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.

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.

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.

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.

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.

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. 

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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