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Posts Tagged ‘Rangarajan

Of an India behind the new poverty ratio

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Mural titled 'In the name of development', at Jawaharlal Nahru University, New Delhi

Mural titled ‘In the name of development’, at Jawaharlal Nahru University, New Delhi

New poverty claims from the government of India are being interpreted as (a) proof that the economic liberalisation is working, (b) that the ruling coalition has begun its preparation for the 2014 general election by claiming the largest percentage reduction of poverty ever, (c) that the ruling coalition by lowering the poverty line (and therefore the number of Indians identified as poor) will slash its social subsidies outlay, (d) that the way India measures poverty is desperately in need of repair, if not altogether in need of renewal.

The new state poverty lines table (see below for xls link)

The new state poverty lines table (see below for xls link)

India’s English-language media (in particular the financial and business press) has either repeated what the Planning Commission has released, or has reported reactions to the latest claim from opposition parties. Here is a selection:

“The proportion of people living below poverty line (BPL) has came down from 37.2 per cent in 2004-05 to 21.9 per cent in 2011-12 — a decline of 15.3 percentage points in a period that roughly coincides with the first eight years of the United Progressive Alliance.”
“The sharp drop was attributed to the high real growth in recent years, which raised the consumption capacity. The number of India’s poor fell to less than a quarter of its population in 2011-12, giving the government a reason to cheer amid the recent raft of disappointing macro economic data.”
“Over the last decade, poverty has witnessed a consistent decline with the levels dropping from 37.2% in 2004-05 to 29.8% in 2009-10. The number of poor is now estimated at 269.3 million, of which 216.5 million reside in rural India.”
“One theory is that this is the outcome of the trickle-down impact of the record growth witnessed in the first decade of the new millennium.”
“The BJP slammed the figures as a ‘political gimmick’ and a ‘conspiracy’ of the Congress to deprive the poor of the benefits of government schemes while CPI(M) said it amounted to ‘adding salt to the wounds of the poor’.”

It was only last year, in 2012 June, that the Planning Commission constituted an ‘expert group’ chaired by a former head of the Reserve Bank of India to “review the methodology for the measurement of poverty”. In the hoary tradition of Indian bureaucratese, this expert group is now “deliberating on this issue” (said the Planning Commission) and is expected to submit its report by the middle of 2014.

What is the main substance of the new claim? The note from the Planning Commission (titled ‘Press Note on Poverty Estimates, 2011-12’ and dated July 2013) has stated that the “percentage of persons below the poverty line in 2011-12 has been estimated as 25.7% in rural areas, 13.7% in urban areas and 21.9% for the country as a whole”. [A spreadsheet with the new statewise rural and urban poverty lines is available here.]

Government-friendly infographics from a financial newspaper

Government-friendly infographics from a financial newspaper

Thereafter the myth of the descending poverty line is outlined: that in 2004-05 the respective poverty ratios for the rural and urban areas were 41.8% and 25.7% and 37.2% for the country; that in 1993-94 the ratios were 50.1% in rural areas, 31.8% in urban areas and 45.3% for the country. And, in triumphant tones, that hence the 407 million Indians below the poverty line in 2004-05 had by 2011-12 dwindled dramatically to 270 million – a reduction of 137 million persons over a short seven years! And that indeed, it is all the more significant that for the last eight years it is the UPA (that is, the Congress) that has ruled India. So flows the polemic.

In the eagerness to find ‘rural’ and ‘urban’ and a ‘national’ poverty line, the tales of the deciles of the NSS surveys, referred to only fleetingly, are of importance (for the 43rd, 50th, 55th, 61st, 66th and 68th rounds, all of which we hope are being studied by the Rangarajan expert group). The deciles in the 68th round tell us that in rural India, the average monthly expenditure per person of Rs 153 on cereals would buy 7.3 kg of rice or 8.5 kg of wheat, and that the Rs 40 spent per person on pulses would buy 0.85 kg of pulses, both monthly measures (outside the fair price shop) being well under (13.8 kg and 1.2 kg respectively) the recommended dietary allowances.

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The realities of India’s fields and farms

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India’s economy planners when discussing agriculture are no closer to farm and field realities. That much is clear from a reading of the ‘Review of The Indian Economy 2010-11’, by the Economic Advisory Council to the Prime Minister, released to the public on 2011 February 22.

The document had, I suspect, been finalised and was waiting for the data from the Second Advance Estimates of agricultural production for the 2010-11 year. A cursory analysis of this forms the ‘Agriculture’ section of the ‘Review’ [read the relevant portions of the Review here].

