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Special Centennial Issue

No. 385

October 2016


ISSN 0019-5170




Dr. Prakash Anant Salvi*
Davinder Kaur Suri**


The monetary policy is transmitted to the real economy through five channels: namely, the traditional interest rate channel, the asset price channel, the exchange rate channel, the credit channel and the 'expectations' channels. In India, prior to the financial liberalization, owing to the administered regime, the credit channel was transmitting the policy changes. Since nationalization of banks in 1969, in India, bank credit has been used extensively to finance socioeconomic development. According to the RBI, there was a strong link between the growth of non-food credit of banks and growth of industrial production till the mid-1990s, but with the development of the financial markets, this the link has weakened. The objective of this paper is to examine the evolution of the credit (bank-lending) channel in India, in terms of its presence and its effectiveness, across the period 1985 to 2014, starting from the implementation of the 'monetary targeting' operating framework. The presence and effectiveness of the bank-lending channel have been examined by using Correlation and VAR in the reduced form. It is found that the bank lending has the desired impact on target variables. However, the impact of monetary policy variable on bank credit appears to be weak, possibly due to response of bank credit to factors other than monetary policy changes. Hence factors impacting bank credit need to be closely monitored by the RBI.

Key Words : Bank Credit, Bank-lending channel, Correlation, Monetary policy transmission, Vector Auto (VAR)

  • *Associate Professor and Head, Department of Economics, D. G. Ruparel College, Mumbai
  • **Research Student, Department of Economics, University of Mumbai.

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Khursheed Hussain Dar1, R.L. Bhat2 & Shahid Raina3


To improve the health outcomes of any country public health expenditure is a necessary; if not the sufficient condition. At the dawn of the new millennium, India emerged as one of the fastest growing large economy of the world. This study is based on panel data taken from 29 states from 2000-14, to analyse how this growth rate in per capita income (PCY) has been translated to expenditure on public health. Despite the increase in PCY the average per capita expenditure on public health (PCEPH) in India is Rs. 1131 which by any standard measure is very low. Although average PCEPH is very low but of late there have been some remarkable shifts. The compound annual growth rate (CAGR) is above 20% and the elasticity coefficient of PCEPH is 1.45. The increasing CAGR and elasticity coefficient of more than one show that there has been a significant change in the public health setup of India during last 15 years. This is reflected in the improvements in health outcomes of India both at national and international level.

Key Words: Per Capita Public Health Expenditure, Per Capita Income, Elasticity, Health Outcomes
JEL classification: C23, H51, I18

  1. Senior Research Fellow, Department of Economics, Central University of Jammu.
  2. Professor, Department of Economics, Central University of Jammu.
  3. Research Schollar, Department of Economics, Central University of Jammu.

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Neha Jindal1 & Naresh Singla2


One of the possible solutions in sustaining economic growth in India lies in its favorable demographics. Most important among these demographics are growing urbanization and rising middle class. There are various factors which affect the size and growth of middle class in India. Some of these factors include: income inequality, fertility rate, education, democracy, share of service and industrial sectors compared to agriculture sector, urbanization etc. The study has empirically found that urbanization and tertiary school enrollment are the major factors which affect the growth of middle class in India. The policies that promote urbanization will also boost the size of the middle class. The policies to spur on the private sector are likely to lead to faster growth of the middle class. The study pointed out that policies that factor in the welfare of the middle class and nurture their growth may be a more effective long-term strategy for alleviating poverty compared to policies focusing solely on the poor.

  1. D. Phil. Student, School of Economics, Keynes College, University of Kent, Canterbury, Kent, U.K.
  2. Assistant Professor, Centre for Economic Studies, Central University of Punjab, Bathinda-151001, Punjab, INDIA E-mail:

