Archives: Publication

As India deepens financial inclusion through digital tools, World Investor Week 2025 urges regulators and citizens to address behavioural biases, fraud risks, and digital trust gaps.

Access to investing has expanded dramatically through digital platforms and mobile tools, aided by the JAM Trinity and Aadhaar-enabled services. Yet, the behavioural vulnerabilities of investors remain as prominent as ever. For policymakers and regulators, the challenge lies not just in widening participation but in ensuring that it is meaningful, safe, and resilient. World Investor Week 2025 offers an opportunity to reflect on the evolving relationship between people and financial markets.

The traditional assumption that investors make rational decisions by weighing risk against return has long been unsettled by behavioural finance. Research by Daniel Kahneman, Amos Tversky and others shows that financial decisions are often guided by fear, instinct, and cognitive shortcuts as much as by hard data. Investors cling to losing stocks rather than admit a mistake while selling off “winning shares”; anchor their decisions to not-so-relevant reference points; or follow the crowd or peers in times of frenzy and panic.

Overconfidence can sometimes create an illusion of control, leading to excessive trading and increased risk-taking. Such tendencies are not mere limitations in individual decision making; they have systemic consequences, intensifying volatility and deepening cycles of boom and bust. These vulnerabilities have magnified in today’s digital landscape.

The speed and ease of online investing means that decisions once made slowly are now executed in seconds, often in haste, with little research, introspection and reflection. Social media amplifies this tendency. Platforms are flooded with ‘finfluencers’—self-styled experts dispensing quick tips, advice and high-risk recommendations to audiences that may lack the financial literacy to assess them. The viral nature of online content rewards hype over prudence, encouraging herd behaviour and speculative bubbles. For budding investors, many of whom are entering markets for the first time, the flood of information often blurs the line between credible advice and reckless speculation.

The impact of digitalisation is, therefore, two-fold. On one hand, it has dramatically improved access for people in small towns and rural areas, who can now invest in mutual funds, equities or digital gold using a smartphone. Financial inclusion has been powered by mobile banking, fintech apps, and AI-driven advisory tools.

However, this access also exposes investors to new risks. Online scams, phishing attacks and fraudulent investment schemes exploit both technological gaps and behavioural blind spots. The rising number of digital fraud cases shows that even educated, tech-savvy users can fall prey when urgency and greed are manipulated.

For policymakers, the central question is whether investor protection is keeping pace with innovation. Awareness campaigns like World Investor Week are vital but insufficient on their own. Regulators must integrate behavioural insights into rule-making, monitor the digital ecosystem closely, and track how information spreads online. A robust framework for regulating finfluencers, stronger safeguards against fraud, and accessible grievance redressal mechanisms are now as critical as traditional compliance measures.

At the heart of all these efforts lies financial education. For too long, literacy has been viewed as a personal responsibility, a skill that individuals have the option to acquire to help themselves. In a world where digital finance is universal, this is no longer tenable. It must instead be treated as a public good—essential to economic inclusion and systemic stability. A citizen unable to understand risk, resist scams or recognise manipulative advice not only endangers personal finances but weakens the broader financial ecosystem.

India’s institutional framework for investor protection has expanded significantly in recent years. Regulators such as the Reserve Bank of India (RBI), the Securities and Exchange Board of India (SEBI), the Insurance Regulatory and Development Authority (IRDA), and the Pension Fund Regulatory and Development Authority (PFRDA), along with Market Infrastructure Institutions (MIIs) and industry associations, have all been active in promoting financial education.

The Investor Education and Protection Fund Authority (IEPFA), under the Ministry of Corporate Affairs, plays a pivotal role. Beyond its mandate of reclaiming unclaimed dividends, deposits, and matured debentures, IEPFA is emerging as a protector of investors, conducting awareness drives, offering financial literacy modules, and partnering with stakeholders to promote informed participation. Outreach to different groups such as women, students, and first-time investors requires tailored strategies.

India has made commendable progress in expanding financial education. From integrating personal finance modules into school curricula to outreach by NGOs and community organisations, the architecture for awareness is steadily taking shape. Fintech collaborations and mobile platforms have widened reach further, drawing first-time investors into formal finance.

Yet, as the ecosystem grows more complex, financial literacy must evolve. It must now include skills like filtering misinformation on social media, recognising behavioural traps such as herd mentality, and understanding grievance redressal mechanisms and digital safeguards.

The behaviour of budding investors merits particular attention. Many display a blend of caution and boldness—some adopt conservative strategies shaped by family experiences of economic shocks, while others chase high returns through speculative trading in cryptocurrencies or volatile stocks. These patterns underscore the need for adaptive literacy programmes designed for diverse demographic realities.

Markets mirror human behaviour as much as they reflect economic fundamentals. Narratives shape choices as numbers shape trends. The stories investors tell themselves about risk and opportunity can influence markets as powerfully as interest rates or fiscal policy. Recognising this truth is the first step towards building resilience.

