“If poverty were communicable, its incidence would be far lower by now”

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I today read an excellent article — The State of Global Poverty by Senior Vice President and Chief Economist of the World Bank Kaushik Basu in Project Syndicate. Here is an excerpt from his article.

The economic geography of the world is changing. The eurozone faces the specter of another round of stagnation; Japan has slipped into recession; and the United States, despite relatively strong performance in the latter part of 2014, has raised concerns worldwide with its exit from quantitative easing. Meanwhile, emerging economies have continued to perform well. India and Indonesia are growing at more than 5% per year; Malaysia at 6%; and China by more than 7%.

The scale of the global change can be seen when purchasing power parity (PPP) – a measure of the total amount of goods and services that a dollar can buy in each country – is taken into account. According to the figures for 2011, released last year, India is now the world’s third largest economy in terms of PPP-adjusted GDP, ahead of Germany and Japan. The data also revealed that China would overtake the US as the world’s largest economy in PPP terms sometime in 2014 – a shift that, according to World Bank estimates, occurred on October 10th.

Despite this progress, a large proportion of people in developing countries remain desperately poor. Globally, the poverty line is defined as a daily income of $1.25, adjusted for PPP – a line that many criticize as shockingly low. But what is truly shocking is that nearly one billion people – including more than 80% of the populations of the Democratic Republic of Congo, Madagascar, Liberia, and Burundi – live below it.

One reason global poverty has been so intractable is that it remains largely out of sight for those who are not living it, safely somebody else’s problem. If poverty were communicable, its incidence would be far lower by now.

Another reason poverty endures is persistent – and, in many places, widening – inequality. The current level of global inequality is unconscionable. According to some back-of-the-envelope calculations, the wealth of the world’s 50 richest people totals $1.5 trillion, equivalent to 175% of Indonesia’s GDP, or a little more than Japan’s foreign-exchange reserves. If one assumes that this wealth yields 8% per year, the annual income of the world’s 50 wealthiest people is close to the total income of the poorest one billion – in other words, those living below the poverty line.


Global Economy Faces Strong And Complex Cross Currents


The world economy is facing strong and complex cross currents.  On the one hand, major economies are benefiting from the decline in the price of oil.  On the other, in many parts of the world, lower long run prospects adversely affect demand, resulting in a strong undertow.

International Monetary Fund (IMF) released World Economic Outlook Update yesterday in Beijing, China. IMF expect stronger growth in 2015 than in 2014, however their forecast is down from last October. The forecast for global growth in 2015 is 3.5%, three-tenth of a percent higher than global growth in 2014, but three-tenth of a percent less than their forecast in October. For 2016,  IMF forecast 3.7% growth, again a downward revision from the last World Economic Outlook.

The cross currents make for a complicated picture for the countries. Good news for oil importers, bad news for exporters. Good news for commodity importers, bad news for exporters. The oil price decline increases real income, decreases costs of production for firms, and both lead to more spending. The effect can potentially be large. To the extent that the price decrease is persistent, oil exporters will have to reduce their level of government spending. Some energy firms may also face financial risks.

Since August 2014, the dollar has appreciated in real terms by 7%, the euro has depreciated by 3%, and the yen by 10%. Good news for countries more linked to the euro and the yen, bad news for those more linked to the dollar. In short, many different combinations, many different boxes, and countries in each box.

IMF forecasts reflect the increasing divergence between the United States on the one hand, and the Euro area and Japan on the other.  For 2015, they have revised US growth up to 3.6%, Euro area growth down to 1.2%, Japan growth down to six-tenth of a percent. Some of the largest downward revisions are in emerging markets, notably in Sub-Saharan Africa, the economies of the Commonwealth of Independent States (CIS), and Latin America. They were smaller in Emerging Asia, where growth is still very high, particularly in its leading economies like India (6.3% for 2015 and 6.5% for 2016) and China (6.8% for 2015 and 6.3% for 2016).

