Indian Economy

Analysis of India’s Labour Codes Reforms with Multi-Stakeholders Perspectives

Leave a Comment / Indian Economy, Public Policy, Skills Development Sector, State Economies, Women Empowerment /

Analysis of India’s Labour Code Reforms: A Multi-Stakeholder Perspective Analysis of India’s Labour Code Reforms: A Multi-Stakeholder Perspective R. Subramoniam September 23, 2026 Indian Economy, Public Policy, Skills Development Sector, State Economies, Women Empowerment Key Highlights The nationwide implementation of India’s four consolidated Labour Codes from November 2025 marks the most significant restructuring of the country’s labour law regulations since independence. The Codes aim to simplify compliance, extend social protection, and introduce labour market flexibility. Yet implementation faces challenges of federal fragmentation, uneven digital readiness, and contested power dynamics. This article offers a multi-stakeholder analysis of the new reforms through qualitative perspectives. It assesses the doctrinal overhaul of wage structures, social security, industrial relations, and working conditions, with particular attention to gig, platform, and informal workers. The article contributes an Integrated Labour Governance Readiness Model (ILGRM) and recommendations for policymakers, enterprises, and researchers. Introduction Prior to 2025, India’s labour regulatory framework comprised approximately 29 Union laws and over 100 State-level statutes, many of colonial origin. This fragmentation imposed heavy compliance burdens on businesses, especially MSMEs, while leaving nearly 90% of the workforce in the informal sector inadequately protected (NSSO, 2024). Global integration, the rise of the platform-based gig economy, and the demand for greater labour market flexibility made modernisation essential. The reform process, initiated by the Second National Commission on Labour (2002), culminated on 21 November 2025 with the Gazette notification implementing four consolidated Labour Codes. This shift moved from a fragmented, sectoral approach to a holistic, worker-centric framework seeking to balance ease of doing business with enhanced worker welfare and social security. The Four Codes: An Overview The reform consolidates existing laws into four comprehensive Codes: The Code on Wages, 2019: Unifies laws on wages, bonuses, and minimum wages. It introduces a standardised definition of ‘wages’ requiring basic pay to constitute at least 50% of total remuneration, a National Floor Wage, and stricter payment timelines. The Code on Social Security, 2020: Extends provident fund, health insurance, and gratuity to unorganised, gig, and platform workers. Aggregators must contribute 1–2% of turnover to a social security fund. Gratuity eligibility for fixed-term employees is reduced from five years to one year. The Industrial Relations Code, 2020: Raises the threshold for prior government permission for lay-off, retrenchment, and closure from 100 to 300 workers. It extends strike notice periods (to 60 days in public utility services) and requires 51% support for a sole negotiating union. A Reskilling Fund is financed by employers’ 15-day wage contribution per retrenched worker. The Occupational Safety, Health and Working Conditions Code, 2020: Consolidates safety, health, and working-condition standards. It formalises work-from-home, permits night shifts for women with safeguards, reduces annual leave eligibility from 240 to 180 days, mandates health check-ups for workers over 40, and recognises commute accidents for compensation. Key Doctrinal Changes and Implications The 50% wage rule increases long-term social security savings but may reduce take-home pay in the short term and requires payroll restructuring. The inclusion of gig and platform workers is historic, yet delivery through a government fund rather than direct employer contributions creates implementation distance. Raising the retrenchment threshold grants operational flexibility to mid-sized firms while eroding job security for workers in that band. Stricter strike conditions and the sole-negotiating-agent rule are viewed by unions as curtailing collective bargaining power. On the positive side, formal recognition of remote work, expanded leave eligibility, and equal-pay principles for contract labour modernise working-condition norms. Stakeholder Perspectives and Implementation Challenges Employer Concerns Industry bodies acknowledge long-term simplification benefits but highlight short-term cost increases of 4–10% for MSMEs arising from the 50% wage rule, expanded gratuity, and social-security contributions. Federal fragmentation is acute: labour is a concurrent Subject under the Constitution of India, and uneven State rule-making (Gujarat and Karnataka are progressing, others lagging) creates a compliance patchwork for multi-State organisations. Many small employers lack digital readiness for portals such as Shram Suvidha and E-Shram. Worker and Union Concerns Trade unions have labelled the reforms “anti-worker.” The raised retrenchment threshold is seen as facilitating easier lay-offs; fixed-term contracts are viewed as institutionalising temporary work; and the 51% threshold plus extended strike notice periods are perceived as weakening union voice. Gig workers remain outside the Industrial Relations Code’s definition of ‘worker,’ limiting collective bargaining. Delays in E-Shram registration and unclear fund utilisation raise doubts that promised benefits will materialise. Federal and Digital Challenges Divergent States rules produce regulatory uncertainty, uneven worker protections, and inconsistent enforcement under the ‘inspector-cum-facilitator’ model. Mandatory digital compliance risks creating a new digital divide: large corporates and tech-savvy workers may benefit, while rural MSMEs and older informal workers risk exclusion. Managerial Governance and HR Implications: The ILGRM Framework Any successful organisational adaptation requires synchronising five dimensions of the Integrated Labour Governance Readiness Model (ILGRM): Regulatory Readiness: Master Union Codes and relevant State rules. Operational Readiness: Restructure payroll, contracts, policies, and compliance calendars. Technological Readiness: Upgrade HRMS for digital filing and government-portal integration. Financial Readiness: Budget for higher statutory contributions, safety upgrades, and reskilling liabilities. Cultural Readiness: Train managers and communicate changes transparently to build trust. Immediate HR actions include conducting a 50% basic-pay audit, classifying all workers correctly (employee, worker, gig, contract labour), updating contracts and handbooks for remote-work and night-shift provisions, forming grievance-redressal committees where required, and launching E-Shram registration drives. Transparent communication on take-home-pay impacts is essential to mitigate anxiety. Flexibility Vs Security The Codes attempt a flexicurity bargain—greater hiring and firing flexibility in exchange for broader social security. In the initial phase the bargain appears asymmetric: flexibility provisions take effect immediately, while security mechanisms (gig-worker funds, benefit portability) are institutionally complex and will take time to operationalise. Workers may therefore experience the costs of flexibility before the benefits of security materialise, fuelling discontents. Digitalisation is a double-edged sword. It promises reduced corruption and greater transparency, yet presupposes digital access and literacy that remain uneven. Large corporates may gain; many MSMEs and informal workers risk exclusion. Sustainable success also requires revitalised tripartite dialogue on continuous mode. The reform process has been criticised

