By Dipak Kurmi
The year 2025 stands out as a defining chapter in India’s economic, social and institutional evolution, marked by an unmistakable assertion of confidence and continuity under the leadership of Prime Minister Narendra Modi. At a time when the global economy faced turbulence and geopolitical uncertainties intensified, India chose not to retreat into caution but to accelerate reform. The government’s own year-end assessment described 2025 as a period when the country refused to slow down despite formidable challenges, ranging from exceptional tariffs imposed by the United States and tighter global visa regimes to persistent disruptions in international supply chains. Against this backdrop of external pressure and internal political contestation, the Indian state projected an image of decisiveness, clarity of purpose and long-term ambition anchored in the vision of Viksit Bharat.
The political environment within the country was far from tranquil. Both the monsoon and winter sessions of Parliament were marked by sharp disagreements, frequent disruptions and sustained Opposition protests. Yet, the Modi government demonstrated a clear separation between political contestation and administrative resolve. Governance, reform and national interest remained its stated priorities. This approach was reinforced by the Prime Minister’s address from the Red Fort on August 15, where he urged the nation to rewrite laws and regulations to meet the needs of twenty-first century India. That call was not rhetorical. Over the course of the year, the government undertook one of the most comprehensive waves of structural reforms since Independence, spanning labour laws, taxation, ease of doing business, trade, education, energy, nuclear power and rural employment. Collectively, these measures signalled an intent not merely to manage the present but to reshape India’s institutional architecture for the decades ahead.
Among the most consequential reforms of 2025 was the implementation of four new labour codes that replaced 29 outdated labour laws. These reforms addressed wages, industrial relations, social security and occupational safety, areas that had long suffered from fragmentation and regulatory complexity. The government highlighted that nearly 10 million gig workers were brought under annual social security coverage ranging between 5,000 and 10,000 rupees, acknowledging the realities of a changing labour market. Additionally, between 50 and 70 million contract workers were integrated into the Employees Provident Fund and Employees State Insurance systems, extending formal protections to a segment historically excluded from such benefits. The introduction of a national minimum wage promised tangible gains for an estimated 150 to 180 million low-paid workers by raising baseline earnings across sectors.
Beyond immediate welfare, the labour reforms were framed as catalysts for structural transformation. Government projections suggested that the formal workforce could expand by around 15 per cent, while the easing of rigidities might enable nearly 500 million working women to enter the labour force over time. For industry, compliance requirements per factory were expected to fall by 60 to 70 per cent, a shift designed to improve productivity, attract investment and enhance global competitiveness. These measures reflected a deliberate attempt to balance worker protection with economic dynamism, countering the long-standing critique that labour reform in India was either politically impossible or socially regressive.
Taxation reform formed another cornerstone of the 2025 agenda. The Goods and Services Tax was simplified into a two-slab structure of 5 per cent and 18 per cent, with higher rates retained only for sin goods. This rationalisation significantly eased compliance for households, MSMEs, farmers and labour-intensive sectors. The timing of the reform coincided with robust festive demand, as Diwali sales reached an estimated 6.05 trillion rupees, underscoring the consumption stimulus generated by lower indirect taxes. Government estimates indicated that consumers experienced an average GST burden reduction of 5 per cent, with some enjoying relief of up to 20 per cent, effectively placing around 1 lakh crore rupees back into the hands of the public. Reduced GST on life and health insurance alone resulted in annual savings of roughly 50,000 crore rupees through lower premiums.
Direct tax reform complemented these changes. The Union Budget delivered historic relief to the middle class by exempting individuals earning up to 12 lakh rupees annually from income tax. More significantly, the long-standing Income Tax Act of 1961 was replaced by the new Income Tax Act, 2025. This overhaul simplified exemptions, reduced litigation and brought long-awaited clarity to a system burdened by decades of complex drafting and interpretative ambiguity. The reform was positioned as an effort to shift the relationship between the taxpayer and the state from one of suspicion to one of trust.
