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    Shankkar Aiyar, Visiting Fellow at IDFC Institute, documents how the Indian government has repeatedly questioned the increasingly mounting scientific evidence on the negative impacts of air pollution in India instead of starting to accept the severity of the problem. How did the government respond to the latest studies? Anil Madhav Dave, Minister for Environment and C...
    Senior Resident Fellow Vivek Deheija on the need for the US Fed to move away from unconventional monetary policies towards fixed, rule-based inflation targeting  This is not the place to rehearse the varied and boisterous academic debate on the merits, or otherwise, of the Taylor rule or of other rule-based approaches to monetary policy. What is most relevan...
    Shankkar Aiyar, Visiting Fellow at IDFC Institute, puts Uttar Pradesh and its upcoming state elections into the perspective of the larger India story. Excerpts below: A victory for the front led by Akhilesh Yadav could provide a face to renew the ideas of National Front, United Front or a new avatar of old algebraic equations. It could sustain, on the margins, the...
    Dr. Rajiv Lall, MD & CEO IDFC Bank, spoke on financial inclusion and the Indian economy at a Speaker Series session at the Meghnad Desai Academy of Economics. He shared insights into the emerging technology trends which IDFC Bank is fast executing to widen the reach of financial inclusion and spearhead growth towards a cashless economy. ...
    Praveen Chakravarty, Visiting Senior Fellow at IDFC Institute, writes on India's low tax base and its plausible explanations. To quote: So, when the Economic Survey suggests that India has among the fewest taxpayers per 100 voters, it is equally important to consider this fact that India has one of the highest exemption thresholds for paying income tax. ...It ...
    In this Indian Express article, Shankkar Aiyar, Visiting Fellow at IDFC Institute, reviews the idea of merging oil PSUs.  Budget 2017 states that the purpose is to improve the performance to match those of global and Indian private players. It’s a laudable thought. It is important to realistically assess expectations from synergy in the Indian context, to ...
    Praveen Chakravarty, Senior Fellow at IDFC Institute, cautions against the growing calls for simultaneous Centre and State elections in India. He says: The idea of simultaneous elections for India is based on false premises, [...] Is ₹8,000 crore every five years or ₹1,500 crore every year really that huge a cost for the world’s largest democracy which has ...
    Jessica Seddon, Visiting Fellow at IDFC Institute, discusses the many roles played by cities and advises some caution on "proprietary cities".  It (Economic Survey) offers two proposals that join long-standing calls for stronger local leadership but add some provocative twists. The first, “competitive sub-federalism” involves devolving addition...

    16 February 2017

    Is Big Data Driving Policy?

    Kadambari Shah, Senior Analyst at IDFC Institute, discusses the scope for harnessing big data to drive policy.  A simple search — ‘Big Data in India’ — in Google’s news search bar reveals that big data can make Indian cities a better place to live in, increase job opportunities, help track fraud, and influence politics. We have a vast amount of data fro...
    Shankkar Aiyar, Visiting Fellow at IDFC Institute, highlights the need to insulate public ownership from political management.  The national carrier is yet again on the “rescue me” queue. This time—after sinking public monies and staking sovereign guarantees—the government is looking at an “innovative” bailout... The 2008 financial crisis, the fa...
    In this Livemint Article, Vivek Dehejia, Senior Resident Fellow at IDFC Institute, talks about the promise and peril of "place-based" economic policies, and how they relate to skyrocketing inter-state income inequality in India.  It is not at all far-fetched to argue that the turn towards a market economy is what created the opportunity for states with ...
    Renuka Sane, Visiting Fellow at IDFC Institute, and Vrinda Bhandari outline the key elements of a data privacy law for the country. With a view towards a future where this glaring gap in our legal regime is filled, we suggest five key elements that should drive the design of a privacy law (when it is actually enacted), or laws that have an impact on privacy. These inc...
    Senior fellows at IDFC Institute, Vivek Dehejia and Praveen Chakravarty, write about why GST is likely to exacerbate the issue of income divergence between Indian states, which was recently raised in the Economic Survey and was addressed in their Briefing Paper. In a GST regime, the ability of poorer Uttar Pradesh to wean Apple away from richer Karnataka usi...
    Shankkar Aiyar, Visiting Fellow at IDFC Institute, highlights the need for champions akin to Verghese Kurien, Vikram Sarabhai, Homi Bhabha, and more recently, Nandan Nilekani, who can power through the powerful ideas suggested in the recent budget. He believes this budget is a sincere, albeit limited attempt at dismantling old shibboleths, but whether these can b...
    Speaking at the event, Praveen Chakravarty, Senior Fellow at IDFC Institute, notes that one needs to free up bad assets that have been festering in the system for the past three years in order to revive the economy and spur growth. “There are ₹15 lakh crore worth of bad assets in corporate and bank balance sheets. It largely impacts how lo...
    Shankkar Aiyar, Visiting Fellow at IDFC Institute, discusses five major reforms that India needs but are not a part of the budget due to political compulsions. Major transformations in India have arrived at in the wake of crises. The political operating system is governed by two key principles. Politicians pursue ideas and policies that are electorally rewarding. Bureau...
    Vivek Dehejia, Resident Senior Fellow at IDFC Institute, talks about why this year's budget was symbolic in a sense that the Annual Budget will no longer we a natural vehicle for announcements of major structural reforms and the growing relevance of the Economic Survey in Mint. First, for the very first time since the onset of the planning era in 195...
    Shankkar Aiyar, Visiting Fellow at IDFC Institute, discusses the menace of a rising death toll due to road and rail accidents and environemntal hazards in Bloomberg Quint. He emphasises the need for the Budget to make provisions to tackle these issues.  The focus on deaths is meant to bring to the fore the chasm of sloth that divides i...

