Remittances as Saviour C. P. Chandrasekhar and Jayati Ghosh

Once again, the World Bank has released a Brief declaring India to be the largest recipient of remittances from abroad. According to the Bank, remittances to India that totaled $65 billion in 2017, are likely to touch $80 billion this year, way ahead of China, the second largest recipient with $67 billion. The rise is in keeping with longer term trends, despite short periods when it appeared that remittance volumes were on the decline. Official Indian balance of payments data provide information on private transfers (which include (i) remittances for family maintenance, (ii) local withdrawals from Non-Resident Rupee Accounts (NRE…

The Yellow Vest Movement Prabhat Patnaik

Nothing shows the crisis of neo-liberal capitalism more clearly than the popular uprising in France that is occurring under the banner of the “Yellow Vest” movement. Thousands are congregating in Paris over week-ends to protest against the intolerable burdens being imposed upon them in the name of “austerity” and to demand that resources be raised instead through taxing the rich. This movement had begun initially as a protest against the diesel price-hikes, but has now taken on a more general character and is drawing huge support from the people. There is an effort in liberal circles to portray the movement…

The Emerging International Regime Prabhat Patnaik

Third world economies are now facing a reduced export demand for their goods and services for two distinct reasons. One is the world capitalist crisis which entails a reduced aggregate demand in the world economy and hence reduced aggregate exports for all countries taken together; the other is the protectionism of the U.S., which, by garnering for that country a larger share than it would have otherwise had of this reduced world market, leaves correspondingly less for others. Since the imports of several of these third world countries are more sluggish to change, these countries face an enlarged trade deficit,…

Is shadow banking a serious threat in emerging markets? C. P. Chandrasekhar and Jayati Ghosh

Everyone seems to have woken up to the fact that global debt levels are too high and portent difficulties ahead. As Figure 1 indicates, the levels of credit to GDP, which were so high as to be unsustainable and resulted in the big crisis of 2008, have increased even more since then. There was a phase of deleveraging in the advanced economies until around 2014, and in developing countries and emerging markets until 2011, but since then, credit/debt has been expanding again. So much so that the credit GDP levels in 2017 were 15 per cent higher than in 2008…

Contemporary Capitalism and The World Of Work Prabhat Patnaik

The most significant feature of contemporary capitalism which is of relevance to the world of work is its inability to provide work to a substantial proportion of persons looking for it. This is not just a matter of economic denial, which itself can have important implications for such phenomena as hunger and crime; it also has deep socio-psychological implications of which at least two must be noted. One is the loss of self-esteem among the unemployed which leads inter alia to drug and alcohol abuse and high mortality rates as a consequence. This has been noticed even in an advanced…

A Curious Divergence C.P. Chandrasekhar and Jayati Ghosh

As is widely recognised, India’s economic growth since the 1990s has largely been on account of an expansion of the services sector, in which exports are seen as having played an important role. The rise in the share of services in GDP was particularly sharp after 1996-97 amounting to 6.8 percentage points over the subsequent ten years as compared with just 1.9 percentage points during the previous ten years. In the event, services as a group came to dominate the Indian economy, accounting for more than half its GDP. The official Economic Survey 2013-14 noted that: "India has the second…

Neo-liberalism and the Diffusion of Development

The level of economic activity under capitalism is subject to prolonged ebbs and flows. When the economy is on an upswing, this very fact acts as an elixir that emboldens capitalists, who begin to expect that the “good times” are going to continue; this makes them less worried about taking risks, more “adventurous”, and hence more prone to taking “bolder” decisions in their asset preference. And because of this they also undertake investment in physical assets like construction, equipment and machinery which makes the boom continue, and thereby justifies their euphoria. The opposite happens when there is a downturn. It…

Who Should Control India’s Central Bank? Jayati Ghosh

The standoff between India's government and the Reserve Bank of India isn't problematic because of the risk of infringing on central-bank independence. It is problematic because, rather than fighting to protect the public interest, the government's goal is to revive irresponsible bank lending, protect its cronies, and win votes. For full article click here (This article was originally published in the Project Syndicate on November 12, 2018)

A Heart-Rending Episode Prabhat Patnaik

This year marks the seventy-fifth anniversary of the Bengal famine of 1943, a heart-rending episode in which 3 million persons died, and which epitomized the callousness of imperialism. The scale of devastation can be understood if we remember that in the United Kingdom, taking civilian and military casualties together, the total loss of life during the entire Second World War was just 0.45 million and in the U.S. 0.42 million. In Germany itself the loss has been estimated as anywhere between 6.6 and 8.8 million and in the Soviet Union which suffered the most at around 24 million. To say…

India’s wealthy barely pay taxes C. P. Chandrasekhar and Jayati Ghosh

India is often mistakenly seen as a country with relatively low economic inequality. In fact, there were always very significant economic inequalities in India, which intersected with social and locational inequalities in complex ways. More significantly, the country’s inequalities widened after the internal and external economic liberalization measures from the early 1990s, which attracted global financial investors and boosted economic growth considerably. The estimates of low inequality are usually based on the fact that the Gini coefficients of consumption expenditure have not been so high in India (although they have increased over time). The National Sample Survey data on which…