How India's economy defied odds in 2025 — but external shocks left a mark
GS3Economy · S&T · Environment · Security· Growth, inflation & macro indicators· Prelims + Mains·
Why in news
India achieved an 8.2% GDP growth rate in Q2 of FY2025 despite external shocks like currency volatility and intensified US tariffs.
Background
The Reserve Bank of India (RBI) identified a 'goldilocks' phase characterized by low inflation and robust growth. The government introduced GST 2.0 to simplify indirect taxes and provided income tax relief to middle-class earners.
Facts for Prelims
- FactIndia's GDP growth rate for the second quarter of the fiscal year 2025 was 8.2%
- Act / BillGST 2.0 was implemented to simplify the indirect tax structure
- Intl. orgIndia signed free trade agreements with New Zealand, Oman, and the UK
- FactThe Indian rupee faced pressure due to the strength of the US dollar
For Mains
Q. Analyze the factors contributing to India's resilient economic growth in 2025 despite intensifying global trade barriers and currency volatility.
Dimensions to cover in your answer
- Trade-policy friction: Impact of intensified US tariffs on Indian export competitiveness
- Fiscal-monetary synergy: Effectiveness of GST 2.0 and income tax relief in sustaining domestic demand
- External vulnerability: Managing rupee depreciation amidst dollar strength and global uncertainty
Keywords: Goldilocks economy · Fiscal consolidation · Trade diversification · Currency volatility · Indirect tax simplification
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