Building Global-Scale Banks for Viksit Bharat

 

As India sets its sights on Viksit Bharat @2047, the strength and sophistication of its financial system will determine how effectively the country can finance its developmental ambitions. Despite being the world’s fourth-largest economy, India has only two banks—State Bank of India (43rd) and HDFC Bank (73rd)—among the top 100 global banks. This limited presence underscores a structural gap: an economy aspiring to reach USD 30 trillion cannot be served by a banking system that remains modest in scale and capacity.

Finance Minister Nirmala Sitharaman recently emphasised the need for India to build “big and world-class banks,” noting that discussions with the Reserve Bank of India and the banking sector are already underway to create larger financial institutions. The case is compelling. If India’s GDP grows to USD 30 trillion by 2047, bank funding must increase to around 130 percent of GDP, a stark rise from the current level of roughly 56 percent. India’s total bank credit stands at ₹192 lakh crore, and deposits at ₹239 lakh crore—figures that need to grow substantially to match international peers.

Scale matters because large banks can finance large ideas. Globally, the largest banks—particularly those in China—have been able to undertake massive lending to infrastructure, manufacturing, technology, and strategic overseas projects. If India is to power its next phase of growth, it needs banks that are not only big in size but also capable of operating at global levels of efficiency, resilience, and innovation.

Why India Needs Larger Banks

Large banks enjoy structural advantages that smaller institutions simply cannot replicate. Their bigger capital base provides a stronger buffer against shocks, and their operations benefit from economies of scale. For Indian public sector banks (PSBs), the cost-to-income ratio averages around 52 percent, compared with 45.9 percent for private banks. Well-designed mergers can close this efficiency gap by streamlining overlapping operations, harmonising technology platforms, and creating stronger, more capable institutions.

Scale also enhances reach. A merged entity can combine the technological strengths of one institution with the regional dominance of another, expanding access to both high-growth urban markets and underserved rural geographies. This is directly aligned with India’s financial inclusion priorities, especially in credit for MSMEs, agriculture, and digital banking penetration.

Lessons from India’s Previous Consolidation

India has already experimented with consolidation. The 2019 round of mergers reduced the number of PSBs from 27 to 12, and the early evidence has been encouraging. Public sector banks have regained market share, and loan growth in the June 2025 quarter surpassed that of private banks. Notably, this growth was driven not by large corporate lending but by retail and MSME credit, suggesting that scale and inclusion can coexist.

It is also worth recalling the Narasimham Committee’s vision (1991), which recommended a three-tier banking structure with three or four large banks, including SBI, that could operate at the global level. Over 30 years later, that vision remains only partially realised. Today, India once again faces a strategic moment to consider another round of consolidation—this time not just among PSBs, but also within the private sector, to build banks of global scale.

Global Experience: Insights and Caution

Internationally, the consolidation of banking sectors has yielded mixed but instructive lessons. After the 2008 financial crisis, the United States and Europe saw numerous mergers, resulting in fewer but more resilient institutions. China’s state-owned banks, by virtue of their scale, have been central to financing the Belt and Road Initiative and expanding geopolitical influence.

However, bigger is not always better. The IMF has warned that overly large banks without strong governance frameworks can become “too big to fail,” creating systemic risks that may undermine financial stability. Therefore, any move toward creating global-scale Indian banks must be accompanied by reforms that ensure transparency, strong oversight, and sound risk management.

Beyond Mergers: Building an Enabling Ecosystem

Creating global-scale banks requires much more than merging balance sheets; it demands a holistic strengthening of India’s financial ecosystem. A critical starting point is governance reform, particularly within public sector banks. Recent policy moves—such as opening senior leadership positions in PSBs to private-sector professionals, including a Managing Director position at the State Bank of India and executive director roles in other large PSBs—signal an important shift. These steps reflect an understanding that managerial expertise, digital fluency, and strong risk-management capabilities are essential if Indian banks are to compete globally.

Equally significant is the ongoing debate on bringing PSBs under the Companies Act rather than the existing nationalisation-era legislation. Such a transition could allow the government to reduce its shareholding below 50 percent while still retaining strategic influence. More importantly, it would free banks from the oversight of agencies such as the Comptroller and Auditor General and the Central Vigilance Commission, thereby granting boards greater autonomy in decision-making. Aligning PSB governance structures with contemporary corporate norms would also strengthen accountability and facilitate quicker operational and strategic decisions—an essential requirement for modern, competitive banks.

A strong ecosystem also depends on talent. India’s public banks have long faced a mismatch between the compensation they offer and what the private sector provides. This has contributed to a steady migration of experienced professionals away from PSBs. Multiple committees—from Rangarajan to the P.J. Nayak Committee—have pointed to the urgency of revamping HR policies, creating performance-linked incentives, and offering longer tenures to top leadership. If India is serious about building banks that can operate at global scale, it must invest not only in capital adequacy but also in leadership capability and institutional professionalism.

Finally, regulatory reforms will need to evolve in parallel. As emphasised recently by the Finance Minister, consolidation is not an end in itself; it must be complemented by an operating environment that encourages innovation and reduces compliance frictions. In a rapidly digitalising economy, Indian banks must be equipped to develop new competencies—whether in fintech collaboration, green financing, or cross-border financial services. Building this broader ecosystem of regulatory flexibility, technological upgradation, and managerial autonomy will be essential to transforming Indian banks from domestic leaders into global contenders.

The Road Ahead

India’s path to becoming a $30 trillion economy is inseparable from the strength of its financial institutions. Building global-scale banks is not merely a matter of increasing size; it requires enhancing governance, strengthening talent, modernising regulation, and fostering innovation.

The task before India is to build not only bigger banks but better banks—institutions that can finance large aspirations, absorb shocks, support inclusion, and demonstrate world-class standards. If India succeeds, its banks will not just support the journey to Viksit Bharat—they will help define it.

 

Understanding GST 2.0: What It Means for Consumers, Businesses, and States

 

India’s GST 2.0 introduces simplified two-tier rates, tax cuts on essentials, automobiles, and insurance, boosting consumption while balancing state revenues.

