Tuesday, 2 March, 2021

ILANOMICS

Modi govt is planning to set up DFIs, but it needs to figure out sources for funds first

Subsidised credit from the government and the RBI has not proved to be a sustainable source in the past. Moreover, the bond market in India is still awaiting reforms.
Illustration by Soham Sen | ThePrint

Relaxing inflation target for growth isn’t necessarily good, Modi govt must assess idea well

The inflation target band is currently 4% plus-minus 2%, but a review is coming up in March 2021. Relaxing it for 5 years may not be a good idea.
Illustration by Ramandeep Kaur | ThePrint

How Modi govt can avoid another farmers’ protest-like crisis — consult better before reforming

When changes are introduced through consultation & engagement, people can get used to new ideas without friction. Bad ones can be dumped; good ones made better.
Illustration: Soham Sen | ThePrint

Why RBI’s status quo on interest rate is the best policy for India right now

GDP numbers for Q2 were better than expected, but growth could still be hit by resurgence of Covid. Persistent supply-side inflation is a problem too.
Illustration by ThePrint team

RBI & Modi govt mustn’t let corporates into banking sector without improving supervision

Recent bank failures show that concerns about RBI’s supervisory capacity are relevant. A common feature was RBI allowing problem of bad loans to linger.
Illustration by Ramandeep Kaur

RCEP would’ve led to flood of imports into India. Reform is a better way to boost exports

India hasn’t signed the RCEP, leading to concerns that it will get isolated. But it’s a China-centric deal that would have few advantages for India’s exports.
Illustration: Soham Sen | ThePrint

Production-Linked Incentives for 10 sectors show Modi govt’s intent, but need to be temporary

PLI scheme focuses on incentivising firms to grow fast, boosting India’s manufacturing & export prospects. But in the long run, sectors need to die and be born.
Illustration by Soham Sen | ThePrint

Urban MGNREGA is a short-sighted idea, Modi govt has shown good sense to drop it

Scope for manual earth work like digging of canals is limited in cities. An urban MGNREGA might not provide employment and create assets as it’s expected to.
Illustration by Ramandeep Kaur | ThePrint

Why Modi govt’s interest-on-interest ‘Diwali gift’ is good for India’s credit culture

Waiver of interest-on-interest for all during the moratorium can minimise moral hazard. Keeping it selective would've run the risk of hurting credit culture.
Illustration by ThePrint Team.

Why IMF evaluators want India-style capital controls to be adopted around the world

While capital controls may be useful in maintaining financial stability, Indian experience suggests IMF should focus on yardsticks of transparency, rule of law.
Illustration: Ramandeep Kaur | ThePrint

Banks need relief too, helping only borrowers will hamper next round of credit growth

As the moratorium on loan repayments ends, the government will have to answer the key question about how to treat defaulting borrowers.
Ila Patnaik
Ila Patnaik is an economist and a professor at the National Institute of Public Finance and Policy.

Ila Patnaik & Shubho Roy