Monographs

Title

The world is not only depleting its fossil fuels and other non-renewable resources, it is also exhausting its renewable resources by over-exploitation at rates exceeding their respective rates of regeneration as driven by the dynamics of the ecosystems. The waste absorptive ability, including that of the greenhouse gases (GHG) by the ecosystems by degrading them, is also a renewable fund service resource of our global common. This common resource is being degraded by injecting more GHGs into the atmosphere than what the forests and oceans can absorb by the processes of carbon sequestration and the drive of ocean currents. It is, in fact, the rate of resource depletion and waste flows into the sink of ecosystems exceeding their capacities of resource regeneration and waste degradation by the natural ecosystem. The attitude of “anything goes” in the name of commercial success is the impelling force behind the exhaustion of resources and degradation of the environment, and its profound effect on the climate of the biosphere we share. In this monograph, Prof. Sengupta provides alternative ways to achieve the stated goal based on empirical analysis.  Prof. Sengupta is an internationally acclaimed scholar and researcher in the area of environmental economics. This monograph makes an important contribution to the discourse on the subject.

Social Security: A Demographic Imperative

In the Middle Ages, in Europe, life expectancy at birth was close to 28 years. It is only in the last 100 years that, on account of advances in medical technology and improved sanitation, life expectancy has increased dramatically. At the same time, there has been a significant fall in fertility rates which would reduce the rate of replacement of those who die, implying that there would be a larger number of aged who will require support for a period longer than before. It is estimated by the World Bank that the proportion of world’s population that is more than 60 years old would rise from 9.5 percent in 1990 to 16 percent in 2030, and by then more than three-quarters of the world’s old people will be in areas which are not industrial today, more than half being in Asia alone. The primary objective of social security is to protect the poor and the vulnerable and to ensure that they have an acceptable standard of living. Social security policies are designed to help individuals and families deal with the uncertainties of economic life. Social security may also entail smoothing consumption and reducing risk or spreading income over the life cycle. Some authors claim that within the context of a developmental anti-poverty strategy social security could also include policies covering access to productive assets, employment guarantee, minimum wages, and food security. Many international organizations, including the ILO, use the broader concept of ‘social protection’, which covers not only social security but also non-statutory schemes.

A Primer on Indian Telecommunication Sector

Around the world, the telecommunications sector has seen rapid development in the recent past. In India, growth of this sector has been even more dramatic. Those of us who remember the period when one had to wait several years just to get a telephone connection would never have imagined that someday, not just landline phones but also mobile phones with advanced features would be available on demand at affordable prices. It would not be an exaggeration to say that over the last few years, change has been the only constant in the Indian telecommunications sector. To the delight of consumers, tariffs for mobile telephone services have tumbled in the last few years. First, the advent of BSNL/MTNL as the third operator in mobile telephony led to a spate of price cuts by the existing mobile service providers (MSPs). This was followed by the opening up of national long distance (NLD) to competition which led to a steep reduction in STD charges. Subsequently, an aggressive campaign by Reliance Infocomm marketing its limited mobility service using wireless in local loop (WLL) created tremendous excitement both in the public and the media and led to a price-war with further price cuts by MSPs.

Crisis in Development Finance

Development financial institutions (DFIs) were once de rigueur for any developing country. Long held to be part and parcel of any development strategy, their reputation had soared after the successes of Japan and South Korea’s state-led growth. Specialised financial institutions, channelling savings into sectors that could trigger high economic growth, were supposed to be the catalyst that sparked rapid late industrialisation. Country after country set up these institutions, India being no exception. Even for those sceptical of directed credit, there was hardly any alternative. Developing countries had underdeveloped capital markets, both for equity and debt, and the long-term capital needs of companies could only be met by the term lending institutions. The policy was very simple – long-term funds at concessional rates were made available to the term lenders, who lent it out cheaply to the corporate sector in an effort to boost rapid capital formation. In India, as in other countries, the strategy was contingent upon a system of financial repression, with administered interest rates, a financial sector divided into watertight compartments, directed credit, and pre-emption of bank resources by the government. Development financial institutions were set up not only by the central government, but by every state government. Different categories of DFIs came into being – for agriculture, for small-scale industries, for the power sector, for housing and for exports. This monograph deals with the issues related to development finance.

Sustainable Transport Pricing in India

The exigencies and imperatives of industrialisation of the developing economies of the world have brought their governments face to face with several new problems of economic and social governance.  Among the most critical of these is the issue of pricing of services. In the area of transport related services, this issue has several dimensions. These include the balancing of the interests of suppliers and users and need for providing an eco-friendly environment. Although some of the costs of transport services are covered in the charges borne by the suppliers and users of these services, other costs – particularly environmental ones – lie outside the domain of conventional markets and are usually neglected in most debates on transport provision and use. In this background, sustainable development has as one of its essential conditions the structuring of pricing in such a way as to reflect, among other things, social concerns of environmental degradation and equity in accessibility to transport facilities.          In this monograph, Dr. Ramprasad Sengupta, who is one of India’s foremost applied economists, has in the context of transport pricing dealt with the crucial issue of equity and its relationship with social sustainability both from a theoretical and an empirical perspective. He brings to bear his usual refreshing and comprehensive approach to the analytical complexities of pricing transport services in a socially equitable yet sustainable growth.

Pricing and Charges in Civil Aviation

Pricing is a method of resource allocation; there is no such thing as the 'right' price but rather there are optimal pricing strategies to permit specified aims to be achieved. The optimal  price, for example, to achieve profit maximisation may differ from that needed to maximise social welfare; facilitate sustainable development; or maximise passenger numbers. One of the major problems in discussing transport pricing policies is to decide exactly what the objective is. The pricing policies in the civil aviation sector have sought to achieve several objectives, some even conflicting. Tulsi Kesharwani, in this monograph, analytically discusses the various aspects of pricing and charges in the civil aviation sector, including the support services of airports and air navigation. To this analysis, he brings his rich experience in planning and financial areas of civil aviation as also his deep insight into the various dimensions of aviation pricing. It is hoped that the monograph would be useful to the policy-makers and researchers in understanding the intricacies of pricing and charges in the civil aviation sector and would also help in shaping the future pricing policy for the sector.

