M. R. Narayana

Demographic dividends for India: evidence and implications based on National Transfer Accounts

There is a lack of verifiable evidence on the period and magnitude of the demographic dividends in India, a gap policy makers must address when setting priorities for human resource and capital investment to harvest the economic benefits of the demographic transition currently under way. This study attempts to fill this gap by quantifying the demographic dividends using National Transfer Accounts framework and by indicating their implications for equity. Our analysis projects that income per effective consumer could increase by 24.9% from 2005 to 2035—9.1% from the first demographic dividend and 15.8% from the second demographic dividend—and that the second dividend will be stable up to 2070. However, unless appropriate institutional reforms create an environment conducive to accumulating assets and raising productivity, India will find it difficult to meet the fiscal challenges posed by population aging.

Economic size and performance of dispersed and clustered small scale enterprises in India: Recent evidence and implications

Purpose - The purpose of this study is the empirical measurement and analysis of economic size and performance of dispersed and clustered small-scale enterprises (SSEs) in India. Design/methodology/approach - Methodology is descriptive and comparative, using a combination of different official databases. Economic size is measured by distribution of SSEs by employment, output, fixed capital investment, and export variables. Measurement of economic performance is focused on output/capital ratio, output/labour ratio, and labour/capital ratio. Findings - The results offer evidence for economic diversity in the size compositions and performance variations of dispersed and clustered SSEs; and bigger economic size and higher economic performance of clustered than dispersed SSEs. Research limitations/implications - Subject to the comparability of economic structure, the results and implications for India are of relevance for promotion and development of clustered SSEs in other developing countries. Practical implications - From the viewpoint of policy formulation, the results offer a strong empirical basis for a cluster approach rather than a dispersed approach for promotion and development of SSEs in India. The cluster approach has implications for establishing linkages between formal and informal SSEs and for elimination of smallness of dispersed SSEs. Originality/value - The paper provides a comparative analysis of economic size and performance of the dispersed and clustered SSEs by consolidating the diverse databases in India.

IMPACT OF POPULATION AGEING ON INDIA'S PUBLIC FINANCE

This paper integrates the methodology of the National Transfer Accounts and Budget Forecasting Model to compute and forecast the impact of population ageing on Indias public finance from 2005 through 2050, based on the fiscal structure in 2004–2005. The empirical results are new and have useful policy implications. The forecasted increase in the share of total public expenditure on elderly individuals is largely accounted for by expenditure on civilian pensions and other cash transfers, government services, and poverty and other social protection. Elderly individuals are found to be not very expensive in terms of public health expenditure. Tax revenues increase and result in a decline of debt-to-GDP ratio because population ageing does not lower tax buoyancy in the long run. Overall, the increasing total budget surplus and fiscal support ratio implies that the long-term impact of population ageing may be fiscally sustainable.

Determinants of Household Access Demand for Telecom Services in India: Empirical Evidence and Policy Implications

This paper estimates the socioeconomic and demographic determinants of household access demand for telecommunications (or telecom) services by employing a binary logit model and using a sample survey data from Karnataka State (India). The evidence suggests that social caste, education level, size of income, income tax payers, and location of friends and relatives in local call area have significant impact on household access demand. However, the nature and magnitude of the impact of these determinants are different in rural and urban areas, respectively. Further, given the socioeconomic and demographic characteristics, a rise in the average income of households is shown to have a remarkable increase in the probability for access demand. These results imply that knowledge of socioeconomic and demographic determinants are relevant inputs for design of a promotional policy for access to telecom services. Subject to the comparability of socioeconomic structures, these implications are of relevance for promotion of household access demand for telecom services in other developing countries.

Size Distribution of Metropolitan Areas

Using the Pareto distribution, this paper estimates the size distribution of metropolitan areas in India from 1981 through 2025. Empirical results offer evidence for dispersion of metropolitan population size, notwithstanding the growing concentration of urban population in metropolitan areas as compared to non-metropolitan areas. The economic importance of metropolitan size dispersion is analysed with respect to levels of employment, consumption expenditure and poverty and for select years since 1987–88. The implications of these results are explored for national urban development policy, as they are related to the competitiveness of smaller metropolitan areas to attract national and global business and investments.

Impact of Economic Globalization on Urbanization A Comparative Analysis of Indian and Select Global Experiences

This article analyzes the impact of economic globalization on urbanization since July 1991, with special reference to comparisons of Indian and select global experiences. India’s degree of globalization, measured by internationalization of trade and capital, is shown to be low at global levels. Patterns of urbanization in the post-globalization period show higher growth and concentration of population in bigger class-size cities. Urban economic growth is increasingly contributed by service sectors, declining share of manufacturing sector and higher labour productivity. These experiences of India coincide with experiences in countries such as China, G7 and Korea. Overall growth implications of these comparative analyses imply a need for continuing with economic globalization and for a national approach for development of large cities in India. Interestingly, sources of urban economic growth in India are distinguishable by both formal and informal sectors with varying labour productivity. Distributive implications of changing composition and growth of urban labour market across countries are essential to compare the growth-cum-equity implications of globalization on urbanization between India and other countries. This is identified as a topic of future research in Indian urban economics.

