Archive for January 30th, 2017

Removal of cash withdrawal restrictions: De jure vs De facto..

January 30, 2017

The Indian central bank apparently has woken up to the uncomfortable political territory it is being pulled into with each passing day. After a drubbing from Indian public and Indian Parliament, it even got a hearing from Election Commission.

So it has decided to remove restrictions on certain withdrawals and restore to status quo before 8 NOV 2016:

In a review of the pace of remonitisation, it has been decided to partially restore status quo ante as under:

  1. Limits placed vide the circulars cited above on cash withdrawals from Current accounts/ Cash credit accounts/ Overdraft accounts stand withdrawn with immediate effect.
  2. The limits on Savings Bank accounts will continue for the present and are under consideration for withdrawal in the near future.
  3. Limits vide the circulars cited above placed on cash withdrawals from ATMs stand withdrawn from February 01, 2017. However, banks may, at their discretion, have their own operating limits as was the case before November 8, 2016, subject to 2 (ii) above.

So restrictions on savings bank account remain (Rs 24,000 per week??) and those on current accounts are done away with. Also restrictions on ATMs are withdrawn from 1 Feb 2017.

However, this is hardly enough. All these are just de jure announcements. De facto one continues to face trouble especially regarding the Rs 2000 note as no one is willing to change. This 2000 note clearly was and remains to be the most atrocious policy decision taken on 8 Nov 2016. There is no point if banks continue to give these high denomination notes  which are useless anyway except for making large payments.  You actually need a lot more Rs 100 and Rs 500 notes coming to the system to help Rs 2000 to circulate.

Infact, there is still time and government should either take back this Rs 2000 note in a “gradual fashion” or reintroduce Rs 1000 note.

The central bank has also not been sharing any data/information which has made it really difficult to assess the situation.

Understanding the war on cash (Why, who and problems)?

January 30, 2017

A three essay series by Tony Joseph of Business World. He looks at the various political economy factors behind the digital cash drive. This go digital drive is hardly as rosy as it is presented to the masses. There are several players involved who are using governments to rush/push through policies to make that quick killing.

In the first essay he says:


Reflections on the art and science of Policymaking in India

January 30, 2017

Dr. Vijay Kelkar recently gave the CD Deshmush lecture organised by NCAER. The lecture was in news as Kelkar said there should be just one GST rate. The news agencies know shot ways to kill any interest in the lecture. This was barely a line in the whole lecture!

The lecture is based on the wide experience of the speaker in Indian policy.


When people downloaded bitcoin apps in Cyprus crisis..

January 30, 2017

William Luther of Kenyon College posts about his upcoming paper on the topic.

He shows how people downloaded more bitcoin apps during Cypris crisis in 2013:


The curious case of the Indian MBA…

January 30, 2017

Veena Venugopal editor of BLine has a piece on Indian MBA (she was an MBA too).


She reflects on her experience of taking about a session on India in a Spain college. She was surprised to see large number of students turn up on a freezing morning. She contrasts this with experiences of students in India who have such a cost and benefit approach to studies:

Last week I was shivering in the -12°C weather in a historic little town called Segovia in Spain. I was there on invitation from one of the big universities, IE, to give their students an idea about contemporary India. What is India beyond the global headlines of the IT industry? What are the social, political and economic issues that India and Indians currently face?

On the panel with me was Eugenio Luján, who is the dean of philology at Complutense University of Madrid and a scholar on vedic history. He traced the strengths and problems of India from a historical context and my job was to inform them about their contemporary status. How does caste work, what are the gender norms for Indian women, why is it that there are communal clashes here; actually since people live so close to each other, how is it that there aren’t more communal clashes? How do the rich behave? How do the poor cope? How does inequality play out across various areas?

What was fascinating for me was not just the fact that a bunch of students braved the weather and turned up at 7pm — after a full day of class — because they were curious about issues in India but, more importantly, that they did this for something that has very little to do with their coursework or examinations. They don’t earn credit from this, they are not tested on their knowledge of this country. They merely wanted to get an idea of how things worked in other places. Last year, they listened to people from Russia. Next year, they’ll pick another nation and try and grapple with the ground realities there. It was impressive, this commitment to general awareness of the world around them.

In India, especially among students pursuing professional courses, it is virtually impossible to find an audience that is eager to understand the nuances of society in their own country, much less a distant land. If there isn’t a grade or a job offer at the end of it, Indian students will not “waste” even a minute of their time on it. While this is a rather all-enveloping phenomenon, it is particularly prominent among management graduates. Other than a routine one-credit course covering business ethics, there is very little that forces these young managers — really the crucial one per cent creamy layer of Indian society who can actually make a big difference — to think about the country they occupy as anything other than a “market”.

Though, she is comparing general students to that of MBA students in India. So it is not really apples with apples. But yes point well taken. It is a big problem..

Is it reverse swing or contrast swing? Spotting the differences..

January 30, 2017

Ever since Pakistan bowlers showed the potential of Reverse swing, it has been a huge area of interest with cricketers and commentators alike.

However, there is a difference between reverse swing(when ball moves differently in the air) and contrast swing (when it moves differently due to surface differences).

Rabi Mehta and Garfield Robinson explain the differences:


Cash withdrawal limits irk India’s Election Commission…

January 30, 2017

We wish governments to stay away from central banking operations. But we should expect the same from the central bank as well especially on election matters. There is research which showing how central bank stances during elections leads some governments coming to power and others being voted out.

Election Commission of India is not just irked by the low cash withdrawal limits but also by the attitude of Indian Central bank:


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