Archive May 22, 2025

Due to concerns over the country’s $ 36 trillion debt pile, Moody’s downgraded its credit rating last week. The action could stifle President Donald Trump’s efforts to reduce taxes and send ripples through the financial markets.

The US government’s credit score was dropped from the pristine Aaa to Aa1 by the Moody’s rating agency. It cited rising interest rates and debt costs that were “significantly higher than sovereigns with comparable ratings””.

The US credit score was downgraded by rating rival Fitch, which had earlier downgraded the US credit score in 2023. After Standard & Poor’s did so in 2011, Fitch was the second major rating agency to remove the US’s AAA rating.

Credit ratings are used by investors to assess a company’s and government’s risk profile. The higher a borrower’s financing costs are the lower a borrower’s rating is.

What justifications were given by Moody’s for the downgrade?

According to a news release released last week, “Successful US administrations and Congress have failed to reach agreement on measures to stop the trend of large annual fiscal deficits and rising interest costs.”

“Over the past decade, US federal debt has steadily increased as a result of ongoing fiscal deficits. Federal spending has increased while government revenues have decreased as a result, it said.

Moody’s downgraded Washington for the first time since 1949, the year it first started grading US government debt.

Trump has stated he will balance the budget since his January return, but Treasury Secretary Scott Bessent has repeatedly stated that the administration wants to lower its borrowing costs.

However, Trump’s initial goals were far short of what Elon Musk’s Department of Government Efficiency attempted to cut spending. Washington’s current debt rate is currently around $1 trillion per three months.

In the meantime, it is unclear whether tariff-based efforts to increase revenues, which raised concerns about a global slowdown and trade war, will succeed. The majority of economists believe they won’t.

US government bonds have been the “risk-free” benchmark for other financial assets for decades. However, that is being called into question more frequently.

How severe is the US debt issue?

A staggering 16 percent (or $684bn) of tax revenues were used this year to pay debt interest payments, according to data from the US Department of the Treasury. By contrast, that figure is closer to 4% in Germany.

Looking ahead, Moody’s predicted that by 2035, the US federal deficit would increase to 9 percent of GDP, up from 6 percent in 2024, “primarily due to increased interest payments on debt… and relatively low]taxes.”

By 2035, the federal debt burden, according to the report, will be 134 percent of GDP, up from 98 percent in 2024. In context of the COVID-19 pandemic, the debt-to-GDP ratio reached a record high of 133 percent in 2020.

Moody’s maintained that the US still has “exceptional credit strengths” in terms of size, resilience, and dynamism, and that the US dollar continues to be a major reserve currency.

What has been the administration’s response?

White House spokesman Kush Desai said in a statement that “If Moody’s had any credibility, they would not have remained silent as the fiscal disaster of the past four years]as it unfolded”

Moody’s downgrade was seen as politically motivated by The White House. Mark Zandi, the head economist for Moody’s, is a Trump critic, according to White House communications director Steven Cheung.

What’s the background like?

Trump is urging members of Congress to pass legislation that extends the 2017 tax cuts that were proposed. His signature first-term accomplishments were those that cut corporate and individual taxes.

A bill to extend those tax cuts failed to pass a procedural hurdle on Friday as some Republicans in the House of Representatives demanded more spending cuts before vetoing Moody’s recent downgrade.

The holdouts then dropped their opposition and allowed it to pass through committee late on Sunday. The full chamber is now one step closer to passing the tax proposal.

According to Moody’s, the fiscal proposals being considered were incompatible with a steady decline in the deficit and ongoing discussions about reducing taxes, which would increase the debt burden by 134 percent of GDP over the next ten years.

Senate Democratic Leader Chuck Schumer said on Friday that “Moody’s downgrading of the United States’ credit rating should serve as a wake-up call for Trump and congressional Republicans to put an end to their careless pursuit of their deficit-busting tax giveaway.”

I’m not holding my breath, sadly.

What results did the downgrade produce?

Fears that a large investor will reevaluate US sovereign debt were exacerbated by Moody’s downgrade. As asset prices decline, so does the demand for them. Returns from investors’ loans to the government are then changed, with the opposite outcome.

More than 4.5 percent of benchmark 10-year yields increased on Monday, influencing both corporate and consumer interest rates. Since then, they have decreased a little. Yields increased for longer-dated 30-year bonds as well.

US stock markets were jittery on Monday despite Moody’s announcement, but they have since largely recovered. Gold, on the other hand, increased by almost 1% to $ 3,220 an ounce before falling off on Tuesday and Wednesday.

