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The government, in its Budget, has projected an 11% rise in GST revenue for the year, estimating total collections at ₹11.78 lakh crore, which includes Central GST and compensation cess.
As of February 28, 2025, 98.18% of Rs 2000 banknotes have been returned to the banking system, leaving only Rs 6,471 crore in public hands. Deposit and exchange facilities were available at bank branches until October 7, 2023, and continue at RBI issue offices and via India Post.
India's savings rate is not as robust as needed due to declining household financial savings and increasing financial liabilities, especially unsecured personal loans. Household savings have dropped significantly from 84% of total savings in 2000 to 61% in 2023. The rise in consumer loans, notably from NBFCs, is exacerbating household debt, threatening economic stability.
At the Advantage Assam 2.0 Investment and Infrastructure Summit, a total investment commitment of Rs 5,18,205 crore was received, amounting to 80% of the state's projected GDP. Chief Minister Himanta Biswa Sarma emphasized that a detailed roadmap will be prepared for the proposals' implementation, addressing challenges like land provisioning and incentives.
India's GST structure is complex with multiple rates, needing simplification for better compliance and efficiency, suggests the IMF. Since GST's introduction, rate changes have reduced its effective rate. The IMF recommends fewer exemptions and compensating vulnerable households for cost increases. Structural reforms and better coordination between the union government and states are also essential for growth.
GST collections showed strong growth in January 2025, with a 12.3% increase in gross and 10.9% in net collections. Manufacturing PMI rose to 57.7, indicating expansion, while services PMI stayed high at 56.5. Inflation moderated to 4.3%, providing more policy space. However, bank credit growth slowed, and there was a continued outflow of FII flows.
Prime Minister Narendra Modi's government aims to reduce the states' share of federal tax revenues from 41% to 40%, as per sources. This proposal will be recommended to the Finance Commission, and if approved, could intensify federal-state tensions. The federal government cites increased spending needs as the rationale for this change.
The World Bank has expressed strong confidence in India's economic growth, despite a slight slowdown. The lender encouraged global investors to invest in India, emphasizing on its robust growth projection of 7.2% for the upcoming fiscal year as projected by RBI for December 2024.
India needs to maintain a tax buoyancy of 1.2-1.5 to achieve 6.5-7% growth, according to an EY report. The government should increase the tax-to-GDP ratio from 12% in FY26 to 14% by FY31, focusing on enhancing tax buoyancy and prudent expenditure management for sustainable growth. The fiscal deficit is expected to reduce to 4.4% by FY26.
The government has extended Chief Economic Adviser V Anantha Nageswaran's term by two years, until March 31, 2027. This indicates policy continuity following the recent Economic Survey for 2024-25, which advocated minimal government intervention for higher growth. Nageswaran succeeded Krishnamurthy V Subramanian in early 2022.
NRI bank account inflows rose by 42.8% to $13.33 billion between April and December 2024, compared to the previous year. FCNR(B) deposits saw the highest growth, almost doubling to $6.46 billion. NRE and NRO deposits also grew, reaching $99.56 billion and $30.04 billion, respectively. The RBI raised interest rate ceilings to attract more inflows.
Uttar Pradesh's 2025-26 budget, presented by Finance Minister Suresh Kumar Khanna, totals Rs 8,08,736 crore, focusing on research, development, and IT. Key allocations include 22% for development, 13% for education, 11% for agriculture, and 6% for healthcare. Plans include an AI City, a Cyber Security research park, and modernising educational institutions.
The new income-tax bill, likely to be implemented on 1 April 2026, aims to streamline and simplify the tax code. Expected to reduce litigation, the bill introduces clearer language and easier understanding for taxpayers and tax authorities. Key changes include simplified provisions, a unified 'tax year', and options for old and new tax regimes.
Four states have managed to reduce their debt-to-GSDP ratio, while others like Punjab and Tamil Nadu have seen sharp increases, potentially exceeding 50% by 2027-28. The study calls for revising the Finance Commission's role, suggests stricter fiscal oversight, including transferring some state debt to the central government, and recommends improving revenue mobilisation and shifting spending priorities towards infrastructure.
The Economic Review for 2024-25 reveals that West Bengal has experienced significant economic growth over the last 13 years, largely due to fiscal discipline. The state's nominal GSDP reached Rs 18,15,010 crore, with improved fiscal health, increased tax revenue, and a substantial rise in spending on agriculture, rural development, and social welfare.
Investment proposals worth nearly Rs 10 lakh crore have been made for Karnataka, prioritizing renewable energy, steel, semiconductors, and automobiles. Companies including Mahindra & Mahindra, JSW Group, Bosch, Toyota, and Foxconn are part of this drive. This initiative supports India's push to enhance domestic manufacturing amid global trade tensions, with significant commitments from both domestic and international firms.
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