Andhra Pradesh declares drought across 21 districts as RBI raises key interest rate to 5.50 percent

Andhra Pradesh has declared a drought in 21 of its 26 districts due to a severe rainfall deficit, while the Reserve Bank of India has raised the repo rate to 5.50 per cent.

State and Economy

The Andhra Pradesh government classified 388 of its 688 mandals as drought-affected following a 53.4 per cent rainfall deficit recorded between June and August, with 283 mandals marked as severely affected and 105 as moderately affected. In national economic updates, the Reserve Bank of India increased the repo rate by 25 basis points to 5.50 per cent, which is its first hike since February 2023 and will likely increase borrowing costs and EMIs. Alongside this rate change, the central bank raised its FY27 GDP growth forecast to 7.1 per cent. Separately, the Union Cabinet approved a Rs 10,000 crore SME Growth Fund to provide equity support to small and medium manufacturing enterprises, particularly in Tier-II and Tier-III cities.

Sports and Global News

In sports, Lionel Messi ended his international career by scoring a goal and providing two assists in Argentina's 3-0 win against Benin in Buenos Aires, finishing with 207 appearances and 126 goals. Harmanpreet Kaur stepped down as captain of the Indian women's cricket team across all formats following the team's failure to reach the T20 World Cup knockouts for the second consecutive time, though she will remain a player. In international health and travel, Kenya reported its first Ebola death after a traveller from the Democratic Republic of Congo died in a Nairobi hospital, prompting border alerts and contact tracing. Flydubai asked to resume flights to Tel Aviv following an incident involving Indian pilot Smit Machchhar, whose flight was attacked midair and diverted to Saudi Arabia, but Israel has denied the request so far.

Politics and Institutions

Political and institutional developments include Rahul Gandhi and other INDIA bloc leaders heading to Jantar Mantar with about 300 opposition MPs to demand the resignation of Chief Election Commissioner Gyanesh Kumar. The Press Council of India is currently operating with only half of its sanctioned members and lacks any working journalists or editors because the Information and Broadcasting Ministry has not formally notified 13 of the 28 nominated members. In consumer affairs, an Amritsar District Consumer Commission ordered a Rs 1.06 lakh payment to a passenger over a cancelled Frankfurt flight during the Covid-19 pandemic. The National Medical Commission stated that medical graduates from Georgia must hold a local practice licence rather than just working as supervised junior doctors to take the Foreign Medical Graduate Examination in India. Finally, the University of Colorado Denver plans to open a degree-granting campus in Hyderabad offering business, computing, engineering, and analytics programmes starting in August 2027.

Context

Drought declarations help state governments unlock disaster relief funds and implement relief measures for farmers facing crop losses during monsoon failures. Central bank repo rate hikes are typically used to control inflation by making loans more expensive, which slows down consumer spending and borrowing.