Editorial in the Indian Express. Consolidation without pain! What am I missing? by Jahangir Aziz in the Business Standard. An anti-inflation budget by T. N. Ninan in the Business Standard. Sweet smell of radicalism by Surjit Bhalla in the Indian Express....
Monday, 28 February 2011
Cross-border exchange mergers are in the news. See Indian exchanges must go regional and then global and Global mergers and Indian exchanges, by Jayanth Varma, who points us to LSE and TMX merge by Jeff Carter on Points and Figures. Also see Stock exchange mergers: the fight for global dominance in the Telegraph, and Big bourse mergers are back but hold the hyperbole by Benn Steil.An article in the Economist, Back for more: Has the global exchange industry lost its marbles again?, is skeptical about various stories that...
Thursday, 24 February 2011
Today, on NSE, derivatives trading showed the following numbers:Product classTurnover (Billion rupees)Index futures 353Index options 1981Stock futures 391Stock options 48Currency futures 178Currency options 30Total 2981 This is really something: Rs.2.98 trillion notional rupees in a day. It's starting to sound like a real market.This data shows an incredible domination of Nifty futures and options. It also shows the...
Wednesday, 23 February 2011
The puzzleAll of us are now curiously thinking about the abrupt phase transition that seems to sometimes occur in the endgame of an authoritarian regime. The traditional script was: The people rise up to rebel and the strongman murders them.When the USSR collapsed, we thought it was special: it was a defunct regime that had just lost the will to live. But for the rest, the basic rulebook stood: the people get mowed down. And sure enough, that happened...
Saturday, 19 February 2011
My collection of links on the transition at SEBI from C. B. Bhave to U. K. Sinha.How India's banks killed the future of commerce on the Cleartrip blog.The defining problem of the Indian State is the tension between spending on program that benefit the few (e.g. the typical UPA welfare program) versus programs that benefit all (i.e. public goods). This problem even extends to skimping on resources for the judiciary. See Dhananjay Mahapatra in the Times of India.Greasing our shock absorbers by Ila Patnaik in the Indian ...
Friday, 18 February 2011
I have long had a complaint that the fines imposed in India for violations of law are too tiny. In SEBI's entire history, big fines - of more than Rs.10 million - have seldom arisen. The economic reasoning suggests that fines have to be way bigger than mere disgorgement, in order to reflect the imperfect probability of getting caught. Fines have to be big enough to really hurt the key decision makers. Only then will they exert an influence on the behaviour of the entire market.SEBI recently came out with a href="http://www.sebi.gov.in/consentorders/relinfraconsent.pdf">a...
by Shubho Roy and Pratik Datta.The SEBI Consent order under discussion has garnered wide media attention. The total settlement amount sounds very large. Certainly, it is the largest `settlement amounts' ever collected by SEBI. One could argue that the settlement amount is large enough to deter such behaviour and prevent recurrence. However, if we are skeptical about the functioning of any government agency (as we all should be) we have to wonder. Whenever you consider the size of a fine, the most important thing ...
The saga of criminalising and then decriminalising cheque bouncing, 15 June 2013.Investigating ponzi schemes: A malady, 30 April 2013.Evaluating responses to India's macroeconomic crisis, 28 May 2012.Movement at SEBI towards principles-based regulation, 11 March 2012.Policy and legal review of the Micro Finance Institutions (Development & Regulation) Bill, 12 October 2011.Solving the problem of black money in real estate, 5 May 2011.Legal process in rule-making: A success story in an unexpected place, 15 April 2011Rule of law: A pair of stories,...
Saturday, 12 February 2011
I have long marvelled about how quickly the world of mobile phones has rapidly moved through four paradigms. My first mobile phone was a Nokia and they seemed to rule. But then Blackberry won because Nokia did not get the importance of email. And then Apple won because Blackberry did not look beyond email. And then Google Android seems to have won because Apple did not understand the problems of a closed system. At each stage, it looked like there...
Monday, 7 February 2011
Ila Patnaik, Giovanni Veronese and I have a paper titled How to Measure Inflation in India?. The abstract reads: What is the best inflation measure in India? What inflation measure is most relevant for monetary policy making in India? Questions of timeliness, weights in the price index, accuracy of food price measurement, and inclusion of services prices are relevant to the choice of measure. We show that under present conditions of measurement, the Consumer Price Index for Industrial Workers (CPI-IW) is preferable to either the Wholesale...
This blog post is joint work with Jeetendra.One important part of capital account decontrol is commitment. If there is risk that capital controls will be brought back in the future, this can have a variety of unpleasant effects. If there is a fear of fresh restrictions coming in on inflows, a surge of money will rush into the country. If there is a fear of fresh restrictions coming in on outflows, a surge of money will rush out of the country. A long-term commitment to openness is required, in order to rule out such behaviour.As a consequence,...
Sunday, 6 February 2011
Raghuram Rajan has an interesting piece on what went wrong with the economics profession in theyears that led up to the global crisis. His big issues: specialization, the difficulty of forecasting, and the disengagement of much of the profession from the real world.I think these, in turn, are directly related to the incentives of academic publishing. It's a recurring theme in agency theory: When the principal rewards the agent for performance in a certain direction, an excessive focus upon that comes about, and performance in other directions...
Friday, 4 February 2011
Important new facts about the Bombay attacks, by Sebastian Rotella, on Propublica. It seems that we have a name and a face for the key handler of the murderers.Vikram Doctor about how Bollywood is (not) growing up.Why Bombay should envy London.Maihar music lineage: first set of shows in Bombay, Calcutta, Bangalore, Delhi.Samar Halamkar in the Hindustan Times on making expenditure programs of GOI work.It appears that the Mubarak regime in Egypt is now at its end game. The most interesting question now is: Will Egypt turn into...
A memorable passage from When Irish eyes are crying, the story of Ireland's economic disaster by Michael Lewis, in Vanity Fair:...the dominant narrative inside the head of the average Irishcitizen -- and his receptiveness to the story Kelly was telling -- changedat roughly 10 o'clock in the evening on October 2, 2008. On thatnight, Ireland's financial regulator, a lifelong Central Bankbureaucrat in his 60s named Patrick Neary, came live on nationaltelevision to be interviewed. The interviewer sounded as if he hadjust finished reading the collected...
The TAGUP report has been released. For the background, see the creation of the group and this blog post. The ideas of the report could give a quantum leap in the execution quality of five projects of tremendous importance -- the Goods and Services Tax (GST), the Tax Information Network (TIN), the Expenditure Information Network (EIN), the National Treasury Management Agency (NTMA) and the New Pension System (NPS). In all these areas, political consensus has been achieved but the execution has floundered. More generally, these recommendations...
Wednesday, 2 February 2011
I first met C. B. Bhave when I walked into his office in September 1993. I was a freshly minted Ph.D. at the time. Speaking with him made a huge difference to my thinking about finance and markets.He had clearly figured out the key building blocks of a revolution in the Indian capital market: electronic trading, clearing corporation, demutualisation, derivatives trading, depository, etc. Most Indian bureaucrats would have visited the trading floor of the LSE and the NYSE and replicated it. He had the strength of mind to look beyond...
As India embarks on the early stages of middle income, there is interest in a more expansive outlay of expenditure for the government. This motivates the question: Can India now embark on constructing an array of welfare programs, which would ultimately add up to an approximation to a welfare state or a social democracy?Vijay Kelkar and I wrote a paper Indian social democracy: The resource perspective on this question, for the 10th `Indira Gandhi Conference' which took place in New Delhi recent...
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