Econ Mom as the confused driver!

Aaaaaaaaaaaaaarghhh! It’s been such a nutty week and poor Econ Mom is a complete, total, confused mess.

It all started a couple of weeks ago, when my car started making strange noises on applying the brakes. Now, a good ole Honda doesn’t ever create any which noise, forget strange noises, and I was spooked. I tried applying the brakes fiercely, gently, with a smile and with a professional pan-face. Nope.

The car wouldn’t be persuaded and was taken off for an overhaul. In the meanwhile, the Hubs sweetly offered me his car. I’d have liked it with the Hub-chauffeur, but no such luck. I got only the machine minus the man. And the main problem is that it is German.

We, of the Honda tribe, detest German engineering. Gott im Himmel! Hubby’s Polo doesn’t start till you apply some serious muscle tension to the key; and the reverse gear is the first gear plus tension. I tell you, I was unused to such tension in my regular driving life and it was freaking me out.

But, you don’t know the worst yet. The Polo indicator controls and the wiper controls are on the wrong side. The Germans may be marvellous at engineering, but the idiots don’t know their left from the right. OMG. This is magnificiently spooky. I was feeling like a right wing economist being forced into writing a poem “In Praise of Marx and Controls.”

The first day on the Polo and some weirdo who came from the opposite side of our super narrow street flashed his headlights at me. Now this, is a pure-ghee Indian driving phenomenon. The person flashing lights first apparently has the moral right of way, other things be damned. “Oh yeah, I’ll show you who goes first,” I thought viciously and flashed the light indicator viciously to be met by a most efficient German water jet on my windscreen, causing me to jump madly in my seat. “Hell,” I thought, automatically moving my left hand towards the wipers, in the process switching on some indicator lights. “Oh, this is really quite merry”, I thought with gritted teeth as cyclists and bikers behind me started to swear, not quite sure where I might eventually turn. By now, in addition to switching on all possible headlights and indicators, I had also started the wiper on the backscreen. My car does not have the feature and I was terrified. Germans, you back stabbers!

I had a real bad first week with the Polo. Even the radio wouldn’t play soothing songs and after listening to that idiotic woman pleading “DJ waale babu mera gaana bajaa do”, followed by Yo-Yo Honey Singh informing me conversationally in the middle of the downpour that “Din Hain apparently Sunny Sunny Sunny Sunny Sunny Sunny”, I was completely disheartened. I had had it.

Hubby was absolutely enjoying the whole process and had started taking unusual amount of interest in my daily “Aaj ki Polo khabar” ravings and rantings. After listening to my conspiracy theory on how the same radio stations were playing different songs for the Polo drivers, he couldn’t control his glee at all. “You could try writing “Who moved my indicator controls? We’ll get Subbarao to write the foreword for your book,” he suggested wickedly. “Oh, shut up. I’ll write Econ Mom and the Cursed Car instead,” I muttered darkly.

Sigh! As if I did not have enough on my plate, J K Rowling, of all the people, had decided to come out with a badly written book.  Lil One and I had quite a merry little boxing bout the day it arrived home, which I won mostly by virtue of tickling him (“That’s cheating, Mom!”) and then packing him ceremoniously off to school. But I was so badly, badly disappointed. The max humor content the book has to offer is when Albus Potter tells Scorpio, “Yeah, you can’t be Voldemort’s son. You’ve got a nose!”

Oh, really. C’mon, is this Rowling? To read a Potter without the witticism and the detailed plots and well-developed character nuances was such a culture shock. It was exactly like putting a Honda driver into a German car.

And then, the GST Constitutional Amendment Bill was passed. Such a rude shock for us economists! I mean, how could they? The monsoon session had started properly enough, with Rahul Baba dozing off and the rest shouting madly. Now, technically, this fervour had to be followed up with paper balls, flinging of chairs, and well, maybe pepper spray for high drama. Chidambaram had to shout that the NDA does not know its economics, and Subramaniam Swamy had to follow it up by saying that nobody in the world knows economics. An apoplectic-with-moral-rage Arnab, falling markets and a witty Tweakonomics piece by Yours Sincerely would wrap it up nicely.

So there I was, waiting for the Amendment not to go through, when it went through! Unanimously! And that is BIG news. It’ll mean a lot of changes in the short run, but the longer run gains should make up for the trouble. A single-window for indirect taxation, lesser administration, more transparency, lesser subjectivity in assessments, lesser time in transit and hopefully, a fair sharing-between-states system. It is what every economist had dreamt of.

