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No. 332 |
July 2003 |
Vol LXXXV |
ISSN 0019-5170 |
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Contents
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Life
and Works of Prof. J.S. Mehta
Dec. 14, 1901 -Aug.
9,1480
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Prof. J. K. Mehta was
an economist and a philosopher of the
first order. Prof. Mehta's scholarship and
academic excellence were matched equally
by his greatness. It humanism and meticulous
concern for detail and truth. Clearly an
exception. a person, Prof. Mehta was
totally unassuming and his gentle manner
and 50ft-spoken words endeared him to all
those who had the good fortune to know
him.
It is a matter of great honour for us, at
the Depal1ment. of Economics, University
of
Allahabad that Prof Mehta studied here
-both as a graduate and a post-graduate
student Subsequently, after two years as a
research scholar, he joined the Department
as a Lecturer in 1927. He became Professor
and Head of this Department in 1951. His
eminent predecessors were Prof Herbert
Stanley Jevons (son of William Stanley
Jevons) the first Head of this Department,
Prof C. D. Thomson and Prof, S, K. Rudra.
At the time of his retirement in 1963,
Prof Mehta was the Dean, Faculty of
Commerce. He worked as a UGC Professor
after relinquishing his post as Head of
Economics, and held that position until
1969, He was also a Visiting Professor in
the Institute of Gandhian Thought and
Peace Studies during 1972-73.
Prof. Mehta's academic brilliance was
widely recognized. In the preface of her
famous book on Imperfect Competition, Mrs.
Joan Robinson acknowledged that Prof.
Mehta had arrived independently at the
concept of marginal revenue. Prof. Mehta
called it marginal demand price. Writing
about Prof. Mehta's book A Philosophical
Interpretation of Economics, Prof G.LS.
Shackle observed: "This is a beautiful,
moving and most deeply interesting book,
and it is superbly written. It deserves to
become a classic." |
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P. K.
CHAUBEY: Wants, J. K. Mehta and
Wantlessness
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Late Jamshed Kaikusroo
Mehta (01.12.1901-09.08.1980) made his
name in inventing, improving and
perfecting tools of neoclassical economics
since early thirties of the twentieth
century tor nearly forty years. It is
clearly demonstrated by acknowledgment
about him by his contemporaries. While
Joan Robinson (1933, xv) accepted him as
an independent originator of the concept
of marginal revenue, H. H. Liebhasfsky
found his works having 'sober and
penetrating ideas of a scholar of much
critical ability.' Of the Indian scholars
Bhabatosh Datta (1961, p. 33)1 recognized
him along with A. K. Dasgupta as one who
started theoretical writings in thirties
and had devoted four pages only on Mehta's
Elements of Economics Mathematically
Interpreted 2 in an affectionate manner in
his work on Indian Economic Thought
(1978). |
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Vulnerability, Networking and Organization
T. V.
S. RAMAMOHAN RAO
|
An organization is a
nexus of contracts. The family is a
classic example. See, for instance, Ben-Porath
(1960). Individuals within it seek to
maintain self-esteem, aspire to achieve
acceptance within the family, and make an
attempt to attain self-actualization.
Organization, like the modem corporation,
are also of the same vintage.
In this enterprise individuals are
constrained by their resource base as well
as the competence to perceive, obtain, and
process information. Much of the
information is accumulated in the process
of repeated execution of exchange
relationship and tends to be specific to
individuals within the organization. By
implication, such information has little
or no value outside the organization. It
is also difficult to visualize anyone
individual having the foresight about the
requisite information over t\1e long run
and/or the competence to obtain it even if
he knows it. Perforce transactions are
subjected to information asymmetry.
Individuals would be vulnerable to moral
hazard of others in the organization. |
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Commodity
Production and Command: Some Observations
BHASKAR MA.JUMDAR
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The concern of
economists for production-centered
economic analysis is as old as the birth
of economics as a branch of scientific
analysis (Chakravarly, 1988; Hicks, 1965.
p. 3648; Hicks, 1971, pp. 15-24; Kuznets,
1961, p. 13; Kuznets, 1965, pp. 63, 84,
105; Kerr,1993, pp. 5, 9). Production
shows a domain where natural resources are
transformed by human labour to yield
products. The products, having use-value,
become commodities by acquiring the
properly of exchange-value. The combined
values, namely, use-value and
exchange-value, show the concrete shape of
production, that is, commodities. The link
between natural resources and human labour,
on the one hand, as cause and commodities,
on the other hand, as final output is
technology. As a corollary of what we said
earlier, commodity is also seen as the
concrete shape of technology. |
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The Philosopher Economist
P. R.
BRAHMANANDA & J. K. Mehta
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Prof. Jamshed
Kaikhusroo Mehta was born in December 1901
at Rajnandgaon, now in Madhya Pradesh. His
father, K. M. ]-1ehta, was an employee
of-Shaw Wallace Company. J. K. Mehta
studied at Muir Central College for the B.
