A letter to the prime minister

Hon’ble Prime Minister

I write to you with a deep sense of disappointment, urgency and hope. While the matter may appear trivial at first glance, the incident carries wider implications for governance, civic responsibility and the trust of our youth in Indian institutions. I therefore request your kind attention and necessary directions to concerned ministries and agencies.

Background

The Common Admission Test (CAT), conducted this year by IIM Kozhikode, is one of India’s most prestigious entrance examinations. Last Sunday, I accompanied my daughter to her designated test center in North Delhi (Indraprastha Public School, Rajeev Nagar, Begumpur – 110086). The center was located inside a narrow by-lane of a regularized unauthorized colony, with examinees—many of whom had travelled over 50 km—reporting as early as 7:30 AM for the 8:30–10:30 AM session.

More than 500 aspirants appeared, spanning diverse socio-economic backgrounds. The accompanying parents included professionals, teachers, bureaucrats, senior citizens, and women.

Routine civic failures

The approach road was broken and congested, causing a 30-minute delay for a 1 km stretch. There were no basic amenities—parking, seating, drinking water, or usable toilets. The school toilets were unhygienic and effectively unusable.

Unfortunately, such civic and administrative apathy has become normalized. Citizens have grown accustomed to these conditions and seldom complain. This, however, is not the core issue I wish to raise.

Deeper concerns: corruption, empathy deficit & opportunism

This experience exposed three distressing patterns that are eroding public trust, especially among the youth.

Blatant corruption

At the gate, security guards insisted that every candidate carry an additional passport-size photograph identical to the one uploaded during the application. This requirement appeared nowhere in the official communication from IIM Kozhikode, which sent multiple detailed emails to candidates beforehand.

Parents and students—many having travelled long distances—were rudely told they would be barred from writing the exam. Panic ensued. Conveniently, two local shops were open at 7 AM offering instant photographs at inflated prices. Once inside the hall, candidates were told that no such requirement existed. The collusion between the gate staff and shopkeepers was evident.

Lack of empathy and disrespect

The behavior of the staff was discourteous and distrustful. Every candidate was treated as a potential cheat. Girls wearing earrings had adhesive tape pasted on their ears. Examinees were asked to remove their footwear and socks despite cold weather and dirty floors. Parents were spoken to rudely and made to stand for hours along filthy, broken streets without any basic civic facilities.

Rampant opportunism

Local shopkeepers and households charged examinees and parents for basic conveniences—₹100 for storing bags or phones, ₹50 per hour just to sit. Ideally, the exam centre should offer storage facilities, and culturally, residents could extend basic courtesy. Instead, everyone seemed eager to monetise the situation.

The larger problem

This incident highlights two serious issues with long-term implications:

·         Future managers and professionals—today’s aspirants—chose not to raise their voice.

Their silence reflects resignation: a belief that enduring dysfunction is part of life here and that success lies in leaving the country. This disillusionment robs India of its brightest minds.

·         Parents, including professionals and bureaucrats, expressed a desire for their children to exit this corrupt, apathetic environment at the earliest.

This reflects a painful loss of faith—not only in institutions but in the idea of India as a place where their children can thrive.

Hon’ble Prime Minister, you once observed abroad that in the past many Indians felt unfortunate to be born in their own country. It is disheartening that such sentiments still persist among our youth and their families.

Request for intervention

India cannot afford to alienate its talent pool. Our youth must feel valued, respected, and confident in the systems that shape their future. This requires not just administrative correction, but a shift in mindset at every level—examination authorities, civic bodies, and local enforcement.

I earnestly request your intervention to ensure strict oversight; accountability for unethical practices, and basic civic standards in all public services. We also need to develop a culture of empathy, integrity, and public service in institutions that interface with our young citizens.

As the head of a nation of 1.48 billion, your leadership can set the tone for restoring trust, dignity, and aspiration among India’s youth. We must treat our talent as our most precious national asset. I cannot emphasize more that we need this talent pool more than anyone else in the world and we are competing with the developed world to retain our talent pool.

I remain hopeful that corrective action will be taken so that such experiences do not discourage or disillusion the next generation.

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India’s AI Moment: A ±5 million job swing by 2031

(Photo Credit IET)

AI (Artificial Intelligence) is no longer a future disruptor—it’s already reshaping how the world operates. For India, a country with 10–11 million tech and customer experience (CX) workers, the stakes are unusually high. AI is already reshaping how India codes, tests, designs, supports, and runs digital work. India’s millions of Tech and CX workers are at the threshold of a major transition to a future that is full of historic new opportunities and risks.

