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Working Papers | 2019

Does GST in India Hurt Producing Regions?
A New Estimate of the Tax Base Under GST of Select States

Sebastian Morris, Ajay Pandey, Sobhesh Kumar Agarwalla, and Astha Agarwalla

GST as introduced in India being a destination based tax, does not encourage regions to vigorously promote manufacturing and tradable services industries. Being in the midst of its economic transformation, and given the subnational character of most states (regions), it is important that the states engage in locational tournaments to attract investments, not through tax concessions, but through the provision of infrastructure services, governance, and other intangible services. A new consumption based approach that adjusts the detailed consumer expenditure figures of the National Sample Surveys at the state level is developed. This is shown to be robust and is used to estimate the RNR (Revenue Neutral Rate of Taxes) at the State level. This reveals that there are stark differences between the rates for the producing states and the consumption oriented states amounting to as much as 10% of GDP. These differences cannot be bridged by the proposed compensation scheme. As the impact of GST goes on to the next stage of determining the locational choices of new investments, the lack of fiscal incentives for states to attract and nurture investments, unless corrected would have deleterious effects on the investment process.
As much as 50% of the Centre's collection of GST may have to be distributed based on economic activity centered around manufacturing and tradable services production, if the country is not to lose the steam of high and growing investments to take it through its economic transformation. The contrast with China is remarkable, China's GST is only partial covering only manufacturing and associated labour services, allowing states to tax and retain many services irrespective of the location of the consumer of the service. More importantly as much as 25% of the central collections on account of GST( in manufacturing) go to the provinces based on their public goods production.

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Working Papers | 2019

Whose Empowerment? National Digital Infrastructure and India's Healthcare sector

Rajesh Chandwani, Saneesh Edacherian, and Mukesh Sud

Patient-centric digital infrastructure can potentially enhance the efficiency of the healthcare systems. Even in developed nations evidence suggests low adoption rates for such infrastructure. The Indian government, piggybacking off biometric identity, is setting up digital infrastructure to enable the provision of universal healthcare. Invoking an information ecology perspective, we investigate the physician's perception to this initiative. We find that, equipped with a unique patient identifier and stakeholders' registry, this initiative is perceived to be a game changer and could significantly impact the power dynamics in the healthcare sector. Physicians, who are the key stakeholders in this initiative, are skeptical about the change in the locus of the power, with power residing in 'data' rather than 'professional expertise'. The changes are expected to manifest through monitoring, controlling and managing the data rather than the provision of knowledge-based services. We present recommendations for the design and implementation of this large-scale patient-centric digital infrastructure.

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Working Papers | 2019

Overestimation in the Growth Rates of National Income in Recent Years? – An Analyses Based on Extending GDP04-05 through Other Indicators of Output

Sebastian Morris and Tejshwi Kumari

Quarterly indices of output like those of Industrial Production, other measures of production like net sales, exports, of companies for which data is available, besides proxies like credit to the sector, and indices of price levels have been used to forward project the growth rates of GDP04-05, for the principal sectors of the National Income Accounts (NAS). These were then compared with the growth rates given by the new Gross Value Added (GVA11-12) at constant price measure. It is very highly probable that some sectors of the National Accounts Statistics (NAS) notably Manufacturing, and Trade, Transport, Storage, Hotels and Communication Sectors were overestimated, especially in periods when the output (economic activity) was slowing down. This questions the use of the new GVA series for macroeconomic (policy) actions, wherein more than extensiveness of coverage, the movements over time of the measure have to be reliable and accurate. This is especially so because manufacturing and its related sector-trade etc., are the core sectors which are responsive to changes in policy and to shocks (that could be countered), wherein there is deep overestimation. Some evening out of the overestimation is noticed over the upswing in the business cycle since 2017:2. However the demonetization which rudely reduced demand did not allow the "phase shifting" and "flattening" aspects, which the new GVA series possibly imposes to be examined in detail, although the same is suggested.