The US dollar’s value also decreased against a range of other currencies. For instance, the British pound increased to $1.35 from its previous high against the greenback at the start of May.

What makes it important?

Because commercial banks use government bond yields as a benchmark for setting their own interest rates, lower credit ratings typically lead to higher bond yields, which will increase interest rates on everything from mortgages to car loans to credit card debt.

Americans, who are among the world’s most deserving of all credit, are in need of this. According to the International Monetary Fund, US household debt in relation to GDP reached 73 percent in 2023. Household debt-to-GDP ratios in excess of 100% are found in Canada, Australia, and Switzerland.

As the government’s spending increases for rising debt repayments becomes more expensive, the US government will have less money for public programs like Social Security, healthcare, and defense.

Washington could raise taxes to reduce its debt in order to generate more income. However, Trump seems to be moving in the opposite direction, lowering both public spending and taxes.

As the federal government tries to “wipe out” long-running armed rebellions in the mineral-rich tribal region of the nation, Indian security forces have launched an all-out war against Maoist fighters in Chhattisgarh state.

The Karrigatta hills forest, which straddles across Chhattisgarh and Telangana states, has turned into a “warzone” with more than 10, 000 Indian soldiers deployed in the anti-Maoist operation – dubbed “Operation Zero or Kagar”.

At least 201 Maoist rebels, also known as Naxals, were killed by the right-wing Bharatiya Janata Party (BJP), which governs both the state and the central government this year.

At least 27 rebels were killed on Wednesday, including the leader of the Maoists. In the past 16 months, more than 400 alleged Maoist rebels have been killed in Chhattisgarh state, home to a sizable population of Adivasis (meaning original inhabitants or Indigenous people).

However, activists are alarmed because many of those killed are innocent Adivasis, according to them. And campaigners and opposition leaders are urging the government to cease fire and hold talks with Maoist rebels to find a solution to the decades-old issue.

Between 2000 and 2024, more than 11, 000 civilians and security personnel have been killed in clashes involving Maoist fighters, according to official figures. Security forces have killed at least 6, 160 Maoist fighters during the same period, according to police and Maoist figures.

So, will the government’s hardline approach help bring peace, or will it further alienate the Adivasis, who are already one of the most marginalised groups in the country?

What are the Maoists’ objectives in the conflict with the Indian state?

The armed rebellion in India originated in a 1967 rural uprising in the small town of Naxalbari, located in West Bengal state. The name of the town gives rise to the word “Naxal.”

Led by communist leaders Kanu Sanyal, Charu Majumdar, and Jungle Santal, the armed uprising called for addressing the issues of landlessness and exploitation of the rural poor by landlords.

The three leaders founded the Communist Party of India (Marxist-Leninist) (CPI (ML)) on April 22, 1969, to wage armed rebellion against the Indian state. They feared that the current democratic structure would not be able to fulfill their demands.

The Naxal rebels were also inspired by the revolutionary ideology of the Chinese leader Mao Zedong. They waged a violent rebellion against the Indian security forces in mineral-rich central and eastern India for decades, following the Chinese communist party’s strategy for capturing the state. The West Bengal government, led by Congress leader Siddhartha Shankar Ray, launched a fierce campaign to suppress the Naxalite uprising.

I once again assure the countrymen that India is sure to be Naxal-free by 31 March 2026

Sanyal, one of the founding leaders of the movement, told this reporter in 2010 that “by 1973, at least 32, 000 Naxalites or sympathisers had been jailed across India”.

“Many people died in fictitious encounters. And when the Emergency was declared in June 1975, it was clear- the sun had almost set on the Naxalite movement”, he said. He died in 2010, aged 78, apparently by suicide in Siliguri.

More than 20 of the parties that made up the CPI (ML) are still present today. The main CPI (ML) itself gave up armed struggle, expressed faith in the Indian Constitution and began participating in electoral politics. It has a number of legislators and is currently a legally recognized political group.

Meanwhile, in 1980, one of the splinters, the Communist Party of India (Marxist–Leninist) People’s War, was founded by Kondapalli Seetharamayya and Kolluri Chiranjeevi in Andhra Pradesh.

Another major breakaway faction, the Maoist Communist Centre (MCC), had a base in Bihar and West Bengal states. The Communist Party of India (Maoist), the largest armed Maoist organization in India today, was formed as a result of the merger between the MCC and the CPI (ML) People’s War in September 2004.

