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Since the late 1970s the West Bengal government has implemented comprehensive reforms of agrarian institutions including land reform (land redistribution, tenancy registration) and democratic decentralization (devolution of agricultural development program delivery to elected local governments). We provide an overview of our research findings concerning the accountability of local governments and the impact of their program interventions on farm yields and agricultural incomes. Programs administered by the local governments were reasonably well targeted to the poor, with a few exceptions. Targeting improved as local elections became more contested and deteriorated with greater socioeconomic inequality. The tenancy registration program, distribution of agricultural minikits, IRDP credit, and irrigation programs administered by local governments had significant effects on subsequent growth in farm productivity and incomes. The benefits diffused widely among farms within the village and trickled down to landless agricultural workers in the form of higher wage rates.
Although poverty in India remains disproportionately rural at the aggregate level, urban poverty is growing in importance. Efforts to address urban poverty should note its spatial distribution. This paper shows that the incidence of poverty in India’s small towns is markedly higher than in large metropolitan areas. It is also in small and medium-sized towns that a large majority of the urban poor reside. Moreover, access to key services and institutions in small towns lags behind the larger cities. Agglomeration externalities are found to arise at the level of individual towns and cities and likely provide part of the explanation of the city-size poverty relationship, but inequalities in infrastructure access and proximity to a dominant metropolitan area also play a role. Efforts to combat poverty in India’s small towns may also contribute to rural poverty reduction. A small but growing literature points to a causal link from urban to rural poverty reduction. Evidence suggests that the association is stronger if the urban center is a small town than if it is a large city. There is thus an instrumental case for special attention to small towns in urban poverty reduction efforts, alongside the strong intrinsic interest in such a focus.
This paper examines India’s federal system in the context of prospects for India’s future economic growth and development. After a brief review of India’s recent policy reforms and economic development outcomes, and of the country’s federal institutions, the analysis focuses on the major issues with respect to India’s federal system in terms of their developmental consequences. We examine the impacts of tax assignments, expenditure authority, and the intergovernmental transfer system on the following aspects of India’s economy and economic performance: the quality of governance and government expenditure, the efficiency of the tax system, the fiscal health of different tiers of government, and the impacts on growth and on regional inequality. In each case, we discuss recent and possible policy reforms. We make comparisons with China’s federal system where this is instructive for analyzing the Indian case. Finally, we provide a discussion of potential reforms of aspects of India’s federal institutions.
The essays in this volume are written by leading economists working on the Indian economy. They collectively emphasize the importance of policies and institutions for sustained growth and poverty reduction, stressing that the success of sector-specific policies is vitally dependent on the nature of markets and the functioning of institutions such as those charged with regulating and overseeing critical sectors. Individual contributions assess the role of Indian government policy in key sectors and emphasize the policies required to ensure improvements in these sectors. The first section discusses aspects of the macro economy; the second deals with agriculture and social sectors; the third with jobs and how labor markets function in agriculture, industry and services; and the fourth with infrastructure services, specifically electricity, telecommunications and transport. The essays are drawn from the most influential papers presented in recent years on Indian economic policy at the Stanford Center for International Development.
This paper identifies the major political and economic constraints that impact the demand side of electricity industry restructuring processes. Demand-side constraints have been a major barrier to implementing effective restructuring processes in many countries, particularly those in developing world. I describe how these constraints have been addressed and how this has harmed market efficiency and system reliability using examples from restructuring processes throughout world. I propose demand-side regulatory interventions to manage these constraints in a manner that limits the harm to wholesale market efficiency. Finally, specific regulatory inventions for developing countries such as India are proposed.