Do it yourself

Recently, NITI Aayog published a working paper titled “Towards India’s Tax Transformation: Decriminalization and Trust-Based Governance”. The paper is a follow up to the recent enactment of the Income Tax At 2025. It is an extremely important step for making the tax governance structure trust based.

The paper seeks to provide a comprehensive and critical analysis of the criminal provisions within the Income-tax Act, 2025, mapping the present extent of criminalization, documenting omissions and modifications, and recommending a trust-based regulatory transition for India’s direct tax regime.

Recognizing the evolving policy landscape which stresses ease of business, citizen-centricity, and the need to move away from “fear-based” enforcement, the paper evaluates each criminal provision through a principled criminal law-making framework rooted in jurisprudence, comparative regulatory best practices, and provides recommendations. Its central premise is that decriminalization, rationalization of punishments, and emphasis on proportionate sanctions will collectively align India’s income-tax law with the vision of a fair, accessible, and modern compliance regime.

Summary of the working paper

·         The paper argues that India’s direct tax regime historically over-criminalized even minor procedural defaults. The Income Tax Act 2025 reduces criminalization but still criminalizes 35 acts across 13 provisions.

·         Applying a principle based criminal law creation framework (harm, necessity, proportionality, intent, clarity), it proposes further decriminalization, removal of mandatory jail terms, restoring burden of proof to prosecution, clearer drafting, and periodic review.

·         It recommends prosecution should be reserved only for willful / fraudulent / significant harm behaviors. All else must be a civil penalty domain.

Strong points

The paper correctly identifies the problem of reverse burden of proof in ITA 2025.

Appropriately flags the disproportionate penalty design relative to the BNS

Correct categorization: obstruction / evasion / payment failure / public servant breach

For the first time a government working paper explicitly shifts “normative anchor” from “enforcement” to “trust”. To this extent there is a paradigm shift.

Gaps

Economic modelling absent: The paper doesn’t quantify fiscal impact of decriminalization vs retaining criminal penalty for 6 core offences. This would be a critical input for developing a policy consensus amongst various organs of the policy ecosystem.

Operational tradeoffs not analyzed: CBDT has historically used criminal threat to solve compliance capacity problem — paper assumes that trust-based regime reduces admin cost but does not model enforcement substitution cost.

Digital rights section inadequate: The section on access to passwords / virtual digital space rightly flags constitutional risk, but it does not propose a constitutional safe harbour architecture. Merely stating risk is not sufficient policy, in my view.

No sunset architecture: The Paper proposes periodic legislative review but does not create an actually enforceable review mechanism (eg automatic expiry unless reviewed).

No tiering by taxpayer class: The compliance behavior of various entities - MSME, gig, self-employed, salaried - is structurally different. A single criminalization framework may not be optimal.

No distinction between pre-assessment vs post-assessment domain: Anecdotally, most criminal threats in India are misused in pre-assessment stage. That is where maximum fear is. Paper doesn’t solve this location of harm.

Suggestions

Policy Design Enhancements

·         Create a mandatory 3 tier compliance framework

Tier 1 → civil / monetary

Tier 2 → administrative sanctions (suspension of benefits, loss of fast track processing eligibility)

Tier 3 → criminal only for fraud / fabrication / concealment > threshold

·         Make fraud the only anchor for criminal prosecution — remove “willful” / “knowledge” from the criminal domain entirely.

·         Introduce statutory requirement of “loss to revenue proven / or reasonably demonstrable” as condition precedent for criminal prosecution.

·         Introduce decriminalization sunset — every 5 years offences auto lapse unless reconfirmed.

·         Create statutory economic impact statements for introduction or retention of each criminal offence (OECD style).

·         Shift burden of proof back to prosecution & codify it explicitly.

Digital Rights

·         Separate digital compelled access into national security statute not tax statute - create clear bright line: no compelled password disclosure for tax.

·         Any digital compelled access must require judicial pre-authorisation (not officer discretion).

