Demonetisation and the Question of Bank Credit

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.

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.India’s retail price inflation for the month of November 2019 (over November 2018) was 5.54 per cent.

The Perversity of the Neo-Liberal Fiscal Regime-II

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.Not a day passes without the government announcing some measure of privatisation.

The Perversity of the Neo-Liberal Fiscal Regime-I

WHEN income growth slows down in an economy, so does the growth of tax revenue within the given tax regime. Since the government has certain expenditure obligations, to meet these obligations it has to either impose additional taxes or expand its fiscal deficit.

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.

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).An actual drop in per capita consumer expenditure is an extremely serious matter.

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?

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.

India’s Rank on the Global Hunger Index

THE news that India’s rank in 2019 according to the Global Hunger Index (GHI) was 102nd among the 117 countries for whom this index was calculated (it is not calculated for countries where hunger is not a problem), instead of causing consternation as it should have, has generated a rather inconsequential debate. This debate ironically has been concerned with two issues.One is whether India’s rank which was 55 in 2014 has fallen dramatically to 102 in 2019.

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.

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Peoples Democracy

ECONOMIC NOTES