Why 2025 was the Year of Big Bang Reforms

Even as the Centre prodded states to take forward next-generation reforms, it took a series of policy measures in the course of 2025 that aimed to improve the ease of doing business and ease of living for citizens. 

From tax cuts to financial sector reforms and most recently implementing the Labour Codes, the focus in 2025 was on deregulation, decriminalisation, boosting consumption and improving the investment climate of the country.

The measures came at a time when the economy was facing heavy reciprocal tariffs from the US, which threatened to disrupt Indian exports, and the objective over the months was to ensure that business sentiments remained robust within the domestic economy.

“The real test of reform is whether it reduces stress for people 2025 marked a clear shift in governance, with reforms focused on outcomes, not complexity. Simpler tax laws, faster dispute resolution, modern labour codes, and decriminalised compliance reduced friction for citizens and businesses alike. The emphasis was on trust, predictability, and long-term growth, showing how well-designed policy can quietly improve everyday life,” said a tweet by MyGovIndia.

The reform process started in February with the Union Budget 2025-26 that gave a massive income tax relief to individual taxpayers with income up to ₹12 lakh attracting zero tax. A new Income Tax Act was also brought about to replace the Income Tax Act, 1961 and simplify the language.

Over the next few months, the Centre took several other measures aimed to support businesses and consumers including ore support to micro, small and medium enterprises and reviewing several quality control orders that have been hurting small and medium businesses and exporters.

Commerce and Industry Minister Piyush Goyal in August also introduced the Jan Vishwas (Amendment of Provisions) Bill, 2025 that aims to amend 355 provisions, out of which 288 propose to decriminalise offences in order to promote ease of doing business and 67 aim to facilitate the ease of living.

The Centre also rationalised the goods and services tax ahead of the festive season, with two main tax slabs of 5% and 18% along with a 40% rate on luxury and sin goods. This resulted in record sales during Navratri and Diwali and its effects are still being felt on private consumption.

In the financial sector too, the Centre took measures to review the long delays in insolvency resolution and introduced the Insolvency and Bankruptcy Amendment Bill, 2025. It also increased the cap on foreign direct investment in insurance to 100% and has introduced the Securities Market Code Bill that aims to unify three security laws -- Securities and Exchange Board of India Act, 1992, Depositories Act, 1996 and Securities Contracts Act, 1956, into a single Code.

While it most recently undertook the implementation of the Labour Codes that rationalise and codify 29 Central labour laws, the ministry of labour and employment has also taken several measures to improve the working of the Employees’ Provident Fund Organisation and cut down on customer grievances.

The Centre has also taken reforms in education and the nuclear power sector recently including the SHANTI Bill that opens up select civilian nuclear projects to private and foreign players.

The new year 2026 is also likely to see a continued focus on reforms with several bills introduced in the Parliament’s Winter Session, likely to be taken forward in the coming months. The focus on deregulation is also likely to continue in the Union Budget with an overhaul of the customs laws expected. Significantly, the report of the Sixteenth Finance Commission will also be taken up by the Centre, which will take forward several of its policy prescriptions.