Tag: Government Schemes

Opinion: DoPT finally sets out to rectify deficit of IAS officers at Center; what actually needs to be done

According to the data provided by DoPT the authorized strength of IAS officers is 6,699 as on 1st January, 2019 but the actual officers available are 5205

In a welcome move the Department of Personal and Training (DoPT) has given an in-principle approval for constituting a committee to look into the deficit of IAS officers at the center and to suggest a recruitment plan for the years 2021 to 2030. The main issue is the shortage of IAS officers in various senior positions. The estimated amount of shortage as told by DoPT to a parliamentary panel is in excess of 1,500.

According to the data provided by DoPT the authorized strength of IAS officers is 6,699 as on 1st January, 2019 but the actual officers available are 5205. It is also a matter of concern that this gap between the sanctioned strength and actual availability is gradually increasing.

The genesis of this shortage can be traced back to the reports of the Central Pay commissions, particularly, that of 1996. This was a period of grave financial crises being faced by Government of India as well as the state governments.

I remember that the Government of UP was facing a situation where the daily cash flow management had become a challenge and we were concerned about the revenue as well as fiscal deficit. The pay commission had recommended higher pay scales for all government officers and employees but had also cautioned about the financial impact. A major part of the recommendation of the pay commission report was about how to control the expenditure on salaries.

I recall that we had arrived at a figure of 3 percent employees retiring every year and it was decided to fill up only 2 percent of the vacancies thus created and in this manner gradually reduce the government staff. This did not take into account the imbalance that such a measure would bring about.

In addition to the above the recruitment to various government posts was slashed and, in particular, the IAS was a major sufferer. The batch strength of the IAS was reduced considerably and brought down to below 100 every year. This led to serious crises and I remember that in a state like UP where we have 75 districts it became a very difficult task to find officers to man the district administration. In fact, several batches of the IAS had only about 4 to 5 people joining the UP cadre. This trend continued for quite some time and is one of the major reasons for the shortage of officers of a particular seniority which is having an adverse impact today at both Government of India and state government levels.

In particular, there is a huge shortage of officers at the Deputy Secretary and Director level in the Government of India. The realization soon dawned on the policy makers and larger batches began to be recruited going up to a level of 180 every year. It is not clear whether a proper rational assessment has been done to decide upon this figure and there are those who feel that this number should be further increased.

In the light of this I find merit in the Government of India decision to setup a committee to examine this issue. We must make an assessment of the number of posts that would be required in the IAS to meet the current and future challenges of governance. They will have to take into account the number of officers recruited directly into the IAS as well as those promoted from the state civil services.

The shortage is more manifest at the Government of India level than in the states. This is because the states can fill up vacancies by rapid promotion of the officers belonging to the state civil services. The number of years required for state civil service officers to be promoted to the IAS varies from state to state ranging from 10 to 25 years.

Again, this is not based on any scientific study but is implemented more as a rule of thumb or decided by the kind of pressure which state officers can mount on the political executive. It is also pertinent to note that the state civil service officers, but for a few exceptions, do not opt for a posting in Government of India on promotion to the IAS.

There are some obvious reasons because of which young IAS officers do not opt for Government of India at the Deputy Secretary / Director level.

The fact is that at the same level of seniority an officer gets much greater creature comforts at the state level as compared to Central government. Many officers are posted as district officers which is one of the most attractive posting for an IAS officer. Even in the state government he is either head of department or in a significant position in the state secretariat where he does not have to bother about issues like an official vehicle, house, school, independent office etc. At the same level if he comes to Government of India he finds that very often he might even have to share an office room and is not likely to get an official vehicle.

A very interesting feature is that in Government of India only Secretaries have an attached toilet to their office while the others have to use a common facility. Then it might take him months to get an official accommodation and for this period he has to fend for himself. The houses allotted, also, are nowhere near what he would get in the state government. To this are added the woes of getting your child admitted to a good school and getting adequate medical facilities.

