Mediate or fight.

Last Easter, "Catholic priests in dioceses across the United States welcomed the largest classes of converts they had seen in 15 or more years." And, "A former intelligence official testifies under oath that the US has been secretly retrieving and reverse-engineering crashed UFOs for decades, and that nonhuman 'biologics' have been recovered. Demonic vexation, teleportation, increased interest in religious practice - these phenomena are all signs that life feels, to many, increasingly charged with unseen forces. You might say it has been re-enchanted." DH. Not just the US, the Middle East is also getting weirder. "Pakistan's army chief is in Tehran as diplomacy around the Middle East war gathered pace," even as "US media outlets were reporting that the US is weighing new military strikes on Iran." Field Marshall Asim Munir "was welcomed by Iran's Interior Minister Eskander Momeni and Pakistan's Mohsin Naqvi. Naqvi had visited Iran for the second time in a week.., meeting President Masoud Pezeshkian and Foreign Minister Abbas Aragchi." TRT. Since Pakistan shares a 909 km (565 miles) border with Iran (wikipedia), its efforts to help Iran reach a deal with the US would be normal, except that Pakistan has signed a Strategic Mutual Defence Agreement (SDMA) with Saudi Arabia, under which "both countries have committed to treating any act of aggression against one as an act against both (known as collective security) (wikipedia)." Iran attacked Arab countries between 28 February and 18 March 2026, during which, "Saudi Arabia was hit with at least 38 missiles and 435 drones." wikipedia. Following which, "Saudi Arabia launched numerous, unpublicized strikes on Iran in retaliation for attacks carried out in the kingdom during the Middle East war," marking "the first time that the kingdom is known to have directly carried out military action on Iranian soil." Reuters. In addition, "Pakistan has deployed 8,000 troops, a squadron of fighter jets and an air defence system to Saudi Arabia under a mutual defence pact, ramping up military cooperation with Riyadh even as Islamabad serves as the main mediator in the Iran war." "Pakistan has deployed a full squadron of around 16 aircraft, mostly J-17 fighters made jointly with China," a Chinese HQ-9 air defence system and may deploy up to 80,000 troops in Saudi Arabia if necessary. Reuters. Though Pakistan achieved independence in August 1947 (Britannica), "Till mid-August 1954, when it finally adopted Qaumi Taranah, the newly founded country had a flag, a governor-general, an army, and a blood-soaked disputed frontier with India, but no official song to give voice to its identity." "Thereafter, when it finally settled on an anthem, it was overwhelmingly Persian in content." The Wire. They did not adopt a song in Urdu because Urdu developed in northwestern India and was known as Hindustani at one time. It is derived from Arabic and Persian, while Hindi is derived from Sanskrit. Britannica. And yet, though Pakistan has over 70 languages, Urdu is its national language and "while sharing official status with English, it is the preferred and dominant language used for inter-communication between different ethnic groups." wikipedia.  Their national anthem is not in their national language. How weird is that? Also, while acting as a mediator, will Pakistan attack Iran if there is open war between Saudi Arabia and Iran? Pakistani troops will be fighting Persians while singing their national anthem in Persian. In India, the Cockroach Janta Party (CJP) has more followers on Instagram than the ruling BJP. ET. People seem to be doing weird things because they have lost faith in their governments, but are powerless to do anything to politicians and civil servants. No way to show their frustration.   

CJP could be the answer.

