The Tamil Nadu government has introduced the Tamil Nadu Assured Pension Scheme (TAPS), a hybrid model combining features of the Old Pension Scheme (OPS) and the National Pension System (NPS). TAPS aims to address the growing demand for pension security while maintaining fiscal sustainability. Under TAPS, employees continue to contribute 10% of their salary (as in NPS), but are assured a monthly pension of 50% of their average pay from the last 12 months of service. This model seeks to provide the certainty of OPS without the massive fiscal burden that led to the shift to NPS in 2003.
- TAPS provides an assured pension of 50% of the last drawn pay, similar to the OPS, but retains the contributory nature of the NPS.
- The scheme includes a Dearness Allowance (DA) linked to inflation, ensuring the pension's value is maintained over time.
- The government's contribution to TAPS will be around 14%, and the scheme is expected to be more fiscally sustainable than a full return to OPS.
The International Monetary Fund (IMF), in its January 2026 World Economic Outlook update, has revised India's GDP growth estimate for the current financial year (2025-26) upward from 6.6% to 7.3%. This revision is primarily a reflection of stronger-than-expected growth in the third quarter and robust momentum in the fourth quarter. While the IMF projects growth to moderate to 6.4% in 2026 and 2027 as temporary factors wane, India remains a global bright spot. The report also notes that inflation in India is expected to return to near-target levels of 4% set by the RBI.
- The 0.7 percentage point upward revision reflects India's resilient domestic demand and strong economic momentum despite global headwinds.
- Global economic growth is projected to remain steady at 3.3% in 2026 and 3.2% in 2027, largely unchanged from 2025.
- The IMF's 7.3% projection is slightly lower than the Union government's prediction of 7.4% for the same fiscal period.
The Reserve Bank of India (RBI) has proposed to the Union government that a plan to link central bank digital currencies (CBDCs) of BRICS nations be included in the agenda for the 2026 BRICS summit. This initiative aims to simplify cross-border payments and potentially reduce reliance on the U.S. dollar as geopolitical tensions rise. While the RBI clarifies that this is not a direct move toward de-dollarization, it builds on previous declarations for interoperability. Currently, all five main BRICS members—Brazil, Russia, India, China, and South Africa—are running CBDC pilot projects to enhance transaction efficiency.
- The proposal seeks to enhance interoperability between the payment systems of BRICS member nations to make cross-border transactions more efficient.
- Linking CBDCs could expedite international trade settlements and bolster the global usage of local currencies like the Indian Rupee.
- India's digital currency, the e-rupee, has already attracted 7 million retail users since its launch in December 2022.
German Ambassador Philipp Ackermann discusses the strengthening strategic partnership between India and Germany following Chancellor Friedrich Merz's recent visit. As the world's third and fourth-largest economies, both nations share interests in a stable, rules-based global order and resilient supply chains. Key pillars of cooperation include the proposed EU-India Free Trade Agreement and the Migration and Mobility Partnership Agreement, which facilitates the movement of skilled Indian professionals to Germany. The year 2026 will mark the 75th anniversary of diplomatic ties, providing an opportunity to deepen defense ties and people-to-people bonds. The partnership is seen as essential for mutual economic growth and addressing global challenges through biennial Intergovernmental Consultations.
- India and Germany are major economic heavyweights, currently ranked as the world's fourth and third-largest economies respectively.
- The Migration and Mobility Partnership Agreement aims to provide safe and predictable pathways for skilled Indian workers to enter Germany.
- A free-trade agreement between the EU and India is highlighted as a critical step for economic resilience and supply chain security.
The Trump administration has threatened a 10% tariff on European goods, potentially rising to 25%, to pressure Denmark into selling the autonomous territory of Greenland to the U.S. European leaders, including Emmanuel Macron and Keir Starmer, have condemned this 'neo-imperialist' approach as a violation of international law. The article warns that such 'bullying tactics' undermine the NATO alliance and degrade years of progress on transatlantic trade. In response, the EU may deploy its 'anti-coercion instrument' to protect member states from economic pressure. This internal conflict within the West could weaken the collective front against Russian aggression, highlighting the urgent need for enlightened leadership to preserve the rules-based global order.
