New Delhi's proposal to establish a $10-billion sovereign wealth fund should be treated with caution. The necessary preconditions for setting up a SWF are squarely lacking in India. Besides, the purported objectives of the fund to pursue strategic investment opportunities abroad are highly debatable.

Just days before the G20 summit in Toronto, South Korea and Indonesia announced several policy measures to regulate potentially destabilising capital flows which could pose a threat to their economies and financial systems. The policy measures announced by South Korea and Indonesia assume greater significance because both countries are members of the G20.

On June 16, 2010, Indonesia (a member of G-20) unveiled several policy measures to regulate potentially destabilizing capital flows.

The policy announcements by Indonesia is the latest initiative by emerging markets to tame speculative money which could pose a threat to their economies and financial systems.

On June 13, 2010, South Korea announced a series of currency controls to protect its economy from external shocks. The currency controls are specifically aimed at regulating capital flows and stabilizing its currency.

In the present uncertain times, imposition of capital controls becomes imperative since the regulatory mechanisms to deal with capital flows are national whereas the financial markets operate at a global scale.

The massive investments by private equity firms coupled with an IPO by a leading microfinance institution (MFI) have ignited a debate about the ethics and objectives of MFIs in India.

As the numbers of MFIs in India multiply, a proper regulatory framework must be developed to ensure that these institutions follow minimum norms and standards. Otherwise, MFIs may simply end up as an exploitative form of organized money lending with no public responsibility and accountability.

Rather than becoming institutional moneylenders, MFIs should give a strong competition to traditional moneylenders in India.

Letter to the Editor: For New Delhi, the first priority should be to free the nation from hunger, malnutrition and illiteracy rather than financing the acquisition of companies and assets abroad.

With the onset of the global financial crisis and the subsequent squeeze in credit and insurance markets, there is a renewed global demand for export credit and investment insurance products offered by ECAs.

The current financial crisis has given ECAs a new life and offered the opportunity to reassert their position as dominant players in the trade finance markets.

This report describes the changing landscape of ECAs in the context of the global financial crisis and the collapse of trade finance markets, and urges civil society actors to be watchful and monitor developments closely.

This paper critically examines the potential costs and benefits of liberalization of trade and investments in banking services under the proposed India-EU FTA. The paper calls for rethinking on banking services liberalization particularly in the light of current global financial crisis.

A two-part series on the impact and implications of a liberal entry of EU-based banks in India under the proposed framework of India-EU Free Trade Agreement.

Since 2007, India and European Union (EU) are negotiating a free trade agreement (FTA). The negotiations not only cover trade in goods but also services, rules pertaining to intellectual property rights, cross-border investments, competition policy, government procurement and regulatory issues. One of the key themes under negotiation is the liberalization of cross-border trade and investment in banking services.

The 70-page Special Report questions the policy framework and objectives of opening up banking sector under the FTA. The report argues that the liberal entry of European banks is likely to further constrict the access of banking services in the country: geographically, socially and functionally. The report reveals that urban-centric European banks are primarily interested in serving three niche market segments in India: up-market consumer retail finance, wealth management services and investment banking. Not a single EU-based bank has opened a branch in the rural areas despite several of them (including Standard Chartered, BNP Paribas and HSBC) have been operating in India for more than 140 years, points out the report.

With the help of statistical data and case-studies, the report debunks several myths associated with the higher efficiency and productivity levels of foreign banks in India. It also debunks the popular conception that foreign banks are discriminated in India. The report observes that no reciprocity in market access has been observed in other trade agreements signed by India.

The report documents important developments in the Indian banking sector since Independence and maps out several disturbing trends (such as growing financial exclusion, decline in bank lending to agriculture and small enterprises, etc.) in the post-liberalization period.

The report questions the much-touted benefits of opening up banking sector under the India-EU FTA. Are big European banks going to augment the reach of the banking system to millions of Indians citizens who have no access to basic banking services? What specialization and experience do European banks have when it comes to providing basic banking services to landless rural workers and urban poor dwellers? Will the India-EU FTA reduce the domestic regulatory space?

