Widening trade deficit
That India’s trade deficit with China has breached $100 billion for the first time does not augur well for the country’s ambition atmanirbhar (self-reliant) goal. Despite the country’s concerted push for domestic manufacturing, dependence on Chinese imports has been on the rise.
At the same time, we cannot be oblivious to the fact that cheaper imports from China are largely aiding the country’s green transition and the digital economy. Rather than resorting to knee-jerk measures such as the imposition of higher tariffs on Chinese imports, which runs the risk of increasing inflationary pressures in the economy besides hurting the manufacturers in India, policymakers have to provide a long and sustained policy boost to empower Indians manufacturing.
Managing credit risk
The recent draft circular issued by the RBI on expected credit loss-based provisioning by banks is a welcome move, as it would lead to enhanced transparency in credit management of banks.
Though the present draft circular is forward looking, the liberty which the RBI has given to banks in terms of designing and measuring expected credit losses and making provisions poses immense challenges in terms of assessing various macro financial vulnerabilities which will have a significant impact on recovery of loans. Once the new guidelines are successfully implemented it will help banks in effectively implementing the stress testing frameworks devised by the Basel Committee.
Start-ups are here to stay
Apropos ‘India’s Startup saga’ (January 17), it would not be an exaggeration if we say that we are living in a start-up era. In the last six years, start-up numbers have grown up significantly, which itself is a testimony of how the whole ecosystem is thriving. What is really heartening is the fact that they are thriving in diverse sectors, from fintech and edtech to defence.
The government and universities should assess their skill requirements to ensure that they get an uninterrupted supply of talent.
OPS vs NPS
Apropos ‘Return to old pension plan is big risk for States, warns RBI’ (January 17), the central bank should be lauded for its State Finances Report, which talks clearly about the major risk looming large on the sub-national fiscal horizon amid piling up of unfunded liabilities of these states.
Significantly, out of four States — Chhattisgarh, Rajasthan, Punjab, and Himachal Pradesh — that have so far restored OPS for government employees, the Punjab and Himachal Pradesh governments have reportedly done so as a part of fulfilling their pre-poll promises, and the other two with the sole aim of somehow cornering the Center over its brain child — the NPS.
This refers to ‘Pakistan’s economy in dire straits’ (January 17). From India’s point of view there are certain worrisome developments. Though the Pakistan economy has been in the doldrums for quite some time, its sponsorship of terrorist activities from its soil and India has not abated.
The chances of repairing relationship with India look remote given the internal squabbles there between fundamentalists and others.