UPSC CURRENT AFFAIRS – 13 AUGUST 2026

Context: As the Unified Payments Interface (UPI) completed 10 years of operation, Parliament passed the Taxation and Other Laws (Amendment) Bill, 2026.

• The Bill amends Section 10A of the Payment and Settlement Systems (PSS) Act, 2007, removing the statutory prohibition against levying a Merchant Discount Rate (MDR) on UPI and RuPay debit card transactions.

About UPI at 10: India’s Digital Payments Revolution and the Road Ahead

What it is?

• Launched as a pilot in April 2016 by the Reserve Bank of India (RBI) and National Payments Corporation of India (NPCI) before going fully operational in August 2016, UPI is India’s real-time, interoperable mobile payment system.
• Built on the Immediate Payment Service (IMPS) protocol, it allows instant bank-to-bank transfers via virtual payment addresses (VPAs) or QR codes.
• Over a decade, UPI has transformed from a domestic retail experiment into the backbone of India’s digital economy, handling the vast majority of non-cash consumer payments.

Key Data & Statistics:

• Dominant Share of Digital Transactions: UPI accounts for 86% of all non-cash digital transactions in India, with total annual digital transactions reaching 28,174 crore in FY2025–26.
• Massive User & Network Base: Over 55 crore citizens actively use UPI, supported by 703 ecosystem entities (banks, payment service providers, and third-party application providers).
• Monumental Monthly Volume & Value: In July 2026 alone, UPI processed 2,366 crore transactions worth ₹29.9 lakh crore.
• Concentration in App Providers: Walmart-backed PhonePe and Google Pay process 80% of all UPI transaction volumes and 83% of the total value, while public sector majors like SBI process just 0.1% by volume.

Evolution & Key Growth Drivers:

• Early Policy Vision (2012–13): RBI’s payment vision documents identified IMPS as a foundation for rapid and spontaneous proliferation of mobile merchant and peer-to-person money transfers.
• Demonetization & Pandemic Push (2016 & 2020): The 2016 currency demonetization and the 2020 COVID-19 pandemic catalyzed a structural shift away from cash and cash-on-delivery toward contactless QR payments.
• Private Venture Capital Inflow (2019–2021): Massive private capital investments into fintech firms (e.g., Paytm, PhonePe) expanded Point-of-Sale (PoS) infrastructure and user acquisition.
• Zero-MDR Mandate (2020): Following the Nandan Nilekani Committee recommendations on deepening digital payments, the government mandated a 0% MDR on UPI and RuPay cards, subsidizing low-value transactions up to ₹2,000.

Core Challenges Facing the UPI Ecosystem:

• Massive Unrecovered Infrastructure Costs: Operating the round-the-clock technological, compliance, and fraud-prevention infrastructure behind UPI costs the industry roughly ₹20,000 crore annually, while government subsidies cover only a fraction of the cost.
• Extreme Market Concentration: Two foreign-backed apps (PhonePe and Google Pay) hold an 80%+ duopoly, raising systemic concentration risks; NPCI has repeatedly deferred enforcement of its 30% market-cap rule to December 2026.
• Erosion of Traditional Banking Volume: Major public and private sector banks have ceded payment volumes to fintech third-party app providers, limiting direct monetizable touchpoints with consumers.
• Cross-Border Scaling Friction: Expanding UPI internationally to compete with traditional remittance networks requires high capital investments for inter-country clearing and regulatory alignment.

Proposed Financial Model: The MDR Reform

To ensure long-term ecosystem sustainability without discouraging small merchants or individual citizens, the government and industry are evaluating a calibrated, threshold-based Merchant Discount Rate (MDR):

• Guaranteed Zero-Fee Policy for Consumers: All Person-to-Person (P2P) transfers and everyday consumer payments remain 100% free.
• Protection for Small Merchants: Small retail vendors and kirana stores (annual turnover below ₹1–1.5 crore) will continue to face zero merchant fees.
• Calibrated Fee on Large Merchants: A nominal MDR (projected around 0.05% to 0.3–0.6%) will apply exclusively to Person-to-Merchant (P2M) transactions exceeding ₹2,000 at large commercial enterprises.

