The Indian Economic Journal, Ahead of Print.
The study analyses the debate around the ambiguous relationship between firm size and performance. We explore how productivity varies across firm sizes in the informal sector, where firm size is sensitive to formal regulations. Additionally, the study also looks into the informal firms’ quantity and quality of employment by observing wage and performance dispersion across firm sizes, thus indicating capital accumulation and exploitation. Considering the data limitations, a pseudo-panel data design was adopted by combining the three, only available, independent cross-sectional surveys by the National Sample Survey Office, spanning from 1999–2000 to 2015–2016. Potential issues such as time-invariant unobserved firm-level heterogeneity were accounted for by using panel random effects regression. Using total firm employment and total factor productivity as the primary measures of firm size and performance, we find a positive relationship between the two across all major industries. Our results stand robust against alternative firm size and performance measures. However, this positive association between size and performance indicated capital accumulation (increasing productivity with increasing size) at the expense of labour exploitation (stagnant wages across firm sizes). The obtained findings convey important policy implications for adopting a carrot-and-stick approach for the gradual formalisation of the economy.JEL Codes: D22, L25, O25

The Indian Economic Journal, Volume 71, Issue 5, Page 781-782, October 2023.

The Indian Economic Journal, Ahead of Print.
The high contribution of India’s exports to its gross domestic product underscores the vulnerability of macroeconomic shocks like the COVID-19 in terms of losses in export revenues, increased cost of import and slowdown in growth. The scale of impact also depends on the degree of trade concentration, geographical expansion, export potential and strategic relationship of a country with its trading partners. This article aims to examine these factors using the modern gravity model approach. It also intends to analyse the export intensity and export potential of India with its 25 major trading partners. The results are estimated by using the Poisson pseudo-maximum likelihood method for the period 1991–2020. The results show that the exports between two nations are remarkably impacted by the trade cost and combined economic size. Furthermore, variables like population and islands are introduced in the extended gravity model, which positively impacts India’s exports. The direction of India’s exports witnessed a reversal in trend towards the traditional export destinations in 2020 compared to emerging countries from 2010 onwards. The export potential index also explains that India has the scope to enhance the export potential with developed nations as advocated by the Heckscher–Ohlin model.JEL Codes: F14, F49

The Indian Economic Journal, Ahead of Print.
This study intended to explore the influence of informational asymmetry on stock liquidity in India. After controlling for the effects of firm-specific risk and investor sentiment, the results show that informational asymmetry, as measured by the delay factors has a significant positive association with illiquidity, indicating that market liquidity decreases with less transparency and a high level of informational asymmetry. The results also show that investor sentiment has a significant association with illiquidity, whereas firm-specific risk and illiquidity seem to have no noticeable relationship. The empirical results are validated using a dynamic panel-data approach, with two-stage GMM and remain robust. Theoretically, this study extends the existing literature on liquidity by offering new evidence from a prospective market like India. In practical terms, the findings of this study would help the stock exchange regulators and other regulatory bodies to strengthen the process of information dissemination and sensitise market participants and investors by maintaining a smooth flow of information.JEL Codes: G11, G12, G4, G32

The Indian Economic Journal, Ahead of Print.
Based on a household survey of 210 borrowing households from the state of Tamil Nadu, India, we investigate the extent and determinants of over-indebtedness among microfinance borrowers. Our analysis based on logistic regression framework using three distinct measures of over-indebtedness shows that the extent of over-indebtedness among the borrowing households is relatively widespread. As regards the determinants, apart from the demographic factors, external and lender-related factors contribute more towards over-indebtedness rather than borrower-related factors. Within the lender-related factors informal sources of credit exert a much stronger influence on over-indebtedness than formal sources which includes microfinance. The above findings imply that the policy environment should facilitate easier access to formal sources such as microfinance, along with provision of social security schemes with a minimum guaranteed income and insurance coverage.