It is, thus, no rocket science as to why a young officer prefers to stay back in the states rather than going to Centre leading to a shortage of officers at the Center. Moreover, below a Joint Secretary level officers in GOI mainly do clerical work where no decision making takes place at their level. The position is very different in the districts and state governments.

In the IAS, out of total vacancies in a state cadre a certain percentage is filled by those candidates who belong to that state while the balance goes to officers from outside. It is generally seen that the “insiders” prefers to stay back in the state while the “outsiders” have a greater propensity to opt for GOI.

Also, officers allotted to North Eastern states prefer to come to Delhi while officers from states nearer to Delhi often prefer to remain in the states.

It is good that the entire issue is finally being examined. It is clear that to attract IAS officers to GOI at a level below Joint Secretary the service conditions would have to be improved and jobs enriched. The whole issue of requirement of IAS officers at each level needs to be scientifically determined. The reality is that the intake of IAS officers each year will have to be enhanced.     

How did the ICS evolve into the IAS?

Alok Ranjan’s Making a Difference provides an insider’s unique perspective on the IAS and the role it plays in public administration and development. Here’s an excerpt from the book about how this service evolved over a period of time.

I often hear people talk about the Indian Civil Service (ICS) and compare the IAS unfavourably with it. It is important to understand in this context that the nature of the job, responsibility, working environment and expectations of the people from the IAS differed hugely from that of the ICS in the colonial days. It is, undoubtedly, the successor service to the ICS but it is not the same and cannot be the same.

For those who are unstinted in their praise for the ICS, it is a sobering thought to be told that this hallowed service was considered neither Indian nor Civil nor a service by the great leaders of the nationalist movement. Yet it would be interesting to trace the journey of the ICS, its origins and contribution, and then try to understand how it evolved into the IAS. It would be relevant to examine how the IAS itself is evolving and undergoing change in its character, nature, diversity and reputation.

In the eighteenth century, the East India Company gradually spread its tentacles through most of India and from a professed trading company, it became an agency of governance on behalf of Britain. Naturally, administering such a huge country needed the Army and the Civil Service. Teenaged men were recruited into the East India Company Civil Service and they spent their time in India collecting revenue for the company and maintaining law and order. In 1800, Governor-General Lord Wellesley decided that teenaged recruits would have to undergo special training in India. For this, he decided to set up the college of Fort William in Calcutta, but this proposal had not been approved by the company’s Directors in London.

 The Directors did however establish a college in Hertford Castle in England in 1806 and then moved to Haileybury three years later. The selection of candidates to Haileybury was by a process of nomination by the Directors. They had to be seventeen years old and come from distinguished families. There was no question of selection based on merit; family pedigree was considered the most important attribute. People joined the civil service for adventure and with a spirit of altruism. The salaries and the pensions offered were very attractive. After nomination and before joining Haileybury, the candidates had to take some kind of a written and oral exam where they were tested in history and mathematics as well as language. The foundational course at Haileybury was for two years and the candidate studied mathematics, philosophy, literature, law, history, general economics as well as Indian languages. Sanskrit, Persian and Arabic were also taught. It is a different matter that these languages were not of much use when the civil servant landed in India. They had to administer in the vernacular languages and learn them as soon as they were posted to the field. The educational atmosphere at Haileybury was not very demanding and most candidates focused on just clearing the exams. There were lectures for about two hours everyday and a lot of free time was available to socialize and indulge themselves in drink. There was, however, the minority who studied hard and were known as ‘Steadies’, much like the ‘Keen Type Probationers (KTP)’ of our time who took the training at the Mussoorie academy very seriously. Though discipline was lax at Haileybury, a feeling of esprit de corps was very visible and close friendships were formed which lasted for a long time. Haileybury continued till 1857 when the British Government took over the governance of India from the East India Company, and introduced a system of selection into the ICS on merit, through a competitive examination.

The British Government made this change as they felt that selection by patronage would no longer meet the needs of governance and that meritorious candidates were required. Initially, the ICS drew a majority of its entrants from the Universities of Oxford and Cambridge but this soon changed. The Macaulay Committee laid out the guidelines of the selection which prescribed the maximum age limit initially as twenty-three but subsequently brought it down to twenty one. The committee designed an exam that demanded strong factual memory and a concentrated study of academic texts. The graduates had to study beyond their university syllabi to prepare for the exam and much like today, establishments like Crammer came up to prepare candidates for the exam.

