TTBR (Topics To Be Read) 03 July 2025

Today's Topics To Be Read (TTBR)

1 Monsoon 2025: How much is too much for Indian agriculture and
economy? (The Pioneer)
2 The urgent call for smarter crowd management (The Pioneer)
3 Across parameters, the Indian banking system is passing the test
(Indian Express)
4 Dalai Lama has confirmed a succession plan. But uncertainty is far
from ended (Indian Express)
5 Swipe, tap, exclude: The uneven march towards financial
inclusion (Indian Express)
6 Away from the edge: On waste disposal from the 1984 Bhopal
plant accident (The Hindu)
7 AI in India: strategy must precede mission (The Hindu)
8 Integrating compassion, prioritising palliative care (The Hindu)
9 Needed: A China strategy (Financial Express)
10 A precarious world order (Financial Express)
11 Can growth forecasts hold amid rising global risks? (Business Line)
12 Financial stability: No cause for alarm (Business Line)
TTBR (Topics To Be Read) 03 July 2025

Monsoon 2025: How much is too much for Indian

agriculture and economy? (The Pioneer)

The southwest monsoon, a lifeline for Indian agriculture, has ushered in a

promising 2025 season with forecasts of above-normal rainfall at 106 per cent ±
4 per cent of the long period average (LPA), as per the India Meteorological
Department (IMD). This bountiful monsoon, critical for the Kharif cropping
season from June to September, supports the livelihoods of 42.3 per cent of
India’s population and contributes 18.2 per cent to the nation’s GDP. With
agriculture serving as the backbone of rural economies, the anticipated robust
rainfall is poised to enhance crop yields, stabilise food prices, and stimulate
economic growth. However, challenges such as uneven rainfall distribution and
the risk of excessive precipitation loom large. The monsoon is the lifeblood of
Indian agriculture, particularly for Kharif crops such as rice, maize, cotton,
sugarcane, pulses, and oilseeds, which rely heavily on seasonal rains.
Approximately 50 per cent of India’s arable land depends on monsoon
irrigation, making timely and adequate rainfall critical for sowing and crop
growth. The 2025 forecast of above-normal rainfall, particularly in June at 108
per cent of LPA, promises an early onset that supports timely Kharif sowing.

This is a marked improvement over last year’s extended monsoon, which led to
flooding and crop damage in several regions. Beyond irrigation, the monsoon
replenishes groundwater reserves, essential for both Kharif and Rabi seasons.
Adequate groundwater levels reduce reliance on expensive irrigation systems,
lowering costs for farmers. The IMD’s prediction of normal to above-normal
rainfall across most regions, except parts of peninsular and northeast India,
augurs well for groundwater recharge and sustained agricultural productivity.
A robust monsoon directly impacts India’s economy through increased
agricultural output, which stabilises food prices and curbs inflation. The
Reserve Bank of India (RBI) reported in April 2025 that headline CPI inflation
moderated to a six-year low of 3.2 per cent, driven by declining food inflation
TTBR (Topics To Be Read) 03 July 2025

for six consecutive months. The expected bumper Kharif harvest, supported by
record wheat production and higher yields of key pulses in the Rabi season,
should further ease inflationary pressures.

This stability aligns with the RBI’s goal of maintaining inflation near its target,
providing room for monetary policy flexibility, as evidenced by the recent 50-
basis-point repo rate cut to 5.50 per cent on June 6, 2025. Higher agricultural
productivity also boosts rural incomes, driving demand for goods and services.
ICRA projects agriculture, forestry, and fishing GVA growth at 3.5-4.0 per cent
for FY2026, following a 4.6 per cent expansion in FY2025. This growth fuels rural
consumption, benefiting sectors like cement, tractors, two-wheelers, edible oils,
and sugar. For instance, the cement sector, with 35-37 per cent of demand tied
to rural housing, is expected to see 6-7 per cent volume growth in FY2026, driven
by monsoon-induced rural prosperity. Similarly, the tractor industry
anticipates 4-7 per cent volume growth, reflecting improved farm cash flows.
India’s position as the world’s largest rice exporter is set to strengthen with
surplus production, enabling increased exports of rice, sugar, and onions while
reducing edible oil imports. It is obvious that above-average rains for the second
consecutive year will support India’s export ambitions, enhance foreign
exchange earnings and bolster the trade balance. The Cabinet Committee on
Economic Affairs (CCEA) has reinforced agricultural optimism by announcing
significant Minimum Support Price (MSP) hikes for Kharif crops in the 2025-26
marketing season. The Government has ensured remunerative prices to the
growers for their produce. The highest absolute increase in MSP over the
previous year has been recommended for nigerseed (`820 per quintal),
followed by Ragi (`596 per quintal), Cotton (`589 per quintal) and Sesamum
(`579 per quintal). These hikes, exceeding April 2025 mandi prices, incentivise
farmers to expand sowing, particularly for oilseeds and pulses, which saw MSP
growth of 6-9 per cent.

However, the effectiveness of MSP hikes depends on rainfall distribution.

Uneven or excessive rainfall could disrupt sowing, negating the benefits of
higher prices. The Government’s proactive measures, including investments in
irrigation and crop insurance, aim to mitigate these risks, ensuring farmers can
leverage the monsoon’s potential.

Despite the optimistic forecast, monsoon variability poses significant

challenges. Excessive rainfall, while beneficial for water supply, can lead to
waterlogging, soil erosion, and crop damage, particularly during the ripening
stage. Last year’s extended monsoon caused flooding that damaged crops in
several regions, underscoring the risks of concentrated heavy rains. The IMD’s
TTBR (Topics To Be Read) 03 July 2025

forecast indicates potential below-normal rainfall in parts of northwest and

northeast India, which could affect regional crop yields and exacerbate
disparities in agricultural productivity. Uneven spatial and temporal rainfall
distribution remains a critical concern. An even distribution is paramount to
maximising crop yields and supporting rural demand. Episodes of heavy
rainfall could disrupt sowing schedules, damage young crops, or lead to post-
harvest losses. Climate change further complicates monsoon predictability.
While neutral El Niño-Southern Oscillation (ENSO) conditions are expected to
persist in 2025, long-term climate trends could introduce volatility, affecting
agricultural planning. Investments in climate-resilient crops, improved weather
forecasting, and robust irrigation infrastructure are essential to address these
challenges. Expanding crop insurance schemes and improving access to credit
will empower farmers to mitigate risks and invest in high-yield crops.

The RBI’s accommodative monetary policy, coupled with Government support

through MSP hikes and infrastructure investments, creates a conducive
environment for agricultural growth. By addressing challenges like uneven
rainfall and climate volatility, India can harness the monsoon’s full potential to
drive rural prosperity and economic growth. As India navigates these
opportunities and challenges, the monsoon’s magic can transform the
agricultural landscape, fostering economic resilience and prosperity.

