Silly to compare Lanka’s economic situation with India: Arvind Panagariya

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Former NITI AayogVice- Chairman Arvind Panagariya on Sunday said it would be silly to compare the profitable situation of Sri Lanka with India, though assignments can be learned from the extremity in the island nation.

Panagariya, in an interview with PTI further said since the 1991 balance of payments extremity, successive governments have managed the macroeconomy conservatively.

He directed out that in the case of India, fiscal scarcities have not been allowed to get out of hand, the exchange rate has been allowed to cheapen to keep the current- account insufficiency low, and the fiscal policy has been restrained to keep inflation low and the opening of financial capital overflows has been done in a calibrated fashion.

” This is a silly comparison. suggestions of any parallels between India and Sri Lanka presently are laughable,” Panagariya said, adding that India has rarely espoused abroad to finance its fiscal insufficiency.

The prestigious economist was asked to note former Congress president Rahul Gandhi’s statement in which Gandhi hit out at the Modi government over rising inflation and severance and said India looks a” parcel like Sri Lanka” and the Middle should not enthrall individualities.

Sri Lanka is scuffling with a severe profitable extremity and India has been at the van of extending profitable backing to Sri Lanka.

Panagariya said,” We must surely take assignments from the Sri Lankan experience for our future macroeconomic operation. That is the main connection of the events there for India.”

Replying to a question on severance, Panagariya, a professor of economics at Columbia University asserted that India’s problem is not severance; rather, it’s under- employment or low- productivity employment.

” We need to work on creating well- paid jobs for the millions,” he said, adding that the severance rate indeed in the Covid time of 2020- 21 had been down to4.2 percent compared with6.1 percent in 2017- 18.

The prestigious economist noted that those who had raised a tincture and cry at the the6.1 percent rate in 2017- 18 have now gone completely quiet on the severance rates detailed by the Occasional Work Drive Overview( PLFS).

On questions raised by some experts on India’s sanctioned data on a range of subjects, he said the country’s GDP, PLFS, and vital statistics collection fare well in international comparisons.

” There are a many honest to virtuousness examens that ought to be tended to. We need to invest a lot more in revamping our data collection,” he noted.

Having said this, Panagariya said’ we must also call out and reject multitudinous motivated examens’.

For case, according to him, those analogous as the Economist and New York Times furnishing the necessary estimates of Covid deaths in India need to apply advanced morals to the evaluation of their own( largely imperfect) methodologies.

Asked whether he thinks the Indian economy is in a better position than it was eight times agone
he said,” You can look at any indicator you like per- capita income, poverty, life anticipation, nutrition, and child mortality. You will see improvement in each of these pointers.”

Responding to a question on the Indian rupee decaying to a record low, Panagariya said the rise in the interest rates in the United States had led capital to move out of arising requests and Europe into the United States.

” That has driven to exception of about all major financial norms against the bone
The rupee is not unique in this regard,” he said, adding that if anything, the rupee has downgraded lower than utmost other currencies partly due to heavy intervention by the RBI.

Panagariya directed out that while during 2022, the rupee has downgraded 7 percent against the bone
, in comparison, the Euro is down by 13 percent, the British pound by 11 percent, and the Japanese hankering by 16 percent.

In Asia also, the South Korean won, Philippines peso, Thai baht, and Taiwanese bone
have all fallen further than the rupee against the US bone

” The net result is an appreciation of the rupee against all of these financial norms,” he contended.

On fears of profitable recession, Panagariya observed that patient inflation at rates not witnessed in four decades and entrenchment of inflationary prospects, especially in the United States, have meant that the only way for the central banks to break the reverse of inflation is through the recession.

” That is, the central banks must keep raising the interest rates until profitable exertion sees a decline and forces a break in high inflation-high pay envelope-high inflation cycle.

” In India, we do not face the same problem,” he commented.

Replying to a question on high inflation, the prestigious economist said the source of India’s inflation problem is largely external– unknown unlooked-for rise in oil painting oil and cereal prices touched off by the Russia- Ukraine war.

With RBI raising interest rates, oil painting oil prices seeing some thaw, and the bottommost fruits and vegetable crops around the corner, he said,” We will see inflation return to below 6 percent by the alternate half of FY23, as directed out by the RBI Governor.”
Pangariya noted that India’s inflation at 7 percent exceeds its forbearance limit of 6 percent under inflation targeting by only 1 chance point.

Only the caption and picture of this report may have been reworked by the Business Standard staff; the rest of the content is a machine- generated from a distributed feed.)

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