On Episode 954 of The Core Report, financial journalist Govindraj Ethiraj talks to Atul Chaturvedi, Director at Shree Renuka Sugars as well as Umesh Sharma, Chief Investment Officer - Debt at The Wealth Company Mutual Fund.

SHOW NOTES

(00:00) Stories of the Day

(01:00) Will Indian Markets Hold Their Gains As US Treasury Yields Rise?

(04:38) Did The Government Fail To Anticipate A Sugar Shortage, Leading To Prices Jumping And Imports Opened Up?

(15:41) The US Treasury Is Openly Intervening In Bond Markets, Even As Gross US Debt Crosses $40 Trillion

(24:09) What China’s Humanoid Robots Can And Cannot Do

(26:00) The Rise And Fall Of Asia’s Second Richest Man As Chinese Real Estate Tycoon And Founder Of Evergrande Is Sentenced To Life In Prison

EVENT: Spotify x The Core's "Building Wealth for a Longer Life" with Saurabh Mukherjea of Marcellus Investment Managers. Register Here

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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 Friday the 21st of August and this is Govindraj Ethiraj broadcasting and streaming usually from Mumbai on weekdays but currently in transit.

Our top stories and themes…

Will Indian markets hold their gains as U.S. treasury yields rise?

Did the government fail to anticipate a sugar shortage leading to prices jumping up?

The U.S. treasury is openly intervening in bond markets even as gross U.S. debt crosses 40 trillion dollars. What does that mean?

What China’s Humanoid robots can and cannot do?

And the rise and fall of Asia's second richest man as Chinese real estate tycoon and founder of Evergrande is sentenced to life in prison.

Markets, US bond Yields and Gold

It is tough to fight the markets particularly in the biggest one of them all. Bond yields climbed Thursday morning erasing most of the pullback they saw the previous day after the U.S. treasury department announced an intervention aimed at easing pressure on longer-dated government debt. The yield of the 30-year treasury bond, the primary focus of the accelerated buyback, was up 5.7 basis points at 5.25 percent according to CNBC overnight.

Yields on 10-year U.S. treasuries, the main benchmark for mortgages auto loans and credit card debt was up 5.1 points that's basis points to 4.70 percent. In a move announced on Wednesday morning the treasury department led by secretary Scott Besant had said they would at least double the size of their government debt buyback starting September 9th and running through November 4th. Yields fell following the announcement with the 30-year down about 10 basis points after previously hitting its highest in about 19 years predating the global financial crisis in 2008 according to the CNBC report.

Meanwhile America's gross national debt topped 40 trillion dollars for the first time on Wednesday. This year the U.S. is on track to borrow more than 2 trillion dollars to help pay for its obligations including spending on the and the sweeping tax cuts that Republicans enacted in 2025 according to the New York Times. Rising interest payments to investors who have purchased America's debt now make up about half of that red ink pushing the United States into a deeper financial hole according to that report.

More on that shortly. Oil prices were up to more than three-week highs on Thursday over concerns that the Iran war will continue and will continue to disrupt supply of oil through the Strait of Hormuz. Brent crude futures were up to about $93.80—that's almost $94 a barrel—on Thursday afternoon.

Now, all of this did not affect the Indian markets, which also chased global markets into positive territory. But part of that risk sentiment improvement was because of those easing treasury yields in the U.S., which of course reversed on Thursday, so we'll have to see today, which of course is another day. But yesterday, the Sensex snapped a four-day declining streak to close 628 points up to 77,537. The Nifty 50 also swung back from a seven-day losing streak, gaining 153 points to close at 24,231. The broader markets were also up, with both the Nifty Midcap 100 and the Smallcap 100 ending higher.

Gold prices were down after prices had hit a more than two-month peak after that U.S. Treasury announcement, which weakened the dollar and lowered treasury yields. Spot gold was down to $4,488 per ounce on Thursday morning.

Meanwhile, Bloomberg is reporting that India's monsoon crop planting has largely recovered after normal July rains helped offset the driest June in 12 years, potentially easing food inflation if the precipitation or rainfall persists. India's Agriculture Secretary has said that sowing of most crops, including pulses, oilseeds, and cotton, is progressing satisfactorily.

