Resources Research

Culture and systems of knowledge, cultivation and food, population and consumption

Posts Tagged ‘2009

The big money in India’s cities

with 3 comments

Almost seven out of ten rupees banked in India are to be found in the top 100 centres. They account for 68.5% of the total bank deposits in India.

Almost seven out of ten rupees banked in India are to be found in the top 100 centres. They account for 68.5% of the total bank deposits in India.

The concentration of the country’s bank deposits in India’s urban centres can be seen in this detail from a table I have assembled using data from the Reserve Bank of India (RBI).

This is the quarterly series that the RBI puts out and is called ‘Quarterly Statistics on Deposits and Credit of Scheduled Commercial Banks’.

The intriguing table which forms the image is of the top 100 urban centres ranked by bank deposits, and arranged alphabetically, for the years 2007, 2009, 2011 and 2013. The city names and total deposits (in crore rupees) are seen. This is the lower end of the table, and I have coloured ten cities to show how their deposits have changed over six years.

The rate of growth has been extremely steep. We have here Panaji, Patiala, Pune, Ranchi, Shillong, Thane, Thiruvananthapuram, Udaipur, Varanasi and Visakhapatnam for no reason other than their entries for all four years are visible. The patterns for the rest of the top 100 centres is generally the same.

For these ten cities, the average growth rate of their total bank deposits over these six years is 190%! This is most significant to us, especially considering the food inflation, the cost of cultivation, wage rates of agricultural labour and allied issues I write about in this diary. Have the wage rates for agricultural labour grown over these last six years at even one-third this average rate? Not at all.

RG-bank_urban_deposits_detailFrom this small set of ten cities alone, the lowest rate of growth of total bank deposits is 88% (Vishakhapatnam in Andhra Pradesh) and the highest is 249% (Thane in Maharashtra).

The progression of the size of total deposits can be seen from Shillong (in Meghalaya) from Rs 2,577 crore in 2007 to Rs 8,311 crore in 2013 (which is dwarfed by the others). In Ranchi (Jharkhand) total bank deposits have grown from Rs 6,436 crore in 2007 to Rs 21,688 crore in 2013!

That is why the top 100 centres accounted for 68.5% of the total bank deposits in India – this is a ratio that has remained roughly the same for the last six years. In addition, as the ‘Quarterly Statistics’ has noted in its highlights, the top 100 centres also accounted for 76.9% of total bank credit.

And that is why it means little for central and state governments, and for businesses and NGOs and social entrepreneurships to talk about ‘financial inclusion’ when we have proof – quarter after quarter – of the persistence of financial inequality between India and Bharat.

Advertisements

Economics is not physics

leave a comment »

From ‘India and the Global Financial Crisis What Have We Learnt?’, by Dr Duvvuri Subbarao, Governor, Reserve Bank of India, as the K R Narayanan Oration, at the South Asia Research Centre of the Australian National University, Canberra on June 23, 2011.

A few months into the crisis [the 2008-09 financial crisis], the Queen happened to be at the London School of Economics and asked a perfectly sensible question: ‘how come none of the economists saw the crisis coming’. The Queen’s question resonated with people around the world who felt that they had been let down by economics and economists. As economists saw their profession discredited and their reputations dented, the economic crisis soon turned into a crisis in economics.

What went wrong with economics? It now seems that by far the most egregious fault of economics, one that led it astray, has been to project it like an exact science. The charge is that economists suffered from ‘physics envy’ which led them to formulate elegant theories and models – using sophisticated mathematics with impressive quantitative finesse –  deluding themselves and the world at large that their models have more exactitude than they actually did.

Admittedly, in a limited sense there may be some parallels between economics and physics. But similarity in a few laws does not mean similarity in the basic nature of the academic discipline. The fundamental difference between physics and economics is that physics deals with the physical universe which is governed by immutable laws, beyond the pale of human behaviour. Economics, in contrast, is a social science whose laws are influenced by human behaviour. Simply put, I cannot change the mass of an electron no matter how I behave but I can change the price of a derivative by my behaviour.

The laws of physics are universal in space and time. The laws of economics are very much a function of the context. Going back to the earlier example, the mass of an electron does not change whether we are in the world of Newton or of Einstein. But in the world of economics, how firms, households and governments behave is altered by the reigning economic ideology of the time. To give another example, there is nothing absolute, for example, about savings being equal to investment or supply equalling demand as maintained by classical economics but there is something absolute about energy lost being equal to energy gained as enunciated by classical physics.

In natural sciences, progress is a two way street. It can run from empirical findings to theory or the other way round. The famous Michelson-Morley experiment that found that the velocity of light is constant led to the theory of relativity – an example of progression from practice to theory. In the reverse direction, the ferocious search now under way for the Higgs Boson – the God particle – which has been predicted by quantum theory is an example of traversing from theory to practice. In economics, on the other hand, where the human dimension is paramount, the progression has necessarily to be one way, from empirical finding to theory. There is a joke that if something works in practice, economists run to see if it works in theory. Actually, I don’t see the joke; that is indeed the way it should be.

Karl Popper, by far the most influential philosopher of science of the twentieth century, propounded that a good theory is one that gives rise to falsifiable hypotheses. By this measure, Einstein’s General Theory was a good theory as it led to the hypothesis about the curvature of space under the force of gravity which indeed was verified by scientists from observations made during a solar eclipse from the West African islands of Sao Tome and Principe. Economics on the other hand cannot stand the scrutiny of the falsifiable hypothesis test since empirical results in economics are a function of the context.

