West Asia war impact managed well, but some concerns remain:: Business Standard 29th April 2026

 The West Asia war has been on for two months and has caused considerable disruption across the world. The question is when will it end? There is no answer here as what was expected to end in no more than a month’s time has gotten prolonged with even more uncertainty.

 At the physical level, there has been disruption in supply of goods, primarily oil related, while transport services (both sea and air) have been affected. While alternatives for the latter have been gradually mediated, the shortages in supply of oil and gas is still a major challenge. 

 

In this situation how has India done? 

The short answer is that we have done rather well given the conditions. But there are two aspects here. The first is the real economy, which has been managed astutely by the government. The second is sentiment as reflected in the market. Here the regulator, Reserve Bank of India (RBI) has been monitoring the currency and bond markets and plugged all possible volatile elements. But beyond a point, the market rules have prevailed.

At the real economy level, while sectors would be affected which in turn will affect consumption and investment, the overall edifice is resilient as seen by the RBI forecast of 6.9 per cent in gross domestic product (GDP) growth. There have been supply disruptions in the form of gas supply, which has affected fertilizers' production. Efforts are on to increase imports so that the kharif crop is protected. In fact, the supply of LPG has been handled well with rationing being initially pursued as domestic production was also increased. While the restaurant business was affected to begin with, there are signs of things going back to normal very gradually though cost increase is unavoidable. Sectors such as paints, glass, ceramics, pesticides, fertilizers, automotive among others have faced supply side challenges that are being gradually addressed. They would remain vulnerable until such time that the war is on. 

More importantly, the inflation has been kept under control as of now with the government absorbing a large part of the crude oil cost increase and protecting the consumer. This will mean a hit to the fiscal numbers, and will hence be a challenge for the government going forward. RBI's forecast of 4.6 per cent for the year does indicate that inflation will be higher, though not going out of hand. 

But in this environment, private investment is bound to turn cautious which will be the second successive year where only some sectors will see an uptick. Last year, the tariffs imposed by the US did come in the way of investment. This time it is the war. 

Unpredictable markets On the markets side, things have been more explosive. The stock market has been extremely volatile with the Sensex declining from the 80,000-plus levels. The gyrations are in response to any news on the political front and hence makes things unpredictable. The 10-year bond yield has risen from the 6.60-70 per cent range prior to the commencement of the war to 6.80-7 per cent in April. While the RBI has ensured there is surplus and comfortable liquidity the market has priced in higher borrowings of the government due to slippages in revenue (excise cut, lower profits and tax payments from OMCs) and higher subsidy on fertilizers (possibly 20 per cent higher than budgeted).  Also with higher US treasury yields, the spread of 230-250 bps is being maintained. 

On the currency side, the RBI has been nimble footed in terms of operations in the spot, forward and NDF markets as well as with fine-tuned regulation to control speculative activity. While the rupee has remained range bound with the Rs 93-94.5/$ rate being maintained, the foreign currency reserves have come down by around $ 16 bn which can be taken as the cost of forex management. 

 

A prolonged war will mean a downside to GDP growth, an upside to inflation and extremely uncertain markets. This also means that the interest rate cut cycle could well be over. 

Book review of Streetwise: Getting to and through Goldman Sachs: Financial Express 25th/26th April 2026

 Risk, Resilience, and the Wall Street Pecking Order: Lessons from Lloyd Blankfein

Goldman Sachs is one of the few investment banks that stood out at the time of the financial crisis of 2008. Much of this resilience can be attributed to Lloyd Blankfein, who was heading the bank at that time. Streetwise: Getting to and through Goldman Sachs is his story. Blankfein takes readers through the important stages of his life with a distinct sense of humour. Like when he was asked by CNBC of being worried about angry mobs storming his house, his reply was that he had a doormat.

His life story is not very different from other people who made it big from rather modest beginnings. Starting from scratch, so to say, he managed a seat in Harvard from where he went on to work with J Aron, which was a commodity trading firm. His transition to Goldman Sachs happened when J Aron was acquired by GS. Blankfein describes the extremely illuminating hierarchy of prestige on Wall Street, which Goldman Sachs also followed.

Investment bankers sit highest in the food chain, followed by traders. Within traders, equity traders are higher placed than those dealing in fixed income. Within fixed income, longer duration bond traders were higher in pecking order than short-term traders dealing with the money market. But all these were more important than currency or commodity traders. Also, there was a prestige gap between traders who took risks and sales people who brought in business. It would be interesting to see if such hierarchies exist in broking houses and banks in the Indian context.

