· 2017-11-25 · “A Society where man is at the centre of all activities, a society where exploitation of man by man has been abolished, where he is cared for as an in a a family,

THE HUMAN FACTOR

August-October 2005 125 | An IIPM Intelligence Unit Publication

THE INDIA ECONOMY REVIEW

2007Volume 4 | Special Issue: 15th February 2007 www.iipmthinktank.com

www.gidf.org

A N I I P M T H I N K T A N K &

G R E A T I N D I A N D R E A M F O U N D A T I O N P R E S E N T A T I O N

HUMANISING UNION BUDGET

2007-08Reliving The Great Indian Dream

“A Society where man is at the centre of all activities,

a society where exploitation of man by man has been

abolished, where he is cared for as an in a a family, where

“to each according to his need’ is practised, a society where

non bureaucratic National Economic Planning is given

due importance for sustainable optimum growth, where

adequate social safety net is a reality and yet market’s

advantages are fully taken care of for creativity and

entrepreneurship, such a society can be truly described as

humane society and the vision as ‘Humanism.’”

Dr. M K Chaudhuri

The Great Indian Dream, 2003, Macmillan India,New Delhi

A v i s i o n f o r I n d i a

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“Let us together dream of a country where poor are not

just merely reduced to statistics but where there are no

poor. Let there be a day when small children are taken to

a poverty museum like science museum where they shiver

at the plight of the way people used to live in the last

millennium. Let this dream take the form of a revolution

and as long as our dreams keep outweighing our memories,

India would remain a young and dynamic nation on this

path to global equality. And for this let the wait not be

for eternity. Let us together achieve this in the next 25

years.”

Prof. Arindam Chaudhuri

The Great Indian Dream, 2003, Macmillan India,New Delhi

4

C r e d i t s

FounderDr. M. K. Chaudhuri

Editor-in-ChiefArindam Chaudhuri

Managing EditorPrasoon.S. Majumdar

Deputy EditorM.N.V.V.K. Chaitanya

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Pathikrit Payne Kumar Anuj

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Who we are?

The IIPM Think Tank, an independent, India-centric research body, is inspired by Dr. M.K. Chaudhuri’s vision of India as an economic powerhouse in the 21st century; a mod-ern nation state where poverty becomes history and the underprivileged are not consigned to the dustbin of amnesia. The national presence (across 7 nodes, New Delhi, Mumbai, Chennai, Pune, Bangalore, Hyderabad, & Ahmedabad) makes our understanding of the economy supe-rior, where in many research fellows and scholars, embark on research assignments and network with global intelligentsia.

What we believe?

The IIPM Think Tank is wholly free of ideology and looks at the Indian developmental paradigms, purely modelled upon the basis of ‘objective reality’ by opting for prescriptive economics. We start with real-life problems, lay down solutions and examine them in real-life context (through G.I.D Foundation) and observe what we learn about people and other variables in the systems in India as we opine that there is much more to boundary between the humanity and the world of ideas. We passionately believe in the credo that we constantly seek to follow: rethink, edify and delineate. This enduring commitment has helped us foster and broaden the parameters of public policy debate and alternatives. Toward that goal, it strives to achieve greater involvement of the intelligent, concerned change agents (reform minded politicians, public servants, socially responsible firms and citizens) in questions of policy and the ideation. Furthermore, we ardently believe that the managers of tomorrow that are being groomed at IIPM today will play a decisive role in India’s renewed tryst with destiny.

What we do?

As a premier ‘ideas organisation’, The IIPM Think Tank is committed to enhance public awareness of policy issues in economics and management and to engineer solutions that will fulfill the Great Indian Dream. By publishing the findings of its research, and through the active participation of its senior researchers in the media and policy, it aims to bring new knowledge to the attention of policy makers. Every year, The IIPM Think Tank commissions and publishes socio-economic three quarterly reviews and an annual review, on a wide range of policy issues including education, health, poverty, unemployment, agriculture, industry, services, FDI, external trade, infrastructure and environment. All these outputs meet the highest standards of scholarship, are accessible to a broad readership, and explore policy alternatives consistent with the philosophy of ours. The central theme of our issues are devoted to assess where the critical predicaments are, analysing what needs to be done to annul the element of development deterrents in the economy and offer concrete proposals on how to accelerate welfare everywhere towards achieving inclusive development. The India Economy Review is a small manifestation of that vision. More than 3,000 students (7 nodes of IIPM) have—and continue to—spent endless hours conducting primary and secondary research on strategic issues that confront India. This research is then analysed by many scholars across the 7 campuses. Brand new insights and policy recommendations that are provided by this core team are then crafted, honed and polished by member Economics Research Group (ERG). This massive effort is spearheaded and led by the renowned economist and management guru, Prof. Arindam Chaudhuri. We trust that the untiring efforts of The IIPM Think Tank are a modest, yet significant contribution to the policy reinvention that is poised to transform India.

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“There is no knowledge, no light, no wisdom that you are in possession of, but

what you have received it from some source.”

-Brigham Young

P a r a d i g m P r i s m

Since its incorporation (1973), IIPM has been an institution with privileged traditions, in the diversity of its fraternity, its global outlook, its world class research and its commitment to alternative national economic planning process.

It can be said, without much oversimplification that there are no ‘underdeveloped economies’. There are only ‘under managed’ countries. Japan 140 years was ago was an underdeveloped country by every material measurement. But it very quickly produced management of great competence, indeed of excellence. The policy inference is that ‘management’ is the prime mover and ‘development’ is the consequence. At IIPM, every one considers that development is a matter of human energies rather than economic wealth. And the generation and direction of these human energies is the task of ‘management’. Accordingly, we formed The Great Indian Dream. Unlike any other dream, this is one dream which each one of us are determined to realise and that too in our own lifetimes. Each bit of cynicism and condemnation from pessimists makes us evolve even stronger and determined.

All our endeavours and initiative is towards realisation of this dream, where in we produce committed ‘bare foot’ managers and entrepreneurs who are needed by nation, on an insistent basis. As an educational institute, we aim at initializing a three dimensional personality in IIPMites, viz. � Pursuit of knowledge in economics and management� Commitment to economic, social, political and technological upliftment of masses and � Cultivation of taste for literature, fine arts and etc.

Economists often have limited access to the practical problems facing senior managers, while senior managers often lack the time and motivation to look beyond their own industry to the larger issues of the global economy. It has set before it the twin tasks: to reorient education and research towards the needs of both the private and public sectors and to establish the link between the National Economic Planning and the development of private enterprises in Indian economy. IIPM dares to look beyond, and understands that what we teach today, other adopt tomorrow. IIPM’s service output (education, research and consulting,) is a unique combination of two distinct disciplines: economics and management. Through this integration, IIPM helps guide business and policy leaders in shaping the Indian and global economy, bringing together the practical insights of industry with broader national and global perspectives.

A hall mark of IIPM is that it is armed with the comparative advantage of engaging the committed, passionate and brightest management post graduates and undergraduates, who pursued the education at IIPM and subsequently joined it, to realise the dream. IIPM alumni, spread across the globe, holding crucial decision-making positions in the corporate sector, are bonded by the one ideology of making a positive difference, turning that ideology into a movement itself.

The India Economy Review is another humble initiative towards the realisation of the same and more distinctly, engaging the broader publics and pertinent stakeholders.

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t h e f u t u r e i s h e r e

“The great aim of education is not knowledge but action.”

-Herbert Spencer

P r a i s e f o r I E R

“Praise invariablyimplies to a high standard”

Aristotle

“…...It is a very informative document ...”

Mr. V.L. Chopra, Member, Planning Commission, New Delhi

“Most credible and valuable resource book...”

M.S.Swaminathan, M.S.Swaminathan Research Foundation, Chennai

“I am happy that the think tank at IIPM has been doing excellent work on various

strategic sectors and issues of importance to Indian Economy... “The IER 2003-2004”,

which is a IIPM Think Tank presentation is extremely fascinating and value adding...”

Dr. P.L. Sanjeev Reddy, Former Secretary to Govt. of India, Director, Indian Institute of Public Administration, New Delhi

“…I have gone through it and it is really a professional exercise to help everyone. What impressed me

the most is its analytical approach used for articulating the figures, which otherwise are lifeless entities… ”

Dr. Mruthyunjaya, Director, NCAEPR, New Delhi

“...the contents are extremely relevant and thought provoking...”

Dr. Charan Wadhwa, Centre for Policy Research, New Delhi

“...It highlights the wealth of intellectual synthesis of agrarian economy available to us for

re-energising the thought process endeavoured at your end…..I hope that the platform of further

synthesis of many such issues provided by IER will be serving great interest of agriculture sector.”

Dr. Rajiv Mehta, Member Secretary, Commission for Agricultural Costs & Prices, MoA, New Delhi

“.In my opinion, it has fulfilled its objective in presenting a comprehensive, upto-

date and clear exposition of the issues and concerns that are essential for understanding,

evaluating and suggesting solutions to the important national economic problems.”

U.K.S. Chauhan, Director, Department of Agriculture and Cooperation, MoA, New Delhi

“...I laud your info base and analytical prowess, particularly your solutions vis-a-vis international

experience….You may like to examine further from your side the aspects of futures trading in the

perspective of the Indian farming community given your extant knowledge base in agriculture.”

Suvendu Ganguly, Deputy Director, Forward Markets Commission, Kolkotta

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P r a i s e f o r I E R

“…I thoroughly enjoyed going through your recent IER…it is undoubtedly a mammoth

task of pulling together divergent perspectives on the critical issues of the nation…..”

Dr. Parth J Shah, Centre for Civil Society, New Delhi

“The IER, a thematic compilation of economic thoughts, ideas, questions, answers

and solutions…..promises to usher in a potentially better, if not necessarily newer, dawn of

economic policies that radiates the power to dispel the current darkness of socio-economic and

socio political confusion... the review exudes ‘qualified optimism’ about country’s prospects”

S.R.Kasbekar Senior Editor, The Financial Express, Mumbai

“I have to say that the magazines, Business & Economy and The Indian Economic

Review, 2005 Vol. III, are very impressive and the material is very good. I send all

of you involved with it, my heartiest congratulations and wish you all the best.”

The Lord Paul, The Rt. Hon. Lord Paul of Marylebone

“I liked the review... It is ‘stimulating’ reading which forces the reader to think about the

issue...”

A. K. Singh, Giri Institute of Development Studies, Lucknow

“Undoubtedly, it is of exceptional quality and amongst the best that I have seen in my interaction

with similar organisations in different countries. I merely wanted to write to you and congratulate

you and your institution on an extremely well researched and presented endeavour... I have taken

the liberty of putting the copies that I had got along in the WTO library.”

Shishir Priyadarshi, Development Division, WTO, Geneva

“...I found it very useful material, which has dealt with the vital issues that we are facing in the

field of education, health, poverty and employment. I would like to compliment all the authors

as well as the editorial team for bringing out such a valuable publication.”

Arun Nigavekar, Chairman, UGC, New Delhi

“If the purpose of a Think Tank is not merely to think issues through but also to ignite thinking

among the readers, I think you have succeeded very well indeed.”

R. Badrinath, Director, Division of Trade Support Services, International Trade Centre, Geneva

“Modern India certainly needs more Think Tanks like yours... unlike most academic journals,

yours is well-designed, readable and also conveys a sense of aesthetics and humour through the

illustrations... It well reflects the high standards of the IIPM.”

Brij Khindaria, President, Diplomatic forum for Business, Geneva.

Dear reader,Indian Economy would have unquestionably grown in excess of 8-9% in 2006-07, which is indeed an outstanding achievement: the stock markets have been on a roll and the India Inc. has announced its arrival in global economic space with sizeable acquisitions. The tax revenues are soaring and the strain of fluctuating oil prices has been handled quite well. Forex reserves are looking very healthy, climbing to US $ 179 Billion. Yet, left to market forces, multiplication of the Gross Domestic Product on no account profits the ‘aam aadmi’ and rural poor. Currently, at the upper extremity, it is an extraordinarily small pyramid of high growth. While undergoing unprecedented socio-economic changes, India plainly cannot take part in the efforts to preserve the current transitional status of the developmental paradigm. India can afford less than others to risk the emergent confidence in our growth movements, which, in turn, is a major dynamic in the overall predictability of development. Consider this: Given the rate at which we are reducing poverty, the goal of poverty eradication appears reasonably far-flung. M. R. Venkatesh, Chennai based Chartered Accountant and also associated with the Madras Chamber of Commerce and Industry reports that in the last ten years, the poverty ratio reduced at a mere 0.75 percentage point a year. At this rate, it will take over 35 years to eradicate poverty, as we know it today (‘Re-engineering social sector development’; The Hindu Business Line; February 09, 2007). At this juncture, it is indeed relevant to consider and appreciate the fitting observation of Herman Daly (Chapter 5; A Catechism of Growth Fallacies; Steady-State Economics), when he mentions that ”the verb to ‘grow’ has become so overladen with positive value connations that we have forgotten its first literal dictionary meaning, “to spring up and develop to maturity”. Thus the notion of growth includes some concept of sufficiency. It is important to remember that “growth” is not synonymous with “betterment.”Escalating prices of essential commodities, degeneration in agricultural production, the condition of farmers, jobless growth in the course of socio-economic development and other degenerating factors must make the Government to present a qualitatively dissimilar budget from the earlier ones. Only a targeted course of action can build up the human fundamentals and amend the misfortune of people. Budget with a people’s orientation can grow to be an effectual instrument for combating misery and joblessness and making a frontal assault on rural distress. There has been no breather from the spate of farmer’s suicides, which has blown in to an epidemic problem. Consider this: GVL Narashima Rao, Managing Director of Development and Research Services (DRS) reports that the number of farmer suicides annually has steadily increased to an estimated 1,050 last year from 324 in 2004 and 38 in 1999 (‘A political budget’; mint; February 06, 2007). The institutional mechanisms are yet to be in place. There is an immediate requisite of bringing more and more land under irrigation. Also, another tangential concern is whether so many people need to depend upon agriculture, for the simple reason that no economy can afford to have 65 per cent of its population making a living out of farming. The electoral implication of these happenings hardly warrants an additional explanation. The government, inspite of it’s much acclaimed to the ‘aam aadmi’, has provisioned a mere Rs 4,000 crore, just 1 per cent of the Budget, for agriculture, that puts in 24 per cent of India’s GDP.”The successive reform budgets of 1991 to 1993 capped public spending in social services and infrastructure like education, health, agriculture and irrigation, and opened up opportunities in commerce, trade-in-services, and the knowledge economy. But this account was written at a price. Consider this: FICCI laments the fact that (‘FICCI seeks lower excise on big cars’; Business Standard, March 22, 2006) in health services, the demand has increased at an annual average rate of 17.5% over the last five years. Yet supply of the same has been impeded as the charge of the long term funds for funding big development schemes remain soaring that increases the cost of services much above the reasonable rates. The Economist quotes that (‘India on fire’), ‘bizarrely, India has one of the most privatised health systems in the world. Government spending accounts for only 21% of total health spending.’ The case of higher education is even more appalling. Many research studies point to the dismal fact that the extant access to higher education services was low, at about 10% of the population in the relevant age group. What’s more is the asymmetry of opportunities as is reflected in the fact that majority of students come from

A C a s e o f F r a g i l e F o u n d a t i o n s A n d M i s p l a c e d P r i o r i t i e s

Prasoon.S.Majumdar

Managing Editor

M.N.V.V.K.Chaitanya

Deputy Editor

10

the top 20% of society. The dismal share of agriculture in GDP is further falling, and nearly all the people living off it are getting increasingly indigent. The decline as a percentage of GDP is from 2.2 percent in the late 1990s to 1.7 percent in 2004-05. Though agriculture grew by 6 percent in 2005-06, the average growth during 2000-05 was at a low of 2.2 percent (‘Govt may go for massive hike in farm sector investment’; Business Standard; February 06, 2007). According to many an expert, if the Eleventh Plan aims for agriculture growth, at best, at 4%, and the entire nation at 8% or above, then those in the rural belt will be worse off. The accentuating disparities in development engender social, economic, ethnic, and religious conflicts. Periodic unilateral use of force is also generating a feeling of insecurity and a sense of desperation. The awkward truth is that although the economy is galloping ahead, majority of the people are wriggling ahead. Women still live with less social freedom than men. Carnages on the grounds of caste, gender and religious grounds occur in notoriety every once in a while. No economy can claim to be free in these circumstances. The state has a role to play in protecting the freedoms, wherein it has a more enlightened role to perform in guaranteeing that every child is attending a school that is functional in all aspects, that every sick person has access to high quality and reasonable health care infrastructure, that intense inequities amongst individuals, groups and localities are lessened and better social and physical infrastructure is envisioned and provisioned to make sure that rural poor is mobile and offer an escape route. We apprehend that the extant business vigour and public economic verve can turn to fury and fad, all at the same time, if a large segment of the population feels it is being left behind in the march towards success and affluence. There are definitely a few specific insurable risks that the government can shield on behalf of its society. While 2007 is an exciting point of inflexion for growth facet in Indian economy, there are very fundamental challenges, which the state has to tackle to make sure that growth is ‘inclusive’ and sustainable. The budget can be become a tactical tool and event of short term use in the long term and strategic national economic planning process. On a parallel basis, there is also a need for governance reform, in guaranteeing that the ‘big talk’ and other grandiose announcements are delivered in actuality, and we hope that in the coming period, we can look at several aspects and facets where this is easily workable, with a modest exertion, and undeniably, with a little concern and passion for the ‘aam aadmi’. As the World Bank recorded it in a report in 2006 (and also has been reiterated by ‘The Economist’), “when systems are failing, it is not enough to fix the pipes, one needs to fix the institutions that fix the pipes.”

Best, Prasoon.S.Majumdar M.N.V.V.K. Chaitanya

Sector Pre-Reform Period

(1987-88 to 1990-91)

During Reform Period

( 1991-92 to 2001-02)

1. Promotional Social sectors 25.47 26.04

(i) Education, art, culture 10.97 11.32

(ii) Medical, public health,

water supply and sanitation

4.36 4.37

(iii) Family welfare 0.60 0.74

(iv) Housing 0.53 0.70

(v) Urban development 0.48 0.63

(vi) Labour and employment 0.49 0.42

(vii) Social security and welfare 1.05 1.16

(viii) Others* 1.61 1.40

(ix) Food subsidy** 1.80 1.86

(x) Rural development*** 3.56 3.44

2. Protective social sectors .006 0.05

(xi) Relief on account of natural calamities .006 0.05

Social sector (1+2) 25.48 26.09

Notes: (i) *Others include scientific services and research, broadcasting and other services.(ii) **Expenditure under the head food subsidy is listed under non-development expenditure in the Indian Public Finance Statistics, Ministry of Finance, Government of India.(iii) ***The expenditure under the head “rural development” is listed under development expenditure and is a component of agriculture and allied services in the Indian Public Finance Statistics. It relates mostly to rural development and anti-poverty programmes, therefore, included under social sector.Source: Computed from the data available in Indian Public Finance Statistics, Ministry of Finance, government of India, various issues as reflected in ‘Impact of Economic Reforms on Social Sector Expenditure in India’; Seema Joshi; Economic and Political Weekly; January 28, 2006.

Combined (Revenue and Capital) Expenditure of Centre and States on Social Sectors(Percentages of aggregate expenditure)

Search, Sieve, Scheme 13

Humanising The Union Budget 14Dr. M. K. Chaudhuri

Housing Sector: Have The Budgets Done Enough? 18Harshavardhan Neotia

CMP And The Social Sector Investments 22Sibasankar Mohanty

Changing Health Budgets 34Ravi Duggal

Unravelling The Indian Budgetary Saga 48Dr. Harnita Chowdhary

INDIA: A Homeless Nation For Its People! 52Indu Prakash Singh

The NCMP-Land, Livelihood & Food Security 58K.S. Gopal

Let’s Budget For Farmer’s Suicides 64Devinder Sharma

India’s Growing Water Crisis 70Dr. P. Ravilochanan

Indian Agriculture At The Cross Roads…Or On The Threshold 76Dr. R. Srinivasan

( f ) a c t s h e e t

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Curing India’s Ill-Health 82Dripto Mukhopdhyay

A Green Foundation For Growth 88Dr. U.K. Srivastava

Health Care In India: Revisiting Priorities! 92Susmita Pratihast

Realising The Great Indian Dream 98Dr. Venkatesh Athreya

Serving Farmers, Saving Lives 104Aparna Pallavi

Cashing In On Growth 110Dr. Amir Ullah Khan

Reliving TheGreat

IndianIndianDream

In economics, like in everyday existence, it is imperative to hear, perceive and consider what others have to say. Of late, a great many voluntary

organisations and NGOs have advocated that the preparation of the Budget must include civil society groups rather than confining the same to the finance minister, prime minister and a few select administrators. Although, the Ministry of Finance invites submissions and memorandums from an array of representative bodies, devoid of involvement in consultations with the Planning Commission and finance ministry, this non-transparent methodology benefits only those who have access to top most decisional makers. It is patently a remnant of the colonial paradigm, where a select industrialist is able to modify Budget provisions to one’s benefit, or to an opponent’s detriment. Also, collectively, businessman and industrialist would like to see greater opportunity for manipulation by means of further tax preferences, lower rates and withdrawal of other irritant measures. There is an immediate need to dissociate the concealment and ceremonial procedures accompanying this financial exercise. This has also the positive benefit of engineering an institutional climate that rewards entrepreneurship and attract more investments from various sources.Taking a cue from parliamentary standing committees and other democratic practices in corporate world, The IIPM Think Tank has invited a cross-section of expert opinion, wherein the Budget can materialise

as an outcome of interface between many entities. The IIPM Think Tank has undertaken an extensive research project titled “Humanising Union Budget 2007-2008: Reliving The Great Indian Dream”, which seeks to encourage a focused, informed discussion on an event that has a disproportionate impact during what will be an extraordinarily important timeline for India. The reader need to appreciate the fact that India is like an elephant that looms too large to be grasped within a distinct structure and paradigm stating parts none of which reveal the entirety. Obviously and observably, no solution to any socio-economic problem (which is also protracted and complex) is possible to please all sides and stake-holders evenly. Consequently, there exists an enormous diversity in economic thinking and perspectives, as is also reflected in the viewpoints of different expert contributors in this issue. The intended outcome of this exercise is to facilitate the invention, improvement, deliberation and dissemination of innovation in economic thinking and national economic planning, insisting merely on well-grounded, open, and free debates, without predetermined outcomes. It is a constructive attempt at helping India fulfill its promises and potential.

HAPPY READING...☺☺☺

“Research is formalized curiosity. It is poking and prying with a purpose.”

Zora Neale Hurston

SEARCH, SIEVE, SCHEME...

13 T h e I n d i a E c o n o m y R e v i e w

14

Founder Director, The Indian Institute of Planning and Management.

Humanising The Union BudgetDr. M. K. Chaudhuri

We are quite happy that we have now overcome the barrier of Hindu Growth Rate and have achieved high growth rates of GDP, in the last decade, but we tend to forget that in today’s globalised world, a GDP growth rate of 14% (per capita annual income growth of 12%) is quite achievable, which could enable us to catch up with USA / Europe by 2025. The objective of our Alternate Budget is to realise this quite realistic and achievable target which will make life of our masses worth living. It is not only important that we achieve high GDP growth rate, but it is more important that the fruits of growth is distributed among masses through effective income distribution policies. Indeed, high growth rate is unsustainable over a longer period unless masses have the purchasing power to absorb fl ow of goods and commodities coming out of production processes.


P E O P L E B E F O R E P E L F

The first two months in the year are the months when our ‘beloved’ Finance Minister appears to be in his all powerful

‘avatar’. India Inc. starts begging for one favor or the other. Photo opportunities are aplenty with the Finance Minister as he meets the top industrialists representing different Chambers of Commerce. The FM starts dropping hints on the likely concessions in the coming budget. ‘Shining India’ (for the Middle Class and the Rich) shines ever more with around 15% increase in salaries and perks year after year, still expecting a reduced income tax and corporate tax rate in the forthcoming budget.

It’s a great feeling to experience an exhilarating GDP growth rate, which has surpassed 9% this year, but has poverty reduction rate even approached 2% a year? No!!

It is perhaps the biggest mockery of facts; the way poverty reduction is accounted for in India, as the very basics of defining Poverty Line poses a big question mark on the intent of the government machinery. From our observations of income distributions in various countries, we can safely define Poverty Line as 1/3rd of the average per capita income in any nation. Since annual per capita income at current prices in India is around Rs. 33,000, Poverty Line in India should be so defined that a person living at less than Rs. 11,000 per annum, should be accepted as one living below Poverty Line. Therefore for a family of 5, if monthly income is below Rs. 4,500, that family can be described as living below Poverty Line. The so called Poverty Line of Rs. 300 per month per person, as defined by the Government of India, can then be described as ‘Destitution Line’. Similarly, for a family of 5 having a monthly income between Rs. 300 and Rs. 600 per capita

can be grouped as living below the ‘Needy Line’ and those having a per capita monthly income of less than Rs. 200 can be grouped together under the ‘Starvation Line’.

We have powerful spokespersons for ‘Garibs’ in and around the cabinet, starting from the lady with ‘inner conscience’. The Prime Minister himself has been speaking about the need to be ‘more humane’ towards minorities. He has mentioned all minorities, yet every one knows that his party’s vote bank politics are compelling him to concentrate only on Muslims. His advocacy for keeping aside 15% of the resources of any ministry to be spent to uplift the Muslims is a just move, as long as he advocates a similar 15% towards the upliftment of the Dalits. It may be pointed out here that the Muslim community in India has contributed 63% of $418 billion remitted from overseas between 1975 and 2002; that is around $10 billion a year on an average and this figure is steadily increasing every year (Times of India, New Delhi, dated: 09/01/2007). One may therefore

expect a grateful nation to acknowledge this contribution, by offering a 10% premium on the foreign exchange. This will create a fund

substantially larger than Rs. 100,000 crore on this account alone, which should then be spent on Muslims to raise them from their life of indignities. This fund will then be an additional resource over and above the share of 15% (in proportion to their weight in the total population), to be allocated by annual budget to different ministries.

Even in post-independent India, majority of Dalits are condemned to die before they attain the age of 40, apart from the innumerable indignities that they are subjected to during their life time. Therefore, they also have a right to demand a speedy improvement of their conditions. Their

Dalits and Muslims, have the right to demand that at least Rs. 200,000 crore be allocated for their socio-economic upliftment.

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proportion in the population is also around 15%, out of which, 95% of them live below the Poverty Line. Therefore, these two sections of the population, namely the Dalits and Muslims, have the right to demand that at least Rs. 200,000 crore be allocated through a dedicated fund for their upliftment to bring them socio-economically at par with the other sections of the people.

Let Mr. Lalu Prasad Yadav, who styles himself as ‘Garibo ki Messiah’ and Mr. Ram Vilas Paswan, whose vote bank consists mostly of the votes of these two sections – Dalits and Muslims, join us in fighting for their cause. With such powerful spokesmen of the Dalits inside and outside the cabinet, we expect Mr. P Chidambaram will make heroic efforts to find out appropriate resources for these sections of the people. Besides, Mr. Chidambaram has always spoken about his heart being on the right side of the poor, year after year, in all his ‘dream budget’ speeches, while rolling out goodies for the middle, upper-middle and of-course the rich! He is likely to speak once more in the same way. Let his sentiments for the poor be backed up this time, with concrete measures. Additional Resource Mobilisation

Here, The IIPM Think Tank has made some suggestions to raise additional resources to the tune of around Rs. 257,500 crore over and above what the conventional economists at the Finance Ministry may suggest:

1. Since diesel prices in advanced economies are almost around 90% of petrol prices, while it is around 70% in our country, there is scope to increase price of diesel by Rs. 10 per litre, which will add roughly Rs. 55,000 crores to the exchequer.

2. Price of electricity per unit can be raised by Re. 1 which would contribute to Rs.

75,000 crore to the centrally administered resources.

3. There is a serious discussion on abolishing exemptions given to corporate tax, reducing nominal tax from around 34% to 17% in reality. We can safely withdraw most of these exemptions, since global forces have strengthened our corporate sector to such an extent that they can on their own take up the global challenge. Indeed, Mr. N.R. Narayana Murthy has advocated withdrawal of tax exemptions to IT sector

(which may alone contribute Rs. 16,000 crores annually). It has been calculated that exemptions granted on account of corporate

tax, income tax, customs and excise duty and various subsidies (not necessarily going to the poor for whom they are meant), cost the exchequer upwards of Rs. 150,000 crore. Even if 1/3rd of these exemptions are retained as economically meaningful, 2/3rd of the remaining (i.e, Rs. 100,000 crores) may be withdrawn and dedicated to the upliftment of Dalits and Muslims.

4. Imposition of a 25% tax on foreign exchange allowance on out-bound tourists (around 6.6 million expected in 2007-08), will bring around Rs. 27,500 crores.

We have therefore accumulated on these four counts, around Rs. 257,500 crore. Let this fund be not frittered away for satisfying sectional and vested interests and be dedicated towards the creation of employment in rural areas, health care and social insurance and for improvement of primary education of the Dalits and Muslims. Resource Allocation For Additional Measures

1. For full employment among people below the Poverty Line, we need to create

Following our alternative budget exercise, the FM can raise additional fi nancial resources to the tune of around Rs. 257,500 crore.

employment opportunities for 10 crore people. The IIPM Think Tank has calculated that an investment of Rs. 20,000 is needed to create employment of one person in rural areas. We may therefore require Rs. 200,000 crores to create employment in rural areas. Such massive employment in rural areas will increase the supply of commodities exerting downward pressure on prices, which will effectively counter potentiality of inflation due to increase in price of diesel and electricity.

2. Roughly about 1 crore private tutors (1 tutor for every 10 primary school children from Dalit and Muslim families) will be required for extra coaching after school hours. In rural areas, such tutors will be easily available at Rs. 2,500 a month. A sum of Rs. 30,000 crores will be required for this specific purpose.

3. Around Rs. 21,000 crores per annum is foreseen for health insurance, AIDS care and sanitation. Details have been described in our book, ‘The Great Indian Dream’. (2003, Macmillan India, New Delhi)

4. The IIPM Think Tank proposes to allocate the balance of around Rs. 6,500 crores for the improvement of the Indian judicial system for speedy and qualitatively improved delivery of verdicts on cases.

This last point is the most important of all measures proposed by us, so that socio-economic lives of Indians become free from the grip of the criminals and criminalised politicians. Without implementing these judicial reforms, none of the above measures can be achieved with any degree of success. Let us hope that all the spokespersons, we have mentioned here, of the Dalits and Muslims will accept our suggestions and thereby earn a glorious place in the history of post-independent India.

Uncapping an

unprecedented gush

of radical economics!

18

Managing Director, Bengal Ambuja Housing Development Limited, Kolkata

Housing Sector: Have The Budgets Done Enough?Harshavardhan Neotia



A strong correlation between housing onstruction and employment and also between housing construction and income

growth has been observed abroad and also in India. The housing sector contributes as much as 3-4% of nation’s GDP in a growing economy. Reforms in housing sector started rather late in 1999. Also when these were initiated, the stress was mainly on urban housing. Rural housing remained neglected till date even though the national housing policy recommended a number of measures to boost rural housing.

While India eyes a GDP growth rate of nine per cent plus in the next five years, there is still no answer to the housing woes of the economically weaker sections of the society. Whether it is West Bengal, Tamil Nadu or Maharashtra, most states across the country will experience a massive shortage of over 11 million dwelling units for the urban poor in 2007. Maharashtra will have a cumulative shortage of 3.72 million housing units this year. “Over 95 per cent housing shortage is related to the economically weaker sections (EWS),” a senior official in Union Housing and Urban Poverty Alleviation Ministry was quoted as saying by a daily. The shortage of housing in 2007 at the national level stands at 24.71 million out of which 21.78 million shortage relates to the economically weak people, the report said, adding that in the category of lower income group, there will be shortage of 2.89 million housing units. According to the National Building Organisation (NBO), an agency under the Housing and Poverty Alleviation Ministry, there will be an estimated 0.04 million shortage of housing in the middle and high-income category in 2007.

