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ECONOMY in ICU : बेरोज़गारी चरम पर , गवर्नेंस फेल..
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India and the economics of good intentions

November 14, 2019 20:01 IST

Good intentions are best left to political parties, governments and religious establishments, suggests T C A Srinivasa-Raghavan.
Illustration: Uttam Ghosh/Rediff.com



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Someone in PMO needs to tell Modi he is the problem
Someone in PMO needs to tell Modi he is the problem

Here's a problem: If economics is a science, then intentions, good or bad, must not be a part of it.
If, on the other hand, and at the very least, good intentions simply must underlie it, it cannot be a science.
Indeed, it ceases to be economics even.
This, to my mind, is the main problem with randomised controlled trials (RCT) in development economics -- though not in the other branches of the subject like, say, mechanism design.
In fact, I have never understood what development economics is other than being an atonement for a bad conscience.





As a result of it, many good economists have become preachers and many preachers have become bad economists.
Some of them have arrived on Indian shores, in a manner reminiscent of the representatives of the Anglican Church after 1870.
Governments loved them then, and they love them now because they bring intellectual respectability to comforting ideas.
So, it appears, do the World Bank and the Nobel committee, not to mention many philanthropists.
There are two major questions that such economists refuse even to acknowledge.
One, why is your good intention better than mine?
Two, is the State the best institution to give effect to good intentions? Religious institutions do a far better job.
Such economists, I think, start with an inadequate understanding of what the state actually is -- a collection of randomly chosen agents who can't reveal anything like a conscience while acting on behalf of their employer.
Those that do become NGOs.
The economists then get very surprised when the State reveals its true colours.
The phenomenon was best summed up by Arthur Koestler in his 1949 classic, The God That Failed.
What is not understandable, however, is how development economists deliberately ignore all the thought that has gone into preventing economics from becoming a vehicle for competitive politics.
This willingness to be an intellectual fig leaf for sheer Robin Hoodism, with its forcible income transfers in return for votes, is what is so distressing, at least to me because unlike many of these guys, I pay taxes in India.
Sorry for that long preamble, but RCTs in development efforts are not new.
It's just that no one thought of giving them that name.
Ask any IAS officer, of any batch, since 1948, who has held a district, and he or she will tell you how they have had to initiate or run such experiments.
One of the first was in 1952 when the then minister for community development, Sudhir Ghosh, started his experiment in Faridabad.
It didn't quite work.
V T Krishnamachari, the then deputy chairman of the now defunct planning commission, was blamed for it.
But VTK foresaw the political dangers. Nehru agreed.
There have been thousands of other development experiments since then.
Indeed, pretty much every single one of what governments call 'schemes' are RCTs.
In fact, MNREGA is the mother of all such schemes: Give money to some on some arbitrary criterion and not to others and see if the beneficiaries vote for you in perpetuity.
We know the answer now: They don't.
This suggests that the experimental method that works in science doesn't quite work in development economics.
RCTs are useless beyond a point.
Again, ask any IAS officer after he has left the district, and he or she will tell you how things went to pieces after his or her term.
But it's got nothing to do with them.
It's how it is if you rule out force and rely on incentives alone.
People are not Pavlov's dogs.
Good intentions are best left to political parties, governments and religious establishments.
Attempts to weave them into in a formal way into economics helps neither the intentions nor the discipline.
Both become suspect.







Let me end by quoting a much derided economist, P T Bauer of the LSE: 'Those who propose replacing the market system by political decisions rarely address themselves to such crucial matters as the concentration of economic power in political hands, the implications of restriction of choice, the objectives of politicians and administrators, and the quality and extent of knowledge in a society and its methods of transmission.'
He wrote that in 1982, but it was the essence of his life's work since 1955.
The series of Indian experiments since 1952 suggest Bauer should have got the Nobel long, long ago.

T C A Srinivasa-Raghavan

Source:

https://rediff.com/business/column/india-and-the-economics-of-good-intentions/20191114.htm
 

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Rediff.com » Business

Time is running out for Lakshmi Vilas Bank

November 14, 2019 11:28 IST

'It's a toss-up between a fire sale of equity or merger with a strong bank,' points out Tamal Bandyopadhyay.

