CURRENT AFFAIRS | 16 APRIL 2026
ECONOMY | RBI | FISCAL-MONETARY POLICY
India’s merchandise trade deficit eased to $20.67 billion in March 2026 as both exports (down 7.44% y-o-y to $38.92 bn) and imports (down 6.51% to $59.59 bn) moderated amid the West Asia conflict. Simultaneously, the Wholesale Price Index (WPI) inflation jumped to 3.88% in March — a three-year high — driven by food articles, non-food articles, crude petroleum and manufactured metals. Retail CPI inflation remained benign at 3.40%, but the WPI-CPI divergence is a red flag for the RBI’s Monetary Policy Committee.
Constitutional & Legal Framework
RBI Act, 1934 (amended 2016): Section 45ZA sets the Flexible Inflation Target at 4% CPI +/- 2%. Section 45ZB constitutes the six-member Monetary Policy Committee — three RBI members and three Centre-appointed, with the Governor holding a casting vote.
FRBM Act, 2003: Fiscal Responsibility and Budget Management framework mandating reduction of fiscal deficit and debt-to-GDP ratio; requires the Centre to lay Medium-Term Fiscal Policy Statements before Parliament.
Foreign Trade (Development and Regulation) Act, 1992: Empowers the DGFT (Directorate General of Foreign Trade) to issue import-export policy and regulate EXIM transactions.
CLAT Angle — Why This Matters
Trade deficit and inflation data are staple GK comprehension passages in CLAT. Focus on: (a) WPI base year 2011-12 and composition (primary articles, fuel, manufactured products); (b) CPI vs WPI — retail vs wholesale; (c) the FIT framework’s 4%+/-2% band; (d) Balance of Payments structure — current vs capital account.
Cost-push inflation (rising WPI with easing import bill) is a classic economics distinction — watch for Assertion-Reason questions.
Key Facts at a Glance
| Indicator | March 2026 Value |
|---|---|
| Merchandise trade deficit | $20.67 billion |
| Goods exports | $38.92 bn (-7.44% y-o-y) |
| Goods imports | $59.59 bn (-6.51% y-o-y) |
| WPI inflation (base 2011-12) | 3.88% (3-year high) |
| CPI inflation | 3.40% |
| RBI FIT target | 4% CPI +/- 2% tolerance |
Mnemonic — TRADE
Twenty-one billion deficit · Rising WPI at 3.88% · Agriculture and fuel push up wholesale prices · Deficit narrows on West Asia effect · Exports-imports both down year-on-year.
Test Yourself — 10 Questions
Master BoP, MPC, FRBM and WPI-CPI distinctions through applied MCQs.
Practice Quiz — 10 CLAT-Style Questions
Click an option to reveal the answer and explanation.
