Indian Growth and Development Review

Gupta, Rajesh; Anand, Arjun

2024 Indian Growth and Development Review

doi: 10.1108/igdr-04-2022-0052

This study aims to review the computational framework of SDGs in India, so that a mid-course correction can be contemplated.Design/methodology/approachThis study deploys, inter alia, econometric analysis to probe the robustness of indicators of SDG India Index 3.0. Methodologically, the study intensively probes the robustness of SDG India index and extensively refers to the global SDG indexes for cross-checking.FindingsThough the three editions of SDGI index mark significant efforts taken towards measuring the progress of SDGs in India, the paradigm suffers from the problem of too many indicators chasing only few targets, quantitative and qualitative issues with indicators, vintage pollution, partial coverage of targets and robustness issues.Research limitations/implicationsThis study has the limitation that it could not check the robustness of SDG scores with different weights assigned to indicators and future researchers can take up that interesting assignment.Practical implicationsSince measuring the SDG progress through SDG index is a global endeavour, the findings of this study are important for almost all countries of the world, as it is still not too late to do mid-course correction because it is not the measurement that matters at the end of the day, rather it is the outcome of sustainable development that every country cares about.Social implicationsThe obfuscation of layers of SDG index in crafty, glossy and power-point-presentation-oriented SDG reports should get the reality check through such review of the computational framework of SDGs.Originality/valueThis is the first study that unpacks the layers of SDG index computation in general and comprehensively reviews the Indian SDG indexing method in particular.

Arora, Rahul; Arora, Nitin; Bhattacharjee, Sidhartha

2024 Indian Growth and Development Review

doi: 10.1108/igdr-12-2022-0138

COVID-19 has affected the economies adversely from all sides. The sudden halt in production has impacted both the supply and demand sides. It calls for analysis to quantify the impact of the reduction in economic activity on the economy-wide variables so that appropriate steps can be taken. This study aims to evaluate the sensitivity of various sectors of the Indian economy to this dual shock.Design/methodology/approachThe eight-sector open economy general equilibrium Global Trade Analysis Project (GTAP) model has been simulated to evaluate the sector-specific effects of a fall in economic activity due to COVID-19. This model uses an economy-wide accounting framework to quantify the impact of a shock on the given equilibrium economy and report the post-simulation new equilibrium values.FindingsThe empirical results state that welfare for the Indian economy falls to the tune of 7.70% due to output shock. Because of demand–supply linkages, it also impacts the inter- and intra-industry flows, demand for factors of production and imports. There is a momentous fall in the demand for factor endowments from all sectors. Among those, the trade-hotel-transport and manufacturing sectors are in the first two positions from the top. The study recommends an immediate revival of the manufacturing and trade-hotel-transport sectors to get the Indian economy back on track.Originality/valueThe present study has modified the existing GTAP model accounting framework through unemployment and output closures to account for the impact of change in sectoral output due to COVID-19 on the level of employment and other macroeconomic variables.

Bhattacharyya, Sucharita; Chaudhuri, Bibek Ray; Chatterjee, Susmita; Chakraborty, Debashis

2024 Indian Growth and Development Review

doi: 10.1108/igdr-11-2022-0128

The Indian pharmaceutical industry currently faces multiple challenges, including rising costs and slowing export growth, which in turn have limited its ability to expand presence in global canvas. Given the nature of sectoral dynamics, a pharmaceutical firm must undertake huge investments in R&D to introduce product innovation, in turn enhancing market share and sustaining profit streams. The development of novel medicines, confirmed by the granting of patent rights, provides a pharma company edge over its competitors. In addition, presence of innovator firms within the industry invigorates the sectoral value chain and raises efficiency. Hence, it is important to analyze whether granting patent rights enhances the exports of pharmaceutical products in the Indian context.Design/methodology/approachThe current study explored this question using a simultaneous-equation framework. Specifically, the authors use the methods developed by Davidson and MacKinnon (1993) and Greene (2003) to obtain heteroscedasticity-consistent estimates. The time-series properties of the data were further probed, and robust estimates were used to test the theory. Methods developed by Baltagi (1981) have been used further to refine the authors’ estimations.FindingsAfter controlling for relevant variables, it is observed that granting of patents caused a significantly positive impact on pharmaceutical exports. Furthermore, the change in the patent administration regime had a significant impact on patent fillings, which further impacted their exportability. Compared to patents granted patents filed had a higher impact on pharmaceutical exports.Originality/valueThis study attempts to apply the framework developed by Goldstein and Khan (1978) with necessary modifications to suit the context of a developing country. The application of the 3SLS method to estimate the export supply equation for pharmaceutical products is a novel approach to the research question in general and to the Indian context in particular. System autocorrelation and heteroscedasticity tests were performed to refine the results further.

