A STUDY ON MARKET ANOMALIES BASED ON NIFTY INDEX

 ABSTRACT

Market anomalies are something which are inconsistent with the efficient market hypothesis (EMH). Anomalies are the ones  which generate abnormal returns/profits to the investor which are above the expected rate of return generated by the efficient markets. Anomalies are considered when there is a trend in the market. If an anomaly is known by everyone in the market then the advantage of this anomaly is taken by every investor in the market and the abnormal profit then scatters away and only normal profits are generated by the investors which are then consistent with the efficient market hypothesis. An anomaly is first found through data mining or data snooping through aggressive research by going through its data of historical prices and volume movements and then causes for such an anomaly are then researched. In this research paper of mine I am going to take the nifty 50 index as my base subject then try to find different market anomalies like turn of the month effect(January effect), weekend effect and turn of the year effect. Nifty 50 index is a portfolio of securities of 50 diversified companies comprising 13 sectors. Nifty midcap 50 captures the movement of the midcap segment of the market and Nifty smallcap 50 captures the movement of the smallcap segment of the market.They are managed by the National Stock Indices which is a subsidiary of NSE Strategic Corporation limited. It was established on 21st April 1997. They are a free float market capitalization weighted index in which market capitalization is found by market price multiplied by number of outstanding shares in the market excluding the number of shares held by the promoters of the company.

KEYWORDS : 

Efficient Market Hypothesis (EMH), Market Anomalies, Turn of the Year Effect (January), Turn of the Month Effect and Weekend Effect.

 

INTRODUCTION

EFFICIENT MARKET HYPOTHESIS (EMH)

 

Efficient market hypothesis (EMH) is a term coined by Harry Roberts (1967) which was developed independently by Fama (1963,1965) and Samuelson (1965). Many other researchers claim its origin in their research work but its due credit is given to Eugene Fama. EMH states that current market price of the shares reflects all the information available in the market, I.e., market participants have all the information related to that company shares. Market participants can only earn normal profits in the market only and passive investment strategy is favorable to the investors. Passive investment strategy is that the investors are following a certain benchmark (like index, shares, etc). In passive investment strategy investors earn equal to their benchmark returns. Whereas in active investment strategy investors use their own investment techniques or strategies for investment and there is also high transaction costs associated with investors buying or selling the assets in this strategy. In active investment strategy investors try to earn above the benchmark. In EMH passive investment strategy is followed and investors earn only equal to their benchmark or normal profit rather than abnormal profits which the active investment strategy tries to earn. EMH describes three types of market:- weak form efficient , semi-strong form efficient and strong form efficient.

 MARKET ANOMALIES

 Market anomalies arise when there are inefficiencies in the market as they should be because markets are formed by investors who are  irrational  and not only  by the rational investors as theories state. The market is driven by people’s sentiments, biases  and not just with the pure rational thought process. Due to anomalies individuals are able to earn abnormal profits than normal profits as stated in EMH. Prices of the stock are different than as predicted by the EMH prices .Anomalies can be of various types like turn of the year effect(January effect) , turn of the month effect, weekend effect, stock split effect etc. Causes of these anomalies  can be because new information doesn’t quickly  adjust , tax treatments are different, adjustments of cash flows and behavioral constraints of the investors. Anomalies are found after a long aggressive data  snooping  by viewing all the past data related to trading volumes and prices and if there is a pattern found, reasons for its occurrence are to be investigated as to why this is happening. By following such patterns investments are made so that abnormal profits can be made and an  active investment strategy approach is taken in this. Volatility of the stock market also influences the inefficiencies in the stock market, more volatile the stock market more inefficiencies it have.

Source: www.google.com

TURN OF THE YEAR EFFECT (JANUARY)

 Turn of the year effect states that there is a pattern of increased volume and higher price movement during the last week of December and first two weeks of January. The January effect is the same as of the turn of the year effect but it is stated that small cap company stocks outperforms the market during the first two or three weeks of January. It can be due to window dressing by companies.

TURN OF THE MONTH EFFECT

 Turn of the month effect states that during the last four days of the month and starting three days of the next month there is an increase in trading volume and higher stock prices.

WEEKEND EFFECT

 Weekend effect states that on Mondays stock prices tend to decrease and on Fridays stock prices tend to rise or increase. It can be attributed to bad news released by companies after the closing of the Market on Friday.

OBJECTIVE OF THE STUDY 

In this study I wanted to find out the following :

•        To find market anomalies in the Indian stock market index Nifty 50, Nifty mid-cap 50 and Nifty small-cap 50.

•        To Compare market anomalies between the three indices : Nifty 50, Nifty mid-cap 50 and Nifty small-cap 50.

Source: www.google.com

 METHODOLOGY

 Daily data of  stock closing prices  has been collected from National Stock Exchange (NSE) for 12 years from 2010-2021 of all the three indices Nifty 50, Nifty midcap 50 and Nifty smallcap 50. Data is collected from secondary sources. Multiple linear regression with dummy variable is applied. 2978 observations are used for turn of the year effect (January) and weekend effect. For the turn of the month effect 2976 observations are used.