- The U.S. is using trade tariffs as a geopolitical tool to coerce Denmark into selling the territory of Greenland.
- European nations view these unilateral actions as a violation of international law and a threat to the transatlantic alliance.
- The EU's 'anti-coercion instrument' is a potential counter-measure to limit the trade of major U.S. tech firms in response to tariffs.
Ahead of the Union Budget, wind energy producers in India are advocating for the introduction of a Production-Linked Incentive (PLI) scheme. While India has significant local assembly capacity for wind turbines, it remains heavily dependent on imports for high-value components like gearboxes, special bearings, and controllers. Industry leaders argue that this dependency impacts costs, technology control, and strategic autonomy. A PLI scheme would incentivize domestic manufacturing of these critical components, helping to curtail long-term import reliance. Additionally, the industry is seeking a rationalization of import duties to provide short-term support for the sector's growth.
- The wind energy sector is pushing for PLI schemes to boost domestic manufacturing of critical high-value parts.
- Current manufacturing is mostly local assembly, but core components are imported from international markets.
- Reducing import dependency is seen as vital for maintaining technology control and strategic autonomy in renewable energy.
The Union Labour Ministry announced that the social security net has expanded to over one crore new workers due to recent reforms. Specifically, 1.03 crore new employees and 1.17 lakh new employers registered with the Employees' State Insurance Corporation (ESIC) between July 2025 and January 2026. This growth is attributed to the 'Scheme to Promote Registration of Employers/Employees' (SPREE), which offers a one-time opportunity for registration without punitive action for past non-compliance. Additionally, reforms in the EPFO now allow members to withdraw up to 75% of their balance under simplified provisions, enhancing financial flexibility.
- The SPREE scheme aims to formalize the workforce by encouraging employers to register workers for social security benefits.
- ESIC provides medical and cash benefits to employees in case of sickness, maternity, or employment injury.
- EPFO reforms have introduced an 'auto mode' for claim settlement, with over 72% of advance claims now processed automatically.
Jyoti Vij, Director General of FICCI, has proposed several focus areas for the upcoming Union Budget 2026-27 to maintain India's economic momentum. Key recommendations include increasing the capital outlay for defense to 30%, establishing an Eastern India defense industrial corridor, and boosting the National Critical Mineral Mission (NCMM). The proposal also emphasizes deepening corporate bond markets, resolving tax disputes through a dual-track disposal system, and calibrating customs tariffs to address inverted duty structures. These measures aim to strengthen domestic growth levers while maintaining fiscal consolidation and encouraging private investment across various sectors.
- The budget should prioritize growth-enhancing productive capital expenditure and social sector spending.
- A dedicated fund for critical minerals recovery and tailings processing is suggested under the NCMM.
- To improve export competitiveness, the allocation for the RoDTEP scheme needs to be significantly raised.
Prime Minister Narendra Modi announced that nearly 44,000 start-ups registered in 2025, marking the highest annual addition since the Startup India mission's launch in 2016. Celebrating the scheme's 10th anniversary, the PM noted India's rise to the third-largest start-up ecosystem globally. The number of start-ups has grown from under 500 in 2014 to over 200,000 today, with nearly 125 unicorns. To further boost innovation, the government approved Fund of Funds 2.0 with a ₹10,000 crore corpus, focusing on deep tech areas like AI, machine learning, and quantum technologies to drive future economic growth.
- India is now the third-largest start-up ecosystem globally with over 200,000 registered entities.
- The Startup India mission, launched in 2016, aims to foster innovation and enable investment-driven growth.
- Fund of Funds 2.0 will specifically target deep tech sectors including aerospace, defense, and artificial intelligence.
