Renu Pokharna

Archive for the ‘Poverty Eradication’ Category

Between govt rates and purchase ceiling, there’s plenty for officials and middlemen

In Bureaucratic Delays, Corruption, Dalits, Poverty Eradication on June 15, 2012 at 6:38 am

Sajivan Manjhi stands in a field and holds his radio set, a gift from the state government, to his ear to listen to the news. One of 70 Mahadalit “beneficiaries” given plots to raise houses in a pond in Pachlova village of Nalanda, he is angry with the government for the very scheme he had once praised.

“Government officials live in bungalows and plan swimming pools and they want us to live in ponds,” says Sajivan, a matriculate who reads newspapers besides listening to the news on the “government radio”, wondering where he will wash with the pond making way for houses.

The Mahadalit Vikas Yojana, launched in 2009-10, was an innovation in social engineering that clubbed 21 Scheduled Castes into a single vote-bank for the first time — 1.20 crore people representing 11 per cent of the population. They went on to help the Nitish Kumar return with a five-sixths majority, sending the caste calculations of Lalu Prasad’s RJD haywire and leaving Dalit leader Ram Vilas Paswan’s LJP almost redundant. The RJD had banked on the 31 per cent Muslim-Yadav vote but Nitish had schemes for minorities, too, besides many for Mahadalits who till then were dismissed as pachpaniyas — people who have some houses here and there.

Today, the flagship scheme is under the scanner, the houses in the pond being one of a number of reasons. There have been Dalits allotted land only on paper. And, as The Indian Express reported, the larger scam involves officials who have bought land cheap and sold it to the government at many times the price.

Scheme and scam

Every Mahadalit family was to get three decimals, or 1306.8 sq ft. Following a survey, the land reforms department shortlisted 2,18,180 families, mostly in Nalanda, Araria, Madhepura, Supaul, Khagaria, Gaya and Aurangabad. Land has so far been distributed land to 1,53,866.

The allotment is made in any of four possible ways, of which three — under the gairmajarua aam and gairmajarua khas schemes and the Privileged Persons Homestead Tenancy Act — involves government land.

The fourth way involves land bought from farmers and given to beneficiaries. It is here that things have not gone as they should have.

The government put a ceiling of Rs 20,000 for every three decimals bought, but it still left plenty of scope for corruption in a state where the government rate for two-crop land, the kind most commonly bought, is only between Rs 1,000 and Rs 3,000 per decimal.

The government has given such land to 29,920 families, and targeted another 27,603.

Circle officers in charge of purchase have engaged middlemen, often small-time real estate agents, in buying land of any kind — low-lying or elevated, near rivers — though the instruction was that it should near areas of habitation and with an approach road. In fact, the state has a dedicated follow-up, Mahadalit Basti Sampark Yojana, for Mahadalit Vikas Yojana beneficiaries.

The middlemen would look for farmers from whom they could buy at government rates or lower, convincing them that it could not fetch a better price as it was of little use with no source of irrigation to draw from.

Cases in point are at Kajra and Bistoria in Araria where, records show, the Raniganj circle officer bought 2.64 acres at Rs 3.63 lakh and 3.56 acres at Rs 4.90 lakh, paying middlemen a total Rs 8.53 lakh, then organised the government purchase days later at Rs 17.60 lakh and Rs 23.60 lakh, a total of Rs 41.20 lakh. The difference of Rs 32.47 lakh works out to 78.81 per cent of the amount the government paid.

There have also been allegations of circle officers conniving with farmers to “share the benefits”. Residents of Malpa, Mahuain and Barma under Guraru block of Gaya have alleged this but admitted there is no way it can be proved.

Point, counterpoint

Revenue and land reforms secretary Hukum Singh Mina has called all this an “eye-opener” but JD(U) national spokesperson Shivanand Tiwari has said there isn’t “any scam”. “It is not easy to run a government. There can be some slip-ups here and there,” Tiwari says.

The Opposition, so far starved of issues, has finally found the opportunity it was looking for. “I have been critical of this three-decimal scheme from the day it started. Why can’t the government give them Rs 20,000 rather than allowing misappropriation?” Paswan says.

Lalu mentions The Indian Express exposé while attacking the government. “How much proof does the government need now? Rather than trying to correct things, they are going for a coverup,” he says. “There is deep-rooted corruption everywhere. Many more scams will come out in the days to come.”

The scheme is one of about a dozen the government has taken up for Dalits, with three departments to take care of them — revenue and land reforms, SC/ST welfare and health. The SC/ST welfare department is in charge of the Bihar Mahadalit Vikas Mission to ensure all schemes are properly implemented (see box).

HOW MUCH INVOLVED

3 decimals

Or 1306.8 sq ft. what each family gets under Mahadalit Vikas Yojana

2.18 lakh

Families shortlisted

1.54 lakh

Lakh families get land

29,920

Of these families get land under the system that involves purchase from farmers, which brings middlemen into the process

27,603

More families to get such land

Rs 20,000/3 decimals

Ceiling for purchase from farmers

Rs 3,000/decimal

Maximum Govt rate for two-crop land, range starts at Rs 1,000

More for mahadalits

Mahadalit Basti Sampark Yojana. To link villages to a main road.

Dasrath Manjhi Kaushal Vikas Yojana. For vocational training.

Mukhyamantri Mahadalit Poshak Yojana. Rs 500 a year to each student of classes I -V for uniforms, shoes.

Vikas Mitras. 10,000 Mahadalits, appointed at Rs 3,000 a month, to coordinate with government on schemes.

Mahadalit Shauchalaya Nirman Yojana. Rs 300 to each family to build a toilet. Funds for 2,33,333 toilets disbursed so far.

Mukhyamantri Jivan Drishti Yojana. Rs 400 to each family to buy a transistor set.

Mahadalit Heath Card Scheme. Mahadalit families to get such cards for routine checkups.

12 June 2012,  Indian Express

This is how economic reforms have transformed India

In Business, Macroeconomic Policy, Poverty Eradication on June 8, 2012 at 2:08 pm

Perhaps the most appropriate tribute to the memory of the illustrious parliamentarian, Professor Hiren Mukerjee, would consist in the celebration of Indian democracy of which the Lok Sabha itself is the chief symbol.

India was for decades unique in her democracy among the post-colonial countries that had gained Independence. Today that uniqueness has thankfully disappeared as several countries around the world have followed in India’s footsteps.

But our embrace of democracy from the outset does set us apart from, and puts us in a higher pecking order relative to China whose egregious denial of democratic and other human rights detracts hugely from admiration for its stellar economic performance.

India has not just the Lok Sabha and elections; it also has all the elements of what we now call a ‘liberal democracy’. I must add that our democracy has been a source of immense gratification, not just to elites, but also to the common man.

It is easy to slip into the fallacy that the masses yearn for economic gains, not for political rights. I have long argued that economic betterment, in a country with an immense backlog of poverty, inevitably takes time.

Even bitter critics praise India’s boom

But let me to turn now to the central question that I wish to address today: the question of economic reforms, what they have accomplished, and where we are and should be headed.

On what we have accomplished so far, what I call the ‘Reforms Yesterday’, there are two conflicting ‘narratives’ that we find currently, one adoringly celebratory and the other hypercritical and condemning.

Perhaps the most dramatic, optimistic view of India has come from the once sceptical magazine, The Economist, which famously wrote nearly twenty years ago that India was a tiger that was crouched for long but unable to leap; the danger was that rigor mortis had set in.

But the magazine wrote a raving cover page story on September 10th, 2010, abandoning its reservations and arguing that India’s steadily accelerating growth rate since the 1991 pro-market, liberal (or ‘neoliberal’ if you wish to make them sound sinister) reforms was not a flash in the pan.

Apparently throwing caution to the wind, it speculated that India’s growth rate ‘could overtake China’s by 2013, if not before’.

Some ‘non-fiction’ on India’s growth

But then, the naysayers, among them the socialists in the currently ruling Congress Party, have rejected the ‘miracle’ produced by the reforms by asserting darkly that the growth ‘lacks a human face’, that it is not ‘inclusive’, that the gains have accrued to the rich while the poor have been immiserized, that inequality has increased, and that India stands condemned before the world.

Perhaps the most articulate critics are the ‘progressive’ novelists of India, chief among them Pankaj Mishra whom the op-ed page editors of The New York Times regularly and almost exclusively invite to write about the Indian economy, a privilege they do not seem to extend symmetrically to American novelists to give us their profound thoughts on the US economy!

Mishra’s latest Times op-ed on October 2, 2010, writes of the ‘alarmingly deep and growing inequalities of income and resources in India’, ‘the waves of suicides of tens of thousands of overburdened farmers over the last two decades’, ‘a full-blown insurgency . . . in central India’ to defend tribals against depredations by multinationals, ‘the pitiless exploitations of the new business-minded India’, and much else that is allegedly wrong with India!

