Arvind's Newsletter

1.Directions in household consumption: Two sharply diverging narratives: Rama Bijapurkar in Business Standard

There are at present two diverging narratives about Indian household consumption. Stock market analysts, especially mutual funds, propagate the narrative of unstoppable, runaway, world-beating consumption growth. They project that the demographics, living conditions, and income-growth parameters that have driven stellar aggregate consumption growth between 2010 and 2025 (which is true) will continue to improve steadily (cannot argue, but the devil is in the detail).

In another narrative, since 2024 main street watchers have been flagging slower consumption growth. The factors are private final consumption expenditure growing slower than gross domestic product, a weak job environment, welfare-fuelled consumption, stagnant middle-class wages causing decline in spending, and incomes growing slower than prices. Reinforcing this are the disappointing results for the fourth quarter and full year of FY25 of large FMCG (fast-moving consumer goods) companies that address the full breadth of Consumer India, such as ITC, Hindustan Unilever, Nestle, and Colgate-Palmolive.

Although leading FMCG companies called out weak urban demand, the Kantar consumer track reports that urban demand is not slackening but households are downtrading from high-priced big brands to local, unbranded cheaper products. 

American novelist F Scott Fitzgerald had said “the test of a first rate intelligence is to hold two opposing ideas in the mind at the same time and still retain the ability to function”. Our present consumption discourse challenges us to do this.

The absence of strong headwinds or tailwinds means that company strategy will be the biggest driver of performance in FY26. As always with Consumer India, the data shows that future optimism is strong. An improvement in the Employment Current Situation index of consumer confidence , the Income Current Situation index of consumer confidence , and inflation will unleash pent-up mass market consumer desire to spend.

Read on

2.HAL, private firms to compete for advanced medium combat aircraft (AMCA) prototype contract: Defence ministry: Mint

Defence Minister Rajnath Singh has formally approved the “execution model” for India’s ambitious Advanced Medium Combat Aircraft (AMCA) programme, marking a major milestone in the country’s pursuit of indigenous fifth-generation stealth fighter capability. The Aeronautical Development Agency (ADA), under the Defence Research and Development Organisation (DRDO), will lead the project in partnership with both public and private Indian industry players.

The approval introduces a competitive framework where Indian companies—either independently or as joint ventures or consortia—can bid for contracts related to the design and production of the AMCA prototype. This marks a shift from previous defence projects, which were often directly assigned to state-owned firms like Hindustan Aeronautics Limited (HAL), and is expected to foster a robust domestic aerospace ecosystem.

3.India Debuts New Weather Model to Help Farming, Flood Planning: Bloomberg

India’s new weather model aims to improve rainfall predictions to a resolution of roughly 6 kilometers (3.7 miles)—doubling the level of detail currently possible. The hope is the Bharat Forecast System will be able to help farmers and flood-preparation teams with predictions honed down to the size of villages.

The model, developed by the Indian Institute of Tropical Meteorology, uses a customiSed version of the US's Global Forecast System and a new grid structure to make predictions for areas roughly the size of a cluster of Indian villages.

The improved forecasting capabilities are expected to enhance public safety, support farmers, and improve crop yields, with the government investing in a new supercomputer and expanding its weather radar network to feed the model with additional data.

4.ET Prime Unicorn 100: Growth slowed for India’s leading startups

The third edition of ET Prime Unicorn 100, a definitive list on India’s strongest startups, reveals a heightened focus on financial sustainability, as several of them are looking to go public and some others are facing capital crunch due to tepid late-stage startup funding. 

While substantial reduction of losses is a key highlight of unicorn financials for FY24, the latest that is available for most of them, it also signals challenges in terms of growth. The number of profitable unicorns increased by just two, or 10%, during FY24 against seven, or 53%, during the previous year.

The long dry spell in the late-stage funding means shortening of the runway for many loss-making unicorns. That has forced them to bring down losses. Although venture capital funding increased from USD9.6 billion in 2023 to USD13.7 billion in 2024, much of the funding activity is concentrated in the early and mid-stages. The late-stage funding, which was already low, further decreased by 20%, according to a Bain & Company report.

For some other unicorns, the driving force behind loss reduction was not a capital crunch. It was rather a conscious choice, as they looked to strengthen their financial fundamentals ahead of a possible public listing. As many as 13 startups went public in 2024 against five in 2023. The trend would continue through 2025.

5.India's central bank seeks approval for overseas rupee lending to neighbours: Reuters

The Reserve Bank of India (RBI) has asked the government to allow domestic banks and their foreign branches to lend Indian rupees to overseas borrowers, beginning with neighbouring nations like Bangladesh, Bhutan, Nepal, and Sri Lanka, Reuters reported quoting sources.

The move aims to internationalise the rupee and deepen its role in trade. Currently, Indian banks abroad can lend only in foreign currencies, primarily to Indian firms. RBI hopes this will expand rupee liquidity and reduce reliance on forex volatility. This development comes as the rupee rose for a second session, closing at 85.09 against the dollar amid broader Asian currency gains.

