Ireland and the Global Economic Trilemma

 The best way to understand the Irish economy Three paths for Ireland if globalisation fractures STEPHEN KINSELLA JAN 29, 2026

100% written by a human.

Why it matters: Dani Rodrik’s trilemma says you can’t fully have democracy, nation‑state sovereignty and deep globalisation all at once. It is the cleanest model for understanding Ireland’s biggest choices right now. We’ve chosen democracy and globalisation, which has worked brilliantly in a stable world but becomes a bind if the world fractures. Kinsella proposes three ideas for what can be done, noting that policy makers can only "pick two".

A model to fit the moment After a previous suggestion that the book Vandalising Ireland lacked a real model to understand the Irish economy, a commenter asked what model would be suggested. While there are several candidates, the model that fits the moment best is Dani Rodrik’s policy trilemma.

Rodrik’s framework has three constraints: democracy, national sovereignty, and deep economic globalisation cannot be fully achieved simultaneously. Rodrik’s idea includes the "impossible trinity" from macroeconomics: if a government chooses fixed exchange rates and capital mobility, it must give up monetary autonomy. If it wants monetary autonomy and capital mobility, it must use floating exchange rates. If it wants to combine fixed exchange rates with monetary autonomy, it must restrict capital mobility.

In the political trilemma, states can choose only two elements: democracy (mass politics), sovereignty (the nation state), and globalisation (integrated national economies). Ireland has clearly chosen democracy and globalisation, a combination Rodrik calls the "golden straightjacket". Once the rules are set by the requirements of the global economy, the ability of popular groups to influence national economic policy is restricted. To stay integrated, governments must pursue tighter money, smaller government, lower taxes, more flexible labour legislation, and deregulation, making individual ideology subservient to global integration.

This "golden straightjacket" has clear problematic aspects. For example, Donald Trump’s critique of the "Davos set" highlighted how capital offshoring to Asia cost US workers their jobs. Mark Carney also noted in Davos that extreme global integration carries risks, particularly when great powers use economic integration as a weapon, using supply chains and financial infrastructure for coercion. This concept is known as "Weaponised Interdependence". Carney argues states must diversify from their dependence on the US hegemon, a consideration Ireland should take seriously on its own and within the EU.

Highlights of the Model:

• The Trilemma: You cannot fully achieve democracy, nation‑state sovereignty, and deep globalisation at the same time.
• Ireland’s Choice: Ireland is in the "golden straightjacket," prioritizing democracy and globalisation. This forces regulatory predictability and legal alignment with supranational regimes like the EU and WTO.
• Limited Sovereignty: Ireland’s sovereignty over industrial policy, labour markets, and macro stabilisation is limited, though this occurred with the consent of the governed via referendums.

The Fracturing of Globalisation If globalisation falters due to balkanization by great powers, Ireland faces a forced trade-off between preserving democracy and preserving sovereignty. This would result in three stages of effects:

1. Fiscal and Employment: These are the most obvious first-stage effects.
2. Institutional: Ireland derives exchange rate credibility from the euro and industrial policy discipline from EU state-aid rules. If globalisation weakens, internalizing these constraints will be hugely costly.
3. Political Economy: Growth via openness has been the standard since the 1990s. Without it, politics becomes zero-sum, and issues like housing, migration, and regional inequality could harden into identity-linked conflicts, eroding democratic legitimacy.

Three Paths for Policy Makers (Pick Two):

1. France in the 1970s (Re-sovereignisation): Managed democracy with stronger industrial policy, strategic protection, and tighter migration control. Democracy remains but is constrained by elite coordination.
2. Australia in the 1990s: Continued openness with democratic strain. Ireland tries to stay integrated by competing harder on tax and regulation, which hollows out democratic choice and is likely unstable.
3. Economic Diversification (Taking Carney Seriously): Reducing exposure to footloose capital by building indigenous scale firms, deepening EU fiscal capacity, and embedding multinationals locally. This is slow and technically demanding but likely stable if the public buys into it.

Ultimately, if globalisation fragments, the EU becomes the decisive arena. Ireland’s real choice will shift from sovereignty versus democracy to national democracy versus pooled European sovereignty.

Speed can reindustrialize United States

 Speed Can Reindustrialize America Reviving manufacturing doesn't require a planned economy, just a better business model.

Manufacturing and the US Economy

The US manufacturing sector represents approximately 10% of GDP (~$3 trillion), positioning the US as the second-largest manufacturing country in the world. Despite this scale, the sector is often misperceived as a failure, leading to calls for blunt government-directed policies. The core issue is that while the US excels at high-volume manufacturing, it performs poorly in low-volume manufacturing, specifically in producing custom parts with short lead times.

The root cause of this malaise is the high cost of "white collar" labor in the US; these high wages create substantial soft costs that are difficult to spread across few units in low-volume production. Paradoxically, these same high wages generate massive demand for short lead time parts. New end-to-end digitized manufacturers are emerging to solve this by eliminating soft costs and shortening lead times through instant quoting and production-integrated software. This superior value structure will likely lead to industry consolidation into larger, highly productive firms, with AI serving as a major accelerant.

Understanding the Manufacturing Industry Today

Manufacturing existence is driven by three main forces:

1. Specialization: The complexity of human desires and the infinite knowledge required means no single region can dominate all production.
2. Economies/Diseconomies of Scale: Most manufacturing eventually hits diseconomies of scale, making it more rational to distribute facilities to minimize transportation and other costs. Only products with very low shipping costs and diminishing returns to scale, like computer chips or phones, move toward global production.
3. The Gravity Model: Economic transactions decrease rapidly with distance. Consequently, most products are produced near buyers, with richer countries substituting capital for labor due to higher labor costs.

US Manufacturing's Hollowness

US manufacturing is currently tilted toward high-volume, static, and bulky products. Domestic production is strongest in items characterized by:

• High Transportation Costs: Such as sand, cement, cars, and dishwashers.
• Need for Speed to Market: Time-sensitive or perishable items.
• High Volume for Fixed Cost Absorption: Allowing setup and tooling costs to be spread over many units.
• Long Product Lifecycles: Where static designs allow for long-term automation investment.
• Technological Complexity: Leading-edge products like stealth fighters, commercial aircraft, and gas turbines.
• Amenability to Automation: Processes like chemical processing that are easier to mechanize.

The Structure of the US Manufacturing Industry

The industry is organized into layers:

• Commodities: Raw materials like steel or plastic produced in gargantuan, capital-intensive facilities; the US is largely self-sufficient in these high-volume basics.
• Intermediates: The "missing middle" consisting of diverse parts like sheet metal, hoses, and clips. This sector contains most of the value-added but is characterized by small, often analog firms with long lead times.
• Final Products: Integrators who design and organize production; while many parts are imported, most final products by value are assembled in the US.

Case Study: Robot Density in China vs. the US

The rising density of robots in China compared to the US is often misunderstood. Robot arms are labor-shifting, not labor-replacing. They reduce hourly labor but increase the demand for high-cost skilled labor for programming and maintenance. Because the US has a surplus of low-paid hourly workers and a shortage of high-skill workers, this trade-off is often uneconomical. In contrast, China has a surplus of underemployed STEM graduates and faces labor restrictions ("Hukou") for hourly workers, making robots a more attractive investment.

Finding Dynamism in Low-Volume Manufacturing

Modern US firms face increasing fixed costs due to scale, specialization, and high-end labor. To remain productive, firms must either increase volume or reduce time. For startups and firms on the technological frontier, ultra-short lead times are critical because the fixed costs accrued during waiting periods often dwarf the actual price of a part.

Speed Sells and Eliminating Soft Costs

Traditional US manufacturing is often slower than Chinese competitors who mass human resources to create speed. End-to-end digitization can eliminate "dead time" (quoting, emails, queues) by removing humans from the procurement loop, reducing lead times from months to days.

In low-volume orders, the "idiot index" is often enormous—the material cost might be only a few percent, while human labor for quoting and billing accounts for the rest. Software can solve this by autogenerating CAM instructions, billing, and shipping labels. Companies like SendCutSend have proven this model, reaching over $100 million in sales by offering instant quotes and delivery in days.

Factors for Competitive US Manufacturing

• End-to-End Digitization: Eliminates soft costs and increases equipment utilization from a typical 10-20% to nearly 100%.
• Lightning Logistics: Modern parcel delivery and future autonomous carriers expand the sales footprint of digitized shops.
• Collapsing Tooling Lead Time: New processes like laser cutting, 3D printing, and roboforming replace expensive, slow "hard tooling" (molds/dies), allowing for faster prototyping and shorter product cycles.

Competition and Strategy

Digitized firms follow a pattern of gaining competitive advantages through low marginal costs and high fixed cost absorption. This forces consolidation, as manual shops cannot coordinate tightly enough to offer the instant quotes customers now expect. While general SaaS solutions often fail in manufacturing due to the high precision and non-generalizable nature of the work, building proprietary software for a single firm that scales is highly valuable.

Policy and National Security

Policy should prioritize minimizing high-end labor misallocation. Tariffs can hurt demand for intermediates and end-manufacturers, while industrial policies like the CHIPS Act often consume massive amounts of technical talent for potentially obsolete methods. For raw materials with small markets like rare earths, stockpiles are more efficient than forced domestic production. Regulatory speed bumps, such as long approval times for drones or aircraft, also stifle productivity and must be addressed.

National security requires technological supremacy and cycle time rather than just mass production. Historical lessons from the Korean War show that having a massive manufacturing base is a net negative without the technological edge. The US already has the raw capacity for mass production (e.g., steel for thousands of ships), but the true constraint is the talent needed to equip and operate a modern force.

The Future of US Manufacturing

By reducing soft costs and lead times, hardware entrepreneurs can iterate faster, similar to how AWS enabled software startups. This shift toward speed and flexibility will allow the US to remain at the center of the global innovation network and effectively address competition from China.

