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India Insider: Foreign Investors and Their Selective Choices

July 8, 2026

by Ben Ezra with No Comment Assets Behavioral Sentiment Ben Ezra Business Commodities Economy Equities Exclusive Content Featured Highlights India Investing Major Global Equity Indices Uncategorized World

Return of Global Investors into the Indian Marketplace

Global investors are gradually returning to Indian assets after months of persistent outflows as risk appetite sentiment has been ignited by an extended ceasefire between the U.S and Iran. Energy prices have moved in India’s favor, sparking favorable conditions.

Despite recent flare ups in the Strait of Hormuz, Brent Crude has dropped about 30% in the past quarter, easing India’s fuel concerns as the world’s third largest Crude Oil buyer. AI trade rotation is gathering pace in Asia also, this as investors pull money from chipmakers that powered this year’s rally and hunt for cheaper ways to deploy their cash.

NIFTY 50 One Year Chart as of 8th of July 2026

Indian equities beat its emerging markets peers in June by its biggest margin in seven months. The Reserve Bank of India’s measures to attract foreign currency deposits and overseas capital have eased funding concerns for lenders, record foreign inflows into government bonds have helped stabilize the Rupee and improve liquidity conditions. According to Bloomberg, “Goldman Sachs favors 30-Year government bonds as lower oil prices allay inflation and fiscal risks”.

Combined with resilient credit growth and improving asset quality, India’s banking sector is once again attracting global investors, this after trading at meaningful discounts to historical valuations for quite a while.

Second Opportunity May Be Information Technology

Indian IT companies have undergone a sharp valuation correction over the past two years. Unlike the post pandemic period, when large Indian technology firms traded at substantial premiums to global peers such as Accenture. These premiums have now narrowed considerably after earnings growth slowed, and enthusiasm surrounding Artificial Intelligence shifted investor attention towards US technology companies.

As highlighted in Business Line magazine, the sector is undergoing a healthy valuation reset, with investors increasingly questioning whether premium valuations remain justified without a corresponding acceleration in earnings growth.

However, the discussion extends beyond valuations. Artificial Intelligence is fundamentally reshaping the enterprise software industry. For decades, Software as a Service (SaaS) companies dominated enterprise technology by offering standardized cloud based solutions that were cheaper and easier than developing software in-house. That advantage is now beginning to erode.

Large AI companies such as OpenAI and Anthropic are building AI agents capable of operating across multiple enterprise applications through a single conversational interface. Rather than competing within individual software categories, these horizontal AI platforms could reduce the importance of stand alone enterprise applications by seamlessly connecting them. At the same time, AI native startups are targeting specialized business functions, while advances in generative AI are encouraging enterprises to revisit the traditional ‘build versus buy’ decision as they develop customized software internally at significantly lower costs.

For Indian IT services companies, this represents both a disruption and a new opportunity. Routine application development and maintenance may become increasingly automated, placing pressure on traditional outsourcing revenues. Yet demand for AI integration, cloud migration, cybersecurity, enterprise transformation, and customised AI deployment is likely to create an entirely new investment cycle. The winners will be firms that evolve from conventional software service providers into strategic AI implementation partners.

Risks ahead for Indian Markets

The near term outlook is not without risks for India. A weak monsoon could push food inflation higher. Elevated Crude Oil prices may widen India’s external balances. And a stronger USD with elevated U.S interest rate yields could moderate foreign capital inflows. The technology sector also faces a structural challenge as Artificial Intelligence reshapes the traditional software business model, requiring companies to adapt more quickly than in previous technology cycles.

Even so, the broader macro backdrop appears to be improving. Policy measures have eased liquidity conditions, corporate balance sheets remain healthy, and valuations across several sectors have become considerably more attractive after an extended correction. Rather than chasing expensive momentum trades elsewhere in emerging markets, global investors may increasingly look toward Indian sectors where fundamentals are strengthening while expectations remain relatively subdued.

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India Insider: Systematic Investment Plan Boom

June 26, 2026

by Ben Ezra with No Comment Assets Behavioral Sentiment Ben Ezra Corporate Economy Exclusive Content Featured Highlights Financial Institutions India Investing Uncategorized World

Liquidity, Valuations and the Limits of Domestic Capital

India’s equity market has surprised many investors over the past two years. Despite persistent foreign institutional investor selling, weak net foreign direct investment (FDI), subdued private capital expenditures and a depreciating Rupee, the broader markets have not fallen and proven remarkably resilient. But risks abound.

Many observers point to the rapid growth of Systematic Investment Plans (SIPs), which millions of retail investors invest regularly via mutual funds in India. Monthly SIP inflows into the Indian equity market has reached record highs at the tune of 32,087 Crore Rupees ($3.38 billion USD) in March, 2026 per AMFI (Association of Mutual Funds India) data.

Nifty 50 Five Year Chart as of 26th June 2026

Before COVID-19, the stock market industry in India was a boring business. Accounts were opened via paperwork, and demat (the account in which the digital shares were held) in a bureaucratic manner with multiple paperwork requirements. Clients who liked to participate in the Initial Public Offerings (IPOs) had to go to their broker or issue a cheque to participate in the bidding process. As of 2019, the total demat accounts in India stood at 40 million. Sophisticated retail investors would go to their local branches of associated brokers and trade stocks, derivatives or commodities. They sometimes would use telephone or online orders.

All this changed during the Covid-19 pandemic, when equity market valuations became depressed and people were forced to stay at home. This ushered a wave of new retail traders who had time to master the game and wanted to capitalize on the falling valuations of many companies and take advantage of opportunities they believed in. Astonishingly, demat accounts opened between 2020-2026 totaled around 180 million, almost quadrupling pre-Covid levels. Due to digital penetration and the rise of discount brokers, young retail traders were able to quickly allocate substantial portions of their monthly income into SIPs.

SIPS have strengthened the financial market resilience of India, compared to the previous decade when it was the domestic institutional investors who helped market stability. Yet concerns are now arising whether domestic household savings are supporting fundamentally stronger companies, or are creating systematic inflows which help tenuous companies to have higher valuations?

For instance, a famous financial markets journalist recently argued that India’s SIP boom has fueled expensive stocks. Thus, enabling insiders and institutions to exit at favorable prices, reduced future return potential, has weakened the Rupee, and exposed the limitations of crowd-driven investing.

As the AMT India Insider columnist, I decided to investigate these considerations and talked with some people in the financial markets who offered different perspectives regarding the issue.

Mr. Mahalingam, an IIM alumnus noted, “it is difficult to generalize like that. Total SIP inflows should be viewed relative to the total market capitalization of listed companies, not in absolute terms. If the Nifty delivers around 12% returns, it roughly doubles every six years. SIP inflows must also increase over time, simply to purchase the same proportion of shares.”

Arguably, the SIP flows into the Nifty Index some 15 years back are not comparable to today. Considering the higher capitalization of Nifty listed companies (which means greater share values), and given the Nifty index has delivered 12% returns in the last few years, and that it took 6 years for it to double at this rate, it’s important that investors look at higher share prices values arising out of company earnings while considering their investment decisions.

