@ThinkTank
@ThinkTank · 1:27

Budget 22: In Conversation with Economist Dr. Radhika Pandey

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How did the government really fare on social spending and many other accounts? This is Karen Dave and I'm delighted to be joined today by Dr. Dr. Dr. Dr. Radhika Pandey, very senior economist and policy expert. Dr. Dr. Radhika is a senior Fellow, the National Institute of Public Finance and Policy

Dr. Radhika is a Senior Fellow at the National Institute of Public Finance. #indianpoliticsonthinktank

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@ThinkTank
@ThinkTank · 0:30

@Radhika-Pandey- the increase in Capex and investor confidence

Dr. Radhika, I think the emphasis of this budget, as most analysts have said is on the supply side. Now given the paucity in private investment in the last few quarters, how do you view the increase in Capex? It's gone up to some 7.5 black Raws and a lot of people believe that this is going to make investors more bullish on the India story. So how would you read this increase and what are the sectors which you think will stand to benefit from this announcement and
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@Radhika-Pandey
Radhika Pandey
@Radhika-Pandey · 1:55
So to pump prime the economy, the budget focus has been on enhancing capital spending and one major plank towards this is also giving assistance to States so that they can pump prime their capital spending. So the central government has given one Lacroix loan to state governments to enhance their capital spending. So towards this it's a positive move. And looking at the sectors which will benefit primarily if we look at the sectoral allocation we see that NHAI has got the maximum enhancement in budget allocation
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@ThinkTank
@ThinkTank · 0:29

@Radhika-Pandey Small and medium industries relief

Thank you for that outline. Dr Dr Radhika Pandey. Know, when you think of employment and you think of just the unemployment levels in India and how to really target it, the real back, the bedrock, if you will, of the Indian economy on me, perhaps the small and medium enterprises. So seeing as how they form a huge part of the economy, do you believe that the budget does justice, especially given the extension in the emergency credit Line guarantee scheme to them
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@Radhika-Pandey
Radhika Pandey
@Radhika-Pandey · 3:50
So there are various ways of providing support to MSMEs. But the government's focus has been supply side oriented. That is not to just give them direct cash in the hands of people, but to provide them credit so that they are able to sustain their business and to provide them credit at guaranteed credit at low rates of interest so that they are able to carry on with their business. So that is one of the instruments through which the government has aimed to help MSMEs
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@ThinkTank
@ThinkTank · 0:40

@Radhika-Pandey Covid management and spending

Dr. Alika, as you mentioned, we're coming out of the backdrop of COVID. The pandemic isn't completely past us. But when you think of how the government really reacted to it, when you compare it to other emerging markets, I suppose the main challenge would be to provide a stimulus to help the economy as well as maintain lower interest rates and control inflation. So how do you see the government fare on these counts when compared to corporate management in countries across the world?
@Radhika-Pandey
Radhika Pandey
@Radhika-Pandey · 5:00
And on the other side, we use this time to introduce reforms and to introduce supply side measures, which during that time, many people criticize that this is not the time to introduce just long standing fundamental reform, but the government of India chose to use this time to introduce longstanding fundamental reforms rather than going in for huge cash transfers. So now what we are seeing in the other country one implication, as I pointed out, is the increase in debt burdens
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@ThinkTank
@ThinkTank · 0:44

@Radhika-Pandey RBI’s digital currency plan and cryptocurrency

Thank you for giving us that outline. Dr. Dr. Radhika Pandey. Know, at the moment, one of the biggest talking points is cryptocurrencies. And a lot of the youth are really looking towards cryptocurrencies as a new way to really exchange transactions and perhaps as a saving tool as well. So while the RBI has been firmly against its use, the Reserve Bank is planning on launching its own version, which is called the digital digital currency Central, which is supposed to be a substitute for cryptocurrencies
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@Radhika-Pandey
Radhika Pandey
@Radhika-Pandey · 4:53
In India, the Reserve Bank of India is opposed to it and it's launching its own digital version of the currency. Now, there are various ways of comparing cryptocurrencies with CBDCs on various metrics. So if we compare cryptocurrencies with the CBDC, which is the central bank digital currency, CBDC is going to be legal tender because it will be guaranteed. It is issued by the central bank
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@ThinkTank
@ThinkTank · 0:36

@Radhika-Pandey Banking sector reforms and public sector banks

Dr. Radhika, before we open this up to questions, I think a conversation around the budget would be incomplete without focusing on the banking sector. So as of 2021, the non performing assets of the banking sector sector have declined to about eight lakh crore as per government estimates. And private sector banks have also posted healthy profits with a reduction a sizable reduction a lot would say in bad loans. So how should the government go about thinking of reform in this crucial sector given the under performance of public sector banks
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@Radhika-Pandey
Radhika Pandey
@Radhika-Pandey · 5:00
So the announcement of 2021 was an important policy announcement and we do hope that going forward, steps would be taken towards actually implementing the proposal that was outlined in the 2021 budget of privatizing to public sector banks. So that is one reform. The other measure of reform that can be introduced in banking sector is to allow more competition in the banking sector space by allowing more licensing of banks
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@ThinkTank
@ThinkTank · 0:33

Open for questions and thank you!

