Markets Close Up After Uncertain Session
The news from across the Atlantic was positive, at least for the day
On Episode 594 of The Core Report, financial journalist Govindraj Ethiraj talks you through the top business news of the day. We also feature excerpts from our interviews with Ram Singh, economist and Director of the Delhi School of Economics (from our podcast series How India’s Economy Works hosted by Puja Mehra) as well as an excerpt with from our upcoming Weekend Edition featuring Dr. Kailash Sharma, Dean Academics (Projects) at Tata Memorial Hospital.
SHOW NOTES
(00:00) Stories of the Day
(00:50) Markets close up after uncertain session
(02:32) More economists are betting on an interest rate cut
(03:54) Don’t pop the champagne on the court freeze on Trump tariffs yet
(06:31) India’s highest tax payers are not those you think they should be
(12:31) Cancer cases in India are rising and the rising number of hospitals are not able to cope
NOTE: This transcript contains the host's monologue and includes interview transcripts by a machine. Human eyes have gone through the script but there might still be errors in some of the text, so please refer to the audio in case you need to clarify any part. If you want to get in touch regarding any feedback, you can drop us a message on [email protected].
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Good morning, it's Friday the 30th of May and this is Govindraj Ethiraj, headquartered in Mumbai, India's financial capital, but in transit right now.
The top stories and themes,
The stock markets close but are after an extremely uncertain session.
More economists are betting on an interest rate cut.
Don't pop the champagne as yet on the court freeze on Trump tariffs.
India's highest taxpayers are not those who you think they should be.
And cancer cases in India are rising and the increasing number of hospitals are not able to cope.
Uncertain Markets
The news from across the Atlantic was positive, at least for the day. A United States federal court ruled that President Donald Trump exceeded his authority with his proposed tariff plan.
Although the White House appealed the decision, the ruling has raised hopes that Trump may scale back on some of those steep tariffs. In many ways, this is back to square one of an unpredictable board, but since markets live from day to day nowadays, today was a better day. Now, that did not really help the stock markets in India who could not make up their mind which queue to go with, global or local or something else, though eventually they closed in the positive.
The Sensex rose 320 points almost in the last minutes of trade to 81,633, while the Nifty rose 81 points to 24,833, below that 25,000 mark, which many consider an important baseline. Across Asia, the MSCI Asia X Japan rose about 0.7 percent, while U.S. stock futures on Thursday indicated a positive start on Wall Street, according to Reuters, which also added that information technology companies which depend considerably on the U.S. rose about 0.8 percent, were the biggest driver of the major indices on Thursday. Elsewhere, we spoke yesterday of several brokerages raising their outlook for India.
Bank of America Global Research put out a caution, which of course everyone else has been, when it said that while the structural drivers for domestic markets remain intact, their cautious and domestic equities as valuations seem full and markets are ignoring risks of likely slowing global growth. After all, the Nifty and Sensex have gained about 13 and 14 percent respectively from their April lows, which as you know was last month, and one reason for that jump was the return of foreign flows.
A Consensus On A Rate Cut Continues
A fresh poll of economists by Reuters says the Reserve Bank of India will cut interest rates on the 6th of June for a third consecutive meeting and once more in August to support a weakened economy. A large number of economists, 53 of 61 polled between May 19th and 28th, expected the Reserve Bank to cut the repo rate to 5.75 percent at the end of its June 4th to 6th meeting. Now obviously lower interest rates are good for the economy in general and borrowing in specific, particularly if you've got home loans, then this is something that you should wait for.
Transmission does take time but it is good news. Two respondents hoped that there could be a cut of 50 basis points and about six expected no change. So India's GDP growth is currently at about 6.3 percent for the last fiscal year from over 9 percent the year before and inflation of course is below the Reserve Bank's 4.0 percent target or 4 percent target. So therefore there is room to cut rates. Back on Thursday the rupee weakened as the dollar firmed up following that court decision to block President Trump's reciprocal tariffs from going into effect. The rupee closed at 85 rupees 50 paise against the dollar which is down slightly from its previous close of 85 rupees 36 paise in the previous session according to Reuters.
Don't Celebrate Yet
A court ruling that seeks to block President Donald Trump's Liberation Day tariffs represents only a temporary setback to his trade agenda and can be offset by other taxes according to analysts at Goldman Sachs in a report on Bloomberg. The judgement by the U.S. The Court of International Trade halts about 6.7 percentage points of levies announced this year though the White House could use other tariff tools to make up for that, the Goldman economist said in a note to clients on Thursday. According to them the ruling does represent a setback for the administration's tariff plans and increases uncertainty but might not change the final outcome for most major U.S. trading partners and for now Goldman says they expect the Trump administration will find other ways to impose tariffs. The alternatives and this gets a little specific so let me just use one example include the use of section 232 levies referring to the charges on steel aluminium and auto imports on national security grounds even if all the pending investigations result in 25 percent tariffs and are added to the current levies under the section that would add 7.6 percentage points alone according to those Goldman economists. A panel of three judges has given Trump's team 10 days to halt tariff collection in a decision that the White House has already appealed. It also said that Trump wrongfully used an emergency law to impose tariffs on global trading partners.
