Newspaper Summary 230126

Bulk of India’s Exports Lose EU Duty Preference Benefits

Effective January 1, 2026, the European Union (EU) has fully suspended import tariff preferences for approximately 87 per cent of India's goods exported to the bloc. This move, under the Generalised System of Preferences (GSP), forces the majority of Indian exports to face full Most Favoured Nation (MFN) tariffs.

Reasons for the Suspension According to an EC update from late 2025, these products lost their GSP benefits because the average value of their imports into the EU exceeded the threshold limit set under the scheme for three consecutive years. The suspension is slated to apply from January 1, 2026, through December 31, 2028.

Impacted Sectors and Products The EU has removed GSP benefits across almost all major industrial sectors that form the backbone of India's exports. The specific items now facing full duties include:

• Mineral products, chemicals, and plastics.
• Iron, steel, basemetals, and precious metals.
• Textiles, garments, rubber, and machinery.
• Motor vehicles and electrical appliances.

Previously, these products received a Margin of Preference (MoP), which averaged a 20 per cent reduction in the EU’s MFN tariff. For example, an apparel product previously subject to a 12% MFN tariff only paid 9.6% under GSP; exporters must now pay the full 12% duty.

Remaining Benefits The products that still retain GSP benefits—including agriculture and food, leather goods, footwear, wood and paper, and handicrafts—account for less than 13 per cent of India’s total exports to the EU.

Economic and Competitive Implications Trade analysts and officials have expressed concern over India's eroding price competitiveness:

• Competitor Advantage: Ajay Sahai of the Federation of Indian Export Organisations pointed out that the withdrawal erodes India's edge against countries like Bangladesh and Vietnam, which continue to enjoy duty-free or lower-duty access.
• The FTA Factor: While India and the EU are actively negotiating a Free Trade Agreement (FTA), experts note that even if a deal is signed soon, implementation could take a year or more.
• Carbon Taxes: The loss of these preferences coincides with the start of the tax phase of the EU’s Carbon Border Adjustment Mechanism, further increasing trade barriers for Indian exporters.

Bilateral trade between India and the EU reached approximately $140 billion in 2024, making the bloc India’s largest trading partner. Leaders from both sides are scheduled to meet in late January 2026 to attempt to close the remaining gaps in the ongoing FTA negotiations.

Based on the sources provided, here is a reproduction of the reporting regarding the increase in rupee invoicing for international trade:

Invoicing of External Trade in Rupee on the Rise

In a positive sign for the economy and the internationalization of the currency, recent data from the Reserve Bank of India (RBI) shows a notable pick-up in exporters and importers invoicing their trade in rupees.

Growth in Rupee Invoicing According to the data for the April-November 2025 period:

• Exports: Rupee invoicing for the export of goods and software reached ₹2,00,056 crore, representing a 4.7 per cent year-on-year increase.
• Imports: Invoicing in rupees for imports grew much more aggressively, rising 24.5 per cent to ₹1,97,127 crore.

For the full fiscal year 2025 (FY25), rupee-invoiced exports grew by 7 per cent, while imports invoiced in rupees saw a substantial 34 per cent surge.

The Vostro Account Mechanism This growth is facilitated by an RBI circular from July 2022, which allowed for the invoicing and payment of international trade in rupees to promote global trade. This system utilizes Special Rupee Vostro Accounts (SRVA) opened by specified banks for partner countries. Under this mechanism, export proceeds are paid in rupees from the balance in the designated vostro account of the overseas importer, while import payments are credited to the special account in rupees against invoices.

Key Global Partners Trade analysts report that India currently has SRVA facilities with 22 countries. Rupee-based trade is actively occurring with key partners such as:

• Russia, Sri Lanka, and Singapore.
• The United Arab Emirates (UAE): In 2023, India tied up with the UAE to allow trade settlements in both rupees and dirhams.

Industry Outlook Ajay Sahai, Director General and CEO of the Federation of Indian Export Organisations (FIEO), stated that the SRVA has emerged as a simple and effective mechanism for traders and has been gaining significant traction in recent months. He noted that recent moves by the RBI, such as increasing the timeline for the settlement of trade proceeds under FEMA regulations, demonstrate a strong commitment to promoting cross-border transactions in rupees.

