US tariffs are testing Modi’s fiscal frugality

SOMETIME in the coming months, the impact of US tariffs will begin to be felt in India – and it will not be pretty.

Jobs will be lost. Labour-intensive sectors such as leather, textiles and jewellery that face 50 per cent duties are concentrated in politically sensitive areas, such as the giant bellwether of Uttar Pradesh or Prime Minister Narendra Modi’s own home state of Gujarat. These are sectors that the government will want to protect.

But it will not want to spend a lot of money doing so. One of the hallmarks of Modi’s administration has been fiscal sobriety. He tends to avoid spending liberally, even in emergencies, instead using his ample political capital to talk up whatever largesse he does hand out.