Will it cut interest rates or not? That will be a key question when the Reserve Bank of India’s monetary policy committee meets next in December. Last time around, the MPC left the repo rate unchanged at 6.50 per cent, but chose to change its stance to neutral. That had sent signals that the central bank was perhaps positioning itself to start a rate cut cycle, even if shallow, in December. But, a resurgence in inflation may have thrown a spanner in the works.

The US Federal Reserve on November 7 cut its key interest rate by 25 basis points. This was on top of the outsized 50 bps rate cut in September. The Bank of England and the European Central Bank too have cut interest rates in recent months. The rate cuts in the West come at a time when supporting growth has gained priority amid escalating geopolitical tensions and cooling inflation.

In India too, slowdown signs have emerged, be it sluggish urban demand for fast-moving consumer goods or passenger vehicles. But, inflation remains a big worry. India’s CPI (consumer price index) inflation surged to a 14-month high of 6.2 per cent in October. Food prices spiking 10.87 per cent last month continues to fuel inflationary pressures. As the MPC meets next, will it continue to focus on inflation and keep interest rates unchanged or will its attention turn to the slowdown signs and in turn prompt a rate cut?

ALSO READ: RBI ‘neutral’ stance: Here’s what economists say about possible interest rate cuts in December

“While the RBI’s change in stance from withdrawal of accommodation to neutral at its last MPC raised expectations of rate cuts in December 2024, inflation data of the past two months indicates that the RBI would hold rates. This is consistent with our view that rate cuts will begin only at the beginning of 2025,” pointed out Sujan Hajra, chief economist and executive director at Anand Rathi Shares.

Pranjul Bhandari, chief economist, India and Indonesia at HSBC, also believes RBI will leave interest rates unchanged in December.

“As the RBI makes its assessment of India’s growth-inflation dynamics for the upcoming December policy meeting, we find that a lower proportion of activity indicators are growing at a fast clip compared to a quarter ago, particularly in financial services and consumption-related sectors. Meanwhile, even as food prices remain elevated thus far, they could start falling in early 2025, at least going by food production and sowing estimates,” said Bhandari.

She feels the RBI could deliver the first rate cut in February 2025, by which time, it would have gained some confidence that the food price spike will drop.

Economists say food inflation remains a major threat to headline CPI inflation and managing that will be crucial given its impact on household consumption budgets. Besides, monetary policy alone may not be enough to get food prices under control and may need more supply-side measures from the government.

As the fresh food harvest starts reaching the market, some of the pressure on food prices is likely to ease. Prospects for winter crop sowing are also positive after good monsoon rains this year. However, current trends suggest that CPI inflation may exceed RBI’s earlier projections in the October-March period this financial year and that may delay the start of a rate cut cycle, according to Rajani Sinha, chief economist at CAREEdge Ratings.

“We anticipate that headline inflation will fall below 5 per cent by the fourth quarter of 2024-2025, driven by a moderation in food inflation. This would create an opportunity for the MPC to consider a 25 bps reduction in policy rates in February meeting,” said Sinha, who now sees CPI averaging 4.8 per cent for the full year ending March 2025. The RBI has earlier forecast CPI inflation to average 4.5 per cent this financial year.

CRISIL’s chief economist Dharmakirti Joshi too expects the MPC to maintain a status quo in the December meeting.

“In our base case, we expect food inflation to ease this fiscal as kharif sowing has been healthy. Vegetable prices can correct sharply when fresh stocks enter the market. Accordingly, we expect the MPC to cut rates towards the end of this fiscal,” he noted.

We have heard much about the £22bn “black hole” in the UK government’s finances left by the previous Conservative administration. In “Britain braced for policy flashpoints with US over trade, tech and defence” (Report, November 9), you cite research by the Centre for Inclusive Trade Policy at Sussex university that forecasts Donald Trump’s threat to impose tariffs on all imports into the US could cause a “£22bn annual hit to UK exports”.

