Governance on Auto-Pilot
(Chapter 14)
Narendra Modi and his party (BJP) have a favourite line against the opposition. They say the opposition is disconnected from the people. They say the Congress lives in air-conditioned rooms and knows nothing about the ground.
Fair enough. But two recent events prove something worse. The ruling party and the government that it runs are now disconnected from their own voters. Not metaphorically. Physically.
One Vote in Parbatsar
Kailash Chand was the official BJP candidate for Ward 13 of Parbatsar Municipality in Didwana-Kuchaman district of Rajasthan. He secured exactly one vote. His explanation was simple. His voter registration was in Ward 12. He was fielded in Ward 13. He could not vote for himself. That one vote came from some unknown stranger in Ward 13 who chose him.
The Congress candidate won with 376 votes. An independent came second with 195 votes. The BJP's official candidate was not even a footnote.
This is not about one lost ward. This is about the selection process. BJP built its reputation on data-driven candidate selection. It claims panna pramukhs, booth-level surveys, internal feedback. The party calls itself a party with a difference. That difference apparently does not extend to checking whether a candidate is even registered to vote in his own ward.
In the same Rajasthan elections, a Congress candidate also got one vote. An RLP candidate got zero. Every party has such failures in hyper-local polls. But those parties do not give speeches about how the opposition is disconnected from the people.
When you live in a glass house, you should not throw stones.
The UPI Sixer in Parvakaal
In cricket, a sixer off your own bowling is not possible. In governance, apparently it is.
The BJP built its political identity on three things: nationalism, economic formalism, and Narendra Modi's personal brand of decisive leadership. UPI is among its biggest achievements. It pushed UPI as India's gift to the world. Modi personally demonstrated it to foreign heads of state.
Then in September 2026, the government notified the Merchant Discount Rate (MDR) on UPI transactions above Rs 2,000. Implementation date: October 15. The fifth day of Navratri.
This is not a metaphor. The bureaucrats who drafted this circular set the implementation date four days into the biggest festival spending season in India. Navratri leads into Dussehra. Dussehra leads into Dhanteras. Dhanteras leads into Diwali. This is Parvakaal. Every trader in India knows this. Every housewife in India knows this. Apparently the joint secretaries in North Block do not.
The government's defence was technical. The charge is 0.4 percent, capped at Rs 300. It is paid by merchants, not consumers. Transactions below Rs 2,000 are free. Claim is that over 95 percent of UPI transactions are unaffected.
Each of these statements is technically true. All of them together cobble up a deception.
The 95% Lie vs. 65% Truth
The 95 percent figure counts transactions by number, not by value.
UPI processes billions of micro-payments every month. Chai at Rs 10. Auto-rickshaw at Rs 40. Sabzi at Rs 80. Milk at Rs 60. These happen multiple times per day, per person. They drown the transaction count. They drag the under-Rs 2,000 share to 95 percent of volume.
But when we consider the volume of payment, the under-Rs 2,000 basket accounts for only about 35 percent of the total money moving through UPI.
The Rs 2,000-plus transactions are 4 to 5 percent in terms of number but they carry 65 percent of total value. The MDR is charged as a percentage of value. So the government placed its toll on the basket that carries 65 percent of actual commercial turnover. Then it announced that 95 percent of transactions are unaffected.
This is not a mistake. It is a chosen framing. An accurate statement dressed to mislead.
Then the clarifications started. First, P2P is free. Then, small merchants are exempt. Then, brokerages get a separate rate. A new clarification comes every day. Each clarification raises a new question. The government is explaining a circular that has not yet come into effect.
When you need this many clarifications before day one, the circular was obviously issued in a hurry without due diligence o consultation. Did they invite any objections of suggestions from merchants or the public? No? Is that the connection with people?
The Festival Season Trap
Banks in India posted cumulative profits of Rs 4 lakh crore last year. The entire UPI infrastructure cost is approximately Rs 20,000 crore annually.
