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Madhavankutty G

Madhavankutty G

1 Lead - Banking and Economic Research ET Prime

I started my nearly 14-year career as a research fellow with the Institute of Chartered Financial Analysts of India. Then came the switchover to industry when I joined Andhra Bank as an economist in the middle management grade. After four-odd years I moved to Bank of India as an economist in the senior management grade. I have had the opportunity to see the banking business from many different sides: treasury, risk management, and strategy and economic intelligence. Apart from being a member of various internal committees, one of my key responsibilities was to periodically apprise the board and top management on domestic and global macro issues. I am also a member of the monetary policy committee of the Indian Banks’ Association which deliberates on key macro-economic issues every quarter to provide views to the RBI for monetary policy. I am a visiting faculty with NMIMS, Mumbai. I am passionate about writing on the financial sector and political economy. I hold a masters degree in Business Economics and a PhD in Economics.

Email: madhavankutty.g@timesinternet.in

I started my nearly 14-year career as a research fellow with the Institute of Chartered Financial Analysts of India. Then came the switchover to industry when I joined Andhra Bank as an economist in the middle management grade. After four-odd years I moved to Bank of India as an economist in the senior management grade. I have had the opportunity to see the banking business from many different sides: treasury, risk management, and strategy and economic intelligence. Apart from being a member of various internal committees, one of my key responsibilities was to periodically apprise the board and top management on domestic and global macro issues. I am also a member of the monetary policy committee of the Indian Banks’ Association which deliberates on key macro-economic issues every quarter to provide views to the RBI for monetary policy. I am a visiting faculty with NMIMS, Mumbai. I am passionate about writing on the financial sector and political economy. I hold a masters degree in Business Economics and a PhD in Economics.

Email: madhavankutty.g@timesinternet.in

Banking

Loan-waiver demands for the industry are unrealistic. India, and its banks, can’t afford it.

Public sector banks (PSBs) don’t have the financial muscle to afford large-scale loan waivers as a lifeline to the Indian industry. It’ll eventually have to be funded by the government, which is terribly stretched at the moment. Such a move will restrict PSBs’ lending activity and can impact economic recovery – the last thing India needs at this critical juncture.

25 Jun 20200 comment
headset AUDIO SUMMARY . 01:29
Economy

Don’t cut direct stimulus fearing a debt overload. It can severely dent India’s economic recovery.

Contrary to the perception that higher stimulus will lead to an unsustainable debt burden, the reality might be just the opposite. By triggering growth, a debt-funded stimulus enables higher revenues for the government, reducing the size of borrowing programmes. The ideal strategy for the Modi government would be a direct and targeted stimulus funded by lower-yielding debt.

2 Jun 20200 comment
Economy

Economy needs the lunch to be served. It doesn’t have to be free.

A fiscal lifeline to the industry has to be conditional. There are tools that can ensure the exchequer gets good returns on the money invested to rescue companies. The TARP mechanism used by the US during the 2008 crisis is a classic example. For India, the returns from a private-sector stimulus can ease fiscal deficit by 5 bps.

8 May 20200 comment
headset AUDIO SUMMARY . 01:31
Economy

INR16 lakh crore hit; dual demand, supply shocks. The ravaged economy needs a big, swift stimulus.

The Indian economy is confronted with severe demand and supply blows. It’s a rarest-of-the-rare occurrence and the country must respond with a swift and large stimulus to support businesses, jobs, and wages. Deficit financing is an option — with the RBI possibly printing new money — to give an adrenaline shot. John Maynard Keynes would have approved.

1 May 20200 comment
headset AUDIO SUMMARY . 01:39
Economy

INR1.7 lakh crore may be small change. India needs a big-bang stimulus to skirt recession.

The world is confronted with a crisis similar to the ‘Great Depression’ in 1929. It calls for a tilt towards expansionary fiscal and monetary policies. India needs an additional spending of INR5 lakh crore and last week’s measures were woefully inadequate. The big stimulus has to arrive quick and fast if we want to avoid a full-fledged recession.

7 Apr 20200 comment
headset AUDIO SUMMARY . 02:00
Jobs

More twinge ahead: why the coming financial year would be a muted one for employees

Stock prices are a leading indicator and employment trend is a lagging pointer to a sector’s health. An ET Prime study of listed companies from banking, commodities, auto, software, and pharma spots a strong correlation between employment and stock-price movements. The steep stock price decline in FY20, particularly in March, indicates a tough time for employment in FY21.

25 Mar 20200 comment
Economy

Covid-19 shockwave: Indian economy needs a massive stimulus. The world can learn from China.

Covid-19 can be a massive blow for the Indian economy, particularly MSMEs, which employ about half of the workforce. It’s reminiscent of demonetisation – only the disruption may be exponentially higher. But India, and the world, can take lessons from China. It contained the virus even as it simultaneously planned a stimulus for the economy and may bounce back sooner than expected.

19 Mar 20200 comment
Banking

Yes Bank’s bond write-down can damage capital-starved India’s creditworthiness. Do a rethink.

RBI’s proposed write-down of Yes Bank’s perpetual bonds has grave implications for India’s ailing financial system. The country can’t be seen as indifferent to creditor obligations. It couldn’t have come at a worse time — just when India is making efforts to quickly expand its small bond market and tap international debt markets through a larger presence in global bond indices.

12 Mar 20200 comment
headset AUDIO SUMMARY . 01:56
Banking

IndusInd Bank has a long list of woes. Can its new CEO regain the market’s lost trust?

