Biz and Eco

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By Deepanshu Mohan:

Kautilya and Adam SmithWhen ancient Greece fell into decline and Europe entered the Dark Ages, mathematical progress became the realm of the genius of the East. Despite developing independently of Chinese (and probably also of Babylonian) influences, some very advanced mathematical discoveries were made during the nascent times in medieval India. From the application of the zero, to the understandings of revolutionary new concepts of infinity and negative numbers – all ushered in an eastern age of mathematical and scientific enlightenment to the forefront (refer to the works of Indian Mathematicians like Madhava, Brahmagupta) long before Colonialism emerged. Rivers of ink have been spilt studying the influence of scientific thoughts that originated from the East to influence the West in ancient times.

The pursuit of a Western economy’s path to prosperity since medieval times has been dependent on the ability of the state in executing the ideas designed and originated in the works of distinguished scientists, mathematicians, and those who studied society. Germany had scholars like Carl Friedrich Gauss, Wilhelm von Leibniz and Max Planck; France had Marquis de Condorcet and Rene Descartes while United Kingdom had Charles Darwin, Issac Newton and Adam Smith to name a few. All these names were seminal in their country’s pursuit of higher economic, technological growth at a time when countries like Germany, France and UK emerged as factories of the modern world.

Unlike the West, the East today witnesses a growing void in the acknowledgement and application of ideas and concepts put forth by our thinkers and scholars; a void often reflected in the views of our modern political class, policymakers, judges and technocrats. Our views on economic justice are still driven by the concept of “what is just” and “fair” under a neo-Rawlsian umbrella which is more institutional in its constitution and vision. What remains lacking in the views of such policymakers, political class, judges and technocrats is the understanding of an instrumental, endogenous process that is germane to the plurality of our own communities and not something which is shaped entirely by a homogenous Western thinking.

As Amartya Sen aptly puts it in his book, The Idea of Justice, “in the inclusive perspective of nyaya, we can never handover the task of justice to some niti of social institutions and social rules that we see as exactly right, and then rest there, to free ourselves from further social assessment.” In the same way, the concept of economic development in totality must encompass a process of social realisation, integrating collective behavioural and social choice actions.

The Missing Indian Idea Of Developmental Growth

In India’s own economic policy making approach, we observe an over-reliance on the theoretical concepts of neo-liberal economics, a framework which saw its emergence in the US and Europe during the late 1950s. India’s current push for driving Foreign Direct Investment (FDI) as a source of physical capital to increase production for economic growth via its Make in India program can also be seen as a neo-liberal method that excludes the scope and importance on pushing for domestic investment and human capital in its model.

A paper written a few years ago by Indira Hirway, provides useful evidence on how, in spite of the adoption of pro-market policies in most of the South Asian countries, the level of income inequalities continued to widen. Out of the fourteen Asian countries for which sufficient data is available, inequality has increased in eleven countries vis-à-vis – Sri Lanka, China, Cambodia, India, Indonesia and Nepal (to name a few). Malaysia and Thailand were the only two countries where inequalities decreased. In the case of India, the Gini coefficient (a useful parameter for measuring income inequality) has increased from 0.44 to 0.47 during the last decade. While functional variables of a neo-liberal production function may have a useful bearing for increasing a developing economy like India’s productive capacities through capital investment; the mistake, often committed by our policymakers is to treat this approach of growth as an inclusive one.

The issue with India’s path to economic development has been with the implementation of Track II reforms where, in spite of higher and sustained economic growth levels since the early 2000s, the level of public spending on education and healthcare has remained drastically low (less than 3% and 2% of the GDP respectively till now). This has resulted in the accumulation of economic wealth in limited geographical city centres where economic prosperity is enjoyed by the few who directly accrue the benefits, segregating those from lower classes of income as the others who ultimately becoming entirely dependent on the government. Upward income mobility within these lower income classes remains unaddressed owing to a lack of access to good quality education, primary health care and productive employable opportunities for livelihood.

One of the other possible explanation for the short-sightedness in economic approach of a developing state like India, can be associated with the existing nature of our political system. A democratic system warrants political parties to achieve quick results and implement policies with short-term implications that allow them to score points in the next election cycle; while ignoring the long-term economic costs of such policies that are usually attached with short-term benefits.

The ad hoc policy decision of the nationalisation of all large banks in India in 1969 can be cited as one such example that resulted in long-term economic costs. The returns associated with social investments in skill development, primary education and healthcare facilities are long term (in the form of human capital development) and are part of a macro strategy for improving the productivity of workers and for enhancing aggregate effective demand in the economy. In this effect, the evidence on sustained economic development, in the recent past, is skewed more towards state led authoritative political regimes such as South Korea, Singapore, Mainland China etc.economic warfare

An Alternative: Social Choice Theories & Collective Action

In welfare economics, utilitarianism emerged as the official theory of studying the overall welfare of given societies in an economy (with contributions from Jeremy Bentham, John Stuart Mill, Pigou etc.). Our policy framework needs to be assessed in light of a question raised by the title of a famous essay by Richard Easterlin, “Will raising the income of all increase the happiness of all?” Putting happiness as a self-evident fact at the center of a utilitarian, totalistic approach is a prescription offered by many economists including Amartya Sen himself (refer to his works on Happiness, Well Being & Human Capabilities reflected in the book on Collective Choice and Social Welfare).

It would be pertinent to acknowledge the work put forth by some of the early social choice theorists who focused on the development of a framework for rational and democratic decisions for a group, paying attention to the preferences and interests of all its members. (Refer to Kenneth Arrow’s work on the impossibility theorem in his book on Social Choice and Individual Values).

The social choice theoretical applications are particularly useful in indigenizing self-assessing developmental process within pluralistic societies; away from the transcendental thinking of an ideal, uniform process of economic development usually projected as a ‘one size fits all’ (similar to the neo-liberal framework or the neo-Rawlsian idea of justice as fairness). The social choice theoretical framework is not a single theory, but a cluster of models and results concerning the aggregation of individual inputs (e.g., votes, preferences, judgments, welfare) into collective outputs (e.g., collective decisions, preferences, judgments, welfare). Information on interpersonal comparisons of well-being and relative advantages turns out to be particularly crucial in the resolution of an inclusive, long-term process of economic development.

There is a strong need for the Indian state, particularly the policymakers to acknowledge the role and importance of social choice theories that allow the emergence of complete symbiosis between the process of institutional reforms along with behavioural changes. As a useful example cited by Sen in his work on economic justice, mentions Condorcet’s (a French philosopher and mathematician) emphasis on the importance of women’s education in medieval France as a need for institutional reforms in securing such a change; a change that is realized by a larger effort to recognize the need for women’s voices in public affairs. Condorcet’s views here reflect the symbiosis needed between the process of reforming institutions that are driven by the collective needs of a society; in the above case, acknowledging more participation of women over time in the public policy decision-making framework.

In India and across the developing world, a fresh look in our public policy framework is required, that, at a micro level is institutionally designed combining elements from both Kautilya’s views on Indian political economy (in Arthashatra, where he acknowledged the role of institutions in planning and directing efficient economic performance, including the imposition of restrictions and prohibitions to promote good conduct at a society level) and Ashoka’s views on advancing the welfare and freedom of people in general (his optimistic views were based on the belief of making more people behave better by promoting self-awareness and persuading them to reflect more) .

At a macroeconomic level, it is critical to end the tug of war that manifests in the clear lacuna evident between the growth phase and the redistribution phase. The mainstream growth process that creates exclusion as well as inequalities tends to overpower the redistribution process and intensifies exclusion. Both the growth phase and the redistribution phase should be complimentary to each other for mainstream growth to be more inclusive.

If we simply talk about principles of fair, equitable and sustainable growth as a precursor to economic development for the overall well-being of a nation’s economy; it is critical in every developing economy like India to have a self-drawn map for developmental growth. The nature of such development beyond the maximisation of comparative economic advantages, warrants an institutional self-assessing process realising the collective social choice of societies in the process; one which is less transcendental in achieving what is “ideal” as against what is pertinent.

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By Harjot Singh Narula:

bob biswas kahaaniLife insurance is a promise you make for your loved ones to ensure financial independence in case you can’t take care of them. It is a financial decision which needs to be taken prudently. Life insurance policies are a long term contract which run for a tenure like 20, 25,30 years or whole life as well.

It is important to keep these 5 crucial things in mind before making a final decision.

1. Buy An Adequate Life Cover

Just buying a life insurance policy for the sake of it does not benefit either you or your family. The most imperative thing is to choose the right amount of life cover, or technically we call it ‘Sum Assured’.

The ideal sum assured is something that you need to assess, based on appropriate calculations of your family’s financial dependence on you. Every individual will have different financial setup, so if your friend has taken a sum assured of 10 lakh or your agent is proposing to take a sum assured of 15 lakh does not mean it is the right life cover amount for you as well.

Your current and future financial obligation towards your family forms the basis of choosing the right sum assured. It all depends on your financial income, lifestyle expenses, regular household expenses, loans (if any), debts and future financial goals as the child’s education, marriage, etc.

The thumb rule is to buy a life cover which is 10 times of your annual income.

2. Analyse The Type Of Life Insurance Plan You Require

Life insurance plans come in all forms and types. Life insurance plans like Term Plans can provide you with pure life protection plans, which pays your nominee/s the life cover amount or sum assured as lump sum amount. Such products offer you higher coverage at the lowest cost.

On the other side, there are life insurance plans which offer a fair amalgamation of Insurance plus Investment. Such plans fall under the category of Endowment Products which offer both Death and Maturity Benefit (whichever occurs first).

The premium component of endowment plans like child plans, money back plans, whole life plans include the cost for mortality and investment both which makes it comparatively higher as compared to term plans.

ULIP’s or Unit Linked Insurance Plans also fall under the category of Endowment Products with a difference of being more transparent (regarding its associated costs, benefits, returns) and market driven products.

The idea is to understand why you want to take life insurance. If it is purely for protection, then Term plans are best suited, but if the objective is both protection and savings, then you may opt for other options.

3. Insurer’s Background Check

Life insurance is a long-term contract, so it is vital to spend some time in doing a background verification check about the insurance company (or insurer) from which you are planning to buy a life insurance policy.

The foremost important aspect is to check on its ‘claim settlement ratio’, which defines the number of claims paid over the total claims received by the insurance company. In case the insurer has a low claim settlement ratio, it is a concern. If after you, your family members are deprived of the death claim amount due to the incompetency of the insurer to pay claims on genuine grounds, the investment done by you towards buying a life insurance policy will go in vain.

Other important aspects to be inquired about the insurer are:

• Ensure the company or the intermediary should be IRDAI (Insurance Regulatory & Development Authority of India) Approved & Licensed entity
• Good and Efficient Customer Services
• Check Expert Reviews about the product and the company you intend to get associated with.

4. Fill Complete And Correct Details In The Proposal Form

The Proposal Form is the basis of your insurance policy issuance. Important information is asked by the insurance company in the proposal form like:

• Income
• Age
• Occupation
• Smoking & Drinking Details
• Family History
• Personal Medical History
• Other Insurance Policies, etc.

On the basis of the details provided by you, the insurer decides to grant you life insurance policy and your premium amount. It is very important to provide the complete and correct information in the form. Any non-disclosure or misrepresentation of facts may lead to serious consequences at the time of claim.

Also, ensure you fill the proposal form yourself instead of your agent filling it on your behalf. Agents at times represent wrong information in the proposal form which you may not be aware of, to fulfil their own targets or goals. Be aware of such things to enjoy the benefits in the later stage of your life insurance policy.

5. Compare And Buy Online

In this internet era, buying insurance is just like buying other tangible products online. Various online comparison portals offer cost-free, unbiased and expert comparison of various life insurance products from the leading insurers. Buying online, requires the least documentation, hassle free process and allows quick policy issuance. Compare and make a decisive buying decision.

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By Awais Imran:

Taking up entrepreneurship shortly after graduating comes with its fair share of pros and cons. It is quite risky: you are potentially sacrificing years of reliable, stable career growth in exchange for the chance of experiencing incredible personal, career and financial growth.

I personally have adopted the middle path: like my peers, I am working full-time for a US-based startup. Unlike most of my peers, however, I work on my own startup at nights and on weekends. At PriceOye.pk, we’re building a shopping intelligence service which helps consumers make great buying decisions – starting with mobile phone price comparisons. It’s a hectic lifestyle, but I’m really enjoying the benefits of both career paths in one go.

I’ve learned a lot over the past year. Today, I’d like to share some of these learnings with you, in the hopes that it will help you become a better professional:

The Dos

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Take risks: All the magic happens when you start working outside your comfort zone. This is where you face your fears by taking risks both big and small. Most will not work out as you had imagined, but you will learn and grow immensely having taken them. Mistakes teach you lessons which push you in the right direction. And the few risks that do work out? These will propel your startup to the next level.

So, I actively encourage you to take risks and not be afraid of making mistakes. The knowledge you gain from them will only push you faster towards your goals!

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Be very patient: It takes years to build and sell great products. When you get into the startups game, understand that nothing – not even Rome – was built in a day. Keep building your product, keep forming partnerships, and keep growing your platform. One day, several years from now, you will be considered an “overnight success” by the public when your startup goes mainstream.

