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

Scarcity of Medical Practitioners in Rural India

Achieving universal health:

The Planning Commission’s draft 12th Plan for health has proposed increase in government health spending from one per cent to 1.58 per cent of GDP. The spending increase was rightly felt to be grossly inadequate to move India towards achieving universal health care.

Obstacles to achieving universal health care in India:

Scarcity of rural doctors:

The scarcity of rural doctors currently prevents the delivery of even basic clinical services to needy citizens. Simply spending more or changing the way health services are purchased will not solve this problem.

Urban-rural divides:

Indeed, our cities are abundant with all manner of clinics, diagnostic centres and hospitals. But having a qualified doctor nearby is a rarity for the vast majority of Indians who inhabit the country’s rural spaces.
According to the 2001 Census, there is a tenfold difference in the availability of qualified doctors between urban and rural areas i.e. one qualified doctor per 8,333 (885) people in rural (urban) areas of India.

Addressing this rural scarcity is fundamental to efforts for achieving universal health care in India.

Reasons behind the reluctance of doctors to serve in rural areas:

The professional and personal expectation of medical graduates is not compatible with the life of a rural doctor. Their ambition lies in becoming medical specialists. Once they specialize, the professional, income, lifestyle, and family life opportunities in cities make rural jobs unattractive. Moreover, with private medical schools and their high fees dominating medical education, it makes little sense for medical graduates to take up jobs that don’t offer them the opportunity to recover their investment.

The scarcity of rural doctors places an important responsibility on the government. However, its efforts to place government doctors in rural posts have been largely unsuccessful. For the hardship that rural doctors have to endure, government service offers relatively little in terms of remuneration, quality schooling for their children and a chance at a decent family life. Human resources in the State health services are also poorly managed.

For instance, there is little transparency about transfers and postings because they are a source of both corruption and political patronage in the health system. Absenteeism is another issue.

Prevailing Situations in abroad:

Interestingly, many high, middle, and low-income countries also face a scarcity of rural doctors. Many of them have ameliorated this problem by using non-physician clinicians to deliver basic health services. In the United States, the United Kingdom, many countries in Africa, and even in South Asia, individuals such as nurse-practitioners or medical assistants, who have some years of basic clinical training, perform many of the clinical functions normally expected of fully qualified doctors. In sub-Saharan Africa and many parts of Asia, clinical services in rural areas are possible only because of these non-physician clinicians. They provide a range of clinical functions, including basic clinical services, manage deliveries, caesarean sections and abortions. Importantly, assessments from a variety of settings have shown that they perform as well as doctors.

Non-physician clinicians in India:

At the time of India’s independence, licentiate medical practitioner (LMP)s, who underwent three years training, comprised nearly two-thirds of the qualified medical practitioners (the other one-third being doctors) and they mostly served in rural areas. LMPs were abolished after Independence but doctors never really occupied the space that LMPs vacated. Now, the shortage of rural doctors has forced some States to look towards non-physician clinicians for relief. Clinicians with around three years of clinical training currently serve at government rural health clinics in Chhattisgarh and Assam. Importantly, assessments of their performance in Chhattisgarh have shown them to be as competent as doctors for delivering basic clinical care. And because their training focuses on serving as rural clinicians and their career ambition is to have a government job, these clinicians, as the Chhattisgarh experience shows, have a greater likelihood of staying and serving in rural areas.

Suggestion to reduce scarcity of doctors in Rural India:

Providing the professional and personal expectations of doctors and Increases in salaries and management changes will attract adequate numbers.

Conclusion:

The road to universal health care in India necessarily requires a serious assessment of basic problems that afflict the health system like the lack of human resources in rural areas. While this piece has focused on doctors, the rural scarcity of other health worker cadres such as nurses, lab technicians and pharmacists is equally acute and equally deserving of serious attention.

The experience of other countries and two States in India show that non-physician clinicians, whether they are three-year trained clinicians or nurse-practitioners, can be part of the solution.

Source: The Hindu

SAMEEKSHA- An Research Study of MGNREGA

In the midst of the debates that prevail in this country over the feasibility of the world’s largest public works programme, the MGNREGA Sameeksha — an anthology of independent research studies and analysis on the Mahatma Gandhi National Rural Employment Guarantee Act, from 2006-2012 — is a significant innovation to evaluate policy and delivery. In bringing out MGNREGA Sameeksha, a collection of critical independent voices, released in English and Hindi by the Prime Minister on July 14, the Ministry of Rural Development provides a platform for evaluation of a law designed to assist the most invisible in India’s political spectrum. The Sameeksha is not a ‘new’ study. As the introduction explains, it is “an analytical anthology of all major research studies done on MGNREGA that were published in academic journals or came out as stand-alone reports”.

