Articles by Vivek Moorthy

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.

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.