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Articles by Abheek Barua
Does Monetary Policy Need a New Paradigm?
The Reserve Bank of India has just raised interest rates and shifted its monetary policy stance to calibrated tightening. But is the central bank confronting an inflation problem that conventional monetary policy is no longer equipped to handle? For decades, central banks have distinguished between temporary supply shocks, which they could largely look through, and demand-driven inflation, which they could address through interest rates. But what happens when supply shocks are no longer temporary?
Could Indonesia’s Sovereign Fund Show India a Better Way?
An important piece of news out of Asia last week seems to have got lost in the hype surrounding the SpaceX IPO launch. Indonesia’s new Sovereign Asset Fund (SAF), Dananatara, saw its debut $1.5 billion bond issue in international markets massively oversubscribed. This was despite the fact that global investor sentiment towards other Indonesian assets has remained tepid, if not downright hostile. Why bother with Danantara?
Will India Once Again Turn to Its Diaspora for Capital, and Will It Work?
The Indian government seems to be reopening its old playbook of stabilising the rupee by raising foreign currency funds from the Indian diaspora. The first chapter of this playbook was incidentally written first in 1991 with the issuance of the India Development Bonds. Resurgent India Bonds were floated in 1998 followed by India Millennium Deposits in 2000. In 2013 the RBIopened a subsidised swap window to incentivise banks to raise FCNR deposits.
RBI’s Quiet Dovish Tilt Meets a Fragile Rupee Defence
By Abheek Barua Abheek, an independent economist and ex-Chief Economist at HDFC Bank, provides deep insights into financial markets and policy trends. April 9, 2026 at 1:46 AM IST Major disruptions, such as the West Asia crisis, that initially surface as supply shocks force central banks to ask a fundamental, almost philosophical question. Should the impact on the economy going forward be treated primarily as a process of demand destruction warranting monetary accommodation?
The Case For a Robot Tax
Did we miss the elephant in the room at the recent AI summit in Delhi? If indeed, as the AI gurus who spoke at the summit suggested, Large Language Models and advanced robotics are poised to snatch away jobs from every conceivable sphere of the economy, should developing economies, especially those that run labour surpluses, use policy to prevent this to some degree?
India’s External Strength Masks a Growing Vulnerability Problem
In gauging India’s external vulnerability, it might be useful to briefly review the terms “resilience” and “vulnerability.” The former refers to an economy’s ability to stay on its growth trajectory when hit by a shock, be it a spike in crude oil prices, a rumble in global financial markets or a sudden increase in tariffs by a major trading partner. Vulnerability is a slightly broader term that factors in the frequency of these shocks and their magnitude.
Rupee Depreciation: How Much More?
The sharp fall in the rupee over the last couple of months and its somewhat uncertain future, should force us to ask some difficult questions. At the outset, one must recognise that this is not textbook capital flight.
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Budget 2024: Centre’s fiscal policy likely to stay on the beaten track
What could continuity imply when it comes to fiscal management? The key question about the budget that everyone seems to be fretting over: given the election results, whether the new government will continue with its fiscal strategy of the past decade or will the compulsions of coalition politics force it to make compromises. There are some clues. The allocation of ministers and ministries in the new cabinet seem to indicate two things.
Rate cuts unlikely as RBI trains guns on inflation
In its monetary policy statement on 10 August, the Reserve Bank of India (RBI) is likely to remind us yet again that the war on inflation is not over. Why? A couple of days after the policy announcement, the official consumer inflation data for July will be released. If most forecasters are right, it is likely to print well above the RBI’s upper tolerance limit of 6%. Besides, there is the associated risk of an upward shift in the future inflation trajectory.
Budget Needs To Consolidate Debt By Bringing Fiscal Deficit Down
Policymaking is a continuous process done through the year. The problem with the hoopla that surrounds Indian budgets is that it implicitly assumes that all policy announcements need to be made in a longish speech on the first day of February every year. This often diverts attention from other policy measures announced at other times. It also skews the criteria defined to gauge how “good” a budget is.