Are citizens being prepared to make informed, confident decisions in a digital-first world? Are regulatory protections adequate to counter both traditional fraud and the new risks born of online platforms? Are policymakers willing to treat trust and behavioural awareness as seriously as they treat financial access? World Investor Week is an occasion to judge not in the number of events held but in the introspection it provokes. It demands more than slogans and seminars; it needs to be remembered as a turning point, a moment when we acknowledged that investor protection cannot be divorced from psychology, and that digitalisation must be paired with digital trust. Investing is never just about money; it is also about behaviour, confidence, and the ability to resist the seduction of unbelievable, false promises. Policymakers need to embrace a behavioural perspective to building more inclusive markets, parallelly funding digitally innovative ways and means to safeguard the financial future of millions of citizens.

CS Mohapatra & Depannita Ghosh are IEPF chair professor and research analyst IEPF Chair Unit at the National Council of Applied Economic Research. Views are personal.

Who Cooked Adam Smith’s Dinner? The provocative question, once aimed at the Father of Modern Economics, echoes with particular resonance in India. The book is a critique of Smith’s ‘Invisible Hand’ postulation and challenges the very foundation of economic measurement, pointing to the vast, uncounted economy of unpaid labour, performed predominantly by women, that fuels the official, market-based one. The Indian women are no different, cooking, cleaning, and caring so that others could participate in the paid economy, but find their contributions relegated to a mere footnote in the nation’s growth story.

There was some food for thought during a recent training programme on ‘Gender and Labour Laws’, organised by VV Giri National Labour Institute, Ministry of Labour and Employment, which sought to address the larger questions on the intersection of paid work and unpaid care work and relevance of social reproduction in labour laws.

Let’s first make sense of some data. According to the Periodic Labour Force Survey (PLFS), women’s labour force participation rose to 41.7% in 2023–24, a notable increase from earlier years. Yet this remains far below men’s participation and skewed towards low paying self-employment and unpaid family work. Meanwhile, India’s Time Use evidence shows that women aged 15–59 years spent about 305 minutes a day on unpaid domestic services in 2024, only slightly down from 315 minutes in 2019. It reflects massive economic inefficiency, a leakage of productive potential that the economy misses out on. In a recent paper with Ratna Sahay at NCAER, we show that a more equitable sharing of household responsibilities between men and women, together with greater flexibility in working hours through formal part-time contracts, could raise female labour force participation in India by 6 percentage points percentage points.

India’s new Labour Codes represent a foundational step toward acknowledging this hidden work and, more importantly, creating a framework to convert women’s untapped potential into formal economic power. This isn’t mere tinkering; it is a necessary rewriting of the rules to bridge the gap between the kitchen and the marketplace. The four codes consolidate 29 legacy laws. Several provisions can ease specific constraints that hold women back.

Fair and Predictable Pay: The Code on Wages, 2019 establishes a national floor wage and extends minimum wage coverage to all employees, while prohibiting gender- based discrimination in recruitment and wages. The Code aims to raise the returns on women’s time. For too long, the shadow price of their unpaid work at home made low-paid market work uneconomical. A credible minimum wage changes that calculus, making formal employment a more viable choice.

Hours and Mobility: The Occupational Safety, Health and Working Conditions (OSHWC) Code, 2020 explicitly permits women to work before 6 a.m. and after 7 p.m. with their written consent, subject to safeguards on safety, holidays, and working hours. This matters because modern services like logistics, healthcare and IT-enabled work run round the clock. The policy task is to ensure the conditions on the ground so that night work expands women’s opportunities.

Care Infrastructure and Maternity Protection: The Code on Social Security, 2020 integrates maternity protection, including 26 weeks of paid maternity leave, nursing breaks, and mandatory crèche facilities for larger establishments. It empowers the government to design schemes for self employed and unorganised workers, including gig and platform workers. For many women, especially in urban peripheries, the binding constraint is childcare, not just the job itself. A functioning crèche at or near the workplace converts unpaid care time into productive work time while nursing breaks and non-discrimination norms smoothen the return to work. Recognising gig workers opens a pathway to social insurance for those using platforms to re-enter the labour market after caregiving breaks.

Industrial Relations: The Industrial Relations Code, 2020 raises the threshold from 100 to 300 at which prior government permission is needed for layoffs, retrenchment, or closure. Proponents argue this flexibility will nudge firms to expand headcount while critics fear weaker job security. For women, the distributional question is paramount: do more, larger formal firms translate into more formal jobs for women, or does adjustment continue to happen through casualisation and contract work? The answer will depend on how states complement the Code with proactive placement, skilling, and anti-discrimination enforcement.

So, what should we watch out for? Heterogeneity across states. Labour is a concurrent subject, and states are already moving at different speeds and with varied rulebooks. Where states pair OSHWC’s nightwork permissions with enforceable safety protocols, women’s participation in sunrise sectors (e-commerce fulfilment, hospital administration, hospitality) should rise. Without the following, the letters of the law will not change lived constraints.

Care as Infrastructure: Treat crèches the way we treat roads- as enabling capital that multiplies the returns to women’s education and skilling. The 26-week maternity leave is necessary but not sufficient. Most Indian women work outside the salaried formal sector. Extending childcare through common facility crèches in industrial areas, social-sector PPPs, and linking them to Self-Help Group (SHG) networks can convert statutory intent into usage.

