1) Household savings rates in India peaked in 2008 but have since experienced a steep decline, with the household savings-investment gap currently at its lowest level since the late 1980s.
2) This decline in household savings has negatively impacted potential growth by reducing capital availability to the private sector and decreasing overall capital productivity.
3) Policymakers should pursue more accommodative monetary policy to further support balance sheet repair and strengthen India's domestic macroeconomic profile while foreign liquidity remains favorable globally. Prioritizing growth over inflation targeting will help maximize the current window of opportunity.
The Curious Case of Savings-Investment Gap and its Implications for IndiaAshutosh Bhargava
Their has been a remarkable shift in the savings-investment gap at the global level as well as in India. While this has had a tangible impact on global potential growth, the recovery is likely to differ from one country to another. In the Indian context, the recovery in trend growth is likely to be much higher than what is generally peceived and thus requires a more proactive response from policy makers, especially the monetary authorities.
The current account deficit that cried "wolf!"RBS Economics
The UK current account deficit hit a record 5.2% of GDP in 2015. Senior Economists Rupert Seggins and Marcus Wright take a look at what the current account deficit is, what has happened to it, why and what it does and does not tell us about the economy.
MTBiz is for you if you are looking for contemporary information on business, economy and especially on banking industry of Bangladesh. You would also find periodical information on Global Economy and Commodity Markets.
As the Chinese authorities inject a fresh $1trn in new credit in the first quarter of 2016, Economist Marcus Wright examines this latest development and what it means for China and the world economy.
The Curious Case of Savings-Investment Gap and its Implications for IndiaAshutosh Bhargava
Their has been a remarkable shift in the savings-investment gap at the global level as well as in India. While this has had a tangible impact on global potential growth, the recovery is likely to differ from one country to another. In the Indian context, the recovery in trend growth is likely to be much higher than what is generally peceived and thus requires a more proactive response from policy makers, especially the monetary authorities.
The current account deficit that cried "wolf!"RBS Economics
The UK current account deficit hit a record 5.2% of GDP in 2015. Senior Economists Rupert Seggins and Marcus Wright take a look at what the current account deficit is, what has happened to it, why and what it does and does not tell us about the economy.
MTBiz is for you if you are looking for contemporary information on business, economy and especially on banking industry of Bangladesh. You would also find periodical information on Global Economy and Commodity Markets.
As the Chinese authorities inject a fresh $1trn in new credit in the first quarter of 2016, Economist Marcus Wright examines this latest development and what it means for China and the world economy.
My outlook for the year, written in December last year. Overly pessimistic unfortunately but with Spanish yields now over 6%, we\'re not out of the woods yet! (Pls note I did not write the China stocks or currency section.)
The Credit Suisse Research Institute released its sixth annual Global Wealth Report, which focuses on how the middle class has developed since the turn of the century. It finds that the size and wealth of the middle class globally grew quickly before the financial crisis, but growth subsided after 2007 and rising inequality has squeezed its share of wealth in every region. In its analysis, Credit Suisse has taken a new approach to defining the middle class category, using a wealth-based definition – versus an income-based one – that allows for adjustments over time to reflect inflation, and also varies across countries depending on local purchasing power.
- Download the 2015 Global Wealth Report (PDF): http://bit.ly/1VPgIlc
- Order the print version of the 2015 Global Wealth Report: http://bit.ly/1K6hMVJ
Visit the Credit Suisse Research Institute website: http://bit.ly/18Cxa0p
This is a recording of a revision webinar exploring some of the causes of financial crises in developed and emerging market countries. There are many different types of crises ranging from currency/external debt crises to disturbances in banking systems.
Making Your IEP System Work for You: 5 Questions to Ask About Your IEP SystemAccelify
An effective IEP system should accommodate your workflow, not determine it. If you and your staff are bending over backward to make your IEP system work for you, it may not be doing its job. And with limited options on the market, of which many lack sufficient flexibility, it may seem like demanding that your current system do more or migrating from one IEP system to another, may not be worthwhile. But reevaluating your IEP system can be disruptive in a good way too. Demanding more from your IEP system can lead to better tools that help you and your staff more efficiently manage the IEP process and the data needed to manage compliance along the way.
My outlook for the year, written in December last year. Overly pessimistic unfortunately but with Spanish yields now over 6%, we\'re not out of the woods yet! (Pls note I did not write the China stocks or currency section.)
