Indian Economy - News & Discussion Oct 12 2013

[Arjun]

Being a DSA isn't part of its approved list of activities.

Acting as business correspondent to another bank is explicitly permitted, including for loan sourcing. The RBI doesn't care regarding any fee-based income as long as the entity is not committing its own funds.

[RoyG]

RoyG, how about you use the postal infra itself to provide internet access in villages ? erect a couple of internet kiosks with local village chaps as operators who can help villagers with online market access, banking, govt schemes info, applying online for jobs or courses etc etc, the list goes on.

btw, as someone who has used India post's speedpost service heavily, I swear by its low cost, speed and reliability. in 100's of usages never had one mistake from them.

Right so again, the service of delivering mail from point A to point B in India using a gov service, is decreasing because the citizenry are using phone, internet, and private services.

So my question is, WHY ARE YOU TRYING TO SAVE THE POST? If you want to turn them into internet kiosks, etc. why not do just that and let the post service whither away on its own.

[Rahul M]

err because delivering mail is not going to go away and IP is still very good at it. as I mentioned, when it comes to pkg delivery IP >>> pvt operators.

just because they can (and should) be used to do othr things doesn't imply the core competence should be surrendered for no reason.

[RoyG]

err because delivering mail is not going to go away and IP is still very good at it. as I mentioned, when it comes to pkg delivery IP >>> pvt operators.

just because they can (and should) be used to do othr things doesn't imply the core competence should be surrendered for no reason.

Err, if it's so good, then why the need to save it? It should do fine on its own.

You call it surrendering, I call it performing.

[somnath]

Being a DSA isn't part of its approved list of activities.

Acting as business correspondent to another bank is explicitly permitted, including for loan sourcing. The RBI doesn't care regarding any fee-based income as long as the entity is not committing its own funds.

Theoretical. BC is useful where the BC would have a physical infrastructure that is expensive for a bank to set up. In a payment bank, the bank itself would piggy back on a telco or a bank for its own physical reach.

Over time it can become a digital loan aggregator platform, but it's unlikely to be about financial inclusion.

[Suraj]

That's a slogan, not a business model. As of now, they can't underwrite any credit, first mile or last mile. Credit is delivered by someone underwriting it.

You're jumping to a conclusion about the payment banks without pausing to consider that they're just one part of a much broader plan under implementation today. I simply pointed out earlier that the Economic Survey provides an idea of what this plan is . The government so far has demonstrated a break from many past tendencies, particularly that of promising much and failing to execute . This one lets out information in dribbles, executes tasks like PMJDY and Rupay cards on a much greater scale than their original target, and then builds upon that by implementing more things.

There was a time when PMJDY was mocked as a gimmick where most accounts had 0 balances . That started changing quickly . Rupay cards were dismissed as a limited novelty but there are now 155 million of them issued in one year . Now it's the turn of the payment banks to be critiqued as being not particularly worthwhile.

[Kakkaji]

"Whatsapp" like movement in Indian finance sector, says Nandan Nilekani

BENGALURU: IT czar and former UIDAI Chief Nandan Nilekani today said India is witnessing a "Whatsapp" like movement in the finance sector due to emergence of payments banks, e-sign, IMPS and other technology-related revolutions.

"...in 2009 there was a Whatsapp movement in telecom. My analysis is, in 2015 there is a Whatsapp movement for finance in India.

"Change is coming on many fronts...new licences, smart phone Aadhar identification, e-sign, payment banks etc. Some of it is regulated, some of it is technology, some of it is design, and some of it is market," Nilekani said.

[Gus]

barrel is below $40 now.

[Gus]

There was a time when PMJDY was mocked as a gimmick where most accounts had 0 balances . That started changing quickly .

--

it is still being mocked. they are deliberately lying to hide the fact that 0 balance accounts are less than 50% now and falling.

[somnath]

You're jumping to a conclusion about the payment banks without pausing to consider that they're just one part of a much broader plan under implementation today. I simply pointed out earlier that the Economic Survey provides an idea of what this plan is .

On the contrary, I think that payment banks have interesting possibilities. Just that we are very far from crystalising thoughts on what they might be. As of now, given the architecture, plans of credit "intermediation", bringing down "cost of credit" etc are all slogans. Even licensees and their business models currently arent thinking on those lines. As the RBI guv said, payment banks are likely to be urban phenomenon to start with. Most of them will piggy back on telcos and other commercial banks to provide complementary services. Regulations will evolve, so will business models, but in India (as in the US), its a matter of trial and error, rather than a grand plan.

No one, least of all I (I work closely with many investors that are getting into this space) think that they are worthless. But as of now, the big action will be on Rel Jio and Airtel Money in a new telco broadband push, not rural financial inclusion.

