Sri Lankan crisis

This refers to ‘Dissecting Sri Lanka’s self-induced crisis’ (April 7). It is saddening to see the worsening economic situation in Sri Lanka. Like other countries, Sri Lanka also had to face the impact of Covid-19, which has affected its tourism industry, which is one of its main sources of forex.

Unplanned borrowings and overdependence on a single country for infrastructural development have added to the burden of servicing its debt. Given the size of the country, a debt exposure of $11 billion is mindboggling. The Rajapaksa government failed to adopt phased development of ports and roads.

The overnight shift to organic farming was yet another blunder. Keeping chemical fertilisers off from the fields is a good move but that should have been done gradually and scientifically taking the farmers into confidence and allowing some time for the soil to adapt to natural manure.

Besides, the country failed to take cue from India’ experience in fighting the pandemic and bringing back the economy on track. Sri Lanka’s failures could also be attributed to a less experienced group of family members occupying key and strategic posts in government.

RV Baskaran

Chennai

Musk on Twitter board

The role social media plays today needs no elaboration. Now, Elon Musk has a seat on the board of microblogging platform Twitter, with a 9.2 per cent stake. So is his intention behind joining Twitter aimed at having a free and fair platform or is it just a practice run before launching his own social media platform? The possibilities are wide open.

Shruti Sharma

Ujjain, MP

Monetary policy

This refers to ‘RBI’s monetary policy conundrum’ (April 7). Notwithstanding the clamour from the public for the reduction of taxes on the pump prices of oil, the government is not taking any action. The increasing price of oil has a domino effect on inflation, which has now gone beyond the target of the Reserve Bank. Even though RBI is formulating a monetary policy for economic growth with price stability, the prices of essential goods and services are surging.

As the surge in the price of essential goods is because of the rising cost of oil, the government must cut the tax on the pump price of oil and simultaneously the MPC must look to increase the policy rate and transmit the effect into the economy to arrest the rising prices of commodities.

The RBI has to tighten its oversight on the expansion of the loan books of the lenders to control the supply of excessive credit. The elevated level of bad assets, the sluggish progress in its resolution and the high likelihood of standard assets sliding into stressed assets are causes of concern, especially at a time when the economy is on the path of recovery and revival. The MPC must consider those causes and frame the policy and rates to accelerate growth with price stability.

VSK Pillai

Changanacherry, Kerala

Sustainable finance

This refers to “The importance of ‘transition bonds’ (April 7). The launch of a new funding instrument designed to help “brown” companies shift to greener business activities is always going to generate excitement. The new product, transition bonds, can be issued by industries that currently have a high carbon footprint and, therefore, excluded from existing markets for sustainable finance.

The slow growth of the transition bond market can be attributed to the non-availability of a clear definition of what transition finance actually means and to what extent such instruments are environmentally sustainable. This has fueled scepticism among investors about this debt instrument becoming yet another tool for “transition washing.”

S Muthulakshmi

Virudhunagar, TN

Digital currency

This refers to ‘Is CBDC even needed’ (April 7). Indeed, the RBI’s move of floating a digital currency seems a hasty one without analytically weighing the pros and cons of bringing such a virtual currency into the monetary system. If a legal digital currency is launched at this juncture, where existing private cryptos are being levied a high rate of capital gain tax, it wouldn’t get the desired reception as a legal medium.

Further, permitting two legal tenders within a country may create chaos in the money market. Nevertheless, a tight control mechanism is needed on government digital currency too, since it may be used for illegal purposes like terror funding and money laundering.

NR Nagarajan

Sivakasi, TN

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