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Decision Making as Output and Bounded Rationality

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  The classical economics theories proceed on the assumption of rational agents. Rationality implies the economic agents undertake actions or exercise choices based on the cost-benefit analysis they undertake. The assumption further posits that there exists no information asymmetry and thus the agent is aware of all the costs and benefits associated with the choice he or she has exercised. The behavioral school contested the decision stating the decisions in practice are often irrational. Implied there is a continuous departure from rationality. Rationality in the views of the behavioral school is more an exception to the norm rather a rule. The past posts have discussed the limitations of this view by the behavioral school. Economics has often posited rationality in the context in which the choices are exercised rather than theoretical abstract view of rational action. Rational action in theory seems to be grounded in zero restraint situation yet in practice, there are numerous restra
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Reading the Union Budget: A Primer

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  The Union Budget is without doubt, the most important document the government presents in the Parliament each year. The reasons are not too far to seek. It is the statement that expresses the government’s plan to spend on various activities as also the government’s measures to raise the revenues from the various sources to meet its expenditure. Therefore, an analysis of the budget is always going to be of critical import. The Finance Minister’s speech comprises two parts. The Part A of the speech focuses on expenditure as also on the policy intent of the government. It is in Part A that the government announces its economic policy for the year. The issues of privatization, nationalisation, expenditure on populist schemes, allocations for various social sector activities, industrial policy, disinvestment etc. all get highlighted in Part A. Part B is about the tax proposals. It has perhaps lost some attractiveness following the GST which meant that indirect taxes by and large come unde
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Judiciary and Hindu Sentiments: Some Notes

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  A couple of judicial orders relating to freedom of expression and Article 32 among others attracted attention in the last few days. There was show ‘Tandav’ which apparently showed Hindu gods in a poor light. This naturally led to an out roar and leading to filing of complaints. The actors and producers and writers of the show were complained about. As police registered FIRs at multiple places, these grieved parties approached the Supreme Court for stay on the FIRs and anticipatory bail for the same. The Supreme Court refused any interim protection. Similarly in Madhya Pradesh, a stand-up comedian and his team were arrested for allegedly hurting the Hindu sentiments in their show. They approached the High Court for bail which rejected the same. These two issues have again opened up the wide debate on the freedom of expression and the limits that apply to it.   Unlike in the US where the freedom of expression is absolute, freedom of expression in India is subject to reasonable rest
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Gamestop Games!

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  In the US, there is an interesting battle going on between a group of redittors and the Wall Street. It has to do obviously with booking profits in the market. In pursuit of research on this battle where a group of redifftors are bringing down the Wall Street hawkish hedge fund to their knees, there appeared an inquisitive thread on Twitter. The tweet and the thread is available here . It would be interesting to understand what is happening through a perusal of this thread and the explanation given.   Short selling is not unusual nor something new. It has existed for years in the market. It is about booking profits through the reverse. Even in the great financial crash of 2008, there were quite a few who made money by shorting them something captured in the book Big Short by Michael Lewis. Traditionally, the speculators in the market would buy shares at lower prices and seek to sell them at higher prices. Yet, there are speculators who opt for the reverse. They sell securities w
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Notes on Punjab Politics

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  The events at the Red Fort and other parts of Delhi in the guise of farmer protests have brought the spotlight back on to the politics as it exists in Punjab. There is no doubt, a rising clamour for the arrest and crackdown of the farmer’s movements or at least the movement that is going on in the name of farm laws. The protest leaders might be busy disowning the actions at the Red Fort but cannot absolve themselves of the responsibility of their actions which led to this fracas. The protestors might have the backing of the media and the opposition parties, each wanting to hit back at the Modi government for their own reasons, but their agenda seems to be suffering a setback. However, the setback might not be visible in Punjab as it would be perhaps in Haryana or Rajasthan or Uttar Pradesh. There is very distinct Sikh identity to the current protests and thus the events would reinforce the perception that Sikh and Khalistani agenda in specific was the real agenda of the protest group
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Red Fort- A Trailer for the Future of Protests?

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  The government had warned of Khalistani infiltration in the farm protests and possibility of violence on January 26. The Supreme Court had chosen to believe the lawyers like Prashant Bhushan or Dushyant Dave representing the farm protest groups. It was an uphill task on the Republic Day to maintain security given the resources that are essential for providing security on the Rajpath. The outcomes are very evident with what happened in the Red Fort. It is no doubt a huge psychological defeat given the symbolism associated with the structure. Yet such moments have come in the life of a nation across the globe. India too has faced moments similar in the past but have conquered and reclaimed back. This too would be reclaimed. The might of the state will exert itself in the days to come. The movement as it exists might die soon. The narrative would see a distinct shift to the anti-national nature of the movement. It would perhaps be difficult to defend even though the might of the media i
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Fiscal Policy-A Note

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  The government without doubt plays a critical role in the economy. Given its volume and domineering presence, one cannot ignore the centrality of the government in giving direction to the macroeconomic plane. The role of course has been controversial and subject to many debates. There exists little consensus on the ideal nature of governmental role. While the classicalists believed the role of government in the economy to be minimal with focus on ensuring law and order, the Keynesians emphasised the centrality of the government intervention. While the classicalists favoured the supply creating its demand, it found its limitations in the Great Depression of 1929; John Keynes formulation was there was lack of demand and the government must step in to create the demand that became the foundation for macroeconomics and thus greater fiscal intervention. While the monetary school emphasised the role of money thus favouring a greater role of the Central Bank in framing the economic trajecto
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Farm Protests, Tractor March and 1982 Asiad Disruption

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  It is apparent that the talks between the government and the protesting farmers have broken down with no end to the deadlock in sight. The farmer groups apparently want a corner solution and seem to be in no mood to settle for any other solution. The government did offer them a sort of face-saver in suggesting a postponement in implementing the laws upto a year or year and half. This was perhaps in view of the upcoming Punjab elections next year and something for the farmers to boast about in those election. Yet as expected the farmer groups have rejected the same. The government would perhaps be anticipating some divisions in the groups over the latest proposals. It is conceivable there would be divisions, but would take time to manifest. The government is perhaps prepared for a long waiting period. Most groups are basically from Punjab with some from Haryana and a sprinkling from other states including Rajasthan and Uttar Pradesh.   Meanwhile there is a clamour for a crackdown
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