ANALYSIS

Stock returns are calculated by :

Rt = ln(Pt/Pt-1) = ln(Pt) - ln(Pt-1)

 Where Rt represents log return of closing stock price,

Pt represents the closing stock price of the present day and Pt-1 represents the  closing stock price of the previous day. Log stock returns are chosen over linear returns because it is very easy to calculate and they give a first order difference of logarithmic prices.

Dummy variable multiple linear regression model is used for finding the market anomalies. Dummy variables  take only two values 1 and 0. 1 represents presence of an attribute and 0 represents absence of the attribute. For the dummy variable model, if there are 'n' numbers of variables then n-1 number of dummy variables should be used. One variable should be omitted as it is represented by the intercept of the model. Total observations for each market anomaly from 2010-2021 is 2978.

For finding the Turn of the year effect (January effect) we have used :

Nifty return = b0 + b1d1(January) + b2d2(April) + u

 As financial year for many countries have different starting period ,i.e., for USA it is January to December and for India it is April to March so we have collected data concerning each financial year :

Nifty return = b0 + b1d1(January) + b2d2(April) + u

 b0 = represents returns in other months other than January and April

b1 = coefficient which represents return on January

d1(January) = dummy variable used for indicating the presence of January or not

b2 = coefficient which represents return on April

d2(April) = dummy variable used for indicating the presence of April or not

 For finding the turn of the month effect we have used a return interval of seven days which comprises first days of the current starting of the month and last four days of ending of previous month.

                                                Nifty return = b0 + b1d1(TOM) + u

 Where b0 = interest represents returns on other days of the month

b1 = coefficient represents returns on Turn of the Month (TOM)

d1(TOM) = dummy variable indicating the presence of TOM or not

 For finding the weekend effect we have used :

Nifty returns = b0 + b1d1(Monday) + b2d2(Friday) + u

Where b0 = intercept which represents returns on rest of the days other than Monday       

                     And Friday

 b1 = coefficient which represents return on Monday

d1(Monday) = dummy variable used for indicating the presence of Monday or not

b2 = coefficient which represents return on Friday

d2(Friday) = dummy variable used for indicating the presence of Friday or not 

HYPOTHESIS 

For Turn of the year effect return on all the months is same ,i.e.,

 

H0 : b0=b1=b2 

H1 : at least  one is indifferent

For Turn of the month effect return on all days of the month are same ,i.e.,

 H0 : b0=b1

 H1 : at least one is indifferent

For Weekend effect return on Monday and Friday and other days of the week are same ,.i.e.,

 H0 : b0=b1=b2

 H1 : at least one is indifferent

 If the dummy variable for any one day or month is significant , we know that effect is significant of the anomaly which the dummy variable is representing then we are rejecting the null hypothesis and accepting the alternate hypothesis. If there is no significant pattern of anomaly found then we are accepting the null hypothesis and rejecting the alternate hypothesis.

 

CONCLUSION

 All the three indices Nifty 50, Nifty Midcap 50 and Nifty Smallcap 50  are showing positive turn of the month effect  and Nifty 50 is also showing positive returns on other weekdays like Tuesday, Wednesday and Thursday. All three indices are showing negative returns on Monday but it is found to be statistically insignificant and Nifty 50 and Nifty Smallcap 50 is also showing negative return on Friday, So weekend effect is not present in all the three indices but Nifty 50 is showing another anomaly with positive returns on other weekdays which is statistically significant. All the three indices are showing negative return on January effect ( turn of the year effect ) and positive return on April ( financial year starting of Indian Market) but it is also statistically insignificant and also for January effect, So turn of the year effect (January) is also not present in Indian stock markets Nifty 50, Nifty Midcap 50 and Nifty Smallcap 50. Comparatively all the indices are showing the same market anomaly except Nifty 50 which is also showing another market anomaly other than the two indices.Nifty Midcap 50 is showing highest return than Nifty Smallcap 50 and Nifty 50 in turn of the month effect and Nifty Smallcap 50 is showing greater return than Nifty 50 on turn of the month effect. So in the end the Indian market Nifty 50, Nifty mid-cap 50 and Nifty small-cap 50 are still not efficient.

REFERNCES

Abraham Abraham, & Ikenberry, D. L. (1994). The Individual Investor and the Weekend Effect. The Journal of Financial and Quantitative Analysis, 29(2), 263–277. https://doi.org/10.2307/2331225

Amarnani, Neeraj and Vaidya, Parth, Study of Calendar Anomalies in Indian Stock Markets (January 1, 2014). Amarnani, Neeraj and Parag Rijwani (Eds.) (2014) Perspectives on Financial Markets and Systems - Market Efficiency, Behavioural Finance and Financial Inclusion, (Ahmedabad, Institute of Management, Nirma University), Available at SSRN: https://ssrn.com/abstract=2398195

Arendas, Peter & Kotlebova, Jana. (2019). The Turn of the Month Effect on CEE Stock Markets. International Journal of Financial Studies. 7. 57. 10.3390/ijfs7040057.

Dutta, Abhijit (2017). Day-of-the-Week and Other Market Anomalies in the Indian Stock Market.(Bengal, University of North Bengal), Available at https://ir.nbu.ac.in/handle/123456789/2958.