In my network, the most successful entrepreneurs are those who have remained patient and kept slugging through the mud for several years until their relentless persistence paid off.

Keep meeting people: Remember that your network is your net worth. Keep finding and meeting new people who interest you – not just for immediately getting something out of them. It’s a highly rewarding experience where you learn about entirely new concepts, understand different perspectives, and get inspiration for your next goals.

Some of my greatest learning experiences have come from directly meeting people above me on my chosen ladder of success. Do you want to become a successful blogger? Find one, and take them out for a coffee. Listen to their story. Their struggles. Their successes. They will equip you with the tools required for success. I’ve found this activity to be as fulfilling as travelling to a new country.

The Do Nots

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Ignore feedback: I know it’s difficult to hear people poke holes in on your startup, but you should actively listen to and implement good feedback. This is especially important for B2C startups whose products are to be used by millions of people. In the process of building them, it’s easy to forget how others use your product since you are naturally always seeing things from your own perspective.

Care about what people say: Entrepreneurship is not a socially accepted career choice in major parts of the world. You will hear extended family members, friends and more tell you to work in a multi-national company. Pay no heed to such people. These are the same folks who go out of their way to show-off their connection to you when you succeed.

You only need your family and close friend’s support. Don’t let that support system go!

Building but not shipping: A huge number of entrepreneurs remain stuck in the building phase. In the pursuit of perfection, they keep iterating on their product until it becomes too late and you’re replaced by something else. Don’t be afraid of an imperfect launch; you will only learn from it, and get better. Be afraid of being rendered irrelevant!

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By Nissim Mannathukkaren:

special-26-Thrasymachus: When there is an income tax, the just man will pay more and the unjust less on the same amount of income… I tell you, Socrates, injustice—
when practised on a large enough scale—has more strength, freedom and mastery than justice. – Plato, The Republic.

When the government released income tax data for the first time a few days ago, it gave us an opportunity to study one of the vital areas of our economic life, hitherto hidden from public scrutiny. It expectedly generated commentary on the implications of the data for the economy and so on. But what it has not generated is a moral and political reflection on the data.

If we consider the data from the latter point of view, two things emerge. One: the data cannot be termed anything but shocking (the fact that it has not occasioned any moral revulsion or critical political questions is precisely part of a larger problem). And two: more, importantly, the data gives the lie, in a searing fashion, to the recent discourse of nationalism, sponsored by the ruling party and the government, and amplified by the elite classes.

How is it that in the year 2012-13, there were, believe it or not, three individuals who paid a tax of Rs. 100 crore or more? In the same year, there were 46 dollar billionaires in India who were collectively worth $ 176 billion— Rs. 11.61 lakh crores; that is ten times more than the Rs. 1.14 lakh crores collected from all the individual income tax payers in the country! How is it that there were only 18,358 individuals who had an income over Rs. 1 crore, and only 10 lakh persons with incomes over Rs. 10 lakhs? This is when, as a report put it, in 2011-12, four luxury carmakers alone sold 25,645 vehicles with an average price of Rs. 40 lakhs, and in Mumbai alone some 1880 luxury apartments worth Rs. 10-100 crore were in the market for sale.

In total, there were 2.87 crore individual income tax returns in 2012-13 (out of a population of 125 crores). 1.6 crores of this did not actually pay any tax, so, effectively, income taxpayers amounted to 1 percent! To give a comparative sense, Canada (of course, a G8 country), had the same—2.88 crore returns, out of a population of 3.5 crores!

Amazingly, the tax-GDP ratio has remained almost constant even after two and half decades of spectacular growth and wealth creation in which the GDP increased 4.5 times (the recent social media buzz was that India is now the fastest growing economy in the world, overtaking even China). In the mid-1990s, there were only 2 dollar billionaires with a combined worth of $ 3.2 billion. But in 2016, there were 111 billionaires with a net worth of $ 308 billion—Rs. 20.48 lakh crores.

The staggering statistics are evidence of shocking levels of tax evasion, fraud and also legally sanctioned tax breaks on income and wealth favouring the richest classes. What does this mean for the discourse of nation and nationalism? What kind of a nation are we talking about when vast numbers of its middle and upper classes, the so-called wealth creators, are the very sections that eviscerate the economic vitals of the nation by not contributing to the national cause?

The “drain of wealth” theory was one of the greatest economic and moral weapons of the Indian nationalists against the colonial rule. Ironically, the nation is subject to the same drain of wealth now. Around $450 billion has gone out of India, illegally, from 2002. In the same period, the FDI inflows into India were around $ 150 billion. As Frantz Fanon, the philosopher and anti-colonial revolutionary, noted many decades ago, in the wake of the independence from colonial rule, the colonial exploiter is replaced by the native exploiter. Nationalism thus becomes an “empty shell, a crude and fragile travesty of what it might have been.”

The current nationalist/anti-nationalist binary is the most potent example of this travesty. An anti-national is one who refuses to chant “Bharat Mata Ki Jai,” not the one who refuses to pay tax. One can indulge in the grossest forms of economic corruption and participate in shoring up an exploitative economic order, but that does not make one an anti-nationalist. As economists have shown, India is an extreme case when it comes to relying overwhelmingly on indirect taxes, with its catastrophic consequences for the poor, unlike the developed countries, which rely overwhelmingly on direct taxes on income and wealth.

Why any of this does not cause any moral outrage is because nationalism has been reduced to a symbolic/cultural entity unyoked from its material underpinnings. That is why we see the exaggerated and virulent battles around the emotive idea of the nation, rather than its material organisation. While the Prime Minister of Iceland resigns over his name figuring in the Panama Papers, there is hardly a ripple in India regarding the Indian names in them. While the “nationalist” government is proactive in jailing “seditious” students, it is hardly serious about investigating the 1200 powerful Indians in the Swiss Leaks. As Fanon would have put it, it “provides nationalism alone as food for the masses.”

The scholar Benedict Anderson had shown that the nation is conceived as a community; that is, despite the huge disparities between people within the nation, it is imagined as a comradeship. As he puts it, “ultimately it is this fraternity that makes it possible, over the past two centuries, for so many millions of people, not so much to kill, as willingly to die for such limited imaginings.”
In the India of the present, the burden of such sacrifices is exclusively placed on the marginalised and the oppressed castes and classes, while the powerful and the wealthy, leave alone sacrificing for the nation, do not even pay what is simply due from them.

This is the conceit of nationalism that no one who profits from it wants to address. By joining the circus supposedly exposing corruption perpetrated by politicians, the privileged conveniently ignore their own participation in the economic fraud perpetrated on the nation. Their rapturous singing of the national anthem, wittingly or unwittingly, becomes a mask. Evading taxes is not an aberration; it is a mundane activity. If “no taxation without representation,” was the rallying crying of the American Revolution, in India there is representation without taxation.

Thrasymachus, in his dialogue with Socrates, asserts that “justice really serves the interest of the ruler, the one who is stronger, at the expense of the weaker.” What is astonishing is that his cynical view of Athens 2500 years ago is equally valid for the India of the present. While releasing the tax data, Prime Minister Modi said that it should “lead to enhanced insights for policy making on taxation.” What did he not say was that it was a scathing commentary on the nation.

Unless the cultural idea of the nation as comradeship and fraternity is complemented by material and economic arrangements that realise this, the nation will remain only in name. It will be Frantz Fanon’s empty shell.

This article was originally published here.

Force India team owner Vijay Mallya gives the thumb up at the end of the third practice session of the Italian F1 Grand Prix in Monza September 12, 2009.  REUTERS/Max Rossi (ITALY SPORT MOTOR RACING) - RTR27QKS

By Bharat Kumar Meher:

Some problems of the economy are not easy to understand or analyse in an appropriate and consolidated form. Normally, if we discuss two or more issue together, it may seem irrelevant or not directly related, but if we examine these in an integrated manner, the cloudy picture may convert to a new one and a fresh correlation between two entirely different issues can be drawn. Non-Performing Assets (NPA) and Limited Liability Concept are two such issues in which a close correlation can be identified especially when we examine them in the context of the recent Vijay Mallya episode.

Today, Vijay Mallya, the Ex-Chairperson of Kingfisher Airlines and the biggest willful defaulter with a debt of about Rs.9000 crores, has already left India and settled in another country. The court has already issued a non-bailable warrant against Mallya for diverting 430 crores. But the question is why the law can’t take immediate steps for such an obvious out-in-the-open nonpayer. A warrant was issued a few months back when it was proved that the loan taken by Mallya had been used for purchasing personal property in foreign countries. But could such legal steps not have been taken before? The answer is clear: Kingfisher Airlines was the debtor not Vijay Mallya and a company is a separate entity from its shareholders. All transactions were made through the company. Therefore, it was the company that was liable to pay or suffer the consequences, but neither the shareholders nor the directors or chairperson are liable for it personally. The company has already been declared bankrupt and its assets have been seized but such assets aren’t enough to compensate the banks. A critical question can be raised here – if a company becomes insolvent why are the shareholders, managers, directors or chairperson not liable? The answer to this question is hidden in the concept of limited liability. Before venturing to answer the above question let me offer a brief understanding of the NPA problem facing Indian banks.

For the clear understanding of the layman, Non-Performing Assets refer to loans or advances for which the principal amount (or a part of it) or the amount of interest (or part of it) remains overdue for a period of 90 days or more. Many banking experts are now calling it the big disease that is severely affecting the functioning of banks. Most people don’t know that the losses in the form of NPAs are not only the losses of the banks but also of the citizens of a country and the whole nation, as a major portion of the money lent by the banks, comes from the deposits received from the public and government share. Ultimately the NPAs in public sector banks are compensated by the Government as a result of which the fiscal deficit increases. One of the hidden reason due to which such NPAs are increasing day by day is flaws in certain laws. The major flaw in the present law is that the court of law cannot enforce the director(s) or chairperson to attach their private asset, in case of bankruptcy of a company and as a result, the total debt taken by the company is irrecoverable, and loss will pile up on public finances.

It is known that wilful defaulters are one of the biggest reason behind the increase of such NPAs. Even though the RBI has prescribed certain norms to recognize wilful defaulters in India, but still no strict legal actions could be taken to make recoveries from these wilful defaulters just because of the limited liability. Most of the wilful defaulters are either companies or big business houses or firms. A company which is an association of many persons enjoys many privileges like separate entity concept, perpetual existence, and the division of risk among numerous shareholders and limited liability. Such privileges attract more people to invest their funds in joint stock companies, and as a result, the companies fetch more capital from the public.

The prime advantage of opening a joint stock company, or to convert any firm into a joint stock company, is to enjoy the benefits of limited liability. Such companies were allowed to start by the government to promote industrialization and to create more employment opportunities. Moreover, the concept of limited liability was further encouraged with the development of Limited Liability Partnership (LLP) in the year 2008, which deems the owners of a concern liable only up to a fixed sum, or up to the investment made by the owners, or up to the nominal value of shares held by them whatever may be the amount of total liabilities. In other words, if the outside liabilities increase due to any loss suffered by the concern then the owners are not liable to attach their personal or private assets to pay the debt. A company with a large share capital could raise more debt from banks as in the case of Kingfisher Airlines.

When a part of the Kingfisher Airlines collapses, Mallya was accused of being a “willful defaulter.” He had taken loans from a group of banks in the name of his company and misappropriated the cash. As a result, when Kingfisher became bankrupt, no proper legal actions could be taken immediately because it is the bankruptcy of Kingfisher not the insolvency of the Chairperson, Vijay Mallya.

Most people think that the losses of the banks in the form of Non-Performing Assets (NPAs) are the losses of the banks only. But the people must be aware of the fact that more than 70% of the losses of the banks are written off through the finances provided by the Government of India and these finances are the funds collected in the form of tax from the people. Thus, the finances provided by the Government leads to the fiscal deficit of our nation. Not just Mallya but an amount Rs. 50,000 crore currently stands locked up in the form of NPAs because of the wilful defaulters of India. Companies are clearly taking advantage of this loophole in the law. They are misusing the concept of limited liability and taking loans in the name of the company for personal use. Other defaulting companies like Winsome Diamond & Jewellery Co. Ltd., Electrotherm India Limited, etc. are afloat in the same boat as Kingfisher Airlines.

To safeguard the country against this, few reforms have been made by Security Exchange Board of India (SEBI). Now the director or directors of a company must repay loans within the stipulated time period to continue in the position they hold. However, still many revisions in loan recovery process are required to make a strong credit system in the banking sector. According to Kishore Sansi, the Managing Director of Vijaya Bank and chief operating officer, “Our legal system is old and somewhat complicated. I opine that legal reforms are urgently needed to control the wilful defaulters. The debt recovery tribunals are doing a fine job, but they are handicapped by a number of constraints,” Moreover it is a fact that day by day the number of joint stock companies and limited liability partnership firms are increasing, and it is evident that their demand of loans would also increase. So, can it be possible for the banking sector to provide sufficient finance to the needy or priority sectors without giving prime emphasis to the big business houses? A painful truth that all the people of India must know is that the financial support given by banks to these big defaulting units are irrecoverable now.