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India’s Energy Transition and Its Challenges

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India’s Energy Transition and Its Challenges India’s Energy Transition and Its Challenges Prince Kumar Tiwari September 23, 2026 Indian Economy, Public Policy According to the Government of India, the share of non-fossil sources in the country’s total installed electricity capacity reached 50.08% in June 2025 (242.78 GW out of a total of 484.82 GW). This achievement exceeded the 50% capacity target under its Nationally Determined Contribution (NDC) more than five years ahead of the 2030 deadline. Renewable energy is highly significant in India. The growth of solar and wind energy is driven by falling technology costs, supportive government policies, and increased funding availability. Solar energy is especially important due to its exceptionally high potential across the country. As said in the International Solar Alliance report on Ease of Doing Solar 2025, policy support, investment climate, infrastructural condition, and reduced administrative costs are the vital factors for rapid solar deployment. Moreover, India is seeking new technological innovations such as green hydrogen, battery storage, electric vehicles, and sustainable fuels. The energy transition handbook by IIT Kanpur highlights that to achieve India’s transition, various energy-consuming sectors must undergo a parallel shift. Progress By March 31, 2026, India had a total of 283.46 GW of non-fossil capacity, which included 274.68 GW of renewable energy and 8.78 GW of nuclear power. This non-fossil capacity represents 56.7% of the country’s target of 500 GW by 2030, with renewable energy alone constituting about 54.9% of the total capacity. Hence, it can be stated that India has already crossed the 50% mark in installed capacity; however, the share of the generated electricity remains below since renewable energy depends on weather and time of day, and there is still a lot of coal-generated electricity. A significant gap remains between available capacity and actual power generation. During FY 2025–26, India generated 538.97 billion units of electricity from non-fossil sources. This accounted for only 29.2% of the country’s total power generation of 1,845.921 billion units. Consequently, while India has crossed the 50% mark in installed capacity, the share of actual clean electricity remains much lower. This gap exists because renewable energy generation is dependent on weather and the time of day, implying that India still relies heavily on coal-based electricity generation to meet its base demand. Indicators Achievements Target / Comparison Non-fossil installed capacity 283.46 GW (31 Mar 2026) 500 GW by 2030 Renewable installed capacity 274.68 GW (31 Mar 2026) ≈54.9% of 500 GW target Non-fossil share of generation 29.2% in FY 2025–26 Shows actual electricity use Ethanol blending 19.05% in ESY 2024–25 20% target Source for the added figures: Government of India / Press Information Bureau releases on Energy Transition and Renewable Capacity (2026). Biofuels are a key aspect of India’s approach as it continues to use fossil fuel for transportation. For example, with the ethanol blending initiative, India is able to use less crude oil and simultaneously support farmers in rural areas. According to government statistics, the average ethanol blend was around 19.05 % in 2024–25, which is almost close to its target of 20%. Promoting the use of home-grown biofuels can also help India boost its energy independence since it helps lessen the dependence on foreign fossil fuel. Challenges of Energy Transitions The major challenge is that the country still relies on coal for electricity production, as it is strongly related to industrial activity and energy safety. Moving away from coal usage is very challenging, as solar and wind energy generation are dependent on the weather and daytime. The second obstacle involves ensuring energy is affordable while simultaneously attracting huge financial requirement needed for creating transmission infrastructure, electricity distribution and storage, EV charging infrastructure, green hydrogen, and energy-efficient technologies. To address this, the national energy policy framework must balance adequacy and access with affordability and sustainability. Further, regulatory uncertainty and project delays significantly increase financial risks. Mitigating these risks requires stable legislation alongside robust, coordinated investments from both the public and private sectors. Infrastructure remains a critical challenge. Abundant renewable energy can only be utilized if transmission, storage, and distribution systems function effectively. Because renewable projects are typically located far from major consumption centers, expanding the grid is essential. As highlighted in the Ease of Doing Solar report, removing implementation bottlenecks is vital to project success. Policy Measures for Energy Transitions India must build domestic manufacturing capabilities and skilled workforce so that the transition does not create excessive dependence on imported technologies and components. Research, innovation and technology transfer can help reduce costs. The transformation of the energy infrastructure brings significant social and regional consequences. Coal areas largely rely on the mining and power generation sectors to provide job opportunities and economic development options. Reduced use of fossil fuels may lead some workers and communities in coal areas to face economic challenges. Consequently, a fair transformation is required. This approach requires reskilling and upskilling programs, creation of new job opportunities, and support for local communities. Energy is related to multiple sectors, including electricity, coal, petroleum, transport, agriculture, industry, buildings, and finance, thus making it vital to bring together many stakeholders such as government agencies, state governments, regulators, companies, and consumers. India’s energy transition is both a necessity and a big development opportunity. The country has already made progress on the renewable energy front in the areas of solar deployment, ethanol blending and other low-carbon initiatives. However, the transition is complicated due to rising energy demand, coal dependency, affordability, financing, infrastructure development, and technological changes. India needs a balanced approach that integrates renewable energy, energy efficiency, storage, grid modernisation, cleaner fuel usage, electric mobility, energy assets use and social policy. The Author is pursuing MBA in Sustainable Development and Management at Nalanda University, Bihar. Views expressed by the author are personal. This article is based on his internship work with the AgaPuram Policy Research Centre, Erode, Tamil Nadu on virtual mode. Views expressed by the author are personal and need not reflect or represent the views of the AgaPuram Policy Research Centre.  

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India’s MSMEs Problem Is Not Credit, It’s Cash Flow!