Back in the markets, the Securities and Exchange Board of India may overhaul decades-old rules to counter unprecedented selling by foreign portfolio investors, according to a Reuters report that quoted sources. As a background, foreign portfolio investors' holdings are at about a 17-year low right now, and the rupee, which is down about six percent, is ranking amongst Asia's worst performers. The SEBI moves potentially include lowering of collateral requirements in cash equities and encouraging longer-dated derivatives, according to those sources. They will add to plans to boost the cash equities market by making shorting of stocks easier and nearly doubling the number of shares eligible for lending and borrowing.

Why Does India Have A Sugar Shortage?

India is set to allow duty-free import of about 1 million tonnes of raw sugar to cool down domestic prices ahead of the festival season that's kicking off right now. This is happening after a gap of about 10 years. Sugar prices have risen nearly 40 percent in two months amidst tightening supplies, prompting the government to import the sweetener for the first time in nearly a decade, according to Reuters. The steep rise in prices since March 2026, just as the country is entering the high-consumption festival period, is largely attributed to drying up of pipeline stocks with mills as consumption overshot production in the 25–26 season that started on October 2025, according to a Business Standard report, which also quoted experts saying the decision to allow exports of about a million and a half to two million tonnes of sugar when India was staring at a shortage based on faulty production estimates is also to blame for the situation. Based on some estimates, India's actual net sugar production in the 25–26 season is about 27.9 million tonnes after accounting for about 2.4 million tonnes of ethanol; the opening stock was at about 4.7 million tonnes. I reached out to Atul Chaturvedi, Director of Shree Renuka Sugars, and I began by asking him why prices had shot up so suddenly, what had brought us to this current situation, and whether the latest moves would help bring down prices.

INTERVIEW TRANSCRIPT

Atul Chaturvedi: In fact, the government and the whole trade was worried that the stock levels in the country were actually coming down. Under normal circumstances, as of 1st of October, the decision makers are comfortable with a stock level of about 6 million tonnes. But this time round, as per calculations available with the trade and feelings in the trade, this stock level would probably come down to about 3.5 million tonnes, and that was triggering all this bull run in the last month or so. Coupled with this, you have El Nino staring at you, and the rains have been relatively patchy. So, which simply means that the production next year also is not going to be all that un-kiduri, so there could be challenges in the next year's production as well. So, keeping all that in mind, the government, I think, very sensibly has just come out with a notification allowing raws of 1 million tonnes to be imported.

What they have also very smartly done is, and they need to be congratulated for that, as a one-time release, what they have allowed is the port-based refineries, which import under advanced authorisation, which means an obligation to export with a 15% value addition. So, they have been allowed one-time clearance, where they can just say, we would like to much rather sell in the domestic market. So, this should help in actually capping the upside run.

And it's sensible and should also put some stocks in the market, and probably augment the supplies in the market.

Govindraj Ethiraj: Right. And some reports are suggesting that there has been a data misunderstanding or misinterpretation. What's your sense?

Atul Chaturvedi: Actually, what had happened was, initially when the trade bodies had predicted the crop, they were talking in terms of 34 or 34 and a half million tonnes of sucrose being produced in the crop year 25-26. But subsequent events turned out to be absolutely different. And in fact, the sucrose levels were closer to 31 million tonnes or even marginally lower.

But based on the 34 or 34 and a half million tonnes of earlier projections, the government actually allowed 1.5 million tonnes of sugar to be exported. If the production had been that much, it would have been definitely a sensible decision because that would have helped the local values to remain relatively better. But contrary to the expectations, nature had different ideas.

And we landed up with a crop of about 31 million tonnes or less, and the sugar production was only less than 28 million tonnes, with about 2.75 million tonnes or thereabouts being diverted towards ethanol. So all these things put together have actually resulted in the stock levels coming down. And what also happened was, initially, the exports were not happening because the world market was factoring in a much bigger crop worldwide.

Even probably India also, India being a swing factor, they were also factoring in a big Indian crop. So the world values were much lower and Indian exports did not take place. But once the rupee started weakening and the Gulf War took place, and everything changed, so some export actually happened.

We ended up exporting about 800,000 tonnes as against a total allocation of about 200 or 2 million tonnes. The government rightly closed the tap once they saw the writing on the wall. And probably we'll end up importing that much what we had exported.

Govindraj Ethiraj: Right. And you touched upon ethanol. So what's the sort of tension here between, let's say, diverting sugarcane for ethanol versus for domestic production of sugar, and the fact that we are also now importing sugar?

