Round The States

New Delhi, 19 January 2026

BJP-Sena BMC Victory

CHURNINGS OVER MAYOR POST?

By Insaf 

The BJP-Sena alliance has ended the Thackeray family’s 25-year control, since 1977of the country's richest civic body, Brihanmumbai Municipal Corporation, winning a majority with 118 out of 227 seats. Attention now turns to who will be Mayor,as political maneuvering continues. Having secured a clear majority with 118 of 227 seats (BJP 89 seats, Shinde-led Sena 29), the drama appears to be far from over. The Shiv Sena-UBT-Maharashtra Navnirman Sena-NCP-Sharadchandra Pawar alliance managed to win 72 seats, with Uddhav Thackerayteam winning 65 seats, giving him hope to install his mayor in Mumbai! Illusional says Chief Minister Devendra Fadnavis, credited for the victory and affirms ‘it will be a Mahayuti Mayor.’ However, eyebrows are being raised with partner Eknath Shinde-led SS shifting its corporators in Mumbai to a luxury hotel, with reasons ‘they can refresh’ themselves after a hectic poll season or to undergo “orientation” course. But the question uppermost is whether it’s an opportunity for Shinde to seek his pound of flesh and insist on a ‘Marathi’ Mayor. Indeed, the battle is not over yet! 

Uncertainty hangs on another front. The Pawars which fought the polls together have been stumped by the BJP’s victory in their bastion, Pune and PimpriChichwad. In Pune BJP won 119 seats, the NCP came a distant second with 27 seats, while its ally, NCP (SP), won only three, with Congress bagging 15 seats; in Pimpri the BJP bagged 84 seats of 128. The Pawars are to mull over the outcome. This apart, the two will need to decide whether to fight the upcoming Zilla Parishad elections together? Ajit Pawar, deputy CM, congratulated his partner in the Mahayuti, the BJP and Chief Minister Devendra Fadnavis, for its performance. Said he, the takeaway from this defeat ‘is not to get discouraged but to continue working.’ The results represent a significant blow to Ajit Pawar’s individual political standing in western Maharashtra. In fact, the defeat in thesecivic polls is being viewed as a critical signal ahead of the 2029 state Assembly elections, indicating a shifting dynamics within the Mahayuti alliance.

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WB Stirring

Mamata Banerjee’s West Bengal has been hitting headlines this past week. One, Prime Minister Modi setting the tone for upcoming Assembly elections. Two, the high drama over political consultancy firm I-PAC ED raids before the polls. On Saturday, Modi addressed a mega rally in Malda, wherein he flagged cross-border infiltration as a key issue, alleging it had altered the state’s demographic balance and fuelled riots, plus TMC’s ‘thuggery’ and its ‘politics of threatening the poor’ would soon come to an end. Said he: Bengal ‘is surrounded by BJP governments that stand for good governance. Now it’s time for good governance in Bengal too.’ He addressed another rally in Singur. Meanwhile, the ED raids on I-PAC have unleashed a high-pitched political drama, reaching the Supreme Court. On Saturday, at a function to inaugurate a new building of Jalpaiguri Circuit Bench of Calcutta HC, Mamata reached out to CJI Justice Surya Kant to protect the Constitution, democracy and judiciary as the people were being wrongly targeted by ‘agencies’. This presumably after the top court viewed her government’s obstruction of ED officials as ‘a serious issue’; stayed FIRs against ED officials and issued notice to the government. It also expressed displeasure over chaos before Calcutta HC saying ‘We are very much disturbed… Today it is this HC, tomorrow it may be some other HC.’ The matter is listed for February 3. Didi, has a lot on her plate to handle.

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DMK-Cong TN Alliance?