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By Abhishek Waghmare, IndiaSpend.com:

jobber_620India will need to generate 280 million jobs between now and 2050, the year when the working-age population (15 to 64) will peak, according to a new report, amid indicators that the country’s demographic dividend could be at the cusp of disaster.

Over 22 years of unprecedented economic growth (1991 to 2013), less than half the Indians who sought jobs got them, 140 million of 300 million, according to a new United Nations Development Programme (UNDP) report.

“In China, the number of jobs grew from 628 million to 772 million between 1991 and 2013, an increase of 144 million, but the working-age population increased by 241 million,” the report said. “A wider gap in India than China suggests a more limited capacity to generate employment—a serious challenge given the continued expansion of the workforce in India over the next 35 years.”

With fears that India is experiencing jobless growth and skepticism abounding that the country may not be able to cash in on its “demographic bonus”, the world’s largest working-age population—869 million by 2020—because of limited progress on health, education and job skills, we identified six warning signs:

  • In 2015, India added the fewest organised-sector jobs—in large companies and factories—in seven years across eight important industries.
  • The proportion of jobs in the unorganised sector—without formal monthly payment or social security benefits—is set to rise to 93% in 2017.
  • Rural wages are at a decadal low, as agriculture—which accounts for 47% of jobs—contracted 0.2% in 2014-15, growing 1% in 2015-16.
  • As many as 60% of those with jobs do not find employment for the entire year, indicating widespread ‘under-employment’ and temporary jobs.
  • The formation of companies has slowed to 2009 levels, and existing companies are growing at 2%, the lowest in five years.
  • With large corporations and public-sector banks financially stressed, the average size of companies in India is reducing, at a time when well-organised large companies are central to creating jobs.

With a million jobs required every month—the UNDP report says eight million are required every year until 2050—dominant castes across various regions are reacting violently to unfulfilled aspirations, as IndiaSpend reported in February 2016.

1. Organised sector, offering 10% of employment and steadiest jobs, slows

Employment shrank over two quarters of four in 2015, the first time since the 2008 global financial crisis, according to the latest data from the Labour Bureau’s Quarterly Employment Survey.

Source: Quarterly Report on Changes in Employment in Selected Sectors, Labour Bureau, Ministry of Labour and Employment.Note: 2008 data only for October to December

The first quarter, January to March 2015, added 64,000 jobs, while the third quarter, July to September, added 134,000 jobs in eight sectors that the Bureau surveys on “changes in employment” (not existing jobs): Textiles (apparels), leather, metals, automobile, gems and jewellery, transport, IT/BPO and handloom/power loom.

Source: Quarterly Report on Changes in Employment in Selected Sectors, Labour Bureau, Ministry of Labour and Employment

However, in the second quarter, April to June, 2015, 43,000 jobs were lost, and in the last quarter of the year, October to December, 20,000 jobs were lost. These jobs were to be in industries that comprise Prime Minister Narendra Modi’s Make in India programme, a manufacturing expansion meant to offer jobs to the millions moving out of agriculture.

The employment generated per quarter slowed since after the relatively short-lived 2008 financial crisis, indicating that the current global slowdown is steadier, as IndiaSpend reported earlier.

Recent Reserve Bank of India data on “Assessment and Expectations for Employment Outlook” indicates India’s jobs gloom.

“The survey indicated moderate increase in optimism for production, financial situation and salary for fourth quarter (January to March 2016) of 2015-16 as compared with previous quarter. However sentiments on other indicators, viz. exports, imports, employments, profit margin and overall business situation, deteriorated,” the RBI quarterly industrial outlook report said.

2. Up to 93% of jobs in unorganised, insecure informal sector by 2017

The informal sector accounted for 90% of jobs through the period 2004-05 to 2011-12, said the Economic Survey 2015-16. This is going to increase marginally to 92-93% in 2017, according to a report by the National Commission for Enterprises in the Unorganised Sector (NCEUS).

The accelerated growth of the Indian economy over the past two decades is accompanied by increasing informalisation, notes the Report of the Committee on Unorganised Sector Statistics by the National Statistical Commission.

The proportion of ‘own account establishments’, such as carpenters and street-kiosk owners, has jumped from 64% of all establishments in 2005 to 72% in 2013, according to the Sixth Economic Census.

The proportion of larger companies—which range from accountancy firms, IT services companies to a Tata Motors—reduced from 35.6% in 2005 to 28.3% in 2013.

In China and Southeast Asia—regions of high literacy—farmers moving off the land found factory jobs. With illiteracy widespread in India, farm labour appears to be the main option. Those who get a better education and move to cities find that construction labour, maids and security guards are most in demand, as IndiaSpend had reported in 2014.

3. As farming recedes, menial rural labour grows 34%; agriculture stays India’s largest employer

From 2001 to 2011, the number of farmers fell 7%, from 127.6 million to 118.6 million. Over the same period, agricultural labourers increased 34%, from 107.5 million to 144.3 million, as IndiaSpend reported.

Agricultural growth nosedived over the last two years, with three, and possibly four (the data for January to March 2016 are not yet out), quarters registering a contraction.

Source: Key Economic Indicators, Office of Economic Advisor, Department of Industry

Rural wages are growing at a much slower pace compared to the initial years of India’s rural jobs programme, the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGA), the wages of which were down at 2005 levels in 2015, as IndiaSpend reported.

“In 2009-10, the previous (nationwide) drought year, MGNREGA was able to increase rural wages,” former chief statistician of India Pronab Sen was quoted in Business Standard. “We are not seeing that trend now.”

The construction sector—building roads, bridges and ports—is rapidly becoming India’s fastest-growing employment destination. More specialised sectors of the economy cannot absorb those leaving farms because they do not possess the skills needed. Modi’s Skill India initiative aims to train 400 million Indians over the next six years—that’s a million every week. In 2014, as we reported, no more than seven million were trained; fewer than 5% of Indians have ever received formal skills training.

4. Under-employment: 40% working people can’t find a steady job

Many Indians who report themselves as ’employed’ do not get year-round work, or may have jobs lagging their abilities and expectations, said the Fourth Annual Report on Employment and Unemployment 2014.

Only 60.5% of the working population (above 15 years) was able to find work through the year.

Source: Volume I, Employment and Unemployment Survey 2013-14, Ministry of Labour and Employment

Underemployment affects youth the most. Of 100 persons aged above 30, only two persons report being fully unemployed, while in the 18-29 age group, 13 in 100 are unemployed, noted the survey.

Education only appears to increase the prospect of unemployment.

Source: Volume II, Employment and Unemployment Survey 2013-14, Ministry of Labour and Employment

This could be because educated young people prefer to remain unemployed than work in jobs they consider below their qualifications or dignity. Job options in the sectors they desire are receding.

5. As industrial growth slows, company jobs recede, jobs per company fall

The growth of eight core industries—coal, oil, oil products, gas, electricity, fertiliser, steel and cement—is now the lowest it has been over the last ten years.

Source: Key Economic Indicators report, Industrial Handbook 2008-09, Office of Economic Advisor; Annual Report 2015-16, Department of Industrial Policy and Promotion.Note: 2015-16: April to January period over April-January 2014-15.

Industrial growth of the last decade (represented here by the year-on-year growth in the Index of Industrial Production) shows a slump during the 2008 crisis; it recovers and again goes south till 2015-16.

Source: Office of the Economic Advisor, Department of Industry

The number of companies registered every year is—after a peak in 2012—down to 2008 levels, an indication of business uncertainty.

In 2014, as many as 70,043 companies were registered in India, marginally less than 70,513 in 2008.

Source: Ministry of Corporate Affairs

Fewer than 2,000 companies were registered in April 2016, the first month of the new financial year, 2016-17, according to ministry data. In comparison, 6,000 companies were registered monthly, on an average, during the last decade.

Indian companies are also hiring fewer employees: The average number of employees employed in an establishment reduced from 2.41 to 2.24, according to the Sixth Economic Census.

“It’s well known that the small size of Indian firms is a major reason for their abysmal levels of productivity,” columnist Manas Chakravarty wrote in Mint earlier this month. Employment in companies employing more than 10 workers declined from 37.1% in 1990 to 21.15% in 2013.

Large corporations are important to India’s economy, RBI Governor Raghuram Rajan said in February, but many are struggling to repay loans and grow, potentially sparking a circle of low growth, low bank credit, job cuts, low output and low growth.

So, a paradox unfolds, with many young Indians, many with substandard education, unable to find jobs commensurate with their education, while industry endures a shortage of skilled labour.

This article was originally published on IndiaSpend.com, a data-driven and public-interest journalism non-profit.

20eco1583

By Akshay Jain:

20eco1583In the last 20 years, nearly 300,000 farmers have ended their lives by ingesting pesticides or by hanging themselves. Although successive governments have tried to help farmers by implementation of various schemes, there is no change on the ground. What is the reason behind such an alarming rise in number of suicides?

India has now shifted from natural cotton seeds to BT Cotton. The firm Monsanto has claimed that crop yields will improve and the dependence on chemicals and high irrigation will decrease. It has now been found that the claims were not true and farmers have to resort to buying more pesticides to spray in the fields. Ironically, the chemicals used like pesticides and insecticides, are provided by the sister companies of Monsanto.

The farmers take loans to buy seeds and an assortment of chemicals. But, what happens if the yield is less? Farmers go into cycles of bad loans and are unable to pay them back. Many thus resort to suicide to end their grief.

Chemicals used in traditional farming methods have a devastating effect on the people who contact them. Some of the chemicals used, such as Aldicarb, can be lethal to people, while others can cause sickness or birth defects. Many farmers are in direct touch with the cotton, increasing the risk of exposure. Cotton is a “dirty” crop. Despite making up about 2.5 percent of all world agriculture, it uses about 25 percent of world’s insecticides and 10 percent of world’s pesticides.

Thus, there has been a call by activists to ban BT cotton and increase cultivation of organic cotton.
Besides helping the environment, there are other benefits from organic cotton products. Working environments are better for those on farms and small-scale farmers save money by not having to buy large amount of pesticides. Consumers benefit too, as organic cotton products are softer and easier on your skin.

Brands like OrganicThreadz are trying to create a market for Organic cotton products by selling Organic clothing through their website. Me and my friend Avishek Kataria started this venture to improve livelihoods through our passion for change.

Since college, we shared a passion for India and a desire to work for a better India. After spending some time in IT jobs, we quit and planned to set up a fashion brand with an aim to improve livelihood. As we researched about different materials, we came across organic cotton and also became aware of all the troubles farmers are facing because of genetically modified cotton. The maintenance of this cotton is very expensive, due to which farmers get into cycle of bad loans and then commit suicides. We realized the need to switch to organic cotton and commercialize it. That’s what shaped our vision and got us going.

More awareness is required in consumers to shift to organic cotton. As people get aware more organic cotton would be cultivated to cater to the demand of the people. As an agrarian economy it is very important to care for our farmers and improving our choice of clothing can go a long way in supporting them.

bengaluru_textile workers_resized

By Saumya Tewari, IndiaSpend.com:

Bengaluru’s garment workers–about half a million of them, mostly women–have no pensions, job security, health insurance and live life close to the poverty line. This hitherto silent mass was suddenly agitated by a central government order to restrict early withdrawals from the Employee Provident Fund (EPF), a financial security net.

Thousands blocked arterial roads, causing snaking traffic jams, and as the protests escalated into rioting, burnt vehicles, and police firing, the Centre suspended the decision to restrict EPF withdrawals.

The Employee Provident Fund has been around since 1951, a law passed by India’s Parliament, requiring employees to contribute a fixed proportion of salary to their EPF account, with the employer matching this contribution. Here’s how it works:

The employee earns an interest of 8.75% compounded annually on the money accumulated in her EPF account.

Contribution by the employer is tax-free. The contribution by the worker is taxed. But the savings withdrawn later are not taxed.

In this year’s budget, Finance Minister Arun Jaitley announced that EPF would be taxed when claimed–to prevent savings from being used before retirement–a move he had to roll back. People did not want the government denying them access to their savings.

There are 65.6 million active EPF accounts–both public and private sector–according to this August 2015 Employee Provident Fund Office (EPFO) newsletter.

Here are three reasons why Bengaluru’s garment workers rioted:

1) Restrictions On Withdrawing EPF Savings

Until the controversial order, workers could withdraw all their EPF money, with interest, if they were unemployed.

Now, EPF holders cannot withdraw all their money for marriage, education of children, serious illnesses and buying property, according to this notification issued on February 10, 2016.

The order was a blow to garment workers, who need money at intervals for precisely the reasons mentioned above.

2) Withdrawal On Retirement, Now Delayed By Three Years

The new order says you can withdraw all your EPF money only at retirement, the age of which has been increased from 55 to 58. This rule has now been suspended until July 31, 2016.

3) 92% Private-Sector Retirees Have No Pension, Health Insurance

India’s formal, or organised, workforce comprises 28.9 million workers, with secure employment, pension and medical benefits. Of these, 40% (11 million) work in the private sector, according to government estimates.

In general, public-sector employees enjoy better and more regular pensions, health benefits and income security than private-sector workers.

The 40% private-sector employees we referred to are only those the government’s statistical agencies categorise under the organised sector. Of these, 92% have no income security, pensions or health insurance, an IndiaSpend analysis has shown. Garment workers are among this insecure population, which needs regular access to EPF accounts for vital life needs.

