Download From Closed to Open Economy Macroeconomics: The Real Exchange Rate and Capital Inflows India 1981-1994

Revised:
July
CLOSEDTO OPEN ECONOMYMACROECONOMICS:
THE REAL EXCHANGERATE AND CAPITAL INFLOWS
INDIA
1981-1994
FROM
bY
Deepak La1
University
of
California,
Los Angeles
and
D.K.
Joshi
NCAER, New Delhi
of Economics
UCLA Dept.
Working
Paper #715
July 1994
Address
for correspondence:
2 Erskine
Hill
London NW11 6HB, ENGLAND
Tel/Fax:
081-458-3713
NCAER
Parisila
Bhawan
ll-I.P.
Estate
New Delhi-110
002, INDIA
Tel:
331-7860
Fax: 91-ll332-7164
1994
INTRODUCTION
With
Manmohan
ent
the
opening
of
Singh
reforms,
macroeconomic
analytical
framework
framework
that
Pohit
e.g.,
integrates
the
framework
(see
apply
has
real
and
variables
Salter,
since
relevant
1991,
see a large
but
monetary
explain
identify
the
macroeconomic
increase
in
capital
framework
in
to
to
useful
aspects
to
India
discussions
for
a
small
(Ch.
the
key
balance
in
is
India
the
(see
so-called
economy
which
equilibrium
This
paper
attempts
of
major
economic
evolution
policy
"structuralist"
general
17)).
Rao-
in a differ-
open
a simple
La1
Narasimha
economy
policy
model
Harberger,
the
to be examined
closed
very
Corden,
and
in determining
needs
characterized
payments
framework
following
essentially
A simple
of
economy
policy
the
hitherto
balance
this
Indian
from
and Bhide).
"Australian"
to
the
instruments
in an economy
which
which
are
is likely
to
inflows.
I.
The Australian
presents
simple
a geometric
algebraic
traded
prices
is
set
"small"
and
traded
are
Pan)
and
nontraded
these
in
model,
India,
so Fig.
whilst
aggregates
(NT).
1 and its
Appendix
III
into
two
effect
demand
It
is
useful
those
Assuming
two tradable
goods,
former
assumed
terms
(supply)
the
(X).
--
its
in
between
commodities
The
prices
changes
prices.
commodities
for
cannot
Excess
equivalent
exportables
the
model
international
and hence
international
of
the
by
subsidies.
through
outline
known,
(T)
are
may be unfamiliar
note
contains
a
formulation.
As is well
--
model
of
for
trade
to
which
are
trade
these
and fixed
--
at,
tariff
domestic
country
and any trade
is
amongst
currency
the
and
CM)
mediated
group
those
prices
cum subsidy
taxes
constant
ex hvpothesi,
importables
foreign
groups
as the
commodities
differentiate
constant
whose
to be given
account
are
goods
large
(p
rates
of
which
*x
(t,s),
and
they
can be aggregated
domestic
the
currency
domestic
currency
price
of
rate
commodity
the
of
and
the
that
one
good
composite
nontradable,
but
goods
by prohibitive
price
of
the
This
(l-b):
exchange
to
rate
traded
tradable
goods
good
the
key
(er),
real
Economic
Survey),
nominal
the
composite
in
the
which
composite
not
have
been
only
tradable
converted
are
into
nontraded
The domestic
currency
the
Australian
model
of the
domestic
in
which
goods
demand
ratio
cum
(1)
by domestic
as the
foreign
tariff
be set
price
(e-
- e*p*T(l+t)
comprises
will
rate
the
(pN)
N
= P /[e*p
rate
*T
to
(usually
(ep>
which
exchange
price
needs
and supply.
--
prices
the
real
of nontraded
is based
rate
levels
(pd,
f or
Pan).
price
(pd)
of nontraded
goods
(pN)
be
with
(7-j
distinguished
in
on purchasing
(e)
The domestic
level
(l+t>l
reported
*T
(l-a),
currency),
quotas.
d
ep -P/~.P
of
exchange
import
defined
exchange
rate
foreign
nominal
whose
(T),
goods:
exchange
the
tradables
or binding
relative
er = pN/pT
This
and
+ (l-b)p*m(l+t)]
tariffs
yields
(P*T)
importables
good
nontraded
foreign
exportables
nontraded
also
of
of
PT = e[b.p*x(l+s)
The
labelled
by the
unit
share
of
good
determined
composite
So if
b,
is
value
(t).
is
a composite
(PT)
currency
price
subsidy
into
the
from
official
power
difference
the
real
effective
publications
parity
e.g.,
the
(PPP) and corrects
between
the
domestic
and
so:
(3)
is
a weighted
a weight
say of
average
of
"a" , and of
the
domestic
traded
goods
prices
(pT)
hence:
Pd - a 0 pN + (l-a)pT
(4)
4
From
(1)
to
(4)
we therefore
have,
ep = (l+t)[aeer+(l-a)]
The
PPP real
effective
real
exchange
"law
of
will
changes
exchange
rate
the
changes
with
respect
therefore
the
in
real
the
to
d = (l+t);
in
tariffs
(6)
will
the
PPP real
for
movements
will
the
index
(WPI).
series
is
series
which
series
are
It
the
real
the
ence
given
in
nontraded
good
final
that
the
and
the
(t=O).
Nor
be surrogates
for
differentiation
of
(5)
of
in
consumption
real
the
rate
Appendix
the
1 for
I.
nominal
official
rate
(er
from
(2)
a cut
but
from
> O),
rate
(ep < 0).
therefore
be taken
the
real
exchange
series
Movements
in
to be proxies
The
and
period
real
exchange
on the
expenditure
data
rate
from
on these
Fig.
price
exchange
rate
exchange
rate
The
three
2.
some important
services,
exclusion
National
other
our
1993-94.
indices,
the
India,
wholesale
effective
to
include
for
real
in
1981-82
this
the
resulting
and miscellaneous
To see if
rate
from
statistics
the WPI does not
composite.
grafting
cannot
Thus
rate.
housing
computed
with
logarithmic
exchange
rate
from
Table
transport,
our
no tariffs
necessarily
exchange
exchange
with
available
viz.,
to
done
along
be noted
experimented
private
are
effective
a real
is
real
available
to derive
charted
the
exchange
are
This
are
k = er[aoer+(l-a)].
exchange
should
services
of
is
rate
(a=O)
goods
to
(6)
raise
PPP real
As no estimates
task
there
For
(l/x)(dx/dn);
effective
first
if
be equal
d
(d < 0)
in
only
yields:
x'=
lower
and
rate.
thus
no nontraded
exchange
exchange
ep=koer+
where
are
holds,
will
(ep>
there
effective
real
time
rate
if
(er> ,
one price"
in
(5)
nontraded
which
makes
based
on
Income
nontraded
are
part
much differthe
WPI,
accounts
goods
we
for
(ONT).
5
This
was done
as
follows.
these
three
nontraded
Table
l(A).
This
give
us
share
in
our
goods
composite
final
the
included
these
goods
NT,
in
consumption
that
ONT and
share
and
the
of
would
in
(l-a
2
series
for
with
these
also
the
the
a2,
the
other
have
(NTS)
and of
the
nontraded
goods
the
"s" ,
this
the
series
follows.
other
NTS series
(NT)
nontraded
is
the
the
and
"s" I
WPI if
by
is
to
goods
weights
be given
in
Given
data
in
for
ONT series
respective
WPI would
From
as the
as
accounts
been
deflator
goods
national
"corrected"
/l+s)T.
implicit
nontraded
series
WPI is
from
the
and is shown
goods
data
T series
(s/l+s)ONT,
combined
nontraded
goods
assuming
the
was constructed,
was then
of nontraded
the
First
it
had
of
the
(a2/l+s)NT,
readily
obtained
as:
NTS = [(a,/s)/(a,/s)
The value
WPI (see
following
s
from
the
Appendix)
is
0.74
till
weights
for
national
1991-92,
combining
the
+ 0.29
From
1992-93:
NTS = 0.68NT
+ 0.320NT.
labelled
ers.
l(A),
and
2(A).
As
is
Hence
our
derivation
be fairly
it
is
Its
charted
apparent
computed
index,
along
there
of
the
from
this
thereafter.
This
NTS and the
changes
in
with
er
(based
not
much
real
a2
from
the
gives
the
ONT
and
is
and for
NT and ONT series.
NTS = 0.71NT
rate
is 0.3,
and 0.64
1991-91:
exchange
+ [(s/l+s)/(a2/s)+(s/l+s)]ONT
accounts
Till
The real
is
of
+ (s/l+s)]NT
exchange
its
values
solely
difference
rate
traded
are
based
given
on the
between
on the
good
WPI)
the
two
WPI is
series
in
in
Table
Fig.
series.
likely
to
robust.
II.
The equilibrium
of the
economic
system
value
which
of the
real
is determined
exchange
rate
by real
is an endogenous
economic
fundamentals,
variable
like
6
the
pattern
of
growth,
this
the
tions
from
fiscal
policy
cannot
persist,
as they
return
the
to
(see
Edwards).
is
this
initially
in
in
PP.
At
will
its
the
internal
and
the
and domestic
OEOT
in
terms
of
slope
of
the
increased
common
their
expenditure
have
to
point
shift
vertical
inflow
goods
being
the
goods
must
have
to
right
between
to the
capital
will
have
and the
necessarilv
capital
been
model
in
at
A,
equal
A.
capital
the
rise,
where
not
will
changed
the
production
highest
possibility
and nontraded
exchange
rate
output
of
is
goods
(OYOT =
given
by the
as
expand.
