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

Raghbendra JhaSubscribe to Raghbendra Jha

Fiscal Consolidation

Fiscal consolidation is a desirable goal in itself and would also facilitate the attainment of the other four objectives of the 2003-04 Budget. Such consolidation would require, primarily, a substantial increase in tax/GDP ratio. However, the current budget has not made any significant effort in this direction. On the other hand, the effects of changes in existing tax rates and exemptions and changes in the debt policy make the attainment of the revenue targets even more difficult.

Noisy Vertical Markets

In vertical markets, volatility at one level of the market may transmit itself to another level. This paper examines the linkages that exist between spreads at different levels of the market hierarchy in Indian rice markets, and highlights the behaviour of spreads in the presence of information asymmetry. The paper also models possible differences between the reaction to an upward revision of the spread from that to a downward revision.

Downward Rigidity of Indian Interest Rates

This paper tries to assess why lowering interest rates is proving to be hard in India. It highlights the role of three factors, namely high public debt and the structure of this debt, the overhang of non-performing assets, and the policy being pursued with respect to accumulation of foreign exchange reserves. These three factors are causally linked to each other and should not be looked upon as mutually exclusive contributors.

Economic Reforms:A Decadal Stocktaking

A recent conference held in Australia to mark 10 years of India's economic reforms saw papers presented on various topics, covering the gamut of trade, investment and economic growth. The meet also helped to highlight the important work being done on the Indian economy in Australia and other neighbouring countries.

Determinants of Sovereign Borrowings from IMF

The article delineates the IMF's rationale for its role in the international economy; particularly in helping those countries that are going through balance of payments crises. The authors attempt to decipher whether the actual lending pattern of the IMF conforms to this rationale. This is done in the context of panel data models for several groups of countries. There appears to be some arbitrariness in the lending pattern of the IMF.

A 20/20 View of Budget 2000

A budget is a complex policy statement and, therefore, needs a framework to be evaluated. The approach taken in this paper is broadly twofold. First, I have evaluated the tax and expenditure proposals of the budget in the light of known and accepted tenets of the theory of fiscal reform. Second, I have attempted to understand some macroeconomic implications of the budget making some reasonably realistic assumptions about how the policy scenario might unfold. I have also tried to indicate the policy challenges that will emerge in this scenario and the shortcomings of what I expect the policy response to be as well as what I perceive to be the desired course of action.

Growth, Inequality and Poverty in India

This paper examines the empirical relationship between economic inequality, poverty and economic growth in the Indian states. Using NSS data on consumption for the 13th to the 53rd Rounds, I compute the Gini coefficient, real mean consumption and the head count ratio for rural and urban sectors and average for 14 major Indian states. The rank concordance index across states does not usually show convergence. Nevertheless, there is (conditional) convergence (in terms of levels) in inequality and poverty measures across states. The coefficients of variation do not show any tendency to fall over time. What is particularly worrisome is that the coefficient of variation of the rural head count ratio seems to be rising over time, indicating greater dispersion in rural poverty across states.

Real Consumption Levels and Public Distribution System in India

The policy of allocation of foodgrains under the Public Distribution System (PDS) has been very ad hoc in India with allocation being fixed on a 'historical basis'. This paper uses four sets of pooled equations for predicting stable levels of per capita consumption of rice and wheat in physical terms in rural and urban India. Foodgrain demand and the own-price, cross price and income elasticities of demand are estimated for all states. A formula that is based on the concept of subsidising real consumption through PDS is proposed.

Will the Right Monetary Aggregate for India Please Stand Up?

This paper re-examines the monetary aggregation procedure in India in the context of the new monetary aggregates proposed by the Third Working Group of the Reserve Bank of India.

Market Integration, Price Efficiency and Short-Run Dynamics

Short-Run Dynamics A Tale of Two National Stock Markets Raghbendra Jha Hari K Nagarajan This paper models price dynamics in the two national stock exchanges. It is discovered that there are well-defined relations between stock prices in the long run in each of these markets. Hence market segmentation is strongly ruled out. Second, the short-run behaviour of stock prices is such that no stock price can be considered to be independent of the others. Short-run price movements are mostly random or unstable, but the impulse response function analysis suggests that the instability does not persist for long. Finally, there seems to be a marked difference in the reaction in the two markets for the same stocks in terms of the responses to firm specific and market specific shocks. This may point to differences in the types of traders in these two exchanges.

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