Indian Economy News & Discussion - Nov 27 2017

[disha]

Ex-RBI Governor Raghuram Rajan is quoted by media

https://www.thehindu.com/business/Econo ... 463267.ece

“The two successive shocks of demonetisation and the GST had a serious impact on growth in India. Growth has fallen off interestingly at a time when growth in the global economy has been peaking up,” he said delivering the second Bhattacharya Lectureship on the Future of India.

Dr. Rajan said a growth rate of seven per cent per year for 25 years is “very very strong” growth, but in some sense this has become the new Hindu rate of growth, which earlier used to be three-and-a-half per cent.

“The reality is that seven is not enough for the kind of people coming into the labour market and we need jobs for them, So, we need more and cannot be satisfied at this level,” he said.

If the above quoted is true and assuming if media is not faking news, then Ex-RBI Governor RRajan is stupid. Stupid to include GST as a break on growth without going into nuances. Stupid to say the following:

“What happened in 2017 is that even as the world picked up, India went down. That reflects the fact that these blows (demonetisation and GST) have really really been hard blows...Because of these headwinds we have been held back, he said.

While India’s growth is picking up again, there is the issue of oil prices, the economist noted referring to the huge reliance of India on import of oil for its energy needs.

With the oil prices going up, Dr. Rajan said things are going to be little tougher for the Indian economy, even though the country is recovering from the headwinds of demonetisation and initial hurdles in the implementation of the GST.

Coming to oil prices:

https://www.cnbc.com/2018/11/09/oil-mar ... focus.html

US crude oil posts longest losing streak in over 34 years, falling for 10th day

And the ex-RBI governor was not aware of this?

And the media article goes on to quote this:

An example of this is the quantum of decisions that requires the ascent of the Prime Minister’s Office, Rajan said as he highlighted the recent unveiling of the ‘Statue of Unity’ of Sardar Vallabhbhai Patel as an example of a massive project that required the approval of the PMO.

Again if the above quoted by media is true and not faking it., then Raghu Rajan to bring in Statue of Unity as an example of centralized decision making in PMO's office is very very stupid.

[Katare]

I don’t think it would work that way. GoI can simply print whatever amount it wants to spend if spending is that easy. Govt expenses are limited by inflation and its share from the total national funds available for investment/spending. If RBI gives that money to GoI inflation could shoot up to double digits and that would amount to a new tax on citizens. The RBI money is notional (or accounting surplus) not real, at best it can be used for accounting purposes such as reducing long term govt debt by accounting entries, nothing more.

[Kakkaji]

Lesson To Be Learnt - Don't bring foreigners (e.g. Jean Dreze), or NRI academics in foreign universities (e.g. Raghuram Rajan, Viral Acharya) in important policy-making positions in India's economy.

[Neshant]

Interesting perspective on where things might go.

https://www.youtube.com/watch?v=fjhLp8AHAYc

[Kashi]

So an ex-RBI governor is calling GST a "strong blow" and blames it for "holding us back". So he was happy with the convoluted tax regime that was there earlier.

This guy is an economist?

[Dumal]

Lesson To Be Learnt - Don't bring foreigners (e.g. Jean Dreze), or NRI academics in foreign universities (e.g. Raghuram Rajan, Viral Acharya) in important policy-making positions in India's economy.

+1

With his statements in totality and its timing , it is clear he is beholden to, for whatever reason, and is a puppet of Chidu! Good thing we got rid of him!!

[Supratik]

The Indian Unicorns.

https://economictimes.indiatimes.com/sm ... 787658.cms

[vera_k]

Perspective on why the government and RBI are at odds.

India’s banking system is flirting with a Lehman moment

For several years state-run banks have failed to get to grips with a $100bn mountain of dud loans. Now panic has seized parts of the privately run system. One bank boss says the situation is as bad as the Asian crisis of 1998 or the global crash of 2008.

