ECONOMIC NOTES

Once More on Poverty Estimates

A REPORT in The Hindu (October 6) quotes a World Bank paper to the effect that the head-count poverty ratio has declined for the world as a whole from 14.2 percent of the global population in 2011 to 12.8 percent in 2012, which presumably also implies a decline for India. (In fact the report in The Hindu is headlined “World Bank Estimates Show Fall in India’s Poverty Rate”).

Interest Rate Cut A Matter of Interest

RESERVE Bank of India (RBI) governor Raghuram Rajan has surprised all by a “bold” 50 basis points (or half a percentage point) reduction in policy (interest) rates. The interest rate payable on borrowing by banks from the RBI (or the repo rate) has been brought down to 6.75 percent and the interest rate banks get when they hold deposits with the RBI (or the reverse repo rate) has been reduced to 5.75 percent. The idea is not merely to reduce interest rates charged to borrowers, but to push banks into lending more rather than holding large cash reserves.

“The Refugee Crisis”

WHAT is new about the “refugee crisis” which appears to have engulfed Europe is that for the first time in history the consequences of the tragedies inflicted by imperialism upon the people in the “outlying regions” are visiting the metropolis itself in the guise of “refugees”.

The State and the Left

THE Maoist attitude to the Indian State is clear; engaged in an armed struggle to overthrow the Indian State, the Maoists see this State as their enemy. What about that segment of the Left, however, which is not engaged in armed struggle, but participates in parliamentary elections, occasionally forms governments at the state level, and functions in accordance with the Constitution? Does it find the current Indian State acceptable?

Behind The Volatile Market

INDIA’S stock market is passing through a volatile phase. While the 1625 point collapse of the Sensex on August 24, 2015, which was the largest decline in six years, was followed by a return to stability and even moderate buoyancy, the mere announcement of a half of a percentage point decline in the quarterly GDP growth rate during April to June, was enough to precipitate a more than 500 point decline on September 1, 2015.

The Devaluation of the Yuan

THE Chinese central bank’s decision last week to let the yuan depreciate in three stages by almost 4 percent against the US dollar, was officially explained as a move towards greater market determination of its exchange rate. Though this explanation pacified stock markets around the world, China’s devaluation of the currency portends a serious accentuation of the world capitalist crisis.

World Recession Set to Worsen

MORE than seven years after the world capitalist crisis began, not only is there no sign of any recovery from it, but the prospects appear even bleaker today than ever before. In fact, while the advanced capitalist world continues to remain mired in crisis, it is now spreading across the globe, even to countries like India and China that had appeared initially to have escaped its impact. India’s GDP growth rate is slowing down; what is more, the manufacturing sector continues to witness almost absolute stagnation.

The Impasse over Economic Policy

NEWSPAPERS have been full of stories about differences between the Reserve Bank and the finance ministry over economic policy issues. The differences are so sharp that the government is apparently planning to amend the Reserve Bank of India Act to clip the wings of its governor. These differences however are symptomatic of a deeper malaise afflicting the Indian economy. The point in this case is not who is right or who is wrong; the point is that whichever policy is pursued, the economy is headed for acute difficulties.

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