FOOD SECURITY IN THE TIME OF INFLATION

If the expansion of the Public Distribution System results in an increase in market prices, it may counterbalance the benefits of food subsidy

Passage of the National Food Security Act (NFSA) has put the Public Distribution System (PDS) at the core of the national mission to feed the hungry. The PDS, operated via “fair price” or ration shops, will distribute up to 5 kg of rice at Rs. 3 per kg., wheat at Rs. 2 per kg, or millet at Rs.1 per kg per person per month to 75 per cent of the rural population and 50 per cent of the urban population.

Will the PDS be able to handle this scale of distribution? Will availability of practically free grains overcome the potential inconvenience of buying from a single shop? Will this allocation meet all the households’ cereal needs? Some of the data from the India Human Development Survey (IHDS) conducted by the National Council of Applied Economic Research and the University of Maryland provides a guide to the recent past. About 42,000 households were surveyed in 2004-05, and once again in 2011-12, and provide an interesting description of how PDS has grown in importance for ensuring household food security in an era of rapid food price inflation.

PDS cards come in three flavours — Above Poverty Line (APL), Below Poverty Line (BPL) and the Antyodaya Anna Yojana for the poorest of the poor. Here we combine BPL and Antyodaya card holders. While the Central government decides on the proportion of a State’s population that is eligible for BPL status, States identify which particular households should get which card using their own criteria.

Substantial efforts were made between 2006 and 2012 to improve targeting of BPL cards and expand the number of Antyodaya cardholders.

Did retargeting of PDS work? Comparing access to BPL cards across different income categories (using 2012 constant prices) paints a picture of the glass both half full and half empty. In 2005, 44 per cent rural and 31 per cent individuals with monthly incomes of Rs. 300 or below had a BPL card; by 2012 this proportion had risen to 56 per cent (rural) and 36 per cent (urban). But while an effort was made to include the poorest, affluent households also benefitted. Among households with monthly per capita incomes of Rs 2,000-2,500, the proportion of households with BPL cards grew from 25 per cent to 43 per cent in rural areas and from 15 per cent to 29 per cent in urban areas.

Inefficient targeting

This low relationship between income and type of ration card is worrisome because it suggests that it is difficult for us to identify the poor and target subsidies. NFSA plans to provide subsidised grains to 75 per cent of the rural households so it should cover most of the poor; but for urban households where only 50 per cent are expected to receive BPL cards, this inefficient targeting could be highly problematic with poor households being excluded from receiving subsidised grain while some middle income households benefit.

Apart from retargeting of PDS, the years 2009-2012 also saw runaway food price inflation. So looking at the IHDS data from 2005 and 2012 allows us an opportunity to examine the role of PDS in household food security during times of high inflation.

The biggest change took place in people who actually purchased grains in PDS, termed PDS off take. Only 25 per cent of the respondents purchased grain from the ration shops in 2004, but over 50 per cent did so in 2012. Food price inflation accounts for much of this increase but perhaps increasing efficiency of PDS shops could also account for some of the increase. People with APL cards are supposed to receive grains at the market price and only 12 per cent APL households purchased grain from PDS shops in 2005. By 2012 this proportion had risen to 29 per cent. Even if they had to pay the full PDS price, in an era of rapidly rising prices, full PDS price was still lower than the market price. This increase was particularly large in the cities. However, since the quantities that can be purchased via PDS by BPL households is limited, only about 4.5 kg of grains per month per person was purchased from PDS, forming about 45 per cent of the total grain consumption. Once households decided to buy from fair price shops, the amount they purchased was determined by the allowance and did not vary between two survey years or across different income groups.

These observations create an interesting quandary. On the one hand, PDS has begun to play a far greater role in the household food consumption in recent years and with the expansion of its role under NFSA, will be even more important. On the other hand, it only covers less than 50 per cent of a household’s cereal intake. If the expansion of PDS results in an increase in market prices, it may have a substantial negative impact on household budget and may well counterbalance the benefits of food subsidy.

