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Special Articles

Higher Education at the Crossroads

The debate around higher education today may have been prompted by immediate

Challenges in Higher Education

The UGC, when it was established in 1956, was not made as powerful as originally envisaged, as the power vested in the centre by the Constitution was not given concrete expression. Educational policy was last reviewed in India in 1986 but the failure to implement its recommendations may not have been an accident: the specific line of authority laid down by the Constitution to fulfil the given mandate was not followed. We need to put the centre and the states in the dock.

Absence of Policy and Perspective in Higher Education

Recent trends indicate a growing public apathy for higher education, that becomes evident with falling public expenditure in the sector. Along with this, there has not evolved a coherent policy on its development. This has led to erratic and unregulated growth of private higher education.

Contractual Arrangements in Academia

The politicisation of higher education, corruption in faculty hiring and enrolment, and student political unrest are being addressed to a certain extent currently. Much less attention has been paid to the recruitment and retention of high quality faculty and the incentive structures that reward merit in academia. This article focuses on the organisational architecture of higher education institutions and uses the framework that describes it to make comments on academic contracts.

Voice, Gender and Space in Time of Five-Year Plans

This article explores Lata Mangeshkar's artistry in order to investigate the processes through which her voice and singing style became the ideal of Indian performative femininity. The discussion examines the stabilisation of gender identities through a number of elements of Indian modernity including nationalism, Hindu identity, the 'woman question', representations of space and also, the cultural meanings of the five-year plans.

Ownership, Competition and Efficiency

One of the main reasons for the present drive towards privatisation is a general belief that change in ownership and competition will lead to efficiency in state owned enterprises (SOEs). This paper attempts to assess the impact of ownership and competition on efficiency of firms. To study the effect of ownership, efficiency of some Indian SOEs is compared (to the extent possible) with comparable private sector firms. To study the effect of competition, the efficiency of SOEs operating under a monopoly structure is compared with SOEs operating under a competitive market environment. Results show that, at the enterprise level, there is little empirical justification for a general presumption in favour of either type of ownership. Further, the empirical study results indicate that more than ownership, it is the degree of competition that affects the performance of an enterprise.

Designs of Healthcare Trade

This paper analyses the impact of information technology on cost, efficiency and equity as drivers of cross-border trade and investments in healthcare. But there is still need for more research on how IT affects costs of diagnosis and treatment with regard to specific disease burdens to resolve tensions between efficiency and equity as internationally agreed conventions such as TRIPS, CBD and BWC do not apply in equal measure in all WTO national jurisdictions. The persistence of unresolved conflicts of rights and conflicts of interests point to the need for new international arrangements to be mandated and resourced yet the extent to which this can be achieved is uncertain.

Ramponkars in Goa

This paper attempts to study the lifestyle of the ramponkars, a traditional fishing community of Goa, and the effect of modernisation on their socio-economic position. The ramponkars' agitation is a classic case of a conflict against marginalisation and exploitation of marine resources. The exploitation itself was a collective design wherein the state was aligned with the mechanised trawler owners, and displayed a lackadaisical approach towards the ramponkars' problems. The ramponkars have, after a long battle, succeeded in getting their demands on implementing an exclusion zone for trawlers and on monsoon fishing. However, the recent technological changes adopted by the traditional fisherfolk themselves are unsustainable and will ultimately result in the intensification of the 'tragedy of the commons'.

Welfare Costs of Import Protection

Despite India's continued trade liberalisation policies, no estimates of welfare loss due to trade restrictions - or gain due to trade liberalisation - are available. Using trade and tariff data mostly from the DGCIS, this paper estimates these for a selected number of commodity groups for years 1993-94 to 1997-98. For the case of constant price elasticity of import demand, a formula for the deadweight loss is derived, which requires information on the magnitude of the elasticity, the tariff rate and total expenditure on imports, not on the import volume. It is shown that in some sectors, the welfare losses have remained persistently high, e g, iron and steel, and, in others, it has come down substantially, e g, machinery. At the absolute level, however, the losses remain high at least in some sectors.

