UPSC Key: Money Bill, Polymer Banknotes and Sedimentation in River

Govt reaches out to Opp, ready to soften FCRA Bill, allay concerns

Syllabus:

Preliminary Examination: Current events of national and international importance.

Main Examination: General Studies II: Development processes and the development industry —the role of NGOs, SHGs, various groups and associations, donors, charities, institutional and other stakeholders.

What’s the ongoing story: On the day it reached out to the Opposition in an attempt to break the deadlock in Parliament where proceedings remain disrupted, the government Wednesday signalled that the Foreign Contribution (Regulation) Amendment Bill, 2026 would not have any penalising retrospective provision.

Key Points to Ponder:

• Foreign Contribution (Regulation) Amendment (FCRA) Bill, 2026-what are the key highlights?

• Why Foreign Contribution (Regulation) Amendment (FCRA) Bill, 2026 is termed as contentious?

• What are issues with Foreign Contribution (Regulation) Amendment (FCRA) Bill, 2026?

• Foreign Contribution (Regulation) Act (FCRA)-What and When it was enacted?

• Rationality behind the enactment of Foreign Contribution (Regulation) Act (FCRA)?

• NGOs and FCRA-why most of the NGOs are brought under FCRA?

• What is foreign contribution defined in Section 2(1)(h) of FCRA, 2010?

• What is a foreign source?

• Can NGOs use the foreign contributions for investment in Mutual Funds and other speculative investments?

• Who can receive foreign contribution?

• Who cannot receive foreign contribution?

• Are there any banned organisations from whom foreign contribution should not be accepted?

• What is ‘pressure group’?

• What is Non-governmental Organizations?

• What are the legislations which regulates the finances of NGOs in India?

• A large number of Non-governmental Organizations (NGOs )exist in India-Can you recall some of those?

• Relationship between Government and Non-governmental Organizations -Analyse

• What is difference between charity and Non-Governmental Organization (NGO)?

• Know the terms and differences between them- Non-Governmental Organization, Non-Profit Organization Charity Organization, Pressure Group and Social Enterprise

Key Takeaways:

• Civil society and religious groups have expressed concern that asset-vesting rules in the Bill could be used to penalise past investments. Sources told The Indian Express the introduction of the Bill during the ongoing monsoon session – it is scheduled to end August 13 – will depend on the Opposition’s readiness to allow a debate.

• Critics have pointed to three provisions in the Bill. Section 14B introduces the concept of “cessation” of an FCRA certificate. It says a certificate is deemed to have ceased if an organisation does not apply for renewal, its renewal is refused or it expires without being renewed.
Section 16A provides that once a certificate has ceased, foreign contributions received by the organisation and assets created from them will vest in a Designated Authority. The authority can manage the assets and, if the organisation subsequently secures a fresh or renewed registration within the prescribed period, return them. If that does not happen, the assets permanently vest with the authority, which may transfer them to government departments or agencies or dispose in accordance with the law.

• Section 16B applies the new framework to assets already vested under the earlier law before the amendment comes into force. Critics argue that, read together, these provisions could also affect organisations whose FCRA registrations had lapsed years ago. According to this interpretation, even organisations that had stopped receiving foreign donations and were functioning entirely on domestic funds could be brought within the new vesting framework because their certificates had “ceased”, potentially bringing assets such as schools, hospitals and community centres built with foreign contributions under the control of the Designated Authority. The government, however, has not stated in the Bill that this is its intended effect.

• The concerns are over a framework for vesting assets created through foreign contributions with a government-designated authority when an organisation’s FCRA registration is cancelled, surrendered or ceases. This has caused anxiety among Christian organisations because many churches and institutions have been built using foreign contributions.

Do You Know:

• The FCRA was first enacted during the Emergency in 1976 amid apprehensions that foreign powers were interfering in India’s affairs by pumping money into the country through independent organisations.

• The law sought to regulate foreign donations to individuals and associations so that they functioned “in a manner consistent with the values of a sovereign democratic republic”.
An amended FCRA was enacted under the UPA government in 2010 to “consolidate the law” on utilisation of foreign funds, and “to prohibit” their use for “any activities detrimental to national interest”.

• According to the 2010 law, NGOs, similar associations and individuals have to obtain registration or permission to be able to accept foreign contributions. Such contributions are divided under five broad heads: cultural, economic, educational, social and religious purposes.

