Last week, the International Growth Centre’s India-Central team hosted the 2013 South Asia Growth Conference in Delhi, in conjunction with the teams from the Bangladesh, India-Bihar and Pakistan programmes. The conference provided a platform for the presentation of research undertaken by the IGC South Asia country programmes and promoted regional dialogue on related issues. This post summarises India-related research findings presented at the conference. Click here and here for summaries of all the sessions, including research findings from Pakistan and Bangladesh

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2013-7-26IGC perspectives on growth in Indiablogs.lse.ac.uk /southasia/2013/07/26/igc-perspectives-on-growth-in-india/Last week, the International Growth Centre’s India-Central team hosted the 2013 South Asia GrowthConference in Delhi, in conjunction with the teams from the Bangladesh, India-Bihar and Pakistan programmes.The conference provided a platform for the presentation of research undertaken by the IGC South Asia countryprogrammes and promoted regional dialogue on related issues. This post summarises India-related researchfindings presented at the conference. Click here and here for summaries of all the sessions, including researchfindings from Pakistan and Bangladesh.SchoolingIn the session on schooling, presentations examined the challenge of converting increases in schooling inputs intolearning outcomes. Nishith Prakash (University of Connecticut) discussed Bihar’s cycle programme, which aims toincrease access to high school for girls in Bihar, and showed that it was successful at creating incentives forenrolment, but not for achievement. Prakash also proposed that the conditionality aspects of the programme werenot critical to its success, and that, beyond education, it might have broader impacts on female empowerment byimproving teenage girls’ mobility and independence.Karthik Muralidharan (University of California, San Diego), presented on the impacts of Andra Pradesh’s SchoolChoice Project, a school voucher programme, and demonstrated that private schools appear to be a lot moreproductive than public schools. Despite not leading to better test scores in Telegu and mathematics, private schoolattendance appears to lead to higher scores in Hindi, English and social sciences. Furthermore, and going againstoft-mentioned public concerns, the spillover effects of this project appear to be negligible both for students whoremained in public schools as well as for those who were already attending private schools prior to the programme.Public sector and programme designThis session looked at design aspects of development projects in the public sector. Maitreesh Ghatak (LSE and IGCIndia-Bihar) and Chinmaya Kumar (IGC India-Bihar) discussed different design aspects of the Bihar cycleprogramme for high school children. They showed that despite high levels of inclusion and limited levels ofdetectable corruption, the majority of beneficiaries would have preferred to receive a bike (an “in-kind” transfer)rather than cash. Whilst the implementation of the scheme – particularly having to submit a receipt prior to receivingcash – played a role in this, the reasons behind this preference were predominantly on the demand-side; such as1/3income levels, access to credit, and the distance to a bike store.Rohini Somanathan (Delhi School of Economics and IGC India-Bihar) examined how to incorporate the differingavailability of public goods into the measurement of poverty, which is primarily based on private consumption data.The research uses survey data on the availability of schooling, healthcare and subsidised food grains from Bihar toshow that accounting for the provision of public services results in a fall in overall poverty. However, it also leads toan increased spatial dispersion in poverty rates due to poor regional targeting of public spending.Macroeconomics and financePronab Sen (IGC India-Central) discussed the incorporation of the Indian financial sector into the planning models ofthe Government of India, focussing on the relationship between savings and investments. He proposed that theincreasing segmentation of the financial sector has some important effects on the macroeconomy. Sen’s maintakeaway was that if the system is investment constrained (rather than savings constrained), opening up the capitalaccount is more desirable than the Keynesian cure of increasing deficit financed public investment.Arvinder S Sachdeva (Ministry of Finance, Government of India) agreed that all these issues remain relevant inpolicymaking today. He clarified definitions around intra-sectoral mobility, and questioned whether the propositionswould change given that a high proportion of savings are in the form of physical – rather than financial – savings, orif the assumption of no asymmetric information was relaxed, or if the current account is partly, or fully, opened.Firms and investmentChaired by Rakesh Sarwal (Planning Commission), this session focused on the role of firms and investment in thegrowth process. Nirvikar Singh (University of California, Santa Cruz)presented research arguing that foreigninvestors do not destabilise the local Indian stock market and instead can bring additional capital into the economyduring boom times. Singh also suggested that there is no evidence for foreign portfolio investors bringing crises withthem into the local Indian stock market. While they can exacerbate extreme movements in stock price returns, theycan also help to stabilise prices and bring capital to the market.Ila Patnaik (National Institute for Public Finance and Policy) presented her research findings about the investmenttechnology of foreign institutional investors (FIIs) and domestic institutional investors (DIIs) in India. As part of herresearch, she compared stock selection patterns of FIIs and DIIs and found surprisingly large differences. Amongothers, FIIs appear to select firms do not have a large promoter ownership, are young and have small physicalassets; the pattern for DIIs is the opposite. The most interesting, and perhaps most surprising result is that FIIsseem to be much less successful than DIIs at selecting stock yielding a high market return. Overall, high FIIinvestment is a relatively poor predictor of growth, which implies that tweaks and improvements to the organisationof the investment regime in India might be warranted.Anupam Khanna (Chief Economist and Director-General Policy Outreach at NASSCOM) presented his policyperspective on Singh and Patnaik’s research papers, raising questions about the concentration and benefits of FDI.He also stressed the importance of taking a look at the FDI impact of average firms, as well as the growth impact ofinvestors that do not fall under the FII and DII categories.HealthChander Kumar Singh (TERI) and Prabhat Barnwal (Columbia University) examined the business of reducing thearsenic poisoning of millions across rural India. Their research suggests that a semi-commercial approach to testingcan reduce arsenic poisoning. After delivering a public-health message describing the risks of high-arsenicgroundwater, field staff offered testing at a fixed price to each household. They found that the proportion ofhouseholds buying a test gradually declined as the price increased from Rs10 to Rs50. The researchers found that ifit was priced at Rs20, more than two-thirds of villagers were willing to pay for the test. This would be sufficient tocover the costs (salary and transportation) of a tester with secondary education, assuming they conducted 10-202/3tests per day.The policy perspective was provided by Sheela Prasad (Ministry of Health and Family Welfare) who said that thisstudy was very timely, especially considering 34 per cent of the wells in the study had arsenic levels above 50micrograms per litre (10 is the recommended maximum). She argued that awareness needed to be generated aboutthe negative health implications of arsenic in well water, and that a graded fee structure may be necessary so thathouseholds paid more according to their wealth. Finally, she recommended that supply-side issues also needed tobe addressed so that disadvantaged groups have access to clean water.Nidhiya Menon (Brandeis University) discussed the seasonal effects of water quality on infant and child health,focusing on the impact of fertiliser use as part of the green revolution. A dramatic explosion in the use of fertiliser inIndia from the 1960s led to children being exposed, both in utero and after birth to fertilisers, as women themselvesare continually exposed due to their work at the forefront of farming activities. Her research has found that thepresence of agrichemicals in water in the month of conception significantly increases infant and neo-natal mortality.In addition, exposure to agrichemicals in the month of conception has significantly negative impacts on height-for-age and weight-for-age at age five. It is noteworthy that month of conception exposure to agrichemicals in water haseffects on both short- and long-term outcomes. Her findings highlight the tension between greater fertiliser use toimprove yields and the negative health impacts of such use.Copyright © 2016 London School of Economics3/3

IGC perspectives on growth in India

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