Gender, Property Rights and Responsibility for Farming in Kerala

This paper critically examines the claim that women in Kerala have substantial property rights arising out of agrarian and social reform and the practice of matriliny. It argues that land reform strengthened the patriarchal conjugal framework of property relations in the state, compromising women's independent right to property. While agriculture is no longer considered a viable occupation in the state, greater male occupational mobility has shifted the balance of responsibility for farming and family property increasingly to women. However, this work is being under-reported, is not necessarily 'visible' and comes at the cost of paid employment. For some, social mobility has afforded greater leisure but, along with declining inheritance rights, has led to the rising economic insecurity and vulnerability of women.

Intellectual Property Protection for Plant Varieties

This paper looks at the Indian Plant Act and highlights some issues that need attention in the context of plant protection and the introduction of IPR-protected transgenic crops in the country. While the act has made a good beginning by providing a legal framework taking into account the various players, its success will depend on creating and strengthening the institutional infrastructure to register, monitor and regulate plant varieties.

Privatisation in Spain

Privatisation differs according to the formula used, the assets that are transferred, the restrictions which are set up for buyers or the resulting potential for change in the regulatory framework where the privatised firm is to operate. Therefore, an interpretation of economic policy regarding privatisation should examine the details of the operations to identify what final goals, priorities and economic transmission mechanisms are defined. In this article, the case of Spain is used to show the various economic policy objectives (consolidating the productive system, reducing the public sector's financial requirements, or directly rebalancing the private and public sectors) that guide decisions concerning privatisation.

Fiscal Transfers in Canada

The Canadian system of fiscal transfers, developed over a long period of time, has two central features: equalisation grants, which are constitutionally guaranteed and the Canadian Health and Social Service Transfers (CHST). This paper examines the relevance and applicability of the Canadian system of inter-governmental transfers in the Indian case. Equalisation grants are meant to ensure that provinces have sufficient revenues to provide reasonably comparable levels of services at reasonably comparable levels of taxation. An elaborate 'representative tax system' approach using individual revenue bases is used in Canada for determining the equalisation grants, although there has recently been a debate to use a more macro approach. The source-by-source approach is less practical in the Indian case for want of comparable and reliable information required for applying the method. A more practical alternative is the macro approach, which is adopted in India, but better indicators of fiscal capacity than those based on GSDP need to be used. In addition, the concept of ensuring that resources are available for maintaining the per capita expenditure of select basic services at certain levels among states, as attempted in Canada through the CHST transfers, is worth exploring.

From Poverty Trap to Inclusive Development in LDCs

LDCs are caught in a structural poverty trap due to severe underdevelopment of their productive forces, compounded by an unfavourable international environment. This paper contends that in spite of these odds they have a latent potential for evolving national inclusive, sustainable and sustained development strategies. The sooner they embark on this difficult journey, the greater will be their bargaining power in negotiations with the international community, mostly if they succeed in strengthening their common stance and in mustering the support of a reinvigorated non-aligned movement.

Citizenship and the Passive Revolution

Modernity as has been argued, is a set of processes that can follow different sequences in different societies and at different historical conjunctures; in India unlike in the west, the two processes of modernity and democracy emerged almost simultaneously. This paper explores the dilemmas created by the 'different sequentiality' by focusing on one revealing moment - the 1951 Act that first amended the Constitution, interpreted here as a landmark in the story of modernity in India. While the amendment was seen to limit individual rights it reflected primarily the imperatives of the modernising project envisaged by India's anti-imperialist elite that included the creation of a bourgeois democracy, the capitalist transformation of the economy and the establishment of social justice.

Linking Central Transfers to Fiscal Performance of States

Based on the recommendations of the Eleventh Finance Commission, the central government has instituted the Medium Term Fiscal Restructuring Programme (MTFRP). This paper evaluates the design and implementation of these schemes. The important conclusions of the paper are that (i) the size of incentive-linked transfers is too small to influence the fiscal performances of the states; (ii) the multiple schemes of incentives tend to create a system of segmented incentivisation; (iii) the design of the incentive-linked system has serious shortcomings, and (iv) the scheme fails to address the basic reasons for the deterioration in fiscal performances of the states.

Small Industry and Globalisation

This paper studies the impact of globalisation and domestic economic reforms on small industry. Small industry has suffered in terms of growth of units, employment, output and exports. But the policy changes have also thrown open new opportunities and markets for the sector. To avail of these, the focus must be turned to technology development and strengthening of financial infrastructure in order to make Indian small industry internationally competitive and contribute to national income and employment.

