Dr B Jhunjhunwala + Professor Rudar Datt
Prime Minister Narendra Modi deserves thumping congratulations for demonetizing notes of Rs 500 and Rs 1000 denominations. This will hit hard at the fake note rackets being run by terrorists, and the large amount of monies stashed away by politicians, government officials and hawala operators. This move will provide much relief to honest taxpayers. Businesses in the country make large transactions in cash. They do not pay taxes on these transactions. This leads to large loss of revenue to the Government.
Development of capacities in an environment of shrinking opportunities acts like fuel in fire. The competition among the unemployed for the limited number of jobs becomes more intense, explains Dr Bharat Jhunjhunwala
Shoppers throng Malls during the new year. Shops offer discounts to attract them to the Malls. People compete with neighbours in doing more shopping. No wonder, the International Council of Shopping Centers is upbeat. A research paper published by the Council states: Mall tenants are currently enjoying industry-leading sales, operating margins and after-tax profit growth. Mall rents have also grown. The situation in India does not seem to follow this bright prognosis, however. Leaving aside a few malls of Gurgaon, the picture is downbeat.
The Government has certainly made some progress in the alleviation of poverty. Programs like Employment Guarantee, subsidized food grains to BPL families and loan waiver for farmers have provided relief to the poorest people. But this is not helping establish peace in the countryside. Maoist activities are increasing. The reason may lie in the huge increase in inequality. Businesses are earning huge profits. Results of top companies indicate an increase in profits of about 28 percent against increase in sales of 2 percent.
The European economic crisis not only persists but continues to get deeper despite the efforts of International Monetary Fund, European Central Bank and other multilateral agencies. Reason is a wrong diagnosis of the disease. It is believed that the main problem of Europe is the disconnect between monetary and fiscal policies. Monetary policies such as interest rates and liquidity in the money market of all members of the Eurozone are determined by the European Central Bank (ECB).
The Mullaperiyar Dam was built about 100 years ago in Tamil Nadu on the border of Kerala. The dam has become weak since then. There is some leakage of water. People of Kerala apprehend that it may break some day. In such an event large amounts of water and sediments will flow through Kerala and destroy fields, villages and cities. People of Kerala are demanding that the dam be dismantled and a new safe dam be built. The Government of Kerala is willing to pay the cost of reconstruction. People of Tamil Nadu, however, are not convinced.
Black money is unquestionably harmful for the economy.
Consumption, the base of modern economics, does not necessarily lead low welfare of masses.
Dr Bharat Jhunjhunwala