Archive for January 24th, 2017

Composition of RBI Board (1999-2017): A glass how empty or how full?

January 24, 2017

RBI’s Board has just come back to centre of research on India’s monetary policy. One just looked at history and evolution of RBI Board from a 14 member team to a 21 member team.

The question that keeps coming to mind is how empty was RBI Board on 8 Nov 2016? Former RBI chief Subbarao in an interview said there have been precedents in the past as well:

Q: There are only three members of the RBI board, external members. The rest are all RBI Deputy Governors and Governor and Finance Ministry officials. The fact that 6-7 seats are vacant, did all this already pave the way for very weak opposition?

A: I do not think so. I think that is reading too much conspiracy into this. There have been several instances over extended period, the RBI board was not fully positioned. At least on the specific point you are referring to that the RBI board is not fully positioned. Yes, that is a shortcoming, that is not desirable, but to see some conspiracy in that and to say that the decision on demonetisation would have been any different or the implementation would have been any different if there had been seven more members on the RBI board is unrealistic.

One just dug up data from RBI’s Annual Report and came with following:

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What is in a name? Withdrawal of Specified Bank Notes vs Demonetisation..

January 24, 2017

There is always this confusion about what to call the currency exercise of 2016.

The Parliament/media/experts call it demonetisation but the official notifications of Government/ RBI insist calling it  ‘Withdrawal of Specified Bank Notes ‘ and so on. The word demonetisation is not mentioned in official notices.

I somewhat got part of the answer from Jairam Ramesh’s book on the 1991 crisis- To the Brink and Back. It is a light account of the 1991 crisis explaining (but not emphasising) on the political negotiations behind the 1991 crisis. How the government sold the tricky changes to both within the party and the opposition. One wishes the account was longer but he just focuses on the first few months of the 1991 crisis,. But that would have taken the crispiness of the book. So it is a trade-off between a breezy read and elaborate one and the author has chosen the former.

In the book, he mentions how government and RBI went about devaluation in July 1991. Indian Government devalued the currency two times on 1 July 1991 and 3 July 1991. To keep the political pressures off, both the Government and RBI did not call it devaluation (pg 38):

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Indian Financial Sector: Structure, Trends and Turns (1950-2015)

January 24, 2017

A new paper by Rakesh Mohan and Partha Ray.

The highlight of the paper is its coverage of insurance industry which is usually ignored from all such financial sector analysis. Thanks to the paper one came to know of Insurance Handbook prepared by IRDAI which gives some data on the sector which is least known. This handbook is a good practice as SEBI also releases handbook on securities markets.

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Hedge-fund managers are buying air strips in New Zealand in case…

January 24, 2017

An interview of Rob Johndon, President of INET.

He says one indicator to look for is the elite anxiety which is rising . As a result, the top elites in US are buying private spaces in New Zealand and private planes to fly there:

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Chala market: origins and evolution of the busiest market in Thiruvananthapuram

January 24, 2017

Just learnt about this historic Chala market in Thiruvananthapuram. Tripadvisor ranks it as 26 of the 114 things to visit in the city.

How the market was shaped by a visible hand – Raja Kesava Das – the dewan of the region:

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