1. FATF (Financial Action Task Force)

• Purpose: Global watchdog for money laundering and terror financing.
• Functions:
  • Monitoring & Informing: Tracks how criminals raise/move funds.
  • Setting Standards: Provides global AML/CFT recommendations.
  • Flagging Non-Compliance: Countries are listed under:
    • Grey List: Increased monitoring; deficiencies in AML/CFT but working on reforms.
    • Black List: High-risk jurisdictions urged for countermeasures.
• Current Status: India may urge FATF to put Pakistan back on grey list due to non-compliance.
• Impacts of Listing:
  • Reduced foreign investment & aid.
  • Pakistan was grey-listed (2018–2022); helped curb illicit fund flows to J&K.
• Current Blacklisted Countries: North Korea, Iran, Myanmar.

2. Indus Waters Treaty (IWT)

• Signed: 1960 between India & Pakistan.
• Division of Rivers:
  • India: Sutlej, Beas, Ravi (Eastern Rivers).
  • Pakistan: Indus, Jhelum, Chenab (Western Rivers).
• India’s Rights on Western Rivers: Domestic, non-consumptive, agriculture, hydro-power; storage up to 3.6 MAF allowed but underutilized.
• Concerns:
  • Treaty outdated; hydro-politics & technology have changed.
  • Article IX grievance redressal mechanism misused by Pakistan.
• ‘In Abeyance’:
  • India optimizing use, not blocking water.
  • Strategic move to pressure Pakistan for renegotiation.
• Future Needs:
  • Bilateral resolution mechanism.
  • Update technical dam-building terms.
• China Factor: No active dam-building on Indus, but caution needed, especially on Brahmaputra.

3. One Big Beautiful Bill (OBBBA) – US

• Proposed by: Donald Trump, 2025.
• Key Features:
  • Permanent tax cuts (income, estate, tips, overtime).
  • Increased spending on defence and border security.
  • Waste reduction in governance.
  • Raises debt ceiling.
• Criticism:
  • Fiscal Impact: Adds to US deficit and debt.
    • US deficit = 6.4% of GDP (2024).
    • Debt-GDP ratio already at 120%; may reach 200%.
  • Redistribution: Favours wealthy:
    • Poor lose in-kind transfers (SNAP, Medicaid).
    • Rich gain from tax reductions.
  • Moody’s downgraded US credit rating.

4. India as 4th Largest Economy

• Declared By: NITI Aayog CEO (2025).
• Current GDP: ~$4.19 trillion, overtaking Japan.
• Global Position: Behind US, China, Germany.
• Future Projection: To become 3rd by 2028.
• Growth Drivers:
  • Domestic consumption.
  • Services sector (e.g., IT).
  • Structural reforms & FDI.
  • Integration in global supply chains.
• Challenges:
  • Low per capita income.
  • Income inequality.
  • Infrastructure & employment gaps.

5. Northeast India: From Frontier to Frontrunner

• Vision: From marginal zone to growth engine.
• Highlights:
  • Rs 4.3 lakh crore investment intent at Rising Northeast Summit.
  • Bio-economy, hydro & solar energy potential.
  • Rich tourism spots: Kaziranga, Kamakhya, Loktak, root bridges.
  • Literacy (~80%) & sports talent (football, boxing).
• Gateway to Southeast Asia:
  • Act East Policy.
  • IMT Highway, Kaladan project, Sittwe & Chittagong ports.
• Challenges:
  • Insurgency, ethnic tensions.
  • Poor tourism infrastructure.
  • Industrial underdevelopment.
  • Drug trafficking, natural disasters.
• Key Initiatives:
  • PM-DevINE, NEIDS, UNNATI, MOVCDNER.
• Way Forward:
  • Boost tourism & organic farming.
  • Industrial clusters, tech connectivity (UDAN, BharatNet).
  • Conflict resolution, youth engagement.

6. Grey Zone Warfare

• Definition: Covert, deniable tactics used below war threshold.
• Tactics:
  • Cyber attacks, disinformation, proxy insurgency, drone ops, economic coercion.
• Examples Against India:
  • China: LAC salami slicing, civilian settlements.
  • Pakistan: Terror support in Kashmir, drone smuggling.
  • Cyber Attacks: On ports, AIIMS, power grids.
  • Media Manipulation: Election interference, fake news.
  • Maritime Shadowing: Chinese vessels near Indian waters.
• India’s Response:
  • CDCC (cyber), anti-drone systems.
  • Fact-checking, QUAD, Indo-French cyber pact.
  • Satellite AI surveillance.
• 2025 Outlook:
  • Over 160 drone incursions (Punjab/Rajasthan).
  • Misinformation during elections.
  • Maritime threats from dual-use Chinese ships.

MCQs to Practice

🧾 Topic 1: FATF

Q1. Which of the following best describes the role of the Financial Action Task Force (FATF)?
a) It provides economic bailouts to grey-listed countries
b) It is a military alliance combating global terror
c) It monitors financial crimes and sets global AML/CFT standards
d) It functions under the World Bank to evaluate national budgets

Q2. What is the official name of the FATF’s “grey list”?
a) Jurisdictions of High Concern
b) Non-compliant Member States
c) Jurisdictions under Increased Monitoring
d) Economically Restricted States

Q3. What was one impact of Pakistan being on the FATF grey list from 2018 to 2022, as per Indian officials?
a) Strengthened India-Pakistan economic ties
b) Enhanced military cooperation
c) Helped curtail illicit fund flows into Jammu & Kashmir
d) Increased Pakistani FDI in India