Wall Street Food Chain

Blankfein’s biggest challenge at Goldman Sachs once at the top was handling the financial crisis, which he describes as a ‘double header’. The media and regulators were worried about the existential crisis of all investment banks, as it was the order of the day for them to come tumbling down with the meltdown. This was something that was managed by the firm due to some smart thinking even before the crisis. But, more importantly, he highlights how the reputation issue was tougher. While there was admiration and awe to begin with when the firm went through the period successfully, some were aghast at the ‘how’ of it, which gave way to wild speculation.

The clue, according to him, was the conscious strategy of risk management at the time of the crisis as the company had been evaluating the mortgage values of their portfolio even before the problem came up. This was important because they were able to smell the danger before it set in. By January 2007 they were quite neutral in terms of positions on these exposures. Ironically, the author points out, that even the regulators were not aware how the defaults on subprime mortgages would have spillover effects on the AAA-rated securities. This is a lesson for any financial institution, which should be able to not just smell a crisis but be prepared for it with the risk practices in place.

Blankfein’s contribution was that he was a kind of contrarian in the way in which he operated. While GS was known to be a firm which took bold bets, his approach, given his background, was to be a worrier and not a warrior. By focusing continuously on the tail risks, he insisted on hedging all the way, which was something that helped the firm in tough times. He believed in the line: given enough time, everything will happen! Hence the department tried to account for all contingencies. This led to GS taking insurance from AIG and then further taking CDS insurance against risk of default on the part of AIG.

At a more global level, the author talks of the US economy and capitalist culture which is set around risk, resilience and recovery, helping it rebound fast successfully. This is something that is encouraged by the superstructure which actually helps to bring out the animal spirits in the entrepreneurial class. If systems are open and encourage enterprise, one can come out of a crisis and do very well.

ESG Critique

Steve Jobs did what he did after he was fired from Apple (which he rejoined); and the same holds for Jamie Dimon who had a forced exit from Citi Bank. He attributes resilience more to having better understanding of risk which is often pushed back by human nature and emotion. Interestingly, Blankfein makes a comparison between centralised decision making, as seen in China, and those based on myriads of decisions in a market economy like USA. He believes that the latter is better and makes better decisions.

China’s way of doing business in a centralised manner is not efficient and will show fissures in the longer run. There would be a large number of supporters for this view as the economy today is no longer in the same position as it was, say, a decade back. A market system identifies mistakes and forces change better. Hence the information superhighway propagated by Al Gore would have worked less efficiently in case it was governed by more of a technocratic than democratic regime.

Now, the author takes a rather provocative view towards the end in his ruminations where he openly talks against the language of stake holding as it muddies the water around the respective responsibilities of government, corporations and nonprofit sector. He believes that the fad for ESG investing, which puts the largest asset managers in the position of pushing for various kinds of policies, seems to be misguided.

It is, in his view, asking finance to step in because politics does not produce the desired outcomes. He is all for taxing and regulating oil extraction. But asking Exxon to justify their existence by building windmills is not in order. This is a powerful and bold message, which few corporates are willing to speak about, however much they might feel strongly about it. This view will find a lot of support for sure.

Streetwise is not a book which teaches CEOs how to do business, though there are valuable tips to be taken for sure. He does believe that his approach was more of partnership with colleagues which involved cajoling, socialising and sharing information. Sounds the right way to go given that today’s generation deserves more understanding to get the best out of them.

Streetwise: Getting to and through Goldman Sachs
Lloyd Blankfein
Orion Ignite
Pp 416, Rs 799

Are freebies really a curse? Business Line 25th April 2026

 https://www.thehindubusinessline.com/opinion/are-freebies-really-a-curse/article70902677.ece

Where will the rupee go from here? Indian Express 22nd April 2026

here is little clarity over the conflict in West Asia. Any news of escalation pushes up the cost of crude oil and puts pressure on the rupee, while signs of a truce work the other way. Therefore, volatility is likely to remain.

https://indianexpress.com/article/opinion/columns/where-will-the-rupee-go-from-here-10649042/

 

Why de-dollarization might not really work at global level: Free Press Journal 22nd April 2026

 

Inflation Expectations: What are these and do they really play a role in the Indian economy? Mint 20th April 2026

 https://www.livemint.com/opinion/online-views/inflation-expectations-indian-economy-rbi-monetary-policy-businesses-consumers-price-levels/amp-11776348299173.html

Monsoons even more important today: Financial Express 15th April 2026

 Agriculture has witnessed a decline in share in GDP by ~8% over the last two decades, mainly due to higher growth in the services sector. There have been limits to agricultural growth given the area under cultivation and the productivity levels. Yet, it is the fulcrum for overall growth prospects.

