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Rate Cuts, Viruses And Morality Plays
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Good Morning. A rate cut in the US, Ebola outbreak in Congo, and an apparent TikTok sale — global headlines this week ranged from finance to disease to tech in a world still deeply affected by US president Donald Trump's policies. The contradictions were stark — as tech giants reached trillion-dollar values, poorer countries were left to fend with deadly diseases without the much-needed aid from the US.
In other news, India’s wealthy are growing fast, according to the Mercedes-Benz Hurun India Index. Meanwhile, GST reforms could boost household consumption.
DECODE THE NEWS
Fed Cuts, Ebola And TikTok Sale: A Week That Was In A Trumpian World
The US Federal Reserve has cut the Federal Funds Rate by 25 basis points, and held out the possibility of two more rate cuts this year. The Fed finds that with unemployment rising to 4.5% and the price index, stripped of food and fuel, rising 3.1%, the risk of deterioration is greater in the case of employment than for inflation.
The bond market seems to have anticipated a sharper cut, because the dollar strengthened marginally after the policy action was announced. The rupee has weakened against the dollar.
Optimism and hype continue to buoy the Indian stock market. After announcing that the expected impact on government revenues would be Rs 48,000 crore, implying that this is the amount of tax give-away via the GST rate cuts, the government now says that it expects Rs 2 lakh crore to flow into the economy as a result of the tax reform.
The new GST rates kick in next week, on 22 September. Many consumers have postponed purchases of things on which rates are slated to come down. Diwali shopping, all of trade and industry fervently hope, will start next week.
Trade talks have resumed with the US, with its representatives visiting India. The optimism this has generated is at odds with president Donald Trump naming India as a major transit route for drugs.
Viruses Thrive, Budgets Die
Ebola has returned to Congo. Congo, by now, has had reasonable experience in handling the disease. What is different about the current outbreak is that it occurs at a time when President Trump, no longer scared of puny viruses, has cut the US budget on international aid and funding of the World Health Organisation. We can hope that Congo will have the resources to vaccinate those vulnerable to the disease and contain it within its borders.
The Trump administration has ordered $10 million worth of contraceptives, meant for poor countries, to help women protect themselves from unwanted births and sexually transmitted diseases, including HIV-AIDS, to be destroyed, as part of the administration’s pro-natal policies.
Trump’s former ally Elon Musk has been doing his personal best to prevent the human population from dwindling to extinction, and has fathered over a dozen children. Trump is doing his bit by preventing American dollars from going to birth control products.
Musk addressed, via videolink, a massive anti-immigrant rally in the UK, organised by far-right leader Tommy Robinson. The Trump-Musk ideology seems to say, “Let there be multitudes, but let them stay in their lands that lack the institutional infrastructure to be as productive as they could be, were they to fill job vacancies in ageing developed countries.”
Meanwhile, in big tech, Alphabet joined Microsoft, Apple and Nvidia in the elite club of companies to be valued over $3 trillion. And, TikTok may be sold to an American-owned company soon.
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CORE NUMBER
8.71 lakh
That’s how many millionaire households India has in 2025, according to the inaugural Mercedes-Benz Hurun India Index (MBHX) report.
Why It Matters: India’s wealthy class is expanding fast — up 90% from 2021’s 4,58,000 — fueling demand for luxury goods, private banking, and premium services.
By The Numbers: Mumbai is still the ‘Millionaire Capital’ with 1,42,000 households. Maharashtra leads states with 1,78,600 households, a 194% surge since 2021. Wealth creation tracks asset growth: Nifty up 70%, gold nearly doubled since 2021.
Upward Mobility: Households worth $1 million, up 445% (2017–25) and $1.2 million+ households up 202%. But just 5% entered Ultra High Net Worth Individual ($12 million+), and 0.01% became billionaires ($1 billion+)
Luxury Snapshot: 55% of millionaires own multiple cars; Rolex tops watches, Taj Hotels in hospitality, HDFC Bank in private banking.