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The outward FDI sector in India is fastly emerging in recent periods. The trend analysis shows that the total outward FDI witnessed tremendous increase during recent years. The analysis of the pattern of outward FDI also reveals that India has attained very high diversification in terms of country-wise and sector-wise outward FDI. The estimation of determinants of outward FDI reveals interesting results. Firstly, the Augmented Dickey Fuller test statistics reveals that the model is stationary. The estimation of co-integration tests confirms the long run equilibrium relationship. Since the model variables are co integrated, we have estimated the determinants of outward FDI using the Fully Modified Ordinary Least Squares (FMOLS) Method. The results of the estimation reveals that there is a positive and significant relationship between inward FDI and outward FDI. This clearly shows the emerging role of FDI sector in India. Thus, wa may draw the inference that for the attainment of fast and sustained growth of Indian economy, we have develop coherent policies in the FDI sector. This is very important because Indian economy is basically scarce in the matter of capital. Next, our results also reveal that there is a negative and insignificant relationship between industrial production and outward FDI in India. This shows that when the domestic industrial production increases, outward FDI decreases. Much of the industrial production is to the domestic sector. So, we may draw the inference that the domestic industrial production in the country is gaining importance and many industrialists may not prefer to operate outside the country. The relationship is positive between trade openness and outward FDI. This result shows the importance of outward orientation in the Indian economy. This reflects that the Indian economy is becoming highly globalized and the degree of openness is increasing over the years. However, we may have to be cautious regarding the check and balance of open economic policies, as evidenced by the statistically insignificant co efficient of relationship between trade openness and outward FDI.

  1. Associate Professor, Department of Economics, Central University of Kerala, Kasaragod, Kerala-671 316 E-mail : drabdukareem63@,
  2. Assistant Professor. Department of Economics, Central University of Kerala, Kasaragod, Kerala-671 316 E-Mail :

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Pabitra Kumar Jena1 & D.S. Hegde2

This study aims at investigating perceptions of people towards FDI inflows on multi brand retail sector. For this a survey has carried out in two major cities: Mumbai and New Delhi. A compressive questionnaire has been used to collect data from 200 (100 from Mumbai and 100 from New Delhi) respondents through email randomly drawn from middle and higher middle class of people with awareness of FDI in multi brand retail. The logistic regression model was used for examining perceptions of people towards FDI inflows on multi brand retail sector. The study finds that there is a positive relationship between age, occupation, education, people benefited and FDI inflows in retail sector. However, there is a negative relationship between gender, experience, percentage, sector benefited and FDI inflows in multi brand retail sector. This study also reviewed some of the earlier works on impact of FDI inflows in multi brand retail. It is observed from the literature review that impact of FDI inflows on multi brand retail is mixed; positive and negative. A SWOT analysis of Indian FDI inflows in multi brand retail sector is discussed. Finally a conceptual framework has been developed for analyzing impact of FDI inflows on small and middle farmer. Further, the paper goes on to discuss some of the policy suggestion for better inflows of FDI on multi brand retail sector in India. Finally, scope for further research and limitations is spelt out.

Keywords: Foreign Direct Investment, Impact, Logistic regression, Retail Sector and SWOT Analysis.
JEL classification: F21, L81 and L89

  1. Assistant Professor at Shri Mata Vaishno Devi Univeisity, Jammu & Kashmir-182 320, India
  2. Professor at National Institute of Industrial Engineering(NITIE), Mumbai- 400 087, India

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The present paper addresses the specific scheme of privatization of CPRs in terms of its developmental programme as a State Institution and the changing status of CPRs during the last five years. This paper primarily focuses attention only on the two acre scheme meant for the landless labourers in Theni district of Tamil Nadu. This scheme was implemented by the State during 2006. Around 2441.96 acres have been distributed to the rural masses (i.e. 2474 beneficiaries) in seven phases in this district during the last five years under two-acre scheme of land to the landless labourers. As a result the availability of CPRs in Theni district has declined from 14.82 percent in 2008 to 12.58 percent in 2012. The study has further estimated that the per capita availability of private, forest and CPRs have significantly declined at all levels in this district during the investigation period.

