Do it yourself

A recent study by the Canada based International Institute of Sustainable Development has highlighted some interesting trend in the energy subsidies in India. The report titled "Mapping India’s Energy Subsidies 2020" examines how the Government of India (GoI) has used subsidies to support different types of energy. As per the findings of the report, the following five key changes mark the shift in India's energy subsidies in recent years. 1.     Oil and gas subsidies up by over 65%. This rise—from INR 40,762 crore (USD 6.1 billion) in FY17 to INR 67,679 crore (USD 10.07 billion) in FY19— is largely driven by higher oil prices and growing use of subsidized liquefied petroleum gas (LPG). 2.     Renewable energy (RE) subsidies down by 35%. RE subsidies fell from a high of INR 15,313 crore (USD 2.3 billion) to only INR 9,930 (USD 1.5 billion) in FY 2019. This reflects falling RE costs but also a slowdown driven by policy decisions such as...

As per some media report, the government of India is considering a proposal to revive the struggling MSME sector. It is reported that the government is considering building a contingency fund of Rs400bn that will be used to provide guarantee to Rs3trn of fresh loans to MSME sector. Earlier, the RBI had proposed a moratorium of 3 months on the repayment of principal and interest on the terms loans. Presently, banks have an outstanding credit of Rs15trn to MSME sector. Now it is indicated that each MSME will be extended additional credit equivalent to 20% of the outstanding credit for 6 months period to kick start their locked down businesses. This additional credit facility shall be fully guaranteed by the central government. "If" "implemented" "simply", without too many conditions and restrictions, it would be a meaningful measure to mitigate the collateral damage caused by coronavirus COVID-19. I would like to share the following though...

The benchmark Nifty has gained more than 22% during the one month of lock down. The broader market indicator Nifty500 has also gained by similar margin. This counterintuitive trend may be perplexing many market observer. I am however not surprised by this sharp rally of past this month. In fact I believe that this rally may even extend little further in May. In my view, this is a classical bear market rally in which the stocks are distributed to a large number of non institutional participants, popularly referred to as retail investors. A significant distribution takes place in the poor quality stocks, which are usually difficult to sell if the markets are falling. As you would observe from the following table, on 14 out of 21 trading session between 23 March and 24 April, the institutional investors and insiders have been net sellers. They have sold a net amount of Rs12676cr of equity on NSE itself. The domestic institutional buy of Rs8420cr is roughly equal to the am...

The elementary principle of economics is that the price of a thing that has any economic value is determined by the forces of demand and supply. Often in the short term a state of inequilibrium may exist leading to higher volatility in prices. However, the equilibrium is usually restored by operation of a variety of factors. There is no denial that economics is youngest amongst the scientific discipline and pure scientists hesitate in admitting it as a discipline of science. Nonetheless it is evolving fast and becoming popular. Not getting into this academic debate, what I have understood is that in popular economics theory is that: (a)    Price of currency is usually a function of demand and supply of that currency at any given point in time. Higher supply should normally lead to lower exchange value and vice versa . The demand of the currency is determined by the relative real rate of return (interest) and structure of economic activity (e.g., current acco...