The 7.8 per cent GDP growth is real; The outrage is manufactured!

Gopal Krishna Agarwal

When India's growth outperforms expectations, the Congress party searches for technical objections to dismiss it. Genuine scrutiny of economic data is healthy for democracy. But scrutiny built on comparing incompatible statistics, quoting half a sentence from an IMF report, and mistaking a household grocery bill for a national price index is not scrutiny. It is a script written in advance.

There is a peculiar ritual that plays out every time India's economy performs well. First comes the news: growth of 7.8 percent in the April to June quarter of this financial year. The fastest expansion recorded by any large economy in the world for that period. Then, within days. comes the counter-narrative from the Indian National Congress: the number is false, the arithmetic is rigged, and the real story is one of stagnation dressed up as success.

This jump was based on a gross misstatement by a former finance secretary, who in all respect expected to know the truth about his agenda-driven statement. The Congress did not stop here, but the party's General Secretary for Communications has gone further than usual, issuing a three-page statement that claims real growth is "basically zero" and that the government owes the country an explanation for what it calls a 43 lakh crore rupee disappearance from the size of the Indian economy.

It is worth taking this claim seriously enough to examine it line by line, because that is precisely what its authors did not do. When one does, the entire edifice collapses under the weight of a single, elementary statistical error, repeated with great confidence and even greater carelessness.

The trick at the heart of the claim

The Ministry of Statistics and Programme Implementation released a new GDP series in February 2026, based on 2022-23 as the base year, replacing the outdated 2011-12 series. This is a routine and necessary exercise that every economy undertakes periodically to reflect current patterns of production and consumption. Under the new series, India's nominal GDP for the first quarter of the previous financial year. 2025-26, was estimated at approximately 80 lakh crore rupees. Under the old series, the same quarter had been estimated at around 86 lakh crore rupees.

The misguided ex beaurocrate's calculation takes the old series figure of 86 lakh crore rupees for last year and divided it into this year's new series figure of 88.27 lakh crore rupees. That division produces a nominal growth rate of only 2.6 percent, from which the gentleman then subtracts inflation to arrive at its dramatic conclusion of near zero growth. The trouble is that this calculation compares two numbers that were never meant to be compared. One is drawn from a series that has been discontinued. The other is drawn from a series with different coverage, different data sources, and a different base year. Dividing one by the other does not produce a growth rate. It produces nonsense dressed in decimal points.

 The correct comparison, using the new series on both sides, is straightforward. Nominal GDP rose from 80 lakh crore rupees to 88.27 lakh crore rupees, a nominal growth of 10.3 per cent. At constant prices, real GDP rose from 75.46 lakh crore rupees to 81.36 lakh crore rupees, which is real growth of 7.8 percent, exactly the figure the government announced and exactly the figure that has now been disputed on the basis of an invalid calculation. Congress Party endorsed the flawed comparison to suite its agenda. That a technocrat of his experience did not catch such a basic error. or chose not to, says a great deal about the intent behind this exercise. Leave aside the individual, but the conspiracy that requires travelling backwards in time.

The most serious accusation in the Congress statement is that the government secretly and suddenly reduced last year's GDP figure in order to inflate this year's growth number. This charge collapses the moment one lays out the actual sequence of events. The old series figure of 86.05 lakh crore rupees for the April to June quarter of 2025-26 was released in August 2025. The new series, with its revised figure of 80.32 lakh crore rupees for the same quarter, was released in February 2026, a full six months before the April to June 2026 GDP estimate was ever calculated.

A further, minor revision brought the figure to 80.00 lakh crore rupees by the end of August this year, a movement of barely 0.32 lakh crore rupees. For the conspiracy theory to hold, the government would have needed to know in February. Precisely what growth rate it wanted to show in September and to have engineered the base accordingly, months before the current quarter's economic activity had even taken place. This is not how national accounting works, and it is not how time works either.

The overwhelming majority of the difference between the old and new figures arose from a comprehensive, well-documented methodological rebasing exercise conducted half a year before the number that is supposedly being manipulated even existed. Rebasing did not begin in 2026.

Controversy is selective

India has revised its GDP base year nine times since independence. And this revision is done every 5/6-year interval. Five of those revisions took place while the Congress party itself governed at the Centre, under Jawaharlal Nehru in 1956, Indira Gandhi in 1967, Rajiv Gandhi in 1988, and twice under the United Progressive Alliance government in 2006 and 2010.

