2019 (missing) report: Government needs to release job data

Suppression of unemployment survey data, howsoever unpleasant, is not only undesirable, it is counter-productive.

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Prasanna Mohanty

New Delhi

January 31, 2019

UPDATED: January 31, 2019 04:16 IST

Aspirants stand in queues during a job fair in New Delhi.

The sudden resignations of two non-government members of the National Statistical Commission an autonomous body supervising statistical reporting by the government brings into sharp focus the Central government’s persistent attempt to suppress inconvenient truth about high unemployment in the country.

Suppression of unemployment survey data, howsoever unpleasant, is not only undesirable, it is counter-productive. Periodic data not only provides timely insights into the workings of the job markets and brings out different dynamics at play; it also helps in making intelligent policy and strategic decisions to overcome the situation.

SHARP RISE IN UNEMPLOYMENT

Even in absence of official data, it is widely known that unemployment has risen sharply in the past few years because of decisions like demonetisation and shoddy implementation of a badly designed GST, apart from factors that may be beyond the government’s control.

The ILO’s World Employment and Social Outlook: Trends 2018 report paints a gloomy picture. It says unemployed in India is expected to rise from 18.3 million in 2017 to 18.6 million in 2018 and 18.9 million by 2019.

But the numbers are likely to be far worse because its estimates are based on an unemployment rate of 3.5 percent, while the withheld 6thEmployment-Unemployment Survey (EUS) 2016-17 reportedly shows that it has gone up to 3.9 percent. Even the fifth EUS of 2015-16 had shown an unemployment rate of 3.7 percent much higher than that of ILO’s.

GOVERNMENT’S RESPONSE DISAPPOINTING

Having promised to create 10 million jobs every year before coming to power, the current dispensation has miserably failed to live up to it. Several of its employment-generating programmes have turned nonstarters. For example, the MUDRA loan scheme (started in 2015) was touted as a big initiative to generate self-employment, but closer scrutiny reveals it has neither improved credit flow to the MSMEs nor able to deploy funding available to it (with 40 percent lying idle).

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The Start-up India scheme was announced with lofty claims of setting aside `10,000 crore for boosting capital flow to start-ups and SMEs in 2014. Nearly five years down the line, the official data shows only 72 start-ups were sanctioned `605 crore. Interestingly, this data was last updated in September 15, 2017. The Skill India programme is now a forgotten slogan, having failed to address the skilling needs of industries or jobs to the skilled. So is the case with the other big-bang initiative, Make in India.

In sheer desperation, the government started peddling EPFO numbers as evidence of new job creation, forgetting that this data is part of its job formalisation drive called Pradhan Mantri Rozgar Protsahan Yojana (PMRPY) the government paying full employers’ contribution of 12 percent towards Employees’ Provident Fund and Employees’ Pension Scheme for new employees since April 2016. This is not the same as new jobs as people switch jobs, duplicat-Govt needs to release job data Aspirants stand in queues during a job fair in New Delhi. ing EPF numbers. Old employment guarantee scheme, NREGA, which was disdainfully dismissed as a living monument to UPA’s failure, is the only saviour, continuing to provide 40-50 days of work to 4-5 crore households every year.

WHY JOB DATA IS NECESSARY

A reading of the quarterly reports on the employment scenario (QES), which too have been discontinued by the government, provides several insights into the job market. For example, such reports from 2009 to 2017 shows that certain sectors like construction and IT/BPO which were providing a bulk of employment for years stopped doing so in 2016 and 2017. Similar is the case with labour intensive sectors of leather, gems and jewellery, transport and handloom. On the other hand, more jobs are being created in health, education, trade, accommodation and restaurant sectors.

WHAT THE GOVERNMENT SHOULD BE DOING

What the government has not denied is that 12.8 million youth are joining the labour force every year. So, ideally, new livelihood opportunities should be created to that extent. But how to do that continues to remain a big challenge. It should release the job data, discuss and debate the findings, consult relevant stakeholders and prepare appropriate policy response and strategies to address the growing unemployment.

2019 reports (missing) In-depth: Why Rahul Gandhi's minimum income promise can be a reality & Universal Basic Income: Will it work in India?

 

In-depth: Why Rahul Gandhi's minimum income promise can be a reality

NPAs being written off and revenue being foregone every year for India's rich can easily fund Minimum Income Guarantee scheme

Prasanna Mohanty | January 30, 2019 | Updated 16:33 IST

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Congress President Rahul Gandhi's unexpected announcement promising a "minimum income guarantee to every poor" may have stumped many, but this is probably the idea whose time has come - to borrow Victor Hugo's words famously quoted by former Prime Minister Manmohan Singh while unleashing the liberalisation process in his 1991 budget.

