In the Foreign Trade Policy Statement 2015-16, the commerce ministry said the government aims to increase India’s exports of merchandise and services from $465.9 billion in 2013-14 to about $900 billion annually by 2019-20, and to raise India’s share in global exports from 2 per cent to 3.5 per cent. This has not happened. The latest trade figures show that between April 2020 and February 2021, exports of merchandise and services stood at $439.64 billion. In pre-Covid years too, exports were barely at 2013-14 levels and nowhere near the target. It may be argued that commodity prices were higher in 2013-14 but even after factoring it in, it is clear that export dynamism has taken a knock.
3. A good detailed summary of India's production linked incentive (PLI) scheme in manufacturing.
4. Tamal Bandopadhyay has a good oped on the implications of the lifting of the loan repayment moratorium by the Supreme Court on the balance sheets of banks.
5. On the opening up of Indian G-Sec market to foreign portfolio investors,
... investment limits in Indian debt calculated as a percentage of the aggregated outstanding stocks of government debt. The limits for 2020-21 were set at 6 per cent and 2 per cent, respectively, of the outstanding stock of government securities and state development loans. This would amount to roughly Rs 9.5 trillion. The FPIs are currently well under the limit, which increases in absolute terms as new bonds are issued. Indeed, FPIs have been consistent sellers of rupee debt in the past three fiscal years. They were last net buyers in 2017-18, to the tune of Rs 1.19 trillion. In 2020-21 (till March 20, 2021), FPIs sold bonds worth Rs 51,221 crore on top of Rs 48,710 crore in 2019-20.
6. Robin Wigglesworth raises some questions in the aftermath of the implosion at hedge fund Archegos Capital,
What on earth were some of the world’s biggest investment banks thinking when they enabled an opaque family office whose founder had a history of regulatory issues to rack up multibillion dollars worth of leverage? Hwang paid $44m in fines to settle US illegal trading charges in 2012, and in 2014 he was banned from trading in Hong Kong. True, Archegos’ status as a family office means that it was exempt from a lot of the standard regulatory disclosures demanded of hedge funds. But banks’ prime brokerage desks — which service hedge funds with research, trade structuring and leverage — appear to have failed basic “know your customer” processes. Each bank may have felt comfortable with their exposure to Archegos, assuming they could always ditch its positions to cover themselves. But they failed to appreciate that if everyone has to dump tens of billions of dollars worth of equities, the collateral they may have embedded in their contracts is going to be wholly inadequate.
See also this, this, and this. The issue itself was one of swap contracts,
In return for a fee, the bank agrees to pay the investor what the investor would have gotten from actually owning a share over a certain period. If a stock rises in price, the bank pays the investor. If it falls, the investor pays the bank. Archegos focused its bets on the share prices of a relatively small number of companies. They included ViacomCBS, the corporate parent of the country’s most-watched network; the media company Discovery; and a handful of Chinese technology firms. The banks it used to buy swaps held millions of shares in ViacomCBS alone.Normally, big institutional investors are required by the S.E.C. to publicly disclose their holdings of stock at the end of each quarter. That means investors, lenders and regulators will know when a single entity holds a big ownership stake in a company. But S.E.C. disclosure rules don’t usually cover swaps, so Archegos didn’t have to report its large holdings. And none of the banks — at least seven that are known to have had relationships with Archegos — saw the full picture of the risk the fund was taking, analysts say...When those bets soured last week after the shares of some of the companies in question fell, it touched off a miniature crisis: The banks that had let Archegos amass such big holdings furiously sold the stocks to protect their own balance sheets, and the flood of cheap shares pushed the stocks’ prices down even more. And Archegos itself imploded... Several stocks that Mr. Hwang’s firm had bet on started to fall, and the banks demanded that he put up additional money or other assets. Known as “margin,” this is a cushion of cash meant to ensure that the bank doesn’t lose money if the stocks fall. When he was unable to do so, the banks dumped millions of shares of stock they had purchased. The effect on share prices was profound: ViacomCBS fell 51 percent last week and Discovery 46 percent. Shareholders in those companies saw the value of their holdings plunge; more than $45 billion in shareholder value was wiped out of those two stocks alone. And banks lost money on any shares whose value had fallen. Kian Abouhossein, a J.P. Morgan analyst, estimated that banks lost $5 billion to $10 billion in their dealings with Mr. Hwang.
7. Good WSJ graphical story of the relationship between Google, Apple, Amazon, Facebook, and Microsoft across cloud computing, news aggregation, digital advertising, video-gaming, social networking and live-streaming, application marketplace, enterprise software suites, messaging, and a host of devices like smartphones, speakers etc. The relationships range from that of friends to enemies to frenemies across these areas. Interestingly, the relationships are mostly those of enemies or frenemies in most areas.
8. More on corporate governance in India, this time from fintech company MobiKwik. The company recently suffered the largest corporate data hack in history, compromising private information of about 100 million users. The company's management's denial and obfuscation as the data leak emerged is a pointer that corporate governance is an issue not only among brick-and-mortar corporates but even among digital corporates.
9. Mihir Shah places the context of bank nationalisation in 1969 in perspective,
At the time, not even 1 per cent of India’s villages were served by commercial banks. While industry accounted for a mere 15 per cent of national income, its share in commercial bank credit was 67 per cent. Agriculture that contributed 50 per cent of GDP virtually got nothing from banks. After nationalisation, the number of rural bank branches increased dramatically. By 2019, 99 per cent of villages with a population of less than 2,000 had access to banking services. It is the easier availability of credit that fuelled India’s Green Revolution and even today it is these banks that are the biggest formal source of credit at tolerable interest rates for the poor in rural India, who are otherwise forced to pay anywhere between 5 and 10 per cent per month as interest to usurious moneylenders.
There is a case that bank nationalisation was one of the most effective policy measures in the fight against poverty.
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