Interview tips by IAS topper Gaurav Agarwal
Economics Issues
Thursday, April 24 2014, 7:28 PMNayar Committee Report
But, more importantly, as the report itself highlights, public sector banks in India are caught in a triple whammy: deteriorating asset quality, massive capital requirements stemming from Basel III norms, and a complete lack of strategic manoeuvrability, given their current governance and management structures. While the report addresses issues relating to the governance of private banks as well, its most significant recommendations could put the entire public sector banking system on to a new, sustainable performance and risk management trajectory.The committee shares thewidespread perception that excessiveand misdirected government control is atthe heart of the problem. Consequently, it believes thatreducing the government equity stake to minority levels and then empowering boards and managements to function within the performance and accountability frameworks of typical corporate organisations is the best way for these banks to get themselves out ofthe three-way trap
Nayak Committee Report
What it would like is forthe government to distance itself from “several bank regulatory functions it discharges.” To do this, it would like the repeal ofthe Bank Nationalisation Act of 1970 and 1980, SBI Act and that relating to its subsidiaries; all banks should be incorporated under the Companies Act.
The government’s holdings should be transferred to a Bank Investment Company (BIC) along with its regulatory functions. The government’s holdings in PSBs should come down to less than 50 per cent, but it can and will remain the dominant partner. But its regulatory functions will now pass to theBIC. At this point, one might think that the Nayak Committee is talking about privatisation. Its concerns, however, seem to lie elsewhere.
The key lies in the appointment of boards and senior officials in banks. Right now thefinance ministry plays big brother with most appointments ofbank chiefs. Under the new dispensation, a Bank Boards Bureau would deal withsenior level appointments till the BIC is formed. Eventually, at theend of a three year process, however, the responsibilities would rest with the boards themselves.
It is interesting that among other things, the committee should list the RTI Act as a deterrent. Look across the spectrum of services Indian citizens are offered and you will finda similar sentiment expressed by bureaucrats and even prestigious higher educational institutions.
. A core recommendation is to unshackle banks from government control andfinance ministry’s interference, by reducing government holding to under 50% and bringing banks under the sole regulation of RBI. It suggests that when government shareholding is brought below 50%,the rest should be transferred to a bank investment company (BIC).
The committee recommends the creation of a category ofauthorised bank investors (ABIs) who
can invest in banks without prior approval.
It recommends that these ‘privatised’ PSU banks be removed from dual regulation of the finance ministry andRBI and brought solely under RBI.
Q. Give me few problems ailing our economy and solutions to address them ?
1. Low growth - manufacturing as well as services.
2. Stalled projects.
1. Multiple clearances, bureaucratic red tape.
2. India’s rank in the World Bank’s Ease of doing business index fell from 116 out of 189 countries in 2006 to 134 in 2013—clear evidence of stalled reforms. The new government needs to reverse this trend and improve the environment for doing business.
3. Unskilled workers / low human capital development.
1. Rope in private sector, allow for profit.
4. Supply side constraints in infrastructure - roads, power plants.
1. Road sector - fresh bids, independent regulator to oversee performance, CAG audit.
2. Power sector - free up coal mining, pass through mechanism, discom reforms, CAG
audit.
3. Ports sector - free up port management and construction.
4. Railways sector - More PPP, independent regulator and auditor.
5. Uncertain policy environment.
1. Increase transparency, reduce discretionary decision making.
in recent years the lack of fiscal discipline has been costly forthe Indian economy, as excessive demand arising from large deficits translated into stubbornly high inflation and was partly responsible for large current-account deficits. Fiscal discipline should be a priority, not an afterthought.
improving the quantity and quality ofeducation and healthcare through partnerships with theprivate and non-profit sector and researchers is essential to sustain growth beyond the next five years.
There are currently three ministries in the energy sector—power, petroleum and natural gas, and renewable energy. It makes sense to fuse them into a single ministry. The recent problem of power plants being built without proper coal supplies could havebeen avoided if policy had been handled by one minister. There is no need for a ministry of information and broadcasting, as the former minister in charge of the portfolio, Manish Tewari, reportedly admitted last week. Is there a need for a separate ministry of urban poverty alleviation? A ministry of culture? A ministry of heavy industries? And a ministry for at micro, small and medium enterprises? What about a ministry of pensions?
