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Working Papers | 1997

Determinants of Growth in Rice Productivity in India, 1980-95

Namboodiri N V

This paper analyses various price and non-price factors that induce rice productivity during 1980-95 using a multi-variate model. This is studied separately for states where rice is a multi-season crop and mono-season crop. The non-price factors considered here include technology, commercialization, government support programme, farm size, and rainfall. The price factors include farm harvest price, fertilizer price and wage rate. Among these explanatory factors the influence of non-price factors is more important than the price factors except that of price of fertilizer in determining rice productivity. The relative influence of these factors differed between the multi-season and mono-season states which emphasizes region specific strategies for promoting rice productivity.

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Working Papers | 1997

An Axiomatic Characterization of the Equal Income Market Equilibrium Choice Correspondence in Non-Convex Economics

Lahiri Somdeb

A property of allocation rules (in problems involving fair division of infinitely divisible goods amongst a finite number of agents) that has received considerable attention in recent literature is consistency. The property may be described as follows: apply a allocation rule to a problem within a chosen class of problems. consistency would require that the restriction of any allocation chosen by the rule for that problem to any subgroup of agents is what this solution would recommend for the “reduced problem” obtained by imagining the departure of the members of the complementary group with what they receive, and re-evaluating the situation from the view point of those who remain. In Lahiri [1997] can be found axiomatic characterization of the equal income market equilibrium choice correspondence in economies characterized by convex preferences, and using the properties of consistency and converse consistency. The earliest known work in a similar direction is the one by Thomson [1988] followed by Thomson [1994] where consistency plays a fundamental role. In the Lahiri [1997] paper, the second fundamental theorem of welfare economics plays a crucial role. Young [1993] provides a generalization of a Thomson [1988] result, where a characterization of sub-correspondences of the equal income competitive equilibrium allocations are available (for convex preferences) using consistency and a property called replication invariance. Simply put, replication invariance says that if we replicate an allocation problem, the solution outcomes also get replicated. In this paper, we extend the Young [1993] result to economies where preferences may be non-convex. We invoke a property called Sigma optimality which Svennson [1994] uses rather persuasively to establish the existence of fair allocations in non-convex economies. The corresponding welfare theorem in terms of optimality is used to characterize the equal income market equilibrium choice correspondence in terms of consistency replication invariance, and a property called quasi-local independence. The last property is implied by local independence – a property used repeatedly in Lahiri [1997]. For a general survey of the literature concerning problems of fair division, the reader should refer to Thomson and Varian [1985].

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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

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

Initiatives in Rural Credit Policies under New Economic Environment

Desai B M

Initiatives in rural credit policies pertain to two instruments. These are institutional development and interest rates. Some of these initiatives are right for both these instruments, while some others are not. Former for the institutional development includes new equity, prudential norms, reorganization of loss-making branches, MOUs and DAPs, hi-tech branches, enlarged scope of indirect agricultural credit, RRBs becoming full-fledged banks, SHGs, and entry of private local area banks. And the latter includes RBI's discontinued financial support, RIDF, and closing loss-making branches. Right initiative on interest rates is their simplified structure that is linked to amount of loans only though this needs to be more consistent with the rural realities. And wrong initiatives include increases in (minimum) interest rates on loans and a hotchpotch of partially and fully deregulated interest rates. Logic and/or empirical evidence are the basis for identifying initiatives that are wrong.

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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

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

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

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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