Key words: Availability, Degradation, Life Sustenance, Privatization

  1. Dr. A. Kannan, Assistant Professor, Department of Environmental Economics, School of Economics, Madurai Kamaraj University, Madurai, Tamil Nadu, India, Email:

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Shri Prakash1, Sudhi Sharma2 & Gautam Negi3

Relations among growth, investment, consumption, public expenditure, bank deposits and credits, and inflation are complex and lagged in structure. Consumption and investment are the major determinants of growth. Inflation in Indian economy is structural rather than monetary. Rising prices of food-grains triggers inflation in Indian economy. Food inflation occurs periodically due to excess demand whenever lower than normal rainfall induces output to fall. Inflation reduces real (i) income, (ii) interest rate, (Hi) consumption and (iv) savings if rise in prices is not swamped by increase in nominal income and/or subsidies. Monetary policy focuses exclusively on inflation without consideration of growth or growth by ignoring inflation. Low real interest rate stimulates banks 'credits/investment which promotes growth. Higher interest rate raises cost of loan capital and reduces demand for investment. Increased material, wage and interest cost due to inflation accentuates inflation further and reduces demand for non-food items. These adverse effects of inflation on overall investment lower growth and demand pull inflation is transformed in to cost push inflation. Consequently, demand recession emerges in fix-price markets of manufactures. These postulations run contrary to Philip's hypothesis and conventional monetary theory of inflation.

The paper formulates a model of five simultaneous equations (SEM) of 10 macro variables. SEM is complemented by growth curves and three versions of Random Walk Model. Equations are estimated by OLS/TSLs according to their status of identification. Diagnostic tests of autocorrelation, heteroscedasticity, and simultaneity bias are applied to estimated equations. Estimates of growth curves and RWM are examined first. Results of finally accepted equations are discussed in the end. Results of SEM lend credence to the postulations formulated in the paper.

Key Words- Investment, Credits, Inflation, Growth, Structural, Monetary
JEL Classification: E51, E62, H5 and Fl

  1. Professor of Eminence, BIMTECH, Greater Noida, E-mail :
  2. Senior Project Associate, BIMTECH, Greater Noida, E-mail :
  3. Assistant Professor Manav Rachna International University, Faridabad

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Guobadia Sam1, Arodoye, N.L.2 & Iyoha3

The principal objective of this study is to appraise the role of fiscal policy in achieving inclusive growth in Nigeria. In order to achieve this, the relationship among economic growth, fiscal policy (government expenditure and taxation) and unemployment is investigated, using the time-series technique of vector error correction model and annual data for the period 1981 to 2013. The results indicate that total tax revenue performs best in explaining changes in real GDP followed by changes in government spending while unemployment rate performed worst. ln relation to causality, a uni-directional causation runs from tax revenue to real GDP and government expenditure. Thus, tax revenues appear to stimulate government spending patterns and ultimately drive growth. Therefore, promoting inclusive growth would necessitate not only growing the economy but also creating quality employment by proactively using fiscal policyin the years ahead.

Keywords: Fiscal policy. Unemployment, Inclusive growth, VEC model, Nigeria.
JEL Code: C32, E62, H50, J60

  • Professor of Economics (Corresponding Author), Department of Economics, Banking and Finance, Benson Idahosa University, Benin City;
  • Lecturer in Economics, Department of Economics and Statistics, University of Benin, Benin City. Email:
  • Professor of Economics, Department of Economics and Statistics, University of Benin, Benin City, Email : : 08035733559)

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Dr. Humayun Rasheed Khan1 & Dr . Falak Butool2  

The fall of Berlin Wall paved the way for the solid foundations of the Capitalist Order as an unchallenged and unfettered ideology. Minimal State and free market system got firm footing even in those parts of the world which were otherwise hostile to capitalist system. The concept of global market competitiveness, which has its inspiration in the Darwinian thesis of the survival of the fittest became lifeblood of corporate giants, investment visionaries and policymakers the world over. In a short span of time, with a magnetic touch and fast speed, capitalist system engulfed almost every aspect of human life in its fold. Market economy was, therefore, culminated into a market society commercializing almost everything in and around the world. Liberalism provided fertile ground for growing capitalist culture in which free choice, commodification, accumulation of limitless wealth and commercialization of social life are the fundamental virtues. This paper is an attempt to highlight the close proximity between Liberalism, Capitalism and Libertarianism and the manner in which this nexus has adversely effected social institutions and natural order causing emotional and psychological suffocation of varied intensity at different levels.

