J o u r n a l o f t h e I n d i an I n s t i t u t e of E c o n om i c s
Volume 49 December 2007 No.3
CONTENTS
1. Tasks Ahead - of IMF and World Bank P. Chidambaram 343
2. The Correlation between Current Globalisation and Wilfred I UKPERE
Human Resources Andre D. Slabbert 347
3. Small and Medium Scale Enterprises’ Access to
Commercial Banks’ Credits and their Contribution Wahab A. Lawal
to GDP in Nigeria Muftau A. Ijaiya 359
4. An Analysis of Free Trade Agreement between the
Democratic Socialist Republic of Srilanka and the
Republic of India C .Ramakrishna Rao. 369
5. Trends of Food Security in Ethiopia J. Narasimha Rao 381
6. Modelling India's Trade : A Near VAR Approach Ashwani K. Tripathi
A.Ramanathan 395
7. Measuring Comparative Advantage in Export of
India’s Dairy Products K.Elumalai
407
8. FDI Inflow and Domestic Investment in India Sadananda Prusty 421
9. Technical and Scale Efficiency in Indian
Manufacturing Sector: A Cross-sectional Sunil Kumar
Analysis Using Deterministic Frontier Approach Nitin Arora 433
10.India’s Tourism Industry – Jayasheela
Is a Take-off Round the Corner? V. Basil Hans 459
11. Strategic Marketing of Indian Textiles in WTO Sanjeev Verma
Member Countries: The Road Ahead Ranjan Chaudhari
A.S.Pandey 475

12. An Empirical Investigation of the Causal Relationship Ved Pal
between Openness and Economic Growth in India Sudesh 485
13. Inter –Temporal Assessment And Prospects of
Employment in Rural Farm and Non –Farm
Sectors of India Arvind Awasthi 495
14. Technological Change and Productivity Growth in N.G.Pendse
Forest Based Industries of India. S.K.Choubey
Rohit Balyani 513
15. Income, Education and Household Health
Expenditure : A Rural –Urban Analysis Himanshu Sekhar Rout 543
16. Debt Management and Fiscal Operations
- An Indian Experience S. A. Saiyed 557
Book Reviews
i. SHG-Bank Linkages in India. Empowerment and
Sustainability Meera Lal 575 ii. Safety Net Programmes in India: Outreach and
Effectiveness, Village Level Perspectives in CESS
Three States Hyderabad 577
Asia Statistics 579
ABSTRACT
Does globalisation advance the general good? The response to this question is not an easy one, given the complexity of the phenomenon. How has globalisation, a force promoting great changes across the globe, affected global workers, working conditions and working environment? The answer to this question can be traced in the correlation between current globalisation and human resources. A negative correlation between globalisation and human resources is proposed here, despite the positive aspects of the globalisation phenomenon.
*Faculty of Business, Cape Peninsula University of Technology (CPUT), Cape Town, South Africa.

W A LAWAL AND M A IJAIYA*
Over the years, the contribution of the Small and Medium Scale Enterprises to the total Gross
Domestic Product (GDP) of Nigeria has been quite insignificant. Using a time series linear forecasting model, this paper examines the amount of commercial banks credits that would be needed to guarantee an increase in the contribution of Small and Medium Scale Enterprises to total Gross
Domestic Product (GDP) of the country between the year 2005 and the year 2014 if certain policy measures are put in place, such as prudent fiscal and monetary policies, prompt disbursement of funds, transparency and good governance; and the fight against corruption.
*Department of Accounting and Finance, University of Ilorin, Ilorin, Nigeria.
ABSTRACT
The free trade agreement between India and SriLanka emerged from different perceptions. SriLanka visualised vast Indian growing market of 350 million middle class for transforming its exports from low value added goods to high value added goods and also make available cheap Indian consumer goods to its low income groups. Besides hoping to attract huge export oriented foreign direct investment for entry into the Indian market. On the other hand India looked at SriLankan market however small it is as an expansion of its overseas market economy. The paper provides the reasons for emergence of free trade agreement between the countries, the content, scope and working of the agreement, latest changes, the impact and critical assessment.
*Director, International Trade Facilitation Centre, Federation of Andhra Pradesh Chambers of Commerce and
Industry, Hyderabad, India
The present globe is under critical challenges and uncertainties. Most of the people in developing countries are suffering from frequent and sharp dips in food intake on top of endemic hunger, uncertainty for next meal, lack of proper nutrition made worse by wide spread exposure to disease, inter-family inequalities in allocation of food etc are the real character, magnitude of the problem of poverty and food insecurity. Poverty alleviation is a very complex and critical concern for the