And yet, there I was, confused. How can the UPA behave so professionally? Now whom will we blame for the low-pace in reforms? When you have all politicians rooting for taking reforms ahead, rather than play their own silly partisan games, it creates a rude shock in the minds of innocent citizens like me. Exactly like putting a Honda driver into a German car.


After driving the Polo for about 10 days, I got my car back. Oh, the feeling! I could have run to it and honked in slow motion! God must have sensed the romance and sent a small drizzle my way.

I immediately sat in my car and then, to my horror, started reflexively moving my right hand to start the wipers. To my consternation, the indicator lights started ticking, while the wipers wouldn’t budge. The radio informed my frayed nerves that “Hafte mein chaar Shaniwar hone chahiye”. OMG. Now I’m a German driver in a Japanese car. Help!




Econ Mom, a Goa vacation and the Tiebout model

Disclaimer 1: Econ Mom is an economist and hence has basic inherent rights to drool on and on about issues that may not be fun/ relevant/ interesting/ exciting/ amazing according to you.

Disclaimer 2: Unless you read all the serious boring stuff on public finance in the beginning of the blog, you anyways won’t understand what Econ Mom is thinking at the end of it.

Disclaimer 3: Yeah, sure! There’s wickedness coming your way, but you are going to have to plough through the basics for that. Lazy readers are advised not to read on.

Disclaimer 4: Econ Mom reserves rights to appear when she feels like in the blog. In the present one, she chooses to appear only in the end. What the hell, it’s MY blog! So here goes..

I have been reading up on fiscal federalism these days. It’s a part of my research interest.

Centre-State fiscal relations mainly span the collection of taxes and sharing of the same. While control over taxes is defined constitutionally under the “Union list” and the “State list”, the sharing of the same has been mostly formula-driven, again constitutionally. The Constitution has provisions for creation of the “Finance Commission”, which can then really decide how the Centre shares its taxes with states.

And then, there is also the Planning Commission, which willy-nilly, has played a part in Centre-State relationships. Well, even the Planning Commission has used some kind of a formula (the Gadgil-Mukherjee formula or some version of it) for tax sharing with states; however, not all tax shares are governed by formulae. Increasingly, in a reforms driven India, there is evidence that states received tax shares based not only on their economic fundamentals as encompassed in the “formulae”, but based on their political goodwill. Thus, states going to elections have received more tax shares, states that are politically more “aligned” with the Centre seem to have received higher tax shares.

Thus, a lot of modern empirical literature is into proving the existence of a political economy factor in determining Centre-State relationships. In my readings on the subject, I kind of went into the subject in a reverse timeline. I stumbled on a really interesting paper by Stuti Khemani (World Bank 2003) in which she spoke about how “political alignment” with the Centre has been a central idea in a 2001 paper on Swedish municipal councils. So I got reading that, which put me on an Avinash Dixit paper written in the 1980s on a game theoretic approach between two levels of Government. And well, since by now I already was neck deep into the subject, I decided to go backwards the whole way to the Big Bang, which happened in 1954.

The Big Bang of Public Finance, so to say, was created by Brahma, Vishnu and Mahesh. They just have different names in our field, and are called Paul Samuelson, Richard Musgrave and Charles Tiebout. And then there are plenty of other deities such as W. E. Oates and James Buchanan, who lent their mental Vajras and other weapons to sharpen the arguments.

The entire discussion started with Paul (Brahma) Samuelson defining public goods; his argument was that since the consumption of public goods (such as a street light) is necessarily, well, public, no one will be willing to pay for the same and hence, the market by itself will underprovide for the provision of public goods. In other words, capitalism may be wonderful. But free markets do not provide optimally for public goods.

Vishnu aka Richard Musgrave took the discussion further and classified public goods to be “non-excludable” as well as “non-rival”.

Hmmm. Nice. But it is Maheshji’s job to provide the necessary churning to the world created by Brahma and Vishnu, right? So here goes.

Enters Charles Tiebout, with a radically different viewpoint from the one provided by Musgrave. Says, are public goods always “non-rival”? Nnnnaah! Not really! Especially, if we are looking at “local” public goods such as a public park. Sure, you can’t exclude anyone. So it definitely is non-excludable. But it’s not always “non-rival”. If there is too much crowding into the park, then there exists rivalry in consumption of the good.

