Vol. 3 No. 1 (Jan-Feb) (2022): Indian Public Policy Review

On November 3, 2021, the Federal Open Market Committee announced that it would reduce the scale of its asset purchases by $15 billion a month starting immediately. Do emerging markets, such as India, need to prepare for a replay of the taper tantrum of 2013? We show that emerging markets, including India, have strengthened their external economic and financial positions since 2013. At the same time, fiscal deficits are much wider, and public debts are much heavier. As U.S. interest rates now begin moving up, servicing existing debts and preventing the debt-to-GDP ratio from rising still further will become more challenging. Either taxes have to be raised or public spending must be cut to generate additional revenues for debt servicing.

This paper examines India's demonetization from the standpoint of policy credibility, employing the standard norms for assessing macroeconomic policies. The credibility appraisal constructs a narrative from contemporaneous economic records, computes the f iscal and quasi-f iscal bailout costs for mitigation, monetary costs of implementation, as well as effects upon the financial sector using public data and other empirical evidence. It considers counterfactual policy tools to examine if demonetization objectives could have been more effectively achieved at lesser costs. Based upon these comprehensive measures, the paper concludes that demonetization does not meet the established principles of credibility in the macroeconomic literature.

The purpose of this paper is to examine the incidence of corporate tax on capital and labour in Indian manufacturing sector. The paper employs ‘Seemingly Unrelated Regression Method’ with add-up restriction based on the work of Desai, Foley and Hines (2007). The study shows that, for the manufacturing sector in India for the period 2005-19, the corporate tax has a significant adverse impact on both wages paid to employees and profit after tax. Capital owners bear 96.3% of the tax burden and labours bear only 3.7%. The adverse effect on wages is slightly higher in public firms than in private firms. The relative tax burdens of labour and capital remained the same in the pre-2008 global economic crisis and post-crisis periods. The impact on both wages and profits increase with age and size of firms but decrease with leverage. These results will be useful to policymakers and other stakeholders to take appropriate strategies to design the corporate tax policy such that it is more redistributive, and not a burden for labour in manufacturing firms in India. The paper contributes to the scant empirical literature on corporate tax incidence.

There is no evidence to suggest that SARS-CoV-2 was a biological agent. However, the ensuing pandemic has driven home the potential dangers of weaponised biological material, especially pathogens. Heightening the concerns about bioweapons is the growing ubiquity of gene editing tools like the CRISPR-Cas-9 system that enable both state and non-state actors to produce biological agents for various purposes. While these dangers are being recognised, this paper goes beyond highlighting the peril, to examining the drivers and constraints on bioweapons use, the ways in which bioweapons may be employed, and the trade-offs involved in mounting such attacks. Furthermore, the paper proposes concrete steps that can be taken in a renewed Biological Weapons Convention (BWC) to reduce the risk of bioweapons attacks. Earlier attempts at strengthening the treaty have focused on increasing verification. However, this has failed because states seek to protect their biotech industries from espionage and harassment. Instead of focusing on traditional verification, this paper proposes the creation of a scientific board under the BWC, that will monitor sensitive emerging technologies in the field, set standards for safety and reporting, and create an epidemiological database. To help deter attacks, it recommends ways to improve the response to disease outbreaks and impose penalties on perpetrators.

A review article on “Justice for the Judge: An Autobiography”, Rupa, New Delhi, 2021 (pp. 249+xiii) by Ranjan Gogoi

Casual Analysis of Unreliable Data for Strategising Child Development - A comment by D Narayana and response by Arnab Mukherji