Way Ahead:

• Operationalizing the NPCI Steering Framework: Empower the NPCI-led UPI and Services Steering Committee to dynamically set fair, threshold-based MDR limits based on evolving infrastructure costs.
• Expanding Value-Added Services (UPI Credit): Transition UPI from simple transaction processing to credit delivery—enabling data-driven, pre-sanctioned credit lines via QR codes for small businesses.
• Diversifying Domestic App Competition: Enforce gradual market-share caps and incentivize bank-led BHIM/state platforms to reduce structural reliance on the PhonePe–Google Pay duopoly.
• Accelerating Global Interoperability: Deepen real-time cross-border linkages (similar to the Singapore PayNow-UPI linkage) across top tourist and remittance corridors in Europe, West Asia, and Southeast Asia.

Conclusion:

UPI’s journey from processing six non-cash transactions per capita per year in 2012 to handling over 28,000 crore annual payments in 2026 is a global success story. As the network expands into rural markets and international corridors, transitioning from a government-subsidized zero-fee regime to a calibrated, large-merchant MDR framework is essential. Balancing accessibility for ordinary citizens with financial sustainability for fintech providers will ensure UPI remains secure, innovative, and resilient for its next decade of growth.

Context: Leading public health and nutrition experts—including Dr. Soumya Swaminathan and Dr. V. Mohan—jointly highlighted the policy implications of the draft National Food Security (Amendment) Bill, 2026.

About The Proposed Reset: National Food Security (Amendment) Bill, 2026

What it is?

• The proposed reset aims to resolve structural inequities between individual and household entitlements under the NFSA. Currently, Priority Households (PHH) receive 5 kg of foodgrains per person per month, whereas Antyodaya Anna Yojana (AAY) households (the poorest of the poor) receive a flat quota of 35 kg per household per month.

Key Features of the Draft National Food Security (Amendment) Bill, 2026:

• Amends NFSA, 2013: Proposes to amend the first proviso to Section 3(1) of the National Food Security Act, 2013.
• Per-Person AAY Entitlement: Every person belonging to an Antyodaya Anna Yojana (AAY) household will be entitled to 7 kg of foodgrains per month.
• 35-kg Household Ceiling: The total entitlement of an AAY household will be capped at 35 kg per month, irrespective of household size.
• Shift from Household to Individual Basis: Replaces the existing uniform 35 kg per household entitlement with a per-person allocation, subject to the overall ceiling.
• Addressing Intra-Category Inequity: Seeks to correct disparities under which smaller AAY households receive more foodgrain per capita than larger households.
• Rational & Nutrition-Linked Allocation: Aims to provide a more rational distribution of foodgrains and better align entitlements with individual nutritional requirements.
• Government-Determined Implementation: The extent of AAY coverage will continue to be specified by the Central Government for each State, while the amendment will take effect from a date notified in the Official Gazette.

Key Data & Statistics:

• Drop in Healthy Diet Inaffordability: Household consumption surveys indicate that the share of Indian households unable to afford the ICMR-NIN recommended healthy diet fell from ~52% in 2011–12 to ~25% in 2023–24.
• Impact of Draft Proposal on Small Households: In Tamil Nadu, 84.5% of AAY households (15.75 lakh out of 18.64 lakh) have fewer than 5 members. Capping their entitlement at 7 kg/person would reduce the state’s monthly AAY allocation by 35.6% (from 65,261 to 42,040 tonnes).
• Outdated Population Ceiling: The NFSA beneficiary ceiling remains capped at 81.35 crore people based on the 2011 Census. Against an estimated 2025 population of 146.4 crore, the current system covers only 55.6% of the population, falling short of the intended statutory targets (75% rural and 50% urban).
• Double Burden of Malnutrition (NFHS-6 & ICMR-INDIAB Data):
  • Under-5 stunting fell to 29.3%, but child wasting (19.0%) and underweight rates (31.8%) remain largely stagnant.
  • Only ~15% of infants (6–23 months) receive a minimally adequate diet.
  • Over 101 million Indians have diabetes and 136 million have prediabetes.
• Carbohydrate Intake & Glycemic Risk: The ICMR-INDIAB study revealed that carbohydrates supply 62.3% of daily energy nationally (versus 12% from protein). Adults with the highest carbohydrate intake face 30% higher odds of developing type 2 diabetes.

