Articles by Ravindra H Dholakia


Discussion Understanding Indian Economic Growth:
Some Observations Ravindra H Dholakia The history of economic growth after independence in India has been an active field of empirical research leading to debates on effectiveness of policy regimes. The latest contribution by Balakrishnan and Parameshwaran (henceforth B-P, 2007), published in EPW on July 14, applying the state of the art statistical techniques to find breakdates in the time trend of the gross domestic product (GDP) endogenously, is a welcome addition to this literature. The purpose of this note is to consider a few findings of earlier studies (missed out by B-P 2007) and thereby add to our outstanding of Indian economic growth. Had B-P gone back to 1992 for selecting their references, they would have found at least three studies directly relevant to their methodology and findings. These appeared in the Indian Economic Journal [Ganesh Kumar 1992], Indian Economic Review [Dholakia R H and Dholakia B H, 1993] and EPW [Dholakia R H 1994]. The first one applied the state of the art statistical techniques (available at that time) to the Indian GDP data from 1950-51 to 1989-90 and found breakdates for three broad sectors

There are differences in the definition of debt used by different bodies like the state governments, Reserve Bank of India, Office of the Comptroller and Auditor General of India and the Finance Commission. Moreover, none of these definitions satisfy the criterion that fiscal deficit in a given year should equal the sum of increase in debt and monetisation. This paper builds on this basic criterion to derive a theoretically consistent and appropriate definition of debt. The definition is then used to estimate debt for 18 non-special category states and 10 special category states for the period 1989-90 to 2003-04 and obtain effective interest rates for these states. We observe that non-special category states have a significantly greater probability of fiscal sustainability than the special category states. Moreover, when the trend in the proportion of debt of each state in the aggregate of all states is compared with trends in similar proportions of fiscal transfers from the centre and that in the primary deficit on own account, we find that certain states have benefited by largesse from the centre despite a consistently bad performance, while certain performing states have been penalised by reduced fiscal transfers.

A model of government expenditure allocation among sectors is developed and its application is illustrated through the data on major Indian states from 1971 to 1991. It is argued that, at the margin, changes in expenditure allocation are determined not by the magnitude of marginal productivities of the government effort, but by the behaviour of marginal returns in relative terms. Nine indicators from education, health, nutrition and other social sectors measure the index of basic welfare as the output of government efforts. Revenue and capital expenditures of state governments on the economic (physical capital) sectors and social (human capital) sectors are considered over two decades - 1971-81 and 1981-91 to examine the stability of the coefficients.

Since 1991-92, India has undertaken widespread policy reforms in order to integrate its economy with the rest of the world. In this fact-finding study, the balance-sheet data of 557 private sector companies are considered with several ratios and indicators of performance and trade behaviour. The companies are divided into exporting and non-exporting groups. On the whole, exporting companies are found to be performing much better than non-exporting ones. The policy reforms have, however, helped the latter to improve their margins, though they have been pushed to the lower end of the domestic markets.

The development strategy in Gujarat has been very clear since its inception in 1960 in according a high priority to industrialisation. The impact of economic liberalisation on the state economy should, therefore, be examined in terms of the performance of industrialisation in the state.