Uncle Scrooge's Economics

In the union budget for 2023-2024, the government has set a disinvestment target of Rs 51,000 crore, down nearly 21% from the budget estimates for the current year and just Rs 1000 crore more than the revised estimates. It is also the lowest target in seven years. Moreover, the centre has not met the disinvestment target for 2022–2023 so far, having realised Rs 31,106 crore to date, of which Rs 20,516 crore, or close to a third of the budgeted estimate, came from the IPO of 3.5% of its shares in the Life Insurance Corporation. As a student of history, I always prefer to read about the past in order to gaze into the future. It doesn't work all the time, but it certainly gives you an edge over others. What is disinvestment? What has been India's disinvestment journey? Why is disinvestment required? What can the government learn from other countries that have undertaken disinvestment in the past? I'll try to answer all of these questions. What is disinvestment? Disinvestment b...

A lot has happened in the past few days in the banking sector, worldwide. Too much to digest in too few days. Rising inflation and interest rates, bank runs, the collapse of SVB, Signature Bank, UBS, and Credit Suisse, the RBI, and so on. Predominantly, I would talk about the US banking crisis. What caused the crisis? What are its implications? FEDs and the US government hypocrisy, and in the second part, I would cover the Credit Suisse and UBS stories and the European banking crisis. So, without wasting a dollar, let's dive in.  THE US BANKING CRISIS  According to legendary hedge fund manager Mr. Ray Dalio, an economy goes through two major debt cycles: the long-term debt cycle and the short-term debt cycle. Following the 2000 market crash, the US economy became stagnant. A classic post-crisis effect In order to kick-start the economy, the Federal Reserve (the US central bank, aka the FED) decreased the FED fund rate by 0.50%. Throughout 2000 and 2001, the FED fund rate decre...

  Last year, the government launched the digital payment solution e-RUPI, which has the potential to impact 190 million lives. It is a cashless and contactless instrument for digital payment, and people don’t even need a bank account to use it. Are you curious to know?  What is e-RUPI?  Why is it a win-win for all? What are some of the challenges associated with e-Rupi? e-RUPI has been developed by the National Payments Corporation of India (NPCI), which oversees the digital payments ecosystem. It has been developed in collaboration with the Department of Financial Services, Ministry of Health & Family Welfare, and National Health Authority. NCPI has partnered with various banks and apps for e-RUPI.    What is e-RUPI? It is a “person and purpose-specific” digital payment solution. Let's elaborate on each word and understand it better.  Person specific - Beneficiaries will get a digital voucher-E rupi on their phone via SMS or QR code.  Purpose spe...

I am assuming that everyone reading this blog knows about the Tata-Ford deal, unless you are an extraterritorial person. It was a really proud moment for India as an Indian auto company had acquired one of the largest automobile players, not just in the UK but in the entire world. Ford was the pioneer in supply chain automation and was also the first auto company to come up with something that is an integral part of all auto companies: the assembly line.  There was a time when the global auto industry was an oligopoly between Ford, GM, and Chrysler. 50 years down the line, none of the companies' have what they once had when they were young. The 2008 financial crisis completely killed GM and Chrysler. Ford somehow managed to survive, but they posted one of the biggest losses in the history of the auto industry: $12.7 billion. Back in the 1990s, Ford wanted to diversify their product segment by entering the luxury car market, and hence they acquired four major luxury brands: 1. Asto...

A lot has already been said about the Adani Group, so this blog is going to be the last one on this topic. Adani's business runs on three things: debt, India's growth, and political connections. Considering his moves, it seems that he wants India to remain completely dependent on the Adani Group for all the major projects that India will undertake in the future. According to me, he is trying to create a company that would look like the byproduct of L&T, Shipping Corporation of India, Ultra Tech, the Airport Authority of India, the Ministry of Ports, SBIN, the Ministry of Power, Coal India, and Vedanta put together. Just thinking about the size gives me an adrenaline rush. Adani ports handle 1/3 of India's cargo. He has 14 ports, out of which 12 are domestic and 2 are international, one each in Sri Lanka and Israel. Monopoly is great from a businessman's perspective, but when such a large amount of control lies in the hands of a monopoly, it's not good for the cu...