By BK Jha

(The writer is a columnist and writes on agriculture and environment.

Views are personal)
TTBR (Topics To Be Read) 03 July 2025

The urgent call for smarter crowd management

(The Pioneer)

The Puri tragedy symbolises not only an administrative shortcoming but also
a human one, underlining how systems can fail when vigilance wanes. As the
size of religious gatherings continues to rise, India must take assertive steps
to protect the lives of those who come together in faith

The devastating stampede in Bangalore, which resulted in the tragic loss of

eleven lives and stunned the nation, remains vivid in our minds. Now, another
sorrowful event has transpired during the honoured Rath Yatra in Puri. This
stampede has taken the lives of three pilgrims and left many others wounded,
turning a moment of spiritual devotion into one of confusion and grief. Despite
having thousands of security personnel and employing advanced surveillance
technology, such as drones, CCTV cameras, and AI, this tragedy could not be
averted. This occurrence, like many others before it, raises urgent questions:
Why do these incidents continue despite past lessons? What more can be done
to protect the millions who participate in these events with hope and faith?

India has a troubling history with stampedes, particularly during religious

celebrations, in temples, and at pilgrimage sites. Since 1996, there have been
over 4,000 reports of such incidents, resulting in numerous fatalities. The
Kumbh Mela, known globally as one of the largest gatherings, has faced multiple
disasters despite thorough planning. The recent tragedy in Puri underscores
the urgent need to reassess our strategies for managing large crowds, moving
beyond mere barricades and police presence to adopt intelligence-driven,
holistic approaches that can predict and prevent such catastrophes.

A key challenge in managing crowds stems from the unpredictability of human

behaviour. A stampede can often be set off by a minor incident-such as a loud
sound, a rumour, or a blockage-that incites fear. People may flee in different
TTBR (Topics To Be Read) 03 July 2025

directions, escape routes become blocked, and within moments, lives can be
lost.

In Puri, initial reports indicate that poor sector organisation and a failure to
disperse the crowd on time contributed to the deadly incident. While authorities
may have enhanced crowd management tactics over time, understanding the
psychology and dynamics of moving crowds is a vital area that requires focus.

What is especially concerning is the possibility of deliberate disruptions.

Evidence from social media and local news indicates that organised groups or
troublemakers may attempt to provoke unrest during major gatherings. This
highlights the need for improved intelligence networks-not just nationally but
also within local communities. It is essential to engage reliable informants,
community leaders, and local law enforcement to collect real-time intelligence
about any potential threats or attempts to create disorder.

The time has come to shift from reactive tactics to a proactive, intelligence-
driven approach to crowd management. Effective preparation should go
beyond simply predicting crowd numbers and setting up barriers.

It must include comprehensive risk assessments that consider human

behaviour, infrastructure readiness, and security intelligence. Frameworks like
the Sendai Framework for Disaster Risk Reduction establish a global standard
for these approaches, underscoring the significance of grasping risks, investing
in preventive actions, and enhancing early warning and response systems.

While technology can significantly aid this process, it cannot operate in

isolation. Surveillance tools such as facial recognition, drone-based thermal
imaging, and AI-enhanced crowd analytics depend heavily on the skills of those
who interpret and act on the data. It is vital to train staff in crowd psychology,
emergency response, and real-time communication.

Likewise, mobile apps that provide instant updates, emergency alerts, and
navigation help attendees avoid high-risk zones. Biometric and Radio
Frequency Identification (RFID)-based access control systems can effectively
mitigate overcrowding in sensitive areas. Nevertheless, these sophisticated
solutions must be integrated into a comprehensive preparedness strategy that
prioritises community involvement. Residents, shopkeepers, and volunteers-
those who best understand the surroundings-should be engaged in security
planning and monitoring.

Their vigilance and prompt reporting of unusual activities can help avert
disasters. India should also learn from international best practices. Countries
TTBR (Topics To Be Read) 03 July 2025

like Japan have adeptly managed large public events with clearly marked exits,
organised crowd flow, and robust communication systems. These tactics can be
adapted to suit India's religious and cultural circumstances with suitable
planning and political commitment. Furthermore, the importance of analysing
incidents after the fact cannot be emphasised enough. Each stampede should be
meticulously examined to pinpoint failures in execution and establish
corrective measures. The duties of various stakeholders — event organisers, law
enforcement, and municipal officials-must be clearly defined and coordinated
under a unified command framework. Publicising investigation findings and
implementing their recommendations can enhance transparency and build
public trust.

The Puri tragedy symbolises not only an administrative shortcoming but also a
human one, underlining how systems can fail when vigilance wanes. As the size
of religious gatherings continues to rise, India must take assertive steps to
protect the lives of those who come together in faith. Belief should never invoke
fear.

Only through a unified, forward-thinking strategy that merges intelligence,

community participation, behavioural insights, and cutting-edge technology
can we hope to ensure the safety of such events. The moment to act is now-
before another holy day turns into a National Day of Mourning.
TTBR (Topics To Be Read) 03 July 2025

Across parameters, the Indian banking system is

passing the test (Indian Express)

But possible areas of stress warrant closer monitoring

The banking system in India is in sound financial health. Banks have over the
years built up sufficient capital and liquidity buffers and their asset quality has
been improving further. This has been detailed in the RBI’s latest Financial
Stability Report. Gross NPAs (non-performing assets) have fallen to 2.3 per cent
as of March 2025, down from 2.8 per cent the year before. Alongside, the capital
position of banks has strengthened — the capital to risk-weighted assets ratio
has risen to a high of 17.3 per cent as of March 2025 — and their provision
coverage ratio also remains healthy.

In the recent past, one area of concern has been the sharp rise in household
debt. Household debt was estimated to have surged from 36.6 per cent of GDP
in June 2021 to 42.9 per cent as of June 2024. The latest report pegs it at 41.9 per
cent in December 2024. In comparison, the ratio averaged around 33 per cent
between 2015 and 2019. While the current levels of debt may well be lower
when compared to other emerging market economies, it is concerning that
households have been taking on more loans for consumption, and not
investment purposes. In fact, non-housing retail loans have grown at a faster
pace than housing, business and agricultural loans. These loans now account
for 54.9 per cent of all household debt and 25.7 per cent of disposable income as
of last year as per the report. Within retail credit, unsecured lending, which
forms a quarter of retail loans, has seen weakness. As per the central bank, new
slippages in this category account for a significant share of slippages in all retail
loans, with the private banks appearing to fare worse. Public sector banks are
also seeing possible signs of stress building up. Stress is also evident in the
TTBR (Topics To Be Read) 03 July 2025

microfinance segment — loans 31-180 days past due have risen to 6.2 per cent.
These areas warrant closer monitoring.

