Weekend reading links

1. German bread facts of the week.

Germany has what may be the most diverse bread culture in the world. The official bread registry overseen by Germany’s national bread institute (yes, really) lists more than 3,000 types. Specialities include pumpernickel, Dreikornbrot (three-grain bread) and Kürbiskernbrot (pumpkin-seed bread). There are specific regional iterations of rolls: Brötchen in the north, Semmeln in the south. In German the word “bread” is partially interchangeable with “meal”—a working lunch is Pausenbrot (break-time bread), dinner is Abendbrot (evening bread). Bavarians, who always do things differently, add Brotzeit (bread time).

2. The number of Indians studying abroad has tripled in five years to 1.8 million in 2025.

3. Visakhapatnam's data centre ambitions are staggering in scale.

Andhra Pradesh has promised Google, Meta, Reliance, Tata Consultancy Services, and half a dozen others a combined 5 GW of data-centre capacity in Vizag alone. That is more than three times everything India has built in 30 years, in a city that had near-zero data-centre infrastructure six months ago... (the government) has committed to 6 GW across Andhra Pradesh in five years, a cable network twice the size of Mumbai’s, and three undersea cable-landing stations—essentially building a digital future on the eastern coast... The state’s own electricity planning documents project Vizag’s peak district demand at 2.2 GW by 2029. Google alone has applied for 2.1 GW from the local distribution company... 

Google is building a 1 GW campus across three sites: Tarluvada, Adavivaram, and the Rambilli-Atchutapuram cluster. Meta and information-and-communications-technology company Sify are reportedly building a 500 MW facility at Paradesipalem, a village 25km from the city. Reliance and alternative asset manager Brookfield’s joint venture has signed a $11 billion MoU for another GW. TCS, Adaniconnex and real-estate developer Anant Raj round out the cluster. Even if the announced 5 GW materialises, Vizag would rank among the largest data-centre clusters in the world. Northern Virginia, the global leader, sits at 6.6 GW. Beijing, London, Tokyo, Singapore—all around 2 GW each. Mumbai, India’s current data-centre capital, has around 600 MW of operational capacity.

The emerging constraint to these ambitions is power supply.

Deloitte has warned that data centres in Andhra Pradesh alone could add 2–3 GW of peak electricity demand by 2030—up to 20% of the state’s entire current peak load—risking grid instability if transmission infrastructure doesn’t keep up... The Andhra government’s Data Centre Policy 4.0 (the “4.0” a chosen suffix for most of the current TDP government’s industrial policies) offers electricity duty waivers for five years and a Re 1 per unit discount on industrial electricity tariffs for 15 years... state has committed over Rs 22,000 crore in incentives to Google alone... Vizag’s data-centre sites are on the eastern coast, far from the state’s renewable-energy generation zones in the south and west. “You would need entirely new, dedicated high-voltage transmission infrastructure. Not an upgrade to existing lines, but new corridors built from scratch,” said a former APIIC official. “In India, this typically takes years to tender and build. And I don’t see them speeding up the process for these mega projects.”

And the solution is to outsource electricity generation or sourcing to the data centre developers themselves. 

In a first for the state, it has granted a private entity, Google, a distribution company licence, allowing it to bypass the standard grid entirely and procure power directly from generators. Reliance is going further still, building its own 6 GW solar project to supply its data-centre operations... when Google contracts directly with generators at premium rates, those generators have less power to sell to the state discom at regulated prices. The discom, which still has the same demand to meet, has to make up the shortfall by either paying more on the open market (which it then recovers through higher tariffs) or simply cutting supply to consumers who have no alternative. If enough large consumers exit the grid, the discom’s revenue base shrinks while its fixed costs stay the same. Eventually, the grid gets more expensive for everyone who remains on it... The data centres planned in Vizag will operate on a hybrid model—hyperscalers will anchor the demand, local operators will build and run the physical infrastructure. Google is the end user. Adaniconnex builds the campus and co-invests in the power infrastructure. Airtel builds the cable-landing station and fibre backhaul.

4. The rise and rise of Chinese cars.

The market share of foreign firms in China has almost halved in five years, to around 30% in 2025. Moreover, in 2023 China passed Japan to become the world’s largest exporter of cars. In 2025 over 8m of its vehicles went abroad, nearly a third more than the year before. In Europe over the past five years, Chinese brands have gone from almost nowhere to nearly 9% of all sales, estimates Schmidt Automotive Research, a consultancy. Incumbents are also under siege in markets from Mexico and Brazil to Indonesia and Malaysia.

5. China promulgates its version of US CFIUS.

In recent weeks the State Council, or China’s cabinet, has issued two menacing decrees. One threatens trade curbs in response to actions that undermine Chinese supply chains (potentially including shifting orders to foreign factories). The other vows countermeasures against firms that apply foreign sanctions against Chinese companies, which in effect criminalises compliance with American law.