As part
of the
the
and
demand
the
the
trade
deficit,
way the
transfer
resulting
deficit
are
of
the
increased
There
and
production
The
The
production
the
In this
on nontraded
deficit.
new equilibrium,
absorption
BC.
be spent
a trade
Moreover
trade
the
they
The economy
expenditure
as the
effectuated.
accompany
1.
domestic
will
through
two comprising
accompanying
Fig.
but
which
have
traded
inflow
and
above
inflow.
the
possible
in the
vertically
--
and
erl.
appreciation,
of
to
The real
met
be in balance
lie
the
makes
on traded
exchange
of
both
monetary
effects
fundamentals
to
Devia-
misalignment
the
for
is a sustainable
must
equal
must
A,
price
distance
appreciation,
at
relative
exactly
They
tangent
domestic
if
and supply
good).
by
inflows.
countervailing
balance
is
capital
rate
tangential
output
this
to
will
external
is
tradable
there
be a real
nontraded
point
the
expenditure
goods,
depiction
demand
caused
exchange
level
curve
and net
be
in motion
equilibrium
balance,
Now suppose
real
set
consider
A
can
labelled
indifference
curve
of demand
level
usually
rate
attainable
is
equilibrium
--
To see
pattern
consumption
supply
equilibrium
capital
for
new consumption
point,
real
will
with
which
of
the
exchange
the
will
be
foreign
rate
phenomenon.
inflow.
But
suppose
domestic
than
that
a further
the
"excess"
price
will
this
leads
of
at
supply
of
nontraded
ables
which
will
equal
to the
excess
(both
measured
equal
inflow
cured
exchange
to
as before
are
capital
C
production
the
what
fundamentals
balance.
depreciate
(and
monetary
in
vertical
and/or
is
It
deficit
In
slope
difference
the
slope
C,
and
demand
demand
for
which
is
and
trad-
exactly
output
OYT
expendi-
because
the
to
the
to unlimited
(BE)
will
the
process,
level
have
be
real
to
2'
a point
the
on the
the
inflow
to
the
er
between
capital
that
the
the
access
of
of
relative
corresponds
misaligned
by the
equals
at
sustainable
not.
part
and excess
Without
its
is
domestic
deficit
lead
PP
consump-
(and
hence
enable
us to
BC.
rate
an open
hence
from
CE,
over
GTE+).
the
of
exchange
extent
trade
given
just
is
policy.
drawn)
where
deficit)
OE$
trade
ETE+ = BE
expenditure
point
real
of
this
by
excess
of
(BC - YT ET>
this
is
is
will
given
and hence
deficit
expenditure
of
C,
that
Assume
Production
There
a trade
it,
excess
1.
rate
so that
whose
equilibrium.
exchange
Fig.
and monetary
((not
trade
in
inflow
finance
and
real
goods,
run
above
Part
er*
will
the
in
into
fiscal
to
A
a new short
The excess
loose
rate.
on nontraded
vertically
over
the
exchange
spent
lines
goods
it.
real
be
of domestic
level
equilibrium
the
of
to
and
countervailing
For
have
tion
the
demand
rate
between
to
excess
the
curve
judge
This
reducing
equilibrium
Using
inflow.
is
tradables).
reserves
by
capital
which
in
from
foreign
by the
ET EN
spill
finances
injection
an amount
establishment
E,
demand
'by
to establish
and
aggregate
output
will
YT YN
expands
domestic
expenditure
the
addition
than
of
to rise
in
greater
appreciation
to
consumption
is
allowed
have
the
ture
government
expenditure
larger
to
the
are
as a diagnostic
economy,
unavoidable)
fiscal
policy
its
tool,
movements
will
represent
or misalignment
corrections).
thus
changes
(which
require
in
8
Secondly,
depend
to
the
constant,
trade
taxes
the
in the
II a II
are
As we have
by
seen
effects
of
the
changes
in
taxes
(t> *
excess
demand
the
real
trade
of
the
For,
is
(t).
tradables
rate
can
nominal
from
(4)
without
the
in
cannot
in
control
from
in
the
there
pressures
requisite
crucial
er.
er
nominal
monetary
It
domestic
exchange
rate
in net
and/or
the
relative
growth
nontraded
goods
Fig.
1
production
--
outputs
that
the
of
induce.
effects
the
changes
of
(for
profitability
prices
of
is
static
producing
Given
will
the
and fiscal
exchange
determinant
are
come
about
rate
and
assuming
can however
on the
is an increase
(t' < 0),
monetary
real
Thirdly,
in
taxes
any undue
(P*T)
that
(7)
change
suppose
trade
from
+b+t
fiscal
capital
rate
changes
the
(or
the
real
shifts
case)
the unavoidable
trade
with
We know from
the
are
exchange
in
on the
--
two
which
and/or
inflows,
From,
rate
level
Thus
(Pd)
(7)
(e'<
will
policy
no
Fig.
unless
0) or
go up,
even
reactions
to
unavoidable
will
be
a
process.
levels
the
also
expansion.
inflationary
in
price
level
(e)
policy.
domestic
neutralize
price
1, that
the real
exchange
rate must appreciate
(er > 0 ).
there
is an equivalent
appreciation
of the nominal
exchange
reduction
with
For
exchange
(2 ) and
will
followed
taxes
exchange
goods,
of them.
policy
This
we have:
changes
Thus
and
prices
of nontraded
required
countervailing
process.
on what
(e)
currency
price
inflationary
above
rate
government
the
(2)
foreign
constant
.d
P = Br
the
and
or some combination
and
the
(1)
exchange
requisite
changes
influence
from
that
the
through
*T
also
nominal
assuming
(21,
will
as can be seen
respect
P
it
the
changes
be unavoidable.
static
production
through
goods
rate
the
these
in the
will
case)
determine
the
of
and
traded
possibility
relative
curve
changes
changes
in
their
real
exchange
in
PP
the
relative
rate,
these
III.
We next
seek
to
1981-84
in
terms
of
version
of
the
model
model's
central
supported
explain
the
the
Australian
in
Appendix
assumption
by econometric
changes
in
model.
Attempts
III
that
were
money
analyses
the
real
foiled
because
prices
Indian
rate
to estimate
determines
of past
exchange
data
the
the
algebraic
monetary
does
(see
between
not
e.g.,
sub-
seem to be
Balakrishnan;
Nag & Upadhyay).
So
instead
we
represented
by Fig.
the
in
the
1,
it
is
to
net
in
changes
Fig.
related
evident
that
(M-X)
= YTET,
trade
deficit
- K.
Normalizing
then
the
share
percentage
that
both
data
for
the
1990,
(and
(M-X)
capital
of
"excess"
the
the
real
standard
national
the
data
any
net
capital
deficit
and
the
inflows
in
GDP
in
GDP
variables
would
given
BC.
by the
inflow
exchange
have
positive
expenditure
as the
is
>
and
with
signs.
is
deficit
between
that
(er)
it
trade
the
ED = (M-X)
as ratios
(DED = A(ED/Y)
model
identities)
rate
A(V)
explain
be positively
difference
(K) ,
model
simple
domestic
But
the
could
will
accounting
capital
(DKY -
it
From the
"excess"
inflow
real
of
see if
(er>
income
(ED)
in
to
1981-94.
ED = EB = YIE+demand
version
exchange
and
changes
demand
the
between
W-1
trade
estimated
and
it
to
inflows
and
simplified
of
GDP, we
by changes
changes
the
in
in
the
expectation
Table
2 gives
the
variables.
correct
1991,
that
excess
the
of
Inspection
the
rate
and that
to explain
significant,
data.
1,
we have
these
fit
exchange
apparent
independent
Whilst
had
real
K = BC,
sought
to
1 econometrically
capital
From Fig.
(ED).
sought
equation
signs
on the
the
overall
of the
data
was anomalous.
for
the whole
independent
variables,
regression
revealed
Estimating
of the
the
represented
that
for
the
sample
the
1981-94,
coefficients
a very
three
relationship
period
bad
"crisis"
without
were
not
to
the
fit
years
1989,
these
years
10
yielded
the
following
kr
[RI1
regression
=
0.02
(0.008)
obs = 9;
(figures
The results
using
[R21
the
+
equation:
3.07
(1.35)
DKY +
2.08
(2.25)
DED
R2 = 0.39
in brackets
; R2 adj - 0.19;
are t ratios).
ers
for
series
the
real
DWS = 1.75;
exchange
rate
RHO = 0.53
series
were:
6rs = (834 + (?:t6jDy + &i8)DED
obs - 9;
There
is
not
exchange
much
rate
R
= 0.39;
difference
from
the
WPI
R
adj
= 0.19;
the
results.
between
(er)
as our
DWS - 1.75;
RHO = 0.075
So we shall
"correct"
er
in
use
the
the
rest
real
of
the
paper.
Fig.
exchange
points
3,
charts
rate
(er).
fairly
at
robustness
through
in
From
changes
the
in
observed
The
well.
significant
outlined
the
estimated
Moreover
the
5% level
an indirect
Appendix
the
predicted
equation
though
seems
the
(whereas
to
on
on
DED
based
in
pick-up
coefficient
that
derivation
,changes
is>,
the
is
not
check
its
of the
(A.12)
we can
the
exchange
rate
derive
the
and various
following
model
parameters
relationship
between
(see Appendix
III
for
derivation).
Br - pn = [(a3.Y/N)/(nd+nS(l-a2)]d(K/Y)
where
real
turning
DKY
we can
on the parameters
the
III.
equation
real
and
a3
- proportion
N/Y
- Nd/Y
of
foreign
- NS/Y = share
capital
of
(A12b)
inflow
nontraded
spent
goods
in
output.
nd
- elasticity
of
demand
for
nontraded
goods.
ns
= elasticity
of
supply
for
nontraded
goods.
on nontraded
domestic
goods.
consumption/
11
= marginal
a2
From
an
propensity
estimated
coefficient
to
consume
equation
import
in GDP is 0.10.
nontraded
for
the
The estimated
goods.
period
equation
1981-94,
was,
with
the
import
I (imports)
and
Y (GDP):
I = -3507
Assuming
that
yields
(2.04)
0.10
(19.5)
foreign
capital
for
a guesstimate
for
The marginal
equal
to
1992-93
the
share
is
1991-92,
d
the
goods)
but
two
we have
lower
and
from
lies
composite
substitutes
the
of
of
nothing
between
0.5
the
coefficient
in
the
nontraded
from
the
for
WPI.
