PM Modi announces substantive yet illegitimate GST discounts for Diwali festive season sale on the 79th Independence Day.

In response to Emperor Trump’s tariff tantrum ,PM Modi announces substantive yet illegitimate GST discounts for Diwali festive season sale .On the 79th Independence Day, PM Modi addressed the nation from the ramparts of the Red fort and announced the introduction of Next-Generation GST reforms by this Deepavali, aimed at reducing taxes on daily-use items. “The government will bring Next Generation GST reforms, which will bring down tax burden on the common man. It will be a Diwali gift for you,” he said, and just as Trump seems to lashing out without due process at his vassals throughout the world ,Modi too is lashing out in a similar fashion against the states of the Indian union without due process .

This imperial decree style declaration of reduction in GST tariff is both unconstitutional and illegitimate.Unconstitutional since the Union government is not empowered to reduce the GST rates by itself and illegitimate since the Modi government had given a solemn assurance during the introduction of GST related constitutional amendments that it would respect ‘cooperative federalism’ and not  usurp the taxation powers of the states , which were overwhelmingly dependent on VAT/sales tax which then got subsumed under the GST.In yet another ruinous demonetisation type of draconian self goal ,Modi is attempting to present a fait accompli to the states in the guise of welfare . Ultimately if the states cannot even decide upon the GST rates upon which they are overwhelmingly dependent, then Modi  may as well declare India to be a unitary nation  and convert all states into mere municipalities rather than pretend to be a sham democratic  federal polity .

Through this declaration PM Modi is trying to convey the following message to both  President Trump and his critics at home.

1)By utilising the occasion of the Independence day speech he is trying to symbolically convey to the Trump Administration that India is an Independent and sovereign nation which cannot be bullied into submission  with respect to either a one-sided trade deal with the USA,or  its Strategic Partnership with the Russian Federation or its Congenital rivalry with Pakistan .

2)To his critics  who point out that India has not retaliated viciously and potently enough as China has in the trade war initiated by the USA under President Trump ,and also that the retaliatory capacity of China has saved it from the penalty Tariff of 25% for Russian crude oil import which has been imposed only on India even though it imports much lesser Russian oil and gas than China does ,Modi’s response  seems  to be that unlike China , India's economy is not primarily driven by exports to the USA and western Europe but driven  by domestic consumption.He is also therefore suggesting that India's pain tolerance vis a vis Tariffs are quite high since any drop in economic growth due to the the tariffs can be offset by pump priming domestic demand through stimulus measures like substantive tax cuts .

3)Likewise he also indicates that India is willing to forego  the export led growth model followed by the rest of the world including China post second world war and the  Brettonwoods agreement and that India will follow its own unique insular domestic consumption based growth  model by undertaking more 1991 type reforms to unleash the animal spirits of the private sector and by entering into FTAs with countries that show  mutual respect and reverence to the potential scale of the Indian market  ,like the ones already concluded with UAE, Australia,EFTA ,United Kingdom etc ,while at the same time Insulating its Agriculture and Dairy sectors from these FTAs.

While the above strategy may appear logical to some extent ,it lacks originality ,ambition and above all an understanding of the gravity , significance and momentous nature of the trade wars of the Trump era .

Firstly PM Modi may be right to the extent that each country has to fight for its national interest as sovereign and Independent entities ,but the proof of the pudding is in the eating and each country has to play to its strengths in these strategic trade negotiations while being conscious of one's weaknesses at the same time.

In today's globalised world no country or peoples are truly independent or sovereign,even rogue  and medieval states such as North Korea or Afghanistan have dependencies let alone developed nations with vast trade and people to people linkages.The COVID pandemic or the Chinese Wuhan Flu  pandemic  as Trump used to so valiantly refer to was a stark reminder to us all of how our supply chains have been monopolised  by China exposing the entire world  to the threat of shortages of every item conceivable .

