Friendly, but for how long?

"Washington blinks, New Delhi benefits," "giving Indian exporters an edge over competitors from Bangladesh (20% tariffs), Vietnam (20%), Indonesia (19%) and China (37%), one can visualise a surge that will speed up India's fast-moving economic engine," wrote Sreeram S Chaulia. Critics are saying that India has lost its strategic autonomy by pledging to give up Russian oil, but, "The reality is that access to US markets, capital, know-how and technology is far more important for the Indian economy (and job creation) than any savings from Russian crude oil discounts," wrote Tanvi Madan. That is the long-term wish, but what happens to short-term revenue for the government. "Petrol tax in India consists of 55% of petrol's retailing price while diesel tax is 50% of of the fuel's retail value." cleartax.in. In January, "India's average crude oil imports cost fell below $60 a barrel,..among the lowest it has been in five years despite...sanctions against three major crude oil suppliers - Iran, Russia and Venezuela." HT. The government may levy a windfall tax on "The three state-run oil marketing companies (OMCs)...which "posted a combined net profit of Rs 340.67 billion in the first half of 2025-26, a 269.4% year-on-year jump that exceeded their full-year profit of Rs 336.02 billion in 2024-25." HT. The government of course squeezes enormous dividends out of the public sector enterprises (PSE) it controls. It has already received Rs 526.67 billion out of PSEs in the financial year 2025-26, which ends on 31 March. dipam.gov.in. "Geopolitics and geo-economics both suggest that our choice in the new G-2 world is to partner either with the US (with which we have a lot in common, starting with democracy) or with China-Russia," and "China's expansionist and mercantilist tendencies should be both contained and reduced," wrote Surjit S Bhalla. Hence, a partnership with the US will protect us. Or, will it? In 2010, during Barack Obama, "In the last three years, the US has provided 14 F-16s, five fast petrol boats, 115 self-propelled howitzer field artillery canons," ostensibly to fight the Taliban. India Today. In 2019, Imran Khan, then Prime Minister of Pakistan, said that the Inter-Servicea Intelligence (ISI) helped the CIA to kill Osama bin Laden in 2011. DH. In 2012, Obama won re-election for his second term in office. wikipedia. In the 1971 war between India and Pakistan, which led to East Pakistan becoming independent Bangladesh, President Richard Nixon discussed asking the Chinese to attack India and, possibly, use nuclear weapons to stop Indian advance. Dhaka Tribune. Russian submarines and ships put the US, UK and Austrlian navies to flight. India Times. Besides, the deal was necessary only because Trump had imposed a reciprocal tariff of 25% unilaterally and a penal tariff of 25% for buying Russian oil. There is no guarantee that Trump won't increase the tariff if he is dissatisfied with India's pace of reforms, as he did to South Korea, wrote Swaminathan Aiyer. China is our existential enemy, the US is fickle but Russia has been our proven friend. We are paying the US for its deal. Let's deal with Russia as well. A friend in need, a friend forever. 

Flow of liquidity.

In its December 2025 meeting, "The Reserve Bank of India (RBI) has slashed its repo rate by 25 basis points (bps) from 5.5% to 5.25%, but in the latest meeting in February, "The RBI has kept its key lending rate, known as the repo rate, unchanged at 5.25% in the first monetary policy decision since the budget." NDTV. "Given the impending revision in two key macroeconomic numbers - gross domestic product (GDP) estimates where the base year is to be brought forward to 2022-23 from 2011-12 at present and consumer price inflation (CPI), where the base is to be moved forward to 2024 from 2011-12 now - any other decision would have risked rocking the boat," wrote Mythili Bhusnurmath. In 2025, the RBI cut its policy rate by a total of 125 bps, from 6.5% to 5.25%, bringing the interest rate down by 105 bps on fresh bank loans and interest paid on fresh term deposits by 95 bps. ET. In addition, the RBI announced a reduction in the Cash Reserve Ratio (CRR) by 100 bps from 4% to 3% in tranches of 25 bps. This was expected to release Rs 2.5 trillion into the banking system. ET. CRR is the money commercial banks must deposit with the RBI without interest and cannot be used for lending or investment. (Kotak Bank). "According to the Economic Survey, average surplus liquidity in the system was a mind boggling 117 times that of the previous year." "What is left unsaid is that, as the government's debt manager, it will manage liquidity so that the government's borrowing goes through successfully and at a low cost." In its efforts to release more money into the system, the RBI has been buying government bonds. "The RBI has already stepped in aggressively this financial year, purchasing nearly Rs 7 trillion worth of bonds, a move that helped cap yields." Mint. By taking the government's debt on to itself the RBI is monetizing the fiscal deficit (BS). Creating fresh money to finance government spending is supposed to be inflationary but the RBI is probably reassured by the CPI inflation falling to an annualised rate of 1.33% in December 2025 (mospi.gov.in). In addition, "The Centre is budgeting a record Rs 3.16 trillion in dividend receipts from the RBI and public sector banks (PSBs) in 2026-27,..helping to keep the fiscal deficit under check. TOI. Last year, the RBI dished out a record Rs 2.68 trillion (newsonair.gov.in) and in 2023-24 it was another record Rs 2.11 trillion (Grip Investment). The bond market seems unimpressed with the RBI's liquidity flood. The benchmark 10-year bond yield is at 6.754%, down a tad from 6.769% on 02 February. investing.com. India's foreign exchange reserves may have been at a record $723.77 billion on 30 January (BS), but even this may not be enough if foreign investors take fright and the government runs up a big deficit because of loss of revenue from free trade agreements. The RBI was nationalised in 1949 (rbi.org.in), so it is paying the government. It is creating a flood of money but can it control the flood? Liquidity is liquid. It may flow out..      

Better to be monkey. Than hostile.

 Three days back, "A pit six meters long four meters wide and deep, dug by the Delhi Jal Board (DJB) on a service road in Janakpuri in West Delhi," resulted in the death of 25-year-old Kamal Dhayani, He was found next morning at the bottom of the pit, still wearing his helmet, with his motorcycle lying next to him. While, "Delhi Police officials said the bike could have fallen while trying to ride over the dug-up mounds of earth," "the DJB said that there was green mesh and safe barricading at the site." TIE. So, he must have committed suicide. Case closed. Many people saw the accident and the victim lying at the bottom of the pit but no one informed the police until a woman, Shivani, came on the scene. HT. It may be because most people feel that no one will be held responsible and they would be forced to turn into 'hostile witnesses'. "In India, in most cases involving the rich and the influential people or corrupt politicians, witnesses turn hostile, making the rule of law a mockery. Very often witnesses become untraceable. Sometimes they are just eliminated." Law Teacher. "While the sub-contractor, identified as Rajesh Kumar Prajapati, 47, was arrested...and booked for culpable homicide, the main contractor and the laborer, identified by his single name Yogesh, were absconding." HT. Delaying arrest gives time to contact influential friends, pay off key individuals and appoint a lawyer adept at seeking adjournments from polite judges. Criminal cases take and average of 5-20 years to resolve (jsrohilla.in) and this gives ample time for the accused to intimidate witnesses into turning hostile. In 2008, 13 year-old girl Aarushi Talwar and 45 year-old man Yam Prasad 'Hemraj' Benjade were murdered inside Aarushi's home, with doors locked from the inside, but no one was found responsible. wikipedia. In 2021, a 19 year-old lower caste woman was found in a field by her family "battered and bruised, barely conscious and naked from the waist downwards. Her spine was broken, she was bleeding and vomiting blood." "In her 'dying declaration', the 19-year-old told a magistrate that she had been gang raped and strangled and named four of her neighbors as the perpetrators." BBC. Three of the four men have been found innocent and one found guilty of a lesser charge. wikipedia. In 2006-07, bodies of 17 children were dug up in Nithari, a village in Uttar Pradesh. One Surinder Koli was found guilty of murder in 10 of the children and his employer Maninder Singh Pandher was found guilty of two, Both were sentenced to death by Allahabad High Court in 2023. wikipedia. In 2025, the Supreme Court found both men not guilty. BBC. In India, people are murdered by no one. It follows, therefore, no one is responsible for children dying by drowning in manholes which have been left open. "The National Crimes Bureau (NCRB) reveals a sobering reality: In India, one person dies every 12 hours from falls into open pits and manholes, with a staggering 5393 such deaths recorded since 2015." Inventiva. If you see nothing and hear nothing you will have to say nothing, or else, you will face serious hostility from goons. Could be labeled 'hostile'. Or end up in a pit. Better to be one of the monkeys. And alive.  

