Praxeology: My Reflexions on India

The former governor of RBI and the chief economist of IMF Dr. Raghuram Rajan recently told BBC that, I think capitalism is under serious threat because it’s stopped providing for the many, and when that happens, the many revolt against capitalism. He said governments cannot afford to ignore social inequality when considering the economy. Is Rajan correct? To understand whether Capitalism is under any kind of serious threat or not we first need to know what Capitalism is? Robert Murphy, in his book Lessons for the Young Economist , gives the detailed definition of Capitalism, A capitalist system is based on private property. In this institutional arrangement, goods and services are owned by individual private citizens, or by groups of such citizens. In a pure capitalist system, not only every house and car, but every tractor, acre of farmland, and assembly line are all respectively owned by private citizens, sometimes organized in groups. A good’s owner is the...

The American journalist Randolph Bourne in his famous essay, The State , said , The moment war is declared, however, the mass of the people, through some spiritual alchemy, become convinced that they have willed and executed the deed themselves. They then, with the exception of a few malcontents, proceed to allow themselves to be regimented, coerced, deranged in all the environments of their lives, and turned into a solid manufactory of destruction toward whatever other people may have, in the appointed scheme of things, come within the range of the Government’s disapprobation. The citizen throws off his contempt and indifference to Government, identifies himself with its purposes, revives all his military memories and symbols, and the State once more walks, an august presence, through the imaginations of men. Patriotism becomes the dominant feeling, and produces immediately that intense and hopeless confusion between the relations which the individual bears and shoul...

A recent militant suicide attack on a convoy of CRPF (Central Reserve Police Force) in Pulwama, Kashmir has jolted India. Total 44 CRPF soldiers died in this attack. This is one of the deadliest attacks on Indian armed forces in the history of Kashmir insurgency. Majority of the Indians, who are now very nationalistic, are very angry and demanding a total war with Pakistan. Social media is awash with such demands. They want government to take revenge. Modi government has decided to avoid calls for this war . The violence and bloodshed is going on for decades in Kashmir. It is sad that people are losing their dear ones and loved ones. If Indians want to end this violence and bloodshed then they must objectively analyze this conflict.   As historically known, Kashmir conflict is a classic case of ‘property dispute’. In human society conflicts arise because of scarcity. When more than one people stake their claim on a given scarce resource, in this case the land of Kash...

A recent news headline said , As many as 7,000 persons, mostly graduates, had applied for 13 vacant posts of canteen waiters in Mantralaya, the Maharashtra secretariat . Another said , As Narendra Modi government and opposition fight over ‘jobs crisis’ in India, another surprising news has come from Uttar Pradesh where over 93,000 candidates including Phd holders, post graduates have applied for peon jobs that have an eligibility of Class V . Then there was this news, More than 25 million people, a number greater than Australia’s population, have applied for about 90,000 positions on India’s state-run railways, underlining the challenge Prime Minister Narendra Modi faces in providing millions of jobs ahead of an election in 2019. All these data present a very grim picture of Indian job market. India is a country of 1.36 billion people with one of the world’s youngest labor forces. Mainstream economists, politicians and media pundits don’t get tired talking about th...

Former governor of RBI Dr. Raghuram Rajan and MIT professor Dr. Abhijeet Banerjee have written an article, viz. Eight things India must do in 2019 , in Times of India on 1 st January, 2019 [i] in which they present a list of eight things which according to them India, government and people collectively, must do in new year to improve her future. In this article I want to critically analyze their proposal. Rajan and Banerjee give the following background as a cause of their proposal, Last October thirteen of us, all economists, got together in the hope that as the country gears up for elections, we could start a conversation by identifying a set of policy ideas that might help inform party manifestoes and policy visions. While our views stretch across the spectrum from right to left, we found surprising agreement on the challenges India faces and reforms it needs now. Two of us sifted through the set of ideas, picking what we felt were the top challenges and propo...

According to the MSN news , the Modi government is preparing to introduce a universal basic income (UBI) scheme before next year’s general election. The government will transfer a certain amount into the bank accounts of citizens who are unable to earn an income. The Centre has been facing a relentless Opposition onslaught over a slew of issues, including agrarian distress and unemployment. The BJP suffered reverses in assembly polls held in three Hindi belt states in November and December. What will be the impact of this scheme on the Indian economy? To understand that, we need to first understand what this universal basic income (UBI) is. Once that is understood, it is easy to see its impact on the economy. What is UBI? Just like Narendra Modi, many liberal politicians in USA are also running the 2020 Presidential election campaign on the platform of UBI. The democrat candidate Andrew Yang defines UBI in this way:   The idea is that all citizens re...

As I opined in my previous article , the RBI governor Dr. Urjit Patel has now resigned finally after a long tussle with the Narendra Modi government. As I discussed earlier, Modi government is under intense pressure to boost the growth and employment figures in the run-up of its reelection next year. The only way in which governments know to boost growth is to increase spending on fiscal programs like the bullet train project or the smart city project or Swaccha Abhiyan etc., etc. And such increased spending is only possible when the central bank monetizes their ballooning fiscal deficit by printing currency notes and allowing commercial banks to boost their lending by relaxing regulatory norms. The problem of non-performing assets (NPAs) for Indian banks is very severe , and RBI was worried that situation will get out of hands if immediately something is not done about this explosive issue. That prompted RBI to tighten their lending norms, which Modi government didn’t l...