That is because the world is experimenting with the idea of income redistribution in a big way for the past few years to overcome two major concerns of our time: vast and growing inequality and the threat of automation creating joblessness. India's concerns are no different. In fact, growing income inequality and unemployment are the two major concerns that the Indian policymakers need to confront but go abegging.

The basic idea of minimum income guarantee (MIG) is to provide income support to vulnerable people and families to ensure a life with dignity. In Rahul Gandhi's scheme of things, this is clearly meant for all poor - presumably, all those who fall below the poverty line. A clear picture would emerge once the details are unveiled.

NDA'S UBI vs Rahul Gandhi's MIG

Rahul Gandhi's announcement adds a twist to the debate on universal basic income (UBI) first mooted by the Economic Survey of 2016-17. The basic premise of the Economic Survey's UBI was: "A just society needs to guarantee to each individual a minimum income which they can count on, and which provides the necessary material foundation for a life with access to basic goods and a life of dignity".

The Economic Survey's plan was to provide Rs 7,620 per annum - Tendulkar's poverty line of 2011-12 was inflation-indexed to 2016-17 - to 75% of population. It said this would cost 4.9 per cent of GDP, which could be funded from 5.2 per cent of GDP allocated for 950 central sector and centrally sponsored sub-schemes in 2016-17.

In contrast, Rahul Gandhi's plan seems to target only the poor (whether he means 22% of population fixed as poor by Tendulkar or 29.5 per cent fixed by Rangarajan is not yet clear) and his "minimum income" has not been declared.

Poverty estimation by Tendulkar and Rangarajan

Click here to Enlarge

The difference between UBI and MIG is this: A basic income is generally understood as the poverty line (as do the Economic Survey and economists world over assume), while a minimum income is pretty much at one's discretion - equal, more or less than the poverty line expenditure.

Growing inequality and unemployment

While the Central government has stopped publishing employment data, ILO's 2018 World Employment and Social Outlook Trends says the number of India's unemployed is expected to rise from 18.3 million in 2017 to 18.6 million in 2018 and 18.9 million by 2019, at 3.5 per cent unemployment rate for each year. Newspaper reports say that the 6th Employment-unemployment Survey of 2016-17, which has been withheld by the government, shows the unemployment rate shot up to 3.9 percent - up from 3.7 percent in 2015-16 and 3.4 percent in 2013-14. This would mean a much higher unemployment number than the ILO's.

Every year, 12.8 million youth are joining the labour force looking for work. But such is the situation that in 2018 alone, 11 million jobs were lost - as the CMIE survey has shown.

As for inequality, French economists Thomas Piketty and Lucas Chancel have shown in their 2017 study, Indian Income Inequality, 1922-2015: From British Raj to Billionaire Raj? that India is more unequal now than any time since the British Raj and that the top 1 percent of earners capture 22 percent of total income".

The latest Oxfam International report says, 136 million Indians, who make up the poorest 10 percent of the country, have continued to remain in debt for the past 15 years; in 2018 alone, India's 119 billionaires saw their wealth mushrooming by Rs 2,200 crore a day on average. Oxfam's executive director found this "morally outrageous" and warned: "If this obscene inequality between the top 1 percent and the rest of India continues then it will lead to a complete collapse of the social and democratic structure of this country."

Selecting the poor and finding funds

Two questions have cropped up since Rahul Gandhi made his MIG announcement: One, how to select the beneficiaries and two, whether India's fiscal situation will allow this. The first one is easy to answer: The same way the Ayushman Bharat selects its beneficiaries - from the list of the Socio-Economic and Caste Census of 2011.

The answer to the second one would have to wait until Rahul Gandhi tells us his "minimum" amount.

But assuming that he would follow the Tendulkar formula, that is 22 percent of population as poor, and that they are to be given Rs 7,620 per annum in line with UBI, it would cost about 1.43 percent of GDP (since it costs 4.9 percent of GDP for covering 75 percent of population as per the Economic Survey's calculations) or Rs 1,99,511 crore  -  Rs 139,51,849 crore (size of GDP as per the advance estimate for 2018-19) multiplied by 1.43 percent.

Where would that money come from?

Well, one source could be the one that the government and RBI find every year to write off corporate loan defaults - better known as the non-productive assets (NPAs) - and "revenue foregone" in the budget for the corporate tax payers.

According to the RBI's report, Operations and Performance of Commercial Banks, Rs 108,500 crore and Rs 162,700 crore of NPAs were written off in 2016-17 and 2017-18, respectively.

Similarly, the revenue foregone was Rs 86,145 crore in 2016-17 and Rs 85,026 crore in 2017-18.

NPAs written off and revenue foregone for past two years

Click here to Enlarge

Taken together, Rs 194,645 crore in 2016-17 and Rs 247,726 crore in 2017-18 were written off up as NPAs and given up revenue foregone for the rich Indians - more than what MIG would cost for the poor Indians!

