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Showing posts from December, 2017

Will imposing import duties on foreign electronic products boost ‘make in India’ campaign?

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Recently the government of India raised import duty on electronic items including cellphones and TVs to allegedly boost its Swadeshi campaign of Make in India as well as government revenues (sic). Let us analyze this protectionist policy of government using sound economic laws and see if it is capable of achieving its stated goals. Economics and Psychology of Protectionism In the immediate aftermath of this hike in import duties the price of the imported electronic goods will go up choking some of the demand. This price rise will though not choke all of the demand. Those people whose price elasticity of demand is inelastic, e.g., a diehard iPhone fan, will continue to purchase these now costly imported goods. The price rise will reduce the purchasing power of their money e.g., if the iPhone was selling at 100 rupees before the 10% duty hike then it will now sell at 110 rupees. This means consumer will have to now spend more on iPhone leaving that much less...

Supreme Court wants to Regulate the Legal Profession

Last Tuesday the supreme court of India expressing concern over growing commercialization of the legal profession with lawyers demanding “astronomical” fees from litigants, which made it difficult for the poor to access justice, the Supreme Court asked the Centre on Tuesday to bring a law to regulate the field and to prescribe “floor and ceiling of advocates’ fees” . Let us examine supreme court’s demand of regulating the legal profession in India using sound laws of economics. First, the concern of supreme court re commercialization of the legal profession where lawyers are demanding ‘astronomical’ fees from the litigants is quite legitimate. But after this correct diagnosis of the symptom the treatment offered by the court isn’t sound at all. In fact it is antithetical to the concerns shown by the court as we will see in a while. To understand the issue reflected in court’s concern one needs to simply ask the question, why the lawyer’s fees are astronomical ...

Your Money in Bank is not Safe!

If Narendra Modi and Arun Jaitley get their way then when next time some bank will fail in India they will be legally allowed to confiscate all your hard earned saving, that you have deposited in that bank in the form of savings or term deposit accounts etc., to rescue themselves. Because doing so will be made legal by the government under the new bill that they are drafting, you will not be able to do anything about it once they do it! You will simply have to watch helplessly banks seize your lifetime savings. Modi government is drafting a new bill viz., the Financial Resolution and Deposit Insurance (FRDI) Bill , 2017 which will give these enormous powers to the banks and other financial corporations. In financial market jargon this method (sic) is known as ‘bail-in’. In just legal language this should be called embezzlement on a grand scale. After demonetization and GST this is another big scale confiscation scheme being devised by Modi and his ministers like Jaitley. ...