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…
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 more…
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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Author: Suman Bery, NCAER, New Delhi
With India’s state elections out of the way (and with a surprisingly favourable outcome for Congress revealed by Monday’s results), the central government was free to proceed with its two-part economic stimulus package.
Monetary policy measures (including fairly significant acts of regulatory forbearance) were announced on December 7, and ‘real’ side measures, primarily fiscal, on December 8. These measures were taken against the background of a deteriorating growth picture in the advanced industrial economies, and a sharp slowdown in certain key sectors of the Indian economy, such as labour-intensive exports, automotive and real estate.
If a rising tide lifts all boats, a falling tide brings out all lobbies. There have been plenty of voices arguing that what has been presented is ‘too little, too late’, in respect of both monetary and fiscal policy. Many of these critics cite the US; there, the emerging professional consensus is that policy has been irresolute and reactive, and that well-timed anticipatory action would have significantly reduced the growth and fiscal costs of financial deleveraging. Others cite the resolution passed by the heads of government of the G-20 in Washington last month, where all countries pledged to stimulate domestic demand (and to avoid protection). Here, the poster-child is the dramatic package announced by China well before the G-20 meetings, followed closely by the public works program announced recently by the Obama administration.
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Author: Suman Bery, Director-General, National Council of Applied Economic Research, New Delhi.
India’s economic managers, and particularly the Reserve Bank of India (RBI) take considerable pride in having protected India from Asia’s financial crisis in 1997-98. Although India did experience a period of slow growth in the years that followed that crisis, the basic financial machinery of the country remained relatively robust, providing a solid foundation for the much more rapid growth that has taken place this decade.
In common with its East Asian neighbours, India is grappling once again with many of the same challenges that the region faced a decade ago, creating difficult choices for economic and financial policy. In a recent statement, India’s PM Dr. Manmohan Singh said that the broad goal of India’s policy is to try to ensure that any reduction in India’s growth is temporary, so that the economy can return quickly to a nine per cent growth rate.
In charting its course, the Government is juggling multiple considerations: the state of the domestic business cycle; ensuring financing for the balance of payments deficit; the sharp shift in the availability of global risk capital for financing Indian investment; and the slowdown in growth in the world’s rich economies. Read more…
