Syndicate content

Recent comments

  • Reply to: Optimal tax policy in a high evasion context: evidence from Pakistan   2 months 3 weeks ago

    There are some fantastic points brought up in this blog. Kudos to you for your excellent work.

  • Reply to: The international bank lending channel of monetary policy rates and QE: credit supply, reach-for-yield, and real effects   2 months 4 weeks ago

    This confirmatory stance on global monetary policy impacts on local monetary policy has been validated thanks to the data synchronization between credit registry, firm level and bank level data sets. In India such synchronization is a dream yet to be fulfilled. Governor Rajan has been under severe pressure from the government and the industry alike for a rate cut. Repo rate showed little consequence when the banks' borrowing from the central bank has been a miniscule and the growth in manufacturing sector has been continuously sluggish. Many a time, local forces have certainly greater impact than global forces. A balanced and nuanced approach to monetary policy is extremely important.

  • Reply to: The economic effects of India’s farm loan bailout: business as usual?   3 months 3 weeks ago

    A detailed analysis of farm credit in India reveals that historically commercial banks ventured to extend credit to farmers in less risky areas. The spread of farm credit across the States reveals that 85% of agricultural credit was disbursed in just 12 States of India and even in these states, in the irrigated districts and villages. Rainfed areas that constitute over 60% of cultivable area did not receive even 10% of farm credit. The vulnerable small and marginal farmers account for lesser attention. Equity and discipline are two cardinal principles of successful farm credit portfolio that received raw deal both from the banks and the government. Even the first bout of loan write-off amounting to Rs.10000cr in 1990 revealed that the credit discipline suffered acutely later. Even as this discipline was getting into place, the bourses-led write-off against the recommendations of the RBI and a well articulated Report on Agricultural Debt (Chairman: R.Radhakrishna, 2007) took a beating again.

    Commercial banks took to farm credit as a compulsive lending portfolio under priority sector dispensation and not as a well defined portfolio. Agriculture credit as a consequence did not form part of their culture.

    Rescheduling and restructuring loans have also been ordained by certain rules. Insurance mechanisms for loss of crops on various counts did not also mature that should have given comfort to the farmer. Marketing of farm products in structured markets, storage of grains, vegetables and fruits and value chain management in agriculture that could have insulated the risks of production credit have received least attention. unlike in the rest of the world, in India, farmer has an integrated set of activities - production of crops, milk, backyard poultry of a few birds, goatery cross holding risks in farming. If only one activity is taken care of in farm credit and the rest taken care of by the private money lender, the latter being high cost credit, farmer after meeting his household needs would prefer to clear the high cost credit instead of institutional credit.
    M.S. Swaminathan Committee on National Food Security desired that the credit to the farmer should be at a rate of interest of no more than 4% among various other recommendations. This Committee also did not recommend write off.
    Credit to farmer is nutrition for production in as much as the farmer fails to have liquidity when he actually requires it as it is locked up in land or stock.
    It would do lot good for the Indian farmer if the government reduces regulation administered by 14 Ministries (www.inclusion.in/yerramraju-reviving of agriculture/oct-dec2011/) and reduces sovereign risk to farm credit by the Parliament enacting legislation to prevent any political party announcing loan write off before the polls and laying down conditions for write-off in a more transparent manner with well laid out procedures after due consultation with the farmer associations. More of these aspects a detailed analysis of this contentious issue can be found in the Author's book: India's Growth Resurgence: Sectoral Issues and Governance Risks (february 2015)co-authors:Sitarama Murty and Subbaiah Singala.

  • Reply to: How are Financial Capability and Financial Access Linked? Insights from Colombia and Mexico   8 months 4 weeks ago

    Data sources analysis is a road map to countries economic state. This a tool to help every body to see true number where the economic health of a country is headed. Please extend this service to all developing countries.

  • Reply to: Correlated Trading by Pension Fund Managers   9 months 1 week ago

    muy buen analisis, si se aplica en Colombia fuera de mayor éxito, ya que la mayoría de contribuyentes no piensas a largo plazo sobre el enciso y se beneficiaran no solo un grupo determinado sino las mayorías...

    felicitaciones por tu articulo señor ALVARO ENRIQUE PEDRAZA MORALES