Appendix: Notable Digitized Firms The author lists several companies embodying these principles, including:

• SendCutSend / Osh Cut (Sheet metal)
• Forge Automation (CNC machining)
• Blitz Panel (Electrical panels)
• Digital Metal (Cast metal with 3D printed molds)
• Machina (Roboforming)
• Hadrian (Digitized defense machining)

Newspaper Summary 210226

 

In 6-3 Ruling, US Supreme Court Strikes Down Trump’s Global Tariffs

The US Supreme Court on Friday struck down President Donald Trump’s sweeping tariffs that he pursued under the International Emergency Economic Powers Act (IEEPA), a 1977 law meant for use in national emergencies. In a 6-3 ruling authored by conservative Chief Justice John Roberts, the court upheld a lower court’s decision that the Republican President’s use of the law exceeded his authority.

Treads on Congressional Power

The court ruled that the administration’s interpretation of the law would intrude on the powers of Congress and violate a legal principle known as the “major questions” doctrine. This doctrine requires executive actions of “vast economic and political significance” to be clearly authorized by Congress. Justice Roberts wrote that “the President must ‘point to clear congressional authorisation’ to justify his extraordinary assertion of the power to impose taris,” adding, “He cannot”.

Joining Justice Roberts in the majority were conservative Justices Neil Gorsuch and Amy Coney Barrett, both of whom Trump appointed during his first term, along with the court's three liberal judges. The three dissenters were conservatives Clarence Thomas, Samuel Alito, and Brett Kavanaugh.

Economic and Legal Fallout

Trump leveraged these tariffs as a central economic and foreign policy tool in a global trade war that has alienated partners and caused significant economic uncertainty. The conclusion reached by the court followed a legal challenge by affected businesses and 12 US States, most of them Democratic-governed, against the unilateral imposition of these taxes.

While the tariffs were forecast to generate trillions of dollars over the next decade, economists from the Penn-Wharton Budget Model estimated on Friday that the amount already collected stood at more than $175 billion. Legal experts indicate that this massive sum likely would now need to be refunded.

Administration Response and "Game Two"

Trump called the ruling a “disgrace” and told reporters that his team would have to develop a “game two” plan. Treasury Secretary Scott Bessent and other administration officials stated the US would seek other legal justifications to retain as many tariffs as possible. These include:

• Statutory provisions for goods that threaten US national security.
• Retaliatory actions against partners using unfair trade practices.

However, officials noted that none of these alternatives offers the "blunt-force dynamics" or flexibility of IEEPA and may not be able to replicate the full scope of the original tariffs in a timely fashion.

The decision marks a major rejection of one of Trump's most contentious assertions of authority, reaffirming that the US Constitution grants Congress, not the President, the primary authority to levy taxes and tariffs.

Novartis to sell entire 71% stake in listed India arm to ChrysCapital group for ₹1,446 crore

Swiss drugmaker Novartis AG is set to sell its entire 70.68 per cent stake in Novartis India Ltd (NIL) to the ChrysCapital group for ₹1,446 crore. The drug major has entered into an agreement with WaveRise Investments Ltd, ChrysCapital Fund X and Two Infinity Partners to sell the India-listed entity. The transaction is expected to be completed by the third quarter of 2026, subject to certain conditions.

Transaction Details

Novartis has agreed to sell 1,74,50,680 fully paid-up equity shares in Novartis India. The acquisition breakdown is as follows:

• WaveRise Investments will acquire 1,39,38,382 equity shares (56.45 per cent) at ₹860.64 per share.
• The second acquirer will buy 25,47,189 equity shares (10.32 per cent) at ₹701.25 per share.
• The third acquirer will buy 9,65,109 equity shares (3.91 per cent) at ₹701.25 per share.

As mandated by regulations, the acquiring companies have also announced an open offer to pick up the remaining shares in the company.

Strategic Transformation

Upon completion of this share transfer, Novartis will finish its transformation into a pure-play innovative medicines company aligned with its global strategy. This strategy focuses on cardio-renal-metabolic, immunology, neuroscience, and oncology products, with growth identified in the US, China, Germany, and Japan.

Novartis reiterated that this transfer of shareholding in NIL will not impact Novartis Healthcare Private Ltd (NHPL). Novartis will continue its presence in India through NHPL, a wholly owned subsidiary used to bring high-value innovative products into the country.

Historical Context

Novartis was formed in 1996 through the merger of Swiss majors Ciba-Geigy AG and Sandoz AG. While Ciba’s history in India dates back to 1947, NHPL was formed later in 1997. Its current innovative drugs portfolio includes cancer, immunotherapy, and gene therapy products. Details regarding the future of the 40 employees with NIL and the associated branded products currently remain unclear.

India joins US-led Pax Silica to secure chips, critical minerals

India and the US signed the Pax Silica declaration on Tuesday at the India AI Impact Summit, formally marking New Delhi’s entry into a strategic partnership to secure resilient supply chains for semiconductors, artificial intelligence (AI), and critical minerals. Both nations projected the initiative as a move to curtail over-dependence on “one country,” an oblique reference widely presumed to be China.

Securing Supplies

The pact, literally meaning “Peace through Silicon,” was signed by Indian IT Secretary S Krishnan and US Under Secretary of State for Economic Affairs Jacob Helberg, in the presence of Union Minister Ashwini Vaishnaw and US Ambassador Sergio Gor. Pax Silica was originally launched in December and its current members include:

• India (latest entrant)
• United States
• Australia, Japan, South Korea, and Singapore
• United Kingdom, Greece, Qatar, and the United Arab Emirates

Geopolitical Context

The broader geopolitical subtext of the coalition is aimed at counteracting China’s predominant role in rare earth processing, advanced manufacturing inputs, and the global semiconductor value chain. US Under Secretary Helberg described the commitment as a rejection of “weaponised dependency” in global networks and warned against the threats of “economic coercion and blackmail.” He further underscored concerns regarding infrastructure vulnerabilities, noting that foundations of economic security had been allowed to “drift” for too long.

Strategic Alignment

For India, the move signals a calibrated deepening of technological alignment with the US and its democratic partners. Minister Vaishnaw highlighted India’s expanding capabilities in chip design and its growing pool of skilled technology professionals as major assets for collaborative global value chains under the Pax Silica framework.

US Ambassador Sergio Gor stated that India brings strength to the coalition, remarking, “Peace doesn’t come from hoping adversaries will play fair... Peace comes through strength. India understands this.” Industry leaders, including Google CEO Sundar Pichai, noted that this agreement, alongside recent trade progress, will lay the foundation for a robust and enduring US-India tech partnership.

‘Sovereign AI means building trusted partnerships, not isolation’

Evan Solomon, Canada’s Minister for AI and Digital Innovation, has been a leading advocate for the concept of Sovereign AI. Speaking at the India AI Impact Summit, Solomon outlined a vision for Indo-Canadian cooperation that balances rapid technological adoption with risk mitigation and the preservation of national digital autonomy.

Defining Sovereign AI

Solomon emphasized that sovereignty does not mean isolation; instead, it means having trusted partnerships and options. He defined it as controlling one’s digital destiny, which involves everything from building efficient data centers to owning the intellectual property (IP) of applications.

Canada provides a global alternative to US or Chinese technology through Cohere, one of the world's major large language models. Solomon argued that international alliances are essential to the process of ensuring sovereignty, including collaborative research, education, and creating IP that remains within a nation’s borders.

Strengthening Indo-Canadian Ties

Discussions between Solomon and Indian IT Minister Ashwini Vaishnaw have resulted in the development of a series of MoUs to map out technological cooperation. Solomon noted that both nations share a common goal: building Sovereign AI stacks to ensure they are not dependent on a single provider or country. He cited Tata Consultancy Services (TCS), which employs nearly 10,000 people in Canada, as a prime example of the deep partnerships required to build these shared technology stacks.

AI Safety and "LawZero"

Safety is a fundamental pillar of sovereignty. To address growing concerns, Solomon highlighted LawZero, an AI system designed specifically to "police" other AI models. Canada has issued a letter of intent to be a primary financial backer of this technology, which was presented at the summit by world-renowned scientist Yoshua Bengio.

While LawZero can identify if an AI is about to perform harmful actions, Solomon clarified that protecting data security and personal privacy remains the responsibility of the government through updated legislation and transparency requirements.

Navigating the Workforce Transition

Addressing the threat of AI-driven job losses, Solomon observed that while history shows technological revolutions eventually create more jobs than they destroy, the current anxiety is real. He stressed that governments must prioritize skills training and education, as those who can effectively use AI will have a significant advantage in a rapidly evolving labor market.

AI is no magic; IT services will be the last mile in agentification: Cognizant

Enterprises are beginning to realise that artificial intelligence is not a magical “pixie dust,” according to Cognizant’s Chief AI Officer Babak Hodjat. Speaking at the India AI Impact Summit, Hodjat emphasized that customization with business processes is the essential key to reaping the actual benefits of AI agents.

Owning the Last Mile

Hodjat argued that IT services companies are uniquely positioned because they “own the last mile” and possess an inside-out understanding of their clients' specific domains. He noted that this contextual knowledge is often the missing piece in the broader ‘agentification’ journey.

To be effective, agents must be designed and defined to model the specific organizations and processes of clients in a trustworthy manner. This requires a rigorous process of tailoring, engineering, and safeguarding. Hodjat stated that Cognizant is "ahead of everyone else" in this regard, supported by significant investments in its AI labs.

Infrastructure and Strategic Partnerships

Cognizant has expanded its research capabilities by opening an India AI Lab in Bengaluru, which complements its existing lab in San Francisco. The company’s research efforts have already yielded results, with its San Francisco facility recently receiving its 61st US patent.

The company is also pursuing win-win partnerships with AI-native startups like Anthropic. While Cognizant empowers its associates to use these models for clients, it also helps these startups become reliable players in the enterprise sector.

Preparing the Workforce

With a majority of its employees based in India, Cognizant is actively preparing its workforce for this technological transition. The company is implementing several initiatives:

• Specialized Training: Running boot camps, hackathons, and specialized courses in context engineering.
• Measuring Impact: Internally tracking how AI affects project delivery and its impact on acquiring new clients and increasing productivity.
• Hiring Freshers: Bringing in large numbers of new graduates who understand and use AI much more naturally.

Hodjat observed a pyramid of attitudes toward AI: skepticism and conservatism at the top, and ‘naivety’ at the lower levels, both of which the company is addressing through targeted training and innovation.

Advancements in Core AI Research

The India AI Lab, which consists of about 30 PhDs, researchers, and engineers, focuses on cutting-edge research grounded in client needs. A major recent breakthrough involves a new way to fine-tune large language models (LLMs) using Evolutionary Strategies instead of Reinforcement Learning. This method is notably less compute-hungry than traditional approaches.