The NBO’s estimation of housing shortage for 2007 in Maharashtra, Tamil Nadu, Uttar Pradesh and West Bengal is 3.72, 2.82, 2.38 and 2.04 million units respectively. The National capital, Delhi, which is on its way to becoming a world-class city, faces a shortage of 1.13 million housing units. Andhra Pradesh, Gujarat, Karnataka and Rajasthan are other

major states where projected housing shortage is 1.95, 1.66, 1.63 and 1 million respectively.

At a time when the Nation needs to take the problem of housing shortage head on, its efforts are stunted by Laws, regulations, and procedures which have evolved on an adhoc basis not only at the national level but also at the state and local government level. Given the wide differences and heterogeneity within the country it is essential that the policy have enough in-built flexibility for it to be relevant for different location and time. At the same time, given the overall environment of greater economic freedom and private orientation of the economy, it should form the basis of greater private sector participation in the housing sector.

This would require action on the following fronts:1. Changing archaic laws 2. Improving the administrative mechanism3. Increasing public-private partnerships4. Simplifying regulatory procedures 5. Creating conditions where more investors

– small and large, national and international, less public and more private – enter the housing sector.

Toady when the Union Budget for 2007-2008 is round the corner, there are lots expectations of the Housing Industry as a whole. Finance ministry may be talking of pruning tax concessions claiming that the government’s flexibility in tweaking tax rates is

limited since it had to ear mark significantly larger amounts for social sector programmes. But at the same time the new National Housing and Habitat policy which is

awaiting the Union cabinet’s approval has suggested a set of measures which would expand the list of tax exemptions, particularly for the urban poor. Taking cue from these suggestions it is hoped, that the government would provide positive impetus to the already robust housing Industry in the country.

Tax concessions on the interest paid on housing loans is one of the major factors cited for the booming real estate sector with individuals queuing up to borrow from

The shortage of housing in 2007 stands at 24.71 million out of which 21.78 million shortage relates to the economically weak people.

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banks to finance a house. To maintain the continuing momentum it is important that the government persists with the tax concessions on housing loans that are currently in vogue. On the other hand citing the lack of availability of credit the new NHHP has suggested the formation a national shelter fund with an initial corpus of Rs. 500 crore. National Housing Bank and HUDCO are proposed to be allowed to raise money through tax-free bonds and those who invest up to Rs. 20,000 a year would be eligible for income tax exemptions. If the move goes through, individuals, who at present park money in Public Provident Funds, National savings Certificate or deposit money in post offices would have another investment option. The policy also proposes concessions to the housing finance companies, banks & companies, which invest in rental housing including serviced apartments, to address the shortage.

To cater to the spiralling housing needs in type one and two cities, the policy states that group housing should be encouraged by societies and co-operatives. The policy proposes that the stamp duty in such cases at the stage of raw land and first sale thereafter would be imposed on a value added basis so that transaction costs are not artificially high to the first purchaser and housing or land remains a liquid asset.

Off late Centre has shown a favourable attitude towards evolving a consensus among state governments on rationalisation of stamp duty on real estate transactions, as it is state subject. High rates of stamp duty levied on real estate transactions by some of the state governments are perceived to be a major reason for undervaluation of property transactions. These efforts need to be pursued with greater vigour and state governments should be made to adopt a more rationalised & uniform regime similar to VAT. Earlier, this year the Tax Consultants Association had demanded that the rate of stamp duty should not be more than 2 percent of the gross value of the transferred property.

Overall growth in the economy is heavily dependent

on the supporting infrastructure. In our country lack of adequate infrastructure has been a handicap for all these years. Given this, infrastructure spending must increase from the current level of 5% of GDP to at least 10% of GDP in five years, and in this direction the figure for 2007-08 should be at least 6% of GDP. In Budget 2006-07, the Government had made changes to the income-tax law to make income from all existing, as well as future investments in eligible infrastructure-related businesses taxable. For this, the Government decided to omit the popular Section 10 (23G) from the income tax law. This change is to come into effect from April 1, 2007 and applicable for assessment year 2007-08. With the budget exercise for 2007-08 already kicking off, the banks have now

asked the Government to re-introduce Section 10 (23G). This provision exempted specified income by way of dividend, interest and long term capital gains

of infrastructure capital funds or infrastructure capital companies from investments in shares and long-term finance to an enterprise wholly engaged in infrastructure business, housing and hotel or hospital industry. As outlined by Mr. B. M. Mittal, Chief General Manager of Punjab National Bank. The re-introduction of Section 10 (23G) benefits would result in finer pricing of loans to infrastructure projects. The borrower would benefit from lower cost of funds as banks may be willing to pass on some of the tax benefit to the borrower in terms of lower interest rate,”

In conclusion it can be said that despite eight years of Housing reforms the attitude towards housing remains as hostile as it could be. The policy is full of hurdles at every turn, in land, in construction, in buying and selling and above all in renting, there are innumerable restrictions, heavy taxes on building materials and unbearable corruption. All these require more meaning full and in-depth measures to be adopted so that the universal developmental goal of a roof over every head and dignified living for each individual can be attained at the earliest.

Despite 8 years of Housing reforms the attitude towards housing remains as hostile as it could be, full of hurdles at every turn.

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Centre for Budget and Governance Accountability, New Delhi

Common Minimum Programme And The Social Sector InvestmentsSibasankar1 Mohanty

The NCMP certainly was an expression of the beginning of progressive prioritisation of the government, especially for the social sector. However, in practice, it appears a grossly inadequate policy directive as it is devoid of mechanisms for the collection of funds to implement its mandate. CourtesyOur experience over last three years show that the government has actually failed to take the social development trajectory far from where it started in 2003-04. In fact, in some cases, the situation has worsened compared to the pre- NCMP era.



The National Common Minimum Programme (CMP) announced by the present UPA Government in May 2004 outlined six

guiding principles of governance to give the economy a quantum leap in social justice. The broad paradigms of these guiding principles are:

• Legal Justice and Social Harmony• Employment led economic growth of at least

7-8% per annum• Welfare and well being of unorganised-sector

workers.• Women’s Empowerment• Equality of opportunity, for socially marginalised

sections of the population• Release of creative energies of productive forces

of society

However, these issues of governance are just baseless promises unless backed by substantial financial commitments. Even after three years since the announcement of the NCMP, it is still relevant to discuss how the CMP is going to be translated into reality, the budgetary implications of the same and the institutional structure to make these promises relevant for the masses.

The purpose of this paper is to look at the progress made so far and the indicators of achievements in the social sector since the announcement of NCMP. However, when we discuss social sector issues, it is also essential for us to keep in mind the promises made by the government in other sectors as well, because at one hand different sectors are so interlinked that it is not worthwhile to discuss sectors in isolation and on the other hand, as far as financial commitments are concerned, the same pie is going to be utilised for allocations in different sectors unless the government takes radical steps to increase its resources through innovative ways.

Therefore, while dealing with the social sector

investments by the government in the light of the CMP, we shall discuss several other sectors, which do not necessarily qualify under the defined social sector bracket, but have a bearing on the social sector commitments of the government. In the present discussion, we highlight some key sectors like Education, Health, Employment and Food Security.

Education6% Of The GDP To Public Spending On Education

The CMP announced an increase in public spending up to 6% of the GDP in a phased manner and at least half of this to be spent on primary and secondary education.

An Additional Investment Of Rs. 44,625 crore Is Needed

The outlay on education needed to take it to around 6 % of GDP from current 2.8% would require an additional allocation of around Rs. 44,625 crore, even at a very conservative estimate basis on the Centre-State share of

around 15: 85 ratio2. At the moment, the deviation in the allocations made by the Centre is to the tune of around Rs. 22,000 crores away from CMP goals. In order to reach the desired levels, an annual increment of Rs. 6804.46 crore must be allocated.

Phased Achievement Of The Promised AllocationThe CMP talks of a “phased manner” to achieve

the 6 % target, but if we assume the increase will be achieved in 2008, the sequential progression in allocations should follow the norms presented in Table 1. The table summarises the financial allocations to be made by the Union Government in different years to realise the goal of public spending on education to the tune of 6 percent of GDP.

The outlay on education needed to take it to around 6 per cent of GDP would require an additional allocation of Rs. 44,625 crores.

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Status Of InfrastructureAt the present juncture, the crisis in the educational

sector is manifold. At the supply side, there is a huge gap in the existing quantum of public provisioning for education. At the demand side also, the issues relating to out of pocket expenditure for providing basic education is increasing. The following tables (Table 2, Table 3 and Table 4) summarise the basic infrastructural inadequacies in the educational system in the country at the primary level.

No. of Class Rooms/Teachers

No of Class Rooms

No of Teachers

0 8.09 1.18

1 14.99 17.51

2 36.23 42.17

3 18.39 18.46

>4 22.3 20.68

Table-2: Distribution of Primary Schools according to No.s of Classrooms and No.s of Teachers in India4

Primary Schools

Primary With Upper

Primary Schools

Primary with UP, Sec& H.

Sec

Upper Primary Only

UP with Sec. H.Sec

Single Teacher Primary Schools 17.51 1.66 1.87 7.72 1.43

Schools Without Drinking Water Facility

23.76 16.11 9.56 21.23 8.67

Schools Without Drinking Water Facility

76.24 83.89 90.44 78.77 91.33

Schools Having Common Toilets for Boys and Girls

36.16 56.93 69.61 44.25 63.61

Schools Having Separate Girls Toilets

20.61 41.86 72.48 32.91 69.31

Schools Having Electricity Connections

14.57 50.74 75.44 20.01 77.86

Schools Having Computers in the School

3.95 10.12 48.73 7.14 35.7

Schools Operating without Blackboards

8.81 6.79 11.43 10.33 6.25

Schools with Libraries 42.54 43.83 52.13 42.23 60.21

Table-3: Inadequacies in the Primary Schooling System in India5

Year ActualAllocations

made by theCentre

Allocations to bemade by the Centre

to realise NCMPGoal of spending

6% of GDPon Education

Gaps in thePresent Level of

Allocationscompared to

what is required

GDP atCurrent

Market Prices

2003-04 10629.7 10629.7 0 2760224

2004-05 13627.4 17434.13 3806.7 3121414 (QE)

2005-06 BE 15791.7 24238.59 8446.9 3529240 (AE)

2006-07 BE 21670.3 31043.05 9372.8 3952749#

2007-08 37847.51 4427079#

2008-09 44651.97 4958328#

#Extrapolated assuming a nominal growth rate of 12 % over the previous year.

Table-1: Financial Commitments Due for CMP Promises on Education3



Health3% Of The GDP To Public Expenditure On Health

The CMP promised an increase in public spending on health to at least 2-3 percent of the GDP over next five years with focus on primary health care. It said that a national scheme for health insurance for poor families would be introduced and the UPA Government would take all steps to ensure availability of life-saving drugs at reasonable prices.

Allocations For Health Increased By Rs. 2000 crore In 2006-07

Given the bad shape of state finances, the responsibility of meeting the target set for expenditure on health in NCMP lies predominantly with the Central Government. The total expenditure

of the Union Government on Health and Family Welfare is projected to go up from Rs. 6251.95 Crore in RE7 2005-06 to Rs. 8127.64 Crore in BE8 2006-07.

As against the CMP-mandated increase in allocations to Health and Family Welfare to the tune of Rs. 5445 Crore, the actual allocations lag far behind. Nonetheless, these allocations have been increased roughly by Rs. 2000 crore, which

1States

Rural Urban All Column 10 Defl ated for 2005-06 prices

Expenditure on Education

as % of Estimated Per capita income

2Male

3Female

4Persons

5Male

6Female

7Persons

10 Persons

Bihar 235 222 230 910 863 890 890 1422.2 34.8

Gujarat 182 160 172 1007 983 996 996 1591.6 8.6

All India 305 286 297 1197 1092 1149 1149 1836.0 13.2

All India Government Schools

219 219 219 509 470 490 490 783.0 5.6

All India Local Body Run Schools

223 223 223 714 621 671 671 1072.2 7.7

All India Aided 693 529 622 1652 165215 1594 1594 2547.1 18.4

Private Schools

All India Unaided Private Schools

902 925 911 1975 1866 1926 1926 3077.7 22.2

Table-4: Average Out of Pocket Expenditure for Free Primary Education in India (Rs. / Year)6

Notes: These Out of Pocket Expenses include, (a) Tuition Fees, (b) Examination Fees, (c) Other fees and Payments, (d) Books, (e) Stationery, (f) uniforms (g) Transport, (h) private coaching, (i) other expenses as described in NSSO 52nd Round (1998)Data presented in Columns 2-10 correspond to the price level 1995-96. Wholesale price index for all commodities has been used as the deflator. Data for per capita income for states have been taken from Rajya Sabha Unstarred Question No. 1045, dated 27.02.2003, and extrapolared as per the growth of GDP

Year ActualAllocations

made by theCentre forHealth and

Family Welfare

Allocations to bemade by the

Centreto realise NCMP

Goal of spending6% of GDP

on Education

Gaps in thePresent Level of

Allocationscompared to

what is required

GDP atCurrent

Market Prices

2003-04 3761.09 3761.1 0 2760224

2004-05 RE 4311.37 9206.87 4895.5 3121414(QE)

2005-06 BE 6251.95 14652.7 8400.7 3529240(AE)

2006-07 BE 8127.64 20098.4 11971 3952749#

2007-08 25544.2 4427079#

2008-09 30990 4958328#

Table-5: Financial Commitments Due for CMP Promises in Health9

#Extrapolated assuming a nominal growth rate of 12 % over the previous year.

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is a step in the positive direction.In the final analysis, however, we find an acute

mismatch between the stated goals and financial allocations made by the Union Government in this regard. To reach the level of the NCMP mandated spending on Health and Family Welfare of 2.5 percent of GDP by the end of Financial Year 2008-09, the expenditure of the Union Government should be 0.625 percent of GDP, which means that in the Financial Year 2008-09, it should allocate an amount equal to Rs. 30990 crore.

Projection Of Investment Required To Keep The Promise

We have assumed the respective shares of the Centre and States in the Total Expenditure under this category as 25:100. It requires an annual accrual of Rs. 5445.78 crore to the existing allocations. The table (Table 5) summarises the financial allocations to be made by the Union Government in different years to realise the goal of public spending on Health and Family Welfare to the tune of 2.5 percent of GDP. Off course, the States also need to increase their spending in this regard as mentioned above and a similar analysis applies in this respect too. However, we shall work out such analysis in respect of the Union Government only as done for the education sector.

Outlay For The National Rural Health MissionThe National Rural Health Mission launched

with a plan outlay of Rs 6075.17 crore in 2005-06 has received an increased outlay of Rs. 8108.47 crore as Plan funds in 2006-07. This substantial increment is indeed a welcome step. However, according to the ministry of health and family welfare, the first year, i.e. 2005-06, is being used as a “preparatory phase” and results would be visible from 2006-07.

Reduction Of Customs Duty On Life-Saving Drugs

The Union Government has taken some positive steps in 2006-07 Budget to bring down the prices of 10 anti-AIDS and 14 anti-cancer drugs by slashing the customs duty to 5 percent. Duty on certain life saving drugs, kits and equipment has also been brought down to 5 percent from the existing level of 15 percent in the Budget proposals for 2006-07. These drugs will also be exempt from excise duty and countervailing duty (CVD). This decisive intervention by the Government in this sector will be very crucial for the welfare of the poor people.

Further, now that we have adopted a restrictive Patent Regime in the country, we need to increase public spending on health even further so that through public research and innovations along with

increased domestic patenting activity, we shall be able to provide cheap drugs to common people.

Increased Allocation For AIDS & TB Control, Polio Immunisation Programmes

The Government has responded positively to these concerns and raised the plan allocation (Budget Estimate) for National AIDS Control Organisation from Rs. 232 Crores (RE) in 2004-05 to Rs 476.5 Crore (RE) in 2005-06 (Expenditure Budget Volume 2). This has further been raised to Rs. 636.67 crore (BE) in 2006-07 (Expenditure Budget Volume 2).

T.B. control programmes have registered an increase in Budget Estimates from Rs. 115 Crore in 2004-05 to Rs. 166.4 Crore and Rs. 184.17 crore in 2006-07 (Expenditure Budget Volume 2).

With the threat of polio re-emerging in Asia (WHO has recently warned that detection of some cases in Indonesia may lead to the disease spreading to south-east Asia), the pulse polio immunisation programme is significant. Budget Estimates on this account has been increased

Now that we have adopted a restrictive Patent Regime in the country, we need to increase public spending on health even further.



to Rs. 1004 crore in 2006-07 from the Revised Estimate of Rs. 806.83 in 2005-06.

EmploymentThe Promise Of 100 Days Of Employment Every Year

The NCMP promised to enact a National Employment Guarantee Act to provide a legal guarantee of at least 100 days of employment every year, at minimum wage, to at least one able bodied member in every rural, urban poor and lower middle class household

After much delay in the implementation of the National Rural Employment Guarantee Act 2005, the scheme was finally launched on 2nd February 2006. For the remaining two months of the ongoing fiscal year, a lump sum of around Rs. 10,000 crore had been allocated for the scheme, diverted from SGRY and Food for Work

Programme to the tune of Rs. 5500 crore and Rs. 4500 crore respectively.

An estimate prepared by CBGA reveals that for the effective implementation of the NREGA in 300 districts in 2006-07, the Central Government would require an allocation to the tune of at least Rs. 22,500 crore. The present allocation is way behind the targets.

In his budget speech for the year 2006-07, the Finance Minister announced an allocation of Rs. 14,300 crore for rural employment generation schemes. Of this total allocation, Rs. 11,300 will be spent under NREGA and Rs. 3000 will be spent under Sampoorna Grameen Rojgar Yojana (SGRY). The need-assessment done by several organisations including NAC indicates that much more than the amount allocated is required even if the government does not expand the implementation of NREGA beyond the 200

Public Provisioning Of Health In India Some Facts, Some Targets And Some Gaps

• The Tenth Plan had set very ambitious physical targets to reduce Infant Mortality Rate to 45 per 1000 by 2007 and by 2012 the target has been set at 28 per 1000 live births.

• Tenth Plan also targets to bring down Maternal Mortality Rate to 2 per 1000 live births by 2007 and to 1 by 2012.

• Against a target of 406 new PHCs in 2005-06, only 135 could be built and against a target of 575 new CHCs, only 199 could be built. For new CHCs, only 14 states and UTs could be covered as against the coverage target of 23 states and UTs.

• In the year 2002, there were around 89 hospital beds for one lakh population compared to 97 beds in 1993.

• In the year 2002, there were around 15 hospitals for a million population compared to 17 hospitals in 1994.

• In 1999, only 33.6 % births were delivered in medical institutions.• For running a comprehensive nutrition programme, the funds required during the Tenth Plan

period was Rs. 6196.92 crore as against Rs. 1203.65 crore available for the purpose.• Annually, around 4.17 lakh people in the country die every year because of T.B. (Economic

Survey 2004-05).• Around 51.34 lakh people were living with HIV/AIDS by the end of 2004 (Economic Survey

2005-06).• Almost one out of every 100 adults (age group15-49) suffers from HIV/AIDS. There are nearly

20-25 million cancer cases at any given point of time and every year 7-9 lakh new cases of cancer are detected and approximately 4 lakh deaths occur due to cancer.

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districts specified by the Planning Commission.If all rural families are willing to become members

the scheme, the total amount that needs to be allocated by the government in the Union budget 2006-07 for the implementation of NREGA, would be around Rs. 55,000 crores (approximately).

However, we can presume that not all rural families would go for the scheme; therefore the amount would be lesser than the above estimate but at the same time can be assumed to be an upper limit of the allocated amount, while Rs. 22,500 crores can be the lower limit.

The rural employment situation is especially bad in India (see Table 6). With a lower agricultural growth and increasing informalisation of the labour force, the livelihood options in rural India have shrunk in recent years. While the government has been taking credit for the implementation of the rural Employment Guarantee Act, its commitment for an effective improvement in the employment situations in the rural India is doubtful.

In the year 2005-06 BE, the allocations of the government for the Food for Work Programme was just Rs. 5400 crore only, which was too less compared to the distress situations in the rural areas. Not only that, but to all our embarrassment, a substantial part of this amount remained unspent for quite a long period of the year. Finally, for the notification of NREGA on 2nd February, the Government diverted Rs. 4500 crore from FWP.

Reduced Allocation For SGSY & SGRYTwo of the flagship programmes for creating

dignified employment opportunities in rural areas namely, SGSY and SGRY have also bore the brunt of the government in the last fiscal year.

Items 2006-07

Estimated nu 54,750 mber of rural population in the 300 districts selected on the basis of rural concentration (in crores)

40.15

Estimated number of rural households if average size of HH is taken to be 5.5 (as given by the census 2001) (in crores)

7.30

Number of person-days employment to be generated (if one from every HH is given employment) (in crores)

730

Total cost at 2004-05 prices (in Rs crores)(Assuming that all the indirect costs need to be borne by the state governments) administrative costs

73,000+

Amount to be Allocated in the Union Budget Towards Direct Costs (75:25 ratio between the Centre and the state government) (in Rs. Crores)

54,750

Table 6: Direct Costs of NREGA for All Rural Households in 300 Districts

Note: The above approximate estimation is based on the assumption that the next 100 districts are chosen based on the urbanisation indicator. Districts with more rural percentage of population have been selected to arrive at this estimation. Therefore the estimates are rough approximates. The data source is based on census 2001 figures and estimates. It is also assumed, based on the general pattern that the indirect costs involved in the scheme may include another 6% of the above for maintenance of the administrative structure at different levels of implementation as well as 4% of it towards publicity and advertisement.Source: CBGA Report on Implementation of NREGA

Round Usual Status Males CWS CDS Usual Females CWS

CDS

60th (2004) 46 57 81 89 90 117

60th (2004) Total 53 64 88 Total

50th (1993-04) 45 52 67 83 84 105

Round Usual Status Males CWS CDS Usual Females CWS

CDS

60th (2004) 24 47 90 22 45 93

60th (2004) Total 23 46 91 Total

50th (1993-04) 20 30 96 14 30 56

RURAL

URBAN

Note: Unemployment Rates (number of persons or person days unemployed per 1000 persons or person days. CWS: Current Weekly Status; CDS: Current Daily Status

Table-6: Unemployment Rates* for 50th round (1993-94) and 60th round (Jan - June 2004) of the NSSO10



The budgetary allocations for SGRY was reduced from Rs. 4590 crore in the year 2004-05 BE to Rs. 3600 Crore in the year 2005-06 BE. Though the government had increased the allocations in the revised budget, it did not spend a substantial amount till February 2006 and diverted Rs 5500 crore for the purpose of NREGA notification.

The allocations for SGSY were also reduced from Rs. 900 crore in 2004-05 BE to Rs. 862 crore in 2005-06 BE. In 2006-07 BE the allocation for SGSY increased to Rs 1080 crore in absolute terms, but as a proportion of total budgetary expenditure it declined from 0.32 % in 1999-2000 RE to 0.19% in 2006-07 BE.

Urban UnemploymentThe growth of

unemployment in urban areas also has jumped up from 0.49% per annum in the period 1983-1993 to 3.45% in the period 1993-2000. In the light of the growing unemployment problem in urban as well as semi-urban areas, an extension of Employment Guarantee Act was essential to cover urban areas as well.

Based on the current daily status, NSS 60th round estimates the unemployment rate in 2004, to be at 9.0 % for males (up from 5.6 per cent in 1993-94) in rural areas and 8.1 % (up from 6.7 per cent in 1993-94) in urban areas. The corresponding figures for females were 9.3 per cent (up from 5.6 per cent) in rural areas and

11.7 per cent (up from 10.5 per cent) in urban areas.

Over the years, the government has in fact announced several schemes and popular programmes for employment generation both in rural and urban areas. Many schemes have been stopped in between or clubbed with other ongoing schemes, but the overall approach towards employment generation have been the same across governments over the years.

• More than 27 million people in the country are jobless (7.32 % of the workforce)

• Projections: In 2007 there would be 40 million jobless and in 2012, 70 million jobless.

Note: Figures for 2006-07 represent BE and for other years Revised Estimates have been taken.

Table-8: Allocations for Employment Generation Programmes in Rural and Urban Areas11

Rural Employment

Urban Employment (Swarna Jayanti

Sahri Rojgar Yojana)

Total Employment Generation

Programmes

1998-99 RE 3690.02 162.28 3852.30

1999-00 RE 3727.30 126.35 3853.65

2000-01 RE 2801.22 95.03 2896.25

2001-02 RE 4591.39 45.50 4636.89

2002-03 RE 9870.56 105.00 9975.56

2003-04 RE 10129.18 105.00 10234.18

2004-05 RE 7118.00 122.00 7240.00

2005-06 RE 11 700.00 159.99 11859.99

2006-07 BE 12870.00 250.00 13120.00

30

Reliving TheGreat

IndianIndianDream

Food And Nutrition SecurityComprehensive Medium Strategy For Food & Nutrition Security

The NCMP promised a comprehensive medium term strategy for food and nutrition security, with the objective of universal food security over time. It was also promised that the PDS system will be revamped and involve women as well as ex-servicemen’s cooperatives in its management. Apart from that an ‘Antodaya’ card was promised for all households at the risk of hunger

Reduced Annual Per Capita Net Availability Of Food Grain

Between 1950-51 and 1997-98, the annual per capita net availability of food grain increased from 150 kg to 186 kg in 1991 and 183 kg in 1997. By 2003, it had fallen to 159.7 kg. Thus, an average Indian family of 5 is availing annually nearly 90 kg less of food grains today compared to seven years ago. This phenomenal drop has been mainly due to an increase in the export of the food grains. Again, the purchasing powers of a large chunk of the population have declined due to an increase in the prices.

Declining Purchasing PowerThe following table (Table 9) gives a picture of

declining purchasing power due to an increase in the price level of most of the basic commodities being used by the majority of the population. This clearly shows a contradiction between the government claims about around 3-5 percent inflation rates and the reality faced by the majority of the population, especially those for whom a major part of the income goes towards food and other consumption items.

In the recent years, we have also witnessed starvation deaths among tribal communities in Orissa, among jobless tea garden workers.

Recently, in a landmark case for defining starvation deaths, the NHRC has sent a notice to the Andhra Pradesh government after CSOs presented documentary

evidences of starvation deaths in Pulimamidi village of Medak district near Hyderabad.

Decline In SubsidiesThe expenditure estimated towards provision of

subsidies for different purposes declined from Rs 46874 crores in 2005-06 RE to Rs.46213 crores in 2006-07. As a proportion of total budgetary

expenditure, it declined from 9.2 % to 8.2% during the period. The food subsidy in absolute terms have increased by Rs. 1000 crore over last year’s figure but as a proportion of total budgetary expenditure, it declined from 4.6 % to 4.3 %.

The increase in food subsidy in absolute terms may be attributed to the targeting of BPL households. Targeting of food subsidy to BPL population has not only reduced the per capita food grain availability

Items Price per Kg in Rs.As on 18 May

2005

Price per Kg in Rs.As on 15 May

2006

% increase in Prices over

the year

Rice Ordinary 12 14 16.67

Wheat 8 10 25.00

Gram 23 30 30.43

Tur 30 34 13.33

Sugar 19 22 15.79

Packaged Salt 8 8 0.00

Groundnut Oil 81 85 4.94

Mustard Oil 49 49 0.00

Potato 7 8 14.29

Tea loose 100 107 7.00

Table-9: Price Chart of Some Essential Commodities in Delhi for 18 May 2005 and 15 May 2006 12

An average Indian family of fi ve is availing annually nearly ninety kilo grams less of food grains today compared to seven years ago.



to the population but has also failed to achieve the stated objective of reducing the subsidy bill of the government. In fact the increase in food stocks held by the FCI in the recent years (an outcome of targeting of PDS) has increased the carrying cost of FCI operations and thus has lead to an overall increase in the food subsidy bill of the government, which stood at 4.45% of Centre’s receipts in 1990-91 and had increased to 9.98% of the same by 2002-03. This year the government is planning to spend Rs. 24200 crores towards food subsidy.

The Finance Minister this year is keen to cut subsidies on all fronts. As a proportion of total budgetary expenditure, the combined fertiliser subsidy declined from 3.4% to 3.1% and on other subsidies, from 1.26 % to 0.84% over 2005-06 RE. This has a detrimental impact on the growth of farm sector in our country. A recent study conducted by a CSO namely Movement against State Repression, reveals that between 1997 till 2005, around 40000 farmers have committed suicide in Punjab alone (agriculturally the most advanced state), reeling under harassment from moneylenders and commission agents.

ConclusionThe NCMP certainly was an expression

of the beginning of progressive prioritisation of the government, especially for the social sector. However, in practice, it was a grossly inadequate policy directive of the government at the centre in a sense that it never highlighted any mechanism for collection of funds for implementing the programmes mandated in it.

Our experience over last three years show that the government has actually failed to take the social development trajectory far from where it started in

2003-04. In fact, in some cases, the situation has worsened compared to the pre NCMP era. The Government is trying to find an escape route through its commitments for complying with the Fiscal Responsibility and Budget Management Act. However, the government is only interested in doing so through a control over the expenses and neglecting resource mobilisation.

The government also admits that the total tax revenue could go up by around 50 percent if the unnecessary tax exemptions and incentives given to the big business community are done away with. The estimated tax revenue foregone in the year 2004-05 alone due to these incentives to the

Year Food Fertiliser Subsidy Others Total SubsidyTotal Of which, Sale

of fertiliser atconcessional rate

to the farmers

2000-01 RE 3.7 4.2 1.3 0.31 8.3

2001-02 RE 4.9 3.3 1.2 0.27 8.4

2002-03 RE 5.9 2.7 0.8 2.28 10.8

2003-04 RE 5.3 2.5 0.8 1.64 9.5

2 0 0 4 - 0 5 RE

5.2 3.1 1.0 1.02 9.3

2005-06 RE 4.6 3.4 1.1 1.26 9.2

2006-07 BE 4.3 3.1 1.0 0.84 8.2

Table-10: Subsidies on different items as proportion of total Expenditure13

Tax exemptions/ incentives/ deductions under

Estimated Revenue Foregone

1 Customs Duty 92,561

2 Corporate Income Tax 57,852

3 Excise Duty 18018

4 Personal Income Tax 11,695

5 Co-operative Sector Tax 1534

6 -(Related to Export Credit) - (35,430)

Total Revenue Foregone 1,58,661

Total Tax Revenue collected in 2004-05 3,06,021

Revenue foregone as % of Tax Revenue collected

51.8 %

Table -11: Estimate of Tax Revenue Foregone Due to Tax Exemptions/ Incentives/ Deductions (in the Central Government Tax System) in 2004-0514

32

Reliving TheGreat

IndianIndianDream

References1The author is immensely indebted to the collective contributions made by all the researchers at CBGA in general and Mr. Nandan Kumar Jha particularly for their support in doing research on the figures and numbers used in this write up. The author was instrumental only in collating all these information and presenting the major concerns raised in this paper. The views expressed here are the collective understanding of the individual researchers at CBGA and not necessarily those of CBGA as an institution. For more details on all these issues, please see CBGA Response to Union Budget 2003, 2004, 2005, and 2006. or contact < [email protected] >2It is to be emphasised here that the estimate is only a conservative one and keeping in mind the extent of crisis the state governments are facing at their fiscal front, one can not expect the states to bear 85% of the financial burden to meet the NCMP target.3CBGA Response to Union Budget 2006-07 & Source: Compiled on the basis of information given in Economic Survey 2005-06 (Tables 1 0.2 and 1 0.3, page: 204-05)4Elementary Education in India, Analytical Report, NIEPA 20055Elementary Education in India, Analytical Report, NIEPA 20056Compiled from NSS 52nd Round7Revised Estimate (of the Budget)8Budget Estimate9CBGA Response to Union Budget 2006-07 & Compiled on the basis of information given in Economic Survey 2005-06 (Tables 10.2 and 10.3, page: 204-05)10Economic Survey 2005-06 (Tables 10.4 and 10.5)11Expenditure Budget Vol-II12Price Monitoring Cell: Department of Consumer Affairs, Government of India13Expenditure Budget Volume I, Statement 414Annexure 12, Receipts Budget, Union Budget 2006-07

business community was Rs. 158661 crore which is sufficient to universalise elementary education in the country as per the norms laid down in the Tapas Majumdar Committee recommendations or

running an NREGA in its true spirit for almost three years. Issues like enactment of a comprehensive Bill for unorganised sector workers is still to be taken up.

