It's 60+3.

"India's services exports touched $421.3 billion in FY26, surpassing $418.3 billion estimated earlier, boosting total goods and services exports to a record $863.1 billion last fiscal year, an official said." "Merchandise exports grew 0.93% in FY26 to $441.78 billion from $437.7 billion in FY25." ET. This glowing report of our export growth omits to report on our imports, and hence, our trade balance. Our combined (services + merchandise) trade resulted in an estimated deficit of -$119.30 billion in FY26, compared to -$94.66 billion last year. pib.gov.in. "India's merchandise trade deficit widened to $28.38 billion in April," compared to $20.67 billion in March. Merchandise exports rose to $43.56 billion in April from $38.92 billion in March, while imports jumped from $59.59 billion in March to $71.94 billion in April. Estimated services exports stood at $37.24 billion and imports at $16.66 billion. ET. "India's trade deficit is likely to remain under pressure in the coming months as elevated crude prices, supply-side disruptions and potential global demand slowdown weighed on exports, according to Nuvama Institutional Equities." Rupee depreciation could increase competitiveness and the increased duty on gold will provide some short-term relief. Electronics deficit jumped from $0.7 billion to $7.6 billion. ET. Not just gold, petrol and diesel prices were also increased by Rs 3 per liter, while the price of CNG, used by all public transport in Delhi by law, was increased by Rs 2. TOI. This was apparently necessary because, "Amid high oil prices. state-run oil marketing companies (OMCs) are losing Rs 20 per liter on the sale of petrol and around Rs 100 on diesel sale, said Sujata Sharma, joint secretary, Ministry of Petroleum and Natural Gas." "On 27 March, the finance ministry reduced the excise duty on petrol and diesel by Rs 10 per liter." So this is an increase of just 4%. Mint. We should be pleased because the price of fuel has gone up only 3.2-3.4% in India it has gone up by 44.5-48.1% in the US, 23.8-50.6% in Vietnam and 15.4-19.8% in Italy. MC. Are we so lucky, or is this just another example of our 'Godi (lapdog) Media' (wikipedia)? "A widely -shared chart posted by many pro-government journalists on social media highlights that India's recent fuel hike was as low as 3%, while countries like the US, UAE and Canada saw spikes ranging from 30% to 80%." This is due to Base Effect, because India's retail prices of fuel were very high compared to other countries when crude prices were low. Comparing retail prices in 2016 with today's, prices in India have jumped by 63%, in Vietnam by 60%, in the US by 36% and in Italy by 34%. That is because Prime Minister Narendra Modi has been taxing fuel without restraint. Taxes comprised Rs 46 out of the retail price of Rs 64 per liter in 2016, Rs 60 out of Rs 80 in 2020 and Rs 62 out of Rs 95 per liter in 2021. The Wire. Increasing the price of fuel will increase transport costs of all goods and services. "India's retail inflation quickened to 3.48% in April, driven by dearer food prices, government data showed." Reuters. So, they must be hoping that it will remain within the government target of 4% +/- 2% on either side  (Reuters). It is not just high prices but also the rupee which has dropped to 96.30 to one dollar this morning (xe.com). This will increase the cost of all imports and, since higher prices mean a lower value of the rupee, as prices rise the rupee will fall even further. The only solution may be to interest rates by a hefty amount, say 100 basis points. That will reduce consumption, and support the rupee by increasing 'carry trade' in which traders borrow currencies with lower returns and invest in one which gives higher returns (Investipedia). It will increase returns for savers.But, it may also cause a severe recession and a fall in share prices. And so, will need guts and character. Not for weasels.        

Another in a long list.

