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Ashok Kotwal
On demonetisation
Posted on: 23 Dec 2016
On the evening of 8 November, the Prime Minister announced on national television that Rs. ... read on »
A symposium on Piketty: Introduction
Posted on: 15 Jun 2015
Thomas Piketty’s book on ´Capital in the Twenty First Century’ has made waves. The f ... read on »
Emerging challenges: Economic and social
Posted on: 06 Aug 2014
To mark the second anniversary of I4I in July 2014, we invited two eminent scholars – Abhi ... read on »

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Decoding universal basic income for India
Jean Drèze
Posted on: 20 Jan 2017

In this article, Jean Drèze argues that while universal basic income is a good idea in principle, as far as India today is concerned, it sounds like premature articulation. It could also become a Trojan horse for the dismantling of hard-won entitlements of the underprivileged.

Tweet using #basicincome

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Rural electrification in India: Focus on service quality
Karthik Ganesan , Abhishek Jain , Johannes Urpelainen
Posted on: 18 Jan 2017
Topics:   Infrastructure
Tags:   electricity


India has set an ambitious goal of achieving high-quality electricity supply for all households by 2019, and impressive progress has been made in increasing the number of household electricity connections. However, this column finds that the quality of electricity service to rural households is dismal and this is considered to be a major problem by rural households. There is a need for rationalising rural electricity tariffs to ensure cost recovery in exchange of improved service quality.
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Reconsidering the 4% inflation target
Gurbachan Singh
Posted on: 16 Jan 2017
Tags:   inflation


The RBI targets an inflation rate of 4%. In this article, Gurbachan Singh takes an in-depth look at the prevailing macroeconomic policy regime. This exercise provides an insight, which forms the basis for an alternative policy regime under which it is makes sense to target a lower inflation rate.
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The historical roots of India’s booming service economy
Stephen Broadberry , Bishnupriya Gupta
Posted on: 13 Jan 2017
Tags:   services , UK


India stands out from other emerging economies because its growth has been led by the service sector rather than labour-intensive manufactures. This column summarises recent research showing that India has a long history of strength in services, and its service-led development may play to historical strengths rather than hindering its progress.
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A five-minute loan to unlock micro-entrepreneurship in India
Vibhor Goyal , Niloufer Memon , Varad Pande
Posted on: 11 Jan 2017
Topics:   Finance


Micro-entrepreneurs are grossly underserved by traditional lenders, as they typically do not have collateral or credit histories to make them creditworthy. In this article, Pande, Memon and Goyal of Dalberg Global Development Advisors, describe how digital infrastructure created by ‘India Stack’ can help provide paperless, presence-less, and cashless credit to micro-entrepreneurs, in a way that is sustainable for lenders.
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Aadhaar, demonetisation, and the poor
Silvia Masiero
Posted on: 09 Jan 2017

There is a view that an Aadhaar-centred apparatus of digital inclusion can shield the poor from the problematic effects of demonetisation. In this article, Silvia Masiero argues that constraints of technology ownership, access to informational networks, and infrastructural readiness prove the argument wrong. Other means are needed to reduce the severe humanitarian consequences of sudden cashlessness.
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School consolidation in Himachal Pradesh: Achieving quality and inclusion
Shrikant Wad
Posted on: 06 Jan 2017
Topics:   Education


While the emphasis on neighbourhood schooling in India’s education policy over the past 15 years has increased enrolment, it has also contributed to a proliferation of poor quality, small schools. To address this, the state government of Himachal Pradesh has announced its intent to consolidate existing schools. In this article, Shrikant Wad discusses the issue and recommends measures that would enable the consolidation policy to achieve quality along with inclusion.
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Assessing the impact of demonetisation through the gender lens
Mitali Nikore
Posted on: 04 Jan 2017

In this article, Mitali Nikore, Senior Consultant at PwC India, highlights how demonetisation is impacting women differentially, and offers policy suggestions on how the negative effects can be mitigated.
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Unified agricultural markets: Where are the reforms lacking?
Nidhi Aggarwal , Sargam Jain , Sudha Narayanan
Posted on: 02 Jan 2017
Topics:   Agriculture
Tags:   Karnataka , IT


In April 2016, Modi government launched the e-National Agriculture Market (e-NAM) platform – a pan-India electronic marketplace for trading of agricultural commodities. However, rather than ushering in a revolution, concerns have been raised regarding lack of traded volumes on the platform. To understand the reluctant progress of e-NAM, this column analyses the experience of the state of Karnataka that embarked on agricultural market reforms in 2007.
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On demonetisation
Parikshit Ghosh
Posted on: 23 Dec 2016

On the evening of 8 November, the Prime Minister announced on national television that Rs. 1,000 and 500 notes are no longer legal tender, and must be exchanged at the banks for newly issued currency. This major policy intervention has sparked a country-wide debate. Will it curb black money? Is it going to nudge us towards a cashless society? How much will be the collateral damage from the liquidity shock and is it a price worth paying?

