About
Rohan Chinchwadkar is an Assistant Professor (Finance, Entrepreneurship) at Shailesh J…
Articles by Rohan
Contributions
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How can you ensure the reliability of a discounted cash flow analysis?
VCs, especially early-stage VCs, rarely rely on conventional DCF valuation. The VC method for startup valuation usually relies on relative valuation and looks like this: 1. Forecast earnings to the year in which you expect to exit (typically via IPO or sale to a listed company) 2. Estimate P/E multiple using a peer group of listed firms (This might be difficult to do if it is an emerging sector and there are no listed peers. Also, P/E multiple in exit year might be significantly different from today's P/E multiple, so an adjustment might have to be made) 3. Assess expected value of the startup at exit using forecasted earnings and P/E multiple 4. Discount the exit value at the target IRR of the VC fund to get the valuation today
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You need to find a new venture capital deal sourcing software. How can you make sure it’s the right one?
Most discussions on sourcing platforms/softwares focus on outbound sourcing (push-strategy - VC fund actively looks for appropriate startups to connect with - largely led by junior-mid level members in the fund). It would be very useful to have a platform which also allows a VC fund to keep track of its inbound sourcing (pull strategy - deals which come through references from "friends of the fund" - largely led by mid-senior members of the fund). Software can help the fund track the different actors in the ecosystem who refer deals to the fund, who refers what kind of deals (stage, industry etc.), who have referred high-quality leads which converted into successful investments in the past, which GP has brought in what type of deals etc.
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You’re running a Venture Capital firm. How do you know if you’re performing well?
Using Modified IRR (MIRR) might reflect actual LP returns better than simple IRR: VC funds return money to investors as and when exits happen. Thus, for a fund with a life of 10 yrs, LPs could start to see cash inflows from year 6. When IRRs are high, the IRR can be an overestimate because of the assumption that intermediate cash flows (CFs) are re-invested at the IRR. Modified IRR can be used to assume a more reasonable return on intermediate CFs. For example: Fund life = 10 years, IRR = 22%, VC distributed $10M to LPs in year 6. IRR assumes that LPs were able to generate annualised return of 22% on that $10M from year 6-10. If that is not reflective of actual returns on intermediate CFs, MIRR with a lower re-investment rate can be used.
Activity
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Dear All, Our paper, "Thinking Beyond Core Activities: Evidence from Telecom Service Providers Competing in the Digital Platform Economy," has been…
Dear All, Our paper, "Thinking Beyond Core Activities: Evidence from Telecom Service Providers Competing in the Digital Platform Economy," has been…
Liked by Rohan Chinchwadkar
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LET THE BRAIN ROT NOT! Oxford Word of the Year 2024 is ‘brain rot’. Their press release says, “‘brain rot’ gained new prominence this year as a term…
LET THE BRAIN ROT NOT! Oxford Word of the Year 2024 is ‘brain rot’. Their press release says, “‘brain rot’ gained new prominence this year as a term…
Liked by Rohan Chinchwadkar
Experience
Education
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Indian Institute of Management, Calcutta
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Activities and Societies: Dramatics Club, Entrepreneurship Cell, Finance Club
First year coursework: Grade of 7.37/9 (Highest CGPA in PhD batch, top 10% in MBA batch) with an 'A+' in Corporate Finance and 'A' in Financial Accounting
Second year coursework: 'A+' in Advanced Corporate Finance and Behavioural Finance
Minor in Strategy
PhD Thesis: Essays in Private Equity and Venture Capital
Conferences & Symposiums
- Selected for ‘Campus for finance – Private Equity Conference’ at Vallendar, Germany
- Completed ‘Advance Certificate Private…First year coursework: Grade of 7.37/9 (Highest CGPA in PhD batch, top 10% in MBA batch) with an 'A+' in Corporate Finance and 'A' in Financial Accounting
Second year coursework: 'A+' in Advanced Corporate Finance and Behavioural Finance
Minor in Strategy
PhD Thesis: Essays in Private Equity and Venture Capital
Conferences & Symposiums
- Selected for ‘Campus for finance – Private Equity Conference’ at Vallendar, Germany
- Completed ‘Advance Certificate Private Equity Management Training’ conducted by IVCA
- Attended BNP Paribas Hedge Fund Symposium at Singapore Management University
- Invited for Behavioural and Quantitative Finance conference, London, in collaboration with Nomura Centre Oxford and Cambridge University