To boost manufacturing, a 'Make in India' initiative was launched by Prime Minister Narendra Modi on 25 September 2014. The aim was to increase the growth rate and, as a result, the share of manufacturing to 25% of GDP by 2022. In fact, the share of manufacturing has fallen from 16.7% of GDP in 2013-14 to 15.9% in 2023-24. wikipedia. In May 2026, "India is preparing a fresh manufacturing push centered on identifying nearly 100 products that are either not produced domestically or are inadequately manufactured despite existing capability, signalling a sharper industrial policy focus amid shifting global supply chains, geopolitical tensions and the country's ambition to emerge as a global manufacturing hub." TOI. "The manufacturing activity's share in the GDP has declined to 13% in 2024 compared to 16% in 2015," because, "India's manufacturing growth is constrained by low spending on research and development (R&D) at just 0.6% of GDP and it should increase to 2% by 2035." ET. Countries "trying to emulate the East Asian model would produce, at best, manufacturing enclaves, with a tiny sliver of productive firms integrated into global value chains while the bulk of the labor force remains stuck in low-productivity activities," wrote Prof Dani Rodrik. "Competing successfully on world markets and with China at home requires skills, technologies and other capabilities that are in short supply," and "The result is that even when countries manage to pull more workers into manufacturing, this happens through the expansion of small-scale, mostly informal, enterprises and at the expense of productivity." Chief Economic Advisor V Anantha Nageswaran and Finance Minister Nirmala Sitharaman have complained about lack of investment by the private sector even though profits have increased by 30% since the pandemic. Mr Nageswaran blames "nepo babies" who choose to set up family offices elsewhere and live on passive investments rather than risk in new ventures. "The real reason India's richest don't want to invest domestically - and, possibly, why they take some of their cash abroad - is because they estimate local political risk as being too high." "If they earn money in India, their first instinct is to try and diversify geographically, so they escape New Delhi's control as much as they can." And if Indians are reluctant to invest here, why would multinationals? wrote Mihir Sharma. To protect Indian industries from competition the government raised tariffs on imports. "As of 2024, the average tariff on non-agricultural goods in India stood at 13% compared to significantly lower rates in China (6.5%), Malaysia (5.3%) and Vietnam (8.3%)." "In parallel, the government has significantly expanded the use of Quality Control Orders (QCOs) especially since 2020." CSEP.  And so, "A report by the Global Trade Research Initiative (GTRI) warns that QCOs on fasteners are raising costs, choking supplies and disrupting production." "cutting MSME output and risks triggering bottlenecks in sectors such as automobiles and infrastructure." "Fasteners - bolts, nuts, screws, washers, rivets and studs - are produced in thousands of variants, often in small batches on the same machine." QCOs are restricting production. ET. "Large companies and factories have failed to generate jobs at the pace required to absorb a growing labor force. In that vacuum, the unorganized sector - small shops, workshops, grocery stores, tiny manufacturing units and street vendors - remains the fallback." "For 2025, the government estimates 79.2 million such entities, up from 73.4 million in 2023-24. These enterprises generated about Rs 20 trillion in output in 2025, compared to Rs 15.4 trillion in 2025-16." But, "Their share in India's value added has fallen from 9.1% in 2015-16 to 6.3% in 2025." Mint. Since profits have fallen, growth in wages of workers has stagnated. Wages of non-unionised contract workers have stayed at between Rs 10,000-15,000 per month for years and are insufficient to pay for rent and food. Workers in Haryana and Noida protested last month. BBC. Perhaps, it would be best if the government stayed out and didn't try to help. But control is power, and a life of no restraint. The Cockroach Janata Party (BBC) represents the mute. CJP could be the answer. Vote CJP.

No question, we have yoga and vaccines.

