Devesh Kapur & I are pleased that, after 4-5 years of researching & writing & decades of reflection, our @HarperCollinsIN book on 75 years of Indian development (A SIXTH OF HUMANITY) will be out in October Announcement: harpercollins.co.in/blog/ann… Pre-order: amazon.in/dp/9369891099?ref=…

On the occasion of @ChessbaseIndia just winning the best content creator (amongst streamers) awarded by @FIDE_chess, Re-upping my piece on @sagarchess1 written in 2022: theindiaforum.in/forum/india…

India produced 11% of the world’s tomatoes in 2022–24, but accounted for just 0.2% of processed tomato exports by volume. Across many crops, agricultural abundance has not translated into processing strength. What needs to change? 1/8

My review in @TheIndiaForum of @DesirajuKeshav’s excellent biography of the incomparable, celestial-voiced Carnatic musician MS Subbulakshmi: theindiaforum.in/article/lif…

Today, we celebrate the release of our 300th episode of #GrandTamasha. To discuss the latest on policy & politics from India--plus what has changed (and what hasn't) since we began the show in 2019--I'm joined by regular guests @dhume & @tanvi_madan piped.video/watch?v=PXSSDRqy…

The Illusion of Booming GST Revenues: Dr. Arvind Subramanian (a) 1 yr ago, govt re-labelled parts of GST (b) That created an optical illusion of booming receipts, while hiding a sharp decline in revenue performance (c) “Observers have been misled” A Masterclass in Magic Tricks In an illuminating piece titled “GST Re-labelling Misleads and Obscures,” former CEA Dr. Arvind Subramanian along with Abhishek Anand and Josh Felman, describe how “observers of revenue performance” (analysts, journalists, and general public) “have been misled.” Starting in Sept 2025, the govt of India changed the labels on certain parts of the GST system. According to the authors, this “re-labelling” has led to two consequences: (1) It creates an illusion of a booming growth in tax revenues, while hiding a sharp decline in actual revenue performance. (2) It deprives state govts of about ₹15,000 to ₹20,000 crores every year from their fair share of the GST revenues. How the Illusion Works Imagine you have a ₹100 note in your left pocket and a ₹100 note in your right pocket. Now you move both notes into one pocket. Has your wealth doubled? a. Before Sept 2025, the GST system had two main buckets: Regular GST and Compensation Cess (an extra tax on luxury or sin goods like SUVs & tobacco.) b. Starting Sept 2025, the govt lowered GST rates on most items, and simplified the GST structure. The “Compensation Cess” was abolished in phases, while the items under that Cess were moved up from 28% GST rate to 40% GST. c. Now in place of the abolished Cess, the govt introduced a new tax on these items called the Additional Excise Duty (AED). d. In effect, the GST labels were changed. The old system was: “GST + large Cess”. The new system became: “Much bigger GST + smaller AED”. Headline Numbers vs. Reality a. The govt does not explicitly publish the data for the new Additional Excise Duty (AED). By obscuring this data, it becomes very difficult to compare the old GST numbers with the new ones. b. The so-called massive surge in “GST” collections has occurred because a major portion of the old Compensation Cess is now labeled as “GST.” So, the GST bucket becomes fatter. c. This moving money from one pocket to the other has been touted as a “Laffer Curve” phenomenon (“miraculous achievement”) where GST rates have been lowered, and yet tax collections have increased. d. Headline vs. Actual GST Revenue Growth Headline GST Growth FY25: 9.4% FY26: 7.5% Q1FY27: 10.5% (Booming) Actual GST Growth: Reality FY25: 9.4% FY26: 5.8% Q1FY27: 4.9% (Declining) IMPLICATIONS: 1. When you count ALL the taxes collected across all labels (GST + AED + old Cess), the total GST revenue growth in Q1 did not surge to 10.5%. It actually declined to 4.9%. 2. GST changes in Sept 2025 may have simplified and improved the system, but they have led to revenue losses. The GDP Reality Check To understand the economic conditions through the lens of tax revenue collections, you must look at net tax revenue (gross minus refunds), and then compare it against the GDP. Since FY24, net GST revenues as a share of GDP have been steadily declining. Net GST Revenues FY24: 6.0% of GDP FY25: 5.9% of GDP FY26: 5.7% of GDP Before the GST system was introduced in the country, the pre-GST average collection of indirect taxes was 6.2% of GDP. So, in terms of receiving revenue as a share of GDP, the govt is doing much worse in FY26 @ 5.7%. The States are Hurting a. When GST was designed, the Finance Commission’s formula meant that if ever the Compensation Cess was folded into the “Regular GST” structure, the states would receive 40% of the Central GST indirectly. b. Reality: The Centre has completely changed the game under the new arrangements. The newly created Additional Excise Duty (AED) allows the Centre to keep a much larger slice. c. The Centre has introduced a new tobacco machinery-related tax (“Health Security and National Security Cess”.) This is not shared at all with the states. The authors argue this seems to “legally” violate the GST law (“de jure”). d. The Financial Hit: The authors estimate the entire act of re-labelling of taxes is depriving the state govts of ₹15,000 to ₹20,000 cr annually. Dr. Subramanian’s full article is available as a repost on his X timeline @arvindsubraman ENDQUOTE “Everything the State says is a lie.” – Friedrich Nietzsche, Thus Spoke Zarathustra (1883) @arabicatrader

