UPSC Mains Current Affairs for 29 September 2025

CAG Report on States’ Macro-Fiscal Health – Explained

September 29, 2025

CAG Report Latest News

The CAG’s decadal analysis of States’ macro-fiscal health highlights uneven revenue sources, rising debt burdens, and the welfare paradox shaping fiscal sustainability across India.

Introduction

India’s States collectively manage some of the largest public budgets in the world, often surpassing those of smaller countries in size.
The recently released decadal analysis of States’ macro-fiscal health by the Comptroller and Auditor General (CAG) offers a crucial snapshot of how reforms, growth, and crises such as the pandemic have shaped their fiscal trajectories.
While some States reported impressive revenue surpluses, others struggle under heavy debt burdens, revealing stark disparities in fiscal sustainability and policy choices.

States’ Macro-Fiscal Landscape in India

In the early 2000s, Indian States were burdened with chronic deficits. Reforms in tax collection, GST implementation, and high growth during the 2010s improved finances, with some States recording surpluses.
However, the pandemic reversed these gains, as shrinking revenues and soaring emergency expenditure pushed most States back into fiscal distress.
States today present a mixed picture: while richer States like Maharashtra fund a large share of their expenditure internally, poorer States such as Arunachal Pradesh remain highly dependent on Union transfers.
This vertical imbalance in fiscal capacity underscores the unevenness of India’s federal fiscal architecture.

Uneven Revenue Sources

The CAG report shows that States rely on highly variable revenue streams. For example:
- Kerala’s lotteries contributed nearly Rs. 12,000 crore in 2022-23.
- Odisha’s mining royalties made up 90% of its non-tax income.
- Telangana raised nearly Rs. 9,800 crore through land sales.
Such revenues are volatile and unsustainable: lotteries depend on sales, royalties on global commodity prices, and land cannot be sold repeatedly.
Even surplus-earning States like Uttar Pradesh generated only 42% of their receipts internally, leaning heavily on central transfers.

Rising Borrowings and Debt Burden

The fiscal health of States is also reflected in their borrowing patterns:
- Andhra Pradesh tripled its borrowings to Rs. 1.86 lakh crore by 2022-23, with debt reaching 35% of GSDP.
- Bihar doubled its borrowings, pushing debt close to 39% of GSDP.
- Kerala’s debt burden remained high at 37% of GSDP despite curbing borrowings post-pandemic.
- Punjab continued its fiscal stress with liabilities touching 45% of GSDP.
- In contrast, Odisha reduced borrowings, lowering debt to 15% of GSDP, the lowest in India.
The pandemic was a turning point: while some States like Karnataka and Maharashtra cut back borrowings after 2021, others like Andhra Pradesh, Telangana, and Rajasthan kept expanding them, signalling divergent fiscal strategies.

The Welfare Paradox

A striking theme of the CAG analysis is the welfare paradox.
Despite reporting surpluses or stable debt, many States underfund key welfare sectors such as education, health, and rural infrastructure.
Instead, reliance on off-budget loans, GST compensation arrears, and central transfers creates a façade of fiscal stability.
Political populism adds another layer. Free power, farm waivers, and cash transfers defer costs into opaque mechanisms like guarantees and special-purpose vehicles.

Implications for Fiscal Federalism

The CAG findings highlight deeper structural issues in India’s fiscal federalism:
- Dependence on volatile revenues limits the States’ capacity to plan long-term welfare.
- Rising borrowings pose risks of debt overhang, especially in poorer and smaller States.
- Vertical fiscal imbalance perpetuates reliance on the Centre, undermining financial autonomy.
- Populist welfare policies erode fiscal discipline while failing to deliver sustainable outcomes.
The analysis suggests that India’s States must prioritise capital expenditure over routine subsidies, diversify revenue sources, and strengthen fiscal transparency.
Without such reforms, India risks sustaining one of the largest welfare States in the world on one of the thinnest fiscal bases among middle-income economies.