India’s Goods and Services Tax (GST) regime has undergone its most significant overhaul since 2017. On 3 September 2025, the GST Council, chaired by Finance Minister Nirmala Sitharaman, announced a simplified two-tier rate structure, exemptions for individual life and health insurance, and significant reductions on daily-use and aspirational goods. These reforms take effect from 22 September, just ahead of the festive season.

Consumer Relief at the Core

Households are the first to benefit. Essentials such as soap, toothpaste, chocolates, and coffee now attract 5% GST, down from 12–18%. Paneer, Indian breads (roti and paratha), and UHT milk, along with life-saving medicines for cancer and rare diseases, are now fully exempt. Exemption of all individual life and health insurance policies—previously taxed at 18%—is expected to make coverage more affordable and increase financial inclusion.

Finance Minister Sitharaman said that the reform had been designed with the common man in mind and that every tax levied on daily-use items had been reviewed carefully to ensure simplicity and fairness.

Structural and Industry Implications

The GST rationalisation is not just about lower rates; it addresses long-standing structural issues such as inverted duty structures and classification disputes. Key sectors stand to benefit:

• Automobiles: Small cars, motorcycles under 350cc, buses, and ambulances see GST reduced from 28% to 18%. Luxury vehicles and sin goods, including large cars, private aircraft, and tobacco products, now attract a 40% rate.
• Renewables and Agriculture: Biogas plants, windmills, handicrafts, tractors, and composting machines now fall under 5% GST, supporting sustainability and rural livelihoods.
• Consumer Durables & Hospitality: Televisions, dishwashers, air conditioners, and hotel rooms below ₹7,500 face lower taxes, encouraging discretionary spending.

The reform also simplifies compliance, reduces disputes, and improves predictability for businesses, particularly MSMEs.

Fiscal Considerations and State Concerns

Revenue Secretary Arvind Shrivastava estimates a net fiscal implication of around ₹48,000 crore. While improved compliance, higher consumption, and resolution of disputes are expected to offset some losses, opposition-ruled states—including Karnataka, Punjab, West Bengal, Telangana, and Sikkim—have voiced concerns over potential revenue erosion.

Without a clear mechanism for compensation, balancing fiscal sustainability between the Centre and states remains a critical challenge.

Sectoral and Market Impact

GST 2.0 is expected to boost consumer-facing sectors. Lower taxes on FMCG, durables, automobiles, and insurance could increase demand and improve revenue visibility. Analysts suggest the structural reforms and simplified slabs may also enhance investor confidence and attract portfolio flows toward domestic consumption sectors.

Experts note that clarifications on intermediary services and post-sale discounts will reduce litigation, settling long-standing disputes that previously hindered business efficiency. Meanwhile, the abolition of the compensation cess restores the original GST design, ensuring a more stable and predictable tax framework.

Balancing Consumer Gains with Fiscal Sustainability

While the reforms promise relief for consumers and clarity for businesses, the central challenge remains ensuring fiscal balance. Opposition-ruled states have called for compensation frameworks to safeguard their revenues, highlighting the political and economic dimensions of this reform.

Nonetheless, the initiative signals a commitment to ease of doing business, rate rationalisation, and structural simplification, which can stimulate consumption and support sustainable economic growth.

Conclusion

GST 2.0 marks a major step forward in India’s tax reform journey. By simplifying rates, correcting structural issues, and reducing taxes on essential goods, automobiles, and insurance, it promises significant benefits for households and businesses. Yet, its long-term success will depend on carefully balancing consumer relief with revenue sustainability for states.

As the festive season begins, GST 2.0 will be put to the test, providing early indicators of how consumers, businesses, and markets respond to this landmark reform.

4% and Flexible: The Case for Stability in India’s Monetary Policy Framework

 

The Reserve Bank of India (RBI) has set the stage for an important policy review. As part of its second five-year assessment of India’s monetary policy framework, the RBI has released a Discussion Paper on inflation targeting. The outcome of this review, which is expected to guide the government’s decision on the inflation target for the next five years in March 2026, comes at a time when the global economy is fraught with uncertainty. From geopolitical tensions and climate disruptions to supply chain fragilities and technological upheavals, the challenges are plenty.

At the heart of the debate is a simple but powerful question: should India continue with the 4% inflation target, or does the changing environment demand a rethink? And, more importantly, should the central bank focus more on headline inflation (the price changes households experience every day) or on core inflation (which filters out volatile food and fuel prices to reflect underlying demand pressures)?

FIT at Work: A Quiet Success Story

Since 2016, India has followed the Flexible Inflation Targeting (FIT) framework, which sets a target of 4% CPI inflation with a tolerance band of ±2%. The results have been impressive. Inflation has been lower and more stable compared to the pre-FIT years, and expectations are better anchored. Markets, businesses, and households now have a clearer sense of the RBI’s priorities. Even in the face of extraordinary shocks, viz., the pandemic and the Russia–Ukraine conflict, the framework held firm.

Of course, it hasn’t been perfect. Food and fuel prices, beyond the central bank’s direct control, continue to drive volatility. Headline inflation often overshoots the band, while core inflation sometimes stays stubbornly high. This underscores the need for sharper communication from the RBI, making it clear when deviations are driven by temporary shocks and when they reflect deeper demand-side pressures.

Headline vs Core: What Should Matter More?

The sharpest disagreement lies here. Should India continue targeting headline CPI, which fully captures the cost of living, or should it move toward core inflation, which many economists argue better reflects policy-relevant dynamics?

Globally, nearly all inflation-targeting central banks use headline inflation, and for good reason. For ordinary households, particularly the poor, food prices are the most important factor shaping their perception of inflation. Ignoring food inflation risks damaging credibility. Yet, relying only on headline numbers can misguide policy if underlying demand pressures remain unchecked.

The middle ground seems most pragmatic: keep headline CPI as the formal target, but integrate core inflation analysis more explicitly into monetary policy deliberations and forward guidance. This way, the RBI can stay true to its mandate while also addressing persistent demand-driven inflationary pressures.

