Newspaper Summary 010426

 

IT sector faces modest Q4 despite healthy deal pipelines

Sanjana B | Bengaluru

India’s IT sector is prepared for a steady but modest Q4FY26, as analysts highlight that selective demand, weak discretionary spending, and elongated decision cycles are offsetting early AI-led opportunities and healthy deal pipelines. Mid-single-digit expansion currently reflects a steady recovery for the industry.

ANALYSTS’ TAKE

• Tier-1 firms have indicated strong deal bookings.
• Enterprise spending remains selective.
• Sequential growth is likely to stay modest.
• Early AI-led opportunities are supporting modest growth.

Harshal Dasani, Business Head at INVasset PMS, noted that while Q4 demand appears stable, it is not yet broad-based. He explained that large deal pipelines remain healthy, driven by vendor consolidation, cloud transformation, and cost optimisation, with initial traction in AI-led projects adding a new layer of opportunity.

NO BREAKOUT

Dasani characterized Q4 as a "quarter of measured execution rather than a breakout". He observed that discretionary spending is returning unevenly and decision cycles remain elongated, particularly in the retail and BFSI verticals. Consequently, sequential growth is expected to stay modest, with revenues supported by deal ramp-ups rather than fresh spending. While controlled costs and lower attrition may stabilize margins, transition costs and pricing pressure could cap the upside.

STRONG DEAL BOOKING

Tier-1 companies have reported strong deal bookings in recent quarters, indicating that underlying demand remains intact even if revenue conversion is gradual. A report from BNP Paribas highlighted that deal signings hit a five-month high of 14 in February, up from 10 in December 2025.

Tushar Badjate, Director of Badjate Stock Shares, explained that the sector closed Q4 in a moderated demand environment, especially across global markets that contribute 70% of export demand. Enterprise spending was selective, with budgets focused on AI-led efficiency initiatives, cloud migration, and maintenance, while large-scale transformation programs were often re-scoped or deferred.

Large-cap firms delivered flat to low single-digit sequential growth with margins between 18-25%, while mid-tier firms outperformed them due to niche capabilities and AI integration.

Pareekh Jain, Founder and CEO of EIIR Trend, expressed optimism that the current quarter would be stronger than the last, supported by steady BFSI demand, accelerating AI momentum, and positive results from Accenture. However, he warned of rising concerns for FY27, noting that the Gulf conflict could drive up oil prices and trigger a second-order impact that might delay AI investments and general tech spending.

Bots take charge in the poll battlefield

From generating digital posters to decoding data, AI now powers political war rooms Sindhu Hariharan | Chennai

As campaigning for the Assembly polls intensifies, the war rooms of major political parties are leaning heavily on artificial intelligence (AI) to navigate a hyper-social media world. Once a niche technology, AI is now a mainstream tool used for recreating the voices of late leaders, producing targeted content, and analyzing public sentiment.

STRATEGY AND OUTREACH

• Strategic Tool: Digital marketer Shubho Sengupta observes that while AI was primarily a production tool for faster creatives in 2024, by 2026 it has moved to the strategy layer. It is now utilized for real-time constituency sentiment analysis and micro-targeted messaging.
• Efficiency: PR Shiva Shankar, the BJP candidate for the Ernakulam constituency, notes that AI brings a cost and time-effective dimension to outreach while enabling more informed, data-led strategies.

HOW PARTIES ARE USING AI

• Left Front (Kerala): To counter allegations of a supposed understanding with the NDA, the CPI(M) released an AI-generated explainer reel acting as a report card for the LDF government’s achievements over the past decade.
• DMK (Tamil Nadu): TRB Rajaa, Secretary of the DMK IT Wing, states the party uses AI to swiftly craft digital content and interpret feedback and data more effectively. However, he maintains that human intelligence remains the primary driving force in politics.
• BJP (Tamil Nadu): SG Suryah, President of the TN BJP Youth Wing, has a dedicated team using AI to create digital posters and video content in minutes through correct prompts. They also employ AI for booth analysis to automate workflows and generate reports on key constituencies.
• Congress: Deepak Joy mentions that while AI is useful for highlighting opponents' shortcomings, it must be used with care. Local teams are also being provided with analysis tools to help create specific campaigns.

Unrealised tax demands rise to ₹38 lakh crore by FY25-end

Sourashis Banerjee | Chennai

Tax authorities have continued to raise tax demands in both direct and indirect taxes, resulting in strong growth in unrealised tax demands in recent years. Budget documents show that these demands amounted to more than ₹38 lakh crore toward the end of FY25.

Direct Tax Dominance

A businessline analysis of Union Budget documents shows that these demands have been significantly higher in direct taxes, where they grew at a compound annual growth rate (CAGR) of 26% between FY20 and FY25. In contrast, unrealised indirect tax demands grew at a slower pace of 8.7% annually over the same period.

The growth in unrealised direct tax demands has been striking:

• Overall Increase: From ₹11 lakh crore in FY20, the figure rose to approximately ₹36 lakh crore in FY25, a three-fold increase.
• Income Tax: Unrealised demands alone reached ₹19 lakh crore in FY25.
• Corporate Tax: These demands stood at ₹16 lakh crore.

By comparison, unrealised indirect taxes reached ₹2.6 lakh crore in FY25, up from ₹1.7 lakh crore in FY20. This divergence suggests that the bulk of aggressive tax assessments is concentrated in direct taxes, raising concerns about structural issues in tax administration.

Litigation and Recovery Concerns

The inordinately high backlog suggests the possibility of frivolous tax demands being issued by the I-T department to meet revenue targets. With 44% of these demands under litigation, their enforceability is in question. Large demands often remain unrealised for years, suggesting overestimation at the assessment stage. This contrasts with indirect taxes, where collections are transaction-based and harder to dispute.

Recent & Undisputed Demands

A closer look reveals that more than half (56%) of unrealised direct taxes are not under dispute as of FY25. A large share of these demands is relatively recent:

• 21% of undisputed taxes have been outstanding for 1-2 years.
• 17% fall in the 2-5 year bracket.

Even among disputed taxes, the largest shares lie within the 1-5 year range. However, approximately 6% of undisputed taxes and 1.6% of disputed taxes have been pending for over a decade, indicating long-standing inefficiencies in resolution and recovery.

India to face pressure as US seeks plurilateral e-comm moratorium,

TRADE TIFF: New Delhi may need to align with Brazil and Turkey to safeguard policy Amiti Sen | New Delhi

US Trade Representative Jamieson Greer has announced that Washington will seek commitments from various countries to pursue a plurilateral e-commerce duties moratorium agreement. This move follows the actions of Brazil and Turkey, who "blocked" the extension of the existing moratorium at the WTO Ministerial Conference in Yaoundé, a development that is expected to place fresh pressure on India.

Experts suggest that New Delhi, which has long questioned the moratorium due to rising revenue losses and a lack of clear definitions, may need to align with Brazil and Turkey to safeguard its policy space and preserve its negotiating leverage. Greer expressed frustration that the WTO could not reach a consensus to make the moratorium permanent or even extend it for more than two years, specifically naming Brazil and Turkey as the two nations that blocked an extension until December 31, 2030.

WHAT IS IT?

The WTO e-commerce moratorium was first established in 1998 as a temporary, two-year agreement to not impose customs duties on electronic transmissions. Under this pact, while physical goods are taxed at the border, digital equivalents—such as software, e-books, and streaming services—remain duty-free. While it had been renewed every two years since its inception, the moratorium lapsed at the conclusion of WTO MC14 due to disagreements over its duration. Despite this, the USTR asserted that the US has secured commitments from dozens of countries and nearly all major trading partners to refrain from imposing tariffs on US digital transmissions.

‘COMMON SENSE AIM’

Greer stated that if the WTO cannot achieve this "common sense aim," the US will work outside of the WTO with all interested partners, inviting them to commit to a plurilateral agreement,. Unlike a multilateral deal, a plurilateral agreement involves only a subset of countries rather than the full WTO membership.

Parminder Jeet Singh, a founding member of the Just Net Coalition, described the end of the moratorium as a "historic moment". He noted that it marks an opportunity for developing nations to view their digital economies through the lens of digital industrial policies, proper regulation of foreign firms, and the collection of due taxes, as most value flows across borders will soon be digital.

Ranja Sengupta, Senior Researcher at Third World Network, India, argued that India should support Brazil and Turkey for standing up for the Global South, which has been losing billions in potential revenue. While she expressed skepticism about how a plurilateral agreement would function for those who stay out, she warned that there would be significant US pressure on developing countries to join if such an agreement moves forward.

What happens when CAD rises

Saumitra Bhaduri & Shubham Anand | Madras School of Economics, Chennai

The escalation of conflict in the Middle East has pushed global oil prices higher, exposing a familiar fault line in India’s external position. Despite robust domestic growth and contained inflation, the rupee has slipped to record lows and equity markets have turned volatile. This is a "flow story" overwhelming a "stock story": war-driven energy shocks and a stronger dollar have collided with thinner, more flighty capital inflows.

THE DISCONNECT

On paper, India’s macro story is reassuring: growth is projected at 7.4 per cent this fiscal, reserves are near $701.4 billion, and the current account deficit (CAD) is about 0.8 per cent of GDP. Yet the rupee fell by more than 5 per cent last year.

Ordinarily, a modest CAD is easily financed, but in 2025 foreign portfolio investors pulled back and net FDI softened as profit repatriation and outbound investment rose. With less "patient capital," the rupee became more sensitive to shifts in risk appetite; as oil buyers needed more dollars just as investors sought safety, the currency took a hit from both sides.

RUPEE DYNAMICS

Purchasing power parity (PPP) indicates where the currency tends to settle once shocks fade. Our pre-shock estimate placed the rupee roughly 18 per cent below PPP fair value. However, India’s adjustment towards PPP is slow, with a half-life of more than five years. In one year, only 13 per cent of the adjustment towards equilibrium is typically completed. This path is too slow and bumpy to offset a sudden oil-and-dollar shock.

THE TRANSMISSION

Because India imports most of its crude, pricier oil raises the import bill before quantities can adjust, widening the CAD. Multi-country evidence suggests that for oil importers, a 1 per cent real oil price shock can worsen the current account balance (CAB) by up to 0.08 percentage points (pp) of GDP over five years. For India, a sustained 10 per cent real increase in oil could translate into roughly a 0.8pp deterioration in the CAB over five years.

