Can we make sense of all this?

Can we make sense from these three articles using macroeconomic theory that appeared in the Livemint, all on the same day?

A useful exercise for students to look at issues from a macroeconomics perspective.

http://www.livemint.com/Politics/Puwo4XzazcHApN5n1JK0eI/India-to-remain-the-worlds-fastest-growing-economy-IMF.html

http://www.livemint.com/Money/XGY7AWl1fNfNEsMWe0PMFO/If-economy-is-really-growing-74-why-is-consumer-sentiment.html

http://www.livemint.com/Money/1dgjHuBdeq6Tct7GwRGJ8I/PMI-data-shows-spluttering-economy-plunging-business-expect.html

Here's some more food for thought ....

Will these strategies work?  Are legislative reforms sufficient to ignite growth?  And what about employment?

http://www.newindianexpress.com/editorials/Onus-on-Both-Govt-India-Inc/2015/09/25/article3046432.ece

http://www.thehindubusinessline.com/companies/bilt-pulls-out-of-malaysia-sells-stake-in-sabah-forest-for-500-million/article7686130.ece

http://www.thehindubusinessline.com/opinion/editorial/chinks-in-make-in-india/article7686002.ece

IMF, India's fiscal deficits and the need to question the obvious

I just read a news report from Business Today (19-Sept-2014) that speaks of the IMF asking the RBI to raise interest rates.  The infatuation over fiscal deficits as being the most serious problem that Indian macroeconomic policy needs to address runs throughout the article.  But there were also some contradictions that I came across, reading between the lines.  Here are some statements from the article that I want to highlight:

"...IMF said the government needed to take more steps to reduce stubbornly high inflation and the large fiscal deficit."

"The IMF said removing supply bottlenecks would lead to more sustainable growth. It also called for increasing public spending on infrastructure to ease supply bottlenecks and support economic development."

"While lauding the new government's emphasis on fiscal consolidation, it said "the quality and durability of the consolidation remain a cause of concern.""

"The government proposes to bring down the fiscal deficit to 4.1 per cent of gross domestic product (GDP) in current year from 4.5 per cent last fiscal ... fiscal deficit has to be brought down to three per cent of the GDP by 2016-17."

On the one hand the IMF wants to cut the fiscal deficit while at the same time they want an increase in public spending on infrastructure.  When they say the quality of the deficit is important, what do they mean?  What are the items that the government should cut spending on?

Also, like MMT warns us, why this concern about fiscal deficit numbers like 4.1% and 3% of GDP?  Will achieving these numbers solve India's macroeconomic problems?

It's time for MMTers to question what is now being seen as obvious in India.



Follow this link to read the article in Business Today:

http://businesstoday.intoday.in/story/rbi-should-raise-policy-rates-to-cut-inflation-imf-g20-cairn/1/210504.html