Sunday, February 18, 2018

Unbridgeable Trust Deficit – NiMo/Tax-Burden/Aadhaar

It’s been close to 4 years for the current government in centre and the trust bestowed by public on the ruling government which was at its peak in mid-May,14 is at the scathing low currently. Year on year promises kept on piling up and execution has always been questioned which kept the public guessing about the process of output. It all started with Demonetization, a massive blow to the middle and lower strata of the society in India, though it kept people engaged (more than MNREGA can keep people busy in a year) to remonetize of their savings. When the public was coming back to its senses post DeMo. the massive GST execution vacuum gulped the business class in it.
Even after these two domestic headwinds the expectation around Budget rose some hope in the so called salaried middle class (major contributor of Direct Tax for GOI) and even that slightest of hope or expectation was shattered. An additional percentage of Cess coupled with Long Term Capital Gain (LTCG) for domestic investors who just calibrated confidence to enter the equity market created an unprecedented abyss. The so called Medicare policy for 10 crore families of INR 5LPA/family, the announcement was done prior the contours of the program being discussed by the state governments, an equal shareholder in this massive scheme. I do not doubt the intention of the ruling government but when execution/planning failure deflates the confident planning of the government, it shatters Hope and widens the chasm.
The majority bestowed by the public of the country expected a lot more for this government but unfortunately all planning with correct intention did not prove to be an execution perfect setup. On one hand when the government tried to plug the so called opposition triggered Non Performing Assets by recapitalizing the Public Banks, they again forgot that due diligence is vital and it’s a significant step in plugging any Asset to turn non performer. And hence, we have now another Mallya as Modi-Chowksy issue to handle. When on one hand the entire country is reeling under pressure to get their Aadhaar linked to PAN and PAN linked to TAN and Aadhaar linked to Mobile and Mobile to Bank and Bank account to Aadhaar and aadhaar to Insurance and Insurance to … and it goes all over again and again, our government forgets to secure public money by securing our Banks and the processes around it. Is Aadhaar safe and secure? (That’s another topic for discussion)
With all these incidents that has impacted the lives of many (Let the ruling Government blame the opposition and vice-versa) it is not the middle, lower strata which has suffered but the elite class has also started losing that trust which was bestowed upon the majority powered ruling Seva Sangathan. With Lok sabha elections in an year or may be before I just want to wish our parties all the best and hope the #TrustDeficit starts reducing in a consistent manner so that we again get a government with Majority and not crippled with Policy paralysis or execution failures.

Monday, December 26, 2016

2016 - An Economically Eccentric Year, leading its way to a hopefully better 2017

2016 - An year with many unprecedented events economically which were only supposedly thought off in the wildest of imaginations, an year which left the globe spell bounded with the results of few referendums and the events which has left the world in awe, is about to wrap it's wings and fly off into the history books for ever.

Economically, the year of 2016 will be remembered as an year which led to the foundations of many unknown and unforeseen circumstances which were only studied as an outliers but can turn out to be a reality soon. Flatter foreign economic policies, race to bigger and better nuclear counts, bolder expenditure on arms and ammunition, skipping the globally felt and palpable geographic environment effect and racing towards boasting the economic chest when monetary and financial survival is so so imperative for some.

You might be wondering why a cloud of negativity or perceived difficulty is being imagined by the author, rather the authors are considered to spread optimism and positivity in general but why I am sharing my thoughts which are serious to ponder over here? Answer to that is, We have just witnessed few events which speaks volumes of what can go against the perceived right and it can only lead to aggravated reality of difficulty!


  • BREXIT - Britain's ouster from the monetary well knit European Union clearly highlights the fundamental void in the union. Can the think tank now atleast take the note of the woes which haunts through massive piling up of debts and it's restructuring process or will they wait and watch till Greece/Spain/Italy or any other country in the economic web ponders to do a Britain?
  • TRUMP's emphatic Victory - Known to have his views on the face, whether you like it or not, be it immigration's policy or his anger towards any specific religious sect, or be it his love for Nukes and poking the second biggest economy or almost anything and every thing. Guys, lets be prepared for some roller coaster ride wrt to Foreign/Economic/Global Environment Policies and the way Emerging/ Developed economies would respond to the same.
  • MODINOMICS - Ouster of the publicly loved and meritorious head of central bank in India to the induction of a media shy lead of the Banking Regulatory body in India, the Modinomics is not easy to study and make thesis on. India's PM is known to keep cards close to his chest and his recently lead #Demonitization has left the people of the country divided in their views. People hope and wish to get securely digitized and go the digital way to contribute in the nation's growth. Many surprises yet to unfold with 2017..
  • US FED's Rate Hike - Since 2008 the normalcy has not started to set in place. US Fed is now slowly and steadily hiking the rates with employment numbers stating the recovery in the largest economy and some public spending boost with other factors which can lead the inflation to raise few notch above and reach the target of the Fed. The emerging economies and the rest of the world would need to adjust their policies accordingly. But the frequency of the rate hike, is yet again thought provoking!
Apart from the above mentioned situations, the Syria issue, EU Migratory Issues, Curbing the Terrorist outfits' menace, Venezuela inflationary woes, US-Russia collaboration, US-China treaties and it's impact. The list can go on and on but the impact of each and every above mentioned situation/pact will have it's impact felt on each and every global citizen.

