Special Centennial Issue

No. 412

July 2023

Vol. CIV (Part-I)

ISSN: 0019-5170


New Economic Geography: The Role of Small and
Medium Towns in the Genesis of Urbanization in India

Boishampayan Chatterjee 1

This paper examines the extent to which small and medium towns in India have contributed toward the growth of urban population. As agglomeration benefits outweigh its costs, small and medium towns can become an important hub for economic activity. Descriptive mapping of 15 Indian states indicates that the growth of small and medium towns have a substantial share in the overall growth of urban areas in a state. Results from the district-level regressions show that a positive shock in district urban population is associated with a significant increase in the number of small and medium towns. Additionally, growth of population in small and medium towns responds positively to the increased pace of urbanization at the district level. However, the dispersed nature of urbanization may point towards the role of the government to mobilize resources from greater economic activities to facilitate the rapid growth of small and medium towns.

  1. Anil Surendra Modi School of Commerce, SVKM’s Narsee Monjee Institute of Management Studies (NMIMS) University, V.L. Mehta Road, Vile Parle West, Mumbai, Maharashtra-400056..

Short Run and Long Run Co-integration between
Economic Growth, Inflation and Money Supply:
An Application of Co-integration Approach

Javaid Ahmad Mir 1
Rekha Acharya2
Majid Rehman Khuroo3

The dynamic relationship between economic growth, inflation and money supply is one of the major macroeconomic policy objectives. The objective of the present study was to examine the impact of inflation and money supply on economic growth in both short run and long run for India. The study uses yearly time series data of economic growth, consumer price index (CPI), Inflation as measured by the consumer price index, and money supply. The studies uses vector error correction model (VECM) model to estimate short run and long run co-integration between inflation, money supply and economic growth. In addition to this, this study aims to examine the association among inflation, money supply and economic growth using VAR Granger Causality test. The findings revealed the existence of both short run and long run elasticities running from inflation to economic growth but only short run cointegration from money supply to economic growth. The results from VAR Granger Causality indicate the existence of causation from both money supply and inflation to economic growth and from economic growth and money supply to inflation. The findings have some important policy implications to be considered while formulating any policy action for stabilizing the economy.

Keywords: Dynamic Relationship, Economic Growth, Inflation, Money Supply, Vector Error Correction Model, Granger Causality Test, Policy Implications.

  1. Lecturer in Economics, GDC Kupwara, Email: Javidecon99@gmail.com
  2. Professor in Economics, DAVV, Indore, Email: mailforrekha@gmail.com
  3. Assistant Professor, Commerce, GDC Kupwara, Email: majidrehman3@gmail.com

Examining the Relationship between Public Private
Partnership Investment and Economic Growth in India:
An Empirical Analysis using an ARDL Framework

Pratibha Rai1
Vijeta Pundir2
Priya Gupta3
Deepthi B.4

The relationship between private and government investment and their impact on GDP remains ambiguous, with studies in developing and advanced economies showing contradictory findings. It is unclear whether government investment complements or substitutes private sector investment, and the dynamics of this relationship need further exploration, along with the role of public-private partnerships (PPPs) in enhancing private sector capital formation and economic growth. Using the Autoregressive Distributed Lag technique within an extended Cobb-Douglas framework, flexible accelerator model, and employing Granger Causality analysis, the study investigates a three-decade period from 1989 to 2020. The findings reveal both short and long-term co-integrating linkages, indicating the Indian economy's tendency to converge to equilibrium following exogenous and endogenous shocks. The study emphasizes the importance of strategic investment allocation in the public sector, particularly in infrastructure and non-infrastructure projects, to stimulate private sector investments aligned with sustainable development goals. The study suggests investigating how PPPs enable governments to avoid or defer infrastructure spending without forgoing the benefits, which can be particularly relevant for countries facing fiscal constraints. The future scope also entails exploring the effectiveness of qualitative fiscal and monetary policies in supporting and enhancing private investments. Understanding the potential of capital formation by the government sector and PPPs to incentivize private sector capital formation and promote national well-being through higher growth is crucial for policymakers and researchers alike. Given the global trend of countries initiating PPPs to address infrastructure and non-infrastructure needs, further investigation into their implications and benefits is warranted. Such studies can provide valuable insights and guidance for countries facing fiscal constraints and seeking sustainable economic expansion.

Keywords : PPP; Crowding out; ARDL; FDI; GDP; Public and Private Investment

  1. Maharaja Agrasen College, University of Delhi, Delhi, India. E-mail: rai.pratibha@gmail.com
  2. Maharaja Agrasen College, University of Delhi, Delhi, India. E-mail: vpundir@mac.du.ac.in
  3. Atal Bihari Vajpayee School of Management and Entrepreneurship, Jawaharlal Nehru University, New Delhi, India. E-mail: pgupta1902@gmail.com
  4. Atal Bihari Vajpayee School of Management and Entrepreneurship, Jawaharlal Nehru University, New Delhi, India. E-mail: deepthy.spandan@gmail.com

How Vaccinations and Stringency Index Impacts
the Volatility of Indian Treasury Bills and
the Stock Market?

