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Economic Highlights
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POLLS ALONE NOT ENOUGH, By Inder Jit, 11 June, 2026 |
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REWIND
New Delhi, 11 June 2026
POLLS
ALONE NOT ENOUGH
By Inder
Jit
(Released
on 24 January 1978)
Thoughts
among ardent nationalists have been turning lately to the state and content of
our resurrected democracy. Not a few of these have been prompted by the recent
developments on the political front and the approaching Republic Day which has
come to be accepted as an annual occasion for national introspection. Interest
has also been encouraged by the glowing compliments paid to India and its
people by the visiting British Prime Minister, M. Callaghann in his address to
Members of Parliament and in what Mr. Morarji Desai stated in his remarks on
the occasion. India, said Mr. Callaghan, had proved its devotion to democracy
and preservation of fundamental freedoms in the events of 1977. Parliamentary
democracy, said Mr. Desai, was functioning in the country now at all levels “in
the fullest freedom.”
Polls are
fundamental to parliamentary democracy. But these by themselves cannot be
regarded as enough. Mr. Callaghan was, therefore, taking a surprisingly
simplistic view when he lauded Mrs. Gandhi for calling the election ignoring
two basic facts. First, her prime motivation, which was anything but
democratic. (Mrs. Gandhi, let it be remembered, made it clear repeatedly that
there would be no return to the pre-Emergency days.) Second, she had by then
reduced democracy to a sham – a mere form. Parliamentary democracy implies a
delicate and well-considered functional balance between its three principal
organs, the legislature, the executive and the judiciary. Yet, Mrs. Gandhi
calculatedly succeeded in making the executive all-powerful by the time the
Emergency was proclaimed. Indian democracy was not subverted in our fell blow
on June 26, 1975. Its erosion began much earlier.
Certain
salient facts need to be recalled since public memory is proverbially short.
The well known dictum that every man has a price and few in modern India ever
want to retire was successfully exploited to play havoc with various democratic
institutions. Incredible as it may seem today, we had at one stage a sitting
judge of the Supreme Court simultaneously Chairman of the Law Commission, a
body directly under the Union Law Ministry. The judge attended the court in the
morning and the Commission in the afternoon! The subtle erosion of the
independence of the judiciary began with the appointment of retired Supreme
Court Judges first as Governors and then as Ambassadors. It was carried to a
decisive stage when Mr. Justice Ray was handpicked by Mrs. Gandhi and named
Chief Justice of India in supersession of three senior colleagues.
Our
Constitution makers thoughtfully provided for an impartial election machinery
outside Government control to ensure free and fair elections. The Chief
Election Commissioner was, therefore, made removable only through impeachment
by Parliament. Yet Mrs. Gandhi eroded his impartiality without outwardly
violating the letter of the Constitution by exploiting the absence of any ban
on his taking an appointment under the Government. Mr. K.V.F. Sundaram, who was
India’s second Chief Election Commissioner, was made Chairman of the Law
Commission on retirement. His successor, Mr. S.P. Sen Verma, who was the CEC
during the crucial 1971 and 1972 general elections to Parliament and the State Assemblies
and allotted Mrs. Gandhi the controversial cow and calf symbol following the
Congress split of 1969, was appointed a member of the Law Commission on
retirement in a new post created to accommodate him.
Little was
done by Mrs. Gandhi to strengthen Parliament and its sovereignty. Outwardly,
Parliament carried on its routine business. But inwardly various recognized
conventions for healthy running of parliamentary institutions were defied. The
impartiality and independence of the Speaker was undermined slowly but surely.
Retired Speakers were appointed as Governors as in the case of Mr.
Ananthasayanam Ayyangar and Sardar Human Singh. Nothing was done to
depoliticize the office of Speaker and to ensure his uncontested return. In
fact, the office of the Speaker touched its nadir at the Centre when Mr.
Gurdial Singh Dhillon accepted ministership in Mrs. Gandhi’s cabinet. Nothing
was done in the States either. Indeed, the lapses in the States became worse
and Speakership came to be actively involved in politics and used as a spring
board to earn richer political dividends.