Chairman of the Economic Advisory Council to the Prime Minister, C Rangarajan (centre), flanked by members Suman Bery (right) and Saumitra Chaudhuri releasing the 'Review of the Economy 2010-11' in New Delhi on 21 February 2011. Photo: The Hindu/V V Krishnan

Chairman of the Economic Advisory Council to the Prime Minister, C Rangarajan (centre), flanked by members Suman Bery (right) and Saumitra Chaudhuri releasing the 'Review of the Economy 2010-11' in New Delhi on 21 February 2011. Photo: The Hindu/V V Krishnan

It is in the ‘Concluding Comments’ section concerning agriculture in India that the intent and direction of the current government are underlined. There are a few strong pointers:

* “As against the target of average 4 per cent growth during the Eleventh Plan period, the actual average growth is likely to be slightly less than 3 per cent.” Which only indicates that ‘growth’ in the agricultural sector will continue to be seen as a primary consideration, outweighing the sustainable use of natural resources management. The growth insistence will also mean the continued support of high-input and financially burdensome agricultural methods.

* “Somewhat in parallel, the per capita availability in grams per day has also not gone up in a context where per capita income has been rising quite strongly.” The Economic Advisory Council has not been honest enough to draw the needed connections – between population growth and therefore foodgrain demand, and the need for urgently revisiting the basis for planning agricultural cultivation at the district level.

* “The international prices for grain have been very volatile and much elevated in recent times and therefore higher levels of domestic output is an even more important factor to consider in the context of domestic food security.” This is spot on. Why doesn’t the rest of the Concluding remarks section build on this?

* “Attention must be focused on building rural infrastructure, developing technologies that are appropriate to the region which have to be disseminated – delivered in an efficient fashion. The institutions that are enjoined with this task have to be activated in a more energetic fashion.” The Concluding Remarks does not build on the above point because of such weak, vague and misguided points as this one. ‘Technologies’ and ‘Infrastructure’ for growth at 4%? Or for food security?

* “The liberalization of the economy has benefited the farm sector and as a result the terms of trade for agriculture are no longer adverse.” This is one of the Big Contradictions of the Review. No, the liberalisation of the economy has NOT benefited the farm sector. Has the Government of India and its economic planners so quickly and so completely forgotten that 200,000 farmers have committed suicide over the last decade?

* “Investment in the farm sector has also picked up substantially and capital formation as a percentage of agricultural GDP has more than doubled in the past decade.” To what end? To achieve the 4% growth target which is denominated in ‘technology’ and ‘infrastructure’ in the agri sector? Has there been even 2% annual growth in the incomes of the cultivating households?

Demonstrators shout slogans as they hold steel plates during a protest rally in New Delhi February 23, 2011. Tens of thousands of trade unionists, including those from a group linked to the ruling Congress party, marched through the streets of the capital on Wednesday to protest food prices, piling pressure on a government already under fire over graft. Photo: Reuters/Parivartan Sharma

Demonstrators shout slogans as they hold steel plates during a protest rally in New Delhi February 23, 2011. Tens of thousands of trade unionists, including those from a group linked to the ruling Congress party, marched through the streets of the capital on Wednesday to protest food prices, piling pressure on a government already under fire over graft. Photo: Reuters/Parivartan Sharma

* “There seems to be evidence that better quality seeds and superior cultural practices are available, but the delivery system for translating these to the field are lagging.” This is where the threat in the Review lies. What delivery systems and who owns them?

* “A major hurdle in agricultural development is the inefficiency of the delivery systems. There is a plethora of institutions in research, extension, credit and marketing. However, efficacy of these institutions to deliver goods and services to the country’s vast small and marginal farms section is quite limited. This is a serious cause for concern.” True. How to support this point and rescue it from the overall contradictions of the Concluding Remarks?

* “There is need therefore, to attune these various institutions to the emerging agrarian structure, which is progressively identified with the small and marginal farmers.” True.

* “A two-fold strategy is indicated for this purpose. One, to encourage farmer’s collaborative efforts as in cooperatives, or more recently in producers companies, and vertical integration of production and marketing by suitable models of contract farming.” Emphatically NO. This is not the answer.

* “Two, at the institutional level, the organizational changes to cut down the cost of transactions (e.g. through a flexible and inclusive business correspondent model) and the use of information technology for the same purpose needs to be encouraged.” True with reservations. Infotech is a means and not an end.

* “In addition both for purposes of ensuring remunerative prices for farmers as well as an anti-inflationary measure, the strengthening of organized retail, as well as use of these outlets for public distribution along with the strengthening of the existing public distribution networks, are measures that need to be tried out seriously.” This is dreadfully ill-advised and apparently motivated by the FDI-seeking stand of the central government. This point of view must be stopped immediately. Dozens of farmers’ cooperatives and small traders have clearly and vociferously rejected FDI-driven organised retail in India. This point holds the back door open for the entry of corporate retail and will be used to legitimise retail control over access to food to vulnerable rural populations.

