Newspaper Summary 300126

 Based on the sources, the concept of India as an oasis of stability is a central theme of the Economic Survey 2025-26, which highlights the country's resilience and growth potential despite a volatile and uncertain global environment.

The following information reproduces the key components of this narrative as detailed in the sources:

Economic Outlook and Growth Projections

The Economic Survey 2025-26 projects India’s economic growth to be between 6.8% and 7.2% for the next fiscal year (FY27). This projection outstrips the forecasts provided by the International Monetary Fund (IMF), the World Bank, and the Reserve Bank of India (RBI). The Survey describes this as steady growth amid global turmoil, positioning the economy on a path of expansion even as uneven global growth and fragmented trade cloud the external environment.

Factors Behind India's Stability

The sources attribute India’s status as an "oasis" to several core factors:

• Strong Macroeconomic Fundamentals: Stability is supported by sustained fiscal-deficit reduction, strong bank balance sheets, a manageable current account deficit, and low external debt.
• Structural Reforms: Recent reforms and high public infrastructure investment have bolstered growth potential.
• Domestic Drivers: The Survey emphasizes that growth is increasingly anchored in strong domestic strengths and a resilient external services sector.
• Macro-Level Stability: This stability earned India three credit rating upgrades in the past year.

Navigating a Turbulent World

The Survey identifies several external risks and structural shifts that India must navigate:

• The "Paradox of 2025": The Survey notes that macroeconomic stability no longer automatically lures foreign capital, as capital flows are increasingly driven by geopolitics and strategic alliances rather than just fundamentals.
• Geopolitical Uncertainty: Challenges include fragmented trade, capital volatility, and the "disorderly multipolar breakdown" of security frameworks.
• Strategic Resilience: To maintain stability, the Survey advocates for a shift from a model of complete self-reliance toward "strategic resilience" through deeper integration into global value chains (GVCs) and diversification.

Blueprint for Sustained Stability

To preserve this stability, the Survey proposes several policy measures:

• Customs Duty Reform: It makes a strong case for lowering basic customs duty on raw materials and intermediate goods to enhance the global competitiveness of Indian firms.
• Entrepreneurial State: The government is urged to act as a problem-solving innovator and risk-taker rather than just a rule-maker.
• Private Sector Role: Private enterprises are encouraged to align their commercial dynamism with nation-building, treating technological deepening and productivity as collective goods.

Based on the Economic Survey 2025-26, here is a reproduction of the details regarding the brewing digital addiction crisis and its toll on mental health:

Digital Addiction Crisis Brewing Warns Survey

The Economic Survey 2025-26 has raised an alarm over a brewing "digital addiction" crisis among minors in India, calling for urgent age-based restrictions on social media access. The survey highlights a growing tension between the rapid expansion of the digital economy—projected to reach 13.42% of GDP by FY25—and the significant emerging social costs associated with it.

Rising Toll on Mental Health and Productivity

The survey identifies several severe consequences of excessive digital engagement:

• Mental Health Harms: Excessive usage is directly linked to a range of psychological and social harms, including anxiety, depression, and cyberbullying.
• Physical and Social Risks: Minors are increasingly vulnerable to compulsive use, harmful content, and cyber fraud.
• Educational and Economic Impact: The survey warns that addiction leads to losses in study time and lower student productivity, which can ultimately damage long-term earnings outcomes for the youth.

Scale of the Problem in India

India currently has approximately 350 million social media users, including a substantial underage population. Data suggests that many young users are spending six to seven hours a day on these platforms, displacing essential physical play and social interaction necessary for healthy brain development.

Proposed Regulatory Measures

To mitigate these risks, the Survey suggests that India align with global trends seen in countries like Australia and France by implementing:

• Age-Based Access Curbs: Setting specific age limits for platform usage.
• Stricter Verification: Implementing more robust age verification processes.
• Feature Restrictions: Introducing curbs on auto-play features and restrictions on targeted advertising for minors.

Expert Cautions

While the survey advocates for stricter controls, experts cited in the sources warn that a sudden "sweeping ban" could result in "high-intensity withdrawal symptoms" among heavy users. They emphasize the need for a balanced approach that addresses the risks without entirely eliminating the benefits of internet access.

Based on the sources, the Economic Survey 2025-26 highlights a major structural transformation in how Indian households manage their savings, marked by a move away from traditional banking toward capital markets.

Significant Shift in Household Savings Composition

According to the Economic Survey, bank deposits have steadily lost prominence in the financial savings of Indian households as mutual funds and equities capture a larger share. As of fiscal year 2024-25 (FY25), bank deposits account for just 35% of annual financial savings, a sharp decline from the 58% share recorded in FY12.

