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    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, 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 reforming the institutional frame...
    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...
    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 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...
    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...
    Shakkar Aiyar, Visiting Fellow at IDFC Institute, advises the government to explore external sources for immediate solutions to mitigate the distress.  To appreciate the anatomy of the cash crisis, consider this. In 2015-16 private consumption expenditure accounted for over half the GDP—for over `80 lakh crore out of `135 lakh crore. Sure. Not all of ...
    Meenaz Munshi, Senior Associate at IDFC Institute, and Sanjay Pulipaka, analyse why this decisive move of demonetisation may force the BJP and regional parties to recalibrate their political strategies.  India’s political discourse was until recently dominated by identity issues such as cow protection, the uniform civil code, and debates on freedom of expr...

    21 November 2016

    The Case for Sound Money

    Vivek Dehejia, Resident Senior Fellow at IDFC Institute, examines whether demonetisation threatens the trust that people have in the legal tender.  ...over the course of history, trust in fiat currency has most often been weakened by erratic and high inflation, and shattered after episodes of hyperinflation. This is a much bigger problem than the one-time we...
    Shankkar Aiyar, Visiting Fellow at IDFC Institute argues that a holistic action plan is required, along with the demonetisation drive to curb black money.  What is black money? It is both the cause and consequence of fault lines in the political economy. It is estimated that black money constitutes over a fifth of the national output. Not all that ...
    Vivek Dehejia, Resident Senior Fellow at IDFC Institute writes with James Dean on how Justin Trudeau and Donald Trump may find more common ground and build a productive partnership between Canada and the US, contrary to the popular expectation based on the common narrative. ...Trump has signalled a willingness to pursue the Keystone XL pipelin...

    16 November 2016

    A Return to Reaganomics?

    Vivek Dehejia, Resident Senior Fellow at IDFC Institute writes about likelihood of the US returning to a version of Mundell-Laffer policy mix under Donald Trump.  Early signs suggest that the mere fact of a Trump victory, even before policies are unveiled after his inauguration or even Cabinet choices are confirmed, has increased the market’s sen...
    Vivek Dehejia, Resident Senior Fellow at IDFC Institute deconstructs the debate on government's demonetisation move by separating facts from fiction.  First, given that the old 500 and 1,000 rupee notes are being replaced with new 500 and 2,000 rupee notes, what is involved is, in effect, a one time wealth tax on black money...Black money will take a hit, at...
    Vivek Dehejia is quoted in a BBC News article on the macroeconomic impact of scrapping Rs 500 and Rs 1,000 notes by the Indian Government. Dehejia says: India now operates under a monetary policy regime known as inflation targeting. If a portion of the stock of currency in circulation, consisting of currency and demand deposits gets 'burned', metaphorically ...
    Praveen Chakravarty, Visiting Senior Fellow at IDFC Institute explains why introduction of Rs 2,000 rupee note goes against the very grain of demonetisation of high value currency to prevent black money.  "Perhaps the situation of counterfeits and illicit cash was so grave that it needed this ‘shock and awe’ cleansing action which other punitive mea...
    Forbes India features Rajiv Lall, MD and CEO of IDFC Bank. It traces the genesis of IDFC Bank, its growth in the last one year, and its strategy for future expansion.  "In its first year, IDFC Bank has taken more than baby steps. Its moves have been firm and well-calculated, which, if executed well, can bear results in the coming years. But as it expands, the ...
    Association for Democratic Reforms (ADR) on 26 October organised a discussion to explore the possibilities and challenges presented by simultaneous elections. Eminent speakers, including Shri Bhupender Yadav (Member of Parliament, Rajya Sabha), Dr S. Y. Quraishi, former CEC, Prof Sanjay Kumar, Director of Centre for Study of Developing So...
    Vivek Dehejia, Resident Senior Fellow at IDFC Institute, argues that free trade need not come with conditions for deeper integration but this is increasingly becoming the case in his latest article in Mint.  Dehejia states that there are important lessons to be learnt from the episode where residents of Wallonia in Belgium made an unsuccessful attemp...
    IDFC Institute Conversation hosted a private discussion with Justice Gautam S. Patel, sitting judge of the High Court of Bombay, and Dr. Harish Narasappa, founding partner of the law firm Samvad Partners and co-founder of DAKSH, for a discussion on "Understanding the State of the Indian Judiciary." The discussion explored issues that...

