A Sparkle of Hope

As pressures from rising oil and gas costs increased the cost of power generation and sent the fertiliser subsidy soaring, Finance Minister Nirmala Sitharaman explored the possibilities of raising revenues from non-tax measures. She had a straightforward message for officials from the Department of Investment and Public Asset Management (DIPAM) during weekly interactions: there was no “target” for disinvestment, and all the firms listed for strategic sale were on the table. There would be no pause, as DIPAM would process the firms on a continuous basis.

On October 14, the Cabinet Committee on Economic Affairs approved the sale of the 60.7 per cent stake held by the government and the Life Insurance Corporation (LIC) in the Industrial Development Bank of India (IDBI) to Canada’s Fairfax Financial Holdings for Rs 52,878 crore. This took disinvestment and asset monetisation past the Rs 80,000 crore Budget target for FY 26-27. The Rs 26,500 crore the government is expected to receive will add to the Rs 55,757 crore already raised from stake sales, with five months still to go in the current financial year. Last year, receipts were Rs 45,306 crore, indicating a near doubling, with more sales in the works.

The DIPAM website lists 11 disinvestment sales in FY 26-27, excluding the IDBI deal. The 6.5 per cent divestment in LIC accounts for Rs 31,514 crore, followed by 2 per cent in Coal India Limited (CIL) and 6 per cent in NHPC, which delivered Rs 5,542 crore and Rs 4,357 crore respectively. The IDBI deal provided the big bang. The government hailed it as a “fair evaluation” of the enterprise, in keeping with the assessments of two professional valuation agencies. The opposition, however, attacked the sale, and Congress alleged that the bid price was lowered from Rs 94.42 to Rs 75 before the Fairfax offer of Rs 81 was accepted. A media report claimed that officials had junked the initial reserve price and introduced new rules to reach a fresh valuation. The misrepresentation was obvious: a committee of secretaries had been mandated to consider options to re-invite bids. “[I]n exercise of the powers delegated and conferred upon the collective decision-making mechanism, and to enhance the value of the transaction as far as possible, sealed bids reflecting their best offers were invited from the qualified bidders in the financial year 2026-27. The stock price of the IDBI Stock was Rs 70.38 per share on the trading day last before the invitation of best offer bids on 18.05.2026,” the government had said on October 14 itself.

The pre-Deepavali cheer in the stock markets, with equities rallying and the BSE Sensex and Nifty 50 marking gains in successive trading sessions this week, is not an aberration or a lucky break. It was partly due to factors such as a cooling of Brent crude prices, though they remain above $100 a barrel, the return of foreign portfolio investors and the “big bang” impact of Reliance’s Jio Platforms IPO. But there was also a story of overall stability in the Indian economy, which recorded a strong 7.8 per cent growth in Q2 and is projected to grow 7.3 per cent for the whole year. As official sources put it, the war against Iran launched by the US and Israel, and its calamitous impact on energy supplies moving through the Strait of Hormuz, could hardly have been anticipated. This, alongside repeated insistence that India reduce or completely stop imports of Russian oil, made economic management a near-impossible balancing act. Although India reduced its import of Russian oil in 2025, the Modi government decided that the option to import it could not be abandoned. This was the first big decision taken in the face of American tariff pressure and the perceived need to conclude the India-US bilateral trade agreement. The US became a major supplier of LNG and India rapidly diversified its crude imports, but the importance of Russian oil lay in the need for energy security and in Moscow’s role as a balancing factor with regard to China.

The fertiliser subsidy is tipped to cross Rs 3.4 lakh crore, double the Rs 1.71 lakh crore budgeted in February, but the government was clear that the burden could not be passed on to farmers. Added to the wars raging in the Middle East and Ukraine, the El Niño weather phenomenon threatened to affect agriculture, and sustaining the farm economy was a priority. Farm incomes remain stable, and Prime Minister Narendra Modi released the latest instalment of Rs 6,000 for every eligible farmer under the PM-KISAN scheme this week. The outlay for the scheme, Rs 63,000 crore in the Budget, could well have gone haywire given the disruptions caused by international factors outside the government’s control. Kharif coverage remained largely unaffected despite a 12.5 per cent deficit in the monsoon that severely hit some parts of the country. Overall, farm growth has been steady and remains so, adding an important layer of comfort and resilience to the Indian economy. Rural India continues to record higher consumption and rising buying power, a critical factor, as distress would soon reflect in slower growth and supply-side shortages. Throughout the year, the government’s economic planners have concentrated on balancing the need to control inflation, ensure shop shelves remain stocked and sustain businesses.

