How does the depreciating rupee affect one’s personal savings and finances? A new book explains it

This article was first published in the Scroll. 

https://scroll.in/article/1093589/how-does-the-depreciating-rupee-affect-ones-personal-savings-and-finances-a-new-book-explains-it

An excerpt from ‘The Economy Is Personal: How Big Economic Forces Shape Your Money – And What You Can Do About It’

Have you ever heard someone say, “The rupee is falling against the dollar”? It might sound like financial jargon, but it actually has a very real impact on your day-to-day expenses – even if you’re not travelling abroad. Let’s break it down.

Every country has its own currency. When countries trade with each other, they need to convert their currency into the other’s. So, for example, if India wants to buy something from the US – like crude oil, electronics or machinery – it has to pay in US dollars, not rupees.

Today, 1 US dollar = Rs 75. But next month, 1 US dollar = Rs 80.

This means the rupee has weakened, depreciated or lost value compared to the dollar. Earlier, India needed Rs 75 to buy something worth $1. Now, it needs more rupees, that is, Rs 80, to buy the same thing. That extra Rs 5 has to come from somewhere – and that “somewhere” is your wallet.

So, when the rupee weakens, imports become more expensive, because we need more rupees to buy the same goods from abroad. And since India imports many essential items, like fuel, cooking oil, smartphones, and electronics, those prices go up for everyone. This increase in prices contributes to overall inflation.

Think of it like shopping at a store where the price tag is in dollars. If your rupees are worth less each week, you’ll have to spend more to buy the same things.

That’s why economists and policymakers closely watch the exchange rate. A weak rupee can make imported goods expensive, and that, in turn, can raise prices across the economy – even for things made in India, because transport and input costs can go up.

Why does a falling rupee make your grocery bill heavier?

Because when imported goods and transport get pricier, those costs ripple through the entire supply chain. When the rupee drops, even your shampoo bottle, bus ticket or smartphone can feel the pinch.

So … What does the exchange rate have to do with the price of milk? If fuel prices rise due to a weaker rupee, transport costs go up and, suddenly, your morning milk costs Rs 2 more.

Inflation refers to the rate at which the prices of goods and services rise over time. In India, this is most commonly measured using the consumer price index (CPI). It is a statistical measure that captures the average change in prices of a fixed basket of items, such as food, fuel, clothing, housing and healthcare, that households typically consume. The base year, currently 2012, is assigned a CPI value of 100. All subsequent values show how much prices have risen since that year.

CPI in 2024: 190. CPI in 2025: 194

This means that prices in 2025 were 94% higher than in 2012. But to find inflation for one year, we look at the rate of change between the two years.

So, inflation is 2.11%, even though the CPI level is 194. The CPI tells us prices are almost double what they were in 2012, but the year-on-year increase is what we refer to when we say that inflation is 2.11%.

The Ministry of Statistics and Programme Implementation (MoSPI) publishes CPI data every month. The RBI monitors it closely to make interest rate decisions. If CPI rises sharply, even due to something like a tomato price spike, it can prompt the RBI to raise interest rates, which affects loans, EMIs, savings returns and overall economic activity.

Can everyday consumers affect global inflation?

Absolutely. When millions of people suddenly start spending more (like after the Covid-19 lockdowns), businesses struggle to keep up with demand. As we saw earlier, this pushes prices higher and is known as ‘demand-pull inflation’. For example, when Americans began “revenge spending” in 2021, global supply chains couldn’t catch up, which drove up the prices of electronics, furniture, fuel and even shipping containers. What you buy, how much and when – these choices affect the entire economy.

Now let’s bring this back to your wallet. Where does Rs 10,000 go in five years?

Similarly, suppose you save Rs 5,000 every month for ten years in a savings account that earns 3% interest. By the end of ten years, you’ll have saved about Rs 7 lakhs. Sounds like a decent amount, right?

But now imagine inflation has averaged 6% during that time. To buy the same things you could have bought with Rs 7 lakhs ten years ago, you would now need over ₹9 lakhs.

So even though your savings have grown in number, their real value has shrunk. That’s the silent, invisible power of inflation – it eats into your future, rupee by rupee.

And this affects your dreams:

The house you planned to buy: Now out of reach.

The college education you thought you’d covered: Now costs double.

The retirement you hoped would be peaceful: Suddenly feels uncertain.

This is why just saving isn’t enough. You need to make your money grow faster than inflation, and that means you’ll need to invest. But every investment carries uncertainty. Risk isn’t something to fear; it’s something to understand.

