ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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COVID-19 Crisis: Understanding the State of Economy during and after the Lockdown

Nothing could have brought the global economy to a grinding halt like the COVID-19 pandemic in recent history. Barring essential goods, the production, sale, and consumption of all goods and services have been affected. This article offers a low-down on the stalled economy, and also makes projections for India’s post-pandemic economy. At the time of writing this article, the Government of India’s Rs 20 lakh crore stimulus package was not yet announced.

Impact of Covid-19 and What Needs to Be Done

Tackling the Covid-19 outbreak will require political will and decisive actions from the government in terms of ramping up the healthcare infrastructure, ensuring public distribution of essentials to fulfil basic needs, and income transfers to the poor, among others. The government should not constrain such expenditures in view of maintaining the permissible limit of fiscal deficit. A higher fiscal deficit may not be inflationary now, since demand is drastically down.

The Structurally Flawed GST

The inherent flaws in the design of India’s goods and services tax are identified, which make its implementation inefficient. Can an ad valorem GST levied at the final stage of production solve the problem?

What Do We Know about Remonetisation?

An analysis of publicly available data suggests that 98.8% of demonetised currency was returned to the Reserve Bank of India by 13 January 2017. The data suggests a sharp slowdown in the remonetisation process in mid-December 2016, which reached only 80% of what was demonetised by the end of April. Clearly, remonetisation has been far too slow, and its consequences on the informal economy, though invisible to official data, are a matter of serious economic, political and social concern.

Economic Consequences of Demonetisation

The nature of money supply and its link with transactions in the economy are discussed, with necessary modifications on account of the presence of the unorganised sector and the black economy. This helps incorporate differentiation in the Indian economy that is useful to understand and analyse the impact of demonetisation.

Estimation of the Size of the Black Economy in India, 1996-2012

This article attempts to make an advance in the estimation of the size of the black economy in India by bringing in the institutional aspects of black income generation and taking the macroeconomic variables they affect into consideration. The fiscal approach recognises that black incomes are generated through many different ways in various sectors. The size of the black economy is projected on the basis of the share of the services sector and trade in gross domestic product, with the crime rate representing the extent of illegality.

Curbing the Black Economy

The Bharatiya Janata Party-led government, which promised to tackle the generation of black incomes and to even bring black money back to India, has over the past two years made many announcements that have little bite, like double taxation agreements, among others. Without strong deterrence, curbing the black economy is difficult. That is why widening the direct tax base from 1% of the population, evident from the recently released tax data, has not been feasible.

Challenges Facing New Education Policy in India

The New Education Policy on the anvil should encourage academic talent and innovation to make the system of higher education more responsive to the needs of various stakeholders instead of just attempting to create a uniform standardised structure. To ensure this, political and bureaucratic interference in educational institutions, which has steadily eroded the quality of higher education in India, will have to be minimised, academic autonomy strengthened and diverse opinions taken into account while building a new policy framework.

Macroeconomic Aspects of Goods and Services Tax

The introduction of the goods and services tax may indeed be the biggest reform of taxation so far, but the proposal, as it stands, has led to confusion. Certainly, the myriad taxes producers face will be simplified. But the benefit will go to large-scale producers while the small-scale ones will be at a greater disadvantage than before. The cascading effect will be reduced but not eliminated. With resort to revenue neutrality, prices and costs will not decline. A "revenue neutral rate" will, however, be difficult to calculate and will be controversial, given the variety of taxes being replaced. The adoption of a fixed revenue neutral rate for all stages of production and distribution will lead to a rise in the prices of basic and intermediate goods, as also of services, making the introduction of GST inflationary, unless this problem is specifically addressed.

Window to a Crisis-Ridden Period

Left of Centre: Kamal Morarka in Parliament edited by Lina Mathias (New Delhi: Rupa Publications), 2013; pp xviii + 267, Rs 495.

Delhi University and the Crisis in India's Higher Education

The Four Year Undergraduate Programme at Delhi University will aggravate the problems of higher education that are so visible in DU and that it is supposed to solve. Delaying specialisation till the students have found their interest is good but this is a process that has to start during school education.

Measuring Illegal Outflows from the Indian Economy

The paper "An Empirical Study on the Transfer of Black Money from India: 1948-2008" (EPW, 9 April 2011) by Dev Kar suffers from definitional and methodological flaws. As a result, it is not very clear what is being captured in the estimate - illicit financial flows, gross capital flight or net capital flight.

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