It's only Interim.

The India-US Joint Statement on a trade deal has been announced which brings down reciprocal tariffs on a range of Indian goods exported to the US to 18%. Reciprocal tariffs on a wide range of goods could be removed "subject to the successful conclusion of the interim agreement." "India intends to purchase $500 billion of US energy products, aircraft and aircraft parts, precious metals, technology products, and cooking coal over the next 5 years." pib.gov.in. A reciprocal tariff of 26% was imposed on India in the Executive Order 14257, published on 4 April 2025, which complained that "the United States has among the lowest simple average MFN (most favored nation) tariff rates in the world at 3.3%," India was charging a rate of 17%. - a rate of 70% on passenger vehicles, 80% for rice in the husk, 50% for apples and 10% for network switches and routers. Seems to have a point. At 18%, India will have an advantage over Vietnam (20%) and Indonesia (19%), wrote Arpita Mukherjee. "The deal comes at a time when exporters of labor-intensive products like garments, footwear and leather items were feeling the pinch of high tariffs imposed in 2025." "Under the agreement, India will remove or reduce tariffs on all US industrial goods and a broad basket of agricultural products, including dried distillers' grains, red sorghum for animal feed, tree nuts, fresh and processed fruits, soybean oil, wine and spirits." India Today. Red sorghum, or Lal Jowar, is already grown in India (gonefarmers.com), so why do we need to import it free of tariffs? While most goods sold in India come under the goods and services tax (GST) collected by the Union government, states levy their own taxes on alcoholic drinks. "It's estimated that taxes on liquor and beer fetch the state governments nearly Rs 900 billion annually." cleartax.in. Will states be free to levy their own taxes on American wine and spirits, which will raise their prices, and if not, will they have to reduce taxes on Indian wine and spirits so that they can compete? Commerce Minister Piyush Goyal "asserted that India's sensitive agricultural and dairy products sectors will continue to be shielded. He also clarified that no genetically modified products from the US will be allowed in India as part of the trade deal." TOI. "The joint statement says both sides have agreed to strengthen economic security alignment to enhance supply chain resilience and innovation through 'complementary actions'," which, according to Global Trade Research Initiative (GTRI) founder Ajay Srivastava "suggests that India's security and economic policies may increasingly need to align with those of the United States." TNIE. Reassuringly, "Adani Group Chairman Gautam Adani and his nephew Sagar Adani have hired prominent attorneys in the US - including one of Donald Trump's lawyers and a former Mafia prosecutor - to represent them in their defence against allegations of securities fraud leveled by the Securities and Exchange Commission." Mint. The Mafia and the Don, they should be safe. India is paying only $500 billion for the trade deal. Seems like a bargain. 

Expecting the unexpected.

The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) kept its policy rate unchanged at 5.25% at its latest meeting yesterday. The forecast for economic growth was raised from 7.3% to 7.4% and that for consumer price index (CPI) inflation was raised from 2.0% to 2.1%. Mint. Earlier, the US Federal Reserve had voted to hold its lending rate at 3.5% to 3.75%, "citing still-elevated inflation alongside solid economic growth, ad giving little indication in its latest policy statement of when borrowing costs may fall again." Reuters. The hawkish outlook from the Fed meant that "The US dollar hit a two-week high...as fresh volatility gripped stocks and the pound tumbled after the Bank of England voted by a razor-thin margin to leave UK rates unchanged." Reuters.The rupee has strengthened by almost Rs 2 against the dollar, from 92.043 on 28 January to 90.596 to one dollar yesterday. Investing.com. Perhaps the RBI does not want any pressure on the rupee as traders look for risk-off investments. In good news, India's foreign currency reserves jumped to $723.8 billion in the week ending 30 January, "providing a robust merchandise imports cover of more than 11 months." Foreign currency reserves fell by $493 million but the value of gold reserves jumped by $14.59 billion as the price of gold soared on the spot market. ET. Since then the price of gold has crashed from  a high of $5,400.25 per ounce to $4,961.15 yesterday. Investing,com. India and the RBI have not forgotten the crisis of 1991 when our forex reserves fell to just $1.2 billion, barely enough to cover 3 weeks of essential imports. India had to airlift 47 tons of gold to the Bank of England and another 20 tons to the Union Bank of Switzerland to raise $600 million and avert the crisis. wikipedia. When asked, former RBI Governor Prof Raghuram Rajan "reportedly said there was no point at which a country could feel safe, unless it had accumulated trillions of dollars like China." We gain foreign exchange from exports, foreign direct investment (FDI), overseas loans and remittances by Indian expatriates. "The Indian diaspora sent home $135.46 billion in the last fiscal year, the highest on record." And the highest in the world. ET. The concern is that remittances are much higher than FDI. Between 2014-15, FDI, which is expected to be long term has been steady at around $30 billion annually, while foreign portfolio investment (FPI), which is short term, has been volatile. However, repatriation of FDI "jumped from $18 billion pre-pandemic to $44 billion and $51 billion in 2023-24 and 2024-25 respectively." And, outward investment by Indian entities doubled from $13 billion in 2019-20 to $28 billion in 2024-25. Mint. The RBI has played safe. Which is good because the world seems unpredictable. We could face the unexpected. Suddenly.   

Don to the rescue.