"First came the corona(virus) pandemic; then wars began to break out, and now there is an energy crisis. The decade is turning into a decade of disasters for the world," Prime Minister Narendra Modi said in the Netherlands," (HT) where he was speaking to the Indian diaspora during his latest foreign tour. It is easy to blame everything on global events when our problems were created by how the government responded to those events. "On 25 March 2020, when India had reported only 500 cases, the country went into what was one of the strictest lockdowns in the world. This first set of curbs remained in place till 14 April and was extended four times, each time with gradual relaxations." HT. As a consequence, "India's economy suffered its worst slump on record in April-June, with the gross domestic product (GDP) contracting by 23.9% as the coronavirus related lockdowns weighed on the already-declining consumer demand and investment." TNIE. And yet, when so many millions were dying of Covid in 2021 that crematoriums had to create pyres in car parks (BBC), there was no lockdown. In May 2021, "India's holiest river the Ganges, has been swollen with bodies in recent days." BBC. Consumer demand and investments were declining because of an ill-considered demonetisation of Rs 1000 and 500 banknotes on 8 November 2016 with just 4 hours notice (wikipedia) so the GDP growth rate fell from 8.3% in 2016 to 6.8% in 2017, 6.5% in 2018 and a dismal 3.9% in 2019, the last full financial year before the Covid pandemic struck (worldometer). One theory was that it was designed to hamper the campaigning ability of opposition parties before the assembly election in UP which the BJP won in a landslide with 312 seats out of a total of 403 (elections. in). The medium, small and micro enterprises (MSME) which operate mainly in cash, constitute 45% of the country's output and employ 60 million people, were badly hit. ET. The Reserve Bank of India (RBI) played an active part by choosing masterly inactivity when retail inflation was at a scorching 6-7% (RI) well above the government mandate of 4% with a margin of 2% on either side (ET). The RBI cut its "short-term lending rate on 22 May 2020, in an off-policy cycle to perk up demand by cutting the interest rate to a historic low." It kept the rate unchanged 11 times at 4% till April 2022. zeebiz. com. Retail inflation was at 6.28% in May 2020 when it took its disastrous decision. Rising prices mean a falling value of the rupee. The rupee was at 70.96 against one dollar in January 2020 but had fallen to 73.78 by December. Thomas Cook. The rupee is flirting with 96 to one dollar this morning. xe.com. Mr Modi has asked people for austerity, telling them to work from home, to use public transport, not to buy gold and not to use cooking oil. ET. A report by Brickwork Ratings said that austerity could save $37.8 billion for the government. "The report argues that voluntary demand reduction across fuel, gold and fertilisers may offer the government fiscal breathing room at a time when its ability to absorb oil prices pass-through is thinning." ET. But, could this be another blunder on the part of this disaster-prone government? "Austerity programs employed after the 2008 financial crisis in Greece, Italy and other European countries led to long recessions in many of these countries. Similar experience was reported by Latin American countries that went for austerity after the commodity price collapse of 2014-15 fared poorly too," wrote Prof Himanshu. Is Mr Modi preparing Indians for a depression, with spiking inflation and a collapsing rupee by blaming everyone else and relying on his zombie Bhakts living in an alternate reality (DH) to swallow his bluff as they have been doing all these years? The end could really be nigh. For Indians.

Deficit will drown surplus.