Mr. Prasath, who taught economics and finance to students during his tenure at a private educational institution, argues, “I think there are many dimensions. In stock markets, everything comes down to valuations, the continuous SIP flows may diminish future returns if the earnings don’t grow. But comparing SIP flow with 2005 numbers exaggerates the issue. The Indian economy has grown bigger since 2005 and naturally inflows will also grow accordingly. India has one of the lowest public participation in the capital markets, even with current SIP numbers.”

Mr. Prasath continued, “currently the world is going through turbulent times with the Russia-Ukraine war, the Trump Presidency including tariff actions, the Iran situation and energy crisis, and supply chain disruptions, etc., which are effecting economic growth. The Indian government is also not taking some required steps. Indian companies also have low R&D and failed to participate in emerging themes like AI and semiconductor development. These turbulent times will continue for awhile and Indian markets will underperform its peers. So we have to wait for better times or for world leaders to come to their senses. I think we have to remain both optimistic/realistic and plan our investments accordingly”

If India grows at 7.7% during the 2025-2026 annual year, and foreign capital (especially foreign portfolio investment) is leaving, while private capital expenditures are weak and government capital expenditures are increasing, then what’s the point of higher stock prices for many of these companies? Is it due to steady retail SIP inflows? Does it really help institutions and insiders to cash out, and make retail investors vulnerable? Foreign investors have sold $29 billion USD worth of equities so far this year, and the Rupee has taken a hit, yet we have not see drastic changes in companies’ share or indices values.

In 2022, when the U.S Federal Reserve was raising interest rates, the Nifty 50 Index lost around 3000 points, but this did not happen in 2026. The SIP retail crowd and domestic institutional investors have absorbed the foreign investors’ outflows and provided a cushion for share prices.

Even if some people in the financial markets argue that the foreign investors’ selloff off did not result in poor corporate performance or themes becoming weak, given that the growing market capitalization and the past earnings has justified the higher share prices, it’s significant to note that the Net FDI remains weak. Indian and foreign corporations are repatriating cash at a faster pace, and capital is flowing out of India. That’s ironically what hit the Rupee this year, along with higher oil prices due to the Iran war. In my opinion, private capital expenditures of listed corporations has to grow to justify higher earnings multiples.

Kotak Mahindra Bank director Paritosh Kashyap, while talking to Business Line said that private capital expenditures in India has been subdued for the last 10 years. Higher interest rates, expensive oil and lower equity valuations has dampened sentiment. India’s government Capex (capital expenditure strategy) remains the primary driver.

To summarize and conclude, weak foreign direct investment, subdued private investment, and inflated valuations of Indian assets along with a lack of AI related development is a large underlying issue and concern. For foreign investors to return with greater force again into Indian equities, either the Rupee has to depreciate or equity prices have to decline to generate investor confidence and create an appealing landscape. Retail investors may soon have to face drawdowns in their portfolios as returns dwindle and headwinds move against them.0

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India Insider: Should the RBI Raise Interest Rates?

June 11, 2026

by Ben Ezra with No Comment Assets Behavioral Sentiment Ben Ezra Central Banks Exclusive Content Featured Highlights Forex India Risk Management Uncategorized World

A Case for Higher Interest Rates In India

As the Rupee remains under pressure and oil prices continue to rise amid tensions in the Middle East, the debate has shifted towards what the Reserve Bank of India (RBI) should do next.

Economist Janak Raj has argued that raising interest rates to defend the Rupee comes with significant costs. Higher rates increase the cost of capital for businesses, reduce investment activity, and compress equity valuations. In theory, this could even accelerate foreign outflows from equities rather than attract fresh capital. Yet the RBI may soon find itself with limited options.

USD/INR One Year Chart as of 11th of June 2026

Foreign Portfolio Investors (FPIs) were net buyers of Indian equities for most of the period between 2004 and 2024, with only a few exceptions such as 2011, 2018 and 2022. However, the trend has changed. FPIs sold approximately $19 billion USD worth of Indian equities in 2025 and another $24 billion USD so far in 2026.

Question: Why are Foreign Investors Selling

One reason is that global investors today have alternatives. The growth of Artificial Intelligence related companies in the United States has created significant investment opportunities. At the same time, U.S Treasury yields hovering around 4.6% offer attractive risk-free returns in a strengthening dollar environment.

For many global investors, earning high returns in Dollar assets is preferable to taking exposure in emerging markets that face current account pressures from rising Crude Oil prices and other energy costs.

Taxation is another factor. India taxes foreign investors at 20% on short-term capital gains and 12.5% on long-term gains. Meanwhile, competing financial centres such as Singapore, Hong Kong, Malaysia and Thailand generally do not tax foreign investors’ capital gains.

Some global funds have argued that India should move closer to international norms, where capital gains are usually taxed in the investor’s home jurisdiction rather than the country where the investment is made. Higher post-tax returns would undoubtedly make Indian assets more attractive.

A stable Rupee would also reduce hedging costs, lower currency-risk premiums and improve the overall risk-reward profile for overseas investors. However, tax cuts alone cannot solve India’s problem.

The Real Issue is Balance of Payments

As Business Line columnist Lokeshwari Mam has pointed out, a significant portion of equity outflows consists of short-term speculative capital. Long-term capital tends to remain invested. This is why the decline in net Foreign Direct Investment (FDI) should concern policymakers more than short-term fluctuations in portfolio flows.

Net FDI has fallen sharply from $28 billion in FY 2022-23 to just $7.7 billion in the year ended March 2026. This is a worrying trend because FDI is the most stable source of external financing. Unlike portfolio flows, it creates factories, jobs, exports and long-term productive capacity.

India therefore needs more than tax incentives. A genuine single window clearance system, reduced bureaucracy, easier business regulations and reforms in manufacturing remain essential. Attracting long-term capital should be a national priority.

The recent foreign buying of Indian bonds after tax cuts is encouraging. But relative to India’s current account financing requirements, it remains a small drop in the ocean.

For example, in FY 2025, the current account deficit was 0.6% of GDP. And in Q4, the current account became a surplus. Is it really that difficult to finance it’s small current account deficit?

India’s external vulnerability is determined not merely by a current account deficit, but by whether the capital account can be comfortably financed. A modest current account deficit still creates currency pressure if foreign capital inflows weaken (which we are seeing), while a larger deficit may be sustainable when capital inflows remain strong. The risk of sustained higher oil prices could widen the deficit, increasing India’s dependence on foreign capital at a time when global liquidity is tightening and U.S Treasury yields are rising.

Furthermore, hedging costs continue to erode much of the yield advantage that Indian bonds offer over U.S Treasuries. In that sense, active global money is likely to prefer Dollar assets over emerging-market debt or equities

India’s repo rate currently stands at 5.25%. The RBI’s decision to raise its inflation forecast to 5.1%, while lowering its GDP growth projection to 6.6% reveals where the shock from the Iran conflict is likely to be felt via higher inflation and weaker growth. For an economy that remains heavily dependent on imported oil, a depreciating Rupee only compounds the problem by increasing the cost of energy imports.