There was a lot of criticism of this ‘Crammer’ system and many felt that unsuitable candidates were being selected just by preparing some questions that happened to appear in the examination paper. Still, many were of the view that the selection system provided better candidates than the earlier system that was based on patronage. This was followed by the Lord Salisbury Reforms which decided that candidates would take the exam at the school leaving age (seventeen to nineteen years) and then they would be on probation, studying in a university for two years. This system lasted from 1879–1892 but some leaders were of the opinion that candidates were being selected at too raw an age and they did not take their probation period in the university seriously. Another criticism was that it deterred Indian candidates from taking the exam.

Since the 1830s, Indians had joined the Government of India (GOI) in the capacity of Deputy Collectors, Deputy Magistrates and bore the burden of governance supervised by a handful of British ICS men. Lord Cornwallis in the eighteenth century had excluded Indians from high positions in the government. The 1853 Act opened up the service to all natural-born subjects of the crown. However, it was near impossible for Indians to compete as it was expensive and there were religious considerations which did not allow Indians to go to London to attempt the exam. Satyendra Nath Tagore was the first Indian to have been selected. In 1869, four Indians qualified, including Surendra Nath Banerjee and Romesh Chandra Dutt. The Indian National Congress in 1885 appealed for a simultaneous exam at a centre in India. In 1886, the government appointed a Public Service Commission which raised the age limit for the ICS to twenty-three years, enabling more Indians to write the exam. Even then, till 1910, only 6 percent of the ICS were Indians.

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A success saga

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

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.

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A menacing threat

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.

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Far too ambitious?

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 brown field 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.

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Tread with caution

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 fall outs 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.

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‘Inappropriate’ measure

The strategy of incentives and disincentives counters the population policy 2021-30, UP government should explore effective options like poverty control and up-skilling

The latest UP population policy has created a lot of interest and debate. Civil servants, both working and retired, as well as intellectuals, are voicing divergent opinions. There is no denying that population control, stabilization and welfare are issues of concern, particularly in Uttar Pradesh where the current total fertility rate (TFR) is 2.7 as compared to the replacement rate of 2.1 and the national average of 2.2. It is significant to note that India, as a country, has almost attained the replacement level of TFR, and the two states where further work is required are Uttar Pradesh and Bihar. Many southern states like Kerala and Tamil Nadu have TFR well below the replacement level. It has been argued that the population of Uttar Pradesh is one of the major causes of its slower rate of development as compared to the rest of India. It is a fact that despite being one of the top states in GSDP — which is currently around 19 lakh crore, contributing to 8.35 per cent of the GDP of the country — UP remains amongst the bottom three states in terms of per capita income. It is for this reason that there is a focus on population control which is in fact a desirable objective towards which the state should work. The only question is regarding the strategy and tactics to achieve this goal.

Let me first clarify that two documents need to be studied. On July 11, which is World population day, UP Chief Minister unveiled the UP population policy 2021-30. At the same time, the UP law commission has posted on its website a proposed bill regarding population control in the state and invited comments from all. It is the latter that has become a topic of debate as it has recommended a series of incentives and disincentives for public servants and others if they restrict the size of their family to either two children or one child.

The population policy 2021-30 is a continuation of steps taken after the population policy of 2000 and has drawn a link between development and control of the population. The population policy of 2000 had projected that by 2016, UP shall attain a TFR of 2.1 but it has not been able to do so. In the light of this, the announced policy has talked about improving the overall public health scenario. It has also emphasized the elimination of social issues like girls being married at an early age and there not being a gap between two children. This policy has rightly pointed out that more awareness about contraception measures need to be created along with improved availability of contraceptive methods. Significantly, it has talked of the education of the girl child and its impact on controlling the population. It has appreciated the efforts which have brought down the infant mortality rate (IMR) from 83 in 2000 to 43 in 2016 and maternal mortality rate from 707 in 1998 to 197 in 2016. These figures are to be further brought down by taking quality measures in coming years. This policy says that the overall objective is to improve the quality of life. It aims that by 2026, the TFR would be brought down to 2.1 and by 2030 to 1.9. There can be no argument with any of these policy statements and they need to be appreciated. However, it also mentions that the UP government is considering a new law to control the population by incorporating a set of incentives and disincentives proposed by the UP law commission.

