Updated: October 24, 2020 7:27:15 am
First, broadly speaking, macro-economic stability matters. But, politically, the government remains convinced that inflation carries serious political risks. This is going to remain a cornerstone of the macro-political economy.
Second, the relative bargaining power of capital in relation to labour will continue to radically favour capital. This has been the trend for the last two decades. In emerging economies, there will be a race to the bottom as far as sensible protections for labour go. Indonesia has, like India, gutted labour protections.
Third, in agriculture, the problem is similar to labour — any position that simply involves defending the status quo loses political support.
Fourth, state-capital relations. State and capital relations will remain very politically cosy. In significant sections of Indian capital, there is a deep commitment to the Hindutva project. The government understands that control of the information order requires control of capital; so it will superintend it. Corruption will be more structural rather than transactional. This has the advantage of being able to mobilise all the necessary funds, and yet at the same time giving the impression that transactional corruption has come down.
In this regard, Mehta points out that this government is comfortable with greater concentration of capital. The argument that there is a need to create national champions who can leverage scale will be used to justify the dominance of the Ambanis over the Indian economy to a point that is unhealthy. 📣 Follow Express Explained on Telegram
Fifth, there is a deepening of the new welfare state. Interestingly, the Modi government’s focus here is on six of the new indicators that the Oxford Multi-Dimensional Poverty Index uses to supplement traditional indicators of health and education. Cooking fuel, water, sanitation, electricity, housing and assets are both vital and visible areas of intervention.
Finally, there is the political economy of federalism that has come under immense strain because of GST and the government’s encroaching on the state’s rights in recent legislation. But the blunt truth is that, in the final analysis, the potency of this fault line depends on the states.
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