UPSC Mains Current Affairs for 12 May 2026

PM Modi’s Austerity Call Amid Rising Forex Pressure and Gold Imports

May 12, 2026

Austerity Call Latest News

Prime Minister Narendra Modi has called on citizens to adopt austerity measures, urging them to cut back on gold purchases, foreign travel, and petroleum consumption.

Introduction

India’s external sector has come under significant stress amid rising geopolitical tensions in West Asia, surging crude oil prices, increasing gold imports, and high outward remittances for overseas travel.
In this backdrop, Prime Minister Narendra Modi recently appealed to citizens to adopt austerity measures by reducing non-essential spending on imported goods such as gold and petroleum products and avoiding discretionary foreign travel.
The government’s concern stems from a sharp decline in India’s foreign exchange reserves, which reportedly fell by nearly $38 billion within two months following the escalation of the West Asia conflict.
The pressure on reserves has also been aggravated by rising imports and sustained capital outflows from foreign institutional investors (FIIs).

India’s Foreign Exchange Reserves and External Sector Pressure

Foreign exchange reserves are assets held by the Reserve Bank of India in foreign currencies, gold reserves, Special Drawing Rights (SDRs), and reserve positions with the International Monetary Fund (IMF).
These reserves help maintain currency stability, support imports, and cushion the economy during external shocks.
India’s forex reserves reportedly declined to nearly $691 billion amid rising import bills and capital outflows.
The depreciation of the rupee, which crossed the 95 mark against the US dollar, further intensified concerns regarding external sector stability.
The decline has largely been attributed to:
- Rising crude oil import bills
- Increasing gold imports
- Outward remittances under the Liberalised Remittance Scheme (LRS)
- FII outflows from Indian financial markets
- Global geopolitical uncertainty
Between January and May 2026, FIIs reportedly withdrew around Rs. 1.97 lakh crore from Indian markets, putting additional pressure on the rupee and forex reserves.

Rising Gold Imports and Current Account Concerns

Gold imports have emerged as a major contributor to India’s external sector stress. India’s gold import bill rose sharply to nearly $72 billion in 2025-26, almost doubling compared to $35 billion in 2022-23.
India is the world’s second-largest consumer of gold after China, with domestic demand largely driven by jewellery consumption, cultural preferences, and investment demand.
However, heavy dependence on imported gold increases the current account deficit (CAD), which represents the gap between imports and exports of goods and services.
According to RBI data cited in the report, India’s CAD widened to $13.2 billion, equivalent to 1.3% of GDP, during the December quarter of 2025.
Switzerland remained the largest source of India’s gold imports, accounting for around 40% of total imports, followed by the UAE and South Africa.

Gold Monetisation Scheme and Policy Suggestions

Industry experts have suggested strengthening the Gold Monetisation Scheme (GMS) to reduce dependence on imported gold. The scheme aims to mobilise idle household gold and channel it into the formal economy.
India is estimated to possess thousands of tonnes of unused household gold stored in lockers and homes. Through the Gold Monetisation Scheme:
- Individuals can deposit idle gold with banks
- Banks can use the gold for productive purposes
- Dependence on fresh imports can reduce
- Pressure on the current account deficit may ease
Experts argue that efficient utilisation of existing domestic gold reserves can help conserve valuable foreign exchange while supporting financial stability.

Liberalised Remittance Scheme and Overseas Spending

Another major source of forex outflow has been spending under the Liberalised Remittance Scheme (LRS).
The RBI introduced LRS to allow resident individuals to remit money abroad for permissible transactions such as education, medical treatment, investment, and travel.
According to the report, outward remittances under LRS stood at nearly $29.56 billion in FY25, with foreign travel accounting for more than half of the total outflow.
Prime Minister Modi specifically highlighted:
- Overseas tourism
- Destination weddings abroad
- Non-essential foreign travel
- Luxury discretionary spending
He urged citizens to postpone avoidable foreign travel for at least one year and prioritise domestic tourism and locally manufactured products.

Crude Oil Prices and Inflationary Risks

India imports over 85% of its crude oil requirements, making it highly vulnerable to fluctuations in global oil prices.
The ongoing tensions in West Asia and uncertainty around the Strait of Hormuz have pushed crude oil prices above $100 per barrel.
Higher crude prices can lead to:
- Rising fuel prices
- Increased transportation costs
- Imported inflation
- Widening current account deficit
- Fiscal pressure on oil marketing companies
State-owned oil companies such as Indian Oil, Bharat Petroleum, and Hindustan Petroleum are reportedly facing significant under-recoveries due to the difference between retail fuel prices and import costs.
To reduce fuel dependence, the Prime Minister encouraged:
- Greater adoption of electric vehicles (EVs)
- Increased use of public transportation
- Carpooling
- Work-from-home arrangements wherever feasible

Tourism Trends and Foreign Exchange Dynamics

There is a widening imbalance between outbound and inbound tourism.
India witnessed a record 32.71 million outbound travellers in 2025, while foreign tourist arrivals remained comparatively lower at 9.02 million.
Foreign exchange earnings from tourism also reportedly declined by 6.6% during the year.
Since tourism contributes significantly to employment and GDP generation, weaker inbound tourism further affects foreign exchange earnings.