The latest report published by NITI Aayog “Roadmap for Job Creation in the AI Economy” (NITI Aayog–BCG–NASSCOM), delivers a clear message- AI can either shrink India’s tech workforce sharply by 2031—or expand it dramatically. The outcome depends entirely on what India does next.

Here are the key points highlighted in the report.

The Stakes: A ±5 Million Job Swing by 2031

India faces two sharply diverging paths:

If India does nothing:

Tech workforce drops from 7.5–8M → 6M

CX workforce drops from 2–2.5M → 1.8M

If India acts decisively:

Tech workforce grows to 10M

CX workforce grows to 3.1M

This is not about technology alone. It's about policy, skilling, and national coordination.

What AI Is Changing (Fast)

Work

AI boosts productivity across the tech value chain:

·         Code generation: +15–25%

·         Testing & documentation: +20–50%

·         Overall SDLC: +10–20%

·         CX automation: Handles majority of L1 queries

·         Routine, scalable tasks get automated first.

Worker

At risk

·         Junior QA engineers

·         L1 IT support

·         Basic CX representatives

Evolving

·         Full-stack developers

·         Data engineers

·         Cloud DevOps

·         Cybersecurity roles

·         New roles created:

·         Prompt engineers

·         AI architects

·         Ethical AI specialists

·         Quantum ML engineers

·         LLM researchers

Workforce

The pyramid compresses:

·         Fewer entry-level roles

·         Faster ramp-up

·         More judgement-led work

·         Leaner teams

·         Higher skill premium

India’s Three Big Vulnerabilities

Job Displacement Risk

·         60% of formal-sector jobs face automation risk.

·         Entry-level roles are most exposed.

Weak AI Talent Pipeline

·         Limited CS in schools

·         AI curriculum lags global benchmarks

·         Falling share of AI patents & citations

AI Talent Shortage

·         India meets only 50% of AI talent demand

·         Net negative migration of top AI researchers

·         Demand growing 25% CAGR

·         India is rich in talent, but not yet in AI-ready talent.

The Playbook: The India AI Talent Mission

A single, unified, all-of-government mission to make India the world’s AI talent capital.

Embed AI from school to university

·         Universal CS education

·         AI + X degrees

·         Scale AI PhDs

·         Faculty-industry exchanges

Make India a global AI talent magnet

·         AI Talent Visa

·         Competitive grants

·         Returnee researcher programme

·         Tier-1 AI Centres of Excellence

Build a national AI reskilling engine

·         AI Masters for working professionals

·         Sector-specific reskilling (IT, CX, BFSI, healthcare)

·         Large-scale AI literacy (PMKVY/NAPS)

Two Critical Enablers (with IndiaAI Mission)

·         Open-Source AI Commons

Public datasets, models, benchmarks

·         National Compute Grid

Affordable GPU access for students, startups, universities

Remember: Without compute + open data, talent simply migrates abroad.

The Bottom Line

AI can make India a global AI workforce hub or a net job loser

The difference rests on speed, scale, and strategic coordination.

India has the people. AI gives them leverage. A national mission gives direction.

The next 4–6 years will decide whether we ride the AI wave—or get swept under it.

2QFY26 GDP: Strong numbers, soft spots, and a credibility question

India’s growth 2QFY26 surprised positively with 8.2% real GDP growth print, up from 5.6% a year ago. On the face of it, this is an impressive print—broad-based, investment-driven, and supported by a healthy services backbone, and steady private consumption; though, a few familiar questions on data quality, especially after the IMF’s recent downgrade of India’s statistical credibility to Category C, cast some cloud on sustainability.  

A broad-based GDP beat

As per the official release real GDP for Q2FY26 is estimated at ₹48.63 lakh crore, growing 8.2% YoY, while nominal GDP rose 8.7%.

Growth drivers

·         Manufacturing (9.1%) and Construction (7.2%) carried the secondary sector, delivering an aggregate 8.1% GVA growth.

·         Tertiary sector GVA expanded 9.2%, led by:

Financial, real estate & professional services: 10.2%

Public administration & defence: 9.7%

·         Agriculture slowed to 3.5%, consistent with weaker output indicators and a patchy monsoon.

Demand side

·         Private consumption (PFCE) grew 7.9%, reflecting steady urban spending and improving mobility indicators.

·         Gross fixed capital formation (GFCF) grew 7.3%, maintaining investment momentum.

·         Government consumption (GFCE) contracted 2.7%, likely reflecting fiscal consolidation ahead of FY26’s second-half.

H1FY26 perspective

For April–September, GDP rose 8.0% versus 6.1% last year, marking India’s strongest two-quarter stretch in almost three years.

