Showing papers by "Indira Gandhi Institute of Development Research published in 2008"

Zero tillage impacts in India's rice–wheat systems: A review

Abstract: To date, the most widely adopted resource conserving technology in the Indo-Gangetic Plains (IGP) of South Asia has been zero-tillage (ZT) wheat after rice, particularly in India. The paper reviews and synthesizes the experience with ZT in the Indian IGP. ZT wheat is particularly appropriate for rice–wheat systems in the IGP by alleviating system constraints by allowing earlier wheat planting, helping control the weed Phalaris minor , reducing production costs and saving water. ZT wheat after rice generates substantial benefits at the farm level (US$97 ha −1 ) through the combination of a ‘yield effect’ (a 5–7% yield increase, particularly due to more timely planting of wheat) and a ‘cost savings effect’ (US$52 ha −1 , particularly tillage savings). These benefits explain the widespread interest of farmers and the rapidity of the diffusion across the Indian IGP, further aided by the wide applicability of this mechanical innovation.

Board of Directors and Opportunistic Earnings Management: Evidence from India:

Abstract: Using a sample of 500 large companies over a two-year period, we examine the impact of board characteristics on opportunistic earnings management in India, a large emerging economy. In addition to board independence, we analyze how characteristics that proxy for the “quality” of inside and outside directors affect the role of boards in curbing earnings management. Our results indicate that it is not board independence per se, but rather board quality that is important for earnings management. We find that diligent boards are associated with lower earnings management, while boards that have directors with multiple appointments exhibit higher earnings management. With respect to inside directors, our results indicate that chief executive officer (CEO) duality and presence of controlling shareholders on the board increases earnings management. We also find that domestic institutional owners, one of our key control variables, act as a compensating control mechanism to mitigate the detrimental influence of con...

Risks, Farmers' Suicides and Agrarian Crisis in India: Is There a Way Out?*

Abstract: Poor returns to cultivation and absence of non-farm opportunities are indicative of the larger socio-economic malaise in rural India. This is accentuated by the multiple risks that the farmer faces - yield, price, input, technology and credit among others. The increasing incidence of farmers' suicides is symptomatic of a larger crisis, which is much more widespread. Risk mitigation strategies should go beyond credit. Long term strategies requires more stable income from agriculture, and more importantly, from non-farm sources. Private credit and input markets need to be regulated. A challenge for the technological and financial gurus is to provide innovative products that reduce costs while increasing returns. The institutional vacuum of organising farmers needs to be addressed through a federation of self-help groups (SHGs) or alternative structures. (This abstract was borrowed from another version of this item.)

Debt and Corporate Governance in Emerging Economies: Evidence from India*

Abstract: We analyze the role of debt in corporate governance with respect to a large emerging economy, India, where debt has been an important source of external finance. First, we examine the extent to which debt acts as a disciplining device in those corporations where potential for over investment is present. We undertake a comparative evaluation of group-affiliated and non-affiliated companies to see if the governance role of debt is sensitive to ownership and control structures. Second, we examine the role of institutional change in strengthening the disciplining effect or mitigating the expropriating effect of debt. In doing so, we estimate, simultaneously, the relation between Tobin’s Q and leverage using a large crosssection of listed manufacturing firms in India for three years, 1996, 2000, and 2003. Our analyses indicate that while in the early years of institutional change, debt did not have any disciplinary effect on either standalone or group affiliated firms, the disciplinary effect appeared in the later years as institutions become more market oriented. We also find limited evidence of debt being used as an expropriation mechanism in group firms that are more vulnerable to such expropriation. However, the disciplining effect of debt is found to persist even after controlling for such expropriation possibilities. In general, our results highlight the role of ownership structures and institutions in debt governance.