Hoping that the logical end or atleast a way would be paved to have the issues talked and studied before it goes the other way round.. Alas!! Wishing the best to everyone for days to come in 2017 and hope and prayfor fantastic health (i.e. financial & physical) to all.

Sunday, November 13, 2016

Modi's Bharat has Jan's choked Dhan (#JanDhan) - Demonetization Process coupled with Execution fatigue!

72 hours since the news broke out by our Honorable PM that India's highest denomination would not be a legal tender, chaos broke out. Long queues outside teller machines and branches for depositing their cash in hand for new denominations.

Majorly, people do believe that short term inconvenience is bound to happen but in long term its a good choke for parallel economy conductors. No doubt about it. But this short term inconvenience will last for long. With more than 80% of the money circulated in the economy was in the largest two denominations (INR 500 and INR 1000) execution at the first line of conduct (Banks/Post Offices) should have been given more importance.

Heard and understood lot of views around the Black Money circulation and its impact on the economy and assistance to the bad elements of society and I do back such acts but if this inconvenience of not having money to spend on the ground prolongs, it will be a massive hit.

Black money hoarders are caught red handed and then should get penalized but public at large who assume this to be a short term choke of liquid cash should not be hit for long term.

This choking scenario could have been avoided if the trust deficit between the Government and the Financial Institutions could have been narrowed and top brass of these institutions could have been informed about such massive operations. Their preparedness about massive drives like one which is under consideration is a concern. Infrastructure issues are plunging the confidence in masses about the handling of such events. People are absolutely fine with it, but till when? Patience is running out and Tension is widening.

Denominations' availability is also a massive concern. Headlines in news are flashing that the regulator has supplied enough INR 500 denominations in the market but its availability on the ground is questionable. INR 2000 denominations are moving in hands of public but the second readily available denomination in hand is INR 100. What about the change deficit?

People with informed resources of earning are not appreciating the mechanism. Infrastructural chaos of supplying the new resources and taking off the old ones had to be sorted. My only view- Don't take the patience of public for granted. I do also believe that the stretched hours put in by our banking officials have to be lauded enough. Their relentless efforts to cope up with the pressure is hugely commendable. But again till the time the other logistics issues are not solved they would not be able to support persistently.

Its an act at the right direction but our rural branch/post office penetration should have been taken into consideration before such massive drives. Urban people would find a way in the 50 days to get their legitimate deposits in the system but in rural India it would be task which might need more time than the announced limit of 50 days. Urging the government to look into the matter and do extend if possible the days limit for our rural community rooted deep into the geographies of our country to give them right opportunity to get their savings flown into the system. These communities would not have "E-Wallets or net banking Facilities" and would find it tough for their resources to get it deposited and then withdraw them too.

Hope normalcy settles soon and we would have the new resources flown into the system easily and conveniently and Jan's Dhan gets unclogged.

Saturday, September 3, 2016

Inflation vs Growth!! Being Dovish vs being a Hawk.. Dr Patel - Yet to Unleash his Powers..

As departing Governor of India's central bank quoted the new/upcoming Governor of Reserve Bank of India "As Urjit [Patel] keeps telling me, we are neither hawk nor dove. We are owl,”, it says it all. The person who spearheaded the committee to review the monetary policy framework in 2013 under aegis of Dr Rajan will now pave his way to the center and fight the Inflation vs Growth battle.

Expectation of the incumbent government is simple, impetus on growth is imperative but +- 2% from mid ranged 4% CPI till the next financial year is the major task of the Governor. Now it's a catchy situation because CPI is dependent on multiple factors which are not in the hands of the Governor. Good Monsoon, minimum leakages in remittances of services by the government, setting government's expectation, Industry's belief and push some natural and other man made factors' might or might not effect Dr. Patel's decision. It's yet to be seen.

Dr. Patel has not made any specific public comment as of now since joining RBI as Deputy Governor in 2013 and his style of working and leading the pack of intellectuals would be something to be looked and analysed upon yet. But being an insider for long has helped him to grow upto being the highest authority in the Bank. 

Keeping up with Government's push would be an imminent challenge for him and he would be preparing his strategy around the same. Dr. Rajan was know to comment on various other topics which were not under his preview but will Dr. Patel follow his steps of being open to ideas across spectrum or a subtle way of being at one side would be his approach. We all are waiting for October 4, 2016 for his views on the economy in his first policy meeting.

