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

GrowthSubscribe to Growth

Growth, Employment and Labour through a Budget Lens

Despite the rhetoric in the budget speech of the finance minister, the larger picture emerging from the recent data is a slowdown in growth and a net decline in employment. Not only is this a case of jobless growth, but also one of job-displacing growth. Men have gained and women have lost. The rural economy has suffered the most. In the meantime, there is a process of downgrading the rights of labour. There is very little to cheer about the economy.

Absolute Decline in Employment from 2013 to 2016: In Numbers and Graphs

Employment growth in India slowed down drastically during the period 2012 to 2016, after a marginal improvement between March 2010 and March 2012, according to the latest available employment data collected by the Labour Bureau.

Problems of Market Economy

Economic Challenges for the Contemporary World: Essays in Honour of Prabhat Patnaik edited by Mausumi Das, Sabyasachi Kar and Nandan Nawn, New Delhi: Sage, 2016; pp 324+xvii, ₹1,195.

Economic Policy Uncertainty and Growth in India

A measure of economic policy uncertainty or EPU for India is constructed to study its impact on the economy. It is found that gross domestic product growth and fixed investment are negatively related to EPU in India. For instance, if the economic uncertainty were to decrease to the level observed in 2005, India's GDP growth would increase by 0.56%, and fixed investment growth would increase by 1.36%. Additionally, a negative correlation between the Bombay Stock Exchange index and EPU in India is observed, suggesting that increases in EPU lower expectations of future growth or increase perceived risk of listed stocks. Lastly, it is found that firm-level capital expenditure rates are lowered when EPU increases.

Demystifying Delusion and Unveiling the Crypt

The Indian Economy in Transition: Globalization, Capitalism and Development by Anjan Chakraborty, Anup Dhar and Byasdeb Dasgupta; New Delhi: Cambridge University Press, 2016; pp xx + 422, price not indicated.

Faltering Manufacturing Growth and Employment

Declining growth and a stagnating employment share of manufacturing in a high-growth regime in India are disconcerting, given the pride of place assumed by manufacturing as the "engine of growth." The sustainability of high growth is linked intrinsically to a trajectory that creates gainful employment. This paper argues that the manufacturing sector, which recorded declining employment elasticity in the organised sector, will not be able to mend the gap between growth and employment. Rather the goal of rejuvenating manufacturing has to be contextualised in a larger strategy of full employment with interventions related to demand structures, technology, size structure of firms, as well as a calibrated engagement with the global market.

Capital Account Management in India

India has been subject to capricious capital flows since its integration with the global capital markets in the early 1990s. In a bid to balance diverse objectives, India, like many other emerging markets, has resorted to active management of various types of capital flows. This paper finds that while the calibrated liberalisation approach resulted in altering the composition of capital flows towards more stable flows, and has helped India to negotiate the "Trilemma," the use of sporadic capital account management measures in the face of surge or stop of capital flows has not been very effective in achieving their objectives of reducing external vulnerability or mitigating macro-prudential risks.

Monetary Policy Dilemmas at the Current Juncture

Monetary policies in advanced economies and emerging markets face quite different challenges at the current juncture. In the advanced countries, current dilemmas derive from the normalisation of unconventional monetary policies. The short-term dilemma is to determine when to start exiting extraordinary policies and selecting appropriate tools, as conventional tools may not be very relevant during this phase. The medium- to long-term challenges relate to the sequencing, pace and mechanics of normalisation. Monetary policy in emerging markets needs to cope with the familiar dilemmas of fiscal dominance, the growth-inflation trade-off and the "impossible trinity." With fiscal parameters in control, and food and commodity prices subdued, the chief dilemma currently confronting emerging markets involves a trade-off between targeting divergent domestic and external cycles. Although they are now better placed to absorb a sudden stop, the impact is likely to be differential, with those with weaker macroeconomic parameters suffering greater pain.

Continuous Revisions Cast Doubts on GDP Advance Estimates

Two recent press releases by the Central Statistics Office substantially revise the new series of National Accounts Statistics. The new releases are more than just routine updates, and entail methodological changes and incorporate new sources of data, perhaps in response to various critiques. Yet, on comparing the advance estimates released with past such estimates, the CSO's latest growth projections once again turn out to be far too optimistic.

Sectoral Linkages and Growth Prospects

This paper examines the linkage of growth among the agriculture, industry and services sectors of the economy, using both an input-output (I-O) and a simultaneous equation framework. Despite the substantial increase in the share of the services sector in GDP over the years, the I-O tables suggest that the agricultural sector still plays an important role in determining the overall growth rate of the economy through demand linkages with other sectors of the economy.

Growth vs Inflation Control

The reduction in the Bank rate and in the cash reserve ratio effected in the latest credit policy statement may appear small, but what is significant is the signal conveyed to the market that the policy of supporting investment by providing adequate liquidity and a softer interest rate environment will continue.

Liberalisation and Growth of Firms in India

This study analyses the impact of the liberalisation policies on the growth of firms in India. It analyses the inter-firm differences in growth rates over a seven-year period. The basic unit is the firm and the study allows for the entry and exit of firms during the sample period. Further, the authors show that not all firms have benefited from the liberalisation measures. There were gainers and losers. The impact of the determinants on growth has not remained constant over the years but has changed during the process of liberalisation.

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