The writer is professor of economics, Royal Bank research professor and Johal Chair, University of British Columbia, Canada
One reason why infrastructure investment in India ran into problems was the anaemic growth in sectors that would have been the main source of demand for infrastructure.
So where will the jobs come from? The job creators are entrepreneurs, conglomerates, and multinationals. It is in their nature to take investment risks as long as the returns are high enough.
The government would also do well to revisit the appointments process to key technical and regulatory bodies. Functions like monetary policy, banking supervision, data collection and dissemination, audit of government financial accounts, are all technical jobs.
India should learn from its past, and speed up critical reforms
The scale of India’s development challenge is immense. The country needs to play the long game and it needs to start now. There is no time to lose. Hopefully, the renewed mandate will give the Modi government the political will and space to pursue overdue land and labour reforms.
To sustain its growth story, India now desperately needs a next generation of reforms. Amongst the most important ones are land and labour reforms to encourage manufacturing to scale up
US move to withdraw privileges provides an opportunity for India to introspect on the general state of its exports.
Possibly the most problematic aspect of evaluating the budget is the opaqueness of the underlying data.
Putting a part of the country’s assets in a protected entity like the central bank builds fiscal credibility of the country as long as the central bank is viewed by markets as being independent of the government.
India missed the chance to usher in second generation reforms and free up private enterprise
RBI has a more coherent case on capital base, performance and autonomy than its critics. Central banks need to be adequately capitalised in order to perform their core functions which include being the lender of last resort for the banking system.
Move to impose barriers on imports to manage the current account deficit is a throwback to the licence raj. We need to focus on the systemic issues pulling down productivity in export sectors.
RBI has been accommodative: Just compare the real interest rate with the ‘natural’ rate
Far from curbing black money and corruption, demonetisation has disrupted the economy.
Ill-thought-out assertions about the efficacy of monetary policy can unhinge private expectations of inflation.