Modi’s A-Team Sets The Stage for An Encore in 2026

2025 belonged to a small army of five bureaucrats who helped salvage India's economy.

It was a year in which everything that could go wrong … did. A slowing economy was further hit by a 50% US tariff, an armed conflict with Pakistan, and China's cold shoulder.It was also the year in which many things that could be set right…were. Income and consumption tax cuts, monetary easing, legislative reforms, trade pacts, deregulation, and delicate diplomacy.

With its back against the wall, Prime Minister Narendra Modi's government was forced to awaken from its post-pandemic-boom complacency. After 2024's underwhelming national mandate, a few state election wins also seem to have helped Modi find his reform feet.And so, his A-team went to work.

Reserve Bank of India Governor Sanjay Malhotra hit the ground running at Mumbai's Mint Street by slashing interest rates, restoring liquidity and easing banking norms. His explicit pro-growth agenda combined with a non-dogmatic regulatory approach has breathed some fresh air into a sometimes stodgy central bank. Malhotra ends the year with mega foreign investments in local banks, but has yet to achieve more effective transmission of lower rates.Following him from the federal finance ministry in Delhi was Tuhin Kanta Pandey, whose primary task as chairperson of SEBI has been to return the markets regulator to its old ways — a more amiable, bureaucratic-style work culture after his predecessor ruffled feathers with her private-sector-style assertiveness and micromanagement. He's also reduced the frequency of regulatory changes but not enough, one might say — I've counted at least five amendments to mutual fund regulations in 2025.

Meanwhile in Delhi, Cabinet Secretary TV Somanathan, who is credited with holding the line on fiscal discipline, has spent the year on a deregulation mission. He's driving ease-of-doing-business reforms, especially with state governments, such as decriminalization of offenses, fewer licensing requirements, land use changes and more flexible labor rules. It's gotten off to a promising start — 16 state governments have implemented 38 reforms in the year, according to an Axis Bank report in November.

At NITI Aayog, the government's policy think tank, Rajiv Gauba has an expansive mandate ranging from employment generation to regulatory reform. The former cabinet secretary made a start by advising the withdrawal of dozens of Quality Control Orders that have often worked as non-tariff barriers to trade, and protected select domestic manufacturers from import competition. Reportedly, he's also been instrumental in pushing through the new labor codes. Next on the agenda seems to be cutting red tape for small businesses.

Finally, there's Shaktikanta Das, who moved last year from central bank chief to Principal Secretary–2 to the prime minister. Das works behind the scenes, so there's no stated public agenda. But he's emerged as the chief architect of a broader economic policy framework that covers areas from India–US trade negotiations to rare earth supplies and shipbuilding incentives, Debjit Chakraborty, Bloomberg's Delhi bureau chief, tells me.

Modi's penchant for reliance on a small group of trusted bureaucrats is not new. But two things are somewhat different with this lot, as Chakraborty, economists and policy experts describe it. It's a mix of seasoned, old guard and young(er) blood (Das is 68, Malhotra is 57). Also, the lived experience of top bureaucrats is very different today than it was in previous generations. They are open to challenging the status quo and see themselves less as doers and more as enablers, as one expert says.So, will this reform intensity continue in 2026?There's definitely a need for it. Of the 30 pending reforms tracked by the US-based Center for Strategic and International Studies, only one is complete and one is partially complete, according to Senior Adviser Richard Rossow.

I fear that this year, with three high-stakes state elections, Modi will be focused on consolidating his rule at all costs. That eliminates any scope for big-ticket items like agriculture reform. Any change involving a budget hit has only a slim chance after last year's tax cuts, continuing free grain supplies to 800 million people, and mounting state election freebies. But the prospects seem bright for politically uncontroversial, low-expenditure yet enduring stuff such as deregulation — also painstaking work that takes years to produce results.

Chakraborty is more hopeful that the reform work will sustain. Three terms in, Modi has demonstrated his political strength; now he must prove his mettle as an economic reformer, he said. What's your bet?

The world's 500 richest people added a record $2.2 trillion to their collective fortunes in 2025.

The dollar ended 2025 with the sharpest annual retreat in eight years and investors say more declines are coming.

President Donald Trump delayed tariff increases on upholstered furniture, kitchen cabinets and vanities.

China has become one of the world's fastest-rising economies in terms of innovative capacity, President Xi Jinping said in a New Year's Eve speech.

India's economy remains "robust and resilient" said the RBI Governor even as he vowed buffers against global volatility.

Source: Bloomberg Europe