Hello, and welcome to Best of BS Opinion, our daily wrap of the Opinion page.
Days after signing a wide-ranging free trade agreement with the European Union, the Indian government announced it had reached an interim framework for a trade deal with the United States, one of its largest trading partners. Both deals will be a win for domestic consumers but, more importantly, they
mark an important shift in the way India views trade - and its associated deals - with other nations, notes our
first editorial. But for exporters, particularly small and medium enterprises, to truly benefit from such opportunities, the government must do more on internal reforms, especially factor market ones.
The Reserve Bank of India's Monetary Policy Committee last week left its policy rate untouched, and
refrained from giving a full-year growth projection. This, our
second editorial says, was the right thing to do because of the impending changes to the base year for calculating both gross domestic product and the consumer price index. While these don't impact real-world economic activity, they will change how we interpret and project it for the future. However, the immediate implications of the revision may not be significant, given core inflation remains benign. The central bank also made some welcome regulatory proposals, particularly with regard to safety of digital payments and compensation for small-value losses through such fraud.
Co-operatives
represent the true dilemma of the Reserve Bank of India (RBI), writes
M S Sriram. While they are effective neighborhood institutions that provide services to those left out of mainstream banking, the central bank is often unable to square their form of incorporation with its own regulatory imperatives. Co-operative societies fit into the idea of providing basic services but don't have scope or scale to provide modern banking services, given their member-centric, democratic structure. To fix this dilemma, RBI needs to think out of the box: it should consider setting up at least two federal institutions, and/or permit Tier 4 co-operative banks to affiliate smaller co-operatives. These national entities could carry the word co-operative, with the understanding that it is a bank of co-operatives rather than a cooperative bank. It would ease RBI’s regulatory burden, while providing a path for new inclusion efforts. The question is: will the RBI bite the bullet?
With the EU and US trade deals in the bag, there seems to be an expectation that foreign investors will reverse course and return to Indian equity markets, and that the markets now have a clean run ahead of them.
Debashis Basu argues that this is
easier said than done, because the key driver for markets are growth and earnings. And right now, Indian markets face the twin challenges of weak demand and already-high valuations. Weak wage growth is a key factor behind poor demand, forcing private companies to throttle back on capital expenditure. On the export side, too, Indian firms have failed to grow their numbers in the way their competitors like China or Vietnam have. Most importantly, until earnings growth revives, the already-high valuations will continue to act as a dampener.
Sophie Pinkham explores the role of the wilderness in the Russian imagination, using the Lykovs as one example: the family, which belonged to a conservative sect, had escaped the Romanovs power grab of the Orthodox Church, and lived out 44 years in the Urals completely cut off from the world. Their fragile existence underscored the Russian
forests' role as a refuge from civilization’s darker forces, while also being entwined with some of the cruellest chapters of Russian history, writes
Joshua Hammer in his review of Pinkham's THE OAK AND THE LARCH: A Forest History of Russia and Its Empires. However, he questions her contention that all of Russian history can be viewed through the prism of its forests, since not every development reduces to botany, and the organising metaphor can sometimes verge on the simplistic.
 "Best of BS Opinion: Trade deals a positive, but more reforms required")