Key Issues & Concerns Surrounding the Amendment:

• The Small Household Vulnerability Trap: Capping AAY allocations at 7 kg per person disproportionately penalizes small households consisting of single elderly individuals, widows, or persons with disabilities who heavily rely on the full 35 kg quota.
• Stagnant Beneficiary Ceilings: Delaying the recalculation of beneficiary ceilings until the post-2026/2027 Census excludes millions of eligible rural and urban poor who have entered the population since 2011.
• Cereal-Centric Over-Reliance: Providing carbohydrates alone fails to reverse wasting, micronutrient deficiencies, and NCD risks. ICMR-NIN 2024 guidelines recommend that cereals/millets supply at most 45% of total daily energy, with the remainder coming from pulses, milk, vegetables, and fats.
• Digital Authentication & Last-Mile Friction: Biometric failures on Electronic Point of Sale (ePoS) devices or lack of offline workarounds risk denying food access to elderly and mobile beneficiaries.

Recommendations & The Way Forward:

• Enforce an Explicit No-Loss Safeguard: Ensure that any revised per-person formula preserves the existing 35 kg  monthly baseline for all AAY households, treating support above 35 kg for larger households as a separate entitlement.
• Separately Budget and Finance Dietary Diversification: Expand the Public Distribution System (PDS) basket to include subsidized pulses, local millets, and healthy edible oils without reducing cereal allocations.
• Recalculate Coverage Ceilings Post-Census: Update NFSA beneficiary limits using the 2027 Census figures and revised deprivation criteria to eliminate exclusion errors.
• Leverage PDS Outlets for NCD Screening & Awareness: Use Fair Price Shops to distribute multilingual nutrition information and voluntarily link beneficiaries to local Ayushman Arogya Mandirs for diabetes and hypertension screenings.
• Strengthen Last-Mile Delivery Protocols: Enforce reliable offline authentication mechanisms, assisted delivery, and doorstep delivery for mobility-impaired individuals to guarantee dignified access.

Conclusion:

Resetting the National Food Security Act provides an opportunity to transition from basic calorie security to holistic nutrition security. Preserving the 35 kg AAY baseline while separately funding dietary diversification ensures that India’s safety nets protect vulnerable families from both hunger and non-communicable diseases. Ultimately, the success of India’s food security policy must be evaluated not merely by the volume of grain distributed, but by whether every family can access a healthy diet with dignity.

Context: The Ministry of Textiles is organising ‘Srijan: Voices from the Loom’ in New Delhi to celebrate the contribution of women weavers to India’s handloom heritage.

About Srijan: Voices from the Loom:

What is it?

• Srijan: Voices from the Loom is a special programme recognising the stories, skills and contributions of women weavers engaged in India’s handloom sector.
• It provides women artisans a platform to narrate their experiences of resilience, creativity and preservation of traditional weaving practices.

Organised By: Ministry of Textiles, Government of India

Aim: To recognise and amplify the voices of women weavers, celebrate their role in preserving India’s weaving traditions and highlight their contribution to the country’s handloom heritage.

Key Features:

• Women Weaver Participation: Brings together over 100 women weavers from six handloom clusters.
• First-Person Narratives: Provides a platform for weavers to share their personal journeys, challenges and achievements.
• Celebrating Resilience: Highlights how women artisans sustain livelihoods while overcoming social and economic challenges.
• Preserving Weaving Traditions: Recognises women’s role in transmitting traditional handloom skills and knowledge across generations.
• Anthology Release: Features the release of an anthology documenting the stories, journeys and voices of participating women weavers.

Significance:

• Women Empowerment: Enhances the visibility and recognition of women artisans and their economic and cultural contributions.
• Preserving Cultural Heritage: Promotes India’s traditional weaving knowledge and handloom heritage by recognising its practitioners.