"Moody's Ratings...slashed India's GDP growth forecast for the year by 0.8% to 6% on subdued private consumption, capital formation and industrial activity amid higher energy costs." "For calendar year 2027, Moody's slashed GDP growth estimates by 0.5% to 6% for India." ET.  Already, "Petrol and diesel prices were hiked by Rs 3 per liter yesterday after state run oil companies faced mounting losses due to a sharp rise in global crude oil prices." "India's retail inflation rose marginally to 3.8% in April, driven by dearer food prices, government data showed." "Annual inflation remains below the central bank's 4% target," as "Food inflation was at 4.2% in April, compared with 3.87% in March." Reuters. However, "India's wholesale inflation unexpectedly accelerated to 8.3% in April, its fastest pace in three-and-a-half years, as surging energy costs triggered by the Middle East conflict pushed up fuel and manufacturing prices across the economy, government data showed." ET. Wholesale prices will feed into retail prices with a lag. But, oil prices are not surging that much. Brent crude is at $109.3 per barrel this morning. oilprice.com. It was much higher in 2008, 2011-14, and 2022-24. eia.gov. What has really changed is the Indian rupee, which has crashed. It was about 49 to one dollar in 2008, at 55-60 per dollar from 2011-14 and at 81-83 to one dollar from 2022-24. Thomas Cook. One dollar buys Rs 95.99 this morning. xe.com. This is not wholly because of the Iran conflict, the rupee has been falling for some time. That is because the RBI has been printing money to finance government spending. "The Reserve Bank of India (RBI) balance sheet shows that the amount of government paper (including treasury bills) held as on 28 February was Rs 21.34 trillion. It was Rs 15.58 trillion in March 2025." "The increase so far of Rs 5.76 trillion in RBI holdings of government paper is remarkable. An increase of this scale has never been witnessed earlier," wrote Madan Sabnavis. It means that the RBI is buying up government debt by printing rupees, or financing its deficit, as was the practice earlier. "As part of the 1991 reforms, the government and RBI decided to stop this financing arrangement." "In 1997, the government and RBI signed an agreement that stopped this practice of deficit financing." The India Forum. This year's budget estimates the deficit between government revenue and spending to be Rs 15.69 trillion. prs.india.org. Is that a gross underestimate? The Asian Development Bank reports that "The Union government spent Rs 6.33 trillion on subsidies and transfers in 2023-24," but "the official figures undercount actual subsidy expenditure by about Rs 3 trillion at the state level alone; dozens of schemes, pensions, loan wavers, investment promotion subsidies and electricity shortfalls are simply not classified as subsidies," wrote Aditya Sinha. Every year the RBI transfers its surplus to the government. In recent years it has been transferring record amounts. It transferred Rs 1.02 trillion in 2023-24 and Rs 2.11 trillion 2024-25. panplexa.com. Last year it paid another record of Rs 2.69 trillion. HDFC. This year the government expects Rs 3.16 trillion, another record. ET. It is hard to believe that the RBI is making so much profits every year. However, it has the authority to print as many rupees it requires. Foreigners are not waiting. "Net outflow by foreign portfolio investors (FPIs) from the stock market for the current year crossed the Rs 2-trillion mark for the first time ever." TOI. As they repatriate in foreign currency the rupee falls in value. To protect the rupee, the RBI has been selling dollars in the spot market as well as in the unseen non-deliverable forward (NDF) market. "The RBI's short dollar book is close to $100 billion across offshore and onshore markets. A bulk of it is in the NDF market, where the central bank has ramped up its intervention in the last few weeks." Linked.in. Appointing obedient officials to help in raiding the central bank may look easy but there will be a price to pay. At some point the RBI will run short. And the rupee will collapse. What then?

Too many friends.

"Prime Minister Shehbaz Sharif has said that Pakistan is now recognized as a 'responsible' nation that not only knows how to defend itself, but has also emerged as a 'guarantor of global peace and security." "He also warned that any aggression against Pakistan would receive an 'immediate, befitting and full-spectrum response'." "He said Islamabad's role as a key mediator during the US-Iran conflict and its efforts to seek an end to violence have earned worldwide acknowledgement." DH. "Pakistan is in a unique position as it is trusted by the US, Iran and the Gulf countries." Also Field Marshall Asim Munir is President Donald Trump's "favorite field marshall". BBC. On 17 September 2025, Pakistan signed a Strategic Mutual Defence Agreement (SMDA) with Saudi Arabia which commits "treating any act of aggression against one as an act against both (known as collective security". wikipedia. This means that Pakistan could face "a potential 'nightmare scenario' if negotiations collapse, and it gets dragged into fighting with its neighbor Iran" in support of the Saudis. That scenario is not as fanciful as it sounds because, "Saudi Arabia carried out a series of unpublicised airstrikes on Iran in late March in retaliation for attacks inside the kingdom during the Middle East conflict, according to sources cited by Reuters. The strikes marked the first known case of Saudi Arabia directly conducting military action on Iranian soil." TOI. To pacify Iran, "Pakistan has opened six overland transit routes to move shipments into Iran, aiming to clear more than 3,000 containers stranded at Karachi and Port Qasim," out of which, "Spanning just 89 kilometers, the Gwadar-Gabd corridor has been activated as a key land route connecting Pakistan to Iran, cutting travel time to the border to just 2-3 hours compared to 16-18 hours from Karachi." oilprice.com. It may seem very easy but Gwadar is a port city in the Pakistani province of Balochistan and the China-Pakistan Economic Corridor (CPEC) connects Gwadar to the Chinese province of Xinjiang. wikipedia. A rebel group, the Balochistan Liberation Army (BLA), "accuses Pakistan's federal government of exploiting the rich mineral resources of its largest province without the local population benefiting. In February, "The BLA said it had launched a coordinated operation dubbed Herof, or 'black storm' against security forces, and claimed to have killed 84 members of the security forces and kidnapped a further 18." The claim was not verified. BBC. To the BLA the CPEC is another means of exploitation of their people and so they have repeatedly attacked Chinese nationals forcing the government to form a force of 12,000 soldiers to protect Chinese nationals in the country. wikipedia. In further help to Iran, "Pakistan, which was trying to play the role of a mediator by holding peace talks to end the US-Iran war, allowed several Iranian military aircraft to park on its airfields to shield them from American airstrikes, a report said." TOI. To get more friends, "Pakistan's Defence Minister Khwaja Asif, in an interview with Hum News.., indicated more progress towards formalizing a multilateral defence alliance among Muslim majority states, the so-called Islamic NATO." Pakistan and Saudi Arabia already have a defence pact and they are trying to get Qatar and Turkiye to join them. ET. In 2017 Saudi Arabia, UAE and Egypt severed diplomatic relations with Qatar, known as the New Arab Cold War (wikipedia) which were restored in 2021 after mediation by Kuwait and the US (BBC). Pakistan seems to be becoming everybody's friend. What if they start fighting among each other? Whose side will it take? Perhaps, our Prime Minister could help. He has toured almost every country. And, is doing it again.  

