Archive for July 24th, 2019

Uttkarsh: RBI’s Medium Term Strategy framework

July 24, 2019

Uttkarsh, a hind word means rising to something better/ pull something upwards.

RBI has used the word for its medium term strategy framework:

Shri Shaktikanta Das, Governor today launched ‘Utkarsh 2022’, the Reserve Bank of India’s Medium-term Strategy Framework, in line with the evolving macroeconomic environment, to achieve excellence in the performance of RBI’s mandates and strengthening the trust of citizens and other institutions.

A formal strategic management framework was launched in April 2015 to rearticulate the core purpose, values and vision statement of the Reserve Bank so as to delineate its strategic objectives in contemporary terms, to provide a framework and backdrop within and against which its policies would be formulated. These core purposes (reflecting the RBI’s commitments to the nation) and values (Public Interest, Integrity and Independence, Responsiveness and Innovation, Diversity and Inclusiveness, and Introspection and Pursuit of Excellence) still remain relevant and valid; however, a need has been felt to have a medium-term dynamic Vision statement reflecting our responses to emerging challenges and dynamics of the economic, social and technological environment in which we operate.

The strategic framework contains, inter alia, the Bank’s Mission, Core Purpose, Values and Vision Statements, reiterating the Bank’s commitment to the Nation. The Medium-term Vision Statements set out the following:

    • Excellence in performance of statutory and other functions;
    • Strengthened trust of citizens and other Institutions in the RBI;
    • Enhanced relevance and significance in national and global roles;
    • Transparent, accountable and ethics-driven internal governance;
    • Best-in-class and environment friendly digital as well as physical infrastructure; and
    • Innovative, dynamic and skilled human resources

These vision statements are mutually reinforcing and will guide the RBI during the medium-term period (2019-22) through various strategies. The strategies are essentially well thought-out actions to capitalise on the emerging opportunities and meet challenges of the future. The desired outputs are proposed to be realised in terms of achievement of strategic goals through one or more tangible and time-bound milestones.

The Management of the Reserve Bank attaches high importance to ‘Utkarsh 2022’ and will periodically monitor its implementation and progress through a Sub-committee of the Central Board.

I was just going through the presentation/document and reads more like a consultant’s report with all kinds of management jargons. I mean there is RBI’s core purpose, mission and values feeding into 6 vision statements!

Everything is f***d: Name of a new course at the University of Oregon

July 24, 2019

The syllabus is here (HT: John Cochrane Blog)

What Machiavelli can teach us about Boris Johnson and Jeremy Hunt (and politicians in general)

July 24, 2019

Fascinating piece by Christopher Fear:

Clown’; ‘buffoon’; ‘jester’; ’racist liar’ – these are just some of the terms used to refer to Boris Johnson, who, today, won the conservative party leadership contest, to become the Prime Minister of the United Kingdom. The media is having a field day over his candidature, portraying him as a clumsy but charismatic politician.

Boris’s opponent, Jeremy Hunt, on the other hand, was portrayed as a ‘serious,’ ‘managerial’ politician who pays attention to detail. In short, though both men embody the values of the Conservative party, they were projected as men with very different political styles.

But what can this campaign tell us about the realpolitik?

To our rescue comes an Italian political theorist, the author of one of the most famous works in history – Nicollo Machiavelli– who famously said: 

“The lion cannot protect himself from traps, and the fox cannot defend himself from wolves. One must, therefore, be a fox to recognise traps, and a lion to frighten wolves.”

As Britain’s Conservative party leadership voted to elect Boris Johnson to be their leader, we dished out an article that explains the phenomenon of image building in the political arena.

Read the whole thing and figure out how can one classify politicians as lions and foxes. How times keep changing making people prefer one over the other…

Is Politics Getting to the Fed?

July 24, 2019

Robert Barro in a new PS piece:

It is no secret that Trump regards the stock market’s performance as an indicator of his own performance. But it has been surprising to see the Fed join the rate-cutting bandwagon. In early 2019, it indicated that it would pause its rate increases, and now it is signaling a sequence of rate cuts in the near future. I, for one, cannot see how the Fed’s sudden reversal fits with the coherent monetary policy that it maintained from 1984 until the financial crisis.

Nonetheless, Powell has tried to justify the move toward rate cuts as consistent with that prior policy. First, he points out, rightly in my view, that inflation has remained tame. Then, he argues that the economy’s prospects may be weaker than low unemployment and recent strong real GDP growth suggest. There may be something to that argument, given Trump’s  and worsening prospects for global growth. Even so, it does not follow that rates should be cut before actual economic weakness appears – I do not know of convincing evidence that the Fed should “get ahead” of a slowing real economy.

The danger, then, is that the Fed will be tempted to cut rates as a result of external pressure, on the assumption that it can always rationalize cuts by pointing to variables that seemed to augur a growth slowdown sometime in the future. It is telling that Powell has not mentioned (at least that I have heard) the fact that the nominal and real federal funds rates remain well below long-term normal values. (This deviation is even more apparent for interest rates in some other advanced countries, such as Germany and Japan.)

The desire to restore normalcy should still be putting upward pressure on rates, just as it did during the period of rate increases between December 2016 and December 2018. Indeed, it was Bernanke’s earlier failure to initiate the normalization process that made things more difficult than necessary for Yellen and Powell.

My view is that the shift in 2019 away from normalization is primarily due to the intense opposition to further rate increases last December, when the loudest objections came, notably, from stock-market analysts and the Trump administration.

The entire point of  is to establish a credible monetary policy by insulating the relevant decision-makers from such influence. That is what we  from the early 1980s, when Fed Chair Paul Volcker hiked the federal funds rate up to the level necessary to choke off inflation. The big difference, of course, is that President Ronald Reagan supported Volcker, whereas Trump is Powell’s chief antagonist.

Powell’s challenge, then, is to maintain Volckerian discipline and independence in the face of growing political pressure. At the moment, his prospects for success are not great.

100th birth anniversary of Hemant Kumar

July 24, 2019

Ranjan Das Gupta pays a tribute to Hemant Kumar the man with the golden voice.

Those were the days when the singer Pankaj Mullick ruled hearts. A young man, with a splendid voice of his own, was such a fan of his that he tried emulating the senior musician’s somewhat nasal way of singing. Mullick, who knew him well, encouraged the young singer to develop his own style — and the world was introduced to Hemanta Mukherjee’s golden voice.

The year 2019 ushers in the 100th birth anniversary of Mukherjee, known as Hemant Kumar in the Hindi music world. The bespectacled musician — who was most often seen in a dhoti with a long white shirt — was born in June 1919, though some believe he was born a year later. More than 30 years after his death, his voice and music are still alive. Yet, few know that it was Mullick who had urged Mukherjee to rely on the strength of his voice.

What songs, what music, what an era!

Private crypto ban: Has India gone overboard?

July 24, 2019

My new article in Moneycontrol.

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