India distracted by ideological considerations, says Nouriel Roubini

While speaking on the monetary policy-related aspects, Roubini also flagged up the issue of RBI autonomy.

Indian policymakers have been “distracted” by ideological considerations, when the economic slowdown deserves the most attention, American economist Nouriel Roubini said on Thursday.

Foreign investors get “worried” by scenes of protests on the streets, the professor at New York University’s Stern School of Business said, warning that economic slump can make a regime unpopular.

The comments from Roubini come at a time when official data showed that GDP growth may to slip to 11-year-low of 5 per cent this fiscal, and amid growing protests across the country against the Citizenship Amendment Act, which critics allege as being discriminatory against the Muslims. “The macroeconomic policies are not where they should be, structural policies are not where they should be,” Roubini said, while speaking at an event organised by CFA Society India.

In a conversation with global brokerage firm Morgan Stanley’s Riddham Desai, Roubini rued that Indian policymakers are focusing on other aspects despite global headwinds like the impacts that can be caused due to a rise in oil prices amidst the US-Iran conflict. x“The attention of the policymakers should have been concentrated on the economy and is instead distracted by political things, ethnic things and other things to do with ideology,” Roubini said.

Uncertainties are not good for the economy, he said and referred to President Bill Clinton’s famous phrase ‘It is the economy, stupid!’ to warn that the policies adopted may not pay political dividends as well. “You may be popular initially because of politics and ideology but if the economy slows down, you will be losing your popularity,” Roubini said.

He said the Indian economy was in a “slowdown” and the declining growth will “probably stabilise” in 2020.He bracketed India among the emerging markets where a growth pick-up is up to two quarters away.

While speaking on the monetary policy-related aspects, Roubini also flagged up the issue of RBI autonomy. "There has been some concern on how much the RBI is independent, than what it used to be," he said... Read More

Indira Gandhi 2.0': RBI coup, CBI fight signs of Modi's authoritarian ways

One institution that is standing firm is India's Supreme Court, although it too has faced challenges.

When Reserve Bank of India (RBI) governor Urjit Patel abruptly resigned on Monday, it stunned many people in government and business circles.

Patel's decision, which came after months of bad blood between India's central bank and the government, is the latest sign that the ruling Bharatiya Janata Party (BJP), led by Prime Minister Narendra Modi, is increasingly demanding that it get its way in the country's premier institutions.

From the RBI, the government demanded a reduction in lending curbs and a share of its surplus reserves.

Patel was appointed by Modi, but he resisted the demand. With him gone, and his replacement being a loyal ex-government bureaucrat, Modi is now expected to get most of what he wanted.

Other institutions know what it's like. Those who have been in the Hindu nationalist government's crosshairs include India's equivalent of America's FBI, its statistics authority, the civil service, the state media, and even Modi's own cabinet.

Sources in all of those areas have told Reuters they face political interference and a drive for centralised decision-making from a government under pressure to deliver results before a general election due by May next year. The BJP's defeats in some key state elections this week will pile on additional pressure.

The prime minister's office did not respond to a Reuters request for comment on the subject. The government's main spokesman declined to comment.

Modi has not held a news conference during his time as prime minister and interviews are few and far between. He prefers to use Twitter to communicate and has a monthly radio broadcast to the nation.

Some political analysts and government officials label him as authoritarian. They say such autocracy is a dangerous game in India given the complex ethnic, religious and caste divisions among its 1.3 billion people.

"You can't govern like you do in China," said Mohan Guruswamy, founder of the Centre for Policy Alternatives think-tank and a former finance ministry official.

"You have to constantly build consensus. Even the British consulted people, and the Mughals co-opted local kings into their army," he said, referring to rulers in India before independence.

Others see the RBI merely as the latest battleground in a broader culture war between right-wing Hindu nationalists allied with the BJP, and a liberal intelligentsia that still dominates India's legal system, academia and English language media.

"The right feels like these institutions are rigged by the left," said Harsh Pant, a political scientist at the New Delhi-based Observer Research Foundation.

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