For UPSC CSE aspirants, analyzing editorials from The Indian Express is essential to build a comprehensive understanding of current affairs, policy debates, and socio-economic challenges. Here’s a structured breakdown of the editorial themes covered on February 01, 2025, tailored for UPSC preparation:
1. Pratap Bhanu Mehta writes: India’s delusion of relevance
In his opinion piece “India’s Delusion of Relevance,” Pratap Bhanu Mehta argues that India’s self-perceived global importance is largely a myth bolstered by propaganda. He contends that despite impressive absolute numbers, India’s actual contributions to global trade, technology, and defence are modest, underscoring a need for a more realistic appraisal of its true international standing.
- Inflated Self-Perception vs. Actual Relevance:
- India’s perceived global importance is largely a product of nationalist propaganda and self-mythologizing rather than hard metrics.
- The focus on impressive absolute numbers (e.g., a trillion-dollar FDI, a five-trillion economy) masks India’s relatively modest share in critical global sectors.
- Economic and Trade Indicators:
- Despite being a large country, India’s share in global trade remains low: approximately 4.6% in services and less than 2% in merchandise.
- The country’s FDI share hovers around 2.5%, even as global trade dynamics evolve, questioning the narrative of India’s economic indispensability.
- Technological and Innovation Gap:
- India lags behind in key future technologies such as artificial intelligence (AI) and green energy.
- Efforts like DeepSeek to develop homegrown AI models have not positioned India at the frontier of global technological innovation.
- Defence and Soft Power Limitations:
- India’s defence budget remains under 2% of GDP, and its soft power exports (e.g., tourism, entertainment) are modest compared to global benchmarks.
- These factors undermine the argument that India is an emerging global power in a multipolar world.
- Political Importance vs. Actual Influence:
- While India is politically significant and maintains good diplomatic relations with diverse global players, this visibility does not translate into actual influence or indispensability.
- Historical comparisons suggest that India’s political clout has not grown as much as its propagandized image might suggest.
- Need for Realistic Self-Appraisal:
- Mehta warns that equating size or cumulative numbers with true global influence is misleading.
- Genuine power is measured by indispensability across multiple sectors—services, manufacturing, technology, defence, and innovation—a standard where India currently falls short.
2. Donald Trump, climate change: Global threats to India’s growth story
India’s economic trajectory faces multiple global and domestic challenges, including geopolitical risks, climate change, and structural economic hurdles. The Economic Survey highlights concerns about slower-than-expected GDP growth and calls for strategic policy interventions, particularly in infrastructure, energy, and investment. The upcoming budget must address these challenges while maintaining a balance between growth, fiscal discipline, and economic reforms.
Key Points:
1. GDP Growth Trends and Economic Survey Projections
- First advance GDP growth estimate for FY 2024-25 is 6.4%, slightly below the 6.5-7% projection.
- Nominal GDP growth at 9.7%, lower than the budgeted 10.5%.
- India expected to be the fastest-growing large economy despite moderation in growth.
2. Global Economic Risks and Geopolitical Challenges
- US economic growth stabilizing at 2% by 2025; China slowing; Europe below trend.
- Potential impact of Donald Trump’s tariff policies on India’s trade surplus with the US.
- Geopolitical uncertainties influencing economic stability and growth outlook.
3. Investment Trends and Economic Reforms
- Public and household investments driving recovery; private sector investment remains weak.
- Urgency for private sector to lead investment push as global competition increases.
- Call for further deregulation in labour laws, land acquisition, tax regulations, and dispute resolution.
4. Fiscal Policy and Budgetary Considerations
- Capital expenditure growth budgeted at 17.1% for FY 2024-25, down from 28.2% in 2023-24.
- Need for better project execution to avoid cost and time overruns.
- Fiscal deficit targets may need a staggered approach given economic uncertainties.
5. Inflation and Monetary Policy
- Retail inflation expected to average 4.4% in the next fiscal year.
- Food inflation remains high (8.4% in December 2024), delaying monetary policy rate cuts.
- Importance of climate-resilient agriculture and food processing to stabilize prices.
