19 results
Effect of relational capability on dynamic capability: exploring the role of competitive intensity and environmental uncertainty
- Ritu Singh, Parikshit Charan, Manojit Chattopadhyay
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- Journal of Management & Organization / Volume 28 / Issue 3 / May 2022
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- 16 May 2022, pp. 659-680
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This study empirically examines the role of market dynamism and a firm's relational capability in the development of dynamic capability. A moderated hierarchical regression method has been used on the survey data of 218 Indian firms to test the objectives of the study. The findings suggest that relational capability (namely, customer linking capability and strategic partnering capability) is an important driver of dynamic capability. However, the effectiveness of relational capability is dependent on the market dynamism; particularly, when competition intensifies, the impact of customer linking capability declines, whereas the impact of strategic partnering capability on dynamic capability becomes stronger. Furthermore, the finding suggests that even though environmental uncertainty represents an important element of market dynamism, it is a driver, rather than a moderator, of dynamic capability. The study contributes to the extant literature by explicitly specifying the relational capability as a specific competence to develop dynamic capability under different market conditions.
Infection, cases due to SARS-CoV-2 in rural areas during early COVID-19 vaccination: findings from serosurvey study in a rural cohort of eastern India
- Pujarini Dash, Asit Mansingh, Soumya Ranjan Nayak, Debadutta Sahoo, Debdutta Bhattacharya, Srikanta Kanungo, Jaya Singh Kshatri, Bijaya Kumar Mishra, Matrujyoti Pattnaik, Debaprasad Parai, Hari Ram Choudhary, Swetalina Nayak, Khokan Rana, Alice Alice, Ajay Kumar Sahoo, Kanhu Charan Mohanty, Prasantajyoti Mohanty, Chinki Doley, Hitesh Jain, Dasharatha Majhi, Pooja Pattanayak, Santosh Behuria, Soumya Panda, Somnath Bhoi, Sanghamitra Pati, Subrata Kumar Palo
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- Epidemiology & Infection / Volume 150 / 2022
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- 03 March 2022, e58
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COVID-19 serosurvey provides a better estimation of people who have developed antibody against the infection. But limited information on such serosurveys in rural areas poses many hurdles to understand the epidemiology of the virus and to implement proper control strategies. This study was carried out in the rural catchment area of Model Rural Health Research Unit in Odisha, India during March–April 2021, the initial phase of COVID vaccination. A total of 60 village clusters from four study blocks were identified using probability proportionate to size sampling. From each cluster, 60 households and one eligible participant from each household (60 per cluster) were selected for the collection of blood sample and socio-demographic data. The presence of SARS-CoV-2 antibody was tested using the Elecsys Anti-SARS-CoV-2 immunoassay. The overall seroprevalence after adjusting for test performance was 54.21% with an infection to case ratio of 96.89 along with 4.25% partial and 6.79% full immunisation coverage. Highest seroprevalence was observed in the age group of 19–44 years and females had both higher seroprevalence as well as vaccine coverage. People of other backward caste also had higher seropositivity than other caste categories. The study emphasises on continuing surveillance for COVID-19 cases and prioritizing COVID-19 vaccination for susceptible groups for better disease management.
Contents
- Charan Singh, Indian Institute of Management, Bangalore
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- Debt Management in India
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- 23 November 2018
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- 22 February 2018, pp v-vi
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5 - Ricardian Equivalence and Consumption in India
- Charan Singh, Indian Institute of Management, Bangalore
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- Debt Management in India
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- 23 November 2018
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- 22 February 2018, pp 130-144
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Summary
In this chapter, the empirical results of the model that has been developed in the previous chapter, incorporating the Ricardian Equivalence Hypothesis in the permanent income specification under rational expectations is presented. The model is empirically estimated and its robustness is examined in the context of India.
This chapter consists of five sections. The few empirical studies on domestic debt and consumption in India are briefly discussed in Section 5.1. In Section 5.2, the model to be estimated is briefly discussed in the context of India. This is followed by a section on data specifications and definitions used in the estimation. The empirical results are presented in Section 5.4. Finally, the conclusions follow in Section 5.5.
