In 2016, despite the Indian government decided to demonetize the 500- and 1000- rupee notes government’s goal was to combat India`s thriving underground economy on several fronts: eradicate counterfeit currency, fight tax evasion (only 1% of the population pays taxes), small business holders and households faced many troubles and tribulations during the period. Even, they made their lips themselves shut up, to find cash. Over 3lakhs Crores (Three trillion) was deposited with Indian banks in just the first week after the demonetization.
As the Wall Street Journal noted in 1986, "When China began its open-door policy in 1979, foreign banks rushed to offer loans." China has an excellent credit rating and can borrow as much as it chooses on the private market. But the World Bank has poured over $5 billion into China in the 1980s, largely to boost its own lending goals.
And, the World Bank is seeking new U.S. funding this year, almost a billion dollars for the International Development Association, which provides zero-interest 50-year loans to the poorest, usually worst-managed countries. The bank expectation is to request a major increase in its capital next year, considering another commitment of some $10 billion from American taxpayers, to allow it to greatly increase its lending to Developing countries. Yet the bank`s operations present a classic illustration of failure being its own reward.
According to Rlpah Miliband, there are four distinct functions of the state in a capitalist society (even in democratic society, the whole power and wealth are in the hands of the capitalists, but not in the government). Those are the repressive function, the ideological- cultural function, the economic function and the international function. These functions are common to all the capitalist states.
Beginning in 1985 and more systematically in 1991, India liberalized economy. Important domestic regularity changes were accompanied and followed by a change in India’s global strategy. Trade, technology and foreign direct investment (FDI) were all encouraged. This policy change had a clear impact on India’s economy.
Posted by: Janga Babu Rao, Ph.D. Research Scholar, University of Hyderabad, India (12-Jun-2018)