As Prime Minister Narendra Modi "walked away after a joint press conference with Norwegian Prime Minister Jonas Gahr Store, journalist Helle Lyng called out to him, asking why he does not take questions, but got no response." "Modi has not held a traditional press conference since taking office in 2014, and has rarely answered questions on his trips abroad." BBC. "The gagging of the Indian media now normalized after 12 years of a government obsessed with evading questions, either outrightly denying data, or not making data accessible. It is capped by zero press conferences by the prime minister - a first in independent India." "Later, Lyng was invited by the Indian Embassy - publicly on social media - to a presser by diplomats," where "she was told, incredibly, that India is the land of yoga, has handled Covid well, and exports vaccines and medicines." The Wire. No wonder, "India is 157th out of 180 countries in the 2026 World Press Freedom Index released by Reporters Without Borders on 30 April." It's a drop of 6 places from 151 in 2025. The Wire. Who cares? We have yoga and Covid vaccine. The whole world must think we are a nation of mindless apparatchiks (wikipedia) programmed to babble inanity to protect Dear Leader from any accountability. China-based analyst Keji Mao recalled "presentations he had delivered years ago on China's industrial and technological ecosystem." The Vietnamese "listened carefully when he discussed the gaps between Vietnam and China," and "they openly acknowledged Vietnam's shortcomings and even asked for deeper analysis on areas where the country lagged behind China's industrial model." Indians, on the other hand, became "'quite argumentative' and attempted to challenge the Chinese participant on every point raised." BT. Contemptuously dismissing any comparison, Victor Gao, Vice President of the Center for China and Globalization, said, "We are probably minimum 20 years, if not 30 years, apart from each other in terms of economic development, science and technological development." BT. In the Netherlands, just before Mr Modi arrived, Prime Minister Rob Jetten said that "there were concerns among the Netherlands and other EU member states about 'developments in India' under Modi's BJP." To that MEA Secretary Sibi George pointed to India's 1.4 billion people, massive voter turnouts and a 'noisy democracy' powered by 900 million smartphones. The Wire. Voter turnout has been curtailed by Special Intensive Revision (wikipedia) just before elections with no time for corrections. In Bengal, "The BJP secured 292,24,804 votes against the TMC's 260,13,377: a margin of 32,11,427 votes that translated into a 127-seat lead. This is significantly lower than the 9.1 million voters deleted during the revision, and even lower than the 6.6 million voters removed for reasons other than death." DH. Definitely does not pass the smell test (idioms), the stench of rot still lingers. As for smartphones, India had the second highest number of internet shutdowns in 2024, after Myanmar. TOI. "The issue before the world is not whether India is an ancient civilization," It is. "The real question is whether modern India, government by a Constitution that promises equality to all citizens, is living up to those promises today," wrote AJ Philip. Ask no questions and you'll be told no lies. For some of us, a government that refuses to explain itself is fascist. But, we have yoga and Covid vaccine. So, there.

Not just a piece of paper.

"The rupee declined 10.8% in FY26 since the closing levels of last fiscal year - recording the worst performance since FY12. Much of this decline came during the pre-war period, even when the dollar was weakening, and other currencies were gaining," wrote Payal Bhattacharya. "India's close to $700bn in foreign exchange reserves will not run out because of higher imports. The only way reserves get depleted is if RBI decides to sell foreign exchange reserves to support the rupee." A weaker rupee is good. "A depreciation raises the cost of imported goods and overseas travel in rupee terms, encouraging households and firms to to economise on precisely those expenditures that strain the balance of payments. In doing so, it delivers - more effectively and more durably - the shift towards domestic spending that voluntary restraint seeks to achieve," Prof Gita Gopinath. India is losing foreign exchange as foreign institutional investors (FIIs) are selling Indian stocks. "FIIs have been net sellers in 13 out of the past 20 months." In 2025, FIIs sold Rs 1.66 trillion in equities and bought Rs 947 billion of debt. But, "Since the US-Israel war with Iran began at the end of February, FIIs have sold Rs 2.03 trillion in equities and also pulled out Rs 125.12 billion from debt." Domestic institutional investors (DIIs) have been buying as FIIs have sold out. DIIs now hold 19.24% of the NSE-listed companies while FIIs hold 16.13%. In December 2020, FIIs held 21.16% while DIIs held 13.58%, wrote Sreedev Kanyakumar. Buying by domestic investors prevents any significant fall in share prices, limiting losses of foreign investors and repatriation of more foreign exchange. Since Sanjay Malhotra took over as Governor of the Reserve Bank of India (RBI) in December 2024, the RBI has slashed its interest rate by 125 basis points (bps) and also pumped nearly Rs 20 trillion into banks to bring down borrowing costs. "Yet, the funds simply leaked out of India's banking system as global money managers dumped local assets and took dollars home," wrote Andy Mukherjee. The RBI has been buying up government debt and "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." "Starting from automatic monetization, under which 4.6% of treasury bills were once issued by the government to RBI for funding the deficit," "In the 90s, we shifted to the market becoming the sole point of contact for the government." "However, with frequent OMOs (open market operations) in recent times, there has been a tendency for that debt to be transferred to RBI and held by it," wrote Madan Sabnavis. There has also been an "extraordinary rise in RBI's surplus transfers to the Union government. In 2023-24, it transferred Rs 2.11 trillion, which was 7.6% of the Centre's overall revenue receipts. The transfer for 2025-26 may be even larger than last year's record Rs 2.69 trillion." The International Monetary Fund (IMF) has warned of "quasi-fiscal" support by the RBI, wrote Ajit Ranade. The rupee has fallen not just against the US dollar but by nearly 12% against the Pakistani rupee and by 10% against the Bangladesh Taka. ET. The steep depreciation in the rupee is unfair because India has a low current account deficit, low external debt and is bringing down its fiscal deficit. India has also received a credit rating upgrade from three institutions. It is because of the flood of investment into artificial intelligence (AI) companies drawing funds away from emerging market economies, regardless of fundamentals, wrote Chief Economic Advisor V Ananatha Nageswaran. Theoretically, a central bank cannot go broke because it can print currency (ET), but printing currency makes it weaker, and if the currency keeps losing value, the wealth of the people and the country will become worthless. India may not be bankrupt but its citizens will feel like that. The rupee is not just a piece of paper. It is food, medicines, rent, education and travel for us. Say no to fiscal support. It's suicide.    

