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Why Communist reforms nearly always failed

By Michael hill

Why communist reforms nearly always failed

Communism had reforming optimists too . Understanding why they failed can help todays reformers to avoid the same fate.

Time and again in the communist bloc, economic reformers from Moscow to Pyongyang planned to introduce rationality and markets into planning. They often thought they had won the argument, and not just among dissidents in labor camps but at the highest levels of their Politburos. Yet almost every time, their proposed reforms were either whittled down to nothing before implementation, or passed and then reversed after a few months or years. Why?

These reformers had faith that what their countries had achieved was far from the limit of what was possible. They aimed for abundance. Many actively believed in the system they were part of, and none sought to overthrow it. Instead, they aimed to write reports and build coalitions; to win the argument in seminars and side rooms, and then in the corridors of power. They often had the impression that they had done just that, only to watch as the system reverted to its original form. Perhaps what they mistook for agreement was actually a surface-level nod from those who had no intention, or no capacity, to carry reform through. Maybe the system absorbed their language but not their logic. Maybe the system was irredeemable and needed to be swept away. Or did the system know things the reformers didn’t?

Some of these questions are still open to interpretation. However, two clear conclusions emerge. People in communist countries, perhaps even more so than people in capitalist ones, really did not like inflation. Reforms that raised prices or lengthened queues had to be delivering very tangible benefits, very quickly, or else they risked instability. Second, successful reforms needed a broad coalition of winners, including the top leadership and a very large percentage of the population. Few reformers were able to deliver that.

Freedom isn’t free

‘We shouldn’t put on colored glasses, and provoke people or find fault with them for allegedly supporting capitalist methods’, Kim Jong Un, December 2011, on tolerating advocates for economic reform.

‘Those who dispute the Party line and its policies should not have their leaves trimmed, but be ripped out at their roots’, Kim Jong Un, September 2012, referring to those who wanted to take economic reform further than he did.

Even discussing economic reform can pose dangers for authoritarian leaders. For their underlings, working out where the line between acceptable comradely debate and counter-revolutionary sabotage lies can be a matter of life and death. When Kim Jong Un assumed power in 2011, his top priority was improving living standards. He understood that achieving this required giving at least a small circle of policymakers more space to think and speak freely. This quickly caused problems. Younger cadres began comparing North Korea unfavorably with China, well aware of how much richer China was and which economic policies had led to this gap. For the Pyongyang elite, and for Kim himself, this was threatening. Though Kim continued to pursue limited reforms for several years, he quickly made clear where the boundaries lay.

This dilemma was not unique to North Korea. In the late 1950s and 1960s, Soviet leaders also encouraged economists to explore new methods, such as linear programming and input-output analysis. To shield their relative freedom, they were sent to the new scientific city of Akademgorodok in Siberia, far from Moscow. Distance allowed some experimentation, while reassuring the authorities that dangerous ideas were isolated thousands of miles from power.

Across communist states, economic liberalization has always implied a reduction of political control. When the market, not the state, provides food and housing, loyalty to the regime weakens. Protests on the scale of those in Tiananmen Square in 1989 would have been unimaginable without China’s ‘Reform and Opening’. It is impossible to understand the collapse of the Soviet political system without understanding the prior collapse of the Soviet economy. Communist leaders who embark on a path of reform increase their chances of leading a country that is economically strong. They also increase their chance of being shot in the head.

The price is wrong

‘You have no idea what the wrong price can do’, Premier of the Soviet Union Alexei Kosygin, in Red Plenty

Marx gave little guidance on how Communists should wield power. He imagined the Communist government would be easy to manage. Revolution would occur in advanced countries already brimming with abundance, not in Russia, China, or North Korea, societies of illiterate peasants that had barely begun the hard graft of industrialization. Yet he was clear about one thing: the labor theory of value. Market prices, he wrote, were a mirage concealing the true value of goods, which was derived from the amount of labor put into them. Communist planners, in theory, were to build prices on this foundation.

In practice, no price in the communist world was set this way. Prices were compromises between politics, economics, and inertia. The result was distortions everywhere: goods overproduced or scarce, resources misallocated, needs unmet. Yet Marx’s teachings armed reform’s opponents with a ready argument: prices that could adjust rapidly were ideological surrender.

Price stability also became part of communist identity and legitimacy. In China, hyperinflation had doomed the Nationalists. In Russia, World War I, the civil war, and a brief experiment with a post-money economy had collapsed the ruble until the Bolsheviks restored price stability with a gold-backed currency. From 1947 to 1948, Stalin went further. He announced the end of rationing, a currency reform, and price cuts. Further price cuts were launched every spring until 1954. These were partly underpinned by genuine productivity gains but were also a much propagandized ideological commitment that equated price cuts with progress. Citizens came to see stable and even falling prices as a right.

Reformers understood the problems and floated alternatives. Some designed elaborate new price systems, supposedly superior to the command economy and the market; others suggested computer systems that could replace the price system; others called for simple adjustments where supply and demand were furthest apart; a few even dared propose full marketization. Almost all failed.

The danger was not theoretical. In 1988, China’s leadership planned a sweeping liberalization of consumer prices, leaving only rice and bread prices under state control. Their slower reforms up to that point had created a ‘dual-track system’, which generated resentment as insiders enriched themselves by arbitraging between state and market prices. The proposed reform triggered panic buying, empty shelves, spiraling inflation, and is sometimes cited as a long-term cause of the Tiananmen Protests. The government retreated, reaffirming price controls and cutting investment to restore stability. Four years passed before they touched the live wire of price reform again.

The Soviet Union had learned the same lesson earlier. In 1962, aware that meat and dairy prices no longer covered costs, planners pushed for price increases. The Politburo agreed. Wages were trimmed at the same time. Protests erupted. In Novocherkassk, when a factory director told hungry workers to ‘eat cabbage’, demonstrations nearly swelled into insurrection. Khrushchev sent in troops. Dozens were killed. Academic economists would continue drawing up models of price reform until the USSR’s collapse. Many were always confused about why their ideas were never acted upon. Many likely didn’t hear of the Novocherkassk Massacre until after their country was gone.

Stable prices, it turned out, were a cornerstone of communist legitimacy. To touch them was to endanger the whole system.

All of the right policies, but not necessarily in the right order

A factory manager is interviewing for a new accountant. He asks only one question: ‘What is two plus two?’ Candidate after candidate gives the wrong answer. Finally, the right man walks in. ‘What answer do you need?”’ asks the applicant. Old Soviet Joke

Alexei Kosygin was a technocrat determined to leave his mark. Tired of Khrushchev’s chaos and reckless schemes, he joined the bloodless coup that brought the old boss down and emerged as Premier of the Soviet Union. His message was clear: reforms were necessary if the economy was to regain initiative, efficiency, and profitability.

But after the trauma of Novocherkassk in 1962, Kosygin avoided touching prices. Instead, he latched onto the ideas of economist Evsei Liberman. Liberman promised a simple fix: stop judging enterprises by crude output targets and start rewarding them for profitability. Profits would be the yardstick, and managers would receive bonuses for hitting targets. By 1965, this ‘Liberman reform’ became official policy.

It didn’t work. With prices set administratively and customers guaranteed, profits reflected politics, not economics. Factory managers gamed the system. They invented ‘new’ products, almost identical to old ones, so that they could raise prices. They lobbied planners to let them charge more. Output shifted toward whatever goods produced the highest paper profits, unrelated to what people wanted. On paper, enterprises looked healthier than ever; in reality, productivity had not budged.

Worse, these distortions rippled through supply chains. An upstream plant chasing fake profits at fake prices might abandon the goods its downstream customers needed. Whole factories could be left idle. Some argue that bureaucratic ‘vested interests’ stopped these reforms from succeeding. However, the economist Kontorovich argues resistance from central ministries and Gosplan wasn’t just self interest. They recognized the reforms would destroy the whole system of central planning, with nothing to replace it. Their resistance prevented the reform from producing an outright economic crisis.

Kosygin correctly recognized a genuine problem: Soviet enterprise managers lacked both the incentives and the autonomy needed to improve performance. The logical place to begin was price reform, since only with more realistic prices could profitability reflect efficiency rather than distortions. But price reform was off the table.

That left enterprise reform as the available lever. Yet here Kosygin faced an impossible dilemma. If the reforms were too cautious, they would deliver no visible results and quickly lose momentum. If they were too bold, they risked undermining the fragile balance of the command economy. Kosygin chose to gamble on bold enterprise reform without first addressing prices. The result was that his program was both too disruptive to be absorbed smoothly and too incomplete to generate real improvements. It ended up achieving neither transformation nor stability, and quickly ran aground.

He was never purged, and his reforms were never officially rolled back. They were just undermined one ministerial directive at a time. His failure strengthened his colleague Brezhnev’s hand and discredited reform itself. It would be another 18 years before serious attempts were made again.

Ignorance isn’t always bliss

‘Analyses of “Gorbachev’s economists” never mention the words “charlatan” or “ignoramus”’, Vladimir Kontorovich.

‘You don’t know what you’re doing’, British sports chant.

Economic reformers thought they knew best, but often didn’t.

Reforming an economy requires a lot of knowledge. In 1985, to better understand the market reforms they were contemplating, Chinese policymakers invited dozens of Western economists to give lectures on a five-day river cruise. North Korean academics have quietly written explanations for trade officials on how banks function in capitalist societies, hinting these institutions might one day be useful at home. Soviet officials in the late 1980s traveled back and forth to Europe and America almost constantly. The learning curve is steep.

Worse still, it is not clear that reformers fully understood their own systems. Planned economies can be almost as complex as market ones, but with far fewer people trained or incentivized to grasp them. In capitalist economies, there are entire professions, from academics to traders, devoted to understanding how markets work. In communist economies, expertise was confined to a small circle of planners. Secrecy made things worse: it may be that no one fully understood how the whole system fit together. When Gorbachev, still a Politburo member in 1983, asked to see the state budget, he was simply told ‘no’.

This ignorance had consequences. When he took power two years later, Gorbachev accidentally destroyed a system he may not have even known existed and certainly didn’t understand: Beznal. In the Soviet Union, enterprises kept two accounts. Nal (paper cash) was used by households for consumer purchases and by enterprises for paying wages. Beznal (noncash rubles) was used for transactions between enterprises, buying supplies, selling goods, and settling debts. Crucially, enterprises had strict limits on the amount of Nal they could hold. Excess cash had to be deposited in banks, converted into Beznal, and thus quarantined from the consumer economy.

This firewall mattered. It kept excess money trapped in enterprise accounts, preventing it from competing with citizens’ wages for scarce consumer goods. Enterprises could not convert Beznal back into Nal without explicit authorization. In effect, the system stored inflation out of sight.

Gorbachev tore down the wall by accident. His new law on private cooperatives allowed them to convert freely between Beznal and Nal. Enterprises quickly realized they could make fake Beznal transactions with cooperatives, which would convert the funds into cash and hand most of it back, keeping a cut for themselves. Suddenly, vast amounts of hidden money entered the everyday economy.

Cash-rich state enterprises spent freely on wages, while goods remained scarce. In sectors without price controls, inflation ran rampant. In those with controls, shortages and queues grew longer. Later changes to banking rules made things even worse, as new banks failed to enforce the Nal and Beznal distinction at all.

It is still unclear whether Gorbachev and his closest advisers understood the system they had demolished. But their blunder shows how reformers, blinded by secrecy and complexity, could unleash forces they neither anticipated nor controlled.

Is communism really so bad?

‘Comprehensively build a moderately prosperous society’, Chinese Communist Party slogan.

The Soviet Union was not a poor country. While far behind Western Europe and North America, it was firmly middle-income, with living standards far above most of the world. And it paired those living standards with genuine excellence in nuclear and space technology, an enormous army that kept up with the United States until the very end of the Cold War, and an elite with world-class education. That prosperity created a problem: reform carried real risks. Elites had much to lose, and even ordinary citizens feared the disruption of hard-won stability. In today’s North Korea, though much poorer, a privileged elite in Pyongyang thrives under the system, and reform would not only strip them of status but could threaten their lives.

Communist reform was easier where planning was never consolidated. China in the 1970s and Vietnam in the 1980s both launched reforms when their systems were weak, not entrenched. Vietnam’s ‘Đổi Mới’ reforms began in 1986, after decades of war and a single failed nationwide five-year plan. Most Vietnamese lived on less than a dollar a day. In China, the Great Leap Forward and Cultural Revolution had devastated both planning and the party elite. By 1976, many leaders had survived exile and persecution, and they knew firsthand how poor rural China was. Stable planned communism had existed for at most 10 of the 27 years of the Communist era when Reform and Opening began.

Where planning worked well enough, as in the USSR, it created vested interests that blocked reform. Where it failed to take root, as in China and Vietnam, there was little to lose and much to gain.

