Journal Press India®
With the continued patronage of our readers, Pragati has been attracting vast and diverse interest, and the topics being covered in the journal have become varied over a period of time. I look at this as an advantage because it reflects the variety of interest areas and concerns that the current literature on Indian Economy demonstrates.
Perhaps one of the best papers in the issue is the ‘Interaction between Monetary and Fiscal Policy: Empirical Evidence from India’, by Arundhati Mallick and Narayan Sethi. Using Vector Error Correction Model (VECM) for the period of April 2010 to March 2015, they study this interaction by using change in gross fiscal deficit and output to represent fiscal policy and inflation and interest rate to represent the monetary policy. The results indicate that fiscal policy responds well to any changes in monetary policy but reverse is not taking place.
Another paper looks at the macro-trends in steel industry in India and its implications for risk. The author has analysed the growth trend for production, consumption, exports and imports of steel in the Indian economy. On the whole, it has been concluded that production and consumption increased over time. Exports and imports show an increasing trend but the export trend is weaker than the import trend. A major implication of this trend coupled with the trend in imports and exports shows that systematic risk arises due to transaction exposure of volatility in foreign exchange.
The issue also has a case study on ‘Gender perspective of rural livelihood and household income’ which covers a village in Odisha. The paper examines the role of gender in determining livelihood aspects like occupation structure and migration. It also investigates the role played by gender in determining employment, family income, and income distribution of individuals. The study observes significant gender gap in occupation structure, and income distribution across gender.
Further, we have another paper in the rural context; ‘Performance of Regional Rural Banks in Indian Economy: An Overview’. This paper is about Regional Rural Banks (RRBs) also known as ‘Gramin’ bank that have emerged as an important rural credit delivery institution in India for meeting the credit requirements of the rural poor. From the analysis, it could be concluded that rapid expansion of RRBs has been able to substantially reduce the regional disparities in respect of banking facilities in India.
On a different note, another paper on Start-ups analyses the Indian experience of start-ups and the challenges faced by the start-ups in India in terms of financial resources. India ranks third among global start-up ecosystems with more than 4,200 new-age companies and it is amongst the top five countries in the world in terms of the new business start-ups. This issue also brings a paper in the insurance sector, that carries out a ‘Comparative analysis of LIC of India with private players.’ The author concludes that in terms of most of the variables, LIC has been at the bottom of the list.
Coming back to the external sector, a paper that analyses Indian’s export pattern concludes that there have been structural changes in direction of India’s exports under the New Trade Policy since 1991. The paper uses the dominance pattern, ranking technique, mobility and turnover, concentration ratio and growth rate technique as research methodology for analysis. The results show that USA, UAE, Hong Kong, UK and Germany accounted for more than 62 percent of exports from India at the world level.
The focus in this issue is on the external sector, the rural sector and certain policy issues. As far as broad policy instruments are concerned, one causality turns out to be an enigma. As long as deficit financing policy continues, monetary policy would directly be affected by the fiscal deficits. The lesson, therefore, is that econometric results should also be correlated to basic economic theory. A decline in the concentration of trade in India direction of trade is a welcome measure. It shows that after liberalisation, the colonial patterns trade have largely been diluted. Steel industry has been a stronghold in the Indian economy. The trends in production, consumption are encouraging but India needs to diversify its export basket, improve varieties and produce high grade steel alloy products which are much in demand in the international market. Only then will the transaction risk that such a great industry faces be controlled.
The decline in the position of LIC is a natural consequence of the policy of liberalisation and the consequent competition. However, further studies show that LIC has been pro-people and has been maintaining a lower premia. The analysis of the policy of start-ups is rather premature. It is good to begin with but may need a much longer period of study to conclude. A similar liberalisation policy during early nineties lead to the mushrooming of ‘vanishing companies’. Today this is a forgotten story! Start-ups should not meet the same fate. Similarly, further studies may be required to conclude that RRBs have actually taken-off. The study on gender and occupation is an interesting study.
We would welcome more of analytical papers which blend highly evolved econometric techniques with good economic analysis and hence, contribute to our understanding of Indian economy.
Prof. K. V. Bhanu Murthy
Editor