This is because it dominates in terms of employment. Thus, income generated in this sector would be critical for defining the consumption and savings patterns in the coming months. The sector is still heavily dependent on rainfall with around 55-60% of the kharif output being exposed to irrigation facilities. More importantly, the spread is uneven across crops—rice has higher access with around 70% being covered, with pulses at the other end withwn less than 30-35%, and oilseeds and cotton in the middle with around 55% and 50% respectively. The latter will be more vulnerable, as traditionally, production falls when rainfall is sub-optimal. 

Two issues have come up recently which are presently potential red flags that could be raised post June, when the monsoon arrives—the first being the possibility of El Nino or winds that typically herald a weaker monsoon. May-July would need to be monitored to keep a check, and the second half of the year could be vulnerable if this occurs. The second is the initial Skymet forecast which expects monsoon to be 94% of normal. While it is too early to get the right picture, the fact that it is lower than normal requires close monitoring. 

In fact, any forecast of the monsoon at present is just too preliminary; however, having such forecasts is necessary to prepare the farm economy. In fact, a normal monsoon is often a necessary though not sufficient condition for a good kharif crop. While the aggregate number is important for a macro picture, the spread is more important. This can be gauged from the rather diverse access to irrigation for different crops, making the spread across regions and crops vital. 

Crops grown along rivers, especially in the north, tend to be less dependent on rains. The same may hold largely for crops grown in the coastal areas as the south west monsoon winds blow across this region before moving to the interiors. Hence, shortfall in rains in states like Punjab and UP may not really matter for the rice crop. However, the interiors become vulnerable and the Deccan Plateau region is always the area of focus as crops ranging from cotton (Gujarat, Maharashtra and Telangana) to oilseeds (MP, Maharashtra, Gujarat, Tamil Nadu, and Rajasthan) and pulses (Maharashtra, Karnataka, and Rajasthan) are grown here. Further, some of these crops are grown in the rain shadow area, where weak south west monsoon winds could result in the rainfall losing intensity as they cross the mountains and move to the interiors. Here, states like Andhra Pradesh, Karnataka, Maharashtra, and parts of Gujarat and Madhya Pradesh would be affected. 

The kharif crops account for roughly 50% of overall agricultural output—they determine growth the sector accordingly. However, monsoon deficiency of any significant magnitude has a bearing on the reservoir levels. This is an important indicator of water levels required for drinking (humans and animals) besides defining prospects for the rabi crop, which though less dependent on winter rains does use the resources from these reservoirs. This does not consider other erratic conditions such as excess monsoons which has in the past affected the horticulture output in states like Maharashtra, AP, Karnataka, and Telangana, causing spikes in inflation. 

Hence, monsoon progress is carefully studied and tracked for monetary policy. Interestingly, the monsoon pattern has tended to change due to climate variations with the traditional June-September season being extended to July-October. This has been a slow process and several farmers have not yet adjusted to this transformation—thus,  the sowing pattern tends to get skewed on account of the late monsoon. It’s progress is also important as crops require different levels of precipitation at different stages of flowering. 

All this means is that the aggregate rainfall, though a good indicator, does not tell the entire story. The arrival is important as is the progress. Next, the spread across states is important, followed by the coverage of various crops. But excess rainfall or late withdrawal can damage crops. This position is normally known by October, where other perspective come to the fore. 

The kharif crop, which is harvested from September onwards until November provides a clue on the rural income generated. While there are no official numbers on the rural economy, it is believed that roughly 50% would be coming from the farm sector. This income is important for supporting rural demand, which tends to peak in this period—the harvest cum festival season. Rural demand has supported the FMCG and consumer goods industries in the last two years when urban demand has tended to be weak. Therefore, monsoon is critical for companies planning their output as well as investment. 
The war has already led to prices of oil-related products going up, in turn possibly affecting pesticide and fertiliser prices. Here, the government can help. But when it comes to rainfall, it is beyond the purview of any authority, making the progress of monsoon even more important.