On Episode 933 of The Core Report, financial journalist Govindraj Ethiraj talks to Prasanna Tantri, Associate Professor of Finance and Executive Director of the Centre for Analytical Finance (CAF) at ISB.

SHOW NOTES

(00:00) Stories of the Day

(01:00) Markets May Have To Wait Longer For AI Unwind

(04:51) Amazon, Meta, Microsoft, And Oracle Are Carrying $1.65 Trillion In Debt That Does Not Appear On Their Balance Sheets.

(06:09) The Number Of Rs 100 Crore Income Filers Have Quadruped In 4 Years.

(07:46) Is The Rupee A Price Or A National Flag?

(23:32) How People Are Travelling Vast Distances To Watch 70mm Versions Of Odyssey And Gen Z Is Now The Most active cinemagoing demographic, attending more films per year than their elders.

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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 feedback@thecore.in.

Good morning, it's Tuesday, the 28th of July, and this is Govindraj Ethiraj, usually broadcasting and streaming weekdays from Mumbai, India's financial capital, but in transit right now

Our top stories and themes…

Markets will have to wait longer for an AI unwind.

The number of 100 crore rupee income filers has quadrupled in the last four years.

Amazon, Meta, Microsoft, and Oracle are carrying $1.65 trillion in debt that does not appear on their balance sheets.

Is the rupee a price or a national flag?

And how people are travelling vast distances to watch 70mm versions of Odessi and Gen Z is the most active cinema-going demographic attending more films per year than their elders.

Markets, Data Centres, AI and Big Tech Debt

India is waiting for firm signals on the global AI-linked frenzy unwinding, but they seem mixed for now, which means markets still need strong momentum to lift it beyond the trickle of welcome news like dollar inflows from NRIs and crude oil prices falling now to about $90 a barrel.

But you have to read news from the other side, so to speak, or more specifically, Wall Street. Predictions of an AI-driven hiring wipeout have yet to materialise. Companies across tech, transportation, and defence are hiring again, offering a bright spot as investors brace for a big week, according to a note from the Wall Street Journal overnight.

This year's stock rally, the note says, has already withstood inflation, war, and eye-watering AI budgets. And we'll come to more on that, though it does add that investors may be reaching their limit. The S&P 500 and Nasdaq Composite both fell last week for the second time in a row, weighed down by what the Wall Street Journal calls familiar threats.

Oil prices fell on Monday more than 5% after U.S. President Donald Trump paused strikes on Iran after two weeks of attacks, raising once again fresh hopes of a diplomatic solution to deescalate the conflict in West Asia. Brent crude prices, as we just pointed out, are holding around $90 a barrel, and Iran's army had also said on Sunday that they had suspended their military response. With all of this in the background, Indian stock prices rose on Monday after five consecutive sessions of declines.

The Sensex was up 776 points to 76,835. The Nifty 50 was up 229 points to 23,995. In the broader markets, the Nifty mid-cap and small-cap were up 1.1 and 1.3% each.

Last week, or rather the last five sessions, the benchmarks had lost about 2.3 and 2.7% each. The rupee had its best trading session, too, in more than six weeks on Monday, thanks to intervention from the Reserve Bank of India, which combined with the fall in oil prices kept traders happy. The rupee opened at about Rs.

96.14 and hit an intraday high of Rs. 95.79 on Monday. The Reserve Bank of India's measures to attract foreign currency inflows have drawn in about $32 billion, the governor Sanjay Malhotra told the Hindu Business Line in an interview that was published on Monday.

Elsewhere is the AI infrastructure build-out and global geopolitical developments spur big spending. An old guard sector of the economy is getting a level of attention from investors that rivals the action in tech, according to a CNBC report. The industrial sector of the S&P 500 is trading at a price-to-earnings ratio above 30, a level investors usually associate with high flyers and a price-to-earnings ratio that's well above the industrial's long-term average, which is closer to 20, according to that CNBC report.

Our own conversations in India with power industry representatives have suggested that India will see similar benefits from investments in data centres, for instance. McKinsey & Company estimates say that the investments, that's global spending on data centres, could touch $8 trillion in about four years' time, or 2030. And the vast majority of this will be data centre infrastructure and IT equipment.

