Newspaper Summary 060226

 

AWS India cuts 400 jobs at AI platform Bedrock as Amazon rejigs global ops

Sanjana B, Bengaluru

As Amazon recalibrates its global operations, AWS India is facing the heat as the company is said to have laid off nearly 400 of the 450 Bedrock employees in Chennai and Bengaluru, according to sources familiar with the matter. Amazon Bedrock is a platform for building generative AI applications and agents at production scale.

According to an internal email from AWS Vice-President Barry Cooks, seen by businessline, the changes are part of a broader push to implement a new strategy aimed at more closely aligning the company with its customers. His mail said that the company is betting on SageMaker as the "front door" for AI training and customisation, high-performance computing (HPC) workloads, and quantum experimentation at AWS. He added that there are other changes in the teams that the leaders will roll out. Amazon SageMaker is a fully managed service designed to simplify the process of building, training, and deploying machine learning (ML) models.

‘NOT AS MANY HIT’ On the layoffs, an AWS spokesperson said, “This estimate is wildly incorrect and exaggerates the number of Bedrock-focused employees impacted in India. We’ve been working to strengthen our organisation by reducing layers, increasing ownership, and removing bureaucracy. This is helping us operate like the world’s largest start-up and let people who work at Amazon have even more ownership and even bigger impact. We have a strong team working on Bedrock, and we will continue to hire essential roles to develop this popular service for customers. We also continue to invest in Bedrock as it is a meaningful and growing business for AWS, powering generative AI applications for more than 100,000 organizations worldwide”.

Sources also shared that the layoffs have affected AWS and other units within Amazon in multiple locations, including the Bay Area and New York in the US, and Bengaluru, Hyderabad, Chennai, and Pune in India. businessline had earlier reported that Amazon India will lay off around 1,100 employees as part of the global restructuring plans.

HIRING AND FIRING In a blog post on January 28, Amazon said it was laying off approximately 16,000 employees. This follows an earlier round in October that saw roughly 14,000 staff lose their jobs. According to media reports, these reductions were largely concentrated in corporate and technology-facing roles, including teams across AWS, retail operations, and internal support functions.

However, during the company’s Q3 2025 results, Amazon had announced that it plans to add hundreds of thousands of seasonal jobs this holiday season, including 250,000 in the US and 150,000 in India. Overall, the company has 1,532,000 employees globally.

After stellar 2025, Cognizant announces 100% bonus for staff

Our Bureau, Chennai

Cognizant Technology Solutions has approved a 100 per cent bonus payout for its employees after closing 2025 with 6.4 per cent growth. The decision follows six straight quarters of organic revenue rise for the company.

In an internal email seen by businessline, CEO S Ravi Kumar credited the staff for this positive performance. He stated, “Our 2025 results are a direct outcome of your hustle, disciplined execution and commitment to our clients and to Cognizant. To recognise this effort, I am pleased to share that we have authorised funding our discretionary bonus programme at 100 per cent”. During a post-earnings call, Kumar added that the company wanted to reward its employees for their "extraordinary performance," resulting in the highest bonus accrued this year.

BETTER THAN PEERS The company reported its December quarter results on Wednesday, showing an 18.7 per cent increase in net profit to $648 million. Revenue for Q4CY25 reached $5.33 billion, representing a 3.8 per cent growth in constant currency (cc). This growth rate was notably higher than that of its top-tier Indian IT services peers—TCS, Infosys, and Wipro.

PROMOTIONS AND SKILLING Beyond financial rewards, the company maintained a strong focus on career development and training:

• Promotions: Cognizant promoted over 35,000 associates in 2025, bringing the total number of promotions to more than one lakh over the last three years.
• AI Training: Approximately 3.4 lakh employees completed AI skilling during this same three-year period.
• Headcount: As of December 31, 2025, the company's total headcount stood at 3,51,600, an increase of 14,800 year-on-year and 1,800 sequentially.