Unfortunately, the positive developments are offset by bad news on a number of fronts. Economic Counsellor and Director of the Research Department of the IMF Olivier Blanchard said that assessing the favorable effects of the decline in the price of oil in the current environment is difficult. This decline may turn out to be a stronger “shot in the arm” than is implicit in the forecasts.


Blanchard, Oliver (2015),  Global economy faces strong and complex cross currents, iMFdirect – The IMF Blog, 19 January.

International Monetary Fund (2015),  World Economic Outlook Update, IMF, January.


The Road To Normal Is Proving To Be Bumpy

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Simon Kennedy said that stunning monetary-policy shifts in Switzerland and India sent markets on wild rides, highlighting Federal Reserve Chair Janet Yellen’s November warning that “normalization could lead to some heightened financial volatility.”

Today, Reserve Bank of India (RBI) cut their key interest rate for the first time in 20 months and Swiss National Bank (SNB) abandoned a three-year-old cap on the franc’s gains. Both decisions were unscheduled and, in Switzerland’s case, unexpected. Swiss franc surged 27% against US dollar while the surprise rate cut by RBI boosted benchmark stock indices 2.6%, the biggest percentage gain since May 9th, 2014. These decisions indicate the prevailing divergence in the global economy. Central banks are no longer aligned and they are often a source of volatility.

SNB dismantled the franc’s 1.20 per euro ceiling a week before the ECB’s expected announcement of quantitative easing. That move would intensify upward pressure on Swiss franc, rendering the cap untenably expensive. RBI reduced the repo rate by 25 basis points to 7.75% after weakening of inflation giving them room to support the Indian economy growing half the pace of four years ago.

In the end, central banks showed that they still have the power to stun. Forward guidance has its limits as policy can shift abruptly when economic conditions change and officials still like the odd surprise. Axel Weber, former Bundesbank president and now chairman of UBS Group AG commented “Better an end with a shock, than shocks with no end.”


Creativity And Innovation


The terms “creativity” and “innovation” are often used interchangeably. According to Teresa Amabile, creativity is essentially responsible for all of human progress. Basically, creativity is the production of anything. It could be an idea, a tangible product, or a performance. What is developed should also be different from what has been done before in some way. Creativity in the workplace should also be appropriate to some goal or meaning. (Goleman 2015)

It’s difficult in some domains to talk about usefulness. One may argue, what does appropriateness mean in the visual arts? There, appropriateness means it expresses some meaning that the artist intended. But in business, creativity has to “work” in some way. It has to make a contribution in creating or adding value.

The connection between creativity and business success is very important, although it’s often overlooked. In a competitive environment, a business cannot succeed without innovation. And innovation depends on creativity. Creativity is the front end of a process that results in innovation. The more creative and innovative you and your team members are, the more long-term success you will achieve.

Creativity is about coming up with the big idea. Innovation is about executing the idea — converting the idea into a successful business. (Govindarajan 2010) Creativity is a function of knowledge, curiosity, imagination, and evaluation. Innovation is the successful implementation of those ideas.

Only ideas do not get you so far. Consider companies that struggled even after a competitor entered the market and made the great idea transparent to all. Did Xerox stumble because nobody there noticed that Canon had introduced personal copiers? Did Kodak fall behind because they were blind to the rise of digital photography? Did Sears suffer a decline because they had no awareness of Wal-Mart’s new every-day-low-price discount retailing format? In every case, the ideas were there. It was the follow-through that was lacking. This occurs when people are not very motivated, or proper systems are not in place. Such workplaces have difficulty hearing the creative ideas, developing them, letting them grow, and figuring out how to implement them successfully.

Govindarajan (2010) said that innovation initiatives face their stiffest resistance after they show hints of success, begin to consume significant resources, and clash with the existing organization at multiple levels — that is, long after the idea generation stage. In other words, innovation is possible only when there is a healthy mix of creativity on the front end, and solid systems in place to foster that ingenuity.

