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Working Papers | 1993

Policy and the Problems of Policy Change: Some Issues

Sebastian Morris

During the eighties there have been stop-start attempts at liberalization and at policy change to give new direction to the economy which had been drifting ever since serious planning had been given up in the mid-sixties with the onset of the recession then. The period since then right up to 1979 was one of slow growth. The eighties with some what better growth provided the confidence for change. In 1991 and 1992 the attempt by the Government to make a radical shift from the past in the direction of liberalization has no doubt been informed by the experience of the fast growing NICs of east and south-east Asia. The debate, that has followed the policy pronouncements, has been at cross purposes, and the ideological predilections of both parties, but particularly of the left has not helped the conduct of the debate. In this paper we examine some of the issues that have thus far been raised- possibility of India going the Latin American way, export pessimism, employment implications of liberalization, trade liberalization and the promotion of efficiency- and attempt to cast them in a way so that one could work towards conceptual clarity and possibly even empirical answers. We also raise other issues for further discussion. One of the fresh insights we offer is the notion of 'high speed growth' and following from it of 'transformation' rates, which we argue has become the only way out of the current crisis of the Indian nation and polity, Land reforms (which gives the land to the actual tiller) becomes vitally necessary for the capitalist transformation of society. The immediate history of the very same NICs, besides the logic of industrial transformation in densely populated economies ensures this. We also conjecture that the long period of slow growth in India has bred not only a growth pessimism among its elite, but many among them see it as hurting the poor. The exhilatory as aspects of high speed growth in the east and south-east Asian case have to be recognized and appreciated With China having grown very fast for over a decade, there is little excuse for India to not actively pursue high speed growth. The current reforms do not recognize the constraint that the slow growth of the home market would place unless agricultural growth itself can be stepped up above the paltry 3.0% that we have all along been content with.

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Working Papers | 1993

Management of Large IT Projects: The Passenger Reservation System of Indian Railways

Rekha Jain and G. Raghuram

The Passenger Reservation System of Indian Railways is a major computer application in a visible, consumer sensitive area. The involves a distributed database, spread over five host computers located in five metropolitan cities in India, and terminals located in more than 22 cities. The objective was to improve the service level to the customer and the exercise may be viewed as an example of a successful application in a developing country. This paper examines this application and draws lessons for management of large Information Technology projects.

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Working Papers | 1993

Energy-Environment Dynamics in a Medium Sized Town

P. R. Shukla, Prem Pangotra, and Khandelwal Bharat

Conservation of energy and protection of the environmental resources are two of the biggest challenges in planning for a higher quality of life in our communities and sustainable economic development for the society at large. This study models the pattern of energy consumption in all sectors of the community in a medium-sized town in north India. The environmental impacts of energy consumption in human activities-domestic, commercial and industrial-have been assessed. Public systems for providing municipal services have been evaluated both in terms of energy requirements and their effectiveness in providing desired levels of service. Policy options for strategic interventions in each major sector have been identified and the capacity of the local government to mobilize resources for implementing some of the recommended strategies has been assessed. Overall the study evolves a general methodology for addressing issues at the energy-environment interface in other similar communities.

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Working Papers | 1993

Dividend Decision: A Study of Managers Perceptions

Bhat Ramesh and Pandey I M

In finance literature several theoretical constructs have been proposed to explain the dividend policy of a company. Several empirical studies have been conducted to test these theories. Very few attempts have been made to understand the perceptions and attitudes of managers about the factors they think are important in determining dividend policy. It is with this objective that the present study purports to present the survey results. The study attempts to answer the following questions: 1. What factors do managers consider important in deciding their companies' dividend policy? 2. Do managers perceive a relationship between their companies' dividend policy and the value of the share? 3. Do managers consider last year's dividend policy relevant in deciding the current dividend policy? 4. Do managers think tax status of their shareholders as an important determinant of dividend policy? 5. Do managers use dividend policy as a signal for indicating the company's future prospects to shareholders? 6. Do managers consider dividend payment merely as a residue? This study used questionnaire to seek answers to above questions. The questionnaire was divided into two parts. Part I focused on determinants which managers consider important (on a seven point scale) in deciding their dividend policy. Part II of the questionnaire was devoted to managers' views (strong disagreement to strong agreement scale) on different issues which have implications for dividend policy. The questionnaire was sent to the Economic Times 250 top companies and was addressed to finance directors of these companies. This study reveals a number of interesting conclusions. First, it is shown that payment of dividend depends on current and expected earnings as well as the pattern of past dividends. This vindicates Lintner's findings in U.S.A. about forty years ago. Similar results are reported by Baker et. al. for U.S.A. companies in 1985. It is also pertinent to note that managers of companies in India would like their companies to continuously maintain payment of dividend. They do not consider liquidity to be a significant consideration in dividend policy. Second, managers consider that there s a positive relationship between payment of dividends and share price. However, it is surprising to find that they do not consider the purpose of dividend policy as maintaining or increasing share price. They strongly believe that companies should strive to maintain an uninterrupted record of dividend payments, and they should avoid making changes in dividend policy that might have to be reversed. Third, respondents in our survey do not seem to fully understand the clientele hypothesis. They, of course, do not deny the existence of high-payout clientele. Managers do consider dividend policy as a signaling device. Fourth, managers seem to prefer payment of dividend even if companies have profitable investment opportunities. Thus, they do not provide any support to dividend residual hypothesis. This is in tone with their perception that the dividend must be paid consistently and continuously.