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India’s MSMEs Problem Is Not Credit, It’s Cash Flow! India’s MSMEs Problem Is Not Credit, It’s Cash Flow! Sivakumar Chockalingam August 29, 2026 Indian Economy, Public Policy, State Economies, Youth Entrepreneurship Why MSMEs reforms matter — and why TReDS could be the missing link between sales and liquidity? India’s MSME challenge is often described as a credit-access problem. Increasingly, it should be understood as a cash-flow architecture problem. Credit can finance growth. Small businesses often lack collateral, have limited financial histories and face higher borrowing costs. But a more fundamental problem is receiving payment for work already completed. For many micro and small enterprises, the most important source of working capital is not another loan. It is the timely realisation of their receivables. The scale of the problem is significant. The Economic Survey 2025-26 estimates that around Rs.8.1 lakh crore are locked in delayed payments to MSMEs. The Survey notes that delayed payments particularly affect micro-suppliers, constraining liquidity and growth. It also identifies the expansion of TReDS (Trade Receivables Discounting System) and digital invoicing as important interventions in addressing the problem. TReDs /Domestic Trade Exchanges system are regulated by RBI through the Receivables Exchange of India Ltd. A small supplier may hesitate to pursue a delayed-payment claim against a major customer because the customer may also be its most important source of future business. The Economic Survey explicitly recognises this tension: MSMEs may fear damaging commercial relationships by taking formal legal action. This is one reason why faster, lower-cost and less adversarial dispute resolution matters. Further, the Union Ministry of MSME’s Annual Report-2025-26 provides another indication of the enforcement gap. As on 31 December 2025, 2,56,892 applications had been filed on the MSME Samadhaan Portal, involving Rs.55,244.31 crore. Of these, 53,911 cases had been disposed of by MSEFCs, involving Rs.14,638.38 crore. At the same time, 52,744 applications involving Rs.8,397.25 crore were still awaiting review. These figures do not capture the entire universe of delayed payments — the Economic Survey’s Rs.8.1 lakh crore estimate is much broader — but they demonstrate how difficult it can be for an MSME to convert a payment claim into actual cash. The issue is not merely financial. It is behavioural. This is why the delayed-payment provisions and the growing role of the Trade Receivables Discounting System (TReDS) deserve to be viewed together. The Micro, Small and Medium Enterprises Development (Amendment) Bill, 2026, passed by Parliament on 7 August 2026, could represent a meaningful shift from simply expanding credit to strengthening the cash-flow architecture around MSMEs. The latest amendment attempts to strengthen the systemic issues. It provides for Online Dispute Resolution, introduces timelines for mediation and arbitration, and strengthens enforcement of mediated settlements and arbitral awards. If an application to set aside an award remains pending for more than six months, courts are mandated to order payment of at least 50% of the awarded amount to the micro or small enterprise supplier. Awards and mediated settlements can also be recovered as arrears of land revenue through the appropriate authority. These provisions matter because a legal entitlement has limited economic value if the enterprise cannot survive long enough to realise it. But enforcement after a payment default should be the second line of defence. The more important policy objective should be to make delayed payments less damaging in the first place. This is where TReDS becomes strategically important: TReDS effectively allows an eligible MSME receivable to become a source of liquidity before the buyer’s contractual payment date. An invoice accepted by the buyer can be discounted through an RBI-regulated platform, with financiers competing to fund the receivable. The MSME receives cash earlier while the buyer continues according to the agreed payment cycle. The scale-up has been striking. According to the Ministry of MSME, invoice discounting on TReDS has increased from about Rs.40,000 crore in 2022-23 to Rs.3.47 lakh crore in 2025-26. In July 2026, the Union government also notified that all operating Central Public Sector Enterprises must route settlement of invoices for goods and services procured from MSMEs through TReDS platforms. TReDS system can turn verified receivables into liquidity. Credit institutions can increasingly use such data to understand the underlying quality of a business. The next logical step is to connect these pieces into a coherent MSME cash-flow ecosystem. For policymakers, therefore, the question should not be simply how much additional credit can be made available to MSMEs. It should also be: how much of the MSME’s existing economic value is trapped because payment does not arrive on time? A business that has already delivered Rs.1 crore of goods or services does not necessarily need another Rs.1 crore loan. It may need its Rs.1 crore receivable to become liquid. That distinction is important because borrowing to compensate for delayed payments can increase leverage and financial costs. If receivables can instead be financed competitively and transparently, the enterprise can maintain production, pay employees and suppliers accept new orders and grow without repeatedly refinancing the same working-capital gap. Yet TReDS system should not become an excuse for buyers to routinely extend payment cycles. Invoice discounting solves the liquidity problem; it does not fully solve the underlying payment-discipline problem. It is also not mandatory for private sector vendors. The policy objective should therefore have two layers. First, make timely payment the norm through stronger disclosure, enforcement and institutional accountability. Second, provide efficient receivables financing when payment cycles create unavoidable working-capital gaps. This is particularly relevant for states such as Tamil Nadu, where millions of MSMEs (are deeply embedded in industrial supply chains — from engineering and auto components to textiles, food processing and a wide range of services, etc. The effectiveness of the national reforms will ultimately depend on adoption at the state and cluster level, including awareness among smaller enterprises and participation by buyers, banks and financiers. Therefore, the 2026 MSMEs reforms are therefore important not simply because they amend a 20-year-old law. They bring together three pieces of a larger policy puzzle: faster dispute resolution, stronger recovery

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India’s Institutions and Its Bottlenecks: National Clean Air Programme