PATH FORWARD

Durable currency strength requires more than growth; it requires resilience in flow dynamics during stress.

• Near-term: Calibrated fuel-tax adjustments to smooth pass-through, deploying FX reserves to counter disorderly moves, and diversified sourcing.
• Medium-term: Attracting "stickier" capital, especially greenfield FDI, by maintaining a predictable policy regime and reducing policy uncertainty.
• Long-term: Raising export complexity and scale in manufacturing while accelerating energy security through strategic reserves and the renewables transition.

By turning recurring oil-and-flows vulnerabilities into managed risks, India can safeguard its currency through well-calibrated policy responses.

For a permanent ‘stabilisation fund’

S Adikesavan

The creation of an Economic Stabilisation Fund by the Finance Ministry represents a move toward establishing institutional mechanisms to respond to economic shocks. Finance Minister Nirmala Sitharaman noted that in an era of global uncertainty, India must equip itself with dedicated institutional buffers to ensure unforeseen disruptions do not derail the country's growth trajectory.

DEALING WITH CRISES

While many advanced economies have established Sovereign Wealth Funds (SWFs), these are typically intended for long-term asset management rather than the short-term macroeconomic stabilization envisioned for this new fund. Historically, governments have relied on expansionary fiscal policies, such as during the 2008 financial crisis and the Covid-19 pandemic, to cushion downturns.

In India, deficit financing during these periods was largely achieved through domestic currency borrowing, which insulated the economy from exchange rate risks. During the pandemic, fiscal deficits rose to over 9 per cent of GDP without destabilizing the economy, eventually tapering to about 4.5 per cent, suggesting that higher deficits can be managed under certain conditions.

FIVE STEPS FOR IMPLEMENTATION

To ensure the Fund is reliable, flexible, and transparent, the article proposes five foundational steps:

1. Legislative Framework: The Fund should be established with a statutory basis through Parliament, similar to the Monetary Policy Committee. While maintaining a clear structure, the government should have the authority to deploy funds swiftly in emergencies without prior approval.
2. Regular Annual Allocations: The corpus should be supported by annual allocations from the Union Budget. A target of ₹5 lakh crore (roughly 1.5 per cent of GDP) would signal a serious policy commitment.
3. State Participation: States should be encouraged to contribute in exchange for "drawing rights" during times of need. This mechanism could include special provisions for strategically vulnerable regions like the North-East, Jammu & Kashmir, and Ladakh.
4. Independent Governance: To insulate the Fund from political considerations, it should be managed by an independent board of trustees consisting of domain experts. Transparency should be maintained through annual reports tabled in Parliament.
5. State-Specific Contingencies: Complementary mechanisms should allow States to levy temporary, purpose-specific cesses through GST amendments to address local crises, using Kerala’s 2018 flood cess as a template.

As global uncertainties become the norm, building such institutional resilience is no longer optional but imperative for economic stability.

BJP promises ₹5 lakh cr investment for Assam

Guwahati: Union Finance Minister Nirmala Sitharaman released the BJP’s manifesto for the Assam Assembly polls on Tuesday, promising the protection of land, heritage, and dignity for indigenous people alongside a ₹5 lakh crore infrastructure investment.

SANKALP PATRA HIGHLIGHTS

The BJP’s Sankalp Patra comprises 31 promises, including:

• The recovery of encroached land from Bangladeshi Miyas.
• The implementation of a Uniform Civil Code.
• Ensuring the development of the State and providing employment opportunities for the youth.

Sitharaman stated that the manifesto was prepared based on a "decade of transformation" in the State, which she alleged the Congress failed to achieve in 60 years. She further claimed that peace has been "restored in Assam" under BJP rule and emphasized that development is only possible with such stability.

AFSPA AND REGIONAL GROWTH

The Finance Minister noted that while Assam lived under AFSPA for 32 years due to Congress policies, the BJP has ensured the law was removed from most States. She also highlighted a shift in migration patterns, claiming that many young Assamese are now leaving global careers to return to Assam because of the opportunities currently available in the State.

‘Vijay’s solo entry may split anti-DMK vote, favour DMK alliance’

T E Raja Simhan | Chennai

The entry of Tamilaga Vettri Kazhagam (TVK) founder C Joseph Vijay into the electoral fray has added a new dimension to the Tamil Nadu Assembly elections 2026, according to Thol Thirumavalavan, Founder of the Viduthalai Chiruthaigal Katchi (VCK). Thirumavalavan noted that Vijay’s prominence and significant media coverage have made him a central figure in the current political discourse.

STRATEGIC IMPACT

Thirumavalavan observed that Vijay has successfully turned the electoral arena into a focal point of public attention. He argued that had Vijay aligned with an anti-DMK coalition, it could have posed a serious challenge to the DMK-led alliance. However, by contesting independently, Vijay is likely to draw a share of anti-DMK votes that might otherwise have consolidated behind the AIADMK-BJP combine. This fragmentation of the opposition vote could, in effect, work to the advantage of the DMK alliance.

While Vijay has asserted that the contest is solely between the DMK and the TVK, Thirumavalavan noted that both the AIADMK and the BJP do not regard Vijay as a significant factor and remain focused on their objective of defeating the DMK.

VCK’S ASSEMBLY BID

Thirumavalavan has decided to contest the Assembly elections himself, despite currently being a Lok Sabha member. He explained that the Legislative Assembly is the "primary arena of Tamil Nadu’s political landscape," whereas the scope to exert tangible influence in Delhi is limited to debates. He believes that, as of now, the DMK alliance stands as a strong coalition with significant public support and that there is little possibility of a hung Assembly.

RESERVATIONS ON WELFARE MEASURES

Answering a question on the proliferation of welfare measures, the VCK leader expressed reservations about "freebie politics". He stated his firm conviction that, with the sole exception of education, nothing else should be provided free of cost. He criticized the current situation, noting that education is not being provided for free, nor is it receiving adequate financial support, while both the DMK and AIADMK engage in the "indiscriminate distribution of goods and services under the guise of welfare".

Unilever food arm to join McCormick in $45 b deal

Bloomberg

Unilever has agreed to combine its food business with spice maker McCormick in a $44.8 billion deal that will create a global seasonings, sauces, and condiments company. Under the agreement, McCormick will pay the Anglo-Dutch company $15.7 billion and provide the equivalent of $29.1 billion in McCormick shares for the majority of Unilever’s food business. This arrangement will leave Unilever and its shareholders with 65 per cent of the combined entity, including McCormick brands such as French’s mustard.

BIGGEST DEAL

The deal is the largest in the histories of both companies and will help recast Unilever as a global leader in beauty, personal, and home care. Simultaneously, it will turn McCormick into a more significant competitor in the global packaged food business. The transaction will be carried out through a Reverse Morris Trust, a type of merger designed to be tax-free.

The transaction represents a highly ambitious move by McCormick, a company best known for its red and white spice containers. Notably, McCormick is a much smaller company, with its entire business generating only half the sales of Unilever’s food arm.

Pricey memory chips hit smartphone sales in 2026

Vallari Sanzgiri | Mumbai

Smartphone sales in India declined nine per cent year-on-year due to a combination of rising memory component costs and seasonal softness, according to data from Counterpoint Research’s India Weekly Smartphone Sell-out Tracker.

PRICE HIKES AND MARKET IMPACT

By the ninth week of 2026, more than eight brands had already implemented price increases, with an average hike of ₹1,500. Despite the resulting impact on consumer footfalls and overall sales, these hikes are expected to continue rising, and new product launches are being introduced at higher price points.

While Republic Day sales provided a temporary boost primarily for online channels, sustained premiumisation helped maintain value growth for the sector. Prachir Singh, Senior Research Analyst at Counterpoint Research, noted that the market started the year on a low note as "persistent price increases continued to weigh on consumer demand," further exacerbated by limited promotional intensity and fewer new launches.

BRAND PERFORMANCE

Despite the broader market slump, some brands saw growth:

• Vivo: Recorded the strongest annual sales growth at 19 per cent in the first nine weeks of 2026, driven by new launches and the performance of its Y and T series.
• Apple: Grew 12 per cent, supported by discounts and sustained demand for the iPhone 17 series.

OUTLOOK FOR 2026

The market faces a challenging year ahead. Tarun Pathak, Research Director at Counterpoint Research, projected that India’s smartphone market could decline by around 10 per cent in 2026. He attributed this to ongoing global uncertainties, geopolitical tensions, and rising prices for essential commodities, all of which weigh on discretionary spending. While the premium segment is expected to remain resilient, affordability constraints will continue to hinder demand in the mass segment, resulting in a gradual and uneven recovery.

RBI Bulletin Mar 2026

 

Good Finance, Good Leadership: On the Road to Viksit Bharat@2047

Shri Swaminathan J.

Prof Nitin Upadhyay, Dean of Academics; Prof Jabir Ali, Dean of Faculty and Research; Prof Pranab Das and Dr. Ashish Kumar, Conference Chairs of this event; Distinguished speakers, panelists and guests; Faculty members, and above all, my dear students. A very good morning to all of you.

Before I begin, let me say it is a pleasure and privilege to be at IIM Jammu, one of the youngest IIMs. In a short span, it has built momentum as a premier academic institution, and conferences like IFAC are part of that journey—bringing together faculty, students, and practitioners to engage with real questions in finance and accounting.

The theme this year is ambitious and important: financial strategies for inclusive and sustainable economic growth to achieve Viksit Bharat@2047. It is a theme that belongs not only in policy papers and boardrooms, but also in classrooms, because it is ultimately about how lives improve over time.

Since the audience today includes many young MBA students, I want to speak less like a regulator and more like someone speaking to future leaders. Imagine it is your first job and your first salary hits your account. You have choices. You can spend it. You can save it. Or you can invest it. Now pause and ask yourself: before you do any of these three, what are the few things that you want from the financial system?

• Safety, so that your money is secure even when conditions become difficult.
• Fairness, so that products are not designed or sold in a way that exploits information gaps.
• Reliability, so that services work smoothly in daily life, and if something goes wrong, it gets resolved without running from pillar to post.

These three assurances are not only personal preferences. They are also a useful way to think about the kind of financial system India needs as we move towards 2047.

Apart from big numbers like GDP or GDP per capita, development is also about the quality of daily life: better jobs, stronger households, safer financial choices, and resilience when shocks occur. It is about whether growth feels real, broad-based and inclusive.

