UPSC Mains Current Affairs for 13 August 2026

UPI at 10: India’s Digital Payments Giant Faces a New Cost-Sharing Challenge

August 13, 2026

UPI at 10 Latest News

UPI has completed 10 years since its launch, now accounting for 86% of all digital transactions in India.
But explosive growth has piled up costs for the payments ecosystem, reviving the debate on who should pay for it — with a recent amendment to the Payments and Settlement Systems Act, 2007 now permitting merchant fees on UPI payments.

How UPI Came About

The RBI's 2012 "vision document" noted an average Indian made just six non-cash transactions a year — a figure unthinkable today.
UPI was built by the RBI-regulated NPCI and the Indian Banks' Association, with groundwork starting in 2012-13.
It launched as a pilot in April 2016 and went fully operational that August.
By 2025-26, India recorded 28,174 crore digital transactions — 86% via UPI, used by over 55 crore people through 703 participating entities.

Early Growth Was Slow

Even after demonetisation in November 2016, adoption crawled: monthly transaction value stayed under Rs 10,000 crore until December 2017.
It took another year to cross Rs 1 lakh crore a month.
A key barrier was the Merchant Discount Rate (MDR) — the fee merchants paid on digital transactions.

Zero MDR: The Turning Point

The Nandan Nilekani-led High-Level Committee on Deepening of Digital Payments (2019) recommended scrapping MDR for customers and small merchants, with government subsidy instead.
From 2020, the government began subsidising UPI/RuPay transactions up to Rs 2,000, capped at 0.15% of transaction value, shared between banks and payment providers.
The COVID-19 pandemic then accelerated adoption sharply, as people avoided cash handling.

Private Investment Fuelled the Boom

A Bank for International Settlements (BIS) paper noted investment in Indian fintech spiked in 2019 (driven by UPI adoption and big deals like Paytm, PhonePe) and again in 2021 (post-COVID digital payment preference).
Most investment flowed into companies offering payment services and point-of-sale infrastructure.

Banks Have Been Left Behind

Two US-backed apps — PhonePe and Google Pay — together handled 80% of UPI transaction volume and 83% of value in July 2026.
As per the experts, banks have "missed the payments bus" and can't match these volumes.
SBI itself handled just 0.1% of UPI volume in July — ranked fourth among banks, behind Kotak Mahindra Bank (0.6% share).
A regulatory cap limiting any single player to 30% market share has been repeatedly postponed; the current deadline is December 2026.

The Cost Problem

UPI transaction growth has been staggering — up 1,800%, compared to just 17% growth in card transactions since November 2019.
This scale comes with rising costs — technology, banking infrastructure and compliance — estimated at around Rs 20,000 crore a year.
Government subsidies for sub-Rs 2,000 transactions don't cover this gap.

The Case for Reintroducing MDR

Industry voices argue zero MDR was right for driving initial adoption, but the next phase needs to create more value per transaction, including data-driven credit access for merchants and consumers.
The industry is pushing for MDR of 0.3-0.6% on transactions above Rs 2,000 for large merchants.
Such transactions form just 4% of person-to-merchant payments but account for 68% of total value — making them a viable revenue base without hurting small merchants or ordinary users.

The Next Wave of Growth

The finance ministry has said subsidies alone cannot sustain UPI's next growth phase.
Domestically, growth is expected to come from rural and semi-urban areas.
Internationally, NPCI is targeting greater cross-border presence — UPI already operates in nine countries (Bhutan, France, Mauritius, Nepal, Singapore, Sri Lanka, UAE, Qatar, Cambodia).
The India-Singapore UPI-PayNow linkage, active for over three years, is seen as a template, since traditional international transfers can cost up to 7% and take days to settle.

Conclusion

UPI's decade-long journey from a pilot project to handling 86% of India's digital transactions is a genuine success story of financial inclusion.
But sustaining this scale now demands a fairer cost-sharing model — one that funds future growth without compromising the accessibility that made UPI a global example.

Source: IE

UPI at 10 FAQs

Q1: What does UPI at 10 signify for India's digital payments?

Ans: UPI at 10 marks a decade since launch, with UPI now accounting for 86% of India's digital transactions and serving over 55 crore users.