French, R. Kenneth (1980). Stock returns and the weekend effect, Journal of Financial Economics, Volume 8, Issue 1,Pages 55-69,ISSN 0304-405X.

Harshita & Singh, Shveta & Yadav, Surendra. (2019). Unique Calendar Effects in the Indian Stock Market: Evidence and Explanations. Journal of Emerging Market Finance. 18. S35-S58. 10.1177/0972652719831549.

Huynh, Nhan. (2021). Turn-Of-The-Year Effect in Asia Pacific stock markets: New Evidence. SSRN Electronic Journal. 10.2139/ssrn.3799914.

Kunkel, Robert & Compton, William & Beyer, Scott. (2003). The turn-of-the-month effect still lives: The international evidence. International Review of Financial Analysis. 12. 207-221. 10.1016/S1057-5219(03)00007-3.

Potharla, Srikanth & Neeraja, Dr. (2014). Anomalies in Indian Stock Market - An Empirical Evidence from Seasonality effect on BSEIT Index. Researchers-world: Journal of Arts, Science & Commerce. V. 109-116.

Safeer, Mohammed & Kevin , Dr. S & S. , Archana (2014). A Study on Market Anomalies in Indian Stock Market. International Journal of Business and Administration Research Review. Vol.I , Issue No.3, Jan-March 2014.

Mr. Tarun Kumar Kadyan, BA Hons. Economics (batch 20-23), Department of Economics, Faculty of Behavioural and Social Sciences (FBSS), Manav Rachna International Institute of research and Studies (MRIIRS), Faridabad, Haryana. tarunkadyan17@gmail.com

How Could the Russia-Ukraine War Impact the Indian Economy in 2022?

 

The ongoing conflict between Russia and Ukraine has been a major topic of international discussion and concern for several years now. However, the implications of the situation extend far beyond the borders of these two countries. In this article , we will explore how the conflict could potentially impact the Indian economy in 2022. With India being one of the fastest-growing economies in the world, any global events can have a significant impact on its economy. We will discuss the potential effects of rising oil prices, trade restrictions, and the impact on Indian businesses. By delving into the economic implications of the Russia-Ukraine war, we aim to provide you with a comprehensive understanding of how this conflict could affect the Indian economy and your finances.

 

Introduction to the Russia-Ukraine War and its potential impact on the global economy

The Russia-Ukraine War has been ongoing since 2014, with both sides experiencing military, economic, and diplomatic consequences. The conflict has had a significant impact on the global economy, with countries around the world feeling the effects of the war through trade disruptions, energy supply instability, and political tensions. Russia is a major exporter of oil and natural gas, and Ukraine has an important role in transporting these resources to Europe. The conflict has disrupted energy supplies, leading to higher prices and increased uncertainty in the global energy market. Additionally, the war has led to economic sanctions being imposed on Russia, which has further hurt the country's economy and caused ripple effects throughout the global financial system. As the conflict continues in 2022, it is important to examine how it may impact various countries, including India.

Source: www.google.com

Overview of India's economic ties with Russia and Ukraine

India's economic ties with Russia and Ukraine are significant, and any conflict between the two nations could have far-reaching consequences on the Indian economy. Russia has been a longstanding strategic partner of India, with both nations sharing a strong defense and energy partnership. India relies heavily on Russia for critical defense equipment and technology, including the BrahMos missile system, the T-90 tanks, and the Sukhoi Su-30MKI fighter jets. India also imports a significant amount of crude oil and natural gas from Russia, which is critical to meet the country's energy demands.

On the other hand, India's economic ties with Ukraine have been growing steadily over the years. Ukraine is a major exporter of agricultural commodities such as wheat, maize, and barley to India. Furthermore, the two nations have been exploring ways to expand their bilateral trade and investment ties, with a focus on sectors such as IT, pharmaceuticals, and aerospace.

Therefore, any escalation of the Russia-Ukraine conflict could have significant implications for the Indian economy. If Russia were to cut off its energy supplies to India or restrict its defense exports, it could result in a severe energy and defense equipment shortage for India. Similarly, any disruption to Ukraine's agricultural exports could impact food prices in India, which is already grappling with high inflation.

In conclusion, India's economic ties with Russia and Ukraine are crucial, and any conflict between the two nations could have significant implications for the Indian economy. It is crucial for India to maintain a delicate balance between its strategic partnerships with Russia and its growing economic ties with Ukraine.

 

How the war could affect India's trade and investment relations with Russia and Ukraine

The ongoing conflict between Russia and Ukraine could have significant impacts on India's trade and investment relations with these two nations. India has a strong economic relationship with both countries, with Russia being one of India's major defense equipment suppliers, and Ukraine being a major source of wheat, sunflower oil, and other agricultural products for India.

If the conflict between these two nations escalates, India's trade and investment relations with both countries could be adversely affected. For example, if Russia decides to impose economic sanctions on Ukraine, it could impact India's wheat and sunflower oil imports from Ukraine, leading to higher prices for these commodities in the Indian market. Similarly, if India's defense equipment supplies from Russia are disrupted due to the conflict, it could impact India's defense preparedness.

Moreover, the war could also impact India's wider foreign policy goals in the region. India has been pursuing closer ties with both Russia and Ukraine, and any instability in the region could impact India's efforts to deepen its strategic partnerships with these countries.

