What lies ahead for the new Indian government

What lies ahead for the new Indian government
Supporters of the ruling Bharatiya Janta Party (BJP) holding cut-outs of India’s Prime Minister and their leader, Narendra Modi shout slogans during an election campaign rally of their president and election candidate Jagat Prakash Nadda (not pictured), in Amritsar on May 30, 2024 ahead of the seventh and final phase of voting in India’s general election. (AFP)
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Updated 30 May 2024
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What lies ahead for the new Indian government

What lies ahead for the new Indian government
  • Economic disparity, inflation, taxes and unemployment likely to be key challenges 
  • Foreign relations with China, Pakistan, Canada will continue to plague any new administration

NEW DELHI: India is expected to have a new government in place by the middle of June after a six-week election that began on April 19. Votes will be counted on June 4 and analysts expect Prime Minister Narendra Modi to win a third straight term.
Here are some key issues the winning party, or coalition, will need to tackle in office.
ECONOMIC DISPARITY
India’s economy is expected to have grown by about 8 percent in the last fiscal year, one of the fastest rates among major economies, but voters have pointed to disparities on the ground, with growth more visible in cities than in the vast hinterland.
The economy has jumped five places to be the fifth-largest in the world in the past decade under Modi and he has said he will lift it to the third position if elected. But the country’s per-capita income still remains the lowest among G20 nations.
Nevertheless, S&P Global Ratings in late May raised India’s sovereign rating outlook to ‘positive’ from ‘stable’ while retaining the rating at ‘BBB-’, saying the country’s robust economic expansion was having a constructive impact on its credit metrics.
INFLATION ABOVE CENBANK TARGET
Annual retail inflation (INCPIY=ECI) in April stood at 4.83 percent, slightly lower than March, but still above the central bank’s 4 percent target.
Food inflation, which accounts for nearly half of the overall consumer price basket, was an annual 8.70 percent in April, compared with a 8.52 percent rise in the previous month. Food inflation has been at more than 8 percent year-on-year since November 2023.
Countering the steep increase in food prices has been one of the key campaign planks of the main opposition Congress party, which has promised several cash handouts to alleviate the situation.
Modi has meanwhile banned exports of wheat, rice and onions to contain domestic inflation.
UNEMPLOYMENT
Unemployment in India has also been one of the main issues in the campaign with Congress accusing the Modi government of doing little to provide jobs for the country’s youth.
The unemployment rate in India rose to 8.1 percent in April from 7.4 percent in March, according to the private think-tank Center for Monitoring Indian Economy.
Government estimates for the latest January-March quarter show that the urban unemployment rate in the 15-29 age group ticked higher to 17 percent from 16.5 percent in the prior quarter.
Overall, urban unemployment rate in the January-March quarter stood at 6.7 percent, compared to 6.5 percent in the previous quarter, according to government data.
The Indian government does not release quarterly unemployment figures for rural India.
FOREIGN RELATIONS
India’s rising world stature and assertive foreign policy have been touted as major recent achievements by Modi’s administration.
A key diplomatic strain, however, remains with China which was spurred by a 2020 border clash that left 20 Indian and four Chinese soldiers dead. Modi said last month the countries should address the “prolonged situation” on their border.
Modi’s government has been trying to attract foreign companies to diversify supply chains beyond China.
Relations with Canada have also been strained in recent months after Ottawa and Washington accused an Indian official of directing the plot in the attempted murder of Gurpatwant Singh Pannun, a Sikh separatist and dual citizen of the United States and Canada.
In May, Canadian police arrested and charged three Indian men with the murder of Sikh separatist leader Hardeep Singh Nijjar last year and said they were probing whether the men had ties to the Indian government.
TAXES
An industry lobby group earlier this year called for a tax exemption limit for individuals to be increased and linked with inflation to help boost consumption.
The Confederation of Indian Industry also asked that the government review its capital gains tax structure by bringing consistency in tax rates for different asset classes such as debt, equity and immovable assets.
FARMERS
Stagnant farm income is a major sign of widening inequality between urban and rural India that has led to widespread protests. The BJP had promised to double farm income by 2022 in its manifesto for the last election, but has failed to do so.
Despite that, Modi has set a new goal to lift rural per-capita income by 50 percent by 2030 but farmers in the hinterland remain skeptical of such plans, Reuters reported earlier.
LAND, LABOUR REFORMS
In February, a BJP spokesperson told Reuters that Modi could make labor reforms a priority if he wins the general election.
New labor codes, which would make it easier for firms to hire and fire workers and impose operating restrictions on unions, were approved by parliament in 2020, but they have yet to be implemented following resistance from workers and states.
The new government may also continue to delay taking on land reforms as any such moves would be contentious and lead to losses in state elections later this year.
In his first term as prime minister, Modi tried to push through legislation that would have made it easier to buy land for industrial corridors, rural housing and electrification, and for defense purposes. However, the plan was put on the backburner amid stiff resistance from the opposition.


