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Jun 09, 2003
Asian Economic Recovery: Policy Options for Growth and Stability Edited by Tan Kong Yam, The Institute of Policy Studies, Singapore University Press and World Scientific, Singapore, 2002, pages 300.
Very few economic events other than the Great Depression of 1929 have generated such worldwide interest as the East Asian financial crisis of 1997-99. Not only its sudden emergence in the lands of fiscal rectitude and export competitiveness but also their remarkable recovery in a short span of time have given rise to heated debates on a host of diagnostic issues, opening new horizon and dimension in open economy macroeconomics. The crisis has also left the ardent prop
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Jun 09, 2003
India’s Fiscal Matters by Parthasarathi Shome, Oxford University Press, New Delhi, 2002, pages 260, Price Rs. 495
The fiscal situation across a wide spectrum of countries poses formidable challenges in public policy making. The way the author has handled these challenges marks his wide experience in this area. The author relies on his analysis of cross-country experience to identify the issues and address them in the Indian context. The book highlights that the prevailing issues and emerging challenges for the fiscal policy in India demand a medium-term fiscal strategy. An effici
Jun 09, 2003
Money and Monetary Regimes: Struggle for Monetary Supremacy by George Macesich, Pracger Publishers, CT, U.S.A 2002, pp XIV +167,US $ 62.
The title of the book evokes considerable academic curiosity and even excitement in the mind of an aspiring reader, especially if he takes the "Struggle for Monetary Supremacy" at face value. "Struggle for Monetary Supremacy" is generally perceived as a contest among various national currencies for a pre-eminent role in international transactions. However, the present book confines itself to the role of money and the performance of monetary regimes within a national e
Jun 09, 2003
Sustainability of Services-Led Growth: An Input Output Analysis of the Indian Economy
(Part 1 of 3)
(Part 1 of 3)
Sanjay K. Hansda*The sustainability of services as also of services-led growth of the Indian economy has been addressed in terms of the inter-sectoral linkages as emanating from the input-output transactions tables for 1993-94 both at the disaggregated level of 115 activities and the aggregated level of 10 constructed national accounts categories. At the disaggregated level, the Indian economy is found to be predominantly services-intensive with 55 per cent activities
Jun 09, 2003
Sustainability of Services-Led Growth: An Input Output Analysis of the Indian Economy
(Part 3 of 3)
(Part 3 of 3)
Appendix Table 2: Backward, Forward & Total Linkages - Activity-wise Indices ActivityBackwardRankForwardRankTotalOverall Index Index IndexRank 1234567 Agriculture 1Paddy2.4262.4174.8362Wheat1.47191.18142.65153Jowar0.63810.14530.76764Bajra0.54880.06700.60895Maize0.57860.11570.68826Gram0.40970.16470.56907Pulses1.01440.34341.36418Sugarcane0.52910.64241.15479Groundnut0.53890.13550.678410Jute0.251070.01870.2610711Cotton0.361000.05710.4110112Tea0.171110.01880.1911
Jun 09, 2003
Public Sector Spending and Economic Growth in India
Jeevan Kumar Khundrakpam*The paper analyses the dynamic interaction between the public sector expenditure and national income in India for the period 1960-61 to 1996-97. It finds a stable long-run relationship between public sector expenditure and national income in India, with the causality running strictly from the former to the latter. The study also indicates that long-run positive impact of public sector expenditure on national income would turn adverse if the gr
Jan 13, 2003
Insurance : The Indian Experience
Achamma Samuel*As a part of the financial sector reforms, the insurance sector has been liberalised recently. With this, the stage has been set for major changes in the insurance market in India with regard to innovations in product, pricing and distribution. This will also necessitate effective regulation to meet the new challenges this sector is likely to encounter in the liberalised environment. In this context, the paper attempts to make an overview of the insuran