From Entry to Progression: A higher labour force participation rate is a step forward, but what matters even more is the quality of those jobs. Instead of just counting heads, we should be asking: are women moving up the ladder? The real journey is from unpaid helper in a family business, to running one’s own account, and eventually to a stable, salaried position with social security.

Gig Work and Social Protection: Rising female labour force participation is progress, but job quality matters more. The real path is from unpaid family work to self-employment, and finally to stable, secure jobs. Gig platforms offer flexibility for women balancing care and work, but without benefits they risk deepening insecurity. The Social Security Code and e-Shram portal mark a start by recognising gig workers, but the task ahead is to turn this into portable benefits like health, maternity, and disability cover for the worker irrespective of the changing platforms.

Change takes time. Laws may open doors, but real progress will come when families, firms, and governments move together. The ‘dinner question’ reminds us how much growth relies on invisible labour. If new labour codes ease this burden, the benefits will extend beyond women to an economy that draws on its full talent, not just half.

Author is Associate Fellow, NCAER, New Delhi. Views are personal.

For India, agricultural protection is similar to US anxiety on immigration.

Once, I took a group of American students to learn more about the rural parts of India. We spent a couple of weeks in a village, where the students were constantly trailed by giggling children, several of them shouting out questions. So, we decided to hold an assembly at a school where the children could learn about America, with me translating. One of the questions was about the difference between villages in India and those in the US.

One of my students responded, “Well, both Indian and American farmers work hard, but American farmers have larger farms with tractors and other machinery, so they produce more. In the old days, American farmers lived like Indian farmers with outhouses. But now everyone has flush toilets, trucks, and refrigerators.” The kids were astounded. They asked, “So everyone wants to live in a village?” The answer, “Not really, many move out and find jobs in cities.” This drew a puzzled response: “My brother studied in a city but did not find a job, so he is helping on our farm. Things must be different in America.”

Therein lies the difference between the challenges Prime Minister Narendra Modi and US President Donald Trump face. Opening up Indian markets to American agricultural and dairy products has emerged as a key sticking point in the tariff negotiations. The democratic pressures on the two governments differ vastly. Farm subsidies, mechanisation, and large farm sizes enable the US to produce affordable wheat, soybeans, and other crops. Indian farmers struggle in a low-productivity world where they barely manage to subsist. Whereas agricultural workers form less than two per cent of American workers, in India, they are 45 per cent. While agriculture is an increasingly smaller portion of Indian GDP — only about 17 per cent by World Bank estimates — the proportion of workers in agriculture has barely declined. Thus, anything that affects agricultural incomes affects a far greater proportion of the population in India than in the US.

India needs to enhance its agricultural productivity and compete effectively in the global market. It needs to generate more jobs in the manufacturing and service industries to reduce crowding in agriculture. However, these are complex challenges without instant solutions, and they are not addressable within the kind of tariff deadlines that seem to be offered. With 65 per cent of the population living in rural areas, farm distress is a genuine concern to both the populace and politicians. It is not surprising that protecting Indian agriculture is the red line around which all Indian political parties have united, whether they belong to the ruling party or the Opposition.

When it comes to dairy, the challenge is even thornier. India produces about a fourth of the dairy products in the world. Almost all of it is consumed locally with little import or export. Unlike the corporatisation of dairy production in the US, India’s milk production primarily comes from households that own two or three milk-producing cows or water buffaloes. Women are largely responsible for animal care and milking. Families use the milk for home consumption, but they also sell it when there is excess production. Milk cooperatives such as Amul and Mother Dairy dominate the market. They purchase, pool, and process milk via village-level cooperatives from rural women. According to some estimates, the dairy sector comprises nearly 80 million dairy farmers.

It is the salience of agriculture and dairy farming to the lives of hundreds of millions of Indians that makes it difficult to imagine a scenario in which global trade pressures and corporate profits trump the livelihoods of rural families. Gujarat is the birthplace of cooperative dairying, where the profits of Amul are distributed to more than three million members. In 2019, when there was a possibility of including the dairy sector in a regional trade agreement, the Prime Minister’s mailbox was flooded by thousands of handwritten postcards from women in Gujarat, arguably leading to India’s withdrawal from the regional partnership.

Indian discourse on agricultural protection is similar to the American discourse on immigration. Republicans and Democrats are, by and large, united that unchecked immigration is not sustainable. Whatever the economic benefits of lower labour costs with a large pool of immigrants, the social costs, particularly for workers living close to poverty, are unacceptable. It is puzzling why the same empathy can’t be shown to Indian farmers, and particularly women dairy farmers, who have few other avenues of employment.

Hopefully, someday, manufacturing and services in India will boom, reducing the stress on agriculture. However, until that day arrives, it should not be surprising to Trump and his advisors to fathom why it would be as difficult for Modi to abandon agricultural tariffs as it would be for America to abandon farm subsidies — they began in 1933 and have ranged from $9 to $55 billion in recent years.

The writer is distinguished university professor emerita, University of Maryland College Park and professor, National Council of Applied Economic Research, New Delhi. Views are personal.