India: Links for 2nd December, 2019

What else?

  1. “The non-government part tends to form 87-92% of the economy. In the July-September period, it formed nearly 87% of the economy. If 87% of the economy is growing at 3.05%, the situation is much worse than it seems.”
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    Vivek Kaul about the GDP data is worse than it looks.
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  2. “At its core, Indian industry is cooling rapidly, with industries like coal, steel, cement and electricity having contracted in October. Eight core infrastructure industries have not grown in the first seven months of this year. Manufacturing, led by the automobile industry, has contracted, and mining stopped growing in the second quarter. Energy utilities and construction saw their growth rates almost halving from the same quarter a year ago. Another three months of declines will officially qualify as a manufacturing recession.”
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    The R-word is being heard, louder and louder.
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  3. “The good news is that GDP growth in the next quarter or the fourth quarter could well be a wee bit higher. The pop thesis is that given the lower base of the previous year, growth could be statistically higher—a bit like standing next to Leonardo DiCaprio, who is six feet tall, and then next to Tom Cruise, who is 5 feet 7. The bad news is that the slowdown is not going away anytime soon. ”
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    Shankkar Aiyyar, in top form.
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  4. ““Besides monetary easing by the Reserve Bank of India (RBI), the government needs to simplify the goods and services tax (GST) and introduce a new direct tax code to clear the tax jungle created by our ancient income-tax law and rules,” he says.”
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    The “he” in this case being Arvind Virmani.
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  5. This may be behind a paywall for you, in which case, my apologies. But the final link in this set is from TN Ninan over at Business Standard.

India: Links for 25th November, 2019

  1. A difficult article to excerpt, so go ahead and read it in its entirety: Andy Mukherjee on India’s telecom woes.
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  2. “The NFMW should be determined based on macroeconomic considerations, namely (1) whether the NFMW would increase aggregate demand for mass market consumption. (2) Whether there are supply bottlenecks in responding to such aggregate demand and, if so, calibrate the NFMW to not cause inflationary pressures by driving up demand that would not elicit a domestic supply response- mass market textiles is a good example. (3) The impact of the minimum wage on the factor distribution of income i.e. wage and profit shares should be a key consideration not from the point of view of equity, but from that of macroeconomic stability and growth optimisation. (4) Subnational minimum wages could be set above the floor as desired with other considerations in mind.”
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    Rathin Roy in an excellent article on the need for minimum wages in India.
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  3. Vivek Kaul is less than impressed with the real estate bailout package.
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    “According to real estate research firm Liases Foras, the number of unsold homes in the country is more than 1.3 million. The number of unsold homes in India has risen dramatically primarily because of high prices. Builders have cited higher development costs as a reason for their inability to reduce prices of properties. The bailout package of ₹25,000 crore will lead to a further increase in the supply of homes, but without adequate price cuts these homes are not going to get sold. Hence, the problem will only deepen.”
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  4. “So he mounted his horse and galloped over to a nearby hill. “From the top of the hill there was a magnificent view embracing old Delhi and all the principal monuments situated outside the town, with the river Jumna winding its way like a silver streak…”The hill, near the village of Raisina, would become the epicentre of the new capital. By October 1912 the government initiated the legal process to acquire land. The first plots, required for the construction of what would be called Rashtrapati Bhavan, amounted to 4,000 acres.”
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    Sidin Vadukut in a lovely article on how modern Delhi came to be, well, Delhi.
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  5. “The scorers refused to continue after the covering over their heads went up in flames. Fire brigades were called and a riot squad formed a line between the dressing rooms and the pitch.”
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    The Guardian on riots in a Test match in Bombay during the 1960’s.

India: Links for 4th November, 2019

5 links about India’s middle class – whatever that means – for today.

