Looking through the lens of social realities, rather than just in economic terms, revival of old pension scheme appears to be a viable proposition

A recent debate has been triggered on the issue of demand of the government employees to be given pension as it was done before 2005 under the old pension scheme (OPS), and not as per the new pension scheme (NPS) — brought into existence by Central Government in 2005 and adopted by all state governments except West Bengal at different points of time. Uttar Pradesh has been witnessing a major agitation in this regard by various employee associations and, recently, in the run up to the assembly elections, the Samajwadi party had promised in their manifesto that they would revive the old pension scheme if voted to power. Soon thereafter, the Government of Rajasthan went ahead and announced the implementation of the old pension policy for their employees. Recently, I also noticed advertisements appearing in newspapers justifying this decision and pointing out its several benefits. In a similar vein, the Government of Chhattisgarh is seriously considering reviving OPS and several other states are also actively examining the issue.

Noted economists and several retired civil servants have been voicing serious reservation on the revival of the OPS. Their contention is that this would be a financial disaster for the public finances of state governments as salaries and pensions were a major drain on the state resources and were increasing every day due to increase in the number of employees. Additionally, longevity of people was causing a huge strain on the budgetary position of governments, leaving limited resources for expenditure on capital items or social areas like health and education. It is true that the logic used to replace OPS by NPS was that the pension liabilities were rising too fast and the state finances would not be able to bear their burden. To discuss the implications further, it is essential to understand the mechanics of both the schemes. In the OPS, a retiring government officer or employee was entitled to 50 per cent of his last basic pay drawn as a monthly pension till the end of his life. He would also be eligible for an increase in dearness allowances announced from time to time to counter inflation by the government. In the case of the death of the employee, his wife was entitled to get 50 per cent of the pension amount for her life. The NPS does away with this system and instead provides for a monthly contribution being made by the employee (10 per cent) and the concerned government (14 per cent) of the basic salary of an employee and this contribution has been kept in a separate fund where fund manager is expected to invest this in the market and get good returns. On the date of his retirement, a lump sum is available for the employee where he can draw 40 per cent and leave the balance 60 per cent in an annuity scheme to get monthly returns. It is true that this would have a lesser impact on the cash flow on the governments than the OPS. However, it must be examined as to why it is being universally opposed almost by all officers and employees who joined service after 2004.

The employees argue that the NPS is linked to the market. They are apprehensive that the amount contributed is being invested in the stock market and that they would get an amount at the time of retirement which is determined by the stock market. There is, thus, no certainty as to what the value of their contribution would be and nor do they have any role in deciding how the amount is to be invested. Employees have different number of years of service and with the age of entry to almost all government services having been increased significantly, many employees are retiring even after just around 20 years of service. During this period, the NPS corpus that is created by their contribution is too small to give any significant lump sum return or a viable stream of returns through annuity. The employees’ associations have been quick to point out several cases where on retirement the employee has been getting a measly sum under the NPS which is too meager to enable the employee to live his balance life with any sense of dignity or comfort. The problem has been further compounded by the fact that many state governments have not been making their contributions regularly to the corpus and also that there is no real time knowledge that an employee has about the fate of his pension fund. Significantly, they point out that if the NPS is as attractive as OPS as pointed out in justification by some governments then why is it that their senior officers who joined the service before 2004 are availing the facility of OPS and not opting for NPS. Similarly, they allege that the policymakers have themselves not made NPS applicable to them. It is also significant to point out that NPS has not been made applicable to the armed forces where the OPS is continuing. In a recent advertisement issued by Rajasthan Government, it was pointed out that the second national judicial pay commission has recommended OPS for the judicial services and the national human rights commission has also expressed its opinion that the state should examine the human rights element involved in NPS vs OPS.

Even though it would not be correct to examine this issue from a purely financial angle I would like to first examine this aspect. All that the OPS is saying is that 50 per cent of the last salary should be given as pension on a monthly basis. There is no reason why state governments cannot plan for this by continuing with the 14 per cent contribution every month and keeping it in a separate corpus and earning returns on it. The budget size of each government is increasing by almost 10 per cent every year and there is no reason why the contribution to the pension cannot be increased by the same amount every year. In this way, the government will be spending only as much every year as they are spending under the NPS. The returns on this corpus can come as an addition to the state finances and, from this, a monthly pension can quite easily be paid to the retiring employees from the government treasury. In this way, I do not foresee any extra pressure on state finances which could imply curtailment of expenditure on physical and social infrastructure. Other innovative ways of handling the situation can also be thought of.

The crucial thing is that the old pension acts as a social safety net for the retiring employees. You only have to look around to see that it is a pension or family pension which allows a pensioner to live a life of dignity and enables him to address his health issues that crop up after retirement. The society is such that children look after their parents if the parents are earning a monthly income to cater to their needs. If a lump sum amount is given then it rarely remains with the old parents, as the children lay claims on the amount to meet some immediate financial requirements of theirs. An OPS ensures that a retiring employee is not dependent on his children and lives in comfort for the remaining part of his life. Every issue should not be seen simply in economic terms and the realities of social life need to be factored in. The government should seriously consider reviving OPS to keep their employees motivated and also get the best brains to apply for government jobs. If the apprehensions around NPS were not genuine then the phenomenon of almost all employees and teachers agitating on a regular basis for revival of OPS would not be there. Policymakers must view this issue not as simply an economic problem but one concerned with providing lifelong social security which is a major objective of a welfare state.

Making the MCQ-based CUET mandatory for UG admissions will promote coaching culture and ignore comprehensive parameters of selecting candidates

Each year, the month of June raises the heartbeats of thousands of young boys and girls, as they rush to apply for admission to Universities for undergraduates courses, based on their class 12 marks. Such is the situation today that even a student with marks in the high nineties is not sure of getting the subject or college of her choice. Delhi University witnesses cutoffs as high as 100 per cent for several courses. I wonder how students score 100 per cent in subjects like literature or history! There seems to be intense competition among various boards to provide higher marks to their students. I read somewhere that this year, students from the Kerala board were more favourably placed than others. There is no doubt that different boards have different ways of evaluating their students and, often, there is a difference in the curriculum also — making it unfair to compare their scores. I have been Principal Secretary of Education in UP. I remember that there was a time when marks secured in the UP board used to be far below those in other boards, and students of UP board found it almost impossible to get admission in Delhi University. This issue was addressed accordingly, and now, even UP board students are securing sky-high marks — though the general level is still below other comparable boards.