The short point is that economics cannot lay claim to the immutability, universality, precision and exactitude of physics. Take the recent financial crisis. It is not as if no one saw the pressures building up. There were a respectable number of economists who warned of the perilous consequences of the build-up of global imbalances, said that this was simply unsustainable and predicted a currency collapse. In the event, we did have the system imploding but not as a currency collapse but as a melt down of the financial system.

We will be better able to safeguard financial stability both at global and national levels if we remember that economics is a social science and real world outcomes are influenced at a fundamental level by human behaviour.

[The entire oration is here.]

Woodfuel in the Western Ghats

with 2 comments

Goatherds in Chikodi taluka, Belgaum district, Karnataka

Goatherds in Chikodi taluka, Belgaum district, Karnataka

The woodfuel-and-dungcakes energy mix for rural India is alive and well in the hills of Maharashtra’s Deccan. The indications are that a combination of factors is at work. There’s less income for smallholder farming households, those farming families which have earnings have seen their monthly household budgets squeezed by rising food prices, and energy costs at least the same or more. That’s why I’ve seen in November and December – when early mornings and nights are cool to chilly, and heating at home is needed – more evidence of woodfuel use.

If you ask the energy planners and econometricians, they’ll say that fuelwood markets are important and have a great influence on shaping demand. As a rule this is likely to be true, but what we’re seeing here has resulted from a variety of volatile conditions. Let’s look at some of the alternatives that rural households in the hills use. A cylinder of LPG (liquefied petroleum gas) costs about Rs 325 in a town in western Maharashtra (the 14.2 kg domestic cylinder). A sack of coal costs about Rs 300 to Rs 350 (20-25 kg) which will usually include the cost of transport (it’ll be carted along with other goods on the roof of an old jeep, in a tempo or lorry – state transport bus conductors are not partial to letting these sacks on board any more).

From the planners’ point of view, market conditions for wood are highly distorted due to government policies on fuel, energy and forests. That’s why discussing both demand and supply in the context of prices and market conditions is important, because in isolation the terms ‘demand’ and ‘supply’ for rural energy mean next to nothing.

It’s important too to a rural household that wood is a multi-use material. For instance, for eucalyptus, the thickest portion of the trunk can be used as timber, if the girth of the trunk, with bark, is more than 70 cm. Poles are used for scaffolding support and as roofing material. The dimensions of logs for use as poles are 3 to 6 metres in length, and 30 to 70 cm in girth (cut pieces of similar girth but shorter are used as pulpwood in paper mills). All smaller pieces, twigs, bark, and roots, which cannot be used elsewhere, are used as fuelwood. Thus there is no single wood market in a town or peri-urban settlement. I’ve found it safe to say that the set-up and behaviour of each market differs from others depending upon the range of species available, and the purposes for which each wood species can be put to use.

Hillside grasses, ghat in Kolhapur district, Maharashtra

Hillside grasses, ghat in Kolhapur district, Maharashtra

All that said, the main point here is that the price of fuelwood has risen in the hills of Maharashtra’s Deccan. A buyer will now pay Rs 60 for a ‘maund‘ of ‘jungli‘ wood and Rs 80 for a ‘maund‘ of babul wood. Now a ‘maund‘ is around 37 kg, so that makes a metric ton of ‘jungli‘ wood worth about Rs 1,620 (without complicating the matter with discounts for weight) and a metric ton of babul wood is worth around Rs 2,160. That’s a pretty steep annual growth rate because at the start of the 2000s – according to those who know about these things in Kolhapur, Satara and Pune – the price of a ton of ordinary wood was around Rs 1,300 and they also said that the price then was twice what it had been (around 700/ton) a decade earlier.

This is both worrying and curious. Worrying because it means that sources of energy among some sections of the rural population are defaulting to the woodfuel-dungcakes mix. Worrying also because it means that natural and protected forests, orchard and scrub are being scoured for woodfuel. Curious because we are in 2010 going to be less informed about the relative importance of the three major biofuels to rural households: has the animal population grown in the last decade? have the growing number of bio-gas plants installed during the last 15 years taken away from the dungcake source? have commercial crops reduced the available quantities of husk and straw (and what’s the effect on these as animal feed? We know a lot less than we think, but we do know what a ‘maund‘ of babul costs so that it can heat a hill household in winter.

FAO’s popcorn moment

leave a comment »

IPC Food Sovereignty

The civil society organisations forum

Proceedings so bland one can hardly believe they have come after a 2008 of extreme food price volatility, price rises worldwide which have kept millions on the poverty line as their food budgets take precedence over everything else.

“The three-day World Summit on Food Security ended here today after committing the international community to investing more in agriculture and eradicating hunger at the earliest date,” said the FAO solemnly. ‘Commiting’ to ‘invest’ at ‘the earliest date’? The FAO knows well (go over to the Global Forum on Food Security and Nutrition to read excellent accouns of field work) what the truth is. That commitment comes from those who work the land, that they invest their lives and that of their families and communities in that land, and that they do this every day.

The Summit is over, and for all it has achieved it may as well have not happened. Sad, when there was so much potential. But as the hyperactivity at the IPC Food Soveriegnty group proves, there’s lots happening outside the FAO world.

Written by makanaka

November 19, 2009 at 20:17

The trouble with big uncomfortable numbers

leave a comment »

459,698,885 people hit by drought

Who's counting? There are 459,698,885 people hit by drought in India.

The Government of India doesn’t like troublesome numbers. And it especially doesn’t like very big troublesome numbers.

That’s why, all through September, October and November 2009 you haven’t heard India’s central ministers talk about just how many people have been affected by the Drought of 2009. Twelve states have 299 drought-affected districts.

How many people affected? This post on the agriculture-ICT website Agropedia has the details in two tables. I’ll put up the detailed spreadsheets in a couple of days.

Written by makanaka

November 19, 2009 at 19:22