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NCAER is hosting a seminar on “Computable General Equilibrium (CGE) Modelling, a Tool for Economic Policy: Achievements and New Challenges” with Professor Peter B. Dixon at the Centre for Policy Studies at Victoria University in Melbourne.

Since its inception in 1960 with the work of Leif Johansen, CGE modelling has proved popular and versatile. The Global Trade Analysis Project, the peak CGE network, has 15,000 members from 150 countries. CGE modelling is used throughout the world to provide historical analyses and forecasts and to elucidate policy issues in trade, microeconomic reform, labour markets, energy, environment, public finance, immigration, infrastructure, tourism, technology, natural resources and commodity prices.

This presentation briefly traces the evolution of CGE modelling and explains some of the things that CGE modelling has taught us. It then sets out five challenges for the field: absorption of technical/engineering information; inclusion of monetary phenomena; integration with modern macro; integration with modern trade theory; and inclusion of the essential features of global supply chains.

Peter B. Dixon is Professor, Centre of Policy Studies at Victoria University in Melbourne. He joined the Australian government’s IMPACT Project in 1975 after working at the IMF and then the Reserve Bank of Australia. At IMPACT he led the team that created the ORANI model. This was the world’s first detailed (100 industries) computable general equilibrium model regularly used in policy analysis. In the 1990s with colleagues at Monash University he created the MONASH model, the dynamic successor to ORANI. These two models have been prominent in the Australian economic debate for 35 years and have been used as templates for other models throughout the world. In recent years Dixon developed the USAGE model of the U.S. which is used by the U.S. International Trade Commission and the US Departments of Agriculture, Commerce, Energy, Transportation and Homeland Security. Dixon was appointed to the Chair in Economic Theory at La Trobe University in 1978 and to a Visiting Professorship at Harvard in 1983. From 1984 to 1991 he was Director and Professor in the Institute of Applied Economic and Social Research at the University of Melbourne, and in 1991 he took up his position as Director and Professor in the Centre of Policy Studies at Monash University. He moved to Victoria University in 2014. Dixon was elected a Fellow of the Academy of Social Sciences in 1982. In 2003, he was awarded the Distinguished Fellowship of the Economic Society of Australia and in 2006 he was appointed Sir John Monash Distinguished Professor at Monash. In 2013, Elsevier published its two-volume Handbook of Computable General Equilibrium Modeling edited by Dixon and Dale Jorgenson.

Dixon has a PhD and MA in economics from Harvard (where he was one of Wassily Leontief’s last students) and a BA in Economics from Monash.

For queries, please contact Ms Sudesh Bala at sbala@ncaer.org or on 91-11-2345-2722.

NCAER released its 2018 N-SIPI, the NCAER State Investment Potential Index at a launch workshop inaugurated by Shri Ramesh Abhishek, Secretary, Department of Industrial Policy and Promotion (DIPP). Covering 20 States and Delhi, this is the third edition of the annual N-SIPI that ranks India’s States’ on their competitiveness in business and their investment climate. Compared to 2017, Delhi jumps one spot to lead N-SIPI 2018, Gujarat ranks at the third position, and Maharashtra, Tamil Nadu move into the top five and Haryana retains its fourth place ranking. Since its launch, the annual N-SIPI has become a credible yardstick of how the investment climate of India’s States is changing.

NCAER launched the N-SIPI series in March 2016 and the second N-SIPI 2017 was released in July 2017. N-SIPI is a pioneering effort to provide metrics of economic governance, competitiveness and growth opportunities at the state and regional levels. The Index is designed to provide a systematic and reliable “go-to” reference for policy makers, existing businesses, and potential domestic and overseas investors.

While delivering the keynote remarks at the launch of N-SIPI 2018, Shri Ramesh Abhishek complimented NCAER for its perceptive and insightful study on the investment potential of India’s States. He said, “Studies like the NCAER State Investment Potential Index are critical to increasing competitiveness in the business climate of States. What makes NCAER’s work unique is the aspect of reaching out to stakeholders and working on the perception-related parameters.”

