Heterogeneous Growth Trajectories of Indian States: Growth Regressions Through the Lens of Club Convergence
Meenakshi SharmaVolume 41, Issue 2 (July 2020 to December 2020)
This paper examines the growth trajectories of Indian states. We find that not only is the disparity among states increasing, there is evidence that the distribution of the per-capita income of states is becoming bimodal. We use the methodology of Phillips and Sul (2007) to identify convergence clubs among Indian states and find three clubs. Furthermore, in a novel application of this methodology we use the identified clubs to run separate growth regressions for different clubs of states and find significant differences in the regression coefficients. This vindicates our approach and shows that combining data from all states at the same time to study growth dynamics can be misleading in a heterogenous country like India.
Sovereign Wealth Funds: A Critical Analysis
Roshni Garg and Abha ShuklaVolume 41, Issue 2 (July 2020 to December 2020)
Sovereign wealth funds (SWFs) refer to government owned investment vehicles that mostly invest abroad to meet some pre-determined macroeconomic objectives. Over the past few years, the number of SWFs and their assets have multiplied. In India too, SWFs have taken several big stakes during the Covid-19 pandemic and become the fourth largest category of foreign portfolio investors (FPIs) among thirty-two categories of FPIs investing in India. They have also expanded their footprint into debt and real estate markets. Despite this, not much is known about their investment activities, primarily owing to lack of data. By analysing multiple resources and databases, this paper seeks to give an overview of SWFs, their evolution, investment activities and associated challenges. We find that commodity exporting nations have been the pioneer of these funds and almost all SWFs have a strong preference for investing in real estate and finance, especially in high-income developed countries. We also discuss the characteristics of Indian SWF, NIIF and how it is different from conventional SWFs. Our paper concludes with a brief discussion on the presence of foreign SWFs in India and the need to further explore the issue in detail.
Agricultural Growth and Stagnation in Bihar: History and Prospects
Rakesh RanjanVolume 41, Issue 2 (July 2020 to December 2020)
The state of Bihar in India draws academic attention mostly for its backwardness. Given that there is very poor industrial base in the state, the majority of its inhabitants still are dependent of agricultural activities for their livelihood. In the near foreseeable future, in absence of any significant change in its economic structure, the growth dynamics of agricultural sector will keep influencing the overall growth of the state. Given this importance, the present paper attempts to understand the nature and character of agricultural growth in the state in the last six decades. This is done to identify some crucial patterns that may guide any possible intervention to ameliorate the agrarian stagnation. Change in cropping pattern, expanding reliable irrigation, and focus on rice yields appear to be holding key to future progress.
Gold vs. India VIX : A Comparative Assessment of their Capacity to Act as a Hedge and/or Safe Haven Against Stocks, Crude and Rupee-Dollar Rate
Rakesh Shahani and Aastha BansalVolume 41, Issue 2 (July 2020 to December 2020)
The present study is an attempt to compare two assets viz. Gold and INDIA VIX against three assets Nifty Index, Rupee-Dollar Exchange Rate, Crude so as to identify which of the two assets could be considered as the right prescription for an Indian investor as a hedge and which asset could prove as a safe haven or a rescue asset during adverse market conditions. The study considers daily closing prices of five variables for the period April 1, 2008 - March 31, 2019. The study employs both traditional tools like OLS Regression (with Dummy Variable) and also newer techniques like quantile regression to achieve the stated objective. Further both linear and non linear models have been constructed and study also includes a separate section for the period of Sub Prime Crisis to judge the behaviour of our variables during these times. The results of the study using OLS Model clearly showed that INDIA VIX does appear to perform its role as a safe haven asset in weak to moderate form against Nifty return while gold fails completely in this role. On the other hand , results from quantile regression do give a clue that gold might work as a safe haven against different assets, this however comes with a very low probability and the same is true for INDIA VIX. The quantile regression however throws some evidence that gold might also act as a hedge against Nifty Return while INDIA VIX could be suitable hedge against crude. Further the results of variability in returns during the sub prime crisis was noticed in case of gold as the dummy for sub prime was found to be statistically significant.
Do SME IPOS Beat the Market on Listing Day?
Lovleen Gupta and Ashween AnandVolume 41, Issue 2 (July 2020 to December 2020)
This paper aims to examine the listing day returns provided by BSE SME IPOs over and above the market indices namely, S & P CNX Nifty, S & P BSE Sensex and BSE SME IPO Index. Further it identifies the different factors that explain the market-adjusted abnormal returns on listing. The results show that on average SME IPOs not only provide positive returns on the listing day but also outperform the Nifty, Sensex and BSE SME IPO Index. The linear regression analysis provides evidence supporting the information asymmetry, ex-ante uncertainty and signalling hypothesis. Favourable underwriter reputation signals good firm quality creating greater investor interest on listing day and higher abnormal returns. A second possibility could be that under-pricing is done to ensure that the SME issue is a success. This study has practical implications for market regulators to minimise the IPO listing delay in order to make the SME platform more attractive for investors and issuers.
Dynamics of External Commercial Borrowings in India
Swami Prasad SaxenaVolume 41, Issue 2 (July 2020 to December 2020)
This paper is an attempt to empirically examine the trends and Intricacies of ECB in India. It also tries to analyze the possible effects of new ECB policy announced on 16 January 2019. The study observes that ECB flows in last about three decades have been highly volatile, and the share of ECBs in the total external borrowing in India is rising fast. Though, government is progressively relaxing the ECB norms to boost the economy, there is need of careful management of ECBs by corporates as well as the government. While applying for ECB the corporates need to be cautious about the exchange rate risk and impact on balance sheet debt to use ECBs effectively; the government too should not be unmindful of the dangers of increasing reliance on such borrowings with external risks.
