Combating ‘Digital Arrest’ Scams – Kill Switch and Fraud Insurance as India’s New Digital Safety Nets

India’s digital payments revolution is at a crossroads. What was once a celebrated global success story, enabling financial inclusion and ease of living, is now under siege. The alarming rise of “digital arrest” scams—a cruel blend of psychological terror and cyber-theft—has exposed a critical vulnerability in our ecosystem. With estimated losses nearing ₹3,000 crore and the Supreme Court taking note, it is clear that traditional, reactive measures have failed. The time has come for a systemic, consumer-centric overhaul.

The proposed solutions from the high-level Inter-Departmental Committee—a transaction “kill switch” and a fraud insurance pool—are not just policy tools; they represent a necessary philosophical shift. For too long, digital fraud has been treated primarily as a law-and-order or customer negligence issue. The reality is starkly different. As the Reserve Bank of India (RBI) itself now recognises, it is a systemic and balance-sheet risk. When sophisticated crime syndicates can impersonate authorities, leverage leaked data, and manipulate citizens in real-time, the very integrity of the digital trust framework is compromised.

Why These Proposals Are a Game-Changer

First, the kill switch is an idea whose time has come. It empowers the victim at the most critical moment—when they are under duress but before their money is fully laundered through a maze of mule accounts. Critics will rightly point to risks of misuse or operational glitches. Yet, these are challenges of design, not of principle. With AI-driven triggers (like abnormal transaction velocity) and clear standard operating procedures, it can be a precise tool for harm reduction. Its success, however, hinges on universal interoperability across all banks and payment platforms—a task requiring decisive regulatory mandate.

Second, the fraud insurance mechanism addresses a fundamental market failure. Current cyber insurance products are ill-suited for the mass retail customer facing social engineering fraud. An insurance pool, backed by contributions from banks and insurers, spreads the risk across the system. It mirrors successful models like terrorism pools, protecting the ecosystem from “tail risk” events without making premiums prohibitive. More importantly, it institutionalises the principle that the system owes a duty of care to its users. Managed by IRDAI, this pool can provide a crucial safety net, restoring confidence.

The Road Ahead: Coordination is Key

The complexity of this crisis demands an unprecedented level of coordination. The good news is that the institutional framework—the IDC—brings together all key stakeholders: MHA, RBI, MeitY, DoT, and law enforcement like the I4C. This whole-of-government approach must now translate into a whole-of-society action plan.

1. Regulators Must Lead in Sync: RBI, IRDAI, and MeitY must harmonise regulations to create a seamless framework for the kill switch and insurance pool. Amendments to the IT Act and banking regulations may be needed to enable rapid response and liability protection.
2. Tech Platforms Must be Accountable Partners: The meeting with intermediaries like Google and WhatsApp is a start. They must be integral in implementing kill-switch APIs, sharing fraud intelligence, and running persistent in-app security alerts.
3. Awareness is Non-Negotiable: Insurance cannot become an excuse for complacency. A nationwide, grassroots campaign—in multiple languages and formats—demystifying “digital arrest” scams is essential. Vigilance remains the first line of defence.

Conclusion

India’s digital leap must not be undone by the predators it has inadvertently empowered. The proposed “kill switch” and fraud insurance are not silver bullets, but they are vital components of a proactive, resilient, and trustworthy digital finance architecture. They signal a move from asking “Whose fault is this?” to “How do we protect our citizens?”

Implementing this vision will require political will, regulatory agility, and private-sector cooperation. The alternative—allowing fear to erode the hard-won gains of digital India—is simply unthinkable. Let us secure the digital future, not with mere warnings, but with intelligent, empathetic, and robust systems of protection. The next phase of India’s digital story must be one of secured trust.

Startup India at 10 — From Disruption to Dominance

A decade ago, “startup” was still a niche term in India, often conflated with small businesses or tech outsourcing. Today, it signifies a national movement. As the Startup India initiative completes ten years, the numbers are staggering—over 200,000 recognised startups, 125 unicorns, and the world’s third-largest ecosystem. But beyond the statistics lies a more profound shift: India has rewired its socio-economic psyche from risk-aversion to risk-taking, from job-seeking to job-creating.

The true success of Startup India is not measured in valuations alone, but in its democratisation of entrepreneurship. Once confined to metropolitan elites with family capital, the startup wave now reaches small towns and rural hinterlands. Over 45% of startups have women directors, and Tier-2/3 cities are buzzing with ventures solving local problems with global scalability. This inclusivity fuels a virtuous cycle where India’s demographic dividend transforms into a demographic advantage.

The government’s role has evolved from regulator to enabler and co-investor. The ₹25,000 crore Fund of Funds for Startups, decriminalisation of minor business laws via the Jan Vishwas Act, and reforms in defence, space, and drone sectors show a sustained commitment to trust-based governance. The recent approval of Fund of Funds 2.0, focused on deep tech, signals a strategic pivot toward sectors where India seeks strategic autonomy—AI, quantum, and aerospace.

Prime Minister’s emphasis on indigenous AI is particularly timely. In an era where data is the new oil, India’s push for sovereign AI solutions, backed by the IndiaAI Mission’s 38,000+ GPUs, is a move to secure not just economic growth but digital sovereignty. This, coupled with manufacturing incentives, positions startups as critical players in building a resilient, innovation-led economy.

Yet, the road ahead demands sober reflection. The ecosystem still faces funding winters, talent shortages in deep tech, and regional imbalances. The next phase must prioritise sustainable scale over sheer volume, encourage export-oriented innovation, and strengthen R&D bridges between academia and industry. Cybersecurity and ethical AI governance will also be critical as technology penetrates every sector.

As India eyes Viksit Bharat 2047, startups are no longer just a segment of the economy—they are its dynamic core. They represent the convergence of youthful aspiration, digital infrastructure, and policy foresight. The challenge now is to convert startup success into broad-based industrial and technological leadership. If the first decade was about disruption, the next must be about dominance—where Indian startups solve global challenges, set standards in emerging tech, and anchor the country’s rise as a knowledge superpower.

The seeds sown in 2016 have sprouted into a forest. The task ahead is to ensure it thrives, diversifies, and endures.

The Section 17A Dilemma – Protecting Governance or Shielding Corruption.?

The recent split verdict by the Supreme Court on Section 17A of the Prevention of Corruption Act is more than a legal technicality. It is a profound reflection of India’s enduring struggle to balance two vital public goods: a fearless, decisive administration and an unflinching commitment to eradicate corruption. The two-judge bench’s divergent opinions lay bare a fundamental governance conundrum that the nation must resolve.

The Heart of the Conflict

At its core, the debate is about trust. Justice Nagarathna’s scathing critique stems from a deep-seated distrust of a system where the executive can gatekeep investigations into itself. Her view resonates with a public weary of high-profile corruption scandals and the perceived impunity of the powerful. By requiring prior sanction even for a preliminary enquiry, Section 17A effectively builds a legal fortress around decision-makers. In a country where investigative delays are often synonymous with denial of justice, this provision can indeed become a potent tool for the corrupt to evade scrutiny indefinitely.

Conversely, Justice Viswanathan’s validation of the provision, albeit with safeguards, springs from a distrust of unchecked prosecutorial power. The spectre of an instant FIR for every contentious decision is real. It can instil a debilitating “play-it-safe” culture among civil servants, where the safest course is to take no course at all. In an era demanding bold policy moves and rapid execution, such administrative paralysis is a luxury India cannot afford. The fear is not of honest error, but of malicious complaints weaponised to settle scores or derail legitimate governance.

Flawed Premises and Unequal Shields

Justice Nagarathna rightly questions the classification under Article 14. The law, in practice, creates a two-tiered accountability system: immediate vulnerability for the lower bureaucracy and insulated protection for senior decision-makers. This is not just legally suspect; it is democratically toxic. It reinforces the public perception that the law bends for the powerful, eroding the very legitimacy of the anti-corruption framework.

Furthermore, the government’s argument that the provision protects the “honest” officer is logically fragile. An honest officer, by definition, acts in public interest without malafide intent. Existing safeguards in the PC Act and judicial oversight already protect against frivolous prosecution. As Justice Nagarathna pointed out, an honest officer does not need this additional, blanket shield. Paradoxically, the shield becomes most valuable for those whose actions cannot withstand the light of a preliminary enquiry.

The Viswanathan Compromise: A Viable Path?

Justice Viswanathan’s proposed solution—filtering sanction requests through the independent mechanism of the Lokpal or Lokayukta—is the most constructive takeaway from this deadlock. It attempts to salvage the provision’s intent while mitigating its perils. An independent body, insulated from the executive hierarchy, can conduct the necessary preliminary scrutiny without being accused of conflict of interest. It can separate wheat from chaff—dismissing vexatious complaints while green-lighting credible allegations for full investigation.

However, this fix is not without its challenges. The infrastructure and effectiveness of Lokpal/Lokayukta institutions across states are uneven. Their own autonomy has often been questioned. Making them the sanctioning authority would require strengthening them immensely, both in resources and statutory authority.

The Larger Bench’s Task: Beyond Legalism

The matter now moves to a larger Bench, whose task transcends interpreting a statutory clause. It must address a foundational question: In India’s democratic ethos, which way should the needle swing when accountability and administrative efficacy appear in conflict?

The Court’s ultimate ruling will send a powerful signal. Striking down Section 17A entirely would be a bold reaffirmation of the principle that no one is above the law, and that the fight against corruption cannot be hamstrung by procedural hurdles. It would place immense faith in the maturity and integrity of investigative agencies.

Upholding the provision, especially with the independent filter, would be an acknowledgment of the complex realities of governance. It would be a statement that protecting the decision-making space of the executive is a legitimate state interest, provided it is done through a transparent and impartial process.

The Way Forward: A Legislative Nudge

Regardless of the Supreme Court’s final verdict, Parliament should not remain a passive spectator. This legal impasse is an opportunity for legislative reform. A refined Section 17A could incorporate:

· A time-bound mandate: The sanctioning authority (preferably independent) must decide within 30 or 60 days.
· A reasoned order: Denial of sanction must be a reasoned, written order subject to judicial review.
· Inclusion for lower officials: If the protection is sound, its logic should extend rationally to all public servants facing action for official duties, not just senior policymakers.

Conclusion

The split verdict is a healthy democratic moment. It forces a national conversation we often shy away from: how much insulation does power need to function effectively, and at what cost to public accountability? The ideal outcome is not a total victory for either side of the bench, but a nuanced framework that distrusts absolute power—whether it resides in the investigating agency or the executive corridor. The goal must be a system that neither paralyzes the honest nor provides sanctuary to the corrupt. Finding that equilibrium is the true test for the larger Bench, and for India’s commitment to a clean and capable state.

Unilateralism Unleashed: The Erosion of International Law and the Imperative for Strategic Autonomy

The recent unilateral military action against Venezuela by the United States is not an isolated event. It is the latest symptom of a profound and dangerous malaise afflicting the global order: the steady erosion of the United Nations Charter and the rules-based system it enshrined to prevent the scourge of war. This action, undertaken without Security Council mandate or a credible case of self-defence, is a blatant violation of international law. More critically, it signifies the accelerating decay of multilateral restraint and the return of might-makes-right politics, with dire implications for global stability and nations like India.

The UN Charter’s foundational principle is crystal clear in Article 2(4): the prohibition of the threat or use of force. The only universally accepted exceptions are collective security authorised by the Security Council or the inherent right of self-defence against an armed attack. The Venezuelan intervention fits neither category. By invoking broad justifications like “narco-terrorism”—a claim seemingly disproportionate to the available evidence—the intervening power is stretching legal doctrine to breaking point. This follows a familiar pattern where pre-emptive or preventive doctrines, first tested in West Asia, are now being deployed elsewhere, undermining the Charter’s very purpose.

This legal corrosion is enabled by a geopolitical vacuum. The Cold War’s bipolar structure, for all its perils, created a mutual constraint. The collapse of the Soviet Union ushered in a unipolar moment where one power could act with minimal external restraint. The result has been a cycle of interventions that have often destabilised regions, sown long-term chaos, and tragically, diminished the moral authority and credibility of the interveners themselves. The balance-of-power mechanism, an ancient check on hegemony, is in abeyance.

The implications are stark. First, it weakens the UN system to the point of irrelevance, encouraging other powerful states to follow suit and settle disputes by force. Second, it normalises the violation of sovereignty, a principle newly independent nations like India have always held sacrosanct. Third, it creates a world where law is subordinate to power, making small and middle powers profoundly vulnerable.

In this fraying order, only credible countervailing power can restore some semblance of restraint. While Russia asserts itself tactically, China is increasingly seen as the systemic counterweight. However, a stable, rules-based multipolarity is not a given; it could easily devolve into a volatile, contested sphere of influence politics. The world risks lurching from a flawed unipolarity to a chaotic, adversarial multipolarity without the robust multilateral glue to hold it together.

For India, this is a clarion call. India’s foreign policy has been anchored in strict adherence to the UN Charter, peaceful dispute resolution, and strategic autonomy. Today, that autonomy is not a choice but a necessity for survival. The weakening of the very international law that protects sovereign states means India can no longer rely solely on diplomatic norms for its security.

The path forward is demanding but clear. India must redouble its investment in comprehensive national power. This means:

1. Accelerating Defence Indigenisation: Building a robust, self-reliant defence-industrial base is no longer just about import substitution; it is the core of strategic autonomy in a unilateral world.
2. Practising Nimble Multilateralism: While the UN is weakened, India must actively shape and leverage other plurilateral formats (Quad, BRICS, SCO) and build issue-based coalitions to protect its interests.
3. Strengthening Economic Resilience: Diversifying trade, securing supply chains, and enhancing technological sovereignty are crucial to insulating the economy from global shocks and coercion.
4. Reaffirming Diplomatic Principles: Even as it builds muscle, India must continue to be a consistent voice for Charter values, reform of multilateral institutions, and peaceful dialogue. This moral capital is a key component of its soft power.

The attack on Venezuela’s sovereignty is an attack on the principle that protects all sovereignties. The unraveling of the post-war legal order is a crisis that demands a response. For the world, it requires a renewed commitment to diplomacy and rebuilding credible multilateral checks. For India, it underscores an urgent truth: in a world where power increasingly trumps law, the ultimate guarantee of security and sovereignty lies in one’s own strength and strategic wisdom. The era of relying on the benevolence of a rules-based order is over; the era of ensuring it through determined self-reliance has begun.

India’s Age of Consent Conundrum – Protection or Overreach.?

The Supreme Court’s recent observations on the misuse of the POCSO Act in cases of consensual adolescent relationships have thrust a long-simmering legal and social dilemma into the spotlight. At its heart lies a critical question: does India’s rigid age of consent, fixed at 18, protect children or unjustly criminalise young love? The answer is not simple, but the growing judicial unease signals an urgent need for a more nuanced law that balances protection with pragmatism.

The POCSO Act was a landmark, born from the imperative to shield children from sexual abuse and ensure stringent punishment for predators. By setting the age of consent at 18, it created a bright, unambiguous line. However, this very clarity has become its flaw in application. As data and court dockets reveal, a significant portion of cases involving adolescents—particularly in the 16–18 age bracket—stem from romantic, consensual relationships. The law, blind to context, treats a 17-year-old in a voluntary relationship with a peer the same way it treats a predator exploiting a child. The result is a tragic irony: a law designed to protect is often weaponised—by parents or others disapproving of a relationship—to punish, dragging young boys (and sometimes girls) into the criminal justice system and traumatising all involved.

This is not a minor anomaly. Studies analysing POCSO cases consistently show that in many instances, the so-called “victim” explicitly refuses to testify against the accused, asserting the relationship was consensual. The NFHS data indicating that a substantial proportion of women experience sexual debut before 18 further underscores the gap between legal fiction and lived reality. The law, in its current form, refuses to acknowledge the agency and evolving sexuality of older adolescents, pushing their normal explorations into the shadows of criminality.

Opponents of reform rightly warn of grave dangers. Lowering the age of consent indiscriminately could open floodgates for exploiters, especially given the horrifying prevalence of abuse within homes and by known persons. A blanket reduction could undermine the fight against child marriage and trafficking. Their caution is valid. However, the solution is not an all-or-nothing choice between 18 and a lower number. The way forward lies in introducing nuanced exceptions, not a blanket lowering.

India can learn from global best practices. Many countries with an age of consent of 16 have “Romeo-and-Juliet” or close-in-age exemptions. These provisions decriminalise consensual sex where the age difference between partners is, for instance, three or four years. This would protect a 17-year-old in a relationship with a 20-year-old from being labelled a statutory rape victim, while still fiercely penalising a 30-year-old abuser. It acknowledges that a power imbalance and coercion are less likely in peer relationships.

The judiciary has been valiantly attempting to correct this overreach case by case, using its inherent powers to quash proceedings or grant bail. But judges cannot rewrite the law. Parliament must act. A carefully drafted amendment to POCSO or the BNS, introducing a close-in-age exception for adolescents above 16, coupled with robust judicial oversight to weed out cases of actual coercion or abuse, is the need of the hour.

Alongside legal reform, we must invest in comprehensive sexuality education and accessible adolescent-friendly health services. This empowers young people to make informed choices. Police and child welfare committees need sensitisation to distinguish between cases of abuse and those of consensual relationships, preventing the mechanical application of a draconian law.

The Supreme Court has flagged the issue. It is now for the legislature to show courage and sophistication. The goal must be to protect children from genuine harm without turning our teenagers into criminals. India’s youth deserve a law that protects them from predators, not one that punishes them for their own humanity.

The Unfilled Vacuum: Trump’s Exit and China’s Blueprint

President Donald Trump’s sweeping order to withdraw the United States from 66 international organizations is not merely a policy shift; it is a deliberate dismantling of the architecture of American-led global governance. Framed as a corrective to “redundant” and unfair burdens, this move is, in reality, a profound strategic abdication. The immediate consequences—diminished funding and crippled leadership in agencies from global health to climate action—are severe. But the enduring legacy will be the systematic transfer of institutional influence to a rising power whose interests are fundamentally at odds with liberal democratic values: the People’s Republic of China.

The Trump administration’s rationale hinges on a transactional, zero-sum view of international cooperation. The arguments of disproportionate cost and lack of control, while politically potent, ignore the intangible returns on investment. Funding the WHO or UNESCO was never a charity; it was a strategic purchase of influence, a means to set agendas, promote shared values, and build a world order conducive to American security and prosperity. By fixating on the price tag and alleging “pro-China bias,” the U.S. is forfeiting the very leverage it seeks. Exiting the room does not diminish China’s voice; it amplifies it.

The retreat from the climate regime epitomizes this self-inflicted wound. Abandoning the UN Framework Convention on Climate Change is an unprecedented act of isolation. It cedes the commanding heights of the defining global issue of this century—the green transition—to others. As the world negotiates the rules for carbon markets, green technology, and climate finance, the U.S. will be a mere spectator. China, already the world’s leading renewable energy manufacturer and investor, is poised to write those rules, locking in advantages for decades and burnishing its image as a responsible stakeholder, even as it remains the world’s largest emitter.

This is not to say China will simply replicate the U.S. model. Its approach to multilateralism is inherently different: more transactional, less value-driven, and focused on insulating regimes from scrutiny on human rights or sovereignty. Institutions weakened by a U.S. funding exodus will become more susceptible to this model. We can expect a shift in priorities—away from reproductive health (with the exit from UNFPA) and gender equality (UN Women), and toward infrastructure and development projects that align with China’s Belt and Road Initiative and its authoritarian governance playbook.

Trump’s team believes raw power—economic and military—can compensate for this institutional retreat. Their faith in tariffs and gunboat diplomacy as primary tools is misguided. While military strikes can eliminate immediate threats, they cannot build the enduring coalitions needed to manage transnational challenges like pandemics, cyber-security, or nuclear proliferation. Similarly, tariffs disrupt trade but do not create the standards and norms that govern the digital economy or global supply chains. By leaving the tables where these rules are made, the U.S. will increasingly find itself forced to react to frameworks designed in Beijing or Brussels.

The administration’s intention to remain in technical bodies like the International Telecommunication Union reveals a tactical, not strategic, understanding of the contest. It plans to fight a rearguard action on specific standards while surrendering the broader battlefield of global governance. This piecemeal approach lacks the coherence needed to counter China’s patient, long-term strategy of embedding itself across the entire multilateral system.

In the short term, allies like India and France, which lead initiatives like the International Solar Alliance, will feel the strain, scrambling to fill funding gaps. In the long term, everyone loses from a fragmented, leaderless global system—except for a revisionist power eager to reshape it. The post-1945 order, for all its flaws, provided a measure of stability and common purpose. Trump’s memo signals its accelerated unravelling.

The great paradox of “America First” is that by refusing to lead the world, America ensures a world it will find increasingly hostile to its interests and ideals. The vacuum created is not empty; it is being filled. And the new architect is waiting in the wings, cheque book and blueprint in hand.

Rebalancing the Federal Bargain: Why India’s Fiscal Architecture Needs a Mid-Course Correction

India’s fiscal federalism is at a crossroads. The system, designed to bind a vast and unequal nation, has long operated on a simple principle: the strong shall support the weak. This redistributive compact, orchestrated through Finance Commissions and central transfers, has been instrumental in funding basic services in poorer states and maintaining national unity. Yet, today, this very system is straining under the weight of its own success, generating a chorus of dissent from the states that power the national economy. The impending report of the Sixteenth Finance Commission is not just a technical exercise; it is an opportunity to renew a fraying federal bargain.

At the heart of the discontent lies a stark mismatch between contribution and compensation. States like Maharashtra, Karnataka, and Tamil Nadu—engines of growth and innovation—contribute a lion’s share of central taxes but receive back only a fraction through devolution. Maharashtra alone accounts for over 40% of certain tax collections but gets less than 7% back. This is not an accounting error; it is a deliberate design feature prioritizing equity. But when perceived inequity for the contributor threatens the legitimacy of the system, the design needs re-examination.

The grievance is compounded by two structural shifts. First, the Goods and Services Tax (GST), while a landmark reform, neutered states’ independent revenue-raising powers. Second, the Union government has increasingly used cesses and surcharges—revenues kept outside the divisible pool—starving the very fund meant for sharing. Simultaneously, Centrally Sponsored Schemes (CSS) have proliferated, tying state expenditures to New Delhi’s priorities and eroding their fiscal autonomy. The result is a double bind for prosperous states: their revenue streams are centralized, and their spending flexibility is curtailed.

The core of the technical dispute revolves around a simple question: how do we measure a state’s true economic contribution? Currently, the place where a company files its taxes—often a metropolitan headquarters—gets credited for the revenue, even if the economic value was created in factories, farms, and markets across the country. This makes “tax collection” a misleading metric. A car plant in Tamil Nadu, serving a national market, might see its profits recorded in Mumbai. This distorts the political economy of contributions.