6. If the US sanctions individuals, they will be denied access to the services offered by among others, Amazon, Alphabet, Meta, Microsoft, Visa, Mastercard, Paypal, Apple, Slack, WhatsApp, Zoom, YouTube, Uber, Instagram, UPS, Fedex, Booking.com, and Expedia. FT writes about the scenario of US extending sanctions to services. 

Weaponising services would mark a clear escalation from trade disputes over goods and have huge repercussions for both sides. For decades, Europe’s economic relationship with the US has been defined by deep integration: goods flowing westward across the Atlantic, services coming back the other way. The EU’s surplus for goods in 2023 was €156.6bn; the EU’s deficit for services that same year was €108.6bn. As geopolitical tensions rise, that interdependence is seen by many EU capitals as a weakness that needs to be fortified as fast as possible.

7. A New York Fed study finds that around 90% of the Trump tariffs have been borne by US consumers and companies. 

Further, the complexity of the tariff regimes and its multitude of carve-outs means that the effective rate is lower than the headline tariff.

8. Global economic imbalances are back. Two graphics capture them starkly. The first is how China and the US represent the two sides of the problem. 

Global public sector indebtedness is at historic highs. 

This is a good description of the way out, though it is unlikely to happen on its own. 

As a first-best response, the Centre for Economic Policy Research’s fourth Paris Report recommends fiscal consolidation in the US, boosting household consumption in China and an increase in productive investment — modelled on former Italian premier Mario Draghi’s report — in Europe. These measures would encourage more balanced patterns of global saving and investment.

9. A ten-fold increase in export restrictions since the pandemic.

According to Global Trade Alert, the number of distortive export restrictions and bans has increased dramatically since the pandemic. Before Covid, an average of 22 export restrictions were being introduced a year. Since 2020, that average has shot up to 228.

The myth of ring-fenced "private" markets

One of the biggest enduring myths in the financial markets is the distinction between public and private markets, and the article of faith that private markets should be lightly regulated. The time may have come to question this article of faith. 

The issue has become a topic of interest in light of the turbulence being faced in the private credit markets, and also the steps in the US and elsewhere to allow public funds to invest in alternative assets. It is also important, given the growing share of private capital markets, amplified as it is by the secular decline in interest rates (in turn a consequence of several factors, including ageing populations, financial market integration, and globalisation). 

On the former (private credit markets), the FSB has just published a report on private credit, pointing to several vulnerabilities arising from complex interlinkages with banks, borrower credit quality concerns, and valuation opacity. 

This activity has grown rapidly, to an estimated $1.5-2.0 trillion in assets at end-2024 and is heavily concentrated in a few jurisdictions… Banks and private credit funds are connected through financing arrangements and strategic partnerships. Across FSB members, the available data captures direct exposures of around $220 billion of drawn and undrawn bank credit lines to private credit funds, while some commercial estimates range from $270-$500 billion… there are also potential vulnerabilities from a range of other indirect exposures including through banks providing revolving credit facilities to companies that are simultaneously borrowing from private credit funds and the growing use of synthetic risk transfers.

The former Bank of England Governor, Andrew Bailey, writes,

Private credit has significant interlinkages with banks, asset managers, insurers and private equity. These multiple layers of leverage across the ecosystem deserve deeper scrutiny. While direct bank exposure to private credit funds may be limited, indirect connections are extensive. Banks are establishing partnerships with asset managers that have a credit focus and often provide revolving credit facilities to companies simultaneously borrowing from private credit funds. Insurers actively invest in private credit markets while also establishing indirect connections to private credit through participation in reinsurance arrangements. Private equity managers increasingly own the insurance companies. These interlinkages can be difficult to detect, assess and manage — and so can the related risks.

On the latter (public financial institutions’ exposure to private markets), in August 2025, President Trump signed an executive order directing regulatory agencies to reexamine existing regulations and open the $9 trillion US retirement market to cryptocurrency, private equity, and other assets like property. Following this, on March 30, 2026, the US Department of Labour issued orders allowing 401(k) plans easier access to alternative assets. 

So why are private capital markets lightly regulated?

The standard response is that they are targeted at sophisticated, institutional investors who are presumed to have the ability to conduct their own due diligence and bear the risks, including high illiquidity. To this extent, it is argued, they do not pose the kind of negative public externalities and systemic risk that is associated with institutions that are public-facing (which take deposits, savings, premiums, etc., from retail investors). Any losers are those well-heeled investors who have the ability to absorb their losses. 

Is it really the case? What does the evidence inform us?

The reality is, as the following figures and statistics show, that retail investors are increasingly participants, both directly and indirectly, in the private capital markets. Here is a simple illustration of the channels of exposure of public-facing financial institutions to the private capital markets.

