Daily Insights December 31, 2025

Daily Insights December 31, 2025

1. INDIA’S FOREIGN POLICY RECALIBRATION IN 2025

Context:
India faced unprecedented diplomatic challenges in 2025, confronting a shifting global order characterized by transactional US policies, regional instability, West Asia conflicts, and rising global right-wing politics. Simultaneously, pragmatic reset with Canada, Taliban engagement, and China rapprochement demonstrated strategic autonomy.​

About the News:

• U.S. Policy Shocks: Punitive tariffs (up to 50%), sanctions on Nayara Energy to curb Russian oil imports, restrictive H-1B visas, and Trump’s mediation claims in Pakistan-India tensions eroded strategic trust​

• Regional Turmoil: Pahalgam terror attack, Operation Sindoor escalation, Pakistan Army chief consolidation as Field Marshal, Gen Z protests toppling Nepal government, and anti-India sentiment in Bangladesh​

• West Asia Crisis: Israel strike hesitation within SCO-BRICS caused discomfort; India–Middle East Economic Corridor (IMEC) stalled, affecting connectivity and regional influence​

• Canada Reset (Major Achievement): PM visit for G7, engagement with new PM facilitated restoration of visas, diplomatic staffing, and full envoys​

• Taliban Engagement: High-level talks culminated in Taliban Foreign Minister’s official Delhi visit with full honors; Afghanistan reframed as “enemy’s enemy”​

• China Rapprochement: Reopened Kailash–Mansarovar pilgrimage, restored visas, direct flights, resumed hydrological data sharing; PM met Chinese President at SCO summit 2025 in Tianjin​

• Neighbourhood Partnerships: USD 450 million aid to Sri Lanka post-Cyclone Ditwah reinforced India’s reputation as reliable first responder​

• Key Challenge – Energy & Climate: Oil price drops threaten renewable energy push; India’s USD billion investments at risk​

• Domestic-International Linkage: Trump’s visa policies impacting tech sector; oil volatility affecting inflation and energy goals​

• Strategic Implications: Shattered assumption of US predictability; forced fundamental re-evaluation of multipolar engagement strategy​

2. MINISTRY OF PETROLEUM & NATURAL GAS – YEAR END REVIEW 2025

Context:
India’s energy security strategy combines infrastructure expansion, cleaner fuels, and regulatory reforms. However, 85% crude import dependence and geopolitical vulnerabilities remain critical challenges for economic stability.​

About the News:

• Clean Cooking Success: Pradhan Mantri Ujjwala Yojana (PMUY) reached ~10.35 crore beneficiaries; 25 lakh new connections approved for FY 2025-26; Rs 300/cylinder subsidy boosted average refill consumption to ~4.85 per annum​

• Infrastructure Expansion: >90,000 retail outlets digitized; >8,400 CNG stations established; ~1.57 crore PNG connections; 25,429 km gas pipeline operational with 10,459 km under execution​

• Clean Mobility: >27,400 EV charging stations; 4,000 Energy Stations planned as multi-fuel hubs (1,064 operational)​

• Gas Grid Tariff Reform: Unified Pipeline Tariff regime (“One Nation, One Grid, One Tariff”) covers ~90% of pipelines, reducing regional cost disparities​

• Biofuels & SAF: Ethanol blending reached 19.24% in ESY 2024-25; CBG blending mandated from FY 2025-26; SAF roadmap set with 1-5% blending targets from 2027​

• Upstream Reforms: Oilfields (Regulation & Development) Amendment Act 2025 and new Petroleum & Natural Gas Rules enacted; under HELP 2016, blocks covering 3.78 lakh sq km awarded with USD 4.36 billion committed investments​

• Strategic Petroleum Reserves: Phase-II facilities advanced at Visakhapatnam, Mangaluru, Padur (Andhra Pradesh, Karnataka); Phase II includes Chandikhol (Odisha) and Padur expansion​

• Critical Challenge – Import Dependence: 85% crude imports; 50% natural gas imports; domestic crude production fell to 28.7 MT in FY25 (from 29.4 MT in FY24) creating critical vulnerability to global shocks​

• Geopolitical Risks: Russian oil purchases led to EU sanctions on Nayara Energy; 25% US tariff imposed; majority imports from volatile Middle East transiting through Strait of Hormuz chokepoint​

• Critical Minerals Crisis: 100% import-dependent for 10 critical minerals (lithium, cobalt, nickel); China controls 90% rare earth, 95% graphite, 79% refined cobalt processing​