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34

Centre for Enquiry into Health and Allied Themes

Research Centre of Anusandhan Trust, Mumbai

ChangingHealth BudgetsRavi Duggal



Why Budgets Are Important?The trajectory of public health budgets is a good predictor of what is happening to the public health system. For instance post Alma Ata, where India signed the Health For All by 2000 Declaration, huge investments were made in the public health sector, especially in rural areas under the Minimum Needs Programme. This raised public health spending up to 1.5% of GDP by mid-eighties and increased access to public health services as shown by the 1987 NSSO data on morbidity and utilisation. Subsequently health outcomes like Infant Mortality Rate and Life Expectancy also showed good improvements and the rural-urban gap also began to narrow. But the neo-liberal economic reforms beginning 1991 set in a process of declining allocations for public health sector and reversed this process.

Thus public health budgets in a scenario of a neglected and declining public health system become key instruments for public health advocates.

Collapse Of Public Health System: Declining Expenditure Cause Of Concern

There is a growing interest in discussion and analysis of health budgets and health expenditures for two reasons.

Firstly, the economic reforms of the nineties have created a trajectory of public health spending that shows a downward trend both in terms of share of the Government’s budget as well as a proportion of the Gross Domestic Product. Prior to economic reforms in the mid-eighties (1986-87) public health expenditures had peaked 1.6% of the GDP and was 3.95% of government’s budget. By 2001 these figures read a dismal 0.9% and 2.7%, respectively, and further down to 0.9% and 2.4% in 2005 budget estimates. What was worse was the decline in new investments by the Ministries of Health as reflected in the decline in capital expenditures from a robust

12% in 1986-87 to a mere 4% in 2000-01 and only a slight improvement in 2004-05 at 5%1

Secondly, the use of the public health system during the decade of 1987 and 1996, for which national data is available via the 42nd and 52nd Rounds of the National Sample Survey (NSS) of the Government of India, shows a shocking decline of over 30% in proportion of patients seeking care in public health institutions.2 This decline in use of public health facilities was precipitated by the neglect and subsequent collapse of the public health system due to its under-financing in the nineties.

The two reasons are closely linked. The declining investment and expenditures in the public health domain have created a scenario where people, especially the poor, have moved away from the public health system because the latter cannot meet

their needs and they often have had to face denial of health care in public health institutions. Further, since 1998 with user fees being charged in many states under the so called health reform

policies dictated by World Bank and allied agencies, the access to public health care for a vast majority of the poor became even more difficult. The NSS data also indicates that between the two rounds the rate of non-utilisation for seeking health care for illness increased by one-fifth and for nearly half the hospitalisations patients had to either obtain loans or sell assets to seek health care.

Thus reviewing health budgets can become an important tool for monitoring performance and deficiencies of the public health system and then use that analysis to bring in changes, which would strengthen the public health system.

Trends In Public Health Spending Table 1 shows a historical trend of public and private health expenditures in India. It is evident that private financing, largely out-of-pocket burden of households, has been the predominant source of

The reforms in 90’s have resulted in a downward trend both in terms of share of the health budget as well as a proportion of the GDP.

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financing health care, though during the eighties public financing picked up substantially and did show the potential for taking the public health sector to new heights. But at the turn of the nineties the World Bank led economic reforms (1991 onwards) set in a trend where the private sector has taken control of the health sector in India at the cost of the public health sector. The private sector in health post-nineties is indeed very different. The small element of philanthropy has completely disappeared and corporate control of the health sector is evident - pharmaceuticals, corporate hospitals, privatisation of public hospitals, medical tourism etc.

This is contrary to global experience. For example in the OECD countries all of which, except USA and Turkey, have universal access with equity for

health care, the proportion of public spending is between 70 and 80 per cent and in these countries the entire population gets access to basic health services, including referral care and drugs, without any payment at the point of delivery. In all these countries all health care resources are pooled and spent rationally under a regulated environment. In India public health expenditure has always been less than one-fourth as a proportion of total health spending; presently estimated at an all time low of 16%. Out-of-pocket burden on households has been the main source of financing health care in India and this has led to a lot of indebtedness and pauperisation in the country.

As depicted in the above box no. 1, India ranks sixth from the bottom in terms of public health spending amongst all countries.

Increasing Out-of-Pocket Expenditure: Pauperisation Of Masses Until 1991 public health budgets moved in a gradual upward

trajectory gradually expanding access to public health care. But budgets after 1991 have set in a linear downward trend and this has drastically impacted the public health system, has affected adversely the vast majority of the poor who are the main users of the public health system and have forced them to migrate to the private health sector which often pushes them into the vicious trap of

Serial No.

Bottom of the Public Health Expenditure

Public Expenditure on Health % of Total 2002

1. Guinea 15.5

2. Iraq 16.9

3. Cambodia 17.1

4. Myanmar 18.5

5. Sudan 20.7

6. India 21.3

Box1: Countries Spending Lowest on Public Health: India at Rock Bottom

Source: 2005 /World Development Indicators, The World Bank.

1951 1961 1971 1981 1986 1991 1995 1998 2000 2003 2004 2006 BE

Health Expenditure Rs. Billion

Public Private

0.22 1.08 3.65

3.35 10.99

12.86 52.84

29.66 90.54

53.50 146.98

85.65 278.59

126.35 459.00

172.16 835.17

201.21 1282.8

216.19 1450.0

301.21 1850.0

Health Expenditure as per cent of GDP

Public Private

0.25 0.71 2.25

0.84 2.60

1.05 4.06

1.19 3.61

1.04 2.88

0.93 3.04

0.91 3.30

0.88 4.76

0.89 5.69

0.85 5.75

0.91 5.61

Private: Public ratio (times)

3.4 3.3 4.1 3.1 2.8 3.3 3.6 5.4 6.4 6.7 6.2

Table 1: Growth of Private Health Expenditures in India in Comparison to Public Health Expenditures 1951-2006

Source: Public expenditures from Finance Accounts of State and Central Governments except 2004 and 2006 which is from CMIE - Public Finance 2005, and private expenditures from National Accounts Statistics of CSO, GOI, various years; for 2004 and 2006 private sector estimated by author; BE=Budget Estimate

India occupies a dismal sixth position from the bottom in terms of public health expenditure amongst all economies.



indebtedness. At the other end of the spectrum the private health market is booming, partly fueled by private health insurance which is experiencing presently a growth rate of over 30% per annum, and India is becoming a major international destination for what is disgustingly referred to as medical tourism3.

The total value of the health sector in India today is over Rs. 2150 billion or US$ 49 billion. This works out to about Rs. 2000 per capita which is 6.5 per cent of GDP. Of this 16 per cent is financed by Central and State Governments, 4 per cent is from social insurance, 1 per cent private insurance and the remaining 79 per cent being out of personal resources as user fees and purchase of medical commodities and services (95 per cent of which goes to the private sector). Two-third of users and 70 per cent of them are from the poorest sections. The tragedy is that in India, as elsewhere, those who have the capacity to buy health care from the market most often get health care without having to pay for it directly (like employees of the government or most employees of the organised sector), and those who are below the poverty line or living at subsistence levels are forced to make direct payments (daily wage earners, peasants and agricultural labourers, petty vendors etc.) often with a heavy burden of

debt, to access health care from the market. We need to change this situation and this can only be done under a public mandate which pools together all the health resources and organises the health sector into a regulated entity, whether public or private, to serve common interests. India spends a lot of money on health care, over 6% of GDP. Since 80% of this is out-of-pocket and mostly on the private sector a substantial chunk is wasted in a wide range of irrational medical practice. We need to reign in these resources into a common pool

and reorganise the entire health system for the common good. After all health is a public good or social good and we must not forget this.

Disparities In Public Health SpendingAnother discerning issue is rural-urban disparities in public health spending. At one level the overall allocations to rural areas is grossly disproportionate to its population and at another level the activities and programmes to which the small rural health expenditures are allocated is highly skewed in favour of family welfare and against medical care. This is reflected in the type of health care facilities one sees in rural and urban areas - the former have PHCs, which focus on preventive and promotive programmes, and the latter have dispensaries and hospitals, which are mainly curative oriented.

The total value of the health sector in India today is over Rs.2150 billion or US$ 49 billion. This works out to about Rs.2000 per capita.

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Disaggregating public health expenditure into rural and urban is not easy because of the way in which health budgets are structured. In Table 1a we have done this exercise for one state from each region of the country as an illustration using the functional knowledge of how each programme operates in these states.

Budget 2005-2006When the United Progressive Alliance (UPA) government came to power in mid 2004 a new hope emerged because the manifestoes of both the Congress and the CPI(M) talked about increasing public health investments and this even got reflected in the Common Minimum Programme (CMP) of the UPA coalition.

In recent months the political economy of health care has generated the hope of bringing about some significant changes. The Common Minimum Programme of the UPA coalition at the Centre had envisaged raising public health expenditure in the next few years to between 2% - 3% of GDP from the current 0.9% with a strengthened focus on primary health care. The first budget of the UPA government failed to address this issue. In the meanwhile the Jan Swasthya Abhiyan with the support of the National Human Rights Commission brought into focus the issue of health care as a right and highlighted the denial of health care within the public health

system through public hearings conducted across the length and breadth of the country between June and December 2004.

While this exercise was happening and states were being criticised for their failure to deliver basic health care to the people, the Central Government came up with the idea of a National Rural Health Mission (NRHM) to address the

primary health care needs of the rural masses. The National Advisory Council made this a priority issue and pushed the Government to expedite the commitments made in the CMP. A number of consultations were held where experts from across the country deliberated the strategies for making this mission a success. The key elements of the

States/ Type ofExpenditure(Row Total fi g.in Rs. millions)

Medicalcare*

PublicHealth

FamilyWelfare #

MCH C a p i t a l **

TOTAL

Rural 5.71 60.00 49.97 60.00 0.78 32.51

Maharashtra Urban 94.29 40.00 50.03 40.00 99.22 67.49

Total 7581.82 7461.46 1305.36 207.99 960.83 17517.48

Rural 51.90 51.00 63.87 51.00 100.00 55.68

Mizoram Urban 48.10 49.00 36.13 49.00 0.00 44.32

Total 497.36 95.20 64.88 5.96 41.03 704.44

Rural 46.89 80.00 90.20 80.00 53.45 58.89

Orissa Urban 53.11 20.00 9.80 20.00 46.55 41.11

Total 3082.14 787.32 697.47 28.90 378.24 4974.07

Rural 42.47 66.00 65.46 0.00 45.40

Punjab Urban 57.53 34.00 34.54 100.00 54.60

Total 5331.71 411.81 359.87 0 1.31 6104.71

Rural 18.96 54.00 73.07 54.00 75.01 35.01

Tamil Nadu Urban 81.04 44.00 26.49 44.00 24.75 64.66

Total 8181.76 1316.74 2192.25 186.83 483.35 12360.95

Rural 39.47 73.00 72.80 73.00 90.66 50.03

Madhya Pradesh Urban 60.53 27.00 27.17 27.00 9.34 49.96

Total 5425.96 1161.96 1018.05 0.10 182.93 7789.02

Table 1 a: Rural - Urban Inequities in Public Health Expenditures for Selected States - Percentages, and Totals in Rs. Millions for 2002-03 Actuals

* includes health services both allopathy and other system of medicines, minor head includes ESIS, Medical education Dep. Drug manufacture; # excluding MCH Programme. ** Includes capital expenditure of Medical, Public Health and Family Welfare Note: For about two-thirds of the expenditure there is a clear rural-urban indication in the budget; for the rest we have used our functional knowledge of programme implementation to allocate proportions to rural and urban areas. Source: Finance Accounts 2002-03, respective states.

The CMP had envisaged raising public health expenditure in the next few years to between 2% - 3% of GDP from the current 0.9%.



discussion focused on comprehensive primary health care, village/hamlet level health worker christened as ASHA (Accredited Social Health Activist) and decentralisation via panchayats. The process of implementing this has begun in a few states and we have to track and see what happens at the ground level. The Jan Swasthya Abhiyan, the Indian chapter of the Peoples’ Health Movement, which has been interfacing closely with government through the NRHM and the NHRC has set up a NRHM Watch and is closely monitoring its progress in a number of states.

Populist Provisions In The Budget?The Finance Minister in the 2005-06 Budget

speech4 said that the increase (Rs. 1860 crores) over the previous budget will finance the NRHM component. This overall increase of 24% in the budget appeared substantial and if it were to be divided equally among all PHCs then each PHC

would get additionally about Rs. 8 lakhs, an amount adequate to solve the problems of the average PHC. However the budgetary allocations belie this fact when we see that the increase for the HIV/ AIDS programme was 105% from Rs. 232 crores in 2004-05 to Rs. 476.5 crores in 2005-06. Similarly for the RCH programme the increase was

a whopping 94% from Rs. 710.51 crores to Rs. 1380.68 crores, for medical education also a high of 50% from Rs. 912.82 crores to Rs. 1360.78 crores and as

much as 80% for Indian Systems of Medicine and Homoeopathy (AYUSH) from Rs. 225.73 crores to Rs. 405.98 crores. Just these four programmes account for Rs. 1543 crores (or 83%) of the increased amount of Rs. 1860 crores. Except for the RCH programme the others have very little relation to the NRHM provisions.

Thus the Finance Minister’s statement in the budget speech was clearly a populist pronouncement and like all such pronouncements of past budgets

A 0.1% Tobin tax on all fi nancial transactions (worth Rs. 600 billion) per day would generate Rs. 60 crores daily for social sector budgets.

Rupe

es

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similar to the various versions of health insurance packages of different finance ministers, sickness assistance funds etc. is a mirage.

The overall budget of the Ministry of Health and Family Welfare for the year 2004-05 and 2005-06 is outlined in Table 2.

But this is only a small part of the story, infact only one-sixth of the story. It is the state governments which account for the remaining five-sixths. We often forget this fact when looking at national health budgets and public health spending and hence focus a large part of our energies on advocating with the Central Government. While this may have worked to some extent given the fact that in the last few years the Central health budget has moved from a share of 12% of total public health spending to over 16% presently, this does not have an impact on the national health situation significantly.

States Worst AffectedThe situation of state governments is getting

from bad to worse where their health budgets are concerned (see Table 3) and this is largely because we have ignored state health ministries in our advocacy strategies, except for few sporadic instances. Thus the major impact on public

health spending policies can be analysed when we focus our attention on tracking state health budgets. So let us be cautious in our approach and strategy of budget advocacy.

Table 3 clearly demonstrates that without exception state governments are neglecting public health as is evident with the declining trend of health expenditures post 1991. However the commitment of Central funding shows an upward trend but we need to be cautioned here as this upward movement is to a fair extent fuelled by aid and debt, which is also showing an increasing trend.

How Can We Change The Forthcoming Budget ?What should we advocate for the next fiscal year?

CMP’s Social CommitmentWe need to work at two levels. First we should

continue to use the CMP mandate of the UPA to demand progressive increase for health allocations to 2% of GDP in the next fiscal year.

We should raise this issue prominently to assess the forthcoming health budget. We must demand from the Centre as to how they plan to reach that level of financing and

how they will get the state governments to more than double their commitments as per the CMP promise.

Resource MobilisationIt is not very difficult to raise additional resources

if the government has some commitment to the social sectors. A health cess of 2% on sales turnover of health degrading products like alcohol, tobacco products like cigarettes, guthka, beedis, paan masalas etc. which together have a turnover estimated at Rs. 1000 billion5 would itself generate Rs. 20 billion which is 8% addition

Category Budget 2004-05

Budget 2005-06

Medical and Public Health 3103.12 4253.84

AYUSH 225.73 405.98

Family Welfare 6696.37 7769.01

Gross Total Health 10025.22 12428.83

Grants to States and UTs 4663.00 5158.00

Total Health Central Govt. 5362.22 7270.83

Less recoveries (-)1587.10 (-)1741.72

Net Health Central Govt. 3775.12 5529.11

Table 2: Demand for Grants of Ministry of Health and Family Welfare (Rs. Crores)

Source: Budget 2005-06, Demand for Grants, Demand Nos. 47, 48, 49, Ministry of Finance, GOI, New Delhi, 2005

A health cess of 2 per cent on sales turnover of alcohol and all tobacco products would itself generate Rs. 20 billion.



to the existing health budgets of central and state governments combined. Similarly, the financial transaction tax (Tobin Tax) introduced by the Finance Minister in 2005 needs to be expanded and earmarked for social sector expenditures only (this should be an additional allocation

and should not entail reductions from existing allocations out of present tax revenues). India is a rapidly growing financial sector economy and daily transactions in securities (Government, stock market and forex) alone are estimated at Rs. 350 billion per day and other cheque and

State/Year 1981 1987 1991 1996 1998 2001 2003 2005 2006

Andhra Pradesh 5.80 7.88 5.53 4.65 5.44 4.74 3.96 3.53 3.57

Arunachal Pradesh 5.91 9.77 4.89 4.66 5.04 NA 4.68 4.45 3.19

Assam 3.96 10.21 NA 5.84 5.87 4.66 3.69 3.06 3.67

Bihar 3.78 8.49 5.10 5.79 5.24 4.01 3.17 3.24 3.47

Chhattisgarh - - - - - 4.13 3.99 3.74 3.89

Goa, Daman & Diu 7.19 13.45 8.70 5.39 4.89 3.90 4.02 3.27 3.87

Gujarat 4.38 9.58 5.03 4.70 4.57 3.38 3.21 3.05 2.98

Haryana 4.33 8.25 4.11 2.95 3.27 3.26 2.88 2.59 3.11

Himachal Pradesh 6.63 13.50 3.32 6.16 7.04 5.64 4.50 5.08 4.90

Jammu & Kashmir 3.79 12.50 5.56 5.50 4.97 4.89 5.30 4.78 4.79

Jharkhand - - - - - NA 4.18 3.65 7.25

Karnataka 3.79 8.23 5.40 5.28 5.85 5.11 4.17 3.49 3.73

Kerala 6.56 9.85 7.21 6.53 5.68 5.25 4.74 4.71 5.08

Madhya Pradesh 4.94 10.11 5.16 4.81 4.57 5.09 4.11 3.39 3.84

Maharashtra 4.85 9.38 5.13 4.56 4.29 3.87 3.71 3.51 3.55

Manipur 2.60 12.61 4.38 4.83 4.48 4.82 2.89 3.72 3.36

Meghalaya 6.25 13.25 6.26 6.19 6.86 5.65 5.88 5.23 5.24

Mizoram 7.89 11.85 3.50 4.18 NA 4.96 5.01 3.96 4.25

Nagaland 5.39 10.88 5.96 5.95 5.68 4.87 4.65 4.68 4.64

Orissa 5.17 8.50 5.13 5.16 4.82 4.15 3.75 3.90 4.34

Pondicherry 9.05 10.01 7.82 0.03 0.04 NA NA NA NA

Punjab 3.67 10.52 6.73 4.62 4.93 4.54 3.54 3.10 3.31

Rajasthan 4.85 14.48 6.50 5.70 7.97 5.16 4.24 3.94 4.65

Sikkim 4.49 6.44 7.89 2.72 1.92 3.67 2.03 2.56 2.50

Tamil Nadu 6.18 10.04 6.91 6.29 6.28 4.86 4.10 4.20 4.76

Tripura 2.51 7.37 5.18 14.74 4.79 4.04 3.79 3.79 5.76

Union Government 0.22 0.29 0.56 0.46 0.52 0.77 0.76 0.83 1.12

Uttar Pradesh 4.69 9.08 6.31 6.03 1.74 3.98 3.75 4.49 4.94

Uttaranchal - - - - - 3.08 3.77 4.34 4.49

West Bengal 6.30 9.73 8.37 6.43 NA 5.63 4.95 3.94 4.78

All India 1.52 3.95 2.93 2.01 1.75 2.77 2.41 2.42 2.77

Table 3: Health Expenditure of State Governments as a per cent of Total Government Expenditure 1981-2006

Sources: Up to 1987 is Combined Finance and Revenue Accounts, Comptroller and Auditor General of India GOI, respective year; For year 2001 is State Finance A Study of Budget of 2002-03, RBI; For year 2003 - 2006 is Public Finance CMIE, 2005 and State Finances, RBI, 2006.

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financial instruments another Rs. 250 billion daily6 and a 0.1% Tobin tax on this would generate Rs. 60 crores daily for social sector budgets. And this would not hurt those transacting as it would be merely Re. 1 per Rs. 1000 transacted. Apart from this there are other transactions like credit card transactions, commodities trading etc. which can contribute substantially. There are also other avenues for raising resources for the health sector, for example a health tax similar to profession tax, a health cess on land revenues and agricultural trade so that the rural economy can also contribute to revenues for public health, health cess on personal vehicles using fossil fuels, on luxury goods like air conditioners, on house rents and property taxes above a certain value or size etc. The bottom line is that these additional resources should be strictly earmarked for the health sector and should not find their way into the general pool - with this caveat and evidence of its use for strengthening social sectors like health and education people will not protest against such levies. Further any attempts to raise revenues through user fees should be resisted, as they are regressive and anti-poor. There is evidence from the states which have introduced user fees via the health sector reforms projects that the user fees contribution has failed to improve the efficiency of the public health system and also utilisation of public health facilities have declined due to user fees impacting adversely access of the poor to public health services7.

Secondly, we need to advocate with both ministries of health and finance for making structural changes in the way in which both

resources are allocated as well as how the health system is organised and structured. The present mechanism of allocating resources to health facilities is very inefficient and also ineffective. It does not allocate resources on the basis of the requirements of the health care facility to meet its goals but on an ad hoc basis of what the governments are able to procure and provide. That is, a PHC or a Hospital is not given resources in terms of the services it is mandated to provide but on the basis of staff it is able to employ or drugs that it is able to procure etc. Hence the way resources are allocated needs restructuring.

Restructuring Resource AllocationResources must be provided to health facilities

whether hospitals or health centres on a block funding or per capita basis. Thus hospitals, for instance, should get funds @ Rs. 300,000 per bed because that is what it requires to run a reasonable district

or rural hospital, and a health centre providing comprehensive health care should get Rs. 150- 200 per capita for the 30,000 or 20,000 population it serves to provide a reasonable level of primary health care. This mechanism of financing will factor in rationality and efficiency in allocation of resources for public health. Further, on a longer term basis (3-5 years down the line) the health care system both public and private

Source What it Should Be What it is Presently

Amount Rs. Percent of Amount Rs. Percent of

Central Government 100 0.33 55.29 0.19

Grants to States/UTs 100 0.33 51.58 0.18

State/UT Governments 300 1.00 194.37 0.69

Local Governments 100 0.33 30 0.10

Total 600 1.99 331.24 1.16

Table 4: What Public Health Budgets Should Look Like in Contrast to What Exists Presently?

Any attempts to raise revenues through user fees must be resisted, as they are regressive, ineffective, ineffi cient and anti-poor.



needs to be restructured into a regulated system - this would involve creating a multi-stakeholder national health authority which pools together all health resources public and private, makes payments to health care providers on the basis of defined and structured costs and monitors and regulates such a health care system. This reorganisation must be done within the framework of universal access and equity using the right to health approach and here linking with the Jan Swasthya Abhiyan’s right to health

Key Questions And Suggestions:

1. The CMP has committed raising public health expenditure to up to 3% of GDP. The current budget is still below 1%. Will the forthcoming public health budget reflect any serious intent of achieving this goal? We strongly feel that the forthcoming health budgets should achieve at least 2% of GDP in order to show that the government is serious about what they have committed.

2. Raising additional resources is critical to meet the health goals set out in the CMP and subsequently in the NRHM Mission document. How does the government propose to raise these additional resources and earmark it for public health programmes? Some suggestions given below:

• Health cess (sin tax) on sales turnover of health degrading products like alcohol, cigarettes, tobacco products, guthka, beedis, paan masalas etc.• Tobin tax on all financial transactions - Government, stock market and forex; bank and credit card transactions; commodities trading and futures etc.• A tax similar to profession tax can be put in place as a health tax.• A health charge on land revenues, agricultural products, vehicles using fossil fuels, luxury goods like air conditioners and luxury cars etc., health cess on house rents and property taxes of a certain value and size etc.

3. Rural - urban disparity in health care access and resource allocation is very severe. Seventy per cent of the population lives in villages but the resources allocated, as a proportion to population is one-third in rural areas in comparison with urban areas. How does the government propose to reduce this gross neglect of rural India without affecting the present level of urban health expenditures, which are also under stress? We suggest that the allocations of the health budget must be made on a per capita or block funding basis. (See Annexure 1 for an illustration).

4. Health is a state subject and hence the Union Government alone cannot make a difference. How does the government propose to help State Governments achieve the CMP goals and commitments? We suggest that the Union Government engages actively the State governments on these issues of resource allocations and help strengthen both curative and preventive health care across the country.

campaign will be important to synergise efforts in budget advocacy.

It is only such changes that will strengthen and universalise access to health care and create equity in health. Thus the forthcoming budgets of Central and State governments need to proactively pursue the goal of doubling resource allocations for public health and allocate these using principles of global budgeting and per capita basis for allocations, as relevant. Hence the Public Health Budget for next fiscal year with

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additional resources raised as suggested above should look something like the projection made in Table 4.

To conclude, the above resources should not be too difficult to raise but what is more important is the political will of the government to take such an initiative. And more importantly the Ministries of Finance and Health have to change the way resources are allocated because the present mechanism leads to a lot of waste of the limited resources which are provided leading to allocative inefficiencies. We have worked out an illustration of how allocations can be made for the above projected resources to strengthen the public health system. (see Annex 1)

To summarise we need to take the following actions:

References

1The percentages have been worked out from the Finance Accounts of respective years; for thelatest year the budget estimates from the Reserve Bank of India were used; national income data was taken from the Economic Survey.2NSSO -1996: Report No. 441 - 52nd Round, NSSO, GOI, New Delhi, 1998.3Rao C S : Indian Insurance Industry- New Avenues of Growth, Oct, 18 2004 www.ficci.com accessed 20-2-2006.4Budget Speech of Finance Minister - Budget 2005-06, Ministry of Finance, GOI, New Delhi 2005.5MoHFW, 2004: Tobacco Control in India, www.mohfw.nic.in; and www.tobaccojournal.com accessed 20-2-2006.6RBI Bulletin September 2005.7Mahal Ajay and Veerabhraiah N, 2005, User Charges in India’s Health Sector - an Assessment, in Financing and Delivery of Health Services in India, National Commission on Macroeconomics and Health, GOI, 2005, New Delhi.8This calculation was originally done for a Jan Swasthya Abhiyan discussion on the National Rural Health Mission. It is now updated to 2005 prices. The parameters / benchmarks used are based on experience of costs and expenditure patterns of optimally run health care facilities in the government and NGO sector. This illustration is approximate and further details will have to be worked out when such a plan is implemented.9Duggal Ravi, 2004: Operationalising Right to Healthcare in India, ICFAI Journal of Healthcare Law, August 2004, Vol2, No. 3, pgs 13-42.

• Demand raising of resources to 2% of GDP for public health.

• Advocate for changes in budget commitments also at the state level.

• Suggest ways in which additional resources can be raised.

• Advocate for changing mechanisms of how resources are allocated to health facilities.

• Work out details of rational and efficient budgetary allocations for different components of health care provision.

• Strategise how the health care system can be reorganised, restructured and regulated.

• Work towards bringing in a national legislation mandating right to health and health care.

• Synergise actions with the Jan Swasthya Abhiyan’s right to health care campaign.



Annexure 1

Calculation For Comprehensive Health Care In India8

Note: To provide comprehensive health care the entire health system needs to be organised into a regulated system in which private provisioning and financing is also included under a health care system which is under public domain like in the OECD countries as well as a number of developing countries like Sri Lanka, Costa Rica, Jamaica, Brazil etc. The framework and financing for such an organised health care system has been discussed by the author elsewhere9. Here we present an illustration of a calculation of how a comprehensive health care system should be financed at different levels of health care.

1. Primary health care (Family Medical Practitioners+PHC) with following features:• Staff composition for each PHC-FMP unit to include 4 doctors, 1 PHN, 2 nurse midwives, 8 ANMs

(females), 4 MPWs (males), 1 pharmacist, 1 clerk/stat asst., 1 office assistant, 1 lab technician,1 driver, 1 sweeper - this adds up to salaries and benefits/capitation of Rs. 3,200,000 (salarystructures across states may be different and hence this could vary). The doctors (FMPs) and nurses need not necessarily be employees and work for salaries- they could be given the option of being contracted in as is done by NHS in UK for example and serve a fixed number of families and paid a contracted amount as negotiated.

• 10 beds per PHC• Average rural unit to cover 20,000 population (range 10-30 thousand depending on density);

Line item Rate Rural (20000 popn.per unit)

Urban (50000popn. Per unit)

Medicine and otherClinical consumables

Rs. 25 per capita per year Rs. 500,000 Rs. 1,250,000

Travel, POL etc. Rs. 6000 pm rural; and Rs. 3000pm urban

Rs. 72,000 Rs. 36,000

Offi ce expenses,electricity, water etc.

Rs. 10 and 12 thousand for ruraland urban, respectively

Rs. 120,000 Rs. 144,000

Maintenance ofbuilding andequipment etc.

Rs. 100,000 Rs. 200,000

Rent and/orAmortization

Rs. 144,000 Rs. 240,000

CHW honorarium Rural 1 CHW per 500 population@Rs. 1000 pm per CHW; Urban 1CHW per 1500 population @ Rs.1250 pm per CHW

Rs. 480,000 Rs. 495,000

Total Non-salary Rs. 1,416,000 Rs.2, 365,000

Total Primary careCost per unit

Rs. 4,616,000(Rs. 224 per capita)

Rs.5, 565,000(Rs. 109 per capita)

Total Primary carecost for country

Rural: 700 million populationneeding 35,000 PHC/FMPunits; and urban 300 millionpopulation needing 6000 units

Rs. 162 billion Rs. 33 billion

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average urban unit to cover 50,000 population (range 30-70 thousand population depending on density).

• Non-salary costs separately for rural and urban units per unit cost as per the table:

2. First level Referral CareIn rural areas for every 5 PHCs there would be one 50 bedded hospital and this would cost Rs. 225,000 per bed per annum or Rs. 11.25 million per such hospital. As per this ratio we would need 7000 rural hospitals and this would translate into Rs. 79 billion for the country as a whole.In urban areas for each 10 PHCs one 200 bedded hospital would be needed and this would cost Rs. 250,000 per bed per year or Rs. 50 million per hospital. As per this ratio 600 such hospitals would be needed and this would translate into Rs. 30 billion for the country as a whole.

3. Secondary and Tertiary care / Teaching HospitalsOne such hospital per 2.5 million population, that is 400 hospitals of 500 bed each at a cost of Rs. 350,000 per bed per year translating into Rs. 175 million per hospital or Rs. 70 billion for the country as a whole. Primary + First Referral + Secondary/Tertiary = Rs. 373.95 billion

4. Other costsCapital@ 10%or Rs. 37.39 billionResearch and Data systems @ 4% or Rs. 14.96 billionAdmin costs @ 4% or Rs 14.96 billionAudit costs @ 2% or Rs 7.48 billionGrand Total would be Rs. 448.74 billion or Rs. 450 per capita and this works out to 1.5% of GDP. This calculation excludes medical education and medical research, which would be 15% and 10% of the total health care cost, respectively, amounting to an additional Rs.112 billion.