developing countries and it is the top of the agenda for the policy planners and development practitioners. The present study examined the food security trends of Ethiopia during the pre-post reform periods and concluded that the post reform experience reveals that the growth in agricultural production is falling short of population growth, which leads to increasing food deficit/ food insecurity. The study suggested that suitable population policy is needed; introduction of advanced technological agricultural inputs is needed in agricultural sector. Strong government intervention is needed in agricultural credit facilities and intervention of Micro finance institutions in providing loans to the farmers.
*Associate Professor of Economics, Department of Economics, Osmania University, Hyderabad, Andhra
Pradesh.
*The author is thankful to many individuals, institutions for their comments and data. Special thanks to
Demographic Training and Research Center (DTRC), Addis Ababa University, Ethiopia where the author worked as a faculty member and for its infrastructural facilities and conducive atmosphere, Dr. M.D. Bavaiah
Associate professor, Department of Economics, Addis Ababa University, Ethiopia, Prof.B.Satyanarayana,
Chairman State Finance Commission, Hyderabad and Prof.K. Pratap Reddy, Department of Economics,
Osmania University, for their critical comments and suggestions.
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ABSTRACT
In developing Asia and elsewhere, foreign trade and industrialisation have been successfully used to spearhead the drive for rapid development. The experiences of the Newly
Industrialised Economies (NIEs) suggest that imports and investment have important influence on the export – economic growth relationship. This study makes a quantitative analysis of the structural linkages among trade variables, viz., exports and imports, and growth in a near-VAR
(NVAR) framework, in the Indian context. The NVAR is a restricted version of the VAR model.
The NVAR model helps us to understand dynamic inter-relationships and to conserve degrees of freedom in small sample data – making it an extremely flexible econometric model, which offers a parsimonious yet fully dynamic specification.
The results indicate that exports have played dual roles in the Indian economy. One, it has liberated the demand constraints in the Indian economy by providing necessary foreign exchange for import of capital goods. Its significant impact on investments is a testimony to this. Two, exports have helped in improving capital allocation in the Indian economy which resulted in improved capital productivity.
*Director, Forecasting Division, Department of Statistical Analysis and Computer Services
Reserve Bank of India, Mumbai.
**Professor, Department of Humanities and Social Sciences, Indian Institute of Technology, Bombay.
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ABSTRACT
India was net importer of milk products till early seventies. The operation flood programme in conjunction with other dairy developmental projects had helped India to move from the state of

deficiency to self-sufficiency in milk production. Presently, India ranks first in milk production in the world with 88 million tonnes during 2003-04. The dairy industry was protected from competition fairly for long period of time. However, as part of trade liberalization drive, the domestic and external markets reforms were introduced during nineties. The export and import controls were removed. Being the largest milk producer of milk in the world, it is contended that India has great potential to influence the world market through increasing the export share. However, such contentions are not based on empirical evidences. The present study attempts to measure the comparative advantage in export of milk products in the global as well as regional (SAARC) level.
The analysis showed that India has revealed comparative advantage to export milk powder and butter in the market of SAARC countries. But, cheese and curd are not competitive. At the global level, India has comparative disadvantage in the export of milk powder, butter and cheese and curd. The regression analysis on factors affecting the pattern the comparative advantage revealed that dairy farmers face tradeoffs between rice production and milk production.

