Why India’s Tax Burden Will Only Keep Increasing

India’s total central government outstanding debt reached approximately ₹201.17 lakh crore as of early 2026: Source: https://dea.gov.in/reports-central-government-borrowings

That is roughly 13.67 lakh rupees of debt for every Indian man, woman and child (using 2026 population figure of 147 crore)

The Government of India (GOI) spends roughly 25% of our budget simply on servicing the interest on these loans, comprising both domestic and external borrowings. It is important to note that interest payments are the single largest expenditure head in the budget—amounting to approximately 2.5 times our country’s defense budget!

Source: https://www.indiabudget.gov.in/budget2025-26

Here’s the total debt over the years:

And chart of the same:

Given this enormous debt burden—and the fact that roughly 25% of our budget is already consumed by interest payments alone, with the principal still needing to be repaid at some point, and the country needing substantial capital expenditure on infrastructure, education, defense, and public health, the only viable option would be to increase both direct and indirect taxation.

If this were your household, and 25% of your total income was going solely toward interest payments—more than what you spend on food, healthcare, education, and transportation combined—what would you do?

Sir. K. Sam (pronounced /sarcasm/) is open to hearing your views. Leave your erudite comments below!

No taxation without accountability

Its that time of the year again, when BBMP wants to raise takes again! Bengaluru will become costlier for homeowners from April 1

It is imperative that Governments justify their expense before asking to increase tax. This is true for any individual, employee or business, to raise prices. Why is not so with the Government?

Instead of find ways to cut down on wasteful expense and “leakages” (aka corruption in its supply chain), its easier to just increase taxes as the common man has no way to complain or escape the tax burden.

Over the last few years, the total tax (state, central, IT, GST, LTCG, Tolls, Cess, Surcharge) have all become extortionate and continue to be jacked up, while the Citizens get almost nothing in return. Free education anyone? Free healthcare? Even basic infrastructure like 24×7 electricity, roads, water supply and clean air are a luxury (and remember to add the 28% GST on luxury items!)

There should be No taxation without accountability. Let the account books be open for scrutiny and questioning by the general public. Let citizens see where their tax money is going, with full details under each head. How many Government employees are there? What is the total payments each month? What do they actually do? How much is spent on each section of a road (so we can know that pot-holed road had a 10CR spending)

Its time citizens stand up and be counted, or be the beast of burden crushed under the system.

What do you think? Voice your thoughts and talk to your local elected representatives.

Can we get a DOGE? Please?

DOGE announces $1b in savings – this is a very good move by the USA to cut government waste. A responsible government needs to take a look at its expense before it tries to tax more or inflate (deficit spending).

Can we have a DOGE for India, please? It would be a good starting point to know where all the tax money is going. We can start with the “health” and “education” cess (taxed on the tax), as a starting point to see an itemized list of expenditure from that collected revenue.

Any Takers?

Fixing Our Competitive Exams

Here’s a simple way to fix our super competitive exams! Instead of conducting Competitive Entrance Tests, conduct Competitive Exit Tests! The idea of an educational institution is to train someone, not to seek out the super-smart to join (who may not require much training, to begin with!)

So, here’s a suggestion for our National Policy on Education (NPE): make the entrance exams simple and meant for testing basic knowledge. Let anyone study any subject/course of their liking. However, keep a strict final exam to filter out the mediocre, so that only the best and capable pass out and are allowed to practice.

For example, allow anyone to join a medical or aeronautical course, with just a basic entrance test for aptitude and subjects. But, have a rigorous qualifying exam, where every aspect of their theoretical and practical knowledge are tested, before they are allowed to pass and issued a degrees. In other words, increase the funnel entrance, but filter at the funnel exit.

Is that not the real purpose of an education system? Put another way: don’t test if someone is a good computer science engineer just to join a computer science course! Test if he/she IS a good computer science engineer, after completing the course!

As things stand now we are doing the opposite (over-testing for quality of those trying to join and not testing enough the quality of those who graduate). This not only makes aspiring students disillusioned, but also removes a potentially large pool of talent from joining the workforce. We are doing a disservice to our country and society by not giving everyone the opportunity to study, because of inane policy that is mixed up on talent vs training vs qualification.

