CA Journal May2026

 

Digital Transformation in Public Financial Management: A Report on Governance, Integrity, and Technology

CA. (Dr.) R. S. Murali

Introduction

Public Financial Management (PFM) serves as the engine room of the modern state. It is the essential operational framework for collecting, allocating, and accounting for public resources, sustaining the social contract between the state and its citizens. When PFM systems fail, the foundation of governance itself erodes. This article addresses the urgent need to transform PFM using information technology, focusing on the digitisation and digital transformation aspects rather than PFM in isolation.

Imperative for Digitisation

The global community currently faces a significant integrity crisis. International Monetary Fund (IMF) models estimate annual global losses of approximately US $4.5 trillion—nearly 5% of world GDP—due to the inefficient use of public funds within public financial systems. Roughly US $1.7 trillion of this loss occurs at the budgetary central government level. Traditional paper-based systems are structurally incapable of mitigating these risks as they lack immutable, verifiable audit trails. Digital PFM is no longer an optional upgrade but a structural requirement for fiscal stability and public trust.

The Landscape of Government Digital Maturity in 2025

As of 2025, digital maturity is defined by "meaningful participation"—the ability of a state to deliver essential services through sophisticated, integrated platforms. The World Bank’s GovTech Maturity Index (GTMI) 2025 shows a global average increase to 0.589, up from 0.552 in 2022. However, a widening gap exists between high-maturity (Group A) and low-maturity (Group D) economies. While advanced states integrate frontier indicators like AI Ethics and Green Tech, developing nations often struggle with legacy system inertia.

Table 1: Digital Maturity Indicators - 2025

Indicator	Strategic Focus	Global Status 2025
AI Ethics & Governance	Ethical utilization of automated decision-making and bias mitigation.	70% of government bodies are piloting or planning AI use.
Green Tech Policies	Integration of environmental sustainability into digital architecture.	High correlation with Group A maturity.
Digital Identity (ID)	Seamless authentication using National Digital IDs.	Fundamental to "whole-of-government" approaches.
Cloud-Based PFM	Secure cloud enclaves replacing fragmented legacy servers.	Essential for real-time monitoring and data integrity.

Key Issues in Digital Transformation

Technology is not an unbiased instrument; it engages directly with organizational law and social fairness. Several perspectives must be considered:

• Legal/Administrative Perspective: "Blackbox" algorithms challenge judicial review, which depends on understanding decision-making logic. To alleviate this, authorities should adopt a "duty of candour," elucidating system logic and potential prejudice before legal proceedings.
• Social Perspective: A technological gap leaves nearly 2.6 billion individuals offline, risking new types of alienation. Addressing this requires moving beyond traditional infrastructure to FinTech and Telecom collaborations (MNOs/MVNOs) to reach the underserved.
• Ethical Perspective: The rise of "dark patterns"—manipulative UI/UX designs—erodes trust. A study of 53 Indian applications found 52 used deceptive tactics like interface interference or drip pricing.

Case Studies: Triumphs and Challenges

Global Triumphs:

• Estonia: Uses KSI (Keyless Signature Infrastructure) Blockchain alongside its X-Road infrastructure to create tamper-proof government records for everything from tax filings to health data.
• Singapore: Employs a whole-of-government approach to AI for real-time anomaly detection to identify procurement irregularities.

Global Challenges:

• Moldova: A 2014 bank fraud siphoned 12% of GDP through shell companies, exposing weak digital oversight.
• Toronto (Sidewalk Labs): A smart city project was shelved due to concerns over privacy and the political legitimacy of a private company controlling public policy and data.

India Triumphs:

• UPI: A global leader, processing over 15 billion transactions monthly as of late 2024.
• Kanpur GIS Mapping: tripling annual house tax revenue by using geocoding to identify unrecorded properties.
• Aadhaar-Linked Payments: authenticating Direct Benefit Transfers (DBT), saving over US $1 billion in LPG subsidies alone.

India Challenges:

• Systemic Exclusion: Technical failures in Aadhaar biometric authentication have occasionally denied essential food rations to vulnerable populations.
• Cybersecurity: Aadhaar's centralized database has faced repeated security failures and data exposure risks.

Synthesis of Case Learnings: The 3PT Framework

Future reforms should be guided by a "3PT" framework: Policy, Process, People, and Technology.

• Policy Perspective: Transformation requires comprehensive legislation for e-signatures, data privacy, and blockchain records to eliminate manual loopholes.
• Process Perspective: Process Re-engineering (BPR) must occur before automation; automating manual inefficiencies is counterproductive. A phased, "test-and-learn" rollout using pilots is recommended.
• People Perspective: Success requires a shift toward a data-driven culture and strategies to hire and retain specialist functional and IT talent using market-based salary scales.
• Technology & AI Perspective: Governments should move from reactive monitoring to AI-driven predictive stewardship to detect fiscal stress and default patterns.

The Role of Accounting Professionals

In the era of AI, Human-in-the-Loop (HITL) is the final safeguard against judgmental atrophy. The accountant's role must evolve from bookkeeper to Digital Integrity Officer and Forensic AI Auditor. Professionals are critical for validating AI audit flags, ensuring the "auditability" of complex digital ledgers, and maintaining fiscal accuracy.

Conclusion

Digitisation is a structural necessity for modern governance. Success requires a balanced approach, pairing advanced technologies like Blockchain and AI Auditing with robust compliance mechanisms and predictive, data-driven stewardship.

The 16th Finance Commission and the Future of Local Self-Governments in India

V N Alok

Introduction

Local self-governments, both the Panchayats and the Municipalities, have a long history in India. While Panchayats have ancient roots, Municipalities have governed urban areas since the 17th century. Recognizing their primacy in providing basic services, the Constitution placed ‘local government’ in the State List of the Seventh Schedule. Until the 1993 Constitutional Amendments, the transfer of funds and functions to these bodies was largely ad hoc.

The 73rd and 74th Constitutional Amendments (1993) formally recognized Panchayats and Municipalities as institutions of self-government, inserting Parts IX and IX A into the Constitution. This mandated State Legislatures to devolve functions and finances, creating the need for structured fund transfers as local expenditure typically exceeds generated revenue. Articles 243 I & Y necessitate every State to constitute a State Finance Commission (SFC) every five years to review these financial positions. Furthermore, Article 280 was amended to mandate the Union Finance Commission (UFC) to suggest measures to augment State Consolidated Funds to supplement the resources of these local bodies.

Union Finance Commission and Local Governments in the Past

Since 1993, seven UFCs have provided grants-in-aid to local governments.

• 10th UFC: Recommended Rs. 100 per capita for the rural population (Rs. 4,381 crore) and Rs. 1,000 crore for Municipalities, totaling 1.38% of the Union divisible tax pool.
• 11th & 12th UFCs: Successively increased grants by approximately three times each.
• 13th UFC: Shifted from ad hoc grants to a percentage share of the divisible pool (1.42% for Panchayats; 0.51% for Municipalities).
• 14th UFC: Reverted to ad hoc grants, providing Rs. 2,00,292 crore for Panchayats and Rs. 87,149 crore for Municipalities.

Over time, the importance assigned to urban governance has grown. The share of Municipalities in total local government grants has risen from 19% in the 10th UFC to 45% in the 16th UFC.

Recent Background for the 16th UFC

The 15th UFC (2021-26) proposed Rs. 2.37 lakh crore for Panchayats and Rs. 1.21 lakh crore for Municipalities. It introduced special grants (Rs. 70,000 crore) for primary healthcare due to COVID-19 and performance-linked grants for million-plus cities via a Challenge Fund. Eligibility for these grants required states to set up SFCs, follow their recommendations, and ensure local bodies published audited accounts online.

Transfers to Local Government by the 16th UFC

Under Prof. Arvind Panagariya, the 16th UFC has scaled up allocations to Rs. 4.35 lakh crore for Panchayats and Rs. 3.56 lakh crore for Municipalities for the five-year period starting April 1, 2026.

Key Targeted Municipal Components:

• Urbanisation Premium (Rs. 10,000 crore): Supports planned rural-to-urban transitions by helping states build administrative structures in expanding areas.
• Special Infrastructure Component (Rs. 56.1 thousand crore): Boosts wastewater management systems in 22 cities with populations between 1-4 million.

Both rural and urban grants are split 80:20 (Basic:Performance). Of the basic grant, 50% is tied to sanitation, waste, and water management. The remaining 50% and the entire performance grant are untied, though they cannot be used for salaries or establishment expenses.

Focus of UFCs on Good Accounting Practices

Successive commissions have driven reforms in financial reporting. The 14th UFC made submission of audited accounts a condition for performance grants, and the 15th UFC introduced mandatory online publication of both provisional and audited accounts. The 16th UFC continues these requirements while noting that more work is needed to ensure timely, exact audits.

Implications and Revenue Mobilisation

The 16th UFC has rebalanced basic grants to a 50:50 tied-untied ratio (from the 15th UFC's 60:40), giving local bodies more flexibility to address community-specific needs.

A major shift in the 16th UFC is linking performance grants to growth in Own Source Revenue (OSR) for both Panchayats and Municipalities.

• Panchayats: Expected to increase OSR annually by a minimum of 2.5%.
• Municipalities: Requirement is a 5% annual growth, emphasizing revenue from rent, holdings, and service fees.

Institutional Reforms: SFCs and Census

While UFCs are constitutionally required to base transfers on SFC reports, only six states (Assam, Haryana, Himachal Pradesh, Kerala, Tamil Nadu, and Rajasthan) had constituted their seventh SFC by 2024. The 16th UFC mandates that the Action Taken Report (ATR) must be tabled in the State Legislature within six months of receiving an SFC report to improve compliance.

Additionally, the 16th Census (begun April 2026) has frozen all administrative units until March 31, 2027. The resulting delimitation of constituencies may affect grant disbursal, requiring new arrangements for smooth fund transfers.