In fact, when the 2011-12 base series was introduced in 2015, the growth estimate for the UPA's final year in office. 2013-14 was revised upward from 4.7 percent to 6.9 percent. a far larger swing than anything being debated today. If the current government's alleged motive is to inflate its own record at the expense of historical accuracy, it has a strange way of going about it, since the same revision exercise that Congress now calls fraudulent actually improved the recorded performance of the UPA years. Rebasing is neither new nor partisan.

The 43 lakh crore rupee illusion

Congress arrives at its headline figure of 43 lakh crore rupees by adding together the differences between old and new series estimates across four separate years. This is statistical theatre rather than serious analysis. GDP is not a fixed, discoverable quantity waiting to be measured with perfect accuracy once and for all. It is an estimate, built from surveys, administrative records, and sampling methods, and it is revised as better data becomes available.

The new series incorporates far more granular information than before, including GST returns, vehicle registration data, updated labour force surveys, improved treatment of unincorporated enterprises, and the adoption of double deflation in manufacturing, a method the International Monetary Fund had itself urged India to adopt.

 None of this amounts to erasing 43 lakh crore rupees worth of goods and services that once existed. It reflects a more accurate accounting method being applied retrospectively, which is precisely what good statistical practice demands. It is also worth noting that a lower nominal GDP base mechanically pushes up ratios such as fiscal deficit to GDP and public debt to GDP, both of which are politically sensitive figures the government would have every incentive to keep looking favorable if manipulation were truly the goal. Instead, annual real growth rates under the new series were revised only modestly, from 7.2 to 7.3 per cent for 2023-24, from 7.1 to 7.2 per cent for 2024-25, and from 7.7 to 7.8 per cent for 2025-26. These are not the fingerprints of a rigged system. They are the fingerprints of a routine statistical upgrade.

Confusing the kitchen budget with the GDP deflator

The statement also argues that since retail and wholesale inflation ran higher than the GDP deflator, the deflator itself must be wrong, and that using a more realistic inflation figure would bring growth down to somewhere between four and six percent. This argument rests on a basic misunderstanding of what these different price indices measure. Retail inflation captures the prices households pay for a specific consumption basket. Wholesale inflation captures prices of goods and raw materials at the factory gate and largely excludes services.

The GDP deflator, by contrast, must capture price movements across the entire economy, including investment, government spending, exports, construction, financial services, and information technology, sectors that a household inflation basket simply does not touch. MoSPI uses more than three hundred individual price deflators to construct this figure. A single household's grocery bill cannot substitute for that exercise, however emotionally persuasive the comparison may sound on a podium.

The related claim that a negative deflator in manufacturing proves manipulation similarly misstating the method now in use. Under double deflation, output and inputs are each deflated separately using their own price indices, and real value added is calculated as the difference between the two. When input costs rise faster than output prices, the resulting implicit deflator can turn negative even as both output and input prices are rising in absolute terms. This is a known and accepted feature of the method, not evidence of wrongdoing. Ironically, it was the IMF that criticised India's earlier reliance on the simpler single deflation approach. The new series adopted the more rigorous method the IMF recommended and is now being condemned for the very improvement that was demanded of it.

Reading half report

The statement leans heavily on the IMF's 2025 assessment, which gave India's national accounts a grade of C, without mentioning what that assessment actually said. The IMF's concerns were specific: an outdated base year, insufficient use of producer price indices, excessive reliance on single deflation, and discrepancies between production and expenditure-based estimates.

The new series addresses precisely these concerns. It updates the base year. incorporates new producer price indices, adopts double deflation, and works toward integrating supply and use tables to reduce discrepancies. To cite the IMF's criticism of the old system while attacking the government for fixing that very system is not analysis. It is selective quotation in service of a predetermined conclusion.

The same applies to the claim about manufacturing activity. The statement cites the Purchasing Managers' Index touching a five-year low in August, without mentioning that the actual reading was 52.8, comfortably above the 50 mark that separates expansion from contraction. Slower expansion is not the same as the 5.2 percent contraction the statement alleges elsewhere, and in any case August falls outside the April to June quarter under discussion. A survey conducted after the quarter ended cannot retroactively erase economic activity that has already been measured and recorded.

