He Supports My View Although not Directly....

Something ( Everything) Rotten in the State of Macro

Readable...

ww.economist.com/news/21567079-meet-economists-who-are-making-markets-work-better-micro-stars-macro-effects

Micro over Macro...

Article;

http://economictimes.indiatimes.com/opinion/interviews/global-economic-turmoil-to-continue-till-2015-kaushik-basu-chief-economist-world-bank/articleshow/17643530.cms


Comment;

I would say both market and government are irrational. We can easilyspot the examples like the US and the Europe. In case of the USmarket fails and in the case of Europe government fails. In one casewe have too  much private debt and in the other too much govt. debt. Where is the relief? We need to steer economies with a common man's intelligence. I mean we need to look at micro aspects or micro economics. We do not need too much debt or may benegligible...

Remove Bottlenecks...

Article;

http://economictimes.indiatimes.com/news/economy/indicators/indian-economy-may-beat-expectations-in-2013-goldman-sachs/articleshow/17542523.cms


Comment;

If infrastructure and supply side bottlenecks were not there the chances are that the economy had grown with a growth rate equal to the rate of inflation, i mean 7-7.5%. Because inflation is also an index of increase in consumer spending even if it is under compulsion, read price-rise. The higher (rational) the inflation target set by an economy or the actual inflation the higher the growth rate probably it can achieve.

Take a Look at Food and Fuel Inflation...

Article;
http://economictimes.indiatimes.com/news/economy/indicators/inflation-hits-10-month-low-but-rate-cut-unlikely/articleshow/17620360.cms

Comment;

I disagree that the main gauge of inflation is WPI, and, it is neither CPI nor core-inflation (manufactured products). If I had to choose an indicator of inflation I would go for food-and-fuel-inflation because the argument is that we need to protect the value of money poor people are getting because their income/wages are more or less indefinite, and, depends upon a variety of factors like season and availability of work. Poor people do not consume all the products WPI, CPI and core-inflation take into account. Ninety percent of their consumption basket includes food-and-fuel. Food inflation at 9.4% and fuel-inflation at 10% makes me, too, expect that key interest rate won’t come down in the next 4-5 months…

The Other Problems...

Arictle;
http://economictimes.indiatimes.com/opinion/columnists/swaminathan-s-a-aiyar/real-and-imaginary-problems-of-electronic-cash-transfers/articleshow/17448650.cms

Comment;

Although i know the writer for a long time because he writes very well but i think he is missing the macro economic effects – inflation and budget deficit – of such a welfare scheme. For the past 2-3 years we are in the realm of high inflation and high fiscal deficit. A simple rule of economics is that whenever money supply increases, either by government or by the central bank, it stokes inflation, then why here nobody is taking note of that thing… Moreover, we are continuously discussing government fiscal deficit as high and the government too is planning to bring it to a sustainable level…

i’am in no way opposing CTS but the ground realities tell a different story; a cash strapped government and a lonely central bank fighting with inflation… It is like telling people about something we can not deliver, right now, but the government looks in haste. Cash transfer schemes have been successful in other countries (like Brazil) to make a dent on poverty which India can replicate, but with a pause, till the supply side is good enough to take the shock demand presents. i’am sure such a scheme would necessitate a little inflation and we have to chose we want it right now or with a time-lag. If we go for former we will have to chose an inflation target of 10% or more, but, if we go for latter we have to wait for some time to let the inflation cool-down and chose an inflation of 6-7%.

No political party can dare to oppose a scheme which covers a large population but they should endorse their own versions/variants of CTS…

RBI's Credibility...

 Article; http://economictimes.indiatimes.com/opinion/interviews/the-real-problem-for-india-is-d-subbarao-shankar-sharma/articleshow/17215127.cms   Comment;

Subbarao is doing what he is supposed to do as a central banker. The RBI's credibility depends upon his actions. Price stability and full-employment are the two macro-economic objectives of monetary and fiscal policies. The economy on the employment front is doing fine we need price stability to check inflationary expectation to limit the demand for increase in income and wages economy wide to avoid the cost-push inflation...