RHO = 0.059
is higher,
goods,
a2
Till
values
nothing
say 0.25,
is
taken
1991-92
to
be
a2 = 0.74;
to
these
d
to
1992-93,
of
to
Y/N
goods
goods)
a2
(the
go on to
them
in
total
output,
= l/O.64
will
so
till
- 1.56.
be given
x elasticity
by
of
substitution
goods.
argues
n
goods
nontraded
traded
is
estimates,
We have
Applying
goods
commodities
these
1992-93
on traded
of nontraded
and
between
of
spend
demand
Harberger
large
good
of
have
substitution.
to
- 1.35;
nontraded
We already
DWS - 1.597;
propensity
0.75.
of
in expenditure
between
this
of
share
= l/O.74
= (l-share
- 0.989;
a2 - 0.64.
The elasticity
n
R2
inflows
of nontraded
also
Y/N
Y
a3
propensity
and after
a2
+
share
estimate
the
that
the
elasticity
such
as
traded
likely
yields
to
elasticity
substitution
nontraded
between
before
of nontraded
requisite
of
and
lie
a value
in expenditure
0.5
between
goods
and
1991-92
of
of
1.0.
without
Taking
nd = 0.13,
- 0.18.
go on to
provide
an estimate
of
ns.
We assume
it
range
of estimates
1.
values
(g)
in
of
(A12b),
DKY,
we get
as the
the
following
determinant
of
changes
in
the
real
12
exchange
rate:
er = g
l
Values
of
n
Till
1992-93
have
the
2.2
on our
is
equivalent
the
It
ratio
to
of the
Table
PSBR
to
(M-X)
relationship
to
improving
years
Rajiv
Gandhi
with
the
rade
deficit.
real
exchange
were
steady
in
the
this
reduced
range,
form
ran
for
and we
estimate
of
had
any
whole
becomes
beginning
of
there
the
is
thence
changes
economy
growing
on the
sample
in
and
undertakings.
changes
ratio
in
of the
the
trade
was no significant
was a steadily
after
1988)
after
we find
budget
deficit,
between
the
level.
the
outlays
there
what
price
borrowing
total
sector
we seek
period,
up of
link
sector
there
opening
the
deficit
between
Whilst
significant
So essentially
of
and
the
the
gap between
and public
1981-94.
deficit
public
regressions
and the
the
of
the
as the
We then
fiscal
termed
governments
(which
opening
Hence
within
The measure
is
U.K.
obtained
two for
government.
rate,
the
is
4.
the
the
lies
government's
demand.
GDP (DPSBR)
relationship
These
"excess"
GDP (DMXY)
between
RI
of
the
and state
in
in
applicability
whether
This
central
reported
deficit
the
of what
the
estimated
India.
of
(PSBR).
of
is
DKY
for
measure
requirement
receipts
of
we examined
effect
=1
3.3
model
Finally,
n
s
2.6
some support
Australian
when
3.9
The coefficient
thus
g
= 0.5
S
1991-92
After
DKY
the
economy
(see
Table
spills
budget
deficit
1985-86.
under
5)
over
is
the
that
into
a
and the
13
IV.
We can now briefly
model
for
the
relevant
of
three
fiscal
and
monetary
of
of
accompanying
the
to
In
give
a small
devaluation
currency
prices
nontraded
our
1993-94,
of
exchange
only
flowing
real
rate
required
about
exchange
It
goods
was offset
from
rate
of
in
Rl,
9%.
should
major
way of preventing
have
However,
in
be noted
the
large
by
by nearly
still
substantial
exchange
continuing
but
rate
6% (the
rise
in
had
to
result
the
occurred
of
foreign
reduction
adjustment
the
14%,
inflows,
and
a
large
capital
rate
their
the
capital
required
this
in
net
with
a rise
which
given
exchange
rate
positive
in
the
foreign
rise
currency
a rise
implicit
appreciation
inflows,
a real
reduction
Given
required
that
the
was required.
by only
in
by a substantial
rise
so
that
rose
the
rate
increase
would
appreciation
about
by
real
of
9%.
appreciation.
the
goods
exchange
but
in net
so the
exchange
offset
over
4.5%.
a modest
largely
traded
was a large
estimate
appreciation
nominal
prices
there
elasticity
the
real
decline
inflows
offset
rose
depreciation
demand,
of
traded
rate
the
both,
Given
prices
of
effects
in
was partially
goods
our
the
net
a decline
by a smaller
small
"excess"
requisite
goods
exchange
the
from
values
are
was entailed.
which
rise
the
from
was
rate
traded
to
prices
of
the
taxes,
real
in
there
emerges
variables
demand
rate,
was a further
as the
of
1991-92
which
6 gives
(exogenous)
exchange
small
Table
"excess"
had
story
reforms.
exchange
prices
increase
But
real
in trade
there
taxes),
the
In
nominal
the
1992-93
appreciate.
macroeconomic
overall
the
goods
a substantial
In
the
reduction
and so nontraded
amount
since
policy.
depreciation
devaluation
the
The two independent
capital
and
small
in
years
variables.
foreign
trade
outline
in
impact
"excess"
in
nontraded
deflation
of
the
real
real
which
goods
the
goods
in
the
demand,
traded
values,
on
1993-94,
exchange
prices
requisite
prices
of
was the
rate
that
14
would
otherwise
transfer
of
foreign
embodied
effects?
governed
by
weather,
the
in
exchange
real
the
terms
we have
recent
(and
sectors
expect
the
would
of
tradable
has
in
thinking
absorbing
Indian
that
of
the
economy.
of
the
capital
the
the
should
be
the
large
full
rise
of
from
in
goods
sectors,
but
1992-93
the
data
would
(as
it
in
(Table
Table
of
1993-94
divided
As we would
7.
would
depress
goods
sectors
should
the
the
tradables
roughly
in
and
As
into
nontraded
is)
industrial
Survey
goods
shown,
1991-92,
manufac-
sectors.
we have
as shown
relative
traded
Economic
category),
changes
in
and
capital
and deflation
rate
reflected
the
output
price
industrial
many
of
relative
of changes
various
converted
depreciation
agricultural
of nontraded
However,
April-Ott
growth
of
growth
the basic
the
that
a classification
tradable
be reflect-
demand
be expected
boost
of
to be higher
goods.
hopefully
been
about
open,
effects
appreciation
goods
Enough
deployment
of
nontraded
increasingly
was
Assuming
and nontradable
exchange
for
have
rates
in
exchange
than
of
has
By contrast,
that
rates
growth
into
Tradable
latter
on
those
real
of preventing
counterpart
movements
categories.
also
1992-93.
model
these
growth
boom.
the
or
we do not
of
real
rates
rate
liberalization
possibly
these
form
the
outputs
data
trade
was a means
whose
output
in
6.4)
effect
reserves.
Unfortunately
output
the
inflows,
the
in
tures.
in
relative
movements
ing
capital
the
of
still
the
This
exchange
What
is
occurred.
to both
the
model
foreign
may
variables
purported
wall
of
past
inflows.
to
show
macroeconomic
policy
In the
said
to
utility
policy
trade
also
the
in
of
usefully
maintain
economy
which
is
It
is with
respect
to
money
the
economy
absorbed
This
rose
to
employed
to
macroeconomic
foreign
about
which
Australian
an
and capital.
be
the
is
balance
seeking
less
than
2%,
in
consider
a home
l/2%
the
the
whilst
in
the
of GDP in
the
mid-1980s.
In
15
1993-94,
the
inflows
double
over
fiscal
policy
is
absorb
these
inflows
whether
this
prices
that
or
and
in
e)
and/or
the
requires
those
in
exports,
relative
tariffs
on importables,
of
net
through
traded
of
trade
of
this
For
of
also
increase
will
The
an
the
well
and
appreciation
(2)
makes
in
nontraded
to
clear
as
is
clear
rate
economy
seeking
nominal
is
goods
exchange
(fall
to
exchange
this
end.
However,
be
reduced
by
the
could
monetary
latter
nominal
taxes.
can
rate
a rise
the
tradables
and
do,
as
goods.
in achieving
price
they
choice
an appreciation
may seem to be counterproductive
the
about
They
GDP.
exchange
The only
an appreciation
reduction
clear,
If
real
comes
in
4% of
future.
unavoidable.
a fall
of
be about
a substantial
is
growth
to
near
appreciation
(7)
the
in
neutral,
through
(2)
estimated
level
real
from
promote
are
rate
as (1)
reducing
relative
makes
import
profitability
of
exporting.
Moreover,
India
tradables
through
exports.
Nearly
QR's
and
requisite
fall
in
exchange
then
equations)
done
inflows
over
consumer
goods
goods
by
prices
maintaining
the
materialize.
last
of
are
average
exchange
months
The required
relative
induced
capital
inflows,
with
is
the
of
baggage
required
goods
the
the
required
nominal
into
traded
(a,,
and
multiplier
rate
by
an unchanged
nontraded
on nontraded
of
By removing
the
as
these
reducing
to
on them
even
price
profitability
close
by
the
at present.
tariff
tariff
goods
a3
effect
of
in
any
rate.
a relatively
few
the
can be obtained
thereby
reducing
non-tradable
expenditure
real
painlessly
improving
by converting
fall,
on the
way
a uniform
movements
domestic
will
say
the
Furthermore
inflow
However,
whilst
exchange
of
other
route
reducing
rate.
our
one
them
tradable
proportion
has
all
real
the
capital
this
replacing
(100%) I and
has
constant
will
real
not
nominal
be viable
exchange
rate
exchange
if
the
appreciation
rate
as India
large
capital
will
fuel
16
inflation
in nontraded
policy
remain
therefore
likely
is
to
foreign
a vital
receive.
banks
is better
than
risk,
as with
direct
be easily
investment
implicit
or
be
crisis
nominal
exchange
rate
making
currency
risks
moreover
by
choke
depreciating
if
government
until
has
to have
should
floating
their
investments.
in
turn
etc.,
equity
given
an
can
suffer
a
By contrast,
if
it
both
the
can mediate
the
these
investment
A fully
and
floating
and prevent
bullish
which
are
then
by appreciating,
sentiments
will
the
attained
a fully
effects
which
floating)
of
investment
latter,
country
averse.
share
inflows
market
investors
investors
with
these
If
turn
form
holding.
the
the
factories
relied
likely
some of
the
past
equity
actual
then
on direct
the
most
most
rate
divestments
or
bearish
about
is
reformed,
the
prospects.
