Daily UPSC current affairs, 12 Oct 2026: quantum-safe banking, National Steel Policy 2047, UPI MDR, Nepal floods, J&K EWS row, OHCHR detentions.

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Table of Contents

1. Quantum-Enhanced to Quantum-Safe: Banks Prepare for the Next Big Threat

Syllabus: GS3 – Science & Technology (Quantum Technology), Internal Security (Cyber Security), Banking.

Why in News?

Banks in India and abroad are racing to replace today's encryption with quantum-resistant systems, while also exploring quantum computing for business gains. The RBI has asked payment system operators to start making their infrastructure "quantum-proof" and has set up an expert committee to plan the shift.

Key Facts for Prelims

• RBI Q-SAFE Committee: an eight-member Expert Committee for a Quantum Secure and Adaptive Financial Ecosystem, set up in May 2026 to map vulnerabilities and draft a phased post-quantum roadmap.
• RBI warning: Deputy Governor Shirish Chandra Murmu told the Global FinTech Fest 2026 that quantum resilience must be built by the whole ecosystem, not single institutions.
• DST task force (May 2026): asked banking, power, telecom, defence and transport to begin a phased switch to Post-Quantum Cryptography (PQC), with a national PQC testing and certification programme.
• NIST PQC standards: FIPS 203, 204 and 205, finalised in August 2024.
• Project Leap: a BIS Innovation Hub project that used PQC in a liquidity-transfer test between central banks.
• National Quantum Mission: approved April 2023; outlay ₹6,003.65 crore till 2030-31; implemented by DST.

Key Concepts

From Quantum-Safe to Quantum-Enhanced

• Quantum-safe (defence): banks must inventory where vulnerable cryptography sits — cards, UPI, net banking, inter-bank messaging — and migrate to PQC before Q-Day. Financial data stays sensitive for decades, so HNDL makes the threat current.
• Quantum-enhanced (offence): the World Economic Forum argues banks should also use quantum tools for competitive advantage, from asset allocation to fraud detection.
• Global banks such as HSBC are already trialling quantum algorithms for forex pricing while preparing PQC.

Challenges

• Cryptography is embedded in millions of devices, ATMs, POS terminals and legacy core banking systems.
• Shortage of quantum-literate talent and certified PQC vendors.
• High migration cost for small banks, co-operative banks and fintechs.
• Interconnected systems (UPI, NPCI, card networks) need coordinated, simultaneous upgrades.

Way Forward

• A time-bound RBI roadmap with a cryptographic inventory mandate for every regulated entity.
• Hybrid approach: software PQC now, QKD backbone for critical links later.
• Indian testing labs and standards (BIS, CERT-In, C-DOT) to cut dependence on foreign vendors.
• Skill programmes under the National Quantum Mission.

Mains Question: "The quantum threat to banking is a present danger, not a future one." Examine in the context of India's digital payments ecosystem. (250 words)

2. New National Steel Policy Sets 604 MT Target by 2047

Syllabus: GS3 – Indian Economy, Industrial Policy, Infrastructure, Climate Change.

Why in News?

The Ministry of Steel has released a draft National Steel Policy (NSP) that replaces NSP 2017. It targets 604 million tonnes (MT) of crude steel capacity by 2047, per a presentation by Steel Secretary Sandeep Poundrik; officials round it to "over 600 MT".

Key Facts for Prelims

• Old policy: NSP 2017 targeted 300 MT capacity by 2030–31; India is on track at ~222 MT.
• Imports: India was a net importer of 3.5 MT finished steel in April–August 2026 (up 29.5%); China supplied 31.8%.
• Viksit Bharat Ispat Scheme: ₹5,000 crore to help small and secondary producers upgrade technology and cut emissions.
• Speciality steel: focus on value-added grades for defence, aerospace, high-speed rail and automobiles.
• Trade remedies: safeguard and anti-dumping duties against cheap, substandard imports.
• India is the world's second-largest crude steel producer after China.

