Through the Looking Glass

Financial Express A house is not merely a place to live and build a life, it is also one of the most significant assets of the family. An investment in a house roots a family to a location, giving them a significant stake in the development of the local area. Housing is a fundamental requirement of human existence. The requirement of shelter is so basic that in common parlance in India, it is clubbed together with food and clothing as the troika of basic human needs of roti, kapda, and makaan. It is no wonder that housing is a key social demand, and a priority area for governments, both at the Centre and the states. Housing as a socio-economic construct The development of housing is a function of the economic reality of a location and its era. India has seen, and will continue to see, significant urbanisation. Where people choose to live is a complex optimisation of how close houses are to their places of economic activity (work, business catchment area, etc), how conveniently...

Financial Express This requires confidence, coordination and capital; resolution can't be imposed using policy actions When commemorating anniversaries, we tend to reserve our special attention for round-number, decadal years. Last year, around this time, the world—and India—remembered and recounted its lessons from the Great Financial Crisis (GFC) that reverberated across the globe in September 2008. Since it is the nature of history to repeat, but not to rhyme, decadal recounting of experiences and learnings serve as good markers, but may not be timed to perfection. The challenges in the local banking and non-banking finance companies 11 years post the GFC require us to take a relook at the learnings, especially, on the aspects that eventually led to the calming of the markets. India is nowhere near the situation that the world witnessed 11 years ago—however, GFC offers helpful pointers on how to navigate the sometimes choppy waters. The business of finance is built on t...

Financial Express The onus falls on business to continue to engender society’s and regulators’ trust in the usefulness of technology. New technologies bring with them challenges of regulation. The key challenges facing regulators in the context of drones are privacy, safety and security. Drones have captured headlines this week. The spectacular drone attack on Saudi Arabian oil facilities knocked out ~5% of daily oil supply. The Maharashtra government announced that it signed up with a global private firm to “use a logistics network of autonomous delivery drones to help transform emergency medicine and critical care”. The Economist, on its latest cover, highlighted that ‘flying taxis take off’ even as earlier this year, the Gatwick airport closed for a day and a half over “drone sighting”. Drones, or unmanned aerial vehicles (UAVs) or remotely piloted aircraft systems (RPAS), have become common in a wide variety of more beneficial, mundane and practical applications in agricultu...

The Financial Express Large digital databases like the GST Network can give granular insight, create predictive models; this can lead to more grounded interventions A lot has been said about the current economic slowdown. Econometricians have opined on whether the fall in growth rate is structural or cyclical; economists have wondered whether the response has to be from the supply side or whether demand needs a boost; politicians have traded barbs on whether the issue is the mismanagement of the local economy or the impact of the global trade wars and suchlike; industry and stock market participants have loudly called for succour, fiscal prudence be damned, as their profits and positions suffer even as bureaucrats and government think-tanks continue to talk of India becoming a $5 trillion economy. Since the macro-economy affects all participants, it is natural for all of them to have an opinion and voice it out clearly. As they perceive the current slowdown from their own vanta...

The Financial Express From purely a financial perspective of current account deficit, the distinction between goods and services does not matter The exports performance of Vietnam continues to be contrasted with that of India: the most recent example being the editorial in this newspaper, “Can India learn from Vietnam to manage export-led growth?”. The article, similar to other analyses on this topic, focusses on the significant ramp-up in the exports of Vietnam, especially over the last decade or so. With Indian merchandise exports remaining range-bound over the last few years in the $300-330 billion annual range and Vietnamese exports having risen from $150 billion in FY14 to $244 billion in FY18, there is hand-wringing for India having missed a trick. It is important to acknowledge the growth of exports in Vietnam but before we jump to conclusions and recommendations for India, we need to explore this growth more deeply so that we can draw the right lessons. Exports is one p...

The Financial Express The announcement of this policy statement in the Budget follows the release of the ‘Rupee Raftaar’ report at the Global Aviation Summit in Mumbai in January earlier this year. The Finance Minister, in her maiden budget, laid the foundation of building an important component of the aviation sector: “As the world’s third largest domestic aviation market, the time is ripe for India to enter into aircraft financing and leasing activities from Indian shores. This is critical to the development of a self-reliant aviation industry, creating aspirational jobs in aviation finance, besides leveraging the business opportunities available in India’s financial Special Economic Zones (SEZs), namely, International Financial Services Centre (IFSC). Government will implement the essential elements of the regulatory roadmap for making India a hub for such activities.” The announcement of this policy statement in the Budget follows the release of the ‘Rupee Raftaar’ report at...

The knife-edge balanced nature of Government finances means that there is little leeway available for the Central and State Governments whenever there is a shortfall in receipts or an increase in expenditure. In both cases, they automatically reflect in a substantial change in the fiscal deficit. As India moves towards a US$5 trillion GDP economy, the current slowdown and the longer-term runway offers two ways to recast the current fiscal architecture. For the time being, we can park the debate on whether it makes more sense for the governments to run a counter-cyclical fiscal policy (i.e. pump in more money in the economy in times of slowdown even if it busts the fiscal deficit commitments) or keep true to its commitment on fiscal deficit numbers (irrespective of any slowdown in collections or in the economy). We take it is as a given that commitment to the fiscal deficit number matters more, especially since this is a number tracked closely by investors, credit rating agencies and...