Summary of findings

No department, from the social sector or otherwise, has published a summary of findings of all the independent research studies conducted on its major programmes. To do so asserts confidence in independent evaluations, and the wisdom that the government would do well to consider such views and analyses. Given India’s very poor record of rural development, it was important that the world’s largest employment programme be evaluated by credible institutions and researchers. By bringing a summary of findings of all the studies together, Sameeksha facilitates informed understanding, analysis, implementation, and reform where necessary.

Sameeksha is an initiative of Jairam Ramesh, Minister of Rural Development, edited by Planning Commission Member Mihir Shah and compiled by a team led by Neelakshi Mann and Varad Pande. To ensure academic merit, suitable coverage of major studies, and veracity of reportage, the anthology was refereed by two prominent academics/writers; economist Jean Dreze, and the editor of the Economic and Political Weekly, C. Rammanohar Reddy. This anthology is finally a tribute to the MGNREGA, and the millions of workers who have diligently struggled against poverty and unequal implementation, and even violence in some cases to access their rights.

Evaluating MGNREGA on the basis of rigorous research, rather than anecdotal evidence, offers a rational framework for improvement, and rejects irrational demands for closure. It also becomes the basis for more informed discussion to write articles, conduct television studio debates, and even design policy initiatives.

In the midst of ill-informed adverse criticism, this compendium gives us a set of answers based on fact and not opinion.

Continuing critical comments and assertions beg for answers. Has the MGNREGA really built assets, or has it just been a compendium of useless earth work? Has it created a lazy workforce that is affecting our work culture? Has it negatively affected agriculture by drying up the labour market? Has the MGNREGA become the biggest source of corruption in rural India? Has it failed to arrest distress migration? Has it helped household income, and reduced hunger in the poorest households?

These papers provide answers premised on detailed research or study. For instance, the oft-repeated aggressive assertion that MGNREGA does not build useful assets has been made without the support of any study to justify this claim. These assertions arise very often from fleeting visits to roadside worksites, with insufficient time for anything more than an anecdote. This off-the-cuff dismissal of “useless earth works” arises from a group which often lives on the other side of a fractured India, for whom mud and dirt become synonymous! It also raises the pertinent question of what indeed is a productive asset — a village tank that recharges 40 wells, or only a work of brick and mortar.

Sameeksha has a whole chapter dedicated to studies on asset creation which, by and large, show that sustainable assets have been created. A study of the best performing water harvesting assets in Bihar, Gujarat, Rajasthan, and Kerala for instance show the potential of these works where a majority of the assets studied had a return on investment of well over 100 per cent, with investment costs recovered in less than one year! Perception-based surveys, including those carried out by the National Sample Survey Organisation (NSSO) in three States showed that the vast majority of assets were being used, and the people found them useful.

Multiplier effect

This report should give policymakers and politicians a chance to take stock. Interestingly, the compendium effectively answers many of the basic criticisms of MGNREGA that have emanated from politicians and bureaucrats even within the system. The Prime Minister will hopefully acknowledge the findings contained in Sameeksha, and accept that MGNREGA is more than a lifeline for survival. Different studies have shown that it has provided livelihood and income security, decreased the incidence of poverty, increased food intake, reduced mental depression, positively affected health outcomes, and been successful as a self targeting scheme — as the poorest and most marginalised communities have sought work. In many States, it has decreased gender differential in wages, increased real wages accompanied by an increase in agricultural productivity and growth. This increase in agricultural productivity could be due to the watershed and water harvesting works, as well as the land development work on the fallow private lands of SC, ST and BPL families to make them productive. The studies do not bear out the assertion that MGNREGA has caused a shortage of farm labour. Importantly, some studies seem to indicate a significant multiplier effect on the rural economy suggesting, as the authors say, a need to study this aspect further.