Eat less for the nation.

"India has raised import tariffs on gold and silver to 15% from 6%, government order said.., as part of efforts to curb overseas purchases of the metals and ease pressure on the country's foreign exchange reserves." Reuters. "The ongoing West Asia crisis is a 'live balance of payments stress test' for the country - directly impacting inflation, the exchange rate and the current account, chief economic advisor V Anantha Nageswaran said." "Nageswaran called India's exposure to the West Asian crisis structural and cautioned that the 'readings' are not of a temporary shock that will self-correct when the situation stabilizes." TOI. Why not? What is he not telling us? After all, in December 2025, "RBI Governor Sanjay Malhotra...characterised India's current macroeconomic moment as a 'rare Goldilocks period', that marks high economic growth and exceptionally low inflation."  DD News. Also, "India's foreign exchange reserves declined by 7.7 billion US dollars, standing at $690 billion for the week ending May 1." News on Air. Also, "The IGoM was informed that the country is secure, and there is no shortage of any petroleum product,..India has 60 days of crude oil, 60 days of Natural Gas and 45 days of LPG rolling stock," as per the Ministry of Defence press release." ET. If everything is hunky dory, as we Indians like to say, why is the CEA warning about a "live balance of payments stress test"? The last time we heard of a 'balance of payments' problem was in 1991, when we ended up pledging 67 tons of our gold to pay for our imports. wikipedia. Now, "As of September-end, out of total gold holdings of 880.8 tonnes, the RBI maintained 575.8 tonnes within India, while 290.3 tonnes remained in the custody of the Bank of England and Bank of International Settlements." TOI. We don't have to airlift any gold, it's already there. How convenient. So, what are they not telling us? The compound annual growth rate (CAGR) of the Real GDP was above 12% since 2004, 6.2% (2014-2026) and below 5.5% (2019-2026). "GDP calculation revision with a new base year (2022-23) has revealed that earlier estimates (base year 2011-12) had overstated GDP." "Net Foreign Direct Investment (FDI) has turned negative, reflecting diminished investor confidence." Vajiram & Ravi. "Since the beginning of the war, the Reserve Bank of India (RBI) has burnt nearly $38 billion in forex reserves, leading to a decline in import cover to 10.6 months from 11.3 months before the start of the war. Moreover, the RBI built up its gold reserves over the past year, and they now account for about 16% of total reserves. Excluding these, the import cover drops by about two months."  Mint. That means 8.6 months. In 2008, the subprime crisis affected the global economy with banking and trade severely affected (wikipedia) and the price of oil spiked to $128.08 per barrel in July (eia.gov) but we did not hear such alarming warnings. In 2024, India received $138 billion of inward remittance. Mint. As financial pressures build up all over the world, these might fall and the current account deficit would increase. Prime Minister Narendra Modi has asked people to decrease the use of petrol, not to purchase gold and to use less cooking oil and India could borrow foreign exchange from Indian expatriates. Reuters. If Indians cut down on food they will need less cooking oil as well as less gas. That is double saving. Ingenious.    

