The dollar inflow puzzle: Financial Express 30th September 2026

 The unexpected flow of dollars under the foreign currency non-resident (bank) scheme likely prompted the RBI to terminate it by August. The total amount of around $127 billion helped foreign currency reserves to increase from $543 billion, before the scheme was announce, to $648 billion. This is the good part of the story. The conundrum relates to the deployment of the rupee funds that have been released due to the swap by banks with the RBI. This is an issue for not just banks but also the RBI as it involves market stability.

The rupee equivalent of the funds raised would be around Rs 12.2 lakh crore, on which an average of about 6.75% has been paid. The interest payment is not covered under the swap with the RBI. Hence, at a swap rate of 2.75-3%, the cost of around Rs 2,000-2,400 crore must be carried by banks for the next three to five years depending on the average tenure of these deposits, which must be factored in while pricing loans. The more interesting part is the parking of funds.

In the best-case scenario for banks, if the entire amount is deployed as credit there would be the maximum gain. At an average return of say 8.5% the return for the system would be 1.75%. Data of private banks on the weighted average lending rates for fresh loans shows they are even higher at 9%, which means the return can be 2.25% on such deposits.

However, it should be remembered that banks would be receiving domestic deposits in the normal course of business. Unlike bond issuances that have limits on how much can be raised, it is open-ended for bank deposits. An increase of around 12% in domestic deposits at a conservative level would have led to a flow of around Rs 31 lakh crore this year, which will now be around Rs 43 lakh crore (an increase of 16.5-17% for the year). Even if credit growth crosses 15-16%, the claim for funds would be up to around Rs 33-34 lakh crore. The system would still have a surplus of Rs 9-10 lakh crore. This is why some economists have flagged the need for banks to maintain the quality of assets. The tendency to push loans by compromising standards should be eschewed at any cost.

Managing the funds is a real challenge. The surpluses have revealed the following. Banks are not in favour of investing in variable rate reverse repo (VRRR) of longer duration (15-30 days). Because September is a busy month for tax outflows, banks may be cautious about locking funds for longer duration. Investing in overnight VRRR is preferred, but it is not an optimal permanent solution as the return is not more than 5.24% — much lower than the 6.75% at which funds have been garnered. A sustained deployment in such an option will mean a negative carry for banks.

One possibility on the discussion table in the market was the imposition of an incremental cash reserve ratio (CRR). While this is an option, it would run contrary to the sops attached when the scheme was announced (funds being free of CRR). Further, several banks have not procured these deposits in any significant measure as their reach is limited. By having an incremental CRR, banks would be penalised on domestic deposits. This would in turn put banks in a spot, and will be a lose-lose situation for the system.

The other possibility is open market operations (OMOs), which have been announced where government securities are sold to banks. The RBI holds around Rs 18 lakh crore of government papers and can easily offload them. It would mean a loss of revenue for the central bank, but a gain for banks. However, for banks, the return must be compared with the cost of 6.75%; else there will be a negative carry. This will be central to the success of OMOs.

From the market’s point of view, the continuous sale of government paper by a calendar will mean excess supply which will depress bond prices. As the price of bonds varies inversely with the interest rate, bond prices will decline with higher interest rates. This will mean all future government borrowings will be at higher cutoffs. While the aggregate amount may not be too large to absorb for the government, it will fuel a bond market sentiment of a rate hike in the immediate future. One can then expect yields to go up in anticipation.

An option that can be considered is to expedite the government borrowing programme in the second half so that the market sentiment is checked. But this will only defer the issue as domestic deposit flow would follow the normal course. This also means that even if the RBI decides to increase the repo rate based on the committee’s recommendations, deposit rates would not increase, and banks would persevere with the existing structure based on their asset liability management positions. This will come in the way of monetary transmission.

Thus, there is a question mark about how to manage liquidity in the domestic market resulting from an overwhelming flow of dollars. The fact that the economy is growing will mean steady demand for credit. But surpluses will remain and must be addressed. Getting in forex flows and maintaining liquidity at appropriate levels has implications for the bond market, which makes setting of interest rates even more interesting.

How has Indian consumption fared this year? Mint 22nd September 2026

 https://www.livemint.com/opinion/online-views/is-india-watching-a-consumption-revival-mixed-signals-persist-gst-consumer-spending-11789989902299.html

India’s ethanol vision needs a feedstock reality check: Sept 21 2026

 The price of sugar has gone up. This is part of a normal cycle based on how sugar output moves. But, it comes at a time when there has been a push for the production of ethanol to reduce the import of crude oil. Some pertinent issues have been raised considering that sugarcane is also an important feedstock for producing ethanol. At a broader level, will this lead to pressure on crop supplies?

Ethanol can be produced from maize, rice and sugarcane-derived products. Around 45 per cent comes from maize and 20-25 per cent from rice, with the balance being sugar based. The economics of the mix is interesting. Maize is most preferred as 1 tonne of maize yields 380-400 litres of ethanol. In case of rice, it is slightly lower at 370-385 litres; for sugarcane it is 220-280 litres. Therefore, maize is highest in the pecking order among the three. Besides, there is also the availability issue which favours maize.

