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The financial situation of Indian states is a cause for concern; however, it’s not the Sri Lankan kind.




Sri Lanka’s economic woes have been a wake-up call to the excessive harm debt can bring. To compare the debt load of Indian states to the obligation of Sri Lanka is like making comparisons between apples and oranges.

The rising amount of debt owed by the Indian States, as well as the rapidly approaching June 30 deadline – following when the government won’t reimburse them for any deficit on Goods and Services Tax (GST) collections – and the pre-state election freebie promises by political parties fueled reports that this year, officials were worried that some states could follow to the Sri Lankan way if they were not able to manage their finances.

However, the states have been aware of the issue for some time.

In March, P Thiaga Rajan – or PTR, was elected as finance minister for Tamil Nadu. With a resume that could make any other finance official green with jealousy, PTR wasted no time recognizing the state’s most significant issue: its debt.

“We have to take our debt to GSDP (Gross State Domestic Product ratio) back to the 20 percent. It is now around 25 percent… If the debt can be brought back to 18 percent or 17 percent of GSDP, as it was in 2014, then we can say we have done the restructuring of Tamil Nadu’s finances,” PTR stated to The Hindu newspaper on May 12, 2021.


A few months later, PTR released a white report about the state’s financial situation, which contained some worrying conclusions.

“The State’s fiscal situation is in dire circumstances,” the report concluded. “The Covid pandemic has greatly exacerbated the situation and highlighted how vulnerable Tamil Nadu is. There are no buffers left. No fiscal headroom that will allow for delay.”

Tamil Nadu is not alone. The past two years have witnessed the finances of state governments suffer a severe blow as the debts for all states, and Union Territories (UTs) rose to 31.1 percent of their GSDP at the close of FY21, up from 26.3 percent in FY20. According to budgets of states’ projections for FY22, only a slight increase to 31.2 percent GSDP was predicted last year.

Indian states in conflict with. Sri Lanka

In the same way that PTR and the white document on the finances of Tamil Nadu noted that state debt is an issue. However, drawing comparisons to Sri Lanka would not be correct.

Although the high levels of debt have played a significant factor in triggering this Sri Lankan economic crisis, it is crucial to remember the foreign type of debt.


The Sri Lankan foreign debt as of the close of 2021 stood at $50.7 billion. Although only 17 percent was short-term debt Central Bank’s foreign currency reserves at the close of the previous calendar year were a mere $3.1 billion. The figure was down to $1.9 billion at the close of March, owing to the tourism industry suffering caused by the coronavirus epidemic and an external debt-fueled political and economic strategy that ensures an economic recovery. The Sri Lankan economy has been badly ruined.

In the meantime, it is indeed worth noting that the Indian government has never missed an opportunity to remind opponents that over 90% of its public debt is in Indian rupees. In addition, India’s total external debt was $570.3 billion by June 30, 2021, of which the obligation of the government totaled $106.9 billion.

In the year 2000, it was reported that the Reserve Bank of India held the sum of $610 billion in foreign reserve reserves for exchange.

Foreign investors can invest in up to 2 percent of the state’s outstanding bonds.

The main point is that the Indian states are not required to spend foreign currency to purchase goods and services imported from outside their borders, the presence of a nationwide currency guarantees that. Moreover, because most of their debt is their local currency. Any comparison to Sri Lanka is a cul of the cul. However, this doesn’t mean that their financial position isn’t robust. PTR and his white paper have demonstrated that states should be focused on improving their financial situation.

Financial weakness


Which state’s finances are most insecure?

Regarding revenue deficit in terms of a percentage of GSDP, Sikkim and Tripura fared well ahead of others before the outbreak. Sikkim’s revenue loss was equivalent to 4.4 percent of the GSDP for FY20. The figure for Tripura stood at 4.3 percent.

The states that follow are more populated: Rajasthan at 3.6 percent, Chattisgarh at 2.8 percent, and Andhra Pradesh at 2.7 percent. In all, only 11 states reported an increase in revenue during FY20.