Rural India received a substantial boost through the enactment of the Viksit Bharat GRAM G Act, 2025, which replaced the earlier rural employment framework. The new law increased guaranteed rural employment from 100 to 125 days per year, directly enhancing income security for millions of households. According to government estimates, this translated into an additional annual wage entitlement of about 6,675 rupees per household and injected nearly 60,000 crore rupees in wages every year across 86 million active job cards. Despite persistent Opposition protests and parliamentary disruptions, the government remained firm in advancing this legislation, framing it as central to rural livelihoods, social justice and economic resilience.
Industrial growth and investment were accelerated through a series of regulatory reforms aimed at reducing costs and delays. One of the most significant changes was the shift from a rigid 33 per cent green cover requirement to a pollution potential-based system for manufacturing units. This reform was expected to unlock approximately 1.2 lakh hectares of industrial land, reduce project costs by up to 20 per cent and attract investments ranging between 20 and 30 lakh crore rupees. Manufacturing units located within pre-cleared industrial parks were generally exempted from separate environmental approvals, cutting project delays by six to eighteen months. The addition of 32 industries to the White Category further reduced compliance burdens for 3,000 to 5,000 units annually.
Ease of Doing Business reforms were reinforced through a comprehensive review of Quality Control Orders. Mandatory compliance was removed for 76 product categories, with over 200 more slated for deregulation. These changes were projected to boost exports, lower manufacturing costs in sectors such as footwear and automobiles and reduce prices for consumers. The government estimated that these measures could generate between 3 and 3.3 million direct jobs, along with a similar number of indirect employment opportunities. The definition of small companies was expanded to include firms with turnover up to 100 crore rupees, reducing compliance costs for around 10,000 companies and saving approximately 2 lakh rupees per firm annually. MSME investment and turnover limits were also raised from April 1, enabling enterprises to scale without forfeiting benefits.
In a landmark move to deepen financial inclusion and attract global capital, the government permitted up to 100 per cent Foreign Direct Investment in insurance companies. This reform was expected to bring 80 to 100 million additional people under insurance coverage over the next five years and attract between 8 and 12 billion US dollars in foreign investment, while easing long-term fiscal pressures. India’s global economic engagement was further strengthened through trade agreements with the United Kingdom and Oman, the finalisation of a free trade agreement with New Zealand, and the operationalisation of its pact with the European Free Trade Association, which carried a 100 billion US dollar investment commitment over 15 years. Negotiations with the European Union, United States, Mexico, Israel, Canada and the Gulf Cooperation Council underscored India’s growing stature in global trade.
Legal and institutional reforms extended into securities markets, education, maritime governance and energy. The introduction of the Securities Market Code Bill sought to unify securities laws under a single framework, potentially reducing compliance costs by 500 to 1,000 crore rupees annually while unlocking fintech-driven investment. Under the Jan Vishwas reforms, over 200 minor offences were decriminalised and 71 outdated laws repealed, saving MSMEs between 65,000 and 85,000 rupees annually. Five maritime laws modernised shipping regulations, while the Viksit Bharat Shiksha Adhishthan Bill replaced multiple education regulators with a single body aligned with the National Education Policy 2020. The SHANTI Bill opened select civilian nuclear projects to private and foreign participation, with estimated investments of 100 to 150 billion US dollars by 2047, strengthening energy security.
All these reforms unfolded alongside strong economic performance. India recorded 8 per cent GDP growth in the first half of FY 2025-26, surpassing expectations and reinforcing confidence in its long-term trajectory toward Viksit Bharat 2047. The year 2025 thus demonstrated that under Narendra Modi’s leadership, India chose decisiveness over drift and reform over inertia. In the face of challenges, it acted with conviction, laying the foundations of a self-reliant, resilient and developed nation for generations to come.
(the writer can be reached at dipakkurmiglpltd@gmail.com)