Marine and space biotechnology are emerging as frontiers for India's scientific and economic growth. Marine biotech focuses on discovering bioactive compounds from deep-sea organisms for use in pharmaceuticals, food, and cosmetics. Space biotech, led by ISRO's microgravity experiments, studies biological systems in extreme environments to support long-duration human missions and develop new materials. With a vast coastline and growing space capabilities, India aims to position itself as a leader in biomanufacturing, though private sector participation remains in its nascent stages and requires more investment.
- India's 11,000 km coastline and Exclusive Economic Zone offer rich marine biodiversity for biomanufacturing.
- ISRO is conducting microgravity biology experiments on microbes, plants, and algae to study life-support regeneration.
- The Deep Ocean Mission and BioE3 policy are key government drivers for these futuristic sectors.
The International Labour Organization (ILO) in its 'World Employment and Social Trends 2026' report projects the global unemployment rate to stay at a historically low level of 4.9%. However, the report warns of rising numbers of 'working poor' and informal workers in low-income countries. About 284 million workers still live in extreme poverty, earning less than $3.00 a day. The report highlights that while headline numbers look positive, structural transformations, digital shifts, and trade uncertainties continue to challenge the quality of jobs and gender equality in the global workforce.
- 186 million people are projected to be unemployed globally this year despite the low percentage rate.
- Over two billion workers remain in informal employment, which is a persistent feature of the economic landscape.
- Extreme poverty among workers declined by only 3.1 percentage points between 2015 and 2025.
India is intensifying its 'minerals diplomacy' to secure critical minerals like lithium, cobalt, and rare earths, essential for the clean energy transition. New Delhi is pursuing bilateral and multilateral partnerships with resource-rich nations like Australia, Japan, and various African countries. The India-Australia Critical Minerals Investment Partnership has already identified five target projects. However, challenges remain, including China's dominance in the supply chain, US trade policy volatility, and the need for domestic midstream processing capabilities to reduce dependence on raw material exports and build long-term resilience.
- Critical minerals are vital for EV batteries, renewable energy infrastructure, and high-tech manufacturing.
- India is exploring joint ventures in Argentina through Khanij Bidesh India Limited (KABIL) with a ₹200 crore agreement.
- African nations like Namibia, Zambia, and Congo offer opportunities for lithium, rare earths, and copper exploration.
India is set to replace its outdated Consumer Price Index (CPI) dataset, which currently uses 2012 as the base year. The new series, starting February 2026, will use 2024 as the base year and incorporate updated weightages based on the Household Consumption Expenditure Survey 2023-24. The current 2012-based index fails to capture modern consumption patterns, leading to a gap between official inflation figures and the actual cost of living experienced by households. This update is crucial for more accurate policymaking and capturing the nuances of a diverse country like India.
- The 2012 base year is over a decade old and does not reflect current spending on services, technology, and subsidies.
- Official retail inflation for December 2025 stood at 1.33%, while household perceptions were significantly higher at 6.6%.
- The new index will incorporate updated weightages for various sub-sectors based on the latest consumption patterns.
India's retail inflation, measured by the Consumer Price Index (CPI), rose to a three-month high of 1.33% in December 2025. Despite the slight uptick, it remains significantly below the Reserve Bank of India's (RBI) lower comfort level of 2%. The low figure is attributed to a broad-based decline in price levels across various sectors. However, core inflation, which excludes volatile components like food and fuel, jumped to a 28-month high of 4.8%. While food and beverage prices saw a contraction, meat, oils, and fruits remained high, potentially exerting upward pressure in the coming months.
- Retail inflation reached 1.33% in December 2025, up from previous months but still below the RBI's 2% lower threshold.
- The RBI targets an inflation rate of 4%, with a comfort band of 2% above and below that target (2% to 6%).
- Core inflation, which excludes food, beverages, fuel, light, and transport fuels, rose significantly to 4.8%.
Prime Minister Narendra Modi, while inaugurating the Vibrant Gujarat Regional Conference in Rajkot, highlighted India's trajectory as the world's fastest-growing economy. He stated that India is on course to become the third-largest global economy. The PM emphasized the success of the Digital India initiative, noting India as the largest consumer of data and the leader in real-time digital payments via UPI. Additionally, he visited the Somnath temple, marking 1,000 years since Mahmud of Ghazni's attack in 1026, and noted the temple's resilience as a symbol of national pride and history.
