The Supreme Court’s judgment went beyond a mere procedural rebuke by invoking its discretionary powers under Article 142 of the Constitution of India, thereby ensuring the immediate implementation of the stalled bills. These bills included critical legislation on social justice and education reforms. Using the office of the Governor to undermine state governments ruled by the opposition is not only a means to undermine federalism but also a means to coerce state governments into incorporating themselves into the neoliberal project. Consent for this two-pronged offensive is sought to be manufactured through the activation of the third prong involving an attempt to saffronise India. Let’s see how.

Role of Governors in Undermining Federalism

The constitutional office of the Governor, serving at the behest of the Union government (aka “pleasure of the President of India”), was conceived as a means to limit authentic federalism, whereby the Union government sought to indirectly influence the working of state governments.

However, since 2014, this role has been explicitly weaponised to try and subvert opposition-ruled states. The case of Tamil Nadu exemplified this misuse: the Governor withheld assent to many bills for over two years. The Governor of Tamil Nadu has become the ideological fulcrum of Hindutva opposition to the progressive ethos of the state. This progressive ethos is derived from a complex synthesis of the work of Periyar, Ambedkar, and Marx and remains a work in progress.

The Supreme Court’s unprecedented step to invoke Article 142 in the case of Tamil Nadu underscored the severity of the crisis of federalism under the neo-fascist dispensation. By directing the Union government to facilitate presidential assent within 15 days, the Court effectively bypassed the Governor’s office, which it felt had become a “tool of partisan sabotage”. This intervention is reflective of the higher judiciary’s awareness of the structural imbalance in India’s federal framework. Similar patterns of gubernatorial obstruction have emerged in all opposition-ruled states, including deliberately delaying legislative sessions, illegal interference in administrative procedures, and refusing assent to bills passed by the state legislatures. It is arguable that such gubernatorial actions violate the Basic Structure doctrine, which enshrines federalism as a foundational principle of the Constitution of India. These anti-constitutional maneuvers are not isolated procedural violations but part of a deliberate strategy to centralise power by paralysing state legislatures. Thereby, the neo-fascist dispensation undermines the democratic ethos that posits that India’s existence as a constitutional republic derives from unity in diversity and not uniformity.

Attenuation of Federalism along the Neoliberal Trajectory

The practice of federalism was always tenuous, but the explicit transition to a neoliberal trajectory since the 1990s has refortified the anti-federal proclivities of the Union government of India. The proliferation of the neoliberal project under the hegemony of international finance capital has involved ongoing attempts to systematically dismantle the fiscal autonomy of states. Early measures, such as the Reserve Bank of India’s (RBI) restrictive credit policies, pushed states into debt traps, with interest payments consuming a large fraction of non-developmental expenditures by the 2000s. Subsequent Finance Commissions have institutionalised conditionalities, tying debt relief to neoliberal policies like de facto or de jure privatisation of power, water, and other types of infrastructure. Besides, states were forced to cede jurisdiction over many economic activities, which resulted in their deepening fiscal dependency on the Union government of India.

The Goods and Services Tax (GST), implemented in 2017, epitomises this assault on federalism. GST stripped states of their constitutional authority to levy indirect taxes, a critical revenue source. The GST Council, though nominally representative of states, structurally favors the Union government of India, which holds an effective veto on all decisions. This quasi-unitary fiscal regime has had dire consequences. For instance, during the COVID-19 pandemic, states faced severe liquidity crises due to deliberately delayed GST compensation, crippling their ability to fund healthcare and welfare schemes, resulting in millions of (officially unacknowledged) deaths.

Other unilateral decisions made by the Union government of India, such as Free Trade Agreements (FTAs) and demonetisation, further illustrate this attenuation of federalism. FTAs negotiated without state consultation—like those with ASEAN—have devastated Kerala’s plantation economy through import surges. Likewise, demonetisation in 2016 had disproportionately adverse consequences on cash-dependent states. Co-operative banks, which are vital to the economies of Kerala and Maharashtra, were excluded from currency exchange, resulting in the exacerbation of economic distress by the working people. These policies, which the mainstream media presents as episodic initiatives unrelated to any larger project, in fact reflect a broader attempt to undermine federalism, thereby reducing states to passive implementers of the neoliberal agenda.