Conclusion

Prime Minister Modi’s austerity appeal reflects growing concerns over India’s external sector vulnerabilities amid rising imports, declining forex reserves, global geopolitical tensions, and capital outflows.
Gold imports, overseas travel expenditure, and crude oil dependence have collectively intensified pressure on India’s current account and currency stability.
While India continues to remain one of the world’s fastest-growing major economies, managing external sector risks through prudent consumption, domestic production, energy transition, and financial discipline will remain critical in maintaining macroeconomic stability in the coming years.

Source: IE

Austerity Call FAQs

Q1: Why has PM Modi called for austerity measures?

Ans: The call was made due to rising pressure on India’s foreign exchange reserves caused by high gold imports, crude oil prices, and overseas spending.

Q2: What is the Liberalised Remittance Scheme (LRS)?

Ans: LRS is an RBI scheme allowing Indian residents to remit money abroad for purposes such as travel, education, investment, and medical treatment.

Q3: Why are rising gold imports a concern for India?

Ans: Gold imports increase the current account deficit and lead to higher foreign exchange outflows.

Q4: How do high crude oil prices affect India’s economy?

Ans: High oil prices increase import bills, fuel inflation, transportation costs, and pressure on forex reserves.

Q5: What is the purpose of the Gold Monetisation Scheme?

Ans: The scheme aims to mobilise idle household gold and reduce dependence on imported gold.

Key Climate Terms Explained

May 12, 2026

Climate Terms Latest News

India is entering a summer marked by multiple climate extremes, including unseasonal rainfall from Western Disturbances, the possible impact of El Niño on monsoon patterns, and rising heatwaves intensified by humidity.
These weather conditions are making temperatures feel more severe than actual readings and are influencing rainfall, heat stress, and seasonal climate patterns across the country.
The article explains key climate terms shaping this summer’s weather and their practical implications for everyday life.

Western Disturbance

The India Meteorological Department (IMD) has forecast a fresh Western Disturbance over North India between May 11 and May 13, 2026.

About Western Disturbance

A Western Disturbance is an eastward-moving rain-bearing weather system that originates beyond Afghanistan and Iran and influences weather conditions in North India and neighbouring regions.
These systems gather moisture from the Mediterranean Sea, Black Sea, Caspian Sea, and Arabian Sea.
Western Disturbances are extra-tropical cyclones formed due to interactions between polar and tropical air masses, creating low-pressure systems that bring rain and snowfall.
They are embedded within the subtropical westerly jet stream — a high-altitude, fast-moving air current flowing from west to east over the Himalayan and Tibetan regions.
Western Disturbances are most common during the winter months from December to March, although they can also bring unseasonal rainfall during summer.
These weather systems mainly affect: northwestern India, Pakistan, Afghanistan, and parts of Central Asia such as Tajikistan.

What Does an El Niño Year Mean

El Niño Southern Oscillation (ENSO) is a climate phenomenon involving changes in Pacific Ocean temperatures and atmospheric conditions that influence global weather patterns.
ENSO has three phases:
- El Niño – warm phase,
- La Niña – cool phase, and
- Neutral phase.
  - These cycles generally occur every 2 to 7 years.
Under neutral conditions, the eastern Pacific Ocean near South America remains cooler than the western Pacific near Indonesia because trade winds push warm surface water westward.

What Happens During El Niño

During El Niño, the eastern Pacific Ocean becomes unusually warm, disrupting atmospheric circulation and weakening moisture-bearing winds reaching India.
El Niño conditions often lead to:
- weak or delayed monsoons,
- dry spells in agricultural regions, and
- more frequent and intense heatwaves across India.
The U.S. Climate Prediction Center projected a 61% probability of El Niño developing between May and July 2026 and continuing through the year.

La Niña and Its Impact

La Niña is the opposite phase, marked by cooler eastern Pacific waters. It generally strengthens India’s southwest monsoon by enhancing moisture-bearing winds.
While La Niña often improves rainfall in India, stronger monsoons can also trigger flooding and crop damage during extreme conditions.

