Rajendra R. Vaidya

The Determination of Industrial Prices in India: A Post Keynesian Approach

One of the well-established empirical findings about industrial prices in India is that cost push factors have a greater influence than demand pull factors (see Bhattacharya and Lodh, 1990). As a consequence of this finding, the structuralist theory of inflation, which emphasizes cost-side variables, is usually taken to characterize the data-generating process of industrial price behavior in India. Structuralists (such as Taylor, 1983, and Balakrishnan, 1991) argue that inflation occurs because of structural bottlenecks in the agricultural sector. Sectoral imbalances (caused by rapid growth of the industrial sector) lead to an excess demand for agricultural goods and, consequently, a rise in agricultural commodity prices. The increase in raw material prices and the indexation of money wages to the consumer price index results in the transmission of the rise in agricultural prices to industrial prices as firms simply pass on the increase in costs to the consumers. Therefore, structuralists argue that the ultimate cause of inflation in industrial prices can be traced to the agricultural sectorthere could be no autonomous developments within the industrial sector that would lead to an increase in industrial prices. A major limitation in the literature has been that there has been no consideration of other theoretical frameworks that also take prices to be cost-determined but that differ from the structuralists in the manner in which they explain industrial inflation. An important theoretical framework that has not been yet considered is the Post Keynesian framework, which argues, like the structuralists, that prices are essentially cost-de-

International competitiveness, investment and finance: A case study of India

1. Competitiveness, Investment and Finance: Analytical Links 2. The Policy Environment in India 3. The Balance of Payments and National Competitiveness 4. The Determinants of Sectoral Competitiveness 5. Outward Orientation: A Firm-Level Analysis 6. Finance Constraints, Persistent Exporting and Investment 7. Conclusions and Policy Implications

Growth and finance constraints in Indian manufacturing firms

In this article, we attempt to evaluate the impact of finance constraints on the growth of firms. We also take in our purview some of the other debated issues relating to firm growth such as growth distribution, persistence and influence of size and maturity. For a sample of 2282 Indian manufacturing firms in the period 1994 to 2009, we show that the growth process of firms does not follow normal distribution; growth of firms is persistent; and size, maturity and finance constraints negatively influence the growth of firms. We check the robustness of our results using alternative samples, firm growth measures and estimation techniques.