Summary Table

Type of Cost Amount in Rupees billion

1. Primary care 195

2. First Referral Rural 79

3. First Referral Urban 30

4. Secondary/Tertiary care 70

SUBTOTAL 374

5. Capital @ 10% 37

6. Research and data systems @ 4% 15

7. Admin @ 4% 15

8. Audit @ 2% 7

TOTAL Health Care Cost 448 or 1.5% of GDP

Medical Education and Research 112

Grand Total 560 or 1.9% of GDP

2 2 f e b 2 0 0 7 R s . 2 0

i n d i a ’ s m o s t i n f l u e n t i a l b u s i n e s s m a g a z i n ea n d e c o n o m y

business in vietnam: towards a bright future

reliance: on top of the world

textiles: pirates of the indian treasure hunt

Move with the herd or just walk alone?

J A C K W E L C H 30E XC L U S I V E C O L U M N B Y

TATA - C O R U S D E A L 38

Billions to lose before we sleep!

B & E A N A LY S I SN O A M C H O M S K Y 122

Beware of your trigger-happy Prez!

E XC L U S I V E C O L U M N B Y

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48

Professor and Head Corporate Relations, Symbiosis Institute of Management

Studies, Pune

Unravelling The Indian Budgetary Saga: From Red Tape To Results Dr. Harnita Chowdhary



Something akin to the cricket fever in India, the hype over the Union budgetary document begins well before February 28th

the date of its presentation. Different sections of our enlightened citizenry join the process of indicating relevant thrust areas. Eager to be a part of this monumental exercise, I, would beg however, to take a relatively untrodden though extremely critical path in this budgetary pilgrimage.

Rather than add to the list of so-called `thrust area’ line- items that would fictionally find place in the exalted document, I choose to steer the discussion on the forth coming Union budget 2007 to a much more serious concern – that of imparting ground reality to the numerous requests, pleas, appeals, horse- trading etc. that receive a ‘fictional promise on paper’. The last statement may seem an oxymoron but an oxymoron may well represent the state of our budgetary ‘structure’ over a century plus. While on the one hand it is like a national promissory note, on the other hand it does not even have the minimum format to ensure accountability by the public at large as to whether the promises were fulfilled or reneged upon. So certainly I feel the greater focus now should urgently be on the via media through which our promises ‘are or are not’ kept rather than on just canvassing for the objects of promise.

If we want to truly relive the ‘Great Indian Dream’ and have the multiplier impact of the Budget 2007-08 surely reach the grass-roots of our great nation, I would want the honourable Finance Minister to carry further the process of budgetary reform that he re-began in August 2005, to the present budget. In order to understand this reform and its requirement lets get a detailed picture of our present budgetary setup and its

glaring lacunae. The present format of the budget presented every year at the Centre is termed technically as an ‘Administrative’ budget. This title seems apt in as much as it lives by, through and for the mere administrative purpose of the government. It is indicative of a mindset, which solely and merely focuses on ‘control’ out of the triumvirate requirements of control, management and planning.

This administrative budget was first presented in India in 1859 by James Wilson, a Britisher. Police and security functions being paramount then, probably this structure sufficed. However, with independence, our socio-economic development needs have grown rapidly and today we are poised

at the brink of ‘take-off’ where we also aspire to take the marginalised sections with us in our march towards progress. Nevertheless, shockingly this so-

called administrative budget is still the mainstay of our budgetary system and is presented with as much ceremony and fanfare as it was more than a century and a half ago.

Its various deficiencies can be broadly grouped in terms of the following categories.

(I) Defi ciencies Associated With The Planning Of Public Expenditure:

(i) Inadequate stimulus and information base for planning and budgeting- The administrative budget with its control and accounting bias does not facilitate the task of drawing the scale of priorities in the allocation of limited public funds. This in turn constraints the decision-making task. Till about mid- October most agency officials do not know how much they will have to spend & frequently receive their money until well into the fiscal year. Since the

Shockingly, the administrative budget is still the mainstay of our budgetary system and is presented with a lot of fanfare and ceremony

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emphasis is on questioning unspent funds and reduction of the ensuing year’s budget by that amount, agency officials inflate their estimates higher & higher.

(ii) Short term perspective- The time horizon gives rise to certain constraints associated with alternative policy options. In the absence of a wider horizon, the traditional budget based on line-item classification leads to inadequate alignment of the action plans with resources. There is a dire need for integrating the quinquennial plans with the system of annual budgeting and in this process the budgetary allocations are required to be projected over a longer period of time.

(iii) It provides an inadequate basis for economic information.

(iv) It is characterised by an absence of identification of the future expenditure requirement of current programs and projects.

(v) However the most glaring deficiency relates to the emphasis on inputs as against outputs. It is not known what last year’s money accomplished. Officials devise their funding request leased on what they got before not whether it produced results.

(II) Defi ciencies Associated With The Budget Structure:

This conventional budget involves too much of fragmentation, a lack of integration of financial and physical aspects and an incremental nature.

(III) Defi ciencies Associated With The Budget Procedures:

The lack of co-ordination between different economic agencies, the control exercised

in terms of objects, very often specified in great detail tends to make the budgetary procedure unnecessarily wieldy and cumbersome leading to the neglect of the overall functional view.

(IV) Budget Execution: The absence of proper cash management

leads to under and over spending cost escalation, schedule slippages and non-utilisation of capacity etc. Furthermore, the practice of what is termed as ‘Concurrent resources allocation’ i.e., changing budgetary

decisions after the budget has been prepared and approved leads to a number of undesirable fall-outs and the budgetary

process not being taken seriously. (V) System Of Accounting:

Here accounting is characterised by out of date classification practices, archaic recording procedures, inadequate links with national income accounts and a mechanical auditing of appropriation units with no attempts to evaluate the output or performance of government expenditure.

Surely the above exposition points to the seriousness of the innumerable lacunae of the administrative budget that has taken roots like a giant banyan tree. In fact, the entire process of its formulation involves a conflict of interests and a corresponding clash of information leading to the accommodation of diverse partisan interests through bargaining. Particularly skewed in favour of those who have access to the top politicians and bureaucrats, the process is an ironical reminder of the ‘license-raj’ era and represents more a ‘muddling – through’ than a ‘rationality’ approach. Hence attention must once again turn

Currently, the administrative budgetary process represents more a ‘muddling–through’ than a ‘rationality’ approach.

urgently to restructuring the entire budgetary structure and process. Here undeniably it can be pointed out that India had begun the reform process as way back as 1968-69 when the first Performance Budgets with an emphasis on outputs, end- results and physical targets were presented at the Centre. However, over the years unfortunately it has been more a ‘reform of form than of substance.’ Hence the base of Performance budgeting needs to be strengthened and wholly integrated with the main budgetary system. The presentation of the Outcome budget last year by the Finance Minister was a logical extension of this reform movement. The Outcome budget is basically a pre-expenditure instrument to realise the government’s vision through clearly defined objectives or outcomes which will lend greater transparency to the budgetary system.

Hence, what need to be linked effectively together are the outcomes, inputs and outputs to ensure the flow of the right amount of money’ at the right time, to the right level with neither delays nor parking of funds and effective monitoring and evaluation systems. Logically the three documents, the Administrative budget, the Performance budget and the Outcome budget together would impart a much more complete picture of what has been achieved on the expenditure made each year. Thus what needs to be emphasised in the end is that this natural progression so necessary for achieving our developmental and infrastructural objectives should not be slackened. Like in other areas, India cannot at this juncture lag behind other countries (like the USA & OECD nations who have seriously begun implementing this budget reform) if it has to reap its own fiscal and related benefits and steer towards the horizons of economic resurgence. Thus the Union budget for 2007-08 should reiterate this vital concern and heighten the progress achieved in budgetary reform.

.....where ‘economic

management’

itself acquires a

deeper meaning.

52

Housing Rights Activist/ Researcher, New Delhi

INDIA: A Homeless Nation for its People! – CMP Notwithstanding Indu Prakash Singh

The UPA government in its CMP had committed to implement a comprehensive programme of urban renewal and a massive expansion of social housing in towns and cities; paying particular attention to the needs of slum - dwellers. They had promised that forced eviction and demolitions would be stopped and while undertaking urban renewal, care would be taken to see that the urban and semi-urban poor are provided housing near their place of occupation.The harsh reality as seen in the past two years however has been that over 1,60,000 families have been evicted and displaced from various cities, families have been displaced because of the Sardar Sarovar project and other development projects and hawkers, vendors and rickshaw pullers have been evicted from the streets.



The Government of India continues to be a ruthless, heartless, and toothless body. It matters little whether NDA (BJP) is at the centre

or UPA (Congress) with the left support. We all were euphoric at the coming of the UPA government, for we were at pains with the way Narendra Modi presided over the butchery of Muslims in 2002. We rightly got the NDA defeated. But the dream that the UPA government would redress all the ills is slowly turning to a nightmare.

2004: The Year Of CMPThe Common Minimum Programme (CMP)

of the UPA government released on 27th May 2004, stated as one of the six basic principles for governance, among others: “to fully empower women politically, educationally, economically and legally.”(p.2) The CMP committed for “enacting new legislation that gives women, for instance, equal rights of ownership of assets like houses and land.”(p.7) It also states, “The UPA government will protect the rights of children...ensure facilities for schooling and extend special care to the girl child.”(p.8) The CMP continues, “The UPA government commits itself to a comprehensive programme of urban renewal and to a massive expansion of social housing in towns and cities, paying particular attention to the needs of slum -dwellers. Housing for the weaker sections in rural areas will be expanded. Forced eviction and demolitions will be stopped and while undertaking urban renewal, care will be taken to see that the urban and semi-urban poor are provided housing near their place of occupation.” (p.12)

Apathy Of The GovernmentI was part of the delegation led by Shabana

Azmi to meet the Ms. Sonia Gandhi and the Prime Minister Dr. Manmohan Singh on 13.10.2004, separately. We met both. We presented India Habitat Campaign, Delhi Declaration 2004 where the very first demand was making housing a fundamental right under Article 21 of the Constitution, and the draft housing rights bill (yet to be finalised by the groups from all over the country).

We also brought up the issue of NDMC trying to evict homeless women from its Palika Hostel on R.K. Ashram Marg (near Gole Market) which was being run for them since 7.1.2004. We sought their intervention to stop the eviction which was planned for the coming weekend, as this would push over 100 homeless women and children back on the streets, at the onset of winter. We also informed them that Delhi topped in the entire

The Indian Urban Morass — Today’s Preference• Capital over people,• World Bank over government,• Profit over poverty elimination,• Corruption over governance,• Property/ games/golf courses over

livelihood,• Injustice over human rights ...

Ground Reality• Untrammeled/ brazen evictions• Total support of Judiciary for the human

rights violations: it’s got elitist in its approach

• World class city (LPG theme) virus catching our government: national/ state (JNNURM is its one of the shoots - it states: ‘funds cannot be used to create wage employment, land costs will not be financed, housing to poor cannot be given free of cost,... the onus of minimising risks for private investor would be on state government/ULBs’). In short, 74th amendment becomes ineffective.

• Constitution and various UN charters, covenants and conventions turned to mute spectators

• Distress migration to cities (mainly push factor and not pull factor) continues

• Laws continue to criminalise poverty and destitution

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country in criminality: rape, murder, kidnapping, theft, cheating etc. And for women and their children it will spell all kinds of sexual assaults, abuse and oppression. Both the PM and Sonia promised their intervention. In fact, Shabana before leaving told us that we are sure at least the women’s shelter will remain.

Unfortunately, our hopes were betrayed as the only Government provided shelter for women in Delhi was dismantled on 16.10.2004. And women and children were beaten up, with one of our community workers, Suraj Prakash suffering a fracture, in his left arm. The police refused to lodge an FIR. The MS of RML Hospital remained unavailable. Women and children were rendered homeless to sleep outside the Palika Hostel, on the streets when Delhi was beginning to get cold.

And to match the cold weather we had our cold bureaucrats of NDMC, the PM, his Secretary, B.V.R. Subrahmanyam, Sonia and the CM. CMP is a mere showpiece. A fraud played on “We, the People of India.”

Since 2004 To May 2006Over 1,60,000 families (a real very, very modest

estimate) have been evicted and displaced from various cities, since the framing of CMP, including Delhi (42907 families), Mumbai (1,02,000 families, on the target are another 1,15,000 families - under MUTP (50,000), MUIP(25,000), Airport (40,000): MMRDA and another 1900 Ceff buildings to be evacuated for repairs, Kolkata (9000 families), Bangalore (15,000 families), Hyderabad, Jaipur, Pune, Ahmedabad, Surat, Vadodara, Lucknow, Patna... the list goes on. Add to this the Sardar Sarovar displacement, over 35,000 families and other development projects. Also link it to the cleansing of streets from hawkers, vendors and rickshaw pullers. One can clearly see that the entire life world of a poor

person is being destroyed, brick by brick and is being brought to nought.

The Realities Of JNNURMThe much touted JNNURM is a ploy to celebrate

prosperity of few and shroud the poverty of many. It supplants 74th amendment by creating parastatals. It cannot lead to wage employment and fresh employment opportunities. It calls for the repeal of ULCRA (Urban Land Ceiling and Regulation Act, 1976; already done by the central government in 1998). Housing (20-25%) for the poor is an optional component, to be taken up anytime in seven years. Administrative reforms includes: VRS, not filling posts falling vacant due to retirement...

These conditions are not just applied to 63 cities under JNNURM but also over 2500 small and medium towns. So the so called “cities as engines of rural development” and “cities as engines

of growth” will not merely limit but extinguish the potentials of growth of the bulk of the poor. It’s targeted for the rich and elite, of national as well as international origins.

Reasons For MigrationOur studies and interactions with homeless

across the country, have shown that people come to cities as a last resort, each one due to one of these reasons: poverty, unemployment, destitution, heavily in debt (of usurious money lenders), atrocities (against dalits, women ...), communal riots, drought, floods, cyclone, earthquake and personal hardships (usurpation of property by relations/ dominant castes etc., disowned elderly parents, ...). . The homeless then are deprived, dislocated/ dehabilitated, dispossessed, disentitled, and disenfranchised people. Unlike, what our bureaucrats and economists are wont to think that the people

The much touted JNNURM, applied to many cities and towns is a ploy to celebrate prosperity of few and shroud the poverty of many.



from rural areas coming to cities do so, as they are attracted to the cities due to its glow and glamour; we have been informed by the homeless that they are in the cities for they were compelled to leave their villages. It is not volitional. Strong structural / systemic processes of destitution and distress are responsible for pushing people to the cities, over which many vulnerable communities in rural areas, have no control.

The entire talk of some of the bureaucrats to put a check on migration from rural to urban areas is not only unjustified and inhuman; it is also unconstitutional, as it is violative of Article 19 of the Constitution of India. Article 19, empowers the people of this country, with the freedom to reside and settle in any part of the territory of India.

Condemn EvictionsLet’s all join in condemning the evictions

going on in different parts of India. Judiciary is not merely a mute spectator; it’s rather an active agent. We are witnessing the biggest farce called democratic India. Our Constitution has been made ineffective for the poor. Look what the govt/SC has done to whole issue of the Sardar Sarovar dam. The emerging pattern is loud and clear. Thus averred our so called Supreme Court ‘Learned’ Judges, Ruma Pal and Markanday Katju: “Nobody forced you to come to Delhi. Is there a right to live in Delhi only? Stay where you can. If encroachments on public land are to be allowed, there will be anarchy ... Tomorrow you can come to the Supreme Court and settle here claiming a right. Your (the counsel’s) home can also be occupied by them. There has to be an end to this” (Times of India, dt. 10.5.2006, p1. New Delhi.) Isn’t this a mockery of justice? The emerging situation is serious and shocking.

Action To Be TakenLet’s all write to the Chief Justice of Supreme

Court of India that we have no hope in him or the institution that he belongs to. Let’s be bold enough in writing it. He can’t make it a contempt of court. And if he does it, the SC turns exposed. It’s time to sink our differences and work in sync with each other. Let’s all come together. Let’s share our ideas as to how to break the stranglehold that is getting tightened with each passing second (not hour or

day). Hawkers/ vendors are not permitted to carry on their work...

I remain optimistic so far as the common people of India are concerned. We need

to create a platform where all movements/ networks/ coalitions... can come together to rise to the occasion, in unison. I write this with lot of pain and anguish, but am hopeful that we can transform the situation, if we are one. Which doors do the homeless knock, now? Who is the conscience keeper, when our Constitution is being violated, in broad day light? Despite violence meted to us, we still believe in Gandhi! Our struggle goes on. Do join us. Our lives are entwined. Together we can set the ills right. And that’s our hope. Hope in “We, the People of India!”

Our DemandsOur demands to the Government include:1. Implement the promise made in CMP,

against forced evictions and protecting livelihoods

2. Social housing should be taken up on a priority basis

3. Stop all demolitions of the homes of slum dwellers

4. Recognise that all forcible eviction and demolitions of homes of slum dwellers are the worst violation of human rights as per all the international human rights

State failure can’t be the basis for the removal of slums but must provide the legitimacy for regularising slum housing built at such low cost.

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commitments, namely: ICESCR, CRC, CEDAW, etc

5. Recognise right to housing as a fundamental right. Enact Right to Housing Act (drafted by Hazards Centre).

6. Treating housing for the poor as a ‘public purpose’ that is superior to all other “public” purposes

7. Recognise that the emergence of slums points to the failure of the State to provide adequate and affordable housing, hence such failure cannot be used as the basis for the removal of slums but must provide the legitimacy for regularising slum housing built at such low cost by the people themselves.

8. No slum cluster be removed unless: a) The geographical conditions of the slum

cluster are not suitable for habitation. b) Slum is lying under high-tension wire or

near any hazardous activity. c) Slums are on the edge of a big drain

and living in unhygienic conditions.9. Security of tenure, amenable to access

credit10. Right to equal access to basic amenities at

household level and at community level11. 24 hours shelters for the homeless. Multiple

use of public spaces (schools, colleges, community centres...)

12. National Vendors/Hawkers Policy to be implemented

13. Enactment of Unorganised Sector Workers Bill

14. Shelve JNNURM, as it is anti - poor15. No development scheme that serves only

the affluent sections of the city and involves evictions, displacement of urban poor must be carried out.

THE HUMAN FACTORT H E I N D I S P E N S A B L E F A C T O R

THE

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Aug

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THE HUMAN FACTORwww.iipmthinktank.com

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EXECUTIVE EDUCATION PROGRAMMES AS IDENTITY

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THE PATH OF WIROQOCHA

PIERO MOROSINI

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LEADERSHIP & INNOVATION IN SMALL AND MEDIUM

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Process or

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A question of “People Alignment Strategy”!

T H E I N D I S P E N S A B L E F A C T O R

When ‘The Great Indian Dream’ (GID), authored by

Malay Chaudhuri and Arindam Chaudhuri, released in

August 2003, it created scores of academic debates

and ideological dissent among thought leaders. Accrediting to their

three decade old research undertaken at The Indian Institute of Planning

and Management, the authors’ have been asserting of potential growth

rates over 14%. Their observations were disregarded. But nowadays,

every national and international think-tank, including the

Prime Minister, talk about a double digit growth rate. After

inquiring into fallacies in national economic planning,

specifically resource mobilisation strategies, it proffered

an alternate plan, reconciling key social developmental

imperatives, economic challenges and political constraints.

Their suggestion on a deisel cess for generating additional

resources were vehemently criticised. Presently, the tax

component is almost 55% in petrol and that for diesel, in

the retail price, it is almost 34%*. Similarly, the futuristic and

unconventional economic wisdom inherent in it has been

gaining a lot of acceptance and appreciation. Couple of

years back even the Election Commission took a leaf out of

this book and ordered enquiry into the rigging process in West

Bengal. Many politicians were defamed and intelligentsia was

provoked. Ram Jethmalani used it for his campaigns against

Atal Bihari Vajpayee. It is indeed very assuring to find that in

the last two years as the book hit stands, tolerant of a few minor

deviations, the compelling recommendations mentioned in it

remained convincingly well-founded. The ideology integral to

this book has turned into a movement called ‘GID Foundation’

(GIDF), stirring a social revolution. Right now, GIDF supports

developmental initiatives in more than 2,000 villages across 12

states and supporting an estimated 2.5 million people, primarily

residing in the remote and backward areas**. Effectual ideas related to

education, public health, deprivation, etc., featured in the book are being

executed to restore pride to the ‘betrayed India’. Reminds one about

Sigmund Freud’s associable observation: "Thought is action in rehearsal".

*‘Petroleum products: Govt readying itself for a price hike?’ The Hindu Business Line; December 13, 2005**For more detailed information please visit www.gidf.org

“The ancestor of every action is thought.”

- Ralph Waldo Emerson

58

Centre for Environment Concerns, Hyderabad

The National Common Minimum Program -Land, Livelihoods & Food Security K.S. Gopal

Two promises were included in the Common Minimum Program announced in June 2004. One was for a National Rural Employment Guarantee - the focus of this note - and the other to develop a medium term strategy to address food and nutrition security along with strengthening the public distribution system. While the NREGA (National Rural Employment Guarantee Act) came into effect only in the last three months, the UPA government undertook in October 2004, a National Food for Work (NFFW) Programme.The dismal performance of NFFW in terms of the work and wages it generated for the poor shows that the UPA government was tall on promises but very short on performance. Moreover, no effort was made to learn the defi ciencies of NFFW and take corrective measures in the NREGA.



Agriculture - A Sector In CrisisAt the time of our Independence, Jawaharlal Nehru

said, “Everything else can wait, but not Agriculture”. The 4th Report (13th April 2006) of the National Commission on Farmers notes that“ unfortunately this profound truth is yet to be converted into concrete policies and action on an adequate scale”.

Agricultural growth has decelerated during the last decade leading to a decline in the real per capita incomes in rural India. 65% of India’s population has farming as its principal source of livelihood. Our farm population is rising annually by 1.84% and the average farm size is becoming smaller each year and the cost-risk-return structure is becoming increasingly adverse. There has been a drop in government investment in agriculture while private investment has also slowed down. Land use and fertiliser consumption have promoted unsustainable exploitation of groundwater and soil micronutrient deficiencies. Land holding is severely skewed with the bottom half the rural households having a total ownership of only 3.33% of the land.

The worst affected are the areas dependent on rain-fed agriculture and holding the bulk of the rural poor and hungry. In such places the livelihoods of pastoralists and small farmland owners is threatened by progressive loss of grazing lands for farmers. No wonder recent NSSO survey showed that 40% of the farmers want to quit farming.

The situation on the ground is of nearly 75% of children in the country being underweight due to inadequate nutrition. India has the largest number of under-weight and low birth weight children and their prevalence is almost double that of Sub-Saharan Africa. Micronutrient deficiencies are widespread. More that 75% of preschool children suffer from iron deficiency anemia while 57% have sub-clinical vitamin deficiency. Adult farmers are committing suicide while there is a rising household debt in the agricultural community.

Initiatives Taken Since 2004-05Several significant initiatives have been taken up

over the last two years including the Bharat Nirman, National Rural Employment Guarantee Act, National Horticulture Mission, National Rain-fed Area Authority, National Fisheries Board, expansion of agricultural credit at lower interest rates, etc. Two years is a considerable time and some momentum should have gathered in their work.

At the same time, this period witnessed the negotiations at the WTO on agriculture, licensing of BT seeds, commodity futures market, import of five million tons of wheat, fall in cereal production despite an overall satisfactory rainfall, contract farming and liberalisation in land holding size, giving away of large productive lands to industries and knowledge companies and “rehabilitation later but dam first”.

The only silver lining was that interstate water disputes were low because we had adequate rainfall all over India especially in peninsular India. The performance of the Agriculture Minister done by a well-known

weekly magazine showed it to be lesser than his counterparts in other ministries.

Promises Made In The CMP

Two promises were included in the Common Minimum Program announced in June 2004. One was for a National Rural Employment Guarantee - the focus of this note - and the other to develop a medium term strategy to address food and nutrition security along with strengthening the public distribution system. While the NREGA (National Rural Employment Guarantee Act) came into effect only in the last three months, the UPA government undertook in October 2004, a National Food for Work (NFFW) Programme.

The dismal performance of NFFW in terms of the work and wages it generated for the poor shows that the UPA government was tall on promises but very short on performance. Moreover, no effort was made to learn the deficiencies of NFFW and take corrective measures in the NREGA.

The recent NSSO survey showed that 40% of the farmers want to quit farming. Nearly 75% of children in the country are underweight.

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As regards food and nutrition security, more seems to be coming from the Supreme Court rather than from the Government. Even here the recent scheme of grain banks is a repeat of what has failed and well known as being bogus.

One Hundred Days Of NREGAOne of the most debated CMP commitments and

with potential to significantly impact and improve the lives of the rural poor is the NREGA. Let me review its performance and what must be done to make it work effectively on the ground.

In February 2006, the NREGA was launched by the Prime Minister Dr. Manmohan Singh in Ananthapur district in Andhra Pradesh. It is now a ‘one hundred days old’ scheme that offers one hundred days of employment as a guarantee to each rural household. What is its performance?

Employment Guarantee Councils Still To Be Constituted

First, not one state has constituted the State Employment Guarantee Council while the Central government has not decided to set an example by setting the national one. States are making their own NREGA guidelines and diluting some of the key provisions of the Act. These include the provisions related to the role of Panchayats and Gram Sabhas, allocation of state contribution to the NREGA financing in the state budget, making laws related to unemployment compensation being vague, procedurally cumbersome and the responsibility being vested with the lowest officials, incompatible with minimum or equal wages etc.

NREGA In Action - The Case Of Andhra PradeshLet me present the NREGA as it is unfolding in

Andhra Pradesh. I am doing so because that is the state I belong to and closely watching its implementation. It is also for other reasons that I choose AP because it was launched in Andhra Pradesh by the Prime Minister, claims of being a pioneer and innovator in this task,

has a bureaucracy known for better deliverance of social programmes with a Congress government and paraded as a model to other states by the Minister for Rural Development, Sri Raghuvansh Prasad Singh.

In Andhra Pradesh, 380,000 households have registered for employment covering 13 districts. Of this about a third are yet to receive their job cards. To obtain the job card poor households had to take a photo at their own costs. In some places they had to pay some money to the village secretary for obtaining a receipt for their job card application. But in the guidelines and the Act all these were to be done by the government at its cost.

In a televised interview with this author, the Chief Minister proudly reported that 3.5 lakh households have taken to NREGA even while from his own records only ten percent of the people seeking employment

cards have been provided with work. In Ananthapur itself only two villages have been taken up per Mandal for implementing the NREGA.

Absence Of Panchayat InvolvementThe Act stipulates that at least 50% of the “works”

are to be decided by the Panchayat. But they are nowhere in the picture and the decision wrests with the bureaucrats. This can been seen from the fact that in Ananthpur district only two types of works are taken up - farm ponds and bunds on private lands. Also the government has given targets to various departments to come up with works and hence the whole participatory nature of choosing works in the NREGA is ignored.

The forest and irrigation department has prepared a shelf of works even while they acknowledge that they cannot take up such massive schemes, as they are five to ten times higher that what they have done in the past. Thus transparency in decision-making on works is completely missing.

Hidden Costs To The WorkerIn Andhra, the wage payment to the workers is

As regards food and nutrition security, more seems to be coming from the Supreme Court rather than from the Government.



paid through post offices. For this, the poor have to take individual photos each costing rupees twenty, must give a deposit of twenty rupees to open the account and after all this, the post office is deducting two percent of the wage received by the worker as service costs. All these are costs to be incurred by the government but the responsibility has been shifted to the wage seekers.

No Guarantee For WomenAbove all this, the job card notes the “head of the

household”, who is invariably a man and thus all the wage incomes are accruing to men even while women are doing the actual work. The Act also provides for work place facilities but only drinking water was observed as being made available and that too in only some places. There is provision of village boards giving details of works sanctioned and their estimates, display details of the muster rolls, show who have been paid how much for their wage work etc but nowhere is it being practised.

One reason is that both transparency and work place facilities is the monopoly of Village Organisations which were created under a World Bank funded poverty alleviation project. These village organisations are getting substantial money for tasks that they do not undertake but are show cased to impress the World Bank as a sustainable institutional model in order to seek fresh borrowings.

There are some positive things done by the Andhra government and they are worth mentioning as being of value to other states. They are good intents of the Andhra government, but seeing what is happening on the ground, there is something missing in the content. Thus merely enshrining them will not help unless there is commitment to see it effectively through by addressing other bottlenecks.

Time, Motion & Work StudyThe first was that Andhra undertook a “Time,

Motion & Work” study that showed that workers were

receiving less than a third of the minimum wage, as out turn is paid for and this is valued against the Standard Schedule of Rates (SSR).

Following the study findings, the SSR has been revised for works taken up under NREGA and people are likely to get fair wages. But although the issue of minimum wages not accruing to the worker is well recognised and the central government has advised states to do this before implementing the Act, no state has come forward. Officials in the states I visited did not want to open the Pandora box and took umbrage saying that this would have a cascading effect on agriculture and it is already unprofitable. I am told that even the central government has developed cold feet on this issue.

IT-Based AppraisalThe second good step was that Andhra developed

an IT-based APREGA. For instance, the entire calculation of the costs of the “works” is by a software and gives details of how many can work and for how long

and other details, decides on the payments for each worker when the work progress data is recorded and advises the post office of the same. This has denied the engineer who was the king pin, to not have any role to enhance payments or bring in contractors. But bureaucrats in states are reluctant to using the software and other new tools and prefer the old approach, despite acknowledging its weaknesses and being the source of corruption and information opaqueness.

The key NREGA officials at the cutting edge namely the village secretary, panchayat engineer and programme implementation officer are just not interested and openly say that have nothing to gain from NREGA works and they do something only when pressurised by a top official, most of who seem reluctant to interfere in view of local powerful vested interests. They want NREGA to fail so that the government will go back to “business as usual”, as that is of benefit to them.

Unless the workers gain confi dence, there is no way they are going to participate in it even if it is a right conferred on them.

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This task is made easy because on one side being a “right” the onus is shifted on the worker while all the decision making power is vested with the bureaucracy. There is no locus standi for anyone else and activists have to helplessly watch a good law being made to fail. It is vital for the UPA to put the NREGA in a mission mode with clear outputs being demanded of officials, rather than leaving it to helpless poor people to get the legislation effective on the ground.

Need For External Grievance Redress MechanismA whole lot of stories abound leading to the workers

distrusting and not coming forward especially as their past experience has been one of being cheated on the rightful wages, inordinate delays in making payments and denials in case they protested. There is no external grievance redress mechanism and villagers have to only be at the mercy of the village secretary and lower level officials.

Unless transparency is widely and proactively taken forward, workers get their wages properly and on time, facilities at workplace are created and flexible working timing is allowed to suit summer heat, the workers will continue to be distrustful of NREGA and unless they challenge the system and take on its might, the NREGA will meet the fate of similar development interventions.

Key Conclusions & RecommendationsThe Centre for Environment Concerns looks at

the NREGA as a valid approach to meet some of the CMP goals in terms of reducing poverty and hunger. It recognises its potential to address multiple development objectives in the rural areas. So even before NREGA was launched, we undertook a pilot under a memorandum of understanding with the state department of rural development. I am sharing a few insights - space and time being the constraint.• NREGA can work effectively only when key

players such as the community leaders, elected representatives and activists work together with

clarity on what must be done and by whom. For this to happen the power must be shifted and officials held accountable. The officials must serve on a mission mode with the administrative mechanism designed to deliver services on time and with courtesy.

• The existing government system is just not suited to serve NREGA and must be thoroughly overhauled. In the whole task, the village secretary plays a key role and this must be shifted to the panchayat who should have clear authority, responsibility and accountability to the outcomes.

• NGOs must assist the panchayat in making its task effective through facilitation services, resources to undertake the task effectively, make available technology including connectivity and bond closely with the workers by providing them with information

and tackling the myriad problems they face in taking employment under NREGA. If such a process could be triggered even in some places, it will have a multiplier with people

seeing and knowing the steps for the fruition of their goals.

In short, unless the workers gain confidence, there is no way they are going to participate in it even if it is a right conferred on them. Once the workers have the confidence the bottlenecks NREGA is now facing will be overcome through their challenge and collective strength. One of the outcomes of the pilot is that villagers refused to apply for work unless a third party such as the NGO gives them the assurance.

