Any policy is a
dis/incentive for a particular outcome... It is true that the black-money is a
product of tax-evasion... But, the money flows to other countries' banks...
However it may have entered the country from other channels... anyway FDI,
FII... foreign banks do invest in g-secs of other countries... The government
could incentivize return of the money to the Indian-banks which would increase
their lending capacity to lend low... The government might offer zero-tax on
the condition that money will be lent to the Indian banks at zero interest
rate... Taxes might be sacrificed to lower interest rate... There is always a
trade off...
Disinvestment should be
calibrated; otherwise it would reduce investment and growth... Timing of
public-investment is also important... Disinvestment during downturn might
weaken demand and growth... However, timely reallocation to other uses may help
growth... Infrastructure is important... Re-capitalizing PSBs could lower interest-rate
but more investment in infrastructure would also crowd-in more private
investment to improve supply and reduce inflation... Inflation constrains
demand and economic-growth by increasing interest-rates... Money from
disinvestment must be purposefully deployed...
Rupee depreciation
might be sensitive to other factors than a mere increase in money-supply...
Like devaluation in dollar due to Fed's rate hike delay... UK may also increase
only in 2017... Easy money-policy for longer than expected might increase
depreciation of their currencies too... Things have changed alot after China...
Everybody is trying to stay afloat... Strong rupee shows the strength of the
INDIAN economy... It means money is flowing in...
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