National Health Account (NHA) estimates suggest a significant decline in India's Out-of-Pocket Expenditure (OOPE) from 64% in 2013-14 to 39% in 2021-22. While the government credits policy interventions for this trend, analysts argue the decline might be an artifact of data limitations in the NSS 75th round survey. Alternative data from the CMIE-CPHS suggests that OOPE as a share of household consumption is actually rising. The article calls for a more cautious interpretation of NHA data and the use of multiple survey bases to reflect the true financial burden on households facing skyrocketing medical prices.
- OOPE is the primary source of financing for healthcare in India, often leading to household poverty.
- NHA estimates are based on the NSS 75th round, which some experts find unrealistic compared to other surveys.
- Rising medical prices and hospital utilization rates suggest that healthcare is becoming more expensive, not less.
Prime Minister Narendra Modi laid the foundation stone for the PM Mega Integrated Textile Region and Apparel (PM MITRA) park in Dhar district, Madhya Pradesh. During the event, he urged citizens to embrace 'Swadeshi' by buying locally manufactured products to boost national development. He also launched the 'Swasth Nari Sashakt Parivar Abhiyaan' (SNSPA), a health initiative for women focusing on early disease detection and free check-ups. The PM MITRA scheme aims to strengthen India's textile sector through a '5F' vision: Farm to Fibre to Factory to Fashion to Foreign, enhancing both manufacturing and exports.
- The Dhar park is one of seven approved PM MITRA sites across India aimed at boosting the textile industry.
- The initiative follows a '5F' theme to integrate the entire textile value chain from farming to foreign exports.
- The SNSPA campaign provides free health screenings and medication for women until October 2.
India has introduced a revised Goods and Services Tax (GST) structure, effective September 22, 2025, aimed at reducing complexity and compliance costs. The new system eliminates the 12% and 28% slabs, retaining 0%, 5%, and 18%, while introducing a 40% demerit rate for luxury goods. While the rate reductions are expected to stimulate demand and benefit sectors like textiles and agriculture, they may lead to an immediate revenue loss of approximately ₹48,000 crore annually. Experts suggest that long-term gains will emerge through increased consumption and improved incremental capital output ratios.
- The revised GST structure simplifies the tax regime by discontinuing the 12% and 28% slabs to reduce the number of tax tiers.
- A new demerit rate of 40% has been introduced for specific luxury and sin goods, merging the previous compensation cess into the tax rate.
- The reform aims to eliminate the inverted duty structure and reduce the 'cascading effect' of taxes on inputs.
India has bagged an exploration contract from the International Seabed Authority (ISA) to search for polymetallic sulphur nodules in the Carlsberg Ridge of the northwest Indian Ocean. This is the first such global licence granted for this specific region. These nodules are rich in critical minerals like manganese, cobalt, nickel, and copper, essential for green energy technologies. While India has secured rights for the Carlsberg Ridge, its application for the Afanasy-Nikitin Sea (ANS) mount is pending due to overlapping claims by Sri Lanka regarding continental shelf boundaries under UNCLOS.
- The ISA granted India rights to explore polymetallic sulphur nodules in the 3,00,000-sq.km Carlsberg Ridge area.
- Polymetallic nodules contain valuable metals including copper, nickel, cobalt, and manganese.
- India's claim to the Afanasy-Nikitin Sea (ANS) is complicated by Sri Lanka's claim to an extended continental shelf.
To become a $30 trillion economy by 2047, India must address the low Female Labour Force Participation Rate (FLFPR), which stands at 41.7%, with only 18% in formal employment. The article highlights the Women’s Economic Empowerment (WEE) Index launched by Uttar Pradesh as a model for district-level tracking of gender parity across five pillars: education, health, livelihood, safety, and infrastructure. Effective gender budgeting requires moving beyond simple allocations to applying a gender lens to every rupee spent. Universal, gender-disaggregated data is essential for creating visible, measurable, and actionable policies across all levels of governance.
