akrishnarao

INDIA GATE

  • Telangana Checkmates BJP

    It was reported in the media that on December 11, 2025, Prime Minister Narendra Modi, in a review meeting with his party leaders, expressed dissatisfaction with the performance of BJP MPs from Telangana. The meeting appears to have conveyed a clear message to Telangana BJP leaders: set aside internal differences, work as a united team, strengthen grassroots outreach, and make better use of social media to improve the party’s prospects in the state. Modi is said to have remarked that although the party has strong potential in Telangana, leadership weaknesses and internal factionalism are weakening it. Despite having eight MPs and two Union Ministers, the party has not effectively played the role of a strong opposition, he reportedly observed.

    But what happened in the recent municipal elections held for seven corporations and 116 municipalities in Telangana? The BJP, which emerged as the single largest party in neighbouring Maharashtra elections, secured third place in Telangana with just 15.68 percent of the votes. With eight MPs — half of the total Lok Sabha seats from the state — and an equal number of MLAs, the party won only 259 wards and not even a single municipality. The saffron party’s performance in other municipalities falling under the Lok Sabha constituencies represented by its MPs has been dismal. Though the BJP has the potential to grow in Telangana, especially after its good Lok Sabha results, it has not fully capitalized on the opportunities. However, strong local leaders have made some difference in places like Karimnagar and Nizamabad, but this will not be sufficient to give a tough fight in the next Lok Sabha elections.

    The municipal results followed strong performances in recent Panchayat elections, where Congress-supported candidates secured approximately 66 percent of Gram Panchayats statewide. In an Assembly segment-wise analysis, Congress secured majorities in 68 out of 81 constituencies where municipal elections were held. After forming the government on December 7, 2023, Congress also won the Cantonment by-election and the Jubilee Hills by-election. This indicates that both urban and rural voters are increasingly supporting Congress.

    The credit goes to Mr. Revanth Reddy, the Chief Minister of Telangana, who has been able to stop the juggernaut of the BJP in the state, despite the Prime Minister himself showing keen interest in Telangana. Under his leadership, the Congress party has demonstrated its strength convincingly. These elections were held at a time when there was widespread speculation in political circles that public dissatisfaction with the Revanth Reddy government was growing. The principal opposition, BRS, had been strongly criticizing the government and claiming that its end was near. Given that the government had completed two years, interest in the municipal results was high, and doubts were raised about Congress’ prospects.

    However, contrary to predictions, Congress performed well. Though leaders like KTR may not acknowledge the importance of the results, it is significant for a party like Congress, which is often known for internal dissent, to achieve this level of success. Revanth Reddy’s strategy ensured favorable outcomes across both North and South Telangana. Districts like Nizamabad, Adilabad, and Karimnagar, previously considered strongholds of BJP and BRS, saw gains for Congress. Even in his home district of Mahabubnagar, where BRS appeared strong, Congress made inroads.

    The Congress party attributes its success to development and welfare initiatives under Chief Minister Revanth Reddy, such as ₹17,000 crore spent on urban development, 200 units of free electricity for poor families, free RTC bus travel for women, issuance of 30 lakh ration cards, expansion of Rajiv Aarogyasri coverage from ₹5 lakh to ₹10 lakh, construction of 3,500 houses per constituency, and the Young India Integrated Schools initiative.

    Apart from its socio-economic agenda, it seems that Revanth Reddy adopted a clever strategy of not completely annihilating the BRS. He understands that if the BRS is finished, it would create space for the BJP to rise. He instead put the BRS on the defensive by exposing alleged corrupt practices such as the Kaleswaram project and the telephone tapping controversy. It is a strategy similar to the one adopted by KCR a few years ago, when he allowed the BJP to rise after sensing that Revanth Reddy was gaining momentum in the state as a Congress leader.

    The Telangana setback for the BJP has come at a time when the party is facing pressure from opposition parties at the national level over issues such as General Naravane’s book, Indo-US trade matters, and elections in five states. The political graph of Narendra Modi appears to be facing challenging weather, and the Modi-Shah duo are trying their best to prevent it from declining.

    Revanth Reddy has shown the Congress party a path forward. The Congress should not confine itself to parliamentary tactics alone; it must reach out to the people on issues such as farmers’ concerns, price rise, and unemployment, and strengthen the party at the grassroots level.

  • Freebies or Bribery? India’s Welfare State on Constitutional Trial

    The debate over “freebies” in Indian politics has now entered the constitutional arena, with the Supreme Court of India agreeing to examine whether pre-election promises of cash transfers funded from the public exchequer amount to a “corrupt practice” under the Representation of the People Act, 1951. The Supreme Court said the petition will be heard in March. What began as a political accusation has evolved into a deeper inquiry into fiscal responsibility, democratic fairness, and the character of India’s welfare state. At stake is not merely the legality of campaign promises, but the broader balance between social justice and macroeconomic prudence in a competitive democracy.