Free but expensive.

"Nitin Gadkari, the Minister of Road Transport and Highways in India, has urged a strong initiative towards achieving 100% ethanol fuel usage in the country in the near future." "E100 refers to a high-ethanol fuel blend that is primarily or nearly pure ethanol by volume." NDTV. Ethanol is produced from sugarcane, rice and maize. "Roughly 10,790 liters (of water) go into producing one liter of ethanol from rice, compared with about 3,630 liters for sugarcane and 2,570 liters for maize." Also, "Nearly 60% of maize is rain-fed, while sugarcane and rice depend heavily on irrigation." However, the rice has already been produced so it may be better to use it for ethanol rather than letting it go to waste. While ethanol will save foreign exchange by reducing crude oil imports, we may have to import more pulses and oilseeds as farmers divert land to growing maize. Since ethanol produces less energy than petrol, consumers will have to buy more of it, and it produces acetaldehyde and formaldehyde which are toxic. NDTV. "Ethanol burns faster than petrol, delivers about 34% less energy per unit, and is corrosive because it absorbs water. Brazil's flex-fuel vehicles (FFVs), re-engineered to run on ethanol, are built to counter these drawbacks and reassure buyers." The Indian government has reassured car owners of ethanol's safety but no one believes them. Earlier claims that ethanol will be cheaper were wrong. "By govt's own admission, procuring ethanol is now more expensive than refined petroleum - a situation that will only worsen as our fuel needs grow," wrote Anjana Menon. To save on fossil fuels and reduce pollution India has been investing in renewable energy. As a result, "Power prices on exchanges have slumped to zero in multiple trading sessions, despite an expected surge in summer electricity demand," because "India's installed solar capacity has risen to 154.23 GW, but battery and energy storage capacity has not kept pace." Mint. Power distribution networks within states are patchy. "Non-fossil sources already account for nearly half of installed capacity, with over 250 GW deployed, yet contribute only about a quarter of actual power generation." And so, "Between May and December, 2.3 terawatt-hours of solar power was curtailed. In Rajasthan, curtailment has reached 50%, with 3.3 GW lying idle." HT. "India is scrambling to solve a growing clean-energy paradox: the country is adding renewable power at record pace, but lacks the storage capacity needed to to use that energy when the sun sets and wind generation drops." The Union government is planning support for long-duration energy storage (LDES) which can supply power for over eight hours instead of battery energy storage systems (BESS) which can supply up to four hours. The plan was for 47 GWh of LDES by FY 27 but only 795 megawatt hours (MWh) of BESS has been installed so far. Mint. The government wants people to use public transport to save on petrol. Since 2014, the government "has splashed out nearly $26bn on building metro connectivity across nearly two dozen Indian cities. The network has grown fourfold from under 300km to more than 1,000km by 2025." Average daily ridership has jumped from three million to 11 million. But, "An Indian Institute of Technology Delhi report from 2023 showed ridership of merely 25-35% of the projected figures across corridors." BBC. Renewable energy is not cheap because we need a parallel system based on fossil fuels when the sun sets and the wind drops. "Ask families in Germany and the UK what happens when more supposedly cheap solar and wind power is added to the national mix, and they will tell you by looking at their utility bills: power gets far more expensive," wrote Bjorn Lomborg. "Poor countries are especially hurt by false claims of cheap green energy." Having pocketed over Rs 40 trillion from extortionate taxes on cheap crude oil since 2015 (ppac.gov.in), the government is now in extreme panic. If they cut taxes the fiscal deficit will balloon while increasing prices will cause inflation and public anger. So they are increasing prices by small amounts, first by Rs 3 and then by Rs 0.90. (TOI), hoping people will not notice or shrug off small increases if they did. Masters of duplicity. Diabolical.   

