Thursday, December 6, 2018

What is the US bond yield curve saying? Is recession ahead? - economic news of india - world economic news - economics news for students - indian economy news

What is the US bond yield curve saying? Is recession ahead? - economic news of india - world economic news - economics news for students - indian economy news
What is the US bond yield curve saying? Is recession ahead?
Macromania explains: It’s well-known that in the US, recessions are often preceded by an inversion of the yield curve. Is there any economic rationale for why this should be the case?Most yield curve analyses make reference to nominal interest rates. Economic theory, however, stresses the relevance of real (inflation-adjusted) interest rates. (The distinction does not matter much for the US in recent decades, as inflation has remained low and stable). According to standard asset-pricing theory (which, unfortunately for present purposes, abstracts from liquidity premia), the real interest rate measures the rate at which consumption (a broad measure of material living standards) is expected to grow over a given horizon. A high 1-year yield signals that growth is expected to be high over a one-year horizon. A high 10-year yield signals that annual growth is expected, on average, to be high over a ten-year horizon. If the difference in the 10-year and 1-year yield is positive, then growth is expected to accelerate. If the difference is negative--i.e., if the real yield curve inverts--then growth is expected to decelerate.(Only 12bps to go. US 2s/10s yield curve drops to 12bps, lowest since 2007.) 66965572 What is the economic intuition for these claims? One way to think about this is in terms of Friedman’s Permanent Income Hypothesis, which states that an individual’s desired consumption expenditure today should depend not only on current income, but the likely path of his/her income over the foreseeable future. The logic of this argument follows from the assumption that people are willing and able to smooth their consumption over time, given their expectations over how their incomes are likely to evolve over time. For example, if people expect their incomes to be higher in the future, then they will want to consume more today in order to smooth out their consumption. They can attempt to do so by saving less (or borrowing more). If a community is collectively “bullish” in this sense, desired consumer spending should rise in the aggregate, and desired saving should fall, leading to upward pressure on the real interest rate.Alternatively, suppose that firms suddenly turn bullish on the likely returns to capital spending. Then the resulting increase in the demand for investment financing should drive real interest rates upward. In this case as well, a higher real interest rate signals the expectation of a higher rate of economic growth. If individual expectations over future prospects are correct more often than they are incorrect, then higher real interest rates today should be correlated with higher future growth rates.So, in theory at least, an inverted yield curve does not forecast recessions--it forecasts growth slowdowns. Nevertheless, there is a sense in which an inverted (or even flat) yield curve can, in some circumstances, suggest that recession is more likely. Here's the basic idea.Consider an economy that grows over time, but where growth occurs unevenly (i.e., the economy alternates between high- and low-growth regimes). Imagine, as well, that the economy is occasionally buffeted by negative "shocks”—adverse events that occur at unpredictable moments in time (an oil price spike, a stock market collapse, etc.). It seems clear enough that in such an economy, recessions are more likely to occur when a shock of a given size occurs in a low-growth state as opposed to a high-growth state.Now, as explained above, suppose that an inverted yield curve forecasts a deceleration in growth. Then the deceleration will entail moving from a higher growth state to lower growth state. Suppose this lower growth state is near zero. In this state, growth is now more likely to turn negative in the event of a shock. In this way, an inverted yield curve does not forecast recession; instead, it forecasts the economic conditions that make recession more likely.My two centsI think something is triggered when yield curves invert, or some recessionary force triggers an inverted yield curve,or maybe the answer is so simple as central banks will raise rates until they cause a recession. The graph above suggests US Federal Reserve would do well to stop raising rates now and see what happens. They seem on course to repeat the previous cycles. The elephant in the room this time is US fiscal deficit which is set to touch a trillion in a year and if US were to attract worlds saving to fund this deficit then they need higher rates and that complicates the picture. 66964771
Source: ET

Indian android apps seek more of your data than global counterparts - economic news of india - world economic news - economics news for students - indian economy news