The report also shows that there is poor implementation in many places. Average wages paid are lower than minimum wages; there is a distressing delay in the payment of wages; demand is not properly captured (an NSSO survey found 19 per cent of people who wanted work did not get it); dated receipts for work applications are not properly given; and the payment of unemployment allowance is a rarity. There is a shortage of staff, and there are many instances of irregular flow of funds. Non-compliance with proactive disclosure provisions such as muster rolls being available at worksites continues to be a problem in some States. As a result, leakages and corrupt practices continue to exist. While social audits in Andhra Pradesh have significantly increased awareness and identified fraud, Sameeksha notes that social audits are a facade in most other States.

Several initiatives have a mixed outcome. The Management Information System places the largest set of data of any public works programme in the public domain via the MGNREGA website, but States are still struggling to upload data online on a real-time basis. Ten crore bank and post office accounts have been opened, bringing about financial inclusion, and reduced corruption in wage payments, but the delay in payments through such accounts is a major cause of distress.

Many of these concerns obvious to those who work in rural India have been corroborated by the scope and rigour of academic research. The area specific outcomes have been no less significant. We have seen thanks to the MGNREGA offering alternative work, hundreds of bonded labour (Saheriya adivasis) in Rajasthan freed from generations of bondage. People have been saved from destitution in Uttar Pradesh, Bihar, Orissa, and Chhattisgarh, women have been empowered and are participating in huge numbers in Tamil Nadu, and the programme is even showing very positive results in “non-NREGA” States like Himachal Pradesh and Kerala.

Academic studies contextualise experience and anecdote, within the framework of critical factual analysis. Policymakers cannot brush these aside as irrelevant. Ironically, the report also reveals the many issues and areas that have not been researched. It exposes the missed opportunities of the academia to invest in detailed and widespread study of this very unique right, entitlement and programme. Perhaps this report can help be a force multiplier for the studies conducted so far, which in turn will encourage more research.

The MoRD has also invited the Comptroller and Auditor General to conduct a performance audit of MGNREGA, and mentor the social audit process. The CAG oversight should enable a detailed appraisal of the shortcomings in implementation. These kinds of partnerships must become a regular activity not only within one Ministry, but in the government. It will help improve implementation and could be a creative way in which governance could be improved with the help of modes of independent evaluation and public participation.

Source : The Hindu

Critical Analysis of Proposed amended Bill on Land Acquisition

Opinions that Supporting the Bill:

Acquiring Land:

There are arguments that since capital and labour are not acquired forcefully then neither should land. The argument seems valid on the face of it but land, unlike capital and labour, is not fungible. In other words, land is finite and immovable. Land for local needs cannot be substituted by the acquisition of land elsewhere. To illustrate; if a road has to be built to connect two towns then land at another location cannot be acquired for this purpose. To take such decisions the State, which is the ultimate arbitrator of public good, has to be vested with the power of eminent domain
At the same time, it is important to also acknowledge the myriad ways in which the doctrine of eminent domain as present in the 1894 law is sought to be significantly attenuated in the proposed new law. The State must have a role in acquisition given that land markets are highly imperfect in India and given that there are huge power and information asymmetries between the buyers and sellers of land.

No acquisition of agricultural land:

The argument for a complete ban on the acquisition of agricultural land without distinctions as to single or multi-crop is not a feasible suggestion as such a sweeping provision will create insurmountable obstructions to growth and development particularly in rural areas. Discretionary power provisions, especially in a law that can only be repealed by Parliament, have to be drafted with caution and in a manner that accommodates need for future growth of the area in question.

Each State in India faces unique development challenges and as several States represented before the Standing Committee, many of them regard industrialization as a key element of their strategy to generate employment. Keeping this in mind, the new Bill retains the restriction on acquisition of agricultural land but leaves the exact limits to be determined by each State in line with its own development priorities.

The Bill also makes it clear that acquisition of multi-crop land is only to be undertaken as a last resort and under “exceptional circumstances.” Furthermore if such land is indeed earmarked for acquisition then an equal plot of alternative land has to be delineated for agricultural purposes. In addition, the Bill provides for States to impose ceilings on such acquisitions taking place within the district as a unit.

Public purpose:

Not only does the new Bill define public purpose comprehensively it also qualifies it by establishing processes whereby such “public purpose” needs to be clearly and compellingly validated. The Social Impact Assessment Process is one where all those affected (including those whose livelihood has been impacted), including representatives from Panchayati Raj Institutions, are invited to deliberate as to whether public purpose is indeed served by such acquisition.

This is then vetted by an independent expert group and finally pronounced upon by the high level committee headed by the Chief Secretary of a State. These safeguards are compounded by the high quorum of consent required (80 per cent). None of these processes exist under the 1894 Act.