Let us first understand what the common university entrance test (CUET) is all about. The University Grants Commission (UGC) has made CUET mandatory for Central universities and has suggested that state and private universities should also follow it. The National Testing Agency, under the Ministry of Higher Education, has announced the format for CUET. The admission to UG courses in Central universities will have CUET replacing the class 12 marks-based admission system. This test shall be based on the NCERT syllabus and will be divided into four broad sections. Section 1A and 1B will involve papers on languages, which will test the reading and comprehension skills of students. Section 1A is compulsory for all and will test the candidate in English or any of the 12 chosen languages. Section 1B shall test their proficiency in specified foreign languages. Section 2 shall test the knowledge in core subjects out of a list of 27. This includes subjects like visual arts, performing arts and music. Section 3 is a general test — not related to any domain subject — which shall test the mental ability of the students. A candidate is allowed to take up a maximum of nine papers in two different combinations. The CUET will not rank students but will provide scores, based on which admissions shall be made. The board exam scores will not have any impact, except that a minimum qualifying score shall be indicated by different universities.

Quite obviously, the main merit of such a system is to put all the students coming from different boards on a level playing field. The race for high cutoffs shall be done away with. This clearly is an improvement over the earlier system. However, this could lead to a situation where the students will focus on preparation for this test rather than learning the prescribed syllabus for class 12. A similar kind of situation is apparent in the case of students applying for engineering entrance tests. It is true that the domain subject will be based on the class 12 NCERT syllabus, implying that students have to be thorough in their class 12-level knowledge. However, multiple-choice questions cannot substitute class 12-level exams. Important skills like written communication, power of discussion, analytical reasoning and logical flow are difficult to test in an objective paper. In this light, it may be worthwhile to consider giving anywhere between 25 to 50 per cent weightage to class 12 board exam results. Such a measure could bring in the best of both systems.

It is also almost certain that coaching institutes for CUET will sprout up in every nook and corner. You only have to look around and see the coaching institutes that have mushroomed for engineering, Law or management entrance tests. The CUET then becomes a question of who can afford the better coaching institutions, and also, test the particular kind of skills required for solving CUET papers, which will be imparted by these coaching shops. The system will work to the detriment of those coming from underprivileged backgrounds. Moreover, very recently, the CSAT, which was an aptitude test for civil services preliminaries, was reduced to a qualifying test after a furore all over the country that this test discriminated against students from rural backgrounds. The same arguments will apply to CUET. Strangely, the chairperson of UGC has confidently stressed that coaching will not be necessary, as this would be different from IIT entrance because the ratio of seats for applicants will be 1:5 against 1:50 in the case of IITs. Furthermore, he said that the level of difficulty of the questions would be moderate so that the students are comfortable without coaching. Frankly, I am unable to see any logic in these arguments. I can foresee that coaching institutes shall spring up within a year of the introduction of CUET.

All over the world, questions are being raised on the efficacy of such tests as a reliable medium for ascertaining the eligibility of students for admission. Even the time-honoured SAT has been open to questions. Many foreign universities are now not in the favour of SAT and have dispensed with SAT as a requirement for entrance to the universities. Moreover, serious issues have been raised about SAT being a genuine test of merit. Most foreign universities now have essays, social activities, references and interviews as means of testing a candidate for admission. Maybe Indian universities will also have to consider adding some of these parameters in their evaluation of a candidate.

The biggest point in favour of CUET is that it is common for all. Curiously, this is also the main criticism of this test where critics argue that one-size-fits-all tests may not give the desired results. It is also to be noted that the CUET needs to be designed intelligently so that it becomes a true reflection of a student’s ability and talent. One critic very candidly said that a test is only as good as the person who sets it.

One feels that CUET is an improvement over the earlier system but it is still a work in process, and much more discussion and understanding will have to go into having a university entrance system that does not discriminate and genuinely tests the aptitude and competence of the students.

While the Budgetary focus on physical infrastructure for growth is a step in right direction, neglect of social infrastructure will likely propel inequality

The Union Budget for the year 2022-23 has continued with the emphasis on growth with the expectation that a high rate of growth would lead to a better quality of life for people. Nobody can dispute that growth is important but there is also the spectre of rising inequalities which cannot be overlooked. Growth has to be inclusive in nature and it is against this paradigm that the Union Budget needs to be evaluated.

We must start with the positives. There is a substantial increase of 35 per cent in the capital expenditure with ambitious targets for roads, railways and ports. This emphasis on development of physical infrastructure was very much required to lay the foundation for industrial growth and economic development. It will also create a demand for items like steel and cement, which should act as an incentive for increase in private investment and also provide jobs for those involved in the construction activities. The real test of the matter would lie in the implementation in both quality and quantity terms. Looking at the trend of expenditure against the current year’s Budget, the prospects do not look very bright but then one should not be unduly pessimistic, and hope that the government machinery will be able to fulfill the ambitious goals of capital expenditure that have been provided for in the Budget. It is also significant that despite the increase in government revenues, this expenditure will have to be met through additional borrowings which will increase the substantial interest liability in the Budget.

The second-most significant aspect in the Budget is the clear focus on digital technology. In every sector in the Budget statement, one finds schemes related to introduction of digital technology. This will definitely improve the functioning of various departments and provide better services to the people. We have the concept of drones in agriculture to improve crop statistics as well as land records. In the education sector, E-Vidya is being used to develop about 200 channels to provide quality education to the school-going children. Similarly, in the health sector, digital healthcare has been given paramount importance. This is the age of technology and only that country will go forward which develops a knowledge economy. The importance given to digital technology is a step in the right direction and prepares India to face the disruptive challenges posed by the fast-changing technological environment. This should also lead to a creation of a new set of job opportunities for the youth.

