This paper examines recent trends in corporate concentration in India’s non-financial sector, with a focus on developments since 2015. Using firm-level data from the CMIE Prowess database we document changes in asset and income distribution across firms. We find that while the overall decline in the public sector’s share of assets and income contributed to a reduction in measured concentration in earlier years, this was accompanied by a steady increase in the share held by the top five private business groups. Through a decomposition exercise, the analysis shows that the increase in income share for these groups was primarily on account of an increase in their share of total assets and total debt. This occurred during a period when many other firms reduced their leverage, particularly after the implementation of the Reserve Bank of India’s Asset Quality Review. The paper provides descriptive evidence on changes in firm-level borrowing patterns and financial indicators, and links them with the differences in financial conditions across the firms.

Traditional measures of inequality, such as the Gini coefficient, involve pairwise comparisons across all members of a given population. But, most people possess information about, and therefore experience inequality in comparison to, only a subset of the population. In this paper, we provide simple axioms to describe inequality as experienced in social networks. We propose an index to measure aggregate experienced inequality that is consistent with these axioms. We then compute the Gini coefficient and ‘experienced inequality’ in 75 villages in Karnataka, India. We show that for a given wealth distribution, the social network could either accentuate or diminish experienced inequality. We show, first analytically and then empirically, how this can happen with respect to two network properties. Firstly, wealth-based homophily is negatively associated with experienced inequality. Secondly, caste-based homophily is negatively associated with experienced inequality when within-caste inequality is less than the overall Gini coefficient (and positively associated when the opposite is true).

Herb Gintis, who left us in 2023, was a giant of left economics. He believed passionately in ideas and their power, especially in helping deliver a more just and desirable world. In a career spanning six decades, he asked the most profound questions about economics and its aims and possibilities, and inspired a generation of economists in turn. We here recount his work and our interactions with him. JEL Classification: A11, P00

James Crotty, who passed away earlier this year, was one of the most important but unheralded heterodox macroeconomists of his generation. In this article, we summarize what we think were some of his signal achievements—a deep synthesis of the insights of Marx and Keynes, an appreciation of the more radical implications of the Keynesian approach, and a passion for teaching relevant ideas. JEL Classification: E12, B14

Abstract This chapter describes the evolution of the security worker landscape in India and identifies some of the correlates of protective security work. Over the past twenty-four years, protective security work has grown at a rapid pace, particularly in the private sector, although the public sector continues to remain an important employer. Protective security work varies substantially across geographical regions and social identity groups. A typical security worker is noted to be slightly older than the average worker, disproportionately male, and earns higher than average wages if employed in the public sector. The average private security worker, on the other hand, belongs to the “doorkeeper” category and has lower than average wages and skill. Of some of the obvious correlates of the extent of protective services in the labor force, only urbanization appears to be a robust correlate, suggesting that growth in protective service work may be driven by the rapid changes occurring in urban India. We end by considering some welfare implications.

In macroeconomic policy discussions, the supply side of the economy is usually represented as a level of potential output, reflecting the real resources available for production. It is often assumed that aggregate demand and potential output evolve independently, and that the task of macroeconomic policy is to keep demand-determined output close to the level corresponding to the economy’s productive potential. A number of developments have made this representation of supply constraints less satisfactory. The failure of output and employment to return to its previous trend following the financial crisis of 2007–2009 suggests that demand-induced changes in output can have permanent effects. On the other hand, it has become clear that supply constraints come into play in response not only to increases in aggregate expenditure, but also to changes in its composition. We argue that these developments call for a reconceptualization of supply constraints. Rather than limiting the level of output, we should think of them as limiting the rate of change of output, both in the aggregate and in its composition. Substantively, we should think of supply constraints in modern economies as fundamentally reflecting limited capacity for coordination by markets.