In such an environment, the Monetary Policy Committee is unlikely to focus solely on growth. Currency stability, inflation expectations and the availability of foreign capital to finance India’s external requirements could become increasingly important considerations. If these pressures persist, the RBI should raise the repo rate, in the same manner other Asian central banks have done in recent weeks.

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India Insider: Growth Matters, Development Matters Even More

June 5, 2026

by Ben Ezra with No Comment Assets Behavioral Sentiment Ben Ezra Commodities Exclusive Content Featured Highlights India Investing Uncategorized World

Participation of Women in the Workforce and Advancing Progress

There is more poverty in this world than many of us realize and would like to comprehend when confronted by the facts, and this is also true with India.

Recently, I visited several villages in Tiruvannamalai District in Tamil Nadu State on behalf of Angry Meta Traders to survey household capital formation, wage growth and labor market dynamics. To my astonishment, in many homes, people still use rice and palm oil purchased through ration shops. The important observation is their consumption basket appears narrow and heavily dependent on subsidized essentials. I saw simple aluminum utensils in kitchens, when higher income households often use silver-plated utensils. Things that many middle-class families consider normal like energy drinks, snacks, or packaged foods were often absent.

What struck me even more was the number of women managing families alone. In some households, the husbands had died due to excessive alcohol consumption. Children attended government schools and depended on nutritious meal schemes provided by the State.

Growing up, I have seen people wear torn uniforms in school because their family could not afford new uniform every year. Some did not wear shoes, and many students stood outside the class because the fees in private schools in India are several times higher than what government schools would charge and their families could not pay on time. Yet, through education and perseverance, many people have succeeded.

However, the poverty I witnessed in Tiruvannamalai District is different. These observations reminded me of a study published in the Lancet Regional Health Center. Researchers followed 251 children in Vellore District (closer to Tiruvannamalai District) and found that poor children living in urban areas were often exposed to calorie-rich but nutrient poor food environments.

If such conditions exist in parts of Tamil Nadu State, one of India’s more developed states, then we should think carefully about the situation across the country.

Another Transformation is Taking Place

For generations, many women carried the burden of childcare, household work, elder care and agricultural labor simultaneously. In many families, they sacrificed their own aspirations for others. Are women born to carry everyone’s burden?

Interestingly, across the globe especially in Southeast Asia, education and economic opportunities have expanded women’s choices. Researchers such as Stanford University’s visiting Professor Alice Evans argue that many women choose marriage only when their partner’s own goals align with their own. If not, remaining single becomes a reasonable choice for them

Female Labor Participation Rates Comparing India and China from 2011 to 2024

As shown in the above chart, India has certainly made progress, but female participation in the workforce remains below that of many East Asian economies. A society that fully allows women to participate in economic life is likely to become more prosperous and productive.

Economic realities are also shaping family decisions. Housing is expensive. Job markets are uncertain. Inflation remains a challenge. Asset prices have risen significantly.

Yesterday, a college friend called me. He recently built a new house in his town. He is 33 years old, unmarried, and works in Oman. Years of overseas employment and remittances have helped him to achieve his goals. I sometimes wonder whether the same outcome would have been possible had he stayed and earned entirely in India, especially outside the software and technology sectors.

India still has demographic advantages, but a demographic does not bear fruit automatically. It requires healthy, educated and economically secure citizens.

We often speak about India becoming a developed nation. However, the real question is whether growth can and will improve the lives of ordinary people, especially women, children and underprivileged. Growth matters, development matters even more.

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India Insider: Growth without Prosperity, Thoughts and Comparisons

May 28, 2026

by Ben Ezra with No Comment Ben Ezra Business Central Banks Commodities Corporate Data Exclusive Content Featured Highlights India Investing Uncategorized World

Growth and Prosperity Data Meet India and China's Realities

Economic growth is important for generating prosperity. India as well as China has helped millions be lifted out of poverty using separate development trajectories. Still, questions about income distribution remain a difficult topic that policy makers in both nations often are unwilling to look at with deeper persistence because plenty of inequalities still exists and the subject remains potentially divisive.

China’s low income population is extremely large. Professor Li Shi’s research argues that nearly 300 million people in China are earning less than 1000 Yuan ($149 USD) per month in 2021, while nearly 98 million had monthly incomes below 500 Yuan ($75 USD).

The same is true for the majority in India. As per the Pahle Foundation research shows nearly 91% of India’s workforce remains in the informal sector where their annual per capita incomes are below ₹2.5 lakh Rupees or ₹20,800 Rupees per month ($217 USD per month).

Although industrial and wage models are different comparatively, for instance in China the industrial sector includes 32% of the total working age population and produces an estimate of 36 to 37% of the GDP. And 22% of China’s workforce are employed in agriculture and produce close to 7% of GDP. In India a higher share of the people are in agriculture – close to 45%, and generate roughly 15-18% of the nation’s GDP.

However, there are still problems in both countries regarding inequality via wage disparities of citizens. When income growth is stagnated or not growing, fixed assets capital formation is difficult. People save less and invest less, which in turn makes the economic consumption story difficult. This is happening in China and in India.

Regarding growth, Professor Li listed a series of mounting pressures: China’s growth rate has fallen from its high-speed era of 8 to 10% to around 5%. Household income growth has slowed sharply and the weakest gains are among the poorest groups. Urban wage growth has also softened. Consumption remains structurally weak. Fixed-asset investment, especially private investment has lost momentum. Unemployment, particularly among young people remains elevated. These are not separate problems. Taken together they raise a harder question, whether China can still generate the level of growth needed to meet its 2035 and 2050 prosperity targets?

India between 2015–2016 experienced significant growth driven by consumption, investment and services expansion. After Covid-19 its growth has stabilized around 6 to 7%, yet higher levels of prosperity are not clearly visible for many and inequality has widened.

The unemployment rate among those aged 16 to 24 in China has remained around 16% for an extended period, fluctuating during seasonal reasons. Unemployment among other age groups have also risen gradually, indicating clear pressure in the labor markets.

In India the unemployment for youth aged between 16 to 25 of age is 42%, per a Azim Premji University Surveys and State of Working India report in 2023. This unemployment rate is double the ratio of what we are witnessing in China.

While in China the education departments have shifted towards STEM (Science, Technology, Engineering and Medicine). India still focuses on Social Science curriculums and students who study within these fields often cannot find job opportunities in the labor market.

India for many years hasn’t invested a substantial amount of energy and commitment to build a vibrant manufacturing sector. Yet, studies have shown that every job created by manufacturing exports creates two additional jobs in related sectors like transportation and logistics.

China’s wealth inequality via income has risen sharply, Professor Li Shi estimates the wealth Gini coefficient above 0.7 in 2023. India’s wealth inequality may be even more concentrated. Various estimates place India’s wealth inequality/income distribution per the Gini coefficient above 0.80, indicating an extremely unequal distribution of assets and accumulated capital.

However, the structures of inequality differ between the two economies. In China inequality emerged alongside rapid industrialization, urbanization and export, and led to manufacturing growth. A large industrial economy generated substantial wealth – but distributed it unevenly between labor and capital.