Conclusion

The 16th Finance Commission continues the trend of increased allocations coupled with a stronger accountability framework. Success depends on states complying with conditions such as regular local elections, publishing annual accounts, and providing a 20% matching contribution.

Key Future Directions:

• Panchayats: Continuing advancement through the eGram Swaraj portal and the cash-based Model Accounting System (MAS).
• Municipalities: Standardizing practices through the National Municipal Accounts Manual (NMAM) 2.0 in consultation with ICAI.
• Legislative Needs: Successive UFCs have recommended raising the constitutional ceiling on professional tax (currently Rs. 2,500, last revised in 1988) and amending Article 285 to allow property tax on Union government properties.

When The Legislature Erases A Law - Do ‘Omissions’ Count as a ‘Repeal’ Under the General Clauses Act?

An Analysis Through the Lens of Proposed Omission of Section 13(8)(b) of the IGST Act, 2017 by the Finance Bill 2026 CA. Madhav Kumar Jha

Introduction

The Finance Act, 2026, has introduced a significant legal development under the Goods and Services Tax (GST) framework by omitting Section 13(8)(b) of the Integrated Goods and Services Tax Act, 2017 (IGST Act). This section previously governed the place of supply (POS) for intermediary services, setting it as the location of the supplier. This meant that Indian intermediaries serving foreign clients were often taxed domestically, excluding them from being considered an "export of services".

The omission of this provision causes the determination of POS to fall back upon the general provision in Section 13(2) of the IGST Act. Consequently, what was a taxable supply within India transforms into a zero-rated export of services, eligible for refunds of input tax credit or integrated tax paid. While this is a welcome liberalization, it triggers profound retrospective legal questions because the omission lacks a saving clause. This leaves the fate of eight years of pending proceedings, demands, and disputes uncertain.

Liberalisation Without a Safety Net: The Problem Section 13(8)(b) Leaves Behind

Intermediary classification has historically been complex and litigation-prone, depending entirely on the substance of the transaction. Tax authorities frequently applied the "intermediary" tag mechanically, shifting the POS to India and leading to the denial of GST refunds. While the 2026 amendment corrects this structural anomaly, the absence of a saving clause triggers a centuries-old common law doctrine regarding statutory erasure.

The Common Law Foundation and The General Clauses Act, 1897

Under common law, the Doctrine of Statutory Obliteration holds that when a provision is repealed or omitted, it is treated as if it had never been enacted. However, this does not disturb "transactions past and closed" that reached complete finality while the provision was in force.

For matters still in litigation, Section 6 of the General Clauses Act, 1897, provides a statutory saving mechanism. It stipulates that unless a "different intention" appears, a repeal shall not affect previous operations of the enactment, rights acquired, or legal proceedings already instituted. The critical debate is whether the word "omission" used in the Finance Act 2026 falls within the meaning of "repeal" as defined in Section 6.

The Four Pillars of the Debate: Journey Through Case Law

1. Rayala Corporation (P) Ltd. v. Director of Enforcement (1969): A Constitution Bench held that Section 6 did not apply to an "omission" effected by a Ministry notification, categorically stating that "repeal" does not encompass "omissions".
2. Kolhapur Canesugar Works Ltd. v. Union of India (2000): Another Constitution Bench affirmed that in the absence of a saving clause, all actions must stop where the repeal finds them, and that Section 6 does not automatically apply to the omission of a rule.
3. M/S Fibre Boards (P) Ltd. v. CIT Bangalore (2015): A two-judge bench challenged prior precedents, noting that Section 6A of the General Clauses Act uses "repeal" to describe acts accomplished through "express omission". They argued the prior benches were per incuriam for not noticing Section 6A and held that express omission does indeed qualify as a repeal.
4. Hikal Limited v. Union of India (Bombay High Court, 2025): This recent GST-related case held that Section 6 only responds to instruments carrying parliamentary authority (Acts or Regulations) and not to omissions made through subordinate legislation like Rules or notifications.

The Legal Landscape Today

The law currently operates on a bifurcation:

• Subordinate Legislation: Pending proceedings generally lapse upon omission unless a saving clause exists, as seen in the Rayala, Kolhapur, and Hikal cases.
• Central Acts: For provisions omitted through a Finance Act (like Section 13(8)(b)), the Fibre Boards analysis suggests Section 6 is attracted, meaning pending proceedings should survive.

However, a constitutional tension remains because the Fibre Boards decision was by a two-judge bench, whereas the cases it effectively overrides were decided by five-judge Constitution Benches.

The Second Side of the Coin

While the omission provides relief for service exporters, it creates new compliance consequences for Indian businesses receiving inbound intermediary services from abroad. Shifting the POS to the recipient’s location under Section 13(2) makes Reverse Charge Mechanism (RCM) liability unambiguous.

Conclusion

The implementation of this bare omission without a saving clause has opened a significant arena of legal uncertainty. Until a Constitution Bench of the Supreme Court definitively determines whether "repeal" includes "express omission" for the purposes of Section 6, stakeholders must navigate an unsettled landscape. A savings clause in the Finance Act 2026 could have resolved this five-decade-old debate and prevented unnecessary litigation.

Gist of Opinions

(Expert Advisory Committee)

The May 2026 issue of The Chartered Accountant features several opinions from the Expert Advisory Committee (EAC) regarding complex accounting treatments under the Indian Accounting Standards (Ind AS) framework.

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1. Accounting Treatment under Ind AS 37 for Extended Producer Responsibility (EPR) for End of Life of Vehicles

Facts of the Case: ABC Limited, a listed automotive manufacturer, prepares financial statements under Ind AS. The newly enacted Environment Protection (End-of-Life Vehicles) Rules, 2025 (ELV Rules) mandate that producers fulfill EPR obligations for vehicles introduced in the market by purchasing EPR certificates. This obligation continues even if the producer ceases operations and is linked to vehicles sold in the past 15 to 20 years. While related Environment Compensation (EC) Cess Rules and specific cost caps have not yet been notified, the querist argued that a present legal obligation exists as of April 1, 2025, due to past sales.

Queries:

• What is the "obligating event" under Ind AS 37?
• What is the correct accounting treatment for vehicle sales made from F.Y. 2005-06 (non-transport) and F.Y. 2010-11 (transport)?
• Should cumulative provisioning for past sales be charged to the statement of profit and loss or adjusted against retained earnings?

Committee's Opinion:

• Obligating Event: The Committee determined that the introduction of vehicles in earlier years becomes an obligating event only when the ELV Rules come into effect, creating a mandate for EPR targets on those past sales.
• Reliable Estimate: Per Ind AS 37, except in extremely rare cases, an entity can determine a range of possible outcomes to make a reliable estimate of the obligation, even if some specific Cess Rules are pending notification.
• Recognition: The company must recognize a provision as soon as the ELV Rules take effect for all already introduced vehicles.
• P&L Treatment: Under Ind AS 1 (Presentation of Financial Statements), this provision must be charged to the Statement of Profit and Loss. Adjustment to retained earnings is inappropriate as this does not constitute a change in accounting policy or the correction of a prior-period error.

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2. Change in Measurement Technique for Expected Credit Loss (ECL)

Facts and Query: The company proposed transitioning its ECL measurement model for financial assets/trade receivables from an "internal grid matrix" to a "scientific actuarial valuation". The querist viewed this as a fundamental shift in the measurement model and asked if it should be treated as a change in accounting policy requiring retrospective application.

Committee's Opinion: The Committee restricted its view to the transition itself rather than the specific calculations. It noted that for trade receivables, companies typically measure loss allowances at lifetime ECL under Ind AS 109. The Committee evaluated whether this shift qualifies as a change in accounting policy or a change in accounting estimate based on Ind AS 8 (Accounting Policies, Changes in Accounting Estimates and Errors).

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3. Classification of an Employee Family Benefit Scheme (EFBS)

Query: Whether a specific EFBS should be classified as a defined benefit scheme under Ind AS framework.

Committee's Opinion: Referring to Ind AS 19 and the Basis for Conclusions (BC 253) of IAS 19, the Committee noted that employee benefits encompass all forms of consideration given in exchange for service, including those provided to an employee's family members.

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4. Lease Assessment for Railway Quarters under Ind AS 116

Context and Opinion: The Committee assessed whether specific arrangements for railway quarters/units constitute a lease. It concluded that an identified asset exists since specific units are designated. Furthermore, the "right to substitute" held by the Railways was found to be non-substantive, as it was intended for mutual convenience rather than a practical ability to substitute assets throughout the period. Consequently, the arrangement was assessed as a lease under Ind AS 116.

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Notes on EAC Opinions:

• These opinions represent the view of the EAC and do not necessarily reflect the official opinion of the ICAI Council.
• Opinions are based on specific facts provided by the querist and current prevailing laws.
• The complete text of these and other opinions can be accessed at: https://eacopinion.icai.org/.

Bridging Compliance and Capital: Chartered Accountants as Catalysts for MSME Expansion

Dr. Kalpana Kataria & Dr. Abhishek Kumar Singh

Introduction

The Micro, Small and Medium Enterprises (MSME) sector contributes approximately one-third to India’s GDP and is a cornerstone of the “Make in India” initiative. Recognized as one of the four key engines of economic growth alongside Agriculture, Investment, and Exports, the sector has gained momentum through a sustained government focus on formalization. This policy thrust has significantly enhanced credit penetration, enabling enterprises to access formal financial systems. However, maintaining this growth is essential for the vision of Viksit Bharat by 2047, as the ecosystem remains vulnerable to macroeconomic disruptions, limited capital access, and inadequate technological infrastructure. Strengthening this sector is crucial for inclusive development and a self-reliant economy.

Micro, Small and Medium Enterprise (MSME) Overview

The Indian MSME sector is highly diverse, with approximately 94% of enterprises operating informally and remaining unregistered. Nationally, MSMEs produce around 6,000 products, predominantly in manufacturing sectors like food, textiles, chemicals, and machinery. Currently, the sector contributes approximately 30% to the national Gross Value Added (GVA) and accounts for about 35.4% of total manufacturing output. Globally, MSMEs represent 90% of all businesses and 50% of GDP. In India, over 63 million enterprises employ more than 110 million individuals and account for over 40-45% of exports.