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Working Papers | 1993

Expected Inflation and Forecast of Growth Rate in India

Ravindra H. Dholakia

Under rapidly changing economic environment in India, economic decision makers at various levels are likely to consider reliable short term forecast of the growth rate of the economy as an important input. It is argued that a simple model with a few variables is likely to be more relevant and reliable for the purpose than elaborate complicated models with hundreds of equations and variables. Expected inflation rate and internal supply-shock are hypothesized to be crucial variables. Numerous alternative methods are tried to measure the expected inflation in India and final choice is made on the bases of certain criteria discussed in the paper. The growth forecasting performance of the model suggested in the paper is compared to the official estimates for the last two years The exploratory exercise carried out in the paper shows promise and potential.

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Working Papers | 1993

Strengthening Primary Health Care Services: Insights from Qualitative Research in West India

Dileep Mavalankar, Satia J K, and Sharma Bharati

Objectives: To understand reasons for nonuse of Government health services and identify ways to address them. Design and Setting: Indepth interviews of 371 married women of reproductive age were conducted in village of two Primary Health Centres (PHC), of north Gujarat. Five focus group interviews in each of the PHC areas were also conducted. Results and Implications: 1. Acceptance of immunization is high, but needs institutionalization, through community preparation. Women are aware of vaccines(90%), but unaware of diseases, dosage, schedule(69%), therefore do not know the importance of completing vaccine schedule(32%). Vaccines are given at home, but there is substantial dropout in coverage, as women report irregularity of worker(26%), and lack of time(15%). 2. Distributing Iron & Folic Acid tablets may not reduce anemia because, of 60% women served, only 12% consumed for more than 3 months due to side effects and treatment form private sources. 3. There was low demand for antenatal care (46% use) as women do not perceive any benefit unless there is a problem. Delivery care needs improvement, as majority are at home(81%), attended by traditional birth attendants (46%), relatives(18%), private practitioners(24%) and only 3% by ANMs. 4. Sterilization is well accepted but fears remain. Tubectomy was perceived to have least side effects but laparoscopy was preferred as less post operative rest required. Major fears were; laparoscopy causes burning of blood(41%), and vasectomy causes weakness(56%). 5. Low knowledge, demand and use of spacing methods was observed. Knowledge of IUD, condoms and pills was 71%, 63% and 51%. Most women felt that since the natural interval between their children was 2 to 3 yrs, no spacing method was required. Trend was to accept sterilization after the desired family size. 6. People used and preferred private care for major and minor illnesses because private care was thought to be more effective(50%), quick(35%), and more accessible(95). The extension work was restricted to three programs: family planning, immunisation and malaria and the working pattern of the workers does not allow time for counselling and education. The role of primary health care in rural areas and the servering of link between preventive and curative care are discussed.

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Working Papers | 1993

Affine Cost Share Equilibria for Economics with Public Goods

Lahiri Somdeb

In this paper we propose the concept of an affine cost share equilibrium and show that under natural assumptions any optimal allocation corresponds to an affine cost share equilibrium. With linear cost functions and under mild regularity assumptions we show that an optimal allocation is a ratio equilibrium with redistribution. In an appendix to the paper we propose a new proof of the existence of a ratio equilibrium when the preferences of the agents are representable by strictly quasi-concave, continuous and strictly monotonically increasing utility functions.