The banking system, however, remains well capitalised. The central bank
routinely conducts stress tests to gauge the strength of banks. In the current
uncertain global economic environment, these tests perform a critical function.
The tests conducted by the RBI accounted for various adverse scenarios — from
“heightened geopolitical risks and escalation of global financial market
volatility” to “a synchronised sharp growth slowdown in key global economies”.
They revealed that even if economic conditions take a turn for the worse, no
bank would fall short of the regulatory minimum capital ratios. This is a
welcome result.

Dalai Lama has confirmed a succession plan. But

uncertainty is far from ended (Indian Express)

It remains uncertain if India possesses the historical basis and legal structure
necessary to validate the Dalai Lama’s reincarnation. A significant portion of
this issue is intertwined with the tension between imperialist China and
communist China. Ideally, the authority to decide should lie with the Tibetans

At the 15th Tibetan Religious Conference that began today in Dharamshala, the
14th Dalai Lama affirmed the continuation of his institutional reincarnation.
Leaders of the principal Tibetan sects are attending the conference, which ends
on July 4. In the weeks leading up to the announcement, there had been
considerable speculation surrounding his next reincarnation. The Dalai Lama,
TTBR (Topics To Be Read) 03 July 2025

who turns 90 on July 7, had confidently stated in his latest publication that his
successor could emerge outside the borders of China.

The Dalai Lama’s reincarnation is a profound event rooted in a 15th century

story about a boy who recalled his past life as Gedun Drub, a key figure and the
First Dalai Lama in the Gelugpa tradition.

Drub’s spirit reemerged in 1475 with Gedun Gyatso, who possessed the
extraordinary ability to recall his previous lives. After his death, he was
honored as the Second Dalai Lama. The legacy continued with Sonam Gyatso,
born in 1643, who received the title “Dalai”, meaning “ocean”, from Mongolian
leader Altan Khan in 1578, signifying the all-pervasive ruler of Inner Asia.

Yonten Gyatso, born in 1589 as a descendant of Altan Khan, was chosen as the
Fourth Dalai Lama. Yonten’s successor, Lobsang Gyatso, born in 1617, was
recognised as the Fifth by the Third Panchen Lama who formed a powerful
alliance with Mongol Gushi Khan, and their partnership was key in establishing
the Ganden Phodrang regime at the Potala Palace in 1642, shaping the future of
Tibetan governance under the Dalai Lama.

In the 17th century, Chinese Emperors Kangxi and Qianlong adopted the
Mongol-style patronage of Tibetan Lamas, incorporating the Dalai Lama and the
Panchen Lama as secular authorities within their imperial framework. This
strategic alliance strengthened their control over Tibet and lasted until the Qing
dynasty’s fall in 1912.

Beijing asserted that the Fifth Dalai Lama established a significant tributary
relationship with the imperial court after paying homage to Emperor Shunzhi
in 1653. He presented the emperor with exquisite horses and precious gems,
and in return, received a golden seal and the prestigious title of “Overseer of the
Buddhist Faith on Earth Under the Great Benevolent Self-subsisting Buddha of
the Western Paradise”. This exchange solidified the Dalai Lama’s authority and
legitimacy as a spiritual leader.

Tsangyang Gyatso, born in Tawang in 1680, was acknowledged as the Sixth

Dalai Lama by the Panchen Lama and Mongol leaders. His legitimacy faced
opposition from competing Mongol warlords, and he was ultimately
assassinated while traveling to Peking to meet with Emperor Kangxi.

The Seventh Dalai Lama, Kelsang Gyatso, who was born in 1708, received his
consecration from the Panchen Lama with the backing of the Qianlong
Emperor.
TTBR (Topics To Be Read) 03 July 2025

Jamphel Gyatso, who was born in 1758, was also appointed by the Sixth Panchen
as the Eighth Dalai Lama. This significant legacy faced challenges after the
Nepali invasion of Tibet in 1791, during which Emperor Qianlong modified
Tibet’s internal autonomy while implementing the “Twenty-Nine Article
Imperial Ordinance”. This ordinance replaced the Regent system with the
Kashag (Council) for governance. Additionally, the Golden Urn method for
selecting the Dalai Lama and other notable Lamas was established by Qianlong.

The immediate Ninth Dalai Lama, Lungtok Gyatso, born in 1805, could bypass
the Golden Urn process due to Qianlong’s abdication in 1795. Tragically,
Lungtok died at the age of nine in 1815.

The selection of Jampel Tsultrim Gyatso, born in 1816, as the 10th Dalai Lama
was also confirmed through the Golden Urn ceremony. He received novice
ordination from the Seventh Panchen. He, too, passed away young in 1837.
These events underscore the challenges faced by Tibetan leadership during this
tumultuous era.

The 11th, who was born in 1838, was also selected via the Golden Urn process;
however, his life was sadly abbreviated in 1856 following his ordination by the
Panchen Lama. The 12th Dalai Lama, selected in 1858 via the same method,
prohibited European entry into Tibet and died at just 20.

Thupten Gyatso, the “Great Thirteenth”, was an important figure. It is believed

that the Tibetan Nechung oracle and the Eighth Panchen Lama significantly
contributed to his selection, which was subsequently endorsed by the Guangxu
Emperor in 1879.

The 13th was a prominent nationalist who spent time in exile across China,
India, and Mongolia. His administration was responsible for the signing of the
1890 Anglo-Chinese Convention concerning the Sikkim-Tibet border, despite
Lord Curzon’s objections to his covert alliance with Tsarist Russia.

In 1904, during Francis Younghusband’s mission to Lhasa, he sought asylum in

Mongolia but returned to Lhasa after Britain and Russia finalised the
Convention pledging not to interfere in Tibet in 1907. He traveled through
Peking (Beijing), where he established a strong relationship with Dowager
Empress Cixi.

As Thupten Gyatso endeavoured to consolidate power, the Manchu military

suppressed his assertions of autonomy. Following the fall of the Qing dynasty in
1911, he traveled to India in search of military support, which the British
refused to provide. Upon his return to Tibet in February 1913, Thupten
TTBR (Topics To Be Read) 03 July 2025

audaciously proclaimed Tibet’s independence, a declaration that was

acknowledged solely by the theocratic government of Mongolia.

The present 14th Dalai Lama, who was born in 1935, was identified through
profound spiritual methods. The Kuomintang (KMT) administration’s claim that
General Wu Zhongxin was responsible for confirming the 14th Dalai Lama in
1940 was strongly disputed by the Tibetans. Interestingly, Basil Gould, the
British representative in Gyantse, attended the enthronement ceremony in
Lhasa alongside the Sikkimese envoy Chogyal Pipon Sonam Wangyal, although
their seating arrangements were not clearly defined.