- Inclusive growth is impossible if half the population remains invisible in the data driving policy and investment.
- The WEE Index in Uttar Pradesh tracks women's participation across five key economic levers at the district level.
- Gender budgeting should not be confined to specific welfare schemes but applied across all departments like energy and infrastructure.
India's General Financial Rules (GFR) and the Government e-Marketplace (GeM) portal, while designed for transparency, often hinder R&D due to rigid procurement processes. Recent reforms in June 2025 aim to address this by allowing institutions to bypass GeM for specialized equipment and raising direct purchase limits. The article suggests further reforms, such as outcome-weighted tenders, 'sandbox' exemptions for premier institutes like TIFR or IITs, and AI-augmented sourcing. Emulating international models like the US SBIR or South Korea's 'pre-commercial procurement' could transform procurement from a cost-control mechanism into a catalyst for innovation.
- Rigid procurement rules often prioritize cost-efficiency over the specific needs of high-tech research and development.
- Recent reforms allow institutions to bypass GeM for specialized equipment and increase direct purchase limits from ₹1 lakh to ₹2 lakh.
- The article advocates for 'mission-oriented procurement' where the state deliberately shapes technological markets.
Prime Minister Narendra Modi inaugurated India's first bamboo-based ethanol plant in Golaghat, Assam, a project valued at ₹5,000 crore. Described as the world's first green bamboo bioethanol facility, it aims to reduce India's reliance on fossil fuel imports and promote clean energy. The plant will source 5 lakh tonnes of green bamboo annually from Northeast states, providing a significant economic boost to local farmers and tribal communities. Additionally, a ₹7,230-crore polypropylene project was initiated at the Numaligarh Refinery. These projects are part of a broader strategy to achieve energy self-sufficiency and accelerate development in the Northeast region.
- The plant is a 'zero-waste' facility that produces ethanol, acetic acid, and other chemicals from green bamboo.
- It is a joint venture between Numaligarh Refinery Limited (NRL), Fortum, and Chempolis.
- The government has reclassified bamboo to allow for its commercial use, supporting the local agrarian economy.
The Promotion and Regulation of Online Gaming Bill 2025, passed during the monsoon session, has drawn criticism for its potential impact on India's digital economy. The Bill outlaws online real-money games, a move that critics argue violates the fundamental right to practice a profession under Article 19(1)(g). Furthermore, as 'betting and gambling' are State subjects under the Seventh Schedule, the Union's unilateral ban is seen as an encroachment on federalism. The industry was expected to generate ₹17,000 crore in GST revenue and employ 1.5 lakh people by 2025. Experts suggest that strict regulation and licensing would be more effective than total prohibition.
- The Bill bans real-money online gaming, potentially pushing the industry into the unregulated underground economy.
- Judicial precedents have consistently distinguished between 'games of skill' and 'games of chance,' protecting the former.
- The lack of consultation with State governments on a State subject raises significant constitutional propriety issues.
India's current macroeconomic landscape is marked by a favorable combination of high growth and low inflation. In August 2025, retail inflation was recorded at 2.1%, staying well within the Reserve Bank of India's (RBI) comfort band of 2%-6%. This stability is largely attributed to subdued food inflation, aided by the provision of free foodgrains under the National Food Security Act. The differential between GDP growth and inflation has widened to 5.5 percentage points, a significant improvement from the previous year. While global oil price fluctuations and new GST rates pose minor risks, the overall outlook remains benign.
- Retail inflation has dropped to 2.1%, providing the RBI with room for potential interest rate cuts.
- The National Food Security Act is a critical pillar in maintaining affordable food supplies and controlling inflation.
- The gap between growth and inflation has increased from 2.1 to 5.5 percentage points over the last year.
The Union government has reopened the application window for the Production-Linked Incentive (PLI) scheme for white goods, specifically focusing on air conditioners and LED lights. The window is open from September 15 to October 14, 2024. This move aims to boost the domestic manufacturing of components that are currently not produced in sufficient quantities in India. The decision follows growing industry confidence and market growth. Both new applicants and existing beneficiaries looking to increase their investments are eligible. To date, 83 applicants with a committed investment of ₹10,406 crore have been selected under the scheme, which has a total outlay of ₹6,238 crore.