Removal of Endosulfan from Water Using Wood Charcoal—Adsorption and Desorption

Abstract: Endosulfan, one of the most widely used pesticides in various sectors including agriculture, has been reported posing a threat to the ecology as well as to the environment. Contamination of groundwater and surface water sources with various pesticides is well documented, and this problem is prominent, particularly in rural areas. In the present study, efforts are made to remove endosulfan from water using wood charcoal, a local and low cost adsorbent. It gave removal efficiency of more than 90%. Equilibrium time was found to be around 5 h . Wood charcoal showed an uptake capacity of 0.53 mg∕g with initial endosulfan concentration in the range of 0.25–5 mg∕L and 1.77 mg∕g for the range of 2–50 mg∕L . Langmuir isotherm gave a better prediction of adsorption capacity than the Freundlich. The Langmuir isotherm fit also gave a better correlation with the experimental data. In the desorption study carried out, 10% solutions of acetone, methanol, acetic acid, saturated EDTA solution, and distilled water were use...

Board of Directors and Opportunistic Earnings Management: Evidence from India

Abstract: Using a sample of 500 large companies over a two-year period, we examine the impact of board characteristics on opportunistic earnings management in India, a large emerging economy. In addition to board independence, we analyze how characteristics that proxy for the 'quality' of inside and outside directors affect the role of boards in curbing earnings management. Our results indicate that it is not board independence per se, but rather board quality that is important for earnings management. We find that diligent boards are associated with lower earnings management, while boards that have directors with multiple appointments exhibit higher earnings management. With respect to inside directors, our results indicate that chief executive officer (CEO) duality and presence of controlling shareholders on the board increases earnings management. We also find that domestic institutional owners, one of our key control variables, act as a compensating control mechanism to mitigate the detrimental influence of controlling shareholders on earnings management. Our results complement the existing literature by analyzing the role of the board in reducing earnings management in emerging economies such as India, where the structures of business organizations are different from those in developed markets.

Union-oligopoly bargaining and entry deterrence: a reassessment of limit pricing

Abstract: This paper introduces wage bargaining in the framework of Milgrom and Roberts (Econometrica 50(2):443–459, 1982) where the workers’ reservation wage is the private information parameter critical for entry. We show that entry threat significantly distorts the wage, which in some cases adversely affects the firm’s ability to signal through price. Consequently, the separating equilibrium (in price) does not always exist. If, however, wage agreements are made public, signalling occurs with or without distortions in wage depending on whether the union’s bargaining power is high or low. Pooling equilibrium also exists and it features similar distortions. We also examine which signal, wage or price, generates greater social welfare.

Use of internet by research scholars at Shivaji University, Kolhapur

Abstract: Highlights the purpose of use, methods of locating information and search techniques used in retrieving the information by the research scholars of Shivaji University, Kolhapur. Finds that the research scholars use the internet for their research and communication purposes. Concludes that more awareness about internet resources and training in use of the same needs to be provided by library professionals.

On Measuring Group-differentials Displayed by Socio-economic Indicators: An Extension

Abstract: In a recent paper, Mishra and Subramanian (2006) propose a measure to explain group-differential which is sensitive to levels in the sense that a given hiatus at lower levels of failure (or higher levels of attainment) is considered worse off. This article critically evaluates their method – refines their two axioms, adds an additional axiom of normalization and proposes an alternative which is more general. It proposes to reduce subjectivity when there is lower hiatus at lower levels of failure and also addresses scenarios when rank ordering of sub-groups will be reversed. Empirical illustration with infant mortality rate data for selected Indian states is also provided.

Incentives from exchange rate regimes in an institutional context

Abstract: An open economy macromodel, calibrated to typical institutions and shocks of a populous emerging market economy, shows that a monetary stimulus preceding a supply shock can abort inflation at minimum output cost, since of the appreciation of exchange rates, accompanying a fall in interest rates and rise in output. Analytic results obtained for two periods are generalized through simulations and validated through estimation. One instrument achieves both domestic output and exchange rate objectives, partly since it creates correct incentives for foreign exchange traders. Strategic interactions imply supporting institutions are required to coordinate monetary, fiscal policy, and markets to the optimal equilibrium.