While economic analysis can often produce a yawning indifference, and Mishra’s narrative is by contrast eloquent and captivating, the latter is really fiction masquerading as non-fiction.

The fact is that several analyses show that the enhanced growth rate has been good for reducing poverty while it has not increased inequality measured meaningfully, and that large majorities of virtually all underprivileged groups polled say that their financial situation has not worsened and significant numbers say that it has improved.

Abysmal growth prior to reforms

The enhanced, and increasing, growth rate since the reforms follow a period of abysmal growth rates in the range of 3.5 to 4.00 per cent annually for over a quarter of a century, starting in the 1960s. The cause had to do, not with our efforts at raising our investment rate, but with the fact that we got very little out of the investment we undertook.

The reason was that we had a counterproductive policy framework whose principal elements were:

1. Knee-jerk intervention by the government through a maze of Kafkaesque licensing and regulations concerning investment, production and imports, prompting the witticism that Adam Smith’s Invisible Hand was nowhere to be seen;

2. Massive expansion of the public sector into many areas other than utilities , with occasional monopoly granted to public enterprises by excluding entry by the private sector, with predictable inefficiencies that multiplied through the economy; and

3. Autarky in trade and inflow of equity investment which was so extreme that the Indian share of trade to GNP had fallen while it had increased in most countries whereas the inward flow of equity investment had been reduced to minuscule levels.

Policy changes not imposed by US

This policy framework had been questioned, and its total overhaul advocated, by me and Padma Desai in writings through the late 1960s which culminated in our book, India: Planning for Industrialization (Oxford University Press: 1970) with a huge blowback at the time from virtually all the other leading economists and policymakers who were unable to think outside the box.

In the end, our views prevailed and the changes which would transform the economy began, after an external payments crisis in 1991, under the forceful leadership of Prime Minister Manmohan Singh who was the finance minister at the time.

It is often suggested that the Indian policy changes were imposed from outside, reflecting what has come to be known by ill-informed observers as the Washington Consensus in favour of liberal reforms at the Bretton Woods institutions.

But that is no more true than to argue that the Soviet perestroika under President Gorbachev and the Chinese economic reforms starting in the late 1970s were imposed by Washington.

Why the transformation came about

In all three cases, the driving force was endogenous, a realization by the leadership that the old, counterproductive policy model had run their economies into the ground and that a change of course had to be undertaken.

The early reforms were primarily focused on dismantling the licensing regime (known popularly as the ‘permit Raj’) which freed up the animal spirits of the private sector.

The economy was also steadily opened up: the average import tariff on manufactures, at virtually 113 per cent in 1990-91, was reduced steadily, avoiding the folly of ‘shock therapy’, and now stands at 12 per cent.

While privatization would prove politically difficult, its intended effects in terms of efficiency of management were often achieved by opening up entry by private firms into sectors hitherto reserved for public sector enterprises: the entry of these firms, plus unwillingness to provide ever more subsidies to absorb losses, was like a pincer movement that meant: shape up or ship out.

Competition mattered

I remember how, on a flight of Indian Airlines from Mumbai to Delhi, the stewardess had brought breakfast with the tea already made Indian-style: one part tea, four parts milk, and spoonfuls of sugar. When I complained, she answered: that is the way we serve tea (and, under her breath: if you do not like it, lump it).

After the growth of splendid new private-sector airlines such as Jet Airways and Kingfisher Airlines, Indian Airlines changed: competition mattered.

The old policy architecture could not be demolished in one fell swoop. The leadership had to negotiate minefields of ideological opposition, bureaucratic intransigence, and the lobbies (called ‘interests’ by political scientists) that had fattened on the rents (i.e. monopoly profits) attending sheltered markets that they were earning.

The three I’s — ideas, institutions and interests — of the old regime had to be confronted. Then, again, the post-1991 reformers felt that their task was akin to cleaning up after a tsunami. Hastening slowly was their only choice.

Substantially enhanced growth after the reforms

Still, as the reforms gathered steam, the effects on the growth rate were palpable. The growth rate, rising to roughly 6 per cent, nearly doubled in the 1990s and increased still further in the next decade and has recently been close to 9 per cent.

The sense that India was now an ’emerging superpower’ was a heady experience for Indian elites who had seen their country marginalized by policies that had become a laughing stock in the world while smaller nations in the Far East had emerged as the much-admired star performers.

The poor and the underprivileged have also benefited. But are the opponents of the reforms right to complain that the reformers have been focused on growth to the neglect of the underprivileged; and that the latter have been bypassed or immiserized?

It has become fashionable to say that this must be so because the Human Development Index, produced by the UNDP, puts India at the bottom, at 135th rank, in 1994.

But this is a nonsensical index which reduces, without scientifically plausible weights, several non-commensurate elements like literacy and health measures to a single number.

Media helps bad science gain traction

It is a fine example of how bad science gains traction because of endless repetition by the media: it must be dismissed as rubbish.

There is no substitute for hard, scientific answers to the questions concerning what has happened, during the period of reforms and enhanced growth, to the poor and the underprivileged: and these answers, as I will presently sketch, are more benign.

To begin with, however, let me remind you that the common criticism that Indian policy was interested in growth for itself is not even true if we go back to the early 1950s when planning took formal shape.

In fact, my first job in the Indian Planning Commission half a century ago was to devise a strategy to bring the bottom 30 per cent of India’s poor above the poverty line so they would enjoy a ‘minimum standard of living’; and we came to the view, often expressed by the leaders of the Independence movement, that we had to grow the pie to do so: redistributing wealth in a country with ‘many exploited and few exploiters’ as the visiting Marxist economist Kalecki put it graphically in 1962, was not a strategy that could produce sustained impact on poverty.

Growth was therefore regarded as a principal ‘instrument’, a strategy, for pulling the poor out of poverty through gainful employment, not as an end in itself.

Growth was seen as what I have called an activist, radical ‘pull up’ strategy, not as a passive, conservative ‘trickle down’ strategy, to reduce poverty.

The growth strategy to pull the poor up from poverty, however, did not work because growth itself did not materialize because of the counterproductive policy framework that I sketched above.

But now that growth has actually been produced by the post-1991 reforms, what can we say about the wisdom of the growth strategy? Let me sketch some of the studies that suggest an affirmative answer.

After a considerable debate, it is now generally accepted that the enhanced growth over nearly 25 years year was associated with lifting nearly 200 million of the extreme poor above the poverty line.

By contrast, consistent with commonsense, the preceding quarter century with abysmal growth rate witnessed no perceptible, beneficial impact on poverty.

Then again, at a narrower level, the political scientist Devesh Kapur and associates have studied the fortune of the Dalits (untouchables) in India’s most populous state, Uttar Pradesh, between 1990 and 2008, to find that 61 per cent of those surveyed in the east and 38 per cent in the west said that their food and clothing situation was ‘much better’.

Most striking is the finding of the political scientists Al Stepan and Yogendra Yadav, drawing on polling data produced by the Center for the Study of Developing Societies in Delhi, that for every disadvantaged group including women, the response to the question ‘Has your financial situation improved, worsened, or has remained the same’ posed in 1996 and again in 2004, shows that every group has overwhelmingly remained the same or improved: those who claim to have worsened are invariably less than 25 per cent of the respondents.

As for the relative economic outcomes of the disadvantaged groups, the economist Amartya Lahiri and associates have studied India’s ‘scheduled castes’ and ‘scheduled tribes’, two particularly disadvantaged categories, and conclude that the last twenty years of major reforms ‘have seen a sharp improvement in [their] relative economic fortunes’.

Then again, using household expenditure data for 1988 and 2004, the Johns Hopkins economists Pravin Krishna and Guru Sethupathy conclude that inequality, using a well-known measure invented by the Dutch econometrician Henri Theil, while showing initial rise, had fallen by 2004 back to the 1988 levels: a straight rise in inequality cannot be asserted.

I should also add that many reforms help the poor more than the rich because the rich can cope with the results of inefficient policies better than the poor.

If the public sector generation and distribution of electricity is inefficient, and the electricity goes off in the middle of the night in Delhi’s summer, the rich turn on their private generators and their air-conditioners continue working.

But the poor man on his charpoy swelters as his small Usha fan is not working. Those who object to letting in Coke and Pepsi forget that the common man derives his caffeine from these drinks while the well-off critics get theirs from the Espresso and Cappuccino coffee in the cafes.

The most interesting political implication of the success in finally denting poverty significantly, though nowhere enough, is that poverty is now seen by India’s poor and underprivileged to be removable.

