Exemplary by design.

"The Indian economy grew at 7.8% in the first quarter (April-June 2026)of the current fiscal year braving what is described as the largest oil shock in the history of capitalism." "March quarter growth now stands at 8.6% compared to 7.8% according to the data released by the NSO (National Statistical Office) in June." "India's exemplary GDP growth of 7.8% during Q1 of FY 2026-27 is a herculean feat," exulted Prime Minister Narendra Modi. Calling it the "largest oil shock in history" is an exaggeration. In 1974, the price of crude jumped from $24 to $56 per barrel because of the Arab oil embargo in 1973. In 1979, oil went from $56 to over $125 because of the Iran revolution and in 2008, the price of crude jumped from $118 to over $165 per barrel and coinciding with the subprime crisis in the US, led to the Great Recession. (Investopedia). US consumer price inflation rose to 12.3% in November 1974, came down to a low of 4.9% by October 1976 and then soared to 14.8% in March 1980. US Inflation Calculator. In fact, except for two or three months in early 2026, when the price of India's import basket of crude oil briefly spiked above $150, the price has stayed comfortably below $100 per barrel. India Macro Indicators. As always, things are not as we are told. "As per a report by Bernstein, company earnings, domestic consumption, and asset valuation are increasingly influenced by regulatory interventions, tax incentives and substantial government transfers rather than underlying productivity gains." "Since financial year 2023, the government allocated over Rs 287 billion to various manufacturing industries" under the Productivity Linked Incentive (PLI) schemes, and "Rural spending resilience persists largely due to government direct transfers rather than productivity gains of farm income expansion." ET. If the economy is sizzling why is the rupee so weak? In July the Reserve Bank of India (RBI) sold $7 billion to defend the rupee. "The RBI intervened across both onshore and offshore markets as the currency approached the record low." ET. The first vulnerability is geopolitical. "Any prolonged disruption around the Strait of Hormuz would push up crude oil prices." The second vulnerability is that foreign portfolio investors (FPI) pulled out roughly $28 billion from Indian equities "despite bringing in a net $2.1 billion in July," wrote Prof Saumitra Bhaduri. "India's 10-year government bond yield is around 6.87%, while the US 10-year Treasury yield is in the 4.6-4.7% range, leaving a spread of roughly 2.1-2.3 percentage points, or 210-230 basis points. The narrowing matters because the yield spread is one of the factors that overseas investors consider when deciding whether Indian bonds offer enough compensation for the currency and other risks involved." MC. According to the RBI, "External debt at the close of fiscal 2025-26 stood at $762.8 billion, an increase of $26.3 billion over the level recorded at the end of 2024-25." It was up by 1% to 20.8% of GDP. However, the higher value of the dollar against the rupee is worth $24.6 billion, so effectively the debt increase was $51 billion. Mint. "In 2025-26, India recorded $334 billion trade deficit. Of this, 120 billion came from petroleum products and $214 billion, nearly double, from non-petroleum products. Electronics trade deficit stood at nearly $69 billion." Mint. For comparison, Vietnam's trade surplus with the US in the first six months of the year stood at $114 billion, ahead of China, Mexico and Taiwan. ET. And, despite "herculean growth" India remains the sixth largest economy in the world. worldometers. The brokerage firm Systematix estimates "a new average annual depreciation path of 6.5% of the currency." "Without aggressive RBI intervention, the Indian currency would have crossed the 100-per-dollar mark." ET. So, in dollar terms the GDP growth is a minuscule 1.3% (7.8-6.5). It's the currency that determines our rank. How long can the RBI support it? Before it runs out. Of cash.