C. P. Chandrasekhar’s Blog

A renewed focus on retail lending, or the provision of personal loans, by India’s banking system (and the non-bank financial companies they support), is giving the otherwise confident Reserve Bank of India some cause for concern. That the period after pandemic year 2020-21 has witnessed a spike, if not boom, in retail credit is clear from the evidence. As Chart 1 shows, between late April 2021 and late April 2024, personal credit growth (76 per cent) outstripped the growth in non-food credit (53 per cent) advanced by scheduled commercial banks (SCBs) in India. Personal loans consist predominantly of credit for…

The election results, which gave both the BJP and the NDA far lower seats than they had in the previous parliament and led to a coalition government, surprised many. But now, attention has shifted to assessing what that would do to the behaviour and policies in different spheres of this version of a Modi-led government. One such sphere is economic policy, where the results suggest that the sense of comfort that the second Modi government claimed to have had with the nature and outcomes of its policies was misplaced. Speculation is rife whether the combination of that signal and the…

For some time now, there has been much discussion of and concern expressed about a decline in the net financial savings of the household sector in India. Overall household savings as a percentage of gross national disposable income (GNDI) rose from 18.8 per cent in 2019-20 to 22.4 per cent in pandemic year 2020-21 (Chart 1). That rise is understandable because opportunities and avenues for spending were severely restricted due to the pandemic and the accompanying sudden and prolonged lockdown. So, the fact that following the pandemic that saving rate fell to 19.8 per cent in 2021-22 and 18.1 per…

Political economists Radhika Desai and Michael Hudson are joined by Professor C.P. Chandrasekhar to discuss what is really happening in India's economy, if its government growth statistics and other official data are accurate, the policies of Prime Minister Narendra Modi and his party BJP, and the country's 2024 elections.

Interest in India’s almost unique success as a services exporter in global markets persists. India’s services export receipts rose from $95.8 billion in post-crisis year 2009-10 to $341.1 billion in 2023-24. Close to one half (47 per cent) of those exports were exports of software services, with business services accounting for another 24 per cent. Led by those sectors, India’s share in global exports of commercial services has risen from 3 per cent in 2010 to 4.7 per cent in 2023. India has indeed done well in this area. Charts 1 and 2 illustrate how the increase in global exports…

Less than a year back, a former chief executive of Mastercard, Ajay Banga, was in a surprise move picked to head the World Bank. Putting a Wall Street player addicted to profits in charge of a development institution claiming to help lift poor countries out of their underdevelopment seemed incongruous. Given that the Bank was and is seen my many as an institution with a disappointing track record and a governance structure unfit to meet the development challenges of the current epoch, a person with demonstrated concern with social purpose was the needed choice. Banga’s appointment too was a disappointment.…

Thames Water, one of England’s many regional water monopolies, infamously privatised by Margaret Thatcher in the 1980s and symbolising the dramatic turn in economic policy that neoliberalism implied, is finally collapsing. Unable to mobilise £500 million from shareholders who have milked the company over years, Kemble Water, the parent company of Thames Water, defaulted on debt service payments of £190 million that fell due in the first week of April 2024. Meanwhile, rotting infrastructure resulting from long years of underinvestment under private ownership is resulting in leakages that are egregiously polluting water sources with sewage. So much so that the…

The Organisation for Economic Cooperation and Development (OECD), predominantly a club of rich market economy countries, has just released preliminary estimates of the flow of Overseas Development Assistance (ODA) or “aid” from 31 members of its Development Assistance Committee to developing country recipients. The figures seem to suggest that nothing really changes in that domain. The promise held out in a UN General Assembly resolution of 1970 that “Each economically advanced country will progressively increase its official development assistance […] and will exert its best efforts to reach a minimum net amount of 0.7% of its gross national product […]…

India’s government has since the year of its G20 Presidency claimed to have restored the country’s role as the ‘Voice of the South’ in global dialogues. That is often backed up by reference to its efforts to focus attention on the problem of debt stress and default in poor developing countries, and to the induction of the African Union into the G20. Third World ‘leadership’ is being won by building solidarity among less developed countries is the argument. But recent episodes suggest that in practice that may not be what India is managing to achieve. One such episode occurred at…

Recent discussions on economic policy in the US and other high-income nations make it appear that there is only one domain and one instrument that really matter: monetary policy and interest rates. Whether on the eve of meetings of the US Fed’s monetary policy committee, or in the interregnum between meetings, economic policy discussions largely focus on whether the Fed would begin cutting rates; whether the expectations of “the markets” on the likelihood of those cuts and their magnitude will be met; and whether investors have “factored” in the likelihood that those cuts would or would not occur. It is…