There are other ways to find funds too. As economist Pranab Bardhan has suggested, tax wealth, inheritance and long term capital gains and collect more tax from under-assessed/under-taxed property. That should be enough.

Just one caution: Whether UBI or MIG, don't fund it from the expenditure on 950 central schemes. These schemes include those of food subsidy, fertiliser subsidy, NREGA, SSA, LPG subsidy, awas yojana, gram sadak yojana, ICDS, Swachh Bharat, Mid-day meals etc. In other words, those are meant for long-term human development (health, education) and rural infrastructure (roads, housing) and can't be substituted with UBI or MIG.

Not at least so long as India remains at the bottom-pile in human development index and per capita income. Currently, India ranks 130th out of 189 countries in the UNDP's 2018 HDI ranking. Once India come out of the low income trap, then such schemes could replaced with cash transfers.

Also read: Modi govt likely to make big announcement for farmers! Here's what you can expect

Also read: PM Modi memorabilia put on sale for 'Namami Gange' project; check out items on offer

Also Read: Tamil Nadu, Andhra Pradesh lag behind Haryana in girl sex ratio at birth

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 3  6

Universal Basic Income: Will it work in India?

The idea of UBI is not new but in the past few years, it has resurfaced globally in a very big way as a means of redistributing income.

Prasanna Mohanty | January 29, 2019 | Updated 14:44 IST

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The central government is believed to be working on a universal basic income (UBI) scheme for the poor ahead of the General Elections. The Economic Survey of 2016-17 had first flagged the UBI as "a conceptually appealing idea" and a possible alternative to social welfare programmes targeted at reducing poverty.

What is UBI?

UBI is a fixed income every adult - rich or poor, working or idle - receives from government. The idea is that a society, as a first priority, should look out for its people's survival; the lesson is that possibly it can do so without unequal redistributive plans.

According to Basic Income Earth Network (BIEN), a global network of academics, students and social policy practitioners promoting and serving as a repository of published research on UBI, "A basic income is a periodic cash payment unconditionally delivered to all on an individual basis, without means-test or work requirement."

Why UBI?

The idea of UBI is not new but in the past few years, it has resurfaced globally in a very big way as a means of redistributing income. Several experiments/pilots are being currently run across the world, but not yet adopted by any country as such.

The primary reasons for the tilt towards UBI are two:

• Growing and vast inequality
• Threat of automation affecting jobs and creating joblessness

Some experts think the existing system "would falter and fail if confronted with vast inequality and tidal waves of joblessness." (Annie Lawrey, author of "Give People Money: How a Universal Basic Income Would End Poverty, Revolutionize Work, and Remake the World")

Basic premise of Economic Survey (ES) of 2016-17's UBI: "A just society needs to guarantee to each individual a minimum income which they can count on, and which provides the necessary material foundation for a life with access to basic goods and a life of dignity." Three components of this UBI model are: universality, un-conditionality and agency (by providing support in the form of cash transfers to respect, not dictate, recipients' choices). Its key features:

• Poverty line for 2016-17 has been fixed at Rs 7,620 per year, using Tendulkar's poverty line formula (inflation indexing @ Rs 5,400 per year fixed for 2011-12 to 2016-17 with a target poverty level of 0.45%) to lift all poor above the Tendulkar poverty line.
• It takes 75% of population as universal for UBI purpose.
• Cost and fiscal space: ES model will cost 4.9% of GDP - as against 5.2% of GDP spent on all 950 central sector and centrally sponsored sub-schemes (actual allocation of 2016-17). So, fiscal space exists - but only if UBI replaces all existing Central govt. schemes.
• Income transfer through DBT and by replacing all Central schemes, using Aadhaar.
• Use gradualism - like starting with women, elderly, widows, disabled etc.

Also read: Modi govt likely to make big announcement for farmers! Here's what you can expect

Why Economic Survey model raises many questions

Economic Survey model is based on gross under-estimation of poverty. The Tendulkar's poverty line was criticised widely for gross under-estimation of poverty - per day per capita expenditure of Rs 27.2 in rural and Rs 33.3 in urban areas for 2011-12. It fixed 22% of population as poor. Therefore, C Rangarajan revisited it in 2014 and put poor families at 29.5% (363 million) - fixing per capita per day expenditure at Rs 32 in rural and Rs 47 in urban areas.

Niti Aayog Task Force on Elimination of Poverty report supports the Tendulkar's formula saying that the Rangarajan formula has not been officially accepted. In 2016, Niti Aayog justified this by saying:

(a) The sole objective behind the poverty line being to track progress in combating extreme poverty, it makes more sense to it at a level just sufficient for accessing the basic necessities of life; and (b) Setting the poverty line at a level at which the individual has comfortable existence will not allow us to assess the progress in the fortunes of those in abject poverty.

