Budget of hope

An expenditure budget focussed on consumer demand, private investment, health, education and agriculture is the need of the hour

On February 1, the Finance Minister shall present the Budget for the financial year 2021-22. The Budget comes after a year-long economic crisis which was the result of an unprecedented crisis in the form of the Coronavirus pandemic. Everybody is looking forward anxiously to the forthcoming Budget to gauge the response of the government to the crisis and also the direction of economic growth that it would indicate. The 1991 Budget was historic as it came in the wake of a serious Balance of Payments crisis and ushered in an era of economic reforms.

The current crisis is much more threatening than that of 1991 as it is for the first time since 1979 that the country is poised to declare a negative growth rate to the extent of 7.5 per cent. This is despite the fact that the economy has shown remarkable resilience and bounced back much faster than expected with even the Reserve Bank of India claiming forthrightly that there is a V-Shaped recovery of the Indian economy. However, it cannot be denied that the pandemic has set back the economic clock and it will take time and a proper blend of policies and reforms to take the economy forward on the required rate of growth.

It is true that even before the once-in-a-lifetime pandemic struck and caught us all unaware, the growth rate of the Indian economy had been slowing down continuously to record a 4.2 per cent growth rate in the preceding year. Unemployment, farmer distress and a host of other economic issues were lingering on the horizon, waiting to be resolved. This Budget, therefore, presents a huge opportunity to give the required momentum and direction to the economy. This could well be the “Dream Budget”. It is true that not all economic decisions of significance are taken during the budget session only, and the government has to keep taking sound policy decisions throughout the year to respond in a dynamic manner to the changing economic scenario. However, the timing of the Budget is such that it would indicate the pace of economic recovery as well as bring into being, the economic reforms across various sectors.

This Budget, thus cannot be an incremental pedestrian budget but has to create an environment which would bring about a quantum leap in economic growth. It is all the more important because the Government of India has set for itself an extremely ambitious target of taking the economy to the level of USD five trillion by 2025, which would require a growth rate in excess of 8 per cent every year in real terms.

The first focus area has to be that of resources. Government will need funds if it wants to step up expenditure on priority sectors, but in the aftermath of the pandemic, there is very little space left for an increase in taxes. The administering of the Corona vaccine is also expected to cost about 6,000 crores and there are speculations that this could be met through a cess imposed for this purpose. This may not be very advisable, as the need today is to put more cash in the hands for the consumers rather than taking money away from them. Macroeconomic theory clearly points out that economic growth is a function of consumption demand, private investment, government expenditure and balance of exports over imports.

Among these, consumption demand has about 55 per cent weightage, and thus, it is a clear pointer that if the consumption demand is raised then the economy would grow faster. It becomes clear that the Budget has to prioritise raising consumer demand. One of the ways of doing this would be to paradoxically reduce the tax rate or do away with some of the imposed cess, so that there is more money left in the hands of the consumer to spend in the market. In addition, stressed sectors like hospitality and tourism need a booster dose of direct cash transfer. This can also be done in other sectors as well.

Special schemes for putting more money into the economy would be beneficial at this moment. This would in turn give the much-needed fillip to the private investment, which so far, has not shown any propensity to increase despite the exhortation by the honourable Prime Minister of India. We have to go forward and further facilitate ease of doing business by suitable reforms in land, labour and other related sectors, but these measures have to bring results at the ground level to genuinely attract more private investment. The government has to step up its investment in public infrastructure in a big way to enhance private investment as well as put more money into the hands of the people. Investment in infrastructure will have a multiplier effect on the economy, besides, leading to increased capital formation.

Some of the measures that can be taken to increase the resources are through public sector undertakings divestment or by offering tax-free bonds. The expenditure priorities have to be healthcare, nutrition, education, agriculture and medium and small scale industries, with public health becoming the topmost priority of the nation. Of course, we cannot ignore the all-important defence sector. New Education Policy was announced in the midst of the raging pandemic and is high on intent and idealism but needs to be translated into cogent schemes and action plans. This Budget would set the ball rolling with special schemes in education sectors to enhance foundational learning as well as to bring about an all-round improvement in the quality of education.

The current century is the one where those investing in knowledge lead the race, and if India has to occupy a dominant status, then there has to be a sharp increase in the budget allocation for research and development in various sectors and also special schemes to incentivise R&D in the industrial sector. The Budget will also clarify the real meaning of Atmanirbhar Bharat, which should not in any way, become like the import-substitution policies after the independence which were the hallmark of self-reliance.

Atmanirbhar Bharat should mean an India having a vibrant manufacturing sector, producing quality goods for the domestic as well as the global economy. The Budget would be watched keenly to see what kind of schemes and incentives are introduced to make the vision of Atmanirbhar Bharat a reality. The farmers’ agitation has shown that the agriculture sector is under a lot of stress and needs more direct support from the government. The PM Kisan is an excellent scheme but the amount has to be increased beyond Rs. 6,000 per year to give more direct support to the farmers — already impacted by the volatility of the agriculture market.

This Budget should come out with a comprehensive scheme for creation of Farmer Producer Companies in such a manner that they can be operationalised to bring about the required aggregation of farmers to come out of the cycle of the low income trap — brought about by fragmentation of landholdings. The Budget should also come up with innovative social safety nets for the migrant labourers whose plight shocked the soul of the nation. Medium Small and Micro Enterprises, especially those related to food-processing have to gravitate towards rural areas to create employment in non-farm activities near the villages, so that people do not have to migrate to the far-off states in quest of jobs and basic minimum income. The Budget should also focus on increasing the exports from India in both agriculture as well as manufacturing.

The growth in exports over the last few years has not shown an encouraging trend. Last but not the least, it is the all-important issue of employment which has been further accentuated by the pandemic. The government must come out with concrete proposals to tackle this problem head-on and create an economic environment where sufficient jobs would be created to absorb the youth joining the workforce in large numbers every year. Introduction of an urban equivalent of MGNREGA could be one of the options. The public sector banks are in urgent need of recapitalisation and the Budget will have to address this to enable the banks to give more credit to generate more investment.

There is no doubt that this has to be a momentous budget, which will set the tone for the recovery of the economy and general well-being of the society in the years to come. This Budget is coming at a defining moment in the life of the nation.

