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Mainstream, VOL 61 No 1-2, December 24, December 31, 2022 (Double issue)

Challenges of the Indian Economy and Banking Under the Sway of Global Capital | Arun Kumar

Saturday 24 December 2022, by Arun Kumar

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Introduction

In a modern day capitalist society, finance (vitta) is of crucial importance. It can help the individuals but also marginalize them since finance is not only complex but becoming more so and even educated people barely understand it. So, most people follow the herd mentality and often that leads to mistakes.

Any analysis of the world of finance in India requires one to understand the nature of the current Indian Economy and its changing philosophical moorings. The problem is compounded by the rapidly changing technology in the world which is hard to keep track of, even for the experts, much less for the common person. Before one has understood the implications of a technology a new one arrives. For instance, in India, the advent of plastic cards has been quickly overtaken by electronic transactions and now the cryptos are threatening banks and even Central Banks.

Thus, the financial sector itself faces unprecedented challenges with new financial instruments appearing in rapid succession. Since their impact on the financial system is little understood, risk has increased and that is leading to growing instability. To take care of the risks in the system newer instruments have emerged and they add to the instability. For instance, the global financial crisis of 2007-09 was triggered by the sub-prime crisis, growth of shadow banking, Credit Default Swaps, etc.

So, the issues facing the world of finance today need to be understood in both the global context and historically.

The Global Context

II.1 Global Capital and `New Normal’

International Finance Capital increasingly dominates the world and dictates policies favourable to them to nation states. This truncation of sovereignty of developing nations prevents them from following policies required for its own people. For instance, in India, policies are not designed to quickly tackle poverty. Instead, policies are designed to benefit businesses in the name of incentives. Globally, this trend has led to growing inequality within and across nations. In India this can be seen between the top 1% and the bottom 50% in the income ladder.

Pandemic has further aggravated inequalities between capital and labour as large scale closures, lay-offs and cuts in wages occurred all over the world. Further, the world is headed towards a ‘New Normal’ which is posing new challenges for labour and capital. Technology companies did well due to `work from home’ and rapid digitization and automation. But now a reversal is being witnessed. The speculation in cryptos that was driving their prices to unprecedented levels has reversed the prices dramatically and some of the trading platforms are now collapsing.

II.2 Marginalization of the Marginal

Post 2007, global financial crisis exposed the true nature of capitalism. The domination of Wall Street over Main Street became clear. The huge profits of the financial sector firms and the high earnings of their managers and their greed which led the world to a crisis became evident to people. In the name of `too big to fail’, they got huge concessions from the governments. It was said that their failure could lead to systemic collapse like, happened when Lehman Brothers collapsed. This led to people understanding 1% vs. 99% and Wall Street over Main Street. This led to the `Occupy Wall Street’ movement but in the absence of an alternative, it did not sustain.

It became apparent to all that marginalization is truly global — it is in each country and across most countries. The situation has further aggravated in the post-pandemic phase which has led to a K-shaped recovery with some sections doing well while others are languishing. For instance, in India much of the organized sector has recovered while the unorganized sector has suffered further. This has led to the stock markets booming in a period when GDP has declined. But the question is, when the future is so uncertain why is the stock market rising? The rise is speculative given the massive liquidity released globally by the Central Banks and lack of alternative investment opportunities. There is a need to understand this phenomenon.

II.3 Current Challenges Globally

The global uncertainty is a result of the ongoing war in Ukraine and the Zero-COVID policy pursued by China. These have come into focus even when the Coronavirus is still around. The result is global supply bottlenecks, high inflation and rising interest rates.

Since most economies had not yet recovered from the slowdown due to the pandemic the world is in stagflation/recession. It is difficult to tackle since the world has entered a `new normal’ and a new `cold war’. The world has split into two blocs which has disrupted trade, technology and finance and in de-globalization and de-dollarization.

The sanctions imposed by the US on several nations are resulting in trade in currencies other than the dollar and that is triggering new financial arrangements. Increasingly, nations are moving their reserves to currencies other than dollar. Nations are planning to shorten their supply chains due to their experience during the pandemic and now the Ukraine war and Zero-COVID policy. Thus, FDI flows are likely to be hit. Cryptos/CBDCs are also likely to disrupt financial flows, role of banks and Central Banks.

Stagflation and recession are likely to persist due to the new cold war and unemployment is likely to grow. As the various national economies decline, budgets will be stretched and that is likely to lead to cut back in expenditures on the social sectors like, health and education. Since these sectors were hurt during the pandemic the situation is likely to deteriorate and that will impact the marginalized sections the most.

