Once More on “The Humbug of Finance” Prabhat Patnaik

The renowned economist Joan Robinson had referred to the view that the government’s budget should always be balanced, as the “humbug of finance” (Robinson 1962), namely as a false proposition with no theoretical merit which was nonetheless promoted by finance capital. These days of course the insistence is not exactly on balancing the budget as was the case during the pre-second world war years. A certain amount of fiscal deficit relative to GDP, usually 3 percent, is considered “permissible”, though it is not clear what is so sacrosanct about the figure 3 and why 3 is better than zero. But…

Budget 2017-18: Blinded by neoliberalism C. P. Chandrasekhar

In an insipid speech that was repeatedly misread, Finance Minister Arun Jaitley presented on 1 February the contours of a budget that was shockingly short of substance. It left disappointed those who expected that policies to compensate sections hurt by the demonetisation experiment would be included and those who were looking for some measures to counter the demand slump afflicting the economy that had been aggravated by the demonetisation. It also surprised those who thought that the budget would be forced to expand aggregate expenditure and social spending to win voter support in the elections to the five assembly elections…

The Budget after Demonetisation C.P. Chandrasekhar

Having announced that it is advancing the date for presentation of annual budgets by a month from end-February, the Finance Ministry is in the midst of preparations for next year’s exercise. But with the attention of economic analysts diverted to the unfolding crisis created by the government’s demonetisation decision, little attention has been paid to what would be the first budget to be presented in the post-planning era. It was to be expected that the implicit and explicit rules adopted by the government to make allocations under different heads of capital and current expenditure would have attracted much attention. But…

Austerity Measures Threaten Children and Poor Households : Recent Evidence in Public Expenditures from 128 Developing Countries Isabel Ortiz, Jingqing Chai and Matthew Cummins

In the wake of the food, fuel and financial shocks, a fourth wave of the global economic crisis began in 2010, viz., fiscal austerity. Updating earlier research by UNICEF, this working paper examines the latest IMF government spending projections for 128 developing countries, comparing the three periods of 2005-07 (pre-crisis), 2008-09 (fiscal expansion) and 2010-12 (fiscal contraction). It discusses the possible risks of the adjustment measures for social expenditures and summarises a series of alternative policy options. poor_households (Download the full text in PDF format)

Prioritizing Expenditures for a Recovery for All Isabel Ortiz, Jingqing Chai, Mathew Cummins, Gabriel Vergara

This UNICEF paper examines government expenditure projections for 126 low and middle income countries and their potential implications for children and poor households during the ongoing fragile economic recovery. While recognizing the importance of macroeconomic stability, the paper questions if the projected fiscal adjustment trajectory in a number of countries is conducive to the objective of protecting vulnerable households and the achievement of development goals such as the MDGs. (Financing options for pro-poor social spending are also explored). unicef (Download the full text in PDF format)

Review of the 2004 World Development Report “Making Services Work for Poor People” Tim Kessler

On September 21, 2003, the World Bank unveiled its annual flagship publication, the 2004 World Development Report, entitled "Making Services Work for Poor People." The WDR's main premise is that basic services - primary education, basic health care, water and electricity services -fail to reach the poor because too many governments lack sound and representative institutions of governance. Ironically, the report expresses strong confidence in the ability of these same unaccountable governments to regulate private service provision. In addition to deficient institutions, the WDR attributes failing public services to regressive budgets (that benefit mostly the middle class), petty corruption, and…