Crisis, Imbalances, and India

With the revival of global economy, the issues of “exit policies” and rebalancing global growth have taken center stage in policy discussions. Since many emerging Asian economies presently have large current account surpluses, the issue of rebalancing has special significance for Asia. While India, like other Asian economies, suffered only an indirect impact from the financial crisis, its current policy challenges appear to be different from those facing the People’s Republic of China (PRC) and other East Asian economies, which have relied heavily on external demand and access to the United States market for their growth momentum. With a negative contribution of net exports to gross domestic product growth along with foreign exchange reserves, which amount to a mere one-ninth of the PRC’s, the issue of Trans-Pacific rebalancing of economic growth does not have the same connotations for India as it does for other East Asian economies. However, this paper argues that, given its large domestic market, India could help other East Asian economies in their efforts to achieve greater export diversification and rebalancing of growth.global financial crisis; rebalancing economic growth; indian economy; export diversification

The Global Economic Crisis: Impact on India and Policy Responses

India's financial sector is not deeply integrated with the global financial system, which spared it the first round adverse effects of the global financial crisis and left Indian banks mostly unaffected. However, as the financial crisis morphed in to a full-blown global economic downturn, India could not escape the second round effects. The global crisis has affected India through three distinct channels: financial markets, trade flows, and exchange rates. The reversal in capital inflows, which created a credit crunch in domestic markets along with a severe deterioration in export demand, contributed to the decline of gross domestic product by more than 2 percentage points in the fiscal year 2008–2009. In line with efforts taken by governments and central banks all over the world, the Government and the Reserve Bank of India took aggressive countercyclical measures, sharply relaxing monetary policy and introducing a fiscal stimulus to boost domestic demand. However, this paper argues that with very limited fiscal maneuverability and the limited traction of monetary policy, policy measures to restore the Indian gross domestic product growth back to its potential rate of 8–9% must focus on addressing the structural constraints that are holding down private investment demand.india global financial crisis; gdp growth