Journalist Amitabh Agnihotri asked the right question on air. If banks sitting on Rs 4 lakh crore cannot absorb Rs 20,000 crore to keep the nation's flagship digital platform free, which Himalayas were about to fall?
The government's answer is that fintechs like PhonePe and Google Pay do not have a lending buffer. That is true. But that is a problem between the government, the banks, and the fintechs. It is not a problem for the citizen standing at a Diwali shopping counter. If the Google Pay of Phone Pay can not afford to serve, it may close shop. The people will use Government promoted Bhim.
The festive season is exactly when the 95 percent figure collapses completely. In October and November, families do not buy chai and sabzi. They buy television sets. Gold coins. Silk sarees. Dry fruits in bulk. Cookware. Electronics. Paint. A box of sweets costs over Rs 1,200 now. Every meaningful festive purchase crosses Rs 2,000 easily.
The 95 percent statistic is an annual average built on daily micro-transactions. The policymakers applied it to the one season when the entire country buys big. That is not analysis. That is chosen blindness toward the spending habits of citizens.
That is called disconnect from people.
The Cash Rebound
Here is what the circular writers did not factor.
The rule bars merchants from passing MDR to the customer. This is legally correct. It is practically meaningless. Indian traders have avoided card fees since credit cards arrived in India. They offer two prices: one for digital, one for cash. This happened with credit cards at 2 percent. It will happen with MDR at 0.4 percent. Not because merchants are criminals. Because margins in Indian retail are thin and every rupee saved is a discount on price.
A shopkeeper selling a Rs 50,000 refrigerator in Kanpur will not explicitly charge MDR. He will offer a Rs 1,500 discount for cash. The customer saves money. The shopkeeper avoids MDR and also the GST trail that digital payment creates. The government loses both the MDR revenue it sought and the GST it had already recorded.
The moment a consumer withdraws Rs 20,000 from an ATM for one large purchase, cash is in his pocket. He will not scan a QR code for the next ten small purchases. He will break a Rs 500 note. The habit of five years unwinds in one festive season.
Small vendors already run multiple QR codes across family members to stay below GST thresholds. With MDR, they will rotate four codes to stay below Rs 2,000 per scan. Or tell buyers to split the bill. Or prefer cash outright. The cash economy is not dead. It was simply asleep because digital was cheaper. The moment digital costs anything, the informal route is awake again.
The government tried to save Rs 20,000 crore. It may have cost itself far more in GST compliance, in the digital adoption it spent a decade building, and in political goodwill it cannot now easily recover. Do not forget the cost of printing and managing the currency notes.
The Uttar Pradesh Problem
This is where the political arithmetic becomes dangerous.
In the 2024 Lok Sabha elections, Uttar Pradesh dismantled BJP's standalone majority. The party fell from 303 seats nationally to 240. UP alone cut its tally from 62 to 33. The lesson was clear: voter fatigue in the Hindi heartland is real and consequential.
Uttar Pradesh assembly elections are approaching. Their result will determine the baseline for the 2029 general elections.
BJP's foundational support in UP comes from the urban and semi-urban trading community. The vyapari varg. Small shopkeepers in Kanpur, wholesale traders in Meerut, retail merchants in Varanasi. This group absorbed demonetization. It absorbed the early GST chaos. It stayed loyal. What kept it aligned was the trust that the government understood their economics.
Imposing transaction fees on commerce right at the start of Navratri is a direct hit to this community during their peak earning window. These are not abstract voters. They are the people behind the counters where BJP's ground cadre lives and breathes. They talk to customers all day. When they are angry, every retail billing counter becomes an echo chamber of anti-incumbency.
The opposition does not even need to campaign on this. The merchant will do it for free, one transaction at a time.
Bheetarghat by Disconnect
Political commentator Amitabh Agnihotri used the word bheetarghat: sabotage from within.