Conclusion

This is one of the most important tax policy drafting direction papers in the last 20 years. However, there is a risk that this remains normative but NOT enforceable reform. If NITI fixes some missing parts and layers, especially in fiscal impact modelling and behavioral economics, this could become an illustrative reform for most emerging market governments.

In the past few months, I have observed the following trends in my socio-economic milieu (urban middle class). Research analysts might like to wait a little more to find investment themes in these trends. However, I do feel that these trends are strong and have the potential to capture a prominent space in the overall Indian consumption basket; be a meaningful source of revenue for the government; emerge as a notable source of incremental employment and pave the way for a deeper integration of the Indian economy into the global economy.

Concert economy

My daughters have attended three live performances of Indian artists, in India, in the past two months. Previously it was not more than one in a year, and that often overseas or foreign performers.

The global live music market, encompassing ticket sales, sponsorships, merchandising, and related revenues from concerts, festivals, and performances, is estimated at USD 38.58 billion in 2025. It is projected to grow 8-11% CAGR for the next 10 years.

The US, with an estimated market size of US$15bn (~39% market share) leads the live entertainment market. India's live music market is projected at USD 1.39 billion (₹11,600 crore) in 2025, up 15x from ~₹805 crore in 2024, but still much smaller than the peers like China, South Korea, Thailand etc. India represents ~3.6% of the global market. However, given the size of the Indian overall music market, the potential is huge. Some estimates forecast the Indian live performance market to grow at 17.6% CAGR for the next 10 year. This may also provide a much-needed boost to India’s lagging inbound tourism sector.

Carnival economy

Ganpati and Durga Puja (including Navratri and Ram Leela) have been very popular festivals in India for a long time. Marketers have exploited the popularity of these festivals to stimulate consumption demand. These festivals, at a bigger scale, are no longer limited to west India (Maharashtra & Gujarat) and East India (Bengal & Odisha), respectively. Several small towns across Uttar Pradesh (UP), Madhya Pradesh (MP), Bihar etc. now celebrate these festivals with the same fervor and scale. Lots of marketing campaigns are run around these events to boost sales of real estate, consumer durables, tourism packages, jewelry, etc.

Besides, Ganpati & Durga Puja, Kumbh Mela, Chath Puja and Kanwad Yatra, are some other religious events that have acquired the scale and popularity to attract marketers’ attention.

Valentine's Day has been popular amongst college going youth for the past many decades. In earlier years the market impact of Valentine's Day was mostly limited to greeting cards and roses. However, in the past few years, the festival has expanded its scope and coverage. It is now becoming a full week of festivities, encompassing a larger section of the population (households, corporates, retailers, students, and event managers).

What I noticed this year was that Halloween is fast becoming as popular with Indian masses, as Valentine's Day. Many tier two towns in India organized special Halloween events with great enthusiasm. Schools, colleges, clubs, corporates, housing societies in Varanasi, Patna, Bareilly, Hathras, Agra, Bhopal, Jabalpur, Jodhpur, Chandigarh etc. celebrated Halloween in the same spirit as Holi.

I expect, the day is not far, when some of these events (or a new one) evolve as global events, and become as popular as Rio Carnival, New York Halloween or ThanksGiving parade, London Notting Hill Carnival, Munich Oktoberfest and Spain’s Carnival of Santa Cruz de Tenerife.

Conclusion

India’s new economy is shifting from goods consumption → experience consumption. The Indian middle-class transitions from “stuff accumulation” to “memory accumulation”.

This is the same transition Korea did 2002-2018; China did 2008-2019; and Japan did 1978-1990. The price of time + boredom premium is rising. That is the real structural marker of middle-class maturity.

This also can become one of the biggest levers to revive inbound tourism.

·         Brazil > carnival tourism

·         Korea > K-pop tourism

·         US > live performance + sports tourism

India can build its version next — with cultural depth as a natural advantage.

The new economy of India will not come from factories alone. It will come from stages, festivals, stadiums and streets. India’s next export will be experiences. IPL and Kumbha Mela have successfully demonstrated the global potential.

Experience GDP (concerts, festivals, events, experiential travel) has three properties India urgently needs, i.e.,

·         high employment intensity

·         high tax buoyancy

·         culture export multipliers

This is where India can gain a sustainable comparative advantage. Not copy trade Korea, but build the India version.

