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Special Centennial Issue

No. 384

July 2016

Vol. XCVII

ISSN0019-5170

Contents


 
 

THE CHALLENGE OF HUMANISING ECONOMICS
A TRIBUTE TO PROFESSOR J. K. MEHTA



R. N. Lohkar*

 

The central concern of Professor Jamshed Kaikhusro Mehta was with 'pure economies', i.e. the analysis of the human system from the economic viewpoint. His approach was based on the ideal of the economist keeping himself aloof from the system, in the sense of restraint from the attempt to influence its working, while taking care to ensure that his analysis is itself not coloured by the system. He was fully conscious that this ideal was difficult to sustain and required the greatest degree of alertness and self-discipline on the part of the economist.

Professor Mehta's approach gives the economist the ability of transcending the exclusive concern with the methods of economics, acknowledging its complementarity with other disciplines, and examining whether the results of economics are congruent with those of the latter. He would be satisfied with the work of the economist if his conclusions were consistent with those "of other basic disciplines (or sciences), but if this were not the case he had no hesitation in advocating the necessity of re-visiting the discipline of economics.

Professor Mehta's open approach to his own discipline was not merely the outcome of a desire for enhancing the 'efficiency' of economics, but also represented his belief in the basic integrity of knowledge and in the need for economists 'to be lifted out of the narrow grooves in which we have been accustomed to move.' He was always prepared to re-examine the economic viewpoint with the help of techniques of other disciplines. He applied to economic analysis the principles being used in Physics, Philosophy and Religion, and reached a richer understanding of the motives and objects of men in material life.

Yet, in the final analysis, Professor Mehta does not care for empirical proof to substantiate his conclusions. It might appear at first glance that this reflects a certain rigidity and even self-righteousness in respect of his approach. But this is far from the truth, for he firmly believes that empiricism inevitably leads to narrow concentration on particular data which in turn is a recipe for intellectual chaos, for any conclusion can be questioned by producing contrary sets of empirical results. Moreover, he holds that 'it is impossible to apply the logical methods of an empiricist in their full vigour without distorting the very pattern of forces that it is our object to study'. Professor Mehta's emphasis is on perfecting the tools of analysis by making them as inclusive and widely based as possible, and by applying them with great care and caution.

  • *Former Professor, Department of Economics, University of Allahabad; Email: ramlolikar@gmail.com Acknowledgement: This paper was contributed for the Centenary Function of Prof J.K. Mehta held on December 14, 2001. It is retrieved from the collections of that function to publish here for a larger audience. The author has benefited immensely from discussions with Professor D.K. Srivastava and the comments of Professor V.C. Pande on the first draft of this Tribute.

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THE CHANGING ROLE OF
GOVERNMENT IN INDIAN AGRICULTURE


V. S. Vyas *

 

Governments in developing as well as developed countries intervene in agriculture, though the objective and strategies differ. The paper traces the nature of government intervention in Indian agriculture since Independence. It outlines the changing context of agriculture in the economy and indicates the required changes in the nature of government interventions.

  • *Professor Emeritus, Institute of Development Studies, Jaipur. He was member of the Economic Advisory Council to the Prime Minister and also Deputy Chairman of the State Planning Board Rajasthan; Email: vijaysvyas2018@gmail.com

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LABOUR MARKET INEQUALITY IN INDIA
AND ITS DYNAMICS


Ravi Srivastava and Navneet Manchanda*

 

Since the early 1990s, the employment structure of the Indian economy has undergone massive changes; characterised by exceptionally high rates of outmigration from agriculture and informal employment outside agriculture. These changes have accentuated wage inequality, specially in the organised sector of the economy. The present paper, therefore, makes an attempt to analyse the linkages between the nature of development and inequality, focusing on the labour market. The results are drawn primarily from unit level records of the employment and unemployment schedule of the National Sample Survey Office for the 50th, 61s' and 68th rounds. The findings on wage inequality are further dissected to understand the changing magnitude of wage penalty/wage discrimination among workers based on caste affiliation and gender across formal-informal sectors and within sectors.

