Search

The Asian Financial Crisis during the late 1990 s revealed the fault lines of foreign currency loans of corporates. It starkly demonstrated that a combination of semi-pegged exchange rates and unregulated foreign currency borrowing could expose corporates and, subsequently, the entire economy to heightened vulnerability. To mitigate these risks, implementing certain capital account restrictions emerged as a potential remedy. Against this backdrop, this paper investigates the changing contours of vulnerability arising from the rising foreign currency leverage of 818 non-financial corporates in India during 2004–2022. In particular, this paper examines the impact of exchange rate shocks and changes in certain key macroeconomic policy variables on the financial vulnerabilities of these firms. Our findings unequivocally indicate that during exchange rate depreciation, unhedged exposures significantly amplified the vulnerability of Indian firms. While our study centres on India, the overarching conclusions and insights derived from our analysis possess broader ramifications for emerging economies grappling with capital account restrictions. The policy implications of our research underscore the need to proactively strengthen the macroprudential toolkit to address the risks associated with foreign currency borrowing and ensure more robust risk management practices to prevent the buildup of systemic vulnerabilities. [ABSTRACT FROM AUTHOR]

India's Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) is the largest public-works based rural livelihood programme in the world. One of the important policy objectives of the Scheme is to curb rural out-migration by guaranteeing demand-driven employment opportunities for 100 days in a year in rural areas. This paper uses a large sample survey-based nationally representative data set and different probability models to investigate how MGNREGS influences individuals' seasonal rural out-migration decisions. The results reveal that contrary to the policy objective, participation , the extent of participation and earnings from the Scheme increases an individual's propensity to out-migrate. However, the Scheme serves broader and equally critical socio-economic goals of empowerment through income security and positive network effects. MGNREGS, on the one hand, significantly drives the decisions of aspirational migration of rural individuals, particularly females and the relatively advantaged. On the other, it curbs distress migration of the relatively disadvantaged by providing them with basic livelihood opportunities within the rural areas. Based on the findings, the paper draws several policy implications and discusses key policy imperatives towards expanding the scale and scope of the public-works Scheme. [ABSTRACT FROM AUTHOR]

We examine the impact of fiscal decentralization reforms on two central components of public service delivery outcomes, viz., health and education using feasible generalized least squares on a balanced panel of 18 non-special category states of India for the period 2002–2020. Given India's complex decentralization framework, intertwined with dynamic political and socioeconomic dimensions and weak institutional processes, our analysis is critical to examining the efficacy of decentralization as a policy instrument to augment the provision of public services. The novelty of our study stems not only from its longitudinal and multidimensional approach towards analyzing the effectiveness of decentralization reforms but also from its unique construction of an 'institutional quality' index that is critical for ensuring accountability in the decentralization process. Our findings underscore the positive impact of fiscal decentralization as a reformative intervention on public service delivery outcomes, highlighting the role of Indian polity and socioeconomic channels of accountability in shaping those outcomes. The study emphasizes the imperative to augment institutional quality, safeguard press freedom, enhance local government capacity, and delineate distinct functions within key policy domains for successful decentralization reforms. [ABSTRACT FROM AUTHOR]