‘I-T return forms may capture only relevant data’

Shishir Sinha, New Delhi

The Income Tax department has adopted a new mantra focused on taxpayer trust, supported by simpler forms, streamlined rules, and structural reforms. CBDT Chairman Ravi Agrawal stated that when income is reported accurately, the need for enforcement diminishes. By choosing collaboration over confrontation, the department aims to provide the certainty and clarity that naturally drive compliance.

SMART FORMS AND AUTO-POPULATION Regarding the new rules and forms based on the Income Tax Act 2025, Agrawal noted that while they have not yet been notified, the general philosophy involves leveraging processes from agencies outside the department. For example, the requirement for Form 60 when opening a bank account without a PAN is being rationalized since banks are now computerized and already capture necessary data attributes.

Another major focus is ensuring consistency between audit reports and returns. The goal is to design audit reports so that some components can be pre-populated in the return itself. Agrawal explained that the vision is for taxpayers to use “smart forms” that capture only relevant data. Irrelevant data will be identified and excluded, while the remaining data points will be converted into a format that supports meaningful analysis. The department is exploring if information reported in one form can be auto-populated into another, specifically between the audit report and the ITR form, to ensure consistency.

LITIGATION MANAGEMENT On litigation management, Agrawal reported significant progress. The department started the year with 5.4 lakh cases pending at the first appellate stage and disposed of 1,53,000 cases between April and January this fiscal year, representing a 40 per cent reduction.

Fundamental changes made in the Budget to curb pendency and minimize litigation include:

• Clubbing proceedings: Assessment and penalty proceedings, which previously took many years to resolve separately, are being combined into one, nearly halving the number of litigations.
• Additional window for resolution: Taxpayers now have an option to pay additional tax and close an issue even after receiving a notice or after an assessment is completed. The department believes taxpayers may prefer this early resolution over lengthy appeals.

SAFE HARBOUR PROVISIONS The Budget also addressed uncertainty in safe harbour provisions for the software industry. Previously, different verticals like IT-ITES, knowledge processing outsourcing (KPO), and contract R&D had different tax rates, leading to fears of interchangeable classification by the department. These categories have now been brought under one umbrella with a uniform rate of 15.5 per cent, providing the certainty required to impact FDI positively.

India may increase coal imports from US under bilateral trade deal

Rishi Ranjan Kala, New Delhi

As the India-US bilateral trade deal nears formalisation, New Delhi is expected to increase its energy commodities purchases from Washington, including more coal, particularly metallurgical—a key ingredient for the steel industry.

Washington accounted for more than 8 per cent of India’s cumulative coal imports in FY25, which industry players, analysts, and government officials indicate could easily be topped up to 10 per cent. However, a senior government official explained that freight costs from the US are higher compared to markets such as Australia, Indonesia, South Africa, or Russia. “My sense is that any decision to buy more US coal would be largely driven by geopolitics, not economics. There is room to grow if we are considering expanding purchases with respect to the bilateral trade deal,” the official added.

RISING TRADE VOLUME India has been continuously increasing its energy trade with the US since 2025. For instance, India imported 8.48 million tonnes (mt) of coking coal from the US in FY25. During the April-November period of FY26, it imported a little over 6 mt. Similarly, overall imports from Washington stood at 20.14 mt in FY25, while during the first eight months of FY26, they reached 15.34 mt.

According to US Energy Information Administration (EIA) data, India’s thermal coal imports from the US have risen in the last five years. India imported 14.38 mt and 13.25 mt of coal from the US in 2023 and 2024, respectively—the highest in more than a decade. Furthermore, India’s coal imports from the US averaged 10.60 mt during 2020-2024, compared to an average of 6 mt during 2015-2019.

CRITICAL MINERALS The push for purchasing more coal comes at a time when the Coal Ministry has notified coking coal as a critical mineral. Even though India holds the world’s fourth-largest coal reserve, it lacks sufficient domestic supply of certain required grades.

SHIFTING DYNAMICS In a September 2025 report, the EIA noted that Russia offset decreased coal exports to European markets by increasing shipments to Asia, mainly China, India, and South Korea. Russia’s exports to India have increased significantly in recent years, rising from about 8.3 mt in 2020 to about 22.5 mt in 2024.

