Drowning in money.

The Finance Ministry's Monthly Economic Review for September 2026 "said the domestic economy continues to show resilience in a challenging global environment." "A strong El Nino could hurt the rabi crop through heat stress and lower soil moisture," and "Elevated crude prices could add to inflation particularly after the US Federal Reserve's 25 basis points rate hikes in September." ET. "Overall food inflation rose to 5.95% in August from 5.52% in July, while headline consumer inflation climbed to 4.82% from 4.45%." "Costlier onions, higher cooking oil prices, a jump in the cost of pulses, and the same shopping list can start becoming noticeably more expensive over time." ET. "The monsoon has failed. Rainfall was 12.6% below normal. In earlier decades, this would have spelt economic calamity and political earthquake." "In 1965, an 18.6% rainfall deficit caused a 3.7% GDP contraction." But in 2009, the GDP grew 8.5% despite a 21.8% rainfall deficit. The monsoon failed in 2014 and 2015 but the "economy soared 7.2% and 8.0% respectively," wrote Swaminathan Aiyar. However, "Despite claims that India's economy has become drought-proof, weak rains remain a key worry." "Inadequate rainfall reduces summer crop yields and leaves inadequate soil moisture for winter sowing." Higher fertilizer prices and lower harvests raise food prices and "Rural purchasing power weakens precisely when households must spend more on essentials. This combination transmits distress beyond agriculture to consumer goods, construction and small businesses. Imports can relieve supply shortages but worsen external finances," wrote Ajit Ranade. The US Federal Reserve raised interest rate by 25 basis points (bps) last month and could hike it once more this year. "The European Central Bank and Bank of Japan have raised rates too." Higher US rate "triggers capital outflows from other markets into the US." This weakens local currencies and leads to imported inflation." Mint. The Reserve Bank of India opened a dollar/rupee swap window for Foreign Currency Non-Resident (FCNR) (B) deposits for banks from June to 31 August. The RBI undertook to sell the dollars back at the buying rate during redemption of the bonds, thus picking up the full cost of hedging any depreciation of the rupee against the dollar. India Macroeconomic Indices. At the end of the window FCNR (B) deposits raised $127.23 billion, while "Overseas Foreign-Currency Borrowings (OFCB) brought in $5.260 billion, and External Commercial Borrowings (ECB) contributed $3.891 billion," for a total of $136.4 billion. DC. As the RBI swapped the dollars for rupees, "Surplus liquidity in India's money market has crossed Rs 11 trillion, leaving RBI to mop up an unusually large pool of cash unleashed by banks' $136 billion mobilisation of foreign currency deposit." CFO. The yield on 10-year government bonds is at 7.247% this morning. in.investing.com. "The 10-year India government bond (IGB) has hardened by around 50 basis points (bps) since the beginning of March, to about 7.20%." And, "it is interesting to see that the rupee is back under depreciation pressure," which "has also confused market participants about why $140 billion will not alleviate pressure." It is because, "The $200 billion forward book is being kept afloat through sell-buy swaps to roll over the dollar liability and maintain 'optimum' reserve levels." This means actual reserves are closer to $550 billion. "The question that begs the central bank is whether a 50 bps rate hike is enough? Will a 100 bps cash reserve ratio be adequate in permanently absorbing the troubling sticky and inflationary excess liquidity created by the FCNR scheme's much celebrated dollar inflows? asked Ajay Marwaha. Cash reserve ratio (CRR) is a portion of deposits collected by banks that must be deposited at the RBI without any interest. Investopedia. This is to reduce money supply. Poor monsoon rains, but it's raining money on the market. Will the RBI drown? And take us with it? 

A difficult ask.

