The costs of currency policy; What impedes foreign investment; Measuring GST in firm data; episodes

Some people like to have a government that tries to have an exchange rate policy. It is important to also reckon with the costs of government management of the exchange rate. These are enumerated in my column in the Business Standard yesterday.

Ashok Desai is the economist who was Chief Economic Advisor in 1991 and wrote the Manmohan Singh speech of July 1991. He once said to me: the organising principle for his generation was trade liberalisation and the decontrol of prices in the real sector, while in my generation the big idea is the power of the price system when applied to the exchange rate.

The policy community is keenly conscious about the difficulties in the economy on foreign investment. Shubho Roy and I wrote a column in the Business Standard, and then Govindraj Ethiraj made an episode of The Core, on six barriers to foreign investment. We suggest that there is no silver bullet, that there are six fields of work, which require establishing the policy pipeline from evidence, research to policy proposals to solutions.

When debating a problem like the input tax credit blockages in the Indian GST, a natural instinct is to reach for firm data in order to investigate this further. Atibhi Sharma and I wrote an article on The Leap Blog on 11 August, What do we observe about GST at the firm level? TL;DR We observe nothing. We offer a policy proposal on how firm disclosures should be modified to obtain good data on GST at the firm level.

An episode of Kushal Lodha’s show. Please ignore the title.