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Working Papers | 1993

Prospects of Foreign Direct Investments into India in the Nineties

Sebastian Morris

The eighties have witnessed major changes in the phenomenon of foreign direct investments (FDI). There have been major shifts their sources and destinations. Japan became an important source, the US the largest host for inward FDI both of Japanese and Western European based FDI. The important underlying reason has been the declining competitive position of US firms in relation to German and Japanese firms, and the assemetry in growth between the three advanced regions-the USA, Japan and Western Europe. An important development has been the emergence, and now dominance, of services related FDI, although these flows have as yet to affect the LDCs significantly. The host countries within the LDCs too have changed as growth in Latin America has collapsed or declined in the eighties. The fast growing economies of East and South East Asia, have became important hosts, since non resource seeking FDI typically seeks to follow growth. There have been changes too within the Indian economy. The eighties witnessed good growth after a near recessionary period of nearly a decade and a half. It is argued that while the FDI inflow into India is likely to increase in the nineties, such increase is contingent on the maintenance of the industrial growth of the eighties in this decade too. Inflows anywhere near the Chinese level is quite out of question, except in the remote chance that India achieves the 'high speed' growth of China. FDI into India is more likely to take the form of joint-ventures and other so called 'non-equity' forms. As indigenous businesses have gathered strength over the period of sheltered growth in the eighties (and even earlier), FDI entry into India would rarely be without an active Indian collaborator. FDI has had little role to play in the manufactured exports growth from most of the NICs, and their role in India is likely to be even less significant. Yet other foreign firms (like retail chain stores in the West, the Shogo Shosho of Japan) and transnationals too, have, to the great benefit of LDC firms sourced manufactured items from them, the LDC firms having acted as subcontractors or as OEM suppliers. Given the wide diversification of the economy, the low cost of manpower, availability of a wide variety of skills, and large excess capacities, subcontracting and OEM relationship in manufacturing can provide the crucial economies of scale, and steady market to segments of Indian manufacturing which are most competitive, even if at low margins, so that a significant contribution to the extensification of growth can be made.

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Working Papers | 1993

Towards an Orderly Indian Market for Corporate Control

Venkiteswaran N

As the Indian economy is being modernized through dismantling of rigid controls and greater reliance on the interplay market forces, the Indian industry is likely to witness major restructuring through a spate of mergers and acquisitions. This paper begins with a short overview of the benefits and drawbacks of what is referred to a market for corporate control in the light of the developed country experience. It than examines the historical impediments against corporate restructuring through mergers and takeovers in India. The paper is of the view that given the economic compulsions, India is also about to witness significant spurt in mergers and acquisitions in the coming years. In this emerging scenario, importance of regulatory reforms covering a wide area such as competition, investor protection, taxation, corporate governance etc. is underscored so that the Indian market for corporate control is developed along orderly lines.

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Working Papers | 1992

Sage of a Star Fish: Participative Design of Sustainable Institutions for Natural Resource Management

Anil K. Gupta

Management of natural resources requires reconciliation in the conflicting world views of different stake holders. The conflicts emerge because of the variation in (a) the perception of nature, (b) associated socio-ecological interactions and (c) the ethical values generating respect for non voting members of our society. It is not easy to design institutions for collective action such that resources are managed not only for the current generation but also in a manner that options of future generations are not compromised. An organization becomes an institution when its members use internal commands (i.e. the directions for action emanating from within one self) instead of external demands (i.e. external regulation or direction for individual action). The cultural conditions in both the cases are very different. The paper provides discussion on the issues which affect 'Our' participation in 'Peoples' organizations and institutions in part one. Much of the literature on participation deals with the opposite, i.e. how people participate in the organizations designed by us. The eco-sociological perspective for survival of households over space, season and sector is given in part two. The nature of risks and the strategies for coping with the same are described. The relationship between culture and ecology is discussed in the light of eco-specificity of social interactions in part three. The problem of collective action, the role of risk and redundancy, and resource diversification are discussed in part four. The Eco-Institutional model dealing with interactions between access, assurances, ability and attitudes of the households with ecological resources, institutions, technology and culture and described in part five. How local creativity and innovative potential can become the building block of future development is discussed in part six. How institutions designed on the basis of alternative eco-ethics generate accountability to people and encourage people to people learning is illustrated with the help of the case of Honey Bee network. This global network of innovators at grassroots level builds upon the local excellence, and urge to experiment and evolve technology and institutions for sustainable resource use. The role played by the process of monitoring the collective action by different stake holders is given in part seven. In part eight, the linkages for lateral learning with particular reference to biodiversity are outline. In part nine, the lessons and issues for becoming accountable to people are summarized. The ethical issues in farmer participatory research and implications of scaling up the peoples' organization are brought out in part ten. In the annexure, a discussion on the philosophy of sustainability is presented.

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IIMA