- The scheme targets the manufacturing of components and sub-assemblies for ACs and LED lights to create a complete domestic value chain.
- The reopening of the application window is driven by high industry appetite and the success of previous rounds.
- The PLI scheme for white goods was originally approved in April 2021 with a seven-year implementation period.
An analysis of Reserve Bank of India (RBI) data for 2024-25 shows that approximately 56% of India's outward Foreign Direct Investment (FDI) is directed toward low-tax jurisdictions, commonly known as tax havens. Countries like Singapore, Mauritius, and the UAE alone account for over 40% of the total outward FDI. Experts suggest that while these destinations offer tax advantages, Indian firms also use them as strategic platforms for global expansion and to attract international investors. The trend has intensified in the current fiscal year, with low-tax jurisdictions accounting for 63% of total outward FDI in the first quarter.
- Singapore, Mauritius, and the UAE are the top destinations for Indian outward FDI.
- Out of ₹3,488.5 crore in outward FDI, about ₹1,946 crore went to low-tax jurisdictions.
- Firms use these jurisdictions for tax efficiency and as hubs for investing in third countries.
India's retail inflation rose to 2.1% in August 2025, breaking a nine-month downward trend. This figure is slightly higher than the 1.55% recorded in July 2025 but remains within the Reserve Bank of India's (RBI) comfort band of 2% to 6%. The data, released by the Ministry of Statistics and Programme Implementation (MoSPI), indicates that while food and beverage inflation remained relatively flat, categories like clothing, footwear, and fuel saw marginal increases. The historic low of 1.55% in July 2025 was the culmination of several months of falling prices, starting from November 2024.
- Retail inflation ended its nine-month decline by rising to 2.1% in August.
- The current inflation rate remains well within the RBI's target range of 2% to 6%.
- Food and beverage inflation remained stable, while fuel and light categories saw a faster increase to 2.9%.
Recent Goods and Services Tax (GST) reforms in India represent a significant shift toward achieving universal health coverage. The most notable change is the complete removal of GST on individual health and life insurance premiums, which previously stood at 18%. Additionally, the GST Council has lowered taxes on most medicines to 5% and reduced the tax on life-saving drugs to zero. Medical devices and diagnostic kits have also seen tax cuts to a uniform 5% slab. These measures are expected to lower procurement costs for hospitals and out-of-pocket expenses for patients, simplifying the overall healthcare supply chain.
- GST on individual life and health insurance premiums has been reduced from 18% to 0%.
- Taxes on essential medicines and life-saving drugs have been slashed to 5% and 0% respectively.
- Diagnostic equipment and medical devices are now taxed at a lower uniform rate of 5%.
The Indian government is leaning against creating a full legislative framework to regulate cryptocurrencies, fearing they could pose systemic risks to the financial sector. A government document highlights the Reserve Bank of India's (RBI) view that containing risks through regulation is difficult in practice. While countries like the U.S. have passed legislation for stablecoins, India maintains a cautious stance, preferring partial oversight. The government worries that formal regulation might grant 'legitimacy' to speculative assets, potentially leading to financial instability. Instead, the focus remains on monitoring peer-to-peer transfers and decentralized exchanges without actively promoting the sector.
- The RBI maintains that regulating cryptocurrencies is practically difficult and poses systemic risks to the mainstream financial system.
- India prefers partial oversight over a full regulatory framework to avoid legitimizing highly speculative digital assets.
- The U.S. has recently passed legislation permitting wider use of fiat-backed stablecoins to reduce volatility.
