Was Gandhi a Racist? Appropriating Ambedkar

104 Pages·2012·3.67 MB·English

LETTERS
Issn 0012-9976
Ever since the fi rst issue in 1966,
EPW has been India’s premier journal for Was Gandhi a Racist? There is another even more substantive
comment on current affairs issue that I would like to mention. In my
and research in the social sciences.
It succeeded Economic Weekly (1949-1965), Iw ould like to compliment Nishikant book, as in my subsequent writings on
which was launched and shepherded Kolge for the research embodied in his the subject, I have stressed the evolution
by Sachin Chaudhuri,
who was also the founder-editor of EPW. article “Was Gandhi a Racist? His Writings in Gandhi’s position on the r acial question
As editor for thKirrtiys-hfi nvae yReaajrs (1969-2004) in South Africa” (EPW, 30 January 2016). within South Africa, and also that much
gave EPW the reputation it now enjoys. I hope the article will enrich the debate of this evolution took place while Gandhi
editor on the subject. was in that country. This evolution has
C Rammanohar Reddy
The article refers to my work, The been largely neglected by scholars, includ-
EXECUTIVE Editor
African Element in Gandhi, published in ing, unfortunately, the recent auth ors
aniket Alam
2006. I have argued that Gandhi was t h a t Kolge has sought to review and,
Deputy Editor
Bernard D’Mello initially infl uenced by racial prejudice perhaps, for that reason has been largely
CHIEF COPY Editor but gradually outgrew it, and that there denied or ignored even by Kolge.
KAUSHIK DASGUPTA
was an evolution in his position on this I consider Gandhi’s evolution on the
Senior Assistant Editor
point even while he was in South Africa. r acial question during his South Africa
Lina Mathias
Kolge seeks to depict such a position as years to have been signifi cant. His broad-
copy editors
Prabha Pillai representing an “extreme” view. He has ened perspective emerges in his repeated
jyoti shetty
sought to counterpose it to the other commending of passive resistance to the
Assistant editorS
“extreme” represented by Arundhati Roy African and coloured people. It emerges
P S Leela
SANGEETA GHOSH and others who hold positions similar to also, for example, in May 1908 in his speech
lubna duggal
hers. There appears to be a categorical in Johannesburg, where he observed:
ASSISTANT Editor (web) mistake in this counterpositioning. If we look into the future, is it not a heritage
Anurag Mazumdar
As I see it, Roy and others hold Gandhi we have to leave to posterity, that all the
editorial Assistant different races commingle and produce a
ABHISHEK SHAW to have been a racist or to have been
civilization that perhaps the world has not
production infl uenced by racial prejudice. If that is yet seen? (Collected Works of Mahatma
u raghunathan
one extreme, the other extreme would Gandhi, Vol 8, pp 242–46).
s lesline corera
suneethi nair be represented by a position holding Incidentally, no reference was made
Circulation Gandhi to have been neither racist nor to this (and similar vital statements indi-
Gauraang Pradhan Manager affected by racial prejudice. As I have cating a widening of Gandhi’s horizon)
B S Sharma
pointed out, that is not quite the argument even by Maureen Swan, whose work on
Advertisement Manager
Kamal G Fanibanda in my work. I had written: Gandhi in South Africa in the 1980s has
General Manager & Publisher The young lawyer, not yet 24, had been brought often infl uenced subsequent discourse.
K Vijayakumar to South Africa by Indian merchant clients and Anil Nauriya
editorial initially shared some of the racial and class New Delhi
[email protected] prejudices prevalent among those for whom he
Circulation worked. He tended sometimes to use the term
[email protected] Kaffi r, then current among both Europeans Appropriating Ambedkar
Advertising and Indians settled in South Africa, to refer
[email protected] to the bulk of the African population. As a On the occasion of the centenary cele-
Economic and Political Weekly subject of the British Empire, as Gandhi then
320-321, A to Z Industrial Estate saw himself, he sought non-discrimination by bration of B R Ambedkar’s birth
Ganpatrao Kadam Marg, Lower Parel the European but resented the equation of anniversary, the eminent scholar of
Mumbai 400 013
Phone: [phone] the educated section of Indians with the ‘raw jurisprudence, Upendra Baxi, had warned
FAX: [phone] native’. If, however, the young Gandhi shared us: “Centenary celebrations are organised
any prejudices towards sections of the popu-
EPW Research Foundation lation, he outgrew these by around 1908, political events having distinctive ideo-
EPW Research Foundation, established in 1993, conducts that is some six years before he left Africa logies of recall and distinctive modes of
research on fi nancial and macro-economic issues in India. (The African E lement in Gandhi, p 4).
