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Parliamentary Standing Committee on Finance's Recommendations: ESG Oversight Body

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The Parliamentary Standing Committee on Finance has proposed the creation of a dedicated Environmental, Social, and Governance (ESG) oversight body within the Ministry of Corporate Affairs (MCA). This comes amid growing concerns over greenwashing and the need for businesses to adopt authentic sustainability practices.

What is ESG (Environmental, Social, and Governance)?

ESG refers to the criteria used to evaluate a company’s impact on environmental, social, and governance factors:

  • Environmental: Assesses a company’s efforts to manage its environmental footprint, including carbon emissions, waste management, and use of renewable resources.

  • Social: Refers to how a company impacts society in terms of human rights, labor practices, and community engagement.

  • Governance: Encompasses the practices related to corporate governance, such as board transparency, ethical business practices, and accountability.

Why ESG is Important for India

  1. Environmental Factors:

    • India faces severe climate challenges, including floods, heatwaves, and sea-level rise. According to the Centre for Science and Environment (CSE), 2024 witnessed extreme weather on 322 out of 366 days in India.

    • Companies that adopt clean energy, reduce carbon emissions, and integrate environmental sustainability can mitigate such risks.

  2. Social Factors:

    • India continues to grapple with poverty, inequality, and lack of access to basic needs. Companies that prioritize social responsibility can create a more inclusive economy and contribute to societal progress.

  3. Governance Factors:

    • Strong corporate governance helps improve transparency, build trust, and attracts long-term investments, ensuring sustainable growth in India’s economy.

Recommendations by the Parliamentary Standing Committee

The committee has suggested several measures to improve ESG transparency and combat greenwashing:

  • Establishing an ESG Oversight Body:

    • A dedicated ESG oversight body within the MCA to ensure companies’ sustainability claims are genuine.

    • The body should include forensic experts to detect fraudulent ESG claims.

  • Strengthening Legal Framework:

    • Amend the Companies Act, 2013 to make ESG a core responsibility of directors.

    • Embed sustainability into business strategy through sector-specific ESG guidelines.

  • Tackling Greenwashing:

    • Introduce stricter penalties for false ESG claims to act as a deterrent.

    • The panel recommends creating a system for early detection of financial crimes and strengthening the Serious Fraud Investigation Office (SFIO) and the National Financial Reporting Authority (NFRA).

  • Improved CSR Oversight:

    • Strengthen the oversight system for Corporate Social Responsibility (CSR) to improve its transparency and effectiveness.

Greenwashing

Greenwashing refers to companies that make false or exaggerated environmental claims about their products or practices to create a misleading impression of environmental responsibility.

Factors Contributing to Greenwashing in India:

  1. Rising Eco-Consumerism:

    • With increasing consumer awareness about climate change and pollution, there has been a surge in demand for sustainable products. Companies exploit this demand by using vague terms like "eco-friendly" without any certification or actual sustainable practices.

  2. Weak Regulatory Enforcement:

    • India’s Bureau of Indian Standards (BIS) Eco-Mark certification is not mandatory, and many products lack this certification, allowing companies to falsely advertise their products as eco-friendly.

    • There is no unified framework for ESG-related requirements, leading to regulatory gaps that companies can exploit.

  3. Cultural Exploitation:

    • Companies use labels like “natural” or “Ayurvedic” to appeal to eco-conscious consumers, even when their production methods are unsustainable and harmful to the environment.

  4. CSR and Marketing Tactics:

    • Companies often highlight token CSR activities like tree planting, while continuing environmentally damaging practices, particularly in fossil fuels or heavy manufacturing sectors.

India’s Initiatives Related to Greenwashing

To combat greenwashing and ensure authentic sustainability practices, India has introduced several measures:

  • Consumer Protection Act, 2019:

    • The Central Consumer Protection Authority (CCPA) regulates misleading environmental claims.

  • Green Rating Project:

    • Led by the Centre for Science and Environment (CSE), this project rates industries based on their environmental performance.

  • Advertising Standards Council of India (ASCI) Guidelines:

    • Any advertisement making environmental claims must be specific, accurate, and not misleading.