II.4 The Rightward Drift Globally

Labour and Capital are likely to face new challenges both globally and nationally, as mentioned above. These challenges have been appearing in the last few decades and are getting aggravated. They are resulting in a Right-ward drift in political, economic and social aspects of life. Conservatives have gained power in various countries, like, Sweden, Italy and Israel. Not only the right wing but the extreme right wing has gained ascendency.

Since the 1980s, with the rise of the Washington Consensus, there has been a retreat of government from the economy and increasing sway of the markets. This even though it is patently clear that markets by themselves cannot solve key problems of society. There is market failure and especially as the economies become more complex. The pandemic made it clear that in a crisis the government has to step in to take care of societal problems, whether of incomes, investment, transportation, banking and so on.

The problem has been compounded by the rapid technological developments leading to increasing automation and use of artificial intelligence. Not only unskilled jobs but even skilled jobs are under threat. For instance, not only autonomous vehicles are threatening the jobs of drivers of trucks and taxis, even teachers, draftsmen, engineers and so on are being displaced.
Unemployment in advanced countries has been blamed on cheap imports from China and India. Migrants are also blamed for lack of jobs since they are willing to work at low wages. Thus, the right wing politicians have used unemployment to gain popularity by promising to bring back jobs and stop migration.

But, it is growing inequality that narrows the market and prevents demand from growing and that aggravates unemployment. In fact, some rich people have realized this for some time. Warren Buffet argued in 2012 that if the rich do not pay higher taxes, capitalism will not survive. He was supported by many rich in the US, Germany and France. He raised this issue again in 2018 and 2021. This reflects the crisis in global capitalism. How does this play itself out in India?

The Indian Situation

III.1 Paradigm Changes in Policy

India’s globalization has been from ancient times but it turned into a one-way globalization from 1750. Since then it has gone through many phases. Even post- Independence, we continue in different phases of one-way globalization. The two main phases started in 1947 and 1991. Both phases were based on trickle down - the latter more so.

These main phases involved paradigm changes, altering the entire basis of policies. There were shift in policies in 1966, 1975, 1980 and so on, but these were not paradigm changes. In 1947, basis of policies was that the `individual is not to blame for her/his problems’ and society has to collectively solve the basic problems of poverty, illiteracy, ill health and so on. Government representing the collectivity was given a large role to solve these problems. In 1991, the policies were turned on their head. Now the individuals had to solve their problems through the market and the collective was no more responsible for them. This started the phase of marketization in India which had been pushed through the world since the late 1970s by Thatcherism and Reaganism and which was called the Washington Consensus.

These policies brought about growing inequality in India and marginalization of the marginals, including farmers, workers, women, dalits and minorities. They have resulted in deficiency of demand and repeated slowing down of growth rate of the economy. For instance, economy’s rate of growth declined from 8% to 3.1% over eight quarters before the pandemic.

III.2 Indian Problems pre-Pandemic

Not only growth sputtered, inequality increased with a large number of billionaires emerging while poverty persisted. The PRICE Survey of 2022 shows that while the income of the top 20% rose substantially the incomes of the bottom 20% dropped sharply between 2015-16 and 2020-21. This is not counting the black incomes generated by the top 3% in the income ladder. Worse, black economy results in policy failure so that `expenditures do not lead to outcomes’ and that impacts the poor who do not get proper public services.

Since 2016, the country has faced policy induced crisis. Demonetization and GST have led the economy into crisis one after the other and slowed down the growth of the economy. They have damaged the unorganized sector which employs 94% of the work force. Thus, unemployment has increased dramatically. The NBFC crisis in 2018 and the sudden lockdown in 2020 further aggravated the crisis for the marginalized sections.

Government instead of recognizing its folly has aggravated the situation by pursuing pro-business, `supply side’ policies. But these fail and have not delivered when there is a shortage of demand. So, investment which had peaked in 2012-13 came down to about 30% and rate of growth plummeted.
The result has been skewed development due to the adverse impact on the unorganized sector, the largest component of which is agriculture, employing 45% of the workforce. In the non-agriculture sector, the organized sector has grown as demand has shifted to it from the unorganized sector. The government has been pushing formalization and digitization of the economy but these are making the situation worse for the unorganized sector. Units in it are so tiny that they cannot cope with digitization and cannot become formal.