A fairer proxy exists: the Gross State Domestic Product (GSDP). GSDP measures the economic activity generated within a state’s boundaries, aligning more closely with where consumption and production actually occur, especially for a destination-based tax like GST. Shifting the weight of the devolution formula more meaningfully towards GSDP would be a powerful corrective. It would formally acknowledge the economic heft of contributing states without abandoning the needy. Our analysis shows such a move would be moderate in its redistribution effect but profound in restoring a sense of fairness.

Critics will argue, rightly, that India’s diversity demands a strong redistributive framework. Abandoning equity is neither desirable nor politically feasible. But a system seen as illegitimate by its primary contributors is unsustainable. The goal must be balanced fairness—fairness to the recipient seeking parity and fairness to the contributor seeking recognition.

Therefore, the Sixteenth Finance Commission must look beyond tinkering with weightage. It should initiate a mid-course correction based on three pillars:

1. Introduce GSDP as a Primary Indicator: Increase its weight in the devolution formula to better reflect where economic value is generated.

2. Impose Discipline on Non-Divisible Revenues: Recommend a constitutional cap on cesses and surcharges to protect the integrity of the divisible pool.

3. Empower States with Flexibility: Convert many CSS into block grants, allowing states to innovate according to local needs while pursuing broadly agreed national goals.

India’s cooperative federalism has been a bedrock of its stability. But cooperation cannot be a one-way street. It requires a bargain that all sides perceive as just. By recalibrating the system to better balance the principles of equity, efficiency, and legitimacy, we can strengthen the trust that holds the Union together and fuel the competitive spirit that drives it forward. The time for a smarter, fairer federal compact is now.

Stability Amid Uncertainty: India’s Financial System at a Critical Juncture

Amid global financial volatility, India’s economic fundamentals shine brightly. The RBI’s latest Financial Stability Report underscores robust domestic resilience against worldwide uncertainties.

At a time when the global economy is navigating a volatile mix of geopolitical tensions, trade fragmentation and asset market exuberance, the Reserve Bank of India’s Financial Stability Report (December 2025) offers a cautiously reassuring assessment of India’s financial system. While the global financial architecture appears resilient on the surface, the report warns that underlying vulnerabilities—ranging from elevated public debt to stretched asset valuations—could rapidly morph into systemic stress. Against this backdrop, India stands out as a relative island of stability, though not without its own set of challenges.

Globally, financial markets are being buoyed by optimism around artificial intelligence and abundant liquidity, even as uncertainty remains historically high. This disconnect between risk perceptions and market volatility is troubling. The surge in equity prices, growing leverage in hedge funds, expansion of opaque private credit markets and the rapid rise of stablecoins point to a fragile equilibrium. History suggests that such periods of calm often precede abrupt corrections, particularly when asset prices become detached from economic fundamentals.

India’s macroeconomic fundamentals, however, present a far more robust picture. Strong domestic demand, easing inflation and a sustained commitment to fiscal consolidation have reinforced economic resilience. Growth has surprised on the upside, and external vulnerability indicators—such as foreign exchange reserves, external debt ratios and current account dynamics—remain well within manageable limits. This reflects the success of prudent macroeconomic management and a gradual shift towards domestically driven growth.

The strength of India’s financial institutions is another reassuring takeaway. Banks have emerged from the post-pandemic period with healthier balance sheets, improved asset quality and strong capital buffers. Stress tests conducted by the RBI indicate that even under severe macroeconomic shocks, the banking system would remain above regulatory minimums. Non-banking financial companies, often viewed as a source of systemic risk in the past, have also demonstrated improved resilience, supported by better governance, stronger capital positions and closer regulatory oversight.

Yet, the report is far from complacent. Financial markets remain exposed to global spillovers. A sharp correction in US equities—particularly in AI-driven stocks—could transmit shocks across borders, affecting domestic equity markets, capital flows and financial conditions. Moreover, the increasing interconnectedness between banks and non-bank financial intermediaries heightens contagion risks, underscoring the need for vigilant supervision.

One of the most forward-looking aspects of the report is its focus on stablecoins and digital finance. While these innovations promise efficiency and inclusion, their rapid growth outside traditional regulatory perimeters poses new challenges for financial stability. The RBI’s emphasis on building regulatory guardrails—without stifling innovation—signals a mature approach to managing emerging risks.

Ultimately, the Financial Stability Report conveys a clear message: financial stability is not an end in itself, but a means to support sustainable growth, innovation and consumer protection. India’s financial system today is stronger and more resilient than in previous global stress episodes. However, in an increasingly interconnected and technology-driven world, resilience must be continuously earned. The real test will be whether policymakers can stay ahead of evolving risks while preserving the momentum of economic growth.

Social Media Policing in India and the Democratic Dilemma

India’s social media monitoring cells are expanding fast. But after the Puttaswamy judgment (right to privacy), state surveillance MUST be legal, necessary & proportional. Where’s the law..? Where’s the oversight..?

In the shadows of our hyper-connected lives, a silent institutional expansion is underway. Over the past five years, Indian states have quietly more than tripled their arsenal of a new policing tool: the dedicated social media monitoring cell. From 262 units in 2020 to 365 in 2024, this network is now embedded from Bihar to Manipur, scanning our digital footprints in the name of security. This is not merely an upgrade; it is a fundamental redefinition of the relationship between the state and the citizen in the digital republic.

On the surface, the rationale is unimpeachable. Social media has become a conduit for genuine harm—cyber fraud syndicates, virulent hate speech, riot coordination, and sophisticated disinformation campaigns. The police, often playing catch-up, argue that specialized cells are a necessary adaptation, a digital thanadar (station head) for the virtual mohalla (neighbourhood). The data supports their need: alongside these cells, dedicated cybercrime police stations have seen a similar surge. The state’s duty to protect life, property, and public order in this new arena is real and urgent.

However, this necessary function collides with a foundational principle: the Supreme Court’s landmark 2017 affirmation that privacy is a fundamental right. The Puttaswamy judgment was clear—any state intrusion must pass the tests of legality, necessity, and proportionality. Herein lies the first major fissure. The expansion of monitoring cells has been administrative and operational, not legislative and deliberative. It proliferates under the vague, sweeping ambit of colonial-era laws or poorly defined IT Act provisions, not a modern, rights-conscious statute designed for the surveillance age. Where is the parliamentary law that clearly defines the offences, protocols, and oversight mechanisms for this pervasive digital watch?

The state-wise distribution of these cells reveals a second troubling pattern: they bloom most profusely in regions of political contestation or social unrest. The staggering rise in Assam, West Bengal, Punjab, and Manipur is statistically undeniable. While security challenges in these states are real, the timing and scale invite scrutiny. Could these tools, ostensibly for fighting crime, be weaponized to monitor political dissent, activism, and lawful opposition? In Manipur, the expansion continued despite internet shutdowns, suggesting the architecture is being built not just for immediate crises but for permanent, pervasive scrutiny.

This leads to the core democratic dilemma: the chilling effect. When citizens know—or suspect—that their online expressions of grievance, parody, or protest are being logged and analysed by the state, a form of self-censorship sets in. The vibrant, chaotic, and essential digital public square, a space that has empowered marginalized voices and held power to account, risks becoming sterile and fearful. The preventive policing logic—”to stop trouble before it starts”—can easily morph into the pre-emptive silencing of dissent.

Furthermore, this technological leap forward exposes a stark institutional hypocrisy. These high-tech cells, drones, and cyber stations are being built atop a police force crippled by over 5.9 lakh vacancies. We are creating a system that is increasingly adept at watching but increasingly incapable of serving at the grassroots. It prioritizes monitoring the virtual crowd over having enough constables to walk a physical beat. This is not modernisation; it is a distorted, top-heavy securitisation of the state.

The Way Forward: Transparency, Law, and Oversight

To navigate this dilemma, a new set of initiatives is required.

1. A New Law First: India urgently needs a comprehensive Digital Rights and Surveillance Reform Act. This law must clearly define what constitutes a “threat” online, set stringent thresholds for initiating surveillance, and mandate judicial or strong independent authorisation. The technology has evolved; the law protecting us from its misuse has not.
2. Mandatory Transparency: Police departments must publish annual, anonymized transparency reports. How many surveillance requests were made? For what categories of crime? How many resulted in legal action versus being mere fishing expeditions? Sunshine is the best disinfectant.
3. Strengthen Oversight: Existing mechanisms like the Cyber Regulation Advisory Committee lack teeth and public trust. We need empowered, independent oversight bodies—with technical experts and civil society representation—to audit these monitoring cells and investigate complaints of misuse.
4. Balance the Modernisation: True police reform means filling the vacancies, improving investigation, and building community trust. A constable who understands local tensions can be more effective at preventing violence than a distant analyst misreading social media chatter. Technology should aid human policing, not replace its human, accountable core.

The expansion of social media monitoring is a fact. It will not be rolled back. The question now is whether it will operate as a precise scalpel in the hands of a accountable, rights-respecting democracy, or as a blunt instrument of control in the shadows. Without robust legal architecture, transparency, and a renewed commitment to balanced policing, we risk sleepwalking into a panopticon, trading our digital liberties for a fragile, monitored peace. The future of Indian democracy will be shaped, in part, by which path we choose today.

State Fiscal Trends in the Post-Pandemic Period

The recent breach of the hallowed 3% fiscal deficit norm by several Indian states has set off alarm bells among fiscal purists. The narrative often frames it as a simple trade-off: populist welfare schemes are cannibalizing the funds needed for growth-enhancing roads, bridges, and factories. However, a closer look at the fiscal data from the post-pandemic period (FY2021–FY2025) reveals a more complex and arguably more strategic picture. This isn’t a story of fiscal indiscipline; it’s a story of institutionally orchestrated flexibility that has allowed states to navigate an unprecedented crisis while investing in both their people and their physical capital.

The Myth of “Indiscipline”

The immediate assumption is that states have gone on a borrowing binge to fund freebies. The reality is that the elevated deficits were largely permitted, even encouraged, by the Union Government and the 15th Finance Commission. The 3% limit was not broken in a regulatory vacuum; it was expanded through sanctioned channels:

· Reforms-Linked Borrowing: States like Andhra Pradesh and Rajasthan accessed extra funds for undertaking tough power sector reforms. This is not rewarding profligacy; it’s incentivizing efficiency.
· Extraordinary Central Support: The massive ₹2.6 trillion GST compensation loan and the game-changing 50-year interest-free capex loans (₹3.7 trillion) were lifelines from the Centre. The capex loan surge, in particular, directly explains how states could simultaneously announce big welfare schemes and yet see their capital expenditure double.

The system consciously chose temporary flexibility over rigid adherence to a pre-pandemic norm. This was the correct call to prevent a sub-national fiscal collapse.

The Welfare vs. Growth False Dichotomy

The most compelling finding is that the feared “crowding out” of capital expenditure has not materialized at the aggregate level. State capex grew at a stellar 18.5% annually in this period. This shatters the simplistic binary that every rupee spent on a woman’s cash transfer is a rupee stolen from a water treatment plant.

The real trade-off has been subtler and potentially more concerning. To accommodate new welfare promises while keeping revenue deficits in check, states have likely compressed other revenue expenditures. The axe may have fallen on routine maintenance, allocations to older social schemes, or incremental budgets for health and education. This inter-sectoral compression is the hidden cost, not a collapse in infrastructure spending. It questions the quality and sustainability of social spending, not just its quantity.

The Looming Cliff Edge: What Happens After FY2026?

The current model is built on a transitory foundation. The special borrowing windows, the capex loan bonanza, and the 15th Finance Commission’s provisions have a sunset date. The central challenge for the 16th Finance Commission, which is now deliberating, is to manage this transition without triggering a fiscal cliff for states.

States have grown accustomed to a larger fiscal envelope. A sudden reversion to a rigid 3% ceiling, without addressing their structural revenue challenges or committed welfare expenditures, could force brutal cuts, derailing both growth and social stability.

The Way Forward: From Flexibility to Sustainable Frameworks

The 16th Finance Commission’s task is historic. It must move beyond managing a crisis to designing a resilient system.

1. Anchor Stability in Own Revenues: The Commission must prioritize recommendations that strengthen State GST collections, property taxes, and user charges. Dependence on borrowed resources for core welfare is unsustainable.
2. Make the Borrowing Framework Predictable: Clear, transparent, and rules-based criteria for additional borrowing (for reforms, disaster management, etc.) must be institutionalized, reducing ad hoc central discretion.
3. Formalize the Capex Push: The transformative impact of central capex loans is undeniable. The Commission should consider a permanent, formula-based mechanism for capital transfers to states, insulating long-term infrastructure planning from annual budgetary swings.
4. Incentivize Outcomes, Not Just Outlays: The success of reforms-linked borrowing is a template. Future flexibility could be tied to measurable outcomes in education, health, or financial inclusion, not just inputs.

Conclusion

The past five years have demonstrated that Indian fiscal federalism can be dynamic and responsive. States used sanctioned flexibility to support households and build assets. The breach of the 3% deficit was not a failure of rules but a proof that the rules had the necessary built-in elasticity for a crisis.

The task now is to learn from this experience. We must not retreat to rigid austerity. Instead, we must build a new, smarter framework that rewards responsible governance, strengthens own revenues, and provides predictable resources for states to meet their dual—and not contradictory—mandates: to care for their citizens today and build for their prosperity tomorrow. The 16th Finance Commission’s blueprint will decide whether this period was a masterclass in adaptive policy or a one-off escape that leaves states staring at a fiscal wall.

India’s Tobacco Tax Overhaul : A Healthy Step Forward, But Is It Enough?

India’s recent overhaul of the taxation regime for tobacco and related sin goods marks a significant and welcome shift in policy. Effective from February 1, the changes—enacted through the Central Excise (Amendment) Act, 2025—do more than just tweak numbers on a budget sheet. They signal a renewed, if still cautious, commitment to public health and fiscal prudence in one of the world’s largest tobacco-consuming nations. However, while the direction is commendable, the journey toward optimal tobacco control remains incomplete.

The Good: Aligning Tax with Health and Fiscal Sense

The government deserves credit for several thoughtful moves. First, by moving cigarettes and chewing tobacco to a 40% GST slab and shifting beedis to 18%, the structure now better reflects relative health risks. This is a rational, evidence-based approach. Beedis, while harmful, are often consumed by lower-income groups, and a gentler hike here avoids excessive regressivity.

Second, the new valuation mechanism—basing GST on the declared Retail Sale Price (RSP) for smokeless tobacco—is a masterstroke against evasion. This sector has long thrived on under-reporting, depriving the exchequer and undermining price-based deterrence. This move could plug a major leak.

Third, the transition from the temporary GST Compensation Cess to a new, purpose-specific cess under the Health Security-cum-National Security Act, 2025, is fiscally innovative. It creates a predictable, non-lapsable fund for long-term security preparedness. This cleverly ties revenue from a health-damaging product to national resilience, without raising broad-based taxes.

The Concerns: Affordability and the Bigger Picture

Despite these advances, critical gaps persist. The central goal of tobacco taxation, as per the WHO, is to reduce consumption by making products less affordable—meaning prices must rise faster than income growth. While the new slabs are higher, the question remains: Will the real price increase be sufficient to deter new, young users and encourage quitting?

Historically, inflation and income rises have eroded the impact of tobacco taxes in India. A one-time slab change must be part of a regular, automatic inflation-linked adjustment mechanism to ensure tobacco becomes less, not more, affordable over time. The policy is silent on this.

Furthermore, the public health rationale is undercut by the continued differential and often lower taxation on bidis compared to cigarettes. Bidis contribute massively to India’s tobacco-related disease burden. While their socio-economic consumer profile demands a nuanced approach, excessive protection contradicts the “sin goods” logic. A long-term roadmap for gradually increasing their tax burden is essential.

Finally, a tax overhaul is just one pillar of tobacco control. Enhanced enforcement against smuggling and illegal trade is critical, especially if price gaps widen. Revenue gains must be partly reinvested in stronger public awareness campaigns, cessation programs, and healthcare infrastructure to treat tobacco addiction. The new cess’s allocation for “health security” should explicitly fund these fronts.

Conclusion: A Strong Foundation, But Walls Must Rise

The February 1 reforms are a substantial step. They modernize a fragmented system, boost revenue predictability, and target evasion. The government has adeptly balanced health objectives with fiscal and security needs.

However, this should be the beginning of a more aggressive public health strategy, not its culmination. To truly curb India’s tobacco epidemic—which claims over a million lives annually—taxation must be dynamic and consistently outpacing purchasing power. It must be coupled with robust complementary measures.

The revised regime is a healthy dose of policy realism. Now, the dose needs to be strong enough, and sustained long enough, to cure the ailment.

The Bottom Line: India has moved its tobacco tax policy in the right direction, blending health, revenue, and security aims smartly. But without a commitment to regular real price increases and a holistic control strategy, the long-term health benefits may go up in smoke.

The Wealth Blueprint: How to Master Your Money for 2026 and Beyond

As we enter 2026, the global financial landscape is shifting. With the “easy money” era of the early 2020s behind us, wealth building now requires a more disciplined, tech-forward approach.

The 2026 Wealth Blueprint isn’t just about saving more—it’s about optimizing your capital against a backdrop of AI integration, evolving tax laws, and changing market volatility.

1. The “Must-Have” Safety Net

Before you download a trading app, you need two things that are often overlooked in India:

The 6-Month Emergency Fund: Don’t keep this in a zero-interest account. Split it between a High-Yield Savings Account and Liquid Funds (which offer 6-7% returns and 24-hour liquidity).

Term & Health Insurance: Do not rely on your employer’s health insurance. Get a personal cover of at least ₹10-15 Lakhs. For Life Insurance, stick to Term Insurance (pure protection) and avoid “Money-Back” or LIC Endowment plans which often offer low returns (5-6%).

2. Mastering the Tax Regimes

India now has two tax paths. Your investment strategy depends on which one you pick:

Old Regime: If you are here, maximize your Section 80C limit (₹1.5 Lakh). The best 80C instrument is ELSS (Equity Linked Savings Scheme) because it has the shortest lock-in (3 years) and the highest growth potential.

New Regime: If you’ve switched to the New Regime (now the default), you lose most deductions. Your focus should shift from “Tax Saving” to “Wealth Creation” using Diversified Mutual Funds and the NPS.

3. The 3-Bucket Investment Strategy

To beat Indian inflation (usually around 5-6%), your money needs to grow at 10%+.

Bucket A: The Growth Engine (Equity)

Index Funds: Start a SIP in a Nifty 50 Index Fund. It’s low-cost and tracks the top 50 companies in India.

Flexi-Cap Funds: For 2026, funds like Parag Parikh Flexi Cap are popular because they invest in both Indian and US tech stocks, giving you currency diversification.

Mid/Small Caps: If you are under 35, allocate 20% here for aggressive growth, but be prepared for “rollercoaster” volatility.

Bucket B: The Debt Shield (Fixed Income)

Public Provident Fund (PPF): The “Gold Standard” of Indian safety. It’s EEE (Exempt-Exempt-Exempt), meaning the investment, interest, and maturity are all tax-free.

NPS (National Pension System): Great for retirement. You get an additional ₹50,000 deduction (under 80CCD) and it allows for equity exposure.

Bucket C: The “Indian Hedge” (Gold)

Indians love gold, but physical gold (jewellery) has making charges and storage risks.

Sovereign Gold Bonds (SGBs): The smartest way to buy gold. You get the gold price appreciation plus a 2.5% annual interest from the government.

The 2026 “Pro” Tip: The Step-Up SIP

Don’t just keep your SIP amount flat. Every time you get a salary hike (say 10%), increase your SIP by 10%. This “Step-Up” can result in a corpus double the size of a normal SIP over 20 years.

Core Geopolitical Shifts in 2025

The year 2025 will be remembered as the moment the postwar world finally shattered. The institutions, alliances, and unwritten rules that governed international affairs for eight decades buckled under the weight of renewed great-power rivalry, regional wars, and the return of unabashed transactional diplomacy. In this age of fragmentation, one nation finds itself at the crucible of this new disorder.

U.S. Unilateralism & Alliance Stress: Trump’s second term acts as the primary disruptor, imposing high tariffs, claiming credit for conflict resolution (India-Pakistan), and forcing allies into difficult choices. The U.S.-India relationship suffers a strategic trust deficit despite continued trade talks.

Regional Conflicts Redefining Redlines: The brief India-Pakistan conflict establishes a new doctrine—treating terror attacks as acts of war and rejecting nuclear blackmail. Pakistan’s internal shift, with Army Chief Munir becoming Field Marshal, signals prolonged military dominance.

Neighborhood Volatility: Regime change in Nepal (youth-led protests) and ongoing turmoil in Bangladesh (interim government struggling) present India with both instability and opportunities to shape outcomes.

Strategic Autonomy in Action: As U.S. ties sour, India proactively re-engages with China (high-level meetings, eased restrictions) and Russia (hosting Putin), unsettling Western partners but asserting independent agency.

Global Conflict Zones: The Gaza war pauses via U.S. mediation, but West Asia remains tense. The Russia-Ukraine war grinds on, with Trump’s erratic diplomacy failing to bridge core disagreements. U.S.-Israel dominance over Iran is asserted through direct military strikes.

India’s Key Balancing Acts for 2026

· Managing the U.S.: The relationship hangs on a trade deal and navigating Trump’s unpredictability, especially his potential mediation between India and Pakistan. The new U.S. Ambassador’s role will be critical.

· Europe as a Strategic Counterweight: With high-profile visits (EU leaders for Republic Day, Macron, German Chancellor) and ongoing EU trade talks, India is diversifying partnerships to reduce over-dependence on any single power.

· Pakistan & Terrorism: An “uneasy pause” prevails. India’s new redline will be severely tested by any future Pakistan-linked terror attack, demanding a calibrated but firm response.

· Hosting Competing Blocs: India plans to host both the BRICS summit (with Putin and Xi) and potentially a Quad summit (if Trump visits). This will be a high-wire act of diplomatic finesse, showcasing its ability to engage rival camps.

· Technology & Influence: The AI Impact Summit is an opportunity to position India as a global tech and governance leader, akin to its G20 presidency.

· Investing in Multilateralism: Focusing on Africa (India-Africa Forum Summit) and engaging in Ukraine peace talks (possibly hosting Zelenskyy) demonstrates India’s aspiration to be a proactive, solution-oriented global power.

· West Asia Economics: A lasting Arab-Israeli peace is key to reviving the IMEC corridor, a major strategic and economic project for India.

