7 June 2026

• Economy: EAC-PM reviewed policy measures to protect the 7.7 per cent growth trajectory. LTCG, STCG and withholding taxes on FII government bond holdings were removed.
• Judiciary: the Supreme Court upheld 28 per cent GST on online real-money gaming and validated state bans on online gambling platforms.
• Digital governance: Anthropic extended its Project Glasswing cybersecurity AI access to Indian agencies including CERT-In and NCIIPC.
• International: FCNR(B) scheme revived with RBI swap facility to attract 70 billion US dollars in foreign capital.

GS area: Economy, Governance

The Economic Advisory Council to the Prime Minister met to review India's economic outlook. The full-year FY 2025-26 GDP growth settled at 7.7 per cent (Q4 at 7.8 per cent). The EAC focused on protecting that trajectory:

• Key risks identified: West Asia conflict driving oil prices higher. El Nino reducing monsoon reliability. Global demand slowdown from US-China trade tensions.
• Tax relief for FIIs: the government removed short-term capital gains tax, long-term capital gains tax and withholding tax on FII investments in government bonds. The goal is to attract approximately 70 billion US dollars in foreign capital.
• Bond index inclusion: India was already included in the JPMorgan GBI-EM index (June 2024), the Bloomberg Emerging Market Local Currency Index (January 2025) and the FTSE Russell Emerging Market Bond Index (September 2025). Inclusion in the Bloomberg Global Aggregate Bond Index could bring an additional 20-25 billion US dollars.
• Fitch rating cut: Fitch Ratings lowered its FY27 India growth forecast by 30 basis points to 6.4 per cent, citing global headwinds.

Static linkage: GDP, FPI, bond markets, fiscal policy.

GS area: Polity (Judiciary), Economy

The Supreme Court upheld the constitutionality of 28 per cent GST on online real-money gaming applied to the full value of the stake (not just the platform's commission). It also validated state laws banning online betting and gambling.

• GST on gaming: the 28 per cent rate applies to the entire amount wagered rather than to the platform's gross gaming revenue. The DGGI (Directorate General of GST Intelligence) issued demands running into "several lakh crore rupees" as back taxes.
• Centre-State legislative tension: states hold authority under Entry 34 of the State List (betting and gambling). The Centre claims authority under Entry 52 of the Union List (industries controlled by the Union). The court's ruling on state ban powers settles the state's right to prohibit. The legislative authority question remains contested.
• Res extra commercium: the court classified betting and gambling as outside legitimate commerce. This doctrine holds that activities contra public morals are beyond the protection of trade and commerce rights.

Static linkage: GST, Centre-State legislative relations, State List vs Union List.

GS area: Economy

The RBI revived the Foreign Currency Non-Resident Bank deposit scheme with two special swap facilities:

• FCNR(B) swap: a USD-only facility for Authorised Dealer Category-I banks. Banks collect fresh FCNR(B) deposits and the RBI provides a currency swap that hedges the bank's forex risk. This reduces the cost to banks of mobilising foreign currency deposits.
• ECB and OFCB swap: a parallel facility covering eligible External Commercial Borrowings and Overseas Foreign Currency Borrowings.
• Purpose: the rupee weakened more than 5 per cent in 2026. These measures aim to stabilise the currency by attracting stable long-term inflows rather than volatile portfolio flows.
• RBI currency printing: an interesting sidebar. The RBI's currency printing expenditure fell 23.5 per cent in FY26 to 4,875 crore rupees from 6,373 crore rupees in FY25. Digital payments are reducing demand for physical currency.

Static linkage: Exchange rate management, capital flows, RBI instruments.

GS area: Science and Technology, Governance, Security

Anthropic extended access to its restricted cybersecurity AI model ("Claude Mythos") to Indian government agencies:

• Agencies receiving access: the Indian Cyber Crime Coordination Centre (I4C), CERT-In (Computer Emergency Response Team-India), the National Critical Information Infrastructure Protection Centre (NCIIPC) and the Department of Telecommunications' Digital Intelligence Platform.
• Purpose: proactive identification of vulnerabilities in banking and power infrastructure. The Finance Minister held a high-level meeting in April 2026 assessing threats from frontier AI systems.
• The geopolitical dimension: Anthropic simultaneously assists the US NSA with offensive cyber operations against China and Iran. The Pentagon designated Anthropic a "supply-chain risk." Anthropic sued over the designation for refusing to enable mass surveillance and lethal autonomous weapon use.
• Concern for UPSC: the dual-use nature of AI in cybersecurity. The same capability that identifies vulnerabilities can exploit them.

