Do it yourself

The macro environment in India looks stable and resilient, despite the scare of war and trade uncertainties. The south-west monsoon has started on a buoyant note, and IMD reconfirmed its forecast of above normal (106% of LPA) for the current season. Enhanced dividend payout by the RBI has lessened fiscal slippage concerns. Concerted efforts by the RBI to improve system liquidity have also yielded positive results. Fiscal strength, benign inflation outlook, and improved liquidity have resulted in the benchmark 10yr bond yields falling to the lowest level since 2021; reversal in FPI flows since March 2025; stability in currency and improved growth outlook. Despite notable stability there are few areas of concern that investors should be mindful of. In particular, I shall be watching the development of external situations closely. External situation - not worrying presently, but could deteriorate India's external sector has shown resilience in recent years, but there are signs o...

The latest report of the United Nation Conference on Trade and Development (UNCTAD) highlights that the funding deficit for the developing economies to meet Sustainable Development Goals (SDGs) is rising. As per the report, the gap is now about US$4trn, up from US$2.5trn in 2015 when the SDGs were adopted. The amount of global foreign direct investment (FDI) has been on decline since peaking at US$2.05trn in 2015. In fact, a percentage of world GDP, FDI peaked at 4% of global GDP in the year 2000 and has been on decline since then. In the year 2023, global FDI fell to US$1.3trn or 1.27% of global GDP.   As per a recent Moody’s report, “Global foreign direct investment flows have shrunk in recent years. The COVID-19 pandemic, supply-chain chaos, surging inflation, and tighter funding conditions have taken a toll on global FDI. Investment flows are also being reshaped by economic fragmentation, trade and geopolitical tensions, industrial policies, and supply-chain diversification...

There is little doubt in anyone’s mind that having the largest youth population (…and still growing) in the world and much improved infrastructure India is a place of immense interest to (i) the global businesses who are looking for an attractive market for their products; and (ii) enterprises who are looking to diversify their production/services base to a place with abundant and cheap skilled workforce, natural resources, favorable policy framework, and decent infrastructure. The foreign governments which run on the support of these businesses (or the governments who run these businesses themselves) are obviously keen to widen and deepen their relationship with the Indian businesses and government. Fast growing economic and geo-political influence of China in global affairs has also enhanced India’s importance as a key balancing factor in the global strategy of developed countries and strategic alliance partners. With this growing interest of the global community, it is natural that ...

Unpredictability has been one of the key characteristics of the incumbent Indian government ever since it assumed office in May 2014. The government, especially the political leadership, has taken numerous decisions that have surprised most of the citizens and global observers. Overnight decision to replace all large currency notes in circulation (demonetization); surgical strikes in PoK; air strikes in Pakistan territories; abrogation of article 370 of the constitution and bifurcation of the state of Jammu & Kashmir to carve out Ladakh as a separate union territory; criminalization of the practice of triple talaq; amendment in the citizenship law; abolition of planning commission; restructuring of corporate tax rates; and most recently the decision to impose a total lockdown in the country to control the spread of COVID-19 virus etc are some of the examples of unpredictable decision making. The tendency to surprise the stakeholders has not remained limited to the ...

In the three year agenda released in 2017, NITI Aayog noted that "unemployment is the lesser of India’s problems. The more serious problem, instead, is severe underemployment. A job that one worker can perform is often performed by two or more workers. In effect, those in the workforce are employed, but they are overwhelmingly stuck in low-productivity, low-wage jobs...Therefore, what is needed is the creation of high-productivity, high-wage jobs." The action agenda therefore emphasized on increased emergence of larger, organized-sector firms that can create high paying jobs. To meet this end, promoting exports was considered a better option rather than trying to substitute imports by producing in India. The agenda paper accordingly highlighted that "A focus on the domestic market through an import-substitution strategy, however attractive it may seem, would give rise to a group of relatively small firms behind a high wall of protection. They will not on...