Indian Public Policy Review

Building on our previous analyses of off-budget borrowing and subsidy spending, this paper extends the methodologies developed in earlier papers to critically examine capital expenditure (capex) reporting practices in India. Capex plays a pivotal role in economic development and fiscal policy, involving investments in durable assets that enhance productivity, generate employment, and foster private-sector participation.  While the reported capex has risen significantly in recent years, a deeper examination reveals inconsistencies, data gaps, and misclassifications that undermine the accuracy, accountability, and effectiveness of these estimates. India’s current reporting practices often obscure the true nature and impact of these investments. Significant portions of the reported capex are allocated to loans and advances to state governments, public sector enterprises, and debt repayment rather than direct asset creation. The paper compares India’s reporting practices with international standards, emphasising the need for accrual accounting, comprehensive reporting, and eliminating misclassification of capex. It proposes adjusted capital spending estimates that align with the global standards and the reforms required to improve transparency and accountability practices in India.

This paper examines an essential yet underexplored aspect of judicial reform in India – the budgeting process and the allocation of funds to the judiciary. By analysing the budgetary allocation towards the judiciary at both the union and state government level, this paper reveals both a vertical disparity (between the union and state governments) and horizontal disparities (across the states) in budgetary allocation towards the judiciary in India. The paper utilises several metrics (pending cases per lakh population, judicial expenditure per capita, expenditure per subordinate court, case burden per subordinate court, etc.) to understand the disparity of public funding of judiciary from various dimensions. The paper also highlights archaic budgeting processes and severe underutilisation of funds, and underscores the role of the Finance Commission in addressing funding disparities and improving budgetary practices. The paper proposes reform measures to the Sixteenth Finance Commission to improve the budgeting for the judiciary, allocation of money to courts, and the utilisation of funds.

Medical devices are one of the most crucial segment of a country’s healthcare system. This paper reviews the demand and supply side factors, including socio-economic, market-enabling, technological and policy instruments, that could drive the growth of the medical device industry. It highlights some key issues and challenges the sector is grappling with. Despite there being several enabling factors for the sector’s growth, India primarily manufactures medical equipment within the low-tech segment, from consumable to implantable devices. This leaves domestic requirements unmet in other segments, pushing the country to import expensive equipment in the advanced technology segment. This drives up the cost of medical equipment, leading to higher diagnostic test fees for end-users, which in turn places a significant out-of-pocket financial payment burden on households for diagnostic services. 

This article explores the ramifications and possible opportunities arising from the tariff war initiated by President Donald J. Trump during his second term in office. Trump’s aggressive trade restrictions target several of the United States' trading partners, including China, Mexico, and Canada, invoking legislative provisions such as the International Emergency Economic Powers Act of 1977. The article provides an analysis of the historical context of US tariff policies, the timeline of recent tariff actions, and the rationale behind these measures, including national security and reducing trade deficits. The implications of these tariffs on global economic stability, investor confidence, and commodity prices are examined, along with strategic retaliation by affected countries. The paper also highlights India's position in this evolving trade landscape, identifying sectors with high potential to boost exports to the US market. This paper suggests that India could benefit from redirecting trade flows and enhancing its role in global value chains through appropriate policies.

This review examines Panagariya's comprehensive analysis of Nehru's economic philosophy and policies, praising the book's extensive use of archival sources to trace India's journey from liberal trade policies to state-controlled industrialization. The book's significant contribution to Indian economic history notwithstanding, Panagariya's tendency to place excessive blame on Nehru alone can be questioned, on account of India's persistent statist tendencies that reflect broader historical forces and the failure of successive leaders to chart a different course.