Why has India's 'sweet spot' turned into so bitter?

 Economically and geopolitically, the wheel has turned.

Rohan Venkat May 23

 

Four years ago – not long after we moved from Delhi to Cairo – I wrote about how, from the global lens, India appeared to be occupying a ‘sweet spot’, both geopolitically and economically.

The world was “wooing India,” said the Hindustan Times. This was the “golden era” of Indian foreign policy, said another international observer. Deutsche Bank called India the “shining star” of the global economy. You can “feel India’s superpower potential being realised” said Citibank.

Even at the time, there were plenty of questions about how much that economic performance was just a post-Covid mirage, and how long New Delhi could walk the ‘multipolarity’ tightrope. But as recently as March 2025, it was being said that “just about everyone it seems (apart from maybe China and a few South Asian neighbours) needs more of India.”

Now, as our four-year stint in Egypt is coming to an end and as we prepare a shift to Brussels this summer (get in touch if you will be there or have recommendations of whom to meet!) the wheel appears to have turned completely.

A few recent headlines, covering foreign policy and the economy:

·        ‘India missed out on AI and now its run as market darling may be over’

·        Indian economy faces perfect storm with oil above $100, rupee in freefall, inflation back

·        Indian Central Bank intervenes as rupee drops to record low

·        India’s weak currency reflects deeper problems than the Iran war

·        Winter is coming for Indian inflation

·        Iran War and India’s diplomatic failures

·        India’s diplomats are hosting the world, but what is getting done?

Look first at the economy, where the government – having attempted to ignore the West Asian crisis while elections were ongoing has now pivoted to top-down demand destruction.

“Prime Minister Narendra Modi has appealed to Indians to revive working from home, buy less gold and limit foreign travel to deal with a surge in global energy ​prices because of the continuing crisis in the Middle East.

Modi said the austerity measures, reminiscent of the Covid era, would reduce India’s fuel use and help save foreign exchange.

“Patriotism is not only about the willingness to sacrifice one’s life on the border. In these times, it is about living responsibly and fulfilling our duties to the nation in our daily lives,” Modi said.

Menaka Doshi and Preeti Soni write:

“Modi’s advice comes two months too late. Many Asian peers began conservation measures in March whereas in India, which imports well over 90% of its oil and gas requirements, state-owned fuel retailers have held local prices steady despite higher import costs since the start of the Iran war… Had Modi’s government allowed for a gradual pass-through of higher import costs, it would have helped curtail domestic demand and conserve fuel for essential purposes… [Now] With no election in sight for months and global energy leaders warning of a long oil market disruption, Indians should expect local fuel prices to climb... quickly.”

The West Asian crisis has caused severe pressure on the country’s balance of payments, the rupee and, as the headlines above indicate, the broader India story.

Ajit Ranade explains:

“There are moments when a currency tells a story more honestly than official statements do. The Indian rupee is doing exactly that. It has lost more than 12 percent against the US dollar in 12 months and has been sliding relentlessly even though India’s macroeconomic fundamentals are not in obvious crisis territory. Growth is still respectable. Inflation is not runaway. The current account deficit, at least in headline terms, is manageable. Forex reserves remain robust. This is not 1991.

But that is precisely why the rupee’s fall is worrying. If a currency weakens sharply despite decent growth and contained inflation, it is telling us that the problem lies elsewhere: in the balance of payments, capital flows, investor confidence, oil vulnerability and the structure of India’s external dependence.”

(In his full post, Madhusudhan does spell out his reasons to be ‘long India’, but his reference to the level of pessimism here is the relevant bit)

Here is Surjit Bhalla, long a pro-Modi voice on economic matters:

“No matter how one slices the data, it is time to dispense with the moniker of the fastest-growing major economy. India has also moved from being one of five “Fragile Five” economies in 2013 to possibly becoming one of just two (along with Turkey).”