Overall, the Russia-Ukraine war could have significant economic and strategic implications for India, and it will be important for policymakers to closely monitor the situation and take appropriate measures to safeguard India's interests.

 

Potential impact on India's energy security and oil prices

The ongoing Russia-Ukraine war could have a significant impact on India's energy security and oil prices. As two of the largest oil exporters in the world, any disruption in their oil supply chain could lead to a significant increase in oil prices globally. India, being the world's third-largest oil importer, could be adversely affected by any such price hikes.

Russia is one of India's key oil suppliers, and any disruption in its oil supply chain could lead to an increase in oil prices in India. This could have a domino effect on other sectors of the Indian economy, particularly on transportation, manufacturing, and agriculture, where the use of petroleum products is significant.

Moreover, India's energy security could also be threatened if the conflict escalates and leads to a disruption in the supply of liquefied natural gas (LNG) from Russia. India is heavily dependent on LNG imports, and any disruption could lead to a shortage of gas supply, which could have serious implications for the country's power sector.

In conclusion, the ongoing Russia-Ukraine war could have a far-reaching impact on the Indian economy, particularly on oil prices and energy security. The Indian government needs to closely monitor the situation and take appropriate measures to mitigate any adverse impact on the country's economy.

 

 

How the war could affect Indian exports and imports

The ongoing conflict between Russia and Ukraine could have a significant impact on the Indian economy in 2022, especially in terms of exports and imports. India has a strong trading relationship with both countries, with Russia being one of India's top defense suppliers and Ukraine being a major exporter of grains and other agricultural products to India.

If the war between Russia and Ukraine escalates, it could disrupt the global supply chain and significantly impact Indian exports and imports. India imports a significant amount of coal, oil, and natural gas from Russia, and any disruption in supply could lead to an increase in prices and affect the country's energy security. On the other hand, India exports a variety of goods to both countries, including pharmaceuticals, textiles, and engineering goods. Any disruption in trade could lead to a decline in Indian exports and affect the country's balance of trade.

Furthermore, the war could lead to geopolitical instability and impact the Indian rupee's exchange rate with other currencies. This could lead to inflation and affect the purchasing power of Indian consumers. Therefore, it is essential for the Indian government and businesses to monitor the situation closely and take necessary measures to mitigate any potential impact on the Indian economy.

 

Impact on the Indian rupee's exchange rate

The Russia-Ukraine War could have a significant impact on the Indian rupee's exchange rate. As we know, the Indian economy is heavily dependent on imports of commodities like crude oil and natural gas. Since Russia is one of the major exporters of crude oil and natural gas to India, a disruption in the supply chain due to the ongoing war could lead to an increase in the global prices of these commodities. This, in turn, could lead to a widening of India's current account deficit, which could put pressure on the Indian rupee's exchange rate.

Moreover, if the war escalates and leads to a wider conflict involving major global powers, it could lead to a flight of capital from emerging market economies like India. This is because investors tend to move their money to safe-haven assets like the US dollar during times of geopolitical uncertainty. This could lead to a significant depreciation of the Indian rupee's exchange rate vis-a-vis the US dollar, making imports more expensive and potentially leading to higher inflation.

Overall, the Russia-Ukraine War could have a significant impact on the Indian economy, and policymakers will need to closely monitor the situation and take appropriate measures to mitigate any adverse effects on the Indian rupee's exchange rate.

 

Possible impact on India's defense and security policies

The Russia-Ukraine conflict has the potential to impact India's defense and security policies in several ways. Firstly, India has traditionally maintained friendly relations with both Russia and Ukraine, and the outbreak of hostilities between the two countries could put India in a diplomatic bind. India will have to balance its relationships with both countries to avoid being seen as taking sides, which could impact India's image as a neutral player in international relations.

Secondly, the conflict could impact India's military procurement policies. India has been a major buyer of Russian defense equipment, with over 70% of its military hardware coming from Russia. If the conflict escalates, Russia may prioritize its defense needs, leading to delays or cuts in the supply of defense equipment to India. This could impact India's military preparedness and lead to a greater reliance on other countries for its defense needs.

Finally, the conflict could impact India's energy security. Ukraine is a key transit route for Russian gas exports to Europe, and any disruption in gas supplies could impact global energy prices. India, which is heavily reliant on imported energy, could face higher energy costs, leading to inflationary pressures on the Indian economy.

In conclusion, the Russia-Ukraine conflict has the potential to impact India's defense and security policies in several ways. India will need to navigate these challenges carefully to ensure that its relationships with both countries remain intact and its national interests are protected.

 

India's response to the crisis and its role in mediating the conflict

India has a significant role to play in mediating the Russia-Ukraine conflict. Being a global player and a non-permanent member of the United Nations Security Council, India can provide a neutral platform for dialogue and negotiations between the two nations.

India has traditionally maintained good relations with both Russia and Ukraine and can leverage this to facilitate a peaceful resolution to the conflict. India can use its soft power to bring both nations to the negotiating table and help them find a common ground for a lasting peace agreement.

Furthermore, India's economic interests are also at stake in the conflict as Russia is one of India's major defense partners and a significant supplier of oil and gas. Any escalation of the conflict could have adverse effects on India's energy security and overall economic stability.