The Special Intensive Revision (SIR) is undertaken by the Election Commission of India (ECI) to update electoral rolls across India by eliminating deceased, permanently shifted, duplicate and non-citizen individuals while adding newly eligible people, such as those who have turned 18 years of age before the date of the election (Constitution of India). "In June last year, five months before assembly elections in Bihar, the ECI announced an SIR of electoral rolls for the state," and asked people to produce documents to prove their identity. "In July 2025, petitioners including Association for Democratic Reforms and the People's Union for Civil Liberties mounted a constitutional challenge in the Supreme Court," but the judges refused to stay the election. SCO. The Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) won an overwhelming majority with 202 seats out of a total of 243 seats in Bihar, with the BJP being the largest party with 89 seats. wikipedia. However, the SIR in West Bengal became highly contentious as over 9 million, about 12% of the total electorate, were made ineligible, of which around 34%, or 3.11 million, are Muslims who the BJP thinks vote against it. BBC. The BJP increased its seats tally from 77 to 208, out of a total of 294 seats in the assembly, and so achieved absolute majority for the first time ever. wikipedia. Retired IAS officer Gyanesh Kumar was appointed Chief of the three-member Election Commission on 19 February 2025. wikipedia. "An investigation by The Indian Express reported that his two fellow Election Commissioners Sukhbir Singh Sandhu and Vivek Joshi had formally objected at least 14 times over 10 months to decisions and orders they said had been issued without their knowledge." BBC. "The ECI has termed allegations by Rahul Gandhi that Chief Election Commissioner (CEC) Gyanesh Kumar illegally and unilaterally changed Form 6 during the ongoing SIR of electoral rolls as 'misleading'." "It also pointed to a Supreme Court judgement of 27 May 2026, saying the court had upheld that order." NDTV. "Form 6 is the statutory application for new registration, not a device to launder wrongful deletion of genuine voters. Making already eligible, previously enrolled voters apply afresh shifts the burden from the Election Commission, which removed them, to citizens." The Wire. Yesterday, "Chief Justice Surya Kant said that any modification for Form 6 - the application citizens use to register as new electors - had not been approved by the top court." TOI. The ECI lied. Four days back, "India's influential Gen Z-led protesters are back on the streets - this time seeking electoral reforms and the resignation of CEC Gyanesh Kumar over allegations of manipulating voter rolls." BBC. To add to the chorus for Kumar's departure, Keralam has ordered the vigilance and anti-corruption bureau to investigate a World Bank-funded, Rs 2.15-billion road upgrade under the Kerala State Transport Project (KSTP) that allegedly led to a Malaysian civil engineer's suicide in 2006." A letter by the engineer apparently blamed Kumar, who was the PWD Secretary in Kerala at the time, for asking for bribes. TT. "Union Parliamentary Affairs Minister Kiren Rijiju has accused the opposition of executing 'a larger conspiracy to weaken India as a nation'." News18. Typical response of a fascist government which fired pellet guns at unarmed peaceful students protesting against a leak of questions for a selection examination (BBC). This time pellet guns were not used but, "Three female journalists have accused police officers in India of sexual harassment during street protests in the capital Delhi." BBC. The duo of Prime Minister Narendra Modi and Home Minister Amit Shah have managed to suppress all criticism by using the police and other agencies to terrorise people but young people have had enough. They are refusing to be terrorised or to be pacified by empty words. Another problem is that no leader in the world uses his office to tour the world like Mr Modi does. pmindia.gov. And the foreign media is reporting extensively on the brutality of the Indian state. Sexual assault on women is especially reviled. The duo would like to suppress protesters with extreme violence and pretend to be law abiding at the same time. A difficult conundrum.    

Dot-com plus subprime, says RBI.