However,
the
foreign
of
guarantee,
is
relied
in
unlike
lending.
(ideally
regime
India
foreign
bears
of
sentiments
is flexible
of
However,
as bank
rate
the
form
lender
have
which
rates,
consists
exchange
that
which
countries
as the
market
associated
will
country's
if
the
Singapore
the
and monetary
future.
inflows
interest
as it
of fiscal
nominal
capital
investment.
exchange
exchange
by
and
borrowing
stance
the
American
as volatile
explicit
of
to be in
foreign
the
for
type
likely
bank
foreign
flows
the
liquidated,
can
matter
China
is
if
an appropriate
at variable
inflow
This
cannot
of
or many Latin
from
capital
by
Unlike
investment,
foreign
even
policy
accentuated
on borrowing
prices,
The choice
neutral.
becomes
This
goods
exchange
In
price
accompany
a reserve
rate.
in
rate.
domestic
necessarily
consider
financial
a balance
floating
on the
domestic
target
the
system
public
that
case,
level
of
large
((say
finances,
it
as a second
the
capital
a year
real
inflows,
of
maybe
best,
exchange
to
the
in
the
imprudent
rate
perhaps
imports)
and
mitigate
changes
government
managing
its
17
Finally,
exogenous,
though
they
interest
rate
investments).
fully
policy,
managing
integrated
likely
this
paper,
to be determined
(as
Once financial
liberalization
the
rate
macroeconomy.
global
policy
well
as
economy,
will
inflows
capital
differentials
into
interest
the
are
in
become
have
by domestic
the
rates
is completed,
an
with
taken
and international
different
along
been
and the
exchange
important
of
policy
rate
as
real
return
on
economy
is
and fiscal
variable
in
BIBLIOGRAPHY
Balakrishnan,
P.:
Pricinp
and
Inflation
in
India,
Oxford
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Press,
1991.
Corden,
W.M.:
Press,
Inflation,
Oxford,
Edwards,
S.:
Theory
Harberger,
and Monetary
Evidence
Economics,
vo1.29,
A.C.:
Lal,
D.:
D.
in
a World
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Edward
A.K.
of
Elgar,
Aldershot,
:
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25,
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and
A.
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vol.
(eds.),
121,
Economic
1982.
and
of
Stabilization,
Meltzer
North-Holland,
Economists
Framework
April
Reserve
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Inflation:
no.4,
the
Sri
1985;
20th
Lanka
reprinted
Century
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1993.
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Various
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1989;
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Amsterdam:
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1977.
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Lal:
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Macro
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Salter,
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Econometric
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mimeo,
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Conference
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of
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226-38.
and
19
TABLE 1
Comparison of REER, NEER and eR
NEER
REER
eR
NEER
REER
eR
Year
1981-82 = 100
1981-82
1982-83
1983-84
100.0
101.2
101.7
1984-85
1985-86
1986-87
1987-88
98.0
100.0
96.8
99.8
96.5
95.1
82.9
78.4
73.0
69.7
64.9
50.7
48.3
1988-89
1989-90
1990-91
1991-92
1992-93
1993-94
1981-82 - 100
100.0
91.9
86.4
1.18
0.49
-3.61
-3.17
3.05
-3.26
94.1
86.4
81.7
77.0
75.1
72.3
91.3
90.3
89.2
83.9
84.7
83.2
-2.93
-12.83
-5.46
-6.90
-4.51
-6.87
-2.55
-8.18
-5.39
-5.79
-2.48
-3.62
61.4
63.4
83.2
86.4
87.8
-21.88
15.08
3.18
96.4
-4.78
-3.61
-4.66
-6.00
5.71
-1.07
-1.24
-5.92
0.95
-1.79
-0.05
3.88
1.60
SOURCE:RBI
NEER : NOMINAL EFFECTIVE EXCHANGERATE
REER : REAL EFFECTIVE EXCHANGERATE
eR
:
REAL EXCHANGERATE (DERIVED AS A RATIO OF WPI IN NONTRADEDTO TRADED
GOODS)
20
TABLE 1A
Inflation
and Real Exchange Rate (eRs) in Traded and Nontraded Goods
WPI
Real
Exchange
Rate(eRs)
% Change
INDEX
YEAR
(1)
TRADED
1981-82
100.00
1982-83
1983-84
1984-85
1985-86
1986-87
107.37
118.95
131.30
132.70
141.26
1987-88
153.92
1988-89
1989-90
1990-91
1991-92
1992-93
1993-94
171.29
182.62
203.57
231.93
246.40
264.93
(2)
NTS
(3)
ONT
(4)
100.00
105.39
112.70
118.81
126.16
100.00
133.49
TRADED
(5)
109.39
118.60
126.54
134.88
143.71
7.37
10.79
10.38
1.07
6.45
NTS
(6)
5.39
6.93
5.43
6.18
ONT
(7)
6-5
(8)
(9)
9.49
8.42
6.69
6.60
6.54
-1.98
-3.85
-4.96
5.12
-0.65
100.00
98.02
94.25
89.57
94.16
93.55
3.10
-2.60
-4.26
91.12
87.24
1.82
-1.40
-1.08
3.83
1.76
88.83
87.58
86.64
89.96
91.54
141.98
151.95
164.77
181.37
204.68
225.30
148.16
8.96
5.81
6.36
162.07
179.43
197.96
218.99
241.53
11.29
6.61
11.47
13.93
6.24
7.03
8.43
10.07
12.86
10.07
9.39
10.71
10.33
10.62
10.29
246.20
265.69
7.52
9.28
10.00
NTS = WPI IN NONTRADEDGOODS(INCLUDING SERVICES)
eRS = REAL EXCHANGERATE (AFTER INCORPORATINGSERVICES IN NONTRADEDGOODS)
21
TABLE 2
Data For Estimating
Excess Demand
RS CRORES
M-X
1982-83
1983-84
1984-85
1985-86
5490.0
6060.0
5390.0
8763.0
159395
186723
208533
233799
1986-87
1987-88
1988-89
1989-90
1990-91
1991-92
7644.0
6570.0
8003.0
7670.0
10645.0
3810.0
260030
294851
353517
405827
472660
541888
1992-93
1993-94
9687.0
-511.5
627913
706402
M-X : IMPORTS-EXPORTS
Y
: GDP (AT CURRENTPRICES)
K
: NET CAPITAL INFLOW
ED : EXCESS DEMAND- (M-X-K)/Y
eR
: REAL EXCHANGERATE
K
AED
837.6
2220.5
3441.9
-0.78
-0.86
-1.12
0.69
0.1767
0.6637
0.4613
0.4748
7607.7
11650.6
11611.7
12895.3
12061.3
12642.5
-0.99
-0.99
-0.68
0.06
0.50
-1.05
1.05
0.1780
0.2769
0.7155
-0.4344
-0.1330
-0.5024
4.93
-0.98
-1.12
-5.28
0.80
-1.51
-0.04
-0.2124
3.23
25120.0
-3.16
1.5426
1.38
4968.9
5989.3
x 100
K/Y
eR
-3.61
-4.49
-5.51
22
TABLE 3
Inflation
In Traded and Nontraded Goods
INFLATION
Year
Traded
Nontraded
Overall
1982-83
7.37
3.76
4.9
1983-84
10.79
6.29
7.5
1084-85
10.38
4.87
6.5
1985-86
1.07
6.00
4.4
1986-87
6.45
5.47
5.8
1987-88
8.96
7.84
8.2
1988-89
11.29
6.00
7.5
1989-90
6.61
7.41
7.4
1990-91
11.47
9.96
10.3
1991-92
13.93
13.89
13.7
1992-93
6.24
9.46
10.2
1993-94
7.52
8.90
8.4
23
TABLE 4
TITLE???
