CONTRACT WITH INDIA
…our mission is to make India great by developing and promoting policies based on the principles of limited government, free markets, individual freedom and rights, equality of justice and individual responsibility…
LATEST POSTS
IN THE PRESS
PANDEMIC OR PANDEMONIUM
In March, the World Health Organization (WHO), a notoriously inefficient and corrupt organization, declared the COVID - 19 virus (also called the corona virus) to be a global pandemic-- an indication of its possible contagion. The WHO pronouncement expectedly created pandemonium. The timing of its various pronouncements raises concerns but I'll leave that for investigators to probe after the dust has settled. But it is suspicious that while the corona [...]
A NATIONAL LOCKDOWN IS BAD POLICY
For those of you who are mathematically inclined the spread of a virus follows what is called an asymptotic distribution. It grows exponentially at first and then the rate of growth slows down and the virus dies. Every virus known to mankind follows this distribution. There is a reason for this. A virus is a non-living thing and spreads by invading cells in the human body. But there is a [...]
Is India headed for a recession
A question I get asked often these days is this: Is India headed for a recession? The standard definition of recession is a drop in GDP for at least two consecutive quarters. In other words, negative GDP growth rates and a contraction in the economy, signified by a decline in real income, employment, industrial production and wholesale-retail sales, spread out over at least two quarters. So, while India is not [...]
LOOTING THE RBI
The Reserve Bank of India (RBI) has three main areas of responsibility. It is a banker of banks and is responsible for maintaining public confidence in the banking system. It is also the government’s banker, responsible for managing the country’s money supply--printing new money, destroying old bills, etc. In this role, it helps to fund the government’s fiscal deficits by buying government bonds (G-secs). Finally, it protects the citizens' wealth [...]
SHOULD INDIA BORROW OVERSEAS?
In the 2019 budget, the FM announced that the government would increase its borrowing in the international market. This was being done to avoid the "crowding out" effect—a phenomenon where the government borrows money that could otherwise have been borrowed (and used more productively) by the private sector. The ubiquitous Pareto principal, also called the 80/20 rule, drives India's savings and investment—80 percent of the nation's savings are used by [...]
ROUGH TIME FOR INDIAN EQUITY MARKETS
The 2019-20 budget is done and dusted. As with most Indian budgets, this one too was a big yawner except in its implications for the stock market. Any prediction about the direction of the Indian stock market must be laced with caution. It is a market driven by a small universe of stocks. Although there are 5,000 companies listed on the BSE and about 1,600 on the NSE, the vast [...]
STATE-SPONSORED OR MARKET DRIVEN CAPITALISM
Mr Modi will encounter a tough economic climate in his second term. The combination of heightened expectations and a weaker global economy will act as headwinds. Plus, he can no longer deflect the blame to past leaders. A hodgepodge of government schemes, without a clear underlying philosophy, will only expand the reach of the government and exacerbate the fiscal deficit without providing the desired economic and social benefits. The window [...]
MODI HAPPENED AT THE RIGHT TIME FOR INDIAN DEMOCRACY
Truth is not the first casualty of war alone; it is the first casualty of populism Today’s world is being increasingly shaped by charismatic leaders. In the US, Europe, and more recently in India, Indonesia, Philippines, Brazil and Turkey, we see the rise of populist leaders who claim to champion the cause of the working poor. So, what is populism? It is a political and social phenomenon that arises [...]
INDIA’S GDP GROWTH: FACT OR FICTION
“A single lie discovered is enough to create doubt in every truth expressed.” Recently there has been much debate about the Indian economy. Surveys conducted by government agencies such as the National Sample Survey Office (NSSO) and data collected by reputed private agencies like the Centre for Monitoring the India Economy (CMIE) show a dramatic uptick in unemployment over the last four years. The NSSO survey shows that unemployment increased [...]
INDIA’S FIRST REAL ESTATE INVESTMENT TRUST (REIT)
Stable, liquid and transparent financial markets are a necessary condition for the growth of a modern economy. An economy grows by developing new products and services and incubating new ideas, and this requires capital. Financial markets (also called capital markets) provide a marketplace where savers can find those who need money for new products. These markets work efficiently only if they operate free of government controls and manipulation. Good companies [...]