Lessons from market cycles – Chapter 5

The years after the 2008 global financial crisis – from 2011 to now in 2026 – have been packed with big changes for financial markets worldwide.

The 2010s started on shaky ground:

·         The world was still recovering from the GFC. Globalization faced pushback. Europe's debt crisis worsened in countries like Greece (with “Grexit” talk), and the UK moved toward Brexit. Ultra-low interest rates and massive money printing (quantitative easing) in rich countries sparked fears of new asset bubbles and soaring commodity prices.

·         Gaps between rich and poor nations grew as aid dried up. The Arab Spring, Gaddafi's death, and Bin Laden's killing reshaped the Middle East. Immigration surged from poorer to richer countries. Protectionism and nationalism – forces that had faded after World War II – came roaring back. (Around 2011)

·         IBM's Watson won Jeopardy! in 2011, signaling the start of the AI revolution.

As the decade rolled on:

·         China overtook Japan as the world's second-largest economy in 2012 and helped launch the BRICS-backed Asian Infrastructure Investment Bank (AIIB) in 2013. Russia annexed Crimea in 2014. The UK voted for Brexit in 2016.

·         AI made huge leaps with deep learning and big neural networks (2013–14). AlphaGo beat a top human Go player in 2016.

·         Donald Trump became US President in 2016–17, sparking a US-China trade war from 2018 that slowed global growth.

·         Trust in traditional money wobbled a bit; cryptocurrencies caught on with everyday investors (2017–18).

·         The 2015 Paris Agreement kicked off serious climate action, boosting renewables fast.

Then came the end-of-decade shock:

·         COVID-19 hit in 2020, crashing economies and markets. Supply chains broke. Governments and central banks poured in record stimulus to avoid depression.

The post-COVID world looks different:

·         Inequality widened. Geopolitical fights grew fiercer and longer. Protectionism and nationalism shape policies more than ever.

·         Asset prices bounced back hard; stocks hit records. But central banks reversed course – hiking rates and tightening money.

·         Trust between countries eroded further. Russia invaded Ukraine in 2022, spiking energy and food prices. The Israel-Palestine conflict escalated in 2023. In 2025, India and Pakistan fought a short four-day conflict (May 7–10) after a terrorist attack in Kashmir triggered India's Operation Sindoor missile strikes. Then in early 2026 (starting February 28), the US and Israel launched major strikes on Iran (Operation Epic Fury / Roaring Lion), killing Supreme Leader Khamenei and others in a push for regime change, with Iran retaliating across the region – creating huge uncertainty in the Middle East.

·         AI large language models like GPT-3 went mainstream in 2022. Massive spending on AI data centers followed. Doubts grew about traditional IT services' future, and job losses sped up.

All these events reshaped markets, capital flows, policies, industries, and global power.

For Indian investors, this period brought its own ups and downs:

·         India handled the 2008 crisis fairly well thanks to earlier growth. But in 2013, a “taper tantrum” (US Fed signaling less QE) triggered capital outflows, plus high oil/gold imports and a weak rupee pushed the current account deficit to a record 6.7% of GDP. India was labeled a “fragile” economy – but RBI and government steps fixed it fast.

·         2014 brought a stable majority government after 25 years.

·         Demonetization in 2016 (scrapping high-value notes) hit small businesses hard and slowed growth.

·         GST rollout in 2017 added pressure on the unorganized sector.

·         COVID lockdowns in 2020 crushed SMEs and informal jobs again. Organized large firms gained market share. Government ramped up welfare support, straining the budget.

Stock market impacts:

·         These shocks weakened small/micro businesses. Bigger organized players took share. Many family businesses sold out to corporates or PE firms. Jobs got scarcer in some areas. Work-from-home spread. All this pulled millions of households – especially younger people – into regular stock investing.

·         Government boosted capex with big infra projects (roads, railways), plus incentives for manufacturing (chemicals, electronics, renewables) and defense amid global tensions. Theme stocks in these areas soared, often ignoring valuations.

·         New companies with unproven models launched IPOs at high prices.

·         Recently, geopolitical risks, sticky inflation, higher rates, and doubts about the financial system pushed gold and silver prices up sharply. Many investors shifted away from their planned mix to buy more metals.

·         But corporate capex and profits haven't met hopes. Government spending fell short too.

