Financial developments in India: should India introduce capital account convertibility?

The objective of this paper is to examine whether India has reached a stage of financial development when full capital account convertibility could be introduced. In its report on capital account convertibility the Tarapore Committee provided a succinct and subtle definition: capital account convertibility is the freedom to convert local financial assets into foreign financial assets and vice-versa at market determined rates of exchange. It is associated with changes of ownership on foreign/domestic financial assets and liabilities and embodies the creation and liquidation of claims on or by the rest of the world. Capital account convertibility can be, and is, coexistent with restrictions other than on external payments. It also does not preclude the imposition of monetary/fiscal measures relating to foreign exchange transactions, which are of a prudential nature. (Reserve Bank of India, 1997) The issue is important because until the Asian crises of 1997-98, there was a growing consensus that free global financial flows were positive for all and more so for the developing countries. This was based on the proposition that it would help improve global allocation of financial resources. As the returns on capital were higher in developing countries, finance would flow, in general, from the developed countries to developing countries. In the aftermath of the Asian and other developing country crises, however, there has been some rethink and recognition that financial deregulation cant run ahead of prudence (Stiglitz, 2002). There is also the issue of the sequencing of financial liberalisation. Even the leading proponent of financial repression and its associated costs, McKinnon (1973, 1991) has argued that capital account convertibility should come at the end of this process. Though there was support for financial liberalization, opinions differed about the pace at which it could proceed. Some countries like Thailand abolished the controls quickly and opened up their economies while countries like India continued to proceed at slow pace. Until 1991, the Indian economy was subject to a high degree of financial repression and national and international controls. These controls were being lifted slowly when the Asian economic crisis struck. Though, India didnt experience the shock and contagion as some South East Asian countries did, rethinking began whether or not controls should continue to be lifted and the pace at which this should be done. It was feared that lifting of all controls and thus making rupee fully convertible could expose India to shocks and contagion such as those experienced by Asian countries. At the same time, lack of full convertibility on capital account was acting as an impediment for free flow of capital resources. India is now in race with China and hence has to weigh the pros and the cons in taking a decision about full convertibility of its currency. Thus, India provides a good case to analyze. We answer the question posed above within the framework provided by McKinnon (1973) on financial repression and thereafter use the relevant financial development indicators developed by Goldsmith (1969) to assess whether India has reached a of stage financial development when full convertibility of rupee could be introduced. The paper is organized as follows: the next section provides an overview of relevant literature on liberalization of financial flows. In section 3, we assess the financial developments in India against the financial development indicators developed by Goldsmith. Section 4 concludes

Foreign investment and issues of corporate governance in India

Introduction: Foreign Investment can be defined as the acquisition by governments, institutions or individuals in one country of assets in another. Foreign investment covers both direct investment and portfolio investment and includes public authorities, private firms and individuals. For a country in which savings are insufficient relative to the potential demand for investment, foreign capital can be a fruitful means of stimulating rapid growth. In addition, direct investment may be a means of financing a balance of payments deficit. Direct investment often involves the setting up of subsidiary companies for the domestic production of goods which previously were imported from the parent company. (Bannock et al, 1998). External capital flows to developing countries have undergone fundamental changes during the past three decades. More recently rapid liberalization of financial markets and privatization of economic activity in developing countries have influenced them. The private sector has become the principal borrower in international capital markets and recipient of other private financial flows. Direct investment is often referred to as foreign direct investment (FDI). FDI inflows have increased in importance during the 1990s, becoming the single most important component of total capital flows to developing countries. FDI not only adds to external financial resources for development but is also more stable than other types of flows. FDI is typically based on a longer-term view of the market, the growth potential and the structural characteristics of recipient countries. FDI is generally preferred by the host country to portfolio management. FDI and the policies concerning it have a preponderant role as the engine of growth because of the diffusion of technology. FDI can contribute to technological upgrading in two ways: if it embodies a higher level of technology than domestic investment, it makes a direct contribution by raising the overall technological level of the host country; and it can also make an indirect contribution through positive externalities which benefit local enterprises. In recent years competition among governments to attract FDI has heated up. The main reason for this is the large number of developing and emerging market economies that have moved during the 1980s and 1990s from relatively closed state-led growth strategies and dirigiste policy regimes to more open and market friendly policy regimes, and have moved in the process to seek actively to attract FDI. For example, China alone has moved from a policy of virtually excluding FDI, until 1979, to successfully attracting an annual FDI inflow of over $40 billion by the mid–1990s–and in doing so has caused developing and emerging countries throughout Asia, and beyond, to worry about intensifying competition, with China and with each other, to attract FDI. The crisis that emerged in Asia in 1997 has tended, if anything, only to heighten those worries. [Oman, 2000]. The subject of corporate governance constitutes a very rich field for research. There is a great deal of work which needs to be done. This is all the more yes for some of the societies in Asia where the subject is very new. One of the significant features of the economic reform is the change that is taking place in the government-corporate relationship. The government has so far played the role of manager in the corporate sector. While in the East Asian models this role has become transformed into that of a “coach”, for a variety of reasons, this is unlikely to occur in India. On the other hand, there is greater likelihood of India moving towards the Anglo-American model, with the government emerging as a “referee”. In large measure, this would be close to the pattern of the political and bureaucratic system that emerged during the last four decades. To what extent this will inhibit India from emulating the East Asian pattern of growth remains to be seen. (Vaghul, 1997