Fig. 1: Key Characteristics of MSMEs

• Employment Generation: Second-largest job provider after agriculture, covering diverse demographics.
• Economic Contribution: Substantial contributions to GDP, exports, and industrial output.
• Diversity: Wide variation in size, technology adoption, and service offerings.

Challenges for MSMEs

MSMEs face numerous hurdles, including outdated technologies, difficulties in accessing formal finance, intense market competition, and supply chain inefficiencies. There is a noted mismatch between credit demand and supply due to collateral constraints. While credit guarantee schemes and invoice discounting platforms like TReDS (Trade Receivables Discounting System) have improved access, many enterprises still rely on informal lending. Furthermore, a study of four core functional areas (Marketing, ICT Adoption, Capacity Building, and Cost Optimization) revealed that advanced ICT tools remain underutilized due to high costs and a lack of skilled manpower.

Contributions of Chartered Accountants (CAs)

Chartered Accountants are pivotal as strategic enablers and resilience builders for MSMEs navigating tighter regulatory regimes and accelerated digitalization.

• Financial Stewardship and Access to Capital: CAs establish robust systems for bookkeeping, budget forecasting, and cash-flow management. They enhance creditworthiness by preparing auditable financial statements; notably, MSMEs supported by CAs are reportedly twice as likely to secure institutional loans. They also guide MSMEs in tapping equity markets, such as the NSE Emerge platform.
• Regulatory Compliance and Governance: CAs mitigate the heavy compliance burden (estimated at ₹13 lakh annually per unit) by managing GST filings, income tax, labor laws, and statutory audits. They ensure MSMEs adhere to global accounting standards like IFRS, which enhances investor confidence.
• Strategic Advisory and Value Creation: Beyond compliance, CAs identify cost efficiencies and investment opportunities. They drive digital transformation by facilitating the adoption of tools like the Udyam Portal and AI-enabled accounting.
• Policy Enablers & Collaborative Advocacy: CAs translate government schemes (e.g., Mudra, PMEGP) into practical business strategies. They also influence the ease of doing business by advocating for tax rationalization and simplified documentation.

Case Studies and Strategic Horizons

• Banking and MSME Sector Conclave 2025: Highlighted CAs' role in bridging information asymmetry between small businesses and banks.
• Boutique Firm Transformation: A firm in Ahmedabad moved from compliance provider to strategic partner by delivering interactive Power BI dashboards, resulting in a 40% rise in advisory fees.
• Small-Town Scaling: A two-partner firm in Nagpur used ICAI's alliance model to collaborate with a Mumbai firm, allowing them to service listed entities.

Fig. 3: Strategic Planning for CAs and MSMEs

1. Broaden Digital Advisory: Deepen competencies in AI, blockchain, and cybersecurity.
2. Facilitate Inclusive Financing: Catalyze access for underserved segments like women-led and rural enterprises.
3. Simplify Compliance Pathways: Advocate for regulatory simplification.
4. Drive Sustainable Innovation: Support green frameworks and ESG compliance.
5. Strengthen Professional Ecosystems: Utilize mentorship clinics and incubation centers.

Conclusion

In a post-pandemic landscape marked by rising competition and supply chain disruptions, MSMEs require a strategic, tech-savvy partnership rather than mere transactional support. CAs provide this through a multidimensional support system. As India aims to become a $35 trillion economy by 2047, the CA-MSME partnership will serve as a foundational pillar, ensuring financial discipline, transparency, and resilience in a competitive global environment.

Newspaper Summary 060526

 mint primer

What is the size of RBI’s total reserves?

As on 24 April, RBI’s total reserves were at $698.5 billion, up $10 billion over the past year, per data released on 1 May. While 79% was in foreign currency assets, 17% was in gold. Gold’s share in reserves has increased over the years. In April 2025, gold comprised 12% of reserves, from 8.7% and 7.8% in April 2024 and 2023, respectively. RBI, in a report last week, said of the total foreign currency assets of $552.28 billion, $465.61 billion was invested in securities, $46.83 billion deposited with other central banks and the Bank for International Settlement. The balance was deposited with commercial banks overseas.

WHY PAYMENTS BANKS FACE A SURVIVAL TEST

BY PUNEET KUMAR ARORA & JAYDEEP MUKHERJEE

PLAIN FACTS The Reserve Bank of India (RBI) has cancelled the licence of Paytm Payments Bank in the culmination of a series of supervisory actions that began with a halt on new customer onboarding in March 2022 and subsequent stringent business restrictions. While the action may appear rooted in regulatory non-compliance, it has reignited a broader debate over the viability of payments banks. Conceived to serve the unbanked, their relevance is now being questioned amid near-universal account ownership driven by Jan Dhan Yojana and intensifying competition from fintech platforms, most notably the Unified Payments Interface (UPI). With a key player exiting, concerns are mounting over the sustainability of India’s differentiated banking model.

FINTECH FIGHT Payments banks began operations just as UPI went mainstream, with both targeting low-value digital transactions—turning overlap into competition. UPI’s seamless bank-to-bank transfers removed the need to park funds in payments bank wallets or accounts, undercutting their model of enabling small-value transactions through stored balances. Driven by demonetization, ease of use, interoperability and zero transaction charges, UPI usage surged from 20 million transactions in 2016-17 to over 240 billion in 2025-26, an almost 12,000-fold rise. Transaction value rose from ₹0.07 trillion to ₹314 trillion, over a 4,000-fold jump. UPI has penetrated the grassroots economy, including small merchants and street vendors. With zero-cost transactions and near-universal acceptance, UPI has made them increasingly redundant. Competition has also risen from platforms such as PhonePe and Google Pay, which offer integrated payment ecosystems on top of UPI.

DEPOSIT DOMINANCE Deposits in the segment are concentrated, with India Post Payments Bank (IPPB) commanding about 73% of total. Backed by a network of over 0.15 million post offices and nearly 0.19 million postmen and gramin dak sevaks, IPPB has scaled rapidly, especially in rural and remote areas. It had around 117 million customers in 2024-25, benefitting from the familiarity and reach of the postal system, with integration into Post Office savings accounts enabling seamless banking. Airtel Payments Bank, the next largest, holds about 13% of deposits and has grown by leveraging its large mobile subscriber base, prepaid recharge network and retailer footprint. Beyond these two, the market thins out quickly. Fino and Paytm payments banks have modest shares, while others remain marginal. The model leaves limited room for smaller players to scale, favouring institutions with strong distribution, large customer bases and the ability to operate at scale in a low-margin, highly competitive market.

WEAK WICKET Payments banks were set up to drive financial inclusion, offering small savings accounts and digital payment to migrant workers, small businesses and low-income households in the unorganized sector. Deposit limits were set at ₹1 lakh per customer in 2014 and raised to ₹2 lakh in 2021. But, they cannot lend, issue credit cards or accept deposits from non-resident Indians. Hailed as a poster child of India’s differentiated banking experiment, enthusiasm faded early. RBI gave in-principle approvals to 11 entities in 2015, but several withdrew, citing high compliance costs, lending curbs, and thin margins. Seven licences were finally issued, with Airtel Payments Bank the first to begin operations. The constrained model and high upfront costs delayed profitability. Payments banks turned profitable only in 2022-23, aided by rising interest income. While they have remained in the black since, including in 2024-25, the recovery appears fragile, with a dip in profits reflecting higher provisions and contingencies.

MARGIN LIMITS The core challenge is a structurally weak revenue model. Payments banks cannot lend and rely on fee-based activities —transaction charges on utility payments and small transfers, banking correspondent services, micro-ATM operations, cash management, PoS commissions, and para-banking services such as insurance distribution and mutual fund facilitation. These are inherently low-margin. Ticket sizes are small, pricing competitive, and the market crowded, leaving little pricing power. In 2024-25, about 76% of payments banks’ income came from non-interest sources, unlike traditional banks, compared with 80-85% interest-led income for traditional banks driven by lending spreads. The margin gap is stark. Commercial banks typically borrow at around 4% and lend at 10-12%, generating healthy spreads. Payments banks pay 3-4% on deposits and earn 6-7% on safe investments such as government securities, resulting in thin spreads and structurally constrained profitability.

MARKET MISFIT Indian payments banks were modelled on mobile money platforms in Sub-Saharan Africa, where M-Pesa and Orange Money reshaped finance for unbanked populations. Over time, these platforms expanded beyond transfers into mobile-enabled credit, wealth management and microinsurance. In 2025, Sub-Saharan Africa accounted for nearly half of global mobile money accounts and processed 92 billion of 125 billion worldwide transactions. India attempted a similar model, but outcomes diverged sharply. Unlike Sub-Saharan Africa, where mobile money often serves as the primary financial account and enables service fees, India’s high bank penetration, fintech competition and the rise of free UPI have made it difficult for payments banks to monetize transactions sustainably.

War may dent India’s growth: Memani

By Gireesh Chandra Prasad

NEW DELHI The West Asia war may temporarily hurt India’s growth rate and dampen investment sentiment, but the conflict poses no existential threat to most businesses, according to Rajiv Memani, president of lobby group Confederation of Indian Industry (CII).

DE-RISKING STRATEGIES Memani said that as a result of the external shocks, businesses are closely examining their factories, enterprises, trade routes and export markets to de-risk themselves. Memani, who is also the regional managing partner of EY Africa-India and chair of EY Growth Markets Council, said that the challenge before businesses is to strike a balance between the costs that they can absorb and those that must be passed on to consumers, while managing the potential impact on demand. Rising cost pressures may require partial pass-through to consumers, some of which may already be happening, Memani said.