There is no available reference point regarding India’s role in the history of

Tibetan succession; rather, the relationship between India and Gaden Phodrang
was characterised by hostility. For instance, during the era of the Fifth Dalai
Lama, the Tibetans initiated a series of assaults on Bhutan, Ladakh, and Monyul
(Tawang). The attack on Ladakh in 1679 resulted in a four-year military
standoff, which concluded when the Mughal Empire intervened to safeguard
the borders of Ladakh. Consequently, Tibet managed to seize half of Ladakh,
including Burang, Guge, and Rudok.

During the reign of the 11th Dalai Lama, Kalon Tsaidan Dorje and Dapon Spel
Bzhi, along with their forces, ruthlessly killed the Dogra soldiers and
decapitated General Zorawar Singh in 1841 at Taklakot.

The 13th maintained a cordial relationship with India and sought assistance in
opposition to China. He judiciously agreed to adhere to the 1914 Simla
Convention; however, his officials subsequently reversed their position.

The 14th Dalai Lama did not take office until 1951; however, his regent
dispatched wireless telegrams to Jawaharlal Nehru in October 1947, asking for
the return of “Tibetan territories,” which encompass around 300,000 square
kilometres (more than ten percent) of Indian land. After arriving in India in
1959, he distanced himself from these telegrams.

While China labels the Dalai Lama as a “political exile”, India regards him as a
“revered spiritual leader”, permitting him to continue his religious endeavours.

It remains uncertain if India possesses the historical basis and legal structure
necessary to validate the reincarnation. A significant portion of this issue is
intertwined with the tension between imperialist China and communist China.
Ideally, the authority to decide should lie with the Tibetans, as the evidence
indicates that the Panchen Lama consistently played a crucial role in the
reincarnation of the Dalai Lama.
TTBR (Topics To Be Read) 03 July 2025

By P Stobdan

The writer is an expert on Himalayan Affairs

Swipe, tap, exclude: The uneven march towards

financial inclusion (Indian Express)

Over two-thirds of Indians who use digital devices struggle with basic digital
banking transactions, highlighting the persistent challenge of bridging the
digital literacy and access gap

India, amidst rapid technological advancement, stands at a critical juncture in

its digital journey. The nation has demonstrably invested in the foundational
pillars of digital financial services through significant infrastructure
development, progressive policymaking, and public awareness campaigns —
epitomised by flagship initiatives like Digital India, Jan Dhan Yojana, and
Aadhaar integration. It has undeniably reshaped the financial landscape,
particularly during and after the Covid pandemic.

The Department of Financial Services (DFS), Ministry of Finance, hosted the

Digital Payments Awards ceremony on June 18, 2025, to recognise the strength
of the nation’s digital payments ecosystem. It highlighted that nearly half of all
real-time digital transactions in the world are happening in India with 35 crore
active users being part of UPI system, and also that the country has an 87 per
cent fintech adoption rate compared to 67 per cent globally.
TTBR (Topics To Be Read) 03 July 2025

However, this impressive digital façade hides a sobering reality: Over two-
thirds of Indians who use digital devices struggle with basic digital banking
transactions, highlighting the persistent challenge of bridging the digital
literacy and access gap.

According to data from the Government’s Comprehensive Annual Modular

Survey (CAMS-2022-23), only 31.7 per cent of people who use a digital device
(mobile phone, computer, laptop, or tablet) are capable of carrying out digital
financial activities like online payments. This isn’t just a gap — it’s a gaping
blind spot, one that threatens to transform a well-intentioned digital revolution
into a tool of exclusion.

Who can perform online banking transactions like digital payment (%)

Data source: Authors’ calculation using CAMS-2022-23, NSSO

TTBR (Topics To Be Read) 03 July 2025

The digital skew

Urban India, with its superior access to internet connectivity, banking facilities,
and digital literacy programmes, reports a comparatively higher share of digital
banking users — 43.48 per cent. However, even this figure highlights that over
half of urban residents are still unable to use basic financial tools. The rural
statistic is more alarming — nearly three-quarters (75.05 per cent) of the rural
population cannot perform digital transactions. For rural India, digital
inclusion remains a promise deferred.

Predictably, digital proficiency peaks among the youth. In the 26–35 age group,
nearly 44 per cent can perform digital transactions. This is the working-age
population, which is more likely to have smartphones, jobs with salary
accounts, and exposure to digital ecosystems. Conversely, people above 60 show
alarmingly low digital engagement.

Children under 15 are understandably out of the financial loop, hence the lower
capability. However, the digital exclusion of the elderly — more than 81 per
cent are unable to transact digitally — is concerning. Many senior citizens
struggle with using digital apps, forget passwords, or fear fraud, leading to a
reluctance to adopt online banking.

Perhaps the most troubling disparity revealed by CAMS data is the digital
gender gap. While around 40 per cent of men can transact online, only 21 per
cent of women can do so — a gap of nearly 20 percentage points. This isn’t
merely about access to technology; it reflects entrenched gender inequality in
education, employment, asset ownership, and digital autonomy.

In the lowest expenditure quintile (Q1), only 13.56 per cent of rural individuals
are able to use online banking for digital payments, compared to 24.53 per cent
in urban areas. This nearly twofold gap, though alarming in itself, is only a small
piece of the broader disparity. The adoption rate increases steadily with
expenditure in both rural and urban areas. However, the rate of growth is
notably sharper in urban areas.

By the highest expenditure quintile (Q5), 61.91 per cent of urban individuals are
able to use digital banking services — a figure that dwarfs the 37.71 per cent
adoption in rural areas. But even in Q5 — where individuals theoretically have
better access to smartphones, internet connectivity, and bank accounts —
nearly two-thirds of rural residents are still not able to use digital banking.

This may indicate not just infrastructural issues but also a lack of trust, digital
literacy, and support systems in rural settings.
TTBR (Topics To Be Read) 03 July 2025

Bridging the faultlines

The data paints a worrying picture: India is moving towards a two-speed digital
economy — one inhabited by the digitally fluent who can transact, save, invest,
and borrow; and the other by the digitally stranded, who remain dependent and
are increasingly being left behind. This divide is not due to unwillingness but
systemic barriers, which include linguistic exclusion, digital illiteracy, and
cultural constraints.

India’s digital revolution must be reimagined to serve every Indian — not just
the urban, young, male minority that currently benefits the most. To ensure
inclusiveness, targeted interventions are needed. These can include rural digital
literacy drives in local languages, special training for the elderly and simplified
interfaces, empowering women with direct access to mobile technology and
policies to include individuals in banking and tech ecosystems.