In the wake of severe crisis gripping many European banks, the report calls upon trade negotiators to rethink about opening up banking sector under the FTA.

One of the key policy issues determining market access is reciprocity. How much market access Indian banks would get in return?

Are sovereign wealth funds involved in colonial-type agricultural land grabbing deals? Will SWFs buy agricultural lands in the future as many of them originate from food importing countries? How to approach SWFs?

Extracts from presentations made at expert meeting and Crisis Café ('De Duurzame Daalder') organized by Both Ends at The Hague on March 25, 2009.

French President Nicholas Sarkozy has proposed that European nations create sovereign wealth funds to protect national companies from foreign “predators.” This column says that idea is protectionist and without merit. Emerging economies establish sovereign wealth funds to invest foreign reserves or commodity revenue – not to bail out domestic firms and stifle global competition.

A Letter to Editor.

On October 11, the International Working Group of Sovereign Wealth Funds (IWG) released the Generally Accepted Principles and Practices (GAPP) that would guide the governance and accountability framework of sovereign wealth funds.

On Nov. 19, the Norwegian Embassy in New Delhi received some unusual visitors. The visitors were Indian citizens, but ethnically they belonged to a distinct tribal minority group called Dongria Kondh.

Western politicians, business leaders and commentators seem paranoid about state-owned sovereign wealth funds (SWFs), particularly those from the Middle East and China. They fear that SWFs follow strategic political objectives -- investing in Western companies and banks to secure control of strategically important industries such as telecommunications, energy and banking - rather than commercial interests.

A protectionist backlash against sovereign wealth funds is fast emerging: the US, Canada, Australia and Germany have introduced substantial legislative changes to screen and restrict investments by SWFs and other state-owned entities. European Parliaments are considering regulations to curb the potential impact of SWFs on financial markets, corporate governance and security.

Are such fears based on facts or assumptions? Is the "invasion of sovereign wealth funds" real? Do SWFs pose a direct threat to financial stability? Do they have hidden agendas? Are SWFs driven by political considerations? Are governments really using SWFs to pursue nefarious foreign policy objectives? Should anyone be afraid of sovereign wealth funds? Are SWFs providing long-term investments and stability to ailing businesses and economies?

This paper examines these questions in order to understand the potential impact and implications of sovereign wealth funds in a rapidly-changing global political economy.

During the last two decades, private equity became an integral component of the world's financial system at a time when financial markets overshadowed the productive economy. Private equity was invariably behind the multi-billion buyout deals, and mergers and acquisitions that swept across the US and Europe, creating a new type of corporate conglomerate that is reshaping the way business is conducted.

Insofar as it constitutes a new form of corporate ownership, private equity poses new challenges to labour unions, NGOs and community groups because it has a significant and distinctive influence on taxation policy, corporate governance, labour rights and public services, and thus deeply affects society, human rights and environment alike.

These challenges are especially clear in Asia, which has become more attractive for private equity firms since mid-2007 when the "credit crunch" took hold and diminished the scope for the huge deals in Europe and North America.

This paper looks at the global growth of private equity and its social, environmental and political impacts, using India as a case study of its growing importance in Southern countries. It concludes with an outline of private equity's vulnerabilities that may provide opportunities for public concerns to be addressed.

“Give priority to financial services,” Stephen Wright, Chief Executive; John Cooke, Chairman, Liberalisation of Trade in Services Committee, International Financial Services London, Financial Times, July 22, 2008.

“Entry of big foreign banks has not widened access to include India's poor,” Kavaljit Singh, Financial Times, July 29, 2008.

“Further liberalisation can widen India's banking system,” Roger Brown, Executive Director, British Bankers' Association, London, Financial Times, August 5, 2008.

“Indian banks denied market reciprocity,” Kavaljit Singh, Financial Times, August 6, 2008.