A. Degree with English, Mathematics and
Economics. He went to Allahabad to study
for his M. A. Degree in Economics under
Prof. Herbert Stanley Jevons, who was
Professor of Economics at Allahabad
University. Jevons was succeeded by Prof.
C. D. Thomson. He later became a lecturer
in 1927 at the Allahabad University and
later rose to the position of Reader and
Professor of Economics in 1951 in the same
University. He retired in November 1963.
He used to regularly write in the Indian
Journal of Economics. His article in that
Journal in 1932 on "The Nature and
Intensity of Demand" became
internationally famous. He wrote many
articles in that Journal dealing mostly
with matters of economic theory. His
papers were on the classification of
wants, problems of distribution, theories
of interest, the negative rate of
interest, the representative firm, concept
of equilibrium, relation between
microeconomics and macroeconomics,
elasticity of substitution, the
measurability of utility, risk and
uncertainty, derived demand etc. His
unique contribution in the exposition of
economic theory was his extension of the
Robinson Crusoe model to illustrate many
themes. He wrote about 16 books. |
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Macro Economic Adjustment,
Stabilization
and Sustainable Growth in India: Looking
Back and to the Future
M. R.
AGGARWAL
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India after attaining
independence adhered strictly to inward
looking Import substitution policies
behind huge tariff walls and highly
restrictive quantitative restrictions and
regulations in the different sectors of
the economy with actual disincentives for
exports due to gradual realization by the
then developmental economists that the
market forces or signals won't operate
efficiently in achieving optimum
allocation of resources and could not be
relied in the long run, to tackle the
fundamental problems of poverty and
unemployment and acceptance of broader
Keynesian framework, and analysis which
accords a leading role to state as an
economic actor, to minimize the impact of
"market failures", and to foster and
sustain rapid rates of economic and social
growth. This analysis is based on the
assumption that there does exist a strong
trade-off between growth and equity i.e.
the distribution of the gains would
gradually and automatically 'trickle down'
to the weaker and lower strata of the
society. Hence, numerous interventionist
measures, both fiscal and monetary, during
the different plans, were initiated by the
policy makers both in the product and
factor markets for increasing the level
and rates of" growth of gross domestic
product (GDP) and to achieve the aim of
"shared growth" |
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Economic
Reforms and The Challenge of Social Sector
Development
SUDHAKARPANDA &
PRATIP K. MISHRA
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Social sector
development comprising education, health,
literacy, sanitation and nutrition is
important to the long, sustained and
wholesome development of an economy. An
enduring development of this sector calls
for, among other things, honest
performance of one's jobs and higher
standards of behaviour and commitment on
the part of teachers, doctors and
government executives looking after these
non-commercial (now they are getting
business-oriented) activities. It is not
in the interest of market of produce and
provide primary education, health care,
sanitation and safe drinking water for the
poorer households living in slums and
rural areas. Continuing government
interventions in the social sector are
designed to provide the poor with easy
access to these services. It is the
universal provision of education, health
care and safe drinking water which help a
society in its struggle against poverty
and deprivation and contribution to the
well-being of the people in a country. As
very aptly stated: "The most basic
capabilities for human development are
leading a long and healthy life, being
educated, having access to resources
needed for a decent standard of living and
being able to participate in the life of
one's community" (H. D. R., 2002, p. 13). |
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India's Uneven Development: An
Analysis of Some Recent Trends and their
Implication
RAVI
S. SRIVASTAVA |
Accelerated growth in
lagging regions and balanced regional
development is an important policy
objective in most market economies since
there is no clear-cut evidence that market
forces, left to their own, lead to a
convergence between rich and poor regions
within a reasonable period of time. In
post-colonial economies such as India, the
pattern of inequalities, inherited from
colonialism have tended to be very large
leading to a major policy focus on
amelioration of regional disparities.