Credit card is not for impromptu Bali trips. Use it to invest in yourself

This article was first published in the Print, June 16, 2026; https://theprint.in/pageturner/credit-card-bali-trips-invest/2961457/

Credit can be a powerful bridge between today’s desires and tomorrow’s means, but it must be used with care. At its core, credit means borrowing now and agreeing to repay later, with an additional cost known as interest. Lenders—banks or fintech platforms—charge an annual percentage rate (APR) to compensate for the risk of non-repayment and forgo the opportunity to deploy those funds elsewhere.

In a healthy economy, credit fuels growth. Students use education loans to gain skills, businesses tap working-capital lines to bridge seasonal cash-flow gaps, families stretch EMIs over decades to buy homes. However, when credit is misused, debt piled on high-interest credit cards or personal loans, the same tool that creates opportunities can turn into a persistent burden.

Credit-card APRs often exceed 25–30% annually, turning unpaid balances into a mounting liability. Suppose you have a ₹2,00,000 credit card balance at 30% APR. Let’s see what happens if you are not able to pay the full amount on the due date. Let’s assume the minimum payment is 2% of the opening balance. Therefore, you pay ₹4,000.

After paying the minimum, the remaining amount accrues monthly interest. The remaining amount, or the new principal will be: ₹2,00,000 – ₹4,000 = ₹1,96,000 Now let’s add one month’s interest: ₹196,000 × (1+0.025) = ₹200,900. So, after one month, despite paying ₹4,000, you still owe ₹200,900, an increase of ₹900 due to interest. If you again pay only the 2% minimum on the new balance, the process repeats. Thus, it barely reduces the principal and can let your balance and total interest rise over time.

Pro Tip: Before you swipe your card, remember: if you can’t pay your balance in full each month, high‐APR debt can quietly grow even while you’re making payments. Always run these numbers first. You’ll often find it makes more sense to borrow less or choose a lower‐cost alternative. Responsible credit use hinges on three pillars: understanding costs, maintaining discipline and aligning borrowing with your long-term goals.

First, know your APR and repayment terms. A loan or card that seems attractive on an ad may carry hidden fees such as late-payment penalties, annual charges or high default rates, that transform convenience into a trap. Second, treat credit like a knife: indispensable in skilled hands, dangerous when misused. Always ask, ‘Can I repay this in full by the due date?’ If not, reconsider the purchase or seek a lower-cost alternative. Third, use credit to invest in yourself or essential assets—a degree, a home or a temporary shortfall—rather than funding fleeting indulgences, like an impromptu trip to Bali.

Credit scores, summaries of your repayment history and utilisation of credit, determine not only your access to credit but also the rates you pay. Consistently paying on time and keeping utilisation low builds a strong score, unlocking cheaper loans and premium card benefits in the future. Macroeconomic forces shape credit availability and cost.

When central banks lower policy rates to spur growth, borrowing costs fall, making mortgages, car loans and even credit card interest more affordable. Conversely, in times of rising inflation, central banks may hike rates, EMIs on floating-rate loans climb and credit card charges mirror the market tightening.

Economic downturns can trigger stricter lending criteria, as banks guard against rising defaults. Across the globe, credit cultures differ. In the US, credit card penetration is high, and APRs can soar above 20%, yet rewards programmes entice responsible users. In Germany, consumers favour debit and cash, shunning high-interest cards.

In India, soaring education and housing costs have fuelled rapid growth in personal and home loans, even as credit card adoption remains nascent. Understanding your country’s credit norms helps you benchmark your own borrowing habits.

Family Businesses as a Pillar of Viksit Bharat

This article was first published in the Economic Times on January 29, 2026; https://economictimes.indiatimes.com/news/company/corporate-trends/family-businesses-as-a-pillar-of-viksit-bharat/articleshow/127759602.cms?from=mdr

Introduction: The Missing Big Idea

In a recent letter to the Finance Minister published in the Times of India, Duvvuri Subbarao, former governor of the Reserve Bank of India, posed a question that goes to the heart of India’s economic moment. If Viksit Bharat is the overarching vision of this government, what does it mean in concrete terms, and how are annual budgets aligned to that vision? Drawing a parallel with Manmohan Singh’s landmark 1991 budget, where the “big idea” was liberalisation, Subbarao asks what the equivalent organising principle is today.

This article argues that one such pillar of Viksit Bharat must be explicitly recognised and supported: India’s family businesses. The objective here is twofold. First, to situate family enterprises historically and empirically as engines of nation building. Second, to outline what the Finance Minister can do, through policy and budgetary choices, to enable family businesses to contribute responsibly, transparently, and sustainably to India’s development journey.

Family Businesses and Nation Building: A Historical Constant

Family businesses are the oldest and most enduring organisational form across nations. In India, family enterprises have long been builders of physical infrastructure, educational institutions, healthcare systems, and local employment. At India’s current stage of development, where the need for infrastructure, patient capital, and institution building is acute, these characteristics matter deeply.