ENERGY AND INFLATION The global energy shock due to the war in West Asia is fuelling price rise, raising concerns for policymakers worldwide, including in India. The statistics ministry data showed that wholesale price index (WPI)-based inflation jumped from 2.13% in February to 3.88% in March, signalling the fast transmission of the energy shock at the wholesale level. Consumer price index-based inflation in the meantime surged from 3.21% to 3.4%, still within the central bank’s tolerance range of 2–4%.

GROWTH OUTLOOK Government had forecast a 7–7.4% economic growth for FY27 before the West Asia war started on 28 February, which has now clouded this outlook. The Reserve Bank of India (RBI) earlier this month forecast a 6.9% economic expansion.

FUTURE OUTLOOK Businesses are closely evaluating the heightened risks in a volatile geopolitical situation and ways of de-risking from future shocks, Memani said, adding that quite a few large Indian companies are evaluating captive nuclear power plants, a sector that has been liberalised now. However, he noted this is a long-term development to watch.

JOBS AND SKILLING He does not see job creation getting impacted because of the West Asia crisis. “I don’t think it should impact. There could be a short-term impact where industry’s posture may be slightly more conservative because of some moderation in growth. But overall, I do not assume that there will be an issue on the jobs front because of this,” he said. He said there is a bigger issue to tackle—skilling people at scale to ensure there is enough manpower for the advanced manufacturing capacity that comes up in sectors such as semiconductors and electronics.

FUNDAMENTAL STRENGTH “Private sector and growth will bounce back once things settle down in a few months, due to India’s fundamental economic strength. India will remain the fastest-growing economy, and I hope the pace of reforms continues to create new opportunities...” said Memani.

Cognizant cuts payouts as AI dealmaking gathers pace The shift mirrors TCS and HCLTech, which returned less cash to shareholders last year

Jas Bardia jas.bardia@livemint.com BENGALURU

Cognizant Technology Solutions has become the third largest Indian information technology (IT) services firm after Tata Consultancy Services (TCS) and HCL Technologies (HCLTech) to dial back shareholder payouts as it redirects capital towards acquisitions and building artificial intelligence (AI) capabilities.

Nasdaq-listed Cognizant, which follows a January-December financial year, returned $1.99 billion to shareholders through dividends and share repurchases last year. This year, the company is set to return less.

“This year again, $2.5 billion (in free cash flow), we have committed $1.6 billion to be returned to the shareholder... of which we have now used about $600 million from the remaining $1 billion for Astreya,” Jatin Dalal, chief financial officer of Cognizant, said on 29 April.

Cognizant ended last year with $21.1 billion in revenue, up 7% year-on-year.

“Our long-term capital allocation framework is to deploy around 50% of our annual free cash flow towards M&A... and around 50% towards dividends and share repurchases,” a Cognizant spokesperson said.

Cognizant’s shift mirrors that of TCS and HCLTech, both of which returned less cash to shareholders last year. TCS gave ₹39,571 crore (down 12%) and HCLTech gave ₹14,618 crore (down 10%). For TCS, this was the second straight year of declining returns; for HCLTech, it was the first in five years.

In contrast, Infosys, Wipro Ltd, and Tech Mahindra Ltd returned more, with payouts up 81%, 85%, and 5%, respectively.

Analyst Amit Chandra of HDFC Securities attributed the shift to the need for growth-led re-rating. “IT services companies are unable to increase their valuations just by giving excess money to shareholders so they are now focussing on growth," he said. Shares across the sector have declined between 2% and 32% over the past year, largely due to concerns over AI-led efficiencies eating into traditional revenue.

At the core of Cognizant’s lower payouts is a ramped-up acquisition strategy. It has already spent $730 million this year, including the acquisition of 3Cloud for $700 million and Astreya for $600 million.

TCS has also stepped up dealmaking, investing ₹6,770 crore on two acquisitions, including Salesforce consultant Coastal Cloud. TCS also committed $6.5 billion to build 1GW of AI data centre capacity. HCLTech announced $420 million across four acquisitions last fiscal to strengthen AI and data capabilities.

STRATEGIC SHIFT

• COGNIZANT last year gave $1.99 billion to shareholders.
• THE firm is set to return even less this year.
• COGNIZANT ended last year with $21.1 billion in revenue, up 7%.
• AT the core of reduced payouts is a stepped-up acquisition strategy.

Iran uses 1980s playbook, plus drones, to cripple shipping Four decades ago, Iran and U.S. were on a collision course over oil shipping, an episode with inexact parallels.

By James T. Areddy feedback@livemint.com

STRAIT OF HORMUZ During the Tanker War of the 1980s, Iran used missiles, mines and speed boats to assert its control over the Strait of Hormuz. Back then, it took an extensive naval operation, including the destruction of command posts on offshore oil platforms by U.S. Marines, to break Tehran’s hold.

After nearly a month of relative quiet around the strait amid a U.S.-Iran cease-fire, an initiative from President Trump to protect ships appeared to spark new Iranian attacks on vessels Monday. In fundamental ways, today’s standoff is very different from the Tanker War, which was part of an “imposition strategy” designed to put Iran in control of regional waters. As Washington weighs responses in the current conflict, that war within a war four decades ago could still hold lessons.

On Sunday, Trump said the U.S. would seek to guide ships aiming to transit the strait. Senior U.S. officials said that would involve sharing the location of mines and assessing what routes are the safest to navigate. They said there was no current plan for the U.S. to send warships to escort tankers and other vessels trapped in the Persian Gulf.

Since being attacked by the U.S. and Israel two months ago, Iran’s Islamic Revolutionary Guard Corps has opened fire on more than 25 commercial ships, seized two and managed to keep the U.S. Navy at arm’s length—effectively closing off the narrow waterway. Iran warned mariners against attempting to pass through the strait without permission from Tehran and warned U.S. forces to stay away.

HISTORICAL PARALLELS Iran’s hard-line leaders are now trying to choke regional oil exports to hurt the global economy. Whereas the regime was young in the 1980s, the country today enjoys alliances with Russia and other partners. Its goal in the 1980s was driving up oil prices without drawing the U.S. into conflict, according to Kenneth M. Pollack of the Middle East Institute.

The current military challenge is also different and costly to counter. When President Ronald Reagan reluctantly inserted the U.S. Navy into the Tanker War to keep crude flowing, the Navy deployed around 30 of its roughly 600 ships to the operation, and U.S. frigates sailed deep into the Persian Gulf. Today, the Navy has no frigates and is about half the size. U.S. Central Command is taking on Iran from a distance, dedicating around a dozen ships and over 100 aircraft.

“We do seem to be understandably concerned about being hit, and the Iranians know that,” said Duffy. Unlike the formal convoy system of the Tanker War, the newly announced U.S. operation appears to provide a framework for a “military overwatch”. This operation is located outside the strait—in the Gulf of Oman and farther afield—to avoid the regime’s blockade.

THE 1980s COST The U.S. suffered its biggest loss of the Tanker War even before the Kuwaiti reflagging-escort operation began. An Iraqi jet mistakenly shot two Exocet missiles into the hull of the USS Stark, killing 37 American sailors. For its later escort operation, known as Earnest Will, the U.S. publicized routes in advance because it thought the presence of the Navy would be enough to ensure safe passage.

By 1988, Iran was hitting merchant vessels weekly, prompting patrols by at least 10 Western and eight regional navies. The Navy had bulked up its escort system with militarized barges and other fortifications. While Iranian forces didn’t directly attack Navy ships, gunners on speedboats shot at escorted vessels with rocket-propelled grenades. At one point, Kuwait even considered assistance from Moscow.

The U.S. eventually responded with Operation Praying Mantis, a quick series of strikes that included destroying Iranian ships and offshore oil platforms doubling as command centers. Iran then backed off. However, the deadliest single incident was still to come: in July 1988, the USS Vincennes mistook an Iran Air commercial plane for a fighter and shot it down.

Why RBI wants to keep India’s gold at home

BY SHAYAN GHOSH

The Reserve Bank of India (RBI) brought over 100 tonnes of gold back to India in the six months to March, taking the total gold reserves stored in India to 680 tonnes. Mint takes a look at why the RBI and other central banks are bringing gold back home.

Why is RBI bringing back gold? After the US and allies blocked Russia’s access to $300 billion of foreign assets in 2022 as part of sanctions following its aggression in Ukraine, central banks became wary of storing gold away from home. India, too, has brought home a large chunk of gold reserves. In September 2023, 48.5% of the gold reserves were held by the Bank of England and the Bank for International Settlements (BIS), which has now shrunk to 22% as of end-March. By value, India’s share of gold in the total foreign exchange reserves increased from 7.4% as at end-September 2023 to about 16.7% at the end of FY26.

Why are central banks buying gold? Global central banks, including RBI, have been raising their gold reserves aggressively over the past few years. World Gold Council data showed National Bank of Poland was the largest purchaser in the first three months of 2026, increasing its gold reserves by 31 tonnes. Central bank gold demand saw a strong start to 2026, with net purchases of 244 tonnes in the March quarter. IDFC First Bank chief economist Gaura Sengupta said central banks are raising their gold reserves to diversify holdings amid a rise in yields on US treasuries.

What is the outlook on gold holdings? Broadly, experts agree that central bank gold buying will continue in 2026. Sengupta said lower gold prices offer a good entry point for central banks to accumulate more gold reserves and does not see central banks slowing their gold investments. The World Gold Council expects central bank buying to be solid at levels close to those in 2025. It said demand by central banks showed good traction despite price volatility, while continued geoeconomic risks could provide additional upside.

Is RBI the only central bank to bring back gold? The central bank of France has also repatriated gold stored overseas. Madan Sabnavis, chief economist at Bank of Baroda, said countries now prefer to keep their gold reserves at home to tell global investors that they have enough firepower during a crisis. At home, he said, these reserves are also excluded from the global sanction net.