The true test of a digital economy lies in who it includes — and who it leaves
behind.

Palash Baruah is fellow at National Council of Applied Economic Research

(NCAER), New Delhi and D L Wankhar is a retired Government of India
officer
TTBR (Topics To Be Read) 03 July 2025

Away from the edge: On waste disposal from the

1984 Bhopal plant accident (The Hindu)

The incineration of toxic waste from the Bhopal tragedy took time and effort

The Madhya Pradesh Pollution Control Board has confirmed that officials had
incinerated 337 tonnes of toxic wastemoved to a private waste treatment facility
in Pithampur from the defunct Union Carbide facility in Bhopal. The event
closes a single, but important, chapter in the sordid history of the 1984 Bhopal
disaster, the state response to which pushed the city and its people to the edge.
The successful incineration is illustrative in that it demanded interventions
from the Madhya Pradesh High Court, the Supreme Court of India, and the
Union Environment Ministry, among other stakeholders, over more than a
decade. In the end, the State government was able to arrange for the waste to
be safely disposed of — including an outreach exercise to assuage public anxiety
over the emissions — within six months at a cost of ₹126 crore. Evidently the
means have always existed; the political initiative to effect them has been
wanting. This is an important detail: waste, once it has entered the
environment, has a tendency to be converted to different forms; it seldom goes
away. The toxic waste incinerated thus far has yielded more than 800 tonnes of
ash and residue that officials will have to landfill in a scientific manner. Like
solid waste landfills around the country, this new facility will require regular
upkeep, monitoring, and funds of its own. The site of the Union Carbide plant
also retains several more tonnes of contaminated soil and other hazardous
artefacts, plus contaminated subsurface resources in the area.

Crucially, much of the impetus for positive change in the matter, including
waste removal, has come from victims’ families, survivors, and activists rather
than from the state. Survivors’ groups have filed petitions arguing that deaths
and injuries continue to be undercounted and that they are owed inflation-
adjusted damages. Since the Supreme Court closed the door on the curative
TTBR (Topics To Be Read) 03 July 2025

route, also in dispute is whether a new valuation of losses can be forced on The
Dow Chemical Company, notwithstanding the fact that it remains a proclaimed
offender. Long-term surveillance has been patchy, with activists and survivors
alleging that the advisory committee appointed by the top court has met only
sporadically and that local hospitals continue to suffer a shortage of specialist
medical workers to attend to survivors. In the final analysis, Dow must account
for all remediation activities. Both the State and the Centre must close pending
settlement claims and attend on a self-motivated basis to the survivors’ well-
being, if required with the assistance of a new statutory body to unify health,
relief, and remediation goals. Ultimately, the families must be able to move on.

AI in India: strategy must precede mission (The

Hindu)

Without a transparent, democratically grounded national strategy on AI,

India’s ability to shape global AI norms will remain constrained

India has declared its ambition to be a global leader in Artificial Intelligence (AI)
governance. As the world’s largest democracy and a tech-savvy nation, it is well-
positioned to champion an inclusive and human-centric approach to AI. But this
aspiration risks being undermined by the absence of a comprehensive,
democratically anchored national AI strategy.
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India’s current AI initiatives centre on the IndiaAI Mission, led by a bureaucrat

and housed as an independent unit within a Section 8 company under the
Ministry of Electronics and Information Technology. The Mission cannot
substitute for a national strategy. Missions are vehicles for executing priorities,
but only after priorities have been clearly defined.

In India’s approach to AI, fundamental questions remain unresolved. What are

our national priorities? Which governance values should guide us? How should
institutions be structured? Moving forward without answering these questions
poses two risks: it may compromise India’s ability to lead and maintain strategic
autonomy; and it may embed an AI governance model that is technocratic,
opaque, and lacking democratic legitimacy.

The many risks

This is not an abstract concern. Several pressing risks are already visible. AI
technologies are becoming increasingly embedded in India’s defence,
intelligence, and critical infrastructure systems. Recent developments —
military conflict, weaponisation of financial infrastructure, strategic technology
competition — have demonstrated how technological dependencies can be
leveraged to achieve geopolitical objectives. Without an indigenous,
coordinated AI strategy, India faces the risk of strategic dependencies on foreign
technologies. Safeguarding India’s strategic autonomy requires developing a
whole-of-government AI strategy aligned with national security priorities and
focused on building resilient, sovereign capabilities.

Data is the raw material of AI. As India builds public data platforms, how this
data is curated, accessed, and governed will shape innovation and market
power. Without transparent, democratically debated data governance
frameworks, these ecosystems risk reinforcing corporate concentration and
undermining public trust.

Nowhere is the governance gap clearer than in employment. Automation is

already transforming India’s labour market. In 2024 alone, India’s top three IT
services firms — TCS, Infosys, and Wipro — shed nearly 65,000 jobs. The
International Monetary Fund estimates that 26% of India’s workforce is
exposed to generative AI, with 12% at risk of displacement. Despite this, national
AI initiatives do not sufficiently address employment transition, workforce
planning, or social protections. The absence of structured input from labour
economists, civil society, and workforce experts has limited the ambit of
deliberation to technocratic concerns. Addressing these gaps will help ensure
that AI adoption supports economic resilience and social stability.
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AI is extraordinarily energy-hungry. The International Energy Agency projects

that global data centre electricity demand will double by 2030. This poses
challenges for India. Eleven of India’s 20 largest cities face acute water stress.
Groundwater levels are rapidly declining in Bengaluru and Hyderabad — both
emerging AI and data centre hubs. Yet policy discussions on AI in India have
scarcely addressed the energy implications of scaling AI.

AI will profoundly reshape work, education, and the social contract. It will
determine which skills are valued, influence how citizens are trained, and
shape who benefits from economic gains. These shifts cannot be left to market
forces or technical experts. They demand national dialogue involving industry
leaders, parliamentarians, educators, civil society, and labour representatives,
to chart a just and equitable path forward.

As AI gets integrated in sensitive domains — healthcare, policing, welfare — the

risks of bias, discrimination, and lost accountability grow. Without clear
regulatory frameworks, public trust in AI governance may erode.

India has rightly positioned itself as a voice for the Global South in international
AI governance forums, notably through its leadership in the Global Partnership
on AI. But global credibility depends on coherence at home. Without a
transparent, democratically grounded national strategy, India’s ability to shape
global AI norms will remain constrained.

Strategy must precede mission. Harnessing AI for national leadership and

public good requires proactive, strategic, and coordinated governance.
Managing this transition demands inclusive, forward-looking, and
democratically accountable governance anchored in a national strategy shaped
through open public deliberation.

