Does India really need a National Manufacturing Policy?

Labourers work in the paint shop of a production line at the General Motors India (GMI) manufacturing plant in Halol, India. (Photo: AAP)

Author: Suman Bery, IGC

The Indian government presented its National Manufacturing Policy (NMP) to the nation in early November.

Presumably, the announcement was timed to demonstrate that reform is alive and kicking before parliament reconvenes later this month. With the final text now available on the Department of Industrial Policy and Promotion website, it is possible to take a considered view of the policy’s goals, the means proposed to achieve them and the probability of success. It is also possible to speculate on the unintended consequences and possible collateral damage.

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The India-China Strategic Economic Dialogue

Chinese Premier Wen Jiabao speaks with Indian Prime Minister Manmohan Singh (R) during the working lunch for the East Asia Summit heads of government on the sidelines of the 13th Association of South East Asia Nations (ASEAN) Summit in Singapore. (Photo: AAP)

Author: Suman Bery, IGC

Following the torpor of the August holidays on both sides of the Atlantic, each September marks the revival of the international diplomatic calendar.

On the political side, the centrepiece is the annual meeting of the United Nations General Assembly in New York; on the economic side, a similar marker is the Annual Meetings of the World Bank and the International Monetary Fund, held in Washington twice every three years. Read more…

India, China and Asian economic integration

Chinese Premier Wen Jiabao, second right, waves during a ceremony at the Rashtrapati Bhavan, or the Presidential Palace, in New Delhi, India, Thursday, Dec. 16, 2010. (Photo: AAP)

Author: Suman Bery, IGC

The narrative on the economic growth of ‘maritime East Asia’ in the period after the Korean War is well-established, and runs roughly as follows.

Japan’s reconstruction was facilitated by its integration with the US and Europe within the liberal trading and monetary order set up under US leadership at the end of the Second World War. Read more…

Coping with unprecedented urbanisation in India

Indian commuters move at a busy road in the old city area in New Delhi. (Photo: AAP)

Author: Suman Bery, International Growth Centre

In the coming decade, Indian cities will grow exponentially. It is essential they are kept healthy.

More by accident than design, India’s Five Year Plans are today well synchronised with its population census. Read more…

Risk and development: a regulatory lesson for India

Venu Rajamony, of India's Ministry of Finance, left, and R. Gopalan, center, economic affairs secretary, arrive for a meeting of the G-20 finance ministers and central bank governors, Friday, April 15, 2011, at the 2011 Spring Meetings of the World Bank and International Monetary Fund in Washington. (Photo: AAP)

Author: Suman Bery, NCAER

The earthquake, tsunami and nuclear disaster in Japan and the global financial crisis centred on the US and Britain suggest that decision makers in even the most advanced societies experience difficulty in acknowledging, let alone managing, worst-case scenarios in modern, complex systems.

In each case, the underlying ‘failures’ were more political than technical. In the US, both the Clinton and Bush administrations believed that market discipline was superior to regulatory oversight in achieving an appropriate balance between innovation and safety. Read more…

India and global monetary disorder

Attending members of the G20 group including President Barack Obama and Prime Minister Manmohan Singh (IM SLOAN/AFP/Getty Images)

Author: Suman Bery, NCAER

On November 3, shortly before US President Barack Obama’s arrival in India, the Federal Open Market Committee (FOMC) of the US Federal Reserve announced that it intended to undertake a fresh round of purchases of longer-term treasury securities in an aggregate amount of US$600 billion until the second quarter of 2011, at a pace of approximately US$75 billion per month.


Even though Fed Chairman Ben Bernanke had done his best to ‘trail’ (that is, anticipate) this decision, starting with a speech at Jackson Hole, Wyoming in late August, the formal announcement of this move (so called QE2, denoting the second round of quantitative easing) has unleashed a firestorm of criticism both within the US and internationally. Read more…

Will Asia have common interests in global monetary system reforms at the G20?

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Author: Suman Bery, NCAER

The East Asian countries responded with coherence and vigour to the weaknesses in their financial systems revealed by the crisis in 1997-98. This raises two issues. First, how important does that earlier agenda remain? Second, is it is reasonable to expect comparable alignment among the Asian members of the G20, particularly on the inter- related issues of global imbalances and the reform of the international monetary system?

Among the ASEAN+3 group of countries (the ASEAN 10, Japan, Korea and China), there is a well-established narrative on the 1997-98 financial crisis. Read more…

India’s quest for economic security

The Hiranandani Gardens township in Powai, Mumbai, India. (Photo: Flickr user

Author: Suman Bery

On the reasonable assumption that India’s current UPA government will complete its full term, the Twelfth Five-Year Plan (2012-2017) will be prepared on its watch.  But is the idea of state planning in India still relevant?

Professor T N Srinivasan of Yale University, feels that the whole business of planning is an embarrassing relic of an earlier era. He argues that planning as we know it should be abolished, and the Planning Commission itself wound up. This seems unlikely to happen; instead, according to press reports, the Commission is currently engaged in an internal effort to rethink its role and purpose. Read more…

Happy days ahead? Policy implications of the global recovery for India

An Indian stockbroker trades on a phone as he watches his monitor at a stock brokerage firm in Mumbai, on 14 Feburary 2007. (Photo: Sajjad Hussain/AFP)

Author: Suman Bery, NCAER

The Business Standard editorial ‘The IMF gets more upbeat’ noted that the IMF has had a patchy record in charting the evolution of the present crisis, following developments more than anticipating them. Despite this performance, and its poor performance in predicting the crisis, each update of its forecast for the global economy (the World Economic Outlook, or WEO) receives considerable international press attention and commentary.