- Selected for ‘Optimization Methods and Financial Applications’ symposium by Brunel University -
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CGPA: 9.1/10
Received a grade of 10/10 in 17 subjects -
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97.33% in PCM (Physics - Chemistry - Maths)
Rank 90 in MH-CET Engineering (out of 1,52,000 applicants) -
90.66% in SSC Examination
Publications
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Truth vs Information: Transcending the naive view of modern science
Forbes India
The “naive view” of information, articulated by Yuval Noah Harari in his latest book “Nexus”, says that more and faster information is always better. The naive view has become increasingly prevalent in modern science too. The article discusses how this view (further encouraged by university rankings) leads to a focus on the quantity of scientific research rather than its quality and impact. To transcend the naive view of modern science, academic institutions need to go back to first principles…
The “naive view” of information, articulated by Yuval Noah Harari in his latest book “Nexus”, says that more and faster information is always better. The naive view has become increasingly prevalent in modern science too. The article discusses how this view (further encouraged by university rankings) leads to a focus on the quantity of scientific research rather than its quality and impact. To transcend the naive view of modern science, academic institutions need to go back to first principles and reinvent the meaning of scientific impact in the age of artificial intelligence.
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In pursuit of financial sustainability: Startup incubators as equity investors
Forbes India
The traditional incubation model primarily focused on providing mentoring and workspace has evolved significantly. Today, incubators are increasingly adopting equity-based models, reflecting a shift towards deeper engagement with startups and aligning their success with the startups’ future achievements. This article explores the strategies incubators can use to manage equity, their challenges, and how they can effectively navigate this evolving landscape to ensure sustainable growth.
Other authorsSee publication -
Finding the sweet spot for India's Sovereign AI
Forbes India
While the allure of Sovereign AI is manifold, its design and implementation can be highly complex and requires a nuanced handling of several considerations. In this article, we emphasize that developing countries like India, need to find the sweet spot in the policy framework which strikes a balance between economic realities and strategic imperatives to get the biggest bang for their buck. Rather than making and owning everything, governments need to create a tailored policy for different…
While the allure of Sovereign AI is manifold, its design and implementation can be highly complex and requires a nuanced handling of several considerations. In this article, we emphasize that developing countries like India, need to find the sweet spot in the policy framework which strikes a balance between economic realities and strategic imperatives to get the biggest bang for their buck. Rather than making and owning everything, governments need to create a tailored policy for different layers of the AI stack.
To orchestrate the creation of an effective AI ecosystem, the government can use a combination of four actions at its disposal: make, buy, collaborate and regulate. To better understand how these choices can play out in the design and implementation of India’s Sovereign AI system, we delve deeper into the different layers of the AI stack: hardware, cloud, AI models and applications.Other authorsSee publication -
A roadmap for start-up incubators
The Hindu Business Line
The article emphasises the importance of financially sustainable startup incubators in building a resilient entrepreneurship and innovation ecosystem. It lays out the different revenue streams available to incubators to achieve self-sufficiency. Incubators can earn by providing value to four key stakeholders: (i) incubatee startups, (ii) industry, (iii) government and (iv) other entrepreneurial support organisations. There are four sources of revenue from incubatee startups: (a) incubation…
The article emphasises the importance of financially sustainable startup incubators in building a resilient entrepreneurship and innovation ecosystem. It lays out the different revenue streams available to incubators to achieve self-sufficiency. Incubators can earn by providing value to four key stakeholders: (i) incubatee startups, (ii) industry, (iii) government and (iv) other entrepreneurial support organisations. There are four sources of revenue from incubatee startups: (a) incubation fees, (ii) equity stake, (iii) revenue sharing and (iv) success fees for additional support.
