Urjit Patel resigns as RBI governor

[Golden_Rule]

I would like to float this idea of a debate here -

why should we use a part of the forex reserves for infrastructure projects? (not whole of the reserves - but a certain part of it)
this could be a replacement for us instead of payign the ADB/WB for these projects hefty interest rates, we could pay the interest back to RBI itself. thats like paying back our own people for building our own country (please give me some valid points against this. I am genuinely interested to learn and debate - not blindly support one view over the other)

Gurumurthy in his speech says the amount of rupee being printed is directly related to amount of dollars coming into the RBI or into India as investment via FII - is this true? if yes - shouldnt India decide how much money needs to be printed?
Smaller economies peg their currencies against bigger economies (like the $) to create confidence among investors - this is what I have seen. why should India' currency be pegged at how much $ comes into the system? (please let me know if this is even true - I am trying to find sources for this claim by Gurumurthy).

This is the biggest myth of economics to peg a currency against another.

Economics is pure and simple supply and demand - of currency as well as the goods and services.

Simply leveraging one will toss the other - putting currency in market which do not successively drive increase in goods and services will cause inflation - the extreme example is that of Zimbabwe. The case of more money chasing lesser goods and services. Similarly higher goods and services produced without expansion of money supply increases demand for capital causing interest rates to go up ultimately strangulating the boom of goods and services into a recession or depression.

Foreign reserve is a separate story. It is simply needed to meet the foreign trade.

Juggling between the fiscal and monetary policy is the final straw in this game.

Nothing much beyond this.

Every other policy acts as promoter, that increase the catalytic activity, even though they are not catalysts by themselves.

 

[vstol Jockey]

Urjit Patel did a very smart thing. he kept quite till the last policy review for this fiscal was done and after retaining repo rates and other parameters, he decided to resign. Now BJP will not be able to exploit his resignation as the next policy review will take place when the nation will be well into general elections. He has done his job of ensuring a serious damage to economy and also ensure that Modi losses 2019.

 

[Guynextdoor]

Urjit Patel did a very smart thing. he kept quite till the last policy review for this fiscal was done and after retaining repo rates and other parameters, he decided to resign. Now BJP will not be able to exploit his resignation as the next policy review will take place when the nation will be well into general elections. He has done his job of ensuring a serious damage to economy and also ensure that Modi losses 2019.

urjit patel was hired by Modi- so you are saying he was a congress plant to damage modi before elections? And modi hired this double agent?

 

[vstol Jockey]

urjit patel was hired by Modi- so you are saying he was a congress plant to damage modi before elections? And modi hired this double agent?

He had left Modi in 2007 and after that he was appointed Dy Governor by UPA on recommendation of Mukesh Ambani in 2013 as he had served with him for between 1996-2007.

 

[Bharath]

Simply leveraging one will toss the other - putting currency in market which do not successively drive increase in goods and services will cause inflation - the extreme example is that of Zimbabwe. The case of more money chasing lesser goods and services. Similarly higher goods and services produced without expansion of money supply increases demand for capital causing interest rates to go up ultimately strangulating the boom of goods and services into a recession or depression.

agree with this.

but the way zimbabwe's inflation took off - is not the same as to how US' printing of a trillion $s worked. again - China does similar to keep buying dollar and keep its currency rate low. there is a bit more to using the resevers + printing money than just printing as much as you can. For example:

what should the policy of printing money in India? how much value of money should be printed? what should be the decision/policy to control the flow of money.

Imagine this scenario: if a real estate value increases 10 times in 10 years (hypothetical) - but the amount of money printed/available has increased only 5 times - what happens to the value of the property?

 

[Golden_Rule]

agree with this.

but the way zimbabwe's inflation took off - is not the same as to how US' printing of a trillion $s worked. again - China does similar to keep buying dollar and keep its currency rate low. there is a bit more to using the resevers + printing money than just printing as much as you can. For example:

what should the policy of printing money in India? how much value of money should be printed? what should be the decision/policy to control the flow of money.

Imagine this scenario: if a real estate value increases 10 times in 10 years (hypothetical) - but the amount of money printed/available has increased only 5 times - what happens to the value of the property?