Table 1: Poor families in millions, % of total population and parameters

Click here to Enlarge

 

Source: Niti Aayog and other govt reports

UBI can't be at the cost of expenditure on health, education or rural infrastructure

• 950 central sector and centrally sponsored sub-schemes include those of food subsidy, fertiliser subsidy, NREGA, SSA, LPG subsidy, Awas Yojana, Gram Sadak Yojana, ICDS, Swachh Bharat, Mid-day meals etc. These are meant for long-term improvement in human development, rural infrastructure, employment etc. and can't be substituted by cash transfer.
• Therefore, replacing existing schemes with cash transfer will adversely impact the development goals of India.
• India stood at 130 out of 189 countries in the UNDP's 2018 HDI ranking. Movement in the HDI are driven by changes in health, education and income.

India already has UBI-like scheme under which too little is paid, not hiked since 2006/7 - Under the National Social Assistance Programme (NSAP) since 1991, the Central government gives pensions to elderly, widows and disabled. The Centre's component is between Rs 200 and Rs 300.  If GOI is interested in UBI, it can easily begin by increasing the pension amounts.

Not tried anywhere with India's level of income disparity and inequality

India's experience with NSAP (given above) and DBT (details in the 'notes') is limited and unsatisfactory. Need for good pilots of sufficient time. India should join in carrying out large scale experiment/pilot like Finnish and Canadian - to generate empirical evidence.

• Aadhaar-based DBT's flaws: Exclusion and authentication errors leading to starvation deaths in Jharkhand and other such experiences elsewhere.

Also read: PM Modi memorabilia put on sale for 'Namami Gange' project; check out items on offer

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 12  54

Bulandshahr violence: Governance takes backseat in UP as Yogi Adityanath govt makes mockery of law and order

Firstpost
Dec 19, 2018, updated on Dec 20, 2018

‘Bizarre. Absurd. Ridiculous. Embarrassing. Trump’. That is what a headline in The Washington Post screamed last year when a doctored video clip was released by US president Donald Trump. What has happened in Uttar Pradesh in the past two weeks since the lynching of station house officer Subodh Kumar Singh by a mob in Bulandshahr on 3 December, over alleged cow slaughter, indeed evokes a similar outrage. Replace US president Donald Trump with Uttar Pradesh chief minister Yogi Adityanath and his cops and the picture is complete.

First, the state police went after the Muslim men for alleged cow slaughter and put them in jail for two weeks on the basis of a complaint filed by the main accused in the mob lynching incident, Bajrang Dal convenor Yogesh Raj. Then on Tuesday, the four were released after the SIT constituted to probe the violence found them innocent.

The SIT arrested three more Muslim men for the alleged slaughter of cows with a bizarre narrative: “They were part of a gang that hunted cows and shot them with a double-barrelled gun. They would slaughter the cows using sharp instruments like knives and share the meat.” They were not named in the original FIR, nor their relations to the 3 December mob lynching incident is at all clear.

For the first time, two others have also been arrested for mob violence, but the main accused Yogesh Raj and a local BJP Yuva Morcha leader Shikhar Agrawal are roaming free. There is no word yet on why they have not been arrested or what actions have been taken to arrest them.

This reverses investigation of cow slaughter, rather than the mob lynching, was set into motion by none other than the chief minister. Two days after the incident, he held a review meeting and gave instructions for ‘strict action’ against cow slaughter, which he described as a ‘conspiracy’, but said not a word on the SHO’s killing. That was a signal for the Uttar Pradesh Police and the latter announced later that they will first go after the cow slaughter and then look at the mob lynching, even though the victim of this lynching was one of their officers. A couple of days later, Yogi went on to claim that “No mob lynching happened in Uttar Pradesh, what happened in Bulandshahr is an accident”.

This was ridiculous, to say the least. There is enough video evidence to show that it indeed took place in broad daylight. Besides, mob lynching is no ordinary crime or just a murder – and former Rajasthan chief minister Vasundhara Raje was rightly called out for saying a mob lynching as a murder in the same week.

That is why the Supreme Court had asked, in July this year, the Centre and state governments to create a special law for mob lynching and provide adequate punishment to instil fear for the law among the people involved in vigilantism and lynching. Sadly, no government has shown any inclination to follow this. Nor the apex court’s directive to give wide publicity to its direction that lynching and mob violence of any kind will invite serious consequence under the law. Had that been followed the SHO’s killing could have been averted.

This open display of hostility towards one community and undermining of the process of justice are not only creating deep fissures in society but also demoralising honest police officers and jeopardising professionalism in the force – which has dangerous consequences.