Shape of things to come
Before getting buried under the avalanche of expectations of budget minutiae - tax rates, exemptions, incentives, etc - it may be useful to look at the simple macroeconomics of the budget. What kind of macro environment will the finance minister face? What will hurt and what will help? Global growth: Recession, or at least a major slowdown, in all developed economies led by the US is an unambiguous negative. Whether it will be deep or shallow remains an open question.
Little scope for RBI to take its foot off the gas
How does one interpret a monetary policy statement that combines a relatively sanguine view on growth with an admission that inflation, particularly core inflation that nets out volatile components like food and fuel, is still a major concern? Going by the textbook, one would conclude that monetary tightening is not quite over yet or even likely to be over in the near future.
RBI Monetary Policy: A Hawkish Lurch On Mint Street
The June 8 monetary policy decision undoubtedly falls into the category of ‘aggressive tightening’. The policy rate has been raised by 90 basis points to 4.9% over the last two months while the effective rate increase is even higher if one accounts for the introduction of the Standing Deposit Facility (in place of the reverse repo) – which has raised the lower bound of the policy corridor from 3.35% to 4.65% – implying a total 130 basis points increase.
Budget 2022-23: A Capex Bonanza Original
By Abheek Barua, Chief Economist, HDFC Bank The 2022-23 Budget has somewhat successfully managed to balance fiscal retreat and support for economic recovery. The budget deserves a somewhat favourable verdict. It has a gameplan premised on credible numbers. The fiscal deficit target of 6.4 per cent, prima facie, suggests that the FM has grabbed some much-needed fiscal space to nurture the nascent recovery and not been tempted to “over-consolidate”.
Economy, Omnicron: With An Extensive 3rd Wave, Will Be Naive To Expect Business Would Be As Usual: Abheek Barua
The somewhat soft inflation numbers in the third quarter of 2021 are likely to be transitory Image: Balaji Srinivasan/ Shutterstock The Indian economy has rebounded sharply in 2021-2022 from the depths it found itself in last year. Unless there is a massive third wave of Covid-19 riding on the Omicron variant, it seems poised to expand by at least 9.5 percent. There was a certain inevitability to this sharpness of the rebound.
RBI's Monetary Policy Imperatives And The Omicron Curve-Ball
The discovery of 'Omicron', the new mutation of the coronavirus in South Africa, and some evidence of its transmission to Europe and North Asia might just put the "best-laid plans of mice and men" well and truly "gang aft agley" (go awry) to quote the Scottish poet Robert Burns. The recent rout in markets across asset classes and geographies might well be the beginning of another phase of growth fears among policymakers and investors.
The great China shock
Final goods producers have to choose between accepting a squeeze on margins or passing the cost-spikes on to consumers. By Abheek Barua The problem with assessing the impact of the current slowdown in China on global supply chain is the sheer complexity of its links. It is the mother factory of the world with its products, particularly industrial inputs, feeding a mindbogglingly diverse range of shop floors from across the world.
China's Evergrande risk: “Too big to fail?”
Market sentiments have been rattled by the potential contagion from a liquidity crisis at Evergrande, the largest property company in China. The DXY, along with other safe haven assets, have gained while equities, metal prices and the Yuan have all come under pressure.
Monetary Policy: RBI’s Firefight Redux
BloombergQuintOpinion Jun 01 2021, 12:18 PMJun 01 2021, 12:18 PMJune 01 2021, 12:18 PMJune 01 2021, 12:18 PM It is possible to argue that monetary policy in the middle of a raging pandemic is now getting somewhat predictable. The usual discussions on the trade-off between growth and inflation that is integral to the so-called process of the monetary policy committee and indeed the very act of setting the policy rate become a sideshow.