India's problem can not be solved without solving rural woes. And rural problems cannot be solved by handing over money to them. There is very strong need to develop "value-added and value-returning local networks" to the producer of goods and service locally. The exploitation by middlemen need to stop as well as scale and economy of production needs to be achieved. Rural transformation. And networks of - roads, transportation, trade, communication with the market, value addition, conversion - all of these do exist, but are exploitative. The key question is how to eliminate this exploitation?

Like Cell towers, bunch of villages, say 20-30 of them should be connected to each other say with a light rail like a cell, and then people can hop from one to another cell at the intersection points. Common infrastructure schools, colleges, hospitals, public utilities, rural service centers etc should be within 5-10 kms. One is city planning, other is trade planning - connecting the producer of goods and service with the money supply and the market.

Government should initiate one such scheme in every district or state to begin with, take feedback, understand the teething issues and expand.

The attraction of rural population towards towns and cities need to be eliminated by creating opportunities locally.

Certain products should be restricted to the SME's. No import also for these products. Real estate problem will get auto solved.

Land and building record for every square foot of India needs to be digitized. Building procedures should be made easy and smooth. Illegal construction should be dealt with strictly. Law of the land should be enforced and prevail.

 

[Bharath]

Like Cell towers, bunch of villages, say 20-30 of them should be connected to each other say with a light rail like a cell, and then people can hop from one to another cell at the intersection points. Common infrastructure schools, colleges, hospitals, public utilities, rural service centers etc should be within 5-10 kms. One is city planning, other is trade planning - connecting the producer of goods and service with the money supply and the market.

Government should initiate one such scheme in every district or state to begin with, take feedback, understand the teething issues and expand.

MNREGA was supposed to be this - instead it became a money hogger for corrupt middle men.

However - the basic question still remains here:
Can/Should the government use the monies from RBI - either through mandating more printing (in very limited quantities) or through using the reserves (not full reserves - only a mandated part that is to be determined by due process) or through using the rupee interests that RBI gets?

 

[Guynextdoor]

@vstol Jockey modi just put an MA history man who was incharge of demonetization as RBI head. 'Progress'

 

[vstol Jockey]

@vstol Jockey modi just put an MA history man who was incharge of demonetization as RBI head. 'Progress'

Bhai kabhi toh sach bola karo.
Education
Das was schooled at the Demonstration Multipurpose School, Bhubaneswar, and then obtained bachelor's (BA) and master's degrees (MA) in history from the St. Stephen's College at the University of Delhi. He did advanced financial management course from IIM Bangalore and development banking and institutional credit from the NIBM. He also got in-service professional training in financial management in Institute Public Enterprises. He did diploma in basic project management from Administrative Staff College of India and mid-career level training from IIM Calcutta along with two programme implementation course from Himachal Pradesh Institute of Public Administration and Institute of Management in Government.

Also please note that he has nearly exclusively served in economic affairs and Revenue streams as an IAS officer. He has better job credentials to be RBI Governor than Urjit and Raghram Rajan who are more of sand model tacticians with zero field experience.

 

[Golden_Rule]

MNREGA was supposed to be this - instead it became a money hogger for corrupt middle men.

However - the basic question still remains here:
Can/Should the government use the monies from RBI - either through mandating more printing (in very limited quantities) or through using the reserves (not full reserves - only a mandated part that is to be determined by due process) or through using the rupee interests that RBI gets?

Investment in rural upliftment should be looked upon as a "capital investment" - CapEx. But to make a bigger sense out of the investment, the government has to look for returns. And those returns will happen where you enable the rural sector through CapEx infrastructure and providing marketing support for products made out of local produce. It will also attract urban population to such rural areas once all amenities are available there.

To answer your question, I think a right mix and balance from all three sources of funds is ideal.