What the ground actually shows

Beyond the arithmetic, it is worth asking what independent, high-frequency indicators tell us about the state of the economy, since these are far harder to argue with than a contested statistical series. Domestic passenger vehicle sales in July rose 34.3 percent year on year, the strongest July on record. Tractor sales rose 28.1 per cent. two wheeler retail sales rose 28.3 per cent, and total vehicle registrations rose 25.9 per cent, with every major category posting its best July ever.

 GST collections grew 15.4 per cent, digital payment volumes grew 16.6 per cent, and bank credit expanded at its fastest pace in over a decade, with public sector banks posting their highest ever annual net profit and their lowest ever bad loan ratio.

 Manufacturing output grew 7.3 per cent in July, with nineteen of twenty three industry groups expanding. Merchandise exports touched a record 44.24 billion dollars for the month. Foreign direct investment inflows in the April to June quarter reached their strongest level in at least fifteen years, and foreign exchange reserves touched a record 729 billion dollars in August.

 Retail inflation, meanwhile, remained contained at 4.45 per cent, comfortably within the tolerance band. None of these numbers come from a press release issued by the ruling party. They come from GST records, vehicle registration data, banking regulators, and trade statistics, and they all point in the same direction: an economy that is expanding, not one limping along at close to zero growth as the Congress statement would have the country believe.

 A pattern, not an aberration

It would be easy to treat this episode as an isolated dispute over methodology, but it fits a familiar pattern. When India's growth has disappointed in the past, the Congress party has cited it as proof of governmental failure. When India's growth outperforms expectations, as it has now, the party searches for a technical objection to dismiss it. Genuine scrutiny of economic data is healthy for democracy and should be welcomed. But scrutiny built on comparing incompatible statistical series, quoting half a sentence of an IMF report and mistaking a household grocery bill for a national price index is not scrutiny. It is a script written in advance, in search of any set of numbers that might fit it.

 India does not need to be defensive about a growth rate that places it well ahead of the United States, China, the United Kingdom, Japan and every other major economy for the same quarter. It needs an Opposition capable of engaging with that success honestly, questioning where genuine gaps remain, in employment quality, in regional disparities, in the pace of manufacturing job creation and proposing real alternatives. The country's growth story is being written in GST returns, export data, vehicle registrations and bank balance sheets, not in an arithmetic error.

बिजली क्षेत्र को सुधारों का इंतजार

 गोपाल कृष्ण अग्रवाल, 

भारत ने बिजली उत्पादन बढ़ाने की चुनौती काफी हद तक जीत ली है, लेकिन अब असली परीक्षा यह है कि हर उपभोक्ता तक निर्बाध, पारदर्शी और भरोसेमंद बिजली कैसे पहुंचाई जाए?

भारत जिस अर्थव्यवस्था का निर्माण करने जा रहा है, उसे भरोसेमंद बिजली आपूर्ति की बेहद जरूरत होगी। अगले विकास चक्र के अगुआ क्षेत्र डाटा सेंटर, सेमीकंडक्टर फैब, बैटरी गीगा फैक्टरी, ग्रीन हाइड्रोजन प्लांट व एडवांस्ड मैन्युफैक्चरिंग, सभी में एक बात समान है। इनके लिए कुछ सेकंड की अस्थिरता कोई मामूली परेशानी नहीं, बल्कि वित्तीय प्रणाली पर सीधा असर डालने वाली घटना होती है।

बीते वर्षों में दुनियाभर के डाटा सेंटरों की बिजली खपत में हर साल लगभग 15 प्रतिशत की बढ़ोतरी हुई है, जो अन्य सभी क्षेत्रों की कुल बिजली खपत वृद्धि की तुलना में चार गुना से भी ज्यादा तेज है। अप्रैल, 2026 तक देश की स्थापित बिजली उत्पादन क्षमता 537 गीगावाट से अधिक हो चुकी है और इसमें गैर-जीवाश्म सोतों की हिस्सेदारी लगभग 51 प्रतिशत है। जो देश कभी बिजली कटौती के लिए जाना जाता था, आज वह दुनिया की सबसे बड़ी बिजली प्रणालियों में से एक संचालित कर रहा है। अब सवाल यह नहीं है कि हम बिजली पैदा कर सकते हैं या नहीं, बल्कि यह है कि क्या हम उसे बेहतर तरीके से उपभोक्ताओं तक पहुंचा सकते हैं।