The IndusInd Bank stock has underperformed the Bank Nifty since August 2018. Blame NPA divergence following RBI’s asset-quality review and its exposure to IL&FS, telecom, commercial-vehicle loan, real estate, microfinance, etc. Sumant Kathpalia, who takes charge on March 24, must focus on low-cost liabilities and less-risky lending to get a fix on the downfall.

15 Mar 20200 comment
headset AUDIO SUMMARY . 01:37
Telecom

Is Vodafone Idea too big to fail? Why its collapse will hurt a billion-plus Indians

A large-scale migration of Vodafone Idea’s 300 million subscribers to Jio and Airtel will severely stretch their infrastructure, with a likely slide in service quality and standards. A duopoly can mean a spike in tariffs and slow down the spread of telecom services to rural India. Then, a possible bankruptcy is bad news for India’s ailing financial sector.

15 Mar 20200 comment
headset AUDIO SUMMARY . 01:25
Economy

Coronavirus is disrupting the global economy. But, for India, it’s both an opportunity and a threat

The outbreak may send the global economy into a disarray by disrupting the supply chains across China. It’ll open up opportunities for Indian manufacturing and softening commodity prices will ease the pressure on the fisc, but several domestic industries depend on China. Still, nobody quite knows the extent to which China’s official figures on the spread of coronavirus can be believed.

13 Feb 20200 comment
headset AUDIO SUMMARY . 01:42
Economy

Mission 2024: solving the productivity conundrum in India’s journey to a USD5 trillion economy

In a world where a shift from labour-heavy industrial production to robotics, increased use of information technology, and large-scale migration of workers are tilting the economic balance, India should look beyond traditional metrics to gauge real productivity. To achieve its ambitious 2024 target, the country should focus on economic effectiveness more than absolute numbers.

18 Dec 20190 comment
Economy

Green shoots or mirage? Early signs show a rise in gross savings. But there’s a missing piece.

Despite all the pessimism surrounding the state of India’s economy, some analysts and economists have spotted early signs of a recovery. While a few opine that the growth cycle may have bottomed out, a brokerage house recently put out an interesting research report with three key findings. However, they are counterintuitive when viewed from a different prism. Here’s why.

9 Dec 20190 comment
Policy and regulations

A tale of two regions: why the government should act fast to address the north-south economic divide

The Indian economy exposes a stark disparity. While its southern and western belts are exhibiting resilience amid a slowdown on higher disposable income and job opportunities, the central and northern regions — home to nearly half the population — are languishing. The government must turn this potential demographic dividend into reality before it becomes a nightmare.

25 Oct 20190 comment
Economy

India’s hunt for animal spirits: Lessons in economic management from Asian powerhouses can help

On Friday, the Modi government moved to arrest the growth slowdown with a raft of measures to boost systemic liquidity and demand. But India needs another round of structural reforms to sustain high growth rates over the medium to long term. And here, it can learn invaluable lessons from the best practices of economic powerhouses in Asia — Singapore, China, and Malaysia.

26 Aug 20190 comment
Banking

The big, fat Indian banking: how a handful of mega banks could ease liquidity

A mere consolidation exercise is unlikely to create the heft needed for competing with the big boys of banking globally. If India wants to build a more efficient credit-delivery mechanism, it should create four or five mega state-owned banks instead of the present 20. First of a three-part series on what needs to be done to live up to the potential credit demand.

26 Jun 20190 comment
Under the lens

IBHFL-Lakshmi Vilas Bank merger a win-win on home-loan business, lower costs

After merger, Indiabulls Housing will gain access to Lakshmi Vilas Bank’s branch network. Similarly, the bank’s shareholders can’t ignore the NBFC’s housing-loan portfolio. The RBI is wary of handing out banking licences to business groups with exposure to sensitive sectors, but it’s a fit case for a deviation from this conservative stance.

5 Dec 20190 comment
Insolvency

The impact of scrapping RBI’s ‘February 12’ order: INR3.8 lakh crore of NPAs in limbo, and the bad-bank debate revived

The Supreme Court decision won’t dilute the Insolvency and Bankruptcy Code (IBC) because banks can still choose to drag defaulters to bankruptcy courts. However, resolution of default accounts filed in various tribunals already under the IBC will get further delayed. Erring promoters will get a chance to resolve their accounts with the banks without the NCLT coming in their way.

9 Apr 20190 comment
Monetary policy

Jobs, price stability, and growth — the Modern Monetary Theory cookbook has the American and Japanese recipes. Add India to taste.

India can pick up a few tips from the US and Japan, which have used MMT to rejuvenate their sluggish economies. MMT policies are neither antithetical to growth and employment, nor does raising liquidity lead to price rise, as is often feared. Fiscal policy can be a vital tool to propel growth through capital expenditure and investment in infrastructure. Monetary policy plays a supportive role.

5 Apr 20190 comment
Lending

Importers still yearn for their lost LoU

The ban on the export-import business’s commonly used credit tool has derailed payment cycles for many. But is the whole sector being penalised for the misadventure of a few?

11 May 20180 comment
Lending

Is the power sector an Achilles heel?

Banks are staring at a huge rise in bad loans, as power-sector assets, which account for 60% of total infra lending, are turning toxic. The RBI's stringent 180-day time frame for the banks to agree on a resolution plan in case of a default means more skeletons could crash out of the cupboard.

1 May 20180 comment
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