Ideas for India is following the issue closely. A lot of commentary has already appeared on our pages and more will be forthcoming. This page collects together all the articles we have posted on demonetisation, in reverse chronological order.

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Unique Health Identification and Aadhaar: A case for mandatory linkage
Mudit Kapoor
Posted on: 23 Dec 2016
Topics:   Health


As part of the Digital India initiative, All India Institute of Medical Sciences (AIIMS) issues a Unique Health Identification (UHID) number to each patient, which documents their entire journey in the hospital. AIIMS has called for a mandatory linkage between UHID and Aadhaar. In this article, Mudit Kapoor, Associate Professor at ISI Delhi Centre, explains how this step can have significant positive implications for delivery and democratisation of healthcare.
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Demonetisation: A thunderbolt in search of a target
Ajit Karnik
Posted on: 23 Dec 2016

In this article, Ajit Karnik, Professor of Economics at Middlesex University, Dubai, examines the various rationales that have been trotted out to justify demonetisation and finds little evidence to back these up. In his view, this seems to have been done mainly because a dramatic gesture was required to keep the supporters of the current government enthused.
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Post-demonetisation: Can the old notes return?
Badri Sunderarajan
Posted on: 22 Dec 2016

Banks in India are reported to have received about 87.7% of the demonetised currency notes so far. In this article, Badri Sunderarajan argues that when once all the old notes have come in, it would make sense to reintroduce them into the system as legal tender.
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Book review: ´India’s long road´ by Vijay Joshi
Pulapre Balakrishnan
Posted on: 21 Dec 2016
Tags:  


In this article, Pulapre Balakrishnan, Professor of Economics at Ashoka University, reviews Vijay Joshi’s book, ‘India’s long road: The search for prosperity’.
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India’s demonetisation drive: Politics trumps economics
Siddhartha Mitra
Posted on: 20 Dec 2016

In this article, Siddhartha Mitra, Professor of Economics at Jadavpur University, argues that even though demonetisation fails the standard economic cost-benefit test with regard to its stated objectives, it may still make for sound political arithmetic.
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Do Gram Panchayat leaders favour their own constituencies in MNREGA fund allocation?
Subhasish Dey , Kunal Sen
Posted on: 19 Dec 2016
Topics:   Political Economy


Political incentives are known to play a role in the allocation of public resources from upper- to lower-tier governments. This column seeks to examine whether ruling parties in local governments favour their own constituencies in allocating MNREGA funds, if they target their core supporters or swing voters, and if this has any electoral returns.
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Demonetisation: Some very counterintuitive effects in practice
Gurbachan Singh
Posted on: 18 Dec 2016

Due to demonetisation, holders of black money lose if they cannot exchange their notes or sell these in the black market. It is widely reasoned that this implies an equal financial gain for the public authorities. In this article, Gurbachan Singh shows that this logic is flawed.
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Will demonetisation lead to a protracted economic slowdown?
Radhika Pandey , Rajeswari Sengupta
Posted on: 15 Dec 2016

In this article, Pandey and Sengupta argue that the impact of the contractionary demand shock triggered by the note ban will gradually radiate from cash-intensive activities to virtually every sector of the economy.
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Governance performance of Indian states: 2001-02 and 2011-12
Samik Chowdhury , Sudipto Mundle , Satadru Sikdar
Posted on: 13 Dec 2016
Topics:   Political Economy


Defining governance as service delivery, this column develops a measure of the quality of governance – also adjusting for the impact of the level of development - and provides a ranking of major Indian states. The analysis suggests that there are two distinct paths of development in the less- and more-developed states.
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The devil is in the details: Successes and limitations of bureaucratic reform
Iqbal Dhaliwal , Rema Hanna , Rebecca Toole
Posted on: 09 Dec 2016
Topics:   Health


To address absenteeism among staff at public healthcare facilities, the government of Karnataka introduced an innovative biometric device to monitor and enforce attendance rules. This column presents findings of a large randomised evaluation of the programme. While some health gains were achieved, imperfect enforcement illustrates the limits of monitoring solutions if there are constraints on full implementation in practice.
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Land acquisition law: The buck stops with the states
Dhanmanjiri Sathe
Posted on: 07 Dec 2016