एक आम भारतीय परिवार या फैक्टरी को ही देख लीजिए। अगर ब्रॉडबैंड रोथा खराब हो, तो एक दिन में ऑपरेटर उसे बदल सकता है। अगर कोई बैंक ज्यादा शुल्क वसूलता है, तो ग्राहक दूसरे बैंक का रुख कर सकते हैं। पर, जब बिजली आपूर्ति बाधित होती है या बिलिंग में पारदर्शिता नहीं रहती, तो उपभोक्ता के पास जाने के लिए कोई दूसरा विकल्प नहीं होता। इसी कमी को दूर करने के लिए समानांतर लाइसेंसिंग की अवधारणा लाई जा रही है। बिजली अधिनियम लंबे समय से एक ही क्षेत्र में एक से अधिक वितरण साइसेंसधारकों को सेवा देने की अनुमति देता है। पिछले दो दशकों में इस क्षेत्र का पूरा ध्यान बिजली उत्पादन बढ़ाने, ग्रिड "विस्तार करने और उन लोगों तक बिजली पहुंचाने पर रहा, जिनके पास पहले कोई सुविधा नहीं थी। तब ये प्राथमिकताएं सही थीं, लेकिन अब समय बदल गया है।

इस समय चल रही गंभीर बहस, खासकर बिजली (संशोधन) विधेयक, 2025 के मसौदे को लेकर है। आशंका जताई जा रही है कि निजी बिजली वितरक सिर्फ मुनाफे वाले शहरी व औद्योगिक उपभोक्ताओं पर घ्यान देंगे, जबकि ग्रामीण-किसान परिवारों की जिम्मेदारी सार्वजनिक कंपनियों पर छोड़ देंगे। पर, मसौदा विधेयक में हर लाइसेंसधारी पर यूनिवर्सल सर्विस ऑब्लिगेशन लागू किया गया है। सरकारें सब्सिडी नीति तय करती रहेंगी, ग्रामीण विद्युतीकरण सार्वजनिक दायित्व बना रहेगा और नियामक संस्थाएं नेटवर्क एक्सेस, टैरिफ और उपभोक्ता संरक्षण पर निगरानी रखती रहेंगी।

देशभर में कुल 72 डिस्कॉम संचालित हैं, जिनमें 44 सरकारी, 16 निजी क्षेत्र की कंपनियों और 12 बिजली विभाग शामिल हैं। टाटा पावर डीडीएल ने वित्त वर्ष 2024 तक एटीएंडसी घाटा 53 से घटाकर 5.9 फीसदी कर दिया। वहीं, टोरेंट पावर (अहमदाबाद-गांधीनगर) का टोएंडडी पाटा 2025 की पहली छमाही में 4.5 फीसदी और सीईएससी, कोलकाता का 2025 में 6.5 प्रतिशत रहा। अगर यह मॉडल देश के सबसे जटिल शहरी बाजारों में सफल हो सकता है, तो यह कहना मुश्किल है कि यह दूसरे इलाकों में काम नहीं कर सकता। बिजली उत्पादन में महारत हासिल करने के बाद अब भारत को उसको निर्वाध और प्रभावी आपूर्ति में भी माहिर होना होगा, और पूरे सिस्टम के केंद्र में उपभोक्ता को रखना होगा।

(गोपाल कृष्ण अग्रवाल भाजपा के राष्ट्रीय प्रवक्ता हैं। उनका एक्स हैंडल @gopalkagarwal है। ये उनके व्यक्तिगत विचार हैं।) 

Are we regulating risk or merely regulating market activity?

ENHANCED RBI COLLATERAL NORMS: IMPACT ON CAPITAL MARKETS

AS THE NARENDRA MODI

Government completes 12 years in office India's macro-economic indicators present a largely reassuring picture. The fiscal deficit and current account deficit remain manageable, GDP growth continues to outpace most major economies, unemployment has moderated, and inflation, despite pressures from global geopolitical tensions and elevated energy prices, remains broadly under control. The principal vulnerabilities lie in the rupee's depreciation and India's persistently high import bill.