Year
(1)
A(X-M)/Y
(2)
40
(3)
(2-3)
AED
(4)
1980-81
-0.41
0.18
0.66
0.46
-0.31
-0.78
-0.86
-1.12
0.47
0.18
0.28
0.72
-0.43
0.69
-0.99
-0.99
-0.68
0.06
12282
13313
16952
19840
25728
27188
35967
38684
44334
54992
-1.55
-0.13
-0.50
0.50
-1.05
0.84
-1.62
-0.21
1.54
1.05
-3.16
1981-82
1982-83
1983-84
1984-85
1985-86
1986-87
1987-88
1988-89
1989-90
1990-91
-0.72
-0.61
-0.20
-0.66
1.16
-0.81
-0.71
0.04
-0.37
0.36
1991-92
1992-93
1993-94
PSBR
(5)
Current
GDP
(6)
_IPSBR/GDPl
(7)
122427
143216
159395
186723
208533
0.1003
0.0930
0.1064
0.1063
0.1234
0.1163
65941
65536
233799
260030
294851
353517
405827
472660
541888
0.1395
0.1209
76529
79519
627913
706402
0.1219
0.1126
PSBR = TOTAL OUTLAY-CURRENTREVENUE
(OF CENTER, STATE GOVERNMENTS
AND UNION TERRITORIES)
0.1383
0.1312
0.1254
0.1355
A(PSBR)
(8)
-0.74
1.34
-0.01
1.71
-0.71
2.20
-0.71
-0.58
1.01
0.40
-1.86
0.09
-0.93
24
TABLE 5
Results
of Regression
of APSBN/Y On A(M-X)/Y
And A(M-X-K)/Y
Sample Period = (1981-1982 to 1993-1994)
Data
Beginning
Denendent Variable
Constant
PSBR
1981-82
1982-83
1983-84
1984-85
1985-86
S
S
S
S
S
1986-87
S
1987-88
1988-89
1989-90
S
S
S
(M-X)/Y
R-Sqr
Dependent Variable (M-X-K)/Y
Constant
PSBR
R-Sqr
NS
NS
NS
NS
NS
NS
0.52
0.55
0.60
0.58
0.46
0.67
S
S
S
S
S
S
NS
NS
NS
NS
NS
NS
0.37
0.36
0.39
0.45
0.41
0.40
S
0.97
0.96
NS
NS
NS
0.63
S
S
0.94
NS
NS
NOTE: S STANDS FOR SIGNIFICANT
NS STANDS FOR NOT SIGNIFICANT
The best equation is for the period 1987-88 to 1993-94
A(m-X)/Y
t-ratios
R2 - 0.97,
=
-0.22
(-5.37)
+
0.29 APBSR/Y
(4.37)
DWS- 2.9;
RHO - -0.6
NS
0.75
0.81
25
TABLE 6
.a
P
.N
P
.T
P
.*Tb
P
tC
-1.05
13.7
13.89
13.93
4.6
-12.6
-0.21
1.05
10.2
9.46
6.24
9.3
-7.6
1.54
-3.16
8.4
8.90
7.52
n.a.
n.a.
et
P--P-----
(->ka
1991-92
-0.04
-21.9
-0.50
12.6-93
3.23
-4.7
1993-94
1.38
0.0
aA fall
in
increase
b
This
LThis
the
nominal
exchange
in
"e"
our
has been
exports,
less
is
DRY
in
estimated
the
from
from
in
the
.T
P =e+i,
rate
index
equations
change
estimated
DED
*T
the
the
in
the
change
a devaluation,
and hence
text.
in
nominal
accounting
implies
the
exchange
rupee
unit
value
rate.
equation:
+t
TABLE 7
Growth
Rates
of
Industrial
Sectors
April-October
Classification
Basic
Goods
Capital
Goods
Intermediate
Consumer
TData
Tradable;
from
Goods
Goods
1992-93
1993-94
T
3.7
2.9
T
9.0
-8.8
N
4.0
10.4
N
0.0
1.4
N = Nontradable
Table
6.4,
Economic
Survey
1993-1994
index
for
an
26
FIGURE 1
ET
.
.
NON
TRADED
GOOD
27
NOTE TO FIG.l.
PP is
the
composite
commodities
indifference
at
to
the
domestic
there
is
also
equal.
will
lead
lead
a rise
in
of
by
er2.
have
to be cut,
real
exchange
in
internal
is
is
in
demand
the
demand
for
of
price
and
a new
expands
to meet
above
C),
and the
excess
deficit
of
With
limited
and the
will
CE.
The real
the
reserves,
economy
depreciate
will
then
back
goods
the
Y E'
TT
exchange
rate
to
its
to
original
This
latter
towards
for
over
will
the
it
into
to
an
that
ultimately
In the
level
an
traded
where
demand
spills
will
induce
appreciates
A.
goods.
away
expenditure
move back
are
to OET.
C,
as
and
= OEoT>,
will
increased
demand
excess
common
balance
the
at
of
equilibrium
which
equilibrium
good
the
goods
deficit,
two
a set
and nontraded
expenditure
(unsustainable)
the
demand
traded
a trade
of
traded
aggregate
of
external
("OT
for
the
Given
is
balance
both
of
slope
and
nontraded
switching
The
PP curve
and supply
in
output
goods.
A.
in
an expansion
relative
be
at
are
the
nontraded
rate
the
running
will
trade
and
expenditure
there
output
is vertically
curve
can be met through
their
the
equivalent
given
in
There
output
(E
former
is
iOiO
the
(N)
equilibrium
as the
an increase
the
goods.
deficit
for
and nontraded
The economy
1'
and
Suppose
to
increase
er
output
no trade
Whereas
to
initial
rate
frontier
CT)
indifference
exchange
A
possibility
traded
curves
tangent
real
production
erl.
process
the
28
FIGURE 2
NEER, REER AND eR
(1981~82=100)
110
‘100
90
80
70
60
50
1
40
1981-82
,
.-.
I
I
1983-84
I
I
198546
I
I
198748
I
I
1989-90
I
1
I
1991-92
-.-NEER
+REER
+
eR
REER: REAL EFIWXWE EXCHANGE RATE; NEER: NOMINAL EITEXXWE
eR : REAL EXCHANGE RATE
.
I
1993-94
29
Table 2A. Real Exchange Rates eRS and eR
105
100
95
90
85
.
80
75
I
1982-83
I
I
1084-85
1
1
1986-87
I
I
1988-89
I
I
1990-91
I
1
I
1992-93
+eRS
+eR
eRS = R&U EXCHANGE RATE AFTER INCORPORATING SERVICES SEC70R IN NO:
eR : REWAXCHANGERATE
(EXCLUDING SERVICES)
30
FIGURE 3
VARIATION IN REAL EXCHANGE RATE
OBSERVED VS PREDICTED
6
4
2
0
-2
-4
-6
1982-83
1984-85
+
1986-87
OBSERVED
+
1991-92
PREDICTED _.
1993-94
31
APPENDIX
A note
on the
data
traded
and nontraded
The data
following
sources
I
and methodology
used
for
classification
of WPI into
goods
used
in
this
study
has been
primarily
obtained
from
the
sources:
Annual
data on Wholesale
Price
Index
(WPI) was obtained
from the Ministry
of Industry.
As final
data on the wholesale
price
Indices
for the year
1993-94
was available
only up to November
1993, we have:
(a)
used
provisional
WPI for
(b)
derived
the wholesale
price
indices
for
March (for
which no data was available)
inflation
rate of 8.4%.
For classification
and Import
policy
used.
of goods
documents
the
months
data
commodities.
For
odd
nontraded
to
traded
traded
goods.
This
not
fixed
traded
goods
market
prices
Items
which
nontraded
Table
Two distinct
group
goods
includes
quota
are
Real
WPI data
are
those
restrictions
which
canalized
or are
is
are
In
to
In
by domestic
about
as the
traded
and
words
prices.
determined
subject
into
subject
other
and
Economic
for
(defined
exported
are
of
available
Rate
which
international
goods
is
February
an annual
goods,
Export
of Commerce were
issues
was classified
on them.
by
various
Indices
commodities
influenced
the months of
so as to give
Exchange
the
of nontraded
are
from
Price
the
goods),
Traded
margin.
have
on Wholesale
deriving
and January.
into traded
and nontraded
published
by the Ministry
Data on other
variables
was obtained
Survey and National
Account
Statistics.
Disaggregated
of December
ratio
tariff
domestic
contrast
demand
of
and non-
imported
to
448
at
the
but
do
prices
of
this
the
to
and
fixed
import
quotas
are
of UP1 into
traded
and nontraded
supply.
treated
goods.
1A gives
time
the
classification
periods
for
which
traded/nontraded
classification
goods.
is
made
as
32
are
as foll0WS:
TIME PERIOD
BASIS OF CLASSIFICATION
1982-83
to
1991-92
Export
1993,
and Import
Policy
published
on March
(April
1990
30, 1990
to March
1992-93
to
1993-94
Export
1997,
and Import
Policy
published
on June
(April
1992
30, 1992)
to March
As can be noted,
remains
uniform
that
there
data
from
for
has
accordance
the
been
1992-93
with
This
separately)
table
and the
real
classification
period
no major
onwards,
the
more
The new series
goods
the
of
also
change
WPI from
rates
in
to
above
inflation
obtained
This
policy
policy
during
this
to
the
period.
classified
(for
methodology
them.
due
announced
1993-94
for
and nontraded
is
differently
rates
from
as traded
1991-92.
been
trade
the
goods
trade
1982-83
using
the
to
has
liberalized
documents
exchange
1982-83
however,
obtained
of
traded
in
traded
is
given
fact
WPI
in
1992.
and nontraded
in
Table
and nontraded
2A.
goods
33
TABLE 1A
YEAR
S. No.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
Commodity
Rice
Wheat
Jowar
Bajra
Maize
Barley
Ragi
Gram
Arhar
Moong
Masur
Urad
Potatoes
Sweet potatoes
Onions
Tapioca
Ginger
(Fresh)
Peas green
Tomatoes
Cauliflower
Banana
Mangoes
Apples
Oranges
Cashew nuts
Coconut/fresh
Papaya
Grapes
Milk
%3s
Fish
Mutton
Poultry
chicken
Pork
Black pepper
Chiles
(Dry)
Turmeric
Cardamom
Ginger/dry
Betelnuts
Cumin
Garlic
Tea
Coffee
Raw Cotton
Raw Jute
Mesta
Raw hemp
Weight
3.685
2.248
0.420
0.178
0.191
0.053
0.049
0.410
0.274
0.201
0.054
0.154
0.472
0.068
0.156
0.128
0.082
0.137
0.117
0.131
0.468
0.964
0.379
0.274
0.115
0.534
0.020
0.044
1.961
0.263
0.507
0.521
0.375
0.117
0.042
0.319
0.051
0.055
0.038
0.151
0.214
0.077
0.564
0.125
1.335
0.160
0.050
0.011
1982-83 to 1992-93
to
1991-92
1993-94
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Traded
Traded
Traded
Traded
Traded
Traded
Non-Traded
Traded
Non-Traded
Non-Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Traded
Traded
Traded
Traded
Traded
Traded
Non-Traded
Traded
Non-Traded
Non-Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
34
Table
1A (cont.)
