Sunday, November 16, 2014

Has Poverty Decreased ?

Has poverty decreased ?

The debate on poverty has transformed into a new plane since the country embarked on globalization. Before 1991 the poverty was measured in the light of the government policies implemented in line with domestic priorities. With the implementation of globalization policies since 1991, the poverty estimates call into question the set of policies under implementation since then. The poverty estimates, both released in 2011 by the Suresh Tendulkar committee and now in 2014 by the Rangarajan committee, are relevant, writesVeeraiah Konduri
New poverty estimates for India are in public domain now. By submitting its report in 2014 July, C. Rangarajan, former Chairman of Prime Minister’s Economic Advisory Council, performed his last official assignment. In preface to his report Rangarajan said, “Growth is not the sole objective of economic policy. It is necessary to ensure that the benefits of growth accrue to all sections of society.” A usual refrain in government language.
The debate on poverty has transformed into a new plane since the country embarked on globalization. Before 1991 the poverty was measured in the light of the government policies implemented in line with domestic priorities. But with the implementation of globalization policies since 1991, the poverty estimates call into question the set of policies under implementation since then. That is why the poverty estimates, both released in 2011 by the Suresh Tendulkar committee and now in 2014 by the Rangarajan committee, are relevant.
A comparative reading of the Lakhdawala committee findings on poverty in India and those of the Tendulkar and Rangarajan ones are important as they reflect the changes in poverty during the last decades of economic reforms. Not only that. During the last two decades, India stood out as one of the fastest growing economy scoring its growth rates nearing double digits before the global capitalist stagnation unfolded.
C. RangarajanThat is why some of the commentators in 2012 went even up to scolding those who begged to differ the estimates of Tendulkar committee. The tongue-in-cheek English media went one step ahead when it claimed that those who differ on Tendulkar’s estimates wants to see India still poverty ridden country and wants to keep their politics alive by punching the bag of sustaining poverty. For a surprise, there is no such a debate on the Rangarajan committee findings. Perhaps all the commenators must be busy in trying to locate the impending economic growth under the new regime in the country. We were told that the growing economies and economic growth benefits all sections of people and helps them to move out from poverty stricken life to life with dignity.
The Planning Commission based on the methodologies and recommendations suggested by the successive working groups on poverty has been performing the job of determining the poverty levels in India. The groups constituted by the planning commission from time to time are also revisiting the methodology deployed for this purpose. Presently the methodology prescribed by Suresh Tendulkar in his report is being used. Experts group headed by Suresh Tendulkar was constituted by the Planning Commission way back in 2005 and the group submitted its report in 2009.
As the Rangarajan committee report mentions, the Suresh Tendulkar committee used the all India urban poverty line basked as the reference to derive state –level rural and urban poverty, which is a deviation from the established practice of measuring the urban and rural poverty line separately. With this attempt, the absolute poverty declined fast in the country during the last two decades. Tendulkar observed, “Fundamentally, the concept of poverty is associated with socially perceived deprivation with respect to basic human needs”. By mentioning it as socially perceived deprivation, Tendulkar seems, refused to see the deprivation in real life of a poor. With the controversy arose about Rs. 32 a day per capita expenditure for a person to be labeled as poor, the then UPA government appointed high level committee to look into the issue under the chairmanship of Rangarajan.
The table below reflects the variation in the basic details of poverty estimates. Table 1 informs about the monthly per capita expenditure where as table 2 informs about the absolute number of poor in India including the absolute poverty decline during the period. As shown in table 1,
the per capita monthly consumer expenditure considered by Tendulkar committee for a person to be categorized as below poverty, is upwardly revised by Rangarajan panel from Rs 673 to 801 for rural areas and Rs. 860 to 1198 for urban areas for the year 2009-10. Similarly for the year 2011-12, the Tendulkar committee fixed minimum monthly per capita expenditure at Rs. 816 for rural and Rs. 1000 per urban where as Rangarajan panel pegged these figures at Rs. 972 and 1407 for the same period. The calculations arrived at by Suresh Tendulkar panel suggests.
Table 2 also reveals similar
variations in the number of absolute poor in the country. The Tendulkar committee concluded that only 29.8 % of India’s population was poor in 2009-10 and it further went down to 21.9 % by 2011-12 where as Rangarajan panel findings concludes that a 38.2 % of Indians were poor in 2009-10 and in 2011-12, the percentage of poor declined to 29.5 %. Thus on an average an additional ten percentage of country’s people got the BPL tag. Though the number of poor went up with the calculations of Rangarajan panel, the so called commentators which expressed its outrage over the Tendulkar committee findings kept silent for its own reasons
Now after perusing the key findings and variations in findings between the two panels, let us consider the problems with the findings of Rangarajan panel. There two set of objections to the latest findings. One is about the food basked and calorie norm computed by the Rangarajan panel and the other is much larger one, the one that contextualize the decrease of poverty in India in the given pace of economic growth over the last few years. As the above tables indicate, there is an average 8.7 % of population moved upward from the shackles of poverty between 2009-10 and 2011-12, just in the span of three years. This feat is primarily achieved by skewing the calorie norm. First let us consider the calorie norm computed by Rangarajan panel.
The Alagh committee in 1979 computed this calorie norm basing the differences of works to be performed by the different classes of people in rural and urban areas. Since then it became a standard for various government policy formulations and fixation of even minimum wages. Over the last 35 years what are the changes that occurred in the nature of works that are being performed by the workers in rural and urban areas that resulted in requirement of reduced energy? How the Ranragarajan panel came conclusion that mere 2155 calorie is sufficient for performing the hard works? What are the new technologies that came into rural area that requires the rural workers to spend less energy while performing the operations? No one knows.
This computation will have far reaching consequences in computing the minimum wages as the nutritional requirement stands a prime concern while fixing the minimum wages. By reducing the minimum required calorie food, the Rangarajan panel excluded considerably higher number of people from being poor who are originally unable to spend to meet the 2400 calorie food. This 10 % reduction in minimum required calorie intake, if one takes into consideration, would have added up number of people below the poverty line to a much higher figure.
Another major question comes up from the government own figures themselves. When we see the poverty estimates of Rangarajan panel in the light of the National Sample Survey Organisation’s 68th round survey, the incompatibility of both the findings comes out more expressively. According to the 68th round survey of NSSO the total number of work force increased to a 30.9 million by 2011-12. But only 1.5 million work force could only be absorbed by the economy given its slackening of GDP growth from 8.40 % in 2009-10 to 6.88 % in 2011-12.