"A robust economy forms the foundation of a strong foreign policy and India must grow faster and increase its share of global trade to gain respect on the world stage, economist and NITI Aayog's former vice-chairman Rajiv Kumar has said." "India's share of global merchandise has remained below 2% for the last three decades," and "In the services sector, India's global share stands at around 4%." ET. On Friday, 03 February, "Shares of Infosys, Tata Consultancy Services, HCL Tech, Tech Mahindra and Wipro dropped sharply, falling by as much as 6% by 9.30 am," US artificial intelligence firm (AI) Anthropic released new tools "designed to handle routine legal work such as contract checks, non-disclosure agreement reviews, legal summaries and standard drafting tasks." NDTV. It has been coming. "In the 12 months leading up to August 2025, Accenture pulled in $4.78 billion in new business - a figure that surpasses the combined incremental revenue ($3.92 billion) generated by India's 15 largest IT services firms in 2024-25." 'Over half ($2.7 billion) of Accenture's new revenue came from advanced AI solutions," wrote Jas Bardia & Varun Sood." "According to Stanford's AI Index Report 2025, in 2024 the US led with 40 notable AI models, followed by China with 15. With these regions controlling nearly all LLMs that have achieved a global footprint, India faces a formidable challenge." "Bain & Co (2025) warned that India could face a shortfall of over a million skilled professionals by 2027." "R&D spending is also low, at 0.6% of GDP in 2024, versus 2.68% in China and roughly 3.5% in the USA." ET. As per the IMF, projected nominal GDP of the US was $30.62 trillion, China's was $19.4 trillion and India's was $4.13 trillion in 2025. Worldometer. It means that, in absolute numbers, the US spent $1.07 trillion while India spent an almost negligible $24,7 billion on R&D in 2024. "Recently, India's most valuable company paused its lithium-ion battery plant because it could not get Chinese technology." "The company could have funded a big research project. Instead it waited for technology from China." Why try to innovate when you can buy, wrote Arindam Goswami. Indians are afraid of failure. "Only the USA stands out as a country that has socially accepted the idea of failure as a legitimate option, worthy of praise." ET. "Patent filings by DPIIT recognized startups have crossed 13,000, since 2021, trademark filings have exceeded 44,000." Filing a patent "can help a founder make a pitch to investors." But, once the funding round closes, no actual patent is achieved, wrote Pravin Kaushal. Similarly, patent filings by educational institutions have risen from 20% to 42% of all filings. But the lack of revenue from licensing patents show that they are merely to improve their rankings, wrote Mihir Mahajan & Arindam Goswami. Artificial intelligence is created by human intelligence. Over one hundred years ago, American Robber Barons established universities and encouraged innovation. Edsurge. Protected by high tariffs our lot has been filing fake patents and begging from China. Perhaps the zero tariff on US goods forced on Mr Modi by Donald Trump (HT) may force them to start investing in R&D, to survive. We may yet hail the Don as our savior. Don of all people! Who would have thought that?        

An oily conundrum.

"In early September, after meeting Vladimir Putin and Xi Jinping, Prime Minister Narendra Modi "dispatched his National Security Adviser (NSA) to Washington to help over fraying ties." Mr Ajit Doval told US Secretary of State Marco Rubio, "India wanted to put the acrimony between the two nations behind it and get back to negotiating a trade deal," and that "New Delhi wanted Trump and his aides to dial down their public criticism of India." HT. Or else what? Give more money to China? As per Chinese Customs, India's exports to China increased by $5.5 billion to $19.75 billion in 2025, while imports from China jumped 12.8% to $135.87 billion, giving us a record trade deficit of $116.12. TOI. "Russia faces a steep drop in oil income if Trump successfully pressures India to stop importing Russian crude," which has already "dropped 22% to 1.38 million barrels per day in December from November, their lowest since January 2023, reducing Russia's share in Indian imports to 27.4% while OPEC's share rose to 53.2%." Reuters. Seems unlikely that Rubio was quaking with fear at threats from Mr Doval. Meanwhile, "China's trade with Russia in 2025 pulled back from a record level in 2024," to 1.63 trillion yuan ($234 billion). Since February 2022, China has been "buying Russian oil, coal and gas and selling goods from cars to electronics to its northern neighbor." Reuters. However, oil could yet have an enormous influence on what happens to our economy, as "aircraft carrier USS Abraham Lincoln and several guided missile destroyers have crossed into the Middle East, which comes under the US Central Command." "Trump had repeatedly threatened to intervene if Iran continued to kill protesters, but the countrywide demonstrations have since abated." Reuters. "For nearly half a century, Iran has prepared for a war with the United States." "Iran is believed to have thousands of missiles and drones within range of US troops based in a number of countries in the Middle East and has threatened to strike them, as well as Israel." CNN. Obviously, the US will need to be guided by Israel, as Israel has repeatedly revealed its intelligence network in Iran. In June 2025, "Israeli Air Force jets, guided by precise intelligence, targeted nuclear facilities, military commanders and soldiers, destroying dozens of radars and surface-to-air missile launchers, according to a statement by the country's War Room." NDTV. Israel could have been supplying intelligence already as, "The top US and Israeli generals held talks at the Pentagon on Friday (30 January) amid soaring tensions with Iran." Reuters. "Iran will hold nuclear negotiations with the US on Friday (tomorrow) in Oman, Iranian media reported." ET. Iran's threat against the US and Israel could be a bluff because it knows that any attack will invite severe reprisals. Instead, it could choose to target oil installations just across the Gulf in Saudi Arabia and the UAE which would send the price of oil shooting up like a missile. What would India do if that happens? Scaring Rubio won't work. Go back to Russia? Trump notwithstanding.   

The budget may need some help.

"Indian stock markets witnessed a historic surge on Tuesday, 3 February," so that, "The combined market capitalisation of BSE-listed companies increased to Rs 467.35 trillion from Rs 455 trillion in the previous session, translating into a gain of more than Rs 12.5 trillion in a single day." The reason for the euphoria was that "After prolonged negotiations, US President Donald Trump confirmed that reciprocal tariffs on Indian goods would be reduced to 18%, a steep cut from the earlier 50%." Mint. The rupee which had sunk to a record low of 92.043 against the US dollar on 28 January, joined in the celebrations, appreciating over 1% to close at 90.423 on 03 February. Investing.com. "After months of tariff threats...New Delhi has finally sealed a trade deal with the United States - not by yielding early but by waiting out the noise." "Even as talks dragged on, New Delhi quietly accelerated trade engagement elsewhere, signing five trade agreements over the past year - including a landmark pact with the European Union." ET. On the other hand, White House Deputy Press Secretary Kush Desai hailed the deal as "Another historic victory for American workers, farmers and industries." ET. US Trade Representative Jamieson Greer claimed that Indian tariffs on US industrial goods will fall from 13.5% to zero and also tariffs "for a variety of things...tree nuts, wine, spirits, fruits, vegetables, etc, they're going down to zero." ET. After two decades of negotiations, India and the European Union clinched a free trade deal last month. In it, "Tariffs on premium European wines will also be cut in stages, falling from 150% to as low as 20% over seven years, while lower priced wines are excluded." TT. In the trade deal between India and the United Kingdom customs duty on Scotch whiskey will come down from 150% to 75% and thereafter gradually to 40% over the next decade. ET. If India is to cut duties on US wines and spirits to zero in one fell swoop, both the EU and the UK may demand the same concessions and, since both agreements are yet to be ratified by their respective parliaments, they could be sent back for re-negotiations. "Replacing Russian crude with market-priced oil could see India's import bill rise by as much as $4 billion (Rs 362 billion at today's exchange rate of 90.50) (MC) but a report by State Bank of India (SBI) Research claimed that switching to Venezuelan heavy crude could cut our impost bill by $3 billion. "It noted that a discount of USD 10-12 per barrel on Venezuelan crude would be sufficient to make the choice economically neutral for Indian importers." ANI. Why should Venezuela give a discount when we have already agreed to Trump's demand? Some sectors like leather and textiles may see some benefits but the nation could incur a large deficit. That brings us to the Budget. But, that's another story. 