- India is currently the world's fastest-growing economy and aims to become the third-largest globally.
- The country has transitioned from a mobile importer to the world's second-largest manufacturer of mobile handsets.
- India's first semiconductor fabrication facility is being established in Dholera, Gujarat.
The Tamil Nadu government has implemented the Tamil Nadu Assured Pension Scheme (TAPS) effective January 1, 2026. This scheme targets state government employees who entered service on or after January 1, 2003, and were previously under the Contributory Pension Scheme (CPS). Under TAPS, retirees are guaranteed a pension equal to 50% of their last-drawn basic pay and dearness allowance. Employees contribute 10% of their basic pay, while the government covers the remaining funding. The scheme also includes provisions for family pensions (60% of the pensioner's amount) and gratuity up to ₹25 lakh based on service tenure.
- TAPS provides an assured pension of 50% of the last-drawn basic pay plus dearness allowance for eligible retirees.
- It is mandatory for employees entering service from January 1, 2026, while existing CPS employees have an option to switch at retirement.
- Employees contribute 10% of their basic pay to the pension fund, with the government bearing the additional fund requirements.
Recent U.S. legislative moves, including the Russia Sanctions Bill and focus on Venezuelan oil assets, reflect growing anxieties over the eroding hegemony of the U.S. dollar. Major consumers like China and India have deepened non-dollar trading arrangements to circumvent sanctions. India has imported substantial Russian crude, accounting for over 20% of its war-period exports, sometimes paying in yuan. The global energy transition towards electric vehicles, led by China, further challenges the traditional dollar-centric financial order. Additionally, the BRICS nations are contemplating parallel currency arrangements, signaling a historic transition in the architecture of global trade and finance.
- The petrodollar system, which underpinned the dollar's global centrality since the late 20th century, is facing erosion due to geopolitical shifts.
- India has imported over 20% of its crude oil from Russia since 2022 using non-dollar settlement mechanisms.
- China's dominance in the EV ecosystem represents a structural challenge to the financial architectures that supported U.S. dominance for decades.
The Ministry of Textiles has signed Memorandums of Understanding (MoUs) with 15 states to launch the 'Textiles focused Research, Assessment, Monitoring, Planning And Start-Up' (Tex-RAMPS) scheme. The initiative aims to improve the quality, coverage, and timeliness of textile-related statistical products and research. Under the scheme, each participating state or Union Territory will receive an annual grant of ₹12 lakh. Furthermore, an additional grant of ₹1 lakh per year will be provided for each district to develop and execute specific district action plans for sectors like handlooms, handicrafts, and technical textiles.
- Tex-RAMPS focuses on integrated planning for key sectors including apparel and technical textiles.
- The scheme was launched during a national textile ministers' conference in Guwahati.
- It aims to build the credibility of textile data to support better policy-making and start-up ecosystems.
The rise of 10-minute delivery services has sparked a debate regarding worker safety, economic viability, and the necessity of such speed. While companies argue that consumer demand drives this model, labor unions highlight the immense pressure on delivery partners, leading to increased accident risks and lack of social security. NITI Aayog projects that the gig economy will employ 2.35 crore workers by 2029-30. However, current labor codes often exclude gig workers from essential benefits like minimum wage, regulated working hours, and insurance, treating them as "partners" rather than employees.
- The 10-minute delivery model is criticized for being a "competition for speed" rather than a consumer necessity.
- Gig workers often face "algorithmic management" where their livelihoods depend on opaque app ratings and automated blocks.
- There is a call for better regulatory frameworks to protect worker rights in a sector that provides essential entry-level jobs.
