"States, Markets, and Control Mechanisms: Monetary Politics in India" by Anush Darius Kapadia

Anush Darius Kapadia

Deposited 2009

Abstract
The present work situates arguments over monetary policy in ongoing efforts to render Indian society governable by regulatory bodies sequestered from popular politics, in this case the central bank. Drawing on fieldwork at the treasury desk of a large bank in Bombay, its entry-point is a set of arguments over the design of the bond and markets. The attempt to control money through markets rests on the fidelity between the aims of reformers and the behavior of traders. Market rules establish this coherence, and this work examines how their political economy generates contradictory market structures that provide a contingent resolution: continued fiscal latitude and direct monetary control enabled by market configurations that actually atrophy trading. While contingent on the prevailing balance of power domestically, this resoltion operates within the context of an increasingly constraining policy trilemma that erodes monetary sovereignty.
Yet by being cast as an argument over market rules, the problem of monetary governance has been definitively set in a new paradigm. This complex of interests, institutions, and ideology is historicized and problematized. Its success is such that the current arrangement is made to appear as a rear-guard action. The discursive groundwork for a new brand of economic governance is in place even as the political economy generates what appears to this paradigm as a "lag." Given that this lag emerges from a democratic fisc, popular politics is posited as the obstacle to money market reform. The purported conflict between democracy and development arises from this kind of discursive framing. Unless its terms are questioned, market-based control will lock in a set of institutions that further concentrate financial and monetary decisions to an unjust and inefficient extent.