The Credit Suisse Research Institute released its sixth annual Global Wealth Report, which focuses on how the middle class has developed since the turn of the century. It finds that the size and wealth of the middle class globally grew quickly before the financial crisis, but growth subsided after 2007 and rising inequality has squeezed its share of wealth in every region. In its analysis, Credit Suisse has taken a new approach to defining the middle class category, using a wealth-based definition – versus an income-based one – that allows for adjustments over time to reflect inflation, and also varies across countries depending on local purchasing power.
- Download the 2015 Global Wealth Report (PDF): http://bit.ly/1VPgIlc
- Order the print version of the 2015 Global Wealth Report: http://bit.ly/1K6hMVJ
Visit the Credit Suisse Research Institute website: http://bit.ly/18Cxa0p
This is a recording of a revision webinar exploring some of the causes of financial crises in developed and emerging market countries. There are many different types of crises ranging from currency/external debt crises to disturbances in banking systems.
Making Your IEP System Work for You: 5 Questions to Ask About Your IEP SystemAccelify
An effective IEP system should accommodate your workflow, not determine it. If you and your staff are bending over backward to make your IEP system work for you, it may not be doing its job. And with limited options on the market, of which many lack sufficient flexibility, it may seem like demanding that your current system do more or migrating from one IEP system to another, may not be worthwhile. But reevaluating your IEP system can be disruptive in a good way too. Demanding more from your IEP system can lead to better tools that help you and your staff more efficiently manage the IEP process and the data needed to manage compliance along the way.
Learn more about the new Startup Visa Program, the first of its kind in the world, through Planet Hatch, part of the entrepreneurial hub located at Knowledge Park. Planet Hatch is the only accelerator and entrepreneurship centre in New Brunswick to offer the Startup Visa Program.
ADME And Toxicity Optimization Servicesthomas shaw
DigitalBioPharma is working with a vision of using IT in medicine development to get effective results and provides ADME optimization, Tox optimization, Virtual Screening and drug design services.
Transition Planning: How To Avoid the "Black-Hole" Between Graduation and Adu...Accelify
Transition planning and implementation of best practices is critical to ensuring successful transition to post-secondary options. Evidence shows that if transition is not carefully and successfully carried out, young adults can become lost in the "black-hole" between graduation and adulthood. Falling into this "black-hole" leaves young adults without independent life skills, embedded maladaptive behaviors, and without the self-determination to leave home. In this webinar, Jennifer Kaut, M.Ed., BCBA, shares best practices for transitioning to post-secondary options, including the impact of quality vocational rehabilitation for students.
Nghị định này hướng dẫn Luật Xây dựng về quản lý chất lượng công trình xây dựng trong công tác khảo sát, thiết kế, thi công xây dựng; về bảo trì công trình xây dựng và giải quyết sự cố công trình xây dựng.
The forums at BionicMe.com are allowing humanity to move forward through the study and discussion of bionics, robotics, prosthetics, artificial intelligence, nanotechnology and virtual reality.
TECHNOMED operating room lighting lamp is fit for various requirements in surgical operation, and is an ideal illumination equipment for modern operation rooms. Our Lights are designed to assists during critical operations where focused source of bright light is required.
Skype: anamika.sinha86
Email: delhi.technomed@gmail.com I Web: www.technomed-india.com, www.technomedindia.org
This report provides an evidence-based overview of developments in capital markets globally leading up to the COVID-19 crisis. It then documents the impact of the crisis on the use of capital markets and the introduction of temporary corporate governance measures.
Financial Assets: Debit vs Equity Securities.pptxWrito-Finance
financial assets represent claim for future benefit or cash. Financial assets are formed by establishing contracts between participants. These financial assets are used for collection of huge amounts of money for business purposes.
Two major Types: Debt Securities and Equity Securities.
Debt Securities are Also known as fixed-income securities or instruments. The type of assets is formed by establishing contracts between investor and issuer of the asset.
• The first type of Debit securities is BONDS. Bonds are issued by corporations and government (both local and national government).
• The second important type of Debit security is NOTES. Apart from similarities associated with notes and bonds, notes have shorter term maturity.
• The 3rd important type of Debit security is TRESURY BILLS. These securities have short-term ranging from three months, six months, and one year. Issuer of such securities are governments.
• Above discussed debit securities are mostly issued by governments and corporations. CERTIFICATE OF DEPOSITS CDs are issued by Banks and Financial Institutions. Risk factor associated with CDs gets reduced when issued by reputable institutions or Banks.
