The Airtel-Aadhaar Fix C. P. Chandrasekhar

Despite its clear violation of the law, telecom major Airtel appears to have been let off lightly by the government. And that story, though reported, has neither led to adequate punishment nor has it received the extent of media attention it deserves. The story is that Airtel used its position as a dominant mobile services provider to strengthen its new role as a “payments bank” by exploiting a loophole in a system created through the decisions of multiple agencies. The company not only opened a large number of payments bank accounts in the names of its mobile subscribers without their…

Making Merry on Bitcoin C.P. Chandrasekhar

Bitcoin has left the world of finance gasping. Though the total market value of all of that cryptocurrency in circulation is only a fraction of the value of the world’s financial assets, the rapid rise in the value of the currency has made it the most wanted of those assets. On January 1, 2017, the currency was trading at between $972 to $990 a unit. By December 7 that range had risen to $14,063 to $17,363. According to a calculation by Reuters, an investment of $1000 in bitcoins at the beginning of 2013 would be worth around $1.2 million now.…

The Dollar Drain C. P. Chandrasekhar and Jayati Ghosh

A recent spike in the volume of foreign exchange outflows under the Liberalised Remittance Scheme suggests that India is vulnerable to large scale capital flight, if economic uncertainty increases. Dollor_Drain (Download the full text in PDF format) (This article was originally published in the Business Line on December 18, 2017)

Shopping Frenzy in the New China C. P. Chandrasekhar

In an otherwise gloomy world economic environment, a new kind of record given the media bizarre cause to cheer: the value of online sales notched up by Chinese e-commerce giant Alibaba on a single discount sales day. Global business headlines screamed that in its annual sale on Singles’ Day, 11 November 2017, Alibaba had registered a record sales value of 168.2 billion yuan or $25.3 billion.  Singles’ Day, or 11 November, was, because of its 11/11 aspect, reportedly chosen around 25 years ago by students of Nanjing University to celebrate the fact of being single. Using what has evolved to…

Indian IT hits a Speed Dump C. P. Chandrasekhar and Jayati Ghosh

A sharp deceleration in growth and restricted employment expansion in the IT sector, India’s post-liberalisation showpiece, has implications beyond the industry’s boundaries. Indian_IT_Speedbump (Download the full text in PDF format) (This article was originally posted in the Business Line on November 20, 2017.)

Engineering a New Crisis to resolve an Old One C.P. Chandasekhar

News that the US economy grew at 3 per cent during the hurricane-blighted third quarter of 2017, close to the 3.1 per cent recorded in the previous quarter, has once more revived claims that the world economy has left the Great Recession behind. There is one reason to discount this claim. Back to back 3 per cent annualized rates of growth in consecutive quarters has been observed more than once since the 2008 crisis. In fact, as recently as the second and third quarters of 2014, rates of GDP growth in the US stood at 4.6 and 5.2 per cent…

The Slide of an Aging Leader C. P. Chandrasekhar

After 15 years, the Tata group has exited the mobile telephony business. Its assets in the area located in Tate Tele Services Ltd (TTSL) have been taken over by Bharti Airtel. The Tata name has featured in the mobile telephony market ever since it acquired Hughes Telecom (India), incorporated in 1995, and renamed it Tata Teleservice Maharashtra in 2002. Since Tata Tele’s other enterprise, retail fixed line, and broadband businesses are being merged with Tata Communications and Tata Sky, TTSL is in essence being dismembered. Few of the firm’s current employees would be absorbed by Airtel or the Tatas themselves.…

The Crisis in Agriculture C. P. Chandrasekhar and Jayati Ghosh

The dilution of government intervention in the form of minimum support prices, procurement and public distribution is undermining the medium-term viability of agricultural production in India. crisis_in_agriculture (Download the full text in PDF format) (This article was originally published in the Business Line on October 23, 2017.)

Create a Crisis and make it Worse C. P. Chandrasekhar

On August 10, the government tabled a new bill in Parliament, with the aim of using its majority to push through a desperate policy initiative in the form of the Financial Resolution and Deposit Insurance (FRDI) Act. The Act seeks to create an ostensibly ‘independent’ FRDI Corporation, which would take over the task of resolution of failing financial firms from the Reserve Bank of India and other regulators. To that end, it is to be armed with special and near draconian powers to implement its mandate, and given control of the deposit insurance framework currently managed by the Deposit Insurance…

Mixed Signals from the External Sector C. P. Chandrasekhar

A slew of numbers released recently point to rather peculiar and contrary trends in India’s balance of payments. Exports have revived but the trade and current account deficits widen, pointing to an excess of foreign exchange expenditure relative to earnings. While the widening current account deficit points to a weakening balance of payments position, foreign exchange reserves are at record levels. The foreign exchange reserve increase is funded largely by capital flows, consisting of a very large share of investments in the debt market. Such large capital inflows are strengthening the rupee and undermining export competitiveness, which can worsen the…