The Indian Economic Journal

This article analyses the post-merger profitability of acquirers for a sample of mergers and acquisitions (M&As) that did take place during the period 1999–2011 in certain high technology industries in India. Taking the performance of median firm(s) from the three-digit industry category of acquirer(s) as the benchmark, this study deploys difference-in-differences (DID) method to evaluate acquirer performance using both parametric and non-parametric tests. Results of the analysis show that an overwhelming majority of acquirers have performed better than the benchmark firms in their respective industries. Interaction of acquirer characteristics such as size, types of M&As undertaken and industry origin, among others, impacts the outcome. Horizontal M&As are more successful than the other types. Smaller firms, being more inclined to go for horizontal M&As, have fared better than their larger counterparts. Similarly, firms from the drugs & pharmaceuticals and electronics industries have performed better than those from chemicals, electrical and non-electrical industries. Here too, better performing industries have higher sprinkling of horizontal M&As.

The aim of this article is to identify and determine various dimensions of deal characteristics affecting the post-acquisition performance of Indian target firms. Available researches have focussed on the stock market reaction as the indicator of target firm performance. Nonetheless, various determinants are found to affect the post-acquisition performance of target firms. Bearing that in mind, this article focusses on the significance of deal characteristics while assessing the performance of the Indian target firms post-acquisition. The article attempts to analyse the post-acquisition performance of target firms independent of the acquirer firm to get a more appropriate perception of their position.

The change model, generalised method of moments (GMM) model and the regression model has been employed to assess the changes in operating performance, analyse the importance of financial variables in post-acquisition performance and study the impact of deal characteristics in the post-acquisition performance of the Indian target firms. The outcomes reveal that there has been a significant difference in the improvement of targets depending on whether it has been taken over by a domestic acquirer or inbound acquirer.

This article comprehensively examines the growth and pattern of India’s merchandise exports during and following the financial crisis period (2007–08 to 2016–17) using Directorate General of Commercial Intelligence and Statistics and United Nations Commodity Trade/World Integrated Trade Solution trade data. The entire analysis is based on leading trade indices and indicators and the results confirm that significant change in India’s trading structure is associated with the fast growth of foreign trade. The composition of exports has undergone changes overtime, bearing a strong influence of factor endowments and technology in favour of both human capital intensive and technology intensive sectors. The magnitude of product diversification shows that India’s export basket is poorly diversified but more diversified than BRICS countries except China. India’s export destinations showed a major shift from the developed countries market to the emerging markets in Asia and Africa. However, India holds more increased trade intensity with USA and Hong Kong. Dynamism in labour-intensive manufacturing sector is vital to promote India’s exports of agricultural value-added products and enable more competitive at the world. Also, the development of new markets should be viewed as part of a wider effort to enlarge the India’s foreign trade.

JEL Code: F10, F14, F19

This article aims to examine the relationship between inflation, export, import and foreign direct investment (FDI) in India from1975 to 2017. The study employed Johansen co-integration test to find out the long-run relationship among the variables and further variance decomposition analysis (VDA) and impulse response function (IRF) through vector autoregression (VAR) used to find out the dynamic relationship. Both VDA and IRF results indicate that export has positive or greater influence in inflation in India than other variables like import and FDI. The pair-wise granger causality approach finds that there is unidirectional causality running between exports and inflation and not vice versa, whereas inflation granger causes import. Toda Yamamoto causality also has shown similar result. Both the causality tests revealed that no causal relationships exist between inflation and FDI in India during the study period. As the exports of India have been continuously declining for past few years, the outcomes of this study are the true depiction of India’s economic situation. So, the government should provide a competitive environment and incentives to the local industry to produce at competitive prices to the international market.

This article investigates the impact of economic policy uncertainty (EPU) on foreign trade and investment into India relative to other macroeconomic factors with reference to the Indian pharmaceutical industry. It employs the Bayesian vector autoregression (BVAR) approach to construct a model and then study the said impact by the impulse response function (IRF) analysis. In a Bayesian procedure, the parameters are treated as random variables and their posterior distribution is estimated via the imposition of prior beliefs on their distribution, which makes the analysis more robust when combined with vector autoregression. The IRF analysis shows no substantial protracted impact of policy uncertainty, inflation and interest rates on the pharma exports. Also, inflation seems to have a more pronounced impact on FDI as compared to the interest rate changes contemporaneously.