Determinants of Competitiveness of the Indian Auto Industry

1. This study analyses the determinants of competitiveness in the Indian auto industry. It is based on a field survey and a quantitative analysis of secondary data. The field survey covers 45 firms all over India, of which 31 are auto-component firms and 14 are Original Equipment Manufacturers (OEMs). 2. From 2001-02 to 2005-06, the Indian automobile sector has grown at an average annual rate of over 18 per cent in terms of value of output at constant 1993-94 prices and the auto-component sector has grown at about 26 per cent. During the same period, in terms of domestic sales in numbers, two-wheelers have grown at over 13 per cent per annum; three-wheelers at more than 15 per cent commercial vehicles at about 25 per cent per annum and the number of passenger vehicles by 17 per cent per annum. 3. Vehicle exports at constant 1993-94 prices have grown at an average annual rate of more than 55 per cent from 2001-02 to 2005-06, while auto-component exports have grown at 21 per cent. Two-wheeler exports have seen an annual average growth rate of 27 per cent; passenger car exports have grown at 80 per cent; and commercial vehicles at about 55 per cent. 4. The effective rate of protection on automobiles is much higher than on components. For example, during 2006-07, while nominal custom duties were 60 per cent for automobiles (other than commercial vehicles), 12.5 per cent for commercial vehicles and 12.5 per cent for auto-components, effective rates of protection were 183.5 per cent, 12.5 per cent and 10.1 per cent, respectively. 5. With the higher countervailing duty and other cesses/levies, the effective rate of protection for automobile sector would be even higher. 6. This differential rate of effective protection distorts resource allocation and investment pattern in the industry. 7. The auto-component sector has much higher employment-generation potential and export-intensity than the auto assembly segment of the sector. The component manufacturers are now globally competitive and are also maintaining reasonable profitability levels despite a tariff protection of only 7.5 per cent. 8. The import tariff for the assembled vehicles is 60 per cent. Given the low level of protection both for the auto components and CKD/SKD kits, this clearly reflects a policy bias in favour of auto assemblers. 9. The reduction in import duties on assembled units may be undertaken in a phased manner and after ensuring that Indian automobile companies get comparable access to ASEAN and Chinese markets. 10. The anti-dumping mechanism should be strengthened to prevent the dumping of vehicles in the Indian market. 11. The government must also ensure that the large infrastructure deficit faced by this important sector is addressed urgently so that any adverse impact of macroeconomic policies is avoided. These are important steps if import duty structure is to be rationalized. 12. Materials cost is the major component in production cost and its share is increasing. Policy measures to reduce domestic indirect taxes on all inputs for the auto industry would be a welcome step to enhance competitiveness. The Chinese auto industry faces a flat 17 per cent indirect tax incidence, so our aim should be to reach that level. 13. Significant scaling up is required at all levels in the Indian auto-component sector so that economies of scale are gained and cost of production reduced. 14. One of the major constraints for the smaller auto-component manufacturers in increasing their scales of production is lack of credit availability at interest rates comparable to other countries. This is also confirmed by our econometric analysis. 15. R&D expenditure as a share of turnover is low in the Indian auto-component sector ranging between 0 and 1.5 per cent while it is 0.5-3 per cent for the automobile sector. In fact, most of the smaller auto-component firms and a few of the bigger ones do not have an R&D facility. Policy intervention is urgently needed to improve the R&D activities in the Indian auto industry. Since fiscal incentives are not working, a scheme of special credit for R&D would be useful to induce the R&D activities. 16. Indias current levels of tariff on capital goods are higher than those in the ASEAN and China. Thus, these tariffs should be brought down further to enhance competitiveness. 17. The Indian auto industry does not possess good design facilities. The Government needs to significantly strengthen non-proprietary R&D and design capacity that has strong connections with research institutes like IITs. This could be used by all the players in the industry to develop new models, reduce material costs and become more competitive. 18. Skill shortages and skill mismatches have emerged as a major constraint. To address this critical concern, the proposed National Auto Institute1 should be quickly established with active participation of private industry players. 19. There is a significant and increasing use to contract workers in the industry. Labour reforms, aimed at more flexibility, are widely considered among the industrialists as an essential step. This will encourage firms to employ and retain more permanent workers and improve learning and raise productivity levels. 20. It is important to recognize that labour reforms are expected to increase overall employment in the auto sector and will also help firms in the organised sector to scale up. 21. The unorganised sector contributes 30 per cent to total employment, 15 per cent to fixed assets and only 1.5 per cent to output in auto industry in India. This sector has much lower capital and labour productivity than the organised sector. The share of power/fuel cost in total costs are much higher in the unorganised sector. Hence, policy measures are required to incentivise these smaller firms to use power and fuel more efficiently, by adopting better technologies and taking steps to minimise wastage. 22. In the econometric analysis, foreign equity participation is found to be correlated with technical efficiency. Therefore, both centre and state governments should create a conducive environment for attracting more FDI. 23. The trend of mid-sized vehicles capturing a large market share is expected to continue in the foreseeable future. 24. A detailed roadmap for strict implementation of emission standards that are harmonised across states should be drawn up. This could go a long way in ensuring that the entire automotive supply chain upgrades quality and technology. 25. While the implementation of VAT is a positive step, remaining differential in indirect taxes should be eliminated by moving to the GST. The currently prevalent region-specific fiscal concessions are creating the unsustainable locational distortions in the industry. 26. So far, Indias FTA with Thailand has resulted in a net trade gain for India. The government must, however, ensure comparable, if not preferential, market access to domestic firms in partner countries, especially in the Asia-Pacific region, while negotiating FTAs. 27. The principles pertaining to the rules of origin have to be strictly implemented.Indian Auto Industry, competitiveness, Efficiency and Indian Auto Policy

Determinants of Competitiveness of the Indian Auto Industry

This paper analyses the determinants of competitiveness of auto industry in India, based on a field survey and a quantitative analysis of secondary data. It highlights that all segments of Indian auto sector are growing at a fairly high rates and their productivity as well as export intensity is on the rise. Domestic sales are rising, but they have declined in certain sub-segments of vehicles. However, the R&D expenditure has been scarce. Effective rate of protection of automobile assembly is far higher than that of auto-components manufacturing. Unorganised sector, which is quite significant in auto-component manufacturing, has grown more rapidly in the urban areas than in the rural areas. The econometric analysis suggests various measures that could be taken by the government, particularly, the credit facilitation for SMEs. A field survey comprising auto manufacturers in India underlines various constraints faced by the sector, such as the shortage of skilled manpower along with poor infrastructure, fluctuating steel prices and unavailability of land at reasonable price. This suggests that the government could facilitate the industry in becoming more competitive by taking steps such as structural fiscal reforms, cut in import duties of raw materials and capital goods, promotion of R&D and FDI, training facilities, research-backed negotiations of FTAs, roadmap for harmonising emission norms across the country and infrastructure improvement. Industry, on the other hand, should improve its R&D capabilities and market research.Indian Auto Industry, Competitiveness, Efficiency and Indian Auto Policy