Munawar Sayyad1
Satish Chandra Tiwari2
Kaushik Bhattacharjee3
Abhishek Sinha4

Pandemic is a black swan event that impacts the returns and the volatility of the stocks market and has cascading impact on the Treasury bill markets as investors look at safe investment opportunities. In this study the authors investigate impact of variables impacting the severity of corona (Total deaths of Corona, Total vaccination given, positivity rate, and Stringency index) on the NIFTY 500 Returns, Volatility Index (VIX) and Treasury Bills Returns (91 days) using regression methodology. We find a significant positive association between NIFTY 50 return and daily vaccination count of Covid-19.The result shows that increasing number of vaccination helps to recover the investor’s faith for investing in market again and hence NIFTY 50 gets a positive signal in terms of return. Furthermore, there is a positive relationship between market volatility and variables that impact Covid-19. The result clearly depicts that as the number of covid-19 cases has been increasing as government takes stringent measures the market has become more volatile.

Keywords : Corona virus, PANDEMIC, Vaccinations, Treasury Bills returns, Financial markets, Stock returns.

  1. Department of Finance, IFHE, ICFAI Business School, Hyderabad, India. Email: munawar0013@ibsindia.org
  2. Department of Finance, IFHE, ICFAI Business School, Hyderabad, India. Email: satish2bhu@gmail.com
  3. Department of Finance, IFHE, ICFAI Business School, Hyderabad, India. Email: kaushik@ibsindia.org
  4. Department of Finance, IFHE, ICFAI Business School, Hyderabad, India. Email: abhisheksinha@ibsindia.org

Sustainability of Microfinance Institutions in India

Nishi Malhotra1
Pankaj Kumar Baag 2

Around the world, 1.7 billion people live in abject poverty. Due to a lack of collateral and knowledge about creditworthiness, these people cannot obtain financial services. Due to mission drift, formal financial institutions are wary of lending to these members. U.N. sustainable development has earmarked an additional role for the MFIs in catering to poor people. This study examines the trade-off Indian microfinance firms face between breadth of outreach and financial sustainability. To study this relationship, we deployed a dynamic panel estimator with the G.M.M. to address the issue of endogeneity between outreach and financial sustainability of microfinance institutions. The analysis confirmed the existence of a trade-off between outreach and financial viability. In other words, small loans are less financially sustainable. Considering the mission drift faced by the microfinance institutions in India, this study demonstrates a critical trade-off between financial sustainability and outreach. This analysis will aid policymakers as MFIs shift their focus away from microcredit and toward individual responsibility loans and lending. No previous research has examined the endogeneity and reverse causality between microfinance institutions' outreach and financial sustainability. This study is the firstever study to explore this issue in the context of the microfinance institutions.

Keywords- Microfinance institutions, financial sustainability, Outreach, Mission drift.

  1. Ph.D. Scholar (Finance, Accounts, and Control), IIM Kozhikode. Email: nishim13fpm@iimk.ac.in
  2. Assistant Professor, (Finance, Accounts & Control) IIM Kozhikode

Macro-Economic Impacts of Covid-19 Pandemic:
A Comparative Study of Developed
and Developing Countries

D. K. Yadav1

Covid -19 pandemic led lockdown for substantially long period of time has affected almost every aspect of human life. Spread of coronavirus is not limited to any particular country. Its spread is now across the countries and continents. In this sense UNO has announced it as global pandemic of current era. Though the spread of corona virus has affected every aspect of human life, be it social, cultural, political, or in that context any other aspect of human behaviour. However, it has most badly affected to economic aspect of human life. In this context it is important to analyse whether global pandemic has affected similarly to macroeconomic indicators of developed and developing countries? If it is dissimilar, what is the level of difference and what are their possible reasons? Keeping these questions in mind, Present study aims to explore the impact of Covid-19 pandemic on fundamental economic variables by comparative analysis of developed and developing countries.

Keywords : Covid-19 Pandemic, Lockdown, Developed Countries, Developing Countries, Macroeconomic Indicators.

  1. Assistant Professor, Department of Economics, Babasaheb Bhimrao Ambedkar University (A Central University), Lucknow. Email: dev1985icfai@gmail.com

Distribution and Determinants of Out-of-Pocket
Expenditures on Healthcare in India: An Empirical
Analysis at the State Level

Piya Ghosh1
Jayanta Sen2

This paper deals with an empirical analysis of the changing pattern of the consumer’s out-of-pocket expenses on healthcare and the extent of inequality that prevails in the distribution of healthcare spending among different income groups across major Indian states. Gini Coefficient & Palma Ratio are used to measure the degree of inequality. Factors influencing out-of-pocket health expenses are examined in rural and urban India separately by using pooled regression econometric techniques. National Sample Survey Organisation (NSSO), India, consumer expenditure data on healthcare are considered. Inequality in out-of-pocket payments on healthcare appeared as remarkably high as compared to the inequality in aggregate expenditure in every parts of the nation. Significant Rural-urban disparity in the Pattern of expenditure and in the inequality levels exhibited across the Indian states. Income being an indicator of ability-to-pay emerged as the prime factor influencing outof- pocket payments. Pro-poor health insurance policies, proper health infrastructure and good governance in health management system would be effective and revolutionary to reduce the gap in spending pattern between rural and urban households.

