Do it yourself

The birth rate (number of new births in a year per 1000 population) has been declining consistently for the past many years, and the trend has accelerated post Covid (2021). The death rate (number of deaths per year for every 1000 population) has slowed down. In fact, the urban death rate has climbed after Covid. The infant mortality rate (number of new born children dying within a year, per 1000 live births) has improved materially in the past one decade, but still remains much below the global standards. Sex ratio also stays adverse for all larger states/UTs.

India's total fertility rate (average number of children that are born to a woman over her lifetime), or TFR, slipped from 2.1 in 2019 to 1.9 in 2023, below the replacement level (ratio required to keep the population level stable) of 2.1. The decline is sharper in cities, where fertility has fallen to just 1.5, compared with 2.1 in villages in 2023.

Declining birth rate, stagnating death rate, high infant mortality and TFR below replacement ratio, and persistent adverse sex ratio, implies that (i) India’s population would begin to decline much before earlier estimated 2050-2055; (ii) the average population age would begin to rise in the next one decade; and consequently (iii) the much talked about demographic dividend might begin to wane the next few years.

Key highlights of the report are as follows:

·         The Birth Rate (BR) at the National level during 2023 was 18.4, a decline of 1.6 points over 2018. The BR in urban areas declined by 1.8 points while in rural areas decline was less at 1.3 points. Among the bigger States/UTs, the maximum BR has been reported in Bihar (25.8) and the minimum in Tamil Nadu (12.0).

·         The Death Rate (DR) for the Country was 6.4 in 2023. Among the bigger States/UTs, the maximum DR has been reported for Chhattisgarh (8.3) and the minimum for Delhi (4.5).

·         The Infant Mortality Rate (IMR) for India was 25 in 2023, down from 32 in 2018. The corresponding decline in rural IMR has been to the tune of 8 points (36 in 2018 to 28 in 2023) against a decline of 5 points in urban IMR (23 in 2018 to 18 in 2023). This implies that one in every 36 infants in rural areas and one in every 56 infants in urban areas still die within one year of the birth.

Among the bigger States/UTs, the maximum IMR was observed in Chhattisgarh, Madhya Pradesh and Uttar Pradesh (37) and the minimum in Kerala (5). For comparison, China has an IMR of 5, Germany 3, Bangladesh 24, Cambodia 20, Congo 28, Iraq 21, and Pakistan 50. The global average for IMR is 27.

·         Sex ratio (Female per 1000 male) in the country stood at 917 in 2023. Amongst the larger states, Chhattisgarh and Kerala have reported the highest Sex Ratio at Birth at 974 and 971 respectively, while Uttarakhand has the lowest (868). Sex Ratio at Birth for Rural and Urban areas was 914 and 925 respectively.

·         The life expectancy at birth for India has been estimated at 70.3 years for the period 2019-23, an increase of 0.4 years from 2018-22. The life expectancy at birth varies from 64.6 in Chhattisgarh to 75.1 in Kerala. The life expectancy at birth is 69.1 years in rural areas and 73.1 years in urban areas for 2019-23. The life expectancy has increased by 0.5 years for rural and by 0.2 years in urban areas as compared to 2018-22

·         The Total Fertility Rate (TFR) for the Country stood at 1.9 in 2023. Bihar reported the highest TFR at 2.8, while Delhi recorded the lowest at 1.2. States like Tamil Nadu (1.3), West Bengal (1.3), Kerala (1.5), Punjab (1.5), Himachal Pradesh (1.6), Maharashtra (1.4), Andhra Pradesh (1.5), Jammu & Kashmir (1.5), Karnataka (1.5), Telangana (1.5), Odisha (1.7), Uttarakhand (1.7), Gujarat (1.8), Haryana (1.9), Assam (2.0) recorded TFR below replacement rate of 2.1.

At present, a rural woman (having a TFR of 2.1) at the National level would have about one child more than an urban woman (having a TFR of 1.5), on average.