Balanced regional development has been
articulated as a major objective in
India's Five Year Plans, particularly the
first seven Five Year Plans and sectoral
and fiscal policy instruments have been
developed to achieve this goal.
However, despite policy concerns aimed at
mitigating large spatial disparities in
development, there has been a steady
increase in disparity in terms of a number
of economic indicators. Inequalities in
per capita State Domestic Product have
shown a steady increase (Dholakia, 1994;
Singh, 1999; Ahluwalia, 2000; Dasgupta et
al., 2000). The disparities in per capita
sectoral net product due to the primary
and secondary sectors also show an
increase, while there is no indication of
any decrease in disparities in per capita
State Domestic Product originating in the
tertiary sector. Also, the growth in
sectoral inequalities have partly
reinforced each other, thus accounting for
a still more rapid growth in per capita
State Domestic Product inequality (Dholakia,
ibid.). |
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Environmental Challenges of Urban sat ion
in India
NEENA
MALHOTRA
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Almost half of the
world population lives in the urban areas
and the cities are growing rapidly,
both in size and numbers. The trend is
~specially stronger in developing world,
where in the rate of rural-urban migration
is high as people flock to cities in
search of employment and higher standard
of living. Globally, the urban population
has grown at an average rate of 4.2% in
the past two decades. In Asia, the urban
population is expected to reach 2.5
billion level in the year 2025 which is
three times 1990 (World Bank, 1999). In
the next thirty years, almost all
population growth will be concentrated in
urban areas, the pace will be fastest in
developing countries, where the urban
population is forecast to increase from
present 1.94 billion level to 3.88 billion
and in Asia it will almost double from
1.35 billion to 2.61 billion (World Bank,
2002). |
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And Promises
to Keep: The Challenge of Gender
Disparities in India's Economic
Development
NISHA
SRIVASTAVA
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The promise of gender
equality has been enshrined in the
Constitution with Article 14 ensuring
Equality Before Law and Article 15(1)
asserting non- discrimination on the basis
of sex. Furthermore, the country has
reaffirmed this promise at various
international forums. The UN sponsored
Convention on the Elimination of All Forms
of Discrimination Against Women (CEDA W)
was ratified by India in 1993. Among the
International human rights treaties, CEDA
W is a milestone, because it brings the
female half of humanity into the focus on
human rights concerns. It spells out the
meaning of equality and notes that
discrimination is 'any distinction,
exclusion or restriction made on the basis
of sex ...in the political, economic,
social, cultural, civil or any other
field.' It presents an international bill
of rights for women and exhorts member
countries to guarantee the enjoyment of
these rights by taking 'all appropriate
measures, including legislation, to ensure
the full development and advancement of
women, for the purpose of guaranteeing
them the exercise and enjoyment to human
rights and fundamental freedoms on a basis
of equality with men.' The country's
commitment to gender equality was
reaffirmed at the World Conference on
Women in 1975 in Mexico City and again in
1995 UN Fourth World Conference on Women
in Beijing. |
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Deteriorating
Fiscal Health of the States in India: Need
for Resource Mobilisation
P. K.
BHARGAVA
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During recent past, the
fiscal situation of the states has
continued to worsen .jn view of their
growing expenditure on the one hand 'and
the revenue receipts far lagging behind
(to cope up with the situation) on the
other. Under such circumstances, the
dependence of the' State Governments on
loan finance has continued to increase and
in consequence their interest bill is also
growing throughout. In this context, the
Planning Commission in its approach Paper
to the 10th Plan stated that "If reckless
borrowing is not kept in check, some
states may be forced to declare a
financial emergency in the 10th Plan."
The available data as shown in Table I
clearly indicate that the total
expenditure of the State Governments
increased throughout the period 1991-92 to
2000-2001 (Budget) and it became three
times during the period. The Table also
shows that the expenditure on revenue
account increased a little faster. The
State Governments have hardly any choice
in the matter as they have been assigned
various social and development functions
which are expensive and expanding in
nature. However, what is troublesome and
cause of worry is that proportion of
development expenditure is falling, while
that of non-development expenditure is
increasing. Table I shows that
non-development expenditure constituted
30.9 percent of the expenditure on revenue
account in the year 1991-92 and this
percentage increased to 42.5 in 2000-02
(Budget). |
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Fiscal
Stability and State Finances: A Case Study
of Uttar Pradesh
NASEEM A. ZAIDI
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Macroeconomic
stabilization was considered to be a prime
objective of the economic reforms
initiated in 1991 in Indian economy. While
the major responsibility in the areas of
monetary management, financial sector
reforms and determination and
stabilization of foreign exchange rates
etc. is of the Union government, states
have to play important role in the fiscal
stabilization programme due to a federal
set up of the government. |
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Emerging
Scenario of Federal Financial Relations in
India
JAYRAJ
GUPTA
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The financial relations
between the Union Government and State
Governments, which were evolved about 52
years back, have undergone a sea change.
