Best of BS Opinion: RBI faces twin inflation risks as uncertainty swirls

Today's Opinion highlights the RBI's policy choices, soaring IPL franchise valuations, fiscal challenges, climate targets and a timely examination of contemporary China

Hello, and welcome to Best of BS Opinion, our wrap of the day's Opinion page.  The Reserve Bank of India (RBI)’s Monetary Policy Committee (MPC) should keep the key policy repo rate unchanged as it navigates an unusually uncertain environment, says our first editorial. Elevated oil prices caused by the West Asia conflict, coupled with the risk of a weak monsoon linked to a developing super El Niño, could create simultaneous inflationary and growth shocks. While retail inflation remains contained for now, higher fuel prices are likely to feed through in coming months. The RBI may also lower its growth forecast amid signs of softer economic activity. Revised inflation projections will be crucial in signalling the future policy path and assessing external risks.  The second editorial notes that IPL franchises have evolved into highly valuable assets because the league combines rapid revenue growth with sustained profitability. Team valuations have soared since the tournament’s launch, exemplified by Royal Challengers Bangalore’s recent sale at a valuation far exceeding conventional earnings multiples. Although the IPL remains smaller than the NFL and the English Premier League in overall revenues, its per-match economics are exceptionally strong. Unlike European football leagues, the IPL’s closed structure, salary caps, and player auction system help contain costs and ensure profits for most teams. These advantages have encouraged franchise owners to expand across global T20 cricket leagues.  In his column 'Raisina Hill', A K Bhattacharya argues that while the Union government deserves credit for meeting its fiscal deficit target in 2025-26, the underlying expenditure and revenue trends warrant closer scrutiny. The government has begun easing its post-pandemic restraint on spending, a shift that may need to continue as economic pressures intensify. At the same time, tax revenues have weakened, with individual income tax collections stagnating despite economic growth. Expanded tax rebates under the new income tax regime to please the middle class have eroded the effective tax base and contributed to the slowdown in collections. Future fiscal stability will require tighter subsidy management, stronger non-tax revenues, and a review of income-tax concessions.  Shubhi Goel and Gopal K Sarangi write that India’s new Greenhouse Gas Emission Intensity targets represent a significant advance in climate policy by translating national commitments into plant-level performance benchmarks across major industrial sectors. However, successful implementation will depend on recognising sharp differences in emissions profiles and abatement costs between, and within, industries. Firms will need credible measurement, reporting, and verification systems to ensure accountability and support effective carbon trading. The authors contend that robust market institutions, sector-specific decarbonisation pathways, expanded coverage, and support for firms facing higher compliance costs are essential if the framework is to deliver efficient and equitable emissions reductions.  In his review, Gunjan Singh writes that Jeffrey Wasserstrom’s Everything You Wanted to Know About China: But Were Afraid to Ask succeeds in demystifying a political system often obscured by censorship and state control. Structured as a series of questions and answers, the book examines Chinese history, ideology, governance, and society, while exploring issues ranging from Tiananmen Square to Taiwan and Xinjiang. Wasserstrom’s analyses President Xi Jinping’s reliance on narrative-building, his similarities and differences with Mao Zedong and Chiang Kai-shek, and the Communist Party’s embrace of Confucian themes. The result is an accessible, insightful guide to contemporary China and its future trajectory.