## Wednesday, January 18, 2006

### Two big-picture lectures about India

I helped Vijay Kelkar in drafting of two lectures, which actually add up to an interesting integrated view of India:

1. The first was the Narayanan Oration (April 2004) at the Australian National University: India: On the growth turnpike.
2. The second was the Gadgil Memorial Lecture in October 2005: India's economic future: Moving beyond State Capitalism.

They add up to interesting reading. The first looks back and thinks of deeper forces, the second looks forward at what is to be done. A slightly related version of the key ideas of the first appeared in Indian Express on Diwali day of 2003. The latter has been written up a bit. Today Andy Mukherjee linked up to it in his column.

1. I am having some difficulty understanding as to why a flexible exchange rate (ref to the first article about "India on a Growth Turnpike") causes a lessened effect due to outward shocks. should it not be the other way round?

i frequently use the analogy of tariffs/protectionism as the presence of friction in a normal spring-mass-system. takes up the energy but without it you cant stop.

which is why i am wondering why an idealized laissez faire should (even intuitively) dampen the shocks!

-new rookie on the block :)

2. Secondly, he talks about how the removal of QRs and duties in the 1990s (removal of import substitution policy) was a subtle cause behind the upsurge of bad loans in the banking industry (via obsolete business plans and the fact that factors of production had to shift into areas of competitive advantage).

If the factors were shifting to areas of competitive advantage, why were the loans bad??

and oh, you might have read it but it seems that 5 young iit grads (mostly IITB) have started a political party in Jodhpur.. http://timesofindia.indiatimes.com/articleshow/1384682.cms

:)

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