Reservations in Private Sector : Arguments and Counter Arguments


Friday, December 6, 2013

Welfare goals overlooked



Welfare goals overlooked
http://www.powerpolitics.in/Issues/December2013/images/writer_img6.jpgNotwithstanding the moves from those at the helm of national affairs, , the government is gradually slipping away from the goals for which its flagship welfare programmes have been conceived, contends K Veeraiah
The Achilles’ heel of fiscal discipline is now going to hit the so-called game changing flagship programmes of UPA hard. On the one hand, different agencies under UPA II are preparing to bank on their “ game changer” flagship programmes. On the other, the finance ministry is circulating guidance notes to curb the funds for the same flagship programmes. Immediate motivation might have come from the quarterly review of economy that was released by the finance ministry for the quarter ended by September 2013. It states the Centre is moving fast beyond the fiscal deficit target for this financial year.
Just before the finance ministry’s fiscal discipline drive, the government has announced new schemes, programmes and intentions hoping that they will help the government to sail through the forthcoming elections. The 11th Five Year Plan document visualized this linkage and said, “ though the 10th Five Year Plan achieved 7.7 % growth, it is perceived that the growth is not sufficiently inclusive for many groups, especially SC, ST, minorities. Gender inequalities remain a passive problem”.
To bridge this gap in developmental indices the UPA came up with idea of flagship schemes and floated 13 such programmes. Though the schemes which were proposed under this banner are not at all completely new, recognizing the role of their economic linkages ushering in comprehensive development is a new phenomenon. Some of them are completely new whereas some are restructured programmes of old ones. Over the time three more were added to the kitty and thus, as of now, 16 such programmes are under implementation.
The ultimate objective behind the flagship programmes is to achieve broad-based improvement in the living The ultimate objective behind the flagship welfare programmes is to achieve broad-based improvement in the living standards and to ensure that growth is widely spread so that its benefits are adequately shared by all, especially the poor and weaker sections of the society. Additionally, on the eve the general elections, the central government  some more schemes such as delivering to rural working women, primarily agricultural labour, educational reforms worth Rs 3 lakh crore, rechristening of Swarja Jayanti Swarojgar Yojana into National Urban Livelihood Mission and so on apart from the game changer National Food Security Act.standards and to ensure that growth is widely spread so that its benefits are adequately shared by all, especially the poor and weaker sections of the society. Additionally, on the eve of the general elections, the central government cleared some more schemes such as delivering mobile hand sets to the rural working women, primarily agricultural labour, educational reforms worth 3 lakh crore, rechristening of Swarja Jayanti Swarojgar Yojana into National Urban Livelihood Mission and so on, apart from the game changer National Food Security Act.
Since beginning of these flagship programmes the neo-liberal intellectuals cried foul and worried about the return of so-called welfare state. But the Comptroller and Auditor General of India in its latest report ( Report 1 of 2013- Financial Audit), laid bare the claims of the government when it reviewed the expenditure on flagship schemes in different years. Over the last four years cumulative spending in the name of seven flagship schemes stood at 4,07,058.5 crore against the budgetary allocations of Rs 4,13,307.69 crore.
In another sense contrary to the general perception that the UPA government is spending more on the social welfare schemes, the table explains the gradual reduction in expenditure under these schemes. Certain schemes such as RGGVY experienced drastic reduction upto 62% whereas the election winning MGNREGA programme seems to have lost the favor of the government. This is evident that in any single year the government failed to utilize the budgetary allocations for the same.
Way back in 2009 itself finding problems in implementation, the Prime Minister’s Office set up a Delivery and Monitoring Unit to coordinate and sort out the delivery mechanisms. Despite that arrangement, there is no major improvements in on the ground. Recognising this, the National Advisory Council, which advises the government on policy matters constituted a three member sub committee to review the implementation problems and suggest way out under the chairmanship of Mihir Shah, who also happened to be a Planning Commission member. The Mihir Shah committee came out with recommendations on three basic aspects of the implementation of flagship schemes. They are, a) streamlining the funds flow, b) improvements in transparency aspects, c) preparing the knowledge banks at district level implementation. Mihir Shah committee also finds it difficult when it comes to the financing the schemes. That is why its first recommendation centres around streamlining of fund flows. This is what the CAG report also indicates when it looks at the budgetary allocations and expenditure levels under different programmes.