• The key change proposed by the 2026 amendment is the creation of a “designated authority” that the Union government will have the power to appoint. This replaces Section 15 of the existing Act.

• According to the Statement of Objects and Reasons, while the existing section did provide for vesting of assets, “the absence of a comprehensive framework” for such assets has led to “administrative uncertainty and scope for misuse”. The Statement of Objects and Reasons also cites “multiplicity of investigations, inconsistency in penalties, absence of timelines for utilisation, lack of express provision for cessation of registration, and ambiguity regarding treatment of assets during suspension”.

• The Bill proposes that the designated authority will take over, supervise and manage foreign contributions and assets of an association in case their FCRA registration is cancelled, surrendered or otherwise ceases.

• The controversy over the Bill appears to have gained significant traction in Kerala, which votes on April 9. According to the 2011 Census, which puts the state’s total population upwards of 3.34 crore, Christians constitute the second-largest minority in Kerala with a population of more than 61 lakh. This makes the Christian community a key voter base in the state. Indeed, the BJP has been attempting to reach out to them for years.

Other Important Articles Covering the same topic:

📍New FCRA bill is about control, not transparency. it must be opposed

Previous year UPSC Main Question Covering similar theme:
📍Examine critically the recent changes in the rules governing foreign funding of NGOs under the Foreign Contribution (Regulation) Act (FCRA), 1976. (2015)

Money Bill route pending before SC, Govt chooses it to raise strength of judges

Syllabus:

Preliminary Examination: Indian Polity and Governance-Constitution, Political System, Panchayati Raj, Public Policy, Rights Issues, etc.

Mains Examination: General Studies II: Parliament and State legislatures—structure, functioning, conduct of business, powers & privileges and issues arising out of these

What’s the ongoing story: The Rajya Sabha Wednesday passed the Supreme Court (Number of Judges) Amendment Bill, 2026, which seeks to increase the sanctioned strength of Supreme Court judges from 34 to 38 including the Chief Justice of India.

Key Points to Ponder:

• How can the number of judges in the Supreme Court be increased?

• Why has Parliament increased the number of Supreme Court judges recently?

• The Supreme Court (Number of Judges) Amendment Bill, 2026-what are the key provisions?

• At present, the Supreme Court consists of how many judges?

• Why the Supreme Court (Number of Judges) Amendment Bill, 2026 is passed as money bill?

• Why the Money Bill route remains controversial

• Article 110 of the Constitution deals with what?

• When can a bill be designated as a Money Bill?

• Who decides if a bill is Money Bill or not?

• There is a key difference between a money Bill and an ordinary Bill-what is that?

• Rajya Sabha and Money Bill-connect the dots

Key Takeaways:

• The Bill, which cleared Lok Sabha Monday, was passed as a money Bill, a route it had also taken in 2019 when the Supre¬me Court strength was raised to 34. In 2018, a key dissenting opinion in a Supreme Court ruling had described this route as a “fraud on the Constitution.”

• The Statement of Objects and Reasons of the Bill cites the expenditure involved in creating four additional posts of judges, along with staff, residences and security.

• “This will increase the expenditure on account of pay and allowances on creation of four additional posts of Judges in the Supreme Court along with required staff. The Judges will also be entitled to the use of a rent-free official residence. Each Judge will have to be provided with personal staff at residence and office. Expenditure would also be incurred in connection with the deployment of security for Judges. ⁠The estimated recurring expenditure on salaries of four Judges and their staff, conveyance and other miscellaneous expenses would be rupees 10,56,81,648 per annum and non-recurring expenditure towards car and furnishing of official residence and other miscellaneous expenses will be approximately rupees 3,47,36,000. Thus, the total expenditure on creation of additional four posts of Judges in the Supreme Court of India will be of rupees 14,04,17,648 approximately,” the Bill stated.

