{"id":324842,"date":"2025-01-27T19:07:31","date_gmt":"2025-01-27T13:37:31","guid":{"rendered":"https:\/\/forumias.com\/blog\/?p=324842"},"modified":"2025-01-27T19:07:31","modified_gmt":"2025-01-27T13:37:31","slug":"state-of-the-indian-economy-before-budget-2025-26","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/state-of-the-indian-economy-before-budget-2025-26\/","title":{"rendered":"State of the Indian Economy Before Budget 2025-26"},"content":{"rendered":"

This post on State of the Indian Economy Before Budget 2025-26 <\/strong>\u00a0has been created based on article \u201c<\/strong>State of economy before the Budget<\/strong><\/a>\u201d <\/strong>published on The Indian express<\/strong> on 27th January 2025.<\/strong><\/p>\n

UPSC Syllabus topic:<\/strong> GS Paper 3-Economy<\/p>\n

Context: <\/strong>The article provides an analysis of India’s economic condition leading up to the Union Budget announcement.<\/p>\n

What is the government\u2019s current economic stance?<\/h2>\n
    \n
  1. The government is seen as pro-corporates and pro-cronies<\/strong>, with corporate profits increasing from \u20b910,88,000 crore in 2022-23 to \u20b914,11,000 crore in 2023-24.<\/li>\n
  2. During these two years, scheduled commercial banks wrote off corporate loans<\/strong> amounting to \u20b92,09,144 crore and \u20b91,70,000 crore, respectively.<\/li>\n<\/ol>\n

    How has India\u2019s economic growth evolved over the years?<\/h2>\n
      \n
    1. Growth in the last three decades has been impressive compared to the 1950s-80s, primarily due to liberalization, enabling people to produce, trade, and innovate.<\/li>\n
    2. Despite this, the economy is growing at 6-7%<\/strong>, which, although faster than many large economies, adds less in absolute terms to GDP compared to the U.S. (USD 787 billion) and China (USD 895 billion). India added only USD 256 billion in 2024.<\/li>\n<\/ol>\n

      Why is the growth rate falling?<\/h2>\n
        \n
      1. Key drivers of growth<\/strong> such as\u00a0 private consumption, public investment, and private investment are declining.<\/li>\n
      2. Private Final Consumption Expenditure (PFCE)<\/strong> (constant prices) in three recent quarters was \u20b922,82,980 crore, \u20b923,42,610 crore, and \u20b924,82,288 crore, reflecting slow consumption growth.<\/li>\n
      3. Government Final Consumption Expenditure (GFCE)<\/strong> in the same quarters was \u20b93,36,707 crore, \u20b93,83,709 crore, and \u20b94,00,698 crore.<\/li>\n<\/ol>\n

        What are the reasons for sluggish private consumption?<\/h2>\n
          \n
        1. Inflation:<\/strong> Food inflation averaged 6.18% (2012-2024), with healthcare costs rising 14% annually and education costs by 11%.<\/li>\n
        2. Stagnant wages:<\/strong> Between 2017 and 2023, real wages of agricultural workers (male) increased from \u20b9138\/day to \u20b9158\/day, while construction workers’ wages rose from \u20b9176\/day to \u20b9205\/day. Female workers earn \u20b940-45 less on average.<\/li>\n<\/ol>\n

          \u00a0How is investment performing?<\/strong><\/h2>\n
            \n
          1. Public investment:<\/strong> Stuck between 6.7-7% of GDP over the past decade.<\/li>\n
          2. Private investment:<\/strong> Ranges between 21-24% of GDP, showing no significant growth.<\/li>\n
          3. Central government capital expenditure:<\/strong> Declined from 4.7% of GDP (2019-20) to 3.8% (2023-24).<\/li>\n<\/ol>\n

            What is the state of inflation and unemployment?<\/strong><\/h2>\n
              \n
            1. Inflation remains a millstone<\/strong>, particularly for essentials like food, healthcare, and education.<\/li>\n
            2. Unemployment:<\/strong> CMIE reports an all-India rate of 8.1% in December 2024. Youth and gender-based unemployment figures paint an even bleaker picture.<\/li>\n<\/ol>\n

              What about income tax and relief measures?<\/strong><\/h2>\n
                \n
              1. In FY 2023-24, 68% of the population filed income tax returns<\/strong> (8.09 crore). Of these, 4.9 crore filers<\/strong> paid zero tax.<\/li>\n
              2. While providing relief to taxpayers is important, relief for daily wage earners is even more critical.<\/li>\n<\/ol>\n

                What are the challenges with India\u2019s tax structure?<\/strong><\/h2>\n
                  \n
                1. The complicated GST system<\/strong> disproportionately affects the poor and middle class. Tax simplification is essential to reduce economic burdens.<\/li>\n
                2. The fiscal deficit<\/strong> and revenue deficit<\/strong> are major concerns.<\/li>\n
                3. Public perception is influenced by the government\u2019s actions, with debates on whether the upcoming budget will adequately address these economic challenges.<\/li>\n<\/ol>\n","protected":false},"excerpt":{"rendered":"

                  This post on State of the Indian Economy Before Budget 2025-26 \u00a0has been created based on article \u201cState of economy before the Budget\u201d published on The Indian express on 27th January 2025. UPSC Syllabus topic: GS Paper 3-Economy Context: The article provides an analysis of India’s economic condition leading up to the Union Budget announcement.… Continue reading State of the Indian Economy Before Budget 2025-26<\/span><\/a><\/p>\n","protected":false},"author":10320,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230],"tags":[216,8184,10500],"class_list":["post-324842","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","tag-gs-paper-3","tag-indian-economy","tag-indian-express","entry"],"jetpack_featured_media_url":"","views":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/324842","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10320"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=324842"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/324842\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=324842"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=324842"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=324842"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}