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Showing posts from September, 2015

Repo Rate Cut - What Does It Mean for India?

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"My name is Raghuram Rajan and I do what I do" - Rajan in a decisive mode (Courtesy NDTV) Raghuram Rajan, the hallowed Governor of the Reserve Bank of India (RBI), caught everyone by surprise today by announcing a 50 basis points (bps) cut in the repo rate , which is down to 6.75%. While the corporate world can sing hosannas about capital now being available and bankers can go gaga in turn while slashing their own rates, there are a couple of points that can get overlooked in this hyperbole, and need to be seen at carefully. The RBI has clearly noted that the availability of capital can be a potential problem in pushing for economic growth, due to which the forecast was redefined. It is particularly telling that the cut has come at the time of the initiation of disbursal of loans to small and medium enterprises under the MUDRA scheme. The cut complements the initiative of the government and its funded banks very well. This also shows that the RBI governor, unnecess

The Overkill of Bihar Elections by Mainstream Media

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I am going to stick my neck out and say that the Bihar elections are being oversold by the media as a mandate on one government or the other. There are several reasons to it, and we shall examine them in some depth as follows. 1. Bihar has a footprint on national politics Not anymore. With the creation of Jharkhand, the number of seats in the Lok Sabha from the state of Bihar came down from fifty six to forty. That makes West Bengal and Maharashtra more important (forty two and forty four respectively) in the national political scenario. Even in terms of Rajya Sabha, Bihar is no different from these states, and even if the state assembly elections are lost by the Bharatiya Janata Party in this state, they can make up for the Rajya Sabha numbers through smaller states that they seem set to sweep (Haryana, Himachal Pradesh, Jammu Kashmir and Uttarakhand) within a short span of time. 2. Bihar will decide Narendra Modi's fate Bihar already decided his fate in 2014. It does not