  1. “The then managing editor of Fortune magazine, Marshall Loeb, was obsessed with the counterintuitive story of a fast-growing middle class in a country still synonymous with poverty. For my story, Loeb devised a headline that trumpeted, “India Opens for Business: The world’s largest middle class beckons foreign investors.” The article quoted NCAER data which estimated that the lower middle class, with annual household incomes of $700 to $1400, was responsible for 75% of unit sales of radios and soap and between a third and half of all shampoo and TV sets.”
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    Care to guess when this article – the one that is being spoken about here –  was penned? Read the rest of the article for a slightly pessimistic take on India’s middle class and its growth prospects.
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  2. I may have linked to this earlier, and apologies if I have, but a compendium of articles on India’s middle class is incomplete without linking to this magnificent – truly magnificent – article from Stanley Pignal in the Economist about India’s middle class.
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  3. Amitabh Kant et al provide for a rebuttal in the Livemint to the article I mentioned above. Given that it is almost two years since both articles were written, give or take, I leave it to you to judge which one has held up better over time.
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  4. Speaking of holding up over time, this is a McKinsey report from 2007 (yes, you read that right), about India’s big spenders – the soon to arrive middle class.
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    “The middle class currently numbers some 50 million people, but by 2025 will have expanded dramatically to 583 million people—some 41 percent of the population. These households will see their incomes balloon to 51.5 trillion rupees ($1.1 billion)—11 times the level of today and 58 percent of total Indian income.”
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  5. And finally, Vivek Kaul on a related note – the income-tax-paying Indian.
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    “In this regard, the Economic Survey of 2015-16 pointed out: “If the state’s role is predominantly redistribution, the middle class will seek—in professor Albert Hirschman’s famous terminology—to exit from the state. They will avoid or minimize paying taxes; they will cocoon themselves in gated communities; they will use diesel generators to obtain power; they will go to private hospitals and send their children to private education institutions.””

India: Links for 21st October, 2019

In honour of the delayed departure of the monsoons from India, five articles about what the monsoon is, and what it means for us here in India.

 

  1. “The unique geographical features of the Indian subcontinent, along with associated atmospheric, oceanic, and geophysical factors, influence the behavior of the monsoon. Because of its effect on agriculture, on flora and fauna, and on the climates of nations such as Bangladesh, Bhutan, India, Nepal, Pakistan, and Sri Lanka — among other economic, social, and environmental effects — the monsoon is one of the most anticipated, tracked, and studied weather phenomena in the region. It has a significant effect on the overall well-being of residents and has even been dubbed the “real finance minister of India”.
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    Wikipedia is always a good place to start.
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  2. “Simulations of future climate generally suggest an increase in monsoon rainfall on a seasonal mean, area-average basis. This is due to the twin drivers of an increasing land-sea thermal contrast, but more importantly, warming over the Indian Ocean which allows more moisture to be carried to India. Typically increases in total rainfall over India may be in the region of 5-10%, although some climate models suggest more and some less. Climate simulations also show different patterns of rainfall change, so it is difficult to predict how rainfall might change within India. ”
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    The Royal Meteorological Society’s take on what is likely to happen in India in the years to come when it comes to the monsoon, and why.
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  3. “This Wednesday witnessed a rare meteorological coincidence. The southwest, or summer, monsoon, finally withdrew from the country, having overstayed and delayed its retreat by a record time. The same day, the northeast, or winter, monsoon made its onset, on time. The two events rarely happen simultaneously, though the three month-winter monsoon season is supposed to begin almost immediately after the end of the June-September summer monsoon season.”
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    The Indian Express on a relatively rare occurrence in meteorological terms.
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  4. … and the Livemint on the same topic.
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  5. “Along with their ancient perfumery, the villagers of Kannauj have inherited a remarkable skill: They can capture the scent of rain.”
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    I’ve probably linked to this before, but it is always worth a reread: on capturing the essence of petrichor.

EC101: Links for 10th October, 2019

  1. “Coase’s originality was not in his reasoning, but in recognizing that economic exchange is not the mere trading of physical goods but trading rights to property or rights to engage in certain types of conduct affecting property.”
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    Was Ronald Coase the first to come up with the Coase theorem?
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  2. “However, the joy of this book is less in the big picture than in the detail. And what a lot of it! The mind boggles at Smil’s extensive reading and absorption of information. We get the speed at which marathons are run – over the entire course of human history; the growth rates of piglets and weight of chicekns over time; sales of small non-industrial motors over time; the envelope for the maximum speed of travel; Kuznets cycles; Zipf’s law for city size…. The middle section of chapters offer a fantastic overview of technical progress over long periods in a wide range of technologies. I love all this detail.”
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    Diane Coyle thoroughly approves of Growth and Civilization.
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  3. “When a daughter is married, we do worry about her future. But why should I worry when the government of India is my son-in-law who married my daughter Syndicate Bank,” asked the late Tonse Madhav Ananth Pai in 1969, in the aftermath of the nationalization of the first-generation private-sector banks. Fondly known as “Brahma of Manipal”, Pai was the founding father of Syndicate Bank in 1925.”
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    A lovely read on bank mergers, bank nationalization and banks from a particular part of Karnataka.
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  4. “This is where the popcorn enters the picture. Pricey popcorn makes those lower ticket prices possible, And that is why you should buy popcorn at the movies.”
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    Expensive popcorn? Uh, no, cheap movie tickets. Yes, really. Cheap for whom, you ask? Welcome to microeconomics.
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  5. “This leads to the question: Why try these markets at all? This is quite similar to creation of super highways which help reach destinations much quicker but lead to accidents as well. Should we then not create highways?Policies always raise such trade-offs and hopefully, the regulator will take steps which minimise the negative aspect of creation of these markets.”
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    Amol Agarwal, in Moneycontrol, on securitization in real estate loans in India. Me, I think this is not such a great idea.