Why 4% Still Works

When India adopted FIT in 2016, the Urjit Patel Committee identified 4% as the “trend inflation” rate consistent with growth and stability. That still holds. India’s fast productivity growth, coupled with the Balassa–Samuelson effect, which naturally leads to higher services inflation in emerging economies, justifies a higher target than advanced economies, which usually aim for 2%.

Lowering the target would mean tighter monetary conditions, which could slow growth unnecessarily. Raising it would risk unanchoring expectations and eroding credibility. Holding steady at 4% remains the best course.

The Band Debate

The ±2% tolerance band has served India reasonably well. Narrowing it to ±1.5% could improve credibility but would come at the cost of greater growth volatility. Widening it to ±3% would reduce breaches but weaken accountability. The balanced approach is to keep the current band while making the 4% midpoint the clear operational anchor.

Introducing formal “escape clauses” could also help, allowing temporary deviations during extraordinary shocks such as pandemics, global oil spikes, or extreme climate events. What matters most, however, is transparent communication: explaining why deviations occur and how they will be addressed.

Beyond Monetary Policy

Inflation management cannot be the RBI’s job alone. Supply-side measures matter just as much: strengthening buffer stocks, improving food logistics, diversifying energy sources, and building climate resilience. Stronger fiscal-monetary coordination is essential to prevent food and fuel volatility from spilling over into persistent inflation.

The Road Ahead

India’s monetary policy framework has matured since 2016. FIT has delivered stability, transparency, and credibility. But the world is changing, and refinements are needed. The path forward seems clear:

1)                1)      Retain the 4% target with a ±2% band.

2)      Keep headline CPI as the formal target but give greater weight to core inflation analysis.

3)      Strengthen RBI’s communication to clearly distinguish between temporary shocks and structural pressures.

4)      Complement monetary policy with supply-side interventions.

If India can do this, it will maintain the delicate balance between credibility and flexibility, anchoring inflation expectations without stifling growth. In today’s turbulent global economy, that balance is exactly what India needs.

Why India’s New Vision for BRICS Matters for the Global South

From an investment acronym to a global power bloc, BRICS has come a long way. Its new identity—anchored in resilience, innovation, cooperation, and sustainability—signals a shift with huge implications for the Global South and beyond.

When BRIC was first coined by Goldman Sachs economist Jim O’Neill in 2001, it was merely an investment term describing the rising economies of Brazil, Russia, India, and China. By 2010, South Africa joined, transforming it into a political grouping - BRICS. Fast forward to 2024–25, and BRICS has expanded into a ten-member bloc, now including Egypt, Ethiopia, Indonesia, Iran, and the UAE. Together, these countries represent nearly half of humanity and a growing share of global GDP.

But what does BRICS really stand for today? At the 17th BRICS Summit in Rio de Janeiro (July 2025), Prime Minister Narendra Modi announced a redefinition:
“Building Resilience and Innovation for Cooperation and Sustainability.”

This new full form is more than a play on words—it reflects an attempt to reposition BRICS as a future-oriented coalition that not only challenges existing power structures but also delivers global public goods.

Resilience in a Fragmented World

The pandemic, the Russia–Ukraine conflict, and supply chain disruptions have highlighted just how vulnerable emerging economies are to global shocks. Energy insecurity, food price spikes, and volatile financial flows have become the new normal.

By foregrounding resilience, BRICS acknowledges that collective strength is essential. For India, resilience means not only cushioning its own economy from external shocks but also championing financial safety nets and cooperative mechanisms that reduce dependence on Western-led systems like the IMF or World Bank. The New Development Bank, created by BRICS, is a step in this direction but needs more robust resources and mandates.

Innovation as a Growth Engine

The word innovation signals a shift in BRICS’ identity. No longer is it just a club of resource-rich economies—it wants to be a driver of technological progress.

India plays a central role here. From its successful digital public infrastructure (like UPI and Aadhaar) to its leadership in renewable energy (International Solar Alliance, Green Hydrogen Mission), India provides templates that BRICS can adopt and scale. Beyond technology, innovation also applies to new models of trade settlements in local currencies, development financing, and collaborative research in AI and clean-tech.

In short, BRICS innovation is about shaping tomorrow’s rules of the game, not just playing catch-up with the West.

Cooperation Beyond Borders

The expanded BRICS is diverse—geographically, politically, and economically. India and China have border disputes, Russia faces Western sanctions, and Middle Eastern members like the UAE and Iran have their own regional priorities. Despite these divergences, cooperation is the glue that holds the grouping together.

The strength of cooperation lies in collective bargaining. BRICS has long advocated reform of global institutions such as the IMF, World Bank, and UN Security Council. With eleven members, its voice carries greater legitimacy. By putting cooperation at the centre of its new definition, BRICS signals that its future lies in finding common ground, even amid internal rivalries.

Sustainability for Global Leadership

As the world grapples with climate change, energy transition, and food insecurity, sustainability becomes an unavoidable priority. BRICS members are among both the largest emitters and the most climate-vulnerable nations. The new full form emphasizes their shared interest in pushing for fair climate finance, technology transfers, and a just transition for developing economies.

For India, this aligns neatly with its domestic commitments—net-zero by 2070, expanding renewable energy capacity, and promoting sustainable agriculture. By putting sustainability at the heart of BRICS, India ensures the bloc is not seen as a geopolitical spoiler, but as a constructive partner in global climate action.

De-dollarization and Strategic Importance

One of the most significant shifts under BRICS 2.0 is the growing push for de-dollarization. By promoting trade in local currencies and developing alternative payment systems, BRICS members seek to reduce reliance on the US dollar in global trade. This move not only insulates their economies from exchange-rate volatility and sanctions risk but also enhances strategic autonomy for the Global South.

For India, while cautious about a rapid shift, participation in this agenda underscores its commitment to a more multipolar financial system—one where emerging economies have greater say in setting the rules. In the long run, de-dollarization strengthens BRICS’ strategic weight, giving it leverage in negotiations with Western-led institutions and shaping the contours of global economic governance.