Unemployment has particularly impacted youth and women. A large number of them are not even in the labour force and that is why India’s labour force participation rate is much lower than that of other comparable countries. This aggravates family poverty since the number of dependents in the family increases when many of its members are not earning anything.

III.3 Invisibilization of the Unorganized

The shocks to the economy have meant that the earlier way of calculating the GDP is no more valid. The unorganized sector is not independently measured since it is very large and surveys are held once in 5 years. But, no survey has been conducted since 2015-16. So, it is being measured by assuming that the organized sector can be a proxy for it. But since the two sectors are moving in opposite directions, as argued above, this method is no more valid since demonetization. In fact, it over estimates growth by a substantial amount and distorts both analysis and policy.

The government keeps claiming that the Indian economy is now the fastest growing large economy in the world. Actually, it has been stagnant or declining. The government claiming robust growth has not felt the need to take specific policy measures to help the unorganized sector. Consequently, the unorganized sector is invisiblized both in data and in policy. In fact, the organized sector is treating the unorganized sector as its colony.

Problems are with all the macro data — consumption, investment, employment, inflation, contribution of services sector, etc. Employment data are especially important. India does not have unemployment allowance so people have to work. Thus, unemployment figure are never high. According to the recent Report of the People’s Commission on Employment and Unemployment which I chaired, there are people who have dropped out of the labour force or are under employed or disguised employed. They number 278 million people who do not have proper work. If they could be given work the GDP could rise by 16%. So, providing work can be self-financing.

Finance in Today’s World

IV.1 Theoretical Aspects of Money

In earlier times, the economy was simple, mostly agricultural and based on barter. Farmers saved from the crop they harvested (seeds) and planted that in the next season to get the next crop. So, the saving was the physical crop and so was the investment. The saver and the investor were the same and it is the saving that determined the investment.

As the economy became more complex, with production becoming large scale and not just for the local economy, money as a token for exchange became more prevalent. Historically, money has taken different forms, commodities, coins, paper currency and now electronic. Over time, everything got exchanged through use of money. This has separated the savers from the investors and demand has become the economic driver.

Production is not just for the local economy. So, there is a need to anticipate demand. This brings into the picture expectations — how much demand is likely to be there and therefore, how much capital one needs to cater to that demand. Since it is about the future, expectations may not be fulfilled depending on the overall economic scenario - in adverse circumstances, demand may fall and in good times the demand may boom. Because expectations may fail, decision making faces uncertainty. Either way, demand drives production.

IV.2 Banks as Intermediaries and Growing Financialization

So, money takes on another role, namely, it is not just for transactions but becomes a store of value and a means of taking care of uncertainty. Now households become the savers and the firms the investors. Banks emerge to intermediate between the savers and investors. Savers put their savings in banks to earn a return and banks lend that money to the investors for investing in businesses. Investors have to decide whether or not to invest. Savers also have to decide which financial instruments to invest in. This brings in the speculative motive for holding money.

Borrowing and lending becomes more and more complicated with different kinds of financial assets appearing and this is called financialization. Stock markets and other financial institutions emerge that offer a variety of financial instruments - shares, debentures, derivatives, mutual funds and so on. This results in the growing complexity of finance.

Central Banks emerged to regulate the banks and the financial markets. In addition they have the task of printing currency, controlling money supply, government’s debt, managing foreign exchange, etc. A new role, controlling inflation, was added under monetarist persuasion. This was a way of keeping wages in check so that the profit share could rise. This move was helped by the mobility of capital in global markets. It enabled capital to extract concessions from national and sub-national governments. One of them being autonomy of Central Banks and another the control of inflation through monetarist policies.

IV.3 Growing Privatization of Resources

Banks holding people’s savings as deposit become the custodians of people’s financial resources. Since banks are controlled by finance, the reins of these resources passes on to them. The world of finance also controls investment. So, they control the entire economy in direct and indirect ways.
As mentioned earlier, due to high degree of mobility of capital, it is able to dictate national policies and assert itself in every way. Assets that were earlier not monetized are now monetized and brought under the purview of the market. For instance, land, water, forests, beaches, etc. The common resources of the people are being privatized and they are losing out. In India this is reversing the trend of public control of resources that was set in motion in 1969 with bank nationalization.

Prior to 1969, most banks were owned by big business and promoted the interest of the owners. There were few bank branches in rural and semi-rural areas. This was slowing down availability of credit to other businesses and also to the farming community that needed the loans to adopt the Green Revolution package. Though it was a political move by Mrs Indira Gandhi, it benefited the marginalized, helped the public sector grow and enabled more equitable growth.