Speculation is rife over DMK-Congress alliance for the ensuing Assembly elections. The past few weeks have seen rising tensions between the two partners over Congress demanding more number of seats, 40–50, significantly higher than the 25 it contested in 2021, and power sharing as currently no DMK ally holds a ministerial portfolio. For a party that has long accepted a junior-partner status in TN, the sudden assertiveness marks a clear departure from its earlier submissive approach. Worse, matters get further complicated as Praveen Chakravarthy, Congress’ data analytics head and a known confidant of Rahul Gandhi meets with TVK leader Vijay at his residence. In the backdrop there are hints even from TVK quarters of a possible alliance with the Congress! This apart, Chakravarthy’srecent post on X about the state’s worsening debt position under the DMK government, has ruffled feathers. He claimed the state’s outstanding debt is now higher than Uttar Pradesh’s and the situation was ‘alarming’. The timing raises eyebrows as DMK leader Kanimozhi has claimed that the Stalin government had transformed a debt-burdened TN into a developed and growth-oriented State.Clearly, DMK cadres are upset over Congress actions as they see it as breaching coalition discipline.However, the state Congress insists all is well and that talks with the DMK are on track and the alliance remains intact. Time will tell.

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Rajasthan SIR Row 

A political row is brewing in Rajasthan following a video of a distressed Booth Level Officer (BLO) alleging political pressure to delete 450 voters during the ongoing SIR. The Congress has seized the opportunity and hit out at the ruling BJP for orchestrating ‘mass voter deletions’.Apparently, reports are emerging from Jodhpur and Alwar among other districts wherein names of several Congress workers have been allegedly removed from electoral rolls and objections suddenly being filed against 1,397 voters. Worse, most of the affected voters reportedly belong to Muslim community.In its response, the Congress has staged protests in several districts, and submitted memorandums to DCs and SDMs, and State CEO alleging a conspiracy to target voters with Congress leanings. Interestingly, alleged targeting of Congress takes another form. On Tuesday last, a BJP leader and former minister,MahenddrajeetMalyia who signalled a return to the Congress was raided by the anti-corruption Bureau. He is said to have been upset with the government’s functioning. The raid and the deletions of voters are bound to have a chilling effect. There can be no two opinions.

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UP’s Stray Dogs Feat

Uttar Pradesh can boast of a success story. More so, as its none other than the Supreme Court making a mention of it in the last six months. Over 1 lakh stray dogs have been sterilised and vaccinated since 2019 resulting in stabilisation of stray dog population and reduction in human-dog conflicts. It’s called the ‘Lucknow model’. Recall, on stray dogs the Supreme Court had in August last ordered that while dogs would still be picked up, they will be released back upon sterilisation and immunisation. The UP government acted with alacrity. In a public-private partnership, the Lucknow Corporation and Human world for Animals India, got cracking and sterilised since 2019 over one lakh dogs of 1.35 lakhs, achieving coverage of 84%.The work is on two planks: Animal Birth Control (ABC) and community engaged. So, other than just sterilisation of stray dogs, Lucknow is placing equal weight on changing human behaviour. These include training and awareness sessions on how to engage with dogs, understand their body language when and when not to approach them and what and how to feed them. Guess, the pioneering work should have takers in other States, struggling with the menace of stray and dogs bites. ---INFA 

(Copyright, India News & Feature Alliance)

Economic Highlights

New Delhi, 17 September 2026

Savings Slump, Revenue Crunch

CAPEX UP, OPTIMISM EBBS

By Shivaji Sarkar 

By conventional macroeconomic yardsticks, India should enter the financial year 2026–27 (FY27) Budget cycle with a degree of comfort. Growth is expected to remain above 7 per cent, inflation has eased from its post-pandemic peaks, and fiscal consolidation appears broadly on track, with the fiscal deficit projected to narrow to around 4.4 per cent of GDP. On the surface, in a slowing global environment, the economy looks resilient.  

Yet budgets are not written for periods of comfort; they are crafted to anticipate stress. Beneath reassuring aggregates lie deep structural pressures that the FY27 budget cannot afford to overlook—weak household savings, skewed public expenditure, a hesitant manufacturing sector, fragile private investment, external trade risks, and a farm economy mired in low productivity. Stability, in short, risks masking stagnation. Inflation that was contained is again on the rise at 4.5 per cent, the Reserve Bank of India tolerance threshold limit. 

Revenue on Fragile Households

India’s recent revenue performance has benefited from buoyant indirect taxes, improved compliance, and steady nominal growth. Yet the quality of revenue is critical. Net household financial savings fell sharply to approximately 5.2 per cent of GDP in FY24, one of the lowest levels in decades as household indebtedness rose. 