India’s Strategic Role

By introducing this new vision, India positions itself as a thought leader within BRICS. It seeks to balance China’s economic dominance and Russia’s geopolitical weight by steering the bloc towards issues where India has proven leadership—digital inclusion, innovation in development finance, and climate diplomacy.

The terms resilience, innovation, cooperation, and sustainability are carefully chosen. They project BRICS as a reformist and development-oriented coalition, not just an anti-West alliance. For India, this reframing is part of a broader strategy to amplify its role as the voice of the Global South.

The Road Ahead

The challenge now lies in turning this redefinition into tangible outcomes. Can BRICS: 

§  Expand the lending scope of the New Development Bank to meet development financing gaps? 

§  Develop digital cooperation frameworks inspired by India’s UPI model? 

§  Push for meaningful reform in global governance institutions?

§  Present a united front on de-dollarization and climate finance at COP 30 and beyond

If BRICS delivers on even some of these, it could emerge as more than just a symbol of multipolarity. It could become a genuine provider of global public goods.

Conclusion

The new BRICS full form—“Building Resilience and Innovation for Cooperation and Sustainability”—marks a turning point. It reflects the bloc’s aspiration to move beyond symbolism and become a platform that strengthens economic resilience, fosters technological innovation, deepens cooperation, drives sustainability, and reduces overdependence on the dollar.

For India, this is an opportunity to shape BRICS 2.0 as the institutional voice of the Global South. For the world, it is a reminder that the future of international cooperation will not be decided solely in Washington or Brussels—but increasingly in platforms like BRICS, where emerging powers set the agenda.

 

AI as the Engine of Emerging Market Prosperity: The Global South Advantage

 With innovation-driven strategies, the Global South is poised to turn AI into a driver of long-term wealth

Introduction

Artificial Intelligence (AI) has rapidly moved from being a futuristic concept to a transformative force reshaping economies worldwide. For emerging markets, where structural challenges often coexist with high-growth potential, AI offers both a catalyst and a compass for creating sustainable wealth. Its integration across sectors can unlock productivity, foster innovation, and accelerate inclusive development—potentially allowing these economies to leapfrog traditional development pathways.

Unlocking Productivity Gains

One of the most immediate contributions of AI to wealth creation is in productivity enhancement. Emerging markets often face constraints such as low labour efficiency, inadequate infrastructure, and fragmented supply chains. AI-powered solutions—from predictive maintenance in manufacturing to smart logistics in agriculture—can mitigate these inefficiencies.

In India, startups like CropIn and Fasal are using AI-based crop analytics to guide farmers on irrigation, pest control, and fertilizer use, boosting yields while reducing input costs. In China, AI-driven smart factories are deploying robotics and computer vision for quality control and predictive maintenance, raising industrial productivity and narrowing the technological gap with advanced economies. Similarly, in Brazil, AI applications in logistics are optimizing commodity supply chains, cutting costs in agriculture exports like soybeans and coffee.

Driving Innovation and Entrepreneurship

AI lowers the entry barriers for innovation by providing affordable and scalable tools for startups and small businesses. Cloud-based AI services, open-source models, and no-code/low-code platforms enable entrepreneurs to access capabilities once reserved for global tech giants.

For example, India’s fintech ecosystem—home to players like ZestMoney and KreditBee—uses AI for credit scoring and lending to individuals and MSMEs without formal credit histories. In China, giants like Ant Group and WeBank use AI-driven risk assessment and digital platforms to bring millions of unbanked citizens into the financial system. In Kenya, AI-enabled mobile platforms like M-Shwari extend microcredit and savings products to rural households, showcasing how innovation can spread wealth to the grassroots.

Financial Inclusion as a Growth Multiplier

Wealth creation in emerging economies cannot be separated from financial inclusion. AI is playing a pivotal role in expanding access to banking, insurance, and investment products.

In India, the success of the Unified Payments Interface (UPI)—processing billions of transactions monthly—has been amplified by AI-driven fraud detection and transaction monitoring, making digital payments both safer and more efficient. Platforms like Paytm and PhonePe are embedding AI to improve user experience, detect suspicious patterns, and provide customized financial products. In China, AI-powered robo-advisors like Lufax are offering low-cost investment services to retail investors, while across Southeast Asia, firms such as Advance.AI are extending credit scoring and digital lending to underbanked communities. Together, these advances democratize wealth creation opportunities for rural households, women entrepreneurs, and informal sector workers.

Strengthening Human Capital

AI is often portrayed as a threat to jobs, but in emerging markets it can also be an enabler of human capital development.

In India, edtech platforms such as Byju’s, Vedantu, Unacademy, and upGrad are leveraging AI to personalize learning, adapt content delivery, and enhance test preparation. For instance, AI chatbots provide instant doubt resolution, while adaptive learning systems track student progress and recommend customized study plans. In China, Squirrel AI is providing AI-based personalized tutoring for millions of schoolchildren, while in Brazil, platforms like Descomplica are using AI to widen access to affordable higher education. Meanwhile, countries like Vietnam and Philippines are positioning themselves as hubs for AI-enabled business process outsourcing (BPO), turning their young, skilled workforce into a global service advantage.

AI in Healthtech: Building Resilient Societies

Beyond education, AI is reshaping healthcare in emerging markets, with significant implications for human capital and wealth creation.

In India, startups such as Niramai use AI-driven thermal imaging for early breast cancer detection, while SigTuple employs computer vision to automate blood sample analysis. Telemedicine platforms like Practo are integrating AI for patient triage and medical record analytics. In China, AI is being widely applied in hospitals for diagnostic imaging and patient monitoring, with companies like Ping An Good Doctor offering AI-powered health consultation to millions. In Africa, AI initiatives such as mPharma are using predictive analytics to improve medicine supply chains and ensure affordability. These innovations not only reduce healthcare costs but also enhance workforce productivity and longevity, contributing directly to wealth creation.

Accelerating Sustainable Development

Emerging markets are disproportionately affected by climate risks, which can erode wealth and exacerbate inequality. AI contributes to sustainability by enabling precision agriculture, optimizing renewable energy grids, and predicting natural disasters.