Population, Gender and Development in Maldives

Despite impressive human development in the past few decades, Maldives faces enormous economic and environmental challenges. Although Maldivian women enjoy a relatively high status in society, several factors constrain them from full and unfettered participation in national development. There is a need for a gender mainstreaming approach that operates effectively and expeditiously to bring about change in the socio-economic status of women.

Democracy and Right to Food

It is widely accepted that the right to food forms one of the basic economic and social rights essential to achieve 'economic democracy' in India. This right is nowhere near realisation in India, where undernutrition levels are among the lowest in the world. The right to food moreover, does not easily translate into well-defined entitlements and responsibilities. Though serious difficulties are involved in making the right to food fully justiciable, new interventions are possible in at least three ways - through legal action, through democratic practice and through changing public perceptions. More importantly, the right to food needs to be linked to other economic and social rights relating to education, work, health and information, which together hold the promise of radical change in public priorities and democratic politics.

Child of the Himalayas

The source of Nehru's deep attachment to Kumaon and Garhwal was the Himalayas, but this relationship developed into affection and concern for the common people of this region. Many of the region's problems such as the lack of water, roads and exploitative zamindari practices that Nehru wrote about are still relevant today. In fact, his writings on Kumaon and Garhwal are significant as they help us to examine the role the state has played in Uttarakhand's development over five decades.

Does EGS Require Restructuring for Poverty Alleviation and Gender Equality?

The Employment Guarantee Scheme (EGS) initiated in Maharashtra in the early 1970s is the oldest and the largest public works programme in the developing world. It has been the subject of numerous studies that have highlighted the positive effects of EGS on the rural economy of Maharashtra. Yet none of these has furnished concrete evidence for most of these inferred effects. Moreover, there have been no investigations since the 1990s, when both the rural economy of Maharashtra and the EGS have undergone significant changes in size, character and direction. This article reviews the EGS to assess whether it requires restructuring for poverty alleviation and gender equality. Part I of the article (which appeared in the issue of April 17, 2004) examined the concept, design and delivery system of the EGS, so as to assess its effectiveness against poverty and pinpoint its limitations. Part II highlights the issues including gender concerns that need to be addressed before restructuring the scheme.

Policy without Theory

During the course of the reform process in India, there has been no particular Indian contribution to the thinking on the issue. Indian debates insulate themselves from the empirical and analytical work done on India outside the country. Globalising without ideas is not a luxury the country can afford. India must participate in the global dialogue on reform in a more positive and well-thought out manner, based on its own experience.

Why India Can Grow at 7 Per Cent a Year or More

Based on a simple growth accounting framework, the authors project India's future potential output growth rate through 2025. They argue that there is perhaps more upside potential than downside risks to their central estimate for annual growth, which is close to 7 per cent, or 5.5 per cent per capita.

Does EGS Require Restructuring for Poverty Alleviation and Gender Equality?

The Employment Guarantee Scheme (EGS) initiated in Maharashtra in the early 1970s is the oldest and the largest public works programme in the developing world. It has been the subject of numerous studies that have highlighted the positive effects of EGS on the rural economy of Maharashtra. Yet none of these has furnished concrete evidence for most of these inferred effects. Moreover, there have been no investigations since the 1990s, when both the rural economy of Maharashtra and the EGS have undergone significant changes in size, character and direction. This article reviews the EGS to assess whether it requires restructuring for poverty alleviation and gender equality. Part I of the article examines the concept, design and delivery system of the EGS, so as to assess its effectiveness against poverty and pinpoint its limitations. Part II will highlight the issues including gender concerns that need to be addressed before restructuring the scheme.

Teaching to Hate

The RSS/BJP has attempted to effect a radical departure in the existing educational ethos through the use of both state power and the instruments of 'civil society'. This article looks at schooling as part of the RSS agenda to create certain notions of citizenship and identity, first examining the textbook debate and then through ethnographic fieldwork in RSS schools in Chhattisgarh.

