Against the backdrop of this to-be-released (2015) NCAER book authored by Hans P. Binswanger-Mkhize, Hari Nagarajan and S.S. Meenakshisundaram, the roundtable discussions explored the effectiveness of long-standing Panchayati Raj Institutions (PRIs) in India as part of strategy of good-governance at the grass-root level. With a strong emphasis on the linkages between local self-government and planning, politics and public policy, the discussion examined the changing role of the Centre and State governments in this system. Also, the roundtable discussions deliberated upon the issues of capacity building, institutional linkages with parallel bodies, and impact of political ideologies on PRIs. This timely discussion also reflected on the role of the three–tier governance system in the recently announced Prime Minister’s Sansad Adarsh Gram Yojana (Model Village initiative). The roundtable featured Professors Binswanger and Nagarajan and Dr Edgard Rodriguez (IDRC).
India’s oldest and largest economic think-tank, NCAER, the National Council of Applied Economic Research in New Delhi, signed a five-year Memorandum of Understanding with the University of Michigan’s Survey Research Center (SRC) to promote collaborative survey research. SRC is a global leader in survey methodology and technology, and is part of Michigan’s Institute for Social Research.
The MoU will promote cooperation in survey-based research, covering methodology, technology, and new research initiatives. Both institutions will jointly seek to develop sample survey infrastructure to support academically rigorous economic and other social science research in India. Other initiatives may include establishing a survey research laboratory at NCAER to test and advance new approaches for social science research and for training professionals in state-of-the-art, survey-based research methods. These cooperative activities are expected to benefit NCAER, University of Michigan faculty and students, and the larger empirical research community in India.
New Delhi, Saturday, 1 November 2014: At a seminar held at the India International Centre, New Delhi, the National Council of Applied Economic Research (NCAER) presented the Mid-Year Review of the Economy, 2014-15. The Review covered the performance of the economy during first half of the current year (April – September 2014-15). It also included two special papers on ‘Financial inclusion in India: why distinguishing between access and use has become even more important’ and ‘India’s Bilateral Trade in Services: Patterns, Determinants and the Role of Trade in Goods’, both issues of critical importance to the economy.
Agriculture
- Deficient monsoon is bound to affect agricultural output, especially in rain-fed areas, which account for about 55-60% of the area sown.
- NCAER’s estimates based on regression models (incorporating the impact of rainfall as well as a trend factor) anticipate a 2% to 4% deficit in overall Kharif food grain output as compared to a higher estimate of around 7% by the Agriculture ministry.
- Lower agricultural output has implications for GDP growth and inflation. In addition, it has huge welfare implications since close to 60% of the population is still dependent on agriculture.
Industry and Services
- After welcome growth of 4.2% in 2014–15:Q1, industrial growth disappointed in July and August 2014 registering a growth of just 0.4% year-on-year in each of the two months.
- Manufacturing Industry proved the biggest disappointment, with the growth rate contracting by 1% and 1.4% in July and August respectively, even though a 3.5% growth was witnessed in the first quarter.
- Gross Fixed capital formation (GFCF) brought in some consolation with a 7% YoY growth inQ1 of FY15, the highest since Q1 FY12.
- However, it is viewed that soon the improvement in the performance of core industries will get translated to better performance in the industry overall. The combined efforts of RBI and prompt actions by government and its committed agenda for industry sector may turn around the industrial sector and give an impetus to overall economic growth.
- The services’ sector grew 6.8% in Q1 FY15, however it is well below the close-to-double digit growth recorded during 2005-06 and 2007-08. Within the services sectors there is a wide variation with trade, hotel and restaurants and construction showing a slower growth compared to community and personal services.
Monetary Conditions
- Money and credit markets have been largely stable during the first half year. Stock markets, equity as well as bond remained steady while credit markets remained subdued.
- Growth in bank credit fell to a five year low at 10.9% at the end of August 2014, the asset-quality continues to decline though at a slower pace.
- Bank deposits grew 13.6% up to the third week of August 2014 compared to 12.6% during the comparable period last fiscal suggesting that financial assets might once again become attractive.
- Equity markets touched new highs, riding on a surge in overseas inflow. After touching a record high in September 2014, the slower FII inflows in response to jitters about the fed taper led to some correction in the BSE Sensex.
External sector
- After recording a strong performance of double digit growth in May and June 2014, export growth slowed down in subsequent months with a growth rate of just 2.73% in September 2014.