·         Higher US yields, a weakening rupee (hitting 89–92/USD range by early 2026), stretched valuations, and limited direct AI/semiconductor plays drove record foreign outflows (~$18 billion in 2025 alone).

·         After euphoric post-COVID years, markets disappointed newcomers. Many theme/momentum stocks corrected sharply. Gold/silver turned volatile below peaks. Even bonds underperformed.

·         The hardest hit were momentum-driven stocks popular with retail investors – when liquidity dried up, prices plunged with few buyers. This is classic: fast-rising assets on hype and easy money fall hardest when mood shifts. No single big event caused the recent correction – just stretched valuations, crowded trades, and a slow global macro change. When everything's priced for perfection, small letdowns cause big reactions.

My final lesson from all these cycles

Stick to a solid asset allocation plan. It's not about maxing returns every year – it's about matching your risk comfort, cash needs, and long-term goals through ups and downs.

Rebalance regularly and calmly. View equity dips (especially in good companies) as chances to allocate more for the long run, not panic signals. Keep fixed income and gold at planned levels – don't overload on fear.

Markets reward patience and discipline far more than chasing the latest hot theme or reacting to headlines. The best investors stay steady when others chase or flee.

This is the concluding part of the series. I will be happy to receive readers’ comments; especially if someone wants to share his/her experiences and lessons learnt from them.

Also read

Chapter 1

Chapter 2

Chapter 3

Chapter 4

Lessons from market cycles – Chapter 4

The first decade of the 21st century was one of the most remarkable periods since World War II.

It started with big shifts:

·         The internet was quickly becoming part of everyday life. Trade, commerce, payments, and settlements were moving online and getting much faster.

·         The 9/11 attacks on New York's World Trade Center in 2001 changed global security forever. NATO took a zero-tolerance stand on terrorism. Internal security rules tightened everywhere. In 2003, the US and allies invaded Iraq and toppled Saddam Hussein's regime after 24 years in power.

·         China joined the World Trade Organization (WTO) in 2001, opening global markets to its products. With huge scale, advanced tech, and low-cost labor, China built massive trade surpluses with almost every country. It exported low prices (deflation) worldwide and lent money cheaply to developed countries to cover their fiscal deficits. China's economy accelerated, driving a big chunk of global growth.

·         Meanwhile, the global economy slowed sharply. World GDP growth dropped from 4.5% in 2000 to about 2% in 2001 and 2002. Stock markets crashed, and house prices fell in many places. To fight the slowdown, central banks and governments cut interest rates hard, made borrowing easier, and ran bigger deficits.

By mid-decade, all that cheap money created a huge credit bubble, especially in the US and parts of Europe:

·         Banks had plenty of cash and lent aggressively. Asset prices – especially homes – shot up.

·         Lenders invented ways to hide risky loans. They gave "subprime" mortgages to people with bad credit histories – often with teaser rates that later jumped, and little paperwork. Banks bundled these risky loans into mortgage-backed securities (MBS) and sold them to investors, offloading the danger while making more loans. They created even more complex products like collateralized debt obligations (CDOs) to spread risk further – without anyone fully understanding the dangers.

·         Rating agencies gave many of these high safety ratings anyway, misleading buyers.

·         In a low-interest world, investors chased higher returns and bought in, assuming house prices would keep rising forever.

·         Stock and bond prices soared. People borrowed heavily to invest. The painful lessons from the dot-com bust were quickly forgotten.

Toward the end of the decade, cracks appeared:

·         Early 2007 saw defaults at smaller US banks. By mid-2007, "subprime" was headline news, but traders kept betting big.

·         In September 2008, Lehman Brothers, a large US based investment bank, collapsed, triggering panic selling worldwide. Over the next 18 months, stock markets crashed globally. Banks failed or needed massive bailouts.

·         Several European countries (especially, Portugal, Italy, Greece, Spain – infamously nicknamed PIGS) teetered on sovereign default; some got IMF rescues.

·         The global financial system froze for weeks. Many compared it to the 1929 Great Depression.

·         Major economies coordinated to restart lending. Emerging markets gained respect – the old G-7 expanded to G-20. The world recognized China's manufacturing power, India's IT strength, Russia's energy, and Brazil's commodities. The "BRIC" idea (coined by Goldman Sachs in 2001) became a popular investment theme. Stocks bottomed in March 2009, but Europe's debt crisis dragged on until around 2013.