Foodgrain stocks, as on April 1, 2014, were estimated at 38 million tonnes, way above the minimum buffer requirement. To the extent that there is a speculative increase in foodgrain prices, the government should aggressively sell its stocks in the market.
From all counts, there would bean avalanche of capital inflows in the immediate ensuing period; this would
swell domestic liquidity and generate inflation, unless immediate countervailing measures aretaken.
The opportunity should be used to build up the forex reserves. Also, there should be a tilt towards longer-term flows rather than short-term flows and more foreign direct investment rather than portfolio investment.
The share of manufacturing in GDP declined from 14.8 per cent in 2011-12 to 14.1 per cent in 2012-13 and to 12.7 per cent in 2013-14, implying that this sector is steadily losing its relevance in the economy, and that the real economy is weakening.
Poor growth of the manufacturing sector has resulted in joblessness. This can be gleaned from the performance of two sub-segments of manufacturing — capital goods and consumer durables. Both segments are highly intensive in theuse of components and ancillaries, and thereby encourage growth oflarge number of small and medium scale industries as they grow.
Any crisis in these two sub-segments affects thesupporting SMEs and gives rise to unemployment. Growth in capital goods and consumer goods sectors suffers due to lack of investment and consumption
demand. In the case of basic and intermediate goods, however, growth is hampered by lack of governance
and excessive regulatory hurdles and interventions.
Govt should follow cluster approach and give investment incentives.
Q. What are 2nd generation reforms.
1. Manufacturing reforms
1. Labor reforms.
2. Land acquisition.
3. Multiple clearances and single window.
2. Governance reforms
1. Transparency and rule of law.
2. Rationalization of subsidies.
3. Restructuring of government schemes.
3. Trade reforms
1. GST and unified market.
4. Financial reforms
1. Financial sector liberalization and more competition.
2. FSLRC recommendations.
Q. Whether subsidies good or bad?
1. In a poor country like India, certain subsidies are essential. Eg. talk about PDS and
Himanshu's findings.
2. What we need is to plug leakages in the subsidies.
1. UID was a good initiative, but after SC's decision, its fate is undecided.
2. Still we can reform subsidy regime by use of IT and mobile. eg. PDS.
3. Also we can create NREGA like architecture where demand is generated from the bottom and is backed by legal rights.
4. We also need effective grievance redressal mechanisms.
5. Social audits.
3. The Indian media rails against the government’s “fiscal irresponsibility” in introducing food subsidies, but the government spends far more on subsidies for the rich, including 1% on electricity and 1% ondiesel and petroleum products, which benefit the middle classes.
Q. What should we do to promote manufacturing sector?
1. Cut red tape, reduce number of clearances, single window mechanism. Transparency, reduce discretions.
2. Reduce compliance costs.
3. Labor laws.
4. Develop infrastructure.
5. Skill development.
6. Land acquisitions.
7. Friendly policies.
Amartya Sen
Nobel Prize
1. Sen got the noble prize for his work in - social choice (Impossibility theorem), distribution, poverty (Capabilities based approach).
Sen's Capabilities Based Approach
1. Functionings are states of ‘being and doing’ which measure an individual's well being such as being well-nourished, having shelter.
2. Capability refers to the set of valuable functionings that a person has effective access
to. Capability represents theeffective freedom ofan individual to choose between different functioning combinations.
3. Freedoms = capabilities. Unfreedom = deprivation of capabilities.
4. Poverty is a serious deprivation of certain basic capabilities to live a good life, and‘development’ is understood as capability expansion.
1. Income approach to poverty is not enough: Defining poverty as simply income below an accepted level is not enough as there can be variations in converting this income into various capabilities. These variations may arise due to personal, environmental, social factors. Hence the need to go beyond income in poverty measurement.
2. Utility approach to poverty is not enough: People can internalize the harshness oftheir circumstances so that they do not desire what they can never expect to achieve. This is the phenomenon of ‘adaptive preferences’ in which people who are objectively very sick may, for example, still declare, and believe, that their health is fine.
3. Resource based approach to poverty is not enough: Because it only focuses onwhat goods a person has, not what he can do with those goods.
Q. sen's policies have become irrelevant now.
1. Not irrelevant, but the new government may beless guided by them.
2. In fact rights based approach is in alignment with the new thought in administration that the citizen must be empowered and government held accountable. RTI, NREGA are examples of success.
3. What we need is tocut down on wasteful expenditure and red tape, opacity. We need to increase transparency and rule of law.
