Swamynomics confirms R3XIT

Swamynomics puts the interests of India first

Swamynomics puts the interests of India first
Swamynomics puts the interests of India first

Swamynomics (noun):

The branch of knowledge concerned with the production, consumption, and transfer of wealth in a way which put the interests of India first;

  • fundamentals for which were created by a Harvard economist trained under a Nobel Laureate and

  • further enhanced by a Journalist & Chartered Accountant (CA) who still believes in the Swadeshi Movement;

  • a funny finance professor who is interested in learning and more recently by

  • a young CA turned capital markets specialist who rocks TV news debates on a daily basis.

Swamynomics is not to be confused with Swaminomics! This Op-Ed piece lists 7 reasons why an R3XIT will not hurt India at all.

  1. Quantum of FII investment in India:

    • World banks data shows Foreign direct investment, net inflows (% of GDP) to be in the range of 1.3 to 2.0%. Do we need this much media publicity for something which can impact less than 2% of our economy?

    • A well respected economist initially estimated that $100 billion dollars would exit India, if Rajan’s term was not extended. This estimate was calculated using proven methods of if & maybe. Subsequently a new number of $40 billion dollar investment in Money Markets was mentioned. But this is purely interest rate arbitrage where Foreign Institutional Investors (FII) borrow cheap money abroad and invest it in India for higher interest rates. Once the Fed announces Quantitative Easing 4 (QE4) all this money is going to return in a flash for more trustworthy US government securities. Finally the author now is questioning the quality of data published. Who are we supposed to believe?

  2. Greener pastures outside India?

    • Let us assume for a moment that the above estimates are indeed true. Almost all the money that FIIs invest into India come from their emerging market funds. If they withdraw their money from India their mandate only allows them to invest in other BRIC countries. Does this mean that the very suave investment bankers will have more faith in the economies of Brazil, Russia and China over India?

  3. Rupee has strengthened?

    • Everyone is applauding Rajan for the stability in the Indian currency. However if you see over the last 3 years the Rupee has been systematically weakened v/s the dollar. This is supposed to help exports which is still struggling and on the other hand is increasing our Oil bill.

    • US Dollar vs Indian Rupee chart

  4. Banks can’t lend at 4% and pay 6% on deposits.

    • Nobody has asked for this. Rajan unfortunately does not understand the Small and Medium Enterprises (SME) & the Unincorporated sector which are still paying 14-20%. By reducing the interest rates this sector will be energized which in turn creates jobs and spurs the economy. Interest rates for Fixed Deposits (FD) and other long term investments of over 3 years can have a special higher rate to protect the average investors and retirees.

  5. India First:

    • People argue as to why it is a problem for our central banker to be a part of Group of 30. Have any previous RBI governors been part of this group? Have this prevented FIIs from investing? FIIs have always come to India because they want to access India’s cheaper labor market and not because of their love for the central banker.

    • People argue what is the problem is using personal email address. Does one realize that this is grounds for dismissal at any corporate entity and probably is going to dearly cost a Presidential nominee?

  6. Charisma can never make up for lack of content:

    • A self-confessed economics non-expert wrote an open letter published by The newspaper that she wanted an extension for Mr. Banker because he smiled during his public policy announcements.

    • A senior foreign banker with decades of experience in India quirked – “my wife till recently never knew any of the central bankers my work so heavily depended on; but now she’s proud of the selfie she has with the current one”.

    • By putting himself out there he has hurt himself more if he would have been stuck to his day 1 line of not wanting to yield to social media demands.

  7. Fear & Sensationalism:

    • Vested groups have realized the best way to get mass approval for any decision is to create fear & sensationalism in the minds of the masses. Two prominent examples of these include God whispering to a world leader about items stored in the basement of a Palace surrounded by oil leaving the region still in chaos a decade later. The other steamed from Gordon Gecko’s greed which resulted in the largest ever bailout of the 1% by the 99%.

    • The strategy used here is very similar but the end goal is not clear. Is this another East India Company in the making? Only time will tell.

Need we say more?

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  1. Sir,
    Fantastic piece .
    Packs the Punches and punches holes in the So called self styled economists’ unfounded theories.
    Crisp and Neat

  2. How can you have a free market economy and have higher deposit rates for retirees and average investors? No economist will agree to this. In any free market economy, Interest rates shall be also market based. US lower rates did not come from Fed’s low rate. It’s because the nation has wealth and money is cheap!.

    • Your concerns are shallow.Savings for middle class timid indians can be protected with higher interest rates linked to long term deposits.Lower interest rates and accessibility of funds are important for SMEs/MSEs because they the ones which provide vast employment.Inflation especially agriculture has come about because of huge black money which has lead to hoarding of produce especially when there is shortage.This can only be addressed through improved agricultural practices leading to higher productivity.R3 is a real cube because he thought keeping high interest rates will bring down inflation.It will only work in countries where there is surplus of goods and surplus of money rolling.In India’s case we have surplus of government printed money and shortage in goods.Shortage in goods can only be changed through higher growth which in turn means we need lesser interest rate for enterprises/agriculturalists to borrow.Don’t compare USA to any other country.These jokers have licence to print any amount of money, ship it outside their country because most of trade happens in US$.All their imports are simply financed through printing dollars.No other country has this dubious freedom.Wait for the day when the world stops using fossil fuels.US$ will be so much it will kill the entire toilet tissue industry.

  3. People who want R3 to continue is not only a tinpot rundown socialite but also people like Jaggi of Swarajya,chitrasubramaniam of newsminute,DrBhalla,Virmani,TCA Srinivasaraghavan and they all think that DrSwamy has gone kaput on this issue.Why? Infact many die hard BJP fanboys think that R3 should continue not to say of the lutyens mafia.When Sven goran Erikksen was appointed England football manager, entire crowd of pundits said that it was a great decision.Mr Eriksen was a first rate dandy,kept on producing one dud result after another and these pundit clowns kept on finding merit in every dud decision.Not surprisingly, England gave the worst display,kicked out from the group stage of world cup and english public woke up to realise they had appointed a dud.R3 appears to me a similar case of mistaken belief,it perhaps require the gutsy DrSwamy to expose this dandy of RBI as a first rate dud.

  4. I have no expertise to judge the work of the RBI governor. But I find there is a big group asking for extension for him, which has never happened before. People emerge from woodwork to support his case offering various reasons, many of them being not credible. They talk as if there is no finance minister with a battalion of officers working with him. They are attributing all the good things happening in the financial field to the RBI governor and at the same time finding fault with FM for adverse things. I suspect all these are due to two main reasons:
    Dr. Swamy’s statements against the RBI governor and that the RBI governor’s purported statements against the government (intolerance etc).
    These people love anybody who says things against this government and Dr.Swamy has his own detractors.

  5. The malady of educated intelligentsia is the fear that there is no alternate. Unless you face the issue straight, no solution emerge. RBI and the country survived before Raghuram Rajan, it will survive and prosper even after. Why raise the bogey thru press and social media.
    Let the issue be decided on merits. Nobody is indispensable in a country’s progress.


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