In India, the story had its own twist:

After the 1998 nuclear tests and sanctions, the government pushed big infrastructure projects like the National Highways Development Program (NHDP) and opened up more sectors to private and foreign investment.

·         Global cheap money flowed in. Rules relaxed for FDI in roads, steel, oil & gas, mining, telecom, aviation, power, cement, and real estate.

·         Companies borrowed abroad cheaply, often without hedging currency risk (assuming the rupee would stay strong or rates low forever).

·         Many big firms jumped into unrelated businesses: telecom, roads, power plants, metro rails, even windmills for tax breaks.

·         Smaller and midsized steel companies grabbed mining leases for coal and iron ore. Banks lent enthusiastically.

·         New “valuation” buzzwords appeared: “land bank,” “order book,” “MW under construction,” “road kilometers,” “proven reserves”, etc.

·         “Projects were built assuming decades of demand growth – ignoring near-term reality. Banks didn't worry much about cash flow to repay loans.

·         Then reality hit. Demand fell short. Courts cracked down on shady allocations (spectrum in telecom, coal/mining rights canceled). Cash dried up. Many road, power, steel, mining, telecom, and cement projects defaulted. Bank bad loans (NPAs) exploded, especially at public-sector banks. Credit and new investment froze. Growth slowed sharply. Several of the top-100 companies lost 80-100% of their value, wiping out investors.

The lesson I took away:

“Growth potential” matters in valuing a company, but it's not enough on its own. Survival comes first. Cash flows and the ability to stay solvent cannot be ignored in the rush to grow.

That episode reminded me once more: When money is too easy and everyone chases the next big thing, the cleanup is painful. Real progress needs discipline, not just dreams.

Also read

Chapter 1

Chapter 2

Chapter 3

Lessons from market cycles – Chapter 3

It was New Year's Eve 1999, the dawn of the new millennium. A close friend – a tech specialist at a top consulting firm – called to wish me a happy new year. He sounded unusually upbeat. When I asked why, he proudly said he had made a fortune in the stock market, his bonus was huge, and he had even taken loans for a luxury car and a bigger apartment. He had poured a lot into random "technology" stocks.

He urged me to jump in on a small tech company about to launch an ADR (American Depositary Receipt) on Nasdaq. Its price had shot from ₹15 to ₹85 in just six weeks. “It will hit ₹250 soon”, he said with total confidence.

I actually knew more about that company than he did. It was basically a shell – recently renamed from “XYZ Securities Ltd” to “XYZ Infosys Limited.” No real business, no employees, no assets. When I tried to warn him, he brushed me off: “You have no idea what's coming”.

That Diwali in 2000 turned out to be the darkest day of his life. He had lost everything – his job, savings, home, car, marriage, health, and his confidence. He moved back to his parents’ house carrying debt of over ₹70 lakh.

The run-up from December 1998 to February 2000 was one of the wildest periods in Indian stock market history. The Nifty50 index more than doubled (over 120% gain) in just 15 months, driven mostly by “new-age” tech, media, and telecom companies. Buzzwords like ICE (Information, Communication, Entertainment) and TMT (Technology, Media, Telecom) were everywhere.

To really understand the magnitude of madness, one needs to note the challenging backdrop:

Politically, India was unstable. From May 1996 to October 1999 – just 40 months – we had three general elections. Each produced hung parliaments and shaky coalitions of 20+ parties.

Economically, things were rough. GDP growth crashed to around 4.3% in FY98 (from 8% the year before). Consumer inflation averaged over 13% in 1998, peaking at nearly 20% in late 1998. The RBI jacked up its Bank Rate to 11% early that year, hiked repo rates sharply (up to 14% by mid-2000), and prime lending rates hit 13–14%. Riskier borrowers paid 15–19%.

Geopolitically, we fought the Kargil War with Pakistan in May–July 1999. Tensions with China rose too – India openly called China “Enemy No. 1”, and China backed Pakistan during Kargil.

Internationally, after India's nuclear tests in May 1998 (Pokhran-II), the US, Japan, and others slapped on economic, tech, and military sanctions.

Globally, the US Fed's easy money policies fueled a massive dot-com bubble. Tech companies with no profits or clear business models traded at insane valuations.