Sector story: Services lead, manufacturing rebounds, agriculture & utilities soft

A deeper look at the GVA table shows a familiar pattern:

·         Services contribute ~60% of nominal GVA, and continue to anchor overall growth.

·         Manufacturing showed genuine buoyancy, supported by strong corporate earnings in Q2 and better IIP manufacturing prints.

·         Construction sustained high growth, mirroring cement and steel consumption trends.

·         Agriculture and utilities remain soft spots, with structural drag from low commodity pricing, erratic weather, and weak rural demand.

Red Flags Worth Noticing

Imports outpace exports

Imports grew 12.8%, much faster than export growth of 5.6%, which typically subtracts from GDP via net exports—even though aggregate GDP still expanded strongly.

Discrepancies surge again

Statistical discrepancies—as shown in the expenditure tables—remain unusually large (₹1.62 lakh crore in Q2), indicating material gaps between the production and expenditure approaches. This has become a recurring feature of quarterly GDP releases.

c) Public Capex vs. Private Capex

While investments remain strong, the composition still leans heavily on the government side. Private capex recovery remains modest outside listed corporates.

Some doubts over sustainability

In parts, the high real growth number may be due to some temporary phenomenon, e.g., benign deflator, GST cuts, lower base, etc. It is, therefore, likely that this high growth rate might not sustain and normalize to a more realistic 6.5-7% range in coming quarters.

The IMF’s "Category C" call: Does it shake the story?

In a recent assessment, the IMF downgraded the quality of India’s national statistics to “Category C”, its second lowest classification. This category signals weak methodological transparency, limited data accessibility, inconsistent revisions, and heavy reliance on indirect indicators rather than direct measurement.

This matters because:

·         India’s GDP is partly extrapolated using proxy indicators (e.g., IIP, credit growth, crop estimates), not actual realised output.

·         As revealed in the NSO’s methodology section, large parts of quarterly GDP are extrapolations from previous-year benchmarks using high-frequency indicators.

·         The persistent “discrepancy” line item—sometimes as high as 3% of GDP—reinforces concerns around measurement error.

·         Frequent, large revisions to past GDP data further complicate trend analysis.

This does not invalidate the strength of 2QFY26 growth, but it does warrant caution in interpreting quarter-to-quarter changes. The IMF’s classification underscores the need to treat India’s quarterly GDP as directionally reliable, but perhaps not precise to the decimal. Hopefully, most of data related concerns will be addressed in the due revision of GDP base year and methodology, that reportedly will be implemented from the February 2026 onward reporting. 

Bottom line: Strong quarter, but keep the salt shaker handy

India’s 2QFY26 GDP print is undeniably strong—broad-based, investment-supportive, and consistent with high-frequency indicators such as credit growth, services PMI, and corporate earnings. Manufacturing’s rebound is a particularly constructive signal.

But the combination of (i) large statistical discrepancies, (ii) significant extrapolation-based estimation, (iii) base effect and benign deflator, and (iii) the IMF’s downgrade of data quality, means markets and analysts must evaluate the numbers with healthy skepticism. India’s growth impulse is real, but the exact magnitude may only settle after future revisions—especially with a base-year change due in early 2026.

For now, the message is clear: the economy is in an upswing.

Indian Equities: The Market Has Grown Up—It’s Time We Do Too

Indian equities have had a quiet year by headline numbers. The Nifty50 is up ~8% over the past twelve months—modest when compared with the sharp rallies in South Korea (KOSPI +71%), Japan (+30%), Brazil (+21%), China (+17%), the United States (+13%) and Europe (+12%).

But short-term snapshots often hide more than they reveal.

Shift the lens to the past three years, and the picture changes meaningfully. Despite geopolitical shocks, supply-chain disruptions, rate volatility and tariff actions, the Nifty50 has delivered +41%, materially outperforming Europe and China, and broadly matching Brazil. Korea (+82%), Japan (+76%) and the US (+68%) remain the standout performers.

Bottom line: 2025 has been a year of consolidation for India—less about chasing returns, more about normalising valuations and aligning equity performance with earnings and nominal growth.

And that’s not a bad thing. It’s what mature markets do.

A Decade of Maturity: Indian Equities Have Entered a New Regime

Over the past ten years, the Indian market has undergone a structural transformation. Three trends stand out:

1. Volatility has declined meaningfully

The wild swings of the 1995–2015 era—multi-year bull and bear cycles, violent drawdowns and dramatic rebounds—have moderated. Price corrections still happen, but the amplitude and duration have compressed.