Jan 13, 2003
The Price of Low Inflation (Part 1 of 2)
Muneesh Kapur and Michael Debabrata Patra*Any society that desires to lower the inflation rate may suffer output losses in the interim period. Even independent central banks have to contend with such output losses, given the inertia in inflation expectations and credibility constraints. Presenting estimates of the sacrifice ratio for India, this paper argues that the slope of the aggregate supply curve in India is flattening and this may raise the output costs of rein
Jan 13, 2003
The Price of Low Inflation (Part 2 of 2)
Table 7 : Estimates with WPI Inflation 1971-1971-1971-1971-1985-1985-1985-1985- 20012001200120012001200120012001Specification4CE4aCE4CE4aCE Constant-2.94-7.26-5.32-7.11-2.17-4.79-2.05-5.18 (-1.3)(-10.2)(-2.0)(-8.5)(-1.3)(-7.0)(-1.2)(-7.0) dxt0.34 0.29 (2.1) (2.7) 0.67 0.44 (6.9) (4.9) dxt + 0.55 0.30 Ygapt-1 (2.9) (2.7) 0.68 0.48 (7.8) (5.1) pt-10.23 0.27 0.45 0.38 (1.9) (
Jan 13, 2003
Business Cycles and Leading Indicators of Industrial Activity in India
Jaya Mohanty, Bhupal Singh and Rajeev Jain*The identification of business cycles in India and construction of a composite leading indicator for forecasting the cyclical turning points have been the focus of this study. The cyclical analysis of monthly index of industrial production (IIP) in India applying the Bry-Boschan procedure indicates that there have been 13 growth cycles in the Indian economy with varying durations during 1970-71 to 2001-02. While the average d
Jan 13, 2003
Government Deficit and Inflation in India
A. Prasad and Jeevan Kumar Khundrakpam*This study covering the period 1951-52 to 1999-2000 finds that government deficit has been an important cause for long-run inflationary trend in India. The estimates in the study, however, suggest that there is an optimal level of monetisation for a given level of government deficit and refutes the concern that monetisation of deficit is always inflationary. This is not to suggest in any way that there is more scope to finance go
Jan 13, 2003
Anatomy of Liquidity Management
Indranil Sen Gupta, Indranil Bhattacharyya, Satyananda Sahoo and Siddhartha Sanyal*The management of liquidity poses a major challenge to the conduct of monetary policy in an environment of financial liberalisation. Recent research has attempted to assess liquidity conditions in the market for bank reserves in terms of central bank balance sheet flows. This paper constructs the concepts of autonomous liquidity (AL) and discretionary liquidity (DL) in the Indian contex
Jan 13, 2003
Infrastructure and Economic Growth: An Empirical Examination
Satyananda Sahoo*This paper explores the relationship between the gross domestic product and stock of infrastructural services in India by estimating a vector autoregressive (VAR) model for the period 1970-71 to 2000-01. Various stocks of infrastructure viz., transport, electricity, gas, water supply and communication facilities are included as inputs in the model whereas gross domestic product at factor cost is considered as output in a Cobb-Douglas production functi
Jan 13, 2003
Delay and Cost Escalation in Central Public Sector Projects
R.K. Jain*Delay and cost escalation in the implementation of public sector projects have been an area of concern. Such delays not only put additional burden on public finances, but also deprive the country of their beneficial effects in terms of their direct and indirect contribution to output and employment. In view of these far reaching consequences, an analysis of the typical implementation period, time and cost overruns and factors responsible for delay in large p
Jan 13, 2003
Industrialisation and Globalisation: Theory and Evidence from Developing Countries John Weiss, Routledge, London and New York, 2002, pages 222.
