Economy

Chief Economic Adviser V Anantha Nageswaran, speaking at the Bengal Chamber of Commerce and Industry in Kolkata on September 19, 2025, pointed out important choices India must make in shifting to cleaner energy. He stressed that while India aims for sustainability, it cannot let this slow down economic growth or harm finances, especially as the country works towards becoming a developed nation by 2047. This comes amid global talks on climate change and India's push for more renewable energy.

The Comptroller and Auditor General of India (CAG) has unveiled a pioneering decadal study on the finances of all 28 Indian states, spanning from 2013-14 to 2022-23. This report spotlights a dramatic threefold rise in combined public debt, climbing from Rs 17.57 lakh crore to Rs 59.60 lakh crore, amid warnings about states increasingly borrowing for everyday expenses rather than long-term investments, potentially jeopardizing economic stability.

The US Federal Reserve, the central bank of the United States, cut interest rates by 25 basis points on September 17, 2025, bringing the target range to 4-4.25 percent. This move comes at a time when both inflation and unemployment are going up together, making it hard for the Fed to meet its two main goals of keeping prices stable and ensuring as many people as possible have jobs. Fed Chair Jerome Powell shared his thoughts in a press meet, pointing out the tough choices ahead, especially with political pressure from US President Donald Trump. This situation is important for India because US policies affect global trade, oil prices, and the value of the Indian rupee.

The Indian government has set up a special committee to make Quality Control Orders (QCOs) simpler and less strict. This will help over 6 crore micro, small, and medium enterprises (MSMEs) import affordable raw materials without long delays or high costs. The move comes after MSMEs complained that current rules block cheap imports and raise their production expenses. The committee, led by former Cabinet Secretary Rajiv Gauba, will give monthly suggestions to cut red tape while keeping product safety intact.

On September 17, 2025, the European Union released its New Strategic EU-India Agenda, a detailed plan to strengthen ties in key areas like trade, technology, and defence. This comes as leaders from both sides push to wrap up a Free Trade Agreement by the end of 2025 and set up a formal security partnership. The move highlights India's growing role in global affairs and the need for stronger links to handle issues like supply chain risks and regional security, with Prime Minister Narendra Modi calling it a step toward mutual benefits.

The Reserve Bank of India (RBI) has been steadily reducing its investments in US Treasury securities as part of a broader strategy to diversify its foreign exchange reserves, with holdings dropping to $227.4 billion in June 2025 from $242 billion a year earlier. This move, which includes boosting gold reserves, comes amid escalating US-India trade tensions under President Donald Trump's administration, which has imposed 50% tariffs on Indian exports, potentially prompting further reductions in US debt holdings to mitigate risks.

Amid apprehensions that businesses might not fully pass on the benefits of recent GST rate reductions to consumers, the Union Finance Ministry has directed its field formations to compile detailed monthly price data on a range of common-use items before and after the new rates take effect on September 22, 2025. This move follows the GST Council's decision to simplify the tax structure into a two-slab system, aiming to ensure transparency and prevent profiteering as part of the broader GST 2.0 initiative.

European Union's top commissioners for trade and agriculture are arriving in Delhi this week with a 30-member negotiating team to accelerate discussions on the India-EU Free Trade Agreement. This visit follows a recent phone call between Prime Minister Narendra Modi and EU leaders Ursula von der Leyen and Antonio Costa, where they emphasized an early conclusion to the deal. The talks have gained momentum due to the ongoing US tariff war, prompting India to seek concessions similar to those the EU recently offered the US on climate-related trade measures.

The 56th GST Council meeting has introduced significant rate reductions on inputs in key sectors like textiles and fertilizers, easing the inverted duty structure where input taxes exceed output taxes. However, persistent wide gaps between these rates continue to raise concerns among industries, primarily due to delays in input tax credit refunds and resulting working capital blockages, prompting calls for faster processing mechanisms.

Prime Minister Narendra Modi has introduced sweeping GST reforms aimed at stimulating domestic consumption and economic resilience amid escalating global trade tensions and looming U.S. tariffs. The changes involve streamlining the tax structure, providing immediate relief to consumers and MSMEs, and potentially repositioning India’s growth trajectory.