Steel Industry: A Performance Analysis

This article looks at the performance of the Indian steel industry and specifically examines certain major players, both during the downturn as well as the recent upswing, when recovery in prices has bolstered the bottom lines of companies. However, the respite provided by the price increases must not obfuscate other areas that need urgent attention, such as financial restructuring. Besides, at present, investment in R and D by the Indian steel sector is highly inadequate. Technology is the key to competitiveness in the steel industry, and only a technology-centric push can move the sector to a higher growth path.

Impact of Economic Reforms on Indian Electorate

Economic reforms initiated since the 1990s became an election issue in the 1996 general elections, when the Congress raised it in its manifesto. Later, the party's defeat and subsequent slide in parliament was attributed to its espousal of the themes of liberalisation and privatisation. This article analyses the results of surveys conducted after the three successive Lok Sabha elections of 1996, 1998 and 1999. While opinions on reforms differ across communities and categories of voters, increasing levels of awareness do not necessarily coincide with a support for reforms.

Making and Unmaking of Trinamul Congress

The Trinamul Congress (TMC) is a party focused on elections, specifically, on unseating the Left Front in West Bengal for which it is not chary of using its varied alliances even at the cost of its long-term credibility. While a Mayawati, or a Laloo Yadav, can play on the slippery ground of disparate alliances, switching partners can only prove terminal for Mamata Banerjee; she has no stable social segment to fall back upon in the bad times. The TMC has failed to translate its electoral promises into a social presence, which could have been its only guarantee against a premature demise.

Revisiting State Level Parties

Today, on the eve of the elections to the 14th Lok Sabha we are witnessing a very competitive party system. While the decline of the Congress can be seen as a moment of 'opening up' of party competition it has also brought with it a convergence among the competitors that obfuscates the advantages of the openness. Does it then mean that the moment of opening up is also constitutive of a closure? The following collection of articles may help in resolving this riddle. The articles, revisiting the phenomenon of state level parties, attempt to locate the new spaces created by them and the effects of their accommodation within the framework of all-India competition.

Telugu Desam Party

The Telugu Desam Party's continued success lies in its ability to manage its relations with the centre, its image as an upholder of Telugu pride and its commitment to development. But in 2004, with an election scenario characterised by the absence of any definitive issue, the outcome would depend on how the TDP conducts its campaign and its ability to mobilise voters among its traditional support base. It would also depend largely on how the neutral and floating voters decide to vote as electoral campaigning ends because vote shares between the Congress and the TDP have always been very narrow.

Lok Shakti in Karnataka

This paper attempts to locate the two-year old party, the Lok Shakti within the broader framework of Karnataka's electoral politics. The state electorate has largely not favoured regional parties, either in the Lok Sabha or in the assembly elections. Karnataka's electoral politics has mostly witnessed a bipolar competition between two major national parties/alliances, thus squeezing the third force out of the competition. The limited success of Ramakrishna Hegde's Lok Shakti can therefore be linked to its being part of an alliance that was seen as a major player in the bipolar competition.

Shiv Sena: A Tiger with Many Faces?

The expansion of Shiv Sena took place in the 1980s and it shot to prominence at the national level in the 1990s. The last two decades have witnessed the rise of Shiv Sena as an important political force in Maharashtra. What does the Shiv Sena stand for? Is it a narrow, parochial, 'Marathi' organisation? Is it a militant Hindu communal organisation? Does it represent the revolt of the lower middle classes? Is it a network of culture guards, or is it an expression of cultural populism. This paper seeks to trace this evolution of Shiv Sena and the political and organisational context in which Shiv Sena operates.

Samajwadi Party in Uttar Pradesh

The Samajwadi Party has been facing the dilemma of carrying forward its anti-BJP politics even while it must avoid becoming part of a Congress-led coalition. It is an important example of a party engaged in consolidating social cleavages and, simultaneously, in overcoming them. In its multi-pronged strategy, it seeks to consolidate the caste cleavage by uniting OBCs and also appealing to upper caste voters in the name of development and globalisation.

Electoral Politics in Punjab

Parliamentary and assembly elections since 1996 have continued to reflect a shift in the electoral politics of Shiromani Akali Dal (SAD) - politico-economic issues have replaced ethno-religious ones. Also discernible is the shift from an anti-centre stand to cooperative federalism and from a politics of confrontation to peace and Hindu-Sikh unity. However, it needs to adopt a new social profile moving beyond its image as a party of jat Sikhs and khatris.