In fact, at least 83 former bureacrats have written an open letter criticising the Centre and the Uttar Pradesh government for failing to take action and demanded the resignation of Adityanath. The letter asked citizens to unite in a "crusade against the politics of hate and division – a politics which aims to destroy the fundamental principles on which our Republic is founded".

Both the chief minister and his police force are obliged to act fairly and impartially to ensure justice is done and peace and order is restored, not divide society on the basis of religion or intimidate a section of society. It is even more reprehensible when elected representatives join the bandwagon and celebrate the transfer of inconvenient police officers in company with fringe groups, instead of helping the cause of justice or law and order.

Uttar Pradesh is not only known for high crime rates but also for poor governance and backwardness. It is the most populous state with the maximum number of poor – 17 percent of India’s population and 22 percent of its total poor, as per Census 2011. It continues to remain a low-income state along with Bihar, Odisha, Madhya Pradesh and Rajasthan and its GDP growth rate has remained below the national average. Its human development indicators also remain very poor. It was ranked 18th among the Indian states in the UNDP’s India Human Development Report (2011) which measured long and healthy life, education and a decent standard of living. As per Census 2011, its literacy rate was 67.7 percent– lower than the national average of 74 percent.


With such credentials, the chief minister and his official machinery should have been more focussed on improving governance and indicators of economic and human development, rather than divisive majoritarian politics which unfortunately is the case. An economically stronger state with a better human capital will not only lift millions of its population out of poverty and backwardness but would also turn into an engine of growth for India. Unfortunately, all the energy is being dissipated in creating social disorder and disquiet.

Agrarian crisis: Bias against agriculture needs to go for revival; higher investment, change in attitude towards sector a must

Fistpost
Dec 13, 2018

The first reaction of the Bharatiya Janata Party-led Central government after the party's debacle in the Hindi heartland states of Madhya Pradesh, Chhattisgarh and Rajasthan seems to be to waive farm loans, which is a telling comment on the state of the agrarian distress in India and the need to pay immediate attention to the crisis. This was expected, too, since 90 percent of the rural constituencies in Madhya Pradesh and Chhattisgarh and 70 percent in Rajasthan are agricultural, where the ruling party suffered a huge setback. Repeated farmers' protest marches may have evoked little response, but an electoral debacle will not be, particularly when the 2019 general elections are looming large.

But farm loan waiver is, at best, an emergency relief that will do little to address the distress in the agricultural economy. What is needed is revived interest and investment in this most crucial sector of India's economy, which provides employment to nearly 50 percent of the total work force and supports more than two-third of the country's population. Official data shows that public investment in agriculture has remained between 0.3 and 0.4 percent of the GDP (based on 2011-12 series at market price) between 2011-12 and 2016-17, which is grossly disproportionate to its significance in the economy. The total investment, both public and private, has also been declining steadily — from 3.1 percent of the GDP in 2011-12 to 2.2 percent in 2016-17. This trend needs to be reversed, but for that to happen, the general sentiment and economic discourse surrounding investment in agriculture first needs to change.

What it means is that referring to investment and relief to the farm sector as "subsidy" — something that is a burden on the economic and hence should be eliminated or reduced — should change and be replaced with something more positive like "fiscal stimulus", which was what the fiscal support to the industry was described as during the post-2008 economic crisis.

That there is a clear bias against agriculture is also reflected in the way policymakers and economists refer to loans being written off for farmers and industrialists. When it comes to farmers, writing off loans is called a "waiver" — giving up something at the cost of economic prudence and health. However, far larger loans to industries that are often written off are referred to as banks' non-performing assets (NPAs).

Now, NPAs are commonly understood as "bad loans" for the banks or financial system as a whole, and hence lenders were remonetised recently to restore their health and enable them to loan out more to boost economic growth. In such a framing, the defaulting industries disappear from public mind and are replaced with that of tottering NPA-riddled banks that need to be rescued as soon as possible.

Here, it is pertinent to provide a comparative picture of bad loans to farmers and industries to establish how such discrimination actually harms the economy. The latest data from the Reserve Bank of India (RBI) shows that bad loans to the agriculture sector is minuscule in comparison to industry-related NPAs, and that waiving farm loans is not as harmful to the economy as it is made out to be. In fact, it is the NPAs of industries that should alarm policymakers and economists.

According to the RBI's 2017 report titled 'Operations and Performance of Commercial Banks', the agriculture sector's share in the total NPAs of banks was just 8.3 percent (or Rs 60,200 crore) at the end of March 2017, while that of the non-priority sector (industry and infrastructure) was a whopping 76.7 percent (or Rs 5,58,500 crore). The situation was not much different the previous year, as well, at the end of March 2016 — agriculture's share was stood at a measly 8.6 percent (or Rs 48,800 crore), while that of the non-priority sector was 75.2 percent (or Rs 4,25,700 crore).

