ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Overcoming Political Obstacles to Economic Reforms via Redistribution

Political obstacles to the reforms process is a genuine problem in most reforming economies. Such obstacles, it is feared, shackle a reforming government, which is then unable to complete the reforms agenda. This paper argues that the magnitude of political economy problems may be exaggerated and that a way out of the impasse is possible. An approach to political calculus is developed that sets out the conditions under which broadbased reforms may be introduced by the government without electoral dangers. This approach is tested using Indian data.

Fiscal Policy and Growth

Can fiscal policy play a key role in the revival of the economy? The problem is that this question has had to be posed in the context of deteriorating fiscal balances of the centre and the states, whose combined deficit is today slightly worse after 10 years of reform. The states' gross fiscal deficit has deteriorated significantly. It is absolutely necessary, therefore, for the centre to be seen to be fiscally prudent, which will be a signal to the states of the centre's seriousness in regard to fiscal management. A contrary signal will undermine any restraint that the centre can bring to bear on the states.

Fiscal Responsibility and Budget Management Bill

India's fiscal scenario at the moment is about as bad as it was in 1991-92, the beginning of the economic reforms process. For a variety of reasons, many of them in the realm of political economy, the government has been unable to reduce its expenditures and increase revenues. A fiscal responsibility bill, of the kind being discussed currently, is meant to offer a credible commitment that the government is serious about fiscal consolidation. By tying its own hands the government signals that it is serious about reducing deficits. While one may disagree with the details of the bill, the broad overall thrust and the philosophy underlying it deserve to be welcomed. Unfortunately, as this note is being written, the government is seen to be completely diluting the provisions of the bill so as to render it completely ineffective.

Slowdown of the Economy:Which Way Out?

In the panic that has gripped Indian business and government policy circles, it is easy to recommend measures which can be best described as quick fixes. But it is important that quick fixes be avoided if long-term development is not to be compromised. The main reasons for the current slowdown are structural and must be addressed as such. This calls for boosting not any kind of government expenditures, but expenditures that will raise productivity. Alongside must be tackled the institutional impediments that continue to obstruct private investment. Ten years after the initiation of economic reforms it is urgently necessary now that we recognise the important role that the institutional environment plays in development.

Government Finances:Weaknesses Remain

The weaknesses that still persist in government finances even though at an aggregate level deficit targets are being met. Also, a look at the issue of food subsidy.

Microsoft, Competition and Competition Policy

The Microsoft case has thrown up interesting issues in the area of regulation of anti-competitive practices. This has relevance for India in the context of the Competition Policy that is currently being debated. The main objective here is to examine in detail the case against Microsoft and the remedy that has been proposed by the court. The paper also looks at the proposed remedy from a transaction costs perspective and puts forward some conjectures on the likely effect on innovations in the software industry. The paper touches upon some of the more contentious issues regarding the Report of the Committee on Competition Policy.

Do Indian Stock Markets Matter?

This paper deals with the inter-relationships between stock prices and important macro-economic variables. Specifically, following macro-economic variables: Exchange rate of rupee vis-a-vis the dollar, prime lending rate, narrow money supply, broad money supply, and index of industrial production are considered. The econometric analysis uses state-of the art techniques such as unit root testing, cointegration and error-correction models. The analysis and discussion are situated in the context of macro-economic changes, especially in the financial sector, that have been taking place in India since the early nineties.

Budget 1998-99 Focusing on Wrong Issues

The Budget 1998-99 is crucial since it encapsulates the economic thinking of the new BJP government. This article looks at the budget critically focusing on the following issues: Is the economic reform process to continue along the lines that had been demarcated? Has the 'swadeshi' rhetoric been reflected in the actual policy? Has the process of redefining the rote of the state been continued?

Budget 1997-98 and Role of the State

This article seeks to analyse the Budget 1997-98 within the broad framework of the role of the state in a changing economic environment The first part, dealing with short-term issues presents an analysis indicating that as the government reduces unnecessary regulation and permits the market to function by creating appropriate incentives, growth will occur. The second part, on long-term issues, shows that the long-term prospects for growth however are none too bright, in the absence of genuine meaningful state intervention. The neglect of the physical and social infrastructure is especially highlighted.

Interest Groups, Subsidies and Public Goods-Farm Lobby in Indian Agriculture

Interest Groups, Subsidies and Public Goods Farm Lobby in Indian Agriculture Ajit Karnik Mala Lalvani Indian agriculture exhibits a wide array of government controls combined with enormous subsidisation of inputs to the sector Apart from the subsidies, the federal and state governments incur large expenditures to provide public goods to agriculture. This article examines the influence of the farm lobby in determining the availability of subsidies and public goods to agriculture.

On Rent-Seeking

On 'Rent-Seeking' Ajit Karnik THE article by Amiya Kumar Bagchi 'Rent- Seeking', New Political Economy and Negation of Politics '(EPW, August 21), raises a number of issues in the area of rent- seeking, a term which has gained currency over the last decade. In response to this article I would like to make the following comments:

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