As a common Indian household, I face three key issues in my daily life. From my discussions with several other common people, and observations during my travels across the country, I understand that I may not be alone in facing these issues. In fact, a large number of common households may be facing similar issues. These issues are –

1.    A conspicuous lack of the “service orientation” in our public servants. A large proportion of public servants usually act like entitled feudal lords and treat the common people as their underprivileged subjects. Even where a public servant is not extracting a fee (bribe) for his/her services, he/she ensures that the recipient of service feels deeply obliged to get, which was his/her right in the first place. The elected representatives put on hoarding (many times at public expense) to thank themselves for basic services done by civic authorities (like cleaning a choked drain, repairing potholes etc.), as if they have done some task extraordinaire. There is inexplicable contempt for accountability, transparency, and empathy – traditionally considered quintessential for any public service institution.

2.    Constant struggle in daily life, notwithstanding the convenience of 10-minute delivery and cashless payments (UPI). Poor roads; encroached pavements; garbage littered around; traffic jams; parking challenges; road rage by aggressive but untrained drivers; poor civic service standards; inadequate public health and education infrastructure; total disregard for public safety, especially women and children; stray animals; lack of empathy in the fellow citizens; overburdened and complex justice delivery system – virtually much of the things that affect the daily life of a common household are either wrong or inadequate.

3.    Constant or diminishing living standards. Real wages for a large majority of common households are either stagnant or diminishing. Notwithstanding the low CPI inflation numbers flashed on media screens frequently, the lifestyle inflation for common households is much higher. The average real wage growth in India during the past decade has been almost zero or negative. Consequently, the living standards of these households are either stagnant or gradually diminishing. Their houses are getting smaller and weaker. Education and skill quality of their children is deteriorating, making wealth and income disparity more permanent. Average health of a common household is deteriorating, even though the average life expectancy is rising, causing a significant rise in healthcare expenses over lifetime. They are being driven to fraudulent people masquerading as saints or religious preachers, in search of solutions to their routine problems, only to be fleeced. This is damaging the scientific temperament of the society, promoting superstitions and quackery and materially straining household finances as more money is being spent on fake rituals and unnecessary journeys.

Unfortunately, the governments are functioning more like shopkeepers in a flea market. They do not mind fleecing unsuspecting citizens in the name of service charge, toll tax, and other taxes; disregarding whether service standards are congruent with the charges/taxes. Even elections have become like a trade, buying votes for free ration etc.

In my view, this strategy to make the relationship between the government and citizens purely transactional, rather than based on mutual trust and accountability is the biggest problem our country is facing presently. “Unless this trust-contract is rebuilt, India risks remaining a nation where citizens endure services rather than receive them.”

Fruit salad and helmets

It was summer of 1992. The weathermen had announced the arrival of monsoon, a few days ago; though it had not rained even once. Weather was hot and humid – just the way mosquitoes, houseflies, fungi, and a variety of bacteria & viruses love it. People, especially children, were suffering from infections. The city administration was daily issuing half/full page newspaper advertisements cautioning people against disease outbreak, and guiding them to maintain personal hygiene, stay hydrated and avoid consuming street food, especially cut fruits. Several billboards and posters were also put up across the city.

My office was located on Indraprastha Marg, one of the busiest streets in the city, just opposite an imposing building housing the Delhi Police headquarter (DPHQ).

Around 100 meters away from DPHQ, there was a major bus stop (ITO). Several fruit chat vendors would sell cut fruits & vegetables like watermelon, pineapple, cucumber, coconut, etc. There were also few vendors who would sell helmets for 2-wheeler riders. These helmets were mostly made from cardboard and thermocol, and were completely unfit for their purpose.

I did not witness any police action against these vendors. In fact, often some policemen were also seen buying fruit salad and helmets from these vendors. On being confronted, these policemen would simply escape, saying, “if you have a problem, file a complaint at the police station, and an action will be taken”.

Sometimes municipal raiding parties would come and scare these vendors away. But this was for unauthorized use of pavements; and not for selling bacteria infested fruits or non-standard helmets.