Significance

• Steel demand tracks infrastructure, housing and manufacturing — central to the Viksit Bharat 2047 goal.
• The emissions target aligns the sector with India's net-zero by 2070 commitment.
• Matters for exports as the EU's Carbon Border Adjustment Mechanism (CBAM) taxes high-carbon steel.

Challenges

• Raw materials: high-grade iron ore and most coking coal must be sourced abroad; the policy seeks overseas assets and joint ventures.
• Decarbonisation: blast furnaces dominate; green hydrogen-based DRI and scrap-based electric arc furnaces are costly.
• Import surge from China and other surplus producers hurts margins of small mills.
• Capital and land for nearly tripling capacity in two decades.

Way Forward

• Green steel taxonomy and public procurement preference for low-carbon steel.
• Scrap recycling under the Steel Scrap Recycling Policy 2019.
• R&D in hydrogen DRI and carbon capture; support MSME secondary steel units.

Mains Question: Discuss how India can balance a near three-fold rise in steel capacity with its decarbonisation commitments. (150 words)

3. UPI MDR Needs Rationalisation to Protect Trust: IIT Bombay Report

Syllabus: GS3 – Indian Economy, Banking, Digital Public Infrastructure.

Why in News?

A report by IIT Bombay professors, UPI at a Crossroads: Reintroducing the MDR, says NPCI's proposed 0.4% Merchant Discount Rate on UPI must be rationalised before rollout, or public trust in UPI could suffer. The charge is due from 15 October 2026.

What Is MDR?

The Merchant Discount Rate is the fee a merchant pays its bank or payment provider for accepting a digital payment. UPI and RuPay debit cards have had zero MDR since January 2020.

The New UPI MDR Framework (from 15 Oct 2026)

Merchants cannot pass the MDR on to customers; GST at 18% applies on MDR.

What the IIT Bombay Report Recommends

• Cut MDR to 0.08% from 0.4%; if an ad valorem rate is used, cap it at ₹40 per transaction.
• No rationale to copy the credit-card MDR model for UPI.
• Banks should not take the bulk share of MDR revenue.
• Limit the charge to merchants with turnover above ₹50 crore, who would account for about 90% of MDR revenue anyway.
• Continue the Payments Infrastructure Development Fund (PIDF) to onboard new merchants.
• RBI and government to make UPI a mandatory banking service, like Core Banking Solutions.
• UPI's long-term economic benefits outweigh the incremental income from merchant fees.

Why the Government Reintroduced MDR

• Cost gap: the Parliamentary Standing Committee on Finance (March 2026) cited about ₹20,700 crore in annual UPI operating costs against a ₹2,000 crore government allocation.
• Scale: UPI handled 2,451 crore transactions worth ₹29.9 lakh crore in August 2026 alone.
• Revenue is meant for cybersecurity, resilience, innovation and merchant onboarding in small towns.

Concerns

• Trust deficit: the Finance Ministry had called MDR reports "baseless" in June 2025.
• Price pass-through: shopkeepers may raise prices or push customers to cash.
• Card networks gain: GTRI says it erodes UPI's price edge over Visa and Mastercard, which the USTR's 2026 report had raised.
• Traders called a "No UPI Day" on 2 October; a deferral to 1 January 2027 and a ₹40 lakh turnover exemption are reportedly under consideration.

Way Forward

A low, capped, transparent MDR for large merchants only, with a clear rule on how revenue is shared and spent, can fund UPI without hurting inclusion.

Mains Question: "UPI is a digital public good; its funding model must not erode public trust." Critically examine the reintroduction of MDR on UPI. (250 words)

4. Indonesia's Forest Fires and the Race to Save Orangutans

Syllabus: GS3 – Environment & Biodiversity Conservation; GS1 – World Geography (El Niño).

Why in News?

Forest and peatland fires burning across Borneo and Sumatra since July 2026 have pushed critically endangered orangutans out of their habitat. Rescue teams are pulling stranded apes from palm-oil plantations as the fires cut off forest corridors.