Rehabilitation:

It is given the guarantee that none of those individuals whose land has been acquired shall be dispossessed unless alternatives, as enumerated in the Bill, are provided for (Section 37). No such protection, enshrined in a statute, has ever been afforded earlier.

Over five chapters and two entire Schedules have been dedicated to outlining elaborate processes for resettlement and rehabilitation. The Second Schedule in particular outlines the benefits (such as land for land, housing, employment and annuities) that shall accrue in addition to the one-time cash payments.


Opinions that against the Bill:

The Bill proposed by the Ministry of Rural Development (MoRD) is clinging on to a colonial legacy. The consent of the gram Sabhas, the community and people should be the precondition before any natural resource, land or mineral, is acquired.

Public purpose has been poorly defined “in a manner worse than in the British Act
Let the community put forth its vision and plan as per Article 243 of the Constitution; what is completely unacceptable is for the government to acquire land for private and PPP projects.

Saving agricultural land for food security and for the livelihood of crores in this country is a must for our survival.There should be complete ban on the acquisition of agricultural land without distinctions as to single or multi-crop.

The Bill is especially weak on rehabilitation. It suggests that “only cash” is being offered to ameliorate the impacts of acquisition and adds that “cash was offered by the British as well.

The rehabilitation provided by the Bill is certainly not fair, nor adequate for an alternative livelihood. Cash being no option, land for land as provided in the 2007 policy is also not in the amended bill. How can the government not have enough land for rehabilitation, when it can and does purchase thousands of acres of land for private corporations and entities? Also, why is no one talking about rehabilitation of those already displaced? Make the law applicable with retrospective effect and include all other Acts with the “acquisition” clause under the new Act.

The present Bill has gone through certain improvements based on our critique and the recommendations of the Standing Committee, yet it falls far short of what is required to protect natural and human resource-based communities and uphold truly democratic development planning. This is the view of the masses, not the corporate.

Energy Efficiency: Let’s start at home

Energy inefficient buildings impose a heavy burden on power supply. They inflate and skew urban energy requirements and contribute to the electricity crisis. Two recent reports published by UN-Habitat send a clear message to complacent Indian policymakers: energy saving solutions are imperative to sustain urban growth and the best place to begin is the building sector since it offers maximum potential for reduction and accounts for 40 per cent of worldwide energy use. In India, of the 7,02,144 GWh electricity annually consumed (IEA 2009), residences use about 20 per cent. Much of this could be easily reduced. Unintelligent design, poor choice of building materials and inefficient appliances have increased power consumption and thus demand. Large swathes of glass and aluminium, which have respectively 3.5 and 30 times more embodied energy than bricks, increase solar gain and consequently the cooling load of the buildings. Excessive concrete pavement combined with poor landscaping of cities has contributed to the creation of heat islands. This not only causes more climatic discomfort, but also adds to cooling-related electrical consumption. Poor fenestration designs have failed to take advantage of daylight and most of the artificial lighting solutions remain energy intensive.

Adopting Green Practices

By adopting green practices, buildings can reduce 29 per cent of their total energy consumption in a decade. For instance, The Energy and Resources Institute (TERI) has shown that a shaded roof and sensitively designed windows have the potential of annually saving 10 to 15 per cent of energy in air-conditioned buildings. Every unit of electricity saved, when factored by transmission loss, would amount to substantial monetary gain, and would cumulatively reduce energy supply investment. What has the Indian government done to take advantage of green building practices? In 2007, the Energy Conservation Building Code, meant to reduce energy consumption by about 1.7 billion units of electricity a year, was launched. Even after five years, this code remains a recommendatory provision and does not bind many buildings. Neither is it integrated with the National Building Code. State governments fare no better. City level regulations have ignored the energy performance of buildings. They are more concerned about the economics of real estate. It is time to make energy audits for large buildings mandatory and dovetail energy codes into local regulations. This is not difficult to achieve. TERI has demonstrated how to integrate green codes with the building byelaws of Bangalore city. What is required is will and wisdom.

Olympic events, shows that diversity and difference are not a barrier to progress but can be a driver of it

During this break in the action between the closing of the Olympic Games and the opening of the Paralympic Games in London this Wednesday, we have a unique opportunity to consider how both events can improve people’s lives and impact the world.