Another thing to consider is how a state’s revenue is used to pay off its debt. Overall thirteen percent of income received by every state and all UTs during FY21 was used to pay the interest for their outstanding debt. Of the significant states, there were just Odisha, and Bihar only paid less than five percent of revenues to pay interest for FY21. The most sloppy offenders – those who spent more than a fifth of their income to service debt, included Haryana, Kerala, Punjab as well as West Bengal.

The income aspect is where the state governments aren’t seeing the kind of growth they would like.

The states’ tax revenue as a proportion of their GSDP was more significant for only 11 states in FY20 compared to levels in FY13. Within the 11 states, the most significant gains were recorded by the smaller states. The only exception to this could be Uttar Pradesh. The state’s tax revenue made up 7.1 percent of the GSDP. In FY20, the figure had risen by 8.0 percent.


Other states haven’t had the same luck. Madhya Pradesh, Gujarat, and Tamil Nadu have seen their respective tax revenue ratios to the GSDP drop by between 150 and 220 basis points from FY13 to FY20.

The basis of a basis is one-hundredth of an % point.

In these circumstances, what do the state election and the election promises from the pre-poll period?

As Soumya Kanti Ghosh, the State Bank of India’s chief economic advisor, the freebies offered to customers were “economically unsustainable,” and some states are “living beyond their means.”

“For example, Telangana has committed 35 percent of revenue receipts of the state to finance several populist schemes,” Ghosh wrote in a report published last month.

Of course, state budgets aren’t just a matter of isolation, and the federal government has an important role; according to the white paper from PTR that the GST and its structure and alternatives to GST will become the primary focus of fiscal relations between the states and center-state beginning in FY23. This topic may be addressed elsewhere. The only thing that should be considered is that, while the states of India need to determine their financial situation, Comparisons with Sri Lanka are not appropriate.


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What is Centralized Decentralized Financing (CeDeFi)?




In our current world, blockchain technology is utilized in various industries, including the finance sector. CeDeFi is an abbreviation that stands for “Centralized Decentralized Finance.” CeDeFi is a financial system that employs both central and decentralized mechanisms. It blends the best features of traditional finance and Decentralized Finance (Defi).

The basics of CeDeFi

CeDeFi can be described as an acronym for “centralized financing decentralized.” CeDeFi refers to the Ethereum-based protocol class that seeks to offer the same advantages as Defi protocols but with more control and central decision-making.

While Defi protocols are permissible and accessible to anyone who wishes to utilize the protocols, CeDeFi protocols are generally run by one entity or a limited number of organizations. This means that CeDeFi protocols have greater control over their functions and governance than Defi protocols.

CeDeFi protocols typically have similar features as Defi protocols, like loans and lending systems, secure currencies, and token swaps. Yet, CeDeFi protocols tend to be quicker and simpler to utilize than Defi protocols due to their centralization. The speed and ease of usage come at the expense of decentralization. CeDeFi protocols are not as resistant to censorship and have lower community involvement than Defi protocols.


The most popular models for CeDeFi protocols include MakerDAO, Compound, and Synthetix. These protocols have provided similar features as Defi protocols but remain centralized.

The centralization of CeDeFi protocols is more prone to attacks and hacks than Defi protocols. However, the usage of CeDeFi protocols is increasing because they provide a more comfortable experience for users than Defi protocols.

The Binance Company and its Role in the creation of CeDeFi

CeDeFi is a unique type of financial system that is built upon the Ethereum blockchain. CeDeFi was developed by a consortium of the top businesses in the crypto industry, including Binance, MakerDAO, and Kyber Network. CeDeFi gives users access to an open platform with access to a range of financial services like lending, borrowing, and payment transactions.

Binance is among the biggest cryptocurrency exchanges in the world. It is also playing a significant role in the creation of CeDeFi. Binance has provided its knowledge of blockchain technology and security to the CeDeFi consortium. Furthermore, Binance Labs, the venture division of Binance, has invested in several CeDeFi initiatives.

In 2022 in 2022, the CeDeFi system is still in the early stage of growth. But with the support of major companies such as Binance and Binance, CeDeFi could become a significant player in cryptocurrency finance.


