Dr.T.V.Gopalakrishnan , Mumbai , says: Yes. High FII inflows will sustain in the calendar year just for the reason that the economic growth will be around 7% despite all the constraints and it is attractive. Once the elections are over and the political stability returns,the economy can perform well.Inflation will be brought under control by March 2012 and the budget is expected to be investment and production oriented as the Govt has no other alternative but to bring fiscal deficit under control.The climate is very conducive for FIIs to continue to invest in Indian market by any reckoning.
30 Jan 2012, 1759 hrs IST
(This appearted et ET dated 30/01/12)
Showing posts with label Indian Economy. Show all posts
Showing posts with label Indian Economy. Show all posts
Monday, January 30, 2012
Monday, January 16, 2012
Why not a Joint review of Monetary and Fiscal policy ?
The economy needs a morale boost and this can come only if the Government and the RBI jointly initiate measures to revive the confidence of the investors.
January 15, 2012:
The Indian economy, which till a couple of years back was going strong and raising expectations of overtaking even China and other strong economies, has turned weak.
The US financial crisis of 2008, which brought down many economies, did not affect the domestic economy as the crisis was well managed both by the Government and the Reserve Bank of India.
In terms of broad parameters such as GDP growth, inflation, financial stability, exchange rate stability, and so on, the economy was doing well. But the situation changed since 2009.
Erosion of confidence
Many scams, one after another, were detected, revealing governance deficit. Corruption and black money attracted much attention and affected decision making at various levels.
Inflation raised its ugly head and continued to remain unabated. Industrial production declined, with hike in interest rates being cited as one of the major reasons for it. Infrastructure development did not get the priority it deserved.
Favourable monsoon did not bring down food inflation as supply chain constraints and periodical increases in fuel prices affected the marketing and distribution of food products at reasonable prices.
The trade gap widened due to increased imports and reduced exports. And exchange rate fluctuations added fuel to fire. The rupee depreciated by around 17 per cent since August 2011.
Administrative policies were not implemented as expeditiously as the economic conditions of the country demanded. Investments, especially FDI, slowed. And FIIs started pulling out their investments, creating volatility in the stock market.
The downgrading of the US economy and the European crisis have aggravated the situation.
Inflation focus
The Reserve Bank took a series of measures, basically to contain inflation. The approach was to make money dearer and reduce the purchasing power. The RBI raised the repo rate 13 times since March 2010, and brought it to 8.5 per cent in October 2011. The reverse repo was revised to 7.5 per cent and the Marginal Standing Facility was fixed at 9.25 per cent.
Interest rate on savings bank and NRE accounts was deregulated. And sensing the mood of the investing community against further interest rate hikes and seeing some respite in inflation, the RBI decided to keep the rates unchanged in its policy review in December 2011.
But production costs have increased, not only because of the hike in interest rates but also because of input costs going up, reducing thereby the profit margins and fresh investments.
The fiscal policies have not been moving in tune with monetary policies. The general opinion is that the RBI alone is taking action and the Government has been keeping quiet on various fronts.
Direct and indirect tax revenues, which are directly linked to GDP growth, have not been keeping pace with Budget expectations, and the Government is falling behind in achieving the disinvestment targets due to poor market and other conditions.
Infrastructure required for industrial production, particularly energy, has not picked up for want of fresh administrative policies and proper implementation of existing ones.
Fresh impetus
The economy needs a morale boost and this can come only from the Government. To start with, the Government and the RBI should jointly review the monetary and fiscal policies pursued so far and initiate measures to revive the confidence of the investors.
Since food inflation has started declining and the overall inflation is expected to fall to around 7 per cent by March 2011, the RBI can consider effecting some reductions in its policy rates.
Dr.T.V.Gopalakrishnan
(This article appeared in The Hindu-Business Line dt16/01/12)
January 15, 2012:
The Indian economy, which till a couple of years back was going strong and raising expectations of overtaking even China and other strong economies, has turned weak.
The US financial crisis of 2008, which brought down many economies, did not affect the domestic economy as the crisis was well managed both by the Government and the Reserve Bank of India.
In terms of broad parameters such as GDP growth, inflation, financial stability, exchange rate stability, and so on, the economy was doing well. But the situation changed since 2009.
Erosion of confidence
Many scams, one after another, were detected, revealing governance deficit. Corruption and black money attracted much attention and affected decision making at various levels.
Inflation raised its ugly head and continued to remain unabated. Industrial production declined, with hike in interest rates being cited as one of the major reasons for it. Infrastructure development did not get the priority it deserved.
Favourable monsoon did not bring down food inflation as supply chain constraints and periodical increases in fuel prices affected the marketing and distribution of food products at reasonable prices.
The trade gap widened due to increased imports and reduced exports. And exchange rate fluctuations added fuel to fire. The rupee depreciated by around 17 per cent since August 2011.