The Growing Distress Of India’s Unorganised Workforce

While many private-sector workers, such as those in the garment industry, lead precarious lives, they are better off than their compatriots in the unorganised sector.

“Unorganized workers consist of those working in the unorganized sector or households, excluding regular workers with social-security benefits provided by the employers and the workers in the formal sector without any employment and social security benefits provided by the employers,” according to this government definition.

About 72% (340 million of 472 million) of India’s workforce was in the unorganised sector at the end of 2011-12, as IndiaSpend has reported.

Much like workers in the private sector, those in the unorganised sector also depend on money from EPF accounts–if at all they have such accounts–to get by.

This article was originally published on IndiaSpend.com, a data-driven and public-interest journalism non-profit.

A entrepreneur works at his computer laptop at the so-called "incubator" of French high-tech start-ups "TheFamily" in Paris, France, July 27, 2015.    REUTERS/Charles Platiau - RTX1LZF7

By Nishant Rao:

Starting Up, Screenshot PitchersI am not even remotely involved with the Indian startup ecosystem. But unfortunately, I read a lot and try to make sense of it in equal measures. And from whatever I have been reading and observing regarding the Indian startup story, especially in the last 12 months, I feel something is not right. Let me cut to the chase right away. Here’s what I think:

1. Where Is India’s Google et al?

Google, Amazon etc were born out of the first internet wave in the US during the 90s. A decade or so later, China built its own Google named Baidu, and practically drove Google out, which otherwise, has a global search engine market share of roughly 80%. Further, the rise of Alibaba displaced Amazon. Circa 2015, if India has indeed become the third largest startup ecosystem, then where is India’s Google? Facebook? Or Twitter? Or such meta-level startups.

What’s wrong then? With due respect to the Indian innovators, IMHO (in my humble opinion), most Indian startups aim to be rent-seekers and not wealth creators in the true sense. They are not interested in the bigger picture, in solving genuine problems, creating new categories or trying to become leaders in the existing ones.

Without generalizing, I want to say that most Indian startups by and large look to copy an existing model, and fine tune it to serve the local need. There’s Ola for Uber, Gaana for Spotify, the N number of food delivery startups, and their extended versions delivering just about anything under the sun. InMobi is the only Indian startup that comes to my mind, which carved out a niche for itself. Again, I may not know enough names, but I hope I have driven home my point.

2. The Zuckerberg Syndrome

This is my biggest pain. Ever since Mark Zuckerberg created the behemoth that is Facebook, every 22-year-old graduating kid wants to become a CEO. The little things called experience and expertise be damned. And sugar-coated, half-told success stories floating on the Internet haven’t helped either.

What these young graduates often forget is that people like Steve Jobs, Jeff Bezos or the latest poster boy Elon Musk slogged for years, writing codes in anonymity, sharpening their skills to the point of perfection before jumping onto their grand idea. To put things in perspective, Elon Musk took many years to self-learn the nuts and bolts of rocket science and electric automobiles, literally. But all we want to see is the end product — SpaceX and Tesla.

This is where the latest breed of Indian founders falter. They do not want to wait. They have been overfed the idea that an ‘IDEA’ is all you need and you need to move fast, unless someone else beats you. Misinterpreting the overnight success of new-age startups like Pinterest, Instagram etc, they do not want to invest in honing their skills or gaining perspective about the sectors they wish to dive in.

The immediate tag of a CEO, CTO, COO (CXO) is way too enticing to let them go through the grind.

They should ask themselves — where is innovation in selling baby diapers online? Or loaning bean bags on rent for parties? Or delivering food from the local chicken-shawarma joint? Creating the most attractive and seamless website/app and hooking up with a local delivery service, while piggy-banking on investor money is NOT innovation. It is not sustainable and definitely not long term. It might be better to call it a normal business instead.

3. The Dichotomy Of Venture Capital And Angel Funds

It is interesting to note that most of the first generation startups in the US and also in China were bootstrapped. That played a huge role in their successes. Why? Because it is human nature which drives us that extra bit when our own money is involved.

However, the Indian startup scene right from the beginning is heavily marinated with huge Venture Capital and Angel funds. However ironic it may sound, this is what I feel is rotting the entire system. Young, creative, enthusiastic professionals leaving their jobs, higher education etc, drawn by the charm of easy investor money and an imaginary million dollar idea. Well, any idea would seem like a million dollar shot when funding is a non-issue.

Add this to what I discussed above and you can see a reasonable argument in why this generation of Indian innovators do not want to wait. The grand vision gets restricted to building a workable model of any existing idea, get funded and then hope for a million dollar exit. This is the purported life-cycle of most Indian startups.

To an outsider like me, the Indian startup ecosystem resembles a large casino where Mc-Daddy VCs come to play their bets.

4. Forcing Western Models In Indian Markets

A entrepreneur works at his computer laptop at the so-called "incubator" of French high-tech start-ups "TheFamily" in Paris, France, July 27, 2015. REUTERS/Charles Platiau - RTX1LZF7
Image source: REUTERS/Charles Platiau

Let me explain by quoting an example — online grocery delivery makes sense in the US, where the nearest Walmart or Kroger might be miles away. Secondly, most food items there are frozen with a longer shelf life. Thirdly, from personal experience I have observed, a US family has a more or less fixed weekly or bi-weekly grocery list with strong brand loyalties.

The Indian system is as opposite as it can get. There’s a Kirana (mom and pop) store at every nook and corner, complemented by the rapidly expanding supermarket chains like Food Bazaar, Big Apple to name a few. But even more important is that we Indians largely consume fresh food — vegetables, milk, fruits etc. Many Indian mothers might not be able to cook in peace until and unless they’ve handpicked their vegetables.

Thus, the Indian market for online grocery shopping gets restricted to the young and working population in urban centres, who are anyhow increasingly eating in office or outside. My point is that there are many such startups in India, trying to fit a western model into Indian markets without fully working out the ground level movements. That’s why they hit a roadblock when it comes to scaling, and end up being the proverbial frog in their respective wells.

5. The Mind Numbing Valuations

I am old school. Hence, I believe that profit is the main driving force behind any venture. And that any venture should be valued according to how profitable it is presently, or might be in the definite future. But when a startup with no profit to show in the near future, and a multi-million cash burn rate, get valued in billions, a layman like me fails to understand the equation being worked out, even after factoring the much talked about cost of customer acquisition. To be fair, this is a more global phenomenon and not just specific to Indian startups.
It almost sounds obscene when Uber is valued at $60 billion. That might be more than the GDP of some countries.

The problem is exacerbated in case of India because nascent startups lose the plot in the glitz of inflated valuations, even before they get a hang of their basic modalities. VC firms often end up sucking out a major portion of total equity in the bargain, leaving very little for the original founders to play around with. Except for the paper tag of being freshly made millionaires, if not more.

6. The Talent, Or The Lack Of It

I wanted to keep this point for the end, because it might surprise a few. Dare I say this — I feel the potential of Indian graduates is being oversold. We are relying on the past laurels of the IIT-IIM system, when it used to be relevant.

With the mushrooming of sub-standard engineering colleges, a major chunk of the talent pool of freshly graduating students is barely employable, let alone equipped with the powers to create a truly disruptive startup. It is no secret that the Indian education system lays little emphasis on practical training. Thus, what we end up doing is building poor products by copying existing codes/tools available on Google. In defense of early stage startups, they just don’t have the resources and time to train an employee whose sole aim might be to make a quick stopover, while on his way to greener shores.

I want to conclude by accepting that it is easier to rant and pick up faults. The likes of Google or Amazon had the first mover’s advantage, backed by strong and developed national economies. In comparison, the task is cut out for anyone starting now. The world order is far from just, and the bigger players do every bit by arm twisting developing countries to their advantage. The Indian startup ecosystem faces somewhat similar problems in its limited domain. Having said that, I do wish to see Indian startups someday working on truly cutting-edge technologies in areas like defense, space, automobiles and opening new vistas, not just for India, but the entire world.

A farmer sits amid stacked sacks of onions as he waits for customers at a wholesale onion and potato market in the western Indian city of Ahmedabad November 14, 2014. India's inflation dropped to a new multi-year low in October, helped by slower annual rises in food and fuel prices, intensifying pressure on the central bank to cut interest rates to encourage spending and investment needed to boost growth. REUTERS/Amit Dave (INDIA - Tags: FOOD BUSINESS) - RTR4E4MS

By Anwarul Hoda:

A farmer sits amid stacked sacks of onions as he waits for customers at a wholesale onion and potato market in the western Indian city of Ahmedabad November 14, 2014. India's inflation dropped to a new multi-year low in October, helped by slower annual rises in food and fuel prices, intensifying pressure on the central bank to cut interest rates to encourage spending and investment needed to boost growth. REUTERS/Amit Dave (INDIA - Tags: FOOD BUSINESS) - RTR4E4MS
Image credit: Reuters/Amit Dave.

“The post-reform period has been characterised by deceleration in the growth rate of crop yields as well as total agricultural output in most states. By ending discrimination against tradable agriculture, economic reforms were expected to improve the terms of trade in favour of agriculture and promote its growth,” Professor G.S. Bhalla wrote recently in an essay in Economic and Political Weekly.

The way I see it, no crisis comes with an invitation. Since India liberalised and exposed its domestic economy to the world, more than three lakh farmers have ended their lives, either by ingesting pesticide or by hanging themselves.

The three most common reasons causing such misery are debt, drought and declining productivity. Statesmen and policymakers failed to recognise the after-effects of Liberalisation, Privatisation and Globalisation (LPG). They might have thought that opening up the farm sector will lead to more prosperous farmers who will be able to get the maximum price for their produce. Unfortunately, that did not happen. In fact, the prevailing distress turned into a crisis. “Agrarian crisis in India is the result of the adaptation of the policies of the World Trade Organisation and its after-effect on the world economy,” opined Vijay Jawandhia, founder of Shetkari Sangathana, a farmers union in Maharashtra, in a documentary, commissioned by the 2014 Food Safety and Sustainable Agriculture Forum, titled YIELD.

A perception still seems to exist that the agriculture sector is growing with the increase in productivity. Yes, the productivity of the land increased, but unfortunately, neither income nor the condition of farmers is improving. We need to understand that for higher productivity, farmers are investing huge amounts in fertilisers and in pesticides and other chemicals. This increases the total cost of production, which most of the time amounts to more than what they are earning. They are unable to match their income with the money they invested even after an increase in production. The growth of agriculture should be measured in terms of real income of farmers rather than productivity to have more realistic information about the economic status of farmers.

Excess use of fertilisers also made agricultural production stagnant and affected the ecology in an adverse way. Excessive use of chemical fertilisers and pesticides made the soil and water contaminated.

Increasing dependence on the market for every agricultural input is another problem. Farmers are facing exploitation in the name of healthy yields. The cost of agricultural inputs continues to rise steadily. The biggest challenge farmers face is not having their own seeds for production. The traditional way of ‘hoarding of seeds’ is no more in practice due to the introduction of various hybrids and modified seeds in the market. These promise high yields, but after sowing, they require proper care as they are very sensitive to climatic conditions. Additionally, they are poorly equipped to resist various seasonal diseases and any consequent extra cost adds to the burden on the farmer.
On the other hand, the traditional seeds are more habituated to climatic conditions and hence, require less care which ultimately reduces the cost of production.

Monopoly and total control of private companies over the sale of seeds have made farmers more dependent as they are forced to buy at higher costs. There is a need to empower farmers in every way possible. Their dependence on the market should be reduced to a minimum and this can be done by reviving some old techniques and modifying them to suit the present times. Organic farming, for example, could promote sustained and healthy ways of agricultural production.

There are two possible ways to support farmers through price policy. One is by increasing the price of the crops grown by farmers and another is by reducing input costs. Cost efficient techniques and methods should be introduced in a big way so that the input costs may come down. Moreover, the government should also enhance the role of the Food Corporation of India in buying crops other than wheat and rice at a price which suits farmers.

Loopholes in fixing the minimum selling price (MSP) is another big problem. In an article on Catch News, the writer tells us,“[MSP] was meant to protect farmers from being fleeced by wholesalers. But it becomes the maximum price that the farmers get in the Mandi.”

‘Floor price’ which is a price level defined by the government to support farmers through the price mechanism, now actually becomes the maximum price a farmer gets in the market. There is a need to review the MSP policy and to restructure the market for the produce of the farmers.

During the post-reform period, India witnessed rapid economic growth. Per capita income increased along with the production of different industrial goods all over India, but the agricultural sector remained an exception. It should be a matter of concern for the policymakers that the sector, which engages 58% of the total rural workforce is facing deceleration in its productivity as well as in income levels during the same post-reform period.

spending_620

By Saumya Tewari, IndiaSpend.com:

spending_620The average American spends $97 every day, the average Chinese $7 and the average Indian $1.8, according to Goldman Sachs data and an IndiaSpend analysis.

An Indian living in a town or city spends Rs. 88 ($1.8) every day and in a village Rs. 48 (72 cents), according to our analysis of
government spending data, last released in 2011-12. The Goldman Sachs study considered 2013 data.