Key Words: 1. Avarice. 2. Capitalist Cult tire, 3. Commercialisation, 4. Faith, 5.Free Competition, 6.Libertarianism

  1. Deputy Director. Judicial Training & Research institute. U.P., Lucknow- India (Email- iclogra72.hrk @,
  2. Dr. Falak Butool is Post- Doctoral Fellow of U.G.C.. National P.G College, Lucknow, U.P., India.

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Dr. Bishnu Prasad Mishra1

A Payment is a transfer of monetary value. The ability to securely send and receive timely payments is a prerequisite for commerce and the smooth functioning of financial markets. Indian growing economy and an ever expanding bank led Financial Inclusion initiative requires increasing level of Payments infrastructure, putting a lot of stress on the fragile rural bank branches and it's limited resources. Therefore, Non-bank retail agents as outlets for financial services have become highly successful where bank branches are not economically viable. Such policies leverage existing retail infrastructure as delivery channels and turn pharmacies, post offices, super markets as agents. Collaboration between banks and Agents has become possible as technology has reduced the cost and risks of the remote exchange of information to carry out financial transaction.

In the proposed system NPCLL will be the nodal platform for regulation, control and settlement in the payment value chain. The players are the existing payment companies like FINO, A Little World, EKO etc (may be a new class of Payment Entities, registered as NBFC - Payment Companies for RBI Regulation compliance). The Payment Companies will have branch/Agent network to deliver payments at the door step of the clients with available technology like smart cards, Mobile banking etc. The entry of Non-bank entities has the potential to make revolutionary changes leveraging on their product offerings with latest technology there by widening the payment market. With more competition, Choices for the customer, will be bountiful.

Time has come for a new experiment where RBI is still in waiting for the Payment banks to emerge. Severe doubt persists in the mind of no Sayers as regards their long-term viability. Let there be an opportunity on the part of NPCL to have the leadership of a grand alliance of payment entities to cover the landscape facilitating payments sans huge institutional building and operational cost to the vast majority of "customers in Waiting".

Key Words: Payment, Payment system, payment value chain, Banks, Non-bank entities, Agent network, RBI, NPCIL.

  1. Associate Prof.(Finance ), XIMB( XUB),ODISHA. E-mail:

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Feler Bose1 & Timothy Sipka2

One large area of research in which much work remains to be done is the role of belief systems and how they affect economic performance and wealth accumulation. The problem with any research along these lines is that it is difficult to isolate belief systems as a causal variable in any social dynamic. When looking at populations that are otherwise demographically equal, however, it becomes possible to connect specific outcomes to specific beliefs. This paper will look at how belief systems affect wealth distribution by testing whether Robert Caldwell's observations in South India are still valid after 150 years.

Key words: Multiple Correspondence Analysis, wealth index, fieldwork, India, beliefs, economic outcomes
JEL Code: C43, C83,010, Z12 1.

  1. Department of Economics, Alma College, 614 W. Superior Street, Alma, Ml 48801 (Michigan)
  2. Department of Mathematics, Alma College, 614 W. Superior Street, Alma, Ml 48801 (Michigan) * Correspondence : The author's e-mail address is I can be reached at the following mailing address : Department of Mathematics, Alma College, 614 W. Superior Street, Alma, MI 48801

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Hilal Ahmad1, Akanksha Singhi2 & Gyan Prakash3

Jammu and Kashmir is basically the state dependent on tourism and agriculture for its employment and survival. Agriculture and allied activities contribute approximate 20 %. So we have tried to study the growth and pattern of apple production in Jammu & Kashmir and also tried to know the estimated returns of scale, I the district of Anantnag. With the help of regression and Cobb Douglas production function we found that though the area of cultivation of apple has been increased but the overall increase in the productivity is very low. The return to scale of farmers is calculated with the help of input output analysis resulting that Coefficients of all input factors accounted in the study have been found positive in case of large ,small and marginal farmers with certain variations of inputs.

  1. M.Phil. Research Scholar, School of Economics, Devi Ahilya University Indore. M.P.
  2. Assistant Professor, School of Economics, Devi Ahilya University Indore. M.P.
  3. Professor, School of Economics, Devi Ahilya University Indors. M.P.

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