  • *Ravi Srivastava is a Professor at the Centre for the Study of Regional Development, Jawaharlal Nehru University; Email: ravisriv@gmail.com

    Navneet Manchanda is a PhD Scholar at the Centre for the Study of Regional Development, Jawaharlal Nehru University; Email: navneetmanchanda@gmail.com

    Acknowledgement: A preliminary version of this paper was presented at the Symposium on Resisting Inequality/Enabling Inclusion: An India Canada Comparison, York University, Toronto, Canada, in June, 2015. The authors are grateful to the Symposium organisers and participants for comments on the paper.

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GANDHIAN ECONOMIC THOUGHT AND
ITS INFLUENCE ON ECONOMIC
POLICY MAKING IN INDIA


D. M. Nachane*  



Gandhi's position on economic issues is unique among Indian thinkers. His opposition to industrialisation and its connotations of technical progress and urbanisation translates into a model of village self-sufficiency based on the principles of morality and altruism, whereas his critique of globalisation leads to a vision of swadeshi which is not based on autarkic isolated independence but on voluntary interdependence. After Independence, there was a marked decline in the appeal of Gandhian economic ideas, though they survived in certain aspects of the government's emphasis on micro- and small-scale industries and on poverty alleviation and social welfare programmes. With the initiation of liberalisation and globalisation in the 1990s, most Gandhian ideals were abandoned, except those bearing on social welfare. Modern India seems to be irrevocably committed to a direction quite distinct to the one the Father of the Nation would have advocated.

"Gandhi enunciated his economic position in the language of the people, rather than that of academic economists. And so the economists never noticed that he was, in fact, a very great economist in his own right..." .. ..Schumacher (1978).

  • *Honorary Professor, Indira Gandhi Institute of Development Research; Email: nachane@igidr.ac.in.

    Acknowledgement: This is a substantially revised version of a paper presented at the IS AS Seminar on "Gandhi: a Modern Perspective" held in Singapore on 2 October, 2006. I express sincere thanks to Drs. Tan Tai Yong, Ishtiaque Ahmed, S. Narayan, Rajiv Sikri, Gynaesh Kudesiya, Maathai Mathiyazhagan and Jayan Thomas for very helpful comments. Errors and shortcomings devolve rally on the author.

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THE INTERACTION BETWEEN GROWTH
AND DISTRIBUTION:
THE LOW WAGE TRAP OF INDIAN
MANUFACTURING


Surajit Mazumdar*
 


Concerns about the distribution of its benefits and the relatively poor performance of the manufacturing sector tend to be part of most assessments of the Indian growth experience since the onset of liberalisation in 1991. Rising levels of inequality and India's continued failure to achieve a full-fledged industrialisation mar what would otherwise appear to be an impressive record of the last 25 years. This paper argues that these two elements of the growth trajectory are in fact related - income distribution trends have expressed themselves through a marked stagnation in wages which underlies both the 'successes' as well as the failures of India's manufacturing performance in the last two decades. The paper concludes that India's low wage road to industrial development has also been fraught with contradictions that may now be coming to a head, as a result of which it is caught in a trap.

  • *Centre for Economic Studies and Planning, JNU. Email: surajit.mazumdar@googlemail.com.

    Acknowledgement: The research for this paper has been supported by the Research Council of Norway through its INDNOR Programme. An earlier version was presented at the 57th Annual Conference of the Indian Society of Labour Economics, Srinagar, October 2015.