Trump says Americans could feel ‘pain’ in trade war with Mexico, Canada, China

Trump says Americans could feel ‘pain’ in trade war with Mexico, Canada, China
Updated 12 min 26 sec ago
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Trump says Americans could feel ‘pain’ in trade war with Mexico, Canada, China

Trump says Americans could feel ‘pain’ in trade war with Mexico, Canada, China
  • “We’re not going to be the ‘Stupid Country’ any longer,” the Republican president wrote on social media
  • Experts warn that Trump’s tariffs could reduce US economic growth and throw Canada and Mexico into recession
  • Democratic lawmakers decried what they called a blatant abuse of executive power. Others warned about rising prices.

WASHINGTON: President Donald Trump said on Sunday the sweeping tariffs that he has imposed on Mexico, Canada and China may cause “some pain” for Americans, as Wall Street and the largest US trading partners signaled hope that the trade war would not last long.
US futures markets opened lower in a sign that investors were worried the tariffs could spur inflation and drag on growth, as economists have warned.
Trump, less than two weeks into his second White House term, defended the tariffs as necessary to curb illegal immigration and the drug trade.
Canada and Mexico ordered retaliatory measures to Trump’s 25 percent tariffs, which promise to jolt the economies of all three countries, which are tightly integrated through free-trade agreements.
China said it would challenge Trump’s 10 percent tariffs at the World Trade Organization and take unspecified countermeasures. Critics said the Republican president’s plan will slow global growth and drive prices higher for Americans, but Trump defended his decision.
“We’re not going to be the ‘Stupid Country’ any longer,” the Republican president wrote on social media. He added in all caps: “Will there be some pain? Yes, maybe (and maybe not!)“
Trump did not specify what he meant by “some pain.” North American companies were braced for the move, which could upend industries from autos to consumer goods to energy.
EY Chief Economist Greg Daco said Trump’s tariffs could reduce US economic growth by 1.5 percentage points this year, throw Canada and Mexico into recession and usher in “stagflation” — high inflation, stagnant economic growth and elevated unemployment — at home.
Trump’s move was the first strike in a what could be a destructive global trade war that Paul Ashworth of Capital Economics said would lead to a surge in US inflation that would “come even faster and be larger than we initially expected.
US crude oil futures jumped more than $2 to hit $75 per barrel, while stock futures fell. The S&P 500 E-mini futures were down 2 percent, while Nasdaq futures were down 2.75 percent.

