National Income in India: What’s really growing? Jayati Ghosh

Recent income growth in India has been dominated by sectors that do not reflect real physical output increases – such as finance, insurance and real estate and public administration and defence.   National_Income  (Download the full text in PDF format) (This article was originally published in the Business Line on February 27, 2018.)

Can Banking Recover? Jayati Ghosh

The bank frauds involving Punjab National Bank (PNB) and the companies associated with businessmen Nirav Modi and Mehul Choksi as well as the Rotomac case couldn’t have come at a worse time. The Indian banking system is already reeling under the pressure of growing NPAs, or non-performing assets (less politely known as loans that are not going to be repaid), which will touch nearly ₹10 lakh crore by March this year. This does not include the ₹6 lakh crore already written-off. This has already caused a slowdown in disbursal of bank credit, in turn affecting productive investment. Failure at many…

The Nirav Modi Scandal Prabhat Patnaik

Nirav Modi, and his uncle Mehul Choksi, are the latest additions to the list of the so-called “entrepreneurs of new India” who have looted public money and decamped with the loot. The Punjab National Bank, the second largest bank in the country, kept giving them loans without any collateral (which is basically what happened through the complicated procedure of the so-called “Letters of Undertaking”); and one fine day Nirav Modi simply left the country with his immediate family, to be followed by his uncle a few days later. Several characteristics are shared by all these decamping “entrepreneurs” whose list includes…

Bubbles, Stocks and Crashes Prabhat Patnaik

What is happening in the U.S. economy provides an object lesson on the functioning of neo-liberal capitalism. Pre-first world war capitalism which had witnessed the long Victorian and Edwardian boom had relied on the colonial arrangement for the system’s dynamics. The goods produced by Britain had been sold in colonial and semi-colonial economies (causing “deindustrialization” there), and goods of even greater value had been taken away from these economies (the difference constituting the “drain of surplus”) to be exported, partly against British imports and partly on credit, to the “New World”, i.e. to the temperate regions of white settlement, for…

Budget 2018-19: No money where the mouth is C.P. Chandrasekhar

Billed as the last full budget of this second NDA government, Budget 2018 was not expected to surprise. The leadership of that government may be pleased with having played, during its nearly 4-year tenure, with programmes varying from “Make in India” to Swach Bharat Abhiyan, experimented with demonetisation, and launched the Goods and Services tax regime. But while none of these immediately benefited the “common man”, some of them like demonetisation hit the vulnerable, and the GST disrupted production and damaged the operations of the micro, small and medium enterprises (MSMEs). There was also evidence that agriculture had been neglected…

The Budget and Education Jayati Ghosh

Forget the massive and overblown promises to farmers and on health insurance, which were not covered by any budgetary provisions.  Ignore the supposed increases in rural development spending, which are all to be met through “extra-budgetary and non-budgetary sources”. Disregard the declared concern for rural areas, the poor and women, which has translated into next to nothing in terms of actual allocations. The real story of this Union Budget is not to be found in the verbose rhetoric of the Finance Minister’s speech or in the supposedly “big ticket” items, which amount more to a manifesto of the ruling party…

The Aging of a Growth Engine C.P. Chandrasekhar and Jayati Ghosh

With the dollar value of exports declining, India’s software sector faces a historical crisis which may worsen, given the protectionist trends in the US and other uncertainties. Aging_Growth_Engine  (Download the full text in PDF format) (This article was originally published in the Business Line on February 13, 2018)

The Economic Survey 2017-18 Prabhat Patnaik

Like the person on the proverbial tiger, the Indian economy is currently riding a precarious course. The Government of India’s Economic Survey for 2017-18 recognizes this frankly, but its panacea is to keep one’s fingers crossed and hope that the ride continues. The macroeconomic data it presents are closer to those of the IMF’s World Economic Outlook Update prepared for the Davos meet than to the figures of the Indian government’s own Central Statistical Office. Its GDP growth estimate for the current fiscal year is 6.75 percent (compared to the IMF’s 6.7 percent and the CSO’s 6.5); and in the absence of anything untoward,…

The 2018-19 Union Budget Prabhat Patnaik

The Union Budget for 2018-19 sets a new record for cynical dissimulation. To be sure there is a certain amount of “window dressing” in all budgets, but the announcement of fantabulous schemes with scarcely a paisa earmarked for them, as has happened this year, is quite unprecedented in the annals of budget-making in India. Consider for instance the much-hyped “World’s Largest Healthcare Programme” announced in this budget, which is supposed to provide insurance cover for up to Rs.5 lakhs per family to 10 crore families constituting 40 percent of India’s population. The total sum allocated for this programme is a…

Budget 2018: The finance ministry’s grey shades of ‘pink’ Jayati Ghosh

Has the Union Ministry of Finance really turned gender-sensitive at last? At least according to its own lights, it has. Indeed, the creators of the Economic Survey are so excited by this new perspective that they have been moved to colour the cover of their document pink. (Presumably, no one has yet told them about how such colour stereotyping is no longer fashionable.) And – instead of the usual practice of clubbing together matters relating to women with children, social sectors and other supposedly “soft” stuff – there is an entire chapter in volume I of the Survey devoted to gender and specifically…