What is the path forward?

First, India needs to publish a Cabinet-endorsed national AI strategy and

present it to Parliament. Second, it must constitute a dedicated Standing
Committee on AI and Emerging Technologies in Parliament to oversee executive
initiatives, ethical risks, and public consultations. Third, it needs to commission
a national impact study on AI-driven employment disruption, particularly in
entry-level white-collar roles, with granular data on sectors, demographics, and
regions.

Taking the time to build democratic consensus and institutional architecture is

a difficult road to take, but it will make India a genuine AI leader.
TTBR (Topics To Be Read) 03 July 2025

Ruchi Gupta, Executive Editor of the Future of India Foundation and an

Aspen Global Leadership Fellow.

Integrating compassion, prioritising palliative

care (The Hindu)

This form of specialised care remains underfunded and underutilised in India,

leaving millions without the support they need

In India, millions endure unnecessary suffering, making it imperative to

integrate palliative care into its health-care system. Palliative care plays a
crucial role in providing comfort and ensuring dignity to those navigating
terminal conditions. Despite its proven impact, palliative care remains critically
underfunded and underutilised in India, leaving millions without the support
that they desperately need.

Palliative care, which is a form of specialised care addressing a person’s

physical, emotional, social and spiritual needs, remains a critical, yet
underappreciated, component of health care. Unlike curative treatment that is
aimed at eradicating disease, palliative care focuses on alleviating pain,
reducing suffering, and improving quality of life — for patients and their
families.

According to the World Health Organization (WHO), an estimated 40 million

people globally require palliative care each year, with 78% of them living in low
and middle-income countries. However, only 14% of those in need receive such
care. In India, where an estimated seven million to 10 million people require
TTBR (Topics To Be Read) 03 July 2025

palliative care annually, only 1%-2% have access to it. This gap underscores the
urgency for systemic intervention and policy prioritisation.

The demand for palliative care is increasing constantly due to the global rise in
non-communicable diseases such as cancer, diabetes and chronic respiratory
conditions. India’s health-care system, which is already strained, faces
increasing pressure, making it essential to integrate palliative care to reduce
unnecessary hospitalisations and ease the emotional and financial burden on
families.

The challenges in India

The inclusion of palliative care in the National Health Policy of 2017 in India
marked a pivotal step in addressing the gap. Subsequent efforts in capacity
building, community outreach and collaboration with global organisations have
fostered growth in this field. However, even today, access remains uneven,
especially in rural areas, and primarily among economically disadvantaged
populations. Each year, approximately 7.2 million Indians need palliative care,
yet systemic inefficiencies hinder its effective delivery.

One of the primary barriers is the shortage of trained professionals. Many

doctors lack specialised training in palliative care, limiting their ability to
provide comprehensive pain management and end-of-life care. While India’s
doctor-population ratio of 1:834, surpasses the WHO recommended norm of
1:1000, the availability of medical practitioners specialising in palliative care is
disproportionately low.

Limited funding and lack of proper infrastructure further exacerbate the

challenges. While palliative care is included in the primary health sector, its
integration into tertiary care remains incomplete. Additionally, public
awareness of palliative care remains limited, leading to misconceptions and
late-stage access to these critical services.

Linking it with medical education

Strengthening the capacity of doctors to deliver this care, particularly in

underserved regions, is imperative. In order to equip medical professionals
with the skills and the empathy required to address end-of-life care, integrating
palliative care into the core MBBS curriculum is crucial. The projects on pain
and palliative care by the Indian Council of Medical Research and the All India
Institute of Medical Sciences exemplify gradual progress in this area.
TTBR (Topics To Be Read) 03 July 2025

Given the limited availability of palliative care specialists, task-shifting

(delegating responsibilities to trained allied health-care workers) emerges as a
viable solution.

India has a huge base of 34.33 lakh registered nursing personnel and 13 lakh
allied health-care professionals. Empowering this workforce through targeted
training can help bridge the gap, ensuring holistic care, particularly in rural
areas and underserved regions.

Policymakers must recognise the long-term benefits of investing in palliative

care, from improving patient outcomes to reducing the overall burden on the
health-care system. Governments should allocate dedicated funding for
palliative care programmes, ensuring that public and private health-care
facilities are equipped with the necessary infrastructure.

Insurance schemes such as Ayushman Bharat should expand coverage to

include palliative care, making these services more financially accessible to
patients and families. Partnerships with non-governmental organisations and
private institutions can also accelerate the expansion of these facilities.

Raising public awareness

Public awareness campaigns can demystify palliative care and encourage early
access to services. Many patients and families are unaware that palliative care
extends beyond end-of-life support and includes pain management,
psychological support, and improved quality of life at any stage of a serious
illness. Educating communities about these benefits can drive demand and
policy changes.

The United States has a well-established palliative care system that is driven by
robust funding mechanisms, insurance coverage, and hospice care models.
Most importantly, in the U.S., there is an emphasis on end-of-life care, which
involves substantial and progressively rising health-care expenditures — an
indication of how robust funding and insurance systems support
comprehensive, patient-centered care, offering a model that India can learn
from while balancing costs and dignity.

India can study and adapt these practices while considering its unique cultural,
demographic and economic context. Continuous research and the adoption of
evidence-based practices are essential for improving care delivery and patient
outcomes.

Integrating palliative care into India’s health-care framework has become

inevitable. A multi-pronged approach of prioritising capacity building,
TTBR (Topics To Be Read) 03 July 2025

embedding palliative care in medical education, empowering allied health

professionals, and addressing systemic challenges can transform the landscape
of end-of-life care in the country.

Dr. Naresh Shetty is an Orthopaedic Surgeon, Hospital Administrator and

Project Director, Niram-RIMH Palliative Care Centre in Tumkur,
Karnataka, supported by the Ajit Isaac Foundation (AIF). Dr. Avani
Prabhakar is an Assistant Professor of Medicine at The Johns Hopkins
University School of Medicine

Wither vanity metrics (Financial Express)

Start-up investors are becoming even more demanding for all the right
reasons.

Fund managers have been tightening their purse strings over the last couple of
years, investing in only those ventures they felt would be able to turn profitable
sooner rather than later. But they are becoming even more demanding on
targets and timelines, as a report in this newspaper showed on Wednesday.
Investors are not just willing to go by a promoter’s estimate of revenue
potential, they want to be convinced the brand is a good fit for the market and
that customers will be sticky. They are also poring over spreadsheets to make
sure the financial forecasts aren’t flaky. A consumer tech startup needs to have
Rs 16-20 crore in annual revenues to be able to raise Series A money; two years
ago, it could have done so with half the revenues. Vanity metrics like gross
TTBR (Topics To Be Read) 03 July 2025

merchandise value are out the window. So, unless a promoter can prove he has
a sound business model and can deliver the numbers, he’s unlikely to get a
cheque.

