Vol. 2 No. 1(Jan-Feb) (2021): Indian Public Policy Review

Issue: Jan-Feb 2021

India currently faces the twin problems of slow job creation and slow economic growth. Even when economic growth has been rapid, India has made slow progress in the creation of quality jobs. To address these issues, I first draw inferences from India’s post-independence economic history. The main lesson is that trade reforms have been followed by high rates of growth, while restrictive trade policies have led to slow growth. For the creation of quality jobs, I emphasize the importance of the exports of labour-intensive manufactures.  To dig deeper, the evidence on structural change and its determinants is presented, followed by some relevant theory.  Policy recommendations presented include tariff reductions, labour law reforms, setting up Autonomous Economic Zones (AEZs) and signing preferential trade agreements.

Issue: Jan-Feb 2021

This paper explores the recent farm laws passed by parliament and their impact on farmers’ income.  The laws collectively offer greater freedom to cultivators to sell their produce at better prices and allow farmers to enter into contracts with processors, aggregators, wholesalers, large retailers and exporters at mutually agreed crop prices. The laws also encourage private investment into storage and warehousing by removing stockholding limits. To make these reforms work, some conditions may have to be fulfilled and imperfections and concerns have to be addressed, which are elaborated in the paper. Finally, the paper focuses on other agricultural reforms to improve the supply-side factors, such as rationalization of subsidies, land reforms, use of technology, strengthening institutions and governance, and improving rural infrastructure.

Issue: Jan-Feb 2021

Financial inclusion may be thought of at two levels: having a bank account, reflecting access to banks and financial literacy; and financial deepening, as reflected in operating interest-bearing deposit or loan accounts. As a sizable proportion of the Muslims in the country subscribes to the belief that ‘Riba is Haram’, such religious prohibition to subscribe to interest-bearing banking products may lead to exclusion from financial deepening. While many countries have overcome this deficiency by hosting Islamic banking in their conventional banking systems, India is an exception. The objective of this paper is to examine the prevalence of financial exclusion owing to religious faith in India. A careful analysis of district-level data on deposit accounts, and population census data on urbanization and religious composition, suggests exclusion of Muslims from financial deepening. Regression analysis confirms that faith-based financial exclusion is significant in many states of India. A few private initiatives of recent years to offer interest-free banking services have attracted a large clientele, indicating unmet demand. The lack of a policy response means denying financial inclusion for large segments of population.

Issue: Jan-Feb 2021

In this paper, we aim to establish the issues with fiscal marksmanship of states’ revenue budgets. We particularly focus on the grants received from the Union government. Within grants, we find state plan schemes and centrally sponsored schemes to be the most volatile. Our analysis looks at three key stakeholders in the budget-making process and their role in poor fiscal marksmanship. These are the Centre, the states and the Finance Commission. The actuals could miss budget estimates due to the Centre misprojecting its revenues or expenditures, the states misprojecting their revenues, or the Finance Commission making errors while recommending grants. Poor estimation methods, weak capacity in drawing up budgets and implementing projects, specific conditionalities imposed either by the Centre or the Finance Commission and exogenous and random shocks that cannot be controlled for — all affect marksmanship of the states’ revenue budgets.

Issue: Jan-Feb 2021

There are geopolitical, strategic and historical reasons for a competitive and adversarial relationship between China and India. The border dispute is both a symptom and a trigger of this adversarial relationship. While border defences and the use of land and air power along the Himalayan frontiers is essential given the nature of the dispute, they are insufficient to deter China from using military provocations to unsettle India's foreign policy and limit it to a sub-continental power. This paper argues that sea power affords India the best way of managing China in the Indo-Pacific region. The development and demonstration of maritime power, particularly in the Indian Ocean and to the east of the Malacca Straits allow India a range of options in explicit and implicit strategic negotiations with Beijing.