    Tamil Nadu Chief Minister M.K. Stalin’s announcement on February 13, 2026, implementing a major bonanza for women in the poll-bound state of Tamil Nadu—crediting ₹5,000 each to the bank accounts of 1.31 crore women family heads who are beneficiaries under the scheme Kalaignar Magalir Urimai Thittam (KMUT)—has added further interest to the debate.

    The petition filed by BJP leader Ashwini Kumar Upadhyay raises foundational questions. Can electoral promises financed from public funds distort the level playing field? Where does legitimate welfare end and electoral inducement begin? And should courts regulate what is essentially a political and fiscal policy choice? The Representation of the People Act identifies certain forms of bribery and inducement as corrupt practices, yet it does not clearly define whether manifesto promises of welfare schemes fall within that ambit. This definitional ambiguity has allowed successive governments across party lines to expand direct benefit transfers without clear judicial boundaries.

    The controversy gains urgency when viewed through the prism of fiscal sustainability. In Maharashtra, the Ladki Bahin Yojana reportedly costs approximately ₹46,000 crore annually—nearly 8 percent of the state’s total budget—at a time when the fiscal deficit exceeds ₹66,000 crore. Such recurring commitments constrain fiscal space for capital expenditure on infrastructure, education, and healthcare. The 2019 farm loan waiver of roughly ₹25,000 crore provided immediate relief but was widely criticized for restricting long-term investment capacity. Economists warn that debt-financed consumption spending can crowd out growth-oriented expenditure, raise debt-to-GSDP ratios, and increase interest burdens that future taxpayers must bear. The Reserve Bank of India has cautioned that excessive non-merit subsidies may affect macroeconomic stability, underscoring the long-term risks of fiscally expansive populism.

    Yet the debate is complicated by the absence of a universally accepted definition of a “freebie.” Economist C. Rangarajan has suggested distinguishing between subsidies on merit goods such as education and health and non-merit transfers that lack productivity linkages. But even this distinction is not always clear. Is free electricity for farmers a distortionary subsidy or a growth investment? Is free education merely welfare, or a constitutional obligation under the right to education framework? Is unconditional income support empowerment for vulnerable households, or an electoral inducement timed for political gain? The boundary between welfare and populism is not merely economic; it is normative and political.

    International comparisons add nuance but not easy solutions. Countries such as Germany and South Korea operate structured welfare systems in which benefits are often linked to employment search requirements, skill development, or contributory social insurance. These systems are embedded within stable fiscal architectures and high levels of formal employment. India, by contrast, confronts a large informal sector, weak employment absorption, and rising aspirations among its population. In such a setting, unconditional cash transfers are administratively simpler and politically more attractive than complex structural reforms.

    Electoral timing further complicates perceptions of legitimacy. In several states, welfare schemes have been expanded, advanced, or newly announced shortly before elections. Even when legally permissible, such timing creates the impression that public finances are being leveraged for electoral advantage. The criticism is not confined to one political formation. Prime Minister Narendra Modi has warned against what he termed “revdi culture,” arguing that fiscally irresponsible promises burden future generations. Yet critics note that the Modi government is providing free food grains to over 81 crore beneficiaries under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) to ensure food security and reduce financial burdens. This initiative covers Antyodaya Anna Yojana (AAY) and Priority Households (PHH) under the National Food Security Act, with a five-year budget of ₹11.80 lakh crore. Moreover, BJP-led governments in states such as Assam, Delhi, Maharashtra, and Madhya Pradesh operate substantial direct transfer schemes of their own. What emerges is less an ideological contradiction than a structural incentive within a competitive democracy.

    Direct transfers produce immediate and visible benefits to identifiable voters. Infrastructure projects, by contrast, yield slower and more diffuse gains that are harder to attribute to a particular government. In an electoral environment where tangible short-term relief can decisively influence outcomes, parties across the spectrum may feel compelled to adopt similar strategies. The result is a normalization of competitive cash-transfer politics, where the debate shifts from whether to provide transfers to how large and how frequent they should be.

    As the Supreme Court considers the legal framework, it faces a delicate institutional balance. An aggressive intervention could risk judicial overreach into policymaking and blur the separation of powers. A restrained approach, however, may leave fiscal populism unchecked in shaping electoral competition. The solution may not lie in absolute prohibition or blanket endorsement, but in greater transparency and accountability. Mechanisms such as mandatory fiscal impact disclosures in manifestos, adherence to medium-term fiscal responsibility frameworks, or the establishment of independent fiscal councils could introduce discipline without undermining democratic choice.