A further example, your October 4 edition carried the story “Carbon capture gains £22bn pledge”.

In Douglas Adams’ The Hitchhiker’s Guide to the Galaxy, the number 42 is the answer to the “Ultimate Question of Life, the Universe, and Everything”. Which made me think. Maybe 22 is the new 42?

Paul Temperton
Chalfont St Giles, Buckinghamshire, UK

India’s labour market has undergone profound changes over the past decade, with the rapid rise of the gig economy standing out as one of the most significant transformations. Characterized by short-term, flexible contracts facilitated by digital platforms, gig work has become a key component of the country’s employment landscape.

According to NITI Aayog, India currently has around 7.7 million gig workers—a number expected to reach 23.5 million by 2030. In the long term, this sector could create up to 90 million jobs annually. However, as this workforce expands, the urgent need for regulations and enhanced protections for gig workers has become increasingly apparent, drawing substantial public and policy attention.

Gig Work in India: An Overview

India’s gig economy spans various sectors, including food delivery, ride-hailing, e-commerce, and freelance services. Platforms like Swiggy, Zomato, Ola, and Urban Company have established themselves as key players, creating new job opportunities. Gig work is not a new concept to India with 85 per cent of the Indian population being employed via the informal economy and ‘casual workers’ segment. India has always had the equivalent of gig work across urban and rural areas—from temporary farm workers to daily-wage construction labourers to household help. Thus, a significant potential for further adoption in labour-intensive sectors like construction, manufacturing and other functional roles remains untapped. What technology has enabled is the ability to provide on-demand delivery requests at a large scale.

The flexibility of gig work has become especially appealing to those seeking supplemental income, enabling individuals to work according to their schedules. A Fairwork India (2023) report found that over 90 per cent of gig workers in food delivery and ride-hailing valued the autonomy these roles provide. However, despite this flexibility, gig workers—often classified as independent contractors or delivery ‘partners’—lack essential labour protections, such as minimum wage guarantees, health benefits, and social security, often amid public apathy. As India’s gig workforce continues to grow, calls for stronger regulatory frameworks have become increasingly urgent.

Regulation of the Gig Economy: Current Status and Gaps

India’s labour regulations have historically catered to formal employment, leaving gig workers in legal limbo. However, recent legislative developments have sought to address this gap. The Code on Social Security (2020) marked a significant policy milestone by extending social security benefits to gig workers. The legislation mandates that platform companies contribute to schemes covering life and disability insurance, health benefits, and old-age protection.

Nevertheless, as of 2024, implementing these labour codes needs to be faster and more balanced. According to the International Labour Organization (ILO), only 10 per cent of gig workers in India currently receive social security benefits. Many companies have delayed or avoided compliance, leaving millions needing access to basic protections. This implementation gap underscores the need for more robust enforcement mechanisms and clearer definitions of gig workers’ legal status.

Judicial interventions have also shaped the regulatory landscape. In a pivotal 2024 ruling, the Delhi High Court sided with Swiggy Delivery Executives who challenged their classification as independent contractors. The court ruled that these workers were, in effect, employees and thus entitled to benefits such as health insurance and paid leave. This ruling marks a potential turning point in how Indian courts view gig work, aligning with global trends. For instance, in 2021, the UK Supreme Court ruled that Uber drivers should be treated as “workers,” granting them access to minimum wage protections and holiday pay.

However, regulatory efforts face significant challenges. The fluid nature of gig work—where workers may shift between platforms or engage in both formal and informal employment—complicates the application of labour laws. This fluidity requires a more nuanced policy approach that accounts for the unique characteristics of gig work while ensuring that all workers receive adequate protection.

The Wage Fairness Debate

Wage fairness remains one of the most contentious issues in India’s gig economy. Operating on a commission-based model means payment per task rather than a fixed salary. While this model allows for high earnings during periods of peak demand, it also leaves workers vulnerable to income fluctuations as seen during the rise in fuel prices and inflation where food delivery executives saw their average earnings drop by 30 per cent between 2020 and 2024 due to changes in algorithmic pay structures and workers were forced to bear rising fuel costs, eroding their take-home pay.