So, this is what Tiebout says. He firstly puts forth an idea that we need to look at public good provision from the perspective of a “local Government”. He likens local Governments (like Municipalities) to suppliers of different baskets of public goods at different prices (taxes). If a household does not like either the basket of goods that is being provided or the price at which it is being provided, then it can “vote with its feet” i.e. it may well choose to migrate away from that locality to another wherein the supply of public goods and its price matches its utility. This solves the problem of preference revelation effectively, as people’s preferences and their utilities get revealed through their decision to migrate. It is exit, rather than voice, that helps to reveal consumer preference.

Local Governments can closely observe the utility profiles of the public and hence, would be able to tax the people more accurately. They also are able to gauge the optimal quantity of public goods that need to be provided in an area. Thus, provision of public goods ought to be done by local Governments, who can then also tax the public for the provision.

Thus, according to Tiebout, there does exist a solution to the problem posed by Paul Samuelson. Provision of public goods need not be always sub-optimal; you just need local governments to take care of the thingy! Let local governments compete and voila! Optimal public goods is what the public will get.

What an interesting theory! He is suggesting that there is effectively, a political solution to this rather economic failure of the market mechanism. Politics to solve economic problems! What a wonderful thought! Though extremely impracticable, as Econ Mommy realized on her vacation to Goa. Yup, Goa it was, this year.

Goa. Blue skies, endless lines of coconut palms, backwaters, mangroves and the sea! Simply marvellous! We felt our spirits turn distinctly salty (just joking, guys!) as we drove down to the sea from Pune. The drive down the quaint little villages was just the balm I needed for my tired body and soul.

“We three are just like the three friends from Dil Chahta Hain,” suddenly announced Lil One with a grin at us. “We’re driving to Goa and we are really cool! At least….I am!” he said uncertainly, looking at the not-so-cool parents. Sigh!

“So who is Aamir Khan?” I asked no one in particular and grinned to see all three hands raised in the car.

Lil One felt he was the truly wicked one and hence qualified to be Aamir Khan. I was Saif Ali Khan, since I was always getting teased by the other two and Dad, he said loyally, was the thinker. Akshay Khanna. Hmmm…

Hubby, on the other, said that it was far too much fun pulling Lil One’s leg and hence Lil One was Saif and he himself, the leg puller, was Aamir. “Mommy’s Akshay Khanna,” he said with a grin, “because she is the sentimental types. Cries on seeing that foul movie. Whatisit called..”

“Kabhi Khushi Kabhi Gam,” supplied Lil One helpfully and suddenly extremely high energy. “And Hum Saath Saath Hain..And Dad, do you know, she was crying watching Kuch Kuch Hota Hain yesterday!”

“Oh, shut up,” I said. It’s their favourite topic these days. Tell me, is it so bad to cry on seeing a movie? Yeah, I mean, even I agree that those movies are complete nonsense, but God alone knows why, Karan Johar makes me want to wail real real loudly, the bugger. I have given this a lot of thought as to how this happens to me and this is my analysis. I think my defences are already lowered by the complete lack of any brain usage for around 50 minutes and then, when I see all these idiotic melodramatic situations, it causes me to cry.

Sorry! I come back to Goa. “Who runs a humor column? I do! That means I qualify to be Aamir Khan!” I said bossily causing Lil One and Hubby to make rude faces at me. “And in any case, only I can sing Tanhai…it’s way beyond your skillsets, got it, boys?” The boys looked sulky about it. Hubby looked positively alarmed at him being chosen to be Saif Ali Khan because he can do the “flap flap” dance, and Lil One happily hummed “Kaisi hain hain, ruta kii jisme”.

We stopped in a picturesque village lane for a small picnic. And sauntered out of the car after our meal, just looking at the pretty little houses with slanting rooftops. Every house has a small yard in the front, mostly hosting coconut palms, with the familiar pepper creepers running up them. How pretty! Hubby said with a real longing in his voice, “Manasi, I wish we could settle here. I could stay here forever!” He had said the same in Kerala. “Goa or Cochin?” I asked with a grin. “Well, both!”

It is such a tempting thought. If you think of what a life you can have in Goa versus the one you have in Pune, Goa takes the cake and eats it too, royally. Look at the basic infrastructure. The roads are so beautiful. I mean, if you can have those smooth kind of roads when you are simply swamped with monsoons, I wonder why Pune has to have road-shadow, even when we lie in the rain-shadow zone. That brings me to the second point.

