Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement

India is a rapidly industrialising economy and society with intense demands for better infrastructure from its people. The last 20 years have seen a great acceleration in this process, with India becoming one of the world’s fastest growing economies. However, for those whose lands were acquired for these purposes and the even more vulnerable people whose livelihoods depended on the lands acquired, a great human tragedy has unfolded. Independent estimates place the number of people displaced following development projects in India since independence at 60 million. This is the highest number of people uprooted for development projects in the world. Only a third of these people were resettled in a planned manner. Most of them were the asset-less rural poor, marginal farmers, poor fisherfolk and quarry workers. Around 60 per cent of the displaced belonged to the Adivasi and Dalit communities. Given that 90 per cent of our coal, more than 50 per cent of minerals and most prospective dam sites are in Adivasi regions, there is likely to be continuing contention over issues of land acquisition in these areas.

Two sides of a coin

We need to move decisively away from the colonial Land Acquisition Act 1894, which treats the Indian people as “subjects,” towards a vision of citizens, whose rights are guaranteed under the Constitution. This is what the proposed Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act seeks to do. The most significant feature of the new law is that it combines land acquisition with resettlement and rehabilitation (R&R). For these must inescapably be seen as two sides of the same coin. R&R must, in each instance, necessarily follow upon significant acquisition of land. Not combining the two within one law risks neglect of R&R, whose provisions need to be made mandatory and not reduced to being conditionalities without consequences, as they have largely been thus far.

Social Impact Assessment (SIA)

The bill has been shaped over the last one year through an incredibly transparent process of consultations with all stakeholders and has taken on board almost all the suggestions of the Parliamentary Standing Committee. The most important provision in the bill is Social Impact Assessment (SIA), a practice well established across the world that has greatly helped carry forward development in a more just and inclusive manner. The SIA includes an assessment of whether the proposed acquisition serves public purpose, an estimate of project affected families (PAFs) and of the extent of land to be affected by the acquisition.

The SIA will study the social costs of the project vis-à-vis its benefits. It will ensure that the views of the affected families are assiduously recorded and included in the SIA Report. For this purpose, public hearings will be held at the affected area, after adequate publicity about the date, time and venue of the hearing. The SIA report will be evaluated by an independent multi-disciplinary Expert Group, which will include two non-official social scientists, two representatives of Panchayati Raj Institutions, two experts on rehabilitation and a technical expert in the subject relating to the project. If the Expert Group is of the opinion that the project does not serve any public purpose or the social costs and adverse social impacts of the project outweigh its potential benefits, it will make a recommendation that the project be abandoned forthwith.

Protecting the interests of PAFs

However, in the event the Expert Group gives the go-ahead to the project, the bill contains powerful provisions protecting the interests of PAFs. Inclusive of 100 per cent solatium, compensation for land losers will be twice the market rate in urban areas and 2-4 times the market rate in rural areas. The exact value in rural areas will be determined through a sliding scale, reflecting the distance of the project from urban areas, the precise scale being left to the State governments to determine.

Each PAF will be entitled to a comprehensive R&R package. In irrigation projects, each landed PAF will get one acre of land in the command area. SC/ST families will get more, being provided with land equivalent to land acquired, subject to a maximum of 2.5 acres. PAFs will also be allowed fishing rights in the reservoirs. House for house lost will be given in every project. Where jobs are created through the project, PAFs will be entitled to employment. In urbanisation projects, 20 per cent of the developed land will be reserved for landowning PAFs, in proportion to the area of their land acquired.

To support relocation, each PAF will get a subsistence grant, resettlement allowance and a transport allowance, which will be higher for the SC/STs. As far as possible, no acquisition of land will be made in the Scheduled Areas. But if this happens, the approval of the concerned gram sabha/panchayats/autonomous district councils will be obtained and they will be resettled preferably in the same Scheduled Area in a compact block so that they can retain their ethnic, linguistic and cultural identity.

Each resettlement area will be provided a number of facilities including roads within the area and an all-weather road link to the nearest pucca road, transport services, proper drainage and sanitation facilities, assured sources of safe drinking water, including drinking water for cattle, electric connections and public lighting, schools as per the provisions of the Right to Education Act, primary health centre, basic irrigation facilities, seed-cum-fertilizer storage facility, fair price shops, panchayat ghars, village post offices, burial or cremation ground, anganwadis, veterinary service centre, grazing land, playground for children, community centre, places of worship, etc.