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Journal Articles | 2018

Reforming agricultural markets in India: A tale of two model Acts

Sukhpal Singh

Economic & Political Weekly

The union Ministry of Agriculture and Farmers’ Welfare had prescribed a model Agricultural Produce Marketing Committee Act in 2003. The state-level adoption of the act has been tardy and varied in terms of both the magnitude and content of agricultural market reforms. Yet, the ministry under the current central government has come up with another model act, the Agricultural Produce and Livestock Marketing (Promotion and Facilitation) Act, 2017, supposedly an improvement over the 2003 act. Among other things, the provision that has grabbed much attention is the removal of contract farming from the APMC domain to a separate model act of Agricultural Produce and Livestock Contract Farming and Services (Promotion and Facilitation). Analysing these draft acts, the paper finds that both the model acts suffer from serious conceptual lacunae that have implications for their application and governance, and, consequently, for inclusive and sustainable agricultural development.

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Journal Articles | 2018

India in 2 C and well below 2 C Worlds: Opportunities and challenges

Saritha S. Vishwanathan, Amit Garg, Vineet Tiwari, and P.R. Shukla

Carbon Management

India's contributions to meeting global mean temperature increases of 2 °C or well below 2 °C would require transformational changes in its energy systems. A bottom-up model analyzes alternate futures (reference, intended nationally determined contributions and low-carbon scenarios) assuming equal per-capita cumulative emissions rights from 2011 through 2050. The cumulative CO2 budget for India for low-carbon scenarios during this period is estimated to be around 115 Bt-CO2, as against 165 Bt-CO2 for the reference scenario. To achieve such emission reductions, while maintaining high economic growth and meeting sustainable development goals, the paper projects that a range of endemic transformations are required such as shifting toward cleaner fuels, resource efficient technologies, widespread use of Information and communication technology (ICTs) to balance demand and supply (e.g. smart grids), substituting demand in transport (e.g. work from home), aggressive promotion of renewables, lifestyle changes, and CO2 capture, storage and use. Modeling decarbonization to meet the needs of the increasing population and urbanization faces myriad challenges due to the distributed nature of technologies used to provide various services, involving risks and uncertainties. The paper finally outlines specific opportunities and challenges faced to meet the increased mitigation ambition to limit the warming to 2 °C and below.

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Journal Articles | 2018

'I show off, so I am well off': Subjective economic well-being and conspicuous consumption in an emerging economy

Saravana Jaikumar, Ramendra Singh, and Ankur Sarin

Journal of Business Research

Conspicuous consumption may be explained by the need to signal higher social status in a society. However, whether this consumption actually translates to improved perception of well-being remains unexamined. In the emerging economy context, we argue that conspicuous consumption may play the role of elevating one's own perception of economic well-being. Further we hypothesize the effect to be higher for the households in the ‘bottom of the pyramid’ (BOP). Using data from a panel of 34,621 households from India Human Development Surveys (2004 and 2011), we examine the relationship between conspicuous consumption and subjective economic well-being (SEWB) using several empirical strategies. Results support our hypotheses that higher conspicuous consumption may result in improved SEWB and that the effect is higher for households in the BOP. Our findings contribute to the domain of conspicuous consumption and BOP in emerging markets. Further, our results have significant marketing and policy implications.

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Journal Articles | 2018

The effect of parenthood on travel behavior: Evidence from the California Household Travel Survey

Sandip Chakrabarti and Kenneth Joh

Transportation Research Part A: Policy and Practice

Literature suggests that young children have a significant influence on activity patterns and time-use of adult men and women in dual-earner households. The resultant impact on travel behavior, however, remains largely unexplored. In this study, we use the 2012–13 California Household Travel Survey to compare daily (weekday) travel behavior of adult men and women belonging to dual-earner heterosexual couple households without children, with their adult counterparts in dual-earner heterosexual nuclear households with one or more young (aged 15 years or less) children living in urban California. We find that the presence of young children is, on average, associated with relatively higher auto use, and lower levels of physically active travel (i.e., walking and bicycling) and public transit use. Specifically, parents of school-age (6–15 years) children, without other small (5 years or less) children, are found to engage in significantly more auto use than childless couples. The likelihood of engaging in 20 min or more of active travel per day falls as couples transition to parenthood, and drops further as small children turn school-age. The likelihood of making at least one transit trip per day follows a similar pattern. We also find that the negative impact of young children on average, and school-age children in particular, on adults’ active travel is significantly greater for men than women. Additionally, we identify factors that can help reduce gender inequality in auto use and active travel within households with one or more young children. This study enhances our understanding of travel behavior variations across household types in cities, and over the life courses of individuals. Planning and policy implications are discussed.