India has a chance to fix its east-west imbalance

The BJP’s West Bengal win places this state under the same party that rules at the Centre. This could improve its governance and help address India’s uneven economic emergence

OUR VIEW

The emphatic victory of the Bharatiya Janata Party (BJP) in elections to the West Bengal assembly focuses attention on an important aspect of India’s political economy: the role of politics and governance in economic development. The link is hard to quantify, especially in an era where economics is increasingly about mathematical models. However, as pointed out by a paper on ‘The relative economic performance of Indian states during the period 1960-61 to 2023-24’ by Sanjeev Sanyal and Aakanksha Arora, there is no getting away from harsh facts: the economic performance of Indian states has been vastly disparate.

West Bengal, which accounted for the third-largest slice of the country’s GDP at 10.5% in 1960-61, saw its share shrink to 5.6% by 2023-24, the most severe reduction among states. Accordingly, its per capita income went from 127.5% of the national average to 83.7% over the same period. Another eastern state, Assam, which had an above-average per capita income in 1960-61, saw it drop in relative terms to 61.2% in 2010-11, though it improved to 73.7% in 2023-24. Likewise, Bihar; the undivided state’s relative per capita income was 70.3% in 1960-61, hit a low of 31% in 2000-01 and then stayed at around 33% after it was split into Bihar and Jharkhand. Odisha, also in the east, saw a consistent decline over the three decades to 1990-91 (70.9% to 54.3%), but then recorded a significant turnaround, taking its figure to 88.5% in 2023-24.

The reasons for the relatively poor showing of our major eastern states vary. What is indisputable, however, is that they have lagged western states like Gujarat and Maharashtra. The eastern states have been resource-rich, but appear to have been held back by a combination of adverse factors. Some states have lacked business-friendly policies. Land acquisition for industrial projects in West Bengal has been difficult, for example, as seen in the Nandigram and Singur episodes (in the latter, Tata Motors moved a car factory to Gujarat). Eastern states have also lacked the sort of growth hubs full of local talent—such as Bengaluru and Hyderabad in the south—that could attract tech-related investment. Law-and-order has been sub-par too, though a long Maoist rebellion in eastern forest belts is said to have finally been quelled. In general, weak governance often features in investor complaints.

Now with West Bengal under the same political dispensation as the Centre and the BJP part of ruling alliances in Bihar and Odisha, can investors expect a shift in business conditions for the better? If so, the country would get a chance to address an economic divide that has not got as much attention as the gap between the north and south.

In the mid-1980s, demographer Ashish Bose coined the acronym ‘Bimaru’ for Bihar, Madhya Pradesh (MP), Rajasthan and Uttar Pradesh (UP) in a paper that outlined the slow progress of these states that were home to almost 40% of India’s population. Since then, these four states have made concerted efforts to shake off that tag, MP and UP especially. If eastern states undergo a gear shift in favour of economic growth, it might well be time for a new acronym, Biba, which means ‘vibrant,’ for Bihar, Bengal and Assam.

Why a wealth tax is unlikely to prevent power concentration

BY ALLISON SCHRAGER

California looks likely to put a ‘one-time’ tax of 5% on wealth above $1 billion on the ballot in November, and polls suggest it could pass despite opposition from some economists and Democratic politicians. Meanwhile, calls to tax the rich are resounding across the country, from New York’s proposed ‘pied-à-terre tax’ to Washington State’s first-ever income tax, imposed only on millionaires. While concentration of power among the wealthy can be harmful, using the tax code to fix it may create worse problems.

Wealth taxes—taxes on assets as opposed to income—are considered bad economics because they are nearly impossible to collect to the point where they are largely self-defeating and can often result in less tax revenue. They not only discourage entrepreneurship and job creation but also distort capital allocation, which is bad for growth. Still, some proponents admit that while a tax may reduce overall wealth in the economy, it is a price worth paying because inequality is toxic.

Other economists argue that the problem with wealth inequality is that it makes the rich too powerful, allowing them to lobby the president and Congress to ensure they maintain their status, which can distort markets and policy. No one elected Elon Musk, who has amassed significant power in markets, media, and the government. At the same time, there is concern over the amount of anger directed at the wealthy. Increasingly, Americans do not see self-made billionaires as success stories, with nearly half of the population seeing them as beneficiaries of a corrupt system who got rich at their expense.

While wealth creation is not zero-sum and the US economy benefits from companies like Amazon and the jobs they create, the anger exists because many positional goods and services are in short supply. For those who are not wealthy, it is hard to move, find a home they like, or afford things now necessary for a middle-class life. There is resentment that the rich live by different rules and do not have to worry about mortgages, good schools, or health insurance.

Now, there are concerns that jobs could disappear just as those who created the "job-stealing technology" get richer. The subsequent resentment could tear the country apart, providing another reason to justify punitive taxes. The result is a societal equivalent of what economists call a "doom loop". While there are serious issues at stake, high taxes are not necessarily the way to address them; while individuals like Elon Musk may not always spend money wisely, there is no conviction the government would do better.

There are at least two other flaws with the rationale for a wealth tax. First, imposing high taxes on the wealthy will not necessarily reduce their power but will simply reallocate it to bureaucrats. While bureaucrats are theoretically accountable to the public, giving them more influence is a recipe for more corruption, whereas billionaires are subject to the discipline and transparency of the market and their shareholders. Second, a lot depends on who decides what counts as ‘too much’ wealth, and such limits could be lowered over time or used against perceived political enemies. Appropriating wealth to limit power has not worked well in other countries.

Taxes are a necessary fact of life, and Americans have big expectations for a government that does not collect enough revenue to finance itself. The very rich are already paying a lot, but they could pay more. However, the principles of good tax policy are about raising revenue while minimizing distortions and maximizing feasibility, not about resentment or power. Concentration of power is a problem that can be better addressed by working on the weakness and loss of trust in institutions. Punishing the rich by making them less rich will only make everyone poorer by reducing growth, and a no-growth economy will only make people more resentful and miserable.

AP clears power distribution licence to Google data centre

G Naga Sridhar Hyderabad

The Andhra Pradesh government has cleared a power distribution licence for the upcoming Google data centre in Visakhapatnam, in line with a new, first-of-its-kind policy. While there is no official confirmation yet from Google or the state government, sources indicate the development will be announced in due course.

Deemed Distribution Licence (DDL) Policy

A policy framework was established a few weeks ago to provide a deemed distribution licence (DDL) to strategic data centres. This initiative recognizes the specialized activities of data centres in power procurement and the development and maintenance of distribution networks. The Energy Department noted that it has become necessary to facilitate data centres possessing requisite expertise to obtain these licences for projects being developed or proposed within the state.

This move makes Andhra Pradesh the first state to grant distribution licences to private firms outside of the power sector.

Eligibility and Restrictions

To be eligible for a DDL, projects must meet specific criteria:

• Connected Load: Projects must be undertaken by a single developer or investor with a minimum connected load of 300 MW or more within the state. Investors may aggregate connected loads across multiple locations to reach this threshold.
• Usage: Power supply is restricted exclusively to data centre loads within the licensed area.
• Third-Party Supply: The DDL is prohibited from supplying power to any third-party consumers outside the licensed area approved by the APERC.

Power Procurement Freedom

Under the DDL, entities have the freedom to procure power from any lawful source, including:

• Renewable energy generators through bilateral PPAs.
• Open access.
• Captive generating plants, including solar, wind, and hybrid systems with Battery Energy Storage Systems (BESS).
• Power exchanges.

Strategic Growth

The state government has been actively promoting data centres as a key growth sector due to their potential for attracting high-value investments and generating employment. This strategy aims to position Andhra Pradesh as a premier digital infrastructure hub.

Notably, the foundation stone was recently laid for the Google Cloud India AI Hub in the Anakapalli district, a project representing a $15-billion investment.

High oil prices put credit strain on fuel retailers

New Delhi

India’s oil marketing companies could see mounting credit pressure if crude prices stay elevated, with delayed fuel price pass-through threatening earnings and cash flow, Fitch Ratings said. Sustained high oil prices would erode EBITDA if domestic pump prices fail to keep pace with rising input costs, while large inventory holdings and refining volumes would increase working capital needs.

Kashmir widens anti-narcotics drive to choke illicit financial networks

Gulzar Bhat Srinagar

The ongoing anti-narcotics crackdown in the Valley is disrupting the channelling of drug trade proceeds into real estate and other informal investments, as authorities widen their focus from enforcement to the financial networks underpinning the illicit economy.

100-Day Campaign

Lieutenant Governor Manoj Sinha last month launched a 100-day anti-drug campaign under the Nasha Mukt Abhiyan, which is aimed at making Jammu and Kashmir drug-free. As part of this ongoing initiative, the Srinagar police recently attached immovable properties worth ₹3.5 crore belonging to narcotics smugglers.

Financial Networks Targeted

The drive specifically targets the financial structures that support the drug trade. Recent enforcement actions include:

• Property Attachments: On May 3, authorities targeted approximately 15 commercial structures linked to individuals accused in cases under the Narcotic Drugs and Psychotropic Substances (NDPS) Act.
• Real Estate Disruption: The crackdown aims to prevent drug money from being laundered through real estate and other informal sectors.

Scale of the Issue

The region faces a significant challenge with substance abuse. According to the National Survey on Extent and Pattern of Substance Use in India, an estimated 10 lakh people in Kashmir use various substances. Officials have reported that over 68,000 kg of narcotics have been involved in recent enforcement efforts.

‘AI layoffs may create budget room, but won’t deliver returns’

Our Bureau Bengaluru

According to a survey by Gartner, approximately 80 per cent of organisations piloting or deploying autonomous business capabilities report workforce reductions. However, these reductions do not appear to translate into a direct return on investment (ROI).

Survey Findings

The survey, which included 350 global business executives from enterprises with at least $1 billion in annual revenue, found that workforce reduction rates were nearly equal between companies reporting higher ROI and those seeing only modest or negative outcomes.

The study focused on organisations already using or piloting AI agents, intelligent automation, or autonomous technologies.

Human-Amplified Business

The shift toward autonomous business involves technologies like AI agents, RPA, digital twins, and tokenised assets. Gartner experts suggest this transition represents "human-amplified business" rather than "humanless business".

