Archive for August, 2016

This is your life in the soon to be silicon valley of India (Gurgaon)

August 23, 2016

Despite not being that old, I am already scared of how technology is taking control of my life. It is just becoming a case of an overkill. Samrat Singh on draws this future scenario of a start-up investor’s life in Gurgaon.

It is a future which is neither too far (some would say it is already there) nor it just applies to investors alone. I guess it applies to professions across the curve. Even just change the Gurgaon locations with those of other cities and the story is likely to be similar.

You wake up at 8 AM with a headache. You blame it on the weird tasting wheat beer you had last night at one of those shady but hip looking craft breweries in Sector 29. You can’t remember the name because they all look the same and there is a new one around every time you go there. You do remember that their Zomato rating was an acceptable 3.9, but you think they’re actually more of a 3.5. You wonder if that “startup networking mixer” at that pretentious co-working space in Hauz Khas was a better idea. The thought of traffic on MG Road at night reminds you that it surely wasn’t. Also, the crowd at such things is even more pretentious, you tell yourself. You search for your phone. InShorts tells you, that same co-working space just raised 10 million, you wonder if they have openings. Living around Hauz Khas would be great.

You pick up the Economic Times and wonder why they don’t just start calling it the ‘Startup Times’. You browse through and see acquaintances on the ‘Young Leaders Awards’ list. You wonder if the application form tab is still open on your laptop and why you never got around to filling it. ‘Forbes 30 Under 30’ one day you say to yourself, then you realize you’re almost 30 already. There’s another story on Ritesh Agarwal today, you wonder where you were at 23. You were in B-School. You wonder why you went to B-School in the first place, that reminds you that your education loan installment hasn’t been paid for the last three months. You download that expense tracking app your friend just made. You try and register but the OTP never comes, you ping him saying let’s meet, you have feedback on the product you tell him. You wonder if he needs a co-founder. Another ET story talks about how Hauz Khas is emerging as a new startup hub. “Wannabe hipsters” you say while sipping that coffee you bought from Blue Tokai last month.

How apps are soon going to control everything we do..

Pakistan rise to No. 1 in Cricket Test rankings is nothing short of a miracle..

August 23, 2016

It just happened as India could not win against the hapless West Indies due to rain and poor ground management. Pakistan edged India by 1 point to top the Test match rankings first time since these rankings were made in 2003.

I mean to see Pakistan top the rankings is just crazy and a miracle. The country does not anymore host test matches at home and the entire cricket structure is just reduced to a royal mess. Despite this they have been producing is a few talented individuals who spice the contest once a while. And now they have surged to top position drawing with England in England against all odds. They have done this with lot of discipline and dignity which makes it a super plus. These two attributes have missed Pakistan cricket for a long time.

Here is a wonderful tribute by Kamran Abbasi who shows how high these odds have been making the achievement even more amazing. (He also highlights that Hockey World Cup was actually an idea from Pakistan).


The story of two migrations and one reverse migration in Kerala

August 23, 2016

Interesting piece from P. Anima of Business Line. She points how years of migration from Kerala to Gulf led to rising job vacancies. These were then filled by migrants from other states especially North India and North-East India (where else??). Now, with rising nationalism in  Gulf, one is seeing reversal with people heading back from Gulf. How this will change the dynamics in the labor and social economy is yet to be seen.


How did EPW start? One of the promoters was disillusioned with a hyped LSE graduate!!

August 22, 2016

EPW celebrates its 50 years and guess what? There is hardly any mention of it in the media as the people seem to be busy obsessing with new Indian central bank chief and write one flowery piece after the other (here is another rebuke). #EPWat50 hardly has any comments. So much so for Indian economy soothsayers that no acknowledgement is even made of the journal which has carried the burden all these years. One could disagree with EPW for its content (too left wing for the market oriented media) but one should atleast make some mention of it.

Anyways, here is a superb piece from Ashok Mitra (former editor who is 88 now!) who details the story behind the journal. Before EPW, there was Economic Weekly which started 17 years earlier in 1949. To cut the story short there was a person named Sachindra Narayan who was really good at economics and based in Dacca. Sachin was quite a character who got really well with people. He moved from Dacca to Mumbai and his brothers joined him.  One of his brother Hiten who once went on a trip with a LSE trained economist to UK:


How Friedman’s helicopter drop is different from today’s helicopter drop? Step by step approach..

August 22, 2016

The authors call it a primer on helicopter money which will be missed by most as another of those primers which are hardly a primer. But this one is and needs to be read.

The authors take the balance sheet approach and explain how helicopter money actually works.