Conclusion: The Delhi Doctrine for a Fractured World

The narrative concludes that India enters 2026 operating in a world where the old rules are gone. Its strategy rests on a triad:

· Autonomy: Making independent choices (engaging Russia/China) without being tied to any alliance.

· Alignment: Building issue-based coalitions (with Europe on trade, with Quad on Indo-Pacific, with BRICS on multipolarity).

· Ambition: Aspiring to shape global norms (AI Summit, peace diplomacy) and regional outcomes (neighborhood, IMEC).

The margin for error is slim. India’s success will depend on its domestic political stability, economic resilience, and diplomatic agility to manage contradictions, deter adversaries, and seize opportunities in an explosive and unpredictable geopolitical landscape.

India’s 2025 Economic Crossroads—Between Promise and Peril

The Indian economy’s journey through 2025 has been a masterclass in contradiction. On one hand, it has showcased a government aggressively pursuing structural reforms and strategic trade partnerships. On the other, it has been a stark reminder of how vulnerable even a large, promising economy remains to the whims of global geopolitics and protectionism. The year’s narrative isn’t one of simple growth or decline, but of a nation caught between its undeniable potential and the harsh realities of a fragmented world.

The Domestic Engine: Reforms with a Human Face?

The domestic policy playbook of 2025 deserves credit. The dual tax reforms—direct (income tax cuts) and indirect (GST simplification)—were a coherent, demand-side stimulus aimed squarely at the common citizen and the consumer. Coupled with the long-awaited implementation of the Labour Codes, which promise to extend the safety net to the most vulnerable in the new economy, the government signaled a welcome shift towards “reform with a welfare focus.” This is a critical evolution from earlier reform cycles, which often prioritized macroeconomic stability over immediate public sentiment.

These moves are more than just economic tweaks; they are investments in social stability and formalization. By boosting disposable income and promising security to gig workers, the government is attempting to build a more resilient domestic consumption base—a vital buffer against external shocks.

The Trade Gambit: A Strategic Pivot, Partially Realized

India’s trade strategy in 2025 has been nothing short of revolutionary. For decades, India was perceived as a hesitant, defensive player in global trade. This year, it has proactively woven a web of agreements with strategic partners (UK, EFTA, Oman, New Zealand) while nearing the finish line with the colossal EU bloc.

This is a clear, intelligent pivot. It reduces over-reliance on any single region, secures investment commitments (the $100 billion from EFTA is a landmark), and opens new markets for Indian services and goods. The “friendshoring” strategy is in full display, strengthening ties with nations aligned during a time of global realignment.

The American Albatross: A Lesson in Over-Reliance

Yet, this very success highlights the year’s most painful failure: the breakdown with the United States. The soaring optimism of February crashing into the 50% tariffs of July is a diplomatic and economic drama underscoring a dangerous truth. For all its diversification, the U.S. market remains disproportionately critical, especially for job-creating sectors like textiles and apparel. The episode reveals that India’s trade strategy, while broader, is not yet deep enough to absorb a major rupture with a traditional partner.

The U.S. tensions are a twofold lesson. First, they expose the continued vulnerability of India’s export basket, which remains concentrated in tariff-sensitive, low-margin goods. Second, they show that in an era of “America First” politics, even the promise of a strategic partnership can be swiftly overridden by domestic protectionist impulses and unrelated foreign policy demands (like the penalty for Russian oil imports).

The Road Ahead: Cautious Steps on a New Foundation

The outlook of “cautious growth” is apt. The projected slowdown to 7.3% is a sobering acknowledgment that global headwinds are real and powerful. However, the most underreported positive development might be the overhaul of economic data systems.

This is a technocratic reform with profound implications. For years, India’s economic debate has been clouded by disputes over data credibility. Revising the base years for GDP, IIP, and CPI is not just an academic exercise; it is an essential step to ground policy in reality. A modern, transparent statistical framework will enhance the credibility of India’s economic story for investors, policymakers, and citizens alike. It is the foundation upon which smarter, more responsive policy can be built.

Conclusion

India in 2025 stands at a crossroads. One path, illuminated by domestic reforms and new trade alliances, leads towards a more self-assured, internally resilient, and globally integrated economy. The other, shadowed by persistent global friction and the unresolved U.S. relationship, warns of continued volatility and export fragility.

The government’s task for 2026 is clear: it must accelerate the domestic virtuous cycle sparked by tax and labour reforms, double down on export diversification into higher-value sectors less susceptible to tariffs, and navigate the U.S. relationship with a blend of pragmatism and principle. The promise of 2025’s achievements is immense, but realizing it fully requires navigating the perils with equal skill. The world is watching to see if India can convert its cautious growth into confident, sustainable momentum.

It’s Time for India to Breathe Free : By Making a Healthy Environment a Fundamental Right

Delhi’s skies have, yet again, turned into a toxic grey blanket. Schools are shutting, flights are disrupted, and doctors are reporting a surge in respiratory emergencies. This annual ritual is more than a seasonal inconvenience; it’s a stark, suffocating symbol of a systemic failure. For decades, India has relied on judicial innovation and policy patchwork to combat environmental degradation. But as pollution becomes a year-round, nationwide crisis, this approach is proving tragically inadequate. The moment has arrived for India to take a historic constitutional step: explicitly recognizing the fundamental right to a clean, healthy, and sustainable environment.

The Judicial Bridge Is Strained

The Supreme Court has been heroic in its efforts. By expanding Article 21’s “right to life” to include the right to clean air and water, it built a bridge where the Constitution’s framers left a gap. Landmark judgments have given us vital principles: the Polluter Pays doctrine, the Precautionary Principle, and the Public Trust Doctrine. Yet, this is a bridge under immense strain. Enforcing these judicially-crafted rights remains cumbersome, reactive, and dependent on persistent litigation. It turns citizens into perpetual petitioners, fighting for the most basic human need—healthy survival. A right that must be repeatedly argued and reinterpreted in court lacks the immediate, self-executing power of a fundamental right enshrined in Part III of the Constitution.

Why an Explicit Right Matters

Inclusion in Part III is not a mere symbolic act. It is a transformative legal tool.

1. Clarity and Direct Enforcement: It would provide an unambiguous, standalone basis for citizens to challenge the state and polluters directly. The burden of proof would shift more decisively towards those harming the environment.
2. Strengthens State Accountability: While Article 48A (Directive Principle) guides the state, it is not legally enforceable. A fundamental right would impose a direct, justiciable duty on the government to act as the primary guardian of the environment. Inaction in the face of Delhi’s smog would become a clearer, more direct violation of constitutional mandate.
3. Elevates Environmental Governance: It would force a fundamental re-evaluation of development projects, industrial clearances, and urban planning through the lens of a non-negotiable right. Economic “ease of doing business” could no longer trump the constitutional right to breathe.
4. Aligns with Global and Moral Imperatives: Over 150 countries recognize this right in their legal frameworks. As the world’s most populous nation and a climate-vulnerable hotspot, India’s leadership is crucial. Domestically, it would affirm that the right to life, in the 21st century, is meaningless without a life-sustaining environment.

Addressing the Counter-Arguments

Skeptics argue that we already have enough laws and that a new right would create litigation chaos. This is a profound misreading of both the crisis and the law. Our existing laws are often weakened by poor implementation, conflicting mandates, and institutional silos. A fundamental right would act as an overarching constitutional compass, guiding and harmonizing all environmental legislation and policy.

The fear of excessive litigation is outweighed by the reality of excessive morbidity. A right is not a veto on development but a mandate for sustainable development. It would not stop industrialization; it would mandate cleaner industries. It would not halt infrastructure but demand green infrastructure.

The Path Forward

Parliament must initiate a constitutional amendment. The drafting must be precise, embedding not just the right but also the principles of intergenerational equity, climate justice, and the duty of care. Simultaneously, we must strengthen our regulatory institutions—like the Commission for Air Quality Management (CAQM)—with greater autonomy, scientific heft, and enforcement power.

Conclusion

The air of Delhi is a warning we can no longer ignore. We have patched, pleaded, and litigated our way through this crisis for too long. The judiciary has done its part, valiantly reading the writing on the smog-filled wall. Now, it is time for the legislature to act. By engraving the right to a healthy environment into our Constitution, we would do more than change a legal text. We would affirm a new social contract—one where India’s growth is measured not only by its GDP but by the breathability of its air and the vitality of its natural wealth. It is the most profound gift we can give to our children: the constitutional right to a future where they can breathe free.

The Securities Code 2025: Modernisation Must Not Mean Over-centralisation

The new Bill is a welcome consolidation, but Parliament must ensure SEBI’s expanded powers come with stronger checks and balances.

The Union Finance Minister’s tabling of the Securities Markets Code Bill, 2025 in the Lok Sabha marks a watershed moment for India’s capital markets. Promised in the 2021-22 Budget, this long-awaited legislation aims to do what the Goods and Services Tax (GST) did for indirect taxes—consolidate a fragmented, ageing legal architecture into a single, modern code. By subsuming the SEBI Act, the SCRA, and the Depositories Act, the Bill promises a “future-ready” framework to boost investor confidence, ease compliance, and harness technology. The intent is laudable. However, as the Bill goes to the Standing Committee on Finance for scrutiny, lawmakers must look beyond its streamlining virtues and address a fundamental risk: the creation of an overly powerful, potentially unaccountable regulator.

The Promise of a Unified Framework

There is no denying the Bill’s progressive core. For decades, market participants have navigated a tripartite maze of laws, some carrying provisions from a pre-liberalisation era focused on controlling markets rather than facilitating them. The new Code’s logic is impeccable: reduce duplication, eliminate obsolete rules, and provide clarity. Features like the decriminalisation of minor offences, an 8-year limitation period for inspections, and a clear classification of violations are pragmatic reforms that will reduce the chilling effect of regulatory uncertainty on business. Empowering SEBI to delegate tasks to Market Infrastructure Institutions (MIIs) and Self-Regulatory Organisations (SROs) recognises the maturity of India’s market institutions.

Furthermore, the enhanced focus on investor protection—through a mandated investor charter and grievance redressal mechanisms—is a direct response to the surge in retail participation witnessed in recent years. In a nation where millions are new to equities and mutual funds, such safeguards are not just desirable but essential for sustainable market growth.

The Peril in the Provisions: Concentration of Power

Yet, nestled within these modernising features are provisions that demand rigorous parliamentary oversight. The most significant concern, rightly flagged by the Opposition, is the excessive concentration of authority in SEBI.

First, the expansion of the SEBI board from 9 to 15 members, while aimed at enhancing capacity, must not become an exercise in expanding the regulator’s ambit without corresponding accountability. The Bill grants SEBI sweeping powers, from levying enhanced penalties to removing its own board members for conflicts of interest. While conflict-of-interest rules are welcome, the process for removal must be transparent and subject to natural justice, not merely an internal exercise.

Second, the heart of the Code’s enforcement will lie in the subordinate legislation—the rules, regulations, and circulars that SEBI will frame. The Bill provides the skeleton; SEBI will put the flesh on it. This delegation is necessary for regulatory agility, but history shows that the devil often lies in these details. Without a mandatory, transparent, and public consultation process codified within the Bill itself, there is a risk of rule-making that could be arbitrary or favour certain market segments.

Third, while delegation to MIIs and SROs is a good principle, it raises questions of accountability. If SEBI delegates key functions, who is ultimately responsible for failures? The Code must establish a clear chain of command and periodic, independent review of these delegated authorities to prevent regulatory capture or dilution of standards.

The Way Forward: Balancing Efficiency with Equity

The Standing Committee’s task is clear: it must fortify the Bill with institutional safeguards.

1. Create a Robust Oversight Mechanism: A dedicated Parliamentary Committee on Financial Regulations or a strengthened Financial Sector Oversight Committee should have a mandatory post-legislative review role to check regulatory overreach.
2. Codify Consultative Processes: The Bill should mandate a three-stage public consultation (concept paper, draft rules, final norms) for all major subordinate legislation, with reasoned responses to feedback.
3. Ensure Judicial Recourse: While promoting faster adjudication, the Bill must protect the right to a fair appeal. The timeline for appeals to the Securities Appellate Tribunal (SAT) and beyond must be reasonable and not overly restrictive.
4. Define ‘Market Abuse’ Precisely: The critical Category II offences, which attract criminal liability, must be defined with utmost clarity to avoid subjective enforcement that could stifle legitimate market activity.

Conclusion: A Code for the Future, Guardrails for Today

The Securities Markets Code Bill 2025 is undeniably a step in the right direction. It reflects an ambition to align Indian markets with global best practices and digital realities. However, in its zeal to create an efficient, powerful regulator, we must not inadvertently construct a Leviathan. The goal is a facilitative regulator, not an omnipotent one.

As the Standing Committee begins its work, its mandate should be to build strong guardrails of transparency, accountability, and proportionate oversight around SEBI’s expanded mandate. A modern, consolidated code is what our markets need. A code that balances regulatory efficiency with democratic accountability and fundamental rights is what our republic deserves. Let us ensure this historic reform empowers not just the regulator, but every investor and market participant it is meant to serve.

The Great Indian Education Paradox: Free by Right, Costly by Reality

India’s Constitution guarantees free and compulsory education to every child. The National Education Policy 2020 ambitiously extends this vision from the preschool years through secondary school. Yet, ask any parent today about “free education,” and you’ll likely be met with a weary smile. Behind that smile lies a story of mounting fees, private tuition bills, and agonising financial choices that betray the spirit of our constitutional promise.

Recent national data paints a troubling picture: schooling in India is increasingly a paid privilege, not a guaranteed right. While 55.9% of students still attend government schools, a seismic and telling shift is underway. Nearly a third of all students—and over half in urban areas—now attend private, fee-charging institutions. This is not merely a preference; it is a vote of no-confidence in the public system, driven by a widespread perception of better quality.

But this “better” quality comes at a staggering cost. In rural India, sending a child to a private school can consume between ₹1,500 to ₹2,800 per month—a sum that aligns with the entire monthly consumption expenditure of the country’s poorest households. In cities, the burden climbs higher. Astonishingly, even government schools, mandated to be free, charge fees to a significant minority of students. The guarantee of Article 21A rings hollow for families scraping together these payments.

The Shadow System of Inequality

Just as alarming is the normalization of a parallel, privatised shadow system: coaching. What began as niche test preparation has become a mainstream academic scaffold. Over 30% of urban and 25% of rural students now rely on paid tuition, with the figure soaring at higher grades. Urban households spend an average of ₹13,000 annually per child on coaching—almost double the rural spend.

This creates a double injustice. First, it imposes an additional financial layer on families already straining to pay school fees. Second, and more perniciously, it amplifies inequality. Coaching is a service purchased by the advantaged: those with higher incomes, educated parents, and urban addresses. It provides an unregulated, unfair academic boost, deepening the chasm between the haves and have-nots from childhood itself. The message is clear: your parents’ wallet is a key determinant of your educational outcome.

A Vicious Cycle We Must Break

This trend sets off a dangerous cycle. As aspirational families exit the public system, government schools face declining enrolment and political salience. This can lead to neglect, further erosion of quality, and a deepening of the perception gap, justifying more flight to the private sector. The very idea of a common, unifying public education system—essential for a diverse democracy—is being hollowed out.

The solution is not to berate parents for seeking the best for their children, nor to over-regulate private actors into ineffectiveness. The solution lies squarely where the responsibility does: with the state.

Reclaiming the Public Promise

The path forward must be a relentless, mission-mode revitalisation of the public education system. The NEP 2020 provides the blueprint; we need the political will and resources to build it. This goes beyond infrastructure.

We must focus on the human core of education: recruiting, training, and supporting excellent teachers. We must implement the NEP’s focus on Foundational Literacy and Numeracy with urgency, ensuring no child falls behind in the early years. We must universalise quality Early Childhood Education to level the playing field from the start. Research confirms that improved school quality directly reduces the demand for private tuition. This should be our most powerful metric for success.

The goal is to make the neighbourhood government school the first, best, and most aspirational choice for every parent. This is not a utopian ideal; it is the bare minimum required to fulfil a constitutional mandate.

Education was envisioned as the great equaliser, the engine of social mobility. Today, it risks becoming an engine of stratification. We stand at a crossroads. One path leads to a fractured society where a child’s future is auctioned to the highest bidder. The other leads back to the foundational promise of our Republic: that every child, regardless of birth, has an equal right to learn, grow, and thrive.

The choice is ours. We must choose public trust over private cost, and reclaim education as a fundamental right for all, not a privileged commodity for some.

Core Paradox: The State vs. The People

At the philosophical center is the circular problem you identified: In a democracy, sovereignty resides in “the people,” yet it is the state apparatus that defines and verifies who constitutes “the people.” This creates an inherent tension between inclusion (democratic legitimacy) and exclusion (administrative control). When the burden of proof shifts from the state to the individual, the presumption of citizenship—a bedrock of democratic trust—is destabilized.

The Documentary Labyrinth and Shifting Burdens

India’s lack of a singular, incontrovertible “master document” for citizenship forces reliance on a patchwork of proxies (voter IDs, passports, legacy data). This labyrinth places immense weight on documentary evidence, which is often unevenly available across class, region, and community. The legal evolution from jus soli toward a more restrictive, descent-based framework, compounded by the introduction of the “illegal migrant” category and religion-based exceptions (CAA, 2019), has made citizenship increasingly conditional and investigable.

Institutional Jurisdiction: ECI vs. MHA

The dispute over the ECI’s SIR highlights a jurisdictional grey zone. While the ECI rightly seeks accurate rolls, its verification actions inevitably brush against the MHA’s exclusive legal mandate to determine citizenship. This clash reveals a systemic gap: verification processes that have the effect of questioning citizenship status are undertaken without the clear legal safeguards and appellate structures (like Foreigners Tribunals) that govern formal citizenship determination.

The Assam Precedent: Bureaucratized Anxiety

Assam’s NRC exercise operationalized the “burden on the individual” principle at a massive scale. Its outcomes—19 lakh people in a state of legal limbo, the trauma of document forensics, and the subsequent political discomfort when exclusion crossed religious lines—serve as a cautionary tale. It demonstrated how bureaucratic processes, reliant on brittle legacy documents and frontline discretion, can become engines of existential anxiety and de facto disenfranchisement.

The Unavoidable Human Element

You correctly note that whether under ECI or MHA, the final arbiters are local officials—the patwari, the constable, the booth-level officer. Their interpretations, biases, and understandings of complex rules directly translate into inclusion or exclusion. This “administrative paradox” means that the lofty constitutional question of “Who is an Indian?” is often answered in cramped government offices based on fragmented paperwork.

Conclusion: The Search for a Democratic Balance

The quest for a “perfect” electoral roll or a “definitive” citizenship register confronts an irreducible dilemma: No technically rigorous verification process can be purely neutral. It is always embedded in political history, social hierarchies, and the state’s evolving conception of belonging.

Therefore, the critical question for Indian democracy is not just how to verify, but under what principles:

1. Procedural Fairness: Are processes accessible, transparent, and equipped with robust grievance redressal?
2. Presumption of Innocence: Does the system err on the side of inclusion, treating citizenship as a right to be protected, not a privilege to be arduously proven?
3. Minimizing Arbitrary Power: Are clear, consistent legal standards in place to constrain frontline bureaucratic discretion?
4. Constitutional Morality: Do verification mechanisms uphold the fundamental rights to equality, dignity, and non-discrimination?

Ultimately, resolving India’s citizenship debate requires more than administrative efficiency; it demands a renewed political and social consensus on what it means to belong. The state must verify, but it must do so in a manner that strengthens, rather than undermines, the democratic covenant that the state exists for its people, and that “the people” are defined by a shared future, not just a provable past.

India’s Invisible Shield Can’t Save a Capital-Starved Rupee

For decades, the story of India’s external account was a simple one of anxiety: a yawning trade deficit in goods threatened to blow up the current account, drain foreign reserves, and sink the rupee. The prescription was equally straightforward: export more, curb “non-essential” imports, and attract foreign capital to bridge the gap. Today, that old narrative is obsolete. India has successfully built a powerful, invisible economic shield, but it is now facing a new and more insidious vulnerability from an entirely different front.

That shield is India’s formidable “invisibles” surplus—the net earnings from its global exports of software, business services, and the remittances of its vast diaspora. As the article highlights, this surplus has ballooned to a record-breaking scale, projected to cross $280 billion this year. It has effectively neutralized the perennial threat from the merchandise trade deficit. India is no longer just a struggling goods importer; it has decisively become the “office of the world,” a powerhouse of white-collar services that funds its physical imports of oil, electronics, and gold. This is a monumental structural shift and a testament to the nation’s human capital.

Yet, despite this strength, the rupee is under severe pressure, sliding past 89 to the dollar. The instinct is to blame the usual suspect—the current account deficit (CAD). But the data tells a different story. The CAD has actually shrunk. The real culprit, as the analysis correctly identifies, is the alarming drought in the capital account.

Here lies the paradox and the new crisis: India’s economy is growing at a stellar 8%, a rate that should be a magnet for global capital. Instead, foreign investment is fleeing. Foreign Direct Investment (FDI) has collapsed from a peak of $44 billion to a trickle. Foreign Portfolio Investors (FPIs) have been net sellers for three of the last four years. Net capital inflows have crashed below the level of the CAD, creating a capital account deficit. Simply put, the world is eagerly using India’s services but is increasingly reluctant to invest in its future.

This capital flight is a more dangerous problem than a trade deficit for three reasons:

First, it is a vote of no confidence. A trade deficit can reflect a growing economy’s hunger for imports. A capital deficit, especially amid high growth, signals deeper concerns—about policy predictability, geopolitical risk premiums, elevated valuations, or more attractive alternatives elsewhere. It is a judgment on the investment climate itself.

Second, it directly attacks currency stability. The rupee’s value is set by the balance of dollar supply and demand. Our services exports provide a robust supply of dollars. But when foreign investors sell Indian assets and repatriate funds, or simply stop bringing new money in, they create a demand for dollars that outstrips that supply. No amount of service export surplus can fully offset a sustained strike by global capital.

Third, it threatens long-term growth. FDI is not just capital; it brings technology, management skills, and global integration. Its absence compromises the quality and sustainability of India’s growth story.

The policy response must evolve with the problem. The old playbook of import controls and export subsidies is irrelevant to this capital account crisis. The government and the RBI must recognize that the battleground has shifted.

The immediate task is diagnostic: Why is capital shunning a fast-growing India? Is it tax uncertainty, protectionist signals, bureaucratic hurdles, or a global risk-off environment? The answer is likely a combination, but honesty is essential.

