Best of BS Opinion: RBI has done well to maintain status quo on repo rate

Today's pieces examine the RBI's decision on the policy rate, what it might do on the issue of Tata Sons' listing, 100 years of the RSS, and the question of rising populism globally as well as India

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Hello and welcome to Best of BS Opinion, our daily wrap of Business Standard's opinion page.

 

The Reserve Bank of India's task is never easy, with constant uncertainty baked into their prognosis. The latest circumstances for the Monetary Policy Committee were no different, with tariffs, geopolitical tensions, wide-ranging GST reforms, and falling inflation mixing things up. In such a situation, the central bank has done well to hold policy rates, notes our first editorial. More importantly, it has also taken a series of regulatory actions that are aimed at making it easier for banks to conduct their business, especially given the proposed implementation of the credit loss framework and Basel-III capital adequacy norms, without losing sight of banking and financial stability. 

 

As it completes a century of existence, the Rashtriya Swayamsevak Sangh (RSS) is at its most powerful, with its political arm, the Bharatiya Janata Party (BJP), in power at the Centre for the past 11 years and leading governments in more than a dozen states. It also has an RSS pracharak as the country’s third longest serving prime minister. It has managed to hold its own despite bans and an often-antagonistic political climate. But, as our second editorial points out, it now faces new challenges: how it readies its volunteers, many of whom join politics, to understand a diverse nation, how it reshapes India’s global perception, and how it continues to be relevant to a younger generation. It has shown adaptability in the past, but there is growing acknowledgement that its model needs a relook, whether on history, caste, or religion. 

 

One could say economic populism is the flavour of the season, whether in the US or in the global South. This is not new, writes Ajay Chhibber, pointing to populist governments since 1900, but also notes that such movements typically come and go. Unfortunately, irrespective of their place on the ideological spectrum, they also lead to lower GDP, higher public debt, and weaker institutional quality. Populist leaders also tend to pick autarchic policies that restrict trade, ignore pro-market policies supported by strong institutions in favour of industrial policy geared to benefit select firms, interfere with central banks' independence, and build wasteful prestige infra projects. The Modi government, also seen as a populist, has eschewed most of these tendencies; however, increasing import protection since 2018 and its pro big business policies come from a right-wing populist playbook, even as its food security schemed is more to the Left. India must focus on correcting these aspects of populism for a more competitive and inclusive economy. 

 

All eyes are on the RBI as it readies to decide on whether Tata Sons needs to go for public listing or not, notes Nivedita Mookerji. At Wednesday's monetary policy media briefing, Governor Sanjay Malhotra gave a Sphinx-like answer, saying an entity which had a registration could do business till it was cancelled. The main question, however, asks Mookerji, is whether the future of Tata Sons rests on whether it gets an exemption from the central bank? The Tata Sons' board is a house divided over the issue of Tata Trust nominees to it. In such a situation, the firm might want to protect itself from Tata Trusts, which seems to be looking to strengthen its oversight of the group's holding company. As of now, there is little clarity on who will shed how much stake if the firm is listed or if there would be legal tangles; in such a situation, it is important to know what Tata Sons wants. Clarity on the listing issue would clear the air considerably. 

 

Chris Horton's 'Ghost Nation: The Story of Taiwan and Its Struggle for Survival' assumes, correctly, that this is a world where moral arguments have been rendered impotent, writes Amritesh Mukherjee. As a result, Horton speaks to our more reliable motivations: economic anxiety and the fear of systemic collapse. Horton traces a pattern as old as the island itself to show how Taiwan became an indispensable yet abandoned democratic nation, an economic powerhouse whose fall would precipitate a crisis in the global economy. Taiwan is proof that democracy and economic growth cannot coexist. By ghosting Taiwan in the face of creeping Chinese expansionism, Horton suggests the 'liberal' world is sabotaging its own credibility.