Now, this all assumes that the data centre investment rollout that we are seeing right now will continue at the same pace. Remember, there is a lot of opposition to data centre projects in America, particularly in smaller towns. The report also says that in order to accommodate the staggering power demand associated with data centres, expanding rural power grids may prove essential.

This is in the United States. And constructing this AI backbone requires new electrical substations, strengthening high-speed fibre internet capabilities, and developing new energy-saving battery technology. Massive amounts of power generation and backup equipment, construction machinery, and electrification software have all come into the mix as necessities for scaling, the report says.

Caterpillar and G-Vernova are both up 50% this year. Caterpillar is up 160% from where it was two years ago. MSN Electric is 20% more in the last two years.

Meanwhile, an investigation from Nikkei Asia has revealed that Alphabet, Amazon, Meta, Microsoft, and Oracle are carrying $1.65 trillion in debt that is not on their balance sheets. Now, that's in addition to the roughly $1.35 trillion in debt they officially report. A note from Professor Scott Galloway of NYU Stern has summed up, which also says that instead of building data centres and buying semiconductor chips themselves, hyperscalers are signing long-term lease agreements with data centre operators, which allows them to offload risk and avoid recording the debt on their balance sheets.

Now, these data centre operators, according to Professor Galloway, are often shell companies that are created and funded by private credit providers like Blue Owl, Capital, Apollo, and Blackstone. And we've been seeing reports of stress in the private credit system on Wall Street in recent months. Now, these private credit funds, says the professor, are financed in part by public pension funds and life insurance companies.

For instance, the California state teacher's retirement system is one of the biggest investors in Blue Owl's public fund. So all of this means that the entities calculating the return on investment on building data centres aren't big tech, but the private credit funds. And if that AI bubble bursts, the risk won't fall on big tech.

It will follow the retirement savings and insurance policies of working class people, according to Professor Scott Galloway. Speaking of working class people, good news for wealth managers, who of course know this already, the number of individuals having reported gross total income of 100 crore rupees or more in their returns filed for assessment year 2025-26 was at 576. This is in India, of course.

And this is a sharp fourfold spike from the 142 reported in 2021-22, according to a report in the Economic Times.

India’s Power Demand

India's power demand rose in the first half of the current calendar, thanks to strong industrial activity and heat waves. The electricity shortage is more than doubling on an annual basis between January and May 2026, the Hindu business line quoted the International Energy Agency saying.

Now this of course sums up what we've been seeing and saying in energy consumption figures in recent months, particularly before the monsoons fully kicked in. In its media electricity review, the IEA noted that electricity demand rose by about 6% in the first half of 2026, thanks to stronger activity in industry and services and by heat waves sweeping the country between mid-April and early June. The month of May, for instance, saw 11% year-on-year increase as cooling degree days were also 7% higher in the country.

The highest consumption happened between May 18th and May 21, with peak load touching about 270.8 gigawatts on the 21st of May, 2026 or two months ago. Peak demand was fully met says the IEA report thanks to higher thermal and renewable capacity with solar covering about 22% of daytime peak that's 60 gigawatts.

Should The Rupee Be like a National Flag?

Should the rupee be at 70 or 100 against US dollars or the good old days of 38 rupees, which are of course not good for everyone.

Prasanna Tantri, Associate Professor of Finance at the Indian School of Business wrote in a recent Business Standard article that the rupee should be seen as a price and not a national flag. His argument, a stable economy does not require a permanently stable exchange rate. If gradual orderly depreciation helps Indian firms enter global markets, learn, upgrade and create jobs, it should not be feared, he says, and should be managed carefully and used intelligently.

He also further argued that these productivity gains do not remain confined to exporters because suppliers upgrade to meet exporter requirements, workers and managers move across firms, competitors imitate successful practises. Moreover, he says exports not just generate foreign exchange, they generate capabilities. India's exports constitute about 22% of GDP.

So question, is that a large enough figure to justify a depreciated currency given the impact elsewhere? And we'll come to that. Tantri also argues that there is a difference between preventing disorderly volatility and defending arbitrary psychological levels. I reached out to him and I began by asking him how you would see the rupees depreciation given that it was not a strategic move, but more an outcome of heavy portfolio investment outflows and a slowdown in foreign direct investment.