Therefore, India's response to the crisis must be measured and balanced, taking into account the interests of all parties involved. India must use its diplomatic and economic influence to foster peace and stability in the region and ensure that the conflict does not escalate into a broader global crisis with severe repercussions on the Indian economy.

 

Mitigating the impact of the war on the Indian economy

 

The Russia-Ukraine war has the potential to impact the Indian economy in various ways, such as increasing oil prices, affecting trade and investment, and causing instability in global financial markets. However, there are ways to mitigate the impact of this conflict on the Indian economy.

One way to reduce the impact of rising oil prices is to invest in alternative energy sources, such as solar or wind power, which can help reduce dependence on oil and gas. Additionally, the Indian government can consider implementing policies to encourage energy efficiency and conservation to reduce overall energy consumption.

Another way to mitigate the impact of the war is to diversify trade and investment partners. India can consider strengthening economic ties with other countries and regions, such as Southeast Asia, Africa, and Latin America, to reduce dependence on Russia and Ukraine.

 

Furthermore, the Indian government can take steps to ensure stability in the financial markets by closely monitoring the situation and implementing measures to stabilize the economy if needed. This can include providing fiscal and monetary stimulus to support businesses and individuals affected by the conflict.

Overall, while the Russia-Ukraine war may have far-reaching consequences, there are steps that can be taken to minimize the impact on the Indian economy. By investing in alternative energy, diversifying trade and investment partners, and ensuring financial stability, India can navigate through this challenging period with resilience and strength.

 

Conclusion and final thoughts on the potential impact of the Russia-Ukraine War on India.

In conclusion, the Russia-Ukraine War could have a significant impact on the Indian economy in 2022. Given India's close trade ties with both Russia and Ukraine, any disruption in the supply chain could lead to an increase in the prices of essential goods such as oil and gas. This could lead to inflation and negatively affect the purchasing power of Indian consumers, leading to a slowdown in economic growth.

Furthermore, the possibility of India getting dragged into the conflict due to its geopolitical position cannot be ruled out. Any military involvement could have severe consequences for the Indian economy, including a decrease in foreign investment and the disruption of trade relations with other countries. It is, therefore, crucial for the Indian government to monitor the situation closely and take necessary steps to mitigate any potential economic impact.

In conclusion, while the full impact of the Russia-Ukraine War on the Indian economy is yet to be seen, it is clear that it has the potential to cause significant disruption. It is crucial for businesses and policymakers to prepare for any potential economic impact and take necessary measures to safeguard the Indian economy.

Ms. Siya Sardana, BA Hons. Economics (batch 20-23), Department of Economics, Faculty of Behavioural and Social Sciences (FBSS), Manav Rachna International Institute of research and Studies (MRIIRS), Faridabad, Haryana. sivya13022002@gmail.com

Budget 2023-24

 Finance brings its finest reshuffle,

For the Economics Budget of ’23 – 24                                  

It has been a long wait from last year,

But the tally of outlay is so clear.                        

Source: Image taken from Google

Reforms and policy profits are set in place,

Tapping from all sources like there is no fore-grace,     

Implementation of schemes for nation’s well-being,

Which can’t be ignored, but shall only bring more seeing.

Disbursement of funds is a painstaking cycle,

To infuse with life, improve ways of hustle,

Diverse credit system across growth pattern,

Enriched with debt-swaps and new civic urban.

Investment opportunities reign in events,                            

As the start-up cult it surely invents,

Improved right to citizens and corporate perks,

Now that’s a budget that’s bound to help with works.

Redefining scope of revenue resources,

Stable governance and sensible services,

The 2023-2024 budget is sure to succeed,

Bringing glory with socio-economic creed.

Ms. Siya Sardana, BA Hons. Economics (batch 20-23), Department of Economics, Faculty of Behavioural and Social Sciences (FBSS), Manav Rachna International Institute of research and Studies (MRIIRS), Faridabad, Haryana. sivya13022002@gmail.com

What will be the recourse of Economics for a Common Good in Future - A Psycho-Analytic Explanation of the World Order (A Short Essay)

  The question with which this piece starts is at the heart of understanding the future solutions to many questions of a probable dystopic future world. While Economics or Economists look for a rationale of an economic incentive or action deciding an individual behaviour, often such behaviour can infringe upon the collective common good or goal. Hence, the new paradigm of finding out solutions to many questions of a dystopic future world is lying at the core of developing a new lens. The new lens might not always be a theoretical, dogmatic foundation principle of micro, macro, development, mathematical economics. Rather, this new lens can actually emerge from a complex disciplinary thinking of an economic problem for addressing a common good for future. The course of such a thinking can be enmeshed or be a maze of reflection of various disciplinary thoughts arising from a wide range of critical thinking. However, in this piece, I will largely put forward a conjecture of understanding the recourse of Economics for a Common Good of a Future Dystopic World from a particular lens. That lense according to me is called a - "Psycho-Analytic" Lens. While, Jean Tirole in his book - "Economics for The Common Good" charts out a new recourse of Economics for a Common Good from the perspective of information or information theory, I will seek answers from a - "Psycho-Analytic" lens. 

