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

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IMF's Autocritique of Neo-liberalism?

In a recent article published in Finance and Development, an International Monetary Fund magazine, three economists have critically evaluated the policies the IMF promotes. They acknowledge evidence that suggests that economic growth under neo-liberalism is difficult to sustain, that it leads to an increase in inequality, and that continuing inequality is harmful for sustainable (or continuing) growth.

Partial Divestiture and Performance of Indian Public Sector Enterprises

Global empirical studies of privatised firms show a significant improvement in their performance after privatisation. This is true in case of fully as well as partly privatised firms. What is the evidence for Indian divested enterprises in this regard? This paper attempts an analysis by empirically examining the impact of divestiture. The results indicate that in case of partial divestiture, where divested equity is thinly spread with the majority shareholding still with the government, there has been no improvement in terms of profitability and operational efficiency. The paper therefore endorses the government's current policy of strategic sale, where management control passes to the strategic partner.

Fiscal Deficit and Rate of Interest

This paper examines whether in the financially deregulated regime, shift in the financing pattern of the fiscal deficit away from seigniorage and external debt financing to bond financing has the probability of creating an upward pressure on the rate of interest in India. Using an asymmetric vector autoregressive model, we found that in the deregulated financial regime, the fiscal deficit did not create a rise in the interest rate. Rather, the causality runs from the exante real rate of interest to fiscal deficit. This result is in conformity with the recent trend in Indian public finance where the high interest rate fuelled the accumulation of more debt through increase in interest payments and the consequent debt-deficit spiral.

Structural Reforms and Health Equity

Preliminary results of an analysis of data sets on morbidity and health care utilisation from two NSS surveys in the 1980s and 1990s together with empirical results of other studies points the worsening of class-based inequalities in access to health services for both men and women. While gender inequity, particularly in untreated morbidity, appears to have remained severe, also seen is a relative worsening of access for poor men over this period, even though in absolute terms men are better off than poor women.

Deregulation and Performance of Public Sector Banks

How have India's public sector banks (PSBs) performed in the years since bank deregulation was set in motion in 1992-93? The banking system has not collapsed nor has there been a banking crisis and the efficiency of the system as a whole measured by declining spreads has improved. This paper documents and evaluates the performance of PSBs since deregulation in absolute and relative terms and attempts to understand the factors underlying their improved performance.

Globalisation and After

India – Globalisation and Change by Pamela Shurmer-Smith; Arnold, London, copublished by Oxford University Press, New York, 2000; pp 209.

The Ecstasy and the Agony

The budget's strategy for stepping up growth in the near term rests on certain key premises: (i) fiscal consolidation is under way; (ii) fiscal consolidation and reduction in administered interest rates will lead to lower lending rates; and (iii) lower interest rates, along with continued deregulation, will make for higher investment and growth. Each of these premises needs to be carefully examined.

Macroeconomic Policy and Asset Markets

Bank-based and stock market-based systems are compared from the viewpoint of macroeconomic policy. The author suggests that the former has desirable properties with reference to the objective of increasing output and employment.
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