Thursday, 4 June 2026 Current Affairs Digest for State PCS Exams

01International Relations·6 min read·Prelims · Mains

Pakistan accuses India of weaponising water after treaty suspension

This article is directly relevant to the India-Pakistan bilateral relationship, water sharing disputes, and the Indus Water Treaty—a critical topic for UPSC GS Paper II (International Relations) and GS Paper I (Geography). The examiner could test knowledge of treaty mechanics (the permanent Indus Commission, dispute resolution mechanisms), its historical significance (World Bank-brokered), and current developments involving the Court of Arbitration. UPSC and SSC candidates should track this as a key flashpoint in India's neighbourhood policy. The mention of the Chenab River projects, the treaty's suspension, and the arbitration court adds layers for both prelims (facts) and mains (analysis of water as a weapon).

Pakistan accused India of weaponising water after India announced two projects on the Chenab River that Pakistan says undermine the Indus Water Treaty.
India announced the suspension of the bilateral Indus Water Treaty in 2025, but Pakistan's Foreign Ministry spokesperson Tahir Andrabi stated the treaty still binds both governments.

02Economy·9 min read·Prelims · Mains

India to drop capital gains tax for foreign investors in government bonds, source says

This policy change directly impacts capital flows, fiscal incentives, and currency management. Prelims may test tax rates for FPIs, bond index inclusions (JP Morgan, Bloomberg), and measures to attract foreign investment. Mains can ask about India's strategy to finance current account deficit, stabilize rupee, and integrate into global bond indices. UPSC candidates should note the link between tax policy, bond yields, and external sector vulnerabilities.

India plans to scrap capital gains tax on foreign portfolio investments in government securities to attract foreign capital and counter rupee pressure.
The Cabinet has approved the plan, according to an Economic Times report; the finance ministry has not commented.
Currently, foreign investors pay 12.5% long-term capital gains tax on listed shares and bonds held over 12 months, and a 20% withholding tax on interest from government bonds.

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03International Relations·10 min read·Prelims · Mains

Portugal, Austria among five nations elected to UN Security Council; Germany suffers setback

This article is relevant for UPSC and state PSC exams as it covers the election of non-permanent UNSC members, a key topic in International Relations. Prelims may test the composition of the UNSC and the election process; mains may ask about India's UNSC bid and the significance of Germany's defeat. The article also touches on geopolitical dynamics, such as Russia's opposition to Germany's candidacy due to the Ukraine conflict.

Austria, Kyrgyzstan, Portugal, Trinidad and Tobago, and Zimbabwe were elected as non-permanent members of the UN Security Council for the 2027-28 term.
Germany lost the election in the Western European and Other States category, securing 104 votes, while Portugal (134 votes) and Austria (131 votes) won the two seats allocated to the group.
India has declared its candidature for the UNSC non-permanent membership for the 2028-29 term.

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04Polity & Governance·8 min read·Prelims · Mains

Congress says Centre in ‘panic mode’ on economy, raises questions over LIC stake in firm under SEBI scanner

This article touches on political economy and regulatory governance, topics frequently tested in UPSC Prelims (tax policy, SEBI powers) and Mains (GS3: economic growth, government interventions). The LIC-SEBI angle connects to financial sector regulation and corporate governance. SSC exams may pick up factual elements about capital gains tax changes. The Congress's structural critique offers a useful counterpoint for balanced discussion in mains answers.

Congress alleged the Modi government is in 'panic mode' over the economy, citing reports of considering removal of 12.5% LTCG tax on FPIs in government securities via an ordinance to amend the Income Tax Act.
Jairam Ramesh pointed to structural issues: stagnant real wages, widening inequalities, concentration of economic power, and rising imports from China as deeper economic challenges.
Congress questioned LIC's ~10.8% stake in Rajesh Exports after SEBI issued an interim order alleging misrepresentation of financials and fund diversion over five years, potentially amounting to ₹15 lakh crore.

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