Home > Global Finance, History, Indian Economy > The Dirty Dozen – Percy S Mistry on India coping with a global economic slump

The Dirty Dozen – Percy S Mistry on India coping with a global economic slump

Percy S Mistry: Coping with a global economic slump

With a full-blown global recession now under way for 2008-10, even prime loan portfolios will turn sour until economies turn around. That will result in increasing non-performing assets (NPAs) in portfolios that were until two months ago regarded as secure. So banks will go into a second round of provisioning, write-downs and reserve accretion, requiring more capital. But government rescues have exhausted the ammunition available to fight this new scourge. The Brown Plan will make it more, not less, difficult to raise more bank capital.

National governments, having mutilated their budgets with financial rescues, are now talking up plans to launch counter-recessionary public capex programmes; even as demands on social security safety net financing increases with rising unemployment. But, as Japan showed in 1990-2005, large public capex can be ineffectual, even counter-productive.

His ideas reach higher than his vision does

Excellent set of recommendations – except that Percy Mistry has too much faith and gives importance to IMF and World Bank. The Indian Government and RBI should do everything that Percy Mistry is saying – except the IMF and the World Bank. Maybe, these can be replaced by SWFs.

The other issue with Percy Mistry is that his vision of India is always subordinate to Western dominance of global economy. Percy understands the mechanics of the current financial system very well- which is an advantage when you want to use it. And a liability when you want to change it.

Percy, a word of advice.

Focus on making plans about how India should prepare itself for the day when India will dominate the global economy – and not, if.


The 2ndlook model for a Third currency Bloc is ready. Join in to review, participate, critique and develop the First Cut. While the need for a new global reserve currency has been evident, there is very little in the public sphere. The speed of events has clearly caught the BRICS and Third World napping – and unprepared. But, not 2ndlook – who, from the very beginning, proposed that the world should stop clinging to the Dollar-Euro skirts.

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