India’s Efforts in ESG Reporting

  • The Securities and Exchange Board of India (SEBI) has mandated that the top 1,000 listed companies disclose their ESG performance using the Business Responsibility and Sustainability Reporting (BRSR) framework.

  • This reporting framework aligns with global standards like the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB).

Conclusion

The establishment of an ESG oversight body within the MCA, alongside strengthening regulatory mechanisms and penalties for false claims, will help India combat greenwashing, improve corporate transparency, and drive genuine sustainability in the corporate sector. As India moves towards a more sustainable future, these measures will ensure that companies are held accountable for their environmental, social, and governance practices.


 

Quick Commerce

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According to a report by consulting firm Kearney, India’s quick commerce sector is set to witness significant growth, but it's also creating shifts in consumer behavior.

What is Quick Commerce?

Quick commerce refers to the instantaneous delivery of goods and services, typically within an hour or less. This is a shift from traditional e-commerce, where delivery usually takes 3-4 days.

Key Benefits of Quick Commerce:

  • 24/7 Operation: Quick commerce platforms operate round the clock, enabling customers to make purchases and receive deliveries at any time of the day.

  • Reduction of Middlemen: By sourcing products locally and directly from suppliers, the role of intermediaries is reduced, which can lead to lower prices and faster deliveries.

  • Improved Supply Chain Management: Through hyper-local sourcing, quick commerce can better manage marketing, delivery routes, and inventory.

Growth Drivers of Quick Commerce

  1. Increased Penetration of Internet and Smartphones:

    • The rise of smartphones and mobile applications has made online shopping more accessible and convenient.

    • The COVID-19 pandemic further accelerated the adoption of quick commerce as demand for contactless deliveries soared.

  2. Rise of Social Media:

    • Platforms like Instagram, TikTok, and YouTube have become essential tools for brands, offering access to vast audiences and driving online shopping trends.

    • Influencer marketing is playing a crucial role in engaging consumers, particularly the younger generation.

  3. Technological Advancements:

    • Advanced Algorithms: These predict consumer demand and optimize the supply chain to improve efficiency.

    • Automation and Robotics: Real-time tracking and automated warehouses ensure faster and more accurate operations, improving the speed of delivery.

  4. Favourable Government Initiatives:

    • Government programs like Unified Payments Interface (UPI), Bharat Net, and RuPay have made digital payments easier and more secure.

    • Open Network for Digital Commerce (ONDC) is increasing the reach of India’s quick commerce ecosystem by promoting inclusivity.

Unintended Consequences of Quick Commerce

While the growth of quick commerce has boosted convenience, it comes with its own set of challenges.

  1. Instant Gratification:

    • The increasing demand for instant gratification has led to impulsive buying. Consumers are encouraged to purchase based on targeted ads and recommendations that trigger their psychology.

    • Cookies track purchasing behaviors to personalize marketing, leading to frequent and often unnecessary purchases.

  2. Social Security Concerns for Gig Workers:

    • Quick commerce often relies on gig workers (delivery personnel) who face significant challenges regarding safety and job security.

    • Ethical concerns arise, especially with companies promising 10-minute deliveries, which may lead to unsafe working conditions and accidents.

  3. Environmental Sustainability:

    • Increased road congestion from delivery vehicles (primarily motorbikes) raises concerns about carbon emissions and environmental degradation.

    • The quick delivery models may also contribute to excessive packaging waste.

  4. Health Implications:

    • The freshness of perishable goods, such as groceries or dairy products, can be compromised during quick deliveries, leading to potential health risks.

    • Poor handling of food items (like eggs and dairy) may cause contamination or spoilage, impacting public health.

  5. Impact on Retail and Kirana Stores:

    • The rise of quick commerce has resulted in reduced footfall at malls, supermarkets, and local kirana stores, especially in urban areas.

    • Retailers are facing declining sales and squeezed profit margins as consumer preferences shift to online platforms.

Striking the Right Balance: Solutions to the Challenges

  1. Social Security Net for Gig Workers:

    • Establishing rigid safety standards for delivery partners, such as insurance, medical assistance, and accident protocols, can protect workers and address concerns regarding their welfare.

