EGROW Shadow MPC - Brief Discussion - Oct 1, 2019

1. Real Repo Rate is still very high and above 2 percent
2. In periods of high GDP growth, Real Repo Rate has generally been negative
3. Fiscal accomodation and Gross Fiscal Deficit is not necessarily inflationary
4. Savings, in aggregate, are not sensitive to interest rates
5. Long term liquidity must be assured through sustained growth of Base Money (Mo)
6. There is enough liquidity in the money market but low growth in money supply
7. NPAs are in control and declining
8. Globally, policy rates are declining along with slowing down of advanced economies
9. External benchmarking of lending rates has led to reduction by 20-25 basis points

Recommendation Reduction in Repo Rate on Oct 4
1 Member - 35 bp
3 Members - 40 bp
2 Members - 50 bp
1 Member - 75 bp
Guest 1 - 25 - 45 bp
Guest 2 - 40 - 50 bp

Recommended Reduction over time -
1 Member - 65 bp
2 Members - 90 bp
2 Members - 100 bp
1 Member - 200 bp
1 Member - watching

Stance: Accomodative

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Digital EGROW

Working Paper

Policy Paper

FIRST ANNIVERSARY LECTURE — Special talk on Military Spending by Dr. Sanjeev Gupta held on October 31, 2019

Sixth EGROW Shadow Monetary Policy Committee Meet held on October 1, 2019

The State of Economy

Arvind Virmani

The first set of measures have been carefully designed to address shocks and cyclical economic problems without blowing fiscal restraint. Examples are the measures on cars, income tax surcharge. Two more tranches are promised by FM, one on real estate sector to deal with collateral damage from black money crusade, including RERA & demonetization. Third tranche of FM decisions on other miscellaneous issues (NBFC? Rural economy). Read more.

Charan Singh

Nripendra Narayan Sarma

The contribution of the manufacturing sector to the Gross domestic Product in India has remained flat for a long period. Manufacturing accounts for employment of 13% of the country’s workforce. Indian exports also have been flat. Read more.

Dr. Arvind Virmani, Chairman, EGROW Foundation speaking on Direct Taxes Code

Fifth EGROW Shadow Monetary Policy Committee Meet held on August 1, 2019

GDP estimation in India- Perspectives and Facts

Primary Contributors: Bibek Debroy, Rathin Roy, Surjit Bhalla, Charan Singh, Arvind Virmani

“Resolving to seek no knowledge other than that of which could be found in myself or else in the great book of the world, I spent the rest of my youth traveling, visiting courts and armies, mixing with people of diverse temperaments and ranks, gathering various experiences, testing myself in the situations which fortune offered me, and at all times reflecting upon whatever came my way so as to derive some profit from it.”
- René Descartes

1. India’s improved GDP methodology with base year 2011-12

1.1 GDP calculation has always been an imperfect art. Irrespective of the methodology, there are always some areas that require extrapolation, estimation and sometimes even guestimates based on past trends. However, the essence of the exercise is to always pursue perfection in calculations in a manner that best reflects a country’s situation. India has frequently revised its GDP calculation methodology and the latest one by Central Statistics Office (CSO) that changed the base year to 2011-12 along with other methodological changes (as many countries do regularly) was no different. Key changes over past years also have involved new base years, incorporation of latest datasets, coverage of new activities and adoption of international standards.

Link to the paper