Q. Compare n contrast bhagwati senmodel
1. Bhagwati model
1. He talks of 2 track reforms. Track 1 reforms are reforms aimed at boosting GDP growth and industrialization. It involves building infrastructure, increasing transparency, incentives to industry etc.
2. Track 2 reforms which will follow track 1 are increased state spending on education and health.
3. Track 2 can follow track 1 because: a) Track 1 will help lift people out of poverty via additional jobs and incomes. b) Track 1 will also generate revenues for thestate to spend on track 2.
2. Sen model1. Public provision of health and education is a must because if labor are not educated and healthy, they cannot have high productivity and growth will not increase. There is not a single example in the world where development has been possible without investing in education and health.
2. Sen is not against growth, but he says we must also focus onwhat this growth does to people's lives.
Q Compare n contrast bihar n gujarat model. Which one do we need?
1. Bihar model
1. State actively engaged in promoting education, food and health facilities to citizens.
2. Gujarat model
1. State creates a business friendly environment. Private investment led model.
3. What we need?
1. We need a synthesis. India is toobig a country where conditions in one part are completely different from another part. For example, in a state like Bihar where poverty and illiteracy are high, government incentives are needed for people to study up to class X. But such a thing is unnecessary in Gujarat where already literacy rates are high. If people are illiterate, then just focusing on private investment will not work to promote an inclusive growth.
2. We need to focus on what kind of growth we are having. We need a growth which creates jobs.
Q. what happened in recent wto?
1. Trade facilitation: A deal was reached. Red tape and delays have to be cut in allowing international trade.
2. AoA: India got a 4 year peace clause after which the fate of subsidies will be decided.
RBI Monetary Policy Review
Recent Policy Action (April 1)
1. Increased the liquidity provided under 7-day and 14-day term repos from 0.5% of NDTL to
0.75% in line with Urijit Patel committee recommendations, and decrease the liquidity provided under theovernight repos from 0.5% to 0.25%. The primary objective is toimprove thetransmission of policy impulses across the interest rate spectrum.
2. Policy stance
1. Kept repo rate under LAFunchanged at 8%.
2. The policy stance is firmly focused on keeping the economy on a disinflationary glide path that is intended to hit 8 per cent CPI inflation by January 2015 and 6 per cent by January 2016.
3. Furthermore, if inflation continues along the intended glide path, further policy tightening in the near term is not anticipated at this juncture.
Macro Forecast
1. GDP growth
1. Itis expected to pick up from below 5% in 2013-14 to 5 - 6% in 2014-15 though with downside risks to the central estimate of 5.5 per cent.
2. Positive factors
2. CAD1. Progress on the implementation of stalled projects already cleared.
2. Stronger anticipated export growth as theworld economy picks up.
1. CAD is expected to be about 2.0% ofGDP for 2013-14.
3. Inflation
1. Forecast of 8 per cent CPI inflation by January 2015.
2. Risk factors
1. Vegetable prices have entered their seasonal trough and further softening is unlikely.
2. El Nino and uncertain rainfall.
3. Uncertainty on the setting of MSPs.
4. Uncertainty in fiscal policy.
5. Geo-political developments and their impact on international commodity prices.
6. There will also be a downward statistical pull on CPI inflation later this year, due to base effects from high inflation during June-November 2013.
Urijit Patel Committee Recommendations
1. Some recommendations of Dr. Urjit R. Patel Committee report have been implemented including
1. Adoption of the new CPI (combined) as key measure of inflation.
2. Explicit recognition of the glide path for disinflation (8% for Jan1015, 6% for Jan 2016,
4% thereafter).
3. Transition to a bi-monthly monetary policy cycle.
4. Progressive reduction in access toovernight liquidity under the LAF atthe repo rate and a corresponding increase in access toliquidity through term repos, and
introduction of longer term repos.
Bimal Jalan Committee Recmmendations
1. RBI will work to give licenses more regularly, that is virtually “on-tap”.
2. It will also set out categories of differentiated bank licenses that will allow a wider pool of entrants intobanking.
Market Development Efforts by RBI
1. Inflation bonds
1. To expand investor demand, design changes improving their attractiveness to the general public are being worked out.
2. Corporate bonds
1. Banks will be allowed to offer partial credit enhancements tothem.
3. Re-repo of g-secs.
The feasibility oflimited re-repo/re-hypothecation of “repoed” government securities is being explored.The idea of rehypothecation typically works not so much with term repos but reverse repos, with somebody sort of lent money and suddenly feels that they have a squeeze on their reserve they want to relend to somebody else, rehypothecation allows that. So as you move to term reverse repos this will be a helpful thing, and we are exploring it, we think we can do it without much risk.
