Modi 3.0 shows an appetite for economic reform, Pg12

Key Highlights:

• India's economy shows resilience with 7.8% growth in the first quarter of FY 2025-26, expected to be around 7% for the entire fiscal year.
• The government increased the nil tax slab to ₹12 lakh in the Union Budget 2025-26, effectively raising the tax-free threshold to ₹12.75 lakh with standard deductions.
• GST structure simplified to two main slabs of 5% and 18%, aiming to boost consumer spending.
• RBI announced 22 additional measures to strengthen the banking sector and promote ease of doing business.

Detailed Insights:

• Post-COVID challenges, including global inflation and trade uncertainties, have highlighted India's economic resilience due to effective policy implementation.
• The government is shifting public expenditure towards productive capital outlays, increasing from 12% in FY 2020-21 to nearly 22% in FY 2024-25, indicating improved fiscal discipline.
• Simplified income tax laws aim to ease business operations and improve citizens' financial lives by removing obsolete provisions.
• Focus on export competitiveness is evident through trade agreement negotiations, such as the India-UK Comprehensive Economic and Trade Agreement (CETA).
• Earlier reforms like IBC, GST, and RERA, along with FDI reforms, have laid the foundation for increased private sector investments in sectors like AI, electronics and renewables.
• Domestic tailwinds, including low inflation and RBI measures, are expected to support India's growth path, promoting inclusion and sustainability.
• Implementation of the four labour codes will streamline and simplify labour laws.

Key Concepts Involved:

• Fiscal Discipline: Prudent management of government finances to control deficit and debt.
• Capital Outlays: Government spending on infrastructure and assets to boost economic growth.
• Export Competitiveness: Ability of a country to offer goods and services at competitive prices in international markets.