Many low and middle income countries face sovereign debt crises even though they have been much more fiscally prudent than advanced economies through the Covid-19 pandemic and after.

In a barely noticed development, the International Monetary Fund (IMF) has "reformed" and extended the conditions it imposes in return for emergency balance of payments support to less developed countries with stressed external accounts.

The practice of making much of any small increase in aggregate GST collections only serves to divert attention from the fact that this tax regime has not delivered and precipitated a fiscal crisis in many states.

The post-second world war period had seen a spate of welfare state measures in the advanced capitalist countries, especially in Europe, in emulation of what the Soviet Union was effecting.

The long-standing debate on whether India's public sector banks should be privatized has resurfaced in recent days. Two articles, besides numerous statements from advocates of 'reform', triggered this round of debate—one wittingly and the other, perhaps unwittingly.

In a new turn to its advocacy of a conservative fiscal stance amidst a recession, the International Monetary Fund in the April 2022 edition of its "Global Financial Stability Report" has called for reining in bank credit to governments as a way of weakening the sovereign–bank nexus that was strengthened during the pandemic and ostensibly threatens bank stability.

The unjustifiable conservatism that characterised the central government's fiscal stance in the first pandemic year has persisted, worsening the impact of the health emergency and imposing long-term costs on the Indian people.

The Modi government has been raising taxes on petro-products to finance government spending; this has led to the dual effect of not stimulating the economy, but the inflation levels. If instead, the expenditure was financed by a tax on the rich, it would have both stimulated the economy and kept inflation levels down.

The $1.9 trillion American Rescue Plan signed by Joe Biden is one of the biggest fiscal boosts in the world in recent times. It marks a move away from the fiscal conservatism and dependence on monetary policy instruments characteristic of the neoliberal era that began with Reagan.

Even the blinkered BJP government sees the need for a fiscal policy to increase the government expenditure and stimulate the economy; but it cannot tax capitalists or enlarge the fiscal deficit, violating the dictates of globalized finance and thus finds itself in a bind.

The features of the 15th Finance Commission's report point to a bias in favour of the Centre that would substantially aggravate the fiscal centralisation that has intensified in recent years, leading to a politically disruptive fiscal crisis affecting all state governments.

Fiscal policy in India has been very timid during the period of the most brutal and inefficient (in terms of public health outcomes) lockdowns in the world. Unless this is changed, the economy may plummet further.

When the GST was introduced, the states virtually gave up their constitutional power to levy indirect taxes. The GST, however, having been singularly unsuccessful in garnering revenue, the GST cess which is supposed to finance the promised compensation payment to states has also failed to garner adequate revenue.

The Centre could borrow and compensate the states, and finance that borrowing from future revenues accruing to the cess fund, but the Centre went ahead with its decision to stop the transfer of compensation to the states to cover the shortfall in state-level Good and Services Tax (GST) revenues.

The Centre recently announced that it would not fully compensate the states for any shortfall in revenues from GST, thus proving that the Centre's belief that compensation cess would serve its purpose over 5 years, when its contribution was needed, was wrong. The GST regime seemed to be on a trajectory when growth was reasonable, but needed a life support when growth slowed down.

Neoliberal policies geared to incentivize private investors while limiting the fiscal deficit, and the shift to a failed GST regime, had sharply lowered tax revenue growth and curtailed expenditure even prior to Covid. The government is now faced with a fiscal crisis, and the economy is in recession.

The Modi government is pushing the Indian economy into further contraction through its completely inappropriate conservative fiscal stance.

Despite invoking wide-ranging emergency powers, the central government has left the task of addressing the Covid pandemic and financing that effort largely to the states. The resulting fiscal crisis threatens the fragile foundations of India's federalism.

Aware of its own inaction, the government has outsourced a large part of sorely needed stimulus to RBI and public sector banks. But the latter's aversion to risk is creating multiple roadblocks and it is time the government directly steps in.

While state governments are expected to meet all the Covid-related expenditure, they have not even been given their legally mandated GST compensation. This centralizing tendency of the BJP govt harms not just the states but the federal consciousness of India.

Monetary policy can only make credit cheaper, it cannot bring money into the hands of workers. It cannot compensate for a fiscal stimuli, especially when India is in a liquidity trap. For such an unprecedented crisis, fiscal spending has been highly inadequate.

As millions are suddenly rendered jobless, the government must enlarge its spending immediately. The current pandemic has brought to fore the fundamental conflict between interests of finance capital and those of people.

At a time when the economy is in freefall absent fiscal push from the Centre only suggests a desire to favour the rich; those forces who risk losing a part of surplus in taxation to finance government debt.

The flight of footloose portfolio capital from India has attracted attention because of its impact on stock indices and the value of the rupee. But the bigger danger is of a debt shock that can be more damaging for the corporate sector.

"The government's fiscal policy must be blamed for India's worsening wealth inequality. With a substantial reduction in taxes on the rich, more investment by capitalists has been accompanied by an increase in their wealth."

As the economy slows down, the Modi government would rather squeeze the state and cut welfare expenditure directed towards the poor than stand up to finance capital under a neo-liberal regime.

As an aftermath to Moodys' decision of downgrading India's credit rating, the government's obsession with fiscal consolidation may see it curtailing expenditure further. If that transpires the descent into recession could be sharper.

"ICRICT's proposal of unitary taxation on MNCs would not only ensure that multinational companies pay their fair share of taxes but also help the Indian government tackle declining tax revenues without adopting regressive tax measures."

