Articles by C P Chandrasekhar

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The International Monetary Fund's World Economic Outlook of April 2016 bodes that emerging market economies, including India, are at risk of sudden capital outflows. The IMF once again makes a case for its conventional, much-discredited tools to manage this risk. To repeat these recommendations, that on many occasions have only worsened crises, is to encourage complacency.

The 27 July blip in India's stock markets was triggered by the Supreme Court-appointed Special Investigation Team's report on black money. This report called for an identification of the owners of Participatory Notes, the instruments used for a good part of foreign investment in the stock market. The history of P-note investment goes back to the early 1990s since when they have served as conduits for making illegitimate money legitimate and have defied half-hearted attempts at control and dismantling. Their importance may have come down but they are unlikely to be banned because the government fears investor exit.

The establishment of the New Development Bank by the BRICS countries is a significant development which could have some impact on multilateral lending for infrastructure in the countries of the South. But if the new bank is to make a difference and alter the international development finance landscape, democratic forces in the BRICS countries and elsewhere should pressurise their governments to act in ways that differentiate the NDB from the currently dominant global institutions in terms of funding patterns, rules and terms.

Disregarding international experience of recent years, the Urjit Patel Committee recommends that the Reserve Bank of India pursue a single objective of infl ation targeting. It focuses on the interest rate to control infl ation (by influencing inflation expectations), though experience has shown that in India this mechanism has a weak impact on inflation and a stronger one on output. It is a disappointing report drawing on a textbook reading of the New Keynesian model.