Components of a Project Plan
Introduction This article details the high level project plan and the components of the same. A project is a success if it meets the objectives of time, cost, technical and business. Project objectives are defined in the preliminary project scope statement. As mentioned above, a project is deemed complete if the project objectives have been […]
Evaluation and Selection of ERP Packages
Evaluation and selection of ERP package is an essential criterion for successful ERP implementation. Quality of selection will have a long term impact on the processes of the organization. It is also not easy to switch to another product with concomitant scale of investment and complexities. This evaluation and selection process should be properly directed […]
What Is China’s Deleveraging Strategy?
China has been the fastest growing economy in the world for the past few decades. The Chinese economy continued to grow even during the recession period. Many economists believe that a growing Chinese economy was a gift to other countries during the slowdown. Since the Chinese economy was growing, international trade was flourishing, and other […]
Quality – A Tool for Achieving Excellence
Introduction For an organization to be successful it is of paramount importance to exceed the customer expectations as to generate customer delight. One of the best ways of doing this is by providing quality products and services. In technical language, quality means to a product adhering to the specifications. For customer probably meeting or exceeding […]
Executive Implementation Team Owns BPI Program
In any Organization, the BPI initiative to be a success would need to be first understood and owned as well as sponsored by the leadership. The leadership here includes mainly the business unit leaders who become the main sponsors of the BPI program. It is important for the Leaders to understand why BPI is required […]
Ever since the great recession ended in 2009, the entire world has been following loose expansionist monetary policies. However, after a decade of such policies, most countries in the world have now started resorting to monetary tightening. The Federal Reserve has raised interest rates four consecutive times in the past four years. The Reserve Bank of India was also raising its interest rates. However, recently the bank has suddenly changed course. It is now reverting to a lot of loose monetary policies. These decisions are inviting a lot of criticism from critics. Loose monetary policies are required to revamp a failing economy. However, since the Indian economy is already doing well, such policies are likely to cause overheating.
In this article, we will have a closer look at some of the loose monetary policies which are being followed by the Indian government as well as its economic effects.
The Reserve Bank of India has made some drastic and unexpected changes to the monetary policy. These changes are aimed at creating more credit which leads to a boom in the underlying economy.
However, securitization is a controversial financial practice since it was at the heart of recession which happened in America in 2009. The Reserve Bank of India is supposedly improving the securitization practice so that the liquidity in the market can be increased without actually increasing the risk.
From all the above policies it is obvious that the Reserve Bank is trying to quickly increase the growth rate of the economy. However, the question arises why is the RBI doing so?
The RBI is justifying all these policy changes on the back of lower inflation recorded. However, this argument stands on very shaky grounds. Most of the reduction in the inflation rate has been caused by a drop in fuel prices. Fuel prices are very volatile. Just about six months back, fuel prices were reaching an all-time high. If the prices of crude in the international market rise, these prices will once again start increasing in no time. The Reserve Bank of India is making semi-permanent decisions based on factors which could literally change overnight!
Arun Jaitley, who is the Finance Minister of India, has mentioned that the government intends to keep lowering the interest rates in the future. This will be done in order to ensure an increase in the growth rate of the real estate sector. The Indian real estate sector is at an all-time low. Consumers are not buying any houses because the prices are too high. The Finance minister has announced that he intends to bring down the prices so drastically that the mortgage payment on a housing loan as well as the rent will be equivalent. At the present moment, the rent is only 25% of the mortgage payment.
Lastly, it is widely believed that the interest rates have been lowered to provide benefits to the incumbent government during the national election. It seems like the government is purposely trying to loosen the monetary policy. This will help them create an aura of financial well-being. At the present moment, the Indian stock markets are at an all-time high, interest rates are low, and the economy appears to be booming. The government wants to create an illusion of prosperity to gain votes even though these policies may not be beneficial for the nation in the long run.
The bottom line is that the policies of the Indian government appear to be strange and misplaced when the global economic climate is considered. However, these policies make a lot more sense when local political motives are understood.
Your email address will not be published. Required fields are marked *
What the Current Wave of Protectionism and Populism mean for the Future of Globalization and Free Trade
February 12, 2025
