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

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Continuous Revisions Cast Doubts on GDP Advance Estimates

Two recent press releases by the Central Statistics Office substantially revise the new series of National Accounts Statistics. The new releases are more than just routine updates, and entail methodological changes and incorporate new sources of data, perhaps in response to various critiques. Yet, on comparing the advance estimates released with past such estimates, the CSO's latest growth projections once again turn out to be far too optimistic.

Macroeconomic Management in the Nineties

This paper discusses India's macroeconomic policies in the 1990s. Section II of the paper provides an overview of macroeconomic performance during the decade. Section III recounts the macro-policy responses to the principal problems and challenges that surfaced as the decade unfolded. Section IV surveys the main institutional reforms carried out in the nineties in the key dimensions of macroeconomic policy - fiscal, monetary and the exchange rate regime. Section V concludes by outlining briefly some of the major ongoing challenges for macroeconomic policy.

What Size the 'New' Economy?

Efforts need to be made to scientifically assess the size, coverage and growth of the 'new', or information technology, economy in India. Econometric models have so far ignored the sector in their analyses and forecasts, as no benchmark estimates are available. The estimates can be attempted on the basis of analysis of GDP estimates of IT-using sectors. The estimates can be cross-checked from private consumption vector, IT spending, and physical indicators of the progress of the IT sector. It is important to study the effect of the emerging IT economy on productivity to gauge the GDP contribution of the IT sector.

In Small Doses

The Reserve Bank of India’s monetary policy announcement for the first half of this fiscal year is very much on the expected lines. There are no dramatic pronouncements on the macroeconomic front – the governor had earlier already ruled out any reduction in the Bank rate or the cash reserve ratio – no big bang reforms, no new announcements on the recent stock market/banking fraud. Nothing to unnerve the markets or unsettle the economy. Instead the policy carries forward the overall reform agenda – albeit in fits and starts – even as it tries to plug the loopholes in the system that have come to light in the context of the latest scam. However, market observers looking to find some admission of regulatory lapse on the part of the RBI are likely to be disappointed. Apart from a brief mention that the policy is being “presented at a time when serious lacunae have emerged in the functioning of certain segments of the financial system”, there is no elaboration of whether the central bank’s own supervisory lapses – of the clearing house or of urban cooperative banks/ commercial banks – contributed to the market operators’ shenanigans.

Economic Consequences of Gujarat Earthquake

Even though the impact of the earthquake on the Gujarat's GSDP may not exceed a quarter per cent, it presents many challenges. Putting in place a proper policy framework may not only restore normalcy in the region, but can start a recovery boom. Estimating the loss from the earthquake is important for devising policies and drawing up requirements for assistance both from within and outside India. However, given all the limitations of the data, firm estimates of losses from the recent quake will take time to compile. In the interim, quantification is critical for designing relief and rehabilitation packages and implementing them before the onset of the monsoon. This paper is an attempt to estimate the economic impact of the earthquake.

Perils of Putin's Russia

Russian president Vladimir Putin faces the mind-boggling imperative of having to integrate Russia's economy with that of the world economy. At the same time, it involves a shedding of old mindsets and long-held notions of the Soviet economy. Russia now has to work towards a three-pronged approach - ensure its territorial integrity; create favourable conditions for economic recovery and growth and yet preserve the civil society and the rights and freedoms that all Russians have come to enjoy.

EFC on States' Fiscal Reform : One-Sided and Impractical

While the Eleventh Finance Commission (EFC) did not itself draw up a state-specific fiscal reform agenda, it has gone to some length in working out and suggesting the lines on which fiscal reform at the state level could be undertaken and that too under the direction and supervision of an agency to be established by the centre as part of the monitorable fiscal reform programme designed by the commission.

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