appropriating a historical fi gure for the
Director
J DENNIS RAJAKUMAR Kolge has quoted in pages 90–91 of purposes of the present.” Baxi identifi ed
C 212, Akurli Industrial Estate
his article from the fi rst sentence of the seven Ambedkars in his discourse to
Kandivali (East), Mumbai 400 101
Phones: [phone]/41 above passage, has left out the interven- highlight different dimensions of his life
Fax: [phone]
ing words and suffi xed to them the bulk and thought.
[email protected]
of the last sentence in the passage. This The changing face of Ambedkar in the
Printed by K Vijayakumar at Modern Arts and Industries, is no doubt an innocent mishap, but the Hindutvavadi discourse is an interesting
151, A-Z Industrial Estate, Ganpatrao Kadam Marg,
Lower Parel, Mumbai-400 013 and full passage would clearly not, it seems phenomenon. A controversy has cropped
published by him on behalf of Sameeksha Trust to me, have been susceptible to be up in the context of the attempt by the
from 320-321, A-Z Industrial Estate,
Ganpatrao Kadam Marg, Lower Parel, Mumbai-400 013. held up as representing an “extreme” Modi government to print the original col-
Editor: C Rammanohar Reddy. point of view. lected works of Ambedkar as a part of his
4 february 13, 2016 vol lI no 7 EPW Economic & Political Weekly
LETTERS
125th birth anniversary celebrations. Kerala’s First Women’s a uthorities was disappointing. They
This venture is facing stiff opposition from Trade Union consistently tried to delay the registra-
Ambedkar’s grandson, Prakash Ambedkar, tion proceedings. The fi rst objection
who has refused to allow the printing of The Asanghaditha Mekhala Thozhilali they raised was that a union could not
the original collected works in English. Union (AMTU), Kerala, a women’s be a women’s trade union despite the
Suspecting the motives of the Bharatiya trade union, applied for registration existence of the Self-Employed Wom-
Janata Party (BJP) and the Rashtriya on 18 January 2016 and received it on 30 en’s Association (SEWA), a women’s
Swayamsevak Sangh (RSS), Prakash January 2016. Even though Kerala has a trade union which was registered in
Ambedkar told the media that he would long history of t rade union movements 1972. However, the main difference be-
not forget “history” wherein the Ambed- this is the fi rst time that a women’s trade tween the AMTU and SEWA is that the
karites were pitted against the BJP and union has been recognised in the state. former welcomes male workers as mem-
RSS. He recalled that when Ambedkar’s The continued neglect by the mainstream bers too. Further, the authorities said
complete works were being published and male-dominated trade unions towards that it is impossible to defi ne “unorgan-
during the tenure of the Shankarrao the issues faced by women workers in ised sector” and therefore a union can-
Chavan government, it was the BJP and the unorganised sector is one of the major not be registered in that name. The
RSS who had vehemently o pposed it. reasons behind the union’s formation. N ational Commission for Enterprises in
Arup Kumar Sen “Asanghaditha Mekhala Thozhilali the Un organised Sector (Arjun Sengup-
Kolkata Union” literally means “Unorganised ta Report) of 2007 clearly defi nes the
Sector Workers Union.” It has evolved unorganised sector and we had to pro-
No Educational Loans for SCs from a women’s collective known as vide it in writing to convince the scepti-
Penkoottu. Penkoottu consists of women cal offi cials. Apart from this, they raised
The participation of Scheduled Castes workers employed in different enterprises a number of technical points. In the
(SCs) or socially backward students in situated in the Sweet Meat Street (popu- end, the working women succeeded.
higher education (professional/technical larly known as SM Street) in Kozhikode When the work spaces and trade
in government or private colleges) is per- and includes sweepers, tailors and sales- unions are ruled by men and their patri-
haps far below expectations. The reasons women. They came together to demand archal prejudices, it is a matter of great
behind this are rightly analysed by their rights in 2009 under the leadership pride that a women’s trade union is over-
Govardhan Wankhede in his article, of P Viji, a tailor in SM Street. The “right coming all the structural barriers and
“Higher Education and the Scheduled to pee” was the fi rst campaign taken up has got registration. Penkoottu will
Castes in Maharashtra” (EPW, 6 Febru- by the movement targeting the lack of continue to function as an open platform
ary 2016). In West Bengal, it was found toilet facilities for women employees in of women for larger causes.