 

[Guynextdoor]

Bhai kabhi toh sach bola karo.
Education
Das was schooled at the Demonstration Multipurpose School, Bhubaneswar, and then obtained bachelor's (BA) and master's degrees (MA) in history from the St. Stephen's College at the University of Delhi. He did advanced financial management course from IIM Bangalore and development banking and institutional credit from the NIBM. He also got in-service professional training in financial management in Institute Public Enterprises. He did diploma in basic project management from Administrative Staff College of India and mid-career level training from IIM Calcutta along with two programme implementation course from Himachal Pradesh Institute of Public Administration and Institute of Management in Government.

Also please note that he has nearly exclusively served in economic affairs and Revenue streams as an IAS officer. He has better job credentials to be RBI Governor than Urjit and Raghram Rajan who are more of sand model tacticians with zero field experience.

Doing short term course in finance which is not even equal to mba is not a substitute to PhD and his only accomplishment is being modi’s ooodle in executing the botched demonetization effort. Modi now has his poodle in RBI.

 

[vstol Jockey]

Doing short term course in finance which is not even equal to mba is not a substitute to PhD and his only accomplishment is being modi’s ooodle in executing the botched demonetization effort. Modi now has his poodle in RBI.

I do not AGREE with your POV that he did short term courses and therefore can't be equated with a PhD. Work experience is most valuable thing. There is a saying, experience is the cheapest thing to buy provided you get it second hand. This man has run states like Tamilnadu and also has best exposure to Indian financial institutions.

 

[Bharath]

Doing short term course in finance which is not even equal to mba is not a substitute to PhD and his only accomplishment is being modi’s ooodle in executing the botched demonetization effort. Modi now has his poodle in RBI.

Current Fed Chairman's education:

n 1972, Powell graduated from Georgetown Preparatory School, a Jesuit university-preparatory school. He received a Bachelor of Arts in politics from Princeton University in 1975, where his senior thesis was titled "South Africa: Forces for Change."[11] In 1975–76, he spent a year as a legislative assistant to Pennsylvania Senator Richard Schweiker (R),[12][13] who had been named by Ronald Reagan as his probable vice presidential running mate on the 1976 ticket, had Reagan succeeded in securing the GOP nomination.

Previous Fed Chairman Benrake's impressive credentials - under whose guidane we had the financial crisis:

Bernanke attended Harvard University in 1971,[25] where he lived in Winthrop House, as did the future CEO of Goldman Sachs, Lloyd Blankfein, and graduated with an A.B. degree, and later with an A.M. in economics summa cum laude in 1975. He received a Ph.D. degree in Economics from the Massachusetts Institute of Technology in 1979 after completing and defending his dissertation, Long-Term Commitments, Dynamic Optimization, and the Business Cycle. Bernanke's thesis adviser was the future governor of the Bank of Israel, Stanley Fischer, and his readers included Irwin S. Bernstein, Rüdiger Dornbusch, Robert Solow, and Peter Diamond of MIT and Dale Jorgenson of Harvard.[26]

 

[Bharath]

Doing short term course in finance which is not even equal to mba is not a substitute to PhD and his only accomplishment is being modi’s ooodle in executing the botched demonetization effort. Modi now has his poodle in RBI.

I actually do agree with you the there is no subsitutue for good education - PHD in economics would have been a great addition to the understanding and the skill set of an RBI chairman.

I still want to know what is the issue in using a part of the reserves held by the RBI in infra projects?

I asked 3 questions:
Can/Should the government use the monies from RBI -
either through mandating more printing (in very limited quantities) or
through using the reserves (not full reserves - only a mandated part that is to be determined by due process) or
through using the rupee interests that RBI gets?

please explain to me your view on why we should or should not.

 

[_Anonymous_]

I actually do agree with you the there is no subsitutue for good education - PHD in economics would have been a great addition to the understanding and the skill set of an RBI chairman.

I still want to know what is the issue in using a part of the reserves held by the RBI in infra projects?

I asked 3 questions:
Can/Should the government use the monies from RBI -
either through mandating more printing (in very limited quantities) or
through using the reserves (not full reserves - only a mandated part that is to be determined by due process) or
through using the rupee interests that RBI gets?

please explain to me your view on why we should or should not.

There's a saying in Marathi - Gaadhva pudhe geeta vaachli.

You've read the Geeta to an a5s.