Indian economic policy

Where a policy becomes a number.

In 1540 an Afghan soldier held Delhi and struck a coin of fixed weight and purity. A state that cannot measure what it is owed cannot collect it. He built roads so the coin could travel, and taxed what moved. Every government since has been judged by that coin.

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A billion people, one balance sheet, and sums that nobody in power wants to add up.

There is a coin in your pocket, and an Afghan soldier who held Delhi for five years put it there.

Sher Shah Suri took the throne from the Mughals in 1540 and lost it to them again by dying. In between he did something more permanent than conquest. He minted a piece of silver of fixed weight and fixed purity and named it the rupiya, and he built roads and rest houses so that it could travel. The purpose was not commerce and it was certainly not beauty. It was tax. A state that can measure what it is owed can collect it. A state that can collect can pay soldiers, and a state that can pay soldiers can hold ground. The coin was an instrument of rule, and everyone who mattered understood that at the time.

The Mughals kept it. The East India Company kept it, and then found it could set the rate at which the coin exchanged for silver and gold, and discovered that this was a more efficient method of extraction than any tax it could have imposed directly. The British Crown kept it, and in 1893 closed the mints to silver, which halved what an Indian salary was worth in London overnight and was decided in London for London’s reasons.

The Republic kept it. In 1966 it devalued the coin under pressure from lenders and the government that did it lost the next election. In 1991 it pledged sixty-seven tonnes of gold against the coin’s collapse, and the humiliation of flying that gold to London bought the reforms that made the country you live in. In 2016 eighty-six per cent of the coin, by value, was withdrawn from circulation overnight, and the queues outside the banks were the longest visible expression of state power most Indians had seen in their lives.

The same instrument, for four hundred and eighty years, doing the same job. Every government of India has been judged by what it did to that coin, and every one of them knew it.

India is not a market. It is a state in the middle of a long argument with itself about what it intends to become, and the argument is conducted through the public accounts — the budget, the deficit, the tax collected, the subsidy that cannot be stopped. This section reads the accounts, because that is where the argument actually takes place, and because the coin in your pocket is the record of who has been winning it.

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