In India, AI is being applied to solar energy forecasting and smart grid management by companies like ReNew Power, helping to stabilize renewable energy integration. In China, AI models are being deployed for real-time monitoring of air pollution and energy efficiency in urban areas. In South Africa, AI-enabled early warning systems are being tested to predict droughts and floods, protecting communities and agricultural livelihoods.

Governance and Policy as Enablers

While the promise is vast, realizing AI’s wealth-creating potential in emerging markets depends heavily on governance. Investments in digital infrastructure, data protection frameworks, ethical AI guidelines, and public-private partnerships are essential.

For instance, India’s National AI Strategy (NITI Aayog) emphasizes inclusive growth and AI applications in agriculture, healthcare, and education. China’s New Generation AI Development Plan (2017) has positioned the country as a global AI powerhouse, with massive state support for R&D and commercialization. Other emerging markets, such as Brazil and Indonesia, are drafting national AI roadmaps, reflecting growing recognition of AI as a driver of long-term prosperity.

Conclusion: A New Frontier for Prosperity

AI offers emerging markets a rare opportunity to reshape their growth story. By boosting productivity, empowering entrepreneurs, expanding financial inclusion, strengthening human capital, and fostering sustainability, AI can accelerate the transition from factor-driven growth to innovation-led prosperity. If nurtured with the right policies and investments, AI has the potential to become not just a tool of efficiency, but a cornerstone of wealth creation for billions across the Global South.

Quantum Leap: How India Can Harness Quantum Technologies for Economic Transformation

 

As the Fourth Industrial Revolution (IR4) unfolds, quantum technologies are set to redefine industries, disrupt conventional business models, and unlock new frontiers of economic growth. With the rapid advancements in quantum computing, quantum communications, quantum sensing, and quantum materials, India has an unparalleled opportunity to leverage these breakthroughs to accelerate its journey towards becoming a developed economy by 2047.

By strategically integrating quantum technologies across key sectors, India can enhance productivity, drive industrial competitiveness, and foster sustainable innovation, positioning itself as a global leader in the post-quantum era.

Transforming Key Sectors Through Quantum Innovation

Manufacturing and Supply Chain: Optimizing Efficiency and Logistics

Quantum technologies will revolutionize India's manufacturing and logistics sectors by optimizing supply chains, reducing waste, and enhancing production efficiency. Quantum algorithms can solve complex optimization problems in seconds—tasks that would take conventional supercomputers days or even weeks.

For instance, Indian manufacturers can use quantum-powered predictive analytics to reduce downtime in factories, improve inventory management, and enhance Just-In-Time (JIT) production models. Quantum-enabled logistics optimization will also help streamline India's massive e-commerce and retail industries, reducing transportation costs and carbon footprints.

Energy and Sustainability: Enabling a Green Economy

As India strives for carbon neutrality and energy security, quantum technologies can drive breakthroughs in battery technology, solar energy efficiency, and grid optimization. Quantum materials research is already leading to the development of next-generation batteries with longer life spans and faster charging times, crucial for India's push towards electric mobility.

Quantum-enhanced algorithms can also improve weather forecasting and climate modelling, helping policymakers better anticipate natural disasters and manage agricultural resources more efficiently. This will ensure more resilient food supply chains and sustainable farming practices, aligning with India’s Net Zero targets.

Financial Services: Revolutionizing Risk Management and Cybersecurity

Quantum computing has the potential to revolutionize financial modelling, portfolio optimization, and fraud detection. Traditional risk assessment models rely on classical computation, which is often inadequate for processing vast amounts of data in real-time. Quantum algorithms can rapidly analyze complex financial markets, enabling more accurate predictions and investment strategies.

Furthermore, quantum communication and cryptography will fortify India's financial infrastructure against cyber threats. With quantum-safe encryption, banks and digital payment systems can enhance data security, prevent cyberattacks, and ensure the integrity of financial transactions, a crucial step in an increasingly digitized economy.

Healthcare and Pharmaceuticals: Accelerating Drug Discovery and Medical Research

The Indian healthcare sector stands to benefit significantly from quantum computing's ability to simulate molecular interactions at an unprecedented scale. Drug discovery, which currently takes years due to the limitations of classical computation, can be accelerated as quantum computers model complex biological processes with greater accuracy.

This will allow pharmaceutical companies to develop life-saving drugs faster and at lower costs, positioning India as a global hub for biomedical innovation. Additionally, quantum-enhanced medical imaging and diagnostics will improve early disease detection, leading to better healthcare outcomes and reduced treatment costs.

 Defence and National Security: Strengthening India's Strategic Capabilities

Quantum technologies will play a pivotal role in defence and national security, particularly in cryptography, secure communications, and autonomous systems. Quantum communication networks can provide hack-proof communication channels for India's defence forces, preventing cyber espionage and enhancing strategic intelligence capabilities.

Moreover, quantum-enhanced sensors can improve radar detection, submarine tracking, and satellite imaging, strengthening India’s surveillance and border security mechanisms. Investing in quantum defence technologies will bolster India's position as a technological powerhouse in global geopolitics.

Artificial Intelligence and Data Analytics: Unlocking New Possibilities

Quantum computing will amplify the power of artificial intelligence (AI) by significantly accelerating machine learning models, making AI systems more intelligent and responsive. This will have a profound impact on industries such as autonomous vehicles, precision agriculture, smart cities, and natural language processing.

India's AI-driven initiatives, such as AI-based governance models and smart infrastructure planning, will benefit from quantum-enabled data analytics, ensuring better policy-making, efficient resource allocation, and enhanced citizen services.

Agriculture and Allied Sectors: Precision, Productivity, and Sustainability

Agriculture remains the backbone of the Indian economy, contributing to livelihoods, food security, and rural development. With its vast agricultural base, India can leverage quantum technologies to modernize farming, enhance supply chain efficiency, and ensure food security, alongside its broader economic transformation. Quantum-driven precision agriculture, resilient food systems, and sustainable fisheries can position India as a global leader in agritech innovation, contributing to its vision of becoming a developed economy by 2047.