The strategic response must be confidence-building. This requires:

1. Policy Consistency: Assuring investors—especially in manufacturing and infrastructure—that the rules of the game will not change arbitrarily.
2. Engaging Portfolio Investors: Addressing their specific concerns regarding market liquidity, settlement risks, and the tax environment.
3. A Compelling “China+1” Narrative: Transforming the geopolitical opportunity into on-ground ease of doing business that matches or exceeds competitors like Vietnam or Mexico.

India has brilliantly built an invisible export engine that provides a permanent income stream and economic stability. But that engine cannot power the rupee alone. The nation now faces the harder task of repairing its image as a destination for patient, long-term capital. The strength of the “office of the world” will ultimately depend on the world’s willingness to keep investing in its headquarters.

The Health & National Security Cess: Right Intent, Risky Execution

The government’s introduction of a Health and National Security Cess exclusively on demerit goods like pan masala reflects a familiar policy impulse: to simultaneously discourage harmful consumption and fund critical public needs. On paper, it appears a neat, politically palatable solution—a “sin tax” with a patriotic purpose. However, beneath its pragmatic veneer lie significant risks of unintended consequences, faulty design, and a deeper trend of fiscal fragmentation that demands scrutiny.

The Allure of Targeted Taxation

The rationale is politically and economically seductive. Demerit goods like pan masala impose well-documented public health costs, straining an already burdened healthcare system. Taxing them aligns with the principles of corrective taxation, where the polluter—or in this case, the health-damager—pays. Linking the revenue to health and national security, two areas of universal public concern, makes the cess emotionally resonant and difficult to oppose on principle. The government’s assurance that essential goods are untouched aims to neutralise inflation fears, while the innovative machine-linked, capacity-based levy promises to tackle the notorious tax evasion plaguing this sector.

Hidden Fault Lines in Design

Yet, the devil is in the design, and here the proposal stumbles.

First, the capacity-based model, while aimed at evasion, threatens to entrench inequity and stifle competition. By taxing installed machinery potential rather than actual production, it disproportionately punishes MSMEs and smaller units. A small factory running below capacity will pay the same cess as a large one operating at full tilt, squeezing margins and potentially driving smaller players out. This contradicts the government’s own stated support for the MSME sector.

Second, it risks resurrecting the spectre of “Inspector Raj.” A levy based on machinery and process invites constant monitoring and assessment by officials. For small manufacturers, this could mean harassment, bureaucratic delays, and a fertile ground for rent-seeking—precisely the kind of burdens the GST aimed to eliminate. The promise of transparency could be undermined at the ground level by opaque enforcement.

Third, the economic logic is contradictory. If the goal is truly to deter consumption, the efficacy of a production-based cess is questionable. Historically, demand for addictive goods is price-inelastic; consumers bear the cost passed on by manufacturers. A more direct consumption-linked tax might have been a stronger disincentive. Some opposition MPs rightly ask: if the product is so harmful, should the policy be a tax or a phased ban, as seen in some states?

The Larger Trend: “Cessification” of Governance

Beyond its immediate mechanics, this cess exemplifies a troubling fiscal trend: the proliferation of earmarked levies outside the divisible pool. While sharing a portion with states for health initiatives is a welcome nod to federalism, it does not offset the broader concern. The increasing reliance on cesses and surcharges—revenue streams the Centre need not share with states—erodes the bedrock of cooperative federalism as envisioned in the GST compact. It centralises fiscal resources while states, responsible for on-ground health delivery, scramble for funds. This move, however well-intentioned in this instance, reinforces a pathway that weakens the fiscal health of the federation.

The Way Forward: Refine and Integrate

The government’s intent to fund health and security is unassailable. However, the method needs refinement.

1. Protect the Small: Introduce thresholds or slabs in the capacity-based levy to protect MSMEs. Alternatively, explore a hybrid model that combines a lower capacity charge with a modest output-linked component to ensure fairness.
2. Build Safeguards Against Harassment: Implement a digital, audit-based assessment mechanism with clear guidelines to minimise official discretion and physical inspections.
3. Commit to Federalism: Make a larger portion of the cess revenue automatically devolvable to states through a transparent formula tied to health outcomes. Better yet, channel these funds through the Finance Commission’s framework to strengthen trust.
4. Holistic Health Strategy: A cess alone is not a health policy. Revenue raised must be integrally linked to a robust public health campaign against tobacco and pan masala use, and to strengthening primary healthcare infrastructure.

Conclusion

The Health and National Security Cess is a solution with a built-in dilemma. It rightly targets harmful products but risks harming small industries and federal balance. In pursuing dedicated funds for noble causes, the government must not lose sight of the principles of equitable taxation and cooperative governance. The bill should be seen not as a finished product, but as the start of a parliamentary dialogue to craft an instrument that is both fiscally sound and federally just. The goal should be a policy that heals public health without hurting the economic ecosystem or the spirit of the Constitution.

The RBI’s Rate Cut: A Bold but Incomplete Prescription

The Reserve Bank of India’s decision to cut the repo rate by 25 basis points to a nine-year low of 5.15% is a clear signal: growth is the overriding concern. With this being the fifth consecutive cut this year, the MPC has unequivocally shifted to an aggressive accommodative stance. The accompanying measures—a massive ₹1 lakh crore OMO and a unique 3-year dollar-rupee swap—reveal a central bank trying to engineer a powerful liquidity transfusion into a sluggish economy. While the intent is laudable, the transmission of these moves from financial corridors to the real economy remains the unresolved puzzle.

Reading Between the Lines of the MPC Statement

The MPC’s diagnosis is telling. It acknowledges “disinflation,” providing the canvas for rate cuts, but its emphasis on “external externalities” and “headwinds” to merchandise exports is a sober admission. The Indian economy is not battling a cyclical downturn alone; it is facing structural challenges in its manufacturing and export sectors, compounded by a global slowdown. The robust FDI and services exports are bright spots, but they are insufficient to propel an economy of India’s size and employment needs.

The dual liquidity measures are the most innovative part of the package. The $/₹ swap does two things elegantly: it provides long-term rupee liquidity without inflating the fiscal deficit, and it bolsters forex reserves as a buffer against global volatility. The OMOs reinforce this liquidity push. This is the RBI using its balance sheet creatively to ensure that the banking system has no excuse for not lending.

The Persistent Transmission Blockage

However, the elephant in the room remains transmission. Previous rate cuts have only partially filtered through to borrowers. The banking sector, burdened with non-performing assets (NPAs) and risk aversion, has been a clogged pipe. While the liquidity glut aims to clear this, the fundamental issue is demand. Corporates are hesitant to invest in new capacity amidst weak consumption demand, and households are deferring big-ticket purchases due to income stagnation and job market anxieties. Cheap credit alone cannot fix a confidence deficit.

A Call for Coordinated Action

This is where the RBI’s move must be seen not as a solution, but as a necessary precondition. Monetary policy is doing its heavy lifting; the baton must now pass to fiscal policy and structural reforms.

1. The Government’s Role: The upcoming Union Budget must respond with a credible growth revival plan. This could involve a strategic public investment push in infrastructure to crowd-in private investment, and direct measures to boost rural and urban demand.
2. Beyond Rate Cuts: Sector-specific interventions—easing regulations for real estate, providing export incentives for labour-intensive manufacturing, and a clear roadmap for resolving financial sector stress—are critical.
3. Managing the Global Risk: The RBI’s note on external risks is a warning. Policy must prepare for oil price shocks and sustained global trade weakness by accelerating the push for self-reliance in critical areas and diversifying export markets.

Conclusion: A Step, Not the Destination

The RBI has played its part with decisiveness and innovation. It has moved beyond mere rate cuts to ensure liquidity is ample and long-term. However, its statement implicitly carries a message for North Block: “We have eased the financial conditions. Now, you must create the conditions for growth.”

The rate cut is a powerful steroid, but the economy needs a broader treatment plan involving reforms, targeted fiscal support, and confidence-building measures. Without this coordinated effort, we risk witnessing the paradox of abundant, cheap money circling a stagnant real economy—a testament to bold monetary policy awaiting its fiscal partner.

The Sanchar Saathi Mandate – Security at What Cost?

The Indian government’s recent directive to preinstall the Sanchar Saathi app on all smartphones, framed as a necessary shield against digital fraud, is a classic case of a well-intentioned policy veering dangerously towards digital authoritarianism. While the goal of empowering citizens against scams is laudable, the means chosen—compulsory preinstallation, ambiguous deletability, and expansive data access—set a perilous precedent that threatens the very rights it claims to protect.

The Slippery Slope of “For Your Own Good”

The government’s justification rests on the alarming rise in cybercrime. The Sanchar Saathi portal, with tools like Chakshu for reporting fraud and the ability to block stolen phones, is undoubtedly useful. The problem lies not in the tool, but in the mandated delivery mechanism. By invoking the amended Telecom Cyber Security Rules and the expansive definition of a “Telecommunication Identifier User Entity,” the government has crafted a legal backdoor to insert its software deep into the personal devices of millions.

The Minister’s subsequent clarification that the app is “not mandatory” rings hollow. When an app is preinstalled by default on every new phone and pushed via updates, the burden of action shifts to the user. For the non-tech-savvy majority, it becomes a de facto permanent fixture. This creates a two-tiered digital reality: the informed who can navigate removal, and the rest for whom state software is a compulsory background actor.

The Privacy Paradox and The Ghost of Puttaswamy

The Supreme Court’s landmark Justice K.S. Puttaswamy judgment established privacy as a fundamental right. Any state intrusion must pass the tests of legality, necessity, proportionality, and procedural safeguards. The Sanchar Saathi mandate stumbles on multiple counts.

· Proportionality & Least Intrusiveness: Is forcing an app onto every smartphone the least intrusive way to achieve fraud prevention? A robust awareness campaign, a voluntary but highly promoted app, and strengthening existing legal and law enforcement frameworks are less intrusive alternatives. The mandate fails this test.
· Lack of Meaningful Consent: The app’s automatic registration—sending an SMS to DoT without explicit user consent—is a blatant violation of the principle of informed consent. It treats citizens as data subjects, not rights-bearing individuals.
· The Surveillance Shadow: The combination of broad permissions (SMS, call logs) and the app’s status as a government platform exempt from key provisions of the Data Protection Act is deeply troubling. It creates a architecture where the state, in the name of security, gains a privileged window into personal communication. The history of mission creep in surveillance tools, both in India and globally, gives little comfort that this access will remain narrowly focused on fraudsters.

The Chilling Effect on Industry and Innovation

The mandate forces smartphone manufacturers, both domestic and global, to reconfigure their operating systems at a fundamental level. As industry voices have warned, this could introduce security vulnerabilities, making devices more, not less, susceptible to bad actors. It also places an unfair compliance burden on companies, distorting the market and potentially stifling innovation. If the government can mandate one app today, what prevents it from mandating others tomorrow?

The Way Forward: Voluntary, Transparent, and Rights-Respecting

The fight against digital fraud is crucial. However, it must be waged without sacrificing the bedrock of a democratic society: personal liberty and privacy.

1. Truly Voluntary Adoption: The government should withdraw the pre-installation mandate. Let Sanchar Saathi succeed on its merits—through public trust, demonstrated efficacy, and transparent operations. A voluntarily adopted, widely used app is far more powerful than a coerced one.
2. Strengthen Procedural Safeguards: Any data collection must be preceded by explicit, granular consent. There must be independent oversight and clear, publicly accessible data retention and usage policies. The source code should be open to audit by credible third parties to allay fears of hidden functions.
3. Focus on Systemic Solutions: Instead of an app-centric approach, the government should double down on strengthening financial and telecom regulations, speeding up cybercrime prosecution, and investing in cyber-police capabilities. Empowering users through education is a more sustainable solution than installing software on their devices.

Security and privacy are not zero-sum games. A policy that erodes constitutional rights to provide safety offers a false bargain. The Sanchar Saathi, in its current mandated form, is a step onto a path where the device in your pocket—the repository of your most private thoughts, conversations, and transactions—ceases to be fully yours. We must demand a security framework that protects us from both criminals and the overreach of the state. The government would do well to remember that in a democracy, the most important system to secure is the one built on public trust.

The Erosion of States’ Fiscal Autonomy

In the intricate machinery of Indian federalism, a quiet but profound revolution is underway—one not of empowerment, but of slow suffocation. The states, the true laboratories of democracy and the primary drivers of development, are facing a silent fiscal emergency. Their fiscal space—the oxygen they need to function—is being systematically squeezed, even as their responsibilities balloon. This isn’t just an accounting dispute; it’s a crisis of federal democracy with deep consequences for India’s future prosperity and unity.

The popular narrative celebrates a landmark shift with the 14th Finance Commission (FC), which raised the states’ share of central taxes from 32% to 42%. This was hailed as a great leap toward cooperative federalism. The reality, however, is that this victory has been cleverly and steadily hollowed out. The subsequent 15th FC began the contraction, and the underlying architecture of revenue sharing has been fundamentally altered to re-centralize power and discretion in New Delhi.

The Illusion of Devolution

The grand promise of 42% is a mirage, distorted by two key instruments: cesses and surcharges. These levies, which have exploded in recent years—particularly on fuels—are kept outside the divisible tax pool. It’s a legal loophole that defeats the constitutional spirit of equitable sharing. The Centre first claims a growing slice of the pie for itself, then applies the 42% rule to the diminished remainder. The result? A shrinking, unpredictable revenue stream for states, making multi-year planning for hospitals, schools, and infrastructure a game of chance.

The GST Straitjacket

The Goods and Services Tax (GST), launched with the noble aim of creating a unified market, has inadvertently straitjacketed states. In surrendering their most powerful and buoyant tax handles (like VAT), states traded fiscal sovereignty for the promise of revenue stability. That promise has frayed. The GST compensation guarantee has expired, leaving a gaping hole in state budgets. Furthermore, the GST Council’s decisions to rationalize (read: often reduce) rates for political or economic reasons directly hit the revenues of consumption- and manufacturing-heavy states like Maharashtra, Tamil Nadu, and Gujarat. They gave up autonomy but gained volatility.

Punishing the Performers

Perhaps the most corrosive grievance is the sense of injustice among the so-called “high-income” or “contributor” states—Karnataka, Kerala, Tamil Nadu, Maharashtra, and Haryana. Their argument is powerful and resonant: they are being penalized for their success. These states invest heavily in human capital, institution-building, and creating pro-growth environments, which in turn generate disproportionate shares of the nation’s GDP and tax revenue.

Yet, the Finance Commission’s distribution formula, rightly designed to promote equity and help poorer states, heavily weights criteria like ‘income distance.’ This means the efficient states get back far less than they contribute. They are effectively subsidizing the rest of the federation while being blamed for their own fiscal stress. This “penalty on efficiency” is a dangerous disincentive for good governance. Why should a state innovate if it leads to fiscal disadvantage?

The Control Wrapped in a Grant

To offset the visible reduction in tax devolution, the Centre has increased grants. This is not generosity; it is a shift from autonomy to control. Tax devolution is untied money—states can spend it on their unique priorities, be it coastal erosion in Kerala or industrial clusters in Tamil Nadu. A significant portion of grants, however, is tied to specific Centrally Sponsored Schemes (CSS). This transfers the power of prioritization from state capitals to central ministries in Delhi. It’s a form of fiscal micromanagement that undermines the principle of subsidiarity—the idea that decisions are best made at the level closest to the people.

The Path Forward: The 16th Finance Commission as Arbiter

The ongoing 16th Finance Commission is not just another technical committee. It is a constitutional arbiter in a charged federal dispute. Its recommendations will set the tone for India’s governance for the next half-decade. It must go beyond tinkering with percentages and address the structural rot.

1. End the Cess Conduit: The 16th FC must boldly recommend a constitutional or legal cap on cesses and surcharges as a percentage of the Centre’s gross tax revenue. A significant portion must be included in the divisible pool. Transparency and fairness demand it.
2. Reform the Formula: Equity must be balanced with incentive. Introducing a modest but clear weightage for fiscal efficiency and demographic contribution in the devolution formula would acknowledge and reward performing states. This is not about taking from the poor; it’s about ensuring the engines of growth don’t sputter.
3. Secure the Post-GST Compact: The era of ad hoc compensation is over. The 16th FC must propose a permanent, transparent, and rules-based mechanism for GST revenue stabilization to give states certainty.
4. Empower Through Block Grants: Shift from restrictive scheme-linked grants to broad sectoral block grants (e.g., for primary healthcare or rural infrastructure). This restores strategic autonomy to states, allowing them to innovate and adapt to local needs.

Conclusion: A Choice Between Two Federations

India stands at a federal crossroads. One path leads to a centralized, directive union where states are mere administrative units, financially dependent and politically neutered. The other leads to a genuine partnership of strong, innovative states, united by a Centre that enables rather than directs.

A fiscally strong state is not a threat to the Union; it is its indispensable partner. The discontent simmering in southern and western India is a fiscal warning shot. The 16th Finance Commission must heed it. The goal must be to forge a new bargain—one of respect, predictability, and shared destiny. The alternative is a federation weakened by resentment, where the very states that propel India forward are left wondering why they are being dragged down. The time for genuine cooperative federalism is now.

Decoding Personality Rights in the Age of AI

When two of India’s most recognisable actors, Abhishek Bachchan and Aishwarya Rai Bachchan, sue Google and YouTube for hosting AI-generated, explicit deepfakes, it signals more than a celebrity dispute. It marks a turning point in the global struggle to protect human identity in an era where generative AI can clone a face, a voice, or an entire persona in minutes — and distribute it worldwide in seconds.

At its core, the case is about dignity, autonomy, and ownership of one’s identity. But it is also about the deep inadequacy of current Indian law to deal with a technology that has blurred — almost erased — the line between what is real and what is engineered.

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India’s Patchwork of Protections Is No Match for Generative AI

Indian courts have recognised personality rights in a piecemeal fashion, relying on a hybrid mix of privacy (under Article 21) and property-like control over one’s likeness. Landmark cases such as Amitabh Bachchan v. Rajat Nagi (2022), Anil Kapoor v. Simply Life (2023), and Arijit Singh v. Codible Ventures (2024) have affirmed the right to control one’s name, image, voice, and signature expressions.

But these rulings expose a fundamental problem: India has no statutory, codified personality rights. The legal framework depends on judicial improvisation, outdated IT rules, and after-the-fact enforcement. Deepfakes, by contrast, operate at Internet speed — anonymous, borderless, and infinitely replicable.

The Centre’s 2024 deepfake advisory may signal intent, but it is far from the comprehensive reform needed.

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What the Global Response Shows: Everyone Is Struggling — But Some Are Moving Faster

The world is converging on a shared recognition: Human identity needs stronger protection.

The United States treats personality as a commercial property right, backed by state-level “right of publicity” laws. Tennessee’s 2024 ELVIS Act goes further — banning unlicensed AI cloning of voices and likenesses.

The European Union, through the GDPR and the 2024 EU AI Act, demands consent, transparency, and mandatory labelling of deepfakes.

China takes an aggressively consumer-protection approach: courts have penalised companies for selling AI-replicated voices and mandated clear disclosures to avoid deception.

Yet the global picture remains fragmented. AI training data crosses borders effortlessly; laws do not.

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The Larger Ethical Crisis: Who Owns a Human Being’s Identity?

UNESCO’s 2021 Recommendation on the Ethics of AI frames identity as a matter of human dignity — not just economic value. Deepfakes expose vulnerabilities across sectors: misinformation, sexual exploitation, political manipulation, and reputational damage.

India faces two especially troubling gaps:

1. No clear definition of AI or deepfake risk categories.

2. No recognition of posthumous personality rights, leaving deceased artists vulnerable to digital resurrection and commercial misuse.

Meanwhile, debates on granting AI systems “legal personhood” threaten to dilute human rights protections. Giving machines legal standing before fixing protections for humans would be a profound moral error.

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India Needs Urgent, Structural Reform

If India wants to protect citizens — not just celebrities — it must move beyond court-crafted solutions and adopt a statutory, forward-looking framework. This requires:

Codifying personality rights as enforceable, inheritable, and applicable to name, image, voice, likeness, and style.

Mandatory watermarking and model transparency for all generative AI outputs.

Stronger platform liability, with penalties for hosting synthetic content without clear labels.

Regulation of behavioural and biometric data used for AI training.

Cross-border cooperation aligned with UNESCO’s rights-based blueprint.

Anything less will leave individuals defenseless against an industry evolving faster than any courtroom can keep up with.

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Identity Cannot Become a Casualty of Innovation

Deepfakes are not just a technological challenge; they are a societal one. If human identity can be copied, commodified, and manipulated without consent, autonomy itself begins to erode. The Bachchan lawsuit is a warning shot — not merely for Big Tech, but for lawmakers.

India now stands at a crossroads. Either it builds a robust legal shield to protect identity in the AI age, or it allows the most intimate aspects of personhood to be auctioned off to algorithms.

Legislation must catch up — before the truth becomes just another editable file.

India’s Four Labour Codes: A Landmark Reform in Labour Governance

The Government of India has notified all Four Labour Codes, consolidating 29 Central labour laws into a simplified, modern regulatory framework. This marks one of the most significant labour reforms since Independence, aimed at strengthening labour welfare, expanding social security, ensuring workplace safety, and improving the ease of doing business.

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Background

The Four Labour Codes are:

Code on Wages, 2019

Industrial Relations (IR) Code, 2020

Code on Social Security, 2020

Occupational Safety, Health and Working Conditions (OSHWC) Code, 2020

These Codes were long pending implementation because of strong opposition from Central Trade Unions (CTUs). Despite resistance, the Centre has now operationalised them.

They introduce several systemic reforms including:

Gender-neutral work policies

Uniform safety standards

Rationalised contract labour norms

Nationwide ESIC and EPFO coverage

National floor wages

A push toward formalisation of the labour market

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Key Features of the Four Labour Codes

1. Universal Social Security and Expanded Coverage

First-time statutory recognition of gig workers, platform workers and aggregators.

ESIC coverage extended to all districts, including hazardous industries.

Aadhaar-linked Universal Account Number (UAN) ensures fully portable benefits for migrant workers.

Accident compensation expanded to include commuting accidents.

Aggregators to contribute 1–2% of annual turnover toward gig worker social security (capped at 5%).

2. Wages, Minimum Pay and Timely Payment

Introduction of a National Floor Wage.

Mandatory timely wage payment across all establishments.

Redefined wage structure: higher basic pay component → increased PF and gratuity contributions.

3. Women’s Rights and Workplace Safety

Women can work in night shifts, underground mines, and operate heavy machinery—subject to consent and safety protocols.

Equal pay for equal work reinforced.

Free annual health check-up for workers above 40 years.

4. Fixed Term Employment (FTE)

Employers can hire for fixed durations without denying benefits.

