Why Indian Monetary System is Pro-Capitalist?
Though we ‘the People of India' solemnly resolved ‘India to be a Sovereign Socialist Secular Democratic Republic and to secure to all its citizens Justice, social, economic and political liberty of thought, expression, belief, faith and practice, equality of status and of opportunity' but we have yet to realize that despite 63 years of independence, our monetary system is not Socialist but continues to be Pro-Capitalist as designed by the Capitalists during the British India rule.
During British rule the Indian resources had been draining towards to British because capitalists of East India Company had made India a colony for the British. When the pro capitalist British India reeked that the agitations for India's freedom may increase in future and the British may need to quit India, they strategically incorporated a monetary system in the form of the Reserve Bank of India Act 1934 on dated 6th March 1934 to allow the capitalists keep on exploiting the Indian economy even after India's independence. Thus RBI Act 1934 made Indian's monetary system Pro-Capitalist through which the capitalists empowered to lend and invest on interest basis.
Even though India got political freedom in 1947, the capitalists kept on exploiting Indian economy through pro–capitalist monetary system. After independence, the Banking Regulation Act 1949 was incorporated on 10th March 1947 even before enforcement of the constitution of India. The strategy was to allow the capitalist exploit the opportunities to earn accumulated interest through monetary transactions; and the non-capitalists groups could not organize the financial resources in socialist manner. Since the Banking Regulation Act 1949 discouraged promotion of interest free banking in India, during last 63 years the capitalist group kept on capitalizing the opportunities whereas the socialist and cooperative movements suffered due to unfair financial regulations. This led dominance of capitalism over socialism and we moved towards so called liberal but pro capitalist economic system. As a result the cooperative institutions hold just 12 percent share in Indian credit market.
Due to unfair financial regulation for the capitalist and socialist groups, Co-operatives failed to succeed at rate of private banks and public companies are being liquidated. Capitalist always got an edge in banking and financial sector, thus kept on capitalizing the resources whereas the socialist were not allowed to organize the interest free banking and financial system. This increased the economic disparities in India. The common Indian became poorer and Capitalist turned into Corporate and Multinational Companies. They are now in a position to rule Indian economy. The interest factor killed the spirit of cooperation among socialist groups in India so cooperatives continued to deteriorate.
This trend will continue till we understand the concept of economic wisdom. Though in recent past the East India Company has been bought by an Indian, considerably that Indian is also a capitalist. In short we never thought about freeing India from capitalism. Historically India was conquered when it was known as Golden Bird, and presently capitalists keep on exploiting India through pro-capitalist financial regulations. Today if the capitalists seek to make any country as a colony, they don't need to conquer that nation, the liberalized pro-capitalists financial regulations are sufficient for it.
The capitalist had biggest threat from Islamic Economics because they had the fear in mind that if India adopts democratic political system of Islam, after understanding the potentials of Islamic welfare economics, India can also adopt the Islamic monetary and financial system which may end the road for capitalist in India. They knew that Islamic system is more socialist and discards economic supremacy of capitalists. Thus after independence, Indian monetary regulators not only approved to continue the British made Reserve Bank of India Act 1934, but also enacted the Banking Regulation Act 1949 in line of Capitalist policies. This kept ‘interest' as prime factor to regulate the monetary system, and disallowed interest free banking which could have otherwise opened way for socialist pattern of banking and finance in India.
Since economic growth is not possible without banking services we need to ensure financial inclusion of poorer and more backward section of our society. The motive behind financial inclusion mission by capitalist group is to find new markets for earning interest over idle capitals. After observing saturating financial sector growth in developed economies, the capitalist managed banks and financial institutions found huge potential to earn higher interest through financial inclusion mission. This emerging market to earn better rate of interest by way of appeal for financial inclusion has convinced the governments as well who otherwise failed to provide banking services to poor.
Does the financial inclusion mission or working of micro finance institutions serving the purpose of inclusive growth? Had this been done, the credit deposit ratio for poor Indian Muslims might have increased and their proportionate share in Gross Domestic Income would have increased. But we just find conflict of interest in this business of financial inclusion. The Capitalist want to earn higher interest, the Micro Finance Institutions want major shares in Micro Finance businesses whereas the poor farmers, artisans, labourers and petty traders seek alternative mode of affordable credits. No player in this business of Micro Finance wishes to ensure inclusive growth. There is still any report to prove the micro finance business as positive for inclusive growth. Growth should not be measured in terms of credit income ratio, but should be measured as effectiveness of Micro Finance to bring positive change in proportionate share of poor in national income during different periods. Has the share of poor workers associated to rural economy increased with growth of micro finance business in India? The answer will open mind of those who seek to evaluate effectiveness of micro finance for inclusive growth.
The Ministry of Finance should evaluate the effectiveness of our banking regulations and credit policies in financial inclusion and inclusive growth. How we could empower the cooperative based interest free banks in India should be worked out. India needs to test at least a pilot interest free cooperative bank to empower the poor and vulnerable through principles of mutual cooperation. Only after that we may find alternative to Pro-capital monetary system. Poor should be allowed to organize and utilize their financial resource through cooperative interest free banking. Is the Reserve Bank of India ready to experiment it or fears that it may saturate scope of interest based banking which is backbone of capitalist growth in India.
