Praxeology: My Reflexions on India

The Indian finance minister Ms. Nirmala Sitharaman while addressing the annual general meeting of the Indian Chamber of Commerce (ICC) said that, While in early 2020 green shoots and revival signs of the economy were visible, it was upset with the pandemic setting in. the government has taken several of measures to support the economy but no amount of intervention will be adequate to deal with the crisis triggered by the Covid-19 pandemic. Ms. Sitharaman is dead wrong. Not only that, she is outright lying. Why? First, there were no green shoots and revival signs of the economy before the pandemic set in. Within a year time of the 2016 demonetization and then GST rollout in 2017 economy was on a continues decline as can be seen from figure 1 below ( source ). It never recovered from those double whammies of Modi government. Indian GDP Second, the present decline of the Indian economy in an official technical recession is not because of pandemic but because of government’s...

 Former RBI governor Raghuram Rajan and deputy governor Viral Acharya have jointly penned an article where they have criticized Narendra Modi government’s move of allowing big corporate houses to enter in the Indian banking sector. They said , Allowing Indian corporate houses into banking will lead to the concentration of economic and political power in these business houses and the exchequer could be faced with significantly higher bailout costs if these banks were to fail. And, The history of such connected lending is invariably disastrous — how can the bank make good loans when it is owned by the borrower? Even an independent committed regulator, with all the information in the world, finds it difficult to be in every nook and corner of the financial system to stop poor lending. Information on loan performance is rarely timely or accurate. Yes Bank managed to conceal its weak exposures for considerable periods. In this article I am going to rebut both Rajan and A...

  In today’s highly volatile world, managing one’s financial resources to remain financially and economically secure is a top priority. We are in uncertain times like never before as no one knows what the next year or month or day will bring in front of us. Who would’ve thought that year 2020 will be a roller coaster ride like how it turned out to be? Who would’ve thought that they will suddenly lose their jobs and savings under the covid-19 lock down? Within few months, many people lost their lifetimes’ earnings and lives. Who would have thought that the banks in which they are saving their nest egg will suddenly close down and refuse to give them back their own money? But all these things have happened right in front of our eyes in recent times. Individuals need to learn some lessons from these events about managing one’s finances to secure their future. In this short article I want to discuss one such investment avenue of government bonds. Many Indians believe that...

Since long world government institutions like the IMF (International Monetary Fund) and the central bankers are pushing for an idea of a cashless economy ( Agarwal et al., 2015 ). Harvard university Keynesian school economist like Kenneth Rogoff wrote a book on the subject The Curse of Cash ! India’s popular prime minister Narendra Modi went as far as to implement this idea on 1.4 billion Indians when he banned the use of 500 and 1000 rupees notes in 2016 under his plan of demonetization. One of the goals of that plan was to make India a cashless economy. Although that plan hasn’t materialized in that most of the cash that he took out of circulation was back in the economy after two years. But global authorities and the Indian government have not given up their goal of a cashless economy. Now under the disguise of the Covid-19 pandemic, they are again pushing for a cashless economy. Their argument for banning or discouraging the use of cash now is that, currency notes are a...

The next batch of reform accompanying recent farm bills by the Modi government has arrived in the form of   Swamitva Yojana    for the rural people. Why did I say ‘reform accompanying recent farm bills’? Because combined with those bills and looking at the intentions of this scheme, it looks like the Modi government is readying the corporate takeover of the India’s rural sector. In the launching ceremony of this scheme prime minister Narendra Modi   said , Despite owning houses, people were facing multiple problems while borrowing from banks. These people can now borrow very easily from banks after showing property cards issued under ownership scheme. Now, is pledging one’s home and farm as a collateral while borrowing money from the banks the only use of one’s property? That seems to be government’s point of view because that is the prime benefit (sic) highlighted by the prime minister in his speech. Looking at this, there are ample reasons to doubt the intention an...

  India’s BJP government recently introduced two farm bills that has generated lot of controversy of late: 1)   The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020   and 2)   The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020 . Opposition parties are alleging that Modi is selling out Indian farmers to big businesses and the prime minister is claiming that this bill will help farmers by removing the often hated middlemen from the agriculture sector. He   said , Mr. Modi said Indian farmers had been bound by several constraints and bullied by middlemen for years. One of the cabinet ministers of the BJP government even   resigned   protesting against these bills. In this article I want to discuss some of the implications of these bills. Before I do that I want to first quickly dispel the myth about the supposed villainy of middlemen. Some groups of people in our societie...

  I was just returning home from office and saw this warning banner (see figure 1), which my local municipality office hung on the middle of the road, saying, and I translate from local Gujarati language, You are now entering a Coronavirus infected   high risk   area so be careful. Figure 1: Warning about Coronavirus high risk area Any sane thinking person will immediately ask a question that how high this risk of Coronavirus is? The risk obviously is of dying from disease called Covid-19 which is caused by this novel Coronavirus. The next logical question is, how do we measure this risk? We measure it by the probability of dying because of Covid-19. Another very important issue that no one is discussing is, what is the risk of Coronavirus compared to other risks in life? We all know that life is full of risk. The day when you enter the world from your mother’s womb the risk of dying from one or the other cause is always present. And ultimately death is inevitable. What i...