This pattern suggests that tax buoyancy has been sustained in part by households consuming more and saving less. Such a fiscal base is inherently fragile. An economy cannot indefinitely extract revenue from households whose financial buffers are shrinking. The FY27 Budget must, therefore, be cautious about over-reliance on consumption-led revenues and should seek to broaden the tax base—not by deeper penetration into already-stretched household finances, but through formal employment growth and productive investment. 

Expenditure: Capex Heavy, Productivity Light

Public expenditure has leaned heavily on capital outlays since FY21, with central capital expenditure now exceeding Rs 11 lakh crore. This emphasis has helped stabilise growth and strengthen physical infrastructure. However, the composition of spending reveals a growing imbalance. 

Investment in human capital—education, skills, health, and research—lags badly. Education spending has stagnated around 3 per cent of GDP, teacher vacancies remain unfilled, and learning outcomes continue to disappoint. R&D spending has stagnated near 0.7 per cent of GDP, far below thresholds typical of innovation-driven economies. Infrastructure without corresponding investment in human capital risks creating assets the economy cannot fully utilise, weakening long-term returns on public investment. 

In advance of the new budget’s presentation on February 1, the government has raised the GST rate on pan masala, cigarettes, tobacco and similar products to 40 per cent, with biris attracting 18 per cent GST as a revenue-enhancing measure. 

In addition, the railways raised fares twice during the year, yielding about Rs 3,900 crore against a prior surplus of Rs2,517.38 crore in 2022–23. These moves aim to support revenue and contain the deficit, as the IMF has flagged a potential “revenue squeeze” in the central budget.

Manufacturing, Investment: Fragile

Manufacturing remains a weak link in India’s growth, with capacity utilisation still below levels needed to spur large-scale private investment and core industrial demand softening. While Production-Linked Incentive (PLI) schemes have attracted nearly Rs 2 lakh crore in realised investments and generated over 12.6 lakh jobs, they cannot substitute for a broad revival on their own. Recent PMI data show India’s factory activity cooling, with new orders and output growth slowing to multi-month lows. 

Sustainable manufacturing growth depends on predictable regulation, faster clearances, reliable logistics, and timely payments—structural constraints that continue to deter private capex. Although corporate balance sheets are healthier than a decade ago, firms remain cautious amid delays in government payments, regulatory unpredictability, and an MSME credit system that favours short-term liquidity over long-term capacity building. 

To unlock private investment, the budget should mandate penal interest on delayed government payments, publish a quarterly transparent dues dashboard, and redesign credit guarantee schemes to prioritise capital expenditure over working capital. Such reforms would do more to catalyse investment than additional fiscal incentives alone. 

External Risks: Tariffs, FTAs, and Russia Trade

The global environment adds further complexity. A potential return of Trump-era tariff aggression poses risks to India’s export strategy, particularly in steel, aluminium, pharmaceuticals, and IT services. India cannot assume benign access to the US market in FY27 and beyond. At the same time, a slew of free trade agreements (FTAs) has delivered only modest export gains, and many have widened trade deficits without significantly boosting value-added exports—reflecting weaknesses in domestic competitiveness rather than market access alone. 

Trade with Russia has expanded in value but remains lopsided, dominated by energy imports settled through complex payment mechanisms. While geopolitically strategic, these ties have done little to strengthen Indian manufacturing exports. The Budget must focus on export capability—improving logistics, standards, and scale—rather than relying on strategic trade alone. 

The Farm Sector: The Silent Constraint

Agriculture still employs nearly half the workforce while contributing less than a fifth of GDP. Productivity remains low, incomes are volatile, and climate risks are rising. Budgetary support continues to be skewed toward subsidies rather than investment in irrigation, storage, crop diversification, and agro-processing. 

Recent changes to rural employment schemes and procurement policies risk weakening income buffers without offering sustainable alternatives. The FY27 Budget must tread carefully: weak farm incomes directly affect consumption, savings, and broader economic stability. A credible farm strategy would prioritise productivity-enhancing investment over repeated fiscal band-aids. 

Savings–Investment Trap

Despite improvements in Direct Benefit Transfer (DBT) targeting, vulnerability remains high. Health shocks, income volatility, and inadequate insurance continue to suppress household savings and risk-taking. An economy that seeks higher investment cannot leave households one illness away from financial distress. The Budget must pivot from transfer-heavy welfare toward genuine risk protection—especially in health coverage and income stabilisation—a step that is not just social policy, but a macroeconomic necessity. 