Other authorsSee publication -
WRCB, IIT Bombay: Commercializing Deep-Tech Innovation
Ivey Publishing, Harvard Business Publishing
The case examines strategic and operational hurdles encountered by a deep-tech support organisation, Wadhwani Research Centre for Bioengineering (WRCB), IIT Bombay, within India’s evolving ecosystem and focuses on funding obstacles and strategies for commercialising deep-tech research. It outlines essential factors for successfully transitioning deep-tech innovations from research phases to commercial viability through effective resourcing practices by an entrepreneurial support organisation…
The case examines strategic and operational hurdles encountered by a deep-tech support organisation, Wadhwani Research Centre for Bioengineering (WRCB), IIT Bombay, within India’s evolving ecosystem and focuses on funding obstacles and strategies for commercialising deep-tech research. It outlines essential factors for successfully transitioning deep-tech innovations from research phases to commercial viability through effective resourcing practices by an entrepreneurial support organisation (ESO).
Other authorsSee publication -
Financial Sustainability of Startup Incubators
Atal Innovation Mission, NITI Aayog
The primary objective of the whitepaper is to outline various revenue streams accessible to startup incubators and recommend a revenue mix which ensures that the incubator remains focused on its core activities related to provision of entrepreneurial support to its incubatee startups. The whitepaper lays out how startup incubators can generate revenue from a wide variety of stakeholders in the ecosystem. We focus on four groups: (i) incubatee startups, (ii) industry partners, (iii) government…
The primary objective of the whitepaper is to outline various revenue streams accessible to startup incubators and recommend a revenue mix which ensures that the incubator remains focused on its core activities related to provision of entrepreneurial support to its incubatee startups. The whitepaper lays out how startup incubators can generate revenue from a wide variety of stakeholders in the ecosystem. We focus on four groups: (i) incubatee startups, (ii) industry partners, (iii) government and (iv) other entrepreneurial support organisations (ESOs). The whitepaper can act as a guide for incubator managers, leadership of their parent organisation, funding institutions and policymakers reviewing the progress of incubators.
Other authorsSee publication -
CIIE: Seeding a Cleantech Entrepreneurship Ecosystem
Ivey Publishing, Harvard Business Publishing
The case highlights the role of academic incubators and the public sector in fostering high-tech innovation and entrepreneurship. It also helps students understand the various funding routes available to an incubator for early stage investments in high-tech start-ups. It outlines the characteristics and structure of an incubator-managed venture capital (VC) fund, along with various types of challenges in managing the interests of diverse stakeholders. It can act as a guide for managers of…
The case highlights the role of academic incubators and the public sector in fostering high-tech innovation and entrepreneurship. It also helps students understand the various funding routes available to an incubator for early stage investments in high-tech start-ups. It outlines the characteristics and structure of an incubator-managed venture capital (VC) fund, along with various types of challenges in managing the interests of diverse stakeholders. It can act as a guide for managers of incubation centres looking to create a VC fund to provide financing for start-ups.
Other authorsSee publication -
Technology Business Incubation: A Literature Review and Gaps
International Journal of Global Business and Competitiveness
We explore the role of technology business incubators (TBIs) in facilitating incubatee growth and competitiveness. We identify an important gap: practice-theory-based approach has not been employed to study TBIs. Adopting a practice approach would allow us to gain a better understanding of how and why the various functions are performed in an incubator, enabling us to also explain the variation in the performance of the different incubators.
Other authorsSee publication -
BETIC, IIT Bombay: Commercializing A Novel Digital Stethoscope
Ivey Publishing, Harvard Business Publishing (Bestseller)
The case covers different stages of the product development, innovation and commercialization processes, and examines potential pathways for commercialization of an innovative product at BETIC, IIT Bombay. It can act as a guide for managers of innovation labs, incubation centres and innovators-entrepreneurs.
Other authorsSee publication -
The evolution of startup incubators and incubation policy in India
YourStory
The article discusses the rapid growth in the number of startup incubators in India over the last two decades and the evolution of startup incubation policy.
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The geography of startup incubation in India
Bloomberg Quint
The number of startup incubators in India grew 15 times between 2000 and 2020, with southern and western states contributing the most and non-metro cities gearing up to become future startup capitals.
