Modeling Economic Growth in Contemporary India

Cover of Modeling Economic Growth in Contemporary India

Synopsis

This volume focuses on core topics of economic disruption caused by the Covid-19 pandemic: changes in socio-cultural relationships, behavioural patterns and psychological attitudes governing human interaction, and government policies to stabilize the Indian economy and contribute to sustainable gro...

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Table of contents

(17 chapters)
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Abstract

A major concern for policymakers and researchers is to ascertain the movement of price levels and employment rates. Predicting the trends of these variables will assist the government in making policies to stabilize the economy. The objective of this chapter is to forecast the unemployment rate and Consumer Price Index (CPI) for the period 2022 to 2031 for the Indian economy. For this purpose, the authors analyse the prediction capability of the univariate auto-regressive integrated moving average (ARIMA) model and the vector autoregressive (VAR) model. The dataset for India's annual CPI and unemployment rate pertains to a 30-year time period from 1991 to 2021. The result shows that the inflation forecasts derived from the ARIMA model are more precise than that of the VAR model. Whereas, unemployment rate forecasts obtained from the VAR model are more reliable than that of the ARIMA model. It is also observed that predicted unemployment rates hover around 5.7% in the forthcoming years, while the forecasted inflation rate witnesses an increasing trend.

Abstract

South Asian countries have recently shown tremendous advancement in Information and Communication Technology (ICT) deployment and have been identified as one of the fastest-growing regions in the world. This chapter reviews 43 state-of-the-art scholarly articles on the role of ICT in accelerating economic growth by fostering innovations in South Asian countries. A seven-step approach to the literature review is used for synthesizing relevant data. The findings indicate that although many South Asian countries understood ICT innovations as an approach that provides a competitive edge to business firms and the country's economic growth, their full potential remains untapped due to many barriers. Some significant barriers include the digital divide, ICT infrastructure, existing ICT policies, and data governance and social trust. The results of this chapter would help policymakers understand the vital role of ICT in fostering innovation and uplifting economic growth in the South Asian region.

Abstract

Event studies have gained lots of popularity and momentum since 1960. It is an effective method to understand the event impact on the variables being tested. This paper aims to examine the reaction of Indian stock market to Russo–Ukrainian Crisis 2022, it is to understand the efficiency of Indian stock market for international events and how information content flow into the market is reflected in the stock prices and how the whole market reacts to the new information. The Event Study methodology is employed in this paper to investigate the effect of an event (Russo–Ukrainian Crisis) on a specific dependent variable (Stock Prices). The Small, Mid and Large cap indices of the Indian Stock exchange were taken for the Event Study. However, the abnormal return, standard deviation and t-statistics were calculated to examine the event effect on stock prices. It is found that there is a significant negative effect of the event on the stock prices.

Abstract

The world of investing has changed drastically. Investors are willing to invest the companies that give high priority to environmental, social and governance issues (ESG). This study delves into the performance of the BSE CARBONEX index in comparison to the BSE 100, BSE Sensex, BSE Energy and BSE Oil & Gas. It seeks to examine the impact of calendar anomalies, particularly focusing on the day-of-the-week effect, on these indices. To accomplish this, daily closing prices of the BSE CARBONEX, BSE 100, BSE Sensex, BSE Energy and BSE Oil & Gas were gathered from the BSE official website. The study period was divided into three segments: the full period, period I (2017–2020) and period II (2020–2022). The study's findings reveal that throughout the full period, period I and period II, BSE Energy exhibited the highest mean daily return compared to the other selected indices. There appears to be a discernible Tuesday effect on the daily average mean returns of BSE CARBONEX, BSE 100, BSE Sensex, BSE Energy and BSE Oil & Gas in both the full sample period and period II. Results from ordinary least squares (OLS) analysis by day indicate a notably high positive and statistically significant daily return on Tuesdays, particularly during the full sample period and period II. Furthermore, the GARCH (1,1) model suggests a significant Tuesday effect on the BSE Energy and BSE Oil & Gas indices.

