Economic Policy in Independent India provides an immersive, accessible yet rigorous understanding of the Indian economy through a political economy analysis of economic policies. It provides a birds-eye view of the politics, context, and ideas that shaped major economic policies in independent India and argues that they are the product of crisis, coalitions, and contingency — not necessarily choice. Each chapter focuses on specific political regimes: Colonial Rule, Jawahar Lal Nehru, Indira Gandhi, liberalisation under coalition governments, the UPA Government, and the NDA Government. The book evaluates how well a government executed its policies based on the economic and political constraints it faced, rather than economic outcomes. Using theories to make sense of the economy, political ideology, historical conditions, and international context, the book’s framework provides multiple perspectives and analyses economic policies as an outcome of interactions between dynamics in the economy.

The Indian story of economic growth and structural transformation has been one of significant achievements as well as continuing challenges. On the one hand, the economy has grown rapidly since the 1980s, drawing millions of workers out of agriculture. And the proportion of salaried or regular wage workers has risen while that of casual workers has fallen. On the other hand, manufacturing has failed to expand its share of GDP or employment significantly. Instead, construction and informal services have been the main job creators. Further, the connection between growth and good jobs continues to be weak.

Report Files

• Full report – download revised pdf file, see corrections sheet for changes made to earlier version.
• Executive Summary (pdf)
• Results Appendix (spreadsheet)
• Figure data (spreadsheet)
• All figures (pdf)
• Tables (spreadsheet)
• Press Release (English | Hindi | Kannada)
• Media Coverage (spreadsheet)

Small manufacturing firms are considered to be engines of growth and job creation. While most research on small firms focuses on formal sector units, in India informal sector units far outnumber the formal. This is true even for manufacturing units employing 5 to 49 workers, which constitute only 5% of all unorganised units, but in absolute numbers are nine times more numerous than organised units in the same size class. Such firms have the potential to contribute to structural transformation but their capacities vis-a-vis formal firms are not well understood. To address this, the researchers create a unit-level dataset combining Annual Survey of Industries data for organised (formal) units with the National Sample Survey data on unorganised (informal) units. They also discuss problems involved in this exercise and some ways to deal with them. They find that matching organised and unorganised units on observable characteristics reduces the labour productivity differences between them to around 25 percent. The researchers discuss some policy implications of their results.

Authors:

• Amit Basole
• Dimple Chopde
• Paaritosh Nath

In this entry, the researcher will analyse neoliberal policies and how they have been popularised through the mass media – with a particular focus on market triumphalism. This is an important issue in contemporary times as neoliberal policies have led to an increase in economic inequality. However, public discourse has argued that these policies are beneficial to the economy and workers. The first section will describe the historical trajectory that shaped neoliberal policies. In the second section, the researcher will trace the introduction of neoliberal policies in India in the 1990s and how English newspapers popularised them. In section ​“Sandel’s Critique of Market Triumphalism in America”, the researcher will discuss the popularity of market triumphalism through neoliberal policies in the USA and Michael Sandel’s (What money can’t buy: the moral limits of markets. Penguin, London, 2012) influential critique of it.

Azim Premji University, in collaboration with 9 Civil Society Organisations (CSOs), conducted a survey of 3,000 households in 92 low-income settlements across 39 wards of Bengaluru. The survey was done to estimate the continuing impact of COVID-19 induced lockdowns and economic disruptions on employment and livelihoods. The survey also captured information on access to government support as well as coping mechanisms to deal with such a crisis. Workers in a wide range of occupations such as drivers (cab, auto, and others), daily wage workers (construction and others), domestic workers, and factory workers (garment and others) were surveyed. The survey was conducted in the month of November 2021 with the help of Action Aid, Association for Promoting Social Action (APSA), The Center for Advocacy and Research (CFAR), Hasiru Dala, Gubbachi, Reaching Hand, Sangama, Swabhimaan Trust, and Thamate.