Relevance in UPSC Examination Syllabus:

• GS Paper I – Indian Culture:
  • Indian art forms, traditional crafts and preservation of India’s cultural heritage.
• GS Paper II – Social Justice:
  • Women empowerment, livelihood opportunities and issues relating to vulnerable sections.
• GS Paper III – Indian Economy:
  • Handloom and textile sector, employment generation, rural livelihoods and traditional industries.

Context: The Himachal Pradesh government imposed a widow and orphan cess of 60 paise per litre on petrol and high-speed diesel.

About Cess:

What It Is?

• A cess is a specialized, targeted tax levied by the government over and above basic taxes to generate revenue for a specific, pre-determined purpose (e.g., education, road development, worker welfare). Once the earmarked objective is fulfilled, the cess is meant to be discontinued.

Constitutional Article & Devolution Rules:

• Constitutional Provision: Governed under Article 270 of the Constitution of India.
• Exclusion from Divisible Pool: Under Article 270, revenues collected through Union cesses and surcharges are excluded from the divisible pool of taxes shared between the Centre and the States. The central government retains 100% of its collected cess revenues without devolving them through Finance Commission recommendations.

Who Can Impose It?

• Central Government: Imposes nationwide cesses through Parliamentary legislation.
• State Governments: State legislatures hold constitutional powers under List II (State List) and List III (Concurrent List) to levy specific welfare or development cesses on state-level subjects like motor spirits, land, and local infrastructure.

Aim: To create a dedicated, non-lapsable pool of funds for a specific social or infrastructural priority without relying on general budget allocations.

Key Features of a Cess:

• Purpose-Bound Earmarking: Funds raised through a cess are ring-fenced and cannot be diverted or spent on general administrative overheads or unrelated government expenditures.
• Flexible Calculation Bases: Can be calculated either as a tax on tax or as a flat per-unit surcharge.
• Non-Lapsable Fund Allocation: Cess proceeds are typically deposited into dedicated statutory funds so unused funds carry forward to subsequent financial years.
• State-Level Welfare Surcharges: States frequently utilize fuel sales as a convenient administrative base for specific welfare cesses—such as Kerala’s ₹2/litre Social Security Cess or Himachal Pradesh’s 60p/litre Widow and Orphan Cess.

How a Cess Differs from a General Tax?

Context: Indian Railways and IRCTC awarded full commercial train-branding rights for the Lucknow–Delhi–Lucknow Tejas Express (Sprite Tejas Express) to beverage brand Sprite for six months.

About The Sprite Tejas Express:

What It Is?

• The ‘Sprite’ Tejas Express is India’s first privately branded, fully air-conditioned corporate superfast train operated by the Indian Railway Catering and Tourism Corporation (IRCTC) featuring full external/internal brand advertising rights.

Operates Between: Lucknow Junction (LJN), Uttar Pradesh to New Delhi (NDLS).

Zonal Network: Runs under the operational supervision of the North Eastern Railway (NER) zone using Indian Railways infrastructure.

Operator: Indian Railway Catering and Tourism Corporation (IRCTC), paying haulage charges to Indian Railways.

Branding Partner: M/s Sprite (The Coca-Cola Company).

Aim: To commercialize train branding to generate non-fare revenue for IRCTC/Indian Railways while offering high-speed, modern passenger amenities on a key intercity transit corridor.

Key Features:

• First Branded Train Name: Marks the first instance in Indian Railways history where a scheduled train service incorporates a commercial corporate brand name in station audio/visual announcements.
• On-Board Passenger Comforts: Equipped with modern LHB coaches, extensive high-quality on-board food/beverage catering, and personalized infotainment systems.
• Group Booking Provision: Allows corporate groups, wedding parties, or event travelers to book an entire AC Chair Car coach (78-seat capacity) as a single block.
• Semi-High-Speed Operations: Runs 6 days a week, covering the ~512 km route between Lucknow and New Delhi in approximately 6 hours and 15 minutes.

Context: Chester Zoo in the UK announced the birth of Rana, a rare babirusa piglet, amid declining wild populations threatened by African swine fever, habitat loss, and hunting in Indonesia.

About The Indonesian Babirusa:

What It Is?

• The babirusa (genus Babyrousa)—commonly known as the pig-deer—is one of the oldest living and strangest wild pig species. The name babirusa comes from the Malay language, describing its distinctive look and stag-like upper tusks.

