ECONOMIC NOTES

The State of the Economy

NEWSPAPER headlines over the last few days have highlighted three facts which point to the current abysmal state of the Indian economy. The first relates to inflation, where the June 2018 wholesale price index was 5.77 percent above that of June last year; this is the highest inflation rate witnessed since December 2013. The second is a burgeoning trade deficit: the trade deficit in June, at $ 16.6 billion, was again the highest for any month in the last five years.

Has There Been an MSP Hike for Kharif Crops?

MUCH has been written by now exposing the fraudulence of the government’s claims of a “historic” rise in the minimum support price for kharif crops. It has been pointed out for instance that while the Swaminathan Committee had recommended that the MSP should be fixed at 50 percent above the cost of production C2 which includes rental on own land, a recommendation that the BJP  in its 2014 election manifesto had promised to implement, the current MSP still falls way below that level.

The Proposed Abolition of the UGC

THE Modi government is bringing in legislation in the coming monsoon session of the parliament to abolish the University Grants Commission. The UGC has two important roles at present. One is the distribution of funds to colleges and universities; this will now be handled by the ministry of human resource development. The other role is a regulatory one, which will now be taken over by a Higher Education Commission of India (HECI). This commission however will have no funds to distribute.

Why Didn’t Socialism Have Over-Production Crises?

SOCIALISM has collapsed over large tracts of the globe. Where it still exists, the economic regimes have undergone considerable reforms. Not surprisingly therefore the old socialist regimes are objects of much vilification these days. While capitalism, understandably, has a vested interest in promoting such vilification, the Left opponents of capitalism continue to remain too shell-shocked to counter it.

George Soros on the Current Conjuncture

BILLIONAIRE financier George Soros has set financial markets aflutter by suggesting that a new world financial crisis is in the offing. In a speech he gave recently to a think-tank, he underscored the outflow of finance capital from the third world which is likely to catch these economies in a cycle of exchange rate depreciations and austerity. And he talked specifically of the European Union facing an “existential crisis” on account of three factors: its territorial disintegration as exemplified by Brexit, austerity, and the refugee crisis.

Trump versus the Rest

DONALD Trump’s leaving the G-7 summit without budging an iota on protectionism is indicative of the disunity among the leading capitalist countries on the strategy to overcome the capitalist crisis. Trump has decided that the US would go its own way, by enlarging the fiscal deficit, not just for giving tax concessions to the corporates, which would have little demand-stimulating effect anyway, but also for increasing government expenditure which would have this effect, and at the same time by protecting the domestic market.

The Push for Privatising Banks

FROM the very beginning, there has always been a demand for undoing bank nationalisation in India. This demand naturally gathered momentum with the adoption of neo-liberal policies. It was completely unacceptable to international finance capital that the bulk of the banking sector in a country like India should remain under public ownership.

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