Archive for December 22nd, 2016

Book Review: Glimpses of Indian economic policy – An insider’s view by I.G, Patel

December 22, 2016

I just picked this book (out of stock on Flipkart and real expensive on Amazon) by late Dr IG Patel, the man who doffed many a policy hats in India.

The book was picked as one read through India’s demonetisation history in 1978 when IG (as popularly called) was the chief of Indian central bank. On the move he said:

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The History Internship @ IIM-Ahmedabad

December 22, 2016

Prof Chinmay Tumbhe of IIMA has invited interested researchers to apply for internship in business/economic history at IIMA:

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A curious case of printing Rs 2000 notes on 8 Nov 2016…

December 22, 2016

The recent RTI request from Indian central bank revealed that the central bank had 2473.2 million pieces of Rs 2000 notes worth Rs 4.94 lakh crore. The new 500 Rs note value was zero as they were not yet in print.

This led to the criticism that the central bank could just replace  24.1% of total currency which had ceased to be legal tender. This blog also argued how there are differences in currency figures  of the central bank, a puzzle which remains unresolved.

However, there is another issue which has cropped up due to this RTI.

Section 24 of Indian Central Bank says:

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How is it that RBI MPC members have so similar and sanguine views about demonetisation ?

December 22, 2016

It is amazing to read the recently released minutes of the MPC meeting released yesterday. The meeting was held on 7th Dec 2016.

Leave questioning the modality of the move, not one member cautioned against any longer term negative outcome of the move.

The first mention of demonetisation or currency withdrawal is mentioned in para 11 which is point no 4 in assessment!

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Relations between RBI, Centre strained over note ban…(have things changed?)

December 22, 2016

A lot of analysis and writing was done into how India’s monetary policy has narrowed the gap with the modern and advanced world. With things like inflation target, constitution of MPC, releasing MPC minutes and so on Indian central bank has finally taken the leap. Then came the appointment of the new central bank chief and people jumped to all kinds of conclusions (see this as well). One should list all those views  and ask the same experts of their opinions now. Am sure some would quote Keynes

It just took one decision from the Government to change all this. Post 8 Nov 2016, we are back to what we saw in the 1950-1980s when RBI was treated just like another department of the government. Finance Ministry is back at the helm of the monetary affairs (it always is at the helm but had played a more secondary role in recent times). The major decisions are being announced by the Finance Ministry officials. Given the decision was taken by the RBI Board and most circulars come from the central bank, one should see central bank atleast taking some initiative. But nothing of this sort is happening. Even more amazing is how the old lost skills of writing circulars are back and giving us a lesson in Victorian English! The name of the bank has been changed by public given frequent changes and rollbacks.

Now Times of India tells us that the relation between the two has been strained. Central bank believes that its reputation is being compromised whereas teh government says that the central bank has been slow to enact. Really? One wonders the level of chaos if central bank was faster:

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