India: Links for 23rd December, 2019

  1. “When it comes to data centre storage though, India lags behind not just the developed world but even Asia-Pacific. With roughly 40 million less Internet users, Europe has more than 12 times its capacity to store data — 8,600 MW, compared to India’s 700 MW. And while India comprises 25% of Asia-Pacific’s Internet users, in 2017, it accounted for only 8.6% of its data centre growth, as per a 2018 research of the Data Center Advisory Group.”
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    A nice article from the Livemint about how this is set to change.
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  2. A short write-up from the Business Standard on reforms to the GST. The specifics do not matter (to me, that is) as the fact that this article needed to be written at all.
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  3. “The remedial measures have to be a combination of factors: capital infusion, capacity building on the supply side to resolve the unproductive assets, incentives for new entrants and tweaks in the regulatory framework. We need to wipe the slate clean and look ahead. The need of the hour is also to take some hard decisions impacting the current stakeholders. Remember, this situation is akin to the housing-led credit crisis in the US, where a turnaround was led by foreclosed properties and those under development.”
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    On revitalizing the real estate sector in our country. It is going to be a long, hard drive, but one that needs to be undertaken as soon as possible. This is necessary reading for anybody who would like to understand India’s economy today!
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  4. Niranjan Rajadhakshya, about nine months ago, on the need (“maybe?” he said then) for Operation Twist.
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    “One option right now is to borrow a trick from the US Federal Reserve—Operation Twist, named after the dancing style that was all the rage in the years after World War II. There have been two famous instances when the US central bank “twisted” a steep yield curve through clever money market operations, first in 1961 and then in 2011. In each case, the Fed changed the relative amounts of short-term and long-term securities in the market. How? It sold the short-term treasuries it had and used the proceeds to buy long-term securities. The result was that short-term interest rates went up while long-term interest rates came down. The yield curve flattened.”
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  5. And we went ahead and did it. However
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    “Yet it is far from clear that the RBI’s goal will be achieved. Certainly, there might be some flattening of the yield curve. But it is not clear that the amounts being discussed are sufficient. The response of the market for short-term bonds is also being questioned. The sale of the shorter-tenor bonds might well blow up yields in that segment, according to some market participants; on the other hand, liquidity at that end is so ample that there might be an effective cap on yields. The essential problem in the Indian bond market is that the country has, in spite of an apparently manageable debt-to-GDP ratio, entered a state of effective fiscal dominance. “

India: Links for 9th September, 2019

  1. Mild disagreement with the conclusions of this piece, but that notwithstanding, a useful piece to read. This is on the slowdown in the Indian economy
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  2. “Those who access public services can be roughly divided into three segments—those who can pay to get, those who vote to get, and then there is the middle class.”
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    Shankkar Aiyar is a fine, fine writer. Here’s further proof.
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  3. “There is no real right time for disinvestment—only the right reason. Yes, mergers are good, but what about erosion of value—the market value of HDFC Bank is more than all PSBs put together.”
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    And even further proof
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  4. Niranjan Rajadhakshya on the linkages between GST reform, DTC reform, and how they feed into and out of each other.
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  5. On Bouncing Boards.

India: Links for 13th August, 2019

Five links about India from the past couple of weeks:

  1. Nitin Pai explains why the banana thingie was a mere storm in a teacup.
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  2. A rather uninspiring review of the GST impementation, by reading the CAG review of the… well, GST implementation.
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  3. Vivek Kaul in the Livemint analyzes credit growth in the economy, and asks who exactly is borrowing. To me, this article raises more questions than answers.
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  4. “At the Centre, the privatisation of state enterprises during the Vajpayee era is an aberration which validates the norm. The government is the largest business house and owns 339 enterprises in 2019. Leave alone the disinvestment of Air India or 23 other enterprises. In 2018, the ownership of private carrier Jet Airways is parked on the balance sheet of public sector banks. The debate is not just about government ownership but about political management. ”
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    To me, a deeply depressing issue is the fact that no government in India, bar none, has taken divestment seriously, with the notable exception of the Vajpayee government. It’s been more of the same before, and more of the same after. Deep sigh.
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  5. Is democracy an end in and of itself, or is it the means to an end?