[ArjunPandit]

^^economist is hyping things as usual and using catchy headlines. Havent read the full article but here are my 2 rs for this article (without reading of course).
1. that Indian banks are not heavily dependent on wholesale funding, like US banks. While that is still big, there are considerable retail deposits. I did dig up no.s many years back to check the deposits as a % of banking assets and Indian banks were quite well. These two charts should be instructive, esp given India's high growht rates
https://fred.stlouisfed.org/series/DDDI02INA156NWDB
While a crude analysis this is a good indicator
2. Also, in India with a large no. of banks on PCA not being allowed to increase lending (on a lot of areas) asset growth is curtailed. That itself is hampering GDP growth rates (which would have been cancerous in my opinion). Maintaining high deposit rates in this environment is quite interesting.
3. While AUM for MFs have increased significantly, the volatility in the performance, esp for mid cap and low returns of large caps are making many people rethink their strategies (based on my small sample).
4. Also, indian banks until now have been failure free. I expect that for at least next 10 years. I doubt any govt risking the ire of voters losing their bank deposits and handling the aftershocks on macroeconomy). Let's say it "Electorate Put" like "Bernanke Put" for TBTF banks

Net net like the indian way, things will continue and drag, now collosal failure.

[Suraj]

Perspective on why the government and RBI are at odds.
India’s banking system is flirting with a Lehman moment

For several years state-run banks have failed to get to grips with a $100bn mountain of dud loans. Now panic has seized parts of the privately run system. One bank boss says the situation is as bad as the Asian crisis of 1998 or the global crash of 2008.

As with most things the Economist writes about India, this is a mistake. It's not because of the bad lending that there's a problem in the banking sector. Rather, banks are willingly disclosing NPAs now because that's a required precursor to being able to initiate IBC proceedings. They no longer have to extend and pretend, and the new law actually makes a debt resolution with just a moderate haircut on the loan feasible. Here's a post on it from a month ago, with reference to RBI report:
post from early Oct
The problem here isn't anything like Lehman.

[ArjunPandit]

Perspective on why the government and RBI are at odds.
India’s banking system is flirting with a Lehman moment

As with most things the Economist writes about India, this is a mistake. It's not because of the bad lending that there's a problem in the banking sector. Rather, banks are willingly disclosing NPAs now because that's a required precursor to being able to initiate IBC proceedings. They no longer have to extend and pretend, and the new law actually makes a debt resolution with just a moderate haircut on the loan feasible. Here's a post on it from a month ago, with reference to RBI report:
post from early Oct
The problem here isn't anything like Lehman.

+1, this is a cyclical clean up that is required. While modi can question the increased lending rate. What he misses out (perhaps intentionally) is the growth rate, inflation and stimulus required during that period to have kept the economy humming under the concerns with sentiment issues. It is better to bite the bullet now, rather than delay it like chinese. Look at their NPA no.s and debt/credit extension as a % of GDP. More so when they are not part of currency syndicate like USD or Euro/GBP/CHF.
Extend pretend business, called evergreening is still going in China and if growth rate falls down the bill will come due soon, esp in light of trade wars. The moment US fully acknowledges China as full fledged economy, Chins will find it hard to export outsiders.

[Suraj]

It's true that some banks are under stress, but the fact is that the current situation is the result of a very effective law enabling banks to clear their books. The only concern is a solvency contagion if too many banks stress themselves at once, and there's a liquidity crisis. But as the quoted RBI report indicates, they've been doing regular stress tests and contagion analyses of the banking system.

[ArjunPandit]

It's true that some banks are under stress, but the fact is that the current situation is the result of a very effective law enabling banks to clear their books. The only concern is a solvency contagion if too many banks stress themselves at once, and there's a liquidity crisis. But as the quoted RBI report indicates, they've been doing regular stress tests and contagion analyses of the banking system.

To that I don't agree
1. 10+ psbs are under pca at same time. Level of stress fir each may be different. While the net had caught bad fish, but the sins of past are non trivial. You should also take note of the fact that this net is also new. Banks were happy ever greening loans until rr started asset quality review. Loans were passed by phone calls from fin min.
2. The stress tests conducted by RBI are very primitive. Anyways They are no silver bullet either. Banks passing stress tests have failed in eu. The rigor is no where close to what we see in us or uk/eu. That stems primarily from lack of data and controls. No stress test can capture control failure in cases like mallaya or nimo, and effect capture would be inadequate coz of poor data and crude models. You're spot on for contagion. That's why RBIs push back on dividend and PCA.
3. Add I said earlier, the "electoral put" will keep the banks going. If the govt messes up on this front, more than the political economic consequences will be far grave than anything. May be more gold.

[JayS]

3. While AUM for MFs have increased significantly, the volatility in the performance, esp for mid cap and low returns of large caps are making many people rethink their strategies (based on my small sample).

Post the tsunami of liquidity that followed DeMo and other clean up initiatives (and significantly increased FII flows too), we did not have enough channels for it to get invested properly. The MF managers also got on to the midcap-smallcap bandwagon to increase returns, even the hybrid funds which are supposed to be conservative started having significant exposure to mid and small caps. This resulted in excess cash flow to these company shares for about 2 yrs, especially in 2017 where some small/mid cap fund were giving upto 80% returns which was unreal. The international indicator - strengthening dollar, trade war rhetoric, oil price hike etc and SEBI mandate for restructuring of MF industry started large scale sale out in small and mid cap shares this year. This year the capital has flown to a handful of large caps from small and mid caps, especially the Reliance and IT giants like TCS, Infy which has inflated returns from Tech focused funds to >60% Y-o-Y..!!

I see that we do not have proper mechanism or enough capacity in existing options to absorb the increased liquidity in the financial system to more productive channels where the money would have a much better and quicker multiplier effect on the economy by supporting increased investment in infra for example. Due to reduced bank interest rates, people tend not to invest money in banks and Equity MF seems like a Hen laying Golden eggs year after year in comparison. The debt MFs are faring even worse than FD/RD in last couple of years. I feel we need better ways to utilize the money that is coming in due to increased formalisation of our economy. Perhaps things will find new equilibrium with private investment kicking in in significant manner which would provide more lucrative bond market investment options. But as of now the money is utilised sub-optimally I think. I don't know what should be done, but clearly channeling whole lot of money in share market, inflating P/E across the spectrum to unreasonably high levels doesn't seem like the best option either.

[Suraj]

To that I don't agree
1. 10+ psbs are under pca at same time. Level of stress fir each may be different. While the net had caught bad fish, but the sins of past are non trivial. You should also take note of the fact that this net is also new. Banks were happy ever greening loans until rr started asset quality review. Loans were passed by phone calls from fin min.

The problem could not be fixed by the RBI, which is why any talk of autonomy on their part is problematic. It takes legislative and administrative fixes. Banks were lending based on patronage and not qualty of debtor. However, that was how the system worked - not rules based but patronage driven. The RBI could not fix that.

The private sector banks were more focused on quality lending, but the state owned banks were agents of patronage, until efforts to negate that in this administration. But they cannot resolve the debt on their books without an effective IBC law, which is also in place now. However, the RBI has the role of managing contagion risk to ensure a systemwide crisis doesn't occur on account of uncontrolled deleveraging of bad debt.

2. The stress tests conducted by RBI are very primitive. Anyways They are no silver bullet either. Banks passing stress tests have failed in eu. The rigor is no where close to what we see in us or uk/eu. That stems primarily from lack of data and controls. No stress test can capture control failure in cases like mallaya or nimo, and effect capture would be inadequate coz of poor data and crude models. You're spot on for contagion. That's why RBIs push back on dividend and PCA.

The RBI has autonomy to implement proper stress testing norms - the inability to do so is entirely theirs. There's no political interference preventing them from stress testing banks, is there ? RBI has come up short on several measures here, including their management of banks auditing processes, the SWIFT process management that was central to the Nirav Modi case, and stress testing norms. It's odd of them to claim lack of autonomy without demonstrating ability.

[Suraj]

JayS and anyone else, can you find and post data to growth in AUM and any additional data indicating sectors into which these were invested, i.e gilt / blue chip / mid cap / small cap / corporate bonds ?

[Katare]

Deleted. No need to lecture other posters on how they should think.

[Katare]

I did not quote anyone neither did i used anyone’s name still I’ll gladly restate.....

RRR or economist article did not say anything against GST, he only talked about the effect it had on the growth in short term. Everyone including our FM agrees on this point. He also expects the growth to improve in future so does our govt.

He has been a supporter of GST reforms and it was made possible by years of hard work by UPA, NDA, state govt and RBI.

[Katare]

Perspective on why the government and RBI are at odds.

India’s banking system is flirting with a Lehman moment

For several years state-run banks have failed to get to grips with a $100bn mountain of dud loans. Now panic has seized parts of the privately run system. One bank boss says the situation is as bad as the Asian crisis of 1998 or the global crash of 2008.

Excellent article hits the nail on the head. Excessive lending based on the poltical patronage has created this massive monster that is threatening to swallow up the entire economy.

Bankruptcy law alone cannot fix it, GoI needsto massively recapitalize the banks to get out of the rut. Once economy starts to roll a lot of NPAs would automatically roll back into performance and rest can be handled by bankruptcy laws.

[ArjunPandit]

JayS and anyone else, can you find and post data to growth in AUM and any additional data indicating sectors into which these were invested, i.e gilt / blue chip / mid cap / small cap / corporate bonds ?

Overall should be easy to find. Scheme wise I haven't seen available publicly. It could be inferred with reasonable confidence. May need a little bit of time. I would have loved to do, but find a bit constrained due to my shift to bartannia

[ArjunPandit]

^^regarding stress tests, Suraj sir, both yes and no.
Yes because Theoretically rbi can do it . But challenges because of data and systems. Remember we're talking about a system where core banking b was not linked with SWIFT for leading bank until nimo was found. So one of me team mate went to present early warning system to top 3 Indian Bank, on which yours truly had a lot of inputs, after an hour long presentation, the guy asked, where do you get this data. Actually, imho, doing high sophisticated work is not required either. Prima facie, both rbi and govt have their hearts and mind in right direction. Not in this later.
AFAIK, autonomy question is more about psb and pca banks. RBI is right on saying they they don't control govt banks like they do to Pvt banks. At the same time fin min Babu's hadn't done a bad job.

This govt had bit the bullet and did the right thing though demo and ibc. Lack of Innovation is the cost paid for past corruption. That's one reason e-commerce companies will be better, at least do away with petty corruption and foster innovation with economies of scale. That's a long and contentious issue. On mobile, so will give a point by point response later.

[Katare]

Here is the famed speech, listen and make up your own mind. Ironically he also talks about roles for foreigners, NRI and Harward return experts in India and argues both sides.

Actually one of the best illustrations of the current Indian issues and opportunities. The whole speech is for a regular non economics audience which makes it easy to listen and learn.

[Suraj]

RRR or economist article did not say anything against GST, he only talked about the effect it had on the growth in short term. Everyone including our FM agrees on this point. He also expects the growth to improve in future so does our govt.

There's no meaningful insight in observations like that. By far the biggest tax reform in decades, and the most comprehensive act of monetary reset performed by any significant economy in modern history, are going to take time to work into the economic system. It has as much insight as the observation that water is wet.

These were necessary actions, taken by a government that had the conviction and the willingness to actually execute it . Far too many grand schemes get announced, that never get executed right. A complete reset of the cash based economy, a nationwide uniform indirect tax regime for the first time in economic history, the most far reaching update to insolvency and bankruptcy law, all within four years, is already a lot of reform.

Statements like RRs are superficial and he merely feeds the lecture circuit. He has demonstrably been misquoted / misstated multiple times by multiple sources - including his latest statements. It serves no purpose at all, other than fill his pocket. He's not a consultant to the Government of India. He has not be sought for advice. He had a public role once, and that's now over.

Former public servants are expected to exercise discretion above all else. Name another ex RBI governor who's made a career on the lecture circuit like him. None. In India, government servants are obligated to serve, then move on and not behave offer gratuitous advice and observations to the government who once paid their salary. It is simply not the done thing. As such, his speeches are not worth this thread. He had a role, he was paid to do it, and once his term ended, norms of public servant behavior require that he go away and not offer advice he's not being asked to offer.

[ArjunPandit]

^^What does not get recognition in mainstream is that Demo was conducted in such a country and economy, with a democratic set up.

[Kashi]

It does get recognition all right, but that recognition mostly does not equal understanding. Maybe purposefully so.

[ArjunPandit]

JayS and anyone else, can you find and post data to growth in AUM and any additional data indicating sectors into which these were invested, i.e gilt / blue chip / mid cap / small cap / corporate bonds ?

Overall should be easy to find. Scheme wise I haven't seen available publicly. It could be inferred with reasonable confidence. May need a little bit of time. I would have loved to do, but find a bit constrained due to my shift to bartannia

Here's a paper with this data till 2011. It is available in AFMI reports.
https://mpra.ub.uni-muenchen.de/83018/1 ... _83018.pdf

let me try to do that in this week.

[Viv S]

Former public servants are expected to exercise discretion above all else. Name another ex RBI governor who's made a career on the lecture circuit like him. None. In India, government servants are obligated to serve, then move on and not behave offer gratuitous advice and observations to the government who once paid their salary. It is simply not the done thing.

In all fairness, he was on the lecture circuit long before he was appointed RBI governor. He has merely returned to his former profession. His opinion today is about as valid/invalid as it was before his RBI tenure i.e. given in his role as an economist rather than a former civil servant, similar to the opinion of say, Arvind Panagariya.

It could be argued that having served in the pay of the state, he had an obligation to disappear from public consciousness afterwards. Then again, numerous civil servants move into a new profession in politics post-retirement and in that capacity do comment on govt/policy matters. Manmohan Singh being the most obvious example from a previous era, and the serving Minister of Power, R K Singh, from the current on.

[JayS]

JayS and anyone else, can you find and post data to growth in AUM and any additional data indicating sectors into which these were invested, i.e gilt / blue chip / mid cap / small cap / corporate bonds ?

Tons of data is available. SEBI is good source. But problem is its difficult to segregate money going into Cap-wise sectors. Debt related data is easier to find. Now at least we have standardization of categories. Earlier there was no hard and fast rule which would limit a Large Cap equity fund to limit its investment in Small/Mid caps. Only Hard limit was on Equity and Debt distribution. Even now there a quite a few categories which would make the segregation very difficult. If you have data for "Large and Mid cap" Category for example, it would be impossible to tell how much went into Large cap and how much in Mid Cap unless someone does a lot of data mining with individual investments of each funds. However some trends are clear to see. Following Page has some interesting statistics, which I found with minimal efforts from Google (I may post the pictures later here).

https://tradingqna.com/t/interesting-st ... stry/46185

Some key observations:
- AUM for MFs was almost stable till FY14. Then started increasing and zoomed post FY16. Majority of this hike is from Equity.
- Significant increase of MF money in Equity market from 2014 to 2018. Almost doubled from 8% to 18% that too on significantly increased base. Relatively the share in Debt market is increased by far less amount.
- Significant increase in individual subscriptions to MF, total individual investment growth outweighed that of institutional investors.
- Much larger portion of individual investors flowing to Equity Market, compared to much more balanced portfolios from institutional investors.

[Suraj]

In all fairness, he was on the lecture circuit long before he was appointed RBI governor. He has merely returned to his former profession. His opinion today is about as valid/invalid as it was before his RBI tenure i.e. given in his role as an economist rather than a former civil servant, similar to the opinion of say, Arvind Panagariya.

It could be argued that having served in the pay of the state, he had an obligation to disappear from public consciousness afterwards. Then again, numerous civil servants move into a new profession in politics post-retirement and in that capacity do comment on govt/policy matters. Manmohan Singh being the most obvious example from a previous era, and the serving Minister of Power, R K Singh, from the current on.

“In all fairness” isn’t meaningful because there’s no fairness to be ascribed here . Everyone speaking out of turn when they aren’t legitimately in a position to - eg the former PM who’s never won a Lok Sabha seat and is not a current MP offering his commentary on the floor of parliament - is making the same mistake. “He is doing it too” is not a legitimate reason .

[ArjunPandit]

Suraj sir, leaving their intent aside, we're not China or Pakistan. People will have opinions and will express it. Right wrong they have right to do so.

{Deleted rest - don't do that again}

[Suraj]

Suraj sir, leaving their intent aside, we're not China or Pakistan. People will have opinions and will express it. Right wrong they have right to do so. Anyways IMHO brf is not Gestapo. I would focus on what is said and who said and why, certainly not why they spoke in first place

Sorry no, this has nothing to do with neighbors. There have always norms of behavior expected of public servants, and those who were formerly public servants whose salary were paid for by the Indian taxpayer. Free speech comes with several caveats when you're a former government servant, the least of which is actual OSA restrictions. Those who break that decorum, whether it be a former navy chief or former RBI head, get treated with scorn for such behavior.

Also, do not comment here on how the forum should be run.

[Viv S]

“In all fairness” isn’t meaningful because there’s no fairness to be ascribed here . Everyone speaking out of turn when they aren’t legitimately in a position to - eg the former PM who’s never won a Lok Sabha seat and is not a current MP offering his commentary on the floor of parliament - is making the same mistake. “He is doing it too” is not a legitimate reason .

I don't believe Rajan or Panagariya see their actions as unethical. They probably see it as a contribution to society, a furthering of the dialectic. Whether they're speaking 'out of turn' depends on who you ask. What level of public participation is kosher, and on what platform, has never (AFAIK) been defined. As things stand its very much a gray area.

They needs to first be a broad consensus on the norms governing the life of a civil servant after retirement and that should (ideally) be codified, similar to the regulations that govern their service life. What they can talk about, what they can say, where they can say it, and who's empowered to censure breaches.

[Supratik]

Why waste time over spent fuel?

Meanwhile

https://www.livemint.com/Companies/fWxU ... water.html

[Suraj]

I don't believe Rajan or Panagariya see their actions as unethical. They probably see it as a contribution to society, a furthering of the dialectic. Whether they're speaking 'out of turn' depends on who you ask. What level of public participation is kosher, and on what platform, has never (AFAIK) been defined. As things stand its very much a gray area.

They needs to first be a broad consensus on the norms governing the life of a civil servant after retirement and that should (ideally) be codified, similar to the regulations that govern their service life. What they can talk about, what they can say, where they can say it, and who's empowered to censure breaches.

Has Rajan ever sought any permission to office advice to GoI or RBI ? Have any of his comments since remitting office been considered by the government ? In fact, has he ever been sought out since, because he stated something helpful and his advice or guidance was considered useful to have ? The answer to all these is no. To what extent does anyone seriously believe the government listens carefully to policy advice offered from the dais of 'Institute of South Asian Studies' in UC Berkeley ?

He's a private individual speaking against the institution of the state, an institution that he left on bad terms from. He's the archetypal high maintenance former employee. Since his freedoms are being asserted, it's equally important to assert that he was gently removed from his post, left on bad terms, and has had an axe to grind with the government ever since.

In India, we do not have any culture of former government servants being encouraged to offer critiques of government policy from foreign shores, in foreign media. If Rajan seeks to be a credible voice, at the very least he needs to demonstrate his desire to help the Government of India, rather than simply offer soundbites to foreign press on the other side of the planet.

[A_Gupta]

https://www.bloombergquint.com/markets/ ... gs.Pz1zqEU

India’s factory output rose more than expected in September despite a depreciating rupee and higher fuel prices increasing costs.

The Index of Industrial Production rose 4.5 percent year-on-year in September, compared with a 4.1 percent growth in the same month last year, data released by the Ministry of Statistics and Programme Implementation showed. A Bloomberg poll of economists had projected a 4.3 percent growth. The reading for August was revised to 4.67 percent from 4.3 percent earlier.

Mining output grew 0.2 percent year-on-year compared with 7.6 percent in the same month last year.
Manufacturing output rose 4.6 percent compared with last year’s growth of 3.8 percent.
Electricity generation growth stood at 8.2 percent compared with a 3.4 percent rise last year.

[ArjunPandit]

^^of course it was not intended to be how forum should be run, those are Mod privilidges. Apologies if it came that ways.

This may be getting OT, please let me explain: really dont want to flag
My point was that there is no value in debating if people are exercising their FoE/FoS, malintention or propaganda is not a crime in our country (the govt couldnt screw urban naxals talking about life threats on PMs life as much as I would've liked to). The decorum for public servant is definitely an essential thing both before and after. But what if they dont do it, but what can anyone do it. To me its infidelity. While immoral, in some cases punishable crime. But what are we going to apart from being the neighbourhood aunty dissing the guy flirting with kaamwali. RRR and all his gang can speak all they want. They may have a malafide intention (a line of thought that I dont ascribe to), but honestly no one can do about it. They are well within their legal limits. If they breach the decorum, they will become persona non grata. Will that impact them a bit, will it impact govt, very likely not. These guys are speaking in echo chamber. The audience that they are pandering to was anyways anti modi and will be. Pro modi audience can anyways see through. Are RRR/UP/VA a part of BIF, I dont think so. They are pointing towards the right areas.
Economics, macroeco more so, is such vague field that there's no one correct answer to a problem as we have in most of places in physics, and hence rightfully called dismal science.

[ArjunPandit]

He's a private individual speaking against the institution of the state, an institution that he left on bad terms from.
He's the archetypal high maintenance former employee. Since his freedoms are being asserted, it's equally important to assert that he was gently removed from his post, left on bad terms, and has had an axe to grind with the government ever since.

High maintenance does not take away, that he served as the head of central bank of 5th largest economy and he's brilliant. Stress tests for all their weakness are effective tools and in right direction. It's good to clean up now with all the pieces rather than reach at the stage of china and wonder when do we do it.

In India, we do not have any culture of former government servants being encouraged to offer critiques of government policy from foreign shores, in foreign media.

I doubt that is the culture most of the places. More so in India.

If Rajan seeks to be a credible voice, at the very least he needs to demonstrate his desire to help the Government of India, rather than simply offer soundbites to foreign press on the other side of the planet.

[/quote]
Credible to whom, folks in delhi or in US. As you pointed out correctly that he left on bad terms, which i would say not good terms. Why are we expecting Charity from him in any case. Not that we are short of brilliant minds. Honestly, given the state our banking is in now with regards to NPA, we dont need that right now either. IMHO what we need best is an APJAK like guy who can bring people together and get us going right on basics. Rest all will start falling in place.
IMO, this govt has done a lot more than Oxbridge and Harvard educated economists by bringing in basics right, SO FAR, I disagree with the govt on capital part. However, I havent gone through the RBI EC framework that is being talked about, untill then I would not like to offer a final comment. But prima facie I agree with the statements on UP and VA on that.

[Suraj]

Rajan is as capable as anyone before or after him in the position he was appointed to, that is all. At that level of responsibility, the primary requirement is the ability to get things done with the government, and not merely demonstrate a personal resume. He was a bad hire, seen from the fact that despite his credentials he was not offered another term, he aired differences with the government publicly both during the end of his tenure, and quite a bit more since. Four of his predecessors served out near full 5 year tenures, with Jalan serving an additional period beyond that. Rajan reflects a break from institutional continuity, at an institution where stability is a very significant requirement.

APJAK and Rajan are as different as examples could be. The former created and sustained institutions of the state, and the grateful nation in a bipartisan move elevated him to the highest ceremonial office in the land, which he represented with great distinction. The latter has no long term legacy, served one term and was unceremoniously booted out, with the first action post his departure being the Government curtailing the unilateral powers of the RBI governor, preferring instead a committee to make policy and rate decisions, with representation from both RBI and the government.

Rajan will always be remembered primarily for his most recent public utterance, and never for any sustained legacy of public service as RBI governor. Unlike his predecessor D Subbarao, he does not even have the benefit of having been remembered for being at the helm during a turbulent international economic crisis. Unlike his successor Urijit Patel, he wasn't around while the most significant economic policy acts of this administration - DeMo, GST, IBC - were implemented.

He'd have a far better legacy within Indian public policy had he put his personal ego aside and worked longer with the government to be part of major initiatives. Instead he'll be remembered as a brilliant temperamental person who left unfinished business and now speaks loudly about what the government should or should not do, from outside.

[Prem]

https://finance.yahoo.com/news/india-in ... 43725.html
India Inflation Eases More Than Estimated Before Rate Review

India’s consumer price inflation eased to a 13-month low as food prices remained subdued, allowing room for the central bank to hold interest rates when it reviews monetary policy next month.Consumer prices rose 3.31 percent in October from a year earlier, the Statistics Ministry said in a statement Monday. That compares with a 3.77 percent gain in September and an estimate of 3.60 percent in a Bloomberg survey of 33 economists.
The weaker than expected inflation adds pressure on the monetary policy committee to stand pat for a second straight meeting after they raised rates to the highest level in two years in August. That increase has added to tighter financial conditions amid liquidity moving from surplus to deficit in the past few months, with the Bloomberg Economics India Banking Liquidity Index showing a nearly 1 trillion rupee shortfall in the banking system.
“Given the ongoing credit crunch which is hitting demand in small and medium sectors, the stabilization in crude prices and the rupee, I expect both inflation as well as industrial growth to become softer in the coming months,” said Rupa Rege Nitsure, chief economist at L&T Finance in Mumbai. “We are not expecting any rate hikes.”Food and beverage prices fell 0.14 percent; clothing and footwear prices gained 3.55 percent, fuel and lighting prices rose 8.55 percent, housing prices jumped 6.55 percent.On Oct. 5, Reserve Bank of India Governor Urjit Patel said a cut was off the table and interest rates would either be on hold or move up.Core inflation -- which strips out volatile food and fuel prices -- was at 6.1 percent in October, according to Aditi Nayar, principal economist at ICRA Ltd.India’s factory output rose 4.5 percent in September, slower than the revised 4.67 percent in August, data showed Monday.Figures due Wednesday will show India’s wholesale price inflation rate was probably 4.93 percent in October. Wholesale prices gained 5.13 percent in September

[ArjunPandit]

Rajan is as capable as anyone before or after him in the position he was appointed to, that is all. At that level of responsibility, the primary requirement is the ability to get things done with the government, and not merely demonstrate a personal resume. He was a bad hire, seen from the fact that despite his credentials he was not offered another term, he aired differences with the government publicly both during the end of his tenure, and quite a bit more since. Four of his predecessors served out near full 5 year tenures, with Jalan serving an additional period beyond that. Rajan reflects a break from institutional continuity, at an institution where stability is a very significant requirement.

APJAK and Rajan are as different as examples could be. The former created and sustained institutions of the state, and the grateful nation in a bipartisan move elevated him to the highest ceremonial office in the land, which he represented with great distinction. The latter has no long term legacy, served one term and was unceremoniously booted out, with the first action post his departure being the Government curtailing the unilateral powers of the RBI governor, preferring instead a committee to make policy and rate decisions, with representation from both RBI and the government.

Rajan will always be remembered primarily for his most recent public utterance, and never for any sustained legacy of public service as RBI governor. Unlike his predecessor D Subbarao, he does not even have the benefit of having been remembered for being at the helm during a turbulent international economic crisis. Unlike his successor Urijit Patel, he wasn't around while the most significant economic policy acts of this administration - DeMo, GST, IBC - were implemented.

He'd have a far better legacy within Indian public policy had he put his personal ego aside and worked longer with the government to be part of major initiatives. Instead he'll be remembered as a brilliant temperamental person who left unfinished business and now speaks loudly about what the government should or should not do, from outside.

We are saying the same thing in different ways. Do not have anything to add further on this chain of thought. I have drafted an email for stress testing part. Want to review it before i ship it out.

To lighten mood, Let me tell you an example someone pointed out to me and made me use RRR and APJAK analogy.
"APJAK was also not given a second term. APJAK for his multiple public utterings like 200 LCA. He questioned Sonia Gandhi's citizenship without any basis" I did respond, only to realize I am talking to a RG supporter.

One geniune pooch, as a fellow poster to a mod (not to the mod also participating as a poster), with no intent to comment/question the running affairs of forum or challenging mod's wisdom or authority. Isn't this RRR discussion a political question more suited for GDF kind of forum in political drama or say banking related forum?