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India’s Institutions and Its Bottlenecks India’s Institutions and Its Bottlenecks Prayaga Venkata Rama Vinayak March 19, 2026 Indian Economy, State Economies, Urban Development This article discusses about one of the most pressing environmental challenges faced by Indian cities – Air Pollution. Also, this piece talk about the sources of the air pollution analysing the latest available data along with the policy assessment of National Clean air program (NCAP) which aim to improve the air quality of selected 131 Indian cities. According to the 2021 Air Quality Guidelines of WHO, PM 2.5, PM 10, Nitrogen dioxide (NO2), Sulphur dioxide (SO2) and Carbon dioxide (CO2) are the major pollutant which influences the air quality in a particular city. Of these, PM 10 & PM 2.5 are the most dangerous pollutants. PM 10 is nothing but particulate matter with diameter near to 10 micro meters. A normal human hair usually has a width of 70 micrometers. These PM 10 particles are 7 times smaller than human hair. These PM 10 particles deposit in lungs and create many respiratory problems like breathing problems, lung irritation, chronic bronchitis etc. According to the WHO’s 2021 Air quality guidelines Road dust, construction dust, cement dust, smoke particles and Industrial dust are the significant sources for these PM 10 particles in the air. WHO air quality guidelines document also highlighted that PM 2.5 is even more dangerous than PM 10. PM 2.5 particles are Particulate matter in the air with diameter less than 2.5 micro meters which means 30 times smaller than the average human hair. Diesel vehicle’s exhaust, Coal power plants, Industrial combustion, Biomass burning (kind of stubble burning), household cooking fuels etc. are the sources of PM 2.5 particles in air. This leads to Lung diseases, Heart attacks, lung cancer and other deadly diseases. For thoroughly monitoring the pollutant levels the Central Pollution Control Board (CPCB) launched NAAQS (National ambient air quality standards) in 1982 and we are following the latest revisions of 2009 in which PM 2.5 was also included as one of the major pollutants. In 2014, the present NDA Government had launched NAQI (National Air Quality Index) which will give consolidated score of 8 pollutants which includes PM 10 and PM 2.5 along with other 6 pollutants responsible for air pollution. National Clean Air Programme (NCAP) has been launched by the Union Ministry of Environment, Forest and Climate Change as a comprehensive initiative in partnership with various Ministries and States to improve air quality at city, regional and national level. It is a focused and time bound scheme to implement various sectoral policies, strengthen monitoring and enhance public participation in 130 cities for effective air quality management. As part of this NCAP all 130 cities should come up with Graded Response Action Plan (GRAP) which is an emergency pollution control framework required implementing in all cities that activates progressively stricter measures when the Air Quality Index crosses specified pollution thresholds. This GRAP will be supervised by the Commission of Air quality management. Along with this, the States and cities are also required to come up with their City Air Action Plans which are city specific long term sstrategies designed to identify major pollution sources and implement targeted measures to reduce air pollution and improve urban air quality. Also, all these cities are required to create Public Grievance Redressal systems which will address the citizen grievances related to the air pollution. As per the Indian Government’s PRANA (Portal for Regulation of Air-Pollution in Non-Attainment cities) website, all 130 cities comply 100% with GRAP, City Air Action Plans (CAAP) and Public Grievance Redressal systems. As per PIB Report on 25th July 2024, 95 cities out of 131 cities have shown improvement in air quality in terms of annual PM10 concentrations in FY 2023-24 with respect to the baseline of FY 2017-18. 18 cities have met National Ambient Air Quality Standards (NAAQS) for PM10 (60 µg/m3) in FY 2023-24. Under NCAP, Rs.2408.19 Crores have been cumulatively released to non-attainment cities from FY 2019-20 till date. In addition, since the financial year 2020–21, the government has provided Rs.11,457.34 crores in grants to 42 large urban cities with populations over one million under the 15th Finance Commission. Further, the City Action Plan (CAPs) of 130 cities is implemented by coordinated action of state government and its agencies at state and city level. The funding for implementation of CAPs is also being mobilized through convergence of resources from various schemes of Central Government such as SBM (Urban), AMRUT (Atal Mission for Rejuvenation and Urban Transformation), Smart City Mission, SATAT (Sustainable Alternative Towards Affordable Transportation), PM E-Drive (Prime Minister Electric Drive Revolution in Innovative Vehicle Enhancement), etc. and resources from State/UT Governments and its agencies such as Municipal Corporation, Urban Development authorities and Industrial development authorities etc. The funding from NCAP/XV-FC is a performance based supplemental grant for funding the unfunded critical gap of CAP. So, can we conclude that NCAP served the purpose? The answer is partially yes. But there is still a room for improvement. NCAP was launched in 2019 aimed to reduce PM 10 levels by 20-30% when compared to 2017 levels by 2024. Many cities could not achieve that as air pollution is a very complex program and most of the cities were not even considered air pollution as serious problem to be tackled before NCAP. So, the governments felt it is not pragmatic to get the desired results by that time and extended the deadline with revised targets to 2026. Target has been set to achieve reduction in PM10 level up to 40% by 2025-26 from the levels of 2019-20. These interim targets are in line with global experiences which highlight those city specific actions led to 35%–40% PM2.5 reduction in five years for cities, such as Beijing and Seoul, whereas cities, such as Santiago and Mexico City have shown 73% and 61% reduction in 22 to 25 years with regard to PM2.5 and PM10 concentrations, respectively. But, the first phase of NCAP has at least brought

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Fiscal Constrains and Structural Transitions

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Fiscal Constrains and Structural Transitions Fiscal Constrains and Structural Transitions Baskar R February 19, 2026 Indian Economy, Tamilnadu Economy State Finances: A Study of Budgets RBI has recently released its annual publication on State Finances: A Study of Budgets of 2025-26 analysing the latest fiscal position of State Governments across India. The report has a separate chapter on India’s demographic transition and its implication for State finances. Key Takeaways for Tamil Nadu Tamil Nadu has been identified as an ageing state – where the demographic share of working age population (15-59 years) begins to decline. This leads to shrinking tax bases and rising committed expenditure in pensions and healthcare.  Compared to peer states, Tamil Nadu operates with the highest committed expenditure burden at 36% of revenue expenditure and high revenue deficit of 1.2%, highlighting structural imbalance between revenue spends and earnings. Read More …

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Highlights of Economic Survey 2025-26 on Tamil Nadu Economy