First, why Friedman version does not work today?


The case of appointment at Indian central bank: When will our media/experts call spade a spade?

August 22, 2016

It is one thing to congratulate someone over his/her promotion but completely another to make such noise of the matter. Indian media has mastered the art of making a mountain of a molehill.The whole media looks for a common story and everyone talks in the same language. Currently the main big theme is not to give financial markets any bad signals. So all news is presented accordingly.

This was seen in recent appointment of Indian central bank chief. All news suggest government bats for continuity and projected the appointee as this great economist which will continue to propel the Indian economy. Really? Earlier people appointed for this job were economists and bureaucrats working with finance ministry and shuttling to RBI (most were such cases) and very few with plain academic experience. This appointment hardly falls into any of these categories with most experiences in private/corporate sector. So the media calls it as  ‘inflation warrior’ with corporate background!! Some call the appointment as globally respected. I mean how?

I mean it is not even laughable as since when did any corporate have an inflation objective? Adjectives like warrior, laser like focus, lakshmanrekha etc are being used to define qualities which suit a military general than a central bank chief.

The usual things like IMF/ivy league connections are being highlighted without looking at any details. This piece even links 1991 crisis to the appointee’s CV! Neither topic of thesis nor past work is being analysed. And then what about the overall work experience and choice of firms? Do we associate them with expertise required for central banking? How come none of these attributes were even mentioned earlier?

Infact, a close look tells you the expertise was much to do with energy and infrastructure and less to do with monetary matters. There are a few papers on monetary matters but hardly of much importance. They are usual bit on inflation and fiscal deficit which are written across the globe by several economists.

In India, all it takes is a committee to become an expert on any matter. One could have easily identified better experts on inflation targeting.  And then implementing inflation targeting itself is a big issue. We are trying to chase something which other central banks are trying to give up. It was just a case of bad copy and paste as highlighted here.

Interestingly, we made similar mistakes with monetary targeting as well which was implemented much later in 1980s when much of the developed world was giving it up. In 1982, Gerald Bouey, then governor of the Bank of Canada, described the situation by saying, “We didn’t abandon monetary aggregates, they abandoned us.” This is a case which requires a detailed post and don’t want to get into several issues here.

Even nationality issues are raised each time. I still don’t understand why our esteemed economic advisers hide their nationality. Just disclose it and live with it. Now we learn that the appointee became an Indian national only in 2013 before taking the deputy position. And guess what media spins it as? It is a case of inclusive governance!!! As if anyone objected to nationality previous assignments in IDFC (which had major backing of the govt), Reliance and so on…

All this smacks at plain elitism and clanish in these matters. Just have the required ticks and all is well and the entire clan comes to celebrate and create hype.  Other countries are closely contesting all this elitism. See the case of French central bank for instance.

It is just too easy here. Just keep creating hype. Just spin the story whatever it is. Like a friend told me even if the government appointed a bank robber for the job, the media will say “the govt appointed someone who knows the true value of money”!

Again to reiterate, happy for the appointee. He would truly be laughing all the way to the bank knowing about so many qualities from the media.

But our media keeps stumping to new lows which barely does its job these days. Why not just call a spade a spade? It is time that the media gets more intelligent in evaluating the body of work which goes beyond the mention of IVY league names. The talent in India is poorly recognised. There are enough researchers here in India who continue to be ignored.

Infact why stop at media alone. Take our bankers and ex-experts. Read statements of any bankers and experts who fear taking on Indian central bank. All of them in one tone say the same thing be it any policy or appointment. How is it that not one says anything different?

GDP was one of the most important inventions of the 20th century, what about its place in 21st?

August 19, 2016

Nice article by Prof. Philipp Lepenies of Free University (Berlin). I didn’t know that US Commerce Dept actually called GDP as one of the most important inventions of 20th century.


Economic and Political Weekly’s (EPW) 50th anniversary: A tribute…

August 19, 2016

EPW celebrates its 50 years of anniversary tomorrow. It transitioned from an Economic Weekly which started in 1949 to Economic and Political Weekly on 20 Aug 1966. For most students of Indian economy, the white and red journal has been a constant companion. It has also been a source of irritation as it comes out with new things to read every week!

Aniket Alam and C. Rammanohar Reddy pay a tribute to EPW on the eve of its 50th  anniversary:


Monetary policy in a low r-star world

August 19, 2016

This short paper by John Williams of San Francisco Fed is doing rounds.

Williams says much of the developed world is stuck in a low r star or the neutral rate:


15 August is an important day for monetary economy scholars…

August 18, 2016

It was on 15 Aug 1971 that President Nixon closed the gold-dollar window.


