Why Zero MDR on RuPay Debit Cards?

Merchant Discount Rate (MDR) is the fee paid by merchants for accepting digital payments. This has been there in India since Visa and MasterCard entered India. Different payment networks charge at different rates across payment instruments. Credit cards generally charge higher MDR than that of debit cards. MDR on Visa and Mastercard credit cards range from 1.5% to 2.5%, while American Express credit cards charge from 2% to 3.5%. Indian payment network RuPay-issued credit cards charge zero MDR on transactions valued up to ₹2000, and for transactions above ₹2000 the charges range from 0% to 2% depending on the transaction type and value. Debit cards have relatively lower rates, with Visa and Mastercard typically between 0.4% and 0.9%. RuPay debit transactions have 0% MDR.

For UPI, there is an MDR of 0.4% on P2M transactions above ₹2000 to be paid by merchants, which is capped at ₹300. P2M transactions up to ₹2000 have zero MDR. For P2P transactions, MDR is zero. Other special provisions apply to small merchants, essential services, and capital-market transactions. Overall, the structure shows how MDR varies by payment method, transaction type and regulatory framework, with the objective of balancing digital-payment adoption, merchant costs and financial inclusion.

Is Human psychology a mystery?

Is Human psychology a mystery?

A person might feel satisfied standing outside an Apple Store for hours, starting at midnight, just to get a mobile phone that could otherwise be delivered to their doorstep in a matter of minutes or hours in this time of instant delivery apps. To them, this arduous wait might feel like a festival. Standing outside the store for hours might seem like an integral part of the product experience itself! They might perceive it however they please, and this very ordeal could even feel like a significant achievement! Yet, this same individual is often in a state of constant urgency in their daily life! They are always in a rush and want everything done immediately! A delay or inconvenience of even a few minutes feels so intolerable to them that they fly into a rage!

The human mind is truly beyond comprehension. People often prefer the voluntary servitude of their own desires over the prospect of unwanted freedom!

Who could stop someone from succeeding if they truly understood this aspect of human nature?

Rajeev Upadhyay

India's First 'A' Rating: Can Monetary Policy Sustain It?

Japanese credit rating agency Japan Credit Rating (JCR) has upgraded India’s sovereign rating from BBB+ to A-. India’s entry into the A-rated sovereign club is not just a technical upgrade or symbolic, but a verdict on India’s policy evolution over two decades, the country’s growth, fiscal management and policy credibility. But the real test of that credibility is not coming from credit rating agencies but from how India responds to the persistent inflation shock in the economy. There looms a critical question now: Can India and the RBI’s monetary policy sustain this momentum? Or will it become the very factor that undermines our newly won credibility?
The Rating Upgrade Decoded

JCR has upgraded India's sovereign credit rating to 'A-' from 'BBB+', with a stable outlook. It is a historic moment for India as it took about two decades to upgrade from BBB+ to A-. With this, India has formally entered the ‘A’ band. Solid economic growth, effective and deliverable economic policies and an improved financial system are the key drivers of this rating upgrade.

Numbers have played the most important role in this upgrade. In FY26, GDP grew at 7.7%. Q1 GDP growth has been 7.8%, which is the fastest among emerging economies, and FY27 is expected to remain above the RBI’s estimate of 6.7% growth, supported by reduced personal income tax and GST rate reduction. The government is working on bringing the debt-to-GDP ratio down from 56.1% to 50% in FY27. The fiscal deficit is projected to be 4.3% to 4.5% during the period. However, on the negative side, the current account deficit has widened to $4.2 billion from $3.4 billion in the quarter ending June 2026, which is 0.5% of GDP. But at the same time, on account of RBI’s FCNR(B) success, India’s foreign exchange reserves have increased to more than $780 billion. 

It’s not the Right Time for MDR on UPI

MDR on UPI has become a household topic, polarising India. Some claim MDR is beneficial, while others express dissatisfaction. Many are asking how long UPI will remain free. Charges are natural. Others are asking when other freebies will be stopped. Every side has some fair points. MDR on UPI, like any decision, does have some benefits for the economy. But on the other side, it will also negatively affect people and the economy.

MDR on UPI does have some positive impacts on the economy. It will make the UPI ecosystem sustainable and competitive in the medium to long term. The annual cost of operating, scaling and maintaining UPI infrastructure is about INR 20,000 crores. Not only this, the business was not profitable for operators, so the businesses were not investing much in cybersecurity, innovation and system upgrades. MDR on UPI will make the business competitive, and more investment will flow into cybersecurity, innovation and system upgrades. This will also help in improving UPI infrastructure in rural areas. So on these counts, the MDR on UPI is beneficial.

It should be noted that UPI cannot be treated as a freebie. Rather, it is an economic enabler which is helping in creating an ecosystem that revolves around the digital economy. This costly free economy is a 'positive discrimination' which is helping increase financial inclusion and formalise the economy. Once, on 15th October, this MDR on UPI becomes a reality, it will have many negative consequences for the economy. It will lead to increased use of cash, indirect inflation and a pushback for growth-stage small retailers.

