies (NAFED and NCCF) will procure these 3 pulses, as much as offered during the next 4 years from farmers who register with these agencies and enter into agreements.

Comprehensive Programme for Vegetables & Fruits:

A comprehensive programme to promote production, efficient supplies, processing, and remunerative prices for farmers will be launched in partnership with states.
Appropriate institutional mechanisms for implementation and participation of farmer producer organizations and cooperatives will be set up.

Grameen Credit Score: Public Sector Banks will develop the ‘Grameen Credit Score’ framework to serve the credit needs of SHG members and people in rural areas.

De-Regulation to boost Indian Economy: Economic Survey 2024-25

Context: Globally, there is a shift from an era of hyper-globalisation to increased protectionism and strategic competitiveness among countries. In this backdrop, the Economic Survey 2024-25 prescribed reforms through de-regulation and increasing private sector participation.

Relevance of the Topic: Prelims: Economic Survey- State of Economy, Measures to boost economy

Highlights of Economic Survey 2024-25

Growth Rate: The Survey predicted India’s economic growth to be between 6.3-6.8% in 2025-26.
- The forecast falls short of both the previous Economic Survey’s 6.5-7% projection and the RBI’s 6.6% estimate for 2024-25.
- Its growth projection for FY26 is lower than the ADB’s forecast of 7% but in line with the World Bank’s (6.7%), the IMF’s (6.5%) and Fitch Ratings (6.5%).
- The Statistics Ministry expects the economy to grow at 6.4% in 2024-25.

Viksit Bharat can only be achieved with 8% growth for at least a decade. The survey prescribes a 4 pillar strategy to achieve higher growth in the new playing field, marked by protectionism and strategic competitiveness among countries.

Reforms prescribed by Economic Survey 2024-25:

De-Regulation:
- The Survey strongly advocates for de-regulation, guided by a broad laissez faire approach of ‘getting out of the way’ principle.
  - It recommends the government to stop micromanaging economic activity and to embrace risk-based regulations.
  - Changing the operating principle of regulations from ‘guilty until proven innocent’ to ‘innocent until proven guilty’.
  - Simplifying regulations that affect businesses. E.g., Adoption of Business Reform Action Plan (BRAP) formulated by the Department for Promotion of Industry and Internal Trade (DPIIT).
- Focus on Ease of Doing Business 2.0, pushing on de-regulation as a pathway to employment generation. It recommends labour with a flexibility of working hours.
De-regulation by States: The Survey has called upon States to begin de-regulation exercise by:
- Identifying regulations that affect decision-making in enterprises
- Comparing their regulations on these issues with those in other States and countries
- Examining the economic impact of their current regulation on a single sample enterprise.
In Ease of Doing Business 2.0, States must work on:
- liberalising standards and controls
- setting legal safeguards for enforcement
- reducing tariffs and fees
- applying risk-based regulation

Private-sector participation in nation building:
- Bridge the Profit-Wage Gap:
  - The Survey suggested an equipartition of profits by the private sector to ensure better wages for workers.
  - Despite companies achieving a stable EBITDA margin of 22% over the last four years, wage growth has moderated.
  - Aligning profit growth with wage increases is essential for sustaining demand and supporting corporate revenue and profitability growth in the medium to long run.
- Creating Jobs: While corporate profits have climbed 22.3% in FY24, employment grew by a mere 1.5%.

Augmenting internal capacities: Enhancing economic freedom for individuals and small businesses to bolster India’s medium-term growth prospects.
Urgent Indigenisation for India’s EV sector:
- India will need to focus on indigenisation of raw material and technology.
- It highlights concerns over the need for imports to achieve transition to electric mobility, even as the global automobile industry looks to reduce its dependence on China.

UIDAI notifies new rules for Aadhar Authentication

Context: The Ministry of Electronics and Information Technology (MeitY) has notified the Aadhaar Authentication for Good Governance (Social Welfare, Innovation, Knowledge) Amendment Rules, 2025 under the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016.

Relevance of the Topic:Prelims: Key facts about Aadhaar Authentication for Good Governance (Social Welfare, Innovation, Knowledge) Amendment Rules, 2025.

Aadhaar Authentication for Good Governance (Social Welfare, Innovation, Knowledge) Amendment Rules, 2025:

Objective: To enable private entities to gain access to Aadhaar authentication.