Industrialisation has often been identified as the cornerstone in the tradition of ‘modern economic growth’ a la Kuznets and Clark. However, the development experience of a large number of developing countries including India runs counter to this conventional wisdom. The preponderance of services ahead of industry remains a major contrast to the development experience of the developed world, giving rise to the phenomenon of industry-less growth. When the obituary on i
Jan 13, 2003
Global Regulation of Foreign Direct Investment, by Sherif H. Seid, Ashgate Publishing Limited, Hampshire, England, Year of Publication: 2002
Foreign Direct Investment (FDI) plays a significant role in the development process of most economies through the transfer of technology and technological spill-over, increased productive efficiency, production of exportable goods and services which generate foreign exchange, infrastructure development, increase in saving and investment, and faster growth of output and employment. Tremendous rise in national regulatory changes in favour of FDI in the last decade, glob
Jan 13, 2003
The Economics of Public Spending - Debt, Deficits and Economic Performance by Hassan Bourgrine, Edward Publishing Ltd., UK and USA, 2000, Pages 177, Price £49.95
The post second world war period is often seen as the golden era of capitalism when most of the economies experienced sustained high economic growth while pursuing demand management strategy in the Keynesian framework. The initial euphoria, however, was replaced by strong recessionary pressure that swept through the world economy in the 1970s leaving its lasting impact on macroeconomic policy prescriptions. Fiscal profligacy became the standard explanation for the ill
Jan 24, 2001
Financial Stability:
A Survey of the Indian Experience
A Survey of the Indian Experience
Michael Debabrata Patra & Sunando Roy*Drawing from recent experiences in India and abroad, the paper assesses the Indian approach to reinforcing financial stability. In the context of macroeconomic, macro-and micro-prudential policies undertaken in India, the paper empirically evaluates the responses of various constituents of the banking system and finds differential responses.IntroductionA consensus on the definition of the term 'financial stability' remains elu
Jan 24, 2001
Short Term Interest Rate and Real Economic Activity
Sarat Chandra Dhal*This paper examines the impact of short term interest rate on real activity in India using monthly data over the period 1961-2000. Using rolling regression technique, monetary impulses transmitted through interest rate effects are compared with policy changes effected through liquidity effects. The empirical evidence points out that interest rate has emerged as a significant factor for explaining the variation in real activity in the 1990s. The empi
Jan 24, 2001
Measurement of Household Financial Saving in India: A History of the Methodological Evolution
Dhritidyuti Bose and Partha Ray*The paper traces the history of compilation of financial saving of the household sector in India. Against the backdrop of the evolution of various methodologies adopted by the institutions producing primary estimates of household financial saving and the progressive movement towards synthesis, the paper discusses the existing methodological impediments and the future directions in the compilation of financial saving in India.Introductio
Jan 24, 2001
Mergers and Acquisitions:
An Indian Experience
An Indian Experience
B.K. Bhoi*This paper undertakes a scan of the first Mergers and Acquisitions (M&As) wave which is currently underway in India. This roughly coincides with the latest wave of international M&As. Takeovers are the dominant mode of M&As in India, similar to the international trend.Mergers and Acquisitions (M&As) have emerged as a natural process of business restructuring throughout the world. The process of M&As spans geographical boundaries: cross-bo
Jan 24, 2001
Design Issues in Micro Credit
Suddhasattwa Ghosh*Micro credit interventions are being increasingly recognized in India, as in other countries, as an effective tool for achieving the distributional objectives of monetary policy which contribute to socio-economic welfare. This study takes a close look at a major micro credit provider in India and seeks to analyse the problems and prospects of designing and implementing a viable micro credit dispensation route in India.IntroductionIn the recent perio
Jan 24, 2001
Eight Lectures on India's Economic Reforms,
by T.N. Srinivasan, Oxford University Press, New Delhi : 2000Indias structural reforms have been driven as much by the response to the balance of payments crisis of 1990-91 as by an animated and broad based debate that transcended national boundaries. The reforms represented a fundamental revision in the prevalent view regarding Indias development strategy. At these cross roads, the political leadership of the day turned to leading economists at home and abroad, to
Jan 24, 2001
Exchange Rates and the Firm
by Richard Friberg, 1999, by Macmillan Press Ltd., Great Britain, and by St. Martin's Press, Inc., United States of America, Priced at 45 pounds, PPX + 174The impact of fluctuations in exchange rates on asset values and profits of firms has been engaging a great deal of interest in recent years in the economic and financial literature. Microeconomic underpinnings for this interest have been provided by multinational firms suffering declines in market shares and profit
Jan 24, 2001
Financial Stability and Public Policy:
An Overview
An Overview
Saibal Ghosh*The paper reviews the sources of market failure in financial institutions and markets and what can be done to alleviate them. It examines game-theoretic explanations for financial instability, in particular the role of asymmetric information in generating destabilising behaviour. In the area of remedies, the paper analyses the potential contribution of official safety nets and what can be done to minimize the associated moral hazard. In this context, it d
Jan 24, 2001
Stock Returns and Volatility in India :
An Empirical Puzzle ?
