Do it yourself

The Monetary Policy Committee (MPC) of the Reserve Bank of India concluded its three-day meeting on Wednesday. The committee voted unanimously to keep the policy repo rate unchanged at 5.50 per cent. The MPC also decided to continue with the neutral monetary policy stance.

Recently, the Ministry of Statistics and Programme Implementation (MoSPI) released its Quarterly Project Implementation Status Report (QPISR) for Q1 FY 2025-26. This report provides a detailed overview of the key high impact infrastructure projects which represent the backbone of India’s infrastructure push. The report offers insights into projects’ progress, challenges, and sectoral distribution.

The report classifies the high impact projects into ‘mega projects’, costing ₹1,000 crore or more, and ‘major projects’, costing between ₹150 crore and ₹1,000 crore.

The following are some of the key highlights of the reports:

Total projects under implementation

·         At the end of 1QFY26, India had 1,734 (vs 789 in Q1FY25) central sector infrastructure projects (≥ ₹150 crore) under execution. Out of this, 619 are mega projects and 1115 are major projects, entailing a total outlay of Rs28.42trn (Rs10.97trn at end of 1QFY25). Out of these 224 projects with an outlay of Rs2.14trn are in North Eastern region.

·  Out of the 1734 current projects under implementation, 1023 (59%) projects with an original outlay of Rs7.93trn (28%) are from roads & highway sector, while 214 (12%) projects with an original outlay of Rs6.32trn (22%) are from railways sector.

 Top ten states dominate

·         Ten states accounted for 57% of the total projects under implementation, with an original capital outlay of Rs14.97trn (53%). Maharashtra (187 projects, Rs2.42trn), UP (13 projects, Rs2.18 trn) and Gujarat (95 projects, Rs1.73trn) were the top three states.

·         During 1QFY26, 116 projects, with outlay of Rs1.34trn, were declared completed, and 46 new projects with an outlay of Rs512bn were added. In this period 13 projects with an outlay of Rs80bn were dropped/downgraded.

Execution best in road sector

·         The completed projects include, 81 Road transport and highways projects, 11 railways projects, 7 each of power and petroleum sector. The new sanctions include 17 projects each from the Road & Highways and Power sector, 7 steel projects, 4 coal projects and 1 railway project. New power sector projects are dominated by renewable and transmission upgrades.

Urban development projects gaining importance

·         There are 150 (11% of total projects) projects related to urban development are under implementation. Capital outlay for these projects is Rs3.5 trn (13% of total anticipated cost).

·         Urban development projects mainly include metro systems, smart cities, and urban housing initiatives.

Cost overrun and delays

·         Total original approved outlay on the large 1734 projects was Rs28.42trn. The revised/anticipated cost to complete the projects is however 11% higher at 31.58trn. Out of this a cost of Rs17.74 (56.2%) has been already incurred.

·         Approximately 70% of projects are on schedule, but 30% face delays due to land acquisition issues, scope creep, and delays in administrative and environmental clearances.

Human capital sectors lag behind

·         Capital outlay for the health and education sector has remained chronically low in India. This sector is significantly underfunded, with only a fraction of resources allocated to hospitals, medical colleges, and educational institutions.

·         In the current pipeline, there are only 8 projects related to health sector with an outlay of Rs73bn and 20 projects related to education sector with an outlay of rs103bn (a meager 3% allocation for both key sectors)

·        There are 40 projects related to water and irrigation (3% of total projects) with an outlay of Rs1trn (4% of total anticipated cost). 

Conclusion

India has a strong infrastructure pipeline which augurs well for the economic growth in the short term. However, the heavy focus on roads and highways reflects a policy bias toward economic infrastructure. While this may boost short-term GDP growth, the long-term consequences of underfunding social infrastructure could be detrimental to sustainability.

Another notable feature is skewed regional distribution of projects and execution efficiency. A few states have been traditionally allocated

“Life is about the journey, not the destination”. This is a popular quote (often attributed to Ralph Waldo Emerson) amongst motivational speakers, self-help and mindfulness coaches, therapists, and teachers. I have spent a good part of my life aimlessly wandering in the hinterlands of India. During these journeys I have learned a lot not only about my country, people, culture, traditions, treasures, and problems; but have also explored my inner self. I can therefore relate deeply with this saying.