Finance will have to play a pivotal role in this transformation. It will have to mobilise savings, allocate capital, and manage risk. Done well, it will support enterprises and households across the country.

So, the first-salary question is not just a thought experiment. Over the next two decades, many decisions that will shape India’s financial system will be taken by people like you — in Banks and NBFCs, fintechs and payment firms, audit and consulting, corporate finance and treasury, start-ups, and in Government and public institutions.

India of 2047 will not be shaped only by technology or capital. It will be shaped by leadership of young students like you.

Leadership in finance is not just about intelligence. It is about judgement. It is about discipline. It is about what you choose to reward, what you choose to question, and what you choose to fix early.

When people think about finance, they often imagine numbers, models, and markets. These things matter. But finance is, at its core, a people business. Behind every deposit is a household trying to be secure. Behind every loan is an ambition to grow. Behind every insurance policy is a fear of uncertainty. Behind every fraud is a moment of vulnerability. Behind every failure of controls is a real loss borne by someone who did not fully understand the risk. If you remember that, you will become a better finance professional and a better leader.

Since this is a finance and accounting conference, let me add one more point. Finance needs numbers, but more importantly, it also needs integrity in numbers. In the age of dashboards and AI, it is easy to forget that accounting is a discipline of clarity. It forces us to recognise losses, admit uncertainty, value assets prudently, and explain performance in a way that others can rely on. In many organisations, the true difference between a good institution and a weak one is not how fast it grows, but how truthfully it measures itself.

I want to offer you a “career compass” in three parts. These are not technical rules. They are a few lessons that my own journey in banking has taught me, often the hard way. If you keep these in mind, I believe your decisions will be sound, and your leadership will be enduring.

1. Respect the customer First part of the compass is to respect the customer. In the long run, customer outcomes are the strongest business strategy. They reduce disputes, lower reputational risk, and sustain participation in formal finance.

Many problems in finance start small, sometimes, quite literally, in the ‘small print’. A fee not explained clearly; A clause buried in the terms; A loan that is easy to take but hard to repay; or A product sold to meet a target, not to meet a need. Over time, these small problems become big issues. They show up as complaints, disputes, defaults, and customer harm. Therefore, we should endeavour to design and sell products that are suitable, transparent, and fair. The best leaders prevent harm before it occurs. They do not wait for problems to become headlines.

2. Respect the financials Second part is to respect the financials. The financial statements tells you what is sustainable and what is not. It tells you whether you are building strength, or simply postponing risk. Look beyond profits to the quality of assets, the stability of funding, the adequacy of buffers, and the concentration of exposures. Strength is built in good times and revealed in stress.

When times are good, you will always find reasons to relax discipline. Competition is intense. Targets are high. Growth looks easy. Risk appears distant. That is exactly when leadership matters the most. The best leaders use good times to build buffers, improve controls, and strengthen governance. They ask uncomfortable questions when everyone else is celebrating.

3. Respect governance The third and last part of your career compass is to respect governance. Many failures in finance are not failures of knowledge. They are failures of governance. People knew what was going wrong, but they did not speak up. Or they spoke up, but no one listened. Or everyone noticed red flags, but incentives pushed them to look away.

As leaders you should endeavour to build systems where growth, risk, and conduct are aligned. Encourage effective challenge. Reward the right behaviours because ultimately what gets rewarded gets repeated. Foster an environment where teams can raise concerns without fear, where risks are discussed honestly, where numbers are not forced to look good.

Now let me translate this compass into a few practical habits you can use early in your career.

Ask better questions Many people ask, “How fast are we growing?” A better question is, “What could break?”

• Ask, “What assumptions are we making, and what happens if they go wrong?”
• Ask, “What happens if the customer’s cash flows fall?”
• Ask, “What happens if the system is down for a day?”
• Ask, “What happens if a third-party service provider faces an outage?”
• Ask, “What happens if fraud spikes in a new channel?”

These questions are not the mark of a pessimistic ‘doubting Thomas’; they are the risk-sensitive questions, mark of a prudent leader. One of the most valuable skills in finance is not giving answers. It is asking the right questions at the right time.

Communicate simply A leader who cannot explain a product, a risk, or a decision in simple language often does not understand it deeply enough. Complexity is sometimes necessary, but confusion is not. Whether you work in credit, markets, compliance, audit, or fintech, your ability to explain clearly will be a major advantage.

Choose the long term over the easy short term There will be moments where the easy path is tempting. A shortcut in due diligence; A small compromise on disclosure; A “temporary” relaxation of standards; or A target that encourages aggressive sales. These compromises may look small in the moment, but they compound. In finance, small compromises can become large losses.

Now let me connect this back to the national agenda of Viksit Bharat@2047. India’s next phase of growth will require three things to happen together.

• We need a steady flow of capital into productive areas that create jobs and capabilities.
• We need inclusion that is meaningful, where people and small enterprises can use finance safely, not just access it.
• And we need customer outcomes to remain fair as finance becomes more digital and more data-driven.

This is where your generation will be tested, because your generation will work in an environment where everything scales quickly. A product can reach ten million people within months. A credit model can approve loans in seconds. A payments platform can process massive volumes.

This scale is powerful, but it also means that harm can scale quickly if design is poor, controls are weak, or incentives are misaligned. Therefore, in finance, speed is not always a virtue. Sometimes speed hides weakness. Technology is a force multiplier. It amplifies good design as well as bad design. Eventually, the future will reward institutions that can combine efficiency and innovation with prudence, and growth with resilience.

Conclusion Let me conclude by emphasising that the journey to Viksit Bharat@2047 is a collective endeavour. It will require sound institutions that can support growth through cycles; inclusion that improves real outcomes for households and enterprises; and customer protection that keeps pace with innovation.

If we align capital with capability, innovation with safeguards, and inclusion with well-being, the aspiration of 2047 will steadily become a lived reality for millions. It will call for leaders who can combine performance with principles, and ambition with discipline.

Before I close, my sincere thanks to the Director, faculty, staff and student team of IIM Jammu for the effort that has gone into organising IFAC 2026. Platforms like these help connect classroom learning with the realities of life, and they sharpen the judgement that future leaders will need.

With this I wish you a very engaging and insightful conference. Jai Hind.

Perspectives on India’s Growth: Last Four Decades to the Present

Dr. Poonam Gupta

It is my pleasure and honour to deliver the 14th Foundation Day Lecture of the Centre for Development Studies (CDS). Established in October 1970 by Professor K. N. Raj, CDS has been a premier academic institute in India for social science and development research, with a pioneering footprint in economic research on human development, labour, industry, international trade, migration, and local governance.

The topic for my talk today focuses on some of the salient features of India’s economic growth in recent years and how they may be contextualised over the past four decades. I focus on three defining features of India’s growth trajectory: first, its sustained momentum and gradual acceleration; second, the coexistence of rapid expansion with macroeconomic stability; and third, a demonstrated resilience reflected in increasingly stable and predictable economic outcomes.

1. Economic growth has accelerated slowly but surely

Looking at the pace of economic growth since the 1980s, the Indian economy has slowly but surely accelerated at an average pace of 0.03 percentage points a year during the past four and a half decades. While the growth rate averaged 5.7 per cent during the 1980s, it improved to 5.8 per cent in the 1990s, to 6.3 and 6.6 per cent during the 2000s and 2010s respectively, and further to 7.7 per cent during the last four years (excluding COVID years). Ten-year rolling averages of annual GDP growth rate confirm this trend acceleration and show that there have not been any periods of prolonged stagnation or secular decline.

The acceleration in per capita income growth has been even faster. From a modest level of US$ 274 in 1981, India’s per capita income has increased nearly tenfold to about US$ 2700 in 2024. While it took about 23 years from 1981 to double per capita income, it has increased almost five-fold in the subsequent 22 years. IMF projections suggest it will increase to US$ 4346 by 2030.

A significant contributing factor has been the decline in population growth. India’s population growth rate has declined faster than the global rate and has been at par with the world average since about 2014. While death rates have fallen, the decline in fertility rates since the 1980s has been even faster, resulting in slowing population growth even as the working-age population share continues to increase.

Since the early 1990s, India has grown much faster than the rest of the world, with its share of the global economy increasing three times from 1.1 per cent in 1991 to 3.5 per cent in 2024. India’s per capita GDP as a percentage of world per capita GDP has also increased from 7 per cent to close to 20 per cent over the same period. Regression analysis shows that this acceleration is specific to India and was not witnessed at an aggregate level by seven other major emerging economies (the EM7).

2. Indian economy has experienced a virtuous cycle of accelerated growth and macroeconomic stability

Macroeconomic stability is typically assessed through outcomes like inflation, deficits, and financial sector health, all of which have remained in a healthy range for India with notable recent improvements.

• Inflation: Average annual CPI inflation has moderated and become more stable, declining from close to 10 per cent in the 1990s to below 5 per cent in the last four years under the flexible inflation targeting (FIT) regime.
• Current Account: India’s decadal average current account deficit (CAD) has varied within a moderate range of 0.5-2.2 per cent of GDP since 1990, halving to about 0.75 per cent in the last six years. This resilience is supported by diversified inflows, particularly services exports and remittances.
• Fiscal Discipline: Institutionalised through the FRBM Act, 2003, fiscal management has helped build resilience. Even though public debt is higher than in many countries, it is sustainable because a large part is held domestically, in long tenors, and denominated in local currency. Following COVID-19, fiscal policy shifted back to consolidation by 2022, accompanied by a dramatic increase in capital expenditure and signs of improved direct tax collection.
• Banking Health: After a decade of balance sheet repair, Indian banks are in a structurally stronger position. Capital positions are robust, with the Capital to Risk-Weighted Assets Ratio at 17.2 per cent in September 2025, and asset quality is at multi-year highs with the GNPA ratio declining to 2.1 per cent.

3. Economic outcomes have become less fickle and more predictable

Economic outcomes now materialize within a narrower range, indicating enhanced stability. Agriculture has seen improved growth and reduced volatility since 2010, and Services, the main supply-side driver, has experienced distinctly lower volatility.

This reduced volatility stems from the economy becoming more resilient to known shocks. The negative correlation between agriculture and rainfall deviation has weakened significantly due to crop diversification, expanded irrigation, and better weather information. Furthermore, the economy is more insulated from global oil prices as the oil intensity of GDP has declined consistently, a trend expected to persist as India transitions toward renewable energy.

