UPSC Mains Current Affairs for 5 July 2026

Citizenship Rights – US Supreme Court Reaffirms Birthright Citizenship

July 5, 2026

Citizenship Rights Latest News

Recently, the U.S. Supreme Court (SCOTUS), in a 6–3 majority ruling, struck down President Donald Trump's Executive Order (EO) 14160, reaffirming that birthright citizenship under the Fourteenth Amendment remains a constitutional guarantee.
The verdict is a major setback to the Trump administration's immigration agenda and revives the debate over citizenship, immigration, and constitutional interpretation.

Constitutional Basis of Birthright Citizenship

The Fourteenth Amendment (1868) states that all persons born or naturalised in the U.S. and subject to its jurisdiction are U.S. citizens.
The Immigration and Nationality Act (INA), 1952 reinforces this principle by recognising citizenship "at birth."
Long-standing exceptions include - children of foreign diplomats, and children born during enemy military occupation.

Supreme Court’s Ruling

Majority opinion:
- The Court held that the Executive Order violated the Citizenship Clause of the Constitution.
- The majority interpreted "subject to the jurisdiction" to mean anyone physically present in the U.S. and governed by its laws, irrespective of immigration status.
- The judgment relied on the jus soli (right of the soil) principle inherited from English common law.
Dissenting opinions:
- The citizenship requires domicile and complete allegiance to the U.S., which temporary visitors and undocumented immigrants do not possess.
- They maintained that the Fourteenth Amendment was intended primarily to secure citizenship for formerly enslaved people, not to establish universal birthright citizenship.
- Concerns were also raised over illegal immigration and birth tourism.

Historical Evolution of Birthright Citizenship in the US

The original U.S. Constitution did not define citizenship.
The Naturalization Act, 1790 restricted citizenship to "free white persons."
The infamous Dred Scott (1857) judgment denied citizenship to Black Americans.
Following the Civil War:
- The 13th Amendment (1865) abolished slavery.
- The Civil Rights Act, 1866 recognised all persons born in the U.S. as citizens.
- To permanently safeguard this principle, the Fourteenth Amendment (1868) constitutionalised birthright citizenship.

Political Debate Around Birthright Citizenship

The issue became central to Donald Trump's anti-immigration agenda and the Make America Great Again (MAGA) movement.
Critics argue that:
- It encourages illegal immigration.
- It fuels birth tourism, where foreigners travel to the U.S. solely to secure citizenship for their children.
The Supreme Court rejected these policy concerns, holding that changing political circumstances cannot alter the Constitution's clear language.
Changing demographic trends:
- Births to unauthorised immigrant mothers increased from about 1.2 lakh (~3% of total US births) in 1990 to nearly 3.8 lakh (9%) by 2006–07.
- After the 2008 financial crisis, the numbers declined to around 2.5 lakh (6%) by 2016.
- According to Pew Research Center, the share rose again to around 9% of U.S. births in 2023, reviving political controversy.

Case of India

India's Citizenship law:
- The acquisition and loss of Indian citizenship is primarily regulated by the Constitution of India (Part II, Articles 5-11) and the Citizenship Act of 1955.
- India does not allow dual citizenship, and citizenship is acquired through birth, descent, registration, naturalization, or incorporation of territory.
No unconditional birthright citizenship:
- Article 5 of the Constitution initially recognised citizenship based on birth at the commencement of the Constitution.
- The Citizenship Act, 1955 granted citizenship by birth to nearly all persons born in India.
- 1986 Amendment to the 1955 Act: At least one parent had to be an Indian citizen.
- 2003 Amendment: Citizenship by birth was denied if either parent was an illegal migrant, further restricting the principle.
The Citizenship (Amendment) Act (CAA) 2019:
- Modifying the rules for naturalization, it reduced the naturalization residency requirement from 12 to 6 years.
- It fast-tracked the path of citizenship of specific minority communities (Hindus, Sikhs, Buddhists, Jains, Parsis, and Christians) from Afghanistan, Bangladesh, and Pakistan who entered India on or before December 31, 2014.

Comparison Between Indian and US Citizenship Rights

Dual citizenship:
- In the U.S., the individuals are citizens of both the United States and the specific state they reside in.
- India has single citizenship, meaning every individual is solely a citizen of the Union of India, with no separate state-level citizenship.
- Also, the U.S. allows its citizens to hold dual citizenship with other countries. However, in India, acquiring a foreign passport immediately nullifies Indian citizenship.
- Instead, India offers the Overseas Citizenship of India (OCI) - lifelong visa-free travel and economic rights (excluding voting or agricultural land ownership) to the Indian diaspora who have acquired foreign passports.
Birthright citizenship (Jus Soli):
- The U.S. grants automatic citizenship to almost anyone born on its soil under the 14th Amendment.
- India previously followed absolute jus soli, but (through amendments) now requires at least one parent to be an Indian citizen, and the other must not be an illegal immigrant.
Citizenship by descent: Both countries allow citizenship by descent if a child is born abroad to citizen parents, though the specific residency/retention requirements for the child differ based on local statutes.

