Missteps in financial sector reforms

Writing in Mint, Mobis Philipose ponders the role of exchange traded derivatives : for credit derivatives, in the difficulties with the RBI/SEBI plans for curency futures, and in the legal mess on OTC currency derivatives. LIFFE just announced that their clearinghouse would do counterparty credit risk management for OTC credit default swaps. While this is halfway to an exchange-traded structure, I do believe it's possible to do exchange-trading also. On this subject, the Mistry report has argued (page 152-153) that there is a case for a policy bias in favour of exchange-traded over the OTC market.

And, Indian Express has an editorial on a new whiff of hope in economic reforms.

Inexperienced with coalitions

Saubhik Chakrabarti says that the Left hadn't understood `coalition dharma', the essential ingredient that makes coalition government work in India.

Readership of this blog

quantcast is an interesting new approach in Internet usage measurement. They have you put a fragment of HTML on the page that you want measured (just like sitemeter or sitecounter do). What's new is that they have instrumented a large number of households in the US. They know quite a bit about the households that have been instrumented. They watch for visits to your web page from these households and report summary statistics to you about this set. (It's a little more complicated than that. Even though they have ~ 1.5 million instrumented households, only a tiny number of these would show up at any blog e.g. this one. Sampling noise would then be unacceptable except for a small number of high traffic websites. They manage to track users across a large number of websites (e.g. this one), and have setup statistical models using which inferences are made. I thank Konrad Feldman of Quantcast for explaining these things to me).

Of course, this is only a measure of the readership of this blog in the US. What it seems to say for this blog:

• 68% are male (a bit more than the average on the net).
• It's a bit above average in the representation of high income groups. 37% have household income from $60k-$100k and 22% are above $100k.
• In terms of age, 44% are from age 35 to age 49, which is above average. There is of course almost nobody from age 3 to 17.
• In terms of ethnicity, it's 61% caucasian, 8% african american, 24% asian.
• 83% have no child in the household, which is a bit above the overall average.
• 34% of the households have a head of household who's been to grad school: this is 2.5x bigger than the overall average. After all, you do have to be a genius to read this blog.

Watching feedburner, I know there are roughly 2000 subscribers to the feed. Using sitemeter data, there are roughly 16,000 visits a month. Quantcast says these visits come from roughly 7000 unique people who show up at the blog per month. Of these, 2000 are from the US. 52.65% are from India. This number (Indian share) has gradually risen over time: I suppose this reflects the growing usage of the Internet.

You might like to see this piece that I wrote at the end of 2006, looking back at one year of blogging.

Reintroduction of tigers into Sariska

Indian Express has an article by Neha Sinha on the relocation of tigers to Sariska and the problems of wildlife conservation in Sariska and Ranthambore. While reading this, I wondered: Sariska has an area of 866 sq.km. - is that enough to hold a Minimum Viable Population (MVP) of tigers? Do look at this cool blog by Aditya Singh.

Charity begins at home

For democracy to work, government agencies must have the highest standards of accountability, transparency and have foundations of sound governance structures. Writing in Financial Express, Vikas Dhoot says that we should do unto EPFO as we did to Sahara.

I'm reminded of a theme that I often emphasise: the transparency standards that we demand of RBI (which hides data on its trading) should atleast match those that we require of FIIs (where trading data is disclosed daily).

Banned in India

Blackberry

Whew

iPhone 3G

You can't use broadband mobile devices such as the new Apple iPhone 3G in India, since there are policy impediments holding back 3G. Some mobile phone vendors are fully ready with the equipment but are prohibited from rolling out services owing to the policy bottlenecks.

Satellite telephones

Satellite phones like Iridium, Thruraya, ISAT (from Inmarsat), BGAN (Broadband Global Area Network) are banned in India. By Indian law, all calls made out from India should be able to be traced and also the user should be known. Only one particular laptop-sized satellite phone called the `Mini-M' is allowed for Government and PSU use only. This phone has been discontinued so even government / PSU customers can no longer buy a satphone. This phone also needed a specific license from the Wireless Public Commission (WPC) which makes case-to-case decisions. Further, the terminal could be activated by only one firm - VSNL.

Paypal

Starting a firm which does intra-India payments services using ideas such as Paypal is prohibited by RBI. E.g. India is not on Paypal's list of `localised sites'.

Currency futures

Interest rate futures

Credit derivatives

`We thought about it, and they're still banned'

Repos on corporate bonds

...

The problems of Indian monetary policy

Ila Patnaik continues her series of newspaper columns that shed light on Indian monetary policy: 13 June, 21 June.

Particularly interesting is this piece in today's Indian Express which deals with a question that is on everyone's mind. When RBI decided to use interest rates to combat inflation in the early 1990s, why were such large interest rate hikes required? Why do other central banks achieve the same task with small rate hikes?