  2. Strengthen Hygiene Practices:

    • Food safety protocols should be strictly followed by quick commerce platforms. The Food Safety and Standards Authority of India (FSSAI) has already issued guidelines to improve hygiene practices on e-commerce platforms to safeguard consumers' health.

  3. Collaboration with Existing Retail Businesses:

    • Quick commerce platforms can integrate and collaborate with local kirana stores and small businesses to improve inventory availability and distribution efficiency.

    • Partnerships with local businesses can enhance the reach of quick commerce while supporting traditional retail.

  4. Regulatory Intervention:

    • Government oversight can help regulate the market by preventing monopolistic practices, encouraging fair competition, and protecting consumer interests.

    • Focus areas should include data protection, privacy, and labour rights for gig workers.

  5. Environmental Resilience:

    • Governments and companies should focus on electrification of delivery vehicles, use of drones for short-distance deliveries, and delivery optimization to reduce the carbon footprint.

    • Solutions like mobile warehouses and collection points can help alleviate urban traffic congestion and optimize delivery routes.

Conclusion

While quick commerce has brought convenience to consumers, it has also led to several unintended consequences, including impulsive consumerism, social security risks for gig workers, and environmental concerns. Therefore, it is crucial to balance growth with sustainability by implementing measures that protect workers, ensure hygiene, support local businesses, and minimize environmental impact.


 


 

Asset Monetization Strategy

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The National Highway Authority of India (NHAI) has outlined a structured framework to monetize public assets and increase public-private participation (PPP) for the development of road infrastructure in India. This strategy aims to unlock the value of existing infrastructure and support the financing of new projects.

What is Asset Monetization?

Asset monetization refers to unlocking the economic value of underutilized public assets to create new revenue sources. It does not necessarily involve the disinvestment of these assets, but rather their efficient use to generate funds.

It’s also known as capital recycling, where the capital raised from the monetization is reinvested into new projects.

Why Asset Monetization?

  1. Bridging Investment Gaps: The development of infrastructure requires massive investments. With limited fiscal space, monetization helps raise non-tax revenue.

  2. Overcoming Public Sector Inefficiencies: Involving private sector participation leads to better operational and managerial efficiency.

  3. Unlocking Value from Brownfield Assets: Focus on de-risked, brownfield assets with stable revenue streams makes them attractive to investors.

  4. Enhancing Global Competitiveness: Improved infrastructure attracts foreign investments and helps integrate India into the global value chain.

Asset Monetization Models in India

  1. Toll-Operate-Transfer (ToT):

    • This model involves attracting private capital for managing completed assets in exchange for toll collection rights. The private player pays an upfront amount and manages the asset for a fixed period before handing it back to the government.

  2. Design-Build-Finance-Operate-Transfer (DBFOT):

    • The private partner is responsible for the design, construction, financing, and operation of a project before transferring it to the government after a set period.

  3. Infrastructure Investment Trusts (InvITs):

    • These are pooled investment vehicles that allow the public to invest in infrastructure assets through the purchase of units. InvITs offer stable cash flows, diversification, and tax benefits, and are regulated by the SEBI.

  4. Real Estate Investment Trusts (REITs):

    • Similar to InvITs, REITs invest in real estate and offer the public an opportunity to invest in property assets.

  5. Project-Based Financing:

    • Involves securitizing toll receipts or user fees from assets like toll plazas to raise long-term finance from banks.

  6. Long-Term Lease:

    • This involves leasing assets to private entities for a set duration in exchange for periodic payments.

  7. Asset Concession:

    • This includes mining assets, real estate transactions, and projects like station redevelopment and airport concessions.

Initiatives for Asset Monetization in India

  1. National Monetization Pipeline (NMP):

    • The NMP aims to generate ₹6 lakh crore by leasing out public infrastructure assets between 2022 and 2025. This initiative covers assets from highways, airports, railways, and more.

  2. National Land Monetization Corporation (NLMC):

    • The NLMC is a 100% government-owned company that focuses on the monetization of non-core assets of public sector enterprises (CPSEs).

  3. Asset Monetization Dashboard:

    • This tool tracks the progress of asset monetization and offers transparency to investors, helping them better understand the opportunities in the market.