The organisation’s most recent general secretary, Nambala Keshava Rao, alias Basavaraj, was killed by security forces on Wednesday in Bastar, Chhattisgarh – the last stronghold of Maoists.

Has the BJP intensified the campaign against Maoists?

The BJP-run Chhattisgarh state government has adopted a more aggressive stance against Maoists compared with the previous government led by the Congress party.

When the Congress party was in power between 2020 and 2023, at least 141 Maoists were killed, but security forces claimed to have killed 223 alleged Maoists alone in 2024, citing government figures.

“For the past 15 months, our security personnel have been strongly fighting the Naxals”, Chhattisgarh Chief Minister Vishnu Deo Sai told Al Jazeera.

“This is a part of the wider efforts to eradicate naxalism in India, spearheaded by Prime Minister Narendra Modi and Home Minister Amit Shah. This is a decisive phase, and we are advancing rapidly in that direction”, he said.

The security forces have currently surrounded suspected Maoist hideouts in Karigatta Hills, with the army’s helicopters assisting in the operation, according to authorities.

The one who kills is tribal, and the one who dies is also tribal, whether it’s the Maoists or the DRG.

31 fighters were killed in the Karrigatta Hills, according to Home Minister Amit Shah on May 14.

“ I once again assure the countrymen that India is sure to be Naxal-free by 31 March 2026,” Shah reiterated in his post on X.

Overall, nearly 66, 000 security personnel spanning a range of paramilitary and special forces have been deployed in Chhattisgarh.

The latest operation, which involves more than 10, 000 soldiers, centres around the mineral-rich Bastar region of Chhattisgarh, which spans 38, 932 square kilometres (15, 032sq miles) – an area nearly the size of the US state of Kentucky.

Three million people live in Bastar alone, and the government has established roughly 320 security camps. The number of personnel at each security camp fluctuates depending on the requirement: It can be as low as 150 personnel and rise up to 1, 200. They include security forces, as well as technical staff.

In order to aid in the rebellious operation, security camps frequently have surveillance and communication equipment. The 20, 000-strong local police force is also helping in the operations in Bastar.

Security forces have been able to monitor Maoist activity in the area’s dense forests thanks to the use of cutting-edge technology, such as advanced drones equipped with high-definition cameras and thermal imaging sensors.

However, local villagers allege that security forces have carried out aerial bombings in various parts of Bastar using large drones. Maoist groups have also accused the forces of conducting air strikes.

These assertions have been consistently refuted by security forces.

Shah, the home minister, has made frequent visits to Chhattisgarh, even spending nights with security forces in Bastar.

However, Manmohan Singh’s former prime minister, who presided over Modi in India’s top executive positions, had also taken a tough stance against Naxals.

Singh even called Naxalism the “greatest internal security threat” to India, and his government launched a major crackdown in 2009 under what it called “Operation Green Hunt” to quash the armed rebellion. Amid allegations of human rights violations, Indian security forces managed to reduce the terrain controlled by the Maoists.

Naxals ruled almost one-third of India’s mineral-rich tribal areas in the 2000s, extending among others Chhattisgarh, Telangana, Odisha, Jharkhand, and Maharashtra. But the number of districts where Maoists wield significant influence had declined from 126 in 2013 to just 38 by April last year.

As the government claims success in its military offensive, human rights groups such as the People’s Union for Civil Liberties (PUCL) accuse the security forces of carrying out fake encounters or extrajudicial killings.

“A large-scale military campaign is being carried out under the pretext of eliminating Maoists”, Junas Tirkey, the president of the PUCL in Chhattisgarh state, said.

“In Bastar, violence, human rights violations, and militarisation have increased significantly since 2024. Innocent tribals are being killed in fake encounters”, he told Al Jazeera.

In Bastar, violence, human rights violations, and militarisation have risen significantly since 2024. Innocent tribals are being killed in fake encounters

Over the past year and a half, the PUCL has identified at least 11 fake encounters.

On March 25, police claimed it had killed Maoist rebels Sudhakar alias Sudhir, Pandru Atra, and Mannu Barsa in Bordga village, Bijapur, about 160km (100 miles) east of Bastar.

The police’s version, however, is claimed by the locals to be false. They claim that the police surrounded the village at night, took 17 people away, released seven, shot three, and took the remaining seven with them.

The government has denied the allegations, but no independent investigation has been conducted in this case. Rights groups and tribal communities don’t agree with the regular magisterial inquiry because it heavily relies on the police’s account of events, which is carried out after so-called encounters.