Forecasting interest rates: a comparative assessment of some second-generation nonlinear models

Abstract: Modeling and forecasting of interest rates has traditionally proceeded in the framework of linear stationary methods such as ARMA and VAR, but only with moderate success. We examine here three methods, which account for several specific features of the real world asset prices such as nonstationarity and nonlinearity. Our three candidate methods are based, respectively, on a combined wavelet artificial neural network (WANN) analysis, a mixed spectrum (MS) analysis and nonlinear ARMA models with Fourier coefficients (FNLARMA). These models are applied to weekly data on interest rates in India and their forecasting performance is evaluated vis-a-vis three GARCH models [GARCH (1,1), GARCH-M (1,1) and EGARCH (1,1)] as well as the random walk model. Both the WANN and MS methods show marked improvement over other benchmark models, and may thus hold out several potentials for real world modeling and forecasting of financial data.

Inclusive Growth: What is so exclusive about it?

Abstract: In the wake of the economic reform programme undertaken since 1991, distributional issues have received considerable attention and policy concern. In pursuit of such concerns, the government has worked out an approach to the Eleventh Five Year Plan, which lays emphasis on, though without defining, a strategy of inclusive growth. In fact, this form of pursuit of inclusive growth has become virtually a universal concern with even the UNDP harping on it without knowing answers for what it calls a "million dollar question - what inclusive growth is and how to achieve it?" This paper proposes to define inclusion/exclusion for an outcome scenario on broad based growth from three different perspectives, viz., production, income, and consumption distribution. It also provides some illustrations based on the National Accounts Statistics and the National Sample Survey consumer expenditure distributions for the year 2004-05.

Estimating the probability of trade union membership in India: Impact of communist parties, personal attributes and industrial characteristics

Abstract: The paper analyses the impact of the reach of communist parties, the degree of political activism, personal attributes of workers, and industrial characteristics on the individual decision to unionise for Indian non-agricultural regular workers using micro data from the 2004-05 Employment and Unemployment Survey, NSSO, linked to state-level factors. A notable result is that the reach of communist parties has considerable effect on unionisation probability. Moreover, it seems that mere existence of communist parties in a state also facilitates unionisation to some extent. State-level political activism and unemployment rate also influence the individual decision to be unionist. The paper concludes also that workers gender, marital status, ethnic background, employment status, experience, occupation, sector of employment, establishment size, and type of industry remain important in the determination of union membership.

Multiple Dimension of Urban Well-Being: Evidence from India

Abstract: This paper addresses differences in outcomes across households residing in slums and non-slum urban areas of India. Using a nationally representative household data set, we undertake a robust multidimensional evaluation of intracity differences in well-being. We first established that if utility is defined as access to public goods such as water and sanitation, then residents in non-slum urban areas are unambiguously better off than slum dwellers. This finding implies that there is justification for slums garnering a sizable portion of the allocation of water and sanitation programs. On the other hand, we found that the distribution of private goods (monthly per capita expenditure and per capita living area) in non-slum areas does not dominate the distribution of these goods in the slums. In fact, at very low levels of MPCE and per capita living area, the distribution of these private goods in slums dominates the distribution in non slums. This important finding implies that non-slum residents are not unequivocally better off than slum residents. Since slums are on an average poorer than other urban areas, it may be more pragmatic, therefore, to target policies at slum development. However, such policies would fail to reach the poorest residents of non-slum areas in both large and small cities. Our results make the case for a more inclusive policy that targets these groups as well.

Identifying and exploiting human needs for a people centric evolving knowledge society: A case study of Indian ICT Emergence

Abstract: The introduction of new technologies upon a society prematurely often results in fears of good and bad, especially when no consideration is given to human needs. This situation becomes more acute in circumstances when sophisticated technology from the west claims to satisfy the human needs of a continental and traditional country like India. This paper highlights the new revitalization of Indian society from a socio-economic and cultural point of view and reiterates the possibility of technology's failure to address human needs. A case study of Information and Communication Technology (ICT) emergence in the Indian context is made in order to examine various issues such as the new technological divide syndrome, ICT needs of rural populations, and others.