Tuesday deadline
The Trump tariffs, outlined in three executive orders, are due to take effect 12:01 a.m. ET (0501 GMT) on Tuesday. Markets were awaiting developments with anxiety, but some analysts said there was some hope for negotiations, especially with Canada and China.
“The tariffs look likely to take effect, though a last-minute compromise cannot be completely ruled out,” Goldman Sachs economists said in a note Sunday.
They said the levies are likely to be temporary but the outlook is unclear because the White House set very general conditions for their removal.
A White House fact sheet gave no details on what the three countries would need to do to win a reprieve.
Trump vowed to keep them in place until what he described as a national emergency over fentanyl, a deadly opioid, and illegal immigration to the United States ends. China left the door open for talks with the United States. Its sharpest pushback was over fentanyl.
“Fentanyl is America’s problem,” China’s foreign ministry said, adding that China has taken extensive measures to combat the problem.
Mexican President Claudia Sheinbaum, raising her fist in the air in a speech outside the capital, vowed resilience.
She accused the United States of failing to tackle its fentanyl problem and said it would not be solved by tariffs.
Sheinbaum said she would provide more details on Monday of the retaliatory tariffs she ordered this weekend.
Canada said on Sunday it will take legal action under the relevant international bodies to challenge the tariffs.
Prime Minister Justin Trudeau also encouraged Canadians on Sunday to boycott their longtime ally after ordering retaliatory tariffs against $155 billion of US goods, from peanut butter, beer and wine to lumber and appliances.
Canadian officials said they were preparing measures to help business who might be hurt by the trade war.
Trump has heaped derision on Canada in particular, with calls for the country to become the 51st US state. On Sunday, he said Canada “ceases to exist as a viable country” without its “massive subsidy.”

Following through
The tariff announcement made good on Trump’s repeated 2024 campaign threat, defying warnings from economists that a trade war would erode growth and raise prices for consumers and companies.
Trump declared a national emergency under two laws, the International Emergency Economic Powers Act and the National Emergencies Act, which give the president sweeping powers to impose sanctions to address crises.
Trade lawyers said Trump could face legal challenges for testing the limits of US laws. Democratic lawmakers Suzan DelBene and Don Beyer decried what they called a blatant abuse of executive power. Others warned about rising prices.
“No matter which way you slice it: costs are going to climb for consumers,” Senate Democratic Leader Chuck Schumer said, vowing to try to “undo this mess.”
Republicans welcomed Trump’s action.
A Reuters/Ipsos poll released last week showed Americans were divided on tariffs, with 54 percent opposing new duties on imported goods and 43 percent in support, with Democrats more opposed and Republicans more supportive.

Investors look ahead
Investors were considering the effects of additional tariffs promised by Trump, including those related to oil and gas, as well as steel, aluminum, semiconductor chips and pharmaceuticals. Trump has also vowed actions against the European Union.
A European Commission spokesperson said the EU “would respond firmly to any trading partner that unfairly or arbitrarily imposes tariffs on EU goods.” Europe’s biggest carmaker, Volkswagen, said it was counting on talks to avoid trade conflict.
Automakers would be particularly hard hit, with new tariffs on vehicles built in Canada and Mexico burdening a vast regional supply chain where parts can cross borders several times before final assembly.
Trump imposed only a 10 percent duty on energy products from Canada after oil refiners and Midwestern states raised concerns. At nearly $100 billion in 2023, imports of crude oil accounted for roughly a quarter of all US imports from Canada, according to US Census Bureau data.
White House officials said Canada specifically would no longer be allowed the “de minimiz” US duty exemption for shipments under $800. The officials said Canada, along with Mexico, has become a conduit for shipments of fentanyl and its precursor chemicals into the US via small packages that are not often inspected by customs agents.
 


Georgian police arrest opposition leaders at pro-EU protest

Georgian police arrest opposition leaders at pro-EU protest
Updated 11 sec ago
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Georgian police arrest opposition leaders at pro-EU protest

Georgian police arrest opposition leaders at pro-EU protest
  • Earlier on Sunday, the Interior Ministry warned protesters in a statement that blocking the motorway was a criminal offense

