The Indian Economic Journal, Volume 71, Issue 5, Page 783-804, October 2023.
The role of food prices is vital for people living in low- and middle-income countries like India as they spend a high share of their income on food items. As the earlier literature suggests, there can be interlinkages between food prices, non-food prices and rural wages. Therefore, this study’s first objective was to empirically test the relationship between (1) food prices and non-food prices based on consumer price index (CPI). The second objective of the study was to test the relationship between (2) food prices based on both CPI and WPI (wholesale price index) and rural wages (agricultural and non-agricultural wages). The time series econometric technique for monthly data available from January 2015 to March 2020 is used to arrive at the findings. The study found no long-run relationship between food and non-food prices. Also, no long-run or short-run relationship is found between food prices and rural wages. However, the impulse response function graphs suggest that food prices and non-food prices are affected by their own lagged prices, and short-run transmission runs from non-food prices to food prices in opposite directions in both urban and rural areas of India. Since we find that food prices are affected by their own lagged prices and non-food prices in the short-run only, the interest rate policy of RBI, which is supposed to influence the prices of non-food sectors faster, has limited capacity to influence the prices of food sectors in the long-run.JEL Codes: E4, E6, 02

The Indian Economic Journal, Volume 71, Issue 5, Page 805-819, October 2023.
The purpose of this study was to investigate the determinants of foreign institutional investors (FIIs) in the Indian equity market. For this purpose, the study has chosen country-specific push and pull factors for the period from January 2011 to December 2019. The beginning of the concerned period is marked by increased FII flows in the Indian market after the global financial crisis of 2008. The study has identified the stock market index of India, interest rate differential between India and the USA, inflation rate, and exchange rate as possible determinants of FII inflows in India and used the augmented autoregressive distributed lag (ARDL) approach based on the statistical properties of variables selected. The study found that in the long-run Indian stock market index, appreciating exchange rate, inflation, and interest rate differential are positively related to FII inflows in the Indian equity market whereas the US stock index is negatively related to FII inflows in India.JEL Codes: F30, G1

The Indian Economic Journal, Volume 71, Issue 5, Page 820-844, October 2023.
Acknowledging coronavirus disease 2019 (COVID-19) as a persistent health challenge in the foreseeable future, there is a need to evaluate how India can emerge as a major exporter in this category. This analysis with 41 COVID-19-related pharmaceutical products indicates that India currently lacks comparative advantage in several categories, for example, active pharmaceutical ingredient, medical equipment and devices, disinfectants and sterilisation products, and personal protective equipment. The country, however, enjoys a comparative advantage in manufacturing vaccines and formulations. Interestingly, India imposes higher tariffs and non-tariff measures (NTMs) on both sets of products, irrespective of the comparative advantages. Additionally, the article identifies important operational, logistic, and financial issues that can improve the efficiency of the pharmaceutical supply chain (PSC), which in turn can ensure smoother availability of these pharmaceutical products in the domestic market. While the operational issues underline the need for better coordination between multiple stakeholders, the logistic bottlenecks call for a general improvement at the infrastructure level. The financial issues correspond to infrastructural bottlenecks, transport costs and resulting cost escalation. The article concludes that the policymakers need to focus on the reduction of import barriers and improve the PSC to ensure the easier availability of COVID-19 medicines, vaccines, and related products.JEL Codes: F13, F15, I18, O25

The Indian Economic Journal, Volume 71, Issue 5, Page 878-894, October 2023.
The female labour force participation rate (LFPR) in India has been persistently declining and has exhibited an unusual pattern over the years, which deviates from the discourse of a U-shaped relationship between female LFPR and economic growth. The article is an attempt to provide some of the empirical foundations to the female LFPR in rural India, and further delves into a comprehensive understanding of the effects of different factors like household, social, economic and personal factors, empirically through previous NSSO data sets. The data sets used in the study are from NSSO 50, that is, from 1993-94 to NSSO 66, that is, 2009-10, to ascertain the factors that were significant over the years in determining the female LFPR in rural areas. These variables were tested to gain an understanding on the variations in female labour supply in rural India. Being cognisant and by problematising some of the significant factors that affected the female LFPR in the past, the article demands the state to exercise policies beyond its neoliberal framework and the ‘Keynesian welfare-state’ model of ‘superficial’ social security. Methodologically, three models were further created based on the NSSO 66 data set to showcase the perennial discouraged-worker effects among the females in LFPR in rural India. The article further empirically tests Jacob Mincer’s theory: ‘substitution effect dominating the income effect’ in the decision of females entering the labour market in rural India and shows empirically how it does not hold in the Indian context, thereby an attempt on debunking the mainstream theory.JEL Codes: J10, J21, J64, C18

The Indian Economic Journal, Ahead of Print.
This article aims to identify the main determinants of annual export flow among BRICS countries through the estimation of panel data from 1992 to 2018. The estimated results suggest that gross domestic product (GDP) and trade openness among other factors can explain export flow among BRICS countries. The most important finding of the study is that the formation of BRICS has exercised a negative and significant impact on bilateral trade among member countries. This study also found that the intra-industry trade dominates the intra-BRICS trade. Finally, the study found that the geographical distance between countries might be a factor for impeding trade among member countries. Thus, this study highlights the importance of increasing economic cooperation among these countries in terms of developing infrastructure, signing of free trade agreement (FTA) and increasing people-to-people contacts.JEL Codes: F00, F15, C23, F13