Abstract

An individual's capacity to manage finances has become critical in today's environment. The availability of various sophisticated financial instruments, combined with the economy's complexity and rising uncertainty, has prompted a significant push to analyse from where the youth learn about managing their money. This study intends to investigate the differences in the selected social predictors (Parents, Friends, School, Books, Job Experiences, Life experiences and Media) that influence the money management behaviour of emerging adults. The data was collected through a structured questionnaire from 230 undergraduates in the age group of 18–22 years. To test the normality of data, Kolmogorov–Smirnov (KS) test was applied and further Kruskal–Wallis test was found to be the appropriate method based on the identification of statistically significant deviations. The results show that parents have been considered as the most influential predictor (X = 3.565) of money management behaviour among emerging adults. followed by Life Experiences (X = 3.526). Whereas School and Job Experience were the least influential social predictors with mean value of 2.278 and 2.130 respectively. The study provides insights to the regulators, academicians and policymakers to initiate innovative strategies and processes for helping emerging adults for effective money management to increase their academic performance in a stress-free environment. Further, this paper contributes towards effective money management advice by recommending implementation of tools, apps and programs relating to Financial Literacy for better Financial Behaviour. Lastly, the paper provides implications that focus on enhancing the financial literacy of the parents as they act as role models for their children by teaching them skills to manage money.

Abstract

The present study aims to provide an overview of the life insurance industry in India and scrutinise various dimensions impacting life insurance uptake in accordance with the views of the management representatives. An exploratory study was assumed by conducting in-depth face-to-face/telephonic interviews with six employees and one agent affiliated to the most prominent life insurance companies operating in India. The interviews focused on operation of life insurance companies in general, their work culture, approach towards individuals/customers, steps taken to attract and retain their human capital (agents), the overall impact of reforms on the life insurance industry and their tactics which make them unique in the market. The study observed that life insurance uptake in India is discernibly affected by an individual's financial knowledge, needs and the level of trust they have on the company apart from brand of the life insurance company and grievance redressal system. It was also found that reforms (Foreign Direct Investment (FDI) Policy, entry of private players) did bring about a difference in work culture, improved employment opportunities and increased the reach of the insurance industry in the country. The study highlights dimensions that life insurance companies constantly work/need to work upon to remain at the zenith of success, broadens the horizons of the life insurance industry in an emerging nation like India as it is one of the few studies to have probed the management's outlook of the Indian life insurance industry and holds scope for future theoretical investigation and development of a comprehensive model as well.

Abstract

With the increase in uncertainty around the globe, an intensifying interest is seen in Economic Policy Uncertainty (EPU) as a topic of research. Researchers worldwide understand the significance of the impact of EPU on the country's development. EPU has a far-reaching impact as uncertainty shocks in one part of the world resonate worldwide due to the level of interconnectivity, globalization and quick communication. In order to facilitate these researchers, this study presents a bibliometric analysis of the existing research in this field using VOS viewer software, by consolidating all the studies from Scopus indexed journal articles, conference proceedings and review papers published in English language from 2006 to 2022. Bibliometric analysis on EPU has rarely been performed. The analysis identifies the publication trends, journal-wise citation, most influential authors, countries, institutions, keyword co-occurrence and authors of different countries who have collaborated for the research in the field. Finally, 1,055 papers were used for bibliometric analysis. The findings depicted that the most cited article on EPU is ‘Measuring economic policy uncertainty’ by and the most prolific author appears to be Rangan Gupta from University of Pretoria which as an institution also has the maximum publications on this topic. The Journal Finance Research Letters has published the greatest number of researches on EPU. This chapter also summarizes the limitations of the study along with new areas of research.

Abstract

E-commerce in India has been experiencing remarkable growth, successfully changing the way people transact. The pandemic has accelerated the shift towards a more digital world and triggered changes in online shopping behaviours that are likely to have lasting effects. Social media has become integral to the teen market online shopping experience. Food and clothing are the primary sources of expenditure in teenagers, followed by health and personal care for girls and video games for boys. 42% of adolescent spending is directed to social uses, such as food, video games, music, movies, events and books. 38% of their expenses are related to clothing, accessories or shoes and 15% to beauty and personal care. The research was conducted to study factors that affected the teen age group in shopping online. This inquisitiveness led to the formation of a questionnaire which focuses on collecting information on the current e-commerce trends of Indian teenagers. The study was conducted online in the age group ranging between 13 years and 19 years over a period spanning two weeks. The study focuses on determining gaps in the Indian Market for teenagers in order to cater them in a better way.

