Structural transformation and stylised business cycle facts

Author : Ajay Shah      Blog : Ajay Shah's blog      Date : 5/18/2013 6:13:00 AM

'The first step in the economics of business cycles is to establish `stylised facts' about the characteristics of business cycle fluctuations. Once these are know, alternative models can be judged on the extent they are able to predict these stylised facts. This is routine in mainstream macroeconomics, which is largely about the United States economy. When we think about India, however, there is the question of structural transformation of the economy.  There was an old Ind(...)'

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Autonomy for the CBI: Desirable but non-trivial

Author : Ajay Shah      Blog : Ajay Shah's blog      Date : 5/16/2013 6:30:00 AM

'I wrote an article in the Economic Times today about autonomy for bodies such as the CBI.  There are five areas where there is a role for autonomy. But this is a difficult puzzle in public administration and we should be wary of simplistic solutions. We know a bit about how to do autonomy correctly in three areas (monetary policy, financial regulation, infrastructure regulation). Comparable cogitation is required for the other two problems (criminal i(...)'

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Recruitment

Author : Ajay Shah      Blog : Ajay Shah's blog      Date : 5/13/2013 9:51:00 AM

'The National Institute of Public Finance and Policy is inviting applications for the post of Consultants / Research Associates to work with the Department of Economic Affairs, Ministry of Finance, New Delhi. The consultancy assignment will be valid till 28 February 2014. The applicants should have a Masters degree in Economics and should have a working knowledge of Microsoft Office. Applicants with experience in Reuters and Bloomberg terminals are preferred. Interested appli(...)'

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The arrogance of power

Author : Ajay Shah      Blog : Ajay Shah's blog      Date : 5/12/2013 12:08:00 PM

'Yu Hua has a great piece in the New York Times titled In China, Power is Arrogant where he says: Several of these rules have since been revoked, but their wacky and arbitrary nature demonstrates the arrogance of power in China. One can imagine all too easily their creators — sitting in comfortable armchairs, drinking high-grade tea and smoking fine cigarettes — discussing the issues at hand as if they were purely intellectual abstractions, never considering how ordinary pe(...)'

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What ails the police?

Author : Ajay Shah      Blog : Ajay Shah's blog      Date : 5/12/2013 8:55:00 AM

'by Pradnya Saravade and Renuka Sane. The recent incidents of rape in Delhi have led to public outrage and calls for resignation of the Delhi Police Commissioner. The problems in police functioning and the unmet expectations of the people are not restricted to Delhi alone. There is a sense of distrust and dissatisfaction with police organisation and operations across the country. In a survey by Transparency International and the Centre for Media Studie(...)'

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Interesting readings

Author : Ajay Shah      Blog : Ajay Shah's blog      Date : 5/11/2013 11:40:00 AM

'; In continuation of Capacity constraints in public policy, India will double the size of its diplomatic staff. And, see Milan Vaishnav in Foreign Affairs. India is Asia's dharamshala -- why not learn to love it? by R. Jagannathan on Firstpost. The crisis in our community by Nilanjana S. Roy in the Hindu. How to tell if your neighbour is a bombmaker by Scott Stewart of Stratfor. ; Read full article

Real estate in India is not a great asset class

Author : Ajay Shah      Blog : Ajay Shah's blog      Date : 5/11/2013 11:33:00 AM

'Most people in India are convinced that investing in real estate is a great idea. In the Economic Times today, I have an article titled Real estate in India is not a great asset class. Economic Times had carried this as a `poke me' feature, where reader comments are invited. There are 186 comments there as I write this, and they are broadly hostile to what I write. I would get nervous about prices of any security where a strong majority of market participants think there are st(...)'

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Mis-selling: from impressions to evidence

Author : Ajay Shah      Blog : Ajay Shah's blog      Date : 4/30/2013 1:18:00 PM

'by Renuka Sane. Retail finance in India is once again in the news for reasons of fraud, this time in the form of the Saradha Group in West Bengal. There is a general sense that such schemes proliferate because of the failure of financial inclusion, and that better supervision by current regulators will bring us back on track. The problems of mis-selling however, are not confined to the unregulated chit-fund industry. For many years now, problems of consumer pro(...)'

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Addressing ponzi schemes: the three parts of the solution strategy

Author : Ajay Shah      Blog : Ajay Shah's blog      Date : 4/30/2013 2:36:00 AM

'There is a great deal of moral outrage about ponzi schemes. Parliament is being asked to "do something!". We have seen this movie in India before. Laws are enacted as a knee-jerk response to an event. Quick and dirty responses are poorly thought through, which perpetuates the cycle of underperformance in public administration [example, example]. Laws are the DNA of government, and the drafting of laws should be done with extreme care. The drafting of law should: Be rooted (...)'

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Investigating ponzi schemes: A malady

Author : Ajay Shah      Blog : Ajay Shah's blog      Date : 4/30/2013 2:14:00 AM

'by Shubho Roy. What has happened? SEBI was investigating Saradha for more than 3 years before the deposit schemes of the company collapsed (See here). Saradha seems to have used two methods to delay the investigation: When SEBI asserted its authority to stop Saradha group from collecting money, Saradha challenged the jurisdiction of SEBI in district courts. It quickly got orders to prevent SEBI interfering in its businesses. These orders were eventually o(...)'

