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

Shashanka BhideSubscribe to Shashanka Bhide

Dynamics of Poverty in India: A Panel Data Analysis

This paper examines the incidence and dynamics of poverty over a period of three decades from 1970 to the end of the 1990s. We use a national rural panel household data set, based on household surveys conducted by the National Council of Applied Economic Research in three rounds in 1970, 1981 and 1998. It examines the trends in the incidence of poverty in India from a longitudinal perspective. The study corroborates the view that the period of 1990s experienced a slower decline in poverty compared to the previous decade, although the incidence of chronic poverty declined even in the latter period. It also examines the pattern of growth in consumption expenditure to understand how it tracks trends in poverty.

Evaluating Quality of Budgets with a Composite Index

How are budgets to be judged? Judgments are often made from specific viewpoints. However, focusing on a single criterion such as the fiscal or the revenue deficit is unsatisfactory, as it does not tell us the manner in which the fiscal imbalance is sought to be corrected. We propose a composite index of quality of the budget that takes into account composition of revenue and of revenue and capital expenditure and degree of fiscal prudence.

Financial Exuberance

There have been significant financial sector reforms through the 1990s. One of the major policy changes affecting the financial markets has been reduction in government's recourse to claims on loanable funds through statutory liquidity ratio as well as high levels of Cash Reserve Ratios. The central government has switched to market borrowing to finance its fiscal deficit on a larger scale than before. There is a general move towards market determined rates and flows in the financial sector. One area where administered rates are still important is the small saving instruments. The government sets these interest rates and mobilises funds for meeting the fiscal deficits at the centre and more so at the state level. If these rates were to be determined by the markets, what would happen to the interest rates in general. One argument is that the small saving rates act as a floor to the deposit rates of the banking sector and hence also determine the lending rates. If the overall balance of demand and supply of loanable funds is such that interest rates can be lower, the small saving rates do not let that emerge. Further, as interest rates decline, there would be significant gains in economic growth. This paper is an attempt to examine this viewpoint. We develop a monetarist model of the economy and assess the implications of alternative methods of financing the fiscal deficit of the government, central and states combined. The results support the view that overall interest rates would decline if the small saving rates were to be liberalised but the gains in economic growth would not be dramatic.

India s Agricultural Dynamics-Weak Link in Development

Weak Link in Development Shashanka Bhide K P Kalirajan R T Shan d There has been a growing concern on the performance of agricultural sector in recent years. The regional balance in growth has also been a matter of interest both in policies and academic discussions. The central budget speeches in recent years have noted the need to accelerate agricultural growth as it has been slower growth than the growth of the other sectors. The declining real public investment in agriculture has also been cited with concern given the implication of such trends to agricultural growth. It is useful to examine the longer-term trends in agricultural growth to place in perspective the more recent trends. This paper is an attempt to assess the trends in agricultural output both at the national level and the state level. The study shows that there are strong cyclical patterns in the growth trends and there is evidence of convergence of the growth rates at the state level in the shorter intervals of time. But in the longer term, the state level growth rates converge to different levels. Thus, the concerns regarding slower rate of growth at the overall level and the divergent growth pattern of the states are well founded. Unless there are policies which strengthen the investment climate in agriculture, by operating on both the supply and demand factors, the slower growth at the national level and the consequent state level imbalances would continue.

What Do the Reformers Have for Agriculture

Ashok Gulati Shashanka Bhide The Central Budget for 1995-96 has little to cheer those who seek to bring about major changes either in the marketing arrangements or institutional structures for pricing and distribution in Indian agriculture. The measures to establish a 'Rural Infrastructural Development Fund' to quicken the pace of completion of infrastructure projects in rural sector are important steps as are the measures to increase the coverage under 'Indira Awas Yojana'. However, as in the case of many of the well intentioned schemes, lack of appropriate complementary institutional mechanisms to operate such schemes may prove to be the pitfall of these new schemes also. Failure to address the reforms needed in agriculture may indeed become the drag on the overall reform process.
Back to Top