There was a time when PMJDY was mocked as a gimmick where most accounts had 0 balances . That started changing quickly . Rupay cards were dismissed as a limited novelty but there are now 155 million of them issued in one year .

Funding of Jan Dhan accounts is entirely up to the govt. If it decides to push more of the subsidies in cash form, the number of zero balance accounts will go down. The question is whether a bank account is the most efficient way of doing it (bank accounts are incredibly expensive to open, maintain and operate). I think mobile wallets presented a more efficient solution, but thats a matter of detail.
Rupay cards - the 150 million number is symptomatic of govt style numbers chasing. How many of those cards are activated? Very few. How many could be? Open question - cards need POS machines to operate, and they are incredibly expensive to install. Rupay has mandatory access to POS machines/ATMs (by diktat), but these are largely in urban areas. No one's going to install large scale POS/ATM in rural India. In the urban areas, most people still interchange through Master and Visa - their value prop is many times superior to Rupay.

In any case, the game on interchange is moving away from POS machines to mobile wallets globally and in India. Expect payment banks themselves to operate that. Whats the use of 150 million plastic pieces then?

So my question is, WHY ARE YOU TRYING TO SAVE THE POST? If you want to turn them into internet kiosks, etc. why not do just that and let the post service whither away on its own.

The answer is simple. India Post's physical infra is built. That needs to be maintained if only to facilitate distribution of small savings (an important social security framework in a country with few of them). Their people are part of govt payrolls - costs are fixed. It makes sense to "sweat" these assets more! And nothing better than a limited bank reaching people where very few will find it worthwhile to go!

[Arjun]

On the contrary, I think that payment banks have interesting possibilities. Just that we are very far from crystalising thoughts on what they might be. As of now, given the architecture, plans of credit "intermediation", bringing down "cost of credit" etc are all slogans. Even licensees and their business models currently arent thinking on those lines. As the RBI guv said, payment banks are likely to be urban phenomenon to start with. Most of them will piggy back on telcos and other commercial banks to provide complementary services. Regulations will evolve, so will business models, but in India (as in the US), its a matter of trial and error, rather than a grand plan.

No one, least of all I (I work closely with many investors that are getting into this space) think that they are worthless. But as of now, the big action will be on Rel Jio and Airtel Money in a new telco broadband push, not rural financial inclusion

Somnath, as usual that was a boatload of clueless garbage from you. Completely and totally wrong on so many different levels.

1. Banking correspondence services, including credit intermediation, are among the top revenue streams being targeted by almost all payment banks

2. Payments banks being an "urban phenomenon" as phrased by you - is the complete opposite of both the RBI intention as well as that of all leading analysts who follow the sector. The biggest impact is likely to be in semi-urban and rural areas

3. Payments Banks are intended to be the primary vehicle for rural financial inclusion and that is precisely where the opportunity lies. Check out the CRISIL report that came out yesterday on the impact of Payment Bank licenses.

[A_Gupta]

http://www.thehansindia.com/posts/index ... ain-171787

Investors who poured into India in 2014 pulled back this year over concerns about taxes and the slow pace of reforms, preferring markets such as China, Taiwan and South Korea. Now, fears about Chinese stock market volatility and Beijing's interventions are overriding those concerns and driving them back to India


...
India recorded inflows of 53.19 billion rupees ($816 million) in July after two months of outflows, regulatory data shows. Meanwhile, northbound investment under the Shanghai-Hong Kong Stock Connect saw fund outflows of about 47 billion yuan ($7.3 billion) since early July, according to Reuters calculations.

[somnath]

Somnath, as usual that was a boatload of clueless garbage from you. Completely and totally wrong on so many different levels.

1. Banking correspondence services, including credit intermediation, are among the top revenue streams being targeted by almost all payment banks

2. Payments banks being an "urban phenomenon" as phrased by you - is the complete opposite of both the RBI intention as well as that of all leading analysts who follow the sector. The biggest impact is likely to be in semi-urban and rural areas

3. Payments Banks are intended to be the primary vehicle for rural financial inclusion and that is precisely where the opportunity lies. Check out the CRISIL report that came out yesterday on the impact of Payment Bank licenses.

Well, if you are certain about the business model, more power to you! you know more than the licensees, and the RBI guv!

http://economictimes.indiatimes.com/opi ... 552799.cms

The board took the view that it was hard to forecast what would happen in the payment space, which is perhaps one of the most exciting spaces from India's perspective — both in terms of the use of technology and breaching of the last-mile barrier.

Given the fact that we did not know what could succeed, the board chose to licence in a variety of players — some tech companies, finance companies, some bank-mobile combines. Now, let's see how the game develops.

the Guv isnt sure, neither am I!

Licensees, some of whom I work with closely don't have it sorted out, yet. Existing successful models in Africa too don't point out anything on credit intermediation.