In India inequality is shaped not only by a wealth concentration at the top, but also by the persistence of low productivity via employment, informal labor markets, weak wage growth, and limited human capital investment across large sections of the population. Thus, while China faces the challenge of emphasizing prosperity within a middle income industrial economy, India continues to struggle with the deeper structural problem of trying to create broad based household income growth in the first place. The differential also sheds light on industrial sector based employment and those in agricultural jobs comparatively between the two nations regarding wage context.

Hard questions that China should ask include if their employment force – who are without many social protections and suffer a lack of higher wages, will allow China to attain competitive advantage over the rest of the world? While its manufacturing products are in demand, it doesn’t help the average Chinese person see realized wages go up and nor creates a dignified life. And China’s trading partners do not benefit, because a lack of competitive advantage destroys industries and makes unemployment problems even worse in other nations. It’s not a question about advantage only, it’s also about why this surplus and deficit competitive problem is growing rapidly and makes stable prosperity unachievable over the long term.

In India despite being proclaimed as the fastest growing global economy, if the young population don’t get jobs and cannot create income for their families, then what’s the purpose of this high GDP growth? Yes, the nation gets to show good growth numbers while hoping to achieve additional investment, but problematic results still occur.

Economic growth without wage growth leads to widening inequality, social unrest and sometimes political backlash. For growth to be inclusive, wages need to rise along with GDP. This requires not just distribution, but a transformation like raising the average productivity of every worker and ensuring they receive their fair share of the economic pie.

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India Insider: Capital Formation in Rural Areas and Distress Hill Terrain

May 21, 2026

by Ben Ezra with No Comment Assets Commodities Featured Highlights India Uncategorized World

Income Comparison via Two Distinct Districts: Tiruvannamlai and Madurai

India is a vastly developing economy, but its national accounting frequently relies on formal sector performance to extrapolate the conditions of the informal economy. Despite official statistics continuing to rise, the economic reality of rural India remains largely unchanged.

Recently, I was travelling extensively across villages in the Tiruvannamalai district of Tamil Nadu State in South India, trying to understand how capital formation works in rural and semi-rural areas.

For more than 50 kilometers, there were barely any shops related to consumption activity. There is no absolute poverty in these areas, but income levels are clearly not standard enough to support strong consumption patterns.

Many people in Tiruvannamalai district villages work in neighboring cities liken Tiruppur, Bengaluru or Chennai and send cash back to their families. Apart from these remittances, agriculture and related seasonal income add to household earnings.

The second observation based on my extensive survey with about 55 women, was that I hardly saw anyone wearing gold chains or ornaments in villages. In other words, household income is often not sufficient enough for families to consistently accumulate gold or jewelry, which traditionally act as a form of savings in Tamil Nadu households.

Evidence suggests the reason for weak savings and low capital formation in Tiruvannamalai is due to low household income generation. And the reason for low household income can be attributed to a lack of local opportunities which offer weak wage growth, plus dependence on migration and the seasonal nature of agriculture sector. Education also plays a decisive role, but the broader issue demonstrates inadequacy of stable income generation.

We do not have sufficient recent district level data to fully validate many of these observations. Tamil Nadu State GDDP data (Gross District Domestic Product) exists, but it often lags. RBI remittance data does helps, but that is largely available at the State level rather than district level.

However, these observations do find relevance in prior surveys conducted by the Tamil Nadu Government before COVID-19. Districts such as Tiruvannamalai were often catagorized as relatively backward compared to more industralized districts where consumption pattern improved dramatically through manufacturing and urbanization.

Instability via MNREGA’s Distress Hills Data

One interesting way to study this phenomenon is from Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) employment data. MGNREGA data is measured in lakh person-days. (A lakh equals 100,000). In simple terms, it measures the amount of labor generated through a combination of workers and days worked under the scheme.

Say for example, if 100,000 people work for 10 days, or 50,000 people work for 20 days, then: lakh person-days per 100,000*10 equals 10 lakhs person-days. And conversely 50,000*20 equals 10 lakhs person-days.

Sometimes, fewer workers, often work for many days or many workers work for fewer days. Thus, economists use person-days instead of counting only people.

In Tiruvannamalai the pattern of MGNREGA demand reveals a strikingly seasonal and distress driven rural labor cycle. Person-days generated surged to nearly 19.8 lakhs during May, before falling sharply toward November as agricultural activity resumed. The peak compared to it low variation is close to 5:1, creating what can be described as a steep “distress hill” in rural employment demand.

Such a dramatic fluctuation suggests that a large share of rural households rely on MGNREGA not as supplementary employment, but as an emergency income stabilizer during periods of agricultural inactivity and cash flow stress. The intensity of the spike indicates the absence of diversified rural income sources, exposing the structural vulnerability of the local informal economy.

Tiruvannamalai District: FY monthly 2024-2025, from MGNREGA person-days shows sharp seasonal distress, peaking near 19.8 lakh person-days during May before collapsing toward November.

In contrast, the Madurai district in Tamil Nadu State presents a far more stable rural employment profile under MGNREGA. Peak demand was comparatively lower, reaching around 11.4 lakh person-days, while the decline across the year was considerably less severe than in Tiruvannamalai. The peak to low ratio was closer to 3:1, indicating significantly lower seasonal volatility in rural wage dependence.

Madurai District: FY monthly 2024-2025 displays a smoother MGNREGA employment curve with lower seasonal volatility, indicating stronger economic continuity and more diversified income generation.

Rather than exhibiting a sharp distress hill, Madurai’s smoother employment curve suggests a more diversified local economy. This because households may have greater access to non-farm income sources including urban linkages or more stable agricultural activity. The reduced fluctuation implies that MGNREGA functions more as a supplementary employment buffer than as a critical survival mechanism in Madurai compared to Tiruvannamalai.

Seemingly it is evident that consumption oriented businesses may struggle to scale in districts such as Tiruvannamalai, where disposable income growth and household surplus remain weak.

Industrialisation changes this dynamic because stable wage growth improves consumption depth and household savings. Without stable income growth, retail expansion and capital formation remain structurally weak.

The distress hill therefore represents far more than a simple employment fluctuation. The steep seasonal dependence on MGNREGA highlights how large sections of the rural economy remain vulnerable to agricultural cycles, with insufficient diversification, weak consumption resilience, and limited avenues for sustained wealth creation.

Notes:

Chart Sources: Ministry of Rural Development, Government of India, MGNREGA Dashboard (District level monthly person-days generated data).

Distress hills refers to my analysis of seasonal MGNREGA employment patterns to measure rural income instability and economic vulnerability. When plotted month-by-month, districts experiencing severe seasonal stress tend to exhibit a steep hill shape, characterized by sharp spikes in person-days generated during agricultural lean periods, followed by rapid declines once farm employment resumes. The steeper the hill, the greater the dependence of rural households on emergency wage employment for income stabilization.