Key features:

The amendment enables both government and non-government entities to avail Aadhaar authentication service for providing various services.
- Aadhaar Authentication has now been extended to private entities along with government bodies, for providing various services in the public interest, boosting innovation, knowledge, and public service enhancement.
The amendment will also enhance the scope for residents in availing many new services seamlessly with respect to E-Commerce, Travel, Tourism, Hospitality, and Health Services.
It will promote the ease of living and livelihood and help service providers and seekers to have trusted transactions.

Process of obtaining Authentication

Any entity seeking Aadhaar authentication will be required to apply with the details of intended requirements to the concerned Ministry or Department of the Central or the State government, in a format available on a portal for this purpose.
The applications will be examined by UIDAI, and MeitY will issue the approval based on the recommendation of UIDAI.
The concerned ministry or department of the Central or State Government will notify the entity for Aadhaar usage after receiving confirmation from MeitY.

Excessive Financialisation can hurt India's Economy

Context: Economic Survey 2024-25 highlights concerns about the rapid growth of financial markets in India, emphasising that excessive financialisation can harm the economy.

Relevance of the Topic: Prelims: Savings Trends in Indian Economy; Basic idea about Financialisation of Economy.

What is Financialisation?

Financialisation of Economy refers to the increasing dominance of financial markets, financial institutions, and financial motives in the overall economy.
- It means that economic growth and wealth generation rely more on financial activities (like stock markets, banking, and investment funds) rather than traditional sectors like manufacturing, agriculture, or services.
Financialisation of Savings refers to the shift of household or corporate savings from traditional, physical assets (like gold, real estate, or cash) to financial assets (like stocks, mutual funds, bonds, and insurance).

Aspects of Financialisation

Expansion of Financial Markets:
- Financial markets include the stock market, bond markets, derivatives, and foreign exchange markets.
- Financial assets and instruments are increasingly traded on a global scale, driving economic growth, but also introducing volatility.
Rise of Financial Institutions:
- Banks, investment firms, hedge funds, and insurance companies have grown in power and influence over other sectors, including manufacturing and service industries.
Shift in Corporate Focus: Companies increasingly rely on stock buybacks, dividends, and mergers and acquisitions to boost stock prices, rather than reinvesting profits into productive activities.
Households and Financialisation:
- Ordinary households have become more engaged in financial activities, from mortgage lending and credit card debt to retirement savings managed through pension funds and mutual funds.
- Financial markets directly influence household wealth and savings, making them vulnerable to market fluctuations.

Implications of Financialisation

Economic Inequality:
- Benefits of financialisation tend to be concentrated among the wealthy, particularly those with significant financial assets, leading to rising income and wealth inequality.
- Workers and middle-class households often do not benefit proportionately from financial growth.
Vulnerability to Financial Crises:
- Financialisation has made economies more vulnerable to financial shocks, such as the 2008 global financial crisis.
- The increasing complexity of financial instruments (E.g., derivatives, mortgage-backed securities) can lead to instability.
- The interconnectedness of global financial systems means that a crisis in one market or country can have ripple effects worldwide.
Short-Termism:
- Corporations and investors focus on short-term profits and immediate financial returns, often at the expense of long-term investment in innovation, infrastructure, and human capital. This short-termism undermines sustainable economic growth.
Debt-driven Growth:
- Financialisation often leads to a growing reliance on debt, both for governments and individuals.
- Consumer credit, corporate debt, and public debt have surged globally as access to credit has expanded.
- This debt-driven growth can lead to bubble in real estate and other asset markets, increasing the risk of financial crises.
Political Influence:
- Financial lobbyists often shape policy in ways that favour the financial sector, such as deregulation and tax incentives.

Financialisation in India

Widening role of financial markets: In India, financialisation is evident in the increasing role of financial markets, particularly with the growth of stock markets, insurance, and the mutual funds industry.
Rise in Retail Investors:
- There has been a significant increase in individual investors participating in the stock market, both directly and through mutual funds.
- The number of demat accounts (necessary for trading stocks) grew from 114.5 million in FY23 to 151.4 million in FY24.

Potential Risks:

Risk of Overconfidence: Overconfidence might lead to speculative behavior, expecting higher returns that may not align with actual market conditions.
Engagement of youth: Many new investors are young and may have a higher risk appetite, leading them to engage in derivatives trading, which is often speculative.
Derivatives Trading Concerns:
- Derivatives are financial instruments used for hedging but are often used for speculation.
- Globally, most retail investors lose money in derivatives trading.
- A significant market downturn could result in substantial losses for these investors, potentially discouraging them from future participation.

Lessons from other Economies:

The Economic Survey warns that rapid financial market growth without corresponding economic growth has led to crises in both developed and developing countries.
The 2008 global financial crisis is cited as an example of the dangers of excessive financialisation.