INTERVIEW TRANSCRIPT

Prof. Prasanna Tantri: This has been my complaint going, you know, people don't push economists much, we are doing that. Okay, so let's take that and we should not be dismissive about hypothesis, especially as a researcher. Let's say, is it a sign of weakness?

Now, first of all, how much has rupee depreciated? This is a big question that we have to ask. This 96 is against the dollar, right?

The real way of measuring is weighted average with respect to all the currencies that we trade with. That, you know, we have this real effective exchange rate. And if you see that, you know, the way it is measured is based on 2016 base now.

Why 2016 base? Because 2016 has been used as a base. If you say something was cost, you know, rupee, the effective depreciation in terms of price of goods and services of the rupee is 10% compared to 2016, which is not earth shattering.

You know, basically Indian goods have become 10% cheaper compared to where they were in 2016. In fact, by 2022, they were 10% more expensive, we had a rupee appreciating. The reason why it looks crazy now, because we have gone from 10% depreciation to 10% depreciation, where people should be asking this question is why are we, which means same people I'm asking, I will ask this question reverse.

Are you saying that in 2022, we were 10% better than the rest of the world? This is actually the 2022 was engineered, you know what we were doing? We kept real rate higher, you know, we discussed this before, we were the highest rate in the world.

Now we know exposed, you know, why people miss this thing going, you know, people are not people like you. Real rate is not nominal minus inflation. Inflation is a past concept.

The reported inflation is last one year, interest rate is next one year, it is interest rate minus expected inflation, and we measure it really badly. So therefore, we will only expose what was our true real rate. Now we know, in 23-24, the real rate was 3, 4, 5%.

We ended up up to 4% because inflation went to 0%, our repo rate was whatever, 6%, you know, inflation went to 2%, we charged 4% real rate. When you charge 4% real rate, when US is giving you 0% real rate, your currency will appreciate in real term. And your viewers are sophisticated, they should know that appreciation of a currency means not depreciating to the extent of inflation differential.

A currency which has higher inflation will depreciate to that. You know, there is nothing, it's like, you know, my age is all time high, does not make any sense. Of course, every day my age will be all time high, you know, if I have higher inflation, I will depreciate.

The question is, am I depreciating more than that inflation or less than that inflation? Up to 24, we were depreciating less than that inflation. That is because our real rate was very, very high.

It is engineered, you know, why it is partly engineered? Our real rate now is 0. You know, our repo is 5.25, reported inflation itself has now caught up, last time when we were talking, it had not caught up. Now the reported inflation itself is 4.39, if you take consumer price it is 9%. US has a real rate of 1%. If India offers 0%, tell me why should I invest in India?

You know, so it is not, not engineered by the way. It is, there is a part of it which is engineered. Earlier appreciation was also engineered, depreciation is also engineered.

But having said that, the reason for our depreciation and why it is not a reflection of non-performance, that question I did not answer still. My direct answer to that is that if it was weakness, our export would not respond to currency depreciation. Our last quarter, last year, we had a current account surplus.

This quarter, we are still at zero deficit. You know, if you add remittances, we are at zero deficit. So if exports are responding, that shows that, you know, it is not that our productivity had gone down.

If our productivity had gone down, if this was a reflection of reduced productivity, then exports would not respond to currency depreciation. I am saying exports have started responding. The main point of my article was, look, there are costs.

You know, what are the costs? Those who borrowed will have to pay more. Those who import, the prices are going to increase.

There are benefits. Benefits export are going to increase. But there is an extra benefit, which is not at all in the debate, which is when we start exporting, we learn.

You know, nobody will buy because of patriotism. Outside the country, people will buy our product only if they like it. Now that means our producers will learn and that has a spillover effect.

When some producers learn, they learn in their domestic production. Then their competitors will have to learn. So that benefit is something is missing.

That is why I would prefer a 10% real depreciation than a 10% real appreciation. That is my whole article. So this is not a sign of weakness.

If it was a sign of weakness, our export wouldn't respond to depreciation. And there is a part in engineering also because of the lower yield.

Govindraj Ethiraj: So exports is, I mean, only one part of the economy and definitely not a substantial part. You know, the thing is, we as a country, we've been trying to bring in dollars. We've had this whole package which was announced in the first week of June.