The features of CeDeFi

CeDeFi is a decentralized finance protocol that allows the creation and trading of synthetic assets. In contrast to other protocols, it does not depend on borrowing or lending platforms. Instead, it utilizes the smart contracts system to create new tokens, which track the underlying value of the underlying assets. This lets users trade derivatives and not have to be able to trust a significant party.

CeDeFi protocols also have numerous other benefits that include:

  • CeDeFi protocols are based on Ethereum, which means they are not vulnerable only to one point of failure.
  • CeDeFi protocols are available to anyone who has access to an Ethereum wallet.
  • CeDeFi protocols are compatible with other Ethereum-based protocols providing a broad range of applications.
  • CeDeFi protocol can be modified to make various derivative products.

The primary drawback to CeDeFi protocols is that they are complicated to grasp for those new to the field. But as the industry grows, it is expected that user-friendly interfaces will be created. In general, CeDeFi represents a significant improvement in the decentralized financial sector and could transform the way trade financial instruments.

CeDeFi protocols can transform the trade of derivatives. Removing the need for central exchanges will lower the risk of counterparties and allow traders to trade the products. Furthermore, CeDeFi protocols are in the early stage of development, which means they have a vast potential to grow in this field.

CeDeFi is DeFi

The cryptocurrency industry is filled with abbreviations and acronyms, and CeDeFi and Defi are among the most popular terms used. What is the difference between the two?

As stated, CeDeFi stands for Centralized Decentralized Finance, whereas Defi is a reference to Decentralized Finance. Both CeDeFi and Defi encompass a broad spectrum of terms and refer to various financial products and services that can be developed upon a blockchain.


However, the main distinction that separates CeDeFi and Defi is their methods of decentralization. CeDeFi, as the name implies, CeDeFi is centralized in its structure, with projects usually being developed and managed by a single organization. Contrarily, Defi projects are decentralized, typically being created and run by a collective of developers.

Let’s take a close review of the significant distinctions between them.

Centralization vs. Decentralization. As mentioned previously, the main distinction between CeDeFi and Defi is their distinct strategies for decentralization. CeDeFi projects are centrally managed; however, the Defi project is decentralized. This is evident in the governance model and development process for CeDeFi and Defi projects.

Governance model. Governance models are a significant difference between Defi and CeDeFi. CeDeFi projects are generally managed by a single entity which could be a company or foundation. Contrary to this, Defi projects are usually controlled by the communities of developers who create and manage the projects. This dispersion of governance makes Defi projects more tolerant of any changes in direction or leadership.

Development process. Development is centralized in CeDeFi, and an individual entity is typically responsible for creating and managing the project. The development method in Defi is decentralized, with various developers working on the same project. Decentralization in development results in Defi projects being more transparent and open and more resistant to changes in direction or leadership.


Use cases. CeDeFi and Defi each have a broad array of uses. CeDeFi initiatives usually focus on offering central financial products and services, like lending and lending platforms, exchanges, and payment processors. Contrarily, Defi projects often focus on providing financial products and services that are not centralized, including smart contracts, protocols, and stablecoins.

Risk factors. It is also essential to remember that CeDeFi and Defi carry their dangers. CeDeFi projects tend to be riskier than Defi projects because of their centralization. The centralization of CeDeFi tasks makes them more vulnerable to hacks, fraud, and theft. Contrarily, Defi projects are generally considered safer because of their lack of centralization. However, Defi projects remain weak, and they are often complex and hard to comprehend.

The advantages of CeDeFi

CeDeFi is a unique form of decentralized finance that allows users to trade crypto assets without a central exchange. This means that users can deal directly with one another without an intermediary. CeDeFi also comes with a range of additional benefits, such as:

Security. One of the significant benefits of CeDeFi is its increased level of protection than the conventional financial system. It is due to transactions being performed on a distributed network, making it difficult for hackers to attack.

Speed. Another benefit to CeDeFi can be that the transactions process faster than the conventional financial systems. There’s no requirement for third-party approval, which may take weeks or even days.


Cost. CeDeFi transactions are, in general, less expensive than traditional transactions. This is because there aren’t any middlemen with the procedure. Therefore, the costs are significantly reduced.