    Ultimately, the freebies debate reflects a deeper tension within India’s development trajectory—between redistribution and growth, between immediate relief and long-term investment, and between electoral competition and fiscal prudence. In a democracy committed to both social justice and economic stability, the challenge is not to eliminate welfare but to design it responsibly. Whether cash transfers represent empowerment or populism depends on their timing, targeting, sustainability, and measurable outcomes. The Court may clarify legal boundaries, but the enduring balance between welfare and responsibility will remain a political question, to be negotiated through informed public debate and accountable governance.

  • Beyond Slogans: The Structural Gaps Threatening India’s 2047 Aspiration

    As Parliament remains caught in political confrontation over issues ranging from the Indo-US trade deal to federal fiscal transfers, the Standing Committee on Finance has quietly presented a detailed roadmap for achieving the ambitious goal of Viksit Bharat 2047. In its Twenty-Ninth Report (2025–26), the Committee delivers a sobering assessment: India’s reform story is no longer constrained by policy imagination but by the depth and quality of implementation. The timing of this intervention is significant. With state elections scheduled in 2027 and general elections in 2029, the current budget cycle may represent a narrowing window for politically difficult structural decisions before electoral considerations begin to shape fiscal policy more decisively.

    The Committee identifies three interlinked structural risks that could undermine India’s long-term growth trajectory. First is the persistent implementation lag—administrative capacity at various levels of government continues to trail policy ambition. Reforms are announced with clarity, yet execution remains uneven across states and sectors. Second, India’s growth model remains heavily credit-driven. While lending has expanded, equity capital, technological upgrading, and productivity-enhancing reforms have not kept pace. Third, federal capacity gaps threaten to dilute national reform gains, as state-level disparities in regulatory quality and institutional strength create uneven investment climates.

    To achieve high-income status by 2047, India would need to sustain annual growth of around 8 percent for at least a decade. That objective requires raising the investment rate from roughly 31 percent to nearly 35 percent of GDP. Yet private capital formation has slowed considerably, with its share in total fixed investment declining from over 40 percent in 2015–16 to about 33 percent in 2023–24. Government infrastructure spending has remained robust, but manufacturing capital expenditure continues to lag. The Committee’s message is clear: fiscal stability is not the principal constraint; the revival of private investment is. That revival depends on deeper financial sector reforms, faster judicial enforcement, regulatory harmonization across states, and a more predictable business environment.

    Food inflation volatility poses another macroeconomic risk. The Committee stresses that stabilizing prices requires stronger agricultural supply chains, expanded cold storage networks, and deeper digital market linkages for farmers. Without supply-side strengthening, inflation shocks could erode real incomes and dampen domestic demand. At the same time, accelerating investment could widen the current account deficit, underscoring the need for domestic demand-led growth and deregulation that enhances export competitiveness without compromising macroeconomic stability.

    Progress on disinvestment has also been slower than anticipated. The Committee calls for concrete timelines and incentive-based frameworks to encourage reform of state-level public sector undertakings. Credibility in execution, rather than repeated announcements, will shape investor confidence. Similarly, in the MSME sector, inadequate risk capital remains a structural constraint. The Self-Reliant India (SRI) Fund has attempted to provide equity-like financing, but uptake has been limited by legal structures, small ticket sizes, and information asymmetries. Expanding credit alone, the Committee warns, will not yield productivity gains unless firms adopt technology upgrades and integrate into larger supply chains.

    Labour market reforms occupy a central place in the roadmap. The Committee advocates establishing a centralized Labour Market Information System to bridge mismatches between job supply and demand. It recommends benchmarking India’s labour force participation rate against advanced economies and upgrading Industrial Training Institutes in Tier 2 and Tier 3 cities. With artificial intelligence reshaping global employment patterns, curricula must become modular, industry-co-designed, and multilingual to address widening digital divides. The emphasis is on agility and employability rather than scale alone.

    Innovation remains another area of concern. India’s R&D expenditure, at just 0.65 percent of GDP, is far below the global average of 2.7 percent. The Committee cautions that increased funding by itself will not deliver results unless accompanied by stronger intellectual property enforcement, faster patent processing, dedicated commercial courts, and deeper industry–academia linkages. Translating research into commercially viable innovation requires institutional reform as much as financial commitment.

    India’s digital public infrastructure has transformed governance delivery, yet the Committee notes that digitalization must move beyond registration metrics toward measurable income and productivity outcomes. The proposal for an indigenous government-owned AI server reflects concerns over data sovereignty and strategic autonomy, but its true test will lie in whether it enhances productivity across sectors rather than remaining a symbolic asset.