A wish list of economic roadmap for Modi 3.0

Small business are the engine of growth for our country. The last several years has seen an increasing burden of regulation, tax & compliance requirements placed on small businesses that it is impossible for them to focus on their core competency.

The following will significantly help the SMEs & their consumers:

• Reduce GST and rationalize it. There are several products where the GST % is more than the profit % of the underlying business. This is detrimental to the business as the cost to consumer is more and the volume of sales go down. This is also seen as inherently unfair, where all the risks are taken by the SME, but the government takes a bigger cut on profits than they do.
• Reduce the dozens of filings required. Even before the regulatory cost was not low. Now it is unbearable, with GST deduction and filing, TDS and now TCS. Not only are SMEs paying significantly more, but are made to put in a lot more work to pay it. Over regulation also makes it easier for “license raj” to perpetuate
• Don’t tax dividends twice. This is entirely unfair (and possibly not even legal!). The company pays a tax on its profits, then when its distributed to its shareholders, they pay tax again on the income. This is also inconsistent with a Salary (where its expensed by company, but taxed in the hand of individual) or a LLC where the company doesn’t pay tax, but the partner does. Make dividend an expense, so its taxed only once or make dividends tax free, as they were before. Make rules that are simple and easy to follow
• Remove TCS. In fact, remove all taxes and deductions on financial transactions itself. Enabling smooth financial transactions is at the heart of a growing economy. If the intent is to get information, you already have the mechanism to track remittance, the actual deduction & payment is not necessary and can only be seen as regulatory overreach.
• Remove STT or remove cap-gains. When introduced, STT was in lieu of cap-gains. Now it has been reintroduced again, which is also double-taxation. The brokerage+GST then the STT and then the cap gains if one makes a profit is a burden and also inherently unfair to the individual taking all the risk. Also, it seems irrational to not allow brokerage to be deducted from Capital Gains.
• Reduce compliance burden & paperwork. For one transaction one party has to deduct, file and comply with GST, the other party has to deduct pay and comply with TDS for the same transaction. Free up the time and resource of the SME to do real productive work and grow our economy. SMEs should be free to focus on make-in-India, instead of spending a major part in just paperwork and fearing their own government. Also, from a time when Aadhar was introduced as an optional ID for welfare, it has become mandatory with biometric even to get a phone connection. Keep the minimum regulations necessary, make policy in the interest of the population, not make policy and over-regulate just because a government has the power to do so.
• Remove GST on Rent. Any business paying rent, will claim it back as input credit. Empirical data indicates more than 95% of rent GST is claimed back. So, the entire exercise (with a very high compliance cost of monthly/quarterly and annual filing) is a farce, meant to create lot of paperwork and avenues for license raj, while the net tax collection for the government is not impacted by rent GST in a meaningful way.
• Make court system work. If, after complying with all the regulations and paying substantial taxes, a SME cannot even get recourse in a court of law, in a timely manner, they get disillusioned. Have a fixed time for finishing civil cases (e.g: 1 year). Don’t allow appeals in the middle of cases, on each individual order. Appeals may be done on the final order, if there’s sufficient grounds only.

Sincerely hope the new administration would genuinely look into this to make India a roaring economy for the 21st century.

Windows update is a spyware!

Have you encountered, say a shoe vendor, who routinely comes to your house to give your free laces, long after you have purchased the shoe? Throws in a cleaning so you won’t slip and fall?

Or a car vendor that insists on changing your tire for free every 6 months, even though you insist that everything is fine?

Or a furniture vendor that insists that you get free fabric replacements every month?

Me neither.

So, why does MS insist on giving you free updates long after they have gotten paid for it? Product liability, you say? That can be easily worked around by saying “we are not liable unless you download and install an update”. So why do they force the updates on you, even when you don’t want it? Even the technical users that can turn off updates, soon find that there are 5 other hidden processes that automatically turn on the updates, without your knowledge or consent, to continue pushing the update “in your best interest”.

