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Working Papers | 1997

Revitalizing the State: 2. Resharing the Bureaucracy

Khandwalla P N

In Virtually any king of modern state, there is a huge role for the bureaucracy. The bureaucracy is intended to be a rational system of administration. But it is prone to many bureaupathologies, and increasing size tends to aggravate these bureaupathologies. Since the state in the 20th century has grown rapidly, it has become increasingly prone to malfunctioning on account of various bureaupathologies. Various attempts at bureaucratic reform have generally failed, especially in developing countries. Several pitfalls in administrative reforms have been listed. But there are also several success stories, from developed countries, newly industrialized countries, and developing countries, and the lessons of these successes can help recharge bureaucracies elsewhere. The experience of several East Asian countries that experienced rapid growth in the sixties and onwards, suggests how bureaucracy can be made growth oriented. Malaysia's experience suggests how values like quality, productivity, innovativeness, discipline, integrity, accountability, and professionalism can be institutionalized in a bureaucracy. The experience of Britain, Australia, New Zealand, Singapore, Canada, etc. suggests numerous ways of substantially improving the performance of bureaucracy. Several conditions are discussed for supporting sustained public service reform, derived from a study of administrative practices in a number of Commonwealth countries.

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Working Papers | 1997

Revitalizing the State: 3. Fragmenting the State for Innovation

Khandwalla P N

Organizational research indicates that large organizations involved in many different activities can counteract the diseconomies of size and complexity, tendency to bureaucratization, and to increasing resistance to innovation by breaking up into relatively autonomous, self-contained units such as relatively autonomous, self-contained divisions, retaining mainly policy control at the centre and a powerful MIS as a monitoring device. States too can enhance their administrative capacity and innovativeness highly by decentralizing and by fragmenting themselves into relatively autonomous, self-contained units headed by professional managers with clear accountability and clear mandate. Such unbundling must, however, be in the pursuit of an integrating, shared vision of national excellence like social justice, economic growth, and improvement in the quality of life. Several case studies from a number of countries of government departments, agencies, and projects that were decentralized along the foregoing lines under a shared vision of state excellence demonstrate the efficacy of this strategy of fragmenting the state in certain effective ways. Several additional mechanisms can institutionalize the culture on innovation in governmental bodies, such as progressively higher goals, with potential conflict among goals. The operationalziation of a strong serving the “customer” commitment, an operationlized commitment to cut costs, to make increasingly technologically sophisticated offerings, to benchmarking, to entrepreneurship, to global scanning for innovations, trends, and opportunities, to periodic diagnosis of the organization's functioning, to participative decision making and brainstorming for novel but workable solutions, to periodic, exonovation, and toa daunting developmental and growth vision are powerful mechanisms to make government bodies highly innovative.

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Working Papers | 1997

Using CEA to Evaluate 29 Canadian Textile Companies-Considering Returns-to-Scale

Pankaj Chandra, Cooper William W, Li Shanling, and Rahman Atiqur

In this paper we analyse the performance of some Canadian textile firms by using Data Envelopment Analysis (DEA). Using DEA we develop efficiency scores, efficiency frontiers and returns-to-scale for three segments of the sector, i.e., spinning, weaving and dyeing. Finally we develop models to solve optimal expansion or vertical integration related problems for firms with increasing and decreasing returns respectively.

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Working Papers | 1997

Globalization Work and Management

Singh J P

Major changes are occurring in the sphere of work and management. While there is emergence of new time based and information based opportunities, some traditional office and business work opportunities are shrinking. Simultaneously, there is recognition of a new type of “Permanently Temporary” Employment that is a pointer to the need for employment laws that take into account new work realities. On a larger plane, changes are also occurring in trade and business world. A few truly global organizations have emerged. However, organizations that operate in 30-40 or 10-20 countries are many, and are beginning to encounter the problem of operating in international environment. Use of values and social concerns have become the new element in protection of markets in addition to the traditional concern for quality and the recent concern for environment. There is a shifting of polluting industries to new environments resulting in environmental hazards where none existed and a major shift in the job market around the globe. National economies are also shifting from industrial to service and information economies. Another major change is linked with the development of distance learning opportunities and a move towards a universal language. This is influencing not only the way education is imparted but also nature and management of educational institutions thus forcing organizations to rethink their human resource development and learning strategies. At the core of all these changes is a major technological breakthrough – in satellite imaging, communication, computing, high speed travel and transport technologies. This explosion of Technology has resulted in new competition giving older organizations very little response time. Emergence of the new slim and trim organizations have forced unions to change focus from wages and benefits to protection of jobs. Since both work and technology are changing at a fast pace, the sphere of management has also been affected. In some ways control and unity of command are under revision and calls for a reassessment of the management theory and practice. The paper concludes with a discussion of the challenges ahead before the business world and developing societies.