"Reserve Bank of India (RBI) Governor Sanjay Malhotra said the Indian financial system remained resilient and the economy had navigated the West Asia crisis well, but policymakers needed to stay vigilant." "Malhotra cautioned against stressed valuations, especially those related to AI, elevated debt levels globally, elevated leverage that could spill over to banks and markets in case of tightening of financial conditions, private credit, and cyber risks that have been compounded by AI." ET. In short, a combination of the 'dot-com bubble', in which the soaring share prices of Internet technology companies reached unsustainable levels, leading to a sudden collapse (Britannica), which caused central banks to lower interest rates to stimulate a recovery and this led to a housing boom caused by lending to high-risk borrowers with poor credit rating, camouflaged by credit default swaps, resulting in the sub-prime crisis in 2008 (Investopedia). The Federal Funds rate dropped to 1% on 6 November 2002, rose to 5.25% on 29 June 2006, and dropped to 0% - 0.25% on 16 December 2008 (Forbes), reflecting the boom and bust cycles of the US economy. Market capitalization of AI related companies sounds like fiction, with Nvidia at $5.67 trillion, Alphabet at $4.16 T, Microsoft at $3.84 T, Amazon at $2.71 T, TSMC at $2.45 T and SpaceX at $2.1 T. Bullfincher. "Total US debt has topped $40 trillion for the first time, the Treasury department said, drawing fresh warnings that a fiscal crisis is brewing." Outstanding total public debt stood at $40.047 trillion. Reuters. "Global debt rose by around $7.5 trillion in the first three months of the year to a record high of over $324 trillion, data from a banking trade group showed." "The global debt-to-output ratio continued to move slowly lower, standing at just above 325%. However, in emerging markets (EM) the ratio hit a record high of 245%." Reuters. India is classed as an EM. India's "seasonally adjusted HSBC Purchasing Managers' Index (PMI) rose to a seven-month high of 55.1 in September after hitting a five-year low of 52.8 in August (below 50 is negative)." "High input costs are adding pressure across transportation, energy and manufacturing activities." "For manufacturers, there is little room to raise prices and protect margins." Mint. "While private consumption gained traction - rising 7.1% in the June quarter against 6.8% a year ago," "new project announcements rose 33% year-on-year (y-o-y) during the April-September (H1) period of fiscal year 2027 (FY27) to Rs 30 trillion." "Manufacturing, once a major contributor to capex, saw a 23.2% decline in new investments," while "intentions in construction and real estate plummeted 31.5%." Mint. While "the listed sector's investments amounted to Rs 12-13 trillion, (averaging about 4% of GDP) in the four years from 2022-23 to 2025-26," "the unlisted corporate sector invests as much as 10% of GDP, or more than two-thirds of aggregate corporate capex," wrote Nikhil Gupta. "While the listed sector's profits are closer to their all-time peak of 5.8% of GDP and its leverage ratio at 17% of GDP was at a two-decade low in 2025-26, the profits of the unlisted sector dropped to a 15-year low of 3.5-4% of GDP, while its debt-to-GDP ratio was at a seven-year high of 33% of GDP in 2025-26." As a result, the listed sector's capex is healthy while the larger unlisted sector has to reduce new investments. Foreign direct investment (FDI) is also down, with net FDI "down from nearly $44 billion in 2020-21 to under $1 billion in 2024-25, even as gross inflows touched a record $94.5 billion," wrote Ashish Dhawan & Piyush Doshi. Is the global economy careering towards an almighty explosion? Should we be concerned here in India? Perhaps, only a little. With a nominal GDP of $4.15 trillion (IMF), compared to Nvidia's market value of $5.67 trillion, and manufacturing contributing only 17% of GDP  (IBEF), the effect on us should be more of a ripple than a wave. Dot-com plus subprime? No problem.        

They can see it.