The proposed bill suggests that a public servant who adopts the two-child norm by undergoing voluntary sterilization operation upon himself or their spouse shall be given certain incentives. These include two additional increments, subsidy towards purchase of a plot or house from a government agency, soft loan for construction or purchase of a house, rebate on house tax, water tax and electricity dues, maternity or paternity leave of 12 months with full salary, three per cent increase in employer’s contribution under the national pension scheme and free health and insurance coverage. It further states that a public servant, who has only one child and undergoes voluntary sterilization, shall, in addition to the above incentives, get additional increments — free health care and insurance for the single child till the age of 20, free education up to graduation, preference to a single child in government jobs and in admission to all educational institutions.

The bill goes further to talk about members of the general public other than public servants. Apart from making them eligible for similar incentives as for public servants, it says that if a couple living below the poverty line has only one child, then they would be eligible for a lump sum of Rs 80,000 if the child is a boy and Rs one lakh if the child is a girl. This is followed by the recommendations which need to be considered as they talk about disincentives and revocation of incentives. Any couple which contravenes the two-child norm shall be debarred from benefits under government welfare schemes and also all the incentives that have been proposed. It also says that a ration card would be limited to four people and there would be a bar on contesting elections to the local bodies. There is a clause that says that other disincentives can be imposed. It also bars such couples from applying for government jobs and puts a bar on promotion in government services and on receiving any kind of government subsidies.

The single child recommendation is a bit too radical. We have seen the case of China where they adopted a single child policy and had to retrace their steps recently because of the negative consequences of this policy which led to a large ageing population with a much smaller younger population to support them. In addition, in a country like India, with its preference for a male child, this measure would certainly be inviting female infanticide in a big way. The current sex ratio in UP at the time of birth is already skewed at 903 females per 1,000 males and this policy would encourage unsafe sex-selective abortions and further skew the ratio. Moreover, the disincentives like no subsidized ration or no government job will impact the vulnerable sections of the population disproportionately.

Even historically, disincentives have never really worked. Such measures always lead to putting excessive powers in the hands of the bureaucracy which tends to misuse those, causing harassment to the common people. The events of the emergency in 1975-76 are a testimony. The population can be controlled without resorting to such measures as has been clearly shown by the example of the southern states. Even in UP, there has been a significant decline in TFR and this can be accelerated further by focusing on education of the girl child, providing better nutrition, improving public health and increasing the pace of all-around development. These measures have worked all over the world.

The UP government strangely talks about bringing about a balance among various communities through its population policy. It is not clear how this will be made possible. Will the government fix the number of children for different communities?

The most significant thing is that the disincentives work against the poor. It is the poor who have a higher TFR and will suffer from the proposed disincentives. The objective of a welfare state is to work for the benefit of the poor rather than formulating laws that restrict the poor from getting government jobs or benefits of government schemes. I would go as far as to say that perhaps the most effective population control measure is the elimination of poverty. Moreover, we should view the population as a resource rather than as a liability. Even the honourable Prime Minister had spoken about the tremendous opportunity that our population and demographic dividend is providing us. We have to focus on providing education, skills and jobs to these people rather than fritter away our energies on implementing a system of incentives and disincentives. These proposed measures, in fact, run counter to the population policy 2021-30 declared by the government, and would actually make it ineffective. I may also point out that a technical group on population projections for 2011-36, constituted by the Government of India, has projected that UP will achieve the replacement level of the required TFR by 2025. There is, thus, no need for coercive policies.