Protest to recognition

The initial chorus of protests from the corporate sector appears now to have settled down in a clear recognition that the price to be paid for compensation and R&R will only be a small fraction of the potential returns from these projects. They are also reassured by the fact that land compensation provided will not be taken as the base for circle rates for subsequent acquisitions, so as to avoid a speculative price spiral. However, a valid remaining concern is about the new processes visualised under the law becoming endless. This is something that is of equal importance to the PAFs for historically R&R processes have dragged on painfully, exacerbating the tragedy of displacement.

Thus, the latest version of the bill being currently reformulated seeks to provide strict time-lines within which the land acquisition as well as the R&R process have to be completed. This includes a provision of six months for the SIA process and an overall limit of 35 months for the land acquisition process. Full payment of compensation will be made within a period of three months and the monetary part of the R&R will be paid within six months from the date of the Award. It has also been provided that in case of irrigation or hydro-power projects, R&R will be completed six months before submergence.

PPP projects

Questions have been raised about the government acquiring land for private or PPP projects. But we must first recognise that a lot of infrastructure development already occurs in India through this route. And given the huge asymmetries of information and power in the land market, there are innumerable instances of distress sales by farmers to more powerful entities at throwaway prices. In many instances, these sales have been followed by use of the land in ways that are completely contrary to the original stated purpose and have yielded windfall profits to land and real estate mafias, with the sellers receiving no share in these. That is why there has to be a role for the government — to put in place a transparent and flexible set of rules and regulations and to ensure its enforcement that protects the interests of land and livelihood losers in every instance of large transfers of land. In all private or PPP projects, acquisition will need the consent of 80 per cent of land losers. Indeed, the bill makes a historic provision of mandatory R&R even for very large private purchases of land, the limits for which will be determined by each State government.

The bill also seeks to protect food security by placing definite limits on acquisition of multi-cropped irrigated land as also on total agricultural land acquired. The limits will again be left to the State governments to determine in line with their development priorities, since these can vary widely across States. The operation of the draconian urgency clause of the 1894 law has also been strictly circumscribed, to be applied only to the minimum area required for defence, national security or emergencies arising out of natural calamities.

Conclusion

It is to be hoped that winter session will see the passage of this ground-breaking legislation that will help avoid several historical injustices, while making development much more inclusive and participatory.

Source:The HINDU

RIGHT TO EDUCATION - AN APPRAISAL

Universalisation of Elementary Education

A National Goal

Universalisation of Elementary Education (UEE) has been accepted as a national goal in India since independence. The Indian constitution recognized UEE as a crucial input for nation building and included it in the Directive Principles to be implemented with in a period of ten years. Article 45 of the constitution states, “The State shall endeavour to provide with a period of ten years from the commencement of this Constitution for free and compulsory education for all children until they complete the age of fourteen years”

The National Education Policies have retired the constitutional directive. Te National Policy on Education, 1986, provided that “Free and compulsory education of satisfactory quality shall be provided to all children up to the age of 14 years before we enter the 21st century.” The Programme of Action (POA), 1992 outlined various strategies for achieving this goal.

Millennium Development Goals

In the millennium year (2000) leaders of 189 nation states including India, signed the United Nations sponsored Millennium Declaration, which set out the Millennium Development Goals (MDGS) to inter alia ensure that all children around the world are in primary school by the year 2015. In adherence with this declaration, the Central Government announced its Sarva Shiksha Abhiyan, 2001 (Education for All) programme and tabled the 86th Constitutional Amendment Act, 2002 which was passed with unanimous acclamation by Parliament.

With the Right to Education Act coming into force, India has joined the league of over 130 countries which have legal guarantees to provide free and compulsory education to children. According to the UNESCO’s ‘Education for All Global Monitoring Report 2010’, about 135 countries have constitutional providing free and compulsory schooling to children in the 6-14 year age bracket, came into force with effect from the 1st April, 2010 . With the new education act now, India has joined some 20 other countries including Afghanistan, China and Switzerland, which have laws guaranteeing free and compulsory education for eight years of elementary education.