• Download the full report here
• Press release: English | Kannada
• Key Findings: Short | Detailed
• YouTube video of the virtual event held on 4 April, 2022.
• Recording of the in-person event held on 29 March, 2022 in Bengaluru is available here.

Media coverage

– Print

• Bangalore Mirror: Inheritance of Covid losses (30 Mar 22 | Page 1, 8)
• Rajasthan Patrika: तीन फीसदी परिवारों को ही मिला नकद हस्तांतरण योजनाओं का कुछ लाभ : अध्ययन (30 Mar 22 | Page 1)
• The Hindu: Survey finds that Covid-19 impact on livelihoods continues (30 Mar 22 | Page 4)
• The New Indian Express: Urban poor still coping with job, income loss- Report (30 Mar 22 | Page 2)
• Udayavani: Kannada (30 Mar 22 | Page 8)

– Online

• ETV Bharat: ರಾಜಧಾನಿಯಲ್ಲಿ ಕೋವಿಡ್ನಿಂದಾದ ದುಷ್ಪರಿಣಾಮ : ಸಮೀಕ್ಷೆಯ ವರದಿ ಬಿಚ್ಚಿಟ್ಟ ಅಜೀಂ ಪ್ರೇಮ್ಜಿ ವಿವಿ
• Hindustan Times: 3% benefitted from Karnataka govt’s cash scheme
• News9: Bengaluru COVID impact survey- Job, income losses hamper ability of households to recover
• Rajasthan Patrika: कोरोना महामारी : 40 फीसदी ने कम भोजन से किया गुजारा
• The Indian Express: Job and income losses persisted among low-income settlements well past 2020 lockdown- Study
• The News Minute: Job, income losses due to lockdowns continue to impact Bengaluru urban poor

We investigate the impact of the COVID-19 pandemic on income levels, poverty, and inequality in both the immediate aftermath and during the long uneven recovery till December 2021 using high-frequency household survey data from India. We find that the average all-India household income dropped between 30 to 38 percent during the months of the nationwide lockdown of April and May 2020. The subsequent recovery remained incomplete and was unevenly spread over the population even twenty-one months after the start of the pandemic. Households, on average, continued to make 16 to 19 percent lower cumulative income in the post-lockdown period, but have mostly recovered after the second wave in the second half of 2021. Poverty more than doubled during the lockdown and was 50 to 80 percent higher in the post-lockdown period in comparison to the pre-pandemic levels. In the post-second-wave phase, poverty was still slightly higher than in the pre-pandemic period, and any progress in poverty reduction that would have been achieved under normal circumstances over the two years was lost. Inequality too spiked during the lockdown, but returned back to the pre-pandemic levels. Using an event study model we find that the initial shock of the lockdown was more severe for the bottom of the income distribution, but the bottom also experienced a faster recovery. On the other hand, the top end of the distribution experienced smaller declines during the lockdown but they have been slow to recover. The bottom deciles in any period typically constituted households working in contact-intensive, informal, less secure occupations that were hit the hardest during the lockdown, but were quick to recover when the economy opened up. The upper end of the distribution constituted households working in less contact-intensive, formal, secure occupations that were shielded from the sudden shock but were slow to recover.

Authors:

• Mrinalini Jha
• Rahul Lahoti

This paper revisits a part of the analysis by Banerjee et al. (2020), in which they examine the consequences of the nation-wide scale up of reforms to the funds management system (e‑FMS) in India’s national workfare programme, using a two-way fixed effects specification. They report a substantial 19 percent reduction in labour expenditures. We exploit the recent literature that highlights the limitations of the TWFE estimator in the presence of staggered roll out and effect a Goodman-Bacon decomposition of the TWFE coefficient, to pinpoint sources of identifying variation. We undertake a detailed examination of subsamples of six constituent and valid DiDs based on timing of treatment that are averaged into the TWFE coefficient to identify heterogeneity in treatment effects. This disaggregated subsample analysis does not support the conclusion of any reductions in MGNREGS labour expenditures, suggesting that the TWFE coefficient based on the full sample is indeed biased.

