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.

Surging Sugar Prices and Ethanol Blending

The government's decision to blend ethanol with petrol will prove economically beneficial for the country in the long run; however, the 40–50% surge in sugar prices over the past month is baffling to the common person.

There was already significant public resentment regarding ethanol blending, though it had not yet manifested as widespread discontent. While ethanol was a topic of discussion in the streets, it had not yet become a subject of conversation within households. Now, however, due to the rising cost of sugar, both ethanol and sugar have become talking points in homes. Women are raising questions. When women begin to express dissatisfaction and repeatedly question society or policies of the government, that discontent tends to become widespread.

Growth in 1st Quarter to remain 7.3%

Despite all headwinds, the Indian economy is expected to grow at 7.3% in the first quarter of the financial year 2026-27 ending on June 30.

Manufacturing, mining, construction & financial services, real estate & professional services would be the major growth pillars in this growth. Agriculture, public administration and trade, hotels, transport, communication & services related to Broadcasting Services will drag the growth momentum.

Among all the problems, rising inflation in the economy is the biggest challenge for the Indian economy. Inflation since March has remained elevated. Not only this, but due to a weak monsoon, crop production is expected to remain weak. Speculation relating to sugar post-ethanol blending in petrol is already a problem.

The economy is expected to grow at 7% this fiscal year. An annual growth of 7% is the new normal for the economy. Its opportune time for India when it can jump its growth rate into double digits.

Rajeev Upadhyay

Uttar Pradesh has to Build an Eonomic Ecosystem to Attract FDI

If you look at FDI received by Indian states, you would be surprised to see the distribution pattern. Uttar Pradesh contributes around 9% to India's GDP. However, it receives less than 2% of the total FDI that India receives! Maharashtra contributes about 14% to India's GDP, but it receives about 35% of total FDI!

Why?

Because, over time, Maharashtra worked on the economic environment. When India was thinking about building one-lane highways-cum-connecting roads, Maharashtra was building 4-lane highways. While states in northern India were busy promoting political fault lines and building narratives around them, Maharashtra was busy establishing manufacturing plants. They built an ecosystem. That's why almost every big politician in Maharashtra has some business interests, and unlike other states, none in Maharashtra has a problem with it. Rather, they appreciate it! They don't like unemployed politicians!