Two
additional statutory restraints were put on the powers of the executive by way
of the Public Service Commission and the Comptroller and Auditor-General; the
latter was described by Dr Ambedkar as "probably the most important
officer in the Constitution." As the watchdog of finances, the Comptroller
and Auditor-General performs a vital role and hence the constitutional ban on
his appointment under the Government after retirement. Yet, the late Asoke
Chanda was successively appointed Chairman of the Finance Commission and two
other Commissions, including one on All India Radio. Another retired C&AG
preferred to fish in obliging private waters and became the Chairman and/or Director
of 20 companies -- the maximum permitted under the Company Law. A third retired
C&AG was elected to the Rajya Sabha two years ago as an independent with
the support of Mrs Gandhi's Congress.
The UPSC,
which is expected to prevent the government from abusing its power and
patronage as an employer and becoming the greatest source of corruption and
nepotism, was not spared either. Its authority was increasingly eroded by
taking more and more posts out of its purview. Many commissions found
themselves needled time and again and were even denied adequate staff. A case
in point was the decision of the Union Agriculture Ministry to set up an ad hoc
committee for recruitment to the ICAR instead of passing the job back to the
UPSC, as recommended by the Gajendragadkar Committee. Some states went further
and crudely reduced their Public Service Commissions’ virtually to zero.
Indeed, the situation in Haryana and a few other States became so bad that at
one stage the UPSC Chairman, Mr .C.S. Sarkar, now retired, was constrained to
seek the Prime Minister's intervention.
The
functioning of the executive was so manipulated as to clear the decks for the
establishment of dynastic rule. All power was concentrated increasingly in the
Prime Minister’s Secretariat. The Cabinet functioned collectively only in name.
Each Minister operated essentially in accordance with the whims and fancies of
the supreme leader. Talk of a committed bureaucracy and the feudal manner in
which personal loyalty was rewarded undermined the concept of an independent
and non-political civil service, one of the basic requirements for a healthy
parliamentary democracy. Public morality and the rule of law took a back seat. Even
solemn assurances given on the floor of Parliament, were flouted without the
betting of an eyelid. A case in point was the Government’s decision to appoint
the second Central Vigilance Commissioner, Mr. S. Dutt, India’s ambassador to
Bangladesh, notwithstanding the rules barring him from further employment.
India perhaps gained abroad. But it lost great deal at home.
One could
go on and on. The office of the President. Federation of our Constitution and
the office of Governor. The fourth Estate. But, in the final analysis, we as a
people need to be clear on the fundamental issue. Do we genuinely want
parliamentary democracy or do we not? If we do, we will need to take effective
steps to nurse it back to health. Happily, the Janata leaders are clear on
fundamentals and appreciate the vital importance of maintaining a delicate
balance between the legislature, the executive and the judiciary. As Mr.
Morarji Desai emphasised prior to Mr. Callaghan’s address to MPs, an independent
judiciary and a non-political civil service and army are necessary to guarantee
the performance of democratic institutions and popular freedom in the country”.
We fool none but ourselves in merely paying lip service to the Constitution and
our Sovereign Democratic Republic. One swallow, as the saying goes, does not
make a summer. So also one poll does not necessarily make a democracy.--- INFA
(Copyright, India News & Feature
Alliance)
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Gold Rush, Vanishing Savings: Rs 15 LAKH CRORE SHOCKER, By Shivaji Sarkar, 8 June 2026 |
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Economic Highlights
New Delhi, 8 June 2026
Gold Rush, Vanishing
Savings
Rs 15 LAKH CRORE
SHOCKER
By Shivaji Sarkar
The unfolding Rajesh Exports controversy is
about far more than allegations of inflated revenues exceeding Rs 15 lakh
crore. It arrives at a moment when India is witnessing a profound shift in
household savings behaviour, driven by rising economic uncertainty, soaring
gold prices and weakening confidence in traditional financial assets.
The Securities and Exchange Board of India
(SEBI) has alleged that Rajesh Exports overstated revenues by about Rs15.15
lakh crore, between FY21 and FY25, an amount so large that it rivals a
substantial share of India’s annual GDP. The company has denied wrongdoing and
attributed the dispute to differences in interpretation regarding subsidiary
revenues. The matter remains under investigation.
