ECONOMIC NOTES

The Rise in Inflation Rate

EVEN as the growth rate of the Indian economy is slowing down, and the index of industrial production actually showing negative growth for three consecutive months, August to October (over the corresponding months a year ago), the inflation rate in the economy has started accelerating. Significantly, the acceleration in inflation has been the sharpest precisely during these very months when the contraction in industrial output has been the most pronounced.

Fiscal Fallacies

“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.

Pathetic State of the Economy: Modi Government Hides Data

THE National Statistical Office (NSO) has decided not to release the quinquennial survey data on consumer expenditure for 2017-18. This is because these data, leaked by The Business Standard (November15) show a drop of 3.7 per cent in real per capita consumer expenditure between 2011-12 and 2017-18, from Rs 1,501 per month to Rs 1,446 per month (at 2009-10 prices).

The Argument about Competitiveness

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?

A Dangerous Agreement to Sign

ON October 24-25, there were widespread peasant protests all over the country against the Regional Comprehensive Economic Partnership (RCEP) involving sixteen nations which India is currently negotiating. As negotiations near completion, such protests are escalating, with the All India Kisan Sabha planning to organise a nation-wide protest on November 4, just before the RCEP agreement is due to be signed. And the Kerala government too is organising a protest.

The World Economy in Decline

THE European Central Bank last month pushed its benchmark interest rate to minus 0.5 per cent, which means that if it gives a loan of 100 euros then it would be paid back only 99.5 euros at the expiry of the loan. This has started a new trend: in countries like Germany, Spain, Italy, Czech Republic and even Greece, the yields on government bonds have been pushed into the negative region. Lenders to these governments in other words are willing to pay for holding government bonds.

In the Lee of Hindutva

THE class function of Hindutva is becoming clearer by the day. In the lee of Hindutva the Modi government is embarking on a massive programme of privatisation of the public sector, and of attack on the working class. Such a programme could not have been launched under the “normal” circumstances of bourgeois rule; it would have aroused stiff opposition.

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