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FUEL CHOICES AND RESPIRATORY
HEALTH IN INDIA
 

P. P. Krishnapriya
and
Rohini Somanathan*
 


Two-thirds of Indian households and four out of five rural households use solid fuels for cooking. Household air pollution from these fuels accounted for over a million premature deaths in 2010. Our paper is in two parts. The first uses secondary data from the Indian census and the National Sample Survey to understand household fuel choices. The second uses primary survey data from West Bengal to examine whether cooking environments can mitigate the health effects of solid fuels. Our results point to the need to go beyond the popular energy-ladder hypothesis by which households switch from dirty to clean fuels as their incomes rise. We find that local availability is an important determinant of fuel use. Households with land rely on agricultural by-products, those using coal are mostly in coal-producing districts and LPG use depends on the density of distributors. Purchase prices of solid fuels are similar to those of clean fuels so their continued use points to frictions in fuel markets or to information gaps about the health benefits of clean fuel. In our West Bengal survey, women cooking in ventilated spaces or using cook stoves with simple chimneys exhibit significantly higher lung capacities suggesting that simple interventions can improve the health of solid fuel users.

  • *Both authors are at the Department of Economics, Delhi School of Economics; Email: kpriya@econdse.org, rohmi@econdse.org

    Acknowledgement: The survey data from West Bengal used in the second half of this paper is based on a project done jointly with Nirmala Banerjee and the staff at Sachetana. We are very grateful to them and to the Royal Norwegian Embassy, New Delhi who funded the West Bengal study.

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IMPACT OF TRADE REFORMS ON PRICE-COST
MARGINS IN INDIAN
MANUFACTURING FIRMS  


Bishwanath Goldar*
 


Since 1991, India has undertaken considerable trade liberalisation. Tariff rates have been drastically reduced and quantitative restrictions on imports almost completely eliminated. There are theoretical grounds to expect that liberalisation of imports will reduce price-cost margins in industrial firms, especially those which are bigger in size and have a relatively large market share. Yet, there has been an increase (though modest) in price-cost margins in India's organised manufacturing between 1991 and 2007. It is only after 2007 that there has been a downward trend in price-cost margins in Indian manufacturing. The paper examines how import liberalisation has impacted price-cost margins in Indian manufacturing firms, focusing on the trade reforms in the 2000s and early 2010s. Data for about 2200 manufacturing companies in India for the period 2004-05 to 2011-12 have been used for the analysis. The results of the analysis indicate that the lowering of tariff rates in India in the period 2004-2011 had a significant pro-competitive effect, putting a downward pressure on price-cost margins in manufacturing firms. Also, there are indications from the results of the analysis that the negative effect of tariff cuts on price-cost margins in Indian manufacturing firms was stronger for those firms which had a relatively greater market share.

  • *ICSSR National Fellow and Former Professor, Institute of Economic Growth, Delhi; Email: b_goldar77@yahoo.com.

    Acknowledgement: The author is grateful to Dr. Deb Kusum Das for providing year-wise nominal rates of protection (average tariff rates) for various three-digit manufacturing industries for the period 1997-98 to 2009-10, which have been used for the econometric analyses presented in the paper. These rates of protection have been computed and used by Dr. Das for a study that he has undertaken for the Reserve Bank of India (Trade Policy and Manufacturing Performance: Exploring the Level of Trade Openness in India's Organised Manufacturing in the Period 1990-2010, Study no. 41, Development Research Group, RBI, 2016).

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DRIVERS OF CHANGE IN THE STATUS
OF WOMEN IN BIHAR  


Janine Rodgers*


Bihar is still predominantly rural. Population pressure on land is very high and not enough employment opportunities have been created in the state to absorb the surplus labour spilling over from villages. Every year millions of men leave Bihar and work in other states while their spouses and children remain in their villages of origin. Some changes in gender relations have occurred in the domestic as well as the public spheres. Male migration and some government interventions favouring women and girls have been the main drivers of change in the status of women. Based on primary data collected in villages of North and South Bihar over four decades the paper looks at the impact of male migration on women left behind. It analyses changes in the employment of women, in the wages, in the well-being of the households and in the intra-household decisionŽmaking. Then it reviews selected government interventions that contributed to enhance the status of women and girls. And finally it raises the question whether the changes observed in the status of women have fostered their empowerment.

  • Visiting Research Fellow, Institute for Human Development, New Delhi; Email: janme.rodgers@graduatemstitute.ch

    Acknowledgement: I would like to thank Gerry Rodgers for his useful comments but claim sole responsibility for any errors or omissions.