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Decentralized governance

Direct elections to the post of ZP chairperson and proper devolution of resources could ensure smooth delivery of public services and reduce corruption

The recent elections to the post of chairman of Zila Parishad in UP made me think about the reality and the possibilities of decentralisation of governance through the third tier of government. I was disturbed by the allegations of use of money power, muscle power and partisan attitude of the local government officers in the indirect election. Such a perception about the election process demeans the office of the chairman and also puts a question mark on the functioning of the third tier of government. An immediate solution to this kind of situation would be to carry out an amendment in the relevant Act and go in for direct elections to the post of chairman. This will give much more stability, credibility, legitimacy and accountability to the institution and also enable the third tier to function in a manner that the 73rd constitutional amendment has envisaged.

I recall that in 1980, I was posted as an administrator of a municipal corporation in Uttar Pradesh and, after one year of my tenure, the elections to the post of corporators and mayor were held. At that time the mayor was elected through an indirect election where the corporators were the voters. I personally witnessed the money power that was used to buy votes by the contestants, and the person who won was reputed to have spent a fortune. Almost immediately after taking the charge, the mayor began to look for avenues to recover his investment and this led to a clash between us. I am not commenting on any one individual but on the system. Indirect elections always tend to bring in these imperfections. A direct election is always a much better alternative. Later on, the Act was amended and we began to have direct elections to the post of mayor in UP. This brought about a big change in the entire system. The mayors today are true representatives of people and have much more acceptance in the society. In fact, more powers should be devolved on the mayor to make him/her the actual leader of a municipal corporation with full accountability to the people. In a similar manner, if direct elections are held for the post of the chairman of Zila Parishad, the elected person would become a genuine representative of the people and local governance will be empowered. I also feel that this system could lead to more people of talent and leadership quality contest for the elections. With this amendment, the institution of the chairman of Zila Parishad would become much more powerful and responsible towards people. I foresee that there could be opposition to this from the bureaucracy. The elected members of the legislature and parliament may also oppose it because the chairman of ZP would be directly elected by a larger vote base than them.

The 73rd amendment in 1992 provided for a three-tier Panchayat system at the village level, intermediate level and district level. This was specifically meant to give these institutions the required status and dignity of viable and responsive people’s bodies. Article 40 of the constitution had laid down, as part of the directive principles of state policy, that every state shall organise village Panchayats and endow them with such power and authority as may be necessary to enable them to function as units of self-government. However, due to the absence of regular elections, insufficient representation of weaker sections and women, inadequate devolution of powers and lack of financial resources, these institutions have not been able to fulfil their role.

As a consequence of 73rd amendment, the three tiers of local self-government have come into existence in most states but the level to which the functions, functionaries and finances that have been devolved to them vary from state to state. States like Karnataka and Maharashtra have set examples of a much higher devolution of power than Uttar Pradesh and Bihar. However, almost all states now have a state election commission which ensures that regular elections to these three tiers are held; the earlier practice of keeping these institutions in a state of suspension is no longer possible. This, by itself, is a major change. The election process gives due representation to women, scheduled castes and scheduled tribes and weaker sections to make them truly representative of the society. Most states have also constituted a state finance commission which decides upon the percentage of state resources that would be transferred to the urban and rural local bodies. In UP, 15 per cent of the state resources are transferred to these local bodies even though successive state finance commissions have recommended a higher percentage. There is indeed a pressing need for such a step.