The article discusses the rapid growth in the number of startup incubators in India over the last two decades, analyses how incubators are geographically distributed across different states and cities in India, and their affiliations and focus. -
Shifting Orbits: Decoding the Trajectory of the Indian Start-up Ecosystem (Co-editor)
Universities Press
In the new millennium, the shape of India’s vibrant entrepreneurial economy has changed significantly to move towards one driven by technology and innovation. Today, India is one of the largest start-up and innovation hubs in the world, and the Indian start-up ecosystem has become an important contributor in our journey to become a $5 trillion economy.
Shifting Orbits Italic text chronicles the spectacular rise of the start-up landscape in India in four different sections: innovation…In the new millennium, the shape of India’s vibrant entrepreneurial economy has changed significantly to move towards one driven by technology and innovation. Today, India is one of the largest start-up and innovation hubs in the world, and the Indian start-up ecosystem has become an important contributor in our journey to become a $5 trillion economy.
Shifting Orbits Italic text chronicles the spectacular rise of the start-up landscape in India in four different sections: innovation, incubation, funding and industry perspectives.
• The first section dives deeper into understanding how India is faring on innovation-led entrepreneurship and delineates the challenges to be overcome.
• The next section explains how incubators provide a safe harbour for start-ups so that they can survive and flourish as viable businesses.
• For start-ups to be able to grow and create an impact, funding is critical – the third section examines the current funding scenario and lists the policy changes essential for its growth.
• The section on industry perspectives takes an analytical, practice-centred view of the growth of the Indian innovation ecosystem.
Taken together, Shifting Orbits is a comprehensive narrative on innovation and venturing in India and provides valuable insights on current trends and practices as well as the challenges and potential benefits for the future.Other authorsSee publication -
Post-COVID-19 Challenges in the Indian IT Industry
Economic and Political Weekly
The article discusses the concept of “cognitive proximity”, how the Indian IT industry has developed cognitive proximity using co-location with clients via international travel and temporary migration, the role it has played in the success and competitiveness of the IT industry, how the COVID-19 pandemic will adversely affect it and some suggestions for how the IT industry can continue to maintain cognitive proximity with clients by adapting to the post-COVID ‘new normal’.
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How to fund innovation in the time of coronavirus
Mint
The article discusses the need to attract more private capital in the fight against the coronavirus pandemic, the need to create a formal regulatory structure to enable investments and how SEBI (Alternative Investment Funds) regulations can be used effectively to achieve that goal.
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Political business cycles, elections and entrepreneurial finance: A framework
Journal of Quantitative Economics
Political processes affect the real economy. An important channel through which politics affects economics is uncertainty. It has been observed that political uncertainty is high around national elections and negatively affects corporate investments and foreign capital inflows. If national elections affect corporations and foreign investors, we should expect them to also affect entrepreneurial finance provided by investors like venture capitalists (VCs). To add to that, in a complex federal…
Political processes affect the real economy. An important channel through which politics affects economics is uncertainty. It has been observed that political uncertainty is high around national elections and negatively affects corporate investments and foreign capital inflows. If national elections affect corporations and foreign investors, we should expect them to also affect entrepreneurial finance provided by investors like venture capitalists (VCs). To add to that, in a complex federal democracy, state level politics is a significant source of political uncertainty.
This is the first paper to examine the impact of national and state elections on entrepreneurial finance and provides a framework of VC investment behavior in the face of political uncertainty. We find that VC investments decrease significantly due to political uncertainty around national and state elections. VCs respond strongly to national elections by decreasing the total investment value and the number of deals in election years. However, they give a softer response to regional political uncertainty around state elections by decreasing only the average deal size. The findings have important implications for governments, regulators and policymakers, and open up an opportunity to examine a variety of new questions which can provide a more detailed and nuanced understanding of the impact of elections on VC investments. -
Choose large-cap funds wisely
The Financial Express
Large-cap alpha is now negative with less than 20% funds outperforming the BSE 100 index
Other authorsSee publication -
Large-Cap Mutual Funds: Big Inflows, Small Returns
Bloomberg Quint
Key results:
1. Large-cap alpha is now negative with less than 20% funds outperforming the benchmark
2. Assets under management (AUMs) per fund have almost doubled in the last 2 years (after demonetisation)
3. Five largest funds by AUMs underperformed the category average in 2017 but recovered in 2018
4. Fall in alphas may not be permanent:
(i) 2018 saw a very narrow performance with only 18 of Nifty 50 stocks outperformed the index. If performance is more…Key results:
1. Large-cap alpha is now negative with less than 20% funds outperforming the benchmark
2. Assets under management (AUMs) per fund have almost doubled in the last 2 years (after demonetisation)
3. Five largest funds by AUMs underperformed the category average in 2017 but recovered in 2018
4. Fall in alphas may not be permanent:
(i) 2018 saw a very narrow performance with only 18 of Nifty 50 stocks outperformed the index. If performance is more broad-based in 2019, alphas could bounce back
(ii) Mutual funds still enjoy a structural advantage since AUMs in India are only about 6.5% of total market capitalisation as compared to 48% in USA
Recommendation for investors: stay put on the mutual fund pitch but fasten your helmets and don’t take your eyes off the ballOther authorsSee publication -
Factors that determine investors’ risk appetite
The Financial Express
Apart from psychological makeup, risk appetite also depends on a number of other factors like age, current income and expenses, family situation, insurance coverage, current net worth and future income expectations.