In India, the team is also researching multi-objective reasoning systems—which allow AI to reason for more than one outcome simultaneously—and is collaborating on research with institutions like the IITs.

The Transition Mantra

Hodjat concluded that the primary hurdle in moving from IT services to AI services is managing expectations. He stressed that AI is not magic but rather an engineered design principle. He believes once the industry tapers down the "magic" expectation, the transition will be complete.

Think before scaling up AI data centres

WEIGH THE COSTS. Countries that moved early now see the full cost of those choices. What began as a digital bet has steadily changed grids, water systems, and land use.

By Nishant Sahdev

New Delhi’s invitation to global companies to build AI data centres in India is being read as a confident move, based on the logic that India has the scale and space to host the computational power AI needs. However, countries that jumped early into building large numbers of data centres have learned wallet-bruising lessons. Unlike roads or bridges, AI infrastructure changes and becomes outdated fast, consumes enormous energy, and depends heavily on the changing priorities of private firms. The real constraints are not talent or ideas, but rather steady power, cooling, water, stable grids, and available land.

Lessons from Abroad

A single modern facility can use as much electricity as a small city and requires that supply without pause. In the US, data centres used about 176 terawatt-hours of electricity in 2023, and that share is expected to climb to 10-12 per cent of total demand within a few years. In Northern Virginia, home to the world’s largest cluster, these facilities already consume more than a quarter of the region’s electricity. This has resulted in household electricity bills rising faster than the national average, as grid planning now revolves around the demands of large computing facilities rather than homes or small businesses.

Ireland offers a similar lesson, where data centres accounted for over 20 per cent of the country’s electricity demand by 2022. Water scarcity is another sharp concern; in Oregon, Google’s facilities used nearly 30 per cent of a city’s water during a drought. The overarching lesson is that data centre costs accumulate over time and spread widely, while the early benefits are captured by only a few.

The Dynamics in India

In India, electricity is not a simple commodity but a social bargain where power supply is deeply political, balancing households, farmers, and small businesses. Adding large, always-on data centres reshapes who gets priority. Once facilities are labeled “strategic infrastructure,” their access to power is rarely questioned during heatwaves or grid stress, often shifting adjustment costs—like outages or higher tariffs—to ordinary users.

Furthermore, while India supplies the resources, it does not automatically gain control over the proprietary models and intelligence produced. There is a risk of repeating a pattern from the telecom revolution: India became essential to global platforms without owning them. AI infrastructure risks a deeper level of this mistake, where the "subsidy" provided is not just market access, but India's power, water, and land.

Set the Terms

India still has an advantage: time. It must price its ambitions honestly and treat large data centres as strategic infrastructure rather than routine real estate. Safeguards should include:

• Transparent and capped power and water costs.
• Time-bound incentives.
• Public subsidies tied to domestic capability and ownership of skills, systems, and models.

Setting these terms early will ensure infrastructure builds national strength; delaying them means the costs will still arrive, but without any remaining leverage.

The writer is a Physicist at the University of North Carolina at Chapel Hill, US

The stray community

Delhi has its share of people who rally against strays, but streeties also have a way of bringing people together.

Across Delhi, like elsewhere in the country, people care for stray dogs in their own little ways.

By Pooja Singh

Raghu is refusing to eat his lunch—a bowl of rice mixed with boiled vegetables. He sniffs it and returns to his spot in a corner of Delhi’s Khan Market. “Chicken nahi hai na aaj (there’s no chicken today),” says Meenakshi Yadav, giving Raghu, a visibly overweight nine-year-old street dog, a gentle slap. A few minutes later, he’s emptied the bowl.

Yadav, who works as a cleaning lady in a shop in Khan Market, travels 30km every day from the outskirts of Delhi to reach her workplace. Alongside her own lunch, she carries food for five stray dogs, including Raghu—all brothers who have lived outside the shop for several years. Mishra, another worker, noted that while he was initially scared of dogs, he and other guards now sit with them at 4pm to share tea and biscuits.

For some street dogs, Delhi can be a welcoming place. Wealthy individuals sometimes provide extensive care, such as Yadav’s boss, who bathes the dogs once a month and pays for regular check-ups. Similarly, those with very little, including people living on the streets, often share what they have to feed strays.

It is a common sight to see packs of dogs hanging around restaurants for scraps or sprawling outside shops as passersby react with affection. Recently, a street dog even sauntered into an India Design Fair preview party and was welcomed with head scratches from the guests.

However, Delhi can also be harsh. Recent Supreme Court discussions have focused on the danger of deadly rabies cases, and some residents have called for the removal of strays from the streets.

Despite the debate, these dogs often bring communities together. In one locality, a woman who feeds strays from her scooter at dawn was recently joined by two neighbours to cover more ground. In Janakpuri, a group of youngsters has organized a care network across 14 residential colonies, washing winter sweaters for the dogs, taking them to the vet, and even setting up resting spots with fans for the summer.

Scattered across the city are these stubborn pockets of care where dogs that belong to no one are still looked after. They provide a reason for people to pause and talk, creating social bonds in the places they are most needed.

The Rift Between Saudi Arabia and the U.A.E.

 

The Growing Rift Between Saudi Arabia and the U.A.E.

What this shocking split might mean for the future of the Middle East.

By Isaac Chotiner February 17, 2026

In the years following his appointment as deputy crown prince in 2015, Mohammed bin Salman (M.B.S.) has gathered significant power within Saudi Arabia. Under his de-facto leadership, the kingdom launched a military campaign against the Houthis in Yemen, blockaded Qatar, and even temporarily kidnapped Lebanon’s Prime Minister. These aggressive foreign policy moves were largely aimed at isolating Iran. Throughout this period, M.B.S. maintained a close alliance with Mohamed bin Zayed (M.B.Z.), the President of the United Arab Emirates, who reportedly viewed the younger M.B.S. as a reflection of himself: energetic and eager to confront regional enemies.

However, this alliance has recently collapsed into acrimony. Saudi Arabia and the U.A.E. now find themselves on opposing sides of violent conflicts in both Sudan and Yemen. Furthermore, the two nations are increasingly competing for regional economic opportunities. While the U.A.E. appears resentful of Saudi power, Saudi Arabia views the U.A.E. as being too willing to align itself with Israel.

Kristian Ulrichsen, a fellow for the Middle East at Rice University’s Baker Institute for Public Policy and author of “The United Arab Emirates: Power, Politics and Policy-Making,” discussed the roots of this rift and its implications in a recent phone conversation.

Why has a falling out occurred over the past several months?

The primary trigger occurred in early December when forces backed by the U.A.E., specifically the separatist Southern Transitional Council (S.T.C.), moved into two eastern Yemeni provinces. This action upended the fragile balance of power in Yemen and was viewed by Riyadh as a major provocation. The Saudis saw this move as antithetical to their interests, unhelpful to the anti-Houthi coalition, and a potential threat to Saudi security due to the proximity of the Yemeni-Saudi border. Notably, the U.A.E.-green-lit advance began on the same day that Gulf leaders were meeting in Bahrain.

Initially, both countries were aligned in Yemen, entering the conflict together in March 2015 to counter the Houthis, whom they viewed as an Iranian proxy. While there was early coordination between M.B.S. and M.B.Z., their paths began to diverge as Saudi forces became stuck fighting the Houthis, while the U.A.E. successfully pushed them back and reclaimed territory from Al Qaeda in the Arabian Peninsula. Feeling its mission was accomplished and facing international pressure over its tactics, the U.A.E. announced a redeployment of its forces in July 2019. It shifted its strategy to supporting local militias in southern Yemen to ensure its own access to Red Sea ports and maritime networks.

Following a 2022 truce that had largely frozen the conflict for years, the S.T.C.’s sudden November advance caught many by surprise. There are reports that the U.A.E. may have been reacting to M.B.S. raising the issue of the Sudanese civil war with President Trump during a mid-November visit to the White House. In Sudan, the U.A.E. has been backing the Rapid Support Forces (R.S.F.), a non-state militia group.

In Yemen and across the region, Saudi Arabia has acted incredibly aggressively over the past decade. Now something seems to have switched, and the U.A.E. seems more aggressive. What changed?

From 2015 to 2019, M.B.S. and M.B.Z. were closely aligned in their assertive and interventionist regional policies, seeking to limit the radical changes brought about by the Arab Spring. They worked together on the Yemen intervention and the blockade of Qatar, and Saudi Arabia intervened in Lebanese politics by holding their Prime Minister hostage in 2017.

The turning point for Saudi Arabia was the September 2019 missile and drone attacks on its oil infrastructure, which were widely attributed to Iran. The lack of a response from President Trump, who stated the attack was on Saudi Arabia and not the U.S., sent shockwaves through Riyadh and Abu Dhabi. Realizing they might be on their own, the Saudis began to pull back, de-escalating tensions with Iran and improving ties with Turkey to focus on internal economic growth.

Conversely, the U.A.E. remained more willing to take risks, continuing to back sub-state networks in countries with weak state institutions to support its own security and governance goals. This fundamental divergence in risk calculation and regional strategy grew throughout the 2020s.

I get that the two countries have different visions for the region, but does it seem like, given the speed with which this has spiralled out of control, there’s a deeper anger here?

The current animosity involves each side attempting to ensure its own narrative prevails, particularly with the Trump Administration. There is fierce debate regarding what M.B.S. actually said to Trump in November concerning the U.A.E. and the R.S.F., with perceptions on both sides driving their respective responses. These long-simmering splits, particularly in Yemen, have become too significant to ignore.

Economically, the two countries are also increasingly in competition. Saudi Arabia is struggling to attract foreign investment and is attempting to move into sectors like tourism, travel, and entertainment—areas where the U.A.E. has a decades-long head start. While this hasn't yet reached the level of a full political rupture like the 2017 Qatar blockade, the economic and security-focused rivalry is intensifying.

How do you think competing for the favor of the Trump Administration changes the rivalry?

Trump’s transactional approach to policy has created opportunities that both countries have sought to exploit. Since his 2025 inauguration, both nations have separately reached out with promises of investments in the U.S. economy and Trump-aligned companies. They are essentially competing for the ear of the White House. This competitive edge extends to technology as well; for instance, the U.A.E. has taken a lead in A.I. over the last several years, leaving the Saudis to play catch-up.