Last month, "US President Donald Trump and China's President Xi Jinping exchanged warm words at a lavish White House state dinner but gave little indication of progress on pressing issues." "Billionaire business leaders and US tech CEOs joined the leaders at the extravagant dinner." BBC. "The two leaders extended a trade truce, exchanged gifts and compliments, and acknowledged the possibility of working together to contain the dangers of AI development." And so, "the Washington trip was relatively uneventful. But for Xi's own ambitions, China didn't need much else." CNN. "Artificial Intelligence, which...Trump has now branded as 'super intelligence' or SI, is reminding more and more of the dangerous Cold War contest between the US and the erstwhile Soviet Russia. With AI companies themselves pointing at possible risk to humanity, it could be even more dangerous than nuclear weapons," so that, "What looked like another tech race between the US and China is turning into a contest over economic power, military capability and technological innovation, with both governments treating the control of AI as a matter of national security." ET. India shares a 3,488 km border with China (mha.gov.in) which, with its advanced technological and defence capabilities, is the greatest existential threat to India. This cloying relationship between the US and China is bad news for us. In addition, "Autonomous technology and defence firm Powerus," with "significant financial backing from...Trump's eldest sons, Donald Trump Jr and Eric Trump," "formalized a strategic Memorandum of Understanding (MoU) and received a limited procurement order from the Ministry of Defence of Pakistan for unmanned aerial systems and associated technical support." This strategic agreement, "signalling a notable warming of defence tech collaboration between Washington and Islamabad," "has heightened geopolitical stakes across the border, drawing serious concern from New Delhi." News 18. This is despite, or maybe because, Pakistan is an 'Iron Brother' of China, whose friendship is 'harder than steel' (CIIS). On the other hand, "Since 2025, India-US ties have been strained following Operation Sindoor, and the Trump administration's tariff announcement." During this time, "India's paid congressional operation in Washington has also shrunk from a multi-firm network to a single account." "Thus when India needed to position its Russian energy imports as an energy necessity forced by the Iran war rather than a policy choice, it had few allies left on the Hill." NDTV. In his speech at the UN General Assemby meeting in September, Trump again repeated his claim that he prevented a war between India and Pakistan after India launched Operation Sindoor on 7 May 2025 (pib. gov.in) in response to a terrorist attack on 22 April 2025 at Pahalgam in Kashmir in which 26 unarmed civilians were gunned down (wikipedia). "The Prime Minister of Pakistan, terrific man, said that Donald Trump was responsible for saving 30 million lives and probably many more than that," Trump said. NDTV. About 10,000 protesters turned up in Mumbai yesterday demanding the resignation of the Chief Election Commissioner Gyanesh Kumar for deleting voters' names from the election rolls in favor of the Prime Minister Narendra Modi's Bharatiya Janata Party (BJP). TOI. This has been dubbed 'vote chori' (stealing of votes) and has made Mr Modi's election victories illegitimate. "Foreign diplomats are unable to ignore the new realities." "In this context, the meeting this May between Rahul Gandhi and the heads of missions of 27 European members was an unusual engagement. September witnessed separate meetings with the Australian High Commissioner Philip Green and Russian Ambassador Denis Alipov." US Ambassador Sergio Gor and Malaysian Prime Minister Anwar Ibrahim have also met Mr Gandhi, wrote Anil Tyagi. Mr Modi heads a minority government with the support of allied parties in the Lok Sabha. wikipedia. When they start getting jittery the end will begin to come. The countdown has begun. 10,9...      

Anything may happen.