- The trade balance improved in the Q1 from $33bn, down from $48bn in the comparable period in FY14. However with the slowed down exports and with the imports climbing 26% in September 2014, the trade deficit rose to an 18 month high in September 2014.
- The slow appreciation of the rupee, combined with the uncertain recovery in the rest of the world, is likely to impact export performance in the coming months.
- Overall, not everything is bleak on the export front. India has diversified its export basket and markets. The new Foreign Trade Policy for 2014-19 may bring in a number of new initiatives to promote exports.
Prices
- There has been some good news on the inflation front, with the retail inflation falling to 6.46% in September 2014, down from 8.59% in April l 2014 as the CPI inflation ruled below 8% for the fourth successive month.
- The decline in food inflation from 8.6% in April 2014 to 3.52% in September 2014 has helped the softening in inflation at large.
- Inflation based on the wholesale price index (WPI) also fell to a 59-month low of 2.38% in September 2014 , down from 5.25% in April 2014
Public Finance
- The first quarter GDP numbers suggest growth might be bottoming out with some ups and downs. At 5.7%, GDP growth during April- June 2014 is one percentage higher than in the comparable period last fiscal and highest in the previous nine quarters.
- The Budget presented in June 2014 saw the fiscal deficit to GDP ratio being retained at 4.1% for FY15 while the fiscal deficit during the period April-August 2014 has touched almost 75% of the budget estimate for the entire year.
- Non-plan expenditure has grown by little over 4% in the first five months as against 9.4% growth projected in the Budget. Food subsidies are also lower at Rs 62,000 crore during the first five months of FY15.
The Mid Year review includes two special papers on ‘Financial inclusion in India: why distinguishing between access and use has become even more important’ and ‘India’s Bilateral Trade in Services: Patterns, Determinants and the Role of Trade in Goods’, both issues of critical importance to the economy. Indira Iyer’s paper traces the development of policies that promoted financial inclusion and suggests the way forward. Seema Sangita’s paper on bilateral trade analyses the patterns and determinants of bilateral trade in services in the case of India.
New Delhi, Saturday, 1 November 2014: At a seminar held at the India International Centre, New Delhi, the National Council of Applied Economic Research (NCAER) presented the Mid-Year Review of the Economy, 2014-15. The Review covered the performance of the economy during first half of the current year (April – September 2014-15). It also included two special papers on ‘Financial inclusion in India: why distinguishing between access and use has become even more important’ and ‘India’s Bilateral Trade in Services: Patterns, Determinants and the Role of Trade in Goods’, both issues of critical importance to the economy.
Agriculture
- Deficient monsoon is bound to affect agricultural output, especially in rain-fed areas, which account for about 55-60% of the area sown.
- NCAER’s estimates based on regression models (incorporating the impact of rainfall as well as a trend factor) anticipate a 2% to 4% deficit in overall Kharif food grain output as compared to a higher estimate of around 7% by the Agriculture ministry.
- Lower agricultural output has implications for GDP growth and inflation. In addition, it has huge welfare implications since close to 60% of the population is still dependent on agriculture.
Industry and Services
- After welcome growth of 4.2% in 2014–15:Q1, industrial growth disappointed in July and August 2014 registering a growth of just 0.4% year-on-year in each of the two months.
- Manufacturing Industry proved the biggest disappointment, with the growth rate contracting by 1% and 1.4% in July and August respectively, even though a 3.5% growth was witnessed in the first quarter.
- Gross Fixed capital formation (GFCF) brought in some consolation with a 7% YoY growth inQ1 of FY15, the highest since Q1 FY12.
- However, it is viewed that soon the improvement in the performance of core industries will get translated to better performance in the industry overall. The combined efforts of RBI and prompt actions by government and its committed agenda for industry sector may turn around the industrial sector and give an impetus to overall economic growth.
- The services’ sector grew 6.8% in Q1 FY15, however it is well below the close-to-double digit growth recorded during 2005-06 and 2007-08. Within the services sectors there is a wide variation with trade, hotel and restaurants and construction showing a slower growth compared to community and personal services.
Monetary Conditions
- Money and credit markets have been largely stable during the first half year. Stock markets, equity as well as bond remained steady while credit markets remained subdued.
- Growth in bank credit fell to a five year low at 10.9% at the end of August 2014, the asset-quality continues to decline though at a slower pace.