“It’s true that Sudhakar was a Maoist and came to visit someone in the village. However, the police shot Sudhakar, my brother, and other people who were still alive after they had been taken away, according to Manesh Barsa, Mannu Barsa’s brother, who falsely claimed it was an encounter.

Inspector general of police of Bastar region, Pattilingam Sundarraj, disagreed with these allegations. He claimed that Maoists often pressure locals to fabricate accusations against the police following encounters.

However, in the past, numerous ‘fake’ encounters at Bastar have been proven false, and victims have typically been evaded justice.

Even if they are eliminated from Bastar, Maoism is an ideology that cannot be defeated through violence alone

Out of thousands of so-called encounters in Bastar in the last 25 years, only two have faced judicial inquiry. On June 28, 2012, 17 Adivasis, including six minors, were killed in Sarkeguda village in Bijapur district. In Edasmeta village in the same district, four minors were killed on May 17, 2013, in addition to the eight Adivasis killed.

The inquiries led by High Court judges found all victims to be innocent. No police cases have been filed against any personnel as of 2022, despite the previous Congress’s rule.

Even peaceful protests against mining projects and the militarisation of the region have been met with harsh crackdowns.

The Moolvasi Bachao Manch (MBM), led by Adivasis, was banned last year for “opposing development” and “resisting security forces”.

Since 2021, Adivasi youth who work for MBM have been detained.

Why is the recruitment of former Maoists in government forces criticised?

The authorities’ recent hiring of Adivasis, many of whom were former Maoists, appears to have turned the tables in favor of the government.

The then-BJP state government started to incorporate Adivasis, particularly former Maoists, in the District Reserve Guard (DRG) force in 2008 with the aim of using them in anti-Maoist operations. The idea: Former Maoists are better at navigating dense jungle terrain and know about Maoist hideouts.

However, concerns have been raised by previous records. Adivasis enlisted as Special Police Officers (SPOs), as they were called, have been accused of rights violations.

Salwa Judum, a campaign against Maoists that the state government, which was led by the Congress government, launched in 2005 (ittranslates as “peace march” in the local Gondi language). Salwa Judum members were armed and were later designated as SPOs and paid 1, 500 rupees/month ($17/month).

On one hand, the government itself had proposed dialogue with the Maoists. However, the same government has now transformed Bastar into a war zone.

However, members of the Salwa Judum were accused of rape, arson, torture, and murder. In 2011, the Supreme Court declared Salwa Judum illegal and slammed the state for arming civilians. Subsequently, many SPOs were absorbed into the DRG.

Although rights abuse allegations against DRG personnel have been made, they have hardly ever been investigated.

Campaigners have also questioned the policy of using surrendered Maoists in combat instead of rehabilitating them.

SPOs’ inclusion in the DRG is unsettling. It shows how tribal youth involved in violence were again handed guns under the pretext of rehabilitation”, lawyer and human rights activist Priyanka Shukla told Al Jazeera.

Former Member of Parliament Arvind Netam believes Bastar is “in a state of civil war”. He claims that tribal people suffer the most in a situation like this.

“The one who kills is tribal, and the one who dies is also tribal, whether it’s the Maoists or the DRG.,” Netam, a tribal leader, told Al Jazeera.

Campaigners claim that Chhattisgarh’s new rehabilitation policy encourages people to “turn on each other for money,” frequently with allegations that may be legally untrue.

Why has the government resisted calls for a ceasefire?

Interestingly, while the government has intensified its offensive, it has also continued to offer peace talks to Maoists.

“We must still say that Maoists should speak out after laying down their weapons for dialogue.” Our doors for talks within the framework of the Indian Constitution are always open”, Chhattisgarh’s Home Minister Vijay Sharma told local media last week.

However, the Maoists demand that paramilitary forces be withdrawn and that a ceasefire be established as prerequisites for talks. They argue that peace talks and military operations cannot run simultaneously.

In a statement, CPI (Maoist) spokesperson Abhay said, “The right to life guaranteed by the Indian Constitution is being crushed by the government itself … On one hand, our party is trying to initiate unconditional dialogue, and on the other hand, ongoing killings of Maoists and tribals render the peace process meaningless”.

Concerns have been raised by activists regarding the Adivasi communities’ plight.

Soni Sori, an Adivasi social activist from Bastar, believes the government must take the initiative for peace talks.

“ On one hand, the government itself had proposed dialogue with the Maoists. However, the same government has now transformed Bastar into a war zone.,” Sori told Al Jazeera.

“Given the way these operations are being conducted, the government should halt them, foster an environment conducive to dialogue, and take meaningful steps toward initiating peace talks”.

