9/10/2023 0 Comments 28 most paused movie moments![]() ![]() That is our limited objective, and we are taking all the systematic steps. The idea is to convert the Indian rupee into a hard currency. There may be one global anchor currency, but there are many hard currencies like the Japanese yen, the British pound, the euro, China’s yuan and so on. Note that we are not trying to disturb the US dollar’s position as the world’s anchor currency it will remain the anchor currency for the foreseeable future. We are trying to systematically internationalize in the hope that the Indian rupee will be a hard currency in a decade’s time. What is the government’s vision of the rupee as a global currency? And the other major area of reform is the legal system. One is administrative reform, which is about reforming the bureaucracy. Separately, there are two major areas of reform that will probably take more than 10 years to implement. These are things like expanding the patenting system, decriminalizing legal metrology provisions (weights, measures, labels), simplifying building codes, etc. Process reforms are the nuts and bolts of the economy. The banking system clean-up was done to create a robust financial system. We introduced the Insolvency and Bankruptcy Code to allow a framework for creative destruction. We introduced GST (goods and services tax) to create a common market. We introduced an inflation-targeting framework for macroeconomic stability. These were to create the broader frameworks for the functioning of an innovation and entrepreneurship economy. Then, in 2014, we began to do a new kind of reform. ![]() ![]() We grew for some two-odd decades because of the first round of reforms. Along the way, it was understood that these liberalized sectors needed to be regulated, so regulatory bodies were created. We were trying to open up sectors from the old licence-permit system. Let us look at the kinds of reforms we have done so far. What kind of reforms is the government looking to aid the growth story? Hence, my emphasis on the importance of macro-stability and financial sustainability. In contrast, The Asian Crisis stalled many economies, and they never recovered. China’s success was not about high growth in any one or two years, but its ability to sustain it over decades. We have just entered that phase, and the key is to maintain steady growth till 2047. We will be in this demographic dividend phase for about 25 years. Over time, we will get back to 8%-plus growth when global circumstances allow it. We need to keep investing in our supply side. It is about compounding, which requires maintaining macroeconomic stability. The point that I am making is, do not sacrifice macroeconomic stability to force growth in a particular year. External demand cycles should not distract us. In my view, a 6.5-7% growth rate under the current circumstances is an acceptable growth rate. Have we missed the tide on the demographic dividend? Given that exports are slowing down, which growth engine should we focus on? We are already the most populous nation, and the economy is shifting towards technology-intensive industries where job creation can happen. We should not let global cycles distract us from this. Focus on the supply side means making sure our infrastructure gets built up, our regulations are rational, our financial system remains robust, etc. Second, we should focus on the supply side and on compounding GDP over time. If we try to overcompensate with domestic demand, we will achieve an external imbalance (current account deficit) as exports will not be able to keep up with imports. First, we should not unnecessarily force growth beyond 6.5-7% in an environment where global growth and export markets are faltering. However, our response needs to be calibrated. ![]() How should we address the situation?Įxternal demand is clearly weakening, and this will be a challenge. ![]()
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