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Do not park too much money in co-operative banks
Do not park too much money in co-operative banks

After the Reserve Bank of India rejected Indiabulls Housing Finance Ltd's plan to be merged with Lakshmi Vilas Bank Ltd (LVB), the housing finance company hopes to focus on the retail segment only.
A recent investor presentation on its new business model has a sub-title: 'The Phoenix Rises Again'.
What's happening at LVB?
Its share is now trading at a level last seen in 2003.
The triggers for the continuous erosion in shareholder value in this once-upon-a-time boutique community-based bank include the inability to raise capital to set aside money for bad loans, leading to ballooning losses.
The RBI bringing it under the ambit of 'prompt corrective action' (PCA), which restrains a bank's lending activities, and rejecting Indiabulls's proposal of being merged with LVB didn't help matters.
Indiabulls holds 4.99% stake in the bank.
It is easier to find why the bank has been put under PCA than why the merger plan was scuttled: Its huge bad loans, insufficient capital adequacy ratio, negative return on assets (RoA) for two consecutive years and its high leverage led to the PCA.
For the fiscal year 2019, LVB's net bad assets were 7.49% of its loan book, its capital adequacy ratio 7.72% and RoA 2.32%.





After its entry into the PCA zone, LVB had said it would make every effort to improve its financial health.
When the merger plan went kaput, it put up a brave front and said, 'This brings an end to recent uncertainty... the bank will continue to work towards raising capital'...
That's fine, but why hasn't it been able to raise capital so far?
It is a post-World War I bank, set up in 1926 at Karur on the banks of the river Amaravathi in Tamil Nadu, by a group of small businessmen belonging to the Vysya community to fund small businesses.
The entrepreneurial community was instrumental in setting up many banks in southern India -- Vysya Bank Ltd (which later was renamed ING Vysya and taken over by Kotak Mahindra Bank Ltd), Karur Vysya Bank Ltd and LVB, besides many smaller ones.
It also chipped in with the initial capital for Andhra Bank.
Seven businessmen at Karur, under the leadership of V S N Ramalingam Chettiar, set up LVB in the textile city of Tamil Nadu.
Between 1961 and 1965, it took over nine other banks and in the 1970s, it started expanding its footprint outside Tamil Nadu.
Till about a decade back, LVB was content being a small and beautiful bank, posting profits every year, giving handsome dividends to its investors but not bothering much about growth.
Things changed around 2008-2009 when the original Karur promoters let in others, also Vysyas, to take charge.
With that, an obsession for growth crept in, but none bothered to put in place the right vision and strategy for such growth.
Historically, LVB has rarely had continuity at the top-management level.
More often than not, the top management consisted retired public sector bankers, and the bank depended largely on walk-in businesses -- both for deposits as well as loans.
The sudden thrust on growth forced LVB to join most loan syndications with a small share, without understanding the implications.
Initially, it paid off as the interest income rose, as did profits.
The going was good till the RBI decided to conduct the asset quality review of Indian banks in 2015-2016.
The central bank's inspectors started checking all banks's books, suspecting ever-greening of loans.
Being part of loan syndications, LVB ended up having exposure to most large rotten accounts that have been dragged into the insolvency court.
That's how bad loans have been created, denting its interest income and forcing it to provide for such loans, eroding its capital.
The bank has been approaching investors to raise capital, but the fear of hidden bad loans and possible interference of the board/promoters in operations has kept them at bay.
Going by the media reports, about a year ago, a number of marquee investors showed interest, but nothing happened.
While the bank management has not explained why the deal was not closed, the investment community says the main reason is unreasonable valuation expectations.
These funds were not willing to play ball.
The last I heard, a large US financial services firm is in talks. Will it say yes?
The bank has been under the regulator's scanner for quite some time now.
In the past, the RBI had to appoint directors on its board and the tradition continues.
It scuttled the efforts of one of the promoters, a chartered accountant, to assume the chairmanship at the bank, but allowed another chartered accountant to don the mantle.
The promoter's wife, a qualified advocate, was on the board till recently.
The RBI, it seems, has not been happy with some alleged related-party transactions that happened in the bank.
The last MD and CEO quit in August, citing 'personal reasons'.
The LVB advertisement looking for a replacement promises an attractive package and an 'excellent working environment'.
Time is probably running out for LVB.
There aren't too many choices before it -- it's a toss-up between a fire sale of equity or merger with a strong bank.
Indiabulls had its compulsions: It desperately wanted a banking licence, but why would any bank in their right mind want to acquire LVB?
It will have takers at the right price as it has a good franchise with 570 branches, 85% of which are in south India and about half of that in Tamil Nadu. It has 1.8 million retail customers and the employees on the rolls are not too many -- about 5,000.
A bank with a predominant presence in the west and north may like to have it for the branch network alone, if the price is right.
A decade ago, HDFC Bank Ltd bought Centurion BoP Ltd primarily for the branch network.
Or else, it needs a white knight a la Fairfax India Holdings Corporation of Indian-born Canadian billionaire Prem Watsa.
Fairfax acquired a 51% stake in Catholic Syrian Bank in 2018 -- the first instance of a foreign company buying a majority stake in an Indian bank.