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India Insider: How a Film Star is Reshaping Politics in Tamil Nadu

May 7, 2026

by Ben Ezra with No Comment Behavioral Sentiment Featured Highlights Financial Institutions India Social Media World

Vijay: A Stunning Victory by an Actor Turned Politician in India

When the Tamil Nadu state election results were announced this Monday, many people were stunned that a party with barely two years of political existence had managed to unseat parties that had dominated the state for more than 75 and 50 years respectively.

TVK (Tamizhaga Vetri Kazhagam), founded by actor turned politician Vijay, used his charismatic presence in Tamil cinema along with the power of social media to attract Gen Z voters and women.

This came despite the incumbent DMK (Dravida Munnetra Kazhagam) government under Chief Minister M.K. Stalin being widely credited for stable governance and helping Tamil Nadu remain one of India’s fastest growing state economies, with a GSDP( Gross State Domestic Product) growth rate of 11.9%.

Voting Results in Tamil Nadu and TVK Topping the Results

The two major Dravidian parties – DMK and AIADMK (All India Anna Dravida Munnetra Kalagam) were originally built on the foundations of social justice, welfare, and development. For decades, they shaped Tamil Nadu’s political identity and succeeded in winning the trust of the people.

However, despite the DMK government’s governance record, allegations of corruption, nepotism, and cash for votes politics continued to surround both DMK and ADMK. These criticisms have become deeply embedded in public perception over the years.

Today’s Gen Z voters appear to want change. Many were looking for a fresh political face capable of reshaping Tamil Nadu’s political landscape.

Vijay’s party reportedly secured around 1.67 crore votes, or approximately 34.3% of the total vote share, one of the strongest performances ever recorded by a newly formed political party contesting its first major election.

India’s political landscape has also been evolving rapidly in recent years. Prime Minister Narendra Modi and the BJP have successfully consolidated much of North India politically and are now working aggressively to expand their influence in southern states such as Telangana, Karnataka, and Tamil Nadu.

For Modi, strong regional opposition leaders such as M.K. Stalin in Tamil Nadu and Mamata Banerjee in West Bengal have remained major political challenges. Any significant political shifts in states like Tamil Nadu and West Bengal could reshape India’s national political dynamics in the years ahead.

While corruption, nepotism, and vote buying are important issues to consider, it is also necessary to distinguish between political allegations and governance outcomes.

In many ways, the DMK government performed better during the last five years than several previous ADMK and DMK administrations. Social indicators are impressive while Tamil Nadu State has attracted billions of USD investment for iPhone and automobile manufacturing.

During the election results, I was driving through Tiruvannamalai in northern Tamil Nadu and noticed that the streets were unusually silent. There were hardly any people celebrating openly.

If another traditional Dravidian party had won, the roads would likely have been filled with supporters distributing sweets and celebrating publicly.

For the first time, it felt as though a major electoral victory had been shaped more by social media influence and public perception than by traditional ground level welfare based political desires.

On my way back home on Monday, I saw an elderly man sitting at a bus stop equipped with fans that helped ease the intense summer heat.

That moment made me wonder: in the next five years, will political change alone truly improve the lives of ordinary people?

Or will charisma and digital influence matter more than governance, infrastructure, and social-welfare in the long run?

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India Insider: Water Crisis Has Turned From Severe to Critical

April 30, 2026

by Ben Ezra with No Comment Assets Commodities Featured Highlights Financial Institutions India Investing Technology World

India Needs Sustainable Water Security With Improved Infrastructure

India’s population has been expanding at a rapid pace and stands at 1.4 billion. Due to the urbanization process, industrialization in cities like Chennai, Mumbai and Delhi must continue to emphasize improving public infrastructures in order to maintain vital growth.

The growing population and urbanization adds noteworthy stress to the nation’s water bodies. With more people living in increasingly congested areas and pumping large amounts of water via borewells, groundwater levels are rapidly diminishing.

For instance, India consumes roughly 761 billion cubic meters of water per year, making it the largest water consumer in the world, ahead of China and the United States. 85% of rural India is dependent on ground water for agriculture and consumption, this because lake and pond water are not accessible. Rural India suffers from a lack of maintenance and sewage water that often contaminates these important sources.

Tap Water via Total Dissolved Solids Comparison in Various Cities Worldwide

Only a few years ago, water facilities provided by municipalities and urban systems were relatively accessible in India. Low and middle income households relied on pipelines, wells and tap water for their daily usage. However, with sharp rises in population, government capital expenditures on water pipelines and sanitation has not kept pace and often fails to meet needs.

For example, rainfall in Chennai City always ends up staying on roads and platforms in the last few years, this despite the city’s infrastructure which has expanded multifold. In many parts of Chennai, water contamination has become severe with high levels of iron, hardness, turbidity and nitrate levels visible. The government has been inefficient when addressing the contamination. As I witnessed in 2019, many parts of Chennai cannot use ground water due to inadequate rainfall, storage and lack of proper municipal supplies.

And due to excessive extraction of ground water and an inability to channel rain water into the ground, many parts of Tamil Nadu now report total dissolved solids (TDS) ranging from 500 to 1000 parts per million, reaching extreme levels of 3000–5000 ppm in some areas. The World Health Organization recommends much lower levels for safe and palatable drinking water.

Water treatment for households using reverse osmosis plants, which were not normal a few years back have become essential for people seeking safe drinking water. Despite being a coastal region , cities like Chennai cannot rely solely on seawater desalination to meet their drinking water needs. While desalination plants contribute to supply, they account for only a fraction of total demand.

Desalination is an energy intensive and expensive process, making it difficult to scale for universal, affordable access. More importantly, producing water is only one part of the solution and delivering it efficiently remains a major challenge.

India endures 3 to 4 crore (30–40 million) waterborne disease cases every year, mostly from contaminated drinking water. As borewells go deeper, they draw water containing high concentrations of fluoride, arsenic, nitrates, and heavy metals. This creates significant health risks, especially for low income households that cannot afford advanced purification systems. The depletion crisis and contamination crisis are increasingly converging.

Due to rapid urbanization and high population with inefficient audits, many water bodies such as lakes and ponds have been encroached upon by the real estate sector or contaminated by waste disposal by surrounding settlements. This is quite visible in Chennai.

Experts claim that many water officials do not have a clear understanding of how pipeline networks are laid out across cities. As Frontline magazine columnist Vedaant Lakhera wrote in April 2026, India’s water crisis stems less from hydrological scarcity and more from a failure of governance.

The absence of water sensitive designs have allowed cities to expand unchecked, almost freely, contaminating local water sources such as lakes and ponds. This has led to a significant depletion of groundwater availability, which were supposed to act as reserve water reserves.

Addressing this crisis requires a multi-dimensional approach. Rainwater harvesting must be scaled to improve groundwater recharge and long-term availability, while modern purification systems remain essential to ensure safe consumption in the short term. At the same time, systemic reforms such as regular pipeline audits, mandatory replacement of ageing infrastructure, and better urban water management are critical to prevent contamination at its source.

Without such integrated efforts, cities will continue to face a paradox of water scarcity amid abundance. Sustainable water security in India does not depend only on how much water is available, but on how effectively it is managed, protected and delivered.

