The Skewed Structure of India’s Bond Market C. P. Chandrasekhar and Jayati Ghosh

India’s efforts to activate its corporate debt market, not least by periodically raising the ceiling on investment by foreign portfolio investors in corporate bonds, are yet to succeed. Mobilisation of capital through the issue of corporate bonds has just about crept up to 4.4 per cent of GDP (Chart 1). Though that is much larger than the 0.2 per cent of GDP for mobilisation through new equity issues, it is way short of the figure (varying from 15 to 50 per cent) for most similarly placed emerging markets. Relative to the size of its economy, India’s corporate bond market is…

Neither Interim, nor Substantial C. P. Chandrasekhar

In a pre-election budget speech filled with propaganda about the supposed developmental achievements of the Modi government, substitute Finance Minister Piyush Goyal read out a text that both window-dressed the revised estimates and violated all norms that should apply to an Interim Budget. Principally, the speech lays out three sets of changes on the expenditure side with the hope clearly of winning votes at election time: one to provide for a Rs. 6,000 crore cash transfer in a year to “landholding” farmers with holding size upto 2 hectares; a contributory pension scheme for unorganised workers with monthly income upto Rs.…

The Strange form of “Disinvestment” C. P. Chandrasekhar

As the term of the current NDA government nears its end, with signs of popular dissatisfaction over its performance on the economic front, the urge to ramp up expenditure to woo the electorate intensifies. But a number of factors have combined to render that task difficult, with the failure of the government’s misplaced disinvestment programme being among the most important. Disinvestment receipts are crucial to the government this year for two reasons. First, while direct tax collections in 2018-9 are according to official figures on track to reaching targets, indirect tax collections have fallen short after implementation and periodic revision…

The failed promise of employment C. P. Chandrasekhar

As election 2019 approaches, the Modi government, damaged by agrarian distress, is also being challenged by evidence that its record on employment generation has been extremely poor. To recall, in its campaign during the 2014 election which brought it back to power, the BJP-led National Democratic Alliance (NDA) promised to create 10 million jobs every year. The best source of information on employment we currently have is the privately conducted (and heavily priced) Consumer Pyramids Household Survey undertaken by the Centre for Monitoring the Indian Economy (CMIE). These figures are available from 2016 from a sample of more than 170,000…

The furore over farm debt C. P. Chandrasaekhar

The decision of the newly elected Congress-led governments in Chattisgarh, Madhya Pradesh and Rajasthan to implement the manifesto promise to waive farm debt has set off a controversy. Opposition to the move comes not just from opposing parties. In fact, the political leadership has been sensible enough not to oppose the policy per se. For example, the BJP that had gone the same route in Uttar Pradesh and Maharashtra, has only said that these governments are not doing things the right way, and are deceiving farmers with mere platitudes. The opposition comes from the neoliberal advocates, who paint this decision…

Do ‘Markets’ talk sense? C. P. Chandrasekhar

As the state election results trickled in on December 11, to the surprise of many, the Sensex after a hiccup rose and closed 190 points above its previous end-of-day level. The following day too, the Sensex moved upwards. This was a surprise to many, since the impression had spread that influential players in the market favoured a return of a Modi government in 2019. To the extent that the defeat of the BJP in three important states was a signal of a possible defeat next year, they expected investors to walk out, triggering a market collapse. That did not happen.…

Remittances as Saviour C. P. Chandrasekhar and Jayati Ghosh

Once again, the World Bank has released a Brief declaring India to be the largest recipient of remittances from abroad. According to the Bank, remittances to India that totaled $65 billion in 2017, are likely to touch $80 billion this year, way ahead of China, the second largest recipient with $67 billion. The rise is in keeping with longer term trends, despite short periods when it appeared that remittance volumes were on the decline. Official Indian balance of payments data provide information on private transfers (which include (i) remittances for family maintenance, (ii) local withdrawals from Non-Resident Rupee Accounts (NRE…

“Wageless growth” not “Jobless growth” the new conundrum C. P. Chandrasekhar

The so-called ‘synchronised recovery’ that global policy makers periodically refer to, seems to have bypassed much of the world’s working people. According to the just released Global Wage Report 2018/19 of the International Labour Organisation (ILO), the rate of growth of average monthly earnings adjusted for inflation of workers across 136 countries registered in 2017 its lowest growth since crisis year 2008, and was well below figures recorded in the pre-crisis years 2006 and 2007. What is more, if China, where wage growth has been rapid and whose workforce size substantially influences the weighted average global figure, is excluded, the…

On taking sides in the RBI-Government stand-off C. P. Chandrasekhar

Unlike in the worlds of business and politics, there is little scope for gossip in the world of economics. So, when multiple signals suggested that that there was a stand-off between the government and the Reserve Bank of India (RBI), the media made the most of it, with a multitude of stories reporting and explaining the nature of the spat and its implications. Given the formal economic arguments that must enter those discussions, there is much that the lay reader cannot process to assess which of the two institutions is right in this controversy. However, the thrust of the reportage…

Hype and Facts on Free Trade C. P. Chandrasekhar

Voices questioning the claim that nations and the majority of their people stand to gain from global trade are growing louder. The one difference now is that the leading protagonist of protectionism is not a developing country, but global hegemon United States under Donald Trump. Free trade benefits big corporations with production facilities abroad, Trump argues, while harming those looking for a decent livelihood working in America. With time Trump has made clear that his words are not mere rhetoric, matching them with tariffs that have frightened European and North American allies and US corporations, besides troubling the likes of…