Quantum technologies can revolutionize the sector by optimizing resource use, enhancing yield predictions, improving supply chains, and ensuring climate resilience. Key applications include:

§  Quantum-Enhanced Weather Forecasting: Farmers depend heavily on weather conditions, yet traditional forecasting methods often fall short in accuracy. Quantum algorithms can process vast climate datasets in real time, significantly improving monsoon predictions, drought forecasting, and extreme weather event assessments. This will enable better planning of sowing and harvesting cycles, reducing yield losses and improving farm incomes.

§  Optimized Supply Chains and Market Linkages: One of the biggest challenges in Indian agriculture is post-harvest losses due to inefficiencies in logistics and storage. Quantum computing can optimize supply chain networks by analyzing real-time variables such as demand fluctuations, transportation conditions, and storage capacities. This can reduce food wastage, stabilize prices, and ensure timely delivery of agricultural produce to markets.

§  Quantum Sensors for Precision Farming: Advanced quantum sensors can detect soil health parameters, nutrient deficiencies, and water content with unprecedented precision. This will allow farmers to apply fertilizers, pesticides, and irrigation in a targeted manner, reducing input costs while maximizing productivity. Smart farming solutions powered by quantum technology can enhance sustainability and efficiency in Indian agriculture.

§  Livestock and Fisheries Management: Quantum-powered predictive analytics can optimize breeding cycles, disease prevention, and feed optimization in the livestock sector. In fisheries, quantum sensors can monitor ocean currents, detect fish population movements, and optimize catch predictions, ensuring sustainable fishing practices while boosting aquaculture productivity.

§  Climate-Resilient Crops and Food Security: With increasing climate volatility, developing drought-resistant and flood-tolerant crops is crucial. Quantum computing can accelerate genetic research, enabling scientists to simulate plant growth under different environmental conditions and develop resilient crop varieties faster. This will enhance India's agricultural resilience to climate change and ensure long-term food security.

§  Quantum Blockchain for Transparent Agri-Trade – Quantum-powered blockchain solutions can enhance traceability in the food supply chain, ensuring fair trade practices and preventing adulteration. This will benefit export-oriented agriculture and organic farming, giving Indian farmers greater access to global markets.

By integrating quantum technologies into agriculture, India can transition from subsistence farming to a high-tech, data-driven sector, boosting farmers' incomes and ensuring food security for a growing population.

Building India’s Quantum Future: Key Policy Priorities

To ensure that India remains at the forefront of the quantum revolution, a strategic, multi-stakeholder approach is essential. Some critical policy measures include:

§  Increased R&D Investments: Expanding funding for quantum research through national initiatives like the National Quantum Mission, fostering collaboration between government, academia, and industry.

§  Skilled Workforce Development: Establishing dedicated quantum computing and engineering programs at top universities and technical institutes to build a strong talent pipeline.

§  Robust Quantum Infrastructure: Developing quantum laboratories, testbeds, and high-performance computing centres to support quantum experiments and industrial applications.

§  Public-Private Partnerships (PPPs) – Encouraging startups and enterprises to co-develop quantum applications for real-world challenges, accelerating commercialization.

§  Global Collaborations: Strengthening ties with leading quantum research hubs in the US, Europe, and Asia to exchange expertise and develop quantum-enabled trade and technology agreements.

Conclusion: India's Quantum-Powered Path to 2047

As the world transitions into the post-quantum era, India has a unique opportunity to lead the Fourth Industrial Revolution by integrating quantum technologies across critical sectors. From optimizing manufacturing and energy systems to revolutionizing finance, healthcare and agriculture, quantum breakthroughs will enhance national security, drive industrial transformation, and boost global competitiveness.

By adopting a forward-thinking, innovation-driven approach, India can leapfrog traditional technological limitations, ensuring that quantum advancements translate into tangible socio-economic benefits. If harnessed effectively, quantum technologies will not only accelerate India’s journey towards becoming a developed nation by 2047 but also position it as a global leader in next-generation technology and innovation.

 

Climate-Smart Agriculture: Transforming India's Farming Future with Satellite Technology

 

Introduction

Agriculture and climate are deeply intertwined, with climate change affecting weather patterns, crop yields, and food security, while agriculture itself contributes significantly to greenhouse gas emissions. This creates a complex feedback loop that poses challenges for global food production. Climate-smart agriculture (CSA) emerges as a crucial approach, focusing on increasing productivity, enhancing resilience, and reducing greenhouse gas emissions. By integrating sustainable practices, CSA provides a vital framework for ensuring long-term agricultural sustainability. Among the many technological advancements supporting CSA, satellite technology and remote sensing have emerged as transformative tools, enabling real-time crop monitoring and data-driven decision-making. These technologies help farmers optimize their practices, reduce resource waste, and enhance crop resilience in the face of climate uncertainty.

The Need for Climate-Smart Agriculture

Climate change presents significant challenges to agriculture in India and around the world. Unpredictable weather patterns, frequent droughts, floods, heatwaves, and shifting pest and disease patterns threaten food production and farmers' livelihoods. Innovative solutions are necessary to adapt to these changes, mitigate their impacts, and ensure food security. Climate-smart agriculture provides an integrated approach to balancing productivity, resilience, and mitigation. Its goals include increasing food production sustainably, enhancing farming resilience to climate shocks, and reducing greenhouse gas emissions through eco-friendly practices. By adopting CSA principles, agriculture can transition towards a more sustainable and climate-resilient future.

Core Principles of CSA

The foundation of climate-smart agriculture is built on several core principles. Sustainable resource management involves optimizing the use of water, soil, and energy to prevent resource depletion and ensure long-term productivity. Developing diverse cropping systems, such as agroforestry, intercropping, and crop rotation, enhances biodiversity and soil health. Leveraging innovative technologies like remote sensing, artificial intelligence, and the Internet of Things enables precision farming and improves climate adaptation strategies. Community engagement plays a crucial role by empowering farmers through capacity building, participatory planning, and access to climate-resilient technologies. Integrating climate and agricultural policies further ensures synergy between development goals and climate action, paving the way for more sustainable farming practices.

