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The ruling Bharatiya Janata Party (BJP) had been on the back foot for several weeks on the trot. This week, its ideological parent the Rashtriya Swayamsevak Sangh (RSS) came to the party's rescue when it hosted former president and lifetime Congressman Pranab Mukherjee at its Nagpur headquarters for an event that attracted a lot of scrutiny.

In fact, the RSS had the Congress so much on the defensive that the opposition party almost seemed to lose its bearings. Initially, senior Congress leaders, including Mukherjee’s daughter Sharmistha Mukherjee, openly voiced their opposition to him accepting an RSS invite. However, after his speech on Thursday, the Congress did a volte face and welcomed his remarks on pluralism and tolerance.

Even as the RSS got the better of the Congress, the BJP-led Narendra Modi government made an attempt at damage control in another area by clearing a Rs 8,000 crore package for the cash-starved sugarcane industry. The package came just days after the BJP lost the crucial Lok Sabha bypoll at Kairana in Uttar Pradesh, where cane farmers’ problems were a key election issue.

The relief package, however, is likely to be insufficient as the cane farmers are owed arrears of more than Rs 22,000 crore, and the government’s tight fiscal math could come in the way of a bigger relief package.

The fiscal math just got more challenging with the Reserve Bank of India (RBI) raising the repo rate to 6.25%, the first time it has increased the benchmark lending rates in four years. While the hike does mean that the economy is back on the path to revival and may have overcome the aftereffects of the November 2016 demonetisation, it also means that the economy may have to contend with rising inflation, especially with higher fuel prices.

Moreover, higher interest rates will increase the government's borrowing costs and curtail its spending power in the run-up to crucial state elections later this year and general elections thereafter. A weaker rupee, high oil prices and muted investments make the government's headache worse.

Even as the RBI bit the bullet, its governor Urjit Patel had some advice to offer to the US Federal Reserve. In an article in The Financial Times, Patel said the US Fed must go slow with its

plans to shrink its balance sheet.

While it is anybody’s guess whether the US Fed will heed Patel’s advice, India’s neighbour China seems to be playing hardball. The two countries failed to resolve their differences on trade tariffs with China demanding that India eliminate tariffs on more than 90% of the traded goods in return for non-reciprocal market access. The two days of talks in New Delhi, ahead of the proposed Regional Comprehensive Economic Partnership ministerial in Tokyo in July, ended in a stalemate, with India offering to eliminate tariffs on 73% of goods traded with China.

In the corporate sector, a battle for control of debt-laden edible oil refiner Ruchi Soya seems to be headed for a climax. Adani Wilmar and Baba Ramdev-backed Patanjali Ayurved, along with Godrej Agrovet, are set to compete in a Swiss challenge fight to decide who takes control. Both companies will get two chances to outbid each other under the Swiss challenge method, with the lenders expecting the final bid to be around Rs 5,200-5,300 crore.

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