Geographic Range: Endemic exclusively to four Indonesian islands: Sulawesi, Togian, Sula, and Buru.

Ecosystem: Inhabits tropical rainforests, swamps, and wetlands, frequently choosing areas near riverbanks and natural ponds rich in aquatic plants.

IUCN Status: Vulnerable on the IUCN Red List of Threatened Species.

Key Characteristics:

• Unique Upper Tusks (Males Only): Male babirusas possess upper canine teeth that grow upward, pierce through the skin of their snout, and curve backward toward their forehead.
• Small Litters & Long Gestation: Unlike standard pigs that give birth to large litters, female babirusas give birth to only one or two piglets per litter after a highly predictable 155 to 161-day gestation period.
• Sparse Hair & Unstriped Piglets: They possess barrel-shaped bodies with bristly, nearly hairless grey-brown skin. Uniquely for wild pigs, newborn piglets lack protective camouflage stripes.
• Agile Omnivorous Foragers: They use specialized hooves to dig for roots and insect larvae, stand on two hind legs to reach high leaves, and can run at speeds up to 30 mph.
• Distinct Behaviors & Scent-Marking: Solitary or social in small groups, they communicate through grunts and tooth-clattering, and practice an unusual ploughing behavior—kneeling and pushing their heads through soft sand while foaming at the mouth.

Significance:

• Babirusas aid seed dispersal and forest regeneration, making them indicators of ecosystem health.
• An ancient pig lineage depicted in prehistoric Indonesian cave art; captive breeding provides a genetic safeguard against extinction.

Context: Parliament passed the Kerala (Alteration of Name) Bill, 2026, officially renaming Kerala as Keralam, following a unanimous resolution by the State Legislative Assembly.

About The Parliament passes bill to rename Kerala as Keralam:

What It Is?

• The Kerala (Alteration of Name) Bill, 2026 is a Parliamentary law that amends the First Schedule of the Constitution of India to change the official name of the state from Kerala to Keralam—aligning the English legal name with its native Malayalam pronunciation and cultural heritage.

Constitutional Provisions Involved:

• Article 3 of the Constitution: Empowers Parliament by law to form new states, alter state boundaries, or change the name of any existing state.
• First Schedule Amendment: Modifies Entry 15 of the First Schedule of the Constitution, which lists the names and territorial extents of the States.

Procedure to Change the Name of a State:

• Initiation & State Resolution: The process typically begins when a State Legislative Assembly passes a formal resolution requesting the Centre to alter the state’s official name.
• Presidential Recommendation: A Bill proposing the name change can only be introduced in either House of Parliament on the prior recommendation of the President of India.
• Reference to the State Legislature: Before recommending the Bill, the President refers it to the affected State Legislative Assembly to express its views within a specified timeframe.
• Non-Binding State Views: While consulting the State Assembly is mandatory to uphold cooperative federalism, the views or suggestions expressed by the State Assembly are not binding on either the President or Parliament.
• Introduction in Parliament: Once the referral period expires or views are received, the Bill is formally introduced in Parliament.
• Passage by Simple Majority: As specified under Article 4, the Bill is treated as an ordinary bill and must be passed by both Houses (Lok Sabha and Rajya Sabha) with a simple majority (50% + 1 of members present and voting).
• Presidential Assent & Gazette Notification: Upon receiving the President’s assent, the Act comes into force, formally modifying the First Schedule of the Constitution and altering the legal name of the state.

Significance:

• Cultural & Linguistic Identity: Restores the native Malayalam name ‘Keralam’, reflecting the State’s cultural identity.
• Cooperative Federalism: Reflects Centre–State cooperation, with Parliament acting on a unanimous State Assembly resolution.

Context: The Ministry of Ayush and the Ministry of Health and Family Welfare (MoHFW) renewed their partnership under the ‘One Herb, One Standard’ initiative for an additional three years.

About The One Herb, One Standard (OHOS) Initiative:

What It Is?

• The ‘One Herb, One Standard’ initiative is an inter-ministerial collaborative framework designed to establish unified, scientifically synchronized quality and testing standards (monographs) for medicinal plants used across different systems of medicine in India.

