Asset Pricing and the closely related research agenda on equity premium puzzle is a fascinating research agenda and I am always looking for some pointers to what is happening in developing countries like in India in this context. Here is a very well written entry on the Equity Premium in India by Rajneesh Mehra the author of the original article on equity premium puzzle with Ed Prescott .
Equity Premium in India
15 Wednesday Jan 2014
Posted in macroeconomics
Economics for India 
Transforming India
Here is a PARTIAL list of initiatives that may transform India – if successful
But let not ” Fear of Failure ” prevent us from undertaking a ” Out of Box ” thinking
In a democracy , people have a right to differ
Hence , many will not agree – but they must have their say
In the end , there is only ONE WAY to find what works – and what does not
BY TRYING OUT !
MY LIST ( not in order of importance or priority ) :
> Food Security Bill
> Connecting 2.5 lakh panchayats thru broadband
> Aakash Tablets for 220 million students
> Lokpal Act / Delivery of Services Act ( ” Magic Wand ” App ? )
> Bank Transaction Tax / Demonetization of Rs 1000 currency note
> Aadhar Identification Card
> Electoral Reforms / Right to Recall ( ” VotesApp ” mobile App ? )
> CAG audit of Private Companies using Government resources
> 4G Wireless Internet all over India
> Delhi Mumbai Industrial Corridor
> Amritsar-Delhi-Kolkata Industrial Corridor
> Natural Resources Allocation Policy
> Political Party’s Funds under RTI scrutiny
> Social Media based marketing
> Liberalization in FDI ( Entire economy – not just retail )
> Direct Transfer of Subsidies to poor
> Government funding of Elections
> Interlinking of Major Rivers
> ” India Post Bank ” with 139,040 branches in Rural areas
> Bank A/C for every adult by 2016
> Divestment / Closure of loss-making / bleeding PSUs
> Imparting skills to 500 million youth ( NSDC )
> Sulabh Sauchalaya
Here are my own suggestions :
> BLACK MONEY
* As incomes climb ( for an individual or for a corporate ), reduce taxation
rates for each higher slab ( inverse of present system )
Eliminate incentive for tax – evasion
Reward honesty / efficiency / productivity
Celebrate Wealth-Creators
No more “Black Money ” generators
With such ” Inverse Taxation ” regime , we can
expect Corporate and HNIs from all over the
world , to pump in $ 100 billion worth of
investment, EVERY YEAR , in our Infrastructure
projects !
* Introduce Amnesty Scheme for black money declaration
No questions asked ( re Source of funds ) for investment in specific
Infrastructure Bonds , with tax – free interest for 10 years
> JOBS
* With ever-increasing mechanization / automation in every sector of
economy , there is no way , we can create 12 MILLION new jobs ,
either in Organized or Unorganized sectors , year after year
Creating just ONE job in these sectors , requires a
Capital Investment of Rs 1 million ( Ave )
Where can we find Rs 12 million million ?
Our only hope lies in creating ” SELF – EMPLOYMENT ”
To generate massive self – employment , provide generous , low interest
loans and ” Tax Free ” income (up to Rs 5 Lakh/ year) for self-employed
( including Proprietary Firms )
* Create an ” ONLINE JOB EXCHANGE ” to replace 943 existing physical
Employment Exchanges , with 42 million current registrations
Call it ” GLOBAL-RECRUITER ”
Require ALL job-portals of India , to RSS feed into Global-Recruiter ,
# Every single job advt posted everyday( including current )
# Every resume posted everyday ( including current )
Make these jobs and resumes ” searchable ” from ALL the job-portals ,
irrespective of , on which job portal , these were posted
After matching ” JOBS ” with ” RESUMES ” , Global Recruiter to send out
daily Job – Alerts on the smart phones of the jobseekers , thru a mobile
App , ” MY JOBS ” – against which , candidates can apply from mobile
Make it mandatory for every Smart phone and Tablet sold ( or given away
free ) in India , to pre-install ” My Jobs ” App
And , most certainly , on those 9 million Aakash – 4 tablets for which
tender opens on 28th Jan 2014
Will Narendra Modi / Rahul Gandhi / Arvind Kejriwal etc , incorporate these , in their poll manifestos for April 2014 election ?
* hemen parekh ( 15 Jan 2014 / Mumbai )