It's very simple.

"The central economic challenge India continues to face is the creation of well-paid jobs for the masses," wrote Prof Arvind Panagariya. We need manufacturing. "It is in manufacturing that unskilled workers become semi-skilled, semi-skilled skilled and skilled yet more skilled." China dropped industrial tariffs to 8.9% by 2009 and to 6.2% by 2021. "At the start of the Covid-19 pandemic, Bonnie Glick, then the deputy administrator of the United States Agency for International Development" came to believe that the US "should focus on making products at home ('reshoring' or 'onshoring'), closer to home ('nearshoring') or in countries allied with the US interests - a concept that lacked an established term but that she called 'allied shoring'." NYT. As countries look to diversify their supply chains away from China, India could take advantage by "progressive liberalisation and, as a first step, end all tariff inversion by dropping input tariffs down to rates applying to corresponding final products in the forthcoming budget." The unequivocal difference between China and India is that India has to hold elections at central, state and municipal levels, wikipedia, while Xi Jinping is the Emperor of China for life with a handpicked seven-member Standing Committee to carry out his whims. Outlook. In a poor country like India, 'freebies' are essential to win elections. "The ruling BJP has offered free subsidised housing, gas cylinders, toilets and sanitation facilities to people." BBC. "From cash transfers, health insurance and food to color TVs, laptops, bicycles and gold; politicians have promised voters the world." The "Union Cabinet...approved extension of free food grain distribution scheme for 81.3 crore (813 million) poor people for a period of one year." ET. Whether they are called subsidies or freebies they need a vast sum of money which means the government needs to collect taxes by any means. Hence, the high tariffs. The fiscal deficit, another name for government borrowings, in this year's budget was estimated at Rs 16.61 trillion and interest payments as a percentage of revenue receipts is expected to increase from 36% in 2011-12 to 43% in 2022-23. PRS. The government needs to collect equivalent taxes to fund its expenses. "Gross GST revenue collection for the month of November accounted for Rs 1,45,867 crore (Rs 1.46 trillion)." ET. GST collection is based on nominal GDP which means the Reserve Bank (RBI) intentionally tolerates a high inflation by increasing interest rate by minute increments - 35 basis points on 7 December. ET. Also high interest rates will increase government's borrowing cost and interest payments on debt. That may be one reason why, member of the Monetary Policy Committee (MPC) Jayanth Varma thinks the 35 bps rate hike was "unwarranted". ET. India "must overcome our fascination with a strong rupee," wrote Panagariya. "India's crude oil import bill nearly doubled to USD 119 billion in the fiscal year that ended March 31." ET. A strong rupee reduces the domestic price of petrol and diesel, which then allows the government to collect trillions of rupees in taxes. India Today. Indian politicians have absolute power. To prolong that state of invincibility they need to win elections, which means freebies to taxes to inflation to the rupee. Seems complicated. Actually very simple.