Editorial

The International Monetary Fund’s latest revision of India’s GDP growth projection to 6.6 per cent for 2025–26 has been welcomed as a vote of confidence in the country’s economic resilience. At a time of global uncertainty, slowing major economies, and persistent geopolitical tensions, India continues to stand out as one of the fastest-growing large economies. Yet the IMF’s optimism is tempered by a clear warning: growth momentum could weaken sharply in FY27, reflecting emerging structural and global headwinds. This dual assessment deserves careful attention.

The upward revision for 2025–26 rests on solid fundamentals. Domestic consumption remains robust, public capital expenditure continues to support infrastructure creation, and India’s financial sector has largely stabilised after years of balance-sheet stress. Manufacturing and services have shown adaptability, while digitalisation and formalisation have improved productivity and tax compliance. Together, these factors reinforce India’s short-term growth outlook and justify the IMF’s revised estimate.

However, the IMF’s caution about a significant slowdown in FY27 highlights deeper concerns. One major factor is the global economic environment. Advanced economies are expected to grow slowly as high interest rates persist, dampening global demand. Any prolonged slowdown in the United States or Europe would affect India’s exports, services earnings, and capital flows. Additionally, volatility in commodity prices and energy markets could place renewed pressure on India’s external balance.

Equally important are domestic structural challenges. While public investment has carried growth in recent years, private sector capital expenditure has not yet risen to levels required for sustained high growth. Employment generation, particularly for the youth, remains a critical concern. Without faster job creation, consumption-led growth may lose momentum. The IMF’s warning suggests that current growth drivers may not be sufficient in the medium term unless accompanied by deeper reforms.

Fiscal constraints also loom large. As the government balances growth-supporting expenditure with fiscal consolidation, room for aggressive public spending will narrow. Any premature tightening could affect infrastructure momentum, while excessive borrowing risks macroeconomic instability. The challenge lies in managing this transition without stalling growth.

The IMF’s assessment, therefore, should not be read as contradictory, but as complementary. India’s economy is strong, but not immune. The message is clear: short-term confidence must be matched with long-term preparedness. Structural reforms in labour markets, education, skilling, and industrial competitiveness are essential to sustain growth beyond the current cycle.

India’s economic story remains one of promise. But promise alone is not policy. The IMF’s warning for FY27 should serve as a timely reminder that enduring growth requires not just momentum, but foresight and reform .

The Centre’s recent announcement of new environmental rules and penalties marks a timely, albeit overdue, step in India’s long battle against escalating pollution, particularly in the choking Delhi-NCR region. Notified by the Ministry of Environment, Forest and Climate Change, these measures primarily focus on two key aspects: guidelines for utilizing funds collected as penalties under various green laws, and expanded emission intensity targets for additional carbon-heavy sectors under the Greenhouse Gases Emission Intensity Target (Amendment) Rules.

The Environmental (Protection) Fund Rules, 2026, channel penalties—ranging from ₹10,000 to ₹15 lakh for violations of air, water, and broader environmental protection acts—into a dedicated fund. This money will support 11 specified activities, including pollution prevention, mitigation, remediation of contaminated sites, and research into clean technologies. By creating dedicated project management units at central and state levels, the government aims to ensure transparent and effective deployment of these resources, moving away from the earlier ambiguity where such funds often languished or were misused.

Simultaneously, the inclusion of four more sectors—petroleum refineries, petrochemicals, textiles, and secondary aluminium—into the emission reduction regime brings the total to eight high-emission industries. Mandatory reductions in greenhouse gas emission intensity (3-7% by 2026-27 from a 2023-24 baseline) will apply to over 200 units, with non-compliance attracting penalties equivalent to twice the average carbon credit trading price. This aligns with India’s commitments under the Carbon Credit Trading Scheme and signals a shift toward market-based incentives for cleaner production.

In the context of Delhi-NCR’s persistent crisis—where schools shift online, GRAP stages trigger vehicle bans, and AQI frequently dips into ‘severe’—these rules offer hope but face scrutiny. Critics argue that while stricter emission controls target industrial sources, they address only part of the problem. Vehicular emissions, stubble burning, construction dust, and biomass usage remain dominant winter contributors, often met with reactive GRAP measures rather than root-cause solutions. The fund’s emphasis on remediation is welcome, yet without aggressive enforcement, monitoring, and public participation, penalties risk becoming mere revenue tools rather than deterrents.

Ultimately, the success of these rules hinges on implementation. If the government translates funds into tangible actions—upgrading monitoring stations, subsidizing clean tech adoption, and coordinating across states—these steps could meaningfully curb pollution. However, half-hearted execution will only perpetuate the cycle of seasonal crises. Delhi-NCR residents deserve more than announcements; they need sustained, science-driven action to reclaim breathable air. The Centre must now prove its intent through results, not rhetoric.

• SAS Kirmani