This is what Indians in villages and cities spend each day, on average, on food, clothing, rent and other daily needs.

Among village folk, those in Kerala spend the highest: Rs. 90 per day, followed by Goa at Rs. 80, and Punjab at Rs. 78.

Among urban folk, those in Haryana spent the most, Rs. 127 per person per day, followed by Kerala at Rs. 114 and Delhi at Rs. 110.

Spending Of Half Of India: Lower Than India’s Average

Half the people in villages spend less than Rs. 1,198 per month, which is Rs. 40 per person per day, indicating the extent of poverty.

In cities, the poorest half of the people spent Rs. 2,019 per month, or Rs. 67 per person per day. Average spending in cities was Rs. 20 higher than what the poor half spent–Rs. 2,630 per month or Rs. 87 per person per day. This shows inequality between the rich and the poor in urban India.

The poverty line in India is defined as the ability to spend Rs. 47 per person per day in urban areas and Rs. 32 in rural areas. As many as 363 million Indians, or 30%, live below the poverty line, as IndiaSpend has reported.

The global poverty line, as defined by the World Bank, is $1.90 (Rs. 126).

The data above indicate how much money the poorest half Indians spend.

Except rural Delhi, where the spending of the poorest half is more than the average, the spending of the poorest half of the people is lesser than the average spending in all states, indicating, as IndiaSpend has reported, the country’s growing urban-rural divide.

Note: Calculations for per person per day spending for Indians are based on the 68th round of Household Consumer Expenditure survey 2011-12. Monthly Per Capita Expenditure surveys by the National Sample Survey Office of the Ministry of Statistics and Programme Implementation have been used to derive per day spending by each person. Rupee to Dollar conversion has been done at the rate from 2011-12.

This article was originally published on IndiaSpend.com, a data-driven and public-interest journalism non-profit.

A gardener plants seedlings at the entrance of Start-up Village in Kinfra High Tech Park in the southern Indian city of Kochi October 13, 2012. Three decades after Infosys, India's second-largest software service provider, was founded by middle-class engineers, the country has failed to create an enabling environment for first-generation entrepreneurs. Startup Village wants to break the logjam by helping engineers develop 1,000 Internet and mobile companies in the next 10 years. It provides its members with office space, guidance and a chance to hobnob with the stars of the tech industry. But critics say this may not even be the beginning of a game-changer unless India deals with a host of other impediments - from red tape to a lack of innovation and a dearth of investors - that are blocking entrepreneurship in Asia's third-largest economy. To match Feature INDIA-TECHVILLAGE/   Picture taken October 13, 2012.    REUTERS/Sivaram V (INDIA - Tags: BUSINESS EMPLOYMENT SCIENCE TECHNOLOGY) - RTR3B6DT

By Yatti Soni:

A gardener plants seedlings at the entrance of Start-up Village in Kinfra High Tech Park in the southern Indian city of Kochi October 13, 2012. Three decades after Infosys, India's second-largest software service provider, was founded by middle-class engineers, the country has failed to create an enabling environment for first-generation entrepreneurs. Startup Village wants to break the logjam by helping engineers develop 1,000 Internet and mobile companies in the next 10 years. It provides its members with office space, guidance and a chance to hobnob with the stars of the tech industry. But critics say this may not even be the beginning of a game-changer unless India deals with a host of other impediments - from red tape to a lack of innovation and a dearth of investors - that are blocking entrepreneurship in Asia's third-largest economy. To match Feature INDIA-TECHVILLAGE/ Picture taken October 13, 2012. REUTERS/Sivaram V (INDIA - Tags: BUSINESS EMPLOYMENT SCIENCE TECHNOLOGY) - RTR3B6DT
Image credit: Reuters/Sivaram V.

Indian entrepreneurs are ferociously foraying into hyperlocal, e-commerce, SaaS – all that sounds trendy and more often than not, has a counterpart in Silicon Valley. But do we ever ask ourselves whether a new app on my INR 20k smartphone makes India developed or is it better transportation in rural areas that will bring about development.

According to Poverties.org, 50% of Indians don’t have proper shelter, 70% don’t have access to decent toilets, 35% of households don’t have a nearby water source, 85% of villages don’t have a secondary school and over 40% of the villages don’t have proper roads connecting them.

While E-commerce, Hyperlocal, Food-Tech, Health-tech, Logistics, Cab Hailing are all great technological interventions, none of them address the enormous opportunities in agriculture, health, education, water, sanitation or housing.

According to the estimates of Ashok Gulati, Infosys Chair Professor at ICRIER, 55-60% of India is farm-dependent and still the contribution of agriculture in the national GDP is mere 15-17%; that is nearly two-thirds of India subsisting on just one-seventh of the GDP.

This clearly brings out the poor redistribution of riches in our country. While India’s economy keeps on rocketing at the rate of 9% (approximately), poverty remains pervasive, especially in rural India which makes up for 70% of India’s population.

These figures call for an introspection of our tech-centred vision of growth. As we keep on advancing urban India while neglecting the rural, the already wide gap between rich and poor keeps on broadening and it is chilling to imagine a country which chooses to leave 70% of its countrymen behind.

Therefore, change is required in the way we think and study business, we need to integrate the idea of creating social value in business within the core curriculum of business schools and not seclude it from mainstream economic and business research.

The Fortune at the Bottom of The Pyramid‘ by C.K. Prahalad and Stuart L. Hart, identifies the widely shared assumptions that multi-national corporations have about Tier 4 (population with an annual income of less than $1,500) of the pyramid and also, stands true for many entrepreneurial minds:

• “Assumption 1 – The poor are not our target consumers because with our current cost structures, we cannot profitably compete for that market.
• Assumption 2 -The poor cannot afford and have no use for the products and services sold in urban markets.
• Assumption 3 – Only urban markets appreciate and will pay for new technology.
• Assumption 4 -The bottom of the pyramid is not important to the long-term viability of our business. We can leave Tier 4 to governments and nonprofits.
• Assumption 5 – Intellectual excitement is in urban markets. It is hard to find talent that want to work at the bottom of the pyramid.”

The paper reasons out these assumptions by comparing them to the story of a person who finds a $20 bill on the sidewalk and does not pick it up thinking that if the bill really existed, someone would already have picked it up!

These assumptions can also be refuted by considering the homegrown examples of rural innovation like the SELCO Foundation which facilitates solar lighting in rural areas. The company was essentially conceived in an effort to dispel the myths that poor people cannot afford and maintain sustainable technologies.

The company works on the wonderful model of user segments, each segment is specifically designed to match the customer’s need in terms of usage, as well as finance. “Remove the M from EMI and all of a sudden, even an expensive technology comes within the reach of the ‘poor’,” Harish Hande, co-founder of SELCO, explains in Rashmi Bansal’s I Have A Dream.

C.K. Prahalad and Stuart L. Hart further summarise the idea with, “Perception of market opportunity is a function of the way many managers are socialized to think and the analytical tools they use.”

Thus, the loophole is not our innovations but our idea of development. Most of us have grown to believe that urbanisation is development. This idea has undoubtedly made India the seventh largest economy with a GDP of $2.067 trillion. On the other hand, the same fastest growing economy scores 0.586 on the Human Development Index (HDI) and is being stated as a ‘medium developed’ country by United Nations Development Programme along with others such as Iraq, South Africa and the Philippines.

In order to bust this bipolar image, Indian entrepreneurs must devise technological innovations for the problems of rural India. This will create a link between modernised India and a stagnant rural ‘Bharat’ so that the tech-driven sector can act as an engine that pulls the rural economy along.

A man smokes a cigarette as he sits on a pavement along a road in New Delhi, India, August 18, 2015. Bulging sacks of letters gathering dust at India's health ministry are the latest obstacle to a push for tougher laws to curb smoking, as more than 100,000 unread messages from members of the public overwhelm officials and stall legislation. Picture taken August 18, 2015. REUTERS/Adnan Abidi - RTX1OPYE

By Manjusha Chatterjee:

A man smokes a cigarette as he sits on a pavement along a road in New Delhi, India, August 18, 2015. Bulging sacks of letters gathering dust at India's health ministry are the latest obstacle to a push for tougher laws to curb smoking, as more than 100,000 unread messages from members of the public overwhelm officials and stall legislation. Picture taken August 18, 2015. REUTERS/Adnan Abidi - RTX1OPYE
Image credit: Reuters/Adnan Abidi.

Among other budget announcements, the Finance Minister announced a 10-15 percent hike in cigarette excise duty in India on the 29th of February.

Mr. Minister, you must know that tobacco kills 10 lakh Indians every year and one-fourth of India is currently using tobacco is some form or the other. Bidis, or hand rolled, indigenous cigarettes and chewed forms of tobacco are far more popular than cigarettes. Most bidi manufacturing takes place in appalling conditions by poor women and child labourers. Therefore, a nominal increase, that too in cigarette taxes alone, can by no means counter India’s devastating tobacco use situation.

Economic prudence warrants that the best way to reduce demand is by raising prices. So, in the case of tobacco, the more unaffordable the products are, the easier it is to counter consumption. The WHO Framework Convention on Tobacco Control (the world’s only public health treaty) also recommends tobacco taxation as the most cost-effective way to fight tobacco use, provided there is simple tax administration and taxes account for at least 70% of the retail price of tobacco products.

Early in February, the issue of tobacco taxation was blazing in Indian media. Findings of a landmark study on the affordability of tobacco products in India commissioned by India’s Health Ministry and the World Health Organization (WHO) were in the news. Tobacco in India is taxed by the central government, in the form of excise, and by the state governments, in the form of value-added tax (VAT). If tobacco products are more expensive in some states, it’s because the respective state government is levying higher VAT. However, the excise tax is very important because is helps to push up the final consumer price of the tobacco product and makes in more expensive for people to buy.

Contrary to this, the recent study has found that prices of tobacco products in India have not risen sharply over time, making them cheaper than essential food items like wheat and pulses. In other words, both current excise and value-added tax (VAT) on tobacco products have been inefficient in pushing up prices of tobacco products and rendering them unaffordable. This news corroborates the findings of the 2015 WHO Report on the Global Tobacco Epidemic, which notes that tobacco taxes in India continue to be well below the FCTC recommendations, particularly in the case of bidis and smokeless tobacco and cigarettes were no less affordable in 2014 than in 2008. This is because although per capita income in India has risen, tobacco taxes have not caught up.

The Virtue Of Simplicity

India does have an immensely complicated multi-tier tax structure and clearly treats cigarette, bidi and smokeless tobacco taxation differently. In fact, cigarettes are differently taxed on lengths and filters. This diversity makes tax administrative very difficult and tax evasion easy since tobacco manufacturers direct products towards illicit trade or introduce new products. Unfortunately, bidis have majorly remained outside the tax net, even though earlier studies have shown that higher taxes on both cigarettes and bidis will lead to a decrease in tobacco consumption and an increase in government revenue.

Within a day of the new study’s release, a cigarette industry front group in India released a fierce reaction to the report, claiming it to be dated and misinforming policy makers. The statement claims that cigarette prices in India are among the highest in the world, making it a haven for illegal tobacco products. The front group accounts legal cigarette smoking in India to be 11% of total consumption, attributing the remaining 89% to other tobacco products and illegal cigarettes and of no concern to them. These unaccredited statistics are only meant to create confusion. While tackling illicit trade is important, uniform taxation of tobacco products is critical.

A cursory reading of two of India’s major cigarette companies’ 2014-15 annual reports also points to staunch dissent and falsified commentary on tobacco taxation policies in India. It seems one of them undertook an ‘analysis’ of the same WHO Report to find that cigarettes taxes in India are among the highest in the world. However, what is more disturbing to read is this: the commentary states that “the company continues to engage with the concerned authorities, both at the Central Government and State level, highlighting the need for moderation in tax rates on cigarettes to maximise the revenue potential from the tobacco sector, arrest the growth of the illegal segment and protect the interest of the Indian tobacco farmer.” The tobacco industry’s lobbying prowess is well known globally, but to read about their blatant submission to such nefarious activities on official statements is terrifying.

Similarly, the annual report of another major cigarette company for 2014-15 laments the strict regulatory environment and skewed nature of taxation on cigarettes and boasts of new outreach strategies. It claims to be responding to the higher taxes by “aiming for steady growth through balanced brand portfolio, consumer engagement programs, quicker response to environmental changes and data-driven decision making process.” They also hope to offer increasingly superior products at multiple price points, which are affordable to various sections of society and improve consumer satisfaction with their brands through quality and innovation, using the latest techniques in consumer research, R&D and manufacturing excellence.

The general debate around a Goods and Services Tax (GST) regime that can levy a uniform and high tax on all tobacco products as ‘demerit goods’ augurs well for the country’s economy. All tobacco products must be equally and highly taxed to accrue public health benefit. At the same time, we have to be alert about official declarations by cigarette companies describing new engagement strategies to lure customers in the wake of higher taxes.

India's Finance Minister Arun Jaitley arrives at the parliament to present the federal budget for the 2016/17 fiscal year, in New Delhi, India, February 29, 2016. REUTERS/Adnan Abidi      TPX IMAGES OF THE DAY - RTS8H1D

By Mahesh Kulkarni:

India's Finance Minister Arun Jaitley arrives at the parliament to present the federal budget for the 2016/17 fiscal year, in New Delhi, India, February 29, 2016. REUTERS/Adnan Abidi TPX IMAGES OF THE DAY - RTS8H1D
Image credit: Reuters/Adnan Abidi.

