C. P. Chandrasekhar’s Blog

With US President Donald Trump leaning towards Russia when advocating a stop to the war in Ukraine and making clear that the US will no longer foot the bill to ensure Europe’s security, talk of “Russian expansionism” in Europe has become louder. This has fuelled calls for Europe to rearm itself. However, there is little appetite among the continent’s current rulers for enhanced taxes on the rich to fund the increase. The fallout has been a discussion on the need for Europe to shed its fiscal conservatism, institutionalised in the form of “fiscal rules” capping budgetary deficits and setting public debt ceilings. However,…

“This is a new form that inter-imperialist relations have taken. It is not the old form of inter-imperialist rivalry that precipitated world wars.” Original YouTube Source : https://youtu.be/9aWG51M-0l8 If the first month of Donald Trump’s second stint as President of the United States is indicative, then it appears that global capitalism with the US as hegemon is in the process of an endogenously triggered process of restructuring. Among the many early signals from the Trump administration to switch US policy at home and abroad, five initiatives stand out in the economic sphere. First is the turn to higher import tariffs,…

If the first month of Donald Trump’s second stint as President of the United State is indicative, then it appears that global capitalism with the US as hegemon is in the process of an endogenously triggered process of restructuring. It must be noted that this process, as other restructuring episodes in the past the New Deal following the Great Depression and the embrace of neoliberalism following the inflationary crisis of the 1970s is driven by policy. But the policy shifts in each case were spurred and necessitated by real world crises and had implications for the regime of accumulation that…

There is a sense of panic gripping financial markets in India. The immediate causes are a combined slide of indices of stock markets and of the rupee vis-à-vis the US dollar. For market players accustomed to what has been an almost continuous bull run and rise in market valuations (barring hiccups in 2022 and early 2023), which took the Bombay Stock Exchange Sensex from a low of less than 26,000 in March 2020 to a peak above 85,000 in September 2024, the recent decline of that index to less than 76,000 by mid-February is cause for concern (Chart 1). Rather…

US President Donald Trump has often said that ‘tariff’ is his favourite word. Within weeks of taking office, he imposed 25% tariffs on all imports from America’s two biggest trading partners, Mexico and Canada, and 10% tariffs on goods from China. Subsequently, he paused the tariffs for 30 days, after Mexico and Canada promised to take certain measures to curb illegal migration and cross-border fentanyl smuggling. Given his repeated statements that he is looking at tariffs as a source of revenue it seems like he is viewing tariffs as a permanent feature rather than as a temporary negotiating tool, as…

“What we are seeing is the re-tranching of the banking system, where banks parcel the riskiest slice to private credit, providing less risky lending themselves. Private credit could be the Ozempic to help banks on yet another diet”. Vice Chair, Oliver Wyman In 2024, the six largest banks in the US—JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley—reported a 20 per cent rise in their collective net profits, relative to 2023. Financial markets in the US are experiencing a boom. The S&P 500 rose to a record, immediately after President Trump’s comments on tariffs, interest…

If an element of surprise is a hallmark of a good budget, then Finance Minister Nirmala Sitharaman can pride herself on having won the day on February 1. In a briefer than usual Budget speech, reflecting impatience to get to the end, Sitharaman concluded with an unexpectedly large tax break for the tax paying middle classes. The tax-free income level has risen from Rs. 7 lakh to Rs. 12.75 lakh and revised rates in different tax slabs give substantial benefits to those required to pay income taxes. That concession results in an estimated Rs. 1 lakh crore of potential direct…

The background to Budget 2025-26, as presented even by the official Economic Survey 2024-25, has posed a challenge to the Narendra Modi government that is settling into its third term. Growth is decelerating because of dampened consumption demand and slowing public capital expenditure, and private investment has not been making up for the slack. Meanwhile, global growth and policy trends, pre- and post-Trump, make it clear that external trade is not likely to be of much help. Any effort to reverse the slump in growth and ensure that the Viksit Bharat 2047 slogan, or ‘the ambition to take India to…

If a spate of recent headlines in the media is to be believed, the rupee is in free fall. That is true when the rupee’s value vis-à-vis the dollar is the sole focus. While the rupee stood at 84.1 to the dollar at the beginning of November 2024, its value has fallen to touch 86.6 to the dollar by the 17th of January 2025 (Chart 1). Given the time span involved that depreciation is significant. This fall could be interpreted as a result of weaknesses on the external front. The current account in India’s balance of payments is chronically in…

The sense in business circles, that demand is weak and growth is slowing down, was confirmed when GDP figures for the second quarter (July-September) of financial year 2024-25 showed growth at 5.4 per cent. This was well below forecasts of annual GDP growth in the 7 per cent range, and the 8.1 per cent recorded in the corresponding period of the previous year. Following that, several international and domestic institutions have revised downwards their projections for the full financial year. Manufacturing in particular has performed poorly, with annualised growth of 2.2 per cent in the second quarter of 2024-25, as…