Flexibility. CeDeFi systems are also greater than traditional banking systems. This is because they can be customized to meet the requirements of any customer.

Privacy. Additionally, CeDeFi offers a higher amount of privacy than other financial systems. It is due to transactions being performed on a distributed network, making it harder for third parties to monitor.

In the end, CeDeFi has several advantages over traditional financial systems. As more people are aware of the benefits, It is expected for CeDeFi is likely to continue to increase in popularity.

Bottom Line

CeDeFi is a category of Ethereum-based protocols which aim to provide the similar benefits of Decentralized Finance (Defi) protocols but with more control and central decision-making. While Defi protocols are permissive and available for anyone to utilize, they are usually run by one company or a smaller group of organizations. This means that CeDeFi protocols have greater control over their functions and governance over Defi protocols. CeDeFi has many advantages, and those who effectively implement them will benefit from more management and central decision-making.


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What Investors Need to Know About ESG Investments.




ESG investing is focused on social, environmental, and governance principles. It has seen a rise in popularity over time.

Sometimes called sustainability investing, impact investing, or socially responsible investment, ESG investing provides a means for investors to think beyond profits and think about the role that companies play in the greater good of society. This is what you need to know about it.

The ESG metrics

There are three primary measures used to judge businesses based on ESG standards. When you look at a company’s performance through an ESG lens can reveal aspects about it that you can’t be able to see when looking at financial statements, which is why it’s essential.

The environmental component of ESG examines how a company’s activities impact the environment, particularly the effects of climate change. For example, many firms contribute to climate change through excessive energy and pollution. You should be aware of this, not just your company’s role in influencing climate change and the impact climate change will have on business and the wider industry shortly.


The social element examines how a company interacts with its customers, employees, and society in general. It can address questions like diversification and inclusiveness, worker security and security, human rights, data security, how the company invests in the local community, and many more. If you’re an investor, no matter if you’re looking at ESG indicators or not, you must be aware of the position companies are in on these issues, as they could be expensive in the future. Employers who are treated poorly result in fewer top talent being retained, security breaches cost increased costs for security and public relations, and so on.

Governance is how companies operate. It is essential to know this as you’re also a shareholder investor. When assessing companies’ management, institutions can consider the transparency, the quality of financial reporting, and the independents of the boards of directors. If a business has questionable operations, you’ll want to be aware. A few of the most prominent bankruptcy cases in the history of business were shocking to investors simply because they did not know what was happening behind the scenes.

ESG funds

Various funds focus on ESG indicators, which means it’s now easy to invest in investments that meet your sustainability goals. Certain funds have the three criteria components, and others decide to concentrate on only one or perhaps two. Some funds focus on particular topics, such as cybersecurity, clean energy, and climate change-related commitments, and general funds focus on the highest ESG standards.

There isn’t a universal rating within ESG standards, so ESG funds do not constantly evaluate ESG indicators on the same basis. Some assign different weights for each of the three ESG practices, while others may be more focused on subtopics that fall within the category. If you’re passionate about a topic, make sure you review the fund’s mission statement and how the fund’s companies were selected.

Don’t forget the basics.

If you’re planning to concentrate on sustainable investments, which is a good thing to do, utilize ESG knowledge and traditional investing wisdom and guidelines. It’s not a good idea to reach a point where ESG standards are the only criteria you need to use when making decisions about your investments. In the end, investing is to earn money. There are many ways to do this sustainably, ethically, and according to your interests. However, it would be best if you didn’t ignore the primary goal of investing. It is still essential to think about your financial goals, the risk you are willing to take, and other relevant factors.


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How can big-scale Finance be used to boost sustainability?




The ability to raise vast amounts of money to move towards a low-carbon economy is within the capabilities of the world economy; however, it will require significant adjustments to the way financial markets operate.

The ever-growing climate issue will require the most continuous movement of capital in the history of mankind. The minimum is $100 trillion that must be invested between 20 and 30 years to switch to a low-carbon economy. Moreover, an additional $3-4 trillion in annual investment is required to reach the targets of Sustainable Development Goals by 2030 and stabilize the world’s oceans.