Do You Know:

• Under Article 110(1) of the Constitution, a Bill is deemed to be a Money Bill if it contains only provisions dealing with all or any of the following matters:
(a) the imposition, abolition, remission, alteration or regulation of any tax;
(b) regulation of borrowing by the government;
(c) custody of the Consolidated Fund or Contingency Fund of India, and payments into or withdrawals from these Funds;
(d) appropriation of moneys out of the Consolidated Fund of India;
(e) declaring of any expenditure to be expenditure charged on the Consolidated Fund of India or the increasing of the amount of any such expenditure;
(f) receipt of money on account of the Consolidated Fund of India or the public account of India or the custody or issue of such money or the audit of the accounts of the Union or of a State; or
(g) any matter incidental to any of the matters specified in sub-clauses (a) to (f).
But a Bill shall not be deemed to be a Money Bill by reason only that it provides for the imposition of fines or other pecuniary penalties, or for the demand or payment of fees for licences or fees for services rendered, or by reason that it provides for the imposition, abolition, remission, alteration or regulation of any tax by any local authority or body for local purposes.

• A money Bill can only be introduced in the Lok Sabha, and the Speaker categorising a Bill as a “money Bill” means that it need not be passed by the Rajya Sabha. The Union Budget, for example, is a money Bill. Article 110(1) (g) adds that “any matter incidental to any of the matters specified in Articles 110(1)(a)-(f)” can also be a money Bill. This additional clause has been the basis for the Modi government to pass key legislations as money Bills in its previous terms. The Opposition had argued then that this was done only because the government did not have the numbers to get these legislations cleared in the Rajya Sabha.

• Under Article 109 (1), a Money Bill cannot be introduced in Rajya Sabha. Once passed by Lok Sabha, it is sent to Rajya Sabha — along with the Speaker’s certificate that it is a Money Bill — for its recommendations. However, Rajya Sabha can neither reject nor amend the Bill, and must return it within 14 days, after which Lok Sabha may choose to accept or reject all or any of its recommendations. In either case, the Bill is deemed to have been passed by both Houses. Under Article 109(5), if Rajya Sabha fails to return the Bill to Lok Sabha within 14 days, it is deemed to have been passed anyway.

Other Important Articles Covering the same topic:

📍RS passes judges Bill; Opp raises ordinance route, diversity deficit

Previous year UPSC Prelims Question Covering similar theme:
1) Which of the following statements are correct in respect of a Money Bill in the Parliament? (UPSC CSE, 2024)
1. Article 109 mentions special procedure in respect of Money Bills.
2. A Money Bill shall not be introduced in the Council of States.
3. The Rajya Sabha can either approve the Bill or suggest changes but cannot reject it.
4. Amendments to a Money Bill suggested by the Rajya Sabha have to be accepted by the Lok Sabha.
Select the answer using the code given below:
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1, 2 and 3
(d) 1,3 and 4

2) Regarding Money Bill, which of the following statements is not correct? (UPSC CSE, 2018)
(a) A bill shall be deemed to be a Money Bill if it contains only provisions relating to imposition, abolition, remission, alteration or regulation of any tax.
(b) A Money Bill has provisions for the custody of the Consolidated Fund of India or the Contingency Fund of India.
(c) A Money Bill is concerned with the appropriation of moneys out of the Contingency Fund of India.
(d) A Money Bill deals with the regulation of borrowing of money or giving of any guarantee by the Government of India.

3) The power to increase the number of judges in the Supreme Court of India is vested in (UPSC CSE, 2014)
(a) the President of India
(b) the Parliament
(c) the Chief Justice of India
(d) the Law Commission

Previous year UPSC main Question Covering similar theme:
📍Discuss the evolution of the collegium system in India. Critically examine the advantages and disadvantages of the system of appointment of the Judges of the Supreme Court of India and that of the USA. (2025)

RBI keeps interest rates unchanged, opts for caution amid uncertain global outlook

Syllabus:

Preliminary Examination: Economic and Social Development-Sustainable Development, Poverty, Inclusion, Demographics, Social Sector Initiatives, etc.

Mains Examination: General Studies III: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.

What’s the ongoing story: The Reserve Bank of India’s Monetary Policy Committee (MPC) Wednesday kept its key policy repo rate unchanged at 5.25 per cent, opting for caution as volatile crude oil prices, geopolitical tensions in West Asia and an uncertain global outlook cloud the inflation trajectory.

Key Points to Ponder:

• Why RBI kept its key policy repo rate unchanged at 5.25 per cent?

• Why the central bank maintains the neutral policy stance?

• What happens if key policy repo rate remains unchanged?

• How repo rate affects economy?

• What happens when repo rate is increased?

• Repo rate is the rate at which central bank of a country (in our case Reserve Bank of India) lends money to whom?

