The Indian Economy Blog

Archive for the 'Fiscal policy' Category

Is The Indian Economy Heading For Its Finest Hour?

Monday, May 18th, 2009

“For what it’s worth, a key conclusion from the IMF’s new World Economic Outlook is that recessions caused by financial crisis typically end with export booms, with the trade balance improving,on average, by more than 3 percent of GDP. I find this a disturbing result: we’re now suffering from a global financial crisis, which means [...]

A Real Estate Triggered ‘Stimulus’ Idea

Sunday, January 4th, 2009

IEB reader Durgesh Prasad, sent in this idea, via email to some of the IEB contributors. In today’s slow economy, where government is trying its best to keep the real estate market rolling and attracting investors to invest in real estate market in order to keep market live, I had an idea through which it [...]

Biggest Lesson From The Great Depression

Tuesday, September 30th, 2008

Ilian Mihov, Professor of Economics at INSEAD, holds forth on the lessons of the collapse of the ‘golden age’ of the late 1920s. What is the biggest lesson from the Great Depression? In my view, it is that monetary policy and the financial sector play a crucial role in economic development. Let me put it [...]

The Cesspool Of Crude Oil Cess

Saturday, September 20th, 2008

Did you know that the Indian government imposes a cess on indigenously produced crude oil? The Oil Industry Development Act, 1974 based on which the cess is being charged, states that “the cess collected under this provision would be made available to the development of petroleum sector”. The cess was introduced to provide financial assistance [...]

Oil Subsidies Now Get Real

Tuesday, September 2nd, 2008

The government has now announced that it will issue oil bonds worth Rs 94,600 crore in the fiscal year 2008-09. If the revenue collection rises at the same rate, it would be to the tune of around Rs 77,000 crore in 2008-09. The subsidy for kerosene and LPG is at around Rs 3000 crore. So, the government will suffer a net loss of nearly Rs 20,000 crore in providing petroleum products to the citizens of India. Phew! 0.4% of GDP wiped out in one go.

5% Cut Not For Defence Expenditure

Friday, June 6th, 2008

Let us rejoice at the government’s consideration for the defence services. As per the finance ministry’s directive on austerity measures for the government, All non-plan expenditure heads excluding interest payment, repayment of debt, defence capital, salaries, pensions and the finance commission grants to states will be subjected to a mandatory 5 per cent cut.[IE] Does [...]

Guest Post: On The Price of Crude Oil

Tuesday, June 3rd, 2008

V Anantha Nageswaran What is interesting in Daniel Yergin’s FT piece is that he deftly sidesteps the question of predicting the future for oil price—near-term or in the long-term. In recent years, he has been proven wrong. His Cambridge Energy Research Associates (CERA) has been bearish on oil since 2004-05. More important rather than interesting [...]

Guest Post: Fighting Inflation The Wrong Way

Friday, May 9th, 2008

V Anantha Nageswaran A table of inflation rates in many countries around the world is beginning to reveal a disturbing picture. The lowest rate is found in Germany – at 3.0%. Many emerging countries that seem to be doing a truthful job are reporting inflation rates in excess of 10% and some in excess of [...]

The Evil That Manmohan Did Will Live After Him

Wednesday, April 30th, 2008

He advocates a false morality to disguise his government’s failures Dr Manmohan Singh the prime minister has routinely relied on platitudes (instead of on incentives) to motivate the UPA government’s policies. But he is getting even the platitudes wrong. In a country where the average annual per capita income hovers around an unacceptably low US$1000, [...]

To Hoard Or To Invest…

Thursday, April 17th, 2008

The Reserve Bank of India is considering launching a Sovereign Wealth Fund which will effectively allow it to invest its excess reserves in higher yielding assets that are off-limits to it right now. This is on the back of the $5 bn set aside in the 2007 budget for the India Infrastructure Finance Corporation. Critics [...]

From Helping Farmers To Hurting Them

Tuesday, April 8th, 2008

Who gets hurt when grain exports are banned? Swaminathan Iyer took the words out of this bloggers mouth. The UPA government, he writes “has suddenly shifted from protecting Indian farmers against cheap imports to protecting the consumer by cheapening imports”. He is referring to the ban on rice exports (which follow the export of wheat [...]

Defence Pensions: Worrying Signs

Sunday, March 9th, 2008

The total strength of the defence employees has risen from nearly 362,000 in 1960 to 1.3 million today. The defence pensions bill, which is over 50 percent of the central government’s pensions bill, has also risen exponentially since the 1960s. It has grown nearly tenfold from Rs. 1670 Crore in 1990-91 to Rs. 15,244 Crore [...]

Farmers And Loans

Friday, February 29th, 2008

So the UPA government is set to improve credit availability (and write off loans) for farmers. Laveesh Bhandari tells you why, if improving the livelihood of farmers is a policy goal, the Manmohan Singh and P Chidambaram are barking up the wrong tree. Here lies the crux of the matter. If use of new seeds, [...]

Capital Investment: The Next Wave of Growth

Saturday, February 9th, 2008

Chandra Kochar, joint managing director and chief financial officer of India’s largest privately owned bank, $80 billion ICICI Bank, is bullish on India growth story. She contends that the growth in India is shifting from consumerism to manufacturing and infrastructure. In the last five to seven years, India has grown on the basis of its [...]

Feeling Good About Indian Economy

Sunday, December 23rd, 2007

As another year draws to an end, extracts from two speeches delivered this year — one by an ex-finance minister (who happens to be the current Prime Minister) and another by the current Finance Minister. Both the speeches were delivered to a foreign audience and the extracts reproduced here cover only the hard facts, not [...]

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