Conclusion

The U.S. birthright citizenship judgment offers an important lesson for constitutional governance and citizenship debates in India.
It highlights the importance of constitutional supremacy, judicial review, and balancing citizenship policies with fundamental constitutional values and the rule of law.

Source: TH | IE

Citizenship Rights FAQs

Q1: What is the U.S. Supreme Court's 2026 recent ruling on birthright citizenship?

Ans: It held that the 14th Amendment guarantees citizenship by birth and that an executive order cannot override it.

Q2: What is the historical evolution of birthright citizenship in the United States?

Ans: Birthright citizenship emerged through the Civil Rights Act (1866) and the 14th Amendment.

Q3: How has India's approach to citizenship by birth evolved?

Ans: India moved from unconditional birthright citizenship to a restricted regime through the amendments to the Citizenship Act, 1955.

Q4: What are the principles of citizenship by birth in the United States and India?

Ans: While the U.S. continues to follow broad jus soli, India has progressively shifted towards a qualified citizenship regime.

Q5: What lessons does the U.S. birthright citizenship judgment offer for India?

Ans: It highlights the importance of constitutional supremacy and balancing citizenship policies with fundamental constitutional values.

AI Hallucinated Judgments: Supreme Court Warns Against AI-Generated Fake Case Citations

July 5, 2026

AI Hallucinated Judgments - Supreme Court Sets Aside NCLT Order

AI Hallucinated Judgments Latest News

Recently, the Supreme Court struck down a National Company Law Tribunal (NCLT) order. The order had relied on six court judgments as precedents.
All six turned out to be problematic. Three judgments did not exist at all. The other three either didn't say what the tribunal claimed, or belonged to a different case entirely.

The Case Background

In 2013, a company called Essel Infraprojects promised to repay a loan if another company failed to. This kind of promise is called a "corporate guarantee."
- The loan itself was for Rs 200 crore. It was given by Jammu and Kashmir Bank to a different company, Pan India Utilities Distribution Company Ltd.
Later, Pan India Utilities failed to repay the loan. Since Essel had promised to pay on its behalf, the bank came after Essel under the Insolvency and Bankruptcy Code (IBC).
- Under this law, if a company cannot pay its debts, it can be taken to a special court for resolution. This is exactly what the bank did.
Essel did not argue that the loan existed or that it had gone unpaid. Those facts were not in dispute. Instead, Essel argued something different: it said it was no longer responsible for this guarantee at all.

Why did Essel say this?

In 2014, the company had gone through a restructuring. Part of its business was separated out (this is called a "demerger"), and then merged into another company (this is called an "amalgamation").
This restructuring was approved by the Bombay High Court. Essel claimed that when this happened, its old responsibility — including the guarantee — had passed on to the new company.
So, Essel argued, it was no longer the one who should be held responsible.

Tribunal’s Judgement

The tribunal handling the case, called the NCLT (National Company Law Tribunal), did not accept this argument. In 2024, it rejected Essel's defence and allowed the bank's case to proceed.
Essel then appealed to a higher tribunal, the NCLAT (National Company Law Appellate Tribunal). But in September 2025, the NCLAT agreed with the NCLT's decision.
Importantly, the NCLAT did not check whether the case references (citations) used by the NCLT were even real.
This became a major problem later, since those citations turned out to be fake or wrongly quoted.

The Fake Citations

Three judgments simply didn't exist:
- ICICI Bank Ltd v Urban Infrastructure Real Estate Ltd (2019)
- V S Dempo & Co Ltd v Reliance Communications Ltd (2021)
- Sarbjit Singh v Union Bank of India (2022)
Two judgments were real, but the quoted passages were not found anywhere in them:
- Everest Kento Cylinders Ltd v Union of India (2015)
- Canara Bank v N G Subbaraya Setty (2018)
The sixth judgment cited was actually a different case altogether. The tribunal called it State Bank of India v Shree Ram Urban Infrastructure Ltd, but it was really M Subramaniam v S Janaki. The quoted passage wasn't in either judgment.
Importantly, neither party's lawyers had cited these judgments. J&K Bank told the Supreme Court that its counsel never referred to them.
The tribunal appears to have generated these citations through its own AI-assisted research.