He is not alleging conspiracy. He is describing something more systemic and in some ways more dangerous. The bureaucracy that drafted this circular does not face a voter. A joint secretary in the Ministry of Finance does not worry about what a kirana owner in Aminabad thinks the day before Dhanteras. His incentive is to solve a balance sheet problem. He solved it on paper and filed it in the gazette.
Nobody in the political leadership stopped to ask the obvious question: why are we doing this on October 15?
The same pattern runs through the Parbatsar candidate. Nobody in the local selection machinery stopped to ask whether the candidate could actually vote in his own ward.
In both cases the machine ran. The machine does not stop itself. It needs someone to stop it. That someone is supposed to be political leadership, with its ear to the ground, its antenna tuned to the electorate.
When that antenna stops working, you get a one-vote candidate and a Diwali MDR circular in the same season.
The opposition did not hand the government this problem. The government built it for itself.
The Irony That Stings
Prime Minister Modi built his political vocabulary around one contrast: he is connected, the opposition is not. He knows India, they know Lutyens. He travels to villages, they attend Delhi dinners.
That contrast has been his most potent political weapon for over a decade.
Fielding a candidate who cannot vote for himself in his own ward is a physical demonstration of disconnect. Notifying payment fees on the festival season's first week is a failure of the most basic ground-level intelligence.
If the opposition had done either of these things, the BJP's communication machine would have run the clip for three months. The speeches would have written themselves.
This was a political sixer hit off your own bowling. In the full sight of everyone. With Uttar Pradesh watching.
The Man Who Said No
Subhash Chandra Garg served as Finance Secretary and Economic Affairs Secretary between 2017 and 2019. In 2019 he was transferred out of the Finance Ministry mid-posting. He took voluntary retirement shortly after.
In September 2026, the government announced 7.8 percent GDP growth for the April-June quarter. The IMF congratulated India. The headline looked good.
Garg disputed it. He pointed out that the base figure for the previous year's first quarter had been revised downward from approximately Rs 86 lakh crore to Rs 80 lakh crore. That revision inflated the growth percentage. Without that base revision, he said, the real nominal growth was closer to 2.6 percent.
The government defended its numbers. Experts said Garg's comparison across different base years was flawed. The debate continues.
But the story that cannot be debated is simpler. A senior finance official, while still inside the system, was moved out of his post. He is now retired and free to speak. He is speaking. And what he is saying makes the IMF congratulations look like a ceremony built on sand.
We will never know what he said inside the room before he was transferred. We do not know how many more like him are still inside. Still silent. Still nodding at numbers they do not believe.
That is the deeper rot. The UPI circular and the Parbatsar candidate are visible failures. Garg's number dispute is another. These events make numbers itself a suspect.
The Pattern
None of this is new. Earlier chapters in this series have documented the same pattern across different sectors. The bureaucracy moves. The government follows. Political considerations enter the picture only when damage is already done.
The CAPF amendment passed over a Supreme Court direction while no one was watching. The UPI circular landed in the gazette with no political screening. The Rajasthan candidate filed his nomination with no one checking his voter roll.
These are not isolated failures. They are the same failure: a political leadership that has delegated ground-level judgment to a machine that has no ground-level instincts.
The machine is working. Diwali is two weeks away. The government is already on holiday.
References:
- Is India in Governance Crises?: Chapter 1.
- Is India in Governance Crises?: Chapter 2.
- Is India in Governance Crises?: Chapter 3.
- Is India in Governance Crises?: Chapter 4.
- Is India in Governance Crises?: Chapter 5.
- Is India in Governance Crises?: Chapter 6.
- Is India in Governance Crises?: Chapter 7.
- Is India in Governance Crises?: Chapter 9.
- Is India in Governance Crises?: Chapter 12.
- Amitabh Agnihotri, Rashtravaani: त्योहारों और यूपी चुनाव से पहले UPI पर फैसला किसके दिमाग की उपज है?: https://youtu.be/6Ozy8d_oyPE?si=L1-yKx94m7q0PGjQ
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