Author: Suman Bery, NCAER

The budget season in India, with its unique hoopla and hype, is over. One of the last substantive events on the Budget was a seminar which brought together heads of the five leading Delhi-based think tanks to comment on the Budget’s impact on India’s economic and political prospects. While the quality of this year’s seminar was certainly comparable internationally, unlike previous years, there was a lack of unanimity among the panelists on the quality of the Budget.

The Budget drew acclaim for showing the Indian government’s commitment to fiscal rectitude and for making subsidies more transparent by not treating them as off-budget items in future. Read the rest of this entry »

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 the rest of this entry »

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 the rest of this entry »

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 the rest of this entry »

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 the rest of this entry »

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 the rest of this entry »

Author: Suman Bery, NCAER

The concept of Asia has ever been fluid and elusive, for outsiders as much as within the region. The Romans invented the name to refer to the lands beyond the Mediterranean explored by Alexander. Asia Minor, Rome’s ‘near abroad’, is current day Anatolia in Turkey.

In the medieval era, it would have been more appropriate to talk in terms of Muslim, Chinese and Indian spheres of influence rather than a common Asian consciousness. Read the rest of this entry »

Author: Suman Bery

India’s Commerce Minister and his senior officials have been unusually candid about their motives in hosting this week’s conclave of trade ministers and officials in New Delhi to revive the Doha trade negotiations (the so-called Doha Development Round, or DDR).

Jointly with the U.S., India is commonly held accountable for the failure of the last mini-Ministerial meeting to discuss the Round, in July 2008.

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Author: Suman Bery

Almost six months after their last get-together in London in early April, the heads of government of the G-20 countries will meet again in Pittsburgh in the United States in late September. They will presumably return to the quartet of issues that has progressively engaged them since they first met as a group in Washington in November 2008. These issues are: macroeconomic coordination, global imbalances and resumption of global growth; global financial reform (including reform of the IMF and the multilateral development banks); strengthening the global trading system and avoiding protection; and burden-sharing in fighting global warming, primarily by capping the growth in the stock of green-house gases in the atmosphere.

Looking at the agenda as a whole, one would have to conclude that progress since April has been somewhat underwhelming, largely because of political constraints in the advanced countries. Profound differences of views persist between the major blocs on the appropriate fiscal/monetary mix, reflecting different traditions and capacities. In the absence of such co-ordination, exchange rates are likely to take on the main burden of adjustment, raising risks of protection, primarily directed at the emerging markets.

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Author: Suman Bery

I first worked on Latin America in the late 1980s. At that time many of the countries of the so-called ‘Southern Cone’ of South America (Argentina, Chile, Uruguay, Brazil and Peru) were engaged in the dual tasks of restoring democracy after an extended period of military rule, and stabilising their economies after extended periods of high inflation.

It was at that time that I first encountered the subtlety and sophistication of Latin American macroeconomic theorists. These academics, some home-grown, most the product of the great US economics departments, succeeded after many unsuccessful attempts in purging their countries of chronic inflation.

Listening to them at that time speak among themselves and with their peers and students, they came across to me like a group of particle physicists commenting on phenomena too exotic to be understood by mere mortals. Yet, much as particle physics led to the taming of nuclear energy, so did the deep thinking of these scholars lead to the practical success of disinflation, and the development of a series of ideas that have since become established parts of the toolkit of macroeconomists.

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Author: Suman Bery, NCAER

Buy on the rumour, sell on the news seems to me the best explanation of the stock market’s swoon during and after the finance minister’s Budget speech yesterday. It was a reaction which surprised me at the time and continues to do so.

As I listened to the Budget speech I found few negative surprises and several positive ones. Accordingly in penning this column, I find myself both attempting to evaluate the Budget (or more accurately the Budget speech), and trying to understand and explain the negative market reaction.

What did I like about the speech? Most of all, I thought it provided a clear and coherent structure for the issues facing the finance minister, and the priority and sequencing accorded to these.

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Author: Suman Bery, NCAER

With the widely anticipated re-appointment of Montek Ahluwalia as Deputy Chairman of the Planning Commission this past weekend, the new government’s ‘economic team’ is now fully in place.

The term ‘economic team’ is widely used in the presidential systems of Latin America. I am, of course, deeply aware of the very different institutional setting of all parliamentary systems, especially our own. As the case of the United Kingdom these days demonstrates so graphically, in any parliamentary system ministers are simultaneously policy colleagues and political rivals of the Prime Minister.

The current Indian setting is even more complex, characterised as it is by the separation of political and policy leadership between the Prime Minister and the Congress President.

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Author: Suman Bery

Mexico tends to be in the news for all the wrong reasons: financial crisis, illegal immigration, drug-lords, and most recently as the apparent origin of the H1N1 virus.

A recent visit there allowed me the privilege of seeing a very different side of Mexican life. It also stimulated reflection as to what lies ahead for India as it gets richer and urbanises further.

Mexico’s population of 105 million makes it the second most populous nation in Latin America after Brazil. Its per capita national income in 2007 of $8,340 causes it to be classified as an upper middle-income country by the World Bank, and it is two-thirds of the way to being classified as a high-income country. It is a member of the OECD; indeed the present Secretary-General of the OECD is Mexican.

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Author: Suman Bery, NCAER

What opportunities does participating in the G-20 offer India?

When asked about the consequences of the French Revolution, Mao Zedong famously observed that ‘it was too soon to tell’. The same is true of the present global economic and financial crisis. It will take years, if not decades, to arrive at a consensus on the causes of the crisis, and of its larger implications. Indeed, scholars (including Ben Bernanke, the current Chairman of the US Federal Reserve, in his former avatar as an academic) still examine and debate the causes of the US Great Depression of seventy years ago.

Nonetheless, the effort at spin management, and the corresponding allocation of blame and culpability, is well under way, with the main protagonists staking out their initial positions. In a famous speech exactly four years ago*, Fed Chairman Bernanke represented the US as responding passively (and benignly) to the global ’savings glut’ which had developed following the East Asian crisis of 1997-98.

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Special Author: Suman Bery, Director of NCAER, New Delhi

The recession now present in advanced economies seems set to continue for a while yet.

The annual Neemrana conferences on the Indian economy provide a valuable opportunity to take stock of the state of the US and world economies, and the implications of global developments for the Indian economy.

The conferences are held annually at the Neemrana Fort Palace hotel in Rajasthan. They are co-hosted by NCAER and ICRIER. International (primarily US) participation is organised by the NBER, arguably America’s most respected network of academics engaged in research on issues of economic policy. The format is designed to encourage informal, off-the-record discussion on a range of current issues in economic policy.

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