Ajay Shah, one of my favourite writers on the subject of the Indian economy, has a column in the Economics Times this week on why the Ministry of Finance needs to be reformed. His blog post on the subject was a lot more trenchant and expansive, but sadly has since been deleted. Do bookmark his blog though, which is chock full of interesting readings. Ila Patnaik’s column in the IE offers a good roundup of the RBI’s needless battle against the falling rupee. The Journal looks at the report card for capital controls amid fears that India will reverse the gradual liberalisation of the capital account undertaken in the past two decades. Banyan was at an event with policymakers earlier this week, and believes they’ve moved from plain denial to acceptance of reality, and indeed Banyan believes that a credible plan is emerging. (If so, we are yet to witness it). Yes, it isn’t quite 1991. However, as David Piling notes in today’s FT:
…crises rarely present themselves twice in the same guise. One possible conduit for trouble is the heavily leveraged corporate sector, which has significant exposure to foreign currency-denominated debt. Corporate woes could quickly spread to state-backed banks, where non-performing loans and more murkily defined restructured loans are already approaching 10 per cent of total assets.
And if all of this hasn’t quite made you despondent, do read PBM’s latest, bemoaning the institutional disrepair at the heart of the economic breakdown.