However, a grave situation could arise when governments, businesses and other institutions begin to take this saying seriously; not realizing that it is about self-help and mindfulness at an individual level. Policy makers and institutions focusing on journeys rather than destinations may frustrate millions, depending on them for governance and livelihood, by causing avoidable agony and making their lives miserable.

Unfortunately, prima facie, our governments have been taking this saying too seriously. Their planning process appears to be focusing too much on means rather than goals. They have been putting the cart in front of the horse, not reaching anywhere or moving extremely slowly.

Let me explain with a few examples.

Constructing fancy buildings instead of character and scientific temper

The government has set a goal of constructing institutions like IITs, IIMs and AIIMS. Whereas, the goal should have been making Indians educated and healthy, in order to help them in developing a scientific temper (fundamental duty of citizens as per the Constitution).

Primary school is the place where you develop the character and temper of a child. And unfortunately, that is the place which is being ignored the most.

Merely constructing fancy buildings to produce graduates with little scientific temper and lacking in basic sense of inquiry does not serve any goal. A number of top engineering graduates pursue a management degree immediately after completing graduation, and they aspire for a banking job. This clearly shows that the selection process of engineering institutes like IITs is completely flawed and does not serve the purpose. A student who does not aspire to become a top class engineer to drive innovation and inquiry, should get eliminated at the application stage itself.

Similarly, a fully equipped primary health center in each village could eliminate the need for 50 AIIMS like institutions, and make the country much healthier. Building AIIMS, when diabetes, cancer, Vitamin B12 and D deficiencies, etc. have already assumed epidemic proportions, makes little sense.

Awarding national awards to actors who have been actively promoting consumption of tobacco, cause of thousands of untimely deaths every year, while focusing on constructing AIIMS in every state clearly indicate towards goal incongruence.

GDP is statistics not development

Celebrating the absolute GDP number and taking comfort in a growth rate that is higher relative to other economies, is also superfluous. The policy goal should be to improve the quality of life of every citizen to a certain level of comfort and dignity. Statistics like GDP growth should be left to the agencies monitoring the achievement of this goal. Government focusing on GDP growth is purely a distraction from the primary goal, i.e., “to minimize the inequalities in income, status, facilities and opportunities (as per the directive principles of the constitution)”. The government should monitor and report the progress in achievement of this goal rather than throwing random and meaningless numbers like $5trn and $10trn.

Medal and sports

The government has apparently set a goal to win a certain number of medals in the international sporting events like Olympics, Asian Games etc.

The goal of the policy should ideally be to promote sporting habits in the citizens, especially children, in order to make/keep them healthy, and help them develop characteristics like brotherhood, team spirit, harmony (as per fundamental duties prescribed in the constitution). Winning medals is just a by-product of sporting habits, which a few young people, who choose sports as a career, might win in due course. This cannot be a policy goal in a country like India.

Temple vs Character

The government has celebrated the construction of a grand Lord Rama’s temple at his birth place in Ayodhya, as one of its main achievements. The point is what should be the policy goal – building temples or building Lord Rama like character in the citizens of the country.

Lord Rama was anointed king of Ayodhya, but left the throne for his younger brother to honor the words of his father. He defeated Bali, but left the throne of Kishkindha to Bali’s younger brother Sugriva. He defeated Ravana, but left his kingdom Lanka for his younger brother, Vibhishana.

However, the outcome of the Ayodhya temple is that the followers of Lord Rama have become aggressive in their pursuit of taking possession of several other religious buildings for constructing temples at the expense of social harmony, common brotherhood, and peace.

An ideal policy goal would have been to develop Lord Rama like character in all primary school students, such that every household becomes a temple. The temple at Ayodhya should be used as an epitome of strong character not as an excuse for jingoistic nationalism.

These are just a few examples, where the government policies are like cart before horse. Everyone is enjoying the journey without going anywhere!!!

 The Federal Open Market Committee (FOMC) of the US Federal Reserve (Fed) maintained its policy rates at 4.25% to 4.5% range, by a majority vote. It was the first occasion since 1993 when two Fed governors voted against the majority decision. Fed governors, Michelle Bowman and Christopher Waller, wanted a 25bps rate cut at the meeting, concluded on Wednesday.