Ghosh, Saibal

2024 Indian Growth and Development Review

doi: 10.1108/igdr-03-2023-0026

The importance of financial dependence of small and medium enterprises (SMEs) on their performance is a relatively unaddressed area of research. Relatedly, whether and to what extent foreign bank penetration exerts an impact in the presence of financial dependence also remains an open question. The purpose of the paper in this regard is to exploit unit-level data on Indian SMEs and assess the independent and interactive effects of financial dependence on SME behaviour, in the presence of foreign banks.Design/methodology/approachThis study uses fixed effects specification to address the issue. In subsequent analysis, this study also uses an instrumental variable approach for robustness.FindingsThe results indicate that financial dependence improves investment and employment, although there is a decline in productivity. These findings differ across size classes of SMEs. Similar is the evidence in the presence of foreign banks. In particular, foreign bank penetration leads to a decline in investment for micro and medium SMEs, although for small SMEs, the impact is found to be the opposite.Originality/valueTo the best of the author’s knowledge, this is one of the early within-country studies to examine the interface between SMEs and financial dependence and the role played by foreign banks in this regard.

Kadiyala, Padma; Ascioglu, Asli

2024 Indian Growth and Development Review

doi: 10.1108/igdr-08-2023-0123

The authors study the effect of an exogenous shock in the form of Coronavirus lockdowns on individual default and on default contagion within the microfinance (MF) sector in India. The authors rely on proprietary data obtained from an MF institution for the period from Nov 2019 to Dec 2020. The authors show that default increased to 95.29% in the month of April 2020, when Covid lockdowns were fully in place. However, borrowers bounced back thereafter, either making full or partial payments, so that defaults had fallen to 5.92% by December 2020. Static features of the group lending model like peer monitoring and joint liability help explain 90% of the monthly deficit during Covid lockdowns among uneducated borrowers. Dynamic features such as contingent renewal help explain why defaults were cured quickly through timely repayments. Finally, there is an absence of default contagion at the district level. Indeed, lagged own default explains 96.6% of variation in individual default, rather than contagion through group, village or district-level defaults. The authors conclude that the MF sector is resilient to exogenous shocks like the pandemic.Design/methodology/approachThe authors use time series panel regressions, as well as cross-sectional regressions.FindingsThe authors find that borrower defaults increased significantly to 95.29% during the month of April 2020, when Covid lockdowns were fully in place. However, borrowers bounced back almost immediately, either making full or partial payments, such that defaults had fallen to 5.92% by December 2020. The group lending model does remarkably well in explaining defaults even during Covid lockdowns. Among the majority (92%) of borrowers who are residents of rural districts, the group lending model appears to blunt the impact of the exogenous shock on rates of default. Indeed, panel regressions demonstrate that the group lending model helps explain 90% of the monthly deficit among uneducated borrowers. Logistic regressions indicate that the group lending model is less persuasive among relatively affluent borrowers residing in semi-urban or urban areas who have some formal schooling. Contingent renewal is shown to be an effective disciplining mechanism when a group does default due to the Covid lockdowns. The authors find that groups who defaulted in April 2020 but repaid the outstanding balance within the next two months were more likely to receive subsequent loans from the lender. On the other hand, groups who defaulted in April 2020 and did not repay the outstanding balance until December 2020 did not receive follow-on financing. Finally, the authors find that lagged individual default is the primary source of individual default, rather than contagion through group, village or district-level defaults.Research limitations/implicationsThe limitation of the study is that it is confined to a single MF institution in India.Social implicationsThe authors conclude that the social capital that is the foundation of the group lending model succeeds in limiting both the risk and contagion of default from an exogenous shock, such as the Covid pandemic.Originality/valueTo the best of the authors’ knowledge, the authors are the first to examine defaults in the Indian MF sector during the Covid lockdowns in April 2020.

