## Wednesday, September 13, 2006

### Keeping our word

Business Standard has some remarkably good writers who seem to want to not reveal their identity. The two names that come to mind are "V V" and "A P". I have guesses based on expanding initials, and I once asked Ninan who they were and he said he was honour bound to not tell. :-)

"A P" seems to be a person who has a remarkable grip of the new world of international finance. He is not a mere data analyser; he operates in that world. But unlike many practitioners, he has top quality knowledge of modern analytical financial economics. When I read his stuff, I don't worry about him making the elementary mistakes about how markets work which one sees so often with people in realworld finance. I take his writings in BS very seriously.

Today "A P" has an article titled Keeping your word where he worries about situations where the Indian State appears to be reneging on prior commitments. The three examples he has are:

First of all, the government's refusal to sell the remaining stake in Balco, which, if my facts are correct, it was bound to do. Second is the refusal by the Reserve bank of India to recognise the CECA treaty, under which the GIC and Temasek are explicitly guaranteed treatment as separate and distinct organisations. Third is the decision by the IT department to challenge a ruling given by the AAR in the case of Morgan Stanley and all for BPOs in general.

He says that the one thing India has going for it, when compared with China, is rule of law. This must be protected, and we need to keep our word. GOI needs to either keep its word, or rapidly come out with clarifications in public which are sufficiently persuasive in the eyes of a sophisticated observer like "A P".

Please note: LaTeX mathematics works. This means that if you want to say $10 you have to say \$10.