THE demonetisation of currency notes of Rs 500 and Rs 1000 denomination in November 2016 suddenly brought a large amount of cash to the coffers of the banks. Since the banks had to pay interest on the deposits that the public was forced to make with them, they also had to use this cash in a manner that would earn them some income; otherwise its lying idle in their tills would erode their profitability. How the banks used this excess liquidity that had suddenly accrued to them is highly instructive.

THE second way, apart from defrauding the states of their legitimate share of resources, in which the centre is attempting to cope with the fiscal squeeze, which it has become subject to under the neoliberal regime, is by privatising a whole range of public sector enterprises.

“MAINSTREAM” economics does not appear to understand the functioning of the bourgeois economic order; and nowhere is this more evident than in matters relating to fiscal policy. It holds to this day that a fiscal deficit “crowds” out private investment by reducing private borrowing. This presupposes that there is a fixed pool of savings in the economy in any period, of which if the government takes more (for meeting a fiscal deficit) then a correspondingly lesser amount is left for the private sector leading to a reduction in private investment.

WITH the government being forced to withdraw from the RCEP agreement, an argument has arisen: if India is not competitive with other countries in producing a whole range of goods, which is why the producers of such goods within the country objected to the agreement in the first place, then why should it go on producing them? And a related argument states: in protecting uncompetitive producers, the country is penalising consumers who would have otherwise accessed cheaper imported goods; is this not unfair?