Yours truly…When Raghu wrote a letter!

Dear Reader,

Hi! Now that Urjit Patel takes over as the Governor, Raghuram Rajan wanted to share those wicked tips on handling the high profile job properly! Read the heart-to-heart, Governor-to-Governor letter in my humor column “Tweakonomics” in the Hindu Business Line at http://www.thehindubusinessline.com/opinion/columns/yours-truly/article9022386.ece#comments. Else, read it here directly. Enjoy!

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Dear Bro,

Hi… ummm, let me firstly do the right stuff and welcome you to this super-high profile job. It’s obviously every economist’s dream job, and yes, highly gratifying, intellectually satisfying, policy-oriented and autonomous as well (err, at least on paper)!

Okay, formalities over, let me now talk plain truth. This job is the most thankless, frustrating, annoying and the most unenviable post an economist can ever hope to man. And while I’m extremely proud of you, I must convey that what I feel for you right now borders between high anxiety to plain paranoia. Friedman help us all! Why did you accept this, man?

Well, so I thought that I’ll be a good friend and share some of those few experiences that you may benefit from, as you step into the ring to try and control inflation, growth, employment, currency, exchange rates, FOREX reserves, bond yields, bank assets, RBI pay-scales, central banking autonomy as well as the Government’s ego, all at the same time, while still managing to look completely unruffled and fit from your squash game last evening.

The media is the undoubtedly most exasperating part of the job and will insist on calling you Santa Claus (post rate-cut), inflation warrior (post rate hike) and rockstar (when you maintain status-quo). Hehehe, I may be the rockstar, but you are the quintessential rapper, eh?

There’s news from the RBI, Yo! It’s sure lookin good/

Sentiment is up, so is the market mood!

China is down, but the US looks bright/

 

We’ve got a new warrior, Yo! A corporate-wala knight!

Rap…….Patel Rap!

All the best, Bro. I never quite knew how to react to these crazy things they wrote about me. So here is my first advice. It is alright even if you do not plan your post-policy review speech, but you MUST plan how you’ll react to the rapper analogy. Will you be white-lipped and disapproving, or give just a plain bored look, or will you laugh outright? My personal strategy was always “review with a smile”. That humour quotient always works. And oh boy, are you going to need that humour!

A word of caution. Avoid idioms and phrases and just talk plain ole repo. You’ll do well to steer clear of the land of the blind, one-eyed, two-eyed or any kind of king completely. Also stay away from regular birds like hawks, doves, owls; run in the opposite direction on spotting the black swan.

What can I advice you about inflation targeting? It was you who spearheaded the entire process and helped set the bandwidths around the 4 per cent inflation mark. But Bro, there is this other targeting I have to caution you about. Tch, tch, tch, you are too international for this profile. Born in Kenya, graduated from LSE, an MPhil from Oxford, and a PhD from Yale? A stint with IMF and BCG? Are we in trouble! Earlier it was only me who was “unIndian”, but now there’s also Brett Lee and you. Wonder if they’ll invite Brett next. Anyway, welcome to the madness. I am sure you will deal with it with your usual good sense, and set those bandwidths of tolerance around your profile.

Don’t let the volatility in markets lead to volatility in your mind. Let statisticians worry about the ARIMA models. Remember, GARIMA is more important that ARIMA. A final word: When you are having a hard time, read ‘Tweakonomics’ in Business Line.

Sincerely,

Banker on the move.

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Playing by the book

Dear Reader,

Hi! Did you know that the FM had tied up the state of the Indian economy sub-consciously to the performance of the Indian cricket team in WC T2o? 😛

Well, here’s the relationship between fiscal deficits and cricket! The piece appeared today in “Tweakonomics,” a column on econ-humour I write for the Hindu Business Line. You can read it at http://www.thehindubusinessline.com/opinion/columns/playing-by-the-book/article8429549.ece, else read it here directly.

Enjoy! And do send in a comment or two!

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Fiscal targets and Indian cricket

Many an eye was left wet and leaking in that last over of the India-West Indies semi final, as the six hit off-Kohli rocketed into the stands. Chartered Accountants, many of whom had created internal deadlines of 6 p.m. on March 31 just so that they could watch the match were particularly indignant about the whole thing and were left vengefully thinking how cricketers could possibly be taxed more.

