India

Vivekananda International Foundation | English | AcademicThink | Jan. 7, 2026 | UndeterminedInitiative

India’s Union Budget 2026 preparation focuses on achieving the ambitious Viksit Bharat goal by 2047, requiring sustained GDP growth of over 8% annually. Despite significant progress in poverty reduction and income growth, key challenges remain in making agriculture more profitable and driving manufacturing growth through the MSME sector, which faces issues like lack of skilled manpower, underemployment in agriculture, and high regulatory burdens.

The agricultural sector, accounting for 18% of GDP, suffers from systemic rural poverty, fragmented land holdings, low productivity, and farmer distress. The repeal of the 2020 farm bills, which aimed to liberalize agricultural markets and promote private investment, has hindered potential gains in efficiency and farmer incomes. India’s agricultural yields lag behind global and Chinese standards, partly due to small and fragmented farms that complicate mechanization. Government efforts at land consolidation have produced limited results, pointing to the need for innovative policies like land acquisition and long-term leasing paired with credit support for small farmers.

Addressing skills development is critical to transitioning underemployed agricultural workers to industry jobs, especially in manufacturing. Existing vocational training programs have trained millions but suffer from outdated curricula and weak industry integration. Learning from German and Chinese vocational models could improve training quality and placement outcomes, helping meet the industry’s demand for skilled labor.

The MSME sector is vital for employment and economic output but faces a severe finance gap of approximately Rs. 30 lakh crores and enormous regulatory hurdles, including over 1,400 compliance obligations. High compliance costs and bureaucratic complexity deter formalization and scaling of MSMEs, leading some to prefer imports over domestic manufacturing. The government must streamline regulations, enhance ease of doing business, and attract private risk capital through innovative funding mechanisms like peer-to-peer lending and incentivized angel investing.

The National Manufacturing Mission, launched with a Rs. 10,000 crore outlay to raise manufacturing’s GDP share to 25% by 2035, faces skepticism due to insufficient funding, administrative challenges, poor infrastructure, and competition from China and Southeast Asia. Large-scale reforms in regulatory processes, export facilitation, infrastructure, and labor skills are necessary to realize its targets.

Urban middle-class consumption, comprising over 60% of GDP, has slowed due to inflation, high taxes, and weak salary growth, dampening economic momentum. Measures like raising income tax exemption limits and reducing GST have provided some relief but sustained efforts are needed to boost consumption and signal government support to this segment.

Finally, while some welfare schemes are essential for social upliftment, large and continuous expenditures on populist programs such as MGNREGA strain public finances and divert resources from productive investments in agriculture, skills training, and MSME growth. Rationalizing welfare spending and improving implementation of development programs at both central and state levels are crucial to unlock higher growth potential.

Effective coordination between the central and state governments is imperative, as land, agriculture, education, and labor laws fall under state jurisdiction. Addressing the five priority areas—increasing agricultural productivity, skill development, MSME support, promoting urban consumption, and reconsidering welfare spending—can help India bridge the growth gap and achieve its $35 trillion GDP target by 2047.

The Economic Times | English | News | Jan. 7, 2026 | Critical Infrastructure Failure

India’s aviation sector faces significant strain following crises at its two largest carriers, IndiGo and Air India. IndiGo, controlling two-thirds of the market, experienced severe operational disruptions in December due to pilot shortages and software issues, resulting in thousands of flight cancellations and the stranding of half a million passengers. The Directorate General of Civil Aviation (DGCA) and the antitrust body are investigating IndiGo’s failures, and the government has pledged strict action.

Air India, recently privatized under Tata Group ownership, encountered several operational failures and a fatal Boeing 787 Dreamliner crash last year that killed 241 people. Despite ongoing investigations, the airline must focus on returning to profitability. Tata Group is reportedly seeking new leadership for Air India and its low-cost arm, Air India Express.

India’s domestic aviation market is dominated by IndiGo and Air India, controlling nearly 90% of seats, amplifying systemic vulnerabilities. The sector has grown rapidly, with the commercial fleet expanding from about 100 planes in 2000 to nearly 900 today, and massive orders for over 1,500 new aircraft. Passenger numbers are expected to nearly triple by 2044. However, regulatory resources and infrastructure have not kept pace with this growth. DGCA is understaffed and underfunded compared to counterparts like the US FAA, limiting oversight capabilities.

Operational challenges and safety lapses persist across airlines, with Air India recording the highest number of deficiencies in a recent safety audit. Cases of neglected aircraft and paperwork issues have been reported, reflecting broader systemic weaknesses. Meanwhile, the government aims to encourage competition, but new entrants face constraints due to aircraft shortages and high capital requirements. Smaller carriers also struggle with financial pressures despite growing demand.

The aviation sector’s rapid expansion without corresponding regulatory and infrastructure enhancements has created fragility. Industry experts view the recent crises as critical turning points requiring substantial improvements in governance, regulation, and operational management to sustain long-term growth and safety.

Times of India | English | News | Jan. 7, 2026 | Pollution

Aam Aadmi Party (AAP) MLAs, led by opposition leader Atishi, held a protest inside the Delhi Assembly premises on January 6, 2026, to highlight the worsening air pollution in Delhi. The protest emphasized the urgent need for government accountability and immediate policy measures to address the hazardous air quality affecting vulnerable populations such as children, the elderly, and individuals with respiratory conditions.

On the same day, several Indian cities, including Delhi, Mumbai, and Guwahati, experienced fog and poor visibility. Delhi’s Air Quality Index (AQI) readings were notably high, ranging from 256 to 337 in various parts of the city, with areas like Chandni Chowk classified as ‘very poor’. This pollution caused flight delays at the Indira Gandhi International Airport. Despite the sub-committee under the Commission for Air Quality Management lifting Stage-III restrictions recently due to better meteorological conditions, pollution levels remained dangerously high, prompting calls for stricter controls on vehicle emissions, industrial pollution, and stubble burning in neighboring states.