Static linkage: Cybersecurity, CERT-In, NCIIPC, AI governance.

GS area: Polity, Economy

The government reappointed Swaminathan Janakiraman as Deputy Governor of the RBI for another two years effective from 26 June 2026. He was first appointed in June 2023. He oversees banking regulation, consumer protection and financial inclusion at the RBI.

• RBI structure: the RBI has a Governor and up to four Deputy Governors. The central government appoints all of them under the RBI Act.

Static linkage: RBI governance, central bank.

GS area: Polity

The GST ruling on online gaming opened a deeper question about which level of government regulates the industry:

• Entry 34, State List: betting and gambling. States have authority to regulate and prohibit gambling. Several states have enacted gaming prohibition laws.
• Entry 52, Union List: industries which the Union declares to be expedient in public interest. The Centre's Promotion and Regulation of Online Gaming Act, 2025 claims authority under this entry.
• Entry 97, Union List: residual power. Any matter not in the State or Concurrent List falls to the Centre.
• The tension: an activity the states have long regulated as gambling is being reframed by the Centre as an "industry" under Union control. The Supreme Court's ruling on state bans settles one part. The larger jurisdictional dispute will likely require further adjudication.

Static linkage: Seventh Schedule, legislative authority, Centre-State relations.

GS area: Economy, International Relations

India's inclusion in global bond indices tracks the liberalisation of the government securities market:

• JP Morgan GBI-EM (June 2024): the first major inclusion. Passive funds tracking this index are required to hold Indian government bonds proportional to India's weight. This brought approximately 20-25 billion US dollars of inflows.
• Bloomberg EM Local Currency Index (January 2025): second inclusion. Broader investor base.
• FTSE Russell EM Bond Index (September 2025): third inclusion.
• Bloomberg Global Aggregate: the next target. Inclusion would bring India into a much larger universe of global investors.
• Fully Accessible Route (FAR): bonds under FAR have no ownership limits for foreign investors. The FAR was expanded to longer maturity bonds to attract duration-seeking investors.

Static linkage: Bond markets, capital flows, government securities.

GS area: Economy, Geography

With El Nino probability at 82 per cent, the EAC-PM's risk review included agricultural vulnerability:

• Rain-fed agriculture: more than 50 per cent of India's cropped area depends on monsoon rainfall. A below-normal monsoon reduces kharif output and raises food inflation.
• Heat stress: higher temperatures reduce outdoor worker productivity. Construction labourers, vegetable vendors and delivery workers bear the direct income loss.
• Buffer stocks: the government's wheat procurement of 35-plus million tonnes provides a buffer. But large buffer stocks also carry storage costs and price management obligations.

Static linkage: Monsoon, agricultural policy, food inflation.

GS area: International Relations

The US-India relationship entered a period of structural friction in 2026:

• Trade tariffs: the US imposed 50 per cent tariffs on Indian goods including a 25 per cent penalty for Indian purchases of Russian crude.
• Quad signal: the absence of a head-of-state Quad summit was read as a downgrade signal rather than a scheduling gap.
• The CAATSA overhang: India's S-400 purchase and continued Russian crude imports create ongoing friction with US sanctions architecture.
• India's position: strategic autonomy. India maintains its own foreign policy calculus rather than aligning exclusively with any bloc.

Static linkage: India-US relations, Quad, strategic autonomy.

GS area: Economy

The government's 4.4 per cent fiscal deficit target for 2025-26 was met (confirmed by the Controller General of Accounts). GST revenue for May 2026 grew 3.2 per cent to 1.94 lakh crore rupees. The 28 per cent GST demand on online gaming adds to the GST enforcement focus.

• CGA vs CAG: the Controller General of Accounts compiles the government's accounts. The Comptroller and Auditor General audits them. Two different constitutional roles often confused.

Static linkage: Fiscal policy, GST, CGA, CAG.

• AUKUS submarines: Australia is to receive used Virginia-class submarines from the US as an interim capability while its AUKUS conventionally armed nuclear-powered submarines are built. India watches AUKUS as a precedent for underwater strategic balance in the Indo-Pacific.
• West Bengal Opposition: the dispute over LoP recognition in the West Bengal Assembly continued. The Tenth Schedule's disqualification provisions are relevant because the fragmented opposition has not crossed the seat threshold for formal recognition.