SEBI’s allegation of Rs 15.15 lakh crore in
overstated revenues—equivalent to over 28 percent of the Union Budget—has triggered
one of the biggest corporate governance controversies in recent years. It comes
at a time when Indians are moving money out of bank deposits and into gold,
mutual funds and other assets in search of higher returns and greater security.
The timing of the controversy is striking. It
did not happen in a day. The complaint is lodged with the SEBI since 2024. Only
on June 3, 2026did the SEBI flagthe issue, and stocks went into a low
circuit.Rajesh Exports shares plunged after SEBI issued an interim order
alleging that the company overstated consolidated revenues by Rs15.15 lakh
crore between FY21 and FY25.
The stock hit consecutive lower circuits as
investors reacted to concerns over unverifiable overseas subsidiary revenues,
accounting practices and corporate governance standards. The company has denied
the allegations, but the sharp fall has intensified scrutiny of auditors,
institutional investors and regulatory oversight.
The Life Insurance Corporation, India's
largest insurer, (LIC) holds a 10.8 percent stake in Rajesh Exports and has
remained invested despite the company’s prolonged share-price decline and
recent regulatory troubles. The stake, built up significantly over the past
decade, has come under scrutiny after SEBI’s allegations of massive revenue
inflation. With the stock down nearly 90 percent from its 2023 peak, LIC’s
investment—along with the savings of nearly two lakh retail shareholders—has
suffered substantial erosion, prompting questions about investment oversight
and the deployment of public funds.
The irony is that as gold becomes more
attractive, the institutions associated with the gold economy are facing
growing scrutiny.Rajesh Exports was once celebrated as one of the world’s
largest gold refiners and jewellery exporters. It represented India’s ambition
to become a major global player in precious metals. Today, allegations of
accounting irregularities have cast a shadow over that narrative. SEBI’s
interim findings raise questions not merely about one company but about
corporate governance, auditing standards and regulatory oversight in sectors
handling enormous volumes of trade.
The stock market promises wealth creation but
often delivers wealth destruction for retail investors. Between FY22 and FY25,
more than nine out of ten retail traders in the futures and options (F&O)
segment lost money, collectively wiping out nearly Rs2.9 lakh crore. Many
others suffered from sharp stock-specific collapses, such as the plunge in
Rajesh Exports, which erased thousands of crores in investor wealth.
A clutch of non-resident Indians (NRIs) and
foreign portfolio investors (FPIs) divested a chunk of their shareholding over
the past three years at the expense of small retail shareholder in Rajesh
Exports. Interestingly as these institutional and wealthy investors sharply
pared their stakes, the company’s price plunged by a staggering 87 percent over
three years till March 30, 2026.
Retail investors holding up to Rs 2 lakh each
held just 1.6 percent of the company’s equity as of Marach 31, 2023. At the
quarter, NRIs held a 37 percent stake, and FPIs held 17.6 percent stakes. A
year later, retail investors holding jumped to 11.42 percent and in March 2026
NRI holding plunged to 7.35 percent and that of FPIs to 15.08 percent.
Between March 2023 and March 2026 when retail
raised their stakes; NRI and FPI sharply cut theirs, the Rajesh Exports scrip
plummeted 87 percent to a five-year low of Rs 80.38 by FY 26 end from Rs 619.10
by FY 23-end, as per Bloomberg. The price recovered to Rs 103.92as the stock isfrozen
at the 5 percent lower circuit.
Midas touch or Mythical Value!
At a time when Indians are rushing towards
gold as a safe haven amid falling bank deposits and volatile markets, a
striking contradiction has emerged. The Reserve Bank of India (RBI) insists its
physical gold holdings remain unchanged at 880.52 tonnes and gold’s share in
India’s forex reserves has risen to nearly 17 percent. Yet official data showed
the value of those holdings falling by about Rs46,000 crore in a single week of
May 2026, fuelling speculation over reserve management and possible market
operations.
