C. P. Chandrasekhar’s Blog

The fall in remittance flows following the loss of migrant jobs in leading host countries has been among the many adverse effects of the Covid crisis on developing countries. While there have been job losses across the board in regions and countries hosting a large proportion of the world’s migrant workers, job losses for foreign workers have been greater than those for domestic workers in most. Moreover, a major region hosting international migrants, constituted by the Gulf Cooperation Council countries, has seen economic conditions worsen also because of the steep fall and continued low level of oil prices. As is…

South Korea, long lauded as a “model” for developing countries looking to transit to developed status, had lost some of its sheen after the 1997 Southeast Asian financial crisis. Yet, the return of stability after the crisis and the global success of its conglomerates (like Samsung and LG) has kept the country in the limelight. More recently, South Korea has been included among countries that managed the Covid-19 pandemic well. Though the test positivity rate for the country rose from below 1 per cent in early October to 2.5 per cent at the end of the first week of November,…

In a move that was expected, the US Justice Department has filed an anti-trust lawsuit against internet search giant Google, alleging that it resorts to anti-competitive practices to ensure its dominance in the search engine space and, through that, over the related online advertising revenues. As a leading example the case cites the successful effort to exclude the competition through a deal, in place since 2005, in which Google pays Apple around $8-12 billion a year in return for pole position as the default search engine in Apple’s devices and the Safari browser. Around half of Google’s search traffic is…

A chapter in the October 2020 edition of the IMF’s biannual publication, Fiscal Monitor, argues that as a response to the Covid-19 pandemic, and to support the recovery as Covid-19 induced lockdowns are relaxed and the world moves to a post-pandemic phase, enhancing public expenditure is crucial. So, governments, the IMF argues, must bother less about increasing their levels of indebtedness and choose to spend instead. While the ongoing phase of partial lockdowns of varying severity, that spending must focus on saving lives and livelihoods, as these shut downs are relaxed and the world finally moves to a post-pandemic era,…

The Covid-19 pandemic has forced governments across the world to increase reliance on debt. The IMF projects the fiscal deficit as a proportion of GDP in emerging markets and middle-income economies (EMMIEs) as a group to rise from 4.9 per cent in 2019 to 10. 7 per cent in 2020 (Chart). That increase is only partly the result of enhanced spending to address the health emergency, compensate individuals and firms for loss of incomes and earnings, and counter the demand compression that keeps production down even after the lifting of lockdowns. A rise in the deficit and the resort to…

The office of the Comptroller and Auditor General (CAG) of India, in its Report 4 of 2020 relating to Union finances, has criticized the Centre’s handling of funds collected from various cesses levied for specified purposes. Cesses collected for designated purposes have to be transferred to specially created funds and not retained in the Consolidated Fund of India (CFI). Once transferred, they must then be deployed to further the identified purpose. The Centre’s violations are many.According to the CAG’s report, in practice, there are cesses with no special reserve fund associated with them, such as a ‘social welfare surcharge’ on…

Provisional trade figures released by the Ministry of Commerce indicate that India’s aggregate trade balance over the period April-August 2020 was in surplus to the tune of $14.2 billion, as compared with a deficit of $45.11 billion in the corresponding months of 2019. In normal times this emergence of a surplus trade balance for a country that is chronically deficit would be a welcome development. But these are not normal times. Global growth has slowed since 2019, which would have adversely affected India’s exports. Oil prices have been volatile, but have broadly swung in India’s favour reducing the country’s oil…

While it was expected that the Indian economy will experience contraction during the second quarter of 2020, the 23.9 per cent fall in GDP reported by the National Statistical Office came as a surprise to many. For some the surprise lay in the sheer magnitude of the contraction, which was projected by forecasters to be less than 20 per cent. For others, the surprise was that, despite recent controversies about political interference in the reporting of economic statistics, the figure actually provided was as high as it was, and possibly closer to the truth than what the government may have…

Declared the leading threat to global stability by the United States and a group of its allies, China has been accused of transgressions varying from stealing hi-tech secrets, spying, and interfering in domestic politics abroad to spreading viruses. Sometimes, even normal measures adopted by countries as part of their international economic relations are presented as crimes when practised by China. A case in point is lending abroad, especially to developing countries, including the poorest among them. China, of course, deploys its hard currency surpluses in multiple forms in a wide range of countries, including the US, with a small share…

Multiple indicators reveal that the pre-pandemic deceleration in growth segued into a deep recession that persists six months after the first reported Covid-19 case. But official optimism hasn’t waned. Some spokespersons promise a V-shaped recovery. Others clutch at every straw in sight. One such is evidence of record and rising levels of foreign exchange reserves (gold, foreign currency assets and SDR holdings) with the Reserve Bank of India (RBI). On August 7, 2020, total reserves stood at $538.2 billion, which, even if the economy were not in the midst of the ongoing recession, would be adequate to cover almost a…