Does fiscal consolidation rest on firm ground?

Sankalpa Bhattacharjee & Amarendu Nandy

Fiscal consolidation is a widely accepted objective of macroeconomic policy, especially in an environment of elevated public debt and heightened global uncertainty. A credible consolidation path can strengthen macroeconomic stability by anchoring expectations and preserving debt sustainability. Budget 2026 signals this intent with a fiscal deficit target of 4.3 per cent of GDP, a steady commitment to public capital expenditure, and a projected decline in the debt-to-GDP ratio to 55.6 per cent. However, whether this plan ultimately proves effective depends on the composition, financing, and durability of the adjustment; on current evidence, the foundation appears more fragile than headline numbers suggest.

FINANCIAL DETAILS AND DEFICITS Analysis of the government’s finances for FY27 shows revenue receipts budgeted at approximately ₹35.33 lakh crore against estimated revenue expenditure of around ₹41.25 lakh crore, implying a revenue deficit of nearly ₹5.92 lakh crore (around 1.5 per cent of GDP). This suggests a substantial share of borrowing continues to finance routine consumption—such as salaries, pensions, and subsidies—rather than asset creation. While capital expenditure is budgeted at ₹12.22 lakh crore (3.1 per cent of GDP), it is partly debt-financed, meaning the headline fiscal deficit may understate how much borrowing supports non-productive expenditure.

DEBT AND REVENUE CONSTRAINTS Fiscal consolidation is increasingly constrained by past debt. In FY27, interest payments are budgeted at ₹14.03 lakh crore, absorbing around 40 per cent of revenue receipts and nearly 26.3 per cent of central expenditure. This pre-commitment of revenues means adjustments are likely to occur through compressing discretionary spending rather than reconfiguring the expenditure base.

Furthermore, the quality of consolidation is limited by revenue composition. Net tax revenues, after statutory devolution to States, account for over 80 per cent of total revenue receipts, but the tax base remains narrow and concentrated in personal income tax and GST. Non-tax revenues (budgeted at around ₹6.7 lakh crore) increasingly rely on dividends from public sector enterprises and the RBI, indicating an over-dependence on contingent inflows.

DEPENDENCE ON WINDFALLS The growing reliance on RBI surplus transfers—such as the ₹2.69 lakh crore dividend in FY25—highlights a significant vulnerability. While legitimate, these transfers are contingent on financial market conditions. Treating these windfalls as quasi-structural revenues risks obscuring underlying fiscal weaknesses.

CAPITAL EXPENDITURE AND HUMAN DEVELOPMENT While public capital expenditure is the centerpiece of the Budget's narrative, as a share of GDP it remains flat at 3.1 per cent. In an economy marked by underemployment, the growth multipliers from this spending cannot be assumed to rise indefinitely without complementary reforms.

The trade-offs are most visible in human development:

• Health: Union expenditure for FY27 is budgeted at approximately ₹1.06 lakh crore (0.27 per cent of GDP). Total public health spending remains below 1.4 per cent of GDP, far short of the 2.5 per cent National Health Policy target.
• Education: Union spending is around ₹1.39 lakh crore (0.35 per cent of GDP). Combined public spending on education (4.1-4.6 per cent of GDP) remains well below the 6 per cent benchmark set by the National Education Policy.

In effect, consolidation is being achieved by postponing investment in human capital, which weakens the growth base required for durable fiscal sustainability. While numerical targets may stabilize ratios in the short term, the strategy remains exposed to growth slowdowns without deeper investments in human capital and revenue capacity.

Don’t neglect higher education

Anajalikirshna Sudhakaran & Aswathy Rachel Varughese

India’s demographic dividend is often presented as a national asset that can propel growth for decades, but the RBI’s latest State Finances report urges a look beyond this optimism. By mapping fiscal behaviour, the report reveals that while demographic transitions differ sharply across States, education spending responses do not, often in ways that may weaken rather than strengthen the demographic dividend.