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Regulatory strategy for savings/investment schemes, that would address ponzi schemes

Author : Ajay Shah      Blog : Ajay Shah's blog      Date : 4/30/2013 2:14:00 AM

'by Suyash Rai and Smriti Parsheera The first task in dealing with ponzi schemes is correctly defining the scope of financial regulation. Once a firm is classified as a financial service provider, the appropriate regulator must choose a regulatory strategy for it. Assuming SEBI had clear jurisdiction with Sahara or MMM, what would SEBI do? Safety and soundness regulation (also called micro-prudential regulation) is an expensive form of regulation, which includes requirements (...)'

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How to make progress on payments: a talk

Author : Ajay Shah      Blog : Ajay Shah's blog      Date : 4/26/2013 7:22:00 PM

'I did a talk How to make progress on payments at a conference organised by Invest India Micro Pensions: This part of the NIPFPMF channel at youtube.'

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Who is in charge of fiscal policy and tax policy?

Author : Ajay Shah      Blog : Ajay Shah's blog      Date : 4/25/2013 3:20:00 AM

'In any country, various arms of government like to indulge in taxation of their own choice, and in setting up little treasuries that they control. However, it is quite clear that there must be only one treasury, and only one authority that determines taxation, through only one Finance Act. In the Economic Times today, I have an article that applies this idea into analysing a recent proposal by DOT to impose an 8% tax on wireline broadband providers. You may find some of the (...)'

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Competence in policing

Author : Ajay Shah      Blog : Ajay Shah's blog      Date : 4/21/2013 5:05:00 PM

'David Montgomery, Sari Horwitz and Marc Fisher have a great story in the Washington Post about how the police tracked down the murderers in Boston. Also see Spencer Ackerman in Wired magazine. On a similar theme, look back at the attack at Times Square in New York. We in India fare dismally on this. Lacking competence in the police, we repeatedly engage in faulty tradeoffs in security, where police either infringe on the freedom of citizens or resort to brutality against innoce(...)'

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Sugar: Letting the invisible hand work

Author : Ajay Shah      Blog : Ajay Shah's blog      Date : 4/12/2013 8:50:00 AM

'by Apoorva Gupta. The recent announcement to dismantle levy and monthly release mechanism in the sugar industry is a step to make the industry more efficient and competitive but the industry is far from being governed by market forces. It is hence a good time to look at the government interventions in this industry, its implications and the way forward. Major government controls With an aim of offering the farmers, firms, and consumers a fair deal, the government inter(...)'

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FSLRC: The cast of 146

Author : Ajay Shah      Blog : Ajay Shah's blog      Date : 4/12/2013 8:29:00 AM

'There is little experience in India with large complex projects of drafting law. The process adopted by FSLRC had many strengths. In the table below, I have pulled together the names of all 146 persons mentioned in the report. A diverse array of knowledge and perspective was brought into the project. In addition, the work took place over two years with a large dedicated workforce. In these respects, it represents an important contrast with the small closed groups, and small scale of(...)'

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Interesting readings

Author : Ajay Shah      Blog : Ajay Shah's blog      Date : 4/9/2013 2:18:00 AM

'; Ramchandra Guha in the Hindu on Narendra Modi. ; Asif Ezdi writes in The News about how Indian culture is undermining Pakistan's `distinct way of life, values and language, which we have successfully preserved through the centuries in an alien and hostile environment'. The loony right in India thinks similarly about Valentine's day. It's interesting to see that Ezdi retired fr(...)'

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Obtaining liquidity for illiquid stocks

Author : Ajay Shah      Blog : Ajay Shah's blog      Date : 4/6/2013 12:24:00 PM

'The problem While there are thousands of listed companies in India, for all practical purposes, stock market liquidity is the exclusive preserve of large companies. For small securities, the conventional continuous market presents daunting problems of liquidity. In conventional continuous trading, the price is made by the orders that come in from one second to the next. However, within a few seconds, there may not be many orders. The price may get swayed sharply by one larg(...)'

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Sunshine in the court room

Author : Ajay Shah      Blog : Ajay Shah's blog      Date : 4/4/2013 5:36:00 PM

'by Pratik Datta.In the functioning of liberal democracy, some of the strongest transparency provisions are required for the judiciary. Indeed, openness of trials is integral to the legitimacy of the judiciary. Secret trials are almost always rigged trials.'Sunlight is said to be the best of disinfectants'. So observed Justice Brandeis in 1913. Little did he know then that almost a century later his observation would find use in naming a Bill - Sunshine in the Courtroom Act. This Bil(...)'

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A sea change in the knowledge of the young in India

Author : Ajay Shah      Blog : Ajay Shah's blog      Date : 3/31/2013 6:36:00 AM

'In 1887, roughly 14 million children were born in India, and we got one Ramanujan. It seems reasonable to think that there were 9 others who went undiscovered. We may guess that the Ramanujan rate is roughly one in a million. Applying this to the 28 million newborns per year that we have today, we may guess that there are 28 Ramanujans being born every year. Our challenge is to find them and nurture them. So far, we do a terrible job of this. Pritchett & Viarengo sugge(...)'

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