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Working Papers | 1997

A Comment on the Diamantaras - Thomson No-Envy concept

Lahiri Somdeb

This paper is really a technical remark on a paper by Diamantaras and Thomas (1990). In that paper, the no-envy concept due to Foley (1967) was refined to accommodate some kind of a radial no-envy comparison, inspired by Chaudhurai (1986). Simply put, each person compares his/her own consumption bundle with all possible radial expansions and contractions of every other person's consumption bundle. A Pareto Optimal allocation which is envy free against such a maximal expansion is the one selected by Diamantaras and Thomson (1990). Our framework differs from the Diamantaras and Thomson (1990) framework in that we consider only the pure exchange situation. Thus, since such technical issues with regard to existence of envy free allocation in the sense of Foley (1967) are somewhat secondary (though present) in our framework, we view this no-envy concept as a new equity criterion. In this framework, we prove the Diamantaras and Thomson (1990) result regarding the existence of an envy free allocation on a somewhat larger domain of preferences. We also feel that our existence proof is much simpler than the one due to the two authors, although it is difficult to say whether our proof would extend to the economies with production as studied by them.

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Working Papers | 1997

Revitalizing the State: 1. Models of the Modern State

Khandwalla P N

In this paper the complexity of the modern state is examined with reference to the pressures under which it operates, and the mechanisms it employs of differentiation and integration. The reasons for the very large increase in the size of the state in this century, both in the developed countries and in the developing countries, are examined, as also some differences in the patterns of growth of the state in these two sets of countries. The major forces shaping the state in the 20th century are briefly discussed, resulting in the evolution of four models of the state. These are: the democratic interventionist-welfare state, commonplace in many Western societies; the developmental state that evolved in the Soviet system, and spread with some modifications to many developing countries; the liberal, market-friendly state espoused by the World Bank which has found a footing in most developing countries that have taken structural adjustment loans from the World Bank and IMF; and the businesslike, managerial state promoted by Margaret Thatcher, Ronald Reagn and others. It is contended that innovations in any kind of state can, with suitable modifications, be adapted in any other kind of state, and that innovations in governance systems and adaptive borrowings are powerful keys to state excellence.

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Working Papers | 1997

Futures Trading in India - Are We Ready

Gupta Ramesh

The article examines the nature of futures market and its development abroad. It provides a theoretical framework reviewing behaviour of future prices and a need for an effective arbitrage between spot and futures market to ensure competitive and fair pricing for hedge seekers. In the Indian context, it examines the hedging needs of Indian investors and probes the robustness of cash markets. Major deficiencies in out cash markets are absence of facilities for margin trading, short sale, dematerialised settlements and electronic funds transfer among participants. Efficient arbitrage is the key to functioning of the futures market. In India arbitrage can be done only in one direction which is to buy in spot and sell in futures market when basis (that is difference between spot and futures prices) after adjusting for carry cost is at premium. If basis is at discount arbitrage would involve sell in spot and buy in future, but this would not be possible in the absence of short sale. This skewness in arbitrage would delink the two markets and futures market would turn into a casino. The article also critically examines the empirical work of Shah and Thomas and questions the validity of their estimates of 'impact cost' and other 'event studies' in support of futures market. The article ends asking the regulators what is the hurry? Derivative trading requires a critical mass of sophisticated investors, supported by credit and stock analysts, serviced by market-makers prodding a modicum of liquidity and protected by keen regulators. If SEBI is finding it hard to manage system for carry-over business (that is, badla which is akin to a weekly forward market), how is it going to regulate risk in a futures market where transactions would remain outstanding for 6 months and more. Regulators are cautioned to avoid economically unjust demands of a few vested interests and let 'public interest' of several million shareholders take precedence over a few 'interest groups' which are know for peddling hot money.

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Working Papers | 1997

Revitalizing the State 4. Reinventing the Democratic State

Khandwalla P N

1407 Although democracy evolved in the West, in this century it has been adopted by scores of developing societies, with several relapses to despotism and recoveries from it. The most common form of democracy is liberal democracy, with several distinguishing characteristics. However, there are several variants of liberal democracy. The more sustainable forms may be those that incorporate elements of associations, deliberative, and direct democracy. In poor countries, democracy may be sustainable if there is also reasonable macro-economic stability, welfare measures for the poor and the insecure, and effective strategy of rapid economic development whose fruits increasingly go to the poor and the under-privileged, and administrative effectiveness. Empirical research suggests that democratization, in conjunction with civil liberties and social empowerment though investment in education, health, etc. of the masses, enhances rather than inhibits economic growth. A number of mechanisms are available to make the democratic state and its organs more innovative and effective. These include innovations for fairer representation of the people in the legislature, for a more stable tenure of elected government, for improving the quality of people's representatives in the legislature, and for improving the competence and quality of political executives. It is argues that democracy has many advantages and some disadvantages also vis-à-vis competing forms of the state, but it can be made sustainable, and the emerging world values are more in consonance with it than with the other forms.