The Real Budget Question

The central question for the FY27 Budget is not whether India can maintain stability—it likely can. The real challenge is whether it can convert that stability into sustained, broad-based growth. Achieving this will require hard choices: redirecting expenditure toward productivity, addressing institutional frictions that deter private investment, preparing for external trade shocks, and confronting long-neglected sectors like agriculture and human capital. 

India does not face a fiscal crisis. But it does face an institutional test. The FY27 Budget will reveal whether the state is ready to move beyond managing aggregates to strengthening the foundations beneath them.---INFA

(Copyright, India News & Feature Alliance)

Round The World

New Delhi, 16 January 2026

Chancellor Merz’s Visit

STRENGTHENING INDIA-GERMANY, EU TIES

By Dr. D.K. Giri

(Prof of Practice, NIIS Group of Institutions) 

German Chancellor Friedrich Merz two-day visit to India marked a significant milestone in the bilateral relations. Accompanied by 23 CEOs of German companies from various sectors, Merz landed in Ahmedabad on 12 January. Having spent a full day in multiple events, in the company of Indian Prime Minister Narendra Modi, the Chancellor flew to Bengaluru. The intent and composition of the delegation was reflected in signing number of MoUs and Joint Declaration of Intents which aimed at strengthening economic, technological and security cooperation between the two countries. 

For Chancellor Merz, it was his first trip to India and Asia as the Head of the German Government. Merz chose India for his first Asian trip as Chancellor, indicating a shift in strategy among European leaders, who previously focused on China. Prime Minister Modi, however, pointed out that Chancellor Merz’s visit coincided with India and Germany acknowledging 25 years of strategic partnership and 75 years of diplomatic relations between two countries. New Delhi is also preparing to receive the EU leaders as the guests in the ensuing Republic Day parade. Their visit should coincide with the India-EU summit later this month. Soon after, the French President Emmanuel Macron is visiting India. 

The new year seems to be starting with bonhomie between Indian and the European leadership. German Chancellor suggested that India and the EU could be concluding the FTA by the end of January. Germany being the largest economy in the Union, German Chancellor’s voice carries considerable weight. The strategic shift in German foreign and trade policy could be detected in Chancellor’s poignant remarks that the world is experiencing “a renaissance of unfortunate protectionism” that harms Germany and India. He did not name any country, but the reference was obvious. 

While the United States has imposed heavy tariff on trading partners, China introduced export controls on minerals used in auto manufacturing causing months of supply chain disruption last year due to the US-China trade war. This has badly affected German car makers. Germany has signalled diversification of its trade and search for alternatives to Chinese exports and market. More than once, the German leadership have revealed their preference for India as a democratic alternative to Chinese authoritarian state. Germany has also expressed interest in building trade relations with India, treating latter as a new source of supply chain. 

That said, Germany has not been able to divert its trade away from China with its bilateral trade pegged at 287b USD in 2024-25, compared to 50b USD with India in the same year. Germany remains the largest trading partner of China, whereas Germany is the largest trading partner of India in Europe. The delay in German disinvestment from China and in deepening trade and economic ties with India may be attributed to the strategic divergence between India and Europe that includes Germany on the war in Ukraine. 

While Europe treats Russia as the main security threat, New Delhi puts China on the table as an aggressive and aggrandising neighbour. Germany is yet to take a concrete call on its attitude towards China, if Bonn wants to have strategic partnership with New Delhi. The geo-political approach has to be matched with trade and economic strategy. Admittedly, Germany has pursued a China plus strategy to reduce the excessive dependence on a single partner. Its trade with China is declining reflecting both emerging challenges in political engagement and Germany’s diversification efforts. 

Chancellor Merz may have overstepped as he decided to characterise the growing India-German defence relationship as a means to reduce New Delhi’s dependence on Russian defence hardware. At the same time, the MoUs and JDIs included strengthening bilateral defence industrial cooperation, a semi-conductor eco system partnership, cooperation on critical minerals and the bio-economy, a roadmap for higher education, easier visa access for health professionals, India-Pacific and scaling up triangular development cooperation in third countries. 