Atul Chaturvedi: In fact, my take is next year, cane juice will not get diverted, neither will be heavy molasses be diverted towards ethanol. For the simple reason that the price at which oil marketing companies buy cane juice ethanol is closer to about 65 rupees or thereabouts. And 65 rupees actually translates to about 37 rupees compared to sugar values.

And sugar being now selling in excess of 50 rupees a kilo. So I don't think any miller would be interested in diverting cane juice towards ethanol and they would probably not be even bidding for ethanol. So obviously, the burden would fall on maize and rice.

So ethanol from cane juice is out of the question, because government will not be increasing the price of ethanol also. So that looks at this point of time, a little out of the syllables.

Govindraj Ethiraj: So all of this, I mean, the duty free imports are aimed at reducing prices. So what's your sense on when they would come down or when they could start trending down?

Atul Chaturvedi: My take is that the international values have also gone up. So markets internationally, because whether we like it or not, India is a very big swing factor in the world sugar market because we are not only one of the biggest producers or are the second biggest producer of sugar in the world, but we are also the biggest consumer of sugar in the world. And anything which happens in India has direct repercussions in the international market.

So my take is that current values at which imported whites would be available would be closer to about 56 or 57 rupees a kilo. What will also happen is the upside as far as the domestic values is concerned will get capped. And whatever sugar which may have been stocked or people who may have gone long, Indian sugar, they will probably offload it and it should bring some sanity in the market.

And apart from this, the government is also going hammer and tongs and trying to beat down the market by various initiatives like storage control orders and you need to sell your sugar within so and so time. And so I think all these actions would ensure that the run up which the trade or people may have been expecting for during festival may actually not happen. And secondly, the other thing is that most of the big buyers and big buyers are relevant because about 65 percent of India's consumption is by institutional buyers, confectionaries, beverages and things like that.

So I'm sure they're all smart enough and they would not like to go long sugar at these values. So their demand may also be muted and that should also bring some sobering effect as far as the domestic values of sugar is concerned. So all put together, I think the run up is probably now reached the top of the parabola.

Govindraj Ethiraj: Right. That's a positive note to end on. Mr. Chaturvedi, thank you so much for joining me.

Atul Chaturvedi: Thank you.

FCNR gone too Soon?

The Reserve Bank expects close to 80 billion dollars in inflows via subsidised swap facilities that were opened in June as a way to bolster foreign exchange reserves, Governor Sanjay Malhotra said in an interview to Financial Express on Thursday. Last week, the Reserve Bank closed one of the schemes—a discounted swap facility for FCNR deposits (or Foreign Currency Non-Resident deposits, or NRI deposits)—earlier than anticipated. The move was sudden because the scheme was supposed to extend into September, and when asked in the first week of August, the Reserve Bank Governor had denied plans to close the schemes early.

Now, the process does suggest some lack of thinking through, as the Reserve Bank clearly had not expected the flows to be as substantial or worked out the cost of servicing this debt, which is effectively a can that's been kicked down the road. The Governor said across all three schemes they expect about 80 billion dollars, which reflects India's strong macroeconomic fundamentals, which would also strengthen the country's balance of payments. He said advancing the last day of the swap window for the FCNR(B) deposits was well thought out, calibrated, prudent, and a data-driven response to the evolving situation, and it was done from a position of strength. And that, of course, is something most Reserve Bank-friendly analysts have been saying in the last few days as well.

He also said that flows have been stronger than expected, and even stronger than what most market participants expected. He also said the Reserve Bank's net forward forex position is very manageable and added that the exchange rate continues to be market-determined. And finally, he told the Financial Express that the Reserve Bank's policy on intervention remains the same: to curb excessive volatility and any undue speculative activity.

What is the US Government Doing in the Bond Market?

Well, we're still staying in the broad realm of interest rates and debt and bonds. So what is the U.S. government doing in the bond market? Many things, and it's part of a larger policy and approach to direct intervention not seen for a while. The intervention has not just been limited to U.S. bond markets, but also extended to currencies like the Japanese yen and the Argentine peso—moves seen as unusual, if not unprecedented, in part because they weren't part of a broader international effort, according to a Wall Street Journal report.

In buying bonds and driving down yields aimed at driving down rates ahead of the midterm elections, as some analysts have said, this is clearly a more political move. And of course, going by Thursday's price response, wherein bond yields have clearly gone up again, the actions do not seem to have worked to that end. It all comes back to Scott Bessent, Treasury Secretary—now America's bond trader-in-chief, or in his words, America's top bond salesman.