Should one welcome the decision by the Norwegian sovereign fund to sell off its stake in Vedanta Resources? The answer is an affirmative “Yes.” If globalization can facilitate the movement of capital, goods and services across borders, the same instrument could also be used to build alliances and solidarity with like-minded groups across the borders to resist destructive projects and investment flows. This episode has shown the potential influence of shareholder activism in punishing bad corporations. It has opened up new avenues for grassroot activists and groups to influence corporate behavior.

The recent decision by Norway’s Government Pension Fund–Global (GPF) to invest $2 billion in Indian markets has come at a time when most foreign institutional investors are fleeing the markets.

Before the global credit crunch hit the markets in mid-2007, newspapers and news channels on television were full of stories about another fascinating multi-billion private equity (PE) deal. More and more companies were willing to go private.

Year 2007 was a gala one for private equity (PE) investments in India. During the year, the total number of PE deals stood at 386 with a value of US$17 billion, as compared to 302 deals with a value of $7 billion in 2006. The private equity firms are investing in a range of businesses in India including infrastructure, telecom, financial services, healthcare and real estate sectors. It would not be incorrect to say that private equity has become the latest fad in the investment game.

Prime Minister Manmohan Singh’s sermon on inclusive growth at an annual summit of the Confederation of Indian Industry (CII) evoked sharp reactions from the corporate world and media. Most comments were aimed at resisting the enforcement of a Ten-Point Social Charter spelt out by the Prime Minister. “The government cannot legislate CEO salaries,” was industry’s common refrain. This is nothing but a complete misreading of the Social Charter because it nowhere hints at curbing excessive remuneration or eschewing conspicuous consumption through regulatory and legislative measures. And, to my mind, that is a big problem with the Social Charter.

The large-scale tax avoidance practices used by transnational corporations (TNCs) came into public notice recently when the giant drug TNC, GlaxoSmithKline, agreed to pay the US government $3.4 billion to settle a long-running dispute over its tax dealings between the UK parent company and its American subsidiary. This was the largest settlement of a tax dispute in the US.

The mid-1990s witnessed the dramatic emergence of transnational corporations from the developing world. Although much of the investment by these corporations is concentrated in other developing countries (South-South), they are increasingly investing heavily in developed countries (South-North) as well. The South-South and South-North FDI flows are growing much faster than the traditional North-South FDI flows.

Despite the dominant trend towards greater liberalization of investment flows, certain kinds of investments have come under closer scrutiny by policy makers. In several countries (both developed and developing), there are moves to tighten existing investment rules or to enact new rules to regulate foreign investments and protect “strategic sectors” from foreign investors.

If 391 districts out of a total 602 districts in India are under-banked, it raises several policy issues which cannot be suppressed by keeping public in dark about the ground realities of the banking sector. On the contrary, such an anomaly could only be addressed through wider public consultation and debate.

The proponents of banking sector liberalization claim that the entry of foreign banks in the poor and developing world is highly desirable and beneficial. But recent empirical evidence suggests that the entry of foreign banks could lead to misallocation of credit, which in turn could negatively affect economic growth prospects as bank credit is a vital input for investment and growth. As the focus of the global banking industry appears to be on India and China, this note analyses some of the recent developments taking place in these countries.

Indian financial markets are among the most speculative and volatile in the world. To curb unproductive speculation and excessive volatility, the author proposes a Securities Transaction Tax (STT) of 0.25 per cent. The author argues that the wider economic
and developmental gains of taxing speculative money in stock markets are more than the private gains of a handful of speculators, financiers and traders. The paper provides legitimate grounds for imposing a STT on Indian financial markets. It underscores the point that the obstacles to put restrictions on speculative trading are not technical,
but political. The author calls upon policy makers to closely examine the proposal of a STT.

July 24, 2004

On July 8, 2004, India's Finance Minister, P. Chidambaram, presented Finance Bill in Parliament in which he proposed the introduction of Securities Transaction Tax (STT) in the Indian financial markets.

August 14, 2004
Under pressure from powerful lobby of brokers, speculators, arbitrageurs and “noise traders,” Finance Minister, P. Chidambaram, diluted several important provisions of the proposed securities transaction tax (STT).