Have you been surprised by the U.A.E.’s enduring support for the R.S.F. in Sudan, despite the bloodshed?

It is surprising that international condemnation of the R.S.F. and its documented links to the U.A.E.—including weapon transfers disguised as humanitarian aid—has not forced Abu Dhabi to compromise its support. Instead, the U.A.E. has doubled down, possibly because it feels defensive or isolated in the region.

Is the U.A.E.’s increasingly aggressive actions driven by ideology or practical ends like projecting power?

It is a combination of both. For example, the U.A.E.'s heavy intervention in Libya was partly aimed at pushing back against Islamist groups supported by Qatar. They have built networks across Libya, Chad, and Sudan to support authoritarian strongmen who will limit Islamist influence. In the U.A.E., security and investment are explicitly linked, as seen in the roles held by Sheikh Tahnoon bin Zayed al-Nahyan, who serves as both national-security adviser and head of major investment groups.

Saudi Arabia has historically been more pragmatic. In Yemen, for instance, the Saudis were willing to work with an offshoot of the Muslim Brotherhood, whereas the U.A.E. maintains a zero-tolerance policy toward any Islamist movements, viewing them as the most likely source of political dissent.

What do you make of the Saudis accusing the U.A.E. of becoming too close to Israel?

Saudi propaganda is currently emphasizing the depth of ties between Israel and the U.A.E., labeling them as regional disruptors. This is ironic because M.B.S. himself was close to a normalization deal with Israel just before October 7, 2023. While the Saudis likely still want to normalize relations eventually, the domestic "price" for such a deal has risen due to the situation in Gaza.

Saudi Arabia faces more domestic political pressure than the U.A.E. because it is a much larger country and serves as the guarantor of Islam's two holiest sites. Consequently, Saudi policymaking is generally more cautious and sensitive to public opinion, which remains unenthusiastic about diplomatic ties with Israel.

Do you think the worldwide condemnation of Jamal Khashoggi’s murder in 2018 influenced M.B.S.'s shift toward being less aggressive?

Yes, the 2018 murder brought M.B.S.'s "Vision 2030" plans to a temporary halt and made him persona non grata in the West. He was only rehabilitated in 2022 following the Russian invasion of Ukraine, as Western leaders realized they needed to deal with him to manage rising oil prices. President Biden's subsequent visit and fist-bump with M.B.S. signaled this shift.

I’m curious if you think their falling out has anything to do with their personal dynamic.

While M.B.Z. is twenty-four years older and initially played a crucial role in establishing M.B.S.'s credibility in Western capitals, the relationship was always likely to face a clash of characters. Both are headstrong leaders; M.B.Z. saw a younger version of himself in M.B.S., but M.B.S. is now the crown prince of a regional leader. Currently, neither leader seems willing to back down in their struggle for the upper hand in the relationship.

Newspaper Summary - 200226

 On Thursday, February 19, 2026, Reliance Industries and its digital arm, Jio Platforms, announced a massive $110 billion (₹10 trillion) investment over seven years to build a "sovereign artificial intelligence (AI) backbone" for India. This announcement was made by Reliance chairman Mukesh Ambani during the fourth day of the India AI Impact Summit 2026 in New Delhi.

The key highlights of Reliance's AI initiative include:

• Sovereign Infrastructure: Ambani stated the goal is to build India's own compute infrastructure to ensure the country does not have to "rent intelligence".
• Data Centres: The plan involves constructing multi-gigawatt (GW) AI-ready data centres, starting with a 120MW facility in Jamnagar expected to come online in the second half of 2026.
• Nationwide Edge Network: Reliance aims to deploy a nationwide edge network integrated with Jio’s 5G infrastructure to make AI "responsive, low-latency and affordable" for all Indians.
• Green Energy: The infrastructure will be supported by green energy-backed capacity.

Simultaneously, Tata Consultancy Services (TCS) announced a major strategic partnership with OpenAI. Under this deal:

• Anchor Client: OpenAI will serve as the anchor client for a new data centre TCS has been building since October 2024.
• Infrastructure Collaboration: The two companies will collaborate to develop secure, India-based AI infrastructure, specifically a project referred to as "HyperVault".
• Employee Access: Thousands of Tata Group employees will gain access to Enterprise ChatGPT tools to enhance productivity.

Ambani emphasized that this push aims to dramatically reduce the "cost of intelligence" in India, similar to how Reliance previously lowered the cost of data. This massive private investment is seen as a move to position India as a global AI hub while maintaining data sovereignty.

Don 3 drama rejigs Bollywood contracts By Lata Jha New Delhi

Bollywood, despite the steady influx of corporate studios and institutional capital, continues to run largely on personal relationships; however, that long-standing informality is currently under significant strain. In response to recent industry friction, producers are revisiting contract drafting standards and insisting on stronger exit clauses, structured payment schedules linked to performance obligations, and clearer commitment periods once projects are publicly announced.

The catalyst for this shift is a high-profile public dispute between actor Ranveer Singh and Farhan Akhtar’s production banner, Excel Entertainment. Excel has reportedly demanded ₹40 crore in compensation for losses incurred after Singh allegedly exited the upcoming film Don 3. While the actor has countered the demand by stating he took no advance payment, experts suggest the episode reflects a widening gap in formal documentation within the industry.

Industry professionals and legal experts highlight several key changes occurring in the wake of this drama:

• Institutionalized Contracting: As film budgets soar—with big-budget movies now costing ₹300-500 crore to produce—investors are beginning to expect binding commitments similar to project finance structures. This includes stronger lock-in clauses and insurance-linked obligations.
• Performance-Linked Payments: Contracts are moving toward more rigorous, performance-based milestones rather than trust-based arrangements.
• Defining Exit Triggers: Legal practitioners like Rahul Hingmire of Vis Legis Law Practice note that we may soon see clearer "exit triggers" to manage the risk of a sudden talent departure, which can otherwise destabilize an entire project.
• Proof of Loss: Attorney Rishabh Gandhi notes that while courts rarely force an actor to perform due to the nature of personal service contracts, producers are now ensuring they have the legal standing to claim quantifiable damages if a breach is established.

Producers are also navigating the "defensible grey area" of artistic dissatisfaction, a common plea used to justify exits that remains difficult for courts to adjudicate in speculative ventures like filmmaking. Conversely, tighter contracts also protect actors; if a project stalls due to a producer's failure, defined clauses may allow talent to retain signing amounts or claim compensation for blocked dates.

Ultimately, experts like Yatharth Rohila of Aeddhaas Legal LLP believe these disputes highlight an essential evolution for Bollywood: the transition from "trust-based arrangements to legally risk-allocated agreements".

RBI asks NPCI to review UPI Autopay on debit concerns

By Mansi Verma & Anshika Kayastha Mumbai

The banking regulator, the Reserve Bank of India (RBI), has asked the National Payments Corporation of India (NPCI) to investigate a rising number of complaints regarding erroneous and involuntary UPI Autopay debits.

Users of the Unified Payments Interface (UPI) began reporting a surge in involuntary autopay mandates and significant difficulty in cancelling recurring payments toward the end of 2025. These concerns, often reported to cybercrime departments, prompted the NPCI to convene meetings in December with third-party application providers (TPAPs), payment gateways, and select merchants to assess whether interface designs or existing payment flows were to blame.

Rapid Growth and User Risks

UPI Autopay, launched in 2020 for subscriptions, bills, and EMIs, has become one of the fastest-growing use cases in the ecosystem. According to the sources:

• Transaction Volume: Recurring UPI payments have doubled over the past year, with the top 10 banks processing approximately 926 million transactions in November alone.
• Market Share: Autopay now accounts for roughly 5% of all UPI transactions by volume, processing nearly 1 billion transactions monthly.

Despite this growth, experts note that issues such as unexplained debits and interface friction are similar to historical problems seen with card-based mandates. Users have reported being unaware that one-time payments were triggering recurring mandates, and many incorrectly assumed that deleting a mobile app would automatically stop further deductions. There have also been claims that users are not receiving clear pre-debit or post-debit notifications directly from the apps.

New Regulatory Mandates

Even before the RBI's recent nudge, the NPCI had begun tightening its framework. In a significant move toward transparency and user control, the NPCI has directed banks and UPI apps to enable interoperability for Autopay mandates by December 31, 2025.

Under these new rules:

• Centralized Visibility: Users must be able to view all active mandates on any UPI app of their choice, regardless of where the mandate was originally created.
• Mandate Portability: Users will gain the ability to "port" or shift mandates from one application to another.
• Nudge Restrictions: Applications are strictly barred from using cashbacks, pop-ups, or other intrusive nudges to pressure users into migrating their mandates.

These measures aim to ensure that mandate management is entirely user-driven and accessible via a dedicated "manage accounts" section within UPI apps.

As demerger nears, Vedanta shores up oil output

By Dipali Banka & Nehal Chaliawala Mumbai

Ahead of its upcoming demerger into five separately listed companies, Vedanta Ltd is in a race against time to shore up production levels at its oil and gas business, which have declined in each of the past 10 years. Higher production levels are seen as critical to bolster the financials of the business before it begins operating as an independent entity named Vedanta Oil & Gas Ltd.

Declining Production Trends

Over the last decade, ageing oil blocks have caused production at Vedanta’s oil and gas vertical to more than halve, dropping from 211 thousand barrels of oil equivalent per day (kboepd) in FY15 to 103.2 kboepd in FY25. For the first nine months of FY26, average output stood at 89.1 kboepd, which is below the company's initial guidance of 95–100 kboepd.

While other industry players like Reliance Industries and ONGC also face declines in ageing blocks, the situation is more pressing for Vedanta. Once the demerger is finalized on April 1, the oil and gas unit will no longer have the financial cushion provided by the conglomerate’s cash-rich aluminium and zinc businesses.

Shrinking Financial Contribution

The vertical’s contribution to the group's overall financials has diminished significantly:

• Revenue: In the first three quarters of 2025-26, it reported ₹6,999 crore, accounting for 6% of the top line, down from approximately 20% a decade ago.
• Ebitda: It contributed ₹3,285 crore, or 9% of consolidated Ebitda, also down from a fifth a decade ago.
• Historical Growth: Between FY15 and FY25, the revenue of the oil and gas business shrunk by a quarter.