India is witness finally to what I have called the Revolution of Perceived Possibilities. Aroused economic aspirations for betterment have led to political demands for the politicians to deliver yet more.

This suggests, as my Columbia University colleague Arvind Panagariya and I have hypothesized, that voters will look to vote for the politicians who can deliver growth, so that we would expect growth before the vote to be correlated with vote now.

In an important paper, Poonam Gupta and Panagariya have recently tested for this hypothesis and indeed found that it works. So, this implies that politicians should be looking to augment reforms, not reverse them as misguided anti-reform critics urge.

So, politicians would do well to strengthen the conventional reforms, which I call Stage 1 reforms, by extending them to the unfinished reform agenda of the early 1990s.

In particular, further liberalization of trade in all sectors, substantial freeing up of the retail sector and virtually all labour market reforms are still pending. Such intensification and broadening of Stage 1 reforms can only add to the good that these reforms do for the poor and the underprivileged.

But these conventional reforms have also generated revenues which can finally be spent on targeted health and education so as to additionally improve the well-being of the poor: these are what I call Stage 2 reforms.

When ‘progressive’ critics argue that Stage 2 reforms must replace Stage 1 reforms, because they appear superficially to be more pro-poor, they forget that Stage 2 reforms have been made possible only because Stage 1 reforms have been undertaken.

How to get the most bang for the buck from programmes under Stage 2 reforms is where we have to turning our attention as well. As it happens, Stage 2 reforms involve ‘social engineering’ and are inherently more difficult than Stage 1 reforms.

Thus, except for political difficulties, it is easy to reduce trade barriers: you just slash them. But if you want to improve education, for example, you have to worry about the best classroom size, the issue of teacher absenteeism, the question of how to get poor children to the school when their parents might want to have them work instead, whether you want to use school vouchers, and so on.

There is little doubt however that, once we have put our minds to work and our shoulders to the wheel, we will move ahead on both Stage 1 and Stage 2 reforms.

Many of the reforms require good governance and indeed necessitate a role for the government in some areas (in the appropriate provision of health, for instance) even as they require withdrawal of the government from others (as with inappropriate labour laws). Can we do this?

It is easy to get despondent today about the deterioration in governance because many seem to surrender much too easily to the notion that we have become hugely corrupt and that this is irretrievably so.

Thus, Transparency International’s index of corruption ranks us high on corruption. However, this index is wholly arbitrary, depending on subjective evaluation of the chosen respondents.

But in India, public figures are considered to be corrupt unless they prove to you otherwise. A blind man will tell you how he saw ‘with his own eyes’ a bribe being given and accepted!

A most distinguished Indian bureaucrat once told me that his mother said to him: ‘I believe you are not corrupt only because you are my son’.

Equally, it is wrong to think that we cannot think of institutional reforms that can reduce the corruption we do have. The abolition of the permit raj, of course, eliminated that important source of corruption.

But that also means that we have removed from our system the way in which politicians could raise money for their campaigns which, while not as expensive as in America, are still large enough to matter.

This means that other forms of corrupt ways of raising political funds have proliferated. We need therefore legal ways to raise campaign finance. Americans have done this; we need to do so as well.

Then again, we can use science to get at corruption in several areas. Thus, Nandan Nilekani is engaged in arguably the most important innovative reform in recent years by creating a national database of identity details of Indian citizens.

This should take the political corruption out of the Public Distribution System and in the Employment Guarantee Scheme, for instance, and will also reduce bureaucratic corruption by bypassing the low-level bureaucrats who refuse to give you what you need unless you grease their palms.

In fact, what Nilekani is doing additionally is demonstrating anew how science is integral to our assault on poverty and other ills in our society. The enormous potential of science is variously manifested.

To take just three examples:

1. The invention of the cheap laptop by Media Lab at MIT and later by Intel, has almost made it possible financially to put a laptop into every lap;

2. The latest invention of Embrace baby warmers for the millions of premature and low-birth-weight babies born each year; these are slated to sell at a price that is 1% of the traditional incubator; and

3. The invention of BT Brinjal and other GM crops makes it possible to have a second round of the Green Revolution that we need so badly if we are to increase productivity in agriculture; but the government has to deploy scientific evidence and argumentation against the naysayers who have objected to these as Frankenstein foods and instead have been allowed to halt their use on flimsy, virtually unscientific grounds including assertions of ‘agricultural suicides’ that have been exposed often as unrelated deaths.

Perhaps we need to recall what Prime Minister Nehru said eloquently: ‘It is science alone that can solve the problems of hunger and poverty, of insanitation and illiteracy, of superstition and deadening of custom and tradition, of vast resources running to waste, of a rich country inhabited by starving poor. Who indeed can afford to ignore science today? At every turn, we have to seek its aid. The future belongs to science and those who make friends with science.’

Reflection on what I have said today should provide the agenda that the impressive young Members of the Lok Sabha, who clearly seek new perspectives and aim to accept fresh challenges, can embrace to take India to what Jawaharlal Nehru called our ‘tryst with destiny’.

After sixty years of Independence, surely it is high time for his vision to turn into reality.

3 Dec 2010,  Rediff

 

India’s Poverty Estimates: Don’t just get Outraged, Understand them!

In Poverty Eradication on June 3, 2012 at 6:25 am

In a curiously timed press release yesterday, the Planning Commission of India, government’s official think tank, announced the latest “poverty line” for India.

Now, poverty line in India, along with the other related issues, has almost become a mysterious concept. This is primarily because there are too many people, who know too little about poverty, speaking too much about it.

A usual suspect is our everyday TV news anchor, who feigns gross outrage at the insensitivity of the poverty estimates, irrespective of the number in question. This fake outrage – and it is fake because no one seems to have taken the trouble to understand why at all do we have poverty estimates and how do we calculate them- on the part of media routinely misinforms and misguides the readers about this very important issue.

One big casualty, for example, is the reputation of Late Prof. Suresh Tendulkar, one of the most important scholars on poverty in the world. The way Tendulkar Committee’s efforts are manhandled in casual chats, it appears as if the legendary economist had an ulterior interest in keeping India poor! But, I wonder if people know that before Tendulkar revised them upwards,India’s poverty line was Rs 12 for rural areas and Rs 17 for urban areas.

Let me spend some time to clear the haze a bit and attempt to de-mystify a few things about India’s poverty and its estimates.

However, given the various misconceptions around it, I am tempted to repeat Sherlock Holmes, when he said, “This is quite a three pipe problem.” I would urge the readers to hear me out before reaching any conclusions.

Let us look at the facts first.

According to yesterday’s statement, using the Suresh Tendulkar Committee’s method  and the latest available sample data (which is for 2009-10), the new poverty line (in terms of money spent on consumption) is Rs 29 per day per person in Urban areas and Rs 22 per day per person in Rural areas.

As a result, when compared to similar sample data of 2004-05, the poverty estimates have “declined by 7.3 percentage points from 37.2% in 2004-05 to 29.8% in 2009-10.” The rural poverty has declined by 8.0 percentage points from 41.8% to 33.8% and urban poverty has declined by 4.8 percentage points from 25.7% to 20.9%.

Now, as I understand, the biggest issue among the people, is about the actual poverty line number.

Some of the things that I have heard (not necessarily on TV):

“Rs 29 or Rs 32 or whatever the hell it may be – it is just too low!”

“How can you have Rs 29 or Rs 22 for daily consumption as the poverty line?”

“How can anyone in the Planning Commission, expect that you are poor at Rs 29 and not poor at Rs30?”

“How can they be so stupid as to think that Rs 30 per day is enough for living a decent life in urban areas?”

“Why don’t they make Rs 100 as the poverty line? That would be the only decent thing to do, no?”

All valid questions except they betray a complete lack of understanding about why countries have a poverty line at all. Or for that matter, what is a poverty line.

So what is poverty? And why is it so difficult to get a poverty line?

Poverty is a relative concept. [This appears straightforward but it is very crucial to understanding the problem in estimating poverty.] Let me elaborate a bit.

“Fundamentally, the concept of poverty is associated with socially perceived deprivation with respect to basic human needs,” states the Tendulkar committee report.

This means a person’s poverty depends most on how he/she is perceived by his surroundings. Of course, self-perceptions also matter, but it is how one stands “relative” to his surroundings that mainly determines how rich or poor he is.  For starters, it is a bit like saying that with Rs 100 in your hand, you are “rich” relative to the person who has just Rs 10 and “poor” relative to the person with Rs 1000. In that sense, as long as people have different incomes in a society, there will always be “poverty” since some will always be worse off than others.

This relative nature makes poverty one of the most complex issues to define and measure.