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Highlights of Economic Survey 2025-26 on Tamil Nadu Economy Highlights of Economic Survey 2025-26 on Tamil Nadu Economy Chandrasekaran Balakrishnan February 6, 2026 Indian Economy, Tamilnadu Economy The national economic survey report has been presented before the announcement of the Union Government Budget for the next financial year since 1957-58. The report outlines the key driving forces of the Indian economy during the past year. The Survey also dives deeply the candors of the key challenges faced in the domestic as well as the international economy. The survey provides a major sector-wise analysis with trends of growth and development, policy gaps, if any, and innovative ways to address sectoral issues at both national and regional levels for achieving national and regional aspirations. With this background, this analysis shows the key best practices highlighted with references to the regional economy like Tamil Nadu state, which is the second largest in size at the regional level. This analysis also looks into some of the grave concerns highlighted in the National Economic Survey on the state’s specific issues. At the national level, it is important to note what the Economic Survey emphasised: “India received credit rating upgrades from three credit rating agencies in 2025, starting with Morningstar DBRS in May, followed by S&P in August and R&I in September. S&P’s upgrade of India from BBB- to BBB was India’s first credit rating upgrade from a major agency in nearly two decades.” This is possible because of India’s macroeconomic performances, which are not only now fundamentally strong now but also the growth accelerated due to a slew of structural reforms and policy measures. Employment, Factories and Higher Productivity The Survey Noted that “in terms of geographic distribution, seven states contributed to around 60 per cent of the total employment in the manufacturing sector with Tamil Nadu (15 per cent) on top followed by Gujarat (13 per cent), Maharashtra (13 per cent), Uttar Pradesh (8 per cent), Karnataka (6 per cent), Haryana (6 per cent) and Telangana (5 per cent). States like Maharashtra, Madhya Pradesh, Tamil Nadu, Himachal Pradesh, Haryana, Uttarakhand, Karnataka and Uttar Pradesh displayed a higher share of larger factories. These states also registered a high productivity in terms of NVA per person engaged. Further, eight industry groups in the organised manufacturing sector contributed to around 60 per cent of the total employment (Chart XII.12).” Growth and Development of Industries It is interesting to note the observations of the Economic Survey on major regional economies, which are essentially “the entrepreneurial state complements this institutional integration by coordinating expectations and bearing risk in sectors where fragmented private actors would otherwise hesitate to act. In automotive components in Tamil Nadu, pharmaceuticals in Gujarat and Hyderabad, and more recently electronics manufacturing clusters in Noida and Sriperumbudur, public policy has not only regulated but convened and aggregated: facilitating cluster formation, underwriting early investment, shaping procurement and export pathways, and making global standards attainable for small and mid-sized firms. In renewables, space, defence manufacturing, and select digital infrastructure, public institutions have signalled technological direction in advance of market consensus.” Further, the Survey noted that “in the area of building and development norms, Haryana, Madhya Pradesh, Odisha, Tamil Nadu, Uttar Pradesh, and Uttarakhand have liberalised building bye-laws, and simplified development norms relating to setbacks, Floor Area Ratio (FAR), parking restrictions, and minimum plot area. These measures have reduced land loss, enabled higher utilisation of urban land, and facilitated project execution, particularly for industrial and commercial developments.” Also, importantly, “for environmental clearances, Andaman & Nicobar Islands, Andhra Pradesh, Goa, Tamil Nadu, and Uttarakhand have enabled self-certification and third-party certification for Consent to Operate, reducing dependence on routine departmental inspections.” Moreover, the Survey observed that for achieving balancing Growth and Green Initiatives…Some evidence shows that states like “Tamil Nadu, Kerala, and Andhra Pradesh have not only enhanced their business environments by integrating sustainability measures but have also, through the Business Reform Action Plan (BRAP), reduced the time taken for environmental clearances.”. Also, the “Tamil Nadu has enhanced the ease of doing business through single-window clearances, digitised approvals, and land reforms, while promoting solar parks, district-level decarbonisation plans, and energy efficiency programs.” The construction sector is an important aspect of industrial growth and development keeping in view that the country is aiming to accomplish viksit Bharat@2047. The Survey mentions that “about 85 per cent of the cement industry is concentrated in the states of Rajasthan, Andhra Pradesh, Telangana, Karnataka, Madhya Pradesh, Gujarat, Tamil Nadu, Maharashtra, Uttar Pradesh, Chhattisgarh and West Bengal. The industry has adequate installed capacity to meet the domestic demand for cement. Domestic cement consumption in India is approximately 290 kg per capita, compared to a global average of 540 kg per capita.” Few States have taken significant policy initiatives in the pharmaceutical sector, with “Scheme for Promotion of Medical Devices Parks: Final approval for financial assistance of Rs.100 crore each has been given to the states of Uttar Pradesh, Tamil Nadu and Madhya Pradesh. Under the scheme, the land has already been allotted to 184 manufacturers.” Under the National Green Hydrogen Mission, “three Green Hydrogen Hubs designated: Deendayal Port Authority, Gujarat; V.O. ChidambaranarPort Authority, Tamil Nadu; and Paradip Port Authority in Odisha.” Moreover, for enhancing Private Participation in the Space Sector,“establishment of a dedicated launch pad and integration facility at Kulasekarapattinam, Tamil Nadu, is underway, which will strengthen India’s launch infrastructure”. Despite the huge potentials in the coastal area developments in the state of Tamil Nadu, the state has not given due importance for a long time, but it has now realised to bridge the gaps and explores with mission mode approach. As per the Economic Survey, “Tamil Nadu’s Coastal Restoration Mission: Tamil Nadu has a 1,069 km coastline, home to 14 coastal districts that are vulnerable to impacts such as shoreline erosion, storm surges, and sea level rise. The Tamil Nadu Sustainably Harnessing Ocean Resources and Blue Economy Project employs a multi-pronged approach to enhance coastal biodiversity, improve coastal protection, enhance livelihoods, mitigate pollution, and enhance project

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Quality of GDP Measurement in India: An Assessment of the Supply-Use Table (SUT) Framework

