Full Text | UPI Tax and the Question of Whether India Is Capitulating to the US?

In a recent episode of The Wire Wrap, senior political correspondent Sravasti Dasgupta spoke with GTRI founder Ajay Srivastava and The Wire's founding editor Siddharth Varadarajan about the new UPI tax in India. Is the US to blame? Is India capitulating? And what about the BRICS summit? 

The following is the full text of the discussion, transcribed by Tamanna Kaul, an editorial intern at The Wire.

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Sravasti Dasgupta: Hello and a very warm welcome. You're watching The Wire Wrap. I am Sravasti Dasgupta.

Prime Minister Narendra Modi celebrated his 76th birthday on Thursday September 17. But the large scale of celebrations that we saw across the country with BJP governments and chief ministers going all out to outdo each other made no mention of the challenges and the political setbacks that Narendra Modi is facing in his 12th year. Most importantly, citizens in the country are now worried about the fact that a charge is being imposed on UPI transactions of above rupees 2,000. And apart from that, the US has passed a broad-based legislation which could impose tariffs up to 100% on countries including India, as a part of sanctions for buying Russian oil. So what does all this mean for India? Narendra Modi and his government as well as India's ties with the US? In the backdrop of the BRICS summit that was held just last week. 

To discuss all this, I'm being joined by Siddharth Varadarajan. He's the founding editor at The Wire as well as Ajay Srivastava. He's the founder of the Global Trade Research Initiative. Thank you so much to the two of you for joining us. Let's get started with the topic, I think, which viewers are most interested in knowing is how the UPI transactions are really going to play out in the coming days? 

The government, of course ,has said that the charge on transactions above Rs 2,000 is not going to be passed on to customers or consumers. But I want to ask you about what Union commerce minister Piyush Goel has said that the charges being imposed on the UPI were “important for structural reasons and improving public infrastructure.” It's not really clear what this public infrastructure really means? But NITI Aayog's vice chairman Ashok Kumar Lahiri has defended this charge in a personal capacity asking, “Who will pay this ?”

So, I want to ask you if you could explain to our viewers in simple terms why the government is seeking to bring this charge and are its reasons justified?

Ajay Srivastava : So, the government says that charges are needed to improve the infrastructure to pay for the server cost and to pay for other costs. How much is the annual expenditure? That figure is not out but somewhere it's mentioned about Rs 2500 crore, somewhere Rs 4,000 crore. Suppose, we take the highest figure of Rs 4,000 crore. Can't the government pay this? 

Now let's understand whether the government can pay for this or not. So, today our fertilizer subsidy for FY26 was 1.7 lakh crores. Our food subsidy exceeded Rs 2 lakh crore. So Rs 2,400 or 4,000 crore is a pittance. The government can very well pay for it. Suppose, government doesn't want to pay for it. Then, also ,there is no logic for charges, from the consumers, from the merchants not because they should not be charged but because there are other ways. So, I say the Rs 4,000 crore government can very well afford to pay, it's giving much larger subsidies. But if it doesn't want to pay, then see who are the firms, who are doing maximum transactions on this. So, 88% of the transactions are done by two US firms-PhonePe and Google pay.

 PhonePe has about 49% share in the transactions and Google Pay slightly less total is 88- 89%. So, they are the dominant users and they gain a lot from the UPI. They get the daily transactional level data of 55 crores of Indian consumers. They can use that database to sell them secondary services like- insurance, loan services. 

They can use this data for developing AI tools and sell it at billions of dollars. But the government could have done, if either, first thing the government should have paid itself, it's a pittance. Second, if the government did not want to pay, they should have charged say $100 million from each of these two companies. So, not paying the government is not paying itself. The government is charging these two companies and not charging these two companies and instead complicating the free UPI structure will have major problems in the economy, as I see it in the future.

Sravasti Dasgupta : And because you mentioned the fact that two American-owned companies basically own the majority of the market share of the UPI. I want to ask you about this, the opposition is focusing on this and saying leader of opposition Rahul Gandhi has said that, “Modi is once again prostrating before the Donald Trump government” in a sense because while NCPI is state-owned, Google pay and PhonePe are American companies and the argument is that the Modi government is making Indians pay more to appease the US government. How do you see these claims? Is there any truth to it? 