Under the current norms, foreign investors can own up to a 74% stake in a private bank but a single entity exposure is typically capped at 5% which can be raised to 10% with RBI approval.
Tamal Bandyopadhyay, a consulting editor with Business Standard, is an author and senior adviser to Jana Small Finance Bank Ltd.

Tamal Bandyopadhyay

Source:

 

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Hackers steal USD 49 million in cryptocurrency from Upbit
  • Nov 28, 2019, 04:30 PM IST

South Korean cryptocurrency exchange Upbit has confirmed hackers stole about USD 49 million worth of cryptocurrency. Upbit CEO Lee Seok-woo revealed in an official blog post that 342,000 ETH (approximately 58 billion South Korean won) were transferred from the Upbit Ethereum Hot Wallet to an unknown wallet. The company will cover the loss of its customers with its own assets. Upbit estimates it to take at least two weeks for the deposit and withdrawal to resume.


Hackers steal USD 49 million in cryptocurrency from Upbit | Latest News & Updates at DNAIndia.com
 

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Hackers steal $48.7M in Ethereum from South Korean cryptocurrency exchange Upbit
Hot wallets are targets for hackers



David CanellisSTORY BY
David Canellis

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South Korean cryptocurrency exchange Upbit has reported that hackers have ransacked its Ethereum $ETH▼1.34% “hot wallet,” stealing 342,000 ETH — a cryptocurrency stash worth $48.7 million.
The attack was confirmed in a statement posted to the cryptocurrency exchange’s website by Upbit’s CEO Lee Seok-woo earlier today.
“At 1:06 PM on November 27, 2019, 342,000 ETH (approximately 58 billion won) were transferred from the Upbeat Ethereum Hot Wallet to an unknown wallet,” the statement reads, before providing the apparent hacker‘s wallet address.
At pixel time, the hacker‘s wallet still contains all of the stolen Ethereum.



Upbit says it will fund the replacement of the stolen Ethereum so as to not leave any users out of pocket. It also noted it has transferred all cryptocurrencies kept in its “hot wallets” to “cold wallets,” which are more secure.
Hot wallets are software-based storage solutions for cryptocurrency, typically applications on phones or computers. Cold wallets are hardware-based — typically standalone devices kept offline while not in use to ensure they’re out of reach of internet baddies.
In the meantime, Upbit deposits and withdrawals are now reportedly suspended, and the exchange estimates that it will take at least two weeks for them to resume, so users are urged to avoid sending any cryptocurrency to the platform before they’re advised to.
Published November 27, 2019 — 09:51 UTC


Hackers steal $48.7M in Ethereum from South Korean cryptocurrency exchange Upbit
 

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Since this is not Bakar channel, you fill the blanks.

I am so P..ed off with this stupid MF-ing Indian government. These MFs are using NRIs to fund their incompetence. First, they screw us by invalidating most of our Indian cash. Now, they raise the minimum amount we hold in Rupees to :r: 2 lakhs (it was 40,000 before). They benefit from NRIs in many ways. First, a higher minimum cash limit gives government cash it needs to rescue the banking crisis India is having. Second, they will give us unfavorable exchange rates by taking huge commissions. Third, they also get foreign exchange. Fourth, they are free to F.. us over because, hey, your bank accounts are only secured up to 1 lakhs, so if you lose the extra 1 lakh then it was your risk. Well, I am cleaning my bank account and will close it. Even that is bad (for me but good for government) because I have to give all the cash to people in India and that is forced charity. However, that is the least harmful option for me.

India is the sh..est country on the planet Earth.
 

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Since this is not Bakar channel, you fill the blanks.

