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Back to Reforms

Back to Reforms JM The nation has so far avoided the devaluation-inflation- devaluation spiral that has wrecked Latin American economies. But the unimaginative policies being pursued since July 1991 have been continuously pointing towards that direction. And the underlying politics of it all suggests that a Latin American-type unconcern for the poor and for future generations is now the norm amongst our ruling elites.

All Arithmetic, Little Economics

All Arithmetic, Little Economics JM What stands out in the government of India's memorandum of economic policies for 1992-93 submitted to the IMF is the absence of imagination and creativity in the realm of economic policy reform. The shifting of macro-economic targets reflects simply some fresh arithmetic rather than any serious attempt to understand why earlier targets were not achieved.

Economic Liberalisation and Employment-Will Enterprise Work

Economic Liberalisation and Employment Will Enterprise Work? J M In the brave new world of liberalisation and globalisation, a large part of a whole generation faces a medium-term future without jobs or the prospect of productive employment.

Banks, the Stock Market, and Making Money

Banks, the Stock Market, and Making Money J M Even a cursory assessment of the stock market-cum-banks scam should reveal that the problem is systemic and structural, that just making scapegoats of certain individuals or making out that the problem is essentially one of corruption will not do away with the forces responsible for the scam. Ultimately, what has happened reflects a major failure of government economic and financial polity.

Waiting for the Rains

black is the description of the lowliest of the genus, the sudras. The rules of the caste game are well known: the kshatriyas and the vatoyas aspire to break into the occlusive fold of the brahmin set, and, similarly, sudras too, slave to the inherited inferior complex, aspire to reach the higher ranges of caste most proximate to them The Indians, once they arrive in the States, follow the rationality of the varnashram It is not the first time in history that this has happened. Sixty years ago, resident Indians in Hitler's Germany tried to curry favour with the Nazis: the latter must be kind to them; they too were, after all, Aryans, only somewhat bronzed off, living a couple of thousand years or more under the tropical sun has given them one or two extra coatings of tan; they were nonetheless as enthusiastic staiKlard-bearers of the philosophy embedded in the swastika as the Nazis themselves were; just consider the closeness of the German language to classical Sanskrit. An identical behavioural process is at work in Los Angeles and Chicago and New York and Houston: we Indians, who have made good in the States, are creme de la creme of the varnashram system back home; we belong to the superior castes; our own instinct tells us that the blacks do not quite belong; despite the so-called civil rights revolution of 1954 and all that crap, the blacks are richly deserving of a segregated, caged in existence. It is with a tinge of pride that Indians settled in the United States will inform, in confidence, the white, affluent American householder, their next-door neighbour, that they vote the straight Republican ticket, Ronald Reagan was the man after their heart.

About Bargaining, Expectations and Maybe Worse

The 1992-93 Budget, which has been greeted by the media with near euphoria, is probably the most irresponsible budget ever presented in independent India. And this stupendous free lunch is offered through the device entirely of supposed reactions in the stock market and to the new gold schemes and the partial convertibility of the rupee.

An Alternative Economic Survey

An Alternative Economic Survey JM IT is customary just before the budget to survey the economic events of the preceding year, and juxtapose claims made with the actual outcome. The official Economic Survey is supposed to do just this, but since it does so officially it is less than frank at best of times, and may be worse this year coming as it does before the presentation of, what an influential newspaper has already termed, a Fudget. Publication of this Policy Watch will almost coincide with the release of the official Survey, and it might be interesting to provide an alternative Survey, keeping in view particularly the alternative viewpoint presented in a statement signed by 35 economists last July, shortly after the devaluation and before the last budget.

Industrial Exit Red Herrings and Real Options

Industrial Exit: Red Herrings and Real Options JM THE failure so far to announce a policy on industrial exit is probably one of the most significant lacunae in government policy-making today. When the new industrial policy was first announced in July, and the July budget made provision for a National Renewal Fund, it was rumoured that high-level differences over the exit policy proposed in the draft document had prevented an early announcement of the policy in its entirety. Later, there was a promise to place such a policy before parliament in the winter session. During this session, parliament did pass an important amendment to the Sick Industrial Companies Act, enabling chronically sick public sector companies to be referred to the Board for Industrial and Financial Reconstruction (BIFR), but the exit policy itself was not revealed. However, since the memorandum attached to the finance minister's letter of intent to the IMF for the stand-by loan promises that ''a suitable framework for reducing barriers to exit'' will be for mulated by the time of the 1992-93 budget, some movement is widely expected on this front in February. But rumours continue to abound of sharp differences within government and the ruling party, and no clear indication has yet emerged of what the government's exit policy is likely to be.

GATT, the Dunkel Draft and India

Dunkel has produced a draft which cleverly attempts to narrow OECD opposition by being less than generous to the US vis-a-vis European farm subsidies, but balancing this by being overly generous to the US on other issues, mainly at the cost of the developing countries. The implications for India are ominous and the response of the government of India has been disturbingly defeatist.

For Bankers, By Bankers

The recommendations of the Committee on the Financial System reflect partly the infectious 'mantras' of competition and globalisation; but even more they reflect the biases of those who are urban, urbane and see banking either from the boardroom or as short-sighted customers whose frame of reference is western High Street banking.

IMF Stand-By Loan Conditions

IMF Stand-By Loan Conditions It is only to be hoped that in the next few months the government does not scramble to achieve the targets laid down by the IMF without reference to how this would affect the output level and future prospects for growth and stability. Unfortunately, the likelihood that unwise decisions may be taken, even within the leeway permitted by the IMF is all too real THE fact that the finance minister has kept his word and tabled in parliament the letter of intent he sent to the IMF for receiving the stand-by loan, is something that must be welcomed by everyone who values open democratic government. It is important to note, however, that the documents tabled refer to the programme of government policy intent for purposes only of the stand-by loan. This type of loan typically involves much less condi- tionality than the Extended Fund Facility (EFF) loan which, as the finance minister's letter to the IMF managing director makes clear, the government intends to seek later, possibly early next year. More significantly, it is well known that the Structural Adjustment Loans (SALs) of the World Bank usually involve the most detailed specifications of particular targets and have strict policy con- ditionalities, especially in areas such as trade reform and industrial policy. The government has already accepted a SAL for a relatively paltry sum of $ 500 million and therefore has clearly accepted some World Bank conditions which are as yet unknown. The same consideration which prompted the finance minister to table the letter of intent for the IMF stand-by loan should also have led to the revelation of the policy conditions required for the SAL, which must already have been pledged.

Confusion in Trade Policy

Confusion in Trade Policy JM After less than six months in office, utter confusion seems to mark the government's policies in regard to crucial sectors of the economy. And nowhere is this chaos more pronounced than in the realm of trade policy.


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