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The first lesson of economics is scarcity: There is never enough of anything to satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics.’

Increased borrowing leads to more foreign investment in government bonds pushing up the exchange rate. The current account deficit that arises is the counterpart of the capital inflows necessary to finance government borrowing Indeed,  recent work  by LSE economist  Ethan Ilzetzki  with two co-researchers from the University of Maryland published by the NBER suggests the following: Fiscal multipliers are zero in countries with flexible exchange rates. Fiscal multipliers are lower in open economies. Fiscal multipliers are zero in high-debt countries.

Recent work by LSE economist  Ethan Ilzetzki  with two co-researchers from the University of Maryland published by the NBER suggests the following: Fiscal multipliers are zero in countries with flexible exchange rates. Fiscal multipliers are lower in open economies. Fiscal multipliers are zero in high-debt countries. Increased borrowing leads to more foreign investment in UK government bonds pushing up the exchange rate. The current account deficit that arises is the counterpart of the capital inflows necessary to finance government borrowing

Last year (2010-11) a sum of Rs.46,267 crore was raised through public equity issues. The mobilisation was roughly the same as that of the previous year.  In 2010-11, a total of 57 public issues entered the market, compared to 44 the previous year. Of these, 52 were initial offerings and the remaining five follow-on offers. The average deal size was Rs.811 crore. Ten issues were for Rs.1,000 crore and above. At the other end, there were six issues of less than Rs.50 crore and none below Rs.10 crore.

Administered interest rates are an anachronism when interest rates are essentially market-determined . There can be no justification for continuing with regulated interest rates whether on saving bank deposits or small savings like provident funds and national savings certificates. deregulation of interest rates is essential for product innovation and price discovery in the long run The need to reward savers (high household savings have been the prime driver of investment) and provide them with some stability in an environment where they have no social security is only part of the reason for the desire to maintain status quo.  The main reason is the higher cost of funds that de-regulation is bound to bring in its wake. Savings bank deposits provide banks with a stable deposit base. Hence the mad scramble among banks for CASA or current and savings accounts. Once rates are de-regulated , it is quite possible competition will drive interest rates up; especially in a situation w...

India's insurance industry will outpace economic growth and is likely to reach $350-400 billion in terms of premium income by 2020, making it among the top three life insurance markets, an industry report revealed.  India will also be among the top 15 non-life insurance markets by 2020, according to an industry study conducted by the Federation of Indian Chambers of Commerce and Industry (FICCI) and the US-based Boston Consulting Group.  The report points out that penetration of the insurance industry, premium as percentage of the country's gross domestic product (GDP), has increased from 2.3 percent in 2001 to 5.2 percent in 2011.  In addition, there has been a vast increase in the coverage of insurance. The number of life policies in force has increased nearly 12-fold over the past decade and health insurance, nearly 25-fold.  Better terms and availability of a wide variety of products, like unit-linked products, whole life, maximum net asset value (NAV) guarantee...

Old-fashioned totalitarian societies control information by suppressing what they consider inconvenient for their people to hear, while the more sophisticated capitalist democracies control information by swamping the truth in a deluge of disinformation, through which it is virtually a full-time job to sift.

Some of the problems for small IPOs have to do with the economics of the capital markets business. First, we have larger players in the institutional investing segment: foreign institutional investors (FIIs), mutual funds and insurance companies. “Investor corpuses have been growing by leaps and bounds,” says Rashesh Shah, chairman and CEO, Edelweiss Capital, a Mumbai-based financial services firm. “Life Insurance Corporation, for instance, collects around Rs 75,000 crore each year, apart from all the other insurance companies.” All of this capital seeks liquidity in large investments, which implies large-cap stocks. But the most significant number that highlights the shift in the investor structure is the fall of retail investors’ ownership of equity: from 16 per cent of total market cap a few years ago to just 8 per cent. In the US and other developed markets, the number is just under 20 per cent. Second, small firms are assumed to have dubious reputations, based on historical ex...

RBI's latest release of 'Statistical Tables relating to Banks in India' is quite revealing when we juxtapose FY00 and FY10 data. We've had several measures that have been invoked under financial liberalisation while a lot has also been spoken of on inclusion to add a social dimension. How has this model worked?  The study of data over these 10 years has some interesting stories to tell. Three aspects of banking development could be looked at: banking structures, business profile and financial performance. Under banking structures, the growth in network increased from 67,532 branches to 87,768. However, the share of rural branches came down from 48% to 37% while that of urban and metro increased from 30% to 40%. Quite clearly, banks have been going to places where there is business.  Simultaneously, the staff strength came down by around 14% to less than a million i.e. 869,412 (FY09). Banks have effectively used technology to replace surplus manpower. The business profil...