I am so P..ed off with this stupid MF-ing Indian government. These MFs are using NRIs to fund their incompetence. First, they screw us by invalidating most of our Indian cash. Now, they raise the minimum amount we hold in Rupees to :r: 2 lakhs (it was 40,000 before). They benefit from NRIs in many ways. First, a higher minimum cash limit gives government cash it needs to rescue the banking crisis India is having. Second, they will give us unfavorable exchange rates by taking huge commissions. Third, they also get foreign exchange. Fourth, they are free to F.. us over because, hey, your bank accounts are only secured up to 1 lakhs, so if you lose the extra 1 lakh then it was your risk. Well, I am cleaning my bank account and will close it. Even that is bad (for me but good for government) because I have to give all the cash to people in India and that is forced charity. However, that is the least harmful option for me.

India is the sh..est country on the planet Earth.
No one's money is safe anymore in banks or even in businesses.
Environment is also not of stability / Fear / Lack of Confidence in State Subjects etc. as told by Rahul Bajaj.
He recently commented.

Check next post.
 

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Amit Shah listening, Rahul Bajaj speaks: No one will tell you… not sure you like criticism


indianexpress.com
Dec 1, 2019 4:05 AM

Bajaj expressed his concerns a day after former Prime Minister Manmohan Singh spoke at the National Economy Conclave about “a palpable climate of fear” in society. “Many industrialists tell me they live in fear of harassment by government authorities...

Entrepreneurs are hesitant to put up fresh projects, for fear of failure attributed to ulterior motives,” Singh said.
Economic Times Awards, ET Awards, Rahul Bajaj, Rahul Bajaj on Amit Shah, Bajaj group chairman, Rahul Bajaj on Pragya Thakur, Rahul Bajaj on ET Awards, India news, Indian Express

Rahul Bajaj raised lynchings, Pragya Thakur’s statement in Parliament
With Home Minister Amit Shah, Finance Minister Nirmala Sitharaman, and Railways and Commerce Minister Piyush Goyal listening, Bajaj Group chairman Rahul Bajaj expressed concern on Saturday evening over the lack of confidence among corporates to criticise the central government, the absence of effective action against lynchings, and the remark of Bhopal MP Pragya Singh Thakur praising Nathuram Godse in Parliament this week.

“Nobody from our industrialist friends will speak, I will say openly…
An environment will have to be created… When UPA II was in power, we could criticise anyone… You (the government) are doing good work, but despite that we don’t have the confidence that you will appreciate if we criticise you openly

(Aap achchha kaam kar rahe hain, uske baad bhi, hum aapko criticise openly karein, confidence nahin hai ki you wil appreciate),” Bajaj said at an awards event organised by The Economic Times in Mumbai.


The ministers were on stage, and top industrialists including RIL CMD Mukesh Ambani, Aditya Birla Group chairman Kumar Mangalam Birla, and Bharti Enterprises chairman Sunil Bharti Mittal were present at the gathering.

Bajaj expressed his concerns a day after former Prime Minister Manmohan Singh spoke at the National Economy Conclave about “a palpable climate of fear” in society.

“Many industrialists tell me they live in fear of harassment by government authorities…

Entrepreneurs are hesitant to put up fresh projects, for fear of failure attributed to ulterior motives,” Singh said.

The Indian Express reported on Saturday on the telling silence from India Inc. after official figures announced on Friday showed India’s GDP growth slowed to 4.5 per cent in the second quarter of 2019-20, the lowest quarterly growth rate since the January-March quarter of 2012-13. The absence of reactions from industry contrasted sharply with the effusive reactions after the government cut the rate of corporate tax in September.

Responding to Bajaj, Amit Shah said that while there was no need for anyone to fear, if he was saying that there is a certain kind of atmosphere, then “we will have to make an effort to improve the atmosphere”.

Several newspapers and columnists have written, and continue to write, against Prime Minister Narendra Modi and the NDA government, Shah said — in fact, the most stringent criticism had been directed against the present regime.

“Magar phir bhi aap jo keh rahe hain ki ek atmosphere banaa hai, hamein bhi atmosphere ko sudhaarne ka prayaas karna padega… but main itna zaroor kehna chaahta hoon ki kissi ko darne ki koi zaroorat nahi hai… Na koi daraana chaahta hai… Na kuchh aisa karaa hai jiske khilaaf koi bole to sarkar ko chinta hai… Most transparent way mein ye government chali hai, aur hamein kissi bhi prakaar ke virodh ka koi dar nahin hai, aur koi [virodh] karega bhi to uske merits dekh kar hum apne aap ko improve karne ka prayaas karenge (But even then, if you say that there is a certain kind of atmosphere, we will have to make efforts to improve the atmosphere. But I would like to say that there is no need for anybody to fear… No one wants to scare… and we have done nothing to be concerned about any criticism… The government has run in the most transparent way, and we have no fear of any kind of opposition, and if anyone does criticise, we will look at the merit of the same and make efforts to improve ourselves),” Shah said.

