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

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Mumbai School of Economics and Public Policy

The Bombay School of Economics, now known as the Mumbai School of Economics and Public Policy, an autonomous department of the University of Mumbai, completed 100 years on 1 August 2021. In this article, we attempt to look at the various facets of one of the oldest departments in the country.

Critical Importance of Cooperative Federalism

In addition to the three-pillar framework suggested by the Fifteenth Finance Commission, we suggest four constituents, namely the finance commission, NITI Aayog, goods and services tax, and de facto decentralisation, which will help strengthen the “cooperative” element—a key factor for Indian federation to work effectively. Further, the article focuses on finance commissions empowering the local governments and, in particular, assesses the Fifteenth Finance Commission’s thrust to empower the local bodies.


Emerging Challenges of Metropolitan Governance in India

Metropolitan regions are primary drivers of the economy and their governance is of crucial importance to harness their full potential. Metropolitan governance in India is akin to a one-tier fragmented system with limited coordination. This article discusses issues pertaining to metropolitan governance in India by looking at metropolitan-level transportation, regional planning, a nd metropolitan finances. It argues that the current metropolitan governance structure, such as it is in India, is suboptimal and requires a serious rethink and discusses some of the institutional responses that have emerged given the existing situation. It also suggests short-, medium- and long-term reforms, which would lead to an improved metropolitan system, and recommends that, in the long run, it would be better to have a two-tier metropolitan governance system in India.

Real Estate Prices in Mumbai

The paper estimates the impact of various neighbourhood, spatial, and externality factors on residential prices in Mumbai. We find that distance from the central business district, proximity to the west coast, presence of slums, proportion of residential and commercial built-up areas, and proximity to the railway station have a significant impact on residential prices. Amenities and open spaces do not have any significant impact on prices. Further, we model the impact of the upcoming metro line on the residential prices. We find that the upcoming metro has no significant effect on prices. These findings have strong implications for policy decisions regarding introduction of land-based fiscal tools such as betterment levies for capturing land value appreciation that is expected to arise from new infrastructure.

Unravelling the Anatomy of Legal Corruption

Corruption in India is ubiquitous and may be broadly classified as illegal and "legal". This paper delves into the typology of legal corruption, which, apart from abuse of discretionary powers and tactical law and policymaking, includes use of the information advantage by politicians to make private gains. Analysing the growth rates in assets of some politicians in the Mumbai Metropolitan Region, it finds that they are much higher than the market growth rate. The paper recommends enforcing greater transparency by disseminating information on all transactions conducted by politicians and implementing broad-based reforms to bring about system-wide changes.

Assessing the Mumbai Metropolitan Region: A Governance Perspective

This paper takes the position that a useful governance perspective must be informed by the socio-economiccultural milieu, and in the specific Indian context must sit on a tripod of "political reality", "state of decentralisation" and "basic economic principles". The Mumbai Metropolitan Region is one of the most important growth engines for India as it accrues tremendous revenues to the central and the Maharashtra state governments. The paper assesses the performance of the governance system in mmr which resembles a polycentric governance system - a system that has been heralded as being greatly suited to metropolitan regions by several scholars. It recognises that metropolitan governance is but a concept, since in reality it comprises a loose bundle of multiple actors and organisations. For sharper focus, the paper studies the interactions between the only two (dominant) public organisations in governance - Municipal Corporation of Greater Mumbai and the Mumbai Metropolitan Region Development Authority. The assessment reveals that the institutions - rules of the game - which are essential for the efficient functioning of polycentric governance system are missing in the region. It emphasises the need to bring about micro reforms in the institutional framework for polycentric governance to be successful in mmr.

Aide-memoire to the 13th Finance Commission on Devolution of Funds

A discussion of important issues on the horizontal and vertical equity in distribution of tax revenues which the 13th Finance Commission must grapple with as it heads towards completing its work. This article also suggests a formula for horizontal distribution of revenue that takes into account a number of appropriate criteria.

Towards Economic Empowerment of Urban Local Bodies in Maharashtra

Scarcity of resources for urban infrastructure is a universal concern in developing economies. Also, prudent mandate of macroeconomic management has led to a reduction in hand-downs from higher governments. The sub-national governments have had to look at several alternatives with a sense of urgency. In this paper we focus on the possibilities of the sub-national governments accessing, the financial markets in general and the debt market in particular. Our paper focuses on the need to create virtual entities - self-help groups amongst the urban local bodies - that could expand the domain of eligible ULBs. We visualise a scheme for capital market access by ULBs, which would work without the state acting as an intermediary and also without any new institution being set up. We provide the theoretical underpinnings, illustrate and operationalise the idea with the help of data related to ULBs in the state of Maharashtra.

Funding Urban Infrastructure: From Government to Markets

This paper argues for a role for newer financial instruments like 'municipal-bonds' for financing urban infrastructure. The paper also argues that for these initiatives to be successful, a thick and efficient secondary market in this segment of the debt market is crucial. It will impart liquidity and create an incentive for individual agents to invest in the muni-bonds.

Construction of a Composite Leading Indicator for Tracking Inflation in India

This paper attempts to construct a 'composite leading indicator' for tracking the future path of inflation rate in India. For doing so, partial information about future inflation rate provided by a number of basic series is analysed first. Based on the correlation analysis, a few of these basic series are chosen for construction of composite indicator. Empirical results show that the percentage change in manufacturing output, money stock, exchange rate, bank credit to commercial sector, raw materials prices, are important leading indicators for inflation rate in India. Accordingly, based on monthly data on these basic series, one composite indicator is constructed which contains information about behaviour of inflation rate six months in advance. It is seen that out-of-sample forecast error of the composite indicator is quite impressive, the magnitude of error in six-months ahead forecast is only 1.2 percentage point.

Do Indian Stock Markets Matter?

This paper deals with the inter-relationships between stock prices and important macro-economic variables. Specifically, following macro-economic variables: Exchange rate of rupee vis-a-vis the dollar, prime lending rate, narrow money supply, broad money supply, and index of industrial production are considered. The econometric analysis uses state-of the art techniques such as unit root testing, cointegration and error-correction models. The analysis and discussion are situated in the context of macro-economic changes, especially in the financial sector, that have been taking place in India since the early nineties.

Learning to Pay for Your Lunch

Shorn of statistics and verbiage, a budget document is most important as a signalling device. This premise is crucial to our treatment of the budget. Looking at the statistics and arithmetic in the budget for 1999-2000, the general impression which emerges is that the budget allocations do not conform with many of the commitments of the budget speech, particularly in the case of economic services - agriculture, irrigation, rural development and industries. For social services, however, the budget does seem to promise a somewhat better package. Of the lessons that need to be learnt and which are very much hinted at in the budget, viz, learn to let go and learn to pay, are of essence. Internalising especially the last of these lessons by the principals (the public) involves facing and resolving contradictions in their own actions. Unless we stop pointing fingers and realise that there is no free lunch to be had, no budget, however well formulated, can really achieve anything.


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