He explained that studies like NCAER Index immensely aid State Governments by bringing issues related to business and investment climate to the forth, forcing governments to make it a priority. The studies also support the bureaucracy in policymaking, pooling resources and re-engineering procedures. He went on to say that government is taking the effort further by working on related aspects of capacity building, sharing good practices, encouraging States to help and mentor each other and recognising good work. He remarked, “From the pioneering initial N-SIPI 2016 report, NCAER’s work has been very comprehensive, bringing out aspects that are very relevant to investors, giving them a good understanding on where to invest. N-SIPI looks at secondary data that represent state-level outcomes that investors look at, and also looks at their perceptions of the business climate along with some of the variables that the overall index looks at. This nicely complements an effective process focussed effort that DIPP has been pursuing in its Business Reforms Action Plan. We look forward to working with NCAER to make the entire exercise of assessment of States in their ease of doing business better.”

Dr Shekhar Shah, Director-General, NCAER, remarked that “India is the fastest growing economy of the world and remains a highly desirable investment destination. The 2018 A. T. Kearney Foreign Direct Investment Confidence Index ranks India 11th in the world, above Singapore, Netherlands, and Sweden: it is the only lower middle-income country in the top 25 countries ranked by the Index. With India being the world’s third largest market, the prospects for growth and investment are truly outstanding.”

He further said that “Investment opportunities are expanding in India in all sectors. The introduction of GST has bound India’s States together in ways that has not been possible before. Taking cognizance of this need, N-SIPI 2018 has expanded its survey questionnaire for its perception pillar by including GST-specific questions. N-SIPI 2018, NCAER’s third edition in the annual series of states’ rankings is an evidence-based index that will help build continuity, consistency, and rigour in ranking investment targets for investors. As importantly, it will help State policymakers measure their State’s performance against that of others. N-SIPI does not track how States have done over time, since almost all States have improved, but it measures the relative ranking of States every year.”

Dr Shah ended by noting that, “We look forward to working closely with interested individual State leaderships to probe deeper into their N-SIPI Index and to explore ways of improving their investment climate in focussed and effective ways.”

What does the 2018 N-SIPI do?

Building on the success of N-SIPI 2016 and 2017, N-SIPI 2018 ranks the competitiveness of Indian States on six pillars: land, labour, infrastructure, economic climate, political stability and governance, and business perceptions.  These six pillars are classified under four broad categories: factor driven (land and labour), efficiency driven (infrastructure), growth driven (economic climate and political stability and governance), and perceptions driven (ranking of business climate built on firm surveys).  A unique feature of the N-SIPI index is the integration of industry perceptions of the investment potential and business climate of a state along with the fundamentals likely to drive investment decisions in that state. Another unique feature of the 2018 N-SIPI is the inclusion of GST specific questions in the survey questionnaire for the perception pillar of the index.

Against the backdrop of the implementation of India’s long-awaited goods and services tax, which aims to create an integrated common market and promote competitive and cooperative federalism, the focus of many policy reforms is shifting to the States. Given the growing state-level investment opportunities, N-SIPI 2018 is hence uniquely positioned to enable decision makers to assess the business potential offered by each state and develop each state in accordance with its strengths and limitations. N-SIPI 2018 nicely complements the World Bank’s Ease of Doing Business (EOD) surveys and DIPP’s assessment of progress made by States on business reforms. It is much broader and more representative than the EOD ratings and at the same time more concise and focused than the DIPP progress assessment.

While introducing N-SIPI 2018, the project leader of the study and Senior Fellow at NCAER,
Dr Anushree Sinha, remarked, “N-SIPI 2018 is unique as it measures investment potential with five secondary data based pillars along with a survey pillar based on a panel data that includes responses on GST and e-Way bill. She further said, “DIPP’s index is based on their action plan, whereas the NCAER index is anchored on perception of the firms in the States. To some extent, the perceptions are also influenced by awareness and the onus of spreading awareness is with the Centre and State Governments, in that order. NCAER feels that perception is a forerunner of the actual intent of investment. The level of awareness of the ground level state official is also a critical driver of perception. At the same time, the State officials may lack initiative for various reasons, like work load, benefits, etc. There is a need for spreading awareness and for a stronger regulatory framework apart from better implementation of reforms across the States.”