Helen Poitevin, Distinguished VP Analyst at Gartner, noted that many CEOs use layoffs to signal quick returns on AI, but called this approach "misplaced".

“Workforce reductions may create budget room, but they do not create return. Organisations that improve ROI are not those that eliminate the need for people, but those that amplify them,” Poitevin said.

Future Outlook

Gartner predicts a significant surge in AI agent software spending, forecasting it will reach $206.5 billion in 2026 and $376.3 billion in 2027, up from $86.4 billion in 2025.

In the long term, autonomous business is expected to create more work for humans, not less. Structural factors, such as demographic decline and the need for trust in high-stakes consumer interactions, will ensure that human talent remains central to governing and scaling these technologies.

Fundamentals are under some stress

Saumitra Bhaduri & Shubham Anand War effects are working their way through trade, economy and financial channels. A structured response is called for.

The ongoing pause in hostilities in West Asia has brought immediate relief to the people in the region, but the aftershocks to global energy infrastructure and supply chains persist. The war has disrupted the flow of crude oil and fertilizers, creating bottlenecks in logistics and trade. Brent crude remains elevated, and India’s economic outlook is clouded by persistent volatility.

Oil makes up 26-27 per cent of India’s imports, and the oil trade deficit has averaged close to 3 per cent of GDP in recent years. In FY26, India's current account deficit was about 0.8 per cent of GDP, cushioned by services exports and remittances. But in a supply shock, that cushion shrinks fast because oil demand is relatively price-inelastic in the short run. Therefore, any price spike quickly inflates the import bill.

Next, the rupee, which had been stable for two years, has come under pressure. By March 2026, it fell past the 95 mark against the dollar, nearly a 10 per cent depreciation over the fiscal year. This was driven by higher oil prices and persistent capital outflows as global investors reassessed risk. In March alone, foreign portfolio outflows topped ₹1.3 lakh crore. While a weaker rupee can help exporters, it also raises the cost of essential imports and adds to inflation.

Despite these pressures, India’s foreign exchange reserves remain strong, covering more than 10 months of imports. Short-term debt relative to reserves is also low, around 20 per cent. These buffers provide protection, but their resilience depends on how long global volatility persists and how deep the shocks go. For instance, remittances have provided a strong buffer, but these are at risk as nearly 38 per cent come from the Gulf.

RBI’S RESPONSE

Against this backdrop, the RBI’s Monetary Policy Committee (MPC) has chosen to keep policy rates unchanged. The RBI has acted with targeted measures such as limiting banks’ foreign currency positions, easing capital rules, and improving access to working capital for small businesses. Its move to limit net open positions of banks in onshore markets helped the rupee recover a bit. While these actions have provided short-term relief, relying heavily on foreign exchange intervention and engineered stability is not a viable long-term strategy.

Channels of Stress

The stress on the Indian economy is coming through several channels:

• Supply Disruption: Energy-intensive sectors are directly affected, and the impact cascades to other sectors. The non-availability of fertilizers and other chemicals may affect the output of agricultural and industrial products, compounding the inflationary impact.
• Logistics Costs: Storage and transport are highly energy-intensive. Increased logistics costs cascade through the economy, raising the prices of all final products.
• Export Impact: Indian exports are taking a hit from both demand and supply sides. The war has affected direct trade and caused a slowdown in other major markets. With West Asia accounting for over 16 per cent of India’s exports in 2023-24, sustained disruption will hit export earnings.
• Fiscal Risk: Fiscal slippage against the budgeted 4.3 per cent of GDP remains a risk, owing to lower excise duty and corporate tax collections, reduced dividend payouts by oil marketing companies (OMCs), and a higher subsidy burden.

Vigilance and Resilience

Policymakers must remain vigilant. The outcome of the conflict, US tariff investigations, and the monsoon’s performance will all shape the next steps of monetary policy. Until there is more clarity, the RBI’s cautious approach is justified.

Resilience will depend on maintaining a strong services surplus and remittance inflows, while expanding manufacturing so the non-oil tradable base grows. Attracting stable, long-term capital and encouraging local currency financing will be crucial. Structurally, energy security must be addressed.

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Saumitra Bhaduri is Professor and Shubham Anand is Ph.D scholar at Madras School of Economics (MSE), Chennai.

Argentina's Stalled Fight Against Inflation under Milei

 Milei’s inflation fight stalls in Argentina The final stretch of reining in price increases is likely to be difficult, warn economists By Daniel Politi in Buenos Aires

Javier Milei’s push to bring down Argentina’s chronic inflation is stalling, with the monthly rate hitting 3.4 per cent in March — its highest level in a year — as economists warn that tackling the final stretch could be far harder than halting the crisis at its peak.

Inflation has fallen sharply from the double-digit monthly rates Milei inherited when he became president in 2023. However, the monthly rate bottomed out at 1.5 per cent in May and hit 2.9 per cent in both January and February.

“The number is bad. We don’t like the number because inflation is repugnant to us,” Milei stated after the data was published. “However, hard factors allow us to explain what has happened and especially to expect that in the future inflation will return to its downward path”. The libertarian president has suggested inflation could soon “start with a zero,” meaning a monthly rate of less than 1 per cent.

Economists remain sceptical, particularly as the energy price surge caused by the Iran war adds fresh pressure to already sticky price dynamics. While the annual rate of nearly 33 per cent is a significant drop from its peak of nearly 300 per cent, it remains among the world’s worst. Lorenzo Sigaut Gravina, an economist at Equilibra, noted that it is easier to reduce inflation from 30 per cent a month to 3 per cent than it is to move from 3 per cent a month to 3 per cent a year.

Milei initially relied on holding the peso’s exchange rate steady to anchor prices. When the government allowed the currency to move more freely as part of a deal with the IMF last April, inflation began climbing again. Without a firm anchor, the government must now combat deep-seated inertia built up over years. In Argentina, habits such as shopkeepers raising prices pre-emptively, families stocking up on staples, and rental contracts with automatic quarterly increases are difficult to break.

Furthermore, wages are often negotiated based on past inflation, which can feed future price rises as companies pass these costs to consumers. While manufactured goods prices are being held down by a semi-floating exchange rate and fewer trade barriers, the costs for utilities and other services are still rising after years of subsidies.

The government has resisted an explicit inflation-targeting policy for the central bank. Gabriel Caamaño, an economist at Outlier, argues that in the absence of an exchange-rate anchor or a clear policy framework, the disinflation process has lost its engine and is at an impasse. This impasse persists despite a plateaued economy and weak growth.

Argentines are feeling a significant squeeze; for instance, meat prices in Buenos Aires surged 6.9 per cent in March. Food prices nationwide rose 3.4 per cent that same month. Wages in the formal sector grew at only about 2 per cent in February, falling below the rate of inflation.

The cumulative effect is a significant erosion of living standards. Real incomes for approximately 14.5 million formal sector workers and pensioners are roughly 8 to 10 per cent lower than when Milei took office.

Recent polls reflect this deterioration, with concerns about stagnant real wages and rising unemployment—which has reached 7.5 per cent—now outweighing inflation as a priority for voters. Milei’s approval rating has fallen to 36.4 per cent, down from 49.5 per cent during his first month.

The government has also faced scrutiny regarding its inflation measurements after delaying a planned update to the consumer price index (CPI) basket, which led to the resignation of the national statistics agency head. While economists suggest the numerical impact of this delay has been negligible so far, they warn that failing to update the index carries a reputational cost in a country with a history of manipulated data.

The Iran war has caused a surge in energy prices, which is creating significant new pressure on Argentina's already "sticky" price dynamics. This external factor is one of the primary reasons economists are skeptical of President Milei’s goal to bring monthly inflation down to less than 1% in the near future.

The impact of these rising energy costs is compounded by internal policy changes and economic habits:

• Subsidy Reductions: While global energy prices are rising due to the war, local costs for utilities and other services are also increasing as the government continues to roll back years of subsidies.
• Inflationary Inertia: Some utility costs in Argentina automatically adjust based on past inflation, meaning that previous high inflation rates continue to drive current price increases.
• Stalling Disinflation: Economists warn that these rising energy costs are contributing to an "impasse" in the disinflation process, making it much harder to reduce inflation from its current monthly level of around 3% than it was to bring it down from its peak of 30%.

The semi-floating exchange rate currently acts as a mechanism to hold down the prices of manufactured goods.

While other sectors of the economy are seeing price increases, manufactured goods are experiencing more stability due to the following factors mentioned in the sources:

• Currency Management: The semi-floating exchange rate helps prevent the sharp price spikes often associated with rapid currency devaluation.
• Trade Liberalization: The effect of the exchange rate is bolstered by the removal of certain trade barriers, which further assists in keeping these prices in check.
• Sector Contrast: This trend contrasts sharply with utilities and services, where costs continue to rise because they are still being adjusted for past inflation and the reduction of government subsidies.

The Algorithmic Frame: Netflix, AI, and the VFX Workforce

 Netflix’s AI deal puts the global VFX workforce at risk. A startup founded by Ben Affleck, recently acquired by Netflix, could automate the frame-by-frame work done by artists across India, South Korea, and Latin America. Netflix’s latest acquisition is threatening thousands of livelihoods from Los Angeles to Mumbai. On March 5, Netflix acquired InterPositive, an artificial intelligence company built by Hollywood actor Ben Affleck, for an undisclosed sum.

InterPositive automates color grading, relighting, and continuity fixes, work that is currently done frame by frame by artists in India, South Korea, the Philippines, and Latin America. More than 2 million professionals work in visual effects globally. Netflix has stated it would share the technology only with in-house creative partners and not with rival production companies, with Affleck serving as a senior adviser to the streaming giant.