During British rule the Indian resources had been draining towards to British because capitalists of East India Company had made India a colony for the British. When the pro capitalist British India reeked that the agitations for India's freedom may increase in future and the British may need to quit India, they strategically incorporated a monetary system in the form of the Reserve Bank of India Act 1934 on dated 6th March 1934 to allow the capitalists keep on exploiting the Indian economy even after India's independence. Thus RBI Act 1934 made Indian's monetary system Pro-Capitalist through which the capitalists empowered to lend and invest on interest basis.
Even though India got political freedom in 1947, the capitalists kept on exploiting Indian economy through pro–capitalist monetary system. After independence, the Banking Regulation Act 1949 was incorporated on 10th March 1947 even before enforcement of the constitution of India. The strategy was to allow the capitalist exploit the opportunities to earn accumulated interest through monetary transactions; and the non-capitalists groups could not organize the financial resources in socialist manner. Since the Banking Regulation Act 1949 discouraged promotion of interest free banking in India, during last 63 years the capitalist group kept on capitalizing the opportunities whereas the socialist and cooperative movements suffered due to unfair financial regulations. This led dominance of capitalism over socialism and we moved towards so called liberal but pro capitalist economic system. As a result the cooperative institutions hold just 12 percent share in Indian credit market.
Due to unfair financial regulation for the capitalist and socialist groups, Co-operatives failed to succeed at rate of private banks and public companies are being liquidated. Capitalist always got an edge in banking and financial sector, thus kept on capitalizing the resources whereas the socialist were not allowed to organize the interest free banking and financial system. This increased the economic disparities in India. The common Indian became poorer and Capitalist turned into Corporate and Multinational Companies. They are now in a position to rule Indian economy. The interest factor killed the spirit of cooperation among socialist groups in India so cooperatives continued to deteriorate.
This trend will continue till we understand the concept of economic wisdom. Though in recent past the East India Company has been bought by an Indian, considerably that Indian is also a capitalist. In short we never thought about freeing India from capitalism. Historically India was conquered when it was known as Golden Bird, and presently capitalists keep on exploiting India through pro-capitalist financial regulations. Today if the capitalists seek to make any country as a colony, they don't need to conquer that nation, the liberalized pro-capitalists financial regulations are sufficient for it.
The capitalist had biggest threat from Islamic Economics because they had the fear in mind that if India adopts democratic political system of Islam, after understanding the potentials of Islamic welfare economics, India can also adopt the Islamic monetary and financial system which may end the road for capitalist in India. They knew that Islamic system is more socialist and discards economic supremacy of capitalists. Thus after independence, Indian monetary regulators not only approved to continue the British made Reserve Bank of India Act 1934, but also enacted the Banking Regulation Act 1949 in line of Capitalist policies. This kept ‘interest' as prime factor to regulate the monetary system, and disallowed interest free banking which could have otherwise opened way for socialist pattern of banking and finance in India.
Since economic growth is not possible without banking services we need to ensure financial inclusion of poorer and more backward section of our society. The motive behind financial inclusion mission by capitalist group is to find new markets for earning interest over idle capitals. After observing saturating financial sector growth in developed economies, the capitalist managed banks and financial institutions found huge potential to earn higher interest through financial inclusion mission. This emerging market to earn better rate of interest by way of appeal for financial inclusion has convinced the governments as well who otherwise failed to provide banking services to poor.
Does the financial inclusion mission or working of micro finance institutions serving the purpose of inclusive growth? Had this been done, the credit deposit ratio for poor Indian Muslims might have increased and their proportionate share in Gross Domestic Income would have increased. But we just find conflict of interest in this business of financial inclusion. The Capitalist want to earn higher interest, the Micro Finance Institutions want major shares in Micro Finance businesses whereas the poor farmers, artisans, labourers and petty traders seek alternative mode of affordable credits. No player in this business of Micro Finance wishes to ensure inclusive growth. There is still any report to prove the micro finance business as positive for inclusive growth. Growth should not be measured in terms of credit income ratio, but should be measured as effectiveness of Micro Finance to bring positive change in proportionate share of poor in national income during different periods. Has the share of poor workers associated to rural economy increased with growth of micro finance business in India? The answer will open mind of those who seek to evaluate effectiveness of micro finance for inclusive growth.
The Ministry of Finance should evaluate the effectiveness of our banking regulations and credit policies in financial inclusion and inclusive growth. How we could empower the cooperative based interest free banks in India should be worked out. India needs to test at least a pilot interest free cooperative bank to empower the poor and vulnerable through principles of mutual cooperation. Only after that we may find alternative to Pro-capital monetary system. Poor should be allowed to organize and utilize their financial resource through cooperative interest free banking. Is the Reserve Bank of India ready to experiment it or fears that it may saturate scope of interest based banking which is backbone of capitalist growth in India.
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