Constitutional Safe Guards:

The 86th Amendment (December, 2002) of the Constitution includes the following changes.

Article 21A: Right to Education:

“The State shall provide free and compulsory education to all children of the age of 6-14 years, in such a manner as the State may, by law determine”.

Article 45: Provision for Early Childhood Care and Education to Children below the Age of 6 years:

“The State shall endeavor to provide early childhood care and education for all children until they complete the age of six years”.

Article 51A: Clause ‘k’ has been added in 51A Fundamental Duties:

It shall be the duty of every citizen of India “who is a parent or guardian to provide opportunities for education to his child or, as the case may be ward between the age f and 14 years”.


International Recognition of Education as a Human Right:

The right to education is marked priority on the agenda of the international community since it is quintessential for the exercise of all other human rights. A number of human rights treaties accepted and recognized internationally, identifies right to education as a fundamental aspect for development and social transformation

The right to education is clearly acknowledged in the United Nations’ Universal
Declaration of Human Right (UDHR), adopted in 1948, which States:

“Everyone has the right to education shall be free, at least in the elementary and fundamental stages. Elementary education shall be compulsory. Made generally available and higher education shall be equally accessible to all on the basis of merit…..”(Article 26).

The Right to Education Act, 2009: An Overview

Article 21-A and the RTE Ac came into effect on 1 April 2010. The title of the RTE Act incorporates the words ‘free and compulsory’. ‘free education ‘ means that no child , other than a child who has been admitted by his or her parents to school which is not supported by the appropriate Government, shall be liable to pay any kind of fee or charges or expenses which may prevent him or her from pursuing and completing elementary education. ‘Compulsory education’ casts on obligation on the appropriate Government and local authorities to provide and ensure admission, attendance and completion of elementary education by all children in the 6-14age group. The Key provision of the act overviewed as follows:

Duties of Appropriate Government and local Authority:

•All children between the ages of 6-14 have access to a neighborhood school with the prescribe number of teachers having prescribed minimum qualifications, building ad infrastructure as defined in the Act.
•All children are entitled to free and compulsory admission , attendance and completion of elementary education (Class 1 to VIII)
•No child shall be denied any of the entitlement guaranteed under the Act on the ground of community, caste or religion, gender , rural, urban , rich or poor , able or with special needs – they will study together in an inclusive environment.
•Good quality elementary education conforming to the standards as prescribes in the Act.
•Provision of training facilities and professional development for teachers.
•Monitoring of school functioning.
•Children will study in their age appropriate class and special training will be provided for out of school children who are being enrolled and need to catch up.

Duties and responsibilities of schools:

•School shall create an environment free of fear, anxiety and stress – there will be no detention, no corporal punishment, no mental harassment and no expulsion. Teachers will care for children and respect their dignity.
•School cannot deny admission to any children the grounds of lack of birth / transfer certificate and they shall be admitted in their age appropriate class.
•School shall admit out of school children through out the academic year.
•A School must have clean class rooms, safe drinking water, toilets (Separate for girls / boys), play area and library facilities.
•Children will have a school Management Committee comprising elected representative who will monitor the progress of the school and draw up a school development plan.
•Prescribe minimum working days and hours for teachers.
•Private / unaided schools will reserve 25% seats for children from disadvantaged communities as stated in the Act.

Duties and Responsibilities of Teachers:

•Maintain regularity and punctuality in attending school.
•Conduct and complete the curriculum in accordance with the provisions of section 29 of RTE Act 2009 within the specified time.
•Maintain a file containing the cumulative records for every child will be the basic for awarding the completion certificate when the child finishes class VIII
•Hold regular meeting with parents and guardians and appraise them regularly about attendance of their children, the child’s learning ability, progress and any another relevant information.
•Participate in training programmes.
•No teacher shall engage himself or herself in private tuition or in private activity.

Suggestions:

Budgetary allocation for RTE-SSA Programme should be adequate to meet the centre’s commitment of 65% since most state government is struggling with ballooning budget deficits. Due to paucity of funds with the Government for allotment under the Act, substantial public-private participation in elementary education may be considered for its effective implementation. The most important challenge, if the ground reality is taken into account is the abject poverty coupled with population explosion emerges as the root causes of depriving the children their right to education. If our Government is really serious abut effective implementation of RTE, and then poverty has to be accepted as a biggest challenge. In addition to that, the spectrum of implementation issues covering finance, accountability and monitoring need to be addressed forthwith.