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India Insider: Rising Hospitalization Costs a Growing Concern

April 21, 2026

by Ben Ezra with No Comment Ben Ezra Exclusive Content Featured Highlights India Regulations Technology & Science World

Indian Households Face Rising Expenditures for Hospitalization and Critical Care

Many households in India face unexpected hospital expenses that have become almost routine in today’s environment. Rapid urbanization, unclean drinking water, poor air quality due to carbon emissions and industrialization have hit low and middle income homes harder than upper income families. These households are increasingly exposed to diseases that require critical treatment, but the government institutions are ill-equipped to handle the growing patient loads. As a result, many Indians are forced to seek treatment in private hospitals, where costs are significantly higher.

Consider that a middle income household in Madurai earns roughly between 15,000 to 20,000 Rupees per month per person. This per the Periodic Labor Force Survey 2023-2024 Annual Report. So if two people are working in a family, it means empirically, we can estimate the income between 35,000 to 40,000 per month. We need to compute the family’s expenditures – if one member is hospitalized for critical illness or gets hospitalized treatment in private and public hospital.

Even if the income range for this family is better than median estimates, their capacity to absorb medical shocks are limited due to high baseline consumption and minimal household savings.

In the case of hospitalization in a government facility, out of pocket expenditures such as medicines, diagnostics, transport, and wage loss can amount to 12,000 to 40,000, effectively deducting one to two months of household income.

In other words, families need to spend out of pocket by borrowing to finance these gaps for consumption and medical expenses.

However, if a family is forced to take treatment in a private hospital, they would be spending 100,000 to 500,000 Rupees in critical cases, their total spending as a higher percentage of net income and is close to 1,250% in extreme cases.

The Role of Savings and Informal Safety Nets

As observed during Covid-19 and other crises, Gold has often acted as a financial buffer for Indian households.

Families that save during stable periods are able to pledge or sell gold in times of distress, helping them to manage medical expenses without relying entirely on high cost borrowing.

In contrast households without many buffers, often turn to informal lenders or personal loans, where interest rates can range between 36 to 60% compounding the financial distress.

Looking at Government Data for Clues

The most authoritative survey on household expenditures on hospitalization comes from National Sample Survey Office’s (NSSO) “Health in India” (2017-2018), and it showed the costs for those hospitalized in private facilities were eight times costlier than government facilitys.

An average hospitalization (excluding child birth) cost 4,290 Rupees in a rural government hospital, and 4,837 in an urban government hospital. The same scenario in a private hospital cost 27,347 in rural India and 38,822 in urban India. Out of pocket expenditures – the amount families pay themselves, follows the same pattern with families having to pay out about 4,000 Rupees in government hospitals, versus 26,000 – 32,000 Rupees in private ones.

Hospitalization Expenditure by Hospital Type and Sector, NSSO 75th Round (2017-2018). Source: MoSPI, Ministry of Statistics.

These were already catastrophic figures for a typical household in 2017-2018. A single private hospital admission cost more than a month’s wages for most Indian families, and it is getting worse.

Seven Years of 12-14% Medical Inflation

Since 2018, the cost of being hospitalized in India has risen at a pace that outstrips almost every other category of spending: Millman’s 2025 medical inflation report pegged the rate at 12% in 2024, more than triple the general CPI inflation of 4.2%.

An urban private hospital admission that cost 38,822 Rupees in 2017-2018 now is in a 76,000 – 91,000 price range, this while real wages are stagnant and not growing. Recent RBI Household surveys conclude that Indians absorb higher debt in order to manage their household expenses.

Critical Illness Can Wipe Out a Household’s Future

Critical illness like heart attacks, a cancer diagnosis, renal failure, kidney transplants costs even more in India – and the problems grow unbearable for Indian families after they are forced to take on more debt. For example, a heart angioplasty with stent that costs 100,000 in 2018 now costs between 200,000 – 300,000 Rupees in private hospitals. A kidney transplant which costs 400,000 – 600,000 a decade ago now costs 1 million to 1.5 million Rupees. A full course of chemotherapy ranges from 250,000 for early stage diseases to 2.5 million Rupees for advanced cases requiring targeted biologics.

Cost ranges for major critical illness in India, 2024-2025, green bars show public hospital costs, orange bars show private hospital costs. Sources: ACKO India Health Report 2024, HCG Oncology, Hospital Quote Data from Apollo, CARE and others.

Where the Indian Household Stands

As per periodic labor force surveys, the median Indian worker earns 10,000 Rupees a month. The Economic Survey in 2024-2025 recorded average monthly earnings of 13,279 for self-employed workers, 20,702 for salaried workers, and 12,750 for casual laborers. Crucially, only the top 22% of the India’s labor force earns more than 15,000 Rupees per month.

Monthly household income distribution, rural vs urban India (2023-2024). Sources: Periodic Labor Force Surveys, Azim Premji University Income Distribution Study 2019-2024.

Statistically, the household we have taken for the reference is not a poor household by national standards. It is comfortably above the rural and urban median, sitting in the top fifth of the country, and this is what makes the rest of the story so troubling. If this household cannot afford a critical illness, almost no household outside the urban upper middle class can afford rising hospitalization costs.

The Insurance Gap

The government of India has expanded insurance schemes for low income households since 2018 via the Ayushman Bharat PM-JAY with 500,000 Rupees coverage. But the scheme which was set many years ago, does not match the current medical costs scenarios. Income eligibility is an another problem where a majority of people who earn in the middle, slip out of the government insurance schemes and have to take private insurance to cover their health risks. Health insurance penetration in India is low at 3.7% of GDP, well below global statistical standards of 7%.

Across much of India, a single critical illness can effectively destroy years of household income accumulation and trigger debt dependence. In the absence of stronger public healthcare delivery, and without deeper insurance penetration at affordable costs providing better claims services, and lacking robust risk sharing mechanisms – escalating medical costs could act as a drag on India’s economic growth trajectory by weakening household balance sheets.

Notes: 1 USD = 93.24 INR

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Progression Upwards for Indian Rupee and Catalysts

April 16, 2026

by Robert Petrucci with No Comment Assets Behavioral Sentiment Central Banks Commodities Equities Featured Highlights Forex India Investing Risk Management Speculators Uncategorized World

USD/INR Persistent Trajectory Remains in Force and Mid-Term Concerns

As of this writing the USD/INR is within the 93.2000 vicinity. The price of Gold is around $4,810.00 and Silver close to 79.50. Importantly, WTI Crude Oil is trading around $89.25. Global markets have turned in solid performances the past two weeks, this has been a two step progression for most investors.

Indian financial institutions began to digest their worries regarding the Iranian war late in March – perhaps acknowledging the risks and ramifications, while adjusting outlooks. Then on Tuesday the 7th of April the establishment of a ceasefire was announced. However, after hitting a low of around the 92.2200 realm on the 8th of April, the USD/INR is back within higher ratios.