For the past two weeks my message inbox has been flooded with messages highlighting that recently “Hindenburg Omen Signal”, which preceded the 2008 and 2020 stock market crashes, has been triggered and a stock market collapse may be imminent. There are several other technical and strategy reports cautioning investors against an apparent bubble in the Artificial Intelligence (AI) related stocks.

Hindenburg Omen Signal: The Hindenburg omen is a technical indicator designed to signal the increased likelihood of a stock market crash. It compares the percentage of new 52-week highs and new 52-week lows in stock prices to a preset reference percentage (typically 2.2%) to predict the increasing likelihood of a market crash. The indicator is said to be suitable for about 30 days out, though it's been a false alarm more often than not in the past decade. Four criteria must be met to signal a Hindenburg omen:

·         The daily number of new 52-week highs and 52-week lows in a stock market index exceeds a threshold amount (typically set at 2.2%).

·         The 52-week highs can't be more than twice the 52-week lows.

·         The stock market index is still in an uptrend. A 10-week moving average or the 50-day rate of change indicator is used for this.

·         The McClellan oscillator (MCO), a measure of the shift in market sentiment, is negative.

How to think about the new Hindenburg Omen narrative

A common problem with the popular market discourse is that every meme indicator that worked once… becomes religion forever.

Hindenburg Omen is just a market breadth anomaly flag that is used to indicate stress emergence — not crash certainty.

Historically, some major crashes were indeed preceded by such a signal. However, false signals have massively outnumbered true signals. The probability distribution is not deterministic. Actually, it is more of a trend change watchlist input — not a trading instruction.

The more important debate now is actually different

The more important debate in my view is “Are AI stocks a bubble or are they discounting the future correctly?”

AI is now the most consequential capital allocation variable in the world — influencing geopolitics, capex, energy security, employment, corporate strategy, national strategy.

But here is the inconvenient fact for India:

·         India has no pure-play AI company.

·         This is not our NVIDIA moment.

·         This is not our TSMC moment.

·         This is not our Google / Meta / Tesla moment.

Our listed exposure is basically:

IT services riding implementation side revenue + consulting banks / logistics / enterprises consuming AI to enhance productivity So in India the AI debate is limited to “IT attrition, pricing, margins”. That is not the real debate in global markets.

The core portfolio question:

In my view the correct frame of reference for Indian investors is – “If global AI bubble were to correct — does India outperform or not?

Indian investors therefore may be better evaluating:

·         October saw FII flows turn positive and several respected global strategists are talking India long duration bull. Is this early 2026 positioning?

·         Have Indian valuations reached the band where global capital actually prefers to hide in India if US/AI corrects?

·         If there is a global risk off — does India fall with them and rebound faster (like 2008-09)… or does India do better in BOTH the fall and the rise?

In my view, instead of predicting market crashes, and consequently taking rash decisions, we would be better off by building antifragile portfolio architecture. For example-

·         Distinguishing between narrative premium vs earnings premium

·         Reducing leverage dependence for performance

·         Moving portfolio factor weights slightly more toward compounding engines, less to short-term momentum chasers

·         Using corrections to accumulate structural compounding themes, e.g., manufacturing formalization, infra development, energy security & efficiency, domestic financial deepening and up-trading in consumption.

Conclusion

Hindenburg Omen is useful… not because it predicts a crash — but because it forces you to re-test the strength of your portfolio design under adverse breadth conditions.

It is not important to forecast whether India will underperform or outperform the global markets. The important thing is to not panic trade technical omen memes — and instead use signals like this to calmly strengthen the probability of multi-year compounding.

A few months ago, two reputable Indian corporate leaders opined that Indian youth should work harder and longer. Their opinion triggered an intense debate on social media, about the need for work-life balance and how Indian businesses neglect this important aspect of social-economic development.

In this context, it is pertinent to note the outcome of the latest “The Time Use Survey (TUS) 2024, conducted by the National Statistical Office (NSO)”. The survey highlights that these corporate leaders were speaking from their vast experience, and the critics are perhaps oblivious of the ground realities.