that higher education along with profes- shops and establishments. Anima Muyarath
sional/technical education in government Penkoottu organised public protests Tata Institute of Social Sciences,
or private colleges depended on parental in Kozhikode city over the issue. The Mumbai
education and occupation. That is why a “toilet strike” as it came to be known
section of such students were much more was successful to a large extent. The
Corrigendum
established in their career. Even their mer- district collector ordered the construc-
its or results were not so much better than tion of new toilets and the repair and There were some citations, quotations,
proper nouns and subheadings which were
those who were not socially well-estab- renovation of existing ones. Gradually,
changed/deleted by mistake during the
lished. But a majority of them (SC stu- the AMTU was formed and has led many
editing of the article “Religion, Caste and
dents) were lagging far behind, even after strikes and protests on behalf of women Conversion: Membership of a Scheduled
obtaining good results or praiseworthy workers such as the Right to Sit strike Caste and Judicial Deliberations”, by
merits. So, these students had to enter (Kalyan Sarees), the Coupon Mall strike, Padmanabh Samarendra, published on 23
January 2016.
their traditional caste-based occupation, the Community Development Organisers
Corrections to the quotations, proper nouns
or worked as daily-wage labourers. Gov- strike, etc.
and subheadings have been made on the
ernment facilities (that is, amount of As a lawyer, I was enthusiastic about website. A full list of citations can be had
scholarship and process of selection and getting the union registered but the from the author.
disbursement) were not enough to access cynical attitude of the labour department The errors are regretted.
higher education. Further, educational
loan facilities did not extend to the poor Web Exclusives
SCs because of the absence of suffi cient se-
The following articles have been published in the past week in the Web Exclusives section of the EPW website.
curities (collateral). Bankers or fi nancial
They have not been published in the print edition.
institutions were only doing business for
(1) Plutocracy, Populism and the 2016 American Election —Kaushik Sunder Rajan
the rich—“to carry coal to new castle.”
(2) Removing Discrimination in Universities —Sthabir Khora
Harasankar Adhikari Articles posted before 6 February 2016 remain available in the Web Exclusives section.
Kolkata
Economic & Political Weekly EPW february 13, 2016 vol lI no 7 5
LETTERS
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6 february 13, 2016 vol lI no 7 EPW Economic & Political Weekly
FEBRuary 13, 2016
Focus on Economy, Not Defi cit
With the global outlook gloomy, the union budget needs to take a larger view of defi cits.
T
his year’s budgetary exercise needs to deal with four credible fi scal policy. If we examine monthly data of revenue
specifi c challenges: (a) the macroeconomic context, Indian collection up to December 2015, more than 70% of the aggre-
and global, (b) expenditure priorities, (c) the revenue gate revenue target has been realised, which is higher than for
stream available to fi nance such expenditures, and (d) fi scal the corresponding period in the previous year. One of the major
sustainability. Though the issues are the same ahead of every reasons for this is the larger collection of non-tax revenue. More
budget, they are in particular major challenges before the than 82% of the non-tax target has already been achieved
2016–17 union budget. due to the signifi cantly higher collection of revenues under the
India is a “bright spot” in the world according to the multilat- head of economic services. Unfortunately, this does not refl ect
eral institutions. One is unsure whether that is of any comfort improvement in the structural bottlenecks in the tax system
when it comes to planning for the budget. The Central Statistics and tax base. Sluggish corporate profi ts and slower economic
Offi ce’s (CSO) advance estimates place gross domestic product activity seem to have reduced direct tax collection, while indirect
(GDP) growth in 2015–16 at a higher than expected 7.6%, but taxes provided a cushion as a tax on petroleum products and an
even the CSO numbers say growth has been decelerating since the additional cess of 0.5% on service tax fetched more revenues.
