What If Mahatma Gandhi Was A Central Banker Today?

AMID a slowdown that is equal parts real and political, newspaper helines call 6 per cent growth anaemic when global rate is hovering at less than half. Reserve Bank of India has reduced its Bank rate by 135 basis points this year, hoping low rates would entice animal spirits back, yet, banks have passed on only 29 basis points to consumers as lending remains on a long-term drip. Viagra of tax sops anunced by Finance Ministry has almost exhausted itself on Sensex. Chances are that profits from huge tax cut given by Modi government to kickstart ecomy would get absorbed as dividend and shareholder returns than be ploughed back into industry. Essentially Keynes is failing to pass on baton to Freidman.

When 2008 global financial crisis was panning out, as a student of political ecomy, I would be left perplexed at remedies that were being implemented. At risk of helpful oversimplification, cause of 2008 meltdown could be summed up in one word: Subprime – a phemen of multi-layered debt recycling that led to a situation where financial institution h a clue as to who owned what risk and at what cost! But that was only one half of problem. remedy found by governments and central banks world over – fiscal stimuli or quantitative easing – was worse than disease. Led by American Federal Reserve, almost all responded by lowering interest rates and getting into bond markets. Aimed at increasing liquidity, palliative overestimated role of capital in growth. tenuous equilibrium has come undone in less than a dece.

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Last two years have seen a total of up to US dollars 2 trillion worth of fiscal pump through tax cuts and public expenditure by Trump ministration to keep ecomy going. Obviously future American generations are in debt. Negative rates have t helped Japan and Germany. miracle of China is unspooling with country recording lowest growth rate in over a quarter of a century. Brexit is a marker of how experiment with financial integration has unravelled in Europe, and US-China tre war has brought idea of globalization itself under a cloud. Essentially model lives between one tipping point and ar, with every cycle ding more debt.

India lived through its subprime era in dece of UPA-I and UPA-II with what is called evergreening of loans in name of corporate debt restructuring, and NAC inspired loan waivers resulting in twin-balance sheet crisis and NPA mountain. Almost entire first term of Modi government was lost to cleaning up mess with limited results.

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As I write this, a promotional tweet pops up on my phone, through which Intel wants to sell its next chip, claiming last one costs 11 extra days per annum in employee efficiency because of its slow speed. last one incidentally came into market less than a year back! Last month, cheap antacid Ranitidine came under investigation for a possible carcigenic toxin. drug was discovered in 1976 and has been in commercial use since 1981. Is it possible to believe that with available science toxin could t have been found before? only possible explanation is that pressure of quarterly results never allowed investment needed for sanitization.

This profits driven capitalism that lives quarter-on-quarter within an overall framework of shareholder supremacy has sure worked to raise billions from poverty but with attendant costs as two examples above show. Should this occasion a relook at ideological framework we use to debate ecomic issues ailing nation, or even society at large? We are marking sesquicentennial year of Mahatma Gandhi with Modi government embedding celebration at all levels of governance. re are many aspects of Gandhian thought that taken toger provide an alternative ecomic model worth looking at.

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Gandhi h close relationship with capitalists and capitalism. One of his first attempt at political activism on return from South Africa was through Majoor Mahajan Sangh – Labour Capitalist Association – a vel experiment he spearheed to bring toger striking textile mill workers of Ahmedab and owners. Thus was born idea of trusteeship, essentially capitalist holding wealth in trust of society. His professing of Upanishic Tena Tyaktena Bhunjitha – enjoy with a sense of reuncement – and practicing ideas of n-stealing (Asteya) and n-possession (Aparigraha) – borrowed from Jainism – provide a construct that can directly dress roots of present debt driven consumerist ecomic model in good measure if t wholly.

In August this year, US Business Roundtable – America’s top body of most powerful CEOs – in its annual statement resolved to uphold stakeholder capitalism. A subtle tweak went almost unticed beyond community of ecomy wonks. In place of shareholder maximisation, statement talked of stakeholder returns – reby including everyone impacted rar than just capitalist and shareholders. statement of course did t mention Gandhi.

Imagine. Would a situation like Subprime have happened h global big four audit firms kept se ideas in mind? Closer home, wouldn’t we have one less scam to deal with if Banks followed se concepts in ir due diligence? If Gandhi were RBI goverr today, would he choose ar ineffective rate cut? Or, picking from his experiments with fasting, would rar let fundamentals heal over a period? Just wr.

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