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| Srl | Item |
| 1 |
ID:
134738
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| Summary/Abstract |
This article examines the determinants of government yields in India using weekly data from April 2001 through June 2012. The analysis covers treasury bills with residual maturity of 15–91 days and government securities of residual maturity 1, 5 and 10 years. The empirical estimates show that a long-run relationship exists between each of these interest rates and the policy rate, rate of growth of money supply, inflation, interest rate spread, foreign interest rate and forward premium. At the same time, the empirical results show that the relative importance of the determinants varies across the maturity spectrum. The normalised generalised variance decompositions suggest that the policy rate and the rate of growth of high powered money are more important in explaining the proportion of variation in shorter-term interest rates than the longer-term rates. The weight of the forward premium also diminishes as we move towards higher maturity interest rates. The inflation rate becomes relatively less important in explaining variations in the yields as the maturity of the security increases. The yield spread, on the other hand, is more important in explaining the longer-term rates. The results also show that a large proportion of the variation in the rates on the 5-year and 10-year government securities is attributed to the interest rate itself, suggesting that the unexplained variation may be a result of cyclical factors that are relatively more important for longer-term rates but are not captured by the yield spread and are omitted from the estimations in this article due to the high frequency of data employed here.
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| 2 |
ID:
134742
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| Summary/Abstract |
India’s 12th Five-Year Plan (2012–13 to 2016–17) emphasises ‘faster, sustainable and more inclusive growth’. The GDP growth target for the Plan was initially fixed at 9 per cent and later revised to 8 per cent against the backdrop of significant contraction of domestic output during the first two years of the Plan period. The Plan document has set a target of achieving a 2 percentage point reduction in poverty per annum. However, the document has cautioned that achieving the revised growth target also needs special efforts and structural reforms in the economic, social and political systems. For the first time, the Planning Commission has proposed to work on ‘scenario planning’ for the 12th Plan. It has proposed three scenarios: ‘The Flotilla Advances’, ‘Muddling Along’ and ‘Falling Apart’. The main thrust of scenario analysis is to highlight the need for specific interventions in policy to achieve the goals of the Plan. Using the macroeconometric model developed by the National Council for Applied Economic Research (NCAER) in India, the study finds that GDP growth rate will decline significantly under the Falling Apart scenario compared with the other two scenarios. As a result, poverty reduction is expected to be marginal under this scenario. The Falling Apart scenario will also lead to an unsustainable fiscal and current account deficit situation over the medium term. The other important finding of the study is that investment in social infrastructure (education and health) and physical infrastructure would not only achieve higher economic growth but also sustain it in the long term and both infrastructures have a similar impact on growth.
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| 3 |
ID:
134737
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| Summary/Abstract |
This article addresses the issue of past and future types of monetary-fiscal coordination that can deliver inclusive growth and low inflation in the Indian context. After India’s Independence, monetary policy was subordinated to planned development and, therefore, implicitly directed at inclusion. But large areas of the economy were still not monetised, and the modern sector was small. So inclusion was about expanding the sphere of the modern economy. Once a populous emerging market (EM) crosses a critical threshold and high catch-up growth is established, higher labour mobility blurs the distinction between the formal and informal sectors. A macroeconomics of the aggregate economy becomes both necessary and feasible. Since monetary policy affects a larger part of the economy, it can directly affect inclusion by affecting the pace of job creation. But bottlenecks that raise costs, pushing up the price at which any level of output is available, can force monetary tightening. If fiscal policies are redesigned for active inclusion that expands human capacity, makes more productive labour available, and reduces wasteful distortions, monetary policy can better support the objective of inclusive growth. The change in the type and efficacy of government policies designed for inclusion required has become politically and technologically feasible.
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| 4 |
ID:
134741
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| Summary/Abstract |
In the aftermath of the global food and fuel price spikes, and the recent global financial crisis, understanding of external sector behaviour has become crucial. The transmission mechanism of external sector shocks to domestic macroeconomic variables is essential for undertaking relevant policies to mitigate the adverse impact of such shocks. Here an attempt has been made to review the theoretical and empirical issues relating to India’s external sector behaviour and to present a suitable analytical framework for macro modelling.
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| 5 |
ID:
134740
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| Summary/Abstract |
Rapid rise in the prices of foodgrains and their continued upsurge is a matter of concern not only for the government and policy makers but also for anyone concerned with social welfare. This is particularly so because the increased prices of basic food items cause great distress to the poor sections of society who spend a large part of their income on food. Thus, a clear understanding of the causes of inflation is necessary for framing the right policy to tackle the problem. The current study tries to examine how prices are determined in the Indian foodgrain market. This requires a slightly different approach from the conventional demand and supply framework as government intervenes in the market through open-market operations. To this end, we propose a structural model, explaining the behaviour of foodgrain prices for the period 1980–81 through 2011–12 incorporating the role of government interventions. Our results confirm that there is a strong impact of demand- as well as supply-side factors. However, when it comes to controlling inflation, demand-side management turns out to be highly significant. Under supply-side management, increased capital stock is found to be important, in so far as it significantly boosts production. Government intervention through procurement and off-take plays a stabilising role.
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| 6 |
ID:
134739
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| Summary/Abstract |
A structural vector autoregression (SVAR) model is proposed for analysing the impact of monetary policy stances on real variables in the Indian economy, in the context of its continuous exposure to global factors like oil price shocks and changes in global financial health. The empirical findings based on monthly data relating to the post-liberalisation period (April 1992–December 2012) suggest that contractionary monetary policy has had a considerable adverse impact on output for a year, which appears to be consistent with the prevailing economic outlook. But the same policy measure fuels inflation further for the first eight months in contrast to its expected decline, and the rise in inflation raises the issue of a ‘price puzzle’ in the Indian context. Monetary policy-induced exchange rate appreciation hampers industrial production due to outperformance of high import demand over export competitiveness and causes an increase in the average price level. Global factors like oil price shocks leave detrimental effects on output for a long time horizon of 10–12 months and raise inflation for nearly half a year, whereas an increase in the US federal funds rate results in a temporary decline in output growth of Indian industries
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