My main concerns around the Budget are regarding the sectors of health and education that haven’t seen any increase in budgetary allocation. Besides, apart from introducing digital technology there is no new scheme to bring about qualitative improvement in education and healthcare. The development of social infrastructure is as important as the physical one. We have examples of various countries which first focused on education and healthcare to develop their human capital and then emphasised on physical infrastructure. Only a well-educated and healthy society can take full advantage of the opportunities created by enhancement of capital expenditure. Health and education should be the topmost priorities of the nation and this should have been reflected in the Budget. For instance, having a digital health card and digital infrastructure is undoubtedly useful but digital intervention without a sound physical foundation is not likely to yield the required outcomes. Healthcare will improve only if there are more doctors, nurses, paramedics, ICU beds, hospitals and other health-related infrastructure. This requires significantly stepping up the expenditure in public health, which is still languishing at only about 1.3 per cent of GDP whereas it should be stepped up to 2.5 per cent at the earliest. The pandemic has exposed the huge gaps in our healthcare system, particularly in the rural areas. This should have sensitized the government to accord highest priority to the health sector.

Similarly, the pandemic has created huge issues in the education sector, which should have been reflected in the Budget. E-Vidya is a welcome move but it is no substitute for improving the education infrastructure, quality of teaching and learning outcomes. I am also mystified by the reduction of allocation for the crucial MGNREGA scheme. People are still suffering from the adverse impacts of the pandemic which has pushed millions into poverty, who require the safety net of a rural employment guarantee scheme like MGNREGA. Also, I was looking forward to the introduction of an urban employment guarantee act along the same lines as MGNREGA to cater to the unemployment problem in urban areas. This could have helped in creating productive assets and more consumer demand. In fact, the Budget has not taken any significant step towards enhancing consumer demand which contributes more than 50 per cent to the GDP and acts as a stimulus to private investment.

Previous year’s Budget talked big on disinvestment and privatisation but current year’s Budget is silent on these goals. For the current year, against the target of Rs 1.75 lakh crore only about Rs 9,000 crore has been realised. Expectations are that with the LIC IPO, it would reach Rs 78,000 crore. The roadmap for the future is not clear. It may be that not being able to push through the structural reforms in agriculture, the government has become a little cautious. Furthermore, the government had announced monetisation of Rs 6 lakh crore of public assets and there were talks of realising Rs 88,000 crore this year itself. Once again, the Budget has not spelt out any details regarding this.

The middle class, particularly the salaried section, was eagerly looking forward to some benefits in income tax but the Budget has not touched the income tax rate at all. A reduction could have once again stimulated consumer demand by putting more disposable income in the hands of the people. However, it is noteworthy that the tax rates have been kept constant which is a positive point in itself.

We can hail the budget as being a growth-oriented one, and also appreciate the stress on digital technology. However, in a society where inequalities have gone up over the last few years, more thought could have been given to the inclusiveness and development of human capital.

A controversy is raging these days regarding the proposed amendments to the IAS (cadre) rules proposed by the Central Government. Several states have reacted strongly opposing these amendments as they feel that this would give Government of India much greater control over the posting of IAS officers to the Center. This amendment is agitating the State Governments more because of certain recent orders issued by Government of India like those relating to the Chief Secretary of West Bengal and some senior officers of the same state.

To put the matter in perspective it is important to understand the current rules regarding deputation. Central deputation in the Indian Administrative Service (IAS) is covered under rule 6(1) of the IAS cadre rule 1954 inserted in May 1969 which states that “a cadre officer may, with the concurrence of the State Governments concerned and the Central Government, be deputed for service under the Central Government or another State Government”. It further states that “provided that in the case of any disagreement, the matter shall be decided by the Central Government and the State Government concerned shall give effect to the decision of the Central Government”.

There were around 5200 IAS officer in the country as on January 1, 2021 and 458 were on central deputation. The Central Government is concerned because the required numbers of officers are not coming forward for central deputation and the Government of India is facing a shortage of officers. Central Government wrote to the State Governments recently pointing out that States were not sponsoring adequate number of officers for central deputation. Depending upon the strength of the IAS officers in a particular state a central deputation reserve is created which indicates the number of officers, at various levels, who are eligible for Government of India deputation. On the basis of this the Central Government asks for an “offer list” of officers from which it selects the required officers. The Government of India has now proposed an additional condition in 6(1) which states “provided that each government shall make available for deputation to the Central Government such number of eligible officers of various levels to the extent of the central deputation reserve”. It goes on to add that “the actual number of officers to be deputed to the Central Government shall be decided by the Central Government in consultation with the State Government concerned”. It also says that in the event of any disagreement the State Governments shall give effect to the decision of the Central Government within a specified time. In the letter written to the State Governments the Central Government has also said that “in specific situations where services of cadre officers are required by the Central Government in public interest the Central Government may seek the services of such officers for posting under the Central Government”. The states realized that through these changes the Government of India is taking greater control over the IAS officers and this is the reason why they are objecting quite vociferously.

It is significant to note that the willingness of the officer concerned to go on deputation on to Government of India is essential as per rule 6(2) which states that “no cadre officer shall be deputed except with his consent”. The clause about posting the officers in Government of India in public interest appears to override this crucial requirement of the willingness of the officer concerned. In effect it would mean that any time the Central Government can pull out an officer from the State Government to serve in Government of India irrespective of the willingness of the State Government or the officer concerned. This has become the real bone of contention, particularly, in the light of recent examples of West Bengal and earlier Tamil Nadu.

Most states are having a central deputation reserve shortfall. Over 14 states have a CDR shortfall over 80 percent with the West Bengal figure being 95% and it is above 90% for MP, Haryana and Telengana. It is a fact that most states are not meeting their CDR obligations. This is not in consonance with the concept of an all India service. This is happening  even though the annual recruitment to the service has gone up since 2000. There is a particular shortage at the level of Joint Secretaries, Directors and Deputy Secretaries. This is definitely a genuine problem which needs to be resolved through consultation between States and Central Government.

