The State of the Indian Economy Jayati Ghosh

Only the blind or the foolhardy would claim that the Indian economy is in good shape. Despite the government’s obsession with high GDP growth – according to which the Indian economy is doing not just reasonably well but is among the best performers in the world – the fault lines are now only too evident: the external fragilities, the internal imbalances, the crisis in agriculture, the lack of employment opportunities, the rising inequality and the growing insecurity of material life for the majority of the population. Indeed, these problems are now so intense that they are clearly evident in plain…

The Misplaced Growth Discourse C. P. Chandrasekhar and Jayati Ghosh

With the GDP estimates for the fourth quarter of 2017-18 placing growth relative to the corresponding quarter of the previous year at 7.7 per cent, talk of India being the world’s fastest growing economy has revived. Moreover, since the year-on-year quarterly growth rates have risen from 5.6 per cent in the first quarter of 2017-18 to 6.3, 7.0 and 7.7 per cent in the subsequent three-quarters, there is talk that India is once more on a trajectory of accelerating growth (Chart 1). However, the story emerging from the provisional annual figures (which are also now available) is at variance with…

Economic Recovery or A Statistical Illusion: Some Observations on Recent Estimates of GDP Growth Vikas Rawal

On November 30th, the Central Statistical Office (CSO) came out with quarterly estimates of GDP for the second quarter (June to Sep) of 2017. Predictably, analysts and spokespersons of the government spent the evening in newsrooms of various TV channels celebrating what they claimed was a sign of revival of the economy. Next morning, revival of economy was the front page news in almost every newspaper. If there was any adverse impact of demonetisation and GST, it was claimed, here was the evidence that such an impact was only short-term and had started to wane. The subtext was that the…

‘Riskless Capitalism’ in India: Bank credit and economic activity Rohit Azad, Prasenjit Bose and Zico Dasgupta

The Indian growth story of the 2000s’ cannot be over-simplistically explained as a result of “market-oriented” reforms. Public sector bank credit-financed investments, particularly in the infrastructure sector, played a significant role in sustaining growth, most crucially after the global economic crisis. Such a growth trajectory, however, proved to be unsustainable with the expansionary phase coming to an end in 2011–12 and bad loans piling up in the banking system. Riskless_Capitalism  (Download the full text in PDF format) This article was originally posted in Economic & Political Weekly on August 5, 2017.

Industrial Growth and Demonetization Prabhat Patnaik

Some weeks ago when the official “quick estimates” of GDP for the third quarter of 2016-17 (October-December) had been released, putting the GDP growth in this quarter (over the corresponding quarter of 2015-16) at 7 percent, which broadly conformed to the CSO’s prediction before demonetization, a veritable chorus had gone up that the critics of demonetization had been proved wrong, that the measure did not have the recessionary effect they had claimed it would. The fact that this growth estimate was spurious, produced at the behest of the BJP government which specializes in “post-truths”, was pointed out by many (see…

Quarterly GDP Estimates: Curiouser and curiouser Jayati Ghosh

So maybe the demonetisation never really happened. Maybe it was all a bad dream: the late evening announcement, the subsequent cash crunch, the regulatory chaos, the deaths because people could not get medical treatment with old notes. Maybe the reporters who described all the job losses and migrant workers forced to go back home and farmers unable to get their sowing done in time and so on were all affected by a mirage. Maybe those who conducted surveys and found massive drops in sales, in consumer spending, in livelihoods of informal workers and self-employed people were similarly deluded. And of…

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…

Banks and the New Asian Tigers C.P. Chandrasekhar

In the immediate aftermath of the 2008 financial crisis and the Great Recession that followed, two countries that were seen as crucial to propping up global economic growth and even ensuring a recovery were China and India. Prior to the crisis these two countries were among those that had registered the highest growth rates in the world economy. Though they were both affected by the 2008 crisis, countercyclical measures adopted by their governments were seen as having returned them to growth. This strengthened the argument that these giants serve as the locomotives for the world economy. Much has changed since…

David Cameron’s Bad Date in Delhi Jayati Ghosh

Suddenly India is being wooed again. In the space of a few days, both François Hollande and David Cameron have turned up on its doorstep with palms outstretched in the search for business contracts. It will have come as a soothing balm to an Indian government facing increasing disillusion at home and growing cynicism on the part of investors abroad. In their foreign dealings, Indian policymakers must feel as if they are on a seesaw with changing partners of varying weights on the other side. There was a period, especially in the last decade, when theyIndia's policymakers could do no…

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