General Collection

  • An article from a year ago which argues that Amazon might have more sales than Flipkart on a standalone basis. With Flipkart about to acquire Snapdeal, and  Myntra and Jabong in its kitty already it is undoubtedly the largest eCommerce player in India.
  • How corrupt are our bankers? – While some macroeconomic factors are responsible for the current Non-Performing Asstes(NPA) crisis in the banking sector some of it is self-inflicted. I know of friends who have worked in infrastructure financing and informed that non-viable infra projects miraculously get viable whenever a politician gets involved. As long as these practices continue the banking system cannot truly get rid of NPAs.
  • GST spurs reordering of centre-state relations – It is a known fact that GST is a monumental event in the history of taxation in India and probably one of the biggest legacies of Modi government. Hopefully, history will be kind to him for implementing GST after the debacle of demonetization. Another aspect of GST which has not received as much attention as it deserves is the impact it has centre-state relations in India.
  • Another article on fake news. I have written articles on similar theme earlier here and here.
  • Article on theoretical models of segregations.

Our results confirm the prediction of Schelling’s original model; that when people are simply tolerant, they still become segregated. But we also found that when people strive for diversity, they are able to achieve integration”

  • This article was written in the context of JNU incident where a lot of people have commented that students should only concentrate their education and not get involved in politics. I am a strong believer in student politics. Many of the best politicians of current times like Chandrababu Naidu, CM of Andhra Pradesh; Arun Jaitley, Central minister etc have come out of student politics. This article about another famous personality who rose from student politics, Bhagat Singh. Bhagat Singh also was a great supporter of student politics.
  • An old article from when Prof. Raghuram Rajan was still the RBI governor. According to this article, large borrowers will have higher risk weights from here on. This implies banks will have to set aside more capital against loans to these large borrowers. This essentially means the bank will have to increase their equity which is a costlier form of funding to the banks. Therefore they will increase the interest rate on loans for large borrowers. The large borrowers will be then forced to look for cheaper forms of funding like issuing bonds to the public. Theoretically, this sounds like a great move to improve Indian bond market. I am not sure if this has been implemented yet.
  • A good article on issues facing Indian start-up funding.
  • There are few institutions in India which cannot be criticized or at least go unscathed criticizing them. For example, Indian Army, ISRO, DRDO etc. People go crazy whenever someone criticizes them. Nowadays you can be called Anti-national for speaking up against these organizations. Well, Supreme Court of India is one such organization. I strongly believe that its always good to have a healthy skepticism about everything and every organization including Supreme Court. So, It’s good to see an article criticizing supreme court judges.

Personal Finance

“When to fire your financial advisor” – An excellent article from Monika Halan on investing in mutual funds.

This article in mint talks about the savings habits of stars like Deepika Padukone, Priyanka Chopra, Yuvraj sigh among others. It also has links to various articles which could be a fun read.

Monika Halan and Renuka Sane estimate in their working paper that Indian retail investors have lost close to $28 billion dollars in Unit linked insurance schemes. They also find that 99% of banks do not show correct returns for insurance products. This is quite depressing. An article based on their working paper can be found here. Unit linked insurance plans or ULIPs as they are popularly are mostly scams to extract money out of retail investors. It is my observation that IRDAI has generally been pathetically negligent in protecting consumers as compared to SEBI.  Hopefully, at least now IRDAI takes some action in this regard.

Some excellent articles from Financial times. However, since they are behind a paywall I cannot reproduce snippets here.  If you have access to Financial times I would suggest you to through these three articles ([1], [2], [3]).


Recently a friend of mine messaged me on LinkedIn to write in a couple of sentences my opinion on the entire demonetization exercise. I am reproducing it here with minor modifications indicated in Italics.