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Unprecedented undertaking

India’s vaccination campaign will pose many challenges of logistics and governance

Following the approval of two vaccine candidates in India, the first lot of vaccines have reached the states for priority vaccination of healthcare workers. One can hear the immense sigh of relief that is widespread and already there is a sense of euphoria that the crisis is behind us and we can look forward to a quick return to normalcy even though it might now be the new normal. In my life — and I am over sixty years old — I have not seen a crisis of this dimension that has shaken the entire world. People have lost their near and dear ones and a lot has changed, including the imperative of moving to a digital economy, online education and work from home.

Many of these changes that the pandemic has forced upon us have shown hidden benefits which might enable them to continue in the future. But it must be emphasised that by no means is the pandemic over and there is no cause for relaxing precautions. I feel that the Government handled the crisis reasonably well but now is faced with the herculean task of administering the vaccine which presents a logistics and governance nightmare. In the order of priority set by the Centre, healthcare workers and frontline workers are to be vaccinated first, followed by those above the age of 50. One has to register to avail of the vaccine.

The first part of vaccinating the health care and frontline workers should not pose much of a problem as they can be easily identified and administered the two doses at requisite intervals. However, my experience of administration shows that administering the vaccine to those above 50 is not going to be that easy. In India, we are plagued by VIP culture and the most annoying habit of queue jumping which is likely to take place in a big way. I can visualise politicians and senior civil servants trying to get themselves and their families vaccinated on priority once they are convinced that the vaccine that does not have any adverse effects. District magistrates and directors of various hospitals will have to wrestle with this problem as it would be difficult to evolve a rational system for this.

It is possible to vaccinate people on the basis of a list drawn on the basis of the date of registration and that should be made public so that it is difficult for influential people to try and get preferential treatment. However, there are going to be numerous vaccination centres making it difficult to have such a simplistic solution. On the other hand, there could also be many people not wanting to take the vaccine as they are not convinced of its efficacy or fear the adverse effects. Further, with registration being a requirement how would those not having a smartphone or awareness of the online registration process avail of this facility?

The vaccine will be supplied in batches and the first question will be that of allocation between states. What should be the criteria of allocation? Should equal doses be given to each state or the amount should vary according to the level of the infection in a state or the fatality rate? The next stage would be the allocation of the vaccine to different districts at the state level where again similar questions will have to be addressed. Whatever the decision is, some people are bound to feel unhappy about it. The most important thing is to communicate the scientific truth about the vaccine to the people so that they take the vaccine and develop a rational attitude towards it.

We do not want a situation where a single adverse reaction may derail the entire campaign. Often such vaccines lead to allergies and provisions have to be made for immediate handling of these allergies so that it does not fuel the rumour mills. A close watch has to be kept on rumour-mongering through social media on deaths taking place which have no connection to the administration of the vaccine. It is important to inform the people and keep doing so on a continuous basis and thereby build an atmosphere of trust.

We can use celebrities as we did for pulse polio where we had Amitabh Bachchan re-enforcing the message of pulse polio continuously. That apart, government officers and doctors and experts whose voice has authority should be on media as well as social media to give authentic information about the vaccine and it’s likely after-effects. Communication will have to be done in all languages used in various parts of the country to reach the maximum number of people and sometimes I have found that such messages are best communicated through street plays, poems, storytelling and community events which involve the entire population in the campaign.

Any campaign succeeds only when the people own it and give it their total support. The objective of administering this vaccine is to control the pandemic and save the life of the people and as such would require sustained efforts over the next two years to reach a significant percentage of the population of the country. This work cannot be done by the health department alone and would need coordination amongst various departments of the state. The coordinating role will have to be performed by the district magistrate at the district level and the Secretary Health/Chief Secretary/Cabinet Secretary at the state or the Central level.

One significant point raised by many people is regarding the existence of cold chain points to ensure that the vaccine is kept at the right temperature. Former Health Secretary Sujata Rao recently wrote in an article that of the 28,932 cold chain points half are in the five southern states, Maharashtra and Gujarat while the eight states in the north and Odisha that account for over 40 per cent of the country’s population have only 28 per cent of the cold chain points. She has rightly pointed out that along with this uneven distribution and the fact that weaker states suffer from a shortage of doctors, health care professionals and medical equipment means that different states of India have different capacity to implement the vaccination program with quality and accuracy.

The same will apply to large states like UP which has huge regional imbalances. Moreover, it would be quite a task to ensure the second dose of the vaccine within the stipulated time and also to maintain the cold chain in extremely remote and backward areas. The Prime Minister and several chief ministers have been talking about implementing this campaign in an election mode. There is no doubt that conducting elections in such a vast and diverse country has been a tremendous administrative success. It is amazing how polling booths are set up in almost every village or mohalla and polling parties are nominated and sent there with all necessary equipment to conduct the elections.

Massive transportation and security arrangements are undertaken and free and fair elections conducted. There is no doubt that a similar level of commitment, dedication and organisation as well as the involvement of all concerned government officers are required to make the vaccination campaign a success. This is possible but the question is whether this momentum can be maintained for a period which is likely to be almost two years? Elections, at best, require this kind of sustained effort for about two months. Then if the entire government machinery is focusing on the vaccine campaign for such a long time, would not other aspects of governance and administration which are equally necessary to bring about economic recovery suffer in the process? Already because of the pandemic, the education of the children, the nutrition programs and handling diseases like TB have been adversely impacted. Ultimately, we all must rise above politics and ideologies and join hands to make this campaign a success.

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100 crore jabs: Govt. system can deliver

The record must not lull us into a sense of complacency. The warlike effort must continue so that there is no possibility of the pandemic striking back in the form of a third wave

October 21, 2021 was a momentous day when India achieved the remarkable figure of 100 crore (one billion) vaccinations. Next to China this is the highest in the world and it has been made possible by untiring coordinated efforts over the last 10 months. The whole exercise of vaccination has been done in a campaign mode. The credit for this must, undoubtedly, go to the political will from the top at the Center and the States and the effort put in by the entire Government system with its civil service and health care administration providing the leadership and the healthcare workers taking care of the last mile delivery.