An Empirical Puzzle ?
Sitikantha Pattanaik & Bhaskar Chatterjee*The behaviour of equity premiums in India shows that long term investors do get compensated for the systematic risk they bear by holding equities. In the short to medium run, however, both the direct and the indirect test suggested by French, Schewart and Stambaugh (1987) fail to establish the expected risk-return relationship for Indian equities. Dominance of short horizon players in the market and the associated avoidabl
Apr 07, 1999
Recent Divergence between Wholesale and Consumer Prices in India -A Statistical Exploration
G.P. Samanta & Sharmishtha Mitra* During the recent period, inflation rates based on the CPIIW have been much higher compared to those based on the WPI. On conceptual plane, though a certain degree of mismatch is unavoidable in the movements of two series, at the same time they are also expected to be linked by some stable relationship to ensure inter-linkages between two markets - the wholesale market and the retail market. Empirical results show that since M
Apr 07, 1999
Liquidity Effects on the Term Structure of Government Securities Market in India
Himanshu Joshi* An empirical examination of the term structure of interest rates in the Indian economy suggests cointegration (or long run stable relationship) among interest rates but existence of multiple common trends. The absence of unique common trend implies that long run movements of any one interest rate are not dominated by the movements of other interest rates. The presence of cointegration, however, suggests a long run interlocking of interest rates across
Apr 07, 1999
The Economics of Amartya Sen - A Review
Sunando Roy* Introduction The economics of Amartya Sen envelopes diverse aspects of economic inquiry ranging from social choice theory to issues relating to poverty and inequality, dimensions of human development and the role of State and social action in enhancing the quality of life. It represents a distinctive approach which cannot be easily bracketed within convenient compartmentalisation of contemporary economic research. This amazing ability to transcend the co
Apr 07, 1999
Managing Financial Risks in India - A Note
Shyamala Gopinath & A. Prasad* While financial markets have been fairly developed, there still remains a large extent of segmentation in the market and non-level playing field among participants, which contributes to volatility in asset prices. This volatility is exacerbated by the lack of liquidity in the secondary markets. In the above setting, the note examines the importance of a risk management exercise for the market participants and preconditions required
Apr 07, 1999
Emancipating the Banking System and Developing Markets for Government Debt
Emancipating the Banking System and Developing Markets for Government Debt, Maxwell J. Fry, The Bank of England, Routledge, London, New York, 1997, pp. XVII + 280. It was often stated that inflation was positively related to the proportion of governmentborrowing from the central bank and in total domestic credit, and that inflation was negatively related to growth. This gave rise to the question : how should a government best meet its borrowing requirements? This was
Apr 07, 1999
India's Exports: An Analytical Study by Sugata Marjit and Ajitava Raychaudhuri, Oxford University Press, 1997, pp ix + 179, Rs. 350.
The authors of the book under review set out a meaningful agenda in studying thebehaviour of Indian exports during the last three decades or so. Some of the familiar hypotheses relating to Indian exports have been put to statistical tests taking into account the recent developments in exchange rate, incentive structure and market share. The book presents a succinct review of India's trade policy and export performance both in the macro and micro policy setting and in
Apr 07, 1999
Index to Volume 19 (1998)
ARTICLES 1.Ajit, D. (1998) : A Case for Risk Based Deposit Insurance System in India, September, p.215. 2.Bhoi, B.K. and S.C. Dhal (1998) : Integration of Financial Markets in India : An Empirical Evaluation, December, p.345. 3.Joshi, Himanshu (1998) : Liquidity Effects on the Term Structure of Government Securities Market in India, December, p.381. 4.Joshi, Himanshu and Mridul Saggar (1998) : Excess Returns, Risk-Premia and Efficiency of the Foreign Exchange Mark
Apr 07, 1999
International Trade and Finance: New Frontiers for Research
International Trade and Finance: New Frontiers for Research Edited by Benjamin J. Cohen, Cambridge University Press, 1997, pp. ix + 402. This book is a collection of essays in honour of Peter Kenen. The essays aim at definingthe research agenda for the late 1990s and beyond in international trade and finance. The essays are grouped into three parts: international trade theory, international monetary theory and applied policy analysis. The book is introduced by Benjami