The Time Use Survey (TUS) 2024 provides a detailed picture of how Indians allocate their 24 hours among different types of activities. The primary objective of the survey is to measure unpaid work, gender participation, and time distribution between paid, unpaid, and personal activities to make an informed assessment of labour participation, care work, and alignment with sustainable development goals (SGD) of Gender Equality a Decent Work.

The key findings of the survey are listed below:

Average Daily Time Allocation (All Persons, 6+ years)

·         Personal care and self-maintenance: ~11 hours/day

·         Employment and related activities: ~3 hours/day (urban > rural)

·         Unpaid domestic and care work: ~4.5 hours/day

·         Learning, social, leisure, and community activities: ~5.5 hours/day

Gender Differentials

Men: Spend ~6 hours/day in paid work and only ~1 hour in unpaid household work.

Women: Spend ~1.5 hours/day in paid work and ~6.5 hours in unpaid domestic and care work.

Women’s contribution to unpaid work remains three to four times that of men.

Time spent in employment is higher in urban males; unpaid household work dominates female time use, particularly in rural areas.

Rural–Urban Patterns

Rural workers devote more time to primary and secondary activities like agriculture and livestock.

Urban individuals spend more time in education, paid employment, and social/leisure activities.

Time in unpaid household and care work is higher in rural areas due to limited infrastructure and service access.

Age-Wise Patterns

·         Children (6–14 years): Primarily engaged in learning and play.

·         Youth (15–29 years): More time on education and job search.

·         Adults (30–59 years): Highest participation in paid and unpaid work.

·         Elderly (60+ years): More time on personal care, social, and community activities.

There has been no material difference in the past five years (2019-2024) in the pattern of time spent on employment

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Unpaid Work and Care Economy

·         The unpaid work economy remains female-driven, accounting for nearly 80% of total unpaid care hours in India.

·         Recognition of this work is vital for valuing women’s economic contribution and designing gender-sensitive policies.

Comparisons with 2019 Time Use Survey

·         Slight increase in paid work time for both genders, especially in urban areas.

·         Unpaid work hours for women show marginal decline but remain substantial.

·         Use of digital and online activities increased, especially for education and entertainment.

·         Improved participation in community and volunteer work post-pandemic.

Some interesting findings of the survey are:

·         Male commuters (for employment related activities) in the age group 15–59 years, spent 77 minutes on average in a day in commuting compared to 67 minutes spent by their female counterparts.

·         Children in the age group 6–14 years, spent 61 minutes in extracurricular activities while participating in such activities. Younger participants in the age group 15–29 years spent 74 minutes in a day on an average in extracurricular activities.

·         About 14.8% male and 3.9% females in the age group 15–29 years participated in sports and exercise activities during a day spending 64 minutes and 46 minutes respectively on an average. Children aged 6–14 years participating in sports and exercise activities spent an average of 83 minutes and 68 minutes in rural and urban areas respectively.

·         87.4% of younger people in the age group 15–29 years in urban areas and 73.4% in rural areas reported to have used mass media in a day. They spent 126 minutes and 116 minutes respectively in using mass media.

·         People aged 6 years and above spent about 89 minutes in a day while taking care of their dependent adult household members. Male participants spent 85 minutes while female participants spent 91 minutes on an average in such caring activities.

·         Rural people aged 6 years and above, spent about 123 minutes in a day in socializing and communication compared to 110 minutes spent by their urban counterparts. Male participants spent 121 minutes in a day compared to 117 minutes spent by female participants.

·         About 71.6% of rural children and 68.8% of urban children aged 6–14 years reported to have participated in learning activities related to formal education in the reference day, spending about 312 minutes in a day in each of the categories. Younger participants (aged 15–29 years) in learning activities related to formal education spent around 308 minutes in a day on average.

·         76.3% females participated in activities of food and meals management and preparation, spending about 209 minutes in the day. Male participation in such activity was 6.2% spending about 87 minutes in a day.