TBILISI: Police in Georgia arrested several anti-government protesters on Sunday as thousands of demonstrators demanding new parliamentary elections briefly blocked a motorway on the edge of the capital Tbilisi.
A Reuters reporter saw three protesters being arrested, including Nika Melia, a leader of the country’s largest opposition party, the Coalition for Change.
Interfax news agency reported that Melia has since been released on bail after detention for an administrative offense.
“At the police station, I was sitting on a chair in handcuffs and was kicked by a police officer,” Interfax cited Melia as telling journalists afterwards.
Reuters could not independently verify the information.
There was no immediate comment from the police. Georgia’s Ministry Of Internal Affairs had said in a statement before the protest that the police would ensure the rally took place “in a peaceful environment, within the limits established by law.”
Former Tbilisi Mayor Giorgi Ugulava was also arrested, local media reported.
Georgians have been rallying nightly since November, when the ruling Georgian Dream party said it was suspending European Union accession talks until 2028, abruptly halting a long-standing national goal.
Georgian Dream held onto power in a disputed election in October that opposition parties say was rigged. The government says the vote was fair and free.
Protests had dwindled in recent weeks but they resumed with greater force on Sunday when thousands of people gathered outside a shopping complex on the northern edge of Tbilisi and briefly blocked the road leading out of the city. Police presence at the rally was considerable. Earlier on Sunday, the Interior Ministry warned protesters in a statement that blocking the motorway was a criminal offense.
One protester was seen by the side of the road, unconscious. Reuters was unable to establish what had happened to him.
Unverified video footage posted on social media showed scores of police in balaclavas beating protesters on the streets and others carrying away injured demonstrators into ambulances.


Trump to cut off all future funding to South Africa, Elon Musk’s original country

Trump to cut off all future funding to South Africa, Elon Musk’s original country
Updated 50 min 31 sec ago
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Trump to cut off all future funding to South Africa, Elon Musk’s original country

Trump to cut off all future funding to South Africa, Elon Musk’s original country
  • He alleged that “South Africa is confiscating land, and treating certain classes of people VERY BADLY”
  • Trump pledged during his first administration to investigate claims of large-scale killings of white farmers in South Africa and violent takeovers of land

WASHINGTON: US President Donald Trump said on Sunday that he would cut off all future funding to South Africa because he claimed, without evidence, that “certain classes of people” were being treated “very badly.”
“South Africa is confiscating land, and treating certain classes of people VERY BADLY,” Trump said in a Truth Social post.
“The United States won’t stand for it, we will act. Also, I will be cutting off all future funding to South Africa until a full investigation of this situation has been completed!” he added.
In 2023, the United States obligated nearly $440 million in assistance to South Africa, according to US government statistics.
South African President Cyril Ramaphosa said last month that he was not worried about the country’s relationship with Trump.
Ramaphosa said at the end of January that he had spoken to Trump after his election victory and looked forward to working with his administration.
During his first administration, Trump had pledged to investigate the unproven large-scale killings of white farmers in South Africa and violent takeovers of land.


Rubio says Panama must reduce Chinese influence around the canal or face possible US action

Rubio says Panama must reduce Chinese influence around the canal or face possible US action
Updated 03 February 2025
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Rubio says Panama must reduce Chinese influence around the canal or face possible US action

Rubio says Panama must reduce Chinese influence around the canal or face possible US action
  • China’s presence in the canal area may violate a treaty that led the US to turn the waterway over to Panama in 1999, Rubio tells Panama President Mulino
  • After his meeting with Rubio, Mulino said Panama would not be renewing its agreement with China’s Belt and Road Initiative when it expires

PANAMA CITY: US Secretary of State Marco Rubio brought a warning to Panamanian leader José Raúl Mulino on Sunday: Immediately reduce what President Donald Trump says is Chinese influence over the Panama Canal area or face potential retaliation from the United States.
Rubio, traveling to the Central American country and touring the Panama Canal on his first foreign trip as top US diplomat, held face-to-face talks with Mulino, who has resisted pressure from the new US government over management of a waterway that is vital to global trade.
Mulino told reporters after the meeting that Rubio made “no real threat of retaking the canal or the use of force.”
Speaking on behalf of Trump, who has demanded that the canal be returned to US control, Rubio told Mulino that Trump believed that China’s presence in the canal area may violate a treaty that led the United States to turn the waterway over to Panama in 1999. That treaty calls for the permanent neutrality of the American-built canal.
“Secretary Rubio made clear that this status quo is unacceptable and that absent immediate changes, it would require the United States to take measures necessary to protect its rights under the treaty,” the State Department said in a summary of the meeting.

