In The Media ⁽⁴⁰⁰⁾

Economic Times, March 31 2020 Corona epidemic, which originated in China in December 2019, has now reached 175 out of a total of 195 countries in the world. No past pandemic has spread this widely and this fast. And we are far from seeing the proverbial light at the end of the tunnel. Until a definite cure and vaccine against the virus are found, the threat will loom. India too is in the midst of this calamity. An extra-ordinary challenge requires an extra-ordinary response. Thankfully, the Prime Minister has acted decisively and confidently. India is now on a 21-day lockdown. Short of this action, risks for India were huge. The Prime Minister couldn't have been more right when he said that without the 21-day lockdown, the nation risked being setback by 21 years. To be sure, the lockdown asymmetrically disadvantages those living hand to mouth. One can argue that even the poor can survive for a week with the help of their better off neighbors, fellow villagers and those for whom they work. But a period of three weeks without…

February 3, 2020 There is much in Budget 2020-21 that I like. But it also has a serious shortcoming in one area requiring urgent course correction. I discuss below three specific provisions in the budget that would serve India well before turning to the one that greatly worries me. First, despite calls from many quarters to go on a spending spree, the Finance Minister has chosen to stay course on fiscal discipline. The level of public sector borrowing, inclusive of deficits in the budgets of central and state governments plus off budget borrowing, is already estimated to be in excess of 9% of the GDP. Therefore, pushing the central government fiscal deficit to 4.5% as desired by some analysts would have starved a private sector already short of investment funds yet more. At a time when the economy is struggling to accelerate growth, crowding out of highly productive private-sector investment is not a winning strategy. Second, the government has initiated the reform of personal income tax system by offering to lower tax rates to those willing to forego nearly all…

Read full article and listen to the podcast here Abstract: AP: You’re listening to the “Transforming India” podcast, jointly brought to you by the Deepak and Neera Raj Center on Indian Economic Policies at Columbia University and the Times of India. I am Arvind Panagariya, Director of the Raj Center and Professor of Economics at Columbia. My co-host on this podcast is Professor Pravin Krishna. He is a professor of International Economics and Business at Johns Hopkins University. Welcome, Pravin. Listen to the Podcast here PK: Hi Arvind. Delighted to join you again for the seventh episode of this podcast as we continue to discuss Indian economic policies. AP: Yes, Pravin. And today we are joined by Naushad Forbes of Forbes Marshall. He is also the former president of the Confederation of Indian Industry and a prominent industrialist as well as a public intellectual in India. Welcome, Naushad. NF: Thank you. AP: So, Naushad, you and your company has been there in India for a very long time and you have been operating in the environment both before the liberalization in…

Read full article Abstract: The Reserve Bank of India has downgraded its forecast for growth in the current fiscal year to 5%. But going by the gloom that pervades our analysts and commentators, one would be tempted to think that the forecast is missing a minus sign in front of it. At such a time, a look at the post-reform economic history of India provides a good reality check. Since 1991, when systematic economic reforms were launched, the economy has oscillated between periods of high and low growth with the latter lasting two to three years. Each time it enters a low-growth phase, sceptics and pessimists of different shades come to the fore, predicting the end of the India growth story. Each time, the economy proves them wrong. Thus, alongside reforms, India had managed to register an average annual growth rate of 6.4% from 1992-93 to 1999-2000. This was the first time the country grew at a rate exceeding 6% for a continuous eight-year period. Even the 1997-98 East Asian currency crisis could halt the economy during this period for…

The govt needs to make the Insolvency and Bankruptcy Code speedier, more transparent and hazard-free.Read full article Two features of the regulatory regime have been central to the current malaise in India’s financial sector. First, until 2015, contrary to international best practice, RBI rules permitted banks to classify restructured loans as standard assets rather than downgrade them to non-performing status. Second, until the Insolvency and Bankruptcy Code (IBC) came along in 2016, the process of exit for defaulting firms and recovery of loans from them was cumbersome, costly and protracted. In good books Fearful that recovery of loans in default would be partial and take a long time, bank managers preferred to restructure loans before they went into default. Under the rules, restructured loans retained their status as standard assets. The incentive to follow this practice was especially high in public sector banks (PSBs), since any write-downs on loans in the event of default and partial recovery carried the risk of attracting the attention of vigilance agencies. As a result, restructured loans with little prospect of full recovery piled up, especially…