Who brings fish to the table? Markets or firms?

August 18, 2016

Jeffrey Tucker points how technology and markets have enabled people in the interiors to eat fish.


US regulatory industry is growing faster than the real economy

August 18, 2016

Nice article by Matthew Andrews  and James L. Gattuso:


App-only bank Mondo gets a limited banking licence in UK…

August 18, 2016

Mondo started only last February and has got a banking licence:

Startup app-only bank Mondo just made a crucial step in becoming an official bank after being granted a restricted banking licence by UK regulators.

Mondo is claiming the decision makes it the youngest-ever bank to be licensed in the UK, given that it only started up in February of last year.

Mondo aims to create a digital-only bank for the mobile generation that offers things like instant notifications of transactions and balances, a detailed Facebook-style feed of what you have spent your money on, and a breakdown of spending across the month.

Co-CEO and founder Tom Blomfield says in an emailed statement: “This is how the banking market changes, not with 800-page reviews from public bodies like the CMA, but with technology bringing new ideas to the table. We’re creating something that will completely revolutionise the way people think about their money.”

The 45-person company has been operating an early version of its product tied to a pre-paid card. It has proved hugely popular, with 30,000 customers spending £20 million ($25.9 million) on the cards since launch. Mondo also has a waiting list of 200,000 and the startupcrowdfunded £1 million in just 96 seconds earlier this year.

The restricted licence will let Mondo hold customer money for the first time – the crucial thing that makes a bank a bank – and let it test its products and services with a limited number of customers. Once regulators, the Financial Conduct Authority and the Prudential Regulation Authority, are satisfied, they will lift the restrictions.

Blomfield told Business Insider earlier this year that Mondo will alsohave to raise at least £15 million to get the restrictions lifted, as part of capital requirements. Mondo has to date raised £9 million and is valued at £30 million.

Mondo is one of a number of so-called “neobanks” in the UK: app-only banks with no branch network. Three others have so far been granted licences: Atom, Tandem, and Starling. Atom is the only one that has so far launched to the public, releasing a savings account earlier this year.

Mondo is also in the process of changing its name, after a legal dispute over its current one. The startup asked customers for suggestions 2 months ago and an announcement on the new name is expected in the next few weeks.

More on the name change here.

What does the app bank plan to offer?

While technology has changed every aspect of our lives, Blomfield says consumer banking has remained frozen in time. Banks continue to offer customers a static list of deposits and withdrawals rather than providing timely updates or useful tools to analyze spending or saving. In a world of instant messaging, many lenders don’t communicate in real time. Blomfield’s current bank (which he declines to name) took two weeks to alert him he’d overdrawn his account by £800 and then charged him £20. “The banks have their hands in your pockets constantly, taking money out,” he says.

The Mondo app is designed to tell you if you mess up. It lets you set up real-time notifications that say how much you’ve spent daily or whether you’re going into overdraft. If you need £500 to tide you over to payday, Mondo will tell you how much it will cost for a short-term loan instead of charging you after the fact.

Pulling out his phone, Jason Bates, Mondo’s 43-year-old co-founder and chief customer officer, shows his Mondo prototype app. He’d just had a burger with his wife at Five Guys in Soho, which turned up immediately on his account with a map of where he’d used his Mondo card. With a swipe, he demonstrates how you can turn off the card if you lose your wallet and immediately turn it back on if you find it. You can even block your card at pubs to encourage a dry spell.

By tracking your regular bills, Mondo can alert you if something is out of the ordinary, like a utility charge that’s higher than normal. This smarter use of data can help detect fraud, Bates says. “We see your phone is in Manchester but your card was being used in London,” he says. “We can block your card and send you a text saying: ‘Something is fishy. Can you confirm?’”

Though, one can always question the hype:

Blomfield and Bates say Mondo could charge much lower fees and still become profitable because its cost base is a fraction of what major banks shoulder. Old-style lenders are saddled with the expenses of maintaining branches and updating antiquated IT systems. Back-end computer systems that process transactions can date to the 1970s and have had meltdowns, says David Parker, head of banking at Accenture in London. Last year, British regulators fined RBS £56 million for a computer failure in 2012 that left 6.5 million customers without access to their accounts for weeks after a contractor updated software. The problems “revealed unacceptable weaknesses in our systems,” Philip Hampton, RBS’s chairman, said.

“It’s difficult to build an app that’s fantastic when you have an ugly core banking system,” Parker says. “The banks have to change quickly or they run the risk their customers will desert them.” 

