बजट 2026: भारत के सामने 3 बड़ी आर्थिक चिंताएँ

For Prelims, focus on these key facts: Nominal GDP growth impacts tax buoyancy, weak direct tax revenue growth is a challenge, and private investment remains sluggish despite government efforts. Understanding these factors is crucial for answering economy-related MCQs.

Nominal GDP growth refers to the GDP growth rate at current market prices, without adjusting for inflation. It's important because it directly impacts the government's tax revenue. Higher nominal GDP growth generally leads to higher tax collections, providing the government with more resources for its developmental programs and fiscal management.

Sluggish private investment means less money is being invested by businesses in new projects, expansion, and job creation. This can slow down economic growth, reduce overall demand, and limit the potential for increased productivity and innovation. The government's fiscal space is thus affected, limiting its ability to pursue developmental goals.

Weak tax revenue growth, particularly in direct taxes, poses a significant challenge. This means the government is collecting less revenue from sources like income tax and corporate tax than anticipated. This shortfall can limit the government's ability to fund essential public services, infrastructure projects, and social welfare programs.

The PLI scheme, launched in 2020, aims to attract private investment in key sectors by providing financial incentives based on increased production. If successful, the PLI scheme can boost manufacturing output, create jobs, and stimulate economic growth, thus addressing the challenge of sluggish private investment.

Pros: Higher nominal GDP growth can lead to increased tax revenues and greater fiscal space. Cons: Over-reliance on nominal GDP growth without addressing structural issues like income inequality and unemployment may not lead to sustainable and inclusive development. Also, high nominal GDP can be due to inflation, which hurts common citizens.

Reforms could include widening the tax base by bringing more people and businesses into the tax net, simplifying tax laws to improve compliance, and strengthening tax administration to reduce evasion. Improving economic growth and formalizing the economy are also crucial for sustainable tax revenue growth.

Higher nominal GDP growth and improved tax collections can enable the government to invest more in public services like healthcare, education, and infrastructure, benefiting common citizens. Increased private investment can lead to job creation and higher incomes. However, if growth is not inclusive, the benefits may not reach all sections of society.

The focus on nominal GDP growth gained prominence post-liberalization in the 1990s. Before that, economic planning focused more on physical targets. The shift towards market-oriented policies emphasized the importance of monetary measures like GDP as key economic indicators.

In recent years, India has witnessed fluctuations in nominal GDP growth due to factors like the COVID-19 pandemic and global economic slowdown. The government has implemented measures to boost tax collections and attract private investment through schemes like the PLI scheme.