The current results season (1QFY26) has been rather underwhelming so far. The market expectations for this quarter were already muted. The consensus estimates projected 1QFY26e Nifty50 revenue and profits to grow around 5% yoy, while the broader market earnings were expected to grow at a better 11-12% yoy rate. However, the results declared so far indicate an aggregate revenue growth less than even the nominal GDP growth of ~10%.

Antimicrobial resistance becoming ominous

Antimicrobial resistance (AMR) is fast emerging as one of the most ominous health concerns at global level.

As per the World Health Organization (WHO), “Antimicrobials – including antibiotics, antivirals, antifungals, and antiparasitic – are medicines used to prevent and treat infectious diseases in humans, animals and plants. Antimicrobial Resistance (AMR) occurs when bacteria, viruses, fungi and parasites no longer respond to antimicrobial medicines. As a result of drug resistance, antibiotics and other antimicrobial medicines become ineffective and infections become difficult or impossible to treat, increasing the risk of disease spread, severe illness, disability and death.

AMR is a natural process that happens over time through genetic changes in pathogens. Its emergence and spread are accelerated by human activity, mainly the misuse and overuse of antimicrobials to treat, prevent or control infections in humans, animals and plants.

Antimicrobial medicines are the cornerstone of modern medicine. The emergence and spread of drug-resistant pathogens threaten our ability to treat common infections and to perform life-saving procedures including cancer chemotherapy and caesarean section, hip replacements, organ transplantation and other surgeries.

In addition, drug-resistant infections impact the health of animals and plants, reduce productivity in farms, and threaten food security.”

Please note that AMR is not a future threat. It is unfolding now—insidiously, incrementally, and globally.

Wolf may enter the barn unnoticed

There’s another kind of resistance building—this time in global financial markets.

President Trump is seeking to alter the global terms of trade through tariffs. In a massive exercise his administration is undertaking a review of the US’s trade terms with all countries (except perhaps Russia and North Korea), regardless of the size of their economy and quantum of trade with the US.

Initially, the global markets were reacting with a good deal of volatility to each tariff related announcement coming out of the White House. The Trump administration would take note of such volatility and take a step back. Of late, something has changed - Markets have "priced in" chaos. Markets are becoming immune to such announcements, assuming the proposed tariffs will not be implemented, as has been the case previously. Taking advantage of this market complacency, the US administration has already implemented some tariff proposals, including a 50% tariff on copper imports into the US. Trade deals have been reportedly signed with key trade partners like UK, China, Vietnam, Japan, Indonesia, and Philippines, materially altering the US’s terms of trade with these countries.

It's a classic “boy who cried wolf” dynamic playing out. Markets are becoming resistant to all threatening news, be it trade, geopolitics or climate.

The question to be examined is whether this resistance is materially different from AMR; or it is similar and would eventually weaken the resilience of markets, making them susceptible to sudden collapses?

As of this morning, I have no view on markets susceptibility to sudden collapses, but I do believe that mindless use of Antimicrobial in India (both through prescription and self-medication) is fast assuming epidemic proportions, and could have catastrophic consequences.

For decades, the United States has held a unique place in the global imagination — as the land of opportunity. Its greatest strength may not lie in military might, financial depth, or diplomatic reach, but in its remarkable ability to attract and absorb the best minds from across the world — including from adversarial or war-torn nations.

The most striking evidence of this is visible in America’s talent pool. Professionals of foreign origin — Indian, Chinese, Iranian, German, and more — dominate leadership roles across top corporations, academic institutions, legal systems, research labs, and even sensitive government-linked establishments like NASA. Many of these individuals come from countries that have historically suffered at the hands of U.S. military or economic policy — yet they thrive in the American ecosystem, contributing to its innovation, productivity, and geopolitical leverage.

This magnetic pull continues despite periodic political rhetoric against immigration, restrictions on student visas, and debates around birthright citizenship. Talented people, especially in emerging fields like artificial intelligence (AI), continue to gravitate towards the U.S. in pursuit of better opportunities and freer expression.