A Wall Street Journal report says that it was never clear what Bessent could do to have a big impact on yields, which are largely determined by the economic outlook and how investors think the Fed will respond—that's the Federal Reserve will respond to those conditions. Yields have continued to climb, says the article, driven in large part by stubbornly high inflation and surprisingly strong economic growth, which has led investors to bet that the Fed's next move would be to raise rates. The report also says investors have already been sceptical that the Treasury's buyback plan would have more than a short-term impact on the bond market.

Now, for those who are keen to dive in a little more: the U.S. government has already been buying back older Treasuries for two years. Officially, these buybacks are aimed at liquidity support and not driving down yields on new bonds, but keeping yields on older bonds from drifting upward just because they're less actively traded. One fund manager told the Wall Street Journal that the increased buybacks appear political, meant to drive down rates ahead of the midterms. He also said it puts into question the validity of the U.S. bond market and that it could push investors into alternative investments, such as dividend stocks.

One of the things, of course, that could help India in all of this is that the dollar might get weaker, which might help the rupee. Now, Treasury Secretary Scott Bessent's bold intervention to stem that potentially damaging rise in U.S. borrowing costs has some investors saying that the dollar will ultimately pay the price, according to a Bloomberg report quoting an analyst saying that the dollar certainly is the biggest casualty and that he sees Bessent is deliberately pushing down long-term real rates and signalling a tolerance for the weaker dollar to keep the economy afloat.

So how are these developments looking like through an India lens once again? Also, India's Monetary Policy Committee has put out fairly hawkish-sounding notes after the recent credit policy two weeks ago. So what could all of this mean? I reached out to Umesh Sharma, Chief Investment Officer - Debt at The Wealth Company Mutual Fund, and I began by asking him to walk us through his reading of the goings-on in the United States debt markets.

INTERVIEW TRANSCRIPT

Umesh Sharma: So yeah, it's a pretty significant number, and the pace at which it has risen—that itself gives a lot of cause for concern. If you look at it in terms of their GDP, the U.S. debt-to-GDP is now over 100%; it's around 122% as we speak, and it's slated to rise further because their fixed spending commitments—like on defence or Medicare, Medicaid, Social Security payments, etc.—these account for a majority of their expense, and they are clearly spending much more than they are earning. It leads to basically build-up of government debt over a period of time.

It is interesting to note that the debt-to-GDP number—it was last higher than this number during World War II, so it's a decadal kind of a number that we are looking at. And the cost for interest servicing itself for this year is projected to rise to about 1.2 trillion dollars, which is more than their amount allocated for their defence budget.

So the pace at which it is rising, again, it's interesting: so in the 2000s, basically, it took about 24 months for 1 trillion dollars to be added to the overall borrowing; in the 2010s, it took about 11 months; and now the last trillion dollars was added in a span of just five months. You look at it from a debt-to-GDP perspective, or whether you look at it from an absolute perspective, that number is now beginning to catch the market's eye.

As we were discussing before, the overall interest rate levels—definitely the more the supply gets, the more investors demand compensation for it. And consequently, we have seen pressure on the Treasury yields all throughout. And please remember that in COVID, majority of the governments—they supported their economy through huge fiscal spend, and inflation rose in the aftermath of that.

So in the U.S., the inflation has now missed the Federal Reserve's target of two percent for more than five consecutive years, so that itself begins to call into question the credibility of the central bank. And with wars now driving the Fed and not giving any guidance to the market, that is another, you know, spanner in the wheels where the market is left grappling with respect to what the Fed is intending to do to bring the inflation back down to target.

Coming to a country like India, basically, why is it important? So, U.S. runs the dollar, which is considered to be the global reserve currency. And, you know, pricing of U.S. government bonds typically acts as sort of a barometer for the rest of the world as far as risk-free interest rates are concerned. And there itself, the risk has been rising, and consequently everything priced off of the Treasury curve definitely also reprices higher.

Second impact is obviously on the dollar, where the U.S. economy is growing recently, but the debt burden is rising disproportionately, and that puts pressure on the dollar to go lower. And the other central banks try to diversify away from U.S. assets. We have already seen global central banks trying to move towards gold or other currencies and trying to reduce their dollar exposure.