What makes this arrangement questionable is that the people at the top of the chain, the actual end-bearers of the investment risk, are not the ones doing the investing. Whatever counts as "sophistication" sits with the agents in the middle layer, not the principals at either end. However, the costs and consequences are borne primarily by the capital providers.

The table below is a summary of the various institutional investors, their respective linkages to the private capital market, and their systemic risk channel. 

The table below is a summary of these investors and the extent of their exposures to private capital markets.

The sheer volume of private funds is staggering. Between 2020 and 2023, assets in private funds grew by 34%, from $20.8 trillion to nearly $28 trillion. This is only slightly less than the just under $31 trillion in assets held by public investment vehicles (mutual funds, ETFs, and closed-end funds). In 2024, 87% of companies with revenue greater than $100 million are private, and private funds have approximately tripled in size in the last decade to $26 trillion in gross assets, comparable to the $23 trillion US commercial banking industry. But their capital comes overwhelmingly from public institutions. 

US public pension plans have allocated 34% of their holdings into alternative assets, including private equity, hedge funds, real estate, and commodities. The channel runs directly from workers’ retirement savings into PE buyouts of companies, hospitals, and infrastructure, with liquidity terms that have no resemblance to the pension’s own annual payout obligations. Similarly, the assets of private equity-influenced insurers have grown significantly in recent years, with these entities owning significantly more exposure to less-liquid investments than other insurers. By 2024, financial and ABS private placements reached 8% of assets for PE-owned insurers, while they were only 4% for non-PE-owned insurers. Apollo’s Athene, KKR’s Global Atlantic, and Blackstone’s insurance partnerships route annuity premiums, the most conservative class of retail savings, into direct lending. 

The numbers alone make it abundantly clear that private capital cannot be a ring-fenced ecosystem of alternative assets with little public externalities. Private markets have become too big to be ring-fenced. Given the linkages discussed above, any stress in the private capital markets will immediately cascade across to public stakeholders and the markets as a whole. 

It is now the hidden layer of the public financial system. Its debts appear in pension statements, its managers appear in index funds, its loans back annuities, and its performance propagates through bank balance sheets and university budgets. The “private” part is increasingly a regulatory and disclosure category, not an economic one.

There’s also the political economy that perpetuates the fiction around a ring-fenced private market. For one, private market intermediaries and investors benefit from favourable taxation regimes like carried interest and a lower capital gains taxation rate. There’s also the trend of diminishing public markets and expanding private markets, with its implications on access and equity, given the entry barriers for retail investors to access private markets. 

Both these dynamics threaten to create two distinct financial systems, with one serving retail investors and the other serving those well-off. Worse still, while the latter can access the former and benefit from it without bearing the proportionate costs, the former must bear disproportionate costs and consequences of excesses arising from the activities of the latter. 

The time has come to view private markets as no longer confined to sophisticated high-net-worth and institutional investors, but ones with deep interconnections with the public financial markets, and therefore demanding greater oversight and regulation. The matter for debate should only be the extent of regulation. 

Unfortunately, such a regulation as a preemptive process is unlikely given the political economy dynamics. However, it is only one big crisis away from such regulation. This painful learning pathway may be unavoidable and the only route to private market regulation.

Industrial policy is back, but the implementation challenge remains

The return of industrial policy to the top of the global development agenda has been formalised with a new World Bank report on the topic. The summary is here. I blogged earlier on this here. 

Notwithstanding the standout success of the East Asian economies in using industrial policy to drive economic growth, for long the WB and others had sought to minimise its role and explain it away by pointing to their unique circumstances. Specifically, their high educational attainment, high savings rate, low inequality, and the capability of the governments to implement such policies. At best, they were targeted to address specific problems in the functioning of markets. These conditions, it was said, did not exist in other countries. 

The report admits that industrial policy is now more replicable. It points to increased capabilities due to higher education levels, political support for delivering development objectives, and greater global trade integration. On their own, none of these is compelling enough for a re-examination. It is most likely that the widespread adoption of industrial policy by developed countries in response to Chinese competition is behind this change of mind within the Bank. 

Two comments in this context. It would have been more appropriate for the WB to acknowledge that its assessment was incorrect and to revise its views. Two, given their own market dominance in manufacturing, it was in the interests of developed countries to then oppose industrial policy in developing countries. Now that China has assumed dominance, it has reverted to the same set of policies that allowed it to become dominant in the first place. 

The WB report defines industrial policy as “the range of policy tools that governments use to shape what an economy produces rather than leave it to the discretion of markets alone”. It says that upper-middle-income countries now spend a record 4.2% of GDP on business subsidies. Low-income countries target growth of 13 industries on average, more than twice that in high-income countries. 

It identifies 15 industrial policy tools and categorises them, as in the table below. 