MANY TRANSITIONS The RBI groups States based on the share of the population aged 60 and above: youthful States (below 10 per cent), intermediate States (10-15 per cent), and ageing States (above 15 per cent). Kerala and Tamil Nadu have already crossed into the ageing category, with more than half of India’s States projected to follow by 2036. Conversely, States like Bihar, Uttar Pradesh, Madhya Pradesh, and Jharkhand will remain youthful much longer, supplying labour to the national economy well into the 2040s.

Ideally, this staggered transition should result in differentiated fiscal strategies; however, data show that education is steadily losing fiscal priority across all demographic cohorts. The growth rate of education expenditure slows in line with ageing: average y-o-y spending growth is 6.1 per cent in youthful States, 5.1 per cent in intermediate States, and 4.1 per cent in ageing States (2014-2024).

COMPOSITION OF EXPENDITURE The deeper concern lies in the composition of what States spend on. Across all groups, school education overwhelmingly dominates budgets. On average, youthful States devote nearly 87 per cent of education expenditure to school education, leaving just over 11 per cent for higher education. Even in ageing States, school education absorbs about 80 per cent of the total. While Kerala, Jharkhand, and Haryana allocate relatively higher shares to higher education, they remain exceptions.

HIGHER EDUCATION VITAL This imbalance is critical because labour markets reward skills, credentials, and adaptability far more than years of schooling alone. While school education builds foundational capabilities, higher education and advanced skilling determine employability, productivity, and innovation. Expanding school enrolment without commensurate investment in universities and research creates a bottleneck at the point of labour market entry.

International experience from East Asian economies shows that successful conversion of demographic dividends required combining universal schooling with strong investments in tertiary education and vocational training. In contrast, India overall spends roughly 85 per cent of its education budget on school education and barely 11 per cent on higher education.

STRATEGIC NEGLECT The irony is that many youthful States enjoy better revenue mobilisation and lower committed expenditure ratios, providing the fiscal headroom to invest in higher education. Yet, education’s share within social sector expenditure has declined as budgets tilt towards subsidies, transfers, and urban services. This strategic neglect at a moment when capacity should be expanding risks causing educated unemployment, informality, migration distress, and weaker tax buoyancy.

Intermediate States must rebalance before ageing pressures harden, while ageing States face a trap where rising pension and healthcare obligations compress discretionary spending. Cutting back on higher education undermines the productivity growth essential to sustain revenues with a shrinking workforce.

BEYOND DEFICITS One reason higher education receives limited attention is that it is complex, capital-intensive, and slower to yield results compared to the visible and decentralised nature of school education. Its returns accrue over time, making it vulnerable in a fiscal discourse dominated by short-term deficit and debt metrics.

WAY FORWARD A demographic dividend without higher education is a wasting asset. Ageing is already slowing education spending, and youthful States are neglecting higher education rather than compensating. If demographic change is destiny, then higher-level education policy is the instrument through which States can shape that destiny rather than merely reacting to it.

SEBI proposes reforms to broaden ambit of REITs, InvITs

Our Bureau, Mumbai

The Securities and Exchange Board of India (SEBI) has proposed measures for Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) to provide operational and financial flexibility, reduce concentration and refinancing risk, and expand their investible universe. The regulator also aims to bring parity between public and private InvITs.

In a consultation paper floated on Thursday, the regulator suggested allowing privately listed InvITs to invest up to 10 per cent of their asset value in pure greenfield projects, bringing them on par with public InvITs.

OPERATIONAL FLEXIBILITY AND DEBT REFINANCING To lower the cost of capital and support long-term asset quality, the paper proposes expanding the utilization of funds when leverage exceeds 49 per cent. This would cover uses such as:

• Capacity augmentation and performance enhancement.
• Non-routine, concession-mandated maintenance.
• Refinancing of existing debt, provided it is limited to the principal only and does not result in an increase in net borrowings.

Under existing regulations, if total consolidated borrowings exceed 49 per cent of asset value, additional debt can only be used for the acquisition or development of infrastructure projects, with no current clarity on its use for refinancing or improvements.