In response, gig workers demanded fairer pay structures and transparency in calculations of commissions The government’s new minimum wage guidelines, introduced in 2023, attempted to address these concerns by establishing a minimum wage for gig workers. 

However, enforcing these guidelines has proven difficult, as platforms argue that the commission-based model does not align with traditional wage structures. This has led to calls for sector-specific wage regulations that reflect the realities of gig work, such as fuel price compensation and guaranteed base earnings.

Social Security for Gig Workers: Progress and Challenges

India’s gig workers face significant challenges, chief among them a lack of social security coverage. While the Code on Social Security aimed to address this by mandating benefits like life insurance and maternity support for gig workers, the progress has been slow, and the impact remains limited.

In September 2024, the Indian government launched a pilot initiative to provide health insurance for gig workers under the Employees’ State Insurance (ESI) scheme, aiming to cover one million workers by 2025. While this program marks a step forward, experts argue that it barely scratches the surface. Given the diversity of gig work—spanning food delivery, ride-hailing, and freelance services—many argue that a tailored, multi-layered approach is essential to meet the unique needs of gig workers, many of whom rely on gig jobs as primary income.

A sustainable solution could be the establishment of a ‘national social security fund’ for gig workers, funded partly by contributions from gig platforms. This fund would provide health insurance, pension plans, and unemployment benefits, offering a safety net against sudden income loss. Such a system would allow gig workers to maintain flexibility while receiving protections similar to traditional employees. Raising awareness among gig workers about their entitlements under labour codes is also crucial, empowering them to claim the rights they’re legally afforded.

To truly build an inclusive gig economy, policy solutions must evolve beyond pilot programs, embedding social protection at scale and actively involving both gig platforms and the state in securing long-term benefits for this growing workforce.

Incorporating Women in the Gig Economy

Globally, economies have long overlooked the contributions of female labour, especially in unpaid or informal sectors, leading to significant undervaluation and invisibility in GDP metrics. A report by the McKinsey Global Institute estimates that advancing gender equality across India’s workforce—including informal labour—could add a substantial $770 billion, or about 18 per cent, to the GDP by 2025. This underscores the tremendous yet untapped economic potential of women, particularly those in the informal economy.

The gig economy offers a unique opportunity to formalize and bring visibility to women’s contributions. It provides a potential pathway for women to access supplementary income, enter the job market more easily, and experience greater social mobility. By breaking down some of the traditional barriers to workforce participation, the gig economy can help women navigate systemic challenges and achieve a stronger foothold in the labour market.

However, realizing this potential requires targeted policy interventions to make gig jobs safer and more accessible to women. Efforts to ensure safe working conditions, flexible work arrangements, and enhanced social protections will be essential in fostering an inclusive gig economy that empowers women and integrates their contributions into the formal workforce.

Looking Ahead: New Models for Worker Protection

As India’s gig economy continues to evolve, innovative approaches to regulation and worker protection are essential. One promising model is the gig worker cooperative, where workers band together to negotiate better terms and conditions with platforms. This model, already adopted in some European countries, empowers gig workers by giving them a collective voice in decision-making processes. In India, gig worker cooperatives could be particularly effective in sectors like food delivery and home services, where workers often face similar challenges.

Another emerging trend is the rise of platform cooperatives, where workers themselves own and manage the platforms they work for. This model distributes profits more equitably and gives workers greater control over their working conditions. While still in its infancy in India, platform cooperatives could offer an alternative to the traditional gig economy model, promoting more equitable outcomes for workers.

Finally, increased transparency in gig platforms’ pay algorithms is critical for ensuring wage fairness. Platforms should be required to disclose how pay structures are determined and provide workers with clear explanations for any changes to their earnings. This transparency would help prevent arbitrary reductions in pay and allow workers to make more informed decisions about their work.