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Maize again comes at the lowest cost which is around Rs 20,000-21,000 per tonne. In case of rice, it is around Rs 38,000-39,000 per tonne while for sugar it works out to approximately Rs 37,000 per tonne. Therefore, companies would prefer to use maize. But, all three guzzle a lot of water. In the case of maize, it takes 500-900 litres to produce one kg, which goes up to 1,500-2,500 litres for sugarcane and 2,000-3,500 litres for rice. Hence, ideally more maize should be diverted for ethanol production.

For maize, there are three sources of demand. First, households, who account for a small part of the demand. Second, maize is also used for supporting cattle and poultry and accounts for 60 per cent of the total feed. Third, for industrial use, where starch is the product. Ethanol will now be the fourth dimension. Considering that production using GM variety seeds is not permitted for maize, output growth and, as a consequence, demand has to be met by using existing domestic seeds. This can be a problem as demand for ethanol is now going to rise with E20 being made mandatory. Higher demand could potentially increase prices which will trickle to prices of dairy, meat and related products. A tempting solution would be to allow the use of GM seeds to enhance output for only ethanol production.

Presently, the excess stocks of rice held by the FCI, which were procured earlier, have been sold in the market. As the quality of rice was low, it made sense to sell these stocks in the open market. But this cannot be the strategy going forward while considering a feedstock for producing ethanol. The higher water usage for rice and sugarcane may make maize a preferred feedstock. But the incremental output will only add to the pressure on water resources in the country. Curiously, there has also been a big push for the creation of data centres which are also heavy consumers of power and water. The supply of water will be a key challenge going ahead for the Indian economy.

Charges to sustain UPI, help maintain viability: Financial Express 21st Sept 2026

 

It is time for interest rates to go up: Forbes 31st August 2026

 https://www.forbesindia.com/article/upfront/column/it-is-time-for-interest-rates-to-go-up/2997593/1

Book review: Guilty As Bought: The Hidden Forces Shaping Why Indians Buy by Krishnan 20th September 2026

 Whether a consumer is buying a bar of soap or a computer, there is always some thought behind the decision, even if it takes more time to decide on a high value good than a cheaper one like a soap bar.

This decision of the consumer and the factors behind it is a question that consumer companies seek answers to, as this is what really drives consumption. As an extension it is always interesting to read the mind of consumers to figure out what goes on in terms of their tastes and preferences. Getting this right is a challenge, and many a times companies may go off track. That’s partly why some products fail and others succeed. The study of consumer behaviour is a science which needs to be understood. It is here that Krishnan Subramanian makes a mark with his rather insightful book, titled Guilty as Bought.

The sub-title of ‘the hidden forces shaping why Indians buy’ tells the reader what to expect from the book, and, in fact, will hold true for consumers anywhere in the world.

Subramanian is a known brand strategist who has invested over 30 years in tracking and analysing consumer behaviour. He starts off by saying that people under different ages, genders, geography and affluence would have varying patterns of consumption as it would be influenced by their environment in which they have been conditioned. But we all change, and he brings in how having a pizza today is now as common as dal chawal. There are evidently various factors at play that have caused such changes as well as moulded our consumption patterns.

Now, how does the author look at what drives consumption? There are three sets of factors that he looks at which combine psychology with his experiences. These are what he calls conscious behaviour, preconscious emotions and subconscious motivations. Basically, all reasons for consumption would be driven by these broad headings. Under these three headings he has 12 sub-headings which he calls ‘peels’, which form the core of the culture of consumption.

The conscious pack is something all of us probably are aware of and identify with. We always talk of ‘value’ for money and hence this is what marketers play on when appealing to the masses. At times we would like to ‘experiment’ with a new product or one that we have not used, which again is a conscious decision. This becomes more of a micro issue, which is nonetheless very important. He also talks about ‘choice’, where we as individuals would like to study an array of products before taking a decision. Having no choice could be a negative factor, especially if it does not suit our lifestyle or our budget. ‘Convenience’ is another attribute which we consciously opt for. Readymade foods or home delivery are good examples here. Last is ‘quality’, where discernment creeps in as we move up the value chain. All these factors play on our minds when we follow our consumption path.

The author gets a bit esoteric when he talks of pre-conscious emotions, which are a little difficult to assimilate. He talks of ‘care’, ‘trust’, ‘enjoyment’ and ‘nourishment’ which have evolved from different legacies through which we have been through. Trust is now moving from faith to fact, which is a very important point made by Subramanian as we accept nothing at face value. Nourishment is more deeply concerned with what we consume, which can be organic food or even peace of mind. Enjoyment has become more personal today as we move away from the spotlight of community enjoyment which was manifested in festivals or even watching TV together.

The subconscious motivations are driven by psychology, and the three drivers are aspiration, assertion and commitment. These can also be seen in consumption patterns as we move out of our comfort zone and become more individualistic. From being servile there is a movement to being assertive. This can be seen in our cricketers who have new-found confidence as evident in the swag and arrogance that can be seen in their body language and play.

The author’s focus is more on the urban youth, whom he terms ‘byteblazers’. But this section is tracked through different eras starting from post-independence to more recent times and how this group looked at consumption. The time chosen periods are ones of scarcity post-independence which got transformed into state-driven development in the 70s and 80s to liberalisation in the next two decades, and digitalisation that we see today.

While the author explains each of these 12 factors in separate chapters with several examples to make it relatable for the reader, he admits that these are not what we may be following in a conscious manner all the time. As his output is what goes into as inputs in devising any brand strategy, this book is a must read for anyone in the B2C business. Putting the pieces together for any successful product can mean borrowing from what Subramanian has put forward as 12 peels for which the boxes can be tick marked.