Where is that abundance you promised?

Every communist reformer promised abundance. Yet again and again, their reforms faltered, not because they lacked ideas, but because they underestimated the scale of the task. Prices became untouchable symbols of legitimacy; the wrong sequence of reforms shattered fragile balances; leaders tinkered with systems they barely understood; elites and ordinary people who had something to lose quietly strangled change. The result was not abundance but frustration, fear, and eventually collapse.

For political movements today, the warning is not that we live under a command economy, but that winning the argument, as we are in many countries, is never enough. Systems push back. Interests entrench. Complexity hides consequences from those who think they know best. Good ideas, launched in the wrong order, can backfire.

That is why the stories of communist reform matter. If we want to reach the frontier of abundance, we must do more than draft clever reports or whisper in the ear of the powerful. We must understand the order of reform, the risks of backlash, and the realities of the systems we hope to change. We must deliver quick wins to build momentum and develop a coalition that gains at least the acquiescence of the most powerful and the masses. And perhaps most importantly, we need to make sure that prices don’t go up. 

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IT slump pushes 3-year SIP returns into red

The relentless sell-off in Indian IT stocks has begun to materially impact systematic investment plan (SIP) outcomes of sector-focussed mutual funds. A bl.portfolio analysis of actively managed IT funds shows that, as of late February, 3-year SIP returns have slipped into the negative territory — the first such instance since the pandemic-led disruption of early 2020.

However, the current phase is not comparable with 2020. During the Covid pandemic, the entire market corrected sharply. This time, the Nifty 50 is only about 4.3 per cent below its all-time high, while the Nifty IT index is 33.5 per cent off its peak. In fact, three months before SIP returns turned negative in April 2020, average three-year returns were still in double digits, slipping only after the Covid-driven market crash.

The average 3-year SIP XIRR for IT funds now stands at -1.6 per cent compared with -7.1 per cent for the Nifty IT TRI, ACEMF data shows. In contrast, the broader Nifty 50 TRI has delivered a positive 9.1 per cent, underscoring the sharp divergence between sectoral and diversified exposures. A little over 4 years back, the 3-year SIP XIRR for IT funds was as high as 56.6 per cent.

Over the past year, 3-year rolling SIP returns have steadily compressed, reflecting earnings downgrades, slowing US discretionary technology spending, pricing pressures and the uncertainty around AI-led disruption.

Of the 13 active IT sector funds, five with over nine years of track record were considered for detailed comparison. On a 3-year SIP basis (as of February 27, 2026), Franklin India Technology Fund and SBI Technology Opportunities Fund delivered marginally positive returns of 1–2 per cent. Meanwhile, Aditya Birla SL Digital India, Tata Digital India, and ICICI Prudential Technology Fund posted negative returns ranging from 1.4 to 5.2 per cent.

CHANGE IN EXPOSURE

A comparison of IT allocations between January 2025 and January 2026 across 373 actively managed equity-oriented schemes shows four funds — including Samco Flexi Cap, Motilal Oswal ELSS, Motilal Oswal Large and Midcap, and Samco Dynamic Asset Allocation Fund — fully exiting IT exposure.

As many as 18 schemes reduced exposure by over six percentage points, including Helios Flexi Cap, Helios Large & Mid Cap, and Groww Multicap Fund, indicating proactive risk management amid expectations of demand slowdown and valuation compression. Conversely, several funds maintained elevated exposure. Motilal Oswal Midcap, Motilal Oswal Flexi Cap, and Quantum Value held IT allocations of 17-19.5 per cent as of January 2026. Funds such as ICICI Pru Value, Motilal Oswal Balanced Advantage, Mahindra Manulife ELSS, and ICICI Pru Focused Equity increased exposure over the past year — a positioning that may weigh on near-term performance amid the sector’s correction.

BIG CHANGES

Within the 39 IT stocks analysed, fund managers displayed selective conviction. Holdings in Mastek rose 250 per cent, while exposure to Newgen Software and CE Info Systems increased 60-70 per cent.

In contrast, aggressive cuts were visible in high-beta names such as Nazara Technologies (Active funds' holdings down by 82 per cent), Tata Technologies (down by 74 per cent), Zaggle (down by 61 per cent) and Tata Elxsi (down by 60 per cent).

GAP WIDENS. The broader Nifty 50 TRI returned 9.1%, highlighting the sharp divergence between sector-focussed and diversified funds.

US, Israel launch major attack on Iran; Tehran hits back at US bases in region

Press Trust of India | Dubai

The US and Israel launched a major attack on Iran on Saturday, and President Donald Trump called on the Iranian public to “seize control of your destiny” by rising up against the Islamic leadership that has ruled the nation since 1979. Iran retaliated by firing missiles and drones towards Israel and the US military bases in the region.

Some of the first strikes on Iran appeared to hit areas around the offices of Supreme Leader Ayatollah Ali Khamenei. Smoke could be seen rising from the capital as part of strikes that Iranian media said occurred nationwide.

KHAMENEI ‘ALIVE’

It was not immediately clear whether the 86-year-old leader was in his offices when the attack occurred. Iranian Foreign Minister Abbas Araghchi told NBC News that Khamenei and President Masoud Pezeshkian are alive “as far as I know”.

“When we are finished, take over your government. It will be yours to take. This will be probably your only chance for generations,” Trump said in a video announcing “major combat operations”. “For many years, you have asked for America’s help, but you never got it”. Israeli Prime Minister Benjamin Netanyahu echoed that, saying, “Our joint operation will create the conditions for the brave Iranian people to take their fate into their own hands”.

The strikes during the holy fasting month of Ramadan opened a stunning new chapter in the US intervention in Iran and marked the second time in eight months that the Trump administration has used military force against the Islamic Republic.

DEMS RUE ACTION

Democrats decried that Trump had taken action without Congressional authorisation. Hakeem Jeffries, the top House Democrat, said that though Iran is a “bad actor,” the President must nonetheless “seek authorisation for the preemptive use of military force that constitutes an act of war”.

Tensions have soared in recent weeks as American warships moved into the region. Trump said he wanted a deal to constrain Tehran’s nuclear programme at a time when Iran is struggling with growing dissent following nationwide protests. The immediate trigger for Saturday’s strikes appears to be the unsuccessful latest round of nuclear talks.

Iran responded to the latest strikes as it had been threatening to do for months, including by launching missiles and drones targeting Israel as well as strikes targeting US military installations in Bahrain, Kuwait and Qatar. “The time has come to defend the homeland and confront the enemy’s military assault,” Iran’s Foreign Ministry said on X.

FLIGHTS CANCELLED

In an indication of the scope of the conflict, flights across the Middle East were disrupted and air defence fire thudded over Dubai, the commercial capital of the United Arab Emirates. Shrapnel from an Iranian missile attack on the capital of the UAE killed one person, state media said.

Trump had threatened military action, but held off, following Iran’s recent crackdown on protests spurred by economic grievances and evolved into a nationwide, anti-government push against the ruling clerics. The Human Rights Activists News Agency says it confirmed more than 7,000 deaths in the crackdown and that it is investigating thousands more; the government has acknowledged more than 3,000 killed.

Iran had hoped to avert a war, but maintains it has the right to enrich uranium and does not want to discuss other issues. The strikes could rattle global markets, particularly if Iran makes the Strait of Hormuz unsafe for commercial traffic. A third of total worldwide oil exports transported by sea passed through the strait in 2025.

Micron opens world’s largest semicon clean room at Sanand; ships first DRAM module to Dell

Avinash Nair | Ahmedabad

India marked a historic moment in its semiconductor journey on Saturday, as Micron Technology began operations at its Sanand ATMP facility in Gujarat and shipped out its first DRAM module to Dell Technologies from a 500,000 sq ft raised-floor clean room, the largest of its kind in the world.

“This is India’s first advanced memory ATMP site. It houses a 500,000 sq ft clean room — the largest single raised-floor clean room for semiconductor assembly anywhere in the world,” said Manish Bhatia, Executive Vice-President. The facility was engineered specifically for Sanand’s soil and climate conditions to prevent moisture-related risks.

The clean room is Class 1000 — meaning no more than 1,000 particles per cubic meter. The facility turns over the air twice per minute, or 120 times per hour. “ICs and the gold bonding wires we handle are thinner than fractions of a human hair. Even a single particle can impact yield or reliability,” Bhatia said.

$2.7-B MEMORY BET

The facility will assemble the non-volatile storage used in SSDs and computing devices. On Saturday, Prime Minister Narendra Modi inaugurated the plant, which represents India’s first advanced memory ATMP facility. The total planned investment across Phase-1 and 2 is $2.7 billion.

“Today, we are making our first revenue shipment — a finished DRAM module for personal computing — to Dell. We will also supply global customers, including Asus and Qualcomm, among others,” Bhatia said. He added that nearly half of the plant’s 1,300-strong workforce are fresh engineering graduates from Gujarat and neighbouring States.

Prime Minister Modi described the facility as a symbol of India–US cooperation in AI and chip technology, predicting it will catalyse a high-tech industrial ecosystem in the region similar to Sanand's transformation into an automotive hub. US Ambassador Sergio Gor added that this represents "India’s entry into the global semiconductor supply chain as a manufacturing nation".

Strait of Hormuz disruption can send crude soaring; impact 2.6 mb/d of India’s imports

Rishi Ranjan Kala | New Delhi

The escalating conflict between Iran and the US, which is now spreading across West Asia, is fuelling fears of a blockade of the world’s most critical energy choke point — the Strait of Hormuz. Such a disruption threatens around 2.6 million barrels per day (mb/d) of India’s crude oil imports.

ICRA points out that roughly 50 per cent of India’s crude oil and 54 per cent of liquefied natural gas (LNG) imports were routed through the Strait of Hormuz in FY25.

IMMEDIATE HIT

The situation poses an immediate risk to India and global oil markets, as the 2.6 mb/d of crude transit primarily comes from Iraq, Saudi Arabia, the UAE, and Kuwait. Industry experts noted that for India, any blockade would translate into higher import costs, freight and insurance spikes, potential short-term supply tightness, and pressure on producers (including Iran) regarding uninterrupted export revenues.

RISING CRUDE PRICES

Prashant Vasisht, Senior VP and Co-Group Head, Corporate Ratings at ICRA, warned that while Indian refiners could source crude from alternative locations such as the US, Africa, and South America, the resulting elevated energy prices could lead to a soaring import bill. Additionally, high crude prices would moderate the marketing margins and profitability of domestic oil marketing companies.

Experts like Ritolia suggested that diversification options for India include increasing sourcing from Russia to mitigate the impact of the disruption.

Getting started: All about investing for resident Indians and NRIs via Gift City IFSC

By Venkatasubramanian K | bl. research bureau

Think of Singapore, Dubai or even Morocco and their image as world-class financial hubs is matched by the sheer number of global majors making their presence felt in these cities and their special economic zones. In addition, these cities and economic zones also happen to be tax havens or low-tax regions making them all the more attractive for global investors and financial institutions to set up and run operations, given the ease of laws applicable.

To replicate at least a part of this success in a more light-touch regulations and moderate tax environment, the Indian government conceived the Gujarat International Finance Tec-City (Gift City) in 2015. Located between Ahmedabad and Gandhinagar, Gift City has two broad business regions – a domestic tariff area for business related to India operations and a multi-service special economic zone (SEZ). This multi-service SEZ spans two main entities – a notified international financial services centre (IFSC) and IT & ITES, support services export.

The IFSC is a hub of fintechs, asset management companies (AIF, PMS), banks, fund houses, stock exchanges, depository participants, and settlement firms allowing for a wide swathe of inbound and outbound investments. As of late 2025, Gift City had almost $30 billion in assets and commitments from 65 different jurisdictions and $100 billion in banking assets. It is envisaged as a jurisdiction that provides financial services to non-residents and residents in any currency other than the Indian rupee. All entities in the IFSC are regulated by a unified regulator, the International Financial Services Centres Authority (IFSCA), which combines the powers of the RBI, SEBI, PFRDA, and IRDAI.

OPTIONS OPEN FOR RESIDENT INDIANS

For resident Indians seeking overseas equity exposure via Indian mutual fund houses investing in global feeder schemes (the US, Europe, etc.), there is a key problem of positioning. Since investments in feeder fund of funds are restricted to $7 billion at an industry level, most of these schemes remain shut for fresh subscriptions or SIPs. This limit set by the RBI in 2008 has not been revised since then.

The choice that residential investors have is to use the LRS (liberalised remittance scheme) of the RBI for outbound/overseas investments. Resident Indians are allowed to remit up to $250,000 in a financial year per person for buying shares, properties, etc., abroad. For such investors, Gift City offers a wide array of choices from stocks, ETFs, domestic fund houses that invest in US stocks, and PMS (portfolio management services) with international investments.