Recovery Strategies and Delays

To reverse these trends, Vedanta is focusing on Enhanced Oil Recovery (EOR) through a process known as alkaline-surfactant-polymer (ASP) flooding at its key Mangala fields in Rajasthan. However, this project—one of the largest and most expensive of its kind—is months behind schedule. Originally planned for a July start, commissioning is now expected within the next three months.

Jasmin Sahurity, COO of the oil and gas business, noted that the delay in ASP commissioning is the primary reason volumes haven't met expectations. Additionally, the company is targeting "tight oil" (reserves embedded in rocks) by drilling new wells to push production toward 90 kboepd in FY27, with a long-term goal of 150 kboepd.

Financial Outlook Post-Demerger

Despite production challenges, CFO Ajay Goel stated that the oil and gas business will be practically debt-free following the demerger. The bulk of Vedanta’s ₹60,624-crore net debt has been apportioned to the aluminium and base metal businesses based on asset value and cash generation abilities. Analysts at JP Morgan remain cautious, pricing in production levels of only 95 kboepd through FY28, while experts emphasize that reversing declines in mature assets requires strategic patience and disciplined execution.

U.S. gathers the most air power in the Mideast since the 2003 Iraq invasion By Lara Seligman, Michael R. Gordon, Alexander Ward & Shelby Holliday WASHINGTON

The United States is sending significant numbers of jet fighters and support aircraft to the Middle East, assembling the greatest amount of air power in the region since the 2003 invasion of Iraq. While the U.S. is prepared to take action against Iran, President Trump has not yet decided whether to order strikes or what their primary objective would be—ranging from halting the nuclear program to attempting to topple the regime.

Over the past few days, the U.S. has moved cutting-edge F-35 and F-22 fighters toward the region, supported by command-and-control aircraft and critical air defenses. A second aircraft carrier, the USS Gerald R. Ford, and its strike group are currently inbound to join the USS Abraham Lincoln and its nine destroyers already supporting potential operations. This amassed firepower gives the U.S. the option of a sustained, weekslong air war rather than a single limited strike like the "Midnight Hammer" operation conducted in June.

While military options are prepared, representatives from the U.S. and Iran met in Geneva this week to negotiate a deal regarding uranium enrichment. White House press secretary Karoline Leavitt noted "a little bit of progress," but stated that the two sides remain "very far apart" on several issues. Trump has indicated he would prefer a diplomatic agreement that eliminates Iran's nuclear programs, disbands proxy forces, and dismantles ballistic missiles, though he has told reporters he mainly cares about the nuclear issue.

Today's military circumstances differ from 1991; the U.S. Air Force is smaller now, and there are currently no allied ground forces or a broad international coalition. Notably, Saudi Arabia and the United Arab Emirates have restricted their airspace for potential U.S. strikes, leading to a concentration of warplanes at the Muwaffaq Salti Air Base in Jordan. Despite a smaller overall force than in the 2003 invasion, military technology has improved significantly, particularly in stealth and precision strike capabilities.

Iran is also preparing for a potential conflict by hardening its nuclear sites and dispersing decision-making authority. Satellite imagery shows Tehran has been strengthening tunnel entrances at its Isfahan site and a deep underground complex at Pickaxe Mountain to protect enriched uranium from airstrikes. Additionally, the Islamic Revolutionary Guard Corps is reviving a "mosaic defense" strategy to make the regime more resilient if the chain of command is disrupted. Domestically, security forces have established roughly 100 monitoring points around Tehran to stifle dissent and block potential insurgents.

As formidable as the current buildup appears, it remains a fraction of the assets used in 1991 or 2003. Some former officers suggest the dramatic increase in force is a signal that "Trump is not messing around," which could prompt Iranian leaders to agree to a deal. However, U.S. and foreign officials are increasingly pessimistic that Tehran will agree to all demands, fearing the gap between the two nations may be unbridgeable.

Why India’s Soil is Gasping for Air

By Sayantan Bera New Delhi

Cheap urea was meant to help farmers. Instead, it is hollowing out farms and damaging soils.

A few years ago, an internal survey of Indian farmers in the 40+ age group revealed a heartbreaking sentiment: most felt they would not be able to bequeath a worthy asset—their land—to the next generation. This is the result of a vicious cycle where low profitability leaves farmers with no surplus to invest in soil health, while recurring climate shocks like droughts and heatwaves further degrade the land.

The Subsidy Paradox

The scale of the crisis is reflected in the federal budget. In 2025-26, the fertilizer subsidy bill is estimated at ₹1.9 trillion, significantly higher than the entire agriculture budget of ₹1.5 trillion. Of this, the government spends ₹1.3 trillion specifically on urea. This massive spending drains funds that could otherwise be used for irrigation, research, or direct price support for farmers.

India’s dependence on imports remains a critical vulnerability, with the country importing roughly 75% of its urea, 90% of its DAP, and 100% of its potash. Consequently, global shocks, such as the 2022-23 energy spike following the invasion of Ukraine, can send the subsidy bill soaring (reaching a record ₹2.5 trillion that year).

Environmental and Health Costs

Because the domestic price of urea has remained largely unchanged for nearly two decades, it is ridiculously cheap, leading farmers to chronically over-apply it while neglecting more expensive nutrients.

• Low Efficiency: Plants absorb only about 40% of applied urea.
• Toxic Emissions: The excess nitrogen is released as nitrous oxide, a greenhouse gas with a global warming potential 272 times that of CO2. These emissions account for over a fifth of all agricultural greenhouse gas emissions in India.
• Soil Degradation: Decades of intensive cropping and heavy urea reliance have led to a nutrient imbalance and a deficiency in micronutrients like sulphur, iron, zinc, and boron.

The Failed "Nano" Hope

A liquid "nano urea" product launched in 2021 by Iffco was hailed as the "innovation of the century," with claims that a 500-ml bottle could replace a 45-kg bag of granular urea. However, it has failed to convince farmers. A 2024 field study by Punjab Agricultural University even reported a significant drop in rice and wheat yields when using the product.

The Road to Reform

Experts argue that the "addiction" to cheap urea is structurally embedded because the retail price does not reflect the true cost. The Economic Survey recently recommended a modest hike in urea prices, with an equivalent amount transferred directly to farmers' accounts on a per-acre basis. This would incentivize farmers to use the cash to buy a more balanced mix of nutrients.

The challenge is also linked to a perverse incentive to grow water-intensive cereals (rice, wheat, and maize for ethanol) due to assured government procurement. As Suresh Kumar Chaudhari, director general of the Fertilizer Association of India (FAI), notes, the moment farmers gain access to irrigation, they often switch from pulses to these fertilizer-heavy crops.

As 2020 World Food Prize Laureate Rattan Lal warns, the health of soil, plants, and humans is indivisible: "If soils are not restored, crops will fail, and people will suffer."

Freebies, and their many hazards

By A Narayanamoorthy Tamil Nadu Example: Freebies showered across a large swathe of voters squeeze out quality welfare for the really needy, and impact capex spending.

The recent announcement by the Tamil Nadu government to credit ₹5,000 into the bank accounts of 1.31 crore women under the "Kalaignar Magalir Urimai Thogai" scheme—marketed as a "Summer Special" allowance—marks a significant escalation in what economists call "competitive populism." While the Chief Minister framed this as an entitlement to fulfill a poll promise of providing ₹2,000 per month, the move has triggered a "bidding war" where opposition parties counter with even higher promises, reflecting a national trend where fiscal prudence is sacrificed for electoral gains.

The Volume and Cost of Freebies

While Tamil Nadu has a long history of successful welfare programs like the mid-day meal scheme, the current shift toward massive direct cash transfers represents a departure from productive welfare toward consumption-led populism.

• The Math: Providing ₹1,000 a month to 1.31 crore households already costs approximately ₹15,720 crore annually. With the increase to ₹1,351 per month, the annual burden will surge to over ₹21,100 crore, consuming nearly 9% of the state’s total revenue.
• Low Poverty Paradox: NITI Aayog data shows multidimensional poverty in Tamil Nadu is just 2.25%. In such a setting, a universal scheme covering 70% of all households is seen as a drain on resources that could otherwise be used to lift the remaining people out of poverty.

Fiscal Arithmetic and Hidden Costs

The expansion of these "gifts" comes at a time when Tamil Nadu’s total debt is projected to reach ₹9.29 trillion by March 2026, with a revenue deficit of ₹41,635 crore for the 2025-26 fiscal year. To fund these distributions, the state has reportedly:

• Increased property taxes and electricity tariffs.
• Hiked registration fees on land and essential utility bills. This creates a regressive cycle where the state extracts money from the middle class through utilities to redistribute it as political populism.

Impact on Development and Infrastructure

The "hidden cost" of these freebies is the inevitable hit to capital expenditure. In Tamil Nadu, the capital outlay for 2025-26 is budgeted at ₹33,724 crore, while the total expenditure on various "freebie" schemes is nearly ₹57,251 crore. When committed expenditures like salaries, pensions, and interest payments already consume 62% of revenue receipts, the fiscal space for new development is rapidly vanishing.

The Moral Hazard

Beyond the balance sheet, there is a mounting concern regarding the dependency syndrome these schemes foster, which critics argue undermines the dignity of labour. The franchise of the vulnerable is increasingly treated as a commodity in an "election marketplace" where parties are judged on their "bidding price" rather than their long-term vision.

Conclusion: A Fiscal Cliff

With interest payments alone now accounting for 21% of revenue receipts, the state is approaching a "fiscal cliff." Experts suggest that the Supreme Court and institutional safeguards must intervene to force political parties to disclose exactly how they intend to fund the freebies they promise. Without such restraint, the primary function of the state risks becoming a cycle of debt servicing and subsidy distribution, leaving the future of infrastructure and genuine welfare in jeopardy.

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The writer is an economist and former full-time Member (Official), Commission for Agricultural Costs and Prices, New Delhi. Views are personal.

Newspaper Summary 190226

 

Sarvam AI unveils two home-grown large AI models

Sanjana B | Bengaluru

Sarvam AI on Tuesday unveiled two new large language models (LLMs) at the India AI Summit—a 30-billion and a 105-billion-parameter model—both of which outperform comparable models in their respective size categories on key benchmarks.