True decentralisation of power would lead to definite improvement in the delivery of public services to the people. For example, Uttar Pradesh has close to two lakh elementary schools. It is humanly impossible for a state-level secretary or a director or a district-level education officer to monitor the functioning of the village schools. This can be best done by the local village Panchayat. The same is true for ICDS nutrition centers and health sub-centers and other local-level development schemes. This is only possible if local self-government institutions have the power over the functionaries of concerned departments. Practically, departments do not allow this to happen and the government employees threaten to go on strike if put under the jurisdiction of the Panchayats. State governments are not very keen on allowing the Zila Parishad to plan for the development of the district. There is a district planning committee which formulates district plans but, at least in UP, I found that these plans do not find a place in the state budget. I found that schemes which are to be a part of the district plan are identified but very often resources are allocated on the basis of decisions taken at the state level. The ideal situation should be that a fixed percentage of the state budget should be allotted for district plans as drawn up by the Zila Parishads. The ZP should prepare these plans on the basis of plans prepared by the village and intermediate Panchayats. Further, the village panchayat and other tiers have the powers of local taxation as per article 243 H of the constitution but internal revenue at the national level is barely four per cent of their total revenues. There is a case for these institutions to raise their internal revenues. Today, a major part of the revenue comes from devolution from state finance commission and central finance commission. Also, in a lot of schemes, funds are now being directly sent to the Panchayats, making it possible for them to spend on local needs. However, this has also created a situation where there are allegations of corruption against the elected members of the local government. These institutions need to be mentored and nurtured with patience so that they become genuinely accountable to the people. To control corruption, the mechanisms of local fund audit, social audit and having an ombudsman for a cluster of villages can certainly help.

It is in the interest for better governance to devolve funds, functionaries and functions to the local self-government institutions with a system of audit and oversight agencies to see that the funds are spent properly. To make this happen, direct elections to the post of chairman of ZP are also necessary. It will need a lot of vision on the part of the political parties and support of the bureaucracy to make these three tiers of government genuine institutions of decentralized governance.

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Holistic gauge

Development indicators need to be reshuffled to go beyond mere growth goals and incorporate wider parameters

Ever since I was a student of economics at Delhi University, the growth versus equity debate has been at the centre stage of any discussion around development economics. Recently, I read an outstanding book titled “The Growth Delusion” by David Pilling which is a critique of overemphasis on the growth of GDP as an economic welfare measure across the world. India is no exception. The current budget boldly talks about economic growth as the goal to be achieved — based on the philosophy that only if the size of the cake is large, it can be distributed amongst maximum people. We hear the talk that India has already become the fifth largest economy and is soon likely to become the third-largest. The Government of India has set up an ambitious goal to achieve a USD five trillion economy by 2025. The UP government has also set a goal of a USD one trillion economy by that period. GDP is an indicator of the size of the economy but not of the wellbeing or quality of life of the people. Pilling has been severe in his comment when he says that all countries are obsessed with the rate of growth of GDP and put all their energy in chasing this chimera.

Despite growth in GDP, economies are witnessing rising inequalities. This has been highlighted in a famous book written by Thomas Piketty. We have also read the opposing viewpoints of eminent economists like Jagdish Bhagwati and Amartya Sen; the former emphasising growth and the latter talking about state intervention in public services like health and education to bring about genuine economic welfare. In India, over the years, we have witnessed jobless growth leading to an increasing rate of unemployment. Further, despite being one of the largest economies in the world, the per capita income of citizens is abysmally low, leaving us as a developing economy, far behind the developed world. There is still a lot of poverty and the second wave of the pandemic has exposed the poor quality of public health infrastructure in the country. Education and nutrition levels are far behind the developed countries and our rank in the Human Development Index is beyond 100. This clearly shows that growth by itself is not going to solve the problems of our country and we need inclusive growth. The latter requires specific state intervention in favour of the poor and the marginalised. This clearly indicates a need to have a broader index of development that goes beyond GDP and allows us to aspire for an improved quality of life for the people.

Pilling discussed various alternatives to GDP in his book. We could have goals for increasing per capita income or net domestic product. Then, we could have the Human Development Index as an indicator or evolve a Sustainability Index which would factor in the crucial environmental needs. He developed a matrix of economic, environmental and social indicators that can best bring out the status of quality of life in a country. Recently, India lost the World Test Championship to the tiny island nation New Zealand. I read an interesting article which tried to analyse the rise of New Zealand as a cricketing power by bringing out the differences in per capita income and various other social and economic indicators between New Zealand and India. The comparison held India in a very unfavourable light.

