UPSC CSE Current Affairs — 3 November 2026

SEBI has recommended that the government remove the 12.5% long-term capital gains tax levied on foreign investors in Indian equities, according to two sources. The regulator also proposed that domestic mutual fund investors switching between schemes after holding units for over a year should not face a taxable event. The pre-budget recommendations are non-binding. Foreign investors have sold a record $31 billion in Indian stocks this year as the Nifty 50 has underperformed emerging market peers.

Long-term capital gains (LTCG) tax is levied on profits from selling assets held beyond a specified period. In India, securities held for more than one year attract LTCG tax at 12.5%, while short-term capital gains (STCG) on securities held under a year are taxed at 20%. Foreign Portfolio Investors (FPIs) also pay Securities Transaction Tax (STT) and withholding taxes on dividends, making India's transaction cost structure among the highest globally.

SEBI's recommendation is significant because it exposes a structural tension: the regulator's mandate is market development, but tax policy rests entirely with the Finance Ministry. SEBI's pre-budget representations are advisory and non-binding — the government retains final authority.

The proposal for mutual fund switchers addresses a behavioural barrier: investors who want to rebalance portfolios are currently taxed on notional gains when switching schemes, discouraging active portfolio management. Exempting switches (after one-year holding) from LTCG would treat intra-mutual-fund movement as a continuation of investment rather than a disposal.

The backdrop matters: the Nifty 50 has fallen 4.8% over two years while the MSCI Emerging Market index rose 40%. FPI outflows of $31 billion are a record. India's mutual fund AUM stands at ₹82.6 trillion, with ₹30 billion flowing in monthly via SIPs. SEBI's move is part of a broader effort to reduce the cost of capital for equity markets and retain foreign capital.

A PIB factsheet released on 12 August 2026 consolidates a decade of agricultural data. Foodgrain output rose from 265 million tonnes in 2013-14 to 376.56 million tonnes in 2025-26. PM-KISAN has disbursed over ₹4.47 lakh crore to farmers across 23 instalments. Agricultural exports reached USD 54.70 billion in 2025-26, up 70.5 percent from 2014-15. The agriculture sector GVA grew from ₹20.94 lakh crore to ₹52.08 lakh crore over the same period.

This factsheet is a comprehensive government scorecard on Indian agriculture from 2014 to 2026. For exam purposes, it bundles key data across five dimensions: production, credit, insurance, digital infrastructure, and allied sectors.

On production: foodgrain output crossed 376 million tonnes (Third Advance Estimates), while horticulture touched 377.78 million tonnes — making them nearly comparable in scale, which is an unusual and testable fact.

On credit: Kisan Credit Card accounts stand at 7.28 crore with ₹10.08 lakh crore outstanding. PM-KISAN has released ₹18,984 crore in its 23rd instalment alone.

On insurance: PMFBY has insured 92.46 crore farmer applications since 2016-17, with claims of ₹1.96 lakh crore disbursed.

On infrastructure: 1,656 mandis are integrated on e-NAM; 10,000 FPOs registered; 79,630 PACS sanctioned for computerisation.

On digital: 10.31 crore Farmer IDs created under the Digital Agriculture Mission; Digital Crop Survey conducted across 648 districts covering 31.3 crore plots.

On allied sectors: the livestock sector has recorded a CAGR of 12.77 percent since 2014-15 — faster than agriculture's overall growth — signalling a structural shift toward allied activities as a rural income driver. Examinees must note that NABARD finances both crop loans and allied sectors, making this shift directly relevant.

Lending institutions have proposed integrating formal institutional financing into the Pradhan Mantri Awaas Yojana-Gramin framework, arguing that government assistance alone does not cover the full cost of constructing a rural house. The proposal leverages the PMAY-G digital platform to reduce lender risk and costs. A structured top-up loan mechanism would allow beneficiaries to borrow the shortfall amount, making home construction viable without forcing families to arrange informal credit.

PMAY-G is India's flagship rural housing scheme, launched in 2016 with a target of providing pucca houses to all eligible rural households. The central assistance is ₹1.20 lakh in plain areas and ₹1.30 lakh in hilly, difficult, and IAP districts, supplemented by ₹12,000 for toilet construction under Swachh Bharat Mission. However, actual construction costs routinely exceed this assistance, leaving a funding gap that beneficiaries typically bridge through moneylenders or asset sales.

The proposal to introduce institutional financing addresses this structural gap. The PMAY-G platform already captures beneficiary data, construction progress through geotagged photographs, and disbursement milestones — reducing the information asymmetry that makes rural lending expensive. Lenders can use this data infrastructure as a credit underwriting tool, lowering both the cost and default risk of small rural home loans.

From an RBI and NABARD perspective, this connects directly to priority sector lending (PSL) mandates: housing loans up to specified limits in rural areas qualify under PSL. Expanding formal credit access here directly serves financial inclusion objectives. For NABARD, which refinances rural credit, this creates a new refinance channel for rural housing. For UPSC, this represents a governance innovation — using a welfare scheme's digital infrastructure as a financial services delivery platform, blurring the line between direct benefit transfer and credit facilitation.