General common sense on BC or banking don't lend much to that either.

But you obviously are quite sure, so best of luck!

[Arjun]

the Guv isnt sure, neither am I!

You obviously aren't, that's for sure.

As for whether the Guv's stand on credit intermediation being allowed and importance to revenue streams, whether they are intended to be urban / rural focused, or intended to promote rural financial inclusion - all of that is explicitly spelled out over several interviews in the past which can be easily googled, in detailed preliminary and final guidelines issued by the RBI to aspiring licensees and a 30 page FAQ issued by the RBI to clarify all questions relating to what is allowed / not allowed. All of this is posted on the RBI website and known well to those who have followed developments closely over the last year or so.

The only point the Guv is understandably unclear on is whether telecom firms, NBFCs, technology firms (or PPIs which will also enter the race) would be the end-winners in this race.
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Somnath, I am forgetting the name you went by on BRF in your previous avatar - and despite the disagreement above I am glad you are back. You do contribute to increasing the level of intellectual discussion and are able to articulate your points well. But your pig-headedness in the face of facts is, shall we say, a little troublesome...

Anyway, welcome back !

[chandrabhan]

Dear all,
Need some bullet points for a presentation to me made to a brit corporation to manufacture in India

a. For India
b. For the world

Apart from demography, democracy & demand .. meaning skilled manpower & rule of law. data on number of engineering grads, income levels, demand data on consumer goods etc. will help. data on infra spends or trends too will help. Links.

thank you

[Suraj]

Bank accounts are incredibly expensive, Rupay cards are bits of plastic and mobile payments are the future ? It seems to be completely forgotten just how expensive the mobile infrastructure itself is. What's more, it is at the mercy of a private business' solvency to deliver those payments on time and effectively . When a phone network fails, it's the government who then takes the blame, even though they don't own the system . At least with banks and postal nodes serving banking needs together with the RuPay cards, the government has greater control over delivery . I find the criticism of the number of cards quite nonsensical intellectualism .

Yes 155m is 'just a number' but a far bigger number than zero. Ditto for the 180 million PMJDY accounts. They brought within one year, a level of greater financial inclusion that was promised back in 1971 with bank nationalization, but was never delivered since. All these work together . Some people need the RuPay cards, some can do with mobile wallets, or may switch between the two . The point is they've an effective means of paying and receiving benefits that cuts out the middleman. The very fact that such a system can be implemented bypassing the political clout of the middleman, is an accomplishment. To naysayer though, it will always be about 'but how many accounts are zero balance' or more recently 'how many cards are active' . It will never be about 'I accept I never thought they could issue so many accounts and cards in so short a time'.

[Mukesh.Kumar]

Dear all,
Need some bullet points for a presentation to me made to a brit corporation to manufacture in India

a. For India
b. For the world

Apart from demography, democracy & demand .. meaning skilled manpower & rule of law. data on number of engineering grads, income levels, demand data on consumer goods etc. will help. data on infra spends or trends too will help. Links.

thank you

Dear Chandrabhan,

Besides the data on India, you could use proximity to emerging markets ( resulting in consumption) as a variable. I had a similar case to build for locating one of our manufacturing decisions in East Africa and used this data source (has to be paid for- even McK uses them); presence of preferential Trading agreements, cargo distances to major ports of consumption as a neat set of numbers. Will show you how besides the Indian demography, you could touch East Africa, rest of Asia with India as a base.

Canback Global Income Distribution Data You can use the McKframework for how different income levels can be split into Discretionary Income and Subsistence Income.

Also, depends on the type of industry, but you could use data on Power, proximity to RM, Water, tax structures (Do a breakup of tax structure and breaks given at special zones).

Also helpful are World Bank Data on Ease of doing Business, Transparency International.

In the end you can also use inputs from think-tanks on Political Stability, etc. Do a PEST Analysis.

IMHO, these should give you quite a few pointers. If you need more help do ask specific questions.

[somnath]

I find the criticism of the number of cards quite nonsensical intellectualism .

Hmm, so what would unquestioning cheerleading of govt numbers be called, "unintellectual bhakti-ism"?

It seems to be completely forgotten just how expensive the mobile infrastructure itself is. What's more, it is at the mercy of a private business' solvency to deliver those payments on time and effectively . When a phone network fails, it's the government who then takes the blame, even though they don't own the system . At least with banks and postal nodes serving banking needs together with the RuPay cards, the government has greater control over delivery .