Siddharth Varadarajan: I want to step back and ask a fundamental question before I come to this, which is that the government when it imposed demonetization back in 2016, one of the stated goals was to “reduce the amount of cash in circulation” and to have digital payments etc. I think that was bogus in the sense that the government didn't really have a clear plan or thinking that was after the decision was taken kind of a justification. But the fact is that you've said this on the record that you “want to move people to digital payments”. UPI has generated that, there's still a hell of a lot of cash currency notes in circulation but UPI transactions you see them now for, you know across a wide range of activities. It has, I think the improved ease of business for small traders, vendors, people who don't have to run around looking for, the other day, I caught a train from Delhi to Allahabad and wanted to buy a bottle of water on the platform at the last minute and you know Rs 14, so instead of scrambling for change, UPI.

 You know it's wonderful right, this kind of ease of transaction, ease of business. You're undermining this by introducing an element of doubt. Yes, they say that levies will not be imposed on transactions below a certain level. But, I can already see at the level of the public; a certain sense of gloom and doom that you know UPI, we're going to have to go back to cash. So , there is a feeling that maybe UPI is not the way to go. So you've introduced an element of doubt. You've undermined what is a genuinely positive achievement or accomplishment of the last decade, something that the whole world is looking to you to replicate instead of building on that core strength, finding ways to pay for this rationally as Ajay has said, “either subsidize it, charge the American firms”. I would say, “Go one step further, instead of charging actually why don't you push Indian owned providers so that if you use BHIM, if you use some Indian app, you get a you know 0.1% rebate.” There are various ways of incentivizing people to move away from these American companies etc. But, what the Modi government is doing and this comes to the timing now. 

So you have India-US trade negotiations, you have the US threatening India with all kinds of countermeasures because of Russian trade, Iran trade etc. And you have the Modi government rushing over to appease it. There is no doubt in my mind that the timing of this decision is linked to American pressure. Just last year, the government issued a press release saying “these are all false rumors. We're not, there's no plan to impose user fees on UPI ” and now you've done it. 

What explains the U-turn other than the fact that the very public American demand because they are worried about the competitiveness of Mastercard, the whole American global payment system which they claim is “being undermined by India's free UPI”. So, instead of building on a core strength, instead of saying okay, fine, here we have a kind of basic financial architecture that the world is looking at, how do we replicate this? How do we ensure that more and more countries adopt this kind of thing? So you escape from the clutches of Mastercard and you know dollar payments and an American dominated financial system which is what you know, you're, that's the stated goal of the country. That's you know that's why you're part of BRICS ,that's why you're part of, you call yourself, Vishwaguru leader of the global south. 

Are you just capitulating by doing something that's going to undermine and hurt the Indian economy and I think the government really needs to offer an explanation about why they are doing this. And be honest and upfront with the wider public because what they're doing so far, is very hard to see any kind of a justification in the going by the stated explanations.

Sravasti Dasgupta: Because you mentioned the fact that the government had said just last year that “no charge will be imposed on UPI transactions”, in fact this statement was made in June 2025 just to tell our viewers. And when the legislation was brought to parliament in the monsoon session, there was no discussion. But Nirmala Sitharaman said that “this will not be passed on to the consumer”. But we are seeing an impact already in terms of, you know, fuel stations saying that there is a chance that we will have to move back to cash transactions for transactions that go over Rs 2,000. But a fundamental question that arises is that how is the government going to make the distinction that here is a trader who's earning more than Rs 1 lakh a month and therefore that person needs to be charged or how is the nuts and bolts of this really going to move forward because now we have a situation which the government itself was priding till last week that the even the smallest business owner or worker on the street of street vendor is using a UPI machine and Rs 2,000 transaction constitute the bulk of the transactions of the worker. So, how is this going to really work out? 

Ajay Srivastava : So first let's understand how this Rs 2,000 mark will work. Now I'm going to a shop and I'm buying two shirts for Rs 500 each, Rs 1,000, so, no MDR (Merchant Discount Rate) charges on the merchant. It's less than Rs 2,000.