Against this backdrop of soaring gold prices
and growing public faith in the yellow metal, one of India’s largest
gold-linked companies, Rajesh Exports’ shares crashed after SEBI alleged
revenue inflation of Rs15.15 lakh crore between FY21 and FY25, triggering
concerns over accounting practices, corporate governance and auditor oversight.
The juxtaposition is stark: as households shift savings from bank deposits to gold
in search of safety and trust, a flagship player in the gold business is facing
allegations that have wiped out substantial investor wealthsurrounding India's
gold economy.
Unexpected Boom, Falling Bak Deposits
India is experiencing an unprecedented gold
boom amid inflation fears and currency stability.At the same time, bank
deposits are losing their traditional dominance.Savings deposits accounted for
only 28.7 percent of aggregate bank deposits in March 2026, down sharply from
34.6 percent in March 2022. Demand deposits stood at Rs31.65 lakh crore in May
2026, while overall deposit growth slowed to 12.2 percent, well below the
long-term average of 14.7 percent.
This is more than a banking statistic. It is
a signal of changing public behaviour. For decades, Indian families parked
surplus savings in bank accounts and fixed deposits. Today, many are moving
towards gold, mutual funds, equities and real estate. The attraction is
obvious. Inflation has eroded real returns on deposits, while gold has delivered
spectacular gains.
The Rajesh Exports signify that gold may be
safe, but an economy cannot build its future solely by storing wealth in vaults
and jewellery boxes. The crash of a gold-based company, its investigations open
up the literal Pandora’s box. Gold can also have muck. And a safe bait may not
be that safe.---INFA
(Copyright, India
News & Feature Alliance)
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Facing Economic Shock: TIME FOR STRATEGY NOT FALLACY, By Dhurjati Mukherjee, 10 June 2026 |
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Open
Forum
New
Delhi, 10 June 2026
Facing Economic Shock
TIME FOR STRATEGY NOT
FALLACY
By Dhurjati Mukherjee
The outlook for the Indian economy in the
current fiscal sadly does not appear quite encouraging, despite growing 7.8% in
January-March quarter of the last fiscal. The Reserve Bank of India left the
repo rate unchanged at 5.25% but reduced its growth forecast for FY27 and
raised its inflation projections. It even signalled the threat could broaden economy-wide
beyond fuel and commodities, if supply-side pressures persist.
While higher oil prices and disrupted supply
chains have already started feeding in costs, the Monetary Policy Committee
(MPC) has preferred to wait for more clarity on the duration and intensity of
the Persian Gulf conflict before acting. Meanwhile, the government stated it
would exempt foreign institutional investors and Bank for International
Settlements from capital gains tax on receipts arising from interest or sale of
government securities. This is aimed at attracting foreign capital as the rupee
weakened over 5% this year amid elevated oil prices and equity outflows.
Undeniably, rise in fuel prices and the sharp
slide of the Indian rupee, perhaps now the worst performing currency in Asia, have
been major causes of worry. The increased fuel price is being felt by all Asian
countries, but their currencies have been stable. This apart, the net inflow of
foreign exchange has dwindled sharply.
The phenomenon of the flight of foreign
investments maybe be attributed to dwindling investment opportunities in the
country. In fact, even Indian investors are not quite aggressive, either
through expansion or modernisation of existing projects or starting new ones.
The sunrise industries of AI, chip making and processing of rare earth minerals
haven’t come up as investment in these sectors has been meagre. AI’s rapid
advent is making coding and other related jobs somewhat obsolete. The effect
has been severe with inflation and unemployment leading to slower growth,
perhaps even recessionary type conditions.
While these problems have emerged as a
fall-out of the West Asian crisis and the delay in signing of a trade deal with
the US, another problem is that India’s macro-economic data has become less
credible. Experts note India’s global stature has come down, though from the
economic perspective it has been relegated to the 7th position. The
large aggregate size of the economy does not have much implication when the per
capita income is very poor. India is structurally a weaker economy than is being
made out by official narratives of prosperity.