Rains. Water. OMG. To see all that water and greenery in Goa, just across the border from Maharashtra, was such a slap in the face. I have recently been on the roads in drought prone zones in Maharashtra and we all know about the monsoon issues that Marathwada and Vidarbha are facing. And in Goa, there is simply no water problem at all.

Plus, its cheap. Oh no, not the hotel stay. But petrol at Rs. 59. Aaaargh! And the basic fruits and vegetables. Its so cheap! There were hawkers on both sides of the roads into Goa, hawking mangoes, coconuts, jackfruits, karmals, karvandas, bimlis, bananas. It was really too much for my poor vegetarian soul to see all these fruits being hawked so cheap. I took it personally and gorged so much on the fruits in Goa in the last one week that I think I have single-handedly caused the fruit prices to go up. That last wrinkle on Dr. Rajan’s already lined forehead (no, not that big one, that one was created by Subramaniam Swamy), yeah, that little one there, that’s the one I created with the inflation index going up one tiny little notch, all thanks to my gluttony.

There aren’t too many things I agree with Hubby on, but this one was really really tempting. Wah, to settle down here! But what about our careers. And Lil One’s schooling. And our friends. And family.

Households are not really that mobile, after all. Even if Municipal Corporations are service providers offering baskets of services, households don’t really move around freely. Their personal choices come first and hence, even with the most tardy of service offerings, people stick around with the Pune Municipal Corporation (PMC).

Thus, even with decentralization and creation of municipal corporations and gram panchayats competing with each other, we may not really find optimum provision of public goods taking place. And what that means is that people will keep flocking to the Tier 1 and Tier 2 cities, causing their municipal corporations to really crash under that huge migratory burden. Consequently, public goods provision will be bad.

But the so long as the losses on the public life are more than made up by gains on the personal front, people will be okay grumbling about it and life will go on, in a most un-Tieboutish manner. The Tiebout model goes wrong, because it makes the most impractical of assumptions, such as assuming perfectly mobile households.

Oh, why is it that the most interesting ideas are the ones that are mostly impractical?


I came out from the waters and walked to Hubby, who was lounging in the sand, enjoying himself. He was singing. How romantic! I thought. May be he’s singing, “Sagar jaisi aakhon waali…”

Hmmm. He looked into my (sagar jaisi) eyes and sang, “Ye kahaan aa gaye hum, yoo hi saath saath chalte!”

Aaaargh! Why is it that the most interesting ideas are the ones that are mostly impractical?

The Metaphorical Faux Pas of the Central Banker

What happens when you cross metaphors with economic ideologies? Controversies, as the RBI Governor discovered after calling the Indian economy a one-eyed king in the land of the blind. Many an eye popped with disapproval, many an eyebrow was raised delicately, many a pert nose wrinkled in metaphorical distaste and all hell broke proverbially loose.

The poor, poor man must have wondered what he’d said that was so very wrong. He was just trying to say that a 7.5% growth rate was not a bright spot by itself; it still was short of hitting the potential growth rate in India. So compared to a lacklustre world, we may seem to be quite the economic miracle, but well, a miracle that could get more miraculous. A one-eyed king in the land of the blind. Uh-oh!

Miffed, the Commerce Minister sniffed at the choice of words. Jayant Sinha too got into the fray with gusto claiming that to confuse the shining star with the shining one-eye was so not done. The FM, who after the Budget debate on Times Now, has discovered the lethal power of silencing loud critics with statistics, merely chose to say in a clipped, dignified fashion that 7.5% growth rate is enough to get celebrating. It’s rather unfair, to get so righteous about metaphors after having used them profusely through sher-o-shaayari to take interesting potshots at the opposition during budget speeches. Remember this, folks? “Kuch to phool khilaye humne, aur kuch phool khilane hai. Mushkil yeh hai bag me ab tak, kaante kai purane hai.” Ha!

Just as the NDA was busy meta-reacting to the poor Governor, Mani Shankar Aiyar, much to the delight of the UPA, chose to give his opinion on the issue. He cleverly and deviously converted the metaphor into an allegory to claim that the PM is in fact the one-eyed king of India, causing a kind of an allergetic or allegoristic reaction all across the NDA. The UPA must have, by now, gleefully decided that henceforth, every RBI monetary policy review will be followed by a press release personally crafted by Mani Shankar Aiyar. The RBI, which on normal days issues good monetary guidance, and on special occasions, well, issues good monetary guidance for variety, is really not used to such excitement and adrenalin. Recoiling in complete horror, it is said to be currently debating whether the Indian economy won’t be better off with only one review in every 8 years, rather than 8 reviews in every 1 year.