WPI and CPI Becomes Sticky in India

Inflation in India is becoming sticky. In August 2026, CPI inflation rose to 4.82%, while food inflation climbed to 5.95%. WPI inflation neared double digits at 9.92%, showing that price pressures are no longer limited to consumers and are spreading through production chains, which will eventually be passed on to consumers. Though CPI remains within the RBI's inflation threshold, inflation's headstrong turn suggests it may soon breach the limit, and the RBI may opt to raise interest rates.

This is not merely a monetary problem. India’s food supply remains vulnerable to monsoons, weak storage, fragmented markets, external shocks due to fuel dependency and, most importantly, speculation. The RBI cannot solve these structural constraints by raising interest rates or by using monetary policy instruments.

The solution to this structural problem lies in the hands of the government. The government must invest in logistics, irrigation and competitive agricultural markets (agriculture reforms), along with bringing down the dependency on imports to plug the problem of imported inflation and shocks.

India's Trade with BRICS Nations

BRICS is now just a forum for talk, but it is a structural reality for India. And India doesn’t sit at its centre by accident but by design. The number of member countries has increased from 5 in 2006 to 11, plus 10 partner countries. BRICS now commands nearly 40% of global GDP, 26% of global trade, and about half of the planet's population. So this bloc is not a simple multilateral forum but has the economic gravity of a very big continent. However, India runs a trade deficit of more than $200 billion with the BRICS nations, while India’s trade with the USA and Europe is more favourable. The USA is the largest trade partner of India, with which India has a huge trade surplus. So, a section of India is asking about the relevance of India’s membership in BRICS and the benefits that India drive from the exercise over two decades. While many already have prejudices, many fear the dominating presence of China in the group. These questions and prejudices are not uncalled for. The stark trade data and China's moves makes these questions relevant. 

Q1 GDP Growth: Not the Numbers but Methodology

The first estimate of Q1 FY 2027 real GDP growth is 7.8%. It's not just a number; it's a fact and a statement. A statement that India’s growth engine, contrary to the gloom peddled by certain quarters, remains robust, resilient, and fundamentally sound. But in polarised India, this data has become a new battleground. Everything relating to GDP growth is now revolving around narratives rather than economics. We're having intense discussions, but we haven't yet addressed the economics and the process through which GDP estimates are calculated. It must be noted that the GDP estimate in India is revised five times over a period of three years. And the GDP numbers released by the Indian Government are the first estimate. That means it will be revised again and again to ensure that there remain the least possible errors and duplicities.

The controversy was sparked by former Finance Secretary Subhash Chandra Garg’s claim that growth was merely 2.6%, which rests on a statistical fallacy so elementary that it does not need any debunking! To arrive at his growth numbers, he compared nominal GDP figures from two incompatible series: the old 2011-12 base year and the new 2022-23 base year. It must be noted that the Ministry of Statistics and Programme Implementation (MoSPI) has made it very clear from day one: the Q1 FY26 nominal GDP was revised from ₹86.05 lakh crore under the old series to ₹80 lakh crore under the new series. So mathematically, the 10.3% nominal and 7.8% real growth stand unchallenged.

India's Economy: Mixed Signals

The Indian economy stands at a stage in its economic cycle where it is uncertain about its future trajectory. One survey indicates an uptick in private sector activity, while another points to a slowdown in industrial output growth. RBI data reveals that India's total foreign exchange reserves have hit an all-time high of $730 billion, with FCNR(B) deposits exceeding $65 billion. Yet, another survey suggests that GDP growth is decelerating, alongside rising inflation.

The Indian economy is sending mixed signals. Due to its reliance on external sources to meet its needs, the economy is becoming trapped in a spiral where the path forward is unclear. In this scenario, uncertainty will persist until government economic policies and increased investments by major business houses align in the same direction. However, there is another aspect to consider: private capital seeks both growth and security simultaneously. Ultimately, the direction lies in the government's hands.

NCLT Approves a Haircut of 99.97% for Subhash Chandra

NCLT has shown the green flag to the repayment plan submitted by Essel Group Chairman Subhash Chandra. However, people are questioning and interpreting this decision as politically nuanced. But is it really true?

It is easier to sensationalise by accusing NCLT and the Government of India of an approximate 100% haircut in this personal Bankruptcy case against Zee Group Chairman Subhash Chandra initiated by Indiabulls. But the fact is very simple. Let’s understand the case first.

Zee Group Chairman became a party to bankruptcy proceedings for being a guarantor of debt transactions with financial institutions in Essel Group insolvency proceedings. It should be noted that he didn’t borrow that money in a personal capacity. Rather, money was borrowed by the group. He is a guarantor. He is there in the case just because he is a guarantor who is eventually the Chairman of the group.

Government to Abolish Bank Guarantee Requirement for MSMEs

Abolishing the bank guarantee requirement would be one of the best forms of support the Government of India could offer to MSMEs. Most of these units operate with limited capital, making it difficult for them to even arrange working capital for day-to-day operations. Financial system unintentionally and indirectly has negative bias against small units!

This proposal would open up new business opportunities for MSMEs. The government should not only increase MSME participation in its operations but also introduce schemes like the PLI (Production Linked Incentive) for them. Implementing such measures would reduce the volume of low-value goods imported from China. This would create business and employment opportunities within India while also helping to bring the trade deficit with China under control helping balance of payments position and Indian rupee. A low trade deficit will result into strong rupee and lower imported inflationary shocks.