New Age: New Opportunities

The twentieth century has been a period of extraordinary change. No aspect of human endeavour has been left untouched, be it political, social, economic, scientific or technological. The most rapid and sweeping changes have occurred within the living memory of most people, that is, in the last half-century. It has been a period not just of random movements but also of convulsive and fast movements. The last twenty years, in particular, have seen extraordinary scientific and technological dynamism. The IT revolution on the one hand and the spectacular success in unravelling the mysteries of the human DNA will both surely have the most profound consequences for mankind. Simultaneously, other important, though less heralded, discoveries and inventions have also been changing the world in a slow but sure manner. These scientific and technological advances have been preceded by the maturing of the notion of individual dignity and rights, the idea of equality before the law, the social acceptance that people have a right to choose not only their rulers but also their way of life, and, equally importantly, the realisation that the key to future happiness lies in the growth and spread of modern science and technology. All these developments have become an important leitmotif of this era. India, like other countries of the world, has not been immune to these global changes. In this monograph, Dr. Abid Hussain deals with the hugely complex dilemmas of liberalism in a poor and largely illiterate society like that of ours. He particularly focuses on the critical issue of effective governance in a politically, economically and socially changing society with sophistication and finesse.

Infrastructure Financing: Current Status and Future Options

For several years now it has been realised that unless India begins to invest heavily in its sagging infrastructure, it will find it difficult to attain high rates of economic growth. In order to mobilise such investments, the focus of policy in recent years has shifted to the private sector. However, success in attracting from this sector even a fraction of the funds required has been uninspiring. This has been mainly due to a lack of proper understanding of the manner in which long-term financial flows occur. At the heart of the problem lies the fact that there is, as yet, no effective way of mitigating the risks involved in financing infrastructure, particularly fixed infrastructure. This is due to a variety of economic, social and political factors. The internal dynamics of bond markets, on the one hand, and their interplay with infrastructure industries, on the other, have become important in this context. This monograph by T.C.A. Srinivasa-Raghavan discusses the various conceptual problems of attracting long-term finance into infrastructure sector. It argues that, since the degree of market failure in the case of infrastructure activities is very high, the provision of finances for developing fixed infrastructure should largely remain the responsibility of the state. It further argues that it is essential to distinguish between fixed and moveable infrastructure assets, and recommends that while the former should be developed by the state, the latter be left to the private sector operating under a well-designed facilitating regime. Once the financial markets deepen and adequate instruments to hedge the risks involved are developed, ground can be prepared for a greater role for private investment in fixed infrastructure as well. Taking into account the experience of the last decade, the paper prescribes a set of pragmatic measures for financial sector reform, not the least of which is a less prominent role for the government and its instrumentalities. 

The world of Pensions

In history, the extended family has been the primary institution that has performed the role of providing income security in old age. Elderly members in a family lived and worked with their children and earned a common livelihood. However, with quick urbanisation, fundamental economic and social changes have taken place, which have broken down or at least weakened the earlier informal arrangements. Families have become smaller and more spatially distributed and organic in nature. At the same time, people live longer and, therefore, the proportion of old people in the population has increased. Broadly, the objectives of all pension systems are three-fold. First, the objective is to provide security against destitution in old age, when the individual is no longer able to support himself as before. The second objective is to smoothen the distribution of consumption spending over a life span, shifting a part from the more productive years to the least, thereby spreading it more equitably over the life of an individual. The third and final objective is to provide insurance for the individual against the risks of a longer than average life, disablement before reaching the pensionable age, and leaving behind dependants without support.

Regulatory Structure for Financial Sector: Emerging Trends

Liberalisation has perhaps had the most telling effect on the financial system in India. The financial system, once the epitome of state control, has been rapidly freed of many of its constraints. Interest rates have been freed; the private sector has been allowed into areas hitherto reserved for the state; and the pre-emption of resources by the state has been curtailed. Markets have changed beyond recognition. While these changes have ushered in a new era of opportunity for entities in the financial services sector, it has also exposed the system to higher risks. The development financial institutions no longer have access to long-term low-interest funds provided by the government. Competition has dramatically increased. New kinds of players have appeared, such as the nonbanking financial companies, the housing companies, the foreign institutional investors, and overseas corporate bodies. The dismantling of controls has increased the need for effective regulation. Unfortunately, our regulatory system has been caught napping several times in the last decade. Indeed, it would appear that the authorities were not fully aware of the sort of systemic risks that the reforms would introduce. Had they been, it seems likely that the frequency and intensity of the meltdowns witnessed during the last decade would have been greatly mitigated.

Greying of Indian Railways

The world over, organisations are coping with the financial pressures arising from the need to provide for an increasing number of their retired employees. The Indian Railways is no exception. Currently, it has over a million pensioners whose retirement entitlements have to be met. However, for a variety of reasons, the railways have been remiss in evolving a viable pensionary system in the long-term perspective. As a result, their pension liabilities have mounted to alarming proportions and an enormous implicit debt has accumulated over the years. Unless remedial measures are taken immediately, this debt could cripple the railway finances over time. Indian Railways are the largest single undertaking in the country employing nearly 1.6 million workers. This large workforce, also accounts for a very large share – 56 per cent – of the working expenses by way of salary, wages, allowances and other benefits to employees. Their impact on the railways’ finances is thus considerable.