ABSTRACTExternal trade balance is a critical constraint in the macroeconomic dynamics of a developing economy. Typically, external adjustment is said to occur through changes in the real exchange rate, and implicitly in the terms of trade. This article decomposes India's merchandise trade ratio into three parts, namely, change in terms of trade, relative expenditure growth and relative import intensity over the period 1980‒2021. It finds that terms of trade contribute little to the evolution of India's trade ratio since the 1990s. Instead, falling relative expenditure growth due to India growing faster than its trade partners, and rising relative import intensity due to a reduction in India's reliance on imports relative to its partners explain a large share of the change in the trade ratio post‐1991. Devaluations have not contributed to the improvement in the trade ratio while export growth and reduced domestic intensity have been critical.

ABSTRACTThere has been substantial recent interest in the decline of labour shares across many countries. For the most part, attention has been focused on developed countries. This article examines the evolution of India's labour share in its formal industrial sector from 1983 to 2016. Using two datasets corresponding to sectoral aggregate data and plant‐level data respectively, the authors document a secular decline in the labour share across all sectors from 1983, with a stabilization at very low levels (around 8 to 10 per cent) starting around 2007. The plant‐level data are used to identify correlates that illuminate reasons for the overall decline in the labour share. The authors find strong evidence to support multiple causes, including increased capital intensity, greater informalization, greater privatization, and productivity increases in larger firms; they therefore suggest that the declines in labour share experienced are due to a composite set of factors. Conversely, other potential explanations (such as regional variation in the labour share) have less explanatory power.

We introduce concepts and measures relating to inequality between identity groups. We define and discuss the concepts of Representational Inequality, Sequence Inequality, and Group Inequality Comparison. Representational Inequality captures the extent to which an attribute is shared between members of distinct groups. Sequence Inequality captures the extent to which groups are ordered hierarchically. Group Inequality Comparison captures the extent of differences between groups. The concepts can be used to interpret segregation, clustering, and polarization in societies.

State and local debt in the United States more than doubled as a share of gross domestic product between 1953 and 2007. Using a historical accounting framework, we find that there is no straightforward relationship over time between state and local deficits and debt growth. We find that only 17 percent of the variation in aggregate state-local debt ratios comes from variation in the fiscal balance. This is especially true in the 1980s, the period of most rapid increase in state-local debt ratios. Before 1980, there were small but persistent deficits, but stable debt ratios. In the 1980s, state and local sectors shifted toward budget surpluses but saw rising debt ratios. This is explained by a faster pace of asset accumulation. Our results demonstrate the autonomy of balance sheet variables and suggest that changing debt ratios cannot be explained by real income and expenditure flows.

Reflecting on their experience of using The Economy to teach undergraduate students in India, two teachers of economics discuss the need for a version of the alternative textbook that addresses the needs of students who seek to understand the Indian economy. The possibilities of such a version of the textbook are discussed.

Interest in the emergence of a global middle class has resulted in a number of attempts to identify and enumerate who belongs to it. Current research provides wildly different estimates about the size and evolution of the global middle class because of a lack of consensus on appropriate identification criteria for a person to be deemed to be middle class. We identify three competing and often conflated understandings in the literature on the subject. We further argue that for at least two of these understandings, the literature has been using inappropriate thresholds for identification. Using data from the Global Consumption and Income Project, we provide estimates of the size, composition, and evolution of the global middle class for three competing understandings and contrast these to existing estimates.

An increasingly visible school of heterodox macroeconomics, Modern Monetary Theory (MMT), makes the case for functional finance – the view that governments should set their fiscal position at whatever level is consistent with price stability and full employment, regardless of current debt or deficits. Functional finance is widely understood, by both supporters and opponents, as a departure from orthodox macroeconomics. We argue that this perception is mistaken: While MMT’s policy proposals are unorthodox, the analysis underlying them is entirely orthodox. A central bank able to control domestic interest rates is a sufficient condition to allow a government to freely pursue countercyclical fiscal policy with no danger of a runaway increase in the debt ratio. The difference between MMT and orthodox policy can be thought of as a different assignment of the two instruments of fiscal position and interest rate to the two targets of price stability and debt stability. As such, the debate between them hinges not on any fundamental difference of analysis, but rather on different practical judgements – in particular what kinds of errors are most likely from policymakers. Anyone who has followed debates on macroeconomic policy in recent years will be familiar with Modern Monetary Theory (MMT). While MMT is an evolving school of thought that combines a number of distinct elements, its most visible claim is that for the United States federal government (and others similarly situated), there is no financial constraint on fiscal policy. If a government seeks to adjust the budget position to bring output to potential, it can do so regardless of the current budget deficit, debt-GDP ratio or similar measures of fiscal space. The goal of this short paper, by a pair of economists who are outside of but sympathetic to MMT, is to clarify where it departs from the views of the majority of macroeconomists and where it overlaps with with them. Modern Monetary Theory is perceived, both by outsiders and many of adherents, as a radical