Apr 07, 1999
Integration of Financial Markets in India:
An Empirical Evaluation
An Empirical Evaluation
B.K. Bhoi & S.C. Dhal* This paper attempts to empirically evaluate the extent of integration of India's financial markets in the post-liberalisation period. The major findings of the paper are the following: a) although fully competitive environment is yet to emerge, several segments of the financial market have achieved operational efficiency; b) the 91-day Treasury Bill rate has the potential to emerge as a reference rate in the Indian context; c) India
Sep 30, 1998
Exchange Rate Management in India : An Empirical Evaluation
Michael Debabrata Patra & Sitikantha Pattanaik* Drawing from a strand in the literature, this paper develops objective indicators i.e., indices of exchange market pressure, intervention activity and monetary conditions in order to assess the efficacy, in terms of both timing and magnitude, of policy measures in assuaging exchange market pressures. The theoretical underpinning for the indices are drawn from a simple monetary model of exchange rate determination. Th
Sep 30, 1998
A Case for Risk Based Deposit Insurance System in India
D. Ajit* The deposit and credit insurance system in India is examined in the light of experiences of other countries - both developed and developing. The study examines important issues such as flat fee, risk-based insurance system for banks/non-banks, ownership of deposit insurance agency, continuation of credit guarantee scheme, etc. As regards deposit insurance scheme for NBFCs the study cautions its introduction at this stage as it could amplify the regulatory di
Sep 30, 1998
Repo Auction Formats, Bidders' Behaviour and Money Market Response in India
Bhupal Singh and Sarat C. Dhal* The treasury securities repo-auction is an important instrument for central banks in managing liquidity and sending interest rate signal to the money market. In the Indian context, the repo-auctions have been used actively in the post-reform period. The present study illustrates the money market reaction to repo-auctions and points out whether such reaction is consistent with applied auction rules. The policy implications are analysed
Sep 30, 1998
Financing of Power Projects in India: Problems and Prospects - A Note
NOTESR.K. Jain* Since 1991, the Government has opened the power sector to private sector and undertook various policy initiatives to reform its working and attract private investment. The liberalisation of power sector has, however, raised many pertinent issues, especially relating to financing of private power projects. This note presents some issues regarding private sector power projects and analyses alternative financing options. Introduction Infrastructure and
Sep 30, 1998
Money and Finance through the Looking Glass
REVIEW ARTICLEY.V. Reddy** Monetary economics has seen perhaps more controversies than any other branch of economicssince the 'twenties. The fall of the gold and gold exchange standard, the decline of classicism leading to the dominance of fiscal economics in the wake of the Great Depression, the Fisherian elegant exposition of the quantity theory of money in terms of the world-renowned equation, MV = PT, followed by the Cambridge version and the Keynesian attempt to
Sep 30, 1998
Private Capital Flows to Developing Countries
BOOK REVIEWS- The Road to Financial Integration, World Bank, Oxford University Press, New York, 1997, pages xvii + 406. Capital flows to developing countries has become a serious topic for debate and discussion,particularly after the Mexican crisis in 1995 and the East Asian crisis in 1997. Various publications on different aspects of capital flows have originated from several quarters. Mention may be made of IMF Occasional Paper No. 108 (1993) on "Recent Experiences
Sep 30, 1998
The Microstructure of Foreign Exchange Markets
Edited by Jeffrey A. Frankel, Giampaolo Galli and Alberto Giovannini, NBER 1996, Chicago, pp. x+346, $71.50 Ever since the advent of the generalised floating exchange rate regime many theoretical andempirical research have appeared explaining the behaviour of exchange rates. The theoretical insight of all recent empirical research is the so-called asset market approach, which has produced a number of models and have been useful in explaining and quantifying exchange
Sep 30, 1998
Effective Cost of Small Savings
NOTESM.S. Mohanty & Nishita Raje* Small saving schemes involve both an explicit and implicit cost to the government. The implicit cost, which arises from several tax concessions offered on these investments not only introduces distortion to the relative return of various assets in the financial market but also gives rise to high effective cost of borrowing for the government. This paper examines the nature and extent of hidden cost of small savings and explores th
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