    30 January 2017

    The Failure of Elite Wisdom

    Vivek Dehejia, Resident Senior Fellow at IDFC Institute, analyses Stephen Harper's keynote address on confounding geo-political events in an article in Mint. Vivek agrees with Harper's analysis that: The forces that created our globalized world might ultimately have undermined what they created... In the Western world, the battle lines have been...
    David Keohane, in this Financial Times article, reviews Milan Vaishnav's latest book titled, "When Crime Pays, Money and Muscle in Indian Politics" and explains the vertical integration in India's crime-political nexus. Excerpts below:  As Vaishnav describes it, there was a reliable political landscape in India, dominated by the dynastic Congress party, up until ...
    Ajay Shah, in this Business Standard article, analyses the principal-agent relationship of the Ministry of Finance and its financial agent, the Reserve Bank of India (RBI). He proposes that the RBI's indepence as a financial agent would be best achieved by following a "middle ground" in terms of delegation of powers and oversight. Excerpts below:  Financial ...
    Shankkar Aiyar, Visiting Fellow at IDFC Institute, in this New Indian Express article, shares his thoughts about the "humongous wastage of Rs. 92,651 crore" and also about "leveraging output to enhance the income of farmers and affordability for the consumer". Excerpts below:  What does `92,651 crore translate into? If the money was spliced into the per...

    20 January 2017

    The New Right

    Rajiv Lall, CEO of IDFC Bank, discusses the intellectual case for the new right in India. The economic ideology of the new right is a belief in markets along with a strong state that can create the necessary conditions for job creation and competition. He writes,  The New Right are not advocates for a minimalist state. Markets cannot substitute for the state. The...

    19 January 2017

    In a State of Tax

    Rohan Shridhar, Associate at IDFC Institute, discusses the importance of federalism for India and the impact of GST on India's federal polity. He states that with the creation of a single market that the GST is expected to achieve, the need for competitive federalism will be stronger. He argues that states will be only be able to compete effectively in this single mar...
    Why do planned schemes of human betterment, designed with the best of intentions, often fail? James C. Scott, the Eugene Meyer Professor of Political Science and Anthropology at Yale University, sets out to answer this question in his 1998 book Seeing like a State: How Certain Schemes to Improve the Human Condition Have Failed. The book contains an extraordinarily well-...
    Shankkar Aiyar, Visiting Fellow at IDFC Institute, discusses the potential for leveraging technology and engineering through a common platform for devicing solutions for some of the country's problems. He outlines some of the efforts that are already under way in this regard. However, most institutions function in silos. Aiyar emphasises the need for an eco-system that ...
    Vivek Dehejia, Resident Senior Fellow at IDFC Institute, distills the ex ante rationale for demonetisation from the ex post facto analysis in an article in Mint.  He writes that the empirical basis for the rationale for introducing demonetisation may have been flawed. Regarding the ex post anaylsis, he argues that  ..the smaller the short-run costs c...
    Praveen Chakravarty, Senior Fellow at IDFC Institute, weighed in on the reasons behind the trend of declining startup growth in 2016 in an Indian Express article.  He said:  The decline was ironical...Just after the government launched a Startup India initiative on January 2016, investments into startups dropped and therein lies a lesson. T...
    Praveen Chakravarty, Visiting Fellow at IDFC Institute, points out that the growth in high denomination currency circulation was proportional to the rise in GDP. He says: To test that hypothesis, Urjit Patel may have further done a logarithmic growth analysis of GDP, banknotes and high-denomination notes in circulation to test if there was a disproportionate growth in...
    Visiting Fellow, Shamika Ravi, in this Livemint article, writes on the urgent need to direct nutrition policy to better invest in the first 1000 days of a child. This includes investing in pregnant and lactating mothers. She says: India’s ability to harness long-term demographic dividends rests on it prioritizing nutrition in its health agenda, and reformi...
    In this New Indian Express article, Shankkar Aiyar, Visiting Fellow at IDFC Institute, writes about the need to enhance the methods of collection of data and its analysis while designing policies. He says: Issues relating to quality and availability of data  could haunt the playbook of growth. The government has declared that a major focus area would be human dev...
    Senior Fellow in Political Economy Praveen Chakravarty writes that only a historic debacle would prevent BJP from winning the UP Elections in 2017. In this India Spend article, he notes that BJP won 328 of 403 assembly segments in 2014. A loss in UP Polls in 2017 would mean biggest vote-share swing in history. Key excerpts from the article are below In a ...
    In this Livemint article, Vivek Dehejia, Senior Resident Fellow at IDFC Institute responds to some of the many criticisms levied against the demonetisation of Rs. 500 and Rs 1000 notes. Dehejia stresses on the urgent need for follow-on reforms which simplify the tax and regulatory burden on ordinary citizens. He opines that this is necessary to gain ful...