We got off to a slow start in January and there was also the debatable issue of vaccine–maitri whereby around six crore doses were exported to other countries. However, the drastic second wave of Coronavirus sent the entire country into a state of shock bringing forth the realization that the only way out was to vaccinate the eligible population with both doses at the earliest possible to prevent further disaster through the third wave.

Accordingly, the Prime Minister gave a clarion call for vaccinating the entire adult population by December 31. Initially, the progress was slow and there was a lot of cynicism about India’s ability to achieve this ambitious goal. There was the policy issue of vaccine being procured by the States which led to a lot of problems and the policy was revised to have the procurement done by Government of India. This was indeed a very positive policy amendment without which this 100-crore figure would never have been realized.

There were a lot of people who doubted the capacity of the government system to deliver. Concerns were raised about the availability of vaccines, the transportation of vaccines to the remotest areas, the existence of a cold chain, the availability of trained vaccinators, the actual conduct of the vaccination, the record keeping, the wastage of vaccines and many other similar issues. No doubt, delivering vaccine to every part of the country was by no means an easy task and required high level coordination, team spirit, motivation, inspiration, decision making, communication and leadership at all levels.

The vaccine manufacturers had to be given the demand well in time so that they could augment their facilities and schedule their production accordingly. They had to be given necessary financial assistance from the Government and a mechanism developed where payment for vaccine bought could be made on time so that there is no disruption in the flow. Thereafter the existing cold chain and other infrastructure used for the massive child immunization programmes had to be made ready to receive and handle the COVID vaccines.

Vaccination centres had to be setup at thousands of points so that the citizen does not have to travel far to get vaccinated. Then the huge army of vaccinators had to be trained in such a short time. There after duties were assigned to employees and officers to run these centres and ensure hassle free vaccination. The problem was far more acute in the rural areas where the basic infrastructure is not of the same level as the cities. The entire exercise was managed through a CoWin portal developed by the national health authority through which you could fix your appointment for vaccination and also get the certificates. There was some debate about the usefulness of CoWin for those not having access to internet facility but the issues were ironed out and the result is that 100 crore vaccinations has been reached.

Such a vast and complex governance exercise involving coordination at various levels is a huge task and due credit must be given to the entire team to have achieved it. In my 38 years of experience as a civil servant the only exercise that can be a parallel to this is the conduct of nationwide elections. The Prime Minister had rightly said that vaccination would have to be done in the election mode. Just like elections all arms of the government had to work together to make this vaccination possible. It required a lot of daily coordination between Government of India and the State Government. Thereafter the leadership had to be given by the political executive at the state level and prompt decision making by the policy planners like the Secretary and Director. Finally, it was the district where action took place under the leadership of the District Magistrate and the Chief medical officer.

The last-mile delivery was made possible by the health workers including Asha and Anganwadi workers. In rural areas vaccination had to be taken to the doorstep of the people. I could witness a tremendous sense of enthusiasm amongst all concerned with the vaccination process. My personal experience of vaccination was also very good as I found that the vaccination centers were being managed very efficiently with full courtesy and protocol. There was vaccine hesitancy in quite a few people and a lot of communication was required to convince the citizens to come forward for the vaccination. The point I want to make is that very often people have a negative perception about government officers and employees.

This vaccination drive has shown the entire government system in positive colours. The entire system has risen to the occasion in response to the challenge of the pandemic in a most professional and effective manner. To a large extent the government must take the blame for not being able to anticipate the coming of the second wave and then not being able to respond adequately to it. There was a definite failure to provide oxygen, ICU beds and medicines during the height of the second wave. However, with the success of the vaccination so far, the government system has been able to redeem itself to a large extent.

The battle is not over and the momentum has to be continued to meet the target of vaccinating the entire adult population by December 31. We must celebrate attaining the 100-crore figure but it must not lull us into a sense of complacency. The war-like effort must continue so that there is no possibility of the Pandemic striking back in the form of a third wave. There are lessons to be drawn from the success story of vaccination for the future overhaul of the public health system which is in urgent need of being modernized and upgraded.

The Centre as well as the States will have to focus on spending a larger portion of their expenditure on health care. More Doctors, nurses and paramedics are required necessitating the opening of more educational institutions to cater to this demand. District hospitals need to be converted into centers of excellence and primary health care centres made operational. The pandemic has exposed the poor State of health infrastructure in the rural areas which needs to be addressed on priority. The success of the vaccination drive has shown that this is possible and the same leadership, team spirit and motivation are required to transform the public health sector.

Doubling farmers’ income by 2022

Evidently, for agricultural productivity and incomes to grow, aggregation of farm holdings in the form of farmer producer organisations is crucial

It has been some time since the committee under Ashok Dalwai appointed by the Government of India gave its report (2015) on the policies to be followed and action to be taken to double the income of farmers by 2022. We are almost approaching the appointed year but do not seem to be anywhere near the ambitious goal. Even in the state of Uttar Pradesh the current government after coming in had assured that they would double the income of farmers by 2022 but the current reports indicate that UP is far from meeting the assurance.

The Dalwai committee report is a very comprehensive document according to which the issue of doubling farmer’s income depends upon increasing crop productivity, increasing livestock productivity, bringing about resource use efficiency or saving in cost of production, increasing cropping intensity, diversification to high value crops, increase in real prices to farmer and shift from farm to non-farm occupations. Except for the last one the rest of the suggestions are all related to the agriculture sector. Doubling in real income is possible only with a 10.4% annual growth rate in farm sector. This requires investments “in” agriculture like irrigation, agriculture market and land development and “for” agriculture like roads, power and transport. Gross capital formation has to be stepped up in both public and private sector.

The recent release of the decennial NSS 77th round situation assessment of Agriculture households (SAS) provides interesting insights which could be useful for public policy makers. This survey gives the figures for 2018-19 and it would be meaningful to compare with the SAS of 2012-13. Taking the base year as 2011-12 the growth in the income of the farmers in real price terms is six per cent. Even in this, the growth rate is much higher in advanced states like Punjab as compared to UP and Bihar. The share of crop production in the total income of agriculture household is 37.7 per cent and that of livestock is 15.48 per cent. The share of income in wages is as high as 40 per cent.

