GST: One more NDA failure C. P. Chandrasekhar

July 2018 marks the first month of the second year in which the much-heralded Goods and Service Tax (GST) regime has been in place. When launched 13 moths earlier, in a propaganda blitz that (wrongly) claimed that this “one nation, one tax” system was a game-changer, the government had promised that the new regime would help the Centre and the states to efficiently mobilise the resources needed to put India on a high growth trajectory. In fact, demonetisation and the GST regime were presented as the two initiatives of the Modi government that would transform India. Demonetisation, as the government’s…

The Indian Economy in A Tailspin Prabhat Patnaik

The Indian economy is in a tailspin. This cannot be attributed only to innocence in economic matters of the command-centre of the NDA government. While that is indubitably a contributing factor, the current travails of the economy point to something deeper, namely the dead-end to which neo-liberalism has brought the economy. Without moving away from the neo-liberal trajectory, the economy cannot come out of its current difficulties. India’s success in raising the GDP growth rate, the main selling point for the neo-liberal regime, was, unlike China’s, built upon the quicksand of a persistent trade and current account deficit on the…

Whither Indian Economy? Sunanda Sen

Growing concerns on the current state of the Indian economy, which have been met with responses filled with assurances and proposals from official circles for remedial actions on part make it urgent to delve into the issues which spell out the reality. Apprehensions relating to the economy are at the moment centred on further escalations in the high prices, of fuel and other goods in the domestic market, affecting the daily lives of people. As is generally held, the major reasons behind this include the rising dollar price of crude oil in international market and the steady declines in the…

Global Instability and the Development Project: Is the Twenty-First Century different? Jayati Ghosh

GLOBAL CAPITALISM TODAY: UNSTABLE, MORIBUND, OR JUST RESTING? Ever since the global financial crisis of 2008–2009, the trajectory of the world economy has been hesitant, unstable and prone to many risks. Output recovery has been limited and fragile; and, more significantly, even in the more dynamic economies, it has not increased good-quality employment or reduced inequality and material insecurity. Global capitalism as an economic regime is increasingly unable to deliver on its own promise of continuous expansion within a largely stable society. Even so, discussions of the ‘end’ of capitalism still typically seem overstated and futile, not least because those…

Another Global Financial Crisis for Developing Countries? Anis Chowdhury and Jomo Kwame Sundaram

George Soros, Bill Gates and other pundits have been predicting another financial crisis. In their recent book, Revolution Required: The Ticking Bombs of the G7 Model, Peter Dittus and Herve Hamoun, former senior officials of the Bank of International Settlements, warned of ‘ticking time bombs' in the global financial system waiting to explode, mainly due to the policies of major developed countries. Recent events vindicate such fears. Many emerging market currencies have come under considerable pressure, with the Indonesian rupiah, Indian rupee and South African rand all struggling since early this year. Brazil's real fell sharply in June, and Argentina…

The larger crisis that NPAs signal C. P. Chandrasekhar

Having overcome a legacy of extreme shortage of supply, India’s power sector is in the midst of a crisis with ramifications of a wholly different kind. The crisis arises because firms accounting for significant proportion of power sector assets have defaulted on their debt servicing commitments, and banks are not able to find ways of restructuring that debt or recouping their money. So the RBI’s guidelines requires that the assets should be liquidated to recover whatever is possible and compensate banks from which these firms had taken loans and then defaulted. But the assessment is that liquidation would yield the…

RCEP Deal can be disastrous for India Biswajit Dhar

Trade ministers of 16 countries negotiating the Regional Comprehensive Economic Partnership (RCEP) met for their crucial sixth meeting in Singapore in end-August, in an effort to create by far the largest economic integration agreement. The joint media statement issued at the end of the ministerial meeting provides some key pointers to where the negotiations are headed. The statement mentions that the ministers exchanged views on the next steps toward the conclusion of negotiations and that they adopted a package of deliverables. Although the contents of the package are under wraps, the statement says that the ministers instructed their negotiators to…

Great Recession, Greater Illusions Anis Chowdhury and Jomo Kwame Sundaram

In 2009, the world economy contracted by -2.2%. Growth in all developing countries declined from around 8% in 2007 to 2.6% in 2009 as the developed world contracted by -3.8% in 2009. The collapse of the Lehmann Brothers investment bank in September 2008 symbolized the US financial crisis that triggered the Great Recession of 2008-2009. Demise of Keynesian consensus In its immediate aftermath, a new consensus reversed the neoliberal Washington Consensus of the last two decades of the 20th century. Proclaimed by the G20's London Summit of 2 April 2009, it envisaged return to Keynesian macroeconomic policies, including large-scale fiscal…

The Real Problem with Free Trade Jayati Ghosh

Even if free trade is ultimately broadly beneficial, the fact remains that as trade has become freer, inequality has worsened. One major reason for this is that current global trade rules have enabled a few large firms to capture an ever-larger share of value-added, at a massive cost to economies, workers, and the environment. For full article click here (This article was originally published in the Project Syndicate on September 10, 2018)

Who’s manipulating China’s exchange rate? C. P. Chandrasekhar and Jayati Ghosh

A favourite trope of Northern economic policy makers – especially those in the United States – is that China systematically manipulates the exchange rate of the RenMinBi to ensure greater external competitiveness, and that this amounts to an unfair trade practice. While this has been a complaint of the US government for some years now, President Trump of the US has become a particularly strong advocate of this theory. Most recently, the recent (slight) depreciation of the Chinese RenMinBi (RMB or Yuan) relative to the US dollar has been met with howls of protest from Mr Trump and his trade…