FTE workers are entitled to:

Same wages as permanent employees

Medical benefits, leave, and social security

Gratuity after one year (reduced from the previous 5-year requirement)

5. Simplified Compliance and Ease of Doing Business

Single registration, single license and single return filing.

Inspector-cum-facilitator system for supportive compliance.

Two-member tribunals for faster labour dispute resolution.

Creation of a National OSH Board to harmonise safety standards.

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Stakeholder Responses

Government

Describes the Codes as the most comprehensive labour reform since Independence.

Believes they will formalise employment, align India with global standards, and enhance worker protection.

Industry

CII termed the reforms a “historic milestone”, supporting their role in creating a predictable labour environment and boosting economic growth.

Trade Unions (CTUs)

Strongly opposed; describe the Codes as “anti-worker and pro-employer”.

Concerns include:

Misuse of FTE

Restrictions on the right to strike

Changes to retrenchment norms

CTUs have announced nationwide protests.

Bharatiya Mazdoor Sangh (BMS)

Partially supportive—backs the Wage and Social Security Codes but seeks changes in OSHWC and IR Codes.

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Challenges and Concerns

Reduced strike rights and dilution of worker protections feared by CTUs.

Implementation asymmetry: Labour is a Concurrent Subject, requiring State-level rulemaking—many states are still finalising rules.

Risk of FTE misuse, potentially replacing permanent jobs.

Gig worker social security remains unclear—past platforms like e-Shram had weak follow-through.

National Floor Wage requires consensus and a robust methodology.

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Way Forward

1. Revive the Indian Labour Conference (ILC) for consensus-building among unions, employers, and states.

2. Strengthen State capacity with financial and technical support for new digital systems.

3. Clear and transparent schemes for gig worker benefits and aggregator contributions.

Yet, success will depend on effective state-level implementation, clarity in rulemaking, and meaningful engagement with trade unions. If executed well, the Codes have the potential to formalise India’s labour market and create a more inclusive and equitable future for its workforce.

4. Monitoring mechanisms to prevent misuse of FTE contracts.

5. Awareness campaigns so workers—especially informal and migrant—understand their rights under the new framework.

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Conclusion

The implementation of the Four Labour Codes marks a historic overhaul of India’s labour governance structure. By merging 29 fragmented laws into a unified, modern framework, the reforms aim to build a labour ecosystem that supports worker welfare, gender equality, social security, and business efficiency.

Why Germany’s Economy Is Struggling

Germany, once Europe’s unquestioned economic locomotive, is now sputtering. With output expected to grow a mere 0.2% this year, following two consecutive years of recession, the world’s third-largest economy finds itself confronting a level of stagnation unseen since the early 2000s—when it was last branded the “sick man of Europe.” The latest annual report from the German Council of Economic Experts, a body established in 1963 to provide independent macroeconomic assessments, paints a sobering picture: Germany has grown just 0.1% since 2019, far trailing both the United States and the wider euro area.

A New Kind of Sickness

The nature of Germany’s economic malaise has changed. In the early 2000s, the problem was unemployment. Today, it is precisely the opposite: a massive worker shortage. Nearly 20 million Germans are set to retire in the coming decade, while only 12.5 million are expected to enter the labor force. An aging society means fewer hours worked, rising labor costs, and a shrinking pool of productive workers.

Productivity, too, has stagnated. Unit labor costs continue to rise due to weak output growth and rising wages. German labor-market institutions—especially short-time work schemes designed to preserve employment—now inadvertently block workers from shifting to more productive, future-oriented sectors.

Manufacturing’s Long Decline

Germany’s famed export machine is faltering. Manufacturing, once the pride and engine of the economy, has been in structural decline since 2018. Competitiveness is eroding under the pressure of:

Weak global demand

Intensifying competition from China

Rising geopolitical fragmentation

The threat of renewed US tariffs

Persistently high energy prices

Energy-intensive industries, in particular, have become significantly less viable. High industrial electricity costs have already discouraged the growth of emerging sectors like artificial intelligence, data centers, and advanced computing — industries that now form the backbone of global innovation.

Trapped by Its Own Success

Germany’s historic strengths are becoming its constraints. The country’s mid-tech industrial base—automotive, chemicals, mechanical engineering—built its prosperity. But over-reliance on these legacy sectors now leaves it poorly positioned to compete in high-growth fields such as IT, biotech, green tech, and advanced manufacturing.

Meanwhile, Germany’s capital markets remain shallow. Companies continue to depend heavily on banks, venture capital is scarce, and large institutional investors shy away from backing high-risk European scale-ups. The result: promising start-ups often flee to the United States to access deeper markets and the financing required to expand globally.

A Model Under Geopolitical Stress

Germany’s export-driven model relied on global openness: cheap Russian energy, buoyant Chinese demand, and American security guarantees. All three pillars are now cracking.

Washington’s shift toward industrial nationalism—across both Republican and Democratic administrations—has reduced the US appetite to provide unconditional economic and security support to Europe. Trade fragmentation has deepened. Meanwhile, the European Union has struggled to act cohesively, with internal divisions preventing the sort of unified industrial strategy that today’s geopolitical moment demands.

Policy Paralysis at Home

Domestically, Germany is burdened by slow policymaking, stringent fiscal rules, and political hesitation. Chancellor Friedrich Merz’s fiscal package promised a boost for infrastructure and defence, but implementation has lagged, trapping the economy in a cycle of low investment and weak productivity.

The Path Out of Stagnation

The German Council of Economic Experts recommends four urgent steps:

1. Targeted fiscal spending focused on productive public investment—digital infrastructure, green technologies, and transport.

2. Deeper European economic integration, including a genuine single market for services.

3. Corporate tax reform to attract investment and stem industrial decline.

4. Policies to reduce wealth inequality, including subsidised long-term investment accounts to strengthen household financial security.

These reforms are not optional—they are essential.

A Larger Global Shift

Germany’s stagnation is more than a national story. It reflects a broader transition: the fading of old economic models built on cheap energy, globalised manufacturing, and steady export demand. If Germany does not reinvent its economy soon, it may not only lose its position as Europe’s economic anchor—India, with a GDP fast approaching $4 trillion, may surpass it as the world’s third-largest economy.

That would mark not just a symbolic shift in global economic rankings, but a reordering of economic power in the 21st century. The question now is whether Germany can reform fast enough to restore dynamism—or whether Europe must prepare for a future where its once-mighty engine remains stuck in low gear.

Rethinking India’s Inflation Targeting Framework

As India approaches the 2026 deadline for reviewing its Flexible Inflation Targeting (FIT) framework, the Reserve Bank of India has initiated a critical debate on the future of monetary policy. Anchored at 4% inflation with a ±2% band, the FIT regime has guided India through a decade marked by a pandemic, supply shocks, volatile commodity prices, and global monetary tightening.

The framework has held up well. But the upcoming review is more than a technical exercise—it is about safeguarding macroeconomic stability in an uncertain global landscape.

At the heart of the review lie three essential questions:

Should the RBI target headline or core inflation?

What inflation rate is acceptable for India’s current stage of development?

And is the existing 4% ± 2% band appropriate?

These choices will shape household welfare and economic stability for years to come.

The Imperative of Controlling Inflation

Inflation control remains the most essential mandate of any credible central bank. High inflation behaves like a regressive tax: it erodes real incomes, hurts savings, discourages investment, and disproportionately affects the poorest households, who spend a large share of their income on food. India’s experience before the 1990s—when monetised fiscal deficits routinely fuelled high inflation—is a reminder of how damaging unanchored prices can be.

Reforms since the 1990s, from the end of automatic monetisation to the passage of the Fiscal Responsibility and Budget Management (FRBM) Act, created an institutional foundation for low inflation. The adoption of FIT in 2016 was a logical culmination of these reforms. Despite numerous shocks, inflation has largely remained range-bound over the past decade, underscoring the regime’s effectiveness.

Headline, Not Core, Must Remain India’s Anchor

A recurring argument is that monetary policy should target core inflation, because food inflation—nearly half of the CPI basket—is influenced by supply shocks and weather. But this interpretation ignores crucial realities.

First, food inflation is not always exogenous. When monetary conditions are expansionary, food prices tend to rise faster, suggesting that liquidity does matter. Second, inflation is ultimately a macroeconomic phenomenon driven by aggregate demand relative to supply. Milton Friedman underscored this in a 1963 lecture in Mumbai: inflation reflects excess money chasing too few goods.

Finally, India’s own data show powerful second-round effects. Food inflation feeds into wages and business costs, then spills over into the broader price level—especially when liquidity is abundant. In a country where food dominates household budgets, targeting anything other than headline inflation risks undermining welfare and credibility.

Why India Should Stick to 4%—or Slightly Below

The appropriate inflation target must be grounded in long-term growth dynamics. Early models of the Phillips Curve suggested a trade-off between inflation and growth, but decades of research—led by Friedman and Phelps—has demonstrated that such a trade-off is only temporary.

Since 1991, India has exhibited a distinctly non-linear relationship between inflation and growth. Empirical studies show an inflection point at around 4%:

Inflation below 4% supports growth.

Inflation above 4–6% sharply reduces growth.

Forward-looking projections for 2026–2031 reinforce this conclusion. Assuming fiscal and external stability, the optimal inflation rate may lie slightly below 4%. There is, therefore, no economic justification for raising the target above its current level.

A ±2% Band Is Sufficient — But Must Be Credibly Enforced

India’s ±2% band has offered flexibility while maintaining accountability. Yet two considerations demand attention.

First, prolonged inflation near the upper bound erodes credibility, even if the target is technically met. The framework must articulate how long inflation can remain close to 6% without triggering corrective action.

Second, inflation above 6% has historically been associated with steep growth losses. This alone argues against widening the band.

Crucially, the effectiveness of the band depends on fiscal discipline. The experience of the 1970s and 80s—when fiscal dominance kept inflation high—demonstrates that monetary policy cannot anchor expectations alone. FIT and FRBM are two pillars of the same architecture. Weakening either would jeopardise macroeconomic stability.

A Moment for Consolidation, Not Experimentation

The upcoming review of the inflation targeting framework is an opportunity to reinforce a system that has served India well. The evidence points clearly in one direction:

Headline inflation must remain the target, not core.

The optimal inflation rate remains around 4%, or slightly lower.

The ±2% band provides adequate room for manoeuvre, but adherence must be strict.

Strong fiscal–monetary coordination remains indispensable.

As global uncertainties intensify and climate-related volatility grows, India cannot afford policy drift. The FIT framework has delivered stability through turbulent times. The task ahead is not to dilute it, but to strengthen its credibility and ensure that inflation remains low, predictable, and aligned with India’s long-term growth aspirations.

The Return of the G-2: Trump’s Duopoly Vision and Its Global Ripples

When U.S. President Donald Trump declared ahead of his meeting with Xi Jinping that “the G-2 will be convening shortly,” it was more than a casual remark. It was a signal — one that rekindles debates about whether the United States and China are drifting toward a world order defined by two dominant powers. For allies who have long relied on American multilateralism, the idea of a U.S.–China duopoly is both provocative and unsettling.

A Concept with Deep Roots

The notion of a “G-2” is not new. It originated in 2005 when economist C. Fred Bergsten proposed that Washington prioritize strategic bilateral partnerships — particularly with Beijing — to stabilize the global economy and energy markets. The 2008 financial crisis further strengthened the appeal of this model, as cooperation between the world’s two largest economies seemed vital to global recovery and climate action.

Though never meant to replace institutions like the G-20 or the IMF, the G-2 was envisioned as a pragmatic mechanism for “pre-coordination.” During the early Obama years, the U.S. even explored whether structured engagement with China could yield global benefits. But as Beijing’s ambitions grew, the G-2 ideal lost traction — supplanted by concerns over China’s assertiveness and America’s strategic recalibration.

China’s Evolved Posture

In the two decades since, China’s rise has transformed the balance of global power. Under Xi Jinping, Beijing has discarded Deng Xiaoping’s cautious dictum to “hide your strength, bide your time.” Instead, it has projected confidence — from building military outposts in the South China Sea to expanding its influence through the Belt and Road Initiative.

This assertiveness prompted Washington to redefine its relationship with Beijing. Trump’s own 2017 National Security Strategy labeled China a “strategic competitor,” ushering in trade wars and tariff barriers. Yet today, his sudden embrace of the G-2 language suggests a possible return to bilateral pragmatism — or perhaps a transactional acknowledgment of China’s indispensability.

The Return of Bilateralism?

For many in Washington’s alliance network, Trump’s G-2 framing feels like déjà vu — a pivot from principled competition to unpredictable deal-making. If the U.S. chooses to negotiate global issues directly with Beijing — on trade, technology, or security — allies could find themselves sidelined. Such an approach would contradict the Indo-Pacific vision built through groupings like the Quad, which champions collective deterrence against unilateralism.

Allies’ Anxiety

India, already navigating trade tensions with Washington, faces renewed uncertainty. The postponement of the Quad Leaders’ Summit and speculation about India’s temporary replacement by the Philippines underscore shifting U.S. priorities. Yet India’s economic and strategic heft makes it indispensable to any sustainable Indo-Pacific framework.

Japan and Australia, too, see risk in any G-2 thaw. Both nations revived the Quad in 2017 precisely to counterbalance Beijing’s regional ambitions. A sudden U.S.–China rapprochement could leave them exposed to policy whiplash.

Meanwhile, ASEAN states welcome reduced great-power tension but fear being marginalized if Washington and Beijing start deciding regional matters bilaterally. For them, autonomy — not alignment — is the goal.

The Global Stakes

A functioning G-2 could, in theory, stabilize global markets and de-escalate military brinkmanship. Joint management of issues like climate change or semiconductor supply chains would benefit all. Yet history warns that duopolies rarely sustain equilibrium for long. Concentrating global decision-making in two capitals risks alienating smaller nations and eroding the legitimacy of multilateral institutions.

Conclusion: Between Pragmatism and Precarity

Trump’s invocation of the G-2 is a reminder that the geometry of global power is never fixed. Whether this marks the return of pragmatic bilateralism or the erosion of inclusive multilateralism will depend on how Washington’s allies — and Beijing’s rivals — respond.

In a world already fragmented by conflict and economic rivalry, the re-emergence of the G-2 idea may offer short-term stability, but it also raises a fundamental question: can two superpowers truly share the steering wheel of the world without pushing everyone else off the road?

The BRICS Pay Gambit: A Challenge to Dollar Dominance or a House Divided ?

The unveiling of the BRICS Pay initiative marks the most concrete step yet in the decades-long whisper of “de-dollarization” becoming a shout. For years, the concept of challenging the U.S. dollar’s hegemony was a theoretical exercise discussed in economic forums. Now, with Brazil, Russia, India, China, and South Africa moving to operationalize a cross-border payment system, the world is witnessing a determined push for a multipolar financial order. But is this the beginning of the end for the dollar’s reign, or merely a geopolitical mirage destined to collapse under its own contradictions?

The Inevitable Rebellion

The motivation for BRICS Pay is not born of ambition alone, but of necessity. The weaponization of the U.S.-controlled SWIFT network—a pivotal tool in sanctioning Russia and isolating Iran—has served as a stark warning to the rest of the world. It demonstrated that access to the global financial bloodstream can be severed at the whim of Western capitals. For nations aspiring to strategic autonomy, this is an unacceptable vulnerability.

BRICS Pay, therefore, is fundamentally about sovereignty. It is a defensive maneuver to build a sanctions-proof pipeline for trade and investment. By leveraging their own robust digital payment infrastructures—from India’s UPI to China’s CIPS—the bloc is assembling the technological building blocks for an alternative ecosystem. This is not just about avoiding U.S. scrutiny; it’s about fostering economic efficiency through faster, cheaper settlements in local currencies, liberating trade from the tyranny of dollar-driven transaction costs.

The Fault Lines Beneath the Surface

However, declaring financial independence is easier than achieving it. The BRICS alliance is not a monolith; it is a coalition of nations with often competing interests. The most significant hurdle is the lack of a unified currency. BRICS Pay, in its current form, is a platform for local currency settlements, not a replacement for the dollar. Without a common currency backed by a central bank and a unified monetary policy, the system will remain a complex web of bilateral agreements, inherently less efficient than the dollar’s universal liquidity.

Furthermore, the initiative is plagued by a fundamental trust deficit. While all members pay lip service to a multipolar world, each is aggressively promoting its own payment system globally. India’s UPI expansion into Asia and Africa and China’s drive to internationalize the yuan through CIPS are not complementary acts; they are parallel, competing campaigns. Can New Delhi and Beijing truly align their systems under a single framework when their own geopolitical and economic rivalry is one of the defining stories of the 21st century? The fear of Chinese economic dominance within the bloc is palpable and could stymie the deep integration required for BRICS Pay to succeed.

A Geopolitical Earthquake in the Making?

Despite these challenges, the West would be foolish to dismiss BRICS Pay. Its success does not require it to topple the dollar overnight to be significant. Even a regionalized system that successfully facilitates a majority of intra-BRICS trade would represent a seismic shift. It would create a gravitational pull for other developing economies frustrated by the current system, slowly eroding the dollar’s dominance in critical sectors like energy and raw materials.

The threat of U.S. retaliation, as voiced by figures like Donald Trump, only validates the initiative’s potential disruptive power. If the response to a challenge is to threaten punitive tariffs, it merely confirms the very dependency and vulnerability that BRICS Pay seeks to escape.

The Verdict: Visionary or Vacuous?

BRICS Pay is at a crossroads. It is simultaneously a visionary project born of legitimate grievances and a precarious experiment threatened by internal divisions. Its future lies not in its technology, which is proven, but in its politics.

Will the BRICS nations subordinate their individual ambitions for a collective gain? Can they build the trust necessary to navigate the technical and regulatory labyrinth? The answers to these questions will determine whether BRICS Pay becomes the foundation of a new financial world order or a cautionary tale of a bloc that dared to challenge the king but was undone by its own squabbling courtiers. One thing is certain: the journey itself, regardless of the destination, has already altered the landscape of global finance forever. The age of dollar unquestionability is over.

The Silent Success of India’s Cautious Capital: Why Slow and Steady Wins the Debt Race

Headline: India’s ‘Disappointing’ Debt Inflows Are a Sign of Prudence, Not Failure

The numbers tell a story of disappointment. Foreign debt inflows into India for 2025 are tracking at less than half of what was projected. The much-hyped inclusion in global bond indices, coupled with the liberal Fully Accessible Route (FAR), was supposed to unleash a deluge of capital, perhaps $25 billion or more. Instead, we have a steady, modest stream.

The easy conclusion is to see this as a failure—a sign that global investors are giving India a thumbs-down. But that is a superficial reading. Look closer, and this “underperformance” is not a symptom of weakness, but a testament to a deliberate and prudent strategy. India is choosing stability over a sugar rush, and in the current volatile global climate, that is the wiser long-term bet.

The Allure of the Quick Fix and Its Dangers

When JP Morgan announced India’s inclusion in its bond index, the excitement was palpable. The promise of tens of billions in foreign capital was seductive. It offered a quick fix to several challenges: it would help finance the government’s fiscal deficit at lower rates, support the rupee, and signal India’s arrival as a mature financial market.

However, unbridled capital flows are a double-edged sword. The memories of the 2013 “Taper Tantrum” are still fresh, when a sudden reversal of foreign capital plunged emerging markets into turmoil. India learned a hard lesson then: “hot money” that flows in easily can flow out even faster, destabilizing currencies and crashing bond markets.

This is the context for the government and RBI’s seemingly “cautious” move in August 2024 to exclude long-term bonds from the FAR. It wasn’t a bureaucratic misstep; it was a strategic firewall. By limiting the pool of securities, they have inherently attracted more stable, long-term investors who are making a calculated bet on India’s fundamentals, rather than short-term speculators looking for quick arbitrage.

A Global Storm, and India’s Sturdy Harbour

Let’s not ignore the obvious: the global environment is treacherous. With the U.S. Federal Reserve keeping interest rates high and geopolitical tensions simmering, investors worldwide are in a risk-off mode. They are fleeing even other emerging markets at a sharper pace. In this storm, India isn’t seeing a tsunami, but it has become a relatively sturdy harbour.

The fact that inflows are still positive, while equity markets see massive outflows, speaks volumes. Investors are not rejecting India; they are being selective. They are placing their debt bets on a country with 7% growth, controlled inflation, and roaring domestic demand—fundamentals that are the envy of the world. This “barbell strategy” of global investors—balancing safe U.S. debt with selective high-growth bets—actually validates India’s position as a premier emerging market destination.

The Real Victory is in the Foundation, Not the Facade

The true success of the FAR and index inclusion is not measured in quarterly inflow data, but in the permanent structural shift they have engineered. India’s bond market is now irrevocably on the global map. The plumbing for large-scale foreign investment has been laid. This is a quiet revolution that will yield benefits for decades.

The goal was never to become a passive recipient of volatile global capital. The goal was to deepen the market, reduce borrowing costs over the long run, and integrate with the global financial system on our own terms. A sudden, massive inflow would have likely inflated the rupee, hurt exports, and created a bubble. The current measured pace allows the market, the regulators, and the economy to adapt organically.

Conclusion: Patience is a Virtue, Especially in Finance

To lament the “missed” $25 billion target is to miss the forest for the trees. India is playing a long game. In a world drowning in uncertainty, its cautious approach to capital flows is a feature, not a bug.

The seeds have been sown. The roots—strong macroeconomic fundamentals and prudent policy—are growing deeper. When the global winds eventually shift and the U.S. rate cycle turns, the inflows will come. And they will be more stable, more sustainable, and far more valuable than the speculative torrent some were hoping for. In the race to build a world-class financial market, slow and steady will indeed win the day.

Why India Needs Bigger, Global-Scale Banks. PSU Banks Merger 2.0

As India marches confidently towards its centenary of independence, the vision of a ‘Developed India’ or ‘Viksit Bharat’ by 2047 is taking centre stage in our national discourse. We speak of cutting-edge infrastructure, global manufacturing hubs, and technological sovereignty. But beneath these grand ambitions lies a critical, and often overlooked, pillar: the need for a financial system of commensurate scale and sophistication. Simply put, India’s journey to 2047 is being hampered by its undersized banks.

Our current banking landscape, while stable, is built for a different era. The State Bank of India, our largest, is a domestic titan but a global middleweight, with assets less than one-fifth of giants like the Industrial and Commercial Bank of China (ICBC). For an economy targeting the $10-trillion mark, this is a severe structural constraint. To power the India of 2047, we need to urgently cultivate a cohort of global-scale banks.

Why Size is a Strategic Imperative

The case for bigger banks is not about vanity; it is about economic necessity.

