ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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‘Riskless Capitalism’ in India

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.

Growth, Imports and Inequality

One of the striking features of the Indian economy in recent years has been a sharp rise in the share of the trade deficit in the gross domestic product. While the period of high GDP growth was characterised by an even faster widening of the trade deficit, the subsequent slowdown has not reduced the deficit proportionately. The widening of the trade deficit in GDP has been primarily due to a similar rise in the import-GDP ratio. One of the main reasons for the rise in the import-GDP ratio, and the persistence of a high trade deficit is rising inequality in the economy.

Development Expenditures of the States in the Post-Liberalisation Period

The states have witnessed a sharp fall in their shares of development expenditure in gross domestic product in the post-liberalisation period compared to the same in the 1980s, albeit with some recovery in recent years. This article attempts to analyse and explain such a trend against the backdrop of the constraints in the independent fi scal policymaking powers of the states.

Fiscal Problem in West Bengal

The fiscal picture in West Bengal is characterised by a high debt-gross state domestic product ratio (the second highest in the country among the non-special category states) and a low own tax revenue-GSDP ratio (the lowest in the country). This paper attempts to understand the reasons for these twin features which underlie the fiscal stress in the state.

The Challenges before NABARD in the Midst of RBI's Sterilisation Policy

Have huge inflows of speculative capital in the post-reform period affected the role of development institutions and banks like the National Bank for Agriculture and Rural Development, the apex bank for institutional credit in rural India? In order to prevent a possible appreciation of the currency, which would have had an adverse effect on the real sector of the economy, the Reserve Bank of India resorted to market intervention and the increase in the foreign exchange reserves, which would have caused a possible increase in the money supply, was neutralised by undertaking a "sterilisation" process. In the process, the rbi suffered a huge loss in its potential income and had to resort to a smaller transfer of funds to nabard. On the other hand, nabard, faced with an increasing demand for loans turned to open market borrowings at a higher interest rate, which ultimately led to a huge loss in its potential income. This paper finds that with the ongoing reforms, the banking system has not only sacrificed developmental aspects, but also failed to satisfy the profit norms of banking.
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