Recommendations:

India should ensure a gradual and orderly development of its financial markets.
All stakeholders, including investors, regulators, and the government, should work together to ensure that capital markets effectively channel savings into productive investments.
Continuous financial education is essential to inform investors about the risks associated with speculative trading.

Underdeveloped Bond Market in India

Context: The Economic Survey 2024-25 highlighted that the Indian corporate bond market remained underdeveloped compared to global standards.

Relevance of the Topic: Mains: Detailed question on bond market of India; its implications and suggestive measures.

Major Highlights:

The Survey highlighted that in contrast to the equity market, the debt market in India remains undercapitalised.
Indian corporate bond market share is 18% of GDP, as compared to 80% in South Korea and 36% in China.
Corporate bond issuances stood at ₹7.3 lakh crore from April to December 2024, with an average monthly issuance of ₹80,000 crore, higher than average of ₹66,000 crore in the corresponding period previous year.
In FY24, the public placement of corporate bonds stood at Rs 19,000 crore against the private placement of around Rs 8,38,000 crore. The overwhelming majority of corporate bond issuance happens through private placement, which significantly limits participation of retail investors.

What are corporate bonds?

Corporate bonds are debt instruments issued by a corporation to raise capital from the public.
Corporations have a right to issue these bonds to fulfill their purpose, like debt refinancing, research development, etc.
The holder of corporate bonds receives interest from the corporation periodically, for a fixed period of time and gets back the principal, along with the interest due at the end of the maturity period.
It normally offers a higher rate of interest as compared to fixed deposits or postal savings or similar investments.
Regulated by: Securities and Exchange Board of India (SEBI).

Who can issue corporate bonds in India?

In India, both public and private companies can issue corporate bonds.
A company incorporated in India, but part of a multinational group, can also issue corporate bonds.
However, a company incorporated outside India cannot issue corporate bonds in India.
A statutory corporation like LIC (Life Insurance Cooperation) can also issue corporate bonds.

Challenges in corporate bond development in India:

Limited investor base: Indian investor base is shrinking due to decline in individuals and households savings. Eg; Indian savings reduced from 35% in 2011-12 to 30% in 2022-23.
High taxation and inflation burden: India is facing a dual issue of high taxation combined with high inflation rate, especially food inflation, leading to low investments.
Long-term capital gains tax: Investors are refraining from the bond market due to re-introduction of the long term capital gains tax.
Regulatory constraints: Stringent regulations limit investors (like insurance companies) to invest in high-rated bonds. Eg; IRDAI mandates insurance companies to invest in at least AAA rating bonds. This effectively crowds out small players in the corporate bond market.
Skewed bond distribution: Over 97% corporate bonds in India belong to AAA, AA+ and AA, making it difficult for lower-rated firms to issue bonds in the market.

Implications on Indian Economy:

Overdependence on banking finance: Companies, due to low corporate bonds, depend on banks for finances. This leads to crowding out effects for the retail borrowers and MSMEs. Eg; In 2023, bank credit grew by 15.4%, while corporate bond issuances lagged at ₹7.5 lakh crore.
Limited access for lower-rated companies: The nascent state of the corporate bond market restricts access to capital for lower-rated or first-time issuers. Investors often prefer bonds from top-rated companies, leaving others with limited financing options.
Economic slowdown: A shallow corporate bond market impedes efficient capital allocation, slowing down economic development and infrastructure projects.
Hampers innovation: The shortage of funding may lead to the reduction in innovation by new corporations and startups.

Suggestive measures to boost Corporate bonds:

Diversification of investor base: Encouraging participation in retail investors, pension funds and foreign investors can enhance market depth and liquidity. Eg; Providing tax incentives and simplification of process in the corporate bonds.
Relaxing regulations: Streamlining regulations to reduce compliance burdens, while maintaining market integrity. Eg; Allowing insurance companies to invest in bonds below AAA rating.
Developing risk management tools: Developing and promoting instruments like credit default swaps (CDS) and Interest Rate Futures to mitigate investment risks. Eg; India can implement similar tools like US Credit Default Swaps.
Diversification of bond: Encourage diversified bonds like Green Bonds, social bonds and Municipal Bonds to encourage the habit of investments in bonds. Eg; India issued $10 billion in green bonds in 2023, but needs further regulatory support.

The Indian corporate bond market can become liquid if problems such as entry costs, information asymmetry, and the absence of a secondary market are addressed.