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 increase 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.

Endurance could be painful.

"The US economy created 115,000 jobs in April as businesses kept hiring despite the economic fallout from the US-Israel war in Iran. The increase was stronger than expected, with the total almost twice as much as economists had forecast." The unemployment rate was unchanged at 4.3%. BBC. "Unemployment rate of 5% or lower is often considered full employment in the real-world context." Zero unemployment would result in higher wages and lead to higher prices and inflation. Investopedia. "New orders for US factory goods rose more than expected in March, led by surging demand for electronics products amid the artificial intelligence investment boom." "Factory orders were up 1.5% on the month," from 0.3% in February and by "3.7% on a year-over-year basis in March." Reuters. In contrast, "War has imposed a heavy cost on Iran's economy: more than a million people out of work, soaring food prices and a prolonged internet shutdown that has slammed online businesses." The US blockade of Iran's ports has dealt "a devastating blow to Iran's already-battered economy. Government revenue has dried up just as the needs of its population are rising." WSJ. "Early signs are that after years of dodging restrictions, this 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 moderates in the Iranian government "believe in holding fire and negotiating a favorable deal with President Trump," while "A growing camp of hardliners believe Iran has to take the military initiative and start a shooting war again to send oil prices shooting and increase the pressure on Trump." WSJ. Even more virulent, "a small but influential hardline faction has intensified efforts to sabotage a potential deal with Washington," and this "ultra-hardline group has ramped up efforts across the media, in parliament and on the streets to advocate against an agreement with the US, arguing that only by defeating Washington can Iran secure a favorable deal." "Known as 'Jebhe-ye Paydari' - or the Endurance Front - its members are often described by observers as 'Super Revolutionaries' who view themselves as guardians of the values of the 1979 revolution that overthrew the pro-Western Shah." CNN. They may be afraid of being accused of being 'Takfiris' (wikipedia), having killed Muslim Iranians. They may remember the hanging of Saddam Hussein (wikipedia) as a punishment for losing against the US. Also higher oil prices mean higher revenue. Already, "Images of bareheaded women sipping coffee in cafes in Tehran, in apparent defiance of the Islamic Republic's strict dress rule, have stirred interest outside Iran," but "the rights of women are still restricted and they live under a system that arrested tens of thousands of people following the January protests and thousands more, including women, in the current war, according to rights groups." NDTV. There is a lot of accounting to be done. The Endurance Front don't want to endure that. Could be painful.                                                                                 

Fewer physical, higher digital.