    1 November 2016

    The $2 Trillion Survey

    The RBI surveys more than 5,000 households every quarter across 18 cities and towns about their short and long-term inflation expectations. Praveen Chakravarty, Visiting Senior Fellow at IDFC Institute investigates to what extent the inflation expectations of the aam aadmi  affect the monetary policy decisions of the RBI. But during the recent...

    1 November 2016

    Ways out of the GST maze

    The Centre has proposed that there be an extra cess on ‘luxury’ goods equivalent to the difference in the current tax rate and the maximum GST rate of 26 per cent. If this is implemented, this would mean six different cess rates on nearly 40 different goods, ultimately leaving us with 10-12 different tax rates in the country. Praveen Chakravarty emphasises why ...
    Shankkar Aiyar, Visiting Fellow at IDFC Institute, deconstructs India's poor performance on World Bank's Ease of Doing Business ranking. Often rankings are dragged down by one or two sectors. The converse seems to be true for India. Ranking in seven of ten parameters are worse than the overall story. Critically, this year, India’s rankings have slid in five of ten s...
    Shankkar Aiyar’s  ‘Accidental India: A History of the Nations Passage Through Crisis and Change’, presents a thought-provoking perspective on the economic and political history of post-independence India. Combining academic rigor with journalistic flair, the book introduces its readers to the history and politics behind the seemingly mysterious process...
    Visiting Fellow,  Shankkar Aiyer, writes in this Firstpost article on the politics and perils of succession plans, in the context of the ongoing crisis in Samajwadi Party and Tata Sons Ltd. Observing astutely as both the situations unfold, Shankkar opines "India's political and corporate world is yet to come to terms with the need for and t...
    Visiting Fellow at IDFC Institute Shankkar Aiyer ,  writes in this New Indian Express article about the floundering approach of Congress party in making itself relevant for the voters. Shankkar writes, "It is scarcely a mystery that the vice-president needs help and advice. The question is: does he seek advice and if so, how does he access it? O...
    Vivek Dehejia, Resident Senior Fellow at IDFC Institute, in this Livemint articlespeaks about the recent trend were central banks adopt unconventional monetary policies (UMPs) like the negative nominal interest rate.  Vivek argues that "Negative nominal interest rates not only put enormous strain on the banking and financial system, they penalize ord...
    In this op-ed, IDFC Institute Visiting Fellow Shankkar Aiyar asks important questions on the eye-watering amounts spent by government. "Between them, the Centre and the state governments raise roughly Rs 28.4 lakh in revenue and spend around Rs 37.8 lakh crore every year – that is, Rs 10,370 crore per day or Rs 432 crore per hour. The moot question being asked by ta...
    IDFC Institute Conversations hosted a roundtable with Dr. Milan Vaishnav, Senior Associate in the South Asia Program at the Carnegie Endowment for International Peace, for a discussion on "The Indian Administrative Service Meets Big Data."  Watch the video of the full discussion with Milan Vaishnav, below:    Vaishnav di...
    Resident Senior Fellow Dr. Vivek Dehejia presented a lecture "Where is India Going?" at the Center of Financial and Monetary Studies at LUISS Guido Carli in Rome, on October 18, 2016. LUISS is one of Italy's leading private universities. The talk focussed on the challenges of improving the doing business climate in India and the new monetary policy regime. The lecture was ...
    The GST Council discusses a four-tier rate structure and agrees on compensation to the loss-incuring states for the first five years of the tax regime. With a peak rate of 26 percent plus cess on ultra-luxury and demerit goods, lower slabs are set at 6, 12 and 18 percent. Read more on Business Standard. ...



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