Syllabus: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment
Background and Economic Context
- India demonstrated economic resilience despite global headwinds and proposed 50% United States tariffs.
- Government reforms treated as a continuous national mission, reinforcing policy stability and investor confidence.
- Budget 2026–27 expected to strengthen domestic growth levers through capital expenditure and social sector support.
- Fiscal strategy should maintain fiscal consolidation glide path while containing medium-term public debt risks.
Defence, Exports and Strategic Manufacturing
- Defence capital outlay share proposed to increase from 26.4% to 30% of total defence expenditure.
- DRDO allocation recommended to rise by at least ₹10,000 crore for indigenous research expansion.
- Defence industrial corridors in Uttar Pradesh and Tamil Nadu improved defence production and indigenisation.
- Proposal for an eastern India defence industrial corridor to broaden regional industrial participation.
- Private sector contributed nearly 65% of defence exports in 2024–25, enhancing global market presence.
- Creation of a Defence Export Promotion Council suggested for inter-ministerial and international coordination.
- Defence exports target set at ₹50,000 crore by 2028–29, requiring institutional and financial facilitation.
Critical Minerals, Trade and Technology
- Rising demand for critical minerals driven by clean energy, semiconductors, and strategic technologies.
- National Critical Mineral Mission 2025 provides a strategic framework for securing essential raw materials.
- Proposal for a tailings recovery programme under NCMM with dedicated government financing.
- RoDTEP allocation of approximately ₹18,233 crore suggested to increase for export competitiveness.
- Clarification of Transfer Pricing guidelines needed for Global Capability Centres operating across sectors.
- Drone sector support proposed through expanded PLI outlay from ₹120 crore to ₹1,000 crore.
- Establishment of a ₹1,000 crore drone research and development fund to enhance global competitiveness.
Finance, Tax Administration and Customs Reforms
- Deepening corporate bond markets recommended to diversify finance beyond banking institutions.
- Insurance investment cap proposed to rise beyond 25% to widen long-term capital participation.
- Revision of Approved Investment rating threshold from AA to AA- to expand issuer inclusion.
- Provident funds allowed to invest in InvITs and REITs debentures for infrastructure financing.
- Around 40% vacancies at CIT(A) level identified as contributing to tax dispute pendency.
- Introduction of a dual-track dispute resolution system for simple and complex tax appeals.
- AEO certification eligibility suggested for new companies under accredited corporate groups.
- Continued reduction of customs tariff slabs to address inverted duties and improve manufacturing competitiveness.
Conclusion
- Budget 2026–27 should integrate fiscal prudence, structural reforms, and private investment mobilisation.
- Policy certainty and institutional strengthening can enhance global competitiveness and domestic growth sustainability.