Authors:

• Deepti Goel
• J.V. Meenakshi
• Zaeen De Souza

Historical experience suggests that a sustained rise in per capita incomes and improvement in employment conditions is not attainable without a structural transformation that moves surplus labour from agriculture and other informal economic activities to higher productivity activities in the non-farm economy. In this paper, I analyse India’s performance from a cross-country comparative perspective, estimating the growth semi-elasticity of structural change. Using a cross-country panel regression, I estimate the effectiveness of growth in moving workers away from agricultural and informal activities as compared to other developing countries at similar levels of per capita income. I show that the performance in pulling workers out of agriculture is as expected given its level and growth of GDP per capita, but the same is not true for pulling workers out of the informal sector. I also propose the following five indicators that need to be kept track of when evaluating the growth process: the growth elasticity of employment, the growth semi-elasticity of structural change, the growth of labour productivity in the subsistence sector, the share of the organised sector in total employment and the workforce participation rate. Comparing these indicators across periods, states, regions or countries, allow us to understand which sets of policies have worked better than others to effective improvements in employment conditions. When taken together the indicators allow us to set structural change targets as well as to say whether the current pattern of growth is going to be sufficient to meet those targets.

The Covid-19 pandemic has created a need for high frequency employment and income data to gauge the nature and extent of shock and recovery from month to month. Lack of such high frequency household-level data from official sources has forced researchers to rely almost entirely on the Consumer Pyramids Household Survey (CPHS) conducted by the Centre for Monitoring the Indian Economy (CMIE). Recently, the CPHS has been criticised for missing poor and vulnerable households in its sample. In this context, it becomes important to develop a detailed understanding of how comparable CPHS estimates are to other more familiar sources. We examine the comparability of monthly labour income estimates for the pre-pandemic year (2018−19) for CPHS and the Periodic Labour Force Survey (PLFS). Across different methods and assumptions, as well as rural/​urban locations, CPHS mean monthly labour earnings are anywhere between 5 percent to 50 percent higher than corresponding PLFS estimates. In addition to the sampling concerns raised in the literature, we point to differences in the way employment and income are captured in the two surveys as possible causes of these differences. While CPHS estimates are always higher, it should also be emphasized that the two surveys agree on some stylized facts regarding the Indian workforce. An individual earning INR 50,000 per month lies in the top 5 percent of the income distribution in India as per both surveys. Second, both PLFS and CPHS show that half the Indian workforce earns below the recommended National Minimum Wage.

Authors:

• Mrinalini Jha
• Amit Basole

The Centre for Monitoring Indian Economy’s (CMIE) Consumer Pyramid Household surveys have emerged as an important source of regular labour market data for India. Given the differences in methods in data collection between the CMIE and official employment sources, it becomes exceedingly important to establish some comparability between the government and the CMIE datasets. With the release of the official labour surveys, Periodic Labour Force Surveys for 2017 – 18, we now have an overlap between the official datasets and CMIE datasets. In this paper, we examine the extent of comparability of labour force estimates from these two datasets. We find that employment estimates for men are broadly comparable. However, for women, there is a consistent divergence with CMIE estimates of women’s workforce participation lower than that of NSS-PLFS. We explore the points of divergence in the measurement of women’s work and hypothesise some potential reasons for this difference. We find that irrespective of the reference period used in the PLFS estimation of employment statuses, there is no convergence with the CMIE employment estimate for women’s employment. Moreover, the mismatch in CMIE-PLFS estimates occurs across all types of women’s employment and irrespective of what reference period of employment (in official data) is used.