The key highlights of the visit include defence cooperation: both countries signed a Joint Declaration of Intent to develop a defence industrial cooperation roadmap, focusing on long-term technology partnerships, co-development and co-production of defence equipment. In trade and economy, the two countries aim to conclude the India-EU Free Trade Agreement by the end of January which should also boost bilateral trade. On critical technologies, agreements were signed on semi-conductor, eco-system development, critical minerals and telecommunications, underscoring the growing cooperation in critical and emerging technologies. Germany will contribute technology, funding for equipment manufacturing, precision engineering and work force training. 

On critical minerals, a JDI was signed focussing on exploration, R&D, processing, recycling as well as acquisition and development of critical mineral assets in both countries as well as third countries. Both the countries emphasised on collaboration on internet and data governance, AI and emerging technologies. Agreements were signed on green hydrogen, renewable energy, climate-resilient urban infrastructure with Germany contributing 1.24b Euro under the Green and Sustainable Development Partnership. 

A major off-take deal was signed between India’s AM Green and Germany’s Uniper Global Commodities for the supply of green ammonia. On space cooperation, the Indian Space Research Organisation (ISRO) and the German Space Agency (DLR) agreed to enhance Space Industry Level Engagements. 

The visit underscores the growing importance of India-Germany relations with Germany emerging as India’s strategic and trade partner. Strengthened bilateralism between India and Germany automatically leads to deepening India-EU ties. Faced with the capricious US trade and security policies, mainly diluting NATO and the traditional trade ties with Europe, Germany and European Union are looking for new partners. While China remained for a long time the strongest trade partner of Germany and the EU, this may no longer be the case for at least two reasons, one, the growing trade and strategic rivalry between the US and China, and the ‘systemic threat’ posed by Beijing. 

Germany and the EU will have no other option than giving up their China obsession while correspondingly reducing their trade with the country. In that scenario, India emerges as the strongest candidate for an alternative to China. This has been a potent expectation but has not been transformed into reality. With the visit of German Chancellor followed by the India-EU Summit, the strategic shift in Europe should reflect in the deliberations between and EU, conclusion of the long-awaited FTA, and European Union using New Delhi to pivot to India-Pacific region. 

In India-EU exchanges in the past, China was the elephant in the room, but now it is Russia, and US as well. So, the eyes of the world powers will be focused on the India-EU Summit later this month. New Delhi is certainly bracing up for it and should not let this opportunity slip out of hand.---INFA 

(Copyright, India News & Feature Alliance)

Round The World

New Delhi, 16 January 2026

Chancellor Merz’s Visit

STRENGTHENING INDIA-GERMANY, EU TIES

By Dr. D.K. Giri

(Prof of Practice, NIIS Group of Institutions) 

German Chancellor Friedrich Merz two-day visit to India marked a significant milestone in the bilateral relations. Accompanied by 23 CEOs of German companies from various sectors, Merz landed in Ahmedabad on 12 January. Having spent a full day in multiple events, in the company of Indian Prime Minister Narendra Modi, the Chancellor flew to Bengaluru. The intent and composition of the delegation was reflected in signing number of MoUs and Joint Declaration of Intents which aimed at strengthening economic, technological and security cooperation between the two countries. 

For Chancellor Merz, it was his first trip to India and Asia as the Head of the German Government. Merz chose India for his first Asian trip as Chancellor, indicating a shift in strategy among European leaders, who previously focused on China. Prime Minister Modi, however, pointed out that Chancellor Merz’s visit coincided with India and Germany acknowledging 25 years of strategic partnership and 75 years of diplomatic relations between two countries. New Delhi is also preparing to receive the EU leaders as the guests in the ensuing Republic Day parade. Their visit should coincide with the India-EU summit later this month. Soon after, the French President Emmanuel Macron is visiting India. 

The new year seems to be starting with bonhomie between Indian and the European leadership. German Chancellor suggested that India and the EU could be concluding the FTA by the end of January. Germany being the largest economy in the Union, German Chancellor’s voice carries considerable weight. The strategic shift in German foreign and trade policy could be detected in Chancellor’s poignant remarks that the world is experiencing “a renaissance of unfortunate protectionism” that harms Germany and India. He did not name any country, but the reference was obvious. 