“Demonetization is a bold political move by the BJP government. It had conveyed a strong anti-corruption stance of the government to the masses and BJP certainly did benefit in the recent elections post demonetization from it. That is where all the positives of this exercise end. There is no economic rationale for such a drastic step. It had a short term negative impact on consumer durable, FMCG and other industries and no know long term benefits. The liquidity squeeze can have irreversible negative effects on the informal sector which is heavily dependent on cash for transactions and employs the maximum number of Indians. The infringement of government into the autonomy of the RBI is also quite disappointing. RBI has not released the information regarding the amount of old currency it received back which itself tells us about the success of the exercise. Recent RBI data also shows there has been no improvement in the value of electronic transactions which the government in later stages stated as the objective of this exercise when curbing black money reason failed to convince people. The cashless economy could have been given a boost with policy initiatives like Jan Dhan Yojana etc without making the poor suffer.”

Recent GDP data shows a drastic slowdown in the economy in Q4 of 2016-17. Hopefully, the government has learnt something from this misadventure. Here are some interesting articles on demonetization which I have collected over the last several months.

Here are some interesting articles on demonetization which I have collected over the last several months. Finally, I have stopped procrastinating and am writing them down. Some of the arguments are awfully old and may not make much sense at this stage. However, I find them interesting in the context of demonetization so please bear with me.

  • This article talks about the benefits of nudging poor women people into opening bank accounts, an unintended effect of demonetization.

“women have difficulty in protecting their savings from demands placed by relatives and social contacts but, at the same time, face barriers ranging from unfamiliarity to distance in opening a bank account. Therefore, an act of nudging them to open a bank account could have dramatic real impact on future savings, investments and consumption.”

“The bottom line of all these research findings is easily summarized. There is enormous latent demand for formal financial services among the poor. However, frictions such as distance, fee, minimum balance requirement, lack of trust and social customs, among other issues, keep the poor away from formal savings instruments. However, once nudged into the formal financial system, the poor not only actively transact but also reap real benefits in terms of additional savings, investments and income.”

  • This article in NDTV from the early stages of demonetization which has several “pundits” predicting the amount that the government is going to save from old currency notes not reaching the banking system.
  • Another article from those early days which talks about the strategies people were using to convert black money to white.
  • This piece by Ajit Ranade, Chief economist of Aditya Birla group, in the early days of demonetization argues that currency swap/ demonetization would not result in windfall gain to the government. He bases the argument on following points

    “Notes are of varying vintage. Their write-down is over a long extended period. So the gains are gradual, and get recorded as special reserves. Secondly, the RBI has to keep issuing new currency to keep pace with at least the nominal gross domestic product growth rate. Thirdly, if the RBI tries to encash its gains by selling assets from its balance sheet, that might exacerbate the liquidity crisis.”

    Most probably since the government has not received any gains we need bother about if and how the government can write down its obligations.

  • In another article from the early dasy of demonetization, Mr Subbarao, Ex-governor of RBI, says that even if there is a windfall to the government they should not use it to reduce fiscal deficit as the entire exercise may be misjudged as an action not against black money.

People worship

This is one of those drafts which has been lying around for a long time. This old article in newsminute was from when Jayalalitha was alive! At first, I couldn’t believe it was actually budget speech of Tamil Nadu’s Finance Minister O Pannerselvam. So I went to Government of Tamil Nadu’s website to pull up his budget speech to find the article to be true. You can find his full budget speech here.  I have looked into some of his earlier budget speeches and found that this to be a norm rather than an exception. A lot of water has flown under the bridge since then. Jayalalitha is no more in this world. Pannerselvam briefly became the chief minister but was ousted from the post by mannaurgudi mafia led by Sasikala. Seems bootlicking didn’t help him much. In India, it’s common to find film stars, cricketers, politicians, and self-proclaimed babas to have huge fan following and these fans worship them like demigods.

I may be overreacting but I think I am seeing a similar trend with the CEOs. For example, Soon after taking office Vishal Sikka, CEO of Infosys, has been praised for all his moves.  Everyone praised his vision of making Infosys achieve $20bn revenue by 2020. That would have required Infosys to grow by 20% y-o-y. The plan seemed impossible and extremely ridiculous. Infosys is not an early stage startup to expect 20 percent growth y-o-y (here). However, he was made to look like a hero by the media and all the founders who warning were vilified. The latest annual reports seem to suggest that Infosys won’t be able to reach the target. Hopefully, this experience will teach the media to be a bit more skeptical and not make demigods out of nothing.