Key Facts for Prelims

• Scale: about 2 million acres burned in 2026; over 1,700 human deaths attributed to smoke.
• Habitat hit: fires are burning in habitats holding 52% of Borneo's orangutans, including 13 of the 20 largest populations, says IUCN.
• Rescues: by late September, Indonesia had rescued 100 animals, including 53 orangutans; West Kalimantan (Ketapang) is the worst-hit area.
• Haze: the EU's Copernicus service rated August 2026 haze the worst for any August in 24 years; it spread to Malaysia and Singapore.
• Driver: a strong El Niño deepened the July–October dry season.

Orangutans: Quick Profile

• The only great apes of Asia; the most arboreal great ape; listed in CITES Appendix I.
• Called "gardeners of the forest" because they spread seeds.

Why the Fires Are So Damaging

• Peatlands: fires smoulder underground, release huge carbon stocks and toxic haze.
• Land clearing: fire is used to clear land for oil palm and pulpwood plantations.
• Health of apes: smoke causes respiratory illness; orangutans burn fat reserves even while resting more.
• Fragmentation: apes trapped in plantations face conflict with humans.

Global & Regional Responses

• ASEAN Agreement on Transboundary Haze Pollution (2002) — Indonesia ratified in 2014.
• Peatland restoration, fire bans, and the push for sustainable palm oil (RSPO certification).

India Connect

India is the world's largest importer of palm oil; sourcing from certified, deforestation-free supply chains matters. India's own National Mission on Edible Oils – Oil Palm also faces biodiversity concerns in the Northeast and Andaman.

Mains Question: Explain the link between El Niño, peatland fires and biodiversity loss in Southeast Asia. Suggest regional measures to tackle transboundary haze. (150 words)

5. Nepal Flash Flood: Houses and Bridges Swept Away, 5 Missing

Syllabus: GS3 – Disaster Management; GS1 – Physical Geography (Himalayan rivers); GS2 – India's Neighbourhood.

Why in News?

On 11 October 2026, a flash flood on the Budhi Gandaki river in Nepal's Gorkha district swept away houses and bridges and left five people missing. Nepal's disaster agency said a dry landslide had dammed the river and then burst.

Key Facts for Prelims

• Location: Chumnubri rural municipality, Gorkha district, central Nepal.
• Damage: about 45 houses swept away; four bridges and three hydropower projects damaged.
• Missing: five people, believed to be herders; at least 82 people, including nine foreigners, rescued.
• Evacuation: alerts issued for riverside residents in Gorkha, Tanahun, Chitwan, East and West Nawalparasi districts; four helicopters deployed.
• River system: Budhi Gandaki → Trishuli → Narayani (called Gandak in India) → Ganga.

Context: Nepal's Deadliest Year of Floods

The new flood came weeks after the 26 August 2026 disaster, when a suspected glacial collapse in Tibet sent a flash flood down the Bhote Koshi–Trishuli corridor. As of 4 October, it had killed at least 1,454 people in Nepal, with 5,285 missing.

Types of Himalayan Flash Floods

Why It Matters for India

• Nepal's rivers feed the Ganga basin; floods affect Bihar and Uttar Pradesh downstream.
• Indian-funded hydropower and connectivity projects sit in the same high-risk valleys.
• Shared lessons with Sikkim's South Lhonak GLOF (2023) on early warning.

Way Forward

• Satellite and drone monitoring of landslide dams and glacial lakes.
• Community-based early warning, as promoted by ICIMOD.
• Risk-sensitive siting of hydropower and roads; India–Nepal–China data sharing on transboundary rivers.

Mains Question: Himalayan disasters are increasingly cascading in nature. Discuss with reference to recent floods in Nepal and suggest a regional framework for early warning. (250 words)

6. What Determines Poverty? J&K's EWS Certificate Controversy

Syllabus: GS2 – Polity (Reservation, Art. 15 & 16), Social Justice, Welfare Schemes; GS3 – Poverty Measurement.

Why in News?