Vast regional differences

While we have painted a national picture here, regional differences in the importance of PDS in household food budget are vast. Whereas in north-central India only about 40 per cent of the people buy grains from ration shops, nearly 85 per cent in the south use food from ration shops.

These observations suggest three major challenges for the country as we move forward. First, identifying the poor is likely to remain a problem, particularly for the urban areas. Second, since PDS covers less than half of the households’ cereal budget, if the expansion of NFSA affects cereal prices it will impact all households, even those covered by NFSA. Third, inter-State disparities will continue to persist given the complex equation between the Centre and the State in providing food subsidies.

SOURCE: SONALDE DESAI, HINDU

MGNREGA ANALYSIS

The Centre’s rural employment guarantee scheme can be substantially improved, but it has undeniably helped Dalits, Adivasis and women find work

In an era of growing globalisation and rising inequality, the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) stands out as a unique attempt to provide a social safety net via a massive public works programme. The government as an employer of the last resort is an idea that has existed in policy discourse around the world for much of the 20th century, gaining most currency during the Great Depression in the United States. However, MGNREGA takes this policy to a new realm because of its massive reach, universal nature, and its initiation during a period of rapid economic growth.

It is a good time to explore the reach and impact of MGNREGA. India Human Development Surveys of 2004-05 and 2011-12, organised by the National Council of Applied Economic Research (NCAER) and the University of Maryland, surveyed about 27,000 rural households in 2004-05, before the Act was passed, and in 2011-12 when the programme was implemented in all districts. Hence, it provides a unique opportunity to examine household well-being before and after the implementation of the Act.

Our scorecard on MGNREGA focusses on three issues: (i) The reach and targeting of the programme; (ii) Experience of the households that participated in MGNREGA; and (iii) Broader changes in the rural labour markets between 2005 and 2012.

The MGNREGA website claims that 500 lakh households — about 36 per cent of rural households — obtained employment from MGNREGA in 2011-12. Our household survey finds only about 25 per cent of the rural households participating in MGNREGA. Another independent household survey, the National Sample Survey of 2009-10, also finds about 25 per cent of households participating in MGNREGA.

Well-targeted scheme

Regardless of the discrepancy between administrative statistics and actual usage, the programme is remarkably well-targeted. This targeting operates at three levels. At the village level, the uptake in villages with low levels of infrastructure is higher (28 per cent) than in villages with better infrastructure (21 per cent). It is more difficult to organise new programmes in more backward areas, so MGNREGA’s success in achieving this goal is quite remarkable.

At the household level, households from the marginalised communities — Dalits and Adivasis — are far more likely to participate in MGNREGA (36 per cent and 30 per cent respectively) than other households (20 per cent). At the individual level, older workers are disproportionately more likely to participate in MGNREGA than in the general labour force. Women, too, have higher participation rates; although only 29 per cent of all non-agricultural wage workers are women, 44 per cent of all MGNREGA workers are women.

However, even for those households doing MGNREGA work, the number of MGNREGA work-days is not very large. About 50 per cent of participating households work 40 or fewer days. MGNREGA administrative data shows that less than 10 per cent of the households complete their full 100 days; the India Human Development Survey (IHDS) data record about 15 per cent of the participating households completing 100 days. In the run-up to the election, the government has raised the limits for Schedule Tribes (ST) households living in forest areas to 150 days, from 100. But 85 per cent of the participating ST households and 95 per cent of all ST households have not exhausted their current limit of 100 days. When asked by IHDS interviewers why they had not completed the full 100 days, 75 per cent of the MGNREGA participants cited “No Work” as the primary reason. It would seem more important to focus on ensuring the full 100 days of work for everyone than to increase entitlement to 150 days.

For those households that participate in MGNREGA, the income from MGNREGA forms about 14 per cent of their total income. While the Act mandates payment in cash for people who are not offered work, we found few respondents knew about this provision and even fewer availed of it.