Bureaucracy destroys initiative. There is little that bureaucrats hate more than innovation, especially innovation that produces better results than the old routines. Improvements always make those at the top of the heap look inept. Who enjoys appearing inept?” — Frank Herbert, Heretics of Dune

Festival, Nature, Religion

Makar Sankranti Is Not Uttarayana

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We celebrate January 14th as Makar Sankranti — the day on which the sun begins to rise in the Makara Rashi (Zodiac Capricorn), Sankranti meaning entering. There is a common misconception that Makara Sankranti is the Uttarayana (winter solstice).

From time immemorial, the days on which the sun touches its northernmost and southernmost points are noted. These are called solstices — winter or summer. In Sanskrit, the journey southwards is called Dakshinayana, and the one northward is called Uttarayana, ‘dakshin’ and ‘uttar’ being south and north respectively. The winter solstice falls on December 21st, and hence Uttarayana begins on that day, while the summer solstice falls on June 21st, when Dakshinayana begins.

While the exact day on which the winter or summer solstice occurs remains steady (within one day error), there is a slight change in the way the Earth’s rotation axis is aligned to the sun. Due to axial precession of the earth, the date of Makar Sankranti is shifting away from the actual season. In astronomy, axial precession is a gravity-induced, slow, and continuous change in the orientation of an astronomical body’s rotational axis. In particular, it refers to the gradual shift in the orientation of Earth’s axis of rotation.

Every year equinoxes slide by 50 seconds i.e. approximately 1 day in every 70 years due to precession of equinoxes, causing Makara Sankranti to slide further. As a result if Makar Sankranti is considered as Uttarayana then as it is sliding. Makar Sankranti was on December 31st in ca. 1000 CE. The Makar Sankranti and Uttarayana coincided during the times of Aryabhata, around 1,500 years ago.

Now Makar Sankranti comes on January 14th, however it continues to hold the importance in Hindu rituals. It marks the beginning of auspicious times. On this day, thousands of devotees take a holy dip in river Ganga and other holy streams. Many Hindu devotees take a holy dip at Ganga Sagar, where river Ganga meets the Bay of Bengal. 

 Makar Sankranti is about nature, energy of the sun, harvest of new crop, and progress of mankind. Happy Makar Sankranti!


Vahia, Mayank,  Why do we celebrate Makar Sankranti on January 14 every year? DNA (March 9, 2014)


Why Does The Life Seem To Be Complicated?

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I don’t know why I am writing this but something inside me is driving me towards it. Life is so much about achieving and running after success that we actually miss the fact that we are forgetting how to live. There is so much in life to live for, to feel for, that we can take the last breadth with full of satisfaction and with the feeling that “I lived my life to the fullest.”

Today I am here in my apartment living alone with a mindful of memories and heartful of hopes and expectations. I never planned for something too far, even when I was a kid. That’s why my parents are worried about me so much. I for myself have always tried to be simple and keep things around me simple; though whatever or however hard I try things and people end up being complicated. I really never could understand why it’s so. Sometimes, I feel that I do understand people but more I find it’s more complicated. I just wonder that why things can’t be as they seem to be.

I just thought of sharing how complicated the things could be. I belong to a family which was once one of the reputed and wealthy landlords of Bengal during the British reign. But as I see now I am just an ordinary middle class guy who doesn’t want to be ordinary anymore. I am born and brought up outside Bengal but still I got a lot of special feeling and attachment toward my mother tongue and the Bengali culture. Though I dislike a lot of Bengalis who are residing there but divided into two groups – one those have completely taken up the modern westernised culture so much that they have forgotten their rich cultural and linguistic heritage, and the second includes those people who although are mindful of the culture and traditions but are not doing anything for it or to take it ahead; they are instead wasting their time in fruitless politics wishing that some day things will change. This is solely my views based on my observations and with no malice or offence to anyone; just an honest observation. Believe me this is not an end.