"The US 10-year Treasury yield hit its highest level in 24 years on Thursday (1 October)," as "It rose to as high as 5.342%, surpassing its 2007 peak, and hitting its highest since 2002." Reuters. "French 10-year bond yields have also hit their highest levels since 2002, Britain's 30-year borrowing costs have touched 6% for the first time since 1998 and Japanese bond yields are at multi-decade peaks." "It adds to concerns about governments' rising borrowing and spending needs. The US debt pile has topped $40 trillion, while debt as a share of economic output is at or above 100% across the G7 group of major economies, bar Germany." "Bond yields set the tone for borrowing costs across economies, from government debt to mortgages to student and car loans." Reuters. "Eurozone inflation surged more than expected in September," as "Inflation in the 21 nations sharing the euro currency jumped to 3.8% in September from 3.2% a month earlier, exceeding expectations for a 3.6% in a Reuters poll." However, core inflation, which excludes volatile food and fuel prices, accelerated to 2.5% from 2.4%. Reuters. This might allow the European Central Bank (ECB) to wait and watch before deciding on interest rate. In its last meeting in August, the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) kept its policy rate unchanged at 5.25% for the fourth successive time. Mint. But, the US Federal Reserve Open Market Committee raised the borrowing cost by 25 basis points to 3.75%-4% last month. Higher interest rates in the US, EU and Japan would increase returns and be an incentive for funds to divert their investments to these markets from riskier emerging markets. Already, "India faces a stiff challenge to attract capital flows as the global investment landscape is being reshaped by the artificial intelligence boom, renewed manufacturing ambitions in developed economies and the increasing weaponisation of global supply chains, according to the India Monthly Economic Review." ET. "Foreign institutional investors (FIIs) stepped up selling in Indian equities on 30 September, offloading Rs 101.4841 billion, their biggest single-day outflow in nearly six months." "Domestic institutional investors (DIIs), meanwhile, bought Rs 112.7173 billion, according to the NSE's combined FII/FPI and DII cash-market data." MC. Pressure on bond yields eased somewhat after, "the Commerce Department's Bureau of Economic Analysis said that the Personal Consumption Expenditures Price Index rose 0.3% in August after a downwardly revised 0.1% gain in July. Core PCE inflation increased 3.0% year-on-year in August after a downwardly revised 3.0% advance in July." ET. "The US economy added 29,000 jobs last month, the Labor Department reported, well below economists' estimate of 90,000." Unemployment edged slightly higher to 4.2% from 4.1%. ET. The Finance Ministry's Monthly Economic Review for September 2026 expects the economy to grow 7.3% in the second quarter (July-September). "Interest rates in the developed world are rising sharply...and this will spill over into domestic yields. It also expects cross-border capital flows to slow, as higher rates persuade investors to stay in their home markets amid rising global uncertainty." ET. Already, yield on India 10-year government bonds jumped from 6.944 on 8 September to 7.209 on 1 October. in.investing.com. A lot of problems could be solved if the RBI increased its policy rate by at least 50 basis points, which would restore the premium with US rates, tempt foreign investors to return, stop the rupee from falling and reduce imported inflation. Will the RBI do it? Definitely not. The government has a fanatical belief that low interest rates increase economic growth, which gives bragging rights and helps in elections. What happens if problems mount? Just ignore them. It's called "Ram Bharose' (depend on Lord Ram). Will it work? Probably not, but may confuse people. Then claim anything. Confuse them more. Great.

The millions that matter.

Economist Ruchir Sharma ranks 50 emerging and frontier economies. India's score is somewhere in the middle and his favorite line is, "India is a country that consistently disappoints the optimist and the pessimist." ET. According to the M3M Hurun India Rich List 2026, India "has created more than two new billionaires a month for three years running." "According to the list, the combined wealth of the people featured in the rich list stood at Rs 187.5 trillion or $1.96 trillion, which is more than the GDP of countries like Turkiye ($1.64 trillion), Switzerland ($1.15 trillion) and Singapore ($0.66 trillion) among others." However, "To put it in perspective, according to the IMF, India's GDP per capita is $2,813, compared with Singapore's $1,07,760." Mint. "In nearly 250 districts, more than 25% youth (15-29 age group) are neither engaged in any productive work, nor are they pursuing education or any sort of training for work, highlighting a gap in human capital utilisation." "A recent Niti Aayog report pegged the number of NEET (not in employment, education or training) youth in the country at nearly 90 million." TOI. In addition to the chronically unemployed, "Thousands of jobs have been cut across India's global capability center (GCC) ecosystem this year as parent companies push for AI-led efficiencies and tighter workforce structures, even as their Indian units take on bigger technology and product mandates." GCCs employ around 2.4-2.5 million people in more than 2,100 centers. MC. "In India, approximately 8 to 15 million students graduate each year. Yet only 8.5% find jobs that match their qualifications and skills." "It is difficult to ignore the paradox: millions spend years pursuing higher education, but only a fraction eventually enter professions connected to what they studied." ET. "The engineering talent market faces a growing mismatch between candidate supply and hiring demand, with entry level job seekers accounting for 45% of the pool against the requirement of just 28%, a report said." ET. "India requires Rs 168-172 trillion of infrastructure investment through FY31, with Rs 70-80 trillion yet to translate into announced project pipeline, according to a joint report by the National Bank of Financing Infrastructure and Development (NaBFID) and Boston Consulting Group (BCG)." ET. Although 70% of India's electricity comes from coal, "A decade ago India's installed renewable energy capacity was barely 4GW. It now makes up 300GW or 54% of its total 552GW installed capacity - a target that has been achieved five years ahead of schedule." Perhaps too fast because "a bulk of the clean energy that was produced in India was wasted because the country's transmission lines have been dogged by missed targets, with one out of four inter-state projects facing delays of over a year." BBC. "India needs nothing short of 12 million new non-farm jobs annually." "Recent National Crime Records Bureau (NCRB) data, including its 2024 report, show that (i) unemployed persons form a large category among suicide victims; (ii) student suicides have risen; and (iii) a substantial share of suicide victims were Class 10, Class 12 and higher education students," wrote Prof Santosh Mehrotra & Jajati Parida. Billionaires are fine. What about the millions?        

