Articles by Shankar Acharya

What leads to sustained growth in output and livelihoods? How important is the role of public policies as distinct from the endowments of geography and the historical legacy of institutions? Which public policies are most growth-friendly in different country contexts? This article attempts to grapple with these questions.

During the past year a number of studies have made very optimistic projections about India's medium- and long-term growth prospects. The forecasts of a 7 per cent plus growth rate in these studies have been based on the demographic outlook for India, projected trends in productivity, strength of the country's institutions and an optimism about reforms. However, a critical examination of these factors suggests that India will grow closer to 5.5-6 per cent a year rather than by 7 per cent. It is still worth emphasising that a 5.5-6 per cent average growth is creditable for a large and diverse society and it implies a reasonably healthy per capita income growth of 4 per cent a year.

This paper reviews India's recent growth performance and assesses medium-term growth prospects in the light of relevant factors. These factors include the likely evolution of fiscal and savings-investment imbalances, financial sector performance, the role of the external sector, economic reforms and productivity, infrastructure constraints, problems in agriculture, the likely developments in labour supply and demand and governmental performance. The paper concludes that it might be reasonable to expect growth in the next five years to fluctuate in the range of 4 to 6 per cent, perhaps averaging close to 5 per cent, provided there is no major economic or financial crisis. This is much lower than the 6.7 per cent growth achieved in the Eighth Plan period and far lower than the 8 per cent mooted in the Tenth Plan.

Informal Credit Markets and Monetary Policy Shankar Acharya Srinivasa Madhur INTRODUCTION IN our paper 'Informal Credit Markets and Black Money: Do They Frustrate Monetary Policy' (see Acharya and Madhur, 1983), we had tried to tackle the issue of whether the existence of an informal credit market and 'black liquidity' undermines the operation of official monetary and credit policy at the aggregate level. To address this issue, we formulated a simple model of the markets for commercial bank credit and informal credit and the interactions between them.

Informal Credit Markets and Black Money Do They Frustrate Monetary Policy?
Shankar Acharya Srinivasa Madhur This paper deals with the issue of whether the existence of an informal credit market and 'black liquidity undermines the operation of official monetary and credit policy at the aggregate level To address this issue the authors have formulated a simple model which characterises demand and supply in the formal and informal credit markets as well as the links between them.