However, the overall share of rupee invoicing remains modest. It currently stands at just 6.1 per cent for exports and 4.9 per cent for imports. Paras Jasrai, Associate Director at Ind-Ra, pointed out that while overseas trade in rupees reduces dependence on foreign currencies like the dollar, there is still vast room for growth given the continued domination of the US dollar and the euro.

According to the sources, here is a reproduction of the reporting regarding the need for India's automobile industry to decarbonize its manufacturing processes:

Green Auto Industry Must Go Beyond EVs

India’s automobile industry is currently at an inflection point; while electric vehicle (EV) sales are rising and now account for nearly 7.5 per cent of national vehicle sales, the industry faces a "quieter challenge" emerging inside its factory gates. While policymakers are focused on accelerating clean mobility and tailpipe emissions, manufacturing emissions from steel, rubber, and electricity-intensive production lines remain largely untouched.

The Manufacturing Emission Web The automobile industry contributes approximately 7.1 per cent to India's national GDP. While 65-80 per cent of a vehicle’s emissions currently come from the tailpipe, electrification is reducing that share, leaving behind a massive web of industrial emissions. For example, the steel required to manufacture just one car can add as much as 2.2 tonnes of CO2 to the atmosphere.

Future Projections and Scope 3 Challenges In a business-as-usual scenario, energy demand for vehicle manufacturing is expected to more than triple between 2020 and 2050, with associated emissions projected to more than double from 30.3 million tonnes of CO2 to 64 million tonnes. A breakdown of 2020 data shows the source of these emissions:

• Scope 1 (Direct factory emissions): 1 per cent.
• Scope 2 (Indirect electricity-related): 16 per cent.
• Scope 3 (Upstream supply chain): 83 per cent, primarily from steel and rubber production.

Decarbonization Strategy A study by the Council on Energy, Environment and Water (CEEW) found that switching to green electricity and low-carbon steel could cut the industry’s emissions by up to 87 per cent. To achieve this, the sources suggest three decisive fronts:

• Renewable Electricity: By 2050, the auto industry will require around 34 GW of renewable energy capacity to meet an annual demand of 54 TWh.
• Green Steel: OEMs should enter into Advance Market Commitments (AMCs) to secure green steel produced via hydrogen-based processes or recycled scrap, aiming for 100 per cent share by 2050.
• Material Electrification: Suppliers must be supported in accessing clean electricity to electrify the production of other materials, particularly rubber for tyres.

Cost and Competitiveness While the price of green steel could be 35 per cent higher, potentially raising vehicle prices by 2-5 per cent, analysts believe the impact on demand will be negligible because India’s per capita income is projected to quadruple between 2020 and 2050. The long-term benefits of a low-emission supply chain include resilient supply chains and export competitiveness, especially as global markets move toward carbon border taxes and green procurement standards.

The article was authored by Chetna Arora, Programme Associate, and Vaibhav Chaturvedi, Senior Fellow at the CEEW.

Based on the sources provided, here is a reproduction of the reporting regarding India’s strategy to leverage Artificial Intelligence as a tool of global diplomacy and influence:

How India Can Turn AI into Foreign Policy

The Global AI Summit marks India’s ambitious bid to be recognized as the world’s most trustworthy and deployable AI partner. Rather than a mere show of strength, the event serves as a declaration of intent, signaling that India’s governance-first model and ability to manage complexity are its greatest competitive advantages.

The Seven-Pillar Framework India has adopted a unique approach that avoids the "AI paranoia" of the West and the "techno-nationalism" of China. This strategy is built on a seven-pillar framework known as "AI chakras," which emphasizes:

• Safe and trusted AI.
• Democratized access.
• Inclusion by design.

Deployment in the "Wild" Unlike many nations stuck in the pilot stage, India is deploying AI at population scale. Real-world applications include AI-powered advisories for millions of farmers, diagnostic tools for TB and stroke in resource-strained clinics, and the Supreme Court’s use of AI for multilingual translation of records. These working systems prove that AI can serve public infrastructure without overwhelming it.

The "Governance Surplus" Advantage While other superpowers face credibility issues, India possesses a "governance surplus". Its AI "stack"—comprising Aadhaar, UPI, DigiLocker, and DEPA—is built on independent courts and open legislation, making it politically legitimate and hard to replicate. While China may have more mature models, it faces a structural trust deficit; India’s goal is to outpace rivals on credibility rather than just raw compute power.