It analyses the minimum requirements for their adoption. The cells marked large indicate the tool needs a large fiscal space, market size, or government bandwidth, and vice versa for those marked small. 

In general, when government capacity is small, local market size is small, and fiscal space is also small (as in the case of most low-income economies still), industrial parks constitute the best industrial policy tool. When all three of those advantages are large (as in the case of the world’s biggest economies), then import tariffs, innovation subsidies, local content requirements, and many other policy tools can be effective... These countries enjoy the widest range of opportunities to experiment with industrial policy for development… this report finds that low-income economies—usually characterized by small market size—tend to be the heaviest users of import tariffs, which require a large market size to be effective. Upper-middle-income countries, for their part, go big on business subsidies.

The report has the latest glowing impact assessment on one of South Korea’s industrial policy decisions, 33 years later.

They found that the impact of the government’s big push for heavy and chemical industry (in the 1970s) caused the economy’s GDP to be 3 percent larger each year in the long run. This benefit far exceeds the economic cost of the government’s “large subsidies,” estimated by the World Bank’s 1993 report at 2.4 percent of GDP in only one year.

While all 15 policy tools are well known, the report provides a very broad but widely-known framework for understanding and applying industrial policy, and has a good compilation of case studies. Beyond this, I’m not sure how relevant or useful the report is for policymakers and implementers struggling to make decisions on their industrial policy. 

The framework presented in the report can perhaps be reduced to three different instruments of industrial policy - regulatory restrictions (restrict access to foreign firms/investors/imports), regulatory enablers (preferential treatment to domestic firms/investors), and fiscal support (tax concessions, input subsidies, capex incentives). 

In theory, mandates (regulatory tools) appear simpler than subsidies since they seek to directly target the required change. For example, domestic content or technology transfer mandates or commodity export bans (Indonesia’s ban on nickel and now bauxite exports) are easier to adopt compared to subsidies for production, innovation, consumption, or exports. But mandates create the risk of suboptimal outcomes - poor quality, capture by vested interests, constraints on production (e.g., due to limited supply), poor uptake, etc. Compliance with the mandates becomes even more of a challenge when the manufacturing supply chain is so utterly dominated by China.

An underlying assumption behind advisorial policy prescriptions by entities like the World Bank, consulting firms, or research experts is that they are actionable and can be readily applied by practitioners without much effort and existing capabilities. This assumption is most often incorrect.

Assuming the objective (say, building local manufacturing capabilities) and the target industry (say, electronics devices), a practitioner who is preparing a proposal for financial appraisal and subsequent approval by the competent authority generally struggles with the following five questions.

1. What combination of instruments is adequate to achieve the objective?

2. What should be the degree or extent of incentivisation or regulation? Specifically, how much is just about enough to trigger the market response? More likely, is the proposed measure sufficient to trigger the supply response?

3. What should be the implementation design of the chosen policy tool (especially relevant for tools like skill development, market access assistance, innovation subsidies, R&D tax credits, etc.)? 

4. How to know that the industrial policy is having its expected impact, and what revisions and course corrections are required?

5. What are the likely distortions from these interventions, including abuses during implementation, and how can they be mitigated?

The policymaker or implementer must make choices in constrained conditions - information, time, resources (financial and physical), acceptance, and capabilities. 

For one, there is the absence of good data to assess, prioritise, and make choices. Second, the theories of change are complicated, especially given the multiple confounding factors. Third, the problem-solving required to figure out the combination of choices is often a challenging exercise that does not get done well. Fourth, given fiscal constraints, the sponsoring departments often end up being forced to compromise substantively on the unit rates for any fiscal support (like the percentage of concession or extent of subsidy). The fiscal support ends up being below the threshold and fails to generate the market response. Fifth, there are the deficient state capabilities that weaken effective implementation. Sixth, there’s no way to know whether the policy combination is meeting the intended objectives, beyond some headline numbers which are often deceptive and misleading. And so on. 

To illustrate the points made above, the table below captures the uncertain elements. The tools and frameworks outlined in the WB report cannot be of much help in resolving the uncertainties and making decisions. The details of these elements matter, and are generally the difference between success and failure. Getting these details right is hard. 

In this context, there may be some useful principles for resolving the aforementioned uncertainties and formulating an industrial policy that is likely to succeed. 

In responding to a policy problem, it is advisable to start with a combination of instruments that are identified and prioritised using internal institutional judgment (and this is the way it happens in practice). But there should be rigorous monitoring systems that use administrative data (and targeted rigorous surveys, as required) to generate feedback on performance and impact, mainly to assess the directionality and order of magnitude of impact. Almost always, it is the absence or inadequacy of the latter that is a far bigger problem than the rigour of the choice and design of the former (combination of instruments). Surprisingly, the report overlooks this aspect completely. 