fi rst quarter (April–June) of 2015–16. On the domestic demand It needs to be noted that government programmes cannot
front, the observations made in the Sixth Bi-monthly Monetary run through cesses and surcharges. Earmarked taxation is bad
Policy Statement, 2015–16 of the Reserve Bank of India (RBI) are tax policy. Yet, it seems to have become the order of the day as
worrisome. The statement highlighted the fact that there has refl ected in its share in central revenues going up steadily in the
been a weak investment demand and defi cient monsoon of the last 15 years. On the tax side, one of the major failures of the
order of 23%. On top of it, we have a grim global economic out- present government is of landing up in a situation where there
look characterised by slowing growth in emerging market econ- is a complete deadlock on the Goods and Services Tax (GST)
omies (EMEs), bleak prospects for export demand, depressed front “despite the best of intentions.” This is only going to harm
commodity prices and extremely volatile global currency markets. the economy, especially the manufacturing and the service sec-
Given this overall weakening of economic activity and negative tors. It is probably time the central government takes proactive
sentiments, the critical challenge would not only be to change steps and introduces GST at the manufacturing level by inte-
the mindset through appropriate policy action but also for grating excise duty and service tax in the coming budget, which
budgetary arithmetic to arrive at a realistic GDP growth number does not require a constitutional amendment, a case made by
for projections of key fi scal variables for 2016–17. many tax experts. This would simplify the indirect tax system,
When one talks about the macroeconomic context of India smoothen the tax credit fl ow between goods and services, pro-
today, we are in a situation where there is no clarity on the nominal vide buoyant revenues and boost growth. If introduced, the
and real growth rates. How much of this difference between the benefi ts of a central GST would create a demonstration effect for
nominal and real is actually due to the decline in the price level the states to come on board on this crucial tax reform.
and how much is due to a change in the way we calculate GDP On the expenditure side, the need to increase capital spending
value added is unclear. According to the advance estimates for and relax the fi scal defi cit target in order to facilitate a higher
2015–16, the nominal GDP growth rate of 8.6% will be much public investment seems to be the offi cial position at North Block.
lower than 11.5% assumed at the beginning of the current fi nancial There is absolutely no harm in taking such a fi scal stance, parti-
year. Since budget-making is an exercise in current prices, a cularly when private investment demand is low. However, there
nominal GDP growth that is lower than expected, by more than is no guarantee that an increase in the fi scal defi cit would auto-
300 basis points, is going to make meeting the fi scal and revenue matically ensure higher public investment when there is a large
defi cit targets for 2015–16 very diffi cult. revenue defi cit. As per the Medium Term Fiscal Policy Statement
Since the revenue side provides the resource envelope for of 2015–16, for the year 2016–17, the fi scal defi cit is estimated at
budgeting, a realistic target for revenue in 2016–17 is a must for 3.5% of GDP while the revenue defi cit is pegged at 2.4%. Since
Economic & Political Weekly EPW FEBRuary 13, 2016 vol lI no 7 7
EDITORIALS
benign petroleum prices have created additional fi scal space via higher than real GDP growth in 2016–17 as well, what that would
the reduction in the subsidy bill, one can only hope that this will mean for defi cits as a percentage of GDP is anybody’s guess. It is
continue in 2016–17, reducing the revenue defi cit and thus creat- probably time we judge the credibility of fi scal policy commit-
ing extra fi scal space for capital spending. However, sooner than ment through multiple indicators that refl ect revenue perfor-
later, two major fi scal commitments will have to be met, namely, mance, expenditure priorities, including the composition of
the award of the Seventh Pay Commission and the implementa- spending, rather than through a narrow target of the fi scal defi -
tion of the one rank one pension scheme for retired defence ser- cit as a percentage of GDP. In other words, the policy focus
vice personnel. Both are going to put pressure on the revenue should move away from meeting the defi cit target to prudent
defi cit. On top of that, if nominal GDP growth continues to be fi scal management for growth and development.
8 FEBRuary 13, 2016 vol lI no 7 EPW Economic & Political Weekly
EDITORIALS
No Method in the Madness
The imposition of customs duties on 76 life-saving drugs is arbitrary and senseless.
T
he decision to impose a customs duty of 22% on a list of do not need such protection? Such mindless imposition on the
76 life-saving medicines is symptomatic of several things costly life-saving medicines, that are under patent or are
wrong with the pharma pricing scenario in India. One dependent on imported active pharmaceutical ingredients
arm of the government, the Department of Pharmaceuticals, is (APIs), will increase the burden on hapless patients as manufac-
in charge of implementing the Drugs (Prices Control) Order turers/importers will pass on the duty. (The additional burden
(DPCO) 2013. Another arm, the Ministry of Health, is nowhere may be less than 22% in cases where value-added tax set-offs
as they are seen as probably not relevant to the issue. are applicable.) In all, there is no method behind this bureau-
The DPCO-2013 has put 348 medicines of the NLEM-2011 cratic madness. It treats apples, oranges and bananas alike.
