Boom and Bust - Growth or Recession
Actions regarding the same were palpable in some of the regulatory reforms taking place. For example attempts to reform RBI to allow more liquidity in the market by easing interest rates. Which RBI governor continues to resist due to high Inflation rates.
Translating the macro economic changes in terms of how it impacts society, we can see that high inflation especially food inflation, reflects poor state of Agriculture output and high demand.
Considering ongoing agitation of 'Jai Kisan', highlights the challenges faced by farming community, who continue to be dependent on farm income with no source of growth, in opportunities to consume or improve standard of living. Though the latter part is not completely true. Though the level of consumption and improvement in standard of living, continues to remain modest or even poor in compared to rising standards of consumption and living in larger cities.
With majority of Indians residing in rural parts have been left behind in the growth story of India. The monetary policies are not guiding how the growth trajectory will be shaped instead it is the Banks who are shaping the economy based on cycles of returns.
Viability of Debt Investment in rural communities may have returns but comes with high risks, due to changing climate, local conditions and commodity market. With financial market in India catering to rural population remains unorganized, such as money lenders, micro credits.
The wealth generated in India continues to be locked down in real estate sector of big cities leaving behind huge acreage of water behind dams feeding the cities. With changing climate, water use is under stress between rural as well as urban communities.
If GIFT India can truly leverage a large rural population to fuel growth in Financial Services it can truly contribute in shaping economy of a trajectory of sustainable growth. Though current Political Economy, Political Structure and Entities are vested in networks of extractive growth, and have been consuming resources at high pace.
This has led to creation of large infrastructure lock downs for cities, with huge financing leverage in form of Infrastructure Bonds, and Sovereign Debt. What would happen if we can pay no more, the liquidity crunch ensues due to spooking of capital markets.
This gives rise to opportunities to innovate monetary instruments, say for example backed by carbon quotient can truly help bring liquidity in the market at the same time check growth of consumption as well as extraction.
In summary, who thinks infinite growth on a finite planet is either a mad men or an economist.