India’s "Third Path" for the Global South For emerging economies, India offers a "Third Path" based on openness, interoperability, and inclusion. By exporting not just technology but governance capacity, India is moving from a follower to a framer of global standards. This AI diplomacy is shaping ecosystems and replacing dependency with mutual capacity, using AI as a primary vehicle for soft power.

Chaos as a Capability A strategic advantage of Indian AI is that it is tested in friction. Systems designed to work in India’s chaotic, low-bandwidth, and multilingual environments are inherently more portable and require less tuning for export. Essentially, if an AI system works in India, it can work anywhere.

Remaining Challenges and Risks To maintain its credibility as it exports this model, the sources suggest India must address several internal bottlenecks:

• Accountability: There is a need for clear liability norms to determine who is responsible when an AI system fails.
• Compute Access: National infrastructure like AIRAWAT must move from concept to transparent access for startups and researchers.
• Regulatory Sandboxes: India needs real, sector-specific zones with legal cover to test high-risk models.

Ultimately, the goal is to demonstrate that democratic AI at scale is a viable model for the world. The question is whether India will shape the global AI race on its own terms or inherit the terms set by others.

The article was authored by Sanchit Vir Gogia, Chief Analyst, Founder & CEO of Greyhound Research.

Based on the sources provided, here is a reproduction of the reporting regarding the decline in India's reservoir storage levels:

Storage in Key Reservoirs Down to 71% of Capacity

Storage in India’s 166 major reservoirs has continued to decline, with levels dropping to 71.23 per cent of the total 183.565 billion cubic metres (BCM) capacity. According to the Central Water Commission, the total level this week dropped to 130.753 BCM. While storage in 155 of these reservoirs is still considered more than 80 per cent of normal, water levels in four out of five regions have now fallen below 80 per cent of their total capacity.

Rainfall Deficiency The decline in storage is attributed to a significant lack of precipitation across the country. Data received from 726 districts shows that 91 per cent of them have received deficient or no rainfall since the beginning of the year.

Regional Storage Status The reservoirs are currently witnessing varying levels of stress across different geographic zones:

• Western Region: This is the only region where levels remain above 80 per cent, currently filled to 82.29 per cent of its 38.094 BCM capacity. This region benefitted from a large surplus of rainfall during the South-West monsoon.
• Southern Region: Storage continues to be a major concern here, remaining below last year’s levels at 65 per cent of the 55.288 BCM capacity.
• Eastern Region: The 27 reservoirs in this region are filled to 69 per cent of their 21.759 BCM capacity.
• Central Region: The 28 reservoirs here are at 73 per cent of their 48.588 BCM capacity.

State-Specific Highlights in the South Within the southern region, storage levels vary significantly by state:

• Telangana and Karnataka have the lowest storage at 59 per cent.
• Kerala is at 66 per cent.
• Tamil Nadu stands at 71 per cent.
• Andhra Pradesh maintains a higher level compared to its neighbors at 80 per cent.

Based on the sources provided, here is a reproduction of the reporting regarding the interest from global private equity firms in the Indian Premier League (IPL) franchise, Royal Challengers Bengaluru (RCB):

Global PE Giants Eye IPL Champions RCB

Global private equity heavyweights Blackstone Inc. and Temasek Holdings Pte have emerged as early aspirants for the reigning IPL champions, Royal Challengers Bengaluru (RCB). Diageo, the owner of RCB’s parent company United Spirits Ltd (USL), initiated the sale process in November and has mandated Citibank to scout for potential buyers.

Valuation and Potential Bidders The transaction is expected to value the franchise between $1.4 billion and $1.8 billion. While bidding interest in the IPL has historically been centered on domestic strategic investors and family offices, this move signals a shift toward global capital. In addition to Blackstone and Temasek, other global buyout firms evaluating bids include:

• Advent International.
• PAG.
• Carlyle Group.

Domestic Competition The global giants will face competition from prominent domestic names. Adar Poonawalla, CEO of the Serum Institute of India, recently announced via his official 'X' handle that he intends to table a "strong and competitive" bid for the team over the next few months. Other domestic groups previously linked to interest in the franchise include the JSW Group and Manipal Hospitals.