• In reverse repo rate is the rate at which the central bank of a country (Reserve Bank of India in case of India) borrows money from whom?

• ‘Repo rate at 5.25 per cent’-What do you understand by this?

• If Repo Rate is increased or say decreased then it impacts common people?

• Who decides the repo rate and reverse repo rate?

• How repo rate and reverse repo rate are decided?

• What is the difference between repo rate and interest rate?

Key Takeaways:

• While the central bank maintained the neutral policy stance and marginally raised its growth forecast for FY27 to 6.7 per cent from 6.6 per cent, it lowered its inflation projection to 5 per cent from 5.1 per cent, signalling confidence that price pressures will moderate over the course of the year despite near-term risks.

• The decision, taken unanimously by the six-member MPC chaired by RBI Governor Sanjay Malhotra, means borrowing and deposit rates are expected to remain stable for now.

• Home, vehicle and gold loan borrowers are unlikely to see any change in their EMIs, while banks are also expected
to maintain existing fixed deposit and savings account rates unless they choose to revise them independently.

• The RBI’s decision comes against the backdrop of heightened uncertainty in global markets. The continuing conflict in West Asia has kept international crude oil prices volatile, posing inflationary risks for India, which imports the bulk of its crude oil requirements. Elevated energy prices have the potential to feed into transportation and production costs, making inflation management more challenging.

• Unveiling the monetary policy, Malhotra indicated that the RBI has opted for continuity as global uncertainties continue to weigh on the economic outlook. “Financial markets remain volatile, fluctuating in line with the changing intensity and uncertainty of the West Asia conflict,” he said.

• While headline inflation has moved above the RBI’s medium-term target, the rise has largely been driven by food and fuel prices rather than broad-based demand pressures.

Do You Know:

• The RBI’s cautious approach also comes at a time when major central banks are adopting a wait-and-watch stance. The US Federal Reserve also kept the federal funds target range unchanged at 3.50-3.75 per cent on July 29 amid concerns over inflation, underscoring the broader global trend of policy restraint despite slowing economic momentum.

• A six-member statutory body led by the Reserve Bank of India (RBI) Governor that fixes the benchmark repo rate to target inflation while supporting growth. Established in 2016, it includes three RBI officials and three government-appointed external members.

• A repo rate of 5.25% means the Reserve Bank of India charges commercial banks 5.25% interest when they borrow short-term money. This rate sets the baseline for the financial system. An unchanged rate of 5.25% means borrowing costs stay steady, so existing loan EMIs and fixed deposit returns will not see an immediate change.

Other Important Articles Covering the same topic:

📍Outlook hazy, need clarity before taking any policy action: RBI Gov

Previous year UPSC Prelims Question Covering similar theme:
4) If the RBI decides to adopt an expansionist monetary policy, which of the following would it not do? (UPSC CSE, 2020)
1. Cut and optimize the Statutory Liquidity Ratio
2. Increase the Marginal Standing Facility Rate
3. Cut the Bank Rate and Repo Rate
Select the correct answer using the code given below:
(a) 1 and 2 only
(b) 2 only
(c) 1 and 3 only
(d) 1, 2 and 3

Previous year UPSC Prelims Question Covering similar theme:
📍What are the causes of persistent high food inflation in India? Comment on the effectiveness of the monetary policy of the RBI to control this type of inflation. (2024)

Explained

How SC’s gender guide differs from the 2023 version

Syllabus:

Preliminary Examination: Current events of national and international importance.

Main Examination: General Studies II: Structure, organization and functioning of the Executive and the Judiciary.

What’s the ongoing story: Trial court judges must actively prevent the secondary traumatisation of sexual assault survivors, control aggressive cross-examinations and develop an “Emotional Quotient” to handle cases involving crimes against women: these are among the key recommendations laid out in a new Supreme Court report aimed at bringing gender sensitivity to the Indian judiciary, published on Monday.

Key Points to Ponder:

• What are the key takeaways from the report titled “Judgments and Gender: Sensitivity and compassion in writing judgments”?

• How the recent gender guide differs from the 2023 “Handbook on Combating Gender Stereotypes”?

• Why a new report?

• Why eliminating gender stereotypes from judicial decision-making is important?

• Which landmark judgment laid down guidelines on workplace sexual harassment?

• Gender-sensitive adjudication is essential for ensuring substantive equality under the Constitution—Discuss.