 I bought six shirts for Rs 3,000. So it's more than Rs 2,000. So MDR charges have to be paid by the merchant on this. The merchant has to recover the shirt prices. So he has to fix a higher price for the shirt. When he fixes the price of the shirt, it has to be on all shirts. I am buying one shirt, I'm buying six shirts. The way the markets work, he has to increase the price of a shirt. If I'm buying, it's not that if I'm buying six shirts, I have to pay more. I have to buy more for each shirt. If I extend the shirt example to the grocery store, I am buying groceries worth Rs 3,000. So for every single item I'm buying a small biscuit packet of Rs 10, their prices also will increase. So I say this Rs 2,000 limit will not work in the market.

That's not how the markets work. There will be an overall price rise in all the items. That's how it will work, number one.

 Number two, your question was how it will be decided who qualifies as the merchant here. Now, the NPCI (National Payment Corporations of India) FAQs, they say that the algorithm will be monitoring for continuous three months, if some shopkeeper, some account has more transactions, I mean exceeding Rs 1 lakh continuous, three months they will switch it to the merchant category and this charge will be applying. So it will be continuous monitoring of MDR who will be monitoring this, it's not clear ,maybe these American companies will be monitoring us. So, this is how it is going to happen. 

Sravasti Dasgupta: This brings me to the other part of this, is the question of how this will really impact India's ties with the US because of the US Senate passing this broad-based legislation which could impose up to 100% tariffs on countries including India, in the last year we have seen the range of tariffs really going from 10% to now we are staring at a possible 100%. How do you see this whole trajectory and how do you see this impacting India US ties?

Siddharth Varadarajan: I think when Trump came to power and began aggressively using tariff hikes, the threat of tariff hikes as a way of bullying countries and imposing his way, India should have taken a firmer stand from day one. The Chinese response was to impose retaliatory tariffs. Brazil talked tough, whichever country spoke tough and threatened to hurt American interests, the Americans have you know found a way to climb down or found a way to be less aggressive. Mr. Modi capitulated from day one and the result of that capitulation is that the pressure has simply been ratcheted up. You stopped buying Venezuelan oil when they said to stop. Now, when he says you buy Venezuelan oil, you go and buy Venezuelan oil. You stopped buying Iranian oil when he said, you stopped buying Russian oil at a certain point then resumed when he said go ahead, now you're buying it again and the Americans are threatening you with this new law that's been passed which Trump can choose to wave or not wave and this is obviously going to be a bargaining chip that Trump is going to hold out in all his conversations with Mr. Modi and I should add this is only one of several bargaining chips that this government has willfully handed over to Mr. Trump and placed in his hand. So you know at one level it doesn't surprise me that this is the way Trump is behaving because he knows that you're dealing with a government that bends in the face of pressure.

So we don't know what eventual outcome is going to emerge. What India, we saw the first statement of the MEA which was, I would say it took note it said “we're studying the implications” it kind of stopped short of a proper condemnation of it and more significantly because this was on the cards right. This measure, this legislative measure, has been in the pipeline for the last two months. What surprises me and I know people come to this when we talk about BRICS is India's failure to actually harness its global alliances and partnerships in such a way that you make a more forceful collective stand against this kind of pressure. 

So you know frankly, we now have a weapon, another weapon in the hands of Mr. Trump and he's going to use that, probably you will see Mr. Modi making some concessions trying to hold back on others because you know he's running a complex political economy right, he is also appeasing domestic corporates who have their own agenda some of which jives well and they've made their peace with America in other cases there may be areas where there is competition and they don't want to concede too much of ground. So, this is a balance that Mr. Modi will have to strike between appeasing for, to use, just very sort of short hand, for instead of you know appeasing Adani and appeasing Trump.

 Sometimes it'll be easy to appease both at the same time. At other times it may not be and so this is a difficulty that the trade negotiations are going to take place. What is clear is that the interest of the average Indian whether farmer, consumer, this is really quite secondary except to the extent to which Mr. Modi feels that in an election season “I might hurt my prospects by you know prostrating too much” but essentially he has laid the grounds for capitulation on different fronts.