Guilty As Bought: The Hidden Forces Shaping Why Indians Buy

Krishnan Subramanian

KBI Publishers

Pp 297, Rs 820

Let us not blame celebrities for surrogate advertising: Free Press Journal Sept 18 2026

 

Ways to deal with FCNR liquidity deluge: Business Line September 7th 2026

 

Changing base years have not altered narratives: Financial Express 4th September 2026

 

Cash is king: Why we cant expect digital payments to dethrone paper money in India: 1st September 2026

 https://www.livemint.com/opinion/online-views/cash-is-king-why-upi-may-never-dethrone-paper-money-in-india-digital-payments-11788174328166.html?

New Rules of work: Book review of Open to work: Financial Express 30th August 2026

 

what do we mean by forex reserves? Businessline 27th August 2026

 

Three action points for the government for micro-level reforms: Free Press Journal 26th August 2026

 

Acquired new tastes and distastes : Economic Times 21st August 2026

 

Dovish views on inflation are abundant but....Mint 17th August 2026

 Dovish views on inflation are abundant but the arguments being made are unconvincing | Mint

The middle life crisis: Book review of Breakpoint : Financial Express 16th August 2026

 

What to take away from the credit policy of RBI: Free Press Journal 10th August 2026

 

RBI's pause signals easing cycle may be over. An interest rate hike next? Mint 6th August 2026

 https://www.livemint.com/opinion/online-views/rbi-policy-does-the-pause-set-up-a-future-rate-hike-gdp-inflation-war-repo-rate-fcnr-liquidity-11785924970585.html

How the world is navigating global chaos amid wars: Free Press Journal 30th July 2026

 

FCNR (B) scheme- a range of possibilities : July 28th 2026

 

A nuanced monetary policy lens: 25th July 2026 Financial Express

 Economist Milton Friedman said that inflation is always a monetary phenomenon. This is the bedrock of monetary policy. Theoretically speaking, by increasing interest rates one can slow down the demand for money, which in turn slows down demand in general and thus controls inflation.

But today, inflation is of a different variety. Crude oil prices are rising, pushing up energy costs. Supplies have been cut due to the disruptions caused by war, widening the demand-supply gap. When edible oil prices increase in global markets, it is more a case of supplies being lower. Metal prices, however, have risen — demand has gone up due to the China factor, and as there are time lags between increasing demand and adjustments in supplies, higher prices prevail.

This leads to the question of whether changing interest rates can control inflation. In India, food price increase is mainly due to supply issues. At a point in time, it was argued that demand for protein-based products like pulses and meat rose sharply, leading to inflation. But more often, it is a case of lower production that causes prices to rise. This is why there is a fear of sub-normal monsoon which can lead to an increase in food prices. Clearly, a higher repo rate cannot bring down these prices.

The core inflation basket is also interesting. When prices of food in restaurants, hotels, etc. go up, it is a clear case of outlets increasing prices to make up for higher fuel prices and other inputs. Gold prices go up when global rates rise and any increase in the interest rate cannot quite reduce demand or price. Petrol and diesel prices depend on the decisions of the government and oil manufacturing companies. The repo rate, again, has little effect.

Last year, inflation rates were benign due to lower prices of agricultural products. The base effect works both ways because extremely low inflation in FY26 was due to high inflation in FY25. This will always happen. To say that inflation was conquered in FY26 would be hasty.

The other oft-cited explanation is inflationary expectation. It is argued that when inflationary expectations increase, they get built into prices and become self-fulfilling. However, if the knowledge of a tomato crop failure enters into prices today, it is the knowledge of the crop prospects that affects the prices. But for manufactured products, companies mostly do not increase prices if they expect inflation to be higher going forward, as they would examine all conditions, including demand, before taking a call.

Hence, for monetary policy action, the following points are important. First, high inflation or a trend of rising inflation posits the merit of raising rates to ensure that the extant excess demand forces drive up prices. This also covers cases of shortfall in supply.

Second, increasing the repo rate is a signalling mechanism for discretion in lending. Higher interest costs make companies factor in this component when planning any investment decision. A repo rate hike automatically feeds into all other markets. In fact, successive hikes ensure that borrowers know the future direction and adjust their plans.

Third, the repo rate change adjusts to inflation to provide the real rate, which is important when it comes to savings and investment. This is where there has been considerable debate on the ideal level. There is no rule as such. But if it is negative, there is reason to believe that savings are going to be affected, especially bank deposits. Here, policy should be forward-looking, as the real rate will make savers take a call on where to put their money. In this context, policy is most effective as it sets the contours for savings and investment.

On the other hand, when rates are lowered, the demand story gets into play. People borrow more, as do companies, which in turn pushes up demand and hence growth. The Keynesians hence have the last word when it comes to linking monetary policy with growth tendencies. Growth can be a monetary phenomenon.

Therefore, monetary policy must be nuanced and calibrated with inflation to maintain an equilibrium on the real interest rate. And this may have to be forward-looking in terms of future inflation to enable decisions.

Inflation pains may get worse this year: West Asia crisis, El Niño key triggers: Hindustan Times 23rd July 2026

 

A gradual easing of oil prices can be expected if pre-war equilibrium is restored. But, the question is whether or not producers will lower their final prices.