The US-Israel war on Iran, and the subsequent blockade of Hormuz, may be the immediate trigger, but as numerous analysts have pointed out, there are structural issues at hand. Here is JP Morgan’s Sajjid Chinoy:

"Pressures have long pre-dated the West Asia conflict. For the first time in more than three decades, the Balance of Payments has been in deficit for two consecutive years and we are on course for a third consecutive deficit. There is a more chronic phenomenon underlying these pressures that we have to address...

In turn, a collapse in FDI is at the heart of the capital flow story, with net FDI — which used to average 1.5 per cent — completely drying up since 2024. What’s driving this? Between 2010 and 2025, India’s net FDI is strongly correlated with US 10-Year Treasuries — a proxy for global financial conditions. When yields are low India tends to get a gush of FDI; when yields harden — like the last two years — net FDI has completely dried up. Recall, FDI is typically governed by both (global) “push” and (country-specific) “pull-factors.” What India’s FDI trajectory suggests it has largely been governed by push factors since 2010. The last time it was driven by pull-factors was in 2005-10 when a strong corporate capex cycle catalysed strong FDI.”

In other words, when cash was plentiful and cheap, it flowed into places like India looking for yields. As conditions tighten, it has flowed back out – since there are no reasons keeping it there. Chinoy says that this wasn’t the case between 2005-10, because businesses were actually investing in India, which they haven’t been doing over the last decade despite the major clean-up of balance sheets and stabilising of macro fundamentals over the last decade.

This is a concern we have flagged for years now, including back during the sweet spot moment (and before when India’s pre-Covid growth had fallen to 4% and the government unveiled what turned out to be spectacularly badly timed corporate tax cuts), and continuously over the last half decade, as the Indian government kept urging and exhorting businesses to invest – never a good sign:

As I read Chinoy’s push/pull analysis, though, it got me thinking of a piece by Kate Sullivan de Estrada that we published on India in Transition a few weeks ago, entitled ‘India’s Foreign Policy Relocations in the Trump Tariff Era.’

“From roughly 2017 until recently, India’s growing international recognition was closely tied to the geopolitical salience of the Indo-Pacific. As External Affairs Minister S. Jaishankar observed in June 2022, the region had moved to “the centre of the geo-strategic and geo-economic discourse,” placing India at the heart of an emerging strategic frame. The Indo-Pacific not only reflected the sharpening rivalry between the US and China, but key regional actors—including the US, Japan, Australia, and India through the Quad—framed the Indo-Pacific as a space defined by shared values of “freedom and openness.”

Against this backdrop, India stood as both a material and an ideological swing state. The Indo-Pacific became a high-yield recognition domain, delivering status, trust, and material benefits, even as India’s leadership interpreted elements of freedom and openness in distinctive ways. It conferred strategic indispensability, elevated India through association with major powers, and created opportunities for India to shape the norms and institutions of an emergent regional order…

But the recognition dividends of the Indo-Pacific frame depended heavily on the strategic priorities of external actors, particularly the US. Under the second Trump administration, advocates describe US policy attention as having gravitated toward the Western Hemisphere, even if more conventional commitments to American primacy persist. The background recognition context that underpinned India’s Indo-Pacific centrality began to shift.”

You should read the whole piece, including an analysis of how India moved its focus from the Indo-Pacific to trade deals, de Estrada noting that “India-as-trade-partner does not strike quite the same note of indispensability as did its role as a key balancer in the Indo-Pacific.”

The analogy here is that the attention on the Indo-Pacific was a push factor, which inflated India’s sense of importance, its ‘vishwaguru’ status and built the idea that its rise was inevitable – fully imbibed at home and translated into domestic messaging. But this was a flawed reading of what was going on.

And Trump, as we have discussed many a time on the newsletter, changed all of that.

Not just because of his affinity for Pakistani generals or his erratic trade wars but also because, at a more structural level, the Indo-Pacific theatre became a less immediate concern, and suddenly India’s stock dropped. The US-Israel war on Iran has added to that, and though the Western Indian Ocean should also be a key theatre for Indian interests, it simply isn’t a space into which New Delhi can project much leverage.

