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from Expert Zone:

No quick fixes to India’s growth problems

(Any opinions expressed here are those of the author and not of Thomson Reuters)

Over the past year, the government has silenced its critics with several pro-reform policy initiatives including the relaxation of FDI norms, freeing FII debt investment limits and a calibrated deregulation of petroleum prices. These reforms were cheered by the markets by way of increased FII inflows.

India's widening twin deficits - fiscal and trade - appeared to have been reined in. But in the first few months of the fiscal year 2013-14, everything seems to have come undone for India - be it the potential end of the U.S. Federal Reserve’s quantitative easing policy or the dollar’s appreciation against emerging market currencies.

Incremental policy measures such as gold import restrictions did not have the desired impact. Has the policy catalyst been introduced too late? Can we blame global macro developments as inhibiters in India’s march towards prosperity?

Liquidity tightening measures by the RBI did little to stabilize the rupee but increased volatility in the bond markets by causing yields to rise across the curve and put India’s economic growth in jeopardy.

from Expert Zone:

Why the rupee is linked to jobs in the U.S.

(Any opinions expressed here are those of the author and not of Thomson Reuters)

It appears odd that an increase in job offers in the United States should pull the rupee down in India. After all, any improvement in the U.S. economy should benefit the rest of the world. It means an increase in imports by the U.S. and exports by other countries. But there is more to it than that.

from The Great Debate:

Addressing China’s ‘soft power deficit’

Xi Jinping (L) met with President Barack Obama in the Oval Office of the White House in Washington, Feb. 14, 2012.  REUTERS/Jason Reed

As Chinese President Xi Jinping prepares for his landmark summit with President Barack Obama in California Friday and Saturday, the critical mission of improving China’s image in the world could well be uppermost in his mind.

from India Insight:

India ponders deficit control after the gold rush

India's central government in January raised the tax on refined gold imports by 50 percent. This increase to 6 percent from 4 percent is the second rise this fiscal year. Why does it keep making gold more expensive, particularly as the nation enters its prime wedding season when brides will be bedecked with the metal from head to toe?

That's part of the problem -- a large part. India's cultural attachment to gold is something that anybody who has been to an Indian wedding could tell you about. For those of you who haven't, consider this report from CBS's "60 Minutes" TV news program:

from Rolfe Winkler:

Lunchtime Links 1-14

Obama to unveil plan on bank taxes (WSJ) Surprisingly this doesn't look dead on arrival in Congress, maybe because banks know that the tax -- spread over 10 years -- isn't likely to hurt very much. It's a missed opportunity to shrink big bank balance sheets.

The advanced technology trade deficit (Mandel, ht NG)

Sheila Bair testimony before FCIC (FDIC.gov) Bair was the highlight of the morning's hearing and the headline from her testimony is that it's the Fed's fault. Had Alan Greenspan taken Edward Gramlich's advice to regulate subprime, perhaps many of the excesses of the bubble could have been avoided. In other news, the commission is unhappy with Attorney General Eric Holder b/c the Dept of Justice isn't sharing as much information as the commission would like.

from The Great Debate:

Imagine when China runs a trade deficit

WeiGucrop.jpg-- Wei Gu is a Reuters columnist. The opinions expressed are her own --

If current trends continue, China might swing to a trade deficit in the not-too-distant future. Given that China has enjoyed more than a decade of strong exports, this may sound a bit far-fetched. But even if it happens, this would not necessarily be something for the world to worry about.

Some economists have recently sounded alarm bells about the possibility of a Chinese trade deficit. They argue that if the Chinese current account surplus shrinks, it would leave Beijing with less spare cash to buy U.S. Treasury bonds. Then who would fund the U.S. budget deficit -- and, by implication, U.S. consumers?

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