It is not clear whether MGNREGA is providing alternative sources of work or attracting people who were formerly underemployed or disguisedly employed. The IHDS data document an increase of just five days of work for men over a 12- month period in rural areas and four days for women. This is not a massive increase, suggesting that some of the MGNREGA work may have replaced rather than added to former work.

The IHDS also documents other changes in rural labour markets. Among workers, non-farm work has grown substantially while an exclusive agriculture focus has declined. The proportion of individuals who focus solely on agricultural activities— cultivation, agricultural labour, and animal care— has gone down from 51 per cent of men aged 15-59 to 35 per cent; for women the drop is from 84 per cent to 66 per cent. Much of this drop comes from changes in agricultural wage work and caring for animals; own-account cultivation is unchanged. While we do not know that MGNREGA caused these changes, the alternative non-farm employment is certainly part and parcel of broader changes in rural labour markets.

Increase in daily wage

This declining agricultural employment has accompanied wage growth for daily wage workers, particularly agricultural labour. For male agricultural workers, daily wages in constant terms grew from Rs. 90 a day to Rs. 134; for male non-agricultural workers they grew from Rs.126 a day to Rs. 155. The growth for women agricultural workers was from Rs. 62 to Rs. 91 and for non-agricultural workers from Rs. 77 to Rs. 111.

These wage increases for women are particularly interesting. Historically, the lack of non-agricultural work has constrained women’s wages. If MGNREGA is in any way associated with the growth in women’s wages, this is a positive outcome. But these observations may also point to a real concern for farmers — a possible lack of availability of agricultural workers and high wages during harvest time. Rising agricultural wages for both men and women and simultaneously declining agricultural wage work suggest that it would be a sensible precaution to ensure that MGNREGA work is not timed for the peak agricultural periods.

The above discussion has noted several concerns with MGNREGA, particularly the discrepancy between official data and household reports on usage as well as the potential wage impact. But we have also noted that the programme has been particularly successful in providing employment to Dalits, Adivasis, and women, thereby serving as an attractive employer of the last resort to the most disadvantaged workers.

SOURCE: SONALDE DESAI, HINDU

Declinig Sex Ratio

On International Women’s Day, the Election Commission of India held a special campaign to bring women voters to the polls. Although men and women vote at a more or less similar rate in State elections, women are 6-8 percentage points behind in the Lok Sabha elections where national issues dominate. These disparities prompt us to take a deeper stock of gender inequalities in Indian society.

India Human Development Survey (IHDS), a nationally representative survey of about 42,000 households conducted by researchers from the National Council of Applied Economic Research (NCAER) and the University of Maryland, provides interesting insights for developing a gender scorecard covering the years of rapid economic growth between 2004-2005 and 2011-2012. NCAER is the oldest think tank in India, and the only one outside the government which carries out large independent household surveys on social and economic issues. The IHDS is carried out under oversight from an advisory panel comprising eminent academicians, representatives of civil society and those of a variety of statistical agencies. It is the only national panel survey covering the same households.

When it comes to changes in the nature of gender relations in India, IHDS records a story of both progress and disappointments. The scorecard on gender reflects a broad stagnation in social mores where some achievements are cancelled out by backsliding in other areas; broader economic impacts on gendered outcomes are by and large negative; and some remarkably successful policy initiatives have been overlooked in an era of overall disenchantment with public policies.

Social stagnation

On social issues, IHDS paints a picture of overall stagnation, except for a few bright spots. The declining gap in school enrolment between boys and girls is the shining story of the past decade. In 2005, among children aged between 6-14, 88 per cent of girls and 92 per cent of boys entered school. By 2012, the percentage for both sexes rose to 96 per cent.