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Quality of GDP Measurement in India: An Assessment of the Supply-Use Table (SUT) Framework Quality of GDP Measurement in India: An Assessment of the Supply-Use Table (SUT) Framework Prayaga Venkata Rama Vinayak January 30, 2026 Indian Economy The International Monetary Fund (IMF)’s 2025 Annual staff report for India has once again given the country’s national accounts, including Gross domestic product (GDP) data, a C-grade, indicating that the statistics have “some shortcomings” that hinder effective economic surveillance. IMF has recommended revising the base year which is a long pending due. We are currently using 2011-12 as our base year from 2015. It’s been almost 10 years since we revised the base year. The Ministry of Statistics and Program implementation (MoSPI) is taking steps to revise the base year to 2022-23. By end of February 2026, the new estimates will be released based on the new base year and within one year the back dated GDP data will also be released. Measuring GDP correctly is important because it affects government policy, budgeting and economic planning. In India, GDP measurement has become more challenging as the economy has changed significantly over the years with the rapid growth in services, digital activities and a large informal sector. These changes have sometimes led to differences between GDP estimates calculated using the Production (GVA) method and the expenditure method. To improve the consistency and reliability of GDP numbers, India has started moving towards the use of Supply-Use Tables (SUT) which helps link production and spending more clearly within the economy. GDP is nothing, but the total value of the final goods and services produced within the country. It can be calculated in 3 methods: 1) Production Method; 2) Expenditure method; 3) Income method. 1. Production (GVA) Method: India primarily uses Production method to calculate GDP. For this, first we need to calculate the Gross Value added (GVA). This is nothing but how much value has been created by the respective stakeholders in the economic process. Let us say, A farmer cultivated 1 KG of wheat grains sold to a miller for 40 rupees. The value added by the farmer is calculated as 40 rupees. Now, the miller using his machinery manufactures wheat flour from those grains. It will be sold to the baker for 80 rupees. The value added by the miller is 40 rupees (Output – Input cost = 80 – 40). The baker prepares bread using wheat flour and sells them for 100 rupees. The value added by the baker is 20 rupees (100-80 = 20). The total GVA can be calculated as 40+40+20 = 100 rupees. Once the GVA was calculated we need to add the net tax levied on the products and services as well. Expenditure Method: This method measures GDP by adding up all the spending on final goods and services produced within a country during a given period. Where,  C – Consumption: Spending by households on goods and services, examples like Food, clothing, rent, healthcare, entertainment, etc. I – Investment: Spending by businesses on capital goodsExample: machinery, buildings, inventories, etc. Also includes residential construction. G – Government Expenditure: Government spending on public servicesExample: salaries of government employees, defense, infrastructure, etc. Does NOT include transfer payments (like pensions, subsidies). (X – M) – Net Exports X = Exports (what the country sells abroad) M = Imports (what the country buys from abroad) Though India uses production method to publish the official GDP figures, the MoSPI also calculated GDP in expenditure method as the GDP calculated through this method depicts the demand from the economy. Theoretically, the GDP Calculated from both methods should be equal. But in reality, GDP through production method greater than the GDP calculated through expenditure method. In India, it is very difficult to capture the minute expenditure data with the existing systems of 1.4 billion populations. But we get the reliable production data through robust systems like MCA-21 filings, GST returns which companies need to file for compliance purposes. Also, due to the large share of informal economy, it is very difficult to capture every transaction. Till now, we have reported the variance of GDP calculated from both the methods as discrepancy. Eventually, this discrepancy made our national accounting look feeble on global stage. Now, to tackle this discrepancy issue, MoSPI integrated Supply use tables while calculating the GDP. SUTs are a core framework in national accounting that ensures internal consistency in the measurement of GDP by systematically linking what is produced in an economy with how that production is used. Simply, if an economy produces a certain value of goods and services, where exactly does the output go? Let us consider a simple analogy of economy as a water distribution network. Supply is the total amount of water pumped into the system and use as how that water is consumed by households, industries as inputs, governments or exports outside the system. If the system pumps 100 litres of water, then exactly 100 litres must be accounted for in use, if only 92 litres are observed as being used, the system is said to have a leak. Earlier GDP compilation methods allowed such leaks to exist as statistical discrepancy. SUTs, however, do not allow water to disappear. They require every unit supplied must be matched with a corresponding use. For an economy as large and diverse as India where many activities happen outside the formal system and data comes from multiple sources, it is very difficult to ensure that production and spending numbers always match. SUTs offer a structured way to bring these different data points together. Their use marks an important step towards making India’s GDP estimates more consistent and comparable with international standards. But there are few shortcomings with the SUTs. The increasing use of administrative data such as GST filings and company returns introduces additional sources of error. These datasets are often affected by under-reporting, misclassification of activities and compliance gaps. For example, A firm producing metal components may report its activity under a

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Bitcoin’s Achilles’ Heel

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Bitcoin’s Achilles’ Heel Bitcoin’s Achilles’ Heel by Shanmuganathan N December 3, 2025 Indian Economy, Public Finance, World Economy While almost all market participants have an opinion on the value of Bitcoin, or the lack thereof, the most vocal proponents for both sides of the argument have come from the same ideological community of Laissez-faire Economists/Libertarians. To that extent, I will be drawing on the work of Rothbard, Menger, and Greenspan in this article. The objective is not to convert the Comrades or the Keynesians. Perhaps ironically, and to paraphrase Greenspan, “They (comrades/keynesians) seem to sense – perhaps more clearly and subtly than many consistent defenders of laissez-faire – that Bitcoin does not have the required monetary characteristics. And a restraining force on the reckless spending habits of government, it cannot be”. Trump, with his “Big, Beautiful Bill,” would not be embracing Bitcoin if it would. Let me start with the conclusions, and the rest of the article is a praxeological explanation of why it is indeed the case. Bitcoin’s Achilles’ Heel, as I have captioned it, is not the lack of widespread adoption as a monetary medium, as one might expect.  It is the lack of any non-monetary utility whatsoever that disqualifies its usage as a monetary medium. Even if Bitcoin is adopted by a few countries as a medium of exchange, either through legal tender laws or by the willing use of market participants, it would ultimately fail the test of “desirability.” The Origins of Money The society transitioned from a direct exchange (barter) to an indirect one (using a medium of exchange), as it was more efficient from a transactional standpoint. It permitted greater, easier, and granular exchanges as compared to the prevailing barter system. Consequently, the division of labour could be greater when the medium of exchange was more “marketable” as compared to direct exchanges. The entire process did not originate through an overnight discovery, but a gradual transition of members accepting and using the medium of exchange for conducting their transactions. This medium of exchange had to be a highly valued good under the barter system before it became accepted for its monetary value in indirect exchanges. Or, in other words, the monetary property of a commodity was a consequence of widespread non-monetary utility within a community. It couldn’t have been otherwise. Many textbooks would define money as a “medium of exchange” and a “store of value” (i.e., retains purchasing power). However, as readers would realize, a good medium of exchange would also be a store of value. Greenspan summarizes it best in terms of the advantages of moving from a barter system to using money as a mechanism for conducting transactions. Reproducing his quote from Gold and Economic Freedom, “The existence of such a commodity is a precondition of a division of labor economy. If men did not have some commodity of objective value which was generally acceptable as money, they would have to resort to primitive barter or be forced to live on self-sufficient farms and forgo the inestimable advantages of specialization. If men had no means to store value, i.e., to save, neither long-range planning nor exchange would be possible.” While all commodities possess varying degrees of acceptability as a monetary medium, it was the non-monetary utility that determined their widespread market acceptance for monetary purposes. Literally hundreds of commodities have been experimented with as a medium of exchange in the free markets, and only three have met the market test across countries and for extended periods of time. This is depicted in the table below. So, why did society start using wheat as a medium of exchange and subsequently transition to iron/copper, and eventually gold/silver? Once again, we turn to Greenspan for a pithy summarization “…the commodity chosen as a medium must be a luxury. Human desires for luxuries are unlimited and, therefore, luxury goods are always in demand and will always be acceptable. Wheat is a luxury in underfed civilizations, but not in a prosperous society. Cigarettes ordinarily would not serve as money, but they did in post-World War II Europe, where they were considered a luxury. The term “luxury good” implies scarcity and high unit value. Having a high unit value, such a good is easily portable; for instance, an ounce of gold is worth a half-ton of pig iron.” So not only should the object used as a medium of exchange have widespread non-monetary utility, but it should be a very highly desired commodity as well. The transitions over thousands of years reflect this, as increasing productivity, induced by the specialization of labour, turned what were once luxury items (e.g., wheat, iron, and copper) into basic, everyday goods. Why only Gold / Silver? While societies have experimented with hundreds of commodities, we eventually settled on gold/silver, as they best met the requirements desired of money. The authors mentioned in the beginning (Rothbard, Menger, and Greenspan) have extensively documented the rationale, and a summary table is included below. While desirability (i.e., a luxury good on account of its non-monetary utility) has been expanded earlier, a brief overview of the other four properties is provided below: Durable: An ability to retain its essential property over prolonged periods of time. Gold and Silver, even under the most corrosive conditions (e.g., the ocean floor), retain their essential properties over thousands of years. While proponents have argued that bitcoin is durable (as it is nothing more than an algorithmic token), durability refers to not merely the extended physical/virtual existence but the continued desirability of the object over that time period. Even assuming some non-monetary utility (i.e., desirability) is found for bitcoin in the years ahead, how can we remotely suppose that a better algorithm will not come along that will serve the same purpose better than bitcoin? Divisible: An ability to subdivide into tiny units, with the divided unit retaining its fractional value of the whole. While gold can be divided into units of 0.001 gram with the unit retaining its value by

