ISSN (Online) - 2349-8846

R RamakumarSubscribe to RSS - R Ramakumar

Economic Rationale of ‘Demonetisation’

The government’s claims about the fruits of “demonetisation” of ₹500 and ₹1,000 notes are analysed. The five claims—fighting terrorism, “black money,” gaining fiscal space, reducing interest rates, formalising informal economy—are scrutinised from an economics perspective.

Revival of Agricultural Credit in the 2000s: An Explanation

This paper examines credit to agriculture provided by the commercial banks, including regional rural banks, and finds that contrary to the general perception that the credit revival began in 2004, the actual revival started after 2000. The increase in credit was to a large extent the result of a growing share of indirect finance, which, in turn, has been broadened in scope to cover many new kinds of farm lending. Moreover, even as direct lending to agriculture has also grown, there has been a sharp increase in the share of large-sized advances for financing agri-businessoriented enterprises, rather than for the small and marginal farmers.

Why Do the States Not Spend?

This paper investigates the unusual phenomenon of state governments currently maintaining large cash balances even as many important sectors call for substantial outlays. Is it a governance issue, as the union finance ministry makes it out to be, or is it something more fundamental affecting the fiscal powers of state governments? We argue that the constraint on expenditure is imposed by the Fiscal Responsibility and Budgetary Management Acts passed by the centre and most state governments; the cash surplus phenomenon is a perverse outcome of such legislation. This essay also investigates the price paid by Kerala, an outlier where receipts do not keep pace with expenditure growth, because of the mechanical constraints imposed by the fiscal responsibility legislation.

Micro-Credit and Rural Poverty

This paper reviews empirical evidence on NGO-led micro-credit programmes in several developing countries, and compares them with state-led poverty alleviation schemes in India. The study shows that micro-credit programmes have been able to bring about a marginal improvement in the beneficiaries' income. However, the beneficiaries have not gained much by way of technological improvements, given the emphasis on 'survival skill'. Also, in Bangladesh the practice of repayment of Grameen Bank loans by making fresh loans from moneylenders has resulted in the creation of 'debt cycles'.
Back to Top