RBI Grade B Current Affairs — 30 September 2026

Nomura projects the RBI will raise the repo rate by 25 basis points each in October and December 2026, taking it from 5.25% to 5.75%, driven by broadening food and energy inflation. CPI is forecast to peak at 6.3% in Q4 2026 before easing. A Reuters poll of 61 economists broadly concurs, with nearly 60% expecting an October hike. Nomura sees the hiking cycle stalling from February 2027 as demand softens and inflation retreats toward the 4% target.

This story is fundamentally about the RBI's inflation-targeting framework under the Flexible Inflation Targeting (FIT) regime, where the Monetary Policy Committee (MPC) must keep CPI inflation within a 2–6% band, with a medium-term target of 4%. When inflation breaches or threatens to breach this band consistently, the MPC's primary instrument is the repo rate — the rate at which RBI lends overnight funds to commercial banks through the Liquidity Adjustment Facility (LAF).

The transmission mechanism works as follows: a repo rate hike raises banks' borrowing costs from RBI, which pushes up lending rates across the economy. Higher borrowing costs dampen credit-financed consumption and investment, reducing aggregate demand and eventually easing inflation. This is called monetary policy transmission.

The dilemma here is the classic growth-inflation trade-off. India's GDP grew at 7.8% YoY in Q2 — above expectations — and credit growth stood at 19.1% in August. Raising rates aggressively risks choking this momentum. But not raising risks inflation becoming entrenched above target, which erodes real incomes and undermines the RBI's credibility as an inflation-targeting central bank.

Nomura's 'short cycle' thesis — two hikes followed by a pause — reflects the view that the current inflation pressure is primarily supply-side (food, monsoon failure, energy), not demand-driven. Supply-side inflation responds poorly to rate hikes; tightening too aggressively in this environment would sacrifice growth without durably reducing prices.

For exam purposes, understand: the MPC's composition (6 members, 3 RBI + 3 external), its voting mechanism, the LAF corridor (repo rate as the policy rate, SDF as the floor, MSF as the ceiling), and how a repo rate change ripples through credit markets, currency, and inflation expectations.

External Affairs Minister S. Jaishankar, speaking at the Asia Society, declared that the global shift toward a multipolar world order has accelerated and is now undeniable, stating the pretence of a unipolar world has dropped. He noted the United States is increasingly acting in its own interest rather than as a global rule-setter. Jaishankar framed India's foreign policy as suited to this transition, engaging multiple power centres rather than aligning exclusively with any single bloc.

Jaishankar's remarks at the Asia Society crystallise a doctrine that has quietly underpinned Indian foreign policy for over a decade: strategic autonomy in a multipolar world. The concept of multipolarity — multiple roughly equal power centres replacing US-led unipolarity — is not new, but Jaishankar's framing marks a shift from diplomatic suggestion to open assertion.

For exam aspirants, the static hinterland here is India's Non-Alignment 2.0 thinking, the Panchsheel principles, and India's consistent rejection of bloc-politics since independence. Unlike the Cold War Non-Alignment Movement (founded 1961, Belgrade), today's strategic autonomy is not about staying out of conflicts but about retaining the freedom to engage selectively — with the Quad, the SCO, BRICS, and bilateral partners simultaneously.

The Asia Society, founded in 1956 by John D. Rockefeller III, is a New York-based policy forum that frequently hosts senior government officials. Jaishankar's choice of this platform — a US-headquartered institution — to openly declare US unipolarity over is itself a signal.

Key policy frameworks connected to this theme include India's Act East Policy, the Indo-Pacific construct, BRICS expansion (new members joined January 2024), and India's presidency of the G20 in 2023. Examiners test whether aspirants can link India's multilateral memberships to its broader foreign policy doctrine — not just name the organisations but explain why India joined them and what they signal about India's worldview.

The Central Board of Indirect Taxes and Customs (CBIC) has approved a new Special Notified Zone (SNZ) at the Surat Diamond Bourse (SDB) to facilitate rough diamond trading. This designation allows eligible buyers and sellers to trade rough diamonds under simplified customs procedures within a bonded zone framework. The move aims to position Surat as a global diamond trading hub, reducing India's dependence on Antwerp and Dubai as intermediary markets for rough diamond sourcing.

A Special Notified Zone (SNZ) is a customs-designated area where specific goods — typically high-value commodities — can be traded under deferred or simplified duty structures without immediate clearance into the domestic tariff area. The SNZ concept is governed under India's Customs Act and is operationally supervised by CBIC.

The Surat Diamond Bourse, inaugurated in December 2023 and touted as the world's largest office complex, was built precisely to consolidate India's diamond processing and trading ecosystem. However, without SNZ status, rough diamond imports still faced complex customs procedures that discouraged international traders from conducting primary rough diamond sales in India — they preferred Antwerp (Belgium) or Dubai.

By creating an SNZ within SDB, CBIC enables foreign rough diamond sellers (including mining companies from Russia, Botswana, Canada, and Australia) to display, auction, and sell rough stones to Indian buyers without the stones technically 'entering' Indian customs territory until a buyer decides to import. This is functionally similar to how bonded warehouses or Free Trade Warehousing Zones (FTWZs) operate — goods remain in a suspended customs state.

For India, this is strategically significant: India polishes over 90% of the world's diamonds by volume. Yet rough diamond price discovery and primary trading happened abroad, giving intermediaries a margin. The SNZ directly addresses this value-chain gap. From an exam perspective, this connects to topics like SEZs, FTWZs, Customs Act provisions, export promotion policy, and CBIC's regulatory authority over indirect taxation infrastructure.

Former RBI Governor Shaktikanta Das, now serving as Principal Secretary-2, argued that the global economy's centre of gravity is moving eastward, creating a structural opportunity for Global South nations. Speaking at a recent policy forum, he outlined challenges including fragmented trade, debt vulnerabilities, and climate finance gaps, while urging developing economies to strengthen South-South cooperation, diversify supply chains, and leverage digital infrastructure to convert this geopolitical shift into sustained economic gains.

The phrase 'Global South' refers broadly to developing and emerging economies across Asia, Africa, Latin America, and Oceania — nations historically peripheral to Western-led multilateral institutions like the IMF, World Bank, and WTO. Das's remarks reflect a structural realignment: Asia's share of global GDP (in purchasing power parity terms) already exceeds that of North America and Europe combined, and institutions like BRICS, SCO, and the Asian Infrastructure Investment Bank (AIIB) are reshaping global economic governance.

For India, the Global South narrative is central to its foreign policy identity. India hosted the Voice of Global South Summit (first edition January 2023, second edition November 2023) and used its G20 Presidency (2023) to champion developing-nation priorities — debt restructuring, climate finance, and digital public infrastructure. The 'eastward shift' Das references is measurable: the IMF projects Asia-Pacific economies to contribute over 60% of global growth through 2028.

The exam-relevant static layer here involves: (1) India's institutional role in Global South diplomacy, (2) key multilateral platforms where this agenda plays out (G20, BRICS, UN), (3) Das's own profile — he served as RBI Governor from December 2018 to December 2024, one of the longest tenures in recent history, and is now Principal Secretary-2 to the Prime Minister, a senior PMO role. Examiners frequently test both the institutional framework and the person's current designation.