What's new

Why a $5 trillion Indian economy is a pipedream

beijingwalker

BANNED
Nov 4, 2011
35,262
2
65,964
Country
China
Location
China
Why a $5 trillion Indian economy is a pipedream
Oct 04, 2020 · 09:30 am


  • The idea that India is losing clout in the neighbourhood has recently become a special cause for anxiety among Delhi’s commentariat. But is this phenomenon really new? A longer look at India’s regional diplomacy suggests that Delhi has always been losing some and winning some in the region, explains C Raja Mohan in the Indian Express.

  • Gone are the days of hoping to trasnform India into a thriving $5 trillion economy by 2025, says William Pesek in Forbes. Nowadays, conversations focus on whether India could be the first member of the BRICs grouping – Brazil, Russia, India, China – to bedowngraded to “junk” status.

  • Congress leaders Rahul and Priyanka Tandhi have gained an upper hand – at least for today, writes Javed Ansari on NDTV.com.


 

beijingwalker

BANNED
Nov 4, 2011
35,262
2
65,964
Country
China
Location
China
Modi’s Economic Failings Dim India’s $5 Trillion Dream
William Pesek
I write about economics, markets and policymaking throughout Asia.
Sep 30, 2020


It’s been a truly dreadful year for a global central banking community that long took independence from political meddling for granted.

From Jerome Powell in Washington to Haruhiko Kuroda in Tokyo, officials have been drawn more and more into doing the bidding of underperforming leaders. Yet even by these standards, the power grab at Reserve Bank of India is both breathtaking and dangerous. The government has effectively refused to staff the RBI amid a global crisis, forcing the central bank to postpone this week’s key policy meeting.

Since 2014, Prime Minister Narendra Modi has made no secret of his desire to pull the RBI directly into his sphere of influence. When he first took power, the RBI was being run by the respected Raghuram Rajan—and run well.

Rajan’s claim to fame was an event-rich stint as chief economist of the International Monetary Fund in Washington from 2003 to 2007. There, he was one of the only economists anywhere to identify, and credibly warn of, the Lehman Brothers-killing subprime crisis to come.

In 2013, he returned Mumbai to helm the RBI just as the “taper tantrum” was upending emerging markets. Rajan acted forcefully to tame inflation, steady the rupee and stabilize the banking system. His calm and transparent efforts reassured credit-rating companies tempted to slap a “junk” label on India.

Modi arrived in 2014 and took a disliking to Rajan’s independent streak. And his unwillingness to play ATM to a new government anxious to hasten economic growth. By September 2016, Rajan found himself back in the private sector as Modi searched for a more compliant RBI head.


Enter Urjit Patel, who also wasn’t quite liberal enough with the rupee-printing press. Patel was gone by December 2018, replaced by Shaktikanta Das. Since then, Das has proven to be far more willing to do Modi’s monetary bidding, slashing borrowing costs early and often.

Perhaps even Das isn’t proving himself to be sufficiently accommodating in Modi’s eyes. The desperation in New Delhi is understandable on some level. Indian growth plunged 23.9% in the second quarter, easily among the worst in Asia. Covid-19 is also devastating the economy. With more than 6.2 million cases, India is second only to America.


Yet a recession-causing pandemic is no time to be suffocating India’s most globally-respected institution.

Earlier this week, the RBI found itself three policymakers short to hold a scheduled meeting on the interest rate outlook. The government failed to appoint replacements for monetary decision makers whose terms expired, injecting fresh uncertainty into Asia’s third-biggest economy.

It smacks of “reckless neglect” at the very worst possible moment, says economist Vishnu Varathan of Mizuho Bank. Yet it’s also emblematic of the how the promise of Modinomics dims more and more each passing year.

Modi rode to national office on the strength of his years running the western Gujarat state, one of India’s most advanced economic regions. As prime minister, he’s been unable to manage an economy veering into trouble. Gone are the days of hoping to morph India into a thriving $5 trillion by 2025, the target date of China’s own attempt at tech domination.

Nowadays, conversations focus on whether India could be the first member of the BRICs grouping—Brazil, Russia, India, China—to get downgraded to junk status. With consumption, exports, private investment and other key growth engines sputtering, it’s not clear how Modi plans to stabilize the economy. Given New Delhi’s debt load, India will be hard-pressed to spend its way back to steady growth.

That, not surprisingly, puts the onus on the RBI to do more to jolt business and household demand. Only, it can’t. Modi’s mishandling of the economy has left the RBI understaffed and global investors wondering what gives.

The RBI does have room to ease further. Its benchmark rate is 4%. One problem: inflation is currently trending above the 2% to 6% target. More stimulus might be inadvisable. Even so, the RBI could indeed act to pump more rupees into a wobbly economy. Well, if not for its staffing crisis.

Is Modi’s party slow-walking nominating new policymakers to further undermine RBI? It’s anyone’s guess. But why Modi’s India would think now is the time to be hobbling its most vital outwardly facing institution is beyond comprehension.

 

graphican

ELITE MEMBER
Jul 21, 2009
11,663
42
18,651
Country
Pakistan
Location
Australia
Modi controls Indian media. Other than a few YouTubers, you would not find anyone speaking of corruption, misgovernance, teetering Indian social fabric, RSS terrorism, unemployment or poor economy. None of these are issues from Indian point of view.
 

shi12jun

FULL MEMBER
Oct 10, 2016
735
0
1,538
Country
China
Location
China
China’s GDP in 2020 will reach 15 trillion US dollars, and India’s GDP in 2020 will be less than one-fifth of China’s
 

Figaro

SENIOR MEMBER
Aug 17, 2017
5,530
8
10,153
Country
United States
Location
United States
Anything relating to Indian success or whatever is a pipe dream by itself ... India will always remain a miserable failure till its inevitable demise as a unified country. I am sure even countries such as Nigeria will eventually surpass India in development, let alone other neighbors in South Asia. This coronavirus just accelerates the progress.
 

siegecrossbow

PDF THINK TANK: ANALYST
Aug 19, 2010
4,422
5
5,563
Country
China
Location
United States
The Indian economy was already going down hill before COVID hit. They registered like 3% GDP growth or something. If anything COVID provides an excuse for the Modi regime.
 

Figaro

SENIOR MEMBER
Aug 17, 2017
5,530
8
10,153
Country
United States
Location
United States
The Indian economy was already going down hill before COVID hit. They registered like 3% GDP growth or something. If anything COVID provides an excuse for the Modi regime.
I don't think the average Joe cares about excuses when it comes to the economy
 

IblinI

SENIOR MEMBER
Jun 21, 2016
2,748
1
5,347
Country
China
Location
New Zealand
Yup. That's the secret. Thanks for pointing it out. Get on more apology letters.
Remeber how indian members here laughing at China and Pakistan during Feb,March when your govt could have actually done something like South Korea,Vietnam etc..:disagree:
 

Users Who Are Viewing This Thread (Total: 1, Members: 0, Guests: 1)

Similar threads


Top Bottom