    30 December 2016

    What We Read

    In this mint article, Senior Resident Fellow, Vivek Dehejia, along with other mint columnists, editors and writers describe the best book they read in 2016. Vivek gives a brief synopsis of his favorite book titled Economics Rules : The Rights and Wrongs of the Dismal Science This is a fun and instructive little book on the use — and misuse — of economic models by ...
    Rajya Sabha member, Rajeev Gowda, has an interesting rebuttal to S. Gurumurthy's explanation on GDP growth during the 2004-09 period. He writes: In essence, the story that black money induced rising asset prices which led to high GDP growth with no jobs is a phantom one, devoid of any basis. This phantom story is then used to justify an unprecedented, ill-conceiv...
      Vivek Dehejia, Resident Fellow at the IDFC institute was invited to a meeting of experts, held by the Prime Minister, to map out the future economic plan. The meeting was also attended by the finance minister Arun Jaitley, all his department secretaries, other secretaries of departments such as DIPP, telecommunications, and information technology. It wa...
    In this mint article Vivek Dehejia, Resident Fellow at the IDFC institute, along with Jagdish Bhagwati and Pravin Krishna explain the myths surrounding demonetisation and the numbers behind the entire scheme First, it is frequently asserted that the return into the formal monetary and banking system of a large percentage, perhaps 80% or more, of the old notes rep...
    In this Bloomberg Quint article, Shankar Aiyar, visiting fellow at the IDFC institute explains how it is imperative to reform the mandate of NITI Aayog, to allow it to have a considerable policy impact in the country Tactics apart, it is an issue that the NITI Aayog should have got concerned about at a strategic policy level. Till recently, India kept the federation g...
    In the New Indian Express, Visiting Fellow Shakkar Aiyar makes the case for deferring GST rollout to 2018 in light of the disruptions caused by demonetisation and global uncertainty. He writes:  India has waited for ‘one nation, one tax’ since 2004, when the Kelkar Committee first introduced the idea. It can afford to wait for a year more—especially for a s...
    Praveen Chakravarty and Vivek Dehejia's article on economic divergence between the rich and poor states in India, gets cited in the Entry Tax Case judgement by Justice Bhanumathi India is the only large country in the world today that is experiencing an economic divergence among its States and not convergence, as economic theory would posit.” “…..Pre-1990 and po...
    In this Indian Express article, Bibek Debroy, explains some of the reasons why India's performance in cross border trade as per the World Bank Ease of Doing Business report is poor. The logistics story isn’t that good. Broadly, major problems are too many unorganised and unregistered players; registration, regulation and accreditation by too many agencies under too ...
    In this piece for Mint, Vaidehi Tandel and Sahil Gandhi urge municipalities to resist the temptation to raise finances using land-based mechanisms such as chargeable additional FSI. They write:  While this is a good move for ensuring buoyancy, it will most definitely have an impact on costs for developers and thus affect residential prices. While making these dec...
    In this Mint article, Resident Senior Fellow Vivek Dehejia presents his view on the monetary economics of the 'currency swap', otherwise known as demonetisation. He discusses four fallacies around the move, including: Third, let us assume that some chunk of the 80% of old notes that have entered the formal financial system represents black money that holders...
    Resident Senior Fellow Vivek Dehejia is quoted in the Financial Express, commenting on the RBIs move to allow eKYC. He says: “The movement of some or many of the unbanked into the formal financial sector and the movement of firms from the informal to the formal economy (or, equivalently, the process of “creative destruction” whereby new formal sector firms repla...
    Harvard professor Gita Gopinath speaks about the demonetisation move and and its implementation in this interview with CNBC 18. She says: I am in favour of the principle of moving to a low cash usage economy. The harder thing to swallow is this rather dramatic overnight making 86 percent of the currency in circulation illegal tender. The argument was that this is...
    In this Mint article, Shamika Ravi, Visiting Fellow at IDFC Institute, weighs in on what demonetization means for the labour market. She writes: Demonetisation is forcing employers in the country to reconsider employment contracts. There needs to be a simultaneous push from the formal financial institutions such as banks, payment interfaces such as National Payments C...
    In his interview with Mint, Dr. Rajiv Lall talks about retail banking products, and tie-ups with fintech companies: I don’t think we can compete on e-wallet. The horse is bolted on that one. Wallet companies have a leg-up against average banks because they have spent much more than banks on marketing. So, the mind share and recall of e-walle...
    Shankkar Aiyar writes about the the role played by the opposition in holding the government accountable: ...It has been a month since the government rendered illegal over 86 per cent of the currency in circulation. It is by far the biggest decision on currency and the most important political economy decision in four decades. People across the nation are looking ...
    Praveen Chakravarty, Senior Fellow at IDFC Institute, questions the 'shock and awe' move by the government to nudge people towards a cashless society. He writes: ...our “results-oriented” and “action-seeking” commentariat, Indians’ love for paper currency is so much more detrimental to the future of this nation than malnutrition that it is perfectl...
    Praveen Chakravarty, Visiting Fellow at IDFC Institute uses data to present an interesting take on the demonetisation narrative. He writes,    A data analysis of the speeches (after translation) reveals a shifting of the narrative of the demonetisation action and its objectives. In his speech on November 8, 2016, when he announced the demonetisatio...
    Visiting Fellow Shankkar Aiyar's fascinating piece in BloombergQuint on individuality of Tamil Nadu and its politics, and what the rest of the states could learn from it. An indelible fact of history is that Dravidian parties have dominated Tamil Nadu now for 49 years and 9 months. There is lot that that the DMK and AIADMK have been accused of. Equally relevant is the...
    Resident Senior Fellow Vivek Dehejia's latest column in Mint on implementing politically difficult economic reforms in India: What, after all, is either left or right in making government function better and better serve its people? What is left or right in ensuring that all Indians, including the poorest, have bank accounts and that every business firm must be regist...
    Visiting Fellow Shankkar Aiyar writes in the New Indian Express on the political climate in Europe and the seeming erosion of representative democracy: Seven decades after World War II, the construct of a contract—consensus on a liberal, rules-based international order—is seemingly coming apart. The co-option of policy, regulation, and the cornering of wealth by t...
    Mudit Kapoor, Visiting Fellow at IDFC Institute, writes on the large behavioural consquences of demonitisation and how they could create a positive welfare impact. Excerpts below: There is no doubt that such a drastic move is pushing people, primarily those in the informal economy, to open bank accounts and actively use them. This might seem trivial and ...
    India Spend's Abhishek Waghmare interviews Praveen Chakravarty, Visiting Senior Fellow at IDFC Insitute, on demonitisation and it's prospects and perils. Exceprts below: The chaos was inevitable… There were 15 billion notes of 500 rupees and 6 billion notes of 1000 rupees on the 8th of November. On the 9th of November, this became invalid; useless paper. N...
    Shankkar Aiyar, Visiting Fellow at IDFC Institute, asserts that the demonitisation of large currency notes is an opportunity for financial inclusion. Read the full article in The Indian Express  here. Excerpts below: India’s transformation and many revolutions have arrived in the wake of crises. This is one crisis that must not be wasted. The biggest ...