Following are the risk attached with debt securities: Credit risk, interest rate risk and currency risk
There are no fixed maturity dates in such securities, and asset’s value is determined by company’s performance. There are two major types of equity securities: common stock and preferred stock.
Common Stock: These are simple equity securities and bear no complexities which the preferred stock bears. Holders of such securities or instrument have the voting rights when it comes to select the company’s board of director or the business decisions to be made.
Preferred Stock: Preferred stocks are sometime referred to as hybrid securities, because it contains elements of both debit security and equity security. Preferred stock confers ownership rights to security holder that is why it is equity instrument
<a href="https://www.writofinance.com/equity-securities-features-types-risk/" >Equity securities </a> as a whole is used for capital funding for companies. Companies have multiple expenses to cover. Potential growth of company is required in competitive market. So, these securities are used for capital generation, and then uses it for company’s growth.
Concluding remarks
Both are employed in business. Businesses are often established through debit securities, then what is the need for equity securities. Companies have to cover multiple expenses and expansion of business. They can also use equity instruments for repayment of debits. So, there are multiple uses for securities. As an investor, you need tools for analysis. Investment decisions are made by carefully analyzing the market. For better analysis of the stock market, investors often employ financial analysis of companies.
Poonawalla Fincorp and IndusInd Bank Introduce New Co-Branded Credit Cardnickysharmasucks
The unveiling of the IndusInd Bank Poonawalla Fincorp eLITE RuPay Platinum Credit Card marks a notable milestone in the Indian financial landscape, showcasing a successful partnership between two leading institutions, Poonawalla Fincorp and IndusInd Bank. This co-branded credit card not only offers users a plethora of benefits but also reflects a commitment to innovation and adaptation. With a focus on providing value-driven and customer-centric solutions, this launch represents more than just a new product—it signifies a step towards redefining the banking experience for millions. Promising convenience, rewards, and a touch of luxury in everyday financial transactions, this collaboration aims to cater to the evolving needs of customers and set new standards in the industry.
Even tho Pi network is not listed on any exchange yet.
Buying/Selling or investing in pi network coins is highly possible through the help of vendors. You can buy from vendors[ buy directly from the pi network miners and resell it]. I will leave the telegram contact of my personal vendor.
@Pi_vendor_247
How to get verified on Coinbase Account?_.docxBuy bitget
t's important to note that buying verified Coinbase accounts is not recommended and may violate Coinbase's terms of service. Instead of searching to "buy verified Coinbase accounts," follow the proper steps to verify your own account to ensure compliance and security.
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
what is the best method to sell pi coins in 2024DOT TECH
The best way to sell your pi coins safely is trading with an exchange..but since pi is not launched in any exchange, and second option is through a VERIFIED pi merchant.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and pioneers and resell them to Investors looking forward to hold massive amounts before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade pi coins with.
@Pi_vendor_247
Turin Startup Ecosystem 2024 - Ricerca sulle Startup e il Sistema dell'Innov...Quotidiano Piemontese
Turin Startup Ecosystem 2024
Una ricerca de il Club degli Investitori, in collaborazione con ToTeM Torino Tech Map e con il supporto della ESCP Business School e di Growth Capital
how to sell pi coins at high rate quickly.DOT TECH
Where can I sell my pi coins at a high rate.
Pi is not launched yet on any exchange. But one can easily sell his or her pi coins to investors who want to hold pi till mainnet launch.
This means crypto whales want to hold pi. And you can get a good rate for selling pi to them. I will leave the telegram contact of my personal pi vendor below.
A vendor is someone who buys from a miner and resell it to a holder or crypto whale.
Here is the telegram contact of my vendor:
@Pi_vendor_247
how can I sell pi coins after successfully completing KYCDOT TECH
Pi coins is not launched yet in any exchange 💱 this means it's not swappable, the current pi displaying on coin market cap is the iou version of pi. And you can learn all about that on my previous post.
RIGHT NOW THE ONLY WAY you can sell pi coins is through verified pi merchants. A pi merchant is someone who buys pi coins and resell them to exchanges and crypto whales. Looking forward to hold massive quantities of pi coins before the mainnet launch.
This is because pi network is not doing any pre-sale or ico offerings, the only way to get my coins is from buying from miners. So a merchant facilitates the transactions between the miners and these exchanges holding pi.
