Comment by Riaz Haq on December 3, 2025 at 4:25pm

Indian Rupee Plunges Past 90 Against US Dollar Amidst Deepening Economic Concerns

https://markets.financialcontent.com/stocks/article/marketminute-20...

Mumbai, India – December 3, 2025 – The Indian Rupee (INR) today crossed a critical psychological threshold, breaching the 90 mark against the US Dollar (USD) for the first time in history. This unprecedented depreciation, with the currency hitting an intraday low of 90.30 before settling at 90.19, signals a period of heightened economic anxiety for India. The rupee's swift decline, marking it as Asia's worst-performing currency in 2025, is a stark indicator of persistent foreign capital outflows, a widening trade deficit exacerbated by surging gold imports, and a globally strong US Dollar.

The immediate implications are far-reaching, threatening to fuel imported inflation, increase the burden of foreign debt for Indian companies, and dampen overall market sentiment. While a weaker rupee typically benefits exporters, the current environment of global economic slowdown and specific US tariffs complicates this advantage, leaving policymakers and businesses grappling with a complex economic landscape.

Historic Slide: A Confluence of Global and Domestic Pressures
The Indian Rupee's journey to 90 against the US Dollar has been a culmination of several intertwined economic forces throughout 2025. On December 3, 2025, the currency fell sharply, extending a period of sustained depreciation that saw it dip below 89.95 on December 2 and a record low of 89.76 on December 1. This rapid descent from the 88+ level to 90 within a single week has sent jitters across financial markets.

A significant catalyst for this sharp depreciation was the announcement of sweeping US tariff hikes on April 2, 2025. India's tariff burden, at 50%, is considerably higher than that of other major economies, directly impacting approximately $45 billion worth of Indian exports, particularly in labor-intensive sectors. This, coupled with a prolonged delay in finalizing a comprehensive trade deal with the United States, has cast a long shadow over India's export competitiveness and investor confidence.

Adding to the pressure are persistent Foreign Portfolio Investor (FPI) withdrawals. Foreign investors have been consistent net sellers in the Indian markets, withdrawing nearly $17 billion from Indian equities in 2025 alone. This sustained selling has created unprecedented demand for the US dollar, widening the demand-supply gap in the foreign currency market. Factors driving these outflows include declining corporate profitability, concerns over stretched valuations, and the lingering uncertainty surrounding US-India trade negotiations.

India's heavy reliance on imports, particularly crude oil, electronics, and bullion, further exacerbates the situation. Rising global commodity prices inflate India's import bill, necessitating a significant demand for US dollars and putting continuous downward pressure on the rupee. The Reserve Bank of India (RBI) has adopted a more "hands-off" and "calibrated" approach to currency intervention, primarily aiming to curb "excessive volatility" rather than defending a specific exchange rate level. While the RBI has intervened by selling dollars (reportedly $30 billion between June and October 2025), its strategy appears to allow market forces greater sway, contributing to the rupee's swift depreciation.

Initial market reactions beyond just the stock market (where the Nifty slipped below 26,000 and the Sensex fell nearly 200 points) included heightened volatility in the foreign exchange market, rising bond yields due to inflation concerns, and increased hedging costs. The rupee's fall directly fuels imported inflation, particularly for crucial commodities, which can erode purchasing power and complicate the RBI's monetary policy decisions.

Comment by Riaz Haq on December 5, 2025 at 7:36pm

Is India really the fastest-growing economy? Economist Arun Kumar breaks...

https://youtu.be/8SYDPqB6Qhg?si=8qvGoQy0Lq4VTbZR

In this episode of Frontline Conversations, economist and retired professor from JNU, Arun Kumar, breaks down the turmoil inside India’s economic data ecosystem. He discusses the latest GDP numbers, the IMF’s “not fit for purpose” assessment, and India’s contradictory economic indicators all point to a deeper structural crisis.

Kumar explains why GDP growth is increasingly detached from lived economic realities, how the unorganised sector has been rendered invisible in official measurement, and why the 2011–12 base year has distorted national accounts for a decade. He also details the political pressures shaping data releases—from unemployment and consumption surveys to poverty estimates—and warns that the upcoming revision of the GDP series may still fail without census data and transparency in methodology.