This decline has been largely offset by a surge in investments in mutual funds and shares, whose combined share of household savings jumped from 1.8% to 15.2% over the same period.

Drivers of Market Participation

Several factors have accelerated this transition over the past decade:

• SIP Growth: The shift has coincided with a massive rise in Systematic Investment Plans (SIPs), with average monthly flows increasing sevenfold from under ₹4,000 crore in FY17 to over ₹28,000 crore in FY26.
• Asset Growth: Assets managed through mutual funds have risen from approximately 10% of GDP in 2010 to around 23% of GDP as of November 2025.
• Demat and Investor Count: In the financial year leading up to December 2025, 23.5 million demat accounts were added, bringing the total to over 216 million. The mutual fund industry also reached 59 million unique investors by late 2025.
• Structural Facilitators: This expansion is attributed to stable macroeconomic fundamentals, simplified KYC processes for onboarding, and strong regulatory oversight.

Portfolio Diversification vs. Displacement

The Survey notes that this trend represents portfolio diversification rather than the total displacement of traditional savings. Households are adding equity exposure to their existing savings portfolios rather than substituting traditional instruments entirely.

This shift has shown remarkable resilience, continuing even during periods of weaker equity performance caused by US tariffs, foreign capital outflows, and weaker-than-expected corporate earnings. Furthermore, the share of individual investors in equities reached 22.8% in December 2025, up from 14.3% in FY19, indicating that retail participation is becoming a permanent and significant component of India's financial system.

Based on the sources, the Economic Survey 2025-26 identifies a critical long-term structural challenge for India: transitioning from an economy defined by persistent external deficits to one that generates sustained surpluses.

The following points detail this challenge and the strategy proposed to address it:

The Necessity of a Surplus-Generating Economy

• Reducing Capital Costs: The Survey argues that for India to obtain enduring relief from the high capital costs that currently weigh on the economy, it must reduce the risk premium paid to global investors. This requires a fundamental shift in the nation’s economic narrative from endless external deficits to sustained surpluses.
• Ensuring Stability: Generating an external surplus is framed as a requirement to ensure exchange rate stability and consistent capital inflows in a volatile world.
• Mitigating Vulnerability: The sources note that economies like India, which run persistent current account deficits, are vulnerable to international capital flows reducing or reversing during periods of geopolitical uncertainty. Such reversals can trigger currency depreciation, which often leads to further capital outflows.

Drivers of the Structural Shift

• Manufacturing Competitiveness: To achieve a surplus, the Survey emphasizes the need to significantly step up manufacturing competitiveness.
• Focus Beyond Services: While India has seen success in service exports, the Survey cautions that these are fragile compared to the export of manufactured goods. Therefore, a manufacturing-led export strategy is considered essential, as services success alone will not suffice to transform the external balance.
• Improving External Balances: By improving external balances, the Survey suggests that Indian businesses will be able to rely on cheaper credit rather than protectionist barriers to compete globally.

Context and Challenges

• High Cost of Capital: Currently, persistent current account deficits are identified as a major structural reason for India's high cost of capital, which makes borrowing in global debt markets more expensive.
• The Paradox of 2025: The Survey points out a "paradox" where sound macroeconomic fundamentals no longer automatically attract foreign capital; instead, flows are increasingly governed by geopolitics and strategic alliances. This makes the transition to a surplus-generating economy even more vital for national resilience.

Based on the sources, the article "Export diversification beats US tariff effect" from the Economic Survey 2025-26 supplement details how India mitigated international trade shocks.

Export Diversification Beats US Tariff Effect

Market diversification has allowed Indian exporters to blunt the impact of the 50 per cent tariffs imposed by the US in August 2025. According to the Economic Survey 2025-26, shipments were swiftly redirected to alternative global markets, preventing the severe downturn that was initially expected.

Resilience Across Sectors While the US tariffs delivered a massive non-specific shock, key industries demonstrated a notable rebound by pivoting to non-US destinations. Notable resilience was shown in labor-intensive sectors, including:

• Gems and jewellery.
• Textiles and apparel.
• Auto parts.
• Leather and footwear.

Shift in Market Share The Survey highlights a dramatic shift in India's export destinations over the past year:

• The US share of India's total exports fell to 18.7 per cent, a sharp decline from 33.7 per cent a year ago.
• The UAE’s share surged to 65.6 per cent, up from 41.4 per cent in the previous year.
• Exports to West Asia grew by 6.5 per cent during the April-December 2025 period.
• Overall merchandise exports for the same period increased by 5.9 per cent.

