Reforms and Regional Inequalities in India
An Analysis
R.V. Dadibhavi and S.T. Bagalkoti

The regional inequalities continue to attract the attention of researchers and the policy makers.The heterogeneous nature of the Indian economy has resulted in wide inequalities despite positive interventions by the governments at various levels. There is also an explicit fear that the liberalisation policies might have resulted in further divergences. The present study aims at analysing the trends in inequalities in the levels of income and growth of the major seventeen state economies of India for the period 1980-81 through 2000-01. An adjusted series of NSDP data was constructed by adopting a specific methodology for the purpose of inter-temporal comparison. The analysis reveals divergence of state incomes, especially after the initiation of economic reforms since 1990-91. The income inequalities at aggregate as well as per capita level have increased as is evident in the increasing values of the co-efficient of variation (CVs). Different measures of Convergence/Divergence have also been estimated. The study makes many policy recommendations for realising better regional balance in the economy.

R.V. Dadibhavi is Professor, Dept. of Economics, Karnatak University, Dharwad.
Email: rvdadibhavi@rediffmail.com 
S.T. Bagalkoti is Lecturer, Dept. of Economics, Karnatak University, Dharwad.
 

Regional Concentration of Polluting Industries
A Study of Andhra Pradesh
Prabha Panth

While there are a number of studies on regional concentration of industries, there has been no work done on the regional concentration of polluting industries, and on methods to measure the same. The present study aims to create an index of regional concentration of polluting industries (called the PICI), based on the Location Quotient. This index is applied to study the distribution of polluting industries across the regions and districts of Andhra Pradesh—the third most industrially polluted state of India. The use of the index, it is hoped, will help to identify highly polluted industrial regions of an economy, and force policy makers to curtail further environmental deterioration in these regions by relocation of the highly polluting industries, and by preventing more regional agglomeration of such factories.

The author is Professor of Economics, Osmania University, Hyderabad.
E-mail: p_panth@hotmail.com 
 

Total Factor Productivity Growth, Technical
Progress and Efficiency Change in
Sugar Industry of Uttar Pradesh
S.P. Singh and Shivi Agarwal

This paper examines the total factor productivity (TFP) growth and its components (technical efficiency change and technology change) in the sugar industry of Uttar Pradesh. The TFP growth is estimated applying SBM-DEA-based Malmquist Productivity Index (MPI) on the panel data of 36 sugar mills for the period 1996-97 to 2002-03. The study finds that the average TFP in the industry grew at a moderate rate of 1.6 per cent per annum during the entire period. The decomposition of TFP growth into technical efficiency change (catch-up effect) and technical change (frontier shift) reveals that the TFP growth is primarily contributed by technical change rather than by technical efficiency change. Sector-wise estimation of the TFP testifies that the private sector has the highest growth, followed by the cooperative sector. Regional pattern of the growth demonstrates that the sugar mills in the western region achieved relatively better TFP growth than their counterparts in other two regions. The study also finds that the mills with bigger plant size attained higher productivity growth than the smaller ones. Further, relatively higher TFP growth achieved during the later part of the study period provides some indication that the policy-induced factors, such as de-licensing and partial decontrol of sugar sector have made some positive impact on the TFP growth.

S.P. Singh is Associate Professor of Economics, Department of Humanities & Social Sciences, IIT, Rorkee. Email: singhfhs@iitr.ernet.in 
Shivi Agarwal is Research Scholar, Department of Mathematics, IIT, Roorkee. Email: shividma@iitr.ernet.in 
 

The Implications of Long Range
Dependence for Stock Prices
Evidence From The South Asian Region
Arusha Cooray

This paper examines the implications of long range dependence in stock prices employing data from South Asia. The results suggest that the stock markets exhibit long memory which raises the interesting question of whether long range dependence is consistent with market efficiency.

The author is Lecturer, School of Economics, University of Tasmania, Australia. Email: arusha.cooray@utas.edu.au 
 

Macroeconomic Impacts of Consumption and Income Taxes
A General Equilibrium Analysis
Keshab Bhattarai

Analytical closed form solutions are provided to show how taxes impact price and real wage rate using a general equilibrium model with production. Macroeconomic impacts of taxes on labour income are more distortionary than taxes on consumption. The sole reliance on labour income taxes is costlier than a combination of labour income and consumption taxes. Model results show that having consumption taxes alone is more efficient than having combinations of various taxes when revenues are recycled to households in the form transfer. These results also hold when model is applied to the benchmark dataset of the UK economy.

