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

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Farmer Suicides

Unravelling Farmer Suicides in India: Egoism and Masculinity in Peasant Life by Nilotpal Kumar, New Delhi: Oxford University Press, 2017; pp xv + 309, ₹ 995.

Industrial Policy and Performance since 1980: Which Way Now?

Since 1980-81, manufacturing sector output has grown at 7 per cent per year, with economic reforms making little difference to the trend in the 1990s. But growth has decelerated over the last seven years, after peaking in 1995-96. Why is this so? The reforms have narrowly focused on policy-induced restrictions on supply, ignoring the demand constraint due to the cut in public infrastructure investment since the late 1980s, and indifferent agricultural performance in the 1990s. These issues have to be squarely addressed to revive industrial growth, and to reap the benefits of the investment boom in organised manufacturing in the last decade.

Time Running Out

To say that something is rotten in India’s financial sector is to state the obvious. The UTI imbroglio has stalled parliament, precipitated a prime ministerial threat to resign and strained relations within the ruling coalition, apart from causing anxiety, hardship and worse to large numbers of small investors. Close on the heels of the UTI crisis comes the news that the country’s oldest development finance institution, IFCI, would default on debt servicing unless the government bailed it out with fresh infusion of funds. It turns out that IFCI’s gross non-performing assets are close to 30 per cent. With two-thirds that level of NPAs, IDBI, the biggest public sector development finance institution, is not far behind. ICICI claims an NPA level of a little under 10 per cent. The fact is that all these figures have limited credibility, given the financial institutions’ expertise in evergreening loans – that variant of the art of throwing good money after bad – under which a fresh loan is granted to a debtor for the purpose of servicing past loans that escape, in this manner, being classified as non-performing.

Public Sector Investment and Agricultural Growth

Ashok Gulati and Seema Bathla (May 19, 2001) have once again raked up the controversy regarding public investment in agriculture and its relationship with private investment and growth. What is however interesting here in their paper is the commendable attempt to re-define and re-estimate the official data on public sector capital formation, with a view to examine: (i) Has the public sector capital formation in agriculture really declined, as is generally made out? If so, what are the factors responsible for it? (ii) Is there any relation between public and private sector investment in agriculture? Do they complement or compete? (iii) How does the deceleration in public sector capital formation affect the rate of growth of agriculture? The purpose of this note is to make a brief comment on (i) and (iii) above, by way of a critique rather than a criticism. As regards (ii), the authors have taken the mainstream view. We do not find any reason not to subscribe to that view.

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.

Low Public Investment Impacts on Capital Market

The persisting low economic growth is having an impact on the financial sector: apart from the recent disquieting developments, the setback to funds mobilisation through public issues which began in the mid 1990s is contributing to a depressing scenario in the capital market and the secondary segment is in a worse state. This has shifted the impetus to the growth of bank deposit with no improvement however in household savings. The severe liquidity strain in the industrial sector has prompted the postponement of investment decisions by entrepreneurs. This is likely to sharply expand the size of non-performing assets of banks and financial institutions .

Capital Formation in Indian Agriculture

Is capital formation in Indian agriculture really declining? How and to what extent has it affected growth in agriculture? These questions have been at the centre stage of a debate sparked off in the late 1980s. This paper re-visits this debate by dissecting different components of capital formation, by digging into the very concept and estimation procedures followed in the Indian system of National Accounts vis-à-vis the UN system. The study, after re-defining and re-estimating trends in capital formation in agriculture, concludes that the situation is definitely not good, but not as alarming as is sometimes made out to be. This is because of the increasing share and role of private sector investments in agriculture over time. And the trend in that has remained robust despite decline in public sector capital formation in agriculture, and despite the fact that public sector investment has an inducement effect on private sector capital formation. This only goes to suggest that private sector investment in agriculture has been increasingly influenced by other factors, especially the terms of trade. And this has implications for the structure of growth within agriculture.
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