Hidden behind this figure is the fact that in poorer states like UP and Bihar the average size of the land holding is continuously becoming smaller and today 90 per cent of the farmers are small and marginal farmers. These small farms are not viable and so are not able to contribute to growth in income of farmers. They are not efficient in the use of inputs. It is clear that for agriculture productivity and incomes to grow aggregation of farm holdings in the form of farmer producer organizations (FPO) is absolutely essential. NABARD is working in this direction but the pace is slow.

Further, I noticed that in states like UP FPO’s are being setup through directives from the top instead of evolving naturally at the ground level leading to a situation where most of these FPO’s exist only on paperand are not active. I feel proper training to officers and farmers is required so that proper functional FPO’s are created. They need initial financial support also from the Government. This is perhaps the only way in getting out of the small holdings trap. Another option could be to adopt the model land leasing Act formulated by the Niti Ayog.

The cost of cultivation for the farmers is steadily going up. Fertilizers are costing more and the prices of electricity as well as diesel have gone up substantially. However, as far as the market price is concerned the farmer is still subjected to the volatility of the market. The MSP mechanism is benefitting farmers in an uneven manner covering less than 20 percent of the farmers and mostly those belonging to Punjab, Haryana, MP and western UP. Moreover, this is restricted further to wheat and paddy. Even though the MSP is declared for 23 crops including oil seeds and pulses there is hardly any procurement done for them. Very limited market intervention is resorted to by NAFED.

There is no MSP either for horticulture crops or milk where the phenomenon of prices crashing is seen more often than not. It is imperative in this situation to develop an ecosystem and institutional mechanism which protects the farmers from the vagaries of the market and enables them to avoid distress sale. This requires the building up a post-harvest infrastructure including WDRA (warehouse development regulatory authority) compliant warehouses and cold storages where the farmer can store his crop and get bank financing under the warehouse receipt negotiable instrument act. Farmers should be able to choose when to sell and not compelled to sell at throw away prices. The agriculture market typically behaves in a manner that prices fall at the time of harvest but tend to rise in future months and farmers need to be economically empowered to take advantage of this.

I was APC (Agriculture Production Commissioner) in UP for more than three years. This post is unique to UP as it coordinates the functioning of nineteen departments concerned with agriculture. My experience was that one of the most under-rated sectors of the economy is animal husbandry which happens to be a major source of employment and it is my firm belief that this is the critical sector which can bring about increase in the income of the farmers. Merely crop production is not sufficient and has to be complimented by animal husbandry. In UP, during my tenure as APC, we started an interest subvention and breed improvement scheme, “Kamdhenu”, in the dairy sector which resulted in substantial increase in the income of the farmers.

Similarly, we introduced a scheme for large scale poultry development with similar beneficial results to the farmers. In fact, before the scheme UP used to import 1 crore eggs per day from other states and during my tenure itself this amount was brought down to 60 lakhs. Unfortunately, both these schemes have not been continued by the current government. The SAS clearly shows that income from livestock is showing an increasing trend and has a great potential for the future. The net receipt from crops has declined from 47.9 per cent in 2012-13 to 37.7 per cent in 2018-19 while that from rearing animals has gone up from 4.3 per cent to 15.7 per cent within the same time frame.

It is also important to keep in mind that agriculture is a State subject and that policy interventions have to respond to state specific issues. In fact, states like UP have nine agro climatic zones each requiring a different strategy and approach.

The RKVY (Rashtriya Krishi Vishist Utpadan Yojna) of the Government of India is an excellent example of a centrally sponsored scheme where sufficient leeway is given to the states to formulate state specific interventions. Agriculture requires many more such policy interventions and finances to create an ecosystem where the income of the farmers keeps on increasing on a regular basis. Doubling of income of the farmers by 2022 does not seem to be within the realm of possibility but substantial improvement can be brought about with the right kind of interventions.

The important issue of unemployment

India needs a national employment policy to meet the demand and supply of labour, maintain global labour standards and ensure basic rights to workers

The issue of unemployment is getting maximum attention from politicians, policy makers, economists, civil servants and media. In the beginning of the coming year, elections to Uttar Pradesh and several other states are to be held and political parties across the board have realized that unemployment is a live issue with the youth and they have to provide solutions to this problem. Promises are being made one after another.

In the recent Bihar elections, one party promised 10 lakh jobs. Just the other day, I witnessed on TV a national party promising one lakh jobs within six months of coming in power and also about giving an unemployment allowance. Parties in power are talking about the number of jobs that they have created. It is clearly a crucial issue wanting a policy response from governments.

vThe problem of unemployment has become more severe due to the extraordinary circumstances created by COVID-19. A study done by Azim Premji Institute showed that about 100 million people lost their jobs in the nationwide lockdown during April to May 2020 and even though the situation improved after that, about 15 million workers continue to remain out of work and the incomes also are depressed. As a result, the labour share of GDP has fallen by over five percentage points from 32.5 per cent in the second quarter of 2019-20 to 27 per cent in the second quarter of 2020-21.

Of the decline in aggregate income, 90 per cent was due to reduction in earnings implying that though most of the workers got back to work they had to settle for lower earnings. States having a higher number of Covid-19 cases were responsible for higher number of job losses. Lockdowns led to fall in mobility further causing decline in the income levels. The impact of the pandemic was disproportionately higher on the women and the younger workers. The study found that only 19 per cent of women workers remained employed. One reason was that with the new culture of work from home the burden of domestic work increased and working women had to bear the brunt of it.

COVID-19 also resulted in a change in the structure of unemployment. Workers moved from formal to informal employment and from salaried jobs to self-employment and daily-wage employment. The reverse movement from nonfarm to farm jobs took place as migrant labour rushed back to their villages and agriculture emerged as a fall-back option. This is the very opposite of what happens when development takes place.

COVID-19 reversed the process of development and pushed millions into poverty. Another study found that about 230 million people became poor as result of the adverse impact of COVID. Inequalities also increased as the poorer households were worse affected. During the 2020 lockdown the poorest 20 per cent of households lost their entire income. The decrease in income led to households reducing their food intake and borrowing money thereby making them more vulnerable. There was already a situation of excessive number of people subsisting on the small and marginal holdings that characterize our agriculture sector. With migrants and others returning to their villages the already existing problem of disguised unemployment was further exacerbated.