New Global Destinations Exporters successfully tapped into several new and expanding markets to offset the loss of US trade. Shipments of labor-intensive products were redirected to:

• Europe: Specifically Italy, Germany, the Netherlands, and Switzerland.
• South America: Driven by growth in Brazil.
• Asia: Including increased exports to China and Russia.
• WANA Region: Covering West Asia and North Africa.

Strategic Trade Agreements The Survey attributes part of this resilience to India's proactive trade policy, including the conclusion of a historic Free Trade Agreement (FTA) with the European Union. This deal is expected to provide a significant cushion for sectors like textiles and gems, which are currently under pressure from US tariffs. Additionally, existing agreements like the Comprehensive Economic Partnership Agreement (CEPA) with the UAE and ongoing negotiations with the UK and Oman have bolstered market access.

According to the Economic Survey 2025-26, the implementation of India's new labour codes has the potential to add 1.25 per cent to the country's GDP by 2029-30. This growth is expected to be driven by improved worker welfare and enhanced business agility.

The following details from the sources outline the components and projected impacts of these reforms:

Projected Economic and Social Impacts

• GDP and Formalisation: Citing an SBI study, the Survey notes that labour law implementation could increase formalisation in the economy from 60.4% to 75.5%. The study projects medium-term growth gains between 1.2% and 2.2% by 2030, despite likely short-term frictions.
• Demographic Dividend: The codes are expected to boost employment in formal sectors and increase productivity, helping India harness its demographic dividend through inclusive growth.
• Empowerment: Effective implementation is framed as a critical step toward improving the ease of doing business and empowering both women and gig workers.

The Four New Labour Codes

The reforms consolidate numerous existing laws into four primary codes, for which draft rules were pre-published on December 31, 2025, to invite stakeholder feedback:

1. The Code on Wages, 2019.
2. The Industrial Relations Code, 2020.
3. The Code on Social Security, 2020.
4. The Occupational Safety, Health and Working Conditions Code, 2020.

Focus on Women and the Unorganised Sector

• Formal Recognition: For the first time, these codes formally recognise unorganised sector workers.
• e-Shram Portal: Over 31 crore unorganised workers have registered on the e-Shram portal, with women making up 54% of this group.
• Gender Equality: The Survey highlights that the codes enable women to work across all establishments, including night shifts (subject to safety provisions). They also promote equal pay for equal work, work-from-home options, and expanded maternity benefits.
• Economic Driver: The Survey emphasizes that increasing women’s participation is not just a matter of social justice but a key driver of long-term economic growth.

Corporate Financial Impact

The transition to these codes has already begun to impact corporate financials. For instance, Larsen and Toubro (L&T) recently made a one-time provision of ₹1,191 crore to comply with the new codes, while Tata Motors reported an exceptional item of ₹603 crore for the same purpose. Other major firms, including Wipro, Infosys, and ITC, have also seen their profits affected by one-time charges tied to these revisions.

Based on the Economic Survey 2025-26, the services sector is framed as a critical stabilizer of growth, providing essential resilience to the Indian economy during periods of global economic volatility and fragmented trade,.

The following reproduction details how services have anchored India’s economic performance:

Resilience in the IT-ITES Sector

Despite subdued global spending, India’s IT-ITES services stayed resilient throughout fiscal year 2025-26. This resilience was primarily anchored by Global Capability Centres (GCCs), which have shifted from functional support roles to core product development, engineering, and advanced digital functions. As of FY24, India hosted over 1,700 GCCs, employing over 1.9 million people and positioning the country as the world's largest hub for captive operations.

Service Exports and Trade Balance

The Survey highlights the vital role of the services sector in maintaining macroeconomic stability:

• Offsetting Trade Deficits: India’s surplus in service exports significantly offsets the large deficit recorded in merchandise trade.
• Domestic Growth Anchor: India's growth dynamics are increasingly anchored in strong domestic strengths and a resilient external services sector, which has helped the economy maintain a steady expansion path despite global uncertainty.

Expansion into New Service Frontiers

The stabilizing role of the sector is further bolstered by the emergence of high-growth sub-sectors:

• Medical Wellness Tourism: The medical and wellness tourism market is projected to reach $16.2 billion by 2030, doubling from 2025 levels due to India's competitive healthcare services.
• The Orange Economy: Live entertainment, media, and concerts have become a new growth driver; the media and entertainment sector crossed ₹100 billion in 2024, creating significant economic multipliers in the tourism and hospitality industries.

Strategic Cautions

While acknowledging services as a stabilizer, the Survey provides two key strategic warnings:

1. Fragility of IT Exports: The Survey suggests that infotech-enabled service exports are fragile compared to the export of manufactured goods.
2. Manufacturing Necessity: It argues that services success alone will not suffice to durably lower India’s cost of capital; the nation must step up manufacturing competitiveness to transition into a surplus-generating economy,.