I and my friends has sold more than 6000 pi coins successfully with this method. I will be happy to share the contact of my personal pi merchant. The one i trade with, if you have your own merchant you can trade with them. For those who are new.
Message: @Pi_vendor_247 on telegram.
I wouldn't advise you selling all percentage of the pi coins. Leave at least a before so its a win win during open mainnet. Have a nice day pioneers ♥️
#kyc #mainnet #picoins #pi #sellpi #piwallet
#pinetwork
when will pi network coin be available on crypto exchange.DOT TECH
There is no set date for when Pi coins will enter the market.
However, the developers are working hard to get them released as soon as possible.
Once they are available, users will be able to exchange other cryptocurrencies for Pi coins on designated exchanges.
But for now the only way to sell your pi coins is through verified pi vendor.
Here is the telegram contact of my personal pi vendor
@Pi_vendor_247
what is the future of Pi Network currency.DOT TECH
The future of the Pi cryptocurrency is uncertain, and its success will depend on several factors. Pi is a relatively new cryptocurrency that aims to be user-friendly and accessible to a wide audience. Here are a few key considerations for its future:
Message: @Pi_vendor_247 on telegram if u want to sell PI COINS.
1. Mainnet Launch: As of my last knowledge update in January 2022, Pi was still in the testnet phase. Its success will depend on a successful transition to a mainnet, where actual transactions can take place.
2. User Adoption: Pi's success will be closely tied to user adoption. The more users who join the network and actively participate, the stronger the ecosystem can become.
3. Utility and Use Cases: For a cryptocurrency to thrive, it must offer utility and practical use cases. The Pi team has talked about various applications, including peer-to-peer transactions, smart contracts, and more. The development and implementation of these features will be essential.
4. Regulatory Environment: The regulatory environment for cryptocurrencies is evolving globally. How Pi navigates and complies with regulations in various jurisdictions will significantly impact its future.
5. Technology Development: The Pi network must continue to develop and improve its technology, security, and scalability to compete with established cryptocurrencies.
6. Community Engagement: The Pi community plays a critical role in its future. Engaged users can help build trust and grow the network.
7. Monetization and Sustainability: The Pi team's monetization strategy, such as fees, partnerships, or other revenue sources, will affect its long-term sustainability.
It's essential to approach Pi or any new cryptocurrency with caution and conduct due diligence. Cryptocurrency investments involve risks, and potential rewards can be uncertain. The success and future of Pi will depend on the collective efforts of its team, community, and the broader cryptocurrency market dynamics. It's advisable to stay updated on Pi's development and follow any updates from the official Pi Network website or announcements from the team.
Indian Economy: The Curious Case of Household Savings-Investment Gap
1. Indian Economy: The Curious Case of Household Savings-Investment Gap
The recent debate between former Federal Reserve Chairman Ben Bernanke and former US Treasury
Secretary Lawrence Summers has rekindled interest in the topic of “Global Savings Glut”. The term was
first coined by Bernanke in his 2005 speech, where he argued that a significant increase in the global
supply of savings, emanating in large part from China and other emerging markets (EMs), had resulted in
both an increase in the US current account deficit as well as the relatively low levels of global long-term
real interest rates.
We know than an economy’s current account balance is a reflection of its savings and investment
behaviour. A country with a current account surplus is saving more than it is investing domestically and
hence is a net provider of capital in international capital markets. By the same logic, a country with a
current account deficit is a net borrower of capital in the global financial markets.
Till the 1990s, most EMs were net importers of capital. But after a series of financial shocks that rocked
them, a number of EMs were forced into new strategies of growth that involved shifting from being net
importers of financial capital to being net exporters. This is clearly visible in Exhibit 1 by the large current
account surpluses which EMs started running since early 2000.
The importance of generating greater savings and its channelization into productive investments in
order to achieve high and sustainable levels of economic growth cannot be underestimated. It is
therefore no coincidence that on the back of an increasing in savings rate, EMs have been the primary
drivers of global growth since 2000. However, it is interesting to observe that since 2010, EMs
collectively have once again started running current account deficits, reflecting decling national savings
rate. In fact, at an aggregate EM level, the savings rate peaked around 2007 and in many countries like
Brazil, South Africa and Turkey, they are now at dangerously low levels. Consequently, the decline in
savings rate along with falling productivity has meant that in the last 3-4 years, the alpha of EM growth
over developed economies (DMs) has significantly come down.
