Archive for August 6th, 2018

The genesis of a perpetual crisis in the Hindi film industry (discussing its business history as well)..

August 6, 2018

superb piece by Amit Khanna mainly on Hindi Film industry which also discusses trends and outlook on the entire Indian Film industry.

The author says the film industry needs to wake up to challenges from competition and technology:

This year has been rather good for the Indian film industry, especially Bollywood. Yet there seems to be a crisis of sorts with many unreleased films, numerous flops, and fear. This strange paradox exists and its genesis goes back to the 1980s, as I will explain later. However, things have really worsened in the last 5-6 years.

While growing at a healthy compounded annual growth rate of over 10 percent in the last 15 years, the market has hardly expanded. The main growth has come about because of multiplexes, lower taxes and higher realisation from overseas sales to the diaspora in key markets like the United States, Canada, the United Kingdom, and the Arabian Gulf. Rising cost of production, the huge increase in the number of films produced from 1,000 to 2,000 annually in the last 15 years, and the fall in the number of screens from 13,000 in the 1970s to 10,000 today have had a crippling effect on the industry. Of course, there are more compelling reasons why we are fast reaching a steady drop in the viability of cinema the medium itself.

In various forums, I have often spoken about the bullheadedness of film people, of which tribe I too belong. We have been tardy in adapting to change.

Every time a film does well i.e. makes a profit for everyone in the value chain, we think the worst is over. There was a time till the 1970s and early 1980s where cinema was the only medium of mass entertainment. It was perhaps the most dominant definer of the popular culture of post-independent India. No wonder Hindi films and film music played an important role in creating a new progressive, secular India which, even as it discovered a new identity, remained deeply connected to its traditions and cultural roots. Even in other languages like Tamil, Telugu, Malayalam, Kannada, Bengali, Marathi, Gujarati and Punjabi, cinema was responsible for social change and to some extent reinforcing old rituals and practices. Sadly, no government in independent India has done anything tangible for the film industry except lauding its role occasionally. As a large fraternity, we have too not done enough for our lot.

Apart from learning about the business history of the film industry, one can also apply microeconomics concepts to the piece as well. How the industry has moved from single screens to multiple screens, the competition which it has faced from different segments like TV, small parlours, video cassettes and so on.

Superb bit…

DBS (Development Bank of Singapore) celebrates 50 years…

August 6, 2018

2018 is just full of anniversaries especially pertaining to banking and finance.

Development Bank of Singapore or DBS completes 50 years of its journey (nice chronology of its history).

An event was organised to commemorate the occasion:

DBS played a crucial role in Singapore’s early industrialisation, taking risks and absorbing downsides to benefit the country but not necessarily the bank itself, Prime Minister Lee Hsien Loong said on Saturday night (Aug 4).

In a speech at a gala event to celebrate the bank’s 50th anniversary at Capitol Theatre,  Mr Lee noted that the year the bank was formed – 1968 – was a period of great uncertainty and anxiety for Singapore. 

It had separated from Malaysia three years earlier and had lost its Common Market and hinterland. 

One of its earliest projects was persuading Rollei, a German camera company, to shift its production facilities to Singapore in 1971.  Rollei was well known for making the best cameras in the world. But it was facing steep competition from Japanese camera manufacturers and was looking to  shift its factories out of Britain.  DBS took a risk on Rollei, offering attractive financing and investment terms to get Rollei to set up operations in Singapore. Rollei eventually folded 10 years later and DBS took losses on the deal.  “But Rollei created much needed skilled jobs for Singaporeans, and …helped us build up a cadre of highly skilled workers in precision machining and manufacturing,” said Mr Lee.  “Years later they would become invaluable when we got into hard disk manufacturing and wafer fabrication.”

When Singapore was striving to become an international financial centre, DBS was one of its anchors. It was the first local bank in 1971 to seek long term financing through an Asian Dollar Bond Issue of US$10 million. 

Hmm..

How it started?

