Faculty Publications
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Item Effects of energy price rise on investment: Firm level evidence from Indian manufacturing sector(Elsevier, 2015) Sadath, A.C.; Rajesh Acharya, H.R.This paper analyses the effects of the rising prices of energy products on the investment of a large panel of manufacturing firms in India during 1993-2013. The prime motivation behind this study is the absence of an empirical study into this research issue exclusively on Indian economy. The empirical results obtained by estimating an Error Correction Model (ECM) using Generalized Method of Moments (GMM) show that energy price rise has negative effect on the investment of firms in the manufacturing sector. The negative effect is transmitted to the firm's investment through both demand-side and supply-side factors. The transmission also depends upon factors such as the energy intensity of production. The results also show that the sales-growth-investment relationship becomes weak in the face of the rising prices of the energy which could be due to the cautious approach to investment adopted by the firms. Therefore, it calls for the attention of the policy makers to evolve a comprehensive energy-policy to ensure continuous supply of energy at affordable prices to the manufacturers. © 2015 Elsevier B.V.Item Implications of energy subsidy reform in India(Elsevier Ltd, 2017) Rajesh Acharya, R.H.; Sadath, A.C.This paper analyses welfare impact of energy subsidy reform in India based on the data from 1970? 71 to 2014? 15. To this end, Auto Regressive Distributed Lag (ARDL) model and Error Correction Model (ECM) have been estimated to quantify the short-run and long-run price and the income elasticity of various energy products. The results show that the price elasticity of demand for all fossil fuels is low, but the respective income elasticity is higher. Therefore, an increase in the general price level caused by the subsidy reform will lead to the erosion of real income and will have related welfare implications in India. The results also reveal that energy expenditure will obviously increase and hence energy consumption will decline depending upon the extent of the withdrawal of subsidy. Therefore, policy makers in India, while undertaking further reforms, must ensure that the subsidy reaches to those who truly deserve, so that the socioeconomic casualty of reforms can be minimized along with achieving fiscal goals. © 2016 Elsevier Ltd