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

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Economic Revival or Dead Cat Bounce?

Although growing at rates that are globally enviable, the Indian economy has been unstable over the last several years. False dawns, shifting time series, and the selective use of data has provided fodder for scoring political brownie points. Citing near-term data, the Economic Survey 2017–18 argues that the Indian economy is on the path of recovery even as it raises some red flags. What does a comprehensive appraisal of the data show? Is this “recovery” sustainable or is this yet another case of a dead cat bounce?

Vulnerability of Emerging Market Economies to Exogenous Shocks

The transmission of global demand, oil supply and monetary policy shocks on the Indian economy are empirically examined using a parsimonious structural vector autoregression model for the period 1996 to 2016. Global demand shocks exert the most dominant effect causing fluctuations in various macroeconomic variables, whereas global monetary policy spillovers play an important role in affecting domestic short-term interest rates and financial asset prices. Global oil supply shocks, given its relative weightage as an intermediate input, have a greater impact on wholesale price index inflation than on consumer price index inflation. Given the rising trade and financial integration of the Indian economy, a quantitative impact analysis of these global shocks assumes importance for macroeconomic and monetary policy frameworks.

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.

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.

Global Slowdown and the Indian Economy

While there may have been some effect of the current global slowdown on economic activity in India, poor performance of agriculture has perhaps been more responsible for the Indian economic slowdown in recent years. Thus domestic factors such as agricultural growth can be neglected only at our own peril. With the information technology industry set to be a major vehicle for productivity growth, India must be prepared to withstand the increased possibility of output volatility through upswings and recessions. And as it increasingly meshes with the globalised trading and financial system, India's own financial system must be strengthened to withstand asset price shocks with policies geared to take quick remedial measures.

A Life in Political Economy

Glimpses of Indian Economic Policy: An Insider’s View by I G Patel; Oxford University Press, New Delhi, 2002; pp 205, Rs 395.

Economy : Wrong Prescriptions

Wrong Prescriptions A correspondent writes: Even a 4 per cent rate of economic growth need not be scoffed at, though it does mean that the economy has underperformed in terms of the target of 6 per cent. It does speak however of the need not to set growth targets unrealistically high. Then the impression goes round that the economy is underperforming. Cynics may suggest that there is a deliberate attempt to show underperformance with a view to push forward the reform programme to which the government is committed.

Balanced Growth and Foreign Trade

This paper attempts to establish a link between the maximum attainable rate of growth and the foreign trade sector for the Indian economy in the framework of the balanced growth model. Using six input-output tables, the paper finds that the exports and the imports of the economy would have to rise manifold, for the economy to achieve the technologically given maximum rate of growth. The paper also identifies the 'exportable' and the 'importable' sectors for the Indian economy.

Impact of Increase in Oil Prices on Inflation and Output in India

This paper attempts to study the transmission mechanism of an increase in petroleum prices on the prices of other commodities and output in India. The paper also examines the nature and the extent of 'feedback' in such a transmission mechanism and obtains evidence of bidirectional causality between oil and non-oil inflation in India.

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.

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