The Indian Economic Journal, Ahead of Print.
The objective of the study is to examine the impact of institutional changes in the financial sector on the long-run behaviour of broad money velocity in India. For this purpose, annual time series data from 1970–1971 to 2019–2020 has been used. To avoid the problem of multicollinearity, three institutional factors (urbanisation ratio, ratio of total deposits to currency and DCPS) have been combined to form an institutional factor index using PCA. The unit root results indicate that variables are a mix of I(0) & I(1), therefore, ARDL-ECM methodology is applied. Results indicate that money velocity exhibits a structural break in 2008, conforming to the global economic crises. To examine the impact of institutional factors a benchmark model (BM) containing per capita GDP and rate of interest has been estimated along with an institutional factors model (IFM) which also contains institutional factors index. The results show that there is no co-integration in BM, whereas co-integration was established in IFM. The error-correction term and institutional factors index were highly significant for IFM, confirming the long-run relationship. The explanatory power (adjusted R2) for IFM was considerably higher than BM, indicating that the addition of institutional variables significantly improves the money velocity model for India.JEL Codes: C32, E41, E52

The Indian Economic Journal, Volume 71, Issue 5, Page 845-863, October 2023.
The present study empirically examines the bi-directional relationship between sustainability disclosures and earnings quality under mandatory sustainability disclosures regime for India, a developing country. It considers both the qualitative and quantitative measurements of sustainability disclosures. Earlier research only explored such relationships assuming a unidirectional approach, under voluntary sustainability disclosure setting with quantitative measurements of sustainability disclosures for developed countries. The study employs the generalised method of moments (GMM) approach on selected listed companies for the period 2013–2019. The result shows a negative bi-directional relationship between sustainability disclosures quality and earnings quality which also hold when tested with an alternate earnings quality measure. The result confirms that firms focusing on sustainability disclosures will also be manipulating earnings because of opportunistic perspective. Also, firms manage earnings to use sustainability disclosures as their cover to protect themselves. The study offers theoretical contribution by empirically corroborating the agency theory based managerial opportunism hypothesis. It extends and validates the managerial opportunism hypothesis in a novel context and under mandatory sustainability disclosures setting. The findings offer strong policy implications to Indian regulators and other stakeholders regarding the unintended consequence of mandatory sustainability disclosures.JEL Codes: Q50, Q56, M48

The Indian Economic Journal, Volume 71, Issue 5, Page 895-911, October 2023.
Taking the data for 17 Indian states for the period running 1991–2017, the study investigates relationship between infrastructure and manufacturing value added at the overall as well as segregated levels to study the spatial differences. Preliminary tests of cross-section dependence point to the existence of dependence among the cross sections after which second-generation testing procedures are applied. Spatial differential impact of infrastructure on the performance of manufacturing activity is estimated using fixed/random effect modelling. The empirical results show that infrastructure index exerts positive and significant impact on the manufacturing performance with estimate of 0.20 for all states in India and 0.49 for high-income states. Similarly, individual components of infrastructure influence manufacturing activity differently. Road infrastructure is influencing manufacturing performance negatively in high-income states while it is positive for other states; teledensity exerts positive influence in case of middle-income states while the impact is negative in case of low-income states. Dumitrescu and Hurlin’s causality test shows bidirectional causality from infrastructure to manufacturing output.JEL Codes: D02, E62, H54, L94, L96

The Indian Economic Journal, Ahead of Print.
This article investigates the spot market’s short-term price reaction on derivatives listing and delisting in India. We comprehensively examine the derivatives listing and delisting with extended time-series data from 2001-2020. We employ event study methodology and find that stocks show positive price reactions on the inclusion, whereas, on the exclusion, stocks show adverse price reactions. In addition, we validate our findings by considering the announcement date and actual date as our event date. We also examine the cross-sectional drivers of cumulative abnormal returns. We find that the underlying liquidity and volatility are critical drivers of cumulative abnormal returns. We produce evidence that derivatives listing (delisting) around the event window significantly increases (decreases) the prices of its underlying. The study attempt to contribute to option listing literature by analyzing the firm-specific cross-sectional drivers of cumulative abnormal returns.JEL Codes: G11,G12,G14

The Indian Economic Journal, Ahead of Print.
The article analytically investigates the association between GDP growth and steel consumption in India from 2004–2005 to 2019–2020. We investigate the association of both long-term and short-term by employing the Granger causality test in the vector error correction model. The results showed one-way causality between economic growth to steel consumption both in the long and short run and concludes that over the period there is a unidirectional movement from economic development to steel consumption. So, as the economy progresses it has a direct impact on the steel industry. Finally, the study forecast the steel demand for the next decade and highlights the readiness of the steel industry to meet its demand and focus on better utilisation of its capacity.JEL Codes: C51, E2, E27