We are seeing a response to that because we've seen bond inflows. So if we did not have a problem of flows, many economists have linked the depreciation to the fact that we've seen a big slowdown in foreign direct investment and outflow in foreign portfolio investment, which is slightly shifted right now. And of course, equities have balanced, but bonds have gone up or flows into debt has gone up.

So we are still fighting another battle, isn't it? I really love this pushback.

Prof. Prasanna Tantri: Let's again look at data. We don't have a problem with current amount. We have a problem with capital as you rightly pointed out.

And what is the problem? You know, the problem is, it is not that gross flows have reduced. Last year, our FDI inflow was 98 billion, one of the highest.

What has happened is outflows. You know, we have FDI outflows. People, Samsungs of the world, or Maruti's of the world, or people who already invested in India, instead of reinvesting, they're taking money off.

And FDI outflows, that was minus 16 billion last year. This is a problem. Now, I agree, that's the problem.

You know, people are going out and they're investing where? They're investing in Korea, they're investing in all those chip and all those places. By the way, last one month, things are reversing a little bit.

It's not one sided as it used to be. Last 15-20 days, numbers are slightly different, as you know. Yes, there is a problem.

So the question is, what do you do? There is a long term solution is what? ISM 2.0 that policy government has introduced, that's a long term solution. You know, if you think that productivity, and long term by definition will take time. It is not going to do anything. What do we do in the short run?

Should we try to artificially support our currency in the short run or not? That's the debate I am addressing. My answer is no.

You can What they have done, for lack of better words, I'm sorry, whether I can use that word here, you know, I wanted to use stupidity, but I don't know, I'll still use it. Because what they're doing, go in, SBI is lending to NRI. Suppose an NRI has $100 in SBI account, SBI will lend 20 times of that, HSBC will lend 25 times of that, the NRI will borrow from Indian banks only, mostly from because gift is considered foreign.

That money will come to India, and India will give higher interest rate and RBI will guarantee exchange rate and that guy will make money. You know, how is it going to solve any problem? Why are we even doing this?

I don't understand. You know, it will not support.

Govindraj Ethiraj: I guess we're doing it because we're worried that the rupee will depreciate further.

Prof. Prasanna Tantri: Why should you worry? If you're worried, you want equity, you worry that ISM 2.0 you did, you do more of those. Why can't you exempt capital gain tax?

If you're worried that FII is a problem, bring down capital gain tax. Why can't you increase interest rate by half a basis? Everything has a cost.

You think this does not have a cost? Someone with 20 times leverage brings money, when they pull out in a coordinated manner, what will happen three years down the line? Should we not bother about what will happen two years later?

You mean two years later, there won't be any war like this? Are we sure? So is this better not to take a cost right now?

See, I understand increase interest rate by 50 basis points. What will happen? Growth will slow down.

Take it. There is no choice. If there is a good and a bad choice, there is no need for an economy.

Question is you have two bad choices. The bad choice is hike the interest rate, cut capital gains, cut some government expenditure, which will slow down activity now. Fair enough.

But I take it, you know, instead of seven and a half, you may grow at six and a half, so on. Instead, what we have done, not do any of those, get this artificial financial engineering, which will increase costs, which will not show up today, it will show up tomorrow. You know, when they will pull out, the guy who has leveraged 20 times, God forbid, it may not play out.

But if they all pull out together 100 billion later, then you will have a bigger crisis. What will you do then? So what was the need?

The whole point going is this, what is the need? Which world will collapse if it becomes 100? Which variable will collapse?

You know, that is what I don't understand. Current account is surplus. What they are missing is at 100, instead of 45 billion a month, you will start exporting 55 billion.

It will create jobs. There are automatic stabilisers in the economy. RBI has to wait for it.

You need to have some patience. I get it. If you have volatility, use your forex reserves.

Why do you have forex reserves for? Use them. Accumulate them in good times and use them in bad times.

So what is that they've achieved by preventing this 100 from happening is what I would ask.

Govindraj Ethiraj: Right. Let me ask the other question. So you're essentially saying that we should therefore not worry about the rupee at all, except for the short term volatility?

Prof. Prasanna Tantri: Yes, except that. I don't want from short term volatility or collapse. Suppose we go to 200 tomorrow morning.