Global AI brain drain

Take, for instance, the migration of AI professionals. Between 2019 and 2024, over 12,000 Indian AI researchers relocated to the U.S., according to migration and academic datasets — second only to Iranian researchers. Over 90% of AI PhD graduates from U.S. institutions have stayed back to work in American academia or industry. Many of these individuals were educated at premier Indian institutions like the IITs, whose costs are borne by Indian taxpayers.

China, however, seems to be bucking this trend. In 2019, only 10% of top-tier Chinese AI researchers remained in China after graduating. By 2022, this figure had grown to 26%, thanks to improving domestic research infrastructure and better-funded universities — six of which now rank among the top 25 globally for AI research.

This trend might just be the beginning. Recently, Canadian mathematician Joshua Zahl, credited with major advances on the century-old Kakeya conjecture, announced his move to Nankai University in China as a full-time chair professor. If such high-profile migrations become common, it would mark a structural shift in the global knowledge economy — one that the U.S. may no longer dominate unchallenged.

Opportunity as a national strategy

What sets the U.S. apart is not just that it welcomes immigrants, but how it integrates and enables them. Many other nations — Australia, the UK, Canada, Germany, and France — have also absorbed millions of immigrants over the past three decades. Yet, none have reaped the economic and strategic benefits at the scale the U.S. has. One reason could be that these countries often pursued immigration for social balancing (aging population, refugee resettlement) while the U.S. positioned itself as a platform for economic opportunity and personal advancement.

This distinction is critical.

India’s blind spot

India, meanwhile, continues to suffer from an unchecked exodus of both talent and wealth. Not only do our brightest minds — trained at the cost of the exchequer — leave in search of better prospects, but increasingly, our wealthiest families are choosing to settle abroad, relocating their capital and potential job-creating capacity with them.

While we celebrate our ancient heritage, digital prowess, and rising geopolitical clout, the hard truth remains: India is still not seen as a land of opportunity — neither by outsiders nor, tragically, by its own elite. We are yet to hear of a rich or highly skilled professional choosing India as their destination of aspiration.

This is not just a branding issue; it is a systemic failure. From bureaucratic hurdles and inconsistent policy to inadequate research funding and a stifling regulatory climate, we are often indifferent — if not hostile — to the very people we need to retain or attract.

Time for radical rethinking

The continued erosion of India’s human capital advantage must not be dismissed as collateral in a globalized world. It is a serious strategic risk. We need a radical rethinking of our talent, research, and immigration policies — including steps like:

·         Creating elite research institutions with global faculty and unrestricted funding

·         Offering residency and startup incentives for global entrepreneurs and returning Indians

·         Reforming academic governance and expanding autonomy

·         Reimagining urban centers as global innovation hubs, not just tech parks

It’s time we recognize that global competitiveness today is not just about trade or missiles — it's about minds. And talent goes where it feels valued, not just needed.

In the classic Hindi film Sahib, Biwi Aur Ghulam (1956), the old aristocracy is shown flying pigeons while their estates crumble around them. There’s a metaphor in that. India must not fall into the trap of living with hubris, celebrating ancient glories while losing out on the future.

(Note: This post has been edited with the help of ChatGPT)

In my middle school Hindi book, there was a thought-provoking story titled Haar Ki Jeet (Victory in Defeat) written by Sudarshan. The story was about a compassionate priest, Baba Bharti, living in a village temple. Baba’s only worldly possession was his horse, named Sultan. A notorious dacoit, Khadag Singh, took fancy for Sultan and vowed to take it from Baba. He offered to buy Sultan from Baba. But Baba refused to part with Sultan, whom he had raised like his son.

Overcome by desire, Khadag Singh deceitfully stole Sultan from Baba. Kind Baba, did not resist the treachery of Khadag Singh, letting him take Sultan. He, however, requested him not to reveal this incident to anyone. Khadag Singh was baffled by this unusual request of Baba. He asked Baba, “why would you request so?” Baba politely said, “if people come to know about this incident, they may hesitate in helping people in distress”. Moved by Baba’s words and overwhelmed by guilt, Khadag Singh quietly left Sultan in his stable in the temple that night.

The moral of the story is that serving the broader social good is far more important than serving one’s own vested interest. You are a winner if you fight for social good, even if that comes at your personal cost.

