CURRENT AFFAIRS | 1 MAY 2026
CLAT GK + ECONOMY + CONSTITUTIONAL FRAMEWORK
The Indian rupee slipped past the psychologically critical 95 mark against the US dollar on 30 April 2026, hitting a fresh 4-year low with intra-day prints near 95.34 and a closing reading around 94.92. The fall was driven by relentless Foreign Portfolio Investor (FPI) outflows — $6.5 billion pulled out in April alone, taking 2026 YTD outflows to $20.7 billion — and a 7% spike in Brent crude to $126/barrel, the highest since June 2022. The Reserve Bank of India sold over $3.6 billion in spot markets to smooth volatility but, in line with its stated policy, did not attempt to defend any specific level.
Kotak Institutional Equities now forecasts a Balance of Payments deficit of $28 billion for FY 2026-27, against a small surplus a year ago. With imports surging on costly oil, FPIs reallocating to US Treasuries amid Fed-rate uncertainty, and exports stagnating, the rupee may test 96-97 in the coming weeks if oil stays elevated.
Constitutional & Legal Framework
- Article 246 + Union List Entry 36 (Seventh Schedule) — Parliament alone legislates on currency, coinage, legal tender and foreign exchange.
- RBI Act 1934 — establishes RBI; Section 17 lists its forex powers (buy/sell, hold reserves, intervene).
- FEMA 1999 — replaced FERA 1973 in 2000; Section 5 (current-account convertibility), Section 6 (capital-account, with RBI restrictions).
- SEBI (FPI) Regulations 2019 — single-window FPI registration, KYC, investment caps.
Why It Matters For CLAT 2027
Rupee depreciation links GK + Economy + Constitutional Law in one passage. Examiners love the chain: Brent up → import bill up → CAD up → BoP under stress → rupee falls → RBI sells dollars → reserves drop. Expect passage-style questions on RBI Act provisions, FEMA vs FERA distinction, BoP components, and the difference between managed float (India) and fixed peg regimes.
Key Facts At A Glance
| Indicator | Reading (30 Apr 2026) |
|---|---|
| USD-INR closing | 94.92 (4-year low) |
| FPI outflow April | $6.5 billion |
| FPI outflow 2026 YTD | $20.7 billion |
| Brent crude | $126/bbl |
| RBI April spot sales | ~$3.6 billion |
| Forecast BoP FY27 (Kotak) | -$28 billion |
Mnemonic — “FERMI” for Forex Drivers
FPI outflow · Energy/Brent crude · RBI intervention · Monetary policy (Fed) · Import bill / CAD. Remember the chain: F-E pressure rupee → R smooths → M-I decide direction.
Practice Quiz — 10 CLAT-Style Questions
Click an option to reveal the answer and explanation.