So for a country like India, definitely the cost of capital could get impacted. We have seen that we need a lot of foreign flows to balance our external account, we have been facing challenges on that front, and it resets the equilibrium rate of interest a little bit higher, you know. That is what we feel.

Govindraj Ethiraj: Right. And let me come to now India—sort of India within. We've seen now the minutes of the Reserve Bank's Monetary Policy Committee, which seem to be now sounding a little hawkish and suggesting—which is a little different from the commentary or the tenor of the commentary we heard from the Reserve Bank itself two weeks ago. So what's your sense?

Umesh Sharma: So basically, in the MPC document itself, there were a couple of lines which were probably hinting at the MPC trying to find a way to normalise monetary policy. However, given the uncertainties that abound—so whether it is the West Asia crisis or whether it is inflation coming up from a very low base, the concerns with respect to El Niño are still materialising—we don't know to what extent growth will hold up, although it has held up pretty well so far.

Given all these uncertainties—so although the RBI could see that core inflation is inching up, even ex of precious metals, which is a metric that they've been tracking for the past few MPCs, that is slated to go up—so I think the idea they wanted to send across was that as inflation normalises, the policy setting, which is at 5.25 percent, that is probably more relevant to inflation which was like in the vicinity of two percent or thereabouts. And now that inflation itself is normalising towards that five percent mark, maybe some recalibration is required on the policy front.

But I agree with you that the conversation post-policy comments—they probably did not emphasise it enough, or maybe, you know, the questions were not pointed directly on these couple of lines already there in the MPC document. The minutes bring that into sharper focus, with a couple of members talking about real rates, you know, and some members flagging the normalisation of inflation, calling for recalibration of policy; notably, the Governor himself in the comments alluded to that.

So the impact is that post-policy, there were commentaries in the market where people had postponed their rate hike expectations, with some going so far as saying that there will be no rate hikes in this calendar year and maybe not even in the first half of next fiscal. So we were of the opinion that probably RBI will start normalising towards the end of this year—to maybe December.

Uh, it's an open question, but our sense is that from December we will begin to see some sort of rate normalisation. At this point in time, we are expecting about 50 to 75 bps kind of rate hikes that the RBI will engineer.

Govindraj Ethiraj: Right. Amazing. Thank you so much for joining me.

Umesh Sharma: Thank you.

The Future of Humanoid Robots

Humanoid robots will reach mass-market popularity within a decade after manufacturers solve problems that hold back their current usefulness, Bloomberg quoted the founder of China's Unitree Robotics saying. In India, we think of humanoids as human-like robots with legs and arms, which is of course correct, but we're all seeing some form of robotics in our lives already—for instance, autonomous vacuum cleaners in many urban Indian homes.

Wang Xingxing, the founder of Unitree, said that the markets will take off once robots can handle 80% of tasks given to them via voice instructions in unfamiliar surroundings. He was speaking at the World Robot Conference in Beijing on Thursday, and he said this could take between two to ten years. He said that robots already perform well in test conditions, but their execution collapses once objects or surroundings shift even slightly. This means that robots still lag behind human workers and suffer from weak versatility in terms of the tasks that they can handle.

Unitree had a blockbuster IPO this week and plans to spend half the proceeds from that offering to help develop the humanoid brain, also known as embodied AI, according to its prospectus. Billions of dollars of venture capital are flowing to companies working on AI models designed to let humanoids carry tasks on their own, according to that Bloomberg report. JPMorgan has forecasted global humanoid robot shipments will rise to 60,000 this year and 1.75 million units by 2030, compared to about 18,000 in 2025, and China could account for more than half of global demand. Unitree Robotics, whose backflipping and dancing machines have drawn global attention, raised about 905 million dollars in its IPO, and its shares closed 460% higher on its debut on Wednesday on the Shanghai market.

Chinese Real Estate Tycoon’s Sentenced to Life in Prison

And more news from China, though of a different kind: China Evergrande Group's founder Hui Ka Yan has been sentenced to life in prison, bringing to an end one of the most dramatic rise-and-fall stories in China's corporate history, according to Bloomberg. The disgraced property tycoon, who was once Asia's second-richest man, had created Evergrande into a poster child of corporate excess during China's long real estate boom. But after a 2021 default, his empire collapsed, and all of that led to a series of official investigations that caused his downfall. He was sentenced alongside 56 others involved in Evergrande, including his sons.