18% + $500 billion to go, for zero return.

Celebrating an abject surrender, "US President Donald Trump announced that he agreed to a trade deal with India's Prime Minister Narendra Modi, where the US will lower tariffs on goods from India to 18% from 25%." The 25% penalty for buying Russian oil will also be dropped. Instead India will buy more US oil and $500 billion worth of American goods and possibly also more Venezuelan oil. BBC. In 2024, a full year of trade before 26% reciprocal tariffs were imposed in April 2025 (Reuters), "US goods and services trade with India totaled an estimated $212.3 in 2024." The US exported goods worth $41.5 billion to India and imported $87.3 billion worth of goods from India, incurring a trade deficit of $45.8 billion. In services, the US exported $41.8 billion and imported $41.6 billion for a surplus of $102 million. ustr.gov. "Russia has sharply increased the discount on its Urals crude oil sold to India. In several cases, the discount compared to global oil prices exceeded $25 per barrel. For some individual cargoes, discounts approached $40 per barrel." man.com. "India imported about 144 billion euros' ($170.09 billion) worth of crude oil from Russia since the start of the Ukraine war, a European think tank said." NDTV. Now we have to buy US oil at market prices. Seems that our losses will be far more than any potential gains. In another standoff with the US, in January 2026, "After India challenged its authority to issue summonses, the US Securities and Exchange Commission (SEC) has moved a federal court to bypass diplomatic channels and allow service on Gautam and Sagar Adani via their US counsel and email." "The move marks a shift in the agency's 14-month effort," following, "On December 14, 2025, the SEC received letters from the Indian Ministry of Law and Justice, date November 4, citing a new and unexpected objection." This was the second time, the first rejection was in April 2025. The Wire. In addition, "The US SEC has arranged to serve Gautam Adani with a civil fraud lawsuit, allowing the regulator's case against India's second-richest person to proceed." CNBC. On 01 February 2026, "Billionaire Gautam Adani and his nephew, Sagar Adani, have agreed to receive a legal notice from US SEC in a civil fraud lawsuit alleging they misled investors about a bribery scheme, according to the court filing." TOI. The civil case is in addition to a criminal charge of bribery by federal prosecutors in Brooklyn. Mr Adani's lawyers have not accepted the jurisdiction of the Eastern District of New York. The trade deal will be hailed as a huge achievement, but a group of more than 800 small businesses in the US noted that effective tariffs on Indian imports were 2-3% but are at 18% now (Reuters) and could rise any time if any Russian oil is imported. Trump also announced that India has agreed to reduce tariff and non-tariff barriers on American goods potentially to zero. India Today. We give away everything and get some small change in return. They said stand and deliver and we did. Why? 

Halwa for them.

The deed is done. The Budget 2026 was presented to Parliament on Sunday, 1 February, for the ninth straight time by Finance Minister Nirmala Sitharaman, the longest serving finance minister of India. At I hour 25 minutes her speech was middle of the range, the shortest lasting 1 hour 14 minutes in 2025, the longest lasting a weary 2 hours 39 minutes in 2020. TOI. To prevent profiteering from advanced knowledge of any tax changes, utmost secrecy is observed. "Fifteen days prior to the presentation of the budget, security at the finance ministry is tightened dramatically." "The full budget statement is printed just 24 hours" before presentation and "The printing process is conducted under extreme secrecy, with staff involved in production kept in isolation and the entire operation secured by heavy surveillance." India Today. In a droll ritual a "Halwa (semolina pudding) is held annually at North Block to mark the final stage of preparation before the budget is presented in Parliament." News 18. The budget is not meant to be a triumph for the finance minister or officials, but is an anxious document for citizens who have to bear the burden of tax changes. The stock markets slumped, reflecting the verdict of investors. "The Nifty fifty fell 1.96% to 24,825.45, while the BSE Sensex lost 1.88%to 80,772.94, marking their worst budget-day performance in six years." Reuters. As is usual, news channels are full of platitudes. "For one brief, glorious period every year, Indian business folks" who "otherwise outsource everything from tax planning to PPTs - suddenly become macroeconomists, fiscal theorists, deficit hawks and growth evangelists," wrote industrialist Harsh Goenka. Before the Budget they "submit wishlists that would make a genie nervous." While just after, "Phones vibrate, heads nod and messages fly: 'Very positive.' 'Strong signal.' 'Game changer.' " "Behind closed doors, of course, nuance returns." "But, publicly, the verdict is unanimous: 10 on 10. Standing ovation." ET. "Led by Thomas Piketty, leftist economists protest inequalities are getting intolerable, so the richest should be taxed severely." But, ""instead of excoriating the super rich, the middle class would rather join them, wrote Swaminathan Aiyar. India does levy a surcharge at a maximum rate of 25% on income above Rs 20 million. cleartax.in. "Originally conceived as a 'temporary' measure to boost revenue, India's tax surcharges have become a permanent and heavy fixture of the fiscal landscape." "As incomes rise nominally due to inflation, more taxpayers are pushed into higher surcharge brackets without a corresponding increase in real purchasing power." ET. In July last year, the Finance Ministry told Parliament that "it expects to collect Rs 5.91 trillion from cess and surcharge in the current financial year, which is 9.43% higher than the previous financial year." ET. The silly rituals and the knee-jerk, obsequious praise by wealthy businessmen show the inequality of power between the rulers and the ruled in India. They share halwa with broad smiles. We groan through gritted teeth. And pay for the halwa.       

It began in 2018.

"Marriages are increasing noticeably in China this year," because "Couples can now register their marriage in places which, until recently, would have seemed unimaginable as a site of official paperwork: nightclubs, beach resorts, even music festivals where civil servants sit at temporary registration desks." Young Chinese may again be warming to marriage, "But specialists caution that the surge may be more about convenience and novelty than a real change in attitude about family life." MC. But, marriage yes, babies no. "China's population fell for a fourth consecutive year in 2025, dropping by 3.39 million to 1.405 billion, a faster decline than 2024, official data showed." ET. Its "birthrate fell to 5.63 per 1,000 people - a record low since the Communist Party took power in 1049 - while its death rate rose to 8.04, the highest since 1968." Fertility rate has fallen to 1, so the government has offered parents 3,600 yuan ($500) per each of their children under the age of three," and "a new 13% tax on contraceptives - including condoms, birth control pills and devices - has sparked concern about unwanted pregnancies and HIV rates." BBC. Sticks and a carrot. "China has given its top AI startup DeepSeek approval to buy Nvidia's H200 artificial intelligence chips," and "a senior US lawmaker had alleged that Nvidia had helped DeepSeek hone artificial intelligence models that were later used by the Chinese military." Reuters. "Engineers at Beihang University, a military-linked school, created a system in which defensive drones mimic hawks by targeting the most vulnerable enemy drones, while attacking drones behave like doves to evade the hawks. In a five-on-five simulation, the hawks destroyed all the doves in just 5.3 seconds." TOI. Drones cannot command an army. "The senior ranks of the People's Liberation Army (PLA) are in tatters. The weekend purging of China's top general, Zhang Youxia, and another senior military officer, Gen Liu Zhenli, has left serious questions about what triggered the elite power struggles unfolding in the country - and what this means for China's war fighting capacity." BBC. "Chinese leader Xi Jinping's decision to place the country's top-ranking general under investigation is a stunning move that leaves Xi virtually alone at the top of the military hierarchy," "But the purge makes one thing clear: Xi sees no target too big to be taken down." Zhang was a close ally of Xi and "Their fathers had fought together in China's civil war." CNN. It seems that Xi has become paranoid like every dictator must become. It would have started in 2018 at the National People's Congress which "approved the removal of the two-term limit on the presidency, effectively allowing Xi Jinping to remain in power for life." BBC. Xi must know how Liu Shaoqi' life ended, having delivered a speech about him in the Great Hall of the People on 23 November 2018. wikipedia. He cannot afford to be deposed. So his brutality will only increase. Unless someone stops him. Permanently.       

