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

Vivek MoorthySubscribe to Vivek Moorthy

Selective Memoirs

Who Moved My Interest Rate? Leading the Reserve Bank of India through Five Turbulent Years by Duvvuri Subbarao,Gurgaon: Penguin Viking, 2016; pp 323,₹699.

What Should be the Criteria for Choosing RBI Governor?

Spending a few years in Washington D C as India’s executive director at the International Monetary Fund or some Ivy League think tank should not be considered as a qualification for the post of Governor of the Reserve Bank of India. Instead, deputy governors and even those junior to them who have spent the immediate preceding years working in Mumbai, and most of whom do have doctorates the PhDs in relevant sub areas, should have the first lien on the governor’s job.

Need for Long-term, Fixed-Income Provident Fund Deposits

While it is necessary to align returns on small savings with other interest rates in the economy, a simplistic focus on lowering savings rates overlooks fundamental weaknesses in provident fund schemes. The option of long-term, fixed-income PF deposits, which are necessary for small investors planning for retirement, is not available.

India's Primary Deficit and Interest Payments Burden

This paper provides a critique of the 'consensus' view that a worsening revenue deficit and debt situation have prevented fiscal consolidation and argues that the fundamental problem has been a deteriorating fiscal deficit. It explains the distinction between worsening deficit and debt conditions using time period simulators with relevant variables from the Domar debt model. It shows that a rising debt ratio, which might appear to be due to unfavourable interest rate dynamics, can be related to a previous rise in the primary deficit. The Finance Commission mandated centre-state transfers are predicated upon economic performance indicators based on the revenue deficit; the validity of the consensus view is then critical in evaluating the efficacy of the transfer criteria.

Small Savings Policy Circumventing Tax Sops

Inflation benchmarking of small savings and provident fund interest rates, which is a sound policy in and of itself, has the added advantage of lowering the interest paid when there is inflation and tax exemptions cannot be touched.

Setting Small Savings and Provident Fund Rates

This paper recommends an inflation adjustment formula for setting the interest rate on all Small Savings and Provident Funds and discusses the rationale for the suggested formula.
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