Bihar Current Affairs 5 August 2026

Welcome to the Ujiyari Bihar Current Affairs notes for 5 August 2026, prepared for BPSC and other State PCS aspirants. No separate Bihar administrative development for this date could be independently verified, so rather than pad the edition we cover two national developments with direct and examinable Bihar bearing: the monetary policy decision, which turns on food inflation in a way that matters for an agrarian state, and a Parliamentary Standing Committee report on urban sewerage. Each item has a Prelims fact table and a Mains angle, followed by five practice MCQs.

1. The RBI Holds for a Fourth Time: Food Inflation and an Agrarian Economy

Why in News: The Monetary Policy Committee, meeting from 3 to 5 August 2026, voted unanimously on 5 August to hold the policy repo rate at 5.25 per cent and retain the neutral stance. The FY27 CPI inflation projection was cut to 5.0 per cent from 5.1, and the FY27 real GDP growth projection raised to 6.7 per cent from 6.6.

Background: The corridor stands at SDF 5.00 per cent, repo 5.25, MSF and Bank Rate 5.50, symmetric at 25 basis points either side. The SDF is the floor and is uncollateralised, introduced in April 2022 to replace the fixed-rate reverse repo; the MSF is the ceiling, collateralised against SLR securities.

Governor Sanjay Malhotra explained the hold through a distinction between headline and underlying inflation. Headline CPI runs above the 4 per cent target, but the pressure is concentrated in food and fuel, while core inflation is projected at 4.3 per cent for FY27, and stood at 2.3 to 2.5 per cent excluding precious metals in May and June 2026. He described the Committee as neither dovish nor hawkish and said it wanted greater clarity before acting.

Why the food question matters particularly for Bihar. Bihar’s economy remains substantially agrarian, with paddy, wheat, maize, pulses and litchi among its principal crops, and a large share of its workforce dependent on agriculture and allied activity. Two consequences follow, and they pull in opposite directions.

For the consumer, food inflation is the inflation that is actually experienced, since food commands roughly 46 per cent weight in the CPI basket and a far higher share of the consumption basket of a low-income household. A central bank that looks through food inflation is looking through most of what a poor household feels.

For the producer, higher food prices are higher farm-gate realisation, at least where the farmer sells a marketable surplus rather than buying back later in the season at a higher price. The distributional effect of food inflation within an agrarian state is therefore not uniform, and a landless agricultural labourer and a surplus-producing cultivator experience the same price movement in opposite directions.

The technical case for looking through remains sound: monetary policy operates on demand, while food price shocks in India are predominantly supply-side, driven by monsoon, crop cycles and global commodity movements. Raising the repo rate does not produce rain. The case against is that the statutory target is headline CPI and repeated looking-through risks de-anchoring inflation expectations, after which a supply shock becomes a permanent shift in the price level.

A quieter point worth noting. With the repo at 5.25 per cent and projected inflation at 5.0 per cent, the real repo rate is roughly 0.25 percentage points, which is close to zero. The stance is therefore already accommodative in real terms, and the conventional room to cut if growth disappoints is thin.

Bihar Relevance:

• Prelims: repo 5.25 per cent, SDF 5.00, MSF and Bank Rate 5.50; stance neutral; unanimous; fourth consecutive hold. FY27 CPI cut to 5.0 per cent, FY27 real GDP raised to 6.7 per cent; core inflation 4.3 per cent for FY27, and 2.3 to 2.5 per cent excluding precious metals in May and June 2026. The SDF was introduced in April 2022 and is uncollateralised. The inflation target of 4 per cent CPI with a band of plus or minus 2 per cent is notified by the Central Government under Section 45ZA of the RBI Act, 1934; the MPC is constituted under Section 45ZB, has six members, and the Governor holds a casting vote. Next meeting 5 to 7 October 2026.
• Mains: Examine the distributional effect of food-price inflation within an agrarian state economy, distinguishing the position of the landless labourer from that of the surplus-producing cultivator, and assess whether a central bank should look through it.

2. Standing Committee on Urban Sewerage: What It Means for Bihar

Why in News: The Parliamentary Standing Committee on Housing and Urban Affairs tabled a report in the Lok Sabha on 4 August 2026 criticising the pace of sewerage and septage work under AMRUT and AMRUT 2.0.

Background: The national findings are stark.

The Committee recommended rapid capacity expansion, reuse and recycle models, and a National Urban Wastewater Reuse Policy.

Why this bears directly on Bihar. The state has among the lowest urban sewerage coverage in the country, and its urban centres discharge substantially into the Ganga and its tributaries, which places the issue at the intersection of urban governance and the Namami Gange programme. Patna, Bhagalpur, Munger, Hajipur and Buxar sit on the main stem or close to it, so untreated urban discharge in Bihar is not only a municipal sanitation failure but a river-basin one.

The analytical point the numbers reveal. Notice the gap between the 50 per cent meeting 2015 norms and the 15 per cent meeting 2019 norms. That gap is not about construction; those plants exist and were commissioned. It is about operation. A treatment plant requires continuous power, trained operators, chemical inputs and an operating budget, all of which fall on an urban local body that in most of Bihar lacks own-source revenue, technical staff and tariff-setting autonomy.