The outlook on prices has yo-yoed in recent months — first rising, then falling and then rising again. Crude oil prices were easing before the conflict in West Asia pushed these up again. Gold prices have hovered in the $4,000-$4,200 band per ounce, though, at that level, they reflect a multi-year uptrend. Short-term inflation forecasts moved from pessimistic to borderline sanguine before coming under the super El Nino and possible food inflation shadow. Against this backdrop, how should we look at full-year inflation?

Crude oil prices remaining high for over 100 days present the main challenge for a benign inflation print, having already entered cost calculations of companies, as reflected in the wholesale price index. This has led to an increase in prices reflected in core inflation.

A gradual easing can be expected if the pre-war equilibrium is restored. The question, however, is whether or not producers will lower their final prices. Higher oil and gas prices have worked their way into prices of pesticides, fertilisers, paints, automobiles, glass, ceramics and other products. Restaurants have hiked prices across their menus and it is unlikely that these will be lowered when fuel supplies, and thereby, prices, normalise. It will take close to three months for restoration of normal supply if a permanent peace accord is signed by the warring sides.

A similar situation can be expected for airlines, which may not be inclined to lower fares fully even if ATF prices come down — their losses due to the conflict extend beyond fuel prices, in terms of rerouting to avoid flying over conflict-affected areas, for instance.

Therefore, even when the WPI trends downwards as oil and gas prices ease, the pass-through may not happen — at least not to a commensurate degree.

On the CPI front, things will be different. The oil impact is primarily a policy decision. When crude oil prices shot up, LPG prices were raised to an extent for consumers but fuel prices remained unchanged. After a point, excise was lowered, and, following that, retail prices were increased in three stages. Therefore, the inflation impact would be largely driven by what the government and oil-marketing companies decide when Brent reverts to a lower level (the weight of fuel products in CPI is 4.8%).

Coming to gold, the metal’s price movement is reflected in the personal care category of CPI (its weight in overall CPI is 1.2%)

A similar issue lies with gold. The personal care category of CPI is being pushed up by gold (it has a 0.62% weight in overall CPI), even though the price of gold has come down. This is due to the imposition of a higher duty on precious metals. Once again, price movement here and its reflection in the overall inflation for the year will depend on the call the government takes.

All this aside, food inflation remains a worry. The monsoon was delayed and overall rainfall may record a below normal level, complicated by the predictions of super El Nino effect July onwards. Agri-regions in the rain-shadow areas will likely be affected worse. Pulses, coarse cereals, and oilseeds are the product groups most likely to get affected, which means that, against last year’s low base, the price increases will be sharper. This means food inflation could come in well above 5-6% for the year. Throw in MSP increases, and benchmark prices for the market are likely to be high.

Whether the government rolls back some of the fertiliser subsidy being offered at present and lets prices increase to an extent also needs to be seen.

Globally, transportation and freight costs have gone up and will take time to return to the earlier normal. Opec may have agreed to increase output, but restoration of damaged energy infrastructure in the Gulf States will likely take many months if not years. Energy contracts, thus, will need restructuring, depending on the terms and prices prevailing in the market.

Finally, a conscious call has to be taken internally on retail prices of fuel. During the last spell of conflict, as well as the short-lived ceasefire when crude prices fell, retail prices were left unchanged. Will this policy continue?

Looking at things as they stand today, it is likely that inflation for the full year could reach 5-5.5%, especially as food inflation rises in the second half of this fiscal.

Rain check for RBI: Food inflation, El Niño risks make rate cuts unlikely Buisness Standard: 16th July 2026

Monetary policy targets headline inflation, and this remains a challenge. While the weight of food products has declined in the new CPI basket, it is still at a significant 35 per cent. The fact that food inflation is above 5 per cent in both CPI and WPI data is a concern, especially as the low base effects alone would have resulted in elevated inflation numbers even under normal conditions. A new risk has emerged in the form of rainfall uncertainty, which needs to be considered while debating the repo rate.

 

The monsoon so far has been less than normal. As of July 14, the monsoon was 21 per cent below normal levels on a cumulative basis. Twenty-seven of the 36 meteorological divisions had lower than normal rainfall, with 19 facing a deficit of above 20 per cent. While the monsoon has arrived late, there are good chances of a pickup and a likely better spread during July and August. Hence, this may not be a worry as weather patterns have changed over the last few years. 

The prevalence of El Niño in the next two months has a high probability, which can come in the way of the progress of the monsoon. Given that around 40-50 per cent of the kharif output is rain-fed (the ratio of access to irrigation varies from 20-80 per cent for various crops), the monsoon is important. In fact, more than the headline number, the spread and progress are critical in determining the crop prospects.

 The heavy rains in the last 10 days in various regions have elevated the reservoir levels to around 32 per cent of capacity, but remains below last year’s level of 52 per cent. This is important as we need to have a level close to 80-90 per cent by the end of the monsoon to provide water for cattle and crops in winter — making it another factor that the RBI MPC would need to consider seriously. 

As of July 10, the area under cultivation was around 48 per cent of normal, making it the lowest since 2023. This is understandable because a late arrival of rains makes farmers defer sowing. But what becomes important is the crop swapping that takes place in certain regions due to this phenomenon of delayed monsoon. The area under cultivation is lower for foodgrains, pulses, and oilseeds. Foodgrains are less of an issue as rice cultivators normally persevere with the crop due to the front-end procurement programme of the FCI. But this does not hold for pulses and oilseeds, where the prices have already shown upward tendencies. Therefore, the RBI will have to monitor the crop sowing across the spectrum as it has been observed that single crop shortfalls in oilseeds and pulses have a sharp effect on prices, and hence inflation. 

