Journal of Indian School of Political Economy

Kishor C. Samal ¹

Affiliations
1 Nabakrushna Choudhury Centre for Development Studies, Orissa, Bhubaneswar-751013, IN

Abstract

The main focus of the paper is a detailed and critical review of literature on the Rural Non-Farm Sector (RNFS) and the main objectives of such a survey are (i) to identify the factors which are supposed to determine the level and growth of RNFS and the mechanism through which these factors operate, and (ii) to find out the characteristics of RNFS in developing countries including India. The jrst section of this paper describes the features of RNFS in developing countries, particularly in Asia and Africa. The second and third sections deal with three well-known hypotheses, as determinants of RNFS in India, viz., Inter-linkages hypothesis, urbanization hypothesis and residual sector hypothesis. The fourth portrays the characteristics of the RNFS in India and the fifth those in Orissa. The sixth section examines the determinants of the level of RNFS in Orissaand comes to the conclusion that equal distribution of land and rural assets including water for irrigation and common property resources (CPR), instead of subsidization of mechanisation of agriculture, and expansion of primary and secondary education rather than subsidization of higher education may help the growth and expansion of RNFS activities through consumption - expenditure linkages by increasing rural income and bringing more equal distribution of such income. Moreover, education and literacy help in increasing the productivity and skill of workers which, in turn, mostly stimulate the growth of modern informal RNFS with new technology. Therefore, to alleviate rural poverty and unemployment, the growth of RNFS is desirable which is possible by reducing both dispersion of land and rural assets by effective land reform measures and dispersion of rural income by expansion of primary and secondary education.

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Kishor C. Samal ¹

Affiliations
1 Nabakrushna Choudhury Centre for Development Studies, Bhubaneshwar, Orissa, IN

Abstract

This paper analyses the development of foreign exchange system in India since 1948 in the backdrop of theoretical analysis. Whatever may be the foreign exchange system - single currency peg, managed float (single currency peg or basket peg), ‘hidden’ partial float, ‘partial’ float or independent floating of Rupee at current account - it is nothing but a new type of move towards depreciation of the Indian Rupee. The paper also analyses one-stroke, two-stroke or backdoor devaluation of the Indian Rupee at various times, which has no favourable impact on export, as commonly believed. At present, since floating of the Indian Rupee at current account under modified LERMS, in March 1993, there have been (i) depreciation of the Rupee and (ii) vanishing of implicit export tax leading to monetisation of fiscal deficit. It is theoretically argued that these, in turn, will lead to inflation and further devaluation, inflation and so on in the long run. Thus the ‘implicit’ export tax is being replaced by ‘inflation’ tax.

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