But no eye watered and no nose sniffed harder than that of the FM, who had somehow tied up the state of the economy with the fortunes of the Indian cricket team in T20s.

The FM too had cricketing aspirations, when a young wisp of a boy. However, as the years passed, the bye-laws began beckoning more sharply than the leg-byes, after which he decided to give a bye to that leg of the aspiration.

The many fascinations of allocation, distribution and stabilisation functions of the fiscal policy overtook those passions of batting, bowling and fielding. The classical version that Tendulkar played seemed almost “normative”; how cricket ought to be. It was rapidly getting replaced by “positive” cricket; higher speed, higher octane T20 cricket with crazy looking shots getting titled the Pallu shot and the Helicopter shot. Cricket, in which what ought to be, got replaced by what is.

Rather like the changes which happened to the NDA in the political arena. After a few years spent in taking interesting jibes at how governments ought to function and budgets ought to be, here was the NDA, now being asked to perform the helicopter shot. That the PM took this literally is another ball-game. And the FM found himself talking to the media not about how the budget ought to be, but about what it actually is.

And he made his pitch, like Captain Cool. As Team India strode as favourites into the World Cup T20 series, the FM felt his spirits rise. Yes, we shall deliver as promised! The UPA may well raise its delicate eyebrows, but fiscal deficit will be contained at 3.9 per cent!

To be defeated by 47 runs by New Zealand was such a shocker; no one had expected NZ to exhibit such form! The FM’s tummy churned unpleasantly. The last he’d felt so stunned was when RaGa had demanded a cap on taxes to get the GST passed.

With that Bill not getting through, the taxes wouldn’t show the expected buoyancy in the next fiscal; but the boys were back in the field laden with the expectations that only an India-Pak match can bring on, looking as buoyant as ever. And what a win! The emotional high of the moment could only bring on fond memories of the HR Minister decimating a cowering Opposition with tears and a voice shaking with high drama. We will not only do a 3.9 per cent fiscal deficit this year, we’ll also do a 2 per cent next year, thought the FM, high on positivity.

And to see Virat Kohli take on the Aussies was to believe that we’ll deliver a balanced budget next year! Zero per cent fiscal deficit target; ha, take that, you disbelievers!

Against WI, Virat and Dhoni’s batting was like watching the markets rise. Chris Gayle fell, as will the repo next month. But what’s this? How could we lose? By 7 wickets! The FM’s hand shook as he took a call from the CSO. “Sir, even if Kohl sector is up, we’ve real bad news. Fiscal target looks difficult because we’ve overspent.” The FM sighed. We’ve overspent by 7 per cent.

Cop out at COP 21!

Scene again opens in the Opposition Neta’s office, where Netaji is reading the newspaper and is confused with all the reports on Paris.

Netaji: Tell me Guptaji, what is this COP 21? Even in the High Command office, they were all discussing this cop. What is the COP 21? It sounds like a new movie with Salman Khan in a cop avatar strong enough to beat 21 gundas.

Clever Guptaji (startled): Sir! COP 21 is not a movie, Sir! It is an acronym for the 21st Conference of Parties. It is an annual forum where countries come together to debate and discuss climate change issues. It was held at Paris, Sir. Developed countries were worried as to how India would play her climate change card, especially with our PM keen on attending. But our team has made quite an impact and held their own in discussion with bureaucrats and technocrats and ministers from 193 countries.

Netaji (disapproving): What! I am not impressed. I don’t like all these new-fangled approaches to politics, Guptaji. Discussing such deep, internal problems with Obama and hobnobbing with that Putin. Now tell me, why should we discuss our climate with other countries? No, no. We should have never attended this event.

Clever Guptaji (startled): But Sir, this is an issue that we cannot resolve single-handedly. All countries will have to come together to take a position on climate change. We really have damaged the atmosphere badly.

Netaji (chewing nonchalantly on his paan): I think everyone is now over-doing it, Guptaji. It is not the first time we are facing such a climate of mistrust and suspicion in India. Why, when we were in power, there was not a single day anyone trusted us on anything. This AAP created such trouble for us, I tell you. But did we tell the globe to assemble in Paris? Never. And just look at this Government. And the newspapers are saying we also made some commitment on power?

Clever Guptaji (stuttering): Oh Sir, you are totally misunderstanding the issue.

Netaji (loudly): QUIET! Just tell me what this power commitment is all about.

