The writer is co-head of Asia Pacific Strategy and India Strategist for Credit Suisse.
As private investment and consumption settle at far lower levels than earlier anticipated, the government’s role in the economy over the next two years or so would need to be much larger than it has been in the last three decades.
We believe a continued focus on reforms and on sustaining India’s growth potential will be critical in preventing macroeconomic instability.
Some observers are also concerned about what high deficits would do to India’s credit ratings. It remains to be seen how agencies respond to globally large fiscal deficits monetised by central banks; India may not be an outlier here.
With central reforms increasingly announced outside budget speeches, and both revenue and expenditures starting to become predictable, it might be more productive for public attention to move to other areas of government functioning like state and municipal budgets.
The government needs to take a decisive approach on the financial architecture in India: It needs to take an axe to the system, as a scalpel will no longer suffice.
Budget takes a calculated risk to fund part of borrowings through foreign currency bonds
New government should utilise its enormous political capital to introduce economic reforms
The constraints in the financial system have further worsened the monetary tightness. As growth continues to slow and inflation stays below the target, interest rates may keep falling, but likely not fast enough to revive growth quickly.
The income transfer scheme was the highlight of the budget. But its success will need deft manoeuvring.
India needs to bring structural changes, reset targets, influence global policy and choices.
With volatility in global currency markets up again, debate on rupee’s correct value has restarted
We need to build institutional memory, improve decision-making. Let’s start with data
Recent surveys suggest a sharp drop in agricultural employment. What must the government do?
Cards provide better security and don’t face the problem of providing change.
There had been a clamour for radical reforms. Demonetisation shows what real reforms feel like.
GST is a reform long delayed. But there may be good reason not to hurry it through now.
Farm incomes may not revive despite good monsoon. There are new challenges for policymakers.
They ignore the extremely high risk of an attempt at privatisation being effectively stillborn, unacceptable to state governments.
Why criticism of the Ujwal Discom Assurance Yojana is misplaced and unwarranted.
By sticking to the fiscal consolidation roadmap, the Union budget has obviated instability. The focus should now be on state capitals, whose budgets need greater market scrutiny
Indian equity markets are turbulent due to high foreign ownership and the renminbi uncertainty
Why popular stockmarket indices are not an accurate barometer of the robustness of the Indian economy.
The election results in the state will impact the Indian economy’s prospects.
RBI raising limits for foreign investors holding government bonds is more significant than the rate cut.
The state needs a stimulus. Only the Centre can provide it.