Money transfers (including Mobile banking) has two components - the mobile (or communication) network and the bank. Safety of money being transferred is dependent on the solvency of the bank, not the communication network provider. Trillions of dollars are transferred via SWIFT everyday, the "safety" of this money isnt on account of the solvency of FLAG !
Rupay cards are useful to the extent that here are ATMs and POS machines to swipe the cards - the card by itself is nothing but a piece of plastic. Sans ATMs and POS machines, they are just pieces of plastic.
Govt's "control on delivery" of cash transfers isnt dependent on ownership of banks or delivery channels (least of all an interchange protocol like Rupay), its dependent on more fundamental issues of beneficary identification and political will to monetise subsidies.

As to the "cost" of the mobile infrastructure, its already set up, and its costs are defrayed through numerous other bundled services. The marginal cost of a couple of Kbs of data being transmitted is close to zero. Not the case with an incremental bank account - the marginal costs of opening, maintaining and operating that is a far higher number (something that the new payment banks could bring down, but as of now these are with vanilla commercial banks).

Yes 155m is 'just a number' but a far bigger number than zero. Ditto for the 180 million PMJDY accounts. They brought within one year, a level of greater financial inclusion that was promised back in 1971 with bank nationalization, but was never delivered since. All these work together . Some people need the RuPay cards, some can do with mobile wallets, or may switch between the two . The point is they've an effective means of paying and receiving benefits that cuts out the middleman. The very fact that such a system can be implemented bypassing the political clout of the middleman, is an accomplishment. To naysayer though, it will always be about 'but how many accounts are zero balance' or more recently 'how many cards are active' . It will never be about 'I accept I never thought they could issue so many accounts and cards in so short a time'.

Well, so was the number of PDS shops opened since independence - a huge number greater than zero. Doesnt mean they necessarily served their purpose for which they were intended.

Actually, massive speeding up opening of zero balance accounts has been a creditable initiative (BTW, a lot of accounts were opened before this govt's time, though at a much slower pace). But that by itself isnt the issue. The big issue is of monetising subsidies and converting them as cash transfers. That is delivery channel (bank account, mobile wallet, payment bank) agnostic - it involves political decision making that hasnt been done, yet.

Hence, any cheerleading of the "accomplishment" is therefore rather premature.

[somnath]

Dear all,
Need some bullet points for a presentation to me made to a brit corporation to manufacture in India

a. For India
b. For the world

Apart from demography, democracy & demand .. meaning skilled manpower & rule of law. data on number of engineering grads, income levels, demand data on consumer goods etc. will help. data on infra spends or trends too will help. Links.

thank you

BEst sources are CMIE, NCAER for macro data.

[Suraj]

Hmm, so what would unquestioning cheerleading of govt numbers be called, "unintellectual bhakti-ism"?

How is it either unintellectual or bhaktiism ? The former requires that I choose to ignore data, but data is exactly what I quote, and ironically what you pooh pooh. Bhakti implies dogma over reason, whereas it is you who, one day after the announcement of one part of a much larger economic infrastructure has been announced, presumes certainty as to its utility. Now that is quite a bit of Bhakti in your own opinion. Far from cheerleading, I'm asserting caution against the sort of definitive assertions you have been making, simply because it is far too early, and prior data shows that anyone making early dismissive claims has usually been shown to be wrong as more things happen.

RuPay cards are useful to the extent that here are ATMs and POS machines to swipe the cards - the card by itself is nothing but a piece of plastic. Sans ATMs and POS machines, they are just pieces of plastic.

Their importance lies in the speed with which a large UID system, and a large card transaction processing system has been put in place to handle all those cards.

I'll always choose to repeat this because we have a tendency to celebrate ideas rather than implementation. Effective implementation of a straightforward idea far trumps middling implementation of a great idea.

govt.'s "control on delivery" of cash transfers isnt dependent on ownership of banks or delivery channels (least of all an interchange protocol like Rupay), its dependent on more fundamental issues of beneficary identification and political will to monetise subsidies.

Both of which are already in place, and yet can face failure if last mile delivery by the telecom doesn't work effectively . It is the governments will that's resulting in these actions, and it is their pragmatism that underlines the use of a UID system that was the previous administrations pet project .

As to the "cost" of the mobile infrastructure, its already set up, and its costs are defrayed through numerous other bundled services. The marginal cost of a couple of Kbs of data being transmitted is close to zero. Not the case with an incremental bank account - the marginal costs of opening, maintaining and operating that is a far higher number (something that the new payment banks could bring down, but as of now these are with vanilla commercial banks).

A telepayment system will need an interface with a formal transaction clearance system, and maintaining virtual accounts, all of which costs money on top of the costs of a telecom network.

Yes 155m is 'just a number' but a far bigger number than zero. Ditto for the 180 million PMJDY accounts. They brought within one year, a level of greater financial inclusion that was promised back in 1971 with bank nationalization, but was never delivered since. All these work together . Some people need the RuPay cards, some can do with mobile wallets, or may switch between the two . The point is they've an effective means of paying and receiving benefits that cuts out the middleman. The very fact that such a system can be implemented bypassing the political clout of the middleman, is an accomplishment. To naysayer though, it will always be about 'but how many accounts are zero balance' or more recently 'how many cards are active' . It will never be about 'I accept I never thought they could issue so many accounts and cards in so short a time'.