    In an era marked by global fragmentation and shifting supply chains, India’s growth advantage rests on macroeconomic stability and the strength of its domestic demand base. However, the Committee’s overarching message is that the next phase of economic transformation will depend less on new policy articulation and more on execution discipline, institutional strengthening, and sustained private-sector dynamism. As political debates continue to dominate the parliamentary landscape, the roadmap offers a quieter but enduring reminder: achieving Viksit Bharat 2047 will hinge not on reform announcements, but on reform credibility and productivity-led growth.

  • Privilege, Politics and Policy: The Debate After Rahul Gandhi’s Speech

    The political storm following Leader of the Opposition Rahul Gandhi’s speech in the Lok Sabha has shifted from economic policy to parliamentary privilege. The Bharatiya Janata Party is reportedly considering a privilege motion against him over remarks linking senior leaders to the so-called “Epstein Files.” Union Minister Hardeep Singh Puri has firmly rejected the allegations as “baseless,” clarifying that his limited interactions with Jeffrey Epstein were in the context of an International Peace Institute delegation and unrelated to any criminal matters.

    Whether Gandhi’s remarks constitute a breach of parliamentary privilege is ultimately a matter for the Speaker of the Lok Sabha, who must interpret them within established rules and precedents. Parliament provides wide latitude for political speech, but it also imposes responsibility. That determination should be made institutionally and without partisan escalation.

    Yet focusing exclusively on the privilege question risks overlooking the larger policy issues raised in the speech — issues that warrant substantive engagement rather than procedural confrontation.

    The Strategic Context

    In his address, Rahul Gandhi framed the Union Budget and the India–U.S. trade understanding within a broader geopolitical narrative. He argued that the global order is entering a phase of instability marked by conflict, technological rivalry, and the weaponisation of energy and finance. In such an environment, he contended, India must negotiate from a position of strength.

    At the core of his argument was the assertion that India possesses three strategic assets: its population and digital data, its agricultural base, and its energy sovereignty. According to him, recent trade negotiations risk diluting these strengths.

    These are consequential claims. They deserve careful examination.

    One area of concern raised relates to digital trade rules. Has India altered its position on data localisation? Are cross-border data flows being liberalised in ways that constrain regulatory autonomy? Do trade commitments affect India’s ability to impose digital taxes or regulate major technology firms?

    Given the centrality of data to artificial intelligence and digital sovereignty, clarity on these points is essential. Trade agreements in the digital domain often contain complex provisions that are not easily understood without detailed disclosure.

    A transparent explanation of the Government’s commitments would help dispel uncertainty.

    Agriculture and Market Access

    Gandhi also warned that the trade framework could expose Indian farmers to competition from highly mechanised American agriculture. India’s agricultural economy is dominated by small and marginal farmers whose cost structures differ significantly from those of large-scale U.S. farms.

    The key question is whether tariff reductions or market access commitments contain adequate safeguards. If protections remain intact, the Government should clearly articulate them. If phased adjustments are planned, their timeline and compensatory measures should be made public.

    Food security is not merely an economic issue; it is a matter of national resilience.

    Energy Sovereignty

    Energy security formed the third pillar of Gandhi’s critique. In an era when sanctions, supply disruptions and geopolitical tensions influence energy markets, any perception that India’s sourcing flexibility is constrained can generate concern.

    Here again, clarity matters. If India retains full sovereign discretion over its energy imports, an unequivocal statement to that effect would strengthen confidence.

    Trade Balance and Industrial Impact

    Concerns were also expressed about tariff asymmetry and potential sectoral impacts, particularly in textiles. Trade agreements often produce winners and losers across industries. The role of government is to ensure that transitions are managed, vulnerabilities are addressed, and competitiveness is strengthened.

    A detailed presentation of expected gains and sector-specific protections would elevate the discussion beyond rhetoric.

    Democratic Accountability Over Escalation

    The controversy over alleged personal references and the potential privilege motion should not overshadow the importance of answering substantive policy questions. Democratic accountability requires both responsible speech from the Opposition and transparent explanation from the Government.

    Prime Minister Narendra Modi enjoys a strong domestic mandate and significant international stature. Supporters argue that his government would not compromise India’s interests in any negotiation. That confidence can only be reinforced through openness.

    Parliamentary debate is not an act of defamation; it is a mechanism of scrutiny. Equally, allegations must be supported by evidence. The health of democratic institutions depends on maintaining this balance.

    If a privilege motion is moved, it should proceed strictly within parliamentary rules. But beyond procedural action, what the moment calls for is clarity — on the nature of India’s trade commitments, on safeguards for farmers and industry, and on the preservation of data and energy sovereignty.

    In times of global uncertainty, trust in national leadership is strengthened not by silencing dissent, but by addressing it transparently.