6. Energy Transition and Sustainability Challenges
- Balancing high growth, energy security, and clean energy transition remains critical.
- India dependent on imports for key solar energy components.
- Need for domestic production capacity in solar and clean energy technologies.
7. Ease of Doing Business and Structural Reforms
- Persistent regulatory hurdles in labour, land, and taxation.
- Prime Minister Gati Shakti model for logistics can be replicated for broader reforms.
- Predictable tariff policies needed to boost manufacturing and attract investments.
8. Fiscal Consolidation Strategy
- High nominal GDP growth previously aided fiscal consolidation, but current growth moderation poses challenges.
- India likely to meet fiscal targets this year due to lower-than-budgeted spending.
- Need for a gradual fiscal deficit reduction approach to maintain economic stability.
The Economic Survey emphasizes the importance of balancing growth with strategic policy moves, focusing on infrastructure, energy, and investment reforms. Addressing these challenges through well-calibrated policies will be key to sustaining India’s growth momentum.
3. Ahead of budget, why India’s middle class needs another 1991 moment
The upcoming Union Budget 2025 presents an opportunity to address the concerns of India’s middle class, particularly in taxation and economic policy. While employment growth has been significant, stagnant real wages and increasing tax burdens have led to financial strain. The article argues for a bold economic shift, similar to the 1991 reforms, advocating for tax cuts, lower import tariffs, and increased foreign direct investment (FDI) to boost real incomes and economic expansion.
Key Points:
- Employment Growth Trends:
- Job growth has accelerated since 2011, increasing by over 12 million per year.
- Non-agriculture paid jobs have grown at 8 million per year since 2011, and 16 million per year since 2019-20.
- The number of tax-paying salaried workers has increased from 9 million (2011) to 33 million (2022-23).
- Stagnation in Real Wages:
- Despite employment growth, real wages of salaried workers have remained stagnant since 2011.
- Casual workers’ real wages have grown at 2.2% annually, while salaried workers face higher tax burdens.
- Personal Income Tax (PIT) Growth:
- PIT collections surged from ₹1.7 trillion (2011) to ₹10.5 trillion (2022-23), projected to exceed ₹12 trillion (2024-25).
- The taxation system imposes an “inflation tax,” leading to higher tax liabilities despite stagnant real incomes.
- Inflation Tax and Middle-Class Financial Strain:
- Progressive tax structures result in higher nominal incomes but stagnant real purchasing power.
- A ₹15 lakh income in 2024-25 (equivalent to ₹7.5 lakh in 2011-12) faces triple the tax burden.
- Need for Tax Reforms:
- The article argues against incremental tax changes and calls for substantial tax cuts.
- A lower tax burden could enhance disposable income and economic consumption.
- Call for Economic Liberalization:
- Suggests a 1991-style economic shift by reducing import tariffs and facilitating FDI.
- Advocates against excessive government control (Deep State) and restrictive economic policies.
- Fiscal Deficit vs. Growth-Oriented Policies:
- Emphasizes that reducing the fiscal deficit should not come at the cost of economic growth.
- Unexpected, bold reforms are more effective than routine policy adjustments.
- Political and Economic Implications:
- Middle-class discontent over rising tax burdens may influence electoral outcomes.
- Strategic economic reforms can be both sound policy and a political advantage.
Conclusion:
The article highlights the urgency of reducing tax burdens and fostering economic liberalization to support India’s middle class. Instead of minor tax adjustments, a bold reform—similar to 1991—is needed to boost real incomes, investment, and economic growth. The upcoming Budget 2025 presents a crucial opportunity to implement such changes.
4. Behind NEP’s success story, the real heroes
Disclaimer:
This analysis is based on the editorial content published in Indian Express and is intended solely for informational and educational purposes. The views, opinions, and interpretations expressed herein are those of the author of original article. Readers are encouraged to refer to the original article for complete context and to exercise their own judgment while interpreting the analysis. The analysis does not constitute professional advice or endorsement of any political, economic, or social perspective.
Follow Fusion IAS