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OCCUPATIONAL SEGREGATION BY GENDER
OVER SPACE AND TIME IN
THE INDIAN LABOUR MARKET  


Malathy Duraisamy
and
P. Duraisamy*  



Labour markets globally share a common feature namely, the persistence of occupational segregation, which is an important dimension of gender disparity. Whereas gender wage gap has been rigorously studied, occupational segregation has not been as well researched in India. The present work attempts to fill the lacunae in literature by examining segregation in disaggregated 3 digit occupations at national and state level using various rounds of NSS employment and unemployment survey data from 1993-94 to 2011-12. Occupational distribution shows evidence of concentration of males and females in certain occupations. Men are more in better paying jobs while women concentrate in low paying work.

Occupational segregation is computed using the popular Duncan dissimilarity (ID) index and the standardized or Karmel and Maclachlan (IP) index. Important findings that emerge are: (i) gender segregation has increased rather sharply over the decade 1993-94 to 2004-05 and marginally thereafter till 2011-12; (ii) the segregation indices for the year 2011-12 point to alarmingly high levels of segregation by gender in regular wage-work followed by self-employed activity and casual wage-work and (Hi) there is wide variation in the segregation measures across the states. Differences in women's education and employment opportunities across states, labour market structure and state specific policies, besides socio-cultural characteristics could be important factors causing the observed disparity in occupational segregation by gender.

  • *Malathy Duraisamy is Professor and Head, Department of Humanities and Social Sciences, Indian Institute of [Technology-Madras, Chennai 600 036; Email: mdurai@iitm.ac.in

    P. Duraisamy is Sir Sarvepalli Radhakrishnan National Fellow of ICSSR, Madras Institute of Development Studies, Gandhi Nagar, Adyar, Chennai 600 020; Email: pduraisamy@hotmail.com

    Acknowledgement: An earlier version of this paper was presented at the Allied Social Science Association (ASSA)/International Association for Feminist Economics (IAFFE) meeting held at Boston, USA, January 2-5, E015 and in a seminar at the Madras Institute of Development Studies, Chennai India on February 5, 2015. The authors are thankful to the participants of the conference and seminar for valuable comments and suggestions/The authors are responsible for errors, if any, in the paper.

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THE CHANGING RATES OF RETURN TO
EDUCATION IN INDIA:
EVIDENCE FROM NSS DATA  


Smrutirekha Singhari
and
S. Madheswaran*


This paper estimates rates of return to education in India by gender, caste, religious groups, and age cohorts using data for the period 1983 to 2011-12. We estimate standard Mincerian wage equations separately for regular and casual workers. To account for the possibility of sample selection bias in multinomial logit model, Lee Procedure is used. We found that for regular workers, overall rates of return to education is the highest for diploma, followed by graduation and above degree, and secondary education; the returns to higher secondary education and graduation and above degree are rising, but primary education is falling over the years; rates of return to education are increasing across the age cohorts. For casual workers, the increase in earnings with levels of education is found to be very low. The rate of return to primary and middle education is positive for casual workers; ever though overall returns are flat as increment with level of education is low.

  • *Smrutirekha Singhari is a Research Scholar, Centre for Economic Studies and Policy, Institute for Social and Economic Change, Bangalore 560 072; Email: smrutisinghari@gmail.com.

    S. Madheswaran is Professor, Centre for Economic Studies and Policy, Institute for Social and Economic Change, [Bangalore 560 072; Email: madhes.hina@gmail.com.

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ANALYTICS OF THE INCLUSIVE
GROWTH PARADIGM IN INDIA  


Biswajit Chatterjee*


This paper analyses the major contours of the inclusive growth paradigm for the Indian economy. It focuses on the measurement of pro-poor and inclusive growth, and the trade-offs between inequality reduction and growth enhancement. It also discusses India's poor record of inequality reduction across states in a regime of growth acceleration, and suggests shifts in policy focus to achieve the objective of faster and inclusive growth in the economy.

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