You know, that I think then it's a serious problem. RBI cannot do anything. That means our economy has collapsed.

You know, if we start going to 200, 300, 500, that's a collapse. You know, that's the end of the economy. This is not that.

When we do historiography, right, we should not do wrong comparison. Go to just 2013. Current amount deficit was 5%.

That was led by inflation. Now current account deficit is zero. We don't have current account deficit at all.

And we have this beautiful thing called NRI remittances. We have to worry, go and if at all you have to worry, you know, the biggest thing that I worry, these NRIs were sending money when their parents, unfortunately, were touching 80, when they're not there. I told you last time, what will happen to this?

This is the single most factor which is helping us. 150 billion dollars. Our crude oil export, which we worry so much, is 170 billion.

And import and export is 150 billion. So net crude oil is 120 billion. NRI remittance net is 145 billion.

And it is accelerating. Now, if at all you want to do something, get this not NRI deposit. This is NRI sending money to India.

Ease that. Make it easy for them. You know, organise more tourism for them.

This is not deposits. Don't make them borrow and send money here for arbitrage. Let them spend money here for tourism, hospital, whatever.

Make that easy. Last year, our crude imports was 170 billion. This year, maybe because of price rise, it will be 200 billion.

And we had a 50 billion crude export. That is also going to rise this year. You know why?

Because Russia is unable to process. We are processing and sending to Russia.

Govindraj Ethiraj: Right. So let me come back to the point on exports. What you're saying strategically, because you've also used the example of countries like South Korea, seems to intuitively make more sense for an economy that is far more export orientated than we are.

Do you disagree on that? We are 25 percent already.

Prof. Prasanna Tantri: They were not born export orientated. You know, they became export orientated. We are 25.

We are not small. Why can't we? Because we are not export orientated out of choice.

We don't produce good products. Until recently, you and me remember, we thought, Scooter, you have to tilt to start. You know, that's the quality we had.

Who will buy your products? See, we have this bad habit of showing our weakness as some kind of strength. 2008, we were not impacted.

Obviously, we don't innovate. Why will we win? You know, you don't do any innovation, we will not be impacted.

So I think it's not a great sign. I'll tell you one more example since we went to Korea. Plaza Accord of 1985, which you are, I'm sure, familiar with, was all about every country was fighting to depreciate their currency.

You know, Japan, yen was 240. And it became 150 after that. And Japan collapsed.

You know, one thing I'm sure, what I don't want is a 83 rupee again. That I'm very sure. You know, if you give me a choice between 102 and 82, I will anyway choose 102.

83, we are done. Our employment will go away. Tirupur will come to street.

You remember, briefly in 2008, when I used to watch in CNBC, rupee went to 39. And there was mayhem, you know, rupee from 50 to 39. So clearly, if you give me a choice between 102 and 82, any day I will go for 100.

Govindraj Ethiraj:

Okay, this is the sentimental part that the rupee is not a national flag, it's a price. But a lot of people do believe that it's a national flag or began to believe that. So how do you address something as sort of conceptual as that?

Prof. Prasanna Tantri: I will give them examples. For the 2030 years, you know, Nikkei was 40,000 in 89, as you know, and then it came all the way to 10,000. That was a time where the currency appreciated the most.

You know, now, for example, right now, the currencies which are appreciated the most against the dollar are European country. Do you think that they are doing the best? They are no growth at all.

You know, it is just the supply and demand of money, you know, and the interest rate and then there is always bubbles going on every point of time. I'm not saying AI is a complete bubble, but there is always these things happen and we cannot do use everyday movement, price movement as some kind of economic performance. But having said that, I agree with you that there is no need to keep rupee low by keeping zero real rate also.

All I'm saying is if the market is doing something, don't do anything artificial. Keep real rate at the natural rate of interest, which is around 1.52% for us, which means for now, if your inflation is 4%, I'll keep the interest rate at 6%. After that, whatever rupee becomes, let it become.

Why should you bother? That is what I'm trying to say. Neither try to depreciate it nor try to appreciate it.

Few years ago, we appreciated it. Now, we are trying to depreciate it. You know, don't do.

Now, having depreciated it, we are trying to fight it through another abusing. We are doing two bad policies and your viewers will understand. One, we kept the real rate low and rupee depreciated.

