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Current Edge Daily Brief 4th September 2025
Quote of the Day
“A law is valuable not because it is law, but because there is right in it.” – HENRY WARD BEECHER
What the Others Say
“All relevant parties must set aside maximalist demands and unite behind the commitment to the February polls, as the stability of Bangladesh depends on it.” – THE DAILY STAR, BANGLADESH
Table of Contents
THE BIG PICTURE
- IE Business: GST 2.0 unveiled: Two-slab structure cleared, new rates will come into effect September 22 (Aanchal Magazine)
- TH Text & Context: Should reservations exceed the 50% cap? (Rangarajan R.)
- TH Science: How Majorana particles promise to shield quantum computers from noise (Vasudevan Mukunth)
The Big Picture
IE Business: GST 2.0 unveiled: Two-slab structure cleared, new rates will come into effect September 22
Syllabus: Pre/Mains – Economy
Why in News?
GST Council’s 56th meeting approved GST 2.0 with simplified two-slab structure (5% and 18%) and zero GST on individual health/life insurance, effective September 22, 2025.
Key Structural Changes
- Two-slab system replacing four slabs – 5% (merit goods), 18% (standard rate), elimination of 12% and 28% slabs
- Special 40% demerit rate – super luxury goods, sin products, pan masala, cigarettes
- Tobacco products exception – current GST rates and compensation cess continue until loan obligations discharged
- Implementation date – September 22, 2025 (first day of Navratri)
- Marathon council meeting – 10.5 hours, consensus decision without voting
Major Tax Exemptions & Reductions
- Zero GST on insurance – individual life insurance (term, ULIP, endowment), health insurance including family floater and senior citizen policies, down from 18%
- Food items to 5% – butter, cheese, condensed milk, pasta, coconut water, soya milk, nuts, dates, sausages from 12%
- Zero GST on basic foods – UHT milk, paneer, pizza bread, khakra, chapati, roti, erasers
- Personal care to 5% – hair oil, soap bars, shampoos, toothbrushes, toothpaste from 12-18%
- White goods to 18% – air conditioners, TVs, dishwashers from 28%
- Small vehicles to 18% – cars under 1200cc petrol/1500cc diesel and under 4 meters, motorcycles under 350cc
- Services to 5% – gyms, salons, barbers, yoga centres from 18%
Sectoral Impact & Corrections
- Inverted duty structure resolved – textiles (manmade fiber 18% to 5%, yarn 12% to 5%), fertilizer inputs (acids, ammonia 18% to 5%)
- Working capital relief – automated 90% provisional refunds, reduced classification disputes
- Revenue implications – net impact Rs 48,000 crore, states initially concerned about Rs 80,000 crore to Rs 1.5 lakh crore loss
- Industry assurance – CII and companies committed to pass benefits to consumers
Administrative Reforms
- Ease of doing business – automated refunds and registration process
- Classification clarity – reduced disputes from differential rates, especially automotive and food sectors
- CBIC implementation – administrative measures for provisional refunds using data analysis and risk evaluation
- PM endorsement – benefits for farmers, MSMEs, middle class, women, youth.
| Prelims Factsheet |
|---|
| GST Council |
| Constitutional Basis: Article 279A (101st Amendment, 2016) Composition: • Chairperson: Union Finance Minister • Members: Union Minister of State (Revenue) + Finance Ministers of all states/UTs with legislature Voting System: • Union Government: 1/3rd weightage • All States combined: 2/3rd weightage • Quorum: 50% of total members • Decision by 3/4th majority of votes cast Important Facts: • Meets at least once every quarter • Joint forum of Centre and States (cooperative federalism) • Decisions binding on both Centre and States |
| Input Tax Credit (ITC) Mechanism |
| Definition: Tax paid on inputs can be set off against output tax liability Core Principle: Avoid cascading effect of taxation (tax on tax) Eligibility Conditions: • Must have valid tax invoice • Goods/services received • Tax paid to supplier/government • Return filed by supplier ITC Flow: • Purchase inputs → Pay GST → Use ITC against output GST • Excess ITC can be refunded or carried forward Restrictions: • No ITC on personal consumption items • Motor vehicles (unless for specific business use) • Food, beverages for employee consumption • Works contract services for personal use Time Limit: ITC can be claimed till September 30 of following financial year |
| Inverted Duty Structure |
| Definition: When tax rate on inputs is higher than tax rate on finished products Problem Created: • Accumulates ITC (cannot be fully utilized) • Working capital blockage • Cash flow issues for manufacturers Common Examples: • Textiles: Man-made fiber (18%) → Yarn (12%) → Fabric (5%) • Fertilizers: Industrial acids (18%) → Fertilizers (5%) • Food Processing: Packaging materials (18%) → Processed food (5%) Solutions: • Refund mechanism for excess ITC • Rate rationalization (as in GST 2.0) • Automated refund processing GST 2.0 Resolution: • Man-made fiber: 18% → 5% • Textile yarn: 12% → 5% • Fertilizer inputs: 18% → 5% • Automated 90% provisional refunds Impact: Improved cash flow, reduced compliance burden, enhanced competitiveness |
TH Text & Context: Should reservations exceed the 50% cap?
Syllabus: Pre/Mains
Why in News?
Bihar opposition leader Tejashwi Yadav declared 85% reservation if voted to power, while Supreme Court issued notice on petition demanding creamy layer system for SC/ST reservations.