Record Wheat And Rice
India could produce a record 117.5 million metric tonnes of wheat in the year ending June 25 according to the government above its March forecast of 115 tonnes as higher prices led to farmers expanding the area planted with high yielding seed varieties. India incidentally is the world's biggest wheat producer after China and produced 113 million tonnes of wheat in 2024 according to a statement from the government of India. Meanwhile the country's rice production is also set to hit a record high with the government estimating it at 149 million tonnes up from last year's 137 million tonnes.
We referred to some of these figures two days ago. Record production of wheat and rice will lift the country's total food grains production to 354 million tonnes from last year's 332 million tonnes according to Reuters. A strong wheat harvest is also rapidly replenishing stocks meaning India will be able to meet domestic demand without imports this year contrary to market talk that it would need overseas supplies and a potential drag on global prices according to Reuters.
Do India's Wealthiest Pay The Most Taxes As Well? The Answer To This Might Surprise You
Journalist Puja Mehra, also host of how India's economy works also on the core alongside us, speaks to economist and director of the Delhi school of economics Ram Singh about why India's income tax base remains so narrow.
The question is why do the richest Indians pay a smaller share of their income in taxes than the middle class? Drawing on his research Ram Singh explains how India's tax system unintentionally favours the wealthy and why income reporting has become less honest as wealth increases.
INTERVIEW TRANSCRIPT
Puja Mehra: And your main finding Ram, intuitively I think all of us even those who don't follow income tax data etc do suspect and believe that people who are wealthy and rich in India the affluent they tend to pay less income tax than legitimately they should meaning to say that they are able to save on tax but just how much this is I think for me that was a real surprise from your paper I was expecting this but not as much. First you know what are the key findings of your paper on the missing income tax?
Ram Singh: You are right about your observations on what people suspect. For me also the motivation was what I read in newspapers. So several years ago I read reports on who was the highest income taxpayer in India.
I followed these reports over several years and I noticed that the highest income taxpayers are people who are celebrities, for example a movie star or a cricketer. These are people who are well off but if we ask the question who are wealthiest of Indians these people celebrities movie stars or cricketers they are not wealthiest of Indians. So from media reports it was clear to me that people who pay the highest income tax are not the wealthiest of Indians and vice versa.
And since income tax payment depends on income we report therefore it follows that even from media reports it follows that people who are wealthiest of Indians do not report highest of income to income tax department. This observation raised my curiosity. I pursued it as a research question and over the course of three years I put together a large amount of data using affidavits filed by people who can test the election. I used statistics published by income tax departments and Forbes list data.
I put multiple data sources together to study the relationship between wealth and income people report to the income tax department. As you remarked very rightly that it's not surprising that the income wealth ratio, which is the ratio if we compare wealth with income, people report this ratio income wealth ratio comes down with wealth meaning thereby this ratio is high for people with very little wealth and it is very small for wealthy and super wealthy and ultra wealthy people. And the real surprise is not that it comes down that this ratio comes down, the absolute levels are something that are striking.
The absolute levels at let's say if we look at the figure of income wealth ratio for the top one wealthiest one percent this ratio comes out to be about two percent which is to say that in top one percent wealthiest Indians report income that is equivalent to about two percent of their wealth. If we consider even wealthier 0.1 percent wealthy Indians this ratio dips down to one percent. If we consider Forbes listed ultra wealthy then this ratio falls even to a level half a percentage point meaning thereby reported income is equivalent to about half percentage point of their wealth.
This is striking because if we go back to our example of fixed deposits, hypothetically speaking if someone puts all their wealth as a fixed deposit they will be earning at least seven eight percent by way of interest income only. So their income they should report should be about more than seven percent whereas actual figures are two percent less than two percent as we discussed. So that's the real surprise here.
Puja Mehra: And Ram how is it for people who are not affluent for the lower ends of the spectrum of wealth the not so affluent how much are they reporting their income as?
Ram Singh: So their reported income of people, let's say bottom 10 percent bottom 20 percent of wealth pyramid bottom 10 20 percent of wealth pyramid they report income which is more than 100 percent equivalent of their wealth. The real issue here is that the bottom of the pyramid owns very little by way of wealth. Their major source of wealth is the house they live in which are tiny houses, small houses in rural areas even in cities small cities tier three tier four cities is what they come from and the real estate value of the house which is their main source of wealth is very small compared to income they earn.