Another area that deserves attention is foreign capital flows. Attracting sustained foreign investment requires more than favourable macro-economic conditions. Global investors allocate capital based on relative returns, and in the near term Indian equity markets have not always compared favorably with some international peers. If India wishes to attract larger and more durable flows, it must continue to strengthen the domestic investment climate, maintain a competitive tax regime, simplify compliance requirements, and nurture healthy financial intermediaries. Equally important is ensuring that regulation strikes the right balance between prudence and market development.

It is in this context that the government's recent tax reforms for foreign portfolio investors in government securities assume significance. The measures seek to create a more competitive environment for overseas investors while deepening India's sovereign bond market. Yet attracting capital requires a broader, ecosystem-wide approach. One question increasingly being asked by market participants is whether financial regulation is focused on managing risk or merely constraining activity. That debate has gained relevance with the Reserve Bank of India's revised framework governing credit facilities to capital market intermediaries, scheduled to come into effect on July 1.

The amendments are intended to strengthen prudential safeguards around bank financing linked to capital market activity. That objective is entirely legitimate; effective regulation must identify risks early and ensure that credit is deployed responsibly. The question, however, is whether the revised framework adequately reflects the actual risk profile of the entities and activities it seeks to regulate.

This issue is particularly relevant for stockbrokers, clearing members, proprietary trading firms, and other intermediaries that operate within exchange supervised and clearing corporation-backed frameworks. These entities rely on credit facilities and bank guarantees to meet exchange obligations, provide liquidity, facilitate price discovery, narrow bid-ask spreads and reduce trading for COSTS investors, including foreign portfolio investors.

 The discussion is often framed around proprietary trading, but the term covers a broad spectrum of activities. At one end are participants taking concentrated directional positions in anticipation of market movements. At the other are firms engaged in arbitrage, hedged strategies, liquidity provision and market making. Both may trade on their own account, yet their risk profiles and contributions to market efficiency differ substantially.

India's capital markets have navigated some of the most turbulent episodes in modern financial history, including the global financial crisis, sovereign debt stresses, the pandemic-induced market shock, and repeated bouts of volatility. Throughout these episodes, exchange-related credit facilities, including bank guarantees furnished by brokers and intermediaries to exchanges and clearing corporations, have generally exhibited limited instances of default relative to overall exposure. Outstanding exchange-related bank guarantees are estimated at over 1.2 lakh crore yet the segment has not demonstrated the kind of sustained credit stress typically associated with elevated lending risk.

The risk profile has also been strengthened by a series of regulatory reforms over recent years. These include upfront margin collection, peak margin reporting, daily segregation and upstreaming of client funds, restrictions on the use of client assets as collateral and intraday margin monitoring Together, these measures have significantly enhanced market discipline and reduced the potential for systemic stress.

Moreover, the entities affected by the revised framework operate within highly structured and continuously monitored environments. Transactions are subject to real-time margining, daily mark-to-market settlements, collateral requirements, and oversight by exchanges and clearing corporations. Risks are measured and managed throughout the trading cycle rather than assessed periodically. These safeguards do not eliminate risk, but they materially influence its nature and magnitude.

Banks, too, conduct independent credit assessments before extending facilities to market intermediaries, evaluating financial strength, governance standards, risk management systems, capital adequacy, and historical performance. The broader banking data provides additional context. According to RBI figures, gross nonperforming assets, 2.3% in industry and 2% in ratios, stood at 6.1% in agriculture services and 1.2% in personal loans during FY25. By comparison, NPAs associated with capital market intermediary exposures have historically remained negligible.

This is not an argument for special treatment. Rather, it is an argument that regulation should be calibrated to evidence. Financial regulation routinely differentiates between activities based on risk characteristics. There is merit in applying the same principle here. Market-linked activity is often viewed through the lens of volatility, leading to the assumption that market risk automatically translates into credit risk. In reality, the two are not always synonymous. The issue is not whether prudential safeguards should be strengthened. The RBI is right to ensure that bank credit is used responsibly. The issue is whether regulation can become more precise in distinguishing between different forms of market activity while recognizing that leverage and liquidity are essential components of well-functioning capital markets.

As the July 1 implementation date approaches, these questions deserve careful consideration. The strongest regulatory frameworks are those that align policy with evidence, encourage responsible risk-taking, and support market development without compromising financial stability. That principle should guide this debate as well.

Global investors allocate capital based on relative returns, and in the near term Indian equity markets have not always compared favorably with some international peers.

