The writer is chief India economist, J.P. Morgan.
Budget's success, and in turn the sustainability of India’s recovery, will now come down squarely to policy execution and coordination.
India’s faster-than-expected rebound is very encouraging. But given labour market pressures and prospects of a K-shaped recovery around the world, the economy will need to be carefully nurtured and stoked.
So even as economies heal from COVID-19, the distribution of incomes across capital and labour risks becoming very skewed in favour of capital. Why does this matter? Equity issues apart, this portends ominously for future demand.
There are no silver bullets or quick fixes. Only a well-thought-out and sequenced reform plan. One that Reclaiming lays out meticulously and comprehensively.
The corona crisis has highlighted the criticality of social infrastructure. India must monetise existing assets in the public sector to fund growth-enhancing investments in physical and social infrastructure.
The global market mayhem reflects an unprecedented intersection of worldwide demand destruction, an adverse supply chain shock from China, and a positive oil shock.
Stimulative impact of RBI transfer is lower than presumed. Sustained reforms remain key
All told, the budget has performed an artful balancing act against a difficult macro backdrop. The big themes — financial, external, fiscal — are all well-intentioned. Now, the authorities must walk the talk with equal skill.
Fiscal tightening will accentuate growth slowdown, fiscal stimulus will hurt monetary transmission. There is a third way.
Policymakers have done well in the last few years to ensure macroeconomic stability. They must not now give in to the clamour for fiscal, monetary and regulatory easing.
Global markets are finally reconciling themselves to the fact that the goldilocks story of 2017 was always too good to be true.
Economy could be in a temporary supply shock. Fiscal stimulus will only accentuate external imbalances
Current buoyancy in global markets is misleading. Structural flaws have not been corrected, economic nationalism is surging and we could be heading towards an economic malaise
India has institutionalised its monetary policy framework in two years; this has to be taken to its logical conclusion
A batsman’s mettle is judged more by the deliveries he lets go. FM does well to resist the lure of spending recklessly in the name of growth
Asset sales are the way for government to protect credibility while avoiding procyclical fiscal stance
If there is to be competitive federalism, borrowing costs for states with varying deficits can’t be the same.
GDP deceleration is a statistical quirk. Inability of numbers to capture growth will have consequences.
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