Well, so was the number of PDS shops opened since independence - a huge number greater than zero. Doesnt mean they necessarily served their purpose for which they were intended.

Hence, any cheerleading of the "accomplishment" is therefore rather premature.[/quote]
So you consider it timely to decide something is a failure within days of announcement and caution against claiming success until when you decide it is ? sorry things do not work that way . The fact that the accounts have been opened and are working is without doubt today , and therefore they are already a case of successful implementation that will only get more versatile in future . It is your assertion questioning payment banks, that is dubious, because you not only are jumping the gun, but you've a long record of asserting support of patently broken policies. Those of us who were around before your past ban remember your fervent support for the now discredited NREGA , and your insistence that it would not feed systemic inflation . Guess what happened

[somnath]

The former requires that I choose to ignore data, but data is exactly what I quote, and ironically what you pooh pooh.

Economic survey assertions are "data"? If all ES assertions since independence were to be "data", India would be an OECD country by now.

Their importance lies in the speed with which a large UID system, and a large card transaction processing system has been put in place to handle all those cards.

What is this "large card txn processing system"? Rupay is an interchange protocol, not a txn processing system. Cards txn are processed through POS, ATMs and online/mobile means. None of them are remotely in place in rural areas. BTW, large UID was rolled out by the previous govt, roundly criticised by the current chaps then!

These are technical issues, cannot be done with generalist rhetoric.

Both of which are already in place, and yet can face failure if last mile delivery by the telecom doesn't work effectively

Well actually, by that logic nothing will work if the power plants stopped supplying electricity!
And well, "beneficiary identification" has happened? Really - which database will that be? And political will? We are still pussyfooting around urea subsidies!

A telepayment system will need an interface with a formal transaction clearance system, and maintaining virtual accounts, all of which costs money on top of the costs of a telecom network.

Again, random generalist terms unknowingly thrown around in a particularly specialist area. There are real bank accounts (there are no "virtual" accounts), where monies get transferred to and from through remittance mechanisms like NEFT/RTGS etc, with instructions being sent across multiple
mechanisms (RBI clearance, SWIFT messages, digital instructions, interbank etc). The telco (today) has little role other than transmitting a few kbs of data.

So you consider it timely to decide something is a failure within days of announcement and caution against claiming success until when you decide it is ?

On the contrary, I think zero balance bank accounts, monetisation of subsidies etc have large possibilities. But it isnt a "success" yet, we are far from it. the big decisions are yet to be taken.

It is your assertion questioning payment banks, that is dubious, because you not only are jumping the gun,

I am not questioning payment banks, I am questioning premature euphoria about them. Simply because I do this as a day job - business models are far from obvious to most investors and promoters. To conclude lofty outcomes and possibilities around opinion and position papers and consultant reports isnt a luxury of definitiveness I have!

your fervent support for the now discredited NREGA , and your insistence that it would not feed systemic inflation . Guess what happened

Ah, NREGA. Discredited? This govt increased the budget for the programme, and minister after minister appeared on national media to painfully argue how the programme is going to be strengthened ! I guess the discredit has happened somewhere else!
It feeds into systemic inflation? Well, another instance of generalist newspaper rhetoric in a specialised area. Can you point out ANY credible research (not random newspaper Op-ed pieces) that establishes that causality?

Here is something that actually establishes the Null Hypothesis, ie, NREGA didnt cause any significant inflation at all.
https://rbi.org.in/Scripts/Publications ... x?id=16055

Done by RBI, and AFTER the new govt was in power.

Actually, it was always quite obvious to anyone who has gone through Econ 101 in an undergrad course - one can damn NREGA for a lot of things, but not for stoking structural inflation.

[Suraj]

What economic survey data do you mean ? In fact what data at all do you present ? The PMJDY and RuPay card data is updated weekly on the program website itself . You don't need economic survey data for that . The economic survey provides not data but a description of why the government set up PMJDY, chose to use Aadhaar and what it plans to to do reduce subsidy wastage . It is an established fact that the initial steps the government has taken has already generated substantial subsidy savings by making the delivery more efficient . My arguments have focused on either the numbers achieved - accounts opened or savings generated . Your position focuses upon empirical claims and rhetoric like 'bits of plastic' . It sounds more political than any quantitative numbers .