• SPR Shortfall: Combined oil storage sustains only 77 days (13 days short of IEA’s 90-day mandate); India’s 39 million barrels far below China’s 550 million, Japan’s 528 million​

3. SUSPENSION OF SENTENCE IN CHILD PROTECTION CASES

Context:
Supreme Court stayed Delhi High Court’s order suspending life sentence of Kuldeep Singh Sengar (former BJP MLA) in Unnao rape case, raising critical questions on Section 430 BNS, POCSO Act interpretation, and judicial discretion in heinous crimes.​

About the News:

• Case Background: MLA convicted and sentenced to life imprisonment for rape of minor; also convicted for custodial death of victim’s father​

• Legal Framework: Under Section 430 BNS 2023, convicts can seek suspension of sentence, but for serious offenses/life imprisonment, suspension is exception, not norm; discretionary judicial power​

• Delhi HC Rationale: Suspended sentence on grounds that MLA is not “public servant” under IPC Section 21, thus aggravated offense under Section 5(c) POCSO Act 2012 was prima facie not made out; considered 7+ years incarceration​

• Key Precedent – Kashmira Singh vs. State of Punjab (1977): SC held that prolonged incarceration may result in injustice if conviction/sentence is later modified​

• Shivani Tyagi Case (2024): SC clarified that for serious offences like life imprisonment, suspension is rare and requires objective assessment of crime’s nature, gravity, and manner of commission​

• Chhotelal Yadav vs. State of Jharkhand (2025): Suspension in life sentence justified only when there is palpable or gross error in trial court judgment indicating possible acquittal​

• Jamna Lal vs. State of Rajasthan (2025): SC set aside suspension of 20-year POCSO sentence, holding that trial court’s finding that victim was minor cannot be lightly unsettled at suspension stage​

• Controversial Interpretation Issue: Delhi HC adopted narrow interpretation relying on IPC definition of “public servant” (judges, military, arbitrators, but excluding legislators)​

• Key Distinction: Only IPC defines “public servant”; POCSO Act 2012 does not define it; Prevention of Corruption Act 1988 defines as “any person performing a public duty”​

• Purposive Interpretation Required: Precedents like Attorney General vs. Satish (2021) and Independent Thought vs. Union of India (2017) affirm that child protection laws must be interpreted purposively, not narrowly, to fulfill legislative intent​

4. INDIA AI MISSION AND EMERGING AI ECOSYSTEM

Context:
India is expanding its AI ecosystem through IndiaAI Mission with ₹10,300 crore outlay and 38,000 GPUs deployed, positioning India as global leader with “Making AI in India, Making AI Work for India” vision.​

About the News:

• IndiaAI Mission – Implementation: Independent business division under Ministry of Electronics and Information Technology (MeitY) building comprehensive AI ecosystem promoting innovation, startups, data access, and responsible AI governance​

• Objectives: Build sovereign indigenous AI capability; promote inclusive and affordable AI access; reduce foreign platform dependence; use AI as growth engine for social-economic development​

• Key Components: 38,000 GPUs expansion for high-end computing; BharatGen AI (foundation models); AIKosh for national datasets; support to AI startups and India-specific applications​

• India’s AI Scale & Position: Tech sector revenues projected to exceed USD 280 billion; employs 6+ million people; ranked 3rd globally in AI competitiveness (Stanford 2025 Global AI Vibrancy Tool)​

• Innovation Base: 1,800+ Global Capability Centres; 500+ AI-focused centres; 1.8 lakh startups; nearly 89% of last year’s startups integrated AI into products/services​

• Enterprise Adoption: 87% of enterprises actively using AI solutions; India scores 2.45/4 on NASSCOM AI Adoption Index; 26% companies achieved AI maturity at scale​

• Sectoral Strength: AI adoption strongest in industrial & automotive, retail, BFSI, healthcare (~60% of AI value)​

• Government Initiatives: BharatGen AI (multimodal multilingual LLM supporting 22 Indian languages); Sarvam AI (Sovereign LLM Ecosystem); Bhashini (20+ Indian language translation/speech); AI Competency Framework​

• India AI Impact Summit 2026 (February): Flagship initiatives include AI Pitch Fest (UDAAN) with focus on women-led enterprises; Global Innovation Challenges; Research Symposium; AI Expo (300+ exhibitors from India, 30+ countries)​

• Ministry Involvement: Ministry of Electronics and Information Technology spearheading initiative with focus on research, innovation, and responsible AI governance​