After being referred to as Naxal sympathisers, people have been targeted for their actions. A 90 percent disabled professor from Delhi University, GN Saibaba was jailed for backing Maoists. He died months after receiving a verdict by the country’s top court after ten years in prison.

But state Chief Minister Sai says there will be no leniency in this matter. “Naxal eradication is not just a campaign but a mission to secure Bastar and Chhattisgarh’s future”, he said.

Is Maoist support declining?

In 2011, then-Director General of Police of Chhattisgarh Vishwaranjan estimated approximately 10, 000 armed Maoists and 40, 000 militia members in the Bastar region. It’s challenging to get accurate numbers.

The rebels were able to carry out deadly attacks against the security forces. In 2010, they killed 76 paramilitary troops in a forest ambush in Chhattisgarh. In a rebel ambush, dozens of people were killed, including the Congressman who founded the Salwa Judum three years later.

Current Bastar IGP Sundarraj P estimates about 1, 000 armed Maoists remain, along with 15, 000 affiliated individuals.

According to internal Maoist reports, there are lessening recruitment, smaller units, and a lack of ammunition. Of the 40 central committee and politburo members, only 18 remain free – the rest are either dead or arrested.

Meanwhile, security forces have expanded, built new camps, and improved intelligence and training, while Maoists ‘ base areas are shrinking.

While our government is conducting an anti-Naxal campaign, we are actively involved in development projects.

Maoists are weakened in Chhattisgarh, according to former DGP Vishwaranjan, but have spread to neighboring Madhya Pradesh.

“ Even if they are eliminated from Bastar, Maoism is an ideology that cannot be defeated through violence alone,” he told Al Jazeera.

“As long as we build a society on economic inequality, the ideology may resurface in a new form”.

Chief Minister Sai defended the policies of his government, claiming that “security and development go hand in hand.”

“While our government is conducting an anti-Naxal campaign, we are actively involved in development projects.,” he said.

Is iron ore actually at stake?

Naxals have invoked the exploitation of natural resources, particularly through mining leases issued to global corporations, and the displacement of local communities, as their reasons for picking up guns in mineral-rich areas of the country. Thousands of Adivasis have been displaced and their local environments severely damaged due to mining activities.

36 of the 51 mineral leases in Bastar are held by private companies, including ArcelorMittal, a major global steel company.

Former MLA and tribal leader Manish Kunjam echoes a similar sentiment, arguing, “The real issue is iron ore”.

Chhattisgarh, primarily Bastar, accounts for 19% of India’s iron ore reserves, according to the Indian government.

Chhattisgarh accounts for 18 percent of India’s railway freight revenue, largely from mineral transport – and this is growing.

Kunjam explained that when the corporations Tata and Essar began their projects in 2005 to mine iron ore, the state launched Salwa Judum, evacuating 644 villages under the pretext of Maoist fear. There were displacements of at least 350,000. However, strong tribal resistance forced the companies to withdraw.

The government has now established security camps in mining areas as it prepares for new extraction, he said, drawing lessons from that failure.

“Without village council approval, mining cannot proceed. If tribals protest, they will be labelled as Maoists or sympathisers and dealt with accordingly”.

When you examine his assertions more closely, it becomes clear that the majority of camps are actually in regions where mining has begun or is about to start. In Bastar’s mining belt, there is one soldier for every nine tribals. Mining companies finance many of these camps.

But Chief Minister Sai believes that the mineral resources in tribal areas should be utilised.

The idea of generating revenue at the cost of tribal lives is dangerous and unconstitutional

“The lives of tribals will change with the beginning of mining and industrial activities”, he said. He boasted that Chhattisgarh earned about 14.19 billion rupees ($1.71 billion) in the year that it was second among the states producing minerals [after Odisha].

This year, the state has allocated 48 major mineral blocks to private companies in the state.

But mass poverty and lack of basic health facilities expose the government’s claims.

The tribal leader, Netam, pointed out that the state has a nearly 38 percent infant mortality rate for every 1,000 live births, compared to the 28 percent infant mortality rate for every 1,000 live births in the country.

In Bastar, he said, poverty is 80 percent.

Sushil Anand Shukla, a spokesman for the opposition Congress, claimed that tribals were being completely displaced from Bastar under the guise of mining.

“Today, Bastar stands on the brink of war, and its answers cannot be found by looking to the past. The government must stop surrendering to corporate houses and mining companies at the cost of evicting tribals”, Sushil Anand Shukla says.