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

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The Black Economy

The major macro-economic problems of the 1970s and the 1980s were integrally linked to the growing phenomenon of black income generation. The black economy should, therefore, have been a significant factor in analyses of the economy. Its non-inclusion in analyses resulted in a partial understanding of the Indian economy and often incorrect policy pronouncements. This paper describes the institutional practices of the black economy and incorporates it into the short run macro analysis of the Indian economy. The need to incorporate the black economy is not simply an empirical matter, but a theoretical necessity. The circular flow of incomes changes with the black economy. Black incomes are first defined. Transfers are not included, but their implications for national incomes, savings and velocity of circulation are presented. The theoretical analysis yields counter intuitive results with regard to tax evasion, investment and savings, subsidies, balance of payments, etc. The empirical trends since the 1970s, say, with regard to unemployment, inflation, the fiscal gap, current account deficit or investments and savings can be better explained using this framework.

New Economic Policies, Instability and Policy Ineffectiveness

New Economic Policies, Instability and Policy Ineffectiveness Arun Kumar A comparison of the trends and the amplitude of fluctuations in several key macro-economic variables in the pre- and post-1991 periods suggests increased economic instability which facilitates speculative activity, especially with financial sector liberalisation and the opening up of the economy, The author also argues that the increased amplitude of economic fluctuations is a result of the nature of state intervention under the new economic policies which has reduced policy effectiveness. The government is unable to control or regulate the impact of shocks (external or internal) since it lacks the policy instruments or has given up some of them or they are greatly circumscribed by the requirements of the new policies precisely at a time when the economy has become far more complex and is subject to more external shocks.

Union Budget 1996-97-Limits of Resource Mobilisation under Market Conditions

Limits of Resource Mobilisation under Market Conditions Arun Kumar Though many concessions have been given to the private sector (including foreign capital), investment and especially the inflow of foreign capital remain uncertain. Even to maintain the current level of investment, more and more concessions may he needed. This creates inequity and problems for resource mobilisation which worsen the budgetary position leading to slow-down of public investment and the capacity to fight poverty.

Reinterpreting Retreat of the State in a Second Best Environment

in a Second Best Environment Arun Kumar The path from the Second Best to the First Best based on reduced government intervention in the economy, with a major component of it based on opening up of the economy, faces instability on several counts inadequate resource mobilisation (public and private), budgetary imbalance and growing debt and interest burden, inability to control inflation and growing disparities (regional and amongst income classes). Thus, any path charted out with reduced government intervention (assuming that policy failure is eliminated) may not only not lead the economy to the socially optimum point but not even to the First Best frontier.

Safety Net or a Trap for the Vulnerable

Safety Net or a Trap for the Vulnerable? Arun Kumar New Economic policy and the Vulnerable Sections edited by P B hargavu; Classic Publishing House. Kapur. 1994; pp 160, Rs 225.

Elaborating Citizens Union Budget-An Alternative

Elaborating Citizens' Union Budget An Alternative Arun Kumar THIS is with reference to the note 'Towards an Alternative Union Budget' by M A Oomen (EPW, March12). I am responding to this note as the principal author of the document and not as the convenor of the preparatory committee for alternative economic policies (PCAEP), the group which presented this year's alternative budget (AB). I welcome the note since it promotes a debate on alternative economic policies.

Growth Prospects Recede as Macro-Economic Situation Slips Out of Control

The economy is in a vicious trap of deteriorating macro scenario resulting from the operation of the new economic policies. The dictates of globalisation have required lowering of customs duties and reduced public investments. Both of these have meant a narrowing of the home market and dependence on the private sector to promote growth. This has required incentives to capital through tax cuts which have led to larger budgetary deficits and lower public investments. These and other policies have shifted the distribution of national income in favour of the propertied and further narrowed the home market and reduced the prospects for growth.

New Economic Policies An Assessment

Arun Kumar The facade of success of the new economic policies (NEP) hides the problems facing the economy. The recent towering of the rate of inflation and the increase in the growth rate of the economy have more to do with a good monsoon than with the NEP. The industrial sector continues to be in the grip of a recession. Foreign exchange reserves are high because of borrowings and the industrial recession.


a result of the growing expenditures by government but the past catching up. The better performance of the economy implies that more resources are being generated in the economy. However, the government is unable to tap them to improve its financial viability.

National Housing Policy-The Implications

National Housing Policy The Implications Arun Kumar The National Housing Policy fails to articulate the interests of the deprived classes. There is no attempt to change the structure of the markets in order to strengthen the position of the weaker sections. The author suggests recognition of the right to shelter and a restructuring of the land market through nationalisation of the right to transfer landed property. In a capitalist society, with its basis in private property rights, these steps may be rejected but then there would be a continued worsening of the housing situation of the propertyless.

Budget 1988-89-Diminishing Returns of Unchanged Fiscal Policy Regime

Diminishing Returns of Unchanged Fiscal Policy Regime Arun Kumar The budget for 1988-89 gives the impression that it neither has any long-term nor any short-run strategy to tackle the serious crisis facing the rural sector of the economy Does this imply a certain incapacity of the state to intervene in the economy to bolster the interests of the classes it has been representing or has the nature of the coalition changed with the growing crisis in the economy?

Accountability and Autonomy in Higher Education-Needed Internal Democracy

Accountability and Autonomy in Higher Education Needed Internal Democracy Arun Kumar THE all-India college and university teachers' strike is almost over. The teachers have been outmanoeuvred by the government but the loss is that of society as a whole since the cause of higher education has received a setback. It is now clear that the perception of the leaders of the strike regarding the real issues facing the academic community was different from that of many others.


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