Ali, Jabir; Khan, Waseem

2024 Indian Growth and Development Review

doi: 10.1108/igdr-07-2023-0088

This paper aims to analyze the nature, magnitude and determinants of access to food among rural households in India during the COVID-19 pandemic.Design/methodology/approachThe study is based on the World Bank’s Rural Impact Survey, which has documented the shocks of COVID-19 among 2,787 rural households across six states in India. The chi-square test and binary logistics regression have been used to analyze the data.FindingsAbout 49.7 % of rural households have reported the incidence of food inaccessibility and shortage, and the majority of them reported a reduction in food intake during the COVID-19 outbreak. However, the magnitude of food accessibility varied across the states and the sociodemographic characteristics of the households. Furthermore, regression analysis indicates that family size, social category and occupation as sociodemographic variables and membership in self-help groups, wage employment under Mahatma Gandhi National Rural Employment Guarantee Act and Cash transfer under Pradhan Mantri Kisan Samman Nidhi and Pradhan Mantri Garib Kalyan Yojana as institutional support factors have a significant effect on access to food among rural households.Practical implicationsThe findings of the study have far-reaching policy implications for developing an effective food distribution system in crisis situations like the COVID-19 outbreak. The study also provides directions for extending the research on determinants of access to food during crisis.Originality/valueThe study is based on a large survey data from the rural households in India and provides empirical evidence on access to food faced by rural communities during the COVID-19 lockdown.

Chingri, Subhrasil; Mondal, Debasis

2024 Indian Growth and Development Review

doi: 10.1108/igdr-09-2023-0129

This paper aims to review the relationship between per capita income and aggregate emission in an economy populated by rational agents. According to the environmental Kuznets curve (EKC) hypothesis, pollution–income relationship is an inverted U-shaped curve. This paper aims to derive that relationship in an endogenous way and extends the relevant literature in an important way.Design/methodology/approachThis paper formulated a general equilibrium model of homogenous population with identical tastes and preferences. Production side is modelled with firms operating in a monopolistically competitive environment. The approach is modelling the economy in an analytical way so that closed form solutions can be achieved. Model simulations have also been performed to get a clear view of results.FindingsThis study shows that increasing returns to scale in abatement technology ceases to be a sufficient condition for the generation of the EKC hypothesis. The general equilibrium structure of the model allows studying the endogenous evolution of income, emissions and prices of the abatement goods in a unified setting.Originality/valueThe paper is novel and original in nature. The results are new in the literature. These results extend and generalise the previous research work in this area in an important way. The sufficient condition that is obtained in this study limits the applicability of EKC in an otherwise identical economy as used in previous literature. Therefore, this paper adds value to the ongoing research related to EKC.

Das, Abhirupa; Sinha, Uday Bhanu

2024 Indian Growth and Development Review

doi: 10.1108/igdr-12-2023-0203

The effectiveness of microfinance institutions (MFIs) in rescuing poor borrowers from “clutches of” moneylenders has been a much-debated topic over the past few decades. This paper aims to contribute by presenting a model of competition between a socially motivated MFI and profit-maximizing moneylenders when market segmentation exists.Design/methodology/approachA principal–agent model is used to characterize equilibrium conditions under scenarios where only moneylenders operate, only MFI operates and when both co-exist to pose comparative results effectively.FindingsThe authors find unambiguous benefits arising when a welfare-maximizing MFI enters the market. However, there are benefits to having local agents like moneylenders on the ground who also have informational advantages.Originality/valueTo the best of authors’ knowledge, this study is the first to evaluate the competition between MFI and moneylenders under the framework of captive and noncaptive segments with a mandatory savings requirement.