Missing Elements

This is a festschrift. The book does not use the word, though. It uses the more pedestrian ‘Essays in Honour of C. Rangarajan’. Festschrift is used in the Prime Minister’s foreword, though, where the PM talks about Rangarajan’s contributions at the Planning Commission, the Reserve Bank of India, 12th Finance Commission and the Economic Advisory Council. Rangarajan needs no introduction. That said, if you plan a festschrift, you need a very good introduction on the person’s contributions to intellectual debate and policy formulation. You also probably have a bibliography of his academic writings. These elements are missing in this volume. A festschrift should also try to capture perspectives from the various spheres and entities the scholar has influenced or associated with. In this case, it should have tried to capture the Planning Commission, Finance Commission and the Economic Advisory Council angles too. But there is not much on that front.

There is an impressive cast — S.S. Tarapore, K. Kanagasabapathy, Balamurali Radhakrishnan, Raghbendra Jha, Joseph Massey, D. Subbarao, Y.V. Reddy, Swayam Prava Mishra, Shyamala Gopinath, Ravi Parthasarathy, Madhu Kannan, Kartikeya Desai and Nitin Desai, K.G. Karmakar, K.C. Chakrabarty, Udaibir Das, Ravi Narain, Ashima Goyal and Kirit Parikh...............

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8% tough on global mkt crisis, high deficit: Rakesh Mohan

According to the RBI's latest document, India's inflation is surging even as the economy grows at 7.5%. So is the economy's potential 7%? Was 8% an aberration? What should the new set of reforms be that can put growth back to 8%? The answers to these questions is crucial for central bankers, investors, corporate India and indeed the aam aadmi. This is the debate on this edition of Indianomics on CNBC-TV18. Former RBI deputy governor and economist, Rakesh Mohan offers his perspectives on the debate and throws light on issues most crucial to the economy....................

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The RBI's Inflation Dilemma

As economic growth falls, the Reserve Bank of India (RBI) once again faces a decision whether to cut interest rates to spur growth. This would be an easy decision were it not for the fact that inflation has been consistently rising since the start of the year. This is a difficult decision because of the trade offs involved. Cut interest rates to boost growth at the risk that inflation balloons. Or leave interest rates the same and risk that growth continues to tumble. Our assumption with that line of thinking is that inflation is significantly affected by the RBI's interest rate decisions. However, if we look at the causes of inflation, we'd see that most of it is completely out of the RBI's control. And actually, the RBI's decisions will have little impact on inflation.
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When electronic transactions fail…

..........Money transfers through RTGS (Real-Time Gross Settlement) and NEFT (National Electronic Funds Transfer) have become quite popular. But as the latest Annual Report of the Banking Ombudsman points out, complaints regarding non-credit, delayed credit and delayed return of funds in failed transactions are on the rise. The report recounts one such case where the complainant approached the ombudsman alleging inordinate delay on the part of the bank in transferring funds under RTGS.................

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Ways to kickstart economic activity

........With our country's GDP growth rate slowing down in the last two quarters, people believe that the RBI is likely to adopt a “quantitative easing” policy to get the economy back on track. What does “quantitative easing” mean? It means that RBI is directly or indirectly making more money available in the economy to boost spending, which in turn boosts economic activity. How does this work?..................

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Rising bank bad loans, slowing credit growth

The Finance Ministry is worried that banks' bad loans will go up, especially if credit growth slows down.

The gross non-performing assets of public sector banks have exceeded three per cent for fiscal 2011-12. NPA management will be one of the key issues at a meeting the Finance Minister has called with chiefs of public sector bank and financial institutions on June 12. The agenda note for the meeting says: “As informed by the Reserve Bank of India, at system level, new accretion to NPAs has been much more than the reduction on existing NPAs due to lower level of upgradation and recoveries. Also, despite write-offs, gross NPAs have continued to rise significantly.”............

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Go long on rate sensitives till credit policy

.......... Until the policy is announced therefore, it may be worth taking long positions in specific rate-sensitive stocks, or the Bank Nifty. Of course, if the rate cut does satisfy the market, the long position can be maintained. Again, hedging is the prudent way to handle this sort of portfolio, which is dependent on policy action. The other potential hurdle that the RBI faces is incalculable external situations. If the Eurozone goes bust, there will be huge outflows from rupee assets to safe havens like the US Dollar, and maybe the Swiss franc and the yen, as well. If there’s sign of a Euro revival, there may be some outflows anyway into beaten down hard currency assets in the EU. Some currency volatility is guaranteed............

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Bias to remain positive

Markets recorded significant gains in the week ended Friday on hope the Reserve Bank of India (RBI) would cut rates in the coming policy review on June 18. From an early week low of 15,749, the Sensex rallied to a high of 16,768, before ending at 16,719, a significant gain of 4.7 per cent. In the process, it also reversed its three-week losing streak. Going ahead, markets are likely to remain fairly volatile, owing to global uncertainties and the coming RBI policy review..............

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Reselling the India story: road shows kick off in the Gulf

..... lot of people are ill-informed about India's potential. We want to tell investors, look, it is a robust economy with high savings, demand and investment opportunities," R. Gopalan, economic affairs secretary, told reporters earlier this week. During the June 10-15 road shows, a delegation of officials from the finance ministry, the Reserve Bank of India, the Security and Exchange Board of India and stock exchanges would seek investment through corporate bonds and debt funds, especially in the country's infrastructure sector...........

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We want to have close ties with Indian banks: Abdulkarim Ahmed Bucheery

Which Bahrain banks are looking to enter India?
Many of our banks, especially from the Islamic banking sector, are interested in India. All these banks would bring capital, which is very much needed in India. Unfortunately, slow RBI (Reserve Bank of India) process and complicated requirements do deter them from doing so. We had to wait for two years to get the licence for our third branch, whereas when an Indian bank comes to Bahrain, a licence is usually granted within three months. But RBI has been very cooperative and understanding.

Is the delay only because of the slow processes or due to other concerns as well?
I think the slow processes basically result from RBI's inability to issue licences for branches. Metropolitan cities in India are overbanked, and RBI would like to direct some banks to villages and rural areas where there are no banking facilities. Banks coming to India for the first time don't want to go to far-off places; they want to be in metropolitan cities

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Banking on the Muslims: Interest payments rejected under Islamic law could be used to help the poor of India

Thousands of crores lying unaccounted in banks across the country and belonging to Muslims could be used for the uplift of the poor section of the community, provided the Reserve Bank of India (RBI) gives the go-ahead. A move to such an effect has been put forward to the Union finance ministry by the National Commission for Minorities (NCM) chairman Wajahat Habibullah.  Habibullah's idea is based on the Islamic tenet which considers giving and receiving interest against the cause of the religion. This has resulted in a huge amount of money lying unaccounted in banks, which the NCM hopes could be somehow made use of for the benefit of Muslims in India. And one of them is opening the doors to 'interest-free' banking in India for the community.............

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