Papers by S Chalapati Rao K
The Corean crisis in 1997-1998 resembled the Mexican crisis of 1982 more than it did the Mexican ... more The Corean crisis in 1997-1998 resembled the Mexican crisis of 1982 more than it did the Mexican crisis of 1995, because it was more associated with international bank debt. It would help if government did not provide implict guarantees on this kind of debt.
The role of state could not be limited to maintenance of law and order, revenue administration or... more The role of state could not be limited to maintenance of law and order, revenue administration or provision of basic health and education services. The state had the obligation to (i) establish basic and strategic industries, (ii) regulate growth and operation of economic activities, and (iii) protect and promote small scale and rural industries in the interest of employment and
This Policy Brief of ISID “The Tenuous Relationship between Make in India and FDI Inflows” analys... more This Policy Brief of ISID “The Tenuous Relationship between Make in India and FDI Inflows” analyses the empirical issues in measuring the FDI inflows and highlights the problems in attributing the inflows to some specific policy measure. It finds that the surge in FDI inflows in recent past can’t be attributed to the ‘Make in India’ initiatives. It can be downloaded from http://isid.org.in/pdf/ISIDpb02.pdf
FDI Companies and the Indian Company Law: Regulations vs. Disclosures, Jul 1, 2014
Discusses about the need to make certain disclosures compulsory for private companies esp. the on... more Discusses about the need to make certain disclosures compulsory for private companies esp. the ones having substantial FDI
For a long time India's approach towards foreign direct investment was governed by the multiple o... more For a long time India's approach towards foreign direct investment was governed by the multiple objectives of self-reliance, protection of national industry and entrepreneurs, import of select technologies and export promotion. As a part of the Structural Adjustment Programme, along with virtually dismantling the industrial regulatory system, India sought to attract FDI with special favours and persuasion. While the new regime places heavy emphasis on attracting large amount of FDI, there is very little discussion on the various facets of actual implementation. This paper seeks to provide empirical content to the developments during the first seven years of liberalisation.
While India has generally been following an open door FDI policy, a few areas are still subject t... more While India has generally been following an open door FDI policy, a few areas are still subject to caps on FDI and/or specific government approval. One of the justifications for the same is the need to retain a degree of control over the operations of the investee companies in Indian hands. Earlier this year, the government specified the methodology for calculating direct and indirect foreign equity in Indian companies in order to remove ambiguities in calculating the extent of FDI in a company. Based on empirical evidence this paper argues that percentage of shares or proportion of directors do not necessarily represent the extent of control and more direct intervention would be required if the objectives of imposing the caps are to be achieved.] 1
To facilitate foreign private capital flows in the form of portfolio investments, developing coun... more To facilitate foreign private capital flows in the form of portfolio investments, developing countries have been advised to develop their stock markets. It was suggested that these investments would help the stock markets directly through widening investor base and indirectly by compelling local authorities to improve the trading systems. While the volatility associated with portfolio capital flows is well known, there is also a concern that foreign institutional investors might introduce distortions in the host country markets due to the pressure on them to secure capital gains. In this context, this paper seeks to assess the importance of foreign portfolio investments in India relative to other major forms and to study the relationship between foreign portfolio investments and trends in the Indian stock market during the past four years.
As a part of the process of economic liberalisation, the stock market has been assigned an import... more As a part of the process of economic liberalisation, the stock market has been assigned an important place in financing the Indian corporate sector. Besides enabling mobilising resources for investment, directly from the investors, providing liquidity for the investors and monitoring and disciplining company management company managements are the principal functions of the stock markets. This paper examines the developments in the Indian stock market during the `nineties in terms of these three roles. Share price indices have been constructed for the years 1994 to 1999 at select company category and industry levels to bring out the investor preferences and their implications for the resources mobilising capacity of different segments of the corporate sector.
Books by S Chalapati Rao K
URL: http://isid.org.in/pdf/Assessing_India's_Inward_FDI.pdf
An important backdrop of this study... more URL: http://isid.org.in/pdf/Assessing_India's_Inward_FDI.pdf
An important backdrop of this study is the Discussion Paper released by the Department of Industrial Policy and Promotion in August 2017. This paper expressed the need to review India’s FDI policy which, being largely aimed at attracting investment, has failed to retain investments and harness technology to the extent possible. Building on the experience of the previous research at the Institute, this study brings out, using multiple case studies and concrete examples, the various shortcomings and special features of the data on India’s FDI inflows which make them unsuitable for drawing straightforward conclusions, especially when assessing the effectiveness of specific policy changes. Even the annual aggregate inflows cannot be relied upon to provide guidance regarding year-to-year changes because of omissions and commissions involving very large remittances. Nor do they truly reflect the extent of capacity creation in the economy. Perhaps, this should not come as a surprise, because compared to the developed ones developing countries are the least equipped to assess FDI’s contribution to their respective economies.