It is also essential to understand the concept of All India Services as well as the federal structure of the constitution. The idea behind the creation of All India Services like IAS has been to have a common perspective between the State Governments and Government of India and that States should also function towards achievement of national goals. On selection, IAS officers are assigned to a State cadre where they serve in the district and State Secretariat and acquire knowledge about the ground level realities. They can also opt for central deputation and generally they spend 5 years in Government of India if selected and acquire a national and international perspective. He carries his experience back to the state after his central deputation period is over. The All India character the service is maintained by the mechanism of giving 1/3 of the vacancies in a state in a particular year to candidates who belongs to the state and the balance is given to the officers from outside the state.

I think the most import point is that there should be a willingness on the part of the officer to go to Government of India. He should not be forced to do so. Central Government must analyse why officers are not offering themselves for Government of India. At the Deputy Secretary/ Director level the main issue is that at the same level of seniority the officer is working either as a District Magistrate or head of department or some other important post in the state where he has a lot of authority to take decisions and the job is immensely satisfying. Further, creature comforts like a vehicle, house, schools for children and availability of health care are available. At the Deputy Secretary level in Government of India many of these hygiene factors are absent and even the job content is such that very few decisions are taken at that level and the officer is primarily involved in pushing files. If Government of India really wants officers to opt for Government of India at this level of seniority it should focus on taking steps to enrich the job content and also provide basic creature comforts. I am surprised why there are less officers on offer for the Joint Secretary (JS) level posts because the JS is a crucial person in Government of India and most decisions are taken by her and she contributes in a big way to the working of the department. The reasons for the shortage at JS level would need to be studied. I feel one reason could be that lesser number of officers were recruited into the IAS between 1990 and 2000 as a measure to slim down the bureaucracy which was misplaced and from 2000 onwards more officers are being selected into the IAS.

The states are also guilty of not sparing officers for Government of India postings on the grounds that they are doing some very important work and they cannot be allowed to go. They have been instances where due to political reasons the names of officers are not forwarded to Government of India. I feel it is the responsibility of the State Governments to have the required number of officers in the central deputation reserve. There after deputation to Government of India can take place on the basis of willingness of the officers and consultation between the two governments. This is how the character of the all India services can be maintained and also it is in accordance with the federal nature of our union. The problem only comes when political reasons start influencing this process either from the Government of India or State Government level.

Indian bureaucracy is in dire need of reforms to ensure its independent and harmonious functioning, as also to hold it accountable to the people

I had the opportunity of chairing a session in the annual convention of the Lucknow Management Association (LMA) on the very important topic of governance reforms for the transformation of Uttar Pradesh (UP). My session was on bureaucratic reforms and leadership development. The panel consisted of illustrious speakers like ex CAG and IAS officer Vinod Rai, Pradeep Mehta of CUTS International and Himanshu Rai, Director, IIM Indore. Though the focus was specifically on the state of UP, the webinar had a larger relevance in the context of the entire country as it is clear that good governance is essential to make India a developed economy. Various studies have established a clear correlation between good governance and pace of growth of GDP. Very often it has been argued that various political parties on coming to power come up with a large number of infrastructure projects and development schemes but have not made any substantial reforms in public governance.

Good public governance is about a system where there is accountability, transparency, impartiality, fairness and integrity. The institutions of governance have to perform their designated roles. It is important that quality public services are delivered to the citizens, which is the ultimate goal of good governance. There is no denying the fact that there is a need for greater result and outcome orientation in the government system. Bureaucratic reforms are an essential component of governance reforms.

Curiously, whenever there is a discussion on bureaucratic reforms, the talk centers on reforming the Indian administrative services (IAS). It is true that IAS is at the top of the bureaucratic structure but it accounts for much less than one per cent of the total bureaucracy. Merely reforming the IAS will not change everything as reforms have to travel down to the last level of the bureaucratic ladder. I can give a classic example of this from my experience in UP. At the top level, we went through several sessions of discussions, formulated policies and issued detailed government orders regarding ease of doing business. We were rewarded for this by attaining a high rank amongst the States in the ease of doing business rankings. However, despite our claim that all clearances should be given online, the prospective entrepreneur had to vigorously follow up at the lower level of bureaucracy to actually get his work done. For example, we found that though online clearance for power connection was given, the entrepreneur did not get the connection for a long time and had to constantly make an effort to contact the junior engineer to get the job done. Ease of doing business failed at the last stage of implementation. It is for this reason that it is important to consider changing the mindset of the entire bureaucracy and not merely the IAS.

The panelists rightly felt that there was a perception about the bureaucracy being unresponsive, insensitive and insulated from people. It is up to the officers themselves to look within and alter their working style to make it people-oriented or citizen-centric. For this they will have to look at themselves as providers of public services to the people and not as rulers. This requires an immense amount of humility, empathy and compassion. Training and orientation programmes can help in bringing about this attitudinal change. However, the real change will come if there is an inbuilt system of reward and punishment which rewards the right kind of behaviour and result orientation. It is not as easy as in the private sector to have quantifiable targets for issues relating to public policy. However, some degree of quantification is definitely possible. There are performance evaluation systems which can be designed to accurately measure the attitudinal aspects also.

For bureaucracy to perform, it has to come out of the maze of rules, processes and regulations, under the garb of which it generally shelters itself. This is possible with wide-ranging reforms in the entire system of governance where an officer is not penalized for bonafide actions done in public interest. We need these reforms to ensure a system of prompt decision-making which is the basis of good governance. Above all, the bureaucracy today needs to be innovative and always ready to take initiative in resolving problems of the people with a positive orientation.

It is not that the bureaucracy cannot perform. There are several instances of outstanding work done by the officers. Two recent examples are the vaccination drive against Coronavirus and the development of Kashi Vishwanath Temple corridor. I remember, during my tenure as Chief Secretary from 2014–16, we implemented game-changing projects like construction of Lucknow-Agra expressway, Lucknow Metro and Dial-100 in a record time with no cost overrun. The quality of execution was also exemplary. Even today, officers in the districts are doing a lot of good work which is not being recognised because of lack of documentation.