National Conference of Jammu and Kashmir

The transformation of the role of the National Conference (NC) from a hegemonic actor to the single largest party of the state has to be located in the larger political context of the state in the last 15 years. This political context, defined by the contestation of legitimacy of mainstream politics on the one hand and the situation of armed militancy and separatism on the other had constricted the very nature of democratic politics. The relevance of the NC today extends beyond competitive regional politics. Its claim as the initiator of the tradition of the political movement in Kashmir and its contribution to the evolution of Kashmiri identity politics, assume importance in the contemporary situation of the state.

Religion under Globalisation

This paper looks at the interface of religion and globalisation. It points out that the major religions of the world are being used as purveyors of the globalisation agenda and this is often accompanied by an unprecedented flow of funds into the third world. The major consequences of globalisation have been: the transmogrification of traditional religions and belief systems; the beginning of the disintegration of the traditional social fabrics and shared norms by consumerism, cyber-culture, newfangled religions and changing work ethics and work rhythms; the fast spreading anomie forcing an ever increasing number of individuals to fall back upon the easily accessible pretentious religious banalities, and attributing to religion the creation and acceleration of extremist, fundamentalist and terrorist tendencies in the third world countries.

Setting Risk-Based Returns in Power Sector

This paper attempts to provide a methodology for determining fair returns for a utility based on the risks associated with the particular segment of the sector it operates in. The analysis comes up with a conclusion that makes intuitive sense: that the distribution segment is the riskiest. The central transmission and generation entities operate under long-term contractual arrangements and have been given the highest form of payment guarantee by the Reserve Bank of India (RBI) in the form of access to state finances in case of defaults by SEBs, operate under the least risk. The paper attempts to emphasise the determination of return on equity based on a comprehensive risk evaluation matrix for each entity in the value chain and not a uniform return for the entire power sector.

Agricultural Growth and Irrigation in Telangana

This paper studies the state of agriculture and irrigation in Telangana, especially from the point of view of agricultural growth corresponding to growth in irrigation. There has been growth in irrigation levels in Telangana, during the past three decades, although the perception that the region suffers from insufficiency of irrigation resources may still be valid. Most of this growth however has come from expansion of well irrigation using private capital, which has adverse implications for groundwater levels and is also contributing to the immiserisation of small and marginal peasants.

Health System Performance in Rural India

The present study attempts to analyse the performance of rural public health systems of 16 major states in India using the techniques from stochastic production frontier and panel data literature. The results show that not all states with better health indicators have efficient health systems. The study concludes that investment in the health sector alone would not result in better health indicators. Efficient management of the investment is required.

Behaviour of Trade Credit

This paper analyses the trends and features of trade credit of the entire economy, public limited companies, private limited companies and foreign companies in India from 1966-67 to 2000-01, and estimates both time series and panel data models for empirically identifying the determinants of trade credit. The period analysis has also been carried out to gauge the impact of liberalisation on the determinants of trade credit. The paper finds that the government sector has remained a substantial user of trade credit through the entire period. The nature of behaviour of trade credit and the changes in it over the years clearly depend upon the type/ownership of companies.

Behaviour of Bank Capital

This paper looks at empirically assessing the determinants of risk-weighted bank capital ratios of state-owned banks in India during 1996-2002. Bank-specific characteristics, variables at the banking industry level and general macroeconomic factors have been taken into consideration for this purpose. The findings suggest that bank specific factors play an important role in influencing bank capital ratios in India.

Effect of Fiscal Deficit on Real Interest Rates

This paper examines the proposition that an increase in the fiscal deficit, financed by government borrowing, necessarily raises the real rate of interest and thus 'crowds out' private investment. It finds that theoretical positions that affirm this point of view assume that the economy is in full employment, a condition that is not fulfilled in most developing countries. The existence of a definitive positive relationship between real rates of interest and the fiscal deficit-GDP ratio is tested empirically for India and for a number of other countries in the world. The finding is that interest rates do not necessarily depend on the fiscal deficit and that policies based on this understanding are erroneous.