Notwithstanding the moves from those who are supposedly directing the affairs of the government, the establishment is gradually slipping away from the goals for which these flagship programmes are conceived and started applying the fiscal discipline yardsticks. Let us consider the allocations and actual expenditure for financial year 2011-12 as test case.
The cumulative allocations for seven flagship schemes for the 2011-12 financial year stand at Rs 126312 crore and actual expenditure at Rs 109379 crore. Except in the case of PMGSY in the year 2010-11 which experienced almost double amount spent than the budget allocation, for all the flagship schemes, the situation stands same. Year by year the expenditure on these schemes is decreasing.
Look at the nature of the schemes. The MGNREGA is the only scheme that is intended to enhance the livelihood sources and wages for the majority of the rural poor. Hence out of the near about Rs 4 lakh crore of allocations, MGNREGA component itself is about Rs 1,79,079.2 crore. But actual expenditure is only 125842 crore short of nearly Rs 53, 237.2 crore which One must remember the fact that whatever the budget announcements, the government is governed by the budget responsibility and fiscal irrespective of the ruling parties at the centre. This fiscal responsibility and budget management act ( popularly called as FRBM act) imposes the ceiling on the over all expenditure of the government and also fixes the bench mark in terms of is a whopping 29.72 %. That means, over the last four years itself, out of the allocations under MGNREGA, the government could not spend nearly 30% of allocations ! Having stated the facts from government report itself, the finance ministry’s proposal for universal reduction of 15 % for flagship programmes means a further deep cut of their spending as well as reducing the coverage which in all likelihood may go against the spirit of the flagship programmes.
This implicit drive could not help the government to meet its fiscal deficit targets mandated by Fiscal Responsibilities and Budget Management Act 2003 forcing Finance Minister Chidambarm to go overboard in asking concerned ministries to reduce their spending. Majority of the spending under these flagship programmes flows into rural economy unless stifled under the corrupting influence of administration.
The indicators already show that the economy is at snail’s pace and urban consumption has failed to pick up despite all the tax concessions imparted by the government. Surveys from McKinsey to Fitch show that the growth of economy is dependent on the possibility of increase in rural spending. Without money flowing into rural economy under these flagship programmes, no one can expect the rural sectors of economy to contribute to the overall economy of the nation.
P. ChidambaramThe government, it seems, is all out gearing itself to please the international rating agencies whose wrath Chidambaram faced during his latest visit to Washington. Though the Indian media played its due role in airing the news as if the Chidambaram took on the rating agencies as well as the IMF and World Bank for their growth projections, what went behind the screen is altogether different story.
With the latest announcement from the finance ministry it can be construed that the finance minister himself gave a commitment to the international community of finance capital that he would do his best to meet the fiscal deficit within the permissible limits.
One must remember that whatever the budget announcements, the government is governed by the budget responsibility and fiscal management, irrespective of the ruling parties at the centre. This fiscal responsibility and budget management act ( popularly called FRBM act) imposes the ceiling on the overall expenditure of the government and also fixes the bench mark in terms of fiscal deficit. As we know, for more than a year the neo liberal policy analysts, both foreign and indigenous experts, are warning the government about the widening current account deficit. The finance minister’s statement suggesting the universal cut of 15 % on all government expenditure is an indication to this effect. Under this mandate only the finance minister is emboldened to ask the concerned ministries to reduce their budgets. By doing this, it is obvious that the finance ministry is pressing the wrong button.
According to the calculations of CBGA, cumulative tax concessions given out to super rich corporates between 2005-06 and 2012-13 financial years amounts a staggering Rs 31,88,760 crore ! Of this, mere corporate income concessions amount to Rs 474346 crore which is equal to the FRBM deficit target for the current financial year, which is higher than the cumulative allocations for flagship programmes over the last four years. Additionally, another Rs 271512 crore worth personal income tax concessions was doled out during this period which means a grand 20 % of the total tax concessions were accrued to the kitty of few super rich sections.
At the same time, this is also a period during which the government failed to meet the FRBM targets and dwindling tax : GDP ratio. Simply warding off to these telling facts, the finance minister prefers to cut back on the public investment which is life line for rural India. In a simple analysis, to ensure the smiles on the face of a handful bunch of super rich in the country and those in the world of international finance capital, the finance ministry has decided to trample upon the livelihoods of more than 3/4ths of Indians.
Major flagship programmes : actual expenditures and budget estimates (BE in crores)
Sr. No
Programme
2008-09
2009-2010
2010-2011
2011-2012


