Indian Public Policy Review

Household Savings in the Indian Economy

Chakravarthi Rangarajan — 2025-12-11

In this paper, we examine the changes in the savings ratio over time in India, from FY 1950-51 to 2022-23. We observe four major structural breaks in the household savings rate data, reflecting important changes in its behaviour over time. We focus on understanding the primary drivers of the household savings rate, as it accounts for more than 70% of total savings, and attempt to identify the factors behind its decline after 2008. We have also investigated the key determinants of household savings, including income levels, income growth, per capita income, and wealth inequality, to understand how these variables shape savings behaviour over time. Our findings indicate that while household savings rose steadily for several decades, they declined significantly in the most recent period. The current decline in savings rate in the Indian economy is a matter of concern. The reduction in household savings rate has been only partially offset by an increase in private corporate savings rate. The future borrowing program of public sector will have to be modified in this context of changing size and pattern of savings. This has implication for the level of fiscal deficit.

Bottom-Up Meets Top-Down

Aritra Chakrabarty — 2025-12-11

This paper examines how state and non-state actors coordinate to deliver energy services in rural India. Using Bindi International’s community solar program in Jharkhand, it asks: to what extent can NGO–state coordination advance equitable access to electricity? Drawing on policy mapping (national and state energy policies), program documents, and interviews with local officials and Self-Help Group members, the study analyses vertical coordination between the central government and state government and horizontal coordination between the state nodal agency for renewable energy and other state agencies responsible for rural development, tribal welfare. Findings show partial alignment at the state level around off-grid and last-mile electricity connectivity objectives but lack of institutionalized roles of NGOs in policy documents, and fragmentation of governance as one of the main causes of coordination failure. The paper argues that formalizing NGO roles, resourcing cross-departmental collaboration, and embedding Panchayats in program design can turn NGOs from “implementers” into co-producers of policy feedback and more just outcomes.

Regulation and the Performance of Microfinance Institutions in India

Muneer Babu Mancheri — 2025-12-11

This study examines the regulatory status and the performance of 183 Microfinance Institutions (MFIs) in India from 2004-05 to 2019-20, using the latest available unbalanced panel data set, compiled from the Mix market database published by World bank. MFIs are vital in providing financial services to underserved populations. In response to concerns over aggressive lending practices and borrower exploitation, the Reserve Bank of India (RBI) has implemented stringent guidelines on interest rates, loan sizes, and borrower eligibility. While these regulations are intended to promote financial inclusion and maintain the ethical and financial stability of the sector, their effects on MFIs' operational efficiency, financial sustainability, and outreach capabilities remain ambiguous. Using the Generalized Method of Moments (GMM) technique, this empirical study examines the relationship between regulatory interventions and MFI performance across three key models: operational self-sufficiency (OSS), the number of active borrowers (NAB), and average loan size per borrower. The findings indicate that RBI-regulated MFIs have higher OSS and breadth of outreach, as regulated MFIs demonstrating improved operational sustainability and a greater capacity to attract and retain borrowers. However, the study also highlights challenges, such as high loan default rates and reduced loan sizes, particularly in response to macroeconomic factors like inflation and economic growth.

Commentary – Earth Credits: a science based framework for sustainable planetary policy beyond carbon

Pawan K Dhar — 2025-12-11

Humanity's global footprint now far exceeds Earth's capacity to renew resources and absorb waste. Recent studies show that several ecological thresholds have been surpassed, some of which experts have deemed critical. Six of the nine safe planetary boundaries, as specified in Steffen et al (2015), have already been breached, leading to unprecedented biodiversity collapse, resource depletion, and increased climate risk. Staying within a "safe operating space" is crucial to prevent an irreversible environmental change (Rockström et al 2009). In practice, however, many large-scale developmental activities go unchecked, while ignoring the enormous stresses on water, soils, nutrients, and species. To address this urgent unmet need, we propose an Earth Credits Framework (ECF): a unified accounting system that quantifies a project's total planetary consumption, integrates the existing carbon credit system, and establishes a limit on the number of Earth Credits that can be justifiably allocated within the nine planetary boundaries. With sufficient data and accepted standards, ECF can offer governments, funders, and agencies a reliable compass for investing in truly sustainable outcomes.

On China’s Engineering Mindset

Shobhankita Reddy — 2025-12-11

This article reviews Dan Wang's book Breakneck, which contrasts China's "engineering state" - characterised by its industrial scale and rapid mobilisation - with America's "lawyerly society" described as unambitious and paralysed by procedural constraints. The review praises Wang's vivid, on-the-ground analysis of China’s technocratic capabilities and social-engineering excesses, and critiques the book for lacking rigorous economic foundations and failing to offer concrete policy solutions for revitalizing American industry.