There is a lot of discussion of the right course of monetary policy for India. In this column, India’s Chief Economic Adviser argues that the country’s real policy interest rates have diverged significantly for consumers and producers, and are unusually high for the latter. The real rate is 2.4% based on the consumer price index, but 7.5% based on the GDP deflator. There is a clear need for more consideration of the appropriate measure of restrictiveness in these unusual times.
Arvind Subramanian, Monday, June 15, 2015
Ejaz Ghani, William Kerr, Alex Segura, Tuesday, June 9, 2015
The vast informal sector in India affects everything from poverty to growth. This column presents new facts on how Indian job growth in manufacturing is concentrated in informal tradable industries, especially one-person establishments. These features are most closely linked to the urbanisation of informal Indian manufacturing, but subcontracting and rising female participation also appear to play noteworthy roles.
Vincent Somville, Lore Vandewalle, Monday, May 11, 2015
Making transfers to bank accounts instead of paying cash could potentially enhance savings. This column tests this hypothesis using a randomised trial from India. The evidence suggests that being paid on the account increases the balance by around 110% within three months of weekly payments. The individuals who were paid in cash do not save more in other assets, such as cash at home, but increase consumption.
Seema Jayachandran, Rohini Pande, Tuesday, May 5, 2015
Indian children are more likely to be malnourished than their counterparts in Sub-Saharan Africa, despite higher standards of living. This column uses data on child height – an anthropometric measure of net nutrition – from Africa and India to explore how parental gender preferences affect the likelihood of children being malnourished. Indian firstborn sons are found to have a height advantage over African firstborn sons, and the height disadvantage appears first in second-born children, increasing for subsequent births. This suggests that a preference for a healthy male heir influences fertility decisions and how parents allocate resources between their children.
Clément Imbert, Saturday, January 10, 2015
Rural policies that affect migration to the cities may have significant impact on urban labour markets. However, there is little empirical evidence on the magnitude of these effects. This column argues that India’s rural employment guarantee – the world’s largest workfare programme – reduces short-term migration from rural areas. At the same time, it increases wages of urban unskilled workers.
Kaushik Basu, Barry Eichengreen, Poonam Gupta, Wednesday, November 5, 2014
India was among the hardest hit by the Fed’s ‘taper talks’. This column argues that this impact was large for two reasons. First, India received huge capital flows before 2013. This had made it a convenient target for investors seeking to rebalance away from emerging markets. Second, macroeconomic conditions had worsened, which rendered the economy vulnerable. The measures adopted in response were ineffective in stabilising the financial markets. Implementing a medium-term framework that limits vulnerabilities and restricts spillovers could be more successful.
Amir Attaran, Roger Bate, Ginger Zhe Jin, Aparna Mathur, Thursday, October 9, 2014
There is a perception amongst pharmaceutical experts that some Indian manufacturers and/or their distributors segment the global medicine market into portions that are served by different quality medicines. This column finds that drug quality is poorer among Indian-labelled drugs purchased inside African countries than among those purchased inside India or middle-income countries. Substandard drugs – non-registered in Africa and containing insufficient amounts of the active ingredient – are the biggest driver of this quality difference.
Ejaz Ghani, William Kerr, Stephen D O'Connell, Thursday, October 2, 2014
Numerous countries have implemented seat reservations for women in politics over the past decades. Starting in the early 1990s, India’s flagship decentralisation reform instituted one-third seat reservations for women in local governance bodies. This column suggests that this political empowerment increased women’s economic empowerment through at least one channel, i.e. small-scale entrepreneurship. These findings suggest that political empowerment policies for women may additionally have beneficial economic effects in the longer run.
Jeffrey Frankel, Tuesday, September 9, 2014
Subsidies for food and energy are economically inefficient, but can often be politically popular. This column discusses the efforts by new leaders in Egypt, Indonesia, and India to cut unaffordable subsidies. Cutting subsidies now may even be the politically savvy choice if the alternative is shortages and an even more painful rise in the retail price in future. Ironically, it is India’s new Prime Minister Modi – elected with a large electoral mandate and much hype about market reforms – who is already shrinking from the challenge.
