WP199: Intensity of Use of Land in Urban Residential Areas, Hariharan Ramachandran, August 2017
Abstract: The present study is an attempt to analyse (a) the proportion of area occupied by urban settlements in India and across different states and union territories between 1991 and 2011, (b) trend in urban population growth vis-à-vis growth in urban area in India during the same period, (c) some correlates of urban population density in the context of state level data, and (d) intra-city variations in population densities of National Capital Territory of Delhi (2001) as a case study. The basic argument is that although India is a land starved country (with relatively high population density at the global level, and a growing population), the impending urban growth is unlikely to put much pressure on land resources and, by extension, on food security. This argument is based on the fact that urban population densities in many Indian cities are still low compared to international benchmarks, as much as the assumption that land productivity in agriculture will increase in India.
WP198: International Trade and Productivity Growth: Evidence from the Organised Manufacturing Sector in India, R. Rijesh, February 2017
WP197: Demonetisation: Macroeconomic Implications for Indian Economy, Santosh Kumar Das & Pradymna Shankar Rawat, February 2017
Abstract: The present study is an attempt to examine the impact of international trade on manufacturing productivity in India. The literature on international trade suggests that the productivity of domestic manufacturing sector will rise through the effects of economies of scale, reallocation, competition, and spillover channels from trade participation. To study the net impact of these effects on productivity, we constructed trade related variables such as relative import price, import penetration and export intensity for a panel of 17 2-digit organised manufacturing sector industries for the period 1980 to 2013. During this period, the Indian manufacturing sector witnessed considerable liberalisation and openness coupled with an increase in manufacturing growth and productivity, especially in the recent decades. There is evidence of a shift in the composition of sectors—from traditional labour-intensive products such as food, beverages, tobacco, and textiles, to modern-skill and knowledge-intensive industries such as chemicals, machinery, and transport equipment. This is accompanied by a noticeable growth in productivity, both labour productivity and total factor productivity, especially during the 2000s. The panel econometric estimation result, based on random effect modelling, reveals the presence of trade induced productivity gains in manufacturing. The productivity enhancing effects of economies of scale, reallocation and spillover largely operate through imports and become prominent after 1–2 year lag. However, in the short period, there is some evidence of dominance of negative economies of scale induced by import competition. Although we find a positive association between exports and productivity during all selected periods, the relationship is found to be statistically significant only in the current period. Overall, we find trade linked productivity gains being channelled through imports, which persist over time. This reveals that the impact of trade on manufacturing productivity in India is not static but dynamic in nature.
WP196: Health in the Era of Neo-Liberalism: A Journey from State's Provisioning to Financialization, Shailender Kumar, December 2016
Abstract: The present paper attempts to explore the macroeconomic implications of the “Demonetization” exercise announced on November 8, 2016 for the Indian economy on three board parameters of growth, distributional consequences, and the challenges it brought in for the Banking Sector. Concomitantly, an attempt has been made to evaluate to what extent the stated objectives behind this exercise is justified. We found that it is beyond dispute as far as the immediate impact on growth is concerned. Given the size of the informal economy, contraction in output during this fiscal was inevitable. However, at this stage it is too early to predict anything about the future course of output growth. Other than the growth challenge, the demonetization exercise throw far more important challenge bearing distributional consequences. The new interest rate regime that emerged during the Post-demonetization period is likely to benefit some while making a large chunk of population worse off. Finally, the banks find it very difficult to manage the liquidity surge in the system. With increase in deposit growth and declining credit growth, it would be difficult for banks to manage their liability. The evaluation of its stated objectives suggests that it do not justify such a mammoth exercise, which is cost intensive and bears serious adversarial economic consequences.
WP195: Contractionary Fiscal Policy and Public Investment: An Empirical Analysis of Emerging Regional Growth Dynamics in India, Santosh Kumar Das, October 2016
Abstract: This paper reflects that India has been compromising the goal of comprehensive provision of public health services, which are essential for making a healthier society, especially in the post liberalisation phase. Over a period of time the privatisation in healthcare has not only been promoted but also facilitated to expend and grow further especially with the adoption of financialisation approach in the health sector. Country's approach to finance healthcare has been shifting from the tax-funded provisioning of services for achieving universal health access to the tax-funded health insurance merely to achieve health coverage. Insurance based financing mechanism, however, has largely been unsuccessful to deliver on either health outcomes or financial protection ground. The study advocates that comprehensive healthcare provisioning is essential for ensuring equitable, accessible and affordable healthcare services and protecting households from the devastating consequences of out-of-pocket payments.
