बेबाक · Editorial
A firmer rupee and strong profits cannot mask an uneven, leaking economy
Currency calm, strong corporate earnings and reopened trade routes sit beside strained households and unaccounted wealth — stability at the top is not comfort below.
The week's ledger
Read together, the past week's business pages describe a formal economy finding its footing. The rupee firmed to 96.25 against the dollar in early trade and settled another session at 95.35, aided by Reserve Bank of India intervention and sustained foreign fund inflows. Mahindra & Mahindra posted first-quarter attributable profit of ₹5,455 crore, up 34 percent, on revenue up 28 percent, driven by SUV and tractor demand. The Nathu La pass on the old Silk Route reopened for commerce with China, six years after Galwan, while the India-U.K. Comprehensive Economic and Trade Agreement, British Deputy High Commissioner Sutapa Choudhury says, makes business "cheaper, quicker and easier." The headline mood is confident.
The core tension
Yet strength at the top of the economy is not the same as relief at its base. A steadier currency and strong corporate earnings coincide with households buying less gold by volume as prices climb, and with fresh reminders that unaccounted wealth still survives in shadow channels. The question is old but unresolved: when the metrics that reassure markets and foreign partners improve, does the improvement reach the family whose basket is thinning, and does governance keep pace with economic scale? An economy can look robust in aggregate while remaining uneven in distribution and porous in accountability. That is the honest frame through which this week's good news must be read, neither dismissed nor oversold.
Steel-manning both readings
The optimistic case is serious. RBI intervention and foreign fund inflows are stabilising the rupee even as higher crude oil prices, a stronger dollar and geopolitical tensions limit gains; CETA is presented as an asset that can create opportunities for states such as Kerala; and profits at firms like M&M point to real demand in SUVs and tractors. Reopening Nathu La is also a signal that India and China remain willing to keep channels of commerce and dialogue open. The sceptical case is equally serious. A slowing United States economy, with weaker second-quarter growth, inflation concerns and a growing trade deficit, shows how fast external conditions can shift, and inflows can reverse as quickly as they arrived. Confidence resting on sentiment and support is not the same as durable competitiveness earned in wages and orders.
What the evidence shows
The concrete figures point to a divided recovery. One report had the rupee opening at 96.18 and trading at 96.28, still 28 paise above its previous close; another had it settling 15 paise higher at 95.35. Against that, the World Gold Council recorded April-June gold demand falling 6 percent by volume even as value rose 50 percent, with jewellery demand down 15 percent to 75.1 tonnes from 88.8 tonnes a year earlier. In India, where gold often reflects household surplus and sentiment, falling volumes amid high prices is a warning. M&M's 34 percent profit jump shows sectoral strength, not universal relief. The formal economy holds; the consumer still bears the cost.
The shadow beneath
Optimism from balance sheets is undercut by the persistence of India's parallel economy. In West Bengal, the recovery of a ₹28-crore cash and gold haul from the residence of a political aide's relative underlines how entrenched patronage networks can remain. In Kerala, the High Court has sought responses from the Central Bureau of Investigation and the State government on a petition to bar K.A. Ratheesh, former managing director of the Kerala State Cashew Development Corporation and an accused in the ₹600-crore cashew import scam, from holding key government posts. Where regulators can close proceedings after stated objectives are met — as the Securities and Exchange Board of India did against Religare Enterprises and Rashmi Saluja after the Burman Group takeover, change in control and completion of the open offer — the contrast with unresolved governance disputes is stark.
The way forward
The task is to make institutional competence more even, and to turn outward confidence inward. The RBI should keep managing volatility without pretending exchange-rate defence cures structural weakness; the Union government should use this calm to reduce costs for smaller firms as well as large groups, so CETA's promised Kerala opportunities become measurable business. Investigative agencies must carry cases such as the ₹600-crore cashew import scam forward through due process, and States must answer for rent-seeking within their borders. Rising output and strong profits are thin comfort if wealth keeps draining into shadow structures. Stability must be felt in prices, work, savings — and in a rule of law that binds the powerful equally.
Macroeconomic stability is necessary, but it is not the same as broad economic comfort — and neither is worth much if wealth keeps leaking into shadow structures.
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