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Journal Articles | 2018

Can highway development promote employement growth in India?

Sandip Chakrabarti

Transport Policy

India has embarked on an ambitious highway development program to significantly improve interstate road transport connectivity. Between 2000 and 2015, total length of India's national highway network has nearly doubled and 4 + lane share of the national highways has increased from 2 to 20%, along with associated improvements in safety and surface quality. National highway development is considered as a tool to promote employment growth by stimulating economic activities and attracting foreign investments. As India's central government continues to increase budget allocations for national highway projects in anticipation of generating more jobs, this study empirically investigates whether past investments can be linked to employment growth. I analyze changes in non-agricultural private sector employment over a 10-year period (2003–2012) across 25 states in response to changes in the density (lane-km per unit area) of national highways, controlling for other factors affecting employment. Using a series of static (pooled ordinary least squares, random-effects and fixed-effects) and dynamic (random- and fixed-effects with first-order autoregressive or AR(1) disturbances, and system GMM or generalized method of moments) panel regressions, I find that 10% increase in national highway density in India is associated with 1–6% (depending on model specification and estimation approach) increase in private sector employment, all else equal. This paper provides first empirical evidence suggesting that India's national highway development efforts have produced positive employment benefits in the past. In addition to contributing to transportation planning scholarship, the findings are expected to inform policy-makers in India as they develop future highway investment plans aimed, in part, at economic development. This paper will also be useful to decision-makers in other developing countries with comparable policy environments.

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Journal Articles | 2018

Gross profit manipulation through classification

Sakina H. Poonawal and Neerav Nagar

Journal of Business Research

The existing research on classification shifting has examined the manipulation of core earnings through shifting of core expenses to special items keeping the GAAP earnings constant. We examine the manipulation of gross profits through shifting of costs of goods sold to operating expenses keeping core earnings constant. We find that managers, on average, misclassify costs of goods sold as operating expenses in order to just meet prior period's gross margin. We also find that managers shift costs of goods sold to both selling, general and administrative expenses and research and development expenses. However, they are more likely to shift costs of goods sold to the latter.

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Journal Articles | 2018

Geographic mobility of recent immigrants and urban transit demand in the U.S.: New evidence and planning implications

Sandip Chakrabarti and Gary Painter

Transportation Research Part A: Policy and Practice

Residential mobility rates in the U.S. have been in steady decline. Most notably, between 2005 and 2013, one-year intercity migration rate for immigrants has decreased by 0.7 percentage-points, compared to a 0.2 percentage-point decline for the U.S.-born population. Literature on urban implications of geographic mobility suggests that consideration of migration trends, or population flows, can improve urban planning, including transportation. Our research focuses on recent immigrants, a group that significantly contributes to public transit ridership in the U.S. In this study, we analyze the influence of the annual average in-migration rate of recent immigrants to various urban areas from within the country on transit ridership changes across the urban areas between 2008 and 2013. We also compare this effect with the effect of annual average in-migration rate of new immigrants to various urban areas from foreign countries. While the average effect of inflow of new foreign migrants on transit demand is suggested in the literature, distinguishing the transit demand of immigrants that are not movers and those that are movers from various locations remains unexplored.

We derive migration flows from the American Community Survey microdata, and transit ridership from the U.S. National Transit Database. We perform geospatial analysis to overcome several constraints that make exploration of the migration-transportation connection difficult, particularly the lack of uniformity in geographic boundaries used for data presentation across and within government agencies, and over time.

Our results indicate that consideration of domestic in-migration rates of recent immigrants can improve transit demand forecasting. As past literature has found, recent immigrants are highly likely to use transit. Recent immigrant migrants that have arrived directly from another country are even more likely to use transit. Interestingly, recent immigrants that move to a metropolitan area from another location in the U.S. are relatively less likely to use transit. Among domestic migrants, however, those that move to cities undergoing large increase in transit service relative to population are more likely to use transit. High population and transit stop density of both previous and current cities seem to positively affect transit mode choice for commute trips of recent immigrant movers. Declining inter-urban mobility among recent immigrants can indeed alter future transit demand trends. Transit agencies should not treat recent immigrants as a monolithic group. Consideration of the migration patterns of various types of recent immigrants, and factors that determine those patterns, can improve demand forecasting and planning.

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IIMA