·         Activities related to childcare and instruction for one's own household in the reference day were reported by 32.8% females and 17% males. Time spent by the participants in such activities was 136 minutes and 73 minutes for females and male respectively.

The global macro landscape remains in flux. A strange mix of structural deflationary forces is colliding with equally powerful inflationary pressures. Technology, demographics, geopolitics, and policy responses are all pulling in different directions — making this one of the most complex investing environments in decades.

I am not competent enough to decode where the current conditions are driving us. Nonetheless, I would like to share some random thoughts with the readers and seek their views on these.

Inflation vs Deflation: The great tug of war

At the structural level, Artificial Intelligence, aging demographics, and the rapid adoption of renewable energy are profoundly deflationary for the global economy.

·         AI is driving efficiency, collapsing cost structures, and displacing traditional labor models.

·         Demographics in most major economies — from China to Europe to Japan — are suppressing consumption growth and wage pressures.

·         Renewables are gradually reducing marginal energy costs.

Yet, short-term inflationary winds continue to blow.

·         Fiscal profligacy, especially in the US and large emerging economies, ensures that governments remain the biggest spenders.

·         Deglobalization and parochial geopolitics — from tariffs to tech embargoes — are reversing decades of supply-chain efficiency.

·         Rising defense spending, both in the West and the East, adds another layer of price rigidity.

Ironically, even AI — while deflationary in the long run — is pushing up energy prices in the short run, as data centers consume unprecedented power.

The result is a macro paradox: consumer inflation may stay moderate, but asset price inflation looks inevitable.

Japanification — slow growth, aging demographics, and low yields — already grips China and the EU. In contrast, the US remains the lone outlier, buoyed by fiscal stimulus and a technology cycle.

Gold: Monetary alchemy or bubble in waiting?

Gold remains the ultimate barometer of trust in fiat systems. As the world lives with near-permanent fiscal deficits, the case for gold as a hedge against monetary debasement remains compelling.

However, a curious distortion has emerged:

The total volume of paper and digital claims on gold — ETFs, futures, tokenized products — now vastly exceeds the quantity of physical gold available. This means that, in the event of a systemic rush for redemption, the notional market could implode under its own leverage.

While dedollarization and rising central bank purchases continue to support the short to mid-term case for physical gold, the near-term structure looks speculative. A bubble in gold positions cannot be ruled out, just because of over-financialization.

Bitcoin: The digital store of value narrative

Bitcoin’s journey from fringe curiosity to mainstream asset continues. Institutional acceptance is growing; sovereigns are experimenting with it as a reserve diversifier. Banks like J. P. Morgan Chase, which termed Bitcoin “fraud’ not long ago, have now embraced it. The key driver remains distrust in fiat money and political money printing.

Yet, the coming wave of official digital currencies (CBDCs) could complicate the landscape.

Governments will likely pitch their CBDCs as “stable digital cash,” competing for legitimacy and mindshare.

If Bitcoin manages to retain its decentralization ethos and scarcity narrative, it could coexist as the digital equivalent of gold — a hedge against monetary mismanagement rather than a transactional currency.​

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Bonds: The calm before a possible storm

Central banks across major economies have begun cutting rates again, signaling confidence that inflation is under control. Markets have bought into this narrative. However, no one seems positioned for a reversal — a renewed spike in inflation due to energy, wages, or geopolitics.

If inflation re-accelerates, the bond market could face a brutal adjustment. Duration-heavy portfolios, built on the assumption of declining yields, remain vulnerable.

The irony is that sovereigns need low yields to fund ever-rising deficits — and this need might override pure inflation management. That tension will define fixed income in the years ahead.​

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Equities: Between resilience and fragility

Global equities are not in bubble territory — though certain US pockets (AI, mega-cap tech) show unmistakable signs of exuberance.

The greater risk lies in a material correction in US markets, which could reverberate globally through portfolio rebalancing and risk aversion.

However, there’s a counterweight: if developed market central banks ease more aggressively than expected, it could unleash a wave of liquidity toward emerging markets. The result might be a sharp rerating of EM equities, particularly those offering growth and currency stability.