An English peer’s epitaph read:

“What I Gave, I have,
What I Spent, I had,
What I Left, I lost”

Mr. Nani Palkhiwala used to say that governments tax you no matter which of the three options you choose. An American IRS Commissioner once said that the difference between a taxidermist and a tax collector is that the taxidermist, at least, lives the hide.

The current dispensation seemed to be no different than the ones envisaged in the preceding paragraph. But then, giving into a public uproar against the proposal to tax EPF (employee’s provident fund) at the time of withdrawal, the government has withdrawn the proposal.

Now, savings in your EPF account still enjoy the EEE status, i.e., exempt, exempt, exempt status. What does this mean? It means that the part of your salary you save in Employee’s Provident Fund is exempt from income tax upto the extent of rebate available in Section 80C of the Income Tax Act which is now Rs. 150000. The interest accrued on this amount is also exempt from tax and the final amount you receive at the time of your retirement is also exempt from taxation. It is this last part that the government wanted to tax. To be more specific, it wanted to tax 60 percent of withdrawal if you do not invest it in annuity scheme.

I would like to utilise this opportunity to throw some light on objectives of taxation. Governments levy taxes to achieve one of or any combination of following objectives:

1) Raise revenue to meet expenditure.
2) Bring about a certain kind of social or economic equality.
3) Dissuade consumption of certain types of goods or services.

“Pension schemes offer financial protection to senior citizens. I believe that the tax treatment should be uniform for defined benefit and defined contribution pension plans. I propose to make withdrawal up to 40% of the corpus at the time of retirement tax exempt in the case of National Pension Scheme. In case of superannuation funds and recognised provident funds, including EPF, the same norm of 40% of corpus to be tax free will apply in respect of corpus created out of contributions made after 1.4.2016.” This statement in the Union Budget Speech by Arun Jaitley presented on the 29th of February created a lot of confusion and drew much flak from the general public.

While it is necessary for the government to tax people so that it can raise revenue for its various activities, it would be prudent if the taxation policy adheres to the four canons proposed by Adam Smith in his book ‘The Wealth of Nations’.

1) Equity: Taxes should be equitable between different classes in society. The proposal to tax 60% of EPF (employer’s contribution plus employee contribution plus the interest accrued) at the time of withdrawal violated this canon. Generally, private sector employees, especially the salaried middle class and the lower middle class, save provident fund over the period of their service so that they can make use of the amount accumulated for meeting high-ticket expenses like children’s marriage or buying a house or renovating their house etc. at the time of withdrawal.

2) Convenience: The taxpayer should have convenient methods of paying tax. The said proposal cannot be said to violate this canon.

3) Economy: The amount spent on collecting the tax should be substantially lower than the tax collected. Since the amount on which the tax was to be levied was likely to be substantial, this canon is also unlikely to be violated.

4) Clarity: The taxpayer should be fully apprised of the purpose, method and other details with regard to the tax. As per the proposal, the withdrawal amount is not taxable if it is invested in an annuity plan. But, this is nowhere mentioned in the Finance Minister’s speech. The proposal clearly penalises the thrift of small savers and there was no clarity on what type of annuity one can invest in.

Giving in to public opinion and the apprehension voiced by the Ministry of Labour and Employment, which is the custodian of EPF, the Finance Minister has agreed to reconsider this particular proposal.

Now, the Finance Minister has given the following statement in Lok Sabha: “In view of the representation received, the government would like to do a comprehensive review of this proposal and therefore I withdraw this proposal…”

His statement is quite telling. If, as he himself has agreed, the proposal is withdrawn because the government wants to do a comprehensive review of this proposal, it means that the proposal was introduced in the budget without doing a comprehensive review. To tax is a sovereign right. And like all sovereign rights it would be an abuse if the exercise of this right were not premised on the sound foundation of economic rationale.

But, one positive out of the entire episode is the diligence shown by the media, especially by people on social media, in shaping the discourse and compelling the government to take notice of their concerns and ultimately mend its ways. At the expense of sounding clichéd, I would like to say that eternal vigilance is the price of democracy.

Children with their containers are silhouetted against the sun as they wait to fill drinking water from a water tanker provided by the state-run Delhi Jal (water) Board on a hot summer day in New Delhi, India, May 11, 2015. Temperature in Delhi on Monday reached 42.3 degree Celsius (108.14 degree Fahrenheit), according to India's metrological department website. REUTERS/Anindito Mukherjee - RTX1CFYJ

By Farhana Yasmin and Kumar Shailabh:

Children with their containers are silhouetted against the sun as they wait to fill drinking water from a water tanker provided by the state-run Delhi Jal (water) Board on a hot summer day in New Delhi, India, May 11, 2015. Temperature in Delhi on Monday reached 42.3 degree Celsius (108.14 degree Fahrenheit), according to India's metrological department website. REUTERS/Anindito Mukherjee - RTX1CFYJ
Image Credit: Reuters/Anindito Mukherjee.

Amidst the global economic slowdown, Mr. Arun Jaitley in his Budget Speech indicated that India’s economy is stable and the GDP has accelerated to a commendable 7.6 per cent growth. On 29th February 2016, the NDA-led government presented its third Union Budget. In his Budget Speech, the Finance Minister mentioned that the “Plan Allocations have given special emphasis to sectors like agriculture, irrigation, social sector including health, women and child development, welfare of Scheduled Castes and Scheduled Tribes, minorities, infrastructure, etc.” But HAQ Centre For Child Rights’ analysis of the Union Budget through children’s perspective shows otherwise.

Before delving deeper into the analysis of the Budget, it is pertinent to note that children, in particular, did not find any mention in the Budget Speech. This compels one to question the Government’s perspective of ‘Inclusive Growth’ when one of the most marginalised and vulnerable sections get no attention at all.

This year, children received 3.32 per cent share [as per Statement 22 of Expenditure Budget Volume I] of the total financial allocations, which is a significant 13.54 percent jump from the previous year’s allocation (3.26 percent in 2014-15).

While this is a welcome increase in the overall budget for children, there are major reductions in some of the key programmes related to children belonging to minorities like ‘Pre-Matric Scholarship for Minorities’ (reduced by 10.48%), ‘Post Matric Scholarship for Minorities’ (reduced by 5.19%), ‘Scheme for Providing Education to Madrassas/Minorities’ (reduced by 68.04%), ‘Incentive to Children of Vulnerable Groups among Schedule Castes’ (reduced by 90%).

What is more, one of the two schemes addressing the needs of children with disabilities, ‘Deendayal Disabled Rehabilitation Scheme’ saw a significant 25 percent reduction against the previous year’s allocation. While the nation is high on dreams of smart cities, GDP growth, digital literacy in rural India, Make in India, Startup India, with such reduced financial resources, would the children belonging to minorities or children with disabilities be included in this dream of ‘Sabka Saath Sabka Vikas’?

Mr. Jaitley, in his Budget Speech mentioned that “after universalisation of primary education throughout the country, we want to take the next big step forward by focusing on the quality of education.” And yet, we see a mere 2.27 percent increase in funds allocated for the Sarva Shiksha Abhiyan. This face-value increase must be examined in the light of findings of Economic Survey 2015-16. As per the Survey, there is a declining trend in the percentage of enrolment in government schools in rural areas from 72.9 percent in 2007 to 63.1 percent in 2014 and it emphasised upon the need to increase the percentage of enrolment substantially to achieve universalization of education. Can a mere 2.27% increase in the SSA budget from the previous year help address both decline in enrolment in government schools and improved quality of primary education?

Further, last year, the NDA government had announced the ‘Scheme for Setting up 6000 Model schools at block level as benchmark of excellence’ with great pride. It took just a year for the government to revisit its decision, and hence, no more model schools in 2016-17.

As against a 21.8% decline in the child health allocations last year, this year witnesses an increase of 3.6%. But, as a proportion of the Union Budget, it has declined from 0.13% in 2015-16 to 0.12% in 2016-17. The 2015-16 Economic Survey clearly notes that “while the achievements of the National Health Mission in reaching affordable healthcare services must be applauded, the need of universal healthcare, both in terms of access and quality remains a cause of concern.” As a share of the Union Budget, child health has seen a consistent decline over the last five years, going down from 0.18% in 2012-13 to 0.12% in 2016-17, showing the low priority accorded to this over the years. Right to health as a fundamental right remains a distant dream.

Another flagship scheme related to young children, the ‘Integrated Child Development Scheme’ (ICDS) has seen a boost of 68% against previous year’s allocation. This scheme has been allocated a total sum of Rs. 14,000 Crore. Though such an increase must be applauded, the mission document of ICDS has fixed a total requirement of Rs. 30,325 crore for universalisation of this scheme. There is still a huge shortfall of Rs. 16,325 crore, which must not be ignored. The allocation for ICDS must be seen in the context of restructuring of ICDS which needs additional investment with additional provisions in the system for covering children who get left out (e.g. migrants, transients). This will also necessitate revisiting the provisions for reaching underserved and unreached tribal settlements which may require specific budgetary allocations.

The only scheme related to child labour in Statement 22 is the ‘Scheme for the Welfare of Working Children in Need of Care and Protection’ observed a decrease of 70 percent in allocation in the 2016-17 Union Budget. It must be noted that India is home to 12.6 million child labourers (Census 2011) in the age group of 5-14 years.

Not only does the child protection sector remain the most under-resourced, the 2016-17 budget clearly does not offer much solace with the allocation for Integrated Child Protection Scheme (ICPS) down by 1.3%. ICPS has been allocated Rs. 397 Crore in 2016-17. The allocation was Rs. 402.23 Crore in the 2015-16 Budget. An increase in both crimes against children and by children make them even more vulnerable, and hence, this lack of attention to child protection is very disconcerting.

The Finance Minister seems to have already forgotten the warning from the Economic Survey 2015-16 which stated that “India is already halfway through its demographic dividend, and taking full advantage requires a healthy and educated population.”

What is more, the government seems to have forgotten its own commitment to inclusive growth. A mere increase from 3.26% to 3.32% cannot be a call for celebration when children remain unprotected and uncared for.

An employee fills a car with petrol at a gas station in Jammu July 1, 2009. The government unexpectedly raised gasoline and diesel prices by as much as 10 percent on Wednesday, its first increase this year, passing some of oil's rally into an economy just beginning to find its feet amid a global recession. REUTERS/Mukesh Gupta (INDIAN-ADMINISTERED KASHMIR BUSINESS ENERGY) - RTR2586R

By Aman Raj

On February 29th while presenting the Union Budget 2016, Finance minister Arun Jaitley tried to cheer the public with a steep cut of Rs 3.02 per litre in petrol prices. Despite deregulation, petrol prices still seem to be in the control of the government. A regular consumer is hardly aware as to why they are spending such a steep amount on fuel.

This 75-second video breaks down the price of petrol in India, one tax at a time. It gives a short but comprehensive understanding of how the State structures petrol costs. The objective is to demystify some of the common assumptions that consumers have about petrol pricing and to educate them about the various components including taxes levied by Central and State Government on the commodity.

Video courtesy: Inshorts and Factly.

tvf pitchers

By Pranav Hebbar

Working towards building an ecosystem that nurtures start-ups, I regularly meet young people who dream and aim high. More often than not, during my interactions with students, entrepreneurs and professors of entrepreneurship, one theme that keeps recurring is – the journey from idea to building start-ups, it’s difficult!

Traditionally Indians have been very conservative while choosing careers. All said and done, I am glad to live in a time where people are choosing passion over safe careers where young students, mid-career professionals and veterans are turning towards entrepreneurship. From tier – 1 to tier- 3 cities, “I am (or want to be) an entrepreneur” is slowly becoming the mantra. According to a report by NASSCOM, from 2014 to 2015, India witnessed a 40% growth in number of start-ups and by the end of 2015 around 4200 start-ups will be operational. With the government of India’s projects like ‘Make in India’ and ‘Startup India, Standup India’, the trend is expected to grow at a much faster rate.

Entrepreneurs themselves are a part of the ecosystem. Their ideas (or dreams) to build something gets all the attention and support. Idea is just the beginning, it takes team effort, patience to understand the market and make necessary changes and of course, investment to sustain and build a product that the customer wants. I have met students who have the most brilliant ideas one can come across and yet do not dare to go ahead with it. Among other things, what stops them is the fear of failure and lack of financial support at the seed stage. Let me make it clear that seed capital is not a major factor that can hinder market test of a product, however, it does play a crucial role in executing an idea.

If you consider an entrepreneurship ecosystem, the role played by investors and mentors is paramount, one fuels the passion and the other one creates an entrepreneurial advantage. NASSCOM’s latest report which highlights that total funding has grown by ~125%. Being a part of the fastest growing ecosystems, India is definitely experiencing one of the best times to start-up and build something. Education institutes are also not left behind, with very active E-cells and incubation centres, support is flowing from every corner. Competitions, investments, policy reforms, widespread discussion, India is witnessing a phase where entrepreneurship is being celebrated.