1982-83
YEAR
to 1992-93
S. No.
Commodity
Weight
1991-92
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
Raw wool
Raw silk
Coir fibre
Groundnut
seed
Rape & mustard
seed
Cotton
seed
Copra
Gingelly
seed
Linseed
Castor
seed
Nigerseed
Safflower(Kardiseed)
Sunflower
Soybean
Mahuaseed
Hidesraw
Skinsraw
Tanning
materials
Sugarcane
Tobacco
Rubber
Lac
Logs & timber
Fodder
Iron ore
Manganese
ore
Bauxite
Chromite
Limestone
Mica
Fluorite
Gypsum
Fireclay
Kasoline
Dolomite
Magnesite
Asbestos
Kyanite
Rock phosphate
Barytes
Sulphur
& pyrites
Steatite
Silica
sand
Imported
petroleum
crude
Indigenous
petroleum
crude
Coking coal
Non-coking
coal
Coke
Lignite
0.082
0.116
0.037
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Traded
Traded
Traded
Non-Traded
Non-Traded
Traded
Traded
Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Traded
Traded
Traded
Traded
1.296
0.661
1.254
0.111
0.142
0.101
0.056
0.038
0.083
0.025
0.074
0.020
0.096
0.078
0.001
2.706
0.275
0.114
0.036
0.571
0.552
0.154
0.048
0.011
0.018
0.070
0.003
0.004
0.003
0.002
0.004
0.008
0.012
0.040
0.001
0.083
0.003
0.087
0.002
0.001
3.004
1.270
0.353
0.798
0.064
0.041
to
1993-94
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Traded
Traded
Traded
Non-Traded
Non-Traded
Traded
Traded
Traded
Non-Traded
Traded
Traded
Traded
Traded
Non-Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Non-Tradt-d
Non-Tradt,ti
Traded
Traded
Traded
Traded
35
Table
1A (cont.)
1982-83
S. No.
98
99
100
101
102
103
104
105
106
107
108
109
110
111
112
113
114
115
116
117
118
119
120
121
122
123
124
125
126
127
128
129
130
131
132
133
134
135
136
137
138
139
140
141
142
143
144
145
146
147
Commodity
Liquified
petroleum
gas
Petrol
Kerosene
Aviation
turbine
fuel
High speed diesel
oil
Light
diesel
oil
Naptha
Bituman
Furnace
oil
Lubricants
Elec.
for domestic
purposes
Elec.
for power purposes
Elec.
for irrigation
purposes
Elec.
for industrial
purposes
Elec.
for special
purposes
Elec.
for other
purposes
Tinned
Milk Powder
Butter
Ghee
Baby Food (All Kinds)
Skimmed Milk
Powder
Canned Juices
Jams/Jellies/marmalades
Canned fish
Maida
Sooji
(Rawa)
Atta
Bran (All
kinds)
Bread & Buns
Biscuits
Non-levy
sugar
Levy-sugar
Sugar
Khandsari
Gur
Manufacture
of common salt
Cocoa, Chocolate,
sugar & Confectionery
Hydrogenated
vanaspati
Gingelly
oil
Kardi
oil
Mahua oil
Solvent
extracted
groundnut
oil
Rape & Mustard
Oil
Coconut
Oil
Groundnut
Oil
Cotton
seed oil
Rice bran oil
Imported
Edible
oil
Rape & mustard
seed cake
Groundnut
cake
Weight
0.677
0.806
0.868
0.341
2.154
0.203
0.342
0.181
0.641
0.453
0.362
0.527
0.317
0.825
0.024
0.686
0.145
0.053
0.256
0.085
0.103
0.053
0.015
0.126
0.297
0.149
0.763
0.321
0.145
0.097
0.000
0.000
2.013
0.300
1.746
0.035
0.088
0.517
0.235
0.075
0.025
0.021
0.276
0.171
0.526
0.064
0.067
0.468
0.041
0.110
to
1991-92
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Non-Traded
Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Traded
Traded
YEAR
1992-93
to
1993-94
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Non-Traded
Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Trader!
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Tradcc!
Non-Tradcc!
Non-Traded
Non-Tr;idI,.!
Traded
Traded
36
Table
1A (cont.)
1982-83
YEAR
to 1992-93
S. No.
Commodity
Weight
1991-92
148
149
150
151
152
153
154
155
156
157
158
159
160
161
162
163
164
165
166
167
168
169
170
171
172
173
174
175
176
177
178
179
180
181
182
183
184
185
186
187
188
189
190
191
192
193
194
195
Cottonseed
oil cake
Deoiled
cake
Linseed
oil cake
Coconut
oil cake
Gingelly
oil cake
Caster
oil cake
Packed tea
Instant
coffee
Cattle
feed
Poultry
feed
Maize starch
Glucose
& dextrose
Malted
food
Rectified
spirit
Indian
made foreign
spirit
Malt liquor
Soft drink
& carbonated
water
Bidi
Cigarettes
Zerda
Hanks
Cones
Longcloth/sheeting
Poplin/shirting
Coating/Drill
Dhoties,
sareas
& voils
Miscellaneous
Cotton
cloth
(Powerloom)
Cotton
cloth
(Handloom)
Khadi cloth
Viscose
staple
fiber
Polyester
staple
fiber
Viscose
filament
yarn
Filament
yarn synthetic
Blended
mixed cloth
Art silk
cloth
Woollen
yarn
Woollen
cloth
Suiting
cloth
Woollen
hosiery
Hessain
cloth
Hessain
& sacking
bags
D.W. tarpaulin
Cotton
Hosiery
Shirts/bushshirts
Coiryarn
Coirmats
& mattings
Plywood
commercial
planks
0.135
0.079
0.003
0.034
0.024
0.006
0.127
0.109
0.061
0.042
0.034
0.050
0.053
0.034
0.065
0.059
0.066
1.086
0.556
0.283
0.616
0.616
0.360
1.127
0.295
1.188
0.189
0.906
0.740
0.056
0.163
0.239
0.314
0.574
1.573
0.058
0.140
0.045
0.076
0.078
0.200
0.456
0.033
1.186
0.174
0.097
0.046
0.188
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Traded
Traded
Traded
Traded
Traded
Non-Traded
Traded
Traded
Traded
Non-Traded
Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
to
1993-94
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Traded
Traded
Traded
Traded
Traded
Non-Traded
Traded
Traded
Traded
Non-Traded
Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
37
Table
1A (cont.)
1982-83
1991-92
YEAR
to 1992-93
to
1993-94
S. No.
Commodity
Weight
196
Resawan 6 hewan timber
planks
railways
sleepers
& others
Pulp
Printing
paper white
Map, litho
paper
M.G. paper poster
Kraft
paper
Newsprint
Duplex board
Straw & mill
board
Other boards
(All kinds)
Printing
& publishing
of newspaper,
periodicals,
etc.
Sheep & goat skin
Sole leather
Footwear
Western
type
Giant
tires
Motor
tires
cycle
tires
Tractor
tires
Giant
tubes
Cycle tubes
PVC pipes
& tubing
Decorative
laminates
Rubber & canvas
footwear
Camelback
Hoses
Tooth brushes
Rubber belting
Sodiumhydroxide
(Caustic
soda)
Sodium carbonate
(Soda ash)
Oxygen
Calicum
carbide
Sodium phosphate
Nitric
acid
Titanium
dioxide
Sulfuric
acid
Liquid
chlorine
Benzene
Low density
polyethylene
Acrylic
fiber
Formaldehyde
Acetylene
Ammonium sulphate
N-content
Urea N-content
Complex fertilizers
N-content
Di-ammonium
phosphate
N-content
Superphosphate
P205 content
Ammonium phosphate
P205 content
1.010
Non-Traded
Non-Traded
0.090
Traded
Traded
Traded
Traded
Traded
Non-Traded
Traded
Traded
Traded
Non-Traded
Traded
Traded
Traded
Traded
Traded
Non-Traded
Traded
Traded
Traded
Traded
Traded
Non-Traded
Traded
Non-Traded
Non-Traded
Traded
Non-Traded
Non-Traded
Traded
Traded
Traded
Traded
Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Traded
Traded
Non-Traded
Traded
Non-Traded
Non-Traded
Traded
Non-Traded
Non-Traded
Traded
Traded
Traded
Traded
Traded
Non-Traded
Non-Traded
Traded
197
198
199
200
201
202
203
204
205
206
207
208
209
210
211
212
213
214
215
216
217
218
219
220
221
222
223
224
225
226
227
228
229
230
231
232
233
234
235
236
237
238
239
240
241
242
0.226
0.059
0.036
0.143
0.137
0.115
0.125
0.200
0.740
0.388
0.277
0.353
0.499
0.085
0.053
0.060
0.031
0.038
0.315
0.127
0.108
0.039
0.097
0.002
0.138
0.300
0.149
0.051
0.047
0.046
0.025
0.027
0.075
0.044
0.066
0.240
0.086
0.032
0.028
0.040
0.992
0.138
0.052
0.064
0.115
Non-Traded
Traded
Non-Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Traded
Traded
38
Table
1A (cont.)
1982-83
1991-92
YEAR
to 1992-93
to
1993-94
S. No.
Commodity
Weight
243
244
245
246
247
248
249
250
251
252
253
254
255
256
257
Complex fertilizers
NPKcontent
Calicum
ammonium nitrate
N-content
Pesticides
Paints
(Except
alum paints)
Enamels
Varnishes
Vat dyes (Indigo
solubilized
& others)
Reactive
dyes
Organic
pigments
Optical
whitening
agents
Vitamin
tablets
(A,B,C,D
6 Others)
Vitamin
capsules
Vitamin
liquids
Chloramphenicol
Penicillin
(Vials,tablets
& other
products)
Streptomycin
(Vials
& other
products)
Tetracycline
(In capsules,
vials
& others)
Powder/granular
other
than vitamin
Liquid
oral
other
than vitamin
Liquid
Injectable
other
than vitamin
Capsule
other
than vitamin
& antibiotics
Tablet
except
vitamin
& penicillin
Ointments
Syrup
Drugs & pharmaceuticals
n.e.c.