What is a Heat Wave

A Heat wave is a prolonged period of unusually high temperatures significantly above the normal levels of a region.
Heat waves can become more severe due to:
- high humidity,
- strong winds, and
- longer duration of extreme heat conditions.
The India Meteorological Department (IMD) considers heat wave conditions when temperatures reach 40°C or more in plains, or 30°C or more in hilly regions.
A heat wave may be declared when temperatures are:
- 4.5°C to 6.4°C above normal, while
- a severe heat wave is declared if temperatures exceed 6.4°C above normal.
Regardless of normal temperatures:
- a heat wave is declared at 45°C or above, and
- a severe heat wave is declared at 47°C or above.
For coastal regions, where humidity is higher, heat wave conditions may be declared if temperatures reach at least 37°C and remain significantly above normal.
Heat wave criteria must be met in at least two stations within a meteorological subdivision for two consecutive days, with the official declaration issued on the second day.

What is Wet Bulb Temperature

The temperature usually measured by a normal thermometer is called Dry Bulb Temperature, which does not account for humidity.
Wet Bulb Temperature measures the lowest temperature achievable through evaporation and reflects the effect of humidity on cooling.
Wet Bulb Temperature indicates how effectively the human body can cool itself through sweating and evaporation.
High humidity reduces the evaporation of sweat, making it harder for the body to regulate temperature and increasing the risk of heat stress and dehydration.

Difference Between Dry and Wet Bulb Temperatures

Wet Bulb Temperature is generally lower than Dry Bulb Temperature. The difference becomes larger when the air is drier and evaporation is more effective.

Health Risks

According to the Intergovernmental Panel on Climate Change (IPCC):
- sustained exposure above 35°C wet bulb temperature can be fatal, and
- exposure above 31°C can become dangerous during intense physical activity.
People with heart disease, diabetes, and outdoor labourers are especially vulnerable because humidity and dehydration increase physical stress during extreme heat.

What is “Feels Like” Temperature

“Feels like” temperature, also known as apparent temperature, is different from Wet Bulb Temperature.
It estimates how hot or cold weather actually feels to the human body by considering humidity and wind conditions.
Apparent temperature combines - actual air temperature, humidity levels, and wind conditions - to measure human thermal comfort.
Apparent temperature helps people better understand the real physical stress caused by weather conditions, especially during heatwaves and humid summers.

Heat Index

The “feels like” temperature is often expressed through the heat index, which combines temperature and relative humidity to estimate how hot conditions feel to the body.

Wind Chill Index

Another type of apparent temperature is the wind chill index, which combines temperature and wind speed to show how cold weather feels when wind removes the body’s insulating warm air layer.

Source: IE

Climate Terms FAQs

Q1: What is a Western Disturbance?

Ans: A Western Disturbance is a rain-bearing weather system originating near Afghanistan and Iran that brings rainfall and snowfall to North India.

Q2: How does El Niño affect India’s climate?

Ans: El Niño weakens moisture-bearing winds, often causing delayed monsoons, dry spells, heatwaves, and reduced rainfall across several parts of India.

Q3: What conditions define a heat wave in India?

Ans: The IMD declares a heat wave when temperatures significantly exceed normal levels or cross specific thresholds such as 45°C in plains.

Q4: What is Wet Bulb Temperature?

Ans: Wet Bulb Temperature measures how effectively sweat evaporates and indicates the body’s ability to cool itself under humid conditions.

Q5: What does “feels like” temperature mean?

Ans: “Feels like” temperature combines actual temperature, humidity, and wind conditions to show how weather physically feels to the human body.

Decentralised Waste Management in India

May 12, 2026

Decentralised Waste Management Latest News

India is facing a growing waste management crisis, with overflowing landfills, plastic pollution, open waste burning, and contaminated rivers affecting both urban and rural areas.
In response, the government introduced the Solid Waste Management Rules, 2026, replacing the 2016 framework from April 1, 2026.
The new rules aim to improve waste segregation, regulate bulk waste generators, promote scientific waste processing, reduce landfill dependence, clean legacy dumpsites, encourage a circular economy, and strengthen digital monitoring systems.
While the reforms reflect strong environmental intent, concerns remain about whether the administrative framework is capable of effectively implementing these ambitious goals.

Treaty Power and Federal Balance in Waste Management

The Solid Waste Management Rules, 2026 were framed under the Environment (Protection) Act, 1986, enacted using Article 253 of the Constitution.
This article allows Parliament to legislate for implementing international obligations such as the 1972 Stockholm Declaration.
Under Article 253, the Centre can legislate even on subjects traditionally linked to States or local bodies, including sanitation, public health, agriculture, land, and water management.
Experts argue that while national environmental standards are necessary, central powers should not undermine State autonomy or convert States and local bodies into mere implementing agencies.

