The Fiscal Deficit: How Achievable is it?

Posted by: Deepa Vasudevan on Fri, Jul 18th, 2014

The Government has targeted a fiscal deficit of 4.1% of GDP for this year. The achievability of this target depends on key assumptions about growth, exchange rate, fuel prices and overall investment climate. Any deviation of actual conditions from assumed ones will result in a much higher deficit. Read more

ECB: Easing into negative territory

Posted by: Deepa Vasudevan on Mon, Jun 9th, 2014

The European Central Bank made monetary policy history by switching to a negative rate for a key bank deposit rate. Shorn of the novelty, this is a simple strategy to boost bank credit and to control depreciation of the Euro, both with the aim of restoring economic growth. Read more

Finding Jobs for the Demographic Dividend

Posted by: Deepa Vasudevan on Thu, May 15th, 2014

More than 100 million persons are expected to enter the workforce between 2010 and 2020. There are few jobs in agriculture and manufacturing now, and services are not labour intensive. The challenge is to productively harness the demographic dividend by creating enough jobs in an economy with declining employment elasticity. Read more

A New Year. A New Monetary Policy Framework?

Posted by: Deepa Vasudevan on Sat, Jan 25th, 2014

The Patel Committee has recommended far-reaching reforms to monetary policy. The key idea in the report is that RBI should move to targeting CPI-based inflation and it should be both independent and accountable for achieving its targets. However, monetary policy is effective only if backed by sound fiscal policy Read more

A More Stable External Account

Posted by: Deepa Vasudevan on Thu, Dec 12th, 2013

The RBI's strategy of compressing imports and attracting NRI funds through the FCNR(B) scheme has greatly eased the BoP situation. If FII inflows also pick up in the remaining months, India should be able to finance its current account deficit with foreign capital inflows without dipping into its reserves. Read more