The Indian Economic Journal, Ahead of Print.
Corporates have traditionally been modelled for their investment rather than saving behaviour. However, in recent times the firm-level saving has displayed an unprecedented behaviour across developed and developing economies. Corporate saving behaviour in India has also witnessed fluctuations, and this study captures a mix of aggregate and firm-level variables that may explain this behaviour. This article has three objectives (a) to understand the firm and macroeconomic factors that drive firm-level saving; (b) to examine whether the firm saving is affected by savings in preceding years; (c) to identify whether this saving behaviour of firms is for precautionary motives or not. The data set used in this article includes panel data of 2,109 publicly listed, manufacturing and service sector firms for the financial years 2004–2018. The data analysis has been done using dynamic panel-data models employing system GMM estimation with multiple robustness checks. The study findings show that firm-level saving in India is mainly driven by lagged corporate saving, Tobin’s Q, GDP growth rate, CPI inflation, and financial depth, among other factors. Additionally, empirical evidence supports the presence of dynamic persistence effect and precautionary motives for savings by firms.JEL Codes: E21, G01, G32, C33

The Indian Economic Journal, Ahead of Print.
Impact of COVID-19 induced lockdown has been massive for the Indian economy; it witnessed a contraction in gross domestic product and massive employment loss. India being a poor country and a huge population having insignificant to no social security, a large number of those workers who lost employment were not having option to remain unemployed. Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) which is a job-guarantee programme launched a decade earlier and that has been instrumental in providing employment opportunities to rural women casual workers witnessed a huge increase in demand as both men and women flocked to it. For the financial year 2020–2021 the share of women in the person-days worked under MGNREGA fell. The article using data from MGNREGA public data portal and the Centre for Monitoring Indian Economy seeks to explain the reasons behind this fall and suggest that MGNREGA needs to be expanded and modified in favour of women casual workers till the recovery on the employment front does not happen.JEL Codes: H53, I38, J08, J16, J23, J30, J48, J71, J78

The Indian Economic Journal, Ahead of Print.
Coronavirus disease 2019 (COVID-19) posed a serious challenge to food production and distribution worldwide. There were major disruptions in supply chains due to mobility restrictions and a slump in demand due to the loss of livelihoods and incomes. What effect do these offsetting movements have on prices? Which commodities experienced price increases/slumps? Were these localised or widespread across regions? What is the relative contribution of sub-groups to the overall trends? We delve into these issues using wholesale and retail price data to understand the price dynamics in India during COVID-19, using the previous four years as the reference point. The analysis revealed that the retail margins were consistently higher in 2020–2021 indicating the persistence of local shortages for all commodities. Owing to government support through procurement and distribution, the effect on cereals’ prices was minimal. Perishables like vegetables and meat/fish marketed in raw form through informal/petty trade networks, faced maximum erratic behaviour, while milk, marketed in processed form by organised intermediaries, experienced a moderate impact on prices. Fruits, a perishable but with high-income elasticity of demand, witnessed muted prices possibly due to income erosion. Pulses and oils/fats, imported in large quantum, saw a sharp price increase due to local supply bottlenecks combined with international trade disruption.JEL Codes: E31, Q11

The Indian Economic Journal, Ahead of Print.
In this article, we analyse how the crisis that emerged in Europe, specifically in Russia and Ukraine, has severely affected European Bull Market. Because of the political unpredictability and the fallout from the most recent sanctions placed on Russia, the financial markets in Europe have often responded negatively to the current geopolitical crisis. The contribution of the Europe Market is the focus of this article, and it does so by analysing several aspects of their behaviour. At the same time, this article contributes to an investigation into the consequences that the proclamation of war against Ukraine had on the stock markets of European countries, global economy and European economy specifically. In addition, the unfavourable reactions shown in stock prices lasted into the post-event period of time. There is a large range of variance in the degree to which stock values are affected by this crisis across sectors, nations, and the size of the firm. This variance may be seen in a wide range of possible outcomes. In addition to its empirical investigation, the research delves into topics pertaining to the marketing modulation as a future scope.JEL Codes: M31-Marketing; F01-Global Outlook; P36-Consumer Economics; G01-Financial Crises

The Indian Economic Journal, Volume 71, Issue 5, Page 912-915, October 2023.