Review of literature of empirical studies on Ricardian equivalence and consumption in India
In India, five studies on domestic debt and consumption have been conducted. Two studies reject Ricardian equivalence, while two other yield mixed results. Ricardian equivalence is supported by only one study (Table 5.1). Amongst these, three studies (Study No. 3, 4 and 5 in the Statement) follow the models which have been developed earlier and empirically estimated for the United States. The limitations of these basic models have been critically discussed in detail in the previous chapter (Section 4.4.1). In the other two studies (Study No. 1 and 2), the equation specified and estimated appears to be ad hoc.
In all the five studies, problems of data availability, specification and estimation emerge. The most important of these is the use of the data in levels, and the definition of the income and the consumption variables. The data series on macro aggregates are generally non-stationary at levels. Hence, the use of data in levels could yield spurious results. In the case of the income variable, as discussed by Kormendi (1983), the appropriate definition would be the national income, and not private income (Study No. 1) or disposable income (Study No. 5). In the case of the consumption variable, the appropriate definition should include some component of the final consumption expenditure on durable goods. In none of these studies such a computation is attempted and either total consumption expenditure (Study No. 1 to 5) or only non-durable consumption expenditure (Study No. 5) is used in the regressions.
8 - Separation of Debt from Monetary Management
- Charan Singh, Indian Institute of Management, Bangalore
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- Debt Management in India
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- 22 February 2018, pp 211-258
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Summary
In India, traditionally, a large component of domestic government debt was incurred at low rates of interest, which was statutorily prescribed for subscription by the institutional investors. A substantial amount of domestic debt was also monetised. The fiscal domination of monetary policy left very little manoeuvrability for RBI to pursue a monetary policy conducive to the overall objective of development of financial markets, price stability and economic growth.
In most of the developed economies, borrowing by the government from the central bank is prohibited. Also, to help the central bank to focus on the objective of stabilising the price level, debt management function has been separated from monetary authority. In India too, the issue was debated in late 1990's and it was concluded that such separation would require well-developed financial markets to finance government fiscal deficit. Then, India still had an administered interest rate regime. In the last decade, due to financial sector reforms undertaken since 1991, markets have developed rapidly and last remnants of administered interest rates on small savings are now being dismantled. Also, the Fiscal Responsibility and Budget Management Act of 2003 included a clause restricting the Government from directly borrowing from the RBI from 1 April 2006 except through Ways and Means Advances (WMAs) to meet temporary mismatches in receipts and payments or under exceptional circumstances. Therefore, it is considered that the separation of debt from monetary management can be undertaken now in India.
The separation has many advantages. First, separation would help the financial markets to integrate further. It is essential that the government mobilise its financial resources entirely from the market to help evolve a market yield curve. The interest rate structure that would consequently emerge would reflect market expectations and would be conducive to financial market integration. The development of a focused and transparent debt management strategy could also ensure that funds are available to the government at competitive rates of interest that will lead to expenditure prioritisation and to fiscal discipline in budget making. Prudence in fiscal and debt management that prevents any dominance on the monetary policy will encourage higher investment and economic growth.
Historically, the debt crises of 1982 and the Asian Crisis of 1997 had led many countries to assign priority to public debt management and then, a number of countries chose to separate debt from monetary management.
Index
- Charan Singh, Indian Institute of Management, Bangalore
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- Debt Management in India
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- 22 February 2018, pp 289-296
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4 - Ricardian Equivalence: Empirical Studies Utilising Consumption Function
- Charan Singh, Indian Institute of Management, Bangalore
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- Debt Management in India
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- 23 November 2018
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- 22 February 2018, pp 76-129
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Summary
The Ricardian Equivalence Hypothesis asserts that consumers respond in exactly the same way to a change in taxes as to a change in the government deficit. Therefore, a tax cut that leads to an equivalent increase in the government debt, would finally have no effect on the consumption pattern.
In this chapter, the implications of the Ricardian Equivalence Hypothesis on consumption behaviour is examined. In Section 4.1, the need for an appropriate consumption function to test for Ricardian Equivalence Hypothesis is emphasised. In Section 4.2, a brief discussion on consumption functions and the related empirical work is presented. The extension of the permanent income hypothesis to incorporate the rational expectations model is discussed in Section 4.3. In this section, the relationship between the Ricardian Equivalence Hypothesis and the Permanent Income Hypothesis under rational expectations emerges. Once this relationship is established, a consumption equation is then derived incorporating the fiscal variables to empirically test for the Ricardian Equivalence Hypothesis. In Section 4.4, a critical review of the existing literature on Ricardian Equivalence is presented. In Section 4.5, six major studies have been replicated to test for the robustness of the specification of the respective models given a common data set. A major issue in empirical work pertains to the market and par value of government debt. This is also empirically examined in this section. The model that has been developed in Section 4.3 of this chapter is empirically estimated in Section 4.6. Finally, conclusions from the chapter are presented in Section 4.7.