BE
Acuals
BE
Acuals
BE
Acuals
BE
Acuals
1
SSA
13100.00
12625.80
13100
12825
15000
19637
20413
20841
2
MDM
8000
6540
8000
6932
9440
9118
10061
9891
3
MGNREGA
29939.60
27250
39100
33538
40100
35841
40000
29213
4
RGGVY
5500
5500
6300
5000
5500
5000
6000
2237
5
IAY
5645.77
8795.79
8800
8800
10000
10337
10000
9872
6
PMGSY
3615.00
14698.39
12000
11340
12000
22400
20000
19342
7
NRHM
9191.82
10477.52
155934
15670
17138
16238
19838
17983

Total
74983.19
85887.5
102834
93143
109178
118649
126312
109379
Statistics for the years 2009-10 to 2011-12 are from CAG Report 1 of 2013. Data for the year 2008-09 collected from different government sources.
Abbreviations :
SSA = Sarva Shiksha Abhiyan,
MDM = Mid Day Meal Scheme ,
MGNREGA = Mahatma Gandhi National Rural Employment Guarantee Act,
RGGVY = Rajiv Gandhi Gramin Vidyudeekaran Yojana,
IAY = Indira Avas Yojana,
PMGSY = Pradhan Mantri Gram Swarojgar Yojana,
NRHM = National Rural Health Mission
( From Powerpolitics.in, December 2013 issue)