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

economic reformsSubscribe to economic reforms

A Tale of Two Countries

Economic reforms produced different outcomes in China and India. This is because, despite the direction of reforms being very similar, the resultant policy regimes in the two countries were very different. China retained important roles for the public sector and the government, particularly in matters of planning and policy coordination, but India tended to leave everything to the market. Initial conditions, including health, education, and the structure of the economy were favourable for higher growth in China. In addition, certain policies of India made some essential inputs and services relatively expensive, affecting its competitiveness in a liberalised economy.

Trade Reforms, Technology Import, and Firm Productivity in the Indian Manufacturing Sector

The paper is an attempt to examine the impact of technology import on the productivity of Indian manufacturing firms during 1995–2016. The empirics are based on an unbalanced sample of 4,616 firms, which is further segregated into four use-based categories of production. This analysis tends to support the predictions of new trade and growth theories that international trade provides opportunities for dynamic productivity gains.

Natural Rubber Sector in India

The changes experienced by natural rubber sector in India during the globalisation period and its consequent challenges are examined. The analysis has been carried out with respect to change in the price and production performance in the country since 1980. The results suggest that there is an increased volatility in prices after economic reforms. There has been a deceleration in tapped area, production, and yield of natural rubber. The drastic decline in yield as compared to other natural rubber producing countries raises questions on the capability of the existing institutional structure.

Economic Ideology for Well-defined Policymaking

Wonked! India in Search of an Economic Ideology by Vivan Sharan, New Delhi: Bloomsbury India, 2019; pp 320, 599.

 

Is ‘Islamic Finance’ Islamic?

Riba could mean usury, interest, economic rent and even surplus value (in the Marxian sense). Riba is “un-Islamic.” Without riba, capital accumulation, and capitalism itself will not be possible. However, those who own capital in the Muslim world have taken charge of defining what is Islamic and what is not. The result? They find ways to multiply it in modes that benefit only themselves, just as their non-Islamic counterparts.

Bad Bank Proposal for India

There have been two main proposals to tackle the stressed assets problem of Indian banks since the beginning of this year. Both proposals are based implicitly on the financial intermediation theory of banking. The alternative credit creation theory of banking opens up other possibilities. One such possibility is a partial Jubilee financed by zero coupon perpetual bonds.

Economic Liberalisation in India

Even if adjustment and reform in 1991 were driven by economic compulsions, it was the political process that made these possible. However, liberalisation was shaped largely by the economic problems of the government rather than by the economic priorities of the people or by long-term development objectives. Thus, there were limitations in conception and design which have been subsequently validated by experience. Jobless growth, persistent poverty and rising inequality have mounted as problems since economic liberalisation began. And, 25 years later, four quiet crises confront the economy, in agriculture, infrastructure, industrialisation and education as constraints on the country’s future prospects. These problems must be resolved if economic growth has to be sustained and transformed into meaningful development. In this quest, India needs a developmental state for its market economy to improve the living conditions of her people.

‘Fiscal Federalism’ in India since 1991

The “reforms” in 1991 laid out a new trajectory in which federalism was dichotomised into two parts—political and fiscal. The fiscal was privileged and used to undermine the political. Fiscal federalism in India since 1991 rests on the contradictions generated by the theoretical infirmities of the sound finance paradigm along with a concerted undermining of federal provisions. This political drive is in keeping with the agenda since 1991, eroding the relative autonomy of the state to turn it into a facilitator of a macroeconomic expansion process in which the wage–surplus distribution becomes more and more favourable to capital.

Political Economy of Indian Economic Policy

The Evolution of Economic Policy in India: Selected Essays by P N Dhar; Oxford University Press, New Delhi, 2003; pp 255.

Argentina's Crisis: Causes and Consequences

During the east Asian crisis of 1997, Argentina was being referred to as a model state because of its fixed exchange rate regime. However, by 2001, due to several macroeconomic reasons the economy had collapsed. It is now clear that Argentina will reverse at least some of the economic reforms introduced by president Carlos Mennen in the early 1990s to survive the crisis it is currently experiencing. That small and open economies are far more susceptible to large external shocks, such as changes in foreign interest rates, terms of trade, regional contagion effects, etc, is among the many lessons of the Argentine crisis.

Direct Tax Reform

The consultation paper of the Task Force on Direct Taxes has an evangelical flavour to it. Some of its suggestions for administrative simplification can be accepted without hesitation, but its other suggestions require more inputs before decisions can be made. It would be interesting to see the detailed computations that underlie the recommendations of the Task Force.

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