Praxeology: My Reflexions on India

The Indian, and world economy, is entering in one of the worst phases of modern day recession right now. The warning signs of rapidly slowing Indian economy are everywhere. Auto companies are firing workers at a rapid pace and halting production. Even age old manufacturing company like Parle, which makes famous Parle-G biscuits, is firing 10,000 workers. GDP growth has collapsed and India has slipped to 7 th place, from 5 th previously, in global GDP ranking. The stock market has already lost 4000 points from its pre-budget high level of 40,000. Indian currency rupee has again touched a low of 72 rupees per dollar mark, and it is poised to go even lower. On the other side the precious metal Gold has gone ballistic to near 40,000 rupees per 10 gram level amidst this fear of a slowdown. Most major Indian commercial banks are drowning in debt. Big corporations are drowning in debt and buckling under debt pressure one after another. Amidst this slowdown it is natural t...

India’s new and first female finance minister Nirmala Sitharaman in an interview recently   said   , At this stage, what we are looking at is making sure that consumption is encouraged through various steps that we’re taking, actually get the money into the hands of people, rural, particularly. This whole DBT-based transfer of entitlements to those who need to get it and get it instantly, being enabled by technology, was one very big way in which we’re pushing money into the hands of people. As you are spending on infrastructure, in-situ promotion of labour is what is happening. Giving money they need in their hands instantly is what is needed. So if government’s expenditure is diverted to only prioritising on infrastructure, the ripple effect, I expect, will be on labour, everywhere rather than concentrated in one place…The virtuous cycle kicks in from there. Consumption increases, demand increases, investment increases, as a natural course. Is Sitharaman right in s...

Chapter 2, Vol I of the Economic Survey of India 2018-19 begins with this title:   Policy for Homo Sapiens, Not Homo Economicus: Leveraging the Behavioural Economics of “Nudge” . It starts with the following Sanskrit stanza:   We cannot rely totally on rational thinking to gain information, as it is not without its bias . The following is the short abstract of this chapter: Decisions made by real people often deviate from the impractical robots theorized in classical economics. Drawing on the psychology of human behaviour, behavioural economics provides insights to ‘nudge’ people towards desirable behaviour. This chapter illustrates how the Swachh Bharat Mission (SBM) and the Beti Bachao Beti Padhao (BBBP) have successfully employed behavioural insights. Using such learning, the chapter lays out an ambitious agenda for social change: (i) from BBBP to BADLAV (Beti Aapki Dhan Lakshmi Aur Vijay Lakshmi); (ii) from Swachh Bharat to Sundar Bharat; (iii) from “Give it up” for ...

Modi government, since again coming to power with even bigger majority than in 2014, is centralizing the economy and the society at a rapid pace. It is bringing out one central plan after another one. It is trying to dictate every little thing that is going on in India. For example, apart from the   flurry of governmental schemes , in last week itself the NITI Aayog issued a central plan of replacing all petrol/diesel based two and three wheelers to   electric vehicles   by year 2030. Then there is a central plan for   higher education   and   overall education system of India. The Centre has also planned to invest ₹25 lakh crore in the   farm sector   in the coming years to boost agricultural productivity etc. Does this centralizing process bode well for India? Not at all. Central planning is a folly. Both   theory   and   history are crystal clear about this. As Ludwig von Mises a century ago logically proved, the government c...

Indian businesses, especially the so-called ‘too big to fail’ ones, are drowning in debt and are failing one after another. Here is a list of few of these businesses: First, the   IL&FS   default and insolvency. Also,   DHLF , another giant housing finance company, is also near default. Second, Baba Ramdev’s   Patanjali   is struggling hard with slower sales and falling revenues. The major reason behind Ramdev’s fall is,   Patanjali also suffered, like many others, from Modi’s 2016 ban on high-denomination banknotes and 2017 introduction of a new goods and services tax. The moves disrupted economic activity . Third, India’s second biggest private airline company   Jet Airways   has gone belly up after around 40 years of successful business. It couldn’t service its debt. Fourth, the Birla family owned   Yash Birla Group   has defaulted on its debt payment. Its owner Yashovardhan Birla is now declared a ‘willful defaulter’ by...

In his second term, the Narendra Modi government is going to carry out some   major labor reforms . These reforms aim to consolidate myriad of different labor legislation under four major labor codes. These codes are as following, The first Code talks about minimum wages for every worker, unorganised, and contract labourers in the organised sector. The second one on industrial relations aims at changing the rules binding labour unions, handling labour disputes, terms of employment, lay off, retrenchment policies etc. The third, social security and welfare expands the scope of the coverage of Employees State Insurance (ESI) to every worker, irrespective of the size of the firm. The last one prescribes occupational safety, health and work conditions for Indian labour. If enacted what impact these major changes in the labor legislation will have on the labor market is the question that I am going to answer here. Two of the codes, minimum wage and social security, are at th...

Immediately after winning his reelection bid with yet another thumping majority, on the back of surgical strikes across the LoC, the prime minister of India Narendra Modi made   three vows   to the people of India. They are, My first vow is that I will not do anything out of ill-will or bad intentions, I could make mistakes but never do anything out of malice. My second vow is that I shall never do anything for myself in order to garner profit for myself, and my third vow is that every minute of my life and myself I shall devote to the country. Whenever you want to evaluate me, you must do so on these parameters. This is a cheap tactic of setting up a narrative that suits him, but for the sake of argument let us evaluate him using his own parameters only. In these vows there is a message for Indians who voted overwhelmingly him back to power. This message is the following one: First, Modi said he won’t do anything out of ill-will or bad intentions. I doubt any form...