Q2: How did zero MDR influence UPI at 10?

Ans: UPI at 10 reflects how zero MDR, government subsidies, and pandemic-driven digital adoption helped accelerate UPI's widespread acceptance among consumers and merchants.

Q3: Why is UPI considering merchant fees at 10 years?

Ans: UPI at 10 faces annual ecosystem costs estimated around ₹20,000 crore, while existing subsidies do not fully cover technology, infrastructure, and compliance expenses.

Q4: How could MDR support UPI at 10 without affecting small merchants?

Ans: At UPI at 10, industry proposals favour MDR of 0.3–0.6% on transactions above ₹2,000 involving larger merchants, protecting smaller businesses.

Q5: What is the future outlook for UPI at 10?

Ans: UPI at 10 is expected to expand through rural and semi-urban adoption and international linkages, while requiring sustainable financing to support future growth.

E20 Ethanol Blending Push – Benefits, Concerns, and the Road Ahead

August 13, 2026

E20 Ethanol Blending Latest News

The government has told Parliament that the ethanol blending programme has helped save around Rs. 2 lakh crore in foreign exchange, even as Opposition leaders have launched campaigns against E20, alleging that it harms vehicles and is being forced on consumers.

About Ethanol Blending and E20

Ethanol is a biofuel produced from sugarcane, molasses, maize, damaged foodgrains, and surplus rice. When blended with petrol, it reduces dependence on imported crude oil.
E20 refers to petrol containing 20% ethanol and 80% petrol. India's Ethanol Blended Petrol (EBP) Programme aims to cut crude imports, save foreign exchange, support farmers, and reduce emissions.
The government's target was to produce 10-11 billion litres of ethanol so that 20% of petrol used in transport could come from domestically produced ethanol.
The intention was to keep this money within the Indian economy rather than allowing it to flow out as foreign exchange through crude oil imports.

Growth of Ethanol Capacity

India's distillery capacity has expanded sharply on the back of this policy push:
- The country now has around 500 distilleries.
- Combined capacity stands at 18-20 billion litres.
- For the current ethanol year, which runs from November to October, oil companies have contracted to procure about 10.5 billion litres of ethanol.

Feedstock Composition

For the current ethanol year, ethanol for petrol blending is drawn from:
- Maize: 45%
- FCI rice: 22%
- Sugarcane juice: 16%
- B-heavy molasses: 10%
- Damaged foodgrains: 4.5%
- C-heavy molasses: 1.1%

The Import Allegation

One line of criticism has been that India is importing ethanol or maize under external pressure. The available evidence does not support this.
Commerce Ministry statistics show no surge in ethanol or maize imports. In any case, direct ethanol import for petroleum blending is banned in India, although the US corn lobby has been pushing for higher corn imports.
Domestic maize output has grown strongly, rising 45% in three years to 55 million tonnes in 2025-26, with more than 20% of it going into ethanol.
Experts in maize research maintain that there is no need to import it.

Impact on Sugar and Food Security

Sugarcane juice and B-heavy molasses would ordinarily go into sugar production and are now being diverted to ethanol. So far, this has not disrupted sugar availability.
The closing stock of sugar in September 2025 was around 5 million tonnes, and a similar closing stock is expected this year. This suggests that diversion to ethanol has not affected sugar stocks.
The risk, however, is not eliminated. In the event of monsoon failure, crop losses, or foodgrain shortages, the diversion of FCI rice, sugarcane juice, and B-heavy molasses to ethanol would come under stress, raising the possibility of corn imports.

The Vehicle Compatibility Question

This is the most contested aspect of the E20 rollout.
Newer Vehicles
- Vehicles bought after April 2023 are E20-ready. That is when the Bharat Stage 6 Phase 2 (Real Driving Emissions) mandate took effect.
- These vehicles were factory-engineered for E20 with ethanol-resistant elastomers, fluorinated fuel lines, upgraded pump seals, and recalibrated engine control units.
- These roughly 70 million vehicles make up about 23% of India's active petrol fleet and face little cause for concern.
Legacy Vehicles
- The remaining 77%, nearly 240 million two-wheelers and cars built for E5 or E10, are the genuine worry.
- Ethanol is a polar solvent that degrades older rubber compounds and plastics, hardening and cracking fuel hoses over time. It is also hygroscopic, meaning it absorbs atmospheric moisture.
- In vehicles parked for long periods, the ethanol-water mixture separates and settles, forming an acidic layer that corrodes tanks, damages fuel pumps, and clogs filters with sludge.
- Consumer surveys have found that 66% of pre-2023 owners reported mileage losses exceeding 10%, and 55% reported increased maintenance.