Keywords : Out-of-Pocket Expenses, Healthcare, Distribution, Inequality, Gini Coefficient, Palma Ratio, Determinants.

  1. Research Scholar, West Bengal State University, Barasat, Kolkata, West Bengal. Email: piyaghosh.ghosh@gmail.com
  2. Professor & Head, Department of Economics, West Bengal State University, Barasat, Kolkata, West Bengal. Email: senj123@gmail.com

Social Networks, Memberships, and Occupational
Mobility in India: Findings from Indian Human
Development Survey (IHDS) 2011-12 Data

Bisla Devi Rajoriya1
Seepana Prakasam2

The study investigates the extent and patterns of intergenerational occupational mobility among households in India using IHDS 2011-12. It estimates the influence of socio-economics, demographic factors, and networks (age, gender, caste, education, urban economic status of the household, and social networks variables) on intergenerational occupational mobility.

All levels of education are found to be significant and positively associated with upward mobility. Son with one higher level of education increases their chances of upward mobility by 7per cent. Son of female household heads has a 28 per cent higher probability of upward mobility. Households belonging to OBC and SC are likely to find open opportunities to move upward in 2011-12.

We also find a significant influence of networks and memberships. Acquaintances with youth memberships within the community in urban areas increase the chances of upward mobility by 6 per cent compared to the networks outside the community, whereas membership in religious groups, social groups, and caste associations have higher chances of upward mobility of 3per cent. Having networks with government officers is statistically significant at positively correlated with upward mobility. Overall, our study suggests that the households of better background characteristics are less likely to be in the same occupation as their fathers and social networks and memberships have an important influence on upward mobility.

Keywords : Networks & Memberships, Intergenerational Occupational Mobility, multinomial logitmodel, India Human Development Survey (IHDS), India.

  1. ICSSR IEG Doctoral Fellow, Department of Economics, Panjab University, Chandigarh. E-mail: bisla04@gmail.com
  2. Asst. Professor of Economics (SG), PGGCG- 11 Chd / Post Doctoral Fellow, Department of Economics, Panjab University, India. E-mail: drsprakasam@gmail.com

Improvements and Impediments of Reproductive
Health of Women: A Disaggregated Analysis
in Indian Subcontinent

Gargi Bhattacharya1

The present study attempts to assess the reproductive health (RH) status based on 5 selected RH indicators of 15 major states in India over 3 time points using the District Level Household and Facility Survey data. Inter-state variations in overall reproductive health situation at a large scale have been found to exist. Although over time the states are converging, the inequality trend in different RH parameters gives quite mixed results. In order to explore the underlying reasons behind the inter-state differential of selected reproductive health parameters, a panel data regression is carried out incorporating both demand and supply side factors and in most of the cases the result affirms that female education, female labor force participation and per capita social sector spending play important role for explaining the differential reproductive health outcomes in terms of different reproductive health services. In some cases poverty and inadequate health infrastructure appear to be vital and significant predictors. Achieving Sustainable Development Goals (SDGs) in respect of reproductive health and “Health for All” in India are utopian concepts until a proper intervention is made at the policy level with an aim to ensure social justice and equity in the economy.

Keywords: Demographic dividend, India, Reproductive health, Achievement index, Relative inequality, Health infrastructure.

  1. Assistant Professor, Department of Economics, Mahadevananda Mahavidyalaya, Barrackpore, Kolkata-700120, India. E-mail: g.b82here@gmail.com

Impact of Coronavirus Pandemic on UPI Payments:
A Major Boost to Digitalization

Hargun Sahni1
Hariom Gupta2

After coronavirus pandemic struck the world, there was an urgent need to curb the spread of virus by avoiding the use of currency notes. This is, where Unified Payments Interface (UPI) transactions played a catalyst role in boosting digital payment transactions post covid. This paper reviews precovid and post-covid performance of UPI (Unified Payment Interface) transactions in India. For this purpose, a time period of six years, i.e., 2016-2018 (pre-covid) and 2019- 2022 (post-covid) considered for the current study. Pictorial representation and paired sample t-test has been used at 5% significance level, if pandemic push has taken place and boosted UPI transactions. The findings of the study reveal that there was a positive and significant difference during pre-covid and post-covid period in UPI transactions with respect to three parameters, viz., volume of UPI transactions, value of UPI transactions and the number of banks supporting UPI mechanism.

Keywords: Unified Payment Interface, Covid-19, digital payments.

  1. Research Scholar, Department of Commerce and Business Administration, University of Allahabad (India). E-mail: h.sahni1996@gmail.com
  2. Assistant Professor, Department of Commerce and Business Administration, University of Allahabad (India) . E-mail: hariom@allduniv.ac.in