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Working Papers | 1997

Cotton in India: Analysis of Differing Performance

Vijay Paul Sharma

This paper attempts to investigate the performance of Indian cotton sector and impact of economic and biological factors on acreage and yield of cotton in the major cotton growing states of the country using time series secondary data. The results indicate that the cotton production in the country increased significantly (2.37% per annum) between 1951-52 and 1995-96, largely as a result of improved productivity. This increase in productivity can be largely attributed to the technologies embodied in improved cotton varieties, efficient irrigation and cultivation, fertilisers and novel pest management. This growth has been accompanied by an increase in variability of production and the increase in yield variability was important source of generating instability in cotton production. Central region comprising Gujarat, Madhya Pradesh and Maharashtra was the major cotton producing zone accounting for about 51 per cent of the total production in 1971-75. However, major changes are occurring in the distribution of cotton growing and the main expansion in acreage and production is in North while the traditional cotton producing region (central zone) is tending to cutback on cotton planting. Research findings also indicate that the use of cotton textiles in the country has been steadily rising but the per capital availability and share of cotton use in total fibre use has been declining moderately. Results of cotton share equations revealed that cotton consumption in the country was not much responsive to the prices but the lagged consumption of cotton captured the strong trend in consumption which indicated that decline in share of cotton was not price related but due to technological improvements in the manufactured fibres industry. Per capital GDP was found to have a significant and positive impact on the per capita total fiber and cotton use and the income elasticity was 0.22 for total fibre use and 0.48 for cotton. Results from the acreage response models reveal that the relative prices of cotton vis-à-vis competing crops play a much greater role in determining the growers' acreage allocations. Favourable weather and irrigation in the cotton yield equations was influenced the cotton acreage. The expected role of fertiliser and irrigation in the cotton yield equations was found in most of the states, indicating a crucial role of these factors in determining the yield. Therefore, if cotton production is to be promoted on sustainable basis, the farmers will have to be assured of not only remunerative and stable prices but also yields.

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Working Papers | 1997

Policy Strategy and Instruments for Alleviating Rural Poverty

Desai B M and Namboodiri N V

The paper departs from the present policy emphasis for and more recent literature on rural poverty in advocating six major conclusions based on its validation of a multi-variate model explaining the behaviour of this poverty for 1960-61 to 1990-91 which is extended up to 1993-94. These are: One, contrary to the view that non-agricultural growth would provide off-farm employment opportunities to the rural poor we think that the strategy underlying such growth at an all-India level being capital-intensive with limited demand pull growth these opportunities do not bear fruits for the rural poor. What is, therefore, required is to shift industrialization strategy from “Machines First” to “Textiles First” which has high and dispersed employment and income multipliers and linkages. Two, what follows from the above suggestion is that agricultural growth should receive higher priority than is accorded now. And since such a growth has no trade-off with poverty ratio it would alleviate this poverty more rapidly. Three, the strategy for technology-led agricultural growth is even more potent than either poverty alleviation programs or land redistribution measures in alleviating absolute rural poverty. This follows from the finding that total factor productivity in agriculture is relatively more important than these other policies and programs in reducing this poverty. Rapid and broad-based technical change would therefore require higher priority for government expenditure on agricultural R&D, extension, irrigation and watersheds, electricity, seeds, rural roads etc. it would also require encouraging private investments in seeds, fertilizers, pesticides, farm implements and machinery through more conducive interest rates on (rural) credit and fiscal and other incentives for industries making these inputs. Four, between the poverty programs and land reforms latter may be prioritized more. But between egalitarian tenancy reforms and land ownership distribution the former may be more emphasized as inequality in land ownership unlike in operational land seems to generate process that alleviate rural poverty ration. Simultaneously, land consolidation programs also need to be urgently undertaken to make effective farm size lartger. Five, economic programmes for poverty alleviation may be prioritized next. These programs also need to have better sectoral integration such as for agriculture, dairying, fisheries etc. with an emphasis on technical change as these have a lion's share in rural work-force. And six, price reforms through macro stabilization measures, and through reducing protection to trade and industry have the least impact on alleviating absolute rural povery. This may be because (a) inflation is more of a structural rather than monetary phenomenon, and (b) industries and business that are protected produce products that are perhaps remotely connected to poor's consumption pattern.

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