Are central bank preferences asymmetric? A comment

Abstract: A recent paper by Ruge-Murcia (2004) on asymmetric central bank objectives provides a new perspective on the policy roots of inflation in developed economies. More precisely, the paper demonstrates that if the distribution of the supply shocks is normal, then the reduced-form solution for inflation implies a positive (or negative) relation between average inflation and the variance of shocks. We argue that the evidence offered in support of this hypothesis suffers from lack of identification because Phillips curve nonlinearity combined with quadratic central bank preferences yield the same reduced-form solution for inflation. If so, estimating reduced form for inflation will not be able to discriminate between these models. Yet they have quite different implications for policy. Other, structural, evidence is needed.

Can Insurance Reduce Catastrophic Out-of-Pocket Health Expenditure?

Abstract: In India, the out-of-pocket health expenditure by households accounts for around 70 percent of the total expenditure on health. Large out-of-pocket payments may reduce consumption expenditure on other goods and services and push households into poverty. Recently, health insurance has been considered as one of the possible instruments to reduce impoverishing effects of large out-of-pocket health expenditure. In India, health insurance has limited coverage and the present paper studies whether it has been effective so far. Literature defines out-of-pocket health expenditure as catastrophic if its share in the household budget is more than some arbitrary threshold level. In the present paper, we argue that for households below poverty line any expenditure on health is catastrophic as they are unable to attain the subsistence level of consumption. Thus, we take zero percent as a threshold level to define catastrophic health expenditure and examine the impact of health insurance on probability of incurring catastrophic health expenditure. Our findings show that the extent of OOP health expenditure is lower for insured households in urban areas. Thus, health insurance may prove to be an important policy instrument to reduce OOP health expenditure.

agflation and the Public Distribution System

Abstract: The demand for “universalisation” of the public distribution system during a period of rising prices is not relevant since, more than four-fifths of households in rural areas and two-thirds in urban centres are already covered by it. Yet, a very small proportion of rural/urban households actually make purchases of either rice or wheat from the PDS; an insignificant amount of consumption is met by ration shop purchases. The pattern is somewhat better for below the poverty line households with ration cards. What all this shows is that the issue is not universalisation but improved functioning, greater efficiency and BPL-friendliness of the PDS. T he threat of agflation, that is, rising food prices, has received much public and policy attention in India as well as the world over in recent weeks. 1 Some political parties have even demanded universalisation of the public distribution system (PDS). Of course, the government seems to be aware of the constraints on such a policy option as evident from the agriculture minister’s statements, which have explained the constraints in terms of the huge procurement and buffer stock requirements for the PDS and their adverse implications for grain prices and hence for the food security of the poor. 1 Issues Two broad issues have been raised: (i) A case for universalisation of the PDS; and (ii) its implications for procurement and buffer stocks. One is not sure how valid the case for universalisation is. This is because successive governments have announced several targeted measures to improve the effectiveness of policy for food security of the poor, in particular in the post-reform era. The government has classified the PDS cardholders as between poor, that is, those below the poverty line (BPL) and the nonpoor, that is, those above the poverty line (APL) households to define foodgrain and subsidy benefits by differential pricing and quantity entitlements. It introduced another category by starting the Antyodaya scheme in December 2001 to provide for 25 kg of foodgrains at highly subsidised prices of Rs 2 per kg for wheat and Rs 3 per kg for rice for one crore of the poorest BPL families. Therefore, it would be important to examine the issues in the context of the latest available information on the current state of the PDS.

The Great Climate Debate - A Developing Country Perspective

Abstract: For over two decades, scientific and political communities have debated whether and how to act on climate change. The present paper revisits these debates and synthesizes the longstanding arguments. Firstly, it provides an overview of the development of international climate policy and discusses clashing positions represented by sceptics and supporters of action on climate change. Secondly, it discusses the market-based measures as a means to increase the win-win opportunities and to attract profit-minded investors to invest in climate change mitigation. Finally, the paper examines whether climate protection policies can yield benefits both for the environment and the economy. The paper suggests the possibility of building environmental and climate policies around development priorities that are vitally important for developing countries and stresses the need for using sustainable development as a framework for climate change policies.