- Bank deposits grew 13.6% up to the third week of August 2014 compared to 12.6% during the comparable period last fiscal suggesting that financial assets might once again become attractive.
- Equity markets touched new highs, riding on a surge in overseas inflow. After touching a record high in September 2014, the slower FII inflows in response to jitters about the fed taper led to some correction in the BSE Sensex.
External sector
- After recording a strong performance of double digit growth in May and June 2014, export growth slowed down in subsequent months with a growth rate of just 2.73% in September 2014.
- The trade balance improved in the Q1 from $33bn, down from $48bn in the comparable period in FY14. However with the slowed down exports and with the imports climbing 26% in September 2014, the trade deficit rose to an 18 month high in September 2014.
- The slow appreciation of the rupee, combined with the uncertain recovery in the rest of the world, is likely to impact export performance in the coming months.
- Overall, not everything is bleak on the export front. India has diversified its export basket and markets. The new Foreign Trade Policy for 2014-19 may bring in a number of new initiatives to promote exports.
Prices
- There has been some good news on the inflation front, with the retail inflation falling to 6.46% in September 2014, down from 8.59% in April l 2014 as the CPI inflation ruled below 8% for the fourth successive month.
- The decline in food inflation from 8.6% in April 2014 to 3.52% in September 2014 has helped the softening in inflation at large.
- Inflation based on the wholesale price index (WPI) also fell to a 59-month low of 2.38% in September 2014 , down from 5.25% in April 2014
Public Finance
- The first quarter GDP numbers suggest growth might be bottoming out with some ups and downs. At 5.7%, GDP growth during April- June 2014 is one percentage higher than in the comparable period last fiscal and highest in the previous nine quarters.
- The Budget presented in June 2014 saw the fiscal deficit to GDP ratio being retained at 4.1% for FY15 while the fiscal deficit during the period April-August 2014 has touched almost 75% of the budget estimate for the entire year.
- Non-plan expenditure has grown by little over 4% in the first five months as against 9.4% growth projected in the Budget. Food subsidies are also lower at Rs 62,000 crore during the first five months of FY15.
The Mid Year review includes two special papers on ‘Financial inclusion in India: why distinguishing between access and use has become even more important’ and ‘India’s Bilateral Trade in Services: Patterns, Determinants and the Role of Trade in Goods’, both issues of critical importance to the economy. Indira Iyer’s paper traces the development of policies that promoted financial inclusion and suggests the way forward. Seema Sangita’s paper on bilateral trade analyses the patterns and determinants of bilateral trade in services in the case of India.
Over the last decade, the Dynamic Stochastic General Equilibrium (DSGE) framework has become a workhorse for macroeconomic analysis in both academic and policy circles. Following this emerging trend, we aim to modernise our research capacity in macroeconomics at NCAER by introducing a baseline DSGE model for the Indian economy. This new generation model can serve as an analytical toolbox for studying business cycles, examining the effects of actual and hypothetical fiscal and monetary policy shifts, and projecting the likely course of macroeconomic events under various short to medium-term scenarios. NCAER recently received a short-term grant from IDRC, Canada, to launch this work, which is being led by Dr. Shesadri Banerjee.
Under the aegis of this grant, a research workshop was organised on DSGE modelling for the Emerging and Developing economies. NCAER hosted both national and international experts in this arena. It started off with keynote speech by Professor T. N. Shrinivasan and followed by the presentation of Professor Parantap Basu, Professor at Durham University, UK giving us background and evolution of DSGE modelling the work. Dr Banerjee and Professor Basu presented the preliminary DSGE model for India. Dr Sohini Sahu of IIT Kanpur used a DSGE model to analyse the transition of India from an agricultural led to a service led economy with labour market distortions serving as severe impediment to economic growth. Professor Ashima Goyal used the DSGE framework to analyse the monetary policy in a small open economy with dual labour markets. Dr Rudrani Bhattacharya of NIPFP examined food price inflation in the DSGE framework and Ms Tara Iyer, PhD student at Oxford University analysed the impact of financial inclusion on monetary policy. Professor Chetan Ghate of ISI, Delhi examined the choice between public and private human capital expenditure and its impact on growth and inequality, depending on how public human capital expenditure is financed. Overall, the research activities in the workshop emphasised the need of modern instruments for macroeconomic modelling in India to answer various policy relevant questions.