While the United States has imposed heavy tariff on trading partners, China introduced export controls on minerals used in auto manufacturing causing months of supply chain disruption last year due to the US-China trade war. This has badly affected German car makers. Germany has signalled diversification of its trade and search for alternatives to Chinese exports and market. More than once, the German leadership have revealed their preference for India as a democratic alternative to Chinese authoritarian state. Germany has also expressed interest in building trade relations with India, treating latter as a new source of supply chain. 

That said, Germany has not been able to divert its trade away from China with its bilateral trade pegged at 287b USD in 2024-25, compared to 50b USD with India in the same year. Germany remains the largest trading partner of China, whereas Germany is the largest trading partner of India in Europe. The delay in German disinvestment from China and in deepening trade and economic ties with India may be attributed to the strategic divergence between India and Europe that includes Germany on the war in Ukraine. 

While Europe treats Russia as the main security threat, New Delhi puts China on the table as an aggressive and aggrandising neighbour. Germany is yet to take a concrete call on its attitude towards China, if Bonn wants to have strategic partnership with New Delhi. The geo-political approach has to be matched with trade and economic strategy. Admittedly, Germany has pursued a China plus strategy to reduce the excessive dependence on a single partner. Its trade with China is declining reflecting both emerging challenges in political engagement and Germany’s diversification efforts. 

Chancellor Merz may have overstepped as he decided to characterise the growing India-German defence relationship as a means to reduce New Delhi’s dependence on Russian defence hardware. At the same time, the MoUs and JDIs included strengthening bilateral defence industrial cooperation, a semi-conductor eco system partnership, cooperation on critical minerals and the bio-economy, a roadmap for higher education, easier visa access for health professionals, India-Pacific and scaling up triangular development cooperation in third countries. 

The key highlights of the visit include defence cooperation: both countries signed a Joint Declaration of Intent to develop a defence industrial cooperation roadmap, focusing on long-term technology partnerships, co-development and co-production of defence equipment. In trade and economy, the two countries aim to conclude the India-EU Free Trade Agreement by the end of January which should also boost bilateral trade. On critical technologies, agreements were signed on semi-conductor, eco-system development, critical minerals and telecommunications, underscoring the growing cooperation in critical and emerging technologies. Germany will contribute technology, funding for equipment manufacturing, precision engineering and work force training. 

On critical minerals, a JDI was signed focussing on exploration, R&D, processing, recycling as well as acquisition and development of critical mineral assets in both countries as well as third countries. Both the countries emphasised on collaboration on internet and data governance, AI and emerging technologies. Agreements were signed on green hydrogen, renewable energy, climate-resilient urban infrastructure with Germany contributing 1.24b Euro under the Green and Sustainable Development Partnership. 

A major off-take deal was signed between India’s AM Green and Germany’s Uniper Global Commodities for the supply of green ammonia. On space cooperation, the Indian Space Research Organisation (ISRO) and the German Space Agency (DLR) agreed to enhance Space Industry Level Engagements. 

The visit underscores the growing importance of India-Germany relations with Germany emerging as India’s strategic and trade partner. Strengthened bilateralism between India and Germany automatically leads to deepening India-EU ties. Faced with the capricious US trade and security policies, mainly diluting NATO and the traditional trade ties with Europe, Germany and European Union are looking for new partners. While China remained for a long time the strongest trade partner of Germany and the EU, this may no longer be the case for at least two reasons, one, the growing trade and strategic rivalry between the US and China, and the ‘systemic threat’ posed by Beijing. 

Germany and the EU will have no other option than giving up their China obsession while correspondingly reducing their trade with the country. In that scenario, India emerges as the strongest candidate for an alternative to China. This has been a potent expectation but has not been transformed into reality. With the visit of German Chancellor followed by the India-EU Summit, the strategic shift in Europe should reflect in the deliberations between and EU, conclusion of the long-awaited FTA, and European Union using New Delhi to pivot to India-Pacific region. 

In India-EU exchanges in the past, China was the elephant in the room, but now it is Russia, and US as well. So, the eyes of the world powers will be focused on the India-EU Summit later this month. New Delhi is certainly bracing up for it and should not let this opportunity slip out of hand.---INFA 

(Copyright, India News & Feature Alliance)