The reason why calculating a poverty line is fraught with difficulties is because a poverty line is an absolute measure of a relative concept. So, no matter what number you choose for delineating the rich from the poor, it would be arbitrary at one level.

Why do governments calculate a poverty line at all? And how is it done?

One of the main concerns for any welfare oriented government in any country, including China, is to provide relief to the poorest population. To this end, governments come up with policies like providing cheap foodgrains, or free education or some kind of unemployment benefit etc. And to know whether these schemes are working or not, government (and its economists) draws a “poverty line” and monitors whether its policies are raising the well being of its poorest people.

The idea behind a poverty line is to choose a number, partly based on some educated assumptions and some sample data, which would capture the picture of the lowest 20% – 30% of the population. This way, the government gets to know the exact standard of living of its poorest population. And as such, it can then tailor its anti-poverty programs more accurately. In a country like India, which is poor relative to, say, most western countries, such a poverty line often looks like a “starvation line.”

However, if, as many seem to suggest while in the throes of sham outrage, government was to draw a poverty line, which includes say 75% of the population, then it will only muddy the government’s policy prescription for the poorest people.

Why and How?

Imagine you are the government responsible for preparing the best pro-poor policies in a country of 5 people: A, B, C, D and E.

Now, total income in the economy is Rs 100 out of which A earns Rs 35, B earns Rs 30, C earns Rs 20 and D and E earn Rs 10 and Rs 5 respectively.

In one look, you would intuitively understand that D and E are the poor in the economy and as such, you might draw the “poverty line” at Rs 10. That way you will be able to narrow down your focus to the two most poor. The next person is C with twice the income of D and four-times the income of E.

Two things will happen if you raise the “poverty line” to Rs 20 and include C in your poverty list. One, you will have fewer resources left to be given to D & E, who are decidedly much “poorer” than C.

Secondly, when you study C’s income and consumption pattern and use them to shape the pro-poor policies, you might miss out on the real needs of D & E – the relatively poorer of the lot.

For example, C may not need subsidized food grains. Instead, C may need some help with skills, perhaps in the form of some government subsidy to allow C to pick up a skill. However, a decision to opt for subsidized skill development instead of subsidized grains may prove fatal for E, who is likely to be severely malnourished and acutely incompetent, in the short term, to earn even two square meals. Remember, governments have limited resources.

Now, with greater clarity about the concept at hand, let us get back to the more current issue of Tendulkar Committee and revision of poverty rates.

Contrary to the common perception, the committee headed by Prof Tendulkar did the country a huge favour by revising the way we estimate our poverty. The sum and substance of the new methodology, suggested by the committee in 2010, was that India is poorer than we thought.

The Tendulkar method revised the poverty line from Rs 12 in rural areas to Rs 15 and from Rs 17 in urban areas to Rs 19.  As a result, overall poverty ratio in the country is 37.2% instead of the old figure of 27.5%, thus recognizing an additional 120 million as poor.

The reason why Tendulkar’s method shows higher poverty levels is primarily that he has moved away from the traditional practice of benchmarking poverty by certain calorie consumption levels.

Instead, for the first time ever, it recognized the fact that apart from the expenditure to consume minimum calories, individuals also have to spend on two other basic requirements — healthcare and education. In the past, it was assumed that healthcare and education is already provided by the government and so the poor do not have to spend from their pocket on both.

Tendulkar Committee’s inclusion of expenditure on private healthcare and education is seen by most economists as an open acceptance that the State has failed to provide the most elementary of all the services it was supposed to.

However, the upward revisions did not mean that poverty reduction has not happened over the years because his method threw up even higher poverty estimates for the years gone by.

The Politics of Poverty Estimates

Typically, poverty lines are not estimated to put a cap on the beneficiaries of government schemes. But with limited resources, poverty estimates came to be used as ceilings for choosing beneficiaries during the 1990s. Thus instead of a universal public distribution system, we introduced the Targeted PDS.

The logic was simple. If the government did not cap its programs at some arbitrary number, its budget deficits would soar, given the high level of “poor” in the country.

This unhealthy convention of using the poverty line to identify beneficiaries or cap the number of beneficiaries has been the real bone of contention.

So on the one hand, you had the planning commission justifying literally a “starvation line”, and on the other hand, you had activists asking for a higher poverty line so that more people could benefit from the government’s anti-poverty schemes.

Things came to a head in September last year when the Planning Commission filed an affidavit in the Supreme Court quoting the Tendulkar Report to justify that the Poverty Line given by Tendulkar is “adequate” for identifying the beneficiaries for various government subsidies.

What I understand from my interactions with Prof Tendulkar and some of his colleagues in the committee, Tendulkar had meant that his method is adequate for broadly measuring the poverty line, not for identifying the beneficiaries.

However, after a long fight, in October last year, the Planning Commission finally relented and announced that poverty line would no longer be used to cap the number of beneficiaries in any government scheme.

Sadly, this decision has not yet been implemented. And with the deliberations of the national food security bill about to begin, the latest press release seems to suggest government’s efforts to bring down the expectation from the bill.

Be that as it may, the point to remember is that there is no point fretting over Rs 29 or Rs 32 as the poverty line. It is only meant to be a pointer which should be revised regularly. For example,China has revised its poverty line twice in the past two years.  The latest revision in November 2011, nearly doubled the poverty line. The move is seen as a reflection of the improving standard of living in China.

Going back to the earlier example, suppose in five years time, the economy grows fast and each individual’s income doubled. As a result, A now earns Rs 70, B earns Rs 60, C earns Rs 40, D earns Rs 20 and E earns Rs 10. Now if you still want to focus on the poorest lot, you will have to double your poverty line from Rs 10 to Rs 20.

A higher poverty number will make sense only when India’s poor are better off. If we arbitrarily increase the poverty line we would do the poor a great disservice.

So why has the Poverty Line come down from Rs 32 in 2011 to Rs 29 today?

There are two reasons for this.

One, the Tendulkar committee not just gave a new method to estimate poverty but also a new method of updating poverty line. Typically,Indiaused the CPI-AL (consumer price index for agricultural labourers) and CPI-IW (for industrial workers) for updating the poverty line. CPI-AL gave 80% weightage to food articles. But as Tendulkar found out, the poor are also increasingly spending on education and health. So his committee recommended the use of Fisher Price Index which updates the poverty line on the basis of actual consumption data. This index gives just 60% weightage to food articles.

Two, and the bigger reason is that when Planning Commission came out with the Rs 32 poverty line last year, it had done a quick, and provisional, calculation based on CPI-AL for June 2011. When it released the poverty line yesterday, it used the Fisher Price Index for prices during 2009. Between the two years, prices have gone up by roughly 14%. As a result, the data for 2009 shows a poverty line at Rs 29.

In short, this fall is just a statistical difference. It does not mean that suddenly a large number of poor have been lifted out of poverty. Neither does it mean that the poor are not slightly better off. They are. But that again is relative.

20 Mar 2012, Forbes

How to get children out of jobs and into school

In Bureaucratic Delays, Corruption, Poverty Eradication on May 30, 2012 at 7:08 am

THREE generations of the Teixeira family live in three tiny rooms in Eldorado, one of the poorest favelas (slums) of Greater São Paulo, the largest city in the Americas. The matriarch of the family, Maria, has six children; her eldest daughter, Marina, has a toddler and a baby. Like many other households in the favela, the family has been plagued by domestic violence. But a few years ago, helped in part by Bolsa Família (family grant)—which pays mothers a small sum so long as their children stay in education and get medical check-ups—Maria took her children out of child labour and sent them to school.

The programme allows the children to miss about 15% of classes. But if a child gets caught missing more than that, payment is suspended for the whole family. The Teixeiras’ grant has been suspended and restarted several times as boy after boy skipped classes. And now the eldest, João, aged 16, is out earning a bit of money by cleaning cars or distributing leaflets, taking his younger brothers with him. Marina’s pregnancies have added to the pressure. She gets no money for her children because she lives with her mother and the family has reached Bolsa Família’s upper limit. After rallying for a while, the Teixeira family is sliding backwards, struggling more than it did a couple of years ago.

Their experience does not mean Bolsa Família has been a failure. On the contrary. By common consent the conditional cash-transfer programme (CCT) has been a stunning success and is wildly popular. It was expanded in 2003, the year Luiz Inácio Lula da Silva became Brazil’s president, and several times since; 12.4m households are now enrolled. Candidates for the presidency (the election is on October 3rd) are competing to say who will expand it more. The opposition’s José Serra says he will increase coverage to 15m households. The ruling party’s Dilma Rousseff, who was Lula’s chief of staff, says she is the programme’s true guardian. It is, in the words of a former World Bank president, a “model of effective social policy” and has been exported round the world. New York’s Opportunity NYC is partly based on it.