In the evidence of the globalised world economy and changing economic structure, the traditional policies require a close examination. This is particularly true in the case of emerging economies like India, which have experienced a rapidly changing policy environment since 1991. The demand for money is an important ingredient for monetary policy formulation. Therefore, the present study re-examines the stability and specification issues of money demand in India’s post-reform era. The study takes care of structural breaks in the macroeconomic series while using a unique quarterly dataset from 1996: Q2 to 2016: Q3. Despite the structural breaks, the application of Gregory and Hansen (1996) and autoregressive distributed lag models demonstrate the existence of a stable short-and long-run relationships between real money balances and their determinants. These empirical findings are having a lot of policy implications in the current monetary policy framework of India—inflation targeting framework.

The discourse on food security in India has concentrated upon availability and accessibility of cereals, neglecting the nutritional significance of fruits, vegetables and meat food products. This article attempts to assess the food security level both quantitatively and qualitatively, and level of dietary diversity among socio-economic groups. A cross sectional survey covering 304 households selected through stratified and proportional random sampling methods was conducted in six villages of Uttar Pradesh, India in 2013–2014. Household Food Insecurity Access Scale and Dietary Diversity approach were used to indicate food security. Subjective assessment highlights that despite sufficient availability of food, most of the households were unable to eat the quality of food they preferred. Findings also show predominant concentration of diet towards cereals, milk, root and tuber food products. Muslims, scheduled caste, labourers and households with lower wealth index consumed a less diversified diet, which is statistically significant. This article provides important insights into the strength and limitations of food policy measures and underlines the need to move beyond the dominant cereal-based interventions for food security in emerging economies like India.

JEL Code: Q18

This study analyses factors affecting agricultural productivity in Ethiopia for the period of 1990–2016 by using autoregressive distributed lag (ARDL) model. Both the bounds test and the error correction model confirmed the existence of co-integration (long-run relationship) between the variables included in the model. The results revealed that cereal productivity is positively influenced by use of fertiliser and real gross domestic product (GDP) both in the long run and in the short run. While size of arable land influences productivity positively in the long run, its short-run effect was found to be negative. Hence, the government and other concerned authorities should work to enhance farmers’ use of improved technologies, such as fertiliser, by ensuring its timely availability at an affordable price, encouraging farmers to participate on alternative sources of income such as off-farm activities and bringing additional area under cereal production to improve agricultural productivity.

The main purpose of this study is to increase the understanding of the perceived service quality of the customer within grocery retailing from an Indian perspective. In this dissertation, data were collected from 403 customers who buy grocery from Big Bazaar and Reliance Fresh during February–July 2017 from Bhubaneswar and Cuttack. A quantitative approach using Statistical Package for the Social Science (SPSS) version 20 is used, which caters to the exploratory nature of the work. Statistical techniques such as exploratory factor analysis, multiple regression, t-test and ANOVA have been used to test the hypotheses and answer the research questions. It can be inferred from this study that consumer behaviour is dependent on the demographic factors. Differences were also found with regard to the impact of service quality on the satisfaction and the loyalty of the customers. This research adds to the study on service quality in the grocery business of the global market by enriching the content of service quality dimensions applicable to the Indian grocery sector. Six key dimensions in the grocery sector have been identified. This will deepen the understanding of the explored factors of service quality, which can then be applied to the grocery stores.

The impact of external debt on investment is a very popular issue which has been empirically tested by many scholars. But when such debt becomes unsustainable it threatens sustainable economic development of a country. Since the inception of debt crisis in the 1980s, when and how external debt burden creates a debt overhang paradox is a controversial issue. Debt overhang is a paradox because debt is expected to stimulate growth and development of a country, but contrary to this expectation debt after crossing a threshold limit hinders such growth and development. This article examines whether huge external debt build over time really has a detrimental effect on investment at the country level. The present study has been conducted on 18 Asian countries of the world for the period from 2000 to 2015 by using the data from the World Development Indicators. Panel regression technique has been applied to examine the impact of external debt on investment. A Granger causality test has also been conducted on external debt and investment to find out whether external debt has any causal impact on investment. The result shows the existence of the debt overhang paradox.

The important task of infrastructure provision and enhancement faces ever rising financing requirement in the face of little fiscal space and this points to the pertinence of market based finance. This calls for a pressing need to gauge the sectoral performance of infrastructure and this study takes up this task. The study assesses the risk-return and volatility profile of Nifty Infra, the National Stock Exchange (NSE) sectoral index for infrastructure vis-à-vis the broader Nifty 50 for the time period 2010-2019. The standard financial economic analysis finds the sectoral equity performance of infrastructure to be marginally below that of a broadly diversified index. Further, the study analyses the cashflow and leverage characteristics which are imperative factors in medium term risk return profile of infrastructure stocks. The disaggregated firm level analysis reveals that rent-like return do exist for the biggest players in the sector due to past installed capacities, while the subcontracting mechanism percolates to meagre cashflows for smaller players, partly bearing the greenfield risks.