The task of civil society activists in NREGA is to take responsibility to volunteer being an honest intermediary and develop worker teams who can work to seeing work that provides proper wages and on time along with developing the natural resource base so as to improve the quality of life. Once these forces move and taste NREGA they will create a new dynamic that could be harnessed to spiral a process that realises to full potential the multiple goals conceived in the Act.

As regards food and nutrition security, more seems to be coming from the Supreme Court rather than from the Government.


NEED THE DOUGH?M A K E W E A L T H W H I L E O T H E R S T H I N K O F I T

J u n e - A u g u s t 2 0 0 6 V o l u m e 1 I s s u e 2 w w w . i i p m t h i n k t a n k . c o mRs. 100

“ Derivatives are like prescription drugs. They can be beneficial when used appropriately but they may be

habit-forming and carry the risk of unpleasant side effects. ”– David Litvack

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Devinder SharmaNew Delhi-based researcher and policy analyst in global food and agriculture.

Let’s Budget For Farmer Suicides



In the past 15 years, successive Finance Ministers have gradually spiked farmers from the country’s economic radar screen. And if the Budget 2007-

08 is to be seen in continuation, Finance Minister P Chidambaram will further push farmers to the margins. Take a look. Presenting the Interim Budget 2004-05, the then Finance Minister Jaswant Singh had spared no effort to eulogize: “In India, agriculture is not just an economic activity; it is a way of life.” A year earlier, he had said that agriculture is the life-blood of our economy. Before him, Finance Minister Yashwant Sinha had romanticized agriculture, saying that his Budget was aimed at ensuring freedom of the farmer -- “kisan ki azadi”. Mr. P. Chidambaram went a step ahead: “We’ve shown that we are a caring government by addressing agriculture, rural economy and infrastructure.” Amidst the rhetoric of strengthening agriculture or emphasis on agriculture to make villages smile, Mr. Chidambaram has followed the age-old principle: repeat the promise a hundred times and it will be taken as truth. With the ignorant media, and the neo-liberal economists in tow, the nation latched on to the right vocabulary that the Finance Minister used. The impression that emerged was that through his Budgets, Mr. Chidambaram had promised to ‘tax India, fund Bharat’. In reality, he had failed Bharat.

To be read in conjecture with the Economic Survey 2005-06 that was presented a day before in Parliament, Budget proposals for agriculture so far, and that too in the name of farmers, are actually aimed at bringing farming under the yoke of Corporate Houses. Strengthening the existing apprehensions, the Economic Survey categorically asks for dismantling the minimum support price for farmers and the procurement based system of food subsidy. In other words, the Congress-led UPA Coalition now appears all set to remove the two major planks of India’s ‘famine-avoidance’ strategy that enabled the country to assiduously build food

self-sufficiency over the years. No wonder farmers continue to commit suicides. Those who did not have the courage to take the extreme step, found escape in selling their body organs. Agriculture hit the bottom line, when nearly 40 per cent farmers as per the National Sample Survey Organisation (NSSO), expressed the desire to quit farming.

Amidst the chanting of the agriculture mantra, what is not being realised is that the agrarian crisis is not limited just to growth percentage. It is rooted in the welfare of the farming community. Even if the growth rate in agriculture reverts back to four per cent, it will not mean an end of the existing farm crisis. Agriculture is faced with a multitude of problems, and the effort of the Finance Minister should be to repeal one by one the crisis-ridden layer that traps the farmers in a vicious cycle of life and death. Instead all efforts are to compound the existing crisis. Unaware of the harsh ground realities, Prime Minister Manmohan Singh has time and again called for reversing the declining trend in investment in

agriculture; and among the measures spelled out stepping up credit flow to farmers; privatisation of mandis, encourage future trading, opening of food retail trade to

foreign direct investment and pushing aggressively the highly controversial ‘contract farming’, and talked of creating a ‘single market’ for agricultural produce and setting up commodities futures markets so as to insure against risks.

From farming to agribusiness, from the first (and almost turning red) Green Revolution to the US-led second Green Revolution, Prime Minister has laid the roadmap for reforming agriculture. What is not being explained is that if the agribusiness model being borrowed from the United States is what India needs than why is that farmers have almost disappeared from the American countryside. With hardly 7 lakh farmers left on the farm, the United States did not count in the national census in 2000 (for the first time in history) the number of farmers.

All the budget proposals for agriculture so far, are actually aimed at bringing farming under the yoke of Corporate Houses.

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In Europe, it has been estimated that one farmer quits agriculture every minute. In Europe, like in America, farming is now increasing in the hands of agribusiness giants and corporations.

Allowing direct procurement of farm commodities, setting up special markets for the private companies to mop up the produce, and to set up land share companies, are all directed at the uncontrolled entry of the multinational corporations in the Indian farm sector. Coupled with the introduction of the genetically modified crops, and the unlimited credit support for the agribusiness companies, the focus is to strengthen the ability of the companies to take over the food chain. Farmers are being shown the exit gate. What is needed desperately is a paradigm shift in agriculture. India needs to embark on an economic strategy that ushers in sustainable rural livelihoods, to restore the natural resource base. This in turn is directly linked to the nations as well as the household food security. Ensuring long-term food security therefore has to be linked to sustainable and economically viable farming practices.

At a time when farmer’s suicide has assumed a shameful proposition, and the government seems to be faced with a drought of ideas on how to combat the grave situation, Finance Minister should use the opportunity to send the right economic signal. The 2007-08 Budget needs to be devoted exclusively to farmer suicides. Let the effort be to bring back the smile on the face of the farmer. After all, like all of us, he too cherishes a dream. Let me humbly redraw the outlines of a sustainable farming system. This is the overall framework under which location-specific alterations and adaptations need to be tried. More importantly, adequate Budget provision need to be made keeping in mind the determination to bring back the shine in agriculture.

Income Commission: As per the NSSO, despite the gains of the Green Revolution, the average monthly

income of a farm household in 2003 stood at a paltry Rs. 2,115. This compares unfavourably even with a peon in government service, whose average monthly packet is at least five times more than what a farmer gets. Uttar Pradesh farmers have the lowest income – Rs. 1630 per month. Farmers in Madhya Pradesh, Rajasthan and Orissa were only a trifle better. The highest farm income was recorded in Jammu & Kashmir – Rs. 5,500 a month, followed closely by Punjab and Kerala. Subsequent studies by the Ministry of Agriculture point to declining farm incomes in the past five years. The sharp decline in farm incomes is happening at a time when urban areas are witnessing an upswing.

For nearly 60 per cent of the population, as much as 85 per cent of its earnings come from crop cultivation and wages earned by family members from employment generation programmes. In fact, what is more startling is that over the years the farm

earnings of marginal farmers have dropped to less than that of the daily wage labourers. To make it still worse, farm income all over the world has remained static

between 1980 and 2003. Adjusting for inflation, a recent UNCTAD report states that the prices of all major commodities showed a declining trend. The report stated that between 1997 and 2001, the combined price index for all commodities fell by 53 per cent in real terms, thereby “commodities lost more than half their purchasing power in terms of manufactured goods.” In India, the impact has been much more severe. Recurring farmer suicides is a reflection of that. It is clear that farm income over the years has eroded. What is not being accepted is that like all of us, farmer too needs an adequate monthly take-home package that takes care of his family needs. What also remains unexplained is why a farmer is expected to live on credit while the rest of the society is provided with a fixed take home salary. While the government clerks and for that matter the government employees continue to get the benefit

According to the NSSO statistics, the average monthly income of a farm household in 2003 stood at a paltry Rs 2,115.



of unwarranted pay hikes, annual increments, medical allowances, paid holidays and of course financial loans at the drop of a hat, farmers remains outside the gambit for all these bounties. Surviving against all odds, and despite the low earnings, farmers have worked hard to ensure national food self-sufficiency. A healthy and vibrant farm sector is to the benefit of the national economy. Probably the only way to ensure the economic viability of the farm sector is to either enlarge the scope of the 6th pay commission to include farmers or to set up a separate pay commission for the farmers. Based on the minimum land-holdings, and de-coupled from production, there is an immediate need to set up an Income Commission for farmers.

Meanwhile, declining farm incomes in the midst of rising cost of production can be addressed by ensuring:

a) Minimum Support Price is extended to other crops. MSP should be worked out on the real cost of production for different agro-climatic regions. For instance, the cost of production of paddy differs from state to state but the price is same. While some states benefit the others lose. The MSP should therefore be different for different states, and for all crops.

b) As the National Farmers Commission has recommended, MSP should be raised by at least 50 per cent.

c) Procurement needs to be further strengthened. Government needs to also extend its reach to include crops like mustard and other oilseeds, coarse cereals, pulses.

d) The amendments in the APMC Act should be withdrawn.

e) Future trading in agriculture should be immediately stopped. It neither helps the farmers nor the consumers.

f) Loan waive-off should be essentially directed to small and marginal farmers. Instead of

a blanket waiver the need is to cap it to a maximum of 5 acres for irrigated areas and 25 acres for non-irrigated areas.

g) Farm loan interest should not exceed 4 per cent. While the focus is on restructuring loan for farmers, rural women end up paying 24 to 36 per cent percent by way of interest under the much-hyped self-help groups. This is four times the rate of interest charged in the urban areas. Credit for SHGs should also be made available at 4 per cent interest.

h) Banks should be directed not to confiscate the movable and immovable property of defaulting farmers. Nor should they be put in prison. The State has the right to revoke the law that the banking sector has been using for harassing the

defaulting farmers. i) Farmers in the rain-fed areas need to be

insured against drought. This can be ensured by making it mandatory for the foreign insurance companies to invest at least 40 per cent of their funds for farm insurance.

Sustainable Farming: The unprecedented crisis in farm sustainability is what has hit agriculture the most. Food grain production in the food bowl, comprising Punjab, Haryana, and western Uttar Pradesh, is on the decline. The green revolution areas are encountering serious bottlenecks to growth and productivity. The dryland areas (comprising nearly 70 per cent of the cultivable lands) continue to drown in misery and apathy. Excessive mining of soil nutrients and groundwater have already brought in soil sickness. Indiscriminate use of chemical pesticides and fertiliser has done serious harm to environment, human health and ecology. There is therefore a need to immediately:

a) Draw a balance sheet of the collapse of Green Revolution. A post mortem of Green Revolution is absolutely necessary. We need

Over the years, the farm earnings of marginal farmers have dropped to less than that of the daily wage labourers.

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to know what went wrong with agriculture, so that we don’t repeat the same mistakes.

b) Investments and increased outlays for agricultural research that is based on external chemical inputs like fertiliser and pesticides need to be discouraged. Besides calling for a social audit of agricultural research to know how much of it has benefited or damaged Indian agriculture, financial allocation should be made for reviving low-input agriculture, which uses cheap and locally available technology and in turn improves production, reduces cost of production and protects environment.

c) Draw a map of the soil health of India. In future, all crop introductions should be based on the soil health conditions. If a crop (including cash crops) has the possibility of destroying the soil fertility and thereby accentuating the sustainability crisis, that crop should not be allowed.

d) Role of technology too needs to be ascertained. Pesticides were promoted blindly on rice, for instance. The International Rice Research Institute in the Philippines now says that pesticides on rice were a waste of time and effort in Asia. Pesticides on rice need to be banned, and for cotton there is an urgent need to promote non-chemical farming as successfully demonstrated in several parts of the country.

e) Hybrid crops require almost double the amount of water than the high-yielding crops. Unfortunately, much of what is cultivated in rainfed areas are the hybrid varieties – in cotton, rice, maize, coarse cereals and vegetables. All these crops are water guzzling and have compounded the crisis in sustainability. Hybrid crops need to be banned for the rain-fed areas. Cropping pattern should be on the basis of water availability.

f) Investments in rainwater harvesting need to be immediately shifted to the revival of the traditional forms of water conservation – ponds and tanks.

g) Dry-land crops like coarse-cereals, pulses and oilseeds require adequate policy measures that bring shine to these forgotten grains. Imports under bilateral trade agreements must protect the dryland crops. In Rajasthan, for instance, mustard is a perfect crop that synchronizes with the semi-arid conditions. But indiscriminate edible oil imports are hitting the profitability in mustard.

h) Fodder cultivation, and the emphasis on the local breed of cattle (and improving its productivity, rather than importing exotic breeds) need to be encouraged.

i) Banks only provide credit for technology-oriented farming systems. This has to be extended to organic agriculture, for which an Organic Bank need to be created by NABARD (like the technology

credit that goes through the private Rabo Bank).

Multiple Cropping: Emphasis on commodities approach during the green revolution has encouraged monocultures, loss of biodiversity, encouraged food trade in some commodities, distorted domestic markets, and disrupted the micro-nutrient availability in soil, plant, animals and for humans. This is what led to the destruction of the natural resource base, the foundation for sustainable farming.

Thrust on monocultures has also pushed in trade activities, encouraged food miles, adding to greenhouse emissions, water mining, and destruction of farm incomes. The need is to revert back to the time-tested farming systems that relied on mixed cropping and its integration with farm animals, thereby meeting the household and community

The dryland areas, comprising nearly 70 per cent of the cultivable lands continue to drown in misery and apathy.



nutrition needs from the available farm holdings. a) Contract farming can compound the

agrarian crisis. Contract farming provides the companies to go in for still intensive farming systems thereby destroying the soil productivity. It is therefore important that all contract-farming approvals be based on farm sustainability parameters. The contract must specify that the company will return back the land to the farmer (which it takes on lease) in the same fertility conditions that existing at the time of the contract. This should be mandatory for all present and future contracts.

b) To revive and resurrect agriculture in a way that it becomes sustainable in the long-run and therefore ensures livelihood security for farmers (thereby restricting their migration to urban areas), there is an immediate need to provide financial incentive to farmers who undertake non-chemical farming and go in for organic and natural farming practices. A minimum incentive of Rs 1400 per acre for multiple cropping systems based on natural farming should be given to small and marginal farmers.

This incentive will supplement the additional cost of labour and also compensate for the yield losses in the first three years. It should be treated at par with the incentives that are given to the industry in the name of improving efficiency.

c) Sale of tractors for small farmers should be banned. Once the symbol of progressive farming, tractors have now become a symbol of farmer suicides. There are 70 per cent more tractors, for instance, in Punjab than what is required. This is because of the easy availability of bank loans for the purchase of tractors by small farmers. In southern India,

tractor manufacturers are signing MoU with universities to promote the sales. This will have a disastrous impact on the farming communities.

The need of the hour is to reduce the dependence on external inputs; turn farming systems sustainable; change cropping-pattern to suit the environmental needs; provide assured prices for farm produce; set up a local marketing network; and ensure an assured income for the farmers based on his landholding. On the other hand what the government is promoting is just the opposite: contract farming, crop diversification, cheaper imports, GM crop varieties and corporate agriculture. The government is trying to withdraw the mechanism of procurement pricing and the food procurement system leaving farmers

to face the vagaries of the markets.

Generating rural employment is the biggest concern. One of the surest ways to meet the challenge of a job for every hand is to

resurrect agriculture in a way that it does not lead to destruction of the natural resource base, and at the same time encouraging village industries that provide the much-needed value addition. On the one hand the government has amended the tariff structures as per WTO norms so as to allow cheaper agricultural imports, and on the other the government talks of creating rural employment. Both these steps are self-contradictory. Agricultural imports into the country are on an upswing resulting in job losses. Take the example of wheat. Despite no shortfall in wheat production, India has become the world’s biggest importer of wheat. What is not being realised is that importing food is like importing unemployment? In other words, the government is trying to convey very loudly that the country does not require farmers. Private companies will produce food for the nation. This needs to be reversed. And therefore the urgent need for a paradigm shift in budgeting for agriculture.

The need is to revert back to the time-tested farming systems that relied on mixed cropping and its integration with farm animals.

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Visiting Faculty - IIPM, Chennai

India’s GrowingWater CrisisDr. P. Ravilochanan

Nationalisation As A Budgetary Solution



Yes, the title would certainly make the readers feel that the subject matter of this paper is inappropriate and also wacky. But the

grim reality is aptly captured by the title. Please recollect the budgetary efforts, which go unending since Independence. While preparation and announcement of budget has turned out to be a crucial task for the ruling party and especially Finance Minister, whether the beneficiaries of the budget [the people] are any way supported by it is any body’s guess. The necessities of human being are: food, cloth and shelter, which are well known as untaught truth to all new-born. But the primary constituent in food is water. What amount of steps or efforts have been taken over these years since Independence towards this, is widely discussed and written. But the sorry state of affairs is that as years roll down, the water-based disputes and divisions are worsening. At this stage it is worthwhile referring to a few fundamental facts about water.

Water is a resource, which is absolutely necessary for the sustained development of a state. Regrettably, the statistics regarding the availability of fresh water in the world are staggering. It is estimated that 1 billion people do not have access to clean water, and 1.7 billion do not have sanitation [Case study 63 on Cauvery water dispute of The Hindu, 1996]. The situation in India is a primary example of these startling statistics. The most significant environmental problem in India today is inadequate water supplies for sanitation and drinking. Official reports indicate that in 1993, 42.9 percent of urban India and only 3.5 percent of rural India had access to sanitation facilities. Similarly, 84.9 percent of the urban population and 82 percent of the rural population of India had clean drinking water [Case study 63 on Cauvery water dispute of The Hindu, 1996]. Of the water available to India, the agricultural sector

consumes 85 percent of the supply. Demand for water from agriculture is expected to rise from 46 Mham in 1990 to 85.5 Mham in 2025. In addition to the agricultural water, demand portions of India are also industrial centres, which require a substantial amount of water. As rapid growth in India continues, this demand is projected to raise three fold by 2025 [Case study 63 on Cauvery water dispute of The Hindu, 1996]

In the light of above, consider what is being done in the past few years over availability of water. The government of India has rightly realised a few years back, that there must be a large-scale infrastructural development in the country to propel the growth and also to sustain the development. Unfortunately, this realisation has addressed only part of the major issue. Thanks to Golden Quadrilateral roads that India is undergoing a metamorphosis in road building and similarly in the communication sectors. But the extent of growth generated by these two sectors cannot

fully reward the society if it is not matched by a conscious effort to ensure availability of water for all – people, agriculture, industry, etc.

Let us consider Indian states free from any sort of water disputes. Are there any? The answer is a resounding ‘no’. What explains this sad state of affairs? India has achieved expertise in Budget making and who else but the current Prime Minister and the Finance Minister, the world-renowned economists, have proved their mettle while preparing the Budget for the economy. But even they appear to have side-lined or marginalised the need to address the water issue. If we spend a few lines on the consequences of on-going water dispute happening all around Bharat, it would be clear that only in such disputes there is equality and unanimity among the states and their people. In the south it is Cauvery water dispute, in the east it is Ganges water dispute and in the West it is

Agricultural sector consumes 85 percent of the supply and demand is expected to rise from 46 Mham in 1990 to 85.5 Mham in 2025.

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Punjab water dispute. Is the scene complete? We have the national pride in mentioning the name of these rivers in national anthem [check yourself by reciting the national anthem], but do the utmost disrespect to these rivers by using the water flowing through them as the seeds for disputes. Consider the animosity that is being perpetrated because of such disputes. The people of Punjab are treated as hostile enemies by neighbouring states and for the people of Tamilnadu and Karnataka, it is always a nightmare as they don’t know when the inter-state transport would come to a grinding halt. They are targeted by the warring group in demonstrations and violence. The same variant and degree of animosity is exhibited and experienced between Tamilnadu and Kerala in matters concerning the Mullai periyar dam issue. In the east, there is always a dispute between the states of Bihar, West Bengal, and Uttar Pradesh and for a change Bangladesh, to give an international status to this dispute. In each state, agricultural prosperity is necessary, drinking water is needed for all people, industrial development hinges on water availability, millions of people depend on water for their day to day survival through fishing, etc. Added to these, the power generation which, has turned out to be a condition for sustained growth depends on water flow. All these pressing necessities around the country, has not evoked any fruitful response from the rulers of the country since Independence. Each party has only succeeded in resorting to a handling, which worsened the situation. The dispute redressal between the states depends on who rules at the centre and that rules the states in dispute. What is then the alternative?

The best solution for this quandary can be achieved by involving in nationalisation of water resources. Many writers and thinkers would immediately start writing pages and pages quoting the experience of nationalisation in India and world

around to argue against nationalisation. Giving due value to such contributions, the reasoning that supports the above belief is enunciated here:

1. Nationalisation would ensure according rightful priority for various issues. In such a task, it is the national interest, which remains a guiding point. Consider Mrs. Indira Gandhi’s revolutionary bank nationalisation approach. The Ministry of Finance and the Finance Ministers after 1969 have been addressing the banking related issues in the budget. Hitherto un-banked and under-banked centres had banking. The volume of deposit raised went up by millions. The volume of credit flow surpassed the rate of deposit mobilisation. The beneficiaries of assistance turned out to be people. While

availability of credit through nationalised banks gave a hope for poor and down trodden to see the light at the end of the tunnel, the inter-state

difference in growth and development started coming down. In the same lines, if water is nationalised, there will be a nation-based priority setting and plan, rather than state-centered plan. One may argue that nationalised banks are being now made to compete with private sector banks. When is this happening? After a period of about three decades. This means, over these three decades, banks have made an inroad into Indian villages and now that people are benefited, it is the institution that must work towards their competitive stance. In the same way, nationalise water resources, allow the people to benefit. Use it for priority projects like power generation and modernising agriculture. The government should use this status to sort out all the sharing issues based on the guidance and models of technicians and specialists. At a

The best solution for the present water quandaries can be achieved by involving in nationalisation of water resources.



time when the objects of nationalisation are proved to have been achieved, then go back to the old model of making water a state subject, but within a very strict surveillance mechanism of the centre. The water sharing formula evolved should be enforced on the states and provision for review of the formula should be present to address the needs of the changes situations over a long period.

2. In the road sector of India, a huge volume of investment is made by the multinationals, thanks to liberalisation. The outcome of such an exercise is there, to be seen to be believed. Extend the same approach for water resources. Let the government develop an integrated approach to use of water around the country and then come up with multiple projects. The Finance Minister must provide liberal funds for such projects, inviting multinationals for their participation in plan execution. In this approach, where is the scope for any one state to object or come up with unreasonable demand. Once these national water projects are completed, imagine what amount of sustainable development can happen.

3. In a Federal set up, resources, which affect the interest of all the states, ideally should be centrally owned and administered. If not, depending upon the party in power in a state, the policy would also change. For example, so long Madam Jayalalitha was in power in Tamilnadu, her counterpart Mr. S.M. Krishna belonging to Congress party, was never allowed a free hand to decide the Cauvery water issue. Now that Mr. Karunanidhi is heading Tamilnadu, there appears to be some ease in relationship between the states [though no resolution

is in sight for the Cauvery dispute]. Such a situation can be avoided when the water resource is nationalised. At least there would be consistency in policy formulation and implementation of projects.

4. Administration of a nationalised resource will always be reviewed so as to initiate mid-course correction. But there is no scope for any review if water remains a state level subject. Even if a review is attempted, the party belonging to the same alliance should rule all the states in dispute and the issue does not have any political importance. Both these conditions are remote possibility. Then without any review if the states stick to their position, the sufferers are the people and

the growth prospects. This could be avoided with nationalisation of water resources.5. Consider another very vital aspect that has the potential to sound

the death knell for the prospects of Ganges valley. The Hindu dated 03.02.2007 reports “India cautioned on melting glaciers.“ Ms. Shruti Shukla, Programme Officer, Climate Change and Energy Programme, WWF-India, has stated “we are already seeing glaciers are receding at a faster rate and islands have disappeared and then there is all this freak weather phenomena.” The report further cautions that ‘the signs already back up forecasts that as the mercury rises the Indian subcontinent, home to one-sixth of humanity, will be one of the worst-affected regions.’ Research project about the Gangotri glacier – which feeds Ganges – has found out that the average rate of retreat has almost doubled to 34 meters a year compared to 19 meters in 1971. Based on this experts say that melting of the Himalayan glaciers could have serious consequences as more than

India needs to have a national policy on water rather than a state level and political party level approach to water disputes.

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500 million residents [almost half of India’s total population] of the Indus, Ganges and Brahmaputra river basin rely on them for water supply. Consider this timely report. Don’t it tells us that we need to have a national policy on water rather than a state level and political party level approach to water disputes ? In the event of the outcome projected by the above report coming true in the near future, what will be India? Are we not to have a long term perspective in such crucial issues? The entire and ostensible growth rate of 9 % and above, revolution in IT, automobile, road and service sectors will become irrelevant and fail to propel the growth. For this single reason itself, nationalisation of water resource has turned out to be the only wisest alternative.

6. A compelling reason for nationalisation is that at a time when oil was freely available around the world, there was no international dispute. When the same resource has turned out to be a scarce and high prized one, all types of internal disputes have arisen. Same thing will happen if water resource is not properly monitored and administered. Imagine the day when with global warming taking place in the northern hemisphere at a rapid rate [glaziers in Arctic region are fast melting, thanks to the contribution of the developing countries to global warming], water will become a most precious commodity for the Western world. They will be on the prowl to locate countries and regions with lot of promise of water supply. India is bound to be one such region attracting the world power, as usual under the leadership of America and Britain, claiming they are ordained to cleanse the world’s biggest democracy.

If water remains a state level subject in such a situation, several possibilities could be imagined. States with ample water resource may venture to engage themselves independently with foreign powers posing a threat to the unity among states. What has happened to Iraq can happen here also, if water becomes so crucial resource for the world. It should be noted that at times Imaginations also become Reality. While there could be alternative source for fuel, there is absolutely no alternative for water. Additionally, consider the international threat from extremists and terrorists. They target the major reservoirs and sources. Left to the States, many states do not have the wherewithal or the technology to protect such attacks. Examples are that of Assam and Arunachal Pradesh struggling with the problem of insurgencies. If water becomes the nationalised sector, then funds would

not be a constraint for protecting the reservoirs and sources, apart from preventing the onslaught perpetrated by international powers.

7. It is well known that among the sources of energy, hydro electric power is the cheapest. With growth prospects predicted at 10% the demand for electric power is going to increase manifold. The power-starved country will become a power-deficit country. This could be addressed only through a national thrust towards power generation and distribution. Once it becomes priority, it is obvious that the ownership of water resource should be centralised. Failure to address this issue now will lead to two crises: water shortage and power shortage. Won’t it be a sensible option then to nationalise water resource and through that tackle the power position?

The Gangotri glacier, source of the Ganges, has been receding at the rate of 10-30 metres per year over the second half of this century.

Finance Minister in this context has to come up with a proposal for nationalisation of water resources by making it mandatory for the states to contribute towards the development of water resources. Apart from centre funding the development projects on water, states have to be allotted funds for creating, maintaining and strengthening the internal watercourse including, tanks, canals and river course. In this regard, it is worthwhile remembering that when the Cauvery water dispute reached a peak, in Tamilnadu the then Chief Minister went on a fast, film personalities conducted two processions and Mr. Rajini Kanth made an announcement that he would contribute one crore rupee as his contribution if any party is willing to start a project inter-linking the rivers in the North and South. Several such contributions would be flowing in once water becomes a national priority and national river water grid is started. Further, the Finance Minister can also float bonds on the lines of Infrastructure Development Funds, to support the funding of water development. Added to this, look at the recent initiatives of Bhagwan Sri Sathya Sai of Puttaparthi, in taking up a cause for the sake of millions of people in water starved Chennai city. Mata AmrithananthaMayi has done a great service by constructing houses for tsunami victims and handing over the keys of houses built for re-habilitation, to the Chief Minister of Tamilnadu. Thousands of philanthropists and organisations around the world and in India competed with each other to extend support to tsunami victims in Tamilnadu. These are eye-openers to understand that people of this Great country rise above petty issues when there is a need for it. Instead of waiting for making water an issue dividing people, it is better to use it to unit them. If Sri Sathya Sai Central Trust, Mata AmrithananthaMayi and several such religious and social leaders can unite people for social cause, the shrewd Finance Minister should intelligently capitalise on this and come up with nationalisation of water resources in the forthcoming budget.

Very unexpectedly,

economic journalism

that ages well

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Reader and Head, Department of Economics, A.M.Jain College, Chennai.

Indian Agriculture At The Cross Roads…Or On The ThresholdDr. R. Srinivasan



Prelude: The Indian development trends and overall economic growth indicators point to a significant leap in efforts to become one of the super-powers of the planet in the near future. From our first citizen to several study groups have a vision for 2020. The Millennium Development goals of the United Nations are indicative of the fields in which the international community should work together for the removal of the social stigma of Poverty world wide. India is a signatory to it.

Human development is first and foremost about allowing people to lead a life that they value and enabling them to realise their potential as human beings. The normative framework for human development is today reflected in the broad vision set out in the Millennium Development Goals, the internationally agreed set of time-bound goals for reducing extreme poverty, extending gender equality and advancing opportunities for health and education. Progress towards these objectives provides a benchmark for assessing the international community’s resolve in translating commitments into action. More than that, it is a condition for building shared prosperity and collective security in our increasingly interdependent worldi

Focus: Various policies have been put into operation from time to time by the National and State Governments for the development of Indian Agriculture, the last one in the year 2002.

“The decline in the growth of agriculture has now led to a climate of despair among farmer families,

policy makers and the general public. Some areas in the States of Maharashtra, Andhra, Karnataka and Kerala have been affected by a serious agrarian crisis, leading occasionally to farmers’ suicides.”ii

The problems of the Indian farmers are manifold and there is the danger of farmers losing opportunities in the light of Globalisation. Reasons are many and the consequent results are highlighted in the report cited above. In serving the farmer, he has to be ensured of a fair return for his employment and this can be attempted only through a multi pronged approach. There has been a stagnant and even negative trend in Indian Agricultural output over the last few years. The areas that require urgent attention

have been neglected far too long and it has resulted in deceleration of output.

A cursory look into the Table-1, points to the growth of output on a

higher growth rate till 1990-91, the period marked by ‘Green Revolution’. Ever since 1990-91, food grains output had been erratic and with monsoon failures, it even recorded negative growth rate in 2002-03 and again in 2004-05. It is estimated that in 2005-06 food grains production would be around 209.0 million tonnes. Thus unstable production of food grains has resulted in issues of sustainability of our development process.

Small and Marginal farmers have found it unviable and large areas of cultivable land remain in the hands of a small percentage of the farming community. There has been lack of adequate employment opportunities in the rural areas. This has led to aggravation of poverty and migration of population from rural areas. The following areas need to be addressed:

The United Nations have predicted scarcity of water where even 10 litres may not be available world wide by 2025.

Year 1 9 5 0 -51

1 9 6 0 -61

1 9 7 0 -71

1 9 8 0 -81

1 9 9 0 -91

2 0 0 0 -01

2 0 0 1 -02

2 0 0 2 -03

2 0 0 3 -04

2 0 0 4 -05

Food grains in million tonnes

50.8 82.0 108.4 129.6 176.4 196.8 212.9 174.8 213.5 204.6

TABLE: 1 - PRODUCTION OF FOOD GRAINSiii

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• Land reforms• Irrigation• Use of technology• Fair and stable prices for the farm produce• Post harvest technology• Combating competition from the global market.

It is in the light of these that the objectives of this paper are to be set.• To analyse the problems faced Indian

agriculture• To devise a suitable strategy for the development

of Indian Agriculture.• To develop a time frame for the achievement of

MDG in India, and• To identify areas for suitable fiscal support.

This paper is an attempt to highlight the policy areas which require urgent attention failing which agriculture would continue to have its adverse effects on the economy.

Land Reforms:The land reform measures have remained ineffective since it has not facilitated ownership of land to the tiller. After five decades, only now gender issues have been addressed, and women have become eligible to own ancestral pieces of land. Vital steps have to be taken to ensure cultivable land does not remain fallow.

Since land is scarce, demand for it being higher, land areas remaining with absentee landlords for fairly long period and cultivated by tenant farmers need to be redistributed by paying suitable package of compensation. The state may ensure transfer of ownership only for effective utilisation of land.

