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Kelkar’s $ 500 billion revolution

We are on the verge of a revolution worth half a trillion dollars. After almost a decade of effort, India is about to move to a unified Goods and Services Tax (GST) to replace the current plethora of central and state indirect taxes. The Empowered Committee of State Finance Ministers is giving finishing touches to More >

High forex reserves can worsen recession

High foreign exchange reserves have, in the current global recession, saved Asian countries (including India) from the travails they suffered in the Asian financial crisis of 1997-2000. So, they must aim for rising forex reserves in future too, right? Wrong. In truth, high Asian forex reserves are an important reason for the current recession. High More >

Beware: Recession May Be Hayekian

Governments across the globe are using Keynesian stimuli to revive drooping economies. Even George Bush has presided over the greatest stimuli in US history, with a projected fiscal deficit of $ 1.2 trillion and monetary injection of almost $ 2 trillion by the Fed. But is the recession Keynesian? Trillions of dollars of stimuli have More >

Is Uttar Pradesh about to take off?

India may have become a miracle economy since 2003, but its largest state, Uttar Pradesh, remains mired in poverty and slow growth. Many people despair of progress in this slough of despond. Yet let me stick my neck out and say that UP is on the verge of economic take-off. I base this prediction on More >

Gloomy news from Neemrana

Government spokesmen claim that, after dipping in 2008-09, the economy will accelerate again next year. But some of the world’s top economists opined at last week’s Neemrana seminar that the global economy might get worse rather than better in 2009, affecting India too. Analysts thought initially that the global recession would end by mid-2009. After More >

Will services shield India from recession?

The global recession is going to be worse than expected. The developed countries as a whole will suffer a fall in GDP in 2009, the first fall since World War II. India cannot escape the global downswing. But the mid-term review of the economy, presented recently to Parliament, claimed that India would prove more resilient More >

Narayana Murthy should rescue Satyam

Satyam Computers is the Enron of India. Like Enron, Satyam was one of the biggest and most feted companies. Like Enron, Saytam perpetrated a balance-sheet scam with the support of supposedly world-class auditors. Like Enron, Saytam stands exposed as a gigantic fraud, and faces lawsuits galore. Yet while Enron deserved to die, Satyam deserves to More >

26/11: Buying opportunity, not economic disaster

Has the terrorist attack on Mumbai wrecked the economy and led to a flight of foreign institutional investors (FIIs), as was feared after 26/11? Not at all. Foreign portfolio investors have adopted Nathan Rothschild’s maxim that the best time to buy shares is when blood runs in the streets. On November 28, in the middle More >

Forecasts: the good, bad and ugly

How hard will India’s economic growth be hit by the global financial crisis and recession? Widely varying forecasts for the next financial year, 2009-10 have been made by three leading economists—Arvind Virmani, Chief Economic Advisor of the government; Raghuram Rajan, Economic Advisor to the Prime Minister; and Rajiv Kumar, head of the Indian Council for More >

Economic aspirin: a palliative, not a cure

Will the government’s economic rescue package revive the economy, which is caught in the throes of a global recession? Alas, no. The rescue effort is the equivalent of giving aspirin to a patient suffering from malaria. This may reduce the patient’s temperature and make him feel better than otherwise. But it will not end the More >

26/11 and 9/11: dangers of Bushspeak

After the terrorist attack of 26/11, the mood and rhetoric in India are reminiscent of the US after 9/11. As in the US then, outraged Indians swear “never again.” The phrase “War on Terror,” invented in the US after 9/11, is now being used widely in India. This is a dangerous, militaristic mood. It led More >

Militants get stronger, states weaker

After the Mumbai terrorist attack, every Tom, Dick and Harry has become a counter-terrorism expert. Drawing room experts and newspaper columnists hold forth on how incompetent the authorities are, and how the attack could have been foiled if only this strategy or that institution had been in place. Alas, modern technology and communications are every More >

Electoral mood is anti-incumbent

A story doing the rounds in New Delhi is that the Congress Party has commissioned a secret opinion poll for the coming state elections, which predicts that the BJP will be voted back to power in Madhya Pradesh and Rajasthan, while the Congress will retain power in Delhi. This opinion poll suggests that incumbents will More >

Building Infrastructure is not Keynesian

Across the globe, politicians from Manmohan Singh to Barack Obama plan to boost government spending to revive flagging economies. Especially popular are big infrastructure projects, widely seen as an excellent way to give a Keynesian boost to economies. Yet this represents a misunderstanding of Keynes. In a recession, many things fall together—production, employment, prices and More >

An Indian American president?

The world is still marveling at the political revolution represented by Barack Obama becoming the first black US President. But while that celebration continues, some readers must be wondering about the next possibility—when will a person of Indian descent become President of the US? This issue is not fantasy. It is in fact quite topical, More >