The Economic Revival Debate, Counterview: Battle Won, War Still On
Image: Shutterstock A raft of encouraging economic indicators suggest that the proverbial animal spirits are back. Are they? Forbes India presents two views. Read the opposing view by economist, author and BJP spokesperson Sanju Verma here Even the most churlish cynic would find it difficult to question India’s economic recovery since August.
Resolving A Monetary Policy ‘Multilemma’
Sep 28 2020, 10:00 AMSep 28 2020, 10:00 AMSeptember 28 2020, 10:00 AMSeptember 28 2020, 10:00 AM
Decoding economic revival package: Factoring in limited fiscal space, it bets on enhanced credit flows as a trigger
In order to get a feel of the contours of the government’s Rs 20 lakh crore revival package, it is useful to understand the circumstances in which it is being announced. First, with the most optimistic predictions pegging GDP growth at barely over 1% for 2020-21 – compared to 5% in the previous year – a stimulus is imperative. Second, with slow economic growth over the last couple of years pulling tax collections down, the government has limited “fiscal space”.
RBI’s Rs 50,000 crore liquidity line to mutual funds through banks could not have come at a better time
The response to the first tranche of this liquidity offered by RBI on April 23 to banks to buy debt paper of the beleaguered NBFCs saw a tepid response. Thus, RBI needs to operate like a commercial bank, but with a huge appetite for risk. By Abheek Barua RBI’s decision to offer a Rs 50,000 crore liquidity line to mutual funds (MFs) through banks could not have come at a better time.
An informed strategy for lockdown exit
Business Standard The only to way to climb back to obstacle-free growth would be more and randomised testing. The government needs to make a much larger financial allocation towards that https://mybs.in/2YMS9N2 Economists have started writing somewhat furiously on the economic impact of Covid-19. One could perhaps argue that this is about the worst time to heed their advice. Things are best left to the medical community and epidemiologists.
View: Whichever way one counts it, bearing the economic cost will be a challenge
How much should India spend just to ensure that the virus doesn’t kill millions? By Abheek Barua What is the economic cost of Covid-19? While the question seems simple enough, it is difficult to find a straight answer. If I follow an accountant’s instinct and begin to tot up the different items of medical supplies and health infrastructure critically needed, things begin to get a little tricky with a raft of assumptions kicking in. Take the need for more ventilators for the most severely affected.
RBI Policy Amidst Covid-19: Decoding The ‘Whatever’ Of ‘Whatever It Takes’
Mar 26 2020, 5:39 PMMar 26 2020, 5:39 PMMarch 26 2020, 5:39 PMMarch 26 2020, 5:39 PM
View: With COVID-19 a pandemic, we need a rational economic damage control plan
PTI The obvious first is the containment of infection. The second is the speed with which the complex GVC machine gets rolling again. Economists have been unusually guarded in their assessment of both the impact and policy antidote for the coronavirus (Covid-19). As US central banker Thomas Barkin put it, ‘Central banks can’t come up with vaccines.’ The US Fed’s attempts to calm the financial markets through an emergency policy rate cut of a hefty half a percentage point on March 3 has boomeranged.
Slowdown: Is there an end in sight?
The Economic Survey seems convinced that 2019-2020 saw the bottom of the economic cycle, points out Abheek Barua, chief economist, HDFC Bank. An Economic Survey, written at the time of what appears to be a prolonged economic slump can perhaps be best 'judged' on the basis of its ability to answer two questions.
View: Not much to move consumer, business confidence
By Abheek Barua The finance minister's budget speech was an unusual instance of her saving the proverbial best (or at least the most critical from an economist’s perspective) for the middle instead of the last.
Economic Survey 2020: A decade-old slowdown reversing?
Business Standard Investments suffered as companies were keen on repaying debt rather than taking fresh loans to add to capacity https://mybs.in/2YKGCgj An Economic Survey (ES), written at the time of what appears to be a prolonged economic slump can perhaps be best “judged” on the basis of its ability to answer two questions.
How bad really is the fiscal situation?
