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August 09, 2025 India's Key Developments: Economic Resilience, Policy Shifts, and US Tariff Tensions

India has seen significant developments in governance, economy, and international relations over the past 24 hours. The government introduced key policy changes, including the withdrawal and re-introduction of the Income Tax Bill, and approved a major scheme for technical education. Economically, the RBI maintained its repo rate while Moody's warned about the impact of new US tariffs. Diplomatic tensions escalated with the US imposing increased tariffs on Indian imports, though India affirmed its stance on Russian oil purchases and strengthened ties with other nations. The judiciary also saw new appointments and notable Supreme Court decisions.

The past 24 hours have been marked by crucial updates across India’s political, economic, and social landscape, with several events holding particular relevance for competitive exam aspirants.

Government and Policy Initiatives

The Union Cabinet has been active, approving a ₹30,000 crore compensation package for public sector Oil Marketing Companies (OMCs) to offset losses from domestic LPG sales. This decision aims to support the financial health of these entities. In a significant legislative move, the central government withdrew the Income Tax Bill, 2025, with plans to reintroduce a revised version on August 11, 2025. This withdrawal is intended to incorporate feedback and recommendations, ensuring clarity and consistency in the updated legislation.

In the education sector, the Cabinet approved the Multidisciplinary Education and Research Improvement in Technical Education (MERITE) scheme. With a financial outlay of ₹4,200 crore, this initiative aims to enhance the quality, equity, and governance of 275 technical institutions across the country, aligning with the National Education Policy 2020. Furthermore, the Indian government is set to advance digital inclusivity by making its BharatGen AI fully supportive of all 22 Eighth Schedule languages by June 2026.

Economic and Financial Landscape

The Reserve Bank of India (RBI) maintained its repo rate at 5.50% in its August monetary policy review, indicating a cautious "wait-and-watch" approach amidst evolving global and domestic conditions, particularly concerning inflation and growth dynamics. The RBI also released the report of its Internal Working Group reviewing the Liquidity Management Framework, inviting public comments until August 29, 2025, to assess its effectiveness and propose improvements.

Despite global economic uncertainties, India’s economy continues to show resilience. The 16th Finance Commission Chairman, Arvind Panagariya, affirmed that the Indian economy is growing at over 7%. Life Insurance Corporation of India (LIC) reported a 5% increase in net profit for Q1 FY26, reaching ₹10,987 crore, alongside improved asset quality. India's electronics exports also saw a significant surge, growing over 47% in Q1 FY26, largely driven by mobile phone shipments. However, an RBI survey projects that India's merchandise imports will grow twice as fast as exports in FY26, potentially leading to a widening trade imbalance.

International Relations and Trade Tensions

A major point of contention emerged in India-US relations as US President Donald Trump imposed an additional 25% tariff on Indian imports, bringing the total tariff to 50%. This move, attributed to India's continued purchases of Russian oil, has escalated diplomatic tensions, with India asserting its determination to safeguard national interests. Moody's Ratings warned that these tariffs could significantly undermine India's manufacturing ambitions and slow economic growth. Despite these tensions, the Ministry of Defence denied reports of pausing defence purchases with the U.S., stating that procurement processes are proceeding as usual.

In other international engagements, India and Russia signed a protocol to deepen industrial and technological cooperation. India also elevated its bilateral ties with the Philippines to a Strategic Partnership, aiming for deeper cooperation across defence, economy, and Indo-Pacific security.

Judiciary and Appointments

The Supreme Court made a notable decision by rolling back its order barring Allahabad High Court Justice Prashant Kumar from hearing criminal cases, following intervention from the Chief Justice of India. The apex court also proposed an interim committee to manage the Bankey Bihari temple in Vrindavan and to modify its May 15 judgment concerning temple funds for corridor development. In a significant step to strengthen the judiciary, the President of India appointed new judges to the High Courts of Andhra Pradesh, Calcutta, Chhattisgarh, Delhi, and Karnataka. In the corporate sector, Yezdi Nagporewalla was re-appointed as the CEO of KPMG in India for a second term.

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