Some believe that by encouraging states to enact their own versions of the land acquisition law, the central government is diluting the law. In this article, Dhanmanjiri Sathe, Professor of Economics at Savitribai Phule Pune University, argues that states have much more experience and expertise in land acquisition. Given the diversity in development across states, it is only prudent that the law be customised to suit local requirements.
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Is the structure of Indian manufacturing geared towards job creation?
Sharmila Kantha
Posted on: 05 Dec 2016
Topics:   Jobs


Government of India has envisaged adding 100 million jobs in manufacturing by 2022. This column finds that the structure of the country’s manufacturing sector is misaligned with the objective of job creation. Subsectors that have low potential to generate jobs dominate the manufacturing profile. To generate jobs, more employment-intensive subsectors should be promoted.
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The demonetisation boondoggle
Amartya Lahiri
Posted on: 04 Dec 2016

In this article, Amartya Lahiri, Professor of Economics at the University of British Columbia, argues that all public policy must rely on a clear-headed cost-benefit analysis and the recent demonetisation move fails the test.
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Why Demonetisation?
Sarmistha Pal
Posted on: 01 Dec 2016

In this article, Sarmistha Pal, Chair in Financial Economics at the University of Surrey, examines whether the current government’s stance in tackling black money has significantly differed from its predecessor, and how far it is willing to go in this respect.
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Demonetisation and agricultural markets
Nidhi Aggarwal , Sudha Narayanan
Posted on: 30 Nov 2016

In this article, Aggarwal and Narayanan contend that demonetisation alone cannot turn agricultural markets cashless. Such a shift would require sustained and focussed effort to expand the reach of formal institutions, especially for credit and storage.
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Consequences of the demonetisation shock
Sudipto Mundle
Posted on: 29 Nov 2016

In this article, Sudipto Mundle, Emeritus Professor at NIPFP, contends that we are likely to see a significant dip in economic activity till January 2017 or even till the end of the current financial year because of the disruptive demonetisation shock.
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Minimum wage legislation for domestic workers: Does it work?
Rohan Gudibande , Arun Jacob
Posted on: 28 Nov 2016
Topics:   Jobs


Between 2005 and 2009, for the first time, seven Indian states notified minimum wages for domestic workers. This column evaluates the impact of the legislation in terms of real wages and employment opportunities for domestic workers in four of these states. It finds that notifying minimum wages by itself has limited impact; there is a need for strong and transparent monitoring mechanisms.
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How do electricity shortages affect industry in India?
Hunt Allcott , Allan Collard-Wexler , Stephen D O'Connell
Posted on: 25 Nov 2016
Topics:   Infrastructure


Poor electricity supply is widely recognised as a key impediment to firm growth and productivity. This column finds that average reported level of electricity shortages in India reduces annual plant revenues and producer surplus of the average manufacturing plant by 5-10%. While productivity losses are smaller, shortages distort plant size distribution due to significant economies of scale in generator costs.
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Notes ban: Modinomics vs. Moditics
Maitreesh Ghatak
Posted on: 23 Nov 2016

Maitreesh Ghatak, Professor of Economics at the London School of Economics, contends that while the ban on high-denomination currency notes is bad economics, it is a brilliant political move.
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Demonetisation and rural cooperative banks
Ajay Vir Jakhar
Posted on: 22 Nov 2016

The RBI has barred rural cooperative banks from exchanging or accepting the denotified Rs. 1,000 and 500 notes. In this article, Ajay Vir Jakhar of Bharat Krishak Samaj - a non-partisan association of farmers - argues that if rural cooperative banks sink, so will farmers.
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A monetary economics view of the demonetisation
Ajay Shah
Posted on: 21 Nov 2016

The demonetised Rs. 1,000 and 500 notes were 86% of the total volume of cash in India. In this article, Ajay Shah, Professor at NIPFP, argues that if a significant scale of firm failure were to come about, it would convert a temporary shock into a deeper and more long-term recession.
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GDP conundrum: A synoptic view
R. Nagaraj
Posted on: 20 Nov 2016
Topics:   Economic Thought
Tags:   GDP , data


R Nagaraj, Professor of Economics at IGIDR, summarises the key points of controversy around the methodology and implications of the new GDP series.

This is the last of a four-part series.