Bajaj also flagged the statement of Pragya Thakur in Parliament, and noted that she had made a member of a House Consultative Committee even after the Prime Minister had said it would be difficult for him to forgive her (after she had said something similar earlier).

Lynchings, Bajaj said, “creates a hawaa — intolerance ki hawaa hai — hum darte hain… kuchh cheezon ko hum bolna nahin chahte hain par dekhte hain ki koi convict hi nahin hua abhi tak (It creates an environment of intolerance and we are scared. We don’t want to say certain things but we see that until now no one has been convicted)”.

Shah responded that he and senior BJP leaders such as Defence Minister Rajnath Singh had immediately condemned whatever Thakur had said. “Neither the BJP nor the government supports any such statement. We strongly condemn it,” Shah said. He noted that while there was some confusion over whether Thakur had meant Nathuram Godse or the revolutionary Udham Singh, she had apologised in Parliament.

On lynchings, Shah said: “Lynching pehle bhi hota tha, aaj bhi hota hai — shaayad aaj pehle se kam hi hota hai… Par ye bhi theek nahin hai ki kissi ka conviction nahin hua hai. Lynching waale bahut saare cases chale our samaapt bhi ho gaye, sazaa bhi hui hai, par media mein chhapte nahin hain… Vineet ji yahaan par hain, agar dhoondh ke chaapenge to hamare liye thoda achchha hoga (Lynchings happened earlier too, and probably more than now… But it is not correct that there have been no convictions. Several cases of lynchings have been concluded and there have been punishments but the media does not publish them. Vineet ji [Vineet Jain, MD of the Times Group] is here, if he looks for them and publishes them, it will be good for us).”



Amit Shah listening, Rahul Bajaj speaks: No one will tell you… not sure you like criticism
 

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Narendra Modi Govt Over GDP
मनमोहन का मोदी सरकार पर हमला, कहा- अर्थव्यवस्था गिरी, सामाजिक ताना-बाना भी टूटा
न्यूज डेस्क, अमर उजाला, नई दिल्ली
Updated Fri, 29 Nov 2019 07:49 PM IST


पूर्व प्रधानमंत्री मनमोहन सिंह ने देश की अर्थव्यवस्था को लेकर मोदी सरकार पर निशाना साधा है। मनमोहन सिंह ने शुक्रवार को कहा कि हमारी अर्थव्यवस्था की स्थिति गहरी चिंताजनक है, लेकिन मैं तर्क दूंगा कि हमारे समाज की स्थिति और भी चिंताजनक है।


मनमोहन सिंह ने कहा, आज जारी जीडीपी के आंकड़े 4.5 फीसदी तक कम हैं। यह स्पष्ट रूप से अस्वीकार्य है। हमारे देश की आकांक्षा 8-9 फीसदी की दर से बढ़ना है। सकल घरेलू उत्पाद की 5 फीसदी से 4.5 फीसदी तक की तीव्र गिरावट चिंताजनक है। आर्थिक नीतियों में बदलाव से अर्थव्यवस्था को पुनर्जीवित करने में मदद नहीं मिलेगी।



पूर्व पीएम ने आगे कहा कि हमें अपनी अर्थव्यवस्था को 8 फीसदी तक ले जाने के लिए समाज में वर्तमान माहौल को बदलने के लिए लोगों से डर को निकालने और आत्मविश्वास बढ़ाने की आवश्यकता है।
अर्थव्यवस्था की स्थिति समाज की स्थिति का प्रतिबिंब है। विश्वास और भरोसे का हमारा सामाजिक ताना-बाना अब फट और टूट गया है।






मनमोहन का मोदी सरकार पर हमला, कहा- अर्थव्यवस्था गिरी, सामाजिक ताना-बाना भी टूटा
 

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#GDP #ManmohanSingh #IndianEconomy

Manmohan Singh says GDP figures are unacceptable
8,599 views


IndianExpressOnline
442K subscribers
Published on Nov 29, 2019
Former prime minister Manmohan Singh Friday said that India’s economic condition is “deeply worrying” and that the latest GDP figures released by the government are clearly “unacceptable”.
 
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