Irrigation:As Indian agriculture still continues to be a gamble in monsoon, and scanty rainfall and increased unscientific use of water has led to acute scarcity of

water. Due to encroachment of tanks and riverbeds, water table has deteriorated and it is reflected in water disputes over sharing of rain fed river water. The state has to earmark substantial resources for rain water harvesting through construction of check dams, and ponds as several lakes have become lands for agriculture or residential purposes. It has to be ensured that water bodies are properly maintained and irrigation is provided scientifically. The farmers should be trained to harvest rainwater and use scarce water more productively. Water should be treated as a national resource and asset.

Budgetary support by providing subsidies for drip irrigation and asset formation to create water bodies through long and medium term farm credit is required. Interlinking of rivers at least in a phased manner would allow nearly 80% of rainwater flowing into the seas to be diverted to provide irrigation opportunities to more than 60% of non irrigated land areas. This measure is bound to provide adequate employment opportunities to the rural labour who suffer from lack of employment opportunities even for 120 days in a year. Such a step requires massive investment and it may not be feasible within the next 10 years even. Still due to the enormity of the rural

unemployment problem, the water starving Indian farmers and urgent need for harnessing water resources to increase agricultural output warrants such

a step. Moreover even after 57 years of planned development, it has not been possible to ensure safe drinking water to all the villages. The worldwide average consumption of water, range from 350 litres of water in Europe to 550 litres of water in the United States, in the developed countries. It is not even 10 litres per day in some of the African countries. In India average per capita consumption on an average is about 150 litres per dayiv.

In order to avert the impending crisis, more rain water which is allowed to go untapped and

In India, the average per capita consumption of water, on an average is about 150 litres per day.



unutilised, should be stored and be made available for both agriculture and daily use by the people. The United Nations have predicted scarcity of water where even 10 litres may not be available world wide by 2025v. The States and the Central governments should share the financial burden and it may resort to special borrowing for financing the same.

In order to avoid wastage of water, progressive water tariffs may be levied on people using water far above national consumption of water. Water management, water distribution and water use need to directed and supervised by the state without which the rich and affluent would have more access to water and larger section may find it difficult to even have normal share of water. Community involvement in watershed management, better distribution and knowledge dissemination would lead to cost effective use of water for varied purposes. Disaster management, flood control, and suitable drainage would ensure that soil erosion not taking place. The ecological and environmental issues need to be addressed while formulating a water use and water sharing policy.

Use Of Technology: Technology refers to the skill set with which man can work with machines to coordinate and reap the benefits of output. The core competencies and their suitability is well discussed in the context of its applicability to Indian agriculturevi.

“Technology can help transform multiple areas such as education and training, agriculture and food processing…”vii India needs to use available technology for eradication of poverty and upliftment of the farmers.

Choice of appropriate technology, use of hybrid varieties of seeds, chemical and bio-fertilisers and pesticides, irrigation, harvesting and post harvesting technology, food processing and preservation of food grains and strengthening the market system

with market information and agricultural extension services are some areas in which the rural people can be trained to suit their farm practices. Any advent of new technology should result in more benefits such as time saving and cost minimising elements. Indian farmers have remained far too long without institutional support to meet their farming needs. This would involve training and development of rural technology centres. These centres should address the problems of the farmers in the use of tools, maintenance and farm produce. Adequate warehousing facilities are required if agriculture is to be transformed into commercial activity. Preservation of food material, processing of fruits to preserve their durability and market related information should all be available for the farmers to benefit.

Indian farmers have been using chemical inputs without careful understanding of the organic content of the soil. This has led to loss of fertility of soil since excessive use of chemical fertilisers had been done without careful scientific examination. Chemical fertilisers have to be used along with organic bio-fertilisers, if the soil health is to be maintained. Thus the need for soil testing laboratories and the suitability of land for a particular crop need to be assessed even before farmers sow the seeds. Rotation of crops also goes a long way in restoring farm land’s fertility.

But prices and other economic considerations have been instrumental in the choice of crops. Thus land has been subjected to irrational use. With the controls being removed and

markets being thrown open it would expose the Indian farming’s vulnerability to face world trade.

At the same time, globalisation of agricultural trade would bring more opportunities with better access to world market; this should create more employment and income generation. For poor farmers economic growth with equity will give increased entitlement. Such a programme would entail creating a suitable infrastructure of storage,

The estimated loss of farm output annually amounts to nearly 1,15,000 crores. Even after discounting 50% of it, the loss appears phenomenal.

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warehousing and information centres. While this should help in building buffer stock of all essential goods it should act as premium against inflationary pressures. This should also help to overcome any unprecedented drought conditions.

Indian farm inputs and their prices have continued to affect farmers’ income generation to a large extent. While the cost of cultivation which has been dependent on inputs derived from industries has gone up manifold the output prices have remained disadvantageous to the farmer. Indian farmer continues to suffer with the age-old problem of indebtedness and there is no visible solution to enhance his economic well being. That has been the major reason for the subsidisation of farm inputs. Without subsidies if the farmer is to fend for his livelihood, there is the danger of his losing heavily and it would not provide any relief. With adequate insurance cover and strengthening of farm credit through cooperatives, farmers’ interest can be protected. Without such an attempt, any effort to make increased use of new technologies would remain futile.

Fair And Stable Prices To The Farmers:Indian farmers have remained under unorganised market and pricing mechanism has remained under the Minimum Support Prices (MSP). Political and non-economic considerations have influenced and this has distorted the ability of the farmer to command higher output prices. The State Procurement mechanism has dwelt on procuring food material and sugar in order the help its Public Distribution System aimed at protecting the Economically Weaker Sections of the society (EWS). The ongoing economic reforms should be tuned to strengthen terms of trade for the farmer. The trade policies have been found to favour more of industries and it has not protected the farmers. The Commission on Agricultural Costs and Prices (CACP) set up in

1965 had not been able to protect the farmers from rising input costs and monitor output prices. The recommendations have remained adhoc and it has not alleviated the farmers from poverty. Though the MSP is announced well in advance of the sowing season to protect the farmers from adverse effects of the market, such prices have not reflected the cost of inputs during cultivation and trends in market prices for farm produce in the post harvest period. The Indian farmers are forced to sell their produce mainly due to their debts and inability to store the products.

The price spread indicates the prices received by the farmer and the final price paid for it by the consumers. There is a vast difference with large price spreads indicating the prevalence of

middlemen and lack of market opportunities at the village level to ensure fair returns to the farmer. Thus the farmer needs to be protected with stable prices for the industrial

inputs and remunerative prices for his output. Farm practices are responsive to price changes. Since cultivation has become expensive and out prices have not yielded fair returns, the deceleration of farm output recorded over last few years need to be looked into. Right from the Prime Minister to various agricultural scientists have suggested the need for embarking on a Second Green Revolution. The first green revolution has benefited only few food crops. Its impact on cereals and pulses through adequate dry land cultivation practices has not received adequate attention of the policy makers. The central government should draw time bound methods so that dry farm techniques are covered and price policies should also cover non food materials. The income level of the farmer does not rest with farm practices alone. While agricultural operations have remained seasonal employment of farm labour during off season has to be strengthened. It is in this context also that post harvest technologies need adequate attention.

Interlinking of rivers would allow about 80% of rainwater fl owing into the seas to be diverted to nearly 60% of non-irrigated areas.



Post Harvest Technology: This refers to suitable implementation of farm related technology to process, to protect and to add value to the farm output. Agro based industries, handicrafts, and cottage industries need to be given due importance and this would not be possible without the rural people being trained. This requires agricultural extension services and supplementary effort to make farm practices more viable. Alternate employment opportunities would help the farmers during extreme drought conditions. Small scale industries with necessary financial support from institutional agencies have to be initiated to create infrastructure for scientific storing of output. Loss of output estimated annually amounts to more than 1,15,000 crores. This is evident from the open letter addressed to the finance minister from an NGO cannot be neglectedviii. Even after discounting the loss to 50% the loss appears phenomenal. It is in this area post harvest technology can play significant role in reducing output loss and making farm practices more viable.

Competition From Global Market: Globalisation has thrown open trade opportunities to every section of the society. Farmers if trained properly can harness it to their advantage. With knowledge economy and Information technology having a wide access it should not be difficult for the government to encourage trade with suitable policies. Continuous dialogue through WTO and removal trade irritants need to be sorted out and

Indian farmer can transform the traditional mindset of subsistent farming replaced by commercial farming. Such a step cannot be taken by any individual and it requires a continuous watchdog to prevent oligarchic and imperfect market conditions adversely affecting the trade potential of the farmers.

Conclusion: Policy initiatives need to be taken to remove poverty from the rural areas in India in consonance with the Millennium Development Goals by the year 2015. To benefit substantial sections of population living below poverty line, concrete steps need to be taken urgently without which the targets would remain only on paper and the real benefits would get appropriated in a more skewed manner, thus widening the gap between the rich and the poor. Development of agriculture need to be focused, since more than 60% of the population depends on it for their employment. If their problems are not addressed there is the danger of migration of labour and its effect would have more negative impact on the economy.

Loss of Crops Per Year

Oilseeds Rs. 25, 000 crores

Potato Rs. 5,000 crores

Sugarcane Rs. 1,500 crores

Wheat Rs. 21,000 crores

Rice Rs. 27,000 crores

Milk Rs. 34,000 crores

Tea Rs. 2,100 crores

Spices and Plantation Crops Rs. 100 crores

Total Rs. 1,15,800 crores

References

iHuman Development Report 2006: Beyond scarcity: Power, poverty and the global water crisis.iiFinal Report of The National commission on farmers: SERVING FARMERS AND SAVING FARMING. (Submitted on 04-10-2006).iiiEconomic Survey, 2006. (Govt.of India)ivHuman development Report, 2006 : United Nations Development Programme.vIbid.viABDUL KALAM A.P.J. WITH Y.S.RAJU, INDIA 2020 – A Vision for the New Millennium.viiIbid.viiiVandana Shiva: An open Letter To India’s Finance Minister, dt.29-06-2004. (Managing trustee of ZNet).

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Principal Consultant, Indian Council for Marketing and Research (ICMR), New Delhi

Curing India’s Ill-Health: The Critical Need For Coherent EffortsDripto Mukhopdhyay



Many of the developing countries including India accepted IMF funding under ‘Structural Adjustment

Programme (SAP)’ in early nineties. As a corollary, they had to adhere to the World Bank policy of reducing expenditure on social welfare, especially health sector, to cope up with the situation. The health care was no longer viewed as a ‘need’, but had been started to be viewed as a ‘demand’ defined by consumer’s ability and willingness to pay. The Bank advocated mobilising additional resources from within the health sector itself, tapping households for payments, introduction of user-fees in public hospitals, and devising mechanisms for risk-sharing through insurance schemes as coping-up options. The basic premise of this process was that the public investment should focus on the preventive programmes whereas the cost recovery mechanisms would be applicable to the curative services.

However, subsequent results of adopting the adjustment policies in various countries was rather disappointing, especially regarding social sectors. An observation by the UNICEF commented that for the first time the modern era, a large section of the population was sliding back into poverty. Under these circumstances, the World Bank realised that it is necessary to provide a safety net for the poorest and vulnerable if SAP had to succeed. Therefore, it had been admitted that a selective investment is an utmost requirement health and allied sectors to achieve economic development.

India was very much a part of this entire experience. The economic reforms of the 90s have resulted in a downward trend both in terms of government’s total budget as well as a proportion of the Gross Domestic Product (GDP). The expenditure on public

health reached its peak in the mid-80s. It was 1.6 per cent of the GDP and 3.95 per cent of the government’s budget. By the year 2005 it reached to a dismal figure of 0.8 per cent and 2.4 per cent respectively. The new investment by the Ministry of Health has declined from 12 per cent in 1986-87 to mere 5 per cent 2004-05.

Coupled with these declining trend in major indicators regarding health sector which clearly reflects governments lack of concern regarding the same, another cause of worry is people’s lack of confidence in the public health institutions. National Sample Survey (NSS) data available for the years 1987 and 1996 had shown a decline of over 30 percent in the patients seeking health care in public health

institutions. These two evidences

strongly suggest that the health sector demands a lot more attention from the government which has been grossly

neglected and under-financed during the 90s. The National Common Minimum Programme (CMP) of the United Progressive Alliance (UPA) government set four important guidelines for the health sector for building a stronger and competent health sector in the country, especially in rural India. • Increasing allocation to a level of 2 to 3 per

cent of the GDP. • Major expenditure on primary health care

and communicable diseases with political backing for HIV/AIDS

• Health insurance for the poor• Regulation of the drug prices for “life-

saving” drugs and revival of the public sector production units.

In 2004-05 out of the total central budget outlay of Rs. 1637.20 billion, 4.6 per cent was allocated to the health sector. Independent estimates suggested that an exchequer up to Rs.

NSS data for 1987 and 1996 had shown a decline of over 30 % in the patients seeking health care in public health institutions.

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3000 billion would be required to implement the CMP promises on health, education and employment. The central government could only allocate an extra Rs. 100 billion in 2004-05. The UPA government had committed a three per cent of GDP for the health sector before the current term of the UPA government comes to an end. Accordingly, by 2008-09, assuming the current growth rate, India’s GDP is likely to be Rs. 52000 billion and three per cent of that would be Rs. 1500 billion. This amount is about five times of what the state and the central governments spend currently on health sector. Is it at all achievable? The realistic answer would perhaps be a big no given the current level of spending and the fiscal conditions of the state governments. An analysis of data on revenue expenditure and expenditure on health for 14 major states in the country suggests that in case of four states, viz., Bihar, Orissa, Gujarat and Uttar Pradesh the state governments’ expenditure on health has declined in real terms. At the all India level the health expenditure has increased only by 7.34 per cent in real terms. The elasticity of health expenditure to per capita SGDP has been reported as 0.68. It suggests that for every one per cent increase per capita SGDP health care expenditure has increased by about 0.68 per cent. Therefore, this analysis clearly asserts that the initiatives by the state governments towards augmenting resources to the health sector are largely missing.

The outcome of these neglects towards the health sector is obvious. Government health centres and hospitals are suffering from tremendous under-staffing, lack of medicines, over crowding of patients, vir tually no maintenance of the health care centres and almost non-existent management. Reports regarding patients lying on the floor due to

shortage of beds, dogs and patients sharing the same bed etc. have become common phenomena in the government health care centres. These are no more shocking news to the common mass. Apart from these, the addendums are malpractices and negligence on part of the management, doctors and support staffs regarding quality of treatments. As a result people, including the poor, move towards private medical clinics and hospitals comprising both qualified and non-qualified medical practitioners. These private medical practitioners including the quacks charge exorbitant prices taking advantage of the situation.

The central government had already taken a few steps as corrective mechanisms of this

dismal situation of this vital sector. National Rural Health Mission (NRHM) has been introduced as a part of the same. The focus of the NHRM was on

family planning services, immunisation, ante-natal services, selected disease surveillance and epidemic control. The goal of the mission is to improve the availability of access of quality health services, particularly, for those living in the rural areas, the poor people, women and children. This would be done through strengthening the three levels of rural health care centres, namely, sub-centre, PHC and CHC. Accredited Social Health Activist (ASHA) has been appointed at the village level to build the linkages with the health system in the rural areas. Additional resource allocation and up-gradation of the facilities at each level has been promised under this scheme. However, even the latest budget provisions did not reflect the same.

Apart from core NRHM, other commitments in UPA government’s budget were regarding health insurance, accelerated HIV/AIDS control

At the all India level the health expenditure incurred by different states has increased only by 7.34 per cent in real terms.



programme, tax holiday for setting up new hospitals in rural areas, duty cut on medical equipment and ambulance. Redesigning of Universal Health Insurance Scheme (UHIS) was proposed in the budget of 2004-05. The scheme was launched in the year 2003-04 focusing on the safety net of the individuals and families below poverty line. The revised scheme suggested a premium of Rs. 165, Rs. 248 and Rs. 330 for individual, a family of five members and a family of seven members respectively. The government proposed to subsidise the premium at the rate of Rs. 200 for individual, Rs. 300 for family of five and Rs. 400 for family of seven considering the fact that the BPL population do not have enough affordability to pay the premium. The Economic Survey 2004 suggested that in the first year after the launch of the scheme only 1 per cent of the persons covered under the scheme were BPL. This suggests the minuscule level of success of the scheme.

Even after raising the foreign equity cap in the insurance sector to 49 per cent not much activity is seen in the health insurance segment. A large number of externalities including the complexities in demand and supply side factors are responsible for poor development of the health insurance sector. Lack of actuarial data, lack of proper supply side for the delivery of health care and lack of standard procedure for costing in the hospitals are a few examples. Though the HIV/AIDS control programmes are receiving lots of funding from the government as well as from external agencies, studies suggest that only about 20 per cent of the fund set aside for this programmes reaches the ground and this is also not free of leakages due to various malpractices.

Tax holiday was extended on profits earned from setting up new hospitals with 100 or more

beds in rural areas for a five-year period. The purpose of this was to encourage setting up of new health care facilities in rural areas as it is well known fact that the hospital facilities are highly skewed towards the urban centres of the country. A study of profit before tax (PBT) of 139 private hospitals (listed and non-listed) suggests that almost 50 per cent of the hospitals are not paying any tax at all. Only about 12 per cent of the hospitals paid tax more than Rs. 10 lakhs. This suggests that tax holiday might not at all work as an incentive towards setting up new hospitals in the rural areas as a large number of hospitals even in the urban areas are not paying any tax. On the other hand, this may bring further distortions in the health sector. With its vulnerability to profit motive

and high information asymmetries tax incentives further promotes profit motive of private health care providers.

The foregoing analysis reveals a few important facts regarding Indian health sector and the budget allocations. Unfortunately, the budget document is essentially policy papers and not a plan document. It is extremely important to translate these policy documents into plans for implementation. Many of the priorities are stated without taking consideration of the ground realities and thus making the policies into mere paperwork. Any policy regarding the health sector development in the country needs to take into account the realities at the micro level. Studies revealed that in rural areas nearly 40 per cent of the days in a year employees are not available in the health centres either due to holidays or vacations or some unknown reason. This leaves the PHCs or the CHCs without any staff to provide care. The doctors and staffs are found reluctant to work in the rural areas not only due to physical hardship but also for

A study of profi t before tax (PBT) of 139 private hospitals suggests that almost 50 % of them are not paying any tax at all.

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lack of opportunities for professional growth. People buy medicines from the PHCs and CHCs which are supposed to be distributed free of cost. A recent survey of patients in Uttaranchal reveals that people travel far away districts for treatments that require attentions from qualified doctors. The quacks and RMPs are the major service providers in most of the rural areas even in case of serious diseases. A large proportion of the rural population still believes that they would die if they are taken to the hospital for treatment. All these are happening instead of existence of a so called organised public health service provision system in most of the regions of our country. Given these complex conditions and challenges in our health sector, the budget must go in tandem with a proper health sector reform process. The reform process needs to look into the strengthening the responsiveness of the health sector through higher allocation, a meaningful micro insurance sector, ensuring local participation to create awareness and public-private partnership. The reform process should also focus on using the existing infrastructure and manpower in a more effective and efficient manner. Development oriented human resource practices would be more powerful tool as it commits health care personnel to enhance quality of care. It should also take into consideration that appropriate institutional structures are essential for the growth and development of the health sector. Though it is often demanded from various quarters to increase the budget allocations, keeping in mind the fiscal condition of the central as well as state governments, the challenges cannot be met only with a higher budget allocation. The situation demands for a systematic and intelligent allocation and use of resources with the maximum possible budget allocation. The opportunities for public-private partnerships must be exploited at the state level to ensure equity, accountability, quality and affordability of the health services. Social

franchising is an effective tool to increase people’s access to health care products and services in rural and remote areas. Models for involving mother NGOs should be worked out for delivering key and essential services. A higher allocation of resources in the budget along with various other important initiatives regarding accessibility and affordability of the poor and rural mass would develop the health sector comprehensively.

ReferencesAhuja, 2004. Health Insurance for Poor,

Economic and Political Weekly, Vol. 39, No. 28.

Baru, R. 2000. Privatisation and Centralisation. Seminar 489: 29-33.

Bhat, and Saha, 2004. Health Sector, Indian Institute of Management, Ahmedabad

Bhat, R. 2000. Management Issues in the Implementation of User Fees Policy in Public Facilities (First Revised Draft). Report prepared for Health Sector Group, DFID, New Delhi, August

Economic Survey, various yearsGill, S., Ghuman, R.S. 2000. Rural Health:

Proactive Role for the State. Economic and Political Weekly Dec.16: 4474-4477.

Gupta, I., Dasgupta, P. 2002. Demand for Curative Health Care in Rural India: Choosing Between Private, Public and No Care. Working paper Series No. 32, National Council of Applied Economic Research, New Delhi.

Mondal, S. and Kanwal, V. 2006 Addressing Key Issues in the Light of Structural Adjustment Programme (SAP) in Health and Family Welfare Sector in India, Working Paper Series No 97. National Council of Applied Economic Research, New Delhi

Selvaraju V. 2003. Health-Care Expenditure in Rural India. Working Paper Series No. 90. National Council of Applied Economic Research, New Delhi.

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Former Professor—IIM-Ahmedabad & Director, P.S. Management Consultants,

Ahmedabad

A Green Foundation For GrowthDr. U.K.Srivastava

Suggestions For Agriculture And Food Processing Sectors.



As per just released information, GDP of our country has increased by 9% in 2005-06 as against the target of 8.4%. This has

been possible because of 6% growth in agriculture sector as against the target of 3.9%. However, only two crops- cotton and sugarcane, have induced this growth rate. Other crops have not done well. Further, over period of 5 years 2000- 2005, agriculture growth rate has been only 2.5%. The contribution of agriculture in GDP has come down to 20% only. Therefore the economy has virtually become agriculture proof. The decrease in agriculture production leads to only very small decrease in overall GDP growth.

The sector, however, employs 61% work force. About 58% of the work force employed in agriculture is engaged in crop husbandry. This is the real problem. If the sector does not grow, the population depending on it becomes poorer and indebted. Increase in number of suicides by the farmer indicates this fact.. This is worst in dry land and rain fed areas where the productivity is low. It is these areas, which produce pulses and oil seeds. Lack of progress in agriculture has resulted in the rise in inflation rate, which has increased to over 6%. Inflation, which is measured in year on year increase in prices, has shot up to 12.2% in case of food grains, 9.2% in case of fruits and vegetable and 8.3% in case of non food articles such as oil seeds.

One view is that if agriculture growth cannot keep pace to support 8 to 9% growth rate of economy, we should import these agricultural products and there is nothing to worry about. But what about 61% labour force in rural areas and its participation in the main stream of growing sectors. It is true that there are too many farmers engaged in a agriculture where productivity ratio with non agriculture sector is 1:7. This point to the

need for creating non-farm jobs for bulk of rural population. This is not happening at the desired pace. Therefore, there is a need to explore ways to increase the productivity of agriculture particularly the dry land /rain fed farming areas and all the allied sectors.

Besides the low productivity, there is large wastage of farm produce due to lack of storage, processing and marketing linkages. A recent study by Dun and Bradstreet has estimated wastage of farm produce to the extent of $13 billion annually, which affects the farm incomes and returns on farm investments. Consumer also pays for this wastage. Processing accounts for 2% of total fruits and vegetable production, 35% of milk production, 21% of meat and 6% poultry production.

Agriculture sector has yet to experience the benefits of economic reforms and liberalisation. The movement of farm produces; cess collection by APMC even on direct sales by farmers and such policies have not

been amended in all the States. The Model APMC Act has been adopted only in Madhya Pradesh, Himachal Pradesh, Punjab, Sikkim, Nagaland, Andhra Pradesh, Rajasthan, Chattisgarh, Orissa Maharashtra and Arunchal Pradesh . Even those States, which have adopted the model Act, have not accepted all the provisions of the Model Act. Model Act 2003 once implemented by all the States in full would allow:• Direct marketing by the producers• Establishment of markets by private bodies

/cooperatives or PPP• Promotion and contract farming• Separate markets for special commodities • Wider role of state Marketing Boards in training

and extensions.Thus the farm economy is still shackled and it

is the State Governments that are charged with

A research study undertaken by Dun & Bradstreet has estimated wastage of farm produce to the extent of $13 billion annually.

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the implementation of strategy for growth of agriculture.

Eleventh Five year Plan has planned a target of 4% rate of growth for agriculture sector. It is in this background that we have to look for measures for increasing agricultural production and productivity of all crops and better price realisation and increase in real incomes of the farmers through stronger processing and marketing linkages. Key areas for budgetary and policy support are

1. Involving greater public and private intervention in irrigation including increased efficiency of water use through drip irrigation and more outlay for watershed development projects.

2. Now that National Rain fed Area Authority is being set up it needs to be made properly functional with adequate funds. It has to give thrust to greater application of technology to improved dry land crops like pulses and oil seeds. Thrust should be to give research in dry land farming in a systems framework.

3. More allocation should be made for agriculture research and development of new crop varieties. The green revolution has tapered of and new tools of biotechnology need to be used to develop seed and planting material which is also disease and pest resistant. As a welcome step CSIR has adopted a policy of sharing the royalties of new technologies with scientist. ICAR have also to adopt similar policy to motivate the scientist to develop new technologies.

4. Last budget did promise greater availability of credit to farmers through Cooperative and commercial banks but there are still many bottlenecks in implementation. As the cost of funds is rising for cooperative and

commercial banks, it is becoming difficult to offer cheaper credit to farmers and keep their own viability intact. The Government has to address this issue in the light of M.S.Swaminathan Committee report.

5. Concept of AGRISNET needs to be developed in all the states to modernise the age-old extension system. In this context Gujarat has made a major intervention linking the scientist in its Agriculture Universities with each individual farmer through the Soil Health Card, wherein each farmer is given advice on the crops to be grown, crop practices on the basis of soil test and rain fall, water availability in his area. This pioneering program needs to be supported in all the states through Central Support.

6. GOI Model Act of APMC’s 2003 need to be adopted by all states. Central Govt. should use stick and carrot to virtually bring all the State Government to do needful and open the space for contract farming, corporate farming and direct procurement by processing units and retail chains. Existing agriculture Markets need to be modernised to facilities of value addition in the form of grading,

cleaning, packaging and warehousing facilities on a systematic basis. A larger outlay is required for this purpose. Auction system need to be more transparent,

price information needs to be made widely available at village levels

7. There is a need to create enabling environment for accelerating the development of cold chain for fruits and vegetables and high degree of processing of grains and other by products. There is a need for research and extension to propagate process able varieties particularly in horticulture sector. Processable varieties

Central & state taxes and other levies increase costs of fi nished product by as much as 30 to 40% as against 0% in many economies.


bring down the cost of raw material to the food processing industry and give increased recovery.

8. New PPP model for shared infrastructure approach need to be supported. This could be:

• Allow private parties to use public infrastructure like extension machinery on charges.

• Management/ Utilisation of government infrastructure warehouses by private sector.

• Part of the public investment could be outsourced to private entities with mega rural plans.

9. Retail- farm linkages in the form of ITC’s E-Choupal, DCM Shriram Consolidated Ltd.’ s Hariyali Kisan Bazar, Mahindra’s Shubh Labh Services Ltd., Cargill farm-gate business, Tata Kisan Sansar are the successful examples. Incentives for promoting such farm-retail linkages need to be provided.

10 The incidence of taxes on processed food is very high in India as compared to other countries. This reduces the market for processed foods. Central and state taxes and levies together increase costs of finished product by as much as 30 to 40%. Just an illustration the incidence of taxes is 20.8% on biscuits, 26.9% on condensed milk and 14.6% on jam and jellies. As against this there is zero taxation on food & beverages (excluding liquor) in several countries such as U.K, Ireland and Malaysia. The incidence is very small in other countries. A holistic view may be taken in rationalising the tax structure on processed food items.

11. Support mechanism has to be evolved for innovative funding required Agri-marketing. For example

• Allow access to RIDF funds to private parties for agriculture marketing infrastructure projects.

• Stipulation like 10% mandatory investment in wasteland in lieu of fiscal concessions, contract farming and lease rights to private sector.

Our Weapons of

Mass Instruction

92

Analyst, Indicus Analytics, New Delhi

Health Care In India: Revisiting Priorities!Susmita Pratihast



The process of normative human development can be achieved through various approaches. One of the ways, the

right based approach, is based on human rights standards and is operationally directed towards promoting human rights. It is important that basic human rights are integrated into plans, policies and process of strategic human development. Poverty and inaccessibility to basic services is a more than just a lack of resources and manifests exclusion and powerlessness

In the era where government is excluding itself from provision of various services, it is important to understand its roles and resources in provision of basic services. The right based approach to human development demands more accountability from the providers, make consumers more aware of their demand and endeavours to strengthen it through development of legal, social, economic and political institutions. Health is one area where strategic interventions from government are needed for provision and accessibility to basic health care services. In order to make such development plausible, it needs a strong political and economic will to spend resources.

Even though the Union Budget 2006-07 did not impede the significant and speedy growth of Indian GDP, it did not bring any structural measures and initiatives in the social sector areas either. India is witness to massive health care schemes both in terms of scope and resource utilisation, however it is difficult to gauge whether it has been effective enough and has been able to make a significant impact. The identification of challenges and needed policy responses in the social sector area, especially health is a mammoth task and justifies the need to make judicious resource allocation and public spending.

The economy has been growing at a sturdy growth rate of 8 percent with a projected run at

9-10 %, and the health care sectors contribution to GDP has been significant. It accounts for about 5 % of the GDP and employs more than 4 million people. The health infrastructure has been growing and the health care delivery market has been nearing US$ 18 billioni . In absence of spectacular changes in the poverty levels, both relatively and absolutely, health care provision is not only challenging but also a concern for the times to come. In such a scenario, union government budgets play an important role in partnership with the state budgets. Even though the economic liberalisation of 1991 brought about a round about turn in the economy, similar revolution is still to be seen in the process of budgeting. It is important that at this juncture, India brings about

better fiscal governance, consolidation and accountability in the budgeting process of social sectors. This article deals with the problems and predicament of

health care spending in India over the years, and the basic need of the hour for development in this sector. The idea is to bring forth a snapshot of the main priorities for the centre-state partnership in provision of health care services in India through the support of consolidating and strengthening the budget allocations.

Budget And Expenditure TrendsThe total health expenditure in India accounts

for around 4.5 % of the GDPii. Out of the total health expenditure, around 75% is private health spending. Public health spending was not always undermined in India. In mid 1980s it was 1.6% of total GDP but came down to 0.8% in 2005. But 2006-07 turned the budget in favour of health and increased allocation to all the sectors. This also substantiated the claims made in the Common Minimum Program of ensuring 3% of GDP on health care provision. However on the financial aspect, this seems a very unrealistic goal.

The total health expenditure in India accounts for around 4.5 % of the GDP . Out of this, around 75% is private health spending.

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Keeping in mind that the government’s share is only 25-30% in the health spending area, it would require increasing the public spending manifold. This would not be possible in the current scenario and policy planners are quite sceptical about the realisation of this goal. In this context, the budgetary allocation for the Tenth plan has shown very fluctuating trend. With a total budgetary outlay of Rs. 21767 crore for the Tenth plan (2002-07), the approved outlays for the consecutive years have been erratic. While 2003-04 saw an outlay of Rs. 4500 crore, it went down to Rs. 4200 crore in the next year and shot up again to Rs. 6100 crore 2005-06. However, the centrally sponsored schemes, with Rs. 10252 crore for a total budgetary outlay for Tenth plan have shown a consistent allocation and expenditure.

Despite this, it is not to say that additional allocation of resources will suffice in providing better health care services and achieve desired outcomes. It is important that the financial mechanisms used should affect incentives and lead to better performance. Financial instruments

should have an impact on the interventions that are taken up by the centre and the state and should be supported by proper implementation. Thus, notwithstanding an increase of more than 250% in the central government health expenditure since 1995, the health outcomes have not commensurate the expenditure. The table illustrates a macro view of government spending in health and its proportion with respect to other public spending areas.

