This article in mint, based on KLEMS study supported by RBI and many other organisations, is pretty scary. Need some time to sink in before commenting.
Presumptive loss is actionable. Actual loss is not. Ironic but true. It seems Rs 2,50,000 crore lost on account of demonetisation is not actionable because the Comptroller and Auditor General of India (CAG) says he cannot go after policy decisions. Also, no-one can be held responsible not just for over 100 lives lost of people forced to stand in queues, but also for the yet untold stories of those who lost loved ones for want of cash in medical emergencies. But his predecessor not only questioned the policy decision of not auctioning spectrum and coal blocks but also conjured up astronomical figures of alleged presumptive loss. I suppose institutional positions change with the change of CAG. Institutions don’t matter, people do. That is why we often witness the ugly spectacle of the National Investigation Agency and the CBI doing a U-turn, depending on the political masters they wish to please.
While it is sad to believe who can not grow forever, atleast in terms of economics, but it is hard reality. Ruchir Sharma offer his two-cents. His contention is that, at the time of Reagan productivity and population growth was both 1.75%, hence US could grow at 3.5%. With population growth declining and productivity at just .75% its hard to achieve purported 3-4% growth. This is the new normal and we all have to adjust to it.
Well,jokes and rhetoric aside, how do RBI treat the notes which are not returned.
C. Rangarajan & Usha Thorat have their take in mint. This is quite a lesson in accounting
Rating Agencies are major stake holder in international finance. No wonder they were identified as the prime culprit when global finance ran wild. The hallow institutions were tarnished. But not enough, I guess. Recent effort by Indian government to lobby one of the three major rating agency.
Though it is highly unbecoming of Indian Govt to indulge in this, I guess the practice is quite widespread.
The cult of independence of Central Banker is not new. Central Banker over the world have worked hard for this independence. Whether FED or RBI we do hear how govt is trying to control the chairman/governor. The independence and the prominence attached to the person holding the chair is so overblown, that recently a report stating Dr Rajan refusing to continue for second term, has set panic among the Forex trader.
But asking more specific question-Independence from whom.
Peculiar case is of European Central Bank (ECB). It is not Central Banker to specific country. Not it get public support like its American or Indian counterparts can get. Yanis Varoufakis, former finance minister of Greece, present his analysis in Project-Syndicate. His analysis is colored by the events, he presided over as finance minister of Greece, but he does drives the point home that ECB is vulnerable to creditors( read Germany). and there is so much ECB can do.
Prof. Eichengreen, points out that possibly Euro can never take the place of Dollar, because it is a currency without state. and too many committee are to be consulted for any decision.
Most of us in pvt sector might find it hard to comprehend, but Public Sector Banks do find this right too taxing. Not sure why but there are quite some cases, where employee resigned is not given relieving letter. Many actually had to go legal ways. Shyamlal Majumdar has an article in BS regarding the same.
The debate on accuracy and validity of new series is far from over. The data released by RBI from MCA has put the debate on the blow up factor of small industry. This is one thing in sample approach- which is most tricky. But never the less good insight.
Today, two years back this blog was started to keep my self updated with the current economics. Just 100 odd posts, which means, little more seriousness.
So Happy Blogging……………………….