Once this bias against agriculture, the negative references in economic jargon, is done away with, the rest will be easier to deal with because then farmers will not be seen as a burden on the economy but as a major driver of growth.

A good example of this change in attitude is Telangana's "Rythu Bandhu", or farmers' investment support, scheme, under which farmers are given Rs 4,000 per acre per crop, or Rs 8,000 in a year for two crops. With the Telangana Rashtra Samithi (TRS) re-elected, this will be raised to Rs 5,000 per crop, or Rs 10,000 per year. The TRS registered a spectacular win in this round of Assembly elections, increasing its seat share from 63 in 2014 to 88, and a part of this credit is attributed to this Rythu Bandhu scheme, which is a stark contrast to farmers' anger against the BJP in the three Hindi heartland states it lost.

The impact of the Rythu Bandhu scheme may not have been assessed yet as it was launched in the 2018-19 Kharif season with a budget outlay of Rs 12,000 crore, which was about 7 percent of state's budget. But its huge popularity attracted unusual attention for obvious reasons.

Eminent agriculture expert Ashok Gulati, who is not exactly a champion of subsidy to the agriculture sector, is effusive in his praise of the scheme. In his latest article in The Indian Express, he advocates for this scheme to be adopted in the rest of the country. "In a nutshell, politicians need to move from price-support policies and loan waivers to income/investment support on a per acre basis," he writes.

It is well known that the high growth trajectory of China and most Asian economies was actually propelled by agriculture, unlike in India. A 2013 study by the Asian Development Bank titled 'Agriculture and Structural Transformation in Developing Asia: Review and Outlook', clearly brings this difference out.

"The most successful Asian economies have pursued an agricultural development-led industrialisation pathway... The newly industrialised economies in East Asia (Japan, the Republic of Korea, and Taipei, China) followed an agriculture development-led industrialisation pathway. The fast-growing transition economies (the People's Republic of China and Vietnam) seem to be traversing a similar one. Agricultural growth has also been a prominent feature in the rest of developing Asia, particularly in Indonesia, Malaysia and Thailand. However, growth in agriculture has lagged in Bangladesh, India, Pakistan, and the Philippines; in these countries, the period of rapid sustainable growth came late or has yet to materialise," the report says.

More attention to agriculture by way of higher investment and positive attitudinal changes, therefore, may actually bring about better economic dividends and put India into a higher development trajectory like other Asian nations. The sooner this is realised, the better it would be to revitalise agriculture and rural economy.

Bulandshahr violence: Congress and BJP's pandering to religious extremists could cause permanent damage to body politic

Firstpost
Dec 2018, Updated on Jan 8, 2019

In a way, the lynching of Station House Officer Subodh Kumar Singh by a mob over alleged cow slaughter in Uttar Pradesh’s Bulandshahr district completes a cycle that began with the lynching of Dadri's Mohammad Akhlaq in 2015 over rumours of beef eating: which sparked a chain of such violence in many parts of North India. Singh was first police officer to investigate Akhlaq’s killing and he apparently did a good job by bringing in evidence quickly, leading to the arrest of the accused.

That Singh was immediately transferred and the chargesheet filed by another officer; that all 18 accused are out on bail and their trial is yet to begin seems like part of the same cycle of cynical political order seeking to normalise mob violence in the name of religion. It tears asunder any semblance to a syncretic and pluralistic culture or society that Indians boast of and presents a grave danger to the very idea of India governed by a secular Constitution.

It is bad enough that no one expects the ruling Bharatiya Janata Party at the Centre and state to speak against such violence, let alone act decisively: after all, they are the ones tasked with governance by a popular mandate and are answerable to the people for such incidents. The main political Opposition, the Congress, seems to have abdicated its responsibility too. Not only has it turned Singh’s killing to a mere law-and-order issue, as its spokesman did at a press conference, it adopted a similar strategy in its poll campaigns in Rajasthan’s Alwar —  apparently the ground zero of cow vigilantism in Rajasthan with three such killings in 2017 — Pehlu Khan in Behror, Rakbar Khan and Umar Khan in nearby Ramgarh.

A national daily said this morning: “From its manifesto to public rallies, social media and posters, the Congress underscores public security and the rising crime rate in Alwar, but steers clear of mob violence fearing a Hindu backlash”. This reluctance to stand up by both the main political players is akin to appeasement of the majority Hindu community and is evidently, undesirable in a pluralistic society. For, these are not isolated incidents of communal violence (the family members of Singh have alleged that his killing is linked to Akhlaq’s killing in TV interviews today). There is a pattern to it all over the country.

