Modi Government's Measured Response to Trump's Tariff Policies

 

While media outlets have been extensively criticizing India's apparent lack of response to the Trump administration's new tariffs, I find the Modi government's measured approach refreshing. Rather than joining other world leaders in making immediate and potentially reactive public statements, India has chosen a path of careful deliberation.

This restraint raises an interesting question: Are other global leaders genuinely interested in productive negotiations with the incoming Trump administration, or are their public pronouncements merely designed to bolster domestic and international popularity?

A Strategic Economic Maneuver

The Modi government has instead implemented a sophisticated economic response by increasing the excise duty on petrol and diesel by Rs 2 per liter. What makes this move particularly astute is that this additional tax burden will be absorbed by the oil companies rather than passed on to consumers.

This timing is strategic for several reasons. Oil prices are expected to decline due to economic slowdowns in China and other markets affected by Trump's tariff policies. Consequently, this tax increase is unlikely to significantly impact either end consumers inflation or oil company profitability.

The government stands to collect substantial additional revenue through this measure, which can be directed toward economic relief programs and help balance the national budget—all without creating additional financial pressure on citizens or businesses during this period of global economic adjustment.

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