Loss of 0.01 jobs.

"India is currently the world's fastest growing major economy," but "During the 1990s, every percentage point of GDP growth yielded roughly 0.41% growth in formal employment. By early 2026, that employment elasticity had plummeted to 0.01." It means GDP growth is not creating jobs for labor. "This is the '0.01 trap' - a state where the economy can double in size while people's economic well-being does not improve," wrote Ejaz Ghani. There is another problem with the growth. "While India's GDP is expected to grow at a healthy 7.4% in 2025-26 in real terms, nominal growth is likely to be just 8%." HT found that "the post-pandemic period has seen the lowest nominal GDP growth since the 1970s despite real growth not doing so badly." The reason is low inflation due to low global commodity prices and deflationary pressures because of China's massive excess capacity in manufacturing, wrote  Roshan Kishore. High inflation helps the government by increasing tax collections and decreasing the real value of its debt. Economics Help. Despite lower inflation, "India's Goods and Services Tax Collections (GST) rose to a record high of Rs 2.43 trillion in April 2026." "The government data show gross GST collections rising 8.7%." "Strong indirect tax collections work well for government finances." TOI. GST came into force on 1 July 2017, replacing all central and state level taxes such as excise duty, VAT, services tax etc. cleartax.in. Since then it has been increasing every year, except for the Covid year of 2020-21. The average monthly collection has more than doubled from Rs 980.83 billion in 2018-19, the first full financial year of collections, to an expected Rs 1.9 trillion in 2025-26. blog.tatanexarc.com. This mirrors consumer price index (CPI) inflation rising to 4.07% in September 2019, soaring to 7.32% in December 2019 and then staying above an average of 6% till about January 2025. RI. GST is a percentage of the cost, so higher the price, the higher is the tax collection. The rate of inflation may be falling since last year, but, since inflation compounds from year to year, even smaller rises on a high base lead to higher GST collections. Not surprisingly "Profit before taxes for 33,000 sampled companies nearly quadrupled between 2019-20 and 2022-23." "Over that period, employment in these firms grew a mere 1.5%," and "real wages for regular workers contracted by 0.7%," wrote Ajit Ranade. India's net direct tax collections rose 5.12% to around Rs 23.40 trillion, while gross direct tax collections rose 4% year-on-year to Rs 28.1 trillion in the financial year ending 31 March. ET. The government is worried about the high cost of oil because of the Middle East conflict but not that worried about a poor monsoon. At worst, growth will fall to 6.7% from 6.9% and retail inflation will rise to 5%. BT. With employment elasticity of 0.01, jobs will fall from 0.069 to 0.067. No one will notice the difference. No worries.                                                                                

It's not AI.

"By almost every conventional measure of sovereign economic health - growth, inflation, fiscal trajectory, external vulnerability and investor confidence in the real economy - India's fundamentals are among the strongest of any emerging market. Yet the rupee has depreciated by over 13% against the dollar in the past two years and by more than 15% since January 2023." This is unfair, wrote Chief Economic Advisor (CEA) V Anantha Nageswaran. In 2025, India received three credit rating upgrades. In May, Morningstar DBRS upgraded India to BBB from BBB (low), in August, S&P upgraded to BBB from BBB-, and in September, Rating and Investment Information Inc (R&I) upgraded India's sovereign credit rating to BBB+ from BBB. pib.gov.in. The reason for the rupee's woes is "the extraordinary pull that the artificial intelligence (AI) supercycle has exerted on global capital flows" "compressing currencies from Seoul and Jakarta to Mumbai regardless of whether  these economies were well or poorly managed.". According to a report from the Bank of Baroda, the Reserve Bank of India (RBI) "reduced the repo rate from 6.50% to 5.25%, a cut of 125 basis points (bps), starting in February 2025." However, "the weighted average lending rate (WALR) on fresh loans declined by 93 bps, showing partial transmission of the rate cuts." ET. In addition to slashing interest rates, the RBI "also pumped nearly Rs 20 trillion into banks, nearly double the amount of liquidity support during the pandemic. Yet the funds simply leaked out of India's banking system as global money managers dumped local assets and took dollars home." The RBI may be forced to raise interest rates as the weak rupee and higher fuel costs raise inflation rates, wrote Andy Mukherjee. The RBI's "balance sheet shows 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." "An increase of this scale has never been witnessed earlier." The RBI transferred Rs 2.69 trillion as surplus to the government , and this "together with RBI's net incremental holdings of government paper, the sum of Rs 8.45 trillion is equivalent to 54% of the fiscal deficit for 2025-26," wrote Madan Sabnavis. Clearly, the RBI is monetizing government debt. "Even when the Federal Reserve prints more currency, there is still a global demand for the US dollar. However, the same will not be the case for the rupee. Thus, when there is excess supply of the currency, it could lead to a fall in rupee value, leading to an outflow of foreign investment," wrote Deepti Mary Mathew. "Net foreign direct investment (FDI) fell from some $40 billion in 2020-21 to about $350 million last year." Indian companies are investing abroad and foreign investors are cashing out. "High-profile exits - Citibank, Allianz, Ford, MG Motors, Hyundai's stake in Ola, Whirlpool, Holcim. BAT and others" "are selling assets, booking profits and reallocating capital to other markets, especially the US, which is now the world's most attractive FDI destination," wrote Ajit Ranade. Even Indian dealers are not buying the fantastic story. The yield on the benchmark 10-year GOI bonds is at 6.981% this morning, down from 7.043% one month ago. ininvesting. com. Perhaps our CEA should ask the RBI why the rupee is sick instead of blaming AI. Foreigners can flee. We can't.