In recent months, high energy and gold and
silver prices have pushed up India’s trade deficit as export growth has also
moderated. Prime Minister Modi’s appeal asking people not to buy gold for a
year or put off foreign travel or consume less fuel, may be in right spirit,
there are factors which can’t be ignored. Such as, public transport is poor in
most urban areas and people depend on
their own transport for commuting.
The current account deficit may widen to
around 2% of GDP in the present fiscal following oil prices hovering around
$100 per barrel and averaging $95 per barrel. At a recent CII meet, banker Uday
Kotak cautioned there is a ‘major shock’ coming through an increase in oil
prices while calling for lowering dependence on foreign capital and focusing on
building a strong domestic pool of long-term risk capital to achieve economic
self-reliance. While the warning needs to be heeded, it shall take time for
India to reduce dependence on oil and gas.
Research by Emkay Global Financial Services
states fiscal deficit is already well above the 3% limit and the massive
pre-poll promises made in West Bengal and other states could add another 2.2 to
3.4% of state gross domestic product in unaffordable expenses. When ongoing retail
prices of petrol, diesel, LPG and kerosene spike, consequences start rippling
swiftly through the economy. The poor and the low-income groups are the hardest
hit since energy comprises a large share of their household budgets.
However, a deeper concern is structural.
India’s strategic petroleum reserves, a buffer against exactly the supply shock
now absorbing, are a fraction of those maintained by other economies. They
amount to less than 2% of China’s reserves, about 5% of the US and 27% of South
Korea’s, with domestic crude production having fallen by around 26% over past
decade and import substitution now approaching 89% of total oil needs. The high
dependence leaves India acutely exposed to geopolitical developments.
Addressing this vulnerability is a long-term, or at least a medium-term strategy
that needs to be addressed via an effective plan at the earliest.
In the meantime, the government has taken
some measures which include a Ra 1 lakh crore economic stabilisation fund,
excise duty cuts on petrol and diesel, reimposition of export levies on
aviation turbine fuel and an expanded Emergency Credit Line Guarantee Scheme
with an outlay of Rs 15,000 crore. In addition, a Resilience & Logistic
Intervention for Export Facilitation package has been approved with an initial
outlay of Rs 497 crore aimed at helping exporters. Analysts opine that even the
economic stabilisation fund shall not last more than three months at the
current pace.
Another aspect of this economic syndrome is
the declining foreign investor sentiment towards India in recent months. As per
available figures, overseas investors have so far pulled out about $22.17
billion, exceeding the $18.9 billion recorded in all of 2025, underscoring the
scale of the shift in capital flows. Additionally, the rupee has depreciated by
5% having reached Rs 96 viz the dollar, further affecting the economy and
putting pressure on both the current account ad overall balance of payments in
FY27.
Finally, it needs to be stated that oil,
fertiliser, gold and cooking oil – the four things the government wants to buy
less – along with electronics make up almost half of India’s import bill. While
these are intermediate goods, if foreign investment, manufacturing and
consumption increase, India’s import bill may go up. Obviously, the only remedy
is to increase exports by scouting for new markets. This is easier said than
done though it is expected that exports to the Gulf countries would increase
steadily in the coming months. In sum, the writing is on the wall--the rise in
oil and gas prices along with the trade deficit will be felt in the coming months
and can’t be wished away.---INFA
(Copyright, India
News & Feature Alliance)
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Cracks In India: UNITY VS DISARRAY, By Poonam I Kaushish, June 2026 |
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Political Diary
New Delhi, 9 June 2026
Cracks In India
UNITY VS
DISARRAY
By Poonam I Kaushish
In
this season of defections, bruised egos and broken loyalties, faultiness
cracked wide open in Opposition’s INDIA Bloc after TMC, DMK, CPM’s defeat
mingled with despair in the recent State polls, exacerbating it further.
Questionably, had the Bloc hit its self-destruct button? Are its days numbered?
Is it time to write its epitaph?
Yesterday’s meeting of
25 Opposition Parties witnessed deepening internal rifts and tensions leaving
the alliance unity hanging by a thread to keep up its anti-BJP focus by raising
fuel hike and economic stress. Despite,
Rahul Gandhi’s call of “united we stand, divided we fall.” Sic.