Highlights:
-Why India’s GDP numbers are unreliable—and what the IMF got right
-How the shift to the MCA-21 database and removal of shell companies distorted growth estimates
-The systematic invisibilisation of the unorganised sector after demonetisation, GST and the pandemic
-Manipulation of data on employment, consumption, poverty and health
-The political logic behind “fastest growing economy” narratives
-Why GST cuts, corporate-friendly labour codes and tariff geopolitics are worsening inequality

Perfect for those interested in:
-Students of economics and public policy
-Researchers of political economy and development studies
-Informal sector and labour rights activists
-Think-tank analysts tracking India’s macroeconomic indicators

Credits:
Host: Sukumar Muralidharan
Camera: Vedaant Lakhera and Vitasta Kaul
Editing: Razal Pareed
Producers: Mridula Vijayarangakumar and Kavya Pradeep M

Comment by Riaz Haq on Monday

Indian rupee slips to record low, central bank intervention curbs fall


https://www.reuters.com/world/india/indian-rupee-weakens-record-low...

Summary
Rupee down nearly 6% on year, worst performer among Asian FX
Lack of trade deal with US key drag
Foreign investors sell over $18 billion of Indian stocks YTD
MUMBAI, Dec 15 (Reuters) - The Indian rupee fell to a record low on Monday, pressured by a prolonged deadlock in U.S.-India trade negotiations and sustained foreign outflows from domestic equities and bonds.
The rupee weakened 0.3% to 90.74 against the U.S. dollar, eclipsing its previous all-time low of 90.55 hit on December 12.
Get the latest news from India and how it matters to the world with the Reuters India File newsletter. Sign up here.
The currency, Asia's worst performer this year, avoided steeper losses amid likely central bank intervention, four traders told Reuters.



The rupee has declined nearly 6% against the dollar year-to-date, as steep U.S. tariffs of up to 50% on Indian goods hurt exports to its biggest market and diminish local equities' appeal to foreign investors.
Overseas investors have net sold Indian stocks worth more than $18 billion so far in 2025, making India one of the worst-hit markets in terms of portfolio outflows. Foreign investors have net sold bonds worth over $500 million in December.


India's trade data for November is due later in the day, with economists pencilling in a $32 billion goods deficit, down from a record high of $41 billion in October.


Remarks from India's chief economic adviser that the trade deal is likely only by March have bogged sentiment down, and outflows have been near-constant, a trader at a Mumbai-based bank said.
India and the European Union, meanwhile, are also unlikely to finalise a trade deal by this year's end, Bloomberg News reported on Friday.


This means the rupee has been unable to benefit from a broadly weaker dollar. The dollar index is down 1.1% so far this month.
"The next support (for rupee) is at 90.80, after which we could see a crossover of 91 towards 92. RBI has clearly let the market to determine the price and has been intervening only to control any excessive volatility," said Anil Bhansali, head of treasury at Finrex Treasury Advisors.


Analysts at ANZ say that while an India-U.S. trade deal could spur a knee-jerk rebound in the rupee, its strength could fade if the RBI chooses to rebuild reserves by purchasing dollars.
India's foreign exchange reserves stood at $687.3 billion as of December 5, down from the year-to-date peak of $703 billion hit in early September.
India's benchmark equity indexes, the BSE Sensex (.BSESN), opens new tab and the Nifty 50 (.NSEI), opens new tab were down 0.2% each, tracking losses in regional shares as sentiment remained tepid heading into a week of key data releases and central bank meetings.

Comment by Riaz Haq on Tuesday

It is now widely understood that India's official GDP is highly exaggerated. IMF has questioned it and Indian economists like Prof Arun Kumar have said India's actual GDP is as low as 50% of the official GDP, mainly because of the way the rapidly declining unorganized sector is overestimated by Indian officials.

https://www.riazhaq.com/2025/11/imf-questions-modis-gdp-data-is-ind...


On the other hand, Pakistan's unorganized GDP is significantly underestimated. It can be seen in the size of Pakistan's cash economy (currency in circulation) which is much larger as a percentage of the total economy than in India and Bangladesh.

https://propakistani.pk/2025/10/10/pakistans-real-economy-is-near-1...

“Pakistan’s recorded economy stands at US$411 billion, but nearly half remains undocumented,” the (finance) minister (Aurngzeb) said. “The real size of our economy is closer to a trillion dollars.

https://www.riazhaq.com/2021/12/has-bangladesh-really-left-india-an...