Asking for Vide-Gousset.

Over the last two years India's central bank has been bringing our gold back to India, "physically moving bullion that was stored in vaults abroad to domestic storage inside India." "The Reserve Bank of India (RBI) held 880.52 metric tonnes of gold as of end-March 2026," constituting 16.7% of India's foreign exchange reserves. The total value of our gold reserves is Rs 8.36 trillion and the value of the 680.05 tonnes stored in India is Rs 6.46 trillion. Zee. If RBI's move was a masterstroke, the Banque de France executed a double masterstroke. Instead of physically transferring the gold bars, "Between July 2025 and January 2026, it sold 129 tonnes of older non-standard gold bars" at record high prices at the time. "It then used the proceeds to purchase higher standard bullion on the European market and stored it in Paris." Making a profit of 12.8 billion euros. ET. From 1963 to 1966, "France secretly repatriated a vast portion of its gold -- in an operation dubbed Vide-Gousset (French for emptying the pocket). Under the operation, France brought back 3,000 tonnes from New York and London using ships and aircraft. A section of economists see this as one of the key triggers that put pressure on the Bretton Woods gold convertibility system." NDTV. In 1971, then President Richard Nixon abolished the Gold Standard, which ended the Bretton Woods system and ushered in fiat currencies. wikipedia. This was one of the reasons for the stagflation of the 1970s. As a result, "Central banks have a greater degree of control over their nations' money and the management of variables such as interest rates, overall money supply, and velocity." They can take radical monetary policy actions such as quantitative easing (QE). It has created a large market for hedging currency risks and "The financial crisis of 2007-2008, in particular, proved that central bank control is no guaranteed defense against severe recessions." Investopedia. "RBI Governor Sanjay Malhotra...called for Indian banks to emerge as market-makers, urging a more active global role for domestic lenders as the central banks seeks to shift rupee price discovery onshore." "When offshore rates diverge from domestic spot and forward markets, arbitrage and hedging flows transmit those signals back onshore, allowing offshore sentiment to drive local pricing." TOI. Will foreign investors be comfortable with this system? In March, the RBI suddenly "announced new rules capping the open positions banks can hold in the onshore currency market at $100 million at the end of each trading day. The change, effective April 10, forces lenders to shrink their books, limiting their ability to run large one-sided bets against the rupee." This caused heavy losses to banks. ET. This does not look like price discovery. It looks as if the RBI wants all hedging to happen in India so that it can control it. Foreigners investing in India would want a better value for their investment. Betting is banned in India but Rs 250 billion have been wagered on the assembly election results on foreign platforms through the internet, using cryptocurrencies. The Federal. Repatriating gold is for protection. But you don't trade in gold. You trade in currencies. Market making is not possible if the RBI changes rules suddenly. Why should banks take the risk? It would be Vide-Gousset.    

Land routes need oil.