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The Big Picture

We are living through a multi-speed world:

·         The US remains inflation-tolerant and growth-driven.

·         China and Europe slide deeper into disinflation and demographic stagnation.

·         Emerging markets stand at the crossroads of opportunity and volatility.

·         Markets are oscillating between the two poles of fear (inflation) and faith (liquidity).

Navigating this phase will demand humility, optionality, and patience — and an acceptance that the next decade will likely reward flexibility over conviction.

Several readers have commented on my yesterday’s post (“USD, Gold, Crypto and a mountain of $38trn debt”). Some agree that the “debt manipulation” theory was far-fetched, others argued that I was underplaying the seriousness of America’s fiscal overhang. Both reactions are valid. My intent, however, was not to trivialize the US debt issue, but to put it in its proper context — and to focus attention on the much larger transitions now underway in the global financial order.

I would like to elaborate to convey my point in the right perspective.

The Debt Problem Is Real — but Not New

The US federal debt now stands around $38 trillion, or roughly 120% of GDP. That sounds alarming, but the ratio has hovered near that level for over a decade. The composition, though, has changed dramatically.

After the dotcom bust, debt piled up in corporate and household balance sheets. After Lehman, it migrated to banks. Post-Covid, it has firmly shifted to the sovereign. In essence, the debt hasn’t disappeared — it has just changed owners.

This doesn’t mean the US is immune to a confidence crisis. But it does mean that debt is a chronic structural feature of modern fiat economies — not an engineered plot to reset the system.

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1933, 1971 — and the temptation of simplistic parallels

Many commentators love to invoke 1933 or 1971 to suggest a looming “USD reset.”

But both those episodes happened in very different institutional and political contexts — gold standard rigidity, post-war reconstruction, and early Cold War dynamics.

Today’s world operates on a networked, digitalized, and politically fractured global economy. If history rhymes, it does so in free verse, not repetition.

The better historical analogy might not be 1933 or 1971, but the slow disintegration of older orders — Roman, British, Ottoman or Mughal — when economic dominance eroded gradually, not overnight.

What the real transition looks like

The true story of this decade isn’t gold manipulation or crypto suppression. It’s the slow-motion rebalancing of global power, as the post-WW2 order strains under its own contradictions:

·         Fiscal dominance is replacing monetary orthodoxy — politics increasingly dictates central bank balance sheets.

·         Fragmentation is replacing globalization — parallel payment systems (like China’s CIPS and India’s UPI stack) are nibbling at the dollar’s monopoly.

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Asset inflation remains the political lifeline of democracies — as long as homes, stocks, and jewellery rise in nominal value, grocery inflation can be tolerated.

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Digital money: Evolution, not Revolution

The tokenization of debt and the emergence of digital treasuries is definitely worth watching. But speculating that Crypto or stablecoins could “replace” outstanding treasuries may be a little far-fetched.

These aren’t part of a grand conspiracy to devalue debt — they are the next evolutionary stage of financial plumbing, blending liquidity, programmability, and regulatory control.

Think less “Nixon shock,” more “software upgrade.”

The real risk: A world without a coherent order

While investors debate gold and Bitcoin, the bigger risk is that the rules of the global system — trade, capital flows, reserve currency privileges — are eroding without a clear replacement.

This “interregnum” between the US-led order and an undefined multipolar system may prove far more destabilizing than any Fed balance sheet maneuver.

In such a world, volatility will not come from conspiracy or manipulation — it will come from institutional entropy.

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Investment implications: focus on what’s observable

Instead of gaming hypothetical resets, investors may be better served by tracking:

·         Real yields and the pace of balance-sheet normalization

·         Fiscal-monetary coordination trends in major economies

·         Shifts in global trade invoicing patterns (USD vs CNY vs others)

·         Political tolerance for inequality and asset inflation

The Takeaway

Markets thrive on stories, and conspiracy is a powerful story. But history suggests that disorder, not design, drives most turning points.

The bigger challenge ahead is navigating a world that’s losing its monetary anchor and political consensus at the same time.

The “debt conspiracy” may fade, but the era of permanent volatility is just beginning.