Good governance requires a relationship of mutual trust between the politicians and the bureaucrats. They are like two wheels of a vehicle which have to move in tandem otherwise the vehicle will not be able to move. Unfortunately, the instances of political interference in governance are on the rise. The mechanism of transfers is used by the political executive to control the working of the officers. Senior officers are not able to get the team they want because of this interference. It is well known that unless you have the right man on the right job it becomes difficult to deliver results. Today it is almost impossible for an officer to have a team of his choice.

It is necessary to develop leadership qualities at all levels of bureaucracy. The officers have to be trained to work in teams and be motivated and inspired to achieve the goals set for the organisation. They must develop the quality of reflective listening which means absorbing the opinions of others and also developing crucial negotiation skills. The bureaucracy has to implement laws in true spirit and provide justice to all citizens. They should wield power for the benefit of the citizens and development of the country. A system should be evolved where the officers need not reinvent the wheel every time but learn from the best practices of others.

Bureaucratic reforms are possible if there is a political will to do so. I hope that the mission Karamyogi started by the Government of India will prove to be a positive step in this direction. The bureaucracy must appreciate that the real test of their performance is in the hands of the citizens. They must deliver if they want respect. It is urgently required to reform the system of governance and make it accountable to deliver outcomes without which the bureaucracy shall never be able to justify itself.

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.

Apart from ensuring efficient operation, the sale of Air India will provide major fillip to disinvestment target and open the floodgates for further privatisation

The biggest news on the economic policy front recently has been the privatization of Air India. This has happened after years of debate and discussion and efforts made by various governments to do something about Air India which had become an albatross around the neck of the government. In 2001, an effort was made to offload 40 per cent of the equity of Air India to the private sector whereas in 2018 this was raised to 76 per cent. Both these efforts failed because they focused on disinvestment and not complete privatization. This meant that the private sector would always have the Government as the big brother breathing down their neck. Moreover, the bid parameters prepared on both these occasions did not take into account the sensitivities of the private sector. The reason behind these moves was that the Government was still not prepared to let go Air India and was concerned about the political ramifications of privatization. Moreover, the bureaucracy always has the propensity to play safe and they formulated the terms and conditions accordingly. Notably, 2018 was very close to the 2019 general elections and it is never possible to go for large-scale structural reforms close to an election.

Having come into power with a comfortable majority, the current government embarked upon a clear path of reforms. Finance minister, in her budget speech, clearly outlined growth as an objective to be pursued and stated that privatization of public sector units would be one of the priorities. The Government mentioned that it would go ahead with privatizing two public sector banks this year, and divide the public sector units into strategic and non-strategic sectors, also mandating that the latter category would be privatized. Air India was on top of the list but there were enough sceptics who doubted the will of the Government as well as the capacity of the bureaucracy in implementing these measures. However, the events have proved the doubters wrong and Air India has been sold to the TATAs. As Ratan Tata tweeted, it was like a ‘homecoming’ because the Government had taken over the airlines which had been set up by the TATAs. I read somewhere that JRD Tata had told the then minister, Jagjivan Ram, that the government would not be able to run the airline properly as it required a skill set very different from that required for running government departments. Future events clearly showed how prescient JRD Tata was. Mr Tata was retained as the chairman, and for a couple of decades, Air India performed creditably well as one of the best airlines in the world. However, over the time the inefficiencies of the government working culture led to the decline of Air India. After 1991, the spurt in the number of private sector airlines further worsened the situation for Air India. The 2007 merger between Air India and Indian Airlines also turned out to be unsuccessful.

Since 2009-10, Rs 1.10 lakh crores has been pumped into Air India. It has been argued on various platforms that this amount of taxpayer’s money could have been utilized much better if spent on sectors like education and health. In fact, the secretary of the department made a statement that the government was losing Rs 20 crores every day while running Air India. The net worth of Air India was minus 44,000 crores. A pragmatic privatization plan was prepared where, out of the cumulative debt of Rs 61,562 crores as of August 31, 2021, the Tatas would be taking over a debt of Rs 15,300 crores and the remaining Rs 46,262 crores will go to an SPV called Air India asset holding company. The government expects to retire Rs 14,000 crores of this debt through monetization of assets as per the newly declared policy of the national monetization pipeline. In addition, the government will get Rs 18,000 crores. This amount, by itself, would not be sufficient to help the government to achieve its disinvestment targets of Rs 1,75,000 crores for 2021-22. At the moment, only Rs 9,111 crores has been achieved through disinvestment. The story of the last two years had been similar, where against the target of Rs 2,10,000 crores for 2020-21, only Rs 32,847 crores was achieved whereas for 2019-20 only Rs 15,297 crores was achieved against the target of Rs 1,05,000 crores. It can be seen from the figures that so far the government has not been very successful with its disinvestment plan. However, Air India privatization would give a major fillip to the entire process of disinvestment. Many more such deals are likely to be made in the future. The Shipping Corporation of India, BPCL and BEML, are some of the corporations next in the line for privatization.

It will be interesting to see how the TATAs can turn Air India around. It is not going to be a cakewalk as there is enough competition in both the external and the domestic aviation sector, with Indigo cornering as much as 57 per cent of the market share in the domestic sector as compared to about 13 per cent of Air India. There is no doubt that a large infusion of capital will have to be made by TATAs to improve the level of services to make the airline profitable. The TATAs can do so but it will take time and an influential leadership. The employees of Air India need to be handled tactfully. In recent years, Air India has offered VRS schemes and has reduced the number of their employees from around 27,000 to 13,500 and the employee per aircraft ratio from 221 to 95. There is a long way to go from here. A system of performance-linked rewards should be introduced for the employees and facilities put at par with those prevalent in the rest of the industry. The private sector will be able to take decisions in a much more commercial manner than it has been possible for Air India as a public sector corporation. Tatas are today running two airlines in joint venture – Air Asia and Vistara and none of the two are earning profits. In any case, the situation is likely to be better than it is today.

Privatization of Air India is a major economic reform that has been made possible by a strong political will and leadership, and initiatives taken by the top bureaucracy. Credit must be given to the Secretary of DIPAM and his team for successfully carrying out this reform. It is a feather in the cap of the Civil Service as well. It also indicates the government’s determination to proceed further with its policy of reducing the role of government in the economy. It augurs well for the future.