On October 1, 2004, the Securities Transaction Tax (STT) came into implementation in the Indian financial markets. The market players and analysts who had predicted that the introduction of STT would bring Indian financial markets to a standstill have been proved completely wrong.

The move by the US to curb the use of capital controls under the bilateral trade agreements with Chile and Singapore has not received adequate attention. The fact that Chile and Singapore have agreed to surrender the use of capital controls in return for more favorable market access should set the alarm bells ringing. If bilateral trade deals banning capital controls become de rigueur it means a country using them to defend its economy will end up compensating American investors for the inconvenience.

An in-depth investigation of attempts made by a select grouping of developed world to widen the scope of trade negotiations to new issues, particularly investments, at the Fifth Ministerial Conference of the World Trade Organization (WTO) held at Cancun, Mexico in September 2003.

July 7 2003

A commentary on the attempts made by the European Union, Japan and Canada to push negotiations for a multilateral investment agreement at the World Trade Organisation meeting in Cancun in September 2003.

The above FT article provoked sharp reactions from International Chamber of Commerce and many others. Here are the exchanges published in the FT.

In recent times, the terms ‘governance’ and ‘good governance’ have become buzzwords in the development discourse. Pushed by powerful international financial institutions, ‘good governance’ has become the cornerstone of development cooperation. Nowadays it is difficult to come across aid packages of multilateral financial institutions and bilateral donors that do not use the term ‘good governance’ and contain ‘governance’ conditionalities. This paper critically examines the emergence of “good governance” agenda and exposes some of the myths espoused by the development aid community.

In the last two decades, economic clout of global corporations has scaled unprecented heights. Does this suggest the end of nation-states? Not at all, says the author. With the help of contemporary examples, the author argues that the role of state has been critical in shaping the present trajectory of corporate-led global economy. The paper critically examines in detail two most controversial and complex issues related to TNCs namely, mergers and aquisitions and transfer pricing. The author calls upon anti-corporate activists and movements to rethink their strategies in order to address new challenges posed by corporate-led globalization.

On March 31, 2005, Paul D. Wolfowitz was appointed as President of the World Bank. The appointment of Mr. Wolfowitz shows the poor governance norms practiced by a few powerful member-countries in the running of multilateral institutions. If the President of World Bank is selected by such secret and undemocratic means, it becomes imperative for the Bank to follows its own dictum of “good governance” and “institutional building” before preaching it to the poor and developing world.

On August 2, 2004, Citigroup traders sold euro-denominated government bonds worth Euro 12.4 billion in less than two minutes, only to buy back bonds worth Euro 3.7 billion at lower prices few minutes later. In the process, Citigroup traders made a handsome profit of Euro 13 million but triggered sharp movements and uncertainty in the bond futures market. A classic example of casino capitalism!

Since early 2004, international crude oil prices have witnessed a massive upsurge. What contributed to the sudden rise in oil prices? Is it the result of demand or supply factors or
rampant speculation in oil futures markets?

The Fifth Ministerial Conference of World Trade Organization (WTO) held in Cancun during September 10-14, 2003, failed to arrive at any agreement on several contentious issues. Since Cancun Conference was expected to provide a further push to the Doha Round, both the proponents and critics were apprehensive about its outcome. But the way Ministerial Conference collapsed at Cancun has surprised everyone.

In December 2003, Italian food and dairy giant, Parmalat, went bust. The dramatic fall of
family-owned Parmalat was triggered when Bank of America claimed that a document
showing 4 billion Euro in company’s Cayman Islands bank account is forged.

The short-term profit-maximizing strategies of private equity funds have received considerable public criticism. A senior German politician described private equity funds and hedge funds as “swarms of locusts that fall on companies, stripping them bare before moving on.” He told a German newspaper that “some financial investors don't waste any thoughts on the people whose jobs they destroy.”

Australia's largest bank, National Australia Bank (NAB), lost hundreds of millions of dollars in speculative currency trading. The scandal broke out in January 2004 when a fellow trader working in the Melbourne office of the bank exposed unauthorized foreign currency derivatives trading.

