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

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World Employment ILO Perspective

Errol D'Souza The ILO report on World Employment 1996-97 attempts to understand unemployment in the light of globalisation and technological change in the major economic regions of the world. It takes a positive view of globalisation as promoting efficiency and enabling high-productivity, high-wage jobs. The report does not hold labour market rigidities as responsible for unemployment in either industrialised or developing countries. The macro-economic environmentappropriate fiscal policy, wage setting institutions, and welfare programmes is seen as central to growth and employment creation. The report downplays the fact that there is tittle room for fiscal manoeuvre in most countries so that interest rates may rise or that debt-deflation or the size of the welfare state may be responsible for the economic downturn in industrialised Countries, Moreover, balanced growth is not a good option for developing countries as it results in enlarging low- paid, dead-end, informal sector jobs.

Budget 1998-99 Inadequate Policy Initiatives

In an attempt to carry along all sections of society the budget has measures to improve the farmers' lot, has not changed the direct tax structure so as not to hurt the middle class, and has given protection to industry whilst increasing expenditure on infrastructure. This accommodative stance has not allowed the government to rein in the fiscal deficit and the budgetary targets may not be met. New measures are needed to strengthen the institutional weaknesses of the financial system such as raising liability limits on shareholders, giving tax sops for NPAs taken off the books of banks, and limiting entry into banking. With indirect taxes still a dominant source of revenue, the exemption limit for personal taxes needs to be reduced and all savings exempted from such taxation so that the introduction of a full-fledged VAT is not regressive. With the emphasis of the agricultural reforms on the terms of trade being misplaced, total factor productivity improvements via research and investments in agricultural infrastructure are called for.

Labour Demand and High Development Theory

Errol D'Souza The role of economies of scale, an elastic supply of labour and imperfect competition are emphasised as essential elements of development theory by 'high development theory'. Whilst highlighting the role of history and expectations, it also suggests the possibility of industrialisation being unable to create new employment. We argue that this outcome depends on the strength of the increasing returns to scale in dominant firms, vis-a-vis the output elasticities of fringe firms and the elasticity of demand in the industry.

How Did the Reforms Gain Acceptability

The process by which the new economic policy regime was introduced and the conditions under which support for its acceptance was garnered have not received adequate attention and is the subject of this essay. It is argued that the distributional struggle whereby attempts are made to pass the burden of stabilisation on to other sections of society is at the heart of a reform programme, including India's.

Low Taxation and High Interest Rates-Adverse Consequences for Growth

Through a lowering of tax rates the budget seeks to increase disposable incomes with the private sector and stimulate aggregate demand. However, financial sector reforms have caused a shift at the margin in bank portfolios towards government securities and away from advances to firms leading to high interest rates and credit rationing. Unless the composition of government expenditures shifts towards capital expenditures, there is a concerted effort to raise the tax revenue/GDP ratio, direct measures to boost savings are initiated, risk assessment and monitoring skills of banks are upgraded, and banks are separated from their bad loans, there could be adverse consequences for economic growth.

Economic Reforms Ringside View

Economic Reforms: Ringside View Errol D'Souza Towards Sustainable Growth: Essays in Fiscal and Financial Sector Reforms in India by Raja J Chelliah; Oxford University Press, Delhi, 1996; pp 220, Rs 375.

Budgetary Policy and Economic Growth

Budgetary Policy and Economic Growth Errol D'Souza The share of capital expenditures in government expenditures has been slipping and the tax reforms have not yet improved the income elasticity of the tax system. In order to keep the economy on a high growth path direct measures to boost savings and public investment are required, both of which measures require a new thrust to economic policy management that is missing in the budget.

Structuralism Fights Back

Poverty and Power: The Role of Institutions and the Market in Development edited by John Cameron with Hans Ramharak and Ken Cole; Oxford University Press, Delhi, 1995; Rs 395, THE 1980s witnessed the demise of the Structuralist position in development studies and the ascent of the neo-liberal position which relentlessly criticised two characteristics of the Structuralist tradition. Firstly, they charged the Structuralists for de-emphasising the importance of relative prices as a means of affecting distributive and productive outcomes. The Structuralists emphasised non-price variables such as big investment pushes (Rosenstein-Rodan) and the cumulative causation of inequality (Myrdal) as important in affecting economic responses. Secondly, the style and extent of state intervention favoured by Structuralists was also criticised by the neo-liberals. The Structuralists assumed that reformist states exist. This assumption was also criticised by the Marxists who pointed out that redistribution of incomes would be against the interests of the owners of capital as well as by the non-Marxists who argued that governments have to reward interest groups that keep them in power and so would not jeopardise the status quo.

The Budget Tax Reforms and Public Policy

Errol D'Souza The weak spots in the economy are not just the fiscal deficit, inflation, and infrastructure but also the decline in savings and investment rates, the real appreciation of the rupee, and the increased debt-servicing, about which the budget is silent. The tax reforms also do not stand fully vindicated as is being claimed, and the composition of government expenditures has deleterious consequences for the long-run growth of the economy.

Restating Arguments on Intellectual Property Rights

Property Rights Errol D'Souza Peter de Souza There are various levels and arguments involved in the debate on Intellectual Property Rights (IPRs). Four aspects have merited attention, the consequentialist, where the dispute is shown to be primarily empirical the intrinsic, where the disagreement concerns the norms of a free society, the incentive, where IPRs are seen as incentives that are socially beneficial, and the desert, where the inventor's desert is the basis of dispute. The authors make a case for an alternative patent regime.

A Deficient Efficiency

A Deficient Efficiency Errol D'Souza A Theory of Efficient Co-operation and Competition by Lester G Telser; Cambridge University Press, 1987; price not stated.
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