"Israel has supplied the United Arab Emirates (UAE) with an advanced laser-based air defence system, known as 'Iron Beam'," which is "designed to vaporise short-range rockets and drones." Israel has used these against the Hezbollah. "Israel has also sent an advanced surveillance system, 'Spectro', which can detect incoming drones from up to 20 km away." TOI. Iran thought that attacking ships in the Strait of Hormuz would create global pressure that the US could not resist. Instead, the US blockade of Iranian ports has stopped Iran's fleet of shadow ships which used to go dark at sea before transferring their cargo to China. Hardliners in Iran believe that "Iran has to take the military initiative and start a shooting war again to send oil prices soaring and increase the pressure on Trump." WSJ. "Since its creation in 1979, the Islamic Republic has revolved around a supreme leader with final authority on all key matters of state. But the killing of Ayatollah Ali Khamenei has created a "different order dominated by commanders of the Islamic Revolutionary Guard Corp (IRGC) and marked by the absence of a decisive, authoritative referee." Reuters. "The IRGC-linked Tasnim news agency recently published a map of undersea internet cables crossing the Strait of Hormuz in a veiled warning." Now, Pakistan has operationalized six land routes which "connect major Pakistani ports, including Gwadar and Port Qasim to border crossings such as Taftan and Gabd, enabling direct land access to Iran with which Pakistan shares a border of over 900 km." India Today. Land routes cannot transfer large quantities of goods over long distances and, since both countries are almost bankrupt, who will pay for the diesel used by the trucks. Recently, "Pakistan's Prime Minister Shehbaz Sharif said that the US-Iran war has dealt a serious blow to Pakistan's economic progress made over the past two years." NDTV. Pakistan may be hoping to be paid in Iranian oil which can decrease shortage for the people. "The Trump administration is now calling Operation Epic Fury as Operation Economic Fury." "In total, 31 tankers laden with 53 million barrels of Iranian oil are 'stuck in the Gulf' and have a value of at least $4.8 billion." Iran has about 30 days before it faces severe shortage of storage. The US Treasury has frozen "half a billion dollars in regime-linked cryptocurrency, while also escalating pressure on Chinese 'teapot' refineries, foreign banks and sanctions-evasion networks facilitating Tehran's trade." ET. Iran is smuggling oil by tankers disguised as Iraqi vessels to get round the US blockade, according to maritime intelligence. Fox. Iran has offered to stop its attacks on ships in the Strait "in exchange for a full end to the war, a lifting of the US blockade of Iranian ports and postponement of nuclear talks." In short, a complete surrender by the US and Israel. The killing of Mahsa Amini for not wearing a hijab, (wikipedia) which is a religious reason and the killing of up to 30,000 Iranians on 8 and 9 January for protesting (Time) means that all IRGC and Basij gangsters are Takfiris (wikipedia). Iranians should shoot them on sight even if they are relatives. That will be an Islamic solution to all their problems. For an Islamic nation. And Islamic Guards.         

Brazilians have 7 times more cars.