Internal factors are just one part of the issues to be dealt with but external factors too are critical, Affects of Brexit are yet to be unleashed, China's influence on the global economy is critical, US's new President and his/her effect on the trade agreements and influence has to be analysed and Arab's surge coupled with Oil's stock accumulation and price effect is important to gauge as well.


Must say, a great throne to be at but not an easy one to be at. But we wish our new RBI head all the very best!! A silent crusader is what I assume Dr Patel is, excited to watch him unleash his thought process to make our economy bigger, better and much deeper.

Saturday, July 23, 2016

Quarter-Full of Socio-Economic Events across Globe!!

Coming 90-100 days are extremely eventful socially and economically for the globe. United States of America would undergo it's Presidential election - Will Clinton get Trumped? Yet to be seen. But for sure a stand on immigration, ISIS, Russia and China's maritime is a sure shot decision which a new leader has to take.

Indian Prime Minister and his government will try and push reforms track forward (Not just FDI extension reforms) - GST is still a hope, can it be a reality? I am hopeful if our legislators take pride in taking decisions.

China's south China sea conflict seems to exaggerate with China not budging an ounce on the issue, it would be interesting to see how other nations react to it. Can impact trade and create trust deficit as well.

Pakistan which is considered to be an upcoming economy but with its internal conflicts and ineffective resistance over menace outfits, it would pose a tough situation for SE Asia.

Brexit and its financial volatility in the market would pose a serious question on the readiness of the countries to protect its domestic economies from the external threats. It would as well raise concerns on the Macro-prudential policies/reforms adopted by countries.

All set for the roller-coaster days ahead to come up. Brace yourself up and experience the volatility.

"Is volatility the new Norm in the markets? Well we cant deny the fact.." 


Saturday, June 25, 2016

It is not about Current or Fiscal deficit but Trust deficit which is causing Ripples across Globe!!

Last fortnight has been really intriguing for the global economies. From dismantling of a Union to a credible central banker's exit. From a failure diplomacy of being an integral part of NSG (Nuclear Suppliers Group) to a presidential candidates consolidation. It's all happening and that is creating ripples across continents.

I foresee so many events as a tip of an iceberg of so much which is yet to be witnessed. Will others in European Union also contemplate freedom via referendum? PIGS next in the race of achieving that "Independent State" tag? Yet to be seen. Brexit (1-GB of memory lost by EU). How will EU shape up its policy after exodus of one of its major economy? Jury is out to understand the effects and affects of exodus. Financially ripples were felt across major and minor economies. Greenback gained its supremacy a tad more.

Central Banker's exit from Reserve Bank of India was a livid example of trust deficit which widened between the ruling government and the Banker. Though he achieved all the sought after targets from CAD to reigning inflation but the ecosystem around him was not fertile enough and he returned to academia. Fundamentally strong emerging India should not have let Dr Rajan go but again as it is said "It's not about personalities but institutions". We hope and wish a better banker to be crowned at the helm.

We have seen that any CAD and Fiscal deficit situation across globe can be catered with either a financial stimulus or financial tightening but the trust deficit which is being fueled by the recent acts of governments or referendums would create far more financial ripples which would be tough to aid or band-aided.

Division of thoughts is a way of expression but widening of trust because of division of thoughts would only be lethal and harm the functioning of economies in long term. Taking the people along and understanding their thoughts to frame policies is the way to go. 

Sunday, May 29, 2016

Modi Govt's 2 year of Intent, Development would supersede!!

Multiple Yojnas (Programs), last mile reach through "Mann ki Baat" - being connected to the smallest hamlet in rural India and display of intent to take the country on the path of Socio-Economic development is what the two years of the governments was all about.

One can not expect a sudden surge in the development post a regime change, but it is all about a conducive environment which is essential for a country to move forward. Work on the ground level would not have been so evident (power cuts are still incessant in many parts of the country, last mile connectivity is still a concerns) but the intent to take the country on the world's fastest growing economic speed path is evident and accorded.

More than any opposition that the current government should prepare themselves off, it is the natural events that the governments should keep a track on. No opposition party can harm the ruling party than the natural disasters that pose a threat to the government. These events pose a threat on the government's preparedness and its ability to pacify the situation to normalcy. National Disaster Management front has to be buckled up to face events like "Himachal Blaze", monsoon's preparedness, Chennai Floods and many more. These horrific events have a direct impact on the economic well being of the nation and hence its approach is talked over on various global platforms.

On one side if the government is pushing the path of development then it should also measure the acts which can drag its intent of forward push. Our reliance on environment for economic prosperity is evident but its reverse impact can be as detrimental to the economy that it can leave an irreparable damage.

Wish and hope for a healthy well being but as we all are aware things are not rosy on environment front - Hence, are we prepared?