Below is given the Table of Contents of the
Issues listed above:
Volume 58.
No 1. April-June, 2010
ARTICLES
/ 1
Inclusive Growth :
An Overview of Performance and the
Challenges Ahead C.H. Hanumantha Rao
The current global financial crisis
makes it imperative to trigger
growth patterns that could tame both
the market and the state through the
governance of financial and economic
sectors that is inclusive and widely
participatory. Economic reforms in
India, including globalisation, have
been associated with rise in GDP
growth rate and rise in income
inequalities, but there is no
unambiguous causal relationship
between reforms and the rise in
inequalities, suggesting that
initial or pre-reform domestic
socioeconomic conditions as well as
post-reform policies could be mainly
responsible for rising inequalities
and slow reduction in poverty. This
paper draws attention to such
unfavourable initial conditions and
discusses policies needed for
achieving inclusive growth.
It is argued that wider access to
infrastructure, capital, education
and skills, rise in productivity in
farm and rural non-farm sectors,
restoration of land rights to
tribals, a humane policy for land
acquisition and resettlement of
displaced persons, financial
inclusion, and inclusive governance
are needed for ensuring equitable
distribution of benefits from
economic reforms and growth.
The paper is a revised version of my
Presidential Address at the 92nd
Annual Conference of the Indian
Economic Association (27-29
December,2009), held at the School
of Management, KIIT University,
Bhubaneswar.
C.H.Hanumantha Rao is Honorary
Professor at the Centre for Economic
and Social Studies, Hyderabad.
Email:chhrao9@yahoo.com
ARTICLES
/ 2
Nehruvian Legacy for the
Indian Economy V.N. Balasubramanyam
Jawaharlal Nehru's economic ideology
and policies centred on economic
self-sufficiency through
industrialisation have been
extensively debated. It was though
the late Prof. Brahmananda who
proposed an alternative model—the
wage-goods model. This paper, based
on the Brahmananda memorial lecture
delivered at the 2009 annual
conference of the Indian Economic
Association, argues that the model
was much ahead of its time and
impractical and could not have
delivered the goods at the time it
was conceived. The paper also argues
that the import substituting
industrialisation strategy
instituted in 1956 sustained until
the year 1991, though it was
anchored in ideology rather than
sound economics, laid the
foundations for the economic
liberalisation programme instituted
in the year 1991. The paper also
suggests that the present economic
climate with a high savings rate and
a substantial pool of human capital
may be appropriate for instituting
the wage-goods model proposed by
Brahamananda with modifications
tailored to the services-led
structure of the economy.
Brahmananda Memorial Lecture, Annual
Conference of the Indian Economic
Association,
Bhubaneswar, 28 December 2009.
V.N. Balasubramanyam, Department of
Economics, Lancaster University, UK.
Email:
v.balasubramanyam@Lancaster.ac.uk
ARTICLES / 3
Goods and Services Tax in
India
An Empirical Analysis of Revenue
Implications Mahesh C. Purohit and Vishnu
Kanta Purohit
Introduction of goods and services
tax (GST) surfaces two important
issues. First, the Centre is
presently collecting 63 per cent of
country's resources. Any major
change in the allocation of
resources would further erode the
autonomy of the States. Second,
given the base of the tax, what rate
would be revenue neutral for both
the Centre and States? With a view
to finding an answer to the above
questions, this paper adopts
different approaches and presents
revenue estimates for the period
2010-11 to 2014-15. Three approaches
(viz., revenue approach, turnover
approach and consumption approach)
have been adopted to estimate the
revenue. Finally, the study suggests
that GST would generate sufficient
revenue if we adopt 8 per cent
‘standard rate’ with 4 per cent
reduced rate on a few select
necessities. Such a system would
generate sufficient revenue, would
not have any socioeconomic
implications, and retain the fiscal
autonomy of States.
Mahesh C. Purohit is Director,
Foundation for Public Economics and
Policy Research, New Delhi.
E-mail:
maheshpur@gmail.com
Vishnu Kanta Purohit is Associate
Professor of Economics at
Indraprastha College for Women,
University of Delhi, Delhi.
E-mail:
vkanta@fpepr.org
ARTICLES
/ 4
Econometric Evaluation of
Forecasting Budgetary
Transactions with Intercept
Correction Narain Sinha
Available forecasts of fiscal
variables are rarely model based;
adjustments are often made to arrive
at the revision stage. Conventional
approach to the theory of economic
forecasting based on the result that
the conditional expectation, given
the available information delivers
the minimum mean square forecasting
error assuming the data generation
process (DGP) known and constant
over time. It cannot be applied to
budgetary variables, because of
frequent shifts in the policy
regimes of the national and
sub-national governments in a
federal set-up as exists in India.
Under these circumstances while
forecasting of fiscal variables for
policy purposes, the main objective
ought to be to avoid systematic
forecasting errors arising due to
deterministic shifts. In the recent
literature on forecasting, various
methods have been suggested such as
intercept corrections, differencing,
co-breaking, regime switching
models, etc., for improving
forecasting accuracies. The major
aim in this paper is to evalute the
accuracy of the forecasts obtained
using the method of intercept
correction in Sinha (2003) in the
light of data available for the
subsequent period for the Indian
economy.
Narain Sinha, Department of
Economics, University of Botswana,
Gaborone (BOTSWANA).