SEBI issued a depositary receipts framework on November 2, 2026, allowing foreign investors to purchase units of Real Estate Investment Trusts and Infrastructure Investment Trusts through depositary receipts listed abroad. The move extends the existing depositary receipt mechanism — previously available for equity shares — to REIT and InvIT units, broadening the investor base for these instruments and deepening India's capital markets by channelling foreign capital into real estate and infrastructure sectors.

Depositary receipts (DRs) are negotiable financial instruments issued by a foreign depositary bank representing ownership of a specified number of underlying securities held in the home country. Indian companies have long used American Depositary Receipts (ADRs) and Global Depositary Receipts (GDRs) to raise foreign capital. SEBI's new framework now extends this mechanism to REITs and InvITs.

REITs pool capital to own income-generating real estate (offices, malls, warehouses) and distribute at least 90% of net distributable cash flows to unit-holders. InvITs do the same for infrastructure assets — roads, power lines, pipelines. Both trade on Indian stock exchanges and are regulated by SEBI.

The DR route matters because many foreign institutional investors face regulatory or mandate-based restrictions on directly investing in Indian markets. By buying DRs on a foreign exchange, they gain economic exposure to REIT/InvIT units without navigating direct FPI registration. For India, this widens the capital pool available to fund real estate and infrastructure projects — both priority sectors — without repatriating equity control.

For exam purposes, the key distinction is that DRs are not the underlying instrument; they are certificates representing the underlying units held by a custodian in India. The DR holder's rights (dividends, distributions) flow through the depositary arrangement. SEBI is the primary regulator for both the underlying REITs/InvITs and the DR framework in India.

SEBI has recommended that the government eliminate the long-term capital gains tax levied on foreign institutional investors, according to a Reuters report. The proposal aims to make Indian equity markets more attractive to overseas capital. However, market experts caution that tax relief alone is insufficient to reverse sustained FII outflows, pointing to broader structural factors including global risk appetite, dollar strength, and concerns about India's earnings growth trajectory as equally decisive determinants.

Long-term capital gains (LTCG) tax on equities was reintroduced in India through the Union Budget 2018, imposing a 10% tax on gains exceeding ₹1 lakh from listed equity shares held for more than one year. Prior to 2018, such gains were fully exempt. The Finance Act 2024 revised the LTCG rate upward to 12.5%, removing the earlier indexation benefit for certain asset classes.

Foreign Institutional Investors (FIIs) and Foreign Portfolio Investors (FPIs) are particularly sensitive to tax treatment because they compare after-tax returns across competing emerging markets. When India raised or maintained LTCG, it reduced India's relative attractiveness compared to jurisdictions with no such levy.

SEBI's role here is notable: as the capital markets regulator, SEBI does not set tax policy — that is the Finance Ministry's domain — but it can make formal recommendations to the government, particularly when tax structures affect market depth and liquidity. This is an example of SEBI exercising its advisory function rather than its regulatory or enforcement function.

Experts who disagree with the sufficiency of tax cuts point to non-tax drivers of FII behaviour: US Federal Reserve rate expectations, the strength of the US dollar, relative valuations, and India-specific earnings disappointments. This debate — structural vs. tax-driven outflows — is a classic exam theme connecting capital market regulation to macroeconomic policy.

Researchers argue that closing the global sustainable-development financing gap requires green finance and technological innovation to operate as complementary pillars, not independent streams. Green bonds, climate funds, and ESG-linked lending must be paired with clean-tech deployment to deliver measurable emissions reductions. The study highlights that without technological absorptive capacity, financial flows fail to translate into real-economy decarbonisation outcomes, making the finance-technology nexus central to meeting Paris Agreement and SDG targets.

Green finance refers to financial instruments and frameworks specifically designed to fund environmentally sustainable projects — including green bonds, sustainability-linked loans, climate investment funds, and central bank green asset-purchase programmes. India's ecosystem includes the RBI's green deposit framework, SEBI's green bond disclosure norms, and NABARD's climate-linked refinancing for agriculture.

The core argument of the research is that capital alone is insufficient. Technological innovation — clean energy, precision agriculture, carbon capture, climate-resilient infrastructure — is what converts financial flows into actual emissions reductions. Without absorptive technological capacity, money pools in low-risk, low-impact projects (so-called 'greenwashing').

For India, this nexus matters across three levels. At the sovereign level, India's NDC targets (45% emissions intensity reduction by 2030, 500 GW non-fossil capacity) require simultaneous scaling of green capital and clean technology. At the institutional level, RBI's climate risk framework and SEBI's BRSR (Business Responsibility and Sustainability Reporting) push banks and listed companies to disclose how finance is linked to real-economy decarbonisation. At the development-finance level, NABARD's climate bonds and watershed programmes must demonstrate technology-linked outcomes, not just disbursement figures.

The SDG financing gap is estimated at roughly $4 trillion annually globally. Bridging it requires mobilising private capital through blended finance structures where public green finance de-risks private clean-technology investment — a mechanism the G20 Sustainable Finance Working Group has formally endorsed.