As air pollution is taking a heavy toll on people’s health, the government should formulate stringent air quality standards apart from creating public awareness

WHO’s recent fresh air quality parameters are far more stringent than those formulated in 2005. For instance, the 2005 limit of PM 2.5 at 10 ug/m3 has been cut to 5ug/m3. The idea is to draw the attention of the nations and individuals to the chronic problem of air pollution and its adverse impact on health. As many as seven million people die every year due to problems related to air pollution and 140 million people in the world breathe air that is 10 times more polluted than the WHO-prescribed limit.

The air quality standards prescribed by the Central Pollution Control Board (CPCB) are several times higher than the WHO standards. If we refer to the PM 2.5 standards, we find that the limit in India is 40ug/m3 and the 24-hour mean is 60ug/m3. It has been observed that on average, Indians have 30 per cent weaker lung functioning as compared to Europeans. This is the reason behind the spurt in the respiratory and cardiovascular diseases in the country. There is an urgent need to attend to this problem arising out of lack of awareness — both at the individual and community level.

The air quality is measured along the Air Quality Index (AQI) by CPCB. A score of less than 50 is considered good while that above 400 is considered severe. Most Indian cities cross the AQI level of 200 during the winter months.

51 per cent of the air pollution in India is caused by industries, 27 per cent by vehicles, 17 per cent by crop burning and five per cent due to fireworks. The six main pollutants are PM 2.5, PM 10, CO (carbon monoxide), NO2 (Nitrous oxide), O3 (Ozone) and SO2 (Sulphur dioxide). Vehicles are the main source of NO2 pollution while industries account for the SO2 pollution which can be very dangerous as it has a tendency to form secondary pollutants. Both these gases are growing at an alarming rate in the atmosphere.

The Air Pollution and Control Act, 1981, remains poorly enforced. The main causes of high air pollution are increase in population, number of vehicles, industrial activities and power generation. Agriculture and mining also contribute to pollution levels, leading to the toxicity of the atmosphere. As rapid growth is negatively impacting the environment, it becomes imperative to strive towards sustainable growth.

In the near future, almost 50 per cent of the Indian population is going to live in cities. It is thus imperative to carry out Environmental Impact Assessment before implementing urban infrastructure development plans. We will have to ensure that all master and area development plans factor in the crucial aspects of ambient air quality. Municipal solid waste will need to be segregated at the source and then disposed of in a manner that does not cause air or groundwater pollution. Open burning of municipal solid waste should be banned completely and biodegradable wastes should be sent directly to waste converters and waste-to-energy plants. Slums will have to be redeveloped in a manner that those do not use wood, crop residue, cow dung and coal as fuels, as these are major contributors to PM 2.5 and PM 10. Hotels, restaurants and roadside eateries should shift from using coal to electric or gas-based appliances. Alternative clean fuel should be provided by the builders to labourers at construction sites for cooking. All urban households should be supplied with LPG or piped gas supply. Road dust and other emissions can be controlled by mechanical sweeping of roads and regular watering. Grass on the pavements would also help. In essence, we cannot stop urbanization, but each aspect of urban development would have to be done in a sustainable manner.

Vehicular emissions can be controlled by the implementation of BS-VI norms and moving towards electric (EV) and hybrid vehicles. The Government of India and state governments have already announced policy concessions for the EV industry, and NITI Aayog has declared a rather ambitious target of moving to EVs by 2025. However, many more concrete steps — including traffic planning and management, traffic restrictions during peak hours and making adequate parking mandatory — are required in a time-bound manner. Prioritizing public transport could also go a long way in controlling air pollution.

Industries should be consulted before enforcement of plans, and be advised to use cleaner fuels. Critical areas should be identified and online monitoring of emissions be ensured. Strict evaluation of norms is required at the time of setting up of new industries or their expansion. A major shift from the use of fossil fuels to renewable energy is the need of the hour, and the government must meet its ambitious target in this regard. The month of November is approaching and soon the capital and the surrounding areas would be engulfed in smog resulting from stubble burning by farmers. I see no reason why a technical solution like happy seeder cannot be found for this. Farmers can be compensated for the additional cost through subsidies.

A 2019 study has found that the poor air quality in India could be responsible for a reduction in GDP to the extent of three per cent in a year, causing a loss of nearly seven lakh crores. Most of the loss was due to employees not turning up for work, reduction in tourist traffic or fewer people going out to buy goods.

The government has come up with a National Clean Air Programme (NCAP) which proposes to reduce air pollution by 20 per cent by 2024 in 102 chosen cities. However, the implementation of this plan still appears to be a little hazy. As a first step, the government should revise its air quality standards to make them more stringent. This should be followed by measurement of ambient air quality at various locations in these cities. This has to be supplemented by a major awareness programme. People have to become conscious of air pollution and its deleterious impact on public health. They must know that in India, on average, a person is losing 9.6 years of his life due to air pollution. With awareness, people will demand action from the government and serious measures would only be taken once this becomes an issue with political ramifications.

Air pollution is an emergency and needs to be tackled on a war footing.

NMP is indeed a bold reform initiative but its effectiveness will depend on how the structural impediments are removed and unemployment challenge is averted

The Union Budget for 2021-22 clearly brought out that the economic policy of the government is geared towards growth which would lead to the overall prosperity of the people. Privatization policy was also clearly mentioned in the budget. In addition, the budget spoke of the need to create a national monetization pipeline of brownfield projects to finance fresh investment in physical as well as social infrastructure. NITI Aayog was tasked to prepare the policy framework for this announcement and, recently, the Government of India announced its policy along with a detailed guidebook covering all aspects of the same. The government declared that it has prepared a national monetization pipeline that would unleash a latent potential of six lakh crore or USD 81 billion by 2025. The target for the current year is Rs 88,000 crore. It is indeed a very ambitious programme and also a very bold reform initiative.

The policy says that there will be no sale of assets and only brownfield assets would be leased out for a certain period of time to private sector investors or an investment trust that will operate and maintain the assets as well as make investments and, at the end of the lease period, hand over the assets back to the government. The assets identified for this purpose are roads valuing 1,60,200 crores; railways 1,52,496 crores; power transmission 45,200 crores; power generation 39,832 crores; gas pipeline 24,462 crores and mining 28,747 crores. Additionally, there are some other sectors also like telecom, sports stadiums etc.