5. ISRAEL’S RECOGNITION OF SOMALILAND

Context:
Israel formally recognized Somaliland (de facto independent since 1991, but lacking international recognition) as independent state, marking first country recognition with implications for regional stability, maritime security, and great power competition in Horn of Africa.​

About the News:

• Recognition Claim: Israel cited Abraham Accords spirit as framework for normalizing relations with non-traditional partners; seeks strategic forward base​

• Somaliland Background: Previously British Somaliland Protectorate (became colony 1920); gained independence 1960, voluntarily merged with Italian Somaliland to form Somalia​

• Independence Declaration: Declared independence 1991 after fall of Siad Barre’s regime following large-scale human rights abuses against Isaaq clan (dominant in Somaliland)​

• De Facto Autonomy: Operates independently with own currency, passports, police, capital (Hargeisa), but lacked international recognition until Israeli move​

• Strategic Location – Horn of Africa: Eastern Africa peninsula extending into Gulf of Aden, Somali Sea, Guardafui Channel; comprises Djibouti, Eritrea, Ethiopia, Somalia​

• Critical Shipping Routes: Overlooks Bab el-Mandeb Strait near Djibouti-Eritrea, linking Red Sea to Indian Ocean (critical for global trade)​

• Israel’s Strategic Advantage: Forward base for intelligence, logistics, counter-Houthi operations; potential location for Palestinian resettlement discussions​

• UAE Military Presence: UAE operates military port and airstrip in Berbera (Somaliland’s port city), indicating regional power competition​

• African Union Context: Implications for AU support and stabilization missions in Somalia and broader Horn of Africa stability​

6. INDIA SIGNS MAJOR DEFENCE CONTRACTS WORTH ₹4,666 CRORE

Context:
India signed defence procurement contracts worth ₹4,666 crore for modern infantry weapons and advanced naval torpedoes, reinforcing operational preparedness, indigenous manufacturing, and Aatmanirbhar Bharat vision.​

About the News:

• Close Quarter Battle Carbines: Over 4.25 lakh carbines procured for Indian Army and Navy from Bharat Forge Ltd & PLR Systems Pvt Ltd (India) to replace legacy rifles​

• Carbine Features: Compact design, high rate of fire, enhanced lethality for urban and confined-space combat; boosts effectiveness in complex warfare scenarios​

• Indigenous Manufacturing: Strengthens Aatmanirbhar Bharat and Make in India initiatives; promotes MSME participation in defence supply chains​

• Naval Torpedoes: 48 heavyweight torpedoes procured from WASS Submarine Systems (Italy) for Kalvari-class (Project-75) submarines with deliveries scheduled 2028-2030​

• Kalvari-Class Submarines: India-built Scorpène-class diesel-electric attack submarines strengthening underwater warfare, stealth surveillance, sea-denial capabilities in Indian Ocean Region​

• FY 2025-26 Capital Acquisitions: Ministry of Defence signed capital acquisition contracts worth ₹1.82 lakh crore reflecting sustained focus on defence modernization and indigenization​

• Strategic Significance: Enhances underwater warfare capability; strengthens submarine fleet operational readiness against regional maritime threats​

• Manufacturing Emphasis: Contract structure emphasizes domestic manufacturing and technology transfer over pure imports​

7. HAL LAUNCHES DHRUV NG HELICOPTER FOR CIVIL AVIATION

Context:
Hindustan Aeronautics Limited conducted maiden flight of Dhruv-New Generation (NG) helicopter in Bengaluru, marking formal push into civil and export helicopter markets with cost-effective indigenous alternative to imported twin-engine helicopters.​

About the News:

• Positioning: Cost-effective indigenous alternative to imported twin-engine helicopters with lifecycle support spanning manufacturing, maintenance, upgrades​

• Logistics & Support: HAL plans higher fleet availability through integrated support models such as Power-By-Hour and performance-based logistics arrangements​

• Design Specifications: 5.5-tonne, indigenously developed, twin-engine, multi-role helicopter capable of day-night, all-weather operations​

• Platform Heritage: Derived from Dhruv ALH Mk-III civil platform with proven operational history​

• Engine Technology: Powered by indigenous Shakti engines with Cat-A performance and AS4-compliant systems suitable for demanding operations​

• Certification Achievements: HAL secured Directorate General of Civil Aviation (DGCA) type certification for indigenous manufacture of Shakti civil engine (national first); restricted certification from European Union Aviation Safety Agency (EASA) in 2023​