FIIs may be allowed to hedge their currency risks through exchange traded currency futures.
KYC norms are being simplified for Foreign Portfolio Investors.
To encourage longer-term flows and reduce volatility, FPI investments in G-Secs will henceforth be permitted only in dated securities of maturity one year and above, and existing investments in T-bills will be allowed to taper off on maturity/sale. Any investment limits vacated at the shorter end will however be available at longer maturities, so overall FPIlimits will not be diminished.
Q. Should we have differentiated licenses?
This will allow people to develop banking capabilities even with relatively small size of operations, which will then allow them to may be apply for full banking licenses down the line.
Q. Does it make sense to augment FX reserves at this stage?
1. If you focus only on reserves there is really no point at which you feel safe, because provided there is enough uncertainty about the economy, uncertainty about conditions, uncertainty about the treatment of international investors, 400, 500, 600 any level of reserves, until you get to Chinese levels, is probably not enough.
2. So really our focus should be on creating the policy environment which gives investors confidence.
3. Our intervention in exchange markets have historically been to reduce exchange rate volatility. So to the extent that we have to intervene to prevent that kind of volatility, we have plenty of reserves.
Five Pillars of RBI's Developmental Measures
1. Clarifying and strengthening themonetary policy framework.2. Strengthening banking structure through
1. new entry, branch expansion, encouraging new varieties of banks,
2. and moving foreign banks into better regulated organisational forms.
3. Broadening and deepening financial markets and increasing their liquidity and resilience.
4. Expanding access to finance to small and medium enterprises, the unorganised sector, the poor, and remote and underserved areas of the country through technology, new business practices, and new organisational structures; that is, we need financial inclusion.
5. Improving the system’s ability to deal with corporate distress and financial institution distress by strengthening real and financial restructuring as well asdebt recovery.
Global Economy
1. Since January 2014 statement, global growth outlook remains broadly unchanged though weaker initial data to someextent cloud optimism.
2. Global economic activity had strengthened in H2 of 2013. On the current reckoning, global growth is likely to be in the vicinity of 3½ per cent in 2014, about ½ a percentage point higher than in 2013.
3. Downside risks
1. Tapering ofquantitative easing (QE) in the US,
2. Continuing deflation concerns and weak balance sheets in the euro area and,
3. Inflationary pressures in the emerging market and developing economies (EMDEs).
4. Weakening growth and financial fragilities in China.
5. Capital flows to EMDEs could remain volatile, even if they do not retrench.
Indian Economy
1. Economic Buffers
1. These buffers effectively bulwarked the Indian economy against the two recent occasions of spillovers to EMDEs — the first, when the US Fed started the withdrawal ofits large scale asset purchase programme and the second, which followed escalation of the Ukraine crisis. On both these occasions, Indian markets were less volatile than most of its emerging market peers.
2. With the narrowing of the twin deficits – both current account and fiscal – as well as the replenishment of foreign exchange reserves, adjustment of the rupee exchange rate, and more importantly, setting in motion disinflationary impulses, the risks of near-term macro instability have diminished.
2. Agriculture sector witnessed record production.
3. Industrial growth stagnating
1. IIP showed -0.1% during April-Mar 2013-14. Mining -0.8%, Manufacturing -0.8%. Capital goods: -4%, Consumer durables: -12.2%. Growth of core industries remained sluggish at 2.6% during April-Feb
2013-14 compared to a growth of 6.4% in the corresponding period a year ago.
2. Reduction in excise duty is expected to provide some relief to manufacturing.
4. Employment scenario showing signs of gradual recovery.
5. External trade
1. Apr - March: Exports: $312 bio (+3.9%), Imports: $450 bio (-8.1%), Trade deficit: -$138 bio (vs -$190 bio last year). Oil imports: $167 bio (+2.2%), non oil imp: $283 bio
(-13.3%). Agriculture exports: $45 bio.
