We implicitly believe that a democracy represents the will of the People, as expressed through the legal institutions and infrastructure in the country. It’s common to blame the ineffectiveness of elected political office bearers if the law is found at odds with the will of the People. However, legal framework of a nation, enshrined in the complex […]
At the current juncture, mainly due to geopolitical reasons and artificial supply constraints, the international crude oil prices are near four-year highs at mid $70s per barrel, in spite of rising shale oil production in the USA. Correspondingly, the RBOB Gasoline (gasoline) near term futures are at $2.08 per gallon in international markets. In India, Indian Oil […]
Last week India made surprising entry in the currency watchlist of USA, as potential currency manipulator. Although, many in India rightly feel that the charge levied is unfair; this unexpected development presents India with an unprecedented opportunity to correct historical imbalances in its trade using two unique approaches. These two approaches will help India extinguish its trade […]
The monetary policy decision of RBI this week, especially the shift in the inflation expectations while keeping the growth forecast nearly intact, needs to be analyzed with a special focus on the background of the developments in the banking sector. The last few weeks have been singularly exceptional for the Indian banking sector. Banks in India have […]
In the recent weeks the headlines are screaming about the impending trade wars, the expected shrinkage in global trade and its impact on the overall welfare of the humankind. In this write-up, I attempt to show that very soon technological changes will lead to shrinkage in global trade. The key feature of industrial revolution since early 19th […]
Many believe that innovators are born, such as some genius like Mozart. However, our experience shows that innovation is an outcome of process and not some magic. In this we should follow the thinking of the most prolific innovator of all times, Thomas Ala Edison, who said “Genius is ninety nine percent perspiration and one percent inspiration.” […]
Since India’s April-June 2017 (Q1FY18) numbers are printed below market expectations, there has been some discussions whether demonetization is responsible for the low GDP print. Some so-called expert economists had predicted, that Indian GDP growth will be lower by 2 percentage points due to demonetization. They had conveniently not given reasoning as to why that would happen. […]
The Indian GDP growth rate came significantly below expectation at 5.7% in the Q1FY18 (Apr-June 2017). The table below shows the contribution to the GDP growth by type of expenditure. Table 1: Expenditure Analysis of GDP Q1FY18 Growth Source: Decimal Point Analytics The above table shows that 3.6% of 5.7% growth was accounted by increase in private […]
We estimate Central Fiscal Deficit for April-June 2017 quarter for India to be at approximately 10.75% of the GDP of that quarter. This is because of planned increase in capital expenditure by the central government in that quarter. To maintain the preannounced target of 3.20% of GDP for fiscal deficit for the year April 2017 till March […]
The low inflation print in recent months has raised some important methodological questions. RBI relies heavily on the internal models that it has developed for its inflation forecast and hence for making interest rate decisions. The table below shows some of the recent long-range forecast envelops and the actual inflation prints at the end of the forecast […]