Japan has avoided fiscal harakiri. The decision by the country&rsquo;s opposition parties to stop blocking the government&rsquo;s deficit-spending plans is a big relief for an economy that shrank by an annualised 3.5 per cent in three months through September 30, and is likely to contract again in the current quarter.

Trouble ahead

Business Standard

Diageo&rsquo;s $2.1 billion acquisition of United Spirits has helped India&rsquo;s largest liquor company and its chairman Vijay Mallya. But hopes that Kingfisher Airlines will fly again simply because the grounded carrier&rsquo;s flamboyant founder has raised some cash look overoptimistic.

In limbo

It&rsquo;s the season for conglomerate-bashing in South Korea. All three of the country&rsquo;s presidential hopefuls are promising to clip the wings of the country&rsquo;s powerful &lsquo;chaebols&rsquo;.

Tough talk

Thailand is reviving a four-year-old bad idea. According to Thai media reports, the country is putting together a cartel of rice producing countries. But unlike oil, rice rots.

Rice Sheiks

A thin sliver of &ldquo;ultimate liquidity&rdquo; is supporting a vast edifice of private-sector debt obligations in China. That structure is unstable.

Too stingy

Ben Bernanke made a bold claim on his trip to Asia. In a speech delivered in Tokyo, the US Federal Reserve chief said money printing by advanced nations is not the &ldquo;dominant&rdquo; force behind surging capital flows to emerging economies, and that these countries are net beneficiaries of stronger demand from the west. If he&rsquo;s right, Asian central bankers who grumble about the Fed&rsquo;s quantitative easing should send Bernanke something nice this Thanksgiving.

Cruel not kind

India's new finance minister is rekindling the country's love affair with investors. After years of policy inaction and a string of corruption scandals, New Delhi's decision to allow foreigners a bigger stake in its insurance and pension industries is another indicator of its determination to push through reforms.

Open for business

The Bank of Japan has a conundrum: how to make a credible commitment to recklessly printing more money. The central bank wrote the primer on unconventional monetary policy a decade ago when it pioneered quantitative easing. But as other central banks have embraced loose money, the BoJ has become an increasingly forlorn figure in a crowded rogues&rsquo; gallery.

Irresponsibly responsible

The Shinzo Abe era will herald a spectacular decline in the yen. The promise by Japan&rsquo;s newly elected prime minister to end the country&rsquo;s chronic deflation spells curtains for the half-hearted quantitative easing that has been the Bank of Japan&rsquo;s hallmark for more than a decade. At some point in 2013, one US dollar will buy 100 yen or more.

Big fall

Abu Dhabi&rsquo;s Etihad Airways is spoilt for choice in India: It could decide to be a white knight to billionaire Vijay Mallya&rsquo;s beleaguered Kingfisher Airlines. Or the Gulf carrier could snap up a smaller stake in Jet Airways, which controls a quarter of the domestic Indian market. The latter looks the better bet.

Passage to India

The quality of growth will disappoint because a much-needed pickup in investment is not yet on the horizon. The credit cycle is still weak; state-owned banks are hobbled by bad loans.

Andy Mukherjee: In 2013, bet on consumption

The slowing Indian economy is not responding to shock therapy. The stock market rally that began in September after the government unveiled its high-decibel reforms programme is fizzling out. The country&rsquo;s benchmark index failed this month to surpass its October peak &mdash; a bearish sign for chart watchers.

Andy Mukherjee: Two more lean years

Kingfisher Airlines has gone from bad to worse. The latest setback is a three-day suspension of services at the Indian carrier. But the worst outcome &mdash; liquidation &mdash; would help no one.

Staying alive

It&rsquo;s too soon for India&rsquo;s central bank to reward the government. Senior officials in New Delhi are hoping for a more benevolent monetary policy. Money markets, too, are increasingly expecting lower future interest rates. But by reducing rates at the next meeting on October 30, the central bank in Mumbai would be rewarding the government a little too soon for what have undoubtedly been some of the more politically courageous decisions it has taken in the last eight years.

Andy Mukherjee: Too soon for central bank rewards

Officially, Pakistan&rsquo;s economy is in almost as bad a shape as the state. The government&rsquo;s statistics show one of the lowest GDP growth rates in emerging Asia &mdash; the annual average over the last five years was 3.5 per cent. But it&rsquo;s hard to reconcile that disappointing number with the busy restaurants of Karachi, record Toyota sales and a booming stock market.

Against the odds

Last week the Indian government in New Delhi cut fuel subsidies and eased restrictions on foreign investors. In return for this good behaviour, some people said, the central bank in Mumbai would quickly cut interest rates. Instead, it held them on Monday. But the hopes were irrational, and the Reserve Bank of India was sensible to dash them.

No party pooper

India&rsquo;s electricity distributors have become zombies. The industry&rsquo;s $35-billion debt overhang, equivalent to two per cent of the country&rsquo;s GDP, means it has few resources to invest in transmission and distribution. The result is massive underinvestment that chokes off economic growth &mdash; 11 per cent of power demand is unmet &mdash; and causes crippling grid failures like the ones that plunged most of the country into darkness in July.

Power politics

India&rsquo;s yawning trade deficit is not a separate problem from the government&rsquo;s budget shortfall. They are two sides of the same coin. The connection between them becomes evident when one looks at the current account gap not as the excess of imports over exports, but as the difference between the country&rsquo;s investment and savings.

Andy Mukherjee: Separating India's twin deficits

Malaysia is stuck in a middle-income rut. Per capita income last year was about $9,000. The government&rsquo;s goal is to lift it to $15,000 by the end of the decade, exceeding the World Bank&rsquo;s threshold for rich nations. The second-quarter growth report gives some clues on how it might succeed.

Getting rich

When property rights are uncertain, owners of long-lived assets will naturally want to get their profits out as soon as possible. That principle helps explain the latest corporate-political scandal in India.

Rationally short-sighted

Less than a month into his new job as India&rsquo;s finance minister, P Chidambaram is in a hurry to rev up the economy&rsquo;s sputtering engines. But with inflation still high &ndash; the rate just dipped below seven per cent for the first time in 32 months &mdash; the central bank in Mumbai is reluctant to help by cutting policy interest rates. So Chidambaram wants to rely on the magnanimity of the US Federal Reserve, the European Central Bank and the Bank of England. He is nudging local companies to take more loans denominated in foreign currencies.

Andy Mukherjee

Andy Mukherjee

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