In the meanwhile, there was a complete kahaani mein twist as P. Chidambaram, whilst reacting to the nation’s demands about Ishrat Jahaan, chose to declare full and final support to the RBI Governor. Does the excitement never end? The Commerce Minister dished back her criticism, no holds barred. State of the economy, Indian and global, notwithstanding, this has now become a full fledged fight between the Commerce Minister and P. Chidambaram, whereas the RBI Governor, I’m sure, has decided to quit giving speeches for a while and just stick to good old monetary guidance.

Metaphorically speaking, the entire controversy is also perhaps indicative of the differences in the delivery mechanisms of the fiscal and monetary policies. The fiscal policy is passed as an Act of the Parliament; its tone does not lend itself to interpretation, its clauses have to be spelled out in black and white. The monetary policy in the Indian context, has always treaded that fine line between growth and inflation; in that sense, it has been more interpretative, more guidance oriented. It’s kind of a déjà vu, that as inflation targeting pushes monetary policy into a more concrete format, the RBI Governor faces ire for having been metaphorical in stating the stance of the Indian economy vis-a-vis the globe.

It was Alan Greenspan, a Central Banker from another time and another zone who had famously remarked, “I know you think you understand what you thought I said but I’m not sure you realize that what you heard is not what I meant.” The RBI Governor may not have been in concurrence of the expansionary monetary policy that Greenspan unleashed on the US prior to the crisis, but even he will not be able to find a fault line in this particular statement by Greenspan.









A case for Evenomics

Dear Reader,

Hi! Happy women’s day! Here’s a piece I wrote under my column Tweakonomics in the Hindu Business Line as a women’s day special! You can see it at; else read it here directly…Enjoy!


On women, economics and sexism

Look at the centre-piece of economic theory. The entire science hinges on the assumption that economic agents are rational. Households, firms, governments and bureaucrats all act in a rational fashion so as to maximise utilities, profits, revenues, rents or social outcomes. Really now. Can anyone smell sexism here?

Mister Ricardo

This is not to imply that rationality is a male domain and that women are irrational. But the very definition of rationality in that other things being equal, rational people think at the margin and always respond to monetary incentives, is so construed as to be necessarily a male domain.

Think of Ricardian equivalence. This theorem says a tax break given to a household today does not really prompt it to consume more immediately; that is, households look at their consumption inter-temporally i.e. across time. So households believe that any reduction in taxes today will be compensated by governments increasing taxes later and, hence, a tax cut may not really promote consumption, in a manner that was assumed by Keynes.

Did Ricardo never indulge in that fun thing called as impulsive shopping? Had he just thought of consulting Mrs Ricardo about her inter-temporal choices, he would undoubtedly, have been given a totally different angle to look at things, saving him a lot of criticism in the future.

Another centre piece of neo-classical economics that has been blasted by feminists is Gary Becker’s paper on “A treatise of a family.” Becker, using rational neo-classical norms goes on to prove that the utility of the family would stand maximised when each partner performed the task in which he or she “specialised”. Through socialisation, he claims, women have developed a comparative advantage in home production, and hence, a happy couple is one in which the woman stays at home. This inherently means that an egalitarian couple could not really maximise their well-being, a conclusion that derives from a premise based on male rationality.

Male models

A last example. Rating agencies failed to predict the sub-prime crisis. Obviously, react feminists acidly, given that the current set of models used by them look at things in a finite orderly, male fashion. So, the probability that things can go wrong becomes a function of fundamentals, bank regulations, housing prices, derivatives prices, etc. There is no place in this model to assume quirky agents, the behaviour of which may lead to super-quirky outcomes. Of course, all of the comments offered above come to a grinding halt when one thinks of Joe Stiglitz, who got famous for predicting the sub-prime bang on.

There is, however, a stream of thought emerging that such episodes could be prevented in the future by just making sure that we don’t simply man our policy posts, but rather wo-man them. Get that gender equality done, not just for woman empowerment, but for the empowerment that the intuition gets to the framework.

