ECONOMY by VIVEK SINGH

2021-02-08 07:24:04 Open / Comment

2021-02-08 07:18:57 Source: Indian Express
Self Explanatory Open / Comment

2021-02-08 07:18:26 There is an article today in HINDU editorial page by C Rangrajan titled "Infrastructure push now, fiscal consolidation later". He has just explained where 2021-22s budget is focussing on. There is too much of numbers/figures. Those who want can read or otherwise can be ignored. Open / Comment

2021-02-07 12:22:17 You all can go through once the above Budget, Survey and FFC notes. Do not waste much time on mugging up all this. It is always better to read all this integrated with the relevant chapters of the book. I have included all this in the new book also in relevant chapters and if something is not related to any chapter then those things I have provided in the end of the upcoming book. Open / Comment

2021-02-07 07:05:08 Nothing relevant for ECONOMY in the newspapers today. Open / Comment

2021-02-06 19:16:11 Source: Todays Indian Express.
As per BASEL III norms, Indian banks had to achieve the capital requirement earlier by 1st April 2021 has now been postponed to Oct. 1st 2021.
Out of the total capital requirement of 11.5% under BASEL III norm, 2.5% is Capital Conservation Buffer and out of this 2.5% , just 0.625% has still not been made effective which the banks are required to do now by 1st Oct 2021.
To understand Capital Conservation Buffer, pls see this link
https://t.me/VivekSingh_Economy/2522 Open / Comment

2021-02-06 19:09:31 Source: Indian Express
RBI had reduced the CRR from 4% to 3% to increase the liquidity in the system in last year March/April due to Covid-19 Crisis.
The article is self explanatory. Open / Comment

2021-02-06 09:17:37 The above is article from Indian Express. (The news in in Hindu also). The following are some relevant points. (read line by line)

1) RBI manages the issuance of Govt. securities through "e-Kuber" platform. Earlier retail investors (like we people) were not allowed to purchase the govt securities (bonds/ debt paper) directly at the time of issuance. But now its allowed. Let me elaborate it.

2) Suppose Govt want to raise Rs. 50,000 crore by issuing bonds (debt). Now a lot of people/investors may be interested to purchase these bonds. So, investors want high interest rate on bonds BUT govt want to issue bonds at lower interest rate (to reduce its cost of interest). So, auction happens. So, investors (those who want to purchase the govt bonds) place BID to purchase the bonds. If govt wants to raise less money (i.e. it wants to issue less bonds) and more people/investors are interested in purchasing then the interest rate will go LOW. But if Govt. wants to raise more money and less people are interested in purchase of those bonds then interest rate will go UP.

3) Now because of covid-19, Govt. borrowing is going to increase, so if more people/investors are allowed to purchase (place bid) for the bonds then the interest will go down and govt. will be able to reduce its interest burden and that is why it has allowed retail investors to participate directly in the Govt. bond market. This will also broaden the Govt. securities market. It is a structural reform.

4) When Govt. (actually RBI does on behalf of Govt.) is issuing the bonds for the first time then also we people can place bid and purchase. This transaction is called Primary Market (between RBI/Govt. and investors). And once I purchased the bond then after some time I sell it to some other investor is called Secondary market (between investor to investor). So, retail investors are allowed in both markets now. And if I purchased a bond whose maturity is of 5 years then I can sell before that also to some other investor because Held to Maturity restriction has been removed.

5) RBI governor has said that it will not impact bank deposits. But I feel it may impact and he may have said no for some other reasons also. He is also trying to say that if economy will grow and people income will grow then there will be more savings which can go in banks or Govt bonds or mutual funds. So, if the volume will grow then it may not impact bank deposits. Open / Comment

2021-02-06 09:02:39 Open / Comment