After tax relief in Budget, RBI cuts key rate, first in five years, to spur growth

As widely expected, the Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) unanimously decided to reduce the repo rate-the interest rate at which it lends to banks by 25 basis points (bps) to 6.25 per cent amid easing inflation and worries over slowing growth due to global uncertainties. The six member rate setting panel has projected the real gross domestic product (GDP) at 6.7 per cent and the retail inflation at 4.2 per cent for the fiscal 2025-26.

Govt ends cash awards for junior athletes to curb doping, age fraud

Junior Athletes winning international medals will no longer receive cash awards from the government. This major Sports Ministry policy shift, which came into effect, is aimed at tackling the twin menace of doping and age fraud as well as "keeping the hunger of youngsters alive". According to the old system, a gold medal at the Junior World Championship would fetch an athlete approximately Rs 13 lakh while a top of the podium finish at Asian or Commonwealth had a cash prize of Rs 5 lakh. One of the key factors behind this decision was to promote junior competitions as developmental events rather than making it all about a podium finish.The award policy for senior athletes, too, has seen a rewrite. The Ministry has removed Commonwealth Championship and South Asian Games from the events on the award list. Chess players winning International Master or Grandmaster norms, too, will no longer be incentivised.

National Commission for Safai Karamcharis gets 3-yr extension

The Union Cabinet on Friday approved the extension of the tenure of the National Commission for Safai Karamcharis (NCSK) for a period of three years up to March 2028. The financial implication for the extension would be around Rs 51 crore, a government note said. The present tenure of the Commission was to end on March 31 and it has been ex-tended up to March 31, 2028. The Commission was set up as a statutory body in 1994 under the National Commission for Safai Karamcharis Act, 1993. After the lapsing of the Act in 2024, the Commission is non-statutory, however, its scope expanded after the enactment of The Prohibition of Employment as Manual Scavengers and Their Rehabilitation Act, 2013.

Its key mandate includes, among other things, recommending to the Centre specific programmes of action towards elimination of inequities in status, facilities and opportunities for safai karamcharis, study and evaluate implementation of pro-grammes and schemes relating to social and economic rehabilitation of safai karamcharis, and scavengers in particular.

Study: Reform mining regulations to secure critical minerals stockpile

India Continues to face challenges in its efforts to develop and secure critical mineral resources and there's a need for reform in regulations on mining and reconsideration of the auction mechanism for allocating mines, according to a new study by a think-tank. The government recently approved an outlay of ₹34,300 crore over a 7-year period for National Critical Minerals Mission, which aims to secure critical mineral resources for the country by offering financial incentives for exploration and promising fast-tracked regulatory approvals. The study, by the Delhi-based Centre for Social and Economic Progress (CSEP), said India has a fair sprinkling of these critical mineral resources, but they have not yet been converted into economically viable mining reserves. It is important to allow global mining companies with proven track record to mine critical mineral resources in India, it suggested. As of now, India is 100% import dependent for five important green technology minerals-cobalt, lithium, nickel, the class of minerals called Rare Earth Elements, and silicon.

From gender equity, biofuels, big cats, India taking lead at global high table

At The World Economic Forum in Davos recently, former Union Minister Smriti Irani spoke about the business imperative of gender parity. At various meetings and seminars, she contended that gender equity is an economic necessity, capable of unlocking trillions in global GDP. Smriti Irani is the Chairperson of the Alliance for Global Good Gender Equity and Equality launched in Davos last year. Irani discussed gender-responsive trade agreements with Singapore President Tharman Shanmugaratnam. At a meeting with philanthropist and Microsoft co-founder Bill Gates, the two explored collaborations on dismantling barriers in healthcare, digital skilling, and leadership. The IBCA was launched by Modi on April 9, 2023, during an event to commemorate 50 years of Project Tiger. Headquartered in India, its aim is conservation of seven big cats-tiger, lion, leopard, snow leopard, cheetah, jaguar and puma-with membership of all UN countries/the range countries harbouring the said species and non-range countries where historically these species are not found but interested to support big cat conservation.

SC to AG: After withholding assent, can TN Gov refer Bills to President?

The Supreme Court asked the Attorney General if it was open to a Governor to reserve Bills sent by the Assembly for the President's consideration after assent to the Bills has been withheld. A bench of Justices JB Pardiwala and R Mahadevan was hearing petitions filed by Tamil Nadu government challenging Governor R N Ravi's decision to refer some Bill regarding the management of the universities in the state for consideration to the President. Under Article 200, a Governor has three options when Bills are sent to him for assent. That is, either to give assent, withhold assent or refer the Bills to the President for consideration. The AG said it would depend on the fact situation, to which the bench said it was not referring to any fact situation, but whether it is permissible in law. The top law officer answered in the affirmative, and said Article 200 will, in such a case, receive a very flexible construction.

