To an extent, strictly going by these two pieces, Jaggi’s piece struck a better chord than the MINT Edit.
Of course, I still believe that too much is made of India’s real rates. That diverts attention from the many failures of omission and commission on the part of elected governments.
Plus, I am a sucker for ‘tough love’ in micro or macro matters. Examples abound:
- Volcker with monetary policy in the USA from 1979 to 1981
- Germany and Japan with their appreciating currencies and export growth built on productivity and quality
- Rangarajan’s high real rates in 95-97 that ‘persuaded’ Indian corporations to de-leverage between 1998 and 2001 and be ready and hungry for re-leveraging and unleashing a capex cycle since 2002 (it turned excessive later)
- Hong Kong’s real estate cycle deflation after the Asian crisis that lasted nearly a decade
- Singapore’s approach to the real estate bubble since 2013, up to now
On balance, MINT Edit came across as a ‘gratuitous’ praise. Not wholly disproportionate but partially.
In other words, I am not sure RBI has done enough to deserve this praise. It may well, down the road. But, for now, it struck me as early days.