Conflicting Assessments

Technical assessments differ sharply on the extent of damage.
IIT Kanpur's Engine Research Laboratory maintains that E20 causes no notable damage, with efficiency loss under 5%, attributing most complaints to driving habits and traffic conditions.
Independent mechanics and automotive communities dispute this, citing real-world fuel pump and injector failures traced to ethanol's solvent and low-lubricity properties.
The government told Parliament in August that one leading automobile manufacturer had serviced 2.84 crore vehicles in FY 2025-26, including about 1.5 crore legacy vehicles, without finding E20-linked engine damage. A two-wheeler maker reported similar findings.
On mileage, the government acknowledged an efficiency penalty of about 2 to 6% in some vehicles designed for E10, though it noted this was also influenced by driving conditions, habits, and maintenance.

The Question of Pace

A significant criticism concerns how quickly the transition happened.
Brazil, often cited as the global benchmark, moved to high ethanol blends gradually over several decades, with parallel modifications to vehicles. This allowed a stable transition and public confidence.
In India, the 10% milestone was reached in 2022. Within just three years, blending was ramped up to 20%, with very little information or advisory support from manufacturers. A more phased and transparent rollout would have carried the public along more effectively.

Economic Gains Claimed

The government has presented substantial economic benefits from the programme.
It told Parliament that ethanol blending has led to savings of around Rs. 2 lakh crore in foreign exchange and substituted about 32 million tonnes of crude oil imports.
Substituting 10 billion litres of petrol with ethanol effectively means dispensing with a month of crude imports.
The government also stated that while crude oil prices rose 70% during the West Asia conflict, petrol prices at the pump increased by only 7 to 8%, though under-recoveries also increased.

The Cost Debate

Whether ethanol is actually cheaper than petrol is not straightforward.
Oil marketing companies procure ethanol at around Rs. 70 per litre for blending, against a pump price of roughly Rs. 105 per litre for petrol.
However, the base price of petrol, covering production, transportation, and OMC margins, is typically only 55-60% of the pump price, with the rest being taxes.
On the surface, ethanol does not appear cheaper than petrol. But ethanol and petrol follow different costing and tax regimes, making it difficult to draw an independent conclusion on whether ethanol has genuinely helped keep prices down, as the government claims.

Source: TH

E20 Ethanol Blending FAQs

Q1: What is E20 petrol?

Ans: E20 is petrol blended with 20% ethanol and 80% petrol, aimed at reducing crude oil imports and foreign exchange outgo.

Q2: How much foreign exchange has the ethanol blending programme saved?

Ans: The government has stated savings of around ₹2 lakh crore in foreign exchange and substitution of about 32 million tonnes of crude oil imports.

Q3: Which vehicles are fully compatible with E20?

Ans: Vehicles manufactured after April 2023, under the Bharat Stage 6 Phase 2 mandate, were factory-engineered for E20 and face little concern.

Q4: What is the main feedstock for ethanol in India currently?

Ans: Maize accounts for the largest share at 45%, followed by FCI rice at 22% and sugarcane juice at 16%.

Q5: Is India importing ethanol for petrol blending?

Ans: No. Direct ethanol import for petroleum blending is banned, and official statistics show no surge in ethanol or maize imports.

Justice Yashwant Varma Cash Row: Inquiry Finds Charges Proved and Raises Accountability Questions

August 13, 2026

Justice Yashwant Varma Cash Row Latest News

A three-member parliamentary inquiry committee has found former Allahabad High Court judge Yashwant Varma unable to explain the presence, source or ownership of a "huge quantity" of unexplained cash discovered at his official residence.
The committee's report, tabled in the Lok Sabha recently, also held that Justice Varma interfered with material evidence and gave misleading explanations, and rejected his argument that his withdrawal from the inquiry should end the proceedings.