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4 steps to construct and manage your investment portfolio
The Economic Times
The article discusses the structured four-step portfolio management process which many retail investors don't tend to follow: creating a policy statement, designing an investment strategy, constructing a portfolio and continuously monitoring/evaluating the portfolio.
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Have you covered your risks?
The Economic Times
Once a cash reserve and different types of insurance are in place, investors can begin designing their core investment plans without worrying about the adverse impact of unexpected events on their financial situation.
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Three ways to forecast the value of the rupee
The Financial Express
Market-based forecasts, fundamental analysis and technical analysis help forecast exchange rates. While the three approaches can be useful in forecasting exchange rates, investors should remember that exchange rates also depend on a variety of non-economic factors like political uncertainty and geopolitical tensions around the world. The value of a currency is thus one of the most difficult economic variables to forecast.
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Is the rupee overvalued or undervalued?
Mint
The only way to improve our understanding of currency valuation is to broaden existing models and incorporate the financial, social and political realities of our world and its societies
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How to measure portfolio performance
Mutual Fund Show, BloombergQuint
I discuss with Niraj Shah about how to measure and analyse the performance of your Mutual Fund investments with the help of six measures of risk-adjusted returns: Sharpe Ratio, Treynor Ratio, Upside-Downside Capture Ratios, Information Ratio and Sortino Ratio. We also discuss Morningstar's forward-looking analyst rating framework which uses five parameters to rate funds: performance, price, process, people and parent.
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Do higher interest rates lead to lower growth?
Mint
Economists rarely agree on anything. Ask 10 economists to explain why the Indian economy is functioning the way it is, and you will hear varied explanations ranging from tight monetary conditions and banking crisis to ineffective fiscal policy and global economic conditions. However, most major schools in economics seem to agree on one hypothesis: Interest rates are negatively correlated with economic growth. That is, higher interest rates lead to lower growth and lower interest rates lead to…
Economists rarely agree on anything. Ask 10 economists to explain why the Indian economy is functioning the way it is, and you will hear varied explanations ranging from tight monetary conditions and banking crisis to ineffective fiscal policy and global economic conditions. However, most major schools in economics seem to agree on one hypothesis: Interest rates are negatively correlated with economic growth. That is, higher interest rates lead to lower growth and lower interest rates lead to higher growth. This hypothesis is critical as it lies at the heart of modern monetary policy practised by central banks around the world. So, is it supported by empirical evidence? The latest research seems to suggest otherwise.