Certainly, Congress
central role in the Bloc has come under strain with some allies openly
questioning its attitude. The unraveling started with DMK announcing it
was unwilling to share space with long-time ally Congress after it snapped ties
to join hands with Vijay TVK and be part of its Government in Tamil Nadu.
Kejriwal’s AAP and Vijay’s TVK
too are not in the Bloc.
Days
later fresh rifts surfaced with CPM and JMM conveying their displeasure over Congress’s
functioning
style.
While JMM is upset by it “unilaterally” announcing
a candidate for one of two Rajya Sabha seats from Jharkhand, CPM has conveyed
its strong displeasure over attacks on ex-Chief Minister Vijayan. “There was a
systematic Congress campaign that CPM had struck a deal with BJP. This strikes
at the very basis of unity forged against BJP.”
Amid
the raging rebel crisis which has hit Mamata’s TMC in West Bengal and
Parliament where 59 MLA’s and 20 MPs have broken away, she is struggling to firm
up a roadmap forward at State and national level as her political survival
hinges on retaining Constitutional power. In contemporary Indian politics, mere
legacy and personal charisma are insufficient shields against irrelevance. Her
post-election reaction --- brushing aside defeat and claiming moral victory ---
reveals a leader struggling to fathom the scale of setback.
Congress,
too, is keeping a close eye on TMC crisis. A senior Congress leader said, “When
Mamata was in the winning phase, she said whatever she wanted about us. She
also tried to snatch India Bloc’s leadership from Congress and criticised Rahul
Gandhi. Now, she should not think that during her bad time, Congress will go
away. But we will not stand like a close friend either.”
The
TMC issue spotlights the generational crisis for regional Parties that tasted
extraordinary success over the last three decades owing to charismatic leaders
now face an existential dilemma. RJD, BJD, TMC, SS, NCP, DMK which survived
because lawmakers coalesced around a strong leader, today have a stark choice:
anointing a chosen successor and triggering rebellion or abandoning the
respective first families and risk unraveling. How they resolve this dilemma
will determine the fate of regional Parties.
Presently,
under its greatest strain since it was formed, yet some key factors will shape
its future: With Congress being the largest Opposition Party nationally
regional Parties will need to coordinate with it in
Parliament on issues like delimitation, federalism and Centre-State relations.
However,
at the same time regional Parties are becoming more assertive. DMK’s departure
and CPM’s public criticism show that allies are no longer willing to accept
Congress as the unquestioned leader of the alliance. Undoubtedly, TMC’s troubles have weakened the
Bloc as it has been one of the largest and most vocal Opposition Parties in
Parliament. Any reduction in its strength reduces the Bloc’s overall
influence.
Besides,
State-level rivalries remain unresolved. Congress competes directly against CPM
in Kerala, TMC in Bengal, SP and it do not have identical priorities in UP and it
has friction with allies elsewhere while Stalin wants regional Parties to have
a larger voice. Thus, these contradictions have always been the alliance’s structural
weakness.
As
for Pawar’s NCP, Akhilesh’s SP or Lalu’s RJD have the strongest incentives to
keep the alliance alive: NCP remains heavily dependent on Opposition unity in
Maharashtra, where it works closely with Congress and Thackeray’s SS. Pawar has
historically acted as a coalition-builder rather than a coalition-breaker.
Samajwadi
is currently the largest Bloc partner in UP after Congress, having repeatedly
benefited from coordination with it and remains one of the alliance’s central
figures. For RJD, Congress is a necessary ally against NDA as a breakup would
weaken opposition in Bihar.
Looking
ahead, there are three broad possibilities: Restructuring, not collapse: Even
as Congress remains the largest Opposition Party nationally, regional Parties
SP, RJD, NCP(SP), JMM and DMK might seek greater autonomy as they appear more
interested in reforming the Bloc than abandoning it.
Two,
loose Parliamentary front: Parties continue coordinating inside Parliament but
fight separately in State elections. Three, regional Parties might re-organise to
demand a less Congress-centric alliance structure whereby Congress remains
important but no longer dominates decision-making. The Bloc survives as a Parliamentary and election coordination
platform with weaker Congress control.
