Current Affairs - Economy

Deloitte forecasts the Indian economy to grow at 6.5-6.8% in FY25, driven by strong domestic consumption, infrastructure development, and digitisation efforts. While challenges such as geopolitical tensions and global liquidity constraints may pose risks, India’s resilience in services, manufacturing exports, and stable capital markets provides a solid foundation for sustained economic growth.

The Pradhan Mantri Shram Yogi Maandhan Yojana (PM-SMY) is a central pension scheme launched in 2019 to benefit workers in the unorganised sector, such as street vendors, domestic workers, and agricultural labourers. These workers, with a monthly income of up to Rs 15,000, contribute a small premium with the government matching their contribution. Despite its ambitious goals, the scheme has faced challenges, including low enrollment, reduced government funding, and minimal coverage relative to the vast unorganised workforce, highlighting the need for revisions to enhance its effectiveness.

India's projected real GDP growth rate for FY25 and FY26 is estimated at 6.5%, supported by robust economic fundamentals despite some recent challenges. While Q2 FY25 GDP growth eased to 5.4% from 6.7% in Q1 FY25 due to factors like a decline in manufacturing PMI and a slowdown in private consumption, inflation trends show improvement with CPI falling to 5.5% in November. The 6.5% projection reflects optimism for sustained economic growth.

In the 55th GST Council meeting, a decision was made to raise the GST rate on used Electric Vehicles (EVs) from 12% to 18%. This aligns the tax rate on used EVs with that of non-electric vehicles, ensuring uniformity. However, the GST will apply only to the margin value, which is the difference between the purchase and selling price of the used EV, adjusted for depreciation if claimed. Importantly, no GST will apply to individual-to-individual sales, focusing the tax on business transactions.

India Ratings and Research (Ind-Ra) has projected a 6.6% GDP growth rate for the Indian economy in FY 2025-26, an increase from 6.4% in FY 2024-25. This forecast reflects optimism about reversing the cyclical slowdown seen over the past three quarters, starting from December 2024. The anticipated growth is attributed to a recovery in investments and easing monetary pressures, signalling a stable economic trajectory despite existing challenges.