However, if we read this improvement in women’s literacy to indicate an overall improvement in their status, we are in for a disappointment. Women remain bound by strict patriarchal norms that govern where they go (18 per cent don’t even go to a Kirana shop), whether they can venture outside the home alone (50 per cent do not travel alone by bus/train even for a short distance), how much input they are allowed in household decisions vital to themselves and their children (only 25 per cent have the final authority on what to do when they are sick) and even whether they have any input in who they marry (only 25 per cent actually met their husbands before marriage). Rising incomes do little to improve women’s status since richer households appear to be more determined to control their movements and autonomy than poor households.

Perhaps the greatest area of concern lies in steadily declining sex ratios. Census 2001 recorded only 927 girls between the ages 0-6 compared to 1,000 boys. This ratio dropped to 919 in 2011. It is a paradox that although today’s parents are even more likely to prefer boys to girls than those of the last decade, often resorting to illegal sex-selection practices to ensure the desired sex composition, the discrimination against daughters in education is steadily declining.

While this stagnation in women’s ability to control their own fate is disappointing, some of the other gender indicators are downright alarming. During years of rapid economic growth, women’s employment has steadily declined. In spite of the attempts the IHDS survey made to capture diverse sources of women’s work, women’s work participation rates for those between the ages 15-59 dropped from 58 to 54 per cent for rural women and from 23 to 20 per cent for urban women between 2005 and 2012. While rising household incomes may explain some of these declines, the consequences for women’s empowerment are worrisome.

Moreover, women remain concentrated in the agricultural sector. In 2005, 73 per cent of the rural men did any agricultural work; by 2012 this number fell to 65 per cent. In contrast, the decline for women has been smaller, from 91 per cent to 86 per cent. Women’s participation in non-farm work would have been even lesser without the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS). With the slow but steady migration of men out of agriculture into non-farm economy, agricultural work is slowly becoming feminised, leaving women concentrated in an increasingly smaller portion of the economy.

Public policy successes

What role do government policies play in shaping gendered outcomes? Here, there are a number of positive signs. Programmes like Janani Suraksha Yojana (JSY) have had a tremendous impact. Hospital delivery rates soared between 2005 and 2012. In 2005, before the implementation of JSY, which provides cash benefits of up to Rs.1,400 for a hospital delivery, only 50 per cent of the deliveries took place in a hospital; by 2012, this had risen to nearly 70 per cent. Implementation of the no-frills bank account has increased women’s financial inclusion.

The proportion of women with their name on a bank account has risen from 18 per cent to a whopping 38 per cent in these seven years. Efforts aimed at ensuring women’s participation in MGNREGS have also borne fruit. The scheme mandates that at least a third of beneficiaries should be women. IHDS records that 44 per cent of the beneficiaries are women.

While these major programmes have had an impact on women’s lives, many other schemes have proven to be remarkably ineffectual.

Only about one per cent of households have registered their daughters for the much trumpeted girl-child schemes that provide cash incentives for the survival and education of girls. Moreover, even large schemes often suffer from operational difficulties; the demand for hospital-based deliveries has fast outpaced the ability of government hospitals to deliver reasonable quality care.

So how will the women voters react in the 2014 election? Would these policy achievements outweigh the social stagnation and economic concerns?.

COURTESY:Sonalde Desai is senior fellow at the National Council of Applied Economic Research and professor of sociology at the University of Maryland. This is the first in a series of five opinion pieces based on the findings of the new IHDS. The views expressed are personal.

