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

Articles by J Dennis RajakumarSubscribe to J Dennis Rajakumar

Fifteenth Finance Commission Award and the North-eastern States

This paper deals with the expected fiscal transfers to north-eastern states under the Fifteenth Finance Commission award. The analysis reveals that the ratio of central transfers has been declining. However, the structural disabilities of these states necessitates that the union government supplements the finance commission transfers with other budgetary support.

 

Tamil Nadu Economy

Tamil Nadu is a state that has ensured a simultaneous improvement in growth and human development. Innovative welfare interventions combined with economic dynamism have been a key feature of the state’s development. In the context of the Dravida Munnetra Kazhagam coming to power on the back of a slew of promises on welfare and development, and the ongoing pandemic, the trajectory of growth and resource mobilisation efforts by the state is examined. The analysis points to an emerging disjuncture between growth and tax efforts of the state as well as a decline in central transfers.

 

Corporate Tax Reductions

The claim of sharp reduction in effective corporate tax rate to 25.11% does not, in fact, represent any significant reduction in the tax burden that the companies bear at present, and hence, the fiscal instrument available for improvement in corporate investment gets blunted. Apart from frittering away the tax potential, this measure will shift the tax burden to individuals. Also, several non-manufacturing companies and a handful of large companies are likely to benefit from the measure.

 

Trends and Patterns of Household Indebtedness

Based on the data from the All-India Debt and Investment Surveys, a re-emergence of non-institutional credit agencies in the incidence of household indebtedness is found since the 1990s, especially in the rural areas, reflecting the inadequate social commitments of the institutional agencies due to their contemporary organisational deficiencies. The data, however, do not seem to capture the extent of urban distress in totality. Yet, given the general dearth of evidence on the status of household indebtedness over time, institutions like the Reserve Bank of India and the National Bank for Agriculture and Rural Development should revisit this information to resurrect their roles in strengthening credit delivery to the general population.

Misguided Priorities

A close examination of the recent trends in government finances suggests that the expenditure pattern of the government does not provide any assurance for the future in terms of building adequate social capital. The regressive nature of taxation policy in recent years along with reduced government spending has put additional burden on out-of-pocket expenditure of individuals.

Comparing IIP and NAS in Their New Incarnations

The Index of Industrial Production series, the most significant macroeconomic lead indicator, was revised by the Central Statistics Office in May 2017, two years and three months after revising the National Accounts Statistics series. Even as the newIIP series is more current, growth rates of output do not match those of theNAS. This, along with the significant lag in the periodic revision ofIIP, diminishes its usefulness.

Measuring Manufacturing

Bringing attention back to the manufacturing sector and to the statistics available to understand it, this analysis presents the differences in size and rates of growth of the sector when measured using the new National Accounts Statistics series (2011–12) and the Annual Survey of Industries. Clearly, changes in methods of measuring (for instance, the shift from the establishment approach to the enterprise approach) have introduced unexplained changes into measures of the manufacturing sector.

Not for Growth

Sticking to the firm commitment to contain fiscal deficits, the reduced thrust on government spending does not seek to be countercyclical given that economic growth is falling. There is vast scope to step up collection of corporate taxes by widening the tax base through greater compliance.

Demonetisation: 1978, the Present and the Aftermath

In the context of the demonetisation of ₹500 and ₹1,000 notes, the issuance of currency and its different denominations are traced over time, while also tracking key macroeconomic features of India's changing economy over the decades. Further, the possible immediate and longer term economic effects of demonetisation are discussed.

Estimates of High GDP Growth for 2015-16

In producing the new series, the Central Statistics Office with its rebased National Accounts Statistics has done a studious job of marshalling diverse sources of data and weaving them together into a composite new source. However, the final picture of NAS data would have been more acceptable if better caution was exercised in using new concepts as well as new sources of data, and in weighing the growth results against frequent and extensive revisions. The CSO has failed to refine the growth results juxtaposed against the repetitive and substantial revisions that the data sources have impelled and have completely ignored the analytical construct of gross domestic product at factor cost.

Continuous Revisions Cast Doubts on GDP Advance Estimates

Two recent press releases by the Central Statistics Office substantially revise the new series of National Accounts Statistics. The new releases are more than just routine updates, and entail methodological changes and incorporate new sources of data, perhaps in response to various critiques. Yet, on comparing the advance estimates released with past such estimates, the CSO's latest growth projections once again turn out to be far too optimistic.

Some Puzzling Features of India's Recent GDP Numbers

An analysis of the end-November 2015 data release of the Central Statistics Offi ce raises some issues that must be kept in mind while discussing the state of India's economy. If past trends are anything to go by, economic growth in 2015-16 will not improve in the last quarter as some seem to hope. The movements in the GDP defl ators and the very odd behaviour of a gradual decline in the investment rate together indicate that growth in 2015-16 will not end as earlier forecast.

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