2. March 2014: Exports: $29.5 bio (-3.2%), Imports: $40 bio (-2.1%), Trade deficit:-$10,5 bio (5 month high).3. April 2014: Exports: $26 bio (+5%), Imports: $36 bio (-15%). Trade deficit: $10 bio. Oil imports: $13 bio (-0.6%), Non oil: $23 bio (-21.5%).4. Slowdown in exports in recent months can be attributed to certain sector specific issues and global factors. For instance, decline in exports of gems and jewellery could be largely reflective of the price effect mainly emanating from an20.1 per cent y-o-y drop in gold prices.
5. Fall in exports ofpetroleum products are largely attributed to lower gross refining margins
6. Destination-wise, while export demand from economies like the US and China was broadly intact, a significant decline was evident in exports to EU economies, Switzerland, the OPEC region, Singapore and Hong Kong SAR.
7. Although the decline in imports bodes well from the perspective of a CAD decline, the lowering of CAD on this account may not sustain with the expected revival of domestic aggregate demand.
8. Surge in capital inflows led to accretion of reserves; the rupee has moved in a narrow
range.
6. Inflation
1. CPI: 8.6% in April, 8.31% in March, 8.1% in Feb, 11.2% in Dec.
2. Decline mainly due to declining vegetable prices. Apart from vegetables, CPI inflation in ‘cereals and products’ posted a significant decline at 9.9 per cent in February 2014 from 12per cent in November 2013.
3. Wage price spiral pushed up inflation in the services segment.
4. Headline inflation has moderated in recent months, but upside risks remain in
2014-15.
5. WPI: 5.2% in April (lower due to vegetables), 5.7% in March (higher due to food items),
4.68% in Feb, 6.16% in Dec.
6. Core inflation: 3% (highest since Apr 13).
7. Efforts to address infrastructure bottlenecks have yielded modest revival so far
1. Cabinet Committee on Investment (CCI) and the Project Monitoring Group (PMG) had together undertaken resolution of impediments for 296 projects with an estimated project cost of `6.6 trillion.
2. However, 15-20 per cent of these projects, mostly in roads, power and petroleum, have reported additional
delays, for which the dates of completion have been extended further.
3. Also, there has been an increase in the number of projects without date of commissioning, mostly in roads reflecting the growing uncertainty about their completion.
8. While fiscal targets were met in 2013-14 (RE), the quality of fiscal adjustment needs improvement.
IV. Differentiated Bank Licensing- Examining Pros and Cons
A. Arguments in Favour of Adopting a Differentiated bank Licensing
4.1 With the broadening and deepening of financial sector, it is observed that banks are slowly migrating from a situation in the past where the number of banking services offered by the banks was limited and all banks provided all the services to a situation where banks are finding their niche areas and mainly providing services in their chosen areas. Many banks keep the plain vanilla banking as a small necessary adjunct. It is widely recognized that banks providing services to retail customers have different skill sets and risk profiles as compared to banks which mainly deal withlarge corporate clients.The present situation where every bank cancarry out every activity permissible under Section 6 of Banking Regulation Act, 1949 has the following implications, relevant to the subject under consideration :
For a wholesale bank dealing with corporate clients only, it becomes a costly adjunct to maintain a skeleton retail banking presence. Moreover it becomes difficult for such a bank to meet priority sector obligations and obligations for doing inclusive banking.
Retail banks may have to create risk management and regulatory compliance structures which are
more appropriate to wholesale banks, thus resulting in non-optimal use of resources.
Similar supervisory resources are devoted to banks with different business profiles. This may also result in non-optimal useof supervisory resources.
The priority sector lending regime for foreign banks indicated in paragarph 3.3 has been causing some discomfort for some of the foreign banks. For example, some of the foreign banks find it difficult to fulfil even the less rigorous target of 32 per cent in respect of priority sector advances. Some banks find it difficult to provide ' no frills' facility to economically disadvantaged. For them themore liberal licensing regime causes a different set of problems.
It appears that given an opportunity, some of the banks may liketo follow a niche strategy rather than competing as full service all purpose banks.
2. On the other hand, there are some factors which point towards desirability ofcontinuing with the existing system of universal banking:In India, the penetration of banking services is very low. Less than 59 % of adult population has access to a bank account and less than 14 % of adult population has a loan account with a with a bank. Under such circumstances, it would be incorrect to create a regime where banks are allowed to choose a path away from carrying banking to masses.