Abstract

Making monetary policy decisions is a fine line to tread, always seeking to balance the needs of the domestic economic conditions with the need to keep events in the outside world under check. It is impossible to overstate the significance of monetary Trilemma in this context. This study aims to test the presence of monetary Trilemma and the contrasting dilemma hypothesis in India. The study is conducted over a considerable long span of time (1996–2022) to understand the evolution and changes in the management of Trilemma. In order to ascertain the changes in the existence of dilemma in India, this study analyses pre- and post-global financial crisis time periods. The relevance of exchange rate regimes in transforming Trilemma into a dilemma in the Indian context is assessed by providing for capital account restrictions. This evaluation helps to comprehend the impact of spillovers caused by monetary policy shocks in the United States and the resulting global financial cycle in India. The study provides evidence in favor of Trilemma and the relevance of exchange rate regimes as well as capital controls in determining monetary policy independence. The prevalence of more flexible exchange rate regimes favors a gradual shift toward dilemma, in situation of low capital controls.

Abstract

The study compares all three versions of sustainable development goal (SDG) India index and assess the pace and direction of each State/UT for the attainment of SDGs by 2030. The study is an attempt to scrutinise performance of each indicator of every State and UT of India across 16 SDGs from 2018 to 2020. For this purpose, 13 SDGs with 56 indicators for first version, 16 SDGs with 101 indictors from second version and 115 indicators across 16 SDGs from third version of SDG India Index are investigated. Instead of relining NITI Aayog's indexing methodology, the study uses the same dataset to assess the distance of each state from national target for SDG. Cursorily, it also derives statistical projections of duration required by each State/UT for achieving particular indicator and goal at large. The investigation derives statistical projections of duration required by each State/UT for achieving a particular indicator and goal at large.

Based on the progress made by each State/UT, distance from present conditions are categorised as a Very far (distance less than 0%), Far (distance from 1% to 25%), Near (distance from 26% to 50%), Very Near (distance from 51% to 75%), Achieving target (76%–100%).

The conclusion of the study intends to highlight the benefits and challenges for adopting indexing or ranking approach to monitor the sub-national level progress made for attainment SDGs.

Abstract

The apex planning body of India, NITI Aayog launched an Aspirational District Programme (ADP) in January 2018. The programme aimed to the quick and effective transformation of 112 (14%) districts of the country. This programme is considered as world's biggest result-based governance initiative having reached up to 250 million people. It is based on a ranking that is done on monthly basis. This ranking is based on 49 KPIs across six broad socio-economic themes.

The study attempts to inquire and assess the progress made by 112 Aspirational Districts under Financial Inclusion, Skill Development and Basic Infrastructure theme from the inception of the programme to June 2022 (i.e. 54 months). Instead of ranking districts with delta rank or composite scores, the study divorce from NITI Aayog's methodology of monthly delta ranking. The study explores 8 indicators under the basic infrastructure theme and 16 indicators under the financial inclusion and skill development themes. For this purpose, the study explores the availability of individual household latrines, drinking water, electricity and road connectivity. Districts are also tracked for the number of Internet-connected Gram Panchayats, and panchayats with Common Services. Every district is provided with the target as per national development priority, the study makes an effort to grasp the distance of each district from the national target. This allows researchers to develop a scale Very Far, Far, Near, Very Near, Achieved with descriptive statistics techniques. Juxtaposing the scale with timelines results in a pattern of progress made by these 112 districts.

Abstract

According to the efficient market hypothesis, a company's advertising expenditures are fully reflected in its stock price. If so, then future abnormal stock returns should not be correlated to advertising spending. Nonetheless, this chapter explores the impact of advertising spending on the abnormal stock returns using portfolio sort based on both the advertising intensity and change in advertising intensity. Using data from 2000 to 2019, the results suggest that larger advertising intensity is coupled with negative abnormal stock returns in India. The study suggests that market is penalizing the firms for spending more on advertising. Hence, it suggests that advertising budgets should be allocated with caution by marketing managers.