SETTING UP TO INVEST

Before starting, you must first complete the KYC (know your customer) process, open a demat account, and start a new bank account. As a resident Indian, you will need your PAN, Aadhaar, passport, proof of address, and bank statement as common documentation.

The process is currently a mix of physical and digital; you have to send a scanned copy of various forms and self-attested proofs via e-mail. Your onboarding is usually done within 48 hours, though you may need to send physical copies if video KYC is not done. All main public and private sector banks (like SBI, HDFC, ICICI, etc.) and larger brokers (like Zerodha, Angel One, INDmoney, etc.) have a presence in Gift City via subsidiaries. Once accounts are established, you can transfer rupees from your Indian account to the Gift City account, where it gets converted to US dollars for transacting.

BUYING OVERSEAS STOCKS

India’s leading exchanges BSE and NSE have subsidiaries in Gift City: India INX (BSE) and NSE IX (NSE). These exchanges already have back-end tie-ups, so you do not need additional foreign brokerage accounts.

• India INX offers global equities and ETFs from 135 exchanges worldwide, along with derivatives and international bonds.
• NSE IX recently expanded its offerings with a platform giving access to 30 global markets.
• Both offer unsponsored depository receipts that mimic underlying shares, including fractional US shares, which allow for part ownership of high-priced stocks for a smaller price. A few hundred to a few thousand dollars are typically enough to buy stocks or ETFs.

FUNDS, PMS, AIF INVESTING OVERSEAS

Several Indian mutual fund houses like DSP, PPFAS, and Tata have rolled out schemes in Gift City investing in indices like the Nasdaq 100 and S&P 500. Minimum investments for these funds range from $500 (Tata) to $5,000 (DSP, PPFAS).

In the case of PMS and AIFs, the minimum investment is generally $75,000, though some can be higher. For instance:

• Marcellus Global Compounders Portfolio (PMS) asks for $150,000 for non-accredited investors and $25,000 for accredited investors.
• Mirae Asset Global Allocation Fund (Category III AIF) demands $151,000 for non-accredited and $10,000 for accredited investors. "Accredited investors" are defined by SEBI as those with high net worth (at least ₹7.5 crore with ₹3.75 crore in financial assets).

TAXES TO CONSIDER

Resident Indian investors face various levies:

1. TCS: Remittances over ₹10 lakh in a year for buying overseas stocks attract a 20 per cent Tax Collection at Source (TCS), which can be claimed as credit during IT returns filing.
2. LTCG: Gains on US stocks, ETFs, or depository receipts held for more than two years are taxed at 12.5 per cent (total 14.95 per cent with cess/surcharge).
3. STCG: Gains on holdings of less than two years are taxed at your marginal slab rate.
4. Dividends: US authorities apply a 30 per cent withholding tax, and Indian depository entities may deduct an additional 10 per cent service charge. Dividends are then taxed at your marginal slab rate.
5. Mutual Funds/AIFs: In these cases, the funds pay the taxes themselves. For gains beyond two years, the rate is 12.5 per cent (14.95 per cent total); short-term gains are taxed at 42.74 per cent, and dividends at 35.88 per cent. The declared NAV is net of these taxes.

DISCLOSURES AND ADVANTAGES

All Gift City income and gains must be reported in your income tax returns under Schedule FA (foreign assets). Non-disclosure can invite penalties of up to ₹10 lakh.

The Gift City advantage lies in its one-stop ecosystem of banks, brokers, and funds. Crucially, there is no securities transaction tax (STT), no commodities transaction tax (CTT), no GST on brokerages, and no stamp duty on trades. Since transactions happen in foreign currency, investors also worry less about rupee depreciation.

SWEET DEALS FOR NON-RESIDENT INDIANS

The advantages of Gift City are more tilted towards NRIs. NRIs, PIOs, and foreign nationals can invest in India and elsewhere via the hub.

• Currency: Unlike NRE accounts (denominated in INR), Gift City accounts are in US dollars or other overseas currencies, allowing NRIs to invest straightaway without currency conversion.
• Access: NRIs have access to outbound products as well as 22-hour trading on exchanges for India-specific indices (Nifty 50, Sensex) and over 200 single-stock futures.
• Concessional Taxation: Short- or long-term capital gains on stocks or derivatives are taxed at a concessional rate of 9 per cent. Dividends are taxed at a lower rate of 10 per cent. Income from Gift City funds does not suffer TDS for NRIs and OCIs.

For resident Indians, the goal of Gift City investing should be diversification and goal-based planning, such as funding a child's overseas education or buying property abroad. Ideally, it is most suited for HNIs and UHNIs.

The HYPE and SUBSTANCE of a ‘blog post’ that shook software stocks

By Nishanth Gopalakrishnan | bl. research bureau

Citrini who? Why are markets reacting to a ‘blog post’? These were some of the questions floating around when news emerged last Monday that an article published by Citrini Research added fuel to fears of how AI will devour the value of software stocks. An over 7,000-word essay titled ‘The 2028 Global Intelligence Crisis’ and defined as ‘A Thought Exercise in Financial History, from the Future’ is set in an apocalyptic June 2028 and seeks to warn of an unpleasant scenario that could play out if AI is allowed to grow unhinged.

As software stocks in India and globally got rattled, questions emerged on whether there was an attempt at market manipulation, though these remain unsubstantiated. However, the report was deemed important enough for responses from the top echelons of global finance. Federal Reserve Governor Christopher Waller disagreed with the extreme job-loss scenario, while Citadel Securities published a counter. Deutsche Bank, using its own in-house AI, termed it a "work of persuasive, emotional rhetoric disguised as a financial memo".

Despite the criticism, the fact that software stocks continued to slide makes the report important to consider. Here are the five key themes from the note:

1. END OF WHITE-COLLAR JOBS

Citrini bases its arguments on the fall of the white-collar job market, contemplating a scenario where AI operates independently without human oversight. It suggests that a single GPU cluster in North Dakota generating the output of 10,000 workers is an "economic pandemic" rather than a panacea.

This disruption begins with agentic coding tools in late 2025, impacting SaaS companies like Salesforce. By 2028, Fortune 500 clients may develop in-house software powered by AI, gutting the pricing power of SaaS firms. Furthermore, as clients cut white-collar labour, the number of per-employee software licences (like Slack) will plummet. This creates a "feedback loop" with no natural brakes: AI replaces workers, companies reinvest savings into better AI, leading to more layoffs. This spreads to legal, accounting, and auditing sectors, eventually causing discretionary consumption to lose its status as the top contributor to US GDP.

2. DEATH OF INTERMEDIATION

The report discusses businesses that solve consumer "friction" through intermediation, such as job portals, real estate marketplaces, or online travel agents. Citrini predicts that AI agents will soon scour the internet to bring tailored deals across all services, disrupting apps people are currently habituated to. Metrics like "average lifetime value" will no longer make sense. Additionally, AI agents may prefer stablecoins (like USDC) for payments because they cost virtually nothing, potentially ending the dominance of Visa and Mastercard.

3. PRIVATE CREDIT CRISIS

Failing SaaS companies could trigger a domino effect in the $2.5-trillion private credit market. Many leveraged buyouts (LBOs) were done at exorbitant valuations assuming perpetual mid-teen growth. By 2027, life insurers could become casualties if private credit firms default, especially since many alternative asset managers have used policyholders’ premiums to fund these private credit deals.

4. MORTGAGE CRISIS

If white-collar workers lose their earning power, the $13-trillion US mortgage market faces a crash as property prices collapse due to lack of demand. Citrini notes this crisis would differ from 2008: back then, loans were "bad on day one" due to poor underwriting. In 2028, the most prime of borrowers—the "bedrock of credit quality"—would be the ones defaulting. Delinquencies might take time to show as borrowers live off savings and credit cards first, but the pattern would be discernible through rising credit card debt.

5. ROLE OF THE STATE

Governments will face a shrinking revenue base as income and consumption taxes dwindle. Labour’s share of GDP could crash to 46 per cent (from 56 per cent in 2024), while jobless claims spike. The State may be forced into uncharted waters, such as taxing AI inference compute or taking stakes in AI companies to fund transfers to displaced workers.

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Our take on the report and its aftermath

Citrini’s note is not perfect and should not be treated as a definitive forecast, but it successfully alerted the market to the exponential strides of AI. For instance, the ongoing rout in Indian software stocks might have been less damaging to portfolios if investors were more open to the view that AI could be detrimental to the IT services business model.

Flaws in the report:

• It ignores a scenario where empowered workers co-exist with AI, becoming 10x or 20x more productive.
• It doesn't account for massive pushback from governments and stakeholders.
• It assumes stablecoins will become legal tender despite central bank concerns.

An interesting counter from Citadel Securities notes that if the marginal cost of compute rises above the marginal cost of human labour, substitution will not occur, creating a natural economic boundary.

Ultimately, while the reality of 2028 may differ, the report highlights that things are changing fast—evidenced by fintech company Block recently laying off 40 per cent of its workforce due to AI. Citrini’s purpose was to grab attention and offer an alternative perspective, and on that count, it deserves a 10 on 10.

How mutual funds played asset classes

By Dhuraivel Gunasekaran | bl. research bureau

ASSETS-WISE. We analyse allocation preferences between January 2025 and January 2026.

The Indian mutual fund industry’s assets under management (AUM) grew 20 per cent year-on-year to ₹80.8 lakh crore as of January 31, 2026, from ₹67.3 lakh crore a year earlier. The expansion was powered largely by robust net inflows of ₹9.4 lakh crore across categories. Equity schemes led with ₹3.7 lakh crore of net inflows, followed by debt funds at ₹1.9 lakh crore and hybrid funds at ₹1.7 lakh crore. Against this backdrop, portfolio holdings across asset classes witnessed meaningful shifts. Our analysis compares month-end disclosures between January 2025 and January 2026 to assess how allocation preferences evolved.

For the one year ended February 25, 2026, benchmark returns remained divergent: Nifty 100 TRI gained 15 per cent, Nifty Midcap 150 TRI rose 20 per cent, while Nifty Smallcap 250 TRI and Nifty Microcap 250 TRI returned 12 per cent and 6 per cent, respectively.

LARGE-CAP STOCKS

Large-cap holdings of mutual funds rose 22 per cent to ₹32.7 lakh crore in the year ended January 2026, the strongest growth among market-cap segments. Amid volatility and valuation concerns in broader markets, fund managers gravitated towards large-caps, offering earnings visibility and relative valuation comfort.

Notably, large-caps were the only market-cap category to increase their share in overall MF equity exposure, from 40.2 per cent to 40.5 per cent. HDFC Bank, ICICI Bank and Reliance Industries remained the top allocations at ₹3.3 lakh crore, ₹2.6 lakh crore and ₹1.8 lakh crore, respectively. In contrast, IRFC, Mazagon Dock Shipbuilders and Lodha Developers saw significant reductions in exposure.

MID-CAP STOCKS

Mid-cap allocations grew per cent to ₹10.1 lakh crore (approximate value based on context), broadly mirroring the 20 per cent return delivered by the Nifty Midcap 150 TRI. Allocation growth remained measured rather than aggressive, suggesting disciplined positioning despite strong index performance.

Funds increased exposure in the past year to improving mid-sized industrial, financial and capital goods names including Indian Bank, Nippon Life India AMC, GE Vernova T&D India, SAIL, APL Apollo Tubes, NALCO and Laurus Labs. Top mid-cap holdings include Max Healthcare, Tube Investments and Indian Hotels.

SMALL- & MICRO-CAPS

Small-cap holdings rose 20 per cent to ₹5.37 lakh crore, despite the Nifty Smallcap 250 TRI delivering a relatively moderate 11.7 per cent return. SIP inflows continued to support allocations. In contrast, micro-cap holdings saw a sharp decline of 18 per cent to ₹1.4 lakh crore, while the Nifty Microcap 250 TRI returned just 6 per cent. Stocks ranked beyond the top 500 by AMFI are considered as micro-caps.

Compared with large- and mid-caps, the small- and micro-cap segments saw relatively slower growth, reflecting valuation fatigue, liquidity tightening and rising risk aversion. Among small-caps, Cholamandalam Financial Holdings, Radico Khaitan and KPR Mill saw fresh scheme additions. In micro-caps, Equitas Small Finance Bank, Metropolis Healthcare and Ujjivan Small Finance Bank feature prominently in portfolios.

OVERSEAS EQUITIES

Domestic mutual funds’ overseas holdings expanded 26 per cent to ₹1.03 lakh crore from ₹81,925 crore a year ago, outpacing most domestic equity segments. The rise, however, largely reflects mark-to-market gains rather than incremental capital deployment, given the industry-wide $7 billion overseas investment cap.