It is typically the case that the extent of subsidy depends on the fiscal envelope available and/or the priority accorded to the objective or target industry by the government. If the primary objective is a national priority, then compromising on the unit rates (or the extent of subsidy) should be strictly avoided. The same risk is there with mandates - how much restriction is sufficient? The feedback loop mentioned above is critical for getting the details of both subsidies and mandates right.

Once the higher-level choices are made, it is essential to avoid constraining implementation with onerous eligibility, access, documentation, compliance, and general procedural requirements that are typically put in place to eliminate abuse and fraud. There should be less invasive and onerous mechanisms to achieve the objective of abuse elimination. Further, the system should condone some level of slack or abuse, like false positives (Type I errors).

Most importantly, competition is critical to ensure that industrial policy is not captured by vested interests. Just as the performers should be rewarded, the non-performers should be progressively excluded. As Joe Studwell has written, export competition was critical to the success of the Northeast Asian economies. Other arrangements/metrics of competition are therefore critical for the success of industrial policy. It shapes the overall expectations and aligns incentives for the policy to play out for the long-term.

Weekend reading links

1. China may be turning to its traditional industrial policy playbook to reduce its current import dependence and achieve self-sufficiency in food, especially animal protein, thereby upending global supply chains. 

Adam Tooze writes, pointing to analysis by the research group Systemiq.

This involves a combination of investment and innovation. Beijing is coordinating central and provincial government, state-owned enterprises and financial institutions around smart agriculture. It has licensed the commercialisation of genetically modified maize and soya. Research clusters are forming around neoproteins, fermentation-derived ingredients, feed additives and agricultural biotechnology. State banks are on hand to provide cheap finance. To channel demand, Beijing is tightening food and feed standards and tweaking procurement requirements. This is the kind of whole-system policy that has given China a commanding lead in the new energy sectors. With all the levers in play, we may, by as early as 2030, see a significant fall in soyabean demand, slashing imports from the US dramatically. By 2040, innovation and efficiency gains could plausibly turn China into a net exporter of poultry, dairy, eggs, fish and seafood. If agriculture follows the industrial policy timeline, by 2050 we should expect to see China emerging as a major source of “cultivated meat”.

2. Indonesia's President Prabowo Subianto has signed a presidential regulation cutting the percentage that ride-hailing platforms like Grab and GoTo can take from each order to a maximum on 8%, down from the current 20%. 

3. The latest on the dominance of the Magnificent Seven (US stocks make up 65% of global stock market capitalisation, up from 40% in 2010).

This is an important data point.

Bloomberg data suggests that almost 80 per cent of the S&P 500 companies that reported first-quarter results this month beat analyst earnings estimates.

4. Chinese ports facts of the week.

Chinese firms now operate or have a financial stake in at least 129 ports outside China (see map), and have spent at least $80bn on port construction from Antigua to Tanzania, with many of the investments tied to bilateral trade and regional shipping agreements. More than a third of China’s overseas ports are near maritime chokepoints, including the Strait of Malacca, the Strait of Hormuz and the Suez Canal, making them indispensable operators in strategic areas. China’s firm grip on global ports has rattled Western governments. MERICS, a think-tank in Berlin, found that after a terminal operating contract is signed, total trade with China rises by more than a fifth, while countries that allow Chinese firms to run all their terminals at one of their ports see a 19% drop in exports to the rest of the world. Operating ports allowed Chinese firms to prioritise their cargo and vessels and speed up customs and logistics...

China’s reach extends beyond physical infrastructure. LOGINK, a Chinese government-run logistics-management software, is used in at least 24 countries and 86 ports (America banned its use in 2023). LOGINK shares data with CargoSmart, another shipping-management software firm owned by COSCO, another Chinese state-owned firm, and in turn gives it access to the whereabouts of 90% of the world’s container ships. It also has a tie-up with CaiNiao, a logistics provider with hundreds of warehouses around the world... Chinese firms are also building industrial parks and manufacturing facilities close to their existing ports in Africa and Europe.

5. Good FT article on how data centres construction is triggering local backlash as residents fear for their water and electricity.

Around two-fifths of all US data centres are located in areas of high water stress, according to S&P Global... In DeKalb, a city of around 40,000 people, water demand averages just over 3mn gallons a day, rising to in excess of 4.5mn gallons at peak. The latter figure is broadly comparable to the needs of a single large AI data centre.

Data centres have already emerged as a significant driver of economic expansion in the US, accounting for 80 per cent of private sector growth in the first half of 2025, according to S&P Global... Researchers at the Lawrence Berkeley Laboratory forecast that so-called hyperscaler data centres will consume anywhere between 60bn and 124bn litres (16bn and 33bn gallons) of water on-site each year in 2028. This figure excludes the indirect water use tied to electricity generation, which the lab previously forecast could be as much as 12 times higher than direct consumption...

