Addressing ponzi schemes: the three parts of the solution strategy

Addressing ponzi schemes: the three parts of the solution strategy There is a great deal of moral outrage about ponzi schemes. Parliament is being asked to “do something!”. We have seen this movie in India before. Laws are enacted as a knee-jerk response to an event. Quick and dirty responses are poorly thought through, . . . → Read More: Addressing ponzi schemes: the three parts of the solution strategy

Investigating ponzi schemes: A malady

by Shubho Roy.

What has happened?

SEBI was investigating Saradha for more than 3 years before the deposit schemes of the company collapsed (See here). Saradha seems to have used two methods to delay the investigation:

When SEBI asserted its authority to stop Saradha group from collecting money, Saradha challenged the jurisdiction of SEBI . . . → Read More: Investigating ponzi schemes: A malady

Correctly defining the scope of financial regulation so as to block ponzi schemes

by Smriti Parsheera and Suyash Rai.

Attack of the ponzi schemes

The Saradha Group has gained notoriety in recent weeks with outstanding public deposits reportedly exceeding Rs.200 billion. There was anger and panic. The state government has stepped in with partial redress.

As we watch this saga unfold, there may be another crisis waiting . . . → Read More: Correctly defining the scope of financial regulation so as to block ponzi schemes

Who is in charge of fiscal policy and tax policy?

In any country, various arms of government like to indulge in taxation of their own choice, and in setting up little treasuries that they control. However, it is quite clear that there must be only one treasury, and only one authority that determines taxation, through only one Finance Act.

In the Economic Times today, . . . → Read More: Who is in charge of fiscal policy and tax policy?

Finding the right path in consumer protection

by Anand Sahasranaman.

The recent approach paper of the Financial Services Legislative Reforms Commission has brought a fresh focus on consumer protection. What are the possible frameworks for financial consumer protection in India, and what would be the core elements of an ideal framework? This is the question that the IFMR Financial Systems Design . . . → Read More: Finding the right path in consumer protection

Blindly sending money down leaky pipes

Proposals to spend more on government programs in India are generally criticised on the grounds that this is sending more money down a leaky pipe. In addition to the problem that the pipes leak, there is an equally big problem that we have no idea about what happens at the other end.

In order . . . → Read More: Blindly sending money down leaky pipes

Government equity infusions into PSU banks

Harsh Vardhan’s excellent blog post on this subject made me think further about the questions.

Finance policy makers in India are often proud of the fact that India has avoided a large systemic crisis in which substantial fiscal resources have been put into rescuing financial firms. I think this optimism is overstated. If we . . . → Read More: Government equity infusions into PSU banks

Should government capitalise public sector banks?

by Harsh Vardhan.

What would you say if someone was borrowing money at 8% and investing it to earn around 3%? “Uninformed!”, “financially illiterate!” or even outright “foolish”! And yet this is what our government has been doing with trillions of rupees over the last many years and has committed to continue to do . . . → Read More: Should government capitalise public sector banks?

Economics and Thinking

What’s the connection?

Economists essentially have a sophisticated lack of understanding of economics, especially macroeconomics. I know it sounds ridiculous. But the reason why I tell people they should study economics is not so they’ll know something at the end—because I don’t think we know much—but because we’re good at thinking. Economics teaches you . . . → Read More: Economics and Thinking

Vijay Kelkar

Financial Express recently did a special feature about 20 interesting people in India’s economic reforms. In that, I wrote this profile of Vijay Kelkar.

Vijay Kelkar’s is a fascinating story in Indian public policy. He started out as an economics Ph.D. and turned himself into a consummate policymaker. While he did many interesting things . . . → Read More: Vijay Kelkar