Conclusion

The CAG’s decadal review underscores the complexity of States’ macro-fiscal health.
While some States like Odisha demonstrate prudent fiscal management, others, such as Punjab and Kerala, remain vulnerable to debt traps and volatile revenues.
The welfare paradox, lavish spending amid weak revenues, reflects the tension between developmental needs and fiscal sustainability.
For India’s federal system to remain resilient, States must pursue balanced fiscal strategies that combine growth, welfare, and sustainability.

Source: TH

CAG Report FAQs

Q1: What does the CAG’s decadal report on States’ finances highlight?

Ans: It highlights uneven revenues, rising borrowings, and the welfare paradox in States’ fiscal management.

Q2: Which State has the lowest debt burden relative to GSDP?

Ans: Odisha, with liabilities at just about 15% of GSDP.

Q3: Why are States like Kerala and Telangana considered fiscally vulnerable?

Ans: Because they depend heavily on volatile revenues like lotteries and land sales.

Q4: What is meant by the welfare paradox in States’ finances?

Ans: It refers to lavish welfare spending despite weak fiscal bases and rising debt.

Q5: How does the fiscal imbalance affect Centre-State relations?

Ans: Poorer States rely heavily on Union transfers, deepening vertical fiscal imbalance and dependence on the Centre.

Delhi Loudspeaker Rules Extended for Festivals | Legal Framework & Court Rulings

September 29, 2025

Delhi Loudspeaker Rules News

Delhi CM Rekha Gupta announced that during cultural events like Ramlila and Durga Puja, loudspeaker use will be allowed till midnight, extending the usual 10 pm limit by two hours.
The move aligns with legal provisions that permit state governments to relax loudspeaker restrictions during festivals and cultural occasions, while still operating within the framework of India’s Noise Pollution (Regulation and Control) Rules, 2000.

Legal Framework Governing Loudspeakers in India

The Noise Pollution (Regulation and Control) Rules, 2000, under the Environment (Protection) Act, 1986, regulate the use of loudspeakers.
Rule 5(1) requires written permission from authorities before use, while Rule 5(2) bans their use between 10 pm and 6 am, except in closed premises like auditoriums or conference halls.
The rules prescribe maximum permissible noise levels for different areas, categorised as industrial, commercial, residential and silence zones.
- For residential areas, the daytime limit (6 am to 10 pm) is 55 decibels (dB) while that for nighttime is 45 dB.
  - For context, a whisper is about 30 dB, while normal conversation is about 60 dB.
Importantly, Rule 5(3) allows state governments to relax restrictions, permitting loudspeaker use till midnight for up to 15 days a year during cultural or religious festivities.
Delhi’s decision to extend the loudspeaker deadline for festivals falls within this legal provision.

Court Rulings on Loudspeaker Use in India

Over the past two decades, Indian courts have shaped a strong jurisprudence on noise pollution, balancing religious freedom with the fundamental right to a peaceful environment.

Supreme Court: Loudspeakers Not a Fundamental Right

In 2000, the Supreme Court ruled that no religion mandates prayers by disturbing others, rejecting the use of loudspeakers as a right under Article 25 (freedom of religion).
In 2005, it further held that the right to a noise-free environment is implicit under Article 21, and “aural aggression” cannot be justified under free speech.
This ruling established the 10 pm–6 am loudspeaker ban.
The Court upheld Rule 5(3) allowing exemptions till midnight for up to 15 days annually, but imposed strict conditions: only state governments can grant it, it must apply statewide, and silence zones remain excluded.

High Court Directions

High Courts have strictly enforced these principles:
- Bombay HC (2016): Loudspeakers not essential to religion; pulled up government for lax enforcement.
- Karnataka HC (2018): Allowed indoor concert use at night, provided boundary noise limits were respected.
- Punjab & Haryana HC (2019): Made written permission mandatory for all religious use, set up complaint mechanisms.
- Allahabad HC (2020): Azaan is essential, but loudspeakers are not historically required.

Recent Ruling: Bombay HC (2025)

The court introduced a graded penalty system: caution for first offence, fines for repeat, and seizure for continued violations.
It also mandated considering cumulative noise levels from multiple sources and suggested modern enforcement, such as mobile decibel apps and auto-limiters in speakers.