WP194: Bottled Drinking Water Industry in India: An Economic Analysis, Swadhin Kumar Mondal, September 2016
Abstract: In recent years there has been growing consensus concerning the need for adopting the policy of fiscal consolidation in India. The contractionary fiscal policy, which has been at the core of the fiscal policy discourse; argues that there is a trade-off between fiscal deficit and economic growth. Higher deficits due to expansion of government economic activities tend to crowd out private investment through its impact on interest rate; hence, hampers growth. The present paper examines the empirical foundation of the current policy discourse, also underlines the crucial role of public investment in the process of economic growth in a developing country like India. Moreover, the empirical findings do not support the predominant thesis that fiscal deficit positively influences the rate of interest. Having empirically tested the above trade-off, the paper moves further to analyze the implications of the current fiscal policy discourse which is opposed to fiscal expansion, for regional economic growth in India. We found that the policy of fiscal squeezing has resulted in reduction in the level of public investment in majority of the Indian states. Given the importance of public investment as a key driver of growth, decline in public investment is likely to impact the growth potentials of the regional economies adversely depending on their growth dynamics.
WP193: An Analysis of Foreign Acquisitions in India’s Manufacturing Sector, Beena Saraswathy, August 2016
Abstract: While safe drinking water is an effective defence against the infection of water borne diseases, a large number of populations suffering from these diseases do not have access to safe drinking water due inadequacy of supply. Private entrepreneurs entered this sector and made bottled drinking water available by supplying various kinds of bottled water. In this study we found that the bottled drinking water industry has experienced a spectacular growth over the past two decades and it has a huge growth potential because of rising demand for safe drinking. High profit margin (217%) is the main attraction to the entrepreneur to invest in this industry. Health awareness, lack of safe drinking water facilities, rising income, urbanization, migration and rising trend in tourism industries are the major influencing factors of demand for bottled drinking water (BDW). This industry also partially fulfils the demand for drinking water. More than 2 per cent of household’s demands were met by this industry and many more households (additional 4%) coping with BDW during water crisis. Poor households spend around 4 per cent of their total monthly household’s consumption expenditure on BDW which may have an adverse impact on household because households could have spent this for purchasing other goods. Like other developed counties, a large section of Indian households are shifting from their traditional sources of water to BDW. However, there are some concerns about the quality of BDW. Many cases, BDW contains chemical toxins at more than permissible level that can be harmful for health. Hence, there is an urgent need for appropriate intervention to regulate price, reduce potential harm and improve the quality of water provided by this industry.
WP192: Impact of Trade Liberalisation on the Indian Electronics Industry: Some Aspects of the Industrial Policy Dynamics of Global Value Chain Engagement, Smitha Francis, July 2016
Abstract: Globally cross-border mergers and acquisitions (CM&A) are an important component of FDI. Though CM&A is less significant in India compared to the global scenario, its contribution is gradually increasing. This study throws light on the current foreign acquisition scenario in India and the emerging concerns. The study observed that across various sectors, many leading foreign firms are trying to eliminate competition in the domestic market by taking over competent firms with high growth potential. The major aim behind the takeover of Indian firms is to expand their Indian operations through acquisition route and to exploit the capabilities built by domestic firms through years of effort. The recent trend in the CM&A scenario is the acquisition of start-ups. The study suggests a look into the Chinese experience, where, in certain areas, foreign acquisitions are scrutinised to ensure compliance with the national security concerns.
Abstract: This paper examines the interplay between trade liberalisation and industrial policies and its implications for industrial restructuring in order to understand how trade liberalisation has influenced Indian electronics firms’ engagement in global value chains. The domestic electronics industry’s pre-liberalisation development trajectory shows that there were inadequate government-directed efforts for creating technological capabilities and scale in domestic firms, and for developing synergies at the industry level. As a result, the industry’s premature exposure to severe external competitive pressures with rapid trade liberalisation of the computer and telecommunications industries under the WTO’s ITA-1 from 1997 became a major obstacle in its subsequent development. A significant part of the learning process required for technological catch-up and potential for systemic synergies was further lost because direct imports took over and domestic manufacturing was avoided in the case of a large number of products in the absence of strategic industrial policy support. Moreover, under successive governments’ liberal FDI regimes, there were nil or ineffective industrial policy measures in place linking foreign-invested firms and the domestic supplier base to ensure positive spill-over effects. These policy failures to correct for market failures were compounded by India’s FTAs with East and Southeast Asian countries, with the latter extending tariff liberalisation to consumer electronics and professional, medical, and scientific instruments. The deep and broad trade liberalisation, the liberal FDI regime, and the absence of vertical industrial policies have together removed tariff-hopping and other policy-driven incentives for MNCs and domestic firms to undertake local production. The consequences are revealed in the continuously growing electronics imports and in the particular nature of India’s two-way trade in electronics products. In the case of all the major trade partners, analysis of India’s bilateral intra-industry trade (IIT) undisputedly established that the rise in intra-industry trade involving both horizontal and vertical differentiation has only contributed to India’s rising trade deficit with each of them. The paper argues that along with vertical industrial policies for upgrading firm- and industry-level productivity and improved infrastructure, a calibrated approach towards trade and FDI policies such that they do not negate incentives for value adding local production is an imperative for enabling domestic firms to engage in global value chains in a sustainable manner.
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