Source: KURUKSHETRA

Establishment of India's Space Mission

Beginning of Space Programme:

Half a century has passed since India took its first steps towards establishing a space programme of its own. The country’s first experimental satellite, Aryabhata, was launched from the Soviet Union in 1975 and the first successful satellite launch from within the country, using the SLV-3 rocket, followed five years later.

100th Mission:

On Sunday, the Indian Space Research Organisation celebrated its 100th mission with a flawless launch of the Polar Satellite Launch Vehicle (PSLV) from Sriharikota. Given the long association between the French and Indian space programmes, it was particularly appropriate that this landmark launch carried France’s SPOT 6 satellite.

Evolution of PSLV:

A deal in the mid-1960s to make a small French two-stage rocket (known as a sounding rocket) in India catalysed the development of solid propulsion capabilities needed for the launch vehicle programme. A decade later, another deal gave ISRO access to French liquid propulsion technology, which has gone into the PSLV’s second stage. The PSLV has become a rugged workhorse with 21 consecutive successful launches behind it. It has taken over 50 satellites and spacecraft into space, half of them for foreign customers. Since it became operational, the PSLV has carried all of India’s remote sensing satellites and also launched the country’s first lunar probe, Chandrayaan-1. The first Indian mission to Mars too will travel on its shoulders next year.

Need of GSLV:

With the PSLV, the country does not have to look abroad for launching its remote sensing satellites. But the same is not true with communication satellites. In contrast to the PSLV, the trouble-prone Geosynchronous Satellite Launch Vehicle (GSLV) has been hampered by delays in mastering the cryogenic technology required for it as well as other problems. Moreover, ISRO’s needs appear to go beyond the capabilities of this rocket, which was designed to carry two-tonne communication satellites. The Indian space agency has already launched three communication satellites weighing over three tonnes on Europe’s Ariane 5. A fourth satellite, GSAT-10, is to be carried on the Ariane 5 in two weeks’ time. Such foreign launches are expensive. In the case of the GSAT-8, which went into operation last year, it cost Rs. 300 crores to build the satellite and a similar sum went for its launch.

The giant solid-propellant boosters and liquid-propellant core stage for the next generation GSLV Mark-III are ready and will be tested in an experimental flight. But this rocket, with the ability to carry four-tonne communication satellites, cannot be put to use till an entirely different cryogenic engine and stage have been perfected. That could take time. The Indian launch vehicle programme has a long way to go.


Source:The HINDU

The Malady of Missing Children

The malady of missing children in many parts of the country is a terrible commentary on our collective response to the complex web of socio-economic and gender-based injustices.

Reasons for the Disappearances

Organised crime, bonded labour, drug peddling, and trafficking for sexual exploitation are among the reasons for the disappearances of children. The Central and State governments have now been issued notices by the Supreme Court on a petition alleging that about 55,000 children have gone missing in the past three years. In the Capital alone, over 19,000 children have disappeared since 2009, according to the Ministry of Home Affairs. Most are still untraced. If this malaise seems familiar, so does the cure.

Recommendation of NHRC

The committee set up in the aftermath of the gruesome Nithari incidents recommended strengthening the separate cell within the Central Bureau of Investigation to track the whereabouts of disappeared children. The apex court has, in its recent intervention, sought to know the current status of this cell. The recommendation dates back to a 2007 National Human Rights Commission report. The NHRC has repeatedly called for greater involvement and accountability on the part of the local administration and the police in protecting vulnerable children and their families.

Crimes involving child-smuggling transcend inter-State and international borders. A central repository of data harnessing forensic science and information technology would go a long way towards breaking the nexus between crime syndicates and errant officials.

Root Causes of Child Trafficking

But addressing the root causes of child trafficking requires a more comprehensive response. Poor access to primary education and the lack of a stimulating learning environment to sustain initial school enrolments account for the still pervasive prevalence of bonded labour, as well as for runaways. It is also worth remembering that better wages for the adult workforce have historically been one of the surest ways of stopping families from sending children to work rather than to school. Cumulatively, such measures would add up to a strong case for replacing informality in India’s workforce — over 90 per cent of which is currently outside the organised sector — and investing more in social protection policies.