Authors:

• Rosa Abraham
• Anand Shrivastava

We cannot achieve the demographic dividend unless we create jobs for millions of youth. There are multiple forces – thirteen of them identified in this report — working against employment growth in India from both supply side and the demand side. It is proven that large enterprises create very few jobs. Even these few jobs are created for educated youth. Only Micro and Small Enterprises (MSEs) can create large number of jobs across India for workers with wide range of skills and education. Out of a total of just over 63 million enterprises in the MSME sector, 62 million are informal micro and very small enterprises (MSEs). Of these, single worker firms (own-account) are 40 million, firms with 2 to 5 workers are 22 million and firms with more than 5 but less than 10 are estimated at 1 million. 107.6 million workers (97% of all employment in the MSME sector) are in this MSE segment. These MSEs, surprisingly, are more rural than urban — 51% are in rural India. Women-owned firms accounted for 20 % of all enterprises, 16 % of all workers and 9 % of aggregate value-added. There is a huge potential to grow these women owned enterprises. MSEs are the most important segment of the Indian Economy if we want to achieve GDP and Employment growth. Moreover, many of these enterprises are closely aligned with households, particularly in location and ownership. These enterprises play a pivotal role in linking the formal and the informal sector through value chains. We don’t need more micro-enterprises or more single-person firms. Instead, we need to scale-up these existing MSEs. How can we do this? By creating a support system which will make these MSEs go digital, grow in scale and increase their productivity. This will automatically create jobs The Udyog Sahayak Enterprise Network (USENET) proposed in this report is that support system. Why a support system? Because it is not possible to educate millions of the MSE entrepreneurs to become digital experts. Why now? Because India and the world are going digital. In the digital marketplace small can compete better and grow.

Download Policy Proposal Here.

Read media coverage here.

Realising India’s demographic dividend requires a focused policy approach for employment generation. Micro and Small Enterprises (MSEs) can create millions of jobs, across India, for workers with wide range of skills and education. Out of a total of just over 63 million enterprises in the MSME sector, 62 million are informal micro and very small enterprises (MSEs). We do not need more micro-enterprises. Instead we need to help existing MSEs to grow in size. We can do this by creating a support system which enables them to go digital, avail of government schemes, adopt new technologies, and increase productivity. This will create millions of new jobs.

This report is a first of its kind collaboration between Azim Premji University, FICCI, and TISS-Mumbai. It proposes the creation of an Udyog Sahayak Enterprise Network (USENET) at the national level. USENET is a support system for MSEs that will improve Ease of Doing Business for micro and small entrepreneurs. Udyog Sahayak Enterprises will take servcies such as digitisation and formalisation, availing of government loans, subsidies or other benefits, ensuring compliance with local, regional, and national regulation, aiding partnership with digital marketing platforms and digital payment platforms, to the MSEs at their doorstep.

Media Coverage

Press Coverage USENET Report Release
The Times of India: Support system to up ease of doing business
The Economic Times: Azim Premji University, FICCI, TISS, roll out plan for employmenet generation in MSME sector
ETAuto: Policy proposal for employment generation, scale-up in MSME sector
Business Today: FICCI, Azim Premji University recommend 18 lakh Udyog Sahayak Enterprises network to assist MSEs

The Hindu: Draft policy to help grow nano, micro enterprises
The Hindu Businessline: ​‘Set up USENET centres micro, small enterprises’ 

The New Indian Express: Micro firms can create 10.3 million jobs: Report
The Statesman: Azim Premji University, FICCI and TISS form policy proposal for employment generation for MSMEs
Telangana Today: USENET could help MSMEs scale up
The New Indian Express – Edex Live: This network for MSEscan help create 56 million new jobs in 10 years. Here’s how
UNI: Azim Premji University, FICCI, TISS come out with new USENET policy for creating one crore job
The Hans India: Azim Premji varsity, FICCI, TISS roll out plan to generate jobs in MSME sector
SME Times: Report proposes ease of doing biz for MSEs
Nagaland Post: Policy proposal to scale up MSME sector

Author:

• Zico Dasgupta

The efficacy of survey-based policy recommendations is primarily dictated by the quality of data collected in the first place. Is the survey truly representative of the population it claims to characterise? Are respondents voicing their true opinions or are they playing to the gallery? Did enumerator bias creep into the data? These are questions that most users of surveys have, but are typically brushed aside in the race to get the analyses out. While there are no foolproof measures to ensure that survey data are authentic, certain steps can be taken to improve their dependability. One such is the use of what is called ​‘para data’ (data about the process of data collection), to streamline enumerator practices, and thereby improve the reliability of the data being collected. This report details our experience of using para data to improve the quality of the India Working Survey (IWS).