BCCL How can we claim that GoI will prevent FD from straying significantly from the target? The answer lies in expenditure compression. By Abheek Barua & Sakshi Gupta The fiscal deficit for 2019-20 is running at 115% of the budget target, with direct tax collections growing at a measly 2.7% between April and November.
Opinion | How to get the economy out of the twin traps
India’s economic troubles appear to come in pairs. The twin deficit problem of stretched corporate balance sheets and a large fiscal gap has been replaced by twin “traps". The first of these is a classic liquidity trap, where infusions of liquidity or rate cuts by central banks seem to have little impact on the real economy. The second is a fiscal trap, in which sluggish growth in tax and other receipts makes expansionary government spending impossible without endangering fiscal deficit targets.
Why are investments not looking up? And, no, demand saturation isn’t a reason
BCCL The investment decision for companies is no longer a simple call based on capacity-utilisation and cost of funds. By Abheek Barua A comprehensive explanation of why the private investment pipeline continues to run dry has to look beyond the usual suspects, like low capacity utilisation and weak demand. The fact that investors are holding back because they have spare capacity is an empty tautology. What we need to figure out is why this capacity is spare.
Is globalisation dying? Advanced economies are losing faith. Emerging markets better come up with a coping strategy
A number of mainstream economists argue that the rising trend of de-globalisation led by advanced economies (AEs) like the US makes for bad economics. Trade protection and immigration control is just as damaging to their economies as the strident brand of nativism is to their societies. However, a hard look at the data on the gains from globalisation over the last few decades tells us a somewhat different story.
Is low inflation the culprit for India's economic woes?
Reuters Growth seems to be back as a central agenda for RBI. The policy rate has been cut sharply and banking liquidity is in surplus. By Abheek Barua The relatively sparse attention paid to the role of past monetary policy mistakes in understanding the roots of the current slowdown is surprising. A closer scrutiny of recent monetary history offers better clues to the growth puzzle than hypotheses like demand saturation or changing consumption habits of millennials.
How to shake off the economic slowdown
BCCL Persistent sluggishness in activity over a few quarters does not de facto make a slowdown ‘structural’. By Abheek Barua For the last quarter of 2018-19, India’s GDP grew at 5.8%, well below the 7% average that it has clocked over the last few years. Estimates based on the proxies that forecasters use, like car sales or corporate profits, suggest that the first couple of quarters of the current fiscal year are unlikely to show a dramatic recovery.
Borrow abroad, for the time being
By Abheek Barua Before trying to find out whether or not India should issue a foreign currency (FC) sovereign bond (SB), we could start by asking what interest rate GoI needs to pay on, say, a 10-year bond issued abroad. This depends primarily on India’s sovereign credit rating and the rates our peers currently pay. India is rated BBB by Standard & Poor’s, right on the threshold of being investment grade. Moody’s gives it a slightly better score on its own scale of Baa2.
View: Opening the gates for a foreign-funded India growth
There is a clear effort to improve capital market mechanisms to ensure that sluices are unclogged. ET CONTRIBUTORS| Jul 05, 2019, 11.23 PM IST Getty Images The Rs 70,000 crore bank recapitalisation for PSBs is certainly more than what most analysts expected. This could ease some of the credit constraints that both consumers and businesses are facing and revive demand.
A much-needed blueprint
The Economic Survey posits a clear development model to put India on a high-growth path https://mybs.in/2X7WIs3 Over the last few years, particularly during the tenure of the previous Chief Economic Adviser (CEA) Arvind Subramanian, the Economic Survey (ES) morphed from an exhaustive — and often tedious— account of the economy’s performance over the previous year into a more analytical and forward looking policy statement.
Budget 2019: Government must play dominant role in reviving investments; here's why
Budget 2019-20: What can the Union budget and the finance ministry do to revive investments? First, it has to recognize the fact that the government will have to play the dominant role Union Budget 2019 India: Finally, steps need to be taken to expand the corporate bond market. Given pressures on domestic fund availability, we need to turn to global long term institutional funds like pension funds for succour.