In the J&K Legislative Assembly, Handwara MLA and Peoples Conference chief Sajad Lone flagged that about 92% of EWS certificates go to the Jammu region and only 8% to Kashmir, even though Kashmir has more families on poverty-linked ration cards. He demanded one uniform definition of "poor" across the Union Territory.

The Data Behind the Row

Of 758 EWS posts in a recent recruitment, Lone argued that a ration-card-based share would give 417 to Kashmir and 341 to Jammu.

Why the Mismatch? — The Asset Test

Most poor households in Kashmir meet the income limit but fail the asset criteria, especially on house and plot size. Larger traditional homes in the Valley disqualify families with low incomes. Residents holding a Reserved Backward Area (RBA) certificate are also ineligible for EWS.

EWS Reservation: Key Facts for Prelims

• 103rd Constitutional Amendment Act, 2019: inserted Articles 15(6) and 16(6); up to 10% reservation in education and jobs for EWS.
• Eligibility: not covered by SC/ST/OBC reservation; family gross annual income below ₹8 lakh.
• Asset exclusions: 5 acres+ of agricultural land; residential flat of 1,000 sq ft+; plot of 100 sq yards+ in notified municipalities or 200 sq yards+ elsewhere.
• Janhit Abhiyan vs Union of India (2022): Supreme Court upheld the EWS quota by a 3:2 majority, holding that economic criteria alone can be a basis for reservation.

The Bigger Question: How Should Poverty Be Defined?

The J&K case shows that different welfare tools label different people as "poor". A uniform, region-sensitive definition would reduce exclusion errors.

Way Forward

• Allow states and UTs to calibrate asset limits to local housing patterns.
• Link EWS eligibility checks with verified welfare databases.
• Regular review of EWS criteria, as recommended by the Ajay Bhushan Pandey committee (2021), which reviewed the ₹8 lakh income criterion.

Mains Question: "Uniform national criteria for economic reservation may produce regional exclusion." Discuss in the context of the EWS certificate controversy in Jammu and Kashmir. (250 words)

7. India Rejects UN Rights Office Concern on Mass Detentions

Syllabus: GS2 – Fundamental Rights (Art. 19), International Institutions (UN, OHCHR), India and the World.

Why in News?

India's Ministry of External Affairs (MEA) on 11 October 2026 called the UN human rights office's concern over mass detentions of protesters in Delhi "unwarranted" and an "unacceptable interference" in India's internal affairs. An identical statement was issued by India's Permanent Mission to the UN in Geneva.

What Happened

• On 10 October, over 7,000 demonstrators were detained as authorities cordoned off Delhi to stop a protest demanding the resignation of Chief Election Commissioner Gyanesh Kumar.
• The protest was over alleged voter-roll irregularities linked to the Special Intensive Revision (SIR) of electoral rolls.
• OHCHR spokesperson Thameem Al-Kheetan voiced concern over detentions of demonstrators, protest leaders, civil society members, lawyers and journalists, and urged respect for peaceful assembly.

India's Position

• The right to peaceful assembly is guaranteed by the Constitution and protected by independent courts and a free media.
• Like every democracy, it is exercised subject to public order and safety; police acted strictly as per law.
• Courts are open for redress of grievances.
• OHCHR shows double standards — silence on violent crackdowns in India's neighbourhood and near its own seat — which erodes faith in multilateralism.

Why "Again"?

India has rejected OHCHR remarks before — on the arrest of activist Teesta Setalvad (2022), calling them interference in its judiciary, and on Kashmiri activist Khurram Parvez (2021).

Key Facts for Prelims

Analysis

• Sovereignty view: law and order is a domestic matter; India's courts and NHRC provide remedies.
• Rights view: preventive mass detention before a protest may chill free speech and assembly; international bodies see this as a legitimate concern under the ICCPR.
• Diplomatic angle: repeated public rebuttals reflect India's push against what it calls selective scrutiny by UN bodies.

Mains Question: "The right to protest is fundamental, but not absolute." Examine with reference to preventive detentions and India's response to international human rights bodies. (250 words)