Thursday, June 18, 1998
Monetary management of fiscal profligacy
A combination of fiscal and monetary policies can suitably influence macroeconomic activity. A tight monetary policy combined with loose fiscal policy retards investment and encourages consumption while easy monetary policy together with tight fiscal policy encourages investment and retards consumption.
Short-sighted move
The decision by the Securities and Exchange Board of India to impose what amounts practically to a ban on short sales is a panic reaction to a situation substantially of its own making. SEBI's entire focus has been to stem the slide in the markets, and it has, in this single-minded pursuit, entirely rewritten the rules of the game.
FDI holds the key
The fall in the value of the yen has sparked off fears of another round of competitive devaluation, with the Chinese yuan being under tremendous pressure. World Bank officials have warned of the dangers of a looming depression. If China devalues, Indian exports are bound to be affected. Add to that lower inflows on account of the sanctions, and there is ample reason to be concerned about the value of the rupee.
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