Indira Gandhi Institute of Development Research

About: Indira Gandhi Institute of Development Research is a facility organization based out in Mumbai, Maharashtra, India. It is known for research contribution in the topics: Monetary policy & Inflation. The organization has 307 authors who have published 1021 publications receiving 18848 citations.

Local skill concentrations and district employment growth: a simultaneous equation approach for India

Abstract: Spatial concentration of skills has been identified as an important factor that causes differences in regional employment in developed countries. In the light of this literature, this paper investigates the relationship between spatial distribution of skills in the year 2001 and district-wise employment growth between the years 2001 and 2011, for India. We argue that educational attainment as a measure of worker skills may not be appropriate for a developing country and take a different approach to measuring skills wherein a worker’s skill is inferred from the occupation in which he/she is employed. We use district-wise data on occupational distribution of employment (from Census of India) along with the skill content of occupations (from a US-based dataset called O-NET) to measure regional skills. Using this measure, we model employment and population growth simultaneously and find a positive relationship between cognitive skills and employment growth. The results are robust across all the models that we employ. Our results suggest the presence of externalities associated with skilled people which is instrumental in increasing productivity and employment in skilled regions.

Reviving Growth in India: Growth Drivers: ICT and Inclusive Innovations

Abstract: INTRODUCTION Innovations are essential to raise productivity and sustain growth. Inclusion is also important to sustain growth, since it prevents possible political unrest, raises average productivity and expands the market size. Innovations using Internet and mobile communication technologies (ICT), especially, suit inclusion, and therefore, sustain inclusive growth, which is a major Indian objective. Inclusion and growth can go together if inclusion is of the type that facilitates growth. ‘Active inclusion,’ defined as creating conditions for the many to contribute to and participate in growth (Goyal, 2012), is of this type. An inclusive innovation is one that creates products that can be accessed by all classes, improving their productivity, and are not restricted to the elite. This chapter develops a simple analytical framework that clarifies the conditions that foster inclusive innovation in Emerging and Developing Economies (EDEs). It brings out two ways of facilitating inclusion through innovation: first, to induce more technical change in products consumed by the less well off, thus, lowering costs for them and second, to make more resources available for them or reduce their transaction costs so that they can afford better products. Alternative ways of doing this are through income transfers or through better systems or public provision of the relevant infrastructure. The latter are suited to active inclusion. The analytical framework shows that large market size stimulates innovation to profit from it, since adoption and further adaptation of technology responds to economic incentives. Increasing the market size creates broader incentives for innovation and reduces the need for direct government inputs that have been difficult to provide. Since market size strengthens private incentives for inclusive innovation, it is likely to improve outcomes. Next, the chapter assesses India's telecommunication policy (2012) and policy changes towards mobile banking to examine the extent to which they have improved relevant infrastructure such as broadband, or taken steps to increase the market size.

Fairness and Equity via Concepts of Multi-Criteria Decision Analysis

Abstract: We briefly discuss principles of fairness and equity in order to incorporate them in a mathematical method for the allocation of benefits or costs (the output) in a distribution problem, on the basis of the effort, the strength or the needs (the input) of the respective parties. Usually, input and output are multi-dimensional, and proportionality seems to be the leading principle. Therefore we employ several algorithmic ideas of Multi- Criteria Decision Analysis in order to support the solution of distribution problems, in particular the ideas underlying the Multiplicative AHP which was designed to process ratio information. We extend the method in order to cover the principles of progressivity, priority, and parity as well. Two examples, (a) the establishment of the member state contributions to the European Union, and (b) the allocation of seats in the European Parliament to the member states, show that the proposed method produces contributions and allocations with a higher degree of fairness and equity than the actual solutions.

Policy errors and business cycle fluctuations: Evidence from an emerging economy

Abstract: In the immediate aftermath of the global financial crisis, the monetary policy in India became accommodative as in other major economies, but the policy subsequently turned highly contractionary despite falling inflation, which we characterize as policy errors. Government expenditure also had similar pattern. This paper therefore estimates a medium scale New Keynesian model (with earnings and assets based collateral constraint) to explore the impact of such policy errors on Indian business cycles, capturing the prevailing narrative on both monetary and fiscal policies along with the actual inflation scenario. Our smoothed estimates of mark-up, productivity, interest rate and government expenditure shocks mimic the actual transition of the economy, with both policy shocks moving together in a similar pattern in the post crisis period. We find that the interest rate policy was highly contractionary during 2013-2016 which led to significantly lower output. We rationalize that if supply side shocks (adverse productivity or mark-up) dominate, such policy errors tend to occur, suggesting that policy makers need to pay attention to the sources of inflation in a developing economy while setting demand-management policies. Given the current pandemic as more of a adverse supply shock, similar policy errors are likely to occur if interest rate responds to this type of inflationary shocks.