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Part II: Has the recession ended? Balance sheet problems of banks and borrowers
INDIA · Report · 30 Jun 2015

Executive Summary While the official GDP numbers are showing an optimistic picture, trusted firm databases suggest that the recession which began in Q1 2012 has not ended. In the second part of our discussion of the recent GDP figures and business cycle conditions, we look at the current balance ...

What Can We Learn From the Currency Defense of 2013
INDIA · Report · 23 Jun 2015

Executive Summary In 2013, at the time of Ben Bernanke’s “Taper Talk”, India mounted a currency defense to combat currency depreciation. It is useful to look back at this episode, in order to obtain insights into the workings of a currency defense. The authorities appeared to throw everything the...

Part I: Has the recession which began in 2012 ended?
INDIA · Report · 22 Jun 2015

Executive Summary Changes in GDP estimation methodology have taken place, and the new GDP data shows a very rosy picture. However, we believe that the recession which began in Q1 2012 has not yet ended. The methodological documents associated with the new GDP data show many improvements in method...

Big Facts about the US Macroeconomic Environment and Implications for India
INDIA · Report · 26 May 2015

Using very long time series in the US, three important facts are: (a) an inflation target of 2%, which is successfully delivered by the US Fed; (b) bond returns of 2.7% and (c) equity premium of 3 percentage points.In the US, there is a fair understanding about these three numbers and confidence ...

The Pre-Crisis Credit Boom
INDIA · Report · 11 May 2015

In Y. V. Reddy's period as governor (6/Sep/2003 to 5/Sep/2008), there was vigorous pursuit of exchange rate policy. In an attempt to defend the dollar, RBI purchased a lot of foreign assets and paid for this using rupees. These rupees distorted domestic monetary policy. At a time of the biggest e...

Important follow-up to yesterday’s report, “Financial Reform Rollbacks”
INDIA · In Brief · 01 May 2015

I would like to rectify some of the analysis presented in yesterday’s report entitled “Financial Reform Rollbacks”. In my report yesterday I said: One key area of failure was tax policy and tax administration. As these reports have emphasized, the budget did not have a plan for how to fix the fai...

Financial Reform Rollbacks
INDIA · Report · 30 Apr 2015

Executive Summary The BJP has rolled back the proposal of applying MAT on foreign investors. Until the fine print is read, we cannot be sure about what the tax authorities have done. And, the increase in the withholding tax from 5% to 18% stands. On financial reform, three issues have held: infla...

Developments in Fiscal, Financial and Monetary Institutions
INDIA · Report · 13 Mar 2015

Executive Summary There is an important three-pronged move in institution building, which comprises: (a) formal inflation targeting at RBI; (b) unburdening RBI of the conflict of interest of debt management for the government; and (c) giving RBI a bond market through which monetary policy would b...

Budget Speech Analysis
INDIA · Report · 02 Mar 2015

Executive Summary This Special Report was originally issued on March 1, 2015 as a post on GSP Direct, the GlobalSource Partners interactive webtool providing clients an initial response to breaking news and developments. The BJP, armed with a clear majority in the Lok Sabha and the desire to brea...

Budget Speech Analysis
INDIA · In Brief · 01 Mar 2015

The BJP, armed with a clear majority in the Lok Sabha, with the desire to break with Indian socialism, was expected to unveil a game plan for structural change from here till 2019. In large part, Budget 2015 does not rise to the challenge. It has some good elements, and with good execution, they ...

The Setting For The Budget Speech
INDIA · Report · 11 Feb 2015

Executive Summary Optimists believe that if Budget 2015 works out right, trend growth in India will accelerate from 6.5%. Pessimists believe that the gulf between the existing structures of government and the requirements of the economy is growing and is steadily becoming a drag on growth. Theref...

A High Stakes Budget Speech
INDIA · Report · 20 Jan 2015

Executive Summary When the Modi administration took charge, there was euphoria and a genuine sense of possibility. However, the first eight months do not bode well. The economic downturn that began in 2010 has not reversed, the fiscal situation remains daunting, and a small part of the Indian rea...

Revival in Investment?
INDIA · Report · 07 Jan 2015

Executive Summary The increased confidence associated with the new BJP government has shown up nicely in the data for announcements of new investment projects. Quarter-on-quarter growth of announcements for the Oct-Dec 2014 quarter was +22% for government projects, +6.4% for private projects and ...

India at the Crossroads
INDIA · Report · 30 Dec 2014

Executive Summary When the Modi administration took charge, there was euphoria and a genuine sense of possibility. The first seven months do not bode well. There are weaknesses in (a) diagnosing the problems (b) establishing strategies of reform and (c) setting up teams that can achieve stated ob...

The Gains To India From Lower Oil Prices
INDIA · Report · 21 Nov 2014

Executive Summary The dramatic decline in the price of crude oil has important implications for the Indian economy. Consumption of crude oil is slightly above 6% of GDP, so a halving of the price of crude oil is tantamount to a tax cut of 3 percentage points of GDP. Crude oil consumption divided ...

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