Franchise Performance and Sale Timeline The surge in interest follows a period of significant success for the franchise:

• June 2025: RCB Men won their maiden IPL title.
• March 2024: RCB Women secured the WPL title.

The team, which was renamed Royal Challengers Bengaluru in 2024, is currently one of the most valuable brands in the league. Diageo has set a target to complete the sale by March 31, 2026, just ahead of the start of the next IPL season on March 26.

Strategic Context United Spirits’ MD & CEO, Praveen Someshwar, stated that while the team is a valuable and strategic asset, it is considered "non-core" to their primary beverage alcohol business. The sale comes at a time when the franchise is also facing local pressure; the Karnataka State Cricket Association recently urged the team to keep its home matches at the M Chinnaswamy Stadium amid speculation that they might move home games out of Bengaluru for the 2026 season.

Based on the sources provided, here is a reproduction of the reporting regarding Blinkit's Q3 performance and the analysis of its future profitability:

Blinkit’s Q3 Profit: A Shift or Blip?

Eternal Ltd’s (Zomato's parent company) Q3FY26 financial results were highlighted by a significant turnaround in its quick commerce vertical, Blinkit, which reported a small profit of ₹4 crore, swinging from a loss of ₹156 crore in the previous quarter.

The Drivers of Profitability

• Inventory Model Shift: Blinkit has transitioned to an owned-inventory-led model, which now accounts for almost 90 per cent of its net order value (NOV), up from 80 per cent in Q2.
• Contribution per Order: The turnaround is largely attributed to a sharp improvement in the profit earned per order before fixed costs. Blinkit earned ₹30 per order, a 25 per cent increase over the previous quarter.
• Growth Metrics: Sequential NOV rose 14 per cent to ₹13,300 crore, even though growth was slightly dampened by GST cuts and store construction delays in the Delhi NCR region.

Store Expansion and Operational Challenges Blinkit added 211 net stores in Q3, bringing its total to 2,027. While it fell slightly short of its 2,100-store target for December due to construction curbs in Delhi, the company remains confident in reaching 3,000 stores by March 2027. However, analysts warn that if competition forces the company to accelerate this to 4,000 stores, the initial setup costs could dent future Ebitda.

Risks to Sustained Profitability Two major factors could turn this profit into a "blip":

1. Fee Waivers: In response to heightened competition, Blinkit has begun waiving delivery fees in some markets, which could impact margins.
2. Marketing Spend: Continued dark store expansion and higher branding and marketing costs in the quick commerce sector may weigh on future earnings.

Leadership Transition Just as Blinkit reached profitability, Eternal’s founder CEO Deepinder Goyal announced he will step down on February 1, 2026, to become vice-chairman. He is handing the reins to Albinder Dhindsa, the current CEO of Blinkit, who will lead the group.

Market Outlook Despite the positive Q3 results, analysts remain cautious about Eternal’s elevated valuation. Even after a 25 per cent drop from its October peak, the stock continues to trade at an EV/Ebitda multiple of 40 times based on FY28 estimates. While some brokerages like Motilal Oswal describe Blinkit as a "generational opportunity," they have cut future earnings estimates to account for the intense competition in the quick commerce space.

Based on the sources provided, here is a reproduction of the reporting regarding President Donald Trump’s shift in policy toward Greenland:

Inside the U.S. President’s Head-Spinning Greenland U-Turn

When President Trump arrived in the snow-covered Swiss Alps for the World Economic Forum on Wednesday afternoon, European leaders were panicking that his efforts to acquire Greenland would trigger a trans-Atlantic conflagration. However, by the time the sun set, the President had significantly backed down.

The Back-Channel Negotiations This abrupt about-face followed days of back-channel conversations between Trump, his advisers, and European leaders, including NATO Secretary-General Mark Rutte and German Chancellor Friedrich Merz. The Europeans employed a strategic mix of enticements—such as offers to boost Arctic security—and warnings regarding the dangers of a deeper rupture within NATO.

A New "Framework" Deal Following a meeting with Rutte on Wednesday, Trump called off his promised tariffs on European nations, announcing he had formed a "framework for a potential deal" regarding the island's status. While the exact contours are still in flux, the potential agreement includes:

• Stationing U.S. forces at bases in Greenland.
• Expanded European efforts to boost security around the Arctic.
• A U.S. "right of first refusal" on investments in Greenland’s mineral resources—a veto intended to prevent Russia and China from tapping the island’s wealth.