Of the roughly 100GW of additional electricity capacity that the US is projected to need at peak times by 2030, roughly half will be used by data centres, according to the Department of Energy... On average, American bill payers — including residential, commercial and industrial customers — paid over 6 per cent more for electricity year on year at the end of 2025. This increase was starkly higher in the mid-Atlantic states which house a large number of data centres such as Pennsylvania and Virginia, where bills rose by 19 and 10 per cent respectively.

6. Indian equities suffer from a high valuation gap with EM peers.

In recent weeks, a string of global brokerages – including Goldman Sachs, Nomura, HSBC, UBS, and JPMorgan – have downgraded Indian equities in their emerging market portfolios. The concerns converge around a common theme: Deteriorating macro conditions amid rising energy prices, weakening earnings visibility and, crucially, more attractive opportunities in other EMs... The relative valuation gap still stands at around 65 per cent—well above South Korea, Brazil, China, Mexico and South Africa. “South Korea is expected to deliver about 180 per cent earnings growth at around 7x P/E. Taiwan offers about 35 per cent growth at 18x. China delivers about 14 per cent at 11x. India, by contrast, offers 8–14 per cent growth but trades at ~19x,” said Amish Shah, head of India Research, BofA Securities. From a global allocator’s perspective, India remains expensive.

The weight of Indian equities in the MSCI EM index has continued to fall since March 2025, from 18.5% to 12.58% in March 2026.

7. India's trade deficit with China continues to grow.

On April 8, Xu Feihong, Chinese ambassador to India, posted on X: “Glad to know that China has become India’s largest trading partner in FY2026 — for the 11th straight month.” This was great news for China but not for India. The $151.1 billion trade between the two comprised $131.63 billion of exports from China to India and a meagre $19.47 billion of imports from India. It was a one-way street. China was flooding Indian markets even as it became India’s “largest trading partner”...

India must import electronics and electrical equipment ($40 billion-50 billion), machinery ($27 billion), organic chemicals ($12 billion-13 billion), plastics, steel, medical equipment, and so on from China every year. These are critical products without which the Indian economy would not be able to function. Alternative sources exist for some, but at a much steeper price. Moreover, China has diversified its supply sources, so even if not directly from it, Chinese goods would still reach India through Southeast Asian and other manufacturing bases.

8. One explanation with oil markets are still not rising as much as expected. 

In 1973, the year of the first oil price shock, I calculate from industry sources that about 80 per cent of one barrel of oil was consumed per $1,000 of global GDP in 2025 prices — 131 litres, to be precise. In 1980, the year after the Iranian revolution, this was down to 116 litres. Last year, it was 52 litres. The current level is still a lot, but the average oil burden is 60 per cent less than 50 years ago. If so much less oil is needed, real prices should have much more room to escalate before they cause the economic damage associated with previous disruptions. A simple illustration of today’s diminished oil cost burden to the global economy is to adjust the nominal price of oil not only for inflation but also for the efficiency improvements. If one does, a hypothetical price of $115 per barrel today compares with an average price of $339 in 1980 in today’s dollars. By this measure, prices have plenty of runway before the oil burden resembles 1980.

But it must be balanced against other factors pulling in the opposite direction.

Oil consumption today is more concentrated in high-value uses and in areas where there is no substitute, like road or air freight and maritime shipping. These are load-bearing economic activities, less price sensitive than discretionary or consumption-oriented drivers of growth. Once disrupted they are likely to cascade through the economy... Oil concentrated in high-value uses is a little bit like rare earths, tiny compared with the size of GDP but essential for much of it. If the size of a supply disruption requires demand to come down and prices surge to the required level, the response will be sudden with a potentially unforeseen and disproportionate impact on economic activity.

9. Jakarta's success with mass transit appears exemplary.

In 2014, Jakarta was crowned the world’s most congested city by the Stop-Start Index and a year later was ranked far below other Asian cities on livability by the Economist Intelligence Unit. Ten years later, Jakarta has the world’s largest and one of the most used bus rapid transit (BRT) systems. The old, crowded diesel commuter trains, famous for allowing passengers to ride on the roofs, are now electrified, air conditioned, and run on regular schedules linking the suburbs to the city center. There are multiple subway and light rail lines crisscrossing the city. The transformation has been remarkable: in 2015, less than 20% of residents were within walking distance of transit. Now, nearly 90% of the city has access to BRT or trains... 