Nepal faces significant challenges characterized by frequent changes in government and a heavy reliance on remittances. Since 1990, no Prime Minister has completed a full term, leading to policy inconsistency and public anger, particularly among the 'Gen Z' population. Economically, Nepal is the world's fourth most remittance-dependent country, with personal remittances surging from 1% of GDP in 1990 to over 33% in 2024. This dependency is driven by high youth unemployment (22.7% for ages 15-24), forcing many to seek work abroad, primarily in India, Qatar, and Malaysia, which further impacts domestic labor participation.
- Nepal has seen 25 leadership changes since 1990, with an average Prime Ministerial tenure of just 13.7 months.
- Remittances account for over 33% of Nepal's GDP as of 2024, making it the fourth most dependent country globally.
- Youth unemployment in the 15-24 age bracket stands at a high of 22.7%, driving mass out-migration.
Indonesia has experienced violent protests following the death of a delivery worker during demonstrations against the government. Initially sparked by changes to housing allowances for legislators, the unrest evolved into a broader movement against economic inequality and austerity measures. President Prabowo Subianto's administration has implemented significant budget cuts to fund flagship programs like free school meals, leading to reduced spending on public works and education. Despite a declining Gini coefficient, Indonesia remains one of the most unequal countries globally, with the four wealthiest individuals holding more wealth than the bottom 100 million citizens.
- Protests in Indonesia were fueled by budget cuts to public services and education to fund a 'free meal' program.
- Indonesia ranks sixth globally in terms of wealth inequality according to Oxfam reports.
- The unrest has led to a cabinet reshuffle and concerns regarding the country's sovereign credit profile.
China continues to dominate the global rare earth market, producing over 60% of the world's supply and controlling 92% of global refining capacity. Rare earth elements (REEs) are a group of 17 metals essential for high-tech applications, including electric vehicles, wind turbines, and defense systems. Recently, China's Ministry of Industry and Information Technology introduced stricter controls to centralize oversight of extraction and refining. This move, along with export restrictions on key elements like neodymium and dysprosium, poses significant challenges for countries like India and the U.S., which are heavily dependent on Chinese imports for their green energy and technology sectors.
- China produces over 60% of global rare earths and holds nearly half of the world's reserves.
- Rare earth elements are categorized into Light Rare Earths (LREEs) and Heavy Rare Earths (HREEs).
- India is highly dependent on China, with over 75% of its rare earth imports coming from there since 2021.
India's proposed 'GST 2.0' aims to simplify tax rates into two main slabs (5% and 18%), but health experts warn this could negatively impact public health. Lowering taxes on ultra-processed foods like confectionery and sugar-sweetened beverages from 12-18% to 5% could increase consumption of unhealthy products. This contradicts India's strategy to combat Non-Communicable Diseases (NCDs). The article suggests that tax treatments should be linked to Front-of-Pack Labelling (FOPL). High-sugar or high-fat products should face higher taxes (18% or more), while healthier alternatives should benefit from lower rates to encourage better dietary choices and improve national health outcomes.
- The proposed GST 2.0 simplification might inadvertently reduce taxes on ultra-processed, 'unhealthy' foods.
- Lowering costs for high-sugar products could exacerbate the crisis of Non-Communicable Diseases (NCDs) in India.
- Experts advocate for a 'health tax' model where GST rates are contingent on the nutritional profile and FOPL status of products.
While India saw gross FDI inflows of $81 billion in FY 2024-25, the net retained capital has fallen due to a sharp rise in disinvestments and repatriations. Recent trends show a shift from long-term strategic investments to short-term profit-seeking. Manufacturing, once a primary sector for FDI, now receives only 12% of total inflows. Furthermore, FDI is increasingly dominated by financial centers like Singapore and Mauritius, rather than traditional industrial sources like the US or UK. The surge in outward FDI by Indian firms also raises concerns about the domestic investment climate and long-term economic resilience.
- Net FDI inflows have declined as gross inflows are offset by high levels of disinvestment, reaching $51.4 billion in FY 2024-25.
- FDI in the manufacturing sector has dropped significantly, now accounting for only 12% of the total investment share.
- A large portion of FDI is driven by tax-efficient routes through Singapore and Mauritius rather than direct industrial investment.