As Modi’s own ministers had been saying prior to the Pahalgam terror attack in Kashmir ,Trump offers a truly momentous opportunity to isolate China ,which definitely isn't a market economy by any measure ,and grab its lion’s share  of the export market to the developed world .Of course it goes without saying that any bilateral trade deal has to be honourable without appearing to be excessively subservient leading to loss of face to the political leadership of the day . Ultimately all that President Trump is primarily asking of the rest of the world is reduction and elimination of trade deficits of the USA induced in part at least,  by the inherent strength of the dollar ,which makes the USA’s exports naturally expensive ,and by unfair Chinese modern day state backed slave labour .India too is a victim of this abusive relationship with  mercantilist China, with an annual merchandise trade deficit of more than  $100 billion in FY 24-25.In a way Trump was fighting India’s fight in resisting China.

 

India and Pakistan’s congenital obsession with each other ,exploited fully by Pakistan's army chief  Terrorist Field Marshal Asim Munir who having a lost limited war with India has succeeded in sabotaging the Indo-US strategic partnership and especially the Trump-Modi modus Vivendi with relations between them nosediving after the reportedly ill-fated long phone call between the two in which Modi seems to have read the riot act toTrump for claiming to have mediated a ceasefire to stop the India Pakistan war post operation Sindoor by using the threat of tariffs against the two warring nations .Terrorist Asim Munir achieved this by perfectly timing the unleashing of his terrorist lapdogs in Pahalgam , Kashmir with the visit of JD VANCE  The  Vice President of the USA  to finalize the broad framework for the bilateral trade agreement and also by prostrating before the Trump administration ,officially recommending President Trump for the Nobel peace prize and with personal favours to Trump’s family through their crypto currency firm .

Be that as it may ,since Modi wanted to show Terrorist Asim Munir’s Pakistan its place in the world even at the cost of sabotaging the Indo US strategic partnership, he could still have played his cards better to make the best of the ongoing world trade wars .

Trump who was already smarting from the humiliation and cold shoulder dealt to him by Modi used the import of Russian crude oil by India as a lame excuse to penalise India doubly by imposing a crippling 50 % Tariff on it .This in spite of China importing far more of Russian fossil fuels than India does , so much for friendship between the world's largest and oldest democracies .Modi should have used this crisis to initiate direct talks with Kremlin to lock-in long term oil purchase contracts with over the top India specific discounts commensurate with the level of US vengeance on this bilateral Relationship.The discounts offered by Russia  to India already over the past few years since the beginning of the Ukraine war is reported have ranged anywhere from a $ 2-4  per barrel to 30-35% to the comparable quality of crude available in the spot market . Simultaneously he should have cut the pump price of fuel in India proportionately or at least by half in addition to extending significant subsidies to state transport corporations to invest in substantive fleet expansion in case he didn't want to  cut the price proportionately for fear of diversion. , Smuggling and discretionary excesses,this would have truly unleashed the animal spirits of the Indian working class and overall economy by acting as a demand and efficiency  boost and acted as an antidote to the imbecile yet crippling 50 % Trump  tariff .

Modi should have also negotiated a larger stake for Indian companies in the upstream Russian oil and Gas sector to help secure our energy security in a meaningful manner .

Since Russia shares a long and troubled border with its immediate neighbour China , India should have negotiated a visa free entry for Indian to be employed in desolate  Russian far east which is rich in natural resources but short of manpower and where Russia is fearful of employing Chinese in sufficient numbers who covet its land as theirs as always in true CCP style .This strategy would have also helped Russia utilise the vast reserves of Rupees it has accumulated in special rupee  Vostro accounts of Indian Banks since the start of Rupee-Ruble trade post the US sanctions on Russia .These steps would have also enabled Modi to have gained leverage over President Putin in order to mediate a settlement to the Ukraine war, which Trump too is desperately seeking .With the Ukraine war over with through the Indian initiative , India could have held the dominant position in trade negotiations with the US and sought India specific tariff rebates much lower than its relevant competitors………....