This paper sets up a demand-supply model to analyse India’s export performance (in terms of volumes rather than values) between 2000Q1–2014Q4. The main objective is to determine the impact of the financial meltdown of 2008 on India’s export performance. During the meltdown period, decline in price by India’s competitors in the international market resulted in (1) loss of competitiveness of India’s export goods and (2) a complete breakdown of the price mechanism affecting India’s export demand. Though export supply was not significantly affected by the meltdown episode we find evidence that exporting firms turned towards the domestic market to cope with the loss in export. The meltdown episode began to significantly affect India’s export demand and supply equations from 2009Q3. The demand and supply equations after that period became so unstable that ‘nothing worked’ for India’s exporters as they tried to counter the decline in export. Hence there was ample reason for them to panic and seek the government’s help. Government policies aimed at boosting export demand did have a positive impact on India’s export performance. Government policies to boost export supply had no impact except being palliative for the exporters at their moment of crisis

In this article, we analyze the dynamic properties of India’s major exchange rates, both in the short and the long runs. The particular issue of our concern is to find whether present values of the exchange rates depend (a) on their own past values and (b) on the past values of India’s other exchange rates. Since the series exhibit long memory, the autoregressive fractionally integrated moving average (ARFIMA) model is used for the first purpose and the cross-correlation, entropy transfer and vector auto regression (VAR) models are used for the later purpose. Combining the results of these models, we conclude that, in general, the Indian exchange rates are persistent and depend only on their immediate past values. In particular, past values, older than two periods (days in this case), do not appear to be consistently relevant in modelling the current value. These observations have clear implications for exchange rate trades using technical analysis (TA) and for exporters and importers.

The paper explores the emergence and consequence of contract farming as a new subsector of agriculture in a small open developing economy, applying the theory of finite change in a general equilibrium framework. In this paper, we analyze the entry of a cash crop-producing foreign contract farming (CF) subsector within the agricultural sector of a country. Entry requires a cash crop price that is substantially above the price of the food crop already being produced within the country. CF (a) increases GDP and hence aggregate economic welfare; (b) may make income distribution more skewed; (c) reduces domestic production of food and hence, (d) increases food import and hence food insecurity. Thus, CF might imply a trade-off between inequality and growth. We employ a variant of the 3 × 3 mixed specific factor-Heckscher Ohlin general equilibrium model of production and trade where introduction of a new policy may lead to the emergence of a new sector resulting in finite changes where we show the possibilities of sectoral diversification with combinations of contract farming vis-à-vis traditional agriculture under some plausible conditions. Our results seem to be consistent when compared to some empirically robust conclusions found in the literature and some secondary data available on the FAO website. We also argue that the food insecurity problem gets aggravated as more and more countries engage in contract farming. Policy simulations identify critical parameters confirming the dominance of distribution over the growth effect in terms of a social welfare function. Simulations imply that there could be a food insecurity problem, as rises in GDP could result in increasing inequality so that government—to preserve social welfare—could restrict the extent of contract farming if non-food-producing sectors expand, causing terms-of-trade deterioration of food-importing nations.