Indian android apps seek more of your data than global counterparts - economic news of india - world economic news - economics news for students - indian economy news
Indian android apps seek more of your data than global counterparts
BENGALURU: Some top Indian Android apps across categories seek as much as 45% higher permissions from users compared to their global counterparts. Access to SMSes, microphone and contact book were some permissions accessed by a significantly higher number of Indian apps compared to global peers.According to an annual study by enterprise cyber security and data privacy platform Arrka Consulting, about a third of the permissions sought weren’t required for core functionality of those apps. Interestingly, most data that these apps and websites share with third parties end up going to two of the largest global tech firms — Google and Facebook. The key privacy metrics were assessed on 100 Indian apps with each having at least a million downloads across Google Play, Apple’s App Store and websites. About 50 global Android apps were assessed on privacy and technical parameters to draw a parallel to Indian ones and their permission settings. In some categories such as travel, shopping and wallets, homegrown apps end up taking 1.5 to 3 times higher permissions than global peers. 66962875 With rising number of smartphones and data becoming cheaper, internet companies are witnessing many unique visitors to their platforms and seeking permissions helps companies gather more information about usage behaviour, shopping patterns, bank transactions and use of a host of services. Essentially, these permissions help build user profiles which third-party vendors can then use for targeted selling. On an average, Indian apps take about 8 permissions when a user installs a certain app.When an app seeks more permissions, it collects additional information about a user that’s seen as invasion of privacy, especially when the user has unknowingly granted access to certain apps.Global tech firms like Facebook have come under scrutiny for mishandling customer data. Most recently, Google said it’s bringing in new controls that allow user users the rights to share data while installing third-party apps from Google Play Store.The study puts the spotlight on lack of discipline in collecting user data and privacy concerns during data collection as some reasons why Indian apps access excess user information. “App development could be done by a vendor and no justification is asked by organization on permissions taken during the process,” the study added. It said 99% of apps send data to one or more third parties for advertising, analytics, etc. “On an average, an app/website sends data to more than five third parties and many had the same parent organisation. Google was observed in 30%-58% instances and was clearly the leader while Facebook was second,” the report said.
Source: ET

Degrees of desperation for traffic brigade job - economic news of india - world economic news - economics news for students - indian economy news

Degrees of desperation for traffic brigade job - economic news of india - world economic news - economics news for students - indian economy news
Degrees of desperation for traffic brigade job
AHMEDABAD: The jobless growth of the economy was very apparent at the children’s park in Lal Darwaja and the traffic police headquarters in Mithakhali, where forms for jobs in the traffic regulation brigade (TRB) were being distributed. On first day of the the forms being available, which will continue till December 8, as many as 12,300 aspirants bought forms, including people holding double master’s degrees, lawyers, teachers and computer engineers.Many of those buying forms were LRD (Lok Rakshak Dal) aspirants, who recently had their exam cancelled due to a paper leak. 66962484 TRB jawans have to assist cops in regulating traffic, for which they are paid a daily wage of Rs 300 and they may work a maximum of 27 days a month. Thus, a contracted TRB jawan gets a meagre monthly pay of Rs 8100 from the state government, for which he or she has to stand at a traffic point for at least eight hours.Tejas Patel, DCP Traffic (admin), told TOI, “Some 12,300 forms were distributed on the first day, Wednesday, and the applications form will be distributed till December 8.”About the educational qualification required for a post which is seeing multiple degree holders apply, Patel said, “The minimum educational qualification for this exam is just class IX-pass.”DCP Traffic (West) Sanjay Kharat said traffic police are holding a recruitment drive to fill 1,400 posts of TRB jawans.At both the form-distribution centres in the city, long queues were seen since Wednesday morning. Some 7,000 forms were distributed till Wednesday afternoon. The rush was so great that the forms got over by the afternoon.
Source: ET

Tuesday, December 4, 2018

The other GDP debate: Did India do that bad under Muslim rule? - economic news of india - world economic news - economics news for students - indian economy news

