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Begin New Search Topic Development Political Geography India Publishing Institution The John F. Kennedy School of Government at Harvard University

1. The Best of Rules and Discretion: A Case for Nominal GDP Targeting in India

Author:
Pranjul Bhandari and Jeffrey Frankel
Publication Date:
07-2014
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
The recent revival of interest in nominal GDP (NGDP) targeting has come in the context of large advanced economies. We argue that the case for NGDP targeting is even more appealing for mid-sized developing countries, because they tend to be more susceptible to supply shocks and terms of trade shocks. For India, in particular, one major exogenous supply shock is the monsoon rains. NGDP targeting splits the impact of supply shocks automatically between inflation and real GDP growth. In the case of inflation targeting (IT), by contrast, the full impact of an adverse supply shock or terms of trade shock is felt as a loss in real GDP alone. NGDP targeting arguably achieves the best of both worlds: it automatically accommodates supply shocks as most central banks with discretion would do anyway, while retaining the advantage of anchoring expectations as rules are designed to do. We outline a simple theoretical model and derive the conditions under which an NGDP targeting regime would dominate other regimes such as IT for achieving objectives of output and price stability. We go on to estimate for the case of India the main parameters needed to ascertain whether these conditions hold, most notably the slope of the aggregate supply curve. We find that under certain plausible conditions, nominal GDP targeting is indeed better placed than IT, especially in the face of the supply shocks that developing countries tend to experience.
Topic:
Development, Emerging Markets, Monetary Policy, GDP, Inflation, and Central Bank
Political Geography:
South Asia and India

2. Caste Embeddedness and Microfinance: Savings and Credit Cooperatives in Andhra Pradesh, India

Author:
Guy Stuart
Publication Date:
09-2006
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
This paper examines how the introduction of a new set of institutional practices through the creation of new organizations bump up against, but also build on, the existing social structure and practices of the setting in which they are introduced. In this case, the new practices were cooperative governance and financial accounting practices introduced through the medium of cooperative organizations into villages in Andhra Pradesh, by the Cooperative Development Foundation (CDF) during the 1990s. The paper demonstrates how the CDF both built on and challenged the existing social structure of the villages in which their cooperatives developed. In particular, the paper shows that the new institutional rules the cooperatives implemented interacted with the existing caste and gender structure in a variety of ways that included direct conflict, mutual support, and in difference.
Topic:
International Relations, Development, and International Political Economy
Political Geography:
India, Asia, and Andhra Pradesh

3. Understanding Regional Economic Growth in India

Author:
Jeffrey D. Sachs, Nirupam Bajpai, and Ananthi Ramiah
Publication Date:
03-2002
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
This paper aims to understand the growth experiences of fourteen major states of India in the period 1980 to 1998. We use two measures of convergence, s-convergence and ß-convergence to examine whether per capita income in the states have been converging or diverging. By both standards of convergence, India demonstrated overall divergence during the period 1980-98, as well as during both the pre-reform and post-reform sub-periods. Interestingly, the richer states experienced a degree of convergence during the post-reform period, while the poorer states did not. Divergence was most notable within the poorer group of states. As against the U.S. states, Japanese prefectures and the European regions, both India and China display no signs of conditional convergence much less unconditional convergence. We suggest four possible hypotheses: (1) the geographical differences are larger in India and China than in the United States, Europe, and Japan; (2) population movements in the United States, Europe, or Japan more readily arbitrage differences across regions; (3) policies of the national or regional governments prevented convergence, and (4) economic convergence is easier at higher levels of economic development than in China and India. A remarkable 82 percent of the cross-state variation in growth is explained by just the urbanization variable in India, and with no hint of any conditional convergence after controlling for the degree of urbanization. The regression estimate shows that a 10-percentage-point higher rate of urbanization is associated with 1.3 percentage points per year higher annual growth. We also offer some preliminary explanations for the unusual growth experiences of some states. We consider four such mysteries: (1) the mediocre growth of Kerala despite excellent social indicators; (2) the relatively fast growth of landlocked, and arid Rajasthan; (3) the improved growth performance of landlocked Madhya Pradesh; and (4) the poor growth performance of coastal Orissa.
Topic:
Development, Economics, and Regional Growth
Political Geography:
South Asia and India

4. A Decade of Economic Reforms in India: The Unfinished Agenda

Author:
Nirupam Bajpai
Publication Date:
03-2002
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
This paper aims to assess the economic reforms in India undertaken during the 1990s. India has gone through the first decade of her reform process. Hence, an assessment of what has been achieved so far and what remains on the reform agenda is in order. Reforms in the industrial, trade, and financial sectors, among others, have been wide and deep. As a consequence, they have contributed more meaningfully in attaining higher rates of growth. A decade of opening of the economy has produced new dynamism, most dramatically in the information technology sector, but in others as well. The new technologies (especially information technology and biotechnology) give new opportunities for economic and social development. It is necessary to move swiftly to complete many of the reforms, which are now underway. Examples of such continuing reforms are the reduction in protection levels, continuing reforms in banking sector, product de-reservation for the small-scale industry, decontrol of prices, such as petroleum, reform of the power sector and so on. Among other things, sustaining higher rates of economic growth would require a more vigorous pursuit of economic reforms at both the federal and state levels. Significant reduction of fiscal deficit is the first order of business. Unless substantial fiscal consolidation is achieved, in our view, continued fiscal deficits pose India's greatest risk to future destabilization. Other critical reforms include, labor laws, exit policy, privatization of state-owned enterprises, further opening-up of the economy to trade and foreign direct investment. In addition, there is a vast amount of economic reform that can be carried out to improve conditions in rural India, especially in the Gangetic valley. The reforms implemented so far have helped India attain 6 plus percent growth, however, should India be able to implement the remaining reforms and re-orient governmental spending away from inessential expenditures towards high priority areas of health and education and infrastructure development, then it is very likely to attain and sustain even higher rates of economic growth.
Topic:
Development, Economics, Science and Technology, Reform, and Economic Growth
Political Geography:
South Asia and India