    25 November 2016

    Demystifying Demonetisation

    Montek S. Ahluwalia, in this Livemint article, explains why demonetisation is only a piece of the puzzle to tackle corruption and black money, and is likely to have an adverse effect on GDP and low-end employment. Moreover, Ahluwalia advises several steps to significantly improve the process and impact of outcomes.  What effect has demonetisation had so...
    Niranjan Rajadhyaksha, in this Livemint article, discusses some broad issues that deserve immediate attention in the wake of the currency reform. Shedding light on the economic processes that result from this exogenous shock, Rajadhyaksha cautions against jumping to quick conclusions, but to observe how this decision plays out over a longer period of time. E...
    Praveen Chakravarty, Visiting Senior Fellow, warns of the potential ramifications of simultaneous elections on federalism and voter behaviour. Read the full article in Swarajya here. Excerpts below:  The typical arguments in favour of simultaneous elections are three-fold – it will be more cost efficient, it will reduce ‘policy paraly...

    23 November 2016

    The Forgotten Hero

    Visiting Senior Fellow, Praveen Chakravarty, moderated a panel at the Tata Literature Live, 2016 at the Prithvi Theater in Mumbai on November 20, between authors Sanjaya Baru and Vinay Sitapati, and Former Union Minister of Finance Mr. P. Chidambaram on the legacy of India's 9th Prime Minister Mr. P.V. Narasimha Rao.  Baru and Sitapati laid out a strong case f...



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