Relevance for UPSC: GS Paper III (Indian Economy, Inclusive Growth, Reforms)
Source: Press Information Bureau; Union Budget & Government reform briefs (2025)

Context

The 2025 Economic Reforms mark a clear shift from rule-heavy regulation to outcome-based, citizen-centric governance. The reforms focus on consumption revival, labour security, rural resilience, MSME growth and export competitiveness, aligned with the long-term vision of Viksit Bharat @2047.

Key Pillars of the 2025 Reforms

1. Taxation: Simplicity and Predictability

  • Income tax exemption up to ₹12 lakh (₹12.75 lakh for salaried taxpayers) under the new regime boosts disposable income and demand.
  • New Income Tax Act, 2025 replaces the 1961 law:
    • Simple language, unified tax year, faceless and digital processes.
  • Impact: Lower litigation, higher compliance, stronger taxpayer trust.

2. GST 2.0: Ease for Citizens and MSMEs

  • Move towards a simplified two-slab structure (5% and 18%).
  • GST base expanded to 1.5 crore+ taxpayers; collections crossed ₹22 lakh crore in FY25.
  • Faster refunds and easier compliance for small businesses.

3. Labour Reforms: Universal Social Security

  • Four Labour Codes subsume 29 laws.
  • Coverage extended to gig, platform and migrant workers.
  • Nearly one crore gig workers brought under social security.
  • Impact: Formalisation with flexibility.

4. Rural Employment: Productivity Focus

  • Viksit Bharat Rozgar & Ajeevika Mission (Gramin), 2025 replaces wage-only approach.
  • 125 days of assured work, timely payments.
  • Emphasis on durable assets, water security and climate resilience.
  1. MSMEs and Exports
  • Expanded MSME definition; credit guarantees up to ₹10 crore.
  • Export Promotion Mission (₹25,060 crore) supports finance, compliance and market access.
  • Focus on district-led and labour-intensive exports.

Overall Significance

  • Represents second-generation reforms focused on delivery.
  • Simultaneously strengthens consumption, employment and exports.
  • Builds a predictable, digital and inclusive economic ecosystem.

One-line Wrap: The 2025 economic reforms aim to convert growth into broad-based prosperity through simplicity, security and scale.

UPSC Value Box

Why important:

  • Addresses job creation, formalisation and growth slowdown together.

Analytical Angle:

  • Shift from deregulation-centric reforms to outcome-driven governance.

Way Forward:

  • Effective implementation, cooperative federalism and capacity building at local levels.

Key Takeaways

  • Reforms simplify taxation, strengthen labour security and boost rural productivity.
  • MSMEs and exports are placed at the centre of growth strategy.
  • Emphasis is on trust, delivery and inclusion.

Q. “Evaluate the 2025 economic reforms as an example of outcome-based governance. How do they contribute to inclusive and sustainable growth?”

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