"India recorded 5.89 million crimes in 2024, down 5.7% from 6.24 million in 2023, according to the Crime in India Report for 2024 released by the National Crime Records Bureau (NCRB). The rate of crime per hundred thousand people in 2024 stood at 419, down from 448 in 2023 and the lowest since 2019, when this number was 385." HT. "Murders in India dropped by 2.4% in 2024," while "Crimes against women declined by 1.5%, with 441,000 cases reported in 2024 compared to 448,000 in the previous year. TOI. "Delhi retained the grim distinction of being the most unsafe metropolitan city for women for the fourth consecutive year, reporting the highest number of rape cases and a high share of violent crimes against women." Delhi, the capital city, recorded 13,396 cases of crimes against women: 1058 cases of rape, more than double that of Jaipur (497) and Mumbai (411); 3,974 cases of kidnapping and abduction; 4,647 cases of cruelty by husband or relatives; 755 cases of molestation and seven murders with rape. HT. Adding to its list of achievements, "Delhi recorded the highest number of dowry death cases among 19 metropolitan cities in 2024, continuing a grim trend that kept the national capital at the top of the ignominious list for the fifth consecutive year." According to NCRB, Delhi recorded 109 such incidents involving 111 victims. TOI. The total number of crimes fell 15.1% in Delhi, from 320,000 in 2023 to almost 280,000 in 2024. "Crimes committed by juveniles totaled 2,306 in 2024, including 144 cases of murder, 526 robberies and 217 incidents of snatching." On the other hand, there were 7,662 cases of crimes against children. "To put this in perspective, Mumbai recorded 3,374 such cases, and Bangalore 2,026 cases." TOI. There is some good news. Although a total of 5,20,614 persons (1,67,414 males, 3,52,729 females and 29 transgender) were reported missing in 2024, "a total of 5,03,602 persons (1,65,465 males, 3,38,116 females and 21 transgender) were recovered/traced." "A total of 98,375 children (22,768 males, 75,603 females and four transgender) were reported missing," but a total of 98,826 children (23,902 males, 74,919 females and five transgender)) were recovered/traced.  " The Print. Which means an extra 451 children, probably missing from previous years, were recovered. What unbelievable joy for distraught parents. These are incidents of physical crimes but it is cybercrime which is growing exponentially. "Over 86% of households are now connected to the internet," and "Cybersecurity incidents in India rose from 1.029 million in 2022 to 2.268 million in 2024." pib.gov.in. Elderly people are especially vulnerable to cybercrimes. "There was an 86% rise in cybercrimes targeting seniors between 2020 and 2022," during the Covid pandemic. "Investigations show that once victims send money, it is quickly moved through dozens of accounts and often converted to cryptocurrency to be moved out of the country." "The police have traced links to China and Cambodia." ST. Digital crimes are easier and potentially much more lucrative. If the government is keen to encourage digital transactions for surveillance purposes, then it is their duty to protect and recompense citizens against cybercrimes by the Chinese. It's an attack on our sovereignty.             

Geographic insurance.

 "Big American companies are piling up profits despite war and consumer anxiety, bolstered by healthy sales growth." "For much of the S&P 500 margins are improving. The gap between profit and sales growth remains below late-2024 highs, suggesting real expansion behind much of the profit growth," but, "In the current K-shaped economy, the wealthy keep spending, while most everyone else feels strapped." WSJ. A similar story is playing out in India. "Wealthy Indians are spending more overall, but a smaller share of that spending is going to retail stores." Instead, "they are increasingly spending on travel, fine dining and curated experiences such as concerts and wellness retreats even as they continue to purchase high-value premium goods." "While retail's share is shrinking, absolute spending on premium goods is rising, with affluent consumers trading up across segments." Mint. Indian companies are investing in the US. "A record $20.5 billion in investments into the United States by top Indian companies was celebrated at the 2026 SelectUSA Investment Summit in Maryland." US Mission India. "The commitments span key sectors including pharmaceuticals, advanced manufacturing, energy infrastructure, and emerging technologies, and are expected to create thousands of jobs in both countries while expanding US production and joint innovation capacity." "Global lenders to Sun Pharmaceutical Industries Ltd are weighing multiple financing options for its proposed $12 billion acquisition of New York-listed healthcare company Organon & Co., according to people familiar with the matter." But shouldn't it be better to invest within India? "Last week, chief economic adviser V Anantha Nageswaran said that profits for the 500 largest publicly traded companies had grown by over 30% a year since the pandemic," but private sector investment has been disappointing. "Finance Minister Nirmala Sitharaman publicly wonders every few months why corporations seem so unwilling to invest." "Back in the boom years more than a decade ago, capital expenditure was 40% of gross domestic product; it's down by about 10 percentage points on average since then." Nageswaran thinks that the younger generation do not want to take any risks. However, "The real reason India's richest don't want to invest domestically - and, possibly take some of their cash abroad - is because they estimate local political risk as being too high." "If they earn money in India, their first instinct is to try and diversify geographically, so they escape New Delhi's control as much as they can," wrote Mihir Sharma. "India is 157th out of 180 countries in the 2026 World Press Freedom Index released by Reporters Without Borders on 30 April. In the 2025 ranking India was at 151." The Wire. Pandering to Dear Leader may be physically safe but ensuring financial insurance by moving money abroad is wise. Something about eggs in one basket (BBC). Especially, one with sycophants.                                                                                                  

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.