ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Independent Fiscal Councils

An appropriate balance between fiscal rules and discretionary development spending within the overall borrowing limit of the Fiscal Responsibility and Budget Management Act is critical for macro stability. However, monitoring and compliance of the act at the union and state levels should be left to Parliament and state legislatures. Mobilising public opinion to rebalance the existing institutional arrangements in favour of fiscal responsibility is essential, and this can happen only through parliamentary and legislative discussions on fiscal issues.

Central Banking in India

The flow of events and ideas behind central banking in India, in four distinct phases since independence—1950–70, 1970–90, 1990–2010, and post 2010—is narrated. The 1950–70 period is characterised as one of planned fiscal dominance, while the 1970–90 period has seen the dominance of the fiscal and financial sector with an inward-looking bias. Although there was partnership in crisis management and reform between the Reserve Bank of India and the government during 1990–2010, the period witnessed some differences between the government and the RBI in the areas of monetary management and external sector. The period since 2010 is broadly categorised by the rebalancing and adoption of a new framework, like inflation targeting.

Society, Economic Policies and the Financial Sector

How can central banks ensure that the financial sector serves society better? How can financial sector policies be more closely integrated with national economic policies? How can it be ensured that fi nance functions as a means and not an end in itself?

A Visionary and Institution Builder

With the demise of R H Patil, I ndia has lost one of its most precious possessions in the world of finance. He was one of my most respected and trusted gurus. I learnt a lot from him of the theory, practice and reality of money and finance.

Perspective on the Financial Crisis

From Financial Crisis to Global Recovery by Padma Desai (New York, USA: Columbia University Press), 2011; pp XVI + 254, $27.50.

A Response

Microfinance Industry in India: More Thoughts M S Sriram Microfinance institutions need not be treated as holy cows. They do not need any soft regulation. They should be treated on par with any non-banking companies. A comment on Y V Reddy

Reflections on the Indian Economy

Indian Economy: Performance and Challenges (Essays in Honour of Montek Singh Ahluwalia) edited by Shankar Acharya and Rakesh Mohan

Financial Sector Regulation in India

Financial sector reform has taken a new meaning all over the world. Until the global crisis, reform of the fi nancial sector meant deregulation. Today's truth is that, globally, reform of the fi nancial sector means reregulation and improving the quality as well as effectiveness of regulation. In moving forward, we must take into account both the global realities and the Indian context. In effecting change, India must be aware that (a) the fi nancial sector and its reform is not an end in itself, (b) the risks are amplifi ed if the reforms in the fi scal and real sectors are not in consonance with the pace of reform in fi nancial sector regulation, and (c) the highest priority should be accorded to effi cient intermediation of domestic saving and investment with a wide participation of the people of India. The three major proposals/ decisions on the fi nancial sector announced in the Union Budget are also discussed here.

India's Financial Sector in Current Times

Following the global crisis, some fundamental factors have been identified as being critical to the efficiency and stability of the financial sector. Where does India stand in this respect? Some of these important factors are discussed here. For instance, mutual funds are meant for the individual investor and they have tax benefits - yet corporates and banks invest in them. Another important factor is the multiplicity of transactions in the financial sector raising the possibility of excessive financialisation. Yet another question must be asked about commercial bank lending to profit-seeking microfinance institutions. And with limited lending to the real sector there seems to be a hollowness emerging in commercial bank services in India.

Krishna Raj: Tributes

Relationships Krishna Raj nurtured an abiding intellectual relationship between the EPW and the researchers at RBI without compromising the journal

IMF: Concerns, Dilemmas and Issues

The main concerns relating to the IMF's policies are relatable to intrusive conditionalities without due regard to the needs of and impact on the borrowers, with expanding scope of surveillance applied asymmetrically between borrowers or programme countries and others with no financial accountability except that of reputational risks. The response of the Fund has been to attune its policies to meet these concerns, emphasise aspects such as national ownership, leaving culture, transparency in its operation, independent evaluation and wider consultations. However, the basic limitations of resources, instruments and mandate in meeting the problems arising from volatile financial markets explain some of the persisting concerns. Three major issues are posed here for discussion to meet these concerns and improve the quality of resolving some of the tradeoffs and judgments involved. The first suggestion is to separate the surveillance function from lending, making the former somewhat independent of political processes as well as the weighted voting structure. The second suggestion is to remove the distortion in current voting strength by recognising intra-monetary union trade as not amounting to international trade since neither currency nor trade restrictions are in place and by accepting the Purchasing Power Parity basis of GDP computation. The third suggestion proposes that the Fund be given some authority to create limited but temporary liquidity under certain circumstances, to be "a lender of some resort".


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