Category: Macroeconomy

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India: Getting ready for global macro resets

Second wave of Covid-19 is now behind us. Localized lockdowns are opening, economic activity is coming back to pre-pandemic levels, and vaccinations are now proceeding apace with large, assured supply over the next few months. Reserve Bank of India (RBI) has eased monetary conditions for the stressed sectors and Government has extended its program for support to the vulnerable. With fiscal space available as … Read More India: Getting ready for global macro resets

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Infra investment plans: India and the USA

Financial Express Two of the largest democracies have embarked on a massive capital investment planover the next few years US President Biden recently announced a two-part plan to invest in the USA: first part of the plan details a USD 2.2 trillion investment in “hard” infrastructure and second part, the families plan, puts in USD 1.8 trillion in “soft” infrastructure. The combined plan, at … Read More Infra investment plans: India and the USA

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India’s USD 550 bn stimulus

Relaxation in fiscal deficit targets creates enhanced fiscal space for India: this offers an opportunity to build India Financial Express Last month was abuzz with many commentaries on the Union Budget 2021-22 – the document was dissected for its numbers and narrative. Many new and bold ideas such as privatization of public sector undertakings (as the Government confines itself largely to the strategic sectors), … Read More India’s USD 550 bn stimulus

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Hedging INR for the long-term

Foreign investors with long-term commitments to Indian infrastructure need the ability to hedge their currency exposure in India. The exposure can typically last for multiple decades, especially in the context of infrastructure. The recently concluded Virtual Global Investor Conference saw large global investors recommitting to their interest in investing in India for the long-term. For investors, the return they seek is dependent on the … Read More Hedging INR for the long-term

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Larger incomes to tax or larger taxes on incomes?

Budget 2020 cares for people’s economic aspirations, says Axis Bank’s Akhilesh Tilotia

A day in the life of an Indian

 What the numbers say—how men and women spend their day differently; and how much bijli, sadak, paani can improve productivity Here’s a question that has been of interest to me: in a country of 1.4 billion people, if only approximately 400 million are in the workforce, what is it that the remaining billion people do?   We now have some answers. Time Use Survey … Read More A day in the life of an Indian

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Finding investors for State debt

As States issue more debt, finding the investors who will subscribe to the issue will require expanding the current pool of investors and making the investment more lucrative. While there have been many deliberations in these pages on the growing amount of debt that the various tiers of the government (Centre and States) will have to raise, little discussion has gone into who they … Read More Finding investors for State debt

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Getting the vaccine to a billion plus people

India can learn a lot from its experience in managing cash – getting a billion people what they need can be planned effectively. A vaccine for Covid-19 is expected to come sometime over the next few months – hopefully in this year. Once a vaccine is available, getting it to India’s billion plus people is a logistical challenge with many moral and ethical questions … Read More Getting the vaccine to a billion plus people

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Making the frontier sector work

Many of the networks of value could start to become ‘utilities’ as they become more embedded in everyday lives. In the previous article, we introduced the idea of the D-sector. The three traditional sectors have a well-defined, or largely settled, understanding of the many elements that build them: (1) what resources are required, (2) employment and its regulations, (3) the path to skills, (4) … Read More Making the frontier sector work

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Defining the frontier sector

The new normal after Covid-19 requires a re-imagining of macroeconomics: we need to start defining the contours of, and measuring, the fourth sector. (First of a two-part article) “There are three estates in Parliament but in the Reporters’ Gallery yonder there sits a Fourth Estate more important far than they all. It is not a figure of speech or witty saying, it is a … Read More Defining the frontier sector

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Medium-term dynamics for India post Covid-19 lockdown

Shape of economic recovery will determine employment, debt and exchange rates. The immediate fiscal deficit dynamics and growth outcomes for India post Covid-19 lockdown have been the subject of intense analysis and discussion. The human crisis of lives and livelihood did demand both an immediate and urgent response. With the lockdown now opening and economic activity picking up, it is important to look beyond … Read More Medium-term dynamics for India post Covid-19 lockdown

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Here’s why India may end up choosing capital flows over current account flows

India may end up implicitly choosing a stance of preferring capital flows over current account flows, if it sets a GDP target in a foreign currency. A currency serves two purposes: medium of exchange and store of value. We have explored this idea in these pages in a different context earlier when we looked at the relationship between legacy finance firms and fintech companies. … Read More Here’s why India may end up choosing capital flows over current account flows