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The Choice of Exit: Influence of Private Equity Investors and Buyout Entry
Journal of Emerging Market Finance
The choice of exit method is an inevitable decision faced by entrepreneurs and private equity (PE) investors. The existing literature addresses four categories of factors which influence this choice of exit method between initial public offering (IPO) and acquisition: industry-related factors, market-timing variables, deal-specific factors and demand-for-funds factors. We extend the literature by introducing a new category of factors, ‘PE investor characteristics’, and test if this category has…
The choice of exit method is an inevitable decision faced by entrepreneurs and private equity (PE) investors. The existing literature addresses four categories of factors which influence this choice of exit method between initial public offering (IPO) and acquisition: industry-related factors, market-timing variables, deal-specific factors and demand-for-funds factors. We extend the literature by introducing a new category of factors, ‘PE investor characteristics’, and test if this category has a significant effect on the choice of exit method. We also test if the type of entry has an influence on the exit method. We find that PE investor characteristics play an important role in the choice of exit method. The existence of a large syndicate of PE investors in the same firm increases the probability of an IPO exit, but the presence of a foreign PE investor reduces this probability. Moreover, unlike in developed markets, the cost of debt does not affect the choice of exit method in India. We further consider specific exit methods such as strategic sale, financial sale and buyback and find consistent results. We find that in buyout transactions, the probability of an IPO exit is less than that of a strategic sale. Finally, we present a unique finding that the probability of a buyback as opposed to an IPO is higher if a firm is in the real estate sector.
Other authorsSee publication -
Reducing the home bias in equity investments
Mint
A broad global recovery and the introduction of the long term capital gain tax improves the case for international diversification
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Budgets have priorities straight, but must be more specific
Business Line on Campus
Coverage in The Hindu Business Line: http://www.thehindubusinessline.com/economy/ximb-student-wins-bloc-budget-contest/article22613477.ece
Rohan Chinchwadkar, Assistant Professor (Finance & Accounting area), IIM Trichy, judged the entries in the "If I were a Finance Minister..." pre-Budget contest and chose Suyash Somani of XIMB (Xavier Institute of Management, Bhubaneswar) as the winner. “The article rightly points out that this Budget is unique because it was preceded by two of the…Coverage in The Hindu Business Line: http://www.thehindubusinessline.com/economy/ximb-student-wins-bloc-budget-contest/article22613477.ece
Rohan Chinchwadkar, Assistant Professor (Finance & Accounting area), IIM Trichy, judged the entries in the "If I were a Finance Minister..." pre-Budget contest and chose Suyash Somani of XIMB (Xavier Institute of Management, Bhubaneswar) as the winner. “The article rightly points out that this Budget is unique because it was preceded by two of the most disruptive economic decisions in India’s history: demonetisation and GST implementation,” said Chinchwadkar of the winning entry. “The winner’s Budget is balanced and practical.” -
Accurate benchmarking of mutual funds
Mint
SEBI’s directive to use the total return index (TRI) for benchmarking of mutual fund performance is a welcome move
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If Keynes had designed India’s central bank
Mint on Sunday
As a member of the Chamberlain Commission, Keynes wanted the Imperial Bank of India (later SBI) to become a full-fledged central bank
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Time for a Reserve Bank of India ‘dot plot’
Mint
Since the dot plot is not an official policy tool, it does not bind the MPC and maintains its freedom to revise projections based on new data and events. At the same time, since a dot plot gives a sense of future rate movements, it would be valued by markets, firms and households.
It is amply clear that the MPC’s journey so far has been exemplary. A dot plot seems to be the natural next step in the evolving MPC culture, one that will boost efforts to increase the transparency and…Since the dot plot is not an official policy tool, it does not bind the MPC and maintains its freedom to revise projections based on new data and events. At the same time, since a dot plot gives a sense of future rate movements, it would be valued by markets, firms and households.
It is amply clear that the MPC’s journey so far has been exemplary. A dot plot seems to be the natural next step in the evolving MPC culture, one that will boost efforts to increase the transparency and accountability of India’s public institutions. -
Does a rate cut lead to a currency dip?
The Hindu Business Line
Not necessarily. It depends on rate of inflation, equity flows, monetary policy spillovers and politics, among other factors.
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Pluralism in monetary policy
Mint
Pluralism is critical for all social sciences and economics is no exception. Harvard economist Dani Rodrik writes in his book 'Economics Rules' that economics is a collection of models, and diverse situations call for different models. “Too often, economists mistake a model for 'the' model that applies everywhere and at all times”, he says.
The RBI should realize that DSGE is a model, not 'the' model. Exploring multiple schools of thought can only improve the accuracy and effectiveness of…Pluralism is critical for all social sciences and economics is no exception. Harvard economist Dani Rodrik writes in his book 'Economics Rules' that economics is a collection of models, and diverse situations call for different models. “Too often, economists mistake a model for 'the' model that applies everywhere and at all times”, he says.