* “Local procurement by State Government agencies provides an incentive for farmers to grow grain. Coarse cereals are a varied commodity and tastes differ across States. There is also a problem in handling coarse grains.” Yes, yes and no. This point must be supported and rescued from the other corporate-oriented directions of the Review.

[Second Advance Estimates are available from here.]

India’s economy planners when discussing agriculture are no closer to farm and field realities. That

much is clear from a reading of the ‘Review of The Indian Economy 2010-11’, by the Economic

Advisory Council to the Prime Minister, released to the public on 2011 February 22.

The document had, I suspect, been finalised and was waiting for the data from the Second

Advance Estimates of agricultural production for the 2010-11 year. A cursory analysis of this forms

the ‘Agriculture’ section of the ‘Review’ (read the relevant portions of the Review here).

https://makanaka.wordpress.com/agriculture-india-review-2010-11/

It is in the ‘Concluding Comments’ section concerning agriculture in India that the intent and

direction of the current government are underlined. There are a few strong pointers:

* “As against the target of average 4 per cent growth during the Eleventh Plan period, the actual

average growth is likely to be slightly less than 3 per cent.” Which only indicates that ‘growth’ in

the agricultural sector will continue to be seen as a primary consideration, outweighing the

sustainable use of natural resources management. The growth insistence will also mean the

continued support of high-input agricultural methods.

* “Somewhat in parallel, the per capita availability in grams per day has also not gone up in a

context where per capita income has been rising quite strongly.” The Economic Advisory Council

has not been honest enough to draw the needed connections – between population growth and

therefore foodgrain demand, and the need for urgently revisiting the basis for planning agricultural

cultivation at the district level.

* “The international prices for grain have been very volatile and much elevated in recent times and

therefore higher levels of domestic output is an even more important factor to consider in the

context of domestic food security.” This is spot on. Why doesn’t the rest of the Concluding remarks

section build on this?

* “Attention must be focused on building rural infrastructure, developing technologies that are

appropriate to the region which have to be disseminated – delivered in an efficient fashion. The

institutions that are enjoined with this task have to be activated in a more energetic fashion.” The

Concluding Remarks does not build on the above point for the weak, vague and misguided point

here. ‘Technologies’ and ‘Infrastructure’ for growth at 4%? Or for food security?

* “The liberalization of the economy has benefited the farm sector and as a result the terms of

trade for agriculture are no longer adverse.” This is one of the Big Contradictions of the Review. No,

the liberalisation of the economy has NOT benefited the farm sector. Has the Government of India

and its economic planners so quickly and so completely forgotten that 200,000 farmers have

committed suicide over the last decade?

* “Investment in the farm sector has also picked up substantially and capital formation as a

percentage of agricultural GDP has more than doubled in the past decade.” To what end? To

achieve the 4% growth target which is denominated in ‘technology’ and ‘infrastructure’ in the agri

sector? Has there been even 2% annual growth in the incomes of the cultivating households?

* “There seems to be evidence that better quality seeds and superior cultural practices are

available, but the delivery system for translating these to the field are lagging.” This is where the

threat lies. What delivery systems and who owns them?

* “A major hurdle in agricultural development is the inefficiency of the delivery systems. There is a

plethora of institutions in research, extension, credit and marketing. However, efficacy of these

institutions to deliver goods and services to the country’s vast small and marginal farms section is

quite limited. This is a serious cause for concern.” True. How to support this point and rescue it

from the overall contradictions of the Concluding Remarks?

* “There is need therefore, to attune these various institutions to the emerging agrarian structure,

which is progressively identified with the small and marginal farmers.” True.

* “A two-fold strategy is indicated for this purpose. One, to encourage farmer’s collaborative

efforts as in cooperatives, or more recently in producers companies, and vertical integration of

production and marketing by suitable models of contract farming.” Emphatically NO. This is not the

answer.

* “Two, at the institutional level, the organizational changes to cut down the cost of transactions

(e.g. through a flexible and inclusive business correspondent model) and the use of information

technology for the same purpose needs to be encouraged.” True with reservations. Infotech is a

means and not an end.

* “In addition both for purposes of ensuring remunerative prices for farmers as well as an

anti-inflationary measure, the strengthening of organized retail, as well as use of these outlets for

public distribution along with the strengthening of the existing public distribution networks, are

measures that need to be tried out seriously.” This is dreadfully ill-advised. This point of view must

be stopped immediately. Dozens of farmers’ cooperatives and small traders have clearly and

vociferously rejected FDI-driven organised retail in India. This point holds the back door open for

the entry of corporate retail.

* “Local procurement by State Government agencies provides an incentive for farmers to grow

grain. Coarse cereals are a varied commodity and tastes differ across States. There is also a

problem in handling coarse grains.” Yes, yes and no. This point must be supported and rescued from

the other corporate-oriented directions of the Review.