The ability to raise these massive sums and invest them wisely is within reach for the world economy and the financial markets that exist. However, it will require significant modifications to the way these markets function. Mainly conventional financial institutions would require assistance in finding the most suitable projects, easing the process of negotiating and drafting transactions, and raising the capital needed to finance these projects.

A majority of sustainability initiatives are small-scale. This is the nature of innovation in which ideas are developed to be tested, tested, and when they are successful, copied. However, the disconnect between the people developing sustainability initiatives and traditional Finance makes scaling such initiatives not easy.


Without risking simplifying the issue, sustainability advocates could be wary about “Big Finance” and its track record of funding nonsustainable industries. Investors, however, are likely to be skeptical of a fanciful approach that overlooks the realities of the bottom line and might not be interested in smaller-scale transactions.

With this in mind, How do we grow sustainable initiatives from small investments up to the $100 million range that starts to draw big Finance and billions required to create a world-changing impact?

Three specific steps are required. The first is that securitization methods are an excellent way to combine several smaller projects into one with enough critical mass to make it worthwhile. Securitization earned a bad rap in 2007 and 2008 due to its part in an economic crisis involving subprime loans which caused the entire world close to financial ruin.

If properly controlled, jointly financing many projects lowers the risk of failure, as the chance that each will face similar operational and financial concerns at the same time is very minimal. The resulting total will be available to investors in the interest market. Smaller projects must share standard features so that they can be grouped. This can’t be done in the future.

For example, we must come up with general terms of reference and terms for similar asset pools like what is being done within the US residential solar market. In addition, we must expose the basics of securitization to more local innovators via regional gatherings, which bring together financiers and sustainable project developers.


The second is to reduce the complexity of transactional terms, making it simpler to create and negotiate the particulars of the instruments used to fund sustainable projects. In the established financial markets, replicating vital elements of successful deals in the past is much simpler than creating a new agreement for every buy. This method works because major financial players have approved many of the conditions and terms for future deals.

Making the most successful innovations more noticeable to investors is crucial. To achieve this, we must create an open-source, high-profile clearinghouse for previous sustainable projects, including those that were successfully funded and those that did not. It would be similar to the currently used databases but is openly accessible and with trustworthy third-party oversight to ensure accuracy.

Thirdly, the variety of sources of financing for sustainable projects must be increased and made more transparent. Because sustainable investments could provide lower returns based on historical market metrics, traditional asset allocation methods, in the context of “efficient markets,” would result in a lower appeal.

But the old benchmarks don’t adequately reflect the growing area of impact investing, which has different return and time requirements and is responsible for around $2.5 trillion in assets. The idea of securing tranches of various kinds of impact investment could become a significant game-changer in sustainability-focused financing.

Therefore, it is sensible to develop an open-source database of investor interest similar to the project database described above, but that can be accessed by designers and innovators of innovative sustainable initiatives. This will make it easier to find investors – whether equity, credit, or a hybrid who are willing to fund. It could also be placed by organizations such as the International Finance Corporation, the United Nations, or the Global Impact Investing Network.


There are positive precedents. Green bond markets began around a decade ago. The total issuance amount could already reach $1 trillion by the end of this year. In November, the majority of the world’s financial community was present at the UN Climate Change Conference (COP26) in Glasgow. Under the direction of UN Special Envoy Mark Carney, the Glasgow Financial Alliance for Net Zero (GFANZ) has pledged $130 trillion of climate-related commitments.

When he was in 1983, Muhammad Yunus founded Grameen Bank to offer banking services, specifically loans, to those (primarily women) that were previously considered “un-bankable.” By the time Yunus received the Nobel Peace Prize in 2006, “micro-lending” had become an international phenomenon, with traditional financial institutions securitizing the loans.

The financial revolution Yunus began transformed how retail lenders lend and how these transactions are structured and opened up an entirely new source of investment capital. To address the present environmental challenges, the financial markets, as well as their key players, must be more creative and be open to unconventional, sometimes even disruptive, ideas and voices.

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