Ayurvedic
medicines
liquid
Household
laundry
soap
Toilet
soap
Synthetic
detergents
Agarbatti
Tooth paste
Tooth powder
Powder talc/face
Hair oils
Glycerine
Resins
Cream snow
Synthetic
resins
Synthetic
rubber
Polyethylene
molding
powder
Rubber chemicals
P.V.C.
resins
P.V.C.
sheets
Caprolactum
Polystyrene
Safety
Matches
Blasting
powder
0.322
0.025
0.202
0.106
0.113
0.021
0.160
0.077
0.078
0.021
0.061
0.030
0.043
0.028
0.047
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Traded
Traded
Traded
Non-Traded
Traded
Non-Traded
0.034
0.068
Non-Traded
Non-Traded
Non-Traded
Non-Traded
0.027
0.116
0.084
0.047
0.300
0.063
0.030
0.054
0.033
Traded
Traded
Traded
Traded
Traded
Non-Traded
Non-Traded
Non-Traded
Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Traded
Traded
Traded
Traded
Non-Traded
Non-Traded
Non-Traded
Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Non-Traded
Non-Traded
258
259
260
261
262
263
264
265
266
267
268
269
270
271
272
273
274
275
276
277
278
279
280
281
282
283
284
285
286
287
288
289
0.594
0.121
0.165
0.134
0.070
0.025
0.016
0.038
0.027
0.014
0.011
0.065
0.066
0.105
0.048
0.070
0.019
0.082
0.022
0.233
0.054
Traded
Non-Traded
Non-Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Non-Traded
Traded
Traded
Traded
39
Table
1A (cont.1
S. No.
Commoditv
Weight
290
291
292
293
294
295
296
297
298
299
300
301
302
303
304
305
306
307
308
309
310
311
312
313
314
315
316
317
318
Cine color
positive
Printing
ink
Carbon black
Fatty
acids
Fire works
Napthols
Castor
oil
Essential
oils
Linseed
oil
Flavoring
essence
Firebricks
Basic refractories
Building
bricks
Ceramic
tiles
Non-ceramic
tiles
Bottles
Sheet glass
High tension
insulators
Tumblers
Bangles
Crockery
Sanitary
ware
Cement
Lime
Mica products
Asbestos
cement corrugated
sheets
Asbestos
cement pressure
pipes
Ports
6 poles
Grinding
wheels
Coated abrasive
Electrodes
Hume pipes
Basic pig iron
Foundry
pig iron
Other pig iron
Steel
ingots
(plain
carbon)
Blooms
Billets
& slabs
Skelps
Oro mild
steel
tensile
plate
Angles,
channels
& sections
Joist
& rolls
Bars & rods
Defective
cutting
Scrap (all
kinds)
Carbon tools
& high speed steel
Stainless
steel
Malleable
castings
Ordinary
castings
0.044
0.040
0.083
0.076
0.030
0.024
319
320
321
322
323
324
325
326
327
328
329
330
331
332
333
334
335
336
337
338
0.119
0.020
0.117
0.016
0.091
0.067
0.454
0.037
0.046
0.069
0.040
0.041
0.034
0.023
0.017
0.072
0.860
0.056
0.041
0.089
0.069
0.028
0.045
0.015
0.261
0.022
0.023
0.031
0.033
0.330
0.090
0.277
0.040
0.126
0.218
0.035
0.955
0.023
0.084
0.063
0.113
0.084
0.307
1982-83
1991-92
YEAR
to 1992-93
to
1993-94
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Non-Traded
Non-Traded
Non-Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Non-Traded
Non-Tr;idt,d
40
Table
1A (cont.)
S. No.
Commoditv
Weight
339
340
341
342
343
344
345
346
347
348
349
350
351
352
353
354
355
356
357
358
359
360
361
362
363
364
365
366
367
368
369
370
371
372
373
374
375
376
377
378
379
380
381
382
383
384
385
386
387
Non-ferrous
castings
(all
kinds)
Stamping
& forgings
Heavy Light
structurals
Heavy rails
(23 Kgs. upwards)
Tin plates
Sheets
Bright
bars
Axles,
wheels
6 tires
Pipes & tubes
Spun pipes
Steel
wire
Wire
Ferro manganese
Ferro
silicon
Alloy
steel,
stainless
steel
Aluminum
ingots
Aluminum
Sheets & Strips
Aluminum
bars & rods
Aluminum
foils
Aluminum
rolled
products
Copper brass
& rods
Brass sheets
6 strips
Tin
Lead
Nickel
Zinc
Calcined
alumina
Barrels
Drums
Tin boxes/containers
Bolts
& nuts
Utensils
Hurricane
lanterns
Steel
files
Twist
drills
Spanners
Locks
Steel
furniture
Razor blades
Collapsible
tubes
Tractors
Dumpers
its parts
& accessories
Boilers,
Internal
combustion
engines
Diesel
engines
(stationary
types)
Road rollers
Mining
machinery
Machinery
for cotton
& synthetic
Ring spinning
6 doubling
frames
0.025
0.225
0.215
0.057
0.058
0.301
0.032
0.029
0.569
0.077
0.073
0.095
0.049
0.045
0.102
0.206
0.034
0.078
0.064
0.072
0.181
0.050
0.060
0.053
0.032
0.097
0.098
0.081
0.062
0.420
0.293
0.552
0.009
0.025
0.024
0.026
0.029
0.252
0.020
0.030
0.343
0.027
0.387
0.214
0.325
0.018
0.079
0.134
0.335
1982-83
1991-92
YEAR
1992-93
to
1993-94
to
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Non-Traded
Non-Traded
Traded
Non-Traded
Traded
Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Traded
Non-Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Traded
Non-Traded
Non-Traded
Non-TradtJJ
Non-TradtAd
Non-Tradc.c!
Non-Tradt,c!
Traded
Traded
Traded
Non-Traded
Traded
Traded
Traded
41
Table
1A (cont.)
S. No.
Commoditv
Weight
1982-83 t0
1991-92
388
389
390
391
392
393
394
395
396
397
398
399
400
401
402
403
404
405
406
407
408
409
410
411
412
413
414
415
416
417
418
419
420
421
422
423
424
425
426
427
428
429
430
431
432
433
434
435
436
Powerlooms
(automatic
& others)
Tea machinery
Refrigerators
(domestic)
Power driven
pumps
Air & gas compressors
Ball bearings
lathes
Typewriters
Computing
machines
Sewing machines
Air Conditioners
Components
& accessories
of generators
Transformers
Switch
gears
Components
& accessories
of switch
gears
Electric
motors
phase one HP
Electric
motors
phase three
HP
Starters
Alternators
Electric
motor contractors
Enamelled
copper wires
P.V.C.
insulated
cables
Paper insulated
cables
Drycore
cables
Wires
Rubber
insulated
6 other
cables
Batteries
Dry cell
Table
fans
Ceiling
fans
Glass lamps
Fluorescent
tubes
Transistor
sets
T.V.
sets AC
Electronic
automatic
indicators
Broad gauge diesel
locomotives
Broad gauge passenger
carriages
Broad gauge open wagons
Truck chassis
(diesel)
Car chassis
assembled
Bus chassis
(diesel)
Body manufactured
for buses
Body manufactured
for trucks,
vans etc
Diesel
fuel pumps
Gears (All kinds)
Jeeps
Three wheelers
Motorcycles
Scooters
0.206
0.038
0.105
0.208
0.130
0.362
0.208
0.038
0.033
0.053
0.034
0.098
0.267
0.158
0.172
0.114
0.157
0.087
0.052
0.042
0.102
0.359
0.095
0.042
0.057
0.073
0.067
0.164
0.063
0.170
0.139
0.052
0.165
0.157
0.139
0.124
0.088
0.062
0.683
0.214
0.228
0.076
0.060
0.039
0.050
0.101
0.039
0.094
0.105
Non-Traded
Traded
Non-Traded
Traded
Non-Traded
Traded
Traded
Non-Traded
Non-Traded
Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
YEAR
1992-93
t0
1993-94
Traded
Traded
Non-Traded
Traded
Non-Traded
Traded
Traded
Non-Traded
Non-Traded
Traded
Non-Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Traded
Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
42
Table
1A (cont.)
YEAR
S. No.
Commodity
WeiEht
437
438
439
440
441
442
443
444
445
446
447
448
Bicycles
Shock absorbers
Radiators
Pistons
Trailers
Gaskets
Springs
Other automobile
spare
Wristwatch
Gramophone
records
Fountain
pen
House service
meter
0.132
0.010
0.021
0.017
0.022
0.016
0.062
0.462
0.352
0.189
0.409
0.022
parts
1982-83
1991-92
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
to 1992-93 to
1993-94
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
Non-Traded
43
TABLE 2A
Annual Data on Inflation
Rates for Traded and Nontraded Goods
And Real Exchange Rate
WPI
Year
INFLATION
Traded
(1)
Nontraded
1981-82
1982-83
1983-84
1984-85
100.00
107.37
118.95
131.30
100.00
103.76
110.29
115.66
7.37
10.79
10.38
3.76
6.29
4.87
-3.61
-4.49
-5.51
100.00
96.39
91.90
86.38
1985-86
1986-87
1987-88
1988-89
1989-90
1990-91
1991-92
132.70
141.26
153.92
171.29
182.62
203.57
122.60
129.31
139.45
147.82
158.78
174.59
1.07
6.45
8.96
11.29
6.61
11.47
6.00
5.47
7.84
6.00
7.41
9.96
4.93
-0.98
-1.12
-5.28
0.80
-1.51
91.32
90.34
89.22
83.94
84.74
83.22
231.93
246.40
264.93
198.84
217.66
13.93
6.24
13.89
9.46
-0.04
3.23
83.18
86.41
237.03
7.52
8.90
1.38
87.79
1992-93
1993-94
(2)
Traded
(3)
Nontraded
(4)
Real Exchange Rate (eR)
% Change INDEX
(4)-(3)
1981-82=100
(5)
(6)
44
For
exchange
these
the
year
rates
were
1993-94,
worked
wholesale
out
price
indices,
on a monthly
basis
inflation
as well.
rates
Table
and
3A gives
results.