Q4. Which of the following is currently NOT in the FATF black list?
a) North Korea
b) Iran
c) Myanmar
d) Pakistan

Q5. What is a major consequence of being placed on the FATF black list?
a) Eligibility for special financial assistance
b) Automatic UN sanctions
c) Application of counter-measures and economic sanctions
d) Permanent expulsion from global trade

🧾 Topic 2: Indus Waters Treaty (IWT)

Q6. Under the Indus Waters Treaty, which rivers were allocated to India?
a) Indus, Jhelum, Chenab
b) Sutlej, Beas, Ravi
c) Ganga, Yamuna, Sutlej
d) Jhelum, Beas, Ravi

Q7. What is the current storage capacity India has developed on the western rivers under the IWT?
a) 2.6 MAF
b) 0.8 MAF
c) 3.6 MAF
d) 1.2 MAF

Q8. What does keeping the Indus Treaty ‘in abeyance’ mean, according to the document?
a) Blocking all river water to Pakistan
b) Terminating the treaty
c) Optimizing India’s rights under existing provisions
d) Starting war over water disputes

Q9. What was a key flaw in the grievance redressal mechanism under Article IX of IWT?
a) India had no representation
b) Allowed Pakistan to stall Indian projects
c) Favoured only World Bank interventions
d) It did not include any legal recourse

Q10. Who initially negotiated the Indus Waters Treaty?
a) UN Water Council
b) Politicians and diplomats
c) World Bank officials
d) Civil engineers from both countries

🧾 Topic 3: One Big Beautiful Bill (OBBB)

Q11. What is the One Big Beautiful Bill (OBBBB) primarily associated with?
a) Immigration reform
b) Judicial restructuring
c) US economic policy reforms under Trump
d) Federal Reserve interest hikes

Q12. Which of the following is NOT a feature of the OBBBB?
a) Permanent income tax cuts
b) Expansion of government welfare schemes
c) Defence and border spending increase
d) Debt ceiling hike

Q13. Which group faces reduced resources due to the OBBBB by 2027?
a) Middle-income households
b) Lower-income households
c) Retired citizens
d) Military veterans

Q14. What fiscal challenge does the Bill worsen according to the document?
a) Trade deficit
b) Corporate bond ratings
c) Federal deficit and debt
d) Social Security depletion

Q15. What term did an economist use to describe the redistributive nature of the OBBBB?
a) Pro-growth reform
b) Anti-Keynesian model
c) Anti-Robin Hood
d) Fiscal populism

🧾 Topic 4: India as 4th Largest Economy

Q16. What is India’s nominal GDP as per the 2025 projection?
a) $3.9 trillion
b) $4.19 trillion
c) $4.5 trillion
d) $5.58 trillion

Q17. Which country did India surpass to become the fourth-largest economy?
a) Germany
b) United Kingdom
c) France
d) Japan

Q18. Which of the following is NOT listed as a driver of India’s economic growth  ?
a) Strategic reforms
b) Domestic consumption
c) Expanding services sector
d) Bitcoin mining

Q19. Which institution confirmed India’s 4th rank status in the global economy?
a) World Bank
b) IMF
c) WTO
d) NASSCOM

Q20. What challenge persists despite India’s economic growth?
a) Low GDP growth
b) Lack of foreign reserves
c) High GDP per capita
d) Income inequality

🧾 Topic 5: Northeast India – From Frontier to Frontrunner

Q21. How much investment interest was recorded during the Rising North East Investors Summit 2025?
a) ₹3.2 lakh crore
b) ₹2.8 lakh crore
c) ₹4.3 lakh crore
d) ₹5.1 lakh crore

Q22. Which state leads in bamboo-based industries ?
a) Assam
b) Nagaland
c) Arunachal Pradesh
d) Tripura

Q23. Which corridor is considered Northeast India’s strategic link to the rest of the country?
a) Khyber Corridor
b) Siliguri Corridor
c) Kaladan Corridor
d) Brahmaputra Belt

Q24. Which of the following is a major challenge facing tourism in Northeast India?
a) Over-commercialization
b) Cultural alienation
c) Low tourist footfall due to safety and connectivity issues
d) Overcrowding of pilgrimage sites

Q25. What major ethnic conflict erupted in 2023 in Northeast India?
a) Naga-Kuki riots
b) Mizo-Assamese clashes
c) Meitei-Kuki violence in Manipur
d) Khasi-Garo dispute

🧾 Topic 6: Grey Zone Warfare

Q26. What best defines Grey Zone Warfare as per the document?
a) Proxy wars fought with declared objectives
b) Military conflicts using cyber weapons
c) Covert, deniable tactics below the threshold of open war
d) Declared war involving unmanned drones only

Q27. Which of the following was identified as a Chinese tactic under Grey Zone Warfare?
a) Providing economic bailouts
b) Funding political campaigns in India
c) Establishing dual-use civilian villages near LAC
d) Launching airstrikes across the Himalayas

Q28. What was the suspected source of the cyberattacks on Indian Railways and Cochin Port in March 2025?
a) Pakistani ISI
b) North Korean hacker units
c) Chinese group APT 41
d) Anonymous activist group

Q29. What is India’s main counter-strategy for narrative warfare and disinformation campaigns?
a) Shutdown of public forums
b) PIB FactCheck and official X (Twitter) handles
c) Foreign propaganda laws
d) Strategic hack-backs

Q30. What grey zone tactic is associated with Pakistan’s use of drones?
a) Aerial cartography of Indian borders
b) Commercial surveillance
c) Arms, narcotics smuggling with plausible deniability
d) Surveying refugee movements