TheJaggi

India is in a bind when it comes to trade and business with both the US and China. Currently, the US is a source of both technology and export markets, while China is a source of critical imports and border tensions. There is no export market for India worth speaking about. As yet.  Put simply, what happens is that the large trade deficits with China ($112 billion in fiscal 2025-26) get partly evened out by our trade and services surpluses with the US (trade surplus of $34 bn in 2025-26, $4-5 bn in services). India is another conduit through which China exports goods to the US. Now that it is becoming clear that neither the US nor China will support our rise economically - both are important for us, but both are threats too - we will have to make a choice in order to rebalance between the two at some point. We need the US for our services, critical technology, and goods exports, but we also need Chinese investment in India if we want a more robust manufacturing base. Without Chines...

Storm clouds are gathering over the Indian political economy, both internally and externally. The external clouds are more obvious - from rising energy prices due to two unending wars, and the US effort to browbeat India over buying Russian oil looming large, to name just two - but internally too we could see a policy/reform slowdown as one more election cycle is upon us, this time including the all-important state of Uttar Pradesh. The fierce opposition to the Chief Election Commissioner Gyanesh Kumar will also heat things up politically. This means that any tough decision that will impact voter sentiment may be avoided, and we can expect one more round of unaffordable freebies to come in the coming months. While both centre and states are trying hard to deregulate the economy in order to provide a fresh burst of entrepreneurial energy, this is not going to deliver an immediate bang for the buck. The external shocks are difficult to ignore and will need more than just short-term fisca...

The BRICS summit, held in India in the midst of a massive global reset of economic and geopolitical power equations, has led some commentators to question the very utility of India remaining inside the organisation. BRICS is an accidental grouping of diverse countries with diverse (even conflicting) interests. The term was coined by a Goldman Sachs report of 2001 which suggested that global economic growth could come from Brazil, Russia, India and China (the countries that together constituted BRICs). Today, BRICS has 11 members, including South Africa, Saudi Arabia, Iran, UAE, Ethiopia, Indonesia and Egypt. The criticism is partially valid, for BRICS countries do not subscribe to any particular set of values or seek economic convergence. The main criticism, though, is that the organisation would amount to little without China. Economist Surjit Bhalla says that BRICS’ economic performance is largely China’s. Take China out of it, and BRICS does not look anywhere like a growth engine...

Some corporate developments are the result more of regulatory pressures than enlightened internal thinking. A case in point is the Reserve Bank of India’s (RBI’s) decision last week (11 September) to reiterate its view that Tata Sons, the most important Tata group holding company, is an upper layer non-bank financial company. Thus, it would have to list itself on the stock exchanges. While the Tata Trusts, which hold two-thirds (66 percent) of the shares in Tata Sons, have been reluctant to list the company, other minority shareholders like the Shapoorji Pallonji Mistry (SP) group are keen on it, since this is the only way for the group to unlock value from its 18.4 percent holdings in Tata Sons. The fact that some companies in the SP group have been facing serious debt repayment problems has added a degree of urgency to the need to leverage their Tata Sons holdings. While the RBI has filed a caveat in the Bombay High Court to ensure that it is heard before Tata Sons is given any...

It is a pity that national accounts statistics (NAS) have become a political football and subject to biased commentary. If the government side would like to put the best interpretation on the latest numbers, the opposition would like to do the opposite. This cannot but be demotivating for those who actually work very hard to compile these statistics painstakingly year after year. The latest data print on first quarter GDP (April-June 2026), which showed that GDP grew by a healthy 7.8 percent in real terms (10.3 percent in current terms), has been celebrated by the government as a huge achievement in the face of global headwinds. The opposition and ideologically inclined economists would like to pretend that this is a fake story, since the new numbers are based on a deflated 2025-26 first quarter base in the new GDP series, which uses new methods to estimate GDP, including double deflation. Double deflation means that output/revenue numbers are deflated twice to remove the effects ...