TABLE 3A
Monthly
Data
on Inflation
Rates
And Real
Year
(1)
Month
(2)
For
Traded
Exchange
and Nontraded
Goods
Rate
TRADED
NONTRADED
WPI % Chance
(3)
(4)
WPI % Change
(5)
(6)
Real Exchange
Rate (eR)
(6)-(4)
% Change (7)
1993
JANUARY
249.88
-
220.33
1993
FEBRUARY
253.29
1.36
220.23
-0.04
-1.40
1993
MARCH
252.60
-0.27
221.00
0.35
0.62
1993
APRIL
253.89
0.51
222.65
0.75
0.24
1993
MAY
256.00
0.83
225.04
1.07
0.24
1993
JUNE
256.87
0.34
228.72
1.63
1.29
1993
JULY
261.80
1.92
231.81
1.35
-0.57
1993
AUGUST
265.46
1.40
236.01
1.81
0.41
1993
SEPTEMBER
266.80
0.50
240.70
1.99
1.49
1993
OCTOBER
267.99
0.45
242.86
0.90
0.45
1993
NOVEMBER
268.45
0.17
241.89
-0.40
-0.57
1993
DECEMBER*
267.67
-0.29
240.44
-0.60
-0.31
1994
JANUARY*
267.40
-0.10
241.12
0.29
0.39
NOTE:
Results
for the
based provisional
months
data.
of
December
1993
and January
1994
real
are
45
APPENDIX II
The program used for obtaining
nontraded
c ***
C
10
50
70
C
C
C
C
20
100
71
30
and
goods is given below:
PROGRAMTO COMPUTEWEIGHTEDPRICE INDEX OF TRADED
AND NONTRADEDGOODS
IMPLICIT DOUBLEPRECISION (A-H,O-Z)
CHARACTER*12FNAME
WRITE (*,lO)
FORMAT(lX,'PLEASE ENTER THE NAME OF THE DATA FILE: '\)
READ(*,50) FNAME
FORMAT(A)
OPEN(5,FILE-FNAME)
OPEN(6,FILE='OUTP',STATUS-'NEW')
SUMWT= 0.0
SUMWNT= 0.0
TRADP = 0.0
TRADNP- 0.0
READ(5,20,END=1OO)IYEAR,ICOM,COMWT,PINDX
IYEAR IS THE YEAR CODE
ICOM IS COMMODITYCODE (l-TRADED, 2=NONTRADED)
COMWTIS THE WEIGHT OF THE RESPECTIVE COMMOFITYIN OVERALLWPI
PINDX IS THE WHOLESALEPRICE INDEX
FORMAT(I5,12,2FlO.O)
IF(ICOM.EQ.l) THEN
Y- COMWT*PINDX
TRADP =Y + TRADP
SUMWT= SUMWT+ COMWT
ENDIF
IF(ICOM. EQ.2) THEN
Z- COMWT*PINDX
TRADNP- Z + TRADNP
SUMWNT- SUMWNT+ COMWT
ENDIF
GO TO 70
WPIT = TRADP/SUMWT
WPINT - TRADNP/SUMWNT
WRITE(6,71)SUMWT,SUMWNT
FORMAT(lX,3F15.4)
WRITE(6,3O)IYEAR,WPIT
FORMAT(2X,'YEAR =', 17,5X,'WEIGHTED WPI FOR TRADED GOODS='
#,F10.2,//)
40
the weighted WPI for traded
WRITE(6,4O)IYEAR,WPINT
FORMAT(2X,'YEAR =', 17,5X,'WEIGHTED WPI FOR NONTRADEDGOODS='
#,F10.2;//)
.
CLOSE(5)
CLOSE(6)
END
46
APPENDIX
AN ALGEBRAIC
We can
Figure,
to
for
(P,>,
foreign
formalize
obtain
the
the
any
given
(Nd)
Nd - a
small
of
terms
macroeconomic
the
money
of
trade
(N')
for
MODEL
model
price
of
(given
depicted
nontraded
Pf)
and
in
market
addition
the
level
supply
al(PN-PT)
d
the
nontraded
+ a2Y + a3Bo + a4(M
s
goods
is
d
-M )
prices,
(nominal)
w
and
of
payments,
are
the
money
demand
and
given
by:
0
Y
notation
wage
for
money
supply
- al(PTd-PN)
rate,
is
MS
the
the
domestic
supply
of
goods,
and
output
money
(nominal).
(T')
for
+ (1-a2)Y
traded
+ (1-a3)Bo
the
+(l-a4)(MS-Md)
(A.6)
at
demand
is
(A.4)
B. = Td - TS
market
function
(Md/N.Pd)
N
balance
(A.5)
prices
is
given
by:
Y = Td - TS
where
at
TS = co + cl(PTd-PN)
output
The money
by
(A.2)
previous
(Td)
Td - a
Domestic
our
the
The demand
given
(A. 3)
is
Md
of
(A.1)
+ bl(PN-w)
to
the
goods
Nd = NS
where
by
as follows.
and
0 -
NS = b.
economy
determinants
(Bo),
The demand
VERSION OF THE AUSTRALIAN
external
borrowing
3
the
(A.7)
is
given
by:
= k(Y/N)a
population.
(A. 8)
The money
supply
process
is
determined
from
47
the
following
accounting
and
a behavioral
relationship
import
of
the
consolidated
banking
system,
function
AM' = ANFA + D
where
the
ANFA = X - I + B.
(A.lO)
I-
(A.ll)
ANFA
system,
value
do + dl
is
D
(A.9)
the
the
of
b cyp,)
change
change
in net
in
exports,
total
foreign
domestic
assumed
assets
of
credit
to be given
the
of
the
consolidated
banking
exogenously,
system,
I
and
banking
the
X
level
of
imports.
From
and
(A.l)
(A.7),
to
(A.3),
and substituting
and rearranging
yields
y
in
an expression
(A.l)
for
the
from
(A.2),
(A.5)
determinants
of
Pn
as
(A.12)
PN = constant
We can use
nontraded
(Bo),
goods
+
bl(l-a2)
-a2clw
al+bl(l-a2)
+
a3
al+bl(l-a2)
this
good
and compare
price
constant
rose
w
required
with
by more
d
P
T'
and
change
(PN)
that
in
for
(P:)
judge
and
to what
the
equilibrium
deviated
form
the
observed
actual
(P,)
that
the
(MS-Md)
estimate
f or the
than
or tradables
weather
to
and with
PN
a1+a2c1
al+bl(l-a2)P:
a4
Bo + al+bl(l-a2)
expression
price
+
change
to
observed
and any excessive
the
rate
for
Next,
changes
monetary
current
erl
in
in
change
nontraded
(with
we can estimate
money
expansion
the
the
the
borrowing
equilibrium
in
real
in
foreign
see whether
was required
MS = Md).
extent
required
exchange
Figure.
wages
the
(w),
(MS > Md),
rate
a
in
price
to
India
48
In
the
the
extent
second
of
consider
monetary
expansion
of
First
exercises
monetary
the
for
and exports
balance
above
the
we ask
observed
payments,
that
is
note
from
(A.8),
that
will
form
changes
for
be necessary
the
What would
is:
there
also
(MS > Md).
derivations
so that
(X),
it
expansion
following
The question
(A.8)-(A.11).
(Bo)
the
any excessive
empirically,
in
of
in
the
To do this
monetary
have
level
was equilibrium
to judge
submodel
been
of
in
the
required
capital
the
inflows
overall
ANFA - O?
we can derive
the
standard
quantity
theory
relationship
YPd
where
v,
the
= v
. M
income
A.8a)
velocity
of money
is
given
by
v = l/(k.ya-')
with
y = Y/N,
Next,
per
from
(A.8b)
capita
(A.lO)
income.
with
ANFA - 0,
we have
X+Bo-I-O
substituting
(A.9)
for
yield
credit
inflow
I
after
(D)req,
for
Comparing
estimated
from
an
the
the
pN
for
(YP,)
the
change
leads
to
Bo>/v
l
from
required
in
ANFA = 0,
(X+
expansion
observed
changes
in
provide
our
will
derive
= [a3/al+bl
in
a relationship
+
(l-a2)ldB
and
in
for
M
form
domestic
foreign
capital
) I/d1
credit
from
the
exports
and
foreign
estimate
from
and
as
dl[(X+BoWy
actual
(A.8a),
expansion
exports
a-l
=
(A.13)
We can also
(A.ll),
exogenous
which
Dreq
for
from
some manipulation,
(X+Bo),
stability
(Al0.a)
(A.12)
of
(A.13)
required
(MS-Md)
between
for
capital
in
PN
monetary
inflows
(A.12).
and
dB,
(A.12a)
as
49
Denoting
n
S
the
elasticity
respectively,
we have
al =
Making
use
dividing
Y,
the
of
Nd
(A.3),
l
nd;
after
numerator
demand
from
bl
and supply
(A.l)
=
NS
and
l
substituting
and denominator
of
(A.2)
nontraded
goods
by
nd
and
that
ns
for
of
al
the
and
RHS of
b
1
(A.12a)
as above,
by real
and
output
yields
pN
where
of
= [(a3aY/N)/(nd+ns(l-a2))]dB/Y
N = Nd = NS
and
dW = dPTd = d(MS-Md)
= 0
(A.12b)