The user experience has also been streamlined. All of the new MRT lines are part of an integrated digital fare system. A journey from one end of Jakarta to another is capped at 10,000 rupiah (about 70 US cents). According to WRI Indonesia, as of 2024, 10 percent of trips in Greater Jakarta are now made by public transit, compared to just 2 percent in 2015... While the JICA loans covered the cost of building the MRTS and training local staff, the full cost of operation has now fallen to the city government. So far, this has worked reasonably well, with Jokowi arguing that the cost of running the system — at about 800m billion rupiah (US$50 million) a year — is justified by the estimated 65 trillion rupiah (US$3.5 billion) in annual economic losses due to traffic.

However, much more remains to be done. 

The city has recently overtaken Tokyo as the world’s largest city, with a metro population of over 41 million people, and it is still growing rapidly. It is projected to add another 10 million people in the next 25 years. To serve this population, Greater Jakarta has only six train lines and under 250 miles (400 km) of track. Tokyo, by contrast, has an astounding 158 train lines and 2,930 miles (4,715 kilometers) of track connecting 2,210 stations throughout its massive metro area.

10. Foreign portfolio investors sharply cut exposure to Indian software firms.

Foreign Institutional Investors’ (FIIs) allocation to the Indian technology sector stood at an all-time low of 7.3% at the end of March compared to 10.1% at the end of FY25, according to brokerage Motilal Oswal Financial Services... So far in 2026, FIIs have sold $21.6 billion of Indian equities – more than the $18.9 billion they sold in all of 2025 – of which $2.4 billion worth of net sales have been of Indian IT stocks (until April 15). As a result, FII holdings in the IT sector reduced to $41.4 billion from $59.8 billion at the end of 2025.

11. TIDCO stake in Titan Company.

This state government-owned industrial promotion agency, TIDCO, has a 27.88% stake in Titan Company Ltd. That’s more than the combined 25.02% share of the Tata Group through its holding company and various subsidiaries. It makes TIDCO the main promoter of Titan, which was established in 1984 as a joint venture for manufacturing quartz analog watches at Hosur on the Tamil Nadu-Karnataka border. That company — originally Titan Watches Ltd — has today grown to a premier lifestyle accessories maker with a product portfolio spanning watches and wearables (Titan, Fastrack and Sonata brands), jewellery (Tanishq and CaratLane), eyecare, women’s bags (IRTH) and ethnic wear (Taneira sarees and tops). Titan Company earned a net profit after tax of Rs 3,337 crore on a total income of Rs 60,942 crore during the year ended March 31, 2025... at the share’s closing traded price on May 6... TIDCO’s 27.88% holding in Titan will alone be valued at Rs 1,07,873 crore... if TIDCO were to sell its entire stake in Titan Company, the Tamil Nadu government would be able to mobilise upwards of Rs 1 lakh crore and bring down its outstanding debt by roughly a tenth. The annual savings in interest outgo resulting from it will far exceed the Rs 272 crore that TIDCO received as dividend for 2024-25 from its 27.88% shareholding in Titan Company.

12. Ruchir Sharma makes some very important points about the critical role being played by retail investors in the US equity markets. Some numbers.

The share of US households that own stocks has surged this decade to nearly 60 per cent, the highest proportion in any country. Americans are all in on the market, holding more wealth in stocks than in their homes for the first time. And retail is now the most active class of traders as well. Retail’s share of daily trading in US stocks doubled in the past 15 years to 36 per cent, surpassing that of big banks or hedge funds, and making them the market price-setters. Last year US retail trading topped $5tn, exceeding the pandemic high, only this time Americans weren’t stuck at home or flush with savings.

He points to contributors to the rise of retail investors.

Three forces are encouraging small investors’ deep faith in the stock market: stimulus, bailouts and technology. Record sums of money pouring out of government and central banks, intended to lift the fortunes of the real economy, have instead been used by households (particularly the richer ones) to invest in the stock market. With policymakers rushing to rescue the economy at the slightest hint of trouble, investors have come to believe the government will always bail them out. And low-cost, mobile trading platforms have given everyone easy access to investments of all kinds.

Finally, a very important political economy dynamic arises from this trend. 

The larger the retail community gets, the more pressure builds on politicians to support the market. What was said of Wall Street banks after the crisis of 2008 can now be said of the stock market as a whole: it’s “too big to fail”.

13. The rise and rise of stock market concentration in the US.

Analysts at UBS said that a measure of how many stocks were materially contributing to the index’s performance — so-called “effective constituents” — hit a record low of 42 last week, far below the level of about 100 that has been typical in recent decades.

14. Nice interactive story of how oil from the Gulf reaches Japan, gets refined, and is distributed. 

15. The $725 bn capex spending projected by the Big Tech (Amazon, Alphabet, Microsoft and Meta) is estimated to leave them with their lowest free cash flow since 2014. 

16. Fascinating 5km split of Sebastian Sawe's sub-two-hour marathon.

Some low hanging fuits in urban planning

I have blogged on multiple occasions, highlighting the importance of instruments of urban planning in shaping the form of urban development, urban renewal, economic growth, and resource mobilisation. 

