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.