Because, maybe economic events cannot be classified just using formulae. Maybe the notions of rationality are gender-specific. Because, maybe markets are from Mars, but value is from Venus

Econ Mom watches Rail Budget with Lil One

Lil One has been quite unwell. He had a bad tonsillitis episode combined with a nasty viral fever and was grounded at home last week. From Wednesday onwards, he was actually quite on the recovery path; a quick barometer to gauge recovery is the “back-answering” index. He was shooting nasty answers at me quite happily and when on Wednesday, dinner saw him crack some of the most abominable toilet jokes, I knew that he was absolutely fine.

“Why don’t you go to school tomorrow? I am busy and you seem to be quite fit. And your jokes will find a much more errr…receptive audience,” I remarked nastily after having suffered about 21 of those, most of them cracked just when I was about to gulp my food.

“What? School? Nnnnaaah, this is so much fun!” Lil One said innocently and quite happily and then catching my nasty gaze, recoiled with a correction. “I mean…I mean…I mean I am quite unwell, Mom. Even Doc says the same thing. Are you going to send your sick child to school?”This one came with wide eyes and the sweetest possible tone.

“You are quite right about the “sick” bit, there. Ok. If you don’t want to go to school, that’s fine. But let’s study something. You have missed a lot of lessons.”

And so we sat down to read the lesson on the Parliament. The main function of the Parliament, said the lesson, was to debate and discuss and legislate. Pass laws for the betterment of the country. The Parliament is made up of the Lok Sabha and the Rajya Sabha and the President. Once the bills are passed by both houses, the President signs the bill into an act.

“Heehee, if I were the President, I wouldn’t sign so easily,” said Lil One, his eyes glinting mischief and wickedness. “What happens then, Mom?”

“Hmmm. I’ll tell you what, Lil One, it is to take care of wicked minds like yours that our Constitution is drafted so beautifully. The moment such wicked thoughts come to your mind, immediately an article comes in to offer correction. So, the Constitution provides that the President can refuse to sign a bill that has been passed by both houses only once. The second time around, he has to sign. Now do you see what a great job Dr. Babasaheb Ambedkar has done?”

I could see awe in Lil One’s eyes. He tends to respect people who can pre-empt mischief.

“The lesson says you can’t introduce money bills in Rajya Sabha. Why is that so, Mom?”

“Well, the LS members are elected by direct voting, but RS members are not. So matters pertaining to money have to be proposed by people’s direct representatives. Got that, pesky?”

“Oh! Is that what you keep talking about? The Budget? Does that mean the Budget only can be introduced in the Lok Sabha?”

“Bingo!” I beamed at him with pride. I like it when he talks economics. “The Budget is a proposal that the Finance Minister has for the country. So, he will present the Budget in the Parliament. The other MPs will listen and debate and discuss. He will then submit the Finance Bill for discussion and approval to the Parliament. All this is done under the supervision of the speaker. The FM is Mr. Arun Jaitley (Lil One nodded knowledgeably) and the Speaker is Mrs. Sumitra Mahajan.”

“Oh! I didn’t know that the Speaker was a woman!”

“Whether in Parliament or at home, only women are speakers, son.” That was Hubby. I gave him a poisonous look while Lil One giggled.

“Is that why you are busy tomorrow, Mom? Is the Budget going to be declared tomorrow?”

“No, sweetie. Tomorrow is the Rail Budget. It will be presented by the Rail Minister Mr. Suresh Prabhu.”

“What happens in the Rail Budget?”

“Well, Railways are a BIG project for the Government. So he’ll tell us tomorrow how many new trains will be introduced. Whether new tracks will be created to join remote areas. Whether trains will be made more hygienic. Whether superfast trains can be introduced for certain tracks. Whether he is planning to increase the fares for passengers and/or freight. Do you know that more business for Railways comes from freight than from passengers like us?”

“Wow! No, I didn’t know that. So will he raise tickets for the freight trains?”

“I guess not,” I said smiling at the peculiar “freight ticket” usage. “Business from the freight component has already been falling. His steepest competition for freight is trucks. And since diesel prices have been steady, I do not somehow see him risking increasing the freight rates.”

“Why is this Rail budget such a big thing?”

“Well, if he plans lots of new trains and tracks, then the Government will go shopping for steel. And the steel makers will employ more people. And they’ll shop for coal. And the coal businesses will increase employment. When the people working in the coal and steel industries get paid, they go shopping for clothes and books and food. So more people get employed in those industries and so on. So, if the Rail Budget promises lots of new investments and new tracks etc., then it is good news for employment and welfare of the people.” Whew! Explaining the Keynesian multiplier to kids is a tough job. Lil One didn’t look super convinced, but didn’t say much.