Much of this acclamation is justified. Brazil has made huge strides in poverty reduction and the programme has played a big part. According to the Fundaçao Getulio Vargas (FGV), a university, the number of Brazilians with incomes below 800 reais ($440) a month has fallen more than 8% every year since 2003. The Gini index, a measure of income inequality, fell from 0.58 to 0.54, a large fall by this measure. The main reason for the improvement is the rise in bottom-level wages. But according to FGV, about one-sixth of the poverty reduction can be attributed to Bolsa Família, the same share as attributed to the increase in state pensions—but at far lower cost. Bolsa Família payments are tiny, around 22 reais ($12) per month per child, with a maximum payment of 200 reais. The programme costs just 0.5% of gdp.

But the story of the Teixeiras and others like them should sound a warning to those who see Bolsa Família as a panacea. There is some evidence the programme is not working as well in cities as in rural areas—and the giant conurbations of developing countries are where the problems of poverty will grow in future.

This concern differs from the usual complaints about the programme in Brazil. There, critics think it erodes incentives to work and sometimes goes to the wrong people. On the whole, though, studies have not borne out these complaints. A recent report for the United Nations Development Programme found the programme did not lead to dependence and that its impact on the labour market was slight. According to World Bank researchers, Bolsa Família’s record in reaching its target audience is better than most CCTs.

Worries about the imbalance between rural and urban benefits may be harder to brush away. Bolsa Família does seem to have a rural bias. Rural poverty is great in Brazil but even so, the programme’s incidence in rural areas is high: 41% of rural households were enrolled in 2006, against 17% of urban ones. In the two largest cities, São Paulo and Rio de Janeiro, fewer than 10% of households are in the programme. Yet these cities contain some of the worst poverty in the country.

Brazil’s success in cutting poverty seems to have been greater in rural areas than in urban ones. Bolsa Família does not publish figures on urban and rural poverty but the official report on the United Nations’ millennium development goals does. The most recent progress report, published in March, said that rural poverty fell by 15 points in 2003-08, much more than the urban rate (see chart 1).

Impressive though they are, these figures, based on household survey data, may understate the fall. Income and spending figures suggest poverty as a whole is lower (they show almost 8m fewer people in absolute poverty). Rafael Osório of the Institute for Applied Economic Research (IPEA) thinks rural poverty rates may well be lower than 12%. If so, Bolsa Família has done an even more splendid job in the countryside than it seems.

Other evidence supports this. Rural malnutrition among children under five in the arid parts of the north-east (one of Brazil’s poorest regions) has fallen from 16% to under 5% since 1996. And since 1992 the proportion of rural children in primary education has caught up with that of city children, while rural enrolment in secondary schools has increased faster than the urban rise (see chart 2).

Because poverty in rural Brazil used to be higher than urban poverty, a larger reduction is both natural and desirable. In the 1990s there were fewer social benefits in rural regions so a nationwide programme was bound to help them more. Moreover, as the ministry of social development, which administers Bolsa Família, points out, the programme was never designed to be run in a uniform way. Local areas use different methods so some variation is inevitable.

Despite all this, the cities remain a problem. In absolute terms there are as many poor people in urban areas of Brazil as there are in rural (because the country in general is largely urban). And there are three reasons for thinking Bolsa Família works less well in the towns.

The first is that, in urban areas, the introduction of the programme has left some people worse off. When Bolsa Família was expanded in 2003, it subsumed an array of other benefits, such as a programme against child malnutrition, subsidies for cooking fuel, stipends for youngsters between 15 and 16, and so on. Though hard to prove (national figures are not available), anecdotal evidence suggests that the family grant can be worth less than the former array of benefits.

Jonathan Hannay, the British secretary-general of the Association for the Support of Children at Risk, a charity in Eldorado, reckons that in his favela households like the Teixeiras used to be able to get the equivalent of two minimum wages (for a family of six) from the old benefit system. The average Bolsa Família grant is a fifth of the minimum wage. One city, Recife, even decided to top up benefits to former welfare recipients when the programme started. More generally, the cost of living in cities is higher than in the countryside, so the family grant (which is the same size across the country) is worth less.

Second, the programme seems to have had little success in reducing child labour in cities. In fact, its record on child labour in general has been rather disappointing, but the urban problem seems more intractable. In rural areas parents take children out of school to help with the harvest. This is, in part, a cultural phenomenon: children learn farming by working the fields. They are often not paid. But their work is temporary and, since children are allowed to miss 15% of school days without penalty, rural kids may be able both to work and stay in the programme.

Child labour in cities is different. Children earn money selling trinkets, working as maids and so on, and their earnings are often greater than the modest benefits from Bolsa Família. So there is an economic incentive to cut school and leave the programme. Of the 13,000 households who lost their grant because of school truancy in July, almost half were in São Paulo alone. The real damage done by child labour happens when the children have no education at all—and that is more likely to happen in cities.

Third, Bolsa Família may affect the structure of households in favelas more than in the countryside. Family benefit goes to the head of a household (almost always the mother). But in densely populated favelas, where—surprising as it may seem—housing is expensive, and where a young woman is likely to stay with her mother after she has her own child, the new benefit still goes to the head of the household, ie, the new child’s grandmother. This is what happened to the Teixeiras. It may, some observers fear, produce a sort of double dependency, on family grant and on family matriarch.

None of this means that Bolsa Família is, on balance, a waste of money in urban areas. As the FGV’s Marcelo Neri points out, the programme shows the state in a new and better light in favelas: as a provider of benefits in places where it has either been absent or present only in the form of brutal police squads.

In addition, the elaborate bureaucracy built up by the programme—every household gets a debit card and the ministry of social protection runs a giant database with every transaction—should make it easier to be more precise in targeting the needy. More important, it should make it possible to use the Bolsa network to do new things, such as helping teenagers of 16 and 17 who are products of the system train and look for work. It should also be possible for cities to top up the family grant. Rio de Janeiro is designing a new programme, called Bolsa Carioca, to do exactly that.

Still, there has been a tendency to treat Bolsa Família as magic bullet—in Brazil and beyond. Once a country has a Bolsa Família-type programme, it thinks it has dealt with the problems of poverty. It has not. Rômulo Paes de Sousa, the executive secretary of Brazil’s social-development ministry, talks about “old” and “new” poverty—old being lack of food and basic services; new being drug addiction, violence, family breakdown and environmental degradation. These “new” problems are more complex. Where they are being overcome, it is taking the combined efforts of the police (to reclaim the streets), new shops and commerce (to make life more bearable), Pentecostal churches (which give people hope)—and Bolsa Família.

Rural Brazil, with its malnutrition and absence of clean water and clinics, is an area of old poverty and Bolsa Família has been wonderfully effective in fighting it. But many of the problems of fast-growing cities, particularly in developing countries, are those of new poverty. And nobody, including the designers of Bolsa Família, has a magic bullet for those.

 

29 July 2010,  Economist

The Poverty Solution: Cash

In Bureaucratic Delays, Corruption, Poverty Eradication on May 30, 2012 at 6:57 am

Who’s responsible for the poor?

Back in the reign of the first Queen Elizabeth, English lawmakers said it was the government and taxpayers. They introduced the compulsory “poor tax” of 1572 to provide peasants with cash and a “parish loaf.” The world’s first-ever public relief system did more than feed the poor: It helped fuel economic growth because peasants could risk leaving the land to look for work in town.

By the early 19th century, though, a backlash had set in. English spending on the poor was slashed from 2 percent to 1 percent of national income, and indigent families were locked up in parish workhouses. In 1839, the fictional hero of Oliver Twist, a child laborer who became a symbol of the neglect and exploitation of the times, famously raised his bowl of gruel and said, “Please, sir, I want some more.”

Today, child benefits, winter fuel payments, housing support and guaranteed minimum pensions for the elderly are common practice in Britain and other industrialized countries. But it’s only recently that the right to an “adequate” standard of living has begun to be extended to the poor of the developing world.

In an urgent new book, Just Give Money to the Poor: The Development Revolution from the Global South, three British scholars show how the developing countries are reducing poverty by making cash payments to the poor from their national budgets. At least 45 developing nations now provide social pensions or grants to 110 million impoverished families — not in the form of charitable donations or emergency handouts or temporary safety nets but as a kind of social security. Often, there are no strings attached.

It’s a direct challenge to a foreign aid industry that, in the view of the authors, “thrives on complexity and mystification, with highly paid consultants designing ever more complicated projects for ‘the poor’” even as it imposes free-market policies that marginalize the poor.

