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Posts Tagged ‘Twelfth Plan

Food Prices, Health and Nutrition: Red-flag indicators for India’s 12th Plan

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Macroscan, the website is maintained by Economic Research Foundation, professional economists seeking to provide an alternative to conservative and mainstream positions, has posted an article I have written on ‘Food Prices, Health and Nutrition: Red-flag indicators for the 12th Plan’. Here is the opening section.

India rice price trends

The long-term impacts of food inflation on the rural and urban poor are yielding worrying indicators in the nutrition and health sectors. The debate over the provision of the National Food Security Bill and over the reform of procurement for the public distribution system has helped a great deal to bring to the foreground persistent inequities in food access and quality. What remains are the health and nutrition dimensions that are also determined by access to food, the prices at which food items are available and the extent to which food inflation determines nutritional choices for citizens in low income categories. Some of these linkages are brought out by reading together new data from the National Sample Survey Organisation’s 66th Round, and recent trends in retail food prices.

Retail prices of the separate elements of a common food basket are recorded by the Ministry of Food and Consumer Affairs (FCA), Department of Consumer Affairs, for 49 cities. This is a new series of 22 items, compared to the 16 items the FCA had maintained until early 2011. For rice and wheat there is a curious pattern to the price rise. The price band for the 49 cities moves up over time, but it also expands over that time. This can be seen in Chart 1.

With Bharat Nirman-centric infrastructure programmes deepening the connectivity between food supplying districts and consuming regions and with growing investment in agri-logistics and in food retail chains, in fact the reverse ought to happen. That is, food basket staples should be displaying greater homogeneity in retail prices. However, there are a variety of other factors influencing the price band (for the FCA’s 49 cities as much as for district kirana shops) and some of these are external factors such as energy costs, new demand centres arising in fast-urbanising towns which skew distribution costs and corner investment, and the offtake by the food processing industry which is growing at an annual rate of 14%-15%.

India rice and wholesale price index

While a number of factors are at work behind the divergences over time between states and between rural and urban consumption centres, these are not reflected by the movement of the Wholesale Price Index. However, it can convincingly show the variance between types of measurements. The Office of the Economic Adviser maintains the Wholesale Price Index (WPI). After indexing the upward movement in WPI (new series 2004-05) for rice from January 2006 and also indexing the minimum and maximum prices per kilo of the 49 cities’ price trendline, Chart 2 is the result.

As pointed out in a number of articles and commentaries on MacroScan by Jayati Ghosh and C P Chandrasekhar, there is a gap between the rate of increase of CPI for food items and the WPI for those items. This we can see in Chart 2. What we also see is that from October 2008 to January 2010 the rise in WPI accompanied, more or less, the rise in the lower limit of the rice price trendline. From January 2010 onwards, the difference in the growth rates of the WPI for rice and of the rice trendline is significant. This is the ‘fair average quality’ of rice. Yet the gap between the lower price trendline and the WPI is now greater than it has been at any time during 2007-08, when the global food price shocks took place.

How have these price trends hurt households in the lower deciles of consumption in both rural and urban areas? One of the early results of the 66th Round of the NSSO, ‘Key Indicators of Household Consumer Expenditure in India, 2009-10’, provides an answer. The state- and decile-grouped summary data tables show that for 16 major states, the rate of increase in monthly per capita expenditure (MPCE) on food has been faster than the rate of increase of the total MPCE. What has been the impact in the states? For example, with both food and total MPCEs indexed to the levels found in each state by the NSSO in 2003,  the food MPCE rose by 87% in 2009-10 in rural Maharashtra whereas the total MPCE rose by 65%. In 2005-06, food MPCE in rural Maharashtra had risen 14% and the total MPCE had risen 19%.

[Macroscan, the alternative economics website, has the full article.] [pdf only is here.]

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Facebooked and challenged, India’s 12th Plan consultation

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Consultations have always accompanied the lengthy drafting process which culminates in a five year plan document. Since the 1990s, these have become more “inclusive”, to borrow a catch-phrase that is now much in vogue with Government of India policymakers. Even so, the inclusion has been restricted to academic institutions, trade unions (not any more, sadly), industry associations and trade representations.