• Asses the role of the judiciary in advancing gender justice in India.

• Empathy and impartiality are indispensable qualities for judges-how far you agree?

Key Takeaways:

• Titled “Judgments and Gender: Sensitivity and compassion in writing judgments”, the report, drafted by an expert committee headed by former Supreme Court judge Justice Aniruddha Bose, emphasises practical courtroom management and ensuring that the legal process does not re-traumatise victims. This marks a shift from the 2023 “Handbook on Combating Gender Stereotypes” published by the apex court that had focused on helping judges identify and avoid patriarchal language — a handbook that the new report will replace.

• While the 2023 document largely focused on identifying and replacing stereotype-promoting language, the new report addresses the trauma that a victim faces in the criminal justice system. It notes that judges require an “Emotional Quotient” to supplement their “Intelligence Quotient” when discharging judicial functions.

• The report highlights how survivors are routinely met with insensitive remarks from police and authorities, such as “samjhauta kar lo, ghar bach jayega (make a compromise, your house will be saved)” or “lipstick laali lagakar complaint likhwane aayi ho? (you have come to lodge a complaint wearing lipstick?)”. Such statements, instead of building a survivor’s confidence, it notes, traumatise them and deter them from seeking justice.

• To combat this, the report recommends “compassionate court practices”. It urges judges to use the Bharatiya Sakshya Adhiniyam’s provisions that bar defence lawyers from asking indecent, scandalous and annoying questions. This is particularly relevant to questions about a survivor’s sexual history, which the report reiterates is immaterial to a rape trial.

• The report also advocates treating witnesses as “guests” invited to help the court, rather than going through “long waits and poor treatment in court, which can discourage them from testifying”. It also recommends pre-trial counselling for victims to alleviate anxiety and that trials for sexual offences be held in camera – which means they are conducted in private, closed-door proceedings to protect the survivor’s privacy.

Do You Know:

• Both the new report and the 2023 handbook contain glossaries of terms to avoid, but their focus areas are different.

• The 2023 handbook, issued under then Chief Justice of India D Y Chandrachud, was designed to replace colloquial or archaic words with neutral legal terms. For instance, it advised judges to use “street sexual harassment” instead of “eve teasing”, “homemaker” instead of “housewife”, and “woman who has engaged in sexual relations outside of marriage” instead of “adulteress”. It also elaborated on the need to dismantle assumptions about women’s supposedly inherent characteristics, such as the idea that women are overly emotional or that all women want to have children.

• The 2026 report, on the other hand, targets the moralistic terms recurring in trial court judgments. After analysing 125 trial court verdicts, the Justice Bose-led committee curated a list of problematic phrases to avoid. For example, it suggests replacing the phrase “the body of women as playground” with “violated bodily autonomy”. Instead of writing that a crime “destroys the very soul of a helpless woman”, judges are advised to write that the crime “caused severe trauma to the survivor”.

• It asks judges to avoid terms like “lost her chastity” or “helpless female” and to refrain from using religious or cultural references like “where women are honoured, there the gods rejoice”, advising them to focus strictly on legal rights instead.

• The arc of the new report can be traced back to a March 2025 judgement of the Allahabad High Court, in which the court ruled that acts such as grabbing a woman’s breasts and loosening her pyjama string constituted only a “preparation” to commit rape, rather than an “attempt” to rape.

Other Important Articles Covering the same topic:

📍Beyond Harvard standards: Supreme Court seeks expert view for guidelines to end judicial insensitivity in sexual offence trials

Previous year UPSC Main Question Covering similar theme:
📍“Though women in post-Independent India have excelled in various fields, the social attitude towards women and feminist movement has been patriarchal.” Apart from women education and women empowerment schemes, what interventions can help change this milieu? (UPSC CSE, 2021)

Silt in rivers to urbanisation: Behind Kerala’s worsening floods

Syllabus:

Preliminary Examination: Indian and World Geography

Main Examination: General Studies I: Important Geophysical phenomena such as earthquakes, Tsunami, Volcanic activity, cyclone etc., geographical features and their location-changes in critical geographical features (including water-bodies and ice-caps) and in flora and fauna and the effects of such changes.

What’s the ongoing story: An unexpected spell of extremely heavy rainfall in early August has triggered flooding in several parts of Kerala, with Kottayam, Pathanamthitta and Alappuzha districts among the worst affected.