Policy frameworks have evolved to reflect global best practices adapted to domestic realities, including rule-based fiscal consolidation, GST reforms, and flexible inflation targeting. These frameworks, along with cushions built during quiet times, allow the government and RBI to respond promptly to shocks like reversals of external capital flows, further insulating the real economy.

4. Conclusion

High, stable, and accelerating growth, along with predictable economic outcomes, have become the hallmarks of the Indian economy. With its macroeconomic stability, policy consistency, and diversified demand and production bases, the Indian economy is assured of a continuously improving economic trajectory. This contrasts with the more modest promise of many other emerging and developing economies that lack one or more of these enabling factors.

No. 19: Consumer Price Index (Base: 2024=100)

Group/Sub group	2025* Rural	2025* Urban	2025* Combined	Rural Feb. 25	Rural Jan. 26	Rural Feb. 26 (P)	Urban Feb. 25	Urban Jan. 26	Urban Feb. 26 (P)	Combined Feb. 25	Combined Jan. 26	Combined Feb. 26 (P)
1. Food and beverages	102.3	102.9	102.5	100.4	103.9	103.8	100.6	104.3	104.0	100.5	104.0	103.9
2. Paan, tobacco and intoxicants	103.1	102.8	103.0	101.9	104.4	105.4	101.8	104.4	105.4	101.9	104.4	105.4
3. Clothing and footwear	105.0	103.9	104.6	103.5	106.6	106.8	102.8	104.8	105.0	103.2	105.9	106.1
4. Housing, water, electricity, gas and other fuels	101.6	101.2	101.3	100.8	102.1	102.2	100.4	101.9	102.0	100.6	102.0	102.1
5. Furnishings, household equipment and routine household maintenance	102.5	102.4	102.4	101.7	103.1	103.3	101.7	102.8	102.9	101.7	103.0	103.1
6. Health	102.8	103.3	103.0	101.8	103.7	103.6	102.2	104.2	104.3	102.0	103.9	103.9
7. Transport	100.9	100.8	100.8	100.8	100.7	100.7	100.7	100.6	100.7	100.7	100.6	100.7
8. Information and communication	103.5	103.1	103.4	103.3	103.6	103.7	102.9	103.0	103.1	103.1	103.3	103.4
9. Recreation, sport and culture	102.7	102.6	102.7	102.0	103.8	104.1	101.8	104.2	104.3	101.9	104.0	104.2
10. Education services	103.4	104.1	103.8	101.7	104.8	104.8	102.1	105.7	105.7	102.0	105.3	105.4
11. Restaurants and accommodation services	103.8	104.7	104.3	103.0	104.8	105.1	103.3	106.6	106.8	103.2	105.7	106.0
12. Personal care, social protection and miscellaneous goods and services	108.2	108.4	108.3	103.9	123.1	125.2	104.2	122.1	123.4	104.0	122.7	124.5
All India General CPI	102.8	102.7	102.8	101.3	104.6	104.7	101.3	104.3	104.4	101.3	104.5	104.6

Notes:

• P: Provisional.
• ‘*’: Arithmetic mean of all monthly indices of calendar year 2025.
• Source: National Statistical Office, Ministry of Statistics and Programme Implementation, Government of India.

Digitalisation for Inclusive Finance and Sustainability: Priorities for the Next Phase

Shri Swaminathan J.

Professor Partha Ray, Director, National Institute of Bank Management (NIBM), Shri Jaikish, Principal, College of Agricultural Banking (CAB), distinguished delegates, researchers, faculty, policymakers, industry leaders, colleagues from India and overseas, ladies and gentlemen. Good afternoon.

As we come to the close of this International Conference on Digitalisation for Inclusive Finance and Sustainability, let me begin by congratulating CAB and NIBM for convening an important conversation at the right time. I am sure the participation over the last two days has been strong, and the discussions have been both forward-looking and grounded in practical realities.

As I reviewed the papers presented, one message came through clearly. Digitalisation is not a goal by itself; it is a means. The real question is: how do we use digital tools to deliver financial services that are accessible, affordable, safe, and useful, while also supporting sustainability and resilience? Against this backdrop, I would like to reflect on three shifts shaping this landscape, then underline what I would call the confidence architecture needed for digital finance at scale, and finally offer a few closing priorities for the road ahead.

From access to capability and confidence

The first shift is in how we look at inclusion. For a long time, access meant inclusion, but the next phase of that is about something deeper: capability and confidence. Inclusion becomes meaningful when households and small businesses can use financial products and payment rails regularly and safely.

Indeed, many discussions in the papers presented here highlight the idea that barriers to inclusion are not only physical; they can also be informational and behavioural. People may have connectivity but lack confidence. They may have access but not agency. They may have a digital tool but not the ability to resolve a problem.

This is why design matters. Effective inclusion solutions often look simple on the surface, but they are thoughtfully engineered underneath. They use plain language, work in low bandwidth settings, and allow assisted journeys. They respect the realities of irregular incomes and modest savings.

A special dimension of capability is the gender gap in digital finance. Bridging this gap is not about devices and connectivity; it requires building women’s digital and financial skills and improving safety and privacy further in digital journeys. If we want digital inclusion to endure, products and processes must be designed around these realities.

From faster finance to fair finance

The second shift is about digital credit and digital intermediation. Digital lending and platform-based models have expanded quickly because they offer speed and convenience. That is a real benefit, but credit is not like any other routine transaction. Credit can strengthen livelihoods, but if poorly underwritten, it can also deepen distress through over-indebtedness.

The discussions here highlighted a central point: the next phase of digital credit must be not only fast, but fair, transparent, and affordable. A related theme is the growing role of data and algorithmic rule engines in credit decisions. Data can reduce frictions and widen access, but it also brings up some important questions: Are we pricing risk, or pricing vulnerability? Are decisions explainable in plain language? Are models being monitored for bias and drift? These questions shape customer confidence, market discipline, and the credibility of the digital finance ecosystem.

From sustainability as a separate agenda to sustainability as core resilience

The third shift is the assimilation of sustainability into mainstream finance. Sustainability is sometimes treated as a specialised product line or a reporting exercise. As climate and environmental risks do translate into financial risks, especially for climate-sensitive sectors and regions, sustainability has to be integral to our products and processes.

At the same time, digitalisation offers tools to strengthen resilience. Better data can improve risk understanding, more responsive credit can support adaptation investments, and digital monitoring can improve transparency and reduce the cost of compliance and reporting. But we should also be realistic: sustainability outcomes require more than digital tools. They require sound institutions, robust capital, and good governance. Digital transformation can enable, but it cannot substitute for the fundamentals.

Confidence architecture is the next frontier

If you bring these three shifts together you will see that the next frontier is not simply building more digital finance; it is building digital finance that people can rely on. This calls for an ecosystem with strong foundations, with four key elements:

1. Security and resilience: As participation scales up, vulnerabilities also scale up. We must invest continuously in cyber security, fraud prevention, incident response, and business continuity. Confidence is built through reliability in ordinary times, and through competence and clarity when disruptions occur.
2. Accountability and effective redress: When a customer is harmed in a digital journey, they should not be passed from one entity to another. Responsibility must be clear, and grievance redress should be simple, time-bound, and effective. A system earns confidence when people experience that help is real, accessible, and fair.
3. Data discipline and meaningful consent: Digital finance runs on data, but data must be handled with discipline: purpose limitation, minimum necessary collection, secure storage, and transparent sharing. Consent must be meaningful, not hidden in fine print.
4. Inclusion with dignity: Inclusion is not only onboarding; it is ongoing service. It is also language, appropriate accessibility and respectful treatment. It is designing for the person who is least comfortable with technology, not only for the person who is most fluent.

Before I turn to the closing priorities, let me briefly underline the critical contribution of digital public infrastructure and interoperability. When core rails are resilient, widely usable, and interoperable, they reduce the cost of reaching the last mile and allow providers to compete on service quality rather than on customer lock-in. They also make it easier to deliver targeted support at scale. However, the wider the rails, the higher the responsibility. Strong governance is essential, including clear standards, reliable uptime, and proportionate safeguards.

Closing: Five priorities going forward

Permit me to close with five practical priorities that can help digitalisation deliver inclusion and sustainability:

• First, build for outcomes, not optics. We should track adoption, but our focus should remain on what matters: active use, reliability, affordability, customer wellbeing, and resilience.
• Second, design for the last user. If the journey works for the most constrained user, it will work for everyone. Simple interfaces, low-data design, and clear grievance pathways should be treated as core features.
• Third, make fairness non-negotiable. Innovation is welcome, but fairness is essential. Transparent pricing, explainable decisions, and respectful collections should all be built into digital credit models.
• Fourth, treat resilience as a design requirement. Operational resilience and cybersecurity are not mere compliance items; they are integral to service quality.
• Fifth, collaborate. Digital finance and sustainability sit at the intersection of regulation, technology, business incentives, and human behaviour. Progress requires collaboration across regulators, financial institutions, fintechs, researchers, and civil society.

Conclusion

In conclusion, digitalisation increases reach and speed, but it also increases vulnerabilities. The task before us, therefore, is to ensure that digital finance scales what is good: inclusion that is usable, innovation that is responsible, and finance that supports resilience and sustainability.

On behalf of the Reserve Bank of India, I thank CAB and NIBM for hosting this conference, and I thank all participants for contributing to a meaningful and constructive dialogue. I hope the ideas discussed here translate into safer rails, better products, and more sustainable outcomes for our citizens and our economy.

Thank you. Jai Hind.

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* Valedictory Address by Shri Swaminathan J, Deputy Governor, Reserve Bank of India at the CAB–NIBM International Conference on Digitalisation for Inclusive Finance and Sustainability, in Pune on March 6, 2026.

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Panic buying sparks spike in fertilizer sales

Prabhudatta Mishra — New Delhi

Farmers appear to be stock-piling fertilizers as government sales data for March show a sharp spike in demand. By March 23, the volume of crop nutrients purchased had already 0vertaken the estimated demand for the full month and surpassed sales from the same period last year.

As much as 20.21 lakh tonnes of urea were sold during February 28-March 23 as against 16.2 lt in the whole of March 2025 and the estimated demand of 14.96 lt for the month.