White House press secretary Karoline Leavitt stated that if the deal succeeds, the United States will achieve its strategic goals in the region "at very little cost, forever".

A Stark Shift in Tone The move represented a major pivot for Trump, who just days earlier had refused to rule out using military force to secure ownership of the territory. At Davos, he de-escalated his rhetoric, stating, "I don’t have to use force... I won’t use force".

Despite this de-escalation, the President continued to voice grievances, suggesting NATO members have an obligation to support the acquisition because of America's central role in the alliance. He also rebuked Denmark as "ungrateful," claimed Switzerland would not exist without U.S. support, and mocked French President Emmanuel Macron for wearing aviator sunglasses at the event.

Battered Relations and Relief While Danish Foreign Minister Lars Løkke Rasmussen welcomed the news, noting the day ended on a "better note than it began," trans-Atlantic relations remain strained. Trump has agreed to hold off on planned 10 per cent tariffs—which were set to increase to 25 per cent in June—to allow a team led by Vice President JD Vance, Marco Rubio, and Steve Witkoff to negotiate the Greenland deal.

EU leaders are scheduled to meet in Brussels to assess the state of their relations with Washington, as many remain wary of another sudden change of mind from the U.S. President. One EU diplomat noted that the episode has "badly shaken confidence" and that there is "no coming back to what it was".

Based on the sources provided, here is a reproduction of the article regarding the need for India to re-evaluate its foreign exchange reserves strategy:

Why India Needs to Rethink Its War Chest

India entered 2026 with $686 billion in foreign exchange (forex) reserves, a figure often cited as proof of the nation's external invulnerability. This is a significant evolution from the 1991 crisis, when reserves plummeted to barely $1 billion, forcing the Reserve Bank of India (RBI) to pledge gold to the Bank of England. Today, India consistently ranks among the top five countries globally for forex reserves.

Challenges in Reserve Momentum Despite the high total, maintaining the momentum of reserve growth has become difficult. In the last 26 years, the annual change in reserves has been negative only six times; notably, three of those instances occurred within the last four years. The RBI currently finds itself walking a tightrope between managing currency volatility and accumulating reserves when possible as the rupee continues to weaken.

Meeting Adequacy Benchmarks By traditional metrics, India’s reserves remain strong:

• Import Cover: At the end of 2025, reserves could pay for 11 months of imports, well above the recommended three-month norm.
• Short-term Debt Ratio: Reserves cover short-term debt obligations by 225%, far exceeding the 100% benchmark.
• Broad Money Ratio: The ratio remains above the 20% benchmark required to meet potential domestic demand for foreign assets.

The FDI Drain: A Silent Threat While the adequacy numbers are positive, the pattern of reserve accumulation has changed. Historically, reserves grew when foreign capital inflows were strong. However, a "worrying phenomenon" has emerged:

1. FDI Repatriation: Gross inflows are stable, but repatriation (money leaving the country) jumped from approximately $18 billion pre-pandemic to $51 billion in 2024-25.
2. Outward FDI: Indian entities are investing more abroad. Outward-bound FDI doubled from $13 billion in 2019-20 to $28 billion in 2024-25, often flowing to tax havens like Singapore, Mauritius, and the UAE.

Unlike China or Japan, which built reserves through trade surpluses, India's reserves are largely "lent" by foreigners through capital flows rather than "earned". This makes India vulnerable to shifts in market sentiment; if investors exit, it puts pressure on the rupee, forcing the RBI to draw down reserves to stabilize the currency, which can create a destabilizing cycle.

Strategic Recommendations The sources suggest that India must move away from the assumption that reserves will grow organically. To plug the "leak," the following strategies are proposed:

• Union Budget Initiatives: Use the upcoming budget to announce FDI-friendly measures and remove hurdles to doing business.
• Customs Reform: Rationalize customs rules—similar to the GST overhaul—to reduce duty slabs and remove duty inversion.
• Efficiency: Implement a single-window clearance system with time-bound approvals for large projects to compete with neighbors like Vietnam and Indonesia.
• Monetary Easing: The RBI has already taken steps by cutting the policy repo rate by 1.25 percentage points and reducing the cash reserve ratio to lower the cost of capital.