For the year ended February 25, 2026, global markets delivered strong returns — S&P 500 rose 16 per cent (USD), Shanghai Composite gained 26 per cent (CNY), and Nikkei 225 surged 54 per cent (JPY). Importantly, the RBI cap applies to capital deployed and not to market value, allowing AUM to appreciate without breaching limits.

DEBT

Long-term debt allocations increased a modest 5 per cent to ₹10.8 lakh crore, while money market instruments and short-term debt grew 11 per cent to ₹10.1 lakh crore. The divergence reflects a duration recalibration. Early 2025 positioning was tilted towards longer duration to capture anticipated rate cuts. As easing expectations moderated and bond yields remained range-bound, managers shifted towards shorter-duration papers to manage interest rate risk.

GOLD AND SILVER

Precious metals emerged as standout performers. Gold holdings surged 257 per cent to ₹1.9 lakh crore alongside an 81 per cent rise in the MCX Gold Index. Silver allocations soared 744 per cent to ₹1.2 lakh crore, supported by a 172 per cent rally in the MCX Silver Index. Both price appreciation and fresh ETF launches drove growth, particularly in silver from a low base.

Gold retained its status as a strategic hedge amid global uncertainty and central bank buying, while silver gained traction as a tactical play benefiting from both precious and industrial demand themes.

REITS AND INVITS

MF exposure to REITs climbed 46 per cent to ₹21,218 crore, aided by both mark-to-market gains and incremental allocations. Embassy Office Parks REIT, Brookfield India Real Estate Trust and Mindspace Business Parks REIT delivered 21–33 per cent returns over the past year. SEBI’s decision to classify REITs as equity for mutual fund scheme categorisation expands their eligibility within equity schemes, potentially improving liquidity and institutional participation.

In contrast, InvIT holdings remained flat at ₹5,803 crore. Although select trusts such as Cube Highways Trust, IndiGrid Infrastructure Trust and Nexus Select Trust generated healthy market returns, InvITs continue to be treated as hybrid assets, limiting broader equity scheme participation.

CASH

Cash levels in active equity funds declined in percentage terms from 5.7 per cent to 4.9 per cent, even though absolute cash rose marginally. Sustained SIP inflows of nearly ₹28,000 crore flowed into the markets, keeping deployment active.

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KEY TAKEAWAY: Large-caps were the only market-cap category to increase share in overall MF equity exposure, from 40.2% to 40.5%.

Real Returns: Resetting retirement targets and making them achievable

By Aarati Krishnan | Contributing Editor

Young Indians looking to make a start on retirement savings often get a rude shock when they learn the amount of money they need to save to retire. Financial planners and online calculators come up with eye-popping numbers when you seek estimates of a target corpus.

For instance, a 30-year-old looking to retire at 60 may find that she needs a ₹20-crore or ₹21-crore corpus to retire. To get to this sum, systematic investment plan (SIP) calculators show she will need to invest ₹58,038 a month in equity SIPs for the next 30 years. Such targets look so outlandish to some folks that they completely give up on thinking about retirement and put off investing indefinitely.

But not thinking about retirement, or not saving for it, are the worst personal finance decisions you can make. Therefore, we decided to look at how you can trim those retirement targets and make them more achievable.

BUILT ON ASSUMPTIONS

Before taking a dive into the numbers, it is important to understand that the retirement targets thrown up by financial planners or calculators are not cast in stone. They are guesstimates built on several assumptions.

Usually, to arrive at a retirement target, calculators use six variables: your starting age, your retirement age, your longevity, inflation rate, portfolio returns before retirement, and portfolio returns after retirement. In deciding the size of the corpus you need, some variables have more influence than others.

For instance, 30-year-old Sarala, with expenses of ₹1 lakh a month at today’s prices, wants to retire at 60. To estimate her target corpus, the calculator assumes a 12 per cent return on her investments until 60, a 6 per cent return from age 60 to 90, a 6 per cent inflation rate, and a longevity of 90 years. The target corpus it throws up is ₹20.28 crore. To get there with a fixed monthly SIP, she needs to put aside ₹58,038 monthly for the next 30 years.

CORPUS TWEAK

In reality, even small tweaks in these assumptions can substantially trim the required corpus.

• Inflation: If Sarala faces 5 per cent inflation instead of 6 per cent, her required corpus drops dramatically to ₹13.3 crore from ₹20.28 crore. As the Indian economy matures, it is possible that inflation rates will trend down.
• Post-retirement Risk: If Sarala earns 7 per cent on her post-retirement portfolio instead of 6 per cent, she can get by with ₹17.6 crore. By switching from a fully debt portfolio to one with about 20 per cent equities, she may be able to achieve this.
• Longevity: Trimming the longevity assumption from 90 to 85 sharply reduces the target to ₹16.9 crore.

However, it pays to be conservative in financial planning, so it makes sense to budget for higher inflation and longevity rather than underestimating them.

INVESTMENT SIZE

If Sarala is clever, she can leave the target corpus unchanged and play around with the size of SIPs.

• Starting Early: If she starts at 25 instead of 30, she can reach ₹27.1 crore by age 60 with a SIP of ₹42,209. Advancing a SIP start by five years can boost the final corpus by 86 per cent.
• Retirement Age: Postponing retirement by five years to 65 allows her to manage with SIPs of ₹35,287 a month.
• Better Returns: Managing 13 per cent instead of 12 per cent during her working life trims the required SIP amount by 21 per cent.

STEP UP YOUR SIP

Calculations often assume your SIP remains flat for 30 years. However, stepping up your SIPs as your income rises can help you reach tall targets.

• A ₹30,000-SIP started at 30 with a 12 per cent return will yield just ₹9.96 crore by 60 if kept flat.
• But if you increase that same SIP by 10 per cent every year, you reach a corpus of ₹23.95 crore in the same time.

In your 30s and 40s, income often expands faster than spending, sharply boosting your saving ability—provided you don’t upgrade your lifestyle faster than your income.

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TAKE NOTE

• Don't let tall retirement targets scare you.
• Start early in equities and remain on track.
• Step up your investments as your needs grow.

REAL RETURNS. Not thinking about retirement, or not saving for it, are the worst personal finance decisions you can make.

‘With Micron’s Sanand facility, India now part of global chip supply chain’

Our Bureau | Ahmedabad

Prime Minister Narendra Modi on Saturday said the launch of Micron Technology’s first phase of $2.75 billion ATMP (Assembly, Test, Marking and Packaging) facility in Gujarat strengthens India’s role in the global technology and semiconductor value chain, signalling a new era of strategic cooperation with the US.

“The beginning of commercial production at Micron’s ATMP plant will strengthen India’s role in the global technology value chain. Today, India is moving rapidly in becoming a part of a global semiconductor value chain,” Modi said while addressing a formal event held at Micron’s facility at Sanand, about 40 km from Ahmedabad.

The Prime Minister described the Micron facility as a symbol of India–US cooperation in AI and chip technology. He emphasised that the ATMP plant is part of a broader government vision to build a pan-India semiconductor ecosystem. Drawing a parallel with Sanand’s transformation into an automotive hub after the arrival of Tata Motors, Modi said the Micron plant is expected to catalyse a similar high-tech industrial ecosystem in the region.

INDIA ENTRY

US Ambassador to India Sergio Gor, at the inauguration, reinforced the geopolitical and economic significance of the facility. He said India’s emergence as a semiconductor manufacturing hub is “not just welcome, but essential”. “As other nations aggressively expand production of legacy chips and seek to dominate the sector, India offers a secure and reliable alternative. Today marks India’s entry into the global semiconductor supply chain as a manufacturing nation. This is just the beginning,” he added.

“This facility represents the future. It represents American technology leadership working hand-in-hand with India’s manufacturing excellence. It represents supply chain resilience built on trust between our two great democracies,” the diplomat added.

Sanjay Mehrotra, Chairman, President and CEO of Micron Technology, noted that the groundbreaking ceremony for the ATMP plant was held in September 2023. “We poured enough concrete to fill 100 Olympic-sized swimming pools; used steel enough for building 3.5 Eiffel Towers and the backbone trusses that make this clean room weigh 24,000 elephants,” Mehrotra said while speaking at the launch ceremony.

Brace for further fall

Gurumurthy K | bl. research bureau

US MARKET OUTLOOK. Geopolitical tensions can knock down US indices.

The Dow Jones Industrial Average, S&P 500 and NASDAQ Composite indices have been struggling over the last few weeks to see a rise. The indices moved up in the first half last week but failed to sustain. They fell in the second half, giving away all the gains.

The US confirming its attack on Iran can weigh on the sentiment. It can drag the benchmark indices lower on the back of high risk-aversion.

DOW JONES (48,977.92)

The index is struggling to rise above 50,000. The price action on the daily chart indicates a possible head and shoulder formation, which is a bearish pattern. A fall below 48,650 will confirm the same, which in turn can drag the Dow down to 48,200 or 47,900 in the coming weeks.

A sustained rise above 50,000 is needed to get some breather. Only then the upside will open to see 51,000 and higher levels, but such a rise looks unlikely at the moment.

S&P 500 (6,878.89)

A break below 6,700 is coming. Such a break can drag the S&P 500 index down to 6,630–6,600 going forward. To avoid the aforementioned fall, the index has to sustain above 6,800. If it does, then it can oscillate between 6,800 and 7,000 for some time.

NASDAQ COMPOSITE (22,668.21)

The index has been stuck between 22,250 and 23,320 over the last three weeks. There is no change in the broader view; the outlook remains negative. Strong resistance is in the 23,000–23,300 region, which is continuing to hold well. The NASDAQ Composite index can fall to 21,900–21,600.

The index has to breach 23,300 to get some breather and go up to 24,000. However, as mentioned last week, the index has to rise past 24,000 to strengthen the bullish trend.

DOLLAR INDEX

The dollar index moved between 97 and 98 all through last week, which leaves the near-term picture unclear. It will be critical to see how the greenback reacts to the US attack on Iran. When the Russia-Ukraine conflict began, the dollar index fell initially but later started to move up. If this repeats, the dollar index can fall to 96 or even 95 first in the coming weeks. Thereafter it can see a fresh rise back towards 97–98 or even 100 eventually. On the other hand, if the index sustains above 97 this week and goes above 98.20, then that could be bullish, potentially rising to 99.50–100 from here itself.

TREASURY YIELD

The US 10Yr Treasury Yield (3.95 per cent) has a very crucial support at 3.93 per cent. A break below will be quite bearish, potentially dragging the yield down to 3.6 per cent in the coming weeks. Such a fall in the yield will be negative for the dollar index as well; if the yield declines below 3.93 per cent, the dollar index can go to 96–95 initially and then rise back again.

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CRUCIAL SUPPORT. The US 10Yr Treasury Yield has a crucial support at 3.93 per cent which has to hold to avoid more fall.

The Evolution of Marriage and Wealth

 The following text is the full article "More cows, more wives" by Olympia Campbell, as reproduced from the provided sources:

More cows, more wives

It is a truth universally acknowledged, that a single man in possession of a good agricultural surplus, must be in want of a wife.

In the 1930s in the Upper Nile region of what is now South Sudan, anthropologist EE Evans-Pritchard met a Nuer woman sitting by a thatched hut with her children. In the distance, the father of her children tended the cattle; they looked like an ordinary family, but this man was not her husband. The Nuer woman was married to a ghost, and her children were officially the children of this ghost.

Among the Nuer, if a man died without leaving any heirs, his kinsmen would find him a wife so that his name would live on, fearing his restless ghost would otherwise haunt them. Evans-Pritchard observed that ghost marriages were nearly as common as those between the living, often necessitated by warfare, disease, or childhood mortality claiming young men. In these unions, a kinsman might marry in the deceased's name—"kindling the fire of the dead"—and while cattle were paid as bridewealth, any children born belonged legally to the ghost.

This arrangement often led to a cycle where ghost marriage begat ghost marriage, as the man marrying on behalf of the ghost gained a family in all but name, and the family's cattle were then used to secure marriages for younger brothers. This Nuer example is just one of many diverse marriage customs that were once invisible to Northwestern Europeans, who assumed their lifelong monogamous religious marriages and nuclear families were the natural order.

By the twentieth century, anthropologists began reporting foreign customs that challenged these notions. Margaret Mead’s 1928 book Coming of Age in Samoa depicted a society where young women deferred marriage through casual love-making. Bronislaw Malinowski’s 1929 The Sexual Life of Savages in North-Western Melanesia described trial marriages among Trobriand Islanders, where young lovers lived together in a bukumatula (bachelors’ house) to see if the relationship worked, resembling modern dating.

The variety of marriage customs

In 1967, George Murdock and Douglas R. White formalized this scholarship in the Ethnographic Atlas, later refining it into the Standard Cross-Cultural Sample of 186 societies. Of these, only 31 were monogamous, 153 were polygynous (one man, multiple wives), and 2 were polyandrous (one woman, multiple husbands). It became clear that most people throughout history have not lived like Europeans. Marriage can be sanctified by religion or state, or simply occur when two people live together; it can be chosen or coerced.

