NL 2017 Jul
NL 2017 Jul
NL 2017 Jul
Director’s column
The 2017 Budget reiterated its commitment to fiscal consolidation, which was a matter
of great personal satisfaction in view of my involvement with the FRBM review committee. This
provided an early signal that many of our recommendations would be valuable to government
and considered seriously.
With important financial sector reforms such as the Bankruptcy Code now in place, the
GST having finally being enacted, and the Monetary Policy Committee of the Reserve Bank of
India functioning actively, fiscal responsibility legislation will complete the suite of policy and
institutional frameworks that will underpin the effectiveness and credibility of the future of
macroeconomic policy making in India. I am extremely pleased that NIPFP’s work on each of
these important areas continues to inform the evolution of this framework. Our publications
in journals have focussed on each of these areas in equal measure; we have also published on specific areas of focus within
this broader framework including drivers and impact of food inflation, state-level debt dynamics, dating business cycles, and
the macroeconomics of the Union Budget. We continue to work on important expenditure reform issues including the scope
for developing the medium-term expenditure framework, tax policy for accelerated development, regional imbalances in
infrastructure, and determinants of public spending on health and education. We also continue to publish extensively on law
and economics, gender and macroeconomics, and fiscal policy and human development.
We were delighted that Dr. Y.V. Reddy, former RBI Governor and Chairman Fourteenth Finance Commission, deliv-
ered the Raja Chelliah Memorial Lecture on the interface between the fiscal and monetary policies to a full house. Following
tradition, we organised a two-day conference on papers in public economics and policy prior to the lecture. The conference
provided evidence that there is much active, if unsung, research being undertaken in this area and I am happy that we were
able to publish several refereed papers from this conference in our working paper series. Jointly with the Indian Econometric
Society Trust, we concurrently hosted the second Professor A.L. Nagar Fellow award presentation ceremony.
Our international work continues to be highly active. Jointly with the UNESCAP we organised a symposium on
Universal Basic Income and old age income security. I presented a joint paper at the Think 20 segment of the German G20
presidency in my capacity as a co-chair of the Task Force on International Tax Cooperation. We were also pleased to host the
meeting of the chairs of this Task Force prior to this, to review the papers to be presented to the G20 and T20 Summits, and
to agree future collaborative research. I was also a member of the Task Force that prepared India’s voluntary national review
of the SDGs for the 2017 United Nations High Level Political Forum on Sustainable Development in New York.
We have also made three new appointments at the Associate Professor Level and I would like to congratulate Dr. H.
K. Amarnath and Dr. Mukesh Anand on their promotions, and to welcome Dr. Renuka Sane.
As we accelerate our efforts on state finances, following the successful completion of projects with the governments
of Assam, Haryana, Madhya Pradesh and Odisha, we are gearing up to work with the forthcoming Fifteenth Finance Com-
mission to provide analytical and research support for its important constitutional task of recommending the future road-
map of intergovernmental fiscal relations. NIPFP sees the state governments and the Centre as important partners and this
means that we have a great responsibility to provide intellectual and analytical support on intergovernmental fiscal issues.
Our past work on the subject sets a high benchmark, and I am confident that we will rise collectively to the occasion this time
as well.
Rathin Roy
The project examined the downside fiscal risks of hydroelec-
PROJECTS COMPLETED tric power projects commissioned in Sikkim and financial
performance of power sector in the state. The study observed
that fiscal risks exposure would depend on the level of tar-
1. Effectiveness of Monetary Policy in Stabilising Food Infla- iff and efficiency in operation of three major hydro power
tion: Evidence from cross-country analysis. plants. In author’s view, even if the state government wants
Rudrani Bhattacharya and Richa Jain to undertake such investments, in the long run this would
call for major power sector restructuring in the state. In this
Sponsored by NIPFP (Faculty Research) context, unbundling of the power sector is the most viable
option. Since State of Sikkim has great hydel potential, in-
In the backdrop of several episodes of high and volatile food vestment in this sector must take into consideration environ-
inflation in emerging economies, the study attempts to anal- mental sustainability, fiscal sustainability and, power sector
yse the effectiveness of monetary policy shock to stabilise efficiency and financial management. The fiscal interface be-
food inflation in a panel of developed and emerging econ- tween power sector and the government expenditure needs
omies. While theoretical literature mainly focus on welfare to become more transparent to improve public sector expen-
- maximising monetary policy, there exists hardly any em- diture management efficiency.
pirical consensus on the effectiveness of monetary policy to
stabilise food inflation. This study contributes to this litera- 5. Medium Term Fiscal Plan under FRBM Act of Sikkim –
ture empirically and identified that an unexpected monetary 2017-18
tightening has a positive and significant effect on food infla- Pratap Ranjan Jena
tion in both advanced and emerging economies.
Sponsored by Government of Sikkim
2. Gender and Macroeconomics in Asia -Pacific
Lekha Chakraborty The report presents the Medium Term Fiscal Plan (MTFP)
for the Government of Sikkim for the year 2017-18. The re-
Sponsored by UNESCAP (Faculty Research) port projects the fiscal variables for three years including the
budget year aligning with the stipulation of the FRBM Act.
The project analysed the work activities of macroeconomic
and financing for development division of UNESCAP, iden- 6. How do disclosures affect financial choices? The Case of
tified how to integrate ‘gender and macroeconomic policy’ in Life Insurance in India
their work activities, imparted training to UN officials in the Ajay Shah, Renuka Sane and Monika Halan
macro division and prepared a roadmap to achieve a sustain-
able outcome on gender and macro policies in the region. Sponsored by International Growth Centre, London School of
Economics and Political Science, UK
3. Sikkim State Finance: Implications of the recommenda-
tions of Fourteenth Finance Commission’s on Sikkim Finances To understand household motivation for the purchase of in-
Pinaki Chakraborty and Manish Gupta surance products and evaluate the effectiveness of different
disclosures formats for insurance products.
Sponsored by Government of Sikkim
The details of NIPFP Ongoing projects can be accessed at
The project examined in detail the implications of FFC’s http://www.nipfp.org.in/projects/current-projects/?page=1.
recommendations on the fiscal resources of the State Gov-
ernment of Sikkim. The study observed that restructuring
of grants post the implementation of FFC award, resulted in PUBLICATIONS (BOOK, MONOGRAPHS, CHAP-
reduced availability of aggregate transfers to the state of Sik- TERS IN BOOKS, AND EDITED VOLUMES)
kim and higher tax devolution recommended by the Com-
mission could not offset the loss. 1. Bhanumurthy, N.R., H.K. Amarnath, Manish Prasad,
Shiney Chakraborty, Richa Jain, 2017. Divergences in
4. Investing in Power Sector in Sikkim: Issues, Challenges, Human Development Outcomes in Madhya Pradesh:
and Fiscal Risk The Role of Fiscal Policy and Governance, New Delhi:
Pinaki Chakraborty and Shatakshi Garg NIPFP.
2. Chakraborty, Lekha, Macroeconomic Poli-
Sponsored by Government of Sikkim cy for Mining Regime (forthcoming book, OUP).
CONFERENCE/TRAINING PROGRAMMES/SYMPO-
SIUM/MEETINGS/WORKSHOPS/ SEMINARS
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Area, New Delhi - 110067. Editor: Lekha S. Chakraborty.