Panama's President Jose Raul Mulino (L) greeting US Secretary of State Marco Rubio on arrival at the presidential palace in Panama City on February 2, 2025. (AFP)

The statement was unusually blunt in diplomatic terms, but in keeping with the tenor and tone Trump has set for foreign policy. Trump has been increasing pressure on Washington’s neighbors and allies, including the canal demand and announcing Saturday that he was imposing major tariffs on Canada and Mexico. That launched a trade war by prompting retaliation from those close allies.
Mulino, meanwhile, called his talks with Rubio “respectful” and “positive” and said he did not “feel like there’s a real threat against the treaty and its validity.”
The president did say Panama would not be renewing its agreement with China’s Belt and Road Initiative when it expires. Panama joined the initiative, which promotes and funds infrastructure and development projects that critics say leave poor member countries heavily indebted to China, after dropping diplomatic recognition of Taiwan and recognizing Beijing.
Rubio later toured the canal at sunset with its administrator, Ricaurte Vásquez, who has said the waterway will remain in Panama’s hands and open to all countries. Rubio crossed the lock and visited the control tower, looking down over the water below, where a red tanker was passing through.
Earlier, about 200 people marched in the capital, carrying Panamanian flags and shouting “Marco Rubio out of Panama,” “Long live national sovereignty” and “One territory, one flag” while the meeting was going on. Some burned a banner with images of Trump and Rubio after being stopped short of the presidential palace by riot police.

Panama activists take to the streets in Panama City to protest US Secretary of State Marco Rubio's diplomatic visit to discuss the Panama Canal and immigration with President Jose Raul Mulino on February 2, 2025. (REUTERS)

Rubio also pressed Trump’s top focus — curbing illegal immigration — telling Panama’s president that it was important to collaborate on the work and thanked him for taking back migrants. Rubio’s trip, however, comes as a US foreign aid funding freeze and stop-work orders have shut down US-funded programs targeting illegal migration and crime in Central American countries.
In a Wall Street Journal opinion piece on Friday, Rubio said mass migration, drugs and hostile policies pursued by Cuba, Nicaragua and Venezuela have wreaked havoc, and port facilities at either end of the canal are run by a China-based company, leaving the waterway vulnerable to pressure from the Beijing government.
“The president’s been pretty clear he wants to administer the canal again,” Rubio said Thursday. “Obviously, the Panamanians are not big fans of that idea. That message has been brought very clear.”
Despite Mulino’s rejection of any negotiation over ownership, some believe Panama may be open to a compromise under which canal operations on both sides are taken away from the Hong Kong-based Hutchison Ports company, which was given a 25-year no-bid extension to run them. An audit into the suitability of that extension is already underway and could lead to a rebidding process.
What is unclear is whether Trump would accept the transfer of the concession to an American or European company as meeting his demands, which appear to cover more than just operations.
Rubio’s trip, which will also take him to El Salvador, Costa Rica, Guatemala and the Dominican Republic, comes amid a freeze in US foreign assistance. The State Department said Sunday that Rubio had approved waivers for certain critical programs in countries he is visiting but details of those were not immediately available.


Elon Musk brands USAID as ‘criminal organization’ in growing row

Elon Musk brands USAID as ‘criminal organization’ in growing row
Updated 03 February 2025
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Elon Musk brands USAID as ‘criminal organization’ in growing row

Elon Musk brands USAID as ‘criminal organization’ in growing row
  • More USAID officials removed from posts as Trump’s team moves to abolish the agency’s independence
  • Trump has ordered a freeze on almost all US foreign aid oending a review of its spending to ensure money is distributed in line with his “America First” foreign policy

WASHINGTON: US billionaire Elon Musk attacked the US Agency for International Development on Sunday, calling it a “criminal organization” after President Donald Trump moved to freeze the bulk of Washington’s foreign assistance for three months.