The Y2K scare created huge demand for software fixes. Indian IT firms sent thousands of engineers abroad to update old systems before January 1, 2000. Suddenly, every middle-class family wanted their kids to learn coding. Computer coaching centers popped up on every street. Wipro's Azim Premji briefly became one of the world's richest people (second at one point in early 2000). Infosys and TCS turned into household names.

Hundreds of companies slapped “Technology”, “Infosys”, “Media”, or “Communication” onto their names. Big business houses rushed to launch tech subsidiaries. Overnight, firms with zero tech know-how or real business popped up and soared to crazy prices.

Old valuation rules went out the window. People talked about “eyeballs” and “footfalls” instead of earnings. Just like Harshad Mehta in the early '90s, operators like Ketan Parekh manipulated stocks – especially a group called the "K-10" – luring everyday investors like my friend with hype and fancy jargon.

The bubble burst in February 2000. The Nifty gave back all those gains over the next 18 months. By September 2001, it was back to December 1998 levels. Most fake tech companies disappeared fast. Many big groups quietly dropped their IT dreams and refocused on core businesses.

The few solid players that survived the storm? They went on to make India a global IT services powerhouse and added real strength to our economy.

My lesson from this episode

Tech revolutions are disruptive and powerful – they eventually make economies and markets stronger. But not every investor has to jump in headfirst during the chaos. Sometimes the smartest move is to watch safely from the sidelines until the storm passes. There are always plenty of good opportunities once things calm down.

That experience with my friend still reminds me: When excitement drowns out common sense, step back. Real winners in stock markets are found with patience, not panic buying.

Also read

Chapter 1

Chapter 2

 

Lessons from market cycles – Chapter 2

The Over the Counter Exchange of India (OTCEI) was set up by public financial institutions in 1990, and started operations in 1992. It was India's first stock exchange with fully computer-based electronic trading – beating even the NSE, which began in 1994.

OTCEI was inspired by America's NASDAQ. Its main goal was to help small, tech-focused entrepreneurs – especially those building new products – raise money easily and cheaply.

Back then, listing on the Bombay Stock Exchange (BSE) needed at least ₹10 crore in paid-up capital (other regional exchanges asked for ₹3 crore). OTCEI? Just ₹30 lakh. That low bar was meant to open doors for tiny, promising companies.

The listing process was different and more transparent:

·         A company placed its shares with a "sponsor member" (like a guide or underwriter). 

·         At least two market makers were appointed to always be ready to buy or sell shares. 

·         The sponsor sold shares to investors through dealers. 

·         After that, investors could trade freely.

It looked modern, fair, and low-cost – the same system that worked well in the US.

At its peak, OTCEI had 30 sponsor members, 118 active brokers, and over 1,000 dealers nationwide. Around 115 companies – mostly small ones started by first-time entrepreneurs – raised money on OTCEI.

Yet this pioneering, fully automated exchange turned out to be a big failure. It collapsed in under five years, though it wasn't officially shut down until SEBI de-recognized it in 2015, and the company went into liquidation in 2017.Almost every company listed on OTCEI ran into serious trouble; most eventually shut down or got liquidated.

Why did it fail so badly? The biggest reason was inexperience everywhere:

·         The exchange managers had never run a stock exchange before.

·         Brokers and members weren't used to transparent, regulated, tech-driven trading – and they didn't have good research skills.

·         The promoters listing their companies were mostly first-generation entrepreneurs with limited money, poor financial know-how, and untested products or technology.

·         Investors were newcomers too; they didn't really understand these new-age businesses or the huge risks.

Everyone treated OTCEI like a casino – chasing quick jackpots. In the end, nobody won. Investors lost money, companies struggled, brokers earned little, and even the exchange itself made almost nothing.

The same story has come back, this time through the BSE SME platform (launched 2012) and NSE Emerge (also 2012). Since then, over 1,400 small and medium companies have done IPOs on these platforms.

Some have done well – more than 500 grew big enough to "graduate" to the main BSE or NSE boards. But a large chunk – around 60% in many recent analyses (with figures like 57-65% in 2024-2025 data) – are now trading below their IPO price. That means heavy losses (often 25-80%) for investors who bought at the offer.

Clearly, regulators, exchanges, brokers, and investment bankers haven't fully learned from the OTCEI disaster. Valuations get pushed too high, issues get oversold to clients, warnings about SME risks stay too mild, and investors keep hunting for that one big winner.

