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Indian Shadow Banking bust Is IL&FS, Lehman Brothers of India? What actually led to the fall of IL&FS and how it can affect the economy Depreciating rupee, plunging stock market, government bailouts and IL&FS debt crises, these past few days have been really hard for the Indian govt. It wouldn’t be wrong to say that economy is in a dangerous condition. The only plausible argument government has put by now to justify the plummeted rupee is rising oil prices. Country’s current account has taken a hit with oil prices touching $85, highest since November 2014. While this might be one of the reasons, it certainly is not the only one. In my previous article I wrote about major reasons for the fall in rupee and how government can tackle it. In this article I am going to talk about severity of the recent IL&FS crises that led to one of the biggest bailouts of financial industries. Recent strings of defaults and huge amount of NPAs have shaken the financial in...

Real reasons of rupee weakening and how Indian govt should tackle it (1 USD = 74.43 Rupees) While it’s fascinating to see how exchange rates move in tandem with macroeconomic factors, continuous decline in rupee has raised lot of eyebrows lately. Most of the media and publishing houses have attributed this to current account deficit which sits at $48.72 bn, highest since the record $88.16 bn of 2012-2013. While CAD indeed is one of the factors contributing to rupee downfall but certainly it’s not the only one. Few things that might need little consideration before coming onto any judgement: 1 . India has never had a trade surplus in merchandise in a decade, means its imports have been higher than exports with crude, gold and diamond being the major contributors. On the other hand, it has enjoyed a surplus in invisible trade (services, software) but not enough to offset merchandise deficit. 2 . Crude & Gold are traded in dollars, which means every time we imp...