Trust is gold.

"The central government has raised customs duties on imports of precious metals, including gold and silver from 6% to 15%, just days after Prime Minister Narendra Modi urged people to adopt austerity measures such as deferring decisions to buy gold by one year to save precious foreign exchange." HT. As an unintended consequence, "Indian jewellery market is seeing a surge in gold purchases, with sales up 15-20% after PM Modi asked people to delay gold spending." Customers are rushing to buy bridal jewellery due to fears of higher import duties or GST changes." Whalesbook. The rise in taxes on gold is great news for smugglers. In 2025, "Gold smuggling into India has spiked ahead of key festivals," although, "Smuggling of gold into the world's second biggest buyer of the precious metal had fallen after the government slashed import taxes on it to 6% from 15% last year." As "Gold prices in India hit a record Rs 128,395 per 10 grams," "smuggling a kilogram of gold is very lucrative for grey market operators, with margins exceeding Rs 1.15 million from dodging the 6% import duty and a 3% local sales tax." The margin had fallen to Rs 630,000 per kg after duty reduction. "In the 2024/25 fiscal year ended in March, government agencies registered  3,005 cases of gold smuggling and seized 2.6 metric tons of the metal." Reuters. Customs duty on gold is changed quite frequently. It was 4% in 2012, rose to 10% in 2013, then to 12.88% in 2019 and to 15% in 2022, before being slashed to 6% in 2024. primeinvestor.in. In 2015, the government introduced Sovereign Gold Bonds which were priced at the market value of 24 carat gold. This allowed Indians to invest in gold without actually buying the metal and since, this was priced in rupees, it saved foreign exchange for the government. wikipedia. However, by the time the bonds came up for redemption the price of gold had shot up, imposing a fiscal strain on finances and so customs duty was slashed to reduce the amount of payout. People perceived this as a loss due to price fixing. Indians buy gold as a hedge against government policy. Average consumer price index (CPI) inflation in India has been above 5% in most years since 2014 (rateinflation.com) , whereas it was below 2% in the US, rising to 4.7% in 2021, 8.0% in 2022 and 4.1% in 2023, dropping to 2.6% in 2025. usinflationcalculator.com. The Reserve Bank of India (RBI) did not increase interest rate to bring down inflation rates since August 2018, increasing it by 40 basis points in an emergency meeting in May 2022. ET. As a consequence the rupee has fallen from 62 to the dollar in 2014 (bookmyforex.com) to over 95 rupees to one dollar today (xe.com). Indians are not allowed to invest in foreign currency, known as capital account convertibility (tatamutualfund.com) so they buy gold which is priced in dollars. People do not understand monetary and fiscal policies but they can feel that their money is being transferred to the government. They buy gold. Trust is gold.

Spooky speech.

