The revised Indian Financial Code brings some alterations to governance within the RBI. At the heart of these changes is the belief in a popular myth that lower interest rates will lead unquestionably to higher economic growth
In its recent monetary policy document, the Reserve Bank of India has imposed strict maturity conditions on foreign portfolio investment in debt to get a better handle on risk. But a fiscal solution would be more elegant and effective
RBI’s second bi-monthly policy did not raise interest rates, as was expected. But, away from the noise on repo rates, the policy has two critical pivots: an emphasis on making liquidity available for credit expansion and, more importantly, managing inflationary expectations through upbeat language
The RBI’s two-pronged strategy to protect the economy from tapering-led volatility discourages unproductive external borrowings and prods foreign portfolio debt investors to think long-term. There's another vexed issue: the IMF has sounded a cautionary note on the rising number of foreign currency debt laden Indian firms
To navigate the U.S. away from the huge monetary stimulus, the Federal Reserve has initiated tapering. But in an integrating world, the emerging economies, especially India, China and Brazil, will see collateral liquidity damage. How will the Fed enforce its mandate? How will central banks in emerging markets react?
The extent of the rupee’s depreciation in 2013 demonstrates the Indian market’s dependence on overseas portfolio investments. Can developing domestic institutional bulwarks allay anxieties during similar crises? Is tapping into India’s deep pool of domestic savings, by modifying archaic regulations, an option?
The outgoing Governor of the Reserve Bank of India, D. Subbarao, delivered his last speech – the Nani Palkhiwala memorial lecture – as the head of the country’s central bank on August 29. Aditya Phatak blogs about how he combined tough talk and confession with balance and political sagacity