As the 16th Finance Commission (FC) begins its work, there is a growing debate on using Gross State Domestic Product (GSDP) as a primary indicator for central tax devolution. Currently, devolution relies heavily on population and income distance, which some high-performing states argue penalizes their efficiency. Proponents suggest GSDP is a reliable proxy for the actual accrual of central taxes at the state level, especially since GST is destination-based. Data shows a high correlation (0.91) between GSDP and GST collections, suggesting GSDP reflects a state's contribution to the national exchequer more accurately than current metrics.
- High-performing states like Karnataka, Maharashtra, and Tamil Nadu contribute disproportionately to central tax revenues but receive lower shares in devolution.
- The 15th FC's devolution formula showed a weak correlation (0.24) with actual tax collection shares.
- Using GSDP could balance the principles of rewarding contribution and ensuring equity.
The United Nations Department of Economic and Social Affairs (UN DESA) has projected India's economic growth at 7.2% for the current fiscal year. While slightly lower than the Indian government's estimate of 7.4%, the report highlights that robust domestic consumption and significant public investment in infrastructure will largely offset the negative impacts of higher US tariffs. The report notes that 18% of Indian exports are US-bound, making them vulnerable to trade policy changes. However, strong demand from other markets like Europe and West Asia, along with tax reforms, provides a buffer.
- India's growth is supported by gross fixed capital formation in physical and digital infrastructure.
- The Indian rupee faced depreciation pressures due to portfolio outflows and US tariff concerns but remains supported by strong economic performance.
- China's fixed asset investment saw a contraction due to property sector weakness, contrasting with India's expansion.
US President Donald Trump has approved legislation empowering him to levy tariffs up to 500% on countries, including India, China, and Brazil, that continue to purchase oil or uranium from Russia. This move aims to increase pressure on Russia by cutting off its primary funding sources for the conflict in Ukraine. The bipartisan bill has significant support in both the Senate and the House. US Ambassador-designate Sergio Gor emphasized that ending India's import of Russian oil is a top priority, noting that India had previously "zeroed out" imports from Iran and Venezuela under similar pressure.
- The bill allows the US President discretion to set tariff figures above the existing 25% penalty.
- It specifically targets oil and uranium imports from Russia to squeeze its war financing.
- India is a primary focus due to its significant intake of Russian crude since 2022.
India has made significant strides in meeting its Paris Agreement commitments, particularly in reducing emission intensity and expanding non-fossil fuel capacity. By 2023, emission intensity had decreased by approximately 36% from 2005 levels, meeting the 2030 target early. Non-fossil capacity reached 43% by 2023, on track for the 50% goal by 2030. However, challenges remain: absolute emissions continue to rise alongside GDP growth, and carbon sequestration through forest cover is lagging. The transition requires scaling battery storage, grid modernization, and addressing the continued reliance on coal for "baseload" electricity to ensure sustainable future growth.
- India committed to reducing emission intensity by 33-35% (later updated to 45%) by 2030 compared to 2005 levels.
- While intensity has dropped, India’s absolute greenhouse gas emissions were approximately 2,959 MtCO2e in 2020 and continue to grow.
- The 'forest sink' target of 2.5-3.0 billion tonnes of CO2 equivalent by 2030 faces hurdles due to definitions of 'forest cover' and slow sequestration progress.
The Tamil Nadu government has introduced the Tamil Nadu Assured Pension Scheme (TAPS), attempting to balance electoral promises with fiscal prudence. TAPS serves as a middle ground between the Old Pension Scheme (OPS) and the Contributory Pension Scheme (CPS). It assures pensioners 50% of their last drawn pay, similar to the Unified Pension Scheme (UPS) implemented for central government staff. While it retains employee contributions, it includes features like death-cum-retirement gratuity. This move aims to address employee demands for OPS restoration without pushing the state into a perilous financial position given its high debt-to-GSDP ratio.
- TAPS is a hybrid model blending elements of the Old Pension Scheme (OPS) and the Unified Pension Scheme (UPS).
- It guarantees 50% of the last drawn pay as pension while maintaining the employee contribution element of the CPS.
- The scheme includes a minimum assured payout regardless of service duration and a death-cum-retirement gratuity.