Long-run performance of the organised manufacturing sector in India : an analysis of sub-periods and industry-level trends

The Indian manufacturing sector has not increased its share in output or employment along expected lines. The aggregate trends in this sector at the 3-digit level of the National Industrial Classification from 1983 to 2017 are investigated here. Using data from the Annual Survey of Industries obtained from the EPWRFITS, it identifies three sub-periods within the overall period: 1988–96, 1996–2006, and 2006–17. A shift-share decomposition is used to show that most of the decline in the labour to capital ratio can be explained by within-industry changes. Finally, industries are analysed with respect to their capacity to deliver job and wage growth

The evolution of India’s industrial labour share and its correlates

There has been substantial recent interest in the decline of labour shares across countries. For the most part, attention has been focused on developed countries. We examine the evolution of India’s labour share in its formal industrial sector from 1983- 2014. Using two datasets corresponding to sectoral aggregate data and plant-level data respectively, we document a secular decline in the labour share across all sectors from 1983, with a stabilisation at very low levels (around 8 to 10 percent) starting around 2005. We then use the plant-level data to identify the reasons for the overall decline in the labour share. We find strong evidence to support multiple causes: increased capital intensity, greater informalisation, greater privatisation, and productivity increases in larger firms. As such, we suggest that the declines in labour share experienced are due to a composite set of factors. Conversely, other potential explanations (for example, regional variation in the labour share) have less explanatory power

Mapping India’s Finances 60 Years of Flow of Funds

As a useful adjunct to other macroeconomic accounts, this paper describes financial flows between different sectors of the Indian economy from 1955 to 2015. It finds that the consolidated government sector has the largest net deficit, while the households sector has the largest net surplus. The private corporate sector is running larger deficits than at any other time in the past, implying more reliance on external credits. With liberalisation and globalisation, the rest of the world sector is now the second-largest net surplus sector in the economy

Monetary Policy Shocks and Consumer Inflation Expectations: An Empirical Study

Economists have become very interested in the relationship between monetary policy and inflation expectations. However, most research has focused on professional forecasters rather than consumers\u27 expectations. This paper explores interactions between monetary policy and consumer expectations. Specifically, we estimate the impact of monetary policy shocks on consumer expectations. Using a simple linear regression model and data from the Michigan Survey of Consumers, we found somewhat surprising results. Namely, that consumers adjust their expectations positively in response to an unexpected tightening of monetary policy. This suggests the existence of the "signalling channel" of monetary policy. We control for a host of macroeconomic and demographic variables, and our results are consistent across income and education groups. In line with previous research, we found greater heterogeneity in expectations for lower-income and lower-educated groups. Our research challenges conventional thinking regarding the influence of monetary policy on inflation Expectations, and suggests that this relationship is more complex

Long-run performance of the organised manufacturing sector in India : an analysis of sub-periods and industry-level trends

The Indian manufacturing sector has not increased its share in output or employment along expected lines. The aggregate trends in this sector at the 3-digit level of the National Industrial Classification from 1983 to 2017 are investigated here. Using data from the Annual Survey of Industries obtained from the EPWRFITS, it identifies three sub-periods within the overall period: 1988–96, 1996–2006, and 2006–17. A shift-share decomposition is used to show that most of the decline in the labour to capital ratio can be explained by within-industry changes. Finally, industries are analysed with respect to their capacity to deliver job and wage growth

Long-Run Performance of the Organised Manufacturing Sector in India: Aggregate Trends and Industry-level Variaton

Despite its weak performance in terms of job creation in recent years, the organised manufacture sector remains vital to employment policy. This paper investigates the aggregate trends in this sector, in employment, output, labour-capital ratio, as well as wage share and wage rates at the three-digit NIC level over a long period from 1983 to 2016 using the Annual Survey of Industries data. We show that three distinct sub-periods can be identified within the overall period. Further, using shift-share decomposition we show that most of the decline in the L/K ratio can be explained by within industry changes. Finally, we analyse industries with respect to their capacity to deliver job growth as well as wage growth

The Evoluton of India’s Industrial Labour Share and its Correlates

There has been substantial recent interest in the decline of labour shares across countries. For the most part, attention has been focused on developed countries. We examine the evolution of India’s labour share in its formal industrial sector from 1983- 2016. Using two datasets corresponding to sectoral aggregate data and plant-level data respectively, we document a secular decline in the labour share across all sectors from 1983, with a stabilisation at very low levels (around 8 to 10 percent) starting around 2005. We then use the plant-level data to identify correlates that illuminate reasons for the overall decline in the labour share. We find strong evidence to support multiple causes: increased capital intensity, greater informalisation, greater privatisation, and productivity increases in larger firms. As such, we suggest that the declines in labour share experienced are due to a composite set of factors. Conversely, other potential explanations (e.g. regional variation in the labour share) have less explanatory power

The evolution of India’s industrial labour share and its correlates

There has been substantial recent interest in the decline of labour shares across countries. For the most part, attention has been focused on developed countries. We examine the evolution of India’s labour share in its formal industrial sector from 1983- 2014. Using two datasets corresponding to sectoral aggregate data and plant-level data respectively, we document a secular decline in the labour share across all sectors from 1983, with a stabilisation at very low levels (around 8 to 10 percent) starting around 2005. We then use the plant-level data to identify the reasons for the overall decline in the labour share. We find strong evidence to support multiple causes: increased capital intensity, greater informalisation, greater privatisation, and productivity increases in larger firms. As such, we suggest that the declines in labour share experienced are due to a composite set of factors. Conversely, other potential explanations (for example, regional variation in the labour share) have less explanatory power