Current Affairs - Economy

As of August 8, 2025, India’s foreign exchange reserves surged by $4.74 billion to reach $693.62 billion. This increase was driven by gains in foreign currency assets, gold reserves, Special Drawing Rights (SDRs), and India’s reserve position with the International Monetary Fund (IMF). Foreign currency assets alone rose by $2.37 billion, while gold reserves added $2.16 billion. The rise highlights India’s strong external sector fundamentals, with the reserves positioned close to their all-time high of $704.885 billion recorded in September 2024. Such robust reserve levels enhance India’s ability to cushion external shocks, stabilise the rupee, and maintain financial resilience.

In July 2025, India’s Wholesale Price Index (WPI) inflation stood at -0.58%, marking the second consecutive month of deflation in wholesale prices. This decline was largely influenced by falling prices of food articles, mineral oils, crude petroleum, natural gas, and basic metals. WPI inflation reflects the overall change in prices at the wholesale level, differentiating it from the Consumer Price Index (CPI), which measures changes at the consumer level. The negative WPI figure indicates easing cost pressures for businesses, potentially impacting input costs, supply chains, and the broader inflation trajectory of the economy in the coming months.

The Centre has proposed a Two-Slab GST structure as part of its next-generation tax reform. This system introduces two main slabs—5% and 18%—along with a 40% levy on sin goods like tobacco and pan masala. The 5% slab will include daily-use and common goods, while the 18% slab will cover aspirational and white goods, such as refrigerators and televisions, that currently fall under the 28% category. Essential food items remain exempt, ensuring relief for households. The overhaul is aimed at simplifying the indirect tax system, resolving disputes, correcting inverted duty structures, reducing compliance burdens, and boosting overall consumption and GDP growth.

India’s merchandise exports in July 2025 registered a 7.3% growth, reaching $37.24 billion. This rise was driven by strong performances in sectors such as electronics, pharmaceuticals, engineering goods, chemicals, and gems & jewellery. Notably, electronic goods exports rose sharply by 34%, highlighting India’s increasing role in global high-tech supply chains, aided by Production Linked Incentive (PLI) schemes. While exports rose, imports also increased by 8.6% to $64.59 billion, pushing the trade deficit to an eight-month high of $27.35 billion. Despite this imbalance, the export growth indicates resilience in India’s trade sector amid volatile global market conditions.

Karnataka witnessed a massive spike in GST evasion during FY25, with cases surging to ₹39,577 crore across 1,254 instances, alongside nine arrests. This represents a fivefold jump compared to the previous year’s evasion figure of ₹7,202 crore. According to Finance Minister Nirmala Sitharaman’s report to the Lok Sabha, enhanced enforcement, improved analytics, and better data-sharing mechanisms contributed to this rise in detection. Voluntary tax payments amounted to ₹1,623 crore, reflecting partial compliance. Importantly, the government clarified that central GST authorities had not issued notices solely based on UPI transactions, addressing concerns raised by small traders in Bengaluru.