Ultimately, while India has built a substantial war chest, the focus must now shift from merely holding assets to securing the sources of reserve accretion to ensure long-term stability in a challenging international environment.

Based on the sources provided, here is a reproduction of the article concerning strategies for building an education fund in a high-inflation environment:

Here’s How to Build an Education Fund in a High-Inflation Economy

As education costs rise significantly faster than general inflation, many parents are beginning to plan early for their children’s higher studies. While the Consumer Price Index (CPI) inflation typically sits around 4–6%, education inflation in India is running at 10–12% annually. This surge is driven by a demand-supply imbalance, with limited seats in high-quality institutions coupled with growing aspirational demand.

Estimating Future Costs

The sources suggest that the first step is accurate estimation. To find the future cost of a degree, parents should take the current cost (e.g., ₹20 lakh for an engineering degree today) and apply a 10–12% annual inflation rate for the years remaining until college. For a child currently aged five, that ₹20 lakh degree will cost approximately ₹70 lakh by the time they turn 18.

Choosing the Right Product Mix

Experts emphasize that education planning works best when different financial products are used for specific roles:

• Equity Mutual Funds: These serve as the primary "growth engine" of the portfolio. Their ability to beat inflation over 10–15 years is considered unmatched by traditional instruments.
• Sukanya Samriddhi Scheme (SSY): For parents of a girl child, this is a highly tax-efficient component that offers assured returns.
• NPS Vatsalya: This allows parents to open a National Pension System account for a minor to fund long-term goals like education, potentially outperforming fixed-return schemes.
• Insurance: The "golden rule" is to use pure term plans to protect the funding goal if a parent is no longer around, while keeping actual investments separate in mutual funds.

A Guided Timeline for Asset Allocation

The sources provide a structured guide for how allocation should evolve as the child approaches college age:

• 15+ Years to College: Allocate 70–80% to equity mutual funds (large-cap or flexi-cap) via SIPs to ride out volatility and compound growth. The balance can be kept in PPF or SSY.
• 10 Years to College: Gradually reduce equity exposure to 60%, moving 40% into debt or hybrid funds. This is a good time to start using target-maturity funds.
• 5 Years to College: Decisively shift toward safety by reducing equity to 30–40% and increasing debt mutual funds and bank FDs.
• 2 Years Before College: Move the full expected fees into liquid or ultra-short-term debt funds. This protects the principal and ensures fees can be paid regardless of market movements at the last moment.

The Importance of Regular Review

Financial planners recommend reassessing the plan every 2–5 years. This allows parents to make incremental tweaks based on the child’s evolving age, changing educational goals, and shifts in the market cycle. As one expert noted, the goal is to ensure that money does not become a constraint when critical decisions about a child's future must be made.

Based on the sources provided, here is a reproduction of the article regarding the structural challenges and potential solutions for inequality in India:

India Needs Long-Term Solutions to Address Its Inequality Problem

The G-20 presidency of South Africa concluded last November with the release of a significant report on global inequality. Authored by a committee of independent experts chaired by Nobel laureate Joseph Stiglitz, the report called for a coordinated global effort to reduce inequality and suggested the creation of an international panel on inequality similar to the one for climate change.

A Global and Local Crisis

Inequality is no longer a phenomenon restricted to the Global South; it is a rising concern for governments worldwide as it fuels discontent and youth unrest. Recent instances of violence in India’s neighborhood, such as in Nepal and Bangladesh, serve as a reminder of the anger among youth against a status-quoist approach by governments.

In India, while few protests arise specifically against "inequality," it is an underlying element in most social friction. Demands for reservations, farmer agitations for remunerative prices, and protests for the rights of women and marginalized castes all reflect unequal underlying conditions where the privileged continue to bask in their privileges while others are denied basic rights.

The Role of the State

Every process of economic growth inherently creates winners and losers, making the role of the state critical in providing a level playing field. While India’s Constitution guarantees affirmative action through reservation policies, it remains relatively silent on the state's role in regulating the excessive concentration of wealth or income.