Conclusion:

None of this detracts from the immediate need for psycho-social counselling services for vulnerable or affected children and families. The police and the law enforcement machinery would also need to be sensitised to this all-important human dimension. Inculcating a culture of respect for the rights of children is essential to strengthen the traditional family-oriented value system.

Source: The HINDU

Developmental success of Bangladesh and the Lessons to India

Developmental success of Bangladesh

Bangladesh is very much in the news these days in our country, but for the wrong reasons. In the unfortunate Bangladesh-bashing that seems to have become somewhat of a pastime, we seem to have failed to notice the striking developmental success that it has had in the last few decades, compared with some high-profile Indian States.

Consider this. Bangladesh is considerably “poorer” than India going by GDP alone — its GDP per capita (adjusted for purchasing power parity) in 2010 was only $1,585, roughly half of India’s ($3,419) and less than a third of Gujarat’s ($5,098) and Haryana’s ($5,434). But how is Bangladesh doing on social dimensions compared to some of our “richer” States?

Child Development in Bangladesh

Let us start with the status of children. In almost every standard indicator of child development, Bangladesh is doing better than some of the richer Indian States.

The Infant Mortality Rate and the under-Five Mortality Rate in Bangladesh is better than 13 large Indian States, including much richer Indian States like Gujarat, Haryana and Himachal Pradesh.

The proportion of children that are underweight is also lower in Bangladesh compared to six Indian States, including richer Gujarat where the Chief Minister has now come up with a truly bizarre explanation for the prevalence of malnutrition there.

Fertility Rate

Interestingly, Bangladesh’s Total Fertility Rate, which measures the children born per woman, is 2.2 (which is nearly the “replacement rate”) and lower than 10 large Indian States, including Gujarat (2.5) and Haryana (2.3). Even when it comes to access to improved sanitation, Bangladesh again does better than every large Indian State other than Kerala, Punjab, Himachal Pradesh and West Bengal.

What does all this data tell us? Clearly, Bangladesh demonstrates that it is possible to have superior social outcomes at lower per capita incomes and lower rates of economic growth. There is more to social development than just GDP. So why has Bangladesh done so well?

TWO ARGUMENTS

Let us first examine the arguments of the naysayers. One set of sceptics would argue that Bangladesh simply “Exports its Poverty” to India, especially to our Northeast. But even if one believes the most exaggerated statistics of Bangladeshi migration to India, not more than five to six per cent of Bangladeshis seek their livelihoods in our country.

The second argument of the naysayers is that Bangladesh’s data is Fudged or Exaggerated by the donor community to justify its larger than life presence in the country. However, doctoring national data at such scale is simply not possible in today’s day and age of scrutiny by academics, researchers and sceptics.

Lessons to be learnt:

Public Health Expenditure

So how might have Bangladesh done it? Spending has something to do with it. As Jean Drèze has argued, the public health expenditure as a proportion of the GDP in Bangladesh has been much higher than in India until a few years ago.

Social Mobilisation at the Local Level

Another clear lesson is that grassroot institutions seem to matter. One of the major reasons for the success of Bangladesh has been social mobilisation at the local level, such as through women’s self-help groups (SHG), which has led to increased public awareness and greater accountability in service delivery. A lot of this has been facilitated by robust and effective development NGOs that have achieved scale — in fact, Bangladesh is perhaps the best case study of NGO success anywhere in the world. As scholars have argued, NGOs are involved at scale in virtually every development activity in the country, including education, health, poverty alleviation, etc. NGOs may have “broad-based” social development in Bangladesh, as some have argued, since they have primarily worked with the poor through social campaigns, but this phenomenon may be unique to Bangladesh, as state institutions may be weaker, as compared to countries like India, and NGOs may be filling up that space.