Concerns Over Delhi’s Loudspeaker Extension

Environmental experts criticised Delhi’s decision to allow loudspeakers till midnight, calling it a backward step that undermines Noise Pollution Rules designed to protect children, patients, and residents.
Activists warned that public health is being sacrificed for short-term convenience, noting that citizens already face excessive noise from construction and commercial establishments.
In 2024, Delhi Police received over 40,000 noise complaints, with 82% linked to DJs and loudspeakers.
This prompted fresh guidelines in March, requiring written permission for loudspeaker use and booking violators under Bharatiya Nyaya Sanhita Sections 270, 292, and 293.
The amended order also tightened limits, mandating that private sound systems cannot exceed ambient noise standards by more than 5 dBA, compared to the earlier 10 dBA allowance.

Source: IE | IT | ToI

Delhi Loudspeaker Rules FAQs

Q1: What are Delhi’s loudspeaker rules during festivals?

Ans: Delhi permits loudspeakers till midnight for 15 festival days under Noise Rules 2000, with state-level approval and strict conditions on noise levels.

Q2: What do the Noise Pollution Rules 2000 say about loudspeakers?

Ans: They ban use between 10 pm–6 am except in closed premises, and allow states to relax restrictions during cultural or religious occasions for up to 15 days.

Q3: What has the Supreme Court said on loudspeakers?

Ans: The Supreme Court held loudspeakers are not a religious right, declared noise-free environment under Article 21, and enforced the strict 10 pm ban.

Q4: Why are activists opposing Delhi’s relaxation of loudspeaker rules?

Ans: Experts say extending timings undermines noise laws, harms public health, and worsens daily problems from construction noise and commercial establishments.

Q5: What enforcement measures are in place against violations?

Ans: Delhi Police requires written permission, uses decibel checks, and books violators under Bharatiya Nyaya Sanhita for nuisance and continued violations.

Sonam Wangchuk Detained Under NSA | Key Facts on Preventive Detention Law

September 29, 2025

National Security Act Latest News

Climate activist Sonam Wangchuk, leading the movement for Ladakh’s statehood and Sixth Schedule protections, was detained under the National Security Act (NSA) and shifted to Jodhpur jail.
The Centre blamed him for allegedly instigating violent protests in Leh, where four people were killed in police firing and 50 injured.
The case has drawn attention to the NSA, one of India’s toughest preventive detention laws, used in the past against separatists, gangsters, and radical preachers.
The law allows governments to pre-emptively detain individuals deemed a threat to public order or national security.

About Preventive Detention

Preventive detention is the practice of detaining a person not for a crime already committed, but to prevent them from acting in a manner that could threaten public order, security, or essential supplies.
It aims to stop potential harm before it occurs.

Difference from Punitive Detention

Preventive detention: Detains individuals to prevent a future act considered harmful. It is anticipatory in nature.
Punitive detention: Imposed as punishment after conviction for an offence already committed, based on due process of law.

Constitutional Provision

The Indian Constitution permits preventive detention under Article 22.
- Article 22 has two parts—the first part deals with cases of ordinary law, which includes situations where an individual is detained as part of a criminal investigation.
- The second part deals with cases of preventive detention law, which pertains to the detention of individuals without a trial or conviction.
A person can be detained up to 3 months without Advisory Board approval; beyond that, detention requires approval by an Advisory Board of judges.
Grounds of detention must be communicated, but certain facts may be withheld in public interest.

Preventive Detention and the NSA

Preventive detention in India traces back to colonial times and was institutionalised post-Independence through the Preventive Detention Act, 1950.
It was followed by the controversial Maintenance of Internal Security Act (MISA), 1971, repealed after the Emergency.
In 1980, the National Security Act (NSA) was enacted, empowering the Centre, states, District Magistrates, and Police Commissioners (when authorised) to detain individuals pre-emptively.
Unlike punitive arrests under criminal law, NSA detention is preventive, aimed at stopping individuals from acting in ways “prejudicial to India’s defence, foreign relations, national security, public order, or essential supplies.”
The Act gives governments wide-ranging powers to address threats, while incorporating certain procedural safeguards to check misuse.

