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Monetary policy can't solve structural problems, it can only address cyclical shocks: Viral Acharya

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In India it is IAS who decide be it space craft or handicraft . illiterate voters send semi-literate reps to law houses


In India, RBI has been excessively focused on inflation instead of real interest rates - it should set monetary policies to achieve a real interest of 1-2% which will not just encourage investment but also boost domestic savings to fund this investment - thus avoid the fire sell of national assets

FailedResort2Escapis (c)

Those who were in office for 2 to 5 years and giving excuses are UNFIT TO BE LEADERS. Any street urchin can do that - resorting to ESCAPISM . A true professional faces the challenges, overcomes tham and delivers results. Only traitorous media house could think of giving media space to failed professionals resorting to escapism of name calling. NO BODY PREVENTED THIS VIRUS to face up the challenges, explain his position clearly, win the trust of elected people holding power and getting things done for the people.


While literate people discuss economy on panel, illiterate people are controlling our economy!

It is not lending,borrowing,repo,reverse repo,or exchange rates a conventional reserve or centrsl is deepening of bond,money,bond,exchange markets.widening of capital bond markets is nse,bse,sebi,rbi, achieve bifurcate rbi,sebi,bse,nse into 5 autonomous administrative zones,plus trf existing public borriwing og 90 lac crore and start issue zone wise land ,state wise land compensation bonds,municipal bonds,.create construction banks,first,secon mortgsge banks,title insurance companies,and masdive distribution of basic free floor space index to first flat seekers and allocate 20 cr acre ,3 cr ingra and land comp bond of one cr prr acre with capital gains tax free,gst free,sgst free,asdignment s


lending rates remain high mainly because of provision and hair cuts for NPA. Established businesses should use their own cash and not borrow debt and divert elsewhere.

Ajinkya (Mumbai)

Real investments come from savings, for savings you need higher interest rates. Indian government cannot presume that by installing a stooge in RBI, that they can defy the laws of economics by printing money. It has never worked throughout history we have seen that money printing never works. It creates wealth inequality by depriving the poor and the needy of credit. Say yes to higher interest rates, that is the only way out.




Some years before Chor Chand Kochar also participated in this event. Ha Ha Ha.

It would be suicidal for RBI to reduce interest rates.Once it has accepted headline inflation as basis of inflation targetting if it reduced rates despite inflation above its target it looses credibility and equally important predictability. It also reduces income of those dependent of fixed income forcing them to spend less.On 120 lakh crore deposit .5 reduction is at least 50000 crores (excluding current deposits). Worse it reduces saving rate which already down from 37.5 per cent in 2008 to about 30 per cent today effectively reducing growth rate by 2 per cent (assuming 4:1 capital output ratio). RBI has work more on financial stability rather that stupid ideas like interest rate cut which makes relevance when long term growth target is 2 per cent like in developed countries so saving of even 5-6 per cent with technological advances is enough to get that.

Ajinkya (Mumbai) replies to Nachiket Katha

When interest rates get reduced, savings shrink. Which means there''s limited resources to lend. Which means lending only reaches the politically connected. Which means the current msme sector lending freeze which we are looking at. Higher interest rates are obviously the way to go. Moving ahead if we have to avoid this problem, we should allow the market to discover the real interest rate. Interest rate is the price of money and politicians have always sought to control it to benefit their ilk. India should privatize interest rates.

Good monetary policy is not allowing banks are not used for monetising asset creation exclusively for land input.allication of agri lsnd,infra land,housing land is the issue.we req 20 cr acre agri,3 crop rotation and 3 cr acre for infra and 50 lacs 4 floor space index housing plots. We req land compensation bonds,with capital gains free,income tax free for interest,gst,state gst free for input credit on value added for asset creation and assignment rights conferred with profit sharing.this takes care of land input. Next we reqire construction and construction materials bank for smooth payment of guarantee for wages,construction inputs like weekly stock market payment guarantee.such assets are absorbed by first mortgage sbd second mortgage specislised and the cash flows are structured to repay land comp bonds and vonst cost of assets. For houding we reqire floor space index and to givr housing for all first flat seekers get flats without land cost at cost of construction meaming free basic fsi and reservation of fsi at 4000 cities at plan stage projrct wise first flat seekers get shelter. 7 trill dollar loans means 420 lac cr borrowing is existing public debt of 90 lacs plus issue of land comp bond at one cr per acre for 350 lac acre is total 440 lac cr total borrowing .at 6 lacs wages for 35 cr households will be 210 lac cr and serviding 420 lac cr at 5 percent and so on so forth,so rbi shoul govern public debt by zinalising deepening money bond market with nse,bse,sebi etc


