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Madan Sabnavis

Articles By Madan Sabnavis

411 Articles

M Narasimham (1927-2021): The father of banking reforms

On the whole, M Narasimham would have been satisfied with the progress made in reforming banking in India, given the socio-economic conditions in the economy where it is not easy to change systems easily. Where it was urgent,

The first relates to privatisation of PSBs. This is something that the government is looking at seriously, as per the Union Budget of 2021-22.

Robert Mundell (1932-2021): Mundell can never be forgotten

Robert Mundell may not be as famous as John Maynard Keynes or Milton Friedman, but holds an important place in the pantheon of economists, and the ‘impossible trinity’ will be something that will never move out from the d

Lockdowns Again: Back to the start?

The economic impact of the current lockdowns will be significant, though not as sharp as that of last year

For a country that is still struggling to deliver vaccines to the public, distributing this amount will be a big challenge as beneficiaries have to be identified.

Stock market beats the virus

All through the year, the markets were not too much enthused by government policies as the series of announcements made under Atmanirbhar Bharat campaign drew an indifferent response. The same was with the Union Budget. There

The market does not really bother about the level of infections, and while there are a couple of sessions that witness a decline in the Sensex, it is back to business

Cash Reserve Ratio: Should the CRR be retained?

It can be argued that the CRR should remain, and RBI has been fair to banks as the cost of the CRR is permitted to be included in the calculation of the base rate and the MCLR.

Therefore, the cost is loaded finally to the borrower and not really borne by the bank exclusively; globally, the CRR exists and is as high as 17% in Brazil, 11% in China and 8% in Russia. In India it will soon be 4%. It is nil in the US, 1% in the UK and 2.5% in South Africa

‘Non Obvious Mega Trends’ (Book Review): The times they are a-changin’

The world is dynamic, and businesses have to keep pace, especially with technology

A file photo of a worker assembling commercial data servers for cloud computing at a Hewlett-Packard manufacturing facility in Houston, US (Reuters)

Why are PSB staff wary?

From their perspective, once government-owned banks are privatised, there is nothing to stop the staff from being rationalised through VRS programmes, which, as seen in some of the leading private sector banks, has always bee

From Incremental to Exponential review: Another guide on how companies should proceed to remain relevant

Yet another reinforcement of the importance of adapting to change

Amazon is a great example of a company that has brought about innovation by leveraging technology (Reuters)

Need to make cryptocurrency illegal: An ‘official cryptocurrency’ can create confusion & unease amongst citizens

The fight against black money is still on and tax data does not show that there has been encouraging success in this area. Under these conditions, it is best to keep away from cryptocurrencies and illegalise the same.

Allowing a parallel currency system is, therefore, antithetical, besides being a danger.

The economics of petrol pricing

The excise rate, levied on a per-unit basis, has been in the range of Rs 18-20 for 2018, 2019 and the first half of 2020.

This break-up in price can be traced back over the last three years.

Privatisation this time, not disinvestment

The path towards total privatisation does involve breaking ideological shibboleths that have been built since Independence. At the same time, is it necessary for the government to actually sell stake to get private ethics in

This makes a lot of sense, and as the finance minister spoke of the concept during the Atmanirbhar series, it does appear that the government is keen on moving out of some companies.

Beyond Covid’s Shadow review: Group of luminaries examine the pandemic’s economic and social impact

A group of luminaries come together with their diverse voices to examine the pandemic’s economic and social impact

Baru has his say in his essay, where he openly says that the lockdown was draconian, as it affected people’s lives and the economy.

No laughing matter: Why India Inc needs to recognise power of humour, levity

A little bit of humour can go a long way in building better relations in the workplace too

A file photo of Richard Branson who is known for his sense of the dramatic (Image:Reuters)

G-Secs: Retail investors may not prefer government bonds

The government can consider issuing bonds for roads or railways as part of the Rs 12 lakh crore programme to retail investors with a simple payoff matrix. Tax-free bonds have resonated well with investors, so too would these

There is scope to think differently when planning convergence between retail investors and government borrowing through these special bonds

Union Budget FY22 not as fiscally expansionary as believed initially

Union Budget 2021 India: Interest payments excluded, the expenditure budgeted for FY22 is slightly lower than FY21 expenditure (RE). So, Bugdet FY22 is not as fiscally expansionary as believed by some

The other big proposals relate to asset monetisation and disinvestment, which is now being called privatisation to signal a change in ideology.

Draft NBFC norms: How to ensure compliance

It is hard to have a fool-proof system that cannot be dodged by determined participants. This has happened in banking as well as NBFCs, and having stringent regulation is only one part of the story.

The regulatory changes proposed have been clubbed under capital regulation, concentration norms, governance and disclosures.

External commercial borrowings decoded

A handy manual on the issues and pitfalls concerning external commercial borrowing

The RBI building in Mumbai (Image: Bloomberg)

Recovery on fast track, need to see if it would create more jobs: Economic Survey of India

This is where the GDP growth of 15.4% in nominal terms represents as it lays down the base for the Budget as the size of the Budget is linked to this number.

In a way this number becomes the pivot for all allocations under expenditure as well as tax revenue.

Managing QE rollback the Indian way

RBI’s calibrated measures will likely be able to address the issue of an increase in demand for funds from both the govt and the private sector in FY22

The defining features of the so-called QE, which came with a combination of instruments, are provided in the accompanying graphic; the QE had started even before the pandemic had set in.

Moderate your expectations from the Budget

Union Budget 2021 India: While sectors may want more from the government in terms of policies, there have already been myriad policy announcements since May 2020 for various sectors and hence it would not be realistic to expe

The Budget anyway is merely a statement of account of the government, and tax rates are outside its purview because of the GST regime

An outro for 2020—The varying notes: A look at the big things economic in the year gone by, drawing from music

‘Top of the charts’ is the Delhi rondo, with farmers gathered to protest against the farm Bills. Everyone is arguing with everyone else on this issue, and a fairly pragmatic policy put up by the government has now been op

The year was not without its top-10 compositions in the economic field.

The not so common sense

A book on innovation in business illustrates how simple application of mind is often missed in business models and strategies

Agri reforms: Should we do away with minimum support price?

The government is working to deepen the commodity derivatives market—a replica of the MSP system. Farmers, through the FPOs, should be nudged to the exchanges to hedge their risks and move towards a diversified crop base

At an ideological level, an interesting conundrum comes to the forefront.

Piketty is right, inequality has risen

Opening up of the economy in India has led to concentration of income at the top 10% level

Budget 2021-22, Union Budget 2021

Recovery hurdles: The salary-cut cloud on consumption

Unless salaries get restored (and then increase) and new jobs are created, the momentum consumption acquired in the festive season won’t sustain

‘The Next Fifty Things that Made the Modern Economy’: Interesting back stories on everyday mundane objects keep the reader hooked, and wanting more

This book is not just interesting and educative, but could also be used in schools where children must navigate inventions in a rather mundane way. Clearly there are better ways of conveying these stories, and Harford excels

A technician monitors cryptocurrency mining rigs in Quebec, Canada. The author discusses blockchain, which has become quite revolutionary thanks to bitcoin Bloomberg

Let RBI make money from forex reserves

If we are not averse to the concept of RBI deploying excess forex reserves for commercial returns, there are strong grounds for the central bank to explore such options

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