Economy & finance

Story hook

1 February 2025, 11:01 AM, Lok Sabha. Finance Minister Nirmala Sitharaman rises to present Union Budget 2025-26, her eighth consecutive budget — surpassing Morarji Desai's previous record of six. The screen behind her flashes the headline that becomes the budget's defining moment: "No income tax up to ₹12 lakh" for individuals opting into the new tax regime, with a 75,000-rupee standard deduction effectively pushing the threshold to ₹12.75 lakh. The middle class, paying 30% income tax just two years ago at this income, has its largest tax cut in two decades.

Two months earlier, on 6 December 2024, the Reserve Bank's Monetary Policy Committee had cut the Cash Reserve Ratio by 50 basis points — from 4.50% to 4.00% — releasing ₹1.16 lakh crore of liquidity into the banking system, even while holding the repo rate steady at 6.50%. By February 2025, the MPC delivered its first repo rate cut in nearly five years — 25 bps to 6.25% under new Governor Sanjay Malhotra (Shaktikanta Das having retired in December 2024).

Indian economic current affairs is the dance of three actors — the Government (budget, scheme outlays), the RBI (rates, liquidity), and the statistical agencies (NSO, MoSPI, CGA) — plus a constellation of regulators (SEBI, IRDAI, PFRDA) and recent shifts (UPI, GST). Tracking it well makes the Economy section of Prelims + GS-III a lay-up.

Why this matters for UPSC

Economy current affairs reliably yields 3-4 Prelims questions per cycle and is the single highest-weighted Mains GS-III area (at least 2 questions out of 8-10). Interview boards probe budget priorities, inflation outlook, RBI's stance, and India's external position. The exam tests data fluency — actual numbers (GDP growth rate, inflation, deficit) memorised + the policy direction (which sector got how much, which scheme launched).