It's fundamental.

Finance Minister Nirmala Sitharaman is to unveil her ninth Budget on 1 February and "The key sectors to look out for this year include railways, infrastructure, urban development, manufacturing, auto, defense, electronics MSME, renewable energy and AI among others." Mint. It may require an urgent last-minute fiscal adjustment as, "The Supreme Court has ruled that the right to menstrual hygiene is an integral part of the right to life under Article 21 of the Constitution." "A bench of Justice LB Pardiwala and R Mahadevan directed all states and Union territories to ensure that every school provides biodegradable sanitary napkins free of cost to adolescent girls." nowsonair.gov.in. Why only adolescent girls? If it is a right to life then all women should be provided. After all, the government is providing free food grains to 813.5 million people for five years, starting 1 January 2024, at a cost of Rs 11.80 trillion. pib.gov.in. The right to travel is a fundamental right. "The Modi government ran up a bill of Rs 356.7 million in 2018-19 for the upkeep of 27 'ghost' airports from where no flights take off, an RTI query has revealed. These 27 are among a total of 31 non-operational airports in the country. There are another 15 that are operational but no scheduled flights operate from there." The Print. Operational, zero flight airports serve the fundamental right of not to travel. Railways are a key sector. "A delay of over four years pushed up the cost of the country's first bullet train project by around 83% to Rs 1.98 trillion. TOI. And so, "The Indian Railways has told the Central Information Commission (CIC) that its methodology for calculating passenger train fares is a matter of 'trade secret' and commercial confidence, and, therefore, it cannot be disclosed under the Right to Information Act (RTI)." ET. Since earnings are finite, train fare may impinge on our budget for food, clothing and healthcare which are fundamental rights. On 27 January, a viral video "shows a crowd of passengers squeezing into a Vande Bharat train in Bihar, allegedly without tickets." "Vande Bharat services are fully ticketed and positioned as a premium offering by the Railways, making the scene especially jarring for many viewers." TIE. If the pricing of tickets is a "trade secret" people of Bihar will decide what they want to pay. "If China's official numbers and India's official projections were to be compared, just Uttar Pradesh and Bihar together now have more births than all of China, even though the population of the two Indian states taken together is just 26% of China's 1.41 billion." HT. Exercising their fundamental right to consummate. FM Sitharaman said India's macroeconomic fundamentals are "stronger than ever". ET. Not just economic. We know all our fundamentals.

Correct, but of little consequence.

The Economic Survey for 2025-26, tabled in Parliament yesterday, paints a rosy picture for India, with 7.4% real GDP growth in this financial year and 6.8%-7.2% in 2026-27. "India is now the fourth largest economy, behind the US, China and Germany," but "global conditions translate into uncertainties rather than immediate macroeconomic stress." ET. "Fiscal prudence, conservatism and economic growth earned the country three credit rating upgrades last year." The rupee fell 6% against the dollar in 2025 but, "when the frame is widened to a six-year window beginning February 2020, most major emerging market currencies, including the Indian rupee, have weakened against the dollar by a similar magnitude," Chief Economic Advisor V Anantha Nageswaran. "Three credit rating upgrades" seems to imply a jump of three places, but it is actually three agencies which upgraded India by one notch. In May 2025, Morningstar DBRS upgraded India to BBB from BBB (low), in August, S&P upgraded to BBB from BBB- and in September, Japan's Rating and Investment Inc upgraded to BBB+ from BBB. pib.gov.in. Why does the CEA choose a 6-year window? Why not 5, 10 or 20 years? "India must align its policies to boost agricultural exports and avoid ad hoc restrictions that disrupt supply chains and damage the country's reputation as a reliable supplier." India could reach exports of $100 billion in agriculture, marine products and beverages. ET. High food prices are immediately visible and may hurt votes, which is why the government interferes to keep prices down. In 2023, "India has started importing tomatoes from Nepal," as "Tomato prices have surged 1,400% at the wholesale market to a record Rs 140 per kg." Reuters. This was after, in July 2023, "A farmer in Medak district of Telangana has earned nearly Rs 20 million during the last 15 days by selling his tomato crop." NDTV. However, just a few months later, in October, farmers were reduced to destroying their tomato crops because prices crashed to Rs 2 per kg. TOI. They incurred enormous losses. "Maharashtra has witnessed 781 farmer suicides in the first nine months of 2025 due to loans, crop failures and excessive rainfall, informed...Minister Makarand Jadhav. Public memory is short. "Unconditional cash transfers (UCTs) have rapidly become a central pillar of welfare policy across Indian states, offering immediate income support, especially to women, but also raising difficult fiscal and economic questions." UCT spending is estimated at Rs 1.7 trillion in FY 26. ET, Just before Assembly election in Bihar last year, "Prime Minister Narendra Modi transferred Rs 10,000 each directly to that bank accounts of 7.5 million women in the state." Brazen buying of votes at a cost of Rs 75 billion. TOI. In Darbhanga's Jale block male villagers also received Rs 10,000 due to "technical problems". When asked to return the money they refused saying, First return our votes to get back money." TOI. The CEA can only produce statistics and make polite suggestions but the coterie in power will do anything to stay in power. Once you resort to abuse of power, using investigative agencies to abuse the opposition (The Wire), any loss of power will result in swift retaliation. The Economic Survey is correct. But, a waste of time.  

Uneasy mother.