"India is expected to withstand global economic shocks despite rising uncertainty due to its strong macroeconomic fundamentals, according to a report by the Bank of Baroda." Even though, "global headwinds such as slowdown in the world economy and geopolitical uncertainty could impact India's exports, disrupt supply chains, and lead to higher commodity prices." ET. "Back in 1991, India was on the edge of a financial crisis." "At the same time, Brazil looked far ahead, with its economy twice the size of India's." "Fast forward more than three decades," and "India was until now the world's fourth-largest economy, which recently slipped to sixth position because of depreciation of the rupee, while Brazil is at 11th place. The country has grown at an average of around 6.5% a year, while Brazil's growth has been closer to 2.5%." India's economy is based on services, Brazil's on commodities. msn.com. India has a higher credit rating according to S&P, Moody's and Fitch and a much lower interest rate at 5.25% compared to 14.75% in Brazil. However, India's population is over 1.40 billion crammed into 3.3 million sq km, while Brazil has a population of just 213 million spread out over 8.5 million sq km. Naturally, Brazil's GDP per capita was $10,282 while India's was $2,592 in 2024 and there were 218.59 motor vehicles per 1000 people in Brazil in 2020 and only 32.57 per 1000 people in India. countryeconomy.com. Clearly, on an individual level Brazilians are much more prosperous. "During the financial year ended 31 March 2026, India's imports from China rose to $131.6 billion, up from $65.2 billion in 2020-21. By contrast, India's exports to China in 2025-26 stood at $19.5 billion - still below the $21.2 billion in 2020-21. India's trade deficit with China widened from $44 billion in 2020-21, to $112.1 billion 2025-26, an increase of 155% in five years." DH. In 2024, Brazil exported a total of $378 billion and imported a total of $368 billion, thus earning a trade surplus in goods and services. atlas.hks.harvard.edu. In FY 2024-25, India incurred a cumulative trade deficit in merchandise and services of $-94.26. pib.gov.in. According to a Reuters poll of economists, India's GDP is expected to grow 6.7% in this financial year, but the figures do not capture "an already-notable hit to the country's vast informal sector." About 90-93% of India's workforce is employed in the informal sector, which had 65 million unincorporated enterprises employing 110 million workers in 2022-23. Vajiram & Ravi. Also, "India is facing inflation threats from heat waves and below normal rainfall this year, creating new economic pressures for policymakers already grappling with soaring energy costs." ET. How is it that our economy keeps growing gangbusters while per capita GDP is only $2,813 in 2026 (IMF)? An increase of just 8.5% from 2024. India is better off than Brazil. But Brazilians are better off than Indians. They have more cars. And oil.      

Duplicitous indispensable.

"The United Arab Emirates (UAE) yesterday said it was quitting OPEC, dealing a blow to the oil producers' group as an unprecedented energy crisis caused by the Iran war exposes discord among Gulf nations." "Once firm allies, Abu Dhabi and Riyadh have developed a simmering rivalry, clashing on issues from oil policy and regional geopolitics to the race for foreign talent and capital." As a participant of the Abraham Accords, the UAE signed a peace agreement with Israel in August 2020. state.gov. Last week, the UAE asked Pakistan to repay a loan of $3.5 billion which had been advanced in 2019. "Behind the UAE's decision lies growing frustration in Abu Dhabi" over Pakistan's role as a neutral mediator between Iran and the US. Also, "Relations between Saudi Arabia and the UAE have been strained, particularly over Yemen, where they back rival factions." "Saudi Arabia stepped in with $3 billion in fresh deposits and extended a $5 billion facility." TOI. Almost like using one credit card to pay the bill of another. On 17 September 2025, Pakistan and Saudi Arabia signed a Strategic Mutual Defence Agreement (SMDA), in which, "both countries have committed to treating any act of aggression against one as an act against both (known as collective security)." wikipedia. NATO has a similar clause. "Article 5 of the North Atlantic Treaty states that an armed attack against one NATO member shall be considered an attack against them all." nato.int. In practice, however, treacherous European countries, while happily accepting the US safety umbrella for decades, have not supported the US in the Iran conflict. "United Kingdom Prime Minister Keir Starmer...reiterated that Britain will not be drawn into the ongoing Middle East conflict, asserting that 'this is not our war' and that joining it is 'not in our national interest'." TOI. Why was the attack on Iraq, based on lies about weapons of mass destruction (WMDs) (wikipedia), Britain's war and in Britain's 'national interest'? "It was a war in which the UK mission in Basra came 'close to failure' and which left Britain's military reputation and confidence 'damaged'." BBC. Then Prime Minister Tony Blair was a lawyer and Labour Party leader and had won a landslide victory in the general election of 2001. Keir Starmer is exactly the same. wikipedia. Starmer's stand has not pleased President Donald Trump and "internal US policy discussions explored options ranging from suspending Spain from Nato positions to reassessing support for Britain's claims over the Falklands Islands" as well as withdrawing from Nato. TOI. King Charles III has been sent to apply some soothing balm. In his address to the US Congress, the King said, "Our two countries have always found ways to come together." And, "As my prime minister said last month: 'Ours is an indispensable partnership'." CBS. Clearly, former Foreign Minister Lord Carrington was not the only one, there are a lot more "duplicitous bastards" (upi.com) in Britain even today. China is Pakistan's "iron brother" (ciis.org) so its SMDA with Saudi Arabia could also be an "indispensable partnership". And, equally duplicitous.

Pessimistic Americans.