In April 2025, the Union government selected Sarvam under the IndiaAI Mission to build the country’s first sovereign LLM. These models, along with a 3-billion parameter variant, were trained using compute allocated under the IndiaAI Mission, with infrastructure support from Yotta and Nvidia.

Production-Ready Conversational Engine

The Sarvam 30B model is a mixture-of-experts (MoE) model pre-trained on 16 trillion tokens. While it has 30 billion total parameters, it only activates 1 billion parameters when generating an output token, which helps keep inference costs low. It supports a 32,000-token context length, enabling long conversations and agentic workflows.

Positioned as a real-time conversational engine for production use, Sarvam 30B supports Indian languages and user-facing dialogue. On benchmarks such as Math500, HumanEval, and MMLU, it remains competitive with or surpasses models like OpenAI’s GPT-OSS-20B, Google’s Gemma 27B, and Alibaba Cloud’s Qwen3-30B.

Advanced Reasoning and Indian Language Edge

The company’s larger MoE model, Sarvam 105B, features 9 billion active parameters and a 128,000-token context window. It is specifically built for complex reasoning, performing strongly across mathematics, coding, and Indian languages. On benchmarks like GPQA Diamond and MMLU Pro, it performs on par with GPT-OSS-120B and Zhipu AI’s GLM-4.5-Air.

Sarvam Co-Founder Pratyush Kumar noted that Sarvam 105B was trained from scratch and provides intelligence competitive to DeepSeek, despite being one-sixth the size of the 600B-parameter DeepSeek-R1. He further highlighted that the model handles Indian languages better than larger, more expensive models like Gemini 2.5 Flash.

Democratizing AI for India

The deployment of these models is expected to democratize legal reasoning and research, as well as improve customer service and government queries for bottom-of-the-pyramid users in local Indian languages. Additionally, Sarvam has partnered with Qualcomm to develop a Sovereign AI Experience Suite, which will run these AI applications across devices like smartphones and PCs, focusing on supporting multiple Indian languages and dialects.

AGI achievable in the next 5-8 years: Google DeepMind CEO

LOT IN STORE. Demis Hassabis says the next 10 years will be a golden era for scientific discovery using AI

Sindhu Hariharan | New Delhi

Artificial Intelligence is currently at a threshold moment, with Artificial General Intelligence (AGI) on the horizon within the next 5-8 years, according to Google DeepMind co-founder and CEO Demis Hassabis. Speaking to a full house at the AI Impact Summit in New Delhi, Hassabis stated that we are seeing the very beginning of what autonomous systems can achieve, and expressed his personal motivation to use AI to advance science, medicine, and climate change.

The Path to AGI

During a fireside chat with Professor Balaram Ravindran of IIT-Madras, Hassabis clarified that while AGI is coming, the current ecosystem is still missing key elements. He noted that today's AI systems are often inconsistent and lack the ability to continuously learn and train themselves. He described current technology as possessing a "jagged intelligence," noting that systems capable of winning gold medals in Math Olympiads still frequently make mistakes in elementary math.

Despite these current limitations, Hassabis predicted that the next 10 years will represent a "golden era" for scientific discovery driven by AI.

India’s Role and Advice to Students

Regarding India’s position in the global AI race, Hassabis remarked that he was "incredibly impressed" by the nation’s energy and positive attitude toward AI. He urged students to "lean in" and become proficient with AI tools, asserting that doing so would provide them with a "superpower" in any field they choose to pursue.

Risks and Responsibility

While Hassabis is "cautiously optimistic" about current AI systems, he emphasized that human ingenuity must be paired with efforts to address societal challenges. When questioned about potential dangers, he specifically flagged cybersecurity and bio hacks as two key risks. He noted that Google DeepMind is actively working to ensure that AI "defences are stronger than of-fences" to counter these threats.

AI disruption to software industry is real, says Zoho’s Sridhar Vembu

Sindhu Hariharan | New Delhi

Artificial intelligence models have become significantly more capable in just the last few months, making the disruption to the software industry "very real," according to Sridhar Vembu, Founder and Chief Scientist of Zoho Corp. Speaking on the sidelines of the AI Summit, Vembu noted that models from companies like Anthropic have improved so much in the last two months that they are drastically accelerating software development speeds.

Rapid Prototyping and Efficiency

Vembu highlighted that tasks which human engineers previously estimated would take two to three months can now be completed in just two to three days using these advanced models. This shift allows companies to reach the prototype stage extremely quickly. He urged software firms to experiment across different areas and try new approaches, noting that "sometimes the opportunity may be in a place where everybody is not looking".

The "Textile Industry Moment"

Vembu described the current state of the Indian IT sector as its "textile industry moment," comparing it to when manual weavers had to adapt to new-age automated technologies. Addressing concerns over job losses, he pointed out that history demonstrates that large-scale technological transformations consistently "create more jobs than they destroy".

Advice to Software Engineers

For engineers worried about their roles, Vembu suggested that the "most safe job" involves developing stronger customer relationships rather than just working with code. He advised them to focus on understanding customer needs and learning how to translate those needs into products faster.

India’s Positive Outlook

Vembu praised the AI Impact Summit for projecting India as an emerging power in the field. He expressed confidence that India would lead in finding unique AI use cases for education and public services. He credited this potential to India's "young and curious population," stating that while there is some fear, the overall national attitude toward AI remains overwhelmingly positive.

India well positioned to be leader in AI: Sunak

Supported by a deep talent pool and strong digital public infrastructure, India is well positioned to be a leader in AI and demonstrate its mass adoption and deployment in society, former British prime minister Rishi Sunak said on Wednesday.

At an interactive session during the ongoing AI Impact Summit, Sunak also said there are different attitudes towards artificial intelligence (AI) around the world, and in India, there is “incredible optimism and trust”, whereas in the West, the “overriding feeling is one of anxiety at the moment”. The session — ‘AI for All: Reimagining Global Cooperation’ — was hosted by Carnegie India in association with the Observer Research Foundation, among other partners.

During the interaction, Sunak was asked about the learnings from the AI Safety Summit, a global event that took place in November 2023 at Buckinghamshire in the UK, under his tenure as the prime minister. “First of all, there was this scepticism about whether you could get these politicians, leaders and all the entrepreneurs and innovators together, and whether they would understand each other,” Sunak recalled.

The former UK prime minister asserted that crucially, the debate has shifted over the years when it came to AI. “I think the AI debate has shifted from technology to strategy. From what these tools could do to what countries are choosing to do with them,” Sunak said. He underlined that for political leaders, “AI can’t be some specialist subject on the side”, it’s got to become the “central responsibility” of a government. “And that’s what we are seeing at this Summit, with its focus rightly on impact,” Sunak added.

When he left office, someone gave him a copy of the book Technology and Great Powers, which looks at the history of great technological revolutions, and proves the thesis that even if you don’t invent a technology, you could be the country that benefits from it the most, stretching all the way back to the printing press. “I think India has recognised that leadership in technology doesn’t just depend on inventing technology, it’s about how you deploy it,” he said.

An expanded Trans-Pacific alliance will be beneficial

Pritam Banerjee

The global economy is currently navigating a sea of uncertainty as the post-Cold War rules-based trading system is increasingly undermined by intensifying geopolitical rivalries. While this order provided essential stability for middle powers to grow, strategic options for these nations now appear to be shrinking. Middle powers—a diverse group including mature economies like the European Union, Japan, and Canada, as well as surging emerging powers like India, Brazil, and Indonesia—share a vital goal: managing turbulence without compromising their national interests.

To achieve this, they must salvage a rules-based system that protects them from the “weaponisation” of demand, supply, and technology. An expanded Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) offers the ideal platform for this collective defence.

A New Economic Gravity

The current CPTPP consists of 12 countries, including major economies like Japan, Australia, Canada, and the UK. With the EU, Indonesia, and South Korea already seeking entry, the addition of India, Brazil, and the Philippines would transform the pact into a massive, united counterweight to any dominant power seeking to destabilise the global economy.

In this configuration, India and the EU would serve as the primary anchors of a trans-regional alliance. This bloc would account for:

• Global reach: 13 G20 members.
• Market power: Roughly 45 per cent of global GDP and over a third of global trade.
• Demographic weight: A combined population of over three billion, representing nearly 40 per cent of humanity.

The Engine of Global Growth

This expanded group would be responsible for approximately 40 per cent of global GDP expansion in 2026, with India alone accounting for 17 per cent of that growth. By 2030, India is projected to contribute 20-25 per cent of all global GDP growth. This surge, alongside contributions from Indonesia, Brazil, and others, will balance the falling economic shares of mature powers, potentially accounting for over 50 per cent of global economic growth by the end of the decade.

The ‘Third Alternative’

This alliance would be more than just a trade pact; it would be a trans-regional economic alliance underpinned by open markets and democratic accountability. Synergies would include:

• A growth-innovation engine: Fusing the demographic dividends of the emerging world with the sophisticated technology and capital of mature powers.
• Dominance in global value chains: Empowering businesses to lead global value chains through unprecedented access to scale and technical know-how.
• A shield against economic coercion: Providing a combined market heft to defend against supply-chain “blackmail”.
• Forging digital sovereignty: Leveraging the bloc's talent pool to create “digital champions” and a more balanced global digital ecosystem.
• Salvaging global institutions: Driving the compromises needed to revitalise the WTO, World Bank, and IMF.

The ‘Grand Bargain’

For this vision to materialise, mature powers must acknowledge the unique developmental imperatives of emerging economies. This requires ‘Grand Bargains’ in sensitive areas like labour standards, environmental regulations, and intellectual property. Success lies in flexibility through carve-outs and exemptions that allow emerging members the policy space to grow. The groundwork is already laid by the India-UK and India-EU Free Trade Agreements (FTAs), which provide a roadmap for the necessary compromises.

India’s Strategic Imperative

As India ascends to the status of a global great power, its leadership in crafting this “third alternative” will be crucial. This leadership is an evolution of India's diplomatic history:

• A new non-alignment: Just as India spearheaded the Non-Aligned Movement during the Cold War, it can now lead a redefined CPTPP to protect middle powers from modern great-power coercion.
• Incremental but defining: Since India is already negotiating or has signed FTAs with nearly every current CPTPP member, joining the bloc is a logical incremental step.

