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Policy economists are going back to the drawing board. The anaemic global recovery more than eight years after the North Atlantic financial crisis has led macroeconomists to either seek new prescriptions or revive old ones to get economies back on track. The political backlash in many parts of the world against inequality within nations—even as inequality at the global level has reduced because of the progress in China and India—has forced new discussions on development policy. Exhibit A: The December issue of the Finance and Development quarterly published by the International Monetary Fund has several discussions about the distributional consequences of free trade. One underlying theme in these essays is that world trade has increased global welfare at the aggregate level but there has been no structured attempt to compensate the losers in order to ensure that nobody is worse off—the classic Pareto principle of welfare economics. This comes even as the multilateral lender has alt...

Mumbai: The capital markets regulator may soon allow investors to buy mutual funds worth as much as Rs50,000 a month through digital wallets, in keeping with the government’s aim of increasing digital transactions, according to two people with direct knowledge of the discussions. The talks were held between officials of the Securities and Exchange Board of India (Sebi) and the Association of Mutual Funds in India (Amfi). Mutual fund schemes will be the only products in which transactions worth up to Rs50,000 will be allowed through e-wallets. For all other products, the existing limit of Rs10,000 a month will remain. (The central bank on 23 November raised the limit to Rs20,000, in the wake of the government’s demonetisation move.) “Sebi is keen to allow e-wallet transactions in mutual funds as part of its efforts to digitize the distribution processes for all financial products,” said the first of the two people cited above, both of whom spoke on condition of anonymity. “The ...

Investment calls for a stable macroeconomic environment, where the dominant currency denomination is not withdrawn at 3 hours’ notice. Photo: Ramesh PaInvestment calls for a stable macroeconomic environment, where the dominant currency denomination is not withdrawn at 3 hours’ notice. Of the two denominations demonetised on 8 November at midnight, Rs500 was the preferred storage denomination among labourers and itinerant people, and the modal transactional denomination in wholesale markets and mandis. The replacement trickle is said to have started supplying the new Rs500 note (although I have yet to see it), well after the Rs2,000 denomination made its appearance. Without enough Rs500 notes in circulation, the Rs2,000 note is rejected everywhere. It has simply not taken root as accepted tender. To what extent was the demonetisation consistent with the statutory provisions in Chapter III of the Reserve Bank of India (RBI) Act 1934, which assigns to the RBI the sole right to issue curr...