The women keep in mind that they do not earn a lot of income but the value of their house is so small that even at minimum wage their income is more than the value of their house and as we move up the wealth pyramid this ratio keeps on decreasing as the ratio of wealth keeps on decreasing.
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To listen to the full episode and the conversation between Puja Mehra and Ram Singh the link is in the description.
Moving On To A Health Issue - Cancer
Roughly 1.5 million Indians contract cancer every year. In India one in nine people are likely to develop cancer in their lifetimes.
Those who cannot afford expensive treatment are particularly affected and there are many stories about how people travel long distances to reach hospitals and then have to stay on and take their treatments. Moreover while the number of hospitals is increasing across the country so are the number of patients. So why is that?
Why does cancer require such specialised care and what is unique to cancer apart from the obvious? In the weekend edition of the core report I speak with Dr. Kailash S Sharma, a near encyclopaedia on the subject of cancer. Dr. Sharma was an anesthesiologist earlier at Tata Memorial Hospital and is now dean of academic projects there. He is also a task force member on the upgradation of cancer care by the central government's health and family welfare department.
INTERVIEW TRANSCRIPT
Dr KS Sharma: So we go into the epidemiology of cancer and how many cancer cases per year in this country may be around 1.4 to 1.5 million cases at any given moment and with these cancer cases the usual mortality happens between say 8 to 8.5 lakh per year and these cases are increasing every year. There are two reasons for this. First, the population is increasing. The second thing is that the longevity of human beings is also now beyond 70-75.
So there are few cancers which are related to say old age or because of lifestyle diseases, some are hereditary, some are genetic. So all these things considered together we find that the number of cases is increasing. Number two will be that when there were no major cancer hospitals in this country, all other countries, all the patients used to come to Tata hospital.
So we used to find that these are the number of cases. But patients who could not approach Tata hospital, were dying in their home state or in their hometown and they never got registered. So that time the number of cases were not properly noted also.
So that is a challenge. The second challenge is the number of hospitals required. Cancer care is such that to treat a cancer patient, a comprehensive cancer hospital is required.
Comprehensive means there should be three core specialities like surgical oncology, medical oncology, radiation oncology and a very important branch which is often said neglected is oncopathology. A pathologist has to be so well trained that oncopathologist will give the guidance that what type of cancer, whether it is invasive, non-invasive, then there are immunohistochemistry markers, then there are molecular diagnostic markers which will give the correct diagnosis, the stage of the disease, then the prognosis also will be marked on whatever the number of tests. So these are the things.
Then of late, maybe say 20 years back, we realised that there is a department which is very much needed is the department of palliative care. So with all the departments of oncopathology, three major core specialities and palliative care, they are the pillar to manage any comprehensive cancer hospital. So Tata hospital has its own history.
Way back in 1939 with the house of Tata, it was founded by them and then by 1962, it was handed over to the department of atomic energy and now it is a standalone cancer hospital under administrative and financial control under the department of atomic energy. So we were the only people available in this country to manage, but for the last maybe 20 years, there are a large number of cancer hospitals in this country which are under government organisation, whether it is state government, whether it is central government or maybe under public sector undertakings. But there are a large number of private corporate hospitals also, not full-fledged for cancer, but they are a multi-speciality hospital having a small cancer wing where they have got three or four specialities available and then they manage the cancer care there.
So presently with number of cases and number of hospitals, what we want that to cater to this node of cancer, the availability of a cancer hospital should be in public domain and they should be available by government so that you can treat them cross-subsidised, highly subsidised, very poor patient, non-paying and under government scheme also like PMJ scheme, Mahatma Phule, Arogyashree, different different schemes are there. So at any given moment, when I saw all these hospitals, more than 85 percent of patients were under schemes.
Govindraj Ethiraj: Right. So when we say that we have 1.5 million cases every year, you're also saying that roughly 50 percent is the mortality rate?
Dr KS Sharma: Yes, around 8 to 8.5 lakh cases every year.
Govindraj Ethiraj: Okay. So is this uniform across types of cancer or is it there is some kind of cancer within that which are more?
Dr KS Sharma: So good question. I will touch upon four major and common cancers. One is say hedonic cancer, which is because of the smokeless tobacco or smoking tobacco, the pan chewing, betel nut, all these habits.
Second will be the breast case. Then third will be hepatobiliary like colon cancer, pancreatic cancer, gallbladder cancer. And fourth, if you want to touch upon, it will be major gynaecological cancer like cancer cervix and cancer uterus, endometrial and all.