NMR, Mass and DFT Studies of Ariose: A Novel Oligosaccharide from Donkey (Equus asinus) Milk

Oligosaccharides play a key role in various physiological, pathological and biological activities such as biological recognition, anti-complementary, anti-coagulant, anti-inflammatory, anti-viral, anti-bacterial, anti-tumour, anti-oxidant, lipid lowering, immunological activities, prebiotic activity and hypoglycemic activity. In our endeavour to find biologically active novel oligosaccharides, donkey milk was taken, which is a rich source of oligosaccahrides and its milk is used as anti-hypertensive, anti-oxidant and heart strengthening agent in folk medicine. For this purpose donkey milk was processed by modified method of Kobata and Ginsburg followed by Gel filtration HPLC and Column Chromatography (CC) which resulted in the isolation of one novel milk oligosaccharide namely Ariose. The structure of purified milk oligosaccharide was determined with the help of chemical degradation, chemical transformation, spectroscopic techniques like 1D-NMR (1H and 13C), 2D-NMR (COSY, TOCSY, HSQC and HMBC), Structure Reporter Group (SRG) theory and Mass spectrometry (ESI-MS). The geometry optimization of compound was done by using B3LYP method at 6-31G (d, p) basis set employing Density Functional Theory (DFT). &nbsp

NMR, Mass and DFT Studies of Ariose: A Novel Oligosaccharide from Donkey (Equus asinus) Milk

Oligosaccharides play a key role in various physiological, pathological and biological activities such as biological recognition, anti-complementary, anti-coagulant, anti-inflammatory, anti-viral, anti-bacterial, anti-tumour, anti-oxidant, lipid lowering, immunological activities, prebiotic activity and hypoglycemic activity. In our endeavour to find biologically active novel oligosaccharides, donkey milk was taken, which is a rich source of oligosaccahrides and its milk is used as anti-hypertensive, anti-oxidant and heart strengthening agent in folk medicine. For this purpose donkey milk was processed by modified method of Kobata and Ginsburg followed by Gel filtration HPLC and Column Chromatography (CC) which resulted in the isolation of one novel milk oligosaccharide namely Ariose. The structure of purified milk oligosaccharide was determined with the help of chemical degradation, chemical transformation, spectroscopic techniques like 1D-NMR (1H and 13C), 2D-NMR (COSY, TOCSY, HSQC and HMBC), Structure Reporter Group (SRG) theory and Mass spectrometry (ESI-MS). The geometry optimization of compound was done by using B3LYP method at 6-31G (d, p) basis set employing Density Functional Theory (DFT). &nbsp

Competency-based medical education (CBME) curriculum and its effect on prevalence of anxiety, depression and stress amongst medical undergraduates