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Interest Rate Cuts – A Sinker to a Plunging Dollar

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Interest Rate Cuts – A Sinker to a Plunging Dollar Interest Rate Cuts – A Sinker to a Plunging Dollar Chandrasekaran Balakrishnan September 26, 2025 Indian Economy, Public Policy, World Economy The US Dollar has been in a rapid decline since 2022, and the series of hikes initiated by Powell has merely stemmed the rate of decline rather than reversing the trend. This pattern has accelerated since Trump assumed office at the start of the year. It is in this context that we should view the 25bps cut effected by Powell with a promise of two more similar cuts to be made in the remainder of this year. Gold prices have more than doubled since January 2022 (from $1,800/oz to $3,700/oz) while DXY has declined by nearly 15% (112 to 97) in the same period. This indicates that the US Dollar is not only losing purchasing power against the market standard of gold, but also against the currencies of its trading partners. In this environment, what a rate cut(s) would do is to accelerate the decline of the Dollar – most certainly against gold but even vis-à-vis other currencies. What the cut signifies to the markets is the greater preference of the US Fed for its employment mandate over price stability (which was, incidentally, the only mandate of the US Fed when it was formed in 1913). As an aside, I should point out that in the book “RIP USD: 1971-202X …and the Way Forward”, it was explained why gold prices will touch $24,000/oz by the end of this decade. So, though the rate cuts pave the way for higher gold prices, these are merely proximate reasons within the larger context of the world reverting to some form of a gold monetary system over the next few years. Do Rate Cuts Always Lead to a Lower Dollar? On the contrary, the converse is true more often than not. Apart from the 4-year period between 2007 and 2011, interest rate movements and gold price changes are positively correlated; that is, when interest rates rise, gold prices tend to increase and vice versa. The reasons are manifold. At the outset, explaining gold prices with a single factor such as interest rates is academically a flawed proposition. We will have to consider at least 3 factors – interest rates, price inflation and Cantillon effects to explain the movements in gold prices. Without delving into a detailed discussion of the factors mentioned above, the prevailing high price inflation rates today lead to a situation where a reduction in interest rates results in increasing gold prices. So, while we are in an environment where gold prices are structurally positioned to go multiples higher from the current levels, the Fed action of cutting interest rates would be the equivalent of throwing gasoline on an inferno. What should the Fed do? Whether Bernanke acknowledges it or not, the US is in a stagflationary economic situation. The growth and employment numbers are below par, while the price inflation numbers are admittedly much higher than their targets. This is despite accepting the government numbers at face value, and we have repeatedly seen the systemic reporting bias in painting a rosier picture than is actually the case. What did the Fed do when it was previously in such a situation, i.e., a stagflation? We will have to go back to the 1970s, and as one can observe in the table above, the Fed hiked rates substantially to 20%. That begs the question – What is different in the environment back then that warranted hiking rates, while under a similar environment today, the Fed is embarking on a path of lower rates? Between the two issues – the stability of the dollar (price inflation or stable prices) and employment, the former must take precedence. There is no historical record of any country achieving prosperity by devaluing its currency. This was precisely the hard choice in the 1970s as well, and the US Fed under Paul Volcker raised interest rates high enough to quell the monetary as well as price inflationary forces and bring stability to the US Dollar. For context, the US annual price inflation has been above 2% since 2020. So why is the exact opposite monetary path being attempted today? The elephant in the room is obviously the $37 trillion National debt that is bankrupting the US Federal Government. Despite previous claims that the US Fed managed the impossible (i.e., raised interest rates without affecting employment), recent trends have exposed the flawed data basis on which the Fed had made the claims. It is only a matter of time before the GDP is also revised downwards in line with the employment data. The Economic Forecast – What does all this indicate? The only question now is “how long and how deep will the stagflation be?” Given the massive imbalances in the US Economy (multi-trillion-dollar budget deficits, trillion-dollar trade deficits, and debt-to-GDP above 125%), we should not be surprised by an economic playbook that is much worse than the 1970s. That is the best-case scenario, and in my opinion, it is not a very high-probability event. The most probable forecast would have to be a high-inflationary depression, with a possibility of hyperinflation depending on how the Fed / Trump choose to respond to the emerging situation. If they continue to prioritize temporary economic stimulus over price stability, then hyperinflation would become a probable scenario. For 2026, we should not be surprised to see gold prices in the $5,000 – $6,000 range. This is assuming none of the asset bubbles burst (the AI bubble, Housing Bubble 2.0, and the US Bond Bubble). It is pretty unlikely that the Fed can postpone the bursting of these asset bubbles, and in that case, we should witness even higher gold prices depending on the size of the QE in store. About the Author: Shanmuganathan N (aka Shan) is an Austrian/Libertarian Economist based in Chennai, India. He is the author of the recently published

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The Euphoria of Tamil Nadu GSDP Growth Rate!!

