C. P. Chandrasekhar’s Blog

As COVID-19 infection rates fall and demand revives the world over, the new global fear is that persisting supply chain disruptions could trigger inflationary trends that would be more than transitory. In India, however, the consumer price index that was on the rise between January and July 2021 has since been in decline (Chart 1) with the inflation rate relative to the corresponding month of the previous year falling from 6.3 per cent in June 2021 to 4.3 per cent in September of that year. This is indeed surprising for two reasons. First, a relentless spike in the prices of…

A charade played out in the weeks preceding the fall meetings of the IMF and the World Bank has subsequently occupied time that should have been devoted to more crucial issues such as a looming debt crisis, inequalities in vaccine distribution and finance for mitigating and adapting to climate change. G7 governments and IMF directors have been preoccupied with the question as to whether Managing Director Kristalina Georgieva had in 2018 manipulated the results of the World Bank’s annual (ease of) Doing Business report (DBR), when she served as the chief executive of that institution, and whether she should for…

China’s Evergrande group, identified as the world’s most indebted property company with accumulated liabilities in excess of $300 billion, missed an interest payment instalment due on September 23, 2021 on bonds borrowed through US dollar bond markets. Though the company enjoys a 30-day grace period to pay up and avoid being in default, the absence as yet of any clarification on the missed instalment has increased uncertainty. Markets seem sceptical that the firm would meet in full the $129 million of interest payments on its bond issues due this month and the $850 million due by year end. Evergrande’s share…

Though not featuring in any of the three farm laws, the Minimum Support Price (MSP) at which the government promises to procure 25 different commodities through different agencies, is a central issue in the standoff between the government and protesting farmers. The latter fear that the implementation of the three laws will end the MSP regime, with the government withdrawing from procuring output at a remunerative cost-plus price. The response of the government and advocates of reform has been that sale at the MSP is resorted to or available only to a few farmers. That opportunity, it is argued, would…

Carbon prices in the European Union (EU), or the value of one unit of an EU allowance (EUA) that gives the holder the right to emit one tonne of carbon dioxide (or its equivalent of other greenhouse gasses), are soaring. From 33.69 euros per tonne at the beginning of the year, the prices of EUAs traded through the EU’s emission trading system (ETS) had risen to a high of 62.75 euros on September 9, or by more than 80 per cent. Since the ETS was created to generate market-driven price signals that would influence the volume of emissions by firms,…

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…