Best of BS Opinion: Credibility comes at a price

Credibility is rarely free. Governments can suppress prices, sign agreements, promise investors protection, announce food-safety rules or defend inherited political arrangements. But each of these choices eventually asks for payment — through fiscal costs, institutional followthrough, enforcement, compensation, or reform. Trust is built only when those costs are faced openly rather than pushed into the future.

 

Our first editorial today, “Economics of energy”, applies this lesson to petroleum pricing. India has received relief after crude oil prices corrected following the US-Iran agreement, with Brent falling from its conflict-period high of about $120 a barrel to around $72. But the earlier decision to prevent full passthrough of high prices did not remove the burden. It merely shifted it. Oil-marketing companies accumulated large underrecoveries and losses, while the government also sacrificed revenue by cutting special excise duty on petrol and diesel. The editorial argues that market interference has historically achieved little. A transparent petroleum-pricing regime would have allowed prices to rise and fall clearly, giving consumers and businesses the right signal.

 

 

The second editorial, “Spanning two oceans”, turns to strategic credibility. Japanese Prime Minister Sanae Takaichi’s visit to New Delhi showed that the India-Japan relationship now goes well beyond economic cooperation. Defence technology, maritime security, rare earths, supply-chain resilience and the rules-based Indo-Pacific order have become central to the partnership. Japan’s decision to ease restrictions on defence exports creates new possibilities for joint development with India at a time when traditional defence sources are less reliable. But, as the editorial points out, the partnership will matter only if the agreements are operationalised and private-sector collaboration is supported.

 

Ajay Shah and Shubho Roy’s column, “BITs: From why to how”, is the clearest statement of the theme. Bilateral investment treaties are described as a form of “rented credibility” for countries whose domestic institutions do not yet inspire full investor confidence. India needs FDI, but investors will look not only at treaty text but at India’s past behaviour on retrospective tax, adverse awards and regulatory unpredictability. The authors argue that India should offer deep protections, create a pre-funded compensation pool, honour awards without outrage, and treat payouts as the insurance premium for attracting durable capital.

 

Sunita Narain’s “Prescription for safer food” asks why food-safety reform should depend on export-market pressure. India tightened rules on antibiotics in animal products after the European Union made such standards essential for market access. That is welcome, but the same standards must protect Indian consumers too. Enforcement must cover domestic food, not just export consignments, and farmers need support to reduce dependence on antibiotics, pesticides and other harmful inputs.

 

“The rise of America’s oldigarchy”, Jennifer Szalai’s review of Samuel Moyn’s Gerontocracy in America, extends the argument to politics. The book argues that wealth, benefits and power in the US are increasingly concentrated among older citizens. Whether or not one accepts all its provocations, the review highlights an uncomfortable question: Societies must confront the distributional costs of their political arrangements.

 

Credibility, these opinion pieces show, is not a claim. It is a willingness to pay the price of transparency, enforcement and long-term responsibility.