 On 27 January, "India and the European Union have concluded what EU chief described as the 'mother of all deals', amid smiles, even open-mouth guffaw, handshakes and a giant photo op. A comprehensive Free Trade Agreement (FTA) was finalized "that is expected to significantly boost India's manufacturing and services sectors, deepen market access and strengthen investor confidence." TOI. "Both countries, however, kept sensitive agricultural products out of the FTA." "On a weighted average basis, the tariffs levied by India on products imported from the EU stands at about 9.6%, while the same on Indian goods in EU is around 3.6%. Once the FTA takes effect, India will bring nearly 96% of EU goods to zero tariff, while the EU will end duties on about 98% of Indian goods." Mint. Nominal Gross Domestic Product (GDP), or GDP at current prices, of the EU was $19.5 trillion in 2024, while India's nominal GDP was less than one-fourth that of the EU's, at $3.9 trillion in 2024. World Bank. so. who gains more? "The EU plans to levy a surcharge on imports of highly polluting industries like steel, aluminium, cement and fertilizers under its Carbon Border Adjustment Mechanism (CBAM)." "While steel exports are modest compared to domestic production," "The trading bloc accounts for 40% of India's steel exports of 8.6 million tonnes in 2025." Mint. As for fertilisers, "India imported 85% more urea, 46% more DAP and 122% more NPK fertilisers in the first nine months of this fiscal year compared with a year earlier, according to provisional data released by the Fertiliser Association of India." ET. The EU needn't worry. If Indian wine connoisseurs are licking their lips at the prospect of duties falling from 150% to 75% and then to 20% on premium wines, "complex state taxes, registration fees and distribution hurdles continue to constrain foreign labels. As a result, any duty relief is expected to benefit only a narrow band of premium imports." Mint. Any gain from the fall in tariffs could be neutralized by a fall in the exchange value of the rupee. The rupee is trading at 91,909 to one US dollar this morning, having closed at 92.043 yesterday. Investing.com. The rupee could go to 95 or even 100 against the dollar. Meanwhile, the euro has strengthened to just over $1.20, "its highest level since 2021." Reuters. The EU is comprised of 27 nations (wikipedia) who have to ratify the deal through their legislatures. Prime Minister Narendra Modi reached out to all 27 nations by tweeting in all 24 official languages of the EU. Some EU prime ministers responded in Hindi. India Today. But, India's External Affairs Minister S Jaishankar had some sharp words for the Polish Deputy Prime Minister Radoslaw Sikorski's recent visit to Pakistan. "Poland should display zero tolerance for terrorism and not help fuel the terrorist infrastructure in our neighborhood" Mr Sikorski had expressed satisfaction with India's reduction in Russian oil imports "because this is financing the war machine of Putin." Dawn. Another EU nation Croatia also came in for some tongue-lashing. "Members of terrorist group Sikhs for Justice (SFJ) trespassed and vandalized Indian embassy in Zagreb and tried to replace the Tricolour with a 'Khalistani flag', drawing strong condemnation from Indian govt." TOI. The UK is yet to ratify the FTA with India, signed in July 2025. House of Commons Library. It may be the mother of all deals. But motherhood is never easy. We wait for the baby. 

Gig, or donkey.

At Independence in 1947, 80% of India's population "faced extreme poverty. This has dropped to 5%, thanks to many factors, ranging from the land reforms of the 1950s and the green revolution of the 60s to the big bank liberalisation of the 90s." However, inequality remains extreme. On the one hand, the top 10% of the population earns 57.7% of total income, while the bottom 50% earns just 15%. On the other hand, unemployment level is at 13% among graduates and 12.4% among postgraduates, but just 3.2% in the general population. Mint. In the absence of regular jobs, many young people take up gig work. "According to various news reports, there are approximately 12 million gig workers as of FY 2024-25, up from 7.7 million in 2020-21, now comprising 2% of the total workforce. This growth - at a compound annual rate of about 17%, and a 38% year-on-year surge in FY 2024-25 - has been fueled by digital connectivity, rapid urbanisation and a cultural shift towards more flexible work arrangements." Mint. However, a strike by gig workers drew attention to their work conditions. Delivery workers went on "A nationwide New Year's Eve strike to protest low pay and lack of social security benefits" and "Gig workers who power the app economy are protesting pressure from 10-minute delivery models which they say are leading to accidents, injuries and mental stress." TOI. Reacting to the complaints, "The Indian government has asked all quick-commerce platforms to drop the controversial '10-minute delivery' promise amid concerns over worker safety." BBC. However, "A recent study by Achyuta Adhvaryu and colleagues shows that compared to their Indonesian and Kenyan counterparts, gig workers in India (in 2024) were better off: working fewer hours, at higher efficiency levels for better pay," wrote Nitin Pai. Earning up to Rs 27,000 per month for working 58 hours a week is not bad for an entry level job and it also provides a cushion while looking for full-time employment. Jobs can only be created by investment. While foreign direct investment (FDI) surged to 4% of GDP in China and Vietnam during their boom phase, "That figure never surpassed 1.5% in India, and it is now just 0.1%, which is one-sixth of the emerging market average." Hence, "This decade, a net total of 6,75,000 people emigrated each year, up from 3,25,000 in the 2010s," wrote Ruchir Sharma. These are the legal migrants. The unqualified, dazzled by stories of an affluent lifestyle from relatives or friends, spend Rs 3-10 million to be smuggled into Western countries,  through 'donkey routes', losing their money if caught and deported back to India (BBC). Shamefully, "One Indian was caught at the US border every 20 minutes in 2025," as "US Customs and Border Protection reported 23,830 Indians were intercepted between January and December 2025. This was much lower than 85,119 in 2024, but the figure still placed India among the top source countries of illegal migrants." ET. Obviously, the number of the successful is unknown. While China recorded a trade surplus of nearly $1.2 in 2025 (Reuters), we are exporting people. Surplus to requirements. Of little value.

Principled, or not.

"India joined China, Pakistan and 4 other countries in voting against a UN Human Rights Council resolution that strongly deplored the crackdown on protests in Iran and extended the mandate of a fact-finding mission on the country by 2 years, while authorizing it to investigate last month's repression. The 47-member body adopted the resolution with 25 votes in favor, 7 against and 14 abstentions." TOI. Naturally, "Mohammad Fathali, Ambassador of Iran to India,..expressed Tehran's 'sincere gratitude' to the Indian government for its 'principled and firm support' while voting against a resolution which was finally adopted by the UN Human Rights Council during its 39th special session." NDTV. "An Iranian official in the region said...the authorities have verified at least 5,000 people had been killed in protests in Iran, including 500 security personnel, blaming 'terrorists and armed rioters' for killing 'innocent Iranians'." "The final toll is not expected to increase sharply," the official said. Reuters. "As protesters rallied in more than 100 cities across the country after nightfall, Iran went dark. At 8 pm, the authorities shut down internet access and blocked international phone calls, imposing an unprecedented communications blackout on the nation's 92 million people. In that darkness security forces cracked down." The deadliest crackdown in the 47 years of the Islamic Republic. CNN. On 11 January, nearly 60 similar 50-seater buses crossed into Iran from Iraq apparently carrying 'pilgrims'. "The passengers did not resemble pilgrims. There were no families, no elderly travellers. There were only young men, all dressed in identical T-shirts." These were mercenaries brought in by the regime to kill Iranian citizens. India Today. All in the name of religion. "National human rights institutions around the world are accredited by GANHRI, which ensures their compliance with the Paris Principles." The National Human Rights Commission (NHRC) of India "was subjected to GANHRI evaluation in 2016, 2023 and 2024, in which its 'A' status was deferred thrice by a sub-committee on accreditation, or the SCA." They recommended "plurality of gender, ethnicity and representation of religious minorities within the NHRC." The Wire. On 4 January, in Odisha, a Christian pastor was forced to drink drain water and cow-dung water by a Hindu mob "following claims that he was involved in religious conversions." NDTV. On 15 August (Independence Day) 2022, eleven men, convicted of raping Bilkis Bano, who was pregnant, and killing 14 members of her family including her 3-year old daughter, in 2002 were prematurely released by Mr Modi's government. BBC. "For years, women in distress knew the first place to go to: Delhi Commission for Women." "Try that now. At its Vikas Bhawan office, ask the guard for Mahila Aayog and he shrugs without even looking up, "Bandh hai (shut)." TOI. Minorities, women, protesters are all to be condemned. Obviously, our support of Iran is highly "principled and firm". Why don't some of us feel proud? Are not so "principled"?                  

