Research
Credit Enforcement, Misallocation, and Income Disparities across Indian States: A Heterogeneous-Agents Framework
A dynamic heterogeneous-agents general equilibrium model with voluntary entrepreneurs and involuntary self-employed individuals is developed and calibrated to state-level measures of financial frictions in India to quantify the contribution of credit contract enforcement to resource misallocation and income disparities. Stronger enforcement relaxes borrowing constraints for high-talent but low-wealth entrepreneurs, improving the allocation of capital, expanding productive entrepreneurship, and raising aggregate output. An extension featuring a common credit market incorporates capital mobility across states and captures general-equilibrium spillovers from enforcement reforms. Complementing the model, empirical evidence using NSS microdata and variation in judicial speed—including reforms that accelerate civil case resolution—shows that improved enforcement reduces the share of voluntary entrepreneurship while increasing formal wage worker and involuntary self-employment shares, consistent with the general equilibrium mechanism highlighted by the model.
Targeting Winners: Firm Growth, Resource Allocation, and Aggregate Effects of India’s PLI Scheme with Priyam Verma
This paper evaluates India’s Production-Linked Incentive (PLI) scheme as a targeted industrial policy intervention. We first implement a difference-in-differences strategy using CMIE Prowess data to estimate the short-run causal effects of PLI eligibility on firm-level outcomes including sales, profits, exports, investment, employment, and input use, as well as potential spillovers on non-PLI firms through market competition and supply linkages. These empirical results inform a dynamic heterogeneous-firms model where firms differ in productivity and make endogenous entry and exit decisions under policyinduced distortions. In the model, the PLI operates as a targeted production subsidy that advantages higher-productivity firms and reshapes the stationary distribution of firm size and productivity. We calibrate the model to observed firm dynamics and size dispersion in the Indian manufacturing sector to quantify the aggregate and distributional consequences of “picking winners,” including its effects on efficiency, reallocation, and welfare.
The 2020 Labor Code Reform and Resource Allocation in India: Firm Adjustment under Relaxed Employment Protection Thresholds with Shreya Kapoor (draft coming soon)
This project investigates how easing India’s employment protection thresholds affects firm behaviour and aggregate productivity. A difference-in-RDD design exploits state-level reforms that relaxed dismissal restrictions at the 100- and 300-worker cutoffs, comparing discontinuities before and after reform across treated and untreated states. Using ASI data, the analysis examines impacts on labor composition, capital and other operating costs, R&D, firm output, and productivity. To quantify reallocation gains, a difference-in-differences Hsieh–Klenow misallocation exercise measures change in the variance of TFPR and marginal products across industries before and after reform, capturing the TFP improvements from reducing size-based labor regulation.
Employment Protection Thresholds and Firm Dynamics: A Quantitative GE Model
The paper develops a general equilibrium model with heterogeneous firms and households supplying three labor types—regular, contractual, and female—to quantify the macroeconomic effects of relaxing dismissal thresholds. Firms face a regulatory cost when employment exceeds the IDA cutoff, distorting labor demand, input mix, and scale decisions. Raising the threshold reduces the share of constrained firms, enabling firm expansion and labor reallocation across types. Model simulations quantify resulting gains in aggregate productivity, capital accumulation, and wage structure under a more flexible regulatory environment.
Why Some States Industrialize and Others Don’t: Institutional Frictions and Sectoral Development in India
Pre-Doctoral Research: “International Monetary System: Evolution, Problems and Future Possibilities” [M.Phil. Dissertation]