Challenges and Strategic Interventions for Asset Monetization

1. Transparency & Governance

  • Challenges: Allocation of assets may suffer from favoritism, political influence, or cronyism.

  • Intervention:

    • Public disclosure of the future monetization pipeline to improve visibility and predictability for investors.

    • Adoption of transparent bidding frameworks.

2. Sectoral Issues

  • Challenges: The focus has mostly been on highways and ports, while other sectors like railways and urban infrastructure are being neglected.

  • Intervention:

    • Broaden and bundle smaller assets across under-invested sectors to make them more attractive to private players.

3. Valuation Discovery & Competitive Bidding

  • Challenges: Poor asset valuation and limited participation from bidders due to capital-intensive models could lead to monopolies.

  • Intervention:

    • Adopt de-risked models like ToT and foster competition through innovative models like InvITs.

4. State-Level Readiness

  • Challenges: Minimal private sector involvement at the state level and lack of financial incentives.

  • Intervention:

    • Unlock state assets (e.g., state highways and terminals) and offer interest-free loans for infrastructure development.

5. Consumer & Public Interest

  • Challenges: Over-exploitation by private players may lead to price hikes and a lack of transparency in service delivery.

  • Intervention:

    • Adopt a "Monetize rights, not ownership" model, ensuring strict contractual obligations and service standards.

6. Institutional Fragmentation

  • Challenges: Multiple ministries involved lead to poor coordination and lack of centralized planning.

  • Intervention:

    • Establish an Infrastructure Ministry to align national and state priorities, with support from NITI Aayog.

7. Regulatory Uncertainty

  • Challenges: Lack of clarity on the distinction between monetization and disinvestment in sectors like telecom.

  • Intervention:

    • Develop sector-specific monetization guidelines and independent contract monitoring mechanisms.

8. Fiscal Utilization & Public Trust

  • Challenges: Misuse of disinvestment proceeds for fiscal deficit management could affect the long-term revenue streams.

  • Intervention:

    • Ensure funds are used for PSU restructuring and explore leasing/rental models for sustained non-tax revenue.

9. Monitoring & Performance Tracking

  • Challenges: Weak post-monetization oversight leads to inefficiencies and delays.

  • Intervention:

    • Define clear Key Performance Indicators (KPIs) for revenue, efficiency, and compliance to ensure continuous tracking.

Conclusion

The Asset Monetization Strategy is not just a financial tool but a transformative approach for infrastructure development in India. By unlocking the value of existing public assets and reinvesting the proceeds into new projects, India can improve its infrastructure, enhance global competitiveness, and generate sustainable growth.


 

India's Groundwater Contamination Crisis

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India's groundwater is facing significant contamination issues, with over 600 million Indians depending on it daily. The 2024 Annual Groundwater Quality Report from the Central Ground Water Board (CGWB) highlights alarming levels of contamination across the country. Groundwater contamination is no longer just an environmental concern but a serious public health crisis.

Causes of Groundwater Contamination in India

1. Industrial Pollution

  • Unregulated Discharge: Heavy metals like lead, cadmium, chromium, and mercury are released by industries, especially near industrial hubs like Kanpur (Uttar Pradesh) and Vapi (Gujarat). These have created “death zones,” where groundwater is dangerously toxic, leading to widespread kidney failures and other health issues.

2. Overuse of Fertilizers

  • Excessive use of nitrogen-rich fertilizers has resulted in nitrate pollution, while phosphate fertilizers contribute to contamination from uranium in groundwater. These chemicals seep into aquifers, threatening both human health and agricultural productivity.

3. Improper Sanitation & Waste Management

  • Leakage from septic tanks and sewage systems contaminates groundwater with harmful pathogens. Poorly maintained sewage treatment plants often lead to localized outbreaks of waterborne diseases.

4. Natural (Geogenic) Contamination

  • Fluoride, arsenic, and uranium naturally occur in specific geological formations. States like Rajasthan, Bihar, Punjab, and West Bengal face chronic contamination from these naturally occurring toxins. Over-pumping groundwater aggravates the problem, as it lowers water tables and concentrates pollutants.