It is not the distortions alone which the Indian policymakers should be concerned about as the annual inflows are simultaneously being balanced to a significant extent by outflows on account of disinvestments and repatriations of capital. These have become quite large both relatively and in absolute terms. The study suggests that this problem can probably be traced to the nature of inflows and the mode of entry. It also raises the question whether all of the FDI that is coming to India has the potential to transfer technology. Only then arises the question whether those who possess technology are transferring it or not.
It is thus imperative that along with a review of India’s FDI policy, the reporting mechanism has also to be reshaped drastically if the inflow figures were to facilitate drawing of meaningful inferences and provide guidance to policymakers and other national and international users. It is hoped that this study will convince the Indian authorities and caution the users nationally and internationally about the pitfalls in offering simplistic explanations for the reported developments and that it would help develop a template to analyse the inflows purposefully.
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Papers by S Chalapati Rao K
Books by S Chalapati Rao K
An important backdrop of this study is the Discussion Paper released by the Department of Industrial Policy and Promotion in August 2017. This paper expressed the need to review India’s FDI policy which, being largely aimed at attracting investment, has failed to retain investments and harness technology to the extent possible. Building on the experience of the previous research at the Institute, this study brings out, using multiple case studies and concrete examples, the various shortcomings and special features of the data on India’s FDI inflows which make them unsuitable for drawing straightforward conclusions, especially when assessing the effectiveness of specific policy changes. Even the annual aggregate inflows cannot be relied upon to provide guidance regarding year-to-year changes because of omissions and commissions involving very large remittances. Nor do they truly reflect the extent of capacity creation in the economy. Perhaps, this should not come as a surprise, because compared to the developed ones developing countries are the least equipped to assess FDI’s contribution to their respective economies.
It is not the distortions alone which the Indian policymakers should be concerned about as the annual inflows are simultaneously being balanced to a significant extent by outflows on account of disinvestments and repatriations of capital. These have become quite large both relatively and in absolute terms. The study suggests that this problem can probably be traced to the nature of inflows and the mode of entry. It also raises the question whether all of the FDI that is coming to India has the potential to transfer technology. Only then arises the question whether those who possess technology are transferring it or not.
It is thus imperative that along with a review of India’s FDI policy, the reporting mechanism has also to be reshaped drastically if the inflow figures were to facilitate drawing of meaningful inferences and provide guidance to policymakers and other national and international users. It is hoped that this study will convince the Indian authorities and caution the users nationally and internationally about the pitfalls in offering simplistic explanations for the reported developments and that it would help develop a template to analyse the inflows purposefully.
An important backdrop of this study is the Discussion Paper released by the Department of Industrial Policy and Promotion in August 2017. This paper expressed the need to review India’s FDI policy which, being largely aimed at attracting investment, has failed to retain investments and harness technology to the extent possible. Building on the experience of the previous research at the Institute, this study brings out, using multiple case studies and concrete examples, the various shortcomings and special features of the data on India’s FDI inflows which make them unsuitable for drawing straightforward conclusions, especially when assessing the effectiveness of specific policy changes. Even the annual aggregate inflows cannot be relied upon to provide guidance regarding year-to-year changes because of omissions and commissions involving very large remittances. Nor do they truly reflect the extent of capacity creation in the economy. Perhaps, this should not come as a surprise, because compared to the developed ones developing countries are the least equipped to assess FDI’s contribution to their respective economies.
It is not the distortions alone which the Indian policymakers should be concerned about as the annual inflows are simultaneously being balanced to a significant extent by outflows on account of disinvestments and repatriations of capital. These have become quite large both relatively and in absolute terms. The study suggests that this problem can probably be traced to the nature of inflows and the mode of entry. It also raises the question whether all of the FDI that is coming to India has the potential to transfer technology. Only then arises the question whether those who possess technology are transferring it or not.
It is thus imperative that along with a review of India’s FDI policy, the reporting mechanism has also to be reshaped drastically if the inflow figures were to facilitate drawing of meaningful inferences and provide guidance to policymakers and other national and international users. It is hoped that this study will convince the Indian authorities and caution the users nationally and internationally about the pitfalls in offering simplistic explanations for the reported developments and that it would help develop a template to analyse the inflows purposefully.