India Economy Thread

[NeptunesVortex]

India draws $136.38 billion in forex inflows, bolstering support for rupee

https://www.reuters.com/world/india/india-draws-13638-billion-forex-inflows-boosting-reserves-2026-09-02/

 

[hydrabadi_arab]

India has over 700 bn in foreign reserves and low domestic inflation. They could easily spend some dollars to support the currency if they wanted to. What they are doing is textbook currency manipulation to keep exports competitive in a tough global trade environment.

The cost of doing that is falling down global GDP rankings despite having a high GDP growth rate, but what really matters is whether nominal per capita income in the domestic currency is outpacing domestic inflation or not and India has kept inflation under control by fixing the price of gasoline and diesel.

India FX currency was on terminal decline defending rupee and had to introduce diaspora deposits offering 7.5% interest on USD. Temporary relief to falling rupee. They can't get out of this by spending FX as foreign investors withdraw at record pace, $45bn in 18 months.

Now local Indians are asked to not buy gold or take foreign trips. Meanwhile diaspora is given almost 8% interest on their USD deposits. Locals are barely given 4% in INR which is falling. Modi spend must of the time on foreign trips taking fake medals.

Giving even more reasons to take that trip abroad and never come back and buy gold.

 

[Owaiz]

India FX currency was on terminal decline defending rupee and had to introduce diaspora deposits offering 7.5% interest. Temporary relief to falling rupee. They can't get out of this by spending FX as foreign investors withdraw at record pace.

Most exporting nations prefer a weak currency. This has been the standard playbook of Japan, China and South Korea , all of which have undervalued currencies and are regularly accused of being currency manipulators by the US. Now India has also joined them and I guess it worked for them since they were able to maintain high GDP and export growth despite 50% tariffs by the US.

The one downside of a weak currency is importing inflation, but India controls the domestic price of gasoline, diesel and other essential commodities. In USD terms, India has actually experienced very high deflation since the price of fuel measured in USD has actually declined significantly at a time when the competitors have seen huge price increases, thus increasing export competitiveness. If Central bank reserves have risen significantly while the currency has depreciated, that is a tell-tale sign that it is deliberate trade policy and in, India's case, the low inflation rate despite the currency depreciation makes it clear that is what is happening.

 

[hydrabadi_arab]

Most exporting nations prefer a weak currency. This has been the standard playbook of Japan, China and South Korea , all of which have undervalued currencies and are regularly accused of being currency manipulators by the US. Now India has also joined them and I guess it worked for them since they were able to maintain high GDP and export growth despite 50% tariffs by the US.

The one downside of a weak currency is importing inflation, but India controls the domestic price of gasoline, diesel and other essential commodities. In USD terms, India has actually experienced very high deflation since the price of fuel measured in USD has actually declined significantly at a time when the competitors have seen huge price increases, thus increasing export competitiveness. If Central bank reserves have risen significantly while the currency has depreciated, that is a tell-tale sign that it is deliberate trade policy and in, India's case, the low inflation rate despite the currency depreciation makes it clear that is what is happening.

Tell me if India prefer weak currency then why offer this to diaspora. In desperate attempt to attract dollars to stabilise currency for short term. You are not making any sense.

 

[Owaiz]

Tell me if India prefer weak currency then why offer this to diaspora. In desperate attempt to attract dollars to stabilise currency for short term. You are not making any sense.

View attachment 213704

All countries borrow money for their funding needs. Deposits can be cheap compared to market borrowing and offer diversification. There can be many reasons for offering these as part of the government funding strategy.

If India wanted a stronger currency, why would the central bank be accumulating dollars and selling INR at a time when foreign portfolio investors are also selling rupees. Generally, when a central bank wants to strengthen its own currency, it sells foreign currency and reduces its reserves, not the other way round and India's central bank reserves are at record levels and far more than what they need as a buffer.

In any case, a weaker currency helps exports . Every country prefers it as long as inflation and inflation expectations stay under control. Even Trump lets that out sometime and hates other countries weakening their currencies, even though the US , as a reserve currency provider, has officially had a "strong dollar " stance. That is basic business sense of what provides competitive advantage.

 

[GatlingGunZ]

Modi is a genius. He introduced gold certificates, asked citizens to buy these papers and not real gold. The scheme ended but enough people brought it and with current gold price India govt will loss $30bn.

His claim to fame was genocide of muslims in Gujarat and general anti-minority which Indian hindus love to this day otherwise he would have been voted out long ago.

You are not as smart as you pretend to be.

30B$ loss ? No, it is the toal amount of payout. Govt prevented 15-20B dollar outflow, and it will payback in rupees. So loss maybe around ~15B$ ( Still in Rupee).
It will pinch a little, but nothing to mourn about. This Rupee payout will only go back into our economic engine.