E-mail: sinhan@mopipi.ub.bw,
narainsinha@yahoo.co.uk
ARTICLES
/ 5
Migrant Remittances
Size and Channels of Money Transfer
among Oriya Workers in Surat City Gagan Bihari Sahu and Biswaroop
Das
Sending money back home safely with
a minimum cost and within the
shortest possible time
continues to remain a major anxiety
and widespread concern for migrant
workers. Since formal channels like
banks and post offices have not
emerged as front line agencies, most
of them depend on informal money
transfer systems. In this context,
this paper analyses the mechanics
and modalities of remittance
collection and disbursals by
different channels and the senders’
rationale for selecting one over the
other.
Gagan Bihari Sahu, Centre for
Microfinance Research, Institute of
Development Studies, Jaipur.
E-mail:
gaganbs09@gmail.com
Biswaroop Das, Centre for Social
Studies, Surat.
E-mail:
dbiswaroop@gmail.com
ARTICLES
/ 6
The Health Cost of Air
Pollution in Kolkata Chirodip Majumdar
Mortality and morbidity loss due to
air pollution is huge in urban
areas. Kolkata is no exception. Use
of solid fuels in industries and
a steep rise in number of vehicles
are the two major causes of air
pollution in Kolkata. The level of
suspended particulate matter in air
in Kolkata is far above the safe
limit. The result is incidence of
airborne diseases. The present study
gathers information from 600
households of Kolkata about
incidence of airborne illness. The
factors explaining variation in
incidence of illness were
investigated. It was found that
vulnerable people having chronic
ailment and smoking habit and
minority community are more
affected. It was also found that
citizens of Kolkata have to bear a
significant health cost due to
airborne diseases.
Chirodip Majumdar, Lecturer,
Department of Economics, Rabindra
Mahavidyalaya, Champadanga, Hooghly,
West Bengal, India.E-mail:
chiro_m@rediffmail.com
COMMUNICATION
FOR DEBATE & RESEARCH / 1
Unanticipated Monetary Shocks
and
Exchange Rate Variations in Sri
Lanka Biswajit Maitra
This paper examines how
unanticipated monetary shocks cause
variations in exchange rate in Sri
Lanka under the independent float
regime. The study addresses this
issue under both the rational and
adaptive expectations framework.
GARCH (generalised autoregressive
conditional heteroskedasticity) (1,
2) based minimum mean squared error
(MSE) forecast give forth the series
of anticipated and unanticipated
money supply. Exchange rate series,
on the other hand, followed
martingale stochastic process. The
study also found the evidence that
in the variations of Sri Lankan
currency, unanticipated monetary
shocks assure significant role.
Biswajit Maitra, Assistant
Professor, Department of Economics,
Surya Sen Mahavidyalaya, Siliguri,
India.
E-mail:
b_moitra@yahoo.com
COMMUNICATION FOR DEBATE AND
RESEARCH / 2
Disparities in Agricultural
Productivity
Growth in Andhra Pradesh A. Amarender Reddy
In the backdrop of the demand for
bifurcation of Andhra Pradesh state
based on growing regional
disparities, the paper examines the
regional disparities in agricultural
productivity growth in Andhra
Pradesh from 1956 to 2007 at
district level by using Malmquist
productivity indices (MI).
Overall, total factor productivity (TFP)
growth in agriculture and allied
activities n Telangana is 1.3 per
cent per annum, 1.1 per cent per
annum in Coastal, while in
Rayalaseema TFP growth is stagnant.
It indicates that, there is a
convergence in TFP growth among
districts of developed Coastal and
less developed Telangana regions,
but districts in Rayalaseema region
are left out of this growth process,
as this region is not able to catch
up with other two regions in
agricultural productivity.
Irrespective of region most backward
districts in agriculture, Srikakulam,
Visakhapatnam, Anantapur, Kadapa,
Adilabad, Nalgonda, Mahbubnagar and
Nizamabad showed stagnation in TFP
growth during last 50 years. With
the existing resource endowment and
technology, Telangana can increase
its output by 28 per cent from the
existing level, while Rayalaseema
region can enhance its output by 25
per cent, Coastal region by only 14
per cent as revealed from efficiency
estimates. Shadow input shares
indicate that, still gross irrigated
area, fertiliser use and
availability of labour are limiting
factors to increase production at
district level. Inefficiency effects
model (Battese and Coelli, 1995)
reveals that, market infrastructure
and credit availability are
essential to increase efficiency.
There is significant influence of
base year resource endowment both
physical and uman for subsequent
agricultural growth.
Regional Rural Banks
The Turnaround Story K. Alamelu and A. Devamohan
Regional rural banks (RRBs) were
established under the provisions of
an ordinance promulgated on the 26th
September 1975 and the RRB Act, 1976
with an objective to ensure
sufficient institutional credit for
agriculture and other rural sectors.
The RRBs mobilise financial
resources from rural/semi-urban
areas and grant loans and advances
mostly to small and marginal
farmers, agricultural labourers and
rural artisans. With the
amalgamation of RRBs, they have
acquired the critical mass in terms
of financial strength to widen and
deepen their outreach. With the
requisite strength having been
developed, RRBs are the best suited
vehicles to widen and deepen the
process of financial inclusion. RRBs
may be provided adequate promotional
and developmental assistance to
contribute substantially to
financial inclusion in a way that
the business generated out of
inclusion efforts add positively to
their performance.
K. Alamelu, Associate Professor,
Department of Bank Management,
Alagappa University, Karaikudi.
E-mail:
alakkn@gmail.com
A. Devamohan, Lecturer, Department
of Banking and Finance, College of
Business and Economics, Jimma
University, Ethiopia.
E-mail:
devamohan78@yahoo.co.in
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