First, consider the infrastructure deficit. The National Infrastructure Pipeline envisions investments exceeding $1.5 trillion. Financing a single high-speed rail corridor or a network of green hydrogen hubs requires underwriting capacity that stretches the limits of our current banks. Only institutions with massive balance sheets can take on such projects without dangerous risk concentration, and, crucially, syndicate them to international lenders, acting as a bridge for global capital into India.

Second, our corporate champions are going global. Whether it is a Tata company acquiring abroad, a Reliance building global supply chains, or an Infosys servicing the world, they need complex financial services—multi-billion-dollar foreign currency loans, merger advisories, and sophisticated hedging tools. Today, they are often forced to walk into the offices of global banks like Citi or HSBC. This represents a colossal flight of high-margin business, a leakage of fees that should rightly fuel the profits and resilience of our own financial institutions.

Third, there is the geostrategic dimension. Finance is the lifeblood of global influence. China has deftly used its banking behemoths to finance infrastructure across Asia and Africa, weaving a web of economic dependency. If India aspires to be a true “first among equals” in the Global South and a counterbalance in the Indo-Pacific, it needs financial institutions that can facilitate trade, fund friendly governments, and project economic power. Soft power needs hard financial muscle.

The Pathways and The Pitfalls

Thankfully, the blueprint is clear. The government has already taken tentative steps by consolidating public sector banks (PSBs). But this is merely the prelude. We now need a bold, two-pronged strategy.

The first prong is deep consolidation. We must move beyond creating larger PSBs to creating mega-banks. Imagine merging two or three of our largest PSBs to create an entity with assets touching $2 trillion—a true national champion capable of standing shoulder-to-shoulder with global peers. This cannot be a mere accounting exercise; it must be a strategic one, focused on creating synergies and global competitive advantage.

The second prong is unleashing the private sector. The merger of HDFC Ltd. with HDFC Bank was a masterstroke, creating a domestic powerhouse. We need to encourage more of this. The regulatory framework should facilitate, not hinder, the organic and inorganic growth of our most efficient private banks. Perhaps it is time to consider allowing strong private banks to acquire smaller, struggling PSBs, injecting much-needed efficiency and capital.

However, this path is fraught with challenges. Creating “too big to fail” institutions demands a super-strong regulatory framework to prevent catastrophic risk. The mammoth task of integrating legacy technologies and clashing corporate cultures in PSB mergers cannot be overstated. Most critically, we must professionalize the governance of PSBs, insulating them from political interference and allowing them to be run by bankers, not bureaucrats.

The Call to Action

The mission to build banks for 2047 is not a financial technicality; it is a national project. It requires a clear-eyed vision and political consensus. We must treat our banks not as tools for populist doles, but as strategic assets that will fund our nation’s destiny.

The journey to a developed India will be paved with roads, ports, and digital highways. But the cement that will bind this future is capital. It is time we built the vessels—the global-scale Indian banks—capable of carrying it. The clock is ticking.

The Income Blind Spot: Why India’s First Household Income Survey is a Leap of Faith

For decades, India’s economic policymakers have been navigating a complex landscape with a critical piece of their map missing: reliable data on what its households actually earn. We have meticulously tracked what people consume, how they are employed, and what they spend. But on the fundamental question of income, our statistical system has operated in the dark. The Ministry of Statistics and Programme Implementation’s (MoSPI) decision to launch the first National Household Income Survey (NHIS) in 2026 is, therefore, a landmark and long-overdue endeavour. It is an ambitious attempt to replace guesswork with data, and assumption with evidence.

The Tyranny of the Known

Until now, consumption expenditure has been the trusted proxy for measuring economic well-being and inequality in India. This was a necessary compromise, but a deeply flawed one. Consumption can mask more than it reveals. A family dipping into savings or accumulating debt to maintain its consumption levels tells a story of stress, not prosperity. The vast informal sector worker, whose income is volatile and seasonal, presents a blurred picture when viewed only through the lens of spending. This reliance on consumption data has, in effect, sanitised our understanding of India’s economic reality, potentially underestimating the true chasm of income inequality and the precariousness of living on the edge of a gig economy.

The NHIS promises to change this. By directly asking the question, “What do you earn?”, it seeks to illuminate the structural anatomy of the Indian economy. The shift from agriculture to services, the rise of platform-based work, and the true scale of inter-state economic disparities—all these macro trends will finally have a micro-level income dataset to validate them.

The Trust Deficit: The Biggest Hurdle

However, MoSPI is under no illusion about the enormity of the task. Labelling it one of the “toughest” surveys ever undertaken is an admission of the profound trust deficit between the citizen and the state when it comes to financial disclosure. The pre-survey findings are a stark warning: 95% of respondents found income questions “sensitive.” This is not mere shyness; it is a rational fear. In a country where a large section of the economy remains informal, and the shadow of the taxman looms large, the idea of officially disclosing income is fraught with anxiety.

The ministry’s success, therefore, will not be determined by its questionnaire alone, but by its ability to launch a massive campaign of public assurance. The promises of “anonymity” and “data used solely for statistical purposes” must be communicated not as fine print, but as a guaranteed contract with the people. The field enumerators are not just data collectors; they must become ambassadors of trust, trained to allay fears and build rapport. The decision to have a Technical Expert Group, chaired by an eminent economist like Surjit S. Bhalla, vet the results is a wise move to insulate the process from political interference and ensure the final data’s credibility.

A New Compass for a New India

The significance of the NHIS, should it succeed, cannot be overstated. For policymakers, it will be a new compass. Imagine designing a pension scheme for informal workers without knowing their income flows, or framing tax policies without a clear picture of the actual tax base. The NHIS data will bring precision to these efforts, enabling welfare to reach the truly deserving and fiscal policies to be grounded in reality.

It will also force a more honest national conversation about inequality and redistribution. The debate will move from theoretical models to hard numbers, showing who gains and who lags in India’s growth story.

The launch of the NHIS is a leap of faith—a faith that Indian citizens will trust the state with their most sensitive financial details, and a faith that the state will honour that trust with transparency and rigorous methodology. It is a daunting challenge, but one that is essential for India to truly understand itself in the 21st century. Filling this data gap is not just a statistical exercise; it is a fundamental step towards building a more equitable and evidence-based future for all Indians.

The UN at 80: An Indispensable, Unfinished Project

As the world fragments, the United Nations remains flawed but essential. It must reform or risk irrelevance.

Eighty years after its founding, the United Nations stands as both a monument to human aspiration and a mirror reflecting the world’s contradictions. Conceived in the aftermath of unimaginable tragedy, it was envisioned not as a symbol of victory but as a safeguard against humanity’s worst instincts. Today, in an era of resurgent nationalism and great-power rivalry, this original mandate is more critical than ever. Yet, the institution built to uphold it is straining under the weight of a century it was not designed for.

The UN’s creation was an act of sober realism, not starry-eyed idealism. Its record is a testament to this dual nature: it boasts both the devastating failures of Rwanda and Srebrenica and the life-saving successes of East Timor and Namibia. Its legitimacy has never flowed from perfection, but from persistence. However, persistence alone is no longer enough. The post-war consensus that birthed the UN has evaporated, replaced by a fragmented, multipolar world where nationalism and populist distrust actively corrode the very idea of multilateralism.

Nowhere is this institutional paralysis more evident than in the UN Security Council. Frozen in the amber of 1945, the Council’s permanent membership is a relic of a world that no longer exists. This anachronism doesn’t just strain credibility; it actively weakens the UN’s moral and operational authority. Consider the case of India.

India’s exclusion from permanent membership is a glaring anomaly that illustrates the deep structural inequities of the current system. It is the world’s most populous nation, its largest democracy, a top contributor of peacekeepers, and a dynamic economic force. By any objective measure—and as an embodiment of the UN Charter’s values—India has earned its place at the table. Its continued absence is not just an injustice to one nation; it is a signal to the emerging powers of the Global South that the system remains rigged in favour of outdated hierarchies. A governance structure that ignores the voices of the nations it claims to serve risks breeding the very alienation and irrelevance it cannot afford.

India’s own foreign policy, with its emphasis on strategic autonomy and multipolar dialogue, offers a glimpse of a different global order—one founded on dignity rather than dominance. This vision aligns with the necessary future of the UN itself. Reform, therefore, must be about more than simply adding new chairs to the high table. It must be a philosophical shift towards a system where cooperation is shaped by shared values and equitable representation, not dictated by historical privilege.

For the UN to thrive in this century, it must undertake a profound transformation on three fronts.

First, it must become more representative. Expanding the Security Council is the non-negotiable first step to restoring its legitimacy.

Second, it must become more agile. The UN’s bureaucracy must be modernized to handle crises that move at digital speed, with streamlined decision-making and empowered field operations.

Third, and most critically, it must reclaim its moral courage. In an age of disinformation, the UN must be a consistent voice for truth. Yet this moral authority is hollow without the political and financial backing of its members. The chronic underfunding and politicization of contributions by the world’s wealthiest nations is a tragic irony: they are starving the very institution they need to manage the global crises that threaten their own security.

The United Nations at eighty is neither a relic nor a panacea. It is an unfinished project. Its failures are real, from bureaucratic inertia to geopolitical paralysis. Yet, to dismiss it would be to surrender the most noble of beliefs: that humanity can govern itself through cooperation rather than coercion.

As the UN’s second Secretary-General, Dag Hammarskjöld, wisely observed, the organization was created not to take mankind to heaven, but to save humanity from hell. On its 80th anniversary, the path to avoiding that hell is clear. Our choice is not for or against the UN, but whether we have the will to rebuild it for the world we have, not the world we had.

The Countdown to Gold’s Decline: A Bull Market Living on Borrowed Time

The relentless climb of gold to record-shattering heights has a certain aura of inevitability. It feels like a safe harbor in a world beset by storms. But for all its glitter, this bull run is not built on eternal truths. It is built on a series of fragile, temporary conditions. And when they crack, the fall will be swift.

The countdown to gold’s decline begins when the world normalizes. It begins when rationality returns. While pundits point to complex charts, the real triggers for a sustained downturn are fundamental, and they are within our sight.

First, the walls of fear must come down. Gold’s current strength is fueled by a potent cocktail of geopolitical anxiety and economic uncertainty. The ongoing tariff wars, the specter of a broader conflict, and the fear of economic instability have driven investors into gold’s cold, hard embrace. But what happens when diplomacy wins? When the tariff wars are sorted, and global trade finds a new, stable equilibrium? The “fear premium” baked into every ounce of gold—a premium that could be 10%, 20%, or more—will evaporate overnight. The first and most crucial pillar supporting its price will crumble.

Second, we must witness a renaissance in corporate health. The “everything but stocks” trade has dominated for too long. Money has flooded into gold precisely because the outlook for corporate earnings has been cloudy, weighed down by inflation, high borrowing costs, and consumer strain. But economies are resilient. When corporate earnings genuinely and consistently improve, it will be a signal that the real economy—the one that produces goods, services, and jobs—is firing on all cylinders. Capital is a coward; it flees uncertainty. But it is also greedy. When the clear, superior returns of a thriving stock market are undeniable, the slow, yield-less asset that is gold will be abandoned in a great rotation back to risk.

Third, and most critically, the US dollar must reassert its dominance. This is the mathematical certainty that underpins all others. Gold is priced in dollars; they are two sides of the same coin, locked in an inverse relationship. The dollar’s recent periods of weakness have been a direct subsidy to the gold price. But the American economy remains the envy of the developed world. As the global economic picture stabilizes and the Federal Reserve’s battle against inflation is decisively won, confidence in the dollar will surge. A stronger dollar makes gold more expensive for the rest of the world, crushing demand. It is the most direct and powerful mechanism to bring the gold price to heel.

So, when will gold fall?

It will fall when statesmanship triumphs over conflict. It will fall when the dynamism of American enterprise, from Silicon Valley to Main Street, reminds the world where true growth is forged. It will fall when the world once again runs on dollars.

Do not be fooled by gold’s current brilliance. It is a reflector of the world’s problems, not a source of solutions. Its bull market is a function of a fearful, fragmented, and uncertain time. The moment that era ends—and history tells us it always does—the rush for the exits will begin. The countdown isn’t just ticking; the conditions for its start are the very milestones of a return to prosperity.

India’s Revision of the Index of Industrial Production (IIP)

India is undertaking a significant update to the Index of Industrial Production (IIP) by changing its base year to 2022-23. This move is designed to modernize the index, making it a more accurate and relevant reflection of the country’s current industrial structure and economic dynamism.

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🎯 India’s Industrial Growth: Progress and Untapped Potential

· Sectoral Shift: India’s economy is now dominated by the services sector (contributing ~62.5% of GVA), while industry’s share is about 22%, indicating significant room for growth.
· Government Initiatives: Policies like Make in India, Production-Linked Incentive (PLI) schemes, and ease of doing business reforms have boosted the industrial sectors covered by the IIP: mining, manufacturing, and electricity.
· About the IIP: It is a monthly composite indicator published by the National Statistics Office (NSO) that measures short-term changes in the volume of industrial production. The current base year is 2011-12.

🎯 Why India Is Revising the Base Year of the IIP?

· Need for Accuracy: As India’s economy evolves rapidly, updating the IIP is crucial to capture real-time changes. Industry’s substantial share (~22%) of national output makes this especially important.
· Official Action: The Ministry of Statistics and Programme Implementation (MoSPI) formed a Technical Advisory Committee (TAC-IIP) to oversee the revision.
· Alignment: The new base year (2022-23) will align the IIP with the base year used for GDP calculations.
· Historical Context: This is the tenth such revision since the IIP was first compiled in 1937, ensuring it stays relevant and complies with international standards.

🎯 Key Improvements in the New IIP Base Year Revision

The revision introduces several major enhancements:

· Modernized Product Basket:
· Removed: Outdated items like fluorescent tubes, kerosene, and printing machinery.
· Added: Modern items like laptops, LED bulbs, vaccines, and aerospace components.
· Expanded Coverage:
· For the first time, data from minor minerals and gas supply will be included, following international guidelines.
· Improved Data Precision:
· The ministry has reclassified 276 vague “not elsewhere classified” items, drastically reducing data distortion.
· Dynamic Factory Substitution:
· A systematic method will replace factories that shut down or change production, using 12 months of overlapping data for a smooth transition.
· Advanced Analysis:
· A de-seasonalised IIP will be introduced to better identify true cyclical trends by removing seasonal variations.
· Data Integration:
· The integration of GST data and digital tools will enhance the timeliness and reliability of the index.

Conclusion: This base year revision is more than a statistical update; it is a comprehensive structural modernisation of India’s industrial data system to better capture the realities of its evolving economy.

Erosion of Workers’ Rights

A series of recent fatal industrial accidents in India has highlighted a critical decline in workplace safety and labour protections, driven by policy shifts that prioritize economic flexibility over worker welfare.

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1. The Problem: A Crisis of Industrial Safety

· Recent Tragedies: Deadly accidents at Sigachi Industries (Telangana), Gokulesh Fireworks (Sivakasi), and Ennore Thermal Power Station (Chennai) in 2025 have brought the issue to the forefront.
· Global Standing: India accounts for nearly one in four fatal workplace accidents globally, a figure believed to be underreported, especially for informal and contract workers.

2. Root Causes of Accidents: Systemic Negligence

· Preventable Failures: Accidents are not random but result from preventable managerial neglect, including:
· Outdated machinery and ignored maintenance.
· Inadequate worker training.
· Absence of safety protocols (e.g., missing alarms, safety officers, ambulances).
· Underlying Drivers: The ILO identifies cost-cutting and management negligence as primary causes. Employers often blame “human error,” but the real issues are unsafe working hours, excessive workloads, and poor wages forcing workers into double shifts.

3. Historical Context: The Evolution of Labour Protection

· Foundation: The Factories Act, 1881 began regulating working conditions.
· Post-Independence Cornerstone: The Factories Act, 1948 became the key law, covering licensing, machinery safety, working hours, and welfare facilities. It was strengthened after the Bhopal Gas Tragedy (1987 amendment).
· Compensation Laws: Acts like the Workmen’s Compensation Act (1923) provided for financial compensation but were weakly enforced and rarely held employers criminally accountable.

4. The New Policy Framework: Diluting Protections

· Shift in Philosophy: Since the 1990s, the push for “labour flexibility” has led to a systematic weakening of labour rights.
· Key Dilution Measures:
· Self-Certification: States like Maharashtra allowed employers to self-certify safety compliance, reducing government oversight in the name of “Ease of Doing Business.”
· New Labour Codes: The Occupational Safety, Health and Working Conditions (OSHWC) Code, 2020 aims to replace the Factories Act. Critics argue it could convert workplace safety from a statutory right into an executive discretion.
· Extended Working Hours: Several states, like Karnataka, have made pandemic-era extensions to working hours and reduced rest periods permanent.

5. Consequences of Weakened Protections

· Loss of Life and Trust: The immediate consequence is the continued loss of workers’ lives and a weakening of public trust.
· Undermined Productivity: Contrary to the goal of efficiency, the ILO finds that unsafe workplaces lead to lower productivity, higher absenteeism, and reduced job satisfaction.
· Short-Termism: The industrial culture prioritizes short-term profits over long-term sustainability and worker well-being.

6. The Path Forward: Restoring the Balance

To achieve sustainable growth, India must restore the balance between economic development and labour justice. Essential steps include:

· Reaffirming labour rights as fundamental rights.
· Reinforcing independent safety inspections.
· Enhancing penalties and ensuring criminal liability for negligent employers.
· Expanding social security coverage to contract and gig workers.

Conclusion: A resilient and equitable economy requires a social contract that values both productivity and human life. Strengthening labour protections is not a regulatory burden but a necessity for saving lives and fostering sustainable growth.

Constitutional Validity of Securities Transaction Tax

The Securities Transaction Tax (STT) is a direct tax levied and collected by the Indian government on the purchase and sale of securities (like stocks, derivatives, and mutual fund units) that are listed on recognized stock exchanges in India.

· Introduction: It was introduced by the then Finance Minister, P. Chidambaram, through Finance (No. 2) Act, 2004.
· Objective and Rationale: The primary objectives were:
· Curb Tax Evasion: Before STT, profits from the stock market were taxed as capital gains, but evasion was rampant due to the difficulty in tracking transactions and under-reporting of profits.
· Simplify Taxation: STT provided a simple, efficient, and transparent method of collecting tax directly at the source of the transaction.
· Generate Revenue: To ensure a steady and predictable revenue stream for the government from the booming capital markets.
· Structure and Applicability:
· STT is levied at different rates for different types of transactions (e.g., delivery-based equity, intra-day trades, futures, options).
· It is applicable to transactions in equity shares, derivatives, and equity-oriented mutual funds.
· The tax is automatically deducted by the stockbroker at the time of the transaction and passed on to the exchange, which then deposits it with the government. This makes the process seamless for the investor.
· Impact:
· For the Government: It has been a significant and consistent revenue generator, often contributing over ₹30,000 crore annually.
· For Investors:
    · Benefit: For long-term investors, paying STT provides an exemption from filing capital gains tax in certain scenarios, simplifying compliance.
    · Drawback: For high-frequency traders and day traders, STT increases transaction costs. Crucially, STT is a non-refundable cost, meaning it must be paid even if the trade results in a loss.

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News Summary

The Supreme Court of India has recently agreed to hear a petition challenging the constitutional validity of the Securities Transaction Tax (STT). The Court has issued a formal notice to the Union Government (Ministry of Finance), seeking its response to the allegations.

About the Petition

The petition argues that the STT, as levied under the Finance Act, 2004, is unconstitutional and places an unjust burden on traders and investors.

Key Grounds of Challenge

The constitutional challenge is based on several key arguments:

1. Violation of Fundamental Rights:
   · Article 14 (Right to Equality): The petitioner argues that STT is arbitrary and discriminatory. It treats all transactions equally by taxing them at a flat rate, regardless of whether the trader makes a profit or suffers a loss, which is inherently unfair.
   · Article 19(1)(g) (Right to Practice Any Profession): It is contended that by imposing a compulsory tax on every single transaction, STT acts as a restriction on the fundamental right to carry on the trade or business of securities trading.
   · Article 21 (Right to Life and Personal Liberty): The petition links the right to livelihood and dignity to the profession of trading, arguing that an arbitrary and punitive tax infringes upon this right.
2. Double Taxation: The petitioner alleges that STT amounts to double taxation. A trader first pays STT on the transaction itself and then is also liable to pay Capital Gains Tax on the profit earned from that same transaction. This, they argue, is an unfair tax on the same economic activity twice.
3. Arbitrary and Punitive Nature: A central grievance is that STT is levied irrespective of profit or loss. Unlike other business expenses that can be offset against income, STT is a sunk cost. For a trader who ends the year with net losses, paying STT on every trade is seen as a punitive measure that taxes the very act of participating in the market, not the income generated from it.
4. Lack of Refund Mechanism: The petition contrasts STT with Tax Deducted at Source (TDS), which can be adjusted or refunded if the taxpayer’s total income is below the taxable limit. STT offers no such recourse, making it a final and non-recoverable cost.

Implications

The Supreme Court’s examination of STT’s validity has significant potential implications:

· If the Court Strikes Down STT: It could lead to a massive restructuring of how securities transactions are taxed in India. The government would lose a major source of revenue and would need to find an alternative mechanism to tax capital markets effectively and prevent a return to pre-2004 evasion issues.
· If the Court Upholds STT but Suggests Reforms: The Court may validate the tax but recommend procedural changes. This could include:
· Introducing a refund or carry-forward mechanism for STT paid on loss-making transactions.
· Differentiating tax rates based on the holding period or the nature of the trader.
· Setting a Precedent: The verdict will be a landmark judgment defining the limits of the government’s power to impose transactional taxes and will set a precedent for evaluating such taxes against the touchstone of constitutional rights like equality and the freedom to trade.

The government is now required to file its counter-affidavit, defending the policy rationale and legal basis of the tax, after which the Supreme Court will hear the matter in detail.

States of Imbalance: CAG’s Warning on India’s Fiscal Future

When India’s Comptroller and Auditor General (CAG) turns its gaze to the States, the findings demand attention. After all, the combined budgets of Indian States exceed the GDP of many nations, shaping the daily lives of over a billion citizens. The CAG’s decadal analysis of State finances offers both reassurance and alarm: some States have steered their fiscal ships steadily, while others are sailing dangerously close to debt storms.

The Uneven Map of State Finances

Reforms of the early 2000s and the growth boom of the 2010s had nudged many States from chronic deficits to the occasional surplus. GST broadened tax bases, better compliance boosted collections, and for a time the fiscal horizon brightened. But the pandemic tore through these gains: revenues collapsed, emergency spending soared, and debt burdens ballooned.