Judicial interventions since 1991 have, by and large, been in sync with the dictates of the neoliberal project. Consequently, judicial review tends to focus on overt constitutional violations by this or that functionary but does not interrogate the neo-fascist dispensation that enables these violations.

Hindutva as Ideological Driver of Anti-Federalism

The neo-fascist dispensation’s project to irredeemably attenuate Indian federalism, thereby hegemonising the neoliberal project in India, involves the deployment of Hindutva. The latter is deployed to manufacture consent for this hegemony. This deployment is based on two pillars: one, cowardice with respect to metropolitan capital, as evidenced most recently by the servile response to Trump’s tariff war; second, a reinvention of history whereby unscientific claims about the ostensibly unitary origins of Indian civilisation and its alleged redemption after centuries of purported alien rule have hegemonised the public space.

For instance, the neo-fascist dispensation has unleashed an unprecedented wave of saffronisation of education with two objectives. First, the drive for saffronisation of education amounts to an acceptance of the permanence of India’s location at the lower and lower-middle reaches of the technological ladder that pertains to global production networks. Second, the saffronisation of education seeks to manufacture consent for its privatisation, commercialisation, and homogenisation. The use of the National Education Policy to redouble the imposition of Hindi, illegitimately trying to take over state universities, and the insistence on the National Eligibility cum Entrance Test for medical admissions (that disadvantage the working people) are illustrative of this drive for saffronisation.

Likewise, the ongoing efforts to engage in delimitation of electoral constituencies disadvantage states that are outside North India and are completely antithetical to the constitutional prerogative of federalism. The neo-fascist dispensation seeks to cement its hegemony by disparaging federal initiatives that directly challenge this homogenising drive of Hindutva, whereby people’s movements in states like Tamil Nadu (that resist the imposition of Hindi), Kerala (that seeks to craft an alternative to the neoliberal project), and Punjab (that seeks to defend the peasantry and workers against corporate encroachment in agriculture) are framed as “anti-national”.

The neo-fascist dispensation’s deployment of fiscal levers and gubernatorial obstruction to suppress such federal movements reveals a strategic maneuver, under the hegemony of international finance capital, to try and make India secure for the neoliberal project by homogenising the country.

Conclusion: Federalism as Democratic Practice

The Supreme Court’s 2025 Tamil Nadu verdict, though significant, is a corrective to a symptom of the deployment of Governors to undermine opposition-led state governments. It does not engage with the underlying phenomenon of the neo-fascist dispensation’s attempt to extinguish federalism in order to secure the neoliberal project in India under the aegis of international finance capital.

The struggle for federalism is inseparable from the fight for India’s democracy as embodied in the Constitution of India and its practice by the democratic movement. Resisting the neo-fascist dispensation’s offensive against federalism is necessary to prevent the eroding of the pluralism that defines the nation.

To reclaim the constitutional republic, parties in the INDIA Bloc and people’s movements that lead the resistance to the neo-fascist dispensation must evolve democratic alternatives to the neoliberal project and eschew vain attempts to operate under the hegemony of international finance capital through the ideological trajectory of cosmopolitan neoliberalism. As argued previously, neo-fascism and cosmopolitan neoliberalism are two different routes of operating under the aegis of international finance capital. Federalism is a central plank of crafting a democratic alternative to the neo-fascist dispensation’s timidity towards international finance capital.

Shirin Akhter is Associate Professor at Zakir Husain Delhi College, University of Delhi. C Saratchand is Professor, Department of Economics, Satyawati College, University of Delhi. The views are personal.

Courtesy: Newclick

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The Indian government’s response to Trump’s tariff war has been, at best, muted. A recent meeting between the U.S. President and the Indian Prime Minister epitomised this submissiveness. Even as the U.S. government was forcibly deporting Indian nationals; shackled, blindfolded, and transported in military aircraft in a manner starkly violative of human dignity. The Indian government chose denial over protest, publicly insisting that the deportees had not been ill-treated. Further, when Ananda Vikatan, a Tamil-language magazine, published a satirical cartoon critiquing the government’s silence on these humiliations, it was summarily censored under India’s draconian information technology legislation.

