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

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Trends and Determinants of Private Corporate Sector Savings in India

The corporate savings rate in India has remained at a relatively low level throughout the long period of 1966-2000 and has, in fact, declined in the recent past, which is a worrisome matter if the planned high rate of economic growth with stability is to be achieved. It appears that profits after tax, investment opportunities, availability of external funds, cost of borrowings and cost of equity are the important determinants of the savings of the private corporate sector in India. This paper analyses the trends in private corporate savings in India during this period, and uses dynamic panel data for empirically identifying the factors which influence corporate savings decisions. The period analysis has also been carried out to gauge the impact of liberalisation on the behaviour of corporate savings in India.

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.

Financial Repression, Liberalisation and Development

Development L M Bhole Monetary and Financial Policies in Developing Countries by Akhtar Hossain and Anis Chowdhury; Routledge, London, 1996; pp X+230, Rs 395.

Inflation and Equity Returns

K V S S Narayana Rao L M Bhole This article examines the impact of inflation in India on the rate of return on equity. The real rate of return for each year and all multi-year holding periods between 1933 and 1987 are presented. Whereas equities provide a positive real rate of return over long periods, it is negative in the short run, especially in years of extraordinary inflation.

Definition, Measurement and Determination of Money Supply

of Money Supply L M Bhole Money is one of (he important macro economic variables. Correct understanding of the role of money in economic activity hinges on defining and measuring money correctly There has been a growing tendency both in India and abroad to conduct monetary analysis and policy in terms of empirically defined broad money and multiple measures of money Recently, the Committee to Review the Working of the Monetary System also has held that M3 is the appropriate definition of money and that the money multiplier framework is dependable for money supply analysis and control. This would give a further wrong direction to the evolution of monetary theory and monetary policy as well as their information base in India.

Definition, Measurement and Determination of Money Supply

Money is one of the important macro economic variables. Correct understanding of the role of money in economic activity hinges on defining and measuring money correctly. There has been a growing tendency both in India and abroad to conduct monetary analysis and policy in terms of empirically defined broad money and multiple measures of money Recently the Committee to Review the Working of the Monetary System also has held that M3 is the appropriate definition of money and that the money multiplier framework is dependable for money supply analysis and control. This would give a further wrong direction to the evolution of monetary theory and monetary policy as well as their information base in India.

Debt Management in India

 chapters carrying the titles 'Bazaar' and Angolan' which deal with economic and political matters. The problem with these chapters starts with the titles themselves; 'Bazaar' in Bengali does not stand for market, nor does Andolan' mean either rebellion 'or revolution ("Itihasa Bazaar, Puja, Jatra and Andolan, which may be glossed as 'history', 'market' 'ritual or festival', 'theatre', 'revolution' ..."). Market in economics stands for an institution; Bazaar stands for the market place. The world Andolan is used by English-speaking Bengalis interchangeably with the English word 'movement'. This confusion between revolution, rebellion and movement is only one among the many that occur in the chapter on Andolan'. About the chapter called 'Bazaar' the question to ask is: what is the justification of this descriptive account? It is not that economists have not studied the functioning of markets both analytically and descriptively.The author's account does not show any specificity of Vishnupur. The Andolan' chapter makes this question even more urgent. The Naxalite movement did not originate anywhere near Vishnupur nor did the town play any crucial role in that revolutionary upsurge. One does not see from the account presented by the author any advantage of looking at the country-wide phenomenon from the viewpoint of Vishnupur. If the author claims that he has been able to connect the Naxalite movement with the legends of Malla kings, the rituals of the goddess Manasa and the techniques of Jatra performance that claim cannot simply be sustained. It is not surprising that the compressed narrative account should contain serious errors like ascribing the split in the Congress Party to some unspecified "issues of good production" and tracing the armed revolt in Telengana to what he calls the 'Zhdanov line'.

FROM THE CHAIR- Administered Interest Rates in India

L M Bhole The rate of interest is an important price in any economy. If it is determined mainly by the market forces, it may help in taking appropriate decisions about saving, investment, allocation of resources, financial and monetary policy, etc However, the level and structure of interest rates in India have remained very closely regulated by the authorities. The present study examines the working of this administered system of interest rates, and discusses the issues and considerations which need to form the basis of future interest rate and monetary policies for the Indian economy THE plan of the study is as follows: In Section I, after stating the background and the content of the present system, we briefly refer to the nature, criteria' and feasibility of an alternative system of interest rates which, according to us, would be appropriate for India. Section II discusses the features and rationale of the present system by reconstructing its scope, techniques, authority, timing, and its effects on interest rates and credit control mechanism. The reasoning and empirical evidence in support of the case for an alternative system are presented in Section III. The lessons from experiences of some countries in operating the similar systems of controlled interest rates are mentioned in Section IV. Summary and conclusions are presented in Section V.

Behaviour of Trade Credit- Its Relevance for Monetary Policy

Behaviour of Trade Credit Its Relevance for Monetary Policy L M Bhole Trade credit is an important source of short-term finance for business units. We know almost nothing about the behaviour of trade credit and its relationship with monetary policy. We take up in this paper the task of presenting a comprehensive analysis of the volume, distribution and other characteristics of trade credit and of finding out how far it can undermine the effectiveness of monetary policy.

Bank Finance for Working Capital after Tandon Committee Report-Some Evidence

after Tandon Committee Report Some Evidence L M Bhole An attempt has been made in this article to present the empirical evidence on the implementation of the major recommendations of the Tandon Committee appointed in July 1974 to suggest, among other things, guidelines for commercial banks to ensure proper end-use and distribution of bank credit.

Retention of Profits and Stock Markets-A Comment

Retention of Profits and Stock Markets A Comment L M Bhole IN his reply (December 27, 1980) to my comment ( July 19, 1980) and Patil's Rejoinder (June 21), Chitalc has attempted to defend his earlier proposal of lowering the retention ratio and increasing the dividend payout ratio by Indian joint-stock companies as a means of activising and developing stock markets.

Retained Earnings, Dividends and Share Prices of Indian Joint-Stock Companies

Prices of Indian Joint-Stock Companies L M Bhole Understanding the retention /dividend policies of the companies is important at the micro as well as the macro levels. However, not much research has been done in this area in developing countries.

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