ECONOMIC NOTES

The Exodus of Finance from the Third World

THERE is an exodus of finance from the third world at present, far exceeding in scale what had occurred in 2008 after the financial crisis. Even more important than the actual outflow is the desire on the part of finance to pull out of the third world, including even the so-called “emerging markets”, and move to US dollars or dollar-denominated assets. This is resulting in a depreciation of a host of third world currencies vis-à-vis the dollar, of which the Indian rupee is an obvious example.

The “Sink” for Indian Capitalism

THE distress to which lakhs of migrant workers were suddenly exposed by the Narendra Modi government’s decision to announce a three-week-long lockdown at four hours’ notice with zero planning, has also highlighted a crucial aspect of the Indian economy. This consists in the fact that the village, with its agriculture-based economy and joint-family system, continues to remain the support-base for crores of urban workers who are perennially exposed to the vicissitudes of life under capitalism.

The Making of a Tragedy

THE tragic irony could not have been more complete. The country is under lockdown, but thousands of migrant workers are thronging bus stands or marching on the roads, making a mockery of it; the aim of the lockdown is to prevent the spread of the pandemic, but the mass exodus can now carry the virus to the hitherto-unaffected rural India where the healthcare system is pathetic; the idea is to prevent a virus-caused human tragedy, but an immense human tragedy is now unfolding.

Pandemic and Socialism

IT is said that in a crisis everybody becomes a socialist; free markets take a back seat, to the benefit of the working people. During the Second World War for instance, when universal rationing was introduced in Britain, the average worker became better nourished than before. Likewise, private companies get commandeered to produce goods for the war effort, thus introducing de facto planning.

Some Basic Lessons from the Pandemic

THE coronavirus attack has so far been much less deadly than the Spanish flu of a century ago. That had affected 500 million people worldwide, about 27 per cent of the world’s population of the time, and had a death rate of about 10 per cent among those affected. (Estimates of death vary greatly; this is a sort of mean). In India alone 17 million people are estimated by some to have died because of it. By contrast the coronavirus has affected, to date, less than two lakh people worldwide, and has a death rate of about three per cent among those affected.

Why have Indian Banks become Financially Fragile?

THE crisis at Yes Bank is only the concentrated expression of a deeper malaise afflicting the Indian banking system as a whole, namely its vastly increased financial fragility. The chief economic advisor is no doubt right when he assures depositors, through the media, that the Indian banking system is quite stable; but this still does not negate the fact that it has become more fragile.

Economy Sliding into Stagnation

CHANGES in estimation methods have of late made statistics on the Indian economy increasingly bewildering; besides, whenever the statistics show the performance of the economy in a poor light, the BJP government simply suppresses them. Nothing however can suppress the fact that the Indian economy is sliding into a serious state of stagnation. The third quarter (October-December) GDP estimates which have just been released show a 4.7 per cent growth over the corresponding quarter last year, which comes on the heels of a 4.5 per cent growth in the second quarter.

The Uses of “Populism”

CLASS struggle occurs in the realm of concepts too. The World Bank for instance systematically counters Left concepts by employing a novel tactic: it uses the very same concepts as are used by the Left, but gives them a wholly different meaning; as a result they either come to mean something entirely different from what the Left had originally meant by them, or, at the very least, they become fuzzy and hence useless to the Left. In either case the power of the Left concept is neutralised.

Bereft of Macroeconomic Vision

THOUGH finance minister Nirmala Sitharaman laboured for well over two hours when delivering her budget speech, it is likely that the aspect of the speech that will receive popular attention would be the restructuring of income tax slabs and reduction in rates that would benefit the tax paying middle class. That was obviously also the intention of the exercise.

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