Sravasti Dasgupta : And how do you see the impact of these tariffs on the economy in the sense that we have seen just in August, retail inflation hit an 8-month high and there are concerns about how the Modi government said that “they had handled the West Asia crisis really well”. The GDP figures last month, they made a big celebration of it of 7.8%. But do you see the prospect of looming tariffs impacting the economy? 

Ajay Srivastava : So, it depends on how much tariffs we expect. My sense is that the US may be threatening these tariffs. They may not impose 100% tariffs. They may say that we'll be imposing say 25% tariffs or 20% tariffs. And why do they say this? They say this, so that you can sign a trade agreement with them. If you go back to February 6, you know, India and US during the trade negotiation, they signed a joint statement which says the US will be reducing its reciprocal tariffs from 25% to 18%. India will be doing 1, 2, 3, 4, and 5 things. Now, on the US side of the promise 25% to 18%, it was lost in two months' time, when the US Supreme Court held the reciprocal tariffs invalid. So now, the US has nothing to offer to India. They know what India is going to offer to them. They are asking for more and more. They have nothing to offer. They were searching for something to offer. 

So ,this Russian tariff could be one of those things. They'll say, “ I can impose 100% but I'll impose 18% only or 20% only. It's a big favor to you. In return you sign the trade agreement.” That is a possibility. I don't have information about this, but this is my hypothesis that they may use this for this purpose. 

Sravasti Dasgupta : And of course, all this has taken place just days after the BRICS summit was held in Delhi. And I'm sure viewers have also seen images of how Modi accompanied by Russian president Vladimir Putin as well as Chinese President Xi Jinping stood together and were photographed hand in hand as well. But beyond the conversations that a lot of you might have seen on social media which focused on the food menu or whether a certain type of food was being imposed on foreign delegates, the question that has been less focused on is that what were the takeaways from this summit really there was a lot of conversation about consensus has been reached over the New Delhi declaration but again the government itself did not focus too much on this and again it was a back and forth between the opposition and the government on the food and the media kits and all of that. But if you could say what were the takeaways from the summit for you? 

Siddharth Varadarajan: Look, can I just say that the focus on food, right? The focus was, I think, introduced into the debate by the government itself, right? Because you know, frankly for the government, the whole summit, the way it was organized, the way in which photo ops are created, the way in which you know the government made its statements or got Godi media to make them. For them, this is purely an optics-driven event. The substance really didn't matter. They were not particularly bothered about it. In fact, I think the substance was something that they were perhaps even wary of because to come back to the Modi-Trump relationship, Modi is of course, India is part of BRICS. India hosted BRICS and India is using the BRICS sort of format as a means of telling the Americans, look India has other options and so on. But Modi is also wary of going too far. So, he knows that Trump is very wary of what BRICS is doing etc. So, the promise to the Americans also that Mr. Modi implicitly makes, is that “look we are in BRICS but we're going to make sure that this BRICS arrangement doesn't work against you.” So it it was helpful for Mr. Modi to have the BRICS summit in the public eye in India, focus on irrelevant things like you know “Oh we've served vegetarian cuisine from all over India and world leaders to kind of create this hype without people actually looking at the substance” and you know I don't fault the opposition for saying that look “ You know you should have a more varied menu” but it is important to look at the substance and contents of the summit and I think there if you read the Delhi declaration , you come away with a sense of acute boredom, there's no doubt I mean a lot of it is boilerplate language. 

 I kind of did a rough estimate. Something like one third of the contents are cut and pasted from the Rio declaration. So, it's very similar to what was said earlier. You look at the paragraph which took the greatest time for them to negotiate, which is the paragraph on West Asia. So, one of the prices you pay for getting compromised language in a difficult diplomatic situation is that the language ends up saying nothing. So, you have paragraphs in this case on West Asia or on other related issues where you know why a certain topic is highlighted but the drafters have gone so carefully to dilute the language that nobody, even the person that you are trying to draw their attention to is not bothered. So you can have a statement on Israel and Gaza but it's put in such a way that even Israel wouldn't mind. So, I think a lot of the elements of the, so the political elements of this declaration are framed in that way. I wouldn't really accord too much of value to it and I wouldn't blame India alone.