    The Government has an opportunity to do precisely that.

  • In Search of Lost Standards

  • In Search of Lost Standards

    “Lok Sabha’s first Speaker G.V. Mavalankar, the second Speaker Ananthasayanam Ayyangar, and the first Chairman of the Rajya Sabha and Vice President Dr. Sarvepalli Radhakrishnan had a profound influence on the functioning of parliamentary institutions. They conducted themselves with dignity and impartiality while framing rules, procedures, conventions, and practices. Even though the Jana Sangh had no representation in the Rajya Sabha, I used to watch the proceedings from the visitors’ gallery. It was because of them that I had the opportunity to learn about Question Hour, adjournment motions, bills and resolutions, standing committees, calling attention notices, members’ privileges, and many other aspects. Eminent leaders sitting on the opposition benches spoke with as much eloquence as those on the treasury benches. The Speaker acted as an honest guardian of the rights of the opposition. It was because of these noble traditions that Indian democracy withstood many tests and maintained its international reputation.”

    These words were written by none other than Lal Krishna Advani, one of the founders of the Bharatiya Janata Party, in his autobiography My Country–My Life, describing the parliamentary standards of earlier times.

    Standards endure only when individuals uphold them. If individuals sacrifice standards for personal interests, no standards remain worth citing as examples. If declining social standards enter Parliament, the current functioning of legislatures is proof of what happens. “Guide us. If we go astray, correct us if necessary. Advise us. Scrutinize our conduct,” India’s first Prime Minister Jawaharlal Nehru requested the first Lok Sabha Speaker G.V. Mavalankar. Mavalankar acted accordingly. Whenever serious differences arose, the Prime Minister and the Speaker would consult and resolve them. On one occasion, there was an argument between Nehru and Mavalankar in the House. Nehru wanted to make a second statement the same day, but Mavalankar clarified that it was against the rules. Nehru accepted and withdrew.

    Mavalankar strongly opposed the frequent promulgation of ordinances. He insisted they should be issued only in rare emergencies and that laws must be made in Parliament. He even wrote to the Prime Minister on this matter. If any legal doubt arose, he personally consulted the Attorney General, asserting that the Speaker must function like a judge. Nehru accorded him equal respect. When officials complained to Nehru that parliamentary committees were subjecting their decisions to excessive scrutiny, Nehru replied that it was not within his domain and advised them to approach the Speaker. Many rules framed by Mavalankar remain in force even today. The first Lok Sabha Secretary-General Shakdher described him as a Speaker who maintained balance between the ruling and opposition parties, conducted the House efficiently, and safeguarded public interest. It is noteworthy that Mavalankar, who insisted that Parliament must remain independent of government control, was elected from Gujarat.

    After Mavalankar’s death, Ananthasayanam Ayyangar followed the same path. Born into a Vaishnava Brahmin family in Tiruchanur near Tirupati, he conducted the Lok Sabha impartially. He once stated: “Under a dictatorship or absolute monarchy, citizens’ lives and freedoms have no protection. If the dictator is benevolent, people may live well. But even in a democracy, there is a danger that dominant groups may behave dictatorially and suppress those in smaller numbers. The only person who can firmly control such tendencies and protect minority interests in the House is the Speaker.” He remarked that there were no greater orators than Hiren Mukherjee (CPI) in English and Atal Bihari Vajpayee (Jana Sangh) in Hindi. Even without formal recognition of an Opposition Leader due to inadequate numbers, Ayyangar gave full respect and opportunity to opposition members. In the second Lok Sabha, both ruling and opposition members unanimously proposed his re-election as Speaker — a testimony to the standards he upheld. In 1972, when a Dalit Christian candidate contested from Tirupati, Ayyangar campaigned to support him at Congress’s request, responding to critics by saying, “Secularism is embedded within Vishishtadvaita.” This was later revealed by former Prime Minister P.V. Narasimha Rao.

    After Mavalankar, Speaker Sardar Hukam Singh admitted no-confidence motions against Nehru’s government, declaring that Parliament held supremacy over the government. His successor Neelam Sanjiva Reddy allowed a discussion on a no-confidence motion on the very day the President addressed both Houses. During his tenure, the first parliamentary committee on the welfare of Scheduled Castes and Scheduled Tribes was formed.