Compared to other animals, human marriage is aberrant; while birds pair bond, only nine percent of mammalian species do. For most animals, relationships only last for the duration of copulation.

Interfering relatives

Humans are unique in that third parties—parents, siblings, and extended family—routinely interfere in marital decisions to shape, delay, or prevent unions. This ranges from South Asian purdah (seclusion of women) to the segregation of men, such as the Enga of Papua New Guinea, where boys were sent to live in men’s houses and could only marry after proving themselves and undergoing purification rituals.

Marriage is rarely a private matter because it serves the basic purposes of managing resources and building alliances. Evolutionary anthropologists suggest people seek to maximize descendants, and the best strategy to do so changes with the environment, often creating conflict between the sexes and families.

Marriage for hunter gatherers

For roughly 95 percent of human history, we lived as hunter-gatherers. In groups like the BaYaka of the Congolese rainforest, marriages are fluid; an enamored couple might simply walk into the forest and return to build a hut together. A young man may perform "bride service" by living and hunting with his girlfriend's family for a year, but the relationship can dissolve just as easily as it began, even with small children involved.

This fluidity is common in egalitarian hunter-gatherer societies with high mobility and no material wealth. Studies show that fathers in these populations have a surprisingly small effect on child survival compared to grandmothers and siblings. Because there is no stored wealth or inheritance, divorce and remarriage are frequent, and women often have children with two or three men over their lifetime.

How farming promotes inequality

Farming, which arrived 12,000 years ago, transformed marriage by allowing wealth accumulation and decreasing mobility. In northern Kenya, a Turkana man named Imana could support four wives and 13 children with his herd of over a hundred cows, while his poorer neighbor was limited to one wife.

The arrival of wealth led to the logic of "more cows, more wives". This shift may have been shaped by female choice; in Darwinian terms, it can pay for a woman to be the second or third wife of a rich man rather than the first wife of a poor one. However, not all polygyny is freely chosen. Among the Dogon of Mali, higher child mortality in polygynous households suggests coercion, whereas in Northern Tanzania, children of polygynous fathers are often wealthier and better nourished.

When women become a limited resource, they become economically valuable to parents who demand bridewealth. For example, the Chagga of Tanzania required a "deposit" of beer, goats, milk, and meat, followed by a "cascade of further obligations" to the bride's entire extended family. Fathers would sometimes allocate a sister to each son so her bridewealth could finance his marriage.

In these systems, wealth flows to sons because they can use inherited wealth to acquire more wives and descendants. These societies often invent ways to limit women's freedom to ensure paternity. The Dogon use menstrual huts to signal fertility; genetic data shows nonpaternity is lower among those who use these huts.

There are exceptions, like the Himba of Namibia, who are pastoralists but relaxed about infidelity. In one sample, 49 percent of children were not biologically the husband's, yet the husband helped raise them and paid for their marriages. This is possible because the Himba have low bridewealth and matrilineal inheritance, meaning men invest in their sisters' sons, whose biological relatedness is guaranteed.

Polygyny was also widespread in other cultures, with Quranic law capping wives at four and Papua New Guinea elites using pigs, shells, or more recently, cars and money to secure multiple wives.

Monogamy and primogeniture

Predominantly monogamous systems, like those in Europe and parts of Asia, often evolved to manage resources rather than as a mating preference. In ancient Greece, Rome, and under Confucian law, monogamy was the legal rule, yet elite men often had mistresses or concubines. Monogamy may have risen when dividing wealth among many heirs (like splitting a farm into tiny, unproductive plots) reduced its total value.

This led to unigeniture—where only one son inherits—and a system where women traded faithfulness for the guarantee that their children were the legitimate heirs. While women’s sexuality was strictly controlled, men often fathered children out of wedlock, but institutional systems were built to exclude "bastard" children.

Following the French Revolution, the government imposed equal partition of assets, which led families to limit their number of children to avoid the over-division of wealth, explaining France's early declining fertility. Similar trends are seen in Sub-Saharan Africa among groups with shared inheritance.

The end of marriage systems

In the contemporary West, marriage systems have become fluid again. Some people are monogamous, while others follow patterns resembling hunter-gatherers through divorce and remarriage, or Samoan-style trial marriages. Traditional controls have weakened as schooling, mobile phones, and urban migration reduce family involvement.

Christian missionaries also inadvertently undermined indigenous regulation systems while trying to ban traditional cults. Furthermore, changes to wealth mean we no longer differentiate between "legitimate" and "illegitimate" offspring, and women's integration into the workforce means they no longer need to trade fidelity for economic security.

While divorce rates are lower among the wealthy—partly because raising children and buying homes now often requires two stable incomes—the fundamental nature of marriage remains a tool to build connections and secure wealth. If marriage has a nature, it is to be reshaped to fit the world around it. In a world where familiar constraints have disappeared, perhaps all that is keeping us together is love.

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Author: Olympia Campbell is a research fellow at the Toulouse School of Economics.

Trade Disruptions and U.S. Bank Return Vulnerability

 The market-based identification strategy discussed in the sources is a novel approach used to quantify the exposure of firms, industries, and ultimately the U.S. banking system to foreign trade disruptions. This methodology leverages the stock market's ability to act as an information aggregator, reflecting complex supply-chain linkages and cost structures that are otherwise difficult to observe through traditional data.

Core Mechanism of the Strategy

The strategy focuses on identifying trading days dominated by unexpected trade policy changes. By examining the resulting dispersion in stock returns during these specific episodes, researchers can infer which entities are most vulnerable to trade risks. This approach rests on the "revealing downturn" principle, which suggests that sharp market declines more clearly reveal a firm's exposure to systematic risk.

To ensure the measure is robust and captures structural trade vulnerabilities rather than temporary market noise, the sources validate the strategy across two distinct historical periods:

• The April 2025 Tariff Announcements: An episode where a massive 12% decline in the S&P 500 occurred following the announcement of broad tariffs ranging from 10% to 50%.
• The 2018 U.S.–China Trade War: Four specific trading days in late 2018 where trade tensions were the primary driver of market movements.

Identifying Vulnerable Firms and Industries

The market-based approach allows for a categorization of sectors based on their performance across these trade shocks:

• Vulnerable Industries: Sectors that performed below average in both the 2018 and 2025 episodes are classified as the most vulnerable. These include industries with direct reliance on global supply chains (e.g., electronics and computers) and those sensitive to broader recessionary spillovers (e.g., oil and gas extraction and air transportation).
• Firm Characteristics: The strategy reveals that firms experiencing the largest stock price declines are typically those with a greater dependence on foreign sales and weaker financial positions, such as higher leverage and lower interest coverage ratios.
• Resilient Industries: Sectors like precious metals and utilities often outperform during these episodes, as they serve as hedges during periods of macroeconomic uncertainty.

Impact on U.S. Banks' Returns

The sources extend this market-based firm/industry measure to the U.S. banking sector by utilizing supervisory loan data (Form Y-14Q). Because banks lend to both public and private firms, the strategy assumes that trade sensitivity is consistent across public and private firms within the same industry.

Key findings regarding U.S. banks include:

• Vulnerability Index: Researchers developed a bank-level index based on the ratio of a bank's commercial and industrial (C&I) loan commitments in trade-sensitive industries relative to its total assets.
• Transmission Channel: Even when banks have limited direct lending to the most affected firms, trade disruptions propagate through their broader loan portfolios.
• Predictive Power: This market-based index explained 18% of the cross-sectional variation in bank returns during the April 2025 tariff shock. Banks with higher scores on the vulnerability index experienced significantly larger stock price declines.

In summary, the market-based identification strategy provides a bridge between trade policy shocks and financial stability, highlighting that monitoring indirect exposure through loan portfolios is essential for assessing the resilience of the U.S. banking system.

Firm-level trade sensitivity is defined in the sources as a firm's differential exposure to foreign trade risk, which is revealed through cross-sectional variation in stock returns during unexpected trade policy shocks,. This sensitivity is not merely a reflection of direct trade involvement but encompasses a complex web of supply-chain linkages, cost structures, and dependence on foreign markets that financial markets aggregate into stock prices,.

Key Drivers of Firm-Level Trade Sensitivity

The sources identify several specific characteristics that determine a firm's sensitivity to trade disruptions:

• Reliance on Foreign Markets: Firms with a greater share of revenues from foreign sales exhibit significantly higher sensitivity,. However, the sources note that foreign sales alone are insufficient to identify all sensitive firms, as those relying on imported inputs for domestic sales are also vulnerable.
• Financial Fragility: A firm's financial health plays a critical role in its ability to withstand trade shocks. Firms with higher leverage and lower interest coverage ratios (ICR) are disproportionately affected,.
• Asset Pricing Characteristics:
  • Market Beta: More cyclical firms (those with higher market betas) suffer larger losses during trade-related downturns.
  • Book-to-Market Ratio: High book-to-market firms—often characterized by lower profitability and higher uncertainty—show more pronounced declines,.
  • Momentum: Firms that performed well in the prior year tended to show more resilience.

The "Revealing Downturn" Mechanism

The identification of this sensitivity relies on the "revealing downturn" principle, which suggests that stock prices react more strongly to aggregate economic news during market contractions. During episodes like the April 2025 tariff announcements (which saw a 12% decline in the S&P 500), the resulting dispersion in returns allowed researchers to distinguish between highly exposed and resilient firms,. This methodology was further validated by looking at similar "trade-dominant" trading days during the 2018 U.S.–China trade war,.

Context: Transmission to U.S. Banks

Firm-level sensitivity serves as the building block for understanding broader risks to the U.S. banking system:

• Loan Portfolio Exposure: Trade disruptions propagate to banks primarily through their commercial and industrial (C&I) loan portfolios,.
• Public vs. Private Firms: Because banks lend extensively to private companies, the researchers assume that trade sensitivity is broadly similar for both public and private firms within the same industry. This allows them to use the market-based firm sensitivity measure to categorize entire industries (e.g., electronics, computers, and oil and gas) as "vulnerable",.
• Impact on Bank Returns: The sources demonstrate that banks with a higher concentration of loans to these trade-sensitive industries experienced significantly lower stock returns during trade shocks,. A bank-level vulnerability index based on these firm-level sensitivities explains 18% of the cross-sectional variation in bank returns during the 2025 episode,.

In this context, firm-level trade sensitivity is a vital metric for financial stability, as it captures the indirect vulnerabilities that can lead to systemic pressure on the banking sector during periods of geopolitical tension,.

The industry vulnerability ranking is a categorization system used to identify which sectors are most susceptible to shocks from trade policy changes. It is constructed by analyzing the (demeaned) cumulative equity returns of the 49 Fama-French industries across two distinct trade-driven market episodes: the April 2025 tariff announcements and the 2018 U.S.–China trade war.

The Four-Quadrant Classification

By plotting industry performance during these two "trade wars," the sources classify sectors into four distinct quadrants based on their structural characteristics:

• Vulnerable (Lower-Left Quadrant): This group includes the 19 industries that performed below the cross-sectoral average in both 2018 and 2025. These are considered the most exposed to trade disruptions. Notable examples include:
  • Supply-Chain Dependent: Electronics, computer equipment, and machinery.
  • Recession-Sensitive: Oil and gas extraction, air transportation, and business services, which suffer from the broader economic slowdown triggered by trade tensions.
  • Consumer & Financial: Apparel, recreation, banking, and real estate.
• Resilient (Upper-Right Quadrant): These industries outperformed the average in both episodes and are considered the least vulnerable. This group includes precious metals and utilities, which often serve as hedges during macroeconomic uncertainty, as well as sectors like defense, healthcare, and food products.
• Has Weakened (Lower-Right) & Has Strengthened (Upper-Left): These quadrants capture industries whose sensitivity shifted between the two episodes, such as textiles (weakened) or aircraft and computer software (strengthened).

Transmission to the Banking Sector

The industry ranking serves as the primary tool for quantifying the indirect exposure of U.S. banks to trade disruptions. Because detailed supply-chain data is often unavailable, researchers assume that trade sensitivity is consistent for both public and private firms within the same industry.

• Bank Vulnerability Index: A bank’s exposure is calculated as the ratio of its commercial and industrial (C&I) loan commitments to these 19 "vulnerable" industries relative to its total assets.
• Impact on Bank Performance: The ranking proves to be a powerful predictor of financial stability. During the April 2025 tariff shock, this index explained 18% of the cross-sectional variation in bank stock returns. Banks with higher concentrations of loans to vulnerable industries—even if they lacked direct lending to the specific firms most affected—experienced significantly larger stock price declines.

