Vol. 5 No. 2 (Mar-Apr) (2024): Indian Public Policy Review

Stylized business cycle facts for South Asia are both similar and different from other regions. They show the dominance of supply shocks, often amplified by macroeconomic policies and procyclical current accounts. Interest and exchange rate volatility rose initially on liberalization, but fell as markets deepened. A gradual approach to openness and market development, with flexible exchange rates, that avoided complete liberalization, worked well initially. But a combination of excessive government/foreign borrowing and inadequate reserves made it difficult for smaller countries to withstand the multiple external shocks that began with the global pandemic. Domestic ability to smooth shocks and global safety nets are both essential. India benefitted from growing diversity, evolution to countercyclical macroeconomic policy better suited to structure and a good coordination of monetary and fiscal policies, with balance between demand stimulus and continuing supply-side reforms. Reserves and capital flow management policies helped insulate from global shocks. Intervention damped excess exchange rate volatility, reducing risk premiums.

The size of fiscal deficits and sustainability of public debt levels remain a key macroeconomic policy problem in all emerging economies following the global financial crisis of 2008-09. In addition, the COVID-19 pandemic poses a considerable challenge to fiscal sustainability in developed and developing countries. Although the sustainability of public finances has been discussed for more than a century and studies have proposed several methods to define and assess debt sustainability, it remains an imprecise concept. This study proposes a new framework for public debt sustainability analysis by constructing a composite indicator, that is, a debt sustainability index. We emphasise the need for an explicit conceptual framework for constructing a composite index and usefulness of multivariate statistical analysis prior to the aggregation of individual indicators. The proposed approach can be used to analyse the debt sustainability of state governments (sub-nationals) in India.

This paper proposes a collaborative effort between India, Australia, Papua New Guinea, and Fiji to pilot a payments system using the infrastructure underlying India's Unified Payments Interface framework. This aims to catalyse the creation of an open, interoperable, and efficient regional payments system in the Pacific that enfranchises all stakeholders. While cost is a central factor, existing funds within the Pacific Financial Inclusion Programme, Forum for India-Pacific Islands Cooperation, Pacific Islands Forum, India-UN Development Partnership Fund, or Quadrilateral Security Dialogue can be leveraged. Frank dialogue about the financial needs of Pasifika peoples and their countries is critical, and open-source protocols can allow for tailor-made, sovereign solutions without vendor lock-in. Current efforts to strengthen regulatory frameworks and address money laundering risks should also continue in concert with this endeavour. More broadly, this paper demonstrates India's potential to collaborate with Australia – and others – to create positive outcomes for low-income states. The policy recommendation in this paper exemplifies how such collaborations can drive positive change globally and accelerate progress for the developing world, such as in the Pacific Islands.

Internet shutdowns have proliferated in the last few years in India owing to the government’s effort to control the spread of rumours and misinformation primarily in periods when there is a possibility of tension or social unrest. This paper examines how public emergency and public safety, which comprises the core of the law for implementing internet suspension, is not adequately defined and therefore, continues to be used indiscriminately. This article reviews the use of internet shutdown as a public safety measure.

Raghuram Rajan and Rohit Lamba are clear that “Acche Din” are not here yet and the direction the NDA government is taking will not get India to the promised land soon. They recommend a strong push for services as against manufacturing, increased spending on education and healthcare, and devolution of power to local governments. They question the logic behind large subsidies to promote manufacturing when the jobs created in this manner are so few.