    Gradually, parliamentary standards began to decline from 4th Lok Sabha. During the Emergency, parliamentary proceedings were censored in unprecedented ways, yet the presiding officers remained silent. Indira Gandhi forced G.S. Dhillon to resign as Speaker and appointed him Shipping Minister the same day. After the Emergency, Speakers such as K.S. Hegde, Balram Jakhar, Rabi Ray, Shivraj Patil, P.A. Sangma, Balayogi, Manohar Joshi, and Somnath Chatterjee each tried in their own way to uphold the dignity of the office. Balayogi, the first Dalit and first Speaker from a regional party, maintained such neutrality that during his tenure the Vajpayee government fell by just one vote. Later, during the tenures of women Speakers Meira Kumar and Sumitra Mahajan, frequent disruptions occurred. The Telangana movement made Meira Kumar’s tenure extremely difficult, while increasing confrontation between ruling and opposition parties during Narendra Modi’s premiership placed Sumitra Mahajan in a challenging position. Since then, tensions have intensified, and Speaker Om Birla too has found himself in a helpless situation over the past six years, with parliamentary standards steadily declining.

    Recently, opposition parties moved a no-confidence motion against Om Birla for not allowing Congress leader Rahul Gandhi to speak — a sign of the deteriorating condition of Indian democracy. If a discussion had been allowed on former Army General Naravane’s book on the India–China conflict, and if the government had responded, people would have had the opportunity to assess the facts. Instead, opposition parties stalled Parliament. Sessions ended without full discussions on the President’s Address or the Budget, and without the Prime Minister speaking in the Lok Sabha. Furthermore, the Speaker himself claimed he had information that women MPs were planning to attack Modi — an unusual development. In reality, both government and opposition are responsible for failing to show flexibility and for using Parliament as a political arena. In an atmosphere where mutual respect is absent, no one expects the Speaker to remain impartial. As a result, the office of the Speaker too appears to be losing its dignity.

    “The Speaker represents the entire House. He reflects its dignity and freedom. Since the House represents the nation, the Speaker becomes a symbol of freedom in the country. It is therefore a position of great honor. Only individuals of the highest competence and impartiality should occupy it,” said Nehru. But it is impossible to compare those days with the present. Those in power then sought to set standards themselves and serve as role models for future generations. At a time when the country aspires toward a ‘Viksit Bharat’ (Developed India), leaders must internally deliberate on preserving parliamentary democratic standards within a defined timeframe.

  • Rethinking Tax Devolution in Uneven India

  • Rethinking Tax Devolution in Uneven India

    India’s fiscal federalism is facing a moment of quiet but consequential strain. Chief Minister N. Chandrababu Naidu’s remarks on tax devolution have once again brought to the surface a long-simmering grievance among better-performing states: that they contribute disproportionately to the Union’s tax kitty but receive a shrinking share in return. The data broadly supports this sentiment. A small group of economically advanced states account for the bulk of direct tax and GST collections, while a significant share of tax devolution flows to poorer, high-population states. However, for the country to prosper, all its regions have to prosper, Naidu said in an interview on Sunday with PTI Videos, adding that the states are allies, not enemies.

    Yet, framing this issue simply as “performers versus non-performers” risks obscuring a deeper structural problem. The real question is not whether redistribution is justified—it is—but whether India’s current system of fiscal transfers is equipped to handle the vastly different development trajectories its states have chosen.

    Finance Commissions are constitutionally mandated to address horizontal imbalances among states. Inevitably, this means that poorer states such as Uttar Pradesh, Bihar, and Madhya Pradesh receive a larger share of devolved taxes.Poorer states like UP, Bihar and MP received 36% of the tax  meant for sharing with the states. Against this, these three states contributed only 5% of the total direct tax and Central GST collected by the Centre during that period. This is neither accidental nor malicious; it reflects the principle that citizens should have access to comparable public services regardless of where they live. From this perspective, redistribution is not a penalty on success but a cornerstone of national unity.

    However, this logic begins to fray when redistribution appears perpetual and weakly linked to outcomes. Southern and western states that invested early in education, health, and population control now find themselves disadvantaged by formulae that give significant weight to population size and income distance. Their success in managing fertility and building human capital—once seen as national assets—now translates into lower relative shares. This creates a perverse incentive structure and a growing political resentment.

    Complicating matters further is the Centre’s increasing reliance on cesses and surcharges, which lie outside the divisible pool. While the official share of states stands at 41 per cent of Union taxes, the effective share is considerably lower. States are being asked to shoulder expanding responsibilities—especially in health, education, and infrastructure—without commensurate fiscal space. It is unsurprising, then, that demands are growing to raise the states’ share to 50 per cent.

    Yet, linking devolution directly to tax contribution alone would be equally problematic. Tax collections reflect not just effort but historical advantages, agglomeration effects, and the location of corporate headquarters. A purely contribution-based system would risk locking poorer states into a low-development trap, undermining both equity and long-term national growth.

    The way forward lies in recognising that India is attempting to achieve too many objectives with a single instrument. Tax devolution is being asked to equalise, incentivise, and reward all at once—and predictably, it satisfies none fully.

