Needed, Proac­tive Pol­icy Ac­tion

The Economic Times - - Economy: Macro, Micro & More -

The weak­ness in PMI in the run-up to GST may have some­thing to do with the pres­sure to clear stocks. But it also sug­gests con­tin­u­ing lack­lus­tre out­put growth, and con­se­quently, the need for proac­tive pol­icy ac­tion. Lag­ging in­di­ca­tors, typ­i­cally “out­put” ori­ented, are easy to mea­sure but hard to im­prove or in­flu­ence upon at least in the short-term. In con­trast, lead­ing in­di­ca­tors are in­put ori­ented, harder to mea­sure and of­ten eas­ier to in­flu­ence. We need a set of both lead­ing and lag­ging in­di­ca­tors to keep bet­ter tab on eco­nomic ac­tiv­ity.

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