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

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Noisy Vertical Markets

In vertical markets, volatility at one level of the market may transmit itself to another level. This paper examines the linkages that exist between spreads at different levels of the market hierarchy in Indian rice markets, and highlights the behaviour of spreads in the presence of information asymmetry. The paper also models possible differences between the reaction to an upward revision of the spread from that to a downward revision.

Perception and Prejudice

This paper presents a theoretical framework to analyse the impact of information and the epistemic reliability attached to this information, on the investment choices made by households when allocating scarce resources within the family. Excess female mortality in India has been attributed to the poor economic returns women generate in the labour market, as well as certain inherent cultural and religious beliefs, which prejudice female survival chances greater than those of males. The authors argue that it is this cultural and religious fabric in India that influences the way in which uncertainty about the outcome of investing in boys or girls is perceived. The result may be an over-reaction - in terms of investment - to positive information about male prospects, and vice versa, an under-reaction to positive information about female prospects, thereby exacerbating the survival differential between males and females. Policy-makers should not only increase the opportunities for females to contribute economically, but they should ensure that these policies are long-term in nature - and not politically motivated - and are well communicated.

Reforming Indian Debt Markets

While equity markets in India have got radically transformed since the 1991-92 securities scam, the government securities markets have not changed very much except that the Reserve Bank of India has significantly improved the settlement process. Recognising the need for introducing transparency and to reform the secondary markets in government securities and money market instruments, the RBI will soon operationalise the Negotiated Dealing System (NDS). Simultaneously, the Clearing Corporation of India (CCIL), promoted by major banks, financial institutions and primary dealers, will be a key market infrastructure to significantly improve market efficiency and integrity. Together with the NDS, the CCIL will introduce major reforms in the way the government securities and money markets function today.

Fiscal Transparency

What one expected from the Report of the Advisory Group set up by the Reserve Bank of India (RORB) to assess conformity to the guidelines specified in the IMF's Fiscal Code was an in-depth exploration of compliance, beneath the formal provisions in place. The peculiar genius of Indian misgovernance is that, while complying with transparency requirements in a superficial sense, there are enough exceptions and anomalies tucked away in the system for it to achieve obfuscation to an impressive degree. The Group was advantageously placed in terms of its membership to ferret out examples where there is de jure compliance, but none de facto. It does not do this. Further, the RORB is largely confined to compliance at the central government level. It does deal to some degree with inter-government issues between centre and states, but not with state-local issues.
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