ABSTRACTThe quantitative growth and increased social prominence of financial institutions and markets can be usefully seen in terms of the constraints or ‘discipline’ they impose on other private and public decision makers. The role of finance in allocating real resources may be less important than its role in supporting the claims and authority of wealth‐owners vis‐a‐vis other social actors. This article discusses the political economy of financialization in the United States, Europe and India. In the United States, the latter role is most visible in the pressure non‐financial corporations face to increase payouts to shareholders. In Europe, the financial constraints on national governments are more salient. Tightening these constraints is openly acknowledged as the major benefit of financial integration, yet, on the other hand, the constraints financialization imposes on policy may also limit the extent to which finance can in fact be liberalized. This countervailing pressure is visible in the great expansion of central banks’ balance sheets and management of financial markets over the past decade. It is even more clearly visible in India, where the conflict between financialization and concrete policy goals has sharply limited the extent of liberalization, despite consistent rhetorical support.

Ever since the adoption of TRIPS, it has become increasingly clear that the intellectual property provisions of the WTO do not effectively support the needs of developing countries. Instead, they principally serve transnational corporate interests disproportionately. We discuss some pathologies of the system for public health, especially the challenge of effectively overcoming micronutrient deficiencies. We discuss the use of public health exceptions in WTO law and argue for greater use of tools such as compulsory licensing, especially with regard to affordably addressing malnutrition.

The interest rate and the fiscal balance can be thought of as two independent instruments to be assigned to two targets, the path of output and the path of public debt. Under what we term a sound finance rule' the interest rate targets output while the fiscal balance targets public debt; under a functional finance rule' the budget balance targets the output gap and the interest rate targets the debt ratio. The same unique combination of interest rate and fiscal balance will be consistent with output at potential and a constant debt-GDP ratio regardless of which instrument is assigned to which target. The stability characteristics of the two rules differ, however. At low levels of debt, both rules converge to the targets, but there is a threshold debt level above which only the functional finance rule converges. Contrary to conventional wisdom, therefore, the case for countercyclical fiscal policy becomes stronger, not weaker, when the ratio of public debt to GDP is already high. We apply our framework to describe the possibility of policy-generated cycles in the United States over the past five decades.

The purpose of this paper is to describe the historical evolution of state and local government balance sheets, and to situate them in a larger discussion of the relationship between financial positions and real income and payments flows. This paper is part of a larger project intended to challenge the idea that variation in balance sheet variables, including debt-income ratios, reliably reflects variation in nonfinancial income and expenditure flows . Rather, the starting point for analysis must be a recognition that the historical evolution of financial positions, including debt, is substantially autonomous from the real activity of production, exchange and consumption. One central fact the paper calls attention to is the large asset positions of state and local governments. Unlike the federal government, many local governments and all state governments are substantial net creditors in financial markets. While state and local debt has increased over the past 50 years, the increase in financial assets has been much larger, especially for state governments; the net financial wealth of state governments has increased from less than 5 percent of GDP in the early 1960s to over 20 percent in 2007. Several implications follow. First, unlike at the ∗Mason: Department of Economics, John Jay. jwmasonnyc@gmail.com Jayadev: Department of Economics, University of Massachusetts at Boston, Wheatley Building, 100 Morrissey Blvd., Boston, MA 02125 and Azim Premji University, Bangalore and the Institute for New Economic Thinking, arjun.jayadev@umb.edu. This work was supported by funding from the Washington Center for Equitable Growth. We thank Amanda Page-Hongrajook for excellent research assistance.