The Indian Economy Blog

Archive for the 'Monetary 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 [...]

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 [...]

Guest Post: Is America Ready For Truth And Reconciliation?

Friday, September 26th, 2008

By V Anantha Nageswaran On September 19th, the U.S. Treasury Secretary Paulson issued a statement in which he said that the Federal government “must implement a program to remove these illiquid assets that are weighing down our financial institutions and threatening our economy”. He called it the ‘Troubled Asset Relief Program’. Many have taken to [...]

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 [...]

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 [...]

The Rise And Rise Of The Rupee, Or How To Screech A Galloping Elephant To A Halt Atop Of A Dollar Bill

Friday, December 21st, 2007

Well my advice on this one – the galloping elephant part (you know, we’ve had the Tigers, the Lynxes, and the Giant Panda, and now its the turn of the Thundering Elephant to lead the global economy onwards and upward) – is not to try it. The very least that could happen is you get [...]

World Bank Loan In Rupees

Tuesday, December 11th, 2007

…likely for the Maharashtra government. The BBC reports that the World Bank is considering the first ever proposal for a loan of $3.5 billion to be disbursed and repaid in rupees and not the US dollar. This is being done to ostensibly counter the fluctuating rupee- dollar rate. However, it needs no saying that a [...]

A Japanese Model for Indian IT Companies

Monday, November 26th, 2007

…to counter the rising rupee. Professor Kaushik Basu of the Cornell University believes that the rise of the rupee against the dollar is inevitable in the mid-term. He also believes that the sudden collapse of the dollar is unlikely but there is not much that India can do to alter the current dynamics of exchange [...]

Trend Growth In India

Saturday, October 14th, 2006

Prashant wrote to me earlier this week to bring a recent blog post (and Business Standard article) from Ajay Shah to my attention. Essentially Ajay is arguing the following: “a lot of what is going on is owing to procyclical (i.e. destabilising) macro policy. I emphasise the distinction between the long-term trend and the business [...]

RBI in inflation fighting mode

Tuesday, October 25th, 2005

Given the rise in inflation, it was inevitable. The RBI just announced its decision to increase short-term interest rates by 25 basis points. The central bank lifted its reverse repo rate, used to drain liquidity from the money market, by a quarter of a percentage point to 5.25 percent, prompting stocks and the rupee to [...]

Is The Indian Rupee Overvalued?

Thursday, October 13th, 2005

As per the India Stock Blog The Rupee is fundamentally weak, but has been propped up by overly positive sentiments of Foreign Institutional Investors (FIIs), which are now moderating… Factors weighing on the Rupee: Trade and Current Account Deficit On the surface it would appear that oil would be the cause of the widening trade [...]

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