Key Government Initiatives in January 2025

Prime Minister Narendra Modi has announced and launched several transformative initiatives, demonstrating a vision for a progressive and self-reliant India. These initiatives span across various sectors, setting a dynamic tone for the year 2025.

SVAMITVA Scheme

• Distribution of over 6.5 million property cards to property owners in 50,000 villages.
• Aim: To provide ownership rights and enhance rural infrastructure.

8th Pay Commission and Space Initiatives

• Approval for the establishment of the 8th Pay Commission.
• ISRO's success with the Space Docking Experiment (SpaDeX).
• Approval for a third launch pad at Sriharikota with an investment of Rs 3,984 crore.

Infrastructure and Welfare Programs

• Extension of a special package for Di-Ammonium Phosphate (DAP) to keep fertiliser prices affordable.
• Distribution of newly constructed flats under the In-Situ Slum Rehabilitation Project in Delhi.
• Foundation laying for educational projects worth over Rs 600 crore.

Rural Development and Economic Initiatives

• Grameen Bharat Mahotsav to promote GI-certified village products.
• Meeting with global tech leaders to foster indigenous innovation, including a $3 billion AI investment by Microsoft.
• Infrastructure advancements including the Namo Bharat Train Corridor and rail projects in several states.

Healthcare and Science Projects

• Launch of the Genome India Project to map genetic diversity.

Youth and Cultural Engagement

• Participation in the Viksit Bharat Young Leaders Dialogue.
• Addressed the Pravasi Bharatiya Divas convention.

Defence and Security Enhancements

• Inauguration of the Sonamarg Tunnel for improved connectivity and national security.
• Commissioning of advanced naval combatants to bolster India's maritime strength.

Prime Minister Modi emphasized the role of these initiatives in shaping a developed India and highlighted the importance of each citizen in building a prosperous future.

Macroeconomic Policymaking Challenges in India (2025)

Macroeconomic policymaking in India faces significant challenges due to external economic pressures and internal growth dynamics. The complex global and domestic economic landscape requires India to navigate carefully to sustain growth and stability.

External Economic Pressures

• American Exceptionalism:
  • Resilient growth in the US has tightened global financial conditions.
  • US Federal Reserve's reduced rate cuts expectations have led to increased bond yields and a strong dollar.
  • These changes put pressure on emerging-market currencies, including the rupee.
• Trump 2.0 Risks:
  • US tariffs increase global uncertainties, depressing capex and growth.
  • Potential redirection of Chinese excess capacity to countries like India.
  • Trade wars could result in weaker global growth but a stronger US economy.

Domestic Growth Dynamics

• Slowing Growth Momentum:
  • Urban consumption has diminished as pandemic savings exhaust and lending tightens.
  • Rural consumption is rising but at a gradual pace.
  • Private investment is cautious, awaiting better demand visibility.

Policy Response and Strategy

Monetary Policy

• Interest Rate Strategy:
  • Avoid using interest rates solely to defend the rupee.
  • Focus on domestic growth and inflation dynamics.
  • Use FX reserves to manage exchange rate adjustments.
• Inflation Management:
  • Food prices show relief, aiding inflation control.
  • Core inflation remains moderate, indicating economic slack.

Fiscal Policy

• Debt and Deficit Management:
  • Public debt/GDP is rising due to slow GDP growth.
  • Gradual fiscal consolidation is essential to avoid pro-cyclicality.

Opportunities and Reforms

Structural Reforms

• Labour-Intensive Growth:
  • Focus on accelerating growth through structural reforms.
  • Enhance the economy's external attractiveness amid global trade shifts.

Strategic Positioning

• US-China Trade War:
  • Position India as an attractive alternative for global firms.
  • Utilize the current government's political capital to push for reforms.

Overall, India must balance domestic policy adjustments with global economic dynamics, seizing the opportunity for reforms and growth amidst external challenges.