The result is stark divergence. Maharashtra can largely fund itself, while Arunachal Pradesh survives on Central transfers. Odisha has emerged as a model of prudence, cutting its debt ratio to 15% of GSDP—the lowest in India—while Punjab staggers under liabilities of 45%.

Fragile Revenue Foundations

What the CAG underscores most vividly is the fragility of State revenue sources. Kerala leans heavily on lottery sales (₹12,000 crore in 2022–23). Odisha depends on mining royalties for 90% of its non-tax revenue. Telangana plugs its gaps with land sales worth nearly ₹10,000 crore. These are unstable foundations—lotteries fluctuate, mineral prices swing, and land is finite.

Even seemingly strong States betray dependence: Uttar Pradesh, despite a surplus, receives over half its receipts from the Centre. The vertical fiscal imbalance in India’s federal structure remains stubbornly unresolved.

Borrowing Today, Paying Tomorrow

If revenues are shaky, borrowings are rising. Andhra Pradesh has tripled its borrowings to ₹1.86 lakh crore, pushing debt to 35% of GSDP. Bihar hovers near 39%, Kerala at 37%. The line between fiscal management and fiscal distress is thinning. For some States, the post-pandemic borrowing binge is simply a deferred crisis.

The Welfare Paradox

Perhaps the most sobering insight is what the CAG calls the “welfare paradox.” Fiscal surpluses or stable debt profiles do not necessarily mean better welfare outcomes. Education, healthcare, and infrastructure often remain underfunded, while populist schemes—free power, farm loan waivers, cash transfers—soak up resources. Off-budget borrowings and opaque welfare financing make balance sheets look healthier than they are, deferring pain but not erasing it.

Why It Matters

This fiscal fragility has implications beyond spreadsheets. Volatile revenues undermine long-term planning. Rising debt threatens macroeconomic stability. Persistent dependence on Central transfers curtails State autonomy. Populist policies, though politically rewarding, risk mortgaging future growth.

The Way Forward

The message from the CAG is clear: diversify revenue streams, prioritize productive capital expenditure, and shine a brighter light on opaque borrowing practices. Strengthening fiscal federalism is not an abstract ideal—it is a necessity for India’s economic resilience.

India cannot afford States that stumble under debt while chasing short-term populism. Nor can it rely on fragile revenue fixes like lotteries and land sales. The true test of governance lies in building sustainable fiscal capacity—so that welfare is funded not by chance or borrowing, but by durable growth.

Buybacks vs. Dividends: Tax Considerations

Buybacks are great for companies though. If you pay a dividend people get taxed at up to 35%+ anyhow. A buy back reduces the number of shares of a company so your future earnings are spread over fewer shares (higher EPS).

And if your company has to pay you, it’s better as a buyback than a dividend. You just pay the tax on dividends. In buybacks at least you get back the capital loss on your purchase.

However, unless you’re in a low tax bracket, you shouldn’t tender perhaps. Cos selling in the market is more efficient tax wise, usually.

Stock buybacks and dividends are two common ways companies return capital to shareholders, and each has distinct tax and financial implications. Your observations cover several important points about these mechanisms.

Buybacks vs. Dividends: Tax Considerations

– Dividends are typically taxed as ordinary income for investors, which can reach rates as high as 37% in the U.S. for high earners, plus potential state taxes.
– Share buybacks reduce the number of outstanding shares, which increases earnings per share (EPS). Investors benefit through potentially higher stock prices, and only incur capital gains tax when they sell shares.
– Long-term capital gains are usually taxed at lower rates than ordinary income, favoring buybacks over dividends for some investors, especially those in higher tax brackets.
– For investors tendering shares in a buyback, the sale is typically subject to capital gains tax. For those who don’t tender, there is no immediate tax event.

EPS and Shareholder Value

– By reducing share count, buybacks increase EPS, which can make a company look more attractive to investors and can result in stock price appreciation.
– Higher EPS does not always equate to increased underlying value unless the company is repurchasing shares below intrinsic value.

Tendering vs. Selling in the Market

– Participating in a buyback tender offer may not always be tax efficient, especially for those in higher tax brackets. Selling shares on the open market gives the investor more control over timing and potential tax-loss harvesting opportunities.
– For investors outside low tax brackets, not tendering can be better, as capital gains rates are often lower, and tax planning can be more personalized.

Key Takeaways

– Buybacks generally provide more tax flexibility and benefit high-income investors by deferring and potentially lowering taxes compared to dividends.
– They also signal management confidence and can strategically increase EPS, but only create value if shares are repurchased at or below intrinsic value.
– Not all investors should tender into buybacks; individual tax situations, market conditions, and investment strategies should dictate the best course.

For most high-bracket investors, buybacks tend to be more tax-efficient, especially if shares are held for the long term and sold under favorable capital gains rates.

Overview of GST 2.0: “GST Bachat Utsav”

The Goods and Services Tax (GST) system in India has undergone a significant overhaul effective September 22, 2025. Dubbed “GST Bachat Utsav” (GST Savings Festival), this reform aims to simplify the complex rate structure that had been in place since 2017. The primary goals are to resolve long-standing issues like classification disputes and inverted duty structures, while also stimulating household consumption.

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Key Features of GST 2.0

The most notable change is the drastic simplification of the tax slab system.

1. Rate Rationalization:
   · Old System: 4 primary slabs (5%, 12%, 18%, 28%).
   · New System: A simplified 2-slab structure:
     · Merit Rate (5%): Applied to 516 essential items, including food products, agricultural machinery, and medical devices.
     · Standard Rate (18%): Applied to 640 items, covering most industrial goods, small cars, and bikes.
   · The 12% slab has been abolished, except for bricks under a special scheme.
2. Special Slabs for Specific Goods:
   · 0.25%: Rough diamonds and semi-precious stones.
   · 1.5%: Cut and polished diamonds.
   · 3%: Precious metals like gold, silver, and pearls.
   · 40%: “Sin” or demerit goods such as pan masala, tobacco, aerated beverages, yachts, and luxury cars.
3. Service Tax Revisions:
   · Life & Health Insurance: GST has been completely exempted (previously 18%).
   · Budget Hotels: Tariffs ≤ ₹7,500 per day now attract 5% GST without Input Tax Credit (ITC) (down from 12% with ITC).
   · Salons, Spas, Wellness Services: Rate reduced from 18% to 5%.
4. Ensuring Consumer Benefit:
   · The Finance Ministry has mandated monthly monitoring of price changes for six months to ensure that the benefits of tax cuts are passed on to end consumers and not retained by businesses as extra profit.

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Economic Rationale Behind the Reforms

The government’s strategy is driven by several key economic principles:

· Boosting Household Consumption: By lowering taxes on a wide range of goods and services, the reform increases the disposable income of consumers. This is expected to spur demand, which in turn can incentivize businesses to invest more, creating a positive economic cycle. The government anticipates that the revenue loss from the cuts will be offset by higher volumes of consumption.
· Correcting the Inverted Duty Structure (IDS): This was a major flaw in the original GST. An IDS occurs when the tax on inputs (raw materials) is higher than the tax on the final product, leading to accumulated tax credits and blocked capital for businesses. By merging the 12% and 18% slabs into a single 18% standard rate for many goods, the reform aligns tax rates on inputs and outputs, resolving this issue for many sectors.

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Implementation and Compliance Reforms

To complement the rate changes, the administration of GST is being streamlined:

· Simplified Registration: Technology-driven and time-bound processes.
· Pre-filled Returns: To reduce manual errors and speed up filing.
· Automated Refunds: Especially for exporters and those affected by IDS.
· Provisional Refunds: An amendment to the CGST Act will allow for 90% provisional refunds in IDS cases, improving cash flow for businesses.

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Persisting Challenges

Despite the comprehensive changes, several challenges remain:

· Revenue Concerns: Both the central and state governments are concerned about potential short-term revenue losses, despite the expected boost in consumption.
· Residual IDS Issues: The problem of inverted duty structure persists in specific sectors like textiles, fertilizers, tractors, and corrugated boxes.
· Enforcement Gap: There is currently no strong legal provision against profiteering. The government relies on monitoring, which may not be sufficient to ensure businesses pass on the tax benefits to consumers.

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The Way Forward

For GST 2.0 to be a long-term success, the following steps are crucial:

1. Address Remaining IDS: Focus on resolving inverted duty structures in the remaining sectors.
2. Strengthen Anti-Profiteering Mechanisms: Implement stricter, legally-backed measures to ensure price reductions reach consumers.
3. Support State Finances: Ensure state revenues are stable through improved compliance and digital monitoring.
4. Periodic Reviews: Regularly review the tax slabs to maintain a balance between revenue generation and ease of doing business.
5. Build Trust: Continue enhancing technology-driven compliance to foster a trust-based tax ecosystem.

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Conclusion

The “GST Bachat Utsav” represents a major evolution of India’s indirect tax system. By simplifying the rate structure, it aims to reduce compliance burdens, stimulate the economy, and correct structural flaws. While the reforms promise significant relief for both households and businesses, their long-term success will depend on effectively addressing the challenges of revenue stability, residual IDS issues, and ensuring that the benefits truly trickle down to the end-consumer.

Onion Sector in India – Price Distress and Policy Challenges

Onion Production in India: An Overview

The onion is not just a vegetable in India;it is a politically sensitive commodity whose price can influence elections. India is the world’s second-largest producer of onions (after China), with an annual production averaging between 25 to 30 million tonnes. This staple is grown across the country but is concentrated in a few key states.

Key Statistics and Regions

· Leading Producers: Maharashtra, Madhya Pradesh, Karnataka, Gujarat, and Bihar are the top onion-producing states.
· Maharashtra’s Dominance: Maharashtra is the undisputed leader, accounting for a massive share of the national output. Key producing districts include Nashik, Ahmednagar, Pune, and Solapur, which benefit from a favourable climate and soil conditions.

Cropping Seasons

India grows onions in three distinct seasons:

1. Kharif (Monsoon): Harvested Oct-Dec. Perishable, not stored for long.
2. Late Kharif: Harvested Jan-Mar.
3. Rabi (Winter): Harvested Mar-Apr. This is the most important crop, constituting nearly 60% of India’s annual production. Rabi onions have a higher dry matter content, making them suitable for storage and supplying the market until the next Kharif harvest.

Persistent Challenges

Despite its massive output,the Indian onion sector is plagued by systemic issues:

· Extreme Price Volatility: Prices swing wildly due to factors like bumper harvests, crop damage from unseasonal rains, and poor storage.
· Massive Storage Losses: A significant portion of the Rabi onion crop deteriorates in traditional storage structures (kanda chawls), leading to wastage and forcing farmers into distress sales.
· Inconsistent Export Policies: The government frequently imposes export bans, minimum export prices (MEP), and duties to control domestic prices. This policy flip-flop damages India’s credibility as a reliable global supplier.
· Rising Production Costs: The cost of cultivation (including seeds, fertilizers, labour, and storage) has skyrocketed, often ranging between ₹2,200 to ₹2,500 per quintal. When market prices fall below this, farmers incur heavy losses.

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The Maharashtra Onion Crisis

The Immediate Cause of the Protests
Onion farmers in Maharashtra,primarily in the Nashik region, began aggressive protests in September 2025. The trigger was a severe crash in prices, where they were receiving a meagre ₹800 to ₹1,000 per quintal—less than half their cost of production.

Why Did the Crisis Worsen?

1. Distress from Stored Stocks: Farmers had stored their Rabi harvest expecting prices to rise later in the year. However, with the onset of the monsoon, these stocks began to sprout and rot, forcing them to sell immediately at any available price.
2. Impact of Buffer Stock Sales: To keep consumer prices in check, the central government directed its agencies—the National Agricultural Cooperative Marketing Federation of India (NAFED) and the National Cooperative Consumers’ Federation (NCCF)—to release onions from their buffer stocks into the market at subsidized rates. While intended to help consumers, this move increased supply and further depressed wholesale market prices, aggravating farmers’ losses.

Key Demands of the Protesting Farmers

The farmers have put forth a clear set of demands:

1. Financial Compensation: A relief package of ₹1,500 per quintal to offset their current losses.
2. Halt Buffer Stock Sales: An immediate stop to the sale of NAFED/NCCF onions in cities to prevent further downward pressure on prices.
3. Stable Export Policy: They demand a uniform and predictable export policy to restore trust among international buyers and ensure a steady outlet for their produce.

The Impact of Erratic Export Policies

India’s export policy has directly contributed to the crisis:

· India exported 25.25 lakh tonnes of onions in 2022–23.
· Due to successive bans and restrictions, exports fell drastically to 11.47 lakh tonnes in 2024–25.
· This policy inconsistency has allowed competitors like China, Pakistan, and Iran to capture India’s former market share in key importing countries like Bangladesh, Sri Lanka, and the UAE. Regaining this lost market is difficult.

Suggested Solutions and the Way Forward

Experts and farmers suggest several measures to break this cycle of crises:

· Incentivize Exports: Instead of bans, the government should incentivize exports to regain global market share when there is a surplus.
· Procurement Support: Replicating successful state models, like Andhra Pradesh’s procurement at ₹1,200 per quintal, could provide a much-needed Minimum Support Price (MSP) safety net for farmers in Maharashtra.
· Long-Term Structural Reforms: Investing in modern cold storage chains, promoting Farmer-Producer Organizations (FPOs) for better collective bargaining, and developing varieties with longer shelf lives are crucial for long-term stability.

Conclusion

The protests in Maharashtra are a symptom of a deep-rooted malaise in India’s agricultural policy, which often prioritizes short-term consumer price control over long-term farmer prosperity. The onion crisis underscores an urgent need for structural reforms that balance the interests of both consumers and producers. Without stable export strategies, robust procurement mechanisms, and massive infrastructure upgrades, India’s onion farmers will remain vulnerable to the same volatile markets and policy inconsistencies, leading to recurrent protests and distress.

“India’s $30 Trillion Goal Depends on Women’s Inclusion”

This article argues that India’s ambitious goal of becoming a $30 trillion economy by 2047 is unattainable without the full economic inclusion of women. It identifies key problems, proposes a solution via the Women’s Economic Empowerment (WEE) Index, and outlines necessary systemic reforms.

Key Challenges:

· Low Economic Contribution: Women contribute only 18% to India’s GDP.
· Low Workforce Participation: Nearly 196 million employable women remain outside the workforce, and only 18% of those working are in formal jobs.
· Hidden Barriers: Broad national data often masks specific, systemic barriers that prevent women from participating in and benefiting from economic growth.

The Solution: The Women’s Economic Empowerment (WEE) Index Uttar Pradesh has launched India’s first district-level WEE Index to tackle these challenges.Its value is twofold:

1. Makes Gaps Visible: It tracks women’s participation across five key areas (jobs, education/skills, entrepreneurship, livelihood/mobility, safety/infrastructure), revealing hidden problems.
2. Drives Systemic Reform: For example, data on the transport sector led to reforms in hiring women bus staff and building supportive infrastructure like restrooms. It also exposed the gap between high female enrolment in skilling programs and low transition to entrepreneurship or credit access.

Urgent Systemic Reforms Needed: The article calls for two critical changes to scale the index’s impact:

1. Universal Gender-Disaggregated Data: Every government department (MSME, housing, etc.) must collect and use detailed data that tracks not just participation but also retention, leadership, and job quality for women.
2. Reimagined Gender Budgeting: Gender analysis should be applied to all spending across sectors like education, energy, and infrastructure—not just limited to welfare schemes. Effective budgeting is impossible without measuring inclusion.

Conclusion: The WEE Index provides a replicable model for other states.By turning data into actionable district-level plans, India can shift from intent to systemic change. Closing gender gaps through better data, targeted budgeting, and frameworks like the WEE Index is essential to unlock India’s true economic potential and bring women from the margins to the center of the nation’s growth story.

SEBI Unveils Sweeping Market Reforms: A Comprehensive Overview

In a significant move to bolster India’s capital markets, the Securities and Exchange Board of India (SEBI) has announced a series of major reforms. These changes are designed to attract foreign investment, ease the process for large companies to go public, strengthen market governance, and encourage retail participation.

The reforms come at a crucial time when Foreign Portfolio Investors (FPIs) have been pulling out capital due to global economic uncertainty, high valuations, and weak corporate earnings.

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Key Reforms and Their Implications

1. SWAGAT-FI: Streamlining Foreign Investment

· What it is: Single Window Automatic & Generalised Access for Trusted Foreign Investors (SWAGAT-FI). This is a unified access platform for trusted foreign investors.
· Who it’s for: FPIs and Foreign Venture Capital Investors (FVCIs) from specific, well-regulated categories like:
· Sovereign Wealth Funds
· Central Banks
· Insurance & Pension Funds
· Regulated Retail Funds
· Key Features:
· Longer Validity: A unified 10-year registration and KYC cycle, a major increase from the previous 3 years.
· Eased Ownership Rules: Exemption from the 50% cap on aggregate contributions by NRIs, OCIs, and resident Indians in an FPI.
· Simplified Process: Reduced paperwork and simplified compliance through the new India Market Access portal.
· Goal: To restore confidence and attract long-term foreign capital amidst significant recent outflows.

2. Relaxed IPO Norms for Large Companies

SEBI has eased rules for large companies to list on stock exchanges, making it more attractive for them to tap public markets.

· Reduced Minimum Public Offer (MPO):
· Companies with a market cap between ₹1-5 lakh crore now only need to offer 2.75-2.8% of their post-issue capital, compared to the previous 5% requirement.
· The MPO size threshold for the largest issuers has been raised to ₹6,250 crore.
· Extended Timeline for Public Shareholding:
· Companies with less than 15% public shareholding at the time of listing now get 10 years (increased from 3-5 years) to meet the mandatory 25% minimum public shareholding norm.
· Revised Anchor Investor Rules:
· The anchor investor quota has been increased to 40% from the previous one-third.
· The minimum allotment size for an anchor investor is now set at ₹5 crore.
· Broader participation is now allowed for categories like mutual funds, life insurers, and pension funds.

3. Stronger Governance for Market Institutions

To prevent past governance lapses, SEBI has introduced new rules for stock exchanges and clearing corporations.

· Clear Separation of Roles: Two executive directors will now head separate verticals:
1. Critical Operations: Overseeing trading, clearing, and settlement.
2. Regulatory Compliance: Handling risk management and investor grievances.
· Enhanced Accountability: The roles of Managing Directors and other key managers have been clearly defined to improve accountability and succession planning.

4. Mutual Fund and Retail Investor Reforms

To promote financial inclusion and protect small investors, SEBI has introduced several retail-centric measures.

· Lower Exit Load: The maximum exit load charged by mutual funds has been reduced to 3% from the previous 5%.
· Incentivizing Broader Participation:
· Distributor incentives have been revised to encourage investments from Beyond Top-30 cities (B-30).
· Additional incentives are proposed to boost participation by women investors.
· Tighter Related-Party Transaction (RPT) Rules: Enhanced disclosure and compliance norms for RPTs, with thresholds now linked to a company’s turnover.

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Significance of the Reforms

· For India’s Markets: Provides much-needed flexibility for large companies to raise capital without excessive dilution and simplifies the investment process for trusted global players.
· For Global Competitiveness: The SWAGAT-FI framework positions India as a stable and attractive long-term investment destination, competing effectively for global capital.
· For Retail Investors: The focus on smaller cities and women investors, along with lower costs (exit load), aligns with India’s goal of achieving inclusive financial growth.

In summary, SEBI’s reforms represent a holistic effort to modernize India’s regulatory framework, making it more agile, investor-friendly, and robust in the face of global economic challenges.

SC Clarifies: Aadhaar Establishes Identity, Not Citizenship

In a significant clarification, the Supreme Court of India has consistently and explicitly stated that the Aadhaar card is a proof of identity and residence, not a proof of citizenship. This distinction is crucial for understanding the role of Aadhaar in India’s legal and administrative framework.

The Core of the Ruling

The most definitive statement on this matter came from the landmark Justice K.S. Puttaswamy (Retd.) vs Union Of India case in 2018 (the Aadhaar Act case). While the court upheld the constitutional validity of Aadhaar for specific purposes, it placed strong limitations on its use.

The Supreme Court clarified that:

· Aadhaar is designed to establish a person’s identity. It verifies that you are who you say you are, based on your biometrics (fingerprints, iris scan) and demographic data.
· The enrollment process for Aadhaar does not require an individual to prove their citizenship. The law (Aadhaar Act, 2016) allows any resident to enroll. A “resident” is defined as a person who has resided in India for 182 days or more in the 12 months immediately preceding the date of application.
· Therefore, possessing an Aadhaar card does not automatically confer citizenship, and the lack of one does not imply that a person is not a citizen.

Why This Distinction is So Important

1. Prevents Exclusion from Welfare: The primary purpose of Aadhaar, as upheld by the court, is to streamline the delivery of government subsidies, benefits, and services. If Aadhaar were linked to citizenship, genuine citizens who may not have other documents could be wrongfully excluded from essential services like food rations, scholarships, and pensions.
2. Protects Fundamental Rights: Linking Aadhaar to citizenship could create a scenario where the state uses it as a tool for mass surveillance or to question the citizenship of vulnerable groups. The Supreme Court’s clarification acts as a safeguard against this.
3. Separates Identity from Nationality: It reinforces the principle that identity verification (who you are) is a separate legal question from nationality verification (which country you belong to). Citizenship is determined by the Constitution of India and laws like the Citizenship Act, 1955, not by an identity document.

Practical Implications and Recent Context

This clarification often becomes highly relevant in public discourse, especially in debates surrounding the National Register of Citizens (NRC) and the Citizenship Amendment Act (CAA).

· Aadhaar is NOT a document for NRC: Authorities cannot demand Aadhaar as a proof of citizenship for any process like a potential nationwide NRC. Citizens would be expected to provide other documents listed under the Citizenship Rules, such as a birth certificate, passport, or documents relating to their parents.
· Government Directives: The government has repeatedly issued directives to all departments stating that Aadhaar is not to be accepted as proof of date of birth or citizenship. Its purpose is solely for establishing identity for receiving a benefit or service under a government scheme.
· Enrollment of Non-Citizens: The ruling acknowledges that even non-citizens who are residents (e.g., long-term foreign students, workers, or spouses of Indian nationals) can legally obtain an Aadhaar number to access services they are eligible for, without it granting them any right to citizenship.

Conclusion

The Supreme Court’s clarification is a foundational principle that protects the original intent of Aadhaar as a tool for inclusion and efficient service delivery, while preventing its misuse as an instrument to determine or question citizenship. It ensures that the benefits of the state reach every eligible resident without creating a hostile environment where people must constantly prove their nationality.

