You can stop worrying that the euro is on the verge of extinction. The new worry in Europe is that it may instead be too strong. But the ability of European leaders to remain calm will determine whether we in… Continue Reading
The Mint newspaper, India’s Wall Street Journal affiliate, published a piece by Russell Green, the institute’s Will Clayton Fellow in International Economics, today on India’s directed lending program. Since the 1970s India has set a mandatory target for its domestic banks to lend to certain “priority sectors” including agriculture and small and medium-sized enterprises. The targets have become more ambitious over time, despite slow growth in the agriculture sector. Banks now struggle to meet the targets without jeopardizing their own standards for lending quality. Green criticizes the recent expansion of agricultural lending targets to foreign banks, and suggests ways the program could be improved. Continue Reading
India primarily relies on coal to generate electricity, and is struggling to provide enough power to light its homes and power its industry. Russell Green, Will Clayton Fellow in International Economics, writes in The Wall Street Journal that although state-run miner Coal India has increased production in the past five years, it has also entered into fuel supply agreements with private sector electricity producers and will “be forced to import massively” to meet demand. Continue Reading
The Indian currency has been under pressure for the past few months, having lost 13 percent since February. Earlier this week, it hit an all-time low of 56 rupees to the dollar in intraday trading. This weakness comes partially from the shift of global investors to “risk-off” mode, retrenching in fear of a European mess. But it primarily reflects bad economic policy in India that has scared away investment (investment in both the economic, building-a-factory sense and the financial, buying-a-stock sense). Continue Reading
The Indian economy’s growth rate, above 6 percent at present, makes India the envy of most of the world. But to those who know India, growth rates below 7 percent are a sore disappointment. India aspires to double-digit growth, and with large domestic markets, a diversified economy and a large pool of competitive labor, it holds the potential to reach its goal. To meet its aspirations, India requires a series of reforms to its economic structure that can facilitate business growth and encourage private sector investment. Continue Reading