Turf war: On Indian bourses and overseas trade
Address structural problems that have caused trading in Indian derivatives to move offshore
India’s stock exchanges are not too keen on the idea of competing with their global peers (श्रेष्ठ जन). Instead, they are happy to guard the home turf against foreign exchanges that do a better job of finding new clients. On Friday, the National Stock Exchange, the Bombay Stock Exchange and the Metropolitan Stock Exchange of India announced their decision to stop providing data feed and other support to overseas exchanges that list derivatives linked to Indian stocks and indices. Any existing agreement allowing data-sharing with foreign bourses (विदेशी मुद्रा बाज़ार), except that which is related to exchange-traded funds, will expire in six months. Explaining the reason, the statement said offshore derivatives could be causing “migration of liquidity from India, which is not in the best interest of Indian markets”. Given that the volume of derivatives linked to Indian stocks trading in the offshore market is higher than volumes in the domestic bourses, Indian exchanges have enough reason to fear their foreign counterparts. Ambitious endeavours (प्रयास करना) such as the International Financial Services Centre in Gujarat, although yet to gain the patronage (प्रश्रय देना) of foreign investors, may also benefit from the crackdown on offshore derivative markets. Foreign bourses, however, will likely find other ways to list derivatives linked to Indian stocks and indices without any help from Indian exchanges soon. The present move, thus, is unlikely to rein (रोकना) in the vast offshore market for Indian derivatives. It also leaves a lot to be desired.
Index derivatives such as the SGX Nifty that is linked to stocks that form Nifty, have gained the patronage of large foreign investors for many reasons. These instruments are traded for longer hours in offshore exchanges, including hours when Indian exchanges are closed for business, making them more investor-friendly. Places like Singapore and Dubai, where these derivatives are traded, are low-tax jurisdictions that offer investors the chance to lower their transaction costs as well. The fact that offshore derivatives are denominated in dollars adds to their allure (लुभाना). In India, in contrast, the securities transaction tax and the capital gains tax discourage foreign investment in financial assets. The proposal to extend trading hours in order to attract investors too has failed to take off. The statement by Indian bourses withdrawing support for offshore derivatives comes after an earlier decision by Singapore’s stock exchange, the Singapore Exchange Limited (SGX), to introduce in February futures on individual stocks that are part of Nifty. Incidentally, the SGX’s decision to introduce futures specific to stocks listed in the NSE was spurred (प्रेरित करना) by the Securities and Exchange Board of India’s decision last year to restrict foreign investment in domestic futures. Offshore markets are thus simply catering to the unmet (आवश्यक) demands of foreign investors. India’s policymakers should thus first of all address the structural problems that have caused trading in Indian derivatives to move offshore. This would be a far better response than any knee-jerk response favouring domestic exchanges.
1. Peers: one that is equal to another in status, achievement, or value
Synonyms: coequal, compeer, coordinate, counterpart, equivalent, fellow, like, match, parallel, equal, rival
2. Bourses: A stock market in a non-English-speaking country, especially France
Synonyms: stock exchange, money market
3. Endeavours: an effort to do or accomplish something
Synonyms: assay [archaic], bash [chiefly British], bid, crack, attempt, essay, fling, go, offer, pass, shot, stab, trial, try, whack, whirl
4. Patronage: the financial support and general guidance for an undertaking
Synonyms: aegis (also egis), backing, auspice, sponsorship
5. Rein: the place of leadership or command
Synonyms: chair, driver’s seat, headship, helm, head(s)
Antonyms: impotence, impotency, powerlessness
6. Allure: the power of irresistible attraction
Synonyms: charm, animal magnetism, appeal, attractiveness, captivation, charisma, duende, enchantment, fascination, force field, glamour (also glamor), magic, magnetism, oomph, pizzazz (or pizazz), seductiveness, witchery
Antonyms: repulsion, repulsiveness, disagreeableness, distastefulness, obnoxiousness, offensiveness, unpleasantness
7. Spurred: something that arouses action or activity
Synonyms: boost, encouragement, goad, impetus, incentive, incitation, incitement, instigation, momentum, motivation, provocation, impulse, stimulant, stimulus, yeast
Antonyms: counterincentive, disincentive
8. Unmet: (of a requirement) not achieved or fulfilled.
States of health: On NITI Aayog’s first Health Index
The NITI Aayog Health Index should trigger a wider public debate
Unsurprisingly, States with a record of investment in literacy, nutrition and primary health care have achieved high scores in NITI Aayog’s first Health Index. Kerala, Punjab, and Tamil Nadu are the best-performing large States, while Uttar Pradesh, Rajasthan, Bihar, Odisha and Madhya Pradesh bring up the rear. Health-care delivery is the responsibility of States; the Centre provides financial and policy support. Being able to meet the Sustainable Development Goals over the coming decade depends crucially on the States’ performance. Yet, health care is not a mainstream political issue in India, and hardly influences electoral results. The Index, with all its limitations given uneven data availability, hopes to make a difference here by encouraging a competitive approach for potentially better outcomes. For instance, with political will, it should be possible for Odisha to bring down its neonatal (नवजात शिशु संबंधी) mortality rate, estimated to be the highest at 35 per thousand live births — worse than Uttar Pradesh. A dozen States with shameful under-five mortality rates of over 35 per 1,000 live births may feel the need for remedial (उपचारात्मक) programmes. What the Index shows for the better-performing States such as Kerala and Tamil Nadu is that their continuous improvements have, overall, left little room to notch (निशाना साधना) up high incremental scores, but intra-State inequalities need to be addressed.
Coming soon after the announcement of a National Health Protection Scheme in the Union Budget, the Index uses metrics such as institutional deliveries, systematic reporting of tuberculosis, access to drugs for people with HIV/AIDS, immunisation (असंक्रमीकरण) levels and out-of-pocket expenditure. The twin imperatives (अनिवार्यता) are to improve access to facilities and treatments on these and other parameters, and raise the quality of data, including from the private sector, to enable rigorous assessments. At the same time, as NITI Aayog points out, data on other key aspects such as non-communicable diseases, mental health, governance systems and financial risk protection lack the integrity to form part of a good composite index. Both the Centre and the States have the responsibility to scale up their investment on health as a percentage of their budgets, to be more ambitious in interventions. While the NHPS may be able to address some of the financial risk associated with ill-health, it will take systematic improvements to preventive and primary care to achieve higher scores in the Index. As the experience from countries in the West and now even other developing economies shows, socialisation of medicine with a reliance on taxation to fund basic programmes is the bedrock (मूल सिद्धान्त) of a good health system. If the NITI Aayog Health Index leads to a mainstreaming of health on these lines, that would be a positive outcome.
1. Neonatal: Relating to newborn children (or other mammals)
2. Remedial: tending to cure disease or restore health
Synonyms: curative, healing, officinal, medicinal, restorative, therapeutic
Antonyms: insalubrious, noisome, noxious, unhealthful, unhealthy, unwholesome
3. Notch: an individual part of a process, series, or ranking
Synonyms: chapter, cut, grade, inch, degree, peg, phase, place, point, stage, step
4. Immunisation: The action of making a person or animal immune to infection, typically by inoculation.
5. Imperatives: forcing one’s compliance or participation by or as if by law
Synonyms: compulsory, forced, mandatory, incumbent, involuntary, necessary, nonelective, obligatory, peremptory, required
Antonyms: elective, optional, voluntary
6. Bedrock: the lowest point or level
Synonyms: nadir, bottom, depth, rock bottom, zero
Antonyms: acme, apex, climax, crown, culmination, head, height, high-water mark, meridian, peak, pinnacle, summit, tip-top, top, zenith