Did developing countries really recover from the Global Crisis? C. P. Chandrasekhar and Jayati Ghosh

We are nearing the tenth anniversary of the collapse of Lehman Brothers in the United States that sparked a Global Financial Crisis,affecting every economy in significant ways. That crisis generated extraordinary monetary policy responses in the advanced economies, with low interest rates and unprecedented expansion of liquidity, in an effort largely driven by central banks to keep their economies afloat. By contrast, expansionary fiscal policy was barely used after the first initial stimulus. In the event, even with these incredibly loose monetary policies, the advanced economies have generally spluttered along, with periodic hopes of recovery dashed by repeated slowdowns –…

The Invisible Class Prabhat Patnaik

G.K.Chesterton has a well-known detective story involving Father Brown called “The Invisible Man”, where “invisibility” is supposed to characterize the postman: one is so used to seeing the postman come and go that one scarcely ever notices him. “Invisibility” in Chesterton’s sense however can get attached not just to an individual but to a whole class; and in our country, the peasantry undoubtedly is the “invisible class”. The peasantry has been called many things by many people, from “a sack of potatoes” to “an awkward class”. But it is above all an “invisible class” whose presence, and providing of essentials…

Public Banks: Dressing up for the market C. P. Chandrasekhar

When the government presented its third supplementary demand for grants to the winter session of parliament, the list of expenditures included Rs. 80,000 crore for a first tranche investment in equity of the public sector banks to recapitalize them. This was a clear declaration that the government intended to go through with its plan to provide as much Rs. 1.35 lakh crore from its budget to recapitalize banks that are recording losses, as they recognize and provide for non-performing assets accumulated substantially from debt provided to a few large corporates. The recapitalisation plan announced in October 2017 promises to infuse…

A Year of Wilful Economic Disaster Prabhat Patnaik

The uniqueness of 2017 lies in the fact that never before has the country seen a government-caused economic crisis as serious as was witnessed in this year. There have certainly been worse years for the people, such as 1965-66, 1966-67, and 1973-74, each of which saw massive inflation. But these were years when economic hardships occurred for reasons that had nothing to do proximately with government policy. 1965-66 and 1966-67 when the “Bihar famine” had occurred, had seen a sharp drop in food grains output, a drop that had lasted two years. The probability of such an event, statisticians told…

The Indian Economy in 2017 Jayati Ghosh

This was the year that the economy tanked. Not necessarily in terms of official growth figures: according to the CSO, GDP growth decelerated, but not by that much. And Finance Minister Arun Jaitley was quick to proclaim that, with GDP growing by an estimated 7.1 per cent for the current financial year, India still remains among the world’s fastest growing economies. Financial investors seem to agree: over the calendar year the stock market has boomed, with the BSE Sensex rising by around 25 per cent and the Nifty50 Index by 28 per cent. But these estimates sit uneasily with the…

Downturn Blues C. P. Chandrasekhar

September did not begin well for the Narendra Modi government. As it prepared for a makeover in the form of a cabinet reshuffle with elections 2019 in sight, news came that India’s GDP growth had slowed significantly to 5.7 per cent during the quarter April-June. This deceleration comes in the wake of a fall in growth rates from close to 8 per cent a year earlier to 6.1 per cent during January to March this year. As is to be expected the government has chosen to attribute this trend to short term shocks, which will not dislodge the economy from…

Growth in the Time of a Credit Squeeze C.P. Chandrasekhar and Jayati Ghosh

GDP growth figures for the last few years have camouflaged a deceleration in credit growth that has affected all but the retail loans segment quite adversely. Credit_Squeeze (Download the full text in PDF format) (This article was originally published in the Business Line on July 31, 2017.)

The Economy Under Modi Prabhat Patnaik

The Modi government’s record in tacitly supporting the actions of  a bunch of vigilante thugs who have been terrorizing the country, especially the Muslims and the dalits, in the guise of gaurakshaks, or opponents of love jihad, or “nationalists”, has been so outrageous that it has grabbed all the critical attention. In the process the government’s abysmal failures in other spheres has gone virtually unnoticed. One such sphere is the economy whose dismal state is sought to be camouflaged by hyped-up figures of growth of the Gross Domestic Product (GDP). In fact, GDP figures these days engage one like an…

The GDP Elephant Jayati Ghosh

National income is hard to estimate in India where so much activity and employment is in the informal sector. Much of GDP calculation is not purely “technocratic” but relies on judgments and assumptions. As long as our system of national accounting does not clarify the real impact on the economy and the actual degree of deceleration of economic activity, we will remain in the dark. GDP_Elephant (Download the full text in PDF format) (This article was originally published in Quatrz India: June 5, 2017)

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