While the Fund’s full analysis of the global economy is undertaken twice a year — in April and September at the time of the meetings of the governors (i.e. finance ministers) of the IMF and the World Bank — the organisation also undertakes summary intermediate revisions. Read more…

Greek lessons for India

A scene from the Greek credit crisis. (Photo: Flickr user 'Verani Federico')

Author: Suman Bery, NCAER

What is at the heart of the Greek crisis? What are the important lessons for India? Based on a fairly close reading of the international press, it has been surprisingly hard to answer the first of these questions, in a way that helps address the second.

The crisis first erupted in late 2009, when the incoming socialist government revealed that its predecessor had understated the country’s fiscal deficit. Read more…

Debt and exit in India’s 2010 Budget

Indian Minister of Finance Pranab Mukherjee during the World Economic Forum's India Economic Summit 2009 held in New Delhi, 8-10 November 2009. (Photo: www.weforum.org/Eric Miller)

Author: Suman Bery, NCAER

In his Budget speech on February 26, India’s finance minister articulated the three important challenges confronting him in preparing this year’s Budget.

These were to restore growth (to 9 per cent, ideally higher); to use this growth to make development more inclusive, particularly by strengthening rural infrastructure; and to address bottlenecks in public delivery mechanisms and institutions. Read more…

India’s budget bore

India's Finance Minister Pranab Mukherjee (L) speaks with Reserve Bank of India's (RBI) Governor Duvvuri Subbarao during a news conference at the RBI head office in Mumbai, on March 6, 2010. (Photo: Reuters/Punit Paranjpe)

Author: Suman Bery, NCAER

Investors reacted with a yawn to Friday’s budget presentation by Indian Finance Minister Pranab Mukherjee—the Mumbai market closed almost flat on the day. That was less an endorsement of the government’s reform agenda and more a sigh of relief that the Minister was prepared to reduce the fiscal deficit after two years of a major expansion.

Mr. Mukherjee mostly accepted the recent recommendations of the 13th Finance Commission, a government committee that by law recommends reforms to the president. Read more…

Time right for Indian fiscal consolidation

Indian Prime Minister Manmohan Singh, right, talks with Congress party president Sonia Gandhi. (photo: AP)

Author: Suman Bery, NCAER

India’s forthcoming Union Budget, now just two weeks away, will be presented at an extraordinarily interesting moment. Two recent releases of data from India’s Central Statistical Organisation (CSO) have contributed to the build-up. These are the ‘Quick Estimates of National Income, Consumption Expenditure, Saving and Capital Formation 2008-09’, released on January 29, and the ‘Advance Estimates of National Income 2009-10’, released on February 8.

My own awareness of these data releases has been heightened by my induction as a Member of the National Statistical Commission, responsible for reviewing and monitoring the entirety of India’s statistical system. This position has led me to take interest in these numbers as they first appear, rather than only when or as I might need them for analysis. Read more…

Emerging markets, globalisation and social protection

(L-R) Brazil's President Luiz Inacio Lula da Silva, Russian President Dmitry Medvedev, Chinese President Hu Jintao and Indian Prime Minister Manmohan Singh pose for a photo in Yekaterinburg, June 16, 2009. Leaders of Brazil, Russia, India and China, known as BRIC, gather for the first summit of the world's biggest emerging economies in Yekaterinburg.  (Photo: Reuters))

Author: Suman Bery, NCAER

As The Economist magazine recently observed, one of the most important and surprising outcomes of the current economic crisis is that the economies of the large emerging market countries have been much more resilient than those of the advanced countries, and are returning to growth faster and more vigorously.

These countries, particularly China, India and Brazil, accordingly are expected to continue to provide the bulk of world growth in the near future. This continues the trend of the past half decade, even if the rhetoric of ‘decoupling’ was somewhat overdone. In turn, this trend parallels and reinforces another important structural trend in the global economy – the steady shift in the locus of economic activity toward Asia since the 1960s. Read more…

Implications of India’s ‘emerging market’ branding

Pregnant women wait inside a women's hospital in Allahabad, India on Oct. 5, 2009 (photo: AP Photo)

Author: Suman Bery, NCAER

What does it mean to be an emerging market? Is it an honour or a trap? Seen from within, India remains a country with the largest number of poor and malnourished people in the world, trying to make its way in a world dominated by countries considerably more affluent than her. This is no doubt the self-perception shared also by the citizens of other important emerging markets, such as Brazil, China and South Africa. This self-perception, in turn, is what generates the sense of entitlement to differentiated treatment in global affairs, as I discuss more fully below.

Shift the kaleidoscope slightly, though, and you begin to see the same countries increasingly portrayed in the legislatures and media of the rich countries as aggressive, fast-growing countries with world-beating capabilities in several fields, commanding increasing regional and global influence through the activities of both their governments and private sectors. Read more…