History offers a useful parallel. In the late nineteenth and early twentieth centuries, the United States witnessed massive infrastructure creation led by business families such as the Vanderbilts, the Carnegies, and the Rockefellers. Railroads, steel, oil, and finance were shaped by families willing to take long-term risks at scale. These families helped build the economic foundations of modern America.

India today stands at a comparable inflection point. Large family-controlled business groups are deeply involved in roads, ports, renewable energy, logistics, manufacturing, education, and healthcare. These are sectors where long gestation periods and intergenerational commitment are advantages rather than liabilities.

Lessons from the Robber Barons

Yet history also cautions us. Many of the American families who built that infrastructure later came to be labelled “robber barons”. Some lost legitimacy due to concentration of power, weak governance, opaque practices, and an inability to manage succession effectively. Several family empires fragmented or faded, not because of lack of wealth, but because institutions did not evolve alongside scale.

This is a lesson India must take seriously. The choice is not between celebrating or constraining family businesses. The real policy challenge is to fuel entrepreneurial energy while embedding governance, transparency, and meritocracy. Without this balance, family capitalism risks public backlash and private decline.

Why Family Businesses Matter for Viksit Bharat

If Viksit Bharat is about sustained prosperity, social stability, and institutional depth, family businesses are uniquely positioned to contribute in four ways.

First, they provide patient capital. Family owners are often willing to invest across cycles, absorb short-term volatility, and commit to long-horizon projects that are unattractive to purely financial investors.

Second, they anchor local economies. Family enterprises are embedded in regions and communities, making them critical to employment generation, skill formation, and social cohesion.

Third, they enable institutional philanthropy. Many of India’s educational and healthcare institutions have been built by business families, often long before corporate social responsibility became mandatory.

Fourth, they ensure continuity. In a world of rapid managerial churn, family ownership can provide strategic consistency, provided governance systems are robust.

Policy Lessons from Other Economies

Across several jurisdictions, governments are beginning to recognise family enterprises as distinct economic actors whose long-term orientation and ownership continuity require tailored policy responses. As documented by Tharawat Magazine , this shift reflects an understanding that family businesses contribute disproportionately to employment, capital formation, and institutional stability, yet face structural vulnerabilities during succession and ownership transition that generic corporate policy does not address. The emerging response is not to privilege family firms indiscriminately, but to make them visible within the policy architecture.

This recognition has taken different institutional forms. In the United States, the creation of a bipartisan Family Business Caucus within Congress signals an effort to ensure that family enterprises are explicitly considered in legislative and regulatory debates. In Poland and Canada, legal and tax reforms have focused on reducing the cost and complexity of intergenerational transfers, acknowledging that poorly managed succession can destroy productive capacity and jobs. In the United Arab Emirates, a dedicated Family Companies Law, supported by state-backed institutions, seeks to codify governance, succession, and dispute resolution mechanisms, positioning family firms as long-term partners in national economic strategy. Hong Kong, meanwhile, has focused on building an ecosystem around family capital and family offices, combining regulatory adjustments with investments in institutional capacity for stewardship and legacy planning.

What unites these diverse approaches, as Tharawat Magazine underscores, is a move away from treating family ownership as incidental. Instead, policy frameworks increasingly aim to align continuity with governance, transparency, and professionalisation. The lesson for India is not to replicate any one model, but to recognise that if family businesses are to anchor Viksit Bharat, they must be deliberately integrated into policy design, fiscal incentives, and economic measurement, rather than remaining an invisible yet systemically important segment of the economy. 

Policy Recommendations

If robust family businesses are to be a measurable pillar of Viksit Bharat, policy intent must translate into administratively actionable and fiscally grounded measures.

First, formal recognition of family enterprises: The Union Budget can announce a formal definition of family businesses, notified jointly by the Ministry of Finance and the Ministry of Corporate Affairs. This would allow family enterprises to be recognised as a distinct category for policy design, without creating a new regulatory burden. Budget documents can mandate periodic data collection through MCA filings, enabling evidence-based policymaking.

Second, governance-linked fiscal incentives: Under the Direct Tax framework administered by the Central Board of Direct Taxes, targeted deductions or concessional tax treatment can be offered to family enterprises that meet specified governance benchmarks. These may include independent directors, documented succession plans, audited family constitutions, and separation of ownership and management. This aligns tax policy with long-term institutionalisation rather than short-term compliance.

Third, succession and continuity financing: The Budget can create a dedicated Succession and Continuity Credit Window, routed through public sector banks and development finance institutions. Backed by partial government guarantees, this facility would support ownership transitions during generational change, preventing distress sales, fragmentation, and employment loss. This intervention sits squarely within the Ministry of Finance’s financial stability and credit flow mandate.