The CMIE (Centre for Monitoring Indian Economy), which comes out with the data for unemployment shows that in the first two months of lockdown the unemployment rate went as high as 23.5 per cent but the situation has considerably improved now though it would still be called critical. The latest figure for 19th September shows that the unemployment rate of India is 7.46 per cent (9.14 per cent urban unemployment and 6.69 per cent rural unemployment). Urgent policy measures to create employment are the need of the hour.

The problem of unemployment is not only because of COVID but has been widespread even before the pandemic set in due to various structural factors. India is a young nation and majority of its population is in the age group between 15 to 45 years and the median age is 28.4 years. Almost about eight to 10 million new entrants are entering the labour force every year. India should be able to take the advantage of this favourable demographic dividend but the growing unemployment is a major obstacle in the path. The country is faced with the challenge of employment creation as well as that of under employment. The interesting thing is that we have witnessed almost seven per cent growth rate per annum since 2000 but the employment growth for the same period has slowed down to even less than one per cent. Curiously in the 1970s and 1980s when we witnessed the “Hindu” rate of growth of three per cent, the corresponding figure for rate of growth of employment was around two per cent. This jobless growth is indeed a cause for worry. With the advent of cost-effective modern technology industry has been replacing labour with capital. Moreover, it has been argued by some that because of the lack of labour reforms and consequent rigidity in the labour market there is a greater incentive for industry to substitute labour with capital. It is also a fact that the majority of the organized manufacturing sector is paying wages below the minimum salary recommended by the seventh central commission of Rs.18,000 per month leading to a situation where there is great hunger for a government job. In UP we found that even when jobs in the “D” category were advertised the majority of the applicants were graduates and even Ph.Ds. had applied. For a few hundred jobs more than a lakh had applied. Nothing brings out the crucial issue of unemployment more than these figures.

To tackle the problem of unemployment on a war footing requires the creation of a data base of unemployed people. The employment exchanges need to be modernized and computerized so that they can match people with jobs. There is a need for a separate department of employment as currently this is a part of the labour department. Above all, it is imperative to have a national employment policy. It will need to be formulated after consultation with all stake holders including employers and organizations of workers. This policy will not merely be a job creation programme but attend to factors relating to demand and supply of labour. It will endeavour to provide decent work to people maintaining international labour standards and ensuring social protection and fundamental rights to the workers.

Such focused attention on unemployment is required to address the vital issues of huge informal employment, rising unemployment amongst the youth and the educated, shortage of skilled work force, jobless growth, declining female work participation rate, threat of automation and the changes that technology is bringing to the overall job environment.

It is hoped that in the coming elections all the political parties will make creation of employment their most important agenda. If this does not take place then the demographic dividend will be converted into a disaster and the abundant energy of youth shall be diverted into negative channels.

Greater Synergy Needed

The policy failure in sustaining the farm laws should not deter policymakers from chalking out more inclusive reforms with well-defined implementation plan

The Prime Minister surprised everyone by his recent announcement of repealing the three laws related to structural reforms in the agriculture sector. This announcement came after more than a year-long agitation by the farmers. While it is being perceived by some as a victory of democracy, others see it as a failure of agricultural reforms, which is likely to impact reforms in other sectors like labour and privatisation as well. Only the future will decide the impact of this decision but it would be unfortunate if this leads to postponement of reforms in the agriculture sector. The 1991 economic reforms were all about opening up the industrial and foreign trade sectors — leaving agriculture untouched. This sector is in urgent need of economic reforms to alleviate the distress of farmers and to ensure that farming in India becomes a viable occupation. Poverty and hunger cannot be eradicated by 2030, as visualised in the sustainable development goals, without tangible and structural reforms in the agricultural sector. For years, in agriculture, we have been focusing on management of inputs like seeds and fertilisers, but now, major reforms will have to be undertaken in post-harvest management and agriculture marketing. Unless we can have people moving from disguised unemployment in the farm sector to employment in the non-farm occupations, we would not get the desired improvement in per capita income. Very often, policy issues are caught between what constitutes good economics and whether it corresponds with good politics. Agriculture sector requires policies which not only represent good economics but are also politically acceptable. This is akin to walking on a razor’s edge and highlights the travails of policymaking.

In a remarkable book on economic policymaking, titled ‘In Service of the Republic’, Vijay Kelkar and Ajay Shah have brought out the nuances of economic policymaking. Taking a metaphor from cricket, the authors equate policymaking with a five-day test match, and caution that it should never be taken as a T20 match. This highlights the point that a good policy, which can be implemented successfully, requires detailed deliberations and consideration of the views of all stakeholders. The authors say that there are three steps in policymaking, and a policymaker must ask himself three questions — whether there is a need for a policy to avoid market failure, does the proposed intervention address market failure and finally, whether the state has the ability to effectively implement the proposed intervention. Instances of policy failure are not new to our economy. Kelkar and Shah are of the opinion that policy failures are born out of information constraint, knowledge constraint, resource constraint, administrative constraint and finally, the voter rationality constraint. I believe that the failure of the farm laws could be attributed to the last of these constraints, as it was opposed by the very group for whose benefit the laws had been formulated. The reality is that public policymaking is a far more complex process than the strategies made by the private sector. Numerous stakeholders have to be satisfied, and a multiplicity of objectives have to be attained, which makes the whole process complicated and cumbersome.

A public policy has to go into the root cause of the problem it seeks to resolve. It should aim at treating the disease and not the symptoms. Policymakers must ask the right questions because only then is it possible to get a complete perspective of the problem. Constant engagement with all stakeholders is essential, and diverse opinions have to be synergised. A policymaker must not shy away from his critics, and the whole exercise has to be dynamic. It is also important to build capacity before undertaking any major structural reform.

The above discussion may indicate that policymaking is an arduous task but it is also true that efficient policymaking is directly linked to faster economic growth. Studies show that at the times of policy paralysis, the growth rate of the economy declines. It is, thus, incumbent upon the government to keep responding with policies to address various issues and problems that are thrown up. In the light of this, one would feel that even though the farm laws have been repealed, the process of reforming the farm sector should keep getting the highest priority. Of course, it is important that the policies are properly communicated to the people so that they realise that it is in their own best interest. The best way of doing this is through widespread participation of all concerned stakeholders rather than using a coercive and top-down approach.