-1.0%
-0.8%
-0.6%
-0.4%
-0.2%
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
2013
2016
2019
Advanced Economies Emerging Markets
OPEC
IMF
Estimates
Source: IMF Economic Outlook
Exhibit 1: Current Account Balance (% of World GDP)
2. Like most EMs, India too has witnessed a precipitous decline in its savings rate in recent years.
Supported by favourable demographics, India’s domestic savings rate started rising from the late 1980s.
It increased from an average of 18.6% (as a % of GDP) during 1980-1990 to 23% during 1990-2000. It
picked up even further in the last decade, reaching a high of 36.8% in FY08. Consequently, India’s
potential growth also accelerated sharply during this period. However, post the crisis, the savings rate
started to show a declining trend, eventually falling to a 10-year low of 30.6% in FY14.
Historically, Indian households have not only been the largest providers of capital (savings-investment
gap positive) to the corporate and conolidated public sector (savings-investment gap negative), but their
savings behaviour has also tended to exhibit remarkable stability. In other words, the cyclicality in the
overall savings-investment gap of the economy and thus the current account has generally come from
the corporate and public sector rather than households. It is perhaps because of this reason that these
two sectors (the public sector in particular) have often been chided during periods of high current
account deficits while the household sector has often escaped being censured.
However, it is the households as an entity who deserve much of the criticism for the increased levels of
external sector vulnerability in recent years. As Exhibit 2 shows, household savings-investment gap
climbed up steadily from 9.9% in FY01 to a peak of 12.0% in FY10, but thereafter has experienced a free
fall. In fact, it is currently reeling at levels last seen during the late 1980s. But this is hardly the complete
picture. This is because the aggregate savings-investment gap in Exhibit 2 does not add upto the current
account balance. This is due to the fact that the category “valuables” is not included in the gross capital
formation of any of the three sectors (as it is difficult to locate the end user of the item) and is instead
reported as a separate category. If we assume that households are the primary end users of “valuables”
and adjust household gross capital formation accordingly, then the decline in the household savings-
investment gap looks far more ominous (Exhibit 3).
Household
(1)
Private
Corporate Sector
(2)
Public
Sector
(3)
Aggregate
(1+2+3)
2000-01 9.9% -1.2% -8.5% 0.2%
2001-02 10.5% -1.9% -8.8% -0.1%
2002-03 10.0% -1.8% -6.7% 1.5%
2003-04 11.0% -2.0% -5.3% 3.7%
2004-05 10.1% -3.8% -5.1% 1.2%
2005-06 11.9% -6.1% -5.5% 0.3%
2006-07 11.3% -6.6% -4.7% -0.1%
2007-08 11.6% -7.9% -3.9% -0.1%
2008-09 10.1% -3.9% -8.5% -2.2%
2009-10 12.0% -3.8% -9.0% -0.8%
2010-11 9.9% -4.8% -5.8% -0.8%
2011-12 7.7% -3.6% -6.2% -2.2%
2012-13 7.3% -3.5% -5.5% -1.7%
2013-14 7.5% -1.7% -6.4% -0.6%
Exhibit 2: Savings-Investment Gap across the Three Sectors (% of GDP)
Source: CMIE database
FY12-FY14 numbers based on new gdp series
3. Evidently, this aberration in household behavior has had some series implications for the macro
economy:
1. When households purchase gold, it often comes at the cost of a financial asset and since gold is
an imported commodity, there is a permanent leakage of a potential financial saving from the
domestic economy. If instead of buying gold, the household exchanges its cash for a financial
asset then a) financial resources remain within the economy and b) the asset forms a part of
domestic savings and to that extent enhances domestic capital formation. Clearly, this
substitution of financial savings towards gold as well as real estate by households in recent years
has shaved off a few additional basis points from our potential growth. This is an important but
a rather under-appreciated fact
2. Increased household investments have not only resulted in a reduction in capital availability to
the private sector, but the economy’s capital productivity too has suffered (reflected in rising
ICOR). This is because private sector investments tend to be far more productive and tend to
have a much higher multiplier effect on the economy as compared to household sector. Though
difficult to quantify precisely, the dent in productivity has further impacted potential growth
3. The reduced capital availability to the private sector has caused domestic liquidity conditions to
remain extremely tight in the last few years, leading to over reliance on foreign savings, despite
subdued levels of private investments. While this over dependence has come at a time when
