Growth could bounce back...

The main reasons for slow growth has had been the election outcomes and lower inflation and interest rate and expectations on the back of lower food and fuel prices... People have delayed spending, especially investors and the borrowers…

Because of uncertainty about the aforesaid three factors which has slowed down growth, but from a medium to long run perspective INDIA story remains intact due to its huge human capital and other factors like low and stable inflation...

Economic policies create more disruption in the economy thorough price and price or inflation expectations, nevertheless it is important to stabilize prices near FULL-EMPLOYMENT by maintaining real interest rates neutral or zero...

They (economic policies) are similar to an untrained swimmer who can save himself by not doing anything than by doing something... If the policy makers try to tighten money it would lead to higher prices which further increase prices by higher borrowing cost and vice-versa...

Real interest rate in INDIA is too high which has made people delay demand, consumption and investment and increase savings and lower spending which might again increase real rates by lowering prices...

Everybody is pretending that the govt should increase spending to boost growth, but only few to point out that it must spend to increase production in the economy by increasing investment and employment... Lower prices are good for demand, but lower price expectations delay demand and spending...

The policy makers should work to stabilise prices and price expectations to continue growth through effective govt spending to increase productivity...

Lower prices mean that productivity has increased which increases demand and at lower prices supply could be increased to earn more or increase profits... Nonetheless, govt spending could increase demand and prices or inflation and inflation expectations, but lower supply which might reinforce inflation...

Therefore, it is important to increase demand and supply, both, and employment and investment for price stability and growth...

Low productivity and wages and demand, supply, investment, employment and growth are problems for the economy... Frankly speaking less use of technology in the face of lack of a vibrant technology sector may be behind lower innovation and productivity...

The Indian stock market has no meaningful tech sector or industry...

The UPA regime had overheated the economy which increased employment, but lowered real wages which did not work, employment should mean higher real wages and incomes and expectations...

INDIA''s huge demographic dividend could go waste if people are not skilled in consonance with market demand and are unproductively employed which is likely to depress wages/incomes, demand and supply and growth...

INDIA could impose export duty to increase domestic supply and lower oil prices and interest rate expectations... The UPA government let increase exports of cereals when domestic prices of cereals touched 20% inflation...

Interest Rate and Prices and the Stock-Market Amid Trade-War and Higher Oil-Prices...

Lower real interest rate increases employment and investment and demand and supply, which lowers cost and prices, more demand for labour may also increase nominal income if labour is scarce, which also increases savings... The evidence from China is consistent with theory, excess savings and lower interest rate...

Lower interest rate expectations in INDIA due to lower oil and food prices, oil has now a ceiling of $ 75-80 pb by Saudi domestic deficit instead of three digit oil prices, and in the US and China lower interest rate expectations are due to low oil and inflation and tariffs and slow trade deal... which have delayed spending in the three countries...  

Stock markets need demand and spending in the broader market which depend upon higher price expectations and bottom price expectations that prices would not fall further... Lower prices and interest rate expectations may increase supply, which may further lower prices and expectations, but if the consumers and investors know the bottom of prices and interest rate s/he might start demand and spending...

Higher interest rate and slow growth are among the reasons for lower margins, loss and NPAs in INDIA... The commercial banks could also increase demand and growth and reduce loss/increase profits by increasing transmission of interest rate cuts... Lower demand and growth has also increased NPAs to a considerable degree...

Manmohan was ignorant when Mukerjee traumatized the investors with too hard economic stimuli which sent inflation above 20% and 9% interest rate... which led too much depreciation that was controlled by Rajan with pledging NRI deposits attracting higher returns...

The economy is in bad shape because of loans during UPA 1 and 2 that turned to NPAs when the economy slowed down due to too much higher demand, higher inflation and higher interest rate, all during UPA... NDA reduced inflation and brought back the rate cut cycle...

Cong so long in the power… never committed food security and oil security which are major sources of inflation and lower real wages and incomes too, including agriculture, which is also hit by the lack of proper irrigation facilities and banking facilities... Congress has totally lost the direction to steer the economy... It has no vision...