In the Sabarimala case, both the BJP and Congress are opposing the entry of women into the temple, ironically in the name of upholding a Hindu tradition which goes against both constitutional values and morality. In the case of changing Muslim names, erecting a statue for Lord Ram or the ongoing rath yatra demanding a law to build a Ram temple even as the case is pending before the Supreme Court, the Congress remains silent. In the election campaigns in Madhya Pradesh, Chhattisgarh and Telangana too, the BJP and Congress are indulging in competitive appeasement of the majority community on religious lines.

It would be foolish to dismiss such pandering as mere election gimmicks or that it would not lead to deep or permanent fissures in society or body politic: it would, sooner than later. The disaffection now caused will continue beyond the round of Assembly elections or 2019 general elections. Recall how ‘Muslim appeasement’ became a big political issue in 1980s and 1990s, unleashed widespread violence (including a series of riots and bomb blasts in Mumbai and elsewhere in the country) and changed the political course.

If something similar were to happen again, it will be equally difficult to put the genie back into the bottle. Attempts to play down the impact of such disruptions or dismiss it as a temporary phenomenon arising out of either frustration due to growing unemployment or any such excuses will be self-defeating.

It is in this context that the grand old party has an obligation to fulfil. The BJP and its affiliates may do what they will, but what will prevent derailment of a pluralistic society or constitutional order? The political Left is now virtually confined to one state and its role in fashioning national politics is quite limited. Imagine if the Congress continues to imitate the BJP, both the Sabarimala and Ayodhya agitation will dominate the body politic in the months to come, providing excuses for not focusing on the real issues or governance: poor job creation, fears of economic slowing, and mob violence. The Supreme Court can only do so much; it can’t establish a political order, make laws or run governments. What will happen if the Supreme Court is defied in the Ayodhya case, if its ruling is not up to the expectations of the BJP and its associated organisations with the Congress being a bystander?

It is indeed scary to imagine such an eventuality. The consequences of religion dictating or hijacking the political order are not unknown to our subcontinent.

Farmers' march in New Delhi: Agricultural policies are not working on ground; existing mechanisms need reform

Firstpost
Nov 29, 2018

Editor's note: This article is the second of a two-part series analysing the agrarian crisis in India, in light of the various marches and protests undertaken by farmers in recent months to highlight their problems.

The agrarian crisis did not happen overnight. As a Niti Aayog report shows, the problem started after 1991-92 — until then, both farm and non-farm sectors grew at the same level. After 1991-92, the non-farm sectors took off to a higher growth trajectory (following economic liberalisation) to more than 8 percent while the farm sector remained stuck, with the long-term growth trend of a mere 2.8 percent.

Liberalisation opened up agriculture trade but did little else. Broadly speaking, three key policy challenges were identified for this: a sharp decline in output growth, steady decline in public sector investment in agriculture and a need to improve competitiveness in the agro-food chain by enhancing efficiency in production, marketing and agro-processing.

The decline in investment is arguably the most critical part. Starting with the National Agriculture Policy of 2000, several policy measures have been taken to improve investment, particularly encourage private investment, but the decline continues. The Agriculture Statistics of 2017 shows that while public investment has remained more or less static between 2011-12 and 2016-17 – 0.3 to 0.4 percent of GDP (based on 2011-12 series, at market price) – private investment has progressively gone down from 2.7 to 1.8 percent, dragging the overall investment from 3.1 percent of GDP in 2011-12 to 2.2 percent in 2016-17.

One of the policy measures adopted to overcome this has been to improve credit supply to agriculture. The Economic Survey of 2014-15 showed that agriculture credit increased substantially since the turn of the century – annual growth rate going up from 8 percent in 1981-91 to 17.8 percent in 2001-2011 – but it also pointed out that “there has been a sharp increase in the share of large-sized loans...which warrants scrutiny”.

Study of the RBI data by R Ramakumar of TISS showed that the share of direct agriculture loans of less than Rs 2 lakh (in the total amount disbursed) progressively went down from 86.2 percent in 1990 to 44.3 percent in 2010. At the end of March 2017 (up to which data is available), the RBI data shows that this has gone further down to 40.28 percent – meaning that a larger share of credit continues to go to rich farmers and agri-businesses, rather than small and marginal farmers – which is the policy objective of liberalising credit disbursement norms.

While we are on loans to farmers, here is some food for thought. Every time farmers’ loans are waived, bankers and economists go ballistic. No less than RBI governor Urjit Patel reacted sharply to it by saying (in April 2017) that farm loan waivers “undermine an honest credit culture”, “increasing cost of borrowing for others” and “eventually affect national balance sheet”. In sharp contrast, no one of any significance has ever uttered such harsh words when corporate loans are written off as NPAs – which is routine and much higher in magnitude and thus pose a far greater risk to the economy and credit culture, by Patel’s own logic. Here is how.

