The great debate over interest on excess reserves (IOER), base money and short term debt used ‘the floor’ analogy to describe what happens to short term interest rates. But that might not have been quite the right analogy, at least in the US case.
Izzy has already covered Manmohan Singh’s excellent paper and presentation. In it he raises a few points in regard to the supposed floor that IOER sets for rates, and it is worth exploring it a bit more. Read more
Manmohan Singh, India’s prime minister, has appealed to Anna Hazare, the social activist, to halt his 10-day public hunger strike in an anti-corruption campaign that has spurred thousands to take to the streets, reports the FT. Mr Singh, addressing parliament on Thursday, applauded the 74-year-old for his desire to cleanse India of corruption. He offered a full discussion in parliament on proposed anti-graft legislation. The premier made a direct appeal, alongside the leader of the Hindu nationalist opposition Bharatiya Janata party and the speaker of parliament, to Mr Hazare to wind up the fast to safeguard his health. “I respect his idealism. He has become the embodiment of our people’s disgust and concern about tackling corruption,” Mr Singh said.
Indian prime minister Manmohan Singh completed a limited cabinet reshuffle on Tuesday, disappointing those hoping for a significant shake-up that might lift the flagging fortunes of the governing coalition, the FT reports. The government’s second reshuffle this year was seen as an opportunity to bring in younger ministers and talent from outside of the government to fend off perceptions of policy paralysis and draw a line under a damaging telecoms scandal. However, Mr Singh’s changes were confined to switching ministers from one ministry to another, while key posts – including finance, foreign and interior – were left alone. Shekhar Gupta, editor of the Indian Express newspaper, characterised the reshuffle as merely changing “the batting order”. Notable among the changes was the move of Jairam Ramesh, from the country’s environment ministry to the post of rural development minister. During his time as environment minister, Mr Ramesh had won the support of many green activists for subjecting industrial projects to intense scrutiny.
India’s ruling Congress party has suffered another setback after nine of its members of parliament resigned in protest at New Delhi’s failure to carve a new state of Telangana from the existing state of Andhra Pradesh, the FT reports. The resignation on Monday of the nine MPs from the Telangana region has roughly halved the size of the Congress-led coalition’s parliamentary majority at a time when the administration of Manmohan Singh is fighting to regain the initiative aftercorruption scandals. “It is a serious headache, among a whole lot of other headaches,” said E. Sridharan, director of an institute for the study of India at Pennsylvania university in the US. Besides the MPs, 73 members of the Andhra Pradesh state legislative assembly – including 39 Congress members, of whom 11 are ministers in the state cabinet – also resigned, highlighting the strength of local feeling about the Telangana issue.
Manmohan Singh, India’s prime minister, is desperately trying to put his administration’s legislative agenda back on course in an attempt to weather a storm over corruption. The scandal has paralysed the world’s largest democracy, the FT reports. The Congress party-led government introduced proposed legislation in parliament on Tuesday to secure tax and banking reform in the face of a barrage of protest over a cash-for-votes scandal. It is the latest of a series of high-profile corruption scandals to have broken around the premier.
Mukesh Ambani, India’s richest man and a powerful industrialist, has challenged the government of Manmohan Singh, prime minister, to be far bolder in its approach to building India into a leading economy and world power. Mr Ambani, chairman of Reliance Industries, warned on Tuesday of a two-speed India whose divisions could not be addressed by “meaningless” small reforms and a lack of a grand vision among the country’s leadership. He called for an urgent return to “disruptive policies” – such as the 1991 financial reforms that Mr Singh masterminded – to take full advantage of India’s economic potential and to remove “the shackles and free up Indian minds”. In an outspoken address to the nation’s top business leaders he said: “India needs a bold new vision and a feasible action plan”.
Pressure mounted on Manmohan Singh, India’s prime minister, as thousands of workers marched in the capital to protest against inflation, reports the FT. The opposition has been seeking to capitalise on the weakening position of Mr Singh, who is reeling from a spate of corruption scandals that threaten to undermine his reputation for integrity. His ability to manage the economy is also being called into question as India battles the highest inflation of any major Asian economy.
India’s parliamentary deadlock was broken on Tuesday when Manmohan Singh, prime minister, gave way to opposition demands for a parliamentary investigation into a high profile telecoms corruption scandal, reports the FT. The climbdown rescued India’s legislative agenda from months of bitter obstruction by the Hindu nationalist Bharatiya Janata party. The world’s largest democracy has been paralysed by a furore triggered by an official audit that claimed as much as $39bn had been lost from the national exchequer.
Shares in India’s Reliance Communications dropped another 3% to Rp96.75 in Mumbai trading on Thursday after billionaire chairman Anil Ambani was questioned by Indian federal investigators in a widening probe into the awarding of mobile-phone licenses in 2008, reports Bloomberg. The FT earlier reported that Indian prime minister Manmohan Singh had agreed to face a parliamentary investigation into a spiralling corruption scandal that has paralysed the world’s largest democracy. Singh said on Wednesday he was prepared to answer questions from legislators about alleged irregularities in the award of 2G telecoms licences. An official audit, claiming the scandal cost the government $39bn, has rocked a fast-growing sector that attracted investments from some of India’s top business magnates.
Manmohan Singh, India’s prime minister, has accused Indian business leaders of having an “ethical deficit” that could impair their ability to expand internationally, the FT reports. In an unprecedented broadside on Indian business on Tuesday, Mr Singh appealed to corporate leaders to adhere to universal standards of good governance. “Our business leaders are aware that business practices of some corporate houses have recently come under intense public scrutiny for their perceived ethical deficit,” Mr Singh said at the launch of a week celebrating corporate India’s rise. “Our corporate culture must be attuned to the universally accepted values of good governance … we must trust corporate India, as indeed [corporate India] must trust us.” Mr Singh’s comments come as his government is engulfed by several corruption scandals that have dented the credibility of his cabinet and threaten to tar him.
Barack Obama, US president, has unleashed an economic charm offensive on India, telling audiences in Mumbai that their country has “already risen” as a global power and describing the ties between Washington and New Delhi as one of the defining relationships of the 21st century, the FT reports. Mr Obama spent most of a 75-minute interaction with Indian students on Sunday extolling the strengthening US-India relationship. The previous day, he told the country’s business leaders they must open their markets to US exports to deepen a natural alliance between democracies. Bloomberg reports that the US president will meet Manmohan Singh, India’s prime minister, today to discuss India’s strategic role. Mr Obama will also make a speech to India’s parliament.