Prabhat Patnaik, eminent economist and professor emeritus at Jawaharlal Nehru University, interviewed by Subhoranjan Dasgupta (The Telegraph)

-The Telegraph

‘Farmers at mercy of corporates, food security threatened’

Eminent economist, professor emeritus at Jawaharlal Nehru University and activist Prabhat Patnaik traces the downward and dangerous slide of the Indian economy, from the demonetisation to the new farm bills.

* The first onslaught was in the form of the demonetisation. While Amartya Sen termed this step “despotic”, Narendra Modi gushed that there would be no black money after the demonetisation. In the process, more than 100 aged people died of heat standing in long queues. How has the demonetisation helped or hindered the common people?

The demonetisation brought immediate pain to millions. But apart from its immediate effects, it also left a lasting, long-term legacy that has undermined the viability of the informal sector, including peasant agriculture, which accounts for 85 per cent of employment and 45 per cent of the output in the Indian economy. Unable to sell the output for immediate cash, this sector incurred much greater debt, which has become a millstone around its neck.

It was also utterly pointless. It revealed the Modi government’s ignorance of economics and its penchant for “shock and awe”. The government believed, as in Bollywood movies, that “black money” is just cash stuffed into pillowcases or mattresses that could be simply disabled.

But “black money” is not a stock of money lying around. It lubricates activities generating employment, output and incomes. These are like normal activities, but illegal. If perchance a cash shortage arises in the “black economy” it will suck out cash from the legal economy but will not fold up. So a demonetisation is no way of tackling the “black economy”.

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Image Courtesy: The Telegraph