Information theory of Economics tells and explains to us how inadequate, asymmetric, complete, incomplete, perfect and imperfect information finally leads to certain kinds of decisions. Those decisions decide how agents, consumers, government, regulators, and producers' function in an economy. Often information and biases related to information lead to outcomes which are sub-optimal in outcome. In most cases, biases of one form or the other exists in terms of decision-making because in a real world of complexity, information can be most of the times - inadequate, asymmetric, incomplete, and imperfect. Information in a real-world context is hardly adequate, perfect and complete for perfect decision-making for a rational outcome to realize a common good. So is it so that in such a situation, the common good is an illusion or myth. When the agents, consumers, government, regulators, and producers do not have a perfect set of information, the paradigm in which the recourse of Economics should work for a "Common Good" of a dystopic future is or should be ideally - "Psycho-Analytic". 

A world which is struggling with Geo-Political Tensions, War, Threats of Pervasive Nationalism, Public Health Pandemics, Endemics, Conflicts, Lack of Peace, Identity Destruction, Prevalence of Intolerance, Terrorism, Subjugation of Human and Civil Rights, Lack of Privacy, Trust with a command economy where everyone in the society is a commodity, it is imperative to rely upon a Psycho-Analytic Definition of Economics for a Common Good in Future.

Such a Psycho-Analytic Definition of Economics will therefore understand the importance and need for competition for states while it will also understand the critical presence of regulation in the presence of markets. This will be because at the core of such an understanding, it will try to solve challenges of Climate Disasters, Market Takeovers, and Predatory Information Capitalism of Technology with Society being a consumer identity on a digital platform being controlled by algorithms. 

Hence, such an approach will place Human Rights and Justice too at the centre point of all challenges of the future and try to solve it for global common good at the backdrop of a dystopic future. Primarily it will be a Psycho-Analytic approach within the new recourse of Economics because it will have the heartlessness of empirical science on one hand and will also have the art of soul, faith and religion. Art of faith, religion will be mixed with Empirical Science within such a Psycho-Analytic approach of the new recourse of Economics for addressing a Common Good for the future. Human relations, human narratives, reflection of human memories, storytelling of human narratives and their interrelationships with and within the society along with the well-being of the Earth, Species, Nature and Humanity will be an essential component of such a Psycho-Analytic Definition of Economics. Since, human relations, narratives, reflections and memories will be a key part of the new Psycho-Analytic Definition of Economics, the importance of verbal and nonverbal language which measures the value of human, plant and animal life on Earth will also become very important as a part of Psycho-Analytic Definition of Economics for a Common Good in Future.  To illustrate, for instance, the global value chain of consumers is already hooked on Amazon for their purchase decisions. The pandemic has made consumers more reliant on Amazon in terms of their purchase decisions regarding any product. Often it can be seen that either the information is complete, incomplete or sometimes it is too much with a large variety of products. In such a situation, consumers can or might fall into the trap of not buying anything online by waiting for another better product because of the huge supply line of products in the Amazon platform. It might also happen that it can also trigger excessive buying of consumers in terms of true and complete information of huge supply lines of products in the online platform. But the question is whether the information about the product is authentic or whether when the consumer decision-making is happening whether uses of rights, ethical valuation of products and their associated impacts on society, ecology and environment is done or not by each consumer. Such a decision-making will be responsible, but it will only happen when each consumer is behaving with a "Psycho-Analytical" viewpoint rather than with an economic and strategic impulsion. It is over here that the role of regulators to implement such a - "Psycho-Analytical" decision-making becomes more important to motivating consumers towards an attitude of "Psychoanalysis" while making consumer decisions.

A similar notion is applicable also to what we are viewing in a post-pandemic situation in all OTT platforms as our entertainment consumption. It is imperative to push for a "Psycho-Analytical" viewpoint while making consumption decisions even for OTT platforms are made in terms of what we are viewing at the present and will view in future. With a plethora of supply of OTT content with a wide range of Psycho-Analytical narratives and impact on society, the imposition of a regulator for OTT content consumption is gradually becoming a necessity. Such a necessity will gradually spill over in most of the purchase and consumption decisions of society for the future with a dynamic and changing World Order. 

The World Order facing the decline of the European Union, Labour Unions, Rise of A New G20 Order, the Rise of A Dragon Growing Developed Country Recessions, Collapse of Institutions with the aggression of new technologies will need this new Economics which will or can only survive if - "Psycho-Analysis" becomes an integral component of such a new definition of Economics. Only then will it be able to ensure a common good for the future. Complete information can only emerge when the Psycho-Analytic definition of New Recourse of Economics of a Futuristic Common Good in a dystopic future is working perfectly with the Art of Faith, Religion, Soul and Objectivity of Empirical Science. In the absence of any one of them, the new recourse will inevitably fail and the World Order will only move towards a larger degree of dystopia.