Some may see the Games only as a cut-throat competition where athletes put their bodies to the limit so they can hear their national anthem played over the loudspeakers, while fans dress in the bright colours of their home countries and count the medals won. However, underneath the bravado of each nation, behind the confident exterior of each athlete and beyond the commercial considerations, there lies the true spirit of the Olympic and Paralympic Games, which matches the fundamental values of the United Nations: tolerance, respect, equality, inclusion and peace.

On the field of play, athletes embody these values in a number of ways, from kicking the football out of bounds when a player is hurt to shaking hands or sharing hugs with opponents at the end of a race. Doing so, they show the true spirit of sport, competing on a fair and respectful basis. Athletes also stand for these values when serving as volunteers in their own communities, visiting developing nations throughout the world and serving as Goodwill Ambassadors for the U.N. and other organisations. We should applaud those athletes who have truly embraced their responsibilities as role models, leaders and agents for change, as they recognise how their celebrity status can be used to help make the world a better place.

Awareness needed

Athletes are not alone in their capacity to effect change, with the hosts of the Olympic and Paralympic Games also in a unique position to create a powerful global legacy. As host of the 2012 Games, the United Kingdom has embraced this opportunity to invest in the future of their country and the world with the “International Inspiration” programme. This programme has, according to the organisation, benefited over 12 million young people in 20 countries, and will continue to create sustainable social, economic and sporting legacies throughout the country and abroad. I commend the efforts of the U.K. government, the London Organising Committee and their partner organisation Unicef in setting the bar so high for future sporting events. The London Games have also been conceptualised as the “Games for Everyone,” where diversity and inclusion are celebrated and featured in the Olympic and Paralympic Games as well as in the legacy efforts. This publicity and support of diversity and inclusion sends a powerful message around the world that diversity and difference — be it in ethnicity, origin, lifestyle, religion or physical ability — is not a barrier to progress but can be a driver of it. Also, we could pleased that the U.K., which hosted a precursor of the Paralympic Games in 1948, the “Stoke Mandeville Games,” particularly emphasised the importance of the Paralympics. Although the Olympics and Paralympics are nowadays part of the single bid a city puts forward benefiting from economics of scale, still much needs to be done to reach equal prioritisation regarding sport for persons with disabilities. Stakeholders include international organisations, governments but also the media. With regard to the latter, in most countries coverage of Paralympic sport unfortunately still lags behind, while in some it does not exist at all. More public awareness is needed to change prevailing negative perceptions in society, including those towards persons with mental disabilities. In that connection, Special Olympics International and their World Games have made much progress in transforming prejudices and promoting the rights of athletes with mental disabilities for instance.

The United Nations has profound partnerships with the Olympic and Paralympic families, represented by the International Olympic Committee (IOC) and the International Paralympic Committee (IPC) respectively, as well as with the Special Olympics, which are all based on the understanding that development, inclusion and peace building goals can be achieved through sport.

Olympic Truce

The Olympic Truce is one example of this partnership. The Truce is a historic part of the Olympic Games; in ancient times, all warring parties laid down their weapons during the Games, providing relief in times of constant war. This tradition of the Olympic Truce was revived in 1993 by a U.N. Resolution, reminding the world that the peaceful spirit of the Games can be a stepping stone for advancing conflict prevention and peace building objectives.

This past year, the U.N. Resolution calling for the Olympic Truce for the 2012 London Games was adopted and co-sponsored by all of the 193 U.N. Member States, indicating the importance that the international community places on the value of sport for peace. While a concrete universal ceasefire was unfortunately not observed so far, with ongoing conflicts in Syria, Afghanistan, and other countries, the Olympic Truce remains a noble goal and a powerful reminder of the spirit, ideals and historic potential of the Games. The Truce also reaffirms the actions of many programmes and organisations working towards unity and reconciliation in communities around the world.

Other efforts in the United Nations to support and promote the values shared with the Olympic and Paralympic families include, just to name a few, the work of the U.N. Environment Programme on environmental protection and sustainability, the World Health Organisation’s contribution to disease prevention and control and the engagement of various U.N. organisations in the educational programme of the Youth Olympic Games.

One can also dream of the Games having an even greater impact; for there is no event in the world that has the power to bring so many people together, generating excitement and attention that can be harnessed for the good of humanity.

