Recent reforms in India’s taxation system and infrastructure development are set to accelerate the country’s economic growth. The government aims to become a $5 trillion economy by 2027 and the third largest globally. Key tax changes and infrastructure projects, especially in Bihar, will boost consumption, trade, and connectivity, creating new growth opportunities.
Taxation Reforms to Boost Consumption
The 2025-26 budget raised the income tax rebate limit to Rs 12 lakh for the general public and Rs 12.75 lakh for salaried individuals. This increases disposable income for lower and middle-income groups, especially in states like Bihar. The GST Council recommended simplifying the GST rate structure from four tiers to two main rates – 18 per cent (Standard Rate) and 5 per cent (Merit Rate), with a special 40 per cent rate for select de-merit goods. This rationalisation reduces taxes on essential goods such as oil, soaps, food items, and medical devices, benefiting consumers and businesses.
Impact of GST Reforms in Bihar
Bihar recorded a 15 per cent year-on-year growth in GST revenue, reaching Rs 1717 crore in August 2025. Lower GST rates on everyday goods and services increase affordability and consumption. This supports small businesses, government employees, and the aspirational middle class. The reforms also facilitate trade by simplifying tax compliance and reducing costs for traders and manufacturers.
Major Infrastructure Projects in Bihar
Bihar is undergoing a transformation with major investments in expressways and highways. The Centre and Bihar government will jointly invest Rs 1,18,849 crore to develop five key expressways. These include the 407 km Raxaul-Haldia and 417 km Gorakhpur-Siliguri expressways. By 2027, these expressways will reduce travel time to Patna from anywhere in Bihar to under 3.5 hours. This will improve mobility for goods and people, stimulating economic activity across the state.
High-Speed Corridors and Road Upgrades
The government approved Rs 48,212 crore for 1030 km of high-speed corridors connecting major towns. Additional Rs 675 crore has been allocated for widening and strengthening state highways. Projects like Patna-Bettiah and Amas-Darbhanga-Jaynagar corridors will enhance connectivity. The Road Construction Department’s Rs 6,806 crore budget for FY26 will support these efforts. Improved roads will open markets for farmers, create jobs, and attract service sector investments.
Economic and Social Implications
Better connectivity and tax reforms will encourage industrial growth and job creation in Bihar. Easier market access will boost agriculture and small businesses. The infrastructure upgrades will support the entry of high-paying service sector jobs. Overall, these reforms will help Bihar integrate more closely with national and global markets, promoting inclusive growth and development.
Questions for UPSC:
- Discuss in the light of India’s taxation reforms how simplifying GST rates can impact economic growth and consumer behaviour.
- Critically examine the role of infrastructure development in regional economic transformation with reference to expressways and high-speed corridors.
- Explain the significance of fiscal federalism in India and how Centre-State collaboration can influence state-level development projects.
- With suitable examples, discuss the impact of improved connectivity on agricultural markets and rural employment generation in India.
