Somesh K. Mathur

Insurance Regulation: Some Issues

Prior to 1956 the insurance business in India was owned and managed by private companies. The management of life insurance business was taken over and nationalized by the Government of India in September 1956 by an act of parliament. Later, the General Insurance Corporation (GIC) was set up in 1972 to deal in non-life insurance services like property and casualty insurance and reinsurance. Insurance in India is a Rs 400 billion (approximately US

Financial Analysis of the ICT Industry: A Regulatory Perspective

9 billion) business. Gross premium collection is about 2 per cent of GDP and grew at nearly 20 per cent per annum between 1990 and 1997. India has the highest number of life insurance policies in force in the world and the total investable funds with the Life Insurance Corporation (LIC) is almost 8 per cent of GDP (Ranade and Ahuja, 1999). However about three quarters of India’s insurable population has no life insurance cover. Health insurance of any kind is negligible and other forms of non-life insurance are much below international standards. The potential for growth and spread of life insurance is high in India due to stronger economic growth, rapid aging of population and a weak social security and pension system, which leaves a vast majority of workers with no old age income security. It may call for privatization of the Indian insurance market and foreign participation in it. The Malhotra Committee Report (1994) advocated liberalization of the insurance sector in India. The report made a strong case for activating professional regulation as a matter of priority, almost as a condition precedent to the further opening up of the insurance sector to private participation. It was not until recently (1999) that the Insurance Regulatory and Development Authority (IRDA) was formed with Mr N. Rangachary as its chairman. The role of IRDA is to ensure orderly growth of the insurance market in India. It must ensure financial soundness of the insurance industry and protection of consumer interest 1 through professional regulation. This development came in the wake of the passing of the IRDA Bill in Parliament. The IRDA Bill which was placed before Parliament in October 1999 is an improvement on its predecessor, the Indian Regulatory Authority (IRA) Bill, 1996. The new Bill is broader not only in its title but also in its reach and content (Pant, 1999). The IRDA Act marks the end of the government’s monopoly in the insurance sector because it seeks to promote the private sector (including limited foreign equity) in the insurance sector (Economic Survey of India, 1999‐2000). It covers major amendments to the Insurance Act 1938, the Life Insurance Corporation (LIC) Act 1956, and the General Insurance

Assessment of the Proposed India-China Free Trade Agreement: A General Equilibrium Approach

This article attempts to quantify the following things: 1. the technical efficiency of the ICT (Information and Communication Technology) sector in 52 countries in 2006–07 and in 45 countries in 2002–03 by using the DEA method. 2. Malmquist Index of Productivity Growth in the ICT sector in 45 countries between these two periods. 3. the proportions of the productivity growth attributable to efficiency and technical change. 4. the effect on total factor productivity (TFP) of catching-up, the export ratio, Broadband policy and technical readiness using a regression analysis. As a result, the paper finds that: 1. The ICT sectors in South Korea and Argentina were relatively efficient in 2002–03, while in 2006–07, the ICT sectors in Bahrain, Brazil and Sweden showed relative efficiency. 2. The productivity growth in the ICT sector in developing and newly industrialised countries is slightly lower than the growth in developed and transition countries, suggesting the catching-up of developing and newly industrialised countries. This catching-up effect is also confirmed in the regression analysis. 3. Technological readiness, which is a measure of the agility with which an economy adopts existing technologies, has a positive impact on TFP growth.

Trade Liberalization and the Poor: A Framework for Poverty Reduction Policies With Special Reference to Some Asian Countries Including India

The present study is an attempt to evaluate the impact of the proposed India-China free trade agreement (FTA) in goods trade on both countries under a static general equilibrium framework.,The study has utilized the Global Trade Analysis Project (GTAP) model of world trade with the presence of skilled and unskilled unemployment in the world. For analysis purposes, 57 GTAP sectors, representing the whole regional economy, have been aggregated into 43 sectors and 140 GTAP regions, representing the whole world, have been aggregated into 19 regions. The study has also used the updated tariff rates provided by the World Trade Organization for better results. ,The preliminary analysis using trade indicators depicted that by utilizing their own comparative advantage, both of the countries can maximize their gains by exporting more to the world. The simulation results from the GTAP analysis revealed that a tariff reduction in all goods trade would be more beneficial for both the countries than the tariff reduction in each others specialized products. All other regions lose in terms of shifting the Indian imports towards China in a post-simulation environment. Regions with a significant loss are: the European Union (28 members), Southeast Asia, the Unites States, Japan, Korea, West Asia, and the European Free Trade Association (EFTA).,The disaggregated sector-wise analysis has been performed using the latest available GTAP database, version 9.