Thirty-three years and thousands of CCTV installations later, I do not think that things in the capital city have changed in any significant manner.

A train journey, not to remember

Last month, it was a rainy morning. I was waiting at Bareilly Junction, for my train to Delhi. The train (Rajdhani Express) was running over half an hour late. For the past 40 minutes, the female announcer at the station was announcing that the train no. xxxxx is arriving at Platform No 2. The live train location tracking apps were showing that the train had stopped just 2km before the railway station, and waiting there for some other train to pass.

While waiting at the platform, wet from a leaking roof, I saw a disheveled man quarreling with a group of passengers. The man appeared hassled and angry. The passengers were apparently poor laborers travelling to their hometown. Since I had nothing to do, and there was no place to sit at the platform where I could read something, I decided to intervene in the quarrel in a typical UP style.

I discovered that the hassled man was a railway contractor. He had recently won a contract to keep the Bareilly Junction railway station clean. He explained in detail how difficult (and expensive) it is to get a railway contract.

The reason for his anguish this morning was that two of the passengers had relieved themselves on the foot-over bridge, instead of the Sulabh Shauchalaya (private toilet) on the station premises. The contractor was fighting with these poor laborers for adding to his work and making him liable for fine, if the inspecting officer finds the excreta on the FoB. I somehow managed to pacify him and offered him a cup of tea and a samosa. What I discovered from my discussion was disturbing, though not unsurprising.  

The privately managed toilet at the station was charging Rs20 per person for latrine, much higher than the specified rate. Poor people who travel on train floors, even for long distance journeys (taking 36-60hrs), and have little cash on them, can hardly afford to pay Rs20 for use of the toilet. They (including women) invariably relieve themselves in the open. The contractor says it is impossible to keep the station clean at all times, as per the terms of the contract.

By the time his story was over, my train came, I boarded on it. I had booked my lunch online to be delivered at the next station (Moradabad Jn). The train halts for less than 5 minutes at Moradabad.

As soon as the train entered the station, the delivery boys started jumping at the train, even before it came to a complete halt. Jostling with the passengers who had to get down at Moradabad, the delivery reached me and handed over my lunch box. However, before I could properly hold my food, the boy insisted that I acknowledge the receipt of food at IRCTC website and also give a 5/5 rating for the quality of food. We had just 2 minute to complete the task. IRCTC website would not open. I had no clue about what food has been delivered to me in the box. Nonetheless, I tried my best, but unsuccessfully. The train started moving and the boy had to jump off. Barely 5 minutes had passed, and I got a call from his boss. He insisted “please give me 5/5 rating”, otherwise IRCTC will not release my payment (Rs374). After struggling for 15 minutes, I somehow managed to complete the task. I acknowledged the receipt of food on time, and gave the food 5/5 rating, even though it was not even 2/5.

Since I have been giving 10/10 rating to the authorized service stations where I get my cars services; to the guy who comes for regular RO and AC servicing at my house; and all my bank relationship managers, regardless of their service standards, I did not even think once before giving this caterer 5/5.

Tackling potholes and meet scary musclemen

Last weekend, I traveled to Mohali (Punjab) from Gurgaon, to meet my daughter at her college. All colleges in Punjab were closed for a week due to floods and heavy rain alerts. We took the newly built UER-2 (link road between NH48 and NH44), to reach NH44. Drove on NH44 till Shambhu Border near Ambala, and then took NH 205A to Mohali. On our way to Mohali, we covered a distance of 270 kms and crossed 5 toll gates, paying a total toll tax appx Rs500.

At each toll plaza wait time exceeded one minute. Each toll plaza has deployed ominous looking bouncers; in case you think of complaining about wait time or seek toll waiver as per the NHAI rules.