What the Supreme Court Said

The SC bench used strong language. They compared AI hallucination in judicial work to a toxic gas leak — "invisible, insidious, and catastrophic by the time anyone notices."
They warned that relying on AI could make judges dependent on it and erode independent judicial reasoning over time.
The court held that even "an iota" of fake or hallucinated material in a decision is enough to set it aside.
A decision built on fabricated case law, the bench said, "is no decision at all."

Wider Directions Issued

The Supreme Court asked the Bar Council of India to set up a committee. This committee will study how AI is being used in litigation across courts.
The court also warned that lawyers citing AI-generated case law without verification could face professional misconduct proceedings.
For now, the NCLT will decide the insolvency petition afresh. Both parties have been told to maintain status quo until then.

Not the First Such Incident

The same bench had faced a similar problem in February 2026, in Gummadi Usha Rani v Sure Mallikarjuna Rao.
There, an Andhra Pradesh trial court had relied on four fake AI-generated judgments.
The High Court had merely issued "a word of caution." This time, the Supreme Court took a much harder line, calling such reliance not just an error but potential "misconduct" with legal consequences.

Conclusion

This case marks a serious warning from India's top court on AI use in judicial decision-making. It shows that AI hallucination isn't just a drafting inconvenience — it can invalidate an entire legal order.
The Supreme Court has made clear that courts and lawyers alike carry a duty to verify every citation, and that unchecked AI use in law can silently corrode the foundation of judicial reasoning itself.
With the Bar Council now examining the issue formally, this ruling is likely to become a key reference point for how AI tools are regulated within India's legal system going forward.

Source: IE | LL

AI Hallucinated Judgments FAQs

Q1: What are AI Hallucinated Judgments and why are they a concern?

Ans: AI Hallucinated Judgments arise when AI generates fake or inaccurate legal citations, threatening judicial accuracy, legal certainty and public confidence in the justice system.

Q2: Why did the Supreme Court set aside the NCLT order in the AI Hallucinated Judgments case?

Ans: The Supreme Court found that the AI Hallucinated Judgments relied on fabricated, misquoted and non-existent precedents, rendering the tribunal's decision legally unsustainable.

Q3: What directions did the Supreme Court issue regarding AI Hallucinated Judgments?

Ans: The Court directed the Bar Council to examine AI use in litigation and warned that citing AI Hallucinated Judgments without verification may amount to professional misconduct.

Q4: What lessons do AI Hallucinated Judgments offer for the legal profession?

Ans: AI Hallucinated Judgments demonstrate that lawyers and judges must independently verify AI-generated research before relying on it in legal proceedings.

Q5: Why are AI Hallucinated Judgments significant for AI governance?

Ans: AI Hallucinated Judgments highlight the need for responsible AI adoption, human oversight, ethical safeguards and accountability in high-stakes decision-making.

WhatsApp Username Feature: Why the Government Is Concerned About WhatsApp Usernames

July 5, 2026

WhatsApp Usernames - Why Is the Government Concerned

WhatsApp Username Feature Latest News

The Indian government sent a notice to Meta. It asked the company to stop rolling out a new username feature on WhatsApp.
The government fears this feature could increase online fraud and impersonation. This incident has raised a bigger question too: can the government stop a private app from launching a feature it wants to add?

About WhatsApp Username Feature

WhatsApp is planning to let users chat using a username instead of their phone number. This is meant to be optional. If someone picks a username, new contacts will see only that username — not their mobile number.
There is no search directory for usernames inside the app. This means a person cannot simply search and find someone by guessing a username. To message someone, you need to know their exact username.
For extra safety, users can also set a PIN. Even if someone knows your username, they still cannot contact you without knowing this PIN too.
The feature has not been launched yet. Meta says it will roll out slowly over the next few months, along with several safety features built in.

Why Is the Government Worried?

The Ministry of Electronics and Information Technology (MeitY) said that hiding phone numbers and showing only usernames could lead to more online fraud.
It specifically mentioned risks like phishing, digital arrest scams, and impersonation.
The government's main worry is that people could create usernames that look very similar to real people, companies, or government bodies. This could trick users into thinking they are talking to someone genuine.
Some public figures have already reported this happening. MobiKwik founder Bipin Preet Singh said on social media platform X that variations of his name had already been taken by other users.
He called the feature a bad idea, warning it could increase fraud and impersonation.
The government also sent similar notices to other messaging apps — Telegram, Signal, and Arattai. These apps have had similar username features for a while already.