Similarly, 4.78 lt of di-ammonium phosphate (DAP) was sold during that period against an estimated demand of 2.43 lt for the whole of March 2026, while 1.58 lt of muriate of potash (MoP) was sold against 1.8 lt of estimated demand, and 7.22 lt of complex was sold against 7.05 lt of estimated demand.

While the government has neither confirmed nor denied the sudden increase in sales this month, it maintained that there was enough stock to meet the demand. Sources said higher demand was noticed from a few States, including Telangana, Madhya Pradesh, Uttar Pradesh and Maharashtra.

Urea sales this month — at 2.63 lt up to March 6 — rose to 6.74 lt by March 13, up 56 per cent week-on-week. Sales have risen further by about 13 lt during March 14-23, they said.

STOCK VERIFICATION

A senior government official of an eastern state admitted that a few districts had reported higher sales in March. Detailed instructions had been given to the Collectors to watch daily sales figures and undertake physical stock verification. In western Uttar Pradesh, fertilizer purchase, which is mainly meant for maize and sugarcane, has risen in the last few days.

In Ludhiana, Punjab, the secretary of a cooperative society said there had been a marginal increase in sales this month, with mostly farmers buying for their potato and maize crops.

Rampal Jat, a farmer leader from Rajasthan, noted that a significant uptick in fertilizer sales is still some time away. He explained that the state is currently in a lean period and most farmers lack the financial or storage capacity to stockpile supplies so far in advance.

Raghunath Dada Patil, a farmer leader from Maharashtra, said the government needs to verify whether farmers are really buying higher or whether retailers are keeping the stock by showing sales on the record.

“There is a clear preference for fertilizers that are cheaper and where farmers have been facing scarcity season after season. In irrigated areas where paddy planting begins around June 1, farmers, in anticipation of a shortage, have stocked up in advance. It will be interesting to see if farmers continue to buy in May,” said agriculture scientist A K Singh.

Manufacturing drives industrial growth to 5.2% in February

Production output expands 6%; mining & power post modest gains

Our Bureau — New Delhi

With strong performance of the manufacturing sector, industrial growth, as measured by the Index of Industrial Production (IIP), rose to 5.2 per cent in February from 5.1 per cent in January.

LEADING SECTOR

According to data released by the Statistics Ministry, the manufacturing sector’s output growth accelerated to 6 per cent in February 2026 compared to 2.8 per cent in the year-ago month. Mining production growth slightly improved to 3.1 per cent compared to 1.6 per cent recorded a year ago. Power generation growth stood at 2.3 per cent in February, down from the 3.6 per cent expansion seen in the year-ago period.

MOMENTUM STEADY

Rajeev Sharan, Head of Research at Brickwork Ratings, stated that on a month-on-month basis, the index eased from January’s high. He described this as a “natural correction” after the strong December–January run-up rather than a fundamental loss of momentum, noting that capital goods output continues to rise sequentially. Overall, the data confirms that investment-linked sectors are anchoring growth, while softer consumer non-durables and modest gains in mining and electricity highlight areas where recovery remains incomplete.

BASE EFFECT

Devendra Kumar Pant, Chief Economist at India Ratings & Research (Ind-Ra), noted that industrial growth in February benefited from a low base effect. Post-festive demand has remained relatively strong, with average growth from November 2025 to February 2026 reaching 6.4 per cent, the highest since August-November 2023.

WEST ASIA CRISIS

While demand has been strong, the West Asia crisis is expected to alter the situation. Pant highlighted reports of LPG shortages forcing certain industries to scale down production. Additionally, a possible moderation of remittances, particularly from West Asia, is expected to impact demand and, consequently, industrial production.

“IIP growth in March 2026 is likely to be impacted by the base effect and the initial impact of the West Asian crisis. Ind-Ra expects it to grow 3.9 per cent,” Pant said.

Fiscal deficit touches 80% of RE in April-February

Our Bureau — New Delhi

India’s fiscal deficit in the April-February period of the current fiscal reached ₹12.5 lakh crore, or over 80 per cent of revised estimates (RE), according to government data released on Monday. This is lower than the ₹13.5 lakh crore or 86 per cent of estimates recorded during the same period last year.

REVISED ESTIMATES

Fiscal deficit represents the gap between the government's income and expenditure. Finance Minister Nirmala Sitharaman, during the Union Budget presentation on February 1, revised the fiscal deficit target to ₹15.58 lakh crore (from ₹15.7 lakh crore), which is 4.4 per cent of the GDP. While economists expect the government to meet the absolute deficit number, some suggest it may end up slightly higher as a percentage of the GDP.

In February alone, the deficit widened to ₹2.71 lakh crore from ₹1.77 lakh crore a year earlier, primarily driven by higher capital expenditure.

REVENUE RISES

On the revenue front, net tax collections rose to ₹21.5 lakh crore during this period, compared to ₹20.2 lakh crore a year ago. Non-tax revenues also saw an increase to ₹5.8 lakh crore from ₹4.9 lakh crore. Total government expenditure stood at ₹40.4 lakh crore, up from ₹38.9 lakh crore in the corresponding period of the previous year.

EXPERT ANALYSIS

Aditi Nayar, Chief Economist at ICRA, noted that while the Centre’s capital expenditure (capex) needs to contract by 31 per cent in March 2026, its revenue expenditure (revex) is expected to expand by a sharp 45 per cent. She highlighted that the net cash outgo of ₹2 lakh crore announced under the 2nd Supplementary Demand for Grants (SDG) will likely keep expenditure elevated in March, ensuring the fiscal deficit remains aligned with the RE.

Overall, ICRA expects the fiscal deficit to settle at 4.5 per cent of GDP in FY26, slightly higher than the RE, due to a downward revision in nominal GDP figures.

FUTURE RISKS

Nayar also mentioned that an expected reduction in excise duty could result in a revenue loss of ₹1-1.2 lakh crore in FY27. Furthermore, she warned that the West Asia crisis has introduced material risks to the budget math for FY27, potentially keeping crude oil and natural gas prices elevated for a prolonged period, which could further strain both expenditure and revenue.

Digital villages: ₹3 lakh cr funds processed virtually

Panchayati Raj Institutions transferred ₹53,342 cr via eGramSwaraj-PFMS in FY26 alone

Dalip Singh — New Delhi

In a major milestone for grassroots governance, more than 2.5 lakh gram panchayats across India have collectively processed over ₹3 lakh crore in online payments since April 2019 through eGramSwaraj, the Ministry of Panchayati Raj’s digital platform.

Every rupee has gone directly to vendors and service providers in real time, with a full and transparent digital audit trail, the Ministry officials explained, saying the move is aimed at curbing mismanagement of rural funding.

PAPER TO VIRTUAL

Developed under the e-Swaraj initiative, the platform has fundamentally changed the way gram panchayats plan, account for and spend public money, overwriting the earlier regime of cash-based, paper-driven village-level expenditure. Now, the virtual system is fast, accountable and fraud-resistant, officials stated.

In FY26 alone, Panchayati Raj Institutions transferred ₹53,342 crore through the eGramSwaraj-PFMS interface, with 2,55,254 gram panchayats uploading their development plans on the portal during the same period, said Ministry officials. So far, a total of 1,60,79,737 vendors have registered.

The system covers traditional local bodies and Sixth Schedule areas in 28 States, including Kerala. Under the 14th Finance Commission, ₹2,00,292.20 crore was allocated to the gram panchayats. Out of this total allocation, ₹1,83,248.54 crore has been released, including ₹3,774.20 crore to Kerala.

“This milestone is the direct result of the Ministry of Panchayati Raj’s sustained and unrelenting commitment to making every panchayat digitally empowered. It stands as proof of the trust that over 2.5 lakh gram panchayats have placed in technology as the backbone of panchayat-level financial governance,” Secretary Panchayati Raj Vivek Bharadwaj told businessline.

The global economy’s many chokepoints

Excessive dependence enables extortion or other forms of pressure, exemplified by China’s rare-earth export controls, America’s enforcement of sanctions via SWIFT

Michael Spence

Iran’s effective closure of the Strait of Hormuz, through which about a fifth of the world’s oil and a quarter of its fertilizer passes, has highlighted a well-known vulnerability of our complex networked global economy: a single point of failure can create massive and costly disruptions. Yet such points of failure have been proliferating for decades.

Global trade flows through a number of other critical passages, which could also become disruptive bottlenecks. The Strait of Malacca — one of only two sea lanes linking the Indian Ocean to the Pacific — receives much attention in war simulations. When the Suez Canal was blocked for six days by the Ever Given in 2021, the disruption reverberated across supply chains for months. The Panama Canal raises similar risks.

MARKET CONCENTRATION

Excessive market concentration generates similar vulnerabilities. The dominance of a few Japanese producers of microcontrollers and engine airflow sensors meant that, when a massive earthquake and tsunami hit Japan in 2011, the global auto industry contracted sharply. Since then, automakers have diversified suppliers and built up buffer stocks to identify hidden single-source risks.

But diversification comes with trade-offs, as seen in the advanced-semiconductor sector. A single Dutch company, ASML, produces all the extreme ultraviolet lithography equipment required for advanced semiconductors. Only two companies, Taiwan’s TSMC and South Korea’s Samsung, can produce 2-nanometre semiconductors.

Governments are now promoting geographic diversification, with the US and EU providing incentives for TSMC and Samsung to diversify production, while China invests heavily to reduce dependence on external sources.

RESILIENCE VS EFFICIENCY

While this approach might increase resilience, the sector can ill afford lower efficiency. Advanced semiconductors are crucial for training generative-AI models and advancing physical-AI applications like robotics and autonomous vehicles.

Rare earths represent another notable vulnerability; China alone controls about 60 per cent of global rare-earth mining and over 90 per cent of processing. Points of failure also characterize the financial sector, such as the US-controlled SWIFT inter-bank messaging system.

Excessive dependence enables extortion or pressure, exemplified by China’s rare-earth export controls, America’s enforcement of sanctions via SWIFT, and US President Donald Trump’s use of tariffs.

OPTIMISING FOR RESILIENCE

In decentralized networks, investors often optimize for efficiency (where benefits are appropriable to the investor) rather than resilience (where benefits are spread across the network). However, networks with greater concentration of ownership are more likely to optimize for resilience.