The RBI should realize that DSGE is a model, not 'the' model. Exploring multiple schools of thought can only improve the accuracy and effectiveness of India’s monetary policy framework. -
Young and the Restless
The Economic Times
Appeared online as the "Poke Me" article of the week in The Economic Times
Modinomics – the economic philosophy of India’s Prime Minister Narendra Modi – has been under the microscope ever since Modi demonetised 86 percent of India's currency in circulation. Modinomics focuses on 3Ds – democracy, demand and demographic dividend. While the world has been focused on the first two, it is the third D – demographic dividend – which holds the key to India’s future. But, the window of India's…Appeared online as the "Poke Me" article of the week in The Economic Times
Modinomics – the economic philosophy of India’s Prime Minister Narendra Modi – has been under the microscope ever since Modi demonetised 86 percent of India's currency in circulation. Modinomics focuses on 3Ds – democracy, demand and demographic dividend. While the world has been focused on the first two, it is the third D – demographic dividend – which holds the key to India’s future. But, the window of India's demographic dividend is closing quickly.
This piece analyses why the window is closing quickly and how a combination of a youth bulge and mass unemployment can threaten the stability of India’s future. The piece also explores why the destabilisation of India has adverse economic and political consequences for Asia and the west, especially the United States of America. -
The perils of a larger public sector
Mint
The government plans to provide operational flexibility to Central Public Sector Enterprises (CPSEs) to takeover stressed assets and turn them around. While this would help unburden the banking sector quickly, it may not be an effective solution, given the state of India’s public sector. The piece argues that given the performance record of India's public sector, any initiative which proposes to increase its size should be discouraged.
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Why a Dr. Dravid is important for cricket
The Hindu Business Line
We all know The Wall. No, not the one Mexico is going to pay for. I’m talking about Mr. Dependable of Indian cricket, Rahul Dravid.
A cricket legend like Dravid can make a significant contribution to research in sports analytics and technology. -
The political economy of India's bad bank
Mint
Macroeconomic and political viability will be a key consideration in the implementation of the bad bank. In order to make the bad bank a viable solution, the government and the RBI will have to ensure that it does not get labelled as a “bailout” of crony capitalists and corrupt bankers at the cost of taxpayers.
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Growth in the time of demonetisation
The Hindu Business Line
Recently, the Central Statistics Office (CSO) released the quarterly estimates of India’s GDP for the “demonetisation quarter". As opposed to grim forecasts by the critics of demonetisation, the Indian economy grew at an impressive 7 per cent, retaining the tag of world’s fastest-growing economy. As soon as the estimates were released, optimists celebrated by claiming that this vindicates the Government’s stance that demonetisation would not slow down growth significantly. The pessimists were…
Recently, the Central Statistics Office (CSO) released the quarterly estimates of India’s GDP for the “demonetisation quarter". As opposed to grim forecasts by the critics of demonetisation, the Indian economy grew at an impressive 7 per cent, retaining the tag of world’s fastest-growing economy. As soon as the estimates were released, optimists celebrated by claiming that this vindicates the Government’s stance that demonetisation would not slow down growth significantly. The pessimists were quick to question the credibility of the data. So, the important question about demonetisation becomes, to celebrate or not to celebrate? As is usually the case in India, the answer lies somewhere in the middle.
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Designing the bad bank of India
Mint
A new solution to the problem of bad loans is gaining popularity, the "bad bank". However, while the concept of a bad bank is simple, the implementation can be quite complicated. A variety of organizational and financial choices are available while designing a bad bank.
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Using Alternative Investment Fund regulations to start up India
Mint
One year after "Startup India" was launched, it is a good time to assess the progress of the scheme and its impact on start-up funding. The piece discusses how the government and SEBI can use Alternative Investment Fund regulations to kick-start the next phase of start-up funding in India.