India’s gig economy offers immense potential for economic growth and job creation, but its rapid expansion has exposed significant challenges in terms of regulation and worker protection. While recent legislative and judicial developments represent progress, much work remains to be done. Moving forward, a combination of innovative regulatory approaches, such as gig worker cooperatives and platform ownership models, and stronger enforcement of labour protections, will be essential for ensuring that gig workers receive fair wages and social security. By addressing these challenges, India can create a more equitable gig economy that benefits workers, platforms, and the broader economy alike.

Diksha Yadav is a political analyst and columnist; Amal Chandra is an author, policy analyst and columnist. 

Follow them on ‘X’: @DikshaYadav____ & @ens_socialis 

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Republicans have won a majority in the House of Representatives, giving Donald Trump’s party full control of both chambers of the US Congress and wide latitude to push a radical agenda through the legislature.

Democratic House leader Hakeem Jeffries congratulated Republican Speaker of the House Mike Johnson late on Wednesday, after several television networks projected Trump’s party would retain control of the House.

“House Democrats gave it our all, running aggressive, forward-looking and people-centred campaigns,” Jeffries said. “While we will not regain control of the Congress in January, falling just a few seats short, House Democrats will hold Republicans to a razor-thin majority.”

The House verdict comes more than a week after Trump won a convincing election victory over Kamala Harris in the presidential race and means that when he is inaugurated in January his party will control the House and Senate.

The unified government will hand Trump considerable freedom to push through his legislative agenda, including plans to renew and expand sweeping tax cuts.

The House result, which came after more than a week of counting in California and other states, is a blow to Democrats, who will be minorities in both the Senate and House and unable to lead powerful congressional committees to oversee investigations into the Trump administration’s actions.

With nine House races yet to be called, the margin of the Republican majority has not been confirmed. But the Associated Press declared late on Wednesday that Trump’s party had secured the 218 seats necessary to retain control of the 435-member body.

Republicans will also have a firm grip on the Senate — where Democrats had held a slim majority — after picking up four seats in Pennsylvania, Ohio, West Virginia and Montana.

Republican senators on Wednesday elected John Thune to replace Mitch McConnell as the party’s leader in the upper chamber. McConnell, 82, remains a senator but said last year he would step down from leadership following health issues.

Johnson, the Republican congressman from Louisiana and close ally of Trump who became Speaker last year, has said he intends to remain in the role.

Trump also presided over a unified government during the first tow years of his first administration, before Democrats won back control of the House in the 2018 midterm elections.

But many in Washington expect Trump to exert a tighter grip on Congress this time, given the unwavering loyalty he commands from many top lawmakers, including the leaders of both chambers. In his first administration, he often faced opposition from McConnell and then-Speaker Paul Ryan.

Still, Trump will not have unchecked power over Congress, and Democrats may be able to exert leverage over his administration in narrow but meaningful ways.

Although budget and tax changes require only a simple majority of both chambers, and the president’s appointments can also be confirmed with the backing of 50 senators, most other legislation will need to break the Senate filibuster — a 60-vote threshold — to become law.

That means Senate Democrats could block other Trump legislative priorities — including laws to crack down on immigration at the US-Mexico border, or repeal the Affordable Care Act, commonly known as Obamacare — unless Senate Republicans take the drastic step of scrapping the filibuster altogether. Thune on Wednesday said the filibuster would be “unchanged” so long as he was Senate majority leader.

Hong Kong’s blank-cheque companies are landing their first acquisition targets but corporate executives warn that tight rules are stifling the risk-taking they are meant to reward.

Last month heralded the first Hong Kong special purpose acquisition vehicle to close a deal, merging with Synagistics, a Singaporean ecommerce company.

The acquisition by the blank-cheque company, headed up by Norman Chan, former head of the Hong Kong Monetary Authority, is likely to be followed by two other mergers that are awaiting final approval from regulators.

Hong Kong authorities regard Spacs, permitted for the first time in 2022, as a way to reanimate their domestic equity market and attract more international companies to list in the territory.

