Reforms

The emergence of India as an economic powerhouse notwithstanding, growth has failed to trickle down to marginalised sections, rendering inclusive growth a major concern. That has made India one of the most unequal countries. In this context, the extent of inequality across states during the post-economic reforms period has been analysed in this paper. Income inequality is estimated by sourcing gross state domestic product data from the Reserve Bank of India’s Handbook of Statistics on the Indian Economy and using the Gini coefficient and Lorenz curve for 26 states and three union territories from 1993–94 to 2019–20. During this period, the western and southern zones have recorded a higher GSDP than the rest of the states in the country. The Gini coefficient was the lowest at 0.25 for Andhra Pradesh and the highest for Sikkim at 0.52. It is argued that the policy focus should not just be on a higher magnitude of growth, but on equitable growth, which requires region-specific interventions with a focus on several dimensions such as setting up agro-processing storage unit storage and transportation and generating accessible employment opportunities—supplemented by significant investments in education and health.

Mapping Power: The Political Economy of Electricity in India’s States edited by Navroz K Dubash, Sunila S Kale and Ranjit Bharvirkar, New Delhi: Oxford University Press, 2018; pp 400, ₹1,195.

Neo-liberal banking reform was launched in the early 1990s to address the low profitability of the public banking system and the large presence of non-performing assets. It set itself the objectives of cleaning out NPAs, recapitalising the banks and modifying banking practices to restore profitability and drastically reduce NPA volumes. This did initially have some effect. However, while the NPA ratio fell between the early 1990s and the mid-2000s, it has risen sharply since then. Moreover, while earlier priority and non-priority loans contributed equally to total NPAs, more recently, large non-priority loans to the corporate sector account for the bulk of NPAs. An analysis of these features reveals that these trends are indicative of the failure of neo-liberal banking reform in India.

Price developments in services need to be analysed on the basis of CPI to study their contribution to inflation in relation to that of goods. At present, services sectors account for almost 50 per cent of the aggregate GDP. Higher price increases, rising productivity and increased tradability could create a â??virtuous circleâ?? associated with a higher share of services in GDP. However, reforms and privatisation programmes, if not associated with increased efficiency, may also contribute to a rise in charges and services prices.

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.