The strategy response to the global economic crisis seems to be to sustain the financial system and wait for the next ‘bubble’ to appear rather than to revive the real economy directly through fiscal stimuli, frets Prabhat Patnaik in the opening essay of ‘Progressive Fiscal Policy in India,’ edited by Praveen Jha (www.sagepublications.com).
Cautioning that the consequence of this strategy will be a prolonged period of recession and unemployment with much human suffering, Patnaik observes this only underscores the power of the financial interests in contemporary capitalism, where even a crisis of epic magnitude engendered by their functioning leaves this power undiminished.
Taking on ‘the mythology propagated by capitalism,’ that the unfettered functioning of the system gives rise to a state of full employment where the resources are efficiently allocated, the author calls for government expenditure aimed at achieving full employment, financed by an appropriate mix of taxes and borrowing. It is better for recovery if the increase in government expenditure is coordinated across the major countries rather than being sequentially undertaken, he adds.
Another essay in the book is titled ‘Assessing tax policy and tax compliance in the reform era,’ where the author Saumen Chattopadhyay makes a case for a progressive tax policy even if it is at the expense of growth rate. Ruing that tax evasion continues to pose formidable challenge for the government even decades after tax reform, he demands a greater focus on direct tax collection and removal of tax concessions.
Recommended reference.
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