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

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The Misdirected Policy Changes in R&D Tax Incentives

Over the years, the government has provided tax incentives for companies investing in research and development. Since 2016, the policy has seen an overhaul, with some older incentives withdrawn while new ones being introduced. That year, the government launched the patent box regime and tax holidays for innovation-based start-ups. It also reduced income-tax weighted deduction on R&D expenses from 200% to 150%, which was further reduced to 100% in 2020. Recently, the Union Budget 2022–23 saw the withdrawal of a few customs-duty exemptions for R&D. India has seen relatively low investment in R&D, which calls for policy changes. However, the effi cacy of some of these recent changes is questionable.

FDI, GDP and Regional Disparity

Foreign direct investment reveals the tendency to fl ow to the industrial agglomerates. Some scholars express the concern that the skewed distribution of FDI can worsen the regional disparity. This article reveals that FDI has limited and unexpectedly negative effects on the Indian gross domestic product. Hence, the fear that skewed FDI infl ow can worsen regional disparity stands rejected.

Do Machine Learning Techniques Provide Better Macroeconomic Forecasts?

Machine learning techniques are now very common in many spheres, and there is a growing popularity of these approaches in macroeconomic forecasting as well. Are these techniques really useful in the prediction of macroeconomic outcomes? Are they superior in performance compared to their traditional counterparts? We carry out a meta-analysis of the existing literature in order to answer these questions. Our analysis suggests that the answers to most of these questions are nuanced and conditional on a number of factors identified in the study.

Pro-poorness of Growth in Gujarat and Tamil Nadu

This article presents a comparative analysis of poverty reduction and pro-poorness of growth in Gujarat and Tamil Nadu during the post-reform period. We use the unit-level data of the Consumer Expenditure Surveys of the National Sample Survey Office to estimate the poverty ratio for both rural and urban areas of these states. The first period (1993–94 to 2004–05) recorded a slow poverty reduction, but the second period (2004–05 to 2011–12) witnessed a faster reduction in poverty in rural and urban areas in both the states concerned.

Can Growth Be Sustained?

Slump in consumption, surging prices, and slow growth in key sectors are likely to stall the recovery.

Monetary Fiscal Coordination and the Evolution of Public Debt

Using an accounting framework, this article simulates the evolution of the debt ratio based on four policy interventions. It recommends pursuing an expansionary monetary policy combined with an equally active and complementary fi scal policy. The article also says that monetary policy should target the debt ratio, while fi scal policy should target output.

Is the Economy Heading towards Stagflation?

Erratic fiscal and monetary policies tend to slow down growth and fuel inflation.

 

States’ Debt Burden Surges to a 15-year High

Strengthening the pandemic-devastated state finances will help boost both welfare and growth.

 

India’s Government Health Expenditure as the Ratio to GDP

The appropriateness of the criterion that pegs the ratio of public health expenditure to the gross domestic product—which is volatile—needs a re-examination. The targets for allocation and expenditure of financial resources for health need to be based on indicators that can be monitored.

 

Revisiting the GDP Estimation Debate

The National Accounts Statistics series with the base year 2011–12 raised controversy on the integrity of the gross domestic product estimates.

COVID-19 Economic Stimulus and State-level Performance of Power Distribution Companies

As part of the COVID-19 economic stimulus package, the Government of India increased the borrowing limit of the states from 3% to 5% of the gross state domestic product. The power sector reform at the state level is one of the criteria to avail this extra borrowing. The efficiency parameters of the power sector are analysed here, and it is observed that there are statewise differentials in the financial and operational parameters. The average aggregate technical and commercial losses that should have been 15% by 2018–19, presently, on average, stand at 26.15%. The average cost of supply–average revenue realised has also widened. The operational parameters indicate widening inefficiencies across states in the power infrastructure.

 

Is There a Bubble in the Indian Stock Market?

The recent surge in stock prices in India sparked off a debate on a possible bubble in the Indian stock market. The attempt here is to detect and date stamp bubbles present, if any, in the Indian stock market using a recursive econometric technique. This technique can help identify bubbles as they emerge, not just after they have exploded. This study does not indicate any explosive price behaviour in the Indian stock market. Thereby, the presence of any bubbles during the study period is not detected. The sharp decline and the subsequent recovery of the stock prices during the past 15 months was most probably an overreaction to the pandemic.

 

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