Ricardian Equivalence Hypothesis and consumption
In this section, the importance of an appropriate underlying consumption function which can be used for testing the Ricardian Equivalence Hypothesis is briefly discussed.
The major empirical work on Ricardian equivalence has generally been based on an ad hoc specification of the consumption function. It is not usually established whether the underlying consumption function itself is supported by the data. It is crucial for tests of Ricardian equivalence to assure that the consumption function in itself is robust and has an appropriate theoretical basis. Otherwise, the result with respect to Ricardian equivalence may be caused by misspecification of the consumption function itself. One of the important assumptions about Ricardian equivalence is that people can rationally forecast the future implications of decisions taken today and accordingly adjust their consumption.
Frontmatter
- Charan Singh, Indian Institute of Management, Bangalore
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- Debt Management in India
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- 22 February 2018, pp i-iv
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7 - Domestic Debt and Economic Growth in India
- Charan Singh, Indian Institute of Management, Bangalore
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- Debt Management in India
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- 23 November 2018
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- 22 February 2018, pp 184-210
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Summary
In India, domestic debt has been incurred with the main objective of enhancing planned investment for economic development. The rising trend in securing financial resources through public borrowing has specially been steep since the early-80s. In this chapter, the relationship between domestic debt and economic growth in India is explored.
In the literature, there are two views on the relationship between domestic debt and growth which are discussed in Section 7.1. On the basis of the theoretical discussion, a testable hypothesis is also formulated in this section to test the relationship between domestic debt and economic growth. This is followed by a brief review of the empirical literature. In section 7.3, trends in domestic debt and growth, and related issues of tax revenue and government expenditure are discussed. The econometric tests to investigate the relationship between two macro series are briefly mentioned in Section 7.4. The discussion on the data base and the methodological issues pertaining to empirical estimation is presented in Section 7.5. The empirical results are discussed in Sections 7.6 and 7.7. Finally, conclusions are presented.
Theoretical issues on domestic debt and economic growth
In this section, a discussion on the theoretical issues on domestic debt and its relation with economic growth is presented. The two views of domestic debt and growth, prevalent in literature, are discussed followed by a brief discussion on domestic debt and developing economies, with special reference to India. Finally, on the basis of the theoretical discussion, a hypothesis is formulated which is then empirically estimated later in the chapter.
The two views on government debt and economic growth
The impact of domestic debt on economic growth can be analysed in the context of two opposite views – traditional and the Ricardian.
The traditional view
In the traditional view, an increase in government debt, is a burden on the economy. In the short run, in view of the increase in government debt, the consumer would consider himself to be wealthier and therefore would resort to higher spending. The increased demand of goods and services, in view of sticky prices in the short run, will raise output and employment. As the marginal propensity to consume is higher than the marginal propensity to save, the increase in private savings, falls short of the government dis-saving. The real interest rate would rise in the economy encouraging capital inflow from abroad.
9 - Conclusions and Policy Implications
- Charan Singh, Indian Institute of Management, Bangalore
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- Debt Management in India
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- 22 February 2018, pp 259-264
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The process of planned development, in terms of the Five Year Plans, started in India in 1951. The main objective of the Five Year Plans was to attain a high growth with equitable income distribution. The emphasis in the plans was laid on high government investment for development purposes. In the drive for higher investment, in view of the unavailability of financial resources from tax revenues due to the low economic base, and inadequate surpluses from public sector enterprises, the government resorted to borrowed funds – domestic as well as external. The increasing reliance on external borrowing had important economic and political implications. Therefore, since the early 70s, after the war between India and Pakistan in 1971 and the oil shock in 1973, the dependence on external borrowing declined and the government increasingly resorted to domestic borrowing. In periods of financial strain, increasing reliance was placed on borrowing from RBI, resulting in monetisation of debt. The domestic debt situation became critical by the mid 80s, mainly because government was able to garner resources, at low rates of interest, from RBI and markets, and fiscal profligacy was rampant.
