How can India's economy grow in the midst of a pandemic, without compromising the health of the working population and aggravating the transmission of COVID-19?
Investments in industry have slowed down considerably in the recent years, as has agricultural growth. Falling levels of capacity utilisation, building up of food stocks and the state of liquidity in the economy sufficiently prove that the problem today is the lack of demand. Rural distress, rising inequality and falling real wages are driving down demand. The government’s response to the slowdown has been woefully inadequate. The biggest impediment to policymaking is not the lack of ideas, but the blinkered vision of economics.
While there has been a tremendous increase in the number of bank accounts opened, the data show that the average balance in these accounts is low and a significant proportion of the accounts are inoperative. Although there was a rise in the average deposits during demonetisation, they later settled at a lower level. Further, financial inclusion means not just the opening of bank accounts but, more importantly, access to credit from formal sources. The limited data available in this regard show that after the Pradhan Mantri Jan Dhan Yojana was launched there has not been any increase in the credit–deposit ratio and the share of small loans has continued to decline. Very few people have benefited from the overdraft facility that is supposed to be provided by the accounts under the scheme. Issues of access to banking in rural areas remain.
For economists, the Great Recession—the worst crisis the world has seen since the Great Depression of the 1930s—has highlighted the need for plurality in macroeconomics education. Ironically, however, there is a move towards greater insularity from alternative or contrasting points of view. Whereas, what is required for vibrant policymaking is an open-minded academic engagement between contesting viewpoints. In fact, there does not even exist a textbook that contrasts these contesting ideas in a tractable manner. This pedagogical paper is an attempt to plug that gap by presenting a comparative study across different traditions in macroeconomics in a unified framework, which can be developed into a semester-long intermediate-level course.
A study of the financial processes underlying India’s high-growth trajectory of the 2000s and its relationship with “riskless capitalism,” a term first used by Raghuram Rajan in November 2014, finds that the Indian growth story cannot be over-simplistically explained as a result of “market-oriented” reforms. Public sector bank credit-financed investments, particularly in the infrastructure sector, played a significant role in sustaining growth, most crucially after the global economic crisis. Such a growth trajectory, however, proved to be unsustainable with the expansionary phase coming to an end in 2011–12 and bad loans piling up in the banking system.
When the state cannot hide behind a façade of national performance, the government has to look for an alternative category of "us versus them" based on religion andcaste. This can be employed to divide people and rule to nip the transformative discourse in the bud. Progressive-minded people should stand together to challenge this with our own "us versus them."
While Keynes was sceptical of the efficacy of monetary policy , the current mainstream macroeconomic consensus , "New" Keynesian macroeconomics , accords it primacy in the process of maintaining both price and output stability. This consensus depends on three relationships: demand is inversely dependent on the interest rate, inflation is positively related to the output gap and the central bank can control interest rates to achieve an optimum combination of price and output. This paper presents a theoretical critique of this consensus from an "old" Keynesian perspective since Keynes had raised fundamental objections to each of the three relationships .
This paper seeks, theoretically as well as empirically, to argue that one of the most important effects of globalisation has been on the working class of the advanced capitalist countries. While the workers in the South have always had a vulnerable position due to their weak bargaining position, the process of globalisation has weakened the working class of the North as their incomes get tethered to their comrades in the South. The reserve armies of labour cannot anymore be considered just "national", they should instead be seen as part of a "global" reserve army of labour.
Building on the literature to construct a theoretical argument for the shape of the Phillips curve in the context of developing economies, this paper argues that a theoretical apparatus that may be valid for advanced countries will not apply to other nations that face structural problems. It tests the validity of the argument empirically in five south Asian developing economies - Bangladesh, India, Nepal, Pakistan and Sri Lanka - and finds that it stands up to scrutiny.