Most countries have added parameters other than GDP in their evaluation of development. The most significant has been the concept of Gross National Happiness developed by Bhutan. The utilitarian approach of the greatest happiness of the greatest number is not the solution as it ignores the problems of the minority and tends to perpetuate inequalities. Happiness economics has evolved as a discipline in itself, and 20th March has been declared as the International Happiness Day. India has unfortunately ranked 140 out of 156 countries on happiness indicator, with Denmark, Sweden, Norway and Switzerland being amongst the top nations. Happiness index accounts for GDP per capita, social support systems and healthy life expectancy, freedom to make life choices, generosity, trust and corruption levels. One can think of including more aspects of happiness in this indicator like the government of Bhutan which calculates gross national happiness on the basis of four pillars — promotion of sustainable development, preservation of cultural values, conservation of natural environment and establishment of good governance.

Currently, a new concept known as subjective well-being (SWB) is being used at the global level to measure the quality of life and the extent of happiness. SWB links happiness with life satisfaction which is a function of in-born temperament, fulfilment of basic needs and quality of social relationships. We all know that happiness has both internal and external causes. Internal happiness, of course, is a spiritual concept where happiness depends on inner contentment and the response of an individual to life situations. This is something that is influenced by the culture of the family of an individual and the spiritual practices that he follows. However, external happiness is determined, to a large extent, by the policies of the government. It is this external happiness that can be measured through an index and governments can influence this in a big way. Happiness can be defined as a state of being where there is a high level of satisfaction, positive feelings and infrequent negative feelings. External happiness depends upon a person having sufficient material resources like money, sufficient social resources like family and friends and a desirable society that is free of hunger, injustice, corruption and war; and is full of spirit of trust and cooperation. If the citizens of a country feel that they are leading a purposeful and meaningful life, and are optimistic about their current position and outlook for the future, then they can be considered to be high on the happiness index. The difference between the SWB approach and GDP is the focus on multiple dimensions of the human lives in the former. It is also true that if there are a large number of inequalities in society, particularly in the form of opportunities, then happiness decreases.

It is thus important that we are not caught in the GDP trap and focus on the larger issues of life which lead to a better quality of life for citizens and makes for a happy society. None other than the famous economist Simon Kuznets said, “The welfare of a nation can scarcely be inferred from a measurement of national income.” Robert Kennedy of the United States famously said, “GDP measures neither our wit nor our courage; neither our wisdom nor our learning; neither our compassion nor our devotion to our country; it measures everything but that which makes life worthwhile.” Human beings have to be at the centre of development policies. We have to evolve an index where we measure the quality of life that we are giving to the people. I would like to end this article by quoting David Pilling where he says towards the end of his book, “Growth was a great invention. Now get over it”.

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Measures for revival

Even as the economy starts limping back to normal, increased poverty and unemployment would require effective policy intervention

Mercifully, the disastrous Covid second wave, largely fueled by the delta variant, has begun to recede. It is time now to take stock of the impact that Covid has had on the lives and livelihood of the people. The numbers of cases, as well as the fatalities, were much higher during the second wave in comparison to the first. Almost all my friends have told me that someone near and dear to them has passed away due to Covid. The fear of Covid has entered every home. There was a period from mid-April to the first week of May when people were clamouring for oxygen, ICU beds, medicines and treatment. Even though I have retired from the civil service I recollect getting at least a dozen calls each day requesting help for getting someone admitted to a hospital. That was indeed a very traumatic period. One state government followed the other in imposing various degrees of lockdown to break the infection chain. Things are much better now with normalcy approaching, the lockdowns lifted in most states and economic activity limping back to normal. Of course, there is always the apprehension that the virus is not likely to disappear soon and may even come back for a third wave. The government is certainly not taking any chances this time and is likely to be better prepared. The people also would be more careful now.