(National List of Essential Medicines) in specifi c formulations The duty imposition has once again brought into focus issues
and specifi c strengths, and only those, under a price ceiling. in urgent need of national debate: namely, accessibility, afford-
The calculation of the ceiling price itself is fl awed based on ability and availability of medicines. First is the issue of price
a naïve simple average market-based price mechanism. This control of expensive patented medicines. Here, only the producer
legitimises the already high drug formulation prices. The knows the true costs of discovery, development and manufac-
fl awed DPCO-2013 nevertheless succeeds in putting a brake on ture of the patented drug. No price formula based on the per
prices of some essential medicines, even if it covers only a max- capita gross national product (GNP) has yielded acceptable
imum of 15% of the domestic pharma market of around results. The second option is to have price negotiations with
Rs 90,000 crore. The list of 76 drugs, on which customs duties manufacturers. Again there is no successful precedent as such
are now to be imposed, has those in common with the 348 negotiations get mired in stalemates. The other alternative is of
drugs of the DPCO-2013 and the recent NLEM-2015. So why does voluntary licensing agreements like that to produce Gilead
the government giveth to the patient with one hand and taketh which have been drawn up with eight Indian pharma companies
with the other? Because the many arms of the government are for the manufacture of sofosbuvir, useful in treatment of
not in conversation with each other. Hepatitis C virus infections. Voluntary licensing checkmates the
The customs duty itself will result in a marginal decrease in domestic licensees who may be thinking of applying for a com-
imports before demand catches up. A liberal estimate of the pulsory licence, apart from twisting their arms in other ways.
annual import of these 76 drugs is that it will not cross The option that is left is compulsory licensing for government use
Rs 15,000 crore. That means a maximum additional revenue of (under Sections 84, 92 and 100 of the Patents Act), which is
Rs 4,000 crore. Is this something that the government valid and consistent with the agreement on Trade-Related
desperately needs, especially when it means increasing the Aspects of Intellectual Property Rights. For this the government
price of life-saving drugs? needs clarity and political will—a scarce commodity. Only
The customs duty imposition may have sought to narrow the actual manufacture by domestic producers can help discover
price gap between locally manufactured bulk drugs and imported the prices of new medicines that are under patent. In the
ones. But in many cases a 22% duty will hardly bridge the gap. imatinib case which Novartis lost in 2013, no amount of price
And in some cases like imatinib mesylate, used in certain types negotiation could have resulted in domestic prices of imatinib
of cancer, the public procurement price of Rajasthan Medical that ended up being 10,000 to 15,000 percent lower than the
Services Corporation is already a hundred times lower than the earlier market price.
government’s own ceiling price. Certainly there was no sense in The revised NLEM-2015 list that will be the basis for setting
including imatinib as its domestic price is affordable. Was it not future ceiling prices under the DPCO is certainly an improved
possible for the government to study the list of 76 medicines list from the point of constituting an essential list. But price
systematically from the point of identifying which medicines control based on such limited lists will continue to leave out
need protection to encourage domestic production and which isomers, derivatives, chemical analogues, medicines other than
8 FEBRuary 13, 2016 vol lI no 7 EPW Economic & Political Weekly
SATIRE
specifi ed dosages, many life-saving medicines, etc. For more medicines, including the list of 76 drugs, and with a liberal
affordable medicines we need price control of an enlarged list that policy of government use of compulsory licensing. Finally, we
includes all life-saving and useful, patented and out-of-patent also need a more nuanced imposition of customs duties, if at all.
Economic & Political Weekly EPW FEBRuary 13, 2016 vol lI no 7 9
SATIRE
Light to Moderate Growth
Forecasting GDP growth is better left to the bookmakers and the weatherman.