Fourth, targeted public expenditure for family-led nation building: Capital expenditure allocations for infrastructure, education, healthcare, and energy transition can explicitly prioritise public–private partnerships anchored by long-term family ownership. Viability gap funding and concessional finance can be linked to governance and transparency standards, ensuring that public funds support stewardship-oriented capital rather than short-term extraction.

Fifth, next-generation capability development: Budgetary support can be provided under skilling and higher education heads, in coordination with the Ministries of Skill Development and Entrepreneurship, and Education, for structured leadership and governance programmes tailored to next-generation family members. Treating succession as a national economic continuity issue reframes it from a private family matter to a public interest concern. 

Measuring Progress: Integrating Family Business Health into Economic Reporting

If Viksit Bharat is to move beyond aspiration, it requires metrics embedded in official economic reporting. One such metric should be the robustness of India’s family business ecosystem.

The Finance Ministry can mandate the creation of a Family Business Development Index, published periodically alongside existing economic indicators. This composite index could track intergenerational survival rates, governance quality, professional management penetration, employment contribution, reinvestment rates, and participation in national priority sectors.

Such reporting would serve three purposes. It would signal that stewardship-based capitalism matters to India’s development vision. It would create incentives for business families to institutionalise governance and succession practices. And it would give policymakers an early warning system for stress in a segment that employs millions and anchors regional economies.

Conclusion: A Call for Early Attention

Embedding family businesses as a pillar of Viksit Bharat will not happen overnight. It may not be feasible to incorporate many of these ideas in the forthcoming budget. Policy design, inter-ministerial coordination, and institutional alignment take time.

But that is precisely why the conversation must begin now. As an early set of ideas for the next budget cycle, this article urges the Finance Minister to take notice. If India wants development that is durable, inclusive, and institutionally sound, it must look closely at the families that build, own, and steward its enterprises.

Viksit Bharat will not be built by capital alone. It will be built by families who think beyond one generation, supported by policies that reward responsibility as much as ambition.

Immersion in the Tata 'black box'

This book review was first published in the Business Standard on November 19, 2021; https://www.business-standard.com/article/beyond-business/immersion-in-the-tata-black-box-121111801571_1.html

Book: TATA- The Global Corporation That Built Indian Capitalism

Author: Mircea Raianu
Price: 699/-
Pages: 304
Year: 2021
Publisher: Harvard University Press, Cambridge, Massachusetts

A long time ago, I wanted to read more about Warren Buffett. There were a few biographies available in the library. For me, a biography was a biography. I was confused about which one to pick. My immediate boss, a man of books, scholarship, and impeccable manners, told me in his soft and thoughtful voice, “There are biographies and there are authorized biographies.” That got me thinking. I hadn’t known the difference until then. Subsequently, I read the authorized biography of Buffett, The Snowball: Warren Buffett and the Business of Life by Alice Schroeder, and then the others. Having access to the man himself definitely made a difference to the insights in Ms Schroeder’s book.

This experience has helped me differentiate between the latest book on the Tatas authored by a historian of global capitalism and modern South Asia, Mircea Raianu, and other books on the group that I have read over the years. Many of the popular books on the group are written by Tata insiders, for example R.M. Lala, Mukund Rajan, and Harish Bhat. A few others are written by the outsiders but are primarily internally focused. Examples include books by Girish Kuber, which chronicles the Tata family and group, Shashak Shah, which provides an insight into the people practices and culture at the Tata group, and Peter Casey, which is the work of a fanboy. Don’t get me wrong. Each of these books have something unique to tell, for the Tata group is such a giant that no one book can capture all aspects of the family and the group.

This is where Professor Raianu’s book makes a unique contribution. His is a book by an outsider that extensively integrates the activities of the group with the external environment, using internal resources (archives), clubbed with his own research about the global and Indian events and economies. The journey of the Tatas is immersed deeply in colonial, socialist, and capitalist India and the confluence of politics, economics, and society. On the one hand, the Tatas have challenged the Schumpeterian “creative destruction” view by traversing salt, soap, and steel along with software and sky (Tata sky as well as the group’s airlines), on the other, it has traversed the corporation and the state mostly with aplomb, barring a few cases of resistance and inadequate measures and slips. Raianu has been able to extract valuable information from the Tata and other archives that throw light on how each of these aspects played out in the group.

At this point, it is important to mention about the relevance of archiving for corporations. The book and the plethora of information in it points towards the gold mine that archives are and can be if maintained well. The archives should be impartial, accurate, and as far as possible, complete. Corporate archives are often either poorly maintained, or even if maintained well, are closed to scholars. The Tatas must be congratulated and credited for leaving “behind a longer paper trail than any other Indian business” and opening the archives to the public. Other large corporations with long histories must follow suit.