I heard from someone that works at MS, that there is an entire team dedicated to figuring out how to defeat smart-ass users from disabling Windows Update, so they can force their benign, generous and benevolent updates that they invest a lot of time and money to develop, on you for free.

Makes no sense right? What would make sense is, if this is being done at the behest of the government or intelligence agencies, so they can keep a door open to eavesdrop on whomever they need to get to. “Please install our spyware, officially, through your update channels or we’ll find these 23 offenses against your founder/company” and I am sure MS would comply! Although, I have no proof, there’s lot of circumstantial evidence pointing to this. This is also the only reason that makes any sense as to why a purely profit oriented business will spend time and money to not just give, but force something on your for free

What do you think?

The dichotomy of the Indian Rupee

India has been trying to get Russia to accept payments for crude in INR for quite sometime. This stalled due to the fact that Russia accumulated a lot of INR from its crude exports to India, that they couldn’t do much with.

There’s recent news on Bloomberg that India has been trying to woo the Arab nations to accept INR as payment. This is also bound to fail.

This might sound cliche, but the first requirement for a currency to be accepted for open trade is that it be open! INR is far from it. In fact, the recent policy decisions are regressive and moving INR in the exact opposite direction. Adding layers of bureaucracy and compliance requirements, not to mention monetary costs to moving money out of India is not a recipe to get INR accepted as a trade currency.

Take for instance the recently introduced TCS of 20%, which was added to the Liberalized Remittance Scheme, which necessitates that someone pay a 20% on outward remittance on already owned (and presumably, tax paid) funds. The whole process nightmare of creating a new class of deductions TCS in addition to the existing one of TDS, subjecting individuals, companies and ADs (banks) to this and making the whole process expensive and cumbersome isn’t helping India. In other words, these are “soft” capital controls, imposed to deter capital outflow. Typically, failing economies that fear capital outflow resort to these type of measures, not an assertive and growing economy (most recent GDP being a healthy 8.4%).

With such policy decisions on one hand, trying to woo trade partners to use INR is a failing proposition. There needs to be a cogent, clear policy directive aimed at liberalization, free trade, convertibility and most importantly, ease of doing business, if INR has to stand a chance of becoming a trade currency.

If India wants to be a global power, with a truly global currency, a consistent policy that is not arbitrary, doesn’t change often (again, the LRS, forced conversion of USD to INR for domestic companies), easy convertibility and open trade are the bare minimum requirement.

Will the powers that be take note?

Time to X on Google?

Dear Google,

if all you can innovate are jumping elephants on your Google Maps, flying text on Youtube and a longer text bar on your Search Engine, it probably means you have a bunch of folks sitting around and twiddling their thumbs not knowing what to do!

It is time to do an X and get rid of the flab, so you can focus on real innovation and your business. Will help your customers and benefit your shareholders.

Is CBDC the new form of slavery?

The CBDC (Central Bank Digital Currency) is being rolled out, its time to think of the potential consequences. We will not even go into the privacy issues, which has been covered in great detail, but rather touch up on the consequences (intended and unintended):

Usefulness

For the uninitiated, what the CBDC does is have your currency digitally (it is same as having 5 x 100 rupees, 2 x 500 rupees, but digitally). To pay Rs 575, you pay one 500, one 50, one 20, one 5 – all digitally. If you are wondering, is it not easier to just online pay, use a card or account transfer the Rs 575? Yes, you would be absolutely right! It is much simpler, easier to do so. So, if CBDC is not about new capabilities or convenience, then what is it about?

Control

Yes, control! Every single transaction can now be tracked and controlled. The Big Brother can now determines what you can buy, what you can eat, where you can travel, how much you can spend on medicine or your kid’s education.

Personal Priorities vs Centralized control

As an exaggerated example, consider that you are sick and in hospital, not having received your salary for 2-3 months and don’t have much money. Your property tax is due and your local municipality, in its authority decides to auto-debit the CBDC linked to the PAN card? You are left with no money for medicine or treatment and your family with no food. Think about it.

