Boil baby potatoes until 80% done, peel, and prick thoroughly with a toothpick.
Deep-fry potatoes in mustard oil until golden brown and crispy; set aside.
Whisk yogurt with Kashmiri red chili powder, crushed fennel seeds, ginger paste, and salt.
Heat 1 tbsp mustard oil, add whisked yogurt mixture on low flame, stirring continuously until oil separates.
Stir in fried potatoes, water, and garam masala; cover tightly and simmer on low heat for 15 minutes.