Financial Parameters and Dividend Decisions of Indian Companies: An Empirical Investigation
Bunny Singh BhatiaVolume 41, Issue 2 (July 2020 to December 2020)
Purpose: Dividend has significant relevance from the perspective of managers, shareholders and potential investors. In this regard the present paper seeks to demystify various financial factors affecting the dividend decision of Indian companies and presents crucial implications. Methodology: The paper has applied OLS panel regression using two models to establish consistency and reliability. In this study, we have examined top 100 companies based on market capitalization during the year 2007 to 2018. Findings: The paper documented evidence pertaining to three most imperative financial variables which positively and significantly affect dividend policy of Indian companies is dividend history, current earnings and investment opportunities. It will have significant implications for managers, shareholders and academician. Implications: Dividend decisions are the one of the critical decisions of the financial management and have serious implications for managers, shareholder and academicians. The paper will provide implications for the predication of firm’s behaviour during financial crisis caused by COVID 19 and give useful insights to investors in their decision making during that period. From the perspective of investors looking for investment in stock with dividend yield, should invest in those companies having higher profitability, pattern of past dividend and opportunities of investment.
Towards Developing a Theoretical Framework for Measuring the Work Life Balance of Teachers in Higher Education
Kinneri Jain, Ishwar Mittal and Anand BansalVolume 41, Issue 2 (July 2020 to December 2020)
Work Life Balance (WLB) is a concept that is important in all spheres of life whether it is political, economic or social as it has been associated with individuals, families and institutions. Work life balance is not only about families and childcare nor it is about working less, it’s about working smart, giving whatever, you need for both work and home without jeopardizing one for the other and it's necessary for everyone whatever stage one is in life. Hence, there is a need to take into consideration various aspects of family and job and to ascertain to what extent the factors related to work and family help in the attainment of a good life. The building blocks of any society or country are teachers and the teaching profession. The present research paper aims to construct a theoretical framework with regard to WLB of people in the teaching area. The paper aims to identify the variables affecting the WLB of an individual and the variables which define the impact of WLB on individuals in teaching with regard to their life, family and organization with the support of existing literature. Identification of such variables and developing hypotheses thereupon would provide a better insight to understand the problems and expectations of teachers. The working environment and job requirements have become so complex now-a-days in colleges of higher education that the pressure on the teachers juggling with career growth to meet academic standards, has made it difficult for them to achieve work life balance. Measuring the factors affecting the work life balance of teachers in higher education with the help of theoretical framework has certain policy implications for those, who are constantly involved in developing strategies to combat the adverse work life balance situations.
A Quantitative as well as Qualitative Study of CSR in the Selected Companies of IT Sector based in India
Astha Dewan and Srijana SinghVolume 41, Issue 2 (July 2020 to December 2020)
CSR has been an emergent area of research in the recent past. Most of the scholars, academicians and practitioners have made massive contributions in this field. The reason why IT sector is chosen is because it is uniquely positioned in terms of skills, expertise and facilities that can help benefit society in the long run. The companies that have been chosen are Infosys and Wipro as these are the top two companies that have satisfied the legal requirements in the context of CSR and have stayed profitable throughout. The main purpose of this study is to understand the history, concept and background of CSR in India, analyse the CSR expenditure for the post-mandate period of Infosys and Wipro and analyse the relationship between CSR and firm performance (net profit, operating margin, ROA, ROE and market capitalisation) separately for Infosys and Wipro. Lastly, the motive is to analyse the major CSR domains of the selected two companies and comment on the similarities and differences altogether. The sources of data used in this study are secondary and empirical in nature including annual reports of the selected two companies namely; Infosys and Wipro majorly for the post-mandate period (2014-19). The CSR expenditure and the profitability ratios including return on assets and return on equity has been considered based on the review of literature of CSR and firm performance. A CSR index has been created consisting of ten parameters explained in detail in the findings and analysis section. SPSS (statistical package for social sciences) 23 has been used to analyse the correlation and linear regression between the independent variable (CSR index scores) and profitability measures (net profit, operating margin, ROA, ROE and market capitalisation) separately. The findings suggest that in terms of CSR expenditure Infosys contributed more than 2% towards CSR during the financial years 2016-17, 2017-18 and 2018-19 and Wipro has even gone beyond 2% in the financial years 2015-16, 2016-17, 2017-18 and 2018-19. In terms of CSR and firm performance, it can be observed that there is a negative or weak correlation and no linear relationship between the scores of CSR index and the profitability measures with respect to Infosys and Wipro as well. In terms of CSR domains, as compared to Infosys, the CSR domains that can be added to the Wipro’s CSR activities can be rehabilitation of homeless and orphans and disaster management relief. The domains that can be added in the context of both the companies can be gender equality programs, women safety and dignity, enhancement of vocational skills for women and care and support for the elderly. Women can be focused more upon in terms of safety provision now-a-days.
Beauty Contest and Learning in Rational Expectation based Stationary State
Avinash Kumar JhaVolume 41, Issue 2 (July 2020 to December 2020)
The paper explores the condition of instability of stationary state outcome as predicted by learning literature in defence of Rational Expectation Hypothesis-REH. By using Beauty Contest Parable in Grandmont’s temporary equilibrium framework, it is argued that under very weak and reasonable conditions agents extrapolate away from the stationary state. This result is achieved even while ignoring large deviations of the past - a method conclusively criticised by Grandmont.