Do you question the number of accounts open ? The number of cards issued ? The subsidy savings already reported ? Sure a much more holistic solution is still in the works . But none of these basic nuts and bolts was even accomplished in 67 years, and yet you consider it 'cheerleading bhaktiism' . If this was all so simple why did it take he current government to accomplish something in one year that The last governments de facto head's mother in law promised 45 years ago ? I can guess what you'll respond - ' but it hasn't been fully accomplished 100% down to every last man and woman, so it's a failure!'

As for NREGA, you're welcome to keep asserting vigorously what a wonderful success it was . The GE2014 results surely bear it out All the current government is doing is turn it back into what NDA-1 originally had done - implement a rural infrastructure development program, NOT a job guarantee program. NREGA in its original form was singularly characterized by the fact that it a) was an explicit dole program and b) it explicitly discouraged mechanization . It is also a fact that it stoked the inflation that substantially deflated the prior government in the election. The current government supports neither of these ; it continues the program in name but with entirely different prerogatives of its own.

[disha]

Suraj saar, a more logical explanation is that Somnath'ji has been cut out from being a middleman. Either an intellectual or a monetary one. Of course it is either an egoistical hurt or economic hurt and hence all the negativity against the PMJDY and RuPay.

Now Somnath'ji - here is my big idea -

1. A POS machine like four-square connected to a mobile for RuPay cards only. No other cards work on it unless there is a RuPay Logo on it.
2. A vegetable vendor, kirana wala, dhobiwala - all carry it. For transactions above Rs. 100/- they use the POS machine. The cost is Rs. 3/-., the government subsidizes by Rs. 1/-., the vendor pays Rs. 1/- and the buyer pays Rs 1/-.
3. The money is disbursed directly from the PMJD account of the buyer to the vendor.
4. This are micro-txn and are un-taxed.
5. Advantage for buyer - does not have to carry around a Rs 1000/- on the purse and deal with "Chuta nahin hain". Advantage for seller, not have a fat purse by the end of the day and lose it to a pick pocket.
6. Advantage to GoI and to India? You please figure it out - since that is the big idea.

[KrishnaK]

NFC has been slated to replace cards, but even Apple is finding it hard to displace Visa, Mastercard and their likes in the US. Maybe India can leapfrog directly to NFC.

[disha]

NFC has been slated to replace cards, but even Apple is finding it hard to displace Visa, Mastercard and their likes in the US. Maybe India can leapfrog directly to NFC.

Those are technologies to make the transaction. An entire infrastructure is available for card reading and processing the traditional way. Also some patents will expire along the way and that makes it even more cheaper to setup such services.

Given that RuPay card with 2-factor authorization (possession of the card with merchant authentication - that is the merchant knows who you are) with a traditional card reading mechanism., will be a cheaper infrastructure to setup. NFC etc are hexy tools. They can come later - let the mango man climb on the passenger train first.

My question for Somnath'ji still stands. Anybody can also answer it.

Viz: What is the advantage to GoI and to India? With RuPay card and micro-txn for micro and small businesses/merchants/entrepreneurs.

[disha]

NFC has been slated to replace cards, but even Apple is finding it hard to displace Visa, Mastercard and their likes in the US. Maybe India can leapfrog directly to NFC.

Those are technologies to make the transaction. An entire infrastructure is available for card reading and processing the traditional way. Also some patents will expire along the way and that makes it even more cheaper to setup such services.

Given that RuPay card with 2-factor authorization (possession of the card with merchant authentication - that is the merchant knows who you are) with a traditional card reading mechanism., will be a cheaper infrastructure to setup. NFC etc are hexy tools. They can come later - let the mango man climb on the passenger train first.

My question for Somnath'ji still stands. Anybody can also answer it.

Viz: What is the advantage to GoI and to India? With RuPay card and micro-txn for micro and small businesses/merchants/entrepreneurs.

[SaiK]

Having any type of non-cash transaction system is 1.25 billion times better than cash based transactions to remove the evil kala angrez corruption setups. directly engaging with the buyer-seller or sender-recipient or gov-people eliminates the middle-man bhaksheesh walas.

people who resist change to better systems are bhaksheeh friendly onlee.. it is hard for them not to give or collect.

[Kakkaji]

Mine auction date

New Delhi, Aug. 22 (PTI): Mineral-producing states are expected to start the auction of mines bearing minerals such as iron ore, bauxite and limestone by October and November, steel and mines minister Narendra Singh Tomar said today.

"I feel mining auction will begin in October and November. I have spoken to all the chief ministers of the mineral-producing states, and the process has started there," Tomar told the reporters here.

The minister also said the government was finalising the guidelines for district mineral foundation as well as the miners' contribution to it and will notify them soon.

On the government's take on the Posco issue, Tomar said since the Mines and Minerals (Development and Regulation) Amendment Act, 2015 has been passed, Posco will now have to bid for mines.