INVESTMENT IN LIQUID SCHEMES Another significant proposal allows REITs and InvITs to invest in liquid mutual fund schemes with higher risk levels. Currently, they are restricted to schemes with a credit value risk rating of over 12 (representing the lowest risk of default). The new proposal would allow investments in schemes with a credit risk value of 10 or above.

REVISING SPV DEFINITIONS The draft paper recommends amending the definition of a special purpose vehicle (SPV) to allow InvITs to continue holding these entities even after their concession periods have been terminated. This would apply specifically to projects under public-private partnership (PPP).

Currently, once a concession period expires, the SPV no longer holds the asset and ceases to qualify as an SPV. The new proposal is subject to the condition that the InvIT must exit or repurpose the SPV within a year of termination, accompanied by enhanced disclosures for both the InvIT and the SPV.

Mamata Advances Enhanced Payouts to Women Ahead of State Election

Jayatri Nag, Kolkata

Chief Minister Mamata Banerjee announced on Thursday that the West Bengal government will begin distributing enhanced benefits under the ‘Lakshmir Bhandar’ scheme starting in February 2026, ahead of the state elections. The Trinamool Congress (TMC), which successfully secured victories in the 2021 and 2024 elections by garnering women’s votes through schemes like Lakshmir Bhandar, aims to replicate this strategy.

BENEFICIARY REACH AND ENHANCEMENTS The state’s portfolio of welfare programs has now exceeded 100. According to the state budget:

• Current Reach: Approximately 2.21 crore women are already receiving benefits under the scheme.
• New Inclusions: An additional 20.62 lakh women, whose applications were recently received, have been added to the program.
• Increased Payouts: To further support approximately 2.42 crore women, all beneficiaries will be entitled to an additional ₹500 per month effective February 2026.

Finance Minister Chandrima Bhattacharya noted that these measures are intended to "strengthen the hands" of women across the state.

OTHER WOMEN-CENTRIC INITIATIVES In addition to the West Bengal scheme, other sources highlight various women-focused policy developments:

• Bihar’s Welfare Scheme: The Mukhyamantri Mahila Rojgar Yojana in Bihar proposed transferring ₹10,000 directly to one woman in every family. Reports indicated that 1.56 crore women eventually received payments under this scheme.
• Healthcare and Innovation: Mainstream policy agendas are increasingly incorporating women’s health, focusing on research and standardisation from menstrual care to mental well-being to create pathways for women-led innovation.
• Infrastructure Support: Budget proposals include loan-linked capital subsidies for women-led groups and FPOs to establish veterinary and para-veterinary infrastructure, aimed at improving income stability.
• Fund Utilisation: Despite these initiatives, the Ministry of Women and Child Development was noted as one of the departments with lower fund utilisation in FY26, contributing to expenditure savings.

Water storage in major reservoirs drops further to 67% of capacity

Our Bureau, Chennai

Storage in India’s 166 major reservoirs dropped further this week to 67 per cent of the capacity even as the level in all the five regions dropped below 80 per cent this week. According to the Central Water Commission (CWC), the level dropped to 66.63 per cent of the 183.565 billion cubic metres (BCM) capacity at 122.313 BCM. It was, however, 8.5 percentage points higher than a year ago and 25 percentage points more than normal (last 10 years storage).

DEFICIENT RAINFALL Four reservoirs continued to be filled to capacity, while storage in 53 reservoirs was above 80 per cent of the capacity. According to the India Meteorological Department (IMD), 71 per cent of the 727 districts received deficient or no rainfall since the beginning of the year. Overall, the country has received 31 per cent deficient rainfall so far this year.

REGIONAL BREAKDOWN The storage levels across different regions are as follows:

• Southern Region: In the 47 reservoirs here, the level dropped below 60 per cent of the 55.288 BCM capacity to 32.710 BCM. This is lower than last year's storage of 60.3 per cent.
• Western Zone: Storage in this region, while the highest among all regions, dropped below 80 per cent this week.
• Northern Region: In these 11 reservoirs, the level stood at 62 per cent or 12.29 BCM of the 19.836 BCM capacity.
• Central Region: In the 28 reservoirs here, the level was at 69 per cent of the 48.588 BCM capacity at 33.581 BCM.