USD/INR Six Month Price Chart as of 16th April 2026

Yes, the USD/INR had been traversing above the 95.0000 ratio late in March, so it can be said the Indian Rupee has gotten stronger. Yet, there will not be many willing participants who will join a parade with the belief this lower trend can be sustained. The bullish trajectory of the USD/INR is not going to vanish.

On the 24th of October 2025, the USD/INR was near 87.7500. At this time last year the currency pair was close to 85.5000. A persistent and long-term move higher has been the theme in the USD/INR. Weakness in the Indian Rupee has been part of India’s economic story rather consistently for a handful of years.

Narendra Modi has been in power since 2014, he is serving his third term as Prime Minister. His political party the BJP clearly has its chosen people within the Reserve Bank of India.

The government’s position of allowing the Indian Rupee to be weaker is not something they will want to state out loud as part of their mandate, but it is clearly not bothering them.

The pursuit of creating a stronger industrial and manufacturing base for India, including IT and software via good exchange rates for international clients is seen as a cornerstone to build demand. The quality of work and technology provided by the Indian workforce is good and this allows global clients to foster solid relationships with Indian companies.

However, the rise of the USD/INR to above the 95.0000 level in late March was a warning sign, that sometimes price velocity in Forex can become dangerous. And the Iranian war although enjoying a week and half of less noise, still could escalate into a problematic scenario for India that could cause additional concerns in Indian financial institutions who are trying to gauge their mid-term outlooks.

The USD/INR is an important part of this economic math and the prospect that higher energy costs, or in a worst case scenario – shortages incur hardship for Indian citizens and companies is an actual concern.

The current situation in the Hormuz Strait and availability of Crude Oil is significantly important for India. So is supply of LNG (liquefied natural gas) which Qatar, Oman and the UAE play a role. The supply of energy presents a glaring dark shadow for the prospects of the Indian economy should there be shortfalls.

The 93.5000 resistance level has been durable since early April in the USD/INR. Stability of the exchange rate is crucial for a wide range of business in India, including banking and financial institutions active in the Bombay stock market – particularly since a weaker India Rupee opens the door to Forex concerns for foreign investors who do not have the ability to hedge if they are exposed via the INR too much. Foreign investors are needed in the Nifty indices to help values.

The near-term is likely going to remain a difficult path for the USD/INR and its outlook. The positive sentiment which has prevailed the past couple of weeks has been welcome and certainly stable conditions are hoped for so equilibrium can be kept. However, if the Iranian situation manifests into open military conflict again, or if there is a disruption of supply of energy that cannot be easily solved by India – then the USD/INR could once again face price velocity upwards that is uncomfortable.

While China may be getting the headlines regarding potential ramifications of its Crude Oil supply being threatened, India is estimated to have consumption that is ranked as the 3rd biggest globally. India’s ability to get a supply of energy from a diversified stable of sources is a key for the nation moving forward.

The USD/INR will continue to move higher, the question is how fast? A slow steady rise in the currency pair – again, this will not be a spoken mandate by the Indian government – will continue. The fear of a rapid debasement is a concern. Financial institutions in India need steady emotions and are certainly hoping for the Iranian war to conclude with a sliver of optimism.

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India Insider: Education, GDP and Personalized Growth a Difficult Balancing Act

April 8, 2026

by Ben Ezra with No Comment Assets Ben Ezra Corporate Exclusive Content Featured Highlights Financial Institutions India World

Is India Still 'The Country of the Future'?

In 1991, when India’s foreign exchange reserves had dwindled to barely three weeks of import cover, the government pledged its gold to the Bank of England. It was a moment of humiliation and, paradoxically, of liberation as the crisis forced an opening that three decades of socialist planning had resisted. Fast forward into 2025: India is a $4.1 trillion USD economy, the world’s most populous nation, with a moon rover, a thriving startup ecosystem, and a digital payments infrastructure the developed world now studies with envy.

This article asks if India is still ‘the country of the future’ using the same growth determinants framework applied by Professor Manoel Bittencourt to Brazil, and argues that the answer lies not primarily in corruption (though it matters), not in policy failure (though that matters too), but in two structural features that resist easy reform: the vast informality of the Indian economy, and the depth of its inequality.

Does Growth Matter? The 70/g Rule Applied to India

Before diagnosing India’s problems, we must appreciate what it has already achieved. Using the 70/g rule which tells us how many years it takes for income per capita to double at a given growth rate – India’s average GDP growth of roughly 6.5% since 1991 implies a doubling of income every 11 years. That is extraordinary by historical standards.

But averages mask distributions. If growth accrues predominantly to the formal sector – the top 10% of earners who hold formal employment, own financial assets, and participate in the organized economy, then the 70/g rule tells a story of elite enrichment, not a broad based development. This is India’s core dilemma.

The Eight Growth Determinants: India in the Data

Bittencourt’s framework identifies eight standard growth determinants: savings, fertility, rule of law, government consumption, trade openness, education and health investment, inflation, and finance. Let us examine some of each through Indian data, with Brazil as our comparator.

Savings & Investment

India’s gross savings rate has historically been a strength hovering around 30–32% of GDP through the 2000s and 2010s. But the investment picture is more troubled. Fixed capital formation has declined since its peak around 2011–12, driven by a stressed banking sector, weak private investment appetite, and an infrastructure gap. Brazil shows a similar pattern of savings-investment divergence but India’s gap has widened more sharply in recent years.

Gross Domestic Savings and Fixed Capital Formation. India vs Brazil. 2000-2023

Education & Health Spending

Perhaps nowhere is India’s “policy-delivery gap” more apparent than in social spending. India spends approximately 4.5% of GDP on education and just over 3% on health, and both figures are well below what comparable middle income countries invest. Brazil, despite its own fiscal struggles, consistently outspends India on health as a share of GDP. The consequences are visible in learning outcomes: the Annual Status of Education Report (ASER) consistently finds that a significant share of Indian schoolchildren cannot read a simple paragraph or perform basic arithmetic.

This matters enormously for growth. An economy hoping to absorb millions of workers into formal, productive employment each year needs those workers to arrive with usable skills. When they do not, informal low productivity employment becomes the default and cycles of informality perpetuate.

Government Spending on Human Capital. India vs Brazil. 2000-2023

The Thesis: Informality as Structural Trap

Bittencourt identified corruption as the growth killer in Brazil. For India, the more precise diagnosis is informality and the inequality it both reflects and reinforces.

Consider the arithmetic: approximately 80% of India’s workforce is informally employed who are working without contracts, without social protection, without access to formal credit, and largely invisible to the tax system. This informal mass produces perhaps 50% of GDP. The productivity gap between the formal and informal sectors is staggering, and it does not shrink naturally with overall growth.

Share of Workforce in Formal Employment. India vs Brazil. 2000-2023

Brazil is itself a country with significant informality, but its formal sector share has grown meaningfully since the early 2000s, driven by the expansion of the Bolsa Família program, minimum wage policies, and labor formalization drives. India, by contrast, saw its already small formal sector shrink as a share of total employment after demonetization in 2016 and the disruptions of COVID-19. The gap between the two countries on this metric is instructive.