[Yogi_G]

Any word on our strategic oil reserves? I don't recall there being any significant budgetary allocation for this purpose. If at all there was a time to really scale up our reserves it is now. With the Iran deal and all. barrel at <40$.

[gakakkad]

what else does infusing liquidity without productivity do ? And TFTA certified Bhagwati /panagriya etc concur with the views of the forum as well...that NREGA was inflationary...Modi re-directed it to a rural infra project with emphasis on skills development and infra...all economist in Niti ayog etc are TFTA certified with big ivy leagues...

The per student cost of running the FTII is believed to be 3.5 times that of a med school or IIT...What is the productivity of it ? Chauhan has been given the task of turning around the insti , which is basically a textbook case of a failed insti...let him do his job...

they last had a convocation in 1997 ...Even air India runs better than this...

[Picklu]

A few observations:

1. Today when my car was delivered after service in bangalore, kerala, the driver brought the portable credit card machine with him so that i do not have to give him large amount of cash for him to carry back.
2. The card reader will work as long as mobile network is working. If mobile network is not present, those mobile wallets will not work either.
3. For last couple of years, those cash teller machines and credit/debit card reading POS machines are available even in make shift vegetable shops (temporary shade built over empty 30X40 plots in the neighbourhood)
4. Almost every vegetable shop owner/kiranawala carries a smart phone today; heck even the boys in local barbershop & pet shot carries one. All the delivery boys of various e-commerce cos also carry one and take the signature in tough screen post delivery. So does the drivers from the cab cos. Given the reducing price of smartphone, the rural folks can easily afford one; it is the mobile network that is the bottle neck.
5. Recently I found many local business have started using the small credit card reader attached to the smart phone. If that works out, it will reach rural areas quite easily along with the smart phone. All the gov need to do is to ensure that reliable mobile network reaches every corner of the country.

As far as mobile wallet is concerned, Airtel money is there for quite some time and so is iMobile from icici. paytm is there piggybacking on uber (or is it the other way round?). Most of the reward cards like payback etc are tagged to phone no and to redeem you do not really need the card. I have used the most but use case is quite different from plastics.
While doing m-commerce via ola, uber, amazon, flipkart, bookmyshow, bigbasket or myntra etc, it is quite ok to use your mobile wallet. Also IMPS is very good in terms of instantaneous money transferring between bank accounts. But all these happens when you are already in the virtual world via phone or computer for doing the main transaction (booking ticket, purchase or money transfer). Also, unless you are absolutely forced to, you may still prefer to use your saved credit card instead of using a mobile wallet which is an additional layer on top of your card only.
When you are in brick and morter, swiping your credit card and typing the pin is still much easier than using the mobile wallet and I do not see much traction of mobile wallet unless the other option is cash only.

[vina]

It is in days like this when there is a gathering global panic that I am ever so grateful that Mother India produces children like Dr Y V Reddy and Dr Raghuram Rajan.

Sure, they are not the most popular people with the politicos and the market scoundrels, but they have it in them to do the absolutely right thing. Thanks to Y.V Reddy we were spared the absolute disaster of the 2008 global crisis, which the Kangress Govt subsequently managed to dump the economy back into high inflation when globally the problem is deflation!

Again, right man at the right time at the right place, who did the right things in the previous year to make sure that we can withstand shocks. To think that some absolute monkeys were baying for rate cuts and this and that and how the gov should be replaced and there should be a bunch of rubber stamping babboons doing central banking etc. Shame..

Rajan's speech was spot on . He perfectly identified that local inflation expectations have gotten entrenched and it needs to be broken to reset to much lower levels and how thanks to dame luck (falling commodity prices) and the good work by the govt in controlling food inflation, we will not have to suffer the decompression in output like what happened in the US in the Volker driven deflation (interest rates went up to 17.5% or so then) and how WPI reflects a lot of globally traded commodities (which are in deflation) and how CPI is a real measure of locally entrenched expectations . Brilliantly articulated. And to think that some random loud mouth chaddi walla ideologues were "experts" on inflation and taking calls on getting him replaced. I hope those monkeys never come within a 10000 Yojanas of policy making in the RBI. They will be more dangerous than the NAC types of the Kaangress.

Rajan just slammed (okay reproached in his ever so mild way) the PRC "we don't have to look very far beyond our borders" on the effects of boosterism. The Chinese boosted their stock market to the stratosphere, and now it is going to thud back to earth. There is nothing that they can do to keep it where it is. Spending some $10T of public money to buy inflated worthless stock is something even the CPC would be too stupid to do. The Chinese stock market is a dead duck and the wealth destruction there is an absolute certainty.

Result.. Try to beggar thy neighbour and try exporting your way out of trouble. I had predicted long ago that the 2008 stimulus would be massively misdirected and it was. Capacity destruction in China will happen across multiple industries - steel, cement, shipbuilding , construction, railways, electronics.. you name it and it will not end very soon.