Spacs typically look to raise funds through listing on a stock market, and then aim to purchase a private company, pulling its target on to public markets — a so-called de-spac transaction.

But executives who have been through the process are warning that trickle is unlikely to become a flood.

“Arguably, it’s actually more complicated in terms of process than to go through a listing,” said Katherine Tsang, who was an executive director of the investment vehicle behind the Synagistics deal alongside Chan. She is also a former chair of Standard Chartered in Greater China.

After conducting merger talks with a promising private company, “they still need it to go through the entire IPO vetting process”, she added.

The experience underscores the delicate balance for Hong Kong as it tries to maintain its attractiveness as an international listings hub while its market moves closer to mainland China.

KPMG estimates the territory is the fourth-largest market for new listings by market value this year, but the numbers were boosted by just one company — the $4bn listing of Midea, a Chinese electronics manufacturer.

China’s sluggish rebound from the coronavirus pandemic has also damped stock market valuations. Hong Kong’s equity market has received a much-needed boost from Beijing’s policy stimulus launched in September, with the Hang Seng index notching its best week since 1998 upon the news of the policy blitz.

But the market has since come down as investors express disappointment in the mainland fiscal stimulus so far and hedge the potential damage of a second Donald Trump presidency in the US.

Authorities sought to emulate the Spac boom in the US in 2021, which raised some $163bn for companies to hunt for deal targets, according to data from Dealogic. The new rules were intended as another route for dealmaking in Asia.

“The beauty of a Spac is that the funds are ready, and for companies looking to list on the Hong Kong exchange I think it will be an attractive alternative to the listing path,” said Jean Thio, capital markets partner at law firm Clifford Chance.

She pointed out that private companies could establish their valuations through direct negotiation with an acquirer, rather than rely on the market price.

“There might be special interest for specialist tech companies as well as companies without market peers listed on the HK exchange,” she said.

However, Hong Kong also sought to guard against low standards: the US boom was widely seen as leading to a bubble — with one short seller dubbing them “castles in the sky”. Critics of the boom in the US say it enriched Spac founders and advisers while often punishing investors, especially retail money.

“I didn’t feel entirely comfortable with it [in the US] . . . the promoters were some strange characters, baseball stars, with no actual finance experience acting as promoters,” said Chan.

The regulations stipulate that Hong Kong Spacs have to meet all the same requirements as an initial public offering. Moreover, unlike in the US, investing in Spacs is only open to professional investors rather than being a retail money play.

Only five Spacs have raised money in Hong Kong since the new rules were introduced nearly three years ago, according to Dealogic.

Optimists say Spacs can find their utility by helping more niche, or foreign, companies list on the Hong Kong exchange.

Chan said his company’s “network”, which includes the main investors in the Spac, would help the Singaporean data company attract vendors in Greater China who are targeting the large south-east Asian market.

But as Hong Kong moves closer to mainland China economically, market participants fear the territory’s capital markets are still overly reliant on Chinese companies looking for an offshore secondary listing.

“The traditional [Chinese] A-share companies doing secondary listings would not be able to do a de-spac,” added Thio.

“In fact, any kind of Chinese companies would be subject to CSRC [mainland Chinese regulator] rules and regulatory approvals. It’s something that puts the timeline into uncertainty.”

One adviser who works on Spac transactions in Hong Kong said they were doubtful the new listing avenue would lead to any meaningful amount of new companies listing in the territory. 

“Hong Kong has always said they don’t like backdoor listings. But [de-]spacs are by definition backdoor listings,” said the adviser, who did not have authorisation to speak publicly. 

“It’s no different to applying for a new initial public offering — you need all the vetting. If you look around, the global trend is that Spacs have not done well. I don’t think they will get bigger in the future.”

Synagistics’s share price has underlined the growing caution. After listing it leapt as much as 400 per cent from its debut price of HK$10 ($1.29) per share. On Wednesday it closed down at HK$12.50.