Tuesday, 25 January 2011
Monday, 24 January 2011
Please see http://delhi-econ-seminars.blogspot.com
If you are in the NCR region and like to get announcements of economics seminars in the region, this would be a useful one-stop source. You can subscribe to these announcements through twitter, RSS, email, etc.
If you are in the NCR region and have organised a seminar or a conference of interest to serious academic and policy economics, please get in touch with Anurodh Sharma of NIPFP who can put up a posting with your announcement.
If you are in the NCR region and like to get announcements of economics seminars in the region, this would be a useful one-stop source. You can subscribe to these announcements through twitter, RSS, email, etc.
If you are in the NCR region and have organised a seminar or a conference of interest to serious academic and policy economics, please get in touch with Anurodh Sharma of NIPFP who can put up a posting with your announcement.
Monday, 17 January 2011
by Viral Shah.
Frictionless payments are an important contributor to India's growth
story. Cash
is costly for everyone in the system: for the central banker,
banks, businesses, and individuals. Yet, we are far away from a mass
adoption of electronic payments.
For electronic payments to take off, it is essential to have a bridge
between the world of physical and electronic money, allowing seamless
conversion between the two. Until recently, this could only be done at
banks or ATMs. Various developments over the last year have greatly
expanded the number of entities that can now offer such services:
- July
2009, Cash withdrawal at point-of-sale guidelines: As a step towards enhancing
customer convenience, RBI allowed cash withdrawals at point-of-sale terminals
with debit cards. - April
2010, Report of the Inter Ministerial Group on the Delivery of Basic
Financial Services using mobile phones: This group chaired by the
Secretary, DIT and included, among others, representatives from
Department of Financial Services, Department of Posts, Ministry of
Rural Development, Planning Commission, UID Authority of India, TRAI,
RBI, Department of Telecom and the Home Ministry. It suggested a
nationwide payments architecture that consisted of a simple
centralized account hosting platform as a national infrastructure,
full interoperability among payments providers, standards based
biometric point of sale terminals, and standards based mobile
payments. - April
2010, From Exclusion to Inclusion with micropayments:
The UIDAI published a strategy document
on micropayments, which provides a detailed framework for
biometrically authenticated transactions, as recommended by the
IMG. The National Payments
Corporation of India has developed an interoperability switch
for Aadhaar
and mobile based
transactions as recommended in the IMG
report. Both, Visa
and Mastercard
have also adopted this framework. - June
2010, Harnessing the India Post Network for financial inclusion:
This report was jointly commissioned and produced by Department of
Posts, Department of Financial Services, Department of Economic
Affairs and Invest India Economic Foundation. It recommended a
framework similar to that recommended by the IMG; that of a low-cost
account hosting platform and cultivating a payments ecosystem by
allowing partners to access its physical and electronic payments
network for a fee. - September
2010, Financial Inclusion by Extension of Banking Services - Use of
Business Correspondents (BCs): BC guidelines have existed for a
while, but RBI recently relaxed the rules for the entities that can
act as BCs. These new guidelines allow for-profit companies (except
NBFCs) also to become BCs. This appears like a small change but it has
had far-reaching consequences.
Over these two years, we have a vivid sense about electronic
payments making the grade, from a vaguely posed idea for the deep
future to something that is tangibly around the corner. Each of these
elements appears to be small in isolation, but the link from public
policy developments to outcomes is like
a butterfly effect.
These developments have important ramifications for mass adoption of retail
electronic payments and financial inclusion. Banks, recognizing the
importance of new regulation, have partnered with telcos with retail
networks. This allows for the telco to leverage its network of
talk-time retailers as BC sub-agents, and to also offer mobile
payments between bank accounts. A flurry of announcements has happened
recently: SBI-Airtel, ICICI-Vodafone, Axis-Idea,
and more will certainly follow.
As much as these announcements are exciting, they raise some worrisome
questions. The biggest question is interoperability. If the country is
going to have a network of a million BC outlets, shouldn't a customer
of any bank be able to use any outlet, much like they can use any ATM?
Shouldn't a customer of one bank-telco partnership be able to send
money to a customer of another bank-telco partnership effortlessly?
