C. P. Chandrasekhar’s Blog

In the outcry against the disastrous demonetisation experiment of the Modi government one aspect that has not been given adequate attention is the damage it has done to the reputation and the balance sheets of the banks. Customers queueing before bank doors and ATMs seem on occasion more forgiving of the government than of the harassed bank employees, who are forced to ration out currency and offer those customers they can accommodate, less than even the maximum withdrawal permitted by the government and the RBI. When new notes are discovered in inexplicable sums in the hands of rogue operators, it…

Capital flight from Asia points to investor concerns about both political processes in the big Asian developing economies and medium-term economic prospects. developing_asia_hold_ground (Download the full text in PDF format) (This article was originally published in the Business Line on December 5, 2016)

A peculiar combination of factors, besides the global recession, explains India's poor export performance in recent times. India_Export_Collapse (Download the full text in PDF format) (This article was originally published in the Business Line on November 21, 2016.)

A distinctive feature of the current phase of capitalism is the growing role of finance capital as an instrument to establish capitalist hegemony and facilitate the appropriation of surplus. In the developed countries this transition towards financial hegemony was the result of the inflationary crisis and stagnation that affected the OECD countries after the late 1960s. The contractionary fiscal and monetary policy response to inflation intensified the deceleration in real growth. This together with the low real interest rates on bank deposits adversely affected banking business and profits. These developments triggered a process of deregulation and liberalisation in the financial…

At the time of writing, chaos continues to prevail at bank branches and ATMs across India, reflecting the larger truth that the government has for no sensible reason frozen a major part of India’s payments and settlements system. The government did this by declaring, for reasons wrong and indefensible, that currency notes of Rs. 500 and Rs. 1000 denomination which accounted for more than 85 per cent of the value of notes in circulation (and around 25 per cent in terms of sheer numbers) would not be legal tender within four hours of a dramatic speech by the Prime Minister…

In today’s troubled times, mega-mergers are the norm. Announcements of marriages like that between AB Inbev and SABMiller in the beer industry or Bayer and Monsanto in the agribusiness sector attract attention that soon fades, even as the difficult task of getting clearances from the regulators continues. But the just announced agreement to merge by AT&T and Time Warner, in a $85 billion deal, is likely to remain in public discussion for some time. If it does not, it should. This is a mega merger not just in any industry like the production of cigarettes or beer, but in the…

China's rapid economic growth has slowed recently - but does this reflect the desired rebalancing of the economy away from investment to consumption and wage-led growth? China_Economic_Rebalancing  (Download the full text in PDF format) (This article was originally published in the Business Line on November 8, 2016.)

Growth in India’s non-financial corporate sector shrank in 2015-16, after three consecutive years of “steep moderation” according to the Reserve Bank of India (RBI). In its annual study of the Performance of the Corporate Business Sector, the RBI attributes this downturn to “lacklustre demand”, echoing the sentiments of many businessmen who have been unwilling to strongly articulate this perception in the face of the hype on growth fed by schemes like “Make in India” and “Start-up India”. But, actual trends in the economy do not seem to provide much ground for satisfaction, let alone celebration. One factor that tends to…

Three parallel developments that caught media attention over the last month point to the restoration of the hegemony of Finance Capital in the years since the 2008 crisis. They also reveal the likely consequences of the neoconservative backlash, led by Finance, against post-crisis financial sector reform in the US and other developed countries. One was the decision of the Financial Sector Protection Bureau (FSPB) of the US, an institution created after the 2008 crisis, to arrive at a settlement with Wells Fargo (WF) in an investigation relating to a rather shocking discovery. More than 5000 employees of the bank had,…

The urban housing market in China is experiencing a bubble that is driving property prices to unbelievable levels in some of the major cities. But the divergence in recent trends in house prices suggests that this bubble may soon burst. housing_market_china (Download the full text in PDF format) (This article was originally published in the Business Line on October 11, 2016-11-03)