Sunday, March 9, 2008

Readings on India Knowledge@Wharton

The current issue of India Knowledge@Wharton contains a few interesting readings that pertain to the Indian corporate and financial sector.

First, “India's 2008 Budget: Few Incentives for Global Investors, but a Windfall for Farmers” discusses the Budget and its implications, primarily to foreign investors.

Second, in The Public Benefits of Public Offerings, Vinay B. Nair, a Senior Fellow at the Wharton Financial Institutions Centre, sets out the various benefits that emanate from a company going public through an IPO. He finds that there are several benefits from IPOs than just returns in terms of an increase in the market price (which may not always be available, especially in case of an ailing market such as the present one). Those benefits include transparency (by occasioning release of information into the market), promoting innovation (by enabling venture capital funding that seeks exits through public listings), and in spurring a market in mergers and acquisitions.

Third, Are Bank Mergers in India Entering a New Era? looks at consolidation in the banking sector, especially in the context of the recent merger announcement by HDFC Bank and Centurion Bank of Punjab. Specifically, the article notes that this is one of the few instances of a merger among equals in the banking industry, as most earlier mergers involved a strong bank taking over a weaker one, typically at the instance of the Reserve Bank of India (RBI). In an earlier post on this blog, we had discussed some instances of regulatory mergers effected by the RBI.

Fourth, it is now very common for India to be referred to in the world economic arena as an “emerging market”. But, that expression lacks a clear definition and there have not been serious efforts in pinning down the contours of that concept. When Are Emerging Markets No Longer 'Emerging'? delves into the genesis and the rationale behind coinage of the term, essentially as an alternative to the expression “third world” that was found to be distasteful. As far as India is concerned, the article observes that it is still a long way away from graduating from the emerging market bracket.

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