Indeed, the data on investments is sobering. In June, venture capital flows into
startups trickled down to $460 million. That’s the smallest sum in 12 months,
according to data from Tracxn. In fact, the first half of 2025 has seen funding
falling a sharp 25% year-on-year to just $4.8 billion. Private equity (PE)
investments too appear to be slowing. The combined PE and venture capital (VC)
inflows plummeted more than 40% in the first half of 2025 to just under $15
million, data from Venture Intelligence shows. Fintechs appear to be cornering
a fair share of the pickings while AI startups are the other favourites. The many
down-rounds are also an indication of how investors are taking a good hard
look at valuations; some businesses are now valued at a tenth of the original
amount.

It’s no surprise investors are waking up to smell the coffee. Too many ventures
that looked promising have lost their way. It’s not just the more high profile
names like Byju’s, but many others that are waiting to implode. With investors
insisting the mindless cash burn to stop, companies have been compelled to cut
back on expenses, even if that has meant a slower top line growth. In FY24, for
instance, India’s top unicorns reported a growth in revenues of just 5.5%, way
below the growth of 32% in the previous year. That helped narrow the losses
sharply to about Rs 15,000 crore from nearly Rs 23,000 crore in FY24. That’s good
going, but it is early days, and we need to how these start-ups fare in the days
ahead.

Nonetheless, with much of the exuberance having evaporated, we can hope for
some promising plays valued reasonably. At least a dozen startups are readying
to debut on the bourses, armed with clearances from the regulator. Their
offerings are likely to get a good response from investors. To be sure, the
performance of listed startups has been somewhat mixed—PayTm trades at half
its IPO price while Ola’s value has eroded by more than 40% from the IPO price.
But investors of Eternal have been handsomely rewarded. By one estimate, the
market cap of VC-backed startups should double to about $200 billion in two
years with 38 more listings. That may not be a very big share of India’s total
market cap of $5.4 trillion, but it’s been just a few years since start-ups have
been going public.
TTBR (Topics To Be Read) 03 July 2025

A precarious world order (Financial Express)

NATO’s growing defence expenditure is poised to intensify a range of

geopolitical dynamics.

For anyone who is piqued by US President Donald Trump’s deceptive

diplomacy, where ‘strategic ambiguity’ is a policy choice, his volte face on North
Atlantic Treaty Organization (NATO) offers key insights. During the recently-
held NATO summit in The Hague, perhaps the biggest development was
Trump’s metamorphosed views that NATO remains relevant for the US. A strong
signal from the NATO countries that its European members have reached a near
unison on spending close to 5% of their GDP on defence, compelling a change of
heart in Trump. In what has been seen as very encouraging by member
countries, Trump referred to NATO as not a ‘rip off’ anymore and reaffirmed
US’ commitment to it. These developments provided a positive appraisal of the
transatlantic relations, especially against the stark background of a consistent
broadside since the beginning of the second Trump administration, inflected by
Vice President JD Vance’s Munich Security Conference speech earlier this year.
Whether this sentiment from the Oval Office will remain consistent for the
remainder of Trump’s term may be anyone’s guess but the Hague summit’s new
promise on burden sharing across the Atlantic is historic and marks a new era
in NATO’s evolution as a leading collective security organisation.

The Hague defence commitment this year promises to increase defence

spending by NATO member countries to 5% of GDP by 2035, out of which 3.5%
will be allocated to core defence needs and the rest to related aspects of security
such as infrastructure, intelligence, cybersecurity, etc. By the end of this year,
NATO expects all allies to meet or exceed at least 2% of GDP expenditure on
defence. These commitments are broadly distributed across three domains—
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deterrence and defence, crisis prevention and management, and cooperative

security.

Perhaps the single most important trend coming out of the Hague summit was
how Europe’s intentions to spend more on collective defence resonated with
global spending trends. Beside political signalling and repercussions for
transatlantic ties, the NATO summit this year is reflective of a broader trend –
the surge in global defence spending. Compared to the Cold War period between
1970-1990, global defence spending as a percentage of GDP halved from 3.6% to
1.9% between 2010-2019. This trend, however, is reversing rapidly, with global
military expenditures crossing $2700 billion in 2024. In 2024, global defence
spending, which increased by more than 8% and was backed by augmented
European commitments, is likely to scale further. While much of this trend has
been churned and fuelled by the ongoing wars in Europe and the Middle East,
the former’s aim for an ambitious defence package through its ReArm Europe
or Readiness 2030 plan and the US’ decision to increase its defence budget to
almost $1 trillion may hasten the end of the ‘era of the peace dividend.’

Trump’s report card that the summit was ‘a very historic milestone’ and the
Hague defence commitment, ‘a monumental win for the United States….and a
big win for Europe..’ seems to suggest that Europe may have been able to put
behind one of the most nagging issues that marred transatlantic ties in recent
months—defence spending. As such, the Hague summit this year provides the
opportunity to mark new European imprint on the NATO in several ways. The
allies’ step up in their financial commitments towards boosting collective
defence may be Europe’s moment of renaissance in restoring the transatlantic
politico-security equilibrium. Besides, the ability to spend more by NATO
members could also mean greater leverage in deciding the course of such
expenditure. For instance, in the context of the ongoing Russia-Ukraine conflict,
Europe’s trajectory would have been completely different, had NATO members
been spending at 5% of their GDPs on defence. The other question for Europe,
as for the US, is managing fiscal sustainability and nursing high levels of public
debt internally alongside increased spending on defence and security.

Despite a positive appraisal by Trump and increased defence spending,

Europe’s woes are far from over. The Hague defence commitment takes a long
arc in seeking to achieve the stated 5% mark with some countries like Spain and
Italy remaining somewhat sceptic. Riding on these concerns is Trump’s
inconsistency and unpredictability, which could hyphenate Washington’s other
impediments apropos of Europe, with its collective security commitments and
the lack thereof, bringing ties back to the drawing board.
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The Hague summit spurred a critical moment in the evolution of NATO and
collective security. Trump’s ire, after all, is not seen as a negative development
for Europe entirely, but rather a jolt that Brussels needed. However, by aligning
itself with the world more closely with increased defence spending, Europe may
well be on its course to change its image as a peaceful continent—an image led
by a vibrant economic union like no other.

