Current Affairs - Economy

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.

The gross direct tax collection in India recorded a 20.32% year-on-year increase, reaching ₹19.21 lakh crore. This reflects a strong fiscal performance driven by enhanced tax compliance and growing economic activities. The percentage signifies the overall improvement in tax revenues, underscoring the efficiency of tax collection mechanisms. While corporate tax collection also grew significantly, the gross figure's rise to 20.32% highlights the broader contribution of various sectors to the revenue base, even as increased refunds impacted net collections. Understanding such key metrics is essential for assessing a country's economic health and fiscal policy effectiveness.

India has risen to the 3rd position among the world's largest smartphone exporters, a significant jump from the 23rd rank in 2019. The country achieved a milestone by surpassing ₹20,000 crore in smartphone exports in November 2024 alone. This success aligns with the goals of the production-linked incentive (PLI) scheme, which aims to export 70-75% of the production value during the financial year 2024-25, showcasing India's growing prowess in the global smartphone market.

The Asian Development Bank (ADB) has revised India’s GDP growth forecast for FY25 to 6.5%, down from the initial estimate of 7%. This revision was made due to factors such as weaker industrial output, muted public spending, and tight monetary policies. In addition, the slowdown in GDP growth during Q2FY25, which fell to 5.4%, has impacted these projections. Despite these challenges, the economy remains supported by strong agricultural output and resilience in the services sector.