Not everyone is convinced tech-savvy banks will lure enough customers from the big four to become major players. New fintech banks may have a hard time attracting more than just “hardcore money geeks,” says James Moed, a consultant to fintech startups and a former director of IDEO,  where he was a London-based financial services designer. “Most people find managing their money boring and regard banking as a utility,” Moed says. “I’m not sure great apps will motivate people enough to switch.”

Even so, mobile bank users globally are forecast to more than double by 2019, according to a 2015 KPMG report. Generation Y, the so-called millennials, born from the 1980s to the early 2000s, may be the most fertile hunting ground. Almost 67 percent prefer mobile apps for banking, compared with 46 percent of baby boomers, aged 51 to 69, according to PricewaterhouseCoopers. A study by Viacom’s Scratch research unit called “Sorry Banks, Millennials Hate You” found 71 percent of 18- to 34-year-olds would rather go to the dentist than listen to what their bank says.

Blomfield acknowledges that Mondo isn’t for everyone. “My grandmother would not use this bank,” he says. “But a big segment of the population would.”

Technology has challenged old banks every once a while but so far they have managed to remain planted. It will be interesting to see whether this time is any different..

More links on Mondo bank here

Jog falls to have perennial flow of water..

August 18, 2016

This was waiting to happen for few years now.

Now a Dubai based entrepreneur Dr. BR Shetty plans to make Jog Falls a perennial fall. Currently people can only see full fall during monsoon months. Now they should be able to see the fall throughout the year:


Look behind the scenes of the world’s biggest mutual fund

August 17, 2016

A nice story of the world’s biggest Mutual Fund – Vanguard’s Total Stock Market Index Fund – and its low profile fund manager – Gerry O’Reilly. He manages the $450 billion fund!


What the invention of the sewing machine tells us about automation, innovation, and jobs

August 17, 2016

James Pethokoukis of American Enterprise Institute points to benefits of sewing machine. It is true it helped lower the drudgery but it also unexpectedly led to the readymade garment revolution.

This is hardly something which the young generation will understand. Earlier, we were so much dependent on tailors but now it is a profession which has almost disappeared..

Designing a behaviourally informed banking market

August 17, 2016

BIT  blog has a post on the topic:

Last week the Competition and Markets Authority (CMA) published the final report of their retail banking market investigation. The CMA has identified that currently, only a tiny proportion of customers switch to a different bank in any year; despite the fact that many of them could save about £90 a year by switching. A quarter of people in the UK use an unauthorised overdraft each year, suggesting they do not have the best account for them: this earns the banks £1.2 billion a year from unauthorised overdraft charges.

The report proposed three foundation measures as the basis for their package of remedies. All three foundation measures have strong behavioural aspects:

  1. Requiring banks to implement Open Banking to help consumers share their data securely with other banks and third parties. This will help make it easier for consumers to shop around and compare banking products (making it easy).
  2. Requiring banks to prominently display a number of core indicators of service quality, including whether a personal customer or small business is willing to recommend their bank to friends, family and colleagues (making it attractive).
  3. Introducing routine and occasional prompts for personal and business customers to encourage them to consider their current banking arrangements and shop around for alternative banking services (making it timely).

Those of you who have read our recent report on applying behavioural insights to regulated markets will recognise that these remedies strongly echo the principles set down in that paper: we will now set out their behavioural underpinning in a bit more detail.

The post goes on to explain all the three making it easy. making it attractive and making it timely..

Adding “realism and a degree of modesty” to monetary policy framework?

August 16, 2016

Reserve Bank of Australia chief Glenn Stevens in a speech says:


How to make GST a success by nudging people to go for pucca bills…

August 16, 2016

All kinds of ideas are emerging on how to make GST a success. Right from prescribing the right revenue neutral rate (why use such a complicated term) to state participation, all is being written and discussed.

Dhirendra Kumar of Value Research gets to the basics and looks at this issue of people preferring kaccha bills (fake) over pucca bills (authentic) to avoid taxes. After all, much of GST is around this idea of paying only value added tax across goods and services. This will require proper billing across the cycle for the tax to work.

How will the government ensure people will suddenly switch to a proper billing system and pay taxes? He points to this interesting solution – Taiwan Uniform Invoice Lottery:


Why do economists fail? (EPW 1949 edition)

August 16, 2016

EPW has a piece from its archives (06 Aug, 1949) which remains relevant till date. Though, things have moved in terms of availability of data (lack of which leads to failure) etc but still we need a lot more as shocks keep coming from all kinds of sources.


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