Economics

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This paper examines the unintended consequences of a policy aimed at improving the groundwater level on crop residue burning in India. The Preservation of Subsoil Water Act, 2009 implemented in two Indian states bans the transplantation of paddy before mid-June to preserve groundwater. Theoretically, this leaves a short window of time for clearing the field before the next crop and thus increases the likelihood of farmers adopting time-saving methods like crop residue burning. Using a difference-in-difference framework we find that the ban results in both delay and an increase in crop residue burning in the winter months. © 2022 Elsevier B.V.

World University root node

(SoHSS) School of Humanities and Social Sciences

Economics Letters

Unintended consequences of Indian groundwater preservation law on crop residue burning

Are elections immediately preceded by periods of increased violent crimes? In this paper, we test the link between criminal activity and electoral cycles. We use annual data from 1981 to 2007 on crimes and data from the parliamentary elections in India for the same period. Using a difference-in-difference design, we find that election years have significantly higher incidence of violent crimes even after accounting for poverty and inequality. This effect is statistically significant and consistent across specifications. The effect is magnified in districts that are more competitive. Similar regressions using economic crimes and elections show either a decline or no effect. Our results are strongly indicative of a close link between violent crimes and elections, and are critical for the growing debate on the criminalization of politics in developing countries. © 2022 John Wiley &amp; Sons Ltd.

Review of Development Economics

Crime, elections, and political competition

This paper proposes new composite measures of relative and dynamic state performance to improve governance and delivery of public programs in developing countries with a federal structure. We illustrate the use of the indices to rank the performance of 19 major Indian states on two large development programs launched by the Indian government over the last two decades using publicly available data. Although we find volatility in performance over time, there exists a positive correlation between measures of initial (administrative) state capacity, development and accountability with program outcomes. Our findings have important implications for both the design and implementation of large-scale public programs across developing countries. © 2022 Elsevier Inc.

Journal of Asian Economics

Measuring performance: Ranking state success over two decades in India

We empirically examine whether violation of hypergamy—which occurs when the wife's economic status equals or exceeds that of her husband's—causally affects domestic violence using microdata from India. Identifying the causal effect of hypergamy violation on domestic violence, however, is challenging due to unmeasured confounding and reverse causality. To overcome these difficulties, we utilize a non-parametric bounds approach. Employing this approach, we find strong evidence that violation of hypergamy leads to a significant increase in domestic violence. Furthermore, we provide suggestive evidence that this result arises because violation of hypergamy is likely to undermine patriarchal beliefs and norms about gender roles, and also because it is likely to increase men's likelihood of using domestic violence as an instrument to sabotage their wives' labour market prospects. Our findings suggest that policies that seek to empower women and promote gender equality might paradoxically increase women's exposure to domestic violence. © 2022 Royal Statistical Society.

Fulltext

Journal of the Royal Statistical Society. Series A: Statistics in Society

Don't cross the line: Bounding the causal effect of hypergamy violation on domestic violence in India

Despite large-scale financial development and banks being the most important credit source globally, banking continues to be plagued by asymmetric information. This uncertainty makes credit risk assessment decisions complex and expensive. In this context, we show how discretionary borrower characteristics, such as the borrower’s network (which can co-insure), help mitigate risk and reduce costs by altering lending decisions. The literature on loan pricing remains focused on objective credit scoring models, while the network literature remains empirical, and borrower based. We fill this void by being the first to theoretically model the lender’s internal decision-making problem when borrowers display discretionary default risk-mitigating attributes such as network strength. We find that the interest rate reduces as the network strength increases. As constraints set in and borrowing becomes more competitive, banks rely even more on network information to parse out better borrowers. Finally, banks substitute monitoring effort with network strength for a more feasible interest rate. This will increase lending, even to borrowers outside the banks’ purview earlier. © 2022 Informa UK Limited, trading as Taylor & Francis Group.

Finance, Accounting and Control

(SME) School of Management and Entrepreneurship

Applied Economics

Mitigating credit risk: modelling and optimizing co-insurance in loan pricing

I study the evolutionary stability of behavioural rules in a bargaining game. Each individual bargains in a pairwise manner with all other individuals over the division of a pie of fixed size by claiming a share for himself; individuals in a pair receive their respective claims if and only if the sum of the claims does not exceed unity. Each individual is associated with a behavioural rule which determines the share he chooses to claim. A behavioural rule is a correspondence that maps from a set of demands that were claimed by individuals in the recent history of the game into a set of shares, and each share in the latter set is chosen by the individual with positive probability. The evolutionary fitness of a behavioural rule is determined by the shares obtained by individuals who follow that particular rule, and fitter behavioural rules are selected over rules that are less fit. A state, i.e. a profile of claims made by the individuals in the population, is defined to be stable (neutrally stable) if the population continues to be comprised only of the incumbent behavioural rules (all incumbent behavioural rules continue to exist) even in the face of an appearance of a mutant behavioural rule. I formalise this in terms of two conditions. Firstly, internal stability requires the incumbent behavioural rules in the population to be equally fit. Secondly, external stability (neutral external stability) requires incumbent behavioural rules to be fitter (to not be less fit) than any mutant behavioural rule. I show that: (i) a necessary condition for stability of a state is that the state must be such that each individual responds by claiming a time-invariant share of the pie, and (ii) the state where all individuals demand half of the pie is the only state that is both internally stable and neutrally externally stable. © 2021 Elsevier B.V.