Dr. Radhika, up until then, I just want to thank you again for taking time out to speak with me on Swift and we're looking forward to having some questions on here
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@Wordsmith
Sreeja V
@Wordsmith · 0:19
Good evening Dr. Radhika. I have a question regarding the financial crisis that happened in 2008. Central banks have utilized a lot of measures to enhance liquidity but what else bills have the central banks done to prevent further shocks from occurring
@Radhika-Pandey
Radhika Pandey
@Radhika-Pandey · 1:26
Good evening. So see, from the point of view of central banks, their main mandate is monetary policy and they have very limited tools in their Arsenal to address the a crisis. So on their side, what they can do is to infuse more liquidity and to ensure that credit is available more easily and at more ease rates of interest to those who want it. So businesses, borrowers, those who need credit, they should be able to avail of the liquidity at cheaper rates of interest
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@Ramya
Ramya V
@Ramya · 0:22
Hi Radhika, I have a question for you. The renewable energy sector is set to grow at an estimated five to 6% if the reports are right. So do you view this consolidation of industrial behemoth as a boon to this sector? I would really love to know your thoughts on this
@NimishaDhami
Nimisha Dhami
@NimishaDhami · 0:18

@Radhika-Pandey

Hello. Good evening. Thank you for this insightful conversation. So the question that I want to ask is that as a student of economics, who are some of the thinkers who still influence you to this day from when you first started studying the subject
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@Radhika-Pandey
Radhika Pandey
@Radhika-Pandey · 1:39
Hi Nisha when I started studying economics, I used to be influenced by classical economists as well as Keynesian economists. Jmkins but later on, as we now know, that the situation, the economic landscape has changed a lot. So there are various central bankers that now you should be studying more of their works in the modern times. Basically, I would recommend Joseph Stiglitz, who is a Nobel Prize winner and he even currently writes on contemporary issues on central banking
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@Bmat
Bhomik Mathur
@Bmat · 0:40

Has the govt taken measures to promote the manufacturing sector?

Good evening Dr. Anika. My question to you would be has the Union government in its latest budget done enough to promote the manufacturing sector of the country because again manufacturing is very important sector of a country like India where there is so much unemployment. It's a sector which can absorb a large number of jobs and transform our aggregating economy
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@sudha
Sudha Varadarajan
@sudha · 3:42

debt restructuring

I do remember that there used to be politics in place in the past which are no longer there, which would allow for, I believe, a short period of time like a couple of years for debt principal repayment to come from pre tax funds for Capex assets. If a loan was taken against Capex, then for a couple of years a percentage of that could be repaid, principal could be repaid, pre tax and so on
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@Radhika-Pandey
Radhika Pandey
@Radhika-Pandey · 3:09
Good evening. So yes, manufacturing is an important segment of the economy and as you rightly pointed out the share of manufacturing sector in India's GDP has remained in more or less static. So policy measures are required to enhance the efficiency and productivity in the manufacturing sector. So towards this one of the major scheme that the government has announced is the PLI scheme. That is the production linked incentive schemes. And for a number of sectors within the manufacturing sector the scheme has been announced
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@Radhika-Pandey
Radhika Pandey
@Radhika-Pandey · 5:00
Here the culture is a bit different and therefore such kind of policy responses had to be put in place because there was a lot of evergreening going on from the period of 2008 nine to 2014 15 and that resulted if you see the NPA also that was quite large during that period and only after that we see that NPA pileup has now gone down and even during the pandemic when banks were advancing loans, even then also the NPA the bad loans of banking sector did not rise to that extent
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@Radhika-Pandey
Radhika Pandey
@Radhika-Pandey · 1:21
In fact, most steps need to be taken on the policy side to incentivize production, manufacturing in this area and also to incentivize people households to shift towards more renewable sector. Of course, there will be some cost of transition, that is movement from other sectors to renewable energy. There will be some displacement of employment, there will be some displacement and transition related costs. And the government needs to look into other country's examples to see that how the cost of transition could be minimized
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