Authors:

• Deepti Goel
• Rosa Abraham
• Rahul Lahoti

Using two rounds of the Periodic Labour Force Survey (PLFS) covering the periods 2017 – 18 and 2018 – 19, we construct a panel of urban Indian individuals aged 15 to 65, and analyse the dynamics of their participation – or non-participation – in the labour force. We construct transition probabilities to study the movement of individuals through three distinct statuses — employment, unemployment and non-participation – at the aggregate level and for different demographic groups. We find evidence of considerable movements from the labour force to non-participation; there exists a significant discouraged worker effect as well as a pronounced movement from employment outside the labour force, specifically for women. A majority of those unemployed in the beginning of the year remain so at the end of the year, indicating the presence of long-term unemployment. The reduction in unemployment rates from 2017 – 18 to 2018 – 19 hides significant weaknesses in Indian urban labour markets. This study represents an original contribution to the field of Indian labour economics, given the paucity of large-scale studies of the dynamics of Indian labour.

Authors:

• Rahul Menon
• Paaritosh Nath

Author:

• Kunal Mangal

When the pandemic hit, the Indian economy was already in the most prolonged slowdown in recent decades. On top of this, there were legacy problems such as a slow rate of job creation and lack of political commitment to improving working conditions which trapped a large section of the workforce without access to any employment security or social protection.

The pandemic has further increased informality and led to a severe decline in earnings for the majority of workers resulting in a sudden increase in poverty. Women and younger workers have been disproportionately affected. Government relief has helped avoid the most severe forms of distress, but the reach of support measures is incomplete, leaving out some of the most vulnerable workers and households. 

The report was released on 5 May 2021- you can watch the recording of the online event here.

This report essentially takes stock of the employment conditions prevailing in the Indian economy prior to the pandemic and then goes on to delineate the impact of COVID-19 on lives and livelihoods. It also charts a possible policy path forward to address both short-term and long-term challenges of livelihood and employment. The focus is primarily on the non-farm economy while analysis and policy recommendations are at the national level.

Author:

• Santosh Mehrotra

This paper attempts to look at the ways informality is conceptualized in India and argues that the problems with the laws pertaining to informal labour are not simply an implementation issue, but the design of the labour laws itself exclude informal labour. While reviewing the history of labour laws in India and the social history of labour participation, the paper also examines the current change in the political approach to labour by changing the labour laws in the pretext of the pandemic. Focussing on the changes made in labour laws in Madhya Pradesh the paper argues that these changes would further informalise the workers intensifying the crisis.

Authors:

• Jenny Sulfath
• Balu Sunilraj

The Covid-19 pandemic has created unprecedented disruptions in labour markets across the world including loss of employment and decline in incomes. Using panel data from India, we investigate the differential impact of the shock on labour market outcomes for male and female workers. We find that, conditional on being in the workforce prior to the pandemic, women were seven times more likely to lose work during the nationwide lockdown, and conditional on losing work, eleven times more likely to not return to work subsequently, compared to men. Using logit regressions on a sample stratified by gender, we find that daily wage and young workers, whether men or women, were more likely to face job loss. Education shielded male workers from job loss, whereas highly educated female workers were more vulnerable to job loss. Marriage had contrasting effects for men and women, with married women less likely to return to work and married men more likely to return to work. Religion and gender intersect to exacerbate the disproportionate impact, with Muslim women more likely to not return to work, unlike Muslim men where we find religion having no significant impact. Finally, for those workers who did return to work, we find that a large share of men in the workforce moved to self-employment or daily wage work, in agriculture, trade or construction. For women, on the other hand, there is limited movement into alternate employment arrangements or industries. This suggests that typical ​‘fallback’ options for employment do not exist for women. During such a shock, women are forced to exit the workforce whereas men negotiate across industries and employment arrangements.