These archives have perhaps been used for the first time for putting together a comprehensive academic history of the Tatas. The 62 pages of references in the book are testimony to the monumental number of records that the author has gone through. As often happens with a haystack of information, organizing it can be daunting.

In the words of the author, “This is not an elite story of great leaders imposing their vision from above, nor a tale of subaltern resistance that looks up at the corporation from below, but an eye-level immersion in the “black-box” of information exchange within the group.”

The challenges for the reader, and perhaps the author himself, stems from these lines. As a historian, Professor Raianu, digs into the meticulously preserved archives of the Tata group, and tries to “reconstruct the conversations, deliberations, and decisions made by several categories of actors…” As a reader, I am left feeling in a “black-box” occasionally. Sometimes, the book is like an abstract painting, left to the imagination of the reader. At other times, it is like what we in India call an “art film”. There is information, sometimes too much of it. It is intellectually stimulating. But too tiring to read for the average reader. Now and again, though, it is good to denounce popularity (commercial cinema) for reality (art movies), even as a reader. Isn’t this the real world? Too much information. The good and the bad. Go make sense of it.

Perspectives on the Banking Dilemma in India: A Q&A with Vivek Kaul

This interview was first published in Risk Intelligence on March 5, 2021; https://www.garp.org/#!/risk-intelligence/credit/counterparty/a1Z1W000005krEZUAY

Recent projections by the Reserve Bank of India confirm that non-performing loans remain a significant hazard for banks. What are the origins of this risk, what’s the connection to COVID-19, and what are the prospects for India’s economic recovery?

Bad loans and deteriorating asset quality continue to plague banks in India. Last September, the gross non-performing assets ratio (GNPA) at Indian banks stood at 7.5%, but that number potentially could double in just a year’s time.

In its recent financial stability report, the Reserve Bank of India estimated that Indian banks’ GNPA ratio could increase to 13.5% under a baseline stress scenario and 14.8% under a severe stress scenario by September 2021. What’s more, for public-sector banks (PSBs), GNPA may rise to nearly 18%.

Vivek Kaul, the author of Bad Money: Inside the NPA Mess and Hot It Threatens the Indian Banking System, is a well-known commentator and podcaster who has written several books on India’s economy. He talked with Risk Intelligence about the NPA dilemma, the impact of COVID-19, default risk, regulatory flaws, and India’s path to economic recovery.

Risk Intelligence (RI): Can you pinpoint the primary reason for the bad debts and non-performing assets (NPAs) in India? Where does the fault actually lie?

Vivek Kaul (VK): If you look at the current phase of bad loans, which have accumulated over the last five years, I think the main reason for that lies in the period pre-2008. Between 2004 and 2006, the Indian economy grew by greater than 9% annually, resulting in a great deal of optimism among the politicians, bankers, businessmen, entrepreneurs and the public, in general. Suddenly, there was this story going around that India will be the next China, which basically meant that since China was growing in double digit rates, India would follow a similar path.

Entrepreneurs and businesses saw an opportunity. They believed that the growth would fuel demand for goods and services. They started to invest in the infrastructure that would drive this growth and fulfill the demand. The data between 2004 and 2008 shows that the loans to industry given by banks in India went through the roof, and that is where it all started:  the belief that India would continue growing at 9%.

RI: In India, the government uses PSBs to increase the money supply in the market. The latest financial stability report of the RBI, released in January 2021, says that the GNPA ratio of PSBs may increase to 17.6%. That number is frightening.

VK: It needs to be mentioned that if you calculate the numbers properly, they are even worse. What has happened is that the categorization of IDBI Bank - which was by far the worst-performing PSB, with a very high NPA of almost 32% - has been changed to that of a private bank. IDBI has NPLs of close to ₹500 billion, but these are now categorized by the RBI as the bad loans of a private bank, rather than a PSB.

Another well-kept secret of banking in India is that once a bad loan has been on the balance sheet of a bank for four years, it can be written off. After that period of time has elapsed, the loans drop from the balance sheet of the bank, reducing the bad-loan numbers for PSBs.

Moreover, Indian banks have a very low recovery rate of bad loans. Once you take these factors into account, it gives an entirely different dimension to the story.

Here’s what will happen: the bad loans that were recognized, let's say, in 2016, 2017, and 2018, will keep getting dropped off from the balance sheet of banks in the next couple of years. This will lead to the bad loans number coming down in the 2020-2021 financials of the banks. But there will also be fresh bad loans, which we will start to see on account of COVID-19.

RI: You mentioned about the mid-2000s and the optimism that followed. But then the global crisis happened in 2008, which led to the optimism not being there. What do you think the spirit of the times now is with the COVID-19 slump and recession? How will it impact the mess further, and what will recovery look like?