The lesson hits hard: The more things change, the more they stay the same. This time around, it's really no different.

Lessons from market cycles – Chapter 1

My association with the Indian capital markets started in the early 1990s. There were 29 recognized stock exchanges in the country, most having a set of exclusive listed companies, besides companies with listing on multiple stock exchanges. These stock exchanges were mostly run as an association of individual brokers, with no regulator overseeing their operations. There was little transparency in their operations.

During 1992-1994 establishment of SEBI as statutory regulator, abolition of capital controls; advent of computer-based stock trading and demutualized stock exchanges (NSE and OTCEI) redrew the map of the Indian capital markets.

This was the time when the economy was opening up at a rapid pace. In particular, the financial sector was witnessing substantial changes. The regulatory framework, product spectrum, market breadth, accessibility, and participants’ profiles, etc. were undergoing a metamorphosis of sorts.

As a student of the capital markets, I noted the following trends in that phase:

·         A new group of intermediaries joined the markets as broker and merchant banker. These were mostly professionals (Chartered Accounts and Company Secretaries) who were admitted as members by stock exchanges or licensed by the SEBI to operate as merchant bankers. This ended the century old stronghold of a few families on the capital market intermediation business.

·         A new set of entrepreneurs emerged (mostly ex bankers and finance professionals) to undertake the business of financing and leasing.

·         Enhanced transparency in stock market operations and assurance of a proper regulatory oversight drew millions of households to the equity investing for the first time. Stock market movements started to appear in media headlines and parliamentary discussions.

·         The share of household financial savings deployed in stocks and mutual funds increased to the highest level.

·         The number of initial public offers (IPOs) increased from 195 in FY92 to 1402 in FY96, implying more than 5 IPOs on every working day of the year.

·         A large proportion of these IPOs were of non-banking financial companies (NBFCs). Most of these companies were small, inadequately capitalized, and promoted by inexperienced entrepreneurs. Many of these companies mobilized unsecured deposits at exorbitant rates.

·         Almost every established business house in the country also incorporated an NBFC and entered the business of financing and leasing in this era.

·         A significant number of non-financial companies changed their names to sound “financial” in this phase. Finserve, Finlease, Finance & Lease were common in names of most of these companies.

·         A significant number of these IPOs were sham (accommodative entries).

The lesson was painful but crystal clear

Within a few years, a large number of these companies simply vanished, wound up, went bankrupt, or quietly changed their names again to remove the “fin” words.

Ordinary investors – many of them first-timers who were either unaware or simply greedy for high returns – lost heavily, whether they had bought the shares or parked money in those unsecured deposits.

That was my first big lesson from the markets: “when everything looks too good and too many new players rush in, caution is your best friend”. 

Is it a pause or break?

I completed my education and professional training in the early 1990s, just as India stood at the edge of profound change. The assassination of Rajiv Gandhi in 1991 had created a vacuum in the Congress party. P.V. Narasimha Rao led a fragile minority government through a perfect storm: a balance-of-payments crisis; two failed monsoons; the Gulf War spike in oil prices; double-digit inflation; a crippling fiscal deficit; the Harshad Mehta scam; and simmering insurgencies in J&K, Punjab, & the Northeast. Mandal reservations and the Ayodhya movement had polarized society; the 1992 demolition and subsequent Mumbai blasts shattered everyday calm.

In that crucible, Rao and Finance Minister Manmohan Singh launched the 1991 liberalization. Industrial licensing was slashed, the rupee was devalued by nearly 20% in two swift moves, trade was opened, foreign portfolio investment welcomed, and the foundations of modern capital markets laid. Within five years the economy was back on a higher growth path.

The 1996 election ended Congress rule and ushered in three years of political instability (Three general elections during 1996–99). Yet the reform momentum not only survived but accelerated. The United Front government deepened financial-sector and fiscal reforms. Vajpayee’s NDA (1998–2004) opened core sectors—telecom, power, roads, ports, oil & gas—to private and foreign players, launched the National Highways Development Project, announced the SEZ policy, conducted nuclear tests, and weathered sanctions and the dot-com crash. India emerged as a recognized IT powerhouse and strategic nuclear power.