2. Domestic participation has surged

Rising household savings, the dominance of mutual fund SIPs, and a more informed investor base have reduced dependence on foreign flows. DII inflows now act as a strong counterweight during periods of FPI selling.

3. Long-term Nifty returns have stabilized

The Nifty’s 5-year rolling CAGR, which used to oscillate between -1% (2012) and +41% (2007), now hovers in a steady 12–15% band—broadly aligned with nominal GDP and earnings growth.

These shifts point to a market that has grown broader, deeper and more resilient, driven by local capital rather than hot flows.

Long-Term Returns: Normalization Is a Feature, Not a Bug

Between 1995 and 2015, long-term returns were lumpy. Market timing mattered enormously. Only investors with surplus capital and high risk-tolerance could endure 25–50% drawdowns and still stay invested.

The past decade (2016–2025) tells a different story:

5-year rolling CAGR has averaged ~13%, staying in a tight 12–15% band.

2019 marked the low (~8%) and 2021 the high (~16%)—both still far more contained than earlier decades.

The Nifty has not delivered negative calendar-year returns in any year since 2016—a sharp contrast to its earlier behaviour.

This stability has democratized equity investing.

Millions of middle-class savers now invest through mutual funds and SIPs because the market no longer resembles a casino. It behaves more like a mainstream asset class.

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Why Returns May Moderate Further

Looking ahead, long-term equity returns are likely to settle into a 9–12% range.

Not because the market is weak—but because the economy is maturing.

Three structural forces explain this:

1. A lower inflation–lower rates equilibrium

As India sustains a more stable inflation regime, the nominal GDP growth corridor naturally compresses.

2. Earnings growth tracks nominal growth more closely

The earlier periods of outsized earnings acceleration were driven by leverage cycles and low base effects. Today, corporate balance sheets are healthier, but growth is more linear.

3. Premium valuations are harder to expand from here

With the Nifty already trading at elevated multiples relative to long-term averages, re-rating becomes a limited source of returns. Fundamentals—not multiple expansion—will do the heavy lifting.

Implication:

Investors should keep return expectations moderate, ignore short-term volatility, and avoid the temptation to time markets in a regime where long-term ranges are becoming more predictable.

Foreign Flows: The Tail No Longer Wags the Dog

FPIs have been net sellers in Indian equities in three of the past four years:

2024: Net equity outflow ~₹70bn; debt inflow kept total flows positive.

YTD 2025: Net equity outflow ~₹1.44trn; nominal debt inflow.

Yet despite persistent outflows, the Nifty is +8.8% in 2024 and +10.5% in YTD 2025. This resilience underscores two points:

1. Domestic inflows are now the primary stabiliser

SIPs, EPFO allocations and DII flows have absorbed foreign selling without destabilising the index.

2. FPI selling has historically coincided with global—not domestic—shocks

The only three negative years for the Nifty in the past 25 years—2001, 2008 and 2015—were all linked to global events (dot-com crash, GFC and the China/Greece scares).

Today, India’s domestic liquidity ecosystem is far thicker than it was during those periods.

Conclusion:

While FPI flows matter for sentiment, they no longer dictate market direction the way they once did.

The Adult Market: What Investors Should Do

As Indian equities transition into a more stable, predictable regime, investor behaviour must evolve too:

·         Moderate expectations — long-term returns are likely to settle in a 9–12% band.

·         Stay the course — short-term volatility is normal and less threatening than before.

·         Avoid timing the market — structure now matters more than cycles.

·         Stay disciplined with SIPs — they remain the most effective way to participate in a maturing market.

Indian equities are no longer the wild child of emerging markets.

The market has grown up—steady, broader, more domestically anchored.

It’s time investors adjust their mindset accordingly.

Rupee Depreciation: Demand, Supply, and Simple Economics

The INR has been under steady depreciation pressure for the past few months. USDINR is down about 4.4% year-to-date, raising familiar concerns about stability and comparisons to the 2013 balance-of-payments scare.

It’s worth noting that the recent 50% US tariffs—which grabbed headlines—are not the main reason behind the rupee’s weakness. India’s exports have broadly held up in the first ten months of the financial year. The pressure has come instead from three other factors:

·         Higher imports, largely driven by a jump in gold imports

·         Weak FDI inflows

·         Persistent FPI outflows

Together, these have widened the current account deficit and strained the balance of payments, naturally weighing on the currency.

Where sentiment meets misunderstanding

In the public narrative, the exchange rate of the INR often gets linked—incorrectly—to national pride. Politicians, spiritual leaders, activists and commentators have repeatedly projected a weaker rupee as a national humiliation. Much of this is rhetoric; some of it stems from a basic misunderstanding of economics. At its core, a currency’s exchange rate is simply a function of demand and supply. Nothing more. Nothing personal.

