Neemrana is the most prestigious forum in India for some of the best US scholars associated with NBER to come together with Indian policymakers and policy analysts from the public and private sectors. For 2014 conference, NCAER brought together a varied and exciting set of Indian participants to engage with our visiting NBER researchers on issues of common policy interest dealing with Indian, US, and global economic developments. A stimulating programme rich both in its depth and breadth was put together for the conference. This included a keynote address by one of India’s most prominent contemporary policymakers.
For now 16 years (1999-2014), the Neemrana Conference remains an enduring partnership that NCAER and NBER started in 1999. NCAER and NBER invited ICRIER to join this partnership in 2008. The impressive list of Indian and overseas participants over the past 15 years at Neemrana suggests the diversity and depth of people who have come—policymakers, politicians, regulators, scholars, corporate leaders, and journalists—and contributed to its success. The important conversations at Neemrana, both in the conference and over dinner and breakfasts have led to an impressive sharing of experience, evidence, and knowledge over the years as conference participants have grappled with policy challenges in India and in the US against the backdrop of a rapidly changing global economy and the shifting global economic order.
Neemrana has covered topics that have inevitably reflected the major economic policy concerns of the day for India, from growth and equity to inflation to infrastructure to the environment to education to social programs to labour markets and India’s demographics. Neemrana has also allowed NBER fellows to both engage with these problems but also bring to bear their policy experience and current research on these topics. And now and then it has anticipated problems that India may face based on the US experience. The informal, off-the-record conversations around these topics remain the hallmark of Neemrana.
This roundtable organised by NCAER presented some of the results from India Human Development Survey (IHDS), a unique panel survey carried out by NCAER in collaboration with University of Maryland. First round of this survey of over 41,000 households was conducted in 2004-5, just before NREGA was implemented. The second round conducted in 2011-12 resurveyed the same households, allowing us to explore household participation in MGNREGA as well as changes in household conditions following implementation of the act. Some of early results were discussed at this roundtable along with the strategies for future research to ensure that the research is responsive to current policy needs.
Dr Sonal Desai, Senior Fellow at NCAER and Professor of Sociology at the University of Maryland while presenting some of their initial findings from the research explained that the results from the India Human Development Surveys suggest that restricting MGNREGA to only the 200 poorest districts is likely to be ineffective—and that it may be better to target households, the reasons being :
A greater proportion 69% of India’s poor live outside the 200 poorest districts.
While 28.4% of households in the poorest districts participate in MGNREGA, 22.8% of households in other districts also benefit from MGNREGA.
The 22.8% of households from other districts are actually more reliant on MGNREGA income than households in the 200 poorest districts.
The presentation of some of the early results on MGNREGA participation was chaired by Dr Pronab Sen, Chairman, National Statistical Commission while the Panel Discussion on Research Needs for Effective Policy Design was chaired by Dr Satish Agnihotri , Secretary, Cabinet Secretariat.
It was further discussed hat reducing the number of districts covered under MGNREGA would “run against a fundamental premise of the Act” – to ensure that gainful employment providing basic economic security is a human right. Reducing the scheme to just 200 of India’s 676 districts would take away economic security for many. It would be better to focus on the poorest households, rather than the poorest districts, to ensure that MGNREGA benefits those who need its income security the most. The roundtable discussion was attended by over 30 people including politicians, academics and policy makers.
Information also available at http://www.pacsindia.org/news-articles/MGNREGA-roundtable-discussion-081214
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.