For example, three companies (Alcatel Submarine Networks, SubCom, and NEC) maintain 87 per cent of the global undersea fiber-optic cable network. These "architects" have a powerful incentive to build resilience into the system as part of the package they sell. The same is true in the auto sector, where players like Toyota control large chunks of the supply chain, and for the internet, where the US government acted as the primary architect.

GOVERNMENT ROLES

When markets undersupply resilience, countries must step in. They can "onshore" production, increase international cooperation, or pursue a combination of both. A crude rule of thumb is that cooperation is less expensive than onshoring and more effective in principle, but much harder to achieve.

Whatever approach countries choose, eliminating or mitigating points of failure will be expensive. But, at a time of growing fragmentation and deteriorating cooperation, it is a cost they will have to bear.

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The writer, a Nobel laureate in economics, is Emeritus Professor of Economics and a former dean of the Graduate School of Business at Stanford University.

Expectations from MPC

K Srinivasa Rao

The ongoing West Asian conflict poses unprecedented challenges for the Monetary Policy Committee (MPC), which meets in a week from now. The global economy faces turmoil, with rising inflation and possible slowing growth, disrupting the path of policy rates and inflation-control plans. While India is fairly resilient, it cannot fully insulate itself from global interest rate trends as FPI outflows threaten exchange rate stability.

POLICY UPDATES

A couple of policy updates will reassure the MPC: the CPI inflation glide path of 4% ± 2% is extended for another five years until March 31, 2031, and the base year for CPI inflation assessment is changed to 2023-24. Similarly, the base year for GDP is shifted to 2022-23, and the IIP base year shift to 2022-23 will take effect in May 2026.

EXTERNAL HEADWINDS

As of now, inflation and growth parameters are in the comfort range, but headwinds are strong. The energy crisis and supply chain disruptions caused by restricted freight passage through the Strait of Hormuz will impact economies reliant on energy imports. Iran’s attacks on US assets in Gulf states could cause collateral damage, such as the return of Indian workers and a negative impact on remittances.

Collectively, these disruptions could drive up inflation and disturb policy rate management. For instance, during the recent FOMC meeting on March 18, the US Fed kept policy rates unchanged despite inflation remaining at 2.8-3.1 per cent, well above its 2 per cent target. Similarly, the UK and ECB retained policy rates despite elevated inflation.

INFLATION & GROWTH OUTLOOK

The CPI inflation during FY26 is expected to be around 2.1 per cent, as projected in the previous policy review. It rose to 3.2 per cent in February, which is below the 4 per cent mark, but steep upside risks remain, especially amid crude price hikes and LPG disruptions. The Chief Economic Advisor noted that while a price of $90/bbl is manageable, a sustained price of $130/bbl for two to three quarters could drag GDP growth down to 6.4 per cent.

In view of these developments, the repo rate may remain unchanged, with the policy stance continuing to be ‘neutral’; specific relief measures may be rolled out to help banks and businesses navigate these tough times.

BEYOND POLICY RATES

Amid increasing collateral risks, banks' asset quality might come under pressure as credit costs rise. Liquidity risks remain high, as credit growth of 13.8 per cent exceeds the deposit growth rate of 10.8 per cent (as of March 13, 2026), with the credit-to-deposit ratio reaching 83 per cent.

• Liquidity Fixes: The RBI’s liquidity adjustment facility window could serve as a temporary fix for banks.
• Digital Deposits: Banks must comply with the ‘run off’ provisioning of 2.5 per cent on deposits linked to digital modes starting April 1.
• Medium-Term Funds: The RBI might propose LTROs to offer medium-term funds, increasing banks’ lendable resources to overcome asset-liability mismatches.
• MSME Support: Temporary relaxations in IRAC (issue, rule, application, conclusion) norms for the MSME sector may be proposed.

Going forward, the government may also unveil financial assistance on the lines of the Emergency Credit Line Guarantee Scheme. The April policy may see unconventional regulatory enablers to help businesses overcome the current crisis.

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The writer is Adjunct Professor, Institute of Insurance and Risk Management, Hyderabad. Views expressed are personal.

India’s sovereign AI models find early takers among healthcare, educational institutions

Vallari Sanzgiri — Mumbai

Strong early demand from healthcare and educational players is emerging as a key validation for India’s push to build sovereign AI models, with companies under the India AI Mission reporting interest from both domestic and overseas institutions seeking country-specific solutions.

Since the launch of the India AI Mission, many tech companies have aired plans to launch sovereign AI solutions for India. Among those, Fractal Analytics and Tech Mahindra said their offerings, slated for completion by 2026, are already drawing traction, particularly from hospitals and educational institutions looking for customised, locally-relevant AI applications.

Nikhil Malhotra, Chief Innovation Officer and Global Head of AI & Emerging Tech at Tech Mahindra, said the company is currently engaged in multiple ongoing discussions across regions such as Eastern Europe and South-East Asia for its AI model. In India, Tech Mahindra’s foundational model is one of the most downloaded models, indicating growing developer and ecosystem interest. The company plans to roll out the model across State and Central government ecosystems in a phased manner once it reaches production readiness.

“For the education-focused LLM being developed in collaboration with partners, early feedback has been positive, with stakeholders appreciating its localised approach, linguistic relevance and alignment with national priorities,” said Malhotra, adding that the model is currently in an advanced stage of refinement.

Meanwhile, Suraj Amonkar, Chief AI Research Officer at Fractal Analytics, said the company received a very good response for their Vaidya 2.0 models from healthcare institutions. The models offer use-cases involving health chatbot integration and specialised areas such as report understanding, general wellness, and symptom triaging.

“The Vaidya 2.0 models are foundational in nature and help with multiple use-cases across various healthcare areas for both general users and specialised needs,” Amonkar stated.

Aside from these companies, businessline also reached out to Gnani.AI, BharatGen and Sarvam AI, which announced sovereign models during the India AI Summit, but they did not respond by the time of publishing.

SOME LIMITATIONS

Despite the interest from healthcare and educational entities, companies could not confirm a similar response from enterprises. According to Anushree Verma, Senior Director Analyst at Gartner, it is not easy for a service provider to simply adopt a sovereign AI solution.

While she approved of company roadmaps to build holistic models focusing on inferencing, she added that she did not anticipate an immediate push for sovereign AI that could escalate adoption among broader enterprises.

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Blackstone-backed EPL merges with Indovida to form packaging firm valued at $2 billion

Our Bureau, Mumbai

Blackstone-backed packaging firm EPL Ltd and Indorama Ventures’ Indovida India have signed definitive agreements to merge, in a deal that will create a $1 billion revenue consumer packaging platform focused on emerging markets, with a combined valuation of about $2 billion. The proposed merger, approved by the boards of both companies, will bring together EPL’s flexible packaging capabilities with Indovida’s rigid PET packaging portfolio, creating a multi-format packaging player with a wider global footprint and stronger growth prospects.

The transaction is expected to close over the next 12 months. Under the deal, EPL is valued at around $1.2 billion, implying a price of ₹339 per share — about 70 per cent higher than its previous closing price — while Indovida is valued at roughly $0.7 billion, at a 35 per cent discount to EPL’s valuation multiple. Post-merger, Indorama Ventures will emerge as the promoter with a 51.8 per cent stake, while Blackstone will hold 16.6 per cent in the combined entity.

Emerging Markets

The merged company will derive nearly 75 per cent of its revenue from emerging markets, leveraging complementary geographic presence across Asia, Africa and Latin America. The combination is expected to drive growth through cross-selling opportunities, improved procurement and supply chain efficiencies, and enhanced sustainability initiatives.

Financially, the merger is projected to be margin and return accretive. The combined entity’s EBIT margin for 2025 is expected to expand to 13.6 per cent from EPL’s standalone 12.4 per cent, while return on capital employed is seen improving to 20.9 per cent from 18.7 per cent. The transaction is also expected to be earnings per share accretive from the first year.

Revenue Boost

“The size of our business, both in terms of revenue and bottomline doubles with this transaction,” EPL’s Managing Director and Global CEO Hemant Bakshi, who will lead the merged entity, told businessline. “Overall, it gets us new emerging markets. It helps us get into a new format of rigid packaging, which has a TAM (total addressable market) of $100 billion. And thirdly, it helps us leverage the capabilities which the Indovida business has, to build innovations and become an innovation partner,” he added.

The aim is to build a consumer packaging leader in the emerging markets, he said. Currently 90 per cent of Indovida’s business is from emerging markets. Bakshi estimated combined cost and revenue synergies of the merger at $35-50 million, with cost synergies alone at $5-7 million. Indovida CEO Sunil Marwah will continue to head the Indovida business and report to Bakshi.

Remittances to moderate in near term: Finance Ministry report

Shishir Sinha, New Delhi

With no sign of the war in West Asia ending soon, a Finance Ministry report expects remittances to moderate in the near term. The report, the latest edition of the Monthly Economic Review prepared by the Economic Affairs Department, also highlighted some upside risks to inflation.

Remittance inflows have remained robust recently, with personal transfer receipts rising to $36.9 billion in Q3 FY26, compared with $35.1 billion during the same period in FY25. However, the outlook for these inflows remains highly sensitive to crude oil price movements.

Crude Impact

“Given that Gulf Cooperation Council (GCC) economies accounted for about 38 per cent of India’s total remittances in 2023-24 and host nearly half of Indian migrants worldwide, any sustained rise in crude oil prices could weigh on fiscal conditions in these economies and, in turn, moderate remittance growth in the near term,” the report stated.

External Affairs Ministry data shows an estimated 9.2 million Indians live in West Asia, with the largest concentration in the UAE (nearly 4 million). According to RBI estimates, at least 35 per cent of India’s annual remittances originate from this region. This implies an annual exposure to remittances from West Asia of around $40 billion. These factors, combined with portfolio capital outflows, have contributed to depreciation pressures on the rupee, requiring calibrated policy responses.

Tilt Trade Balance

The report added that beyond remittances, higher petroleum import bills, increased logistics costs, and reduced exports to West Asia could exert pressure on the current account. Elevated crude prices also pose risks to the merchandise trade balance.

Regarding inflation, the report highlighted upside risks to the March print despite favourable agricultural supply conditions. “The oil price shock poses an unexpected upside risk for inflation in the medium term. Supply disruptions and higher input costs are being transmitted to domestic prices, particularly in fuel-intensive sectors,” it said.