Awareness of Policies and Programmes among Small-scale Industries in India: Evidence and Implications of a Case Study

Small-scale industries (SSIs) have been important for India’s economic development due to their contribution to production, employment, exports, and investments in the private sector. National- and state-level economic reforms since July 1991, and India’s commitments to honouring the disciplines under World Trade Organization (WTO) agreements since January 1995, have added new policies and programmes for promotion, regulation and development of India’s SSIs. Full awareness of the policies and programmes for all the SSIs has been an essential requirement to exploit the opportunities and meet with challenges under these policy regimes. In the light of this requirement, this article analyses the nature and extent of awareness of select policies and programmes under the new policy regimes in India, based on a case study (or sample survey in 2001-2) of 373 manufacturing SSIs in Karnataka State (India). The empirical results: (1) offer evidence for spatial variations in the awareness by policies and programmes and by sector-specific WTO agreements; and (2) imply a policy need for effective awareness programmes as a precondition for equalizing the benefits of new policy regimes for all the SSIs. The results and implications of this case study are of relevance for design and implementation of current and future awareness policies for the SSIs at the national and sub-national levels in India as well as in other developing countries.

India’s Proposed Universal Health Coverage Policy: Evidence for Age Structure Transition Effect and Fiscal Sustainability

BackgroundIndia’s High Level Expert Group on Universal Health Coverage in 2011 recommended a universal, public-funded and national health coverage policy. As a plausible forward-looking macroeconomic reform in the health sector, this policy proposal on universal health coverage (UHC) needs to be evaluated for age structure transition effect and fiscal sustainability to strengthen its current design and future implementation.ObjectiveMacroeconomic analyses of the long-term implications of age structure transition and fiscal sustainability on India’s proposed UHC policy.MethodsA new measure of age-specific UHC is developed by combining the age profile of public and private health consumption expenditure by using the National Transfer Accounts methodology. Different projections of age-specific public health expenditure are calculated over the period 2005–2100 to account for the age structure transition effect. The projections include changes in: (1) levels of the expenditure as gross domestic product grows, (2) levels and shape of the expenditure as gross domestic product grows and expenditure converges to that of developed countries (or convergence scenario) based on the Lee–Carter model of forecasting mortality rates, and (3) levels of the expenditure as India moves toward a UHC policy. Fiscal sustainability under each health expenditure projection is determined by using the measures of generational imbalance and sustainability gap in the Generational Accounting methodology.ResultsPublic health expenditure is marked by age specificities and the elderly population is costlier to support for their healthcare needs in the future. Given the discount and productivity growth rates, the proposed UHC is not fiscally sustainable under India’s current fiscal policies except for the convergence scenario. However, if the income elasticity of public expenditure on social welfare and health expenditure is less than one, fiscal sustainability of the UHC policy is attainable in all scenarios of projected public health expenditures. These new results strengthen the proposed UHC policy by accounting for age structure transition effect and justifying its sustainability within the framework of India’s current fiscal policies.ConclusionThe age structure transition effect is important to incorporate the age-specific cost and benefit of the proposed UHC policy, especially as India moves toward an ageing society. Fiscal sustainability is essential to ensure that the proposed UHC is implementable on a long-term basis and within the framework of current fiscal policies.

Management of Coffee Leaf Rust Disease in India: Evidence for Channels of Communication

Management of coffee leaf rust (CLR) disease is essential to avoid its resultant production losses of Arabica coffee. Communication channels provide coffee farmers with the required knowledge for management by the recommended disease control methods and their applications. In this context, this paper analyses the role of communication channels for management of CLR by using a newly collected household level data of 575 Arabica coffee farmers in India. Management is focused on cultivation of resistant varieties and application of chemical sprays. Two methods of analyses are developed: Descriptions based on spatially aggregate data. Second, estimations based on Binary Logit Model using individual data. Descriptions show that prevalence of CLR is universal; key channels of communication are fellow farmers, extension workers and television; and desired channels of communications include on-farm demonstration and training workshops. While individual communication is most preferred channel, farmers’ associations are considered useful institutional channels of communication. Estimations distinguish communication channels by fellow farmers and extension workers and show significant differences in nature and extent of impact of these communication channels on CLR management by resistant varieties and chemical sprays. These results have important implications for identifying and improving the current and future information needs and channels of communication for effective management of CLR, especially for small farmers with lower educational attainments in India. However, the approach and implications of this paper are of general relevance and applicability for other coffee growing countries in Asia and Africa.

Growth Effects of Industrial Clusters Evidence and Implications for India

This article develops a simple methodology for calculation of growth effects of industrial clusters at national level and estimates the economic determinants of the clusters’ size-class of production by using data on 354 individual industrial clusters in India. Gross value of industrial clusters is indirectly measured and growth effects are calculated within the National Income Accounting framework. Determinants are estimated by using the grouped data on size-class of value of production by clusters. Results show that industrial clusters contributed to India’s economic growth of manufacturing sector (or Indian economy) between 8 to 3 per cent (or between 1 to 0.4 per cent) in 2002–2003 and 2003–2004, respectively. Binary Logit estimates show that industrial clusters with modern small scale industries and traditional art and craft products, high and medium heterogeneity, high and medium potential for technology upgradation and exports and those which are market or resource based are the important determinants of size-class of production of clusters. Other things being equal, an improvement in these determinants may contribute to higher gross value added and maximization of economic growth by industrial clusters. This analysis is useful to calculate the determinants of probability of individual clusters belonging to larger size-class of production at the state level. Further, the approach is relevant and applicable to estimate growth effects of industrial clusters in other South Asian countries as well.