The market has already signaled higher prices for oilseeds and pulses. The reason is straightforward. First, the area under cultivation is lower, and the market factors in future shortfalls. Second, as pulses and oilseeds are largely single season crops, the existing stock from last year’s production tends to get reduced with time. Late sowing means late harvest, which in turn means that existing stocks have to be pulled for that much longer. All this puts pressure on prices. 

 

Keeping in mind all these factors on crop prospects, it stands to reason that rate cuts are out and an unchanged position can be expected. The OIS market is still talking of one or two rate hikes in the next nine months, but it may be useful for the MPC to probably signal in some way that a rate hike could be considered if the situation becomes grim considering that the crude oil crisis has once again popped up. Maybe change in stance or simple articulation. 

Foreign currency deposits are arriving but with risks: Mint July 16 2026

 https://www.livemint.com/opinion/online-views/leveraged-fcnr-deposits-not-risk-free-india-dollar-attracting-scheme-nris-rbi-currency-swap/amp-11784024529461.html

Offer for sale is the latest mantra in the IPO market: Free Press Journal 13th July 2026

Social welfare spending is improving quality of lives: Business Standard 10th July 2026

 

RBI, a stabilizing force in turbulent times: Business Line 6th July 2026

 

Addressing inequality in education: Financial Express 2nd July 2026

 

Redev projects in Mumbai need to tick several boxes: Free Press Journal 30th June 2026

 

India's credit policy provides boost to forex flows: Free Press Journal: June 21st 2026

 

Markets ride the Trump 'put' as TACO trade gains ground: Economic Times `9th june 2026

 Idiosyncrasy and vicissitude stamp Donald Trump as an exceptional president. Right from the time he imposed his tariff policy to the start, progress and possible end of the US war on Iran, his words have driven markets in all directions, though in a predictable manner. He has been the biggest market mover in recent times. But has there been any method to this from the markets' PoV?

The answer is yes. Let's go back to the tariffs imposed in April 2025. Game theory would have suggested that all other countries, at least the big ones, should have got together to announce similar tariffs to force some amount of backtracking. But the EU, Britain and Japan all went to the US and signed deals under which they had to open more of their markets besides promising to make more investments in the US. It was a win for the US, as the base tariff rate was 10%, up from an average of 3-4% earlier.

Other countries continued to try to work things out amid announcements of higher tariffs for dealing with Russia, among other things. Then there was backtracking as goalposts shifted. This then led to TACO - Trump Always Chickens Out. While dispensations to different countries kept changing and gave the impression of chickening out, anyone following the market would have observed a distinct pattern..

First, higher tariffs meant that stock indices went down. NYSE Composite had a low of 18,743 on April 5, 2025, and a high of 23,602 on February 12, 2026, before the US Supreme Court overruled Trump tariffs. Currencies would weaken, with dollar strengthening. But when the chickening out took place, there would be a reversal of fortunes. Hence, the derivative trader had a blast.

If one believed that higher tariffs would be followed by lower tariffs, then it made sense to buy during the falling phase and sell later at a higher price, that is, going long. This worked well in both stocks and currencies.

Now, in the case of the US-Israel vs Iran war, while March was a phase of tough talk, end of the war has been spoken of by Trump many times before a deal between Washington and Tehran was signed this week. Every announcement that the war is almost over raises stock prices, while any continuation leads to a fall.

Just before the war began on February 28, NYSE Composite was at 23,524. By March 30, it had touched a low of 21,506. Now it is at 23,470. Thus, this yo-yo movement means traders could keep buying as indices fell, knowing well that talk of the end of the war, or even a ceasefire, would lead to prices rising.

The dollar, too, gained. Just before the war, the dollar index was at 97.56, signifying a weak dollar. By March 30, when the US was on top, the index had crossed 100. It corrected subsequently, but crossed the 100-mark again when an agreement date was announced. Currency dealers have had a challenging time interpreting war gains and energy-price shocks throughout this period

Casualty in the war has been gold, which is no longer the preferred investment. During the tariff episode, it got a boost as a safe haven for investors. Silver and platinum enjoyed collateral benefits. But with the war now seemingly ending, upside for gold is limited, and highs of above $5,000 an ounce, observed in February, are no longer on the horizon. As dollar is stronger now, with the dollar ndex at 100, gold has lost its lustre.

Oil traders have been taking various bets on how prices would move. At one time, there was talk of oil reaching more than $150 a barrel. As signals were sent by Trump that the West Asian conflict was over - and that Iran's military had ceased to exist - prices came down to the $90s and remained there.

Now, with peace being restored and the Strait of Hormuz set to reopen, prices could go below the $80 mark. Traders and punters would never have bargained for this. This business has become more volatile than ever.

If one puts everything together, TACO has now been transformed, in derivative parlance, into the 'Trump put'. This gives him the right, but not the obligation, to go ahead with, or stop, the war. This outcome vindicates the view that options are risky.