Associate Fellow, National Council of Applied Economic Research (NCAER), 11, I. P. Estate, Parisila
Bhawan, New Delhi-110 002.
ABSTRACT
The paper tries to explore whether FDI inflow to India acts as a means to supplement domestic investment for achieving a higher level of economic growth or not. The major findings of the paper are(i) there is a bi-directional causation between FDI inflow and net domestic real investment. (ii) the correlation matrix clearly states that there is a high degree of positive relationship between FDI inflow and net domestic real investment, (iii) the double log regression result reveals that FDI inflow is positively and significantly influencing net domestic real investment, (iv) the cointegration result reveals that there is a positive long-run relationship between FDI inflow and net domestic real investment. The regression and cointegration results, thus, clearly state that FDI inflow into India supplements domestic investment. The above findings suggest that if India wants to achieve 8% economic growth target as mentioned in the Tenth Five Year Plan, it should take some special measures and deepen the ongoing reform process through a consensus among all the political parties to ensure more and more FDI inflow.
*Faculty Member, ICFAI Business School, Multi Media Project Complex, A-123, Industrial Estate,
Mancheswar, Bhubaneswar, India.
ABSTRACT
This paper has endeavored to evaluate the relative technical and scale efficiency of 127 industrial groups in Indian manufacturing sector using a deterministic frontier approach named Data
Envelopment Analysis (DEA). The mean of overall technical efficiency (OTE) scores has turned out to be 0.603 (with standard deviation of 0.177) and OTE scores range from a minimum of 0.345 to a maximum of 1. These results imply that, in Indian manufacturing sector, on an average, 39.7 percent of resources are being wasted in the production process. Only 9 industrial groups attained the status of globally efficient groups with OTE score equal to 1. The decomposition analysis of OTE score into

its two mutually exclusive non-additive components viz., pure technical efficiency (PTE) and scale efficiency (SE) delineate that 31.2 percentage points of 39.7 percent of overall technical inefficiency
(OTIE) is due to inappropriate management practices being adopted by firms’ managers in organizing the inputs in the production process. The remaining part of the OTIE is due to the firms not operating at optimal scale size. Further, it has been observed that 62 percent of groups are operating at above their optimal size and thus, experiencing decreasing returns-to-scale.
The results of Tobit regression analysis reveal that the proxy variables for capital deepening, profitability and degree of skill formation have a positive impact on the OTE of Indian manufacturing sector.
*Reader in Economics, Punjab School of Economics, Guru Nanak Dev University, Amritsar- Punjab, India.
**Junior Research Fellow (UGC),Punjab School of Economics, Guru Nanak Dev University, Amritsar-
Punjab, India.
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Travel in the young sort is a part of education, and in the elder,
a part of experience (Francis Bacon).
*
**
Tourism once regarded as a pastime activity for the leisured few in society, has at present grown into a multi-billion industry. Worthily on account of its phenomenal socio-economic magnitudes and prospects tourism has also become the subject of scholarly interest and Indian tourism is no exception to this. Indian tourism industry today is on the threshold of a big change for large economic gains. From the traditional concept of Athithi Devobhava (The guest is God) to the modern slogan of Incredible India, India’s tourism parampara has come a long way. It is time now to have a fresh look at this sector in the light of impact and implications of GATS and the burgeoning service sector of the country.
* Reader in Economics, Mangalore University, Mangalagangothri, Karnataka, India.
**Teacher Fellow in the Economics Department, Mangalore University, Mangalagangothri Karnataka .
This is a revised version of a paper with the title Tourism Industry in India – Is a Take-off round the corner?
presented to the National Seminar on “GATS and India’s Services Sector: Progress and Prospects”, held on 24-
25 March 2006, (Technical Session 4) organised by the Department of Economics, Karnataka University
Dharwad, Golden Jubilee Year 2005-2006.
According to the organizations, overriding objective of WTO is to “help trade flow smoothly, freely, fairly, and predictably.” It will make every hearth on this planet to have fire, fire of hope to have a life free of hunger, free of disease and free of exploitation. To a worried life with a worried mind things have changed. The WTO Agreement incorporates important texts, covering subjects ranging from agriculture to textiles & clothing; services, rules of origin and intellectual property rights. The

