Through the Looking Glass

Financial Express Foreign investors with long-term commitments to Indian infrastructure need the ability to hedge their currency exposure in India. The exposure can typically last for multiple decades, especially in the context of infrastructure. The recently concluded Virtual Global Investor Conference saw large global investors recommitting to their interest in investing in India for the long-term. For investors, the return they seek is dependent on the performance of underlying investment and the exchange rate of the Indian rupee. Foreign investors with long-term commitments to Indian infrastructure need the ability to hedge their currency exposure in India. The exposure can typically last for multiple decades, especially in the context of infrastructure. While, over the long-run, the Indian rupee has depreciated in small single-digit percentages (2.3% pa over the last two decades), there are years when the exchange rate has moved significantly causing a large variability in returns

  What the numbers say—how men and women spend their day differently; and how much bijli, sadak, paani can improve productivity Here’s a question that has been of interest to me: in a country of 1.4 billion people, if only approximately 400 million are in the workforce, what is it that the remaining billion people do? We now have some answers. Time Use Survey 2019, compiled and released by the Ministry of Statistics and Planning Implementation (MOSPI) reveals interesting data about the pattern of time use by Indians. This is how the day of an “average” Indian goes. (Yes, there is no average Indian person – this is the average of the times spent across men and women in rural and urban India.) Out of the 24 hours in a day, almost exactly half is spent in “self-care and maintenance” – this leaves only 12 hours, which is typically used for these five activities: employment and related activities (2.7 hours), unpaid domestic services for household members (2.2 hours), culture, leisu

Financial Express As States issue more debt, finding the investors who will subscribe to the issue will require expanding the current pool of investors and making the investment more lucrative While there have been many deliberations in these pages on the growing amount of debt that the various tiers of the government (Centre and States) will have to raise, little discussion has gone into who they will raise the funds from. It is left to the all-encompassing term: ‘market borrowing’. We deep-dive to see who constitutes this market and what policy implications arise.  Every September, the Reserve Bank of India (RBI) releases a treasure trove of data: Handbook of Statistics on the Indian Economy. While there are many aspects of interest in this data release, we will specifically focus on tables 113 and 114. The former details the “Combined Liabilities of Central and State Governments” and the latter, “Ownership of Central and State Government Securities”. These annual data releases of RB

In 2015, I was summoned to the North Block from the office of the then Minister of State for Finance, Jayant Sinha. For somebody who worked in a bank, my first thought was that some hell had broken loose somewhere; I may have written something that was a slip-up or something. We ended up having a one-hour long conversation and that was it. Nothing happened; life moved on as usual. Then, in 2016, I received another call that I now think possibly changed the trajectory of my career path and maybe, even life. I was asked if I want to work with Mr Sinha as the Officer on Special Duty. After mulling over it, it was decided that I will work with him for 18-24 months—even after Mr Sinha moved from the Ministry of Finance to the Ministry of Civil Aviation.  Why? I wanted to explore the world of policy. Such opportunities are hard to come by.  Besides, it’s where I learnt two of the biggest lessons that I now see panning out around us these days, especially during the debates on the #FarmBill20

Financial Express India can learn a lot from its experience in managing cash – getting a billion people what they need can be planned effectively A vaccine for Covid-19 is expected to come sometime over the next few months – hopefully in this year. Once a vaccine is available, getting it to India’s billion plus people is a logistical challenge with many moral and ethical questions attached. How should India plan for the vaccination program?  Before we go there, let us recognize that a few very important questions still remain to be answered. What shape and form the vaccine will be remains to be seen: it is expected that it will be intravenous and hence may require skilled or trained practitioners to administer. It is also not clear whether there will be only one vaccine or many competing ones, and how effective each might be. All of this will feed into the number of doses that might be required – whether a single shot would do or multiple jabs may be required. Hopefully, India will dev

Financial Express Many of the networks of value could start to become ‘utilities’ as they become more embedded in everyday lives In the previous article , we introduced the idea of the D-sector. The three traditional sectors have a well-defined, or largely settled, understanding of the many elements that build them: (1) what resources are required, (2) employment and its regulations, (3) the path to skills, (4) how they are priced and valued, (5) taxation policies, and (6) their impact on society. We detail these below. Defining the D-sector Resources required : Five elements are required to build a sturdy ‘digital cocoon’: the ability to (1) get on a network, (2) communicate and connect, (3) add value, (4) make and receive payments and (5) access assets and liabilities. We detailed these in the earlier article. There is a role for both the public and the private sector in creating the networks. Many networks that help create value in the fourth sector are largely private today: th

