Table Of ContentMarket, Regulations and Finance
India Studies in Business and Economics
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Ratan Khasnabis • Indrani Chakraborty
Editors
Market, Regulations
and Finance
Global Meltdown and the Indian Economy
1 3
Editors
Ratan Khasnabis Indrani Chakraborty
Institute of Development Studies Kolkata Professor of Economics
Kolkata Institute of Development Studies Kolkata
West Bengal Kolkata
India West Bengal
India
ISSN 2198-0012 ISSN 2198-0020 (electronic)
ISBN 978-81-322-1794-7 ISBN 978-81-322-1795-4 (eBook)
DOI 10.1007/978-81-322-1795-4
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Dedicated to our respected teacher
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Preface
All is not well with the state of the Indian economy post 2007–2008. The growth
rate of GDP declined following the subprime crisis in USA. Subsequently, the econ-
omy experienced serious volatility in terms of fluctuations in stock prices, exchange
rates and rise in inflation rates. There were signs of revival of the economy in 2010–
2011, but the growth rate has declined recently. As a manifestation of concerns in
policy-making circles, we may cite the recent Reserve Bank of India initiative for
an international deliberation on the new trilemma between monetary policy, debt
sustainability and financial stability. Many of the certainties of the old macroeco-
nomic management have been called into question by recent developments. For
example, a membership of OECD (Organisation for Economic Co-operation and
Development)—a rich nations’ club—was supposed to shield an economy against
the kind of crisis that has repeatedly embroiled the smaller or newer members of
the eurozone. Or to take another example, fiscal prudence was supposed to be a
guarantee of investor faith and therefore balance-of-payments sustainability of an
economy. Those kinds of certainty are now gone. Or to take yet another example,
with high rates of interest on loans and a turbulent stock market, why is Indian in-
vestment so capital-intensive? In a world in which there is so much unemployment
everywhere and in which incomes have become highly concentrated in a few hands,
usual calculations of Engel elasticity-driven demand should have predicted a crash
in food prices. But that has not happened. We are perhaps again facing problems of
stagflation. But the old conservative remedy of defanging trade unions or weaken-
ing social security nets is not working. In order to suggest appropriate policies, we
need better to understand the macroeconomics of this situation and the incentive
structures that are nested within that macroeconomic framework.
With the aim of throwing more light on these burning issues the Institute of
Development Studies Kolkata (IDSK) organized a national conference on “Money,
Finance and Macroeconomics of the Real Economy” which was held during 26–28
April, 2012 at the Institute. The present volume is an outcome of the papers pre-
sented at the conference.
Many people have helped us in this endeavour. First of all, we are greatly in-
debted to Amiya Kumar Bagchi, former Director and presently Emeritus Professor
of IDSK, for constant support and inspiration to organize the conference as well as
vii
viii Preface
to complete this volume. We are also grateful to Achin Chakraborty, the Director of
IDSK for constant support. Support from Ramkrishna Chatterjee, the Joint Director
of IDSK, should be specially acknowledged. We are also indebted to the other fac-
ulty members and administrative staff of IDSK to organize the conference success-
fully. Our heartfelt thanks to Poulomi Lahiri, Simantini Mukhopadhyay, Abhinab
Ghosh, Soumali Banerjee, Sucheta Sardar and Dyuti Sinha, the rapporteurs of the
conference. We finally express our gratitude to all the eminent scholars who have
contributed to this volume, for their active participation in the conference which
enriched the quality of deliberation as well as their sincere cooperation which made
it possible for us to prepare the volume without delay.
Finally, we thank Sagarika Ghosh and Nupoor Singh of Springer (India) for
agreeing to publish this volume.
Contents
1 Introduction ............................................................................................... 1
Ratan Khasnabis and Indrani Chakraborty
2 Monetary Policy, Financial Stability and Macro-prudential
Regulation: An Indian Perspective .......................................................... 17
Dilip M. Nachane
3 Crisis as Paradigm Shifter: Reflections on 2008–?? .............................. 41
Subir Gokarn
4 The Financial Sector and the Real Economy: Some
Considerations in the Indian Context ..................................................... 53
Pronab Sen
5 Recent Drivers of Global Commodity Prices: An Exploration ............. 63
Partha Ray
6 Fiscal Reforms, Fiscal Rule and Development Spending:
Two Decades of Indian Experience .......................................................... 83
Pinaki Chakraborty
7 Inflation Targeting in Developing Countries: Barking up the
Wrong Tree ................................................................................................ 95
Rohit Azad and Anupam Das
8 Global Ramifications of Reoriented US Policies Towards
Employment Generation .......................................................................... 113
Parthapratim Pal and Atulan Guha
9 Employment, Growth and Inequality in India: A Critical Analysis ..... 141
Subhanil Chowdhury
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x Contents
10 Effects of Changing Pattern of Corporate Savings on Firm
Profitability in India: A New Approach .................................................. 169
Indrani Chakraborty
11 Determinants of Price Deviations Across Regions in India ................... 195
Kaushik Bhattacharya
12 Globalisation and Growth: The Indian Case in Perspective ................. 213
Surajit Mazumdar
13 Oil Price Shock, Pass-Through Policy and its Impact on India ........... 231
Surajit Das, Sukanya Bose and N. R. Bhanumurthy
Description:This volume’s primary contribution to the field of Economics is that it addresses the issue of inter-linkages between money, finance and macroeconomics with a broad analytical perspective that has commonality with the Post-Keynesians. In an attempt to assess the consequences of economic reforms an