FOR GROWTH'S SAKE

The RBI's monetary policy committee cut interest rates by 25 basis points, joining the list of central banks across the world who have moved to ease rates. The benchmark repo rate stands at 6.25 per cent. The decision of the committee - this was the first time the MPC had met under the new RBI governor, Sanjay Malhotra - was unanimous. Alongside, the committee voted to continue with the neutral policy stance. The momentum in the economy dipped sharply in the second quarter, with GDP growth coming in at 5.4 per cent. The first advance estimates have pegged growth at 6.4 per cent for the full year. However, the pick-up in the second half of the year does not seem to be robust. The RBI has noted "early corporate results for Q3 indicate a mild recovery in the manufacturing sector." Greater clarity will emerge in the coming weeks and months. The central bank now expects the economy to grow at 6.7 per cent in 2025-26-this is at the higher end of the Economic Survey's projections, which had pegged growth to range between 6.3 and 6.8 per cent.

A shallow cut 

The Monetary Policy committee of the RBI has embarked on a rate-cutting cycle in its February 2025 review. The growth-inflation trends and outlook mix had provided a window to cut rates. The committee presciently used this opportunity to do the same even as the global arena is fraught with uncertainty, which has manifested most visibly in the depreciation in the rupee versus the US dollar. However, while India's rate cut cycle has kicked off, it is highly likely to be shallow. The global environment is mired with inflation risks, one of which stems from tariff-related actions by the US and countermeasures by other countries. The yo-yo on tariff measures has already enhanced financial market volatility and impacted the rupee, which has depreciated over the last few months, even though it has outperformed other emerging market currencies. This raises concerns on account of pass-through to inflation and adverse growth outcomes, which have also been acknowledged by the MPC.

JOURNEY'S END

The deportation of illegal migrants from the US, including from India, is not new. Data shows that hundreds of people have been sent back to India for being in the US illegally every year. It is this context that External Affairs Minister S Jaishankar sought to lay out in Parliament on Thursday. His task, however, was an unenviable one. In the current political moment, in both India and the US, foreign policy is coming under new pressures and is being asked to submit to the tests of a performative patriotism. The images of 104 Indians being flown back on a US military aircraft, restrained and shackled, are disturbing. But they must be seen in context.

The H-1B Paradox

As India's Growth flounders, the lack of a coherent national development strategy is increasingly evident, with our global aspirations seemingly relying more on our size than achievements. This is especially clear in the H-1B visa discourse. The Indian government frames H-1B preservation as national interest. The H-1B debate in the US is tied to broader immigration issues and coloured by economic and racial anxieties. Addressing these concerns is primarily about domestic US politics. For India, the focus should be on why a country producing top talent cannot provide enough opportunities at home, leading to 75 per cent of H-1B holders being Indian. The true cost of this talent exodus extends beyond brain drain. It perpetuates an outward focus that weakens the urgency for domestic reform, allowing the state to neglect its responsibility to create equitable opportunities and an environment conducive to growth and innovation. The question is no longer whether Indians can succeed globally- they clearly can - but why India struggles to replicate this success domestically and equitably.

Al race: What India should do

The US committed billions to semiconductor investments with the Stargate initiative, laying the groundwork for its technological future. The aim was to create 1,00,000 jobs and secure pole position for the US in Al. In another part of the world, an open-source Al model emerged in DeepSeek, shaking the foundations of proprietary systems with its unmatched cost-efficiency and performance. DeepSeek developed an open-source product in less than two years with 200 employees and less than $10 million in capital. In comparison, OpenAl boasted 4,500 employees and had $6.6 billion in funding. India must take decisive steps to build and fortify the hardware backbone powering Al systems, ensuring that they deliver unmatched efficiency, reliability, and scalability. Owning our AI hardware capabilities is a necessity for securing independence in an increasingly tech-driven world. Investments in AI hardware will create jobs and attract significant capital, while also sparking a ripple effect of innovation across industries. 