According to the RBI’s 2017 report Operations and Performance of Commercial Banks, agriculture’s share in the total bank NPAs stood at a mere 8.3 percent (or Rs 60,200 crore) while that of the non-priority sector (industry and infrastructure) was a whopping 76.7 percent (Rs 5,58,500 crore) at the end of March 2017. At the end of March 2016, the situation was similar – agriculture’s share of NPAs was a mere 8.6 percent (Rs 48,800 crore) against that of the non-priority sector’s 75.2 percent (Rs 4,25,700 crore). So, which loan waiver should raise the eyebrows of policy makers, economists and bankers – farm or non-farm?

Another key policy thrust in agriculture has been to provide crop insurance to protect farmers from natural calamities – another major cause of farm distress. The Centre for Science and Environment assessed the flagship Pradhan Mantri Fasal Bima Yojana (PMFBY) and found several flaws – sum insured is substantially lower than the scale of finance (cost of cultivation plus some profit) reducing farmers’ claims; inadequate and delayed claim payment; delayed payment of premium by states; negligible coverage of sharecroppers and tenants etc.

There is yet another issue. In the last two years, 2016-17 and 2017-18, the difference between the premiums received and the compensations paid by the insurance companies amounts to Rs 16,000 crore – according to the Union agriculture ministry data accessed through an RTI. Farmers pay only 1.5 to 5 percent of the premium while the rest is shared equally by the Centre and states. The question is: Should this money not be put to better use by investing in agriculture instead of handing over to the insurance companies (all of which are now private) as profit?

Raising farmers’ income is yet another policy debacle. On multiple occasions, the Niti Aayog has said the avowed policy of the government to double it by 2022 is not possible and that the real income of farmers has been declining between 2011-12 and 2015-16. Doubling the income would require output growth to be accelerated by 33 percent and a higher price realisation – the Niti Aayog said in its policy paper of 2017.

The rise in minimum support price (MSP) as a direct method of higher price realisation has not kept pace with the rise in input costs for years and hence, the demand to implement the Swaminathan Commission formula continues. Moreover, in absence of commensurate public procurement, market prices remain below MSP, both post-kharif and post-rabi harvests, making a mockery of higher MSP. A recent report (there are, in fact, many such reports throughout this year) shows that the prices of cereal, paddy, oilseed and cotton crashed in more than 1,700 markets in October. This also demonstrates that the market reforms have failed to bring better price realisation to farmers.

On the other hand, input costs have been going up. Except for urea, which is under government control, the prices of other fertilisers, seeds, herbicides, pesticides and diesel routinely go up and the government can do nothing about it, having de-controlled these items as a part of the liberalisation process. How does one increase farmers’ income if neither input costs nor output prices can be managed by the government or market?

This leaves another critical issue: land. The overwhelming presence of small and marginal landholdings and landless (92.82 percent as per the last NSSO data) – which are on a nosedive – are not only bad for productivity but also bad for institutional credit, insurance and other government support. To overcome this, the Niti Aayog has come out with a ‘model agricultural land leasing law’ for the states to follow (T Haque committee report).

Implementing this model law would need the states (land is a state subject) to amend their land laws, particularly those relating to tenancy rights. So far, this is a non-starter and the future does not seem particularly bright since hardly any farmer with surplus land is expected to risk giving land on long-term lease (which is essential to make an investment on land for better productivity). Who will guarantee that the tenancy rights will not be restored in the long term?

The only meaningful land reform attempted — after zamindari was abolished, land ceiling was imposed and surplus and wasteland was distributed among the landless in the first three decades after independence — is the Forest Rights Act of 2006. It gave ownership rights over the forest land and forest resources to the tribals and other forest dwellers, who have been residing in these forests for generations but their rights have not been officially recorded.

It should have been implemented in two years (by 2008). But, according to the latest update from the tribal affairs ministry, as on 31 August, 2018, only 44.6 percent of ‘claims’ have been granted so far – not to talk of the ‘potential’ lost due to lack of awareness among the tribals about their rights (particularly the community forest rights) and reluctance of the state governments and their forest departments to do an honest job of it.

To conclude, the above narration is by no means exhaustive but is an attempt to provide a big picture to put the agrarian crisis in perspective and highlight the inadequacies of the policy responses to it. Evidently, sops, half-hearted measures or political skulduggery would make no difference. What is needed is a macroeconomic vision, accompanied with appropriate policies, plans and strategies. This would essentially involve an overhauling of the existing mechanisms which have spectacularly failed to take care of half of India’s workforce and more than two-thirds of its population who are agriculture dependent. Until that happens, farmers, landless and tribals have no option other than periodically marching to the seats of power.