The worst part however is that most of the expressway was in bad shape. There were potholes at many places. There were diversions to the poorly maintained service lane (apparently for many weeks) as the main carriageway is under repair. There were tractors overloaded with chaff, ominously covering almost two highway lanes. There were e-rickshaw; three wheeled tempos; overloaded motorbikes with riders not wearing helmets; large goods carriers and trailers consistently driving in fast lane and overtaking lanes, blocking cars; and roadways buses driving crazily. On the entire stretch we did not see even one policeman. Driving through NH44 was definitely a forgettable experience. Moreover, there is no chance that things will improve anytime soon.

“As I dodged potholes on NH44, I was reminded of a recent groundbreaking judgment of the Kerala High Court (Re. Shaji J. Kodankadath v. Union of India), establishing a crucial precedent in public infrastructure law. The court ruled that the National Highways Authority of India (NHAI) cannot collect toll fees from road users when highways fail to meet prescribed maintenance standards. This landmark decision suspended toll collection at the Paliyekkara Toll Plaza on NH-544 for four weeks, citing severe traffic congestion, poor road conditions, and NHAI's failure to provide adequate infrastructure services. The judgement has been subsequently confirmed by the Supreme Court of India also.

The judgment ought to represent a paradigm shift in the relationship between infrastructure development authorities and public rights. It must establish beyond any doubt that toll collection must be contingent upon service delivery standards.

NHAI has, however, not taken any action in pursuance of this judgement. No instruction, advice, order, and/or request has been apparently issued to the toll collector to suspend toll collection where the road conditions do not conform to the prescribed standards.

If the government agencies treat the Supreme Court instructions with such contempt, what should be expected of scrupulous elements of the society.

These are just three short stories. But collectively they make for a big picture which depicts the biggest malice in our system.

….to continue tomorrow

The Economic Survey 2019 reminded us that India’s own thinkers since ancient times tied prosperity to rule of law (Dandaniti) and protection against arbitrary rule (Matsyanyaya). In modern terms, this means clear rules, consistent enforcement, and contract sanctity. Investors, entrepreneurs, and global partners all look for this.

Yet, over the past decade, India has repeatedly seen sudden policy shocks. These not only create losses for businesses and investors but also erode long-term trust between government and enterprise.

Case Studies of Policy Uncertainty

Maggi Ban (2015)

FSSAI imposed a sudden nationwide ban on Nestlé’s Maggi noodles citing excessive lead/MSG. Months later, the Bombay High Court lifted the ban after independent tests cleared the product.

·         Nestlé lost sales and investor confidence.

·         The episode became a global case study on India’s regulatory unpredictability.

Demonetization (2016)

The government invalidated 86% of currency in circulation overnight, citing black money, corruption, counterfeit notes, and digitization.

·         Micro and small enterprises faced an existential crisis.

·         Consumers struggled for months.

·         No credible outcome report has been released, and the ruling party no longer highlights this “reform”.

Amaravati Project Rollback (2019)

The new Andhra Pradesh government cancelled ongoing projects, reopened power purchase agreements worth 5.2GW, and lost World Bank/AIIB funding for Amaravati.

·         Contractors, lenders, and investors faced huge losses.

·         Political risk perception shot up.

·         Trust deficit between private capital and state deepened.

Online Gaming Ban (2025)

The government abruptly banned all real-money online gaming under the guise of protecting users from addiction.

·         Stakeholders were given no consultation or transition.

·         Just a year earlier, the government had legitimized the sector with a 28% GST.

·         The move exposed inconsistencies in governance priorities.

Frequent Tax Changes

Ad-hoc changes in taxation of capital gains, buybacks, and dividends have repeatedly disrupted long-term investment planning. Investors call this “taxation by surprise”.

Why This Matters

The Economic Survey 2019 itself warned:

·         Policy uncertainty raises systematic risk and cost of capital.

·         Higher uncertainty discourages investment due to irreversibility of capital decisions.

·         Predictable and consistent policy attracts investors.

Despite this, India continues to score high on unpredictability.

The Bottom Line

India has the scale, demographics, and entrepreneurial energy to attract global capital. But without policy stability and regulatory predictability, much of these potential risks being wasted.

A government that consults, provides forward guidance, and avoids sudden reversals can unlock enormous investor confidence.