Journal of Economic Behavior and Organization

Evolutionary stability of behavioural rules in bargaining

Bat-borne pathogens such as Nipah virus, SARS-CoV2, and Ebola have been causing significant losses to the global economy and human lives. In this paper, the role of afforestation and agroforestry in mitigating risk of bat-borne disease transmission to humans is explored using an epidemiological-agroforestry model of land use decision on private farms. Farmers owning land in fragmented forest areas are financially incentivized to grow Gmelina arborea-based forests or intermix them with agricultural crops. This reduces forest fragmentation through creating connectivity between forest patches. While agroforestry may increase the chances of contact between bats and humans, a reduction in forest fragmentation improves the carrying capacity of bats and reduces their risk of migration and roosting near human dwellings. Results indicate that afforestation on private lands or promoting agroforestry can help reduce the risk of virus transmission to humans. A small sum paid under a payment for ecosystem services (PES) scheme would be sufficient to incentivize farmers to convert their farmlands into Gmelina arborea-based agroforestry or forests. In absence of substantial PES incentives, private landowners may delay land conversion when financial benefits generated through agroforestry timber sales carry higher weight in their optimization decisions. Whereas the socially optimal land use option would be to immediately convert farmland in affected areas to agroforestry or forests. Therefore, from a policy perspective, promoting PES-based forestry and agroforestry in fragmented bat habitats can help prevent spread of deadly viruses in the future. © 2021 Elsevier Ltd

Journal of Cleaner Production

Mitigating vector-borne pathogen spread risks through promoting Gmelina arborea-based afforestation and agroforestry on private farms

This paper develops a potential Payment for Ecosystem Services (PES) based agroforestry mechanism for removing nitrate contaminants from a groundwater plume. Under a PES arrangement, farmers are incentivized to grow nitrate removing poplar trees which yield timber revenues along with PES incomes for cleaning a contaminated aquifer. Optimal land use allocation decisions between a traditional agricultural crop and poplar based agroforestry are derived using a dynamic bio-economic model of groundwater nitrate assimilation in trees, where rate of biomass accumulation is influenced by the length of rotation, PES payments and revenues from poplar and wheat. Results, derived through an application of the model to Uttar Pradesh, India, suggest that the rate of nitrate removal from contaminated plumes can get constrained by the total land area dedicated to poplar farming as well as by the rotation length of poplar plantation. Revenues generated through poplar biomass sale play a crucial role in land use decisions in favor of poplar afforestation. In absence of biomass income, afforestation decisions become sensitive to PES price. Findings also indicate that nitrate remediation of highly contaminated aquifers would require large-scale conversion of farmlands and a long-term time frame, for which it is important to make PES-based agroforestry financially attractive to the farmers. © 2020 Elsevier Ltd

Payments for ecosystems services-based agroforestry and groundwater nitrate remediation: The case of Poplar deltoides in Uttar Pradesh, India

In the year 1975, the Indian government initiated the Integrated Child Development Services (ICDS), the largest national programme in the world targeting long-term nutrition and holistic development of children, to be implemented through the Anganwadi Centres (AWC). Combining differences across villages in the year of AWC construction with birth-year of children, we capture the variation in ‘exposure’ to the programme, to estimate the impact of the ICDS exposure through access to AWCs on later life health outcomes of children. Our findings suggest that a 10–13 year old cohort fully exposed to the scheme during first three years of life has higher height (by 2.3 cm) and weight (by 1 kg) as compared to the same cohort, not exposed to the services in initial three years. The Z score of height-for-age (ZHFA) and Z score of weight-for-age ZWFA, although not statistically significant, seem to increase as well. The average impacts seem to be as high as 0.74 cm and 0.33 kg for an extra year of exposure, for measures of height and weight, respectively. Our findings are robust to changing age cohorts and several specifications. The effects seem to be larger among girls and in poor households. © 2020 Informa UK Limited, trading as Taylor &amp; Francis Group.

Journal of Development Studies

Lasting Impact of Early Life Interventions: Evidence from India’s Integrated Child Development Services

In this paper, we study the role of a tax-funded public security system in superior technology adoption by strategic agents and consequent welfare implications of improvement in property security in an environment where rights to private property are completely insecure. We show that if property insecurity leads to technological backwardness (through strategic non-adoption of costlessly available superior technologies), a tax-funded public security that thwarts appropriation (much like a security-guard) can successfully support superior technology adoption by strategic agents in a subgame-perfect Nash equilibrium. The superior technology equilibrium might even be welfare improving over the technological backwardness equilibrium if the available technology spectrum is sufficiently wide. We then study—within the confines of superior technology adoption—whether more secure property is always welfare improving for everyone. We find that better property security—although growth-enhancing—might not be welfare improving for all. Indeed, it is possible that the poor are made worse-off as a consequence of reallocation of resources in response to enhanced property security and not because public authorities are corruptible. In such a situation, we design a budget-balanced tax-linked-transfer scheme where the poor is given a tax-relief at the expense of an additional tax burden on the rich agent. We show that for a below thirtypercent tax relief to the poor, a Pareto-improving movement towards property security can be achieved. © 2021, Editorial Office, Indian Economic Review.