ILANOMICS
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.