A
re we really growing at 7.6%? The pessimists invite us to the provisions for welfare spending in the budget. One must not
look at what has been happening to exports and public rush from this to the conclusion that we are dealing with a
investment. Consider the spate of criticism to which the government that cares more for the business community than
Central Statistics Offi ce’s estimates of the gross domestic prod- for the labouring poor. Oh no, it is not a case of crony capital-
uct (GDP) have been subjected (not least in the columns of EPW). ism, simply a case of arithmetic gone awry because of defective
Given the discrepancy between the new series and the old growth forecasting. If the projected value of GDP is erroneous,
series, which (if either) is to be believed? And what, the nay- how can the government be expected to get its numbers on
sayers ask, of the past record of growth forecasts? For the fi scal revenue and expenditure and defi cit right? So if the state is to
year (FY) 2013, the initial estimate was 5.1% while the actual be aided in its genuine concern for progressive taxation and
outcome was 5.6%; for FY14, the corresponding fi gures were generous social sector spending, if academic economists and
6.9% and 6.6% respectively. The cynics assure us that it is not the chiefs of data generating agencies are to be prevented from
just the magnitudes of the forecasts but their directions which engaging in tetchy exchanges, if the CEA and the RBI governor
are suspect. And then there was the very public disagreement are to avoid betting in public, then the time has come to let
between the chief economic adviser (CEA) and the governor of ambiguity in and keep the bookies out. That is to say, no more
the Reserve Bank of India (RBI). It would appear that the CEA precise numerical forecasts. There is a strong case, instead, for
has lost his bet with the governor on an accelerated growth rate prognosticating in very general terms, for allowing for multiple
rather badly: the former was backing 8.1% to 8.5%, while the gov- interpretations, for predicting one thing and its opposite, and
ernor put his money on a more modest (and in the event, realis- for refraining from hasty commitment to specifi c numbers.
tic) 7.4%. If we do n ot watch out, bookmakers are going to get We already have a helpful model available from the Indian
into the act in a big way, and then what will the match-fi xing Meteorological Department. Everybody all around, henceforth,
harvest be? We may soon have to be drawing again on the ser- would benefi t greatly if the Economic Survey were to couch its
vices of Justices Mudgal and Lodha. growth forecasts along the following lines:
What all this suggests is that it is not a good idea to make
…light to moderate growth, with isolated heavy growth, expected
growth rate predictions that involve actual real numbers. For it over interior Karnataka, Kerala, and Madhya Maharashtra…Interior
is on the basis of these numbers that the government and the Tamil Nadu, Kerala and Rayalseema may witness scattered light to
RBI have to make decisions on public spending, revenue mobili- moderate growth, while North Coastal Andhra Pradesh and Telangana
may experience isolated bouts of growth…the growth impetus could
sation, the size of the defi cit, and the rate of interest. The economist
shift towards South Interior Karnataka and South Coastal Andhra
Pranab Bardhan has recently expressed the apprehension that
Pradesh and intensity of growth may increase (or not) over South
the tax concessions made to the corporate sector are in excess of Coastal Andhra Pradesh, South Interior Karnataka and Rayalseema…
Economic & Political Weekly EPW FEBRuary 13, 2016 vol lI no 7 9
SATIRE
First Published in 1966 the latest industrial policy statement will in of industrial priorities, if that is possible. As
any way lead to more effective control of con- already mentioned, the list contains omnibus
centration of economic power does not merit categories which no doubt hide all manner of
serious consideration non-essential industries. Even some of the in-
If in the past industrial licensing failed to dustries specifi cally mentioned, such as synthet-
To mark 50 years of EPW, each week in 2016 will
ensure the development of industries accord- ic detergents or man-made fi bres, can scarcely
present an extract from our archives.
ing to plan targets, the reasons were that the be classifi ed as “basic, critical and strategic”.
Vol ViII, No 7 FEBRUARY 17, 1973
development plans for industries were never This again is perfectly in keeping with what has
worked out in suffi cient detail in terms of scales been actually happening in the last few years
Facade of Licensing
of production, technology, location, etc, that when, faced with an industrial recession, the
The liberalisation of licensing policy for the inter se priorities among the legion of so-called government has thrown to the winds even such
larger houses conforms to the actual trend of priorities were never determined, that the notions of priorities as might have been con-
government policy in the last year or so when time-phasing of the planned investment in any tained in the now practically-defunct Fourth
fewer and fewer cases of concentration of eco- industry was left vague, and so on. In these re- Plan. Clearly, without a scheme of priorities, in-
nomic power relating to the larger houses spects too the industrial policy statement pres- dustrial licensing has no raison d’etre as a major
have been referred to the MRTP Commission ages no improvement. Quite the contrary. The instrument for regulating the development of
and these houses have been allowed to even off-hand manner in which the list of so-called industries. Of course, it will continue to be used,
regularise clandestinely installed capacity in a “basic, critical and strategic’’ industries has as it has been in the past, as a devise for dispens-
number of industries. Clearly, the claim that been put together points to a further dilution ing — or withholding — political patronage.