Authors:

• Rosa Abraham
• Amit Basole
• Surbhi Kesar

This paper makes an attempt to do an assessment of the impact of COVID-19 on employment and migration in India. The analysis is based on up-to-date facts and figures available in the public domain on economic growth, employment and migration. Using the employment elasticity approach, the study estimates employment loss during 2020 – 21 owing to the negative impact of COVID-19 on economic activities. The results of the study suggest that the country may witness job loss with the tune of 18.5 18.8 million in the current fiscal year. This in turn would shoot up the unemployment rate from 5.8% in 2018 – 19 to 8.9% in 2020 – 21, warranting a coordinated and focused approach from both the Central and State governments to uplift the confidence of the people and bring back the lost jobs, particularly the migrant workers. The study also emphasises on Central government’s urgent attention and action plan for uplifting the rural economy in order to revive India’s economy in the short run.

Authors:

• Purna Chandra Parida
• Yogesh Suri

The authors examine the impact of labour law deregulations in the Indian state of Rajasthan on plant employment and performance. In 2014, after a long time, Rajasthan was the first Indian state that introduced labour reforms in the Industrial Disputes Act (1947), the Factories Act (1948), the Contract Labour (Regulation and Abolition) Act (1970), and the Apprentices Act (1961). Exploiting this unique quasi-natural experiment, the authors apply a difference-in-difference framework using the Annual Survey of Industries longitudinal data of India’s manufacturing establishments. Their results show that reforms had an unintended consequence of the decline in labour use. Also, worryingly, the flexibility resulted in a disproportionate decline in the directly employed worker. Evidence suggests that the reforms positively impact the value-added and productivity of the establishments. The strength of these effects varies depending on the underlying industry and reform structure. These findings prove robust to a set of specifications.

Authors:

• Diti Goswami
• Sourabh Paul

Using the CMIE’s Consumer Pyramids Household Survey, we track a panel of households prior to the lockdown (in December 2019), during the lockdown (in April 2020) and afterwards (in August 2020) to investigate the employment and income effects of the Covid-19 pandemic and its associated containment measures. We identify four distinct employment experiences during the pandemic for those who were in the workforce just prior to the lockdown: no loss of employment (“No effect”), loss of employment followed by recovery (“Recovery”), loss of employment with no recovery (“No recovery”), and a delayed loss of employment (“Delayed job loss”). Overall, 54% of individuals experienced no job loss, while 30% lost work in April but recovered by August. 12% had not recovered employment as of August 2020. We analyse how these trajectories vary across different social and economic characteristics to quantify contractions and recovery in the labour market and the extent to which the vulnerabilities vary across different social groups, employment arrangements, and industries. We find that women were substantially more likely to lose employment as well as less likely to recover employment. Job loss was also more severe for lower castes as compared to intermediate and upper castes and for daily wage workers as compared to regular wage workers. Younger workers were particularly vulnerable to job loss compared to older workers. Having lost employment in April, younger workers were also less likely to recover employment in August. Finally, for those who were employed in both December 2019 and August 2020, we examine the changes in employment arrangements. We find a much greater frequency of transitions from wage employment to self-employment, more than that in the seasonally comparable period last year (Dec 2018 to Aug 2019). Our results call for urgent additional fiscal measures to counteract these effects.