Financial Express   The new normal after Covid-19 requires a re-imagining of macroeconomics: we need to start defining the contours of, and measuring, the fourth sector. (First of a two-part article) “There are three estates in Parliament but in the Reporters' Gallery yonder there sits a Fourth Estate more important far than they all. It is not a figure of speech or witty saying, it is a literal fact, very momentous to us in these times.” Edmund Burke's quote highlighted the rising of the Fourth Estate as press and media became an important pillar of the society. A similar momentous time is upon us again, courtesy the pandemic, as we recognize what brings income and wealth to the society. In an earlier article , “ Getting India digitally ready: COVID-19 pandemic highlights urgent need to build digital cocoons for the whole population ” (May 15, 2020, The Financial Express), we had looked at the importance of and need to build “digital cocoons” for a large segment of India’s p

Financial Express Aviation is amongst the worst-hit industries in Covid-19: what might change? Akhilesh Tilotia and Sunil Bhaskaran Before Covid-19 pandemic hit India and its aviation industry, airline traffic had been growing smartly for last many years: indeed, the industry had celebrated fifty consecutive months of double-digit growth in December 2018. Airlines in India had started transporting more people annually (~140 million) than the AC coaches of Indian Railways (~130 million) over longer distances and at comparable or lower prices. The UDAN scheme helped move the number of India’s operational airports to more than 100. When India hosted its first Global Aviation Summit in January 2019, the local industry was expected to continue growing smartly to a target of a billion trips a year in the forecast-able future. Given these expectations, tens of billions of dollars of aircraft were expected to come to India – plans for setting up a lease finance industry in

Notes from a Live Webinar co-hosted by Axis Bank and agribazaar The panel was represented by senior government officials, investors, developmental agencies, agri-industrialists and a banker. The reforms undertaken by the Government were outlined and explained by the four Secretaries to the Government of India. These reforms have been variously called the "watershed moment", "1991 moment", and the "unshackling" of Indian agriculture, especially since they converted the Covid-19 crisis into a massive opportunity. A good start with many reforms With almost half a billion people associated directly or indirectly with Indian agriculture, any change here impacts incomes, jobs, social status, and prosperity for them. These changes fit in well with the Government's commitment to double farmers' incomes. The three big changes that have taken place are: (1) abolition of the monopoly of local mandi, or agriculture yard, where the farmer was required to

Financial Express Shape of economic recovery will determine employment, debt and exchange rates The immediate fiscal deficit dynamics and growth outcomes for India post Covid-19 lockdown have been the subject of intense analysis and discussion. The human crisis of lives and livelihood did demand both an immediate and urgent response. With the lockdown now opening and economic activity picking up, it is important to look beyond FY21 to see how India could fare in the first half of the next decade. Discussions have focussed on whether the economic recovery will be L, U, V, W, or a swoosh, a la the logo of a famous sports brand. These descriptors refer to the shape of the chart when plotting real GDP (on y-axis) over time (on x-axis). The GDP in FY20 is estimated to be Rs 204 trillion (Rs 204 lakh crore) and if it had continued to grow at 8% in real terms, GDP would have reached Rs 300 trillion by FY25. Depending on the inflation trajectory, the nominal number would have been highe

Financial Express Covid-19 highlights the importance of and urgent need to build ‘digital cocoons’ for the whole population The Covid-19 series of lock-downs have brought very different experiences for varied segments of society: the contrast cannot be starker than the social media posts of fancy meals at home compared to the long walks back to hometowns. What explains the difference? Those who have been able to weave a ‘digital cocoon’ have done comparatively better than the real-world migrants. A migrant moves location for economic activity, whether a job, business or studies. In case of a real-world migrant, her presence at the site of the economic activity is sine qua non – there is simply no way that the activity can be performed without the person being there. In the case of a ‘digital migrant’, however, a virtual presence suffices. Juxtapose the move of migrants to their hometowns with the initiatives that many companies are now running to empower their employees to ‘wor

Financial Express COVID-19 could change entire industry ecosystems—what makes planning challenging is that it is not clear how permanent and deep the changes will be By now you are deep in your business continuity planning (BCP)—if your organisation had planned it, good; if not, you have learnt its importance the hard way. The COVID-19 related disruption is such a seminal event in our generation that none of us are likely to forget the lessons from this pandemic. From now on, there will be few organisations to not have a BCP: building a BCP will prepare you for any such event which surprises you. What organisations now need is a Beyond COVID-19 Plan (BCP), which pools in the learning from this event to make the business go faster, higher and stronger. The new BCP requires a look at both your internal resilience and external reality. Be brutal in assessing what has changed and how permanent the change is expected to be. The change will be in employees, their behaviours and expect

Financial Express Building liquidity infrastructure and solution and protecting incomes required in the short-term; rebuilding trust in the long-term We looked at some of the possible impacts of social distancing in the previous article . As various supply chains get disrupted due to sudden convulsions of demand and supply, the impact will be as much social as economic. The public health systems across the world are gearing up to cope with the challenges of the virus. We detail some of the steps that policy makers, industries and companies can take to tackle the uncertainties arising from this unprecedented way of living. The fundamental premise of social distancing is that individuals keep distance from one another. The premise of human economic activity in the modern world is based on the division of labour which intricately links up the economy to social interactions. Any lack of social interaction can create significant break-ups in the economic links. This flows through not