MORE DROP LIKELY With the IMD not projecting any major rainfall event over the next weeks, the storage levels will likely continue to drop further.

‘India is now using ‘lean innovation’ in high-tech — it’s sparked by our economics and geopolitics from both East and West’

Jaideep Prabhu, Professor of Marketing at Cambridge University's Judge Business School, discussed the evolution of 'frugal innovation' in India during a conversation with Srijana Mitra Das in ET Evoke.

Q. What is your new work ‘Lean Spark’ about? A. Co-authored with Mukesh Sud and Priyank Narayan, this work discusses a phenomenon now termed ‘high-tech jugaad’, or relatively simple innovation reaching a new level in India. This is no longer about quick fixes or improvisation; it is intentional and strategic. Entrepreneurs and large organisations are deliberately applying elements of ‘jugaad,’ such as frugality, to achieve scaled solutions with long-term global impact.

Q. Can you provide examples of this intentional simplicity? A. Aadhaar is a primary example, envisioned from its design phase to include every Indian by remaining highly affordable and simple. These principles were subsequently applied to UPI and digital commerce, and are now being utilized in AI.

Another example is ISRO, which operates with a budget considerably smaller than that of NASA or China's space agency. Despite resource constraints, ISRO’s focused, simple objectives have produced impressive outcomes, powering a burgeoning space sector with 'lean spark' startups, agricultural AI tools using satellite data, and fintech ventures. India is also seeing a growth in intellectual property (IP)-backed products, where science-led ideas are commercialized using frugal principles.

Q. Will the foundation of frugality endure with a new generation that spends more and saves less? A. Despite current growth, India remains a lower-middle-income country where large numbers of people still earn relatively little. Our economics naturally favours frugal innovation, as commercial success often depends on offering products at affordable prices to obtain volume. Even affluent minds behind projects like the UID understood that for such systems to work, they had to be sensitive to the logistics of reaching disenfranchised groups.

Q. How does ‘jugaad’ in India compare with innovation in China? A. China's innovation is largely state-driven, moving fast to grow rich. However, China also demonstrates frugal innovation when faced with constraints. For example, DeepSeek faced hardware constraints due to US trade restrictions on high-end GPUs, leading them to focus on software-led innovation using human talent and open-source tricks.

Q. Is geopolitics an impetus or a restraint on innovation? A. It is both. ISRO landed a spacecraft on the moon’s southern pole at a fraction of the cost, demonstrating strength, yet India still lacks the massive satellite constellations possessed by the US and China. Facing a fraught neighbourhood, geopolitics push India to do more with fewer resources. We are moving toward renewables and need frugal innovation to replace scarce commodities, such as innovating around thorium for nuclear power. A crisis, whether from the pressures of China or shifting global leadership, can spark ingenuity.

Q. Does India have a ‘big picture’ for innovation like the US or China? A. The US has decades of investment in security and a lively entrepreneurial ecosystem, while China has an omnipotent state with deep pockets focused on technological independence. India is largely a bottom-up country, whereas China is top-down. India’s demographics, macroeconomics, and geopolitical experiences make us intentionally frugal and scalable. While we currently look more like a mosaic or a palimpsest of many layers, a clearer big picture will emerge as this approach expands across sectors.

India’s multi-engine growth push

With a sharp focus on execution, the Union Budget 2026-27 signals how the nation plans to convert ambition into durable economic growth

Artha Neog

A broader policy approach underpins this year’s economic agenda, with execution taking centre stage. The Union Budget 2026–27 spreads its focus across sectors, reinforcing the foundations of jobs, consumption and competitiveness. Manufacturing gets a targeted push through cluster-led development and innovation-driven localisation. Industry experts, such as Arun Malhotra, note that the focus on areas like sports goods manufacturing successfully links local production with design excellence and materials science.

