cafeconomics

 When the world is reeling under inflationary pressures, OPEC+ has decided to cut down daily production to ensure that energy prices don't fall too much. Ethanol blending, investing in alternative sources of energy, investment in public infrastructure, strategic increase in oil imports from Russia are some of the measures taken by the government to tackle energy price issues in India. Please take a look at the chart below. Starting from 2001, the correlation between CPI Inflation and Brent Crude price is very high at 0.65 based on data sourced from investing.com, macrotrends.net, world bank. Close to 85% of India's energy needs are imported from outside India and therefore global demand and supply issues have a potent impact on India's growth ambitions. Whenever there is an increase in crude prices, the costs have to be borne by the government, OMCs or common people, in any case, this is depleting the much required growth capital. The multiplier impact of increase in energy

 Time and again, we come across situations where large banks incur huge losses due to some poor bets or lack of asset liability matching. As a result, we have unintended consequence of the financial economy pulling down the real economy and common people getting impacted due to no fault of theirs. An equity investor or a mutual fund investor has a reasonable idea of the risks involved in the markets. She understands that there are downside risks involved in equity or mutual fund investments. So it is safe to conclude that an equity investor(mf investor) is more risk taking than a bank depositor. A bank deposit holder is far less risk-taking when compared to an equity investor. However, we notice that depositors run into trouble to risk taking activities of their banks. One solution to this problem,(apart from stringent disclosure requirements, capital requirements and regulatory supervision) is to align a bank's risk profile with that of depositors' risk profile. So while makin

 This is a descriptive article on the Indian Economy based on data provided by the Economic Survey 2023. Link to open the Economic Survey in a new window As per advanced estimates for 2022-23 India's GDP is Rs 1.576 crore crores. In dollar terms, the chart below gives you a feel for the GDP of India. At constant prices of 2011-12 India's GDP is at $1.97 trillion. Economists often say that a significant proportion of Indian Economy is in the unorganized sector and therefore it is difficult to account for the same. Several steps have been initiated to formalize the Indian Economy. to be continued

 Based on Prof.Damodaran's/S&P Capital IQ data set, there are approximately 3982 stocks listed on Indian market or at least for which data is available. The actual number could be different but that's not the issue here.  In the attached excel workbook, the first excel sheet contains the data set of total number of stocks with a serial number starting from 1. In the second excel sheet, we have 30 names selected using random number functions on excel. By clicking on the random tab we iterate the random selection of stocks. After iterating this process for a large number of times, 30 names have been chosen. The key is to not be biased towards any particular company or group.On the third excel sheet the price only return performance of these randomly chosen stocks has been compiled from the economic times website. The 5-year price return of such a randomly chosen equally weighed portfolio of 30 stocks  comes out to be 13.57% and it does not include any dividend and buy back re

 Everyone has a wish list for the annual budget event and so here are some of my ideas. 1. Welfare Effectiveness Index by Scheme and State: Each year we allocate thousands of crores for different welfare schemes including health, education, child and women welfare etc. The quality of welfare is not the same everywhere in the country with a huge population.  In order to gauge the effectiveness of the welfare schemes a welfare effectiveness index can be introduced. By surveying the beneficiaries on the key aspects of the welfare scheme and registering responses on a numeric scale, one can gauge the effectiveness. A healthy feedback loop can be put in place. Further potential beneficiaries can be encouraged to form Whatsapp/social media  groups (wherever possible) to sort out common issues and communication. 2. Ease of doing business index by sector: An ease of doing business by country and state is in place. It can be extended to sectors as well. So if mining sector scores low when compa

 It is a great honor for India to host the G20 meet this year.It is an acknowledgement of emergence of India as a global power. Among a plethora of economic and political issues at hand, one area that is not receiving due attention is the problem of immigrant workers particularly in the middle east. For decades, we are accustomed to hearing and watching about atrocities against (South Asians!) immigrant workers in the middle east. The ghosts of migrant laborers are looming large over the foot ball world cup tournament this year. It is high time India addresses this issue on behalf of the South Asian workers. In the next three decades, crores of young people will get added to the work force and many of them will immigrate to foreign lands in search of work and greener pastures. While the remuneration, living and working conditions for most of the skilled and white collared workers is great, the same cannot be said of blue collared workers who involve in physical labor. It is important t