Just a little nudge.

"As India prepares for the Union Budget, salaried individuals and middle-class taxpayers are hoping for relief measures to ease financial stress and boost disposable income. With direct and indirect tax collections at robust levels, expectations are high for reforms that balance relief with growth," wrote Homi Mistry. In 2019, corporate tax rate was reduced to an effective rate of 25.17%, inclusive of surcharge and cess. For a new investment, the effective rate was even lower at 17.01%. pib.gov.in. In 2025, the threshold for personal income tax was raised to Rs 1.20 million and to Rs 1.275 million for salaried individuals. Bajaj Finance. If tax collections have been robust, why "India's fiscal deficit for April to November, of the first eight months of this fiscal year, was at Rs 9.76 trillion, equivalent to 62.3% of annual estimates, widening from the previous year's 52.5%?" ET. In 2023-24, 6% of the population filed income tax returns. However, in 2022-23, 63% of filers did not pay any income tax. PRS. We do not know how many people would have dropped out of the tax bracket after the increase in income tax threshold. However, the 2025 Budget estimated income tax revenue to rise 14.4%, from Rs 12.57 trillion in 2024-25 to Rs 14.38 trillion in this financial year. PRS. This acts as a target for income tax (IT) officials who then resort to unjustified demands, known as 'tax terrorism' in India (ET), with the result that around 600,000 disputed tax cases, amounting to a total of over Rs 16 trillion, are pending before courts (BW). To fulfill their targets, "Under its 'nudge' initiative, the tax department sent automated alerts asking taxpayers to re-evaluate their 2024-25 returns and revise them before 31 December 2025. I-T officials have used Artificial Intelligence, Annual Information Statement, Form 16 and foreign reporting mechanisms to issue such alerts." ET. IT officials have corrupted Prof Richard Thaler's Nobel Prize winning 'Nudge Theory' to help people BBC) into a weapon and utilised AI and other tech tools to terrorise legitimate taxpayers. "The daily average price of various crude grades (popularly known as Indian basket) dipped to $59.29 a barrel." "A research report by State Bank of India (SBI) said...that crude oil prices would 'soften significantly in 2026' to touch $50 per barrel by 2026." HT. This would be of no benefit to Indian citizens because the government intends to levy taxes on the windfall gains of fuel retailing companies, instead of reducing fuel prices at pumps. HT. Toll collections on national highways are expected to cross Rs 1 trillion in financial year 2026-27, about 25% higher than Rs 750 billion this year. ET. High cost of fuel and tolls translates to high transport cost which affects prices of all goods and services, causing inflation. Inflation erodes wealth so that savings of Rs 100 million, which looks luxurious today, will be worth just Rs 15 million in 30 years with an average inflation rate of 6-7%, calculated Chartered Accountant Nitin Kaushik. ET. The Budget is another eyewash. A nudge for us, a cudgel for IT.      

Trying to beat 1991?

"India's foreign exchange reserves witnessed a massive surge of $14.167 billion to reach $701.36 billion in the week ended January 16, the Reserve Bank of India (RBI) data showed." Reserves increased by $392 million the previous week. Zee. "RBI...announced a series of liquidity measures that will inject more than $23 billion (around Rs 2 trillion) into the banking system, following a review of current liquidity and financial conditions." ET. On Friday (23 Jan), "The rupee slipped close to the 92 mark before ending the day at 91.94 against the dollar, down 24 paise." The RBI sold dollars to support the rupee, pulling rupees out of the banking system. "This tightening of liquidity tends to push up short-term interest rates," making borrowing more expensive. So, the RBI conducted a dollar swap to solve the problem. "Under this arrangement, banks sell dollars to the central bank and receive rupees, with an agreement to reverse the transaction after three years." This increases liquidity and reduces yields on bonds, while the RBI sells dollars in the spot market to push the rupee up. TOI. In effect, the RBI is short-selling borrowed dollars. The rupee lost 5% against the US dollar in 2025. This will raise the cost of durable goods like air-conditioners and washing machines etc. where imported components comprise 20-60% of material costs. Hence the core inflation, which ignores volatile food and fuel prices (Investopedia), "has stayed above 4% for 11 consecutive months and hit 4.6% in December." As prices rise, consumers may cut or postpone purchase which may impact earnings and profits of companies, wrote Rumki Majumdar & Swapnil Kothari. "India typically runs a current account deficit (exports minus imports) and a surplus on the capital account (it receives more capital than it sends out)." Mint. Foreign Direct Investment (FDI) and remittances by non-resident Indians (NRI) contribute to the capital account. "The overseas Indian community transferred $135.46 billion to India during the previous fiscal year (2024-25), setting a new record." TOI. Although, inward FDI has held steady, repatriation of FDI by foreign investors has "jumped from around $18 billion pre-pandemic to $44 billion and $51 billion in 2023-24 and 2024-25 respectively." Also, outward FDI by Indians has more than doubled from $13 billion in 2019-20 to $28 billion in 2024-25, most of it going to tax havens like Singapore, Mauritius and the UAE. Rich Indians are protecting their wealth against high taxes and the depreciation of the rupee. To add to the outflow, Indian exports to China increased by a negligible $5.5 billion to $19.75 billion during January-December 2025, while imports from China soared 12.8% to $135.87 billion, so that the trade deficit with China jumped to a record $116.12 billion. TOI. While, fertilizer imports "are expected to surge 76% from a year earlier to a record $18 billion." ET. While dollar inflows fall, outflows and deficits rise, the rupee will continue to fall. The RBI can print the rupee but it cannot create dollars. The Budget could expect a dividend up to, or over, Rs 3 trillion, since the RBI paid Rs 2.56 trillion last year. MC. Will the RBI run out of reserves? And if so, what happens to the rupee? The rupee was devalued by 20% in July 1991. wikipedia. The present government may want to beat that. 30% or 50%?        

Sell anything, except that one, please.

"I have a great respect for your prime minister (Modi). He is a fantastic man and a friend of mine. We are gonna have a good deal," said President Donald Trump. Talks have been going on since March-April 2025, ever since Trump imposed 50% tariffs on India. HT. At the same time, he claimed to have stopped the India-Pakistan conflict, called Operation Sindoor, from 7-10 May (wikipedia). "Trump has made this assertion upwards of 80 times, according to news reports, despite New Delhi maintaining that the two countries had no help from a third country in arriving at the decision to end tensions." The Wire. Perhaps, to freshen memories, "The US Securities and Exchange Commission has asked a US court for help in serving summonses upon Indian billionaire Gautam Adani and group executive Sagar Adani over alleged fraud and a $265 million bribery scheme, filings show." "Serving a summons is often routine, but the SEC said India's law ministry had refused two requests to have its summonses served on the Adanis." Reuters. As a result, Adani Group stocks plunged. "The combined market capitalisation of all 10 listed entities fell Rs 1.40 trillion to Rs 12.20 trillion during the day." msn.com. In February 2025, after Prime Minister Narendra Modi said that MAGA + MIGA = MEGA, Congress MP Jairam Ramesh remarked, "Actually, the only equation that counts is Modi + Adani = Modani." ANI. Did someone whisper it into Trump's shell-like? Meanwhile, 27 January is the expected D-Day for the signing of the Broad-based Trade and Investment Agreement (BTIA) between India and the EU. "This will be the mother of all deals," said Commerce and Industry Minister Piyush Goyal. ET. "The real impact of the India-EU FTA will be shaped by how effectively it is implemented, how ambitiously industry engages with it and how decisively both governments support collaboration beyond tariff restrictions and legal frameworks." HT. As an encouragement, "India's exports to the European Union is facing higher tariffs from January 1, 2026 after the EU suspended Generalised Scheme of Preferences (GSP) benefits for 87% of Indian goods," which "means that a large share of Indian exports will now be charged full Most Favored Nation (MFN) tariffs, ending years of preferential access under EU's unilateral trade arrangement for developing countries." TOI. The suspension applies to, "minerals, chemicals, plastics and rubber, textiles and garments, stone and ceramics, precious metals, iron and steel, base metals, machinery, electrical goods and transport equipment." At the same time, EU's Carbon Border Adjustment Mechanism (CBAM) will add costs to Indian steel and aluminium exports. TOI. So tight is the squeeze that the "government has asked Indian embassies and commercial missions to step up outreach across all markets, big or small, with a clear message from the PMO (Prime Minister's Office). The message is simple, almost an ad theme like: 'Har ek country zaroori hota hai'." ET. No harm in our ambassadors hawking pakodas (The Hindu). Just stay off cough medicines (BBC) please. Not good ad.  