Trump has not only created uncertainty for growth on the trade war front, but also through sanctions on world's some biggest oil producers... Saudi Arab should try to increase scale of oil production to increase quantity or exports or supply instead of reducing supply or quantity and increasing prices and lower demand... Trump has put global growth in doldrums...

The Fed does not need to follow China, 'coz the evidence we have that weak Phillips-Curve or unemployment and inflation relationship from Japan.. The evidence from Japan shows that supply has outpaced demand, due to lower population growth rate and demand and prices may still fall after full employment, due to tech advance, and oversupply...

The Fed itself is aware of the low demand and prices trap, often called as liquidity trap... The lower prices and interest rate in the US shows that demand is still low due to historical gap in productivity and real wages, lower borrowing cost has also bolstered supply relative to demand, also due to lower real wages...

Keeping the real interest rates close to neutral near full employment might still increase demand, real wages and price expectations which may also increase interest rate expectations and reduce some supply that might further increase prices and expectations to avoid falling back in the trap...

Recently, the US has criticised INDIA for higher tariffs on US imports, but it cannot and do not differentiately treat exports from the US and China, it is unbelievable… The reason behind more exports from China is that the US dollar and products are very expensive…  

Economic Policy INDIA, US...

Congress has seen the fiscal profligacy of Pranab and the resulting inflation and election results... Food and fuel inflation have been the sources of worry for INDIA, though both are going through a benign period...

Poor people have a higher propensity for consumption, which may stoke inflation and interest rate expectations... and lower investment and increase outflow of capital... We have evidence of easily overheating in the economy in the case of INDIA...

If the government borrows money it could also increase interest rate and crowd out private investment... Increasing productivity through training and skills may also help increase real wages/incomes, instead of wage spending by the government....

The policymakers are worried about lower prices or inflation in the US. The prices in the US may also fall due to rising productivity due to lower borrowing or capital cost, which might increase real wages/incomes... ORC lower prices would increase nominal and real wages/incomes near full employment and demand if people do not expect lower prices or expect higher prices...

Real rates in the US are near zero or neutral, 2.25 nominal rates and close to 2% inflation, which needs to be maintained for stability in the market... Low inflation means more demand and higher price expectations and vice versa...

Stable interest rate and inflation expectations are important for growth... Lower price and interest rate expectations might delay demand and spending and increase supply and higher price and interest rate expectations may delay supply and increase demand and spending...

We need to balance both demand and supply to shape prices and growth expectations...

We are experiencing low inflation in US, which could possibly mean lower demand and higher supply, which need higher price expectations to increase demand that could be achieved by a loose monetary policy or neutral interest rate or longer lose policy to increase demand near full employment or little higher interest rate to curb some supply and increase price expectations...

The interest rates in the US are still low compared to the past and developing countries. But, the problem is that the Fed is either likely to overtighten or undertighten because lower interest rate further reinforces lower prices through lower borrowing cost and vice versa...

Government should promote hedge investment to control risk... Both, lower cost and prices and higher cost and prices and expectations can benefit businesses if they are anticipated correctly... Investment at lower prices increases profitability to sell at higher prices...

Bonds work well during slowdowns and equities during growth... Businesses and investment needs to know price and expectations before investment... If you can rightly predict prices, lower or higher, and act accordingly, any investment would give you better returns...

Easy money and higher inflation and financial assets prices and consequently higher interest rate and expectations are the problems that trigger slowdowns... Low inflation and interest rates in both, the developed and developing countries point the capacity to expand further.

Nonetheless, stock markets could go for bigger correction in the case of a slowdown, which is so far far given low demand and spending and prices... The biggest problem to the growth is oil prices, which may feed into inflation and asset prices, including dollars...

Few years back lower demand and commodity prices in the global economy had helped INDIA contain the CAD and inflation, that low global growth was good for INDIA… but due to increased demand for employment and exports the need is a steady growth in demand in the other countries, too...