  Prime Minister Narendra Modi asked Indians to work from home and use public transport to use less fuel and farmers to use less chemical fertilisers to reduce use of petroleum products. He also asked Indians to stop buying gold, buy locally made shoes, bags and accessories and to cut cooking with oil to conserve foreign exchange. ET. When Dear Leader speaks the world listens. Or, at least, the markets do. And they did. "Immediately after this explosive speech from the PM, the stock market took a massive beating." "The effects of this speech delivered by Modi in Hyderabad was so severe that nearly Rs 7 trillion was wiped off the market." "The Sensex dropped around 1,313 points to close at 76,015, while the Nifty fell 360 points, ending at 23,816." gulte.com. "The rupee weakened by 82 paise to settle at a record low of 95.31 against the US dollar," as "Modi's comment sparked concern about the balance of payment challenges and stress in the economy.""Japanese financial services firm Nomura said the prime ministers' austerity appeal is a signal that India's fiscal position is reaching a tipping point." DH. Nomura projected that the current account deficit (CAD) will rise to 2.4% of GDP in FY27 and the fiscal deficit would be 4.6% of GDP, higher than the government's target of 4.3%. The rupee is trading at around 95.50 to one dollar this morning. xe.com. India's "Swachh Bharat Mission (SBM) was launched in 2014 to achieve an open defecation free (ODF) India in five years." By 2019, "the campaign realized over 100 million household toilets constructed, benefiting 500 million people across 630,000 villages." sdgs.un.org. A rare success imitated by Nigeria, Indonesia and Ethiopia. If farmers are not to use chemical fertilisers, will they urinate and defecate to fertilize their fields? The Reserve Bank of India (RBI) has been strenuous in its efforts to cut borrowing costs by increasing liquidity. A report by the Bank of Baroda noted that "the RBI reduced the repo rate from 6.50% to 5.25%, a cut of 125 basis points," "to lower borrowing costs and support private investment." ET. The RBI is also trying to infuse liquidity into the market "through open market purchases of government securities and long-tenor dollar-rupee swaps." At the same time dollar sales to support the rupee sucks liquidity out of the system. policycircle.org. Meanwhile, "Net outflow by foreign portfolio investors (FPIs) from the stock market for the current year crossed the Rs 2 trillion mark for the first time ever." TOI. Foreign funds convert rupees to foreign exchange before repatriation. It seems that the RBI is being vanquished by the 'Impossible Trinity' because it is trying to push down borrowing rates through monetary policy, allowing free capital movement by FPIs and support the rupee at the same time. But it's not just the impossibility of monetary policy but a failure of fiscal restraint is the conclusion from Mr Modi's speech. That's spooky. Extremely.                                                                                                                                                                                               

Fourteen curbs for us.

"Speaking at an event in Secunderabad,""Prime Minister Narendra Modi yesterday urged citizens to revive work-from-home practices and avoid non-essential foreign travels for at least a year, citing growing concern over the economic impact of the ongoing West Asia conflict." ET. Speaking in Hyderabad next, he enumerated 14 rules to be followed by citizens, including no foreign travel, use of public transport, reduce use of edible oil, not to buy gold and buy locally manufactured shoes, bags and accessories. ET. Dear Leader is known to offer advice on every subject, but surely being the foremost citizen of the nation he should lead by example. PM was in Secunderabad "inaugurating and laying the foundation stone for projects worth around Rs 94 billion in Telangana." ET. This was a most  non-essential travel and could have been delegated to some local politician with considerable saving in aviation fuel. Mr Modi's office is in Delhi (wikipedia), but his itinerary shows that he was not in his office almost throughout April and has already visited Bihar and West Bengal in May (pmindia.gov.in). In addition, he made 11 foreign trips in 2025 and has already been out of India twice this year (pmindia.gov.in) and is to shortly visit the United Arab Emirates on his way to the Netherlands, Sweden, Norway and Italy (HT). He could not tour Croatia, Norway and the Netherlands last year because of the Pahalgam attack on 22 April in which terrorists shot 26 civilians to death  (wikipedia). Most inconsiderate of the terrorists. In response, the Congress Party said that 'it was 'shameless, reckless and downright immoral' for the Prime Minister to ask people to face inconvenience instead of putting contingency measures in place to keep the economy insulated from the global crisis." India Today. And also to sit in his office for which he was elected. The Congress is entitled to ask because it was in office when the price of oil spiked to $80 a barrel in October 2007, rose to over $106 in April 2008 and then to $128 in July. The price fell in December 2008 but jumped again to over $80 per barrel in December 2010 and stayed above $90 barrel, occasionally reaching above $100, till August 2014. Since then it has stayed below $60 a barrel, briefly spiking in 2022 probably because of Covid. eia.gov. But, during the period the Congress was in power, the retail price of petrol stayed at reasonable levels, briefly reaching above Rs 70 per liter in 2013 and 2014. However, we have been paying over Rs 80 per liter since 2020 and over Rs 95 per liter since 2021. cleartax.in. Because of extortionate taxes levied by this government. We, the people, have been looted of over Rs 40 trillion through taxes on petrol since 2014-15 as government figures show. ppac.gove.in. Shameless and immoral. Power and tourism at any cost.