Interesting readings

• An editorial in Financial Express on recent efforts to snarl up `minor' ports, which are the hotbed of progress in India's ports.


• Writing in Foreign Affairs, Christian Le Miere proposes a way for China to deal with its problems in Tibet and Xinjiang. In similar fashion, Sri Lanka has problems with the Tamil regions.
  I have a suggestion for a well-tested approach that could help forge a union out of diverse provinces: the federal structure of the Indian Constitution. Some of these ideas could be ported to these new settings. As an example, I believe the Indian idea of the Finance Commission has been used to some extent in the design of the South African Constitution.


• Some people in the Indian policy establishment are smugly basking in the glory of having blocked securitisation in India, given that securitisation got into trouble in the West. Jayanth Varma has an article in Financial Express which is most interesting. One key point is that when bank assets get into trouble, the difficulties are first visible in transparent assets such as securitisation paper. He ends saying: We must also remember the US home owner gets a bargain that is available to few home owners elsewhere in the world : a 30-year fixed rate home loan that can be repaid (and refinanced) at any time without a prepayment penalty. This is possible mainly through securitisation and deep derivative markets that allow lenders to manage the interest rate risks.
  In India by contrast, the home owner gets a much worse deal: most home loans are of shorter maturity (20 years or less) and are usually either floating rate or only partially fixed rate. The few `pure fixed rate' loans involve stiff prepayment penalties when they are refinanced. It would be sad if we keep things that way because of an irrational fear of securitisation.
  On a related note, see K. Vaidyanathan in Financial Express on CDS.


• Tim Harford in Financial Times on the remarkable fact of poor people in India choosing to pay for private education or healthcare services when government alternatives exist and are free.


• Watch Raghuram Rajan and Bibek Debroy on Ila Patnaik's TV show.


• Sunil Jain in Business Standard on the role of ad campaigns in winning public policy arguments.


• Meghnad Desai in Financial Express on the evolution of ideas on stabilisation, and the outlook for the `new orthodoxy' of macroeconomic policy.


• One of the more egregious forms of protectionism that afflicts india.