Background of the Case

Wads of burnt and partially destroyed currency notes were discovered at Justice Varma's official bungalow in New Delhi in March 2025, when he was serving as a judge of the Delhi High Court.
Following this, 146 Lok Sabha MPs moved a removal motion against him in August 2025.
A three-member committee — comprising Supreme Court judge Justice Aravind Kumar, Bombay High Court Chief Justice Shree Chandrashekhar, and senior advocate B.V. Acharya — was constituted under the Judges (Inquiry) Act, 1968, to investigate the matter.

The Three Charges

The committee framed three specific "articles of charge" against Justice Varma:
- Unexplained cash: Possession of "substantial unexplained Rs 500 denomination currency notes" in a storeroom at his official residence, with no lawful explanation for their source.
- Interference with evidence: Failure to preserve material evidence, leading to the unexplained disappearance of the burnt currency notes before they could be lawfully seized.
- Misleading conduct: Furnishing "evasive and misleading explanations" that lacked the candour expected of a constitutional functionary.
The committee found all three charges proved.

Why He Was Held Responsible for the Notes' Disappearance

No direct proof he removed the cash himself.
But his secretary and attendant were seen cleaning the storeroom after the fire, turning away a guard who offered help.
Call records show Varma was in phone contact with them that night, despite being out of town.
He took no steps to secure the room or file a police complaint — termed a "dereliction of duty."

Why Withdrawal Couldn't Stop the Inquiry

The committee said a statutory inquiry can't hinge on the "unilateral" decision of the judge being probed.
By the time of withdrawal: charges were framed, defence statements filed, nine witnesses examined and cross-examined, evidence marked.
The panel held he'd been given a fair opportunity — he chose to walk away rather than enter the witness box.

What Happens Next

Justice Varma had already resigned as a judge with immediate effect on April 9, 2026 — a resignation that takes effect from the date the letter is addressed to the President, without requiring formal acceptance.
Historically, judicial resignations during inquiry proceedings — as with Justices P.D. Dinakaran and Soumitra Sen in 2011 — have caused impeachment motions to lapse, since the objective of removing a judge from office becomes moot once he no longer holds it.

Unresolved constitutional question

This raises an unresolved constitutional question: can Parliament proceed with a removal motion against a judge who has already resigned?
According to jurists, impeachment is not legally possible against someone no longer holding office, and even discussion of the report in Parliament may not be permissible under the Act.
They suggest Parliament should amend the Judges' Inquiry Act to address such situations for future cases.
However, other senior advocates noted that the report's findings could still enable criminal prosecution against Justice Varma, since he no longer enjoys the protections available to sitting judges — while clarifying that the parliamentary inquiry was not equivalent to a criminal trial and did not establish personal ownership of the money.

Conclusion

The Varma case exposes a critical gap in India's judicial accountability framework — a judge's resignation can effectively neutralise an ongoing impeachment process, even after serious charges are proved.
This underscores the need to strengthen the Judges' Inquiry Act to ensure accountability keeps pace with such strategic exits.

Source: TH | IE

Justice Yashwant Varma Cash Row FAQs

Q1: What is the Justice Yashwant Varma Cash Row?

Ans: The Justice Yashwant Varma Cash Row concerns unexplained cash found at his official residence and a parliamentary inquiry into related allegations.

Q2: What charges were proved in the Justice Yashwant Varma Cash Row?

Ans: The Justice Yashwant Varma Cash Row inquiry found unexplained cash possession, interference with evidence, and misleading conduct charges proved against him.

Q3: Why was Justice Yashwant Varma held responsible for the missing notes?

Ans: In the Justice Yashwant Varma Cash Row, the committee cited his failure to secure the room, contact with staff, and lack of police reporting.

Q4: Could Justice Varma's resignation end proceedings in the Cash Row?

Ans: The Justice Yashwant Varma Cash Row raises an unresolved constitutional issue because resignation may make parliamentary removal proceedings legally ineffective.

Q5: What are the broader implications of the Justice Yashwant Varma Cash Row?

Ans: The Justice Yashwant Varma Cash Row exposes gaps in judicial accountability, particularly when judges resign during ongoing proceedings involving serious allegations.