Response of WhatsApp

WhatsApp says it has already "reserved" usernames belonging to well-known people and organisations. This is meant to stop imposters from grabbing those names first.
This protection is said to cover public figures, celebrities, government bodies, and verified Meta accounts.
WhatsApp also explained another safety feature: if a stranger messages you without showing their phone number, the app will still show you their country of origin. It will also tell you whether that number is already saved in your phone's contact list.
A WhatsApp spokesperson said users can simply choose not to reply to strangers if they feel unsafe.

Can the Government Really Stop an App Feature?

This is the most disputed part of the issue. The government argues that WhatsApp counts as a "significant social media intermediary" under India's IT Rules, 2021.
- This classification applies to any platform with more than 50 lakh registered users in India. WhatsApp has around 80 crore users in India, making it a clear case.
Because of this classification, the government says WhatsApp must follow certain due-diligence rules under law.
The notice also referred to specific sections of the IT Act — Section 66C (identity theft), Section 66D (cheating by impersonation), and Section 79 (which protects platforms from liability for what users post, as long as they act responsibly).
However, digital rights groups have pushed back strongly. They claim that none of the laws cited actually give the government power to approve or block a feature before it's launched.
They pointed out that Section 79 is only meant to decide when a platform can be held liable for user content — not to control what features a company can build into its own product.

Has This Happened Before?

This isn't the first time the government has closely watched WhatsApp's operations.
In October 2022, when WhatsApp faced a global outage, then IT Minister Ashwini Vaishnaw had asked the company to explain the reasons behind it.

Conclusion

This dispute is really about where the line sits between a government's power to regulate for public safety, and a private company's freedom to design its own product.
The government sees the username feature as a fraud risk that needs oversight before launch.
WhatsApp and digital rights groups see it as a lawful product decision that no current law actually allows the government to block.
How this plays out could set an important precedent — not just for WhatsApp, but for how much control the Indian government can exercise over global tech platforms operating in the country.

Source: TH | NDTV

WhatsApp Username Feature FAQs

Q1: Why is the WhatsApp Username Feature facing government scrutiny?

Ans: The WhatsApp Username Feature may enable impersonation, phishing and digital fraud by allowing users to communicate without displaying their mobile numbers.

Q2: What safety measures are included in the WhatsApp Username Feature?

Ans: The WhatsApp Username Feature includes optional usernames, PIN protection, reserved usernames for public figures and country-of-origin indicators for unknown contacts.

Q3: Can the government legally stop the WhatsApp Username Feature from launching?

Ans: The government's authority over the WhatsApp Username Feature is disputed, with digital rights groups arguing that existing laws do not permit prior approval of product features.

Q4: How could the WhatsApp Username Feature affect online safety?

Ans: The WhatsApp Username Feature may strengthen user privacy while simultaneously increasing risks of impersonation, identity theft and fraudulent communications if misused.

Q5: Why is the WhatsApp Username Feature important for digital regulation in India?

Ans: The WhatsApp Username Feature could establish an important precedent on balancing platform innovation, user privacy, public safety and government regulatory authority.

Slowing CASA Growth Forces Banks to Rely on Costlier Funding Options

July 5, 2026

CASA Growth Latest News

Slowing growth in current and savings account (CASA) deposits has forced Indian banks to shift toward costlier funding sources, raising concerns about long-term margins and stability.

Understanding CASA and Bank Funding

Banks rely on deposits as the main source of funds to give out loans. Not all deposits, however, are equal. Deposits are broadly classified into two categories:
- CASA deposits: Money kept in Current Accounts (CA) and Savings Accounts (SA)
- Term deposits: Money locked in for a fixed period, such as fixed deposits (FDs) and recurring deposits (RDs)

Why CASA Matters

CASA deposits are extremely important for banks for four key reasons:
- Low cost: Banks pay only around 3-4% interest on savings accounts and nothing on most current accounts.
- Stickiness: Customers rarely shift these accounts between banks, making these deposits stable.
- Reliable funding: These deposits are consistently available, giving banks a dependable base to lend from.
- Higher margins: Since CASA is cheap, it improves the net interest margin (NIM) of banks.
In contrast, term deposits carry higher interest rates (typically 7-8%), making them a costlier source of funds.
Another wholesale option is the Certificate of Deposit (CD), a short-term money market instrument used by banks to raise funds from corporates and institutions.

News Summary

Indian banks are facing a widening mismatch between fast-growing credit and slower deposit growth, particularly a sharp slowdown in CASA growth.
This has forced banks to look for alternative funding, mostly at a higher cost.
Credit Growing Faster Than Deposits
- Over recent months, credit growth has picked up, but deposit growth has not kept pace. The gap between the two has widened significantly:
  - From 1.8 percentage points in December
  - To 5.4 percentage points as of June 15, according to RBI data
  - As a result, the credit-to-deposit ratio, the share of deposits deployed as loans, has increased to 82.5% as of June 15, up from around 75% in mid-2025.
- This trend has also been flagged in the RBI’s recent Financial Stability Report.