Even though there has been an increase in public spending on health; it’s a very marginal increase in proportion of ever increasing GDP and total social sector expenditure. At this juncture it is vital

to notice that there are various problems in the utilization of the allocated funds as well. Health spending is distraught with inordinate delays in release of funds, actual and proper accounting of expenditure, and in providing access to the implementing agencies. There is greater need to have proper financial management system in place so that under-utilization does not go unnoticed and a cost-benefit analysis is possible.

Innumerable instances of under-utilization/ improper use of funds in the states that are in greatest need is an evidence of the poorly managed system. Some of them being Bihar, Uttar Pradesh, Jharkhand, Orissa to name a few. This is also true for centrally sponsored programs where finances flow through various levels and channels, leading to major flaws in the resource flows. This accompanied with the lack of fund mapping, guidance at the district level and lack of communication between government and implementation

An important challenge is to shift the fi nancial and implementation responsibility from the Central Govt. to the State Govts.

Source: website: http:/indiabudget.nic.in

Year Total expenditure on health (in

billion)

As a % of GDP

As a % of Total

expenditure

As a % of total social

sector expenditure

2001-02 (actual exp)

280 1.32 4.7 21


286 1.25 4.4 21


315 1.28 4.5 22


348 1.26 4.4 22

2004-05 (revised estimates)

415 1.32 4.6 22

2005-06 (revised estimates)

477 1.35 4.9 23

Table: India’s Social Sector Expenditure Pattern



agencies lead to inefficient reporting and delay in consolidation of budgets and expenditure.

Predicaments: Is Anyone Watching?An equitable society is a just and fair society

where the government provides opportunities for growth. A good fiscal and expenditure policy is a critical component in the strategy for accelerating growth and improving its quality. Today, at the root of fiscal malady lies years of fiscal profligacy that borders on lack of accountability and governance failures. The health expenditure accounts only for 0.9% of GDP (Mita Chowdhary, NIPFP, 2006) thus does not even come close to what is needed and expected. This is supported by the problems of percolation to the targeted section and lopsided impact of the schemes. The objective of the recent governments has been to increase the public spending on health care services and this has been done through various all-India level health schemes on disease control, maternal and child care, family welfare and planning. However, it has been evident that most health schemes have been effective in impacting health care only in some areas.

With an increase in the growth of the economy, a tendency towards a cutback in social sector spending becomes an unavoidable fact due to inability of the state governments to mobilise additional resources to finance increasing budgetary demands, increasing share of non-developmental expenditure by the states and lack of control over the functioning of the economy as a result of structural adjustment policy. Some of the main problems that do not facilitate adequate utilisation of resources are over-centralised and lopsided planning, improper and unbalanced financial outlays, and lack of accountability of both health workers and communities. This coupled with dereliction of duty by medical and nursing professional leads to very haphazard and

inadequate delivery of health care services. There are various issues that do not get

addressed in the formulation and distribution of the health budget. In health, non-monetary resources also form a huge part of the central and states allocation. Monetary and non-monetary resources are provided to innumerous government institutions without proper performance accountability. Most of the schemes are centrally sponsored schemes, and thus give no incentives to the state government to keep provisions for adequate resources for health care. Inability and diminishing investment

in health care due to poor fiscal management causes deterioration in provision of health care services. Just the provision of more resources does not

guarantee percolation to the poor but only leads to corruption and inefficient use of resources.

However, after debating the crunch and accountability of resources, it is pertinent to ask that if health is a state subject, is it possible to make it only state subject or primarily a state subject. Is there a practical need for infrastructure at the Centre? In provision of health services, a logical problem is that despite the central government spending only a quarter of the total health spending in a state, it has an ever-increasing dominant role in financing public health and family welfare. In the mean while states are spending their resources in providing only inpatient care and medical services that are curative in nature. Thus an important challenge is to shift the financial and implementation responsibility from the central government to the state governments. This can be achieved by making them equal partners in financial resources and also accountable for the achievement of the health outcomes. The private sector also needs to be given the right kind of incentives and mechanisms in order to ensure adequate provision of health care services.

A widespread premise in all the health policy

At the root of fi scal malady lies years of fi scal profl igacy that borders on lack of accountability and governance failures.

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discourse is that health care system is a special case of market failure and thus government intervention and its role is significant and necessary. However what gets missed is that there is a greater necessity for proper mechanisms to incentivise market players and deregulate the system with various checks and balances which will be able to provide the necessary framework for better provisions. Thus, careful observations will manifest that it is more of a government system failure than a market failure. There is a significant need of a system where the consumers have more choice to make a decision without government influencing their behaviour and making choices instead.

The Road AheadThe policy discourse in India has to consider

various issues that envelop health care provision in India. In the wake of complexity and labyrinth of processes, tiers and levels of the problems, it is important that more attention and concerted efforts are made to ensure affordable health care to all. Bulk of finances should be devoted to primary health care centres, public health and disease control and family welfare. The other part should be devoted to secondary health care. In such a case, before health financing is revisited and allocations are stepped up, the public, private and voluntary services should be put under performance audit. This will help in restructuring and reorganising the provision of health care services, priorities as well as identifying the areas that require financial support. The process needs a mechanism that makes it imperative to recognise the deficient areas and is able to assess where the savings can be utilised.

It is essential that the government health schemes are highly focussed on small and cost effective interventions. This would help in providing

universal financial access to these services. Rural health schemes should get maximum public funding as it is impossible to levy user charges. This could be supported by financial aid from foreign partners; however it would require fiscal intelligence for achieving outcomes in the most cost effective way. This creation of fiscal plan would enable to concentrate on areas of critical and urgent need.

Government needs to give proper attention in the formation of union budgets and play an active role in revamping and restructuring health infrastructure. In absence of adequate government health care provision, private providers should be encouraged to provide the services. However, good quality private health services have always been the privilege of the elite class with the lower economic quintiles generally exposed to inexperience or unqualified health providers. Despite such circumstance, in the face of totally free market technology driven operational principles, the climate is appropriate for the private sector to provide quality health care at reasonable cost. There is also a huge significance of voluntary sector in provision of health care

services. It has been argued that empowering consumers by providing more competition on the supply side is an important component; however its applicability

is very limited in the areas of low population density or inadequate supply side capacity. There is a need for timely generation of local specific information on financial transfers for providing effective coverage of government schemes and achieving delineated health outcomes.

One of the most important policy questions that health provision faces today is that whether Indian economy will be able to translate its tremendous economic growth into health outcomes. There is a strong link between what is being spent and the outcomes received; however, the link is getting

A widespread premise is that health care system is a special case of market failure. But, in reality, it is a government system failure.

weaker considerably. This implies that economic growth alone is less likely to bring about large health improvements in the future, which points the growing need for state intervention in health at the core level. However, it should be seen that state should not be wasting resources on interventions that do not yield quality health outcomes.

Conclusively, it is important that the budgeting process in the second largest democracy in the world should involve more rigorous analysis of the outcomes desired and mechanisms that would generate them. As discussed before, it is not simply the allocation that brings the change and better quality outcomes in the health sector, but a more meticulous exercise of identifying the interventions, stakeholders and providers as well as range of choices that people have in using these services. Therefore, the government needs to play an important role in providing resources and focus on few selected health schemes and interventions that have better coverage and density, with special focus on areas with greatest need. Centrally sponsored schemes should be utilised more effectively and state government should be made more accountable both in terms of financial and non-financial health outcomes. The health spending should be increased to target additional poorer areas and a more specialised state-wise approach to health interventions. A more thought induced budgeting process is the first step in achieving this arduous task.

References

iDebroy, Bibek and Khan, Amir Ullah. 2006. “India’s Health Sector, Analysis of Social and Economic Burden of HIV.AIDS and Tuberculosis links” PHD Policy paper VI, September 2006.

iiNational Health Accounts, 2001-02, Ministry of Health and Family Welfare, Government of India.

Affi rming The

‘Incomprehensible’

In Terms Of ‘Obvious’

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Dr. Venkatesh Athreya Programme Director, M.S.Swaminathan Research Foundation, Chennai

Realising The Great Indian Dream: A Blue Print To Transform The Indian Economics



I

One may begin by pointing out that the budget is one among the many policy instruments available to the government to

influence macro economic outcomes as well as the well-being of people. It also needs to be kept in mind that the basic determinant of people’s well-being is the structure of the economy in terms of the distribution of productive assets and command over resources. The division of the population into segments very unequally placed with regard to wealth and economic power also caries the implication that, even with a formal democracy, the holders of economic power have far greater influence over the economic policy framework of the government than those less well endowed. This ‘democracy deficit’ influences budgetary policy as well. At the same time, since the Union government’s expenditures account for close to 15 to 16 per cent of GDP, the budget is among the more important policy instruments. The budget has traditionally been primarily a statement of estimated annual receipts and expenditures of government for a specified financial year. In recent years, however, the budget speeches of the Union finance ministers in India have included several policy announcements, sometimes going beyond the mandate of the finance ministry, as with Yashwant Sinha’s pronouncements on flexible labour policy some years ago. One may evaluate the budget from several perspectives, such as growth, distributive outcomes, price stability and self-reliance, keeping in mind that the budget is presented in a specific economic context, described selectively, but at some length, in The Economic Survey, also prepared by the Union finance ministry, and released a few days prior to the budget. While the budget is set against the overall policy framework of the government, it is also expected to respond to some extent to the popular mandate as expressed through the electoral process.

In this paper, we first assess the Union budget

for 2006-07 in the light of the foregoing. We then briefly indicate possible alternative approaches to the budget.

IIIn my view, the Finance Minister missed an

opportunity in 2005-06, when he presented his first full year’s Budget, to expand adequately outlays on capital formation and welfare measures, especially in relation to agriculture and rural employment as well as education and health. Instead, while increasing outlays on rural employment, health and education to some extent, the Finance Minister chose to gift the corporate sector a reduction in the corporate

income tax rate from 35 per cent to 30 per cent, thus choosing to forego revenue that could have been useful for expanding outlays to meet the goals set by the National

Common Minimum Programme (NCMP). He also demonstrated his (theoretical) loyalty to the Fiscal Responsibility and Budget Management Act (FRBMA) by window-dressing the Budget so as to understate the fiscal deficit, using the device of sending many items of expenditure outside the Budget.

If not quite like the Bourbons who learnt nothing and forgot nothing, the Finance Minister nonetheless was again unwilling in 2006 March to acknowledge the incompatibility between the neoliberal ideology that underlies the FRBMA and the needs of the NCMP. The Economic Survey of 2005-06 waxed eloquent on the virtues of fiscal prudence. It warned against any attempt to achieve demand-led growth that would violate the lakshman rekha of a specified level of that holy cow of the Fund and the Bank, the fiscal deficit. In his Budget speech, the Finance Minister was even more categorical when he asserted: “Our success this year is due to our unrelenting emphasis on fiscal prudence through enhanced revenues and expenditure control, monetary stability and management of the external debt. However, our success should not tempt us to stray from this path and

As the Union government’s expenditures account for about 15 to 16 % of GDP, the budget is an important policy instrument.

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we shall not do so.” One immediate consequence of this obsession with the FRBMA and the fiscal deficit is that the Finance Minister has stepped up outlays for crucial programmes rather more modestly than would appear at first sight. Let us look specifically at what the Union Budget 2006-07 had to offer by way of revenue and expenditure proposals before turning to certain other aspects of the budgetary exercise. On the revenue side, there were practically no changes with regard to personal and corporate income tax rates, except for a marginal increase in the rate of minimum alternative tax on book profits. There were reductions in both import duties and excise duties, with small cars and aerated soft drinks being the beneficiaries of the Finance Minister’s munificence by way of reduction in excise duty from 24 per cent to 16 per cent. The only revenue raising measure of any significance in the Budget was the raising of the service tax rate to 10 per cent and a widening of its base. There was thus no attempt to mobilise resources for development from the well-to-do. Yet the Finance Minister assumed that, while his tax proposals by themselves would garner Rs. 6,000 crores in a full year, the overall increase in tax revenues in 2006-07 would be 19.5 per cent over 2005-06, or Rs. 72,000 crores in absolute terms. The apparent buoyancy of tax revenues in recent years would appear to support the Finance Minister’s estimates. Nevertheless, it is worth noting that even in 2005-06 when tax revenues to the Centre were estimated to have risen by 21. 4 per cent, the corporation tax collection had fallen short of Budget estimates by Rs. 7,000 crores and the excise revenues by Rs. 9,500 crores. The overall tax revenue target was achieved only on account of a surge in import duties, despite lower rates, of Rs. 11,000 crores in excess of Budget estimates, and a similar excess of Rs. 5,0 00 crores over Budget estimates by way of service tax collection.

In any event, the fact that the Finance Minister expected an increase of 19.5 per cent in gross

tax revenues in 2006-07 over those for 2005-06, without imposing additional direct taxes, and with only a marginal contribution from budgetary measures, suggests that there was considerable scope for enhancing expenditures with a view to fulfilling NCMP commitments at least to a significant extent. Yet, the increases in allocations to areas highlighted in the NCMP, such as employment, education, the Integrated Child Development Scheme (ICDS) and health in 2006-07 were rather modest, and did not go far towards meeting NCMP goals. The overall plan outlay was higher by a little over 20 per cent,

but the proposed capital expenditure in the plan was in fact marginally lower than in 2005-06.

What about sectoral priorities? Here, as was rightly pointed out by the

chairperson of the National Commission on Farmers (NCF), the eminent agricultural scientist Professor M.S. Swaminathan, the Budget 2006-07 did not grasp adequately the depth of the agrarian crisis in the country. While the lowering of the interest rate to 7 per cent on short term loans to farmers up to a limit of Rs. 300,000 and the opening of a special loan window for self-help groups or joint liability groups of tenant farmers were indeed welcome measures, they were by no means adequate.

In his Budget speech in 2006, the Finance Minister himself referred to the findings of the 59th round of the National Sample Survey (NSS) that out of the total number of cultivator households, only 27 per cent access institutional credit and 22 per cent receive credit from non-institutional sources, implying clearly that around half of all cultivator households do not receive credit from formal or informal sources. Yet the only action that he proposed in this regard was the appointment of a Committee on Financial Inclusion that “... will be asked to identify the reasons for exclusion, and suggest a plan for designing and delivering credit to every household that seeks credit from lending institutions.” This is a classic case of passing the buck. The NCF had in fact not

The 59th round of the NSS fi nds that only 27 per cent access institutional credit and 22 per cent receive credit from non-institutional sources.



only recommended reducing the rate of interest on farm loans to 4 per cent per annum, but also the setting up of a price stabilisation fund to help farmers get a reasonable price for their produce, and the universalisation of crop insurance. But these NCF recommendations were ignored in the Budget. The Budget also provided little by way of public investment in agriculture.

In a detailed note submitted to the Finance Minister in the run-up to the preparation and presentation of the Union Budget last year, the Left parties made concrete suggestions for resource mobilisation. These included steps to collect tax arrears of about Rs. 115,000 crores, the mobilisation of Rs. 25,000 crores by way of dividends from cash-rich public sector undertakings that were not reinvesting their large surpluses, restoration of tax on long-term capital gains in the stock market and strengthening and extension of the stock market transactions tax to yield about Rs. 5,000 crores, a nominal tax on foreign exchange outflows above floor-level with a similar yield, rationalisation of corporate taxation, including removal of various exemptions and export incentives to fetch about Rs. 10,000 crores, expanding the base and rate of service tax, increase in wealth tax rate from the current 1 per cent to 3 per cent and imposition of an inheritance tax, starting with a base rate of 1 per cent and an exemption limit of Rs. 15 lakhs. The Finance Minister ignored practically all of these suggestions.

Findings from the NSS show that, between 1993-94 and 2004 January-June, the current daily status (CDS) unemployment rates increased for men and for women, and in both rural and urban areas. The rural CDS unemployment rates rose from 5.6 per cent to 9.0 per cent for men and from 5.6 per cent to 9.3 per cent for women, while the urban rates rose from 6.7 per cent to 8.1 per cent for men and from 10.5 per cent to 11.7 per cent for women. Yet the Budget of 2006-07 did little to address the issue of

unemployment. The Economic Survey of 2005-06, in fact, pleaded for ‘labour market flexibility’, an euphemism for the right of employers to fire workers at will.

The Union Budget for 2006-07 thus reflected, by and large, a neo-liberal policy framework and mindset, even while political compulsions forced it to pay obeisance to the NCMP. The fact that the economy has been estimated to have grown by 9.2% in 2006-07 so far is likely to lead to euphoria and complacency about the state of economic health of the nation. The agrarian crisis and the crisis of unemployment

would, in such a scenario, continue to remain outside the pale of the budgetary concerns of the policy makers. One can only hope that this does not happen, and

that this time at least, the reasonable suggestions of the Left parties are not ignored by the Union finance minister.

IIIIn the light of the foregoing comments on the Union

budget for 2006-07, let us briefly indicate what could be the possible priorities for the budget of 2007-08, consistent with the NCMP commitments.

To begin with, one may briefly note the current issues of concern: • Inflation is running at well over 6% per annum.

Even this figure understates the impact of inflation on the poor, since the items showing the most rapid rise in prices are food articles.

• The acute rural distress that has been a feature of our economy for several years now has not abated. If anything, farmers’ suicides are continuing at the same pace. The less visible but very widespread feature of rural distress and deprivation-hunger and undernourishment- remain at unconscionable levels. Between 1990-92 and 2001-03, while China reduced the number of hungry people by 40 million, India reduced it by only a tenth of that number. The data from National Family

Between 1990-92 and 2001-03, while China reduced the number of hungry people by 40 million, India reduced it by only a 1/10th of that.

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Health Survey-3 present a picture of mass under-nutrition.

• Mass migration, the accompaniment of rural distress. Continues apace, and we have little to offer migrants by way of even the most minimal social security.

• NCMP promises in agriculture, health and education remain unfulfilled.

• With foodgrain production practically stagnant for a decade now, we resorted to foodgrain imports last year, signifying a serious failure in our goal of foodgrain self-sufficency. Despite the imports, however, food insecurity is widespread in the country. This has to do with lack of access to food for significant segments of the population on account of lack of access to productive livelihood opportunities. A key imperative is to address the issue of food insecurity through a life-cycle approach, and this requires strengthening the PDS, the mid-day meal scheme (MDMS) and the ICDS. The Supreme court directives on MDM and ICDS should be met. Accordingly, there should be greater allocations for agriculture and rural development, spent through elected local bodies via the state governments, and monitored closely by people’s organisations. Likewise, allocations for Education, ICDS and Health should be enhanced in line with NCMP promises. The budget should also reverse the process of financial centralisation under the reforms, ensuring a better deal for the States, and not eroding the federal character of the polity.

The implications of these observations for expenditure priorities, as suggested by the Left parties and several economists, are as follows: • Implement key NCF recommendations: lower

interest rates for farm loans, price stabilisation fund, strengthened extension system, crop loss assistance fund, universal crop insurance

• Enhance tariff protection for agriculture• Widen basket of agricultural commodities eligible

for MSP, and fix reasonable MSPs• Increase public investment in agriculture and

irrigation. Ensure expeditious completion of

ongoing irrigation projects • Reduce interest rate on farm loans for farmers

to 4%. Provide Debt Relief to all debt-stressed farmers. Ensure 50% of priority sector lending to agriculture goes to small and marginal farmers.

• Extend NREGA to 200 more districts. Allocate more funds for the rural employment and infrastructure development.

• Increase expenditure on education to meet 6% of GDP. Increase education cess to fund expansion of education at all levels.

• Increase expenditure on health to 2-3% of GDP• Allocate funds to initiate social security scheme for

unorganised workers.• Increase food subsidy to ensure universal food

security• Move to universal PDS, ICDS and MDM, with

quality and equity.The question that arises is: Can resources be

mobilised for this wish list? The short answer is “Yes”. The following measures will be needed:• Greater direct taxation, especially of corporate

incomes• Bringing back long term capital gains on share

transactions and restoring short term capital gains tax to 20% as earlier, reversing the 2005-06 budget measures

• Stricter Tax Enforcement• Unearthing nearly 100,000 crores of black

money• Recovering corporate dues to the banks• Removal of the plethora of unnecessary tax

exemptions for the corporate sector, raising the effective tax rate considerably from the present 16-17%

• Broadening the wealth and income tax base and increasing the wealth tax rate from 1% to 3%

• Reversing the trend of indiscriminate import duty reduction

As the old adage goes, where there is a will, there is a way. Is there the political will to present and implement a genuinely pro-poor budget in India, even as we talk of “faster and more inclusive growth” in the eleventh plan?

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Freelance Development Journalist based in Nagpur.

Serving Farmers, Saving Lives Aparna Pallavi



If one looks at the budget outlay for agriculture in the Union Budget of 2006-07 as mentioned in the finance minister’s budget speech delivered

on February 28, 2006, the picture comes out rather rosy – Rs. 7,121 crore for irrigation, Rs. 175,000 crore for farm credit, Rs. 1,700 crore for debt relief and Rs 600 crore for rural infrastructure. With such huge budget allocations, with the finance minister even stressing that he is ‘ready to go the extra mile’ for the sake of the stricken farmer, and a number of farm packages to top it all up, how come the suicide rates among farmers show no signs of coming down -- both in ‘high visibility’ areas like Vidarbha and Andhra and the ‘low visibility’ states of North India?If one is unwilling to join the ranks of the beautiful people in the elite financial and political circles, who would have us believe that the suicides are not occurring due to debt burden at all but due to family problems, alcoholism, or worse, precisely because the government is offering a ‘huge’ relief package of Rs. 1 lakh to the family of the deceased farmer (logical deduction : scrap relief and suicides will come down automatically) then one must look not at the size of the allocation but at the spirit of it. How responsible is the budget allocation? Is it solving the farmers’ problems or serving other interests? Is it in sync with the national agricultural policy; and more important, are the allocation and the policy both in sync with the farmers’ needs?When it comes to agriculture the problem is not with the lack of allocation. It is with the sense of responsibility – or lack of it – that goes into allocation, that must be kept in mind while assessing the value of budget allocations as a solution to social and economic problems. Solutions come from the perspective the government brings to the problem and not from the sheer amount of money that is pumped into it. As someone who has had some occasion to communicate with farmers in

the suicide fields of Vidarbha and to study their problems, it can be deduced on several points, that the trend in budgetary allocation as brought out by last year’s Union Budget – and many before it – is downright irresponsible and anti-farmer on many points. None of the points are new and most of them are plain common sense. But common sense is not known for penetrating to the thick carapaces of officialdom’s insensitivity. Hence this reiteration.Take the allocation on irrigation. While the four-figure crores are both very alluring and very assuring, one must ask what exactly this money is to be spent on – large and medium irrigation projects, everyone of which will not just displace hundreds or thousands of farming families, but – the less stressed fact – will also swallow thousands of acres of prime, and already naturally irrigated agricultural land in an attempt to provide water to arid lands which are sure to be less agriculturally viable? How can such allocation – which will destroy both land and

human resource involved in agriculture and divert it away from agriculture -- be called beneficial to either farming or farmers by any stretch of imagination?

Why should such allocation not be scrapped altogether? Or better still, be used for sustainable, community initiated and community managed water conservation and irrigation projects (which, perhaps, will cost much less and reach a far greater number of people) based on indigenous knowledge? Or/and on community-initiated research into sustainable crop patterns suited to the agro-climatic conditions which do not require much irrigation? And finally, who benefits from irrigation projects apart from the construction companies who construct the huge structures and the manipulating forces who, for their own reasons, want to impose irrigation-intensive commercial crop patterns?Or take the allocation on farm credit. Hey presto! six figure crores! The biggest allocation and why

When it comes to agriculture the problem is not with the lack of allocation. It is with the sense of responsibility – or lack of it.

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not? Is not the farmer in crying need of money to bail him out of his present financial crisis? What better way to provide him relief than put more money in his hands? But then, at its very basic, does farm credit really benefit the farmer? To put it more directly, is this credit legitimate? Who exactly benefits from this credit? Does more credit translate into more income? Experts agree that there are four major reasons for which farmers draw loans – farm inputs, irrigation facilities (digging of wells, bore wells and so on), health and education. Let us take them one by one.Credit for farm inputs: Who benefits from the farmer taking a loan for farm inputs? What returns the farmer gets from his crop is a dicey point, decided not just by the rainfall, but also by how the prices of produce are manipulated, in a process in which the government is very much hand in glove with big business. The sure-shot beneficiaries are the seed, fertiliser and pesticide companies -- and their middlemen, who, it is open knowledge, are just the latest reincarnation of money lenders. And yes the banks, which will get their investment back with interest if they have to resort to terror tactics, and will earn an extra cut by levying unrecorded fines on confiscated ceiling fans and sacks of soybean.Credit for irrigation: If the farmer uses his loan for a sustainable irrigation facility like a bund or a small irrigation tank, it might be a useful exercise, but mostly irrigation loans are given for wells and bore wells, which, what with the fast depletion of ground water levels everywhere, are finally benefiting no one at all, except providing livelihood to the diggers.Credit for health and education: Effective public health and education systems in villages would eliminate the need for a large proportion of these loans which finally benefit private service providers in the health and education sectors. Would it not be more logical to divert funds and energies to

providing these facilities? One more point about education. A sizeable majority of farmers, at least in Vidarbha, voice the opinion that higher education is a must now because farming is an unviable and insecure livelihood option. This should make it clear enough that the investment is needed on measures to make farming viable, not in providing loans.Finally, the entire concept of farm credit boils down to a question of legitimacy. The debt crisis of India’s farmers is not just a financial crisis but also a political problem that is based on, and also reinforces unequal power relations between the farmer and the inputs industry. The credit that the

government and now even the international financial institutions (the Asian Development Bank recently announced its intention to lend in a big way to the Indian farm

sector) are over-eager to extend to the farmer does not translate into income in the farmer’s hands. It only aids the entry of multinational corporations trading in seed, pesticide and fertilisers into the sector, and it aids their agenda of enforcing trade and agricultural practices beneficial to them. This lending is patently reckless, self-interested, irresponsible and exploitative – and hence illegitimate. Coupled with the driving down of price of crops in the market (what happened to cotton in the last two years) this credit pushes the farmer into illegitimate and unpayable debts. It also undermines the existing indigenous, self-sufficient agricultural practice that exists in the villages and traps the farmer in an ever-tightening noose of debt. One elderly farmer in the suicide prone Yawatmal district of Vidarbha described in grim humour the debt cycle thus: “If you own ten acres of land, then take for granted a deficit of Rs 25,000 a year. Four years, and the debt reaches Rs 1 lakh. Then, ting tong! The ending! My turn comes in two years, you know!”Debt relief is a sensible place to allocate funds in, if only as an urgently needed safety valve to take

If you look at last year’s allocation for debt relief, it is less than a 100th the size of the allocation for fresh credit .



the pressure off the farming community. But if you look at last year’s allocation, it is less than a 100th the size of the allocation for fresh credit. And the relief to be doled out through this allocation is to the tune of a minuscule two percentage points on the interest on loans up to Rs 1 lakh! This is hardly a coincidence. There is no money to be made for transnational input dealers in debt relief, nor does it translate into cheap land for the votaries of special economic zones and corporate agriculture. The very size of this allocation shows the lack of political will to extend debt relief. But even if there were any, mere debt relief, not backed up by effective measures to ensure agricultural self-sufficiency so as to keep the farmer out of unpayable debts in future will not work. The situation will come back to the same explosive point, going by my farmer friend’s estimate, in four years. Rural infrastructure building, the last on the list of allocations, is again a sensible place for investment. But again the question is who takes the decisions about what kind of infrastructure to build, and whether the infrastructure helps farmers or merely facilitates the further penetration of big money.When it comes to the present union budget, a responsible approach to budget allocation in the farming sector is strongly recommended. Allocation must be tailored to the clear aim of taking the pressure off the farming community as an immediate measure and on measures that will restore to agriculture its value as a viable livelihood option and keep the farmers on their land in the long term.

The immediate areas of investment are as follows:• 100 per cent one time debt relief to all farmers

in the country as an immediate relief measure.• For small and marginal farmers, an input dole

(not loan) for one crop season.• Aid to community-initiated research and

initiatives in recovering indigenous varieties of seeds suited to the agro-climatic conditions of the region and the establishment of community seed banks.

• Aid to community-led and community-managed sustainable irrigation, ground-water recharge and water conservation practices.

• Aid to community –led initiatives in terms of establishing community-level security nets such as grain banks and cooperative micro credit systems.

• Strengthening of public services like health and education so as to make them serve the rural community effectively.

• Any other relief and infrastructure-building endeavours which are decided on by farming communities.

These measures must also be backed up by policy and implementation measures so as to make them effective and long-lasting. These are as follows:• Immediate scrapping of the Special Economic

Zone (SEZ) policy.• Policy changes in favour of sustainable and self-

sufficient indigenous agricultural and irrigation practices controlled by farming communities.

• Firm curbs on the powers of multinationals and other powerful input dealers and market manipulators to prevent them from arm-twisting farmers into unequal power relations and thus controlling farming.

• Similar curbs on all attempts at corporate land-grabbing under any excuse.

• Intensive and transparent consultation with communities before undertaking irrigation or other ambitious infrastructural projects, especially those involving displacement.

• Sufficient prior notice to communities while undertaking projects and making all requisite information available to communities in a transparent and hassle-free manner.

• Tailoring such infrastructure endeavours to requirements of communities, and ensuring transparent process of community participation in decision-making process.

• Any other changes to make the country’s agricultural policy farmer – especially small farmer friendly.

9% of the GDP Belongs to Us, children tell the PM

On the morning of 1 Feb, 2007, twenty children were received by the Prime Minister, Dr. Manmohan Singh at his residence on 7 Race Course Road. Subhasini Kumari (9 years) & Biswas Pandey (10) from Bihar opened the discussion with the PM. “We want every child in India to have health and education, and for this we want you to keep your promise of 9 (Nau Ka Wada)”, they said. Laxmi Gudillu (13) and Tejal Sawant (14) from Jogeshwari, Mumbai presented the PM with a film which captures the efforts undertaken by children across the country to ensure that 9% of the GDP is allocated for Health & Education.

The 9-Is-Mine Campaign

In the year 2000, all the 189 member nations of the United Nations signed the historic Millennium Declaration to ‘free men, women and children from the dehumanizing conditions of extreme poverty’. India is a signatory to this international agreement. Wada Na Todo Abhiyan is a national campaign that seeks to hold the government accountable to its promise to end Poverty and Social Exclusion as expressed in the National Development Goals and the National Common Minimum Program (NCMP). “9-Is-Mine” is the children’s initiative of Wada Na Todo Abhiyan, which aims to ensure that the government commits 9% of the GDP to public expenditure on Health & Education, as promised in the NCMP.

The Children’s Petition

On 13 November 2006 – the eve of Children’s Day - a nation wide signature campaign was launched with the objective of uniting 100,000 across the country to speak up and ensure that their voices are heard in time for the Budget Session of

Parliament which commences on February 15, 2006! On 30th January 2007 – the 59th death anniversary of

our Mahatma – thousands of child campaigners met again at the National Stadium, Delhi to reinforce the call for ‘9-Is-Mine’. Since

the campaign focuses on the promise of 9% of the GDP, this gathering was held exactly a month before the Budget Announcement of the

Finance Minster – and to celebrate the collection of 200,000 petitions – twice the number anticipated - from children across 14 states for this cause. The spirited involvement of special guests Om Prakash Gurjar (winner of the International Children’s Peace Award), Dr. Kiran Bedi, Minar Pimple (Dy. Director,

United Nations Millennium Campaign), Swami Agnivesh and Leslie Lewis enabled the creation of an emphatic message and a powerful experience for over 5000 children who have rallied for

‘Nine Is Mine’. The event received wide media coverage the following day, with over 15 newspapers – in addition to radio and television broadcasters - carrying reports of

the initiative.

Reaching the Prime Minister

On 1 February, 2007 a delegation of 20 children met the Prime Minister and presented him with a Giant 9-Is-Mine Postcard representing the 200,001st signature – and signed in his presence by Ranjan (13), who spoke of his life on the streets of Delhi. The Prime Minister extended his solidarity and assured that their cause is also the priority of his government.Sony Kumari (11 years) of Asansol, West Bengal shared how she has been forced to drop out of school due to her parents’ inability to meet the increase in the school fees. Priyankaben (17) from Surat district, Gujarat spoke of Budwada village which was displaced by the Ukai dam 38 years ago, and how even till date, there is no school or health

centre for the village. Dr. Manmohan Singh assured that he would discuss these issues in the forthcoming meeting of Chief Ministers.

