The Indian economy is in a tailspin. This cannot be attributed only to innocence in economic matters of the command-centre of the NDA government. While that is indubitably a contributing factor, the current travails of the economy point to something deeper, namely the dead-end to which neo-liberalism has brought the economy. Without moving away from the neo-liberal trajectory, the economy cannot come out of its current difficulties....Neoliberal solutions that rely on only a few factors, such the reliance on central bank interest rate setting and price rationing in markets, are insufficient for dealing with the complicated issues of a modern society, its politics, and its economy, especially in a country as large and diverse as India. A constellation of issues and causal factors must be identified and address comprehensively, especially growing inequality.
This applies in particular to countries that must import vital resources, especially petroleum, hence, are dependent on global price fluctuations over which they have no control.
A combination of direct import controls on inessential items, reduction of petro-product prices, measures for reducing the consumption of such products, and direct taxation, especially on wealth, is the obvious way of getting out of the tailspin in which the Indian economy is currently caught. But this combination of measures which is desirable, not just for getting out of the current travails, but on other, more long-term considerations as well, runs contrary to the direction of neo-liberalism. There is however no alternative to them if we are to avoid the fate of countries that eventually run to the IMF and get caught in the vice-like grip of “austerity”....Although the author doesn't mention it, this also applies to India in that US interest rate policy affects everyone, since world economy uses the USD as the dominant global reserve currency. When the Fed increases the policy rate, this constitutes a global price rate in the cost of credit.
Moreover, US sanctions, in particular sanctions on the export of Iranian oil, also constitute an issue for India in that sanctions affect the supply side of a vital resource that must be imported in quantity, with India using a great deal of Iranian oil owing to the proximity of Iran.
Peoples Democracy
The Indian Economy in a Tailspin
Prabhat Patnaik | Indian Marxist economist and political commentator, retired Professor at the Centre for Economic Studies and Planning in the School of Social Sciences at Jawaharlal Nehru University, New Delhi, and the vice-chairman of the Planning Board of the Indian state of Kerala from June 2006 to May 2011
1 comment:
Farmers aren't too happy.
https://qz.com/india/1411632/delhis-kisan-protest-why-indias-farmers-are-fuming-at-modi/
Have to get people to move off farms and move to the city, because 10 acre farms can't support the productivity growth needed to reduce poverty, of course, ...and luddites and all those neoliberal memes. But at the same time, if the farmers are educating their Children so they don't have to be farmers, it makes sense for government to take a measured approach that encourages kids not to be farmers without punishing the actual farmers too harshly for a few decades during transition.
I think the current problem is one of currency and budgets more than neoliberal policy, but the lack of funding is fundamentally one of ideology, so maybe.
Post a Comment