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

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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.

Convergence Bill: An Advance, but Flawed

What has come to be known as the Convergence Bill, introduced in parliament in the monsoon session, is a great advance on previous enactments for setting up the TRAI and the TDSAT. There are nevertheless a number of serious flaws, omissions and undesirable provisions in the bill which need rectification. A critical analysis.

Aspects of Banking Sector Reforms in India

This paper examines some of the consequences of the banking sector reforms in India which were an integral part of the liberalisation process of the economy initiated in 1992. In particular, the data show that, in the post-reform period, investment in government securities by banks has remained persistently high and there has been a significant reduction in the flow of credit (as a proportion of deposits) to the real sectors of the economy. There have also been significant changes in the flow of credit to various groups and sectors within the economy, some of which might be thought not to be in conformity with the stated social goals of the government.

India and the Global Economy

The roots of India's prolonged economic stagnation and the glimmer of hope that one notices on the horizon today cannot be fully understood if one ignores the variables that conventional analysis has taught us to ignore - the social norms, culture, beliefs, and the fabric of social interaction.

Opening Up and Openness of Indian Economy

An essential task prior to any analysis of the costs and benefits of globalisation is to determine exactly the extent of international integration of a specific economy. In the case of India, while there has been a significant advance in the country's external integration compared with its own past record, the advance has been modest and gradual and decidedly suffers in comparison with that of most of the other countries studied in this paper.

Investment Boom and Underutilisation of Capacity in the 1990s

This paper discusses the possible reasons for the boom in industrial investment in the first half of the 1990s, in the wake of the relaxation of industrial regulation and controls, and why the boom petered out after the mid-1990s.

A Reply to A Reply

It is nice to receive a reply from Prabhat Patnaik to our rejoinder (EPW, May 12, 2001) to his article (‘On Fiscal Deficits and Real Interest Rates’, EPW, April 14, 2001), as it gives us an opportunity to clarify further our position. Let us state upfront that we do not agree, as he claims, with his “weak proposition that there is no theoretical justification for cutting the fiscal deficit as a means of lowering the interest rate” as it applies to the Indian situation. In India, which has a partially open economy (some capital controls) and a floating exchange rate regime (a managed float), cutting the fiscal deficit should theoretically lower the interest rate....

Fiscal Deficits and Real Interest Rates

Deena Khatkhate and Dan Villanueva’s (henceforth KV) rejoinder (EPW, May 12) to my piece ‘On Fiscal Deficits and Real Interest Rates’ (EPW, April 14) is rather intriguing: after castigating me for my position they reach a conclusion which is in conformity with it. I had argued in my paper that the fiscal deficit has no direct bearing (i e, other than through a general equilibrium system, of which IS-LM is the simplest possible example) on the level of the interest rate, and that therefore the proposition that the fiscal deficit must be cut in order to lower the interest rate, lacks theoretical justification. They conclude: “The factual evidence also shows that interest rates can remain higher with a fiscal surplus, depending on other economic variables, than in a situation with a fiscal deficit”. Their conclusion appears to be in conformity with my argument, though not necessarily identical with it (since I was arguing on a ceteris paribus basis, i e, ruling out other simultaneous parametric changes). From their conclusion too the question should follow: what theoretical justification is there for the current official position that the fiscal deficit must be cut for lowering the real interest rate?

Preparing for Doha WTO Meeting

The upcoming WTO ministerial meeting at Doha will be considered to have been of benefit to developing countries if negotiations lead to cogent steps towards achieving a balance between liberalisation and particular development requirements. Third world countries will do well to forge broad alliances and workable coalitions.

End of Quantitative Import Restrictions

The paranoia in some quarters over the ending of quantitative import restrictions will be proved unfounded and will die down. There will be some difficulties initially, particularly because domestic producers have been protected for so long. In the longer run competition from producers elsewhere will be beneficial for the domestic economy. This will, however, require policy-makers and other economic agents to give up their defensive attitudes and approach positively the tasks of becoming globally competitive.

Capital Account Liberalisation

The short experience with liberalisation of capital inflows documented in this paper highlights the pressures of a capital surge upon domestic monetary management. It also reveals the additional constraint of fiscal-led monetary expansion in India, which raises aggregate demand and aggravates the inflationary impact of capital inflows. These pressures complicate macroeconomic management as the only variable that can be varied in this scenario to control inflation, or adhere to a monetary target, is domestic private sector credit.


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