5. Fragmented and Weak Regulatory Framework

  • Lack of Enforcement: The Water (Prevention and Control of Pollution) Act, 1974 largely ignores groundwater, and its enforcement is inadequate. Key regulatory bodies like the CGWB lack statutory powers, and State Pollution Control Boards (SPCBs) are underfunded and constrained.

  • Lack of Coordination: Different agencies like CGWB, CPCB, SPCBs, and the Ministry of Jal Shakti often work in isolation, duplicating efforts and failing to take integrated action.

6. Poor Monitoring & Public Awareness

  • Data Gaps: Groundwater monitoring data is infrequent and not publicly accessible. This delays the detection and mitigation of contamination. Moreover, the local community's involvement in managing and monitoring groundwater is often inadequate.

Key Bodies Involved in Groundwater Management

  1. Central Ground Water Authority (CGWA):

    • The CGWA, created under the Environment Protection Act, 1986, regulates groundwater at both the central and state levels.

  2. Central Ground Water Board (CGWB):

    • Under the Ministry of Jal Shakti, CGWB explores, monitors, and manages India's groundwater resources.

  3. Central Water Commission (CWC):

    • CWC works on various water management aspects like flood control, irrigation, drinking water, and hydropower projects.

  4. Central Pollution Control Board (CPCB):

    • CPCB enforces the Water (Prevention and Control of Pollution) Act, 1974, and works on improving water quality, advising the government on pollution control, and maintaining water standards.

Impacts of Contaminated Groundwater

1. Health Impacts

  • Fluoride Contamination: Excess fluoride causes skeletal fluorosis, joint pain, and bone deformities, affecting 66 million people in states like Rajasthan, Madhya Pradesh, and Uttar Pradesh.

  • Arsenic Poisoning: Levels of arsenic in states like Bihar and Uttar Pradesh have reached dangerously high levels, causing skin lesions, respiratory issues, and cancer.

  • Nitrate Contamination: Nitrate levels above the WHO limit can cause blue baby syndrome (methemoglobinemia), a deadly condition for infants, especially in regions like Punjab, Haryana, and Karnataka.

  • Uranium Contamination: Over-exposure to uranium in water causes kidney toxicity and chronic organ damage, with regions like Punjab’s Malwa region showing alarming levels.

  • Heavy Metals: Areas like Kanpur and Vapi face severe contamination from lead, cadmium, and mercury, leading to neurological damage, developmental delays, and anemia.

2. Agriculture Impacts

  • Toxins in the Food Chain: Contaminated groundwater affects crop yields by introducing harmful substances into the food chain, potentially affecting the health of consumers.

  • Salinity Intrusion: In coastal areas, over-extraction of groundwater leads to salinity intrusion, which severely reduces agricultural productivity.

3. Ecosystem Stability

  • Polluted groundwater negatively impacts local wildlife by contaminating water sources, leading to a loss of biodiversity. Species that depend on clean water sources are at risk, which further impacts the balance of ecosystems.

Reforms Needed to Address Groundwater Contamination

1. National Groundwater Pollution Control Framework (NGPCF)

  • Establish a National Groundwater Pollution Control Framework (NGPCF) to define the roles of agencies and empower the CGWB with stronger regulatory powers.

2. Modern Monitoring Systems

  • Upgrade the groundwater monitoring systems by using real-time sensors, remote sensing technologies, and National Aquifer Mapping. This will allow for better detection and faster response to contamination.

  • Integrate groundwater monitoring with health surveillance systems for early detection of contamination-related health issues.

3. Targeted Remediation

  • Expand the installation of community water purification plants (like those for arsenic and fluoride removal). The Jal Jeevan Mission (JJM) should be utilized to improve safe piped water coverage and provide safe drinking water to communities affected by contamination.

4. Strict Industrial & Waste Regulation

  • Mandate Zero Liquid Discharge (ZLD) for industries, strictly regulate landfills, and empower the CGWB to enforce penalties for illegal discharge of effluents into groundwater.