A Markov-Switching Vector Error Correction Model of the Indian Stock Prices and Trading Volume

Abstract: Using weekly data from the Indian stock markets, the relationship between stock price and trading volume at an aggregated market level are examined using a Markov Switching-Vector Error Correction Model (MS-VECM), where deviations from the long run equilibrium are characterized by different rates of adjustment depending on the state of a hidden Markov chain. The long run dynamics are characterized by one co integrating vector relating the price to trading volume. We find stock price is weakly exogenous. The MS-VECM with two regimes provides a good characterization of the Indian stock market and performs well relative to other linear and nonlinear models. The two regimes are well identified as the first regime of high volatility and the second regime of modest volatility. The regime with high volatility is found to be associated with important local and international events (social, economic, & political) affecting the Indian Stock market.

Can Insurance Reduce Catastrophic Out-of-Pocket Health Expenditure?

Abstract: In India, the out-of-pocket health expenditure by households accounts for around 70 percent of the total expenditure on health. Large out-of-pocket payments may reduce consumption expenditure on other goods and services and push households into poverty. Recently, health insurance has been considered as one of the possible instruments to reduce impoverishing effects of large out-of-pocket health expenditure. In India, health insurance has limited coverage and the present paper studies whether it has been effective so far. Literature defines out-of-pocket health expenditure as catastrophic if its share in the household budget is more than some arbitrary threshold level. In the present paper, we argue that for households below poverty line any expenditure on health is catastrophic as they are unable to attain the subsistence level of consumption. Thus, we take zero percent as a threshold level to define catastrophic health expenditure and examine the impact of health insurance on probability of incurring catastrophic health expenditure. Our findings show that the extent of OOP health expenditure is lower for insured households in urban areas. Thus, health insurance may prove to be an important policy instrument to reduce OOP health expenditure.

Dynamics of inflation in India: does the new inflation bias hypothesis provide an explanation?

Abstract: In this paper we estimate the Reserve Bank of India's (RBI) policy response to supply shocks. In particular, we exploit an important strand of the recent literature (the new inflation bias hypothesis) to understand why the two frequently cited measures of inflation in India have persistently diverged in recent years. Specifically, it is argued that the difference in coverage and weighting pattern between the indices interacting with policies pursued by the RBI to control its preferred inflation measure WPI turned out to be inappropriate with respect to stabilizing expected CPI-IW inflation. This in turn provides an explanation for the persistent divergence between the two measures of inflation.

Is Rural Non Farm Sector the Last Resort for Employment in India

Abstract: The current trend in Indian Economy reveals that the excessive dependence on agriculture as a source of livelihood is on continuous (steady) decline and rural employment base has accordingly witnessed a modest degree of diversification. In this paper it has been attempted to review the determinants of rural non-farm employment i.e. the factors determining the access by the households and individuals to rural non-farm income generation activities. The share of total working population in Primary sector is more than 60% even today but its contribution to GDP is around 21%. The statistics reveal that the large population is unproductively engaged in agriculture and the need of the hour is to take this huge army of labour into more productive sectors. These statistics reveal that the country is facing huge challenges of productive employment in agriculture and its allied activities. That's why in India, non-farm activities in rural areas have become increasingly important.