“A quiet revolution is taking place based on the realization that you cannot pull yourself up by your bootstraps if you have no boots,” the book says. “And giving ‘boots’ to people with little money does not make them lazy or reluctant to work; rather, just the opposite happens. A small guaranteed income provides a foundation that enables people to transform their own lives.”

There are plenty of skeptics of the cash transfer approach. For more than half a century, the foreign aid industry has been built on the belief that international agencies, and not the citizens of poor countries or the poor among them, are best equipped to eradicate poverty. Critics concede that foreign aid may have failed, but they say it’s because poor countries are misusing the money. In their view, the best prescription for the developing world is a dose of discipline in the form of strict “good governance” conditions on aid.

Joseph Hanlon, a senior lecturer in development at the Open University in Milton Keynes, and Armando Barrientos and David Hulme, professors of poverty and development studies, respectively, at the University of Manchester, England, and directors of the Brooks World Poverty Institute there, back up their conclusions in Just Give Money with a wealth of studies on cash transfer programs, many of them conducted by the skeptical foreign aid community, including such global micromanagers as the World Bank and International Monetary Fund.

According to the World Bank, nearly half the world’s population lives below the international poverty line of $2 per day. As the authors of Just Give Money point out, that’s despite decades of top-down, neo-liberal, extreme free-trade policies that were supposed to “lift all boats.” In Africa, South Asia and other regions of the developing “South,” the situation remains dire. Every year, according to the United Nations, more than 9 million children die before they reach the age of 5, and malnutrition is the cause of a third of these early deaths.

Just Give Money argues that cash transfers can solve three problems because they enable families to eat better, send their children to school and put a little money into their farms and small businesses. The programs work best, the authors say, if they are offered broadly to the poor and not exclusively to the most destitute.

“The key is to trust poor people and directly give them cash — not vouchers or projects or temporary welfare, but money they can invest and use and be sure of,” the authors say. “Cash transfers are a key part of the ladder that equips people to climb out of the poverty trap.”

Brazil, a leader of this growing movement, provides pensions and grants to 74 million poor people, or 39 percent of its population. The cost is $31 billion, or about 1.5 percent of Brazil’s gross domestic product. Eligibility for the family grant is linked to the minimum wage, and the poorest receive $31 monthly. As a result, Brazil has seen its poverty rate drop from 28 percent in 2000 to 17 percent in 2008. In northeastern Brazil, the poorest region of the country, child malnutrition was reduced by nearly half, and school registration increased.

South Africa, one of the world’s biggest spenders on the poor, allocates $9 billion, or 3.5 percent of its GDP, to provide a pension to 85 percent of its older people, plus a $27 monthly cash benefit to 55 percent of its children. Studies show that South African children born after the benefits became available are significantly taller, on average, than children who were born before.

“None of this is because an NGO worker came to the village and told people how to eat better or that they should go to a clinic when they were ill,” the book says. “People in the community already knew that, but they never had enough money to buy adequate food or pay the clinic fee.”

In Mexico, an average grant of $38 monthly goes to 22 percent of the population. The cost is $4 billion, or 0.3 percent of Mexico’s GDP. Part of the money is for children who stay in school: The longer they stay, the larger the grant. Studies show that the families receiving these benefits eat more fruit, vegetables and meat, and get sick less often. In rural Mexico, high school enrollment has doubled, and more girls are attending.

India guarantees 100 days of wages to rural households for unskilled labor, paying at least $1.25 per day. If no work is available, applicants are still guaranteed the minimum. This modified “workfare” program helps small farmers survive during the slack season.

Far from being unproductive, the book says, money spent on the poor stimulates the economy “because local people sell more, earn more and buy more from their neighbors, creating the rising spiral.”

Pensioner households in South Africa, many of them covering three generations, have more working people than households without a pension. A grandmother with a pension can take care of a grandchild while the mother looks for work.

Ethiopia pays $1 per day for five days of work on public works projects per month to people in poor districts between January and June, when farm jobs are scarcer. By 2008, the program was reaching more than 7 million people per year, making it the second largest in sub-Saharan Africa, after South Africa. Ethiopian recipients of cash transfers buy more fertilizer and use higher-yielding seeds.

“In other words,” the book says, “without any advice from aid agencies, government, or nongovernmental organizations, poor people already knew how to make profitable investments. They simply did not have the cash and could not borrow the small amounts of money they needed.”

Just Give Money is lucidly written, but it bogs down when it explores the complex ins and outs of designing cash-transfer programs. In effect, the authors are combining a book for general readers with a book for policymakers. But there are helpful summaries for the layman at the end of every chapter, and some of the debates are fascinating.

For example, there’s the question of whether mothers who receive grants should be required to attend health talks and perform community work, as they are in Mexico and Brazil. On one hand, these rules could be viewed as reinforcing the view that mothers must sacrifice themselves for their children. On the other, studies show that many of the women had been confined at home by their husbands and welcomed the chance to get out.

Just Give Money does not put much stock in micro-credit programs that loan money to the poor in developing countries. Many people are too poor to take on the risk of paying back a loan, the authors say. They find fault with the U.N.’s Millennium Development Goals, too, saying these have “kept governments at arm’s length from the economy.”

A better way for donor countries to help, the authors suggest, is to give aid as “general budget support,” funneling cash for the poor directly into government coffers.

Cash transfers are not a magic bullet. Just Give Money notes that 70 percent of the 12 million South Africans who receive social grants are still living below the poverty line. In Brazil, the grants do not increase vaccinations or prenatal care because the poor don’t have access to health care. A scarcity of jobs in Mexico has forced millions of people to emigrate to the U.S. to find work. Just Give Money emphasizes that to truly lift the poor out of poverty, governments also must tackle discrimination and invest in health, education and infrastructure.

The notion that the poor are to blame for their poverty persists in affluent nations today and has been especially strong in the United States. Studies by the World Values Survey between 1995 and 2000 showed that 61 percent of Americans believed the poor were lazy and lacked willpower. Only 13 percent said an unfair society was to blame.

But what would Americans say now, in the wake of the housing market collapse and the bailout of the banks? The jobs-creating stimulus bill, the expansion of food stamp programs and unemployment benefits — these are all forms of cash transfers to the needy.

 

2 July 2010,  Pacific Standard

Not all abujh: Between Maharashtra, Chhattisgarh, two ‘states’ of a forest

In Naxalism, Police Reforms, Poverty Eradication, Tribal Development on May 29, 2012 at 6:54 am

The name may have stuck, but it’s the Chhattisgarh part of the densely forested Naxal hotbed that is really ‘Abujhmaad’. As one drives on to Maharashtra, the first half of that name — abujh or “unknown” — falls by the wayside, thanks to policies pursued by successive governments in this state, from development to how it has handled its tribals. While 5,000 sq km of Abujhmaad lies in Chhattisgarh, roughly 1,000 sq km falls in Maharashtra.

Policing

Gadchiroli in Maharashtra and Narainpur in Chhattisgarh are among the most Naxal-affected districts of the country. However, that is where the similarity ends.

Surrounded by formidable hills, Orchha is the last police station in Narainpur district towards Abujhmaad. On the April afternoon that The Indian Express visits, there are few constables around. The ones that are present admit to being scared and warn you against going on into Abujhmaad: “Proceed at your own risk.”

Last year, after a Naxal ambush in Bijapur district (adjoining Abujhmaad) had left 11 jawans dead, nobody had dared go in to retrieve the bodies. The bodies had lain in mud and rain till villagers had gone the next morning and ferried them in a bullock cart.

The policemen complain about how money meant for thanas in Naxal areas never reaches them, about their living conditions — the asbestos roof overhead kept in place with boulders — and the crumbling kitchen.

Contrast this with Lehri, the last police post in Gadchiroli towards Beenagunda, from where the Abujhmaad begins in Maharashtra. Lehri incidentally had been the site of the worst Naxal attack on state police in the district, with 17 cops killed in an ambush in 2009. Their framed photographs now hang in Police Station Officer Vijay Talware’s office.

Cops of the Lehri post can be seen patrolling up to 2 km in

the nearby areas. Nobody stops entry into the Red zone; the cops let visitors go after noting down the particulars.

The support of the administration is with the policemen, asserts Talware. “Even when a jawan is ill, a chopper lands to take him away,” he says.

As the Chhattisgarh top cops gush about their first entry into Abujhmaad, PSO Talware shrugs it off. “The CRPF might have gone inside first time, my jawans routinely patrol maad region,” he says.

Development

Across Gadchiroli, even in the forest-covered Alapalli to Lehri, roads are better than almost all roads connecting various districts in Chhattisgarh, let alone roads inside a district. The usual excuse given out by top Chhattisgarh officials is that the Naxals blow up roads. However, the state of the roads in Gadchiroli belies that claim.

