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

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Under High Finance's Grip

The acceptance of absurd doctrines suggests that high finance has increased its grip on the economy.

It was a panel discussion in the middle of April on the “challenges of economic reforms in India” or some such talking point at a function to present a book of essays by leading economists of the establishment to Prime Minister Manmohan Singh. The tracts were in honour of the personage widely credited with having ushered in neo-liberal economic “reforms” in 1991. D Subbarao, governor of the Reserve Bank of India (RBI), was one of the speakers. He is widely credited by the fi nancial markets with doing the kind of monetary policy which, even in these times of high food and fuel inflation, continues to ensure the holders of the various financial instruments that their investments will not be inflated away. At this celebration, the governor of the RBI did what he came to do with dramatic effect, comparing the fi scal deficit, the current account defi cit and the proportion of short-term arrears in the total foreign debt in 2011-12 with the corresponding figures in 1990-91 to paint a rather “disturbing picture” of the present. The international credit rating agencies must have been immensely pleased, for the message to the government from the central bank was clear – do what is required in the arena of government spending to satisfy the private funds so that your commissions will not generate inflationary effects which will adversely affect the real return on their fi nancial investments.

Not to be left behind, in the week that followed, the chief economics guru of the treasury, in the United States for the spring meetings of the International Monetary Fund and World Bank, told his audience at a meeting of the Carnegie Endowment for International Peace that major economic reforms were unlikely to be pushed through before the next parliamentary elections in May 2014 because of the current political constraints that have paralysed the government in New Delhi. But be patient and worry not, for the new government in 2014, presumably not of the present coalition kind, will be free to rush through all the important economic reforms that are pending, and thereafter, India will be one of the fastest growing economies in the world!

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