You get the sense from many a policymaker that they expect that the US, once it is done with its ‘Middle Eastern dalliances’, will eventually come to its senses and start focusing (pivoting?) to Indo-Pacific competition with China once again, and then India will return to its rightful place in the order of things. The ‘push’ will come back, while India works on trade deals to shore up the slower process of building a ‘pull’ factor.

Is that a given? There are already those who have argued that the Indo-Pacific and the ‘pivot’ are dead, or worse, ‘zombies’. And then there was the ‘G2’ in Beijing this month. Here’s India’s former foreign secretary Shyam Saran:

“The May 14-15 summit in Beijing between Chinese President Xi Jinping and his US counterpart Donald Trump was a landmark geopolitical event, whose impact will reverberate across the Asian region and the world for years to come. This is an inflection point, and one is not using the term lightly. It is perhaps for this reason that there is a reluctance not only in the US and the West but also in our own region to grasp the full significance of just what happened in those two days of early spring in the Chinese capital.”

It will take time to understand the implications of the US-Israel war on Iran, but perhaps the biggest challenge for New Delhi is to take the right bet on how important the Indo-Pacific will be for its Western partners over the next few decades. Good thing US Secretary of State Marco Rubio is about to visit – from May 23 to May 26 – with, among other things, the question of the Quad hanging in the air.

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Source:  https://rohanvenkat.substack.com/p/why-has-indias-sweet-spot-turned

శ్రీ కౌముది మే 2026

 

What does Modi's big 'delimitation' loss in Parliament tell us about the post-2024 BJP?

 It both is and isn't about affirmative action for women.

Rohan Venkat

Apr 23, 2026

There are two elements to the significant events that took place in India’s Parliament – and outside – last week.

First is the bigger picture question of how the law to reserve one-third of India’s Parliamentary seats for women candidates will actually be implemented. In 2023, they ‘superglued’ the women’s law to an even more controversial question: Should India expand and redistribute the share of seats in Parliament to correct historical imbalances, a process commonly referred to as ‘delimitation’ (a subject we’ve tackled   at length on this newsletter)?

However these two issues are resolved, these will fundamentally reshape India’s parliamentary framework, and therefore its democracy, for decades.

The second is the political scaffolding propped around those constitutional debates. Why did the BJP move now? Where does this historic loss in Parliament, the first legislation Prime Minister Narendra Modi’s government has failed to pass since he came to power in 2014 (and indeed the first government-introduced bill to be defeated since 2002) place his party? And what are the likely political reverberations, including for the Opposition?

I’m planning to look at these two issues separately, starting with the second question today.

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Previously, on the delimitation drama…

But first, a bit of background.

Despite massive changes to the underlying Indian population, the Lok Sabha, the lower house of India’s Parliament, has had the same number and distribution of seats for half a century now. These were supposed to be readjusted every decade – a process called ‘delimitation’ – based on census results, but  that process was frozen in the 1970s, for demographic and fiscal reasons.

As a consequence, there has been a huge disparity in the sizes of constituencies in the (higher fertility, poorer) North versus the (ageing, low-fertility, richer) South and, therefore, an undermining of the principle that each person’s vote is equally valuable. The freeze was due to end after 2026, but any potential delimitation based on updated population figures would massively tilt the balance of power in Parliament, giving, per some calculations, Uttar Pradesh alone as many seats as all the South Indian states combined. Leaders of southern states have described this as a ‘damocles sword’ hanging over the region, and argued that they shouldn’t be penalised politically for an official state policy of population control.

In 2023, the BJP – whose core support base is concentrated in (but not limited to) North India – attempted to solve this extremely delicate problem by appending it to an entirely different issue: the long-pending demand to reserve one-third of Lok Sabha seats for women. In a surprise special session of Parliament  that year, the ruling party managed to pass the affirmative action legislation unanimously, but rather transparently included provisions that meant it could only be implemented after the next census, i.e. alongside a post-2026 delimitation.

