Articles by Ajay Shah

Though monetary policy in India is not explicitly charged with delivering low and stable inflation, it still needs to choose a measure of inflation as a reference. Questions of timeliness, weights in the price index, accuracy of food price measurement, and inclusion of the prices of services are relevant to the choice of measure. This paper looks at detailed price data, expenditure patterns of households and the composition of different price indices available in India, and discusses policies on inflation measurement in other countries. Under present conditions of measurement, the consumer price index for industrial workers, despite some serious deficiencies, is preferable to both the wholesale price index and the GDP deflator as the headline inflation rate. Thus, macroeconomic analysis and policy thinking need to move away from a focus on the WPI to the CPI-IW.

In India, year-on-year percentage changes of price indexes are widely used as the measure of inflation. In terms of monthly data, each observation of a one-year change in inflation is the sum of 12 one-month changes. This suggests that better information about inflationary pressures can be obtained using point-on-point monthly changes. This requires seasonal adjustment. We apply standard seasonal adjustment procedures in order to obtain a point-on-point seasonally adjusted monthly time-series of inflation in India. In three interesting high inflation episodes - 1994-95, 2007 and 2008 - we find that this data yields a faster and better understanding of inflationary pressures.

There is a considerable consensus that over the multi-decade horizons encountered in pension investment, there are enormous gains which can be obtained through portfolios of corporate bonds and equities, instead of a focus on government bonds. However, such investment strategies do impose greater uncertainty upon the worker about post-retirement consumption. Guarantees are one mechanism through which this investment risk can be contained. In this paper, we work out the cost of certain guarantee structures in the context of a simplified model. These calculations could help assist better decision-making about the role for guarantees in the Indian pension system. We also discuss some policy issues in pensions and in finance, which are related to the problem of guarantees.



Infrastructure Ajay Shah Shuvam Misra One of the current policy debates in India concerns the need for a 'national information infrastructure (NII)' and how it should be built. This paper sketches some key principles which a strong NIl should satisfy, in order to yield the maximal impact upon productivity growth of India's economy at the lowest possible cost.