The UPA years (2004–14) built on this foundation while adding a strong social dimension. Markets were opened further, NPCI was established (laying groundwork for later digital payments), and landmark rights-based legislation was enacted: RTI, MNREGA, RTE, NRHM, and the Food Security Act. Growth averaged over 8% for much of the period despite the 2008 global crisis, though a current-account scare in 2012-13 required swift RBI action.

When the NDA returned in 2014 under Narendra Modi, it inherited an economy recovering but scarred by the previous slowdown. Far from avoiding major reforms, the government completed and launched several of its own: the long-awaited GST (2017) created a unified national market; the Insolvency and Bankruptcy Code (2016) cleaned up NPAs; four Labour Codes rationalized archaic laws; corporate tax rates were cut; direct benefit transfers scaled massively via the JAM trinity; and UPI revolutionized digital payments. Infrastructure spending surged, Ease of Doing Business rankings improved, and schemes emphasizes on manufacturing were reinforced under Make in India and Production-Linked Incentives banners.

Growth has not been linear though. The 2016 demonetization and GST rollout caused temporary disruption; COVID-19 delivered a sharp contraction. Yet India has remained the fastest-growing major economy in most post-pandemic years. Recent quarters have shown strong rebounds, though challenges persist: uneven job quality (especially for educated youth), volatile foreign flows, a tight fiscal position, and rising aspirations of one billion young Indians.

I still believe we are witnessing a pause in our journey of growth, not a break. The institutional scaffolding built over three decades—open markets, digital public infrastructure, a resilient banking system—remains intact.

In my view, the next three years will be decisive. How the government sequences the next wave of reforms (land, labour, agriculture marketing, and trade openness), executes with consistency, and manages fiscal discipline will determine whether India’s growth story merely pauses or regains its full stride. The momentum built since 1991 has bent but not broken. With pragmatic course-correction, the best chapters may still lie ahead.

The path to net zero

(Based on NITI Aayog's Scenarios Towards Viksit Bharat and Net Zero: Macroeconomic Implications (Vol. 2), 2026)

Why Net Zero matters for India

India is one of the fastest-growing economies in the world — but it is also one of the most vulnerable to climate change. Erratic monsoons frequently hurt farmers. Heatwaves impact millions of students and daily-wage workers. Floods disrupt millions of lives and cause severe damage to homes, farms and infrastructure. Climate change is not a future problem; it is already costing India money, jobs, and lives.

Besides, India spends a huge chunk of its money importing fossil fuel. This has a profound impact on our economy. Dependence on imported energy weakens our geopolitical strength & energy security and adversely impacts our trade balance, currency, inflation, and rates. Moving away from fossil fuels is not just good for the planet; it makes India less dependent on other countries and less exposed to price shocks.

Finally, the world is changing its trade rules. Countries like those in Europe are starting to charge extra on goods made with heavy carbon emissions. If India wants to keep selling to the world, going green is no longer a choice — it is a business necessity.

India’s strategy

India has promised the world it will reach net zero carbon emissions by 2070. That means, by then, the country will not be adding more greenhouse gases to the atmosphere than it removes. This is a big goal — and it is tied directly to India's dream of becoming a fully developed nation by 2047, what the government calls Viksit Bharat.

India’s pathway to net-zero is built on ambitious targets, such as reaching 500 GW of renewable energy capacity by 2030, meeting 50% of its energy needs from renewables, and reducing emission intensity of GDP by 45% over 2005 levels by 2030.

India is progressing well on the committed path. Today, half of India's electricity-generating capacity comes from clean sources like solar and wind. Government spending on infrastructure has tripled over the last decade. Programmes like PM-KUSUM (solar panels for farmers) and FAME (support for electric vehicles) are pushing the green agenda into everyday life.

What the shift will feel like

Short term (up to 2030): Costs before the gains

India’s net-zero targets, however, is challenging, especially since its per capita emissions are significantly lower than the global average. Despite this, India faces the pressing task of meeting the energy needs of a growing economy while reducing its carbon footprint.

In the short term, transitioning to a low-carbon economy will require massive investments in renewable energy, energy-efficient infrastructure, and clean technologies. The investment gap for this transition is estimated to be substantial—around USD 2.25 trillion more than the business-as-usual scenario. This will pose challenges, as public and private sectors must find ways to mobilize capital without straining India’s fiscal health.

The government will need to step in with subsidies, cash support, and strong social safety nets so that the burden does not fall on those who can least afford it. Coal workers and others in fossil fuel jobs will also need help retraining for new roles in the clean economy.