 

[Indos]

The Modi government is particularly adept at playing with propaganda, such as frantically touting the 7.8% growth rate, and selectively presenting various distorted data.

Today ,Modi is again appealing for people not to buy gold. At the same time, his human loudspeakers are reveling and blaring out 7.8%. Any human with intelligence can sense the strangeness in it. In reality, for ordinary citizens, in order to hedge against inflation and rupee depreciation, gold remains the best choice—after all, ordinary citizens in India cannot get U.S. dollar banknotes either. Now is the moment to compare the power of devotion. Gold has been the faith of Indians for thousands of years; Modi is the faith of a portion of Indians for these past few decades. I bet on gold

7.8 % growth rate is easily understandable if you add India federal gov spending/budget deficit (4.4 % of GDP in 2025- I take real figure last year) + combined state deficit (3.2% of GDP) total then 7.6 % of GDP last year

The growth is derived from gov spending/budget deficit (federal and states)

 

[Indos]

7.8 % growth rate is easily understandable if you add India federal gov spending/budget deficit (4.4 % of GDP in 2025- I take real figure last year) + combined state deficit (3.2% of GDP) total then 7.6 % of GDP last year

The growth is derived from gov spending/budget deficit (federal and states)

If the spending goes to infrastructure and Adani for example get large chunk of it, then you know that the growth is making Adani very rich and gov + people in more debt

This is also the reason India stock market is in long decline even when its growth scores very high, people that invest for long term in India may feel insecure for this loan taking by gov but not having much leverage to the over all growth (take example of Indonesia gov budget deficit at 2.8% last year can make the economy grow at 5.1 percent or Vietnam gov deficit of 3.3 % of GDP that can result to 7.5 % growth rate)

 

[Owaiz]

7.8 % growth rate is easily understandable if you add India federal gov spending/budget deficit (4.4 % of GDP in 2025- I take real figure last year) + combined state deficit (3.2% of GDP) total then 7.6 % of GDP last year

The growth is derived from gov spending/budget deficit (federal and states)

That statement demonstrates complete ignorance of the distinction between stock and flow variables.

Did India have a balanced budget in the prior year and did the deficit suddenly increase by 7.6 percentage points of GDP ? If the deficit was the same % of GDP as the prior year, it would barely maintain the GDP level and contribute nothing to growth.

 

[GatlingGunZ]

7.8 % growth rate is easily understandable if you add India federal gov spending/budget deficit (4.4 % of GDP in 2025- I take real figure last year) + combined state deficit (3.2% of GDP) total then 7.6 % of GDP last year

The growth is derived from gov spending/budget deficit (federal and states)

Looks like you never read about concept of double counting. Massive chunk of provincial budget comes from center itself. Indian GDP calculation method have forumula to eliminate that.

 

[Indos]

Looks like you never read about concept for elimination of double counting. Massive chunk of provincial budget comes from center itself. Indian GDP calculation method have forumula to eliminate that.

Nope. Different. You can look on IMF data on India. China also do the same actually, state and provinces take loan, but on the news journalist just take the gov budget deficit without looking to overall deficit done by gov + provinces/states

 

[Indos]

The World Bank estimates India's consolidated general-government deficit at about 7.4% of GDP in FY2025–26, down from 7.7% in FY2024–25

 

[Thinking]

If the spending goes to infrastructure and Adani for example get large chunk of it, then you know that the growth is making Adani very rich and gov + people in more debt

This is also the reason India stock market is in long decline even when its growth scores very high, people that invest for long term in India may feel insecure for this loan taking by gov but not having much leverage to the over all growth (take example of Indonesia gov budget deficit at 2.8% last year can make the economy grow at 5.1 percent or Vietnam gov deficit of 3.3 % of GDP that can result to 7.5 % growth rate)

Decline has come simply due to higher gains from other markets (thanks to AI) and overpricing in Indian market from 2021-24.

No one should use words like "Adani" if they are trying to have serious conversation.

 

[Owaiz]

The World Bank estimates India's consolidated general-government deficit at about 7.4% of GDP in FY2025–26, down from 7.7% in FY2024–25

So that should have REDUCED GDP growth by 0.3% compared to the previous year, ceteris paribus.

 

[GatlingGunZ]

Nope. Different. You can look on IMF data on India. China also do the same actually, state and provinces take loan, but on the news journalist just take the gov budget deficit without looking to overall deficit done by gov + provinces/states

Nope it isn't.
Every time India's debt to GDP is mentioned as 80%(which includes center+state both) , not 55% of center.
And even for Chinese economic reports any post 2020 discussion won't forget to mention LGFV (Local Govt .... ).