The strategic objective of the national monetization pipeline, according to NITI Aayog, is to unlock the value of investments in public sector assets by tapping private sector capital and efficiencies which can thereafter be leveraged for the augmentation of greenfield infrastructure creation. In essence, this means that a lot of public sector assets are lying underutilized and they are not being managed and operated efficiently because of the inherent structural impediments of the public sector, and which can be transformed by the private sector to generate resources that can be utilized for the development of new infrastructure. There is no denying the fact that to achieve a high rate of growth, India needs substantial investment in infrastructure which raises the question of the availability of resources. For quite some time, economists and administrators have been grappling with this problem of financing infrastructure. The national monetization pipeline is an innovative solution in this direction and, by all means, can be called a significant structural reform in creating value in infrastructure.

However, the crucial thing is the implementation of this policy. Historically, we have seen that the ambitious targets of disinvestment have not been met year after year due to various procedural bottlenecks. In light of this, it is difficult to see how such a massive scale monetization of public assets can be executed in the given time frame. Personally, I feel that it would be difficult to achieve the 88 thousand crores target for the current year and six lakh crores till 2025. The matter of Air India privatization and that of BPCL pending for years exemplify how such matters take a long time to materialize.

The experience of public-private partnership (PPP) would be vital in implementing the NMP. Various models like upfront lump-sum payment or annuity payment were devised to implement PPP and they are as many success stories as failures. I remember one of the first PPP projects in UP was the bridge on the Noida Delhi highway. The private concessionaire was expected to collect toll for a certain number of years but there was a massive agitation by the farmers and residents of the area after some years and, finally, the toll barrier had to be shut down. There were views on both sides. Some claimed that the PPP agreement had been drafted to give extra benefit to the concessionaire while some felt that the concessionaire was entitled as per the agreement to collect toll for the stipulated number of years. In any case, the whole episode showed the kind of problems that a PPP agreement can lead to. Even in NMP, this crucial issue of valuation of the assets, amount of lump-sum payment and other terms and conditions would determine the success of the policy. The private sector has often argued that the PPP documents are prepared in a manner that private developers do not get a reasonable rate of return on their investment, making it unviable for them. There is no doubt that the civil servants who draft the agreements along with consultants are inclined to err on the side of caution. They deliberately want to put such conditions which would shield them against any inquiry in the future. Naturally, this leads to putting conditions that impact the viability of the project. NMP is a new policy and the civil servants do not have prior experience and, despite the guidelines formulated by NITI Aayog, there is a likelihood that such terms and conditions may get framed that adversely impact the rate of return to the private investors, implying that they would not evince interest in bidding for the assets. Of course, in the case of PPP, things improved over time as the civil servants got more experienced and repeated guidelines were issued by the government. Similar learning experience is possible in the case of NMP but this will take time, making it difficult to achieve the NMP targets in the prescribed time frame.

The fear of subsequent allegations of corruption is not entirely unfounded. You can look around and see the number of cases of privatization or disinvestment where inquiries are going on and there have even been court directives to investigate and lodge criminal complaints. It is, thus, important that the Government of India evolves the system to protect the civil servants from any undue harm if they faithfully, and with bona fide intentions, carry out the NMP exercise.

Apart from above, the private sector would only come forward if it gets a higher rate of return than it would get through an alternative opportunity of investment. Not all assets listed in NMP are likely to give this kind of a return. This could lead to a situation of cherry-picking where the private sector bids for assets with the greatest potential of returns and avoids the others. The implication being that not all assets listed in the NMP will get a private bidder. The more lucrative assets will get bidders while the ones with less potential will remain with the public sector. I saw an example of this when in Uttar Pradesh we wanted to bring in the private sector in power distribution in the districts. We found that the private sector was keen to take up only the city areas where it was easy to collect power dues and did not want to go into the rural areas at all. This meant that the state power corporation would lose its best accounts and remain saddled with the most problematic. We had then decided to offer a package of rural plus city consumers. Not many bids were received as per this model. This is very much possible in the NMP also. We already saw when the Railways wanted the private sector to run some trains, only the public sector corporation IRCTC came forward. This again gives weight to my argument that the entire NMP list of six lakh crores is not likely to get private bidders.

Moreover, there would be issues relating to the employees. Will the private sector retain them? Will the terms and conditions remain the same? What will happen to the crucial issue of reservation in case the private sector does recruitment of its own? There are various social objectives that these assets are fulfilling and it would need to be seen whether the private sector would continue to do so. Moreover, if the public sector has not been performing then it is due to various structural impediments which would need to be analyzed, otherwise, they would constrain the working of the private sector also. Further, a private-sector monopoly is no better than a public sector one.

It is also important to see how the regulators would respond to this kind of initiative. There would also be the need for an open and transparent dispute resolution mechanism. Finally, a special independent authority would need to be created to monitor the entire process.

NMP is a bold reform initiative that could unlock funds for further development of social and physical infrastructure but there are a lot of implementation issues that need to be handled. Also, we should be aware that the targets set are far too ambitious.

The stated objectives of NMEO-OP are reasonable but the additional cultivation of oil palm has to be done in a sustainable and responsible manner

The Government of India on August 18 announced the National Mission on Edible Oils and Oil Palm (NMEO-OP). This mission proposes additional cultivation of 6.5 lakh hectares of oil palm by 2025-26, bringing the total area under oil palm cultivation to 10 lakh hectares. A total sum of Rs 11,040 crore has been earmarked for the scheme. This decision has generated a lot of controversy because of the likely ecological fallouts in terms of massive deforestation and loss of biodiversity. It thus becomes important to evaluate the various aspects of this policy and its intended as well as unintended consequences.

India is a net importer of edible oils with palm oil being the principal import. The annual consumption of edible oils in India is 25 million tonnes while the domestic production is 10.5 million tonnes. 58 per cent of the requirement is imported. The import bill in 2019-20 was USD 9.6 billion which is a significant amount. This mission proposes to reduce our dependence on imports to 38 per cent by 2025-26, though our consumption is likely to go up to 29 million tonnes. Obviously, the intent of the mission is to reduce the import bill and make India self-sufficient in edible oils to a large extent. Nobody can argue against this objective.