Since September 2025, several taxes have been re-labelled under the GST umbrella. This has made headline GST collections look stronger, even though the underlying revenue performance has been much weaker. Apples to apples comparison shows: • Headline GST growth in Q1 FY27 was 10.5%, but actual GST growth was only 4.9% after accounting for revenues that have merely been reclassified.

The print version of our piece

.@IndianExpress piece by @abhishekecon @FelmanJosh & me on latest GDP numbers and the raging controversy Link: indianexpress.com/article/op… I will discuss this with @sardesairajdeep at 930 PM IST (1130 EST) Four take-aways Thread 1/

The full discussion of the GDP estimates and controversy with @sardesairajdeep: piped.video/wtUxx222Aoc?is=B3sw… It is based on this @IndianExpress piece with @abhishekecon and @FelmanJosh: indianexpress.com/article/op…

Important thread

GDP: Dr. Arvind Subramanian Delivers a Body Blow to the Official Narrative (a) Govt has created a fundamental trust deficit (b) GDP numbers are disconnected from reality (c) Why macro-indicators were poor in the past, yet GDP was high? The GDP Challenger Is Here For years, former CEA Dr. Arvind Subramanian has been a powerful voice questioning the credibility of India’s GDP numbers. Having examined India’s growth data under the microscope for over a decade, Dr. Subramanian’s commentaries on the subject carry unusual weight. Today he enters the ongoing GDP debate along with Abhishek Anand and Josh Felman. EXCERPTS: Govt is Correct on Face Value The Ministry of Statistics (MoSPI)’s argument is correct on the technicalities. GDP numbers of Q1FY27 (new base, new methodology) cannot be compared to Q1FY26 (old base, old methodology). But then why are people doubtful? Govt Faces Trust Deficit a. Govt’s handling of data has created a fundamental trust deficit. During the demonetisation shock (86% cash withdrawn) in 2016-17, the official data showed GDP has risen to a dizzy level of 8.2%. That was the beginning of distrust. b. Examples: The census has been delayed. The 2017 consumption survey was withdrawn. Covid deaths were significantly understated. Open defecation related claims were exaggerated. c. With this track record, the public has become doubtful about the govt’s claims. The burden of proof has passed on to the govt to demonstrate the integrity of its data. d. Govt has still not explained why Q1FY26 GDP was revised down by 7% (an extraordinary revision compared to historical data.) e. Govt has not released a long back series to explain this revision. Unusually, the govt has not even announced the standard committee to calculate this series. Decoupled from Ground Reality a. During the quarter of 7.8% GDP growth (Q1FY27), April and May 2026 were months of shortages. Fuel was being rationed, travel was subdued, restaurants & other businesses were buying LPG in black, wage & employment had slowed, stock market was sagginng, and currency had crumbled. b. It is hard to understand how the economy could have done so well in the face of the global energy shock. Despite fiscal stimulus and increase in exports, the damage from 32% jump in import bill was far greater. That was the RBI’s view, which had estimated that the economy had slowed in Q1FY27. c. In these circumstances, it would have been impressive if India had merely managed to sustain its previous growth rate. But when the numbers came in, the GDP had accelerated by almost full one percent to 7.8%. d. More Unsolved Puzzles: If the economy was booming, why did nominal net GST revenue grow just 5% (even allowing for GST rate cuts)? Why did import volumes fall? How could mfg deflator be negative when RBI data shows business margins actually improved? e. Govt should release the complete “Sources and Methods” document, which details how GDP is calculated and revised. This document exists, and it has always been released in the past. Let independent economists examine the document and reassure the public about the govt’s data. The Final Question The govt and its supporters argue in favour of Q1 GDP growth of 7.8% citing strong macro-indicators. If these macro-indicators have led to 7.8% GDP growth, how was 7 to 8% GDP growth achieved in the past years with several much weaker macro-indicators (notably, sales, trade, electricity, investment)? You cannot use one measuring tape for today, and another measuring tape for the past to suit your convenience. Data and charts are available in Dr. Subramanian’s published paper @arvindsubraman @arabicatrader

Nuanced take on the GDP brouhaha from @arvindsubraman & colleagues.

Do read this comprehensive take on the latest GDP data.

My discussion with @sardesairajdeep on the GDP numbers and debate coming soon @ 9 pm IST (1130 am EST)