An autonomous research institute under the Ministry of Finance


Minimum Wage Macroeconomics


The government has taken several policy initiatives to address the current economic slowdown. These important and necessary measures to ameliorate the slowdown have addressed 1) sentiment, 2) the credit pipeline, 3) policy misinterpretations and 4) sector specific issues.  However, if, as I have been arguing, the roots of the ...

Fiscal policy and the growth slowdown


The question then is: On what should government spend this extra borrowing?
Several economists have recently argued for increasing public expenditure, through deficit financing, to address the current growth slowdown. This argument rests on the premise that increased government spending would enhance purchasing power in the hands of consumers ...

Coherent set of immediate actions


The government must announce a calendar for implementation of Friday's measures
I have been concerned about some macro-solutions proposed to address the slowdown. Calls for fiscal stimulus are misplaced and would, without much sustained benefit, jeopardise the hard-earned macroeconomic stability attained since 2014. Monetary and credit policy transmission needs ...

Paying Attention to Tax Buoyancy


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(Coauthored with Lekha Chakraborty) 
Often, fiscal stimulus is launched through the tax side than expenditure side, assuming that the buoyancy of the former will ensure minimum fiscal slippage, while shoving the economy out of a glut. The general idea is that a reduction in rates will increase the ...

Fiscal Monetary Policy Co-ordination:It is worth a relook at what Subir Gokarn said in 2013 RBI report of currency and finance


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Economists often trace back the institutional linkages between fiscal and monetary authorities to ‘Unpleasant Monetary Arithmetic’ (UMA) of Thomas J Sargent and Neil Wallace. This UMA regime deals with the question of who “dominates” and who gets the “first-mover advantage” in policy decisions to finance the fiscal deficits. The Reserve ...