La crisis económica mundial y la India: un análisis

La actual crisis económica mundial se manifiesta en diferentes formas y presenta muchos retos y también muchas oportunidades, si bien todavía es demasiado pronto para predecir resultados concretos. Sin embargo, cabe destacar que el sistema internacional y el concepto de poder como tal están protagonizando un cambio. Este hecho tiene importantes implicaciones para el mundo en vías de desarrollo. La crisis financiera tiene varias implicaciones geopolíticas para la India en particular. Decir que la economía y la política están íntimamente relacionadas puede resultar un tópico pero, sin embargo, la actual crisis financiera mundial nos lleva reconsiderar esta afirmación. La crisis financiera que sufre el sistema internacional en la actualidad tendrá graves implicaciones geopolíticas: por ejemplo, ha supuesto la aparición de nuevos actores internacionales como la India y China. Sin embargo, queda por ver la medida en que un país como la India puede convertir los retos provocados por la crisis en oportunidades

Indian Economic Outlook 2008-09 and 2009-10

This paper provides an outlook for the Indian economy in the light of the extraordinary global financial crisis, that started in the US, but which has now transformed into the worst economic downturn since the Great Depression. The Indian economy was slowing down even before the onset of global crisis and so the timing of this external shock could not have been worse. The analysis undertaken for this paper shows that the global crisis is likely to bring the Indian GDP growth rate down considerably. This will pose a big challenge requiring urgent and sustained policy attention to prevent this downturn from becoming unnecessarily prolonged. There is real downside risk that the growth rate could plummet to the pre-1980s levels if appropriate countercyclical measures are not taken immediately and are not urgently followed by necessary structural reforms. The paper provides a short-term forecast for GDP growth based on a model of leading economic indicators. We present three scenarios in the paper assuming differentiated impact of the external crisis. Finally the paper suggests a set of policy measures to get the Indian economy back on the path of sustained rapid and inclusive growth.Forecasting, Indian economic growth, Economic outlook and conditions, Financial crises

The financial crisis: impact on BRIC and policy response

The paper looks at the transmission channels by which the financial crisis affected the four emerging economies- Brazil, Russia, India and China, the degree and extent of the impact of the crisis, the subsequent policy interventions which enabled recovery and an assessment of how successful recovery has been in these economies. We conclude by noting that in the long term global recovery will necessitate a rebalancing of the world economy which in turn means that the hub of global consumption has to shift from the west to the global south, particularly to BRICs

The financial crisis: impact on BRIC and policy response

The paper looks at the transmission channels by which the financial crisis affected the four emerging economies- Brazil, Russia, India and China, the degree and extent of the impact of the crisis, the subsequent policy interventions which enabled recovery and an assessment of how successful recovery has been in these economies. We conclude by noting that in the long term global recovery will necessitate a rebalancing of the world economy which in turn means that the hub of global consumption has to shift from the west to the global south, particularly to BRICs

Papillary carcinoma breast in male patient - A rare presentation

Introduction - Male breast carcinoma is rare, accounting for 1% of all malignancies in men and around 1% of all cases of breast carcinoma. Intracystic papillary carcinoma accounts for 0.5–1% of all breast cancers. It generally has good prognosis in women with almost 100% reported 10 year survival rate.Similar data for male patients is not available as the disease is extremely rare.Presentation of Case - A 52 year-old male patient presented with a swelling in his left breast. Swelling had gradually increased in size. On examination, a well-circumscribed swelling was palpable in retro aerolar region with nipple retraction. Mass was not fixed to underlying pectoralis muscle.A large mobile axillary lymph node was palpable. Fine needle aspiration was done, which reported “atypical ductal hyperplasia”. A core biopsy was done which displayed features of intracystic papillary carcinoma. A left modified radical mastectomy was carried out with axillary dissection. The biopsy report of the specimen confirmed the diagnosis of intracystic papillary carcinoma, tumor deposits were seen in lymph nodes. Adjuvant chemotherapy was given postoperatively. Patient recovered well.Conclusion - Intracystic papillary carcinoma is a rare malignancy of breast .It carries an excellent prognosis with upto 100% ten years survival rates reported in females.Surgery with chemotherapy has remained mainstay of treatment but due to rarity of the male breast cancer as such and Intracystic papillary carcinoma in particular, there are no clear guidelines for its management. Further analysis of this disease is needed for its better understanding and management.

ON PERTURBATION OF BINARY LINEAR CODES

Abstract. We present new codes by perturbation of rows of the generating matrix of a given linear code. Some properties of the perturbed linear codes are given