Negative interest rates

As we all know the powers that be are wont to come up with new rules, as Japan did several years ago, to create negative interest rates. For the uninitiated, a negative interest rate of 5% means, you lose Rs 5 every year for keeping Rs 100 in your bank (just as positive interest rate means, you get paid Rs 5 every year).

Why is this done? In the case of Japan, ostensibly, to increase spending, boost consumption and drive the economy. You may ask, has it worked? No, it hasn’t made any difference in a decade and that is not for lack of trying! Japan is still in deflation, just as its government keeps printing new money, runs a huge deficit and takes money off of savers. Unrelated to this topic, Japan has the highest suicide rates of any country in the world.

Conclusion

In the end, CBDC is not about convenience or accountability (there are existing mechanisms to do this). It is all about control. It seems to be a new form of slavery, a modern day colonialism. After having won our
freedom from the British in 1947, it would seem, we are about it to give it up! Think about it. Talk to people in power that you know and hopefully, convince our government and bureaucrats to takes the right decision and scrap CBDC.

As Schwab famously said “Give me control of the money, I care not who runs the nation”. In their infinite wisdom, our bureaucrats and politicians may feel they would be the ones to wield this power, and retain control of this genie, and this would somehow remain benign. But in all probability, they are themselves being used to usurp this power, so it can eventually be usurped by others, higher up the food chain. It has all the hallmark of a new colonialism, that would make the British colonialism of India, a walk in the park. Everyone, including the elites and political class may end up being a slave to the neo-colonizers. Time to beware and think very hard.

Private militia and kangaroo courts in the land of dharma

There was a recent news, that in Kerala an ex-police officer was running a “parallel” police setup and settling disputes. Some months back there was a similar news in Tamilnadu that ‘parallel’ courts were functioning to dispense justice.

Bihar was in the spotlight recently for politicians keeping a private militia. However pained, I must point out that this dubious distinction is not specific to Bihar. One can see this to varying degrees in a supposedly progressive place like Bangalore!!

Why is this phenomenon common in developing countries, but not so in developed countries? Senators in US don’t seem to runaround with carloads of their own private militia wherever they travel. Congressmen don’t seem to hold court and settle disputes at their homes. So, why here?

After much thought and ‘social experimentation’, I had to conclude that these things happen for the same reason people in India have UPS and power generators. Seriously!

It is very common to see businesses, hospitals and homes sporting a UPS or power generator in India, because the power supply is spotty and long spells of “powerlessness” is not uncommon! People resort to their own electricity supply, because the system is incapable of providing it. For the same reason, the systemic failure of the judicial and police system opens the gates for these alternate services!

The only way to fix this, is to fix the badly broken system. A recent headline highlights this: A case reached supreme court after 33 years (both the parties are long dead and the case is run by heirs). A very simple case, really. “A” gave his/her property on rent to B. B won’t vacate it, but has money and connections to exploit the Rent Control Act. In every court, the ruling was in favor of A, but a broken system let this be dragged on for 33 years without relief to A. The supreme court also gave a verdict in favor of A, admonishing B that it is unbecoming of someone of his stature.

Now, if you think, well at least there is justice after 33 years, you’d be very naive. I’d very surprised if it ended there or “A” got relief. In a country like India, with a completely broken system, with laws that haven’t been updated since the 60s and 70s and a rusted bureaucracy, even if one got a final court order, it cannot be executed without “money and connections”. But, even that is getting far ahead of ourselves. There is no such thing as a “final” order. It can always be appealed, taken on for another 30 years, for the next generation to deal with!

It may require a 1000 Gandhis to reform India.

Who moved my road?

If you are living in Bangalore, you could be forgiven for mistaking the roads for lunar landscape. We are still in the 13th century when it comes to road and garbage disposal (just dump and burn). And, what are our elected representatives doing? One should read the recent news to see what they are doing (or rather not doing!).

I just want to refer a Chicago mayor that famously said in the 60’s, “let us turn over our city administration to the mafia. We’ll have competent criminals running it!”