The story of DBS was also captured in a 50th anniversary book that was presented to Mr Lee at the Capitol Theatre on Saturday. Called The 50 Years, the book chronicles the former Development Bank of Singapore’s heritage through reflections written by pioneers and other s from the bank. 

The book includes the story of how a small counter staffed by two cashiers at the entrance of its rented premises in Shenton Way marked the start of commercial banking at DBS.  When the bank set up its first branch in Jurong in 1972, fishmongers and stallholders would arrive wearing clogs and carrying paper bags of cash to bank in the morning.

Two staff set up a desk at shipyards and factories to open personal accounts for factory workers and enable direct salary crediting. 

In the book, Mr S Dhanabalan, part of the original team that left the Economic Development Board to set up DBS, wrote about the entrepreneurial spirit that in 1975 drove the bank to build the tallest building in Singapore at Shenton Way – the 50-storey DBS building. 

Fellow pioneer Mr Ang Kong Hua, shared his memories of bringing German camera maker Rollei to Singapore through financing, creating thousands of jobs and training local workers. The book will be available for download from Aug 15 at: go.dbs.com/ourjourney

Looking forward to reading the book.

The evolution of Reserve Bank of India as a full-service national institution

August 6, 2018

I just figured Dr YV Reddy has put up a website which has all his major speeches as a policymaker and post his policymaker avatar.

One such speech looks at evolution of RBI as what Dr Reddy calls as a full-service national institution. This is even bigger than the oft cited term for RBI as a full-service central bank and its evolution being different from the other central banks in the world. By calling it a national institution, Dr Reddy looks at the several development activities RBI has undertaken (both willingly and by force) in its history.

In conclusion, the RBI has been serving the nation since Independence to the best of its capacities and acquired a reputation for high integrity and professional competence. Over a period, it has won the trust of people at large and the financial system, particularly the banking system. However, the extent to which and the way it could serve the nation has been dictated by the demands from the government and evolving economic compulsions.

In doing so, it wore different caps, custodian of the trust of people in money and finance; the protector of integrity of banking system, the policy instrument for development and adviser to State Governments also.

It was sometimes an agent, often an adviser, and to the extent feasible, an operationally independent central bank.

Over a period of 70 years, RBI has earned the respect of people at large, domestically, and admiration of many, globally, as a full service national financial institution.

The speech was given at State Bank of Pakistan and it would have been great if the former Governor of RBI even discussed the RBI events during partition. But perhaps given the sensitivity of the matter, he avoided it. Even then some anecdotes etc could have been included by looking at the brighter aspects of RBI functioning during the Partition.

Another thing is the speech is hardly critical of any development within RBI. The evolution is discussed mostly in the positive light and no missteps are discussed in its nearly 85 year journey. Dr Reddy has such wide experience and has been a student of world monetary affairs for a very long time. By touching on certain matters which offers scope for improvement and introspection, one could be made to think over future of RBI and central banking in general.

Nevertheless, a good overview…

Richard Thaler and the Rise of Behavioral Economics

August 6, 2018

Prof Nicholas Barberis of Yale Univ pays tribute to Prof Richard Thaler’s work in this paper. It is also one of the best summaries of both Thaler’s work and behavioral economics.

In the end Prof Barberis concludes hoping beh eco becomes a more integrated discipline and not a seperate subject as it is today:

In his talks and writings, Thaler has often noted his wish for “the end” of behavioral
economics. His hope is that economics will reach a point where there is no need for separate
courses or conferences in behavioral economics. Rather, the ideas of behavioral economics
will be fully integrated into existing courses on financial economics, labor economics, macroeconomics,
and so on; moreover, all research economists will be familiar with these ideas and
will apply them as appropriate in their work. While there is some way to go before this goal
is reached, the underlying vision is starting to be realized. More and more often, researchers
who do not identify particularly as behavioral economists are nonetheless incorporating behavioral
ideas into their analyses. The end of behavioral economics is in sight, and Richard
Thaler is surely heartened to know it.

Hmm..


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