The author is Lecturer, Business School, University of Hull, UK. Email: K.R.Bhattarai@hull.ac.uk 

Business Cycle Accounting of the Indian Economy
Suparna Chakraborty

Can we use neoclassical growth model to single out the important transmission channels
through which primitives affected the Indian economy and caused the remarkable growth of the period 1982 to 2002? In this paper, we answer the question by applying the new technique of business cycle accounting to the Indian economy. Business cycle accounting procedure is based on the idea that primitives affect the economy through three possible channels: through changes in productivity, through changes in labour market frictions or through changes in investment market frictions. Our results show us that the primary conduit of policies that brought about significant growth in India was productivity that registered an unprecedented increase particularly in the nineties. Our results further indicate that changes in labour market frictions and investment market frictions did not play a significant role.

Suparna Chakraborty, Dept.of Economics and Finance, Baruch College, CUNY, USA. Email: suparna_chakraborty@baruch.cuny.edu 

Measuring Cost of Environmentally Sustainable
Industrial Development and Designing Pollution Taxes
A Case Study of Thermal Power Generation
M.N. Murty and S.C. Gulati

This paper provides a method of estimating the cost of environmentally sustainable thermal power generation. It describes the technology polluting firms as one of producing jointly good output and bad output. The data about thermal power generation in Andhra Pradesh (AP) state of India is used for the estimation. Estimates of shadow prices of pollutants and the cost of environmentally sustainable power generation are obtained. Also, this paper provides the estimates of pollution taxes needed to make the thermal power generating units in AP comply with the air pollution standards in India.

M.N. Murty, Institute of Economic Growth. Email: mnm@ieg.ernet.in 
S.C. Gulati, Institute of Economic Growth. Email: gulati@ieg.ernet.in 
 

Productivity Growth, Efficiency Change and Technical Progress
A Case Study of Australian Private Sector Industries
I.K.M. Mokhtarul Wadud and Satya Paul

This paper examines productivity growth in the Australian private sector industries using annual time series data for 1968-69—1995-96. The Malmquist indices of total factor productivity growth (TFP) are computed and decomposed into the components of technical progress and efficiency change for each of the seven industries. Our investigation reveals that five industries have shown productivity growth during the sample period. The highest annual productivity growth has been recorded by transport, storage and communication industry (2.6 per cent) followed by mining (2.1 per cent) and manufacturing (1.2 per cent). Productivity growth has been low in agriculture (0.8 per cent) and wholesale and retail trade industry (0.1 per cent). The construction and the recreation and personal services have recorded productivity regress. In the former, technological regress is accompanied by no changes in technical efficiency whereas in the latter low growth of technology (0.2 per cent) has been offset by a higher rate of decline in technical efficiency. The results are, by and large, useful for policy makers in designing industry specific policies.

Prof. I.K.M. Mokhtarul Wadud, Deakin University, Geelong, Victoria, Australia. Email: mokhtarul.wadud@deakin.edu.au 
Prof. Satya Paul, School of Economics and Finance, Campbelltown Campus, University of Western Sydney, Australia. Email: s.paul@uws.edu.au 

COMMUNICATIONS FOR DEBATE AND RESEARCH / 1

Trade and Development Index

The original source for the Trade and Development Index presented here is : UNCTAD(2005). Developing Countries in International Trade.

COMMUNICATIONS FOR DEBATE AND RESEARCH / 2

An Approach to Economics of R&D in India
Y.N.T. Seshagiri Rao

This paper points out the various facets of economics of R&D, Indian economists can pursue. It describes the various important areas relating to economics and R&D activities like the relation between R&D and economic development, cost-benefit analysis of an R&D activity, economic and social returns from technical changes, firm size and innovative activity, patent and monopoly, project evaluation and so on.

The author is Scientist, National Geophysical Research Institute (Council of Scientific and Industrial Research, Government of India).

BOOK REVIEW / 1

Higher Education in India: The Need for Change
Monograph of ICRIER - Dr. Pawan Agarwal

Reviewed by Dr.P.R. Panchamukhi,
Founder Director & Professor Emeritus (Honorary),
Centre for Multi-disciplinary Development Research (CMDR), Dharwad, Karnataka

BOOK REVIEW / 2

Enterprise Development in Mountain Areas
T.S. Papola and D.N. Awasthi
(Himalaya Publishing House, 2005, Price: Rs.550, pp.168)

Reviewed by I.C. Awasthi, Institute of Applied Manpower Research, Delhi

BOOK REVIEW / 3

Information Technology and Economic Growth-Prof. R.G. Desai
(Rawat Publications, Jaipur, India , 2005, Price: Rs. 500, pp.232)

Reviewed by Ravi M. Tirlapur, Department of Economics, Bangalore University, Bangalore