As part of this dream, The athletes becoming even more aware of their status as social role models and more involved in promoting peace as well as sustainable change. The gender equality and women’s rights making strides through ever-greater female participation in sports, from the grassroots up to the elite levels. The U.N. working even more closely with organising committees of large sporting events to fully harness the power of sport as a driving force towards a safer, more secure, more sustainable, more equitable future.

For now some of it is already reality, some is just possibility. But the efforts of those involved with the 2012 London Games is giving me hope that we are heading in the right direction. Encourage the future hosts of sporting events and sport organisations to take up the baton and ensure that every major sporting event leaves behind a sustainable legacy.

An exercise to update capital market

The Securities and Exchange Board of India (SEBI) announced some important measures to “revitalise” the primary market and “re-energise” mutual funds. Though in its announcement SEBI has divided the various measures into two categories, it must be understood that what is being sought to be reformed is the capital market itself, comprising the intermediaries, investors and, of course, the regulators, including stock exchanges.

Reform measures can never be viewed in isolation — their broad objectives are always on strengthening the capital market and protecting its investors.

Another reason why compartmentalisation does not help arises from the fact that there is a substantial overlap in the reform measures applicable to the new issue market and mutual funds. Mutual funds channelise investor funds to the stock markets. So does the primary market. The difference, of course, is that investors in the primary market take on far greater risks compared to mutual funds, whose fund managers, with their presumed expertise, help investors in managing their risks to a large extent. It is for this reason that mutual funds have been officially recommended as the preferred choice of first time investors. The SEBI board’s recommendation to extend the Rajiv Gandhi Equity Savings Scheme, a budget-notified tax savings scheme, to mutual funds is to be welcomed. In fact, the scheme should have been confined to mutual fund investments only.

That said, there are specific measures to increase the penetration of mutual funds and incentivising their distribution network. Fungibility of Total Expense Ratio (TER) is allowed. This will help mutual fund manage their expenses better. In some cases, they can reward their distributors better.

There will be a simplification of the registration process of distributors. The base of mutual fund distributors will be expanded to include postal agents, retired government banks and certain others. SEBI will clarify as to what mutual fund products this newer category will distribute.

With a view to incentivising mutual funds to extend their coverage to beyond the top 15 tier cities, Asset Management Companies (AMCs) are allowed to charge additional TER of up to 30 basis points on funds collected from these centres, subject to certain conditions (new inflows from these places should be at least 30 per cent of the total inflows). Investors will, therefore, pay more. Mutual funds shall disclose in the half-yearly reports of their Trustees to mutual funds their efforts at tapping funds from centres other than the top 15. Their reports will include details such as opening of new branches in those areas.

To spur investor education, the industry should set apart a portion of the asset management fees annually for investor education campaigns. In one more significant move to expand the coverage of mutual funds to small investors who may not be tax payers, cash transactions up to Rs.20,000 are being allowed, subject to certain conditions.

By way of strengthening the regulatory framework, AMCs will make monthly disclosures on their websites. Distributors will set up a self-regulatory organisation. Mis-selling of mutual fund products will be deemed to be a fraudulent and unfair trade practice in terms of SEBI regulations.

Primary market

The thrust of the new reform measures is on enhancing retail participation. That has been the avowed SEBI objective for a long time. However, retail investors remain disillusioned with the primary market. It is highly unlikely that the ongoing fine-tuning of existing regulations and rules will help overcome the scepticism and persuade small investors to invest in IPOs (initial public offerings) in large numbers. Even so, it is worth noting that SEBI has been doing its best from time to time

An important new measure is to make the IPOs more accessible to retail investors through the existing network of brokers at more than 1,000 locations. The facility of ASBA (application supported by blocked amount) is also being extended through this mode. Under this, investors get to keep their money until allotment, which will also be speeded up. Banks are being asked to extend this facility to all branches in a phased manner.

The most headline-grabbing of the SEBI announcements is the one relating to the allotment process. Every retail applicant, irrespective of the application size, will be allotted a minimum bid lot, subject to availability of shares in aggregate. The minimum application size for all investors is also being increased to Rs.10,000-15,000 as against the existing Rs.5,000-7,000.

While other measures to facilitate capital-raising by the issuers have been announced, it is obvious that the regulatory focus is on enhancing market integrity and enhancing investor confidence. In that context, most of the new measures, though appearing to be just tinkering of existing rules, are really part of a larger process of bringing the Indian capital market and its regulation up to date. Investor confidence is bound to go up.

At the moment, however, regulatory initiatives can help only that much. It needs quality issues to drive the market forward.