Are Global Oil prices the culprit for India’s burgeoning Trade Deficit? C. P. Chandrasekhar and Jayati Ghosh

India’s external account has once again emerged as a source of concern, as the current account deficit widened to reach 2.4 per cent of GDP over April-June 2018. This increase was driven entirely by the trade deficit, which grew rapidly in 2017-18. Since 2014, as Figure 1 shows, exports have been mostly stagnant (after a period of healthy increases before then) but total imports came down and then increased sharply in 2017-18. This was reflected in the total merchandise trade deficit, which declined for several years from the large deficit observed in 2013-14, and only rose sharply once again in…

The Political Roots of Falling Wage Growth Jayati Ghosh

New findings from the International Labor Organization show that workers across many advanced and emerging economies continued to miss out on the gains from growth in 2017. Rather than trotting out the usual suspects – trade and technology – it is time for policymakers to place the blame where it belongs. For Full article please click here    

The Modi government, the RBI governor and the mess that is the Indian economy Jayati Ghosh

The sheer ineptitude of economic policymaking under prime minister Narendra Modi’s government has been evident from almost the beginning of its tenure. What is also now well-established is the aggressive and rigid approach of the political leadership, which generally pushes its own (often hare-brained) policies regardless of the views of experts and the wider impact on ordinary people, both of whom it tends to treat with disdain. Surely, any of the economic advisors and others in significant positions of economic policymaking would have known all this for some time now. Any self-respecting central bank governor (or indeed anyone described as…

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…

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…

Is “Formalisation” possible? C. P. Chandrasekhar and Jayati Ghosh

In recent times, the clamour for formalising economic activity, or shrinking its unorganised component and expanding the organised, has been heard from diverse sources. There are those who want formalisation to occur because the unorganised sector is seen as being largely outside the direct and indirect tax net, depriving the government of much needed resources. Hence, for example, one feature seen as favouring the Goods and Services Tax regime is that it is likely to force formalisation by requiring transactions to be recorded whenever those transactions are between the organised and unorganised units. Others see formalisation as the process through…

Can the RBI’s open market operations help the rupee? C. P. Chandrasekhar and Jayati Ghosh

The recent depreciation of the rupee has created consternation among those who need to buy foreign exchange. It has also caused panic in the stock markets, whose decline partly reflects the exit of foreign investors, which contributes to the rupee’s fall. It spells further trouble for companies that borrowed heavily in foreign currency, encouraged by lower interest rates abroad. It adds to domestic inflationary pressures that were already rising with higher global oil prices, which have been mostly passed on to domestic consumers. While the recent slide in the rupee’s value is particularly steep, it is part of a longer…

Understanding Farmers’ Rage Jayati Ghosh

The eruption of farmers’ agitations across India is beyond anything that has been seen in India since the late 1980s. At that time, such outrage presaged a change of government, with the rise to power of a coalition of parties with some more identified with farmers’ interests. Then, for around two decades, cultivators somehow lost their voice in national politics, even as neoliberal policy reforms made their situation more vulnerable. The agrarian crisis that festered from the late 1990s and then exploded in the mid 2000s had its origins in the combination of trade liberalisation (which exposed Indian cultivators to…

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…