What the NSA Provides

Under the National Security Act (NSA), detention orders function like warrants of arrest, allowing authorities to hold individuals in designated places, transfer them across states, and impose conditions.
Grounds of detention must be communicated within 5 to 15 days, and detainees can submit a representation to the government.
An Advisory Board of High Court judges must review the case within 3 weeks and order release if there is “no sufficient cause.”
Detention can last up to 12 months, though it may be revoked earlier.
However, safeguards are limited:
- detainees cannot have legal representation before the Advisory Board, and
- the government may withhold facts citing public interest, leaving significant powers in official hands.

Wangchuk’s Legal Remedies

Sonam Wangchuk can challenge his detention under the NSA by filing a representation to the government or await the Advisory Board’s review within three weeks, which must order release if no sufficient cause is found.
He may also approach the High Court or Supreme Court under Articles 226 or 32 to contest the legality of detention.
Additionally, the government itself may revoke the order at any stage.
Until these processes conclude, the NSA permits detention without formal charges or open-court evidence, giving authorities wide leeway in holding him.

Past Use and Misuse of the NSA

The National Security Act (NSA) has been invoked in several high-profile cases.
In 2023, radical Sikh preacher Amritpal Singh was detained under NSA and moved to Dibrugarh jail.
Earlier, Bhim Army chief Chandrashekhar Azad was booked in 2017, though the order was later revoked by the Supreme Court.
During the anti-CAA protests (2020), multiple protesters in Uttar Pradesh were detained under the Act.
The law has also targeted individuals such as Dr Kafeel Khan, whose 2020 detention was struck down by the Allahabad High Court.
States like Uttar Pradesh and Madhya Pradesh have applied NSA in “Love Jihad” cases, communal violence, cow slaughter, and habitual crime, often stretching its definition of national security.
Courts have intervened in cases of misuse: in 2012, the Supreme Court struck down the detention of a man accused of kerosene black-marketing as unjustified.
These instances show a pattern where governments justify NSA as vital for security, while critics denounce it as a blunt instrument prone to abuse.

Source: IE | SCO | ET

National Security Act FAQs

Q1: Why was Sonam Wangchuk detained under NSA?

Ans: He was accused of instigating violent Ladakh protests. NSA allows preventive detention of those considered threats to national security or public order.

Q2: What is preventive detention in India?

Ans: It is anticipatory detention to prevent potential harm, unlike punitive detention, which punishes after a crime. Article 22 of the Constitution permits it.

Q3: What powers does the National Security Act provide?

Ans: NSA allows detention up to 12 months, requires grounds to be shared within 5–15 days, but denies legal counsel before Advisory Boards.

Q4: What legal remedies are available under NSA detention?

Ans: A detainee can represent to the government, await Advisory Board review, or approach the High Court/Supreme Court under Articles 226 and 32.

Q5: How has the NSA been used in the past?

Ans: NSA has been invoked against Amritpal Singh, Chandrashekhar Azad, and CAA protesters, but critics flag misuse in cases like Dr Kafeel Khan’s detention.

Corporate Average Fuel Efficiency (CAFE) – Norms to Revamp Vehicle Emissions Framework

September 29, 2025

Corporate Average Fuel Efficiency (CAFE) Latest News

India has released draft Corporate Average Fuel Efficiency (CAFE) 3 norms through the Bureau of Energy Efficiency (BEE).
These norms aim to tighten fuel efficiency and emission standards while addressing industry demands for flexibility, especially for small cars and electric vehicles (EVs).

Current CAFE Framework in India

CAFE:
- Introduced in 2017 by BEE, Ministry of Power, to regulate fuel consumption and carbon emissions from passenger vehicles.
- These norms apply to vehicles running on petrol, diesel, liquefied petroleum gas (LPG), compressed natural gas (CNG), hybrids, and electric vehicles (EVs) weighing less than 3,500 kg.
- Designed to reduce oil dependency and curb air pollution, pushing automakers to lower carbon dioxide emissions while incentivising the production of EVs, hybrids, and CNG vehicles.
CAFE 2: In 2022-23, the norms were tightened (fuel consumption capped at 4.78 litres/100 km, and CO₂ emissions capped at 113 g/km) with increased penalties for non-compliance.
Need for CAFE 3:
- In the USA, EU, China, Japan, smaller lightweight cars receive relaxed CO₂ norms.
- However, India’s current framework is inverted, giving SUVs more relaxed limits and burdening small cars.
- So, CAFE 3 seeks to align with global best practices.