One often hears that the policies are good but the implementation has been poor. Having been involved in the implementation of several policies, I have some disagreement with this. I feel very often that policymakers do not take into account the realities of implementation, and that is why many policies fail at the execution stage. A good policy must be accompanied by a realistic implementation action plan, without which it is not possible to ensure that the benefits of the policy would reach those for whom it has been intended.

In the case of the farm sector, I feel there is an utmost need for reforms. Farmers are not getting a remunerative price for their produce, agriculture market system is not working efficiently, cost of cultivation is continuously going up, soil fertility is being adversely affected by excessive use of chemical fertilisers, water is being used indiscriminately and landholdings are fragmented to the extent of being unviable. These are some of the major problems which have been causing farmer distress in the country. We need to set up a process of detailed deliberations between administrators, political executives, agricultural experts and farmers to come out with a comprehensive policy package to address the woes of the sector. Unless productivity and returns in the agriculture sector improve significantly, labor would not move from farm to non-farm occupation, which is essential to bring about faster economic development. 

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Opinion: Making a difference with IAS as a career

There is huge disruption due to technology and the economic and social environment is changing at a rapid pace posing a great challenge to the IAS.

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Inclusive growth

The Budget envisions growth as a driving factor for development; could have been more cautious on privatisation and explicit in employment generation

The Budget 2021-22 has received wide acclaim and the Sensex has given its thumbs up to it. The Government has responded to the unprecedented once-in-a-century crisis brought about by the Coronavirus pandemic which saw GDP plummeting down to -23 per cent in the first quarter and it is likely to be -7.7 per cent by the end of the financial year. This led to problems of large scale unemployment and hardship to a lot of people but the last few months have shown a v-shaped recovery brought about by the liquidity enhancing measures of the Government and the resilience of the economy.

The Budget speeches always give an indication of the economic philosophy of the government and the Finance Minister outlined this by stating that this Budget is based on six pillars — health and well-being, investment in human capital, more research and development, infrastructure development, inclusive development for aspirational India and maximum governance. She went on to elaborate on how these pillars have led to the areas of focus — health, education, agriculture, youth empowerment, women empowerment, inclusive growth, increase in capital expenditure and innovation. This represents sound economic thinking and is an indicator not only of the desire to handle the current economic situation but also to give a vision and a roadmap for the future. In this regard, it is really a very welcome and laudable Budget.

The Economic Survey had been very clear in saying that growth was the main objective and the Government would be focusing on it. From time immemorial, economists have been debating the issue of growth versus equity but this survey and the Budget is clear that growth is the mantra which will pull all sections of the society forward and also contribute to the reduction in disparities. Personally, I feel that at this particular moment, to come out of the depths to which the economy has been pulled down by the pandemic, growth is the only way out. However, looking into the future for a country like India, where millions have been pushed into poverty by the pandemic, direct intervention by the Government to bring about distributive justice is required. To my mind growth alone is not enough. There are a lot of data showing that the Coronavirus pandemic has led the widening of inequalities, and all over the world including the World Economic Forum at Davos, the economic thinkers are talking about a “reset of capitalism” implying that we need to have growth along with a reduction in inequalities. This is a growth-oriented Budget and this fact must be appreciated because the economy has to come back on the rails as fast as possible. However, a major pillar of the Budget, as enunciated by the Finance Minister, is inclusive development which I think should be the main guiding principle for the future to make this growth sustainable.

The emphasis on infrastructure is indeed a very positive step with over one lakh crore increase proposed in capital expenditure including a 33 per cent hike in Rural Infrastructure Development Fund. There are increased allocations for construction of roads, development of an ambitious National Rail plan to develop rail infrastructure by 2030 and to increase the share of rail in freight from the current level of 27 per cent to 45 per cent and 100 per cent electrification of broad gauge routes by 2023. The infrastructure of the ports, to double recycling capacity by 2024, is being improved and major reforms in power distribution outlined with an outlay of Rs 3,05,984 crore over five years. For financing infrastructure, a new development finance institution would be introduced and a national monetisation pipeline of brownfield infrastructure assets created. We all know that infrastructure has a huge multiplier impact on the economy and these steps should lead to a high level of growth and employment. However, it is important to keep in mind that there is always a time lag in reaping the full benefits of investment in infrastructure, and therefore, certain sections of society would need immediate support to get gainful employment.

It is for this reason that I think the Budget should have come out with some measures to boost immediate consumption demand which has a direct bearing on the growth rate as well as lead to the creation of employment. As an example, I would like to say that the services sector, hospitality sector, in particular, is likely to take another year or so to fully get back on its feet and some direct cash support for this sector would have been more useful.

The Budget has been bold in declaring privatisation of public sector banks and undertakings as a policy moving away from hesitant and time-taking disinvestment processes. I read the statement of the Disinvestment Secretary that even organisations like Steel Authority of India could be considered for privatisation. This brings to my mind a dilemma which is whether a profitable and cash-surplus public sector undertaking should be privatised? It would definitely lead to the generation of resources but may not lead to any better management or their more efficient allocation. I do not think anything and everything that goes under the name of the public sector should be given a bad name. There are a large number of public sector enterprises performing extremely well and fulfilling multiple objectives. Moreover, already the farm sector reforms which are in the right direction have got the farmers up in arms and this kind of a bold no holds barred approach to privatisation would similarly lead to agitating the minds of the labourers and employee unions. Privatisation of PSU’s is a path full of pitfalls and the Government will have to tread carefully.

The biggest issue even before the pandemic was rising unemployment but the Budget has not directly confronted this problem and it appears that the belief is that growth by itself will lead to a situation where employment is created. The reduction in MNREGA allocations as compared to the revised estimates of 2020-21 is a little surprising, especially when one was looking forward to concrete schemes for generating employment like starting an urban version of MNREGA.