Key 2018 N-SIPI Findings

The key findings of the 2018 N-SIPI show that Delhi, Tamil Nadu, Gujarat, Haryana, Maharashtra and Kerala are the top six States for business investment potential. At a greater level of detail, Delhi tops the rankings under the third and fourth pillars on infrastructure and economic conditions in the state. Tamil Nadu comes in second place and tops the rankings in labour and governance. Compared to the 2017 ranking, West Bengal, Tamil Nadu and Punjab have made the most rapid gains in 2018,  moving up by 11, 4 and 4 spots to the 10th, 2nd, and 12th positions, respectively. The 2018 N-SIPI ranking of States and the relative shifts compared to 2017.

Although Assam, Jharkhand and Bihar are ranked among the least favourable States for investment, they are ranked higher under individual pillars, with Bihar doing better in the labour pillar, Assam in the land pillar, and Jharkhand in the economy pillar. Chhattisgarh and Karnataka maintain their ranks from last year at the 14th and 9th positions, respectively. Assam, Kerala and Himachal Pradesh made the most rapid gains in becoming more competitive under the land pillar, while Haryana, Odisha and Delhi slid down the rankings. In the labour pillar, Uttar Pradesh and Karnataka moved closer to the top, while Odisha and Telangana moved further away. Uttarakhand and Telangana achieved the most gains in the infrastructure pillar, while Gujarat and Odisha witnessed the maximum slippage. As regards the economy and governance pillars, Rajasthan and Tamil Nadu, respectively, gained the most, while Uttarakhand and Uttar Pradesh, respectively, were the largest losers. Under the survey pillar, Uttarakhand and West Bengal saw a massive improvement in industry perceptions with regard to the investment potential, but Andhra Pradesh and Telangana suffered big losses in terms of the perceptions of industrial firms.

Corruption continues to be the number one constraint faced by businesses, as found in the N-SIPI 2017 survey. But perceptions of corruption may be changing: the 2017 N-SIPI reports a decline in the percentage of respondents citing corruption as a constraint to conducting business from 57 percent in 2017 to 46 percent in 2018.  Getting approvals for starting a business was the second most pressing constraint faced by businesses both in 2016 and 2017, though this figure has declined from 72.1 per cent to 43.6 per cent over the years.

The 2018 N-SIPI perception survey shows that the difficulty in obtaining approvals for land, the quality of skilled labour, and access to finance. These issues are also the focus areas of the present government under the National Skill Development Mission launched in July 2015, and the Jan Dhan Yojana in August 2014. The transition of the tax policy to GST has been ranked by 44.5 per cent as a major constraint and more than half of the surveyed industries reported no problem related to tax policy transition to GST. Interestingly, industry-related policies and the availability of unskilled labour are not that problematic, while the availability of power and raw material, and rail and road quality and connectivity are seen to be the least problematic for the firms in the sample.

NCAER will update this evidence-based index annually. Along with DIPP’s assessment of business reforms and the World Bank’s index on the Ease of Doing Business, N-SIPI should aid governments in policy making as well as allow both Indian and foreign investors to make informed investment decisions.

Background:

The National Council of Applied Economic Research (NCAER) is India’s oldest and largest independent, non-profit, economic research institute. It does grant-funded research, commissioned studies for governments and industry, and is one of the few think tanks globally that also collect primary data. NCAER has set up a National Data Innovation Centre (NDIC) to serve as a laboratory for experiments in data collection, interfacing with partners in think tanks, Indian and international universities, and government. NDIC forms an important core of NCAER’s long-standing data collection activities. NCAER has partnered with the Universities of Maryland and Michigan for the NDIC. Initial funding for NDIC is provided by the Bill & Melinda Gates Foundation.

