Last year in an article in New York Times, Paul Krugman, called Dr.Rajan's arguments as "Sensible Nonsense". He said, "Again, I find it astonishing that anti-expansion arguments are advanced without even a bit of data in support, when a few minutes of looking at that data would make the foolishness of the arguments obvious. Why, it’s almost as if people are looking for reasons not to do anything, and aren’t interested in the facts".
Dr.Rajan seems to suggest that a "Sensible" Keynesian must advocate more austerity and cuts in government spending until the private sector recovers of its own accord. The question is: can he therefore be called a Pure Keynesian?
Meanwhile, the Economic Times (7th August, 2013) writes: "India needs lower interest rates to revive growth, but the sharp depreciation in the rupee requires rates to remain high, a conflict that the former IMF chief economist will find difficult to address, though he has hinted that he might give growth a little more attention".
Anyway, my sincere thanks to Mr.P Chidambaram and his team, for removing the non-performing Dr.Subbarao, though I would have been more happy if the name of Dr.Kaushik Basu would have been announced.
Today Nifty_Spot closed at 5, 542.25 down 143.15 points. Now seeing the FII buying (Rs.212.74 Cr today) once again, I feel that the current market has bottomed out for the time being and we need to cross the next resistance of 5620, to confirm any upmove]
Analysts say the government would ultimately need to take meaningful steps to address the record high current account deficit and stem further declines in the rupee.