A redeeming feature of the Budget is that there have been no new taxes and the Government is relying on borrowings to meet its expenditure. This again is a very positive step and makes economic sense also as the Economic Survey has pointed out that the Government is in a position to handle this debt burden. The Budget has rightly not been squeamish about a high fiscal deficit of 6.8 per cent for the Budget year and fully recognising that fiscal prudence can take a back seat today to economic growth and let things normalise by 2025-26. The increased allocation to health raising to 1.8 per cent of GDP from 1.3 per cent is a very positive step, though 35,000 crores out of this is to go for vaccination and the 15th Finance Commission grant for health has also been included in the proposed outlay of 2.23 lakh crore along with items related to water, sanitation and nutrition. In any case, this is a welcome beginning and the Government should aim to raise health expenditure to 2.5 per cent of GDP next year.

Though investment in human capital and agriculture development has been mentioned as areas of focus, I feel the education sector deserved a higher outlay, especially, for early childhood care education and for improving the quality of education across all levels. The Government has reaffirmed its commitments to maintaining the agriculture mandis and MSP, and has also introduced a special cess for financing agricultural infrastructure. I feel this sector also needed a little more attention. However, the focus on animal husbandry and fisheries and developing them as agri-business enterprises is worth appreciating.

There is no doubt that this is a Budget that would lead to growth and it is based on a strong economic philosophy which should form the blueprint for future budgets and bring about sustained economic growth in the future.

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An insight into an IAS officer’s work with the Government

Here’s an excerpt from Making a Difference by a successful retired IAS officer, Alok Ranjan, who served with distinction in various assignments in the State Government as well as the Government of India.

Working with the State Government

A very revealing incident took place when I was the Principal Secretary Urban Development and the urban local body elections were to take place. They were thirteen posts of mayors and as per the act and rules, there was a clear roster system to determine which seat would be general, which reserved, which would go to women, etc. The CM wanted particular candidates to contest from specific municipal corporations and I was summoned by the CM Office and given the brief to prepare the roster accordingly. I explained that this is not possible as the rules and their interpretation was clear. The stratagem of taking legal opinion was then adopted by the CM Office and the Principal Secretary Law interpreted the rules differently which accommodated eight out of the thirteen proposed mayor candidates. I said that I did not agree with the opinion but if given in writing, I would abide by it. However, the CM was keen that at least three other proposed mayoral candidates should be accommodated in the roster. To my utter disbelief I was called and told by the CM Office in the presence of the Principal Secretary Law that for eight seats, the interpretation given by the law department should be used while for other three, my earlier interpretation should be employed. I had to show my dissent by saying that I could agree with an interpretation I felt was wrong if given in writing, but I had to be consistent and could not possibly choose different interpretations for different mayor seats. At my refusal, the officers present looked at me as they would at a goat about to be sacrificed and I realized that my goose was cooked and mentally began to prepare for my transfer. Imagine my surprise and amazement when the CM saw my point and agreed with it. It just shows that often the officers close to the CM try to be holier than the king. If they put up both sides of the picture to the CM they will invariably get to the right decision.

Secretariat working is all about files which are almost like living organisms having a life and energy of their own. A good Secretariat officer believes in not keeping files pending and he is proud to proclaim that his table is clear. However, this movement of files has little relation to actual decisions being taken and on closer examination, he will find that the files have been sent to law, finance or personnel departments for advice. The files move to and fro with volumes of noting which ensures that no accountability can be fixed on anyone at a later date. A close relative of this strategy is the formation of a committee to examine the matter which takes its own sweet time to give a voluminous report. Even developing a system of tracking files and prescribing maximum time limit for files to stay at a particular desk does not help.

The Principal Secretary of a department is expected to provide leadership to his team. He has to have the skill set to build the team which shares the objectives and goals of the department and works towards its fulfillment. The key task is to prepare the budget of the department, then release the budget to the field officers and monitor physical and financial progress. Above all, he has to assess the problems in his department, resolve them and achieve the required outcomes. Unfortunately, this does not often happen as the officers are more concerned about processes than giving results. Calling or attending a meeting becomes an end in itself and occupies the majority of the time of the secretaries and the heads of the departments. The job of a Principal Secretary is not only to assist in policy formulation but ensure implementation. Often we hear the rather unfair and incorrect statement that policies are good but implementation is poor. The reality is that policies are framed in the rooms of the Secretariat overlooking the harsh realities at the field level and a good policy must take into account how it can be executed…

To really play a transformational role, the officer must focus on results and outcomes but unfortunately, the officer is often more concerned about the process than delivering results. I have personally seen many brilliant officers mellow down in the Secretariat to the level of becoming ‘inaction wonders’. They disconnect themselves from the field and get mired in the rules and regulations with the results that the files become thicker, with no difference being made to the actual delivery of public services. For instance, if an officer is Secretary in the urban development department and is busy disposing of files while cities are full of garbage and filth rotting on the roads, then it implies that his working has no connection with the real issues confronting his department. Similarly, there is no purpose served by the Health Secretary clearing files on a daily basis if the quality of healthcare remains abysmally poor. Teachers remain absent from schools while the Secretary Education is busy issuing detailed guidelines and instructions which have a total disconnect with the realities in the field. This leads to discontentment amongst the people as they are receiving poor quality of public services. It is, thus, mandatory to make better outcomes the focus of each and every department and the performance of all the Secretariat, departments should be measured accordingly…

Working with the Government of India

The biggest attraction of a GOI posting is the international exposure. In simple language, it means the prospect of foreign travel and also a chance of a foreign posting. Ministries are categorized according to the avenues of foreign travel that they promise. That is why ministries like commerce are sought after and the competition to get into them is high. When the GOI officers meet each other, the common topic of conversation is the number of countries that an officer has visited. Some claim to have crossed the half-century mark whereas others make tall claims of having scored a century. I happened to go as JS Defence and defence was a ministry which had very few opportunities for foreign travel. If at all they travelled, it was mostly to Russia. Many of my colleagues looked sympathetically at me and said ‘could you not manage a better ministry? ’I was told that most officers avoid PHD ministries – personnel, home and defence – as they have the least chances of foreign travel. So, defence, despite being such an important strategic ministry, has few people opting for it. Within the ministries too there is intense competition for the international co-operation desk. A foreign posting or deputation to an international organization is highly coveted. This is despite the fact that these assignments do not give great opportunities for doing challenging work. Late T.S.R. Subramaniam who retired as Cabinet Secretary and had served in the state, center and in an international organization, had commented in his book that the maximum work is done in the districts, then the state government, then the GOI and finally the international organization where you have a lot of time on your hands. Still, the lure of the international posting is there.