Growth, not in the middle.

"Even with external uncertainties lingering, the Indian economy is expected to record a healthy growth of 7% in the upcoming financial year 2026-27." According to CareEdge Ratings, "The growth momentum has been supported by income tax cuts, GST rate rationalisation, continued momentum in services exports, easing inflationary pressures and RBI rate cuts." ET. All this is maybe true, "Yet beneath the headline numbers sits a quieter, more uncomfortable reality: urban India, especially its middle class, is still holding back." "Rural demand has led the recovery," but "Urban consumers drive discretionary spending, from cars and appliances to housing upgrades and lifestyle services. When they delay purchases, entire value chains slow." ET. Rural demand partly depends on the National Rural Employment Guarantee Scheme (NREGS) which entitles "every rural household to demand up to 100 days paid manual work each year at a statutory minimum wage." The central government paid 90% of the cost. Now the scheme has been replaced by a scheme called G RAM G which will force states to pay over 40%, wrote Soutik Biswas. Already, "A surge in borrowing by Indian states is complicating the central bank's efforts to lower interest rates as officials worry the increased supply of bonds could affect the yield curve." "State governments are issuing debt at a pace that increasingly rivals sovereign borrowing, significantly boosting bond supply for a shared pool of investors." Reuters. The central government may be slyly trying to shift its expenditure on the states but increased cost of borrowing will nullify some of the gain. As a result, "The delay in including Indian bonds in a key global index has raised the chances of the central bank extending its record government debt buying, seeking to cushion the market from weaker foreign inflows and rising yields." Reuters. This is also known as monetizing government debt by creating new money and is considered to be inflationary  (wikipedia), but the RBI may think it can get away with it because the Consumer Price Index (CPI) inflation came in at a low 1.3% in December (HT), while the Wholesale Price Inflation was even lower at 0.83%.  Such low inflation rates is because food prices fell by 0.43% in December after falling 4.16% in November, with vegetable prices falling 3.50% in December after falling by an enormous 2023% in November. TOI. Vegetables are perishable so the crash in prices will hurt farm income and may adversely affect rural spending. "With just 17 net hires in the first nine months of the 2025-26 financial year, India's top five IT companies eased off the hiring throttle and moved firmly into caution mode." TOI. Bad news for first-time job seekers. According to the State of Working India 2023 report by Amit Basole and his team at Azim Premji University, "Although upward mobility at the lower end of the hierarchy has improved somewhat in recent years, it's still severely restricted." "Folks at the top of the ladder don't see the teeming masses as a meaningful market," while "those at the bottom of the pyramid lack the education and skills to manufacture things for the wealthy at home and overseas." ET. Gig work will not raise them to the middle class. "An unambitious elite spoiled by finance - plus a working class held back by inadequate education and inequities of caste and gender - are stymying the emergence of a global middle class in India." No middle class, lower tax collections. Will the RBI keep printing money to support the government? The world watches.              

Unilateral national interest.

"As New Delhi prepares to host the European Union's top leadership for India's 77th Republic Day celebrations and the 16th India-EU Summit on January 27," "the long-pending India-EU Free Trade Agreement (FTA), formally the Broad-based Trade and Investment Agreement (BTIA), would mark a strategic, economic and geopolitical turning point." "The EU is pressing India to sharply reduce export duties on cars, which can exceed 100%." ET. But what happens if Ford, a US company, claims the same tax reductions on its exports from its manufacturing plants in Europe (wikipedia)? Will our tax officials suddenly present it with a huge tax demand for using the EU to avoid taxes on its sales in India, even as President Donald Trump imposed 50% tariffs on Indian goods in August 2025 (BBC). Recently, the tax authorities in India demanded a capital gains tax of Rs 145 billion (over $1.7 billion) on Tiger Global (TG) Mauritius over the sale of Flipkart Singapore shares to Walmart. Flipkart Singapore owns Flipkart India so TG is accused of using the FTA with Mauritius to avoid tax on an Indian company. ET. The Supreme Court upheld the tax demand saying that "Treaties should be driven by national interest, not pressure from foreign governments and corporations." PTI. Indeed. But that surely must be during negotiations and not as an afterthought, to increase revenue. "Indian government data shows that in the 23 years to 2023, foreign investment inflows from Mauritius were the largest at $171 billion - a quarter of all investment inflows in that period." "An updated India-Mauritius treaty in 2017 ended the tax-free system but said all pre-2017 investments would continue to enjoy the previous benefits under a so-called grandfathering clause." Reuters. In the case of Nestle, a Swiss company, in 2024, the Supreme Court ruled that a tax benefit offered to one nation could not be extended to another even though both have Double Tax Avoidance Agreement (DTAA) with India. dpncindia.com. Switzerland promptly revoked India's Most Favored Nation (MFN) status under the DTAA and imposed 10% duties on Indian imports. NDTV. "India has issued a final warning to Apple that it will proceed in an antitrust case against the US tech giant as the company has delayed responses to officials," as "Apple has said it fears it could be fined up to $38 billion if India's competition watchdog uses its global turnover calculation for penalties, after an investigation found it had abused its position on its app store." ET. "Apple Inc's manufacturing push in India has resulted in a dramatic surge in iPhone exports, with shipments crossing the $50 billion mark under the production-linked incentive scheme period." TOI. The manufacturing sector in India comprises just 17% of GDP and the Confederation of Indian Industry (CII) would try to increase this to 25% of GDP. pib.gov.in. Apple is already manufacturing and exporting. Also, both Apple and Tiger Global are US companies and Trump is in the White House. In 2025, India removed a 6% tax on digital advertising, known as Google tax, which would have affected Google, Meta and Amazon. TOI. The Supreme Court ruled in national interest. Is our national interest served by driving away foreign investment even as we continuously run huge trade deficits (TOI)? "National interest" has already bowed to "pressure from a foreign government". Read all the fine print while signing FTAs. Selective change later will invite retaliation and a bad reputation. After all, every country has its own "national interest".