So far the
Opposition has presented a disunited front amidst unity bonhomie. But this does
not rule out gradual fragmentation wherein more
allies leave and State-level conflicts intensify, the Bloc might survive only
as an informal issue-based grouping rather than a cohesive electoral
alliance.
Is India Bloc is
finished? No, but its weaker and more fragmented than after 2024 election. Succinctly,
‘unity despite disagreements’ rather than ‘unity in disunity.’ Whether it
survives as a meaningful national alliance depends largely on whether Congress
can repair ties with DMK, CPM, JMM, TMC and adhere to one common goal: Challenging
Modi-led NDA to keep the alliance together.
Consequently, the challenge
is: Can a coalition of strong regional leaders rather than a single Party with
a clear command structure survive internal disputes which require constant
negotiation? The current picture: More friction than before, no signs of
immediate collapse, pressure on Congress to share leadership topped by common
interest in staying united against NDA.
Whether this is enough
to hold the Bloc together through future elections will depend on seat-sharing
arrangements, leadership questions and how regional Parties judge their own
electoral interests. Regardless of indicators that the Bloc
is facing an existential crisis and could break, giving NDA distinct advantage.
Clearly,
Opposition
will have to find the language and repertoire that can match BJP’s dexterity, multi-vocality,
poll fighting mean machine and resources with which it shores up its
communication dominance and perceived imagery. Modi has already thrown down the
gauntlet by refreshing Hindutva, projecting and redefining nationalism and
country’s self respect.
Surely,
how the narratives pans out in coming days will be watched. It will require
foresight, nimbleness and flexibility. If they want to play the game right
India will have to start lengthening its stride. Remember, a weak and divided
Opposition by any name will remain a weak Opposition.
In the
ultimate, at stake is whether Opposition can strike the right balance between
being popular and taking care of popular interest with a long term vision. Remember, the business of shaping Bharat is
not a matter of arithmetic but of politics. ----- INFA.
(Copyright, India News & Feature
Alliance)
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US-Iran & Persian Gulf Crisis: BIG TEST FOR FOREIGN POLICY, ECONOMY, Dr. Tomasz Łukaszuk, 6 June 2 |
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Spotlight
New Delhi, 6 June 2026
US-Iran
& Persian Gulf Crisis
BIG TEST
FOR FOREIGN POLICY, ECONOMY
Dr. Tomasz
Łukaszuk
(Expert,
Centre for Intl Relations, Poland)
The Persian Gulf
conflict represents one of the most significant tests for Indian foreign policy
in the 21st century. The war highlighted the limitations of India’s influence
on US actions in the Indian Ocean, as well as the boundaries of the strategic autonomy
India has been cultivating over the past decade. Economically, the conflict
compelled India to adjust its supply chains regarding energy security and to
reassess Gulf markets for Indian goods, services, and labour exports.
It has also
underscored the need to accelerate the development of domestic energy
capabilities and to diversify gas sources for fertilizer production.
Implementation of the India-Middle East-Europe Economic Corridor (IMEC)—a
hybrid transport and economic corridor utilizing Red Sea ports, a railway line
across Saudi Arabia, and Israeli ports on the Mediterranean—is expected to
accelerate.
Since 2014—the start
of Prime Minister Narendra Modi’s tenure—India has pursued a multi-vector
foreign policy. India itself terms this “strategic autonomy,” a concept that
draws elements from the tradition of non-alignment, while experts in the US and
Europe often describe it as a “pendulum” policy. India simultaneously
cultivates relations with Israel, Iran, and the Persian Gulf states. Indian diplomacy
is driven primarily by economic considerations, as all these nations play a
crucial role in the country's trade and investment landscape.
Israel is a key
trading partner—with a trade volume exceeding $6 billion and investments
surpassing $300 million—and a source of advanced technologies in agriculture,
irrigation, water desalination, the defence industry, and medicine.
Iran has been a
traditional, vital source of oil and gas—though constrained by US sanctions—as
well as a market for Indian rice. Furthermore, India has invested in the
Chabahar port near the Strait of Hormuz; this facility is intended to serve as
a counterweight to the Chinese-Pakistan port of Gwadar, the southern terminus
of the China-Pakistan Economic Corridor.
