Best of BS Opinion: Navigating shocks, reforms, and policy choices

India faces energy-driven policy strain as global tensions rise, even as DPI 2.0, regulatory lessons, and FDI choices shape long-term resilience

Hello and welcome to Best of BS Opinion, our wrap of the day's Opinion page.

  Today’s first editorial notes that the continuing United States (US)-Iran deadlock has forced India into a difficult policy space. With the Strait of Hormuz blocked, Brent crude above $125 per barrel, and energy supplies under pressure, India’s fiscal and monetary choices have become more complicated. The recent increase in commercial liquefied petroleum gas, 5-kg LPG cylinder and aviation turbine fuel prices signals the need for policy recalibration, even as petrol and diesel prices remain unchanged. With fiscal stress rising, inflation likely to firm up, and a below-normal monsoon forecast, India may face difficult decisions if the conflict persists.

 

The NITI Aayog’s latest road map on digital public infrastructure marks a shift from building digital access to driving economic outcomes, notes our second editorial. India’s first phase of digital public infrastructure helped address foundational gaps in identity, financial inclusion and public service delivery. The next phase, DPI 2.0, aims to embed digital systems into sectors such as micro, small and medium enterprises, agriculture and credit, reducing transaction costs and expanding market access. The editorial argues that open, interoperable networks and district-level execution can strengthen productivity and resilience. Yet, uneven innovation capacity, fragmented data systems, limited artificial intelligence readiness, and weak institutional capacity could limit its real-economy impact.

 

M S Sriram argues that the Reserve Bank of India’s experience with local area banks, payments banks and peer-to-peer lending shows how regulatory intent can fail when design and business models are weak. Local area banks were meant to support market development but were constrained by geography and limited commercial viability. Payments banks lacked a clear revenue model, especially after UPI reduced fee income from remittances. Peer-to-peer lending, too, raises questions about scale, risk transfer and whether users fully understand the model. Sriram says experimentation is welcome, but regulators must ask old-fashioned questions about simplicity, viability and whether the revenue model is transparent.

 

Debashis Basu writes that India’s relaxation of Press Note 3, allowing non-controlling foreign direct investment of up to 10 per cent from land-border countries through the automatic route, is unlikely to meaningfully change China-India economic ties. He argues that China views India less as an investment destination and more as a major export market. India-China trade in FY26 was heavily skewed, with China exporting $131.63 billion to India against imports of only $19.47 billion. Basu says India’s cautious, hesitant approach to Chinese investment is not a policy. Instead, India must define its objective clearly and build production capability, technology absorption and competitiveness as its first priority.

 

David Kortava reviews Mikhail Fishman’s The Successor, a biography of Boris Nemtsov that frames him as the democratic Russia that never came to power. Nemtsov, once seen as a possible heir to Boris Yeltsin, rose quickly from governor of Nizhny Novgorod to deputy prime minister before the 1998 financial crisis and disillusionment with reforms derailed his ascent. As Vladimir Putin rose, Nemtsov became a persistent critic of the Kremlin, documenting abuses, organising protests and facing harassment, lawsuits and detention. Kortava notes that Fishman does not overstate Nemtsov’s chances of becoming President, but presents him as a symbol of an alternative political future that Russia violently suppressed. 

Quote of the day

 

“Iran has not yet paid a big enough price for what they have done to Humanity, and the World, over the last 47 years”

 

- US President Donald Trump