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To Reap What You Lend
The Economic Times
Appeared online as "Demonetisation has placed a large kitty in the hands of banks"
One of the most ignored advantages of demonetisation is the substantial increase in lending capacity of banks. However, prudent policies are needed to make the best of this opportunity. Minsky’s financial instability hypothesis provides some guidance. -
Evolution of private equity regulations in emerging markets: A case of India
The Journal of Private Equity
Post liberalization in 1991, the private equity (PE) industry has played a significant role in India’s growth story, contributing more than $100 billion of stable long-term capital in the last 15 years. Owing to its fast emergence, the PE industry went from having ad-hoc regulation to a formal regulatory framework. This evolution presents a good case to study and understand financial policy making as it happens in emerging markets. This article is also a comprehensive guide for PE investors who…
Post liberalization in 1991, the private equity (PE) industry has played a significant role in India’s growth story, contributing more than $100 billion of stable long-term capital in the last 15 years. Owing to its fast emergence, the PE industry went from having ad-hoc regulation to a formal regulatory framework. This evolution presents a good case to study and understand financial policy making as it happens in emerging markets. This article is also a comprehensive guide for PE investors who want to understand the history and landscape of PE regulations in India.
The authors track the evolution of regulatory environment for the PE industry in India, from SEBI (Venture Capital Funds) Regulations 1996 to the SEBI (Alternative Investment Funds) (Amendment) Regulations 2013, which govern the industry today. This historical study shows that while regulators in emerging markets are usually reactive rather than proactive, it also emphasizes the importance of effective regulation in boosting an important industry like PE. It highlights the fact that a regulator should not create regulations in isolation; it is critical to take inputs from different stakeholders to develop effective regulations.Other authorsSee publication -
Real exchange rate and real interest rate differential: A cointegration approach with structural shifts
Journal of Quantitative Economics
Long term determinants of the movements in exchange rate have been an active interest area for both theoretical and empirical research. In this paper, we consider the long term relationship between exchange rates, inflation and interest rates. We find evidence that the purchasing power parity does not hold for the USD/INR exchange rate, which is consistent with previous research. We examine the relationship between real exchange rate and real interest rate differential between India and USA. We…
Long term determinants of the movements in exchange rate have been an active interest area for both theoretical and empirical research. In this paper, we consider the long term relationship between exchange rates, inflation and interest rates. We find evidence that the purchasing power parity does not hold for the USD/INR exchange rate, which is consistent with previous research. We examine the relationship between real exchange rate and real interest rate differential between India and USA. We find weak evidence of cointegration between USD/INR real exchange rate, US real interest rate and Indian real interest rate. We also find no evidence of cointegration between USD/INR real exchange rate and real interest rate differential using standard cointegration tests. To make our analysis robust, we identify important structural shifts in the exchange rate and interest rates and introduce them in our analysis to test the cointegration between real exchange rate and real interest rates. After introducing structural shifts, we find new evidence of a long term equilibrium relationship between USD/INR real exchange rate and real interest rate differential between the two countries. The results of our study underscore the significance of monetary factors in predicting exchange rates in the long term as well as the role of structural shifts in long term time series analysis.
Other authorsSee publication -
Merger Returns and Choice of Payment Method: A Case from the Indian Banking Industry
International Journal of Economics and Finance
In mergers and acquisitions, information asymmetry models show that merger returns for the bidder are
significantly negative when the choice of payment method is stock. However, studies in the banking industry show that that merger returns for the bidder are positive in the case of cash offer, stock offers and combined offers i.e. they contradict the information asymmetry models. Recent studies on mergers in the Indian banking industry also show similar results. We present the case of a…In mergers and acquisitions, information asymmetry models show that merger returns for the bidder are
significantly negative when the choice of payment method is stock. However, studies in the banking industry show that that merger returns for the bidder are positive in the case of cash offer, stock offers and combined offers i.e. they contradict the information asymmetry models. Recent studies on mergers in the Indian banking industry also show similar results. We present the case of a banking merger where merger returns for the bidder are significantly negative when the method of payment is stock i.e. we present support for informational asymmetry models in the banking industry. We study the ICICI Bank - Bank of Rajasthan merger and show that the loss for ICICI shareholders was 4.29%, while the gain for Bank of Rajasthan shareholders was 44.86%.
Courses
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Disaster Risk Financing Products
IBRD, World Bank Group
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Fundamentals of Disaster Risk Finance
World Bank Group
Languages
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English
Native or bilingual proficiency
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Hindi
Native or bilingual proficiency
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Marathi
Native or bilingual proficiency
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