Showing papers by "Indira Gandhi Institute of Development Research published in 1999"

Traditional Industry in the Economy of Colonial India

Abstract: List of illustrations List of maps List of tables Acknowledgements 1. Introduction 2. Markets and organization 3. Handloom weaving 4. Gold thread (jari) 5. Brassware 6. Leather 7. Carpets 8. Conclusion References Index.

Tax efficiency in selected Indian states

Abstract: This paper attempts to measure pure tax efficiency of fifteen major Indian states (Andhra Pradesh, Assam, Bihar, Haryana, Gujarat, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Orissa, Punjab, Rajasthan, Tamilnadu, Uttar Pradesh and West Bengal) for the period 1980–81 to 1992–93 in a manner that allows this efficiency to vary both across time as well as across states. It is discovered that there is a moral hazard problem in the design of central grants in that higher grants by the central government to the state governments reduce efficiency of tax collection by these states. The less poor states are more efficient in tax collection. The rankings of states by tax efficiency for the various years do not converge. An index of aggregate tax efficiency is calculated and it appears that this index has been stagnating. It is argued that the weight placed on tax effort in the formula determining central grants to state governments should be increased to improve tax efficiency of state governments.

The provision of public services by government funded decentralized agencies

Abstract: Public services are often provided by lower level agencies that are funded by higher level government. Since markets for such services do not exist, normal pressures to minimize costs do not operate; indeed, usually these costs are unobservable. We study a principal-agent model which emphasizes the distinction between the financing and provision of public services. Two broad situations are analyzed: (i) the agencies are induced to reveal true costs; and (ii) in addition, to minimize costs, agencies must be induced to exert effort. The characteristics of the optimal funding contract and the marginal cost of public funds are derived in each case.

Contractual structure in agriculture

Abstract: This paper develops a generalized double-sided moral hazard model of contract choice in agricultural production, with mutual monitoring of each other by the landlord and the tiller, who generally have different levels of farming efficiency and are risk-averse. Using this model, we formally prove that the optimal contract maximizes the output net of the risk-bearing and agency costs, of both the parties and carry out a simulation exercise which helps explain many of the tenancy-related issues. The difference in the farming efficiency of the two sides, often ignored in previous analysis, turns out to be the principal determinant of the contract offered to a tiller.

Large Shareholder Activism in Corporate Governance in Emerging Economies: Evidence from India

Abstract: Most of the existing evidence on the effectiveness of large shareholders in corporate governance has been restricted to a handful of developed countries, notably the UK, US, Germany and Japan This paper provides evidence on the role of large shareholders in monitoring company value from a developing country, India, whose corporate governance system is a hybrid of the outsider-dominated market-based systems of the UK and the US and the insider-dominated bank-based systems of Germany and Japan The picture of large-shareholder monitoring that emerges from our case study of Indian corporates is a mixed one Like many of the existing studies, while we find that blockholdings by directors and other insiders decrease company value for low levels of holdings and increase it thereafter, we find no evidence that institutional investors are active in governance We find support for the efficiency of the German/Japanese bank-based model of governance; our results suggest that lending institutions start monitoring the company effectively once they have substantial equity holdings in the company and that this monitoring is reinforced by the extent of debt holdings by these institutions Our analysis also highlights that foreign equity ownership has a beneficial effect on company value In general, our analysis supports the view that the identity of large shareholders matters in corporate governance

Selection of appropriate greenhouse gas mitigation options

Abstract: Greenhouse gas mitigation options help in reducing greenhouse gas emissions so as to avoid the adverse environmental impacts due to global warming/climate change. They have different characteristics when evaluated using different criteria. For example, some options may be very cost effective, while some may have an additional advantage of reducing local pollution. Hence, selection of these options, for consideration by a national government or by a funding agency, has to incorporate multiple criteria. In this paper, some important criteria relevant to the selection are discussed, and a multi-criteria methodology is suggested for making appropriate selection. The methodology, called the Analytic Hierarchy Process, is described using two illustrations.

Schooling, Informal Experience, and Formal Sector Earnings: A Study of Indian Workers

Abstract: This paper estimates an earnings function for male workers belonging to the Indian corporate sector. The model allows for differential rates of return to schooling and distinguishes tenure from total labor market experience. The rate of return to schooling is found to be low up to the junior level, increases significantly at the secondary and undergraduate levels, but sharply declines at the masters level. Seniority and firm-specific factors are found to be important determinants of earnings. When years of unemployment and informal experience are incorporated, earnings of low-education workers appear to be driven entirely by formal-sector experience.