When I was a kid at school, things were not very simple either but were not as complicated as they’re now. The memory of earlier parts of my schooldays is blurred since I had been changing school every third/fourth year. My dad was in a bank and they got this really freaky thing called transfers on promotions. I love the travelling part and the opportunity of making new friends but rest all of it I hate. If you are living in a place for sometime then either you get bored with the damn place or you get attached to it. I just wanted to runaway from some places but at some places I got attached, I felt connected.

Sometimes, spotting me in a crowd of students in a school was easier than spotting a butterfly in a swarm of bees. Well, people say that I got an innocent face and I hate that comment. That’s rubbish! I believe that innocence and ignorance go side by side. But yes my “innocent” face saw me through a lot of troublesome situations. But the reason that I am easily spotted is not how I look but it’s what I do and these are my attributes but people say I got an attitude problem. I say to them “you got problem with my attitude, then it’s not me to worry about.” This often makes things complicated for me.

In school, things were far simpler except for the new mid-session admission exercises and the subsequent adjustment hassles. During that time, there was nothing much to do except waking up, go to school, come back, do homework and in between relish delicious home cooked meals and lastly go to sleep to start the cycle again.

In schools, it was also easy to befriend any girl. You go to anyone start talking randomly and things just went cool. In schools, girls have open minds to make friends with boys. But as we grow up, things do not actually change people get complicated. If you are famous, people like to talk about you but not to you. People like to acknowledge you but not know you. In college, the complications are not just with girls, it’s between friends too.

When I was in my secondary school, we used to hangout in a group of 5 most of our time. But today, one of the five is depressed or disturbed — it’s a bit complicated as I couldn’t find the reason — wants to avoid us even when me meet after a long time. Honestly, I do care about them and what’s happening in their life as we have grown up together. As we are studying at different places now, I am not always properly updated. Also, our holidays don’t always match. Actually it’s been so long time that I find myself like a stranger and sometimes wonder what to talk about. I am meeting them so infrequently that I hardly know anything about their present. It’s not my fault, everybody is at different places to pursue for their career. We have joined that shit rat race, without actually knowing it.

When we were in school nothing mattered. Even when we met after long vacations, it used to be a great fun always. Earlier it was so simple, even when we made fun of each other all the time, but now people are feeling offended quite often. You may say that things change with time. But, I feel that with passage of time, as we are getting busy in our career, we are complicating our life.

I am not sure whether I have any true friend now with whom I can hangout without any inhibition. Anyone gets offended with anyone on petty matters and the worst of all they keep grudges! Also, it seems that they will carry those grudges to their death-bed. I do sometimes brawl with my friends but I never keep grudges or stop seeing them. I have also never even said sorry to anyone after that. And if I had any problem, I just tell them on their face. But now I feel scared of saying anything good or bad because it may not be appreciated unless I am sure that I have a solid reason for that.

I am feeling very sad for my roommates. They used to be like best friends forever since our first year in the college; but now they don’t even want to see each other or even talk! They talk indirectly. When one comes in the other one goes out as if they are a married couple waiting to get divorced. Actually, things are never so complicated, it’s just how one perceives it that matters. We only make the things complicated as we only see everything through our glasses and sometimes these glasses are tinted.

You always make friends and have fun but remember never allow any complication to creep in from the beginning. In case of any hint of complication, do talk it out among yourselves and never discuss with any third person. That third friend may create a breach in the friendship. Sometimes such actions are intentional and motivated and we realise that when it’s too late. So, if you want to lead happy life, then keep it simple. I know that it’s pretty difficult to keep the things simple, but any effort is worth it.


A Very Inspiring Blogger


I am excited to announce that Indrosphere was nominated for a Very Inspiring Blogger Award! A couple of days ago, Indrosphere was nominated by lovely Somali K Chakrabarti of Scribble and Scrawl for the Very Inspiring Blogger Award. When I received her message, I had to read it over and over again to make sure I got it right, even though it was quite straight forward.

Awards are always amazing whether they are virtually given or awarded in person. Thank you Somali, your creativity and inspired words are so fueling for me. It means so much to me when someone, somewhere, finds what I do worthy of recognition. And coming from a great writer like Somali, I couldn’t help but do a little dance of joy.