VK: This time around, the issue is a little different. Common sense tells us that this time there will be retail defaults, as well corporate defaults, because salaries have been slashed and people have lost jobs. The entire informal sector has seen huge destruction.

The data for listed Indian corporates for the quarter July to September 2020 actually shows that their profits went up, mainly because they have cut down their costs. But when a corporate cuts costs, someone else's income is being impacted.

For example, if you're a corporate who's making profits, and you've managed to cut down on your raw material costs, some supplier somewhere is seeing reduced business.  As a consequence, that supplier is likely doing the same thing with some of its third-party vendors. The impact is felt across the hierarchy, and that’s problematic.

We haven't yet begun to see the impact of this, because there is a case going on in the Supreme Court about whether the interest on loans during the COVID-19 months should be waived. Until that decision arrives, banks are not allowed to recognize defaults as bad loans. So, will we come to know how bad the defaults situation is at PSBs only after the Supreme Court hands down its decision.

It is also important to remember that more than 50% of all retail loans are home loans, and people will try their best to not default on home loans. So, that is a very good thing going for banks. But the other kinds of loans – e.g., credit card debt, personal loans, consumer durable loans and auto loans - will see an uptick in the defaults.

RI: In this case, culture could also play a big role, right?  In the U.S., the subprime crisis was essentially driven by home-loan defaults, but in India, people probably try to hold on to their homes more dearly, correct?

VK: Yes, the stigma of losing your home is huge in India. People will try selling everything, defaulting on everything else before they default on their home loan.

The other good thing is that even if people default, banks may not lose much. The first reason lies in the loan-to-value ratio (LTV). The LTV of entire home-loan business in India is between 65% and 70%, giving some margin to the banks.

What’s more, over and above the registered price of a house, in many parts of the country, there is a so-called “black portion” in mortgages, which gives a bank the right to recover most of the home loan, if defaulted, by selling the house.

RI: You mentioned in your book that there was an era of easy money in the Indian financial system in the aftermath of the financial crisis of 2009. Do you predict the same will happen after COVID-19?

VK: That is already happening. The amount of money floating around right now is just humongous.

Banks don't know what to do with it. That is clearly visible in the fact that, one, they’re depositing billions of rupees with the RBI to the reverse-repo window, because they don't have any use for that money.

There is indeed a huge amount of liquidity in the system. Some of this has been driven by the RBI printing money, some of it has been driven by the fact that the psychology of a recession is totally in place.

Even though interest rates are falling, people want to save money with banks as deposits because, as of now, they are more worried about return of capital than return on capital.

People are scared. They have lost jobs, and salaries have been cut. Even for those who have not been economically impacted, the psychology of fear is at play, given that everyone wants to be prepared for a situation where, say, jobs are lost, and they are unable to find new positions.

Businesses are not borrowing, too, because with private consumption coming down, there is no need for businesses to borrow and expand. All these factors have come together, and there is consequently a huge amount of liquidity in the financial system.

RI: What can you say about India's path to economic recovery and the current so-called technical recession that we are in? How does it compare to other countries?

VK: The Indian economy contracted by around 15.7% during the half-year from April to September of 2020. In between April and June, we were right at the bottom. Between July and September, we were in the bottom quartile, though not right at the bottom. There were countries, like Chile and UK, which performed worse than India.

Now, to answer your question about when the economy will recover and when growth will go back into positive territory, there are varying opinions. But what most people are not talking about is the fact that India will not return to its 2019-20 GDP level until either late 2021 or early 2022, at the earliest. By the time we see this return, moreover, we will have lost two years of economic growth.

Another point to keep in mind is that a lot of this economic contraction is not simply because of COVID-19. The economy had been slowing down much before the pandemic struck. Indeed, if you look closely at the data between October and December 2019, India grew by just 4%. So, issues which were plaguing the Indian economy, even pre-pandemic, will now only get worse.

For example, the investment-to-GDP ratio has been falling in India since 2012, and that is not going to improve anytime soon. A lot of growth that is happening, or will happen, is basically jobless growth.

The rate of unemployment has been coming down, but how that rate is coming down is very interesting. It is because the labor force participation rate - proportion of the population that is looking for jobs - is also declining.

What that means is that many people who have been unable to find jobs have stopped looking for a job, and, hence, have dropped out of the labor force. This is a very worrying trend, because India anyway has a low labor force participation rate (especially among women), and I think this will only get worse post-pandemic.

The growth will eventually come back. For an economy of India’s size, people will eventually consume and spend money, and we can debate about t when this will happen. But long-term growth prospects of India have now, I think, been hurt, and all the talk of 8%-9% growth is overly optimistic. At this stage, even a 6% growth rate will be brilliant for India.