Rural Unemployment: Incidence and Evidence

Abstract: The effect of population growth and demographic transition on economic growth, poverty, inequality and on rural livelihoods has been widely discussed and debated (Birdsall and Sinding 2001). Within this debate, the focus has also been on how the age structure of a country’s population could affect its future rate of growth. A productive work force coupled with a larger working age population could offer the opportunity for a country to grow faster. This phenomenon is referred to as the demographic dividend. In the context of East Asia, it has been argued that one of the factors contributing to the annual increase in per capita income of over 6 percent over the period 1960-1995 was the favorable age structure of the population. These countries had a bulge in the working age population and created opportunities for the workforce. This enabled them to reap the demographic dividend (Bloom and Williamson 1998). Against the backdrop of these discussions, in this paper we examine the employment and unemployment scenario over the period 1993-2004 in the context of India. This is also the period when the Indian government undertook a slew of economy wide reforms. India is a relatively young country and it is often conjectured that it might be ideally poised to reap the demographic dividend. Over 37 percent of its population is in the age group 0-14 years, 17.7 percent is in the age group 15-24 years and 14.8 percent is in the age group 25-34 years. It is projected that the proportion of population in the working age group of 15-64 years would increase from 62.9 per cent in 2006 to 68.4 percent by 2026 (Economic Survey 2006-2007, p. 215). There has been feminization of the workforce over the years. Except for the low poverty regions, in all other regions the workforce participation rate for women have increased and that of men have declined in 2004-2005 compared to 1993-1994. Over the period employment situation worsened in the low poverty region. Though there was some tendency of diversification of workforce away from agricultural sector, the unemployment rate almost doubled for both men and women. Thus even though people are moving out of agricultural sector all of them are not getting absorbed in the non agricultural sector.

Social Impact of Biofuels in India

Abstract: This article tries to predict future impact of implementation of biofuel mission in India specially from social point of view. It examines the effect of the mission on employment generation, income generation, literacy as well as HDI.

Effects of Free Trade Agreement on Indo-China Trade

Abstract: Given the nature of huge trade inflows into the Indian market from the China this paper tries to shape up the possible effects that a free trade agreement between these trading giants will have. In addition to a general overview of how trading relation has gone about in the last decade we will try to magnify into the fact that whether the proposed FTA agreement between India and China will lead to any welfare gains for India or not.

Name Ordering in Economics Publication

Abstract: Using data from an exhaustive list of journals for the 40 year period starting in 1969 we document the stylized facts in name ordering in Economics publication. We provide a theoretical model to explain the observed facts. Our model fits the data well. We show that contribution to the idea of a paper determines the name ordering of the authors rather than famous authors yielding their name to junior authors to increase the chance of publication.

Are Central Bank Preferences Asymmetric? A Comment

Abstract: A recent paper by Ruge-Murcia [European Economic Review 48 (2004), 91-107] on asymmetric central bank objectives provides a new perspective on the policy roots of inflation in developed economies. More precisely, the paper demonstrates that if the distribution of the supply shocks is normal, then the reduced form solution for inflation implies a positive (or negative) relation between average inflation and the variance of shocks. We argue that the evidence offered in support of this hypothesis suffers from lack of identification because Phillips curve nonlinearity combined with quadratic central bank preferences yield the same reduced form solution for inflation. If so, estimating reduced form for inflation will not be able to discriminate between these models. Yet they have quite different implications for policy. Other, structural, evidence is needed.

Child Labor as an Institution in India

Abstract: This paper deals with various dimensions of child labor in India,its magnitude and its effect on different sections of the society viz. urban, rural and tribal. This paper also brings out the condition of children in different employments and steps taken by government to reduce child labor. This paper also brings out various national and international initiative taken up by the government and various international agencies and there short comings.

Wage Spillovers in Indian Manufacturing: Evidence from 1989-2004

Abstract: Demand for skilled labour from multinational firms is also high which might lead to movement of skilled labour from domestic firms. To prevent such movement domestic firms might feel the pressure to increase their wages. Also, productivity spillovers from foreign firms may increase productivity of domestic firms and possibly wages given in domestic firms. On the other hand, inflows of foreign firms can lead to lower scale of production and lower productivity in domestic firms, either of which could result in lower wages in domestic firms. This raises the following question i.e. are the wages offered by domestic firms to their labour affected by the presence of foreign firms. In this paper we try to answer this question by trying to find the existence of wage spillovers, if any, in Indian manufacturing. We carry out our analysis for an unbalanced firm-level panel dataset for six two digit industries. We find some evidence for positive wage spillover in three industries.