Key Points to Ponder:

• What is sedimentation in a river?

• Why is Kerala vulnerable?

• Why are floods becoming increasingly frequent and intense in Kerala?

• What is the role of the Western Ghats in influencing Kerala’s rainfall and flood patterns?

• Discuss the role of Centre–State coordination in disaster preparedness and climate adaptation.

• What is the significance of the Sendai Framework?

• What is the role of wetlands, floodplains and forests in mitigating flood disasters in India?

Key Takeaways:

• Twenty-six people were killed and four others were missing in monsoon-related incidents while more than 27,000 were sheltering in around 460 relief camps as of Wednesday (August 5), said Chief Minister V D Satheesan.

• Studies conducted by Kerala’s irrigation department have found that sedimentation in rivers and water bodies contributed to the intensity of the crisis. The water-holding capacity of rivers has significantly declined owing to the accumulation of silt and sand over the last decade.

• The 2018 floods, which had deposited huge amounts of sediment into the rivers, aggravated the situation, reducing their capacity to carry water — especially during flash floods.
Landslides in hilly and forest areas also deposited huge volumes of soil and sand in river beds. Sediment accumulation has also resulted in formation of deltas, which obstruct the flow of floodwater.

• The extremely heavy rains have increased the water level in all dams, run by both the state electricity board and the irrigation department. A CAG report in 2021 had found a significant fall in storage capacity of dams due to sedimentation.

• Rapid urbanisation, coupled with change in land use patterns, have shrunken the state’s paddy fields, marshlands and wetlands, which would have absorbed a huge volume of rainfall. According to data from the state statistics department, Kerala had had 7.93 lakh hectares of land as paddy in 1979-80. This fell to 2.05 lakh hectares in 2020-21 and to 1.80 lakh hectares in 2023-24.

• Kerala’s dense network of concrete roads, tarred lanes and paved surfaces across both rural and urban areas has
significantly altered the state’s natural hydrology. During heavy rains, these impervious surfaces channel stormwater rapidly into nearby rivers and streams, causing water levels to rise within hours.

• This rapid runoff has become a defining feature of the state’s landscape, where tarred roads and concrete pavements extending from the hills and other high-lying areas effectively function as channels for stormwater. As a result, many roads in low-lying areas become inundated within a short time as large volumes of runoff rush downstream from these paved surfaces.

Do You Know:

• The state government is planning to desilt rivers and reservoirs to ensure that they have enough room to hold water. Chief Minister Satheesan on Wednesday said: “There is no room for water to flow. A heavy spell of rain can leave our rivers swollen or overflowing. To lower the threat of floods, the sedimentation in rivers and dams will be removed urgently. An asset register will be prepared for rivers, streams and lakes and land auditing will be conducted to prevent encroachment of rivers,” he said after the cabinet meeting.

• Mining of sand from rivers and reservoirs can also act as a source of income for the government. Till a decade back, sand mining in rivers had been widespread, but was banned following indiscriminate mining, which raised environmental concerns. Besides, after the manufactured sand (made from pulversing rock) gained dominance in the construction sector, the demand for river sand had gone down.

• Sedimentation and flooding are deeply connected processes in river systems. Heavy rainfall and soil erosion send loose dirt and sand into rivers. When water slows down, these materials settle at the bottom, raising the river bed, shrinking water storage capacity, and causing floodwaters to spill over banks more easily.

Other Important Articles Covering the same topic:

📍Kerala rains leave 8 dead, 8 missing; nearly 5,800 shifted to relief camps

Previous year UPSC Prelims Question Covering similar theme:
5) The World Bank warned that India could become one of the first places where wet-bulb temperatures routinely exceed 35 °C. Which of the following statements best reflect(s) the implication of the above-said report? (UPSC CSE, 2025)
I. Peninsular India will most likely suffer from flooding, tropical cyclones and droughts.
II. The survival of animals including humans will be affected as shedding of their body heat through perspiration becomes difficult.
Select the correct answer using the code given below.
(a) I only
(b) II only
(c) Both I and II
(d) Neither I nor II

Economy

RBI set to launch ‘plastic’ notes at start of 2027-28

Syllabus:

Preliminary Examination: Current events of national and international importance.

Main Examination: General Studies III: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.