The future would be determined by the pace, extent and efficacy of the vaccination campaign. The goal is to achieve the vaccination target by end of December as, only if the majority is vaccinated, will we be able to escape the scourge of the pandemic. Various policy options are being considered, debated and implemented. Normal life would return after the battle is won but the scars of the Covid will take years to disappear. The economy has been badly damaged. The year 2020-21 showed a negative GDP rate of -7.3 per cent and now the growth rate projected for 2021-22 has been scaled down even by the RBI to 9.5 per cent. This has impacted the level of unemployment in the economy. The finance ministry has come out clearly putting growth as its main objective in the current budget. However, the anticipated growth momentum has encountered a roadblock in the second wave. Economists and governments are banking on private consumption demand to pick up significantly after the lifting of lockdowns. We have to wait and see with what pace the economy will bounce back. The finance ministry has clearly stated that everything will depend on the pace of the vaccination process and talked about completing maximum vaccination by September end to push forward the growth of the economy. The government is planning to front-load its capital expenditure and also the private sector is planning major capex infusion. All this would certainly help but it remains to be seen to what extent this would raise the spirits of the economy and in how much time.

The CMIE report on unemployment in the Indian economy shows that as of June 17, 2021, the unemployment rate has been as high as 11.2 per cent with urban unemployment being at a staggering 13.9 per cent and rural unemployment at 10 per cent. The unemployment issue which was already troubling the youth before the onset of the pandemic has now assumed dangerous proportions with its consequential impact on the level of poverty. The poor and the marginalised, especially those in the informal economy, have been the worst hit. The State of Working India Report, 2021 prepared by Azim Premji University before the second wave had indicated issues of serious concern. The report proposes policy imperatives for the government to respond to the impact of Covid on the poor. Firstly, it is clear that the Central and state governments will have to focus on healthcare and education. The pandemic exposed the poor quality of health infrastructure in the rural areas which requires massive investment. The sector will assume greater importance in the coming decade and will be a major job provider.

Additionally, the government has to focus on increased poverty resulting from Covid. The Azim Premji report shows that despite the V-Shaped recovery after the first wave about fifteen million workers remained out of work and the per capita income remained below the pre-Covid level. The huge employment and income losses led to the labour share of GDP falling by over five percentage points to 27 per cent in the second quarter of 2021. Most of the decline in income was due to a reduction in earnings. It also came out that the poorer states suffered more in terms of job losses. The women and the young workers were disproportionately affected and many could not return to work even by the end of 2020. The report says that 33 per cent of workers in the 15-24 age group could not recover their employment by the end of the year.

The most significant finding of the above study was that monthly earnings for all workers fell and that of the poorer households declined more than the others. More than 230 million people were pushed into poverty with a 15 per cent increase in rural poverty and 20 per cent in urban poverty. This is indeed an alarming picture and negates all the poverty eradication efforts made since 1991. The challenge now is to provide gainful employment to these displaced people so that they can come out of the poverty trap. It becomes all the more significant as India is aiming to achieve the dream of a five-trillion-dollar economy by 2025. Agriculture has performed in a stable manner and has been the saving grace yet we have to see how this sector can generate more employment. Increased allocation for MGNREGA and more jobs to people on MGNREGA-related projects would certainly help. In addition, the agriculture sector has to be reformed and modernised with the aim to increase the income of the farmer. The Government of India has promised to double the income of the farmers by 2022. However, we are far away from this goal at the moment. A concentrated effort is required to bring out major reforms in the sector to increase the income of the farmer. The recently proposed structural reforms have run into heavy weather but are in the right direction and, with some modifications to protect the interest of the farmers, they can make a difference. Dairy and other animal husbandry projects can contribute to increasing the income of the farmer. Massive investment in storage and cold chain is required. To shift workers from farm to non-farm activities and discourage migration, there is an immediate need for setting up rural growth centers — each of those being a hub of rural industrialisation, particularly for the agro-processing sector.

A lot more needs to be done to support the worst-hit MSME sector. Merely giving loans will not suffice; a fiscal package of direct support is required because this sector has immense potential for employment. In particular, the services sectors like hospitality and tourism have been badly hit and need a special relief package for revival. The time for such a fiscal stimulus is now and should be done without any further delay. A major scheme for employment in the urban areas has to be implemented to cater to the issue of urban unemployment. Measures like increasing the old-age and widow pension and direct cash transfer to the poor can also bring about faster recovery. The impact of Covid on lives cannot be done away with but we can certainly take urgent steps to see that the livelihood of people is not threatened. The impact of Covid on poverty and unemployment needs to be seriously addressed.

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