C. P. Chandrasekhar’s Blog

Its once again a time for exposés of big ticket scams. The headline hogger currently is the alleged huge Rs. 11,400 crore ‘scam’ unearthed in transactions through the Punjab National Bank (PNB) involving diamond merchants Nirav Modi and Mehul Choksi. That this is not an isolated occurrence is established by news of another Rs. 3,700 crore alleged fraud involving Vikram Kothari of Rotomac Pens being reported almost simultaneously. The full details of the possible fraud in either of these cases is yet to emerge. But underlying them is the suspicion that loans or guarantees of huge magnitudes were offered to…

Billed as the last full budget of this second NDA government, Budget 2018 was not expected to surprise. The leadership of that government may be pleased with having played, during its nearly 4-year tenure, with programmes varying from “Make in India” to Swach Bharat Abhiyan, experimented with demonetisation, and launched the Goods and Services tax regime. But while none of these immediately benefited the “common man”, some of them like demonetisation hit the vulnerable, and the GST disrupted production and damaged the operations of the micro, small and medium enterprises (MSMEs). There was also evidence that agriculture had been neglected…

For India’s post-liberalisation poster-child, the software and IT-enabled services industry, recent developments in the global economy are bound to be disconcerting. Even as early signs of a synchronized global recovery emerge, fears of inflation and high interest rates have resulted in a collapse of capital markets. What that could do to the incipient recovery is as yet unclear and the prognosis is uncertain. But for an industry that has been battling a slowdown ever since the 2008 global financial crisis that is clearly not good news. According to RBI survey figures released in December last year, India’s approximately $150 billion…

This Debate contribution describes the promotion of digital rather than cash payments as a form of the financialization of finance, in its role as a payments system, with reference to recent Indian experience. The obsession with digital transactions as a marker of social and material progress is misplaced; it may become yet another means by which finance extracts rentier incomes out of relatively poor populations. Financialisation_Finance (Download the full text in PDF format) (This article was originally posted in the Wiley Online Library)

The tendency of the current government to misinform and conceal is well known. Yet its periodic resort to such practices does not fail to surprise. The most recent example is the decision to sell its shareholding in Hindustan Petroleum Corporation Limited (HPCL) to the Oil and Natural Gas Commission (ONGC), which it owns, ostensibly to strengthen the latter. The decision comes at a time when low oil prices have hurt the ONGC. Yet, the ONGC board has cleared the proposal to buy 778,845,375 equity shares in HPCL for cash at a price of Rs. 473.97 per share. This acquisition of…

When the government presented its third supplementary demand for grants to the winter session of parliament, the list of expenditures included Rs. 80,000 crore for a first tranche investment in equity of the public sector banks to recapitalize them. This was a clear declaration that the government intended to go through with its plan to provide as much Rs. 1.35 lakh crore from its budget to recapitalize banks that are recording losses, as they recognize and provide for non-performing assets accumulated substantially from debt provided to a few large corporates. The recapitalisation plan announced in October 2017 promises to infuse…

Private banks, especially foreign ones have relied on off-balance sheet liabilities to earn revenues and profits, courting risk and leaving the business of banking proper largely to the public sector banks. Other_Face_Private_Banking  (Download the full text in PDF format) (This article was originally published in the Business Line on January 15, 2018)      

Despite its clear violation of the law, telecom major Airtel appears to have been let off lightly by the government. And that story, though reported, has neither led to adequate punishment nor has it received the extent of media attention it deserves. The story is that Airtel used its position as a dominant mobile services provider to strengthen its new role as a “payments bank” by exploiting a loophole in a system created through the decisions of multiple agencies. The company not only opened a large number of payments bank accounts in the names of its mobile subscribers without their…

Bitcoin has left the world of finance gasping. Though the total market value of all of that cryptocurrency in circulation is only a fraction of the value of the world’s financial assets, the rapid rise in the value of the currency has made it the most wanted of those assets. On January 1, 2017, the currency was trading at between $972 to $990 a unit. By December 7 that range had risen to $14,063 to $17,363. According to a calculation by Reuters, an investment of $1000 in bitcoins at the beginning of 2013 would be worth around $1.2 million now.…

A recent spike in the volume of foreign exchange outflows under the Liberalised Remittance Scheme suggests that India is vulnerable to large scale capital flight, if economic uncertainty increases. Dollor_Drain (Download the full text in PDF format) (This article was originally published in the Business Line on December 18, 2017)