Gurbachan Singh | Ideas for India

Gurbachan Singh
ISI, Delhi Centre; Ashoka University
Gurbachan Singh is an independent economist, and adjunct faculty at the Indian Statistical Institute (ISI), Delhi Centre. He is also visiting professor at Ashoka University. His research is at the interface between finance and macroeconomics. His emphasis is on theory to explain the real world; his writings are primarily on policy. He writes research papers that are in-depth, fresh, exploratory, simple, and with a broad perspective. The main motivation is to understand and highlight the shortcomings of the system that lead to macro-financial instability in one way or another. He is also a keen teacher; his main teaching is on ‘Finance and Volatility’ at ISI Delhi Centre. He received his Ph.D. from ISI Delhi Centre, M.A. from Delhi School of Economics (DSE), and B.A.(Hons.) from Hindu College, University of Delhi. His other interests include good cinema.

Articles By Gurbachan Singh
Huge bank losses, frauds, and economic risks
Posted On: 09 Mar 2018

Topics:   Finance
Tags:   banking

Banks have incurred humongous losses in India. The public authorities have taken corrective measures primarily in the form of strengthening laws, audits, and the enforcement processes. In this article, Gurbachan Singh argues that while this is indeed required, at the margin there is a much greater and urgent need to improve assessment of the economic risks in a dynamic economy.
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Self-employment: Elephant in the room
Posted On: 22 Jan 2018

Topics:   Jobs

While nearly half of the labour force in India is self-employed, persistent low standards of living on a large scale imply that not many of these are ‘entrepreneurs’. Much of the self-employment is in low-productivity occupations or businesses. In this article, Gurbachan Singh contends that if financial institutions, labour laws, redistributive policy, and educational certification worked well, low productivity self-employment would give way to more efficient and productive businesses.
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Bubble in Bitcoin or elsewhere?
Posted On: 11 Dec 2017

Topics:   Finance

The price of Bitcoin has skyrocketed. Gurbachan Singh contends that there may or may not be a bubble in cryptocurrencies. If there is a bubble, then the prices will fall eventually, and the story will end there. If, however, there is no bubble in cryptocurrencies, then there can be interesting implications for other important assets.
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Recapitalisation of public sector banks, and financial repression
Posted On: 05 Nov 2017

Government of India recently announced its decision to infuse Rs. 2.11 trillion of fresh capital into public sector banks, financed partly through recapitalisation bonds. In this article, Dr Gurbachan Singh discusses how by opting for normal government bonds instead, issues of financial instability and financial repression could have been avoided.
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Should India hold US$400 billion of foreign exchange reserves?
Posted On: 03 Oct 2017

RBI’s foreign exchange reserves have now crossed the US$400 billion mark. In this article, Dr Gurbachan Singh discusses why India’s Central Bank should not hold such large reserves.
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Purchasing power parity: Some concerns
Posted On: 04 Sep 2017

In this article, Dr Gurbachan Singh discusses how it may be problematic to make international comparisons using PPP that is based on observed prices, and why effective prices should be used instead.
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Towards financial prescription
Posted On: 24 Jul 2017

The Securities and Exchange Board of India has proposed that the distributors of mutual funds should only be allowed to sell financial products and not act as financial advisers for customers. Drawing analogies from the regulatory frameworks for driving on public roads and practising medicine, Gurbachan Singh contends that this is a step in the right direction but much more needs to be done to regulate financial advice.
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Reconsidering the 4% inflation target
Posted On: 16 Jan 2017

Tags:   inflation

The RBI targets an inflation rate of 4%. In this article, Gurbachan Singh takes an in-depth look at the prevailing macroeconomic policy regime. This exercise provides an insight, which forms the basis for an alternative policy regime under which it is makes sense to target a lower inflation rate.
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Demonetisation: Some very counterintuitive effects in practice
Posted On: 18 Dec 2016

Due to demonetisation, holders of black money lose if they cannot exchange their notes or sell these in the black market. It is widely reasoned that this implies an equal financial gain for the public authorities. In this article, Gurbachan Singh shows that this logic is flawed.
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A closer look at demonetisation
Posted On: 13 Nov 2016

