Planet Money: On Why India Made Most Of Its Money Worthless
India’s prime minister recently decided to make almost all of the cash in his country worthless. He said it was meant to stop corruption. It turns out, that idea came from a very surprising source.
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“In many ways, people in India are actually quite comfortable, you know, going back and forth between science and spirituality. The lines are sometimes quite blurred.”
Listen to the full NPR piece, including comments from Dean Chakravorti
Evaluating India’s Radical Experiment In Eliminating High-Value Currency
Economist Bhaskar Chakravorti says even after all the drama, almost all of the cash in circulation in India made its way back into the banking system.
BHASKAR CHAKRAVORTI: Not all of that was legal cash. It just happened to be the case that India has – is extremely innovative in getting it on constraints.
STACEY VANEK SMITH: But the public loved it. Modi’s approval rating has continued to climb. It’s just amazing to me that people aren’t angry about this. Like, why do you think that people are supportive of this move?
CHAKRAVORTI: Because populism is a strange thing, right?
The Art of Curry Diplomacy
Infosys’ curry diplomacy was, no doubt, inspired by Donald Trump’s “Buy American, Hire American” order and his threat to revise the H-1B visa programme. I am not convinced that extravagant job-creation programmes in the US are the best use of Infosys’ increasingly scarce resources. While the Bengaluru-based IT giant may know how to mix its spices, to “curry favour” is a phrase that, oddly enough, has little to do with treating someone to a mean curry. Its obscure origins are in the grooming of horses: “To curry” is “to brush”. By spending resources on creating thousands of tech jobs in a country where the administration is gutting resources for science and technology programmes in an industry rapidly being automated, it seems Infosys is bringing the wrong curry and backing the wrong horse.
Read the full op-ed from Dean Chakravorti in The Indian Express
by Dan Robinson (MALD 2017)
Technological solutions for agriculture in the developing world have become fairly widespread during the last decade, but challenges remain related to reaching farmers in rural, less connected areas. Well known applications such as M-Farm in Kenya have provided SMS-based market and price information to farmers, while other applications, including Esoko in Ghana, have offered information on weather patterns and other factors. However, due to lack of digital infrastructure or farmer literacy, reaching those at the base of the pyramid remains a significant challenge.
An eKutir farmer’s irrigated tomato plants
eKutir, a social business based in Bhubaneswar in the Odisha State in eastern India, has developed an ICT-based model that is designed to create value at the base of the pyramid. The eKutir model provides “micro-entrepreneurs” working in farming, food sales, and sanitation with access to technology that helps to improve productivity and streamline value chains. Over time, there is potential for this system to make a substantial impact by increasing returns on investment and reducing transaction costs throughout a wide range of value chains.
With support from the IBGC, I had an opportunity to travel to Bhubaneswar in March 2017 to meet with the eKutir management team as well as some of the farmers and entrepreneurs involved in eKutir’s value chains as part of research for my Fletcher capstone project. During my time in India, I was impressed by the consistent positivity among the various people with whom I spoke.
What’s in a name?
by Imad Ahmed (MIB 2011)
Disputes over the Indus waters divide the Republic of India and Pakistan. There is talk of talks in Lahore this month between the countries’ representatives. Recognising shared historical identity stemming from the river could bring people of the two nations closer, and facilitate smoother discussions in the long term.
Early Lessons from India’s Demonetization Experiment
Did India just pull off a monetary and political miracle?
Consider the sequence of events in its demonetization saga. In November the government made a high-risk, high-stakes economic intervention in the world’s largest democracy, with an objective to reduce corruption. Overnight, 86% of cash in circulation was voided. In a country almost 90% cash reliant, chaos ensued. As I said at the time, it was a case study in poor policy and even poorer execution.
Read the full piece from Dean Chakravorti in Harvard Business Review
What Can India Teach Us About Abolishing High-Value Currency?
by Julie McCarthy
Bhaskar Chakravorti of The Fletcher School at Tufts University says most Europeans don’t rely on the 500 euro bill to conduct legitimate business any more than Singaporeans depend on their country’s S$10,000 bill, which has also been phased out.
“Those denominations are so high that generally, anybody who would have to deal with that value of a transaction would probably use a digital transfer for it,” says Chakravorti.
The Less Cash Budget
After the drama of demonetisation, the 2017-18 Union budget has been a decidedly sober affair. The budget speech, one of the longest in history, was short on game-changing ideas. The finance minister didn’t seem terribly perturbed by the gathering storm clouds worldwide: Populist surges in the US and Europe; a strengthening dollar and oil price uncertainties; prospects of trade or religious wars, maybe both. That the IMF has shaved off a full percentage point of India’s anticipated growth rate as the economic penalty for the November cash carnage did not seem to provoke much worry either.
Read the pull op-ed from Dean Chakravorti in The Indian Express
A New Abnormal
A little over two months has passed since the Narendra Modi government’s ambush on its own currency. In keeping with the unexpected nature of its launch, the manoeuvre has had some unexpected consequences. There are at least three ways in which the November 8 experiment has upended conventional wisdom.
Read the full piece from Dean Chakravorti in The Indian Express
India’s Botched War on Cash
[In the wake of demonetization], retail and wholesale markets have stalled around the country. Supply chain transactions, real estate deals, and even weddings and funerals have been frozen. Consumers are coping with lines that are frustrating even for Indians used to standing in lines or waiting for basic services. People up and down the income spectrum are dealing with changing cash withdrawal policies and empty ATMs. The nation’s status as the world’s fastest-growing big economy has been severely imperiled and its currency risks being further devalued, a situation made worse by prospects of a strengthening dollar after the U.S. election.
Sounds bad, right? But there is a question that hasn’t been asked: Is there a digital upside to this crisis?
Read the full piece from Dean Chakravorti in the Harvard Business Review
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