Current Request for Proposals:

Historically, household surveys in low- and middle-income countries (LMICs) have been carried out by conducting face-to-face interviews. Despite the advances in computer-assisted personal interviewing (CAPI) technologies, household surveys still tend to be costly and resource-intensive because of their complexity (Dabalen et al. 2016). The process of designing and implementing a survey and producing a clean dataset that is ready for analysis often takes several months. Moreover, to accurately capture certain rapidly changing conditions (e.g., seasonal employment or the outbreak of disease) and to reduce recall biases in certain types of data (e.g., consumption expenditure or more specifically, out-patient health expenditure), it becomes imperative to conduct more frequent surveys, which in turn, limits the use of face-to-face surveys. The widespread use of mobile phones in India offers a new opportunity to remotely conduct surveys with increased efficiency and reduced cost.

Therefore, the focus of the current RFP is to seek proposals on data collection experiments involving phone surveys across the following themes: household income and expenditure, labour force participation, financial inclusion, health insurance and out-of-pocket expenditure, gender equality and empowerment, other forms of social inequality, and agriculture.

The proposals on these themes should ideally focus on generating evidence in the context of the following specific areas relevant to phone surveys:

Sampling frame for mobile phone surveys: What would be an ideal sampling frame for mobile phone surveys that is representative of the target population? Can a random digit dialing (RDD) sampling frame, commonly used in developed countries, be a viable alternative in India? Or is a two-step approach entailing a face-to-face baseline survey combined with follow-up survey rounds conducted through mobile phones a better alternative? How can we address the issue of imperfections in the sampling frame, such as under coverage and duplication, in the analysis of phone survey data (Valliant, Dever and Kreuter 2013)? How can we reduce bias and adjust for selectivity due to mobile ownership?

Non-response bias and measurement bias in telephone surveys: How to evaluate the accuracy of different modes of data collection (face-to-face versus. telephone interviewing)? How to design a study that would allow for estimation of non-response bias and measurement bias separately leading to a more effective comparison?

Comparison between face-to-face surveys and phone surveys: In the case of certain types of data collection requiring high-frequency surveys, which of the two approaches, face-to-face surveys or phone surveys, produces better data in terms of data accuracy, timeliness, cost-effectiveness, and analysis of the attrition rate? Further, how can the attrition rates in phone surveys be reduced?

Appropriate length of survey questionnaire for phone surveys: One of the constraints of a mobile phone survey is the limited number of questions that can be asked over a phone. What is the ideal length of a questionnaire for phone surveys? How can the drawback of phone surveys be overcome in the case of long questionnaires?

Comparison between different phone-based modes of data collection: Compare the data quality and data collection efficiency of phone surveys using electronic forms, SMS, interactive voice response (IVR), and live voice interface (computer-assisted telephone interviewing) on the basis of attrition, data quality, and technical and logistical considerations.

Variation in mobile phone coverage across regions: How can the heterogeneity in mobile phone ownership and network coverage across states and districts in India be incorporated while drawing inferences based on a phone survey?

Impact of respondent and interviewer characteristics: Access to telephone may be limited by age and gender. How would this constraint affect the representativeness of the sample? Do attrition rates differ by respondent characteristics? Does the gender of the interviewer affect response rates?

Survey of sensitive behaviour: Can phone surveys reduce bias and improve reporting for sensitive behaviours (e.g., contraceptive use, domestic violence, and practice of gender-, caste- and religion-based discrimination) relative to face-to-face surveys?

Mixed-mode data collection methods: How can multiple modes of data collection be combined to reduce biases in a cost-effective manner, especially for geographical regions lacking optimal mobile phone access and network coverage?

