ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Infrastructure and Fiscal Management

In India, fiscal consolidation is rule-based and focuses on deficits and debt. Macroeconomic concerns are not integrated with fiscal targets, which have been achieved at the cost of infrastructure investment. States have to use their revenues more effectively to spend on health and education, and borrow more to fund infrastructure. The centre must incentivise states to use their fiscal space effectively. A strategy for infrastructure investment by the central and state governments is discussed, especially in the context of the recommendations of the Fourteenth Finance Commission.

Economic Revival or Dead Cat Bounce?

Although growing at rates that are globally enviable, the Indian economy has been unstable over the last several years. False dawns, shifting time series, and the selective use of data has provided fodder for scoring political brownie points. Citing near-term data, the Economic Survey 2017–18 argues that the Indian economy is on the path of recovery even as it raises some red flags. What does a comprehensive appraisal of the data show? Is this “recovery” sustainable or is this yet another case of a dead cat bounce?

A Farewell to Arms

A former IAS officer looks back with mixed emotions at a career in the civil service that spanned the divide between two centuries.

Monetary Policy Dilemmas at the Current Juncture

Monetary policies in advanced economies and emerging markets face quite different challenges at the current juncture. In the advanced countries, current dilemmas derive from the normalisation of unconventional monetary policies. The short-term dilemma is to determine when to start exiting extraordinary policies and selecting appropriate tools, as conventional tools may not be very relevant during this phase. The medium- to long-term challenges relate to the sequencing, pace and mechanics of normalisation. Monetary policy in emerging markets needs to cope with the familiar dilemmas of fiscal dominance, the growth-inflation trade-off and the "impossible trinity." With fiscal parameters in control, and food and commodity prices subdued, the chief dilemma currently confronting emerging markets involves a trade-off between targeting divergent domestic and external cycles. Although they are now better placed to absorb a sudden stop, the impact is likely to be differential, with those with weaker macroeconomic parameters suffering greater pain.

Deconstructing Indian Monetary Policy through the Taylor Rule

It is meaningful to evaluate the Reserve Bank of India's monetary stance through the prism of the Taylor Rule, even if it is inadvisable to apply it mechanically.

Quantitative Easing and the Helicopter Drop

Over the last few decades economists and policymakers came to regard macroeconomic policies as the holy grail that could smoothen business cycles. This confidence has been badly shaken in the aftermath of the global financial crisis. Aggressive and unconventional monetary policies have been unable to put Humpty Dumpty back on the wall again. This article examines the working and possible implications of quantitative easing and the helicopter drop, the two unconventional monetary policies beyond the prevailing zero bound policy rates in advanced economies.

Unravelling of the Bretton Woods Twins

The Bretton Woods twins - the International Monetary Fund and the World Bank - have become largely irrelevant for both developed and developing countries. The market has enthroned the US dollar as the international reserve currency, with little role for the IMF which has lost its role as international lender of last resort. And the0 World Bank's capital is inadequate to meet the massive requirements of infrastructure in the developing world.

The New Triad of Policy Concerns

Monetary Policy, Sovereign Debt and Financial Stability: The New Trilemma edited by Deepak Mohanty (New Delhi: Reserve Bank of India, Foundation Books, Cambridge University Press India), 2014, pp xiv + 370, Rs 995.

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