Anandajit Goswami, Professor, Department of Social and Political Studies and Director, Faculty of Behavioural and Social Science (FBSS), Manav Rachna International Institute of Research and Studies (MRIIRS), Faridabad, Haryana, director.fbss@mriu.edu.in.  Views ar authors own. Usual disclaimers apply.  This article is excerpted from https://geekonomistdiary.blogspot.com/2022/12/what-will-recourse-of-economics-for.html 

Focus on Russia-Ukraine at G20, Has Geopolitics over casted economic cooperation at G20 Indonesia Summit 2022

The geopolitical crisis surrounding the Russia-Ukraine war and the growing tensions between China and the West came to the forefront as leaders of the world’s biggest economies gathered at the sun-shine island of Bali between 15-16 November. With the theme of “recover together, recover stronger”, the G20 Bali 2022 summit was the first multilateral forum where leaders have met since the Russia-Ukraine war. Despite of conspicuous absence of Vladimir Putin, the Russia-Ukraine war overshadowed events but failed to come up with any strong consensus. Even without Putin's attendance, G20 Bali Summit was about awkward moments and potential tension. Putin's absence also increased focus on President Xi, whose strong support for the Kremlin reflected well in the draft of the summit communique. The summit has also come when President Xi has further tightened his grip on power at the Communist Party congress. However, bilateral meetings on the side of the G20 between President Xi and President Biden did put a floor under their country’s relationship.

G20 is the collection of the 20 largest economies conceived mainly as a bloc to discuss economic and policy matters and coordinate some mutual interest financial issues. Emerged in the wake of the financial crisis, The bloc now accounts for 80 per cent of global economic output aimed at united finance ministers and central bankers from the largest economies. Though it initially focused on broad microeconomic policy, the last few summits, especially the G20 Bali 2022 summit, saw an expansion of its avenues to incorporate the significant challenges in the world today like Global Health and architecture, digital transformation and sustainable energy transition. Though the group’s main priorities are economics and development, unfortunately, there are limited substantial outcomes at the economic level to counter the sky-high inflation rate, energy security concerns, and food crisis so severe that some countries are on the verge of bankruptcy.

At the political level, it is evident that without the presence of Putin and Zelensky, no real peace or negotiation is possible. In fact Missile attack on Ukraine while the G20 leaders were debating the Russia-Ukraine war shows Putin's defiance of international laws. The 10-point peace plan and decry for ending the war by the Ukrainian President, who addressed the summit as G-19, looked futile as leaders failed to reach a common ground on ending the war. When the first summit was held in 2009, it was applauded for its diversity, strength and ability to respond to global challenges. However, the Bali G20 summit has been good at issuing a grandiose communique. It acknowledges that it is not an era of war but has proven incapable of advancing any solution. This G20 summit has also failed to raise consensus and deliver a joint text on energy and climate concerns. The lack of discussion around climate finance and the environmental impact of the Russia-Ukraine war also highlighted the limitation of the G20 summit. Undoubtedly nine months of war severely disrupted the trade, natural gas and food supplies but the discussion to mitigate geopolitical crisis also shifted the focus from economic progress. Sixty per cent of the countries are also facing sovereign debt distress. Without handling debt distress, it is impossible to initiate a vast flow of private sector climate finance and reach net zero.

India is next in line and inheriting a divided G-20. Indonesian Presidency kept G20 on life support and handed over the presidency to India, which now has the pivotal role of restructuring it as a functioning body before it loses its purpose. Indonesia's presidency has tried to create a powerful, balanced approach, and India is aiming for a more “inclusive, ambitious, decisive, and action-oriented” stand knowing the criticality of collaboration and cooperation at this juncture. Indonesia’s presidency sets the precedence for Global south setting the G20 agenda. From 1st December, India will take up the presidency, followed by Brazil and South Africa. This gives onus in the hand of the Afro-Asian nation to build a solid synergy to put forward cohesive plans and prioritize concerns of the developing world by building solidarity in the Global South. It also provides a unique opportunity for these four developing countries to create a strong niche by building a multilateral organization that sees beyond division and alignments. The task of driving a multilateral organization is a challenging task; it requires institutional effectiveness and a political stronghold. Nevertheless, India can utilize this opportunity to emerge as a strong player by championing the principle of non-alignment.

by Dr. Shreshtha Chkroborty, Asst. Prof., Department of Social and Political Studies, Faculty of Behavioural and Social Science (FBSS), Manav Rachna International Institute of Research and Studies ( MRIIRS ), Faridabad, Haryana, shreshtha.fbss@mriu.edu.in

# Excerpted from Focus on Russia-Ukraine at G20: Has geopolitics overshadowed economic cooperation at G20 Bali Summit 2022? https://www.financialexpress.com/opinion/focus-on-russia-ukraine-at-g20-has-geopolitics-overshadowed-economic-cooperation-at-g20-bali-summit-2022/2829349/?utm_source=whatsapp_web&utm_medium=social&utm_campaign=socialsharebuttons--

The Ancient Economic History

Ancient Indian Economic History refers to the economic activities that happened in the Indian ancient time when the world was not much aware of the economy and the word used in the history was “Arthashastra”. Ancient Indian History itself is the root of many great things globally. The time period of Ancient India starts from 3000BC to 500CE which was the end of the Gupta dynasty too. As we all know, the father of economics, Adam Smith, was an 18th-century Scottish economist but no one teaches us about Kautilya also known as Chanakya or Vishnugupta (350- 275 BCE). Chanakya was the father of Arthashashtra (which means Economics). He wrote the book Kautilya Arthashastra. He was the Prime Minister under the reign of Chandragupta Maurya. Chandragupta Maurya was the ruler of the Iron Age Indian Empire who expanded a geographically-extensive kingdom based in Magadha and founded the Maurya dynasty. He reigned from 324 BCE to 293 BCE. Chanakya was the one who made Chandragupta Maurya the king and established the Maurya dynasty. He had made possible a journey of a poor guy from shepherd to the king of the Maurya dynasty. He was a magician of economics and politics. Many great works had been done by him which include books on the nature of government, law, civil and criminal court systems, ethics, economics, markets and trade, the methods for screening ministers, diplomacy, theories on war, the nature of peace, and the duties and obligations of a king.

