The imposition of custom duty on flat panel televisions last month is seen in some quarters as a signal that the government is serious about trying to reduce the current account deficit. Similarly, the increase of import duty for gold, twice in fact, during recent months is being seen as a signal that the government does care about the economy.

However, these moves have not been without negative effects. Signalling could be either ignored or misinterpreted. In either case, it might not achieve its intentions. Not all of these signals reach their aim. For instance, the higher import duty on gold has led to instances of  smuggling of gold.

At times like these, it takes guts to say that India’s crisis could be a good thing, and to take the effort to explain why. Prof. Jayanth R. Varma of the Indian Institute of Management, Ahmedabad has done exactly that in his post dated 29 Aug. The same post also points to three other links that are equally worth reading. His blog is worth following even for those who are not in the world of finance and business.

Besides this, there is also the history of other countries that we can consider in order to understand our own economy better. There is cyclicality which is seen in several economies. There are periods of booms and busts, and very often the cyclicality is something policy-makers might find difficult to act upon.

One country whose history is interesting for us to understand is Argentina. Apparently, Argentina is a country that has seen strong growth followed by political deterioration accompanied by economic decadence. For those who are even mildly interested, the Wikipedia page of the economic history of Argentina makes for very interesting reading. Many thanks to the person who pointed this out.

Related articles

• Current Account Gap seen widening, Rupee in focus (news.in.msn.com)
• Import duty on gold jewellery may be hiked to 15 pc (thehindu.com)
• Import curbs, export spurt mean CAD peaked out in June (dnaindia.com)