Every year, National Council of Applied Economic Research hosts the India Policy Forum, a platform where economists and policymakers dissect research ideas for their relevance to public policy. Following the 21^st edition of IPF held on 2-3 July, Ideas for India presents the Ideas@IPF2024 series, introduced in this anchor post by NCAER Senior Advisor Pradip Kumar Bagchi.

Between 10-16 July, we will host summaries of policy-relevant economics research presented at the IPF, on themes ranging from female leadership in corporate India, costs and benefits of holding foreign exchange reserves to social safety nets and economic development in the state of Punjab.

The India Policy Forum (IPF), a signature event of National Council of Applied Economic Research (NCAER), has acquired a distinctive character as an interactive platform for meaningful brainstorming on key socioeconomic issues confronting India. The IPF attracts eminent participants from the policy, research, and academic spheres, both from within India and abroad. The intellectual exchange of ideas at platforms such as the IPF also drives NCAER’s mandate of ensuring ‘Quality, Relevance, and Impact’ through its work.  

The research from IPF 2024 represents a wide spectrum of issues, ranging from the impact of having women directors on firm performance, assessing the current state of poverty and the need for altering the nature of social safety nets, and the rationale for the Reserve Bank of India to hold high levels of foreign reserves, to how Punjab can escape its ‘low growth and high debt’ trap.

In the paper “Female leadership in corporate India: Firm performance and culture”, Ratna Sahay (NCAER & CGD) and co-authors Navya Srivastava (NCAER) and Mahima Vasishth (NCAER and Bocconi University) evaluate the impact of the mandate under the Companies Act, 2013, which requires listed firms to have at least one woman on their board. They find that within a year, the percentage of listed firms without women on board plummeted, but despite this progress, India still lags in the share of women in middle and senior management roles. They combine personnel-level data with firm performance data to examine the effect of having at least one woman on the board on economic performance, financial stability, and risk for the firms, to make a business case for having more women in top positions.

In their paper on “India’s foreign reserves and global risk”, Chetan Ghate (Institute of Economic Growth), Kenneth Kletzer (University of California) and Mahima Yadav (Indian Statistical Institute) take a look at India’s rising foreign reserves and the rationale behind keeping reserves, which are well past the threshold laid down by the International Monetary Fund and others. They list the benefits of healthy reserves, including providing self-insurance against sudden financial outflows and managing exchange rate volatility, reducing the economy’s exposure to global financial risks, and lowering the volatility of portfolio debt flows in response to relative policy interest rate shocks; and assess whether these outweigh the cost of holding reserves. They suggest that the precautionary benefits of reserves could well increase as India becomes further integrated into international financial markets.

In their paper “Rethinking social safety nets in a changing society”, the authors, led by NCAER’s Sonalde Desai look at the curious challenge that India faces in providing a social safety net to its citizens with a growing economy and declining poverty. Using data from the India Human Development Survey (IHDS), this work shows that, as the economy grows, households face considerable transition in and out of poverty. Historically, India’s approach to social safety nets has involved identifying the poor and providing them with priority access to various social protection programmes that include both in-kind and cash assistance. However, as the nature of poverty changes, it becomes difficult to precisely identify and target the poor. Traditional approaches to identifying the poor through provision of Below Poverty Line (BPL) cards, assume long-term stability of poverty and tend to focus on chronically poor households – but the IHDS data show that with a decline in chronic poverty, transient poverty begins to dominate. This suggests that the approach to social protection must pay greater attention to circumstances of life that push people into poverty.

The paper “Economic development of Punjab: Prospects and policies”, assesses Punjab’s economy and the reasons for it being trapped in low growth and high debt. The authors Lakhwinder Singh (Institute of Human Development), Nirvikar Singh (University of California) and Prakarsh Singh (Plaksha University), argue for Punjab to shift away from mono-culture farming, scrap power and water subsidies, and reorient industry and services to contemporary needs. It highlights how Punjab’s lock-in to the agricultural system created by the Green Revolution has led to social issues, with agriculture providing little opportunity for tax revenue and the problem being compounded by huge power and water subsidies. It notes the state’s growing problem of unemployment, particularly among women, in both rural and urban areas. 

Over the next few days, research presented at IPF 2024 will be shared on Ideas for India, in collaboration with NCAER. We hope that these will generate greater debate and discussion on pivotal policy issues.

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