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20 views8 pages

Presentation PDF

Uploaded by

aditlunkad269
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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This YouTube video transcript presents a comprehensive overview of how

the economic machine works in the Indian context, as explained by Mr.


Utpal Sheth from FLAME University. He discusses various policy levers and
their impact on the economy, offering insights into the current economic
situation and future outlook. Here's an explanation and key takeaways
from his presentation:
KEY POLICY VERTICALS

1) Monetary Policy focuses on managing money


supply, interest rates, and exchange rates. Key
components include M3 growth and monetary slack,
liquidity in the banking system, the yield curve, and forex
reserves. Recently, there's been lower monetary slack,
increased liquidity, a steep yield curve, rupee
appreciation, and rising forex reserves.
2) Fiscal Policy involves taxation, government
spending, and borrowing. Key aspects are tax
revenue, disinvestment, and the fiscal deficit. India
has seen a rise in indirect taxes and a significant
increase in the combined fiscal deficit.
•
3) Economic Policy encompasses structural
changes and reforms. Significant reforms like JAM,
UPI, GST, IBC, and corporate tax cuts have been
implemented. The government's focus has shifted
towards supply-side management and fiscal
prudence.
4) External Policy deals with trade, investments, and balance
of payments. Key areas include the trade balance, current
account, and foreign investments (FDI & FPI). The non-oil
trade balance has improved, the current account has turned
positive, and foreign investments have increased.

5) Macro-prudential Policy focuses on the stability of the


financial system. Measures like the Asset Quality Review
(AQR), bank recapitalization, and the IBC aim to create a
more resilient financial system.
t
CONSTRAINTS AND CHALLENGES

1) Low Capacity Utilization: This has been a persistent issue, hindering fresh private capex.

2) Supply-Side Disruptions: The COVID-19 pandemic significantly impacted the supply side.

3) Saving and Credit Growth: While savings have increased, a significant portion was
absorbed by government borrowing. Credit growth has been subdued.
•
4) Fiscal Deficit and Debt Management: Managing the elevated fiscal deficit and debt levels
will be critical in the coming years.
•
5) Infrastructure Investment: Revitalizing infrastructure investment is essential.
•
6) Velocity of Money and Credit Multiplier: Both have declined, indicating that the impact of
increased money supply might be limited unless credit growth picks up
Key Takeaways from the Q&A Session

1) The difference between CPI (Consumer Price Index) and WPI (Wholesale Price Index) can be significant,
indicating variations in inflation at the consumer and wholesale levels.

2) M3 growth is a crucial indicator for future nominal GDP growth, and a higher monetary slack might be
needed to support a strong recovery.

3) While acknowledging potential resistance to change, the speaker believes the current macro-level reforms
will ultimately benefit Indian economic growth.

4) Regarding investment, the speaker suggests focusing on identifying long-term trends and having the
conviction to stick with those choices.

5) In inflationary environments with negative real rates, assets like gold, real estate, and equities tend to
perform better. However, various factors influence asset performance.
CONCLUSION

In conclusion, Mr. Sheth's presentation provides a


detailed analysis of the Indian economic machine,
highlighting the interplay of various policies, the
structural reforms undertaken, the existing
challenges, and the prospects for future growth. He
emphasizes the importance of sustained reforms,
prudent fiscal management, and addressing the
issues in the financial sector to ensure a robust and
sustainable economic recovery.t

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