September 06, 2019

A key piece in India’s slowdown puzzle that has gone unnoticed

In Mint, Niranjan Rajadhayksha highlights how monetary data can provide insights into India's current economic slowdown. Excerpts:


"Much of the debate till now has remained focused on whether macroeconomic policy needs to be eased through some combination of a higher fiscal deficit, lower interest rates, a weaker rupee and structural reforms. However, this column looks at another set of data that has not received enough attention in recent discussions about the slowdown. It is worthwhile to look at monetary data as well, especially how much money is available for economic transactions, how people choose to hold this money, and how rapidly it is circulating in the economy.


Here are a few monetary facts from the annual report released by the Reserve Bank of India (RBI) last week.


First, reserve money in the 12 months to June grew at 14.5%, or close to its average over the past decade. Also, the Indian central bank expanded its balance sheet faster than the growth in nominal GDP, mainly through open market operations rather than dollar buying..."


Read the whole article here.

Topic : State Capacity / In : OP-EDS
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