Constitutional Framework
Articles 15 & 16 Provisions
- Article 15: Prohibits discrimination, enables special provisions for backward classes in education
- Article 16: Guarantees equality in public employment, allows reservations for advancement
- Current central reservation: OBC (27%), SC (15%), ST (7.5%), EWS (10%) = 59.5% total
- State-wise variation based on demographic profile and policies
Formal vs Substantive Equality
- Formal equality: Uniform treatment for all, reservations seen as exception to equality principle
- Substantive equality: Different treatment to achieve equal outcomes, reservations as continuation of equality
- Courts evolved from formal approach (Balaji 1962) to substantive approach (N.M. Thomas 1975)
Judicial Evolution on 50% Cap
Key Court Rulings
- Balaji vs Mysore (1962): Established 50% ceiling, reservations should be within reasonable limits
- N.M. Thomas (1975): Introduced substantive equality concept, reservation as assertion of equality
- Indra Sawhney (1992): Reaffirmed 50% cap except in extraordinary circumstances, introduced OBC creamy layer
- Janhit Abhiyan (2022): Upheld EWS 10% reservation as separate category, not counting toward 50% limit
Current Legal Status
- Most states already exceed 50%: Chhattisgarh (82%), MP (73%), Nagaland (80%), Mizoram (80%)
- EWS reservation itself breaches 50% cap established in Indra Sawhney judgment
- Supreme Court considering review of 50% ceiling through various pending cases
Arguments For Exceeding 50% Cap
Population Proportion Logic
- Backward classes constitute majority population requiring proportional representation
- Demand for caste census to determine actual demographic data rather than estimates
- 40-50% reserved seats in central government remain unfilled annually
Constitutional Flexibility
- Constitution as living document adaptable to changing circumstances
- Indra Sawhney judgment is 30-year-old, laid down possibility of relaxation in extraordinary circumstances
- Social justice requires affirmative action for historically disadvantaged communities
Concentration of Benefits Problem
Within OBC Category
- Rohini Commission findings: 97% benefits captured by just 25% of OBC castes/sub-castes
- Around 1,000 of 2,600 OBC communities have zero representation in jobs/education
- Sub-categorization needed based on demographic data
SC/ST Creamy Layer Debate
- No current creamy layer exclusion for SC/ST unlike OBCs
- Punjab vs Davinder Singh (2024): Four judges impressed need for SC/ST creamy layer policies
- Central government reaffirmed August 2024: creamy layer doesn’t apply to SC/ST
- Supreme Court issued notice on petition demanding two-tier reservation system within SC/ST
Arguments Against Exceeding Cap
Equality of Opportunity Concerns
- Fundamental right violation if reservation reaches 85%
- Merit principle compromise affecting overall community interests
- Formal equality requires equal treatment regardless of group membership
Practical Implementation Issues
- Risk of converting unfilled reserved seats to unreserved category
- Increased vacancy backlog in SC/ST categories with creamy layer exclusion
- Limited public sector opportunities versus growing youth population aspirations
Way Forward Recommendations
Data-Driven Approach
- Implement Census 2027 caste enumeration for empirical basis
- Wide stakeholder consultations based on demographic data
- Review reservation levels according to actual population proportions
Targeted Implementation
- Sub-categorization among OBCs per Rohini Commission report
- Two-tier reservation system prioritizing most marginalized within SC/ST
- Skill development mechanisms for gainful employment beyond public sector
- Periodic review mechanism for economic progress assessment
TH Science: How Majorana particles promise to shield quantum computers from noise
Syllabus: Pre/Mains – Science & Tech
The Achievement
Microsoft’s Majorana 1 chip successfully created and controlled Majorana particles, offering a potential solution to quantum computing’s fundamental noise problem. The palm-sized chip can distinguish between a billion and billion-plus-one electrons with unprecedented precision.
The Problem It Solves
Current quantum computers face critical limitations:
- Fragile qubits lose information within microseconds due to environmental noise
- Massive overhead requires hundreds to thousands of physical qubits to create one stable logical qubit
- Decoherence from heat, light, or any environmental interaction destroys quantum states
Majorana Particles: The Solution
What they are: Self-antiparticles proposed by Italian physicist Ettore Majorana in the 1930s, artificially created as collective excitations in superconducting materials at near absolute zero temperatures.
Key advantage: Unlike natural particles, they can be studied in tabletop condensed matter experiments rather than requiring high-energy physics facilities.
Topological Protection Advantage
Non-Local Encoding
- Single qubit information split between two widely separated Majorana modes
- Local noise cannot destroy information—both halves must be disrupted simultaneously
- Like storing half a secret in Paris, half in Tokyo
Braiding Operations
- Majorana modes are non-Abelian anyons—rare quantum particles where exchange sequence matters
- Topological computation through braiding patterns naturally resists errors
- Results depend on topology, not precise physical movements
Current Status & Challenges
Progress Made:
- Successful creation and measurement of Majorana particles
- Digital voltage pulse control rather than fine-tuning individual qubits
- Compact design fitting standard datacenter quantum computers
Remaining Hurdles:
- Must demonstrate actual braiding operations for ultimate proof
- Need 2D structures for braiding (current devices mostly 1D wires)
- Requires atomically precise superconductor-semiconductor interfaces
Future Impact Potential
- Dramatic reduction: From million-qubit requirements to potentially thousands for same computational tasks
- Hardware-level protection eliminating need for complex error correction layers
- Accelerated timeline bringing practical quantum computing years closer to reality
- New computational possibilities currently impossible due to noise limitations
This breakthrough represents 17 years of Microsoft’s research and could fundamentally change quantum computing’s scalability trajectory.