Why CASA Growth Is Slowing

Retail savers today have many more options to invest their money than just savings accounts. Popular alternatives include:
- Stocks
- Mutual funds
- Digital investment platforms
These options usually offer higher returns and have become more accessible due to:
- Digitisation of financial services
- Simpler regulatory norms
- Growing financial awareness among retail investors
As a result, a large share of retail savings that would otherwise stay in low-yielding CASA accounts is now flowing into market-linked investments.

Shift Toward Term Deposits and CDs

To bridge the gap, banks have turned to more expensive funding sources:
- Term deposits (FDs, RDs) for retail savers
- Certificates of Deposit (CDs) for wholesale, institutional funding
The impact of this shift is visible in the composition of the banking system’s deposit base:
- Share of CASA in total deposits has fallen to around 39%, from a peak of about 44% in FY22
- Share of term deposits has risen to over 61%, from around 56% in FY23
CDs are typically used to manage shorter-duration liquidity, while CASA has traditionally supported the creation of longer-tenure assets such as home loans.

Why This Is a Concern

The move to higher-cost funding creates several structural risks:
- Higher interest outgo: Term deposits and CDs cost banks 7-8%, versus 3-4% for CASA.
- Squeezed margins: As funding costs rise, banks’ net interest margins (NIM) come under pressure.
- Rollover risk: CDs have short tenors (3-12 months). If liquidity tightens, banks may need to refinance them at even higher rates.
- Less sticky funds: Wholesale CDs are more price-sensitive and can flow out quickly during stress.
The concern is that while banks have managed to protect margins so far, the pressure is starting to show.

Why the Impact Has Been Limited So Far

The full pain of costlier funding has been partly cushioned by:
- The current low-interest rate cycle, during rate cuts, CDs and bulk term deposits reprice downward the fastest, making short-term wholesale funds cheaper.
- Rate cuts by the RBI, which reduce the cost of freshly raised wholesale funds.
- Robust asset quality, which has helped banks maintain financial stability.
However, some banks have already marginally increased their term deposit rates in Q1, and analysts expect the pressure from higher bulk deposits to reflect in the cost of funds during the second half of FY27.

The Bigger Risk Ahead

The situation flips sharply if the interest rate cycle turns:
- If the RBI hikes rates, the cost of CDs and term deposits will rise faster than CASA rates.
- If there is an external shock or liquidity crunch, wholesale funds may become expensive or unavailable.
- Continued weak CASA growth would deepen this vulnerability.
In short, the current strategy is workable in a low-rate environment, but risky in a tighter one.

A Cyclical or Structural Shift?

Experts remain divided. Some believe the slowdown in CASA is cyclical, linked to the post-COVID liquidity boom and the temporary dominance of market-linked investments.
Others argue that the shift is more structural, because savers now have better alternatives to traditional deposits permanently. As one analyst put it, with most banks showing similar asset quality, the quality of the liability franchise is emerging as the key competitive edge in Indian banking.

Significance

This development matters for several reasons.
First, it reflects a big change in household financial behaviour, with retail investors increasingly choosing market-linked options over bank deposits.
Second, it highlights a funding structure challenge for banks, as they depend more on costlier and less stable sources.
Third, it has direct implications for monetary policy transmission, since a shift in deposit composition affects how banks respond to RBI rate actions.
Finally, it could shape the future of banking competition, where banks that build stronger, stickier retail liabilities will have a lasting advantage.

Source: IE

CASA Growth FAQs

Q1: What are CASA deposits?

Ans: CASA refers to money kept in current accounts and savings accounts, which offer low or no interest and are a low-cost source of funds for banks.

Q2: Why is CASA important for banks?

Ans: Because it is cheap, stable, and “sticky”, which improves banks’ margins and supports long-term lending.

Q3: What is the current credit-to-deposit ratio in the banking system?

Ans: The credit-to-deposit ratio has risen to 82.5% as of June 15, up from around 75% in mid-2025.

Q4: Why is CASA growth slowing?

Ans: Retail investors are increasingly shifting savings to stocks, mutual funds, and other market-linked options that offer higher returns.

Q5: What is the main risk of relying more on term deposits and CDs?

Ans: They are costlier and more sensitive to interest rate changes, which can squeeze banks’ margins, especially if rates rise or liquidity tightens.