The Indian polity, in whose name these Plans (capital ‘P’) are drafted and debated and approved, have never been a part of this vast, slow process. From the approach paper to the Twelfth Plan however, the Planning Commission has found it scores points by inviting suggestions and comments from anyone interested. Email ids were given out on the website, consultations were held open for public comment via downloadable drafts.

Now the Commission has gone an ambitious step further. A Facebook page, a dedicated website for online consultations and a discussion forum to debate the Commission’s 12 “challenges” – that is the engaging approach taken by India’s primary planning body for social and economic development.

This approach is still too raw and new to determine whether it can make a difference to the actual drafting of the Five Year Plan. Participatory planning for land and natural resource use has not been encouraged by the central and state governments, and it would be naive to imagine that this situation will change concerning the fundamental planning document for India. Still, it is a beginning, and it is up to those concerned enough to contribute to widen this space.

“The Planning Commission has started the process of preparing an Approach to the 12th Five Year Plan and is adopting a new and more consultative approach. In addition to consultations conducted across the country by organizations representing various citizens’ groups e.g., women, dalits and youth, the Planning Commission has for the first time adopted consultation from interested stake holders via the Commission’s web-site,” said the deputy chairman of the Commission.

“Based on an intensive process within the Commission, ‘Twelve Strategy Challenges’ [I’ve listed them below] have been identified to initiate these consultations. The ‘strategy challenges’ refer to some core areas that require new approaches to produce the desired results. These should not be viewed as chapters of the Twelfth Plan, nor the layout of the Approach Paper, which will be decided only after the consultations are complete. They are only a way of organizing thinking in critical areas.”

“To give a few examples, the management of water resources is a critical area and is mentioned under the strategy challenge ‘Managing the Environment’. There is an obvious overlap with other challenges such as Rural Transformation and Sustained Growth of Agriculture. Similarly ‘Social Justice’, which is a critical challenge, will be met in a manner in which many of the other challenges are addressed. Therefore, if a challenge is not highlighted separately, it may be because it is wide enough to be covered by several other challenges. However, we recognize that such cross-cutting challenges must not be lost sight of and they must be adequately recognized and addressed in the Approach Document.”

The ‘Strategy Challenges’ are: Enhancing the Capacity for Growth; Enhancing Skills and Faster Generation of Employment; Managing the Environment; Markets for Efficiency and Inclusion; Decentralisation, Empowerment and Information; Technology and Innovation; Securing the Energy Future for India; Accelerated Development of Transport Infrastructure; Rural Transformation and Sustained Growth of Agriculture; Managing Urbanization; Improved Access to Quality Education; Better Preventive and Curative Health Care. The Strategy Challenges are listed in full here.

The web-based innovation notwithstanding, it is useful to look at the intention through a historical lens. “The — Plan represents the first phase in a scheme of long-term development extending over the next fifteen years or so, the preparation of which will now be taken in hand. In the course of this period, India’s economy must not only expand rapidly but must, at the same time, become self-reliant and self-generating. This long-term approach is intended to provide a general design of development for the country’s natural resources, agricultural and industrial advance, changes in the social structure and an integrated scheme of regional and national development.”

“The size of the task and the many-sided challenge should not be underestimated. The greatest stress in the Plan has to be on implementation, on speed and thoroughness in seeking practical results, and on creating conditions for the maximum production and employment and the development of human resources. Discipline and national unity are the very basis of social and economic progress and the achievement of socialism. At each step, the — Plan will demand dedicated leadership at all levels, the highest standards of devotion and efficiency from the public services, widespread understanding and participation by the people, and willingness on their part to take their full share of responsibility and to bear larger burdens for the future.”

Which Plan document does this extract – from the introduction – come from? India’s Third Five Year Plan, whose preparation commenced towards the end of 1958 and was carried out in three main stages. The first, leading to the publication of the Draft Outline early in July, 1960, comprised detailed studies by working groups set up at the Centre and in the States. Parliament gave its general approval to the Draft Outline in August, 1960.