5. Agrochemical Reforms

  • Promote organic farming through schemes like the Paramparagat Krishi Vikas Yojana (PKVY). Also, regulate the use of chemical fertilizers and pesticides to reduce nitrate and heavy metal contamination.

6. Community-Centric Groundwater Governance

  • Empower local communities—including panchayats, water user groups, and schools—to monitor and manage groundwater quality. The Atal Bhujal Yojana (ATAL JAL) encourages community-led groundwater management and ensures long-term water security through awareness programs and capacity-building initiatives.

Conclusion

Groundwater contamination in India has escalated into a severe public health crisis with millions of people exposed to toxic substances. To address this crisis, a multi-faceted approach involving strict regulation, modern monitoring, targeted remediation, and community empowerment is essential. By focusing on both prevention and remediation, India can secure safe, clean groundwater for the future and protect its population from the harmful effects of contamination.


 


 

India’s Foreign Direct Investment (FDI) Trends

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India's net Foreign Direct Investment (FDI) inflows witnessed a dramatic fall of 96% in FY25 compared to FY24, as per the RBI Bulletin (June 2025). This sharp decline in net FDI, despite a rise in gross FDI inflows, raises several questions about the underlying causes, while also underscoring the complexities surrounding India's economic and investment landscape.

What is Foreign Direct Investment (FDI)?

FDI refers to the investment made by foreign entities in Indian companies, either through equity instruments in unlisted companies or by acquiring 10% or more of the paid-up capital of a listed Indian company. Key regulations and policies govern FDI in India, such as:

  • Consolidated Foreign Direct Investment Policy (2020) and the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019.

FDI can flow through two main routes:

  1. Automatic Route: No government or RBI approval is required. Example sectors include agriculture, coal and lignite, telecom, etc.

  2. Government Route: Requires prior government approval for certain sectors.

Some sectors, including lotteries, gambling, and atomic energy, are prohibited for FDI in India.

Significance of Growing FDI Inflows for India

FDI plays a pivotal role in India’s economic growth due to the following reasons:

  1. Capital Investment: FDI infuses non-debt capital into India’s economy, providing sustainable funding for sectors such as technology transfer and strategic sector development. In 2024, greenfield investments saw a 25% rise, reaching USD 110 billion.

  2. Exchange Rate Stability: India’s foreign exchange reserves can cover 11+ months of imports and 96% of external debt as of May 2025. This stable reserve base supports the Indian Rupee's value.

  3. Sustainable Finance: India has emerged as the largest carbon credit issuer in the Verra Registry, showing a growing commitment to green investments and sustainable finance.

  4. Supports Competition and Innovation: FDI fosters competition, promotes the best practices, and brings in managerial and technological know-how, leading to the creation of employment.

Key Reasons for the Fall in Net FDI in India (FY25)

While India continues to be an attractive investment destination, several factors have contributed to the 96% fall in net FDI in FY25:

  1. Rising Outward Indian Investment: Indian companies have been increasingly investing abroad. According to the Ministry of Finance’s Monthly Economic Review (April 2025), Indian direct overseas investment surged to USD 12.5 billion in FY25, leading to a rise in outward FDI.

  2. Liberalized Policy for Overseas Direct Investment (ODI): India’s ODI guidelines (2022) have enabled Indian entities to invest abroad with fewer restrictions. This shift is contributing to an increase in Indian investment abroad, impacting net FDI inflows.

  3. Increase in Repatriations: The increase in repatriations (foreign investors pulling back capital) signifies a maturing market, where foreign firms are withdrawing investments after achieving their targets.

  4. Global Economic Uncertainty: Rising global trade tensions, such as tariff hikes by the USA, and a weak global demand, especially in key markets, have dampened FDI flows worldwide. Global FDI declined by 11% YoY in 2024, as per UNCTAD’s WIR 2025.

  5. Maturing Investment Cycle: Many earlier foreign investments in India are now entering the harvest phase, where investors have realized their growth targets and are withdrawing investments, affecting net FDI figures.

Initiatives to Boost FDI in India

Despite the challenges, India continues to take proactive measures to attract and retain FDI:

  1. Sectoral Reforms:

    • Several sectors like Defence, Insurance, Petroleum and Gas, Telecom, and Space have seen reforms aimed at increasing FDI caps. For instance, the Union Budget 2025 increased the FDI sectoral cap for the insurance sector from 74% to 100% for companies investing the entire premium in India.