Implementing Organisations:

• Pharmacopoeia Commission for Indian Medicine & Homoeopathy (PCIM&H): Under the Ministry of Ayush.
• Indian Pharmacopoeia Commission (IPC): Autonomous body under the Ministry of Health & Family Welfare.

Aim: To eliminate conflicting quality parameters across different pharmacopoeias, establishing single, clear, and scientifically reliable standards for medicinal herbs to improve the quality, safety, and international credibility of Indian botanical products.

Key Features:

• Harmonized Quality Standards: Synchronizes testing methods and quality parameters for identical medicinal plants across the Indian Pharmacopoeia (IP) and the Ayurvedic, Siddha, Unani, and Homoeopathic (ASU&H) Pharmacopoeias.
• Phase-wise Monograph Development: Builds on the successful development of 50 single-herb monographs created during the first phase (initiated in 2022).
• Cross-System Integration: Applies universally to single drugs of plant origin utilized across five recognized systems: Ayurveda, Siddha, Sowa-Rigpa, Unani, and Homoeopathy.
• Alignment with Global Benchmarks: Integrates international quality parameters alongside Indian standards to ensure Indian botanical monographs meet global trade and regulatory demands.
• Streamlined Testing Protocols: Provides testing laboratories, regulators, and manufacturers with a single reference standard, avoiding conflicting analytical requirements.

Significance:

• Ease of Doing Business & Exports: Reduces regulatory ambiguity and simplifies testing and compliance for Indian botanicals.
• Global Acceptance of Ayush Products: Internationally aligned standards improve safety, credibility, and export potential of Indian herbal products.

Context: A container ship paid nearly $4 million to bypass a 10-day Panama Canal queue amid surging shipping demand, Middle East diversions, and drought-related transit restrictions.

About The Panama Canal:

What It Is?

• The Panama Canal is an artificial 50-mile (82 km) lock-type waterway that cuts across the narrow Isthmus of Panama. Connecting the Atlantic Ocean (via the Caribbean Sea) with the Pacific Ocean, it serves as one of the world’s most critical maritime transit choke points.

Location & Governance:

• Location: Situated at 9° N latitude in Central America across the Isthmus of Panama, connecting Colón on the Atlantic side to Balboa/Panama City on the Pacific side.
• Administrative Control: Solely owned, operated, and administered by the autonomous Panama Canal Authority (ACP) (Autoridad del Canal de Panamá), an agency of the Government of Panama.

History:

• Construction & Opening: Built by the United States Army Corps of Engineers and officially opened on August 15, 1914.
• Transition of Sovereignty: Jointly administered under the Panama Canal Commission from 1979 until full control was handed over to Panama on December 31, 1999.
• Third Set of Locks Expansion: Opened in June 2016 (Neopanamax locks), accommodating larger, deeper-draft vessels and integrating water-saving basins that recycle 60% of lockage water.

Key Features:

• Gravity-Fed Freshwater Lock System: Operates without pumps, relying on natural gravity flow from artificial freshwater lakes—primarily Gatún Lake and Alajuela Lake—fed by the Chagres River.
• Step-Lock Elevation: Uses a series of locks (Gatún on the Atlantic side; Pedro Miguel and Miraflores on the Pacific side) to lift ships 85 feet (26 meters) above sea level over the Continental Divide via the Gaillard (Culebra) Cut.
• Electric Towing Locomotives (Mules): Trains riding on cog tracks along the lock walls guide large vessels through the original lock chambers to keep them centered and prevent hull collisions.
• Water-Saving Neopanamax Basins: The 2016 expansion locks utilize 182 million liters of water per transit, capturing and recycling 60% of the water used in adjacent basins to minimize lake depletion.
• Auction & Reservation Slot Mechanism: While regular transits follow pre-booked slots, the ACP operates a competitive daily auction system allowing non-reserved vessels to bid high premiums to bypass multi-day queues.

Global Significance:

• Avoids the lengthy Cape Horn route, saving up to 8,000 nautical miles and weeks of travel.
• Carries around 3–5% of global maritime trade, including energy, agricultural commodities, and manufactured goods.