Nevertheless, there are lessons for India — effective grassroot institutions matter for service delivery. In the Indian context, financially and administratively empowering the Panchayati Raj institutions, with their 2,50,000 gram panchayats, and 30 lakh elected representatives (of which 12 lakh are women) is critical. This is not happening on any significant scale. Similarly, the 30 lakh women’s SHGs (that we hope to increase to 70 lakh in the next five years through the National Rural Livelihoods Mission — Aajeevika), could play a major role in improving social outcomes. But for this to happen, we will need to ensure that these SHGs are linked to banks and involved in service delivery, as in Andhra Pradesh.

ENHANCING CONNECTIVITY

Currently, 80 per cent of all credit to SHGs goes to the four southern States of India — Andhra Pradesh, Tamil Nadu, Karnataka and Kerala — and this needs to be broad-based nationally. In addition, we need to enhance rural connectivity — the Pradhan Mantri Gram Sadak Yojna (PMGSY), a major success in connecting habitations above 500 population with pucca roads, needs to scaled up to connect smaller habitations. Sanitation and hygiene have to undergo a veritable revolution, given their multiplier effects on reducing child mortality and malnutrition, enhancing economic productivity, and upholding the dignity of women.

Conclusion:

Clearly we must not settle for lower GDP growth rates in India. Indeed, the data shows that there is a clear positive correlation between GDP and social development indicators. More importantly, continued high rates of GDP growth are required for generating resources to invest in health and education, and sustaining the investments on the required scale.

But what Bangladesh’s experience shows is that we don’t have to wait for that high economic growth to trigger social transformations. Robust grassroot institutions can achieve much that money can’t buy.

Proposed National Food Security Bill and the Revival of the Public Distribution System

In earlier writings, we have drawn attention to the quiet revival of the public distribution system (PDS) in many States during the last few years. Market prices of PDS commodities — mainly rice and wheat — have sharply increased, giving people a much greater stake in the system. In response to this, or for other reasons, many States have initiated bold PDS reforms. The combination of increased public pressure and greater political commitment to the PDS has led to significant results, including more regular distribution and reduced leakages.

INCLUSIVE PDS

Many States have also moved towards a more inclusive PDS. Restricting the PDS to “below poverty line” (BPL) households has proved very problematic: there is no reliable way of identifying BPL households, exclusion errors are massive, and targeting is also very divisive. There is, therefore, growing pressure for a different approach, where the PDS covers a large majority of the population. Tamil Nadu has gone all the way to a universal PDS: every household there is entitled to 20 kg of rice every month, that too free of cost. Other States that have made significant moves towards a universal or near-universal PDS (at least in rural areas) include Andhra Pradesh, Chhattisgarh, Himachal Pradesh, Kerala, Orissa, and Rajasthan. This approach has helped to not only avoid exclusion errors but also ensure that the PDS works: a more inclusive PDS is under much greater pressure to function.

In some States such as Orissa and Rajasthan, these changes are very recent. In others, notably Chhattisgarh and, of course, Tamil Nadu, they were initiated several years ago. The National Sample Survey (NSS) data for 2009-10 provide a useful opportunity to look for early signs of the results.

One interesting development is a major increase in PDS purchases: between 2004-5 (the previous “thick round” of the NSS) and 2009-10, household purchases of wheat and rice from the PDS increased by 50 per cent in quantity terms. The proportion of households purchasing at least some rice or wheat from the PDS increased from 27 per cent in 2004-5 to 45 per cent in 2009-10. This quantitative expansion is one important aspect of the recent revival of the PDS in large parts of India.

Further, in value terms, PDS entitlements are now quite substantial in many States. The implicit income subsidy from the PDS can be calculated as the difference between PDS price and market price, multiplied by quantity purchased, and summed over wheat and rice. There are different ways of estimating this, since there is more than one way of identifying the relevant market price. Using the median market price, State-wise, as a benchmark, the average implicit subsidy (for rural households that purchased at least some grain from the PDS) was around Rs 250 per month in 2009-10. Over the year, this is equivalent to the earnings of a whole month’s work under the Mahatma Gandhi National Rural Employment Guarantee Act — without having to work. In absolute terms, it is not much, but for people who are constantly struggling to make ends meet, it does help. The implicit subsidy would be larger, of course, if the PDS worked well across the country.