The jobs AI creates may not be the same—or as many—as the jobs that it replaces in the coming years. While AI had already been eroding visual effects jobs before the InterPositive acquisition, the involvement of Ben Affleck has turned a quiet industry shift into a global conversation. The impact will be hardest on entry-level workers, as these early-stage opportunities are where artists traditionally "learn by doing". If AI tools begin handling tasks like cleanup, relighting, or base compositing, these foundational roles may vanish.

In 2023, a study commissioned by Hollywood labor groups found that about 75% of entertainment industry executives were already using AI to remove, reduce, or consolidate jobs. The study estimated that as many as 118,500 positions could be lost within three years, with 80% of early adopters deploying AI in post-production. While these projections measured the U.S. impact alone, the global figure has yet to be quantified.

Some industry experts argue that efficiency gains from AI will lead streamers to commission more productions, creating new work. However, Kimberly Owczarski, an associate professor at Texas Christian University, argues this logic fails against the reality of a contracting industry. Los Angeles County alone has lost 41,000 film and television jobs in three years, representing a quarter of its entertainment workforce. Owczarski noted that a surge in new work seems unlikely given the global shrinkage in the overall number of film and TV productions.

Netflix, which had more than 325 million subscribers and generated $45.2 billion in revenue last year, did not respond to questions regarding the impact of its AI capabilities on its international post-production workforce. This is particularly significant for India, where more than 90% of Hollywood’s rotoscoping work is performed. Rotoscoping is the painstaking, frame-by-frame tracing of shapes in live-action footage that allows visual effects to be layered into a scene. Joseph Bell, author of the Visual Effects & Animation World Atlas, noted that while AI technology has not yet swept away those jobs, it "will get there sooner than later".

The InterPositive deal allows Netflix to push its investment in AI-powered production further and faster. Other major players are also staking claims; for instance, Disney invested $1 billion in OpenAI in December 2025 to license characters for the Sora video platform. The fragility of the VFX industry was recently highlighted when Technicolor collapsed under debt in February 2025, abruptly shutting its India operations and leaving 3,000 workers without pay or notice.

Amidst these shifts, Netflix opened Eyeline Studios in Hyderabad on March 12, a facility designed for what it calls "generative virtual effects". Netflix’s chief product and technology officer, Elizabeth Stone, described their approach as serving the needs of the "creative community," yet the company has not specified if VFX studios in India, South Korea, or Latin America will qualify as "creative partners" with access to InterPositive’s tools.

In the U.S., labor unions like SAG-AFTRA and the WGA are making AI protections a central demand in contract negotiations. In contrast, post-production workers across India and South Korea have no equivalent representation, and conversations about AI impact remain largely informal within teams or peer groups. Furthermore, the perception of what AI can do is moving faster than the technology itself; as Joseph Bell pointed out, even if AI cannot yet do a job, a client's belief that it can is enough to disrupt project budgets, schedules, and employment.

The Blueprint for Japan’s World-Class Railway Success

 Why Japan has such good railways Words by Matthew Bornholt & Benedict Springbett (7th April 2026)

Japan’s railways are the finest in the world, and the authors argue that other countries can copy its formula. Japan is uniquely "the land of the train," with 28 percent of passenger kilometers traveled by rail—a figure over a hundred times more likely than in the United States. The network is divided among dozens of mostly private companies; JR East alone carries more passengers than the entire railway system of every country except China and India. Despite serving ten million fewer people and having fewer kilometers of track than the British railway system, JR East carries four times as many passengers while remaining profitable and receiving far less public subsidy than Western systems.

While some attribute this success to culture, the authors assert that Japanese citizens take trains because they have the best railway system in the world, which is a result of sound public policy including business structure, land use rules, and superior privatization models.

The Structure of Japanese Railway Companies

The Japanese railway system is characterized by institutional diversity and private ownership. Although the system was nationalized in the early twentieth century as Japanese National Railways (JNR), private lines were still permitted. These "legacy private railways" evolved from electric tramlines into heavy-rail intercity connections that flourish today. In major urban areas, these operators account for nearly half of all tracks and stations. In 1988, JNR was largely privatized and broken into six regional monopolies (the Japan Railways Group, or JR). This leaves Japan with a mix of the descendant JR companies, sixteen large legacy private companies, and various minor railways and metros.

Railway-Led Urbanism: The "City-Builder" Model

A core business model for these companies is to capture the value they create by operating businesses beyond rail. For example, the Tokyu corporation allows passengers to live in Tokyu houses, work in Tokyu offices, see Tokyu doctors, and shop at Tokyu supermarkets. This "railway-as-city-builder" approach was pioneered in the 1950s by Kobayashi Ichizo of Hankyu Railways, who built suburban housing, department stores, and even a musical theater to create a passenger base. While core rail operations are profitable, side businesses in real estate and retail provide a significant portion of revenue and create a virtuous circle of transit-oriented development.

Land Use and Urban Planning

Japanese railway success is supported by liberal land use regulations that make it easy to build new neighborhoods next to lines and densify urban centers. Unlike other Asian cities, Japanese cities have vast low-rise residential suburbs, but their hyperdense centers—featuring "vertical street" buildings and underground shopping—are uniquely suited for rail’s spatial efficiency. This development is facilitated by a standardized national zoning system and private planning powers like land readjustment, which allows railways to redevelop urban areas cooperatively with local landowners.

Pricing Driving and Parking

Japan ensures that cars and trains compete on a level playing field by not extending the same implicit subsidies to cars as Western governments. Japan has privatized parking, making it illegal to park on public roads without permission; car owners must prove they have a reserved private space before purchase. Consequently, there are no "parking minimums" for developments, and in dense centers, parking is often outcompeted by more valuable land uses. Furthermore, Japanese roads are expected to be self-financing through tolls and vehicle taxes.

The Privatization of JNR

The 1988 privatization of JNR resolved chronic issues of political interference and militant labor unions. Before reform, politicians forced JNR to build loss-making rural lines, and labor costs reached 78 percent of total expenses. Privatization restored the vertically integrated model where regional companies own the tracks, trains, and stations, leading to immediate increases in productivity.

Regulation and Capital Subsidies

The system operates under generous fare maximums designed to maintain profitability per rider, which incentivizes companies to maximize ridership. While they do not receive operational subsidies, railways receive targeted government grants for public priorities like disability access, earthquake-proofing, and reducing road congestion by elevating tracks.

The authors conclude that Japan’s success is not due to a unique culture but to the restoration of institutional models that originally built the first railway systems in the nineteenth century.

The land readjustment model is a decentralized urban planning tool in Japan where agreement among a two-thirds supermajority of residents and landowners in a specific area is sufficient to allow for its comprehensive replanning. This process grants the power to compulsorily take and demolish land to make room for essential infrastructure and amenities.

Key features and applications of this model include:

• Evolution from Rural to Urban: Originally, land readjustment was primarily used to assemble rural land for new urbanization. Over time, it transitioned into a tool for redeveloping already urbanized areas, including the creation of the massive skyscrapers surrounding major Tokyo stations.
• Cooperative Railway Development: Private railway companies have historically used this model to secure land for building lines, double-tracking, and redeveloping station thresholds. This is typically done cooperatively with local businesses and landowners, rather than through a top-down government masterplan.
• Scale of Impact: Roughly 30 percent of all urban land in Japan has been subject to land readjustment.
• The Den’en Toshi Line Example: Perhaps the most famous application involved the Tokyu corporation’s Garden City Line. Over 30 years, a series of land readjustment projects covered 3,100 hectares, successfully balancing residential and commercial development (36%) with roads (17%) and green spaces like forests and parks (20%). This transformed a rural area into a high-density transit corridor, with the population growing from 42,000 to over 500,000.

By allowing homeowners and businesses to replan neighborhoods privately, Japan has been able to facilitate the densification of urban centers and the creation of "vertical cities" that are uniquely efficient for rail transport.

 

How Australia really stopped the boats

Words by Amelia Wood 17th April 2026

Many countries want to copy Australia’s immigration rules. But its most-copied border policy is not the one that worked.

Since 2014, around three million people have crossed the Mediterranean Sea to claim asylum once they reach European shores. These crossings are extremely dangerous: 33,000 people are missing, presumed dead, according to figures from the International Organization for Migration—a mortality rate of one percent. Unicef reports that at least 3,500 of them were children.

These crossings are deeply unpopular with Europeans. The vast majority of voters tell pollsters that ‘the fight against irregular migration’ is a priority, and three-quarters favor reinforcing the EU’s external borders. Populist-right parties have gained significant support due to their opposition to the current asylum system.

In response, Europe’s leaders are turning to offshore processing: sending and holding asylum seekers overseas while their claims are adjudicated. Britain previously attempted a plan to send asylum seekers to Rwanda permanently, and Italy is currently arguing to send those collected at sea to Albania. Denmark has passed similar legislation, and it is likely the EU as a whole will follow suit in June 2026.

Europe’s politicians are keen on this approach because they believe Australia solved its own boat problem using it. Unauthorized boat arrivals to Australia peaked at over 25,000 people between 2012 and 2013, then dropped to zero for almost a decade after a new policy regime kicked in. However, there is a problem with this narrative: offshore processing did not stop the boats. Instead, Australia’s success lay in turning boats back to their country of origin before they reached Australian shores.

The first and second waves

Unauthorized boat arrivals in Australia began in the 1970s with Vietnamese refugees. They were generally well received, and most were granted refugee status quickly. The second wave started in 1989, and for the next nine years, about 300 people arrived annually.

In 1999, boat arrivals rose tenfold, and by 2001, they doubled again. These arrivals were increasingly from the Middle East or Central Asia, often using smugglers from Indonesia. In August 2001, the Tampa affair—where the Australian navy boarded a Norwegian ship that had rescued 433 Afghan asylum seekers to prevent them from landing—led to a much tougher stance called the Pacific Solution.

The Pacific Solution involved three main policies:

1. Excising islands from Australia’s migration zone so arrivals couldn't legally apply for asylum.
2. Offshore processing on Nauru or Papua New Guinea.
3. Operation Relex, which ordered the navy to intercept and turn boats back to Indonesia.