Satellite Technology and Remote Sensing: A New Era for Agriculture

Among the most transformative innovations in climate-smart agriculture is satellite technology, coupled with remote sensing. These tools capture vast amounts of data, enabling real-time monitoring of crops and facilitating informed decision-making. By applying satellite technology, farmers can optimize their agricultural practices, reduce resource wastage, and improve crop resilience. This technological advancement not only helps agricultural systems adapt to changing climatic conditions but also enhances productivity and sustainability. The ability to monitor environmental factors remotely provides valuable insights that support precision farming and long-term agricultural planning.

Real-Time Monitoring and Data-Driven Decisions

Satellites equipped with advanced sensors gather critical data on vegetation health, soil moisture, temperature, and precipitation. Remote sensing technologies analyze this information to provide actionable insights for farmers. By monitoring crop health, farmers can detect early signs of pest infestations, diseases, or nutrient deficiencies, allowing for timely interventions. Optimizing resource use becomes more effective as farmers apply water, fertilizers, and pesticides precisely where needed, reducing wastage and minimizing environmental impact. Enhancing resilience is another major benefit, as satellite data helps identify areas vulnerable to drought or flooding, enabling proactive planning for adaptive strategies. These technologies empower farmers to respond promptly to threats and opportunities, leading to improved yields and reduced losses.

India’s Advancements: The Role of ISRO

India has been at the forefront of satellite technology applications in agriculture, driven by the pioneering efforts of the Indian Space Research Organisation (ISRO). The country’s satellites, such as Cartosat and Resourcesat, provide high-resolution imagery for mapping agricultural landscapes and assessing crop coverage. Remote sensing data supports soil health monitoring by analyzing soil characteristics and enabling targeted soil improvement measures. ISRO’s monitoring systems also play a crucial role in drought and flood forecasting, allowing for early warning systems that help farmers prepare for adverse conditions. The FASAL (Forecasting Agricultural Output using Space, Agrometeorology, and Land-based Observations) project integrates satellite data with meteorological information to predict crop yields, while the NADAMS (National Agricultural Drought Assessment and Monitoring System) initiative assesses drought conditions across India. These initiatives highlight India’s leadership in utilizing satellite technology for agricultural resilience.

Global Best Practices

While India has made significant progress, global best practices offer valuable lessons for further advancements in climate-smart agriculture. The European Union’s Sentinel Program provides free satellite data for environmental monitoring, helping European farmers optimize inputs and build climate resilience. A similar open-access data policy in India could empower farmers with timely, accurate insights. In the United States, tools such as CropScape and VegScape utilize satellite data for real-time crop mapping, aiding farmers and policymakers in analyzing crop conditions. Developing similar platforms in India could enhance resource management and crop planning. Brazil’s National Institute for Space Research (INPE) uses remote sensing to monitor deforestation and soil health, supporting sustainable farming and combating illegal land use. India could adopt a similar approach to protect its forests and promote climate-smart agriculture. In Africa, the Crop Monitor Program provides real-time crop monitoring and early warning systems to manage food security and market trends. Adopting similar collaborative models in India, particularly in regions facing critical food security challenges, could strengthen agricultural resilience.

Role of Agri-Tech Startups and Strengthening the Extension System

Agri-tech startups are playing a crucial role in driving climate-smart agriculture by developing innovative solutions for farmers. These startups leverage artificial intelligence, big data, and precision farming techniques to optimize agricultural inputs, improve yield predictions, and enhance supply chain efficiency. Many startups are offering satellite-based advisory services, enabling farmers to receive real-time insights on weather patterns, soil conditions, and pest outbreaks. The collaboration between the government, private sector, and startups can further accelerate the adoption of climate-smart practices, making agriculture more efficient and resilient.

To ensure that these advancements reach the grassroots level, it is essential to strengthen the agricultural extension system. Both public and private extension services must be enhanced to provide farmers with the necessary training and access to climate-resilient technologies. Public-private partnerships (PPP) can play a significant role in bridging the gap between research institutions, technology providers, and farmers. By integrating government initiatives with private-sector innovations, a more effective and widespread extension system can be established, ensuring that even smallholder farmers benefit from the latest advancements in climate-smart agriculture.

The Way Forward

To fully realize the potential of satellite technology and remote sensing in agriculture, India must take strategic steps. Improving data accessibility and investing in rural connectivity, data-sharing platforms, and farmer training programs will ensure that digital agriculture becomes more inclusive and beneficial. Public-private partnerships are essential to fostering innovation, with collaboration between the government, private companies, and research institutions driving new applications for satellite data in farming. Equipping farmers with the knowledge and skills to interpret satellite data is crucial, necessitating the development of accessible training programs and mobile platforms. Sustainable financing through government support and financial institutions should provide incentives for climate-smart practices, including subsidies for technology adoption, ensuring that smallholder farmers also benefit from advanced technologies. By adopting a strategic, collaborative approach and learning from global best practices, India can scale agricultural innovations, empower farmers, and create a future where climate-smart agriculture supports food security, sustainability, and prosperity.

 

RBI’s Policy Pivot: Balancing Growth, Inflation, and Financial Stability

 The Reserve Bank of India (RBI) has taken a significant step in its monetary policy strategy with its latest announcement on February 7, 2025. In a move widely anticipated by market participants, the Monetary Policy Committee (MPC) unanimously decided to reduce the policy repo rate by 25 basis points, bringing it down to 6.25%. This marks the first rate cut in nearly five years, aimed at boosting economic growth amid shifting global and domestic macroeconomic conditions. Despite this reduction, the RBI has maintained a neutral stance, emphasizing a measured and data-driven approach to policy adjustments.

The rationale for this policy shift lies in India’s evolving growth-inflation dynamics. Inflation, which briefly exceeded the upper tolerance band in October 2024, has moderated, with Consumer Price Index (CPI) inflation easing to 5.22% in December 2024. RBI projections suggest a continued decline, with inflation expected to average 4.8% in the current fiscal year and 4.2% in 2025-26, assuming normal monsoon conditions. The rate cut reflects the RBI’s balancing act—supporting economic expansion while ensuring inflation aligns with its target.

