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…

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…

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…

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…

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…

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…

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…