USAID, an independent agency established by an act of Congress, manages a budget of $42.8 billion meant for humanitarian relief and development assistance around the world.

But it is one of the targets of the so-called Department of Government Efficiency (DOGE) headed by Musk, whom Trump has tasked with cutting the government workforce and slashing what the Republican calls waste and unnecessary spending.

Trump ordered a freeze on almost all US foreign aid, saying his administration will review spending to ensure money is distributed in line with his “America First” foreign policy.

The Trump administration has since issued waivers for food and other humanitarian aid. But aid workers say uncertainty reigns — and that the impact is already being felt by some of the world’s most vulnerable.

USAID is a criminal organization,“ Musk wrote on his X platform, replying to a video alleging USAID involvement in ”rogue CIA work“ and ”internet censorship.“

In a subsequent post, Musk doubled down and, without giving evidence, asked his 215 million X followers, ”Did you know that USAID, using YOUR tax dollars, funded bioweapon research, including Covid-19, that killed millions of people?“

He did not elaborate on the allegations, which officials in the previous administration linked to a Russian disinformation campaign.

Mayhem

Two top USAID security officials were reportedly removed during the weekend after they tried to stop DOGE representatives from gaining access to restricted parts of the building, three sources said on Sunday.

The action added to the dozens of staff at USAID being removed from their positions, as Trump’s team moves to abolish the agency’s independence and possibly bring it under the control of the State Department.

USAID’s account on X had been disabled, and the agency’s website was still offline.

Nearly 30 career staff in the agency’s Legislative and Public Affairs bureau lost access overnight to their emails, at least five sources said, bringing the total number of senior USAID career staff who have been put on leave over the past week close to 100.

“DOGE did access the building yesterday,” a senior Senate Democratic aide said, requesting anonymity to discuss the incident. USAID security officers tried to turn away DOGE personnel without security clearances.

“They (security personnel) were threatened with action by the federal Marshals Service,” the aide said. Following the incident, the director of USAID security John Voorhees and his deputy were removed from their positions and put on leave, sources said.

Members of the group from DOGE were allowed to access several secure spaces, including the office of security and the agency’s executive secretariat.

There was no record of what information DOGE officials were able to obtain in those areas, but the offices they accessed included classified files and personal information about Americans who work at USAID, the sources said.

Katie Miller, a DOGE spokesperson, said on social media platform X that no classified material was accessed without proper security clearances.

Matt Hopson, who was appointed as chief of staff by the Trump administration, has resigned, five sources familiar with the matter said. A congressional source said his resignation followed the incident with DOGE officials. USAID did not respond to a request about Hopson.

Legal battle looms

Congressional Democrats said the changes appeared to violate US laws establishing USAID and funding it as a separate agency. Two senior Senate Democratic aides said lawmakers and staff had been meeting on Sunday and would meet again on Monday to consider further steps, including legal action.

Senior Democratic members of the Senate Foreign Relations Committee including its chair Jeanne Shaheen on Sunday sent a letter to US Secretary of State Marco Rubio seeking an explanation over the incident. Shaheen said that she was working to gather Democrats and Republicans to ask for answers.

The global freeze on most of US foreign aid is already sending shockwaves around the world. Field hospitals in Thai refugee camps, land mine clearance in war zones, and drugs to treat millions suffering from diseases such as HIV are among the programs at risk of elimination.

US House Foreign Affairs Committee Chair Brian Mast on Sunday said that he would support moving USAID under the State Department and that there needs to be “more command and control.’

Asked on CBS’ “Face the Nation” if congressional approval was needed or whether Trump could act unilaterally, Mast did not answer. The “purging of people throughout the State Department, other agencies” and freezing aid were “all very important and necessary steps to make sure that we secure America,” he said.

The State Department and USAID did not respond to requests for comment.