  2. Investor-Friendly Environment:

    • The Jan Vishwas (Amendment of Provisions) Act, 2023 decriminalized 183 provisions across 42 central acts, making the regulatory environment more business-friendly.

  3. Promotion Agreements:

    • India has signed Bilateral Investment Treaties (BITs) with countries like Kyrgyzstan (2019), UAE (2024), and Uzbekistan (2024), along with a Trade and Economic Partnership Agreement (TEPA) with the European Free Trade Association (EFTA).

  4. Competitive Cooperative Federalism:

    • Programs like Business Reforms Action Plan (BRAP) 2024 and Logistics Ease Across Different States (LEADS) 2024 encourage states to compete for FDI by improving their business environment.

  5. Institutional Mechanisms:

    • The Project Development Cells (PDCs) set up by the government fast-track investments by providing support across various ministries and departments.

  6. Government Schemes:

    • Initiatives like Make in India, Start-up India, PM Gati Shakti, National Industrial Corridor Programme, and the Production Linked Incentive (PLI) Scheme are designed to promote both domestic and foreign investments.

Way Forward

India must implement strategic reforms to reverse the fall in net FDI and enhance its position as a top investment destination:

  1. Undertaking Policy Reforms:

    • Stable and predictable policies, including taxation, regulatory, and judicial reforms, are essential to improve the ease of doing business and attract higher FDI. Vietnam’s 10-year economic plans offer a good example of long-term investment planning.

  2. Strengthening the Digital Economy:

    • India should focus on advancing the digital economy, given that it is one of the key drivers of global FDI. Investments in digital technologies were up by 14% in 2024 (UNCTAD's WIR 2025), and India can capitalize on this trend.

  3. Investment Incentives:

    • Offering targeted fiscal incentives such as tax breaks, grants, and subsidies can help steer foreign capital into key sectors, especially green technology and innovation-driven sectors.

  4. International Cooperation:

    • India must continue reforming the international financial system and engage in multilateral cooperation to manage global risks, promoting fair investments.

Conclusion

The decline in net FDI in FY25 is largely temporary and driven by a combination of matured investments, outward Indian investments, and global economic challenges. However, India’s long-term potential to attract sustainable and inclusive capital remains strong. With focused reforms and smarter investment strategies, India can retain its position as South Asia's largest FDI recipient and continue to drive economic growth.


 

Judicial Pendency Crisis in India

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India's judiciary is grappling with an overwhelming backlog of over 5 crore cases, which has severely impacted the justice delivery system. This backlog spans across the Supreme Court, High Courts, and District Courts, affecting governance and eroding public trust in the legal system.

Key Statistics on Judicial Pendency in India

  • Total Pending Cases: As of mid-2025, more than 5 crore cases are pending in Indian courts.

    • District Courts: Handle the bulk of the cases, with 90% (around 4.6 crore cases).

    • High Courts: Over 63.3 lakh cases.

    • Supreme Court: Approximately 86,700 cases.

Disposal Disparities: Criminal vs Civil Cases

  • Criminal cases are disposed of more swiftly, with 85.3% of High Court cases resolved within a year.

  • Civil cases face a slower pace:

    • Only 38.7% of civil cases in district courts are resolved within a year.

    • Nearly 20% of civil cases remain pending for over 5 years.

The Chief Justice of India has raised concerns about the growing pendency, attributing it in part to the "fear psychosis" among district courts in granting bail.

Key Factors Contributing to High Pendency

  1. Low Judge-Population Ratio:

    • The current judge-to-population ratio stands at 15 judges per 10 lakh people, far below the Law Commission's recommendation of 50 judges per 10 lakh.

    • Additionally, women make up 38% of the lower judiciary, but their representation in High Courts is just 14%.

  2. Frequent Adjournments:

    • Adjournments are a key contributor to case delays. A study on delayed cases in the Delhi High Court found that 70% of cases involved more than three adjournments. The culture of "tareek pe tareek" (date after date) exacerbates delays.