Somali is a management consultant with a fantastic background. She describes herself as a reader, blogger and nature-lover with an appreciation for language, art and culture. It’s my pleasure to be connected with such a talented blogger. In fact, it was she who found Indrosphere and commented on one of my posts. I enjoy interacting with her through our blog posts and comments.

blogging-award3I googled about the award. The Very Inspiring Blogger Award is passed from blogger to blogger, some might say like a chain letter, but I like to think of it as a thread of gratitude, sharing and connection. It links bloggers with similar notions and ideas together; but by similar I don’t mean people who agree. As the title suggests it is about linking people who inspire and that is one of the things I’m most passionate about.

Once nominated, I have to write seven things about myself and I have to nominate fifteen bloggers for this award. As per the rules seven things about myself, in no particular order:

  1. I am mathematician by education but banker by profession.
  2. I am passionate about my work and in love with my family.
  3. I believe that the most meaningful gift a parent can give a child is the love of travel. Thank you, Mom and Dad!
  4. I am still a child inside me and I love playing with kids.
  5. I love foods.
  6. I love watching movies alone but I hate eating alone in restaurants.
  7. Nothing makes me happier than sharing a meal and a bottle of wine (or two) with good friends.

Here are my nominations; fifteen incredible blogs and bloggers who have touched and inspired me in different ways:

  1. 2HelpfulGuys
  2. A day in the life of India and beyond
  3. Bucket List Publications
  4. China Sojourns Photography
  5. Edgeofhumanity
  6. Everything Candid
  7. Kapil Srivastava
  8. Katherine Scrivens
  9. Prasun’s Photography
  10. Ray-trospective
  11. Rose Thomson
  12. Some Good Eats
  13. Something Special
  14. Translations
  15. Wrong Hands

There are so many more blogs I enjoy, but alas I had to narrow it down to fifteen. My apologies!


Banks Are Adjusting Their Activities To Absorb Bank Levy


On April 16th, 2010, the International Monetary Fund (IMF) proposed the idea of a “financial stability contribution.” It was proposed as one of three possible options to deal with the crisis similar to the recent financial crisis of 2007-10. These options were presented in response to an earlier request of the G-20 leaders, at the September 2009 Pittsburgh summit, for an investigative report on all possible options to deal with the crisis. Financial stability contribution or bank levy is a tax on banks’ balance sheets (most probably on their liabilities or possibly on their assets) whose proceeds would most likely be used to create an insurance fund to bail them out in any future crisis rather than making taxpayers pay for bailouts. This is in addition to existing deposit insurance schemes, which is primarily to cover discrete failures in normal times.

Bank distress can have severe negative consequences for the stability of the financial system, the real economy, and for public finances. Regimes for the restructuring and resolution of banks, financed by bank levies and fiscal backstops, seek to reduce these costs. Bank levies attempt to internalize systemic risk and to increase the costs of leverage.

In case of a crisis, the management, shareholders, and creditors do not bear the full systemic costs of a failure, while the real economy feels the burden and society pays the price, whether in the form of bailouts, lost productivity or unemployment. While profits remain privatized in good times, downside risks are socialized.

Systemic banking crises have imposed fiscal costs of up to 7 percent of gross domestic product (GDP) in some countries, and output has fallen by 23 percent compared with long-run trends. Crises increase public debt significantly, aggravating the risk of public sector default.

To lower the probability of banking crises and internalize the costs of bank distress, policy makers have chosen two main instruments. First, the new Basel III regulations impose higher capital requirements for banks (and thus lower leverage), demand better quality of regulatory bank capital, and implement capital buffers to account for systemic risk. Second, regimes for restructuring and restoring banks have been established. They rely on fiscal backstops and bank levies, which seek to both internalize systemic risk and increase the costs of leverage.