BACKGROUND: A growing body of literature now identifies higher levels of anxiety, depression, and stress among medical students as a distinct mental health domain. The competency-based medical education (CBME) curriculum was introduced to revamp the existing curriculum with an aim to garner constructive impact on the mental health of undergraduate medical students. As such, we sought to draw comparisons between the mental health of medical students, studying the old (2018 batch) and the new (2019 batch) medical education systems in India. MATERIALS AND METHODS: We designed a survey that contained structured questions pertained to anxiety (HAM-A, GAD-7), depression (HAM-D, BDI), and stress (PSS) amongst medical undergraduate students of 2018 and 2019 batches at the Government Doon Medical College (GDMC), Dehradun, India. RESULTS: Contrasting the 2018 and 2019 batches, the introduction of CBME resulted in a significant two-fold decrease in moderate anxiety, as exhibited by both HAM-A (6.0 vs 3.0, P = 0.016) and GAD-7 (3.5 vs 1.0, P = 0.037) scales, although no significant change in mild and severe anxiety, and overall depression (BDI: P = 0.05, HAM-D: P = 0.05) or stress (PSS: P = 0.86) was found. CONCLUSION: The CBME system has made a significant impact on the mental health of undergraduate medical students for anxiety, albeit its effect on depression and stress remains equivocal. Future studies are warranted to compare the effect of CBME in other undergraduate and postgraduate courses across the country to help predict the psychological impact of the newfangled CBME education system

The Structural Relationship Between Current and Capital Account Balance in India: A Time Series Analysis

The long run relationship between current account balance (CAB) and capital account balance (KAB) and the repercussions of capital account convertibility (KAC) on growth process of a country is a much debated issue. In particular, in the aftermath of the Southeast Asian crisis, the limitation of the liberal capital regime for a developing country like India is often highlighted in the literature. However, the probable impact of introducing KAC on CAB in India generally is discussed theoretically. Though some of the existing studies in India have earlier focused on this research question, they have done so by exogenously assuming the existence of a single structural break in the interrelationship between CAB and KAB. The present study intends to bridge the gap in the literature by raising two empirical questions: first, how far KAC is likely to destabilize the CAB and second, measuring the strength of the interrelationship between CAB and KAB. The current paper also contributes to the literature by incorporating multiple endogenous structural breaks in the empirical analysis. The empirical findings do not support any long term relationship between capital and current account balance and reveals that two significant structural breaks are observed in 1993-94 and 2003-04

The Demand for Manpower in Malawi: Economic Growth, Employment Opportunities and the Utilization of Manpower

It is a truism to say that people with higher education earn more on the average than those with less education, at least if the same age profile is being considered. This is even more so in the case of developing countries, particularly in those ex-colonial territories, which have recently attained independence. There are several reasons for this. The basic one is that of relative scarcity i.e. those with higher education are in relatively greater demand in relation to their supply than those with lower education. We are all aware that if supply increases more rapidly than demand for any given type of labour then there will be a relative fall in its earnings, other things being equal. So the basic point to bear in mind in explaining the relative earnings is the different historical rates of demand for and growth of different types of labourforce. In the case of open economies i.e. those which are willing to import manpower to meet basic deficiencies, the international market earnings do influence the earnings level of the local labour force. But often institutional mechanisms are devised, and sometimes quite successfully, to ward off the upward spiralling effect of rising international wages on domestic wage levels. Thus apart from the fundamental supply and demand relationship, there are the institutional factors, which determine the basic wage levels and the changes in these. To take an example minimum wages were increased between 1954 and 1966 in Malawi, but until late 1974 there was no change in these, (see Table One), despite increases in price level. Thus institutional factors pushed up the minimum wage between 1953 and 1966, but played no part in changing them since; except in so far as the more rigorous wages and salaries restraint policy implemented since 1970 may have had a depressing effect on these

Current economic trends, 1995

No abstract availabl

India: The Weakening of the Congress Stranglehold and the Productivity Shift in India

This paper explains the complex of factors in the weakening of the Congress Party from the height of its power at the centre in 1984. They are connected with the rise of state and regional-based parties, the greater acceptability of BJP as an alternative in some of the states and at the Centre, and as a partner to some of the state-based parties, which are in competition with Congress. In addition, it demonstrates that even as the dominance of Congress has diminished, there have been substantial improvements in the economic performance and primary education enrolment. It is argued that V.P. Singh played an important role both in the diminishing of the Congress Party and in India's improved economic performance. Competition between BJP and Congress has led to increased focus on improved governance. Congress improved its position in the 2009 Parliamentary elections and the reasons for this are briefly covered. But this does not guarantee an improved performance in the future. Whatever the outcomes of the future elections, India's reforms are likely to continue and India's economic future remains bright. Increased political contestability has increased focus on governance by Congress, BJP and even state-based and regional parties. This should ensure improved economic and outcomes and implementation of policies.Indian Elections, Congress Party's Performance, Governance, Nutrition, Economic Efficiency, Productivity, Economic Reforms, Fiscal Consolidation