Book review of Beyond Belief: The Science-Backed Way to Stop Limiting Yourself and Achieve Extraordinary Results: Financial Express 14th June 2026

 The Science of Mindset: How Nir Eyal’s ‘Beyond Belief’ Deconstructs the Power of Placebos

Consider these three situations. In Europe, several people go through surgical procedures without anaesthesia. There is a psychiatrist who talks to the patient and controls the mind so as not to feel pain. Recovery is fast. In a second situation a person who has been hurt is administered a balm, which reduces the pain immediately. Later it is revealed that it was not a balm but a plain cream that was applied. In the third situation a person volunteers to be part of an experiment for a pill. When he reads up on it after taking it he realises it is potent and has some negative effects. The blood pressure levels increase dramatically and the person is rushed to hospital. But all body parameters are normal. Then the person is told that he was not given any medicated tablet but just a placebo. The blood pressure stabilises.

What do these stories tell us? It is belief that drives our behaviour. The way the mind is conditioned by such beliefs can make one feel the way we do. This is the core of Nir Eyal’s book written with Julie Li, titled Beyond Belief. It is a book that uses scientific ways to stop limiting ourselves which will, in turn, help to achieve breakthrough results. By changing the way our mind works or thinks we can change our attitude to life.

Quite interestingly, he argues that placebos are useful as they serve the purpose of making us feeling better. The same phenomenon can be taken to the area of religion or belief in god, which works in an analogous manner. While praying and doing nothing will not get one far, belief and effort put together can deliver better results. Therefore, whether or not one prays, belief in an entity called god is useful. A far reaching extension of this discussion is that those who are spiritual but not religious often suffer the most and have higher levels of anxiety, phobias and depression.

Beliefs, according to the author, are the foundation of motivation in life. Efforts will matter only if we believe in what we are doing. Motivation includes three elements of ‘what to do’ to reach the ‘desired outcome’ with ‘conviction’. If any of these three links are missing or weak, it will not work. We also need to be open to feedback so that we can change our goals so that we are tuned into reality all the time. Hence everyone cannot hope to become a president or sport star just by believing that one is made for it.

Three-Part Framework

In this context the author talks of three powers of the belief framework, which is the crux of the book. The first is ‘attention’, which he describes as seeing things that help to shape possibilities.

This is important because if our mind starts seeing failure or threats, it becomes demotivating, and eventually nothing is achieved. Therefore, negative thoughts need to be kept away. This is something that one tends to be caught in and hence there is need to challenge such unhelpful beliefs. This comes from rumination which should ultimately lead to reshaping our perception, which, in turn, redirects our attention through the power of belief.

The second element is ‘anticipation’, where one should predict what to expect from any action. If we anticipate pain, then it just might come true. There is need, according to the author, to break the pain-fear-pain cycle. If we fear pain, we will experience more of it, which will confirm the danger which we anticipated. Therefore, how one conditions the mind is important whenever we form expectations.

This is why placebos work because the conscious mind understands the cure being taken and the body responds to the same as if it is curing the problem.

Here there is an interesting take on ageing which most people can relate to. The author argues that one’s belief in ageing and physical capability literally influences the biology of the being. People with positive ageing beliefs live 7.5 years longer than those with negative thoughts. Negative beliefs leads to physical de-conditioning and social isolation, which just accelerates the process.

The third element is called ‘agency’. To make positive thinking work we need to use evidence to change and make it happen. The difference between people who perform this function well will determine how one tackles challenging situations. It is not just anticipating problems but working to navigate them, which helps beliefs turn into reality. Hence there is need to focus on things which we can control. Agency, therefore, transforms uncertainty into a bridge towards concrete benefits through intentional practice. This is where prayer works through psychology and hence goes beyond plain theology.

Trap of Pure Optimism

Is all positive thinking very good and a panacea for our problems? This is a likely question to come up as the reader peruses these pages. Here the author raises a red flag and talks about how positive fantasies can backfire as they relax the body as if the goal has already been achieved. The circle of false promise traps people, leading to major disappointments. He hence prefers mental contrasting to plain positive thinking where we constantly pair future dreams with present obstacles. They hence engage with all the three powers of belief. They direct attention to realistic obstacles. They build anticipation for both success and challenges, and finally strengthen the agency trait to handle these challenges.

his book can come under the self-help category which uses psychological principles to enable empowerment of the individual. It does show that belief lies in the mind which can be made to work to take us in the right direction. But the three vital components of belief — attention, anticipation and agency are essential to make wishes come true. This is a book with a strong message to reinforce confidence in oneself and meeting challenges with a positive mind frame.

Beyond Belief: The Science-Backed Way to Stop Limiting Yourself and Achieve Extraordinary Results
Nir Eyal with Julie Li
Penguin Random House
Pp 304, Rs 999

RBI's plan to attract foreign currency : How much of it could FCNR deposits really expect to lure? Mint 12th June 2026

 https://www.livemint.com/opinion/online-views/rbi-plan-foreign-currency-fcnr-deposits-nri-dollars-yen-carry-central-bank-debt-yields-11781081669374.html

An apt policy: RBI may tighten credit later but its current focus is on attracting flows of foreign exchange: Mint 5th June 2026

 https://www.livemint.com/opinion/online-views/rbi-mpc-monetary-policy-committee-credit-foreign-exchange-forex-rupee-repo-rate/amp-11780638285109.html

Withdrawal of taxes on FPI investment in Gsec: The final frontier? Business Standard 5th June 2026

 The foreign portfolio investors (FPIs) have been in a withdrawal mode this year. One of the reasons which has been given is the system of taxation where returns become less competitive when compared with other markets.