Push for spending and investment: Why RBI has cut the repo rate

The Reserve Bank of India's (RBI) six-member Monetary Policy Committee (MPC) reduced the repo rate - the rate at which RBI lends to other banks - by 25 basis points (bps), bringing it down from 6.50 per cent to 6.25 per cent. This was the RBI's first repo rate cut in nearly five years. The decision will lead to a fall in interest rates, and equated monthly instalments (EMIS) on home and personal loans. The RBI expects that a lower repo rate will help stimulate economic activity by making borrowing cheaper for individuals and businesses, thereby encouraging spending and investment. The central bank hopes that this will ultimately increase job creation and employment. All external benchmark lending rates (EBLR) - lending rates set by banks based on external benchmarks such as the repo rate -will come down by 25 bps, giving relief to borrowers as their EMIs will fall as well. Lenders may also reduce interest rates on loans that are linked to the marginal cost of fund-based lending rate (MCLR, or the minimum lending rate below which a bank is not allowed to lend).

DUNKI

Opposition leaders in Parliament protested the manner in which undocumented Indian immigrants were deported from the United States. External Affairs Minister S Jaishankar addressed the issue in the Rajya Sabha, saying. "We are engaging the US Government to ensure that the returning deportees are not mistreated in any manner during the flight. At the same time, the House will appreciate that our focus should be to crack down strongly on the illegal migration industry..." The first step in the most popular dunki route from India is to reach South America. Countries such as Ecuador, Bolivia, and Guyana have visas on arrival for Indian citizens. A migrant's route also depends on the links that his "agent" has with human trafficking networks, but the process can be long. Agents charge be-tween Rs 30-40 lakh to Rs 1 crore per person and usually take the sum before the migrants reach the US. 

Budget, beyond the tax break

The Union Budget for 2025-26 has provided a massive Rs 1 lakh crore (1 trillion) relief to income-tax payers with the hope that the money left in their pockets will boost consumption demand and push the GDP growth rate above 6%. Governments can influence overall GDP growth by their taxation and expenditure policies, together known as fiscal policy. The government did both these things in the Budget. And yet, an inspection of the Budget numbers suggests that the huge tax break notwithstanding, overall impact on growth - also called the fiscal impulse of the Union Budget - may be negative or, at best, neutral. Analysis by the independent research agency HSBC suggests a likely negative fiscal impulse of the Budget - this remains true even after the improved quality of the central government's expenditure is factored in. Another research agency, Nomura, said that "In the near term, we see the budget as largely neutral for growth". It also said that "our estimates suggest a minimal fiscal im-pulse to growth".

What issues will the SC consider in the TN govt-Governor dispute case?

The Supreme Court continued to hear petitions filed by the Tamil Nadu government raising questions on the scope of the Governor's powers in the legislative process. The state argued that the pro-longed delay in acting upon Bills passed by the state legislature would result in a situation where the "system of democracy will fail in this country." The hearing essentially involves debating the contours of Article 200 of the Constitution, which requires the Governor to declare "that he assents to the Bill or that he withholds assent therefrom or that he reserves the Bill for the consideration of the President". Broadly, the Governor is bound to act on the aid and advice of a state's Council of Ministers. However, there are a few exceptions to this. For instance, in recommending the imposition of the President's rule under Article 356 of the Constitution, and in granting assent to Bills under Article 200.

RBI's committee reviewing external capital framework

Reserve Bank of India (RBI) Governor Sanjay Malhotra said the central bank is currently reviewing the Economic Capital Framework (ECF), which is used to determine risk provisioning and surplus distribution by the central bank. An expert committee led by Bimal Jalan, former RBI Governor, was set up in November 2018, to review the ECL framework of the RBI. In 2019, the RBI had adopted the recommendations of the expert committee on ECF. The committee had suggested that the RBI's contingency risk buffer (CRB) should be maintained in a range of 5.5 per cent to 6.5 per cent of the central bank's balance sheet. For the accounting year 2023-24, the RBI board had approved a record surplus transfer, or dividend, of Rs 2.11 lakh crore to the Central Government.

New income-tax bill gets Cabinet nod; to be tabled in Parliament next week

The Union Cabinet cleared the new income-tax bill that is proposed to replace the existing six-decade old Income-tax Act. The new income-tax bill is aimed to make the language and implementation of the income tax legislation simpler for taxpayers. Finance Secretary Tuhin Kanta Pandey had said that the new income-tax bill will not have long sentences, provisos and explanations and will mark a different way of engagement with citizens, with no aim to put any new tax burden. While presenting the Union Budget for 2025-26, Union Finance Minister Nirmala Sitharaman had stated that a new income tax legislation will be introduced by the government next week in the ongoing Budget session of the Parliament.