If oil and gas prices remain high, they may spill over into other sectors through higher input prices. While the government is monitoring the situation and taking measures to ensure domestic energy availability, retail inflation based on the consumer price index already rose to 3.21 per cent in February, up from 2.74 per cent in January, primarily due to higher food prices.

Economists divided over impact of excise revision on States

Shishir Sinha, New Delhi

The Centre’s sharp reduction in special additional excise duty (SAED) on petrol and diesel has set off a fresh fiscal debate, with economists split on whether States stand to lose revenue from a shrinking tax base or gain from elevated crude prices that inflate VAT collections.

The total central excise duty for a litre of petrol, which stood at ₹21.90, has now been lowered to ₹11.90. Similarly, for diesel, it has been cut to ₹7.80 from ₹17.80. On the other hand, States and Union Territories impose sales tax/VAT on an ad-valorem basis, ranging between 1 per cent and 35 per cent, along with some fixed levies and cess.

The Centre’s revenue does not change with fluctuations in crude prices, but States/UTs do gain on account of changes in crude prices. Also, tax is calculated on base prices that comprise crude prices plus central levies. This raises the question of what impact the revision in SAED will have on States’/UTs’ collections.

Under Pressure

Replying to that, DK Srivastava, Chief Policy Advisor at EY India, said assuming retail prices of petrol and diesel do not change, State VAT/sales tax collection may come under some pressure if availability of fuel or petroleum products reduces or if their supply is rationed.

“Since the central excise duty has been reduced, the tax base on which State VAT/sales tax is levied will also be correspondingly reduced and therefore State VAT/sales tax revenue may fall at least to some extent,” he said.

However, an SBI research report by Soumya Kanti Ghosh presents a different view. The report said States earned ₹3.02 lakh crore from sales tax/VAT on petroleum, oil, and lubricant (POL) products in FY25 and, with an increase in crude prices, States are likely to earn higher VAT revenue from oil at unchanged VAT rates.

Higher VAT

“Even if we consider the FY26 oil consumption by States (estimated from FY25 share) and the new excise duty rates of the Centre, the States are expected to earn higher VAT by ₹25,000 crore, benefiting from the higher crude oil price, with Karnataka benefiting the most,” the report said.

Further, in March 2026, the States had already benefited by ₹2,500 crore incrementally owing to higher oil prices, with around ₹2,400 crore increase occurring before the excise duty cut. “This is definitely going to be higher once we consider the higher consumption of petrol and diesel by States,” it added.

Revising Levies

Now, the big question is whether States will revise levies. “States can act to cut VAT rates and pass on the benefit to consumers,” Ghosh said. “The GoI may also ask states to consider reducing their VAT/Sales tax rates. If this is done then state tax revenues will be adversely affected,” he added.

As wars rage elsewhere, India must battle to green itself

Mahua Acharya

India’s new Nationally Determined Contribution (NDC) — non-binding climate action plans outlined by countries under the Paris Agreement — approved by the Union Cabinet on March 25 is a welcome development amidst all the global disorder. The NDC neither overreaches nor is it as incremental as some critics have called it. It just moves forward, which in the domain of international climate politics is a rare quality.

India is committing to 47 per cent reduction in emissions intensity from 2005 levels by 2035 (building on the 45 per cent by 2030 target); about 60 per cent of installed electricity capacity from non-fossil sources by 2035; and a carbon sink of 3.5–4 billion tonnes through forests and tree cover. These appear to be calibrated extensions from the past. But the drag is that the current power system presents challenges that possibly prevent larger jumps.

The previous NDC targeted 50 per cent non-fossil installed capacity by 2030, which India has already crossed. It is also on track to achieve the targeted 36 per cent reduction in emissions intensity. However, of the achieved 50 per cent non-fossil fuel target, less than 15 per cent is renewable.

Can we do better? The answer is ‘yes’. Globally, countries that once set the pace have struggled to hold it. Targets have slipped, timelines have stretched, and fossil fuels are back in the mix. The US has stepped out of the Paris Agreement altogether. So, when it comes to India’s targets, in a landscape of uneven compliance, greater ambition without assured execution would do little more than invite criticism.

The new NDC is practical, perhaps deliberately. India is transforming one of the largest and fastest-growing energy systems in the world, while still industrialising and expanding access amid rising demand. Because the base is vast, every incremental shift is enormous in absolute terms. Ambition at this scale encounters challenges such as transmission constraints, land acquisition hurdles, storage requirement, and lack of grid readiness and system flexibility.

Had we planned differently — built transmission ahead of generation, designed for variability — the ceiling today may have been higher. In 2025, India built less than 50 GW of renewables capacity when China built three times that. If we had planned ahead for storage and grid infrastructure, perhaps we could have achieved more with unmatched speed and precision.

If urban pollution and oil imports persist, then the response should be rapid electrification of mobility. Only the Centre can do this, as has already been done with urban buses. From fewer than 1,000 electric buses in 2022, the country has contracted over 40,000 in 2026 and nearly 16,000 are on the roads today. Delhi has chosen to go all-electric with its bus system. This shift at a rapid pace is possible, but demands the collective effort of ministries, alongside dogged determination. A similar endeavour is needed for all wheels on the ground, starting with roadway transport vehicles, which currently move over 50 per cent of India’s freight. This is the time to mandate electrification of all corporate, heavy-duty, gas-guzzling fleet.

So, the next phase of India’s climate leadership will be defined through internal pressures, by choosing where to be relentlessly focused. While the NDC continues to be India’s public commitment to the world, the fact is that now is the time to use the outside war to drive greener growth back home, and build a truly green atmanirbhar Bharat.

The writer is CEO, INTENT Platform, and former MD and CEO, CESL.

‘In a shift back to Russian oil, India bought 60 m barrels since March 5’

Rishi Ranjan Kala, New Delhi

Indian refiners shifted back to Russian crude oil buying around 60 million barrels of the geopolitically sensitive commodity from Moscow since March 5 as closure of the Strait of Hormuz impacted 40 per cent of its imports. The Oxford Institute for Energy Studies (OIES) in its recent energy comment pointed out the scale of the Hormuz disruption is like “no other seen in oil market history”. In such a scenario, one of the US tools to help put a lid on crude oil prices has been granting exemptions on sanctioned barrels. Russia has been a clear beneficiary of this measure, OIES pointed out.

Supply Chain

Before the war, pressure was building on the Russian oil supply chain. US sanctions against Rosneft and Lukoil in November 2025 drove India to reduce its reliance on Russian urals, pivoting instead to greater West Asia term volumes. A full pivot has been made back to Russian oil, the OIES said. “Indian refiners have bought up around 60 million barrels of Russian crude since the US issued a sanctions waiver on 5 March. The US reprieve on Russian oil has led to a major repricing of urals and ESPO in the physical market with reports indicating that these have traded at premiums to their benchmarks,” it added.

US Sanctions

India’s importance as a key distillate swing supplier further increases the likelihood that India’s compliance with US sanctions on Russia going forward could ease. Asian countries outside China are highly exposed to the flow disruption from the Hormuz both in terms of availability of crude and products supplies and higher prices, OIES said. For countries such as India and Japan, it added that crude imports through the Strait of Hormuz stood at above 40 per cent and 70 per cent, respectively. For India, the LPG and ethane exposure stand at above 80 per cent while for Japan, the naphtha exposure is around 70 per cent.

The oil market has been reacting in phases as new information continues to emerge. In the initial stage, the focus has been centred on the disruption of oil trade flows through Hormuz with a prevailing view that the disruption will be short-lived and that the existing ‘oil glut’ will provide an effective cushion. As the disruption to Hormuz persisted, the market shifted into a new phase: the conversion of flow disruptions into large production losses, OIES said.

“At the current stage, with no clear visibility as to when trade will resume through the Strait of Hormuz, the market is not only assessing whether output losses could worsen but also how quickly production and refinery runs could recover in the light of the shut ins and damage to physical infrastructure,” OIES said.

Is more online presence less profitable?

Karan Taurani

PLATFORM SHIFT The global FMCG industry is undergoing a structural shift, led by the rapid rise of online channels. While this transition is visible across markets, India stands out — not just for its low online penetration, but also the speed and nature of the disruption driven by quick commerce.

Online grocery penetration in China and the US stands at 15–16 per cent, reflecting a reasonably scaled omni-channel ecosystem, while India remains significantly under-penetrated at less than 5 per cent. As China moved from low- to mid-teen online penetration between 2018 and 2022, the ecosystem saw broad-based margin pressure. FMCG companies faced higher platform commissions, increased trade spends, and a shift away from higher-margin traditional trade, leading to visible compression of gross margin and EBITDA. In the US, during a similar ramp-up phase, margin pressure was largely borne by retailers due to the high cost of order fulfilment and last-mile delivery, while FMCG brands remained relatively resilient as online was primarily a route-to-market shift.

Discovery and Discounting

For India, the trajectory is likely to be closer to that of China than the US. With quick commerce driving a large share of online grocery growth, brands are more dependent on platform-led discovery, discounting, and higher channel investments. As penetration scales up from current low levels, FMCG companies are likely to face near-term margin pressure, driven by an adverse channel mix and rising competitive intensity. While growth will accelerate, profitability may remain under pressure until scale efficiencies and supply chain optimisation begin to offset these costs.

Unlike global markets, India has leapfrogged into quick commerce — a model that delivers groceries within minutes. This level of convenience is not present at scale in the US or China. As a result, India is not merely following the global online transition — it is accelerating it. Quick commerce is turning grocery into a high-frequency and impulse-driven category, fundamentally reshaping consumer behaviour. India’s online grocery market remains significantly under-penetrated; however, of the online grocery penetration, 50–60 per cent is driven by quick commerce, which is a powerful indicator of where the market is headed.

A structural shift is visible in India’s beauty and personal care (BPC) segment. Digital-first platforms such as Nykaa have delivered strong multi-year growth. BPC GMV/revenue growth is trending at 25–30 per cent, outpacing traditional incumbents — for instance, Hindustan Unilever’s BPC segment has grown 8–12 per cent. Notably, HUL’s e-commerce channel (including quick commerce) is growing at about 2x the company average and contributes 10–12 per cent of domestic revenues. However, this growth comes with higher channel costs and mixed impact.