Principle of Subsidiarity

Mature federal systems generally follow the principle of subsidiarity, where governance functions are performed at the lowest effective level closest to citizens, local conditions, and accountability structures.
According to the critique, India often assumes central superiority and limits the flexibility of States and local governments, reducing their role in policy design and implementation.

The Knowledge Problem

The discussion draws on economist F. A. Hayek’s concept of the knowledge problem.
This concept argues that effective governance depends on local and context-specific knowledge that cannot be fully managed through centralised decision-making.
Waste management policies should account for regional ecological conditions, settlement patterns, and varying administrative capacities rather than relying on uniform national directives.

The Centralisation Reflex in Waste Management Rules

The critique argues that the Solid Waste Management Rules, 2026 reflect a broader tendency in Indian governance to rely on centralisation and over-regulation instead of strengthening State and local administrative capacity.
The Rules are based on an implicit assumption that States lack the competence to independently manage waste systems, leading to excessive central supervision and control.
The argument stresses that reducing States to implementing agencies weakens federalism and discourages local experimentation, innovation, and institution-building.
Drawing on economist Kenneth Arrow’s idea of “learning by doing,” critics argue that administrative capacity develops through decision-making, experimentation, and feedback at the local level.

Waste Management as a Local Governance Function

Solid waste management is deeply connected to: public health, sanitation, land use, local administration, and citizen participation.
Therefore, it requires locally tailored governance models rather than uniform national frameworks.
Waste management requirements differ greatly between megacities, Himalayan towns, coastal regions, island settlements, and tribal or low-density rural areas.
A single regulatory model cannot effectively address these varied conditions.

Challenges for Rural Local Bodies

Although extending waste management rules to rural areas is considered necessary, the article argues that most gram panchayats lack:
- trained personnel,
- sanitation infrastructure,
- vehicles,
- digital systems, and
- financial resources required for complex compliance mechanisms.

Suggested Rural Waste Management Model

A more practical rural framework should focus on:
- gram sabha awareness programmes,
- household and community composting,
- periodic plastic and sanitary waste collection, and
- cluster-level waste processing with nearby urban bodies.

Need for Stronger Urban Institutions

For megacities and metropolitan areas, the article recommends dedicated Metropolitan Waste Management Authorities with:
- elected local representation,
- State participation,
- technical experts, and
- citizen oversight mechanisms.

Recommendation for Phased Implementation

Experts suggest a phased rollout of the Rules:
- megacities and metropolitan cities first,
- large municipalities and tourist towns next,
- medium and small towns later, and
- simplified systems for rural areas in the final stage.

States as Policy Laboratories

Drawing on Justice Louis Brandeis’s idea of States as “laboratories” of policy innovation, experts argue that India should allow States greater flexibility in designing waste-management systems.
Different States could experiment with decentralised composting, waste-worker cooperatives, metropolitan authorities, or tourist waste regulation based on local needs.
The Centre could later identify successful models and establish evidence-based national standards instead of imposing a rigid centrally designed framework from the outset.

Concerns Over Centralised Waste Governance

Experts argue that the Solid Waste Management Rules, 2026 over-centralise environmental governance through rigid reporting systems, weak local participation, and unfunded mandates on municipalities and panchayats.
Excessive dependence on centralised digital compliance may undermine service delivery and democratic accountability.
They warn that without State flexibility, empowered local bodies, predictable financing, and citizen participation, the Rules could result in bureaucratic reporting and litigation rather than effective waste management and cleaner cities.

Source: TH

Decentralised Waste Management FAQs

Q1: Why is decentralised waste management important in India?

Ans: Decentralised waste management helps address regional waste challenges through local solutions, citizen participation, efficient segregation, and reduced dependence on centralised landfill systems.

Q2: What are the concerns regarding the Solid Waste Management Rules, 2026?

Ans: Critics argue the Rules over-centralise governance, weaken State flexibility, impose unfunded mandates, and overlook local administrative and ecological realities across India.

Q3: What is the principle of subsidiarity in waste governance?

Ans: The subsidiarity principle states that governance functions should be handled at the lowest effective local level closest to citizens and local conditions.

Q4: Why are rural local bodies facing challenges under the new Rules?

Ans: Most gram panchayats lack trained staff, infrastructure, vehicles, digital systems, and financial resources required for complex decentralised waste management compliance mechanisms.

Q5: How can States act as policy laboratories in waste management?

Ans: States can experiment with composting models, waste cooperatives, metropolitan authorities, and local recycling systems before successful approaches are adopted nationally.