Digital Economy and Social Costs

The digital economy, which is a major component of the services sector, is projected to reach 13.42% of GDP by FY25. However, the Survey warns that this growth must be balanced against emerging social costs, such as "digital addiction" among minors, which could damage long-term productivity and mental health.

Based on the sources, while a single article with the exact title "EU FTA: a deal with many hoops" is not explicitly present in the provided text, several reports from the Economic Survey 2025-26 coverage describe the historic India-EU Free Trade Agreement (FTA) and the significant complexities—or "hoops"—involved in its implementation and benefits.

The Historic India-EU FTA

Earlier this week, India and the European Union (EU) concluded negotiations for a historic FTA described as the "mother of all trade deals". The pact grants India greater access to one of the world's largest integrated economic partnerships. Once fully implemented, India will reduce tariffs to zero on nearly 96% of EU goods, while the EU will eliminate duties on approximately 97-98% of Indian goods.

The "Hoops": Complexities and Limitations

Despite the "Trade Triumph," the sources highlight several challenges and restrictions:

• Implementation Timeline: Although the deal is concluded, the sources note that the actual implementation of the agreement could take up to a year to come into effect.
• Auto Sector Quotas: In the automotive sector, even if tariffs on auto imports are reduced to as low as 10%, these will apply only to a quota of 250,000 cars annually. This represents only about 5% of India’s passenger vehicle market, estimated at 4.5 million cars for FY26.
• Visa and Immigration Restrictions: A major "hoop" involves worker mobility. The newly announced "Legal Gateway Office" in India is intended only as a facilitation and information hub to support Indian talent moving to Europe. It does not create special immigration rights or fast-track visas. Decisions on long-term visas for employment, education, and research will continue to rest with the 27 individual EU member-states under their own immigration laws.
• Bureaucratic Hurdles: The Survey suggests that for exporters to truly benefit from such accords, the government must release the private sector from "stifling bureaucratic controls". It also notes that macroeconomic stability no longer automatically lures foreign capital, meaning India must still navigate a world of fragmented trade and geopolitical uncertainty to make the deal effective.
• Reciprocal Market Access: The deal involves unprecedented reciprocal access to each other's markets, which requires India to balance its own domestic manufacturing interests with increased competition from European imports.

Expected Benefits for Key Sectors

For sectors currently pressured by high US tariffs—such as textiles and apparel, leather and footwear, marine products, and gems and jewellery—the EU agreement is expected to provide a vital cushion. It is also projected to increase student mobility to European countries and enable deeper integration with European technological and manufacturing ecosystems.

Based on the sources, the article titled “A case for optimism, and a vision for faster growth” details the projections and strategic blueprints contained within the Economic Survey 2025-26.

Growth Projections and Economic Outlook

The Economic Survey 2025-26 projects India’s economic growth to be between 6.8% and 7.2% for the next fiscal year (FY27). This optimistic forecast outstrips the outlooks provided by the International Monetary Fund (IMF), the World Bank, and the Reserve Bank of India (RBI). The Survey notes that while this is slightly lower than the 7.4% estimated for FY26, it reflects steady growth amid global turmoil.

Behind this optimism lie recent structural reforms and a resilient economic performance that have bolstered India's growth potential. Specifically, the economy’s annual potential growth rate has risen from 6.5% to 7%,. Chief Economic Adviser V. Anantha Nageswaran stated that with further reforms in land, cross-subsidization, and manufacturing costs, this potential could eventually rise to 7.5% or 8%.

A Vision for Transformation

To navigate a volatile world, the Survey outlines several pillars for economic transformation:

• Manufacturing Competitiveness: There is a critical need to step up manufacturing to transform India from an economy of external deficits to one of sustained surpluses,.
• Global Value Chain (GVC) Integration: The Survey advocates for making Indian products integral to GVCs rather than seeking complete self-reliance,.
• Strategic Resilience: This involves building resilience through the Swadeshi movement and ensuring exchange rate stability via external surpluses.
• Entrepreneurial State: The government is urged to move beyond being a rule-maker to becoming a problem-solving innovator and risk-taker that acts before certainty emerges,.

