The RBI and the real sector

Whatever may have been the American experience, in India we have to be aware of a much higher degree of what economists, borrowing a term from insurance, call moral hazard

T C A Srinivasa-Raghavan  |  New Delhi 

T C A Srinivasa-Raghavan

Last month someone posted a very interesting link on Twitter: https:// www.newyorkfed.org/ research/epr/2018/ epr_2018_political-origins_sastry.html It is about something that matters in the current Indian context: The politics of central bank lending, namely, can a central bank lend to the real sector instead of just the financial sector.

The author is an economist called Parinitha Sastry who used to work at the New York Fed. The paper is about Section 13 of the Federal Reserve Act that allows the US Fed to lend to the real part of the private sector, that is, the parts that make real ...

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First Published: Fri, August 10 2018. 22:51 IST