That''s pretty powerful statement and radical as well. However, our experiential economists have done enough damage to the $2.7 trillion economy, business and 1.2 billion plus people. The country has lost its steam, dreams and livelihoods to the knees. You cannot become radical everytime to engage shock therapies but become more prudent and pragmatic in approach. Though as an economist you may definitely be right, however the time may have been lost or isn''t right.

We need a sector like IT which can earn dollars.Previously,we had diamonds-jewellery-meat-metals sectors who supplemented income from IT.The remittances from gulf have been going down due to prolonged low oil prices.Besides,we need a non BJP govt otherwise,by 2024-states will start demanding independence.I read history of maharashtra from 1980 to 2000.If economy does not improve,expect thing go that way very very fast.

Pl read prof brahmananda semibombla,sceme of economists for monetary immobilisation for blocked assets,and fed gov marcia stegam bond market operations and yield curve management.main pronlem is banks exposure to monitising land is the art of central banking. So infra and housing land input has to come from long term borrowing so it is capital gains,tax free,gst free,state gst free,and assignment rights and issue management of massive land compensation bonds by swap and tsp to locals and forigners,creation of construction and construction materials bank of limited banking licence for contractors weely wages a payment guarantee, anf first,second mortgage .normal banking is only for margin funding and collateral ,gyarantees must be selective.massive free floor space index,reservation of fsi in every plan at 4000 cities for first flat seekers are way forward. Reserve bank has to deepen the bond,money market eith sebi,nse,bse and this can come by zone wise giving autonomous status for note circulation and public debt management of land comp bonds,municipal bonds private land only for infra.rbi role has to spread wings not confined for domestic and int borrowing pegging to 7 trillion dollars and at 5 percent ,35 cr households family income at 6 lacs,wages plus interest will make agri gdp at 4.5,other gfo at 4.5 total at 9 percent,20 cr acre agri,3 rotation,2 cr acre infra,50 lacs acre 4 fsi plots you need to give 8000 cal food intake,200 meters cloth every year,300 days 70 cr empl

please post it again with paragraphs,commas and capitalised first letter of sentence.

Unfortunate i am not a computer savvy, i will try sir.

your comment is good and filled with knowledge

acharya ji,it is no use.Just keep quiet and enjoy retired life.Our chaiwala and tadipar alongwith dedicated bhakts want to destroy this nation in name of hindu deshbhakti.Only lord ram can save us now


we lack professional competence in every field,. geniune people are shunned.dogmatism, nepotism,selfishness, corruption are the biggest hurdles of our country''s progression.honesty, commitment,ownership are missing in all fields.delayed judicial decisions are hampering . judiciary is costly,deliverance is not time bound .the laws are very porus.lots is desired.investment in science, education, research is very low ebb god bless

Your last point is well taken.But RSS-BJP-Modi and his bhaktas hate western education.Why would they promote it?Their aim is to shutdown everything.Had judiciary worked efficiently,modi and shah might be rotting in prison and wont have contested elections or became powerful.

Govt choking the informal sector. Govt need to stay away from informal sector and it mode of transaction


A toxic mix of new capital ! Wait as we have no idea what lies ahead as booted and suited guys spew a never ending solutions.


Negative interest rates do not exist globally. They are present mainly in the EU and Japan. And they have only served to destroy the saving habit and eroded bank profits. Neither the EU nor Japan has been able to get out of their economic weakness via negative interest rates. Some EU finance ministers are questioning the efficacy of negative interest rates and whether what benefits they have brought outweigh the detriment of reduced income for savers. For India to ignore savers and talk only about corporates getting cheaper loans elsewhere is foolish.

Realdeshbhakt replies to AG

Independent thoughts was gift of european thinkers to world.Before that,only priests and kings used to have opinions and thoughts.RSS-BJP have mastered art of copying disastrous decisions from EU-USA-UK in name of hindu deshbhakti.The way things are going,negative interest might be reality in india in span of a year.

Viral should have also explained the situation then when he was RBY Dy Governor and now . How stability has affected in between tose time and now else people would treat it as a political statement

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