Agreement on Textiles and Clothing (ATC) is a potential area of benefit for India. In fact, it is estimated that more than one third of the total benefits from the WTO would result from the liberalization of textiles and clothing. This article elucidates the boon not the bane of WTO on the development of strategic marketing in textiles in integrating global trade for competitive advantage in the perspective of Indian economy.
*National Institute of Industrial Engineering (NITIE), P.O.NITIE, Vihar Lake, Mumbai.India
**University of Petroleum and Energy Studies,Dehradun,
ABSTRACT
The present study is an attempt to evaluate the relationship between the openness of external sector and the economic growth of India. For the purpose cointegration and error correction models are applied to estimate the relationship by using annual data for the period 1951-2002. Here openness is taken in broader sense by taking the summation of both exports and imports. The integration and cointegration properties of the data are analyzed and the Granger Representative Theorem is used to identify the nature of the causal relationship. The results suggest that a feedback causal relationship exists between economic growth and exports plus imports. There is no evidence for short run Granger causality between the economic growth and openness. An important implication of our findings is that India’s economic growth and openness reinforce each other. A high degree of openness is associated with enhanced economic performance for India.
* Reader, Department of Business Economics, Guru Jambeswar University, Hisar
**Reader, Institute of Management Studies, Kurukshetra University, Kurukshetra.
ABSTRACT
The paper has estimated and examined the magnitude and extent of change in rural farm and non– farm employment in India from 1972 to 2004. The employment estimates determined on the basis of different NSS and NAS reports have revealed that employment in the farm sector has initially increased, but between 1993–94 and 1999–2000, additional employment opportunities have almost ceased in this sector. In the rural non–farm sector as a whole, employment expansion has slowed down from 1993–94 to 1999–2000, which is the initial phase of the economic reform programme in
India. However, latest estimates on employment, based on 60 th round survey report of the NSSO, have revealed a significant employment expansion in all the sectors of the rural economy between 2000 and 2004. These estimates, though based on ‘moderately large’ sample size appear to be exaggerated, because available evidences are sufficient to contradict significant employment expansion in rural farm and in certain rural non–farm activities during 2000 to 2004.

*Reader, Department of Economics, University of Lucknow, Lucknow.
The relationship between technological change and economic development is intimate and complex. The economists have always recognised the central role that technological change plays in economic development. Technical change or technological change or technological progress is a shorthand expression for any kind of upward shift in the production function indicating improvements.
The present study covers the period from 1973-74 to 1997-98. Gross fixed capital stock (or gross fixed assets) at constant prices has been taken in the present study as a measure of capital input. In the present study total employees including both workers (i. e. direct labour) and persons other than workers (i. e. indirect labour) have been taken as the measure of labour input, for the purpose of production function the labour input used was total emoluments to employees. It is obvious that labour productivity ranges between 0.0 percent to less than 1.0 percent per annum, capital productivity ranges between 0.0 percent to more than 5.0 percent per annum, and capital intensity ranges between 0.0 percent to less than 2.0 percent per annum.
The trend growth rates for Kendrick, Solow and Divisia index index are found positive and significant in most of the cases showing positive improvement in total factor productivity growth.
Whereas, in most of production function specifications insignificant time coefficient was found thus suggesting technological stagnation in the cases of industry groups. Thus the forest-based industries in India shows mixed picture of technological growth and technological stagnation.
* Reader, Dept of P.G. Studies & Research in Economics, Rani Durgavati University, Jabalpur, M.P, India.
** Professor and Head, Dept.of P.G. Studies& Research in Economics, Rani Durgavati University, Jabalpur,
M.P, India.
*** Research Scholar, Dept of P.G. Studies& Research in Economics, Rani Durgavati University, Jabalpur,
M.P, India.

ABSTRACT
The study examines the effect of income and education of the household on its health expenditure, based on primary data collected from Cuttack and Bhubaneswar Municipal Corporations (for urban area) and Jajpur district (for rural area) of Orissa, India. The descriptive statistics show an average person spends around nine and eight per cent of his/her income on health expenditure from his/her own pocket in rural and urban areas respectively. In an average, a person in rural area spends 46 per cent of what a person in urban area spends on health expenditure from his/her own pocket where as the income is only around 41 per cent of the urban counterparts. Regression analysis indicates that income has greater positive effect on health expenditure than education. Income of the household has significant influence on its health expenditure where as the effect of education is insignificant.
The effect of income on health expenditure is same in urban and combined areas followed by rural area.
*Lecturer, P.G. Department of Economics, Dr. SRK Government Arts College, YANAM , East Godavari
District, Andhra Pradesh, India.
ABSTRACT
This paper is concerned with government fiscal operations and debt management in the Indian context. This study covers three decades from 1970 to 2005; we have used well-known statistical techniques for the empirical analysis by incorporating some crucial fiscal and monetary variables into the structural equations. The results strongly support our contention that during the period of this study, national debt has statistically strongly and positively influenced the level of Reserve Bank of India’s net credit to the Government (NRBIG) and influenced by deficit and also we found fiscal and monetary policies are intertwined in Indian context.
*Reader in Business Economics Department, Faculty of Commerce, The M. S. University of Baroda (Gujarat
State - India). The Author would like to thank his Murshideen and family members for their help and also Dr.
D. S. Pathak his PhD Research Guide/Supervisor.