Unfortunately, recent history shows that India is still far from that goal.

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Here the minister is telling the truth (70000 employment letters given), without answering the question. He did not even clarify whether these 70000 youth have actually been given jobs or just been promised a job in the future. In this way, the minister lied by telling a plain truth- manipulated it to suit his convenience.

A similar pattern often plays out in economic statistics, where data may be technically correct but presented in a way that conveys a misleadingly optimistic picture.

The blockbuster GDP data for 1QFY26, released by the National Statistics Office (NSO) last Friday, prima facie appears an example of manipulated truth. According to NSO, the Indian economy recorded real GDP growth of 7.8% in 1QFY26, over and above 7.4% recorded in 4QFY25. The reported growth rate is far above the estimates of RBI and the professional forecasters.

Key highlights of GDP Data for 1QFY26

Basic data

Real GDP Growth:  7.8% in 1QFY26, compared to 7.4% in 4QFY25 and 6.5% in 1QFY25.

GDP at Constant Prices Rs. 47.89 lakh crore in 1QFY26, up from Rs. 44.42 lakh crore in 1QFY25.

Nominal GDP Growth: 8.8% in 1QFY26, compared to 9.8% in 4QFY25 and 9.7% in 1QFY25.

Nominal GDP in Q1FY26 is estimated at ₹86.05 lakh crore (US$975bn at today’s exchange rate), against ₹79.08 lakh crore (US$943bn at 1^st September 2024 exchange rate) in 1QFY25.

Real GVA Growth: 7.6% in 1QFY26, compared to 6.4% in 4QFY25 and 6.5% in 1QFY25. Real GVA was Rs. 44.64 lakh crore in 1QFY26, compared to Rs. 41.47 lakh crore in 1QFY25

Demand side performance

Private consumption demand slows: Private Final Consumption Expenditure (PFCE) grew by 7.0% in 1QFY26, compared to 7.6% in 4QFY25 and 8.3% in 1QFY25.

Investment demand strong: Gross Fixed Capital Formation (GFCF) grew by 7.8% in 1QFY26, compared to 7.3% in 4QFY25 and 6.7% in 1QFY25.

Government consumption rises: Government Final Consumption Expenditure (GFCE) grew by 9.7% in 1QFY26 (nominal terms), compared to 4.4% in 4QFY25 and 4.0% in 1QFY25.

Notably, 1QFY25 was election quarter and the model code of conduct was in effect for much of the period.

Supply side performance

Services: GVA up 9.3% in 1QFY26, from 6.8% in both 4QFY25 and 1QFY25. Boosted by exports, financial services, government spending, and the digital economy.

Construction: GVA up 7.6% (vs. 8.6% in 4QFY25, 7.0% in 1QFY25), supported by infrastructure investment but moderated by seasonal factors.

Manufacturing: GVA up 7.7% (vs. 3.5% in 4QFY25, 2.2% in 1QFY25). Recovery driven by domestic demand, production-linked incentives, and improved export orders (HSBC PMI at 58.4 in June 2025). Low base effect also helped.

Agriculture: GVA up 3.7% (vs. 3.8% in 4QFY25, 1.5% in 1QFY25). Better Kharif sowing conditions supported growth despite a 5.6% monsoon deficit in 2024.

Mining & Quarrying: GVA down -3.1% (vs. +1.4% in 4QFY25, -0.01% in 1QFY25), hurt by weak global demand and domestic bottlenecks.

Utilities: GVA up just 0.5% (vs. 3.0% in 4QFY25, 10.5% in 1QFY25), reflecting weaker energy demand and delays in renewable project

Material divergence from expectation

The 7.8% real GDP growth in 1QFY26, driven by services (9.3%), manufacturing (7.7%), construction (7.6%), and agriculture (3.7%), was well above RBI and analyst estimates of 6.5–7.0%. Weakness in mining and utilities moderated the overall picture, but the outcome still exceeded consensus by 0.8–1.3 percentage points.

