Economy

India’s economy expanded by 7.8% year-on-year in the April–June quarter of FY 2026-27, exceeding the Reserve Bank of India’s Q1 forecast of 7.0%. The latest National Statistical Office estimates show that strong manufacturing, services, investment and private consumption helped sustain growth despite disruptions linked to the West Asia conflict, higher energy costs and global uncertainty.

India’s Index of Industrial Production recorded year-on-year growth of 7.3% in June 2026, accelerating from the previous month on the strength of manufacturing, electricity and investment-related goods. However, the use-based composition of industrial production shows a less balanced picture: capital goods and intermediate goods have grown much faster than mass-consumption goods over several quarters. This has renewed concern that India’s industrial recovery may be driven more by investment and infrastructure than by broad-based household demand.

Electric, hybrid and compressed natural gas vehicles together accounted for a record 40.35% of India’s passenger-vehicle retail sales in June 2026. Electric-vehicle adoption also accelerated across passenger cars and two-wheelers, amid higher conventional-fuel costs, new vehicle models, lower operating expenses and expanding charging infrastructure. The development indicates a diversification of India’s automobile market, although all “alternative-fuel” vehicles do not offer the same environmental benefits.

The RBI Governor has publicly stated that the rupee is "not overvalued" and can even be described as undervalued — a rare assertion by a serving central bank chief. RBI data support this: the rupee's 40-currency Real Effective Exchange Rate (REER) has fallen from 108.03 in November 2024 to 91.26 in June 2026, while the Nominal Effective Exchange Rate (NEER) touched a record low. This article explains NEER and REER from first principles, the RBI's index methodology, why the rupee slid from overvaluation to undervaluation, whether this will actually help exports, and the policy measures now in play.

The Union Budget 2026-27 allocated a record ₹1.39 lakh crore to the Ministry of Education, yet analyses of budget data show that education's share of total central government expenditure has roughly halved over twelve years, from about 4.6 per cent to about 2.5 per cent. The same period saw the share of the Ministry of Road Transport and Highways nearly treble. The gap between rising absolute allocations and a shrinking relative share has renewed debate on whether India can reach the 6 per cent of GDP benchmark set by the National Education Policy, 2020. This article explains how education is financed in India, where the 6 per cent target came from, what the money actually funds, and why learning outcomes have not tracked spending.

Indian banks have mobilised about $17.4 billion in fresh Foreign Currency Non-Resident (Bank), or FCNR(B), deposits under a special Reserve Bank of India (RBI) swap window opened to attract foreign capital, support a weakening rupee and rebuild foreign exchange reserves. Along with overseas foreign currency borrowings and external commercial borrowings, total inflows through the concessional swap facility reached $20.72 billion up to 17 July 2026. This article explains what FCNR(B) deposits are, how the swap and hedging mechanism works, the macroeconomic context of rupee pressure and falling reserves, and how the scheme compares with the RBI's 2013 measure.

India imported a record 16.9 million tonnes of vegetable oils, nearly 6 million tonnes of pulses and 1.1 million tonnes of raw cotton in 2025-26, and a strengthening El Niño with a weak southwest monsoon now threatens to push these agricultural imports even higher in the current year. Rainfall in June 2026 was 38% below normal and kharif sowing of pulses, oilseeds and cotton has fallen sharply. This article explains what El Niño is, how it affects the Indian monsoon and kharif-rabi crops, why India depends on imports of edible oils, pulses and cotton, the cushioning factors like record foodgrain stocks, the government's likely policy response, and the long-term missions to cut import dependence — with UPSC Prelims facts, MCQs and Mains practice questions.

The Government of India is working on a new contributory pension scheme under the EPFO 3.0 reform programme to extend retirement security to unorganised and formal sector workers currently left out of the Employees' Pension Scheme (EPS). The scheme proposes a Target Retirement Sum (TRS) that converts accumulated savings into a pension at age 60, with options of an annuity or a systematic withdrawal plan. This article explains the proposed scheme, the TRS concept, the existing EPFO and EPS-95 framework, the defined contribution model, the Code on Social Security 2020, comparisons with NPS and PM-SYM, the Singapore model, and key data for UPSC Prelims and Mains.

The Union Cabinet has approved the Mobile Phone Manufacturing Scheme (MPMS) with a budgetary outlay of ₹62,500 crore, a five-year follow-on to the Production Linked Incentive (PLI) scheme for smartphones that ended in March 2026. Beyond boosting local production and domestic value addition, the scheme's most striking feature is an additional 3% incentive for design and R&D aimed at building an Indian smartphone brand that can compete globally. This article explains the MPMS structure, the PLI scheme's legacy, why India lacks a homegrown smartphone brand, the concept of moving up the value chain, technological sovereignty, and the challenges ahead — from the UPSC Prelims and Mains perspective.

The Reserve Bank of India has introduced the concept of Specified Non-Financial Assets (SNFA) — immovable properties that banks acquire when borrowers default — through amendments to its Resolution of Stressed Assets Directions, 2025. The new framework bars banks, small finance banks, and NBFCs from selling such assets back to the defaulting borrower or its related parties, mandates disposal primarily through public auctions on SARFAESI Act principles, and prescribes conservative valuation norms. This article explains what SNFAs are, the full framework of acquisition, valuation, and disposal, the NPA and SARFAESI background, the statutory basis in the Banking Regulation Act, and why these norms matter — from the UPSC Prelims and Mains perspective.

India has amended the Foreign Trade Policy 2023 through DGFT Notification No. 23/2026-27 to prohibit imports produced wholly or partly through forced labour. The amendment inserts Paragraph 2.20B, establishes an enquiry mechanism and adopts the International Labour Organization’s definition of forced labour. The decision comes while the United States Trade Representative is considering a 12.5% additional tariff on Indian goods under its Section 301 investigation.

India's wholesale inflation measured by the Wholesale Price Index (WPI) surged to 9.87 per cent in June 2026 — the highest in the revised series with base year 2022-23 — from 9.68 per cent in May, driven by a sharp acceleration in food prices even as fuel inflation eased, with economists warning that inflation is becoming more generalised. The Ministry of Commerce and Industry also released the new Producer Price Index (PPI), which rose to 9.57 per cent. This article explains the June data, the revised WPI series, the WPI-to-PPI transition, the WPI–CPI distinction, and the implications for monetary policy and the economy, for UPSC Prelims and Mains.