C. P. Chandrasekhar’s Blog

For some time now, global economic news reporting has been dominated by the growth slowdown in China. The tone of that reporting is conflicted. On the one hand, there is a barely suppressed sense of satisfaction or “schadenfreude” (pleasure derived from another’s misfortune). The myth of a ‘rising China’ capable of sustaining high growth for decades is seen to be busted. On the other hand, there is a sense of fear about the consequences for the rest of the world. This is not restricted to the less developed countries exporting primary commodities to China and receiving large investments from it.…

The Sveriges Riksbank Prize, the Nobel for “Economic Sciences”, has always been controversial. This is true of the 2024 award to Daron Acemoglu, Simon Johnson, and James Robinson as well. Typically, the economics Nobel is awarded to mainstream economists for work that directly or indirectly privileges the market in capitalist economies and makes a case for limited intervention by the state. It also tends to be awarded to academics from a few institutions that control the “academic” discourse and serve as gatekeepers to the higher echelons of the profession, at least in the US. But claims are that this time…

In early October, in a show of pique, a European Commission proposal to impose additional tariffs of up to 35.3 per cent (on top of the pre-existing 10 per cent) on electrical vehicles (EVs) imported from China, was passed by a majority vote in the European parliament. With that vote, Europe joined the US in the effort to use high tariffs to block imports from China. The US has, typically, responded to China’s success in EV manufacture by raising tariffs to as high as 100 per cent despite lower imports of Chinese vehicles. It has also used national security as…

The financial media in India and abroad are flagging the likelihood of a meltdown in India’s financial sector, resulting from large scale defaults on personal loans. Even the Financial Times of London has chosen to devote considerable column space to an article focusing on a potential problem in a country that ranks among the globe’s fastest growing. Three developments have triggered this concern. First, a statement from the Governor of the Reserve Bank of India that “excessive” retail lending by Indian banks, “mostly for consumption purposes”, needed to be closely scrutinized from a “macro-prudential point of view”, or simply put,…

Europe is clearly battling to stall its decline in the global economy. Most recently, the Mario Draghi report on “The future of European competitiveness” commissioned by the European Union reflected that sentiment. At the centre of Europe’s economic decline is the descent of former leader Germany to the status of the “sick nation” of Europe. Inflation, rising unemployment, falling competitiveness, and slow growth have been plaguing the nation for the last few years. This European disease, while leading to much handwringing on the future of Europe vis-à-vis the rest of the world, is in practice triggering economic conflict within Europe…

Sri Lanka’s new president, Anura Kumara Dissanayake, must reject his predecessor’s recent debt-restructuring deal with the IMF. That agreement would inflict unnecessary pain on Sri Lanka’s population and set a dangerous precedent, undermining other developing economies’ ability to restructure their foreign debts. Ranil Wickremesinghe, Sri Lanka’s president, recently lost his re-election bid after voters overwhelmingly rejected the debt-restructuring deals he negotiated with the International Monetary Fund and other creditors. Instead, Sri Lankans elected Anura Kumara Dissanayake, leader of the left-wing National People’s Power (NPP) alliance and a vocal critic of IMF-imposed austerity measures, who has vowed to renegotiate the country’s agreement with the Fund............. Download…

It is more than a year since China, reportedly in retaliation to US-driven restrictions on exports of advanced semiconductors and related manufacturing equipment, imposed export controls on two crucial materials—germanium and gallium—that enter into the production of semiconductors and military and communications equipment (advanced microprocessors, fibre-optic products and night-vision goggles). Imposed in the name of safeguarding “national security and interests”, the restrictions on the exports of these materials from China were viewed with alarm. China accounts for 98 per cent of global production of gallium and for two thirds of imported supplies of germanium in the US market. If these…

Recently Congress President Mallikarjun Kharge quipped that the ‘U’ in UPS (Unified Pension Scheme) stands for U-Turn. While that may be seen as stretching interpretative liberty, he was touching a raw nerve. Whether it be lateral entry into the civil services or the Waqf (Amendment) Bill, the current Modi-led government in which the BJP and the NDA must share power with outside partners, seems to be learning the art of coalition politics on the job. Accustomed to brute majorities that allowed them to ‘bulldoze’ policy change, the inclination of the BJP’s leadership is to push ahead with its preferred policies…

India’s quasi-federal democracy, which was in danger of collapsing into a centralised authoritarianism, seems to be holding up. The results of the 2024 Lok Sabha election that reduced the brute majority of the National Democratic Alliance fronted by the BJP, making the coalition it leads dependent on support from two regional parties—the Janata Dal (United) and the Telugu Desam Party—is one important reason. The whims of the centralist BJP have to be tempered to meet the demands of these regional partners, the exact nature and financial costs of which are by no means clear. In fact, the concessions to these…

(Paper presented at the PERI-IDEAs conference on "Debt and Climate Justice". 3-5 May 2024) Abstract The ongoing sovereign debt crisis in low- and middle-income countries (LMICs) was signalled by instances of default or failure to meet external debt obligations denominated in hard currencies. But the response to the crisis has included attempts to restructure domestic sovereign debt issued largely in domestic currencies. Such moves have been justified by identifying the crisis as one of excessive aggregate public debt rather than just unsustainable levels of external debt. There is a need, it is argued, to reduce the gross financing needs (foreign…