This is why the constraint is not principally central allocation: barely a third of committed Central Assistance has been released, against a slow project pipeline, which indicates absorption capacity rather than funding as the binding limit. The corrective measures are therefore volumetric sewerage tariffs, treated-wastewater reuse mandates for industry and construction, and devolution of Twelfth Schedule functions with matching finances, as the Fifteenth Finance Commission recommended.

Bihar Relevance:

• Prelims: AMRUT launched June 2015; AMRUT 2.0 launched 1 October 2021, extended to 31 March 2027; nodal ministry Housing and Urban Affairs. Of 1,044 urban STPs, 50 per cent meet 2015 norms and 15 per cent meet 2019 norms. Urban India generates about 52,644 MLD against 31,885 MLD of treatment capacity. Water supply, sanitation and sewerage are Twelfth Schedule functions under Article 243W, inserted by the 74th Constitutional Amendment Act, 1992. Connects to SDG 6 and SDG 11.
• Mains: Examine why urban sewage treatment plants in India are commissioned but under-operated, and assess what devolution and tariff reforms would be required for Bihar’s urban local bodies to run them.

Practice MCQs

1. What was the Monetary Policy Committee’s decision on 5 August 2026?

a) A hold at 5.25 per cent with a neutral stance, taken unanimously, the fourth consecutive hold b) A 25 basis point cut to 5.00 per cent, with an accommodative stance c) A 25 basis point rise to 5.50 per cent to address food inflation d) A hold, decided by the Governor’s casting vote after a 3-3 split

Answer: a Explanation: The Committee voted unanimously to hold the repo rate at 5.25 per cent and to retain the neutral stance, its fourth consecutive hold. It simultaneously cut the FY27 CPI projection to 5.0 per cent from 5.1 and raised FY27 real GDP growth to 6.7 per cent from 6.6. The Governor holds a casting vote under the framework, but it was not needed.

2. Why did the Committee not raise rates despite headline CPI running above the 4 per cent target?

a) Because the statutory target applies only to core inflation b) Because the pressure was concentrated in food and fuel, which are supply-side, while core inflation excluding precious metals ran at just 2.3 to 2.5 per cent c) Because the Central Government had suspended the inflation target for the year d) Because the repo rate had already reached its statutory floor

Answer: b

Explanation: Governor Sanjay Malhotra distinguished headline from underlying inflation, noting that above-target headline CPI was driven by food and fuel with little sign of generalisation, and that core inflation excluding precious metals stood at 2.3 to 2.5 per cent, against a headline core projection of 4.3 per cent for FY27. Monetary policy operates on demand, while food and fuel shocks in India are predominantly supply-side. Option (a) is the trap: the statutory target is headline CPI, not core, which is precisely why repeated looking-through is contestable.

3. The Standing Committee report of 4 August 2026 found that of 1,044 urban sewage treatment plants, what proportion meets the stricter 2019 discharge standards?

a) About 50 per cent b) About 75 per cent c) About 30 per cent d) About 15 per cent

Answer: d Explanation: About 50 per cent of the 1,044 plants meet the 2015 CPCB standards while only about 15 per cent meet the stricter 2019 NGT standards. The gap between the two figures is the analytically important number, because it shows the constraint is operation rather than construction: those plants exist and were commissioned, but running them requires continuous power, trained operators, chemicals and an operating budget that most urban local bodies cannot sustain.

4. Water supply, sanitation and sewerage are functions assigned to municipalities under which constitutional provision?

a) The Twelfth Schedule, read with Article 243W, inserted by the 74th Amendment b) The Eleventh Schedule, read with Article 243G, inserted by the 73rd Amendment c) The Seventh Schedule, Union List d) Article 21, as interpreted by the Supreme Court

Answer: a Explanation: The Twelfth Schedule, read with Article 243W and inserted by the 74th Constitutional Amendment Act, 1992, lists the functions with which State legislatures may endow municipalities, including water supply, sanitation and sewerage. The Eleventh Schedule and Article 243G, inserted by the 73rd Amendment, perform the corresponding function for panchayats, and reversing the two is the standard error.

5. Which statement about the Standing Deposit Facility is correct?

a) It is the ceiling of the LAF corridor and requires collateral b) It is a refinance facility for regional rural banks c) It is the uncollateralised floor of the LAF corridor, introduced in April 2022, and stood at 5.00 per cent d) It replaced the Marginal Standing Facility in 2022

Answer: c Explanation: The Standing Deposit Facility, introduced in April 2022, is the floor of the Liquidity Adjustment Facility corridor and absorbs surplus liquidity from banks without collateral. It replaced the fixed-rate reverse repo, not the Marginal Standing Facility, which remains the collateralised ceiling at 5.50 per cent. The uncollateralised feature was the point of the reform, since under the reverse repo the RBI’s absorption capacity was limited by its own securities holdings.