The objective of this study was to look at the trends and investigate the implications of domestic debt on Indian economy. The period of the empirical work has been restricted to the earlier exhaustive work done in 1997. The descriptive analysis broadly pertains to the period 1951–2017 where data was available while the empirical analysis varies from 1951–95 to 1971–95, depending on the availability of consistent time series data.
In India, the central and the state governments incur domestic debt. Therefore, the appropriate measure is the consolidated debt position of the central and the state governments to analyse the implications of domestic debt on the macro-economic aggregates in the economy. Domestic debt of the government, in addition to market loans and bonds, also includes Treasury bills, small saving schemes, provident funds, and reserve funds and deposits. The component, reserve funds and deposits, refer to domestic debt which includes depreciation, developmental, contingency or similar funds, which are not strictly liabilities but more of financial obligations in the regular course of the conduct of government business. Therefore, this component has been excluded while empirically analysing the impact of domestic debt on the macro aggregates.
6 - Monetisation of Debt in India
- Charan Singh, Indian Institute of Management, Bangalore
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- Debt Management in India
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- 22 February 2018, pp 145-183
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Summary
In India, the rising public debt has been supported by the central bank, the RBI. This trend has specially been followed since 1971. The rise in the support of the government debt by RBI has implications for the rising net-RBI credit to the government and consequently reserve money, money supply and the price level. This aspect of the rising monetised debt and its relationship with the price level has not been investigated earlier in the empirical work. The relationship between the monetised debt and the price level, and the monetary aggregates is investigated in this chapter.
In Section 6.1, an analytical model is discussed wherein the rising importance of monetised debt in the context of a small open economy is analysed. The implications derived from the Mundell-Fleming model suggest a close relationship between monetary aggregates and the price level in India. The rising trend in monetised debt and its relationship with other monetary aggregates is discussed in Section 6.2. The concept of Granger causality is briefly discussed in the next section. A brief critical review of the empirical literature on causality between the monetary aggregates and prices in India is presented in Section 6.4. The data base and the methodological issues for the causality test are discussed in Section 6.5 followed by a section on empirical results. Finally, the conclusions are presented in Section 6.7.
The analytical framework
In this section, an analytical framework on the implications of the rising monetised debt is developed. A brief review of the economic conditions prevailing in India during the period of the study is presented. This is followed by a discussion on the open economy model and the implications emerging therefrom.
The prevalent economic situation in India
The Indian economy has passed through a period of transition in the last five decades. The economic condition has changed especially since July 1991 when the current liberalisation measures were initiated. Therefore, a brief overview of the prevalent economic situation during the period, 1951 to 1995, relevant to the analysis of the open economy model, is presented in this subsection. The major relevant areas focussed in discussion are the exchange rate, capital mobility and trade restrictions, and interest rate and demand for money.
Preface
- Charan Singh, Indian Institute of Management, Bangalore
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- Debt Management in India
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- 23 November 2018
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- 22 February 2018, pp xi-xii
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In India, fiscal policy has undergone significant changes since start of the planning era in 1951. Initially, external debt played an important role but by 1970s, India became aware of the risks associated with borrowings from external sector. The development process, requiring significant amount of financial resources was financed by domestic sources. The rising domestic debt led to high interest payments pre-empting resources for investment purposes, given the constraint of limited taxable capacity of the economy. Soon, the discussion on having a fiscal rule resulted in legislations at the centre and states.
The debt management is done by the Reserve Bank of India (RBI), the monetary authority of India. To ensure independence of monetary policy and transparency in debt management, the key issue of separating debt from monetary management was extensively discussed. The initial steps of separating the two functions were taken hesitantly and even those were stalled when the great recession of 2008 occurred. RBI argued against the separation, given the fragile economic situation, domestically and globally.
I have been part of the fascinating story of debt management in India from 1987 onwards when I was introduced to the subject by Professor I. S. Gulati. This book is a result of my academic research for about a decade, and then working in the Debt Management Department of RBI for more than five years, first in the initial stages and then as Director of Research. The experience and interaction with the best minds in the country, nay the world, is unparalleled. Hence, I owe my sincerest gratitude to my professors and colleagues.
