This paper examines the solvency and sustainability of India’s external imbalances and analyzes the optimality of its capital flows. We use three approaches: an intertemporal model of the current account that allows for capital controls; a composite model of macroeconomic indicators that...

We examine the evolution of nontradable and tradable prices in the Indian economy over 1980-2002 and find widening differentials: the real exchange rate has been appreciating. This might seem unsurprising, since India''s rapid per capita income growth suggests Balassa-Samuelson factors at play....

The fiscal performance of the States in India has been an area of concern for quite some time. The Twelfth Finance Commission (TFC) recommended a three-pronged strategy to alleviate States'' fiscal distress, built around greater orientation toward market discipline, incentives for fiscal...

Do the short and medium term adjustment costs associated with trade liberalization influence schooling and child labor decisions? We examine this question in the context of India''s 1991 tariff reforms. Overall, in the 1990s, rural India experienced a dramatic increase in schooling and decline...

This paper examines rising asset prices in India. For the most part, asset prices in India reflect structural factors but the risk of a correction cannot be ruled out. However, at this juncture monetary policy may not be the most effective tool to safeguard financial stability because (i)...

India''s planned pension reform will set up a proper regulatory framework for the pension industry and open up the sector to private fund managers. Drawing on international experiences, the paper highlights pre-conditions for the reform to kick-start financial development, including: (i) the...

This paper assesses the effects of India''s tax system on growth, through the level and productivity of private investment. Comparison of India''s indicators of effective tax rates and tax revenue productivity with other countries shows that the Indian tax system is characterized by: (1) a high...

This paper examines the impact of international trade on industrialization in developing agricultural economies. The findings show that developing agricultural economies that increased their openness during 1970-95 experienced an increase in their share of industrial production at the expense of...

The authors examine the numerous structural and policy changes Indian authorities have adopted since the 1991 balance of payments crisis; how these changes helped India weather the Asian financial crisis of 1997-98; the risks to fiscal sustainability and their implications for growth; the...

We evaluate empirically the impact of the dramatic 1991 trade liberalization in India on the industry wage structure. The empirical strategy uses variation in industry wage premiums and trade policy across industries and over time. In contrast to earlier studies on developing countries, we find...