This trend of nationalization has been reversed since 1991 with increasing privatization and disinvestment in public sector. There has been a deliberate strategy to run down the public sector so that it can be argued that the private sector can run it more efficiently. The importance of the public sector became apparent during the recent pandemic when it provided public services which the private sector was not willing to. Like, in the case of banking, health, food, cooking gas, transportation, and so on.

Ignoring these contributions, the Atmanirbhar package announced in 2020 May, is pushing for privatization. Monetization of assets is another means of privatization. The lesson from the pandemic that a large public sector is needed to take care of any crisis in society, when private markets fail, is being ignored.

IV.4 Black Economy Used to Siphon out Funds

One way to make the public sector fail and lower its profitability is via the black economy. Profits of the public sector are siphoned out into the hands of private individuals — crony capitalists, politicians and the executive. This is the triad that runs the black economy for its own benefit. They are able to acquire public assets at low prices, just as the Kleptocrats in Russia did after the collapse of the Soviet Union and became billionaires overnight.

Indian rich have also been resorting to flight of capital to keep a part of their capital abroad, just as the Russian Kleptocrats have done since 1991. Money is transferred via the tax havens which offer secrecy and low rates of tax. Private banks operate in tax havens and help the rich to siphon funds from economy. Of late, the corrupt business men have used the PSU banks also to siphon out funds as has been discovered in the Nirav Modi case.

Savings are siphoned out of white to the black economy and then taken abroad. A capital short economy exports capital and slows down development. Because black incomes do not pay taxes, the tax/GDP ratio falls and the resource availability to the government declines. The fiscal deficit tends to increase and that is frowned upon by the international agencies like, the IMF and Credit Rating agencies. The government then reduces expenditures on the social sectors which could have helped the marginalized to overcome their poverty.

Black economy also results in policy failure, inefficient use of capital and missed development. `Expenditures do not lead to Outcomes’. It has been shown that these inefficiencies lowerd the average rate of growth of the economy by 5% since the mid-1970s. If this had not happened, today the Indian economy would have been 8 times larger. There would have been better education, health and so on and each Indian would have been far better off.

In brief, the black economy impacts the marginalized in society both directly and indirectly. Directly through shortage of resources for development and indirectly through policy failure and privatization of the public sector. Flight of capital not only leads to policy failure but the drain of wealth. It opens up new channels for fraud since the ill-gotten funds can be siphoned out of the economy. Thus, the black economy perpetuates itself. These have political and social effects, not just economic.

IV.5 Frauds, Risk and NPAs

Black economy has resulted in growing fraud and cronyism. This has been growing since the 1950s but it accelerated after 1991. Contrary to what the proponents of market philosophy said, the black economy has continued to grow, increasing economic inefficiency. It creates difficulties for honest businesses and reduces investment in the economy.

Public sector banks under political pressure give loans to cronies without doing due diligence and that has led to the growing problem of non-performing assets (NPAs). This has dented the profitability of the PSU Banks and reduced their capacity to serve the poorer sections of the population. It also prepares the grounds for their privatization.

Black economy, rapid rise in liquidity and policy failure increase risk in the economy. Flight of capital is a means to diversify to reduce risk for the businessmen. Further, as risk rises, the role of insurance grows in society. The public sector insurance companies have been providing cheap insurance to the public and to businesses. However, the private sector has been encouraged to capture the market and slowly this has led to growing pressures to privatize the insurance PSUs.

But, the private sector is a high cost solution to the problem and will only marginalize the marginalized sections and the micro and small businesses. This will be detrimental to growth and employment generation.

Laws can never be perfect since human ingenuity can find ways of getting around them. There has to be a culture of probity in society. No amount of auditing can be successful since there are clever ways of manipulating accounts. During the financial crisis, it was found that even the best world class auditors had been collaborating with the managements for overlooking fraud. In fact, the so called prestigious international banks were found manipulating the financial markets and had to pay billions of dollars as fines. Switzerland is considered to be a prestigious nation but it has supported criminal activities by enabling use of its financial channels. Similarly, London as a financial hub has enabled movements of illegal funds. In brief, financial markets have supported all manner of illegal and criminal activities of the rich which increases risk.