The Arthashastra is also known as Kautilya Arthashashtra. Kautilya wrote this book for his King Chandragupta Maurya and stated in its preface that it has been written as a guide for “those who govern”. Kautilya wanted the establishment and operation of the machinery through which the king preserves his integrity and solidarity of the state and generates power. It explores the issues of social welfare, the collective ethics that hold a society together, advising the king that in times and in areas devastated by famine, epidemic and such acts of nature, or by war, he should initiate public projects such as creating irrigation waterways and building forts around major strategic holdings and towns and exempt taxes on those affected.

It is astonishing to observe that several concepts of present-day management theories have been properly explained by Kautilya in his book. As in present-day management, the importance of vision, mission and motivation was captured in Arthashastra. Kautilya evolved an elaborate hierarchy under the king. The King appoints Amatya (The Prime Minister). Amatya operates day to day machinery of the state through a council of officials consisting of Mantris (The Ministers), Senapati (Defence Minister), purohit (The Chief Justice), and Yuvaraj, (The Hier Apparent) as the time changed and the Yuvaraj are not there in the present democratic Indian Economy. Kautilya weaves a design of a tall hierarchy for governance going down to the level of the village through his concept of Mandalas. Gram Panchayat and Panchayati Raj set up that were adopted by the Government of India can be considered as a logical derivative of Kautilya’s attempt to bring the administration to the lowest appropriate level in the machinery of state.

The Arthshastra was written in Sanskrit and was further translated into many other languages. Arthashashtra was rediscovered in 1905 by Rudrapatna Shamasastry and got published in 1909 and in 1915 in the English language. The translation project was termed to be one of the most difficult by R. Shamasastry. Arthashashtra is divided into 15 book titles, 150 chapters and 180 topics as follows:

Title	English	Title	English
Raja	King	Yuvaraja	Prince
Senapati	Chief, armed forces	Parishad	Council
Nagarika	Town Manager	Pauravya vaharika	City overseer
Mantri	Minister	Karmika	Work officer
Samnidhatr	Treasurer	Karmantika	Director of factories
Antapala	Frontier commander	Antar Vimsaka	Head
Dauvarika	Chief guard	Gopa	Revenue officer
Purohita	Chaplain	Karanika	Accounting officer
Prasastr	Administrator	Nayaka	Commander
Upayukta	Junior officer	Pradeshtri	Magistrates
Sunyapala	Regent	Adhyaksha	Superintendent

We had much other evidence to know about our ancient economic achievements but that vanished timely by many intruders. One of the pieces of evidence to know about our ancient economy is the Indus Valley Civilization. The Indus Valley Civilization is also the evidence for the Ancient Indian Economy. The Indus Valley civilisation, the first known permanent and predominantly urban settlement, flourished between 3500 BCE and 1800 BCE. It featured an advanced and thriving economic system. Its citizens practised agriculture, domesticated animals, made sharp tools and weapons from copper, bronze and tin, and traded with other cities. Evidence of well-laid streets, drainage systems and water supply in the valley's major cities, Dholavira, Harappa, Lothal, Mohenjo-Daro and Rakhigarhi, reveals their knowledge of urban planning. The Indus Valley civilisation is one of the four oldest civilizations and economical life was there. All the conditions were fulfilled in the Indus Valley Civilization to be called an Ancient Economic Civilization.

But the Mughals and East Indian Company destroyed many other proofs and evidence about the great achievements of Ancient Indian culture and some of that also got vanished by the modern education system. We are developing day by day and pushing ourselves towards being modern but it doesn’t mean that we have to lose our legacies made by our Rishi Munis and our ancestors. India was also known as “Sone ki chidiya” not just because of its wealth but also due to our rishi munis and the storage of knowledge.

It is all our compulsion to study the bookish language and what all the world is studying right now but it is our duty to initiate our ancestor’s and our rishi muni's legacy and pass them to the next generations. There is a quote “To forget one’s ancestors is to be a brook without a source and a tree without a root”. Without our ancestor’s legacy, we are just a kite, that means we are just dependent upon a string which could be cut out by anyone. To grow more we have to be a tree with vast roots inside the earth, and the roots are the knowledge passed from our ancestors, which we should spread not only in India but also all over the world.

Mr Yashraj Tanwar, MA Economics, (Batch AY2022-23), Department of Economics, Faculty of Behavioural and Social Sciences (FBSS), Manav Rachna International Institute of Research and Studies (MRIIRS), Faridabad, Haryana. yashrajtanwar2002@gmail.com