EDITORIALS FROM 17th Sep 2025
EDITORIAL 01
The hidden human cost of Artificial Intelligence
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EDITORIAL 02
GST 2.0 — short-term pain, possible long-term gain
Issue: The Goods and Services Tax (GST) was introduced in India to simplify indirect taxation, promote consumption and production efficiencies, and establish a destination-based system where the tax burden falls on the final consumer with input tax credit (ITC) ensuring no cascading.
However, over time, the GST framework became complex due to multiple slabs, compensation cess, inverted duty structure, and high compliance costs.
The new GST rate structure effective 22 September 2025 aims at rationalisation but raises significant fiscal and growth-related concerns.
Key Features of the New GST Rate Structure
- Rate Rationalisation:
- 12% & 28% slabs discontinued.
- Existing 0%, 5%, and 18% slabs continued with revised coverage.
- 40% “demerit rate” introduced for sin goods & luxury items.
- Some special rates <5% retained.
- Beneficiary Sectors:
- Consumption side: textiles, food, consumer electronics, health, automobiles → lower prices & broad-based gains.
- Production side: fertilizers, agri-machinery, renewable energy → farmers benefit from lower input costs.
- Rate Changes:
- 546 goods affected → 80% saw rate cuts, 20% saw increases.
- Most increases are cess mergers (28% → 40%), not genuine hikes.
What are its impact on revenue?
- Mechanics: Revenue = r × (p.q). Lower tax rates reduce post-tax prices, raising demand, but revenue fall is greater than revenue gain.
- Calibrations: For all feasible demand elasticities, net revenues fall.
- Finance Ministry Estimate: ₹48,000 crore loss annually (others predict higher).
- Zero-rated goods: yield zero revenue regardless of consumption.
- Revenue shift: Immediate shortfall vs possible long-run gains from higher disposable income & luxury consumption.
What are the Structural and Compliance Challenges?
- Cascading Effects: Exempted goods disallow ITC → input taxes get embedded in final prices.
- Inverted Duty Structure: Inputs often taxed at 18% vs outputs at 5% → ITC mismatches, refunds delayed.
- Classification Issues: Goods often shifted across slabs based on demand weakness, not intrinsic nature → creates uncertainty.
Macro-Economic Implications
- Fiscal Stress:
- Budget already factors ₹1 lakh crore foregone due to income tax reforms.
- With direct taxes contracting (-4.3% in Q1 2025–26), GST shortfalls worsen fiscal pressures.
- Nominal GDP growth (8.8%) below budgeted 10.1% → gross tax revenues likely to undershoot.
- Policy Options:
- Cut expenditure or raise fiscal deficit (both hurt growth).
- States: may borrow more or reduce spending.
- RBI dividends could offset partially.
- Monetary Risks: Repo rate cuts or liquidity expansions could raise inflation; monetising deficit has limited scope.
Way Forward
- GST Simplification: Move towards fewer slabs, rationalise exemptions, correct inverted duty structures.
- Revenue Safeguards: Strengthen ITC system, curb evasion, improve digital compliance.
- Fiscal Management: Balance between deficit financing and growth support; avoid unsustainable populism.
- Growth Strategy: Long-run growth must rest on higher savings, investment rates, and efficiency in capital use, not repeated tax cuts.
- Centre–State Coordination: Transparent revenue-sharing to reduce disputes and improve fiscal stability.
The 2025 GST reform signals a bold attempt to simplify tax rates and reduce consumer burden, with clear benefits to employment-intensive and farm-linked sectors. However, the immediate revenue shortfall, cascading risks, and fiscal pressures underline the need for a balanced approach. Sustainable growth cannot rely on periodic tax reductions; instead, it must emerge from higher investment, productivity gains, and structural fiscal discipline.
EDITORIAL 03
Scripting the New India story
Issue: Since 2014, India has witnessed a governance model rooted in national pride, decisive leadership and development-centric reform (Vikasvaad).
This model combines economic reforms, technological innovation, welfare expansion, infrastructure growth and assertive diplomacy, with the overarching principle of keeping “India First” at the core of policy-making.
Major Achievements
- Governance & Security
- Operation Sindoor symbolised India’s swift and sovereign response to protect its citizens abroad.
- Abrogation of Article 370 (2019) integrated J&K fully into India.
- Muslim Women (Protection of Rights on Marriage) Act, 2019 outlawed instant triple talaq, ensuring gender justice.
- Economic & Fiscal Reforms
- GST unified indirect taxes.
- FDI inflows worth $667.74 billion (2014–24), 67% of total FDI since 2000.
- Digital Economy: UPI processed 172 billion transactions in 2024, making India global leader in digital payments.
- StartUp India → 3rd largest startup & unicorn ecosystem (118 unicorns).
- Welfare & Inclusion (JAM Trinity Revolution)
- Direct Benefit Transfers → eliminated leakages, ensured transparency.
- PM Jan Dhan Yojana: 55.17 crore accounts; ₹61 lakh crore deposits; 30.8 crore women account holders.
- Poverty reduction: extreme poverty down to 5.3% (2022–23) from 27.1% in 2011–12 (World Bank).
- Social Infrastructure
- PMAY: 4 crore houses built, including 90 lakh urban homes owned by women.
- Jal Jeevan Mission: tap water to 59 crore rural households.
- Saubhagya Yojana: 2.86 crore households electrified.
- Ujjwala Yojana: 10.33 crore LPG connections; 32.94 crore active users.
- PM Garib Kalyan Anna Yojana: free ration to 81 crore beneficiaries.
- Swachh Bharat Mission: 12 crore toilets; 6 lakh villages ODF.
- Agriculture & Rural Development
- Agriculture budget up 5x (2013–14: ₹27,663 cr → 2024–25: ₹1,37,664 cr).
- PM-KISAN: ₹7 lakh crore transferred to 11 crore farmers.
- Kisan Credit Card (KCC): ₹10 lakh crore credit; loan limit raised to ₹5 lakh (2025–26).
- Foodgrain production: from 265.05 MT (2014–15) to 347.44 MT (2024–25).
- Infrastructure: 4 lakh km rural roads; 40,000 km highways.
- Science, Technology & Space
- ISRO achievements: Chandrayaan-3 success (2023).
- Focus on renewables, space, defence tech strengthening India’s global standing.
- Cultural Renaissance
- Redevelopment of sacred sites: Kashi Vishwanath corridor, Ram Lalla Mandir, other pilgrimage hubs.
- A blend of modernisation and civilisational pride projected to the world.
Macro-Economic Performance
- India emerged as 4th largest economy, poised to become 3rd largest earlier than projected.
- GDP growth estimated at 6.3–6.8% (2025–26), the fastest among major economies.
Significance
- Welfare and empowerment of poor, women, farmers and youth integrated into growth strategy.
- Transparency & digital inclusion reshaped governance.
- Strategic autonomy in foreign policy enhanced India’s global stature.
- Cultural revival reinforced India’s civilisational identity in the modern era.
The governance model since 2014 has transformed India into a decisive, development-driven and self-confident nation.
With its focus on economic strength, social inclusion, strategic assertiveness and cultural pride, India is laying the foundation for Viksit Bharat@2047.
The milestones achieved in the past decade represent not just policy outcomes but also the awakening of national aspirations as India enters the Amrit Kaal
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