Such episodes highlight a broader incapacity to mount even a symbolic defence of Indian sovereignty when affronts originate from hegemonic global powers like the United States. This inability to respond meaningfully to external provocations, whether on trade, diplomacy, or the treatment of Indian citizens, raises important questions about the ideological and structural orientation of the Indian state.

Two interrelated factors underlie this posture of passivity. First, India’s ruling classes and their political apparatus remain deeply beholden to international finance capital, which is largely centred in the United States. Second, this dependency is compounded by a fundamental misreading of contemporary global political economy. These material realities are expressed ideologically through two distinct, yet convergent, wings of India’s neoliberal project: the neo-fascists and the cosmopolitan neoliberals. While the former deploy a pseudo-nationalist rhetoric and the latter a pseudo-internationalist one, both ultimately converge in their reluctance to challenge U.S. imperialist hegemony. Their divergence lies only in the rhetorical justifications they offer for this subservience. These arguments merit closer scrutiny.

One strand of cosmopolitan neoliberal thought argues, somewhat brazenly, that Trump’s tariff war offers India an opportunity to unilaterally reduce its own tariffs. They claim that such a reduction would boost domestic competition and thereby improve economic efficiency. However, this argument is logically inconsistent: if lowering tariffs unconditionally leads to better outcomes, why does the U.S., the world’s most powerful economy, choose to increase them?

Other cosmopolitan neoliberals argue that India is a small open economy while the US is a large open economy, implying that world prices are given as far as the Indian economy is concerned while the US is capable of at least partially influencing world prices. Therefore, it would be unwise for India to engage in retaliation vis-à-vis the the imposition of tariffs by the US. On the face of it, this argument seems somewhat logical and therefore let us examine this further. While it is true that the Indian economy is smaller than the U.S. economy in terms of share of world income, for a number of commodities that India does import and export, the respective share of India’s imports and exports in the total world trade is non-negligible. Therefore, the ability of India to partially determine the pricing of its imports and exports can be an element in its trade policy including tariff retaliation.

Moreover, the very structure of Trump’s tariff war, which involves differential tariffs on different countries, is a tactic designed to try and prevent coordinated opposition to Trump’s trade policy. Therefore, it would be relevant for India to work in multilateral forums such as the BRICS to prepare strong and coordinated responses to Trump’s tariff war. However, whenever there emerges a debate around working in multilateral forums such as BRICS to counter Trump’s tariff force, both cosmopolitan neoliberals as well as the neo-fascists might immediately argue that BRICS is dominated by China and that the interests of China and India diverge. Therefore, joint action against US hegemonic actions such as Trump’s trade war is not possible. However, this is a self-defeating argument and actually amounts to creating non-tariff barriers in the trade between China and India which weakens India’s bargaining power with respect to US imperialist hegemony.

For example, cosmopolitan neoliberals as well as neo-fascists often claim that software semiconductor chips made in China could be hacked by the Chinese government and therefore would be inappropriate for use in the Indian economy.  Let us assume for the sake of argument that this claim is true. Is there any reason to claim, on the contrary, that semiconductor chips that are designed or produced using US technology cannot be or will not be hacked by the US government? After Edward Snowden’s revelations even those working outside governments know the facts about global surveillance by the US government. Under these circumstances, a prudent option available to India would to diversify its chip demand between two or more sources so that no one foreign government can exercise undue leverage in matters of security vis-à-vis India. While this would be the short-run course that would be appropriate in the case of countries like India, over the long run, efforts should be made to develop an indigenous semiconductor industry.

Another common claim by both ideological segments of the Indian neoliberal project is that U.S. tariffs on Chinese goods provide Indian industry with a relative advantage, potentially encouraging multinational corporations to shift production from China to India. However, this argument too is completely disconnected from the concrete situation concerning global production networks. China exercises a leading position in almost all reaches of the technological ladder that pertains to global production networks due to its advantages in infrastructure, skilled labour with respect to wages, domestic demand, the role of the public sector, state support to innovation, and industrial policy (which involves among other things a euthanising of finance capital and the political neutering of enterprise capital). Most of these conditions are incompatible with contemporary Indian political economy and therefore cannot be replicated here without relevant political changes. Therefore, multinational corporations are unlikely to significantly relocate production capacity to India due to Trump’s trade war.