Priority sector lending is important for banks. The revised guidelines on priority sector lending have rationalized the components of priority sector. For thefirst time, investments by banks in securitised assets, representing loans to various categories of priority sector, shall be eligible for classification under respective categories of priority sector (direct or indirect) depending on the underlying assets, provided the securitised assets are originated by banks and financial institutions and fulfil theReserve Bank of India guidelines on securitisation. This would mean that the banks' investments in the above categories ofsecuritised assets shall beeligible for classification under the respective categories ofpriority sector only if the securitised advances were eligible to be classified as priority sector advances before their securitisation. These measures would make it easier to comply withthe priority sector lending requirements by those banks which had faced some difficulties in this regard.
The business model adopted by such ‘niche’ banks depends heavily on ample inter-bank liquidity.
Any shock leading to liquidity crunch can translate into a run on the bank. This situation has been clearly illustrated recently in UK in the case of Northern Rock Bank.
Q how to draw private investments to manage problem to storage of perishable commodities?
1. One way is FDI in multi brand retail. But for this we need:
1. Policy certainty.
2. Reduce red tape.
3. Not to frame rules which discourage companies.
2. Another is toboost local entrepreneurship.
1. Create a favorable ecosystem - ESMA, credit, reduce red tape, give more incentives.
2. National Food Processing Mission - Mega Food Parks.
Q. GDP of your town
1. $25 bio.
Q. UPA - 2 is failure ? comment
1. Result has been good in certain areas and not good in certain other areas.
2. Success
1. Social indicators: Poverty, IMR, education.
2. NREGA - empower rural workers.
3. RTI.
3. Failures
1. GDP growth, stalled investments.
2. Corruption, lack of transparency.
3. GST and other critical bills.
4. Foreign policy.
Welfare Indicators
HDI
1. A long and healthy life: Life expectancy at birth
2. Education index: Mean years of schooling of adults and Expected years ofschooling of 5 year oldchildren
3. A decent standard of living: GNI per capita (PPP US$)
4. Indian rank is 136 out of 187 countries @ 0.554 (slight improvement of 0.007 from last year).
5. Inequality adjusted HDI is 0.392 and rank is 91 (improvement from 93 last year).
1. HDI ≥ 0.800 indicates high human development.
2. 0.799 ≥ HDI ≥ 0.500 indicates medium human development.
3. HDI < 0.500 indicates low human development.CPI (corruption perception index )
1. India's rank s 94 out of 177 and is same as last year. Index is maintained by Transparency
International.
2. The CPI scores and ranks countries/territories based on how corrupt a country’s public
sector is perceived to be. It is a composite index, a combination of surveys and assessments of corruption, collected by a variety ofreputable institutions. 0 means that a country is perceived as highly corrupt and a 100 means that a country is perceived as very clean.
Ginni Coefficient
1. It is computed from the National Sample Survey for 2011-12. In rural areas, the coefficient rose to 0.28 in 2011-12 from 0.26 in 2004-05 and to an all-time high of 0.37 from 0.35 in
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UNDP report on India's poverty1. The estimated number of $1.25 poor in India in 2010 falls from 396 million in 2004-05 to 148 million in 2014. In 2014, the World Bank reported that 11.8%[1]of all people in India fall
below the international poverty line of US$ 1.25 per day (PPP).
Q. Interim budget vs Vote on account
1. Vote-on-account deals only with the expenditure side of the government's budget. The government gives an estimate of funds it requires to meet the expenditure that it incurs during the first three to four months ofan election financial year until a new government is in place.
2. A vote-on-account is different from an interim Budget as the former is a statement of only expendiatures while the latter is a complete set ofaccounts, including both expenditure and receipts. However, a vote-on-account is practised every budget. Unlike a full Budget, the vote-on-account does not tweak the prevailing tax rates. Also, it cannot announce any new schemes.
Eminent Indian Economists
K N Raj
1. He played an important role in India's planned development, drafting sections of India's first Five Year Plan, specifically the introductory chapter whenhe was only 26years old. He was a veteran economist in the Planning Commission.
2. He helped shape the contours ofwhat later came to be called the "Kerala model" of development - the co-existence of low per capita income and very high physical quality oflife indicators.3. He worked out a plan to raise India's rate of savings in the post-Second World War period when the country was in need of foreign aid.
4. He computed India's Balance of Payments for thefirst time for theReserve Bank ofIndia.
5. Raj was an advisor to several prime ministers from Jawaharlal Nehru to P.V. Narasimha Rao.
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