Brace up for the sixth rate cut in a row
Tamal Bandyopadhyay | Senior adviser to Jana Small Finance Bank Ltd
Business Standard
Now that September quarter’s GDP growth stands at 4.5 per cent, Bandyopadhyay says it’s likely for the RBI’s monetary policy committee to affect another rate cut. If it does, it will be the sixth one in a row, he writes, adding that the last time this happened was in 2008-09, post the global financial crisis, when the RBI cut interest rates from 9 per cent to 4.75 per cent.
While the last time it was meant to shield the economy from an external recession, this time its is to quell internal cracks in the economy that has caused the current slowdown, he writes.The RBI may have to “revise its inflation projection upwards and growth projection downwards,” he adds.
Bandyopadhyay warns that “every successive rate cut diminishes its marginal utility” but the MPC does not have a choice right now and will probably go for another cut in March. “Will it be 25 basis points (bps) or a token 15 bps” is the question, he adds.
RBI governor Shaktikanta Das must “reassure the market that the fiscal slippage is priced in” and perhaps step in later when the government announces “additional borrowing from the market,” he writes.
What economists must do to quell the rising disquiet
Kaushik Basu | Professor of economics, Cornell University
Mint
In his piece, Basu calls for a “paradigm shift” in the way we understand economics. He examines the foundational issues of the evaluation of economics and terms the discipline “a strange mixture of science and common sense” that is based on its own axioms and assumptions. Policy-making goes awry when conventional economics fails to account for the “new world of [economics] and its major issues” like “digital revolution, volatile markets, sharp climatic changes, and the retreat of democracy,” he writes.
Basu also points out that breakthroughs and various “seminal works” in the study of economics have usually happened during an economic crisis, like the scores of landmarks economic papers that came out a decade after the Great Depression in the US. The current world is no different, except that it is globalised, explains Basu. We need to think beyond statistical regularities and understand that economics impacts our political choices and economic behaviour is shaped by social norms, he concludes.
Good governance is good business
Vikram S. Mehta | Chairman and senior fellow, Brookings India
Financial Express
Well-governed companies do better, writes Mehta. They have “easier access to capital, pay lower interest rates, secure better credit terms and attract the best and brightest of talent”, he writes. However, the “chant of good governance” across boardrooms today is hypocritical because there is no structure of incentives for management to balance shareholders’ interests with societal welfare policies. “The current structure …regards one as a trade off for the other,” he writes.
Catering to societal welfare demands is paramount given that a company’s reputation comprises of almost 81 per cent of it value and a strong one “yields 2.5 times better stock market performance” compared to the overall market, writes Mehta. Take how the recent whistleblower allegation against Infosys has jeopardised its market cap, he adds.
To address the hypocrisy around incentive structures, Mehta discusses the epic of Gilgamesh. He uses messages from the epic as “guideposts for stakeholders of governance to initiate such a process”. These stakeholders, be them corporate management, independent directors (ID) or regulators, should also be part of a forum to discuss and negotiate demands that they have in their own spheres, he writes.
Discovering India’s intellectual past
Rahul Sagar | Global Network Associate Professor, New York University, Abu Dhabi
Hindustan Times
Sagar “stumbled upon the fact” that between 1837 and 1947, “India had been home to a few hundred English-language periodicals”. These periodicals “featured beautiful essays by many of our prominent public figures” and “moderated a national conversation about what kind of society and country India ought to become”.
Owing to neglect, “these periodicals are no longer available in India” and are “scattered in libraries around the world”. Sagar explains that this index comprises of 3,15,000 entries and “is now freely available on www.ideasofindia.org”.
He reveals the lessons he drew from readings these periodicals. The “quality of greatness though belongs to those who reflect on what has raised them up and what has brought them low, and then endeavour afresh.” Further, these periodicals show “Hindu nationalism to have a longer and more important role than we recognise”. Sagar calls for the need to “read these periodicals to be reminded of how deep-rooted parochialism is in our society” and that “it is entirely possible that we shall reprise the errors that brought our nation low”.
Women’s safety is a hard battle. But we can’t give up
Advaita Kala | Author and columnist
Hindustan Times
Kala writes that the murder of the Hyderbabad veterinarian was “chilling, not only for its brutality, but also for how easily relatable it was”. She reminds us that the veterinarian “must have been a teenager when the 16 December 2012 Delhi gang rape and murder shook the nation”. This incident was “supposed to make life safer for women” but we failed.
During the Parliament session, the “Hyderabad victim should have been spoken about”. However, “politicians argued over flippant statements made by their peers on social media and in the House”.
She claims that the “outrage only lasts this long” and “after that, its agenda and politics”. Kala calls for the need to “hold on to the anger”. Further, “we have to continue to feel the immediacy of brutality, even if it means we will have to hold ourselves hostage to dread”. In order to keep the “Hyderabad victim alive in our outrage and despair and recollection is to breathe life to the right to exist and feel safe”.
Making Air India’s disinvestment work
Jitender Bhargava | Former executive director of Air India
The Hindu
In the last four decades, Air India has “witnessed a calamitous fall”. Even though the “diminution has been gradual but when it operated in a near-monopoly environment but the pace of descent intensified when it faced competition,” Bhargava writes.
He notes that the airline’s descent was owing to a series of ‘reckless’ decisions like, “acquisition of aircraft in numbers far more than what it could afford or gainfully employ; the merger with Indian Airlines” among others.
Bhargava argues that the airline’s survival depends on “induction of a professional management with an effective leadership, a sound financial package that does not come with political interference in its day-to-day operations, and unions allowing changes in work conditions and pay packages”.
In conclusion, Bhargava hopes that the “disinvestment exercise this time is thought of wisely, pursued with determination and is successful”. “The stakes are high because failure will mean doom through further marginalisation,” he writes.