The implied political tactic was that the BJP would eventually seek to blunt Southern opposition to delimitation by arguing that all who opposed it were ‘anti-women.’ But given the move would only come into effect ahead of the 2029 national elections at the earliest, it didn’t majorly play into the 2024 campaign, which the BJP went into promising more than 400 seats and emerged from having lost its simple majority, needing to rely on alliance partners to stay in power. (It has since regained its mojo through a series of comprehensive state-level victories).

‘Single largest change to Parliament in history’

Which brings us to April 16 and 17, 2026.

Not for the first time, the BJP chose shock and awe over the consultative-deliberative route to introducing major legislation that could have major huge consequences for Indian democracy (see also: the stripping of Article 370, the 10% upper-caste ‘EWS’ quota, the Citizenship Amendment Act, and the ordinances to alter land acquisition and agriculture regulation, i.e. the ‘farm laws’).

Without having called an all-party meeting and while politicians were smack dab in the middle of important campaigns for state elections taking place in West Bengal and Tamil Nadu, the BJP announced  a special session of Parliament, keeping the agenda and texts of the legislation (a constitutional amendment, and two related bills) under wraps until less than two days before they were introduced.

When they were revealed, the bills confirmed the impression that anyone paying attention back in 2023 could easily foresee: The main thrust of all three proposed laws was the expansion and delimitation of Parliament:

“The proposed 131^st amendment expands the size of the Lok Sabha to 850 seats, ends the fifty-year freeze on inter-state seat distribution in the Lok Sabha, accelerates delimitation on the basis of 2011 census data, and ends the constitutional requirement to conduct delimitations after every census. The Bill represents  the single largest change to the design of Parliament in the nation’s history, one that deserves far more parliamentary and public scrutiny than the government appears willing to afford it, with the draft circulated two days prior to Parliament taking it up.”

The proposed constitutional amendment also proposed to remove a clause requiring the women’s reservation to only be implemented following the results of a fresh census. Given that other elements in the bills permitted the use of the 2011 census data to carry out delimitation, instead of waiting for the results of the ongoing census, the effect would be to accelerate implementation of the 1/3rd quota. Note: Back in 2023, the Opposition had demanded the BJP remove the clause for the women’s law to only be implemented after the next census, but Modi’s party at the time refused.

In the Lok Sabha, the government attempted to defuse the expected pushback from the Opposition, especially South Indian states, by offering up a personal assurance, from Modi:

“If you want me to use the ‘guarantee’, then I give you my guarantee, if you want me to use the word ‘promise’ I can use the word ‘promise’, or if you have any word in Tamil that conveys this, I am willing  to say it as well. No injustice will be done to any State – from east to west, and north to south.”

Home Minister Amit Shah even claimed that he would formalise Modi’s promise, by using a ‘50% formula.’ Per this maneuver, the South Indian critique of delimitation would be addressed by avowing  that the new, 850-seat Lok Sabha would not fix the huge imbalance caused by the 50-year-old delimitation freeze. Instead, each state would mechanically get 1.5 times the number of seats it had before, thereby maintaining the same proportional share they have in the current Parliament.

(Why, you might ask, do this rather than simply introduce one-third reservation for women to the current Lok Sabha of 543 members? The answer came from Shah: The BJP didn’t want the political economy instability that would come from expecting male MPs/candidates to effectively vacate their seats/pathways to power. Currently, there are 469 men and 74 women in the Lok Sabha. 1/3rd reservation would cover approximately 180 seats1 , meaning in more than 100 more constituencies men would have to give up plans to contest, with all the attendant political fallout. The only way, then to accommodate a 33% quota would be to expand the Lok Sabha).

The problem with Modi’s promise, however, was two-fold.