FROM THE PERIPHERY
Cheaper Basket
The recent GST rationalisation is expected to deliver a measurable boost to household consumption by lowering effective tax rates on daily essentials and middle-class staples, according to Crisil Ratings. The average GST rate on the top 30 household items, which account for nearly 88% of spending, has dropped from 11% to 9%.
By The Numbers: Almost 47% of the consumer price index (CPI) basket is now taxed at 0%, compared with 35.3% earlier, while 20% of the basket faces rate cuts. In contrast, only 1.2% of items have seen an increase. Essentials such as milk products, medicines, and processed foods now fall into the lowest slabs, while clothing, footwear, two-wheelers, entry-level cars, and TVs also see relief.
Flashpoint: Crisil estimates that entry-level car prices could fall by 8–9% and standard two-wheelers by 7.8%. The reforms tilt in favour of the middle class, even as premium goods face hikes. Global experience shows tax passthrough can range from 25–100% and take months, but if transmission is swift, GST 2.0 could meaningfully boost demand and ease retail inflation.
The Future is Green.
India’s power sector lowered its carbon dioxide emissions by 1% year-on-year in the first half of 2025, according to a report by the Centre for Research on Energy and Clean Air (CREA). The report says this reduction happened because of three reasons: clean energy capacity surged, electricity demand growth slowed, and hydropower output rose.
By the Numbers. Specifically, India added 25.1 gigawatts (GW) of non-fossil capacity in H1 2025. Moreover, 2025 saw above average rainfall and lower temperatures, which reduced emissions.
What This Means Going Forward: India has vowed to build 500 GW of renewable energy capacity by 2030, and reach net-zero emissions by 2070. CREA’s report suggests that if clean-energy deployment continues and demand stays moderate, India’s power-sector emissions could peak before 2030, and decline from then on.
SAIC Bye-Bye?
China’s largest state-owned auto company, SAIC Motor, will cut its 49% stake in its joint venture with India’s JSW Group and stop making fresh investments, according to sources Reuters interviewed.
Backdrop: The decision comes against the backdrop of India’s 2020 foreign investment rules that subject Chinese investments to extra scrutiny. This policy remains in place despite recent diplomatic efforts to improve India-China ties.
Setup: JSW has offered to acquire most of SAIC’s holding, though the two sides differ on valuation. SAIC will continue providing technology and cars, while seeking to dilute ownership.
CORE THOUGHT
"In today’s world of supply chains, we should always have a plus one strategy with every country, so that if one country cuts off the supply chain, you are not caught floundering”
— Kaushik Basu, former chief economic adviser (CEA) to the government of India, in an interview with Moneycontrol.com.
PODCASTS
The Markets Rise On Tariff Developments
On Episode 681 of The Core Report, financial journalist Govindraj Ethiraj talks to Amit Prothi, Director General at Coalition for Disaster Resilient Infrastructure, as well as Ambareesh Baliga, Veteran Market Expert.
The markets rise on tariff developments and rate cuts
How far can domestic flows support markets?
How Mumbai is India’s millionaire capital
Building more disaster resilience is critical if we are to learn from the extreme weather events we saw in recent months in India
Are Smart Meters Really Making Bills Soar?
Electricity theft is a huge issue in India. In FY24, India’s power sector lost 17% of electricity during transmission and distribution. To curtail those losses, and to update the country’s infrastructure, the Indian government launched Smart Meter National Programme (SMNP) in 2017. Its goal was to replace 25 crore conventional meters with smart meters by March 31, 2026.
But, by mid-July of 2025, power entities had installed only 2.41 crore smart meter units, according to government data. That’s just 10% of India’s 25-crore-meter target for 2026.
A recent survey found that low consumer awareness is one of the primary hurdles to smart meter installation. Some consumers worry they’ll see higher bills after getting a smart meter installed. In Gujarat, people even vandalised and set fire to electricity department buildings in protest of smart meters.
So, why are consumers upset? To learn more, check out the latest episode of The Signal Daily.
Listen to The Signal Daily on Youtube, Apple Podcasts and Spotify.
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