Abstract

Using the most recent dataset from 2013–2014 to 2017–2018, the study examines the efficiency of 75 coal-fired power plants in the Indian thermal power sector. The authors obtained robust estimates of efficiency scores by employing DEA-based classification invariance technique to account for CO2 emissions as an undesirable output. Meta-frontier analysis and the Tobit regression are used to compute technology heterogeneity across power plants belonging to public and private groups and investigate the factors driving carbon-adjusted efficiency, respectively. The results reveal that, on average, the efficiency of power plants during the study period is 78.26%, showing significant room for reduction in CO2 emissions alongside augmentation in electricity generation. Private plants are more efficient than public ones, and relative performance inefficiency is the primary source of inefficiency in the thermal power sector. Regression analysis indicates that domestic-equipped plants perform with lesser levels of efficiency, and plants with more units are more inefficient than plants with fewer units. Carbon productivity significantly improves efficiency since fewer fossil fuels with high carbon will generate more electricity.

Abstract

This study finds whether there exists any correlation between the rates of technological progress, unemployment and labour productivity among a total of 21 world economies that are categorized as developed, developing and least developed by the United Nations. An attempt has also been made to check the reliability of the model through regression analysis. Time series analysis has been conducted over 19 years, from 2000 to 2018. The Solow Residual Method based on the Cobb Douglas Production function has been used and modified to find the rate of contribution of technological progress towards Gross Domestic Product (GDP) for each country. Correlation analysis has been conducted to measure the degree of correlation between the variables and trend analysis has been used to identify the exact directions in which the variables are moving. Further, regression analysis has been conducted to check whether the identified strength of the relationship between the dependent and the independent variables can be well justified or not. There is an unsustainable economic development when the contribution of technology to a nation's GDP increases in tandem with an increase in the rate of unemployment. A country is said to have sustainable economic development when the rate of contribution of technical advances to GDP growth drops or if it grows but with a lower unemployment rate.

Abstract

Since 1960s it has been realized that the bilateral trade at international level cannot be explained solely by the classical and neoclassical models of trade based on inter-industry trade. There is an existence of export and import within the same industry among the trading partners. Intra-industry trade (IIT) for products and product groups has been empirically observed by several studies. However, there is not much literature available on IIT in services. So also, from country perspective many studies are based on IIT for advanced countries. There is not much empirical evidence available for IIT among the emerging economies. The study aims to analyze the IIT in tourism services for five major emerging economies constituting BRICS – Brazil, Russia, India, China, and South Africa. The group constitutes 41% of world population with 24% of world GDP and 16% share in world trade. The study used both static and dynamic approaches to measure the IIT between India and other BRICS nations between 2018 and 2020. To empirically estimate the IIT, the study employs Grubel and Lloyd index and Brülhart index (MIIT). The study reveals that India had a very high level of intra-tourism trade with Brazil and South Africa. While with China and Russian Federation it was moderate. Results denote a correlation between the theory of international trade and tourism. There is two-way trade in BRICS tourism flows.

Abstract

This study examines the temporal trends and determinants of household cooking fuel choices in India. Access to affordable, reliable, clean cooking fuels is crucial for improving household health and mitigating environmental issues. However, a significant portion of the population in developing countries, including India, still relies on traditional solid biomass fuels, leading to adverse health impacts. Using data from India Human Development Survey conducted in 2005 and 2012, this research analyzes changes in fuel choices. It explores the influence of socio-demographic characteristics, education, and accessibility on these choices over time. The findings reveal a gradual transition toward mixed fuel usage but a limited reduction in the use of dirty fuels, indicating the challenges in achieving cleaner cooking practices. Education is a crucial driver of fuel choices, highlighting the need for targeted educational campaigns. Age and household size also play significant roles, with older household heads and larger households exhibiting different fuel preferences. The availability and cost of firewood and kerosene influence fuel choices. The study also suggests developing educational campaigns, improving the availability and affordability of clean cooking fuels, and tailored strategies for larger households. These findings provide guidance for policymakers in promoting the adoption of cleaner cooking fuels and improving household air quality and public health in India.

Cover of Modeling Economic Growth in Contemporary India
DOI
10.1108/9781803827513
Publication date
2024-07-22
Book series
Entrepreneurship and Global Economic Growth
Editors
Series copyright holder
Emerald Publishing Limited
ISBN
978-1-80382-752-0
eISBN
978-1-80382-751-3