How demand and supply actually work

In today’s world of fiat money, demand for a currency mainly depends on:

·         Its international acceptance as a store of value or medium of exchange

·         The country’s trade balance

Supply, on the other hand, is shaped by domestic conditions:

·         Fiscal deficit

·         Monetary policy and money supply

·         Growth trajectory

This is why closed economies—North Korea, Afghanistan, Tajikistan—can theoretically have “stronger” currencies. With very limited external trade, demand for foreign currency is low. But this strength is optical and meaningless in real economic terms.

India, in contrast, is a large, open, fast-growing economy that:

·         Runs a significant trade deficit

·         Expands domestic liquidity to fund fiscal needs

·         Maintains a higher inflation trajectory to support growth

·         Offers higher interest rates than developed markets

·         Actively integrates with the global economy

Besides, India’s inflation has been structurally 3–4 percentage points higher than the US. Under Purchasing Power Parity (PPP), this guarantees long-term USDINR depreciation.

All of this naturally creates higher demand for foreign currencies, especially the USD and EUR. A gradual INR depreciation in this context is normal and predictable.

What can strengthen the rupee?

There are only two durable ways to improve the demand–supply balance in India’s favor:

·         Raise domestic rates meaningfully to attract global capital into INR debt despite the risks; or

·         Make Indian assets irresistibly attractive—equity, real estate, infrastructure assets—so that global investors bring in long-term capital. To do this, the following would be needed:

·         Productivity gains (higher real growth without higher inflation)

·         Export competitiveness (moving up the value chain)

·         Lower fiscal deficit (reduces money supply expansion)

·         Deep, credible financial markets (especially long-tenor debt)

·         Institutional credibility (policy stability, governance)

Unless one of these plays out at scale, the rupee will continue its gradual depreciation trend. That’s not a sign of national weakness; it’s textbook economics.

A quick reality check

The Bhutanese Ngultrum is pegged to the INR (1 BTN = 1 INR). So USDBTN depreciates in sync with USDINR. Bhutan’s national pride remains intact.

The Afghan Afghani trades “stronger” than the rupee (1 AFN ≈ 1.34 INR). This obviously does not make Afghanistan economically more prestigious than India.

Currencies reflect macro conditions—not national greatness.

Pendulum in balance - for now

Over the weekend, I met a cross-section of market participants at a social gathering—veteran investors, traders, money managers, and brokers. If I had to summarise the overall mood in one word, it would be “befuddled.”

There was a clear sense of cognitive dissonance in the room. People were wrestling with conflicting signals and contradictory beliefs. The discussions felt like watching multiple emotional currents collide beneath a calm surface.

On one hand, there was frustration about personal portfolios lagging. On the other, there was comfort in seeing the benchmarks hold up well. Add to this the fear triggered by headlines predicting an imminent burst in the AI bubble; anxiety over rising Japanese bond yields and a weakening INR; excitement around a potential Indo-US trade deal; and hope that Indian equities may outperform if global markets slip into turmoil.

Amid this emotional tug-of-war, a few broad positioning trends stood out:

Active participants remain overweight in narrative-driven themes — defense, infrastructure, railways, specialty chemicals, semiconductors, data centers, EVs, renewables, and so on.

Many traders have taken FOMO-fueled leveraged bets in precious metals, despite elevated prices. Interestingly, no one mentioned any meaningful crypto exposure.

Despite broad bullishness, there hasn’t been major reshuffling within banking, though money clearly continues to drift from private banks to PSU banks.

Exposure to unlisted names, small caps, and microcaps remains significant.

Sentiment on capital-market-linked stocks has cooled from “exciting” to “neutral,” even though actual positioning hasn’t caught up with this shift.

The mindset seems to be slowly moving from “buy the dips” to “sell the rise.”

Notably, nobody brought up terms like economic reforms, the Budget, macro fundamentals, geopolitics, or economic growth. Bihar’s election outcome came up only as a surprise, not a market factor.

The idea of a December rate cut was casually floated as a reason for a year-end, consumption-led rally—but only a couple of participants seemed genuinely enthused by it.

If I step back and look at the mood, the sentiment pendulum feels balanced—caught somewhere between Greed and Fear. This is despite the negative market breadth, persistent FII outflows, and the relentless drumbeat of bearishness on social media.

A major global shock—something like a Lehman-style event—could easily push that pendulum towards Fear. A successful Indo-US trade deal could just as quickly swing it towards Greed.

For now, though, it sits quietly at the center.