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Money and Finance
JAM and the pursuit of nirvana
The Finance Ministry is proposing to roll all subsidies into a single, lump-sum cash transfer to households, on the back of the JAM (Jan Dhan Yojana, Aadhaar, Mobile numbers) trinity. In this article, Jean Drèze, Honorary Professor at the Delhi School of Economics, argues that a single-minded focus on high-tech cash transfers as a foundation for social policy in India is fraught with dangers.
Foreign currency borrowing by Indian firms: What do we know?
As foreign currency borrowing by Indian firms has been increasing, concerns have surfaced about rising associated risks. Hence, recent policy changes seeking to make the regulatory regime simpler and more transparent are timely. This column addresses several important questions regarding foreign currency borrowing of Indian firms, the answers to which can provide a firmer basis for ongoing policy formulation.
Are banks responsive to credit demand shocks in rural India?
The output of Kharif crops is estimated to decrease by about 2% this year due to deficient monsoon rains in some Indian states. How responsive are commercial banks to a credit demand shock in rural India? Analysing data on rainfall and agricultural credit during 1993-2010, this column finds that banks increase the supply of agricultural credit to farmers following a drought, but that the additional credit is directed towards existing customers.
Emergence of Bandhan as a bank: A new era in the Indian banking industry
At a time when the Indian banking industry is experiencing a steep rise in bad loans, Bandhan – an MFI with a near 100% loan recovery rate – has converted into a bank. Based on a survey of 112 Bandhan clients in West Bengal, this column highlights the features of Bandhan’s lending model that have enabled it to keep its bad loans at negligible levels.
Inclusive finance for inclusive growth: A gender perspective
While research has established that financial inclusion programmes lead to economic upliftment of poor families owing to the participation of women, the evidence on the impact of such programmes on women empowerment is mixed. Based on a household survey data in India, this column finds that female-headed households that participate in financial inclusion programmes gain more in terms of economic well-being, vis-à-vis male-headed households.
Reining in gold imports
In an attempt to reduce gold imports, the Indian government has proposed three new schemes – gold monetisation, sovereign gold bonds, and domestic production of branded gold coins. In this article, Prof. Gurbachan Singh diagnoses the market failure and government failure involved in large gold imports, and provides a broad perspective on the issue. He examines the potential effectiveness of the schemes, and suggests policy alternatives.
Barriers to basic banking in India
The Indian government is promoting the Jan Dhan Yojana, Aadhaar and mobile banking – or the “JAM trinity” — as the pathway to financial inclusion. But are banks capable or even willing take on their role in this ambitious agenda? Based on a field study in Chennai, this column highlights the range of costs and constraints imposed by banks on customers attempting to enter the formal financial sector.
Impact of American FDI in India
The United States is one of India’s largest trade and investment partners. This column discusses the impact of American FDI in India in terms of direct effects such as job creation, exports and technology transfers, as well as indirect effects like spillovers from R&D and adoption of best practices. It also highlights challenges faced by American firms while investing in India.
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