I remembered this story last night while reading about the report of Viceroy Research LLC, a Delaware (USA) based investigative financial research group, on the UK based Vedanta Resources Limited (VRL), a holding company of NSE listed Vedanta Limited (VDL).

What reminded me of this story was not just the act of perceived betrayal or the quick reactions it triggered, but the broader impact such actions can have on the trust fabric of society.

Viceroy, in its report, highlighted that the entire structure of VRL is “financially unsustainable, operationally compromised” and that it is susceptible to default on its debt. It also termed VRL a “parasite” living on resources of VDL. The stock market reacted to the report in a knee jerk fashion. The stock of VDL initially fell 8%, but ended the session with a smaller cut. This was in contrast to the market reaction to a similar report by the US based short seller Hindenburg Research LLC, on Adani Group of India, in January 2023. In reaction to the Hindenburg report, Adani group stocks had crashed more than 50%, and many of the group's stocks are still not fully recovered to the pre-January 2023 levels.

The reason for a muted market reaction to the Viceroy report, might arguably be that Hindenburg could not substantiate its allegation, and in the process negatively impacted the credibility of investigative research. From anecdotal evidence gathered in the last one week, I find that the market participants are significantly less willing to accept any such investigative research post Hindenburg episode.

I am not commenting on the merits, or otherwise, of either Hindenburg or Viceroy reports. My concern is about the process. If you make some allegation (of throw and run kind) just to gain from short selling, without possessing ability, or holding an intent, to substantiate such allegations in a court of law, you destroy faith of the society in the institution of investigative research and put the entire investing community at risk of being defrauded by unscrupulous businessmen.

This might also apply to the enforcement agencies which make unnecessary arrests or register frivolous cases, under political pressure or for some other reasons. This practice allows building a narrative that enforcement agencies are “caged parrots” and their actions are always motivated by extrajudicial purposes. This obliterates the stigma of being arrested, motivating fearless white-collar crimes. The criminal conveniently plays the “victim of vendetta” card and gathers sympathy instead of being blemished. Five motivated arrests make ninety-five genuine arrests futile.

The criminals come out smiling and uttering a famous dialogue of 1993 Shahrukh Khan starrer movie Baazigar, “haar kar jeetne waale ko Baazigar kehte hai" (those who win after losing are called Baazigar). Baba Bharti would obviously not like it.

(P.S.: Short-sellers like Hindenburg or Viceroy do spark necessary scrutiny, even if not immediately substantiated in court, by exposing potential risks to investors. Also, in most cases enforcement agencies are not politically driven. But the point is that sometimes even one case could be enough to erode the credibility of the entire process.)

Continuing from yesterday…(see In search of Leadership)

As I see it, the current settings of the Indian economy and market are as follows:

Macroeconomic conditions are stable – inflation is under control, fiscal balance is improving, primary deficit is improving faster leaving room for further fiscal stimulus (may be GST rationalization on the top of income tax concessions already announced); terms of trade may improve as more bilateral trade agreements and free trade agreements begin to yield results; monetary policy is growth supportive – liquidity conditions are comfortable, rates cuts have been frontloaded, and current account position is stable.

Financial stability – The health of the financial system is very good. Bank’s balance sheets are stronger than ever with adequate capital and excellent asset quality. Corporates balance sheets are also stronger with accelerated deleveraging in the past 3 years. The government balance sheet is also improving, against the global trend. Settings are thus good for credit and investment cycles.

Growth moderate but stable – The Indian economy is expected to grow at a steady 6.5% annual rate in FY26e. Corporate earnings are expected to grow in the low double digit, accelerating to high teens in FY27. This may not augur well for significant new capacity addition; but nonetheless may keep employment conditions stable.

Consumer demand outlook improving – There are several factors that support an improvement in the domestic consumption demand in the next couple of years. For example, the southwest monsoon that is critical for rural income growth is progressing well. Two, the fiscal stimulus in the form of an effective tax rate cut is beginning to show an impact, as the advance tax collections have shown a decline. Third, the GST rate rationalization on essential household consumption is expected. Fourth, 8^th pay commission recommendations are expected to be implemented wef FY26, substantially increasing the disposable income of government and public sector employees. Fifth, the soft commodity disinflation is under progress, making staples more affordable. Sixth, the consumption demand has lagged for the past couple of years, hence providing a favorable base for growth.