India: Links for 7th October, 2019

  1. This was a fascinating read. I was aware of the flu and its impact on India, but had no clue about the extent, the severity and the multiple what-might-have-beens. For example:
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    “y 1918, Gandhi was being seen in intellectual circles as a future leader of the nation, but he lacked grass-roots support. That spring, in his native state of Gujarat, he had organised two of his first satyagrahas, but these were followed by thousands of people, not hundreds of thousands. When the flu returned that autumn, he was struck down, as were other leading members of the independence movement who shared his ashram, notably Gangabehn Majmundar, the formidable spinning teacher, and Shankarlal Parikh, who had helped organise one of those early satyagrahas. Gandhi was too feverish to speak or read. He could not shake a sense of doom. “All interest in living had ceased,” he wrote later, in his autobiography.”
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  2. Professor Jayanth Varma is less than impressed with benchmarking for loans, and the rules associated with them:
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    “In the next few years, India needs to work on creating both a better banking system and better financial markets. One of the pre-requisites for this is that regulators should step back from excessive micro-management. For example, the RBI Master Directions require the interest rate under external benchmark to be reset at least once in three months while elementary finance theory tells us that if the floating rate benchmark is a 6-Months Treasury Bill yield, it should reset only once in six months. Either banks will refrain from using the six month benchmark (eroding liquidity in that benchmark) or they will end up with a highly exotic and hard to value floating rate loan resetting every three months to a six month rate. Neither is a good outcome.”
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  3. “The Socioeconomic High-resolution Rural-Urban Geographic Platform for India (SHRUG) is a geographic platform that facilitates data sharing between researchers working on India. It is an open access repository currently comprising dozens of datasets covering India’s 500,000 villages and 8000 towns using a set of a common geographic identifiers that span 25 years.”
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  4. “Prime Minister Narendra Modi, through “Make in India”, has the right idea when he says he wants to make India a global or regional manufacturing hub. But this cannot be accomplished by keeping an inefficient domestic industry shielded behind import barriers forever. Until something is done to change that, the industry will continue to lurch from crisis to crisis, and no lessons will have been learned.”
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    Rupa Subramanya and Vivek Dehejia in Livemint on what ails the automobile industry, and how to correct it.
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    “For a car financed to the extent of Rs 6 lakhs and driven for 1500 km every month the effective cost of ownership/operations, with a driver is probably in the region of Rs 28 per kilometre. Shared mobility wins hands down against this arithmetic of ownership costs.”

Etc: Links for 27th September, 2019

  1. Inside the lives of food delivery riders.
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  2. “Michael Shermer, who advances the case for moral behaviour determined by science and reason in The Moral Arc, argues that the arc of our moral universe is expanding and over history, “we have been steadily—albeit at times haltingly—expanding the moral sphere to include more members of our species (and now even other species) as legitimate participants in the moral community.” ”
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    I look forward to this day. I have a six year old daughter.
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  3. Do you like bananas?
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  4. Speaking of which, I enjoyed listening to this podcast a couple of years ago. Vikram Doctor on bananas.
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  5. “Musk’s believers argue that the details of his ventures don’t matter: It’s the grand vision that counts. “The guy has a will to make stuff happen that is extraordinary,” says someone who worked closely with Musk. “He willed Tesla to happen. And in willing a reality into existence, he might not stick to the facts.” But in the case of SolarCity, Musk’s penchant for making promises he can’t deliver on turned out to matter a great deal—and could even pose a threat to his entire empire.”
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    An update on Mr. Musk and his endeavors.