Its like that only.

The Same Difference?

After a promising start, the new government seems to be falling into the same tracks as its predecessor. No serious judicial reforms or police reforms have even begun. We still have an environment where the powerful can walk free, after burning their evidence and serial killers are given reprieve by courts because government didn’t act on time. Is that the message we want to be sending to our society? That we are lethargic, apathetic and have no respect for the common man who works hard, abides by the rules?

In spite of all the chest beating, we have created a huge moral hazard that only fools abide by the law and the rest are free to make a mockery of justice.

Lifted Burden

The ministry of road transport released guideliens to help accident victims, which doesn’t involve harassment by police, not waiting to start medical treatment till an ALL-OK from the police (by which time, most victims would be gone for good).

New norms to help accident victims

It took 60 years, some basic common sense, a Supreme Court order and a new government to get this! But, it is a welcome relief!!

Simillarly, when will the law ministry wake up to judicial reforms? That a vast majority of cases in the Court are of property disputes and many based on archaic laws. Take for example, rent control – which has no place in a free market system and is today being blatantly abused by the tenants.

Keep the laws that make sense for today’s world, get rid of the rest. Fix a timeline for finishing cases and automate the scheduling process to clear the clog!

Unclog our courts

Based on my recent experience with the Indian court system, I can safely say that it favors the criminal and unscrupulous elements, not so much because the laws are wrong, but because the system is kludgy and inefficient. But there are a few glaring bottlenecks that can be addressed easily to duct-tape and immediately speed up the system!

1. Before admitting a case, the Judge or a senior court appointed Counsel should call both the parties for a discussion, spend a few hours and see if there is scope for resolution, saving both of them years of trial and tribulations!

2. Once admitted, the 2nd party should be made to reply/counter within a set time (say a maximum of 4 weeks). If it is not done, the court should issue an ex-parte decree and it should not be contestable.
(Now, it take several months for the parties to put their counter. If one is intent on delaying it, it can easily stretch several years. If an ex-parte is issued, it can still be ‘set-aside’/appealled at a later time. If one cannot be bothered to be present & counter a case on time, why let them challenge/appeal?)

3. Keep all arguments in writing and dispense with oral arguments for prelimnaries. Instead, let the Judge call the counsels if they need clarification.
(Now, after submitting written arguments, both parties are expected to present oral arguments. Unexpected court holidays, Counsel/Judge/party calling in sick can all make this take several months. Years, if one party seeks to deliberately delay things. In any case, this has no practical use as a Judge hears so many arguments during the day, that they seem to rely only on written arguments to make their judgement.)

4. Have orders made within a set time
Once both arguments are in, Judge should deliver the order in writing, within say 7 days. Now, the order can take several weeks to be issued in writing – even after the Judge has it down.

5. Automate scheduling.
To make sure all of this happens on time, automate. Now, the whole process of scheduling and setting dates itself seems to take a huge amount of time of the judicial machinery, time which can be saved & spent on more useful things with automation.

6. Set the bar high for Appeals
Now, anything and everything can be appealled. This gives an incentive to the wrongdoer to delay things until the other party gives up. Justice delayed is justice denied. Set a high-bar for allowing appeals. A Judge or a senior Counsel appointed by the Court should verify that something material has changed or there is new evidence that warrants an appeal. If not, just dismiss the petition. This whole process shoud be done in, say, a  maximum of 2 weeks.

The new GOI was seeking inputs to improve things. Is the PMO office listening?

The Uncommon Man!

The Uncommon man is no more, but the common man lives on.

Stop Uber?

A recent news article says governments are running around to stop all app based cab bookings.

Is this the real solution to the problem?

While, I am all for enhancing checks by private companies, what about the failure of the State that lets a two times rapist and a convicted felon on bail? A justice systems that lets criminals free, so they can commit more crimes?

The government’s time may be better spent on updating archaic laws and taking steps to remove convicted felons and repeat offenders off the streets of our country (including high-flyers convicted of high-crimes!)

post-publish-notes: Reuters reports that Uber driver arrested was career criminal .