"Central governments' tightening control on fiscal resources is preventing state governments from undertaking the much-needed public spending which have recently propped up economic activity."

The unprecedented additions to the terms of reference for the 15th Finance Commission continue the Modi government's attempts at fiscal centralisation and denial of resources to states.

Under the NDA government disinvestment is increasingly turning out to be a process in which surpluses are wrung out of PSEs or government linked institutions to support the budget, instead of the usual route of sale to private buyers. Apart from adversely affecting the modernization and expansion plans of PSEs, this change in the nature of disinvestment does not enable the government to raise its expenditure to the desired levels in a pre-election year.

The central government regularly fudges fiscal data, to pretend to meet the FRBM Act targets. This messes up public companies, but does it really matter for the macroeconomy?

Agrarian crisis is a direct result of the neo-liberal fiscal regime, which advocates tax incentives for finance, the corporate sector, and the rich in general, and tight control over government borrowing; all this has resulted in long-term neglect of agriculture. Now the measures to provide relief to farmers are being opposed by neo-liberal advocates on the grounds that it will violate fiscal prudence and yet not resolve the problem created by neo liberal fiscal regime in the first place.

The most recent deceleration in growth is the result of the inability of the system to sustain the artificial stimuli that the neoliberal policy environment facilitated. It is a problem that does not lend itself to easy resolution.

The few days old Volume II of the Economic Survey by Ministry of Finance shows a GVA growth rate much less than that of the previous year, and that too artificially boosted by seasonal variations in non-core sectors. This deceleration is most likely to continue, with growing NPAs and plunging exports, and interest rate cuts will not help in a demand-constrained economy unless the government starts thinking beyond "fiscal rectitude".

The central governments' Draft National Education Policy promotes privatization of education to meet its target, which is not only logically absurd but also legitimizes inequality. Solutions like student loans are impractical with educated unemployment, and fee subsidies turn counterproductive. The one efficient way is to extract the private funds through progressive direct tax, but that seems impossible in this neo-liberal era.

The policy shifts of the reform era have not been in favor of agriculture. Trade liberalisation, deregulation and a greater role for market forces have not benefited the farmer, who is trapped in a persisting crisis. It is time for today's policy makers to recognise their own disconnect, and learn from the evidence at hand.

The failure of the government to provide universal access to quality schooling and to ensure equal access to higher education among all socio-economic groups as well as across gender and region has significant implications for equitable socio-economic advancement. Ensuring a reasonable quality of education to all children will necessarily require a significant expansion of the public resources to be provided.

The Siren Song of Cash Transfers

Budget 2011-12: The wages of cynicism

The budget allocations for the education sector are not sufficient for fulfilling the commitments made by the Centre in the sector. In particular, it seems that the financial burden of ensuring the right to education is to be thrust on the state governments, which might find it difficult to raise the required resources.

The Budget certainly benefits the Indian elite class, but the conditions of the majority of people whose lives continue to languish in dreadful conditions are not going to get better. This is because it has not addressed the two major issues that matter for most people, namely food inflation as well as productive and gainful employment.

The Budget is remarkable for its effective rejection of the interests of the common people. Instead of focusing on measures that will increase food supply and food distribution, the government has curtailed allocation for food subsidy. In the case of employment, the presumption seems to be that economic growth on its own will deliver more jobs; but this is not likely.

Across the world governments are debating whether it is time to exit from their fiscal response to the global crisis and return to austerity and fiscal consolidation. This may be premature, since the question whether there was indeed such a generalized and adequate fiscal response that triggered a recovery remains unanswered.

There was a sudden resurgence in Keynesian ideas everywhere when the global financial crisis broke in September 2008. But, equally suddenly, financial markets have once again turned back on state intervention and policy makers are giving in to demands for massive cuts in public expenditure that would require enormous sacrifices from their populations.

The most obvious reason behind the government's decision to ''free'' the price of petroleum products - even as inflation has emerged as a major problem - seems to be that it has chosen to favour the private companies in this sector. But, the current strategy puts the entire burden of irrational shifts in the international prices of oil on the consumer, and the burden sharing involved is extremely regressive.

While this year's Economic Survey identifies the basic goal of economic policy as inclusive growth, this is to be delivered by a change in focus to an enabling government from an actively interventionist one. This vision excludes the possibility that the process of market-driven economic growth itself generates greater material insecurity and impoverishment for a significant section of the population.

Food price inflation is one of the most critical economic problems in the country today, and the ability to control these prices quickly and effectively is one of the main bases on which people will judge the performance of this government. This article examines the recent pattern of inflation in important food items and considers the possible causes, including the growing distribution margins.

If increasing its fiscal manoeuvrability and greater transparency and equity were the objectives that the government was pursuing through a tax reform, then a revamp of the existing tax law to get rid of a wide range of unnecessary exemptions would have been adequate. However, the draft direct tax code is a signal that UPA II plans to continue with the policy of cajoling private capital into investing for growth with concessions that have adverse equity and welfare implications.

Panchayati Raj should not be viewed either as a mere ''governance arrangement'' or as an end in itself. It is a means of social transformation that derives its legitimacy exclusively from the perspective of how far it facilitates this process of social transformation. If we miss the transformational role of panchayati raj, then we may end up condoning and even accentuating caste and class oppression in the countryside and also weakening the State structure.

One of the significant impact of the financial crisis on the world of ideas is that it has brought to the forefront the recognition of the role of the government expenditure in mitigating recessions, as was advocated by Keynes and Kalecki. This article makes a theoretical case for undertaking Keynesian measures to cope with the recession.