At the global level, these changes converge with NATO’s emerging intent to pivot
eastward and deepen engagement with countries in the Indo-Pacific, albeit not
directly in the realm of defence and security. While Trump may have framed
NATO’s budget realignments as a victory for the US, the political, security, and
economic recalibrations underway within the alliance could significantly
reshape NATO’s profile, particularly from a European standpoint. Over the next
decade, efforts to consolidate transatlantic security are likely to reverberate
along opposing axes, with China, Russia, Iran, and North Korea coordinating
strategies to counter the West. NATO’s growing defence expenditure is poised
to intensify a range of geopolitical dynamics in the years ahead—chief among
them being escalating great power competition, rapid innovation in defence
and technology, and the deepening fracture of the world order.

By Harsh V Pant & Vivek Mishra

The writers are respectively vice president: studies and foreign policy and
fellow, Americas, ORF.

Disclaimer: Views expressed are personal and do not reflect the official
position or policy of FinancialExpress.
TTBR (Topics To Be Read) 03 July 2025

Can growth forecasts hold amid rising global

risks? (Business Line)

A bumper crop and capex push are the bright spots. US tariff policy and West
Asia turmoil are the negatives

Over the last few years, one of the feathers in India’s macro cap has been its
high GDP growth as compared to other large economies. In FY24, the GDP
growth notched an impressive 9.2 per cent.

Subsequently, it slid to 6.5 per cent in FY25 and we project a further dip to 6.2
per cent in FY26, even as the downside risks have risen because of global
uncertainties.

The high frequency data available for the first two months of FY26 displays a
marked lack of conviction.

Economic activity displayed a decidedly mixed trend, with nine of the 17 non-
agri indicators showing an improvement in year-on-year (YoY) growth relative
to the trend in Q4 FY25. In particular, the early onset of monsoons in May 2025
partly weighed upon the performance of the electricity and mining sectors. The
agri outlook seems brighter.

The output of summer crops is estimated to grow at a healthy pace. While rains
have picked up after a hiatus in early-June, the spatial and temporal distribution
remains crucial to support favourable kharif sowing and sustain rural demand.

In our view, urban consumption should improve in the second half of the
ongoing calendar year, as the benefits of the income tax relief, cumulative 100-
basis points of rate cuts and softening food inflation start to materialise.
TTBR (Topics To Be Read) 03 July 2025

Given the additional cushion on the receipts side from the higher-than-budgeted
RBI dividend pay-out in FY2026, the government could push up its expenditure
by at least ₹0.8 trillion in FY26 relative to the BE (Budget Estimates).

If this entire amount goes towards additional capex, it will push up the headline
figure to nearly ₹12.0 trillion and take its YoY growth to a healthy 14.2 per cent.

Additionally, the data for 22 States indicated a considerable YoY expansion of

28.6 per cent in their combined capital expenditure to ₹9.8 trillion in FY26.

This would augur well for investment demand in the ongoing fiscal and support
a 6+ per cent GDP growth in the year.

Commodity risks

However, global risks have undoubtedly intensified amid the uncertainty

created by geopolitical conflicts, and the continuing haze surrounding global
tariff policies. Despite promises of ceasefires, the world remains on tenterhooks
regarding the conflicts in West Asia and Eastern Europe. The attendant impact
on commodity prices, especially crude oil, and exchange rate movements, could
impact India Inc’s profitability. The jittery sentiment could moderate
investment flows and pose headwinds to domestic growth.

Further, the final contours of relative tariffs between the US and other major
countries, including India, remain as yet unclear. Excess capacity in China and
cheap imports could act as a drag on domestic production. Tariff wars could
weigh on India’s exports, but may also offer opportunities to capitalise on
export markets and embolden our manufacturing capacity, from a medium-
term standpoint.

The biggest fallout of the lingering uncertainty on the external front, however,
is likely to be seen in private sector capacity expansion. While the domestic
environment is conducive for private capex, weak external demand, along with
concerns of an increase in imports from China, will likely delay capacity
expansion in some sectors in FY26. This could certainly cause GDP growth to be
weaker than our current forecast of 6.2 per cent.

By Aditi Nayar

The writer is Chief Economist, Head- Research & Outreach, ICRA

TTBR (Topics To Be Read) 03 July 2025

Financial stability: No cause for alarm (Business

Line)

But RBI flags geopolitics and PSB loan book as risks

The risks to financial stability have increased in recent times — given the
increase in geopolitical conflicts, disruptions caused by reciprocal tariff talks
with the US and the re-alignment of trade and capital flows. The systemic risk
survey conducted by the Reserve Bank of India in May this year highlights this
growing uncertainty with all major risk groups being in the ‘medium risk’
category.

But there is no cause for alarm. Unlike in other turbulent periods, such as June
2022, domestic demand conditions are fairly robust. Domestic financial
institutions have adequate capital buffers to withstand severe stress conditions.
Yet, policymakers need to keep the ammunition ready to ensure financial
stability, should the need arise. While the Financial Stability Report has flagged
rising public debt as a problem globally, it points out that debt-to-GDP ratio and
the ratio of interest payments to receipts is much lower in Indiavis-a-visits
emerging market peers. The Centre’s resolve to improve the debt-to-GDP ratio
also adds to the credibility of the financial system. However, a risk to financial
stability could arise from overvaluation in stock markets. Earnings are growing
at a far lower rate than what the share prices are building-in. Any adverse
development increases the risk of a stock market crash.

Measures taken by the RBI in the past year such as increasing scrutiny on the
retail loan portfolios of banks and NBFCs, cracking down on the lax on-boarding
process for unsecured retail loans and tightening the rules for digital lending,
have led to a deceleration in overall credit growth. But public sector banks
appear to be still chasing high growth, which is reflected in their credit growth
as well as uncertain asset quality. Year-on-year credit growth in public sector
TTBR (Topics To Be Read) 03 July 2025

banks was at a higher 12.2 per cent in March 2025 quarter compared to growth
of 8.9 per cent in private sector banks, and the overall growth of 11 per cent in
scheduled commercial banks. The growth for PSBs appears to be led by retail
credit which grew 17.7 per cent in the March 2025 quarter, while private and
foreign banks witnessed a sharp degrowth in personal loans. Further, PSBs have
witnessed a 21.3 per cent increase in unsecured personal loans.

The asset quality of public sector banks is a bit weaker than other groups. The
GNPA and NNPA ratio of public sector banks was at a higher level of 2.8 per cent
and 0.6 per cent, respectively. The proportion of GNPA being written off was
also much lower in PSBs at 25.5 per cent in FY 25, compared to 45.3 per cent in
private banks and 34 per cent in foreign banks. The GNPA in credit card loans
of public sector banks has continued to grow in recent quarters, standing at 14.3
per cent in March 2025. The RBI should watch the loan portfolios of PSBs for
potential vulnerabilities. The impact of supply chain disruption on debt
servicing must be considered.