REGULATORY ASSETS
What are regulatory assets?
Regulatory assets constitute the unrecoverable revenue gap due to the difference between the average cost of supply (ACS), the expense incurred by a DISCOM to deliver a unit of electricity to consumers, and the ARR, which is the revenue collected by the DISCOM as consumer tariffs and subsidy payments from the government.
If the ACS is greater than the ARR, the DISCOM effectively makes a loss on the sale of every unit of electricity. For instance, if a DISCOM’s ACS is Rs 7.20/unit and ARR is Rs 7.00/unit, the gap is Rs 0.20 per unit. If the DISCOM supplies 10 billion units, the total shortfall is Rs 2,000 crore.
To avoid suddenly burdening consumers with an immediate tariff increase to recover the gap, SERCs allow the DISCOM to record the gap as a regulatory asset. This is essentially a deferred cost that the DISCOM is entitled to recover from consumers in the future, usually with interest.
The ruling: The Supreme Court recently directed the State Electricity Regulatory Commissions (SERCs) and distribution companies (DISCOMs) to clear the existing regulatory assets within four years and liquidate any new assets within three years. The court also advised capping the regulatory asset at 3% of a DISCOM’s Annual Revenue Requirement (ARR) and instructed regulators to set out transparent roadmaps for recovery, along with conducting intensive audits of DISCOMs that continue without recovering these assets.
ENGELS’ PAUSE
What is an Engels’ pause?
The term refers to a paradox in economic history: in 19th century Britain, industrial output surged, yet ordinary living standards barely budged. It was first called so by Oxford economist Robert Allen, in a seminal paper, after Friedrich Engels, the German philosopher. In early 1800s Britain, wages stagnated, food consumed most household budgets, and inequality widened even as factories hummed, and Britain became the “workshop of the world”. Only decades later did sustained improvements in welfare reach Artificial Intelligence (AI) pioneer and Nobel Laureate Geoffrey Hinton, in the Financial Times, said that AI will make a few people rich and the rest of us poorer. In doing so, he hinted at an Engels’ pause in our modern AI economy.
PwC estimates that AI could add $15.7 trillion to global GDP by 2030. But the benefits will be concentrated in the U.S., China, and a handful of firms controlling foundational models. The IMF (2024) estimates that 40% of jobs worldwide are exposed to AI — half in advanced economies, where high-skilled substitution is likely.
GLOBAL SUMUD FLOTILLA
The Global Sumud Flotilla (GSF), is an international humanitarian initiative that organized a fleet of civilian vessels to deliver aid to Gaza and challenge Israel’s naval blockade. The term “Sumud” is an Arabic word that translates to “steadfastness” or “resilience,” reflecting the Palestinian spirit of endurance.
Key aspects of the Global Sumud Flotilla:
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- Mission: Its stated goals are to break the blockade of Gaza by sea, deliver humanitarian aid, and raise international awareness of the humanitarian crisis and suffering of the Palestinian people.
- Formation: The GSF was established in mid-2025 by a coalition of several activist and humanitarian groups, including the Freedom Flotilla Coalition, the Global Movement to Gaza, the Maghreb Sumud Flotilla, and Sumud Nusantara.
- Participants: The GSF is comprised of a diverse group of participants, including activists, humanitarians, doctors, artists, and lawyers from dozens of countries. Notable individuals who have joined the flotilla include Swedish activist Greta Thunberg and a grandson of Nelson Mandela, Mandla Mandela.
- Interception and reaction: Like previous flotillas, the GSF has been intercepted by Israeli forces in international waters. The Israeli government has called the mission a “publicity stunt” and maintained that its blockade is legal.
Global Governance Initiative (GGI)
In September 2025, Chinese President Xi Jinping introduced the Global Governance Initiative at the Shanghai Cooperation Organization (SCO) summit. This diplomatic initiative complements China’s previously announced Global Security, Global Development, and Global Civilization initiatives.
Five Core principles of GGI
1. Sovereign equality: All nations should be equal participants, decision-makers, and beneficiaries in global governance, regardless of their size or wealth.
2. International rule of law: The universally recognized principles of the UN Charter must be upheld, and the “house rules” of a few countries should not be imposed on others.
3. True multilateralism: Global affairs should be decided through consultation among all countries, with a rejection of unilateralism. The United Nations is presented as the core platform for this effort.
4. People-centered approach: The global governance system should serve the needs and well-being of all peoples.
5. Real results: The focus should be on resolving real problems and achieving tangible outcomes in areas such as financial architecture, AI, climate change, and trade.
SOUTH-SOUTH AND TRIANGULAR COOPERATION (SSTC)
South-South and Triangular Cooperation (SSTC) are partnerships where developing countries collaborate to share knowledge, skills, and resources for mutual development. South-South Cooperation (SSC) is a partnership between developing countries, while Triangular Cooperation (TrC) involves two or more Southern countries supported by a developed country or a multilateral organization. Both are seen as vital complements to traditional North-South aid, focusing on solidarity and shared learning to address global challenges like climate change and inequality.
South-South Cooperation (SSC)
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- Definition: Collaboration among developing countries to promote their common interests through the exchange of expertise and resources.
- Principles: Based on principles of sovereignty, equality, non-conditionality, and mutual benefit.
- Examples: India-Bhutan hydropower projects and Brazil-Mozambique agricultural collaboration.
Triangular Cooperation (TrC)
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- Definition: A partnership where developing countries collaborate with the support of a third, “triangular” actor, typically a developed country or multilateral organization.
- Structure: Involves two or more Southern countries and a Northern partner or international organization that provides funding, technology, or other support.
- Example: An India-France-UAE partnership on renewable energy initiatives, where France provides support to the India-UAE collaboration.
Key aspects of SSTC
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- Origins: The concept gained momentum with the Bandung Conference in 1955 and was institutionalized by the 1978 Buenos Aires Plan of Action. The UN Day for South-South and Triangular Cooperation is celebrated on September 12th.
- Complementary to traditional aid: It is viewed as a vital supplement to, rather than a substitute for, traditional North-South development cooperation.
- Areas of cooperation: SSTC is used in a wide range of fields, including health, climate change, agriculture, human rights, and employment generation.