Daniel Bennett, Wes Yin, Thursday, August 14, 2014
Many drugs sold in poor countries are counterfeit or substandard, endangering patients’ health and fostering drug resistance. Since drug quality is difficult to observe, pharmacies in weakly regulated markets may have little incentive to improve quality. However, larger markets allow firms to reorganise production and invest in technologies that reduce the marginal cost of quality. This column discusses how the entry of a new pharmacy chain in India led incumbents to both cut prices and raise drug quality.
Ejaz Ghani, William Kerr, Ishani Tewari, Friday, July 11, 2014
Some cities grow through specialisation others through diversity. This column measures specialisation and diversity for the manufacturing and services sectors in India. It finds that Indian districts with a broader set of industries exhibit greater employment growth. This is particularly true for low population densities, rural areas and unorganised sector, reflecting knowledge flow and the inclusive nature of employment growth due to diversity.
Piritta Sorsa, Wednesday, June 18, 2014
Female labour market participation in India is lower than in other emerging markets. This column discusses the dynamics and causes of this issue. Many women have dropped out of the labour market in the recent years, or work in low-paying jobs without social benefits and with large wage differentials. Raising female labour force participation could boost economic growth up to 2.4% with a package of pro-growth and pro-women policies.
Sean Dougherty, Veronica Frisancho, Kala Krishna, Thursday, May 8, 2014
Recent supreme court action has reintroduced labour reform into India’s public debate. This column estimates productivity effects of deregulation exploiting state-level variation in policy and plant-level data. Even modest deregulation has improved total factor productivity substantially; this sets the scene for a deep liberalising reform
Poonam Gupta, Arvind Panagariya, Monday, March 17, 2014
Do voters care about economic outcomes? Evidence on this question, especially in the context of developing countries, is rather scant. This column reports the findings from analysis of the 2009 parliamentary elections in India. Voters favoured parties that delivered high growth in their states and rejected those that did not. The authors also find that voters preferred candidates who had served in the parliament before, were wealthy, educated, and affiliated with a large party.
Neeraj Kaushal, Felix Muchomba, Tuesday, December 24, 2013
A recent food security bill passed by the Indian government has raised criticism due to its high cost but questionable effect on nutrition. This column presents a recent study that finds the food subsidies did not improve nutrition, but affected food consumption patterns. In particular, consumption of subsidised grains increased, and consumption of some cheaper and inferior substitutes decreased.
Kristin Forbes, Michael W Klein, Tuesday, December 24, 2013
Government interventions to control capital flows and reduce exchange-rate volatility have long been controversial. The Global Financial Crisis has made the debate more urgent. This column discusses recent research that evaluates such policies against the counterfactual of no intervention. Depreciations and reserve sales can boost GDP growth during crises, but may also substantially increase inflation. Large increases in interest rates and new capital controls are associated with reductions in GDP growth, with no significant effect on inflation. When faced with sudden shifts in capital flows, policymakers must ‘pick their poison’.
Prashant Bharadwaj, Leah Lakdawala, Nicholas Li, Thursday, December 5, 2013
The most popular regulation against child labour is a ban against it. This column presents evidence from such a ban in India. Not only did the ban not reduce child labour, but it even increased it. The effects are concentrated among the poorest families. Therefore, policy reforms other than bans could be more effective in reducing child labour, and in improving the lives of children.
Anders Åslund, Wednesday, September 4, 2013
Emerging markets are under pressure. This column argues that this is not a mere headwind but that the BRICs’ party is over. Their ability to get going again rests on their ability to carry through reforms in grim times for which they lacked the courage in a boom.
Marco Annunziata, Sunday, September 1, 2013
India, like other emerging markets, is having a tough summer. This column argues that India needs to step up reforms and critical infrastructure investment to reboot growth. Its economic health – and that of other emerging markets – is not as dire as headlines suggest. The alarm and pessimism surrounding emerging markets appears to have run well ahead of any deterioration in fundamentals.
Meghana Ayyagari, Thorsten Beck, Mohammad Hoseini, Sunday, June 2, 2013
Using state-level data from India over the period 1983 to 2005, this paper gauges the effect of financial deepening and outreach on rural poverty. Its findings suggest that financial deepening contributed to poverty alleviation in rural areas by fostering entrepreneurship and inducing geographic-sectoral migration.