Economic & Political Weekly EPW FEBRuary 13, 2016 vol lI no 7 9
HT PAREKH FINANCE COLUMN
Has the Crash of the Global started: the third quarter of 2014, or the
second quarter of 2015, or the third
Financial Markets Begun? quarter of 2015, or with the turn of 2016
and the like. I must confess, however, that
I appear to be the only one who claims
that the crash started in the third quar-
T Sabri Öncü ter of 2014, at least to my knowledge.
But, what did happen in the third
A
Even as some insist that the global s the following quotation from quarter of 2014?
economy is in “secular stagnation,” Bradford DeLong’s 8 January 2016 On 18 September 2014, the US market
Huffi ngton Post article demon- index (Standard & Poor’s 500 or S&P
the facts suggest that we may be
strates, one of the ongoing debates among 500) peaked and stayed more or less at
entering the “worst” depression in
economists of many tribes is whether the same level the next day. It started to
history. The global markets have the period that began in the summer of decline after 19 September and bot-
been on a slippery slope since the 2007 will be called the “Greatest Depres- tomed on 15 October 2014. The total
sion” or the “Longest Depression” by decline from 19 September to 15 October
summer of 2007, and things have
future economic historians. was about 7.4%, falling short of 10% to
only been getting worse in 2016.
qualify as a market correction.
Unless something big and constructive in
The picture looks dismal, no matter
the way of global economic policy is done
which theoretical lens one uses. soon, we will have to change Stiglitz’s fi rst Quantitative Easing Stops
name to ‘Cassandra’—the Trojan prophet- After the fact, many explanations can be
(This article was written
princess who was always wise and always
and were offered such as concerns about
on 5 February before last correct, yet cursed by the god Apollo to be
the absence of aggregate demand in the
always ignored. Future economic historians
week’s tumble in global and may not call the period that began in 2007 world, the possibility of the Federal
Indian markets.) the ‘Greatest Depression’. But as of now, it is Reserve or Fed (the US central bank)
highly and increasingly probable that they raising the interest rates, lower than
will call it the ‘Longest Depression’.
expected infl ation in China, and other
I offer “Worst Depression” as the third such explanations. Ongoing in the back-
alternative and leave it to future eco- ground, however, was the Fed’s winding
nomic historians to call the period that down of the bond purchases in its third
began in 2007 whatever they want. bond-buying programme, also known
However, some sort of consensus is emerg- as Quantitative Easing 3 (QE3). This
ing as the reconciliation prize of this winding down of the QE3 started in
debate. It is that the period that began in February 2014 and ended on 29 October
the summer of 2007 is some sort of 2014 (I had discussed QEs in an earlier
depression, despite Lawrence Summers column in EPW (10 October 2015)).
still calling it secular stagnation. With the benefi t of hindsight, I can
now say that the real reason for this
Market Crash 7.4% decline from 19 September to
A second and more heated ongoing debate 15 October 2014 was the 17 September
is whether the global fi nancial markets press release of the minutes of the meet-
will crash or not. Of course, there are even ing of the Fed on 16–17 September. The
those who claim that the global fi nancial minutes announced that the Fed offi cials
markets have crashed already, but we had decided to reduce the bond pur-
are the minority these days. Apparently chases to $15 billion a month and agreed
to some, an evaporating $14.4 trillion in to end the QE programme after their
the world equity markets from its peak 28–29 October meeting if the economy
of $73.1 trillion on 14 June 2015 to $58.7 continued to improve as expected.
trillion on 31 January 2016 does not Apparently, it took two days for readers
count as a market crash.1 of the minutes to digest the information
And there are some minor debates even and the slide started a day after 19 Sep-
among those of us who claim that the tember to continue until 15 October. Then,
T Sabri Öncü ([email protected]) is an crash has already occurred. The minor on 16 October 2014, James Bullard, the
economist based in Istanbul, Turkey.
debates are about when exactly the crash President of the Federal Reserve Bank of
10 febrUARY 13, 2016 vol lI no 7 EPW Economic & Political Weekly