Ideals of Diversity and Inclusion Confront Pressures of the Pandemic

This article was first published in the Risk Intelligence, GARP, October 09, 2020; Co-author- Sai Nitya Bodavala

https://www.garp.org/?gclid=CjwKCAiAnIT9BRAmEiwANaoE1X4rhFetaNK1DLTbwhctSbYRfytVuS2XlAAat-3d08bCZpDi59HqLxoChLMQAvD_BwE#!/risk-intelligence/culture-governance/conduct-ethics/a1Z1W000005jKKbUAM

The economic downturn is a stress test for a pillar of ESG policy and analysis

In a 2015 report, The Power of Parity, McKinsey & Co. concluded that if women fully participated in the world economy, global GDP would increase $28 trillion by 2025. India alone could account for $770 billion of that amount.

In the United States, according to a recent study by Citi, racial inequality cost the economy as much as $16 trillion over a 20-year period.

The benefits of gender and racial equality – the diversity and inclusion objectives now embraced by much of the corporate world – are more and more evident. The tide rose and prosperity spread during years of economic growth. Will the pandemic-constrained economy put these gains and commitments at risk?

“The global pandemic has certainly brought to light a renewed focus on diversity and inclusion, reinforcing the reality that we are all in this together,” Debra Walton, chief revenue officer of Refinitiv, said in September when the financial data and technology company released its annual Diversity & Inclusion (D&I) Index.

Those advocating greater representation of women in executive suites were heartened when Citigroup – which ranks 60th on the D&I Index top 100 – designated Jane Fraser as its next CEO, effective in February.

Ranking	Company	Overall Score
1	BlackRock, Inc.	81
2	Natura & Co Holding SA	80.25
3	Accenture Plc	80
4	Royal Bank of Canada	79
5	Industria de Diseno Textil SA	78.5
6	L'Oreal SA	78
7	Allianz SE	77.75
8	Telecom Italia SpA	77.75
9	Novartis AG	77.5
10	Bank of Nova Scotia	77.25

“The global pandemic and social unrest this year has reinforced the focus on diversity and inclusion in the workplace coming from different business stakeholder groups,” said Elena Philipova, global head of ESG at Refinitiv. The D&I Index, now in its fifth year, based on hundreds of environmental, social and governance data points and topped by asset management giant BlackRock, “emphasizes the critical importance for companies to commit to, measure and report on their diversity journey beyond gender. Sustainable and resilient workforce is the fuel for businesses especially during volatile times.”

Gaps Remain

And yet, only 37 of the Fortune 500 corporations are led by women, and minorities remain significantly under-represented on corporate boards, according to an Institutional Shareholder Services ESG analysis reported in the New York Times. 

Those boards must contend with the reality, as expressed in a Bloomberg Professional Services blog article last year, that “companies that do not evolve with the times, embody the principles of their target markets and implement clear diversity initiatives will quickly find themselves struggling to retain clients – especially in light of the wealth transfer to the millennial generation that is expected in the next five to ten years.”

In support of women, companies have altered workspaces to be more accommodative to breastfeeding mothers, implemented leadership development programs, and encouraged women to enter into traditionally male sectors such as manufacturing. 

For When Women Thrive, Businesses Thrive, Mercer analyzed workforce gender equality in multiple industries and geographies. “The overall representation of women at an average organization is 47% across all functions and career levels,” Mercer senior consultant Ayçe Nisancioglu writes. “Women comprise 58% of support staff and 21% of executives. Among [126] financial services organizations participating in the survey, there are fewer women compared to men entering the workforce, and women are hired at lower rates compared to men in all levels, except the senior manager level.” 

Internal Labor Market Map on Financial Services Organizations

Source: Mercer

Job Loss

Historically, in economic downturns, men's jobs have been more at risk than women's, owing to men's greater representation in sectors such as manufacturing. In the recession of 2007-'09, 5.5 million men lost their jobs, versus 2.5 million women. Sectors hit hardest by COVID-19 – leisure and hospitality, health and education, and retail trade sectors – have a disproportionately high number of female employees, making them 1.8 times more likely than men to lose their jobs,” McKinsey says.

An analysis by Ashoka University economics professor Ashwini Deshpande found that in India, men lost 100 million jobs in April 2020, as opposed to 17 million women. However, absolute numbers can be deceiving. When compared to March-April of 2019, 29% of men reported a loss in employment in April 2020, women 39%. The pandemic has left a larger percentage of women unemployed.

In India's informal sector, in 2017-18, 4.9 million domestic workers were considered regular but unprotected, two-thirds of them women. Current social distancing norms disallow these women from working, meaning that if they were the sole earners in their family, they have no source of steady income. Even in those sectors where working from home is a possibility, women face considerable difficulties. 