Economic growth, however, presents a mixed picture. The GDP growth forecast for 2024-25 stands at 6.4%, lower than the 8.2% recorded last year, but signs of recovery are emerging. The RBI projects growth at 6.7% for 2025-26, with steady improvements expected in agriculture, employment, and household consumption—factors buoyed by recent budgetary measures, including tax relief for consumers.

Despite domestic resilience, external risks persist. The global economy remains sluggish, and disinflationary trends are stalling. The US Federal Reserve’s policy recalibration has strengthened the dollar, placing pressure on emerging market currencies, including the Indian rupee, which has depreciated by 3.2% since November 2024. In response, the RBI has intervened in forex markets to ensure orderly adjustments while maintaining a market-driven exchange rate policy. The RBI has assured market participants that it remains committed to managing liquidity through appropriate interventions.

The policy announcement also introduced critical regulatory and developmental measures. The RBI has expanded the suite of financial instruments available in India’s bond market, allowing forward contracts in government securities. This initiative will help long-term investors, such as insurance firms, manage interest rate risks. Additionally, access to the Negotiated Dealing System – Order Matching (NDS-OM) platform has been extended to SEBI-registered non-bank brokers, enhancing retail participation in government securities.

Digital security and financial market stability remain key areas of focus. In response to rising cyber threats, the RBI has announced the introduction of Additional Factor Authentication (AFA) for international digital transactions, aimed at curbing fraud in cross-border payments. Moreover, the launch of dedicated banking and financial domains—'bank.in' for banks and 'fin.in' for financial institutions—will enhance cybersecurity and reduce digital fraud risks.

The RBI is also conducting a comprehensive review of trading and settlement timings across financial markets. A working group comprising key stakeholders will evaluate the potential benefits of synchronizing market operations, with a report expected by April 30, 2025.

Overall, the RBI’s policy decisions reflect a carefully calibrated strategy to balance growth, inflation, and financial stability. By adopting a modest rate cut while maintaining a neutral stance, the central bank signals its readiness to adapt to evolving macroeconomic conditions. The success of these measures will depend on global economic trends, domestic fiscal policies, and geopolitical developments. While the rate cut is a welcome boost for growth, the RBI’s prudent approach highlights the complexities of steering India’s economy through an uncertain global landscape.

A Budget for the Future: Innovation, Growth, and Fiscal Responsibility

 The Union Budget 2025-26, presented by Finance Minister Nirmala Sitharaman, lays out a roadmap for India’s economic trajectory in an era of global uncertainty. With a focus on fostering inclusive growth, accelerating private sector investments, and strengthening key sectors, the budget aims to propel India towards its vision of ‘Viksit Bharat’ by 2047. The budget’s overarching theme is structured around four key economic engines—Agriculture, MSMEs, Investment, and Exports—powered by policy reforms and guided by an inclusive growth strategy.

One of the most significant announcements in the budget is the revision of personal income tax slabs, providing much-needed relief to middle-class taxpayers. The tax-free income limit has been raised from ₹7 lakh to ₹12 lakh, with a standard deduction of ₹75,000 for salaried individuals. The new tax structure is expected to boost disposable income, spurring consumption and savings. By alleviating the tax burden, this move is expected to revitalize household consumption, which remains a key driver of economic growth.

The government has reinforced its commitment to agricultural growth with the launch of the Prime Minister Dhan-Dhaanya Krishi Yojana, a new initiative aimed at 100 districts to benefit 1.7 crore farmers. Additional measures include the expansion of the Kisan Credit Card (KCC) scheme with an increased loan limit of ₹5 lakh for farmers, fishermen, and dairy farmers, a six-year Pulses Self-Reliance Mission focusing on crops like Tur, Urad, and Masoor to boost domestic production and reduce import dependency, and the National Mission on High Yielding Seeds to strengthen research on climate-resilient and high-yielding seed varieties to ensure sustainable agricultural growth.

A strong emphasis has been placed on fostering innovation and research. A total of ₹20,000 crore has been allocated to research and development for promoting private sector-driven research and technological advancements. The PM Research Fellowship will provide 10,000 fellowships to students pursuing advanced studies in IITs and IISc, while a second Gene Bank for Crop Germplasm will be established with 10 lakh germplasm lines to ensure future food and nutritional security. These measures signal India’s intent to emerge as a global leader in cutting-edge technology and scientific research.

To boost India’s exports and strengthen manufacturing, the budget introduces BharatTradeNet, a digital public infrastructure for seamless trade documentation and financing. Tax exemptions have been announced for key sectors, including duty exemptions on open cells for LED/LCD TVs and capital goods for lithium-ion battery manufacturing. Additionally, the MRO (Maintenance, Repair, and Overhaul) sector will receive a 10-year customs duty exemption for shipbuilding and shipbreaking, and extended time limits for exporting repaired railway goods. These reforms align with India’s broader ‘Make in India’ and ‘Atmanirbhar Bharat’ strategies, ensuring that domestic manufacturing becomes more competitive globally.

With an estimated fiscal deficit of 4.4% of GDP, the government has maintained its commitment to fiscal prudence while ensuring robust capital expenditure. Key initiatives include ₹1.5 lakh crore interest-free loans to states for infrastructure projects, an extension of the Jal Jeevan Mission to 2028 to ensure 100% coverage of rural households with potable tap water, the establishment of an Urban Challenge Fund of ₹1 lakh crore to revamp cities as growth hubs, and encouraging states to leverage public-private partnerships (PPP) for infrastructure growth. These initiatives underscore the government’s focus on long-term economic resilience and sustainability.

The Union Budget 2025-26 balances fiscal responsibility with ambitious growth-oriented policies. By addressing key sectors such as agriculture, manufacturing, innovation, and infrastructure, the budget aims to strengthen India’s economic foundations. The emphasis on tax relief, increased investments, and export competitiveness signals a strategic shift towards making India a global economic powerhouse. As the country navigates complex global economic headwinds, this budget provides a clear blueprint for sustained growth, job creation, and overall economic prosperity. The coming years will determine the effectiveness of these policies, but the direction set by this budget is undeniably forward-looking and transformative.