Indian Economy Slowdown

Indian economy has slowdown structurally Says Rakesh Mohan

Indian Economy Slowdown

Indian Economy Slowdown, Former Deputy Governor and former Executive Director of the IMF Reserve Bank of India (RBI), Rakesh Mohan said on Wednesday that since 2012, the Indian economy structurally slowdown. 

“Tax reduction does not have as much reaction. We don’t know what the prices in a certain way should be like. This is a global issue because of the major central banks since the North Atlantic Financial Crisis 2008-2009. whether the US Fed, the European Central Bank, the Banco Japan, the Bank of England, etc. have all fallen down to zero levels. 

The general view around the world is that the monetary policy activity, utility, efficiency, etc., appears to have ended. Therefore, a lot more interesting debates are now underway without concluding that we must consider macro-management much more with greater fiscal and monetary coordination, but this debate remains in progress but Maharshi’s like Stan Fischer who was indeed the teacher of people like Ben Bernanke and others are also talking about this.

The privilege of teaching strategies for economic development and also the evolution of central banking that I can afford to take more helicopter view. So I think that the key issue in terms of reviving growth in the medium term which always the short term as well is really stimulating investment both private and public, now it does seem to be the case that there is muted demand for private sector investment. 

“There also seems to be some indication as some papers have recently pointed out there’s also supply issue in terms of risk-reverse behavior of banker banks. So there’s also both in some construction of supply credit also construction demand for credit. So in some sense, one is not seeing a stimulation of the private investment.” 

In terms of FISC

In terms of FISC, one interesting fact is that all the variety of fiscal reforms tax most of them in the right direction. The Indian tax DDP ratio has been rock-solid at the central level at around 10% we leave a plus. So in terms of fiscal stability, you do need to think of ways and means of increasing the tax revenue ratio for GDP but not necessary rising rates. 

Is Currency a Problem?

Yes, it is far too strong most estimates of the rate exchange rate, of course, the different estimates do suggest something like 10-15% overvaluation but these estimates are different from different sources and different ways of calculation. I was sorry to see that in the recent high-level advisory group report on trade gave in 300 pages give a cursory one paragraph to currency. It must be the only country we don’t think the exchange rate is important but for competitiveness and I remember it’s both important for exports as well as for domestic production. 

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