IV.6 Financial Markets and Inequality

Financial markets have not only supported illegal activities and thereby aggravated inequality between the haves and have nots, they do so directly also. They collect the small savings of large numbers and channelize them to the big investors. While the former get a little bit of return the latter earn the big profits.

Further, in India, the poorer states with their low savings rate see their resources leak out to the more advanced states where investment is more profitable. As it is, the poor states lack investment and that goes down as their savings leak out. This sets back their development while the development of the better off states accelerates and disparities increase.
Prior to 1991, the Central government intervened to give more resources to the poorer states to develop and that slowed down the rise in inequality. Public sector investment in backward areas helped their development. Post 1991, with investment becoming market determined, the backward states have suffered. Finally, with widespread market failure and with government retreating, inequalities have increased. For instance, with reduction in government regulation, the tendency for monopolies to form has increased.

Emergence of International Finance Capital

As argued earlier, capital has accumulated globally to become international finance which is highly mobile and able to extract concessions from national governments. This has led to the loss of sovereignty of the developing countries and it has been the case with India, at least since 1991. The interest of global finance is looked after by the global financial institutions, like, IMF, World Bank, WTO, ADB, etc.These institutions are dominated by the OECD countries, especially the USA, and push the interest of their capital.
This Washington consensus drives marketization and retreat of government from the economy. This constitutes the latest phase of globalization.

V.1 Marketization and Philosophical Shift in Societal Thinking

While markets have always existed, marketization is new. It implies the penetration of the market principles into social institutions. It has deeply impacted people’s thinking across the world - their philosophy about life and how they should live. It has changed the meaning of commonly used words. For instance, liberalization does not stand for liberation and tolerance but for conservative pro-business policies. Reform does not stand for progressive pro-poor policies but for pro-business policies.

The philosophical change in society has led to growing individualism, consumerism and short termism. People have got atomized making collective action more difficult. Market outcome is seen as `objective’ while societal norms are seen as `subjective’. So, social initiatives are seen as less desirable compared to the market outcomes. Government is seen as a reflection of the collective and therefore its intervention should be minimized and it should retreat in favour of the markets.

Taking a stand against consumerism or advertisement and entertainment based on sex and violence is characterized as paternalistic. If individuals become conscious and give up consumerism, profits of companies would be hit. High dividends declared by monopolies are not seen as detrimental to social welfare instead these companies are lauded as well run. They are seen as the outcome of market functioning and hence objective. That these profits are a result of price fixing which restrict the consumption of the marginalized is of little concern. These could also be a consequence of pushing useless consumption which the poor can ill afford or due to children developing expectations that cannot be fulfilled or through objectification of women are all social considerations that do not matter since the market outcomes are more important.

V.2 Marketization Principles

Markets run on `Dollar vote’ and not on `one person one vote’. Their outcome is determined by the purchasing power of individuals. The better off then have more of a say and this results in the `marginalization of the marginal’. This along with `consumer sovereignty’ means that the well-off can do what they like without any social restraint even if they act against the social interest. People are stripped off of social aspects of life as they are supposed to be `homo economicus’ for determined by their economic interests.

People are taken to be rational, which stands for, maximising individual welfare. This not only atomizes them but also makes them into automatons bereft of other social concerns. In this sense markets are amoral and immoral. Making profit anyway is acceptable even if it is at the cost of social harmony and well-being. People should not have a conscience since that would prevent them from activities which are socially less desirable though individually profitable. So, smuggling is seen as efficiency enhancing. Addiction to cigarette smoking spread through advertising targeted at children and women is seen as revenue enhancing and therefore justified. One should not feel guilty about one’s action done in one’s self-interest.

The principle `More is better’ promotes consumerism by defining increase in individual’s welfare on the basis of consuming more. While consumption has always been there, consumerism is consumption for the sake of consumption. It is impacting the environment, increasing extreme weather events due to climate change, impacting the health of people and aggravating poverty. It is promoted via advertising which creates demand by stimulating need, even that which did not exist. Instead of drinking water many drink fizz drinks which are 99% water because it is promoted as `cool’. The fashion industry promotes new colours and designs every season so that people change their clothes, even if they could last many more years. Automobile industry promotes new models even though cars can run for decades if kept well. New mobile phone models are introduced every year so that people change their phones, etc.