New political and economic development
have taken place. A single party rule,
both at the centre and the state levels
has given way to multi-party rules.
Regional parties have developed a national
outlook. New concepts like cooperative
federalism is being propagated. At the
economic front, already a decade of new
reforms has passed. And now we are talking
about the second generation reforms, of
which the State reforms are an integral
constituent. Privatization or
liberalization demands the reduction of
micro-economic controls both at the centre
and the state levels, so as to unleash the
economic forces at the grassroots levels.
And globalization is not only throwing a
great challenge but also provides large
opportunities for agriculture and
industrial growth of the economy. Tax
harmonization of internal trade through
the ultimate adoption of a single
commodity tax say Value Added Tax (VA 1)
would give rise to a number of problems.
But it must be kept in mind that in any
federation, much less in a developing
federation like ours, no permanent
solutions to all inter-state or
Union-state economic problems are
possible. After 30 years of experience, it
was Sarkaria Commission and now after 50
years, it is the National Commission to
Review the working of the Constitution
that the working of the Union-State
financial relations is being reviewed. It
may be recalled that federation is a
compromise between national unity and
regional interests, and this compromise
must be maintained at all costs. |
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Challenges
before the Banking and Financial Sectors
in the context of Globalisation
A. K.
JAIN
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India has made some
progress in the field of banking and
financial sectors after the policy of
globalization adopted during the past
decade. There has been development of a
competitive financial sector with multiple
intermediaries, the movement towards best
institutional practices ill regard to
capital adequacies, prudential norms and
supervisory standards, strengthening the
transparency and disclosure practices by
banks and other financial institutions and
better application of asset-liability and
risk management by financial
intermediaries. Process has al5o been
achieved in reducing non-performing assets
and speedier mechanisms have been
introduced for settlement of bad debts. |
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Indian
Financial System: Emerging Challenges
B. S.
R. RAO
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The Indian financial
system has shown remarkable progress and
considerable sophistication over time in
regard to the establishment and
development of new financial institutions,
as for example, development financial
institutions, mutual funds including UTI
and public sector and private sector
mutual funds, private sector insurance
companies including foreign insurance
companies either singly or as joint
ventures with Indian Corporate. Likewise,
there has taken place proliferation of new
financial instruments, such as convertible
and non-convertible debentures, warrants,
forwards and futures, contracts and
options and swap contracts, particularly
those that permitted risks to be
identified, separated and allocated to the
parties able and willing to bear such
risks. There has been also improvement in
the functioning of financial markets, and
strengthening of regulatory mechanism
including starting of new regulatory
authorities such as Securities and
Exchange Board of India (SEBI) and
Insurance Regulatory and Development Authority (IRDA) and periodic modification
of trading and regulatory rules in the
light of Indian and global experience with
the avowed purpose of facilitating smooth
trading operations and improving the
market efficiency. It is also noticed that
the volume of transactions effected has
increased manifold and the competitive
pressures have been growing despite at a
slow pace. |
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Intra-SAARC
Trade: Challenges and Possibilities
R. S. TIWARI
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The corpus of
literature on trade and development dwells
on the wide discrepancy in socio-economic
development that exists between the
developed and the developing economies.
Many developing countries, in order to
bridge this developmental gap, have
followed the industrialization strategy by
adopting internal production and trade
policies in which the key element has been
the growth of trade. Until the mid-1960s,
the development process in many developing
countries was characterized as
inward-oriented, laying emphasis on the
consolidation of internal production base
through the reorientation of indigenous
investment, material resources,
technological capability and protective
measures, such as, tariffs, quotas, taxes
and exchange rate appreciation. It was
soon realized, however, that such
industries, which grew under a protective
regime of development, also demanded
inputs, which could not be met through
domestic sources alone. This forced the
developing countries to enhance their
import capacity through an increase in
exports. It was felt that if rising
imports were not matched by increasing
exports, the growth process was likely to
be constrained by the balance of payment
bottlenecks, unless the country opts to
increase its dependence on foreign aid. |
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