Moreover, any process of industrialisation in any country of the world would require for its continuance some Chinese inputs and/or some access to Chinese markets to be sustainable. Under these circumstances, the question before any country, including India, is not whether to engage or disengage from China, but how best to engage with China. The Economic Survey of 2023-2024 had pointed out that India should explore the option of involving itself in global production networks centered in China. However, progress in this respect has been slow and expectedly subject to counter-pressures from cosmopolitan neoliberals as well as sections of the neo-fascist dispensation in India.

Vietnam offers a valuable lesson in strategic diplomacy. Its ability to maintain productive relationships with multiple great powers, without being beholden to any, demonstrates an autonomous balancing strategy. For India, the path to greater sovereignty lies in rejecting the binary of alignment with either the U.S. or China, and instead adopting a policy framework driven by authentic national interests (which is centred around the working people). In order to understand this proposition, let us examine the actual leverage that foreign countries exercise over India.

The fundamental leverage that U.S. monopoly capital exercises over India is through the hegemony of international finance capital that is centered in the U.S. Since India does not have effective capital controls, this allows U.S. monopoly capital to exercise effective power over Indian policymaking. One exception to this trend was when the Biden administration tried to pressure Indian government to cut relations with Russia. The Indian government could not accede to this US demand because the Chinese-Russian strategic concord that would have emerged may have been directed against India. This strategic concord could not have been counterbalanced by the strategic proximity that may have emerged between India and the USA. But in most other matters, the U.S. monopoly capital has been able to influence, to a very significant extent, the contours of policymaking in India. Consider, for instance the examples of India’s relations with Iran, with Venezuela, on the question of the conflict in Palestine, and so on. The contrast with US attempts to exercise similar leverage over China or Russia is readily evident.

In the absence of effective capital controls, international finance capital, primarily centred in the United States, continues to serve as a conduit through which U.S. monopoly capital exercises considerable influence over Indian economic policymaking. This structural dependence finds its ideological expression in the distinct yet convergent narratives of cosmopolitan neoliberals and the neo-fascist dispensation.

On the one hand, neo-fascists have intensified a differential squeeze on the socially oppressed (such as Indian Muslims) under the guise of cultural nationalism and security. This project is part of a broader attempt to erase what remains of India’s anti-imperialist legacy from the freedom struggle. On the other hand, cosmopolitan neoliberals, while cloaked in liberal internationalism, contribute to the same erasure by sanitising colonial history and glorifying imperialist globalisation. Though their methods differ, both ideological strands ultimately function to sustain the hegemony of metropolitan capital.

At the core of any meaningful anti-imperialist position lies the understanding that broad-based economic progress in the Global South is not possible without directly confronting the hegemony of metropolitan capital. The recent efforts of U.S. monopoly capital and its state apparatus to drive a wedge between China and Russia is a tactic aimed at forestalling the emergence of a multipolar economic order indicating the waning strength of U.S. imperialist dominance. Against this backdrop, restoring policy autonomy for India must begin with the imposition of robust capital controls on international finance. Once this critical step is taken, several policy options become viable to counter the effects of Trump’s tariff war:

One, India must reduce its excessive reliance on the U.S. market for specific commodity exports. While the U.S. may currently offer higher returns for certain export goods, this concentration increases India’s vulnerability to external leverage. A geographically diversified export strategy will enhance India’s bargaining position across all markets. Such a strategic reorientation, especially one that considers long-term national interest is best undertaken through initiatives involving the public sector, which operates with a longer policy horizon than private actors driven by short-term profitability.

Two, India should actively attract greenfield foreign direct investment (FDI), from both the U.S. and China, in carefully selected sectors and regions. These choices must be guided by a coherent industrial policy aimed at enabling India to appropriately ascend the technological ladder of global production networks while not compromising the objective of full employment. Simultaneously, this policy should aim to reduce regional disparities within India by dispersing industrial development beyond existing hubs.