There has been a concerted effort to devise policy interventions, duty tweaks and incentives to help exporters and assist domestic manufacturers. The prime minister’s insistence on credible economic data and fiscal prudence gave the finance ministry the headroom to absorb costs, particularly when the Hormuz shock set in. The decision not to raise pump prices paid off, as did the effective management of cooking gas supplies, where the government drew on the lessons it learnt in the just-in-time management of oxygen and vaccines during Covid. Thinking on their feet, government managers oversaw the diversion of hydrocarbon feedstock to raise domestic cooking gas production by 25 per cent in a matter of days. The strength of the Indian refining industry came to the fore, with exports increasing 33 per cent year-on-year in April before levelling off. Months later, the economic data remained reassuring, and merchandise exports grew 23 per cent in September, led by electronic products (mobiles), petroleum products and engineering goods. “The cumulative value of merchandise exports during April-September 2026-27 was US$259.89 Billion, as compared to US$219.30 Billion during April-September 2025-26, registering a positive growth of 18.51%,” the government announced in mid-October. Non-petroleum exports in April-September 2026-27 were valued at US$218.70 billion, up 15.5 per cent. The drivers of merchandise export growth included cotton yarn, fabrics and handloom products, with exports rising 20.76 per cent to $1.12 billion in September 2026.

The nimble-footedness in economic decisions has come in the wake of political challenges at home and abroad. Relations with the US proved difficult with the passage of legislation that empowers President Donald Trump to impose punitive tariffs of up to 100 per cent on countries importing oil from Russia. Yet the decision to resist American pressure paid off, as rising costs at home forced Trump into an about-turn and he began importing diesel from Moscow. The results of the mid-term elections in the US are a massive rebuff to Trump and his policies, and bear out the Modi government’s assessment that tariff policies would translate into domestic inflation. Indian officials are unclear what the loss of the House and Senate means, as some American commentators feel Trump will be even more confrontationist and may even use his foreign policy remit to restart the war with Iran. However, it is evident that the domestic challenge from a resurgent Democratic Party is bound to occupy Trump’s attention, with the prospect of investigations and impeachment. The foreign policy challenge has seen India increase its reliance on trade pacts. While big ones such as the deal with the European Union (EU) are yet to kick in, the successful negotiations with several Western nations boost perceptions of the Indian economy and its prospects.

The dramatic emergence of the Cockroach Janta Party (CJP), which campaigned against the leak of medical undergraduate entrance examination papers and secured the resignation of Dharmendra Pradhan as education minister, offered a new challenge. CJP found support among foes of the Modi government, such as Left student wings that provided the street muscle and organisational capacity for the July protest. A report in The Indian Express on Election Commissioners Sukhbir Sandhu and Vivek Joshi disagreeing with Chief Election Commissioner (CEC) Gyanesh Kumar about certain decisions and procedures led CJP to demand the CEC’s resignation, with Congress and I.N.D.I.A. bloc members separately raising a similar demand. Congress leader Rahul Gandhi has made the CEC’s resignation synonymous with his long-running “vote chori” campaign, which he claims explains the Bharatiya Janata Party (BJP)’s electoral success. The I.N.D.I.A. bloc rally at Ramlila Maidan on November 1 was intended to place the demand at the centre of the grouping’s political programme. The political goal, according to BJP leaders, is to undercut the Modi government’s legitimacy and play spoiler despite the upbeat mood of the markets and the confidence of the Indian consumer. The confrontation is likely to continue even as the CEC’s functioning and the Election Commission’s (ECI) decisions are being closely scrutinised by the Supreme Court. The court will, in due course, deliver a verdict on ECI’s decisions and processes, and while it may recommend some correctives, the possibility of Kumar being held guilty of any serious lapses is negligible. The government has backed ECI’s Special Intensive Revision (SIR) of the electoral rolls to the fullest and hit back at the I.N.D.I.A. bloc with vigour, accusing the opposition of trying to orchestrate an illegitimate regime change.

Amid festive cheer, the Indian economy is on a growth path despite political ferment at home and stark uncertainty abroad. Sales of automobiles and domestic appliances tell the story, as manufacturers and retailers flood consumers with offers and unleash an advertising boom. The government will continue to be tested, but the prime minister has ensured that policies and decisions are insulated from the political cacophony. Sitharaman made the point at a recent public event when she said capex, set at Rs 12.2 lakh crore in the Budget with another Rs 4.9 lakh crore as grants-in-aid to states, would support growth even as the government’s commitment to fiscal prudence would remain undiluted. It is a formula that has worked so far and, the government’s brains trust believes, will continue to deliver returns.