What’s the ongoing story: The Reserve Bank of India (RBI) plans to launch polymer banknotes at the beginning of next financial year (FY28), and people will initially get hold of lower denomination “plastic” notes, that of Rs 10 and Rs 20.

Key Points to Ponder:

• How is the Indian rupee note made?

• What is the raw material of Indian currency notes?

• What is the place value of Indian currency?

• What is the face value of Indian currency?

• What is the manufacturing cost of a coin and rupee note?

• What are polymer currency notes?

• What is Bharatiya Reserve Bank Note Mudran Pvt Ltd’s (BRBNMPL)?

• Is Bharatiya Reserve Bank Note Mudran a private or government company?

Key Takeaways:

• “Polymer notes have two purposes. One, it enhances the durability. This is relevant especially for the lower denominated notes with higher velocity. These notes have been in circulation for more than 30 years in various countries, and one finds that the life is much more, around 2-4 times the life of the paper currency,” Malhotra said at the central bank’s post monetary policy press conference.

• “The second purpose is to expand our capacity as the needs of the economy increase,” he said.

• The new notes will be checked for durability and adaptability to Indian conditions before the RBI clears it for circulation.

• “We will test and check on how they perform in the Indian climate, conditions, and other infrastructure that we have put in place,” Malhotra said. “We are targeting that circulation, if everything goes to plan, starts from the beginning of the next financial year,” he said. The project will begin with the lower denomination notes of Rs 10 and Rs 20 which have “higher velocity” to change hands, and thus are prone to more wear and tear.

• The RBI’s trial of plastic notes will see 100 crore pieces of Rs 10 and Rs 20 notes each being introduced, totalling Rs 3,000 crore. The central bank’s subsidiary Bharatiya Reserve Bank Note Mudran Private Limited had last month floated a global tender for 3.4 crore polymer sheets for the same purpose.

• The tender had deemed the sheets an “immediate requirement” and once field trials were successful, “we intend to go for procurement of larger quantities of substrate across different denominations”.

Do You Know:

• The biggest advantage plastic notes provide over paper notes is that they are far more durable, lasting anywhere between two to six times longer depending on the denomination of the note (small denomination notes are handled more frequently, which reduces their life). And this longer life is the source of nearly all the benefits.

RBI’s cost of printing currency

• The RBI currently spends thousands of crores every year to print currency notes. Just over the last decade, the central bank has spent Rs 52,095 crore in total to print nearly 26,000 crore pieces of notes.
While this is a big sum in itself, it is large even for the RBI, which routinely deals in thousands of crores. In fact, over the last 10 years, the cost of printing paper notes has accounted for anywhere between 15-44% of the RBI’s total expenditure, excluding provisions.

Cash demand rising

• The face value of an Indian currency note is the exact monetary number printed on it (e.g., ₹10, ₹20, ₹50, ₹100, ₹200, ₹500). The place value applies to the individual digits inside the note’s serial number based on where each digit sits (ones, tens, hundreds, thousands, etc.)

• Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL) is a wholly-owned subsidiary of the Reserve Bank of India (RBI) established on February 3, 1995. Its primary objective is to mass-produce and design Indian banknotes to successfully bridge the gap between supply and currency demand in the country.

Other Important Articles Covering the same topic:

📍Explained: The many benefits of replacing paper notes with plastic ones

Previous year UPSC Prelims Question Covering similar theme:
6) With reference to Central Bank digital currencies, consider the following statements: (UPSC CSE, 2023)
1. It is possible to make payments in a digital currency without using US dollar or SWIFT system.
2. A digital currency can be distributed with condition programmed into it such as a time-frame for spending it.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

7) Which of the following are the sources of income for the Reserve Bank of India? (UPSC CSE, 2025)
1. Buying and selling Government bonds
2. Buying and selling foreign currency
3. III. Pension fund management
4. Lending to private companies
5. Printing and distributing currency notes
Select the correct answer using the code given below.
(a) I and II only
(b) II, III and IV
(c) I, III, IV and V
(d) I, II and V

 

PRELIMS ANSWER KEY

1.(c)  2.(c)  3.(b) 4.(b) 5.(c) 6.(c) 7.(d)

  

For any queries and feedback, contact priya.shukla@indianexpress.com

Subscribe to our UPSC newsletter. Stay updated with the latest UPSC articles by joining our Telegram channel – IndianExpress UPSC Hub, and follow us on Instagram and X.