Income Stability of Scheduled Commercial Banks

Of late, banks have been increasingly diversifying into non-interest income activities as against traditional banking. This phenomenon, seen globally, is also being witnessed in the case of Indian banks. In this context, this paper attempts to compare the behaviour of interest and non-interest income of scheduled commercial banks in India for the period from 1997 to 2003. The paper further tries to examine whether non-interest income has helped in stabilising the total income of scheduled commercial banks in the country.

Rural Finance: Role of State and State-owned Institutions

Governments have a critical role to play in development of agricultural and rural financial institutions. But state involvement in the management and implementation of rural financial system has proven expensive and inefficient. Subsidised credit programmes which are part of state intervention in rural financial markets undermine the institutional sustainability of financial institutions, distort rural finance markets and discourage savings mobilisation and fail to develop market-driven sources of funding. The revitalisation of the state-owned rural financial institutions is possible without a wholesale structural and ownership change.

Corporate Debt Market

The healthy development of the corporate debt market hinges on a significant level of reforms in regulations governing the primary and secondary markets in corporate debt. The recent initiatives of both Securities Exchange Board of India (SEBI) on the issuance and trading of corporate debt and the RBI's investment guidelines to its regulated entities like banks and primary dealers in this area comprise essentially the first set of reforms. Further initiatives are needed to consciously shape the corporate debt markets, upgrade them and bring them on par with our equity markets in terms of efficiency in trading, price discovery process, transparency, and investor friendliness. In this article an attempt is made to explain the rationale behind the recent measures announced by RBI and SEBI and then draw out the broad contours of the future directions needed to deepen and widen the corporate debt market, both through the stock exchange and banking mechanism.

Is Bank Debt Special?

Despite reform programmes in the capital market in the last decade, for most firms banks and internal sources remain the most important financing sources. The uniqueness of bank debt is evident in its many flexible loan schemes and credit sanctions as well as in options that exist which facilitate tailor-made structuring of debt. This paper attempts to understand specifically the role of banks as a source of debt capital for different groups of firms in India. Even as firms continue their dependence on banks for funding, this paper examines the determinants of various forms of bank finance - short-term, long-term and overall bank debt.

Regulation of India's Financial Sector

This paper assesses the role of the state in regulating the financial sector in India. It attempts to find the rationale for the role of state in a regulatory system, develops a framework for a regulatory mechanism and reviews state policy as well as the existing regulatory structure in India. An assessment based on standard parameters indicates that all regulatory agencies have the state's presence. Also, an assessment made on the basis of international codes and standards shows a high degree of compliance of supervisory standards in the banking segment. In obtaining and maintaining these standards the state has played a significant role through legislative, consultative and supportive measures.

Collateral Monitoring and Banking Regulation

It is well recognised that in the event of massive defaults or significant accumulation of non-performing assets, the government or a super regulator such as the central bank bails out public sector banks. Banks usually ask for collateral to hedge against defaults. However, we argue that they might not be careful in monitoring the quality of collateral, particularly when they think that the success probability is reasonably high and they will be protected in case of defaults. Limited liability and the definite possibility of a bail out in case of a default can impose severe costs on the regulator who, due to political or social reasons, cannot shift the risk onto the depositors. This is very likely to happen in poor developing countries. We design an incentive mechanism for public sector banks that calls for auditing in the 'good states' of nature. The regulator does not need to regulate when the probability of success is very high or very low. But there is a range of probabilities for which private monitoring by banks falls short of optimal monitoring desired by the regulator. Our scheme helps to implement the desired outcome.

Corporate Governance in Banking System

The paper examines the issue of corporate governance in the Indian banking system. Using data on banking systems for the period 1996-2003, the findings reveal that CEOs of poorly performing banks are likely to face higher turnover than CEOs of well performing ones.

Comparing Performance of Public and Private Sector Banks

This paper attempts a comparison of performance among three categories of banks - public, private and foreign - using physical quantities of inputs and outputs, and comparing the revenue maximisation efficiency of banks during 1992-2000. The findings show that PSBs performed significantly better than private sector banks but no differently from foreign banks. The conclusion points to a convergence in performance between public and private sector banks in the post-reform era, using financial measures of performance.