Journal of Business Thought

Rajesh Chadha , Geethanjali Nataraj

Abstract

Despite being a group of contiguous countries, South Asia is one of the least integrated regions in terms of intra-regional investment and trade relations. The share of services in GDP of South Asian countries has increased substantially with South Asia exhibiting a high revealed comparative advantage in commercial services and more particularly in “other services” including computer and information technology enabled services. Analysis of the foreign direct investment (FDI) inflows in South Asia reveals that the number of total sale deals including Greenfield investments and Mergers and Acquisitions have increased in recent years. Though India is ranked as the second most attractive destination for FDI, South Asian countries, including India, do not rank high in terms of the FDI performance and potential indices and are also ranked low in the global competitiveness index. The study points out the investment constraints in South Asia and cites poor infrastructure and labour market inefficiencies as the bottlenecks in attracting higher FDI inflows. Emphasising the importance of Doha Development Agenda on the one hand, the paper lays out the importance of larger and broader RTAs like Pan Asia Free Trade Agreement (PAFTA) instead of narrow RTAs like SAFTA. The success of SAFTA in enabling regional integration would depend on turning its current shallow constitution in favour of a deep agreement taking into account various behind the border issues.

Keywords

Trade, Services, Investment , South Asia

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Ashwani ¹, Geethanjali Nataraj ²

Affiliations
1 NIT, Kurukshetra, Thanesar – 136119, Haryana, IN
2 IIPA, New Delhi – 110002, Delhi, IN

Abstract

Indian economy took a historic move of banning high denomination notes measured as 87 percent of total currency in November 2016. The early objectives of the move were linked to various issues such as curbing black money, removing counterfeit currency and stopping terrorist funding. But in due course the implications of demonetisation have been pronounced in the form of wider tax base through accounted income, progress towards a cashless economy, increase in bank deposit balances under Basel III accord, controlling inflationary activities, removing the asset bubbles through limited cash availability, etc. In this regard, several academics have carried out their own analysis of demonetisation and its effects but most of the research work has addressed the partial effects of the demonetisation move and have been carried out in the early months of the move. But now that the economy has crossed about one and a half year of this landmark reform, there is ample scope to measure the true impact of demonetisation on the financial system, inflation and real economy of India. The paper concludes that overall the effects of demonetisation on the economy can be said to be neutral. Interestingly, macro indicators of the economy have improved in recent years despite two major initiatives of demonetisation and GST reforms. This reflects that the resistance of the Indian economy continues due to its strong demand. This is of prime importance for reviving investment in the economy, which in turn, has wider implications for the overall growth and development.

Keywords

Demonetisation, Digitalisation, Fiscal Health, Financial Sector, Real Economy.

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