 This has been addressed well by the government by exempting interest earned on GSecs holding from tax as well as removing any capital gains tax on GSecs. This is a big positive step that has been supplemented by the Reserve Bank of India (RBI), which now allows them to invest under the FAR regulation in securities of over 10 years duration. 

 

The important question is whether or not there will there be an about turn in the flow of funds in the debt segment? This is something which will be tested in the coming months. Prima facie, the tax rates of 20% on earnings in interest or capital gains meant erosion in real return. The prevailing thought process earlier was to have some kind of a level playing field for investors from both the domestic and foreign sections.

However, this could have militated against such investment, especially so considering that investors have been looking at other emerging markets and comparing returns. A declining rupee already lowered effective return that was compounded by the tax rate. This correction should make GSecs valuable again for investors. 

 

It must be pointed out that our GSecs are now part of global bond indices, which means that all such policies matter as investors keep rebalancing their portfolio depending on effective returns. Often investment in indices is complemented by separate investments in the Indian market to take advantage of any arbitrage opportunities. The nominal returns on bonds are fixed by the market over which no one has control. The same holds for currency movement that is determined outside the system. What we can control is the system of incentives available for investors. The government intervention here is hence pragmatic as it plugs a gap. 

With interest rates poised to rise across the world, the bond returns would be one of the clinching factors. The decision taken by the Fed in the upcoming meeting will hold the clue to the direction of interest rates in the US under the new Chairman. 

The next few months will test the efficacy of these measures as there has been a long standing demand for withdrawal of the withholding tax on FPI earnings in the debt segment. 

 

With the present measures being invoked all returns – interest and capital gains are not subjected to any tax. In parallel the RBI has also enabled them to invest in bonds of maturities higher than 10 years as well as in fresh issuances of paper.  All this should boost inflows. But ‘how much’ is the question? 

Why are FPIs exiting? Financial Express 5th June 2026

 Since the war began, global stock indices have behaved differentially. The Sensex surely has gone down from 81,287 to 75,415 between February 27 and May 22. This could give a signal that the Indian market has underperformed; however, US indices S&P 500 and DJI have gone up while the NYSE Composite is marginally down. Nikkei is up significantly while FTSE is down. German (DAX 40) and French (CAC 40) indices are down. So is the case with Brazil (IBOVESPA). But Korean KOSPI has done brilliantly while Singapore (STI) has trudged in the positive zone. Hang Seng of Hong Kong is down, as is the Shanghai Composite. Therefore, our market is not an outlier.

Yet it has been seen that foreign portfolio investors (FPIs) are in a withdrawal mode. Since March 1, they have pulled out $23.75 billion from the Indian market (equity and debt) while in the corresponding preceding 51 sessions, they withdrew $1.25 billion. The former included around $21 billion in equity and the balance in debt and hybrid. Interestingly, for the 51 days prior to the war, equity withdrawal was at $22.75 billion, with debt being positive.

Thus, the FPIs have been withdrawing funds from the equity segment even before the war began, which means it is a continuation of an earlier trend. The war has only maintained this tendency. However, in debt it was positive though marginal, which turned negative once the war began. An explanation can be conjectured here.

Decoding Herd Mentality

On the equity front, the FPIs have been bearish about Indian markets. It should be remembered that FPIs consists of myriad investors who are registered with Sebi and not a single entity. Therefore, the joint action can be taken to be some kind of group-think where decisions are taken based on a common line of thinking. One reason is the belief that some of the major stocks and sectors may be overvalued with very high private equity ratios. Generally, ratios above 30 denote overvaluation, less than 20 reflect opportunity, while the range of 20-30 could go either way.

The NIFTY pharma, FMCG, and consumption indices show ratios of ~35. It is 30 for auto, while it is less than 15 for banks, making them attractive. Here, the clue is corporate profitability. Growth in sales and profits has tended to be more in the single digit range, which indicates stability at best. This needs to change for the valuations to be justified or else, theoretically, the prices would have to correct over a time period.

The issue with stocks being considered to be overvalued is twofold. First, it makes sense for investors to exit as the upside seems limited. In fact, with the Sensex exhibiting higher volatility, it is a sign that the best is over for the time being until there is more buoyancy in the performance. The annualised daily volatility since the war began increased to 21.6% for these 50-odd sessions compared with 11.6% in the earlier period. Second, for new investment to flow, a wait and watch approach would be taken, following which a fresh round of investment would begin.

As mentioned earlier, some markets have shown remarkable resilience during these times, and investors would probably be moving their funds from markets like India, Brazil, etc. to the US, which has witnessed a general upward movement. It must be noted that ever since the central banks have been pursuing quantitative tightening, the quantum of investible funds has come down considerably. Hence, funds are being reallocated as investors search for opportunities in a wider set of markets.
Coming to the war, India’s market performance could be making FPIs cautious.

The high dependence on imported crude oil makes the trade balance jittery. While real growth is less of a concern, the issue with rupee depreciation is a consideration. The fact that the rupee is moving down lowers purchases and enhances sales, leading to net outflows. This in turn, feeds back to the currency strength as the rupee tends to be affected perversely, thus justifying the view that real returns would be weak. This is a tough nut to crack from the policy point of view.