Determinants of Trade Costs and Trade Growth Accounting between India and the European Union during 1995–2010

The paper examines the impact of trade liberalization on the poor through its impact on prices and incomes. A simple framework is developed which traces the impact of trade liberalization on the poor. Some guidelines are given for making trade work for the poor after identifying how the trade regime works. The paper also discusses necessary complementary policies that can make trade policy reform effective. These complementary policies include among others: macroeconomic and microeconomic stability, a competitive exchange rate, flexible labor markets and competent product markets. Also, there is large outstanding agenda that can and should be undertaken by high-income countries that will generate significant benefits for ordinary people in developing countries. These include trade distorting policies in agriculture, disciplining non-tariff measures that restrict trade and removing restrictions on the temporary movement of natural persons supplying services (Stern, 2002). The success of trade reform lies in focusing the reform agenda on agricultural and services sector. It is imminent from the study that these two sectors are key sectors in poverty reduction. The paper provides the basic elements of a good trade policy regime. These provide a benchmark against which to judge the prevailing trade regime and provide guidance for the direction of reforms for the poor in future.

Goods Trade Liberalization Under Canada-India FTA and Its Impact: Partial and General Equilibrium Analysis

This study aimed to utilise the micro‐founded measure of trade cost derived by Novy to estimate the relative bilateral trade costs of India with its European Union partners. The advantage of using such a model is that the trade costs can be derived entirely using observable trade data. The results show that Indian tariff equivalent with its major EU trading partners has declined by 20 percentage points between 1995 and 2010, with Malta and Latvia experiencing the greatest decline. The study then decomposes the bilateral trade growth to ascertain whether it is an outcome of increased domestic production or reduction in bilateral and multilateral trade barriers. Novys model indicates that the decline in relative bilateral trade costs explains the greatest percentage of this trade growth, which is partially offset by decline in multilateral resistance terms that has diverted trade away to other trading partners primarily in South and South‐East Asia and North America.

Trade Growth Accounting in Goods and Services: An Empirical Exercise

This chapter uses the partial (SMART) and general equilibrium (GTAP) tools to assess and simulate the impact of complete trade liberalization of ‘All’ and ‘Specialized’ products’ between India and Canada under the proposed Canada-India free trade agreement (FTA).The simulation results obtained from both of the analyses (partial and general equilibrium analyses) indicate that India would invariably gain more (than Canada) in terms of welfare change and consumer surplus when ‘All’ or ‘Specialized’ products of Canada enters India in comparison with the scenario when Indian ‘Specialized’ and ‘All’ products enters Canada. This study recommends the reworking of benefits and costs associated with Canada-India FTA in the presence of WTO plus and extra provisions.

Theoretical Exposition of Some Ex Ante Approaches to Assess the Proposed Trade Policy

This chapter explores the reasons behind trade growth in goods and services over the years for some selected countries by using Novy’s measure. We calculate trade costs in terms of tariff equivalents by using the indirect trade cost measure given by Novy. Trade costs and trade growth accounting in both goods and services are shown separately. For trade costs in goods, we look at the case of India and APEC countries, and for trade costs in services we consider the 61 trading partners for which data is available.

Bilateral Trade Costs and Growth of Trade in Services: A Comparative Study of India and China

This chapter explains the partial and general equilibrium approaches of evaluating proposed changes in trade policies. It discusses some of the empirical methods available in trade policy research that have been presented in earlier chapters. Advance references and online links are given for detailed reading. This chapter is very important for those readers who have initiated and planned their research in the field of empirical analysis of international trade policy issues. It will guide them in choosing appropriate methodology and acquiring data for their research work.

Developments in International Trade Theory and Gravity Modelling

This chapter estimates the bilateral trade costs of services in India and China, and investigates whether trade costs are significantly different for these two countries with respect to their major trading partners. It also assesses how much the decline in trade costs accounts for the growth of trade in services in these two countries over the period 1995–2010. This study will add to the very scanty literature on the analysis of trade costs in services comparing the case of India and China. Existing estimates largely use total trade or the goods sector without any focus on the services trade. The study finds that over the sample period (1995–2010), both the countries have witnessed a significant decline in trade costs with respect to many of their major trading partners but compared to India the decline in trade costs are larger in China. It has also been noted from the results that even though bilateral trade costs declined with many of their major trade partners over our sample period, increase in the economic size of these countries relative to the world played the most important role behind the growth of bilateral services trade both for India and China.