"Pakistan’s currency in circulation reaches Rs10.8 trillion ($38.5 billion) , up 27.4% of total money supply"

https://profit.pakistantoday.com.pk/2025/08/28/pakistans-currency-i...

——————-

Countries with most cash use in world in 2025: Pakistan in top 10; know where India ranks

List of top 10 countries with most cash usage in 2025: At the top of the list is Myanmar, where cash is used for about 98 per cent of everyday transactions.

https://indianexpress.com/article/trending/top-10-listing/countries...

With around 90 per cent of everyday transactions being performed in cash, Pakistan is likewise at the top of the list. Here, the sizable informal economy is crucial. Cash is preferred by many daily wage workers and small business owners, in part to avoid complex banking procedures and occasionally to avoid paying taxes.

How much Cash do Indians use in 2025?
Approximately 70 per cent of all transactions in India involve cash, despite the country not ranking among the top 10. However, India is notable for spearheading the revolution in digital payments. With just a smartphone, millions of individuals may now send and receive money without using cash thanks to the government-backed Unified Payments Interface (UPI). UPI has made digital transactions quick, simple, and accessible for both online and street merchants.

Comment by Riaz Haq yesterday

India Looks To Boost Nuclear; Power Demand Lags GDP Growth By Far - Bloomberg

https://www.bloomberg.com/news/newsletters/2025-12-16/india-looks-t...


Why is India’s power demand up barely 1% if GDP growth is tracking 7%-8% this fiscal year?

It started with several reports that show power demand growth at 0.9% during April to November. That, too, on a weak base of 3% growth last fiscal year through March.

A key reason is a cooler summer and an extended monsoon — unseasonal rains in May and October lowered use of irrigation pumps in rural areas and air conditioners in cities, Murtuza Arsiwalla, director of research at Kotak Institutional Equities, told me.

But that doesn’t explain why power demand declined last month, making it the first November contraction in five years. Arsiwalla adds two more reasons to the list — a rise in off-grid power supply, such as captive and rooftop solar power, and moderation of industrial activity, which is 40% of all power consumption.

Typically, power demand growth is about 0.9 times GDP growth, with exceptions in some years. Right now, that ratio is running at about 0.1. Economists caution against reading too much into the correlation. One pointed to the less energy intensive services sector dominating economic growth. The other suggested rising energy efficiency across the economy, citing the modest increase in fuel consumption despite a pick-up in GDP growth post-pandemic as evidence.

To be sure, some analysts expect power demand to bounce back. Till that happens, the data casts a shadow over the strength of India’s economic recovery. It also spells trouble for an energy sector already concerned about oversupply and rising instances of solar power curtailment.

—————-


Tax collections of the Centre have grown only 4% between April and October 2025, way below the fiscal 2026 target of 11% growth


https://www.moneycontrol.com/news/opinion/india-s-gdp-outperformed-...

Comment by Riaz Haq 3 hours ago

@ShoaibDaniyal

Had a fascinating chat with @arvindsubraman and Devesh Kapur.

They argue that India's official GDP data is wrong.

They posit that the liberalisation phase ended a decade+ back.

India's growth has fallen sharply since then.


https://x.com/shoaibdaniyal/status/2001998168041652333?s=61&t=m...


https://youtu.be/KfEk0mEiK8I

In A Sixth of Humanity, political scientist Devesh Kapur and economist Arvind Subramanian set out to do something ambitious: chart India’s development journey from Nehru to Modi.

In this episode of Adda, they sit down with Shoaib Daniyal and break down the four stages of India’s development. Starting with Nehru’s planned economy, which they argue did not do what it set out to: import substitution. Rather than create a safe space for Indian industry to grow and then eventually take on international competition, it ended up nearly killing the private sector.

Interestingly, Modi might be doing something similar now by promoting so-called national champions like Adani and Ambani. Again, by allowing them to largely play in the domestic space, rather than making them take on international competition, these firms are not adding to India’s growth story.

Most shockingly, however, Kapur and Subramanian argue that India’s GDP growth has ground to a halt over the last decade or so, with them estimating that average growth has been only around 3%. For context, official data reported that India’s real GDP grew 8.2% in the second quarter of 2025-26.

Comment