The other GDP debate: Did India do that bad under Muslim rule? - economic news of india - world economic news - economics news for students - indian economy news
The other GDP debate: Did India do that bad under Muslim rule?
ET will periodically analyse debatable or dubious claims that catch public attention and try to bring clarity and order in what often become fact-free free-for-alls.CLAIMIndia used to be the world’s largest economy back in ancient times, and that happened in the era of ‘Hindu kingdoms’, that is, before the ‘Muslim rulers’ invasion.WHO MAKES IT?Various figures on the Hindu Right.IS IT A FACTNot entirely wrong and not entirely right, and the causality is wrong.WHY?Tonnes of research by economic historians come to these broad conclusions, although debate over specifics continue. ET summarises the research.ARGUMENTS1. Starting from 1 AD and for a long time after that, India and China were the world’s largest and second largest economies. But that was mostly because, in the absence of technology-led productivity jumps, population determined total GDP. India and China were the most populated countries. Note also, per capita income in ancient times was low everywhere, because output was basically a function of the size of the labour force.2. In 1500, China and India were still the largest economies. Some historians say China was slightly ahead. Both are estimated to have GDP of around $100 billion, PPP terms, with US dollar taken at its 2015 value. Around this time, the Delhi Sultanate was in its last period of reign, there were Hindu kingdoms too, and Vasco Da Gama had visited India, an early indication of European colonialism to come later.3. In 1700, India, most of it under Mughal rule, is said to have pulled ahead of China again.4. But China was making better use of agricultural technology and by early 19th century, India was the second-largest, but its GDP was just over half of China’s.5. India never resumed lead position again. Industrial revolution made the West pull ahead. The US became the largest economy in 1890, and remains till today. And British colonialism took its toll on India’s economy. So, although for much of the time India was under British rule, its GDP was larger than Britain’s, but Britain had far larger per capita income. In 1870, for example, Britain’s per capita income was 6 times higher than India’s.6. Tragically, post-Independence, India made it worse for itself by choosing state socialism. And China went Communist. The socialist/communist period saw both countries slipping down the ranks. India’s was the ninth-largest economy in 1980, followed by Communist China’s at 10th.7. But then Deng Xiaoping yanked China out of collectivism. China raced ahead of India, and remains far ahead even now. India’s catch-up started in 1991.8. Now, in PPP terms, India’s GDP ranks behind China’s and the US’. But in per capita income, India ranks much more poorly.CONCLUSIONIt’s historically meaningless to ascribe India’s ancient, Middle Ages and pre-industrial revolution periods’ top GDP rankings to either ‘Hindu’ or ‘Muslim’ rule. It was a function of India’s high population. And, note that it will have taken 550 years (1500 to 2050) for China and India to lead the world in GDP terms again. But it’s very unlikely India will assume number one position in foreseeable future.
Source: ET

This is how far Airtel is ready to go to beat Jio - economic news of india - world economic news - economics news for students - indian economy news

This is how far Airtel is ready to go to beat Jio - economic news of india - world economic news - economics news for students - indian economy news
This is how far Airtel is ready to go to beat Jio
NEW DELHI: Bharti Airtel is open to creating a company with rival Vodafone Idea to jointly own their fibre networks, which could be monetised to raise funds to drive growth as it seeks to regain revenue leadership by Marchend, senior company executives said.“We will be delighted to share and create one company. We have already built a lot of fibre with Vodafone Idea and over the past two years, a lot of sharing has happened between the two companies,” a top company official said.Although the fibre network company offers an opportunity for monetisation, the official said the plan is essentially to co-own it with the competition, along the lines of Indus Towers, India’s largest telecom tower company that is jointly owned by Bharti Infratel and Vodafone Idea.A Bharti Airtel spokesperson declined to comment on the matter. 66929920 Both Vodafone Idea and Airtel are seeking funds for expansion as they recover from intense competition that has eroded earnings and revenue over the past two years in a sector that has now consolidated into three private operators.Telecom market leader Vodafone Idea, which was formed in August with the merger of Vodafone India and Idea Cellular, recently spun off its fibre assets to a wholly owned unit with the intent to monetise it.Airtel has been selling stakes in tower unit Bharti Infratel and placing shares privately in its Africa business ahead of an initial public offering. The company plans a rights issue of up to Rs 15,000 crore, as reported by ET last month.Airtel reckons the worst of the competitive pressure — unleashed with the entry of Reliance Jio Infocomm in September 2016 — is behind it. The telco has been able to increase tariffs by small margins in some plans without denting demand.Airtel increased the price of its Rs 99 plan by Rs 20. “No problem at all – every customer has taken it,” the official said.The telco has also lured subscribers to higher tariff plans by dangling incentives such as free subscriptions to Netflix and Amazon and both factors will help it increase revenue from the current quarter.Airtel’s focus is to regain its top slot by revenue market share (RMS) from Vodafone Idea by the end of this financial year.Vodafone Idea led with an RMS of 32.8%, followed by Bharti at 30.9% and Reliance Jio at 26.1% in the September quarter, according to an ICICI Securities report based on data from the telecom regulator.Airtel officials said only three rounds of price increases every six months are needed to reach an average revenue per user (ARPU) of ?200 a month and recover from the fall triggered with Jio’s entry.
Source: ET

India's record energy feat that went unnoticed - economic news of india - world economic news - economics news for students - indian economy news