Now, we are doing another bad policy of letting leveraged money come into India with 20 times leverage, giving them forex guarantee as if these things will not have any cost and trying to boost this rupee. Why do we do two bad policies? Remove both of them and exempt the capital gain.

I'm telling you, you know, even if you want rupee stability, exempt capital gains for equity. We need equity. We don't need debt.

Debt will make system even more risky. Get equity and we can't create AI tomorrow. Short-term measure is 1 lakh crore.

Lose 1 lakh crore from your budget and reduce spending. You know, there is a way. So, that's all I'm trying to say.

Govindraj Ethiraj: Okay. Thank you so much for joining me.

Prof. Prasanna Tantri: Thank you so much for pushing.

I always ask this. Non-politicians are never pushed. It was nice talking to you.

Govindraj Ethiraj: Thank you so much and I'll see you soon.

Prof. Prasanna Tantri: Thank you.

An Odyssey to See the Odyssey In IMAX

You may have seen Christopher Nolan's The Odyssey, but if you're in India, you would not have seen it in the original 70 mm IMAX film version that many are vying to see it in because among other things, that's the version Nolan wants you to see it in. Now there is only one such theatre in India and it's in a science city in Ahmedabad which does not screen commercial films. Other IMAX theatres across India are digital projection systems with smaller aspect ratios.

Now there are 25 theatres across the US and an additional 16 internationally playing the 70 mm version of The Odyssey. CNBC quotes the example of a family of five that drove approximately 900 miles round trip by minivan from their home in St. Louis, Missouri to watch The Odyssey in 70 mm. Melbourne reportedly hosts the only IMAX theatre in the whole Southern Hemisphere and people are flocking there too.

CNBC quotes the CEO of IMAX saying that IMAX 70 mm film has become amongst the hottest tickets in the world, fliers are flying across countries, if not continents to experience The Odyssey in IMAX 70 mm. But there are only a small number of IMAX theatres that are big enough as we said and equipped with a high cost machinery necessary to project the 15 by 70 film considered the largest and rarest format in cinema and shot on gigantic rolls of 70 mm film. The print stretches for more than 17 kilometres and weighs about 240 kilogrammes.

But the interesting thing is that while Odyssey is pulling back into cinema halls, that is viewers, the trend of course has been growing for a while. Gen Z is now the most active cinema going demographic, attending more films per year than their elders according to a new Fandango study that was released a few months ago. They're also spending more per visit on concessions on premium format screens like IMAX according to the Variety magazine.

By generation, 87% of Gen Zs and 82% of millennials saw at least one movie theatrically in the last 12 months compared to 70% of Gen Xers and 58% of baby boomers. Motivations according to that study varied across age groups, millennials treat movie going as an escape from daily routine, Gen Z sees it primarily as a social activity. Gen Z also attributes a better selection of movies and of the appeal of leaving home as a key driver of attendance.

Across all demographics, the biggest barrier to getting off the couch wasn't the movies themselves. Patrons cited coordinating schedules, finding time and securing a deal on tickets as challenges in getting to a theatre or a multiplex. Although the first quarter of 2026 has greatly improved from last year, this summer 76% of movie goers reportedly planning on seeing a movie in theatres between May and August.

Hybrids FTW

Electric vehicles, hybrid and CNG cars are now roughly 30% of all auto sales in India and growing fast. Within this hybrid cars are still a small portion or around 4% of the total number of cars sold but Toyota alone has 80% of the hybrid market right now. So the strategic call not to go all in into electric as Toyota did and stay focused on internal combustion engines and hybrids as an extension is evidently working for now.

In the U.S. the first half of 2026 sales of hybrid cars not long ago considered a bridge to fully electric vehicles have risen nearly 20% to a record market share of 15% according to the Centre for Automotive Research, almost three times the share of pure electric vehicles according to a CNBC report. It also quotes an analyst saying that the only growth that they're seeing is in hybrid market share while all other propulsion systems have lost market share year to date. The leaders there in the U.S. market that is our Toyota, Hyundai and Honda who control about 86% and significantly most if not all American car makers are missing.

The only U.S. major car company is General Motors which has one hybrid in its lineup in the Corvette E-Ray and GM told CNBC in an email that hybrids do have a role in our future product plans.