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Ashok Kotwal
GST Explainer: Introduction
Posted on: 16 Oct 2017
Seventeen years after its framework was formed, India’s biggest tax reform – the goods and ... read on »
Introducing a new feature: ‘Explainers’
Posted on: 16 Oct 2017
Our day-to-day lives are tossed around due to economic changes, resulting sometimes from g ... read on »
On demonetisation
Posted on: 23 Dec 2016
On the evening of 8 November, the Prime Minister announced on national television that Rs. ... read on »
Introduction to e-Symposium: The GDP conundrum
Posted on: 16 Nov 2016
Ever since India’s Central Statistical Organisation came out with the new GDP series with ... read on »

Tag: interest rates

The tussle between RBI and Ministry of Finance: A different dimension
Gurbachan Singh
Posted on: 18 Aug 2016

The popular belief about the tussle between RBI and the Ministry of Finance is that it is an issue of the trade-off between inflation and economic growth, with the former more focussed on controlling high inflation and the latter emphasising high growth. However, according to Gurbachan Singh, there is a different dimension to the story; the Ministry doesn’t fully appreciate that RBI cannot ignore market forces while making announcements about interest rates.
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Household savings and India’s current account deficit
Nikhil Gupta
Posted on: 25 Sep 2015

India’s current account deficit widened consistently in the post-crisis period between 2008-09 and 2012-13. This column finds that while the public sector was the key driver of this trend in the first two years, the increased consumption/investment by households was responsible for the high deficit in the later period. It recommends that policymakers should now incentivise household savings rather than consumption/investments, which implies limited scope for further interest rate cuts.
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How interest rates affect financial decisions of Indian households
Nikhil Gupta
Posted on: 17 Jul 2015

RBI has cut interest rates three times this year so far. While rate cuts are welcomed by the Indian corporate sector, their impact on households is less discussed. This column analyses the relationship between deposit rates and financial decisions of households. It finds that lower rates reduce net financial savings of households, which in turn reduces the resource pool available to the corporate sector.
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Responding to external shocks
Ashima Goyal
Posted on: 30 Apr 2015

Following the global financial crisis of 2007-08, the Indian economy was exposed to various shocks. While the major source of shocks was external, the effects were magnified by certain lapses in domestic policy. This column discusses what policies worked and what did not work to reduce excessive rupee volatility, and how the lessons were applied to prepare for any future shocks.
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Financing India’s infrastructure growth
Samik Metia
Posted on: 12 Jan 2015

Interest rates in the developed economies are still at very low levels, while investors are looking for high and stable returns for their money. This article outlines an innovative proposal for financing India’s infrastructure needs via government bonds targeted at foreign investors, with returns linked to the growth rates in the country.
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Understanding India’s monetary policy
Rajeswari Sengupta , Nirvikar Singh
Posted on: 21 Dec 2012

From the outside looking in, it may seem that India’s central bank is making up its own rules, making it difficult to predict the next movements in the interest rate. This column argues that the central bank is in fact following a rule, you just have to look hard enough.
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Searching for the soul of monetary policy in India
Amartya Lahiri
Posted on: 09 Aug 2012

What is the thinking behind the current policy of the Reserve Bank of India? This column argues that its rules for deciding on India’s interest rates are based on assumptions that hold in developed economies – but not necessarily in India. Indeed, in many cases this leads to precisely the wrong policy decisions.
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