Buckling under Pressure Jayati Ghosh

Is there no one left in our important institutions who is still capable of speaking truth to power? The last year has seen a depressing – even frightening – erosion in the credibility of the major institutions that in different ways are vital for the functioning of our democracy. It is true that the Congress Party when in power has also not covered itself in glory in terms of respecting such institutions, except when forced to do so. But the current “low, dishonest” phase of history (in W.H. Auden’s apt phrase) that we are experiencing in India surely marks a…

The Demonetization Fiasco Prabhat Patnaik

The demonetization of 86 percent of the currency of the country, a virtually unprecedented  measure anywhere in the world, has brought immense hardship to the working people of the country, and will damage their living standards permanently (since the Modi government plans not to replace the entire value of the demonetized notes by printing new ones). Many however believed that it was a step being taken for the greater social good, for achieving certain important social goals. Three of these goals were mentioned by the government from time to time: to attack black money, to replace counterfeit notes, and to…

Barbara Harriss-White on Demonetisation An interview with Madras Courier

Part 1 Barbara Harriss-White is an Emeritus Professor at the University of Oxford, with decades of experience studying India’s vast informal economy. It was this economy that was most hit by the move to demonetize higher denominations of currency taken on November 8. She answers a series of questions on the noteban with Madras Courier – painting a comprehensive picture of what demonetization has done to democracy, the 'black economy', corruption, agriculture, Introduction by Barbara I have been following notebandi from Europe (where the media are paying little attention) and I’m not watching Indian TV. So my experience isn’t first-hand, and my answers are…

The Pursuit of Unreason Prabhat Patnaik

A distinguished Ugandan social scientist of Indian origin, whom I happened to meet earlier this month at an academic conference, told me that Modi’s demonetization reminded him of the Ugandan dictator Idi Amin’s fiat in 1972 that all Asians should quit Uganda within a period of three months. His analogy of course would be considered inapposite for an obvious reason: expelling people from their places of domicile, as Amin did, is certainly a more inhumane act than snatching away people’s purchasing power as has happened in India; and this remains true, even when the victims in the former case are…

The Utter Failure of Demonetization: The RBI says so even as it says not Surajit Mazumdar

From the figure of the value of fresh banknotes issued by banks by 19 December, it can be concluded that we are still very far away from the full replacement of the cash withdrawn from circulation and the severe cash shortage is going to continue well beyond 30 December. Utter_Failure (Download the full text in PDF format)

Banks as victims C. P. Chandrasekhar

In the outcry against the disastrous demonetisation experiment of the Modi government one aspect that has not been given adequate attention is the damage it has done to the reputation and the balance sheets of the banks. Customers queueing before bank doors and ATMs seem on occasion more forgiving of the government than of the harassed bank employees, who are forced to ration out currency and offer those customers they can accommodate, less than even the maximum withdrawal permitted by the government and the RBI. When new notes are discovered in inexplicable sums in the hands of rogue operators, it…

Supreme Court should Frame an Eleventh Question on Demonetisation Prasenjit Bose and Zico Dasgupta

Whether the demonetisation scheme declared through the November 8 notification qualifies as a fiscal or economic policy is a vital question that merits the attention of the Supreme Court. SC_Questions_Demonetisation (Download the full text in PDF format) (This article first appeared in www.dailyo.in)

Money and the Social Contract in India Jayati Ghosh

The social contract between a state and its citizens is a complex thing. Philosophers of the European “Enlightenment” saw it as the basis on which society is organised so as to ensure the mutual protection and welfare of its members. It is therefore the implicit social arrangement whereby citizens give up some of their rights and freedoms to the state or a similar authority, in return for some degree of order and stability that would effectively ensure the protection of their remaining rights and freedoms. In very unequal societies, the voluntary nature of such a social contract is not particularly…

Demonetisation and Banks’ Lending Rates Prabhat Patnaik

Spokesmen of the ruling party are busy these days spreading another falsehood, namely that, because of demonetisation which has brought in huge amounts of cash to their coffers, banks would be so keen to lend that their lending rates are going to fall, and that such a fall will act as a stimulus for the economy. This is completely wrong, and banks’ lending rates can never fall for this reason. They may of course fall because the monetary policy announced by the Reserve Bank of India is so altered as to cause such a fall. But that could happen anyway;…

Demonetisation and India Inc C. P. Chandrasekhar

In Finance Minister Arun Jaitley’s pre-Budget meeting with members of India’s Chambers of Commerce and Industry and other special category capitalists like exporters, the latter reportedly told him that while demonetisation is a welcome move, the government must “offset the immediate downturn that industry will go through”. This was accompanied by a range of demands varying from reduced corporate taxes to special export incentives and accelerated privatisation. In sum, India Inc had its own ideas of how the short term pain of demonetisation could be converted into long term gains for itself, though the policies recommended to ensure the realization of…