Next day was the Rail Budget. Since Lil One was at home, I told him to watch the Rail Budget with me. “But I won’t understand it!” He started to whine. “See the Lok Sabha in action once. You will get a better grip on that lesson!”

And so Econ Mom sat down with Lil One to watch the Budget. He was watching everything quite carefully, and in between listening to the announcements, I was pointing out where the Speaker sits. And showing him how the MPs sit on their benches in a semi-circular arrangement to debate and discuss.

As some shouting erupted over some announcement, I primly told him, “The chief function of the Parliament is to debate and discuss and pass laws.”

I was rather proud of myself for having converged my rail budget gyan with his civics lesson and was congratulating myself on having done a simply phenomenal job when Lil One piped up.

“But Mom, they are only shouting!”

I was flustered. “Ahm, well, that does happen at times, when they feel very errrr…passionately about an issue.”

“And look at that man. He is sleeping. Hee hee hee! And those two women back there don’t even know what is happening. That’s exactly how Swapnil looks in the class when Teacher is teaching us linear equations. Heeheee!”

Gawd! What a reality check! I guess I should have never got so enthusiastic about getting civics lessons to come alive. “Now if anyone asks me what I want to be, I know what I’ll say! I want to be an MP! It’s really easy and it’s so much fun!” Sigh!




Thought for food: Coco(a) Bonds and Dosa Economics!

Dear Reader,

This article appeared in the Hindu Business Line in my column “Tweakonomics”. You may want to read it directly at

Else, read it here…Enjoy!


Economics just became a whole lot more edible this week. It all started rather unexpectedly, with a student asking the RBI governor why dosas have become more expensive despite the disinflation phenomenon in India. Pat came the answer.

It’s not the dosa, stupid. It’s the tawa! It’s the tawa that has retained its price and reluctance to change the tawa technology has cost us, dear. Pun intended. And it doesn’t quite end there, does it? The hand that rocks the cradle, rules the earth. And the hand that rules the ladle, rules the worth.

Simple! Labour prices have skyrocketed, so much so that they nullify the reductions we get from ingredients. Ahem, not that we are getting too many reductions from those ingredients there. Important to note that the dosa is primarily made from urad dal, after all.

The statement from the Guv created quite a furore. The RBI has issued a new guideline saying that all future governors should necessarily be good cooks and have to know all ingredients going into major food dishes. The Bhumata Ranragini Brigade is now actively considering marching into the inner sanctum of the RBI saying they always knew that women would make better governors.

The RBI has launched a new Big Dosa Index to counter the very popular Big Mac Index as the Indian contribution to quick-fix inflation gauges. The CSO, ruffled at being sidelined, cleverly pointed out that since dosas are only sold on retail, the BDI can only be seen to be a quick gauge of CPI movements and is hence, an incomplete index. The RBI reacted sharply by also announcing the creation of a Tawa-Index to understand wholesale price movements.

Startup India has announced a new VC funding line to whoever gets new technology for creating dosas. It’s expected that support to this line of credit will be declared in the upcoming Budget through the Tawa Hatao, Dosa Bachao Yojana.

Commercial banks now know what it takes to reduce their NPAs. Risk rating on the over-the-counter food service business units has gone down drastically since they are seen to be the only guys who can continue to charge high and make high profits, no matter what the inflation numbers. The new base rate or PLR will be termed the DLR, the Dosa Lending Rate.

On a more international front, Deutche Bank made headlines with its coco(a) bonds ratings taking a beating from S&P. “Their standard is very poor,” said an RBI spokesperson. “We always knew that this cocoa business is very risky. Had they listened properly to the Hon Governor, they would have issued Dosa bonds. That is the only way ahead.” The Chinese are also thinking of replacing Dim Sum Bonds, which have in letter and spirit become Dim Sum since the devaluation, with Dosa bonds.

In the meanwhile, the FM was fairly terrorised when he was asked to host the halwa ceremony. Despite the fact that no student interaction was allowed at all, he made sure that he knew the halwa recipe by heart before meeting the media. For good measure, he also learnt the prices of rawa, sugar and ghee, all by heart.

