Government and regulators need to focus on the systemic risk engendered by excessive compensation. As calendar year 2009 draws to a close, it is bonus season for the financial sector in the West. In the last several months, the need to cap bonuses and compensation packages has been extensively discussed in the context of limiting the future impact of the next financial sector breakdown. On December 9, 2009, the UK was...

After dedicating most of 2009 to jump-starting financial markets through stimulus packages, developed countries are now turning their attention to reforming the basic architecture of those markets, especially the incentives for risk-taking. In a major step towards regulating systemic risks, the United Kingdom last week announced a one-off 50 per cent “super-tax” on bankers’ discretionary bonuses exceeding £25,000. The move could raise £550 milli on, which would be used to...

We Indians implicitly believe in India’s great past. Recently, that past has been given a statistical underpinning by Angus Maddison. To celebrate the beginning of the 21st century, Maddison wrote a book called The World Economy: A Millennial Perspective. There he says that India was the world’s largest economy in the first millennium AD. It produced one-third of the world’s income in the first century, and 29 per cent in...

There has been uproar in southern India's Andhra Pradesh assembly in protest against the government's decision to create a new state. Lawmakers have shouted slogans against the decision to carve out a new state of Telangana in its north. An estimated 35 million people will live in the new state, Telangana. Separately, a four-day strike called by a regional political party demanding a separate state has begun in India's tea-producing Darjeeling...

At a time when there is growing concern about the causes of increasing discontent and alienation among tribals, it is important to recall a very important law for improving the governance of the Scheduled Areas in such a way as to protect the interests of tribals. The reference here is to the Panchayats (Extension to Scheduled Areas) Act 1996 (briefly called the PESA law). If this Act had been properly...