This post will point to nine urban planning levers that are low-hanging fruits whose implementation can go a long way in creating the conditions for sustainable urban development. 

1. Higher FAR (without restrictive conditions) - The objective should be to incentivise more built-up area on a plot of land, especially in built-up cities. Today, a reform involving an increase in FAR is often gated by minimum plot size and minimum road width requirements, which prevent most plots from qualifying. The reform should focus on relaxing these conditions, to the extent possible, so that more plots can be built vertically, easing housing supply and using land more efficiently. A proposal in this regard is here. 

2. TDR for land foregone and a trading platform - When a landowner gives up land for public use (road, green belt, community facility, etc.), pay them not in cash but in a Transferable Development Rights (TDR) Certificate, which can be used elsewhere to build extra. This avoids land acquisition disputes, eliminates fiscal expenditures for the government, and gets roads and amenities built faster. This should be facilitated with a simple online exchange (like a stock market for TDRs) where buyers and sellers find each other transparently and in a regulated market. For each city, the numbers and values of TDRs allocated should be monitored. 

3. TDR for affordable housing / urban renewal - Use the same TDR mechanism to incentivise specific outcomes, such as affordable housing units, slum redevelopment, and heritage preservation. The critical requirement here is to be generous with the provision of the TDR to incentivise the outcome. The TDRs would be issued and transacted on a platform. The number and value of such TDRs allocated should be monitored. 

4. Purchaseable FAR and a digital transacting platform - Treat the basic FAR (say, 1.5) as a property right of the landowner, but make the remainder of the master-plan FAR (say, up to 3.5) available for purchase from the city. This generates substantial revenue for ULBs, gives developers a clear, predictable path to higher density, and removes the discretion-driven approvals that breed corruption. The purchasable FAR can, in turn, be sold at a lower rate to encourage certain outcomes, as with TDRs for affordable housing or urban renewal. The number and value of FAR purchases should be monitored. 

5. Transit-oriented development (TOD) - Allow significantly higher FAR within walking distance (typically 500m) of metro and RRTS stations. The result would be that people living and working close to transit drive less, congestion eases, and the public investment in transit gets repaid in higher tax revenue and ridership. This should be made a mandatory requirement before sanctioning of any mass transit project. The number of stations and the extent of area covered, and the incremental FAR claimed, should be monitored. 

6. Mixed-use on/beside metro stations - Build offices, shops, and homes directly above or right next to metro stations, and not several minutes' walk away in the sun. This is how Hong Kong, Tokyo, and Singapore work. In India, DDA's Karkardooma (1,800 flats) is the lone meaningful example. Every other metro/RRTS station is a missed opportunity. The numbers and descriptions of such developments should be captured and disseminated widely for emulation. 

7. Land Value Capture (LVC) - When public infrastructure (a metro line, an expressway, a flyover) raises nearby land values, capture some of that uplift through a betterment levy or impact fee, and use it to repay the infrastructure investment. Hyderabad ORR is the Indian benchmark. Today, most of the value uplift goes to private landowners. Mandate the incorporation of the LVC framework of the MoHUA in the Development Control Regulations of all cities. The city-wise numbers of LVC tools in place and the amount of revenues collected should be monitored. 

8. Business Improvement District (BID) / Tax Increment Financing (TIF) - Both are forms of LVC. In the case of BID, the businesses in a defined commercial area collectively agree to pay an extra small levy that is ring-fenced for upgrading and maintaining their own area - cleaning, lighting, security, beautification, etc. In the case of TIF, the future tax growth from a regenerated area is earmarked upfront to finance the regeneration itself. Both require enabling state legislation, and neither exists in India yet. The number of such BID/TIF, their area extents, and their respective annual realisations should be monitored. 

9. Town Planning Scheme (TPS) - It is a land readjustment mechanism used for planning urban development by pooling adjacent land parcels, developing the consolidated area with infrastructure like roads, parks, and utilities, and returning a portion (usually half) of the developed, serviced land to the original owners. This is used extensively in Gujarat. Its adoption should be encouraged in the initial stages with incentives for the development using TPS. The numbers, landowners involved, and extents of land should be monitored. 

While many states in India will claim to have issued rules adopting these, very few have implemented them in any meaningful manner to generate outcomes. Some have not been implemented at all in any city. The details matter for their effective implementation (or non-implementation). It is for this reason that the outcome metrics outlined above for each of these reforms should be monitored closely. This would force attention to the constraints that prevent their effective adoption. 

None of these is likely to bear significant outcomes immediately. But they are the plumbing for sustainable urban development and address intractable problems like affordable housing, traffic congestion, and municipal revenue augmentation. There’s a strong case for central and state governments to mandate or incentivise the effective implementation of these reforms.