I also would like to thank Cambridge University Press for persistently pursuing me and ensuring that I publish this work on Debt Management in India.
Debt Management in India
- Charan Singh
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- 23 November 2018
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- 22 February 2018
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This book is a comprehensive analysis of the implications of rising public debt in India. It specifically investigates the implications of domestic debt on consumption, the effect of monetised debt on prices, the long-term relationship between domestic debt and growth, and the separation of debt and monetary management. It studies data on debt in India from 1951 to 2017, and covers a wide canvas of issues related to debt management and important developments in the government securities market. It discusses trends in domestic debt, and provides a descriptive review of the major components of public debt. The book presents a close theoretical discussion on the Ricardian equivalence hypothesis, an important concept both historically and in contemporary literature on public debt. The implications of domestic debt delineated in the objectives are empirically analysed.
3 - Ricardian Equivalence: Introduction
- Charan Singh, Indian Institute of Management, Bangalore
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- Debt Management in India
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Summary
In this chapter, the concept of Ricardian equivalence is introduced and discussed in a theoretical framework. In Section 3.1, the concept of Ricardian equivalence is introduced followed by a brief discussion in Section 3.2. The Ricardian equivalence holds under special assumptions which are delineated in Section 3.3. In Section 3.4, the assumption of finite lives and intergenerational transfer is discussed in detail. This is followed by a discussion on imperfect capital markets in Section 3.5 and on uncertainty and taxes in Section 3.6. In Section 3.7, other assumptions for Ricardian equivalence are discussed.
The concept of Ricardian equivalence
The Ricardian Equivalence Theorem is the proposition that a public loan and a lump-sum tax exert equivalent effects upon the economy. More precisely, the choice between levying lump-sum taxes and issuing government bonds to finance government spending does not affect the consumption pattern of any household nor does it affect capital formation. The fundamental logic underlying this argument was presented by Ricardo (1951, 244–45) as follows:
“When, for the expenses of a year's war, twenty millions are raised by means of a loan, it is the twenty millions which are withdrawn from the productive capital of the nation. … Government might at once have required the twenty millions in the shape of taxes; in which case it would not have been necessary to raise annual taxes to the amount of a million. This, however, would not have changed the nature of the transaction. An individual instead of being called upon to pay 100 per annum, might have been obliged to pay 2000 once and for all.”
Ricardo assumes that the creation of public debt implies a stream of future interest payments and possible repayments of principal. These future payments have to be financed by future taxes. It is argued, that a rational individual living during the time when the expenditure decision is made will fully capitalise all future tax payments arising due to debt and will consequently write down the value of the income-earning assets which he owns by the amount of the present value of these future payments. The present values of assets will be reduced by the present value of the tax obligations created by the future service charges. Present values will be identical in the two cases.
1 - Introduction
- Charan Singh, Indian Institute of Management, Bangalore
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Summary
Public debt as an important instrument of public finance policy is of a relatively recent origin, but has already assumed great significance. Though its origin can be traced back to war finance, it has only recently become an integral part of the fiscal and monetary policies of the developed as well as the developing countries. In the case of the developed economies, the implications of rising public debt have been analysed and critically evaluated. However, the economic literature on developing countries is lacking on this critical issue. The need for financial resources has led many developing countries to increasingly resort to public debt, in the context of public investment.
This study examines the economic impact of public debt in India. Public borrowing in India is a recognised source of public finance. The central and state governments derive the power to borrow from Articles 292 and 293 of the Indian Constitution, respectively. Article 292 of the Constitution empowers the union (federal) government to borrow on the security of the Consolidated Fund of India within such limits, if any, as may be fixed by the Parliament. Article 293 confers similar powers on the state governments within the limits fixed by the State Legislative Assemblies. States can only borrow domestically, whether from the centre or from other sources. However, if a state has any loans outstanding from the centre, or for which the centre is a guarantor, it must obtain the centre's consent before borrowing from any other source. As a consequence, in effect, almost all states today need union governments consent before they can borrow funds.