While the public distribution system is almost non-existent in Chhattisgarh’s Orchha, one can buy fresh cold drinks and even Amul Lassi in Lehri. The neighbouring taluka, Bhamragad, has been developed as a tourist spot, with a forest resthouse located where rivers Indravati, Pamul Gurta and Pearl Kota meet. State transport buses come right up to Bhamragad.

In contrast, the beautiful landscapes of Chhattisgarh’s Bastar region get few visitors.

The story is the same in availability of power, phone signals etc. “Orchha tribals might not have ever visited Narainpur, but they are familiar with Gadchiroli. For marketing and other needs, instead of their own state, they travel a greater distance to go to Maharashtra,” said a district official.

Except two-three crumbling primary schools at the periphery, there is no administration worth its name inside the Chhattisgarh part. Neither is there a health centre or banks. Admits Narainpur Collector S R Bhramne: “Administration is yet to reach inside.”

The only schools functional here are run by the Ramakrishna Ashram. “If an NGO can operate in maad, what prevents the government?” asks an official.

Narainpur SP Mayank Srivastava acknowledges that the absence of a government allows schools run by the Janatana Sarkar of the Maoists to flourish, and these in turn allow easy brainwashing of tribals.

The forces demolished some of these schools DURING THEIR operation. However, Gudsa Usendi, spokesperson of the Dandakaranya Special Zonal Committee of the CPI (Maoist), hits the nail on the head when he says: “The attack ( by CRPF) was on the alternative development model built by the people.”

Politics

The Narainpur district is absolutely devoid of political activity. Local MLA Kedar Kashyap, a powerful minister in the Raman Singh Cabinet, holding the crucial portfolio of the SC & ST department, doesn’t dare venture into Abujhmaad. Tribals in this area are unaware of the polling process, leave alone having heard of Kashyap, himself an ST leader. While voting touched nearly 30 per cent in the 2008 Assembly elections, the Congress has repeatedly accused the BJP of poll rigging in the interiors of Bastar.

In contrast, Dipak Atram is a popular and accessible MLA from Aheri/Lehri area. Incidentally, he stood as an Independent and won.

Tribals

Outsiders were prohibited from even entering the Chhattisgarh part of Abujhmaad without informing the collector till the state government lifted the ban in 2010 . District officials say it added to the isolation of tribals, who not only became an easy base for Maoists but were also pushed away from their own state.

Lehri, on the other hand, has a conglomerate of Bengali-, Telugu-, Marathi- and Chhattisgarhi-speaking population, besides local tribals.

However, even as the government still lags behind, Abujhmaad tribals may be now seizing the change. Since the security forces ventured in, Orchha and Narainpur have been seeing the first protests by tribals seeking “what is due to us”. While some of the protests are still about the “intrusion of government through armed forces in our lives”, the tens of them out on street largely want change — and they are not seeking that under the Naxal umbrella.

It’s up to the Chhattisgarh government, that has largely abdicated Abujhmaad while putting the blame on the Naxals, to decide what course this agitation takes.

 

9 Apr 2012,  Indian Express

Electricity surplus Gujarat not so ‘power full’, reveals census

In Energy, Gujarat, Poverty Eradication on April 6, 2012 at 5:55 am

For a state government that pats itself for having turned Gujarat into a power surplus region by connecting all the urban and rural areas to the electricity grid, the census data of 2011 — that shows over 11 lakh households not having electricity as main source of illumination — could come as a shock.

The housing data of the census points out that there are over 11 lakh residences that do not use electricity in a state that has a power generation capacity of over 14,000 MW (mega watt) and claims to have 2,000 MW of surplus power.

Of these 11 lakh homes, a significant nine lakh homes are in rural areas, where the government claims to have finished implementing the Jyotigram Yojana (rural electrification programme) through which it has linked all the 18,065 villages of the state to the electricity grid (in just 30 months), providing round-the-clock, three phase electricity.

Gujarat became the first state in the country to claim all its villages had electricity. Former president Dr A P J Abdul Kalam dedicated the Jyotigram Yojna to the nation in November 2006 in an elaborate event in Champaner of the Panchmahals district.

The census, however, belies this claim and points out that Gujarat has 11 lakh households that have absolutely no source to light up their homes. About 15% of these homes are in the urban areas.

There are about nine lakh houses that use kerosene lamps to light their homes. Of this, over eight lakh houses are in the rural areas, while the remaining one lakh are in the urban centres.

So of the total 1.2 crore households in the state, 1.1 crore use electricity to light up their dwellings.

In 2010, Gujarat had declared itself a “power surplus” state when GUVNL’s (a state run power generation, distribution and transmission company) access to generation capacity crossed the 10,000-MW mark and touched 11,500 MW against the peak demand of 10,000 MW.

The state, which was power deficient barely a decade ago, now says it has surplus of 2,114 MW. In the next few months, Gujarat will be adding 3,000 MW of power taking the total power generation capacity to 17,000 MW through six new projects.

In the recent past, the state has sold the surplus power to states like Rajasthan, Tamil Nadu, Uttar Pradesh, Maharashtra, Andhra Pradesh, Delhi, Haryana, Karnataka, Chhattisgarh, Uttarakhand, Madhya Pradesh and West Bengal.

The census also found that there are 16,000 houses in the state that uses solar power as the main source of illuminating their homes. Of this, a majority 13,000 are in the rural Gujarat.

Only 46 lakh houses use LPG, PNG

Also, eye-opening are the census figures about fuel used in kitchens of the state.

For a state that claims to be the ‘energy’ hub of the country, the census data reveals there are only 46 lakh homes who either use Liquified Petroleum Gas (LPG) or Piped-Natural Gas (PNG) as fuel for cooking.

There is still a majority 63 lakh homes that either use age-old sources of fuel like crop residue (leftovers of crops), cow-dung cake or fire wood as fuel for cooking. Surprisingly, about eight lakh of such homes are in the urban areas.

Similarly, an additional nine lakh homes use kerosene to light their stoves; seven lakh of which are in urban centres.

There are over 46,000 homes that do not cook mostly due to exigencies of work. Of these, 26,000 are urban homes. There are also one lakh homes that use bio-gas as fuel in their homes (65,000 are rural homes).

 

5 April 2012, Indian Express

‘Annual Action Plans had unrealistic targets’

In Agriculture, Bureaucratic Delays, Corruption, Gujarat, Poverty Eradication, Property Rights on April 5, 2012 at 10:39 am

The Comptroller and Auditor General of India (CAG) has noted a shortfall of 8 to 100% in the implementation of Annual Action Plan (AAP) for 2010-11 and said its targets were not realistic.

It also noted that the government had acquired only 75% of the surplus land under the Gujarat Land Ceiling Act, and was not able to distribute all of it to the poor agricultural labourers.

CAG, in its annual civil performance report for the state, observed, “The AAP was being prepared setting out financial and physical targets for various activities to be undertaken. Audit analysis have revealed that the AAP prepared by the settlement commissioner and director of land records was not realistic and there were persistent shortfalls (eight to 100 %) in achievement of physical targets fixed.”

The report added: “As per Gujarat Land Ceiling Act, 1960, government shall take possession of land beyond ceiling limit from land owners and distribute it among agricultural workers or to needy agricultural labourers of SC/ST (categories) and other weaker sections as per yearly targets. We observed from the records of commissioner of land reforms that as on November 2009, as against declaration of 2,38,339 acres of land as surplus, possession of only 1,79,327 acres of land was taken by the government, of which 15,587 acres were yet to be distributed (March 2011) among the beneficiaries.”

It further noted the entitled groups were either agricultural workers/ labourers belonging to SC and ST categories, who needed financial assistance. But “all of them were not provided financial assistance”. It added that nothing was found on record to show that the beneficiaries were motivated to file applications for financial assistance and to avail the benefits of the scheme.

 

31 Mar 2012, Indian Express

Errors of Commission

In Bureaucratic Delays, Centre-State Relations, Civil Services Reforms, Macroeconomic Policy, Poverty Eradication on March 20, 2012 at 9:32 am

The Planning Commission is not an institution. It is a syndrome. It, often unconsciously, operates on assumptions that no longer have much plausibility. It has lost much of its credibility as an interlocutor in India’s debates. During the recent controversy over the poverty line, the commission was often accused of being “out of touch”. Much of the discussion focused on the poverty line, and the uses to which it should or should not be put. But it is also clear that the Planning Commission has ended up in a cul-de-sac because its institutional mission is incompatible with the governance requirements of the 21st century.

