The events in the last week have been extraordinary. Our honourable finance minister called for reducing prices by industrialists. The honourable Prime Minister of India and the Chairman of the UPA addresses the Hindustan Times Leadership summit and used this opportunity to instill confidence in the nation about the economy. The Prime Minister particularly said "Government is aware of the enormous task ahead and will take necessary steps to mitigate the effect of the global financial crisis", If that does not instill confidence in the public mind then what can? Here we have an acknowledged world leader, a leader of people and thoughts and a noted economist saying that his government is seized of the matter and is ready to do whatever it takes to tide over this situation in the country. We should all be proud and glad that we have the necessary resource to battle this situation in the form of mind and motivation to counter this crisis.
Now we move over to the G-20 declaration: All the leaders of G-20 countries pledged to counter this crisis and do whatever it takes to tackle the situation. One thing that comes as a cropper in this deliberation is the mandate to formulate accounting policies to value illiquid securities. How do you value a security as X amount when nobody is ready to pay that X amount to purchase the security. the fundamental basis of value or price is the agreement of two parties to exchange that asset at a price or value. So what is the value or price of the security that is ILLIQUID?
Showing posts with label G-20. Show all posts
Showing posts with label G-20. Show all posts
Sunday, 23 November 2008
Monday, 17 November 2008
India ahead
Indian's rejoice! the world "leaders" have finally realised that the it is not G-5, oops G-6, oh no! G-7, Oh My God G-8, but the G-20 which will decide the fate of the world's economy. So, finally Indian's can rejoice on being included in the hallowed club of decision makers for the world.
Come 2010, India will be a show case of withering financial crises and the financial storms. Then we will witness the world giving India its due as the thought leader of the world.
It was India which invented the ZERO to teach the world to count beyond 9, It was India which helped the world adapt to the understanding that years should be counted in four digits and not in 2 digits (remember Y2K?). Now It will be India again which will show the world that the middle path or the mixed economy is the correct way of managing ones economy, that is the way to absorb the shocks.
My definition of mixed economy is a little different from that of the popular one!
Here we have an organised industry, American Style with 12000 listed companies on the stock exchanges, investment banks, commercial banks, mutual funds, and all the trappings of the so called developed world.
Then an unorganised industry of big and small businessmen who have never been part of the organised world. people who have bought plots, built homes and managed families oblivious to home loans, income taxes and PAN cards.
Another part of the economy is the co-operative one, we have borrowers co-operatives running finance operations, cane suppliers co-operatives running sugar factories, consumers running consumer co-operatives, farmers running Agriculture produce marketing co-operatives... i.e. generally all those who have no bargaining power ganging up and setting up down stream co-operatives to manage their own interests. This also meant that depositors or capital providers of finance co-operatives are at the mercy of the borrowers who are also the owners of the finance co-operatives, Sugar consumers and sugar factories at the mercy of sugar cane suppliers (raw material suppliers), etc.
Prima facie, doesn't it seem like we have segregated the problem areas and kept them at arms length distance from each other?
So, In India we not only have a mixed economy, but also a segregated economy and thus "bad" credit, "bad" customers, "bad" suppliers and "bad" consumers are segregated in the economy and do not have anything to do with the "organized" sector.
That's the Indian Economy, cheers!
Come 2010, India will be a show case of withering financial crises and the financial storms. Then we will witness the world giving India its due as the thought leader of the world.
It was India which invented the ZERO to teach the world to count beyond 9, It was India which helped the world adapt to the understanding that years should be counted in four digits and not in 2 digits (remember Y2K?). Now It will be India again which will show the world that the middle path or the mixed economy is the correct way of managing ones economy, that is the way to absorb the shocks.
My definition of mixed economy is a little different from that of the popular one!
Here we have an organised industry, American Style with 12000 listed companies on the stock exchanges, investment banks, commercial banks, mutual funds, and all the trappings of the so called developed world.
Then an unorganised industry of big and small businessmen who have never been part of the organised world. people who have bought plots, built homes and managed families oblivious to home loans, income taxes and PAN cards.
Another part of the economy is the co-operative one, we have borrowers co-operatives running finance operations, cane suppliers co-operatives running sugar factories, consumers running consumer co-operatives, farmers running Agriculture produce marketing co-operatives... i.e. generally all those who have no bargaining power ganging up and setting up down stream co-operatives to manage their own interests. This also meant that depositors or capital providers of finance co-operatives are at the mercy of the borrowers who are also the owners of the finance co-operatives, Sugar consumers and sugar factories at the mercy of sugar cane suppliers (raw material suppliers), etc.
Prima facie, doesn't it seem like we have segregated the problem areas and kept them at arms length distance from each other?
So, In India we not only have a mixed economy, but also a segregated economy and thus "bad" credit, "bad" customers, "bad" suppliers and "bad" consumers are segregated in the economy and do not have anything to do with the "organized" sector.
That's the Indian Economy, cheers!
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