Even though concerns are being raised today, this initiative is not exactly a new one. To reduce dependence on imported edible oil, India began encouraging oil palm cultivation in 1991-92 under the oil palm development programme. Incidentally, oil palm gives four times more oil than other edible oils and so appears to be a viable proposition. In 1995, a national research centre for oil palm was set up. In 2004-05, 12 states took up oil palm cultivation as part of an integrated scheme of oilseeds, pulses, oil palm and maize. During the 11th five-year plan, a committee was set up under KC Chadha to reassess the potential of palm oil cultivation. This committee identified 10 lakh hectares as a potential area for the cultivation of oil palm. In 2011-12, oil palm cultivation and expansion was included in the prestigious Rashtriya Krishi Vishisht Yojna (RKVY) of the Ministry of Agriculture, Government of India. In 2014-15, a national mission on oilseeds and oil palm was launched. In 2015, 100 per cent FDI in palm oil production was allowed. The cooperation of the State was also elicited in the programme, and oil palm was declared a plantation crop to attract private sector investment. It is thus clear that the decision taken last week is merely a continuation of the thinking that has been taking shape for almost the last three decades.

To counter the criticism regarding the adverse impact on the environment, the Government of India claims that no forest will be destroyed for oil palm cultivation which would be done mostly in the fields of the farmers and assures that the programme will be kept farmer-centric. The scheme envisages assistance to farmers for planting materials in the range of Rs 12,000 to Rs 29,000 per hectare. Special assistance of Rs 250 per plant is to be given if old gardens are replanted. Oil palm takes four years to fructify. However, in the first three years, farmers can grow other crops (except paddy) like ground nuts, soya bean etc. which would ensure that the farmer does not suffer losses on going for oil palm cultivation. The Government of India has also given the farmers a price assurance through a mechanism of viability price to counter price volatility.

Oil palm grows in tropical climate, especially near the equator. The Indian government has identified the Northeast and Andaman & Nicobar Islands as the areas where this plantation would be taken up. Incidentally, both these areas are ecologically sensitive. Northeast is recognized as a home to around 850 bird species along with citrus fruits, medicinal plants, and a host of other rare plants and herbs. Similarly, Andaman & Nicobar has rich biodiversity in flora and fauna and experts have opined that no new flora or fauna species should be introduced in these Islands. There is thus a very valid apprehension of the destruction of valuable biodiversity due to the introduction of oil palm in these areas. It is likely that primary forest will be replaced by oil palm as the greed for profits by the palm oil industry would soon create political pressure for expanding the cultivation beyond the fields of the farmers.

Historically, palm oil has led to the deforestation of three per cent in West Africa and 50 per cent in Malaysia and Borneo as well as Indonesia. In fact, the entire low land in Malaysia has been lost to oil palm. It has driven the orangutans, gibbons, tiger, Sumatran rhino and elephants to the verge of extinction. To preserve biodiversity, Indonesia and Sri Lanka have already started controlling oil palm cultivation and, as pointed out by Sudhir Suthar in an article in Indian Express, the Indonesian government put a three-year moratorium on licenses on palm oil production and Sri Lanka has even ordered the uprooting of oil palm plants.

Even in India, where oil palm plantation has been taken up, the experience shows that particularly in Arunachal the farmers have been going in for oil palm cultivation in a big way and this is leading to an adverse impact on forest land. I read a study by YR Shankar Raman and Jaidev Mandal (2017) about oil palm cultivation in Mizoram. It says that in the same area, where teak cultivation supports about 38 species of birds and rain forests sustain 58 species, oil palm supports only 10 species. Incidentally, there is no environmental impact assessment (EIA) required for conversion of land to oil palm cultivation because it is designated as a plantation. Further, oil palm cultivation gets encouraged due to the ambiguous definition of forest cover which states that all lands more than one hectare in area with a tree canopy density of 10 per cent, irrespective of ownership and legal status, are covered under the definition of forests. Such lands may not necessarily be recorded as forest areas. It also includes orchards, bamboo and palm. Thus, supporters of oil palm can argue that planting oil palm leads to enhancement of forest cover which would be a fallacy.

We cannot argue that there should be no effort towards producing palm oil within the country as we need to minimize the import bill due to palm oil imports. Also, the government and the consumers would be interested in keeping the prices of edible oil under control. However, we cannot allow the destruction of the biodiversity and degradation of the environment. The solution then lies in the sustainable and responsible production of oil palm. It should be insisted that this cultivation takes place only in the fields of the farmers, and industrial large-scale plantation by the corporates should be prohibited in ecologically sensitive areas. Also, palm oil production should only be for edible purposes and not for non-edible uses like cosmetics etc. This would keep the demand in check. Already in 12 states, oil palm plantation has begun and the ecological impact on this needs to be studied. The government should focus on increasing the area under oil palm cultivation in these 12 states where it has not led to adverse impact on ecology, rather than moving to new areas like Northeast or A & N which are highly sensitive and where it could lead to widespread rain forest destruction, wildlife loss and bring about climate change. Even in the fields of the farmers, it has been found that the growth of oil palm leads to soil erosion and air and water pollution. It is thus desirable that any extension of oil palm cultivation should not be done without an environmental impact assessment.

Companies producing palm oil should be incentivised to produce it in a sustainable manner. Illegal plantations will need to be severely dealt with. No conversion of forest land to oil palm should be permitted as this leads to poverty amongst the communities dependent upon forest for their way of life and has the potential of leading to mutually destructive man-animal conflict. These days there is a movement in the West, and in India also, to encourage those companies which invest in ESG (environment, social, governance) issues. Banks provide credit to such companies and the investors are putting in their money in these ventures. Palm oil production should be done in a manner to address these ESG concerns. In fact, there could be a system where palm oil would need to be certified as having been produced ecologically just like you have in the case of organic plants. Oil palm production does not have to be destructive to the environment. It has to be done responsibly with great concern for the ecology and biodiversity.