India’s macro story is turning upbeat. On October 1, 2025, the Reserve Bank of India held the repo rate at 5.50 % and raised its FY26 growth forecast to 6.8 %, banking on domestic momentum as the economy grew 7.8 % in the first quarter. Fiscal policy is aligned with this plan.
The Union Budget 2025–26 lifted the income tax rebate so that no tax is payable on income up to Rs 12 lakh. Finance Minister Nirmala Sitharaman said the change will boost household spending and savings. A “next generation” GST overhaul soon followed, simplifying rates to 5 % and 18 % and cutting levies on everyday goods and mid-ticket purchases.
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Seen together, the central bank’s pause and these tax changes show policymake
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