 Iran and UAE are at loggerheads. I would say even the Chinese would like to use BRICS again to signal to Washington particularly, on the eve of, she's going to be meeting Trump soon in a couple of months time. So the Chinese are also telling the Americans that “look we are masters of our own universe” and you know Xi was here for the BRICS summit, went to Egypt, traveling around. He was telling the Americans that “You know whatever you may be trying to do turning insular turning the whole world against you, China has a world full of friends” So, doing that but also doesn't want to turn you know to create a send an explicit message to the Americans that “look we are building BRICS as a weapon against you.” 

Chinese are clever and smart in not wanting to do that. So that also accounts for some some of the anodyne language where the statement is important is that it registers the collective opposition to some of the unilateral measures that the US has imposed but it doesn't go far enough, it doesn't, you know for example- a simple thing couldn't they have said as an organization that “We will not allow the imposition of secondary sanctions” For example- the Americans say anybody who trades with Iran will, so you know, it's okay, it's one thing for the Americans to say “American companies are not not allowed to trade with Iran”.

 Who is America to say, “An Indian company or a Chinese company can't trade with Iran”, right so that's the concept of secondary sanction, it has no place in international law it was important for BRICS as a block to say “Look we are going to take measures, we're going to take counter measures”.

The Europeans have a whole system of taking counter measures for, in the case of secondary sanctions it would have been good if BRICS had done that, something more effective, you know, India had already ruled out any further talk on having a common BRICS currency. I do feel BRICS currency is very far, it's a far-fetched concept at this stage but finding ways to reduce your dependence on the dollars is a good thing. There's lip service paid in the declaration but nothing very concrete. So ,I think these are elements which ought to have been built on which were not. And I think in large part because the host country is not sure what it wants to do with BRICS. It wants to use it to tell the Americans that “Look don't push us too

far”. But at the same time, it doesn't want to annoy the Americans to the point where Trump then delivers on some of his threats. And this explains, I think, the Indian eagerness to reduce BRICS into a kind of heavily optic-driven summit rather than something of substance.

Sravasti Dasgupta : How did you see the declaration? And I know you've written a piece on how there's not much being made of the declaration in terms of the unnamed aggressors in it. But a question that a lot of people in India are also saying because the BJP has made a quite, a bit of a celebration of the fact that the declaration has condemned Pakistan even though it has not done so. What it has, is that it has condemned terrorism as well as a Pahalgam terror attack last year. How significant is this declaration uh in terms of what the Indian side has achieved in terms of Pakistan and terror? Is there a cause for celebration?

Ajay Srivastava : So, everybody knows that Pakistan was after these terror attacks and we have not named, even Pakistan. So, I think it's merely for optics that we can be happy world may not notice this. See, strong language on political size as Siddharth is saying was not possible because of the diverse nature of the group but I expected that something concrete will be there on the local currency trading side because that's how you can cut the dollar use and it's not for de-dollarisation purposes. It's because, if you trade in local currencies your transaction cost between buyer and seller, it comes down by 2 to 5%. It's good for the countries to go for the local currency trading. 

China has two-three systems like- SIPS, mBridge were ready. India is also almost ready with the project- Nexus. So, I thought something concrete will be announced, promoting use. But I was disappointed that the declaration says, “We note with happiness that something good is happening.”No concrete steps were announced. So that was a bit disappointing on the political side,I think nothing more was possible. 

Siddharth Varadarajan: Can I just add, because I've been talking to my colleague, our co-founding editor M.K.Venu and he's sort of very, he's bullish on the what BRICS is accomplishing at the trade level right and so his view is that, you know, if you look at BRICS as a bottom up kind of phenomenon it is a fact that over the last decade intra BRICS trade has grown by huge leaps and buds. In fact, I was looking at the data and the rate of growth of intra BRICS trade for each of the BRICS countries is a good 4-5% points higher than the rest of the world trade of these countries. So, there has been some deepening which is positive. 

However, if you go back and look at the founding documents, I happen to cover the first summit, the BRICS summit of 2009 in Yekaterinburg in Russia and I was going back looking at my notes and my stories. So the BRICS declaration then was less focused on the bilateral trade or multilateral trade. It was more about using collective, the collective strength of the members. It was BRIC then, there was no South Africa but using the collective strength of these four countries to push for a more equitable world order. 