In the larger context, this ranking demonstrates that trade disruptions do not just affect "tradable" sectors; they propagate through the banking system's loan portfolios, making industry-level monitoring essential for assessing systemic financial risk.

The sources conclude that disruptions to foreign trade pose a significant risk to the U.S. banking system, primarily through the transmission of trade-policy shocks to bank loan portfolios,. While large U.S. banks may have limited direct lending to the most trade-vulnerable individual firms, they maintain substantial indirect exposure through their lending to broader trade-sensitive industries,.

The Bank-Level Vulnerability Index

To quantify this impact, researchers developed a bank-level vulnerability index by combining their market-based industry rankings with granular, supervisory loan data from Form Y-14Q, Schedule H.1,.

• Definition: This index is calculated as the ratio of a bank’s total commercial and industrial (C&I) loan commitments in the 19 "vulnerable" industries relative to its total assets,.
• Key Assumption: The strategy assumes that trade sensitivity is consistent for both public and private firms within the same industry, allowing the measure to capture a bank's exposure to its entire corporate borrower base.

Empirical Impact on Bank Returns

The effectiveness of this index was validated during the April 2025 tariff announcements, which triggered a severe market contraction,.

• Negative Correlation: The sources identify a statistically significant negative correlation of -0.42 between a bank’s vulnerability index and its stock returns during the shock.
• Predictive Power: The vulnerability index alone explains 18% of the cross-sectional variation in bank returns during the 2025 episode,.
• Magnitude of Decline: Banks with higher concentrations of loans to sectors like electronics, machinery, and oil and gas extraction experienced significantly larger stock price declines,,.

Transmission Channels to the Banking Sector

The impact on the banking system is driven by two primary channels:

1. Supply-Chain Linkages: Trade policies directly affect the cost structures and valuations of firms within a bank's portfolio that are dependent on global supply chains,.
2. Broad Recessionary Forces: Trade disruptions can trigger wider economic contractions, reducing investment, output, and real income. This systemic pressure affects "recession-sensitive" industries (e.g., air transportation and business services), which in turn increases the risk profile of the banks lending to them,.

Implications for Financial Stability

The sources emphasize that there is substantial heterogeneity in how individual large U.S. banks are exposed to trade risk,. Because trade disruptions propagate through loan portfolios even without direct lending to the most affected firms, the researchers argue that monitoring these indirect exposures is critical for accurate financial stability assessments,.

The research findings demonstrate that disruptions to foreign trade have a significant and measurable impact on the U.S. banking system, primarily through the exposure of their commercial and industrial (C&I) loan portfolios. The central finding is that U.S. banks with a higher concentration of loans to trade-sensitive industries experienced significantly larger stock price declines following the major tariff announcements in April 2025.

Quantifying the Impact: The Vulnerability Index

The researchers developed a bank-level vulnerability index to quantify these effects, using granular supervisory loan data from Form Y-14Q to map banks to their corporate borrowers.

• Statistical Significance: The study found a statistically significant negative correlation of -0.42 between a bank’s vulnerability index and its stock returns during the 2025 trade shock.
• Explanatory Power: This index alone explains 18% of the cross-sectional variation in bank returns during the four-day market contraction following the tariff announcements.
• Heterogeneity: The findings highlight substantial variation in how different large U.S. banks are exposed to trade-sensitive sectors, meaning some institutions are far more at risk than others during trade-related market downturns.

Key Transmission Channels

The findings reveal that the impact on banks does not necessarily require direct lending to the specific firms most crippled by trade policy.

• Indirect Industry Exposure: While direct lending to the most vulnerable individual firms may be limited, banks are heavily exposed to the broader industries identified as trade-sensitive, such as electronics, machinery, and oil and gas extraction.
• Private Firm Exposure: A critical finding is that trade sensitivity extends beyond public firms; because banks lend extensively to private companies, the impact is transmitted through the entire industry's risk profile. The researchers assume that trade sensitivity is broadly similar for both public and private firms operating within the same industry.
• Financial Fragility Link: Banks are further impacted by the financial health of their borrowers; firms with higher leverage and lower interest coverage ratios were found to be the most susceptible to trade-related losses within their respective industries.

Broader Financial Stability Implications

The findings suggest that trade policy shocks act as a significant driver of bank performance and systemic risk.

• Information Aggregation: The market-based strategy confirms that stock prices effectively aggregate difficult-to-observe information about supply chains and foreign market dependence, making them a useful tool for assessing bank risk.
• Beyond "Tradable" Sectors: The impact on banks is not confined to firms that export or import directly; it includes sectors that suffer from the broad recessionary forces trade barriers can cause, such as air transportation and business services.
• Need for Monitoring: The authors conclude that monitoring these indirect exposures is vital for financial stability assessments, as they represent a substantial transmission channel for geopolitical tensions into the U.S. financial sector.

Newspaper Summary 280226

 

REIT moves

Easier bank finance with guardrails, way forward

The Reserve Bank of India (RBI) has done well to liberalise lending to Real Estate Investment Trusts (REITs). Now, banks can lend to REITs directly, instead of going through special purpose vehicles. With bank lending rates moving lower, REITs can access more funds at lower cost to scale their operations. Banks too can grow their loan books through this segment.

The five listed REITs hold assets worth ₹2.5 lakh crore and enjoy market capitalisation of about ₹1.12 lakh crore in India. Indian REITs industry has not achieved the scale seen in other countries. It forms a small part of the overall Indian real estate market. REITs can play an important intermediation role in channelising institutional and retail funds into the market. The stock market regulator has been making a series of changes in this segment to make it more attractive to investor demand and awareness. These include classifying REITs as equity and encouraging mutual funds and insurers to invest in them, allowing REITs to be included in equity indices and expanding the scope of strategic investors in these vehicles to include some more players.

But given the cyclicality in real estate prices, banks face higher credit risk. To this end, the RBI has proposed some guardrails to ensure that banks do not increase their stressed assets:

• The overall bank credit taken by a REIT and its SPVs is being capped at 49 per cent of its assets.
• REITs would also have to follow more traditional modes of funding such as the bond market.
• The RBI has disallowed bullet and balloon repayment structures, which can increase risk posed by cyclical swings. Under such arrangements, the initial instalments are small and the bulk of it is paid towards the end of the loan tenure.
• Restricting bank lending to publicly listed REITs is also a good move as these are subject to more scrutiny and are more transparent in their operations.
• Other stipulations include: the assets of the vehicle should not be in the form of a work-in-progress; it should be well established, with three years of operations and distributable cash flows in the two preceding financial years; second, the sponsors/directors should not be in financial distress or under regulatory action for any misconduct; third, banks cannot provide finance for acquiring new or refinance existing loans; and finally, loans should be fully secured through mortgage of the underlying assets.

The central bank can however review the rule that lending to REITs can be up to 49 per cent of the value of its assets. This figure appears too high given the size of the REIT segment in the economy. The RBI will also have to be extra vigilant in the initial years to monitor the end use of funds lent to REITs. The caution should be exercised past a history of defalcation in this sector by large developers. The Real Estate (Regulation and Development) Act, 2016 has worked to an extent in tightening processes. In sum, the sector should be liberalised, but with an element of circumspection given the intrinsic risks.

Why the concern over capital flows?

UNDER PRESSURE. Developed markets too becoming a draw for investors, the outlook on currency looks slightly uncertain

By Madan Sabnavis

The RBI’s new regulation on ECBs (external commercial borrowings) can be read along with the message given in the Economic Survey on the rupee being under pressure in the year. This is notwithstanding an otherwise remarkable performance of the economy.

The current account deficit is very much in control even though the exports sector faced challenging times. It is the capital account that has been transformed, putting pressure on the currency. The measures announced by the RBI on the amount and tenure of borrowings would enable companies to raise more money in this market and improve the supply of dollars.

Historically the capital account was dominated by net FDI which have become more fragile. While often it is argued that we need to be more open to FDI, the current list of sectors is quite comprehensive, and it does not look like that much more can really be done. FDI can flow into almost all sectors with limits being increased over time. The challenge is to have investors interested in the India story. It is the pull factor rather than push which matters here.

THE PULL FACTORS

There are two main issues here. The first is that globally there is a much smaller corpus of investible funds to be shared by all emerging markets. With quantitative easing of central banks giving way to tightening, there is less easy money available. The other factor is that the avenues for investment have widened over time. What was earlier ‘mainly emerging markets’ has now broadened to cover developed countries too which are working hard to push up their growth. The US, UK, Japan and the EU are also active destinations for FDI. It will always be a challenge to get a higher slice of this fund at this end.

Data on FDI show some interesting trends. The first is that gross FDI has been high in the last five years ending FY25, averaging over $70 billion per annum which is impressive. However, the repatriation of equity has been rising quite prodigiously from $27 billion in FY24 to $40 billion in FY25, which lowered the net inflows substantially. Clearly, companies are using these funds to pay dividends to their investors or are taking back the equity.

Second, the net FDI by Indian companies overseas has increased from $14.8 billion in FY21 to $27 billion in FY25, which is often interpreted as a part of the global diversification of Indian firms. This is what has brought down the net FDI to the $21-27 billion range, which is what affects the capital account and hence the currency. Interestingly, during the first eight months of the current year, net FDI was $27.7 billion.

THE FPI PICTURE

The picture on FPI is also interesting. Earlier, it was common to think that there could be $30-40 billion flowing in every year with the inclusion of Indian bonds in global indices providing a booster. However, this has not happened. The net flow for FPI which was high at $36 billion in FY24 fell to $6.1 billion in FY25 and in FY26 a negative $7.8 billion for the first eight months.

Now, equity flows have tended to be negative for two reasons. The first is that Indian stocks are seemingly overvalued. While this argument is debatable, the high P-E ratios in some sectors have buttressed this argument that the upside remains limited unless earnings grow at sharp rates, which is not happening. Growth in corporate profits (denoted by net profits) has been quite subdued post-Covid which probably does not justify high valuations in some sectors where the P-E ratio was in the range of 30-40 like FMCG, consumer durables, healthcare, and realty.

The other factor is that the developed countries, including the US, UK, Japan, France and Germany, are doing very well making other markets attractive. Hence portfolio reallocation has been faster towards these markets where the P-E ratios are relatively lower, at least for now, giving a higher better upside.

There is hence a lot of ambiguity when it comes to capital flows. Any firm direction of net inflows would be hard to conjecture. These are decisions taken by overseas players, and policy reforms within the country have only a limited bearing on these outcomes. FDI was assumed to increase exponentially and numbers of $100 billion on an annual basis were taken for granted.

Public sector investors have been taking back their profits which has affected the net inflows. Further, Indian companies are looking to diversify their businesses outside the country which has made FDI fragile. FPIs were always considered to be ‘hot money’ given their nature. While this has not quite affected the stock market significantly as domestic institutional investors like mutual funds and LIC have been putting money in the market, the currency market has been under pressure. All this makes the capital account uncertain, given their volatile nature.

Hence, it will be important to keep the current account balance under control and the big hope for us is the IT sector that has potential to counter the deficit on the trade account. The focus on domestic production will help to an extent to lower demand for imports. However, all the PLI schemes and fragmented landholdings limit the expansion as our exports make deeper inroads into other countries. This suggests that a stable path for the rupee cannot be taken as a given.

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The author is Chief Economist, Bank of Baroda. Views are personal.

AI and the data centre backlash

THE WALL STREET JOURNAL

President Trump sought to mollify a growing public backlash against AI data centres Tuesday by proposing to require that companies build their own power plants. It’s a good idea that could help accelerate innovation and ease electric rates, though it will require AI companies to sacrifice their green posturing.

“Many people are concerned about the increased power demand from AI data centres could unfairly drive up their electric utility bills,” Mr Trump said. “We’re telling the tech companies that if they want the power, they have to provide for their own power needs”. This may soon become a political and business necessity.

(New York - February 24)

Improving GDP accuracy

Adoption of new GVA series to use 600 items to represent the economy is a welcome step. The full adoption of the double deflation method will improve the measurement of real growth. This method adjusts the growth of goods and services materials separately across sectors. This way the effect of inflation is measured more accurately.

Earlier, a single price method was used. It mainly adjusted only output prices. It could not accurately account for it. Greater use of survey and GST data will better capture the informal economy, including small businesses. More accurate GDP data will support better policy and investment decisions.