Apparent reasons for divergence

Manufacturing rebound: Analysts expected ~5%, but the sector delivered 7.7%.

Government spending: GFCE grew 9.7%, far above expectations of modest increases.

Agriculture: Growth of 3.7% (vs. ~2.5–3.0% expected), though actual yields may revise this down later.

Services: Tertiary sector expanded 9.3% (vs. ~7.0% expected), on strong exports and financial services.

The true lie

In my view, the base effect, discrepancies in data collection that are corrected later through revision of data are regular factors and should not raise doubt about the integrity of the GDP data.

However, what stands out in this quarter’s data is GDP deflator – the inflation factor used to convert nominal GDP into real GDP.

·         In 1QFY26, the deflator was just 0.9%, compared to 3.1% in 4QFY25.

·         The low deflator boosted real GDP growth by roughly 2 percentage points versus what it would have been with a 3.1% deflator.

·         Real GDP growth (7.8%) thus appears unusually strong, even though nominal GDP growth slowed both year-on-year and quarter-on-quarter.

This matters because corporate profits, tax collections, private consumption, and the current account deficit (CAD) all track nominal GDP, not real GDP. Slower nominal growth implies weaker profits, lower revenues, softer consumption, and a higher CAD ratio.

It is therefore unsurprising that financial markets have shown little enthusiasm for the GDP “surprise.” Government bond yields have edged back to pre-budget levels (despite a 50bps repo rate cut), and the INR has slipped to its lowest ever level.

Yes, 1QFY26 real GDP growth is surprisingly high—but it would be misleading to present it as evidence of a booming economy. Beneath the headline number, the economy still faces strong headwinds: new US tariffs, climate catastrophes in Punjab, J&K, Himachal Pradesh, and Haryana, and a steady erosion of foreign investor confidence (reflected in weak FDI and negative FPI flows).

What made traders’ life tough

·         The external environment has been volatile. Geopolitical conflicts in the Middle East had escalated materially. The war between Russia and Ukraine continued and developed a new trade/tariff angle for the Indian economy. India engaged with Pakistan in a small but intense war that could have serious long-term repercussions for regional geopolitics. These events caused sharp volatility in the market, causing exacerbated margin calls and losses to the traders.

·         The US imposed reciprocal (25%) and penal (25%) tariffs on imports of merchandise from India, making Indian exports to the US significantly uncompetitive in comparison to the traditional competitors like Vietnam, Bangladesh, Sri Lanka, Turkey, Indonesia, Ecuador, etc. This led to a sharp correction in the stocks of companies drawing material export revenues from the US.

·         Economic growth of India has been stable but no acceleration is seen. The demand (both consumption and investment) has remained subdued, impacting consumer companies that were over owned by traders and investors alike.

·         Earning momentum has stalled for the past few quarters, with earnings growing in single or low double digits. The valuations of several popular and fancied sectors and stocks have witnessed some de-rating, but still continue to be in the realm of “questionable” for a large majority of stocks.

·         While the implied volatility (VIX) has remained low, the realized volatility experienced by the traders has been elevated. Also, sector rotation has been swift and painful. Stocks from sectors like IT services, Pharma, FMCG, Realty and smallcap that were doing well couple of years ago and were over owned have noticeably underperformed YTD2025. While sectors like Auto, Metals and financial services that were under owned and performed poorly have outperformed.

What worked for the traders

International equities, precious metals and crypto assets have done exceedingly well YTD2025. Traders who had invested enthusiastically in Asian equities (especially greater China) a few years ago and were suffering losses have managed to recoup most of their losses. Crypto assets have provided phenomenal return, while gold and silver have also fared very well.

·         Internationally, the worst performing markets in the Post Covid period, especially, China, Hongkong, and Japan, have been top performing markets in the past one year. While India has been one of the most notable underperformers. In USD terms, India has yielded a negative return of ~5% in the past twelve months.

·         Precious metal and crypto assets have done exceedingly well for Indian investors and traders in the past twelve months.