Under the Constitution of India, union government's debt is a ‘union subject’, while state government’ debt is a ‘state subject’, i.e., the centre cannot legislate how state governments should manage state borrowings. Article 246(1) of the Constitution read that Entries 35 and 37 of List I provides that Parliament has exclusive power to make laws regarding public debt of India and foreign loans. Article 246(3) of the Constitution read that Entry 43 of List II provides that state legislatures have exclusive power to make laws regarding the public debt of states. However, the Constitution limits sources from which state governments can borrow, and gives the centre power under certain circumstances to influence whether a state can borrow from sources other than the centre.
2 - Public Debt in India
- Charan Singh, Indian Institute of Management, Bangalore
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Summary
In India, domestic debt has been rising at a higher rate than the national income since 1952. The rise in domestic debt has been a result of large domestic borrowings resorted to by the government to achieve a higher rate of economic development. Therefore, the pattern, trend and the components of domestic debt need to be analysed. In this chapter, a discussion on the domestic debt of the government in India is presented.
In India, domestic debt of the central and the state governments are separately published and analysed. But in order to analyse the impact of domestic debt on macro aggregates in the economy, it is important to have a consolidated debt position of the government. Therefore, in this chapter, a consolidated position of the debt situation of the government, both the central and the states, is computed and presented.
Trends in the domestic debt of India
India's public debt, as a percentage of GDP, steadily increased between 1952 and 1990 and then after some respite started rising again from 1999–2000 to reach a peak by 2003–04 (Table 2.1).
The pattern in the rise of public debt reveals that external debt rose rapidly until 1971, with a quantum increase in 1966–67 and since then has been taken over by domestic debt. The trend in annual growth rates of domestic and external debt, and GDP are presented in Figure 2.1. External debt increased by an annual average rate of 23.7 per cent from 1952 to 1980 while domestic debt increased by 10.1 per cent. In the period 1980–81 to 1990–91, both external and internal increased by nearly 19.2 per cent. Since 1991–92, the rate of annual increase of domestic debt is higher than external debt.
The rise in public debt is mainly due to the domestic debt. India's domestic debt has been steadily increasing since 1952.2 The domestic debt rose from 31.0 billion in 1952 to 89.1 trillion by end March 2016, an annual average growth of 13.27 per cent during the period. The domestic debt as a per cent of GDP rose from 32.7 per cent in 1952 to 76.8 per cent in 31 March2004 and since then has declined to reach 65.6 per cent in March 2016 (Table 2.1).
List of Tables and Figures
- Charan Singh, Indian Institute of Management, Bangalore
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Bibliography
- Charan Singh, Indian Institute of Management, Bangalore
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6 - A Separate Debt Management Office in India
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- By Charan Singh, Director of Research at the Reserve Bank of India
- Edited by Supriyo De
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- India's Fiscal Policy
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- 23 July 2017
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- 21 November 2016, pp 155-181
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Summary
Introduction
In recent years, after the global crisis, the issue of separation of monetary policy, fiscal policy and debt management has re-emerged. In many countries, during the period of crisis, scope of fiscal policy was expanded and debt to gross domestic product (GDP) ratios increased significantly. Consequently, debt management, in general, became difficult and coordination between monetary and debt management assumed significance.
Historically, the debt crises of 1982 and the Asian Crisis of 1997 had led many countries to assign priority to public debt management and then, a number of countries chose to separate debt from monetary management. As developments in the government securities market became more sophisticated, a different institutional structure was considered to be better suited to achieve different monetary policy and debt management objectives. In normal economic circumstances, the central bank operates at the short end of the market, and debt management on the long end to minimize cost of raising resources, but in times of crisis, the operations can become blurred. A separation in responsibilities was considered a better solution that reduces the risk of policy conflicts in the central bank actions. Once the financial markets had developed, the role of the central bank in sustaining the markets was considered minimal. Therefore, in many of the Organization for Economic Cooperation and Development (OECD) countries, separation of debt and monetary management had been undertaken in the 1990s.
This chapter discusses the basics of debt management and its separation insection ‘Some basics of debt management’. Traditional viewpoints about separation of debt management, central banks’ independence, and coordination between debt management, monetary and fiscal policy, are presented in section ‘Separate debt management office: A traditional view’. After 2008, the traditional view on separation of debt and monetary management has been challenged by a few central bankers. This debate is presented in section ‘Separate DMO: Post-crisis debate’. Indian debt management practices, role of Reserve Bank of India (RBI) and the debate about separation of debt management in India are discussed in section ‘Debt management in India’. Finally, conclusions are presented in last section.