On November 11, 2003, the World Trade Organization (WTO) issued an important verdict confirming that heavy import duties imposed on steel products by the US violate trade rules.

Against the backdrop of September 11th terrorist attacks in the US, the anthrax crisis raised highly controversial issues related to intellectual property rights. Not long ago, the world witnessed heated debate on the patent controversy when the leading drug companies took the South African government to court to prevent it from importing cheaper versions of patented drugs for patients suffering from AIDS.

The lawsuit filed by drug transnational corporations’ association against the South African government has clearly exposed how TRIPS and the concomitant patent regime can adversely affect the lives of AIDS patients in the poor and the developing world. Universal health programs and other public funded interventions notwithstanding, it is also necessary that monopolies in the drug industry be dismantled so as to ensure that crucial drugs are made accessible to the poor patients at affordable price.

A commentary on the series of financial crises faced by Turkey since 2000.

A three-part commentary on how Coke made a mockery of disinvestment provisions by denying voting rights to the Indian shareholders.

World Investment Report has become one of the strong proponents of the liberalization of foreign direct investment in the developing world. However, the hard-selling of FDI is often based on several myths. FDI is not a panacea. There is no country in the world which has developed solely on the basis of FDI flows.

An analysis of how Houston-based Enron Corporation became victim of its own contradictions and large-scale fraudulent practices by its top management.

After lending billions of dollars in supporting neo-liberal adjustment programs in over 100 countries, the World Bank is nowadays reinventing itself as an anti-poverty crusader. By suddenly espousing the cause of the poor, the Bank has not just shocked the global financial community but also its die-hard critics who had never anticipated that much of their lexicon such as “empowerment,” “governance,” “decentralization,” “microcredit” and “transparency” would soon become buzzwords at the Bank.

Historically, women’s groups and NGOs initiated microcredit programmes as one component of the development strategy to empower poor women. But nowadays microcredit offers new avenues of profit-making since interest rates range from 20 to 40 per cent and repayment rates are over 90 per cent, far above commercial lending. This economic logic makes the poor more attractive to banks and financial institutions, but not vice-versa.

In the development circles, microcredit has become the buzzword. Advocates of microcredit often perceive it as a panacea for poverty alleviation. The recent trends indicate that microcredit programs are moving away from ‘development as
charity’ model to more profitable ‘development as business’.

In March 2001, a massive scam broke out in Indian financial markets which wiped out US$32 billion in market capitalization. The market analysts have called the market crash the first “Black Friday” of the millennium. This briefing paper provides an in-depth analysis of the scam and the resultant market crash.

A three-part series examining various economic reforms launched in China since 1980s. This series was written on the eve of China’s entry into the WTO. The part III specifically focuses on the potential impacts and implications of opening of the financial sector under the WTO mandated timetable.

There is no denying the fact that the globalization of finance has surpassed the globalization of production and trade. In order to address issues emerging from globalization of finance, citizens and peoples' movements need new tools of analysis and advocacy. It is high time that activists and groups start developing understanding of finance capital and its institutions in order to develop effective campaign strategies.

This paper is a part of several studies commissioned by FES on International Financial Architecture in 1999.

Bayer India Limited (BIL) has significantly increased its presence in India since 1991. However, this growth has been accompanied by deteriorating commitment to industrial values and total disregard for social and environmental concerns. BIL has greatly succeeded in marginalizing the trade unions and is seeking to impose its new industrial culture among its workers. BIL has also benefited with lax regulatory bodies. This case study examines these issues based on information collected from various sources.

The post-liberalisation period (1991-96) received a substantial amount of foreign direct investments from Germany, particularly in the industrial sector. This report examines the trends and patterns of German investments in India, in the light of Investment Protection Treaty and Double Tax Avoidance Pact between India and Germany. The report finds that the major attractions for German investors in India are cheap labour, huge domestic market, and lax environmental and public health regulations with ineffective implementation by state machinery.

A guide and resource book on how to research and campaigns on TNCs.