Best of BS Opinion: Inflation projections demand monetary tightening

Today's opinions examine the RBI's inflation dilemma, rising life insurance surrenders, India's employment crisis, possible UPI charges and the shift from food to nutrition security

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

 

The RBI's Monetary Policy Committee rightly kept the repo rate unchanged, given moderating core inflation, uncertainty over the monsoon, and the prospect of easing energy prices if tensions in West Asia subside, notes our first editorial. However, the inflation outlook has become more challenging. With headline inflation projected to remain above 5 per cent for three consecutive quarters and the policy rate at risk of turning negative in real terms, the central bank may have to begin raising rates in coming meetings. Additionally, measures to attract foreign capital have helped stabilise the rupee, though global interest rate movements remain an important risk.

 

 

Today's second editorial highlights rising premature withdrawals and surrenders of life insurance policies as evidence of weak policy persistency and questions whether products adequately meet consumer needs. Early exits reflect unsuitable products, unaffordable premiums, mis-selling, poor financial literacy, and changing financial circumstances, pointing to deeper issues in product design and sales practices. Recent regulatory reforms to improve transparency, consumer protection, and attract investment are welcome, though some new share transfer rules could deter foreign investors. It contends that the next phase of reform should prioritise long-term policy retention through better incentives, simpler products, stronger suitability assessments, improved disclosures, and sustained post-sale engagement with policyholders.

 

The recent student protests - led by the Cockroach Janta Party - over the NEET-UG question paper leak reflect deeper frustrations over rising inequality and the lack of employment despite strong economic growth. Ajay Chhibber argues that India's low employment elasticity, labour and land market rigidities, and capital-intensive growth model have produced jobless growth that threatens to squander its demographic dividend. Drawing comparisons with Vietnam and China, he advocates export-led growth, greater foreign investment, wider trade integration, and stronger tourism promotion to generate employment. Without broad economic, governance, and education reforms, he warns, social tensions will persist and India's development ambitions could falter.

 

Nivedita Mookerji examines how the proposed return of a merchant discount rate (MDR) on select UPI transactions could affect India's fast-growing quick commerce sector. While the proposal aims to create a sustainable financial model for digital payments, it could introduce a complex system of exemptions, transaction thresholds, and turnover-based calculations. Such rules may increase compliance burdens for merchants and eventually raise costs for consumers if businesses pass on the levy. She notes that seamless UPI payments have underpinned quick commerce's growth and questions whether restoring MDR through a complicated framework is the best way to fund the payments ecosystem.

 

Improving Nutritional Outcomes: Connecting the Dots through Grounded Action, edited by Vandana Prasad and Arti Ahuja, examines India's shift from food security to nutrition security, combining policy analysis with grassroots evidence to assess what has worked and what gaps remain, writes Neha Bhatt in her review. Through case studies, data, and contributions from public health experts, policymakers, and practitioners, it explores community-led interventions, government programmes, and decentralised approaches to improving nutritional outcomes. Particular attention is paid to maternal and child health, women-led initiatives, and vulnerable communities, while also addressing emerging challenges such as obesity and micronutrient deficiencies. By linking field-level experience with public policy, the volume offers a practical roadmap for strengthening nutrition programmes and achieving lasting improvements in health.