IMPACT ON POVERTY

Based on these implicit subsidy calculations, it is possible to estimate the impact of PDS on rural poverty — by adding the implicit subsidy to the explicit NSS estimate of Monthly Per Capita Expenditure (MPCE) for each sample household. To illustrate, consider the following exercise. Suppose we define the “Tendulkar poverty gap” as the sum, over all rural households below the national Tendulkar poverty line, of the difference between that line and a household’s actual MPCE. How far does the PDS reduce the Tendulkar poverty gap? In other words, how much smaller is the poverty gap (in rural areas) when the implicit PDS subsidy is added to the standard components of MPCE?

Using NSS data for 2009-10, it turns out that the PDS (more precisely, the foodgrain component of the PDS) reduces the Tendulkar poverty gap by around 18 per cent at the national level. This is a moderate achievement, but what is more interesting than the national average is the contrast between States. In Tamil Nadu, the PDS reduces the Tendulkar poverty gap by more than 50 per cent. Other States where the PDS has a large impact on rural poverty include Chhattisgarh and Andhra Pradesh (about 40 per cent), and also Himachal Pradesh and Kerala (around 35 per cent). By contrast, the poverty impact is below 15 per cent in Bihar, Jharkhand, Madhya Pradesh, Punjab, Rajasthan, Uttar Pradesh and West Bengal. As it happens, all the States in the high-impact list have a relatively inclusive PDS, whereas all those in the low-impact list were still clinging to BPL targeting at that time (Rajasthan did expand the coverage of the PDS after 2009-10, with impressive results). In short, a more inclusive approach seems to give better results not only in terms of the general functioning of the PDS, but also in terms of its impact on poverty.

These figures are illustrative, since (as mentioned earlier) there are various ways of going about these calculations. All of them, however, point to the same basic conclusion: the PDS is now having a substantial impact on rural poverty in States where it is broad-based.

So far, we have looked at PDS as an implicit income transfer. Aside from “transfer benefits,” the PDS is likely to have important “stabilisation benefits”, insofar as it brings some security in people’s lives. It is a little bit like having an additional source of income, and a stable one too; this can be very important for those who depend on a single and meagre source of income (such as casual labour) for their survival. The PDS may also have a positive impact on food consumption patterns (e.g. by enabling households to spend more on nutritious food items), although this is somewhat speculative. More likely, the PDS will start having a significant impact on nutrition when commodities other than rice and wheat (e.g. pulses, oil, and millets), with a higher nutrition value, are included in it. This has already happened in some States such as Tamil Nadu (where a wide range of food commodities are included in the PDS), Andhra Pradesh and Himachal Pradesh. The provision of nutritious foods that are badly lacking in the diets of poor households is an important future possibility for the PDS.

FOOD SECURITY BILL

These findings have an important bearing on the National Food Security Bill. The Bill is a great opportunity to complete the transition towards a functional and inclusive PDS across the country, and put an end to food insecurity. In its present form, however, the Bill is likely to undermine instead of facilitating this transition. This is because it seeks to impose a rigid targeting formula, based on a complicated division of the population into three groups (priority, general and excluded), without any clarity on how each group is to be identified. Given the failure of numerous expert committees and advisory groups to come up with any reliable targeting method, the idea of a universal PDS (at least in rural areas) looks more sensible than ever.

Various proposals have also been made for an intermediate approach, whereby all households would have common minimum entitlements except possibly those who meet reasonable and well-specified “exclusion criteria”. However, the government is turning these proposals into a reductionist version of the Bill, which would amount to little more than a reshuffling of existing PDS allocations, without any justiciable entitlements being created for anyone. Further, under the abominable formula proposed by the Food Ministry, whereby — roughly speaking — 33 per cent of the population would be excluded from PDS across the board (in every State, in rural as well as urban areas), the reshuffling would favour the richer States at the expense of the poorer States. Punjab and Haryana would be the biggest gainers, while Orissa stays in place — this makes no sense, and defeats the purpose of the Bill.

These and other flaws of the Bill (including a gradual trimming of many entitlements) derive partly from misplaced fears about the foodgrain requirements. Meanwhile, procurement has crossed 70 million tonnes per year, distribution is not keeping up, and excess stocks are growing. Never in history has so much undernutrition co-existed with so much hoarding of food. Reviving and revamping the Food Security Bill sounds like a better idea.