"The good news is that Americans have never been richer. The bad news is that most of them don't feel like it," wrote Allison Schrager. "In 1967, a little more than 5% of Americans earned or received more than $150,000 (in 2024 dollars). Now more than 30% do. And it's not just the middle class that moved up: In 1967, more than 38% earned or received less than $50,000. Now that figure is 21%." "There are hundreds of Americans who are worth more than a billion dollars," "and more have the sense that something is wrong with the economy." A new study by the American Enterprise Institute finds 31% of households, up from 10% in 1979, now earn $153,864 to $461,592, enough to be considered upper middle class. "The share of wealthy households also rose 3.7%, roughly 12 times higher than in 1979, while poverty and near-poverty rates declined." man.com. "Over the past half-century, incomes have risen across the distribution, aided by economic growth, expanded opportunities - especially for women - and a stronger safety net." However, "High housing costs, expensive college education and rising healthcare expenses can stretch budgets even for households earning well into six figures. For families of color, these pressures are often more acute." The Print. An increase in double-income families and higher income for women are reasons for increasing household wealth. "In 1970, about 11% of women had college degrees, according to the Bureau of Labor Statistics. Today, about 40% of American women have bachelor's degrees, which is linked to higher lifetime earnings." CBS. "Since January 2025, manufacturing jobs have indeed fallen by about 100,000 workers, or about 0.6%. In the same period, though, manufacturing production rose 2.3%, and manufacturing shipments, unadjusted for inflation, climbed 4.2%." "The US is good at making things that happen to be in big demand right now," and "manufacturing indicators have improved since Trump's so-called Liberation Day tariffs a year ago, despite some predictions of calamity." WSJ. Maybe no calamity for the US, but a small calamity for India. "The (Indian) rupee has declined 10.8% in FY26 since the closing levels of last fiscal year. Much of this has come during the pre-war period, even when the dollar was weakening, and other currencies were gaining. This was due to a "calibrated depreciation approach" by the RBI, "massive capital outflow due to concerns over high tariffs and valuations, and widening trade deficit and high gold imports," wrote Payal Bhattacharya. More Indians are borrowing to finance their spending. "Over the past seven years, the number of Indians with outstanding debt has more than doubled, from 128 million in 2017-18 to 283 million in 2024-25," and there has been "a surge in household financial liabilities, ballooning from Rs 3.9 trillion in FY2015 (financial year 2015) to Rs 18.8 trillion FY2024 before moderating to Rs 15.7 trillion in FY2025." NDTV. And yet, "The stagflation risk is real" for the US, and India remains the world's fastest growing major economy. Earnings rising in the US, borrowings rising in India. Calamity or growth. Strange.           

Iran standing firm.

"US Central Command (CENTCOM) forces will begin implementing a blockade of all maritime traffic entering and exiting Iranian ports on April 13 at 10 am ET," and "The blockade will be enforced impartially against vessels of all nations entering or departing Iranian ports on the Arabian Gulf and Gulf of Oman." centcom.mil. On 14 April, "A US destroyer interdicted two oil tankers attempting to leave Iran,..a day after President Donald Trump's blockade went into effect, and instructed them to turn around, a US official said." Reuters. "The Rich Starry, a sanctioned Chinese oil and chemical tanker, masked its exact location in the Persian Gulf for more than 10 days," but "When it emerged into the Gulf of Oman - near where the US Navy is operating to enforce its blockade of Iranian ports - the tanker made an about U-turn." "Early signs are that after years of dodging sanctions, the Iranian shadow fleet may have met its match in the US naval blockade - its ships now appear unable to leave the Persian Gulf." WSJ. "The US and Israel hit at least 17,000 targets over five weeks of war, including factories; rail, road and port infrastructure; government buildings; and military facilities. Iranian state media put the cost of rebuilding at $270 billion." The US blockade will cost an estimated "$435 million per day, including $276 million in lost exports." And, "As many as 12 million jobs, nearly half of Iran's workforce, are at risk from furloughs and layoffs." WSJ. Given this appalling state of the economy and the prospect of real hardship, even starvation, among its people, Iran would be expected to be eager to negotiate with the US. Instead, Iran is refusing to talk unless its conditions are met. "Iran's President Masoud Pezeshkian has said that Iran will not enter into negotiations under pressure, threats and siege, Mehr News Agency reported." Gulf News. "The prospect of direct US-Iran talks remains uncertain as the Iranian delegation led by Foreign Minister Abbas Araghchi departed from Pakistan after holding discussions with Pakistan's leadership." "He also delivered Iran's list of demands and reservations for ending the US-Israeli war." News18. What is the reason for Iran's resistance? The regime wants to ensure its own survival regardless of the people's suffering. "As many as 30,000 people could have been killed in the streets of Iran on Jan. 8 and 9 alone, two senior officials of the country's Ministry of Health told Time." If people starve, or die of lack of food or medicines, they will just blame the Americans and Israelis. Also, they are probably hoping that Trump will be weakened by the vicious hostility of the majority of the US media. "Both CNN and The New York Times disseminated a fake ten-point plan they claimed was from Iran - with CNN going even so far as pushing the narrative that the Iranian regime was victorious and had 'forced' the US to accept its terms." The White House. The media blame Trump for being against free speech. "Since taking office in January, President Donald Trump has waged an aggressive campaign against the media unlike any in modern US history." PBS. Probably because Media Research Center found 92% of negative coverage of Trump in his first hundred days in 2025. But the report is inaccessible on every site. Is Google censoring the truth about media bias? Iran must not be allowed to hold the world to ransom. The US must win.