In short: Your Aadhaar card answers the question “Are you a resident and who are you?” It does not, and cannot, answer the question “Are you an Indian citizen?”

Analysis: The Divergence Between RBI Rate Cuts and Rising Bond Yields in India

The recent phenomenon of India’s 10-year benchmark government bond yield rising by 26 basis points amidst significant RBI rate cuts is a classic case of bond market dynamics where other factors overpower the traditional influence of monetary policy. This divergence is a strong signal of underlying investor apprehensions.

1. The Core Issue: A Telling Divergence

· What Happened: The Reserve Bank of India (RBI) cut the repo rate by 100 basis points (1%) over seven months, a move typically expected to lower borrowing costs and cause bond yields to fall.
· Market Reaction: Contrary to this expectation, the yield on the 10-year government bond (a key benchmark) rose from ~6.34% to ~6.60%.
· Why it Matters: Bond yields move inversely to prices. Rising yields indicate selling pressure, reflecting investor unease about future risks such as inflation, increased government borrowing, and fiscal health.

2. Understanding the Bond Market in India

The bond market is where governments and corporations raise long-term capital by issuing debt securities.

· Purpose: It is crucial for funding national development (infrastructure, schools) and fueling business growth.
· Key Segments:
· Government Bonds: Issued by the central (G-Secs, T-Bills) and state governments (SDLs). Considered low-risk and are regulated by the RBI.
· Corporate Bonds: Issued by companies to raise capital. They offer higher returns but carry higher risk and are regulated by SEBI.
· Role of Yields: Bond yields act as a benchmark for interest rates across the economy, influencing everything from corporate loans to bank deposits.

3. Key Developments Driving the Sell-Off

· RBI’s Hawkish Stance: Despite cutting rates, the RBI’s communication has been cautious (hawkish) on inflation. The Monetary Policy Committee (MPC) has paused, keeping the:
· Repo Rate at 5.50%
· Standing Deposit Facility (SDF) at 5.25%
· Marginal Standing Facility (MSF) at 5.75% This caution signals that the central bank’s primary focus remains on controlling inflation, not just stimulating growth.
· Inflation Forecasts: While the RBI revised its 2025-26 inflation forecast down to 3.1%, its projection of a rise to 4.9% in Q1 2026-27 keeps investors on edge about future rate hikes.

4. Market Interpretation: The Steepening Yield Curve

The market’s worry is visible in the yield curve (a graph plotting yields against different maturities).

· Steepening Curve: Long-term yields (e.g., 10-year) have risen more sharply than short-term yields.
· Interpretation: This indicates that investors demand higher compensation for holding long-term debt due to expectations of:
· Higher future inflation.
· Increased government borrowing in the future.
· General fiscal risks.

5. Major Fiscal Concern: GST Reform Proposal

A significant source of investor anxiety is a proposal to reform the Goods and Services Tax (GST).

· The Proposal: To rationalize the current 4-tier rate structure (5%, 12%, 18%, 28%) into a simpler 2-rate structure (5% and 18%), with a high 40% rate for “sin goods.”
· The Fear: This simplification could lead to a substantial revenue loss of ₹50,000–60,000 crore for the government.
· Impact on Bonds: A drop in revenue increases the risk of fiscal slippage (the government missing its deficit target). To compensate, the government may need to borrow more money. An increase in the supply of bonds naturally pushes their prices down and yields up.

6. Possible Corrective Measures

To calm the bond market and control yields, authorities can intervene:

· Government Borrowing Strategy: The government could shift its borrowing towards more short and medium-term bonds, which are less sensitive to long-term inflation fears.
· RBI Intervention:
· Open Market Operations (OMOs): The RBI can buy long-term government bonds from the market. This reduces the supply of bonds and pushes their prices up (and yields down).
· Operation Twist: A simultaneous action where the RBI buys long-term bonds (to push long-term yields down) and sells short-term bonds (to prevent excess liquidity). This flattens the yield curve.

7. Forward Outlook

The near-term trajectory for bond yields depends heavily on the inflation path.

· No Immediate Relief: Immediate rate cuts are unlikely as the RBI will want to see a sustained decline in inflation.
· Potential Stabilization: If inflation data continues to ease, the RBI could adopt a more growth-supportive (dovish) stance. This could revive demand for long-term bonds and help stabilize or lower yields in the medium term.

Conclusion

The rise in bond yields despite rate cuts is a powerful message from investors. It highlights that while the RBI is managing monetary policy, the market is deeply concerned about fiscal risks—particularly the government’s ability to maintain revenue and control its borrowing.

Going forward, the stability of India’s bond market will hinge on a balanced approach: prudent fiscal management by the government to allay borrowing fears and timely interventions (like OMOs) by the RBI to manage yields. Once inflation risks subside, this will create room for policies that support economic growth without spooking the bond market.

RBI’s Surplus Transfer: Windfall or Warning?

Every year, the Reserve Bank of India’s balance sheet provokes more public interest than most central banks elsewhere. The reason is simple: the surplus that the RBI transfers to the government is not just an accounting exercise, but a matter of fiscal strategy and political significance. In May this year, the central bank announced that it would transfer a record ₹2.69 lakh crore to the government, surpassing last year’s ₹2.1 lakh crore. The figure comfortably exceeded expectations and, in doing so, once again underscored how dependent the public debate has become on this annual ritual.

The frenzy around the surplus transfer is not misplaced. Unlike in advanced economies, where central bank profit transfers are routine and relatively modest, the numbers in India are eye-catching. The RBI earns substantial income from its foreign exchange reserves, holdings of government securities, and lending operations. After making provisions for risks, the remainder flows into the government’s coffers. For a fiscally stretched government, this has become a crucial support—helping narrow the deficit, finance welfare commitments, and sustain capital spending without visibly raising taxes or cutting back on politically sensitive expenditure.

The very scale of these transfers explains the excitement. Few budget lines can shift the fiscal arithmetic so dramatically and so suddenly. But the repeated reliance on this “windfall” raises a deeper question: should a central bank’s financial strength be routinely leveraged to plug fiscal gaps?

That was precisely the issue that led to the establishment of the Economic Capital Framework (ECF) in 2019, following the recommendations of the Bimal Jalan Committee. The Committee, set up after a public dispute between the government and the RBI over surplus sharing, sought to strike a balance between two imperatives: ensuring the RBI retains adequate capital buffers to manage risks, and ensuring that the government receives a reasonable share of profits without undermining monetary stability.

Under the ECF, the RBI calibrates how much capital it needs to set aside against risks such as exchange rate volatility, interest rate changes, and credit losses. Only the residual can be transferred to the government. The framework was designed to depoliticize the transfer process and shield the central bank from pressure to over-disburse.

This year, in line with the recommendation that the ECF be reviewed every five years, the RBI conducted an internal review. The Board concluded that the framework had broadly achieved its objectives: maintaining a resilient balance sheet while allowing healthy transfers. While the broad principles remain unchanged, refinements have been introduced to give the Board greater flexibility in setting aside buffers depending on prevailing macroeconomic conditions and evolving risks. This allows for inter-temporal smoothing—ensuring transfers do not swing wildly from one year to the next—while preserving the credibility of the RBI’s risk management.

The review is as significant as the headline number. It signals that the RBI is aware of the temptation to treat its balance sheet as a fiscal cushion. By reaffirming the principles of prudence while tweaking operational details, the central bank is trying to reassure both markets and the government: yes, the transfers will continue, but not at the cost of financial resilience.

Still, the broader debate remains unresolved. Should the government view RBI transfers as a stable revenue source, or as an uncertain supplement? The answer matters. If treated as stable, fiscal planning becomes hostage to central bank fortunes—potentially pressuring the RBI to prioritize profits over prudence. If treated as a supplement, the government would have to maintain discipline on taxes and spending, while welcoming the surplus as a bonus.

The political economy of India tilts towards the former. Each year, expectations are set, headlines are written, and the eventual transfer is hailed as either a relief or a disappointment. The risk is that such dependence, if unchecked, erodes the firewall between fiscal and monetary authority. The credibility of central banks worldwide rests on their independence; India is no exception.

The ₹2.69 lakh crore transfer should, therefore, be read with nuance. It undoubtedly provides the government breathing space at a time when spending needs are high and revenues strained. But the more enduring message lies in the ECF review: the RBI is prepared to share the bounty, yet determined to keep its guardrails intact. For India’s long-term macroeconomic stability, that balance—between fiscal need and monetary prudence—is more important than the size of any single transfer.

GDP Q1 Growth 7.8% : Bluechips Power Ahead

Of course. This is a fascinating and classic divergence that highlights a key dynamic in the Indian stock market and economy. Here’s a breakdown of what these numbers mean and why they are occurring.

Summary of the Key Data Points:

· Macro Economy (GDP): Strong and broad-based growth at 7.8% for Q1 FY25. This indicates the overall Indian economy is firing on most cylinders.
· Large Caps (Nifty 50): Exceptional corporate earnings growth of 26%. This shows the country’s largest companies are not just growing but profiting handsomely.
· Small Caps (Nifty Smallcap 250): Negative earnings growth. This indicates that smaller companies, on average, are struggling with profitability despite the strong economic backdrop.

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Why is this Happening? (The “Bluechips Shine in Turmoil” Thesis)

The headline “Bluechips shine in turmoil” perfectly captures the situation. The “turmoil” refers to a challenging environment for smaller businesses, while “bluechips” (large, established Nifty 50 companies) are thriving. Here are the primary reasons for this divergence:

1. Economic Structure and Market Share Consolidation:

· In a post-pandemic, high-inflation environment, larger companies have immense advantages.
· Pricing Power: Bluechips can pass on increased input costs (raw materials, logistics) to consumers without losing significant market share. Small companies often cannot, which crushes their profit margins.
· Operational Efficiency: Large companies benefit from economies of scale, better logistics networks, and sophisticated cost-management systems, helping them protect margins.
· Formalization: A strong economy often accelerates the shift from the unorganized sector to the organized sector. Large, listed companies gain market share at the expense of smaller, unlisted players.

2. Financial Strength and Access to Capital:

· Interest Rates: While not rising sharply, interest rates have been high. Large companies have strong balance sheets, low debt, and better access to cheap capital. Smaller companies often rely on costlier borrowing, which hurts their profits as financing costs rise.
· Investment Capability: Bluechips have the financial muscle to invest in new technologies, digital transformation, and capacity expansion during good times, positioning them for even stronger future growth.

3. Sectoral Composition:

· The Nifty 50 is heavily weighted towards sectors that have done exceptionally well:
· BFSI (Banks, Financial Services): Benefiting from strong credit growth and healthy asset quality.
· Automobiles: A strong rebound in demand, especially for premium vehicles.
· Oil & Gas: Managed volatility in crude prices effectively.
· IT Services: While growth is muted, margins have stabilized for large players.
· The Smallcap index is more diversified into manufacturing, chemicals, textiles, and mid-sized IT companies. These sectors are more vulnerable to global demand fluctuations, intense domestic competition, and margin pressure.

4. Valuation and Speculation:

· In the recent past, the smallcap segment saw a massive rally, often driven by retail investor euphoria rather than fundamentals. This led to stretched valuations.
· Q1 results acted as a reality check. When earnings failed to support these high valuations, the reaction was severe, resulting in negative sentiment and price corrections. The Nifty 50, while not cheap, had valuations more in line with its earnings growth.

What Does This Signal for the Indian Economy and Markets?

· K-Shaped Recovery: This is a textbook example of a K-shaped recovery, where different parts of the economy recover at starkly different rates. The large, formal sector is booming, while the smaller, informal sector is lagging.
· Stock Market vs. Economy: It demonstrates that a strong GDP number does not automatically translate into prosperity for all listed companies. Stock market performance is highly segmented.
· Flight to Quality: In times of uncertainty or “turmoil” (even within a growing economy), investors and consumers alike tend to flock to established, trustworthy names—the bluechips. This reinforces their dominance.
· Caution for Investors: It serves as a crucial reminder of the risks in the smallcap space. Investing based solely on macroeconomic optimism can be dangerous; bottom-up stock selection focusing on fundamentals is critical.

In conclusion, the data reveals a tale of two economies within India’s growth story. The macro economy is robust, but the benefits are flowing disproportionately to the largest, most efficient corporations, allowing them to deliver stellar earnings even as their smaller competitors struggle.

Analysis: US Imposes 50% Tariffs on Indian Exports

On August 27, 2025, the administration of US President Donald Trump implemented sweeping 50% tariffs on a wide range of Indian merchandise exports. This move represents a significant escalation in trade tensions between the two strategic partners. The tariffs are explicitly framed as a punitive measure against India for its continued economic engagement with Russia, particularly its purchases of Russian oil and S-400 missile defence systems. The policy shift threatens to derail a key growth engine for the Indian economy, impacting millions of jobs and undermining ambitious government initiatives like the Production Linked Incentive (PLI) schemes.

Details of the Tariffs

· Scope and Scale: The tariff is not universal but targets specific, high-value export sectors. It effectively doubles the existing import duties on these goods, pushing total tariffs in some categories above 60%.
· Value Affected: According to the Global Trade Research Initiative (GTRI), nearly 66% of India’s exports to the US (worth approximately $59 billion in FY25) are now subject to this new tariff.
· Projected Impact: GTRI estimates suggest Indian exports to the US could plummet by 40-45% in FY26, falling from $87 billion in FY25 to around $49.6 billion.

Sector-wise Breakdown of Impact:

· Heavily Impacted (Facing 50% Tariff): This group constitutes the bulk of the affected exports and includes labour-intensive, low-margin sectors:
· Textiles and Apparel: A critical sector where the US is the largest market.
· Gems and Jewellery: Exports worth over $10 billion to the US are at risk.
· Marine Products (Shrimps): The US accounts for nearly 48% of India’s shrimp export revenue.
· Handicrafts, Carpets, and Furniture: These sectors are highly dependent on US demand.
· Moderately Impacted: Auto parts will face a separate 25% tariff.
· Exempted (Duty-Free): Key sectors like pharmaceuticals ($12.7 billion), **electronics** ($10.6 billion), and petroleum products will continue to enjoy duty-free access for now.

Sectoral Impact on India

The immediate impact is severe for specific industries and the broader economy:

· Immediate Disruption: Production hubs like Tirupur (textiles), Surat (diamonds), and Noida (apparel) have already reported order cancellations and production halts.
· Job Losses: These targeted sectors are highly labour-intensive. A sharp decline in exports is expected to lead to widespread unemployment among low-skilled and semi-skilled workers.
· Export Volume Crunch: Industry bodies fear export volumes from the affected sectors could drop by up to 70%, making them uncompetitive against rivals in Vietnam, Bangladesh, and Cambodia who enjoy lower or zero tariffs.

Implications for India’s PLI Push and Investment

The timing of the tariffs is particularly damaging as it threatens to stifle India’s nascent manufacturing revival.

· Private Capex Slowdown: The tariffs inject significant uncertainty, causing businesses to reconsider long-term investment plans. Nearly 50% of India’s planned industrial capital expenditure is in sectors exposed to such global trade risks.
· PLI Scheme Disruption: The tariffs directly undermine the goals of the PLI scheme.
· Weak Uptake in Vulnerable Sectors: Applications for PLI in advanced sectors like advanced chemistry cells (ACC), solar PV modules, and drones were already lagging due to high investment needs. The new trade barrier makes them even less attractive.
· Investor Caution: Both domestic and foreign investors are likely to become cautious about investing in export-oriented manufacturing in India, fearing similar punitive measures from other Western markets.

Macroeconomic and Geopolitical Dimensions

· GDP Growth: Economists project that a sustained export shock of this magnitude could shave off 0.5-1% from India’s GDP growth, potentially pulling it down from ~6.5% to ~5.6%.
· Geopolitical Strains: The move highlights a clear friction in the India-US relationship: strategic security alignment versus economic protectionism. While the two nations cooperate closely on Indo-Pacific security (e.g., the Quad), trade relations are being weaponized to force geopolitical compliance, in this case, against Russia.
· Future Risks: The threat of similar tariffs on currently exempted sectors like pharmaceuticals (Trump has previously floated the idea of 200% tariffs unless production is localized in the US) looms large, creating a climate of persistent uncertainty.

Way Forward for India

India’s response will be critical in mitigating the damage. Potential strategies include:

· Diplomatic Engagement: Intense dialogue to negotiate exemptions or a phased reduction of tariffs, highlighting the broader strategic partnership.
· Export Diversification: Accelerating efforts to diversify export markets and reduce dependence on the US by fast-tracking Free Trade Agreements (FTAs) with the European Union, the United Kingdom, and regional blocs like ASEAN.
· Domestic Policy Support: The government may need to provide immediate relief to affected exporters through:
· Enhanced Duty Drawback schemes.
· Loans and Moratoriums for stressed MSMEs.
· Logistics and Infrastructure Improvements to reduce domestic costs and improve competitiveness.
· Leveraging Domestic Strength: India’s large domestic economy (exports are only ~20% of GDP) provides a buffer that more export-dependent nations like Vietnam (exports are ~90% of GDP) lack. Boosting domestic demand can partially absorb the shock.

Conclusion

The US decision to impose 50% tariffs is a severe economic blow that carries significant geopolitical weight. It directly targets the core of India’s export economy and its ambitions to become a global manufacturing hub. While India has some defensive strengths, navigating this challenge will require a multi-pronged strategy of deft diplomacy, urgent policy support for affected industries, and a renewed push to integrate with other global markets to ensure its economic growth story remains on track.

Powell says rates may need to be cut, but Fed to proceed carefully

Here are the key takeaways from Fed Chair Jerome Powell’s speech at the Jackson Hole Economic Symposium on August 22, 2025:

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Key Takeaways

1. Risks Now Tilt Toward Jobs, Not Just Inflation

Powell highlighted a shifting balance in the Fed’s dual mandate. While inflation risks remain, slowing job growth and a weakening labor market are now gaining more attention. He observed an unusual “balance” in the labor market, with both supply and demand for workers declining, increasing the downside employment risk. This marks a clear tilt in the Fed’s focus toward jobs, not solely inflation.

2. Labor Supply Weakening, Demand Weakening

Powell emphasized that both labor supply and labor demand are weakening—a rare and “curious” dynamic. This kind of weakening can rapidly lead to spikes in layoffs and unemployment if conditions deteriorate further.

3. Fed Scraps Flexible Average Inflation Targeting

As part of a broader review of its monetary policy framework, the Fed has removed language related to flexible average inflation targeting (i.e., allowing overshoots of inflation as makeup for past shortfalls), and the “makeup strategy” from its 2020 framework has been eliminated. The updated framework is more adaptable to a wider range of economic conditions.
It emphasizes the importance of anchoring longer-term inflation expectations and makes clear that setting numeric goals for “ideal” employment levels is now considered unwise.

4. Stable Inflation Expectations No Longer Taken for Granted

Powell reaffirmed the Fed’s strong commitment to keeping inflation expectations anchored, stating it’s crucial for fulfilling its dual mandate. The framework update underscores that this stability cannot be assumed and requires active monetary policy reinforcement.

5. Possible Rate Cut in September — But No Commitment

Markets interpreted Powell’s remarks as a strong signal toward a September rate cut—possibly a quarter-point easing—though Powell stopped short of committing, noting that decisions will remain data-dependent.
Indeed, futures markets quickly priced in a high probability of a cut in September.

6. Fed Sticks to Independence and Data-Driven Approach

Amid political pressure—particularly from President Trump—the Fed reiterated its independence from political influence, stressing that policy decisions would continue to be made based solely on incoming economic data.

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Bottom Line

Powell’s Jackson Hole address on August 22, 2025 signaled a notable shift. With growing risks to jobs, a revised policy framework that removes previous flexibility on inflation and emphasizes anchoring expectations, and markets pricing in a likely rate cut in September, the Fed is striking a posture that balances caution with adaptability—while reaffirming its independence and data-driven approach.

The Online Gaming Bill 2025: Ban on Real Money Gaming, Boost for E-Sports & Social Gaming

Introduction

The Lok Sabha has passed the Promotion and Regulation of Online Gaming Bill, 2025, marking a watershed moment in India’s digital policy framework. The Bill introduces a blanket ban on harmful real money gaming—such as fantasy sports, poker, and rummy—while at the same time providing institutional support for e-sports and online social gaming.

With this legislation, the government seeks to protect vulnerable communities from financial and psychological harms, while harnessing the potential of e-sports to drive innovation, employment, and India’s global digital competitiveness.

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Key Provisions of the Online Gaming Bill 2025

1. Segmentation of Gaming Activities

E-Sports – Recognised as a legitimate industry, eligible for policy support, investment, and promotion.

Online Social Games – Encouraged as safe, recreational activities without monetary stakes.

Online Money Games – Explicitly banned, covering all platforms where users deposit funds in expectation of financial returns.

2. Penalties for Violations

First-time offence – Imprisonment up to 3 years and fines up to ₹1 crore.

Repeat offence – Imprisonment between 3–5 years and fines up to ₹2 crore.

3. Creation of an Online Gaming Authority

Statutory regulator to:

Frame and enforce gaming regulations.

Monitor platforms for compliance.

Support e-sports and safe gaming enterprises.

Curb harmful practices such as money laundering, fraudulent models, and predatory algorithms.

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Rationale Behind the Legislation

The government cited urgent social and security concerns as the primary drivers:

32 suicides in 31 months linked to compulsive online money gaming.

Rising household indebtedness due to gambling-related financial losses.

Money laundering and terror financing risks through unregulated gaming networks.

Psychological harm from addictive and manipulative gaming algorithms.

The Lok Sabha Speaker described the Bill as a “national interest legislation”, while the IT Minister stressed that digital innovation must not come at the cost of public safety and welfare.

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Industry Response & Potential Challenges

The ban has rattled India’s multi-billion-dollar real money gaming industry, which had long sought regulation instead of prohibition.

Industry view – May challenge the Bill constitutionally, citing trade restrictions and federalism concerns.

Legal experts – Believe the Bill is robust, grounded in public interest and national security, making it likely to withstand judicial review.

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Significance for India’s Digital Future

The Bill strikes a balance between innovation and protection:

For Youth – Shields vulnerable players from financial exploitation and addiction.

For Industry – Provides clarity and legitimacy to e-sports and social gaming start-ups.

For Society – Reduces risks of fraud, money laundering, and mental health crises.

For Governance – Establishes a long-awaited uniform national framework over the fragmented state-level rules.

Importantly, by recognising e-sports as a mainstream industry, the Bill aligns with India’s ambition to become a global hub for digital entertainment, especially as the country eyes hosting major international events like the 2036 Olympics.

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✅ In essence, the Online Gaming Bill 2025 draws a clear red line against exploitative money games, while creating fertile ground for India’s e-sports and digital gaming future.