Eligibility

Applicants affiliated to any academic or research institutes, non-profit organisations, and private companies that have experience in primary data collection and have offices within India are eligible to apply. We hope that the successful applicants will be able to collaborate with NCAER researchers in the future activities, allowing NCAER and the Centre to expand its network and the skill sets of professionals associated with it.

Funding

The Centre will support a budget of up to Rs. 20 lakh (inclusive of all applicable taxes) for a period of 12 months. The budget should clearly indicate the actual needs and modes of utilisation of the funding for the proposed project. There is a provision for two such grants. Only one grant from each applicant will be considered for funding.

Application Procedure

All applications must be emailed to Ms Arpita Kayal, Program Manager, NDIC (akayal@ncaer.org) in a single PDF document (font ‘Georgia’, size 12) with the following components:

A) The proposal (no longer than 6 pages in single space) on research work falling under the focus areas outlined above. The proposal should include the following sections:

1. Project Summary

2. Specific Aim(s)

3. Research Strategy, which would further specify:

a. Significance

b. Innovation

c. Approach and Implementation Plan

4. Expected Outcomes

5. Potential Challenges and Alternative Strategies

6. Timeline

7. Budget and budget justification

8. Institutional background

(The proposal page limit is exclusive of the budget and institutional background.)

B) Curriculum Vitae of the key research staff who will undertake the proposed work.

Last Date for Submission of Proposals has lapsed

Expression of interest

Applicants interested in participating in this RFP may let Ms Arpita Kayal (akayal@ncaer.org) know of their interest. We expect to set up an information sharing phone call with potential applicants during early August.

Selection Criteria

The selection of proposals will be based on the merit of the proposal and the CVs of the research team. And, the merit of the proposal will be judged on the basis of the following criteria:

Alignment of the proposal with the RFP
Innovativeness in methods
Rigour and feasibility of approach
Clarity of thought
Clarity in writing

Expected Output

It is expected that a report on methodology and results will be submitted to the Centre to be placed on NCAER’s website. Successful applicants are encouraged to submit their results for journal publication. The study instruments and anonymised data set will be also placed in the public domain for free online download.

References

Dabalen, Andrew, Alvin Etang, Johannes Hoogeveen, Elvis Mushi, Youdi Schipper, and Johannes von Engelhardt. 2016. Mobile Phone Panel Surveys in Developing Countries: A Practical Guide for Microdata Collection. The World Bank.

Valliant, Richard, Jill A Dever, and Frauke Kreuter. 2013. Practical Tools for Designing and Weighti

A seminar on “The Impact of Groundwater Accessibility on the Performance of Firms” with Dr Sheetal Sekhri, Department of Economics, University of Virginia, USA will be held at NCAER on July 17, 2018.

This presentation is based on the joint work of Sheetal Sekhri with Jiahua Liu. In this paper, the authors evaluate the impact of groundwater accessibility on the performance of firms. The authors use a physical limitation that discontinuously raises the cost of accessing groundwater at a depth of 8 meters to examine how such a jump in the cost of groundwater access affects firm outcomes. Employing nationally representative Micro, Small, and Medium Enterprise Census data along with groundwater measures from observation wells in India in a regression discontinuity design framework, the authors find that firm outcomes worsen in areas where the cost of groundwater access is high. The authors examine mechanisms and find that evidence weighs in favour of groundwater inaccessibility changing the composition of firms for the micro, small, and medium enterprises as opposed to the dampening of demand due to a decline in the agricultural sector. The authors do not find evidence of forward linkages in the agricultural and industrial sectors.

Sheetal Sekhri is an Associate Professor and Director of Graduate Studies at the Department of Economics, University of Virginia, USA. She is also a Fellow at the International Growth Centre, London School of Economics. Her fields of interest are development economics, applied microeconomics, environmental and natural resource economics. Her research focuses on the delivery of public services and safety nets, higher education and skill development, and water-related issues in India.

She has a BS from Iowa State University, and an MA and PhD in Economics from Brown University.

For queries, please contact Ms Sudesh Bala at sbala@ncaer.org or on 91-11-2345-2722.