So, there was talk at the political level, at the level of political economy, trading system, environment, pooling the resources of these four countries in order to push for structural changes, you know, in the sort of world architecture. There's very little of that now and I suppose you know what can you say when Russia, one of the big members of BRICS, has invaded a sovereign country like- Ukraine. When India is still fixated on its relationship with the United States. So, there are very real political reasons why the sort of, BRIC countries have not been able to follow through on their promise. But the big appeal of BRIC and BRICS when South Africa joined was precisely this that these these countries are going to push for whether it's Bretton Woods ,whether it's security council, whether it's other global institutions they're going to push for things, positive change and what better occasion than would there have been than for Delhi, the Delhi climate change.

 I saw a tweet by our Nepali colleague Kanak Mani Dixit expressing disappointment that the declaration didn't even take note of the devastating flood in Nepal. The fact that the flood is a product of climate change for which Nepal cannot be blamed. Right? It's a classic issue for BRICS to have taken up and said that look we need to push on this, especially when the United States has abdicated, when you have a president there who says who doesn't believe that climate change is such a thing, let alone that is an issue that needs to be acted upon. 

So, I would like to have seen so, well you know, yes the bottom-up part is good there is greater trade ,there's greater cohesion at the economic level today than there was say 10 years ago but at the political level, at the sort of super national level, the kind of output that BRICS ought to have been able to deliver, that's missing and it's a pity because India of all countries one would have hoped would be one that would have championed and pushed for that and that's just not happening under Modi. 

Sravasti Dasgupta : The other part of this is, of course, how the Indian side behaved or what has transpired between India and China. A lot of conversation after Xi Jinping did not attend that dinner that Modi hosted. But after that there was a sense that India and China had reached a common ground. China said that India had agreed and the prime minister had reiterated one China policy, a position that India had not taken earlier. But after that there was again a sense of not really clear what really had happened, when India rejected the operationalization of the Pakistan-China boundary joint commission. How do you see Xi Jinping's visit to India after 6 years? A lot was made about that in the media. Was it successful to your mind? 

Ajay Srivastava : I am not sure. We have a roaring trade relationship. I mean driven by mostly imports and we have political problem but trade was always traveling in the independent orbit, then even we had political boundary problems where war trade was always growing, so trade has some problems and the I think both the countries, India also wants to increase it exports and we we feel that China imposes many of the non-tariff barriers on Indian imports or Indian exports so I think Indian side has a long list of trade grievances against China. These must have been discussed. But what precisely has happened. We have no idea. We just saw the headlines that critical minerals, all these things have been discussed. But no firm statement is there, what precisely happened? We can only guess.

 Sravasti Dasgupta : How do you see the fact that Xi Jinping did not eventually attend that dinner? A lot of speculation on why that really happened and of course India rejecting the boundary joint commission just days after. How do you see the events that transpired? 

Siddharth Varadarajan: No, I think this visit, it was an important visit because India-China relations have been in the doldrums for the last 6 years, perhaps even longer but in the last 6 years because of the Galwan, the Chinese intrusions in Ladakh have kind of created a special urgency around you know this relationship. So, resetting in some way, although there are questions to be asked about what's happening in Arunachal, I know that the government has denied at various levels that there are any Chinese intrusions but the unsettled nature of the boundary is a perennial source of tension. The fact that Modi and Xi have met , the fact that the special representatives process has again been kickstarted. These are positives. I think that it shows neither side wants the boundary dispute or you know differing interpretations about where the patrolling limits are etc. To kind of cast a shadow over the wider relationship. So, to that extent, this is positive.

 The underlying issues which have to do with China's help to Pakistan and that includes the, you know, of course operation Sindoor. But, you know the session of Indian territory that is in Pakistani control to the Chinese. Hence, the whole Indian statement on the China-Pakistan boundary, you know these are all niggling questions that have not gone away and they will flare up from time to time. So, that shouldn't surprise us. The imbalance in trade if you go back and look at India-China statements for the last two decades, this is an issue that the Indian side has flagged consistently. No government on this side has succeeded so far in ensuring that the imbalance that you have in bilateral trade comes to an end, let alone even gets mitigated. 