HEALTHCARE AND LOGISTICS Healthcare and women’s wellness have also moved into the mainstream policy agenda. By emphasizing research and standardisation in women’s health—ranging from menstrual care to mental well-being—the Budget creates tangible pathways for women-led innovation.

These ambitions are further supported by logistics reforms aimed at increasing speed and certainty. Key measures include the recognition of trusted importers and the implementation of factory-to-port clearance through electronic sealing.

TOURISM AND INFRASTRUCTURE Tourism has emerged as a major growth lever, supported by regulatory easing. The Budget’s focus on rail and road expansion, particularly connecting Tier-2 and Tier-3 cities and temple towns, is expected to significantly boost regional tourism.

Infrastructure-led growth remains the backbone of the Union Budget, providing confidence-building measures for both lenders and investors. At a macro level, the scale of public spending underlines a clear intent to sustain economic momentum. The increase in public capital expenditure to ₹12.2 lakh crore in FY27 is viewed as a critical trigger to crowd in private investment and accelerate on-ground delivery.

AN INTEGRATED APPROACH Taken together, the Budget signals a more integrated growth approach, blending infrastructure with human capital, logistics efficiency with manufacturing depth, and wellness with workforce productivity.

KEY GROWTH PILLARS

• Tax and regulatory simplification to improve the ease of doing business.
• Support for manufacturing, trade, and faster logistics clearances.
• Skilling, tourism, and emerging sectors to drive jobs and growth.

Rate Cuts Came, but Bond Yields Didn’t Quite Follow the Script

Rozebud Gonsalves, Mumbai

Indian bond yields have failed to faithfully mirror the reduction of policy rates in the current easing cycle that began a year ago. Experts attribute this rare deviation from precedents to a lack of clarity on a glide path to terminal rates and a sustained supply of debt paper, particularly from states. However, the transmission of rate cuts is visible in the consuming end of the borrowing spectrum, such as loans for homes, cars, or small businesses, which are typically benchmarked to the repo rate and repriced immediately.

MUTED TRANSMISSION Indian policy rates have eased by 125 basis points (bps) since February 2025, following Governor Sanjay Malhotra taking office in December 2024. Despite this, benchmark yields have barely moved, marking a clear departure from previous easing cycles.

For comparison:

• 2020: Yields eased 73 bps against a repo rate cut of 115 bps.
• 2019: Yields eased 119 bps versus a rate cut of 135 bps.
• 2017: Yields eased 196 bps against a cycle of 200 bps.

In the current cycle, the 10-year paper, which traded between 6.69 per cent and 6.72 per cent in February 2025 before policy easing began, is trading at similar levels a year and multiple reductions later.

RETAIL BORROWING AND DEPOSITS While bond yields remained sticky, Reserve Bank of India (RBI) data for December showed that loans benchmarked to external gauges have benefited from transmission:

• Fresh Loans: Rates eased 112 bps to 8.28 per cent.
• Outstanding Loans: Rates eased 74 bps to 9.06 per cent.
• Fresh Deposits: Rates eased 82 bps to 5.67 per cent.
• Outstanding Deposits: Rates eased 34 bps to 6.68 per cent.

Policy rates were reduced throughout the past year to safeguard the economy against high US tariffs and a global trade slowdown.

STANCE AND LIQUIDITY CHALLENGES A significant factor in the elevated yields was the quick shift in policy stance. Following a larger-than-expected 50 bps cut in June 2025, the stance was changed from accommodative to neutral in just two months. Alok Singh, head of treasury at CSB Bank, noted that this change triggered selling in long-tenor bonds as markets reassessed growth projections.

Furthermore, while the RBI injected liquidity via open market operations (OMO) and foreign exchange swaps, the surplus in the banking system was inconsistent. "Without a glide path, liquidity becomes crucial. The RBI injected funds but couldn’t maintain a sustained surplus, so it offered little support to funding costs or yields," Singh added.

A treasury head at a large private bank observed that central banks typically cut gradually and hold an accommodative stance longer, but in this cycle, they reverted to neutral too quickly.

