GS Paper III · Economy
RBI & Monetary Policy Current Affairs for UPSC (GS Paper III)
From the syllabus: Indian economy and issues relating to planning, mobilization of resources, growth, development and employment; inclusive growth; government budgeting; effects of liberalization; changes in industrial policy; investment models
Why it matters: Interest rate management and liquidity control are tested to see how the central bank balances growth objectives with price stability.
In the news
October 2026
13 Oct 2026
Finance Minister discusses LTCG and Rupee volatilityFinance Minister Nirmala Sitharaman stated the government will engage with stakeholders regarding Long Term Capital Gains (LTCG) tax and Securities Transaction Tax (STT). She emphasized that the RBI is actively intervening to mitigate...
13 Oct 2026
Robert Hall and Michael Woodford Win 2026 Economics Nobel for Stabilization ModelsEconomists Robert E. Hall and Michael Woodford have been awarded the 2026 Nobel Memorial Prize in Economic Sciences for developing advanced macroeconomic frameworks. The Royal Swedish Academy of Sciences noted that their models...
13 Oct 2026
Retail Inflation Rises to 23-Month High of 5.5% on Food and Fuel PressuresIndia's headline retail inflation, measured by the Consumer Price Index (CPI), climbed to a 23-month high of 5.5 percent in September 2026, up sharply from 4.8 percent in August. The acceleration was propelled by elevated price...
08 Oct 2026
RBI Raises Repo Rate to 5.50 PercentThe RBI's Monetary Policy Committee has raised the repo rate by 25 basis points to 5.50 percent, shifting its monetary stance to calibrated tightening from neutral. This hike, coming after nearly three and a half years, is aimed at...
September 2026
21 Sep 2026
Local Currency Settlement Mechanism in BRICS TradeIndia's exports to core BRICS nations surged by 34 percent during April to August, reflecting deeper economic integration within the bloc. However, shifting to local currency trade mechanisms presents complex policy trade-offs regarding...
20 Sep 2026
RBI Deputy Governor Clarifies MDR Rules for High-Value UPI TransactionsThe Reserve Bank of India has clarified that a 0.4 percent Merchant Discount Rate (MDR) will apply to person-to-merchant UPI payments exceeding 2,000 rupees starting October 15. The fee will be borne solely by merchants rather than...
18 Sep 2026
Bank of Japan Hikes Policy Rates to 31-Year HighThe Bank of Japan has raised its benchmark interest rate to a 31-year high to battle rising domestic inflation. This rare policy tightening pressure increased as global oil prices surged due to the West Asia geopolitical crisis. The...
18 Sep 2026
Debate Over UPI Merchant Discount Rate and Digital EcosystemDiscussions regarding the Merchant Discount Rate (MDR) structure on UPI transactions have resurfaced following demands from payment providers for fair revenue-sharing mechanisms. The Ministry of Finance clarified that current guidelines...
17 Sep 2026
FCNR(B) inflows buffer India against Balance of Payments deficitInflows into Foreign Currency Non-Resident Bank, or FCNR(B), deposit accounts helped shield India from recording a Balance of Payments (BoP) deficit in July 2026. Financial economists noted that while these non-resident dollar deposits...
16 Sep 2026
Retail and Wholesale Inflation Surge Signals Monetary Tightening RisksConsumer Price Index (CPI) inflation rose to a 20-month high of 4.8% in August, driven primarily by rising food prices, while Wholesale Price Index (WPI) inflation climbed to 9.92%. The sharp uptick across both retail and wholesale...
14 Sep 2026
India Foreign Exchange Reserves Reach Record High of Over 740 Billion DollarsIndia's foreign exchange reserves expanded by a record 44.9 billion dollars in a single reporting week, reaching an unprecedented total exceeding 740 billion dollars. The significant surge reflects strong foreign institutional...
13 Sep 2026
BRICS Leaders Deliberate on Local Currency Settlements and Health CooperationAt the 18th BRICS Summit hosted in New Delhi, member nations emphasized the linking of national payment systems and trading in local currencies rather than introducing a single common currency. The leaders also adopted the New Delhi...
11 Sep 2026
Currency Risk Management in Foreign Currency Non-Resident DepositsFinancial analyses of Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits emphasize how commercial banks manage foreign exchange risk. While Reserve Bank of India (RBI) swap mechanisms shield banks from principal exchange risk,...
10 Sep 2026
RBI Swap Mechanism Shielding Banks from FCNR(B) Currency RisksForeign Currency Non-Resident, Bank, known as FCNR(B), deposits are attracting scrutiny regarding currency risk management. While the Reserve Bank of India swap window shields banks from currency fluctuations on the principal amount,...