First, given the state of politics between the BJP and the Opposition in India, the question of expecting other parties to simply ‘trust’ Modi’s word was always a losing proposition, as Samajwadi Party chief Akhilesh Yadav spelled out in Parliament:

“Based on nearly 11 years of experience, even if the Bharatiya Janata Party were to give a written assurance that they would appoint a woman Prime Minister, we still would not trust them.”

(Particularly pertinent because, reportedly, the BJP did attempt to reach out to the Samajwadi Party in the final hours in the hopes of getting it on board).

The second reason is even more important, and explains why Shah never actually ‘formalised’ the assurance. As Pavan Korda writes,

“The actual text of the Delimitation Bill, 2026, makes this 50% formulation legally impossible… Article 81(2)(a) dictates the government must allot seats so that “the ratio between that number and the population of the state is, so far as practicable, the same for all states.” Population growth since 1971 has been massively asymmetrical. The North boomed, and the South stabilised. You cannot maintain an equal population-to-seat ratio while increasing every state’s seats by a flat percentage.”

‘Winning by losing’?

Eventually, the constitutional amendment bill failed to pass – an extremely rare occurrence in the Lok Sabha, where if it is clear that the government doesn’t have numbers, it usually pulls the legislation rather than see it defeated. The other two bills had to be withdrawn. This defeat seemed likely, since constitutional amendments require a 2/3rds majority, but not certain, as Sobhana Nair’s reporting on the Opposition’s thinking makes evident.

Rather than wanting to move past its landmark legislative failure or work more closely with other parties to find a solution, the BJP appears to have ultimately decided that it would rather have the Opposition’s votes on record, and trust that it can spin this as an ‘anti-women vote’ by its opponents (as much of the Indian media promptly did).

https://www.youtube.com/watch?v=CO3oMbcuknU

“The Opposition appears united. They do not want to let the Bills pass. In such a situation, we have no option but to become martyrs,” the Indian Express reported an anonymous ruling alliance leader saying. “As of now, there is no indication of the Bills being withdrawn. That would look bad. The defeat of the Bills can be weaponised politically against the Opposition.”

The very next day, the party already had advertisements in the newspapers, and Modi delivered a primetime speech – in his capacity as prime minister, no less – aimed at blaming the Opposition for standing in the way of women empowerment, with a particularly stark metaphor:

“This honest effort has been subjected to foeticide in Parliament by Congress and its allies, foeticide. Congress, TMC, Samajwadi Party, DMK—these parties are guilty of this foeticide. They are criminals against the Constitution of the country, they are criminals against the women power of the country.”

Modi’s argument that his party is only motivated by national interest, while the Opposition has politics on its mind is, predictably, disingenuous. Nearly every element of the process leading up to the defeat of the proposed legislation has been based on BJP political calculations: the ‘surprise’ special session to pass the law in 2023; the decision that year to link the women’s law to delimitation thereby putting off implementation until after the next census; the long, unexplained delay in conducting what should have been the 2021 census; and the timing of this special session as well as the text of the bills introduced.

This much is to be expected, and political calculations are a normal factor in timing legislative business. The question then is: What was the BJP’s thinking?

4D Shatranj

As has been the case for the last 12 years, we have little direct insight into what Modi and Shah were thinking. But some have attempted to piece together an explanation.

Roshan Kishore suggests that the BJP was planning ahead for 2029, knowing that it could not, at a national level, rely on the pre-election cash benefit gambit that has been a central element of practically every state election victory over the past half-decade:

“The state-level fiscal burden of this populist bargain is already threatening to overwhelm India’s debt management. There is no way the Centre can afford something of this kind at the all-India level in 2029…

What can the government do to carve out a narrative ahead of 2029 in such circumstances?