KEYNESIAN OR HAYEKIAN MODEL FOR INDIA

Indian economic thought is still fired up with the keynesesian remedies prescribed for the industrial countries in the late 1930s. The keynesian analysis was that there was  an excess of saving over investment and,as there was  large unemployment,the remedy was for the government to undertake pump-priming.
In the aftermath of the 2008 global economic crisis, Indian economists are ecstatic that pump priming was being restored in a big way in the industrial countries which then gave legitimacy to India restoring to pump priming. The unexpected monitory fiscal expansion resulted in a sharp expansion of inflation,and put paid to the aspirations of double-digit growth.
OVER INVESTMENT THEORY:
In India, there is a lack of appreciation for business cycles. It was argued that since India is a planned economy it was immune to business cycles. As Indian economic thought was allured by the keynesian doctrine,it totally ignored the over investment theory of business cycle set out in F.A. Hayek's Prices and Production(1931). Under the Hayekian approach, there is excess of investment over saving,and this has to be equilibrated by forced saving via created money. At each successive round of production,the created money has to be larger and larger,and as inflation gathers momentum,the central bank inevitably presses the panic button and the economy goes into a tailspin. In the Hayekian model. the upper turning point is the most important point of the business cycle. John Hicks in his 'Hayeks story ' in Critical Essays in Monetary Theory (1966) emphasized that it was Hayekian approach which was relevant to developing countries.
The lesson is that monetary tightening should be undertaken during the upswing of the business cycle,well before the upper point is reached ,this is easier said than done  as the  central bank is accused of being the spoil sport ruining the party. Invariably monetary tightening is undertaken after the upper turning point,when the downturn has started, and this accentuates the downturn. Earlier monetary tightening is optimal as the extent of tightening is mild.

PROSPECTS OF INDIAN TOURISM

1. 
   

Tourism is a vital element for overall growth of economy and gears both state and central governments to work towards increasing India’s tourism market share on the global platform in the current 12^th plan (2012-2017). The ministry has projected the budget requirement of Rs 22,800 crores for various activities relating to development of tourism. The foreign tourist arrivals (FTAs) in India witnessed an impressive growth of around 8.9% during 2011 as compared to 4.4% for the world as a whole. During the first four months of 2012 growth in FTAs has been 8.3%.

CINEMA TOURISM:

In an Endeavour to establish India as a filming destination, the ministry of tourism and ministry of information and broadcasting have recently entered into a memorandum of understanding (MOU) to promote cinema of India as a sub brand of INCEREDIBLE INDIA at various international film festivals and markets to develop synergy between tourism and film industry and to provide an enabling partnerships between India and the global film industry.

SPIRITUAL TOURISM:

The government is promoting spiritual tourism by coordinating with local authorities and other stakeholders to keep the highest standards of hygiene at sacred places. In consultations with stakeholders the Jain circuits, the Buddhist circuits Sufi and other spiritual circuits have been identified for development during 12^th plan.

Jain circuits:

(a)   Jodhpur-Bikaner-Udaipur-Chittorgarh-Nagpur

(b)   Bengaluru-Mandya-Hassan-Dakshin kannada-Udipi

(c)    Muzaffarpur-Bhojpur-Patna-Nalanda-Girdhir-Navda-Jamui-Banka

(d)   Bhavnagar-Mehsana-Patna-Udaipur-Bikaner-Nagur        

Sufi circuits:

(a)   Delhi-Agra-Fathehpursikri-Ajmer

(b)   Mumbai-Aurangabad-Shiridi

(c)    Sufi circuit of Bihar

(d)   Hyderabad-Bijapur-Gulbarga

(e)   Dargahs of J&K, Punjab,Himachal Pradesh

Sufi circuits of Awadh region           

   

The government is also targeting the Buddhist rich destinations of Himachal Pradesh, Odisha, Arunachal Pradesh, J&K, Sikkim, and Bihar. The ministry of tourism is endeavoring to strengthen international infrastructure capable of meeting the market demand of hospitality sector. This is done for both managerial as well as skilled service provider categories.

Tourism Promotion in North East:

 

Embracing the eastern Himalayan region from Sikkim eastwards, north east region of India witnessed an incredible increased flux of tourists. Each year people come here to experience its rich natural beauty serene environments exotic flora and fauna. Huge plan for promoting tourism in north east as it will have a positive socio economic impact of these states. Central financial assistance to augment infrastructure at selective places is provided