More Competition

First, the rise of quick commerce will lead to more brand fragmentation. The platform-led discovery model, combined with low consumer loyalty in essential categories, enables new-age and D2C brands to scale up rapidly. Unlike traditional retail, where shelf space is constrained, quick commerce allows for faster experimentation and rotation of products. This will result in more winners, but also competition. For incumbent FMCG companies, this creates incremental pressure; while overall category demand will expand, market share consolidation may weaken, as newer brands capture niche segments and consumer attention.

Second, the channel shift will have direct implications for margins. Quick commerce and e-commerce channels typically operate with lower margins for brands compared with general trade. As FMCG companies navigate this shift, they are relying on three key levers: premiumisation, supply chain efficiencies, and tightening operating expenses. However, these levers have limitations. In a fragmented and competitive market, reducing brand investments or innovation could be counterproductive. As a result, even in the best-case scenario, FMCG companies may be able to hold margins only at current levels; the more likely outcome is moderate margin compression in the medium term, particularly as quick commerce continues to scale up.

The pace of disruption will depend on one critical factor: non-metro expansion. Currently, quick commerce remains concentrated in metro markets. If the model scales up effectively in tier 2 and 3 cities — and gains acceptance in grocery — the impact on growth and margins will be amplified. India’s FMCG market could see a faster and deeper structural shift than those of global peers. Net-net, India is entering a phase where growth and margins are diverging. Quick commerce will drive a sharp acceleration in FMCG consumption, increase category penetration, and expand the overall market. At the same time, it will introduce higher competition, lower loyalty, and sustained margin pressure.

The broader lesson from global markets remains relevant: online penetration does not destroy profitability — it delays it. However, India’s journey could be more intense. With quick commerce acting as a catalyst, the transition may be faster, sharper, and more disruptive than what China or the US experienced. For companies and investors alike, the message is clear: the near term will be defined by scale, growth, and market capture. Margins, as history suggests, will follow — but only after the ecosystem matures.

CERC settles dispute dating back a quarter century

A 25-year-old dispute between Lanco Kondapalli Power Ltd and the electricity distribution company (discom) of Andhra Pradesh was settled recently by the Central Electricity Regulatory Commission.

Lanco Kondapalli owned a 368 MW gas-fired power plant. The dispute centered on the exact date of commencing power generation. Lanco maintained that the plant began functioning in October 2000, whereas the AP/Telangana discom argued for January 2001, characterizing the intervening period as a trial run for which they would only pay for fuel rather than fixed charges. At the core of this long-standing disagreement was a sum of ₹78 crore.

On March 23, the commission ruled in favor of Lanco. Consequently, the discom is required to pay Lanco ₹165 crore, a figure that includes accumulated interest. The significant precedent set by this ruling is that the ‘commercial operation date’ is defined by a plant’s operational readiness rather than receiving buyer approval.

Startups now deliver healthcare too

RX-TECH. Moving on from digitising hospital settings and processes, startups are getting into the business of running them Aishwarya Kumar

Anyone who has walked into a hospital in India knows the drill: moving from one counter to another, navigating multiple floors for diagnostic tests and investigations, and generally struggling to find one’s way around the place... and all while being unwell too. A new crop of healthcare startups aim to find a cure for this. “You can’t change how care is delivered unless you actually deliver the care,” says Varun Dubey, founder of SuperHealth, explaining the broader shift that is underway in India’s health-tech ecosystem.

No longer content with just building discovery platforms or digital layers, startups are venturing into the business of healthcare delivery itself. In a country where access to quality secondary and tertiary medical care remains uneven, particularly outside large cities, the startups view the gaps not as a challenge but an opportunity. According to Tracxn, healthcare providers in India have attracted $3.76 billion in funding since 2019. Investments peaked at $760 million in 2021, before moderating in subsequent years. In 2025, the sector raised $602 million, a 15 per cent drop from $709 million in 2024.

Where that capital is flowing to, and where it is not, is shaping the next phase of innovation. “Significant capital is already flowing into hospital infrastructure, particularly in urban markets. What remains under-built are scalable formats such as single-speciality networks, distributed chronic-care pathways, and tech-enabled coordination models that can expand access without replicating heavy capex,” says Dr Pankaj Jethwani, Managing Partner at W Health Ventures. This is where many new-age startups see a place for themselves.

“In a capital-intensive and regulated sector like healthcare, startups can still carve out real advantages in the right white spaces by staying asset-light and deeply patient-focused from day one,” Jethwani adds. “What’s particularly interesting is seeing teams bring in talent and thinking from outside healthcare, and applying ideas from other industries to build differentiated models, especially in single-speciality and clinic-led setups,” he says. The earlier wave of health-tech startups focused on aggregation or convenience. The current generation is redesigning how healthcare is delivered, priced, and experienced. Even Healthcare, for instance, integrates insurance with care delivery, with a focus on continuous preventive care.

“We bundle insurance membership with an end-to-end, full-stack healthcare platform,” says co-founder Mayank Banerjee. “That means everything from digital primary care to physical infrastructure. We currently operate two hospitals and expect to have six or seven by the end of the year”. The next phase of expansion is focused on under-served tier-2 and tier-3 cities such as Agra, Nagpur, and Indore, he says. The startup is betting on an asset-light model to keep costs under control. “We spend about ₹40 lakh per bed because we don’t buy the underlying land... we lease it,” Banerjee explains. “We aim to deliver a high-quality experience, but we’re not trying to be a luxury hospital”.

Others in the ecosystem are rethinking different parts of the value chain. SuperHealth is focused on the economics of hospital infrastructure itself. By redesigning layouts, optimising operations, and embedding technology into care delivery, it aims to significantly reduce costs without compromising quality.

ASSET-HEAVY VENTURE

Among the earlier entrants in this space, Pristyn Care, which offers surgical services to partner hospitals, is redoing its model as the market matures. The company, which has raised $187 million from investors across seven rounds, is moving towards building and operating its own hospitals, says co-founder Dr Vaibhav Kapoor. It is also sharpening its focus on the under-penetrated secondary-care segment, where consolidation is inevitable as individual doctors or smaller hospitals struggle to operate independently, says Kapoor.

“Just like food delivery or e-commerce, healthcare will also consolidate into a few large players over time,” he says. “Smaller hospitals will increasingly partner with, or become part of larger chains”. Hospital owners view this as a practical trade-off. “They continue practising, remain owners, but don’t have to deal with the operational headaches,” Kapoor says.

Pristyn Care targets around ₹1,000 crore revenue over the next two years, with EBITDA margins of 15–20 per cent. Along the way, it has made several course corrections. “We’ve made mistakes — expanding too fast, over-hiring, and not being efficient enough. Those are things we’ve corrected now,” Kapoor says. Unlike asset-light startups, healthcare delivery demands tight control over operations, working capital, and talent. “Large hospital chains manage cash flows and working capital extremely well; that’s something startups have to learn quickly,” Kapoor adds.

FUNDING MARKET

India remains among the top global markets for healthcare startup funding, even as overall venture capital flows tighten. “Major white spaces for hospital and clinic startups are in tier-2 and tier-3 markets,” says Neha Singh, co-founder of Tracxn. “These regions remain underfunded despite strong demand”. She adds that areas such as chronic care, mental health, and rural primary care networks also remain under-explored. The growing number of funding deals in smaller centres such as Coimbatore, Thrissur, and Patna, however, point to a change in thinking.

The curious case of a resignation

DIRECTOR’S CUT. The premature exit of a board member puts India’s largest private bank under the lens like never before K Ram Kumar

When Atanu Chakraborty, the part-time non-executive chairman of HDFC Bank — one of India’s three domestic systemically important banks (D-SIBs) — quit abruptly before the end of his tenure, it caused consternation among stakeholders, including the bank’s board, senior management, shareholders, and regulators. The stock was hammered, with the market capitalisation of India’s largest private sector bank declining by ₹1,52,689 crore over three consecutive trading sessions from March 19–23.

Eyebrows were raised because Chakraborty, a 1985-batch former IAS officer who previously served as Secretary in the Department of Economic Affairs, did not cite the usual “personal reasons” for his exit. The fact that he resigned from a position fetching ₹50 lakh per annum plus perks suggests that "something in him snapped".

The Resignation Letter

In his resignation letter dated March 17, Chakraborty flagged that “certain happenings and practices within the bank, that I have observed over last two years, are not in congruence with my personal Values and Ethics”. He also noted that the benefits of the HDFC merger in July 2023 are yet to fully fructify. While he did not elaborate on specific allegations, his exit raises questions about whether the issues he raised to the board were satisfactorily addressed and highlights concerns regarding shareholder protection in a bank with no promoter.

Hot-Button Issues

Speculation is rife that Chakraborty and MD and CEO Sashidhar Jagdishan were not on the same page regarding several "hot-button issues". Reports suggest Chakraborty wanted a performance review of the CEO before recommending him for a third term.

The bank has faced several regulatory hurdles recently:

• RBI restrictions on the Digital 2.0 programme and credit card sourcing (2020–2022).
• A ₹1 crore RBI penalty in September 2024 for non-compliance regarding interest rates and recovery agents.
• A SEBI administrative warning in December 2024 regarding merchant banker and insider trading regulations.
• A prohibition by the Dubai Financial Services Authority in September 2025 on the bank’s DIFC branch soliciting new business.
• A ₹91 lakh RBI fine in November 2025 for adopting multiple benchmarks and outsourcing KYC verification.

Damage Control

Following the resignation, the bank’s board moved quickly, seeking RBI approval to appoint Keki Mistry as interim part-time Chairman for three months. Mistry downplayed the resignation in an analyst call, dismissing the idea of a power struggle and asserting that the management team works as a "cohesive unit". Another director, Renu Karnad, described Chakraborty's refusal to specify a trigger for his exit as “baffling”. The RBI also issued a statement declaring there were no material concerns regarding the bank’s governance or conduct.

Expert Opinions

Legal expert Vijay Trimbak Gokhale noted that it would be "naive" to think regulatory issues did not weigh on Chakraborty’s mind. He emphasized that directors have a fiduciary responsibility to inform the board and regulators of their concerns.

Banking expert V Viswanathan suggested that because D-SIBs are “too big to fail,” the RBI should consider having nominees on their boards to oversee corporate governance, risk management, and audits. While the bank has appointed external law firms to review the circumstances of the resignation, experts believe RBI and SEBI should conduct their own independent reviews into the matter.