    A more mature framework would separate these goals. A core equalisation transfer should continue to ensure minimum fiscal capacity for all states. Alongside this, a distinct performance-oriented component could reward states for expanding the national economic pie—through growth, tax effort, infrastructure creation, demographic management, and human capital outcomes. Such a structure would acknowledge both need and contribution without pitting one against the other.

    Equally important is addressing sectoral imbalances. States like Kerala, which prioritised social development, now face infrastructure constraints. Others, like Gujarat, built strong physical infrastructure but lag in social indicators. Poorer states struggle on both fronts. A dedicated, outcome-linked national infrastructure fund—outside routine tax devolution—could help bridge these gaps without distorting the principles of redistribution.

    India’s diversity in development paths is a strength, not a flaw. But managing that diversity requires fiscal institutions that are transparent, differentiated, and forward-looking. Unless redistribution is paired with clear incentives and a fair sharing of resources, political “heartburn” will only intensify.

    The choice before India is not between rewarding success and supporting the vulnerable. It is about designing a federal compact that does both—openly, credibly, and sustainably.

  • India’s Uneasy Balancing Act in the Trump Era

    A close reading of the India–US agreement makes it evident that New Delhi is unwilling to treat US President Donald Trump as an adversary. Keen to prevent any further deterioration in bilateral relations, India appears to have adopted a cautious and conciliatory approach. The United States has already imposed tariffs of up to 50% on Indian exports, severely impacting textiles, jewellery, engineering goods and chemicals. India’s trade deficit is widening, and a series of unilateral statements by Trump have pushed Prime Minister Narendra Modi into a defensive posture at home, where he faces questions he is increasingly unable to answer. This appears to have prompted efforts to placate the US President.

    Two months ago, US Senator Lindsey Graham, a close ally of Trump, told reporters aboard Air Force One that Indian Ambassador Vinay Kwatra had met him, conveyed that India had reduced oil imports from Russia, and urged him to persuade Trump to lower tariffs. Trump, standing beside him, warned that unless India completely stopped purchasing Russian oil, matters could worsen. “India wants to make me happy. Modi is a good man. He knows I’m not happy — and making me happy is very important. If India doesn’t help on the Russian oil issue, tariffs could be increased,” Trump said. The warning came shortly after the US attack on Venezuela, highlighting the pressure India was facing.

    Why should a US President certify India’s Prime Minister? Why should India align its policies to suit Washington’s preferences? Why should Modi seek to “please” Trump? These are questions India appears unwilling — or unprepared — to raise. Despite being larger than the European Union in scale, India does not seem ready to assert that it fears no one and can independently determine its foreign policy and internal security priorities. The ideals of non-alignment and strategic autonomy appear absent from current decision-making.

    At an RSS event marking its centenary year on Saturday, RSS chief Mohan Bhagwat underscored that while economic interdependence among nations is a reality, it must be voluntary and not driven by coercion. He cautioned against decisions imposed through trade wars and tariff pressure, arguing that international trade should be guided by a country’s free will. Agreements, he said, should not be entered into out of helplessness. He clarified that Swadeshi does not mean isolation or a blanket ban on imports.

    Against this backdrop, attention has turned to what Bhagwat may say about the recently announced draft India–US agreement. Many observers suspect the deal was not concluded on equal terms. Notably, even before the draft was officially announced, Trump unilaterally disclosed its details in a Truth Social post, stating that India would stop buying Russian oil and instead source oil from Venezuela. Prime Minister Modi promptly endorsed the announcement and expressed satisfaction, later being felicitated at an NDA meeting.

    Subsequently, US Trade Representative Jamieson Greer and Agriculture Secretary Brooke Rollins outlined the agreement’s details. Only thereafter did Commerce Minister Piyush Goyal address the issue, stating that Modi had leveraged his personal friendship with Trump to secure a favourable deal. Critics argue this framing overlooks the fact that agreements are concluded between nations, not individuals. It is India’s 1.4-billion-strong market that gives it negotiating strength — not personal rapport. After all, the India–US civil nuclear agreement was not a personal arrangement between Manmohan Singh and George W. Bush.

    Even with Trump reducing tariffs to 18%, questions remain about the deal’s benefits. Prior to July 2025, Indian exports to the US faced an average tariff of just 3%. The new rate represents a sixfold increase in less than a year. Meanwhile, India has reduced tariffs on American products such as Harley-Davidson motorcycles and several alcoholic beverages. Though US goods earlier faced tariffs averaging around 15% in India, these duties will now be eliminated.

