Neo-Liberalism and “Sound Finance” in India: Viewing Economic Theory and Praxis from the Lens of the People
Neo-liberalism and “Sound Finance” in India: Viewing Economic Theory and Praxis from the Lens of the People
-Zico Dasgupta
I
The present economic crisis, while engulfing the whole capitalist world, has left its distinct imprint on the Indian economy. The latter has been characterized by a sharp decline in the GDP growth rate, a negative growth rate in agricultural and manufacturing sector, massive job losses and plummeting crop prices in the recent period. However, as one of the recent estimates of IMF reveals, the fiscal stimulus provided by the government under such an appalling situation is the one which is the fourth lowest among the G 20 countries. This apathy of the government to raise its expenditures adequately, nonetheless, has been one of the specific reflections of its “sound finance”[1] policies in the neo-liberal regime. Such a fiscal policy in the neo-liberal regime has been typically marked by deflationary policies and decline in the development expenditures in India. Nonetheless, it has found ‘adequate’ justification in economic theories, which have been typically haunted by the spectre of fiscal deficit and characterized by what Joan Robinson (1964) had once termed as the “humbug of finance”. However, the very fact that those economic theories continue to be in vogue both within the academia and policy circles, inspite of its inherent biasness against the common mass, leads one to examine its very relevance in the Indian context.
The very question on the relevance of any economic theory, at any historical juncture, can be apparently addressed in at least two distinctly different, but mutually related ways as follows: firstly, in terms of its “logical correctness” along with the precision with which it depicts the reality of the economic society; and secondly, in terms of the social hegemony that it exercises along with its ‘acceptance’ within the policy circles. The nature of relationship between the two, however, depends on the manner in
-Zico Dasgupta
I
The present economic crisis, while engulfing the whole capitalist world, has left its distinct imprint on the Indian economy. The latter has been characterized by a sharp decline in the GDP growth rate, a negative growth rate in agricultural and manufacturing sector, massive job losses and plummeting crop prices in the recent period. However, as one of the recent estimates of IMF reveals, the fiscal stimulus provided by the government under such an appalling situation is the one which is the fourth lowest among the G 20 countries. This apathy of the government to raise its expenditures adequately, nonetheless, has been one of the specific reflections of its “sound finance”[1] policies in the neo-liberal regime. Such a fiscal policy in the neo-liberal regime has been typically marked by deflationary policies and decline in the development expenditures in India. Nonetheless, it has found ‘adequate’ justification in economic theories, which have been typically haunted by the spectre of fiscal deficit and characterized by what Joan Robinson (1964) had once termed as the “humbug of finance”. However, the very fact that those economic theories continue to be in vogue both within the academia and policy circles, inspite of its inherent biasness against the common mass, leads one to examine its very relevance in the Indian context.
The very question on the relevance of any economic theory, at any historical juncture, can be apparently addressed in at least two distinctly different, but mutually related ways as follows: firstly, in terms of its “logical correctness” along with the precision with which it depicts the reality of the economic society; and secondly, in terms of the social hegemony that it exercises along with its ‘acceptance’ within the policy circles. The nature of relationship between the two, however, depends on the manner in