Big US Banks Boost Washington Lobbying Muscle

Reuters

Lobbying spend by major US banks jumped 12 per cent in 2025, marking the largest increase in more than a decade, as the industry intensified efforts to navigate significant policy shifts under the Trump administration. Among banks with at least $50 billion in assets, 38 reported lobbying last year, collectively spending $86.8 million along with seven of their top trade groups to influence the White House, federal agencies, and lawmakers.

DRIVERS OF EXPENDITURE The surge in spending—the highest since the post-2008 financial crash era in 2011—comes as regulators work on a sweeping overhaul of capital rules and potentially transformative fintech and crypto policies. Ed Mills, a policy analyst at Raymond James, noted that in such an active environment, banks want to ensure they are "fully at the table" to shape the agenda.

Wildcards and "Affordability Politics" While much of the administration's agenda is seen as positive for banks, President Trump himself has proved a wildcard, accusing banks of "politicized debanking" and pushing populist policies like credit card interest rate caps. One lobbyist noted that the rise of "affordability politics" and bills limiting credit card swipe fees have been a significant shock to the industry.

THE CRYPTO THREAT A major driver for the increased vigilance is competition from the digital asset sector. The crypto lobby's spend surged 66 per cent in 2025 to $40.6 million as it successfully pushed for stablecoin legislation and regulatory clarity. The power and policy gains of the crypto industry have become a source of "alarm and frustration" for many banks, prompting some to call for a more aggressive stance.

WHITE HOUSE WHISPERERS To navigate this new landscape, banks have aggressively hired lobbyists with close personal and political ties to the White House:

• Bank of America hired Bryan Lanza, a former communications director for Trump’s transition team.
• Morgan Stanley hired Jeffrey Miller, a prominent Trump fundraiser.
• JPMorgan retained Ballard Partners, the firm where White House Chief of Staff Susie Wiles previously worked.

ADMINISTRATION RESPONSE In response to these industry efforts, White House spokesman Kush Desai stated that the administration would not create "undue handouts or carveouts," asserting that the President’s only guiding special interest is the "best interest of the American people".

Despite the jump in spending, banks are still routinely outspent in Washington by the defense, telecommunications, and insurance industries.

The rise, fall and rise of a social media giant

For an app that was once dismissed as nothing more than a platform for teenagers’ dance videos, TikTok has become a juggernaut with two billion active users worldwide. Here’s a timeline of the app’s meteoric rise and the challenges it had to face along the way:

• 2014: Alex Zhu and Luyu Yang launch Musical.ly, allowing users to upload 15-second videos of them singing along to popular songs.
• 2015: Musical.ly takes the top spot in Apple app store downloads in the US.
• 2016: Musical.ly users appear on the cover of Billboard, which notes the app is “changing the music industry”.
• 2017: In September, ByteDance launches TikTok in Indonesia. Two months later, ByteDance buys Musical.ly for $1 billion.
• 2018: Musical.ly merges with TikTok. By year-end, TikTok surpasses Facebook, Instagram, Snapchat, and YouTube in monthly downloads for the first time.
• 2019: US senators raise concerns over potential security risks from China-based platforms. The US Department of Defense and Marine Corps begin blocking the app or asking personnel to remove it from phones.
• 2020: TikTok becomes the app of choice during pandemic lockdowns. In September, the US announces it will ban several Chinese-owned apps, including TikTok.
• 2022: ByteDance admits that employees, including some based in China, inappropriately obtained data from US TikTok users.
• 2023: The US Department of Justice investigates ByteDance over possible surveillance. US lawmakers grill TikTok CEO Shou Chew for five hours regarding ties to China and data privacy.
• 2024: US lawmakers pass a bill to ban TikTok or force its sale to non-Chinese owners; President Joe Biden signs it into law.
• 2025: The US Supreme Court upholds the law, and the app goes dark in the US. Re-elected President Donald Trump signs an executive order to delay enforcement but confirms the company will be sold.
• 2026: ByteDance announces a deal with non-Chinese investors to create a "new" TikTok. Investors include Oracle, MGX (an Emirati firm), Silver Lake, and Michael Dell.