Proposed Policy Reforms

The Survey serves as a "broad policy compass" and proposes several key measures:

• Customs Duty Reform: It makes a strong case for lowering basic customs duty on raw materials and intermediate goods to enhance the global competitiveness of Indian firms, citing the success of Vietnam,.
• Tariff Calibration: It flags the risk of high tariff protection in upstream sectors like steel, aluminum, and textile fibers, which can act as a tax on downstream producers.
• Disinvestment Strategy: The Survey proposes amending the Companies Act to allow the government to retain "government company" status even with a minimum 26% ownership,. This would enable the government to monetize its stake while maintaining effective control.
• Fiscal Discipline: States are encouraged to adhere to fiscal discipline to support macro-level stability.

Inflation and Macroeconomic Stability

The Survey highlights that domestic inflation in FY26 showed a broad-based easing, with headline CPI declining to 1.7% due to sharp disinflation in food prices. While core inflation has shown persistence—largely due to price spikes in precious metals—underlying demand-side pressure remains limited.

Prime Minister Narendra Modi described the Survey as a comprehensive picture of India’s "Reform Express," reflecting progress despite a challenging global environment. Finance Minister Nirmala Sitharaman added that the document provides an economic overview of the past year and ideas for the road ahead.

Based on the sources, global consulting firm Kearney is overhauling its selection process to remove human bias through a hiring transformation piloted in its India office.

Mapping Careers and Removing Bias

Kearney India has initiated a program that involves mapping the career trajectories of thousands of individuals who have applied to the firm over the years. By identifying these candidates and comparing their profiles to their current performance levels—whether within Kearney or elsewhere—the firm aims to assess the accuracy of its past selection and interview processes.

Siddharth Jain, managing partner and country head at Kearney India, stated that the goal is to move toward a "near-perfect method" of recruiting. Specifically, the firm wants to eliminate:

• Type-1 errors: Missing out on shortlisting a highly qualified candidate who would have fit the profile.
• Type-2 errors: Selecting a candidate who is ultimately not a good fit for the firm.

The Role of AI in Interviews

Kearney is among the first consulting firms to use in-house artificial intelligence tools to conduct the initial rounds of interviews. The process involves:

• Initial Screening: Candidates upload their resumes and video messages, which are then evaluated by AI.
• Objectivity: This method has shown higher accuracy because it is devoid of human biases, specifically removing social, gender, and concept bias.

Industry Context and Talent War

The shift occurs amid a fierce talent war in the consulting sector, where firms like Bain & Co, Boston Consulting Group (BCG), McKinsey, and Accenture are aggressively recruiting from the leading B-schools in India. These efforts are driven by India’s increasing role in complex, AI-driven work, with many global projects now being led by Indian teams.

Broader Industry Trends

Other major firms are also integrating AI into their recruitment:

• McKinsey: Reported to have asked graduate candidates to use an AI tool called "Lilli" during tests for global positions.
• B-Schools: AI is becoming prevalent in campus recruitments to test the thought process and prompts students use when developing business strategy plans, rather than just testing technical skills like coding.
• Startups: AI tools are already widely used in the startup ecosystem to save costs and time while sifting through high volumes of resumes.

Based on the sources, the article titled "China’s free-trade island a signal of big change" details how India must respond to shifting global trade dynamics triggered by Chinese policy.

China’s Free-Trade Island a Signal of Big Change

The Economic Survey 2025-26 warns that India must prepare for a prolonged phase of geopolitical uncertainty, trade disruption, and capital volatility. It identifies China’s decision to operationalize the Hainan Free Trade Port as a definitive signal of a transformed global trade and investment landscape.

Strategic Shift in Global Trade

• Economic Zone Transformation: By converting the Hainan island province into a low-tariff, services-heavy economic zone, China is expected to significantly influence investment decisions across Asia.
• Shift from Efficiency to Strategy: While the Hainan port does not pose an immediate disruption for India, the Survey notes it represents a gradual structural shift. In this new environment, production and capital decisions are increasingly shaped by strategic considerations rather than efficiency alone.

The Case for Swadeshi and Resilience

• Economic Necessity: Against the backdrop of global fragility, the Survey makes a strong case for Swadeshi as both an economic necessity and a strategic imperative.,
• Altered Calculus of Openness: The Survey points out that policies across both advanced and emerging economies have fundamentally altered the "calculus of openness."
• End of Naïve Assumptions: It warns that naïve assumptions regarding permanent access to global inputs, technologies, and markets are no longer tenable in the current climate.
• Policy Redefinition: The Survey argues that the central policy question is no longer whether the state should encourage Swadeshi, but how it should do so without undermining efficiency, innovation, or global integration.

Strategic Integration To navigate these changes, the Survey suggests a move toward "strategic resilience" through diversification and deepening capabilities. Rather than seeking complete self-reliance, India aims to make its products integral to global value chains (GVCs)., This involves a calibrated shift away from simple import substitution toward a model focused on scale and competitiveness.