• Operational Capabilities: Suitable for offshore operations of Oil and Natural Gas Corporation (ONGC), maritime patrol, and civil transportation​

• Proven Track Record: Built on Dhruv platform with over 3.75 lakh flying hours; demonstrates reliability for commercial operations​

• Significance – Aatmanirbhar Bharat: Strengthens indigenous civil helicopter ecosystem; reduces import dependence; anchors India’s aviation manufacturing capabilities​

• Market Opportunity: Civil and export helicopter markets offer significant revenue potential; positions India as regional aviation hub​

8. SUPREME COURT STAYS ARAVALLI RULING – MINING AND ECOLOGY PROTECTION

Context:
Supreme Court temporarily stayed its November 20 judgment supporting government expert panel’s Aravalli definition (limiting range to hills 100m+ high, groups within 500m), recognizing need for high-level expert committee to reassess ecological risks of mining in newly marked areas.​

About the News:

• November Judgment Reversal: SC accepted committee recommendations defining Aravalli by elevation-linked criteria limiting range to hills 100m+ high and groups of hills within 500m​

• Exclusion Impact: Definition excluded over 90% of Aravallis from mining regulation purposes, sparking public concerns over ecological damage​

• Current Order (December 30, 2025): SC stayed judgment, suggesting high-level expert committee needed to study whether “sustainable” or “regulated” mining in newly marked areas could harm environment​

• Chief Justice Directive: CJI Surya Kant said independent expert opinions must be taken after consulting all concerned parties​

• Government Solicitor Response: Tushar Mehta argued court’s earlier acceptance of committee recommendations had been misunderstood and wrongly presented in public discourse​

• Management Plan Directive: SC ordered Environment Ministry through Indian Council of Forestry Research and Education (ICFRE) to prepare “Management Plan for Sustainable Mining”​

• Geographic Scope: Aravalli range spans Delhi, Haryana, Rajasthan, and Gujarat – major metropolitan and industrial regions​

• Ban vs. Regulation Approach: SC rejected complete mining ban, noting that total bans often fuel illegal mining mafias and unregulated extraction; adopted calibrated approach​

• Suo Motu Case Status: Listed for further hearing on January 21, indicating ongoing court oversight​

• Key Concern – Ecological Damage: Court concerned about unregulated mining in technically excluded areas affecting water bodies, tiger corridors, aquifer recharge areas​

9. DAC APPROVES DEFENCE PURCHASES WORTH ₹79,000 CRORE

Context:
Defence Acquisition Council (DAC) chaired by Defence Minister Rajnath Singh approved capital defence purchases worth ~₹79,000 crore for Army, Navy, and Air Force, reflecting sustained focus on defence modernization and indigenous capabilities.​

About the News:

• Army Systems Approved: Loiter Munition Systems for Artillery units; Low Level Light Weight Radars; Long Range Guided Rocket Ammunition for Pinaka MLRS; Integrated Drone Detection and Interdiction System (IDD&IS) Mk-II​

• High Altitude Long Endurance RPAS (HALE): Provides long-duration surveillance and intelligence gathering, strengthening awareness and monitoring across Indian Ocean Region​

• Air Force Acquisitions: Automatic Take-off and Landing Recording System; Astra Mk-II beyond-visual-range air-to-air missiles; Full Mission Simulators; SPICE-1000 long-range guidance kits​

• Strategic Significance: Addresses gaps in precision-guided munitions, air defense, and surveillance capabilities across three services​

• Aatmanirbhar Bharat Focus: Emphasis on indigenous development and integration of domestic defence systems with operational platforms​

• Operational Readiness: Systems designed to enhance joint-force effectiveness and modernize armed forces across conventional and emerging warfare domains​

• Budget Impact – FY 2025-26: Capital acquisition contracts totaling ₹1.82 lakh crore signed, indicating sustained defence investment trajectory​

• Chair Authority: DAC chaired by Defence Minister, highest defence procurement authority reflecting government-level strategic prioritization​

10. PINAKA LONG RANGE GUIDED ROCKET (LRGR-120) – MAIDEN FLIGHT TEST

Context:
DRDO successfully conducted maiden flight test of Pinaka Long Range Guided Rocket (LRGR-120) on December 29, 2025 at Integrated Test Range, Chandipur, achieving maximum range of 120 km with high-precision target impact, validating guidance and maneuver capabilities.​

About the News:

• Test Details: Maiden flight on December 29, 2025 at ITR Chandipur; achieved maximum range of 120 km with “textbook precision” target impact​

• System Compatibility: Launched from in-service Pinaka launcher, proving compatibility across Pinaka variants and enhancing operational flexibility​

• Guidance & Navigation: Likely INS-GPS based guidance with mid-course corrections and terminal accuracy enhancements for precision strike​

• Development Ecosystem: Developed by ARDE with support from HEMRL, DRDL, RCI; trial coordinated by ITR & Proof & Experimental Establishment​

• Platform Evolution: Pinaka Mk-I (~40 km, unguided); Pinaka Mk-II/Guided (~70-90 km); Pinaka LRGR-120 (120 km, precision-guided long-range strike)​

• Launcher Mounting: Fired from existing Pinaka launcher enabling multi-range munitions from single platform; high-mobility launch vehicles provide shoot-and-scoot capability​

• Strategic Advantages: Extended battlefield reach, higher standoff distance, improved survivability, quick deployment, reduced logistics footprint​

• Capability Gap Bridging: Bridges gap between tube artillery and tactical ballistic missiles for counter-battery fire and deep-area targeting​

• Comparative Systems: Comparable to HIMARS/MLRS (US), Lynx (Israel), Tornado-S (Russia) but cost-effective and indigenously developed​

• Future Enhancement Potential: Integration with network-centric warfare, ISR-targeting chains, UAV-based cueing; potential for higher-range variants and swarming salvo doctrines​

• Export Potential: Strong candidate for defence diplomacy and friendly foreign militaries; strengthens Aatmanirbhar Bharat in defence munitions​

11. INSV KAUNDINYA MAIDEN VOYAGE – MARITIME HERITAGE

Context:
INSV Kaundinya, an indigenously built traditional stitched sailing vessel of Indian Navy, embarked on maiden overseas voyage from Porbandar (Gujarat) to Muscat (Oman) on December 29, 2025, reviving India-Oman maritime heritage and retracing ancient Arabian Sea trade routes.​

About the News:

• Expedition Overview: From Porbandar to Muscat; aim to revive and celebrate India-Oman maritime heritage and ancient trade-cultural routes across Arabian Sea​

• Voyage Significance: Underscores maritime diplomacy, cultural connect, and heritage preservation as strategic pillars of India’s naval outreach​

• Stitched Vessel Tradition: Traditional shipbuilding method where planks stitched together with natural fiber cords (not metal fasteners); historically used along Gujarat, Konkan, Kerala coasts​

• Civilizational Context: Reflects India’s pre-modern maritime trade networks (spices, horses, dates, textiles, pearls); echoes Arab chroniclers, Sangam texts, maritime archaeology links (Lothal, Sohar)​

• Crew Composition: 4 officers + 13 sailors; demonstrates Indian naval capability and seamanship traditions​

• Design Heritage: Indigenously constructed using traditional stitched shipbuilding techniques and natural materials; based on historical and iconographic evidence​

• Living Laboratory: Acts as “living laboratory” of maritime history, linking craft traditions with contemporary naval heritage initiatives​

• Maritime Diplomacy Impact: Reinforces India-Oman strategic partnership through heritage-led engagement; deepens people-to-people ties and shared oceanic identity​

• Geopolitical Context: Complements SAGAR vision, Indian Navy outreach, and Western Indian Ocean engagement strategy​

• Historical Linkages: Gujarat-Oman ties via Kutch, Mandvi, Porbandar trading communities; shared maritime routes across Gulf of Oman for centuries; Oman hosts largest Indian expatriate community in West Asia​

12. INDIA-NEW ZEALAND FREE TRADE AGREEMENT

Context:
India and New Zealand concluded Free Trade Agreement negotiations in December 2025 (announced December 22), representing one of India’s fastest-concluded FTAs at 9 months, providing zero-duty market access for all Indian exports and USD 20 billion FDI commitment over 15 years.​

About the News:

• Agreement Timeline: Negotiations announced March 2025; concluded December 2025; fastest-finalized FTA by India (9 months vs. typical 2-3 years)​

• New Zealand’s Commitments: Zero-duty access on 100% of Indian exports (1,379 tariff lines); eliminates current 2.2% average tariff; covers textiles, leather, gems, jewelry, engineering goods​

• India’s Reciprocal Commitment: Liberalize 95% of NZ exports by value; 57% become duty-free from day one; immediate duty elimination on 30% of tariff lines (wool, wooden logs, coking coal, sheep meat)​

