Saturday, August 01, 2009

The low level equilibrium of Indian finance

There is a fascinating editorial in Business World, which worries that Indian finance has `become moribund, and ... no longer promotes either growth or competition ' which ends with:

To the question about what is to be done, there are no easy answers. It is necessary for wise people to reflect, to sit together and deliberate, and to rethink the entire system. But the question is, where are the wise people? The government has encroached on all the repositories of intellect. It has politicised the universities, and its funding has given it patronage that has emasculated research institutes. Democracy is supposed to have one great advantage over dictatorship — that it creates space for divergence and debate, that it keeps boiling a cauldron of clashing positions from which the truth can emerge. It is this diversity of opinions that the country needs today.

Also see this column by Ashok Desai in The Telegraph on 28th July. Among other things there, he says:

My findings are based on a cursory analysis of easily available banking statistics. So much more could be inferred from the masses of statistics accumulated by the Reserve Bank of India. All it needs is a good, elementary economist. The RBI employs economists by the hundreds; the finance ministry gives generous grants to many more. But their minds are focused on higher matters; looking at easily available figures and calculating simple ratios would not occur to them. So we continue to have one of the world’s best documented and least analysed banking systems.

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