While the step may be incremental, the consequences would be world-defining, shifting the centre of gravity towards a more equitable international order defined by cooperation and mutual interest.

The writer is Head, Centre for WTO Studies, Indian Institute of Foreign Trade. Views are personal.

Effect of the new rules on bank lending to brokers

NEW NORMS. Will push up cost of funds for proprietary trading

The RBI ban on bank funding for proprietary trades from April 2026 will raise costs and force deleveraging

Akshata Gorde

The Reserve Bank of India (RBI) has tightened rules governing how banks lend to capital market intermediaries, raising significant concern among brokerage firms, particularly those with large proprietary trading operations. While the move is intended to curb excessive leverage and strengthen financial stability, brokers warn the transition could disrupt funding and trading activity.

What has the RBI changed?

The RBI has mandated that all bank lending to capital market intermediaries must be fully backed by eligible collateral and subject to continuous monitoring. Crucially, banks are now barred from financing brokers’ proprietary trading or investment positions. However, lending for operational requirements, such as working capital, settlement mismatches, and market-making, remains permitted. Banks are also explicitly allowed to fund margin trading undertaken by clients through stockbrokers.

Why does the proprietary trading restriction matter so much?

For many brokers, bank credit served as a relatively low-cost source of leverage for proprietary trading desks. With this route shut, brokers will be forced to either cut back positions, deploy more internal capital, or shift to alternative funding sources, which are typically more expensive. This directly impacts leverage, trading volumes, and short-term profitability, especially for firms where proprietary trading is a meaningful contributor to earnings.

What do the new collateral rules do?

The RBI has introduced standardized collateral haircuts:

• 40 per cent on listed equities.
• 25 per cent on sovereign gold bonds, mutual funds, and REITs/ETF units.
• 15-40 per cent on debt mutual funds and debt instruments.

While these norms bring clarity and consistency for banks, they may reduce the effective borrowing value of pledged assets for brokers, further tightening funding in some cases.

Are client-facing brokers affected?

Brokers focused on client-driven businesses—such as cash equities, derivatives broking, advisory, and wealth management—are expected to see limited impact on core operations. The clear regulatory backing for bank funding of client margin trading is viewed as a positive for this segment, removing a long-standing grey area for lenders.

Why are brokers planning representations to the RBI?

While brokers generally support the goal of reducing systemic risk, they are concerned about near-term disruption. Industry representations are expected to focus on transition timelines, operational clarity, and the cumulative impact of higher funding costs. In the short run, brokers warn of selective unwinding of proprietary positions and some pressure on market liquidity.

Over the longer term, the rules are likely to push the industry towards lower leverage, stronger balance sheets, and more conservative business models.

Norway shares India’s vision for AI impact

How can we measure the success of Artificial Intelligence? By how sophisticated its algorithms are? By the speed of its computation? For me, the metric that should matter most is its impact. That is why I’m so happy to be here in Delhi for the AI Impact Summit.

The Summit’s three guiding “sutras” — People, Planet, Progress — remind us that AI’s real value lies not in technicalities but in its power to improve lives and shape a safer, more equitable and sustainable future.

Norway’s ‘National Digitalisation Strategy 2024-2030’ sets out an ambitious goal: To become the world’s most digitalised country by 2030. This is not an end goal but a means to build better public services, a more competitive private sector and a more inclusive society. The responsible application of AI is central to this effort.

Strengthening Infrastructure and Governance

Norway is strengthening our national AI infrastructure through concrete initiatives. Last year, we launched AI Norway, a national AI hub to support the innovative and responsible development and use of artificial intelligence in both the public and private sectors.

Initiatives such as Olivia, Norway’s most powerful supercomputer, will play a key role in developing artificial intelligence, particularly in advancing and improving Norwegian language models. We are also establishing new AI Research Centres to boost expertise in sectors where Norway has clear industrial strengths and where AI can help solve pressing societal challenges.

Norway is also a co-founder of the Digital Public Goods Alliance, aiming to promote open and shareable digital solutions that support sustainable development and the public good. On the regulations side, Norway has proposed that the European Union’s AI Act be implemented into Norwegian law. All these developments reflect a broader philosophy: AI must be aligned with real economic and societal needs.

A Complementary Agenda

In this context, Norway’s complementarity with India stands out. Norway brings strengths in governance, sustainability and innovation. We have extensive experience in managing natural resources responsibly, building transparent public institutions and ensuring that technological change is anchored in open dialogue.

India, on its part, brings scale, an enormous talent pool and expertise in building digital systems for a population of 1.4 billion. As part of India’s remarkable digital transformation, systems for identity, payments and service delivery have provided digital access to millions, even in remote locations. Its dynamic start-up ecosystem and thriving digital economy offer much scope for AI innovation. India has consistently emphasised the use of AI for service delivery at the grassroots level, from agriculture and healthcare to legal services and education. Together, these strengths create synergies leading to meaningful and mutually beneficial cooperation.

The India-Norway economic relationship has also entered a new phase. The Trade and Economic Partnership Agreement (TEPA) between India and the EFTA countries, including Norway, entered into force on October 1, 2025. This agreement provides a foundation for a trade and investment partnership and gives a boost to collaboration in energy transition, maritime technology, healthcare innovation, cybersecurity and digital services — all sectors where AI will play an increasingly important role.

Converging Ambitions

Despite the differences in size and scale between our two countries, our ambitions converge. We want AI that can strengthen democratic governance, drive inclusive and sustainable growth and serve the public interest. Together, as partners, we can put responsible AI frameworks into practice and test how they work on the ground.

Norway and India are already cooperating on digital public infrastructure solutions such as MOSIP (Modular Open-Source Identity Platform) developed in India, benefiting countries around the world. The democratisation of AI is another shared imperative. Access to AI tools should not be limited to a privileged few. Open innovation, support for start-ups and collaboration between public and private sectors can help distribute benefits more widely.

Safety and Ethics

Having said that, democratisation must not come at the cost of safety. Guardrails must be in place to prevent misuse, such as the spread of misinformation or violations of privacy, and to protect vulnerable communities. During India’s G20 presidency, the agreement on a common Framework for Systems of Digital Public Infrastructure was an important milestone, demonstrating that shared digital systems can drive development, inclusion, trust and healthy competition.

As Minister of Digitalisation, I am aware that technological change often outpaces the ability of institutions and legislation to adapt. We cannot predict every new change. But what we can do is base our innovations on principles of human rights, the rule of law, ethics and sustainability that can maximise their benefits for the people.

The choices we make today about how AI is developed and used will influence our societies for decades to come. The question is not whether AI will transform our public and private lives—it is already doing so. The question is how we ensure that this transformation is responsible, transparent and aligned with democratic values. I look forward to the many valuable answers that will emerge during the AI Impact Summit.

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The writer is Norway’s Minister of Digitalisation and Public Governance.

Exporters face uphill task to ship wheat

LACKING PARITY. With MSP hiked to ₹2,585 a quintal this year, the grain will be $45/t higher than global rates

Subramani Ra Mancombu | Chennai

India will find it tough to get buyers abroad for its wheat as the domestic cost of the foodgrain is higher than in the global market, according to traders and analysts. This "uphill task" is primarily attributed to the government fixing the minimum support price (MSP) for wheat at ₹2,585 a quintal, an increase of ₹160 from the previous year.

Export Context and Pricing

Last week, the government lifted a nearly four-year-old ban on wheat exports, allowing for shipments of 2.5 million tonnes (mt). This move was intended to ensure remunerative prices for growers after domestic rates dropped earlier this month. However, price disparities remain a significant hurdle:

• Domestic Costs: Wheat delivered at Kandla port currently costs between ₹25,200 and ₹25,500 a tonne ($285–288).
• Freight Impact: Including a freight rate of $20 a tonne for the Middle East and South-East Asia, the total cost and freight (C&F) could reach $305–308 a tonne.
• Global Comparison: Global wheat prices are currently ruling at approximately $260 a tonne. Even with the premium Indian wheat sometimes commands in the Middle East, a difference of $45–48 makes it uncompetitive.

International Competition

Traders noted that Indian wheat struggle to compete with global offers from companies like Olam International, Bunge, and Louis Dreyfus, who are offering wheat for late March delivery between $286 and $290 a tonne. Furthermore, Indian wheat with 11.5% protein content is trading $20 higher than grain from the Black Sea region.

While Australian and North American wheat are finding strong global demand, Indian exporters are left with limited competitive options.

The Bangladesh Option

The "best-case scenario" for Indian exports may be limited to road or rail transport to Bangladesh. Wheat exported from Bihar could cost approximately $283 a tonne, which is closer to the current landing price in Bangladesh of $270. Analysts suggest that under the new regime in Bangladesh, India could potentially explore government-to-government (G2G) exports.

Record Stocks and Production

India is under significant pressure to export because its ending stocks as of March 31 could reach a 10-year high of 21 mt. Currently, the Food Corporation of India (FCI) holds 25.31 mt of wheat alongside record-high rice stocks.

The initial export ban was implemented on May 13, 2022, following severe heatwaves that lowered production to below 110 mt. Since then, the promotion of climate-resilient wheat varieties helped production rebound to 117.95 mt in 2025.

Wheat Cost & Freight Price Disparity ($/t)

Origins	West Coast (Kandla)	East Coast (Vizag)
Gujarat	308	-
Rajasthan	305	-
Uttar Pradesh	306	311
Madhya Pradesh	308	306
Disparity	45–48	46–51

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The phantom stealth fighter that exposes Europe’s deep divisions over defense

Duplicated efforts, fragmented industry and soured collaborations are among reasons region isn’t getting more bang for its defense buck

Alistair MacDonald, Cristina Gallardo, & Robbie Gramer | LONDON/BARCELONA/MUNICH

It was billed as the answer to high-tech U.S. stealth fighters. Instead, an ambitious pan-European project has become a case study into some of what has gone wrong with the region’s defense push.

The Future Combat Air System (FCAS) project, involving France, Germany, and Spain, was intended to develop a next-generation aircraft to compete with the latest U.S., Chinese, and Russian models. However, the venture has devolved into bickering between defense giants Airbus and Dassault Aviation—and between Berlin and Paris—over leadership of its development, leaving all sides questioning its future.