09 Sep 2026
Debate on Effectiveness of Inflation Targeting in IndiaA recent economic analysis raised questions regarding the efficacy of flexible inflation targeting in India due to a flat Phillips curve. Household inflation expectations in India consistently remain higher than projections by the...
04 Sep 2026
India's Q1 GDP Growth Reaches 7.8% Exceeding RBI EstimatesIndia recorded a robust Gross Domestic Product (GDP) growth rate of 7.8% for the first quarter of FY 2026-27, surpassing the Reserve Bank of India's projection of 7%. The expansion reflects strong domestic demand and resilience in...
August 2026
21 Aug 2026
RBI Drafts Strict Rules for Revolving CreditThe Reserve Bank of India (RBI) has proposed new regulatory restrictions on revolving credit facilities offered by commercial banks and non-banking financial companies. The proposals aim to enhance transparency regarding interest rate...
17 Aug 2026
UPI Transaction Value Growth Slows as Cash Usage RisesEconomic analysis indicates that the growth rate of Unified Payments Interface (UPI) transaction values has experienced a gradual moderation since 2021-22. Simultaneously, cash held by the public has registered a steady increase in...
July 2026
30 Jul 2026
RBI Views Rupee as Undervalued Amid Strong InflowsThe Reserve Bank of India (RBI) has indicated that the Indian rupee is undervalued against the US dollar despite recent weakening caused by global uncertainties and capital outflows. Inflows through Foreign Currency Non-Resident (Bank),...
28 Jul 2026
Ministry Urges RBI to Licence New Urban Cooperative BanksThe Ministry of Cooperation is actively pushing the Reserve Bank of India to ease licensing norms and approve more Urban Cooperative Banks (UCBs). This initiative is aimed at deepening financial inclusion at the grassroots level, though...
25 Jul 2026
FCNR(B) Deposits Emerge as Key Rupee Stabilisation ToolForeign Currency Non-Resident (Bank) or FCNR(B) deposits have emerged as a strategic macroeconomic tool for the Reserve Bank of India to stabilise the rupee during capital outflows and geopolitical volatility. While these deposits...
23 Jul 2026
RBI Explores Shift Towards Polymer Currency BanknotesThe Reserve Bank of India (RBI) is actively evaluating a potential transition from paper-based currency to polymer banknotes to improve durability and security. Polymer notes offer significant advantages over paper currency, including a...
22 Jul 2026
Reserve Bank of India Steps Closer to Polymer BanknotesThe Reserve Bank of India (RBI) is actively evaluating and moving toward the introduction of polymer (plastic) banknotes to replace traditional paper currency. Polymer notes offer significant advantages, including a much longer...
19 Jul 2026
Retail Inflation Breaches Targets, Restraining Rate CutsIndia's retail inflation has breached the Reserve Bank of India's (RBI) medium-term target, leaving limited scope for the central bank to ease interest rates. Driven primarily by volatile food prices and global geopolitical supply chain...
17 Jul 2026
Deciphering India's three major inflation indicesEconomists are analyzing the divergence between India's three primary inflation measures (the Consumer Price Index, the Wholesale Price Index, and the GDP deflator) to understand consumption trends. While CPI reflects the direct impact...
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July 2026
17 Jul 2026
RBI issues data governance framework for banksThe Reserve Bank of India has released a comprehensive data governance guidance framework aimed at strengthening data quality, security, and accountability in the banking sector. The goal is to build operational resilience and protect...
14 Jul 2026
Retail inflation climbs to 18-month high of 4.4 percentDriven by a surge in food and fuel prices, India's retail inflation (CPI) reached 4.4 percent in June 2026. Economists suggest that a lacklustre monsoon may continue to put upward pressure on food prices through July, potentially...
Practise RBI & Monetary Policy
10 of our latest questions on this topic (out of 12).
Question 1 of 10
The 2026 Nobel Memorial Prize in Economic Sciences was awarded to Robert E. Hall and Michael Woodford primarily for their work on which of the following areas?
Mains practice
Evaluate how modern macroeconomic stabilization frameworks, effective policy communication, and transparent governance institutions collectively contribute to sustainable economic resilience and public trust in developing democracies.
15 marks
The path to sustainable development in India requires balancing economic growth, environmental preservation, and individual rights. Evaluate this statement in the light of current challenges in monetary policy, threatened wildlife habitats, and local governance reforms.
15 marks
India's policy push for economic resilience and sustainable growth often involves complex trade-offs across external diplomacy, energy transition, and regulatory oversight. Examine how short-term management of capital flows and energy imports impacts long-term structural stability and regulatory integrity in the economy.
15 marks
Previous years' questions
Past exam questions sorted by topic are coming here. Until then, the full papers are in our previous papers library.