India's record energy feat that went unnoticed - economic news of india - world economic news - economics news for students - indian economy news
India's record energy feat that went unnoticed
NEW DELHI: Nine out of 10 Indian homes now use cleaner cooking gas, a record improvement over just about five in 10 homes four years ago, as a result of the Modi government’s relentless effort at popularising cleaner fuel and subsidising subscription to poor families.State oil companies, pushed by the oil ministry, have added record 10 crore consumers since April 2015, expanding the active consumer base by two-thirds. This has increased access to cooking gas, or liquefied petroleum gas (LPG), to 89% of the country’s households by October end, a sharp jump from 56.2% on April 1, 2015.The increased LPG coverage has primarily been driven by the government’s determination to take cleaner fuel to more and more homes, which forced state oil companies to reach out to potential customers and simplify subscription process. A subsidy for fresh LPG connection to poor families helped fuel demand.Rural areas still have untapped potential with more than half of all consumers, or about 13.6 crore, residing in urban areas. India has a total of 24.9 crore active customers, of which 22.9 crore receive subsidy. Those with double cylinders comprise barely half of the consumer universe—one reason why new customers do not entirely give up polluting fuels as they are forced to fall back on their traditional fuel while refill is on way.Companies are beefing up distribution infrastructure, which has been slow to expand compared with the consumer base, becoming another hurdle in smooth delivery of services.Northern states have the highest 99.9% LPG coverage ratio, with Punjab (136%) and Delhi (126%) leading the table. Chandigarh, Haryana, Himachal Pradesh, J&K, and Uttarakhand have recorded more than 100% subscription while Uttar Pradesh (89.7%) and Rajasthan(95.4%) have lower coverage. 66930102 The government calculates LPG coverage ratio by factoring in the number of subscribers and the current population, which is estimated by adding certain growth rate to 2011 census figures. Due to increased migration, some of the states like Delhi and Punjab end up having population that’s higher than the estimates, resulting in an LPG coverage ratio of more than 100%, an official said.Overall, Goa has the highest coverage ratio of 139%. Telangana, Puducherry, Kerala and Mizoram are other states with higher than 100% coverage. Southern states together have a coverage of 99.7% while western states have 81.9%.With 74.6% coverage, the eastern states are at the bottom of the pile although they have come a long way from their traditionally poor access to clean energy.The worst among major states are Jharkhand (65.4%), Bihar (67%) and Odisha (66.9%). In Gujarat too, the LPG coverage ratio is 66.6% but that’s more because the state is already well connected to the alternative piped natural gas. Most north-eastern states have less than 80% coverage.
Source: ET

Family office gains ground among India’s super rich - economic news of india - world economic news - economics news for students - indian economy news

Family office gains ground among India’s super rich - economic news of india - world economic news - economics news for students - indian economy news
Family office gains ground among India’s super rich
The concept of a family office to manage, preserve and grow wealth is gaining ground among the country’s super rich. In India, 45 business families have already created such structures, which manage an average of $318 million (Rs 2,226 crore).Family offices have a much wider role than that of financial advisers, or even wealth advisers, whose services are used by high net worth individuals (HNWIs), a term used to describe those with liquid assets over $1 million (Rs 7 crore). This is an advisory firm that looks after wealth, which includes assets like properties (real estate), paintings, yachts and other investments for the super rich (with over $100 million). It also provides counselling and concierge services to family members, and enables a smooth transition of wealth from one generation to another.Amit Patni, part of the family that had founded Patni Computer Systems, was one of the first to take the family office route to manage wealth. The family office was founded after General Atlantic invested $100 million in the company in 2002. It came in useful when Patni Computer Systems was sold to iGate in 2011 for $1.22 billion. Impressed with the structure, Patni partnered with UK’s Campden Wealth Connect to set up RAAY Investments, which advises families.The first ever study in India has been done by Edelweiss Private Wealth Management, and Campden. According to Campden Wealth CEO Dominic Samuelson, there was a need for such a firm that would provide advice across generations as less than 3% families have successfully transitioned wealth beyond the third generation, and less than 30% have transitioned from first generation to the second.Anshu Kapoor, private wealth management head at Edelweiss, said India has 1.5 lakh high net worth families with $2 trillion.
Source: ET

Solar Projects: Tariffs drop lower in UP auction - economic news of india - world economic news - economics news for students - indian economy news