Three, Resist Pressure to Reduce Import Tariffs, Especially in Agriculture and Key Inputs as succumbing to U.S. demands for reducing import tariffs, particularly on agricultural products would further pauperise India’s already vulnerable peasantry and agricultural labour force. A related argument advanced by cosmopolitan neoliberals claims that high-priced inputs supplied by large domestic firms disadvantage micro, small, and medium enterprises (MSMEs), and that reducing import tariffs would level the playing field and boost MSME exports. However, such logic is deeply flawed. Lowering tariffs on critical inputs may indeed reduce costs for MSMEs in the short run, but it is likely to trigger an import surge that undermines domestic production, employment, profits, and investment in import-competing sectors.

In the current global environment, where export prospects are weakening this would have contractionary effects across the economy. Furthermore, once domestic competitors are displaced, foreign suppliers may increase input prices, thereby nullifying any temporary advantage gained by MSMEs. The structural disadvantage faced by Indian MSMEs in relation to monopoly capital cannot be addressed by import liberalisation. Instead, it demands active policy intervention that redistributes resources away from monopoly capital towards MSMEs. This may include public sector production of essential inputs at regulated prices to mitigate cost pressures faced by MSMEs.

Reviving the Anti-Imperialist Legacy

The ideological currents that dominate Indian policy discourse, be they cosmopolitan neoliberals or neo-fascists, seek to suppress the anti-imperialist ethos that once animated India’s freedom movement. The former sanitise colonial history; the latter attack marginalised communities within the country. Both ultimately serve the interests of metropolitan capital. Genuine anti-imperialism today must recognise that sustainable development in the Global South requires breaking free from the grip of metropolitan capital. The growing strategic anxieties of U.S. monopoly capital, exemplified by attempts to isolate China and Russia signal a waning imperialist order. For India, this moment demands bold and thoughtful policy shifts aimed at recovering national sovereignty, economic justice, and strategic autonomy.

Shirin Akhter is Associate Professor at Zakir Husain Delhi College, University of Delhi. C Saratchand is Professor, Department of Economics, Satyawati College, University of Delhi. The views are personal.

Courtesy: Newsclick

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In practice, the first goal prevails. Since taxation of the super-rich is off limits, the confinement of the ratio of fiscal deficit to GDP to the level prescribed by the Fiscal Responsibility and Budget Management Act takes the form of expenditure compression.

This compression of public expenditure takes the following forms: one, cut in nominal budget allocations; two, cut in real budget allocations; three, post facto expenditure cuts whereby actual expenditure is less than revised estimates, which in turn are less than budget estimates; four, misrepresenting budget allocation for corpus accumulation or loan repayment, both amortisation and debt service, as expenditure. 

Using Union Budget 2025-26 data, we demonstrate how this turned out for public education when compared to the Union Budget of 2024-25. 

We highlight four key trends in the case of Union government funding for the higher education sector: 

(i) Only 2.4% increase in real budget for the Department of School Education and Literacy and stagnant real budget allocation for higher education in 2025-26 as compared to 2024-25. 

(ii) A gap between budget estimates and revised budget estimates in 2024-25. 

(iii) An increasing role for Higher Education Financing Agency (HEFA) loans to public educational institutions. 

(iv) Rising significance of Madhyamik and Uchhatar Shiksha Kosh or MUSK component in the budget. 

The MUSK amount has not been apportioned to any purpose or institution concerning education in 2023-24. MUSK is in fact a non-lapsable corpus in which the annual collection of secondary and higher education cess is apportioned. Though MUSK is supposed to be utilised for various policy programmes in secondary and higher education, there has been no movement in this direction. 

The HEFA loans category in the Union Budget has been specified under two heads: (i) Interest payment under HEFA and (ii) Principal repayment amount under HEFA. Allocation under both these heads has been rising in the Indian budget for the education sector. But repayment of interest or principal amounts of loans is not creation of demand. 

In 2025-26, the total budget estimate amount for the education sector is Rs. 128,650 crore. This increase in nominal terms by 6.7% as compared to the revised budget of Rs. 120,628 crore in 2024-25. If we consider the average inflation rate to be 5.2%, then the real increase is merely 2.5% for the education sector.