Less Than the Sum of Its Parts

This unraveling collaboration highlights a fundamental problem in European defense: while collective spending dwarfs Russia’s and has overtaken China’s, the whole is somewhat less than the sum of its parts. National interests often take priority, leading to industrial fragmentation, overlaps, incompatibilities, and high prices due to low economies of scale.

In 2022, collaborative procurement accounted for less than a fifth of the total spent on defense equipment in the European Union. Additionally, Europe lags significantly in research and development; R&D accounted for 16% of total military spending in the U.S. in 2023, compared to just 4.5% in Europe the previous year.

The FCAS Vision and Conflict

Conceived as a sixth-generation jet fighter, FCAS is meant to incorporate artificial intelligence and operate in connection with a swarm of drones, potentially surpassing the U.S. F-35.

The project took a wrong turn last year when Dassault Aviation’s CEO Eric Trappier argued that his firm must lead the development and select subcontractors, citing their superior record in developing combat aircraft. Airbus, whose defense business is heavily centered in Germany, has pushed back. German unions and politicians have grown impatient, with German Defense Minister Boris Pistorius stating that it “wouldn’t be the end of the world” if the project failed to proceed.

A Pattern of Friction

France, the world’s second-largest defense exporter, is frequently blamed for disrupting joint ventures. Recent examples include:

• Eurofighter: France dropped out of this earlier joint jet fighter project.
• KNDS Tank: Italy’s Leonardo abandoned a deal to make a tank with the Franco-German company KNDS after failing to receive a sufficient share of the project's development.
• Bromo Project: French opposition reportedly nixed an attempt to merge space activities involving Leonardo, Airbus, and OHB.

The Imperative for "Defragmentation"

Despite these tensions, analysts argue that Europe has little choice but to make joint projects work to effectively deter threats from Russia and step up as a pillar of NATO. While some collaborations, like the MBDA missile maker, are seen as successful models, the region still suffers from a lack of standardization. For instance, European nations have supplied Ukraine with 11 different types of howitzers all firing the same 155mm shell.

Some governments are shifting toward pooling development budgets while allowing national companies to produce the resulting weapons, such as the frigate co-designed by Italy’s Fincantieri and France’s Naval Group. As Fincantieri CEO Pierroberto Folgiero noted, the goal should be "defragmentation" to generate much-needed efficiency.

‘Mutual fund boom reflects a structural shift in savings’

MFs are evolving from niche investments into mainstream savings, set to rival bank deposits

Shipra Singh | Mumbai

Mutual funds are rapidly becoming the primary choice for Indian savers, evolving from what was once considered a sophisticated market product into a mainstream savings vehicle. At the Mint Money Festival held on February 14 in Mumbai, Madhu Nair, CEO of Union Mutual Fund, and Kailash Kulkarni, CEO of HSBC Mutual Fund, stated that the industry’s explosive growth represents a structural transformation in Indian savings behavior rather than mere short-term market enthusiasm.

Structural Shift

Nair highlighted the power of the mutual fund license to convert retail savings into market-linked returns within a transparent, diversified, and professionally managed framework. He noted that while the industry stood at just ₹1 lakh crore 25 years ago (compared to ₹12 lakh crore in bank deposits), it has now surged to ₹80 lakh crore, while bank deposits are approximately ₹250 lakh crore.

Nair’s estimates suggest that by 2035, both mutual fund assets and bank deposits could reach equilibrium at ₹400 lakh crore. He credited this rise to institutional transparency, competitive costs, favorable taxation, and diversification across market caps.

Asset Allocation Over "Best Fund"

Both experts emphasized that investors often focus on the wrong variables. While people spend significant energy trying to pick the “best fund,” this typically only alters outcomes by 5-10%. The real impact comes from asset allocation based on specific goals and risk tolerance.

Regarding the active versus passive debate, Nair noted that while beating the index is difficult in mature markets like the US or Japan, India still possesses information asymmetry and under-researched segments. He believes there is still room for alpha (outperforming the market) in India for the next 10 to 15 years.

Navigating Category Confusion

Industry complexity and the sheer number of categories can be intimidating for new investors. Many rely solely on past performance, but point-to-point returns only capture a specific moment and do not reflect consistency. Nair advised looking at rolling returns over 3-5 years to gauge how a fund performs across different market cycles. He also cautioned against relying on "star" fund managers, suggesting instead that investors look for institutions with a defined philosophy and process consistency.

Discipline vs. Timing

For salaried individuals, SIPs (Systematic Investment Plans) are recommended to enforce discipline and reduce the risk of entering the market at peaks. While a mix of SIP and lump sum can work for those with surplus funds, the core principle remains focusing on asset allocation and discipline rather than short-term performance tables.

A Maturing Investor Base

A significant sign of change is how investors now react to volatility. In previous cycles, market corrections often triggered panic redemptions; today, market falls frequently see higher transaction volumes as investors view a 1.5-2% dip as an opportunity.

Kulkarni warned that a common mistake is starting SIPs during bull markets but stopping them during downturns. He noted that corrections are actually the best time to accumulate more units at lower prices to improve long-term outcomes. Wealth in equities comes from staying invested across cycles rather than perfect timing.

The Retail Roadmap

To succeed, retail investors should:

• Align investments with clear goals and risk tolerance.
• Stay disciplined during volatility, particularly by maintaining SIPs.
• Evaluate funds based on process and consistency rather than one-year returns.
• Understand the distinctions in what they own, such as whether a fund is concentrated or diversified, or follows a buy-and-hold versus high-turnover strategy.

Resist social sector temptations: Learn how to laugh at yourself

Money, power and sainthood may beckon but those who do not fall for them have common traits

Anurag Behar

I met a few friends after a long while who also work in the social sector, and they remembered a series of columns I had written about donors and social-sector leaders with amusement. While my critiques of donor methods were met with widespread praise, the columns describing the three seductions faced by leaders—money, power, and sainthood—generated sharply divided reactions. My friends and I began discussing the common characteristics of individuals who manage to resist these seductions, agreeing on three primary traits.

Three Key Characteristics

The first characteristic is a clear idea of the role they play in society, distinguishing their chosen purpose as researchers or organizers from roles like politicians or policymakers. This clarity includes an understanding of what they are not, which is as vital as knowing what they are.

The second trait is simplicity, referring not just to a lifestyle but to a consistent habit of mind. This involves the ability to communicate complex matters in relatable terms and engaging with others in a direct, straightforward manner without "dumbing down" the content.

The third is that they don’t take themselves too seriously. While conscious that their work and purpose are serious, they are able to laugh at themselves, see their own limitations clearly, and acknowledge mistakes with a sense of lightness.

The Role of Circumstance

Underlying these traits is a deep awareness of the role of circumstances. These individuals appreciate that they are where they are because of the specific people, events, and moments in time they grew up in, rather than being the sole authors of their destiny. This understanding of the world as a somewhat random place helps keep hubris at bay.

A Method for Sanity

When asked if there is a specific formula for developing these sensibilities, I suggest that one should work closely with people who can laugh at you and pull your leg. Invaluable colleagues are those who take your role and competence seriously but can make fun of you without malice, reminding you that while your work may be special, you are not.

Laughter at oneself is an underrated tool for effectiveness and sanity in a sector filled with deep problems and serious work. Ultimately, the test is whether you can find genuine amusement in your own foibles and pretensions; if you cannot, it may be time to find people who will help you learn how.

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The writer is CEO of Azim Premji Foundation.

The puzzle of cash and UPI both touching record highs

SOUMYA KANTI GHOSH & TAPAS PARIDA

India’s currency in circulation (CiC) climbed to record-high levels in late 2025 and early 2026, reaching ₹40 trillion in January. So far in the 2025-26 fiscal year, CiC has increased by ₹2.76 trillion, which is 3.1 times the rise seen in the same period the previous year. Intriguingly, even as cash usage has jumped, India continues to log record levels of Unified Payments Interface (UPI) transactions. In January, the value of these stood at ₹28 trillion, representing 70% of CiC.

Simultaneously, the cash-to-GDP ratio has declined in recent years to 11.2% in 2025-26 from 14.4% in the pandemic year 2020-21. This shows that even as economic activity has been expanding at a rapid pace, currency is growing at a different rate than the broader economy.

Four Reasons for the Puzzle

The authors identify at least four reasons explaining why high CiC is co-existing with high UPI usage:

1. GST Signaling Impact: In July, the Karnataka Commercial Taxes Department issued around 18,000 GST notices to small traders and vendors for UPI transactions exceeding the ₹40 lakh registration threshold. This likely acted as a disincentive for UPI use, pushing small traders "into the shadows of cash". Statistical testing suggests these notices created a perverse signalling impact in other states like West Bengal and Kerala, where ATM-withdrawal data also showed an uptrend.
2. Rural Motivation and Sluggish Deposits: The motivation to hold cash has grown, particularly in rural areas, due to low interest rates on bank deposits paired with increased consumption. This shift is reflected in the sluggish growth of deposits for the banking system.
3. Recycling of Precious Metals: Rising prices for gold and silver may have encouraged households to recycle their holdings. Some households have used the surge in prices to encash metal holdings, leading to a rise in cash usage across the economy.
4. Withdrawal of ₹2,000 Notes: Following the withdrawal of the ₹2,000 currency note, the value share of ₹100 and ₹200 notes increased significantly. Because smaller notes display greater velocity in their circulation, this shift has boosted CiC. Notably, while UPI is used for 86% of person-to-merchant transactions under ₹500, the substitution of low-denomination notes with UPI is unlikely to happen beyond a certain point.

Two Key Learnings

From this increase in currency with the public, two main conclusions emerge:

• Don't Hinder Innovation: UPI is a global showpiece that has leapfrogged other digital banking transactions and significantly enhanced the ease of living; policymakers should not raise hurdles for it.
• Evidence of Formalization: Despite the rise in gold and silver imports, the decline in currency as a proportion of deposits indicates increased formalization and a steady move towards a digital economy.

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Soumya Kanti Ghosh is a member of the 16th Finance Commission and PMEAC, and group chief economic advisor at SBI. Tapas Parida is an economist and assistant general manager at SBI.