Inequality: When Growth Passes People By

India’s Gini coefficient – a standard measure of income inequality – has risen over the reform era even as aggregate poverty has fallen. It shows the signature of unequal growth. The bottom quartile has seen real income gains, but the top decile has captured a disproportionate share of the growth dividend. Recent estimates suggest that India’s top 1% now hold a larger share of national income than at any point since Independence.

Income Distribution India vs. Brazil.

Compare this to Brazil, which, despite its own severe inequality, pursued deliberate redistributive policies through the 2000s with Bolsa Família reaching 14 million families at its peak and a concerted minimum wage policy. India’s equivalents – the MNREGA rural employment guarantee, PM-Kisan farm payments are larger in coverage but smaller in benefit size at this stage, and reach informal workers imperfectly.

The Structural Complications

A purely data driven analysis, as Bittencourt himself acknowledged for Brazil, understates the depth of the challenge. India’s informality is not simply a policy failure, it is rooted in structures that predate modern economics.

The caste system, legally prohibited but still socially persistent, has historically sorted populations into occupational roles and those at the bottom of the hierarchy were systematically excluded from property ownership, formal education, and credit. Colonial de-industrialization destroyed the artisan economy that might otherwise have been a pathway to formal employment. The fragmentation of the federal system with 28 states running effectively different labor markets, land acquisition regimes, and social programs means that a policy that works in Tamil Nadu may fail in Uttar Pradesh.

These are not excuses. They are explanatory variables that any honest growth analysis must include.

What Does Growth Theory Tell Us to Do?

The prescription is not mysterious. If informality is the barrier, then the priority is to make formal employment more accessible through labor law simplification, portable social insurance that follows the worker rather than the employer, and a genuine skill based learning infrastructure that reaches the rural poor.

If inequality is the barrier, then the priority is redistribution that enhances human capital at the bottom – not cash transfers alone, but the quality of the school your child attends and the clinic your mother can access. India has the architecture of such systems; it does not yet have substantive results.

The demonstrators on India’s streets – whether farmers in 2020-21, or youth protesting paper leaks, or contract workers demanding permanence – know this intuitively. They are not asking for charity. They are asking to be absorbed into the formal economy that has prospered around them.

Conclusion: Is India Still the ‘Country of the Future’?

The answer to the question is Yes, and it is both an achievement and an indictment. India has built a moon program and yet cannot reliably staff a primary school. It has produced the world’s most used digital payments system and left 200 million people without bank accounts until recently. It exports software engineers to Silicon Valley, while its domestic labor market cannot absorb graduates at scale.

Brazil, our comparison, has struggled with its own version of this duality longer. But Brazil’s welfare state, however fiscally stressed has created a floor. India’s floor is thinner, and the drop beneath it steeper.

Informality is not the destiny for any developing economy. South Korea was deeply informal in the 1960s, China was an overwhelmingly rural agrarian nation in 1980. Both made transitions through deliberate, state led investment in human capital and formal employment creation. The path is known. The question for India in 2026 is whether the political will exists to progress via focused programs, or whether fifty years from now someone else will write another article illuminating the same structural problems.

Article Notes:

Data sources include the World Bank World Development Indicators, ILO Labour Statistics, Transparency International Corruption Perceptions Index, ASER Centre (India), UNESCO Institute for Statistics, and IMF World Economic Outlook. Growth determinant categories follow Barro (2008) as synthesized by Bittencourt.

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India Insider: Why the Gulf Remains a Vital Economic Lifeboat

March 25, 2026

by Ben Ezra with One Comment Assets Ben Ezra Exclusive Content Featured Highlights India Investing Uncategorized World

Indian Expat Labour and Recalibration Realities

The skyline of Dubai, once a symbol of untouchable prosperity, now sits under a shadow of regional recalibration. As Reuters recently noted, Dubai has successfully transitioned to a non-oil economy, with oil accounting for less than 2% of its GDP. It is now a powerhouse of trade, high-end real estate, and financial services.

However, its “backyard” – the Strait of Hormuz – remains a strategic bottleneck. With 20% of global seaborne crude passing through this narrow vein, the recent tensions in March 2026 have forced a shift in perception: the Gulf is no longer an insulated sanctuary, including Dubai where millions of Indians work and earn for their families in India.

Indian Diaspora Gulf Representation

The scale of this “labour export” is enormous. As of early 2026, approximately 9.5 to 10 million Indians live and work across the GCC (Gulf Cooperation Council) countries. To put that in perspective, that is nearly the entire population of a country like the UAE, made up solely of Indian expats.

A Remittance Driven Economy

As per Government data sources, India remains the world’s top remittance recipient, with total inflows hitting a record $135.4 billion in the last fiscal year. And despite a rise in high-skilled migration to the US and UK, the GCC remains a juggernaut, contributing roughly 38% of India’s total remittances.

For states like Tamil Nadu, Kerala, and Maharashtra, which receive nearly 50% of these total inflows, it is a macroeconomic stabilizer that funds the current account deficit and keeps the Rupee from a freefall.

India’s Labour Market Paradox

But here is the real question, if people return to India due to the crisis in the Middle East, are there any “good quality” jobs waiting for them in India? The honest answer is no.

Youth unemployment remains elevated, particularly among graduates. Engineers in mechanical and construction fields face limited opportunities. Outside IT, and to some extent automobiles, there are not enough stable, high-paying jobs.

So people adjust. You will find postgraduates working in delivery jobs and informal sectors. I have personally spoken to Amazon delivery workers who told me they hold M.A degrees, or that they had worked in Dubai or Singapore before Covid and are now trying to leave again. This is becoming norm nowadays.

Indian National Wages and Savings Compared to Expat GCC Averages

In many towns in India, migration itself has become an economic model. People move to Singapore, Malaysia, or the Gulf, and the money they send back drives real estate, consumption, and local business activity. In many such regions, the labour market feels tight, not because jobs are available, but because the workforce has already left.

The wage gap explains everything. A nurse or lab technician in India may earn ₹15,000–₹20,000 per month. The same person can earn close to ₹80,000 in the Gulf. A private school teacher in Villupuram city in Tamil Nadu state earns around ₹8,000.

While nominal wages are 2–2.5x higher in GCC, the true driver of migration is savings arbitrage , which can be 5–6x higher.

This reflects structural differences in labour productivity and capital intensity.

India has a large pool of educated labour. But instead of becoming an advantage, it has turned into a wage suppressing force. There is always someone willing to work for less. As a result, wages remain low and bargaining power stays weak.

Percent of India’s Remittances From The GCC

At the same time, we are told growth is strong. Yes, the labour force participation is rising, but inequality is also increasing. A large share of employment remains informal and unstable. Inflation continues to erode purchasing power, and disposable incomes remain under pressure.

Right now, for many Indians, prosperous conditions are easier to find outside the country. Yes, the Gulf has risks. However, geopolitical tensions will come and go, and these are short-term disruptions.

Structurally, GCC economies will stabilize and grow again, and when they do, the flow of Indian labour will continue to pursue these opportunities. Because until India creates enough high-quality jobs at scale, migration will not slow down.