Best of the Week: A Goldilocks budget moment — but can India make it last?

Dear reader,

As finance minister Nirmala Sitharaman prepares her ninth consecutive Union budget, India appears to be in an enviable place. Growth is strong, inflation is low, and the economy is outperforming much of the world. But this calm comes against a noisy backdrop: a fractured global order, tariff wars, and geopolitical shocks that are reshaping trade and capital flows. The budget will have to look outward and inward at the same time.

On the surface, the story is reassuring. At 7.4%, India remains the world’s fastest-growing large economy. Fiscal discipline has improved steadily, public investment has surged, and infrastructure spending has become the backbone of growth. Yet the undercurrents are harder to ignore. Nominal growth is weak, threatening revenue collections. Government debt is still high, pushing up borrowing costs and crowding out private investment. The capex-led strategy, so effective so far, may be nearing its limits.

Private investment has yet to rediscover its animal spirits. Tax revenues are rising only marginally as a share of GDP. Disinvestment targets continue to slip. States remain heavily indebted and skewed toward revenue spending.

This budget, then, is not about grand giveaways. It's about choices. How decisively the government tackles debt, revives private investment, broadens the tax base and improves spending quality will decide whether India’s current Goldilocks phase becomes a durable growth story, or a fleeting one. Read more.

On to the best of Mint's work from this week:

India and EU seal landmark free trade pact

India and the EU have concluded a long-awaited free trade agreement, positioning India at the heart of a vast economic bloc spanning nearly two billion people.

The deal promises preferential or duty-free access for over 99% of Indian exports, boosting $75 billion in shipments, especially in textiles, leather, gems, pharmaceuticals and engineering goods.

Sensitive farm products are excluded on both sides, while India opens up to EU wines, spirits and olive oil. Carbon border taxes stay outside the pact, though dialogue is planned. A mobility framework also eases movement for professionals and students.

Economic Survey flags slower growth ahead, leans on domestic strength

The Economic Survey has struck a cautious note, projecting GDP growth of 6.8-7.2% in FY27, down from an estimated 7.4% this year, as global risks weigh on the outlook. While it highlights India’s strong domestic fundamentals, the survey acknowledges persistent uncertainty from geopolitics and fragmented trade.

The survey's previous growth forecasts have often missed the mark. Still, the survey argues India’s medium-term growth potential has firmed up at 7%, supported by resilient consumption, improving private investment and strong services exports, which continue to offset external shocks.

Air India’s turnaround lags IndiGo despite growth push

Four years after the Tata Group took over Air India, the airline is on steadier footing but its turnaround has been slower than planned. Data shows Air India and Air India Express have grown passenger share more slowly than market leader IndiGo, both domestically and internationally, even as India’s aviation market expands.

A fatal crash in June 2025 forced capacity cuts and hurt momentum, while ageing fleets and slower aircraft deliveries have constrained growth. Although pilot hiring has picked up sharply and revenues have risen, profitability remains elusive, with combined losses near ₹9,700 crore in 2024-25 and more pressure ahead.

Panna’s diamond dreams are built on desperation

Beyond Khajuraho’s temples and Panna’s tiger reserve lies India’s only active diamond mining belt, driven less by riches than distress. Artisanal miners, many burdened by debt and loss, lease tiny plots hoping a single find will transform their lives. The odds are brutal. Years of backbreaking labour often yield nothing, while costs quietly pile up. A few rare successes keep the dream alive, even as diamond prices slump and illegal trade thrives.

Panna’s diamonds are not mined by machines or conflict, but by human desperation, where faith, poverty and blind hope collide in shallow pits of gravel.

Why India isn’t taking chances with Polio

India’s drug regulator has drawn a hard red line on polio safety. The Central Drugs Standard Control Organisation has rejected Indian Immunologicals Ltd’s proposal to begin human trials of a six-in-one paediatric vaccine, citing fears that a Chinese-origin polio strain could slip through containment gaps.

The concern? The vaccine uses antigens sourced from Sinovac, based on a variant never used in India. Regulators worry an accidental leak, even during trials, could threaten India’s polio-free status, achieved after years of relentless public health effort. With missing real-world safety data and no WHO-certified containment clearance, officials chose caution over speed.

Big plans for small cash in post-demo India

Ever had trouble getting change for a ₹500 note? It's hardly a surprise, giving India's small-change shortage. The Centre is now looking to fix this problem nearly a decade after demonetisation. The plan is to install machines that dispense ₹10, ₹20 and ₹50 notes, hybrid ATMs that swap big notes for smaller ones (and coins), and nudge the Reserve Bank of India to print more low-value currency.

A pilot is already underway in Mumbai, with possible rollouts at busy spots like markets, hospitals and transport hubs. The aim is to make small notes as readily available as ₹500 bills. Will this move finally deliver the change' that commuters, small traders and wage earners desperately need?

Can AI make audits smarter and faster in India?

India’s audit watchdog is stepping into the future. The National Financial Reporting Authority is testing artificial intelligence to sharpen its oversight of statutory audits, even as it plans a record 10 firm inspections this year. Chairperson Nitin Gupta calls these “baby steps,” but the ambition is, faster scrutiny of complex accounts, risky transactions, and audit quality in a fast-moving economy.

AI could help the regulator scan more financial statements, flag inconsistencies early, and improve confidence in audits without relying only on manual checks. Add capacity-building workshops and new disclosure standards to the mix, and the message is—tougher supervision, yes, but also smarter.

Science reclaims space in Padma honours

The Padma Awards list often mirrors India’s priorities, and 2026 tells an interesting story. After years of slipping into the background, scientists, engineers and doctors are back in focus. This year, science and engineering clocked their highest Padma tally in 12 years, while medicine saw its biggest presence in a decade. Together, they made up a full one-fifth of all awardees.

Contrast that with business. Just four leaders featured, including banker Uday Kotak, underscoring how uneven recognition has become. Is this a quiet course correction, rewarding innovation over influence?

The rise of the label readers’ revolution

When Revant Himatsingka flagged the sugar load in Bournvita, he expected views, not a legal notice. What followed surprised everyone. The backlash amplified his message, drew regulators’ attention, and pushed parent Mondelez to cut sugar by 14%. That spark lit a wider consumer awakening.

Today, Himatsingka and voices like Cyriac Abby Philips have become part of a growing “trust economy”, where people trust individuals and communities over brand and even regulators such as Food Safety and Standards Authority of India. Are labels finally being read?