Consumerism requires people to be unsatiated and have incomes to fulfil their growing needs. This has a psychological impact and pushes people to try to earn more anyway, legal or illegal. People should not be satisfied with what they consume or earn. More needs to be consumed. So, greed which always existed has been raised to a new high pedestal. Material yardstick is now used to measure welfare but that can never be fulfilling since one can always want/have more. So, dissatisfaction has increased with deep psychological impact on people’s welfare. Through demonstration effect, the poor are aping the well-off and they in turn are aping those in the advanced countries. Inability to be like their ideal in the short run is leading to a sense of failure.

A new international division of labour has emerged due to marketization. It is leading to the location of all dirty and polluting production in the developing world and clean production in the advanced countries. This is argued to be efficient since the loss of income in case of people dying due to pollution in the advanced countries is far more than when people die in the developing world. This was the argument advanced by the World Bank. No wonder production of heavy metals, chemicals, recycling of hospital waste and electronic equipment is taking place in the developing world. The air and rivers in the developing world have become heavily polluted while these in the developed world have become clean.

Washington consensus has pushed through all these changes by pushing nations to adopt marketization through implementation of the neo-liberal paradigm. People are treated as a cog in a big machine working to enhance profits. Capital has come to dominate over people and society which are marginalized by marketization. Marketization has changed people’s philosophical moorings so that they are voluntarily accepting the changes being brought about

V.3 Global Strategic Shift in the mid-1970s

Domination of global financial capital has been aided by the global strategic shifts taking place since the mid-1970s. Soviet Union weakened and China took a 180 degree turn in policies. The former had been supporting the independence of the developing world countries, like, India. China after Mao’s death and ascendency of Dang Tsiao Peng followed the path of state capitalism though it called it socialism with Chinese characteristics. The strategic shifts made people think that there is no viable alternative to global finance.

This weakened the developing nations. Mrs. Thatcher proposed TINA in 1978. With Mr. Reagan becoming the US President in 1980, this received a fillip. Right through the 1980s, the capitalist countries pushed their agenda on the developing world to make them fall in line. GATT was changed to WTO in 1995. But the move towards it started in 1987 in the Uruguay Round of negotiations. Opening of new areas of trade were proposed, like, agriculture, services, investment and intellectual property rights. This further truncated the sovereignty of the developing nations in the name of trade, technology and finance.

Real Economy Dwarfed by Finance — Instability Rises

Financial flows at $6.6 trillion every day far exceed global GDP of $96 million or trade of $28.5 trillion in 2021. They are also far in excess of the estimated global wealth of about $ 460 trillion. Thus, a bubble has developed in the world economy which has to self-perpetuate to sustain itself. The returns from the financial transactions have to be ploughed back into the bubble since if the return are cashed out the bubble will collapse.

As the bubble grows, not only risk rises but the economy becomes a hostage to it. This is a source of rising disparities in the world economy — both within nations and across nations. In turn, this impacts demand, slows economic growth and leads to growing unemployment.

The result has been a rising instability and periodic global crisis. This was seen in 1987, 1997, 2007 and now post-pandemic. This suggests that `free’ financial markets are destabilizing. Alan Greenspan admitted in 2008 that he was wrong for 16 years when he did not intervene in the markets as the Chair of the Federal Reserve of the US. He said that his belief that markets are self-correcting was wrong. It was massive government intervention in 2008 and during the pandemic that prevented the world economy from tipping into a disastrous depression.

Conclusion

Clearly, the world faces the choice between following the theoretical construct of `free’ market or government intervention in the economy. For the marginalized sections, the magic powers of markets are not what the neo-classicals claim them to be and they need government help. This became clearer during the recent pandemic.

For the balance to be restored between the state and the market, people have to be convinced. The changes in their basic thinking favouring the markets need to be revisited. Consumerism — based on convenience and ease — propagated by advertising has to be countered since that has become the new opium of the masses. It diverts their attention from real issues. Governments in the developing world need to regain their sovereignty to pursue independent policies in favour of their people. The current development paradigm which is based on markets needs a rethink. The new core elements to be incorporated will be environment, gender justice, trade and capital flows, inequality, education, health, unemployment, technology and the emerging `new normal’.

(Author: Arun Kumar, Retired Professor of Economics, JNU)

References:

Kumar, A. (2020). ‘Indian Economy’s Greatest Crisis: Impact of the Coronavirus and the Road Ahead’. Gurgaon: Penguin Random House.


. (2017). `Demonetization and the Black Economy’. Gurgaon: Penguin Random House.
 -----------. (2013). ‘Indian Economy since Independence: Persisting Colonial Disruption’. N Delhi: Vision Books.

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