• Sensitive Sectors Protected: India protects dairy and agriculture sectors from direct competition, balancing trade liberalization with domestic industry protection​

• FDI Commitment – USD 20 Billion: Over 15 years; focuses on infrastructure, renewable energy, agri-technology, skill mobility; oversight committee can suspend benefits if targets not met​

• Services Trade: Liberalized across 118 sectors; post-study work visa for STEM graduates; student mobility provisions strengthen human capital exchange​

• Bilateral Trade Growth: Current trade USD 2.4 billion (2024); expected to reach USD 5 billion within five years (2x growth)​

• Investment Oversight: Unlike EU FTA (3-year grace period), NZ agreement includes no grace period for FDI targets, making accountability stronger​

• Strategic Gateway: Provides access to wider Oceania and Pacific Island markets; enhances India’s regional trade diversification​

• MSME Cooperation: Institutional linkages help small businesses access trade-related information and global markets​​

13. IIP GROWTH AT 25-MONTH HIGH OF 6.7% – MANUFACTURING SURGE

Context:
India’s Index of Industrial Production (IIP) reached 25-month high growth of 6.7% in November 2025, driven by manufacturing (8% growth) and capital goods (10.4% growth), reflecting strong festive demand, GST cuts, and restocking after seasonal fluctuations.​

About the News:

• IIP Growth Rate: November 2025 achieved 6.7% growth – highest in 25 months (best performance since October 2023)​

• Manufacturing Sector: Showed 8% growth indicating strong production momentum across industrial units; led overall IIP performance​

• Capital Goods Expansion: 10.4% growth reflecting strong investment demand, capital formation, and industrial infrastructure development​

• Construction & Infrastructure: 12.1% growth demonstrating activity in real estate, urban development, and infrastructure projects​

• Intermediate Goods: 7.3% growth indicating sustained demand across mid-stage production chains​

• Key Growth Drivers: Festive season strong demand; GST cut benefits; post-festive restocking dynamics; positive consumer sentiment​

• Month-on-Month Comparison: October 2025 IIP at 1.8%; jumped to 8% in November – significant acceleration indicating demand momentum​

• Two-Month Average: IIP growth averaged 3.6% between October-November 2025 suggesting sustaining trend despite seasonal volatility​

• Economic Signal: Reflects investment confidence, manufacturing capacity utilization, and demand recovery post-festive period​

• Future Trend: Demonstrates India’s manufacturing resilience and capital goods sector strength heading into FY 2025-26 growth trajectory​

14. RBI BANKING REPORT – NPA DECLINE AND FINANCIAL STABILITY

Context:
RBI’s latest banking sector report shows gross non-performing assets (NPAs) declined to 2.1% in September 2025 from 2.2% in March 2025, and net NPAs at 0.5% remain stable, reflecting improved asset quality and bank sector resilience despite economic challenges.​

About the News:

• Gross NPA Decline: Fell to 2.1% (September 2025) from 2.2% (March 2025); represents 42.8% decline in NPAs during FY 2024-25 driven by recoveries of bad loans​

• Net NPA Stability: Remained at 0.5% in September 2025, unchanged from March 2025; indicates net asset quality after provisions well-maintained​

• Historical Improvement: Gross NPAs at 2.1% represents minimum level in recent years; previously 2% March 2025, fell to 2.2% earlier periods​

• Provision Coverage: Banks maintained robust provisions to cover NPAs; net NPA calculations show conservative approach to bad loan provisioning​

• RBI Stress Test Findings: Banks’ gross NPAs may improve to 1.9% by FY27 from 2.1% in September 2025 under baseline scenario; indicates continued sector strengthening​

• Recovery Momentum: Strong recoveries of defaulted loans through SARFAESI, DRT, and IBC processes boosted asset quality improvement​

• Five-Year Trend: Bank sector NPA ratios declined from very high levels (~5%+ during 2015-17 NPA crisis) to current 2.1%, demonstrating sustained cleanup​

• Advances Growth: Bank advances continuing growth trajectory; credit growth sustaining economic expansion while maintaining credit quality standards​

• Capital Adequacy: Banks maintaining robust capital buffers well above regulatory minima, enabling lending expansion and risk absorption​

• Sector Resilience: Despite macro challenges (inflation, geopolitical tensions, global uncertainty), banking sector demonstrates healthy fundamentals and deposit mobilization

PIB

THE HINDU

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