Disbelief creates heroes.

"Inside dense forests of Rajasthan's Baran," "Sahariya women are transitioning from low-wage forest foraging to managing automated packaging units, supplying local produce to a guaranteed institutional market set to achieve an annual target worth Rs 80 million." "The initiative was conceptualised soon after IAS Balmukund Asawa joined as Baran district collector around 6 months ago and visited tribal villages in the Shahabad area of the district." ET. IAS stands for Indian Administrative Service which controls all government administration of the Central and state governments. wikipedia. The IAS is a continuation of the British Indian Civil Service (ICS) which was created by the Government of India Act 1858 and which "transferred the administration of India from the East India Company to the British Crown. Under Crown rule, the ICS emerged as what contemporaries and historians alike called the steel frame of British administration." Pubadmin.Institute. "Among the thousands of civil servants who keep India's vast government machinery running, a small number become unlikely public figures every few years." Recently, the commissioner of Maharashtra's Food and Drug Administration Tukaram Mundhe "has led a series of enforcement drives" in which "His team have inspected restaurants and other food businesses, uncovering pest infestations, poor hygiene and expired food." "These actions have made Mundhe a social-media celebrity." "But why are these officers treated as heroes for doing their jobs?" BBC. In Bengaluru, raids on hotels led to the seizure of 132 kg of various types of rotten meat, fish, vegetables and 15 kg of cooking oil. HT. Why has Mundhe become a hero? Because people have suddenly realized that these establishments were serving rotten food because they were not expecting any objection. It means that they could have been doing this for years, maybe decades, with complete impunity. It means previous officers must have been lazy or corrupt. And, it also means that an unknown number of people must have fallen sick, maybe even died, from rotten food. IAS officers curry favor with politicians, are indifferent to the poor and often fudge figures. "Secretaries to the states, who belong to the IAS, often collude with the junior staff, and don't honestly report figures on hunger deaths, malnutrition and usage of toilets, leading to an erosion of accountability," wrote NC Saxena. "Most (IAS) officers assume the trappings of feudal grandeur much like their colonial predecessors but without their efficiency, commitment, or impartiality. Their 'power' props begin with their massive office revolving chairs, with the mandatory white towel - changed regularly - draped over the back for reasons unknown." "These worthless, ironically known as public servant, are largely inaccessible to common people who obsequiously line up outside for redressal of their grievances, sometimes waiting the entire day without getting to see the 'sahib'," wrote Amit Cowshish. Prof Kaushik Basu was the Chief Economic Advisor to the Government of India from 2009-2012. wikipedia. "The use of the word, sir, is very common in Indian officialdom." A senior official, he counted, was saying sir "on average 16 times a minute (there was a minister present)." BBC. 'Chamcha' (sycophant) to a minister; arrogant, uncaring and mendacious with the people. Why do we create a hero of someone doing what they are paid enormously for? It's disbelief. Used to the rot.