Key Features of Proposed CAFE 3 Norms

Applicability:
- Covers M1 category passenger vehicles with a seating capacity of 9 people (including the driver) and a maximum weight of 3,500 kilogram.
- Non-compliance will attract penalties under the Energy Conservation Act, 2001.
Efficiency targets:
- Under CAFE 3, the efficiency formula is: [0.002 x (W – 1170) + c]. It is measured in petrol-equivalent litres per 100 kilometre.
- Here, W is the average fleet weight, 1,170kg is the fixed constant for weight, 0.002 is a fixed constant multiplier, and ‘c’ is a constant that changes every year.
- Since ‘c’ continues to decrease from FY28 to FY32, the rules will become stricter over time. This constant starts at 3.7264 in FY28, then subsequently drops to 3.0139 in FY32.
- Lighter vehicles have easier compliance compared to heavier SUVs or premium cars.
Incentives for small cars:
- Additional relaxation of 3.0 g CO₂/km (capped at 9.0 g/km) for compact petrol cars (unladen mass up to 909 kg, engine capacity not exceeding 1200 cc and length not exceeding 4000 mm).
- This is designed to revive the small car segment, which saw a 71% sales decline in six years.
- Complementary policy: GST 2.0 reforms lowered GST on small cars from 28% to 18%.
Boost for EVs and alternate fuels:
- Super credits multipliers:
  - Companies could potentially obtain relaxation in their overall efficiency target as the norms propose to offer companies “super credits” based on the type of vehicle they sell.
  - Each EV sold will be counted three times while calculating a company’s average.
  - Plug-in hybrids will be counted 2.5 times, and strong hybrids twice.
  - Flex-fuel ethanol cars are given a smaller multiplier of 1.5.
- Carbon Neutrality Factor (CNF) introduced:
  - CNF offers further relaxation on the targets based on the type of fuel used in a car.
  - For example, for petrol vehicles (E20 to E30) 8% CNF on tailpipe CO2; for flex fuel ethanol vehicles and strong hybrid electric vehicles 22.3% CNF on tailpipe CO2; etc.
Emissions pooling:
- Up to three carmakers can form a pool (to meet the targets jointly) and be treated as a single manufacturer.
- Pool manager legally responsible for compliance and penalties.
- Reduces compliance costs and encourages strategic alliances.

Conclusion

The proposed CAFE 3 norms mark a critical shift in India’s emission strategy—reviving small cars, incentivising EVs, and tightening long-term efficiency goals.
If implemented effectively, they could reduce India’s oil import dependency, accelerate green mobility adoption, and align India’s policies with global climate commitments under the Paris Agreement.
However, challenges remain in industry adaptation, consumer acceptance, and infrastructure readiness for alternative fuel vehicles.

Source: IE

Corporate Average Fuel Efficiency (CAFE) FAQs

Q1: What are the key features of the proposed Corporate Average Fuel Efficiency (CAFE) 3 norms in India?

Ans: CAFE 3 norms introduce stricter efficiency targets, incentives for small cars, super credits for EVs/hybrids, provisions for emissions pooling among carmakers, etc.

Q2: How do the proposed CAFE 3 norms aim to revive the small car segment in India?

Ans: By offering 3.0 g CO₂/km relaxation (capped at 9.0 g/km) for compact cars and reducing GST from 28% to 18%.

Q3: What is the concept of “super credits” under the proposed CAFE 3 framework?

Ans: Super credits assign higher weightage to EVs and hybrids in fleet average calculations, easing compliance.

Q4: What is emissions pooling under the draft CAFE 3 norms and why is it significant?

Ans: Emissions pooling allows up to three carmakers to jointly meet efficiency targets.

Q5: What is India’s current CAFE framework?

Ans: Unlike global practices (in the USA, EU, China, and Japan) that relax norms for lightweight cars, India’s framework currently favors heavier vehicles like SUVs.