Solar Projects: Tariffs drop lower in UP auction - economic news of india - world economic news - economics news for students - indian economy news
Solar Projects: Tariffs drop lower in UP auction
BENGALURU: A generous commissioning deadline for solar projects provided by the Uttar Pradesh government in its latest auction has resulted in surprisingly low winning tariffs.The offer of 550 MW of projects by the UP New and Renewable Energy Development Agency on Monday attracted bids between Rs 3.04 and Rs 3.08 per unit. NTPC, the lowest bidder, quoted Rs 3.04 per unit to win 85 MW.The bids were lower than the winning tariff of Rs 3.17 a unit at the auction in October, which itself was fairly low, considering that UP’s power distribution companies are in poor financial health. Solar radiation in UP is also low compared with that in Rajasthan, Gujarat and Andhra Pradesh.Solar tariffs have been rising ever since the finance ministry imposed safeguard duty of 25% on imported solar panels and modules for a year from end-July in an effort to support local manufacturing. The duty will be lowered to 20% for the next six months and to 15% for another six months. More than 90% of the solar panels used in Indian projects are imported because local manufacturers cannot match those in China and Malaysia on price.The UP agency has set a project commissioning deadline of 21 months from the date of signing of the power purchase agreement. Most such deadlines vary between 13 and 21 months.“With the signing of PPAs usually taking around three months, it gives developers time till December 2020,” said Vinay Rustagi, managing director of solar consultancy Bridge to India. “They are probably hoping they can import their requirements after July 2020 and still complete their projects in time, in which case safeguard duty will not apply.”Other winners of Monday’s auction included Adani Green Energy and Tata Power Renewable Energy.Rustagi maintained there were other reasons for the lowered rates.“Module prices have been coming down globally,” he said. “Besides, there are half a dozen winners, each of whom has won a fairly small-sized project. Indian developers are typically more aggressive, particularly when the project sizes are small. They would have been less inclined to do so if these were large projects connected to the inter-state transmission service where stakes are higher.”UP’s July auction of 1,000 MW at the height of the confusion over impending safeguard duty had seen winning tariffs of Rs 3.48-3.55 per unit. The auction was later cancelled, without any official reason assigned.
Source: ET

LPG cylinder now used by 89% households - economic news of india - world economic news - economics news for students - indian economy news

LPG cylinder now used by 89% households - economic news of india - world economic news - economics news for students - indian economy news
LPG cylinder now used by 89% households
NEW DELHI: Nine out of 10 Indian homes now use cleaner cooking gas, a record improvement over just about five in 10 homes four years ago, as a result of the Modi government’s relentless effort at popularising cleaner fuel and subsidising subscription to poor families.State oil companies, pushed by the oil ministry, have added record 10 crore consumers since April 2015, expanding the active consumer base by two-thirds. This has increased access to cooking gas, or liquefied petroleum gas (LPG), to 89% of the country’s households by October end, a sharp jump from 56.2% on April 1, 2015.The increased LPG coverage has primarily been driven by the government’s determination to take cleaner fuel to more and more homes, which forced state oil companies to reach out to potential customers and simplify subscription process. A subsidy for fresh LPG connection to poor families helped fuel demand.Rural areas still have untapped potential with more than half of all consumers, or about 13.6 crore, residing in urban areas. India has a total of 24.9 crore active customers, of which 22.9 crore receive subsidy. Those with double cylinders comprise barely half of the consumer universe—one reason why new customers do not entirely give up polluting fuels as they are forced to fall back on their traditional fuel while refill is on way.Companies are beefing up distribution infrastructure, which has been slow to expand compared with the consumer base, becoming another hurdle in smooth delivery of services.Northern states have the highest 99.9% LPG coverage ratio, with Punjab (136%) and Delhi (126%) leading the table. Chandigarh, Haryana, Himachal Pradesh, J&K, and Uttarakhand have recorded more than 100% subscription while Uttar Pradesh (89.7%) and Rajasthan(95.4%) have lower coverage. 66930102 The government calculates LPG coverage ratio by factoring in the number of subscribers and the current population, which is estimated by adding certain growth rate to 2011 census figures. Due to increased migration, some of the states like Delhi and Punjab end up having population that’s higher than the estimates, resulting in an LPG coverage ratio of more than 100%, an official said.Overall, Goa has the highest coverage ratio of 139%. Telangana, Puducherry, Kerala and Mizoram are other states with higher than 100% coverage. Southern states together have a coverage of 99.7% while western states have 81.9%.With 74.6% coverage, the eastern states are at the bottom of the pile although they have come a long way from their traditionally poor access to clean energy.The worst among major states are Jharkhand (65.4%), Bihar (67%) and Odisha (66.9%). In Gujarat too, the LPG coverage ratio is 66.6% but that’s more because the state is already well connected to the alternative piped natural gas. Most north-eastern states have less than 80% coverage.
Source: ET