Medium term (2030–2050): Green jobs and a leaner import bill

By mid-century, the benefits may start showing up. Manufacturing — driven by solar panels, batteries, and clean tech — grows significantly, creating more jobs for skilled workers. India's oil import bill, which currently eats up about 4% of GDP, shrinks dramatically as the country relies less on imported fuel. That means more money stays in India, the trade deficit narrows, and the economy becomes more stable. If the world helps fund India's transition through international climate finance, the gains come sooner and the costs on ordinary people stay lower.

India’s GDP is projected to remain resilient during this period, with growth rates largely unaffected by the transition, driven by increasing investment in clean technologies and infrastructure.

Long run (2050–2070): A stronger, self-reliant India

By 2070, the picture looks very different — and much brighter. India’s economy will have fully transitioned to a low-carbon structure, with green industries driving much of the growth. The shift towards a capital-intensive economy will be evident, as investment in infrastructure, clean energy, and technology development will continue to grow. This shift is expected to increase manufacturing output in clean-tech sectors, significantly improving economic resilience.

India's fuel import bill drops from 4% of GDP today to just 0.2%. The economy is cleaner, more competitive, and far less exposed to global oil price swings. Wages in the clean energy and manufacturing sectors rise. And India becomes a more attractive destination for global investment because it plays by the new, greener rules of the global economy. Growth holds firm — the USD 30 trillion economy target remains in reach.

The Bottom Line

India’s commitment to achieving net-zero emissions by 2070 is a critical step towards a sustainable future. The country faces significant challenges in balancing economic growth with climate action, but it also has a unique opportunity to lead the way in green technologies and low-carbon development. The socio-economic impacts of pursuing a net-zero pathway will be profound, affecting sectors ranging from energy to industry, agriculture, and transportation.

Going net zero does not mean India has to slow down. It means India has to grow smarter. The costs are real in the short run, especially for vulnerable households — and the government must not ignore them. But the long-term picture is one of energy independence, more jobs in new industries, a cleaner environment, and a stronger economy. India has pulled off big reforms before — think GST, UPI, and Aadhaar. The green transition is the next big one. And if done right, it will be worth it. 

Investors’ dilemma - 2

In my post yesterday (see here) I mentioned that most of the sectors popular with small investors (…and also fund managers) are witnessing growth challenges. Though a majority of market analysts are expecting an earnings recovery from FY27 that should further accelerate in FY28, after two years of stagnation, uncertainties still persist with regard to (a) the resumption of a sustained uptrend in the Indian equities; and (b) likely leadership in the expected up move. Regardless, it is a good idea to prepare the ground and sow the seed well in advance.

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 In my view, resumption of the up move in the Indian equities may be led by a combination of domestic factors like easy liquidity, stable rates, improvement in rural income and higher urban household cash surplus, stable macro environment, acceleration in earnings growth, etc.; and improved external environment, e.g., settlement of trade issues with major trading partners, easing geopolitical concerns, improvement in trade balance, and reversal of investment flows, etc.

Therefore, in my view, the investors’ positioning ought to be based on domestic growth drivers which are adequately supported by a favorable global environment. I have shortlisted the following areas for finding future leaders.

a)    Industrial companies with market and technology leadership, strong brand equity and access to global markets. Product companies rather than services companies are more preferable. Select companies with substantial operating leverage.

b)    Technology companies (product and services) that may benefit from fiscal incentives.

c)     Consumer companies both in staple and discretionary space which may benefit from higher disposable income, stable global economy, favorable tariffs, and stable prices. In particular, healthcare companies (product and services) are more preferred.

d)    Local units of global corporations that may see larger participation through more investment, hike in stake or transfer of manufacturing operations for regional exports, as the tariffs lower.

e)     Financials will inevitably participate in any bull market. Better asset quality, better yielding bond portfolio, higher credit demand, geographical spread due to deeper financial inclusion efforts, and improved capital adequacy recapitalization are some of the factors that support financials. Focus on large banks and NBFCs.

f)      Stable prices is one of my core investment premises. I would therefore avoid pure commodity plays. However, there are several companies that are transforming from a pure commodity company to a (value added) product company. Such companies offer interesting investment opportunities.

g)     I shall be size agnostic in selection of companies. In fact, the growth could be much higher in several small and midcap companies that have a technology edge.