The risk profile has also been strengthened by a series of regulatory reforms over recent years

(The author is National Spokesperson, BJP)

 Indian Economy: Budget And Beyond

Written By : Gopal Krishna Agarwal,

With commitment and willpower to achieve our stated objectives, the budget will be a vision document to the goal of Viksit Bharat

Globally, there is a lot of interest around India right now. It is not surprising, given that India appears to be an island of calm amidst the geopolitical upheaval that is going on.

When countries in the world are unsure about their changing position and role in the emerging global order, India has hunkered down and focused on its economy.

With current financial year’s GDP growth projected to be above 7% and healthy growth expected to continue, India is poised to become the third largest economy of the world soon. It does not mean that there will not be challenges on the economic front.

I underline this because the current bump in GDP growth rate is a result of a number of initiatives by the Government—increased exemption limit for income tax, lowering of indirect tax under GST 2.0 reforms, successful inflation management which gave RBI a window to reduce policy rates. Thus, the low-hanging fruits for pushing up GDP growth have been plucked, and sustaining real GDP growth above 7 per cent in the coming years will require significant policy initiatives by the Government. PM Modi calling his commitment to express reform becomes vital in this context.

The upcoming annual budget is an important document and will outline India’s roadmap to Viksit Bharat beyond headlines. It is satisfying to note that the policymakers in the Government ecosystem know the challenges and acknowledge them with sincerity. We have already seen promising developments, like the notification of the labour laws, in the last few months. It shows that the Government will continue to work on the challenges that are holding back economic growth.

Nothing is more symptomatic of the failure of India’s economic planning than the abysmal share of the secondary sector in our GDP. There just cannot be equitable growth without the manufacturing sector taking off in a big way.

Though initiatives have been taken under the rubric of ease of doing business, production-linked incentives, etc., a lot more still needs to be done. Factor market reforms need to extend to land and capital. Land ownership and transfer needs digitisation fillip, and land acquisition and land use change needs to become easier. We have successfully implemented digital public infrastructure, but digitisation of land records is still a work in progress. Policy gaps crippling manufacturing units in the MSME sector will be addressed for it to become globally competitive and take full benefit of several FTAs that we have signed.

Our manufacturing is still capital intensive, in spite of an abundance of labour. Hopefully, implementation of the labour code will correct the balance, but still, uniformity in labour regulations across States is a must. The Central government will ensure that the objective of codification is not defeated by differences in State-level regulations, but States have to come on board. Custom Duty reduction and process simplification are on the cards, and ideas like quality control orders (QCO) are given up. At a time when the government is successfully negotiating free trade agreements (FTA) such as with the European Union, which is the eighth in line, it is equally important to ensure that we position our manufacturing sector to benefit from it.

With the continued government focus on fiscal consolidation and the private sector investment still to pick up in a big way, the government sure will continue spending on capital expenditure. The Economic Survey has pointed out that bringing disinvestment back on the agenda will have a reassuring effect on the economy; its suggestion to amend the definition of Government Company in the company law, bringing the requisite government’s shareholding to 26%, is welcome. It would not only provide resources for high public capex, it will also signal the government’s firm commitment to continued economic reforms and generate an additional source of revenue to the government.

The trickle-down effect of economic growth alone cannot bring equity of income, because of varying educational and health standards in the country, our focus should shift to a bottom-up approach, utilising India’s cultural diversity, particularly handicrafts, cottage industries and in areas like art, music, dance, food, festivals, etc. Skilling and establishing financial connect with artisans in rural areas will bring prosperity to remote villages. Monetisation and creation of value for the practitioners with e-commerce and digital transactions will see our country’s cultural economy as a new catalyst to propelling growth in our country. It is a vital intangible resource that remains largely untapped.

India is witnessing exemplary growth in Southern and Western States, and States in the North are also doing reasonably well. The Government’s extra attention to states and regions in the East—Bihar, Jharkhand, Chhattisgarh, Orissa, and Eastern Uttar Pradesh—will bring balanced geographical growth.

A plan for these States in the upcoming budget on the lines of ‘aspirational districts’ could be a good starting point. These states/regions offer cheap land and labour, proximity to the energy source of coal can help them grow as good manufacturing centres.

With commitment and willpower to achieve our stated objectives, the budget will be a Vision document to the goal of Viksit Bharat.

Gopal Krishna Agarwal is the National Spokesperson of BJP for economic affairs.