The impact was nearly instantaneous: only one person landed in Australia in 2002, compared to 5,516 in 2001. While some argued the drop was due to calmed conflicts or the "spectacle" of the Tampa, the policies were clearly effective.

The third wave

The Pacific Solution was ended by Kevin Rudd’s Labor government in 2008. Consequently, boats returned, with arrivals rising 17-fold in 2009. In 2012, Prime Minister Julia Gillard reinstated offshore processing on Nauru and Papua New Guinea as a "matter of urgency."

This time, it didn’t work. In the six months following the reintroduction of offshore processing, 10,000 more people arrived. Facilities were overwhelmed, and many arrivals were simply given visas to live in Australia while their claims were assessed.

In 2013, the government took a harder line: arrivals after July 13 would be sent offshore and never be allowed to settle in Australia, even if granted refugee status. This was followed by the election of Tony Abbott, who launched Operation Sovereign Borders, shifting the focus back to boat turnbacks. The navy began using commercial and purpose-built lifeboats to tow passengers back to international or foreign waters. In 2014, only a single boat reached Australia, and none did for nearly a decade afterward.

Offshore processing didn't work. Turnbacks did.

The evidence suggests that turnbacks were the decisive factor. When offshore processing was reintroduced by Gillard, arrivals actually hit record highs because it was no longer a "credible blocker." Thousands concluded it was still worth the chance because, historically, 70 percent of those sent offshore eventually made it to Australia or another rich country.

The final proof is that in 2014, the Australian government quietly ended offshore transfers because facilities were full, relying only on turnbacks. Boat arrivals remained nil for years, proving turnbacks alone were enough.

Learning the wrong lessons

Offshore processing appeals to European leaders because it is "out of sight and out of mind," whereas water operations are visible, risky, and legally difficult. However, offshore processing is:

• Hugely expensive: Australia spent A$1.5 billion ($1 billion USD) a year on it after 2012.
• Cruel: Some refugees remained stuck on Nauru for 11 years, and six people committed suicide while held offshore.

While turnbacks have costs—including the risk of stopping legitimate refugees—Australia’s policy has, on net, made its waters safer. Between 2008 and 2013, over 1,200 people drowned attempting the crossing; no one is believed to have drowned in the years after turnbacks were reintroduced because the incentive to make the dangerous journey was removed.

Crucially, control of the border has preserved public consensus. Australians now hold more positive views about asylum seekers than people in 28 other rich countries surveyed by Ipsos. In 2023, Australia accepted three times as many asylum claims as it did in 2013, with little public outcry.

Turning boats around, not processing people offshore, is what really worked.

The Rapid Rise of Hyper-Accelerated Online Degree Hacking

 

Students are speeding through their online degrees in weeks, alarming educators

Some online colleges allow students to take unlimited courses on their own time, leading to quick degrees and worries about devaluing credentials.

By Todd Wallack April 19, 2026

It takes most college students at least four years to earn a bachelor’s degree, but Christie Williams finished in three months. The North Carolina human resources executive spent two months racking up credits through web tutorials after work in 2024, then raced through 11 online classes at the University of Maine at Presque Isle in four weeks. Later that year, she went back to earn her master’s — in just five weeks. The two degrees cost a total of just over $4,000. Since then, she has coached a thousand other students on how to speed through the state college, shaving off years and thousands of dollars from the usual cost of a degree. “Why wouldn’t you do that?” Williams asked. “It’s kind of a no-brainer if you know about it”.

Many U.S. schools have been experimenting with ways to speed up traditional college programs to reduce the burgeoning cost and help students move into the workforce faster. Some offer three-year bachelor’s programs, reducing the number of credits needed for a diploma by one quarter. Many more allow students to enroll in college classes while still in high school. But the breakneck pace of the fastest online programs concerns some academics, who say there is a big difference in what students can learn in weeks or months compared with three or more years.

The phenomenon — sometimes referred to as degree hacking, college speed runs or hyper-accelerated degrees — has spawned a cottage industry of influencers making videos about how quickly they earned their degrees and encouraging others to follow suit. Supporters of the approach tout it as an affordable, convenient way for people to earn credentials they need for their careers. Others, including some online students and academic officials, expressed concern about what the super-accelerated students are missing, and whether a quick path devalues degrees. “We want diplomas that mean something,” said Marjorie Hass, president of the Council of Independent Colleges. “I would prefer to have some of these degrees called something other than a bachelor’s”.

Nationally, it’s hard to know exactly how many students are graduating so quickly. The National Center for Education Statistics estimates that 44 percent of students finish a bachelor’s degree within four years but doesn’t offer numbers for shorter time periods. The University of Maine’s Presque Isle campus has more than 3,000 students in its online YourPace program. The school’s president said the program is designed to help older, nontraditional students rapidly obtain an affordable degree they may need for a raise, promotion or new job — students who don’t need the traditional longer college experience on campus that many young adults crave. “They literally just need a certificate” to help their careers, said Raymond Rice, president of the Presque Isle campus. He said the program is open only to students age 20 and older, in part to avoid competing with its traditional four-year program on campus.

Of the nearly 300 students who earned a bachelor’s in the YourPace program in fall 2024, the vast majority finished in less than a year. More than 1 in 4 finished their entire degree course load in a single eight-week session, half the length of a traditional academic semester. Under a system known as competency-based education, students typically must finish several assignments or pass a test to prove they learned the material, regardless of how long it takes. In a philosophy class Rice oversees, students have to show they learned the online material by completing five five-page essays and one longer paper that’s up to 10 pages. There are no class meetings, no group discussions, and no weekly assignments to slow students down. “The students demonstrate how much they can learn as quickly as they can,” Rice said. “They take as long or as short as they need to get there”.

At some schools, students can sign up for as many classes as they want for a flat price per term. For instance, the YourPace program in Maine charges $1,800 per eight-week session for undergraduate programs and $2,450 for graduate degrees. That gives students a powerful financial incentive to push through the programs as quickly as possible to limit the cost and avoid taking out significant student loans. Low-income undergraduate students may be eligible for Federal Pell Grants that help cover the cost. “That’s what is so dramatic and so impactful,” Rice said.

One reason some working adults can speed through the programs is that many have taken at least some college classes in the past and have credits to transfer. More than 43 million students in the United States started college but never earned a degree. The online schools best known for accelerated degrees, such as Maine’s Presque Isle campus and Western Governors University, also let students transfer in as many as three-quarters of the credits from nontraditional sources. That includes giving students credit for past learning on the job, passing tests that show they already know the material, or completing tutorials from online learning platforms such as Study.com, Sophia Learning and StraighterLine.

The head of the New England Commission of Higher Education, which oversees the accreditation of the University of Maine system, told The Washington Post that he had never heard of students completing a bachelor’s degree in only a few months. He said that is something his organization may decide to investigate. “If students are getting a baccalaureate degree in a few months, the commission could certainly inquire, ‘Is there integrity to the degree to be awarded?’” said Larry Schall, president of the commission.

Serenity James of Atlanta completed 16 courses through an online learning platform in 22 days. That gave her most of the credits she needed for a bachelor’s degree at Western Governors. She finished the remaining 13 classes in two months last year and spent 2½ months earning a master’s of business administration. Altogether, she said, the degrees cost less than $9,000, which was covered by a scholarship, her employer and a Federal Pell Grant. Western Governors — one of the largest colleges in the country, with more than 194,000 students — did not respond to requests for interviews or additional data. The nonprofit school’s website says that students finish their bachelor’s degrees in an average of 2.5 years, but that many “finish significantly faster than that!”.

James, who has a 6-year-old daughter and a full-time job, said she never would have been able to attend a traditional college in person. She said she had little contact with her professors or fellow students but was in touch regularly with a mentor assigned to her by the college. The work has already paid off, as she earned a promotion to a new, higher-paying job with her employer, a national health insurance company, after finishing the degrees. “It’s the best thing that’s ever happened to me, honestly,” said James, 25. She said no one has questioned how long it took her to earn her degree or the name of the school. “People should do what works for them,” she said.

Some users on a Reddit forum for Western Governors have pleaded with peers to stop bragging that they earned degrees in weeks or months, worrying it damages the school's reputation and devalues the degree. The complaints spurred Reddit moderators to create a separate forum for accelerated students to reduce the conflict. The head of the accreditor for Western Governors said she is confident that the school complies with standards. Selena Grace, president of the Northwest Commission on Colleges and Universities, said the school just has a different model that allows students to move at their own pace. “Students are demonstrating competency,” Grace said.

Historically, the Education Department has recommended that students spend at least three hours per week per credit hour for a traditional class. So a typical three-credit class might require 135 hours of work over a 15-week semester. But there’s no equivalent time recommendation for competency-based courses. Some of the ultrafast finishers have also sparked worries about cheating. In January, Purdue Global stopped students from taking an unlimited number of classes in a term without permission in its ExcelTrack program, citing concerns about “academic integrity and the value of a Purdue Global degree”. A spokeswoman for Purdue Global said ExcelTrack was never intended to be a six-month degree. The school said students finish a bachelor’s degree on average in a little more than two years.

The growing interest in fast degrees has spawned a mini-industry of coaches offering advice on how to find a school, figure out what classes to take and speed through the programs. College Hacked offers a 50-minute coaching session for $295. Ryan Swayt, who completed his bachelor’s degree at Western Governors in nine months, offers everything from a $5 how-to book to extensive one-on-one coaching sessions for $1,500, a program he calls Degree Hacking Academy. Swayt also has recorded hundreds of YouTube videos with tips on how to finish college fast. Christie Williams, the graduate of Maine’s YourPace program, is also selling advice, charging $99 to $199 per student. Williams plans to walk in the graduation ceremonies for the University of Maine at Presque Isle next month after earning three degrees from the university. This year, she reenrolled at the school for five weeks to earn a third degree. Her daughter also utilized online learning platforms and, just like her mother, finished her bachelor’s degree in a single eight-week session — summa cum laude — with highest honors.