RBI does not directly monetise the government’s deficit.
Dear Balbir Singh,
The fiscal-monetary coordination is like the game of chicken in many countries. Both governments and central banks expect the other party to yield first. While governments want central banks to follow an easy monetary policy, the banking regulator expects the former to maintain fiscal discipline. In India, the RBI has eased its stance and adopted an accommodative monetary policy. The government, too, has done its bit. But the real test for this newfound coordination would be how they approach debt monetisation, at a time when the economy is in a tight spot.
The first story in today’s edition tracks this interesting topic.
ECONOMY
A case for debt monetisation
Recently, Indonesia announced a plan for direct monetisation totalling USD40 billion of sovereign bonds to be purchased by its central bank. India could take a cue from Indonesia and use this route to reduce its ballooning fiscal deficit, although the RBI does not directly monetise the government’s deficit. Cross-country experience suggests that debt monetisation should be no reason for panic, at least from an inflationary perspective.
OTT
OTTs call time on cinema’s hits-and-flops era
The pandemic-triggered trend of releasing movies on streaming platforms marks a fundamental rewiring of the moviemaking business. The standard acquisition cost is 20%-50% of the production cost, and can go as high as 70%. That kind of money helps the cash roll up and down the chain for the producer. But there will come a time when the lopsided economics of paying high prices to acquire films will come under scrutiny.
TECH
Regulating biometric technology
Amba Kak, director of global strategy and programmes at New York–based AI Now Institute, recently released a new report detailing eight case studies on how biometric systems are regulated around the world. In an interview, Kak shares details about how we should move forward and what are the major gaps in biometric regulation.
Regards,
ET Prime Team