Network
effects are essential for mass adoption of electronic
payments. After all, regulations today allow a person with a debit
card to withdraw cash over an interoperable network of point-of-sale
terminals.
Banks and telcos are unlikely to want interoperability; to justify
investments, gain customers, and want them to stick. Perhaps the
regulator ought to take a firm stand on the issue. A good balance may
be to ensure that the products are designed to be interoperable with
some uniformity of customer experience, but offer an interoperability
holiday for the first two years.
Saturday, 15 January 2011
India has an inflation crisis. From 2006 onwards, the yoy rise in CPI-IW seems to have gone unhinged:
Why did this happen? We have a `Nobody killed Jessica' situation here. Sharad Pawar and D. Subbarao both insist that the problem cannot be laid on their doorstep. I would argue that it was the currency policy from 2003 onwards (large purchase of dollars with partial sterilisation) which gave us this mess, which was then compounded by repeated RBI speeches saying that inflation is not important, and RBI actions which were soft on inflation.
The weakness of macroeconomic thinking in official circles is visible, with government actions including banning exports, sending the police to raid traders and hoarders, etc. I believe there is an iron law of economic policy: across each doubling of GDP, you have to reinvent government. The trouble in India is that we are getting each doubling of GDP in a decade or less, giving a very large gap between the structures of government and the underlying conceptual frameworks, when compared with the requirements of the economy. With agriculture at only 15% of GDP, one has to think differently about the role of food in inflation as a macroeconomic phenomenon.
Getting back to stable 4% inflation is terribly important, and it's going to be hard. In recent weeks, Ila Patnaik has written four newspaper pieces which add up to an interesting perspective on inflation: 20 Dec, 25 Dec, 3 Jan, 13 Jan. And, a blog post of mine on food price volatility may also be useful.
Why did this happen? We have a `Nobody killed Jessica' situation here. Sharad Pawar and D. Subbarao both insist that the problem cannot be laid on their doorstep. I would argue that it was the currency policy from 2003 onwards (large purchase of dollars with partial sterilisation) which gave us this mess, which was then compounded by repeated RBI speeches saying that inflation is not important, and RBI actions which were soft on inflation.
The weakness of macroeconomic thinking in official circles is visible, with government actions including banning exports, sending the police to raid traders and hoarders, etc. I believe there is an iron law of economic policy: across each doubling of GDP, you have to reinvent government. The trouble in India is that we are getting each doubling of GDP in a decade or less, giving a very large gap between the structures of government and the underlying conceptual frameworks, when compared with the requirements of the economy. With agriculture at only 15% of GDP, one has to think differently about the role of food in inflation as a macroeconomic phenomenon.
Getting back to stable 4% inflation is terribly important, and it's going to be hard. In recent weeks, Ila Patnaik has written four newspaper pieces which add up to an interesting perspective on inflation: 20 Dec, 25 Dec, 3 Jan, 13 Jan. And, a blog post of mine on food price volatility may also be useful.
Wednesday, 12 January 2011
by Rudrani Bhattacharya.
Today's data release showed y-o-y growth in the Index of Industrial Production: this was at +2.7% in November when compared with the previous value of 11.3%. Some analysts have conjectured that this was driven by seasonal fluctuations including the placement of Diwali, holidays related to Diwali and the reduced number of working days in November. In the jargon of seasonal adjustment, Diwali is termed a `moving holiday': it's a holiday which shows up in different months in different years.
Our work on seasonal adjustment includes treatment of the overall IIP and some of its components while controlling for the Diwali effect. Even after this adjustment, the seasonally adjusted annualised growth rate for the month is negative (-1.97%) while the average growth over three months including the current month is 0.18%.
IIP consumer goods fared particularly badly (a value of -6.48% for the 3-month average of the annualised point-on-point change of the seasonally adjusted level). Another weak performer was IIP manufacturing (0.017%). However, IIP capital goods shows an encouraging picture with a 3-month average of seasonally adjusted annualised rate of 41.10%.
The year-on-year change is the sum of 12 shocks. Ordinarily it has a lot of inertia. It is, indeed, surprising that the y-o-y change flipped from +11.3% to +2.7% for two consecutive months. There may well be major difficulties in the statistical system which are leading to this. We can be pretty confident that the odd behaviour is not caused by seasonal effects.