Currently, governments at both the Centre and State levels have used redistribution as a primary tool to combat this gap. The recent surge in cash transfers to women and youth is a direct acknowledgement of growing marginalization and the need to redistribute income, even if it has resulted in political competition over the "generosity" of these transfers.

The "Freebie" and Fiscal Dilemma

Experts warn that redistributive transfers, while helpful, come at a significant fiscal cost. In some cases, the pressure of these transfers has forced governments to reduce spending on essential services such as health, education, and nutrition. This is viewed as counterproductive, as it may lead to rising inequality in access to critical services.

Furthermore, for fiscal policy to be effective, taxation must be progressive. Unfortunately, the last few Union budgets have included large tax giveaways to the middle class and corporations—an approach that the sources suggest has failed to deliver economic growth while making it harder to reduce income inequality.

A Call for Market Intervention

The sources argue that redistributive transfers are an "easy way" for governments to respond to inequality because they yield tangible political dividends in the short run. However, they are no substitute for core measures required to fix the problem.

For a long-term solution, India must move beyond temporary relief and intervene strongly in the labour and capital markets to fix the distortions that widen the gap in the first place. Substantive efforts are needed to curb unfair market practices and restructure the environment to ensure all citizens can participate as equals in the workforce.

The article was authored by Himanshu, Associate Professor at Jawaharlal Nehru University.

Based on the sources provided, here is a reproduction of the article regarding the structural and social obstacles to reversing China's population crisis:

Sisyphean Challenge: Can China Reverse Its Demographic Decline?

China recently announced that births in 2025 plunged to 7.92 million, down significantly from 9.54 million the previous year. This figure represents almost half of the 14.33 million births projected when the one-child policy was repealed in 2016. In fact, China’s current birth level is comparable to that of 1738 CE, a period when the nation's total population was only about 150 million. Although authorities introduced new pro-natalist policies last year, experts describe the decline as a "boulder rolling down a hill" that will be nearly impossible to push back up quickly.

The Marriage Market Mismatch

A primary driver of this decline is a profound mismatch in the marriage market:

• Shrinking Base: The number of women aged 20–34, who account for 85 per cent of Chinese births, is expected to drop from 105 million in 2025 to just 58 million by 2050.
• Gender and Education Gaps: Decades of sex-selective abortion have created a shortage of women, while a "leftover women" phenomenon has emerged because female students now outnumber males in undergraduate admissions (a 59:100 male-to-female ratio in 2022). This leads to more men unable to find wives and more highly educated women remaining unmarried due to a preference for even more highly educated husbands.
• Rising Marriage Age: The average age at first marriage for men rose from 26 in 2010 to 29 in 2020; for women, it rose from 24 to 28. Furthermore, the share of unmarried women aged 25–29 surged from 9 per cent in 2000 to 43 per cent in 2023.

Density, Housing, and Economic Barriers

The sources highlight an "ecological law" where high population density inhibits growth:

• Extreme Urban Density: China’s average urban density is 8,900 people per sq km, with many districts in top-tier cities reaching 20,000–30,000 per sq km. This is far higher than Tokyo (6,000) or urban areas in the U.S. (800–2,000).
• Housing Costs: High density drives up housing prices, and China’s price-to-income ratio far exceeds that of Japan. Lowering these costs would require a massive demolition and rebuilding of cities, a move that could trigger an economic collapse.
• Income Constraints: Household disposable income in mainland China accounts for only 43 per cent of GDP, making child-rearing exceptionally difficult.

Comparative Failures and Policy Risks

China’s current efforts are seen as a scaled-down version of Japan’s ineffective response to demographic decline. Japan attempted to fund childbirth subsidies by raising consumption taxes, which ultimately burdened households and reduced disposable income. Similarly, Taiwan’s fertility rate fell to 0.72 in 2025, partly due to declining household income.

The sources suggest that China's best option—raising the household income share—is unlikely to be pursued by Beijing because it could weaken the state's finances and power, potentially reshaping the political landscape. Additionally, pro-growth policies such as the "new quality productive forces" may inadvertently lower fertility further by prolonging education and delaying childbearing. Experts warn that collectivist social benefits could weaken family structures and that fertility will only rise if China addresses its weak socioeconomic links without violating human rights.

The article was authored by Yi Fuxian, a senior scientist at the University of Wisconsin, Madison.