    Goyal claimed the agreement would open the $30 trillion US market to Indian exporters, benefiting MSMEs, farmers and fishermen, and generating millions of jobs for women and youth. However, he avoided questions on the reported halt to Russian oil imports. External Affairs Ministry spokesperson Randhir Jaiswal maintained that India accords the highest priority to the energy security of its 1.4 billion citizens.

    Under the agreement, American products will enter India at zero tariffs, while the US will impose an 18% duty on Indian textiles, garments, leather, footwear, plastic and rubber goods, organic chemicals and select machinery. Generic pharmaceuticals, gems and jewellery, diamonds and aircraft parts will be exempt. India has committed to purchasing $500 billion worth of US goods, but the agreement does not specify reciprocal US purchases from India.

    The Congress party criticised the deal, alleging it was unequal and that India had opened its agricultural market to the US at zero tariffs. Congress spokesperson Pawan Khera described it as “Narender Surrender,” claiming it would enable dumping of American goods in India. Former Finance Minister P. Chidambaram said the agreement appeared heavily tilted in Washington’s favour, while former Union Minister Jairam Ramesh warned that India’s imports from the US could triple, erasing its long-standing trade surplus.

    Whether the government’s claims or the opposition’s criticism prove accurate remains to be seen.

    Meanwhile, there is little indication of any softening in the US stance on visa issues affecting Indians. Trump has significantly tightened visa norms, causing hardship for Indian professionals reliant on H-1B visas and for Indian students. Visa renewals now take years, and it remains unclear whether the Prime Minister’s much-touted personal rapport with Trump will yield any relief.

    The economic and political consequences of the India–US agreement, many argue, are likely to be far-reaching.

  • Air Pollution Outside, Political Pollution Within: India’s Twin Crises

    Air pollution has engulfed India’s national capital. What were once winter mornings marked by dew on leaves are now defined by thick smog. At daybreak, a chemical sting in the eyes and persistent coughing have become routine. Although the Air Quality Index (AQI), which exceeded 300 during November and December, may have declined to around 260 by the end of January, daily life in Delhi remains severely affected.

    Beyond the toxic air outside Parliament, the atmosphere within appears no less suffocating. In both Houses, heated confrontations between the ruling party and the opposition have created a climate of near-constant disruption. Prime Minister Narendra Modi did not attend the Lok Sabha to respond to the debate on the motion thanking the President for her address, but he did speak in the Rajya Sabha, launching familiar attacks on the Congress. As he has often done, Modi traced the party’s alleged failures back to the Indira Gandhi era, accused the opposition of seeking his political demise, and charged it with disrespecting Dalits and Sikhs. The speech bore a closer resemblance to an election rally than a parliamentary response. Few leaders in India match Modi’s effectiveness as a political orator—a point even his critics concede.

    The government has attempted to sidestep discussion of a book written by former Army Chief General Manoj Naravane, but the opposition appears determined to keep the issue alive. The debate on the President’s address ended amid disorder, and there are signs that the upcoming Budget discussion may face similar disruptions. Meanwhile, Commerce Minister Piyush Goyal has said an India–US trade agreement could be finalized within days. Whether India has made significant concessions will only become clear once the details are released. Politically, the agreement represents another test for Modi, even as his opponents watch closely for potential revelations from the so-called Epstein files.

    At the World Economic Forum, IMF Chief Economist Gita Gopinath underscored a more fundamental challenge. She said air pollution poses a far greater threat to India’s economy than US tariffs on Indian goods. Gopinath noted that air pollution causes an estimated 1.7 million deaths annually and discourages foreign investment. She warned that the resulting health costs, premature deaths, and productivity losses could reduce India’s GDP by as much as 9.5 percent. India’s Commerce Minister Ashwini Vaishnaw, who was present at the forum, offered no public response.

    These concerns are echoed within India’s own policy establishment. The National Institute of Public Finance and Policy (NIPFP) has described air pollution as a failure of government policy and an ongoing public health emergency. Economist Lekha Chakraborty has pointed to rising cases of severe respiratory illness in public hospitals, increasing health expenditures, and declining labor force participation—all of which weigh on economic growth. Air pollution, she argues, is not an unavoidable risk but a solvable problem. Yet it continues to reflect governance shortcomings. Despite India’s claims of leadership in environmental economic federalism, implementation remains weak.

    China’s experience offers a contrast. Both India and China enacted environmental laws around 2000, but China followed up with sustained, long-term action. It invested heavily in pollution-control technologies, shut down thousands of obsolete and highly polluting industrial units, and aggressively promoted electric vehicles. China’s progress demonstrates what political will and consistent policy execution can achieve.

    India today faces two parallel forms of pollution—one in its air, and the other in its politics. Leaders appear more invested in applause, spectacle, and rhetoric than in effective governance that delivers tangible improvements to citizens’ lives.