So,you know I think these are all going to be difficult to sort out at least in the short term. What Modi wanted I think was some assurance that the boundary situation will not be allowed to flare up. I don't know whether he's got that or not and what concessions he has had to make in order to get that. So, I would say the jury's out. I think it's positive that the two large sort of neighbors are talking to each other at this level. It's never a good situation when leaders don't meet, they don't talk or when you have sort of a non-dialogue situation. And I would say this is also true for India-Pakistan by the way that reset is also long overdue. So I think, it's good that these two sides are, but it's not going to be, as if it's a panacea all our outstanding problems remain and you know it's something that's going to that's bound to flare up particularly if we don't manage other elements of Indian policy particularly the India-PAK one. So, if you allow India-PAK to fester and deteriorate, China will again emerge as a problem in your sights. 

Sravasti Dasgupta : And the other last part about this, is of course the fact that Modi is pushing an Atmanirbhar Bharat in India in terms of not using Chinese products some time ago. He said that,“Chinese products should not be used” and yet the meeting between Xi and Modi is also important in terms of what the trade objectives can achieve. So to that end, how do you see this meeting, the summit that took place and the dissonance really in how Modi asks Indians not to buy Chinese products but Indian imports from China are always very high?

Ajay Srivastava : Mr. Modi is asking Indians not to buy Chinese products because trade deficit is very high. It exceeded $10 billion. But at the same time about more than 70% of our imports from China, they're intermediate products. They are like APIs which are inputs for making pharmaceuticals. They are like electronic components which are making our smartphones and TVs and refrigerators. Those components are there. There are machinery, precision machinery. They all come from China. Most of the laptops come from China. So, we are dependent on China for plenty of needed goods, needed in India. 

And since they're intermediate they go into factories of India they value, add and produce final products. So,they basically feed to the factories of India. Very little import from China goes to the consumers directly. So, consumers even if they cut the purchases like – Diwali lights and all those things – it's a very small part of the imports. Major imports are industrial intermediate goods which come from China and Make India should focus on making those intermediate products like APIs. We were making more APIs than China in the late 80s but no more. We are totally dependent on China. Similarly, there are more than 100 products we have critically dependent on China. So while we cry about increasing the trade deficit with China, China gives us a hint by stopping some supply of something like automagnet, few months back or stopping visa, all these things to come over these things, we have to truly make in India that means deep manufacturing not the superficial valuation. We have to work very earnestly on that.

Sravasti Dasgupta: And finally before we wrap up, I want to ask you that yesterday of course was Modi's birthday 76th birthday celebrations across the nation diyas were lit and it was a 14 module program which we'll see for the next one month as the BJP is celebrating 25 years of Modi in public life, so the grandeur that we saw saw yesterday and the scale of celebrations. How do you see that? Is it an attempt by the government to fix its perception problem with all these issues that we have discussed over the last 30 minutes to kind of pepper over that and show the country that actually everything's fine?

Siddharth Varadarajan: See, the problem with cult personality is that, the personality who is being glorified and all the chala-chapatis who are busy glorifying him are so disconnected from reality that they actually believe that more and more glorification of this kind is going to help politically. The opposite is true.

You know the details that are emerging of wasteful expenditure, coercion, schools being told you better celebrate. I mean, who forces somebody to celebrate their birthday? Come on and you yourself wrote in your story how Mr. Modi himself made a fetish back in 2013, 2014 of not celebrating his birthday. Right? So there's no explanation as to how you've gone within the space of 10- 11 years from that kind of a position to one where 40,000 diyas , 45,000 litre of oil are wasted to light diyas in your honor. I mean what nonsense is this right? So, I think that people of India will have contempt for this. They are not going to be impressed. But the fact is that you know the cult takes on a life of its own. So Modi ji and you know the great glory to the leader, you've seen some of the official handles of the BJP Uttar Pradesh referring to him as the “Priest king”. So, you know they've taken this exaltation of his personality to such a level that there is no reason or political common sense anymore and I think that ultimately the BJP and Mr. Modi will end up paying a price that they don't want to pay because the public are not fools. They see through this. 

Sravasti Dasgupta: All right, on that note, thank you so much to the two of you for joining us and to our viewers for watching.

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