Industry pundits and ecosystem players, all agree that competitions are a great way to bring real awesome ideas to the limelight. It also performs as a stage where all players meet to exchange views and opinions. I have seen projects starting as a classroom assignment to go on and create impact the communities. Universities, incubators, accelerators and other players frequently host events that scouts for ideas that can change or disrupt an industry and create value to customers. MindBatteries is one such company which is using edutainment as a tool of empowering people.

Ideathon 2MindBatteries’ Startupreneur Series showcases story and journey of entrepreneurs that started small and made it big. The first of the series showcased Vijay Shekhar Sharma – Founder & CEO of Paytm. MindBatteries is hosting its first ever ‘Ideathon – Chase Your Dreams‘ contest that promises some big stuff to the participants. The contest is all set to look out for the next big idea that can change the way Indian tech start-ups operate. Vijay in the interview said, “I invest in the driver and not the bus or the destination,” emphasizing that its always people that make the difference and not the idea itself.

Winners of the ‘Ideathon’ contest will receive Rs. 1 crore as seed-fund for their ideas and mentorship by Vijay himself. This according to Vijay, ‘giving back to the ecosystem’.

If you have an idea and dream of creating value to the customer, log on to the website and send in your ideas. The last date is 1st of March 2016.

Featured image for representation only. Source: Facebook.

budget wishlist 2

By YKA Staff

Editor’s note: Amidst heated debates around ‘nationalism’ and ‘sedition’ at JNU, demands of justice for Rohith Vemula’s death, and violent protests led by Jats for reservation, the Budget session of Parliament commenced on 24th February. With the first day spent on the blame-game and some name-calling, the country is anxious to know what the coming financial year will look like. 

The Parliament can be a loud place, and it is easy for the citizen’s voices to drown. #MyBudgetWishlist is Youth Ki Awaaz’s attempt to give these voices a platform. We asked citizens from diverse fields about 3 things they want this year’s budget to focus on and here are the answers they gave:

NupurNupur Mittal, Assistant Professor, English, DU

1. Adequate funds should be earmarked to provide stipends to M.Phil and PhD research scholars, particularly in the Humanities disciplines.
2. More funds should be pushed into development of physical infrastructure in public funded universities.
3. More funds for equipping government hospitals and clinics with the latest medical technologies, which must be updated on a periodical basis.

JyotiJyoti Mhapsekar, President – Stree Mukti Sangathana

1. Restore the 30% cut in the Ministry of Women and Child Development.
2. Allot funds not just for the drafting of laws, but for their implementation.
3. Allot funds for the welfare of constables and women working in the unorganised sector.

akkaiAkkai Padmashali, Trans rights activist, Founder – Ondede

1. Allot funds for the employment of the marginalised sections of society and education of women. Loans should be easily available for women entrepreneurs.
2. Invest in the welfare of the entire transgender community when it comes to education, employment, housing, and small-scale business support.
3. Allot funds to conduct gender sensitisation and training programmes for police and to handle cases of violence against women and transgenders.

Kumar SundaramKumar Sundaram, Coalition for Nuclear Disarmament and Peace (CNDP)

1. Taxing the rich and cancelling all the staggering holidays given. No writing off corporate loan.
2. More spending on social sector. We have outrageously low spending on education, health and there are further cuts under Modi govt.
3. Transparency on the spending in military and nuclear sector. The globally declining and inherently accident-prone nuclear industry is flourishing in India as the govt is providing hidden subsidies.

RaghavRaghav Bahl, Founder – Quintillion Media

1. Begin withdrawing from areas where markets work, expanding the space and role of private enterprise there.
2. Increase intervention in areas where markets fail – health, education and rural infrastructure.
3. Use Aadhaar and other modern instruments to ensure better targeting and efficiency in these areas.

prem ayyutharaiPrem Ayyathurai, Lawyer

1. With public sector banks running up non-performing assets of Rs 1.14 lakh crore, the govt. should publish the list of large corporate defaulters so that citizens know how public funds are being utilised.
2. Stop budget cuts for government schemes targeting development of women, children and other marginalised.
3. Increase budget allocation towards education. Last year, only 4.6% of the total budget was allocated to education.

nikhil deyNikhil Dey, Mazdoor Kisan Shakti Sangathan:

1. Central social sector laws such as the MGNREGA should be adequately funded so that their legal mandate can be fulfilled without continual tension.
2. All entitlements from laws and programmes should be indexed to inflation so that at least their real value can be retained. For e.g., social security pensions have remained at Rs 200 per month for almost a decade, bringing their value down to shamefully low levels.
3. Our tax to GDP ratio has to be raised to levels that are comparable with BRICS countries, or other countries like India.

anoop jainAnoop Jain, Founder – Sanitation and Health Rights in India (SHRI)

1. Increase in budget allocation on health. Right now, India only spends 1.2 percent of its GDP on health, the lowest of the BRIC nations.
2. More money spent on women’s rights and empowerment through the ministry of rural development.
3. There is also a need to concentrate on improving India’s infrastructure. This includes trains, railway lines, and roads.

You too can share your wishlist. Add your expectations from the budget to our comments section below. 

child-marriage

By Anisha Ghosh and Farhana Yasmin:

child-marriage“India is progressing at a rapid pace,” said Narendra Modi during one of his recent speeches. He added that India was also the fastest growing economy among the larger economies of the world. The UN too, as if on cue, estimated that the Indian economy would grow by 7.3% in 2016. This is indeed a positive sign. But a nation such as ours cannot grow when it’s future, our children, are neglected. Inclusive growth is the need of the hour and must be the priority of the Government.

Even though children constitute about 36.68% of the country’s population (as per the 2011 Census), the total Union Budget allocation for children in the last 15 years has never gone above 5%. At a time when the UN Human Rights Council and the Sustainable Development Goals (that have replaced the Millennium Development Goals) talk about better investment in order to achieve developmental needs, India has been reducing its spending on children.

The Budget 2015-16 saw children receive an inadequate share of 3.26% out of the total allocation, a substantial reduction of 29% from the Budget 2014-15. Also, the allocations for Ministry of Women and Child Development (MWCD) were cut down by almost 51% while the Ministry of Human Resource Development (MHRD) received 17% lesser allocations. The Ministry of Health and Family Welfare (MoHFW) too saw a 13% cut.

As a result, India’s children received a meager 0.13% share for health. Similarly, resources for child protection were the lowest yet again. However, the education sector received the largest share out of the budget for children. Interestingly, over the last few years, the major chunk of government financing of elementary and secondary education has been through the education cess. While this began as a measure to inject additional amounts to supplement government’s own support, it grew to be more of a substitute. This is a wrong practice and must be stopped. The decreasing share of the budget for children is a clear indicator of the lack of political will to commit to children’s issues.

Can We Afford These Cuts? What Is The Situation Of India’s Children?

1. Even though the overall sex ratio has shown an improvement, the child sex ratio has shown a declining trend. In Census 2011, the child sex ratio for 0-6 years is 914.
2. Nearly 1.73 million children die in India annually before completing their fifth birthday.
3. Nationally, the proportion of children (age 6 to 14) who are not enrolled in school has gone up slightly, from 3.3% in 2011 to 3.5% in 2012.
4. The percentage of SC & ST enrolment at the primary level in 2011-2012 is 19.80% (SC) and 19.92% (ST) of the total enrollment.
5. The drop-out rate in India is 40.6 % in 2010- 2011.
6. According to the trend exhibited during 1991-2001 (1991: 61.9% and 2001:76.4 %), India is likely to attain 100% youth literacy (literacy rate of 15-24-year-olds) by 2015.
7. As per the National Crime Records Bureau, the total incidence of crime against children in 2014 is 89,423 which is a 36.98% increase over 2013.
8. In 2014, the total number of cases of crimes committed by children is 38,565 which is a 107.54% increase over crimes committed by them in 2013. The share of crimes committed by children in the total cognisable crime committed is 1.18% which is a 0.02 point percentage decrease over 2013.

Despite the current situation, what we saw in the Budget 2015-16 were huge cuts even though the Finance Minister, Mr. Arun Jaitley had assured the government’s commitment towards the welfare of poor and that adequate provisions had been made for the schemes for ‘poor’ and ‘disadvantaged’. But the allocation of financial resources for social security programmes and particularly those for children reflected otherwise.

Scheme Percentage Fall in Allocation (between 2014-15 & 2015-16)
Sarva Shiksha Abhiyaan -20.74
Mid-Day Meal Scheme -30.11
Rashtriya Madhayamik Shiksha Abhiyaan -28.70
Scheme for Setting up of 6000 model school at block level as a benchmark of excellence -99.92
Support to education including teacher training -36.55
Integrated Child Development Services (ICDS) -54.19
Deendayal Disabled Rehabilitation Scheme -33.33
Manufacture of Sera Vaccine -18.03
National Rural Health Mission-Reproductive and Child Health programme (NRHM-RCH) Flexible Pool -21.63
National Programme for Youth and Development -28.75
Scheme for prevention of alcoholism and substance (drug) abuse -66.81

 

This cut in the Union Budget 2015-16 is due to the acceptance of the Fourteenth Finance Commission (FFC). The FFC recommended that share of the States in the divisible pool of taxes should be increased to 42% from 32%. Therefore, in the current scenario, it is expected that States should enhance their own resources and give priority to social sector spending.

What remains a matter of concern is that if the Centre stops funding the major Centrally Sponsored Schemes (CSS), would States still give priority to the ongoing developmental programmes/schemes launched to address children’s issues in a time bound manner?

Whatever little is allocated remains unspent, affecting the implementation of some of the important schemes, as a result, ignoring children’s rights.

What Must The Government Ensure For Children In The Upcoming Budget 2016-17?

Many, including Nobel Laureate, Kailash Satyarthi are advocating for children’s right to adequate budget allocation and are demanding more investment in the upcoming Budget. Some of the more specific demands that the Government must focus on are as follows:

1. Allocations of financial resources for the key nodal Ministries such as MWCD, MHRD and MoHFW and flagship schemes (such as Sarva Shiksha Abhiyan, Mid-Day Meal Scheme, Integrated Child Development Scheme, Integrated Child Protection Scheme, Rashtriya Madhyamik Shiksha Abhiyan etc.) related to children must go up in Union Budget 2016-17.

2. Children related legislation and commitments must have financial backing and be adequately resourced in the upcoming Budget. For example, Protection of Children Against Sexual Offences 2012, one of the most effective legislation enacted to combat child sexual abuse does not have any financial backing built into the budget. As a result, state governments struggle to find resources to meet requirements of special educators, translators and interpreters, or to set up special courts with child-friendly infrastructure etc.

3. Integrated Child Protection Scheme (ICPS) introduced in the Eleventh Plan, was envisaged to create a protective environment for children in the country. However, the delayed rolling out of the programme and inadequate resources allocated to it has meant that the scheme remains ineffectively implemented. The newly enacted Juvenile Justice Act, 2015, an important part of ICPS, has brought in new developments for assessment and rehabilitation of young offenders through serious interventions through experts, psychologists, counsellors etc. This additional responsibility requires more funds than what is currently available.

4. The Central government should be the primary duty bearer to implement the Centrally Assisted Schemes related to children. As highlighted in the Chief Minister’s Sub Group Report on CSS, children related schemes are one of the critical elements of National Development Agenda and as per the recommendation, these programmes must be kept in the ‘Core of the Core Schemes’ category and Centre should finance these schemes majorly.

5. When we talk of inclusive growth, are we paying due attention to the needs of those children with disability? Specific services of habilitation and rehabilitation, required for full development of children with disabilities, continue to be unavailable to the majority of children. Rehabilitation services do not reach even a small number of children with disabilities because of the way they are designed. Even though the Right to Education Act 2009 makes specific mention of children with disability, the education system doesn’t still have the capacity to include them. The government must ensure the rights of the disabled children.

While we proudly claim to be a nation with the fastest growing economy, seeking to be a global leader in the coming years, we mustn’t forget that India has the world’s largest youth population. It is the government’s responsibility to ensure its young citizens get their basic human rights.

Therefore, is it justifiable for the Government to spend a paltry sum of 3 rupees and 26 paise out of every 100 rupees on those who will lead the nation tomorrow?

A farmer attends a day-long protest in New Delhi August 8, 2013. Thousands of farmers from different states of India on Thursday protested against the introduction of the Biotechnology Regulatory Authority of India (BRAI) bill in parliament by the union government, that would make a foray for genetically modified crops and its proponents like Monsanto, into India's food and farming, a media release said. REUTERS/Adnan Abidi (INDIA - Tags: CIVIL UNREST AGRICULTURE FOOD SCIENCE TECHNOLOGY BUSINESS) - RTX12DTI

By Sakshi Jain:

A farmer attends a day-long protest in New Delhi August 8, 2013. Thousands of farmers from different states of India on Thursday protested against the introduction of the Biotechnology Regulatory Authority of India (BRAI) bill in parliament by the union government, that would make a foray for genetically modified crops and its proponents like Monsanto, into India's food and farming, a media release said. REUTERS/Adnan Abidi (INDIA - Tags: CIVIL UNREST AGRICULTURE FOOD SCIENCE TECHNOLOGY BUSINESS) - RTX12DTI
Image Credit: Reuters/Adnan Abidi.