Productivity Growth, Protection and Plant Entry in a Deregulating Economy: The Case of India

Abstract: In this paper we study the comparative performance of Indian manufacturing industries during relatively recent periods of domestic regulation and de-regulation of plant entry. The period of de-regulation is accompanied by largely unchanging levels of import competition and higher output growth. The growth of labour and total factor productivity (TFPG) is observed to be higher during the deregulation period. We use data on 42 three-digit manufacturing industries. Our sample covers consumer, intermediate and capital good industries. We study the relationship between levels of effective protection and total factor productivity growth (TFPG). We found that increasing effective rates of protection was not associated with lower TFPG. We test the hypothesis that higher degree of trade protection induces greater entry of plants. This hypothesis is statistically supported. Our econometric estimates found a positive association between net entry and TFPG, after controlling for inter-industry differences in effective protection, asset size of plants and demand growth. Our results support the proposition that competition positively contributes to TFPG during deregulation.

Deregulation, Ownership, and Productivity Growth: Evidence from Indian Banks

Abstract: This paper analyzes the relationship between deregulation and productivity growth in the context of a mixed developing economy. A generalized shadow cost function approach is used to model the effects of regulation and measure total factor productivity growth. We use a panel of Indian private and public sector banks, observed during 1985-1996, to empirically examine the effect of deregulation on productivity. A disaggregated analysis is done for public and private banks to examine the presence of ownership effects. Our results indicate that significant decline in regulatory distortions and the anticipated increases in total factor productivity growth did not materialize in Indian banking following deregulation. While private sector banks improved their performance mainly due to the freedom to expand output, public sector banks did not respond well to the deregulation measures.

Plantation programmes through people’s participation: a case study from India

Abstract: This paper provides a framework for analysing land regeneration programmes combining financial, economic and environmental aspects as applied to a wood plantation programme undertaken by a Tree Grower’s Cooperative Society (TGCS) established by the National Tree Growers’ Cooperative Federation (NTGCF), Anand, India. Mallanahally TGCS, situated in the southern part of Karnataka state in India was selected and a survey was carried out. Benefit–cost ratios and internal rate of return are worked out for various situations. The paper also examines the role of cooperatives in managing plantation activities and assesses the distributional aspects of the benefits of the plantations. The survey elicited information on the villagers’ perceptions regarding benefits from and barriers to implementation of plantation programmes. It is shown here that despite apparently unequal distribution of benefits, the present arrangements preserve cooperation as each of the stakeholders derive positive benefits.

An Asian Perspective on a World Environmental Organization

Abstract: Transboundary and international environmental problems are a pressing concern for the global community and call for innovative institutional design to address them. Whereas the developed countries value the international environment highly they realize that some of the solutions must originate within the geographic boundaries of developing countries, including Asian Developing Countries (ADC). The ADC, on the other hand, do not appear to have these problems high on their agendas at least at first glance. More important appear to be economic growth and domestic environmental concerns. However, it is also true that not addressing global environmental problems could hurt, in specific areas, ADC economic growth and their domestic environmental problems. But, the fundamental fact of the indivisibility of the growth and environmental agendas in the ADC has to be faced. Since the developed countries seem to consider global environmental problems as an emergent issue and since ADC will soon become major contributors to this problem, it would be necessary to have the foresight to conclude a treaty at an early date. This would mean that ADC would have to be persuaded and provided enough incentives to enter into international environmental negotiations and remain committed to this process. The paper has argued that since ADC have considerable environmental assets, these countries should probably look for linking slowing down the depletion of these assets to other areas of linkage to the developed countries. In particular, this would include international trade, transfer of technology and, perhaps, direct transfers. Since this linkage would be very wide ranging, it would be necessary to exploit any positive external effects that might flow from some treaties and avoid duplication and conflicts in others. It makes sense, therefore, to have a World Environmental Organization (WEO) to coordinate these efforts. But what version of a WEO is to be opted for is, at this point in time, an open question. Clearly a mild version of a WEO that brings all environmental treaties under one umbrella, provides technical know-how and facilitates negotiations would be innocuous enough and, therefore, acceptable. However, such a WEO would also not be very effective in controlling the problem of global externalities, assuming that this problem is of an emergent nature. Stronger versions of a WEO would not be acceptable to ADC unless issue linkage of the sort discussed here becomes a reality. Before that is achieved, given the past experience of ADC with MEA, the WEO would have to build considerable credibility as an organization that is truly interested in global environmental problems, is sensitive to the needs of the ADC