Source: The Hindu

Overcoming the Economic Crisis

The worst setback to the economy since 1991 on account of the weakening rupee and deterioration in the budgetary position has become more daunting as a result of the prevalence of drought conditions in parts of Karnataka, Maharashtra, Gujarat and Rajasthan.

GDP GROWTH PROJECTIONS:

The GDP growth for the first quarter, as per the official data estimates released by the Central Statistics Office is placed at 5.5 per cent against 8 per cent in the same period last year. As the performance of the industrial sector has not been satisfactory so far, the growth in GDP has been scaled down to 6.5 per cent for the current fiscal from 7.5 per cent initially, and further to below 6 per cent. Moody’s have estimated the growth at only 5.5 per cent. Manmohan Singh, Prime Minister, however, is confident that it may be even 6.5 per cent plus.

C. Rangarajan, Chairman, Prime Minister’s Economic Advisory Council (PMEAC), for his part, is exuding cautious optimism and has estimated that the growth may be even 6.7 per cent. This is probably due to the expectation that agriculture and allied industries will be making a contribution of 0.5 per cent against a negative growth assumed in other quarters. The cautious optimism is, perhaps, due to the expectation that the happenings in the second half of the current financial year would be favourable.

THE RAIN FACTOR:

The progress of rainfall in the drought-affected areas was somewhat encouraging in August and the deficiency got reduced to 12 per cent from around 20 per cent. The forecast of the Indian Meteorological Department that the monsoon will be near normal has gone awry. It is felt that the deficiency in rainfall will be significantly lower and the output of food and cash crops in the Kharif season would not be affected significantly.

BUDGETARY POSITION

Since the Exchequer would be badly affected due to a shortfall in receipts from direct and indirect taxes and on the foreign trade front too trends are unfavourable, several measures aimed at stimulating growth in exports have been initiated along with other steps for improving industrial growth. Towards this end, the limits for borrowing in forex terms under various heads have been raised. The objective would seem to be to relieve stringency in the money market and increase the forex inflows. The then Finance Minister, stated that there should also be a reduction in non-plan revenue expenditure, excepting interest charges and defence expenditure, by 10 per cent in a year. These exercises have not yielded tangible results so far.

INDUSTRIAL SECTOR

The industrial sector too, has not performed satisfactorily so far. In April-June, there was a contraction in industrial output to 0.1 per cent against 5.3 per cent. It had been hoped that the industrial sector would acquit itself creditably and enable the economy to overcome the meagre contribution of the agricultural sector and allied industries. Since the net rise of over 6 per cent in industrial output is required for the whole of 2012-13, it remains to be seen how the phase of recovery will be aided through new measures.

FOREIGN TRADE:

On the foreign trade front too, the happenings have been discouraging. It has not been possible so far to register a rise in exports in forex terms. The performance in the previous year was creditable in the first six months. In April-June this year, there was a drop in exports by 1.7 per cent. The trade deficit, however, was lower at $40 billion against $46.23 billion as there was a pronounced contraction in imports. The preliminary details for July, however, are more disappointing as it appears that exports in rupee terms also grew in a less pronounced manner than in April-June.

Against this sombre background, it will not be easy for the monetary authorities to effect a significant reduction in key interest rates. The inflation rate, of course, declined to 6.87 per cent in July from 7.25 per cent in June. As the retail inflation rate is still high, a helpful decision by the RBI is still awaited, especially as the borrowing programme up to July accounted for 42.51 percent of the gross amount excluding receipts from the treasury bills. The Union Finance Ministry is, therefore, endeavouring to raise the required resources through borrowing in forex terms and others also are being encouraged to adopt a similar course. There may be an increase in interest rates on loans in foreign currencies. These attempts will be helpful in the short term to overcome resource bottlenecks. But there will be an increase in external indebtedness and therefore in servicing charges in forex terms.

SUGGESTIONS TO ENHANCE THE GROWTH RATE:

The need of the hour is to augment the pool of resources in forex terms as well as rupee terms. It will, of course, be possible to mobilise the required funds for implementing the projects based on public-private partnership to some extent through issues of tax-free bonds.

Without the requisite resources and an increase in outlays on ongoing and new schemes in the infrastructure sector, the economy cannot be placed on a new growth path.

SOURCE: THE HINDU