How about debt? Ever since the war began, the bond markets have been in a different mood. Higher crude prices cause higher inflation across the world. This means that interest rates will no longer be lowered. Kevin Warsh’s appointment as chairman of the Federal Reserve was supposed to be associated with lowering of rates, which is what Donald Trump wanted. The last policy was cautious on rates. Now there is talk of rates being increased rather than lowered as inflation increases. This has pushed up bond yields. While Indian bond yields too have climbed up to cross 7% for 10 years’ maturity, there is a case of investors weighing the net return where the currency decline comes into play.

Therefore, FPIs will continue to be unpredictable in the next few months. They cannot be considered as a source of long-term capital when working out the options for closing the current account deficit gap. As long as they do not accelerate their withdrawal, it could be steady news. But the declining rupee is definitely a consideration for them as the real value gets affected.

What will the MPC do this time. BusinessLine 2nd June 2026

 

Business beyond profit and loss: Financial Express Book review 1st June 2026

 https://www.financialexpress.com/life/lifestyle/business-beyond-profit-amp-lossnbsp/4255152/lite/

Today businesses need to think beyond just making money. They need to be socially relevant as well. The government has come up with a mandatory amount to be spent by companies on corporate social responsibility, but that is just the monetary aspect, and money spent has often has been belittled as green-washing. All that is changing now, as companies and corporate heads work seriously to bring about changes in the way business is conducted.

Sutapa Banerjee captures this in her book, where her focus is on what companies should do to go beyond mere profit and loss. There is no better way to do it then get a mélange of experts to talk about the importance of three broad heads—sustainability, equity and breaking stereotypes. There are 24 essays in this book with 20 authors providing their views on various issues under these headings, besides the author who has her say on each of these subjects before having a round-up in terms of structuring a playbook.

There are some stellar names associated with this book, starting with a foreword by Nadir Godrej in a rather catchy poetic style. Others include Abheek Barua, Kiran Khalap, Sanjeev Bikhchandani, Manish Sabharwal, Deepinder Goyal and more.

Abheek Barua has an impressive piece on sustainability and inclusion, which is an economist’s view that talks about the importance of this issue and how corporates can work to make this world a better palace. This can be on projects taken up as well as environment-friendly ways of going about their business. Hence, what is important is doing the same business in a better manner. There is the case of ITC taking up projects to not just tackle waste but also new ways of greening land. Companies have now started projects to address issues concerning product disposal, which is very important.

Mukundan takes up the case of his domain, the chemicals industry, and flags three issues that have to be taken up by corporates. The first is to support bioethanol and biodiesel to ensure that coal boilers become more ecofriendly. The second is to set intermediate targets such as closure of old and inefficient power plants, vehicles, building, and improvement in logistics to enhance efficiency and lower costs. Third is to focus on goals such as providing green hydrogen at $1 per kg by developing smart grids, etc.

There are nine essays in this section with some foreign insights on sustainable agriculture in Africa being provided by MD Ramesh, which can hold clues for us within the country too.

Digital Equalizers

The section on equity and economic participation will appeal to every Indian reader. For instance, the essay on a digital job place by Bhikchandani takes us to how the concept of Naukri.com evolved, which has made searching for jobs easy for both prospective employers and employees. There is an extension now for blue collar workers too, called JobHai.com.

This concept was novel when it started and was an equalising tool for all segments of society. We have also seen the government launch a similar initiative at a different level for MSMEs where a virtual marketplace called GEMS has been launched.

Sabharwal’s name is synonymous with human resources and he has focused on reforms that are needed in the education space. He touches the right chord when he talks of reforms in the twins of education and skilling, which are both priorities of the government. The former is a challenge because it is quite diverse in the country and becomes the basis of fomenting inequality as access to quality education is not the same to all. A similar challenge is on the skills front where the youth do not have them to get meaningful jobs.

Preeti Reddy writes on the gender inequality pervading corporate India. She believes that things are changing as many companies are addressing this issue by making jobs more inclusive. Therefore, the DEI (diversity, equality and inclusion) formula is widely used by them. In USA, however, there has been a slowdown on this front, especially after Donald Trump has come to power, and there have been executive orders passed to restrict race and gender-based DEI programmes.

Reddy highlights the progress made in India and the fact that 97% of NSE-listed companies have one woman director and 48% have two or more than two, which is testament to this commitment. She highlights the need for political will to pursue this cause. She also believes that we need to have more women role models. Here an interesting observation is made that when the CEO is a woman, there tends to be more gender balanced boards.

At a different level, Deepinder Goyal talks about how his model of Zomato quite effectively fostered equality across three constituents in the value chain of food delivery. The customer, of course, is most empowered by getting access to not just knowledge but also to food from various outlets. Restaurants are the second group which are able to enlarge the universe of customers which was not possible in the pre-online model where they had to depend on the locality of their establishment for business. Last is the delivery partner model which has become a large industry given the proliferation in not just these delivery-app companies but also the physical area to be covered.

Pirojsha Godrej talks of the construction industry and the assimilation of migrant labour given that this industry employs 56 million workers, including 7 million women. The efficiency of starting projects and completing on time is contingent on delivery, and the seasonal labour shortage is a bane for the industry. The solution is to give primacy to the worker and ensure well-being as it is the only way to ensure there is limited reverse migration. Business hence has to be more responsible to remain viable and successful.

Banerjee has made this compilation well focused on three subjects which has several takeaways for both existing and prospective entrepreneurs.