S Balasubramanian Villupuram, TN

Based on the sources, the following is the reproduction of the cover story "Taking the slow lane in Mysuru" by Tara Das, as it appears across pages 8 and 9 of the "Lounge" section:

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Taking the slow lane in Mysuru

Mysuru’s pace is drawing those seeking to escape the rush of large cities, and its conscious café culture reflects the space it gives people to pour themselves into a slow and creative life

By Tara Das

Amaresh Subramaniam, 41, founder of Vui Coffee Roasters, jots the temperature of a batch of coffee beans every half a minute for 13 minutes in a small notebook. “Great coffee is high attention work,” he says. Prathvi Agarwal, 32, in his solo-run bakery, Khameeri Sourdough Microbakery, says you must knead sourdough until “you become one with the dough”. Prathiksha Prahallad, 27, of Leaven café is deeply influenced by the Kannada recipes from a baking certification her grandmother acquired over six decades ago. Getting it right matters so much, she’s even eaten scraps off a plate that a customer hadn’t finished to test if something was wrong with it.

In the post covid-19 pandemic years, Mysuru has seen a new bakes and brews culture, brought about by patissiers, baristas, chefs, and roastmasters for whom the process is individualistic, creative and skill-based. It is also deeply personal. As the world speeds up and scales up, Mysuru is slowing it all down and doing it by hand. Whether it’s coffee, cocoa or bread, slow process skills have value here.

Mysuru is a uniquely multi-cultural microcosm. Yoga centres attract a multi-cultural foreign crowd, who along with the visiting Indians from other cities keep the market for a variety of food vibrant. The Bengaluru tech brewery-hopping crowd comes to Mysuru, three hours away by the new expressway, to café-hop. From Madikeri come coffee planters, Tibetans, and tourists dropping into the nearest city. This floating population is not always loyal, but Mysuru has always been a retirement-friendly city. Dina Weber, 31, founder of bakery SAPA, points out that many of her initial customers included repatriates from overseas who missed good breads. Thus, here, the local anchors the culture as opposed to a Goan or Himachali hot spot, which is about the romance of influx and transience.

As in R.K. Narayan’s books, the Mysurean is a character whose quirks are known intimately, not fleetingly. Mysuru becomes a crucible for the kind of knowing that takes care and attention. Indira Chandrasekhar, author and editor of Out of Print journal, grew up in the Mysuru of the 1960s and 1970s, when her father was a professor. “Culturally, one didn’t eat out. The idea of getting into a car and going to the centre of Mysuru to eat a meal didn’t enter my parents’ psychology,” she says. There was Champakali, a sweet shop run by Dasaprakash hotel on Sayyaji Rao Road, which passed for a café.

Mysuru has always been a dreamy locale for film-makers, given its lush greenery and the royal back-drops of seven palaces, including the current residence of the erstwhile Wodeyar royal family, Amba Vilas Palace, the accompanying landscaped gardens and not to mention the Indo-Saracenic and Art Deco architectural features of the city’s quaint neighbourhoods. Legendary Kannada actor Rajkumar was the last to shoot inside the Amba Vilas palace for Mayura in the 1970s. However, a palace floor tile was cracked in the shoot and all subsequent filming was stopped by the palace board. Rajinikanth, whose 1990s hits Padayappa (1999) and Muthu (1995) were shot in Mysuru, has long considered the city lucky for him and drew crowds while shooting here for Jailer-2 in 2025. Mysurean director S.V. Rajendra Singh Babu (best known for the National-award winning Bandhana, 1984) has called the city “200 different locations within 20km”.

Yet, abhorrent of hang-out culture, and small enough for everyone to know everyone, the close-knit circles are now contending with an evolving social landscape. “Mysuru has always had an intellectual drift thanks to the patronage of the palace, a steady integrity to it,” Chandrasekhar says. Visibility is not generally prized here; quietude and an immersive practice is. Thus, engagement tends to be more conversational, learning-oriented, and serious, which inspires drop-ins and meetings at a talk, or at each other’s houses.

[...The article continues describing cafés in areas like] tikoppal and Yadavgiri. They are non-intimidating. You sit outdoors, alone or hang out, read, work, think. They have the floor space to accommodate more tables, but as Qinwan Ali, 41, co-founder of Sihi, a café set in an Art Deco bungalow, explains, they keep it free to retain a sense of expansiveness and allow children to run around. “It’s not that Mysuru has changed,” says Nikhilesh M.M., 37, founder of Aane café, who also says he will not add more tables though he has the space. “It is that Mysuru has not and will not”.

Geographically, Mysuru is green, has minimal pollution, is surrounded by dense wildlife reserves, is a planned town with parks in each block, and wide walkable avenues. It is also centrally accessible to several coffee and cacao-growing regions such as Kodagu (Coorg), Chikkamagaluru, Saklesh-pur and Bababudangiri in Karnataka, Wayanad and Idukki in Kerala, and the Nilgiris in Tamil Nadu, which makes good supply easy. Estate coffee and craft chocolate festivals are on the rise.

[The article mentions a contributor who] apprenticed with the three-Michelin starred L’Auberge de l’Ile Barbe in Alsace, France, in early 2019 and sought out Naviluna café in Mysuru to work as a chocolate maker in late 2019. He left in 2021 and set up Loco, a chocolate microfactory, in 2022, operating out of a rented garage in Gokulam. He now supplies to and consults with food start-ups and businesses. While each café may source from a different vendor, the rise of an exploratory and experimental food culture has also matured Mysuru’s palate. “Mysuru is a discerning market, people know what good coffee and chocolate tastes like, can distinguish [only open from Thursday to Sunday, and invariably sells out].

Originally from Delhi, he says he could get higher footfall in a larger city, but the overheads would be higher. “In Mysuru people want to know the process, the ingredients, how organic everything is, ask questions and savour the product knowledgeably,” says Sujay Shivapooja, who is married to Prahallad and handles the brews at the one-year-old Leaven. “They’re not picking up a bite on the way to some-where else. They’re savouring the bite. This translates to a willingness to pay higher prices for better products”. Their third partner, Kedar Ram, 31, is a...

Mysuru has always had a culture of great connection, but is seemingly hesitant to locate it in an accessible space. Mysuru is cherished deeply by locals who tend to close ranks. In his 1939 travelogue Mysore, Narayan writes, “As in ancient Athens, people settle many matters of philosophy, politics and personal affairs, while promenading around the statue or strolling down Sayyaji Rao Road. But this creates certain traffic problems, as such discussions, by preference, are held on road junctions, rather than on the very broad footpaths (which, for mysterious reasons, are detested and avoided by one and all)”. Narayan lived here and wrote several of its residents, his friends, into his books, for over 50 years.

“The café scene belongs to an evolving generation that requires a different kind of money, engagement, that is stepping away from corporate madness in search of meaning,” Chandrasekhar notes. “One doesn’t want to live in nostalgia, but one has to rec-ognise the transitions that are happening because something integral is being eroded”. In a flowering to inclusiveness, these new cafes become accommodating spaces where the past and the present, the old and the new Mysuru may sit at a table and mingle. Mysuru is one of the last bastions of the slow life and as it evolves, it is holding on to a unique essence of itself.

It is [common now] to see young creators set up a small stall on popular street corners or outside a park or lake entrance to sell homemade cupcakes, cheesecakes, breads, cookies, unique brews, or fermented beverages. This becomes a test ground for many small food businesses that then go on to set up brick and mortar establishments. Naviluna, a craft chocolaterie, was set up by David Belo from South Africa in 2012. In 2016, Weber, a German national, began to bake from home for friends and built a growing client base by 2019. By 2020, she had moved into a tiny counter room-only space on Kalidasa Road. She was self-trained but found Mysuru to be a supportive space in which to begin. “I was greatly inspired by Minimal (Coffee Roasters), which began with low infrastructure investments in a small space,” she says.

Minimal Coffee Roasters, set up by Ashwin Shetty in 2019, still operates from a standing room-only shop in Gokulam. It was the first in the brewed coffee space. Shetty, 37, used to work in the coffee busi- [Yercaud and other estates]. Both SAPA and Minimal seemed a bit foreign to prevailing local taste. Weber worked hard to cultivate the market. She even set up a stall in the local sari market and held bake sales every Thursday and Saturday. She never explained her food, she says, not wanting to come off as condescending, but held a line between catering to tastes and cultivating it to one’s vision for the food. “Starting slow and small in a city where your rent is low, the rents of your employees are low, and of your customers are low, gives room for experimentation,” she says.

That’s Mysuru’s advantage over tier-1 cities, where you’ve got to either be wealthy or have bank or venture capital money to begin, which puts pressure on you to start showing profits and you tend to lean towards making what sells. “It’s okay to have a bad month here,” she says. That allows for organic growth in which consumer tastes grow with you. “When we began, consumers were addicted to milky, sugary coffee. They’d get offended when we [on them that an older generation, until then filter coffee sticklers, started trooping in, Shetty says]. Today, Minimal has a cult following.

Nikhilesh says when he wanted to open his café, he picked up the phone and called Shetty out of respect for his paving the way. There is a solidarity to the lineage of what is being built. Minimal has expanded to the Southern Star, a five-star venue, and now hosts “coffee raves”, that Gautam Bhaskar, who runs Ritual in the tiny space in which SAPA once began on Kalidasa Road, calls the “respectable man’s rave”. Leaven held their first collaborative sun-downer in January with a mix of mocktails and alcoholic beverages at 3pm on a Saturday.

The new ventures are broader and hold the middle ground for the average joe with money but not much exposure—one who can’t pronounce “croissant” and doesn’t know what a sourdough or a medium roast is. Akin to the first-time flyer when new airports in small towns came up, these non-intimidating spaces allow one to get into the culture and mindset of a chiffon cake, a Berliner, a Korean cream cheese bun, and a tres leches. There is more openness to knowing now. “People come to the counter and tell us, we don’t know what to order, so you tell us what this is,” Shivapooja says. The cafés create a symbiosis of relying on the community as much as the community relies on them.

The muted colours and minimalist decor at Leaven were chosen so that the bakes speak without interruption. Most cafés rotate the menus weekly to afford experimentation. Khameeri maintains an inconsistent periodicity that The Local Friendly Bakery (TLFB) run by Raquel Cohanim also embraced, announcing menus only for part of the week when ready to sell, with menu and pre-orders via Instagram and WhatsApp in its early days. The sparse functionality of decor and low budget spaces convey simplicity and humility. Being slow to scale up or staff up, and being frequented by community anchors these aspects of approachability, innovation, and effort on both sides of taking the market forward.

VIBE CODED BY GEN Z

The whole front of the house team of Leaven, all in their 20s, has just returned from a day out at the Sakleshpur estate, from where their café sources beans. Among them, some are learning to serve, others are taking a break after their graduation while they figure out their direction. Chaman Naik, one of the two engineers who work as baristas here, travels to Bengaluru once a week to audition and hopes to make it in theatre and modelling. On Sundays and Wednesdays, the staff get to run their own trials, invent drinks and experiment with additions to the menu. At Vui and TLFB, a young barista service team puts out unembellished reels on Instagram, inviting customers with a vibe that has no need for script or artifice. It’s a joyous, relaxed, and self-proud vibe.

Many of these café founders have worked in the corporate world before deciding to pursue the slow life. While the rise in barista-patissier-roasting roles is a reaction against the corporate work culture, it’s not about shirking responsibility. The Mysurean café, chocolaterie and patisserie arose neither by impulse nor fantasy. Subramaniam is a mechanical engineer from Chennai who sourced coffee in Vietnam for seven years and came to Mysuru in 2017 in search of sustainability (and began roasting in 2018). Agarwal, a CFA by qualification, worked in investment banking in Mumbai, and came to Mysuru in 2021 for Ashtanga yoga, expecting to be here initially for six months, but gained his teacher certification four years in before the sourdough passion took him. Ali, an electrical engineer, was holding down his family business in Dubai and retrained at Cordon Bleu, Bangkok at age 30. He interned with The Oberoi, Bengaluru, studied patisserie at Lavonne Academy of Baking Science and Pastry Arts, Bengaluru, where he met and collaborated with his co-founder Pooja Shridhar, 33, who has passed her civil services exam. While Prahallad trained at Lavonne too, husband Sujay did his article traineeship at PriceWaterHouse Coopers, went on to do his MBA, and worked with an angel network funding startup for two years before quitting to focus on speciality coffees. Prahallad had made cupcakes and specialised in desserts like budino and tres leches from home for many years. Both Mysureans, they’d get bakes from SAPA and coffee from Minimal when they went on dates and noticed a lacuna in the market—a space in which the two were sold together.

Versha Verma, 31 and her husband Ashwani Karoriwal, who co-run Hideaway, are both computer science engineers from Haryana. He worked with Meta in London, UK. Influenced by the annual London Coffee Festival, Verma apprenticed at local coffee shops there to train as a barista. They returned after three-and-a-half years in London in 2024 to set [in a café while he continued to work remotely but the founder bailed out in 2022, and Bhaskar had to take it over unexpectedly]. They’ve also each invested in training themselves. Samyuktha Alwar, 26, manning her chessboard-tiled kitchen-cafe (that she set up from her savings for less than ₹2 lakh) solo at Chiffon, will be specialising in tiered wedding cakes to cater to the increasing trend of people choosing to get married in scenic Mysuru. Shivapooja wants to improve barista certifications and Prahallad is aiming for a gelataria training in Italy. Running a business is exhausting, they each find: there are no days off, no personal life, and constant staffing issues, customers are demanding, and food requires maintaining consistency and freshness in quality. So it’s not quite a shirking of the slog of corporate life, more an embracing of a personalised work ethic instead.