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Going cashless but thinking cash?
Bappaditya Mukhopadhyay
Posted on: 20 Nov 2016

In this article, Bappaditya Mukhopadhyay, Professor of Economics and Finance at the Great Lakes Institute of Management, contends that switching from a predominantly cash-based to cashless economy needs a positive, exogenous shock and the recent currency ban could be the perfect opportunity for that. To give India’s cashless economy the push it needs, the government could allow mobile and other digital payment platforms to accept deposits in demonetised notes.
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Picking up the pieces
Pronab Sen
Posted on: 18 Nov 2016

In an earlier article , Pronab Sen, Country Director, IGC India Central, examined some of the economic consequences of the recent demonetisation of Rs. 1,000 and 500 notes in India, and concluded that the potential damage could be substantial, both in terms of growth and equity.

In this article, focussing on solutions, he contends that the government now needs to realise that credit for production purposes is at least as, if not more, important than providing liquidity for consumption.

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GDP conundrum: Some areas of concern around growth overestimation in Indian manufacturing
Amey Sapre
Posted on: 18 Nov 2016
Topics:   Economic Growth


Based on the new GDP series, large upward revisions in manufacturing growth rates were made – from 1.1% to 6.2% in 2012-13, and from -0.7% to 5.29% in 2013 – 14 that were not reflective of the actual performance of the sector during the period. In this article, Amey Sapre, doctoral student in Economics at IIT Kanpur, analyses some of the methodological issues in measuring growth in the manufacturing sector.

This is the third of a four-part series.

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Policymaking in the ‘grey zone’?
Prerna Mukharya
Posted on: 17 Nov 2016

Prerna Mukharya, Founder of Outline India – a social enterprise that focuses on data collection, impact assessments and evaluation studies, predominantly working with rural populations in remote areas – discusses the impact of the currency ban on their work.
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GDP conundrum: Is India booming?
Rajeswari Sengupta
Posted on: 16 Nov 2016
Topics:   Economic Growth
Tags:   GDP , data


Rajeswari Sengupta, Assistant Professor at IGIDR, points out that the methodology used for the new GDP series seems to be underestimating the GDP deflator, which in turn is causing real growth to be overstated, perhaps by as much as 2 percentage points.

This is the second of a four-part series.

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GDP conundrum: What makes the changes in the new series so radical?
J. Dennis Rajakumar , S.L. Shetty
Posted on: 16 Nov 2016
Topics:   Economic Growth
Tags:   GDP , data


Dennis Rajakumar and S.L. Shetty of the EPW Research Foundation, present a detailed explanation of the wide-ranging changes in the new 2011-12 National Accounts Statistics series.

This is the first of a four-part series.

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Introduction to e-Symposium: The GDP conundrum
Parikshit Ghosh
Posted on: 16 Nov 2016
Topics:   Economic Growth
Tags:   GDP , data


Ever since India’s Central Statistical Organisation came out with the new GDP series with 2011-12 as the base year, controversy has surrounded it. The CSO claims that the new series is calculated based on a number of methodological changes that bring India closer to international practice. However, the resulting high growth figures do not seem to quite agree with several other indices that usually reflect the strength of the economy.

To examine the issue, I4I Editor Parikshit Ghosh is hosting an e-Symposium over the next few days. A panel of experts will explain, in detail, the exact changes in estimation methods and identify potential problem areas that could be a source of overestimation.

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A macro view of India’s currency ban
Rajeswari Sengupta
Posted on: 15 Nov 2016

The recent ban on high-value currency notes has taken the country by storm. While much is being written about the pros and cons of this announcement in terms of the effect on black money, logistical costs, and the immediate inconvenience faced by the public, there is little or no discourse on the macroeconomic implications. In this article, Rajeswari Sengupta, Assistant Professor of Economics at IGIDR, discusses the impact of this move on money supply, output and prices, in the short- and medium-term.
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Shock and oh damn
Pronab Sen
Posted on: 14 Nov 2016

In this article, Pronab Sen, Country Director for the India Central Programme of the International Growth Centre, argues that India’s recent demonetisation has penalised virtually the entire informal sector, and perhaps damaged it permanently.
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A closer look at demonetisation
Gurbachan Singh
Posted on: 13 Nov 2016

In this article, Gurbachan Singh contends that black money and white money are simplistic concepts; there is a grey area as well. In his view, the economic effects of demonetisation in terms of real estate, seigniorage, and political funding are complex. The measure can be useful in curbing black money only if supplemented by other policies on a sustained basis.
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Happy Seeder: A solution to agricultural fires in north India
Ridhima Gupta , E. Somanathan
Posted on: 12 Nov 2016

It is believed that much of the pollution in Delhi in November every year originates in the neighbouring states of Punjab and Haryana where farmers burn their fields to dispose of crop residue. This column discusses a simple, practical and cost-effective solution to deal with th