In this article, Gurbachan Singh contends that black money and white money are simplistic concepts; there is a grey area as well. In his view, the economic effects of demonetisation in terms of real estate, seigniorage, and political funding are complex. The measure can be useful in curbing black money only if supplemented by other policies on a sustained basis.
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The tussle between RBI and Ministry of Finance: A different dimension
Posted On: 18 Aug 2016

The popular belief about the tussle between RBI and the Ministry of Finance is that it is an issue of the trade-off between inflation and economic growth, with the former more focussed on controlling high inflation and the latter emphasising high growth. However, according to Gurbachan Singh, there is a different dimension to the story; the Ministry doesn’t fully appreciate that RBI cannot ignore market forces while making announcements about interest rates.
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Public sector banks: The more things change, the more they stay the same
Posted On: 21 Jul 2016

Tags:   banking

Banks Board Bureau has been set up to help the government appoint heads of public sector banks (PSBs) and to advise on important issues in banking. In this article, Gurbachan Singh asks basic questions – what is the rationale for PSBs? Was there a rationale for the nationalisation of banks even in 1969? In his view, privatisation is needed but as a second-best solution, meaningful autonomy can be useful.
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Recapitalising public sector banks by disinvesting in RBI: Right and wrong
Posted On: 09 May 2016

The Economic Survey 2015-16 put forth the argument that the Government of India could reduce its capital in the RBI from its current large level and use it to increase its capital in public sector banks, which face a capital shortage. RBI Governor Raghuram Rajan has stated that this argument is not valid. In this article, Prof. Gurbachan Singh contends that while the argument does not hold in general, it does so for all practical purposes under the present conditions.
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Land in India: Market price vs. fundamental value
Posted On: 29 Feb 2016

Topics:   Finance , Land

The Real Estate (Regulation and Development) Bill, 2015, is focused on protecting the few home buyers who can afford to buy homes but does not address the issue of high land prices, which is a very serious problem. This column demonstrates that the market prices of land in India are very high compared to fundamental values, and to market prices in developed countries.
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Fiscal deficit and growth slowdown
Posted On: 17 Feb 2016

Ahead of the Union Budget, several policymakers and economists in India have advocated increasing public spending to spur economic growth. In this article, Gurbachan Singh argues that even if India is facing a slowdown, a larger fiscal deficit is not the solution – more so now that RBI and the government have adopted inflation targeting. The prospect of a fiscal crisis may be farfetched but India may be incurring costs differently.
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Reining in gold imports
Posted On: 12 Jun 2015

Tags:   imports , RBI

In an attempt to reduce gold imports, the Indian government has proposed three new schemes – gold monetisation, sovereign gold bonds, and domestic production of branded gold coins. In this article, Prof. Gurbachan Singh diagnoses the market failure and government failure involved in large gold imports, and provides a broad perspective on the issue. He examines the potential effectiveness of the schemes, and suggests policy alternatives.
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Inflation targeting in India: Right and wrong
Posted On: 31 Jan 2014

An RBI-appointed Expert Committee has recommended targeting a 4% inflation rate, but allowing it to vary between 2% and 6%. This column takes a different position on the target and leeway. It argues that achieving truly low and stable inflation alongside macroeconomic stability is not as difficult as is usually made out to be, if the right policies are in place.
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What is mitigating a financial crisis in India?
Posted On: 08 Nov 2013

The recent turmoil in the currency market and the general slowdown in growth in India are disturbing. However, India has by and large performed better in terms of macro-financial stability as compared to many parts of the world. This column discusses the problems confronting policymakers, and current policy responses and associated costs, and suggests alternative policies.
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The market for inflation-indexed bonds
Posted On: 31 May 2013

On 15 May 2013, the Reserve Bank of India announced that it would begin monthly issues of inflation-indexed bonds starting June 2013. These bonds, wherein in the principal amount adjusts according to changes in the price level, are already in use in the developed world and their introduction in India is a welcome development. However, they are likely to have different implications for India given the presence of the Statutory Liquidity Ratio regulation in the country.
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Why India should not further delay a credit line from the IMF
Posted On: 03 Apr 2013

India is expected to run a current account deficit of more than 4% of its GDP this year. At the moment this can be paid for with money coming in from abroad – but what if the flow of money were to suddenly stop? This column argues that India should not further delay a credit line from the IMF.
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