Current geopolitics on trade and tariff and India’s economic interest

Gopal Krishna Agarwal,

The recent churn in global trade and geopolitics has exposed the limits of sentiment-driven diplomacy and forced nations to reassess long-held assumptions about strategic partnerships

The last few months have upended not only global trade but also long-held beliefs in international relations. Despite being strategic partners and natural allies, we see that many countries' policies, particularly those of the US, are not conducive to India's global positioning and current stature. Though the Indo-US trade talks are back on track after hitting a rough patch, Indians should not be too surprised by any future shocks. The US has put restrictions on the H-1B visa and the withdrawal of the exemption to the Chabahar port in Iran, both of which disproportionately affect Indian interests. Our surprise at these developments reflects on our lack of perspective on geopolitics and geo-economics.

Global geopolitics is given. Every country is pursuing its national interests. An overlap of interests in one area does not mean that the first country will not pursue its interests in matters that might put it in an adversarial position with some of its partners. Pursuance of one's own national interest also involves actively undermining the economic, strategic and political interests of other countries.

India must first and foremost decide its national interests. It includes rapid economic growth, social stability, peace within its borders, and the maintenance of credible deterrence along its land borders in the north, east, and west. Our national interest also lies in maintaining strategic autonomy, for which we need to insulate ourselves from hostile actions by global powers in the domain of energy (oil and gas), semiconductors, rare earth materials, pharmaceuticals, defence platforms, etc. Some of these need to be achieved through the doctrine of aatmanirbharta, irrespective of the financial costs involved. For others, we need to cultivate our relations with other countries and strengthen multilateral platforms.

No doubt, the US have bruised Indian self-respect and ego, and there is a shared sense of betrayal among the citizens; however, the path of retaliation is not a prudent strategy. India has already done enough to show that global players would not dictate it on matters of its national interest. We do not depend on external security cover. We have continuously reduced our dependence on foreign sources in defence relations, especially in the purchase of offensive platforms that require constant support for operations and maintenance. Except for energy, all other areas of engagement are expected to remain unaffected.

America and European countries remain important to India. As a free, democratic, and secular society, India is a natural ally of the US and other G7 and G20 countries. Until we have a trade deal with the US, our FTAs with countries like Germany, the United Kingdom, New Zealand, Oman, the UAE, Australia, Latin America, and the Eurasian Economic Union are bound to benefit our economy. This is already evident in the increase in our exports, robust GDP growth, and IIP manufacturing-sector numbers.

But to take full benefit of FTA, our first focus should be on domestic reforms and strengthening our manufacturing sector, particularly the MSME segment. It was already a work in progress and a focus area for the government, but the trade imbroglio with the US has added urgency. It is an undeniable fact that the Indian manufacturing sector still needs to cover a lot of ground to be globally competitive. India could not fully take advantage of its earlier FTAs with countries such as Japan and South Korea because of this limitation. The recent Goods and Services Tax (GST) Next Gen 2.0 reforms and other important steps, such as deregulation and Labour Code notifications that reform factor markets, will ensure that our economy continues to withstand global shocks and move ahead as the fastest-growing large economy in the world.

India has always been a strong proponent of multilateralism and a rules-based international order. The current cold phase in global relations gives India the opportunity to focus its time and attention on protecting and promoting multilateral platforms and organisations. A world divided into small camps with competing bilateral relations is neither conducive to economic growth nor to global peace. Bilateral free trade agreements (FTAs) have become a rage, and we too are negotiating several FTAs, but we should not forget to protect the interests of the Global South, most of which would not be able to negotiate fair bilateral trade agreements with the Western block.

India is not beholden to any great power and will never act as a hired gun. This might come as a disappointment to some countries, but they must understand the psyche of the Indian state and modify their expectations accordingly. We might have some overlap with China right now, but given the ruthless pursuit of its own interests and its strategic culture and history, China might try to lull us into complacency and then give us a rude shock later.

A unique feature of hotly contested domestic politics in India was a near-consensus on international matters. With an irresponsible opposition that fails to draw a boundary between political and national interest, that aspect of consensus is, regrettably, missing right now. Domestic political compulsions in such cases may limit the options of the Government to take a strong stand on foreign affairs. Thankfully, Modi Government, in pursuance of India's national interest, is not constrained by petty domestic political considerations.