The budget estimate amount for the Department of School Education and Literacy is Rs. 78,572 crore during 2025-26, while it was Rs. 73,008 crore in 2024-25, reflecting an increase of 7.6% in nominal terms. But the real increase is thus merely 2.4% with the 5.2% inflation rate on average. 

The revised estimates declined for the Department of School Education and Literacy during 2024-25 to Rs. 67,571 crore, showing a decline of 7.5% in nominal terms as compared to the budget estimates of 2024-25. This gives us an indication of what can be expected when the revised estimates of the Union Budget 2025-26 are released after one year. 

The nominal allocation for the Department of Higher Education is Rs. 50,078 crore during the Union Budget 2025-26, which involves a nominal increase of 5.2% when compared to 2024-25. But this involves no real increase since the average rate of inflation is 5.2%. 

Moreover, the revised estimates of the last Union Budget’s allocation to higher education were 2.4% lower than the budget estimates. Once again, this does not portend well for what will happen to revised estimates for allocation to higher education in this year’s budget. 

The budget estimate of allocations to UGC is Rs. 3,336 crore during 2025-26. This involves an increase by Rs. 886 crore or 33%. But the share of UGC-MUSK is Rs. 2,447 crore during 2025-26, leaving very little for actual expenditure. 

The budget estimate of allocations to AICTE is Rs. 200 crore in 2025-26, which involves a decline by 50% when compared to 2024-25. What is a further concern is that last year’s revised estimates have declined by 65%. 

The grants to Central Universities (CUs) for 2025-26 is Rs. 16,146 crore, which involves a nominal rise of Rs. 674 crore or 4.4% but this amounts to a real decline with an average rate of inflation of 5.2%. 

The MUSK budget estimate amount is increased to Rs. 5,500 crore in 2025-26. The HEFA interest and repayment of principal of HEFA loan for the Central Universities are Rs. 83 crore and Rs. 462 crore, respectively, during 2025-26. As we pointed out earlier, allocation for loan repayment does not amount to expenditure. 

The budget estimate of allocation for IITs in 2025-26 is Rs. 16,691 crore. This involves a nominal increase of 4.6%, which once again amounts to a real decline given an average rate of inflation of 5.2%. Increased nominally by 4.6%, this implies a real decline in the IIT budget over the last year. Further, of this allocation, MUSK, interest, and repayment of principal of HEFA loan are respectively Rs. 4,000 crore, Rs. 240 crore, and Rs. 450 crore during 2025-26, which implies that actual expenditure is lower. 

MUSK and HEFA components also figure prominently in the allocation for two other professional education institutions, namely Indian Institutes of Management (IIMs) and National Institutes of Technology (NITs). 

In 2025-26, allocation for the NITs/IIEST and IIMs is Rs. 5,474 crore and Rs. 252 crore, respectively. The budget for interest and repayment of principal of HEFA loans in IIMs are Rs. 72 crores and Rs. 150 crore during 2025-26.

The budget for interest and repayment of principal of HEFA loans in NITs is Rs. 81 crore and Rs. 133 crore, and the MUSK budget is Rs. 5,500 crore during 2025-26. This leaves very little for actual expenditure. 

The grants for Indian Institute of Science, Education and Research (IISERs) have also declined by 9.4% nominally from Rs. 1,469 crore in 2024-25 to Rs. 1,331 crore in 2025-26. Here too, the HEFA interest and principal amounts are Rs. 10 crore and Rs. 12 crore, respectively. The budget support for the Indian Institute of Science (IISc) is Rs. 894 crore, which involves an increase of 5.9%, amounting to virtual stagnation in real terms with an average rate of inflation of 5.2%. 

The entire approach of the Union government involves a neglect of public education. The four modes of jugglery with budget allocations to public education and other areas demonstrate that this government is fully committed to undermining public education. All those who are committed to public education need to resist this policy assault in every possible domain, including mobilisation, battle of ideas, and electoral. 

Narender Thakur is Professor, Department of Economics, Dr. BR Ambedkar College, University of Delhi. C. Saratchand is professor, Department of Economics, Satyawati College, University of Delhi. The views are personal.

Courtesy: Newsclick

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