…

By preponing the rollout of women’s reservation to 2029, the government, especially the Prime Minister, is hoping to compensate for lack of material attribution with metaphysical attribution for women’s reservation. By clubbing this bill with delimitation (and possible gerrymandering) and leaving assurances of keeping the parliamentary share of southern share’s intact outside the text, the government is hoping to make the rollout of women’s reservation not a bipartisan but a partisan achievement…

This writer sees it more as a desperate attempt to front the social against the economic in politics.”

As for why now, the Hindu proposed an explanation in an editorial:

“When India’s decennial Census was delayed for more than five years without a definitive or rational explanation from the BJP-led Union government, the political logic was not hard to discern... By delaying the Census to 2026-27, the government ensured that the delimitation exercise could be initiated on its preferred timeline, using the 2026-27 Census rather than one conducted in 2031.

Now, perhaps realising that any delimitation exercise would itself take years to conclude after the 2026-27 Census, and therefore not be ready even for the 2029 Lok Sabha elections, the government appears to be in a tearing hurry to proceed with delimitation on the basis of the last completed Census, that of 2011.”

If either of these proposals are accurate – and they sound plausible, even if I would put less stock on the ‘metaphysical attribution’ element and more on simply charging forward towards delimitation – they also suggest that there are still major questions to be asked about the BJP’s national-level strategising post 2024.

Modi has faced legislative defeat before: With the land laws early in his first tenure, and the farm laws in his second term, major legislative priorities had to be set aside. In both those cases, however, it was street-level pushback rather than the Opposition’s efforts that did the job (although Rahul Gandhi’s ‘suit-boot sarkar’ jibes did get the prime minister to generally stop wearing suits). This time around the party appeared woefully unprepared, even though it should have come as no surprise that delimitation would be something that the Opposition would rally around.

Did Modi, Shah, Parliamentary Affairs Minister Kiren Rijiju and, uh, BJP President Nitin Nabin, really think they could get support for these bills over the required 2/3rds mark, knowing how sensitive the issue would be? Even as elections were about to take place in West Bengal and Tamil Nadu? And on the strategic side, how sloppy was the government’s calculation on delaying the census (admittedly, in part because of the other tricky political matter of counting caste), if it didn’t also take into account what that would mean for the maneuver to combine the women’s bill and delimitation?

The party may have resurrected itself in the aftermath of the 2024 electoral disappointment, and gone on to be wildly successful in several state-level contests. But is its leadership still relying on a playbook that dates back to its days of having a Lok Sabha majority? More broadly, does it have a national narrative?

Modi’s ‘vishwaguru’ of international relations angle is struggling, not least because of the Trump narrative violation and the aftertaste of disappointment following Operation Sindoor; the war on Iran and Strait of Hormuz closure has already proved to be a massive vulnerability for India’s economy; and the fruits of the government’s newfound love for trade deals will not be ready to harvest in time for 2029. The BJP of course, has its tried and tested ‘infilitrators’ line – but will that be deployable nationally, after 15 years in power?

Back when ‘400 paar’ seemed like a real possibility,  expected the BJP to push quickly for delimitation and simultaneous elections, with the aim essentially of making 2029 something of an electoral reset. Not a referendum on 15 years of Modi, given he would be 78 by then, but a question about who would lead India into its ‘viksit’ future, with a new Parliament building, supersized Lok Sabha composed of entirely reshaped constituencies, a newly compressed electoral calendar and perhaps a uniform civil code to govern everyone.

Building aside, do any of these now seem likely?

The answer may well be… delimitation. Remember, as things stand, the 50 year freeze ends in 2026, and is not automatically renewed. The government is constitutionally obligated to re-balance the current 543 Parliament seats based on population according to the results of the census (although it might have room to maneuver by choosing when it releases census data, and how a delimitation commission will operate).

In other words, the delimitation question is not resolved, by any means. On the next issue, I hope to cover some of the many interesting proposals put forward for how to tackle delimitation (which we discussed previously, at length, here) and also link out to lots of other useful analysis on both delimitation and the future of the women’s reservation law.

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