The GOI concerns itself with policy formulation at the national level and is generally not involved in the implementation aspect, which is the responsibility of the state governments. In some departments like defence, external affairs and commerce, all the action is at the GOI level. There are, however, huge GOI bureaucracies dealing with subjects on the concurrent or the state lists. Sometimes, one wonders whether it is necessary at all. For example, the Ministry of Agriculture in the GOI has ten Joint Secretaries whereas agriculture is a state subject. There is a serious case for reduction in the size of certain ministries at the centre and also of clubbing several ministries together as it is strange that the Ministry of Agriculture is not involved with issues related to fertilizer, water or agriculture credit.

The ministries of such size at the GOI exist because of political reasons and also the bureaucratic culture of creating work to perpetuate work and justify itself. The major mechanisms for this are the centrally sponsored schemes where the major financial contribution (60 per cent or 75 per cent) is done by the centre and schemes are formulated at the GOI level with detailed guidelines. The problem arises as no two states are alike. The same schemes will succeed in one state but the conditions in other states will not favor its implementation. Thus, the states constantly argue that funds should be transferred to them and they be left free to design schemes. However, there is no denying that there is greater wisdom available at the GOI due to its knowledge about the best practices in the states, presence of experts and availability of international inputs. The GOI involves stakeholders, specialists and consultants in designing policy and the due diligence done is of a very high order. Yet, there cannot be a universal policy looking at the extreme variations between states. The solution, as usual, has to be in between…

To succeed in GOI, one needs to study the department in detail, understand crucial issues, articulate your viewpoint and have the ability to carry officers of other services and specialists along with you. It requires great qualities of leadership to set the goals and milestones for your departments and then lead the entire team towards fulfilling them. A dedicated officer will always find working in the Government of India to be a transformational opportunity.

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A letter from Alok Ranjan to all IAS aspirants

Alok Ranjan, the former Chief Secretary of the Government of Uttar Pradesh, has had the career that most people dream of. So, he has put together the information that every aspiring officer should know. While sharing his own experiences, he has provided a deep understanding of the IAS as an institution, valuable tips and insight for cracking the daunting UPSC exam, and how to build a successful career in the services.

Dear Readers,

It was a difficult decision after having done my MBA from IIM Ahmadabad to resign from my job and write the IAS examination. I was fortunate to succeed in the exam in my first attempt and secured 4th position in India in the IAS and was allotted to the Uttar Pradesh cadre. I retired in 2016 after 38 years of a very fulfilling and satisfying career. I can say with complete confidence that no other service or job can provide the diversity and richness of experience that a career in the IAS provides.

I often meet young boys and girls embarking upon a career and find that most of them have dreams of joining the IAS or the civil services. Despite the numerous alternative career opportunities that are available, civil service is still the preferred choice of many. Students prepare for years to get through the hallowed portals of the civil service. For those who succeed it is a realization of their cherished aspirations while others keep making honest efforts year after year hoping that one day they shall succeed.

This book is for those young boys and girls who nurture the desire to join the IAS. I want to communicate through this book that it is possible to get selected in the IAS provided you have the right kind of motivation and are prepared to put in the requisite amount of dedicated hard work. This book is also about the challenges and opportunities that an IAS officer faces during his service period. it is not an autobiography but I have used interesting anecdotes from my career to illustrate the situations that an IAS officer faces and the leadership principles which are essential for him to ensure quality public service delivery and good governance. It is for this reason that this book would be of interest to the serving IAS officers as well as all those who are concerned in any way with issues related to public policy. A student must think of joining the IAS if she wants to bring about a positive change in society and contribute to the development of the country. Issues of power, position, and status cannot be ignored but they should not be the prime motivation for joining the IAS. This service gives you the opportunity of touching numerous human lives. You can bring about a transformation in the quality of life of the citizens. This book is all about making a difference to society which should be the main goal of an IAS officer.

A person interested in joining the IAS should prepare herself mentally for at least three to five year before the IAS exam. He should take a keen interest in current affairs and also read widely on all possible subjects. This is an extremely tough exam where you have to compete against thousands for a hundred seats and therefore your preparation has to be that much more solid and deeper. It is best to devote at least one year of single-minded focus and effort to this exam. You need to develop your personality as well as your communication skills as well as a logical and analytical way of thinking. This book will give those preparing for IAS some very useful tips for both the written exam and the personality test. I have talked about the experiences of an IAS officer as a District Magistrate which is, perhaps, the most rewarding and exciting posting in the service. A young IAS officer gets the opportunity of leading the entire team at the district and he is the voice of the government at the District level. Any scheme gets implemented if the District Magistrate takes it up. There is tremendous authority attached to this post but along with this comes a great sense of responsibility and accountability. It is, indeed, a thrilling assignment and most IAS officers never tire of talking about what they achieved in the Districts.

State Government provides a tremendous opportunity to make policies that could influence the life of the ordinary citizen. You could be looking after education and make a mark by improving the quality of education or you could be looking after the health and can make a difference by reducing infant and maternal mortality. Every post in the IAS has the potential of giving you an opportunity to bring about a positive change in the lives of people. A great experience at the State level is the post of the Chief Secretary who leads all the government officers and employees in fulfilling the ideal of good governance. IAS gives an opportunity of working with the Government of India where you get National and International experience and the policies you make impact the entire nation.

I have also discussed some of the common myths and beliefs about the IAS like the need for domain specialization, promotion on the basis of seniority, political interference, corruption, professional integrity, and lack of promptness in decision making. I have tried to show how some of these could be individual attributes but the system also plays a great role in molding the personality and administrative style of an IAS officer.

It is my fervent belief that a career in the IAS can be hugely satisfying but the relevance of the IAS for the future requires the service to introspect and reinvent itself and for this, it has to look within and make itself responsive to the changing needs of the 21 st century. The IAS is not merely a job but is a service to society and the Nation. The greatest reward that an IAS officer can get is when the common man on the street feels that a positive difference has been made in his life.

All the best!

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