Some thoughts on the CBAM debate
Urbanomics Blog
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1d ago
The European Union’s Carbon Border Adjustment Mechanism (CBAM) seeks to put a fair price on carbon emissions during the production of carbon-intensive goods entering the EU, to encourage green manufacturing in non-EU countries.  By confirming that a price has been paid for the embedded carbon emissions generated in the production of certain goods imported into the EU, the CBAM will ensure the carbon price of imports is equivalent to the carbon price of domestic production, and that the EU's climate objectives are not undermined… CBAM will apply in its definitive regime from 2026, while ..read more
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Urbanomics Blog
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3d ago
1. Animal spirits contribute to inflation One recent academic paper argued that animal spirits or bubbles in markets can themselves be responsible for as much as an additional 0.8 percentage points on US inflation rates.  2. Apple joins the list of Google, Amazon, and Meta which are currently under various stages of anti-trust actions by US competition regulators. Apple with a net income in 2023 of $97 bn, more than the GDP of over 100 countries, and with a services revenue of $85 billion, has been accused of using its market power in the smartphone market to quash competition and limit c ..read more
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The chronicle of an industrial decline - US shipbuilding industry
Urbanomics Blog
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1w ago
Econ 101 teaches us that the combination of comparative advantage and free market would result in efficient and mutually beneficial outcomes. The problem is that this is correct, but only in theory. The reality, while always different, is made far worse by the domineering presence of China with its capture-global-markets industrial policy.  Across industries, the Chinese have established global market dominance through its combination of economy-wide (cheap land, labour, and capital) and industry-specific (cheap inputs, credit, and other incentives) subsidies, and tariff and non-tariff ba ..read more
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Some reforms to GST administration
Urbanomics Blog
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1w ago
The mainstream public commentary on GST revolves around the tax rates for various goods and services. This post will look at three other aspects of GST that do not get the attention it deserves. They cover the areas of GST administration (for both tax officials and taxpayers), investigations, and enforcement.  The GST system consists of four taxpayer-side processes - registrations, returns filings, e-way bills (EWB) generation, and refunds - and its administration by tax officials. These processes generate three distinct databases - GST registrations, GST returns filings, and e-way bill ..read more
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Urbanomics Blog
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1w ago
1. Graphic on India's semiconductor chips manufacturing ambitions On Thursday, the Union Cabinet app­ro­ved Rs 1.26 trillion worth of investments in three semiconductor plants, including one by the Tata group to build India’s first major chip fabrication facility at Dholera in Gujarat. The Cabinet also cleared a separate Tata proposal for a chip assembly and testing plant in Morigaon, Assam, and another by CG Po­wer in Sanand, also in Gujarat. Work on all three is expected to begin within 100 days. The Tata group’s Dholera plant entails an investment of Rs 91,000 crore and will churn out 28-na ..read more
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Some thoughts on India's automobile green transition path
Urbanomics Blog
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2w ago
I have blogged on the need for developing countries like India to be prudent with the green transition. For these countries, unlike their advanced counterparts, poverty eradication competes with climate change as an existential challenge. For a large share of the populations of these countries, the daily and immediate challenge of subsistence far overrides the more distant and diffuse challenge of climate change. It’s easy for academicians, commentators and opinion-makers to demand a rapid green transition with ambitious decarbonisation goals. They advocate coal-based electricity gen ..read more
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Urbanomics Blog
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2w ago
1. One of the less discussed but genuine successes of India's Insolvency and Bankruptcy Code (IBC) is the resolution of stressed power generation assets.  “Stressed assets” — coal generators that were unable to pay their debts to lenders — became a $23 billion drag on the financial sector, but the list of plants has been whittled from 34 in 2018 to four after alternative utilities, led by state-owned NTPC Ltd., stepped in as buyers of last resort and creditors took haircuts on their investments. This about the comparative economics between coal and solar In 2017, a new solar or wind gener ..read more
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Industrialisation and development
Urbanomics Blog
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3w ago
Livemint has an excellent long-read story about how industrial growth has transformed Krishnagiri district in Tamil Nadu, one of the state's most backward districts. This is a great example of how transformative development happens with industrialisation and productive job creation. In the space of three years, the manufacturing investments in the region have created tens of thousands of jobs. Since most of these jobs employ women, it has also transformed the society and gender relations in one of the state's worst gender-imbalanced districts.  This is a very good summary of the tran ..read more
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Overcoming the hesitations of the Indian bureaucracy
Urbanomics Blog
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3w ago
I have written and blogged on the hesitations of bureaucrats about making high-stakes decisions for fear of subsequent fault finding by auditors, investigators, and courts. Such decision paralysis is not unique to India, but a feature of all bureaucracies exposed to public scrutiny and oversight agencies like auditors, investigative and vigilance institutions, and courts. Such decision paralysis had become acute in India following a series of high-profile corruption cases in the early 2010s where senior officers were investigated and prosecuted after long-drawn humiliating ..read more
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Urbanomics Blog
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3w ago
1. Europe's counterpart to the American stock market's Magnificient Seven is the eleven companies dubbed Granolas.  The crunchy acronym was coined by Goldman Sachs for pharma companies GSK and Roche, Dutch chip company ASML, Switzerland’s Nestlé and Novartis, Danish drugmaker Novo Nordisk, France’s L’Oréal and LVMH, the UK’s AstraZeneca, German software company SAP and French healthcare firm Sanofi. In the past 12 months the group has accounted for 50 per cent of gains on the Stoxx Europe 600 index, which hit a new high on Thursday, and for about half of all mergers over the past five yea ..read more
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