India invented the zero.

Election freebies announced by the DMK party in Tamil Nadu include "women from families that do not pay income tax will be given a coupon worth Rs 8,000 to purchase household appliances", Rs 2,000 per month to 13.1 million women and Rs 1,500 stipend to college students. AIADMK will give refrigerators to all rice-ration-card holders and NTK will increase jobs by creating five capitals across the state. The Wire. The 2025-26 Economic Survey warned that unconditional cash transfers (UCTs) "are making state governments bankrupt," and preventing investments in "healthcare, building schools, hospitals, roads, paying for teachers'salaries." "A meta-analysis of 115 randomized evaluations across 72 UCT programs in 34 low- and middle-income countries finds that UCTs improve consumption, food security and short-term income stability, but have little impact on consistently improving child nutrition, education, or reducing poverty," wrote Prof Neeraj Kaushal. "The population covered by social protection systems has increased from 22% in 2016 to 64.3% in 2025," so that "poverty in all its dimensions according to national definitions has declined sharply from 24.85% in 2015-16 to 14.96% in 2019-21." TOI. "The Union government spent Rs 6.33 trillion on subsidies and transfers in 2023-24, up from Rs 2.76 trillion in 2018-19, a compounded annual growth rate (CAGR) of 21%." The official figures undercount actual subsidy expenditure by Rs 3 trillion and there are off-budget payments as well, wrote Aditya Sinha. In addition, the central government is providing free food grains to 813.5 million people for five years, starting on 01.01.2024 at a cost of Rs 11.80 trillion over five years. pib.gov.in. The Forest Minister of Maharashtra proposed raising Rs 120 billion to finance its Ladki Bahin (daughter, sister) Scheme by chopping down its teak plantation, wrote Ajit Ranade. India's GDP growth may be among the highest in the world, but "Among the leading signs of weakness: India is losing more people and attracting a lot less money than it used to. This decade, a net total of 6,75,000 people emigrated each year, up from 3,25,000 in the 2010s." Foreign direct investment (FDI) surpassed 4% in China and Vietnam during their boom phase. "That figure never surpassed 1.5% in India and is now just 0.1%, which is one-sixth of the emerging market average," wrote Ruchir Sharma. Indians are flocking to Russia for work. "In 2021,..5,000 work permits were approved for Indian nationals. Last year, almost 72,000 were okayed for Indians - nearly a third of the total annual quota for migrant workers on visas." Reuters. Throwing handouts to win elections leads to tax terrorism which has caused several industrialists to commit suicide (TOI). "Average citizens [often express the feeling] that most of the time attempts by tax authorities to go after taxpayers are to meet some arbitrary collection targets, instead of being based on careful investigation. The numbers seem to partly justify this suspicion: When these disagreements go to court, the government wins less than 8% of the time," wrote Mihir Sharma. With a nominal GDP at $3.916 trillion (TOI) can India afford endless handouts? Only if the rupee falls to the basement. It won't matter. After all, India invented the zero (BBC).