More than anything else, this raises the question of why is a career criminal on the street? Why would any judge grant him bail? Not once, but several times?

I am really at a loss to understand if the system is riddled with holes, or ours is a toothless justice system, or is it plain old corruption? Maybe someone with a better understanding of our criminal justice system can throw more light on this?

Jayanagar 4th Block is now more expensive than Washington DC!

The Karnataka government has release the latest guideline values  and the price-per-sft in Jayanagar 4th block, Bangalore is Rs.16400/- or about $273 per sft ($2730 per sqmt).

The guidelines values are about half the market price! So, the market price would be about $5000/sqm.

Compare that with Washington DC rates! About $5500 in city center and $4400 in suburbs. We are officially more expensive than the suburbs of Washington DC!!

What do we have to show for it?

Garbage @ Jayanagar 4th Block

http://www.thehindu.com/news/cities/bangalore/garbage-problem-in-jayanagar/article5948618.ece

Welcome to the most expensive dumping ground!

The Right Way!

Given the last few announcements from the GOI, I tend to flatter myself that someone from the PMO is actually reading the blog 🙂 !!

1. Modi announces permanent visa for PIOs (See my prior post Welcome to India, Maybe not)

2. Government removes need for police verification for passport renewal (MOPSOTHCRDR)

3. GOI plans to remove archaic laws (A justice system rendered impotent)

4. GOI promises 24 hour electricity  (For a stronger rupee, provide electricity!!)

That being said, the local infrastructure woes seem to have no end in sight. Take the garbage problem in Bangalore, which hit NY Times headlines a year and half back. Still, no resolution is in sight. Both the previous and the present government have a pathetic record of fixing the issue and bringing in scientific means of garbage disposal. Almost 2 years after the issue came to light, they are still running around trying to find alternate landfills, instead of using an incinerator and also turning the waste to energy! This is not rocket science – tiny nations smaller than the size of Bangalore have implemented it successfully. It just needs someone with a bit of common sense, and an iota of accountability to not pass the buck around.

In a recent interview, the BBMP person in charge had absolutely no clue as to how he would solve the problem – just promised to close Mandaur landfill (which means, without a plan, he just has to open another mandur, elsewhere). The apathy and lack of accountability is palpable.

If we want more of our smart country men to come back to India from abroad and contribute to the society, we at least have to provide them with basic infrastructure – reasonably clean air (not everyone likes to see the air they breathe!), clean water, electricity and safety of person & property.

Even if the center moves ahead, there seems to be no plan as to how the state governments will clean up their acts – which are intent on electoral politics and populist governance, which is what brought us here in the first place.

One hopes, one can dare hope, this time around.

That it is not “its like that only!”

There is a new CEO in town!

I must say, PM Modi’s talk on I-day was impressive. It was more a CEO talk, than that of a politician’s! The scrapping of the planning commission from the 1950’s to be replaced with a more modern organization. Setting up SEZ’s around ports (instead of a 0.25 acre wherever a politician or his kin had land and changing the laws to force actually productive export companies to “rent” them to get tax benefits).  Trying to drive development from the state to the centre! It is heartening to finally see someone take the initiative to move things forward. Even a jaded Sir. K. Sam, is more optimistic!!

However, one hopes, the run towards growth will be guided by responsible policies towards environment, tackling corruption and inclusive growth. In a earlier post I have written about pollution and how regulatory authorities  tied down by corruption or apathy, weren’t  doing much. If that part is not fixed, along with growth, we may be looking at cancer cities like those that dot the periphery of some of the larger industrial towns in China.

Despair of the Depressed

Another common sense law:

Govt plans to decriminalize attempt to commit suicide

The Home Ministry is in the process of effacing Section 309 of IPC, under which anyone attempting to commit suicide is punishable with a jail term of upto one year and fine, and discussions in this effect are on.

Seriously folks, someone so driven to the edge that they attempt suicide requires counseling, medication and support – not a jail term & fine.  That it took so long to see something that should have been obvious, points to the apathy, we so long called governance!