Authors:

• Rosa Abraham
• Amit Basole
• Surbhi Kesar

We examine the Indian economy during a peak period of high growth between 2005 – 2012 to analyze nature and patterns of household-level transitions across the different sectors of the economy and to relate these transitions to the broader process of structural change. We use a pan-India household-level panel data to categorize households according to their primary income sources into seven sectors characterized by varying degrees of formality/​informality and various production structures and labour processes. We find that even this this relatively brief period, there has been a very large volume of transitions of households across these sectors. However, despite such volumes of transitions, the overall economic structure, and its segmentations, has continued to be reproduced, along with a regeneration of ​‘traditional’ informal spaces that were often expected to dissolve over time with high economic growth. To ascertain the nature of these transitions – ​‘favorable’ or ​‘unfavorable’ – in terms of economic well-being of households, we employ a counterfactual analysis. We find that a majority of the transitions in the economy during the period of analysis have been ​‘unfavourable’ in nature, with large proportion of households transitioning to sectors that are not ​‘optimal’ locations for them, given their socioeconomic characteristics. Further, using a multinomial logit regression framework, we find that
the likelihood and nature of these transitions significantly vary with household characteristics, some of which, like social caste, are structurally given and cannot be optimally chosen by households. This dynamic process of reproducing a rather stagnant structure, along with substantial ​‘unfavourable’ transitions towards ​‘traditional’ informal economic spaces that are continuously reshuffled and reconstituted, provide insights into the complexity of India’s development trajectory that is often glossed over in the literature.

Author:

• Surbhi Kesar

This paper is based on fieldwork I had undertaken regarding tribal migrant workers in the construction sector, in Ahmedabad in May-July 2018, coordinated by Aajevika Bureau(AB). I had undertaken this fieldwork to assess the work of AB and advise them about strategies to collectivize migrant labour groups. While interacting with a particular social group (Bhil tribals from South West Rajasthan) who work in the construction sector, I struggled to capture the specificity of their experience through the concept of informal labour. This paper is an attempt to characterize the specificity of their social experience, while also, reframing the concept of informal labour. I use the concept of labour process (Michael Burawoy: Manufacturing Consent) to argue that there is not a binary or one-dimensional power relationship between informal labour and owner/​state/​capital, but instead, the process of surplus appropriation occurs at multiple nodes through different agents. In this paper, I have identified multiple modes of surplus extraction which are embedded as institutions or social norms in the labour process. Further, I argue that there is a close link between the status of tribal workers as marginalized within society, and their status as displaced and marginalized in their living areas and workplace. This difference translates into identity based discrimination faced in the city, as well as, structural exclusion from the governance apparatus faced as migrants. Therefore, tribal migrant workers do not earn enough to subsist and are highly dependent on early child birth, non-remunerated services of their family and the social security net provided by their village community.

Author:

• Rahul De

Does there exist a trade-off between labour’s income share and output growth rate? Or does a reduction in wage share in itself reduce the output growth rate? These questions have returned to the centre stage in the midst of India’s present crisis as the government sought the dilution and suspension of labour laws as a counter-cyclical policy instrument. In the absence of any other stimulus or countervailing factors, the impact of such a policy would hinge on the relationship between income distribution and effective demand. This paper attempts to lay bare this relationship for the Indian economy through an empirical analysis of India’s macro data and a theoretical model on the basis of regression results.

Author:

• Zico Dasgupta

Controlling for monetary policy, government transfers are potentially inflationary. This, however, may not be true when the economy is demandconstrained. Using a panel data of 17 Indian states over 30 years, we show that government transfers via welfare programs do not lead to inflation. For identification, we use a narrative shock series of transfer spending that is based on the introduction of new welfare programs. We then look at a specific program, NREGA, which has been shown to increase rural wages, and show that its implementation did not increase inflation.

Authors:

• Girish Bahal
• Anand Shrivastava

Most international development economics and industrial organization literature emphasises the importance of SMEs (small and medium enterprises) as important to output, but especially to employment generation. Countries have different definitions for SMEs. In India the MSMEs (micro, small and medium enterprises) are defined in terms of investment in plant and machinery or equipment. The MSME Ministry (Annual Report, Government of India 2017 – 18) stated that the sector accounts for 45% of the manufacturing output and 40% of the total exports of the country; also that MSMEs accounted for 30.74% of GDP in 2014– 15. Not surprising, MSMEs are considered a driving force of the economy.

Authors:

• Santosh Mehrotra
• Tuhinsubhra Giri