foreign liquidity has been in surplus mode, going forward, given the transient nature of this
liquidity, the global environment may not continue to remain as supportive
Households
(1)
Private Corporate
Sector
(2)
Public Sector
(3)
Aggregate
(1+2+3)
Errors &
Ommissions
(4)
Current Account
Balance
(1+2+3+4)
2000-01 9.2% -1.2% -8.5% -0.4% -0.1% -0.6%
2001-02 9.9% -1.9% -8.8% -0.7% 1.4% 0.7%
2002-03 9.5% -1.8% -6.7% 0.9% 0.3% 1.2%
2003-04 10.2% -2.0% -5.3% 2.9% -0.6% 2.3%
2004-05 8.8% -3.8% -5.1% 0.0% -0.3% -0.3%
2005-06 10.7% -6.1% -5.5% -0.8% -0.3% -1.2%
2006-07 10.1% -6.6% -4.7% -1.3% 0.3% -1.0%
2007-08 10.6% -7.9% -3.9% -1.2% -0.1% -1.3%
2008-09 8.9% -3.9% -8.5% -3.5% 1.2% -2.3%
2009-10 10.2% -3.8% -9.0% -2.6% -0.2% -2.8%
2010-11 7.8% -4.8% -5.8% -2.8% 0.1% -2.8%
2011-12 4.8% -3.6% -6.2% -5.0% 0.8% -4.2%
2012-13 4.6% -3.5% -5.5% -4.4% -0.4% -4.8%
2013-14 6.2% -1.7% -6.4% -1.9% 0.2% -1.7%
Exhibit 3: Savings-Investment Gap across the Three Sectors Adjusted for Valuables (% of GDP)
Source: CMIE database
FY12-FY14 numbers based on new gdp series
4. While it is far easier to penalize the public or the private corporate sector for their profligacy, there is
hardly any solid mechanism to regulate/alter household behavior. However, our view is that the damage
to the output gap due to aberration in household behavior has been so large, that the recovery (which is
already underway) is also likely to be much quicker. While we do not expect the headline household
savings rate to improve much in the near term, we believe that the savings-investment gap will continue
to show a marked improvement going forward. This is because while the headline savings rate is a
function of income, the allocation of savings into financial and physical assets is a function of relative
returns. Thus, with real income growth continuing to remain muted, the recovery in the headline savings
is likely to be very gradual. On the other hand, with more and more money gravitating from gold and
real estate and with inflation remaining constrained due to structural and cyclical reasons, households
investments is likely to moderate significantly, leading to a large positive savings-investment gap.
So what should be the way forward for policymakers? We believe that monetary authorities should be
more aggressive in cutting interest rates because of two factors:
1. Even though headline savings is unlikely to meaningfully pick up soon, the slack creation process
(rising savings-investment gap, falling credit-deposit ratio, falling inflation) is moving reasonably
quickly. In other words, the balance sheets of all stakeholders are showing signs of
improvement. Since potential growth is a direct function of strong balance sheets, it implies
that a recovery in potential growth is also underway. However, balance sheet repair still has
some way to go and this is unlikely to be possible without an accomodative monetary policy
2. Globally, the fear of deflation has led to an extraordinary monetary policy response in recent
years by the world’s major central banks. In fact, six years post the crisis, central banks around
the world (led by ECB and BoJ) continue to provide monetary support in some way or the other.
While deflation has become the consensus trade, potential growth in all major economies
continue to head lower, led by a collapse in labour and capital productivity. A fall in potential
output means that the world economy, especially the US, is operating much closer to potential
than most realize. This in turn implies that the need for unwinding of this ultra accomodative
monetary policy is likely to arise sooner rather than later. India, therefore, only has a small
window before global liquidity conditions turn unfavourable. Thus, In order to efficiently avail
this window, it is imperative for policy makers, especially the monetary authorities to provide
full support to the economy, so as to strengthen the domestic macroeconomic profile and
thereby reduce dependence on foreign liquidity.
To conclude, the Indian economy has undergone significant macro-rebalancing in the last 18 months.
Domestically, a number of imbalances which had creeped up is now showing signs of reversal. The
global environment also remains supportive, atleast as of now. In such an environment, the RBI has
adopted inflation targeting as its priority number one. Considering that a) the drivers of inflation could
be very different from rates/liquidity and b) balance sheets still need support and time to recover, the
urgency of implementation of a CPI based inflation targeting regime may not have been apt. Though
there is never a right time to swallow a bitter pill, the current environment warrants that growth gets
the attention it deserves.