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.

Understanding the 'missing middle' in Indian manufacturing : the role of size-dependent labour regulations and fisical [i.e. fiscal] incentives

Abstract: This paper studies the problem of missing middle in the size distribution of manufacturing plants in India as an outcome of threshold effects of labour regulations defined by employment size and fiscal incentives determined by turnover for small-scale enterprises. Two alternative avenues that firms could use to escape from higher adjustment costs of larger firm size are employment of non-permanent workers and subcontracting output to other firms. These two outcomes are measured by contract-worker intensity and subcontracting intensity. The study is based on a large unbalanced panel of manufacturing plants in the formal sector covering 25 states and 5 union territories of India spanning the period 1998-2008. Contract-worker intensity is found to be higher in size class 50-99 relative to others supporting the proposition that firms use non-permanent workers to stay below the size threshold of 100. Mean contract-worker intensity of factories in size group 50-99 is found to be higher in labour intensive industries located in states categorized as inflexible. Mean subcontracting intensity was found to be significantly high in the size group eligible for excise-tax exemption with turnover below Indian Rupees 50 million. The empirical results supported the threshold effects of size-dependent labour regulations and fiscal incentives.

Migrant Networks in the Urban Labour Market: Evidence from India

Abstract: This paper analyses the informal channels of the job search process through migrant networks in the urban labour markets in developing countries. Using a novel approach and nationwide sample survey, we measure various aspects of migrant networks such as size, diversity, efficiency and experience content and estimate their effect on probability of employment. Our findings suggest that migrant stock (having experience content) has an inverted-U relationship with the probability of finding a job for a migrant. The share of employed workers in a migrant network (efficiency) and different origin identity (diversity) positively affect the employment outcome through weak ties. Further, the migrant network effect is more active in larger cities as compared to smaller urban areas. The implications of this study indicate towards the importance of non-market informal channels in job searches and the need for integrating labour markets to harness the benefits of larger positive network externalities.

The Structure of inflation, information and labour markets: Implications for monetary policy

Abstract: The paper gives a simplified version of a typical dynamic stochastic open economy general equilibrium models used to analyze optimal monetary policy. Then it outlines the chief modifications when dualism in labour and in consumption is introduced to adapt the model to a small open emerging market such as India. The implications of specific labour markets, and the structure of Indian inflation and its measurement are examined. Simulations give the welfare effects of different types of inflation targeting. Flexible CPI inflation targeting (CIT) without lags works best, especially if the economy is more open. But volatile terms of trade make the supply curve even steeper than in a small open economy despite specific labour markets and higher labour supply elasticity. Exchange rate intervention limits the volatility of the terms of trade and improves outcomes, making the supply curve flatter. As long as such intervention is required, domestic inflation targeting (DIT) continues to be more robust and effective. The welfare losses from the lags in CPI, which prevent the implementation of CIT, are low as long as the dualistic structure dominates. As the economy becomes more open, however, the loss from not being able to use CIT rises. The lags in CPI therefore need to be reduced, making its future use possible.

Universal PDS: Efficiency and Equity Dimensions

Abstract: India being home to the largest number of poor and malnourished population in the world, the tabling of National Food Security Bill has renewed the public pressure for universalization of PDS in India. In this regard, Tamil Nadu’s model of universal PDS has been cited for its success in providing comprehensive food security. This paper puts forward an analytical framework to analyse the resource use efficiency and redistribution achieved in a universal system. An illustrative survey was conducted in Coimbatore-Tiruppur region of Tamil Nadu to assess the merits and demerits of universal system based on the framework developed. The survey covering 154 households seeks to understand the utilization of PDS by the poor and the non-poor households, if there is voluntary exclusion of better-off sections of the population from the system and the reasons behind them. It is found that there is low drop-out of non-poor households from the universal system. This is because around 25% of all households who are eligible for any PDS commodity reported selling one of the commodities or feeding them to livestock. Also, the entitlements of poor to subsidized commodities are reduced in uniform universal system. Based on the theoretical framework and the observations from the survey, we make further recommendations in designing an optimal PDS model.

Operational Planning of Power System: An Integrated Approach

Abstract: Power system operational planning to utilize the existing capacity in the best possible manner is of prime importance and is particularly relevant in a developing economy. This modeling exercise presents an integrated approach for the multiarea short-term operational planning of the power system. It considers various related activities like coal mining, transportation, generating unit maintenance and generation scheduling, demand-side management options, and unmet energy distribution among different areas in case of inadequate system capacity. The power system operations are required to meet multiple objectives, namely minimizing the total costs, minimizing the total emissions, and maximizing the generating system reliability (minimizing the loss of load expectation). A compromise programming approach is adopted to arrive at the best compromise among these noncompensatory objectives. Thus it is a systems approach to power system planning that uses a multiobjective framework to integrate all relat...