From India’s perspective,
Iran also plays a significant role in monitoring and balancing Pakistan’s
influence in Afghanistan. Persian Gulf states account for 50% of India’s oil
demand and 40% of its liquefied gas needs, as well as 15% of its exports and
20% of its imports. The Indian diaspora in the region—numbering nearly nine
million—is the largest in the world, generating 50 billion US dollars in
additional annual revenue. Indian citizens make up 35% of the population in the
United Arab Emirates.
The war that began in
February poses a challenge for India and its balancing act in foreign policy.
Initial reactions from Prime Minister Modi and Foreign Minister Jaishankar were
measured, expressing concern and calling for dialogue and the protection of
civilians. India sought to maintain neutrality while indirectly supporting the
US and Israel and condemning Iran for attacks on the Gulf states. In this
context, Modi’s visit to Israel two days before the war began served as a
significant signal.
The sinking of an
Iranian ship off the coast of Sri Lanka—which had been sailing from
Visakhapatnam, India’s largest naval base in the Bay of Bengal, following the
joint MILAN exercises—sparked concern in Delhi. It highlighted the limits of
the status India had gained, with the US assistance, as a security guarantor in
the eastern Indian Ocean. Despite the belief in India’s broad strategic
autonomy, these limits are still defined by the administration of President
Donald Trump. To counterbalance the negative impact on its image, Indian authorities
agreed to provide shelter to Iranian ships at the naval base in Kochi, on
India’s west coast.
A significant aspect
of the US-Iran conflict and the war in the Persian Gulf, from India’s
perspective, was the US acceptance of Pakistan’s proposal to act as a mediator
in peace negotiations with Iran. External Affairs Minister S Jaishankar criticised
Pakistan for effectively acting as a “broker” rather than a “mediator,” emphasising
that India would not agree to play such a role. At the same time, he stressed
the need for a swift end to the conflict in the Persian Gulf. India’s reaction
reflects its ongoing rivalry with Pakistan for influence in the Gulf and for
the quality of its relationship with the US.
The lack of extensive
comment from the government in Delhi on this matter was viewed in India as an
indication of compliance with Trump’s request to Modi to grant the US greater
freedom of action in India’s immediate neighbourhood than previously allowed.
The top priorities for Indian diplomats remain stabilising supply chains and
ensuring the safety of the Indian diaspora. A blockade of the Strait of Hormuz
is a critical factor regarding supply chains, given that 2 million barrels of
oil per day passed through the Strait prior to the war. Indian diplomacy
successfully secured permission for over a dozen ships to transit through
Iranian territorial waters.
The Indian government
also obtained authorisation to import oil from Russia. This enabled the
replenishment of strategic oil reserves, which are estimated at 25 million
barrels. The blocking of imports of gas and other fertilizer production inputs
has forced India to switch suppliers and reroute vessels along paths connecting
India to Morocco and Jordan via the Cape of Good Hope, as well as to Indonesia
and Malaysia via the Bay of Bengal. Domestic producers in India are operating
at 60% capacity due to LNG supply shortages.
Approximately one
million citizens have already returned to India through individual or group
repatriation efforts. Authorities in Delhi recognise the impossibility of
providing them with jobs given the protracted war, a situation that could
escalate into a social crisis. Returnees fear losing their assets, jobs, and
social benefits in the Gulf countries, where more than half of them were
employed in the construction sector. Another issue concerns 14 Indian merchant
vessels still located in waters adjacent to the Strait of Hormuz and the
associated need for humanitarian assistance. Initially, 37 ships were blocked,
but thanks to the efforts of Indian diplomats, clearance was secured for 23 of
them to proceed.
With Iran and the US forces continuing to exchange
strikes despite a temporary ceasefire signed, and both sides offering
different versions on talks’ progress, India shall need to gear up for further
economic vulnerabilities and perhaps consider tweaking its foreign policy. ---INFA
(Copyright, India News & Feature
Alliance)
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