The Modi Government’s spat with The RBI Prabhat Patnaik

The Modi government’s spat with the Reserve Bank of India, like its sudden resurrection of the Ram temple project, indicates the desperation it feels at its dwindling electoral appeal. Having dealt a huge blow to the small-scale sector through its measures like demonetization and the GST, having aggravated through its inaction the impact on the Indian economy of the world capitalist crisis, and of Trump’s protectionism that has followed, it is now quite desperate to salvage some support for itself as the Lok Sabha elections approach. Since mere grandiose announcements such as Ayushman Bharat or doubling agricultural incomes can no…

Lessons for the ‘Rest’ from ersatz miracles Jomo Kwame Sundaram

Of the ten fastest growing economies since 1960, eight are in East Asia. Two main competing explanations claimed to explain this regional concentration of catch up growth since the late 20th century, often referred to as the East Asian miracle. The dominant ‘neo-liberal' Washington Consensus, sought to establish minimalist ‘night-watchman' state, attributed this exceptional regional performance to macroeconomic stability, public goods provision, and openness to trade and investment. Meanwhile, more heterodox economists focused on the need for states to adopt pragmatic, experimental ‘trial and error', selective approaches to overcome market and coordination failures in order to accelerate growth, especially through…

The Government-RBI Stand-Off Prabhat Patnaik

The stand-off between the Modi government and the Reserve Bank of India has generated a false discourse on the one hand and an illusion on the other. In this discourse the RBI’s position, articulated  by its Deputy Governor, is that central bank policy has to be guided by financial markets rather than by a government headed by politicians with electoral compulsions and “populist” agendas. This is obviously an  undemocratic position, for it amounts to saying that crucial decisions affecting people’s lives should be outside their sphere of intervention through the electoral process. It is also a dangerous position, since financial…

Bracing for the Bust C.P. Chandrasekhar

The message from the October meetings of the International Monetary Fund (IMF) and the World Bank, which normally exude optimism, is glum. In January this year, the IMF noted that “the cyclical upswing under way since mid-2016” was growing stronger, contributing to “the broadest synchronised global growth upsurge since 2010”. It now feels that while “the global economic expansion remains strong”, it has “become less balanced and with more downside risks”. This does not just mean that one more sighting of the “green shoots of recovery” is proving to be premature. Given the IMF’s predilection for underplaying bad news, it…

Did post-Soviet Russians drink themselves to death? Jomo Kwame Sundaram and Vladimir Popov

Although initially obscured by The Economist, among others, the sudden and unprecedented increase in Russian adult male mortality during 1992-1994 is no longer denied. Instead, the debate is now over why? Having advocated 'shock therapy', a 'big bang', 'sudden' or rapid post-Soviet transition, Jeffrey Sachs and others have claimed that the sudden collapse in Russian adult male life expectancy was due to a sudden increase in alcohol consumption, playing into popular foreign images of vodka-binging Russian men. In fact, the transition to the market economy and democracy in Eastern Europe and former Soviet republics dramatically reduced life expectancy owing to…

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…

A Private Debt Story: Republic of Turkey Hires McKinsey & Company T Sabri Öncü

About four years ago, I penned an article in this column titled, “A Sovereign Debt Story: Republic of Argentina vs NML Capital” (EPW, 17 May 2014). Many things have happened since then and it is time to write a private debt story now, Turkey’s story. Turkey and Argentina are twins in the sense that these countries suffered from almost simultaneous financial crises both in 2001 and 2018. Both are currently suffering from currency crises with potential spillover to the rest of the emerging markets, and there are those who argue that these twins may have triggered a crisis in the emerging markets…

External Commercial Borrowings: Difficult times ahead Parthapratim Pal and Ahana Bose

The Federal Reserve of United States has raised short term benchmark interest rates for the third time this year. With this increase, the benchmark rates have crossed the 2 percent mark for the first time since 2008. The FED has also given enough indications to suggest that there might be one more rate hike in December followed by a few more next year. As job growth figures in USA are pointing towards historically low unemployment levels, and the GDP growth rate is expected to be more than 3 percent this year, the FED is gradually moving away from the accommodative…

Hype and Facts on Free Trade C. P. Chandrasekhar

Voices questioning the claim that nations and the majority of their people stand to gain from global trade are growing louder. The one difference now is that the leading protagonist of protectionism is not a developing country, but global hegemon United States under Donald Trump. Free trade benefits big corporations with production facilities abroad, Trump argues, while harming those looking for a decent livelihood working in America. With time Trump has made clear that his words are not mere rhetoric, matching them with tariffs that have frightened European and North American allies and US corporations, besides troubling the likes of…

Improving Infrastructure Planning In Developing Countries Jomo Kwame Sundaram and Anis Chowdhury

Infrastructure investment is necessary, but hardly sufficient to enable developing countries to transform their economies to achieve sustainable prosperity, according to this year's UNCTAD Trade and Development Report: Power, Platforms and the Free Trade Delusion (TDR 2018), released in late September. For various reasons, infrastructure projects in developing countries are receiving broad endorsement. Multilateral financial institutions – such as the Asia Infrastructure Investment Bank – are scaling up investment, and several international initiatives – such as the Belt and Road Initiative of China – prioritize infrastructure. Yet, such efforts may still not accelerate industrialization. Nevertheless, most recent discussions still tend…