State or Market? : India’s telecom wars C.P. Chandrasekhar

As the shakeout in the Indian mobile telephony market continues, price wars are being complemented by verbal wars. The most recent spat involves the Telecom Regulatory Authority of India as well. Its latest revised tariff order has been attacked by Airtel and Vodafone (and by the Cellular Operators Association of India, or COAI) for favouring Reliance Jio, the aggressive new entrant that is seeking to get ahead of the other two, in what is clearly becoming a three-horse race in the industry. The “split” within the COAI, with long-time members and a new entrant on opposite sides, is indicative of…

When Business Turns ‘Easy’ C.P. Chandrasekhar

Its once again a time for exposés of big ticket scams. The headline hogger currently is the alleged huge Rs. 11,400 crore ‘scam’ unearthed in transactions through the Punjab National Bank (PNB) involving diamond merchants Nirav Modi and Mehul Choksi. That this is not an isolated occurrence is established by news of another Rs. 3,700 crore alleged fraud involving Vikram Kothari of Rotomac Pens being reported almost simultaneously. The full details of the possible fraud in either of these cases is yet to emerge. But underlying them is the suspicion that loans or guarantees of huge magnitudes were offered to…

The Aging of a Growth Engine C.P. Chandrasekhar and Jayati Ghosh

With the dollar value of exports declining, India’s software sector faces a historical crisis which may worsen, given the protectionist trends in the US and other uncertainties. Aging_Growth_Engine  (Download the full text in PDF format) (This article was originally published in the Business Line on February 13, 2018)

The Financialization of Finance? Demonetization and the Dubious Push to Cashlessness in India C.P. Chandrasekhar and Jayati Ghosh

This Debate contribution describes the promotion of digital rather than cash payments as a form of the financialization of finance, in its role as a payments system, with reference to recent Indian experience. The obsession with digital transactions as a marker of social and material progress is misplaced; it may become yet another means by which finance extracts rentier incomes out of relatively poor populations. Financialisation_Finance (Download the full text in PDF format) (This article was originally posted in the Wiley Online Library)

Window Dressing Budgetary Figures C.P. Chandrasekhar

The tendency of the current government to misinform and conceal is well known. Yet its periodic resort to such practices does not fail to surprise. The most recent example is the decision to sell its shareholding in Hindustan Petroleum Corporation Limited (HPCL) to the Oil and Natural Gas Commission (ONGC), which it owns, ostensibly to strengthen the latter. The decision comes at a time when low oil prices have hurt the ONGC. Yet, the ONGC board has cleared the proposal to buy 778,845,375 equity shares in HPCL for cash at a price of Rs. 473.97 per share. This acquisition of…

Indian Banking: Current challenges & alternatives for the future C.P. Chandrasekhar and Jayati Ghosh

Published by : AIBOC About the Book Indian banking today is at a tipping point. Banks are burdened with non-performing assets, incurring significant losses due to provisioning and unable to sustain credit growth, and therefore changes are both necessary and inevitable. There are possible strategies with very different implications: many leading banks could be restructured with state support and encouraged to regain the status they had as major instruments of development policy in the two decades after nationalization; or they could be allowed to weaken further, only to be swallowed up by large domestic and private players at bargain prices.…

Indian Banking: Current Challenges & Alternatives For The Future C.P. Chandrasekhar And Jayati Ghosh

Public Banks: Dressing up for the market C. P. Chandrasekhar

When the government presented its third supplementary demand for grants to the winter session of parliament, the list of expenditures included Rs. 80,000 crore for a first tranche investment in equity of the public sector banks to recapitalize them. This was a clear declaration that the government intended to go through with its plan to provide as much Rs. 1.35 lakh crore from its budget to recapitalize banks that are recording losses, as they recognize and provide for non-performing assets accumulated substantially from debt provided to a few large corporates. The recapitalisation plan announced in October 2017 promises to infuse…

The other face of Private Banking C.P. Chandrasekhar and Jayati Ghosh

Private banks, especially foreign ones have relied on off-balance sheet liabilities to earn revenues and profits, courting risk and leaving the business of banking proper largely to the public sector banks. Other_Face_Private_Banking  (Download the full text in PDF format) (This article was originally published in the Business Line on January 15, 2018)      

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…

The Demise of Bank Credit C.P. Chandrasekhar and Jayati Ghosh

Growing economies generally show increasing deployment of bank credit – but in India this has been decreasing for years and recently has been almost flat. What does this suggest about the growth process and the health of the Indian economy. Bank_Credit  (Download the full text in PDF format) (This article was originally posted in the Business Line on 1 January 2018.)