6.Rising shortage of nurses as more Indian nurses go abroad for substantially higher salaries; Business Standard

There’s a rising anti-immigrant sentiment in European countries as well as in the US, but despite that, nurses are in demand everywhere. A Business Standard report said that even though there’s a nursing shortage in India, particularly in Tier 2 and Tier 3 cities, more Indian nurses are going abroad. That’s because Indian nurses receive an almost 5X increase in pay in the West and countries like UAE.

7.India’s crypto industry urges tax cuts as Trump support softens New Delhi’s stance; Financial Times

India’s cryptocurrency industry is lobbying for cuts to taxes that have curbed domestic trading, in a bid to take advantage of what it sees as New Delhi’s softening stance towards digital assets as lawmakers negotiate a wider trade deal with the US.

Once a pariah sector in India because of regulators’ suspicion about the potential for criminal activity, policymakers’ attitudes towards crypto have been thawing. Executives at exchanges told the Financial Times that Prime Minister Narendra Modi’s government has become markedly more receptive and engagement more frequent following Donald Trump’s return to the White House and his embrace of digital currencies. 

Industry meetings with policymakers now take place “monthly, if not weekly”, up from little more than once every six months until recently, according to Ashish Singhal, co-founder of CoinSwitch, one of India’s largest crypto exchanges with more than 20mn users.

The industry’s “big ask”, he said, was a reduction in what he described as “very harshly” imposed taxes. Those include a 30 per cent capital gains tax and a 1 per cent levy on every crypto transaction, introduced in 2022 in an effort to help authorities track and combat criminality. But the effect of those measures, according to a study by New Delhi-based think-tank the Esya Centre, was to push more than 90 per cent of digital asset trading by Indians offshore.

The world’s two largest crypto exchanges, Binance and Coinbase, which had left the country, have re-entered. They are trying to get a piece of a crypto market in the world’s most populous nation that is expected to grow to more than $15 bn in 2035 from $2.5 bn last year, according to estimates by accountancy firm Grant Thornton.

8.Merz Gives Ukraine Green Light to Strike Deep Inside Russia: Bloomberg

Ukraine gets the green light. Germany gave Kyiv the all clear to strike deep inside Russian territory, with Chancellor Friedrich Merz saying there are” absolutely no range limits any more.”

The Kremlin called the decision dangerous and counter to the goal of reaching a political settlement, Interfax reported. Moscow brushed aside Trump’s criticism of Vladimir Putin as an “emotional reaction.”

9.Denmark raised its retirement age to 70, the highest in Europe: CNN

The Scandinavian country ties retirement age to life expectancy, and the new rules will apply to anyone born after 1970. The country is likely to be at the vanguard of a broader shift, with the OECD forecasting that several countries will have to raise their retirement age to 70 or more by 2060.

Denmark’s system isn’t universally popular, but has broad buy-in, with the latest increase winning about 80% of votes in parliament. In Washington, by contrast, “nobody wants to take the heat for proposing real reform, so the US keeps barreling toward a cliff while pretending not to notice,” The Wall Street Journal’s editorial board lamented

10.Daniel Dennett’s 4 rules for a good debate: Big Think

A straw man is when you simplify or exaggerate somebody’s argument to make it easier to target, an opponent you can blow down with adversarial flair. For example, if an atheist says that Christianity is just worshipping “some bearded man in the sky,” well, that’s a straw man, because barely any Christian would accept that representation of their religion. Of course, if a Christian says that an atheist does not believe in anything or that life has no meaning, that is also very likely a straw man.

The problem with the straw man argument is that not only does it not actually address someone’s points, but it poisons the entire debate. It’s a bad-faith argument that sees conversation as a brawl and “truth” as only one weapon in the war to win at all costs. But there is a better way.

The opposite of a straw man is a steel man. This is where you not only represent someone’s arguments faithfully and with respect, but you do so in the best possible light. You spend a great deal of attention clarifying and double-checking what your debating partner actually means.

In my experience, if you take the time to genuinely inquire about what someone believes, you will find far greater nuance — and often far greater agreement — than you thought at the start. For example, only the most dastardly and venal of politicians are doing it entirely for themselves. Most politicians want to make society and the world a better place. It’s just that left- and right-wing arguments differ about how to achieve that.

In the 2013 book Intuition Pumps and Other Tools for Thinking, philosopher Daniel Dennett described something like the steel man in his four rules for any good philosophical debate:

• First, and most important, is that you should “attempt to express your target’s position so clearly, vividly, and fairly that your target says things ‘I wish I thought of putting it that way.’”

• Second, you should list all of the ways in which you and your partner agree on things.

• Third, you should recognize the ways in which your partner has taught you something new.

• Fourth, only after all of this can you go on to try and rebut or criticize their position.

This doesn’t mean that you have to agree or compromise on your position, though. After all, some people hold repulsive and horrendous beliefs. It just means that you should fight what is there to fight, and not an imaginary shadow or straw man.

Read on.