Clever Guptaji: Well Sir, our stance is that India will change the way power is used, but developed countries have to lead the way in this commitment.

Netaji (irritated): Hmph! Quite in the ivory tower we are, aren’t we, Guptaji? Change the way India uses power indeed! What a joke! Nothing can move in this country if we change the way power is used. We politicians have ensured that completely! If the Government wants more growth and development, they will need more and more power. Just to Make in India, they will need more power. Do you think any investment can be driven without power? And if they want to pass the GST, they’ll definitely need more power. Hee hee hee. Especially post-Bihar. And in the Rajya Sabha.

Clever Guptaji (now completely horrified): We are talking about power, as in coal, Sir. Coal is bad for the atmosphere.

Netaji (indignantly): First they said coalition was bad, now they are saying coal is bad. First they wanted power, now they don’t want to use power. In India they want more action on GST. And outside, they want more action on GHG. What a misleading Government, Guptaji!

Clever Guptaji (exasperated): They should have sent you to Paris, Sir. Then, India could have really displayed a real COP out on commitments!

 

Yoganomics!

Dear Reader,

This article appeared in the Hindu Business Line under my column titled “Tweakonomics.” You can see the article directly at http://www.thehindubusinessline.com/opinion/knotty-problem/article7339329.ece. Enjoy!

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Sigh! This International Yoga Day is really getting to the economists. The closer it gets, the more hassled they look.

And now that it’s here, even as the world celebrates the uplifting art and science of the body and the mind, the economists will be seen frozen in a corner, with numb bodies and dumb minds. Why, you may ask. Why, you may wonder. Why, you may well say with that snooty indifference which only muggle non-economists can have.

It’s simple. Our hopes stand crashed. We were told that Yoga is the most generic solution to any problem, personal or interpersonal. But we have been conned. And we are now sore as hell. Because it looks like Yoga does offer solutions to all types of issues, so long as they are not of the economic type. The UN Secretary General Mr. Ban Ki-Moon (BaMo) says that the singular act of getting the tree posture (Tadasana) right gave him that “simple sense of satisfaction” of having set the world right. Just try getting that GDP series into the tree posture.

So, imagine, how Baba Ramdev would react on seeing the GDP growth series. OMG! That would be like seeing a seriously distressed patient, with pathetic levels of energy. “Anulom Vilom!” The commanding voice will bark and while all 3500 participants at the Nehru Stadium will demonstrate the sharp intake of the breath, the GDP series will give out a huge sigh and continue on its way out of the stadium, looking more depressed than usual.

Send in the WPI. Hell lot of negativity all over. The Ramdev solution? Immediate pranayam to get the positive vibes back into the series. The entire RBI is now breathless doing Pranayam for the past 6 months, but WPI hain ke manta nahi. Perhaps the right thing is to get the Arabs into Pranayam mode, so that they’ll not swamp the markets with crude.

And just look at the exchange rate series. Like a temperamental artist, it goes all over. It’s so volatile, surely Yoga can help us to calm down this hyper energetic model? “Padmasana!” says the Master. The Lotus will help to stabilize the exchange rate. Really, now. Ahm, that’s too politically correct, isn’t it? No, let the exchange rates dance their zumba.

Baba will have to really think when he sees the interest rate though. Firstly, there’s a schizophrenia issue. Sometimes, the series is a repo, at times it can convert itself into lending rates, and sometimes it dons on an international personality like the LIBOR. “Shavasana!” The posture of the dead body. The classic remedy to calm down mental issues. But surely, we can’t afford a lifeless interest rate, can we? They have been in a dead state in Japan for nearly 15 years now and still the gloom persists.

Further, this is a series that is not in great form physically either; it’s seen too many surgeries for its own good. It is sometimes raised to a great height and pegged to a target and then slashed. Hmm, post-surgical Yoga. Tricky, this one. But no problem. We have a solution, says the Master. “Ardha Titaliasana!” The butterfly posture. But that is recipe for chaos theory. Fluttering of a butterfly in Indian banks causing a storm in businesses, you see. Thanks, no thanks!

Bring in those tricky blighters. The fiscal deficit and public debt. The sweetmeats you consume everyday and the total added up weight of the body. The diagnosis is immediate. Obesity. “Shirshasana!” The headstand. And view everything upside down, eh? And then you’ll claim that economists are freaks and need Yoga to calm down.