Don’t expect big surprises in Budget; many constraints on expenditure side
The key issue in the Budget remains the transfer of RBI’s ‘surplus’ capital. ET CONTRIBUTORS| Jun 28, 2019, 01.13 PM IST Reuters The room for significant fiscal stimulus, in order to spur growth, is constrained, considering that achieving the current (Interim Budget) target of 3.4 per cent of GDP could in itself be a tall order. ChartsValuation & Peer ComparisonCommunity Buzz By Abheek Barua & Sakshi Gupta Don’t expect big surprises from the forthcoming Union Budget for 2019-20.
India's China syndrome
Instead of the average growth of 7 per cent that the official data shows in the period between 2011-12 and 2016-17, Arvind Subramanian's estimate is a meagre 4.5 per cent Abheek Barua & Tushar Arora Last Updated at June 26, 2019 00:36 IST Follow this columnist https://mybs.in/2X6tiR7 Those who are aware of the intense debate on the reliability of China’s economic data should find many familiar elements in the face off between former chief economic adviser Arvind Subramanian’s (AS) and the...
GDP Growth Slowdown: When A Repo Rate Cut Isn’t Enough
Jun 01 2019, 10:51 AMJun 01 2019, 10:51 AMJune 01 2019, 10:51 AMJune 01 2019, 10:51 AM
What constitutes a good UBI?
The lack of "universality" becomes the biggest problem in any Universal Basic Income scheme since it raises the challenges of effective targeting Abheek Barua & Sakshi Gupta Last Updated at May 26, 2019 22:08 IST Follow this columnist https://mybs.in/2X69Qop The idea of Universal Basic Income (UBI) seems to have made a permanent entry into the Indian policy lexicon. The NDA government took its first step with PM-KISAN and the Congress manifesto promised Nyuntam Aay Yojana (NYAY).
View: Shouldn't the concept of job creation take precedence over income transfer?
BCCL NYAY scheme formed one of the major points in Congress' vision document The idea of minimum income guarantee is now firmly ensconced in our public policy debate. Its most recent avatar is Congress’ Nyunatam Aay Yojana (NYAY) proposal, targeted at the bottom 20% of the population. According to economist Thomas Piketty in his April blogpost , the sum of Rs 6,000 a month to be transferred works out to a little over 60% of median household income for the population as a whole.
View: Some ways to understand the RBI's dollar-rupee swap move
Reuters RBI is doing two things: buying dollars from banks, and selling ‘forward dollars’ for a price or premium. By Abheek Barua The initial commentary on RBI’s new swap mechanism to infuse liquidity or cash ($5 billion, or Rs 35,000 crore) into the banking system has raised more questions than provided answers. This is understandable primarily because it is being tried for the first time.
The emerging factor in Indian markets
Business Standard Besides macro-balances - current account and the fiscal gaps - of a number of EMs have shown remarkable improvement since the taper tantrum of 2013 https://mybs.in/2X4SV7O Where are Indian markets headed in 2019? The stock answer is that it all depends on the election outcome. That might be an oversimplification. Markets move in packs and India’s fate is tied to that of emerging markets (EM).
Global situation not conducive to cut
The RBI’s decision to stay pat on the policy rate might have disappointed the majority in the markets who had expected a cut in rates in response to a slowdown in growth that the cash crunch brought. But perhaps there is method in the madness and one could look for a clear rationale for the RBI’s inaction. Why the ‘wait and watch’ But first things first.
Monetary Policy: If Not Cut Now, When?
BloombergQuintOpinion Feb 04 2019, 8:25 AMFeb 04 2019, 8:25 AMFebruary 04 2019, 8:25 AMFebruary 04 2019, 8:25 AM The fundamental question the Monetary Policy Committee faces as it delivers the policy resolution on Feb. 7 is the following: “if not a rate cut now, then when?” A rule-based model like inflation-targeting introduces a de facto element of data dependence.
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