C. P. Chandrasekhar’s Blog

Post-Trump expectations of a shift back from an easy monetary policy with low interest rates to reliance on a fiscal stimulus for growth are reversing trends in global bond markets. Bond_Market_Reversal  (Download the full text in PDF format) * This article was originally published in the Business Line on February 13, 2017

The state of Jharkhand has reportedly stopped payments to the Damodar Valley Corporation (DVC) for the 700 MW of power the later supplies it every day. The evident reason is that it has not been able to cover payments for the power it acquires from the generators and supplies to its customers, resulting in deficits that are covered with debt that it is no longer able to service. A consequence of this would be an inability to purchase power from the generators, increasing their losses and affecting the debt they in turn owe the banks. With this debt being a…

The government's claim that it has ensured electricity for all does not seem to be warranted by the evidence. Spreading_Light  (Download the full text in PDF format) (This article was originally published in the Business Line on January 30, 2017.)

China, now one of the world’s two largest nations measured by gross domestic product (GDP), is displa­ying a strange malady. A sudden and large outflow of capital from the country is resulting in a sharp fall in its reserves. Going by International Monetary Fund (IMF) statistics, between the quarter ending June 2014 and the one ending June 2016, China’s foreign exchange reserves fell by $752 billion, from $4.1 trillion to $3.3 trillion. According to recent reports, reserves had fallen further to $3.1 trillion by the end of October 2016. This collapse in reserves due to an outflow of capital is…

Prime Minister Modi is selling the idea that the engineered cash shortage that resulted from the disastrous demonetisation exercise is an opportunity to force-march India to being what is inelegantly termed a “less cash” society. In his view, that transition, if ensured, would for some inexplicable reason tame the rich and reward the poor. This new sloganeering of the Prime Minister and his government has given the “Digital India” mission a whole new dimension, with electronically-executed financial transactions and settlements becoming a means to realising larger economic and social objectives. Making this an immediate, or even medium term, objective is…

As January 20th, the day Donald Trump assumes his Presidency nears, the fear that he would turn US trade policy in a protectionist direction appears to increase. Protection against import competition and an attack on global relocation and outsourcing by American firms that are seen as destroying jobs in the US and immigration that is viewed as depriving the American working class of available livelihoods were central elements of the populist rhetoric that swung the white working class in Trump’s favour. Key items in Trump’s election campaign promise list were policies to recapture American jobs by clamping down on the…

Banks strapped with stressed assets are holding back on lending, dampening in the process the principal stimulus to growth in recent years. And there are no alternative routes to growth in sight. Waning_Stimuli   (Download the full text in PDF format) (This article was originally published in the Business Line on January 16, 2017.)

In the context of the failed demonetisation and continued shortage of currency, the government continues to push cashless digital payments. What are the implications for Indians? Digital_Payments    (Download the full text in PDF format) (This article was originally published in the Business Line on January 2, 2017.)

With the US Federal Reserve deciding to exit the era of low interest rates even when growth in the rest of the world economy falters or remains sluggish, economic uncertainty intensifies. Age_Uncertainty (Download the full text in PDF format) (This article was originally published in the Business Line on December 19, 2016)

Having announced that it is advancing the date for presentation of annual budgets by a month from end-February, the Finance Ministry is in the midst of preparations for next year’s exercise. But with the attention of economic analysts diverted to the unfolding crisis created by the government’s demonetisation decision, little attention has been paid to what would be the first budget to be presented in the post-planning era. It was to be expected that the implicit and explicit rules adopted by the government to make allocations under different heads of capital and current expenditure would have attracted much attention. But…