Finance Minister Nirmala Sitharaman expressed confidence that recent GST rationalization, including a move towards a two-tier tax structure (5% and 18%) and a 40% slab, will bolster GDP growth by stimulating consumption. Despite an estimated revenue shortfall of ₹48,000 crore, the government expects revenue buoyancy to bridge this gap within the current fiscal year. The reforms aim to simplify the tax regime, making it a 'people's reform' that touches all citizens. Additionally, the exemption of GST on health and life insurance premiums is highlighted as a significant move to support the financial security of India's youthful population.
- The GST Council approved a two-tier structure of 5% and 18%, along with a 40% peak slab for specific items.
- The government estimates the fiscal deficit for 2025-26 at 4.4% of the GDP, or approximately ₹15.69 lakh crore.
- GST 2.0 aims to reduce the tax burden on essentials and exempt critical services like insurance to increase household purchasing power.
The GST Council is considering a new paradigm of indirect tax regimes involving fewer rates and rationalized structures. A Group of Ministers (GoM) was constituted to look into these changes, aiming to simplify the existing multiple-rate structure (0%, 5%, 12%, 18%, 28%). Key proposals include reducing GST on health and life insurance, cancer drugs, and certain consumer goods to boost demand. While some sectors like healthcare and renewable energy welcome these moves, others like the textile and insurance industries have expressed concerns regarding input tax credits and increased costs. The removal of the compensation cess is also a major point of discussion.
- The rationalization process aims to reduce the complexity of the current GST structure and nudge economic growth.
- Proposed cuts include reducing GST on cancer drugs and potentially exempting certain insurance premiums.
- The compensation cess, currently levied on luxury and 'sin' goods, is slated to expire or be restructured.
Activists have raised concerns over the declining Central budget allocation for the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS). They argue that reduced funding is leading to a shortage of available work, effectively pushing the scheme back to its pre-2006 status. This trend particularly affects rural women, who constitute over 50% of the MGNREGS workforce. In the current financial year, women completed 56% of the total person-days. The scheme has historically been a tool for gender pay parity in rural areas, where women previously earned significantly less than men for similar work, making its funding crucial for social equity.
- Women represent more than 50% of the workforce in MGNREGS projects across India.
- Reduced budget allocations are causing a 'starving' of the welfare program, leading to work unavailability.
- MGNREGS provided rural women with equal pay for the first time, bridging the gap in agricultural wages.
A youth-led initiative in Assam's Bodoland Territorial Region (BTR) has successfully secured Geographical Indication (GI) registration for 21 traditional items. These include local textiles like Dokhona, traditional alcoholic beverages like Jou Bidwi, and agricultural products. The initiative aims to protect indigenous heritage, prevent unauthorized imitation, and enhance the market value of local crafts. The BTR government has launched a special drive to secure GI tags for items from all 26 communities in the region. This movement is also being used to create 'GI villages' to support artisans with training, infrastructure, and direct market linkages.
- A total of 21 items from the BTR have received GI registration, including textiles, beverages, and musical instruments.
- GI tags provide legal protection against imitation and help in preserving the cultural identity of indigenous communities.
- The initiative fosters rural development by increasing the export potential and market value of traditional products.
External Affairs Minister S. Jaishankar will represent India at a virtual BRICS summit convened by Brazilian President Lula da Silva. The meeting aims to address the global trade impact of unilateral tariffs imposed by the U.S. on several nations, including BRICS members. While India and Brazil face high tariffs (up to 50%), China and South Africa face 30%. The summit seeks to form a 'common plan' to counter these economic measures and strengthen multilateralism. This comes as India prepares to take over the Chair of the BRICS grouping and host the next summit.
- The summit is a response to U.S. imposed tariffs ranging from 10% to 50% on various BRICS nations.
- BRICS has expanded to include new members like Egypt, Ethiopia, Iran, Saudi Arabia, and the UAE.
- The meeting focuses on countering unilateral economic measures and promoting a multilateral trade order.