The recent controversy around the sedition charges being against the Jawaharlal Nehru University Students’ Union President has taken up a lot of space in all media publications and broadcasts. While the issue is gaining momentum with each passing day, it appears to have been used as a tool to divert attention away from other significant developments that took place simultaneously.

The recent agreement between the Maharashtra government and Monsanto, which is interested in setting up a seed hub in Vidarbha region, its biggest in the country, during the Make In India Week is an issue that needs serious attention.

Monsanto is an American multinational agrochemical and agricultural biotechnology corporation that aims to deliver agricultural products that support farmers all around the world. It initially produced food additives, later diversifying into industrial chemicals and now focusses on biotechnology and genetically modified (GM) crops after the major success in 1983.

However, Monsanto has been criticised throughout the world and has become the face of ‘corporate evil’. The company and its genetically modified organisms (GMO) have become the subject of global protests and criticism from environmentalists. Documentaries such as Forks Over Knives and GMO OMG also condemn their activities.

The History Of Monsanto’s ‘Evil Corporate Face’

According to a report by Friends of Earth, around 90% of GM traits used in the world are supported by Monsanto. The company aims at expanding its base and penetrating new markets which could possibly make developing countries more susceptible to environmental, economic and social problems.

In its attempt to promote the shift from conventional to GM seeds, it is believed that Monsanto, instead of benefitting the farmers, deprives them of their basic choice and availability of alternatives to what it (Monsanto) has prioritised.

The Friends of Earth report also points out that Monsanto has been severely criticised for its assault on regulatory and policy regimes. The report suggests that the corporation has resorted to bribery to create a foothold in the world market. It states that, “an investigation by the US Securities and Exchange Commission revealed that over US$700,000 was paid in bribe to at least 140 current and former Indonesian government officials and their family members between 1997 and 2002, financed through the improper accounting of Monsanto’s pesticides sales in Indonesia.”

The report talks about several other criticisms of the company. In most countries, Monsanto has had the tendency of spreading contamination first and then legalising it. In India in 2002, contamination in the commercially released of Bt (bacillus thuringiensis) cotton was detected. The commercial release had taken place without authorisation and was approved after a few months. They have also been accused of “unethical and irresponsible” advertising to gain the confidence of farmers. In India, products were marketed through local newspapers, television advertisements etc. and were endorsed by famous actors such as Nana Patekar, who was the brand ambassador of Monsanto. This, according to the report, has been criticised as a form of “aggressive advertisement” by the National Commission of Indian Farmers.

The tough collection regime for royalties of GM products challenges the farmers’ right of seed saving as the royalty is collected in the form of ‘technology fee’ paid at the time when the seed is purchased. Farmers are made to sign an agreement which states that they can’t save any GM seed from their harvest for replanting.

Profound environmental impact has also been reported in countries like Argentina where an increase in soy production led to a decline in soil fertility and soil erosion. It has been predicted that the soil will become infertile in fifty years if this were to continue.

Does The History Of Monsanto In India Suggest That The Recent Deal Can Be Dangerous?

In a country like India, known to be primarily an agricultural economy, with a large number of farmers who are largely poor and uneducated, the entry of Monsanto changed the business market for cotton farmers in India. Contrary to the rosy promises made my Monsanto in the beginning, the consequences have been outrageous. The farmers have suffered a lot since the expensive seeds did not reap great harvests and led to indebtedness.

Vandana Shiva, an environmental activist and eco-feminist, explains how companies like Monsanto have turned farmers’ self-reliance regarding seeds into a dependency on purchasing seeds. Initially, the farmers are lured by the scientific advice of ‘seed replacement’ given by Monsanto who are even paid for giving up their seeds. However, the farmers ultimately fall into the trap of depending only on the seeds offered by Monsanto since there are no other alternatives since all other farmers in the neighbourhood are trapped in the same situation as well.

Apart from these, use of chemical pesticides, which weren’t required earlier, is also a problem now. Moreover, unfair U.S. subsidies for American cotton farmers further affect global prices. Local money lenders often cheat farmers for their own profit and free-market policies affect the cost of production regularly because of volatile global prices.

Impact Of the Recent Deal At The ‘Make In India’ Week

Having observed the historical impacts of Monsanto in India, the recent deal seems a threat to the future of farmers and the country. Large corporate interests may lead to the patenting, genetic engineering and mass marketing of all essential products in our country. The exercise of influence by Monsanto and other biotechnical companies has been so immense that they lead to the ushering in of poorly tested and potentially hazardous products through weak approval processes.

The issue of the loss of traditional methods of farming is of concern since most Indian farmers are poor and uneducated. Initially, there were incidents of farmers being unaware of the extra water requirement of GM seeds, which was much higher than that for traditional seeds. It devastated their harvest. Such issues need to be addressed before expanding the base of GM seeds in India. Moreover, in a country like ours where agriculture still largely depends on rainfall, rather than irrigation, and other traditional methods, the real question is: Are we ready for such a deal or has corporate power influenced our decision so much that, despite the scandalous history, the deal is being made?

NREGA2_620

By Swati Narayan, IndiaSpend.com:

NREGA2_620The fruits of a people’s movement and the world’s largest anti-poverty public works, the National Rural Employment Guarantee Act (NREGA) last year provided employment to 22% of all rural homes.

At its peak five years ago, it was a lifeline for 55 million, or one in every three rural homes.

But it has yet to expand to its full potential. Up to 70% of interested poor households did not receive any NREGA work between 2004-05 and 2011-12, reports the India Human Development Survey 2 (IHDS2).

Unemployment allowance, stipulated in the law, has also rarely been paid as a substitute. Nevertheless, for recipient families, 32% of their poverty decline comes from NREGA alone, according to IHDS2.

Why NREGA Is Currently Not An Effective Drought-Relief Measure

Under the law, promulgated in 2005, each household is guaranteed 100 days of work every year. But, on average, each NREGA household received only 45 days of work over the last decade–less than half the guarantee.

The lowest average was last year: 38 days. Uttar Pradesh and West Bengal clocked in even less.

So, it is ironic that recently the Central government has expanded the guarantee to 150 days of work in 14 drought-affected states. Odisha further increased the cap to 200 days.

But this does not work as a drought-relief measure, as only 4% of employed households hit the 100-day mark last year. At its peak, too, only 14% have ever received 100 days of work. Worse, the total nationwide person-days–a measure of NREGA employment–almost halved in 2014-15 (1.49 billion), compared to its peak five years ago (2.84 billion).

The law also stipulates that wages are to be paid within 15 days. Last year, 72% of wages were delayed. This year, no more than 45% of wages have been paid on time. In the midst of a drought, villagers who survive hand-to-mouth cannot afford to wait. Compensation for delayed payment is also rare.

In several states, such as Kerala, Andhra Pradesh, Karnataka and Rajasthan, NREGA wages are lower than the minimum wages for unskilled agricultural work, which makes it difficult to attract workers, especially the youth, who often prefer to migrate to urban areas. Yet, this safety net has bolstered their bargaining power even on distant shores, as scores of Bihari migrants will testify.

NREGA Especially Helps Women, Dalits And Tribals

“Earlier, we had never seen Rs 500 notes; now we have more than Rs 7,000 to Rs 8,000 as our bank balance,” Sunil Munda, an Adivasi from Sanramlai village in eastern Odisha recounted six years ago. “Now, if we have malaria, we can take an auto and go to the hospital for treatment. Earlier, if herbs didn’t work, we knew we would be dead. We hadn’t seen the doors of the hospital.”

On a more positive front, 40% of households employed under the law are impoverished Dalits and Adivasis, even without any explicit targeting. The IDHS2 attributes 38% and 28% reduction in poverty in employed Dalit and Adivasi (tribal) homes, respectively, to NREGA alone.

As importantly, in India’s patriarchal society, the NREGA has emerged as a torchbearer for women’s empowerment. As many as 55% NREGA workers in 2014-15 were women, and their participation has soared 38% over the last decade.

Predictably (since they are states with high female literacy and social emancipation), Kerala and Tamil Nadu top the charts, with as many as 92% and 86% of NREGA workers being women.

Even before the Jan Dhan Yojana, the NREGA had opened 100 million bank accounts, often used by women for their wages, often for the first time, and on par with men.

Note: In 2006-7 NREGA was applicable in only 200 backward districts, in 2007-08, it was extended to 330 districts, and, from 2008-09, implemented across India.
 

There has also been much hand-wringing about the quality of NREGA work. A deeper look reveals that 28% of works, even in 2013-14, were to improve rural sanitation, even before the Swachh Bharat Abhiyan. Another 30% were for water conservation, flood control, drought proofing and micro-irrigation.

More than half the works were ‘green jobs’ directly related to improving agricultural productivity.

For example, the Institute for Human Development shows a high completion rate, with a 6% rate of return for about 100,000 wells sanctioned in Jharkhand.

The Maharashtra government’s Jalyukt Shivar Abhiyan to make 5,000 villages drought-free also depends on the NREGA. In another ingenious initiative, Tamil Nadu has employed 60,000 Thuimai Kavalars (sanitation workers) under NREGA across three-fourth of villages. In Karnataka, NREGA workers have even been employed to manufacture environment-friendly earthen bricks. These tasks are a far cry from digging and filling trenches.

And So, To The Next Decade

Despite the Prime Minister’s mockery of the lifeline in Parliament last year, the Bharatiya Janata Party, at the 10th anniversary celebration of NREGA, hailed it as the nation’s “pride.”

NREGA3_300
Workers in Tripura.

Tripura is the only state to offer urban dwellers guaranteed employment. With the tide turning, the clamour has now begun for its nationwide replication.

The next decade holds much promise for the right to work.

This article was originally published on IndiaSpend.com, a data-driven and public-interest journalism non-profit.

A worker fills petrol in a car at a fuel station in Jammu May 14, 2011. State-run oil firms will raise petrol prices by about 8.6 percent or 5 rupees a litre from Sunday, company officials said on Saturday, a record hike that will fuel inflation in Asia's third-largest economy. REUTERS/Mukesh Gupta (INDIAN-ADMINISTERED KASHMIR - Tags: BUSINESS ENERGY) - RTR2MESK

By Abhishek Waghmare, IndiaSpend.com:

Record production in the United States (US), weakened demand from the Eurozone and emerging economies like China and Brazil, and Iran’s entry into the international market have effectively slashed the price of crude oil for India, from $106 per barrel in July 2014 to $26 in January 2016 — a 75% drop over 15 months.

So, why are you not seeing evidence of this price-cut at your local petrol and diesel station?

The answer: As global crude prices reach an 11-year low, the Centre and state governments steadily increase excise duties and value-added tax, shoring up their revenues and keeping fuel prices high for retail consumers.

Although India imports more than 80% of its fuel requirement, which means declining global prices should, theoretically, have seen sharp declines in retail petrol and diesel prices, Indian consumers of petrol and diesel now pay about double the global rate.

A Series Of Taxes, Oil-Company Profits And Other Commissions

Retail prices of petrol and diesel prices in three states — Assam, Uttar Pradesh and Gujarat — show a variation of less than 10% during the current financial year, 2015-16, according to an IndiaSpend analysis.

For instance, the petrol price in UP rose Rs 2 per litre, when global oil price halved over the same period.

 


Indian prices stay high because oil marketing companies (OMCs), such as Indian Oil Corporation Ltd, Hindustan Petroleum Corporation Ltd and Reliance Industries Ltd., add their margins, the central government adds excise, state governments add their own (value-added) taxes, and the dealers (petrol pumps) get their commission.

The total of these is the retail price of the fuel you pay.

Excise Hiked Five Times In Three Months; Diesel Duty Hiked 140%

The excise duty on petrol and diesel has been hiked five times over the last three months, increasing the excise duty on petrol by 34%. On diesel, excise duty has increased by 140%.

The price at which OMCs sell petrol to dealers (petrol pumps) has been halved in two years. Over the same period, retail petrol prices have come down only by 15%.

The value-added taxes imposed by states have more or less remained the same, but excise duties — both basic and additional — imposed by the Centre have doubled between 2014 and 2016.

You Pay More Taxes On Diesel And Petrol Than Price Of Fuels

The addition of central taxes on diesel is higher than those on petrol. Central taxes per litre of diesel rose to four times its value in April 2014 — from Rs 4.52 per litre to Rs 17.33 per litre in February 2016.

Retail consumers pay more tax on petrol and diesel than its actual price.

Of the price you pay for a litre of petrol, 57% goes to the government as tax. Of the Rs 44 per litre of diesel, 55% is tax.

If the excise duties on diesel had not been increased these two years, diesel would have cost Rs 32 per litre today, other factors remaining the same.

The direct effect of oil prices on cost of transportation of goods and thus consumer inflation has been demonstrated by research from Integrated Research and Action for Development (an autonomous research institute), as journalist and economist Swaminathan Anklesaria Aiyar wrote in this blog.

Research on inflation in Turkey and Sri Lanka has underlined the effect of fuel prices on inflation.

Lower fuel prices can keep inflation in check, according to this report in Business Standard.

This article was originally published on IndiaSpend.com, a data-driven and public-interest journalism non-profit.

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