Archive for January, 2014

— by Yogi Aggarwal

Narendra Modi constantly refers to himself as a ‘chaiwala’ (tea vendor), in order to get common people to identify with him, rather than with the elitist Congress party. But is his economic programme really for the chaiwalas, i.e., the self-employed and owners of small businesses?

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Some rise in real wages has been achieved, through struggles of workers
In an April 2012 post we noted that the last few years had seen a wave of labour unrest. We pointed out then that behind this unrest was the startling fact that employers had waged a war on labour, driving down real wages – i.e., nominal wages minus inflation – in the factory sector in the decade ending 2009-10. In particular, real wages had fallen steeply in the automobile sector, which was the hub of unrest. We noted that this was “the background to the rising incidence of what the media refer to as violence – i.e., not the routine violence of the management, but the resistance of the workers.”
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Let Them Eat Fat

A pet theme of officialdom and the dominant school of economists is that increasing prosperity has diversified Indian diets. According to this argument, there is no reason to be worried at the decline of calorie intake or of cereal consumption per head: Indians are now eating superior foods. A deputy governor of the Reserve Bank once explained the current food inflation thus: “as households move up the income ladder, their expenditure on food shifts relatively towards proteins, fruits and vegetables and so on, which exacerbates demand pressures. Nobody would dispute this simple assertion. People eat better (as reflected in a more diversified and balanced diet) as they grow richer.”[1]
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— by a special contributor

Applicants for new bank licences will be required to furnish their business plans for the banks along with their applications. The business plan will have to address how the bank proposes to achieve financial inclusion. – Reserve Bank of India, “Guidelines for Licensing of New Banks in the Private Sector”, February 22, 2013.

The Indian banking sector is under the spotlight, as new private sector licences are expected to be issued on an ongoing basis from 2014. It is also highly likely that  large industrial houses may be permitted to set up banks, overturning a banking policy that prevailed since the first round of bank nationalization in 1969. According to the RBI, one of the principal purposes of issuing fresh  licences is to achieve ‘financial inclusion’ – to bring the large numbers of persons without access to banking services into the financial system. When announcing the The authorities claim that such financial inclusion will help bring about more balanced growth and reduce poverty.

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In the last few days, two news items about the Indian Railways, the largest transporter as well as the largest employer in the country, were buried on the inside pages of most papers.

The first news item concerns the possibility of a Railway strike, and this may eventually come on the front pages; already the editorial columns have started to disapprove of the workers’ “selfishness” in pressing their demands when the poor Government is doing its best to slash spending in its budget.

The second news item reveals private corporate plunder of the Railways on a staggering scale. It is worth connecting these two seemingly unrelated developments.

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