Chinese have effectively shut down the stock market (no selling, only buying allowed , and despite that market goes down ), they should do the correct thing as per the Commie doctrine and shut down the stock market and tell all the investors who hold paper that the values are any way "man made" (like their numbers anyways) and go home and that they will be eventually paid back over the next 30 years.

[Arjun]

Lets see where the carnage stops in China. Looking at the charts 3000 seems to be resistance, so markets may not fall by much more - in which case they are still up 50% from June 2014. If they decisively breach that mark - all their fancy billionaires will get 'resized' for sure

[Singha]

i think NPA builders whining for handouts have been told by Rajan sir to reduce the price of unsold inventory to raise capital.

amid all this chaos, the ISIS model of economy - deliver basic services, burn a few infidels in the square daily, demolish a few kafir shrines, fire a few shells, go home to the harem and cook a goat is looking robust and insulated from the global economy. no wonder 'believers' are flocking to their banner

[vina]

Lets see where the carnage stops in China. Looking at the charts 3000 seems to be resistance, so markets may not fall by much more - in which case they are still up 50% from June 2014. If they decisively breach that mark - all their fancy billionaires will get 'resized' for sure

Don't believe any of that nonsense. It was tom tommed around that 3500 was the redline below which the Commie Govt won't let the market fall. Well, guess what, it is already close to 9% below that. My guess is that 2000 to 2500 is the range where the Shanghai Composite is probably going to settle, that is a good 30% down from here.

[Yagnasri]

We are forgetting two things here:

1. China is a f***ing dictatorship wherein rulers can do what every they want to. That is a major advantage except dealing with non local investors and lenders. They can of course make China "too big to fail" and enjoy life.
2. China has a huge war chest. Surplus $ reserves are massive. So that is an advantage they can use.

On the negative side, they can not function well in a stressed conditions as most of them are habitual to have their own way in their entire life. Middle Kingdom idea is also going to prevent them take hard decisions and decisions which may lead to unrest in people.

I feel we are going to see some interesting maneuvers from dictatorship and it will be a historical lesson.

[tushar_m]

^^^^ China Needs to have surplus $$$ reserves (massive $$$ reserves) to support its currency.

Yuan is not a free currency depending on market . To keep it stable /manage it they have trillion dollar reserves .

They have lost a lost in market crash , today itself market is down 8% in china . They will use their currency reserves to stabilize everything from market(decreasing interest rates , decreasing CRR etc, maintain liquidity) to Yuan.

RBI governor have predicted currency wars & global meltdown , it looks like we have started on that path.

[Austin]

^^ What if they dont defend their currency and let it devaluate further ?

Does the Stock Market in China has any direct bearing on Yuan ?

[Yagnasri]

We need to be more worried about our NPAs and so called good loans particularly to major corporates. I see many these fellows on daily basis and the picture is not so good to say the least. Most of it is the same kind of the things we note in china like over borrowing, cooking of books, diversion of funds etc etc.

[somnath]

It is in days like this when there is a gathering global panic that I am ever so grateful that Mother India produces children like Dr Y V Reddy and Dr Raghuram Rajan.
-----------------------------------
Brilliantly articulated. And to think that some random loud mouth chaddi walla ideologues were "experts" on inflation and taking calls on getting him replaced.

Three successive guvs, Reddy, Subbarao and Rajan have followed the template of inflation combat, resisting pressures from both Left and Right, and everyone in between. More than the individuals, the institution (RBI) should take the credit - as an ED in RBI told me last year, RBI changes individuals a lot more than the other way round!

The challenge is multifold, not just the issue of protecting the currency. It is about inability of the banking system to pass on rate reduction as they battle with large NPAs. On the other hand, there is a contra challenge of Indian industry battling the highest real interest rates in the world.

The solutions hence will have to come almost exclusively in Keynesian terms, ie, higher public spending. The private sector is too leveraged to invest, rates are too high (and demand too anaemic) to encourage more leverage even by larger firms, banks too short of capital and balance sheet space to lend at lower rates. The only option is for govt to speed up investments.

The good news for India is an oil price windfall totalling up to ~2% of GDP. The govt is mopping up ~25-30% of this in terms of extra taxes. The balance acts as effective tax-breaks for the consumer, which is what is preventing negative growth in consumer spending (rather than being flat as it is now). The extra oil tax revenues are making the fisc a lot healthier today, creating headroom for public investments.

The govt has a chance to reshape the narrative - instead of going after GST (whose form has been substantially diluted in its presetn form) and LAB, get the executive parts going. More public investments, get serious about "ease of doing business" and a calibrated opening up of corporate bond markets to more foreign investments. As they are at it, they need to take this opportunity to eliminate subsidies, esp kerosene.