“This kind of work requires long attention spans and focus which are rare today. Gone are the days when young people just want any job they can get. I recruit for personality, skill I can teach,” Subramaniam says. “Gen Z is effecting a decommodification of the role, and is bringing dignity to it, by extracting identity from the skill. They’ve found a creative space to pour their identities into,” he explains. It is a process of individualisation, which perhaps is lost in the tube-lit cabins of corporate giants. Further, working with one’s hands brings a rare point of connection in a chronically online world.

Alwar says the difference between the cafés that last and those that open and shut overnight is training and discipline, which gives consistency. If it wasn’t for the pandemic, she might have migrated into a job after her patissier training. “Security doesn’t exist anywhere anymore. So a personal risk doesn’t feel like a big deal,” she adds. Verma feels the pandemic-induced mass layoffs put the uncertainty of even corporate life on display and conveyed to employees their hard work doesn’t matter. There is no such thing as a steady job anymore, just the illusion of one for a while. Agarwal points out that often techies and those with the highest salaries work untenable hours and get into a debt trap, where they buy high-cost homes, and have to take loans for which they need to keep making high salaries to pay off. “The trade-off is just not adding up and my generation sees that wealth, growth and a sense of purpose is not going to come from a salary anymore,” he says.

Koppera saw his father work hard all his life and have nothing substantial to call his own after retirement. While he was hesitant about Koppera’s career choice, he has come around now. Bhaskar says post-pandemic, people started using their savings to experience life and live well and taking risks they earlier might not have. “The world is so unstable today. What’s the worst that can happen?” asks Verma.

OLD CITY, NEW CITY

Brunda Ganesh, 43, architect and mother of two young girls, grew up in Mysuru and has since relocated to Bengaluru. “It was in the doldrums. If you had to do or experience something ‘different’, you’d have to leave Mysuru,” she says. At best you had the Iyengar Bakery and the bhajji-bonda-chur-murri guy in Gokulam and a place called Tootsie in Yadavgiri for burgers and pizzas that came with a lot of mayonnaise. She sees the change as social media driven.

“We never went to sit in a café because we didn’t need to. We pooled whatever little cash we had and bought stuff like peanuts or popcorn off handcarts and biked, walked, went to a local park or the terrace of one of our houses. Whether you were from a wealthy family or not, you didn’t need money, planning, or documentation to hang out,” she says. The gentrification of Mysuru is a reflection of the changing utility of public spaces, Ganesh notes. Mysuru’s parks are well-kept, well-lit, and safe. The transition from single homes with gardens and terraces to apartments with tiny balconies is also indicative of how homes are changing. “Homes are getting smaller and people are in each other’s spaces”.

Most cafés claim to have broken even a few months in. Business is good and expansion offers come in, but most don’t want to scale in a hurry. “We don’t want footfalls, we want regulars,” Verma says. Nikhilesh finds that no one wants to sit in a cafe that is filled with noise and chatter. That is not the Mysuru way. You want space and chill. So mindless upscaling goes against the vibe these cafes are working towards. He does have plans for Aane, named for the iconic elephants in the Dassara parade, though. Nikhilesh is considering merchandising and expansion, hoping to make the brand instantly recognisable at airports, and believes Mysuru has the potential to be a café-hopping hub.

Leaven seeks to expand too in considered outlets that meet a niche demand, like a gelataria and a second outlet. Bhaskar is concerned that it’s too many people doing more of the same thing and the market will get saturated; he’d like to see them col-...Based on the sources, the following is the text of the article "A new voice emerges in Tamil cinema" by Aditya Shrikrishna, as it appears on page 3:

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A new voice emerges in Tamil cinema

R. Gowtham’s debut Tamil feature, Members of the Problematic Family, premiered at the 76th Berlin International Film Festival last week in the Forum section. Everything about this film—a raw, unflinching portrait of a family rationing grief and despair—is distinct yet unfamiliar, beginning with its title, writes Aditya Shrikrishna.

It invites you not to witness a few days in the life of irascible characters but just human beings who, as fate would have it, need to function as a society sanctioned order. The word “dysfunctional” doesn’t do justice, nor is it accurate for a group of people who are simply trying to get by amidst unusual turmoil.

Based on the sources, the following is the reproduction of the article "Build your own village by showing up" by Nisha Susan, as it appears on pages 10 and 11:

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Build your own village by showing up

Asking people for help and getting it can rekindle your sense of optimism.

By Nisha Susan

For years and years, I have heard the phrase “it takes a village”. I knew former US secretary of state Hillary Clinton had popularised the line when she named her book after the proverb, in the context of raising children. For most of those years that I heard the proverb, I had no children and I lived in a metaphorical village where all my friends knew my business and I knew theirs.

When I did have children, the earliest years were a combination of well-paid nannies, covid-induced isolation and a covid-induced move close to my family. During the pandemic, my immediate family and I saw each other more often than we had in my teens. A good indication of how things went in those years was my father remarking, “Your neighbours must be wondering why they can hear people singing Happy Birthday every week.” We celebrated everybody’s birthday and ate every last crumb of every festival. Then alas, we had to leave the temporary village and take off our masks.

When we were newly far from home, everyone assured me, “You will find your village.” And the first principles of that involved asking people for help. People meant it less in the context of childcare and more in the context of “you will find your kind of friends”.

As I was about to find out, I hated asking people for help. And I didn’t want to discuss my children with strangers. I did both. I talked about my kids with people—with the understanding that I might have to someday swallow my pride and ask for help. And when that rare, annoying colleague made snide remarks about my being 5 minutes late two days in a row because of child-related duties, I also surprised myself with an explosive Mount Etna-like performance. Who knew I still had it in me?

Asking people for help and getting it, like I did, can rekindle your sense of optimism, if that sense has recently been feeling less like Etna and more like Mount Fuji. But did it give me the village? Not quite. I was still in search of that old cosy, nosy feeling where everyone was all up in my business and I was up in theirs. And then recently I saw someone say, “if you want a village, you have to be ready to be a villager.” I was so taken by this idea. I had been going about it all wrong!

I had been smiling inanely and trying to be as little trouble as possible and asking for help through gritted teeth. I hadn’t actually been trying to join anything. If anyone asked me for help, I had been ready to turn up. But there were obviously other ways to turn up, other ways to be a villager, other than being braced to save the day.

I gave myself the assignment of going to things I didn’t really need to go to, to see people I didn’t know too well and definitely see people I knew well. This is not easy because most of the people I know have two-and-a-half adults/children/animals they are responsible for and have three-and-a-half jobs to pay the bills.

After giving myself the assignment, I have gone to a talk by the translator of an Italian poet who died young and whose name I can’t remember, had coffee with a much younger, very funny acquaintance, took a walk with a deadpan and surprisingly bossy other acquaintance and even wandered into a catered office lunch. Each of these activities definitely took me away from the all-holy and ever proliferating to-do lists. Occasionally during an otherwise engrossing conversation, I would start feeling breathless because of visions of the white board jungle that lives on top of my desk and every task on it. But I got back on the assignment of being a mindful villager and everyone survived.

This week, a neighbour invited me to come over on a Saturday afternoon. A bunch of women were getting together to cook big quantities of freezer-friendly food to help a neighbour who is expecting a baby in a few days. The pregnant neighbour brought over the ingredients. It was a quick and cheerful two hours. I chopped a lot of onions.

Afterwards, I was happy to have gone. But before going? I dragged my feet and said several times to my family, “I may not go.” They all grunted. I needed to get dressed. I needed to fold clothes. I needed to clear my desk. I needed to buy groceries. And I hadn’t bought anything for the pregnant lady. “I may not go,” I said for the 10th time. Eventually the resounding, cheesy echo of “be the villager you want to be” drove me to put on kajal and leave the house. In the same mood as the chicken crossing the road to get to the Other Side, I went next door.

Next door was a bustle of chips and efficiency. I was reminded again of the reasons for the renewed post-pandemic success of Priya Parker’s 2018 book The Art of Gathering. My neighbour is the master of the low-pressure gathering that can leave you feeling nourished. I have heard via Parker devotees of gatherings where women have met just to wear an outfit that they love but are never going to wear Outside. Or others where people have met to just do paperwork chores they have been procrastinating over. Parker’s book, like my neighbour’s baby prep party, was meeting a heartfelt need. The Outside is intimidating. (I am intrigued and entertained to hear that her newest book is called The Art of Fighting.)

One neighbour made fun of me for frantically doubling the fractions in the recipes in my head. Another reminded me how I had tried to run away with someone’s cute baby the last time we met. Then she cut her finger while chopping capsicums and ran about explaining that she hadn’t done it on purpose to get out of cooking. And while I was standing at the stove, waiting for half a kilo of vegetables to cook down, I thought to myself that next February a new baby could be trying to walk around here when I tease my neighbour about cutting her finger to get out of cooking. And in the thinnest of onion layers, this February, I might be building a new village.

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Nisha Susan is the author of The Women Who Forgot to Invent Facebook and Other Stories.

Based on the sources, the following is the reproduction of the article "Paramount-Warner deal set to reshape Indian cinema" by Lata Jha, as it appears on page 15:

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Paramount-Warner deal set to reshape Indian cinema

By Lata Jha NEW DELHI

With Netflix backing away from its proposal to buy Warner Bros Discovery, paving the way for Paramount Skydance to take over the legacy studio, the merged Hollywood giant may be set to dominate the Indian theatrical space and reshape distribution strategies. In the English-language streaming ecosystem in India, there will be less disruption but heightened competition.

“The merged entity would command considerable distribution clout in India, given their significantly enlarged slate, enabling it to command a larger share of the Hollywood box office pie,” said Rahul Puri, managing director of Mukta Arts and Mukta A2 Cinemas.

Warner Bros owns franchises such as The Conjuring, Harry Potter and Godzilla, which, coupled with Paramount titles Mission: Impossible and Transformers, give the merged entity better bargaining power with exhibitors. However, according to Raheel Patel, a partner at Gandhi Law Associates, if Paramount Global takes over Warner Bros. Discovery, there will be stronger studio consolidation in India, not market domination. The combined entity would control major Hollywood IP, giving it sharper bargaining power with exhibitors like PVR Inox.

“Theatres may face tougher revenue-share negotiations, but tentpole supply would remain stable because Paramount is still a studio-first player,” Patel said. “A Netflix takeover would have been more disruptive, likely accelerating direct-to-OTT (over-the-top) releases and weakening theatrical windows faster”. Earlier, the Multiplex Association of India (MAI) had expressed concern over Netflix’s $82.7 billion acquisition bid for Warner Bros, which it said could disrupt the studio’s supply of Hollywood films to theatres.

A combination between Paramount and Warner Bros Discovery would primarily operate at the level of upstream content ownership and global distribution strategy, according to Tushar Kumar, a Supreme Court of India advocate. Paramount has been historically aligned with the conventional studio model and has institutional incentives to preserve theatrical exclusivity windows in order to maximize box-office recovery.

“This approach is comparatively less disruptive to Indian exhibitors and existing OTT licensees,” Kumar said. He pointed out that a hypothetical acquisition by Netflix would have raised apprehensions of accelerated direct-to-digital migration and internalization of marquee content within a single dominant platform, weakening competitive parity in premium English-language content acquisition.

Some experts said this transaction does not raise significant competition concerns in India. Neither Paramount nor Warner Bros operates a consumer-facing OTT platform in the country, although their content is available on JioHotstar and Amazon via licensing deals. Furthermore, according to Mihir Rale, partner at Cyril Amarchand Mangaldas, other studios like Disney, Universal, Amazon MGM, Sony and Netflix hold a meaningful presence in the theatrical space.

It would be interesting to see if licensed Warner content is pulled off platforms such as Netflix, though many of these agreements could take three to five years to end, said Uday Sodhi, senior partner at Kurate Digital Consulting.

“The transaction does not, in a strict doctrinal sense, create a monopoly in India. The SVoD (subscription video-on-demand) market remains structurally oligopolistic,” said Shravanth Shanker, managing partner at B. Shanker Advocates LLP. The market is currently shared by:

• JioHotstar and Amazon Prime Video: roughly 23-25% each.
• Netflix: about 19%.
• Apple TV+: around 14-15%.

However, the concern is one of increased concentration. The merger aggregates a significant share of premium Hollywood IP under one entity, enhancing its bargaining leverage in licensing negotiations with Indian platforms.