Administrative policies were not implemented as expeditiously as the economic conditions of the country demanded. Investments, especially FDI, slowed. And FIIs started pulling out their investments, creating volatility in the stock market.
The downgrading of the US economy and the European crisis have aggravated the situation.
Inflation focus
The Reserve Bank took a series of measures, basically to contain inflation. The approach was to make money dearer and reduce the purchasing power. The RBI raised the repo rate 13 times since March 2010, and brought it to 8.5 per cent in October 2011. The reverse repo was revised to 7.5 per cent and the Marginal Standing Facility was fixed at 9.25 per cent.
Interest rate on savings bank and NRE accounts was deregulated. And sensing the mood of the investing community against further interest rate hikes and seeing some respite in inflation, the RBI decided to keep the rates unchanged in its policy review in December 2011.
But production costs have increased, not only because of the hike in interest rates but also because of input costs going up, reducing thereby the profit margins and fresh investments.
The fiscal policies have not been moving in tune with monetary policies. The general opinion is that the RBI alone is taking action and the Government has been keeping quiet on various fronts.
Direct and indirect tax revenues, which are directly linked to GDP growth, have not been keeping pace with Budget expectations, and the Government is falling behind in achieving the disinvestment targets due to poor market and other conditions.
Infrastructure required for industrial production, particularly energy, has not picked up for want of fresh administrative policies and proper implementation of existing ones.
Fresh impetus
The economy needs a morale boost and this can come only from the Government. To start with, the Government and the RBI should jointly review the monetary and fiscal policies pursued so far and initiate measures to revive the confidence of the investors.
Since food inflation has started declining and the overall inflation is expected to fall to around 7 per cent by March 2011, the RBI can consider effecting some reductions in its policy rates.
Dr.T.V.Gopalakrishnan
(This article appeared in The Hindu-Business Line dt16/01/12)
Sunday, January 8, 2012
India and Hybrid car, Affordability of people
Dr.T.V.Gopalakrishnan , Mumbai , says: Manufacturers are ready for hybrid cars,but in terms of infrastructure,inequality of income and ever increasing oil prices, persistent level of poverty,the economy is not ready. Some industrialists and well off people who enjoy lots of black money can certainly afford high brid cars. If black money holding is the criteria many can afford and will go for these hybrid cars. But an average honest Indian cannot afford even to own a vehicle is a fact if one goes by the poverty level, rate of inflation, unemployment, hand to mouth existence etc.Reality cannot be and should not be hidden by displaying prospirity and wealth among a miniscule percentage of population who can afford and who are eager to own hybrid cars.
8 Jan 2012, 2127 hrs IST
(This appeared in ET dated 9/01/12)
8 Jan 2012, 2127 hrs IST
(This appeared in ET dated 9/01/12)
Tuesday, January 3, 2012
RBI and the Govt to act togother
Your editorial comment on the economy was apt (“Little hope for 2012,” January 2). The year 2011 will go down in the history of our economy as the worst performing year since India’s economic liberalisation. The reason you have given for the poor performance – the mismanagement of the economy by the government – shows your unbiased approach and openness in assessing an economy and that is commendable. But it should be noted that the growth potential of our economy remains strong and a little more attention from the government and other institutions, particularly the Reserve Bank of India (RBI), can make 2012 a better year. Inflation is softening and the situation may improve with a favourable monsoon and credit support. RBI can consider reducing the interest rates and improving the liquidity further to ease monetary conditions and attract fresh investments. RBI and the government have to make a joint effort to instil economic confidence by all means. If they are able to do so, 2012 may not end up being such a bleak year after all.
T V Gopalakrishnan Mumbai
T V Gopalakrishnan Mumbai
Sunday, September 11, 2011
Should the Indian government have a sovereign wealth fund to invest overseas?
Dr.T.V.Gopalakrishnan , Fort Worth, Texas , says:
India's present economic status does not permit for such luxuries. India has to make its economy strong in terms of improved GDP,percapita income,inflation and standard of living for its people. Charity begins at home and India should not venture for such adventures at least for another decade.Overseas markets are also not very conducive of late to attract investments. There are lots of uncertainities.Better to secure India's economy first and then think of entering overseas market. What is the source of Soverign wealth? Has India got the wealth?
(This appeared in ET E paper,9 Sep 2011, 1950 hrs IST)
Get a Quote
LATકો
India's present economic status does not permit for such luxuries. India has to make its economy strong in terms of improved GDP,percapita income,inflation and standard of living for its people. Charity begins at home and India should not venture for such adventures at least for another decade.Overseas markets are also not very conducive of late to attract investments. There are lots of uncertainities.Better to secure India's economy first and then think of entering overseas market. What is the source of Soverign wealth? Has India got the wealth?
(This appeared in ET E paper,9 Sep 2011, 1950 hrs IST)
Get a Quote
LATકો
Subscribe to:
Posts (Atom)
