[Urbanstudy] What are Indian economists smoking these days? It must be gobar which is making them hallucinate about growth and ejaculate numbers

Kabir Khan kabirkhan1989 at gmail.com
Sat Sep 30 00:39:40 CDT 2017

What are Indian economists smoking these days? Gobar!

Two op-eds published in The Indian Express <http://indianexpress.com/>
today are enough to boil your blood. One is by the member of recently
constituted Economic Advisory Council
Mr. Surjit S Bhalla
<http://indianexpress.com/profile/columnist/surjit-s-bhalla/> and the other
one is by Mr. Sajjid Z. Chinoy
<http://indianexpress.com/profile/columnist/sajjid-z-chinoy/>. The op-eds
force you to question what are our economists smoking these days? It must
be gobar which is making them hallucinate about growth and ejaculate

Mr. Bhalla is telling us that poor benefitted the most with an increase in
wages because of demonetization and introduction of Good and Services Tax.

Dear Bhalla Sahib, demonetization destroyed the backbone of poor. They
didn’t have money to even enter the labor market. There are costs of
mobility. One needs food to have energy. Demonetization ensured reduced
mobility, access to food. People weren’t able to go to work because they
had no money.

Many informal workers (garment workers) need thread and other stitching
material. They had no cash to buy that material. The shopkeepers weren’t
selling them on credit. This ensured that home-based workers like those
engaged in stitching have no work.

Illustrations above are the tip of the iceberg.

They are enough to state that demonetization reduced the supply of labor
and those who were working needed higher wages to survive and help others
survive. Similarly, due to the cash crunch, they were to be paid later. The
only reason as a worker you’ll wait for the wages for longer duration is
the promise that you’ll be paid extra. Demand for labor was already there,
but the government pursued to reduce the supply through artificial measures
and here we are with so-called ‘higher wages’.
Further, you’ve not even accounted for the opportunity cost loss to those
who stood in the queue to withdraw cash. Their numbers stand in thousands
and millions. Leaving their work aside, they were standing in front of ATMs
and banks.

Another example which is worth quoting here to demystify this higher wage
narrative is the prices of recyclable plastic material. All over India,
after the introduction of Goods and Services Tax (GST), scrap plastic
material prices crashed. Reasons of price crash have been provided below.
An interesting phenomenon emerged in Indore, the prices of recyclables rose
in Indore. Prices of PET bottle went up from INR 20/kg to INR 25/kg,
cardboard INR 03/kg to 05/kg. This was strange.  A well-versed economist
will say, ‘O dear, poor waste-pickers are benefitting from GST in Indore’.
Mr. Bhalla will say ‘higher prices’- good for poor. This will be replayed
multiple times without finding the reasons of price rise. Continued here...
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