Rumour is that after getting to know the phenomenal prices of ghee and dry fruits, he wants to create a halwa cess to fund such colossal expense programmes. It is estimated that this single move will move the fiscal deficit from 3.9 per cent to the magic number 3.6 per cent. The RBI governor is happy. Dosas sure work!

Econ Mom becomes the FM!

“Sssshh! Can you reduce the volume, guys? I am reading something important!” I yelled to Lil One and Hubby, who were watching some crazy TV show with great gusto.

“Mom, come join us…what are you reading anyway which is so important?” Lil One sounded hurt that Mommy wasn’t joining in the fun.

“Oh, she is reading news pertaining to the Budget,” said Hubby, in a maddening, condescending fashion. “As if she’s going to be the next FM.”

The words stuck to my mind. As if I am going to be FM. That would be a disaster of an order unknown. Econ Mom could almost see the entire circus unfolding.

A couple of days ago, the Halwa party was held at North Block. Well, that’s kinda traditional. The halwa party marks the printing of the budget documents. About a 100 officials who are involved in the printing of the budget documents stay at North Block from the halwa party upto the budget day so as to maintain complete secrecy regarding the same.

If Econ Mom were to be the FM, the first unmitigated disaster would be awaiting me at the halwa party in the format of Hubby’s Aunt, the Cook, who believes that she is the Only One who can..Cook.

“Oh no no no, is this the way to make halwa,” she would grumble, causing all the bureaucrats and budget experts, already weak from the crazy work schedule, to cower visibly before her towering persona. “And this is not halwa, to begin with. This is Sheera. Your cooks don’t even know how to make halwa.”

I would be busy trying to pretend I do not know the woman and do some intellectual talk on the fiscal consolidation path.

“Beti, next year, whether you are FM or not, and looking at your track record, I am really not sure you will be, but I am going to teach this joker to cook halwa. Tch, tch, tch…when the boss doesn’t know how to cook, how can I expect this poor man to be cooking properly!” This last bit would be probably addressed to Arvind Subramaniam, the Chief Economic Advisor, who would start to explain that he was NOT the cook. “No, no, no. Don’t give me excuses, young man. You are a very poor cook!”

Eve of the budget. The entire team would be discussing the last minute issues. “And Madam, be forceful when you make that announcement about cancelling the LPG subsidy for the richer households!”

And in the midst of the Chak De! huddle, Hubby would call, just to take stock and generally shake me up with the most stupid details. “Sweetheart, our washing machine stopped working today.”

“Ohk, look, I really can’t talk about this…we are in the midst of the LPG subsidy strategy..”

“Good you reminded me!” This, if I know him, will come in a super booming voice. “Say, sweetheart, we’ve run out of both cylinders. I know you asked me to book a refill, but I don’t have the number….errr, do you?”

“What? Gawd, how can you? Forgot to book a refill? I am really going to levy a special tax on Company Secretaries tomorrow.” That last bit would be hissed in that poisonous tone I generally reserve for him.

“Hey, cool down, honey…just joking…what are you so tense about? It’s just a budget!”That’s SO typically Hubby.

“Just a budget? JUST a budget? I have to announce it in the midst of antagonistic opposition members and later there’s a talk scheduled with Arnab Goswami…I am scared…”

“What are you saying? Scared of Arnab? Arre, don’t you worry, just imagine its me you are talking to and you’ll tear him down to pieces in that rude, impossible, toxic, inimitable fashion of yours, sweetheart. I give him 2 minutes at the most. He is going to meet his match today!”

Sigh! Was that a compliment?

Day of the budget. I reach the Parliament with the suitcase in hand…nnnnah, make that a purse, a real classy one. Hmm, I am dressed up and am walking up the steps when the cell phone rings.

“Moooooommmmy, I forgot to tell you…we had to take Geography maps to school today, else I’ll get a remark!” That was typically Lil One, who ALWAYS remembers what’s to be taken to school whilst at the doorstep or in the school bus. Grrr!

Gawd, this is so stressful! “Listen, I am going to be on TV. You can tell your friends too. And a remark or two is ok!”

“What? They finally gave you that lead role in Kabhi Bahu Kabhi Daayan? Dad was telling me! How embarrassing! I am not telling my friends. They’ll laugh at me. So now I’m getting a remark and plus everyone’s going to laugh at me….Aaaaaaaaaaarrghh!”

It’s final. Econ Mom really doesn’t want to be FM.