Students from St. Columba’s School & Mater Dei School, Delhi spoke to Dr. Singh of their effort to spread awareness about the Millennium Development

Goals & Global Call to Action against Poverty across schools. They presented the PM with the symbolic White Band representing the global movement to Make

Poverty History by 2015.Representatives of Wada Na Todo Abhiyan presented the PM with the report of the

2nd Civil Society Review of the National Common Minimum Program and apprised him of the efforts being undertaken to monitor and ensure that the promises in the

NMCP are fulfilled. The Prime Minister emphasized that the NCMP is the Charter of the People of India, and we must all work together to fulfill the same.

As the children remained for refreshments on the lawns of the PM’s residence, there was a burst of jubilation among the little activists of 9-Is-Mine that the voices of hundreds of thousands of

children had finally reached its destination! And even as they filed out, smiling and waving at the PMO staff on their way, they were determined not to rest, “We will now renew our efforts back home,

and make our voices heard during the Budget,” they promised

For further information & to join the campaign, contact: Wada Na Todo Abhiyan

C-1/E, Green Park Extension, New Delhi 110 01Email: [email protected]

Tel: 011-46082371 / Fax: 011-46082372

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Faculty, The India Development Foundation, Gurgaon

Cashing In On GrowthDr. Amir Ullah Khan

Budget 2007-08: Balancing The State Elections, Defi cits And Infl ation.



This year is a tough year for the Finance Minister. Seven states go to the voter and the ever so crucial Uttar Pradesh is one of

them. For the Prime Minister, the situation would remind him of his own budget in 1993-94. Deficits had been controlled then by severely curtailing public expenditure and investments. In times of stagnation, this indeed seemed to have suggested itself as the most efficient manner of handling a fragile economy. The difference this time is that public finances have been spent well, if not extravagantly. This time around, the government seems to be really counting on growth like never before. For at once the budget making exercise is faced with rising inflation, crucial elections and the need to control deficits. And if grand schemes need to be announced and old schemes need to be upscaled, more money is required. Growth seems to be the only way out and the constant revision of GDP growth rates upwards is what is saving the day.

The Growth StoryThe Central Statistical Organisation (CSO) has

reported that the Indian economy grew by 9.2% in the second quarter of 2006 – 07. This is the highest growth recorded in any quarter since the Central Statistical Organisation (CSO) started reporting quarterly GDP figures ten years ago. The growth in the first half of 2006-07 has gone up to 9.1 per cent and this way the government’s forecast that growth in the current financial year would be upwards of 9 per cent is almost a certainty. India has now seen four successive years of 8 per cent plus growth, and has therefore clearly accelerated away from a trend of 6.5 per cent. The 11th Five Year Plan’s target of 10 per cent now seems conservative. The annual rate of population growth is around 1.6 per cent now and 9 per cent growth means per capita income

growth of 7.4 per cent, ensuring an unprecedented growth in consumption and prosperity.

India today occupies the centre-stage in the global arena, and markets the world-over are bullish on India’s unprecedented economic growth in the last 10 years, and its growth prospects in the future. The 21st century is slated as the century of the rise of Asia in the global economic and political scenario, and both China and India are set to play an increasingly pro-active and predominant role. It is believed that in the next couple of decades, both India and China will surpass most developed economies at least in terms of national incomes.

Economic growth is the increase in value of the goods and services produced by an economy. It is conventionally measured as the percent

rate of increase in real gross domestic product, or GDP. The GDP is nothing but the total money value of production in any economy during a period of time. Economic growth is measured as the annual percent change of National Income. The real GDP per capita of an economy is often used as an indicator of the average standard of living of individuals in that country, and economic growth is therefore often seen as indicating an increase in the average standard of living. There are some deficiencies in using the GDP as an indicator of economic well being, thus, it should always be viewed merely as an indicator. There is no other indicator in economics which is as universal or as widely accepted as the GDP.

India’s GDP growth now is estimated to be upwards of 9% for the year 2006-07. During the same time, the US economy will grow at 3.2%, Japan at 2.6%, UK at 1.9% and the European Union at 1.7%. There are countries like Azerbaijan and Angola which are growing at more than 20% but this is sporadic and unstable growth. An increase in GDP of a country is generally taken as an increase in the standard of living of its

For at once, the budget making exercise is faced with rising infl ation, crucial elections and the need to control defi cits.

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inhabitants. Over long periods of time, even small rates of annual growth can have large effects. A growth rate of 2.5% per annum will lead to a doubling of GDP within 28 years, whilst a growth rate of 8% per annum will lead to a doubling of GDP within 9 years.

The phenomenal rise of India in the global economy has been attributed to a whole host of factors, the major ones being the focus on economic reforms, and the young population that India currently enjoys due to its demographic transition. The large pool of human capital – young, talented and well-educated workforce – is one of the major drivers of economic growth in the country. Rapid strides in knowledge-based industries, especially information technology, biotechnology and pharmaceuticals, and a resurgence in exports have made India one of the fastest growing economies in the world. Opening of the economy and the growing economies of scale and scope for Indian enterprises, access to ‘modern’ technology, especially information technology, and the growth in entrepreneurship have made India a sought-after destination for foreign investments.

Explaining The GrowthThere are four major

reasons in the post-reform era which have made India a powerful economic force to reckon with. They are macro-stability, young and aspiring population, a democratic free market, and the use of modern

technology. In this column we first focus on the stability of India’s growth. Which indeed is why the Finance Minister is confident of his welfare expenditure in the face of promises made in the FRBM Act? The Indian economy has a macro-resilience which enables the economy to grow despite shocks and political uncertainties. For instance, in the early ‘80s and the ‘90s, India witnessed political uncertainty and turmoil. The assassination of Mrs. Indira Gandhi in 1984 led to widespread unrest in northern India, especially in New Delhi, the political capital. The confidence of investors, both domestic and foreign, in the Indian economy hit its all-time low during this period.

The early 1990s were characterised by a severe balance of payment crisis, when the forex reserves dipped to an all-time low – just enough to meet barely 15 days worth of imports. The balance of payments crisis was also an outcome of several shocks – both endogenous and exogenous – that the economy was facing. The sudden spurt in oil prices in the late 1980s, the pressure on NRIs due to the Gulf war and mounting import bills became a big drain on India’s foreign exchange reserves. Indian exports, under years of neglect by the government, finally succumbed to the growing global competition and were not able to generate enough foreign exchange to allow India to pay for its imports. The fixed exchange rate regime also acted against the interests

Population 1.1 billion

Gross Domestic Product 740 billion USD

GDP growth rate 9 - 9.2%

Infl ation 4 – 5 %

Foreign Exchange reserves 170 billion USD

Percentage poor 22-26%

India at a glance



of Indian exporters and made Indian exports price uncompetitive. The growing import bills, spiralling oil prices due to political turmoil in the Middle-east countries, especially Iraq and Kuwait, and stagnating exports triggered the balance of payments crisis in the late 1980s and forced India into a systematic policy of economic reform

A Mature EconomyIn the decade of the eighties and the nineties, the

economy also faced one of the worst droughts in the history of independent India. There was also the largest cyclone (Orissa) in India’s recorded history. The states of Uttaranchal, Maharashtra and Gujarat also witnessed mammoth earthquakes causing colossal damages to life and property. Natural disasters put a lot of strain on the country’s limited financial resources, and a lot of money assigned for asset creation and capital formation had to be used for relief and rehabilitation. As if this was not enough, there were man made calamities like the demolition of the Babri masjid which resulted in a shock to the economy. On the political front there were frequent changes, coalitions. Large parties, rightist formations and leftist coalitions came and went.

Despite all the problems and struggles on the political and economic front, the Indian economy recorded an impressive growth rate of 5.7 per cent per annum on an average for the more than 2 decades. In the post reform period, the economy has shown a secular growth path of more than 6 per cent on an average, with growth rates in the last few years being upwards of 7.5 per cent per annum. For the fiscal year 2006-07, GDP growth in the country is expected to be more than 9 per cent. As Goldman Sachs puts it, “India has the potential to deliver the fastest growth over the next 50 years…”

Infl ation In A Poor DemocracyUnlike other developing countries in Latin

America, Africa or Eastern Europe, the Indian growth experience has been remarkable as it has always kept prices in check. While the mean growth rate of the economy showed an upward trend in the post reform era, the price volatility has consistently been on a decline in the country. India, in the post reform era, never really let inflation run out of hand. Inflation has always been under the double-digit mark in the country. Why does it always appear that prices are going up in the market place when we go and shop, but inflation figures are low? It is important to understand the phenomenon of price rise and how prices are kept in check.

Prices have gone up. Newspapers have been discussing how inflation has increased and there

is a sense of panic everywhere. What is inflation and what does it mean to a growing economy? Inflation is sustained price rise, where the prices of

goods and services go up due to an increase in demand, a fall in production or an excess of money supply. Inflation is also seen as a fall in the value of the rupee. The same amount of currency now can buy fewer goods as prices have risen. Prices go up when the cost of production goes up. In growing economies like India, one of the ways in which costs go up is through rapid increases in wage rates. In the last two years Indian workers have recorded the highest wage hikes worldwide. Average annual increase in wages has been upwards of 13 per cent for the last two years. Also as a result of oil prices going up a large number of inputs have registered price rises.

On the other hand there has been a more than generous infusion of liquidity in the market. With interest rates having fallen in the last ten years, there is a large amount of cash at hand. This has

Average annual increase in wages has been upwards of 13 per cent for the last two years, recording the highest wage hikes worldwide.

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caused consumption to go up and has increased the demand for goods and services. The increase in per capita income has been phenomenal and while it used to take more than 18 years fro income to double in the eighties, now for an average Indian, income doubles every nine years. Given this impressive rise in income in India, a small amount of inflation is to be expected.

Inflation is calculated in several ways. The government uses wholesale prices and this is what figures in the inflation index we see. There is yet another set of indices that are calculated based on Consumer prices, and these indices are different for different sets of people – an index for the industrial worker, the urban non manual worker and the rural labourer. It is because different people buy different things that any inflation index suffers from shortfalls and is seen as not being reflective of the general price rise at the marketplace. A rise in the price of firewood does not affect the

urban consumer, nor does a fall in the price of sulphur. The inflation figure we see is a weighted average of all these commodities and therefore while one commodity might become expensive it is averaged out by the fall of prices in some other commodity or service. The RBI has a thumb

rule that 5.5 per cent inflation is tolerable and now is worried as inflation has crossed this threshold. The finance ministry has a more stringent target

of 4 per cent but that is indeed too low for a fast growing economy. It is almost axiomatic to suggest that growth is inherently linked to price rise. Wages go up; consumption goes up and by the time production catches up, prices will increase. What is important therefore is that this time lag is as small as possible and that inflation does not shoot up drastically.

Inflation in India based on wholesale prices has zoomed to a two-year high of 6.12 percent. The year-on-year inflation, measured by the

official wholesale price index, stood at 6.12 percent for the week ending on January 7th, compared with 5.58 percent for the week before. Inflation surged to this year’s highest level due to some expensive food products and fuel items. Wholesale prices-based inflation crossed six percent for the first time in this financial year. One of the major drivers of recent inflation in the country have been the consistent increase in the prices for fuel (petrol, diesel and cooking gas – LPG) and power (electricity rates). Inflation was just

The fi nance ministry has a more stringent infl ation target of 4 per cent. But that is indeed too low for a fast growing economy.



3.86 percent during the week ending January 7th, 2006. Prices of fruits, vegetables, maize, arhar pulse, wheat, groundnut seed, cotton seed, rapeseed, mustard seed, aviation turbine fuel, naphtha and furnace oil, moved up. The moot question is whether this price rise is unhealthy enough for the government to react as sharply as it has done and is expected to do in the annual budget again? But these will now stabilise and in time with increased production the supply demand gap will close and then there will be a reversal to the inflation spike. The suspicion is that the increase in interest rates and the cutting down of certain import duties has been for political purposes and not for economic reasons. Seven state elections are being fought this year, including the big battle in UP, therefore politics must prevail.

Historically, unlike other developing countries in Latin America, Africa or Eastern Europe, the Indian growth experience has been remarkable as

it has always kept ‘price volatility’ in check. While the mean growth rate of the economy showed an upward trend in the post reform era, the price volatility has consistently been on a decline in the country. India, even in the post reform era, never really let inflation run out of hand. Inflation has always been under the two-digit mark in the country. Countries like Russia, Israel, Brazil, Italy, Indonesia and Pakistan have seen double digit inflation in the recent

past. For these countries inflation accompanied by growth seems to be a logical fallout and little was done to pull the prices back immediately. However, a low inflation regime in our country, under constant fiscal and monetary check of the Reserve Bank of India, allowed prices to be stable, especially for essential commodities such as food items.

The most important reason inflation was always kept well under control in India was on account of the fact that no democratically elected

government can afford to let prices escalate. The BJP government in Delhi in 1997 realised much to its shock that onion prices alone can cause a government to tumble. In fact in

India, the prices of onions and potatoes are the most important barometer of electoral success. The reason why onions and potatoes are such political vegetables is that they together constitute nearly 70 per cent of the total fruit and vegetable consumption in India. No government can afford

Unlike other developing economies in Latin America, Africa or Eastern Europe, India’s growth has always kept ‘price volatility’ in check.

116

Reliving TheGreat

IndianIndianDream

to let their prices go up. Therefore you would have noticed that there is great political turmoil whenever the prices of either onions or potatoes go up. This government therefore is following the same practise. However it might be doing more harm than good if it goes to the extremes.

The second quarter’s review of budget 2005-06 is out and this mid year review has a number of interesting observations to be made about the budget last year. Of the total budgeted expenditure in 2006-07, current expenditure has been increased by 22.7 per cent while capital expenditure has gone down by 7.7 per cent. This increase in revenue expenditure is clearly because of the spending on Bharat Nirman and the eight flagship programmes - Sarva Shiksha Abhiyan, Mid-day Meal Scheme, Rajiv Gandhi Drinking Water Mission, Total Sanitation Campaign, National Rural Health Mission, Integrated Child Development Services, National Rural

Employment Guarantee Scheme, Jawaharlal Nehru National Urban Renewal Mission.

The government would have spent Rs. 82,381 crore on its flagship programs in 2006-07. This is in addition to the Rs. 44.533 crore on major subsidies and we begin to understand why the revenue expenditure has gone up dramatically and so has the non plan expense. What will be a delicate task for the Finance Minister is to include these and factor in the adverse impact on public finances of the welfare programs that must be scaled up this year. This will be in addition to a huge hit that finances will take on account of the impending Sixth Pay Commission. States demand more, especially in coalition arrangements. With this in mind, inflation a political risk as always, growth almost a compulsive necessity and controlling deficits now a committed goal, the budget exercise gets very complicated and demands astuteness like never before.

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“Many ideas grow better when transplanted into another mind than in the one where they sprang up.”

-Oliver Wendell Holmes

Quarterly Issue: 30th September 2004

The marginalisation of agriculture, minimilisation of industrial activity and magnification of service sectors are three broad concerns that

form the fulcrum of this particular issue. With its analysis and policy implications on broader patterns of these three sectors and some

select specific ones like that of food processing, textiles, small-scale industries, tourism and etc. Agriculture, through decades has been

grossly neglected. As a nation we have lost the potential of being the world’s ’Food Factory’. It is a strategic policy imperative to generate

purchasing power to the 55 percent of the population dependent on agricultural sector. This by itself would fuel the growth engine on a

self sustaining basis. On the other hand, we could not leverage the cost competitiveness of the manufacturing sector, as a nation, due to

archaic labour policies and other repressive procedures. Moreover, India Inc. critical success factor lies in an entrepreneurial class that

is talented, gutsy and conversant. So it is urgent to create an enabling business environment which would enable these entrepreneur’s to

churn out globally competitive products and services. Let the ‘Nuts and Bolts Revolt’……

Quarterly Issue: 30th June 2005

It features qualified optimism about the issues of Education, Health, Poverty and Unemployment, the social imperatives of any developing

nation, like India. “Education” as an issue requires sterilized (very clear and fresh) vision. The policies with selective and blurred vision have

caused deformation, under-utilisation and complete disarray. This issue delineates the reallocation and better utilisation strategies, which

in turn can herald a Knowledge Revolution. Speaking of “Health”, diseases like AIDS, TB, Polio and sudden spurt of epidemics has caught

attention, in recent times. Inadequate state funding, inefficiencies and inequality in provision are an eventful combo for catastrophe. IER

calls for commitment at policy level and energetic participation of private sector and NGOs . A lot remains to be done with emerging

issues like Medical Tourism and Health Insurance. “Poverty” through decades remained successfully a core area of interest for researchers

and policy makers. But it took a little too long for the realisation to dawn upon that there is an insistent and urgent need to alienate ‘the

poor’ from the ‘poverty’. In course of ‘Tracking Poor’s Spoor’, IER suggests alternatives in social security mechanisms, creation of food

banks and other resource-light options. The other socio-economic problem ‘Unemployment’, calls for radical changes in the structural and

occupational patterns. Non-agricultural opportunities, self-employment, micro-enterprises and other options are delineated in the section,

‘Labour Lost Unloved’

Quarterly Issue: 1st January 2005

Infrastructure is the very foundation on which a country’s industrial economy is built, while foreign trade and FDI are the modern day

pillars that support it. India grandiose ambitions about growing 8 percent annually, every year and becoming an economic giant, making

foreign investment the only imperative. Yet it has attained notoriety among foreign investors for the tedious procedures, an apathetic

bureaucracy, lacking infrastructure and unwarranted delays. Time has gone for policy makers to have realised ‘Foreign purse’ pectives’.

Foreign investments act as a catalyst to sustainable growth, have tremendous positive ripple effects and help to generate competencies

with Indian manufacturing and thus lead us to become a trading powerhouse. The International Trade section features the highlights of

the New Foreign Trade Policy, (as a separate section, at last, for the convenience of the reader). The same has been dissected from an

analytical point of view, incorporating the view points of sectoral experts and researchers. The IIPM Think Tank explains that India

should unhesitatingly opt for ‘International Intercourse’ by reducing transactional costs. More than any investment, good infrastructure

investment is a strategic key to bring out inherent strengths of any nation, making it work for growth, global competitiveness and poverty

reduction. Adequate attention to Inland Waterways and Rural Infrastructure can make a vital difference to the nation. Let there be no

‘Constricted Constructions’.

Special Issue: 15th February 2006

The focal intent of this issue is to present an all-inclusive, up-to-date and lucid exposition of an array of socio-economic and political

concerns and issues that are of paramount importance for appreciating, evaluating and suggesting solutions to one of the most important

national economic exercise, the Union Budget 2006-2007. It puts in perspective, for the casual observer and public, the ground realities,

in all dimensions and hues, by featuring the ideas, philosophies, opinions, observations, and recommendations of many experts in select

sectors of strategic importance for socio-economic development. This issue from The IIPM Think Tank promises to usher in a potentially

better, necessarily newer dawn of economic policies that radiates the power to dispel the current darkness of socio-economic and socio-

political confusion, under the aegis of “Reliving The Great Indian Dream: A blueprint to transform politics, economics and governance”.

As humanising planning process was systemically killed over the planned period, humanising budget becomes a vision imperative. Used

strategically, it can become a policy doctrine that can eliminate the remaining hurdles and obstacles that are preventing India from

realising The Great Indian Dream.

Great Indian Dream

When Great Indian Dream got released in August 2003, it created scores of academic debates and ideological dissent among many

leaders. After inquiring into fallacies in national economic planning, specifically resource mobilisation strategies, it proffers an alternate

plan, reconciling key social developmental imperatives, economic challenges and political constraints. The futuristic and unconventional

economic wisdom inherent in it has been gaining a lot of acceptance and appreciation

from many thought leaders in all walks of life. Accrediting their three decade old

research at IIPM, the authors’ talk of potential growth rates over 14%, since then.

Their observations were disregarded. But nowadays, every national and international

think-tank, including the PM talks about a 10%. The Election Commission took a

leaf out of this book and ordered enquiry into the rigging process in West Bengal.

Many politicians were defamed and intelligentsia was provoked. Veteran lawyer, Ram

Jethmalani used it for his campaigns in opposition to Atal Bihari Vajpayee. As on

December 2005, the tax component is almost 55 per cent in petrol and for diesel, the

tax component in the price is almost 34 per cent, in line with the resource mobilisation

strategies of the authors. It is indeed very assuring to find that in the last two years

as it hit book stands, tolerant of a few minor deviations, the compelling socio-

econonomic recommendations mentioned in it remain convincingly well-founded. The

ideology integral to this book has turned into a movement called ‘GID Foundation’

(GIDF), stirring a social revolution, as it supports developmental initiatives in more

than 2000 villages across 12 states and supporting an estimated 25, 00,000 people

residing primarily in the remote/backward areas. Effectual ideas relating to all social

sectors are featured in the book are being executed to restore pride to the ‘betrayed

India’. Reminds one about Sigmund Freud’s associable observation: ‘Thought is

action in rehearsal’.

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Educational Projects Executed By Aurobindo Chaudhuri Memorial Great Indian Dream Foundation


Government of India declared children as a “supremely important asset”. The Integrated Child Development Services

(ICDS), the most comprehensive programme for children symbolises the country’s commitment to its children and is the most visible and convergent intervention. Even though India has a clearly articulated commitment to ensuring universal primary education for its children, this goal continues to remain elusive. The woeful inadequacy of resources is not only one important factor, but of equal importance which is a little understood phenomenon of wide and persistent differences in the spread of education across both regions and social groups within the country. We consider education as every child’s birthright and firmly believe that only through education can the needy children free themselves from the vicious cycle of ignorance, disease & poverty. We recognise education as the main tool that empowers individuals to make informed choices, resist oppression & claim their rights, besides opening new possibilities & opportunities for themselves. Everything that we do is focused to turn our beliefs into a tangible reality. We have a very comprehensive education programme as per the developmental age of children and socio-economic milieu under which they exist. The philosophy of our organisation is based on the belief that each child deserves an opportunity for total development. The triad of the project includes- parents, children and the community.

The saying that one never gets too old to learn is only partially true. Studies have proven that first seven years of child’s life forms a basis of his/her future learning and early childhood requires an integrated approach to the child’s care, development and learning. In India working parents usually have difficulty in finding accessible, high-quality early

care for their children. The situation is even more grim, incase parents are from the lower economic background, keeping in mind their limited access to resources and information. Thus the vicious cycle of illiteracy and underdevelopment continues.

Aurobindo Chaudhuri Memorial Great Indian Dream Foundation (ACM GIDF) reaffirms its belief

that each child deserves an opportunity for the total development. ACM GIDF

has comprehensive child specific projects specially aimed at providing opportunities for the holistic development of children in the age group of 0-14 years. Varied strategies have been used, singly or in combination

for the betterment of the children’s health, psycho-social development,

early childhood education and universalisation of education. ACM GIDF is running age-specific projects for early education and stimulation of children from the less privileged strata of the society. The projects try to inculcate

motivation and interest in education among the less privileged children and their parents.

Objectives Of Educational Projects:• To provide stimulating and enriching

environment to the children as per their developmental age.

• To promote the over all development of the child through companionship and focused recreational activities.

• To act as a focal point for the sharing of information on child and family issues and as a referral point to health, family support and other services.

• To work with the families and communities in further promoting primary education.

• To liaison with the schools and larger society, so that the transition from Non formal to Formal is smooth.

Reliving TheGreat

IndianIndianDream

Guiding Principles Of Educational Projects: • Child centric approach of intervention.• Individualisation, where every child would

be given an opportunity to grow at their own pace.

• Potent role of family and community in the development of the child.

• Integrated approach, multi disciplinary staff that would ensure the mental, emotional, physical and creative development of the child.

• Worth and dignity of the people, we work with.

• Good nurturing/fostering is based on understanding the child’s needs and trying to meet them.

• Respect for the culture of the child.

1: Day Care Centre: This project aims to look after the early

developmental and nutritive needs of a child. The children come from families which are socially and economically vulnerable and require more support in childcare as they struggle to cope with burden of activities, within & outside home. Currently 90 children are benefiting form the programme that is being run in Delhi, Bengalooru and Chennai. A rich variety of experiences and activities are planned to promote the over all development of the child. The project aims to provision the children with a child-friendly, hygienic and safe environment. The centers are equipped with educational games, audio-visual equipments and play materials. The centers are painted with bright colours with cartoon and animal characters to make the environment children friendly and stimulating. The aim is to provide the child with ample opportunities to express themselves and learn.

The Project also relieve older children of some of their childcare burden and provide them with the opportunities for cognitive and personal development that formal schools make available to more privileged children. An important feature

of the Project is a well-developed system for monitoring the impact of its programs through observations of daily activities in relation to the developmental milestones of children.

2: TARA: TARA, the early childhood education project

of ACM GIDF aims to spend the formative years of children lives in learning basic skills that are required throughout the life. Through the preschool we aim to expand and reinforce the child’s innate strengths and promote the universalisation of primary education. 135 Children in the age group of 2-4 years are benefiting from this project. Currently it is functional in four preschools in Delhi, Chennai and Bengalooru.

The learning in preschool is through play and experiences, rather than putting undue emphasis on formal learning structures. Under this project, facilities like play room, resource centre, study room and rest room are created to ensure child friendly environment.

The child is given lots of fun filled experiences and art activities to expand and enhance the imagination and development abilities. Weekly topics, monthly themes and daily activities keep the curriculum focused and fun. The curriculum encourages the children to pursue their own interests in the context of life, community and the world. Children are involved in 60 minutes duration of structured physical activities and 3 hours of daily unstructured activities. The children are also given various roles and duties in organising the regular activities of the projects, keeping in mind their age and other variables. All of these, in turn creates a sense of togetherness, learning and responsibility in their environment. Additionally, TARA project also covers growth monitoring, immunisation, health, nutrition services and development.

3: Non Formal Centres: It is meant for out-of-school children at the

elementary level and it provides part-time education through flexible school timings and innovative


teaching methods in an informal environment. The aim is to develop skills & inculcate the manners & teaching about health to the deprived, less privileged society specially women and children, who are frequently denied of their identity in the community. By making the child educated, we not only aim to bring positive changes in the lives of his/her immediate family but also the larger society. The flow of education is promoted from child to child and child to adult.

Our Non-Formal Education Centres (NFE) seeks to ensure quality education, higher retention in the primary school and reduction in school drop out rates. The prime objective is to attain universalisation of education in the project area. The programme is envisaged, to provide the children with basic education.

We lay a special emphasis on the education of the Girl Child and children who are under difficult circumstances. These Non Formal Centres are established within the community itself for running the education program, which is so planned that the children can eventually be mainstreamed into formal education systems (viz. Admission to govt. school).

Our NFE Centres provide education to children within the age groups of 5-9 and 10-14 years. Though it does not impart formal learning its focus is on the overall development of the child’s attitudes, values and behavioral patterns. The programme aims at inculcating and stimulating every child’s endeavour towards taking care of his/her environment. Due to variety of social, cultural, economic and linguistic differences, there is a fair amount of flexibility in the teaching methodologies. The children are constantly encouraged and stimulated to grow at their own pace depending on their environment. The centres are striving to

satisfy the curiosity of the child and channel it in a creative direction.

They are also provided with toys and play materials to ensure holistic development of each child. GIDF has 12 Non Formal Education Centres located in slum clusters spread across the various cities in India like Delhi (Madan Pur Khadar, and Okhla), Haryana (Prem Nagar in Gurgaon), Uttar Pradesh (Khoda Colony in Noida), Karnataka (Viveknagar, Srinivagilu in Bangalore), Maharashtra (Nargis

Dutt Colony & Lal Mitti in Mumbai) and Tamil Nadu (Karunanidhi Nagar, Gothamedu

and Kothachavadi in Chennai). These Centres cater to over 1000 children.

4: Alternate Education:This programme focuses on

providing academic support to school going children who do

not have the privilege of attending private tuitions. The aim is to assist

students academically and sustain their motivation and interest for studies. Special attention is given to each and every child with the focus to strengthen their skills and develop their interests

in specific subjects. The purpose of the alternate education is to improve the standard of education of the school -going children and to minimise drop-out rates. A substantial number of students drop out of the formal sub-system. Through this programme children appreciate the merits of basic education and are motivated to attend their formal schools regularly.

Special attention is given to the physical environment and care taking arrangements in all the projects, as it has direct bearing on the development of the child. As importance of family in the development of the child cannot be negated at any life stage, Parent’s active participation in planning and implementing the program is highly valued. Organisation also acts as catalyst to increase the adequacy of parents thus accelerating the development process.

IER is a quarterly journal featuring contents of academic and professional interest that are of utility to managers, policy makers, politicians, consultants, teachers and students in the areas of Economics and Management. It is a multidisciplinary platform for sharing and disseminating knowledge in the issues of education, health, poverty, unemployment, agriculture, industry, service, FDI, international trade, infrastructure and environment, pertaining to Indian economy. We passionately believe in the credo that we constantly seek to follow: rethink, edify and delineate. This enduring commitment has helped us foster and broaden the parameters of public policy debate and alternatives. Toward that goal, we strive to achieve greater involvement of the intelligent, concerned change agents (reform minded politicians, public servants, academicians, socially responsible firms, civil society organizations and citizens) in questions of policy and the ideation. In order to further augment value and provision a broad perspective to Indian economic problems, your knowledge and expertise in the above mentioned fields would be highly valuable to IER. We would like the possibility of receiving a write-up from you, on a topic of your expertise and interest as per the under-mentioned guidelines.

Guidelines For Contributors Content: Articles should be in the areas of education, health, poverty, unemployment, agriculture, industry, service, FDI, international trade, infrastructure and environment, pertaining to Indian economy, which are of contemporary interest and value to the esteemed and intellectual readers. The journal seeks to present an eclectic approach supported by empirical research or practical applications as necessary. Contents that demonstrate clear and bold thinking, fresh and useful ideas and solutions, accessible and jargon-free expression, and unmistakable authority and proficiency are those most likely to meet our reader’s needs.Reviewing Process: Each article is reviewed by the Economics Research Group (ERG). If found suitable, the same may be sent for another round of review before final acceptance. With prior information and consent, the editors reserve the right to modify and improve the manuscripts to meet IER’s standards of presentation and style. The editors also have full right to accept or reject an article for publication. Editorial decisions will be communicated within a period of 2 weeks of the receipt of the submission.Word Length: Articles should be of 2,500 to 3,000 words including abstract and references. Headings And Sub-Headings: Headings should be typed in capital and underlined; sub-headings should be typed in upper and lower case and underlinedReferences: References to other publications should follow the Harvard style.Figures, Charts And Diagrams: Use of figures, charts and diagrams should be kept to the minimum and text should indicate where the same will appear. All tables, charts, graphs should be typed on separate sheets. They should be numbered as Table 1, Table 2, etc. The graphs should have the minimum amount of descriptive text and the axes should be labeled with variable written out in full, along the length of axes, with the unit in parentheses. Abstract And Key Words: An abstract within 100 words and three key words should be submitted. Author’s Bio-data And Photograph: A brief bio-data with full postal and e-mail addresses and a coloured photograph should be sent along with the articles.Copyright: Authors should warrant that their work is not an infringement of any existing copyright and will indemnify the publisher against any breach of warranty. The articles published in IER will become the legal copyright of the publisher. The articles appearing in IER are the personal responsibility of the authors themselves and do not reflect the views of the editor, principal or the Economics Research Group (ERG) or the sponsoring organization. The author(s) will receive a complementary copy of IER in which their articles are published; they will also receive ten reprints of their articles for their personal use. Submission: The submission should be sent to M.N.V.V.K. Chaitanya at [email protected]

C a l l f o r P a p e r s

THE HUMAN FACTOR

An IIPM Intelligence Unit Publication | 126 August-October 2005

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EXECUTIVE EDUCATION PROGRAMMES AS IDENTITY

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