ECONOMIC NOTES

Economic Recovery or a Statistical Illusion: Some Observations on Recent Estimates of GDP Growth

ON November 30, the Central Statistical Office (CSO) came out with quarterly estimates of GDP for the second quarter (June to September) of 2017. Predictably, analysts and spokespersons of the government spent the evening in newsrooms of various TV channels celebrating what they claimed was a sign of revival of the economy. Next morning, revival of economy was the front page news in almost every newspaper. If there was any adverse impact of demonetisation and GST, it was claimed, here was the evidence that such an impact was only short-term and had started to wane.

Banks and Non-Performing Assets

WHAT exactly constitutes a non-performing asset (NPA) of a bank is not easy to determine. Since banks tend to roll over credit to borrowers, whether the request for such a roll over arises in the normal course of business or owing to a fundamental inability to pay back the loan, is difficult to decide. The tendency of late therefore has been to see NPAs as an extreme case of a wider category called “stressed assets” which are defined according to certain criteria.

Moody’s Upgrade

CREDIT-rating agencies, discredited by the collapse of the housing bubble in the United States when they had blithely endorsed all so-called “sub-prime lending”, are now crawling out of the woodwork, and the Indian establishment is predictably impressed by the sight. Moody’s have just upgraded India’s credit rating marginally and the BJP is beside itself with joy. Surprisingly, much of the media too have flashed the story of the upgrade as if India’s status being raised from Baa3 to Baa2 is a matter that calls for great jubilation.

One Year after Demonetisation

IT is exactly a year ago that Narendra Modi had announced the decision to demonetise, at four hours’ notice, as much as 86 per cent of the total currency of the country. After one year it is clear that none of the objectives that demonetisation was supposed to achieve has been achieved. This should not come as a surprise; indeed so obviously inapposite the measure had been for achieving its stated objectives that most economists, cutting across the ideological spectrum, had predicted its futility.

Too Little and Too Vague: Arun Jaitley’s Scheme for Bank Rescue

THE finance minister Arun Jaitley had announced on October 24, a Rs 2.11 lakh crore plan for capitalising the public-sector banks. Out of the total announced amount, the banks will get a capital of Rs 1.35 lakh crores through recapitalisation bonds. Jaitley was vague on, who is going to issue the bonds.  Rs 76 thousand crores  will be raised by selling banks’ shares from the market. Only a paltry Rs 18,000 crores will be from the central exchequer. This recapitalisation is not going to be immediate, but will happen over the next two years.

A Hungry Nation

THE Global Hunger Index brought out annually by the International Food Policy Research Institute (IFPRI) has just been published for 2017. The fact that India occupies the 100th rank among the 119 nations specifically studied by IFPRI (for whom hunger is a problem), with only two other Asian countries, Pakistan and Afghanistan, below India in the rankings, has attracted some attention in the media.

Structural Changes within Imperialism

FOR long one could divide the world’s currencies into three distinct categories: (i) the leading currency, typically belonging to the leading imperialist power,in the present case the United States, which was considered “as good as gold” by the world’s wealth-holders; (ii) other metropolitan currencies in terms of which the world’s wealth-holders also held their wealth, but which, precisely by virtue of not being considered “as good as gold”, had to maintain a certain stable value vis-à-vis the leading currency through the pursuit of appropriate macroeconomic policies, including contraction

The Class Content of Goods and Services Tax

THE discussion on the Goods and Services Tax (GST) until now has focussed almost exclusively on the distribution of its burden across commodities, on the difficulties of meeting its stringent bureaucratic demands, and on the delays in obtaining claims for refunds. Even the view that it is pushing the economy into a recession has attributed this looming recession merely to its stringent procedural demands which supposedly have tied most sellers in knots. In all this however the class content of this new tax regime has been missed.

The Growing Income Inequality

THOMAS Piketty and Lucas Chancel have just written a paper as part of their work for the World Inequality Report discussing the movement of income inequality in India. And their conclusion is that the extent of income inequality in India at present is greater than it has ever been at any time in the last one hundred years.

A Bull in a China Shop

THE BJP government, like a bull in a China shop, is wrecking the economy. A neoliberal regime, even at the best of times, i.e., even when the economy is booming, brings misery to the vast mass of the working people by imposing upon the petty production sector a process of primitive accumulation of capital, through a withdrawal of State support from it and through leaving it to the mercy of the “spontaneous” working of untrammelled capitalism.

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