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Horizontal Imbalances in India

Horizontal imbalances (measured by the coefficient of variation in own revenue as a percentage of total expenditure) persist in India even today mainly due to a host of economic and political factors. Variations in tax base, tax effort, infrastructural facilities - both physical and social - and political uncertainty are found to be the important determinants of horizontal imbalances. The dispersion in horizontal imbalance can only be reduced through all-round development of the poorer states. General-purpose transfers from the centre are essential for horizontal equity but they cannot ensure a permanent solution.

Capital Account Liberalisation in India

This study attempts to explore the consequences for India of opening up the capital account. It builds a model to establish a formal link between capital flows and economic growth in the Indian context and reconciles the results from this model with the possible end-use of capital flows into different sectors.

Reviving the Economy

Since the beginning of the 1990s contractionary features inherent in public policies have resulted in a massive squeeze on investment in physical infrastructure in particular, and a sharp deterioration in the share of development in the government's total expenditure. All hopes have been pinned on the revival of industrial demand through possible improvement in agricultural growth in the current year following copious rainfall so far. However, because this beneficial impact, if it occurs, follows two years of falling incomes in the sector, it is not likely to be either significant or immediate. This note explores the possibilities of deploying the surfeit of liquidity in the financial system in a 'supply-leading' strategy for the development of railways and other physical infrastructures in order to kick start the economy.

MSRDC and Mumbai-Pune Expressway

This case study of the Mumbai-Pune Expressway points out that delivery of infrastructure like road and highways, especially mega projects, totally through the private sector is currently difficult. In the absence of such private sector capacity to take on this responsibility, the role has been creatively shouldered by the Maharashtra government by forming and supporting a road development corporation - carved out of its public works department in its primary mission, the building of essential projects in a timely fashion. The experience of the Mumbai-Pune Expressway indicates that the public sector, freed of political intervention and outdated organisational structure and given command and authority to innovate is able to deliver needed products efficiently.

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