D H Pai's Feed
Oct 29, 2012
via Expert Zone

The crippling effect of QE3

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(The views expressed in this column are the author’s own and do not represent those of Reuters)

It was tried twice before and it is being tried once again. Whether quantitative easing (QE3) will increase employment in the United States is questionable. But it will certainly disturb currency exchange rates of emerging market economies with related consequences.

Oct 23, 2012
via Expert Zone

RBI policy: Cut in repo rate imperative

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(The views expressed in this column are the author’s own and do not represent those of Reuters)

The Reserve Bank of India (RBI) is fixated on inflation and with that rigid mindset it is difficult to expect any liberalisation of monetary policy. But there are other parameters that have changed. Food inflation was down in September if that is any comfort. More than that, the budget deficit will be reduced with a cut in subsidies on diesel. There are also initiatives being taken on reforms. Obviously, the RBI needs to tune its policy to fit the new situation. If the RBI does change its stance, what instrument is it likely to use?

Oct 15, 2012
via Expert Zone

If the U.S. and EU slide into recession

(The views expressed in this column are the author’s own and do not represent those of Reuters)

There are apprehensions that the U.S. and EU could drift into recession again. The economic crisis of 2008 unnerved every country, with growth either turning negative or falling drastically. The recovery from that recession was weak and any relapse could be prolonged.

Oct 8, 2012
via Expert Zone

When will India’s reforms show results?

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(The views expressed in this column are the author’s own and do not represent those of Reuters)

After a long silence the spell has finally been broken. The second phase of reforms in the country has begun with almost the same conviction as the first but under different conditions. The 1991 reforms were under compulsion but the present reforms are voluntary. This is because the last 20 years have been a test to prove to ourselves that reforms help and they have substantially helped to make the country an emerging market economy.

Sep 6, 2012
via Expert Zone

Economic consequences of deadlock in Parliament

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(The views expressed in this column are the author’s own and do not represent those of Reuters)

The monsoon session of Parliament has been a washout without any important business being transacted. This has been made out to be a political strategy on the part of the Bharatiya Janata Party (BJP) to force early elections. Obviously, the Congress-led coalition is unlikely to oblige. The unintended victim is the economy which has been stopped from getting back to growth.

Aug 2, 2012
via Expert Zone

Why the RBI preferred an SLR cut

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(The views expressed in this column are the author’s own and do not represent those of Reuters)

The first quarter review of monetary policy did not create any ripples. The stock market remained flat and investors and consumers showed little interest. That was because RBI Governor Duvvuri Subbarao had made enough noise earlier that the time was not right and conditions were not suitable for a rate cut.

Jul 27, 2012
via Expert Zone

Consequences of an export squeeze

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(The views expressed in this column are the author’s own and do not represent those of Reuters)

In June, exports shrank more than five percent to $25 billion largely due to recessionary conditions in major importing countries such as the U.S. and the EU. Although exports are not as critical to us as they are to Singapore or China, they do count for a lot.

Jul 19, 2012
via Expert Zone

The growth versus inflation dilemma

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(The views expressed in this column are the author’s own and do not represent those of Reuters)

The RBI is concerned about inflation; the finance ministry has growth as its priority. That, as RBI Governor D. Subbarao mentioned, makes the two almost look like adversaries.

Jul 12, 2012
via Expert Zone

The enigma of diesel prices

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(The views expressed in this column are the author’s own and do not represent those of Reuters)

Budget considerations make it necessary to raise prices of diesel; political exigencies make that difficult. No wonder Chief Economic Adviser Kaushik Basu was cautious enough to suggest ‘partial decontrol’. But the present is the time to do more than that.

Jul 4, 2012
via Expert Zone

No silver lining in this monsoon cloud

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(The views expressed in this column are the author’s own and do not represent those of Reuters)

India’s monsoon rains have been delayed and were already 30 percent deficient by the end of June. There are doubts whether rains will pick up during the rest of the season. August and September are likely to be dry which will damage crops and reduce farm incomes.

    • About D H Pai

      "I undertake research on current macroeconomic issues of interest, mainly to industry, as president of RPG Foundation, a private think tank. I have also been bringing out for the past 18 years a monthly publication entitled 'State of Business' for circulation electronically among select contributors."
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