The Planning Commission has gifted individuals. There is no reason to doubt their commitment to India’s growth prospects and the well-being of the poor. But we need to ask: why has it lost authority? Part of the answer may require excavating a whole range of illusions it has fallen prey to. The Planning Commission has long been a victim of its own name. It has this illusion that it can neatly order India’s economy. It does so, but often as a kind of conjuring trick, where real credible objectives disappear under a set of entrenched assumptions.

First, the commission exhibits great confusion over ends and means. The Planning Commission’s goal should have been to end poverty. It needed to work backwards from that end to ask the question: what instruments are necessary? Instead it picked on a bizarre intellectual construction, the poverty caps, and defended those with the zeal of a politburo. So you got a strategy where a commission told you how many poor you could have, independently of the means of identifying them. Instead of focusing on the objective, it made holding a line its raison d’etre. The illusion of targeting became more important than the achievement of objectives.

The Planning Commission arrogated to itself the role of a quasi-ombudsman, whose job became “just say no”. It is difficult to find any major innovative social sector scheme — whether it is food, health, employment or education — whose intellectual origins were in the Planning Commission. Instead of taking the lead on how socially desirable objectives could be met, its entire approach was to act as a kind of fiscal police. As a result, it completely ceded the initiative in the social sector space to other actors and now does not have a leg to stand on.

The commission does not plan. It creates the illusion of planning. Planning ought to be future-oriented. The Planning Commission ought to be a space to think at least a decade or so ahead. But in almost every field the commission has touched, it ends up bringing a strangely pinched-up imagination to planning. Ever wonder why our infrastructure always looks like it was based on yesterday’s realities, rather than future needs? Somewhere, in the explanation, the Planning Commission’s penny-wise, pound-foolish conception of its role will figure prominently. But the other issue with planning is this: we often confuse plans with a statement of objectives. A plan not only requires a destination, but all the series of steps that will get you there. These steps have to be embedded in a range of ground realities from finance to administrative capability. The commission’s abilities to internalise these ground realities in the steps it proposes have become even shakier.

The commission’s penchant for standardisation extends to its own proposals. Take, for example, its current obsession with public-private partnerships. These are worthy instruments. But there are huge questions about sectors in which these should be applied, and the terms that define a good PPP. But the Planning Commission now has an unenviable track record of indiscriminately advocating them in areas where there is less compelling justification for them, and on insisting on standard models for these. Again, rather than work backwards from an objective to an instrument, the commission seizes on an instrument as a fad.

The commission, as the late economist Amaresh Bagchi used to remind us, is a big detriment to the development of states. It narrows the space of state governments to set priorities on expenditure. It is pre-empting more resources. It has an in-built bias towards standardisation and homogenisation. India is now a diverse and fast-moving economic space. Planning that does not have flexibility or responsiveness to local conditions is designed to fail. But it is bizarre to think that we can have supple planning without giving more autonomy to states, cities and local governments. Yet, the Planning Commission, in the end, peddles the illusion that without its omniscient choices and conditionalities, anarchy would ensue in the states. Nothing is farther from the truth.

The commission mistakenly believes that inclusive consultation can be a substitute for inclusive governance. It is has to be said, the commission’s consultative reach has become truly impressive. But institutionally this consultation produces odd outcomes. For, on the one hand, it allows the commission to check every box. Most approach papers have all the bases covered. You can never accuse the commission of not discharging its responsibilities. It can point to the right phrase as evidence. But on the other hand, this inclusive approach makes the central goal of planning obscure. Planning is not simply about stating all the good things you want. It is about explaining the hard choices that need to be made. These are often implicit in the financial allocations the commission makes. But these financial allocations often bear little relationship to the overall strategic direction.

Admittedly, the commission has a difficult task. It is now located amidst a thicket of actors. The prime minister has very little authority to throw his strategic weight behind the commission. The task of aggregating diverse views into a plan is not easy. To the commission’s credit, it is engaging in a lot of self-examination and trying to be more experimental. Plans are required. But the commission is still not reconciled to the fact that the very scale at which it plans militates against innovation. And by not giving ministries, state government, local governments enough space or ownership, it dooms proposals to failure.

The commission has taken a dazzling array of talent and sucked them into this illusory world of its own making. Thought leaders who should have been at the cutting edge of thinking about growth, or a new welfare architecture, or new data, have now become the object of easy scorn. They may not be personally out of touch. But the institution they serve is ill-fitted for the times we live in.

 

The writer is president, Centre for Policy Research, Delhi

 

6 Oct 2011, Indian Express

Free-Trade Blinders

In Business, Poverty Eradication on March 20, 2012 at 6:58 am

CAMBRIDGE – I was recently invited by two Harvard colleagues to make a guest appearance in their course on globalization. “I have to tell you,” one of them warned me beforehand, “this is a pretty pro-globalization crowd.” In the very first meeting, he had asked the students how many of them preferred free trade to import restrictions; the response was more than 90%. And this was before the students had been instructed in the wonders of comparative advantage!

We know that when the same question is asked in real surveys with representative samples – not just Harvard students – the outcome is quite different. In the United States, respondents favor trade restrictions by a two-to-one margin. But the Harvard students’ response was not entirely surprising. Highly skilled and better-educated respondents tend to be considerably more pro-free trade than blue-collar workers are. Perhaps the Harvard students were simply voting with their own (future) wallets in mind.

Or maybe they did not understand how trade really works. After all, when I met with them, I posed the same question in a different guise, emphasizing the likely distributional effects of trade. This time, the free-trade consensus evaporated – even more rapidly than I had anticipated.

I began the class by asking students whether they would approve of my carrying out a particular magic experiment. I picked two volunteers, Nicholas and John, and told them that I was capable of making $200 disappear from Nicholas’s bank account – poof! – while adding $300 to John’s.  This feat of social engineering would leave the class as a whole better off by $100. Would they allow me to carry out this magic trick?

Those who voted affirmatively were only a tiny minority. Many were uncertain. Even more opposed the change.

Clearly the students were uncomfortable about condoning a significant redistribution of income, even if the economic pie grew as a result. How is it possible, I asked, that almost all of them had instinctively favored free trade, which entails a similar – in fact, most likely greater – redistribution from losers to winners? They appeared taken aback.

Let’s assume, I said next, that Nicholas and John own two small firms that compete with each other. Suppose that John got richer by $300 because he worked harder, saved and invested more, and created better products, driving Nicholas out of business and causing him a loss of $200. How many of the students now approved of the change? This time a vast majority did – in fact, everyone except Nicholas approved!

I posed other hypotheticals, now directly related to international trade. Suppose John had driven Nicholas out of business by importing higher-quality inputs from Germany? By outsourcing to China, where labor rights are not well protected? By hiring child workers in Indonesia? Support for the proposed change dropped with each one of these alternatives.

But what about technological innovation, which, like trade, often leaves some people worse off. Here, few students would condone blocking technological progress. Banning the light bulb because candle makers would lose their jobs strikes almost everyone as a silly idea.

So the students were not necessarily against redistribution. They were against certain kinds of redistribution. Like most of us, they care about procedural fairness.

To pass judgment on redistributive outcomes, we need to know about the circumstances that cause them. We do not begrudge Bill Gates or Warren Buffett their billions, even if some of their rivals have suffered along the way, presumably because they and their competitors operate according to the same ground rules and face pretty much the same opportunities and obstacles.

We would think differently if Gates and Buffett had enriched themselves not through perspiration and inspiration, but by cheating, breaking labor laws, ravaging the environment, or taking advantage of government subsidies abroad. If we do not condone redistribution that violates widely shared moral codes at home, why should we accept it just because it involves transactions across political borders?

Similarly, when we expect redistributive effects to even out in the long run, so that everyone eventually comes out ahead, we are more likely to overlook reshufflings of income. That is a key reason why we believe that technological progress should run its course, despite its short-run destructive effects on some. When, on the other hand, the forces of trade repeatedly hit the same people – less educated, blue-collar workers – we may feel less sanguine about globalization.

Too many economists are tone-deaf to such distinctions. They are prone to attribute concerns about globalization to crass protectionist motives or ignorance, even when there are genuine ethical issues at stake. By ignoring the fact that international trade sometimes – certainly not always – involves redistributive outcomes that we would consider problematic at home, they fail to engage the public debate properly. They also miss the opportunity to mount a more robust defense of trade when ethical concerns are less warranted.

While globalization occasionally raises difficult questions about the legitimacy of its redistributive effects, we should not respond automatically by restricting trade. There are many difficult trade-offs to consider, including the consequences for others around the world who may be made significantly poorer than those hurt at home.

But democracies owe themselves a proper debate, so that they make such choices consciously and deliberately. Fetishizing globalization simply because it expands the economic pie is the surest way to delegitimize it in the long run.

20 Mar 2012, Project Syndicate