Introduction
Today's legal landscape is defined by pivotal developments in international institutional law with the US retreat from multilateral bodies, and domestic fiscal federalism through the Department of Expenditure's review. The analysis also covers India's evolving Maritime Strategy and the legal framework for Textile Sector Planning.
1. International Law & Institutions: US Retreat from Multilateralism
The US withdrawal from 66 international organizations, including key UN bodies, raises significant questions about the future of global legal governance.
A. Legal Implications for Treaties
UNFCCC & Paris Agreement: A withdrawal from the UN Framework Convention on Climate Change (UNFCCC) would legally release the US from binding reporting obligations and financial commitments under the Paris Agreement.
Funding & Veto Power: The exit impacts the operational capacity of bodies like UNESCO and UNHRC, creating a "funding gap" and removing a key veto player in international norm-setting.
B. Trade Law Impact
Carbon Border Adjustment Mechanism (CBAM): With the US stepping back from climate norms, US exporters may face carbon tariffs from the EU. This could trigger disputes at the WTO, testing the "General Exceptions" under GATT Article XX regarding environmental protection.
2. Fiscal Law & Federalism: Department of Expenditure Review 2025
The Department of Expenditure (DoE) review highlights the statutory mechanisms governing Centre-State financial relations.
A. Constitutional Borrowing Powers
Article 292: Governs the borrowing powers of the Central Government (upon the security of the Consolidated Fund of India).
Article 293: Governs borrowing by States.
Article 293(3): A critical provision mandating that a State must obtain the Centre's consent for new loans if it still owes debt to the Centre. The Centre uses this power to enforce fiscal discipline (e.g., Net Borrowing Ceiling).
B. Scheme for Special Assistance to States
CAPEX Loans: The "Scheme for Special Assistance to States for Capital Expenditure" provides 50-year interest-free loans. This is a fiscal transfer mechanism designed to bypass the immediate fiscal deficit constraints of states while boosting capital asset creation.
C. Statutory Body: Finance Commission
15th Finance Commission: The DoE implemented its awards, including the Net Borrowing Ceiling (NBC) of 3% of GSDP.
8th Central Pay Commission: Constituted to review central government pay structures, a standard administrative law procedure.
3. Maritime Law & Strategy: SAGAR and UNCLOS
India's maritime strategy is evolving into a comprehensive legal and security framework.
A. Strategic Vision: SAGAR
Security and Growth for All in the Region (SAGAR): While a policy vision, it relies on international maritime law, specifically UNCLOS (United Nations Convention on the Law of the Sea), to promote a rules-based order in the Indian Ocean.
B. Proposed Legal Reforms
National Maritime Security Framework: The analysis calls for a statutory integration of the Maritime Security Strategy (2015) with the Blue Economy Policy to define clear legal roles for the Indian Navy and Coast Guard (governed by the Coast Guard Act, 1978).
Underwater Domain Awareness (UDA): A critical legal gap exists in regulating the underwater domain (seabed cables, autonomous vehicles), which requires new domestic legislation aligned with international norms.
4. Administrative Law: Textile Sector Planning
The National Programme on Capacity Building for Strategic Planning highlights the role of cooperative federalism in industrial planning.
A. Institutional Mechanism
Viksit Bharat @ 2047: The programme aligns state textile plans with this national vision.
MoUs: Memorandums of Understanding signed with states create a quasi-legal obligation for data sharing and integrated planning, supported by central grants.
Key Legal Takeaways
Constitutional Articles: Article 292 & 293 (Borrowing Powers of Centre vs States).
International Law: UNFCCC Withdrawal (Impact on Paris Agreement obligations).
Maritime Law: UNCLOS (Basis for rules-based maritime order).
Fiscal Policy: Net Borrowing Ceiling (NBC) (Enforced under Article 293(3)).
Statutory Body: 8th Central Pay Commission (Constituted for pay revision).
Policy Vision: SAGAR (Maritime Security).
Frequently Asked Questions (FAQs)
Q1: Under which Article of the Constitution does the Central Government give consent for State borrowings?
Answer: Article 293(3). It requires a State to obtain the Centre's consent for raising any loan if the State has an outstanding loan due to the Central Government.
Q2: Is the 'Scheme for Special Assistance to States for Capital Expenditure' a statutory grant?
Answer: It is a Central Sector Scheme providing financial assistance in the form of 50-year interest-free loans. While not a statutory grant mandated by the Finance Commission (like Revenue Deficit Grants), it is a major fiscal transfer mechanism.
Q3: What is the 'Net Borrowing Ceiling' (NBC) for States in 2025-26?
Answer: It is fixed at 3% of GSDP, with an additional 0.5% tied to power sector reforms.
Q4: Which international convention governs the 'Law of the Sea'?
Answer: The United Nations Convention on the Law of the Sea (UNCLOS), 1982. India is a signatory and its domestic Territorial Waters, Continental Shelf, Exclusive Economic Zone and Other Maritime Zones Act, 1976 aligns with it.
Q5: What is the primary function of the Department of Expenditure?
Answer: It oversees the public financial management system (PFMS), releases funds to states (Finance Commission grants), and manages the borrowing limits of states under the Constitution.