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This paper documents the recent slowdown in investment in India and explores its underlying causes. The sharp investment deceleration has sparked an intense debate about the role of interest rates, as well as business confidence and economic policy uncertainty. Our results suggest that while explaining aggregate investment activity better than nominal interest rates, real interest rates account for only one quarter of the explained investment downturn. In addition, standard macro-financial variables do not fully explain the recent investment slump. Using a new measure of economic policy uncert

This paper contributes to the debate on the relationship between public-capital accumulation andprivate investment in India along the following dimensions. First, acknowledging major structuralchanges that the Indian economy has undergone in the past three decades, we study whether publicinvestment in recent years has become more or less complementary to private investment incomparison to the period before 1980. Second, we construct a novel data-set of quarterly aggregatepublic and private investment in India over the period 1996Q2-2015Q1 using investment-project datafrom the CapEx-CMIE database. Third, embedding a theory-driven long-run relationship on themodel, we estimate a range of Structural Vector Error Correction Models (SVECMs) to re-examinethe public and private investment relationship in India. Identification is achieved by decomposingshocks into those with transitory and permanent effects. Our results suggest that while public-capitalaccumulation crowds out private investment in India over 1950-2012, the opposite is true when werestrict the sample post 1980 or conduct a quarterly analysis since 1996Q2. This change can mostlikely be attributed to the policy reforms which started during early 1980s and gained momentumafter the 1991 crises.

We document the evolution of poverty and inequality across Indian states during the recent period of rapid growth (2004-09), and examine the role of growth and distribution in reducing poverty. Robust economic growth has been a major driver of poverty reduction and inclusiveness in India. We explore the role of economic policies and macrofinancial conditions in explaining inclusive growth and its components, using a new measure of inclusive growth. Social expenditures, spending on education, and educational attainment rates are important for fostering inclusive growth. Macro-financial stabilit

Indian food and fuel inflation has remained high for several years, and second-round effects on core inflation are estimated to be large. This paper estimates the size of second-round effects using an estimated reduced-form general equilibrium model of the Indian economy, which incorporates pass-through from headline inflation to core inflation. The results indicate that India's inflation is highly inertial and persistent. Due to second-round effects, the gap between headline inflation and core inflation decreases by about three fourths within one year as core inflation catches up with headlin