From an investor’s viewpoint, these settings, in my view, imply-

·         The market should trade with an upward bias for most of the 2HFY26 and FY27.

·         The participation should be broader, with most sectors participating.

·         Financials, especially consumer finance, may remain in the lead.

·         Exports may do selectively well, depending on the contours of the trade deals. A global growth recovery in FY27 may improve broader outlook for exports.

·         Domestic consumption growth accelerates. Earnings of the consumer sector that have been on a downward trajectory during the past few quarters, should reverse and become positive. Discretionary consumption (Textile, alcohol, beauty, personal care, healthcare, white goods, etc.) may improve. Up-trading in staples may also be witnessed. Mobile data, budget fashion, food delivery services, quick commerce service, and budget international travel are some areas of consumption with stronger outlook.

·         New capacity addition may not be in focus. Capex may be focused on modernization, optimization (debottlenecking) and automation. Power T&D and mining are the two sectors with high capex visibility.

Consumption may be the new leader

From the above summary, it is reasonable to conclude that consumption could be the dominant theme for the next market up move. I find the following consumption ideas worth closely examining:

Consumer finance – NBFCs, private banks

Aspirational consumption – Mobile data, budget fashion, IMFL, and budget international travel, health insurance, preventive healthcare

Consumer services - food delivery, quick commerce

Also read

In search of new leadership

The benchmark indices in India have been directionless for almost two months now. In fact, Nifty50 has yielded a return of less than 2% in the past one year. Broader market indices have also not done any better. However, there has been a significant divergence in the sectoral performances. Some sectors like financials (+13%) and pharma (+8%) have outperformed the benchmark indices in the past one year, sectors like Media (-17%), Energy (-16%), Realty (-13%), FMCG (-7.5%), and Auto (-7.5%) have materially underperformed.

It is a common adage amongst the financial market participants that “When America sneezes, the rest of the world catches a cold”. The origin of this belief is the global market turbulence in the aftermath of 1929 Wall Street crash. In the past 100 years, whenever the US economy or markets have faced any serious problem, most of the global economies and markets have witnessed elevated volatility and erosion in asset prices. The prime reason for this correlation of the US economy and markets has been the disproportionately large size of the US economy and markets; dominance of the US dollar in global trade; and over-reliance of emerging markets on the US for investment, development assistance and humanitarian aid.

In the past couple of years, serious concerns have emerged about the sustainability of the US public debt and fiscal deficit. The overall GDP growth has been aligned to the average of the post global financial crisis (GFC) period. The efforts to accelerate growth have not yielded much results.

Since January 2025, when the incumbent President (Mr. Trump) assumed charge, things have been rather volatile. Mr. Trump has presented some radical ideas to tackle the economic problems distressing the US economy. These ideas include renegotiating terms of trade with all the trade partners; drastically reducing the budget for global development assistance and humanitarian aid programs; optimizing the size of US administration; and reducing the US commitment to strategic alliance (e.g., NATO); multilateral institutions including the UN and IMF etc.

The impact of these measures, whenever these are effectively implemented (or abandoned), may be felt in the US economy and markets, as well as the global economy and markets. Till then expect the markets to remain tentative and sideways.

Trump Plan

Notwithstanding the theatrics of Mr. Trump, a method in his madness is conspicuous. As I see it, the primary problem of the US is its unsustainable debt. At last count the US public debt was out US$36trn (appx 123% of its GDP), entailing over US$1trn in annual interest payments.

The conventional way to reduce this debt is to use a judicious mix of —

(i)    Curtailing government expenses;

(ii)   Increasing revenue;

(iii)  Inflating the economy to reduce the value of money

(iv)  Weakening the currency; and

(v)   Lowering the debt servicing cost through lower rates.

Mr. Trump is trying to achieve through tariffs (higher revenue and inflation); lower expenses (reducing the size of government, cutting foreign aid, lower clean energy subsidies, etc.); additional revenue (higher VISA fee, new taxes etc.); weaker USD; and coaxing the Fed to cut rates.

How much success he gets in his endeavor, we will know in the next 6-12 months. For now, I see nothing to worry about whatever is emanating from the US. In the next 12 months, the situation will either be the same or significantly better. I shall stay hopeful, though.