Banking and Finance
GLOBAL FINANCE _ AN OVERVIEW
Against the background of its long-run goals of price stability and sustainable economic growth and of the information currently available, the Committee believes the risks are weighted mainly toward conditions that may generate heightened inflation pres sures in the foreseeable future.

Indira Gandhi versus Morarji Desai -- The real reason for bank nationalisation
THE nationalisation of major commercial banks in July 1969 was one of the crucial decisions taken by the then Prime Minister, Indira Gandhi. For many years, the Left parties and some radical Congressmen had persistently demanded nationalisation to preven t concentration of wealth in private hands and to mobilise more resources for economic development. The government, however, did not favour outright nationalisation because that would involve payment of large-scale compensation to shareholders of banks, and would create other complications due to the lack of adequate and competent technical personnel. The Government, therefore, decided to introduce social control over them without actually owning these institutions.

Economy
Defence vs development dilemma is back
`GUNS OR butter' is an age-old question that every society must ask itself. In the early years of planning, the Indian leadership struggled hard to meet both these opposing goals. Defence expenditure does eat into the available resources; to that extent, less is available for development. India has been in a state of quasi-alertness, ever ready to battle strident neighbours since Independence _ distinct from the rather more peaceful environment that helped the growth of the South-East Asian countries.

Interest rates -- RBI must be sensitive to growth needs
EYEBROWS were raised when the US Federal Reserve chairman, Mr. Alan Greenspan, hiked the federal fund rate by a quarter percentage point some time back. The move was seen as an effort to tame inflation, which could affect consumer prices. However, it cau sed some unease as only last year the Fed had raised interest rates thrice (in a bid to save the world's financial markets by rescuing the hedge fund, Long-Term Capital Management).

WIDE CANVAS
IN RECENT days, the Government of Mr. Atal Bihari Vajpayee has scored impressively on the economic front, the most important news being the step to free foreign direct investment from the shackles of control. This, of course, is not to suggest that all o ur economic ills will be tackled effectively by this move because FDI, as of now, forms a very small part of gross domestic product. However, the point can still be made that, if the new policy on FDI is implemented effectively, it can be expected to imp art the proper growth impulses at the right points which, through the multiplier effect, could generate a favourable impact on GDP within a few years.

Editorial
Symbolic gesture
THE FACT THAT the `operationalising' of the India-Sri Lanka free trade agreement (FTA) has been effected a year after its scheduled date indicates clearly that the entire process was plagued by problems, some of the differences between the two countries being rooted in the distrust of each other's basic motives. Even so, since the agreement, for whatever it is worth, is now ready to be implemented, hopefully both the countries will play their roles constructively, the ultimate objective of course being to put in place the South Asian Free Trade Area (SAFTA) of which the India-Sri Lanka trade accord is a building block.

Miscellaneous
Disaster mitigating, the World Bank way
NATURAL DISASTERS have become tragically recurring events for many of the world's poorest countries. Floods in Venezuela and Bangladesh; cyclones in India and Vietnam; earthquakes in Turkey, Greece, Taiwan, and Armenia; Hurricanes Mitch, Andrew, George a nd Joan in Central America and the Caribbean, the ravages of El Nino and La Nina from Peru to the Far East... Just as the emergency response stage of one catastrophe ends, another earthquake, cyclone or hurricane hits. Last year alone, disasters killed m ore than 60,000 people, and many more lost their homes and livelihoods, and are still rebuilding months later, as the global community's attention shifts elsewhere.

Page One | Index | Home