Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: ACCOUNTING STANDARDS :: Central Excise rule to resale the machines to a new company :: due date for vat payment :: ARTICLES ON INPUT TAX CREDIT IN VAT :: list of goods taxed at 4% :: cpt :: TAX RATES - GOODS TAXABLE @ 4% :: ACCOUNTING STANDARD :: VAT Audit :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: empanelment :: form 3cd :: TDS :: articles on VAT and GST in India :: VAT RATES
 
 
« Latest Circulars »
 Payment Systems - Next Orbit (Shri R. Gandhi, Deputy Governor - February 20, 2017 - at the launch of Bharat QR Code at Hotel Trident, Mumbai)
 Financing MSMEs: Banks & FinTechs – Competition, Collaboration or Competitive Collaboration? (Shri S. S. Mundra, Deputy Governor – February 20, 2017 – at the NAMCABS Seminar organized by College of Agricultural Banking in Mumbai)
 Issuance of Rupee denominated bonds overseas – Multilateral and Regional Financial Institutions as Investors
 RBI-Formation of twenty one new districts in the State of Telangana - Assignment of Lead Bank Responsibility
 RBI imposes penalty on Janata Urban Co-operative Bank Ltd., Wai, District Satara
 Monitoring of Foreign Investment under PIS in Indian Companies- Incorporation in Ban List–M/s HDFC Bank Ltd.
 Reserve Bank of India seeks Comments on Draft Circular on Rationalisation of Merchant Discount Rate (MDR) for Debit Card Transactions
 Forward Rate Agreement (FRA) and Interest Rate Swap (IRS) - Withdrawal of Fortnightly return
 RBI-Foreign Investments in India
  RBI cancels the Licence of the Shri Chhatrapati Urban Co-operative Bank Ltd., Pimple Nilakh, Pune, Maharashtra
  Finance Minister meets the Directors of the RBI Central Board

The Global Outlook and India : RBI Governor
May, 23rd 2016

Delivering the Mahtab Memorial Lecture at Bhubaneswar on May 21, 2016, Dr. Raghuram Rajan, Governor, Reserve Bank of India emphasised that even though policies in the rest of the world could enhance uncertainty and volatility for emerging markets like India, because of measures taken by the government and the central bank since the “taper tantrum” in summer of 2013, India was much better prepared for global volatility.

Among the key points he made were:

  • The world is growing extremely slowly, and while the reasons for slow growth differ between countries, there were probably some common factors.

  • As a result, the decoupling of growth between industrial countries and emerging markets was probably illusory.

  • While final demand in industrialised countries was boosted by debt pre-crisis, which was subsequently held back by deleveraging, emerging markets needed to change their export led models because industrial countries no longer bought their goods in such large quantities. Further, the effects of ageing in industrial countries on savings and investments were poorly understood, as were reasons for the slowdown in productivity. This again makes it hard for countries to determine the right policies to boost demand.

  • Structural reforms to boost potential growth in industrial countries are probably still useful – for example, reforms increasing competition in services as well as reforms increasing the flexibility of labour markets -- but they are politically difficult.

  • Easy and unconventional monetary policy in industrial countries could increasingly be a part of the problem. For example, it could contribute to low productivity by allowing inefficient companies to continue in business. This may also depress new entry and investment by startups. At the same time, low interest rates could encourage savings as people find they need to save more to reach the amount they want for a comfortable retirement. Thus neither investment nor consumption may move up if rates are cut even further from really low levels. Furthermore, the adverse impact of capital flows, from industrial countries into emerging markets, induced by the low rates could also create volatility, which spread the slowdown to emerging markets. 

  • Unfortunately, even if aggressive monetary policy has little positive effect, with much of even that effect coming from depreciating the currency and taking demand from other countries, central bankers in industrial countries are mandated by their monetary policy framework to keep being aggressive. The difficulty is that there is no requirement in that framework for them to behave as a responsible global citizen, as their mandate to revive the domestic economy trumps everything.

  • Going forward, it would be good if large central banks started thinking more internationally. To give them an incentive to do so, we need to start discussing new rules of the monetary policy game in the international setting.

  • These new rules will take time to develop, perhaps even decades. In the meantime, emerging markets like India should focus on macro stabilisation, building buffers and reducing vulnerabilities. "Good policy is the first line of defence – including our focus on controlling fiscal deficits, reforms like the Bankruptcy Code and Aadhaar, and our steady fight against inflation".

  • To limit external vulnerabilities, India is also taking measures to control inflows, intervening in the foreign exchange market as a macro prudential measure to reduce volatility, and maintaining sufficient foreign exchange reserves to be able to withstand a sudden stop in capital inflows.

  • Given great uncertainty about outlook and policies of others in these times, a country like India should try to take sensible measures without getting too ambitious, as we have done so far. This will serve as a sound basis for strong and sustainable Indian growth as the world economy picks up.

Alpana Killawala
Principal Adviser

Press Release: 2015-2016/2715

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Our Portfolio

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions