C. P. Chandrasekhar’s Blog

Announced with much fanfare as an innovative means of financing greenfield infrastructural projects, the National Democratic Alliance government’s asset monetisation plan raises a host of concerns. It seems predicated on undervaluing potential returns over a longish period to make the exercise attractive enough for the private sector to bite. It can also involve collateral effects that adversely affect sections like consumers and workers, whose representatives were not adequately consulted with when formulating the plan. An asset monetisation plan, announ­ced in the budget, has now been fully unveiled, with a detailed listing of assets that are to be transferred for finite…

ESG investing, or investment that looks to “environmental, social and governance” factors when deciding on potential targets, is much the rage. High net worth investors concerned about human rights, inequality, environmental degradation and climate change have embraced the ‘movement’, happy to know that they can address these concerns while building a portfolio that guards and enhances their wealth. According to the Global Sustainable Investment Alliance, socially responsible investment has grown to constitute more than $30 trillion, or around a third of professionally managed assets. In the first eleven months of 2020 alone sustainable mutual funds and exchange traded funds (ETFs)…

The multiple encounters with government agencies and the courts of Videocon Industries—the now bankrupt durables-to-energy corporate group—on charges of violations of one kind or another get curiouser by the day. Having put behind media attention on allegations such as corruption and fraud in its credit dealings with ICICI Bank and its high-profile chief executive Chanda Kochhar and the illegal diversion of funds meant for overseas oil investments (for which its offices were raided as recently as July 17), the group has once again been in the news. This is because of the twists and turns the bankruptcy proceedings that followed…

On 16 July 2021 India’s foreign exchange reserves stood at $612.7 billion. That was almost 30 per cent higher than its level of $475.6 billion at the end of March 2020, when the effects of the pandemic began to be felt. It also reflected a $95 billion increase from the level of reserves a year earlier and a $35.7 billion rise over the level touched at the end of financial year 2020-21. This evidence, which could be construed as a sign of resilience in a time of crisis, is, however, no cause for celebration. Rather it points to effects of…

Following years of negotiations, most nations in the world now appear to be willing to align their corporate tax regimes to prevent multinationals from evading taxation in the jurisdictions in which they operate. They have now tentatively agreed on the need for a global minimum corporate tax rate and a system of allocating the global profits of multinational firms to the different national markets in which they operate, where they can then be taxed. After the G-7 and G-20 finance ministers agreed at meetings in London (June 4-5) and Venice (July 9-10) on the principal elements of a compact that…

In a stealthy game played over two decades, corporate India is walking away with huge wealth transfers, largely from the public banking system. After much delay, the halting process of settling the bad debt of defaulting corporates using the Insolvency and Bankruptcy Code (IBC) is being completed in a rising number of cases. When examining the outcome of cases of completed resolution what emerges is that (i) public banks are taking huge “haircuts” and suffering losses, the burden of which falls on the tax payer who funds recapitalisation; (ii) those who acquire the assets of the corporate defaulters that underlie…

The NDA government has decided to further tighten its regulation of e-commerce, taking on in particular foreign giants like Amazon and Flipkart-Walmart, with implications for domestic organized retail majors like Reliance. The Department of Consumer Affairs in the Ministry of Consumer Affairs, Food and Public Distribution has called for comments on an amended version of the Consumer Protection (E-Commerce) Rules, 2020, which it posted on its website in late June 2021. The amendments, conveniently highlighted using track changes, go beyond strengthening consumer protection per se. The intent seems to be to rein in dominant players in an area. Among the…

In mid-June, the National Company Law Tribunal (NCLT) approved a resolution plan for the Rs. 35,000 crore non-performing debt of Videocon Industries. The plan was a successful offer made by Twin Star Technologies, a Vedanta group company, and accepted by a committee representing the creditors exposed to Videocon. While granting approval, the NCLT noted that the scheme involved Vedanta paying almost nothing, with its successful offer amounting to 4.15 per cent of the outstanding claim and the creditors settling for a “hair cut” of 95.85 per cent. Moreover, the NCLT felt it necessary to request the Insolvency and Bankruptcy Board…

In early June Finance Ministers and central bank governors of the G7 met over two days in London, as a prequel to the meeting of heads of states of the grouping a week later. The meet was of special significance. Global leaders now hope that the slow and hesitant vaccination roll-out will help tame the coronavirus. So, their attention increasingly turns to addressing the many economic challenges that preceded the pandemic and were aggravated by it. Before the pandemic, inter- and intra-country inequality, intolerable deprivation, a battered environment and changing climate had forced nations to jointly commit to achieving a…

With India experiencing a severe second wave of the Covid-19 pandemic, forcing decentralized lockdowns, a crisis of loss of jobs and livelihoods and resulting hunger is being reported from across the country. A reluctant central government has, therefore, been forced to revive the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY), to distribute 5 kilograms of free foodgrain per person per month to the approximately 80 crore beneficiaries covered under the National Food Security Act (NFSA). The reluctance shows in the decision to introduce the scheme only for a two-month period (May-June 2021) and to ignore demands for a significant hike…