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The Euphoria of Tamil Nadu GSDP Growth Rate!! The Euphoria of Tamil Nadu GSDP Growth Rate!! Chandrasekaran Balakrishnan September 4, 2025 Indian Economy, Public Policy, Tamilnadu Economy The regional economies in India are still largely evolving and have their own pace of sectoral growth trends. The evolution of the state economy is dependent on the pattern of institutional governance, services, and facilities deliveries, which plays a vital role for achieving the national dream of Viksit Bharath@2047. The degree of economic freedom between and within States varies across India, indicating disparity. The Gross State Domestic Product (GSDP) is an aggregate of all sectors, broadly consisting of agriculture and allied activities considered as the primary sector; manufacturing, including construction, etc., as the secondary sector; and financial services, transports, hotels, etc., as the services sector. Each sub sector has its own significance for achieving a balanced regional growth as well as intra-regional growth within a State and contributing to the national growth rate. When politicians or policymakers become passionate about achieving a year’s GSDP growth rate as the biggest achievement, leaving the growth trends and other inferences, it becomes detrimental for economic development, which accounts for a sustained and overall improvement in welfare. Further, at the regional level, some of the sub-sectors’ growth trends are undermined while focusing only on the overall GSDP growth rates, which leads to not only misinterpretations but wrong conclusions for short term political gains. It is pertinent to note that Ludwig Von Mises, a prominent figure in the Austrian School of Economic Thought, saw statistics as descriptive rather than explanatory, and he cautioned against interpreting statistical regularities for political milage. He argued that statistics deal with past events and historical facts, lacking the ability to predict future outcomes or reveal causal relationships in the realm of human action. In April, 2025 when the Union Ministry of Statistics and Programme Implementation (MoSPI) had released the state-wise GSDP data, there was a huge celebration among a section with the claim that the one-year growth rate of Tamil Nadu state (9.69% for 2024-25) was an extraordinary achievement. The truth is that one year growth rate data cannot give a true picture for a trend analysis- short run, medium run, and long run. The macroeconomic growth rate discourse in the State missed an important point that Tamil Nadu’s agriculture and allied sector witnessed in negative growth of -0.15% in 2024-25 (provisional). As per the provisional data, the average GSDP Growth rate of Tamil Nadu in the last four years (2021-22 to 2024-25) was 8.48%, which was way below the growth rates of States like Odisha (9.80%) and Maharashtra (8.99), and Karnataka (8.73%). Moreover, more than a dozen States’ provisional GSDP data were not even released for the year 2024-25 in April, 2025. Similarly, the MoSPI released the revised State-wise GSDP data on 1st August, 2025, for the financial year 2024-25. One-year GDP data is important, but it is the trend which is more important. There is another dubious claim of a 14-year break of the Tamil Nadu State GSDP! Let’s look at what the actual average trend data reveals. In the current regime of DMK rule in Tamil Nadu, the average growth rate of State GSDP for last four years (2021-22 to 2024-25) is 8.63% which is lower than states like Assam (9.05%), Bihar (9.59%), Karnataka (8.73%), Maharashtra (8.99%), Meghalaya (9.54%), and Uttara Pradesh (9.15%). It is also interesting to look at the data of the first four years’ average state GSDP growth rate of the previous DMK regime. Tamil Nadu’s economy performed far better than comparatively. The average state GDP growth rate for the first four years was 9.41% (2006-7 to 2009-10). Further, even then, States like Bihar (10.41%), Chhattisgarh (9.76%), Haryana (9.89%), etc. outperformed Tamil Nadu. It is pertinent to note that Tamil Nadu’s share of GDP at all India level over the last 7 decades increased only by 0.2% from 8.7 % in 1960-61 to 8.9% 2023-24. Maharashtra’s economic performance has remained relatively steady throughout the period (from 12.5% to 13.3%). According to recent NCAER Analysis (2025), the state of public finance of Tamil Nadu is worrisome. Debt Sustainability Analysis, a method used to assess whether a state (or country) can meet its debt obligations without resorting to excessive borrowing or facing financial instability, expects an upward and increasing trajectory, during the period from 2022-23 to 2026-27. In recent years, what Tamil Nadu missed is the following key drivers of economic growth and creation of employments opportunities, which is at par with States of Karnataka and Maharashtra. Attracting FDI: Analysis of major states’ attractions of Foreign Direct Investments (FDI) Trends of the last decade (2015-16 to 2024–25) shows Gujarat’s share increased from 6% to 11%, while Tamil Nadu’s share declined from 11% to 7%. Tamil Nadu is still lacking what Karnataka and Maharashtra have nurtured for decades, including improved infrastructure policy stability and mature industrial ecosystems across the departments and across the region/districts within the State. The latest FDI data analysis for 2024-25 reveals that among the top ten states, Maharashtra accounts for 39%, followed by Karnataka (13%) and Delhi (12%). Tamil Nadu ranks 5th with FDI inflow of Rs. 31,103 crores. Under-utilised Coastal economy: The strategic geo-economic coastal advantage of Tamil Nadu has not yet been harnessed. Mobility: In the area of mobility as a key driver of the economy, Tamil Nadu has done some concrete efforts in terms of policy for the attraction of new investments for the production of Electric Vehicles, but it has been lacking consistently over the years in terms of adoption of EVs in public transportations across the state. Sub-par urban civic amenities: Urban Population in Tamil Nadu has consistently exceeded the national estimates, and the gap between the two has widened, particularly over the past three decades. Now, Tamil Nadu has 54% of its urban population, but basic urban civic facilities are very poor across the state, without decentralisation Diversification: Tamil Nadu predominantly concentrates on some services sectors, agriculture, forestry, and

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