Childcare and Chores

The advances of women in the corporate world, and into jobs that were traditionally male, has contributed to a redefinition of conventional gender roles. The expectation that women must still manage their household has not abated, however. Working women have had to devise ways to manage their work, their home lives, and raise their children. Having different physical spaces – home and office – can be helpful for balancing these activities. The pandemic has upended this idea entirely. 

The closure of schools and offices forces all family members to stay at home and figure out a new dynamic. With parents working from home and having to care for children with little to no chance of getting additional help, women seen a regression in role expectations. An OECD report found that women in India on average spend six hours a day on unpaid care work, while men spend 36 minutes on the same. 

In the context of the pandemic, a Boston Consulting Group study of working parents in the U.K., U.S., France, Germany and Italy found that women are currently spending 15 more hours on household and childcare activities per week than men. The results are reinforced by Cambridge-INET Institute in Inequality in the Impact of the Coronavirus Shock: Evidence from Real-Time Surveys. 

“When men went to war in times when conquest and bravery were the proud badges to wear, women stepped up and supported the soldier in every way they could,” said an Economic Times article. “The working woman has been largely lonely in contrast, in a society that still can't see women as holding important positions at work that cannot be compromised.” It seems to be accepted now that when push comes to shove and a choice must be made about whose job is more important, the woman's job takes a back seat, and she is duty-bound to take household responsibilities. If support systems – extended family, household help, day-care centers – crumble, so may women's professional prospects. 

Waning Productivity

The amount of time that women are spending on unpaid care work cuts into what they can devote to their jobs. A study by the Institute for Fiscal Studies in the U.K. found that “mothers are doing paid work during 2 fewer hours of the day than fathers, but they do childcare and housework during 2 more hours each. Mothers combine paid work with other activities (almost always childcare) in 47% of their work hours, compared with 30% of fathers' work hours.” 

A report published in Nature said the number of hours that female academics were able to dedicate to research during the pandemic has come down significantly. This was, again, owing to the increased time spent on childcare and housework. Such impacts could set back the cause of women for future generations.

The U.S. employment report for September 2020 showed the percentage of women working or actively looking for work was 55.6%, the lowest since 1987 (with the exception of last April and May). “We know that women leaving the workforce to care for children for a while has lasting effects on their earnings, their seniority and their climb up the ladder,” Julia Pollak, a labor economist with the career site ZipRecruiter, told the New York Times. 

Digitization and Credit

Some of the touted benefits of digitizing the workplace are heightened efficiency, greater flexibility, faster implementation and the like. But how does the digitization benefit women? 

A lot of small-scale female entrepreneurs in services such as salons, food catering and boutiques have lost their livelihoods due to the pandemic. The impact of digitization is questionable. 

However, should the digitization within these sectors be designed in such a way that it increases access to formal credit for these women, it may be beneficial. Currently, small-scale women entrepreneurs have a tough time accessing loans to fund their enterprises, but digitizing their banking and simplifying the credit process may ultimately help then to revive their businesses. 

For women working in sectors where digitization is possible, perhaps more research needs to be done to determine mental health effects. Working from home has brought om feelings of isolation and depression. Although work-from-home is intended to offer more flexibility, it could also be argued that the workday for women never seems to end, and there is no clearly defined line between work and home life. 

Sustain the Commitment

COVID-19 has brought about unforeseen changes in the lives of everyone, forcing adaptation to a “new normal.” Still unresolved is the question of who bears the brunt of this adjustment. 

Despite all the strides toward gender equality, there has also been a reversion to conventional roles that may set women back by a decade or two. Avoiding this dismal outcome will require a policy response by governments and companies. Writes Bloomberg Opinion columnist Elisa Martinuzzi, “As governments shift from handing out financial lifelines to restarting and rethinking their economies, they could tie aid to goals of sustainability, such as improving the balance of women in companies' leadership.” 

Diversity and inclusion efforts can suffer when survival is at stake. Ian Cook, vice president of data analytics company Visier, argues that D&I must be strongly embedded in decision-making processes so that companies remain true to their values and uphold commitments that they have made to their employees, especially during a time of crisis. And this is sure to reward them in the long run. 

“Make sure that inclusion is a core value of the organization – not just something you do to ‘check a box,’” leaders of the Center for Talent Innovation (CTI) and Center for Workforce Excellence wrote in Harvard Business Review. “For instance, when CTI's CEO Pat Fili-Krushel was head of HR at Time Warner, they instituted a tracking and reporting system to measure progress against the diversity and inclusion goals for each division. Leaders were held accountable with 10% of their bonuses tied to their goals.” 

This is the 21st century. It is a shame that many women still have to explain equality to men. While ways of nature cannot be questioned or undone, in most other areas, let merit alone be the deciding factor. Society and culture change when people want them to change. And this change cannot be brought about by just women. Men must equally participate in bringing about the change that is on their lips, but not always in their actions (– well, for most. Not all).