It was a revealing article by Ila Patnaik in Indian Express.I think most are not aware (including me) about such a report by RBI. I wonder whether it is meant to be read! (15kg! 2600 pages!). So essentially it is not a communication of the status of our financial sector, rather it is something for the researches to pore over a decade later.As regards the comments on Accounting Standards, with IFRS convergence planned for 2011, there is hardly any sense of urgency amongst the financial community, since compliance with IFRS would require substantial changes in the Companies Act (even after recent passage of the new Act). I wonder whether such negligence is intentional. Since if the format and content required to be reported is ambiguous/open and insufficient, the reporting authority always has an escape route, especially when it impacts substantially the results of the company under audit.But isn't RBI doing a reasonably good job on the financial sector over the past decade.I have here an Op Ed in New Indian Express wherein Prof Stiglitz lauds Dr Y V Reddy for his astuteness in directing the economy without "Mindless Liberalisation".http://www.expressbuzz.com/edition/story.aspx?Title=Stay%20away%20from%20mindless%20liberalisationGiven this, are there sufficient reasons for not agreeing to the code of IMF, apart from being socialistic/communist orientation. I would like to understand this.Regards
Being educated in the West, or working in/working with Western firms/economists, doesn't entail that somebody should turn a blind eye to the risks of revealing and disclosing everything about India's economy to some outside agencies. Many Indians don't have confidence in the Indian Government, and believe that only an IMF expert can provide an accurate picture.Last year the United States Federal Reserve extended new credit of more than $ 2 trillion to private sector banks. Nothing is known till date about the details as to which banks were given what amounts of credit. The Fed stated in some cases that the collateral offered by certain institutions was unsatisfactory. And that revealing details of credit given and collateral received would amount to revealing "trade secrets" of commercial banks. This sequence explains how large institutions like Wells Fargo, Wachovia, Washington Mutual, etc collapsed. Citigroup, Bank of America,Goldman Sachs and JP Morgan seem to be doing well and seem to be the excpetions that the Fed found in terms of collateral.Coincidentally, these are the 4 primary dealers in the US Treasury securities. Nobody has yet breathed a word about where the Fed got an extra $2 trillion from. The Treasury issued new debt, then the Fed gave a credit to the Treasury's account with the Fed. Then the Fed extended credit to banks against the bad loans, or just as new credit. The entire $ 2 trillion was money borrowed from US taxpayers, in the name of the US Treasury.The IMF being a well known stooge pigeon of the US Treasury is less trustworthy than our home grown scamsters. At least our homegrown folks are always under the pale of institutionalized doubt.With clean cops on the streets and clean visa clerks, the US Treasury has convinced its masses that the top politicos and busines leaders aren't more corrupt perhaps than those even in banana republics.
Waiting for your exclusive comments on pleding of shares by promoters.
Stiglitz was a good, narrow, technical economist in the 1970s and 1980s. He richly deserved his Nobel prize for that. But when he branched out into economic policy thinking, he has floundered badly. He doesn't have common sense. Praise from Stiglitz generally means you're doing something badly wrong.
Indian Investor (comment 2)All the actions of the Federal Reserve and the Treasury are publicly viewable in the H.4.1 weekly release by the Fed and daily treasury statements.
@ anonymous:@have you looked at H41 releases?The Fed gave a credit of $200 billion to the Treasury in its supplementary financing account, and lent the Treasury issuance dollars to private sector banks, without revealing anything about the details.Tell me which private sector banks have got credit from the Fed, how much, and against what collateral.Then we'll talk about the IMF review the Govt. of India books.
Maybe Stiglitz accolades is not worth that much in these days.However the hawkish stance of RBI in framing policies anticipating inflationary trends (which did come true) was successful, and they have been able to manage to move along without facing any major collapse of banks or closure of markets or ban on short sales, though we are not exactly in the best of the situation.A good suggestion was made in the Op ed of K S Narayanan, to build up on the learnings of NAM movement(despite its collapse) and implement a neither here nor there policy may seem fit for a highly disintegrated polity inside an integrated nation.And the IMF prescription for independent review has not been accepted by the US itself.
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