Today's data release showed y-o-y growth in the Index of Industrial Production: this was at +2.7% in November when compared with the previous value of 11.3%. Some analysts have conjectured that this was driven by seasonal fluctuations including the placement of Diwali, holidays related to Diwali and the reduced number of working days in November. In the jargon of seasonal adjustment, Diwali is termed a `moving holiday': it's a holiday which shows up in different months in different years.
Our work on seasonal adjustment includes treatment of the overall IIP and some of its components while controlling for the Diwali effect. Even after this adjustment, the seasonally adjusted annualised growth rate for the month is negative (-1.97%) while the average growth over three months including the current month is 0.18%.
IIP consumer goods fared particularly badly (a value of -6.48% for the 3-month average of the annualised point-on-point change of the seasonally adjusted level). Another weak performer was IIP manufacturing (0.017%). However, IIP capital goods shows an encouraging picture with a 3-month average of seasonally adjusted annualised rate of 41.10%.
The year-on-year change is the sum of 12 shocks. Ordinarily it has a lot of inertia. It is, indeed, surprising that the y-o-y change flipped from +11.3% to +2.7% for two consecutive months. There may well be major difficulties in the statistical system which are leading to this. We can be pretty confident that the odd behaviour is not caused by seasonal effects.
Monday, 10 January 2011
Rick Bookstaber has an interesting post on facebook, which makes you think about the world. It reminded me of the lines: But there's gonna be a meter on your bed / That will disclose / What everybody knows. We used to think of that as a dystopian vision where we collapse into an authoritarian regime, where the liberal project fails. What is surprising is that people are wilfully walking into this surveillance arrangement. In all fairness, what's come about is closer to Lord of the Flies (monitoring by peers) than to 1984 (monitoring by the State). But it's creepy all the same.
He ends on an optimistic note:
He ends on an optimistic note:
So my bet – a long term bet because it will take the force of cultural change to accomplish – is that Facebook will become marginalized. It will not disappear, it will remain a repository for factoids about one's collection of friends, but the reality of what Facebook friends really are will become evident, as will the effects of standardization of the individual, the cost to individuality of giving up privacy, and the frustration with having Facebook friends that are increasingly fictionalized and flattened versions of their real selves.I would like for this to be true but I fear this is not the world that we live in.
Sunday, 9 January 2011
Many places in India have experienced name changes. I wondered: To what extent do these new names take over? Google gives us interesting bits of information about this question.
ngrams.googlelabs.com gives us the ability to measure the extent to which a word occurs in the millions of books that google has digitised. For the Bombay vs. Mumbai question, it shows:
This suggests that the people who write books are still emphasising `Bombay' instead of Mumbai.
Turning away from books to the web, google gives us two kinds of information: the extent to which either name is used in the stock of material on the net (as of today), and the extent to which either name is used in google searches.
In the case of Bombay, this tells us that the old name (`Bombay') makes up 19% of google search traffic and 22% of the stock of content on the web. So this evidence suggests that the new name has been accepted the most in contemporary use with Chennai, less so with Mumbai and further less with Kolkata. I wonder why this would happen.
ngrams.googlelabs.com gives us the ability to measure the extent to which a word occurs in the millions of books that google has digitised. For the Bombay vs. Mumbai question, it shows:
 |
| The phrase `Bombay' vs `Mumbai' in books |
This suggests that the people who write books are still emphasising `Bombay' instead of Mumbai.
Turning away from books to the web, google gives us two kinds of information: the extent to which either name is used in the stock of material on the net (as of today), and the extent to which either name is used in google searches.
| City | Share in search | Share in web |
| Calcutta | 0.22 | 0.25 |
| Bombay | 0.19 | 0.22 |
| Madras | 0.11 | 0.17 |
In the case of Bombay, this tells us that the old name (`Bombay') makes up 19% of google search traffic and 22% of the stock of content on the web. So this evidence suggests that the new name has been accepted the most in contemporary use with Chennai, less so with Mumbai and further less with Kolkata. I wonder why this would happen.
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