  3. Underutilization of ADR:

    • Alternative Dispute Resolution (ADR) mechanisms, including mediation, arbitration, and conciliation, are underused. Lack of centralized data on ADR utilization makes it difficult to assess their full potential in easing the judicial backlog.

  4. Rise in Litigation:

    • Legal awareness has increased, leading to more Public Interest Litigations (PILs) and non-meritorious cases, many of which are directed at government departments. Delays in government decision-making and routine appeals contribute significantly to the backlog.

  5. Structural and Procedural Constraints:

    • Inadequate infrastructure, including courtrooms, staff shortages, poor ICT systems, and lack of case management practices, make it difficult to manage the rising caseload efficiently.

Key Judicial Reforms in India

India has initiated several reforms to improve its justice delivery system, but significant challenges remain:

  1. National Mission for Justice Delivery and Legal Reforms (2011):

    • Aims to enhance access to justice, efficiency, and accountability through various reforms.

  2. e-Courts Project:

    • Aiming for a paperless judiciary, this project focuses on digitizing court records, enabling virtual hearings, and speeding up case processing.

  3. National Judicial Infrastructure Authority of India:

    • A proposed body to develop and maintain uniform judicial infrastructure across the country, ensuring better facilities for courts.

  4. Fast Track Special Courts:

    • Special courts dedicated to the speedy trial and disposal of specific types of cases, particularly those related to sexual offenses, economic offenses, and terrorism.

  5. ADR Mechanisms:

    • Expanding the use of mediation, arbitration, and conciliation as effective, cost-efficient alternatives to litigation.

  6. Tele-Law:

    • An initiative to provide legal advice to marginalized groups via technology, especially in remote areas.

  7. Nyaya Bandhu (Pro Bono):

    • A pro bono legal aid initiative that connects volunteer lawyers with individuals needing free legal assistance.

  8. Filling Judicial Vacancies:

    • From 2014 to 2024, a significant number of judicial appointments were made: 62 Supreme Court judges and 976 High Court judges. The strength of High Court judges rose from 906 to 1,114, and the district court strength rose from 19,518 to 25,609.

Measures to Strengthen India’s Judicial System

The judicial pendency problem requires comprehensive, long-term reforms.

  1. Strengthening Judicial Capacity and Appointments:

    • Fast-track judicial appointments in High Courts and District Courts, with an aim to raise the judge-to-population ratio to 50 judges per 10 lakh.

    • Implement reforms to the collegium system for greater transparency in appointments and increase the retirement age of judges.

    • Create specialized courts to address case types like economic offenses, cybercrimes, and commercial disputes.

  2. Infrastructure and Technology Reforms:

    • Establish the National Judicial Infrastructure Authority (NJIA) to standardize court facilities across the country.

    • Expand the e-Courts project to increase digitalization, integrate FASTER (Fast and Secured Transmission of Electronic Records) for case management, and promote virtual hearings.

    • Invest in staff training to ensure smooth integration of new technologies.

  3. Procedural and Case Management Reforms:

    • Limit adjournments and promote summary trials and pre-trial conferences to expedite hearings.

    • Implement time-bound hearings, and integrate AI tools for case clustering, tracking, and listing to streamline case management and improve judicial efficiency.

  4. Promoting ADR and Legal Access:

    • Expand ADR mechanisms (e.g., mediation, arbitration) and ensure their effective implementation. The Mediation Act, 2023 and increased use of Lok Adalats can significantly reduce the caseload in courts.

    • Expand legal aid services through Tele-Law and mobile legal clinics to improve access to justice for underserved communities.

  5. Addressing Government Departmental Delays:

    • Streamline the decision-making process in government departments to reduce the volume of government-related cases, which account for nearly 50% of pending cases.

Conclusion: A Call for Urgent Action

India’s judicial pendency crisis is a matter of national importance that affects the very foundation of democracy and rule of law. The growing backlog, particularly in district courts, undermines public confidence in the justice system and raises concerns about effective governance. The judicial reforms underway, including e-Courts, ADR, and infrastructure enhancements, show promise, but their success will depend on faster implementation and integrating modern technologies.


 

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