ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Investment Behaviour in India

Most of the investment slowdown debates have been around aggregate investment but disaggregate investment institution- and assets-wise may respond heterogeneously with respect to the macroprudential policy measures. The present study explores the investment dynamics at disaggregate level for 2004–19 in the wake of changing economic environment characterised by active utilisation of monetary and fiscal policies, varying monetary transmission effect, economic uncertainty, business environment, and financial pressures either by credit shortfall or debt overhang.

Economic Growth and Social Progress

Bangladesh at 50: Development and Challenges edited by S Narayan and Sreeradha Datta, Hyderabad: Orient BlackSwan, 2020; pp 263, `995.

Dietary Diversity during COVID-19 in India

The article reports the findings on the changing dietary patterns of Indian households during COVID-19, based on an analysis of the Consumer Pyramids Household Survey. The impact of the pandemic on diet composition was most severe for the poor and the deprived, who substituted inferior cereals for expensive cereals and spent lower amounts on nourishing foods such as fruits and vegetables.

FDI, GDP and Regional Disparity

Foreign direct investment reveals the tendency to fl ow to the industrial agglomerates. Some scholars express the concern that the skewed distribution of FDI can worsen the regional disparity. This article reveals that FDI has limited and unexpectedly negative effects on the Indian gross domestic product. Hence, the fear that skewed FDI infl ow can worsen regional disparity stands rejected.

Assessing the Recent Indian Economic Growth

Although the headline growth in 2021–22 and the projections for 2022–23 following the disastrous COVID-19 pandemic are impressive, indeed the highest among major economies, this is not the hoped-for V-shaped recovery as the output loss is far from being recouped. India’s output loss is among the highest in major G20 economies. It may be difficult for the Indian economy to sustain an average growth above 5% in a business-as-usual scenario because its potential growth has declined through hysteresis, and it faces several headwinds going forward.

Impact of Public Debt on the Economic Growth of Subnational Economies in India

This study examines both the short- and long-run impact of public debt on the economic growth of Uttar Pradesh during the post-reform period of 30 years by employing the vector error correction model. The empirical analysis revealed that the increase in public debt-to-gross state domestic product ratio and interest payments burden would have an adverse impact on the long-run economic growth of UP, while having no significant impact on the short-run growth. It is also notable that the effective interest rate has negatively correlated with the gross capital formation in UP, and the latter has shown significant positive long-run association with the economic growth. In order to attract investments and economic growth, the state Government of UP should continue a countercyclical fiscal stance that would help in adhering to fiscal sustainability rules by smoothing out the repercussions of the COVID-19 pandemic.

What Must be the Priority of the Budget?

Improving agriculture incomes and boosting consumer demand must be the top priorities.

 

Economic Growth in Uttar Pradesh in Recent Years

This article critically scrutinises the tall claims of the state government using the official figures of the gross state domestic product, and shows that over the four years of the present government, the per capita income in UP has increased merely by 0.43% as against the claim of 100% growth. The analysis of growth rates at the sectoral level shows that the rates of growth in most of the sectors during the present government are lower than the growth rates registered during the previous government.

 

Impact of Leverage on Firms’ Investment

It has been observed that the economic growth cycle coincides with the investment cycle in India. It is found that firm-level leverage could provide early signals about the movements in the investment cycle. Furthermore, a firm’s leverage adversely affects its investment activity after a threshold. Regression results, after controlling for firm’s price to book ratio and operational variables, indicate that the adverse impact of high leverage is predominant on low-growth firms. The initiatives to clean up the balance sheets of banks and deleveraging by non-financial corporates should help in the revival of the investment cycle. The results are consistent with the agency cost of debt and trade-off theory of capital structure, wherein firms set targets for leverage by balancing costs and benefits of debt.

 

The Role of Inequality and Growth in Determining Social Outcomes

The impact of inequality in hindering social outcomes is discussed. Although it may appear on the basis of limited data, in the Indian context, that growth alone is the main driver in improving social outcomes, including poverty reduction; and that increased inequality that is a by-product of the Indian non-inclusive growth process does not hinder social development, such a conclusion advanced recently in the Economic Survey 2020–21 is based on possibly insufficient analysis of the data. It is demonstrated that the apparent favourable association, which is counter-intuitive, between income inequality measures and social outcomes, is possibly due to both being associated with growth and could therefore be revealing a spurious relationship when considered in isolation.

 

Migrant Workers from West Bengal since 1991

The in and out balance of migration in West Bengal, for the first time, was recorded negative in the 2000s, and it is estimated to have gotten worse in the 2010s. Based on estimates, more people migrated out than entered the state in the 2010s compared to the 2000s. Though the crisis started towards the end of the left regime, it has worsened under the Trinamool Congress government. The article provides insights into labour migration, unemployment and economic growth during 1991–2018.

A Framework for the Analysis of State–Society Relations

Class and Conflict: Revisiting Pranab Bardhan’s Political Economy of India edited by Elizabeth Chatterjee and Matthew McCartney, New Delhi: Oxford University Press, 2020; pp x + 299, £47.99 (hb).

 

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