Following the financial crisis and the subsequent imbalances for financial institutions and even national economies, legislators all over the world have introduced various measures concerning the regulation and supervision of financial institutions and financial markets. In this context, some countries have introduced bank levies some of which have been given the form of a tax while some others are regulatory levies. Since 2009, 14 countries have introduced compulsory bank levies (Belgium, Finland, France, Germany, Hungary, Iceland, Korea, the Netherlands, Portugal, the Slovak Republic, Slovenia and the United Kingdom) or stability fees (Austria, Belgium and Sweden). In addition, Greece has operated a bank levy since 1975 and Australia has had a supervisory levy dating back to 1998. With the exception of Finland and Slovenia, these are permanent measures.

Bank levies are generally calculated by taking banks’ total liabilities and deducting equity and retail deposits/insured deposits, etc. Every country has different rate and formula to determine the composition of the tax base. In a few countries like France, it is levied on the amount of risk-weighted banks’ assets, which are used for the determination of banks’ capital requirement. Also, the notional amount of off-balance sheet financial derivatives less used for hedging etc are included in some cases.

A research conducted in Germany to study the effect of the bank levy indicated that in the short run, banks could adjust by reducing their lending activities, increasing their loan rates, and/or lowering deposit rates to compensate for the increase in their funding costs due to the levy. The extent of this adjustment depends on the pricing power in loan markets. In the long run, a bank levy might also affect banks’ risk-taking behaviour.

As a consequence of negative deposit rate policy of the European Central Bank (ECB), the profit margin of the European banks are getting squeezed. Many German banks have partially passed on the cost of levy to their customers in December 2014 on selective basis.


Buch, C. M., B. Hilberg and L. Tonzer (2014), Taxing banks: an evaluation of the German bank levy, Discussion Paper No. 38/2014, Deutsche Bundesbank, Frankfurt.

OECD Special Feature (2013), Revenue Statistics 1965-2012, OECD.

OECD (2012), Funding Systemic Crisis Resolution, Presentation given at the Meeting of the Investment Committee, Paris, 20 March 2012.

Celebration, Food, Friends

It’s A Nice Afternoon — Last Of 2014


Jaya and Babai were urging me since yesterday that I must celebrate the beginning of the new year. I earlier planned to welcome the new year in solitude, staying in at my home.

In the morning Subhash informed me that he has arranged for a Masgouf lunch at Iraqi Hunting Club along with his department colleague Nadia. He said that only we four people will be there — three from his department including him plus me.

Today being the year-end, I was busy in my department to ensure that the deals are complete, accruals are properly assessed and booked, and securities are marked to market, etc. Anyway, as I finished, we rushed to the club. Nadia & Russel were already there waiting for us. By the time we reached there, the fish was ready to be served.

We enjoyed the fish along with khubuz and fried rice. We had nice chat over our lunch. The lunch was followed by tea. In Iraq, no meal is complete without tea. Tea is also called here as chai! We were sitting on the side terrace and enjoying the sun.


The sun started it’s last journey towards the western horizon for this year 2014. It started becoming a bit chilly so we had a round of coffee — turkish coffee. After settling the tab, we started walking out through the lawn.


New Year eve without whiskey is incomplete. We went to the alcohol shop inside the club. To our dismay, we  found that they have run out of stock of single malt whiskey. So, we returned with Chivas Regal.


Another activity of New Year eve is wishing and responding to New Year wishes from friends and family. These are a few such occasions in our mundane, busy life when we connect to our near and dear ones. We used to make cards or buy cards, write the messages and send them but now we do it on Facebook & Twitter! I feel that we are losing the personal touch in our relationships.

Thanks to Nadia & Russel for being with us in the afternoon and making the last afternoon of 2014 a different and of course a special one.

I had an amazing 2014. Now let’s see you top that, 2015!


2014 In Review

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The stats helper monkeys prepared a 2014 annual report for this blog.

Here’s an excerpt:

The concert hall at the Sydney Opera House holds 2,700 people. This blog was viewed about 21,000 times in 2014. If it were a concert at Sydney Opera House, it would take about 8 sold-out performances for that many people to see it.

Click here to see the complete report.